Studsvik — Annual Report 2008

Apr 7, 2009

Annual Report 2008

Information to shareholders

ANNUAL GENERAL MEETING APRIL 22, 2009

The Annual General Meeting will be held in Stockholm, World Trade Center, Klarabergsviadukten 70 / Kungsbron 1, on Wednesday, April 22, 2009, at 4 p.m.

Notification of attendance

Shareholders wishing to participate must be registered in the share register kept by Euroclear Sweden AB (formerly VPC AB) by April 16, 2009, and must give notification of their intention to attend by April 16 at the latest.

• By telephone +46 155 22 10 33,
• By mail to Studsvik AB, P.O. Box 556, SE-611 10 Nyköping, Sweden,
• By email to studsvik@studsvik.se,
• By fax on +46 155 26 30 00, or
• Via Studsvik's website, www.studsvik.com.

The shareholder's notification should state

• Name
• Personal/corporate identity number
• Address and telephone number
• Number of shares

For entitlement to vote at the Annual General Meeting, shareholders with nominee-registered holdings must apply to the bank or broker managing their shares for temporary re-registration a couple of banking days before April 16, 2009.

Nomination committee

Studsvik's Nomination Committee consists of:

• Anders Oscarsson, SEB fonder (Chairman)
• Jan Barchan, Briban Invest, Member of the Board
• Frank Larsson, SHB fonder
• Anders Ullberg, Chairman of the Board

The task of the Nomination Committee is to submit proposals to the Annual General Meeting of shareholders regarding election of the Board of Directors, auditors and alternate auditors and their fees.

Nomination Committee's proposed Board of Directors

The Nomination Committee will propose to the AGM that the Members of the Board Jan Barchan, Ingemar Eliasson, Lars Engström, Anna Karinen, Alf Lindfors, Per Ludvigsson and Anders Ullberg be re-elected.

FORTHCOMING FINANCIAL INFORMATION

ƒ Report on the first quarter as at March 31	April 22, 2009
ƒ Report on first half year as at June 30	July 21, 2009
ƒ Report on the three first quarters as at September 30	November 2, 2009
ƒ Year-end report 2009	February 2010
ƒ Annual report 2009	April 2010

The reports will be available at www.studsvik.com on the publication dates. The Annual Report and half-year report will be sent to the shareholders by post.

Contents

This is Studsvik	2
Confidence after a tough 2008	4
Mission, objectives and strategies	6
Market	8
Business operations	12
Studsvik's offering	14
Organization and processes	16
Operating segments	18
Sweden	18
United Kingdom	20
Germany	22
USA	24
Global Services	26
Studsvik's corporate responsibility activities	28
Risks	32
The share	35
Administration report	38
Accounts	45
Consolidated income statement	45
Consolidated balance sheet	46
Consolidated cash flow statement	48
Parent company income statement	49
Parent company balance sheet	50
Parent company cash flow statement	52
Notes to the consolidated accounts	53
Notes to the parent company accounts	74
Audit report	77
Corporate governance	78
Board of Directors and auditors	82
Executive Group Management	84
Five-year review	86
Definitions of key figures and ratios	88

This is Studsvik

Studsvik offers a range of advanced technical services to the international nuclear power industry in waste treatment, decommissioning, engineering and services, and operating efficiency. In more than 60 years in the industry Studsvik has developed into a leading edge company with services covering the whole lifecycle of a nuclear power plant.

The company has modern facilities for treatment of low and intermediate level waste, which enables waste treatment that is economically and environmentally superior to direct disposal. Studsvik also has qualified laboratories for testing irradiated and non-irradiated material.

Nuclear technology is a growing and dynamic industry today. New technology is improving efficiency in nuclear power plants and enabling better environmental and safety management. This positive development of nuclear power coincides with many countries currently working actively to reduce dependency on fossil energy sources such as oil, coal and gas. Major price changes and increased focus on climate impact are augmenting this trend. The renaissance of nuclear power has triggered a consolidation where many companies are striving to strengthen their positions.

The International Atomic Energy Agency (IAEA) predicts that production of nuclear-generated electricity can have doubled by 2030. The increase is expected to take place through modernization, new-build and replacement of old reactors by new ones. Growth is following a clear trend, but due to the industry's dependence on decisions by public authorities it is sometimes difficult to assess in the short term.

2008 iN BRIEF

The cover picture was taken when a steam generator was being cut.

• Sweden performed well, with good growth and an operating profit that exceeded 2007
• In the United Kingdom waste treatment continued to grow, but decommissioning projects at Sellafield reduced profits by SEK 6 million
• A decision was made to build a facility for treatment of metallic waste in the United Kingdom. The facility will become operational in mid-2009.
• Growth in the consulting operations and good capacity utilization in engineering and services contributed to strong earnings in Germany
• In the USA the Erwin facility was very busy until the end of June, when the only repository for intermediate level waste in the USA closed. The Erwin facility was then temporarily taken out of operation.
• Studsvik launched a new business model for the treatment of intermediate level waste in the USA. Three customer contracts had been signed at the close of 2008. The Erwin facility will resume normal operation in the first quarter of 2009.
• There was a positive trend in materials technology but low software sales. Earnings for Global Services were slightly lower than in 2007.
• The consulting operations in Global Services were reinforced through the acquisition of the Swedish consultancy company ALARA Holding
• The Board of Directors proposes a dividend of SEK 1.00 (2.00) per share for 2008

Key ratios	2008	2007	2006
Net sales, SEK million	1,285.9	1,314.7	1,219.6
Operating profit, SEK million	12.7	62.1	71.3
Profit after net financial items, SEK million	0.7	46.0	57.1
Earnings per share before dilution, SEK	–0.05	5.65	4.24
Earnings per share after dilution, SEK	–0.05	5.65	4.24
Operating margin, %	1.0	4.7	5.8
Equity-assets ratio, %	40.4	42.5	41.2
Equity per share, SEK	74.32	69.58	67.97
Average number of employees	1,130	1,141	1,279

STUDSVIK'S OPERATING SEGMENTS

Segment	Sales Percentage of total segment sales	Operating margin	Employees Percentage of Group total
Sweden	12.6%	20.1%	6.9%
United Kingdom	12.4%	neg	7.6%
Germany	32.3%	6.0%	52.6%
USA	26.4%	neg	13.8%
Global Services	16.3%	6.6%	11.4%

Confidence after a tough 2008

At the start of 2008 Studsvik was facing major challenges in the USA. Stiff competition characterized the market for low level waste and at the end of June the repository for intermediate level waste at Barnwell was to close, which would have a negative effect on our facility in Erwin. Unfortunately it took us all year to overcome these challenges, with a negative impact on 2008 earnings. However, substantial restructuring combined with getting a new business model in place just before the end of the year mean that we are now considerably better equipped for the future in the USA.

Our young operations in the UK suffered some growing pains in the form of losses in two major projects, which brought down both sales and earnings. We have learned from these experiences and in future will be working closer to both customers and public authorities to ensure efficiency and profitability in complex decommissioning projects.

Major changes in the USA

In the USA we restructured operations in Erwin and Memphis to restore them to profitability.

We launched a completely new business model for the operations in Erwin and in less than a year succeeded in transforming it into a functioning business. The way there has meant many contacts with various state authorities, major efforts to develop a structure for contracts, cooperation and remuneration to suit both our customers and partners, while at the same time allowing us to continue our main business in Erwin; treating waste. Before our customers were prepared to accept the model it was scrutinized from a legal, economic and safety perspective. The fact that we signed the first contracts at the end of the year meant that we had introduced a completely new model for treating intermediate level waste in the USA in record time.

Just now the new business model is a prerequisite, not only for us but for the entire industry, for being able to treat intermediate level waste in the USA at all. We expect more customers to sign contracts so that the facility in Erwin can be run at a good profit.

We also restructured the operations in Memphis. The effectiveness of the treatment of low level waste was substantially increased, doubling the percentage that can be treated as conventional waste without needing to be deposited as radioactive. The transport and logistics operations were encumbered by falling demand for transport and high diesel prices. In the current economic climate we decided in the spring to scale down operations.

A maturing British market

The British market has very high growth but is less mature than other markets where Studsvik operates, which means that customers, suppliers and public authorities more often create solutions as they go. Since the establishment of the British Nuclear Decommissioning Authority (NDA) in 2004 the market has developed rapidly, but it is not unusual to encounter temporary setbacks in individual projects, which also happened to us in the past year. With our long experience of the industry Studsvik has in three years created a strong market position, both through our own work and through our participation in the NWM consortium for low level waste.

The UK operations continued to grow in 2008, but energy also went into creating internal conditions for continued growth in coming years. In 2008 a total of 300 tonnes of British waste was sent to Sweden for treatment, signifying that this operation has reached commercial volumes. In 2009 we expect to double these volumes. When our new facility in Workington opens its doors in the second quarter of 2009, Studsvik will have a comprehensive system for treatment and storage of low and intermediate level waste in the UK.

Studsvik is growing with new services

Our initiative to treat steam generators and other large components has resulted in substantial operations in Sweden. Our methods are continually developing, which means that today we are able to give radiological clearance to increasingly large parts of the components, while treatment has become more effective. In 2008 Sweden also developed processes to incinerate contaminated oil

Studsvik's President, Magnus Groth, and the head of the Japan Atomic Energy Agency, Sohei Akada signing a cooperation agreement on research and development in waste treatment and radioactive material testing.

and treat cable material, which makes us an even more complete supplier.

Materials technology in Global Services started longterm cooperation with British Energy. The British company must by law analyze certain quantities of reactor fuel per year. Studsvik expects to analyze considerable amounts of fuel on a regular basis from 2009 onwards on behalf of British Energy. The cooperation signifies an important step towards increasing capacity utilization in materials technology.

Another milestone for us in 2008 was that segment Germany opened an office in France, which after the USA is the world's largest nuclear power nation. The intention is to provide consulting and decommissioning services to the French nuclear power industry. A local presence gives Studsvik the ability to build up a position in this very interesting market too.

Studsvik operates in an industry that influences and concerns the rest of the world and which is also carefully regulated and supervised. Most of our business is aimed at reducing the environmental impact of nuclear power. With such a position it is important to apply systematic corporate responsibility. In 2008 we enhanced this work by initiating a dialog with representatives of employees, customers, authorities, nearby residents, the financial market and the media to identify which issues we should be examining and giving priority to. You can read more about this in the annual report and the corporate responsibility report we will present in May.

Increased interest in nuclear power

Nuclear power is experiencing a renaissance and the positive market trend is intensifying. New nuclear power plants are being planned in Europe, North America and rapidly growing economies in Asia. In Sweden nuclear power plants are being modernized to supply more electricity. When building new facilities, consideration is given to the entire cycle of a nuclear power plant, with detailed plans for how operational waste is to be dealt with and how future decommissioning is to be done. This is a trend that benefits Studsvik.

It is as yet unclear how our industry will be affected by the financial crisis and the weaker economy. Historically the industry has had relatively low cyclical sensitivity, but lower electricity prices and the wish to retain liquid funds may dampen growth in the industry somewhat without interrupting the long-term growth trend. As an independent supplier of nuclear services Studsvik is well-positioned.

Profitability in focus for 2009

I expect 2009 to be a year of consolidation with a focus on profitability. We will also continue to grow, but growth will not require capital-intensive investments. It will mainly come through using our facilities more and continuing to develop our consulting business.

Nyköping in February 2009

Magnus Groth President and CEO

Mission, objectives and strategies

Studsvik's mission is to supply specialist services characterized by innovation, efficiency and safety to the international nuclear power industry. The Group does this by offering services mainly in waste, decommissioning, engineering and services and operating efficiency.

To enable handling, radioactive material must be transported in special containers.

Financial targets

Studsvik is to grow organically and through acquisitions with sustained profitability. This is reflected in the Group's financial targets, which are seen in a three-year perspective:

• Organic growth in net sales should be at least 10 per cent per year
• The operating margin should be at least 8 per cent
• The equity-assets ratio should be at least 40 per cent

Financial targets by segment

As of 2008 Studsvik's segment reporting will be based on the operative organization. The segments operate in different environments, on account of the different breakdown of sales between services, the maturity of the market, competition, etc. Separate targets have therefore been formulated for the operating margin of each segment. These targets also have a three-year perspective:

• Sweden 20 per cent
• United Kingdom 10 per cent
• Germany 9 per cent
• USA 10 per cent
• Global Services 15 per cent

Business objectives

In addition to the financial targets, Studsvik has also formulated six specific business objectives for 2009:

• Create sustainable profitability in the American operations by contracting for treatment of intermediate level waste for a large percentage of the nuclear power plants in the USA
• Increase the long-term order book in all segments with a view to reducing dips in capacity utilization caused by delayed decision-making or licensing processes
• Improve logistics efficiency in the facility for treatment of metallic waste
• Expand the materials technology operations, for example by cooperation with British Energy
• Establish the facility in Workington as the leader in treatment of metallic waste in the UK
• Create stable profitability in the UK by reducing dependency on individual projects

Growth strategy

Demand for nuclear engineering services is increasing in many markets. Studsvik is strengthening its position in priority markets through organic growth in combination with alliances and acquisitions.

Nettoomsättning Operating margin

Rörelsemarginal Equity-assets ratio

FOLLOW-UP OF BUSINESS OBJECTIVES FOR 2008

Expansion of long-term order book

The order book improved in parts of the organization, but is not satisfactory as a whole. A long-term orderbook creates greater flexibility and better staying power, as Studsvik operates in a market characterized by long decision-making processes that in many cases also include extensive processing by public authorities, where delays

Minimal outage or shutdowns at the Group's production facilities

The Group's facilities have had few outages or shutdowns during the year.

Sustained rapid growth in the United Kingdom

Revenues in the United Kingdom segment increased in 2008 by 15.1 per cent to SEK 148.6 million. Operations were negatively affected by substantial delays in two major projects at Sellafield, with the consequence that growth did not match Studsvik's expectations.

Completion of new waste

treatment facility in the UK

Building started in 2008 and the facility will be brought into operation in the second quarter of 2009.

Higher profitability in the USA

Profitability in the USA was negatively affected by the Erwin facility being at a standstill in the second half of 2008. However, a new business model was established for the facility during the year. With all licenses in place for the new model and customer contracts Studsvik has good prospects of reporting profitability in the USA in 2009. The Memphis-based operations were restructured. Waste treatment in Memphis is now profitable, while the logistics operations, which are also dependent on the general economic climate and fuel price levels, continued to have profitability problems.

Continued cutting-edge expertise by means of competence development and hirings

Besides individual competence development, training was carried out in 2008 to strengthen marketing and sales competencies. The acquisition of ALARA strengthened the knowledge advantage in Global Services.

Products and services strategy

The Group is focusing on products and services that strengthen the customers' profitability, help to improve safety and make it easier for customers to be environmentally accountable. Studsvik has a long tradition of maintaining a high innovation rate and develops its own technology and methods on the basis of the customers' requirements.

Market strategy

Studsvik has long experience of doing business in geographical markets with high barriers to entry. As a consequence, it has created a strong position in these markets, providing a platform for continued development of its offering there.

Studsvik has a strong global market position in some niche activities. This geographical spread can be utilized when more full-scale establishments in individual new markets are being considered. These establishments in new geographical markets will take place when demand for Studsvik's services is deemed sufficient.

Partnership strategy

Studsvik operates independently on the market and develops proprietary services in close cooperation with customers and public authorities. When developing new services or when bidding for major projects Studsvik's competitiveness can be strengthened by strategic partnerships, either with highly specialized niche players or global enterprises.

Organizatorial strategy

Studsvik's organization typically has short decision lines and a clear geographical management structure with a sharp focus on profitability and customer satisfaction. The business is run in five operating segments with their own geographical areas of responsibility. The company's services are marketed within the framework of Groupwide Key Offerings.

Market

The renaissance being experienced by the global nuclear power industry is evident in plans for new nuclear power plants and modernization of older facilities. Waste and decommissioning are also becoming more important from an economic and environmental perspective.

Material being analyzed in a water chemistry laboratory in Studsvik.

Nuclear technology is a growing and dynamic industry today. New technological solutions, both for new nuclear power plants and for facilities in operation and being decommissioned, are improving the efficiency and safety of nuclear power. This development is a consequence of many countries working actively to reduce their dependency on fossil energy sources such as oil, coal and gas. Major price changes and increased focus on the climate impact of fossil energy sources are augmenting this trend. This has triggered a consolidation in which many companies are striving to strengthen their positions by broadening or deepening their operations and also increase market presence.

Studsvik is a leading edge player that supplies specialist services to the nuclear power industry. Several factors contribute to growth in this market:

• Building new reactors
• Modernizing existing reactors
• Decommissioning older reactors
• Shortage of storage facilities for low and intermediate level waste and high storage costs
• Management of waste and facilities from civil and military research programs

The majority of Studsvik's revenues are generated by the commercial nuclear power industry. This includes nuclear power plants in operation, being built or decommissioned and reactor and fuel manufacturers. There are 439 powergenerating reactors in operation in the world and 36 new reactors under construction. The world's largest nuclear nations are the USA, France and Japan with 104, 58 and 55 reactors respectively. The percentage of nuclear-generated electricity supply varies considerably from country to country. In France nuclear power accounts for three quarters of the electricity supply, while it is a quarter in Germany, a fifth in the USA and less than a sixth in the UK.

Nuclear-generated electricity may double by 2030

The International Atomic Energy Agency (IAEA) predicts that production of nuclear-generated electricity may have doubled by 2030. The increase is expected to result from modernizations, completely new construction and replacement of old facilities with new ones. Most of the 36 new reactors that are under construction are being built in China, India and Russia. Another 81 reactors are at the planning stage. Plants designed today have detailed

plans for their entire lifecycle; from operational waste to decommissioning. Sweden has one of the world's largest modernization programs comprising seven reactors. In Sweden the same amount of electricity is generated today by ten reactors as was generated before by twelve when Barsebäck was operating.

It is planned to close twelve reactors before 2012, five of which are in Germany, four in the UK and one each in France, Japan and Slovakia. Many countries have also started to deal with facilities and waste from the 1950s and 1960s, when the first power-generating reactor types were developed. Military waste from facilities, nuclear submarines and older nuclear weapons are often included in this category. In the infancy of nuclear power the view of waste management was less developed than it is now, which means that management of parts of this waste is a challenge even with current technology.

To be seen as a safe, environmentally friendly and effective source of energy the industry must manage to treat residual products and waste in a responsible way. Just as for other industry, responsibility covers the entire lifecycle, from the first design phase, via modernizations in the operating phase to decommissioning and restoration of land used. The nuclear power industry has made major progress in these areas in recent years and Studsvik has often been at the forefront.

The nuclear power plants that are in operation work continually on improving their operating efficiency and optimizing power extraction from the fuel. For these needs Studsvik has developed services in niches such as software for fuel optimization and core monitoring and various laboratory tests of fuel and material.

The shutdown of a reactor today does not necessarily mean the start of decommissioning. In some countries nuclear power plants are allowed to remain shut down for decades to allow the radioactivity to decay before decommissioning is started. Public authorities and the public are now increasingly calling for reactors to be decommissioned and not just shut down, particularly in densely populated areas.

There are several strong reasons in favor of starting decommissioning as soon as possible. More and more people are realizing that it is important to start decommissioning when there is still access to staff with specific knowledge of and operative experience of the facility in question. Nuclear power plants are complex facilities and it is necessary to have detailed and correct information to be able to handle decommissioning responsibly. One sign of the times is that the UK, that developed its nuclear power early, has now started extensive decommissioning programs for reactors that have long been shut down in order to make room for new nuclear power plants.

DIFFERENT TYPES OF WASTE

Waste can consist of protective clothing, decommissioning waste, replaced reactor parts or residual products from medical care. It is treated in different ways depending on the degree of radioactivity. Some waste can be radiologically cleared directly and then recycled. Other parts of the waste are treated using different methods and then sent for final disposal.

Studsvik treats low and intermediate level waste at its facilities. Metallic waste is decontaminated, segmented and melted. In that way the radioactivity is separated from the metals and the amount of residual waste minimized. In large components such as reactor vessel heads and steam generators up to 95 per cent of the material can be recycled in industry. Dry organic waste such as protective clothing, plastic and paper is reduced in volume by incineration.

1. Operating waste

As much as 85 per cent of waste arises in operation. Most of the operating waste is classified as low and intermediate level waste. The low level waste does not need to be shielded and can be transported in normal containers. The intermediate level waste needs shielding and is cast in concrete or steel containers. The waste is often treated to reduce volume. Studsvik's processes also stabilize waste for final disposal.

2. Decommissioning waste

Dismantling nuclear power plants gives rise to large amounts of metal scrap and concrete residue. Most of it, just like the operational waste, is low and intermediate level. Some parts of the decommissioning waste, such as fuel rods and other core components, are classed as long-lived and must be isolated for thousands of years.

3. Spent nuclear fuel

Spent fuel is classed as high level and accounts for the smallest part of the waste. This is shielded and cooled down during treatment, transport and storage. Nuclear fuel is at present put into intermediate storage encased in a few decimeters of steel, both above and below ground, to cool it and allow the radiation to decay. Intermediate storage is sometimes in pools at the nuclear power plants. After about 30 years the fuel can be sent for final disposal. The methods and facilities that are under development for final disposal are based on geological storage at great depths.

Trends at public authorities

Supervisory authorities focus today on issues concerning safety and physical protection to prevent nuclear facilities from being used for terrorism.

In the field of waste there were changes in several countries in 2008. In the USA large parts of the nuclear power industry were left with no alternative for storing intermediate level waste after the facility in Barnwell, South Carolina, was closed to virtually all market players. At the end of 2008 Studsvik introduced a solution to this problem which was well received by customers. However, there is a continued need to address the issue of storage of low and intermediate level waste in the USA, but this is complicated by the lack of a central decision-making authority. Decisions are often made at state level.

In the UK the interest of public authorities is increasing with regard to volume reduction of waste, since the low level waste repository will soon be full.

In Europe there are signals that more countries are abandoning the idea that each country should manage its own waste. Finland gave the all-clear to treat low and intermediate level waste in Sweden and in France there is also a clear interest in treating such waste abroad. Final disposal of radioactive residual products is, however, always in the country in which the radioactivity arose.

The British NDA's "waste pyramid" shows the authority's policy for how radioactive waste should be handled in six steps. The principle for radioactive waste is that it is to be prevented or reduced at source as far as possible, to secure the conservation of nature and resources. When this is not possible the waste or products must be recycled or treated so that they can be used again.

Market participants

There is a large number of subcontractors to the nuclear power industry. The largest are reactor manufacturers, which often also supply fuel, and companies that manage waste and storage. Others supply various consulting services, software for operation and core monitoring, equipment, tools and support. Studsvik is a leading-edge company that operates in several of these areas.

The greatest competitor in waste treatment is quite simply the failure to treat waste, sending it instead directly for storage or final disposal. Large parts of the waste are still handled in that way, but a growing number are choosing some form of treatment, both for economic and environmental reasons. Like Studsvik, those who are involved in waste treatment often have a history in the nuclear power industry in their domestic market. Among the few international players are Studsvik, the American company EnergySolutions and the French company Nuvia. In some countries there are individual local players, such as Energie Werke Nord (EWN) in Germany, but the majority are small local players that offer certain services in waste management and companies offering intermediate storage and final disposal.

In decommissioning it is common to have large contract solutions offered by contractors and technical consultants. However, few of them have comprehensive specialist knowledge of nuclear technology, so Studsvik can cooperate with them on decommissioning contracts. In operating efficiency Studsvik's software is by far the most predominant in the world market, with about half of the world's power generating reactors as customers. Other suppliers are the fuel suppliers themselves, such as GE, Westinghouse and AREVA. In materials testing Studsvik is the only commercial company with competition mainly from public sector research organizations.

Business operations

Studsvik is a leading supplier of specialist services to the international nuclear power industry. Customers consist mainly of operators of nuclear power plants and other nuclear facilities. A nuclear power plant can be a customer of Studsvik throughout its lifecycle.

Studsvik offers specialist services to the international nuclear power industry in four areas: waste treatment, decommissioning, engineering and services, and operating efficiency. Studsvik has developed a broad and competitive portfolio of services for nuclear facilities in operation or being decommissioned. A nuclear power plant can be a customer of Studsvik throughout its lifecycle. Operations have concentrated increasingly on waste treatment and decommissioning, which in 2008 accounted for 70 per cent of Studsvik's sales. In recent years there have been major investments in these areas through acquisitions and substantial investment in new geographical markets. Engineering and services offer a growing range of consulting services to nuclear power plants in operation.

The business is conducted through five operating segments:

• Sweden
• United Kingdom
• Germany
• USA
• Global Services

Global Services comprises the operating efficiency area of operations. This is the Group's most research-intensive area of operations, including software for fuel optimization and specialist services in materials technology and fuel analysis. It has the largest geographical distribution and operates in most geographical markets in the world.

Studsvik's services are based on a very well defined offering with a high degree of harmonization with customers' specific requirements. Studsvik currently markets eleven key offerings:

• Processing of radioactive waste
• On-site waste services
• Engineering and consultancy
• Health physics services
• Transport logistics
• Decommissioning services
• Operational and outage support
• Fuel and materials performance
• Materials integrity and water chemistry
• Nuclear fuel analysis software
• Design and build

These key offerings are described in detail on the next page.

Studsvik treats metallic waste from the nuclear power industry; stainless steel, carbon steel, copper, aluminum and lead. After various stages of segmentation and sorting the metals are melted. About 90 per cent is radiologically cleared and then reused in industry in the same way as normal metal scrap.

Studsvik's offering

Studsvik offers a broad and competitive portfolio of services for nuclear facilities in operation or being decommissioned. Our offering reflects customers' needs and includes waste management, decommissioning, engineering and services, and operating efficiency. The company has developed eleven key offerings in these areas.

Processing of radioactive waste

Studsvik offers treatment of low and intermediate level waste at its own facilities in Studsvik outside Nyköping in Sweden, and in Erwin and Memphis, Tennessee in the USA. Another facility for recovery of metallic waste is being built in Workington, UK, where Studsvik is licensed to process low level waste. The facilities in Studsvik process dry and metallic waste, mainly from nuclear facilities in Europe, by incineration and melting. The facility in Erwin, Tennessee, treats wet waste using the unique Studsvik-developed pyrolysis process THORSM. In Memphis, Tennessee, low level waste is reduced in volume using other methods. The purpose of waste treatment is mainly to achieve volume reduction and stabilization of waste before final disposal.

On-site waste services

Waste treatment is also carried out at customers' own sites; for example characterization, sorting and packaging of waste, stabilization and solidification of wet waste, compacting of dry waste and measurement of radioactivity in waste before treatment and recycling.

Engineering and consultancy

Studsvik, with its long and broad experience of the industry, offers expert support in nuclear engineering, for example in waste management and decommissioning and related areas, such as health physics and environmental issues. Studsvik also offers engineering and advisory services covering design, nuclear safety, fuels, core and materials.

Health physics services

Personnel at nuclear facilities are at risk of exposure to ionizing radiation. When working in classified environments radiation levels are always measured and steps taken to minimize radiation doses. Studsvik offers health physics services, including supervision and planning, and services personal dosimeters, which are instruments that register radiation doses.

Transport logistics

Transporting radioactive material is subject to strict national and international regulatory frameworks. Studsvik transports waste and other material to and from customer facilities in the UK, Sweden and the USA. Transport is by road, rail, air and sea. In the USA transport is largely in Studsvik's own trucks.

Decommissioning services

The decommissioning process is long and complicated. Studsvik's services cover everything from feasibility studies, planning and project management to practical dismantling and subsequent waste management.

Operational and outage support

Service and maintenance requirements in a nuclear power plant are substantial. All systems and components in classified environments need frequent maintenance and cleaning to guarantee safe operation throughout the lifetime of the facility. Services include mechanical servicing, decontamination (removal of radioactivity) and general property maintenance at nuclear facilities.

Fuel and materials performance

Both fuel rods and other material associated with a reactor are subject to severe strain during operation. To ensure that fuel and fuel cladding retain the properties required for secure and stable operation for as long as possible these properties are tested in Studsvik's laboratories. Tests of materials to check durability in various operational situations and conditions over the full lifecycle are also conducted in Studsvik's own laboratories. Studsvik also offers tests in a reactor environment in collaboration with the Institute for Energy Technology, IFE, in Norway.

Materials integrity and water chemistry

Crack growth measurements and other corrosion studies are conducted on non-irradiated and irradiated material in order to reduce fuel and material related operational disruptions, secure the service life of materials and counteract and reduce radioactive dose loads in nuclear power plants.

Nuclear fuel analysis software

Fuel is a significant cost item for nuclear power plants, and so there are sizeable gains to be made from optimizing fuel efficiency. This is done using computerized reactor operating efficiency software. Studsvik's software is a world leader and includes applications for in-core fuel management, core monitoring, transient analysis, simulators and analyzing spent nuclear fuel. The software is used for both licensing and design of light water reactors and real time calculations for reactor operation.

Design and build

Studsvik can take overall responsibility for designing and supplying solutions for new nuclear power plants and other nuclear facilities and also performs upgrades and modernization of existing facilities. Studsvik has unique and industry leading competence in waste facilities, special equipment for dismantling, as well as ventilation systems. The company also manufactures equipment according to specifications for new nuclear power plants.

Organization and processes

Studsvik's organization typically has short decision lines and a businesslike approach, with emphasis on innovation, efficiency and safety. In recent years the business has become more international, and has at the same time been streamlined around a small number of integrated offerings for the nuclear power industry.

Organization

Studsvik has offices and subsidiaries in eight countries around the world and operates in many more. The Group has more than 1,100 employees, most of them outside Sweden. The CEO, some of the Executive Group Management and central Group functions for administration, accounting and business development as well as HR, quality, environment, safety and technology are all located at the head office in Nyköping. The Group's subsidiaries are responsible for operations in their respective geographical markets, which form the operating segments used in the Group's reporting system.

The Executive Group Management consists of the CEO, the CFO, who is the deputy CEO, the segment heads and the heads of the central Group functions.

Studsvik has its own facilities outside Nyköping in Sweden and in Memphis and Erwin in Tennessee, USA. Another facility is under construction in Workington in the UK.

The business is based on a strong safety culture and high quality awareness. This requires well documented and functioning processes.

Operating segments

As of January 1, 2008 the business reporting is based on five operating segments: Sweden, United Kingdom, Germany, USA and Global Services. The new segment structure sharpens the organization's focus on individual markets and at the same time creates a clear picture of the Group's operations and development.

CENTRAL BUSINESS PROCESSES Quality, safety, environment and health

There are common working practices and procedures within the Group that enable information on needs, problems and successes to be picked up and communicated between different parts of the organization. Systematic quality management is conducted within the Group, which enables integrated and consistent communication. Information can be interpreted and evaluated to achieve best practice throughout the organization.

Major disparities are reported in a Groupwide system, which increases transparency and gives clear signals to the organization. Data on environment, safety and health is reported monthly, which makes it possible to continually analyze developments in these areas and identify disparities early. If there is an incident an analysis of causes is distributed within the Group to benefit from experience and avoid recurrence.

Studsvik's operations in Sweden, the UK and Germany are ISO 9000 and ISO 14000 certified, which means that the processes are documented. The Group's operations in other countries are certified under other standards, such as ASME NQA-1 in the USA.

Studsvik is expanding both organically and via acquisitions, which means that new employees and organizations are regularly becoming part of the Group. An important part of the integration of new employees and acquisitions is to maintain and develop value-generating and business critical processes with retained coordination between the various parts of the organization. New employees follow an introduction plan, with information on the company, safety and an introduction to the relevant workplace, including work in a radioactive environment.

Studsvik works continually on improving and developing documentation and communication on Groupwide business processes in the organization. The most important are described in brief below.

Research and development

Innovation and technical development are key competitive devices for Studsvik. Technical and methods development are normally based on specific customer requirements, and are subsequently applied in a wider commercial context. All research and development in the Group represents knowledge capital that is managed, developed and made available in the Group.

Studsvik's research and development costs have varied in the past five years between SEK 35 million and SEK 45 million. In 2008 the main part was spent in the Global Services segment, above all on maintenance and development of software for in-core fuel management.

Internal systems for knowledge transfer make most research reports and other material searchable and easy to access. Studsvik conducts research and development as part of its own operations and in joint projects with customers in the nuclear power industry. Pure contract research in nuclear engineering is also conducted. This leads to specific solutions for the customer in question, whose needs may be complex. The solutions may often be developed at the next stage into more flexible services that are offered to Studsvik's other customers.

Business development

Studsvik's business development processes regarding investments, acquisitions, alliances and collaboration are well-documented in manuals and other policy documents. This sustains the tempo of the decision-making process without compromising on quality.

Recruitment and skills development

Studsvik is a knowledge-intensive service company that operates in an international market. The renewed interest in nuclear power increases competition for qualified employees. The supply of people with relevant competence and experience is also strongly affected by how the local nuclear power industry in each country is developing.

Studsvik's local organizations reflect these variations. At the same time the Group aims to be consistent as regards skills and continuing professional development. A project is in progress to survey skills and supply of staff for the different parts of the Group. The project is to form the basis of a plan for how the Group is to manage competence and leadership. The plan will be based on principles of best practice. Already now there is extensive exchange of experience within the Group, but the plan will include measures to increase internal mobility.

Sales and marketing

The customer focus of the operations is of central importance to the company's development and growth. Each segment has its own sales organization. All the Group's services are marketed by the individual segments. The sales organizations must cooperate when technology developed in one segment is marketed by another. Effective coordination of these functions requires a high level of clear and well-documented goals and strategies that are regularly evaluated and revised.

The Group operates under a uniform profile and brand platform with central guidelines and resources for market communication. Groupwide customer meetings and trade fair participation are implemented on the initiative of either the Executive Group Management or individual companies.

Project management

Many of Studsvik's contracts are carried out as projects. The mix of resources and competence is adapted in each project for optimum fulfillment of the contract requirements. The projects are managed by means of documentation and reporting in accordance with given guidelines before, during and after project completion. Qualified project management is particularly important in the case of on-site projects, since quality assurance and knowledge transfer are more difficult to implement than in projects conducted at Studsvik's own facilities.

Sweden

Sweden is performing well and aiming at continued growth through participating in the modernization of Swedish nuclear power plants and the British decommissioning program. Treatment of large components, introduced a couple of years ago, has attracted great interest and this area of operations is growing.

Leif Andersson, head of segment Sweden

Business overview

Low and intermediate level waste is treated in the Swedish facilities to reduce volume, stabilize the final product and recycle valuable material. Material that is radiologically cleared goes back to industry as raw material.

Metallic material is decontaminated, segmented and melted, which enables the radioactivity to be separated and the amount of radioactive waste product minimized. Metals are recycled after a rigorous free-release procedure. Large components, such as steam generators and reactor vessel heads, are treated so that large parts of them can be free released.

Dry organic waste such as protective clothing, plastic and paper is reduced in volume by incineration. Incineration minimizes the waste and converts it to ash that is returned to the customer. Studsvik applies an incineration technique that entails emissions to the environment at levels far below the authorities' threshold values.

The facility at Studsvik is on the east coast of Sweden and has its own harbor, which makes it easily accessible for transport, which is a great advantage when transporting large components. In order of size, customers are from Germany, Sweden, the UK and other countries in Europe with nuclear power.

The nuclear power industry's most common alternative to sending waste to Studsvik for treatment is to send the untreated waste for final disposal or intermediate storage. Interest in processing waste is increasing as storage costs rise and commitment to environment and sustainability issues grows.

Comments on the year

Sales and earnings improved in 2008. All production facilities had good capacity utilization.

Studsvik's treatment method for steam generators progressed well. Interest from customers both in and outside Europe is great. These large components have previously been sent directly for final disposal or been stored temporarily at the nuclear power plants. Using Studsvik's method, up to 90 per cent of the component volume can be free released, which dramatically reduces the amount of waste that must be sent for final disposal. The size of the steam generators varies between different nuclear power plants, from around 100 tonnes to over 300 tonnes. Nuclear power plants change steam generators as part of regular maintenance and when they are modernized.

Studsvik is currently treating steam generators from Germany and Sweden. In early 2009 treatment of three steam generators from Ringhals will start, an order worth SEK 34 million.

In 2008 Studsvik developed a method for oil incineration and was also granted regulatory licensing for routine incineration of oil. The oil that is used in reactors contains radioactive particles and must therefore be dealt with after changes. A method for recycling cable, in which plastic and metal are separated, was also launched during the year.

The orderbook for 2009 is good. Waste volumes from Swedish customers will increase as a consequence of modernization of reactors, giving rise to large quantities of metallic material. In 2009 the British Metals Recycling Facility (MRF) will be brought into operation, which will open the way for increased metal volumes for the Group as a whole. Studsvik can offer a package concept, where simpler treatment is done locally in the UK, while material requiring more qualified treatment is sent to Sweden. Germany will continue to be an important market with a high percentage of the segment's total volumes.

Studsvik has agreed with OKG to treat 1,400 tonnes of metallic waste from the modernization of the Oskarshamn reactor 3, for a total of SEK 28 million. OKG has reported that the project will start in March 2009.

A boring machine will be brought into operation in 2009 at the Metals Recycling Facility (MRF). The machine will be used to remove induced activity by cutting part of the goods. The boring machine means that material can be handled with greater precision than is possible when blasting. The method will be used when treating large components.

See page 15 for a description of key offerings

Key ratios	2008	2007
Net sales, SEK million	152.4	135.4
Operating profit, SEK million	30.7	28.2
Operating margin, %	20.1	20.8
Investments, SEK million	7.8	33.9
Average number of employees	78	78

During the year Studsvik received several steam generators from Ringhals. The steam generators will be treated in Studsvik's facility for large components to recover as much as possible of the metals and minimize the amount of waste.

United Kingdom

The British market is growing fast with extensive decommissioning programs for facilities that are part of the historical legacy from the early years of nuclear power. Plans for new nuclear power plants are also taking shape. With growth of 15 per cent, 2008 was a year of consolidation for United Kingdom.

Mark Lyons, head of segment United Kingdom

Business overview

Studsvik successfully entered the UK market in 2005 and has established itself as a leading player in decommissioning and waste treatment. Studsvik is currently broadening its offering to engineering and consulting services and is seeking customers from different parts of the market to balance its significant contracts with the Nuclear Decommissioning Authority (NDA).

Operations are mainly conducted at the customers' facilities and waste is also transported to the Swedish waste facility for treatment. Work is underway to construct a Metals Recycling Facility (MRF) in Workington for treatment of metallic waste. The new facility is expected to open in mid-2009.

With a total annual budget of GBP 2.8 billion, the NDA continues to be Studsvik's largest customer in the United Kingdom. Initially the NDA contract was for "high hazard projects" involving removal of waste considered to pose a high environmental risk from nuclear power plants, processing and research facilities. Most of the measures related to Sellafield, one of Europe's largest nuclear facilities. Studsvik's assignments subsequently broadened to encompass regular decommissioning and waste treatment.

Studsvik's services are also in demand in the private nuclear power industry, the defence sector and other industry. In the private nuclear industry and other industry Studsvik processes waste for British Energy and General Electric. In the defence sector Studsvik works with both the AWE (Atomic Weapons Establishment) and private sector customers, such as Babcock.

Comments on the year

2008 was the third full financial year for the United Kingdom and, despite sales growth of 15 per cent, it was a year of consolidation. Two projects in Sellafield were delayed, which caused Studsvik to break off one and renegotiate the other, which reduced profits. These problems arose after Studsvik had established itself within only a few years as the leading player in decommissioning and waste treatment in a rapidly growing market. The problems in both projects can be seen as teething troubles in a new market. Studsvik is now focusing on again supplying high quality services and developing the organization for this new role. During the year Studsvik was awarded several contracts in the defence sector.

In 2008 Nuclear Waste Management (NWM) was engaged by the NDA to operate the UK low level nuclear waste repository. NWM is a consortium between Studsvik, with a 15 per cent stake, the American company URS and the French company AREVA. The order value for the first five years is GBP 125 million, with options to extend worth up to GBP 500 million.

Under the contract, NWM is developing a national UK strategy for management of low level waste from nuclear power plants. The strategy paves the way for large-scale processing of low level waste from the NDA's planned decommissioning of redundant facilities. The low level metallic waste in the UK is estimated to be 500,000 tonnes, 80 per cent or more of which Studsvik calculates can be recycled. Studsvik has the technology for reducing waste volumes and stabilizing the final waste.

In May 2008 Studsvik started the construction of a Metals Recycling Facility (MRF) near Workington and Sellafield in West Cumbria. The facility will be the first of its kind in the UK and the first privately funded waste facility. It will process low level metallic waste from operations and decommissioning of British nuclear power plants. The facility will serve the nuclear power plants that the NDA is decommissioning and other civil and defence customers. Following treatment, a large proportion of the metals can be free released and then sold for recycling. Radioactive residual products are packed and stored safely at the UK low level nuclear waste repository near Drigg in Cumbria.

The Studsvik facility will have the capacity to recycle large volumes of metal scrap, ensuring that the amount of low level waste is minimized before it is sent for final disposal. This is in line with the British low level nuclear waste strategy and the waste hierarchy for storage and final disposal of radioactive waste. The facility is expected to become operational in mid-2009. The investment cost is about GBP 5 million.

Key ratios	2008	2007
Net sales, SEK million	148.6	129.1
Operating profit, SEK million	–3.2	3.0
Operating margin, %	neg	2.3
Investments, SEK million	38.3	42.4
Average number of employees	86	65

See page 15 for a description of key offerings

7 6

In 2008 shipment was started of British low level waste to the Swedish facility for treatment. This solution has been received well by both public authorities and customers.

A growing market

The UK market is expected to continue its positive trend. UK nuclear expenditure is estimated to be GBP 4.5 billion annually, of which the NDA's budget is GBP 2.8 billion. The UK was one of the first countries to use nuclear power and consequently has both facilities and waste from the pioneering days to deal with. The NDA's decommissioning commitments were valued at GBP 76 billion when the Authority was established in 2004. Apart from substantial commitments to decommission redundant nuclear power facilities and manage the waste, there are also plans to build new nuclear power plants.

The British government wants to expand the country's nuclear power with ten new reactors to be ordered in the next 4–5 years and operational between 2015 and 2017. Planning is already underway and several energy companies have expressed an interest in taking an active part in the program. Furthest along is British Energy that has chosen sites for two reactors.

The waste treatment market offers substantial business potential. As a consultant to NDA, NWM is devising a strategy that includes treating low level radioactive waste to minimize the volumes that need to be sent for final disposal. This is in line with the priority given by the Authority to maintain the highest standards of safety, health and environmental protection. With Studsvik's Workington facility working in tandem with the Swedish facility, Studsvik is ideally positioned to benefit if the NDA adopts such a strategy. Both public authorities and companies in the nuclear industry have shown great interest in the Workington facility.

In the UK there is also interest in Studsvik's proprietary THOR technology. The technology could be used when decommissioning facilities and treating waste from the early days of nuclear power in the UK. However, this potential is still considerably unexplored and is thought to lie further in the future.

The challenge for Studsvik is to compete in a rapidly growing market, restore a healthy orderbook after completing a major project, while building up capacity to handle rapid growth. Measures have been taken to ensure the supply of staff and competence.

With the Workington facility becoming operational in 2009, a broader customer base and a growing market increasingly attuned to waste treatment, Studsvik is well positioned to continue growing in the UK in the coming years.

Germany

Studsvik's activities in Continental Europe are based in Germany and focus on decommissioning and engineering and services. A small office was opened in France, the second largest nuclear power market in the world.

Ulf Kannengiesser, head of segment Germany

Business overview

Germany accounts for Studsvik's operations in Continental Europe, half of which concern decommissioning. The work is mainly carried out on site with a growing element of consulting services. Studsvik's only facility in Germany is a workshop where many methods and systems have been developed, including Studsvik's system for mechanical decontamination of building surfaces. About half of the Group's workforce is in Germany.

All nuclear power plants in Germany are customers of Studsvik. Studsvik also offers services to research facilities, universities and fuel producers. Customers in Germany, Belgium, France, the Netherlands and Switzerland are served using Germany as a base.

The German government has agreed with the nuclear power industry to close all nuclear power reactors and it is planned to take the last reactor out of service in 2021. A number of reactors have already been shut down and initial dismantling has begun. With the exception of France and Belgium, there are no major decommissioning projects in other Central European countries.

Waste from Europe is processed in the Swedish waste facility, after which stable, volume-reduced residual waste is returned to the customer. This service is handled by and reported in segment Sweden.

Comments on the year

After acquiring Ingenieurbüro Dr. Fary and Ingenieurbüro Ralf Kienzle in 2007, the German operations continued to grow organically in the consulting area. Today Studsvik employs 50 engineers in Germany, which is a significant increase from 2006 when there were 35.

Studsvik is playing an activie part in decommissioning the research center in Karlsruhe. Other parts of the German decommissioning market were characterized by delays, which also affected Studsvik. Some improvement could be noted towards the end of the year when the Obrigheim power plant, after more than a year's delay, received permission to start dismantling the turbine hall there. Studsvik is to dismantle the components in the turbine hall, a contract worth EUR 2.7 million.

The services carried out in connection with nuclear power plants' annual refuelling and maintenance outages vary from year to year. The number of refuelling and maintenance days was slightly lower in 2008 than in 2007. Studsvik's market position continued to be strong and capacity utilization could be kept relatively steady, which had a positive effect on profitability.

The assessment is that the German decommissioning market has long-term potential. Customers are expected to have different approaches to decommissioning. Some will put out large complex assignments to contract, while others are expected to procure smaller contracts. Studsvik holds a good competitive position both as an independent suplier and as a specialist partner.

In 2008 a subsidiary was opened in France, located in Sens, 150 kilometers south of Paris. At year-end it had ten employees. France is clearly the largest nuclear power market in Europe, with 58 reactors, followed by Russia with 31 reactors and the UK with 19. With a local office, the aim is to successively build up a position in the market for more advanced engineering services.

In recent years Studsvik has strengthened its position among operating nuclear power plants, thanks to its specialized engineering and consulting services. These represent a growth area with higher margins than normal maintenance contracts.

See page 15 for a description of key offerings

Key ratios	2008	2007
Net sales, SEK million	387.9	341.3
Operating profit, SEK million	23.3	25.3
Operating margin, %	6.0	7.4
Investments, SEK million	7.8	17.6
Average number of employees	594	564

Work at a lead cell in Germany.

USA

At the end of 2008 Studsvik launched a new business model for B/C-level waste in the USA. This is the first and to date the only long-term storage alternative for this type of waste that has been introduced since the closure of the Barnwell repository in mid-2008.

Lewis Johnson, head of segment USA

Business overview

In North America Studsvik markets its services primarily to the US commercial nuclear industry. It also has customers in research, state and other institutions in the USA, and nuclear power producers in Canada. Studsvik owns and runs facilities in Memphis and Erwin in the State of Tennessee. Three of Studsvik's key offerings dominate sales; processing of radioactive waste, on-site waste services and transport and logistics.

Wet A- and B/C-level waste from operating nuclear power plants is treated at Erwin using Studsvik's patented pyrolysis technology THORSM. Other organic waste and metallic waste is treated in Memphis. The logistics operations have a fleet of 20 vehicles, with the capacity and competence to transport radioactive material.

Facilities for treating waste using Studsvik's THOR technology are marketed to the US federal market by THOR Treatment Technologies (TTT). Ownership of the company is divided equally between Studsvik and URS Washington Division.

Comments on the year

Studsvik launched a new model for treatment and storage of B/C-level waste in which Studsvik takes overall responsibility for customers' waste. The waste is treated as before at the Erwin facility, but Studsvik also takes charge of storage and final disposal. Studsvik has signed a contract with Waste Control Specialists (WCS) in Texas for storage of processed and volume-reduced waste.

Residual products used to be sent to a facility in Barnwell, South Carolina, for final disposal. As of July 2008 the Barnwell facility only accepts waste from three of the USA's 50 states, leaving most of the American nuclear power industry without access to final disposal of B/C-level waste. Studsvik's new model has therefore met with great interest from nuclear power plants. Capacity utilization at the Erwin facility was high in the first two quarters before Barnwell closed. The subsequent lack of storage and disposal facilities inhibited demand and the facility was taken out of operation temporarily during the second half of the year. The first contracts under the new waste model were signed at the end of 2008.

Falling waste volumes and stiff competition led to a decision to restructure the Memphis-based operations. Measures were implemented to enhance efficiency in the treatment processes. The measures have resulted in higher efficiency and the amount of waste that can be free released directly has increased considerably. The operations are again profitable. Competition on the transport side was tough, with downward price pressure and high fuel costs. Studsvik reduced the number of transport vehicles from 60 to 20. The operations continued to report losses and further measures were taken towards the end of the year to improve efficiency.

THOR Treatment Technologies (TTT) developed according to plan and reported a profit and a positive cash flow.

See page 15 for a description of key offerings

Key ratios	2008	2007
Net sales, SEK million	317.1	427.7
Operating profit, SEK million	–22.4	6.3
Operating margin, %	neg	1.5
Investments, SEK million	26.4	21.4
Average number of employees	156	234

Studsvik also performs on-site services.

Global Services

Studsvik is one of the world's foremost independent suppliers of tests, examinations and analyses of nuclear fuel and material and the only independent supplier of fuel optimization software. The services and products are collected into the Global Services segment, with customers among nuclear power plants and fuel manufacturers in a large number of countries.

Magnus Arbell, President, Studsvik Nuclear AB

Thomas Smed, President, Studsvik Scandpower

Business overview

Global Services comprises operating efficiency services, i.e. materials technology and software for reactor operation. Revenues are relatively evenly distributed between the operational areas. The segment offers services in the following areas: fuel and materials performance, materials integrity and water chemistry, nuclear fuel analysis software, transport logistics and engineering and consultancy.

Studsvik is a world-leading supplier of fuel optimization software through core monitoring and nuclear fuel analysis. Operating efficiency and fuel optimization are becoming increasingly business critical for the nuclear power industry and in practice Studsvik is the only independent player in the world market. Studsvik's software is used by about half of the world's nuclear power plants as well as by fuel manufacturers. In the USA Studsvik's software is used by 80 per cent of the reactors, while the corresponding figure for Japan and Europe excluding France is 50 per cent. Other software on the market is supplied by the fuel manufacturers themselves.

Studsvik is also one of the world's foremost independent suppliers of tests, examinations and analyses of nuclear fuel and material. These are carried out at Studsvik's laboratories in Sweden and, in collaboration with the Institute for Energy Technology (IFE), at the research reactor in Halden, Norway. Customers are fuel suppliers, nuclear power plants, reactor manufacturers, public agencies and research institutions from all over the world.

Technical examinations and analyses are carried out in connection with the development of new types of fuel to meet rigorous standards of effectiveness and safety. Spent nuclear fuel is analyzed to continuously increase the level of knowledge of how fuel and its cladding is affected over time. Most assignments in this segment deal with highly complex issues and often develop in dialog with the customer. Studsvik and the customer work together on an idea that then forms the basis of Studsvik's proposal. This establishes a trusting, long-term and stimulating partnership that results in innovative and customized solutions.

Comments on the year

New sales of fuel optimization software were lower in 2008 than in the previous year, which meant that fullyear earnings were lower than last year. Variation between years is normal for the business and tender activity in the software area is very high. After the reporting period an order was signed with a Japanese customer for delivery of Studsvik's Gardel core monitoring system for a contract value of about SEK 7 million.

Studsvik strengthened its market position with new applications and software versions and a new version of the in-core analysis software CASMO was introduced during the year. MARLA, a newly developed program for managing movement of fuel, control rods and detectors during maintenance outages, was launched during the year and several power companies showed great interest in it.

The strategy of broadening the use of Studsvik's software among American power companies resulted in contracts for Studsvik's core monitoring software CMSOps and the potential for further expansion is good. Relations and cooperation with important customers were enhanced during the year. Studsvik also addressed customers in new markets in Asia.

Performance for materials technology improved in 2008. Contracts were signed with new customers in the UK and Japanese markets. The orderbooks were healthy and tendering activities high.

There were extensive preparations for receiving and testing irradiated fuel from the UK within the framework of the multi-year contract signed with British Energy. The first deliveries under the contract were delayed, however, due to the amended requirements imposed by the public authorities' processing of the shipment. The material will be delivered in April 2009 and the framework agreement is expected to lead to sizeable contracts in coming years.

Demand from the international nuclear power industry for consulting services is growing. In October 2008 Studsvik acquired the nuclear technology consuting company ALARA Holding, with customers in the Swedish and Finnish nuclear power industry. The acquisition implies a broadening of Studsvik's range of specialist services.

Key ratios	2008	2007
Net sales, SEK million	196.0	178.8
Operating profit, SEK million	13.0	14.4
Operating margin, %	6.6	8.1
Investments, SEK million	14.4	5.3
Average number of employees	129	118

See page 15 for a description of key offerings.

Transporting nuclear fuel is complicated and involves rigorous regulatory requirements. Studsvik has decided to invest in its own transport flask, which will facilitate both regulatory licensing and physical transport. Certification of the transport flask in advance in different countries will reduce the authorities' processing times for individual

shipments. Having access to our own transport flask will eliminate or at any rate considerably reduce the delays that often arise today. The transport flask will be delivered in the first half of 2010.

The picture shows the type of transport flask that will be delivered to Studsvik in early 2010. The transport flask weighs about 45 tonnes.

Studsvik's corporate responsibility activities

Studsvik conducts systematic corporate responsibility activities to ensure good working conditions inside and outside the Group. With the help of a stakeholder dialog the perspective of this work moved one step further in 2008.

Eva Halldén, Senior Vice President, Group Assurance and HR

Studsvik is taking a new approach to the field of corporate responsibility

For many years Studsvik has reported the Group's environmental impact in the annual report and in separate publications. In 2007 the first step towards a wider approach to what is now called corporate responsibility accounting was taken when a Groupwide Corporate Sustainability Report was published. In 2008 the work progressed yet another step and Studsvik is publishing a Corporate Responsibility Report which takes an integrated approach to the Group based on corporate responsibility, environment, safety and work environment. Studsvik uses the term Corporate Responsibility to mark clearly the significance of the responsibility the company has towards its stakeholders and the industry in which it operates. For Studsvik, Corporate Responsibility entails a commitment to follow the principles of sustainable development that also includes the environment, health and safety as well as ethical and social aspects.

Studsvik's Code of Conduct is the cornerstone of our corporate responsibility activities. The Code of Conduct presents and examines the core values that form the foundation of corporate responsibility activities, how Studsvik's employees are to behave towards each other and Studsvik's responsibility as a player in the nuclear power industry. The Code of Conduct also describes Studsvik's responsibility towards its stakeholders and how the Group expects its business partners to behave.

The Global Reporting Initiative and Corporate Responsibility Report

Transparency and accounting for corporate responsibility activities are crucial to establishing the credibility expected of a company that delivers highly specialised services to the international nuclear power industry. Studsvik's Corporate Responsibility Report has been prepared in accordance with the Global Reporting Initiative (GRI) and covers the following four areas:

• Employees and organization
• Society
• Customers and suppliers
• Environment

The Group's objectives, performance, results and future plans in these four areas are presented and commented on in the Corporate Responsibility Report. To establish transparency, facilitate benchmarking and improve communication with the company's stakeholders, Studsvik's Corporate Responsibility Report 2008 follows level B in the Global Reporting Initiative's guidelines.

In 2008 Studsvik conducted a stakeholder dialog to determine what different stakeholders want to know about Studsvik and the Group's activities. An external consultancy carried out 30 telephone interviews with stakeholders in the countries where Studsvik operates.

The conclusion from the interviews was that stakeholders wanted to follow Studsvik's work in the areas described in the table.

Studsvik's strategic areas of Corporate Responsibility	Topics prioritized by interviewed stakeholders
Employees and organization	ƒ A safe and healthy working environment ƒ Managers create the right conditions for openness and cooperation ƒ Compliance with legislative and regula tory requirements
Society	ƒ Compliance with legislative and regula tory requirements
Customers and suppliers	ƒ Basic human rights respected by Studsvik's suppliers, such as ensuring that there is no child labor, no forced labor and ensuring compliance with occupational health and safety standards ƒ Compliance with legislative and regula tory requirements
Environment	ƒ Minimizing the impact on the environ ment with respect to emissions and radioactive releases ƒ Minimizing impact on the environment with respect to waste generated by Studsvik's own operations ƒ Compliance with legislative and regula tory requirements

Studsvik's Code of Conduct launched in 2008

Studsvik is an international Group that continues to expand its operations globally. Studsvik's Code of Conduct was launched to meet a growing need for common guidelines for corporate responsibility and ethical conduct for Studsvik and its business partners.

As a minimum Studsvik of course complies with all applicable laws and regulatory requirements in the countries where it operates. In areas not covered by existing legislation or regulatory frameworks Studsvik has adopted or will adopt guidelines that are in line with the Group's values.

The Code of Conduct is a living document that contains guidelines on issues such as health and safety, environmental impact, human rights, corruption and ethics, insider trading, employer relations, social relations, IT security and whistle-blowing.

The Code of Conduct was introduced into the organization in summer 2008 and employees were informed and given the opportunity to discuss issues with their managers. The Code is available to all employees via Studsvik's intranet and is included in the introduction program for new employees.

The Code is available in four languages; English, French, German and Swedish, and can also be downloaded from Studsvik's website.

Safety, environment and work environment

All Studsvik's operations must, where applicable, follow up and measure radioactive releases. Studsvik has a legal and moral obligation to ensure that all such emissions are minimized. Studsvik's facilities and operations have been designed to fulfil this obligation. Radiation to the environment can be measured both in the form of annual doses at the facilities' fence perimeters and in the form of radioactive releases to air and water. Studsvik's facility in Sweden gives rise to radioactive releases to air and water. At the facilities in Memphis and Erwin in the USA there are only emissions to air. The annual dose at the fence perimeter and in the releases to air and water are far below the applicable limit values.

Radiation doses to personnel at Studsvik's nuclear facilities have not exceeded applicable limit values. The collective radiation dose increased in Sweden in 2008, mainly as a consequence of more people being engaged in radiological work with low individual doses. Radiation doses at the American facilities are higher than at the

Swedish facilities due to differences in working methods and type of waste treated. The collective dose at the Erwin and Memphis facilities was halved in 2008 compared with 2007, as a result of improved radiation shielding and improved instructions and procedures. The decrease is also explained by lower production than in the previous year and by the lower radioactivity of waste treated. Studsvik has no facilities of its own in Germany or the United Kingdom, but since Studsvik's staff work in radiologically classified areas at customer sites, the doses to personnel are also monitored there.

In 2008 the number of work-related accidents in the Group decreased by almost half, from 40 in 2007 to 22. The decrease is mainly related to Germany and the result of extensive efforts to train the staff and improve routines and procedures.

1 Radiation doses to personnel, collective/max individual (mSv)

2008	2007	2006
202/8.3	158/14.2	164/7.2
786/26.4	1,578/31.3	1,858/34.8
413/30.0	1,230/34.0	866/35.5
952/17.3	875/13.5	596/12.8
35.5/3.4	4.6/0.8	5.5/1.7

2 Radiation doses to the environment, max at fence perimeter (mSv)

2007	2006
0.2	0.2
0.7	0.9
3.7	2.1

3 Emissions to air and water (% of permitted emission)

	2008	2007	2006
Sweden	0.28	0.21	0.18
Erwin, USA	0.05	0.14	0.003
Memphis, USA	0	4	0.4

4 Work-related accidents leading to sickness leave

	2008	2007
Number, Group total	22	40

Objectives and plans for corporate responsibility activities

Studsvik's overall objectives for the Group's corporate responsibility activities, the specific action plans adopted for the period 2008–2011, the trend in 2008 and direction for 2009 are presented below.

"We've worked a lot on developing and refining our sales and business skills, but this alone is not enough. The Code of Conduct is an important tool in enhancing our business ethics. As managers, it's important to have a good understanding of ethical behavior so that we can be a role model for others in the organization."

Camilla Hoflund, General Manager, Materials Technology, Studsvik Nuclear AB

	EMPLOYEES AND ORGANIZATION	SOCIETY
OVERALL GOALS	Studsvik aims to offer its employees a safe and healthy workplace and a good balance between work and leisure. The role of managers is to ensure that every indi vidual's knowledge and competence are utilized to the full and also to create sound conditions for cooperation and the exchange of expertise.	Studsvik aims to maintain good and open communi cation with its stakeholders. Studsvik aims to promote a culture of responsibility where honesty, integrity and fairness in its relations with stakeholders are important elements. Studsvik strives to hire local employees as far as possible in its operations and to thereby make a positive economic contribution to society.
ACTION PLAN 2008–2011	ƒ Occupational health and safety is to be improved systematically ƒ Best practice is to be applied and training conducted to minimize radiation doses to employees ƒ Continuous competence development is to be carried out, including the training of managers and employees ƒ Appraisal interviews are to be conducted with all employees ƒ Job rotation is to be encouraged among the different Studsvik companies ƒ Regular and structured feedback is to be obtained from employees to improve human resource development work ƒ Employee recruitment and retention measures are to be implemented	ƒ As far as possible, recruitment is to be conducted locally in communities where Studsvik has its operations ƒ Initiatives are to be carried out with educational establishments to encourage the younger generation to become interested in science and technology ƒ Good relations are to be maintained with regulatory authorities, financial stakeholders and the media ƒ Consultation with local communities and other relevant stakeholders is to be carried out ƒ Sponsorship of selected local events and causes is to be conducted ƒ Job vacancies are to be advertised on Studsvik's intranet and on the Internet
ACHIEVEMENTS IN 2008	ƒ A common model for following up work-related accidents and incidents was established for the Group ƒ Safety awareness training was conducted in Germany which led to a reduction in the number of occupa tional injuries ƒ A Human Resources team was appointed to develop an action plan to create and implement common tools for the development of Studsvik's employees ƒ Appraisal interviews were held throughout the Group during the year ƒ Job rotation was carried out between employees in the UK and Germany during the year ƒ Investors in People accreditation was achieved in the UK ƒ Environmental and occupational exposures were reduced in the US operations through shielding and material handling improvements	ƒ The corporate website was updated in order to improve communication through this channel ƒ Stakeholder dialog for the Corporate Responsibility Report 2008 and other purposes, was conducted with key stakeholder categories ƒ A Code of Conduct was launched and introduced to all employees ƒ Sponsorship of local events and causes was conducted in the UK, Sweden, Germany and the USA ƒ Educational initiatives were carried out with local schools in Sweden and in the UK ƒ Contact was maintained with financial stakeholders ƒ Contact was maintained with regulatory authorities in Sweden, the UK and the USA ƒ Contact was maintained with local stakeholder groups in Sweden, the UK and the USA
FOCUS FOR 2009	Studsvik will continue to focus on improving its safety culture, on quality assurance and on implementing the employee development actions, including training, job rotation, new recruitment and employee retention, as identified by the Human Resources Team.	Studsvik will continue to cultivate an open commu nication with all stakeholders. Studsvik will continue to develop and monitor compliance with its Code of Conduct. Studsvik will also contribute to local economies and communities by providing local employment opportunities, through participation in local job fairs, and through cooperation with local universities.

	CUSTOMERS AND SUPPLIERS	ENVIRONMENT
OVERALL GOALS	Studsvik aims to meet its customers' demands and deliver services and solutions with a high value added. Studsvik's services are designed to minimize risk for its customers and the environment. Studsvik's services are characterized by innovation, efficiency, safety and reliability.	Studsvik aims to minimize the environmental impact of its operations, with respect to radioactive releases and other emissions, waste generated and resource usage. Studsvik's business is to provide sustainable solutions for the safe and environmentally responsible operation and decommissioning of nuclear facilities, including waste minimization.
ACTION PLAN 2008–2011	ƒ Service offerings are to be broadened to meet customer demands ƒ Operations are to be established in new markets where there is a demand for Studsvik's services ƒ Continuous efficiency improvement is to be achieved	ƒ Best available technique is to be used to minimize emissions and radioactive releases from Studsvik's nuclear sites to air and water ƒ Available methods are to be used and new methods developed to minimize waste from Studsvik's own operations ƒ The use of resources is to be minimized. This work is to be followed up and corrective actions taken when necessary ƒ Natural habitats located next to Studsvik's operations are to be protected and/or restored as far as possible ƒ Training in environmental awareness is to be provided
ACHIEVEMENTS IN 2008	ƒ Development and licensing work was conducted for a new business model for the treatment of intermedi ate level waste in the USA ƒ A license for a new nuclear facility for metallic waste treatment was obtained in the UK ƒ New services for the treatment of metallic waste were launched in Sweden ƒ Stainless steel components for nuclear facilities were manufactured in Studsvik's workshop in Germany ƒ New in-core fuel management software versions were launched within the Global Services segment ƒ A new Studsvik office was established in France ƒ Studsvik was established as a supplier of materials technology services on the UK market	ƒ A new chemical handling management system was introduced in the operations in Sweden ƒ An internal waste management system was further developed in the operations in Sweden ƒ A project to measure the individual carbon footprint of each employee in the UK was implemented ƒ Fuel consumption was reduced by increased use of cars with low/environmental friendly consumption in Germany ƒ Studsvik continued to take and analyze samples of flora and fauna in the areas surrounding the site in Sweden ƒ As required by law, an Environmental Impact Assessment was conducted for a new pyrolysis unit in the incineration facility in Sweden ƒ Basic environmental awareness training was implemented for all employees in the UK
FOCUS FOR 2009	Studsvik will focus on growing its engineering and consultancy business, on gradually establishing its presence in France and on increasing its presence in Canada, Finland and Spain. The UK facility for metallic waste treatment will be taken into operation and the new business model for waste treatment will be implemented in the USA. Studsvik will continue to improve the logistics efficiency in its metallic waste treatment facility in Sweden and will develop its sustainable procurement requirements and procedures.	Studsvik will continue to work on minimizing its envi ronmental impact and on cooperating with local or ganizations to protect the habitats in areas where its operations are located.

Risks

Studsvik operates on an international market that is exposed to competition. With operations in eight countries Studsvik is exposed to both operational and financial risks. The responsibility for risk assessment lies mainly within each subsidiary, but is reviewed and followed up by the parent company. An overall analysis of the Group's risks and how they are dealt with is presented annually to the Board of Directors and is followed up on a regular basis. The Group has a high safety culture, which rests on a long tradition of clear routines for quality assurance and followup in the context of various quality certification processes. The fact that Studsvik operates in the nuclear sector entails special risks that are regulated and supervised by national agencies and international bodies.

An overall risk assessment must include all parts of the annual report and a general business environment analysis. Selected risk factors are described below in no order of rank.

Financial risks are dealt with in the section "Financial risk management", note 2 on page 58.

EXTERNAL RISKS Licensing and permits

Studsvik handles radioactive material and waste, which means that some of the operations must be licensed and are subject to official approval and supervision. Consequently there is a risk that the conditions governing operations may be changed through amendment or cancellation of official permits, changes in the regulatory framework or through political decisions. This may for example involve further protective measures that Studsvik may need to invest in to fulfil requirements. Studsvik may be notified by regulators of alleged infringements of licensing or regulations. As far as the management and Board of Directors can judge, Studsvik fulfils the requirements imposed by such regulations. The Group's high safety culture means that it has a high capacity for adjustment to new rules and terms of reference.

Market

Demand for Studsvik's services depends on a number of factors, and in the long term is dependent on developments in the nuclear power industry and the factors influencing them. By tailoring its services to the nuclear power industry's needs throughout plant lifecycles, Studsvik's business is only dependent in the very long term on the survival of the nuclear power industry.

Public opinion

Issues relating to nuclear technology are of public interest. Various issues may be subject to various expressions of opinion and debate. In such a context it cannot be ruled out that opinion may emerge on matters that directly or indirectly restrict Studsvik's scope of business action. Studsvik acts consistently to maintain high public confidence by doing what it can not to conduct its business in conflict with public opinion. Its approach to the world around is characterized by dialog and the principle of the greatest possible transparency.

OPERATIONAL RISKS Technology

Software, laboratory activities, waste treatment and certain specialist services provided through Studsvik's operations are based on proprietary technology that is constantly exposed to competitive challenges. The possibility of other methods being developed that reduce the competitiveness of Studsvik's technologies cannot be ruled out. Studsvik manages this risk by patenting its proprietary technology whenever it is considered possible and financially justifiable. The risk is also managed through continuous product development in close cooperation with customers, as well as through offering customers to a great extent one-stop solutions, based on Studsvik's extensive experience, which makes Studsvik less sensitive to the replication of individual services or products.

Transportation

A large part of Studsvik's operations, especially in the field of materials testing and waste management, involves the transportation of material to and from Studsvik's facilities, which could be hindered by new legislation or amendments to international conventions. Transportation already complies with high safety standards, is subject to frequent inspections by supervisory authorities and has a low risk of harmful consequences in the event of an accident.

Operation of company facilities

Studsvik conducts its business at its own facilities. Technical failures that cause unplanned operational disruptions cannot be ruled out, and may have an adverse effect on income and give rise to costs. Studsvik's quality and monitoring systems, as well as its competence development processes, are intended to minimize the risk of unplanned operational disruptions, and improve contingency planning to minimize the effects of any disruptions that do nevertheless occur.

Dependence on employees

The running of Studsvik's facilities depends on the workforce being complete and competent. Studsvik has a long history of industrial peace. However, labor conflicts that

may affect business and cause loss of income cannot be ruled out. Studsvik works actively to create stable and sound relations with employees and trade union organizations. An active human resources policy with the means and systems required for employee development creates a high level of job satisfaction. In accordance with Swedish legislation Studsvik has trade union representatives on the board of the parent company.

Dependence on key personnel

Studsvik offers proprietary technical solutions and services using different types of specialist expertise. This makes the company to some extent dependent on key personnel. This risk is continually limited by systematising processes, recruitment and competence development.

Fixed price contracts

In connection with large decommissioning projects and other service contracts Studsvik sometimes accepts fixed price contracts. These projects require effective risk management and project management. Studsvik trains its project managers and applies special procedures that are integrated into the Group's quality systems (ISO 9001:2000) to ensure that these risks are managed professionally.

Supplier liability

Studsvik supplies services with a high technical content to qualified customers. As a supplier, Studsvik is responsible for timely delivery, functionality and other qualities of services ordered. If a service is delivered late or does not fulfil requirements that a customer can rightfully impose, Studsvik risks loss of income, for example as a consequence of costs incurred for redress through replacement or damages. Studsvik makes regular assessments of potential exposures and makes provisions in the balance sheet.

Owner liability for intermediate level waste

In the USA Studsvik takes over owner liability for certain intermediate level waste from its customers. The Group has agreed with the subcontractor on storage of this waste pending the opening of a final repository. Changes in regulatory or commercial conditions that necessitate amendments or supplements to this arrangement cannot be ruled out. The risk is managed by Studsvik making provisions in the balance sheet for future costs of storage and disposal and receiving compensation for the risks associated with long-term commitments. Liquid assets referring to the future commitments are deposited in a blocked account in an American bank.

Dependence on suppliers

An element of Studsvik's strategy is to design unique customer offerings together with selected suppliers, which can result in a measure of natural dependence on these suppliers. The design of Studsvik's contracts enables close relationships based on trust, while keeping alternative suppliers available.

Financing and political decisions

In most countries, nuclear decommissioning and the treatment of radioactive waste require the active involvement of the authorities, for example through decisions on financing, decommissioning permits, and rules regulating final disposal. In many markets these activities are funded through complex systems involving a combination of accumulated funds, income from the operations of nuclear power plants, and taxes. Consequently, political decisions affect demand for Studsvik's services, particularly in the areas of waste management and decommissioning. Delays in processing by the authorities and resulting delay in completion of contracts cannot be ruled out.

INSURABLE RISKS

Accidents

Studsvik conducts operations at its own laboratories and facilities. The possibility of an accident at one of these sites, or in connection with transportation to or from a site, cannot be ruled out. Potential accident risks are regularly surveyed at the subsidiaries. Preventive measures are integrated into the Group's quality and safety systems. In order to reduce the negative impact on profits that an accident and subsequent stoppage could have, consequential loss insurance has been taken out for some strategic facilities.

Theft, sabotage or attack

A company handling radioactive material can never completely exclude the possibility of theft. The transportation of radioactive material, as well as facilities for storage and processing, can be the target of sabotage or other forms of attack. Studsvik takes active measures to maintain physical protection in close cooperation with the police and public authorities.

The level of physical protection is regularly adjusted in line with the assessment of the threat picture made by the police and public authorities. During the period 2006–2008 considerable investments were made in physical protection of the Swedish facilities. Studsvik follows the plans drawn up by the licensing and supervisory authorities.

The Group's insurance policies

The Group has global liability and product liability insurance cover. Liability and property insurance for Swedish nuclear business has been taken out with Nordic Nuclear Insurers (NNI) and with the mutual insurance companies EMANI and ELINI. Insurance covering corresponding risks on the US market has been taken out with a local nuclear insurance pool and with EMANI. The cover for the nuclear business is regulated by the Swedish Nuclear Liability Act and is currently SDR 360 million (SDR=Special Drawing Rights) equivalent to SEK 4.35 billion. However, the possibility that internationally regulated insurance amounts will be increased or that the cost of insurance cover will rise as a result cannot be ruled out. Property insurance for non-nuclear activities is usually arranged locally. The scope and amount of the insurance cover are determined after individual assessment and risk analyses, but insurance is always procured under the supervision of the parent company.

OTHER RISKS

Liability for decommissioning costs

The operations at Studsvik's Swedish nuclear facilities are conducted under license pursuant to the Swedish Act on Nuclear Activities and it is therefore Studsvik's responsibility to decommission the facilities. Under US regulations Studsvik is technically and financially responsible for decommissioning the Group's US facilities. The scope and implications of these obligations and a risk assessment of them are described in more detail in the administration report, page 38.

Environmental debt

Studsvik generates only an extremely limited volume of waste that impacts the environment. In those cases where Studsvik manages radioactive waste on behalf of a customer, the liability for the residual radioactive products lies with the customer, except at the Erwin facility, where Studsvik takes over ownership of the waste. Studsvik has contracted with Waste Control Specialists on storage of that waste and also intends to contract with the same company on final disposal.

Sensitivity analysis

Variations in prices to customers and the Group's costs affect the Group's earnings. The Group's largest single cost item is personnel, which accounts for 50 per cent of total costs. The Group's largest currency exposures are in USD, EUR and GBP.

Impact on operating profit	Change		SEK million
Price to customer	1 per cent	+/-	12.9
Personnel costs	1 per cent	+/-	6.4
Exchange rate	10 per cent	+/-	1.9
USD/EUR/GBP

The share

Share price and trading

The Studsvik share is listed on NASDAQ OMX Stockholm. The price of the Studsvik share fell by 65 per cent during the year, from SEK 155 at the end of 2007 to SEK 55 at the end of 2008, equivalent to a closing market capitalization of SEK 452.0 million. During the year the share price varied between a high of SEK 170 on January 3 and a low of SEK 47 on November 21. In the same period the Carnegie Small Cap Index fell by 54 per cent.

Earnings per share before dilution amounted to SEK –0.05 (5.65).

In 2008, 2.96 million Studsvik shares were traded for a value of SEK 281.2 million. This corresponds to 56 per cent of the free float (the value of shares that are available for trading). The market capitalization of the free float was SEK 291.2 million at the end of the year, defined as the value of the shares held by shareholders with less than 10 per cent of the capital.

Number of shares and share capital

On December 31, 2008 Studsvik AB (publ) had 8,218,611 shares in issue. Each share carries one vote and entitles the owner to share equally in the company's assets and earnings. The quotient value is 1.0 and the share capital amounted to SEK 8.2 million.

Shareholders

On December 31 Studsvik had 3,928 shareholders. The percentage of shares registered abroad was 35.6 per cent. The two largest owners held 36.3 per cent of the shares and the ten largest owners 68.6 per cent. At year-end Studsvik's Board of Directors owned 2,602,954 shares, corresponding to 31.7 per cent of capital and votes. The Executive Group Management, consisting of nine persons, together owned 31,300 shares, corresponding to 0.4 per cent of the shares.

Dividend policy and dividend

The Board's goal is that on average the dividend should correspond to at least 30 per cent of the consolidated profit after tax. Decisions on dividend proposals will, however, depend on Studsvik's growth potential, the strength of its balance sheet, liquid funds and financial position in general.

The Board proposes that the Annual General Meeting approve a dividend of SEK 1.00 per share for the 2008 financial year.

DATA PER SHARE

Amount, SEK	2008	2007	2006	2005	2004
Number of shares at close of period	8,218,611	8,218,611	8,218,611	8,218,611	8,116,611
Average number of shares before dilution	8,218,611	8,218,611	8,218,611	8,167,611	8,115,411
Average number of shares after dilution	8,218,611	8,218,611	8,218,611	8,167,611	8,217,411
Price, December 31	55.00	155.00	253.00	204.00	92.50
Earnings per share before dilution	–0.05	5.65	4.24	7.48	–8.19
– of which from continuing operations	–0.05	5.65	4.24	5.81	2.99
Earnings per share after dilution	–0.05	5.65	4.24	7.48	–8.09
– of which from continuing operations	–0.05	5.65	4.24	5.81	2.95
Equity per share	74.32	69.58	67.97	68.90	54.60
P/E ratio	neg	27	60	27	neg

SHAREHOLDER STRUCTURE DECEMBER 31, 2008	Number of shareholders	Number of shares	% of total shares
1 – 500	3,490	318,082	3.9
501 –2,000	284	299,197	3.6
2,001 – 10,000	98	456,007	5.6
10,001 – 50,000	32	711,956	8.7
50,001 –100,000	5	369,328	4.4
100,001 –	19	6,064,041	73.8
Total	3,928	8,218,611	100.0

SHAREHOLDERS DECEMBER 31, 2008	Number of shares	Holding, %
Karinen Family	1,703,552	20.7
Briban Invest AB	1,283,492	15.6
Allianz Global Investors	714,561	8.7
Bank of New York, London	441,413	5.4
Goldman Sachs International Ltd	351,146	4.3
Lannebo Fonder	333,091	4.1
State Street Bank, Boston	267,552	3.3
Invus Investment AB	199,800	2.4
JP Morgan Chase Bank, England	184,450	2.2
Citibank NA, London	154,868	1.9
Total, 10 largest shareholders – holdings	5,633,925	68.6
Other shareholders	2,584,686	31.4
Total	8,218,611	100.0

CHANGE IN SHARE CAPITAL

Year	Transaction	Increase in number of shares	Share capital SEK	Total number of shares
1994	Founding	500,000	500,000	500,000
2001	Bonus issue	5,300,000	5,800,000	5,800,000
2001	New issue	2,314,211	8,114,211	8,114,211
2004	New issue 1)	2,400	8,116,611	8,116,611
2005	New issue 1)	102,000	8,218,611	8,218,611
1) Conversion of warrants.

Annual accounts

Administration report	38
Consolidated income statement	45
Consolidated balance sheet	46
Consolidated statement of changes in equity	47
Consolidated cash flow statement	48
Parent company income statement	49
Parent company balance sheet	50
Parent company statement of changes in equity	51
Parent company cash flow statement	52
Notes	53
Audit report	77
Five-year review	86

NOTES TO THE CONSOLIDATED ACCOUNTS

1	Accounting policies and valuation principles.	53
2	Financial risk management	58
3	Important accounting estimates.	59
4	Segment reporting.	60
5	Other gains and losses – net	61
6	Other income	61
7	Costs by nature of expense	61
8	Remuneration of auditors	61
9	Employee benefits	62
10	Financial income and expenses.	63
11	Income tax.	63
12	Foreign exchange differences – net	63
13	Earnings per share	63
14	Dividend per share	63
15	Property, plant and equipment	64
16	Intangible assets	65
17	Investments in associated companies	65
18	Financial instruments by category	66
19	Credit quality of the financial assets	66
20	Derivative financial instruments.	67
21	Trade and other receivables	67
22	Inventories.	67
23	Cash and cash equivalents	67
24	Share capital and other contributed capital	67
25	Retained earnings	68
26	Other reserves.	68
27	Trade and other payables	68
28	Borrowings.	68
29	Deferred tax	69
30	Pension obligations.	70
31	Other provisions	70
32	Cash flow from operating activities	70
33	Contingent liabilities	71
34	Commitments.	71
35	Business combinations.	71
36	Information on the Board of Directors and senior management.	72
37	Transactions with related parties	73

NOTES TO THE PARENT COMPANY ACCOUNTS

38	Net sales.	74
39	Employee benefits.	74
40	Costs by nature of expense	74
41	Depreciation.	74
42	Operational lease contracts.	74
43	Interest income and similar profit/loss items.	74
44	Interest expense and similar profit/loss items.	74
45	Appropriations.	74
46	Income tax.	74
47	Deferred tax.	75
48	Property, plant and equipment.	75
49	Financial assets.	75
50	Prepaid expenses and accrued income.	75
51	Shares and participations in subsidiaries.	75
52	Untaxed reserves.	76
53	Liabilities to credit institutions.	76
54	Accrued expenses and prepaid income.	76
55	Pledged assets. 76
56	Contingent liabilities.	76
57	Derivative financial instruments.	76
58	Investment in property, plant and equipment.	76
59	Cash flow from operating activities	76
60	Transactions with related parties	76
61	Average number of employees.	76
62	Investment in subsidiaries.	76

Administration report

The Board of Directors and the President of Studsvik AB (publ), corporate identity number 556501-0997, hereby submit the annual accounts for 2008.

BUSINESS ACTIVITIES OF THE GROUP

Studsvik is a leading supplier of services to the international nuclear power industry. Its customers are mainly nuclear power plants and suppliers to the nuclear industry. The Group's largest markets are the USA, Germany, the UK and Sweden. Studsvik's operations are conducted at its own facilities in Sweden and in the USA as well as at customer sites. Studsvik offers specialist services and technical solutions throughout the lifecycle of a nuclear power plant, with an emphasis on the operative and reinvestment phases, as well as the decommissioning phase.

In 2008 the Group conducted its business through five operating segments. The segmental structure is geographical, consisting of the operating segments Sweden, United Kingdom, Germany, USA and Global Services.

The company's share is listed on the NASDAQ OMX Stockholm exchange.

MARKETS

Energy prices in the world are high and demand for electricity is increasing. The use of fossil fuels causes a heavy environmental burden and interest in nuclear-generated electricity has increased. In light of this, existing nuclear power plants are being modernized and new production capacity is being planned and built. A total of 36 reactors are being built throughout the world, while over 80 reactors are being planned. The International Atomic Energy Agency (IAEA) predicts that production of nucleargenerated electricity may have doubled by 2030. Older facilities which cannot be modernized for technical or economic reasons are taken out of operation and prepared for dismantling. Extensive government investments are being made in the USA and the UK to deal with waste and to decommission civil and military nuclear facilities. Both countries are investing considerable resources in these programs, which are expected to run for a long period. The nuclear power industry has focused in recent years on taking care of its residual products responsibly. In some countries there is a shortage of space for storage of low and intermediate level waste and storage costs are high. Interest in and demand for environmentally responsible methods for handling industry's residual products is growing. The generation of experts who developed today's reactors is successively leaving the industry, and there is a consequent shortage of certain specialist functions both at electricity producers and reactor and system suppliers.

The market trend is favorable for Studsvik and presents business opportunities for all segments.

STUDSVIK'S BUSINESS AND MARKET POSITION Waste treatment

The generation of electricity at nuclear power plants gives rise to low and intermediate level radioactive waste that has to be dealt with. By processing the material using a variety of methods, Studsvik can recover large quantities of metallic materials, as well as reducing the volume of and stabilizing residual products, thereby lowering customers' waste treatment costs considerably.

Increasing the output of and modernizing a power plant usually entails changing large components such as turbines, heat exchangers and steam generators. Replaced components must be dealt with cost-effectively and environmentally responsibly. Studsvik's facilities and waste treatment methods are designed exactly for this.

When decommissioning nuclear facilities, large amounts of waste of different kinds must be processed before being sent for final disposal. Studsvik has superior methods for treating this material. Organic waste is usually treated using various thermal processes to achieve a chemically stable product suitable for final disposal, but is also melted and sorted to reduce the volume of final waste for disposal. Metallic material is cleaned by several mechanical or chemical methods, usually in combination with melting, to enable recycling of a substantial part of the waste.

Decommissioning

Decommissioning of nuclear facilities has started in several countries. Studsvik has worked with decommissioning in Sweden and Germany for more than 20 years and is well-established in these markets. Just over three years ago Studsvik established operations in the UK, where the Government has initiated an extensive decommissioning program. During the decommissioning phase services in various areas of competence are needed, from qualified calculations and project management to dismantling and demolition.

Engineering and services

High electricity prices combined with increased electricity consumption are resulting in efforts by the nuclear power industry to achieve as high a level of availability as possible. The power industry therefore attaches great importance to improving efficiency and cutting outage times for planned maintenance and service. Studsvik has established a strong position in central Europe with multiyear partnership contracts.

For renewal and upgrading of operating licenses the nuclear power industry needs to implement safety and process analyses and draw up waste plans. Studsvik has many years experience of these matters and is focusing on expansion of these and associated operations through recruitment and acquisition.

Operating efficiency

In both the operating and reinvestment phases there is a demand in the nuclear industry for qualified technical services in order, for example, to establish the strength and expected life of construction materials and fuel. Studsvik has more than 60 years experience of these issues and has competence and laboratory capacity necessary to test and evaluate both irradiated and non-irradiated material. In day-to-day operations the nuclear power industry aims at good fuel economy. An increase in output usually means that the power industry wants to increase burn-up from the reactor fuel, i.e. extract more energy from each fuel element, without jeopardizing the high operating safety level. Studsvik's software for fuel and core optimization and monitoring is market leading.

FULFILMENT OF FINANCIAL OBJECTIVES

Studsvik's long-term targets are organic growth of at least 10 cent per year, an operating margin for the Group of 8 per cent and an equity-assets ratio of at least 40 per cent.

In 2008 there was a radical change in market conditions in the USA, which led to one of Studsvik's production facilities being taken out of operation for most of the second half of the year. This had a strong negative effect on the Group's sales. In other segments organic growth was 6 per cent, measured in local currency. The operating margin was 1 per cent, which is a drastic decrease compared with 2007. This can be mainly attributed to the developments in the US operations, but also to developments in the United Kingdom. The equity-assets ratio in 2008 was 40.4 per cent, compared with 42.5 per cent in 2007.

IMPORTANT EVENTS

Orders for treatment of steam generators

In July Studsvik won a contract for treatment and recycling of three steam generators on behalf of Vattenfall Ringhals. The customer is planning to deliver the steam generators to Studsvik in spring 2009 when treatment will start. The order value was SEK 34 million.

Acquisition of consulting company in Sweden

In October Studsvik acquired ALARA Holding, a nuclear engineering consultancy, with customers in the Swedish and Finnish nuclear power industry.

Order for metallic waste from Oskarshamn

In November Studsvik signed a contract with the Oskarshamn plant to treat 1,400 tonnes of metallic waste for a total of SEK 28 million. The metal is from the reactor 3 at the Oskarshamn plant, where a large number of components are being replaced in connection with increasing output. Transportation of the material will start in the second quarter of 2009, after which processing at the Studsvik facility can start.

Contract with American FPL

In December Studsvik signed a long-term contract with the FPL Group for processing intermediate level waste at the Erwin facility. The contract is the first to be signed under Studsvik's new business model for intermediate level waste in the USA. The contract with the FPL Group will run up to and including 2013.

NET SALES AND PROFIT

Net sales were SEK 1,285.9 million (1,314.7). Sales in the USA fell by 26 per cent compared with the previous year. Other segments reported overall organic growth of 6 per cent in local currency. The decrease in the USA is mainly attributable to the operations in Erwin. As a result of the closure of the repository for intermediate level waste in Barnwell, South Carolina at the end of June, Studsvik took the Erwin facility temporarily out of operation. A new business model has been introduced for the operations and normal operation of the facility will be resumed in the first quarter of 2009.

The operating profit was SEK12.7 million (62.1). The Group reports negative earnings in the USA and the United Kingdom. The negative US earnings are attributable to the Erwin operations. The loss in the United Kingdom is mainly attributable to the costs of discontinuing a major project at Sellafield.

Sweden reached its 20 per cent operating margin target for 2008. Global Services and Germany reported by and large unchanged earnings compared with 2007.

Non-recurring items are included in the operating profits reported for 2007 and 2008. The table below presents these items and the adjusted operating profit.

	2008	2007
Reported operating profit	12.7	62.1
Capital gain	-	–23.3
Costs of discontinued acquisition process	-	10.5
Restructuring costs, USA	12.6	-
Adjusted operating profit	25.3	49.3

Foreign exchange effects in connection with the translation of foreign subsidiaries' operating profit amounted to SEK 2.1 million in 2008.

PROFITABILITY

The Group's operating margin was 1.0 (4.7) per cent and the profit margin was 0.1 (3.5) per cent.

Capital employed increased by SEK 108.5 to SEK 999.0 million. The turnover rate of capital employed was 1.4 (1.5) and the return on capital employed was 2.1 (7.9) per cent.

COMMENTS ON THE GROUP'S OPERATING SEGMENTS

Sweden

Studsvik is one of the major commercial players in the treatment of radioactive waste in Europe and treats waste mainly at its own facilities, but also to some extent at its customers' sites. By separation and volume reduction of the waste, separating metal waste that can be recycled and thus minimizing the amount of residual waste to be sent for final disposal, Studsvik contributes to reducing its customers' costs.

In the segment Studsvik mainly serves the European market with incineration of dry waste and treatment of metal scrap.

The operations performed well, with good growth and an operating profit that exceeded 2007. The incineration facility ran at full capacity, apart from during a short suspension of operations at the beginning of the year. Capacity utilization was good at the facility for treatment of metallic material as well as the production line for treatment of large components. Both the incineration facility and the metal waste treatment facility are starting 2009 with a good orderbook. All facilities have the capacity to process large volumes.

United Kingdom

Studsvik has established a strong position in the British market for decommissioning and waste treatment. In 2008 decommissioning activities were predominant but waste treatment successively increased. A decision was made to invest in a metals recycling facility and the project was started. Studsvik is part of the Nuclear Waste Management (NWM) consortium, which has been appointed to operate the UK low level radioactive waste repository. Studsvik owns 15 per cent of NWM.

The segment reported a loss in 2008. The loss is entirely attributable to the decommissioning operations and more specifically two major projects at Sellafield. The projects suffered repeated delays during the year. Studsvik decided to call off one project and renegotiate the conditions for the other. These measures reduce profit by SEK 6 million, which includes organizational adjustments.

Waste treatment operations, which include Studsvik's associated company Nuclear Waste Management, performed well with organic growth and satisfactory profitability. The reported earnings include a share in the profits of NWM of SEK 2.9 million (0).

The discontinuation of the projects at Sellafield resulted in a reduction in the volume of orders. The level of market activities in both waste treatment and decommissioning, however, continues to be high. Several contracts are being negotiated and capacity utilization will successively improve.

The metals recycling facility under construction will be brought into operation in the second quarter of 2009. The total investment cost is SEK 50 million, of which SEK 20.3 million was generated in 2008.

Germany

Germany includes Studsvik's operations in Continental Europe. In the segment Studsvik offers a broad range of services to operating nuclear power reactors and other nuclear facilities taken out of operation and in various phases of decommissioning. A considerable part of the business volume is generated during the time that the various nuclear power plants are shut down for refueling and maintenance outages, but a growing part of the business volume comes from consulting services.

Capacity utilization was high in the consulting and engineering and services operations. Market demand for consulting services is high; consequently there are good opportunities for continued growth with good profitability. Decommissioning operations reported growth toward the end of the year after a somewhat weak start. Decommissioning work at the Obrigheim power plant started after the customer, with a delay of over a year, had received the necessary licensing. Component manufacturing operations grew during the year but with unsatisfactory profitability. The management organization and work processes were changed towards the end of the year. An office opened in France, where a small consulting organization has been built up. The order situation is good in the German operations.

USA

Studsvik conducts waste treatment in two facilities in Erwin and Memphis in the state of Tennessee. In addition Studsvik has a logistics operation based in Memphis, with its own transport fleet of about 20 vehicles, with the capacity and competence to transport radioactive material. Wet low and intermediate waste is treated in Erwin, in a facility that uses Studsvik's patented pyrolysis technology THORSM. Other organic waste and metallic low level waste is treated in Memphis. The segment reported a loss in 2008.

As a result of the closure of the repository for intermediate level waste in Barnwell, South Carolina at the end of June 2008, deliveries of material to Studsvik's Erwin facility ceased. Studsvik therefore closed the facility temporarily and it was out of operation in the second half of the year. Studsvik has developed a new business model for treatment of intermediate level waste, which means that Studsvik treats waste at the Erwin facility as before, and thereafter takes responsibility for storage and final disposal through cooperation with Waste Control Specialists (WCS). Three power companies had signed agreements under the new model at the end of 2008 and talks were in progress with several potential customers. The Erwin facility will resume normal operation in the first quarter.

Business volumes fell at the facility in Memphis, partly due to tough competition in early 2008 and the operations were restructured. The efficiency program implemented had a good effect and, despite the continued tough market situation, performance improved towards the end of the year.

The general economic downturn combined with high fuel prices affected the Memphis-based logistics operations adversely. Capacity was cut from 60 vehicles at the start of the year to 20 at its close. The cuts made in the logistics operations were not sufficient to compensate for the fall in demand. Operations continued to report losses and further measures were taken towards the end of the year to improve efficiency.

The profit for the segment in 2008 includes restructuring costs for the Memphis-based operations of SEK 12.6 million.

In December Studsvik acquired a minority share (10 per cent) in the Erwin facility.

Studsvik's associated company THOR Treatment Technologies (TTT) developed well and reported a profit and positive cash flow in 2008. The segment earnings include a profit share in TTT of SEK 5.6 million.

Global Services

Studsvik is one of the world's foremost independent suppliers of tests, examinations and analyses of nuclear fuel and material as well as a world leader and in practice the only independent supplier in the field of fuel optimization software. The tests and analyses are carried out at Studsvik's laboratories in Sweden. The software is mainly developed in the USA.

The materials technology operations reported a continued positive trend. Sales and operating profit improved compared with the previous year. The orderbook is good and the volume of tenders is high. The consulting operations are growing successively and ALARA Holding, which was acquired in 2008, is performing well.

New sales of fuel optimization software were lower in 2008 than in the previous year, which meant that fullyear earnings were lower than last year. Variation between years is normal for the business and tender activity in the software area is very high. After the reporting period an order was signed with a Japanese customer for delivery of Studsvik's Gardel core monitoring system for a contract value of about SEK 7 million.

FINANCIAL POSITION AND LIQUIDITY

Cash and cash equivalents, including current investments, amounted to SEK 147.7 million (176.9).

Equity amounted to SEK 610.8 million (571.8).

The equity-assets ratio was 40.4 per cent (42.5).

Interest-bearing liabilities amounted to SEK 388.3 million (318.7).

The Group's borrowing was conducted entirely in foreign currencies in the course of investments and business acquisitions in the USA, Germany and the United Kingdom. After renegotiation the average maturity of the loan portfolio was extended to 4 years. The average interest rate on loans was by and large unchanged.

The Group's internally generated cash flow is considered to be sufficient for the Group's operating activities. Increased borrowing and an increase in equity may be necessary if one or more major acquisitions are contemplated. The parent company has full access to the subsidiaries' cash flows.

CAPITAL EXPENDITURE

The Group's capital expenditure amounted to SEK 108.4 million (127.3). Among the year's investments in growth may be mentioned the extension of the facility for treatment of metallic waste in the United Kingdom.

Acquisition of subsidiaries for SEK 11.2 million (46.2) is included in the year's capital expenditure.

At the end of 2008 the Group's commitments in respect of investment projects still in progress amounted to SEK 17.4 million (9.3). It is estimated that investments in progress will be financed using internal funds.

CASH FLOW

Cash flow from operating activities before working capital changes amounted to SEK 61.9 million (76.7). The working capital increased by SEK 32.4 million (37.7). The increase in 2008 is mainly attributable to payment of a current liability for final disposal of spent fuel from the company's shutdown R2 reactor. Cash flow from operating activities after investments was SEK –68.9 million (–36.4).

RESEARCH AND DEVELOPMENT

Development projects are initiated and implemented both in cooperation with customers in the form of consulting contracts and within the framework of Studsvik's internal product development. Research expenditure is expensed as it is incurred. Identifiable expenditure for the development of new processes and products is capitalized to the extent it is expected to bring economic benefits.

In 2008 total costs of company-funded research and development amounted to SEK 44.8 million (41.8). Most resources were allocated to Studsvik's in-core fuel management codes. In software development the expenditure is a combination of maintenance of existing software and new development. As the economic benefits of the new development work are allocated over a very long period this expenditure is expensed as it arises.

MATERIAL RISKS AND UNCERTAINTIES

Studsvik operates on an international market that is exposed to competition. With operations in eight countries, Studsvik is exposed to both operational and financial risks. The Group's financial risk management is described in note 2 on page 58. Other risks are reported and commented on in the "Risks" section on page 32. The responsibility for risk assessment lies mainly within each subsidiary, but is reviewed and followed up by the parent company. The Group has a high security culture, which rests on a long tradition of clear routines for quality assurance and follow up in the context of various quality certification processes. The fact that Studsvik operates in the nuclear power sector entails special risks that are regulated and supervised by national agencies and international bodies.

DECOMMISSIONING OF NUCLEAR FACILITIES

The operations in Studsvik's nuclear facilities in Sweden are run under license pursuant to the Act on Nuclear Activities and it is therefore Studsvik's responsibility to decommission the facilities. Under the Act the holders of the licenses have both the technical and the financial responsibility for decommissioning. However, under the Act (1988:1597) on Financing the Handling of Certain Radioactive Waste etc ("the Studsvik Act"), the Swedish nuclear power producers pay a fee per generated kWh of electricity to the Government. The fees are funded for the purpose of covering costs for decommissioning a large part of Studsvik's nuclear facilities in Sweden. For its other nuclear facilities in Sweden, the Group makes provision in its own balance sheet for the obligation and issues collateral for performance in the form of bank guarantees to the Swedish Radiation Safety Authority and the County Administrative Board. A new Act that came into force in 2007 (2006:647) will replace the Studsvik Act in 2009. At that time it is the intention of the legislator and the authorities that the obligation under the Studsvik Act will have been fully settled. The Group's facilities that are not currently covered by the Studsvik Act will be covered by the new legislation. The Group expects that even in the future and in the context of the new legislation the obligation will be secured through bank guarantees issued to the authorities concerned.

Decommissioning of nuclear facilities taken out of operation and financed under the Studsvik Act is mainly undertaken by the subsidiary AB SVAFO. The company's obligation also includes restoring the Ranstad uranium mine in southern Sweden. Operations ceased in 1987. AB SVAFO is a wholly-owned subsidiary entirely financed by the Swedish Nuclear Waste Fund. The Nuclear Waste Fund covers the costs of its operations.

The Nuclear Waste Fund will also finance the future decommissioning of the Group's material testing reactor which ceased operation in 2005. The license holder of the facility is the wholly-owned subsidiary Studsvik Nuclear AB, which is consequently responsible for decommissioning.

INSURANCE

As a result of its geographical dispersion and its different lines of business, Studsvik is exposed to several types of third party risk. Studsvik's third party liability insurance is intended to cover Studsvik against the financial risks and consequences of its business. Studsvik's business is insured from two risk perspectives; nuclear liability and non-nuclear liability. The nuclear liability insurance is regulated by the Nuclear Liability Act in Sweden and corresponding legislation in the respective countries. Nuclear liability insurance for the Swedish operations is provided by Nordic Nuclear Insurance (NNI) and European Liability Insurance for the Nuclear Industry (ELINI). Liability insurance for the American operations is provided by the American Nuclear Insurers (ANI) Liability Insurance Pool. The non-nuclear operations are currently insured through a global liability insurance policy with the insurance company AIG.

Property and consequential loss insurance policies for the Swedish nuclear risks have been written by Nordic Nuclear Insurance and the European Mutual Association for Nuclear Insurance (EMANI). An EMANI nuclear insurance policy has also been taken out for the American Erwin facility. Non-nuclear property and consequential loss policies have been taken out in the respective countries.

EMPLOYEES AND THE ENVIRONMENT

The average number of employees in 2008 was 1,130 (1,141). A Groupwide Code of Conduct was introduced in 2008, which focuses on four areas of responsibility:

• Employees and organization
• Society
• Customers and suppliers
• Environment

In 2008 a stakeholder dialog was completed which will form the basis of Studsvik's continued corporate responsibility activities, which are also described on page 28. Studsvik publishes a separate Corporate Responsibility Report, which also deals with the company's environmental impact.

The number of work-related injuries resulting in sickness absence fell in 2008 to 22 from last year's 40. Studsvik has a program to reduce the number of workplace injuries. The collective radiation dose to personnel did not exceed the current limit values. For detailed information on radiation doses please refer to page 29.

The Group conducts activities requiring licenses in Sweden and the USA. Activities at the Group's Swedish facilities are licensed under the Swedish Environmental Code, the Act on Nuclear Activities and the Radiation Protection Act. Activities in the USA and the UK are conducted in a corresponding way in accordance with national legislation. The Swedish nuclear facilities that require a license under the Act on Nuclear Activities include nuclear reactors, laboratories where radioactive materials are used, facilities for treatment and intermediate storage of low and intermediate level waste and a facility for storage of nuclear material. The main environmental impact from the Group's facilities is from emissions and discharges to air and water. The licenses under which the nuclear facilities are operated state limit and recommended values for emissions and discharges to the exterior environment.

PARENT COMPANY

Parent company operations comprise the coordination of tasks for the Group and assets mainly consist of shares in subsidiaries. The parent company's net sales amounted to SEK 10.8 million (5.6). The operating loss was SEK –28.7 million (–38.3). The loss after financial items was SEK –25.8 million (–2.6). The profit for the previous year includes a capital gain of SEK 35.0 million from the sale of Studsvik Stensand AB and costs of a discontinued acquisition process in the UK of SEK –10.5 million.

The parent company's investments amounted to SEK 0.2 million (0.5). Cash and cash equivalents amounted to SEK 84.1 million (91.2) and interest-bearing liabilities to SEK 221.2 million (154.2).

INFORMATION ON THE ARTICLES OF ASSOCIATION AND THE SHARE

There is no provision in Studsvik's Articles of Association that restricts the right to transfer shares. The company has not transferred any of its own shares or issued new shares during the financial year. The company is not aware of any agreements between shareholders that may result in restrictions on the right to transfer shares in the company. The company is not a party to any material agreement that is affected by any public take-over bid. The company's employees do not hold any shares for which the voting right cannot be exercised directly. The elected members of the Board of Directors are appointed by the Annual General Meeting. There is no provision in the Articles of Association concerning appointment and dismissal of Board members. Information on trading in the Studsvik share and ownership structure in 2008 can be found on pages 35–36.

BENEFITS TO SENIOR MANAGEMENT

The Annual General Meeting held on April 22, 2008 adopted the following principles for benefits to senior management.

Senior management executives will be offered a commercially competitive fixed salary based on the individual executive's responsibilities and powers. Salary will be fixed for a calendar year.

Senior management executives may be offered bonuses. Such bonuses may not exceed 50 per cent of fixed salary. Senior executives are entitled to convert bonuses to extra pension payments on their own initiative. Bonuses will primarily be based on the Group's financial targets. A bonus plan will be determined for the financial year.

Apart from the provisions of collective agreements or other agreements, senior management executives are entitled to arrange pension solutions on an individual basis. Salary or bonus may be used instead to increase pension allocation, given that the cost to Studsvik remains unchanged over time.

A maximum period of notice of 12 months from either senior management executives or Studsvik is applicable. Severance payments, apart from salary during the period of notice, may be made amounting to the equivalent of a maximum of 12 months' salary.

There is more information concerning benefits to senior management in note 36.

OUTLOOK

Modernization and increasing output of nuclear power plants is taking place in several of the countries where Studsvik operates. Decommissioning of nuclear facilities is expected to continue at least at the present rate in 2009. Demand for the services of the type Studsvik offers, including waste treatment, materials testing and consulting services is strong.

Studsvik's operations are only marginally affected by fluctuations in the economic cycle. With the exception of parts of the US operations, the financial unrest has not affected Studsvik's operations.

PROPOSED DISTRIBUTION OF PROFITS

The Board proposes that a dividend of SEK 1.00 (2.00) per share be distributed for the 2008 financial year and that the remaining non-restricted equity be retained in the company.

The total profits at the disposal of the Annual General Meeting comprise the Parent Company's non-restricted equity, SEK 591,302,461. The Board of Directors proposes that the profits be distributed as follows:

To the shareholders

SEK 1.00 per share, a total of	SEK 8,218,611
To be carried forward	SEK 583,083,850
Total non-restricted equity	SEK 591,302,461
in the parent company

The proposed dividend to shareholders will reduce the Group's equity-assets ratio to 40.1 per cent. In light of the Group's business activities, the equity-assets ratio is adequate. It is expected that liquidity in the Company and Group can be maintained at a satisfactory level.

In the opinion of the Board of Directors the proposed dividend does not impede the Company, and other companies of the Group, from fulfilling their obligations in the short and long term.

The consolidated income statement and balance sheet and the parent company income statement and balance sheet will be adopted at the Annual General Meeting to be held on April 22, 2009. In our view, the consolidated accounts have been prepared in accordance with international financial reporting standards (IFRS) as adopted by the EU and give a true and fair view of the Group's financial position and results of operations. The annual accounts have been prepared in accordance with generally accepted accounting principles and give a true and fair view of the parent company's financial position and results of operations. The administration report for the Group and parent company provides a fair review of the development of the Group's and the parent company's business, financial position and performance and describes significant risks and uncertainties faced by the parent company and the companies that are part of the Group.

Nyköping, March 17, 2009

Anders Ullberg Anna Karinen Jan Barchan

Chairman Vice Chairman Board Member

Ingemar Eliasson Lars Engström Maria Lindberg

Board Member Board Member Employee representative

Alf Lindfors Per Ludvigsson Roger Lundström Board Member Board Member Employee representative

Magnus Groth President

Our audit report was submitted on March 25, 2009 PricewaterhouseCoopers AB

Magnus Brändström Göran Tidström Authorized public accountant Authorized public accountant Auditor in charge

Consolidated income statement

	Note	2008	2007
Net sales	4	1,285,951	1,314,647
Costs of services sold	7	–986,303	–1,000,017
Gross profit		299,648	314,630
Selling and marketing costs	7–8	–52,119	–53,817
Administrative expenses	7	–194,751	–180,415
Research and development costs	7	–44,817	–41,754
Share in earnings from associated companies	17	8,465	-
Other operating income	5–6	2,848	25,088
Other operating expenses	5	–6,545	–1,628
Operating profit	4–9	12,729	62,104
Financial income	10, 12	7,415	8,716
Financial expenses	10, 12	–19,448	–24,834
Profit before tax		696	45,986
Income tax	11	446	1,234
NET PROFIT FOR THE YEAR		1,142	47,220
Attributable to
– parent company's shareholders		–395	46,475
– minority interest		1,537	745
Earnings per share
– before dilution	13	–0.05	5.65
– after dilution		–0.05	5.65

Consolidated balance sheet

	Note	2008	2007
ASSETS
Non-current assets
Property, plant and equipment	15	503,740	406,594
Intangible assets	16	419,358	368,718
Investments in associated companies	17	22,064	-
Deferred tax assets	29	63,987	41,608
Derivative financial instruments	18, 20	55	356
Trade and other receivables	18, 21	15,344	25,372
Total non-current assets		1,024,548	842,648
Current assets
Inventories	22	28,817	22,459
Trade and other receivables	18, 21	309,156	303,043
Derivative financial instruments	18, 20	516	933
Cash and cash equivalents	18, 23	147,713	176,873
Total current assets		486,202	503,308
TOTAL ASSETS		1,510,750	1,345,956
EQUITY
Capital and reserves attributable to parent company's shareholders
Share capital	24	8,219	8,219
Other contributed capital	24	225,272	225,959
Other reserves	26	48,989	–9,932
Retained earnings	25	327,985	344,130
Equity attributable to the parent company's shareholders		610,465	568,376
Minority interest		320	3,457
Total equity		610,785	571,833
LIABILITIES
Non-current liabilities
Borrowings	18, 28	350,520	196,368
Derivative financial instruments	18, 20	1,209	52
Deferred tax liabilities	29	34,329	40,889
Pension obligations	30	7,790	5,961
Other provisions	31	84,476	55,280
Other non-current liabilities	27	9,138	7,942
Total non-current liabilities		487,462	306,492
Current liabilities
Trade and other payables	27	357,512	301,552
Current tax liabilities		5,644	11,502
Borrowings	18, 28	37,742	122,287
Derivative financial instruments	18, 20	2,432	158
Other provisions	31	9,173	32,132
Total current liabilities		412,503	467,631
Total liabilities		899,965	774,123
TOTAL EQUITY AND LIABLITIES		1,510,750	1,345,956

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Other contributed capital		Other reserves Retained earnings	Minority interest	Total equity
Opening balance at January 1, 2007	8,219	225,959	7,653	316,534	286	558,651
Transfers within equity				–2,442	2,442	0
Change in translation differences			–17,585		–16	–17,601
Total transactions recognized directly in equity			–17,585	–2,442	2,426	–17,601
Profit for the year stated in the income statement				46,475	745	47,220
Total income and expenses stated for the				46,475	745	47,220
period
Dividend				–16,437		–16,437
Closing balance at December 31, 2007	8,219	225,959	–9,932	344,130	3,457	571,833
Opening balance at January 1, 2008	8,219	225,959	–9,932	344,130	3,457	571,833
Transfers within equity		–687		687		0
Change in translation differences			58,580		938	59,518
Cash flow hedges			463			463
Tax attributable to items recognized directly in equity			–122			–122
Acquisition of minority					–5,612	–5,612
Total transactions recognized directly in equity		–687	58,921	687	–4,674	54,247
Profit for the year stated in the income statement				–395	1,537	1,142
Total income and expenses stated for the period				–395	1,537	1,142
Dividend				–16,437		–16,437
Closing balance at December 31, 2008	8,219	225,272	48,989	327,985	320	610,785

Consolidated cash flow statement

	Note	2008	2007
Cash flow from operating activities
Operating profit		12,729	62,104
Adjustment for non-cash items	32	60,942	37,504
		73,671	99,608
Interest received		5,406	8,716
Interest paid		–18,458	–24,834
Income tax paid		1,204	–6,811
Cash flow from operating activities before change in working capital		61,823	76,679
Change in working capital
– Current assets		–24,929	–52,309
– Other current liabilities		–7,459	14,589
Cash flow from operating activities		29,435	38,959
Cash flow from investing activities
Acquisition of subsidiaries	35	–6,045	–41,869
Sale of subsidiary		-	45,766
Purchases of property, plant and equipment	15	–95,528	–80,512
Sale of property, plant and equipment		4,165	1,225
Purchases of intangible assets	16	–1,696	-
Dividend from associated company	17	744	-
Cash flow from investing activities		–98,360	–75,390
Cash flow from financing activities
Loans raised		166,048	15,444
Repayments of loans		–119,368	–34,525
Dividend		–16,437	–16,437
Cash flow from financing activities		30,243	–35,518
Decrease in cash and cash equivalents		–38,682	–71,949
Cash and cash equivalents at beginning of the year		176,873	247,574
Translation difference		9,522	1,248
Cash and cash equivalents at end of the year	23	147,713	176,873

Parent company income statement

	Note	2008	2007
Net sales	38	10,798	5,634
Costs of services sold		–7,911	–5,395
Gross profit		2,887	239
Selling and marketing costs		-	-
Administrative expenses		–32,366	–39,340
Other operating income		770	795
Operating profit	38–41	–28,709	–38,306
Interest income and similar profit/loss items	43	13,918	51,326
Interest expense and similar profit/loss items	44	–11,065	–15,631
Profit before tax		–25,856	–2,611
Appropriations	45	4,363	329
Income tax	46–47	6,955	10,460
NET PROFIT FOR THE YEAR		–14,538	8,178

Parent company balance sheet

	Note	2008	2007
ASSETS
Non-current assets
Property, plant and equipment	48
– Equipment and tools, buildings, land		704	1,664
Financial assets	49
– Deferred tax assets		2,574	2,680
– Shares and participations in subsidiaries	51	779,119	779,397
– Receivables from Group companies		221,362	154,094
Trade and other receivables		12,148	10,918
Total non-current assets		1,015,907	948,753
Current assets
Inventories and goods for resale		508	423
Trade and other receivables		1,635	12,279
Derivative financial instruments	57	15	71
Receivables from Group companies		36,461	42,312
Prepaid expenses and accrued income	50	1,515	1,045
Cash and cash equivalents		84,119	91,210
Total current assets		124,253	147,340
TOTAL ASSETS		1,140,160	1,096,093
EQUITY
Equity
Share capital		8,219	8,219
Restricted reserves		225,272	225,272
Total restricted equity		233,491	233,491
Non-restricted equity
Non-restricted reserves		605,839	591,418
Net profit for the year		–14,538	8,178
Total non-restricted equity		591,301	599,596
Total equity		824,792	833,087
Untaxed reserves	52	2,510	6,874
LIABILITIES
Non-current liabilities
Liabilities to credit institutions	53	201,915	137,113
Deferred tax liabilities		4	20
Liabilities to Group companies		38,106	48,106
Other liabilities		9,138	7,942
Total non-current liabilities		249,163	193,181
Current liabilities
Liabilities to Group companies		31,469	34,821
Accounts payable		2,563	2,747
Liabilities to credit institutions	53	19,250	17,125
Other liabilities		1,484	1,357
Accrued expenses and deferred income	54	8,929	6,901
Total current liabilities		63,695	62,951
Total liabilities		312,858	256,132
TOTAL EQUITY AND LIABLITIES		1,140,160	1,096,093

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

	Share capital	Statutory reserve	Non-restricted equity	Total equity
Opening balance at January 1, 2007	8,219	225,272	581,052	814,543
Group contribution received			37,226	37,226
Tax effect of group contributions			–10,423	–10,423
Dividend			–16,437	–16,437
Net profit for the year			8,178	8,178
Closing balance at December 31, 2007	8,219	225,272	599,596	833,087
Opening balance at January 1, 2008	8,219	225,272	599,596	833,087
Group contribution received			31,500	31,500
Tax effect of group contributions			–8,820	–8,820
Dividend			–16,437	–16,437
Net profit for the year			–14,538	–14,538
Closing balance at December 31, 2008	8,219	225,272	591,301	824,792

Parent company cash flow statement

	Note	2008	2007
Cash flow from operating activities
Operating profit		–28,709	–38,306
Adjustment for non-cash items	59	–434	–849
		–29,143	–39,155
Interest received		6,738	16,121
Interest paid		–8,553	–14,526
Income tax paid		9,652	–133
Cash flow from operating activities before change in working capital		–21,306	–37,693
Change in working capital
– Current assets		–269	–1,447
– Other current liabilities		–11,201	–46,962
Cash flow from operating activities		–32,776	–86,102
Cash flow from investing activities
Investment in subsidiaries		-	–32,875
Sale of subsidiary		-	47,999
Sale of property, plant and equipment		1,576	1,352
Loans to subsidiaries	49	–31,150	17,376
Disposal of other financial assets		-	587
Purchases of property, plant and equipment	48	–182	–533
Cash flow from investing activities		–29,756	33,906
Cash flow from financing activities
Repayments of loans		–25,213	–269,746
Loans raised		59,865	251,019
Dividend paid		–16,437	–16,437
Group contribution received		37,226	28,919
Cash flow from financing activities		55,441	–6,245
Decrease in cash and cash equivalents		–7,091	–58,441
Cash and cash equivalents at beginning of the year		91,210	149,651
Cash and cash equivalents at end of the year		84,119	91,210

NOTES TO THE CONSOLIDATED ACCOUNTS

Amounts in SEK '000 unless otherwise stated

Note 1 Accounting policies and valuation principles

The principal accounting policies applied in the preparation of these consolidated accounts are set out below. These policies have been applied consistently to all the years presented, unless otherwise stated.

1.1. BASIS OF PREPARATION

The consolidated accounts for the Studsvik Group have been prepared in accordance with the Annual Accounts Act, the Swedish Financial Accounting Standards Council's recommendation RR 30, Supplementary accounting rules for groups and International Financial Reporting Standards (IFRS) as adopted by the EU. The consolidated accounts have been prepared in accordance with the historical cost method except as regards remeasurement of land and buildings, available for sale financial assets and financial assets and liabilities (including derivative instruments) carried at fair value through profit or loss.

Preparing statements in accordance with IFRS requires the use of a number of important accounting estimates. Furthermore, the management must make certain judgements when applying the Group's accounting policies. The areas that entail a high degree of judgement, which are complex or of such a nature that assumptions and estimates are critical to the consolidated accounts are specified in note 3.

Standards, amendments and interpretations that have come into force and are applied by the Group

IFRS 7, Financial instruments: Disclosures, and the supplementary amendment to IAS 1, Presentation of financial statements – Capital disclosures, introduces new disclosures regarding financial instruments. IFRS 7 has no impact on classification and valuation of the Group's financial instruments.

IFRIC 8, Scope of IFRS 2, requires that transactions concerning the issuing of own equity instruments - where the consideration received is less than the fair value of the equity instruments issued - are examined to determine whether they fall under the scope of IFRS 2. This interpretation has no impact on the Group's financial reporting.

IFRIC 10, Interim financial reporting and impairment, does not allow reversal of impairment losses recognized on the balance sheet in a previous interim period in respect of goodwill, investment in equity instruments or a financial asset carried at cost. This interpretation has no impact on the Group's financial reporting.

IFRIC 14, IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction. IFRIC 14 provides guidance when assessing the limit in IAS 19 of the amount of the surplus that can be recognized as an asset. It also explains how the pension's asset or liability may be affected when there is a statutory or contractual minimum funding requirement. This interpretation has no impact on the Group's financial reporting, since there is no net asset in any of the Group's pension plans and these plans do not include a minimum funding requirement.

Interpretation applied by the Group in advance

IFRS 8, Operating Segments, was applied in advance by the Group in 2008. IFRS 8 replaces IAS 14, Segment reporting, and adapts the segment reporting to the requirements of the USA standard SFAS 131, Disclosures about segments of an enterprise and related information. The new standard requires reporting from the management perspective, where segment reporting is presented as it is used in management accounting. Moreover, the segments must be reported more in line with the internal reports submitted to the chief operating decisionmaker. There is no impact on valuation of the company's assets and liabilities. Figures for comparison for 2007 have been restated.

Standards, amendments and interpretations in force, but which are not relevant to the Group

The following standards, amendments and interpretations of published standards are compulsory for financial years starting on January 1, 2008 or later, but are not relevant to the Group.

• IFRS 4, Insurance contracts,
• IFRIC 7, Applying the restatement approach under IAS 29, Financial reporting in hyperinflationary economies,
• IFRIC 9, Reassessment of embedded derivatives,
• IFRIC 11, Group and treasury share transactions, and
• IFRIC 12, Service concession arrangements.

Standards, amendments and interpretation of existing standards that as yet have not come into force and that are not applied in advance by the Group

The following new standards and amendments and interpretations of existing standards have been published and are compulsory for the Group's accounting for the financial year starting on January 1, 2009 or later, but have not been applied in advance by the Group:

• IAS 1 (Amendment), Presentation of financial statements (applies from January 1, 2009). This amendment of the standard is still subject to the EU endorsement process. The amendments mainly entail changes in formats and names of the financial reports. Consequently the future presentation of the Group's financial reports will be affected when this standard is introduced.
• IAS 23 (Amendment), Borrowing costs (applies from January 1, 2009). This amendment of the standard is still subject to the EU endorsement process. The amendment requires that companies capitalize borrowing costs that are directly attributable to acquisition, construction or production of an asset that takes a substantial period of time to get ready for its intended use or sale, as a part of the cost of that asset. The alternative of immediate expensing of borrowing costs will be removed. The Group capitalizes borrowing costs in 2008 attributable to investment in the new waste facility in the UK.
• IAS 27 (Amendment), Consolidated and separate financial statements (applies from July 1, 2009). This amendment of the standard is still subject to the EU endorsement process. The amendment means that profit attributable to minority shareholders must always be reported even if it means the minority share is negative, that transactions with minority shareholders must always be reported in equity, and that if a parent company loses the controlling interest any remaining participation must be remeasured to fair value. The amendment of the standard will affect reporting of future transactions.
• IFRS 2 Share-based payment (Amendment) Vesting conditions and cancellations (applies from January 1, 2009). This amendment of the standard is still subject to the EU endorsement process. The amendment affects the definition of vesting conditions and introduces a new concept, "non-vesting conditions" (conditions that are not defined as vesting conditions). The standard states that "non-vesting conditions" must be taken into account when estimating the fair value of equity instruments. Goods or services received by a counterparty that satisfy all other vesting conditions must be recognized irrespective of whether "non-vesting conditions" are satisfied or not. This amendment has no impact on the Group's financial reporting.
• IFRS 3 (Amendment), Business combinations (applies from July 1, 2009). This amendment of the standard is still subject to the EU endorsement process. The amendment applies prospectively after the effective date. The application will entail a change in how future acquisitions are reported, including accounting for transaction costs, any conditional purchase prices or successive purchases. The Group will apply the standard from the financial year starting on January 1, 2010. The amendment of the standard will not have any impact on previous acquisitions, but will affect reporting of future transactions.

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• IAS 32 (Amendment), Financial Instruments: Classification, and IAS 1 (Amendment), Presentation of financial statements – Puttable financial instruments and obligations arising on liquidation (applies from January 1, 2009). Under the amended standards, puttable financial instruments and instruments, or components of instruments that impose on the company an obligation to deliver to another party a pro-rata share of the net assets of the company only on liquidation will be classified as equity, on condition that the financial instruments have particular properties and fulfill certain conditions. The Group will apply IAS 32 and IAS 1 from January 1, 2009, but this is not expected to have any impact on the Group's financial reporting.
• IAS 23 (Amendment), Borrowing costs (applies from January 1, 2009). The amendment is a part of the IASB's annual improvements project published in May 2008. An amendment has been made to the definition of borrowing costs so that interest expense is calculated using the effective interest method as defined in IAS 39, Financial Instruments: Recognition and Measurement. This eliminates the difference between IAS 39 and IAS 23. The Group will apply IAS 23 on capitalization of borrowing costs prospectively from January 1, 2009.
• IAS 28 (Amendment), Investments in Associates (and the consequent amendments to IAS 32, Financial Instruments: Classification, and IFRS 7, Financial instruments: Disclosures) (applies from January 1, 2009). The amendment is a part of the IASB's annual improvements project published in May 2008. A holding in an associated company is treated as a separate asset as regards testing for impairment and any impairment loss is not allocated to specific assets included in the holding, such as goodwill. Reversals of impairment losses are reported as an adjustment of the value of the investment to the extent the recoverable amount of the associated company increases. The Group will apply IAS 28 for impairment testing of investments in associates and related impairment losses from January1, 2009.

Interpretations of existing standards that as yet have not come into force and that are not relevant to the Group

The following interpretations of existing standards have been published and are compulsory for the Group for financial years starting on January 1, 2008 or later, but are not relevant to the Group.

• IFRIC 13, Customer loyalty programmes1 (applies from July 1, 2008). This interpretation is still subject to the EU endorsement process. IFRIC 13 clarifies that when goods or services are sold together with some form of customer loyalty incentive (for example loyalty points or free products) these are multiple elements arrangements. The payment received from the customer is allocated between the different elements of the arrangement on the basis of the fair value of the respective element. IFRIC 13 is not relevant to the Group since no Group company offers any loyalty program.
• IFRIC 15, Agreements for the construction of real estate (applies from January 1, 2009). The interpretation clarifies whether IAS 18, Revenue, or IAS 11, Construction Contracts, is applicable to certain transactions. This will probably lead to IAS 18 being applied to more transactions. IFRIC 15 is not relevant to the Group's operations, since all revenue is accounted for under IAS 18.
• IFRIC 17, Distributions of non-cash assets to owners (applies to the financial year starting on July 1, 2009 or later). IFRIC 17 provides guidance stating that a liability referring to a non-cash dividend should be recognized when the company has an obligation to its shareholders and that the liability is to be recognized at fair value. When the obligation is settled, i.e. the dividend paid, the assets distributed to settle the obligation are to be revalued at fair value. The result of the revaluation is to be recognized in the income statement. IFRIC 17 also states that IFRS 5, Non-current assets held for sale and discontinued operations, is applicable to non-current assets available for distribution. The Group will apply IFRIC 17 for non-cash dividends and in cases where dividends are a mixture of non-cash and cash, prospectively from January 1, 2010.

1.2 PARENT COMPANY

The parent company has prepared its annual accounts in accordance with the Annual Accounts Act (1995:1554) and the Swedish Financial Accounting Standards Council's recommendation RR 32:06, Accounting for Legal Entities (Separate financial statements). RR 32:06 means that the parent company, in its separate financial statements, must apply all the IFRS and statements adopted by the EU as far as possible, subject to the Annual Accounts Act and taking into account the connection between accounting and taxation. The recommendation specifies the exemptions and additions that must be made in relation to IFRS. The differences between the Group's and the Parent Company's accounting policies are presented below. The main differences between the accounting policies applied by the Group and the Parent Company are:

Shares and participations in subsidiaries

Investments in subsidiaries are recorded at the lower of cost and fair value. Assessments are made as to whether the book amount corresponds to fair value and the book amount is written down if the impairment is deemed permanent.

Income

The Parent Company's income includes dividends received from subsidiaries and other internal transactions that are eliminated in the consolidated accounts.

Leases

All leases, regardless of whether they are finance or operating leases, are recorded as rental agreements (operating leases).

Pensions

Pension obligations refer to defined contribution plans and are covered by insurance arrangements.

Taxes

The accumulated values of accelerated depreciation and other untaxed reserves are presented in the parent company balance sheet under the item Untaxed reserves with no deduction for the deferred tax. Changes in the untaxed reserves are shown on a separate line in the income statement in the parent company income statement. The consolidated accounts, however, divide untaxed reserves into deferred tax liability and equity.

Group contributions and shareholders' contributions for legal entities

The company reports group contributions and shareholders' contributions in accordance with the statements of the Swedish Financial Accounting Standards Council's Emerging Issues Task Force. Shareholders' contributions are recognized directly in the equity of the recipient and capitalized in shares and participations by the giver, to the extent there is no impairment loss. Group contributions are reported in accordance with their financial significance. This means that the group contributions made for the purpose of minimizing the Group's total tax are recognized directly in retained earnings less the current tax effect.

1.3 CONSOLIDATED ACCOUNTS

Subsidiaries

Subsidiaries are all the companies in which the Group has the power to govern financial and operating policies, generally accompanying a shareholding of more than half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets provided in payment, equity instruments issued and liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets, liabilities and contingent liabilities acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement.

Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated, but any losses are regarded as an indication of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Transactions with minority shareholders

The Group policy is to state transactions with minority shareholders as transactions with a third party. Divestments to minority shareholders generate gains and losses for the Group that are recognized in the income statement. For minority share acquisitions in which the purchase price exceeds the acquired share of the carrying amount of the subsidiary's net assets, the difference is recognized as goodwill. For divestments to minority shareholders in which the purchase price received differs from the carrying amount of the interest in the divested net assets, a gain or loss arises. This gain or loss is recognized in the income statement.

Associated companies

Associated companies are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20 per cent and 50 per cent of the voting rights. Investments in associated companies are accounted for in accordance with the equity method and initially recorded at cost. The Group's carrying amount for investments in associated companies includes goodwill identified on acquisition, net of any impairment.

The Group's share of the post-acquisition profit or loss of an associated company is recognized in the income statement and its share of post-acquisition changes in reserves is recognized in the Reserves item. The cumulative post-acquisition changes are adjusted against the carrying amount of the investment. When the Group's share of losses in an associated company equals or exceeds its interest in the associated company, including any unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associated company.

1.4 SEGMENT REPORTING

Operating segments must be reported in line with the internal reports submitted to the chief operating decisionmaker. The chief operating decisionmaker has been identified as the President.

1.5 FOREIGN CURRENCY TRANSLATION

Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (functional currency). The consolidated financial statements are presented in SEK, which is the parent company's functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement.

Translation differences for non-monetary financial assets and liabilities are recorded as part of fair value gains/losses. Translation differences for non-monetary financial assets and liabilities, such as shares recognized at fair value in the income statement, are recorded in the income statement as part of fair value gains/losses.

Group companies

The results and financial position of all the Group companies (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the Group's presentation currency as follows:

a) assets and liabilities for each balance sheet presented are translated at closing rates.

b) income and expenses for each income statement are translated at average exchange rates.

c) all resulting exchange differences are recognized as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders' equity. When a foreign business is sold, fully or partly, the currency differences reported in equity are transferred to the income statement and recognized as part of the capital gain/ loss. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

1.6 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost of acquisition less depreciation. The cost of acquisition includes expenditure that is directly attributable to the acquisition of the asset, expenditure for dismantling and restoration is added to the cost of acquisition and reported as a separate component.

Subsequent expenditure is included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount for the replaced part is removed from the balance sheet. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives as follows:

ƒ buildings	25–50 years
ƒ machinery	3–20 years
ƒ equipment and fixtures and fittings	3–15 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing sales proceeds with the carrying amount and are recorded under Other gains/losses – net in the income statement.

1.7 INTANGIBLE ASSETS Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary/associated company at the date of acquisition. Goodwill on acquisition of subsidiaries is included in Intangible assets. Goodwill on acquisition of associated companies is included in the value of investments in associated companies and tested for impairment as part of the value of the total investment. Goodwill that is disclosed separately is tested annually for impairment and recognized at cost less accumulated impairment losses. Goodwill impairment loss is not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units when tested for impairment. Allocation is to the cash-generating units or groups of cash-generating units that are expected to benefit from the business combination giving rise to the goodwill item. The Group allocates goodwill to all segments in all countries where the Group operates.

Computer software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These capitalized costs are amortized over the estimated useful life (normally 10 years).

Costs associated with developing or maintaining computer software are recognized as an expense as incurred.

Development costs for software recognized as an asset are amortized over the estimated useful life.

Renting and similar rights

Renting and similar rights consist mainly of customer relations and contracts. Documents to verify their capitalization could be business plans, budgets or the company's assessments of future outcomes. An individual assessment is made for each item. Amortization starts when the asset is ready for use and subsequently continues over the estimated useful life.

1.8 IMPAIRMENT LOSSES ON NON-FINANCIAL ASSETS

Assets that have an indefinite useful life, such as goodwill, are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less selling costs and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Assets other than financial assets and goodwill for which an impairment loss has previously been recognized, are tested to establish if any reversal should be made.

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1.9 FINANCIAL ASSETS

The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables and financial assets available for sale. The classification depends on the purpose for which the financial asset was acquired. The management determines the classification of financial assets when they are first reported.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it is acquired mainly for the purpose of selling in the short term. Derivatives are classified as held for trading if they are not designated as hedging instruments. Assets in this category are classified as current assets.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group's loans and receivables comprise Trade and other receivables and Cash and cash equivalents in the balance sheet.

Available for sale financial assets

Available for sale financial assets are any non-derivative financial assets designated on initial recognition as available for sale or not classified in any of the other categories. They are included in non-current assets, unless management intends to dispose of the asset within 12 months of the balance sheet date. At present the Group holds no such assets.

1.10 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivatives are recognized in the balance sheet on the date of the contract at fair value, both initially and on subsequent remeasurement. The method of reporting the gain or loss arising on revaluation depends on whether the derivative is identified as a hedging instrument, and, if so, the nature of the hedged item. The Group identifies certain derivatives as either:

(a) a hedge of the fair value of a recognized asset or liability or a firm commitment (fair value hedge),

(b) a hedge of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge).

When the transaction is entered into, the Group documents the relationship between the hedging instrument and the hedged item, as well as the Group's risk management objective and strategy for undertaking the hedge. The Group also documents its assessment, both when the hedge is undertaken and on a continuous basis, of whether the derivative instruments used in hedging transactions are effective in offsetting the changes in the fair value or cash flows of the hedged items.

Information on the fair value of the different derivative instruments used for hedging purposes is given in note 20. The entire fair value of a derivative designated as a hedging instrument is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Derivative instruments held for trading are always classified as current assets or current liabilities.

Cash flow hedging

When a hedging instrument matures or is sold or when the hedge no longer fulfils the criteria for hedge accounting and accumulated gains or losses referring to the hedge are in equity, these gains/losses remain in equity and are recognized in revenue at the time when the forecast transactions are ultimately reported in the income statement. When a forecast transaction is no longer expected to occur, the accumulated gains or losses deferred in equity must immediately be taken to the income statement item Other gains/losses – net.

1.11 INVENTORIES

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads. Borrowing costs are not included. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

1.12 TRADE RECEIVABLES

Trade receivables are initially recognized at fair value and thereafter at amortized cost, applying the effective interest method, less any provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or other financial reorganization and default or delinquency in payment (more than 30 days overdue) are regarded as indicators of impairment of a trade receivable. The size of the provision is the difference between the carrying amount of the asset and the present value of estimated future cash flows, discounted using the original effective interest rate. The carrying amount of the asset is reduced by using a depreciation account and the loss is recorded in the income statement under Selling expenses. When a trade receivable cannot be collected it is written off against the depreciation account for trade receivables. Recovery of amounts previously written off are credited to Selling expenses in the income statement.

1.13 CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash in hand, bank balances and other shortterm liquid investments with original maturities of three months or less of the date of acquisition.

1.14 SHARE CAPITAL

Ordinary shares are classified as equity.

Transaction costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

1.15 TRADE PAYABLES

Trade payables are initially recognized at fair value and thereafter at amortized cost, applying the effective interest method.

1.16 BORROWINGS

Borrowings are initially recognized at fair value, net after transaction costs. Borrowings are thereafter recognized at amortized cost and any difference between the amount received (net of transaction costs) and repayment amount is recognized in the income statement allocated over the period of the loan, applying the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

1.17 CURRENT AND DEFERRED INCOME TAX

The current tax expense is calculated on the basis of the tax laws that have been enacted or substantively enacted on the balance sheet date in the countries in which the parent company's subsidiaries and associated companies operate and generate taxable revenues. The management regularly assesses claims made in tax returns for situations where applicable tax rules are subject to interpretation and, where deemed appropriate, makes provision for amounts that will probably have to be paid to the tax authorities.

Deferred tax is recognized in its entirety, using the balance sheet method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated accounts. However, the deferred tax is not recognized if it arises as a consequence of a transaction constituting the initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

Deferred tax assets are recognized to the extent it is probable that future taxable profit will be available against which the temporary differences can be applied.

Deferred tax is calculated on all temporary differences arising on participations in subsidiaries, apart from when the time of reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not be reversed in the foreseeable future.

1.18 EMPLOYEE BENEFITS Pension obligations

The Group companies operate various pension schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, in which the payments are determined on the basis of periodic actuarial calculations. The Group has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate legal entity. The Group has no legal or constructive obligation to pay further contributions if this legal entity does not have sufficient assets to pay all employee benefits associated with the employees' service in the current or prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. It is characteristic of defined benefit plans that they define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and for unrecognized costs for past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability.

Actuarial gains and losses as a result of experience adjustments and changes in actuarial assumptions are reported in equity in the account of reported income and expense in the period in which they arise.

Past service costs are recognized immediately in the income statement, unless the changes in the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past service costs are recognized in income by amortization on a straight-line basis over the vesting period.

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that cash refund or a reduction in the future payments is available to the Group.

Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy or in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the balance sheet date are discounted to present value.

Profit-sharing and bonus plans

The Group recognizes a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit that can be attributed to the parent company's shareholders after certain adjustments. The Group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

1.19 PROVISIONS

Provisions for environmental restoration measures, future waste management costs, restructuring costs and other legal requirements are recognized when: the Group has a present legal or constructive obligation as a result of past events; it is more probable than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. No provision has been made for future operating losses.

If there are a number of similar obligations, the probability that an outflow of resources will be required to settle the obligations will be assessed overall for the entire group of obligations. A provision is reported even if the probability of an outflow for a particular item in this group of obligations is minor.

The provisions are recognized at the present value of the amount expected to be needed to settle the obligation. A discount rate before tax is used here which reflects a current market assessment of the time-dependent value of money and the risks associated with the provision. The increase in provision due to the passing of time is recorded as interest expense.

1.20 REVENUE RECOGNITION

Revenue comprises the fair value of the consideration received or receivable for goods and services sold in the Group's operating activities. Revenue is reported exclusive of value added tax, returns and discounts and after elimination of sales within the Group.

The Group recognizes revenue when its amount can be reliably measured, it is probable that the future economic benefits will flow to the company and special criteria are fulfilled for each of the Group's operations as described below. The revenue amount is not regarded as possible to measure reliably until all obligations concerning the sale have been fulfilled or otherwise extinguished. The Group bases its assessments on historical outcomes, taking into consideration the type of customer, type of transaction and special circumstances in each individual case.

The Group uses the percentage of completion method to determine the appropriate amount to recognize in a given period. The stage of completion is measured by reference to the contract costs incurred up to the balance sheet date as a percentage of total estimated costs for each contract.

The Group presents as an asset the gross amount due from customers for contract work for all contracts in progress for which costs incurred plus recognized profits exceed progress billings. Progress billings not yet paid by customers and retention are included in Trade and other receivables.

The Group presents as a liability the gross amount due to customers for contract work for all contracts in progress for which progress billings exceed costs incurred plus recognized profits.

Sales of contract services are recognized in the accounting period in which the services are rendered, by reference to completion on the balance sheet date as a proportion of the total services to be provided.

Interest income is recognized on a time-proportion basis using the effective interest method. When the value of a receivable is impaired, the Group reduces the carrying amount to the recoverable amount, which is the estimated future cash flow, discounted at the original effective interest rate for the instrument, and continues to reverse the discount effect as interest income. Interest income on impaired loans is recorded at the original effective interest rate.

Dividend income is recognized when the right to receive payment is established.

1.21 LEASES

A finance lease is a contract under which the risks and rewards incident to legal ownership are transferred by the lessor to the lessee. Leases that are not finance leases are classified as operating leases.

Assets held under finance leases are recognized as non-current assets in the Group's balance sheet at the lower of market value of the assets and the present value of future lease payments. The liability of the Group in relation to the lessor is recorded in the balance sheet under the heading Liabilities to credit institutions and is allocated between a short-term and long-term component.

The lease payments are allocated between interest and amortization of the debt. The interest is allocated over the lease term so that each accounting period is charged with an amount equivalent to a fixed interest rate on the reported debt in the respective period. The leased asset is depreciated on the same principles as applicable to other assets of the same type.

The lease payments for operating leases are expensed on a straight-line basis over the lease term.

1.22 DIVIDENDS

Dividend distribution to the parent company's shareholders is recognized as a liability in the Group's financial statements in the period in which the dividends are approved by the parent company's shareholders.

Note 2 Financial risk management

2.1 FINANCIAL RISK FACTORS

Through its operations the Group is exposed to a number of different financial risks: market risk (covering currency risk, fair value interest rate risk, cash-flow interest rate risk and price risk), credit risk and liquidity risk. The financial risks also include the company's ability to uphold financial key ratios (covenants) that regulate borrowing. The Group's overall risk management policy focuses on the unpredictability of financial markets and aims to minimize potential adverse effects on the Group's financial performance. The Group uses derivative instruments to hedge certain risk exposure.

Risk management is handled by a central treasury function in accordance with policies determined by the Board of Directors. The central function identifies, evaluates and hedges financial risk in close cooperation with the Group's operating units. The Board of Directors draws up written policies, both for overall risk management and for specific areas, such as currency risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments and investment of surplus liquidity.

Market risk

Price risk

The Group's largest single cost item is personnel, which accounts for 50 per cent of total costs. Other expenses vary. The Group's risk exposure as regards purchases is therefore of less significance.

Currency risk

The Group operates internationally and is exposed to currency risk arising from various currency exposures, above all in US dollars (USD), euros (EUR) and pounds sterling (GBP). Currency risk arises through future business transactions, reported assets and liabilities and net investment in foreign operations.

The Board of Directors has drawn up policies and guidelines for how currency risk is to be managed in the Group. To minimize the currency risk arising on business transactions and for reported assets and liabilities, the companies use different forms of currency derivatives issued by external banks. Currency risk arises when future business transactions or reported assets and liabilities are denominated in a currency that is not the functional currency of the unit.

At Group level only external foreign currency derivative contracts are classified as hedges of gross amounts of specific assets, liabilities or future transactions.

If the Swedish krona had weakened by 10 per cent against the US dollar, all other variables being constant, the year's profit as at December 31, 2008 would have been SEK 2.2 million (1.6) lower, mainly as a result of the Group's total costs in USD being somewhat higher than the corresponding income in USD. The low capacity utilization in the Erwin facility in the USA has also contributed to the losses of the US operations. Equity would have been SEK 32.3 million (29.4) higher, mainly due to translation of the Group's net investments in the USA.

If the Swedish krona had weakened by 10 per cent against the euro, all other variables being constant, the year's profit as at December 31, 2008 would have been SEK 2.5 million (3.4) higher, mainly as a result of positive net earnings in the German operations. Equity would have been SEK 9.4 million (6.8) higher, mainly due to translation of the Group's net investments in Germany.

If the Swedish krona had weakened by 10 per cent against the pound sterling, all other variables being constant, the year's profit as at December 31, 2008 would have been SEK 0.5 million (0) higher, mainly due to increased income in the UK, which also impacted segment Sweden positively. Equity would have been SEK 3.0 million (0.1) higher, as a result of translation of the Group's net investment in the UK.

Interest rate risk referring to cash flows and fair values

Since the Group does not have any material interest-bearing assets, the Group's income and cash flow from operating activities are in all essentials independent of changes in market interest rates.

The Group's interest rate risk arises through long-term borrowings. Borrowing at variable interest rates exposes the Group to cash flow interest rate risk. Borrowing at fixed interest rates exposes the Group to fair value interest rate risk. In 2008 and 2007 there were no loans at floating interest rates. The Group's contractual repricing dates for interest rates are shown in note 28.

The Group analyses its interest rate exposure regularly. Different scenarios are simulated, taking into account refinancing, renewals of existing positions, alternative funding and hedging. With these scenarios as a base, the Group calculates the impact on earnings of a given interest rate change. For each simulation the same interest rate change is used for all currencies. The scenarios are only simulated for debt constituting the largest interest-bearing positions.

Simulations carried out show that the impact on earnings of a change of 0.1 per cent would be a maximum respective increase or decrease of SEK 0.4 million.

If the interest rate on borrowings in euros on December 31, 2008 had been 0.5 per cent higher/lower, all other variables being constant, the profit after tax for the financial year would have been SEK 0.1 million (0) lower/higher, mainly as an effect of higher/lower interest expense in connection with new fixed interest borrowing. Borrowing in other currencies in 2007 and 2008 was at fixed interest rates and was not affected by interest rate changes.

Credit risk

Credit risk is managed at company and Group level. Credit risk arises through cash and cash equivalents, derivative instruments and balances at banks and financial institutions, as well as credit exposure to customers, including outstanding receivables and contractual transactions. The Group only uses banks with an AA- or higher rating for depositing cash and cash equivalents. In cases where no independent credit evaluation exists, a risk appraisal is made of the customer's creditworthiness in which financial position and prior experience and other factors are taken into consideration. Individual risk limits are set, based on internal or external credit evaluations in accordance with limits set by the Board of Directors.

The credit quality of financial assets is reported in note 19.

Liquidity risk

Liquidity risk is managed through the Group holding sufficient cash and cash equivalents and short-term deposits in a liquid market, available funding through contracted credit lines and the possibility of closing market positions. Due to the dynamic character of operations, the Group retains flexibility of funding by maintaining contracts for withdrawable lines of credit.

The management also carefully follows rolling forecasts of the Group's liquidity reserve, consisting of unutilized loan assurances (note 28) and cash and cash equivalents (note 23), on the basis of expected cash flows.

The table below analyses the Group's financial liabilities and derivative instruments settled net that constitute financial liabilities, broken down by the contractual time to maturity remaining on the balance sheet date. The amounts stated in the table are the contracted, undiscounted cashflows. The amounts falling due within 12 months agree with book amounts, since the discount effect is immaterial.

As at December 31, 2008	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	More than 5 years
Bank borrowings	37,742	59,631	225,475 65,414
Derivative financial instruments	2,432	1,202	7	-
Trade and other payables	357,512	646	1,938	6,554

As at December 31, 2007	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	More than 5 years
Bank borrowings	122,287	47,130		75,866 73,372
Derivative financial instruments	158	41	11	-
Trade and other payables	301,552	648	1,944	5,350

The table below analyses the Group's financial derivative instruments that will be settled gross, broken down by the contractual time to maturity remaining on the balance sheet date. The amounts stated in the table are the contracted, undiscounted cashflows. The amounts falling due within 12 months agree with book amounts, since the discount effect is immaterial.

As at December 31, 2008	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	More than 5 years
Forward exchange contracts – cash flow hedges
– outflow	-	-	-	-
– inflow	36,903	12,415	4,388	-
		Between	Between	More
As at December 31, 2007	Less than 1 year	1 and 2 years	2 and 5 years	than 5 years
Forward exchange contracts –
cash flow hedges
– outflow	3,657	-	-	-

2.2 CAPITAL RISK MANAGEMENT

The Group's goal for its capital structure is to safeguard the Group's ability to continue as a going concern, so that it can generate a return for its shareholders and benefit for other stakeholders and maintain an optimal capital structure as a means of controlling the cost of capital.

To retain or adjust the capital structure the Group can alter the dividend it pays to shareholders, repay capital to shareholders, issue new shares or sell assets to reduce its liabilities.

Just like other companies in the industry, the Group assesses its capital on the basis of the debt/equity ratio. This ratio is defined as net debt divided by total equity. Net debt is defined as total borrowing (including the items Short-term borrowing and Long-term borrowing in the consolidated balance sheet) less cash and cash equivalents. Equity is measured including minority interest.

	2008	2007
Total borrowing (note 28)	388,262	318,655
Less cash and cash equivalents (note 23)	–147,713	–176,873
Net debt	240,549	141,782
Total equity	610,785	571,833
Debt/equity ratio	39%	25%

The change in debt/equity ratio in 2008 was mainly due to translation effects on borrowing in USD and increased borrowing related to investment in the UK operations.

2.3 FAIR VALUE ESTIMATION

The fair value of forward exchange contracts is determined using quoted forward exchange rates at the balance sheet date.

The carrying amount, after any impairment loss, for trade receivables and trade payables is assumed to be equivalent to their fair value, since these items are shortterm by nature. The fair value of financial liabilities is calculated, for information purposes, by discounting the future contracted cash flow at the current market interest rate available to the Group for similar financial instruments.

Note 3 Important accounting estimates

Estimates and assumptions are continually evaluated and rest on historical experience and other factors, including expectations of future events regarded as reasonable under the circumstances.

3.1 IMPORTANT ESTIMATES AND ASSUMPTIONS FOR ACCOUNTING PURPOSES

The Group makes estimates and assumptions about the future. The estimates for accounting purposes derived from these assumptions will, by definition, seldom correspond to the actual outcome. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

Impairment tests for goodwill

Each year the Group examines whether goodwill is impaired, in accordance with the accounting policy described in note 1.7. Recoverable amounts for cash generating units have been determined by calculation of value in use. Certain estimates must be made for these calculations (note 16). When calculating value in use the same discount rate is used for all calculations, since difference in risk between different cashgenerating units in all material respects has already been taken into account when assessing cash flows.

Based on the assumptions and estimates made, there is no impairment loss on goodwill.

Income taxes

The Group is liable to pay tax in many different countries. Extensive assessments are required to establish the global provision for income tax. There are many transactions and calculations in which the final tax is uncertain at the time the transactions and calculations are made. The Group reports a liability for expected tax field audits based on assessments of whether further tax liability will arise. In cases where the final tax for these cases differs from the amounts first reported, the differences will affect current tax and provisions for deferred tax in the period when these determinations are made.

If the actual final result (in the areas where assessments have been made) were to deviate by 10 per cent from the management's assessment, the Group would be forced to:

• reduce the current tax asset by SEK 1.1 million if the outcome is unfavorable, or
• increase the deferred tax asset by SEK 1.1 million if the outcome is favorable.

Fair value of derivative instruments or other financial instruments

Fair value of financial instruments not traded on an active market is established using valuation techniques. The Group chooses several methods and makes assumptions that are mainly based on the market conditions existing on the respective balance sheet date.

Revenue recognition

The Group uses the percentage of completion method for reporting fixed price contracts. The percentage of completion method means that the Group must estimate completion of services on the balance sheet date as a proportion of the total services to be provided. If the proportion of completed services to total services to be provided deviates by 10 per cent from the management's estimate, the year's reported income would increase by SEK 3 million if the percentage of completion had increased, or decrease by SEK 3 million if the percentage of completion had decreased.

4
Note 4 Segment data
Financial year 2008	Sweden	United Kingdom	Germany	USA	Global Services	Other	Eliminations	Group
Net sales	152,287	148,704	387,872	317,141	195,988	128,361	–44,402	1,285,951
External net sales	126,047	148,704	386,231	317,141	192,438	115,390		1,285,951
EBITDA before non-recurring items	38,934	–2,172	32,270	7,449	20,039	–24,804		71,716
Depreciation/amortization and impairment	–8,240	–3,924	–9,004	–35,405	–6,985	–3,894		–67,452
Earnings from associated companies and joint ventures		2,880		5,585				8,465
Operating profit	30,694	–3,216	23,266	–22,371	13,054	–28,698	0	12,729
Net financial items								–12,033
Income tax								446
Net profit								1,142
Share of equity in associated companies and
joint ventures		1,994		20,020	50			22,064
Other operating segment assets	133,869	131,074	301,424	638,561	147,507	434,312	–298,061	1,488,686
Total assets								1,510,750
Operating segment liabilities	78,771	98,652	211,637	365,328	120,383	323,255	–298,061	899,965
Adjusted equity								610,785
Total equity and liabilities								1,510,750
Investments	7,756	38,327	7,808	26,349	14,427	13,731		108,398
Average number of employees	78	86	594	156	129	87		1,130
		United			Global
Financial year 2007	Sweden	Kingdom	Germany	USA	Services	Other	Eliminations	Group
Net sales	135,438	129,120	341,289	427,689	178,752	159,090	–56,731	1,314,647
External net sales	104,372	125,771	339,561	427,689	167,170	150,084		1,314,647
EBITDA before non-recurring items	33,978	5,420	30,603	41,703	22,562	–35,201		99,065
Non-recurring items							23,184	23,184

Depreciation/amortization and impairment	–5,778	–2,434	–5,258	–35,456	–8,122	–3,097		–60,145
Operating profit	28,200	2,986	25,345	6,247	14,440	–38,298	23,184	62,104
Net financial items								–16,118
Income tax								1,234
Net profit								47,220
Other operating segment assets	121,080	89,910	244,369	624,588	183,293	389,477	–306,761	1,345,956
Total assets								1,345,956
Operating segment liabilities	58,810	47,800	179,087	326,288	158,719	285,017	–281,598	774,123
Adjusted equity								571,833
Total equity and liabilities								1,345,956
Investments	33,886	42,444	17,647	21,400	5,267	6,683		127,327
Average number of employees	78	65	564	234	118	82		1,141

Note 4 Segment data

Note 4 (cont)

External net sales per product area

	2008	2007
Waste treatment	495,805	565,296
Decommissioning	331,856	268,669
Engineering and services	174,742	163,428
Operating efficiency	195,988	167,170
Other	87,560	150,084
Total	1,285,951	1,314,647

Other operations mainly refer to the parent company and AB SVAFO. AB SVAFO is responsible for management of older state-owned research waste and decommissioning of facilities related to previous research operations. The costs of the operations are covered by the Nuclear Waste Fund.

External net sales based on the customer's country

	2008			2007
	SEK thousands	Per cent	SEK thousands	Per cent
Sweden	226,400	17.6	258,662	19.7
Europe excl Sweden	678,530	52.8	564,323	42.8
North America	369,034	28.7	463,560	35.3
Asia	11,975	0.9	25,853	2.0
All other countries	12	0.0	2,249	0.2
Total	1,285,951	100.0	1,314,647	100.0

At present the Group has no individual customers that account for more than 10 per cent of total sales.

Non-current assets per country

		2008		2007
	SEK thousands	Per cent	SEK thousands	Per cent
Sweden	179,016	17.5	148,265	17.6
Europe excl Sweden	248,047	24.2	197,380	23.4
North America	597,282	58.3	496,862	59.0
Asia	203	0.0	141	0.0
Total	1,024,548	100.0	842,648	100.0

Note 5 Other gains and losses – net

	2008	2007
Other financial instruments at fair value
through profit or loss
- fair value losses	–541	–203
- fair value gains	1,408	599
Forward exchange contracts
– net exchange differences	–3,238	–1,425
Total	–2,371	–1,029

Note 6 Other income

	2008	2007
Sale of subsidiaries	-	23,184
Sale of property, plant and equipment	770	733
Other	670	572
Total	1,440	24,489

Note 7 Costs by nature of expense

	2008	2007
Purchases of material and services	510,077	552,063
Personnel costs	635,089	610,289
Energy	27,336	21,705
Depreciation/amortization and impairment	65,839	60,502
Other costs	39,649	31,444
Total	1,277,990	1,276,003

Note 8 Remuneration of auditors

	2008	2007
PricewaterhouseCoopers
– audit assignments	3,475	2,071
– other assignments	2,061	6,786
Other auditors
– audit assignments	175	192
– other assignments	69	-

Audit assignments refers to examination of the annual accounts, the accounting records and the administration by the Board of Directors and the President, other duties incumbent on the company's auditors, as well as advisory services and other types of support as a result of observations made through such an examination or performance of such duties. All other tasks performed by the auditors are classified as other assignments.

4 5 6 7 8

Note 9 Employee benefits

Employee benefits

	2008	2007
Salaries	522,428	481,561
Social security costs	96,374	84,851
Pension costs – defined contribution based	22,871	25,066
Pension costs – defined benefit based	116	284
Total	641,789	591,762

Salaries and other remuneration by country and between Board members and Presidents as well as other employees

					2007
	Board and President	of which profit sharing and bonuses	Other employees	Board and President	of which profit sharing and bonuses	Other employees
Parent company	4,787	–110	8,977	5,033	110	6,926
Subsidiaries in Sweden	2,067	94	101,204	1,913	72	93,175
Subsidiaries abroad
– Norway	-	-	1,798	-	-	2,388
– Germany	1,930	308	245,417	1,644	148	236,378
– United Kingdom	1,788	84	50,976	1,399	108	27,505
– USA	3,463	184	96,954	3,993	510	99,451
– Japan	664	16	307	571	-	287
– Switzerland	-	-	1,208	-	-	898
– France	-	-	888	-	-	-
Total subsidiaries	9,912	686	498,752	9,520	838	460,082
Total Group	14,699	576	507,729	14,553	948	467,008

Average number of employees

		2008				2007
	Men	Women	Total	Men	Women	Total
Parent company	6	5	11	6	4	10
Subsidiaries in Sweden	180	67	247	170	63	233
Subsidiaries abroad
– Norway	2	-	2	3	-	3
– Germany	520	68	588	499	68	567
– United Kingdom	71	15	86	57	8	65
– USA	161	22	183	232	28	260
– Japan	1	1	2	1	1	2
– Switzerland	1	-	1	1	-	1
– France	10	-	10	-	-	-
Total subsidiaries	946	173	1,119	963	168	1,131
Total Group	952	178	1,130	969	172	1,141

Gender breakdown in the Group for members of the Board and other senior management

		2008		2007
	Number on balance sheet date	Of which men	Number on balance sheet date	Of which men
Board members	11	8	11	9
President and other senior management	9	8	8	7
Total Group	20	16	19	16

For information on benefits to senior management executives, see note 36.

Note 10 Financial income and expenses

	2008	2007
Interest income
– short-term bank balances	5,492	8,293
Fair value gains (realized and unrealized)	1,923	255
Other financial income	-	168
Financial income	7,415	8,716
Interest expenses
– bank loans	–17,131	–22,207
Fair value losses (realized and unrealized)	–990	–1,173
Other financial expenses	–1,327	–1,454
Financial expenses	–19,448	–24,834
Financial items – net	–12,033	–16,118

Note 12 Foreign exchange differences – net

Foreign exchange differences are recognized in the income statement as follows.

	2008	2007
Other gains and losses – net (note 5)	–2,371	–1,029
Financial items (note 10)	933	–918
Total	–1,438	–1,947

Note 13 Earnings per share

Before dilution

Earnings per share before dilution is calculated by dividing the profit for the year by the weighted average number of shares in issue (see note 24).

Earnings per share before dilution (SEK per share)	–0.05	5.65
Weighted average number of ordinary shares in issue	8,218,611	8,218,611
Net profit for the year	–395	46,475
	2008	2007

After dilution

Diluted earnings per share is calculated by adjusting the weighted average number of shares in issue to assume conversion of all dilutive potential shares. There were no unconverted share options or convertible debt instruments in issue on the balance sheet date.

	2008	2007
Net profit for the year	–395	46,475
Weighted average number of ordinary shares in issue	8,218,611	8,218,611
Earnings per share after dilution (SEK per share)	–0.05	5.65

Note 14 Dividend per share

Dividends paid in 2008 and 2007 amounted to SEK 16,437 thousand (SEK 2 per share) and SEK 16,437 thousand (SEK 2 per share). At the Annual General Meeting on April 22, 2009 a dividend for the 2008 financial year of SEK 1 per share, a total of SEK 8,219 thousand, will be proposed. The proposed dividend has not been recognized as a liability in these financial statements.

Note 11 Income tax

Total	446	1,234
Current tax	–9,718	–10,085
Deferred tax	10,164	11,319
	2008	2007

The Swedish tax rate is 28 (28) per cent. The income tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate for profits of the consolidated companies as follows.

	2008	2007
Profit before tax	696	45,987
Tax in accordance with the current tax rate	–196	–12,876
Non-taxable revenue	86	10,053
Expenses not deductible for tax purposes	–1,327	–983
Deferred tax asset referring to pensions	1,024	328
Adjustment for foreign tax rate	74	–2,733
Adjustment for previous years' tax assessment	1,556	3,089
Other effects	–771	4,356
Tax expense	446	1,234

Weighted average tax rate was –64 (–3) per cent. The main reasons for the difference in tax rate between Swedish income tax and the weighted average tax rate are mainly explained by previously unrecognized deferred tax assets in Sweden and adjustment of the previous year's tax expenses in the United Kingdom, Germany and Sweden.

Note 15 Property, plant and equipment

				Construction in progress and advance payments
	Land and buildings	Plant and machinery	Equipment and tools	for property, plant and equipment	Total
As at January 1, 2007
Cost of acquisition	160,183	357,600	252,984	38,283	809,050
Accumulated depreciation and impairment	–73,503	–182,672	–152,228	-	–408,403
Book value	86,680	174,928	100,756	38,283	400,647
January 1 - December 31, 2007
Opening book value	86,680	174,928	100,756	38,283	400,647
Foreign exchange differences	–2,453	–8,810	–4,581	–834	–16,678
Acquisition of subsidiaries	-	-	401	-	401
Subsidiaries sold	–1,549	–236	–461	-	–2,246
Investments	3,714	6,124	15,784	54,890	80,512
Redistribution during the year	29,818	13,826	4,726	–51,132	–2,762
Disposals and retirements	–491	–95	–669	–483	–1,738
Depreciation/write-down	–3,850	–25,968	–21,724	-	–51,542
Closing book value	111,869	159,769	94,232	40,724	406,594
As at December 31, 2007
Cost of acquisition	188,307	350,764	257,732	40,724	837,527
Accumulated depreciation and impairment	–76,438	–190,995	–163,500	-	–430,933
Book value	111,869	159,769	94,232	40,724	406,594
January 1 - December 31, 2008
Opening book value	111,869	159,769	94,232	40,724	406,594
Foreign exchange differences	4,350	22,996	12,375	3,250	42,971
Acquisition of subsidiaries	-	-	3	-	3
Investments	2,721	4,597	13,052	75,158	95,528
Redistribution during the year	15,862	37,914	5,998	–40,023	19,751
Disposals and retirements	–806	–827	–392	–2,710	–4,735
Depreciation/write-down	–5,428	–26,561	–24,161	-	–56,150
Impairment losses for the year	-	-	–222	-	–222
Closing book value	128,568	197,888	100,885	76,399	503,740
As at December 31, 2008
Cost of acquisition	212,084	445,749	308,075	76,399	1,042,307
Accumulated depreciation and impairment	–83,516	–247,861	–207,190	-	–538,567
Book value	128,568	197,888	100,885	76,399	503,740

Depreciation costs include SEK 51,400 thousand for cost of goods sold, SEK 281 thousand for selling and marketing costs, SEK 3,952 thousand for administrative expenses and SEK 517 thousand in research and development costs. Interest of SEK 2,441 thousand (-) is included in the cost of acquisition of buildings, plant and machinery. The assessed value of buildings is SEK 29,888 thousand and of land SEK 26,202 thousand.

Note 16 Intangible assets

	Goodwill	Software rights	Renting and similar rights	Total
As at January 1, 2007
Cost of acquisition	310,129	21,698	53,110	384,937
Accumulated amortization and
impairment	–5,386	–19,045	–4,932	–29,363
Book value	304,743	2,653	48,178	355,574
January 1 - December 31, 2007
Opening book value	304,743	2,653	48,178	355,574
Foreign exchange differences	–2,503	1	–2,430	–4,932
Acquisition of subsidiaries	28,959		11,827	40,786
Subsidiaries sold	–11,250			–11,250
Adjustment of cost of acquisition	–2,857			–2,857
Redistributions	–5,386	10	5,376	0
Amortization		–2,186	–6,417	–8,603
Closing book value	311,706	478	56,534	368,718
As at December 31, 2007
Cost of acquisition	317,092	21,732	67,067	405,891
Accumulated amortization and
impairment	–5,386	–21,254	–10,533	–37,173
Book value	311,706	478	56,534	368,718
January 1 - December 31, 2008
Opening book value	311,706	478	56,534	368,718
Foreign exchange differences	47,241	–1	7,807	55,047
Acquisition of subsidiaries	3,455		917	4,372
Adjustment of cost of acquisition	605			605
Investments		1,217	479	1,696
Redistributions		87	–87	0
Amortization/write-down		–538	–10,509	–11,047
Impairment losses for the year		–33		–33
Closing book value	363,007	1,210	55,141	419,358
As at December 31, 2008
Cost of acquisition	368,393	22,970	78,639	470,002
Accumulated amortization and
impairment	–5,386	–21,760	–23,498	–50,644
Book value	363,007	1,210	55,141	419,358

Note 17 Investments in associated companies

2008 2007 Opening balance - - Share in earnings 8,465 - Dividend received from associated companies –744 - Transferred from other financial assets 13,475 - Share received through acquisition of subsidiary 50 - Foreign exchange differences 818 - Closing balance 22,064 -

The Group's share in earnings of the most important associated companies, which are all unlisted, and its share of assets (including goodwill and liabilities) is as follows.

2007		Assets	Liabilities	Income	Profit/loss	Participating interest %
THOR Treatment Technologies, LLC	USA	27,715	13,521	76,262	2,935	50
UK Nuclear Waste Management Ltd	UK	-	-	-	-	15
Total		27,715	13,521	76,262	2,935
2008		Assets	Liabilities	Income	Profit/loss	Participating interest %
THOR Treatment Technologies, LLC	USA	31,318	11,296	76,543	3,052	50
UK Nuclear Waste Management Ltd	UK	5,724	5,584	7,965	0	15
KraftAkademin AB	Sweden	68	12	145	3	20
Total		37,110	16,892	84,653	3,055

THOR Treatment Technologies, LLC, is a joint venture where Studsvik is a co-owner under a cooperation agreement on joint control. TTT conducts waste treatment operations on the US federal waste market. The Group has no contingent liabilities referring to the holding in TTT.

UK Nuclear Waste Management Ltd is a joint venture where Studsvik is one of four partners. Studsvik has a significant influence through board representation and knowledge transfer. NWM has been appointed to be responsible, together with the Nuclear Decommissioning Authority (NDA), for management and operation of a final repository and to implement a well-functioning strategy for management of low level radioactive waste in the UK.

KraftAkademin AB produces and conducts training for the nuclear power industry. The business concept is based on giving customers the opportunity of supplementing their internal training activities with courses and seminars when implementing individual competence development plans. Studsvik contributes competence in thermo hydraulics, reactor dynamics and health physics to KraftAkademin's operations.

Note 16 (cont)

Other intangible assets mainly consist of customer relations/contracts. Amortization of SEK 11,047 thousand (8,603) is included in cost of services sold in the income statement.

Impairment tests for goodwill

Goodwill is allocated to the Group's cash generating units (CGUs) identified by segment. A segment level summary of the goodwill allocation is presented below.

	2008	2007
Sweden	-	-
United Kingdom	24,226	27,143
Germany	130,800	113,504
USA	205,150	171,059
Global Services	2,831	-
Other	-	-
Total	363,007	311,706

Goodwill is tested annually to identify any impairment loss. The calculation is carried out for each respective CGU and is based on estimated future cash flows according to historical trends and business plans for the next three years. Cash flows beyond the three year period are extrapolated with an appraised annual rate of growth. For each CGU a recoverable amount is determined as a present value of estimated future payment flows. The recoverable amount for the Group's CGUs is determined on the basis of value in use calculations. The discount rate used is a weighted cost of capital calculated for the Group, consisting of the cost of borrowed capital and the cost of equity.

The cost of borrowed capital is calculated on the basis of an estimated average interest rate for the Group's loan portfolio. The cost of equity is calculated as the return on risk-free investments plus a risk premium that is estimated to reflect investors' requirements of listed companies in Studsvik's industry sector. The weighted cost of capital used in calculating the recoverable amount is 9 (8) per cent before tax. Based on the assumptions and estimates made, there is no impairment loss on goodwill.

Note 18 Financial instruments by category

Accounting policies for financial instruments have been applied to the items below.

	Loans and receivables	Assets at fair value through profit or loss	Derivatives used for hedging	Total
As at December 31, 2008
Assets in the balance sheet
Derivative financial instruments		146	425	571
Trade and other receivables	309,156	15,344		324,500
Cash and cash equivalents	147,713			147,713
Total	456,869	15,490	425	472,784
	Liabilities at fair value through profit or loss	Derivatives for hedging	Other financial liabilities	Total
Liabilities in the balance sheet
Borrowings			388,262	388,262
Derivative financial instruments	2,754	887		3,641
Total	2,754	887	388,262	391,903
	Loans and receivables	Assets at fair value through profit or loss	Derivatives used for hedging	Total
As at December 31, 2007
Assets in the balance sheet
Derivative financial instruments		1,289		1,289
Trade and other receivables	313,667	14,748		328,415
Cash and cash equivalents	176,873			176,873
Total	490,540	16,037	-	506,577
	Liabilities at fair value through profit or loss	Derivatives for hedging	Other financial liabilities	Total
Liabilities in the balance sheet
Borrowings			318,655	318,655
Derivative financial instruments	210			210
Total	210	-	318,655	318,865

Note 19 Credit quality of the financial assets

The credit quality of the financial assets can be assessed by referring to external credit ratings (if available) or to the counterparty's payment history.

	2008	2007
Trade receivables
Counterparties without external credit rating
– new customers (less than 6 months)	11,389	2,160
– existing customers with no defaults in the past	147,456	130,897
– existing customers with some delayed payments in the past	42,903	72,914
Total	201,748	205,971
Bank balances and short-term borrowing
AA	147,713	176,873
Total	147,713	176,873
Derivative financial instruments
AA	571	1,289
Total	571	1,289

None of the fully performing financial assets has been renegotiated in the last year.

Note 20 Derivative financial instruments

	2008			2007
	Assets	Liabilities	Assets	Liabilities
Forward exchange contracts	571	3,641	1,289	210

Revaluation of forward exchange contracts designated as hedges is through equity. Other forward contracts are revalued through profit or loss.

Outstanding forward exchange contracts, December 31, 2008

					INFLOW CURRENCIES
		EUR	GBP	JPY	USD
Maturity year		000	000	000	000
2009	Amount	854	259	23,970	3,184
	Rate 1)	10.087	11.835	0.068	7.408
2010	Amount	98		39,970	1,178
	Rate 1)	10.132		0.069	7.369
2011	Amount				273
	Rate 1)				7.719
2012	Amount				297
	Rate 1)				7.680
	Remeasured at fair value, SEK	9,607	3,065	4,388	36,656

1) Average contractual rate

The nominal amount for outstanding forward exchange contracts is SEK 56,737 thousand.

Note 21 Trade and other receivables

	2008	2007
Trade receivables	211,032	213,554
Less – provision for impairment of receivables	–9,284	–7,583
Trade receivables – net	201,748	205,971
Shares in other companies	5,558	5,645
Other securities	9,786	9,103
Work in progress	20,553	16,741
Tax assets	6,972	24,022
Other receivables	25,316	35,465
Prepaid expenses and accrued income
– accrued income	31,853	16,857
– accrued interest income	9	225
– prepaid rent	1,768	746
– prepaid lease charges	61	177
– prepaid insurance premiums	7,368	5,299
– other prepaid expenses	13,508	8,164
Total	324,500	328,415
Non-current portion	15,344	25,372
Current portion	309,156	303,043
Total	324,500	328,415

Carrying amounts of the Group's trade and other receivables by currency are as follows.

Note 21 (cont)

	2008	2007
SEK	89,629	87,920
EUR	76,791	66,175
GBP	91,223	37,362
USD	49,931	107,909
Other currencies	1,582	3,677
Total	309,156	303,043

Changes in the reserve for doubtful receivables are as follows.

	2008	2007
As at January 1, 2008	–7,583	–863
Translation difference	–1,441	-
Provision for doubtful receivables	–333	–7,200
Receivables written off as unrecoverable	73	–593
Unused amounts reversed	-	802
Sale of subsidiaries	-	271
As at December 31, 2008	–9,284	–7,583

Transfers to and reversals from reserves for doubtful receivables are included in the item other costs in the income statement. Amounts stated in the depreciation account are normally written off when the Group is not expected to recover further cash funds. No impairment loss has been identified for any assets in other categories of trade and other receivables. There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of customers, internationally dispersed.

Note 22 Inventories

	2008	2007
Raw material	4,891	5,096
Work in progress	22,159	15,820
Finished goods	1,767	1,543
Total	28,817	22,459

The expensed expenditure for inventories is included under Cost of services sold and amounts to SEK 30,510 thousand (19,339).

Note 23 Cash and cash equivalents

	2008	2007
Cash and bank balances	147,713	176,873
Total	147,713	176,873

Note 24 Share capital and other contributed capital

			Other contributed
	Number of shares	Share capital	capital
As at January 1, 2007	8,218,611	8,219	225,959
As at December 31, 2007	8,218,611	8,219	225,959
As at January 1, 2008	8,218,611	8,219	225,959
Transfers within equity	-	-	–687
As at December 31, 2008	8,218,611	8,219	225,272

All shares are ordinary shares with a quotient value of 1.0.

Trade and other receivables are recognized at fair value. No impairment loss is considered to exist for trade receivables less than 3 months overdue. As at December 31, 2008 trade receivables of SEK 84,573 thousand (68,349) were overdue without any impairment loss being identified. These refer to a number of independent customers who have had no payment difficulties in the past. The age analysis of these trade receivables is given below.

	2008	2007
Less than 3 months	71,207	40,668
3 to 6 months	3,662	24,546
More than 6 months	9,704	3,135
Total	84,573	68,349

25 26 27 28

Note 25 Retained earnings

As at December 31, 2008	327,985
Transfers within equity	687
Dividend paid for 2007	–16,437
Net profit for the year	–395
As at January 1, 2008	344,130
As at December 31, 2007	344,130
Transfer of earnings to minority	–2,442
Dividend paid for 2006	–16,437
Net profit for the year	46,475
As at January 1, 2007	316,534

Note 26 Other reserves

	Currency translation reserve	Hedge reserve	Total reserves
As at January 1, 2007	7,653	-	7,653
Foreign exchange differences	–17,585	-	–17,585
As at December 31, 2007	–9,932	-	–9,932
As at January 1, 2008	–9,932		–9,932
Foreign exchange differences	59,262		59,262
Cash flow hedges
– fair value differences		–462	–462
– tax on fair value differences		121	121
As at December 31, 2008	49,330	–341	48,989

Note 27 Trade and other payables

	2008	2007
Trade payables	97,387	63,333
Liabilities for work in progress	29,425	35,292
Advance payments from customers	32,605	37,716
Social security and other taxes	54,508	29,490
Other liabilities	16,432	9,218
Accrued expenses and deferred income
– deferred income	19,947	17,425
– accrued interest expense	1,836	312
– accrued salaries	31,280	50,291
– accrued pension costs	9,138	10,574
– accrued tax expense	-	769
– other items	74,092	55,074
Total	366,650	309,494
Non-current portion	9,138	7,942
Current portion	357,512	301,552
Total	366,650	309,494

Note 28 Borrowings

	2008	2007
Non-current portion	350,520	196,368
Current portion	37,742	122,287
Total	388,262	318,655

Shares in Studsvik GmbH and Studsvik Verwaltungs GmbH have been put up as collateral for the Group's bank borrowings. The Group's borrowings are recognized at fair value.

The exposure of the Group's borrowings to interest rate changes and the contractual repricing dates at the balance sheet date are as follows

	2008	2007
6–12 months	388,262	137,113
1–5 years	-	181,542
Total	388,262	318,655

The bank loans mature on to 2017. Total borrowing includes bank loans and other borrowing against collateral of SEK 99,099 thousand (94,169). The collateral for bank loans is the Group's shares in subsidiaries.

Maturities of borrowings

rencies

	2008	2007
Less than 1 year	71,225	122,287
Between 1 and 2 years	66,794	47,130
Between 2 and 5 years	236,803	75,866
More than 5 years	13,440	73,372
Total	388,262	318,655

The carrying amounts of the Group's borrowings are denominated in the following cur-

	2008	2007
EUR	99,480	94,169
USD	219,342	209,042
GBP	69,440	15,444
Total	388,262	318,655

The Group has the following unutilized credit facilities

	2008	2007
Variable interest rate
– matures within one year	31,882	27,034
– matures after more than one year	4,950	5,580
Total	36,832	32,614

The lines of credit that mature within one year are one-year credit facilities that are reviewed periodically. This review is done anually during December.

Average effective interest rate on balance sheet date, bank borrowings

	2008	2007
EUR	4.45%	4.30%
USD	4.54%	5.74%
GBP	7.24%	6.89%

Note 29 Deferred tax

Deferred tax assets and tax liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax refers to the same tax authority. The amounts offset are as follows:

Offset amounts	2008	2007
Deferred tax assets
Deferred tax assets to be utilized after more than 12 months	49,434	36,160
Deferred tax assets to be utilized within 12 months	14,553	5,448
Total	63,987	41,608
Deferred tax liabilities
Deferred tax liabilities to be paid after more than 12 months	31,780	38,391
Deferred tax liabilities to be paid within 12 months	2,549	2,498
Total	34,329	40,889

Changes in deferred tax assets and liabilities during the year, without taking into account offsets made in the same fiscal jurisdiction are shown below:

Deferred tax assets	Tax losses	Other	Total
As at January 1, 2007	41,317	3,085	44,402
Recognized in the income statement	2,397	–2,792	–395
Change through sale of subsidiaries		–145	–145
Translation differences	–2,254		–2,254
As at December 31, 2007	41,460	148	41,608
Recognized in the income statement	12,271	1,693	13,964
Reclassification		1,550	1,550
Recognized in equity		121	121
Translation differences	6,744		6,744
As at December 31, 2008	60,475	3,512	63,987

Accelerated
tax depreciation	Other	Total
5,503	38,884	44,387
–72	–6,961	–7,033
	3,741	3,741
	–206	–206
5,431	35,458	40,889
1,124	1,406	2,530
	–14,488	–14,488
	458	458
	4,940	4,940
6,555	27,774	34,329

Deferred tax assets are recognized for tax loss carry forwards to the extent that the realization of the related tax benefit through the future taxable profits is probable. Most of the Group's tax loss carry forwards are related to the US operations. These total USD 42.8 million, to be utilized within a 20 year period. The Group's recognized deferred tax assets include tax loss carry forwards in the USA of SEK 56.1 million (36.2).

Note 30 Pension obligations

Defined benefit pension plans

There are a few defined benefit pension plans within the Group, which are primarily based on final salary. The plans that have been considered to be material are in Germany. A reclassification has been made for a defined benefit pension plan in Sweden. From 2005 the pension plan is a defined contribution plan. Other pension obligations have not been considered as having any material effect, and have therefore not been restated in accordance with IAS 19.

Pension insurance with Alecta

Commitments for old-age pension and family pension for employees in Sweden are safeguarded through insurance with Alecta. According to a statement by the Swedish Financial Accounting Standards Council's Emerging Issues Task Force, URA 42, this is a defined benefit plan covering several employers. For the 2008 financial year the Group has not had access to such information as will make it possible to report this plan as a defined benefit plan. Consequently, the pension plan, under ITP, which is safeguarded through insurance with Alecta, is reported as a defined contribution plan. The year's contributions for pension insurance taken out with Alecta amount to SEK 3,846 thousand (6,970). Alecta's surplus can be distributed to the policy holders and/or the insured. At the end of 2008 Alecta's surplus in the form of a collective solvency level was 126 (164) per cent. The collective solvency level comprises the market value of Alecta's assets as a percentage of its insurance commitments calculated in accordance with Alecta's actuarial assumptions, which do not comply with IAS 19.

	2008	2007
Obligations in the balance sheet for
Pension benefits	7,790	5,961
Income statement charge for (note 9)
Pension costs	22,987	25,350

Amounts recognized in the balance sheet

	2008	2007
Present value of unfunded obligations	7,790	5,961
Total	7,790	5,961

Amounts recognized in the income statement

	2008	2007
Defined benefit plans
Current service cost	328	142
Interest expense	58	142
Total	386	284

Of the total cost, SEK 76 thousand (28) was included in Cost of services sold and SEK 310 thousand (256) in Administrative expenses. The actual return on the plan assets was SEK - thousand (-).

The movement in the liability recognized in the consolidated balance sheet

	2008	2007
At the beginning of the year	5,961	5,939
Translation differences	1,476	–109
Total expense recognized in the income statement	386	284
Contributions paid	–33	–153
At the end of the year	7,790	5,961

Total pension costs recognized in the consolidated income statement

	2008	2007
Total costs for defined benefit plans	386	284
Total costs for defined contribution plans Costs of special employer's contribution and tax on	19,214	21,467
returns from pension funds	3,387	3,599
Total	22,987	25,350

Actuarial assumptions

	2008	2007
Discount rate	5.6%	5.3%
Expected return on plan assets	0.0%	0.0%
Future salary increases	3.0%	3.0%
Future pension increases	2.2%	1.9%

Note 31 Other provisions

	Future waste ma nagement expenses	Restruc turing	Other provisions	Total
As at January 1, 2008	53,137	11,217	23,058	87,412
Recognized as an expense in the consolidated income statement
- additional provisions	18,691		1,279	19,970
Foreign exchange differences	–1,419			–1,419
Effects of changed conditions for
discounting	1,388		3,927	5,315
Amount utilized during the period	–18,336	–3,637		–21,973
Translation difference			4,344	4,344
As at December 31, 2008	53,461	7,580	32,608	93,649
Non-current portion	52,721		31,755	84,476
Current portion	740	7,580	853	9,173
Total	53,461	7,580	32,608	93,649

Future waste management expenses

The Group's operations generate nuclear waste and radioactive waste which must be sent for final disposal within the framework of the systems and rules in force in the countries in which Studsvik carries on operations in its own production facilities. Provisions are made for operational waste, spent reactor fuel and also to some extent for decommissioning of facilities and the resulting decommissioning waste. The main part of the costs of decommissioning and decommissioning waste from the Group's Swedish nuclear facilities is financed, under the provisions of the Act 1988:1597. The Swedish nuclear power producers are liable to pay this charge. Fees paid in are administered by the Nuclear Waste Fund.

Funds for decommissioning and waste management may be withdrawn from the Fund by Studsvik, which holds the nuclear permit for the facilities in question. Studsvik is not liable to pay under the current Act. Studsvik's responsibility for decommissioning and waste management for its own nuclear facilities is limited to buildings, systems and components coming into existence after June 30, 1991. Studsvik estimates these commitments on a current basis and provision is made for them. The provision stated in the accounts includes waste management and decommissioning of facilities of SEK 53.5 million. Of the total provisions it is expected that SEK 0.7 million will be utilized in 2009, SEK 25.3 million starting no earlier than in 10 years and the rest is expected to be utilized only when operations are discontinued and the facility dismantled.Additional provisions in 2008 mainly refer to future decommissioning costs for newly built waste treatment facilities in Sweden.

Restructuring

In December 2004 the Board of Directors of Studsvik AB decided that the Group's reactor operations would cease in 2005. Operations ceased in June 2005 after which restructuring of the business was started. This is expected to be fully completed in 2009.

Other provisions

Other provisions mainly refer to future costs for decommissioning the American waste management facilities.

Note 32 Cash flow from operating activities

Non-cash items

	2008	2007
Depreciation/amortization and impairment	67,452	60,145
Results from sale of property, plant and equipment	–2,124	–733
Results from sale of subsidiaries	-	–23,184
Share in earnings from associated companies	–8,465	-
Change in provisions	4,079	1,276
Total	60,942	37,504

Note 33 Contingent liabilities

The Group has contingent liabilities in respect of bank guarantees and other guarantees as well as other items arising in the normal course of business. No material liabilities are expected to arise through these contingent liabilities. In the normal course of business the Group has issued guarantees amounting to SEK 63,290 thousand (93,257) to third parties. No further payments are expected as at the date of these financial reports.

Note 34 Commitments

INVESTMENT COMMITMENTS

Capital expenditure contracted for at the balance sheet date but not yet recognized in the financial reports is as follows.

	2008	2007
Property, plant and equipment	17,424	9,309
Total	17,424	9,309

OPERATIONAL LEASE COMMITMENTS

Lease expenses for operational leases for the year amounted to SEK 23,591 thousand (7,646).

Future aggregate minimum lease fees

	2008	2007
Within 1 year	13,733	5,240
Between 1 and 5 years	19,211	13,416
More than 5 years	3,819	-
Total	36,763	18,656

FINANCE LEASE COMMITMENTS

Assets activated as financial lease

	Equipment and tools
Opening book value January 1, 2007	12,221
Depreciation for the year	–3,978
Closing book value December 31, 2007	8,243
Opening book value January 1, 2008	8,243
Depreciation for the year	–2,904
Translation differences	1,114
Closing book value December 31, 2008	6,453

Future aggregate minimum lease payments

	2008	2007
Within 1 year	303	3,123
Between 1 and 5 years	8,217	5,397
Total	8,520	8,520

Lease expenses for financial leasing for the year amounted to SEK 64 thousand (721). The Group's financial leasing mainly consist of lease contracts for transport vehicles in the USA.

Note 35 Business combinations

On October 13, 2008 Studsvik Nuclear AB acquired 100 per cent of the shares in ALARA Holding i Skultuna AB and its wholly owned subsidiary ALARA Engineering AB, operating in Sweden. ALARA conducts consulting operations in the nuclear power field with customers in Sweden and Finland.

On December 18, 2008 Studsvik, Inc. acquired the remaining 10 per cent of the shares in the Studsvik Processing Facility Erwin, LLC in Erwin, Tennessee, USA. The Studsvik Processing Facility Erwin (SPFE) treats wet low and intermediate level waste from nuclear power plants using Studsvik's patented pyrolysis technology. The company is reported as a subsidiary. The purchase price for the remaining 10 per cent of the shares was USD 750 thousand.

The acquired operations in ALARA contributed net sales of SEK 2,348 thousand and an operating profit of SEK 71 thousand for the period from October 13 up to and including December 31, 2008. If the acquisition had taken place on January 1, the Group's net sales would have been SEK 1,289,580 thousand and the operating profit for the year SEK 13,236 thousand. These amounts have been calculated in accordance with the Group's accounting policies, adjusting the subsidiary's earnings to include additional depreciation/amortization that would have taken place if fair value adjustments to property, plant and equipment and intangible assets had been made as at January 1, 2008.

Information on acquired net assets and goodwill

	ALARA	SPFE
Purchase price paid to seller	4,828	5,775
Direct costs in connection with acquisition	109	461
Total purchase price	4,937	6,236
Fair value of net assets acquired	–2,106	–5,612
Goodwill	2,831	624

Goodwill is attributable to the market position and synergy effects expected to arise on integration with Studsvik's other similar operations.

Assets and liabilities as a consequence of the acquisitions

		ALARA		SPFE
		Acquired carrying		Acquired carrying
	Fair value		amount Fair value	amount
Intangible assets	917	-
Property, plant and equipment	3	3
Non-current financial assets	50	50
Trade and other receivables	1,385	1,385
Cash and cash equivalents	1,279	1,279
Total	3,634	2,717	-	-
Minority share			–5,612	–5,612
Trade payables	11	11
Other current liabilities	1,059	1,059
Deferred taxes	458	201
Total	1,528	1,271	–5,612	–5,612
Net assets acquired	2,106	1,446	5,612	5,612
Cash flow from acquisition of subsidiaries
Purchase price paid		11,173
Financial liability to sellers		–3,849
Cash and cash equivalents in acquired
subsidiaries		–1,279

Change in the Group's cash and cash equivalents on acquisition 6,045

Note 36 Information on the Board of Directors and senior management

Salaries and other benefits, 2008	Basic salary/ Board fee	Committee fee	Variable remuneration	Other benefits	Pension cost	Total
Chairman of the Board
– Anders Ullberg	625	25				650
Members of the board (6)
– Jan Barchan	212					212
– Ingemar Eliasson	212	50				262
– Lars Engström	112					112
– Anna Karinen	350					350
– Alf Lindfors	212					212
– Per Ludvigsson	212	25				237
– Leif Nilsson *)	100					100
Employee representatives (4)	22					22
President	2,692			148	799	3,639
Other senior management (8)	11,025		661	550	2,575	14,811
Total	15,774	100	661	698	3,374	20,607

*) Member of the Board until April 22, 2008.

Salaries and other benefits, 2007	Basic salary/ Board fee	Committee fee	Variable remuneration	Other benefits	Pension cost	Total
Chairman of the Board
– Anders Ullberg	300					300
– Per Wahlström *)	275					275
Members of the board (6)
– Jan Barchan	200					200
– Ingemar Eliasson	200					200
– Håkan Johansson **)	150					150
– Anna Karinen	275					275
– Alf Lindfors	200					200
– Per Ludvigsson	100					100
– Leif Nilsson	200					200
– Henry Sténson **)	100					100
Employee representatives (4)	112					112
President	2,679		127	121	858	3,785
Other senior management (7)	9,273		330	538	2,088	12,229
of whom outgoing (1)	470					470
Total	14,064	-	457	659	2,946	18,126

*) Chairman of the Board until April 19, 2007.**) Member of the Board until April 19, 2007.

Remuneration to the Board of Directors
and senior management	2008	2007
Parent company
Salaries and other remuneration	8,802	8,772
– of which profit sharing	93	204
Pensions	2,504	2,429
Number of persons	16	18
Subsidiaries
Salaries and other remuneration	7,733	5,749
– of which profit sharing	568	230
Pensions	870	517
Number of persons	5	5
Group
Salaries and other remuneration	16,535	14,521
– of which profit sharing	661	434
Pensions	3,374	2,946
Number of persons	21	23

In 2008 the members of the Board of Directors did not receive any remuneration in addition to the Board and Committee fees.

The President is entitled to a bonus. The forms of the variable part of the salary are established annually. For 2009 the variable part of the salary is based on the Group's net sales and operating margin and may not exceed 50 per cent of annual salary. Bonus for other senior management for 2009 is based on outcomes related to individually specified targets at both Group and unit level. For 100 per cent target fulfillment in all parameters a bonus is payable of 50 percent of the basic salary.

Note 36 (cont)

Financial instruments

Under his employment contract the President is entitled to acquire options for a maximum of 100,000 shares in Studsvik AB from Briban Invest AB, Heureka Invest AB and Blue Whale Ltd. The option premium is determined in accordance with Black & Scholes formula.

On December 31, 2008 the President's holding of options was 20,000 corresponding to 20,000 shares. The President can exercise 20,000 call options no later than December 31, 2009. Calculation of the option premium is based on the following data:

Exercise 2009
172.50
250.00
3.00
2.75%
25%

Based on the above assumptions the option premium was set at SEK 15.00 per share.

Pension

The pensionable age of the President is 65 years. The President receives a pension under the ITP plan. In addition to this, the company pays an annual pension premium equivalent to 17 per cent of the fixed salary to an endowment insurance owned by the company. The premium is paid up to the age of 65 on condition that the employment has not ceased before this. Retirement pension is paid from the month after the President reaches the age of 65 and for a period of 20 years. The size of the pension depends on the capital formation, including the return received at the time. As a rule, other group management executives receive a pension from the age of 65 in accordance with collective agreements on the Swedish labor market. The pension obligations are vested.

Termination and severance pay

The President's period of notice is 6 months for his own termination of employment and 12 months for termination by the company. In the case of termination of employment by the company, salary is payable during the period of notice as well as an additional severance payment equivalent to 12 months' salary. If Studsvik AB should be acquired through a stock exchange buyout or through the company being acquired by a new principal owner (more than 50 per cent of the shares) the President is entitled to termination pay as though the termination was on the part of the company. For other members of the group executive management, the main rule is that the period of notice is 6 months when employment is terminated by the employee and 12 months when terminated by the company. In the case of termination of employment by the company, salary is payable during the period of notice as well as an additional severance payment equivalent to 12 months' salary.

36 37

Note 37 Transactions with related parties

Studsvik, Inc. owns 50 per cent of THOR Treatment Technologies, LLC (TTT). In accordance with a Joint Venture Operating Agreement the owners are to provide management, technical and marketing services to TTT. Studsvik owns 15 per cent of UK Nuclear Waste Management Ltd (NWM), where Studsvik, in a consortium together with other partners, will manage and operate a repository for low level radioactive waste in the UK.

Transactions with associated companies

	2008	2007
Sale of services
– THOR Treatment Technologies, LLC	7,315	1,069
– UK Nuclear Waste Management Ltd	4,155	-
Receivables from related parties
– THOR Treatment Technologies, LLC	2,664	142
– UK Nuclear Waste Management Ltd	1,176	-

Under an agreement with the owners the services are supplied on a commercial basis.

NOTES TO THE PARENT COMPANY ACCOUNTS 38 39 40 41 42 43 44 45 46

Note 38 Net sales

Net sales by geographical market

	2008	2007
Sweden	3,964	1,934
Europe, not including Sweden	3,775	1,800
North America	3,059	1,900
Total	10,798	5,634

Note 42 Operational lease contracts

	2008	2007
Maturity within one year	1,118	1,268
Maturity after one year but within five years	928	1,617
Total	2,046	2,885

The parent company's leases mainly refer to vehicles and premises with traditional terms and conditions.

Note 39 Employee benefits

		2008		2007
	Salaries and other remuneration (of which profit sharing)	Social security expenses (of which pension costs)	Salaries and other remuneration (of which profit sharing)	Social security expenses (of which pension costs)
Board of Directors	4,787	2,358	5,033	2,692
and President	(–110)	(758)	(110)	(1,045)
Other employees	8,977	6,016	6,926	4,756
	(650)	(3,043)	(94)	(2,483)
Total	13,764	8,374	11,959	7,448
	(540)	(3,801)	(204)	(3,528)

See also note 36.

Note 40 Costs by nature of expense

	2008	2007
Purchases of material and services	18,535	24,188
Personnel costs	21,406	20,225
Depreciation/amortization	336	322
Total	40,277	44,735

Services include fees and remuneration to accounting firms as follows

	2008	2007
PricewaterhouseCoopers
Audit assignments	801	391
Consulting assignments	202	6,173

Audit assignments refers to the examination of the annual accounts, the accounting records and the administration by the Board of Directors and the President. It also includes other duties that are incumbent on the company's auditors as well as advisory services and other types of support as a result of observations made through such an examination. All other tasks performed by the auditors are classified as Other assignments.

Note 41 Depreciation

	2008			2007
	According to plan	Book	According to plan	Book
Equipment and tools	336	336	322	322
Total	336	336	322	322

Note 43 Interest income and similar profit/loss items

	2008	2007
Interest	12,707	16,121
Capital gains on sale of shares	-	35,022
Exchange rate differences	1,211	183
Total	13,918	51,326
Of which, in respect of Studsvik Group companies
Interest	10,187	11,154
Total	10,187	11,154

Note 44 Interest expense and similar profit/loss items

	2008	2007
Interest	10,008	14,526
Exchange rate differences	990	1,105
Other financial expenses	67	-
Total	11,065	15,631
Of which, in respect of Studsvik Group companies
Interest	1,499	3,553
Total	1,499	3,553

Note 45 Appropriations

	2008	2007
Dissolution of tax allocation reserve	4,363	329
Total	4,363	329

Note 46 Income tax

	2008	2007
Current tax	5,819	10,423
Current tax attributable to previous years	112	-
Deferred tax	1,024	37
Total	6,955	10,460

Note 47 Deferred tax

	2008	2007
Deferred tax expense referring to temporary
differences	16	54
Deferred tax in the income statement	1,120	–17
Total	1,136	37

Difference between the company's tax expense and tax expense based on current tax rate

2008	2007
–21,493	–2,282
6,018	639
–275	–242
76	10,311
1,024	-
112	-
-	–248
6,955	10,460

Note 50 Prepaid expenses and accrued income

	2008	2007
Prepaid rent	215	203
Prepaid insurance premiums	128	279
Other	1,172	563
Total	1,515	1,045

48 49 50 51

47

Note 51 Shares and participations in subsidiaries

	Share of equity, %	Share of voting rights, %	Number of partici pations/ shares		Nominal value	Book value
Parent company's
holdings
Studsvik Holding, Inc.	100	100	2,000	kUSD		25,372 568,747
Studsvik Nuclear AB	100	100	5,000	kSEK		50,000 133,400
Studsvik Scandpower,
Inc.	79	79	1,503	kUSD	149	984
Studsvik Scandpower AB	91	91	910	kSEK	91	603
Studsvik Japan Ltd	100	100	10,000	kJPY	10,000	373
Studsvik Germany GmbH	100	100		kEUR	26	241
Studsvik Verwaltungs
GmbH	100	100		kEUR	26	261
AB SVAFO	100	100	10,000	kSEK	1,000	1,000
Studsvik UK Ltd	100		100 1,022,500	kGBP	1,023	55,404
Studsvik Instrument
Systems AB	100	100	17,000	kSEK	17,000	18,106
Total						779,119

Information on subsidiaries' corporate identity numbers and registered offices

	Corporate identity number	Registered office
Studsvik Nuclear AB	556051-6212	Nyköping
Studsvik Scandpower, Inc.	36-3088916	Boston, USA
ALARA Holding i Skultuna AB	556573-6591	Nyköping
ALARA Engineering AB	556514-8177	Nyköping
Studsvik Scandpower AB	556137-8190	Nyköping
Studsvik Scandpower AS	008797.45012	Kjeller, Norway
Studsvik Scandpower GmbH		HRB,4839Norderstedt, Germany
Studsvik Scandpower		Fischbach-Göslikon,
Suisse GmbH	CH-400.4.021.112.4	Switzerland
Studsvik Japan Ltd	-	Tokyo, Japan
Studsvik Holding, Inc.	35-3481732	Erwin, USA
Studsvik, Inc.	36-2999957	Erwin, USA
Studsvik Processing Facility Erwin, LLC	36-4063922	Erwin, USA
RACE Holding, LLC	20-2472653	Erwin, USA
Studsvik Processing Facility
Memphis, LLC	62-1801098	Erwin, USA
Studsvik Logistics, LLC	77-0631902	Erwin, USA
Studsvik Germany GmbH		HRB 504467 Mannheim, Germany
Studsvik Verwaltungs GmbH		HRB 504468 Mannheim, Germany
Studsvik GmbH & Co. KG		HRA 503411 Mannheim, Germany
Studsvik Holding GmbH & Co. KG		HRA 503806 Mannheim, Germany
Studsvik Industrieanlagen
Verwaltungs GmbH		HRB 505432 Mannheim, Germany
Studsvik Industrieanlagen
GmbH & Co. KG		HRA 503808 Mannheim, Germany
Studsvik SAS	504 440 330	Paris, France
AB SVAFO	556446-3411	Nyköping
Studsvik UK Ltd	0477 2229	Newcastle, England
Studsvik Alpha Engineering Ltd	0365 8198	Newcastle, England
Studsvik Instrument Systems AB	556197-1481	Nyköping

Note 48 Property, plant and equipment

	2008	2007
Land, buildings and equipment
Opening cost of acquisition	2,416	2,647
Investments for the year	182	533
Sales and disposals	–827	–764
Closing accumulated cost of acquisition	1,771	2,416
Opening depreciation	–752	–526
Depreciation for the year	–336	–322
Sales and disposals	21	96
Closing accumulated depreciation	–1,067	–752
Closing residual value according to plan	704	1,664

Note 49 Financial assets

	2008	2007
Shares in subsidiaries
Opening cost of acquisition	822,346	805,305
Shareholder's contribution	-	32,875
Sales	-	–12,977
Adjustment of cost of acquisition	–278	–2,857
Closing cost of acquisition	822,068	822,346
Opening impairment losses	–42,949	–42,949
Closing impairment losses	–42,949	–42,949
Closing value	779,119	779,397

Receivables from other Studsvik Group companies

Loans to Studsvik Holding, Inc. Group
– opening cost of acquisition	154,094	184,472
– items added/deducted during the year	15,220	–30,378
Closing value	169,314	154,094
Loan to Studsvik UK Ltd
– opening cost of acquisition	-	16,409
– items added/deducted during the year	52,048	–16,409
Closing value	52,048	0
Other non-current receivables
Opening cost of acquisition	10,918	11,870
Items added/deducted during the year	1,230	–952
Closing accumulated cost of acquisition/
Closing residual value according to plan	12,148	10,918

53 54 55 56 57 58 59 60 61 62 52

Note 52 Untaxed reserves

	2008	2007
Tax allocation reserve	2,510	6,874
Total	2,510	6,874

Note 58 Investment in property, plant and equipment

	2008	2007
Equipment and tools	182	533
Total	182	533

Note 53 Liabilities to credit institutions

	2008	2007
Bank borrowings
Non-current portion	201,915	137,113
Current portion	19,250	17,125
Total	221,165	154,238

Note 54 Accrued expenses and prepaid income

	2008	2007
Holiday pay liability	2,115	1,389
Accrued social security expenses	4,418	3,006
Accrued interest expense	1,836	312
Other	560	2,194
Total	8,929	6,901

Note 55 Pledged assets

	2008	2007
Shares in subsidiaries	502	502
Total	502	502

Note 59 Cash flow from operating activities

Non-cash items

	2008	2007
Depreciation	336	322
Results from sale of property, plant and equipment	–770	–684
Other items	-	–487
Total	–434	–849

Note 60 Transactions with related parties

Intra-Group purchases and sales

The percentage of the year's purchases and sales referring to other companies within the Studsvik Group is presented below.

	2008	2007
Purchases	4%	10%
Sales	100%	100%

The same pricing principles are applied to purchases and sales between group companies as applied to transactions with external parties.

Agreements on severance payments and other obligations to the Board members and the President

The President's period of notice is 6 months for his own termination of employment and 12 months for termination by the company. In the case of termination of employment by the company, salary is payable during the period of notice as well as an additional severance payment equivalent to 12 months' salary. If Studsvik AB should be acquired through a stock exchange buyout or through the company being acquired by a new principal owner (more than 50 per cent of the shares) the President is entitled to termination pay as though the termination was on the part of the company. See also note 36.

Note 56 Contingent liabilities

	2008	2007
Guarantees	1,311	6,609
Contingent liabilities referring to insurance	1,845	11,713
Total	3,156	18,322

Note 57 Derivative financial instruments

		2008		2007
	Assets	Liabilities	Assets	Liabilities
Forward exchange contracts	15	-	71	-

Revaluation of forward exchange contracts is through profit or loss.

Outstanding forward exchange contracts, December 31, 2008

	Inflow currency USD
Maturity year	000
2008 Amount	188
Average rate	7.780
Remeasured at fair value	1,449

Note 61 Average number of employees

	2008	2007
Women	5	4
Men	6	6
Total	11	10

Board members and senior management executives

		2008		2007
	Number Of on balance which sheet date men		Number on balance sheet date	Of which men
Board members	11	8	11	9
President and other senior executives	5	4	4	4

Note 62 Investment in subsidiaries

	2008	2007
Shareholder's contribution	-	32,875
Total	-	32,875

Audit report

To the Annual General Meeting of the shareholders of Studsvik AB (publ) Corporate identity number 556501-0997

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and the President of Studsvik AB (publ) for the year 2008. The company's annual accounts and the consolidated accounts are included in the printed version on pages 37–76. The Board of Directors and the President are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the President and significant estimates made by the Board of Directors and the President when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any Board member or the President. We also examined whether any Board member or the President has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.

The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act and give a true and fair view of the Group's financial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.

We recommend to the Annual General Meeting of shareholders that the income statements and balance sheets of the parent company and the Group be adopted, that the profit of the parent company be dealt with in accordance with the proposal in the administration report and that the members of the Board of Directors and the President be discharged from liability for the financial year.

Stockholm March 25, 2009

PricewaterhouseCoopers AB

Magnus Brändström Göran Tidström Authorized Public Accountant Authorized Public Accountant Auditor in charge

Corporate governance

Studsvik AB is a Swedish public company with its registered office in Nyköping and is listed on the NASDAQ OMX. The company is the parent of a Group that carries on business in nuclear technology in an international arena. Corporate governance is based on the Articles of Association and the Swedish Companies Act, together with other Swedish and foreign laws and ordinances. Studsvik has been following the Swedish Code of Corporate Governance since the beginning of July 2008. Departures from the Code are described in more detail in the text below.

This report has not been audited by the company's auditors.

General Meeting of Shareholders

The General Meeting is the company's highest decisionmaking body, where the shareholders exercise their influence through discussions and decisions. All shareholders entered in the share register five days before the General Meeting are welcome and can participate either in person or through a proxy.

Notification of attendance must be given to the company in accordance with the notice calling the meeting. Studsvik's ordinary general meeting, the Annual General Meeting, may be held in Nyköping or in Stockholm and must be held within six months of the close of the financial year. The notice calling the meeting is published in the daily newspaper Svenska Dagbladet and Post och Inrikes Tidningar (the Swedish Official Gazette) and on the company's website www.studsvik.com.

The Annual General Meeting elects the company's Board of Directors and decides on their fees. Moreover, the Annual General Meeting adopts the annual accounts, decides on appropriation of profits and discharges the Board of Directors and the President from liability. The Annual General Meeting also stipulates the principles for remuneration of senior management and determines the appointment of a Nomination Committee. At the Annual General Meeting in 2008, which was held at the World Trade Center in Stockholm on April 22, shareholders representing 48.3 (48.7) per cent of the total votes in the company participated.

The company has 3,928 shareholders. Studsvik's largest shareholders and the shareholder structure as at December 31, 2008 are presented in a table on page 36. The minutes of the Annual General Meeting can be found on the company's website.

Nomination Committee

The main task of the Nomination Committee is to propose candidates for the Board of Directors, Chairman of the Board and auditors and their fees, so that the Annual General Meeting can make well-founded decisions. The Nomination Committee must also propose a new Nomination Committee or how a Nomination Committee should be appointed. The 2008 Annual General Meeting decided that the company's Nomination Committee is to consist of the Chairman of the Board and representatives of each of the three largest shareholders. The Chairman of the Board of Directors was tasked with contacting the largest shareholders in the third quarter of 2008 and with them appointing a Nomination Committee.

The composition of the Nomination Committee was published in November 2008. The Nomination Committee consists of:

• Anders Oscarsson, SEB fonder (Chairman)
• Jan Barchan, Briban Invest (also a member of the Board of Studsvik)
• Frank Larsson, SHB fonder
• Anders Ullberg, Chairman of the Board of Studsvik

The Nomination Committee held one meeting during the year. The Nomination Committee's term of office is until a new Nomination Committee has been appointed.

The names of the members of the Nomination Committee were published on the company's website in November 2008 together with information on how shareholders can submit proposals to the Nomination Committee.

Composition of the Board of Directors

Studsvik AB's Board of Directors consists of seven board members elected by the general meeting of shareholders, as well as two members and two alternates appointed by the local trade union organizations Unionen and the Swedish Association of Graduate Engineers. At the Annual General Meeting in 2008 the following Board of Directors was elected:

• Anders Ullberg, Chairman of the Board
• Jan Barchan
• Ingemar Eliasson
• Lars Engström
• Anna Karinen
• Alf Lindfors
• Per Ludvigsson

For a more detailed presentation of the Board, please refer to pages 82–83.

Chairman

The Chairman of the Board leads the work of the Board. The work involves a particular responsibility to follow the company's development between Board meetings and ensure that the Board Members regularly receive the information necessary for performing a satisfactory job.

The Chairman is to maintain contact with the President and Vice President and hold meetings with them on various matters as needed.

Work of the Board of Directors

The task of the Board of Directors is to administer the company's business in the best way possible and safeguard the interests of the shareholders in its work. The Board's work follows rules of procedure adopted annually at the inaugural board meeting. The rules of procedure establish the division of duties between the Board and the President, the responsibilities of the Chairman and President respectively, and the forms of financial reporting.

The President participates in the work of the Board except when his own performance is being evaluated. Other members of the Executive Group Management team participate when required to provide the Board with information. The Group's Chief Financial Officer, who is also Executive Vice President, acts as secretary to the Board.

In 2008 the Board held eight ordinary meetings, including the inaugural meeting immediately following the Annual General Meeting, and in addition two extraordinary meetings.

In 2008 the Board of Directors devoted particular attention to the Group's continued development in the United Kingdom, deciding to invest in a metals recycling facility. Moreover, the Board dealt thoroughly with the development of waste treatment in the USA, where a new business model for managing intermediate level waste was implemented and parts of the operations were restructured. The Board of Directors has also regularly dealt with the respective segments' strategic position and conditions and established a strategic plan for the Group for the period 2009–2011.

The company's auditors have reported their observations from their audit of the annual accounts and examination of interim accounts and internal control at two meetings during the year.

The work of the Board is evaluated annually and the evaluation was dealt with at the last meeting of the year.

Policies, guidelines and instructions

The Board reviews and adopts Group policies and guidelines and the Group's Code of Conduct. These are dealt with, in accordance with Board procedures, at the October meeting or, in individual cases or where circumstances so require, at a different meeting. The President adopts guidelines and operative instructions based on policies and guidelines established by the Board. Guidelines and operative instructions issued by the President mainly relate to financial reporting and information technology (IT).

Remuneration Committee

The Board has appointed a Remuneration Committee from among its number. The Remuneration Committee submits proposals to the Board for the President's salary and other conditions of employment and approves salaries and other conditions of employment for the Executive Group Management proposed by the President. The

Committee also draws up the Board's proposals to the Annual General Meeting on principles for remuneration and other conditions of employment of the Executive Group Management.

The Remuneration Committee consists of Anders Ullberg, chairman, Jan Barchan and Anna Karinen.

Audit Committee

The Board has set up an Audit Committee to assure the quality of the company's financial reporting. The Audit Committee consists of Ingemar Eliasson, chairman, Per Ludvigsson and Anders Ullberg. The Chief Financial Officer presents the reports to the Committee. The Committee started its work in mid-2008. During the year the Committee has dealt with risks related to the Group's operations, project management, the Group's financing, organization of internal review, the Group's Code of Conduct and established forms and methods of work. The company's auditors reported their observations from the hard-close and internal control audit carried out at the time of the third quarter closing. The Committee meets regularly before each reporting date. The Committee held four meetings during the year.

Board fees

The total board fee paid by Studsvik AB for 2008 amounted to SEK 2,059,500 (2,112,000). In accordance with a resolution passed by the Annual General Meeting, the Chairman of the Board receives SEK 650,000 per year, the Vice Chairman SEK 350,000 per year and ordinary members SEK 225,000 per year. No fee is paid to the members appointed by the employee organizations. The chairman of the Audit Committee receives a fee of SEK 100,000 per year and members SEK 50,000 per year.

Auditors

At the 2007 Annual General Meeting the registered public accounting firm PricewaterhouseCoopers AB was elected as auditor for the period up to and including the 2011 Annual General Meeting. The auditors in charge are authorized public accountants Magnus Brändström and Göran Tidström. Besides the assignment for Studsvik Magnus Brändström also performs audit assignments for Acando, Intellecta and Note, among others. Göran Tidström performs audit assignments for TeliaSonera and Volvo, among others.

Remuneration to the company's auditors is paid in accordance with an approved invoice on agreed terms. For information concerning remuneration in 2008 please refer to note 8, page 61.

President and Executive Group Management

Studsvik's Board of Directors has appointed a President and CEO to be responsible for day-to-day management of the company and lead the business operations. The President prepares information and input for the Board's decision-making process and presents reports at the Board meetings.

The President has appointed a Group Management team consisting of the Executive Vice President/CFO, the heads of the Group functions and the heads of the five segments. The Group Management team meets monthly to consider the results and financial position of the Group and questions concerning strategy, budget follow-up, forecasts and general progress of business operations.

The President and central staff functions are based in Nyköping.

Taking into account the Board's rules of procedure and the policies and guidelines established by the Board, the Group functions are responsible for business development, allocation of financial resources among the Group's operations, capital structure and risk management. Their tasks also include questions of Groupwide acquisitions, certain major projects, the Group's financial reporting, communication with the stock market, internal and external information, IT and co-ordination and follow-up of safety, environment, work environment and quality.

The President and Executive Group Management are presented on pages 84–85.

Operative management

The Group's operative business is carried out mainly in subsidiaries of Studsvik AB, which by and large correspond to the Group's operating segments. In each subsidiary the board plays an active role under the leadership of the CEO or Executive Vice President. The boards of the subsidiaries follow day-to-day operations and establish business plans and budgets.

The business is carried on in accordance with the rules, guidelines and policies established by the parent company, and with local rules established by each subsidiary company board. The heads of the subsidiaries have budget responsibility and responsibility for ensuring growth in their respective companies, as well as responsibility for utilizing the synergies between the Group's various units.

Internal control

Internal control aims to ensure

• that company strategies and goals are followed up
• that shareholders' investments are protected
• that external financial reporting reflects the actual situation with reasonable certainty
• that the financial reports are prepared in accordance with generally accepted accounting principles, laws and ordinances and other requirements of listed companies

The Board of Directors has the overall responsibility for ensuring the Group has effective internal controls. The President is responsible for ensuring that processes and organization are in place that guarantee internal control and the quality of financial reporting.

Review of internal controls

Studsvik has no special internal audit function. Review of internal controls is carried out by the Group Accounting and Finance function as an integrated aspect of the work of the business and finance controllers, which the Board has found to be appropriate in light of the Group's size and complexity. The controllers report to the CFO.

In addition, the external auditors perform an annual

review of internal controls. The review is based on checklists and question lists in material for self-assessment that are subsequently verified from the point of view of materiality through direct examination. The outcome of the examination is reported to the Audit Committee and the Board.

Control environment

The Group consists of relatively few operating units, for the most part with well-established processes. Structural and policy documents in the form of policies, guidelines and instructions have been drawn up to ensure a common view and method of working within the Group. These include:

• Authorization manual
• Financial reporting system
• Investments and acquisitions
• Budget and business plans
• Financing
• Currency hedging
• Cash management
• Risk management and insurance

All policies, guidelines and manuals are available on the company's intranet. Information on changes is provided at regular finance manager meetings.

Risk analysis

The review of internal controls performed by the external auditors is based on an annual assessment of risk and materiality that is made jointly by the Group Accounting and Finance function and the external audit function. The risk analysis and review was dealt with by the Audit Committee and the Board, identifying and deciding on improvements.

Control activities

Control activities are carried out regularly by the Group's controller organization, and at company level within various parts of the accounting and reporting process.

The control activities focus on known risks, but they are also intended to identify and correct any errors and nonconformities. Processes and systems are examined regularly with a view to identifying areas for improvement.

Board members	Elected	Atten dance	Remu neration Committee	Audit Committee	Independent of company	Independent of share holders	Fee SEK thousand
Anders Ullberg, Chairman of the Board	2007	10/10	1/1	4/4	yes	yes	650
Anna Karinen, deputy Chairman	2003	10/10	1/1		yes	no	350
Jan Barchan	2004	9/10	1/1		yes	no	225
Ingemar Eliasson	2002	10/10		4/4	yes	yes	225
Lars Engström	2008	5/6			yes	yes	225
Alf Lindfors	2006	9/10			yes	yes	225
Per Ludvigsson	2007	7/10		4/4	yes	no	225
Maria Lindberg	2006	10/10
Roger Lundström	2005	9/10

Board of Directors and auditors

Anders Ullberg

Danderyd, born in 1946 Chairman of the Board since 2007 Former President and CEO of SSAB, Svenskt Stål Chairman of the Board of Boliden, TietoEnator and Eneqvistbolagen and member of the board of Atlas Copco, Beijer Alma, Sapa Holding and Åkers Education: M.Sc. (Business and Economics) Holding: 15,000 shares

Anna Karinen

Sparreholm, born in 1963 Board member since 2003 Vice Chairman since 2007 Self-employed, in commercial real estate management Board member of Handelsbanken Flen branch office Education: Bachelor of laws Holding: 1,307,492 shares

Jan Barchan

Malmö, born in 1946 Board member since 2004 CEO of Briban Invest AB, Chairman of the Board of AudioDev AB and connectBlue AB and board member of Arcam AB, Assistera AB and TAT AB Education: M.Sc. (Business and Economics) Holding: 1,285,492 shares

Ingemar Eliasson

Drottningholm, born in 1939 Board member since 2002 Marshal of the Realm. Former county governor, minister and member of the Riksdag (Swedish parliament) Chairman of the Board of Stiftelsen Centralfonden and Prins Eugens Waldemarsudde Former Chairman of the Board of SBAB, the Stockholm Stock Exchange and Cancerfonden, former board member of SAS and SAS Sweden, Radio Sweden, the Swedish Central Bank and the National Agency for Government Employers Education: M.Sc. (Business and Economics)

Holding: 600 shares

Lars Engström

Örebro, born in 1963 Board member since 2008 President and CEO of Munters AB. Formerly active in Atlas Copco, most recently as President of the Atlas Copco Underground Rock Excavation Division Education: M.Sc. (Engineering) Holding: 2,000 shares

Alf Lindfors

Östhammar, born in 1946 Board member since 2006 Senior adviser, former head of the Electricity Generation business area and Vice President of Vattenfall AB Chairman of the Board of Vattenfall Inlandskraft AB Education: M.Sc. (Engineering) and postgraduate qualification in reactor technology Holding: 0 shares

Per Ludvigsson

Råå, born in 1943 Board member since 2008 Chairman of the Board of Inter IKEA Group Board member of IKANO, Catella, AudioDev and Briban Invest Education: M.Sc. (Business and Economics) Holding: 1,000 shares

EMPLOYEE REPRESENTATIVES

Maria Lindberg

Kibblesworth, Gateshead, United Kingdom, born in 1964 Board member since 2006, alternate board member 1999–2006 Employee representative for the Swedish Association of Graduate Engineers Works as Technical Services Manager Studsvik UK Education: Ph.D. in physical chemistry Holding: 200 shares

Roger Lundström

Nyköping, born in 1966 Board member since 2005, alternate board member 2003–2005. Employee representative for Unionen Works in microscopy and damage analysis at Studsvik Nuclear AB Education: Laboratory technician Holding: 70 shares

Lena Bergström

Nyköping, born in 1970 Alternate board member since 2008 Employee representative for the Swedish Association of Graduate Engineers Works in the marketing and sales department of waste treatment, Studsvik Nuclear AB Education: M.Sc. in Business Administration and Economics Holding: 0 shares

Per Ekberg

Nyköping, born in 1959 Alternate board member since 2006 Employee representative for Unionen Works in the materials research department at Studsvik Nuclear AB Education: Power generation technology Holding: 100 shares

AUDITORS

Magnus Brändström

Born in 1962 Authorized public accountant, PricewaterhouseCoopers, Stockholm Auditor of Studsvik since 2003

Göran Tidström

Born in 1946 Authorized public accountant, PricewaterhouseCoopers, Stockholm Auditor of Studsvik since 2003

Maria Lindberg and Lena Bergström Per Ekberg and Roger Lundström

Alf Lindfors and Lars Engström Anders Ullberg, Jan Barchan and Anna Karinen

Per Ludvigsson and Ingemar Eliasson

Executive Group Management

Magnus Groth

President and Chief Executive Officer Education: M.Sc. (Engineering) and M.Sc. (Business and Economics) Year of birth: 1963 Year of employment: 2005 Background: Vattenfall AB, Enron Nordic Energy AS, Boston Consulting Group Directorships: Board member of Hägglunds Drives AB Holding: 1,000 shares and 20,000 options

Sten-Olof Andersson

Senior Vice President, Groupwide projects and company acquisitions Education: Engineer Year of birth: 1955 Year of employment: 1996 Background: Project management and international sales in ABB's Power Generation segment, President of Studsvik subsidiaries Holding: 5,800 shares

Lewis Johnson

Head of segment USA Education: Master of International Business Administration Year of birth: 1962 Year of employment: 2007 Background: President and CEO of Radatec, Inc. Holding: 0 shares

Jerry Ericsson

Executive Vice President and Chief Financial Officer Education: M.Sc. (Business and Economics) Year of birth: 1951 Year of employment: 1984 Background: Controller and CFO of companies in various industries, at top management level since 1978 Holding: 16,600 shares

Magnus Arbell

President Studsvik Nuclear AB Education: M.Sc. (Materials Technology) Year of birth: 1963 Year of employment: 2008 Background: President StiebelEltron AB, President Sveaverken AB, President Kverneland Group Sweden, development engineer ABB Atom, chairman of Sörmland Provincial Bank Holding: 0 shares

Ulf Kannengießer

Head of segment Germany Education: Dipl.-Kfm Year of birth: 1961 Year of employment: 1990 Background: Managing Director of construction company Holding: 1,000 shares

Leif Andersson

Head of segment Sweden Education: Engineer Year of birth: 1950 Year of employment: 1975 Background: Employed in the nuclear industry since 1975; the last 19 years in the area of treatment of radioactive waste, President of Studsvik subsidiaries Holding: 5,500 shares

Eva Halldén

Senior Vice President, Group assurance and HR Education: M.Sc. (Chemical Engineering) Year of birth: 1959 Year of employment: 2003 Background: President of Studsvik Nuclear AB, Vice President of ABB Atom AB and Westinghouse Atom AB Holding: 400 shares

Mark Lyons

Head of segment United Kingdom Education: Bachelor of Science, Applied Chemistry Year of birth: 1971 Year of employment: 2005 Background: Business Manager at Rolls-Royce Nuclear Engineering Services Ltd, Business Development Director at MB Nuclear Ltd Holding: 1,000 shares

Magnus Groth

Sten-Olof Andersson

Lewis Johnson

Jerry Ericsson

Magnus Arbell

Ulf Kannengiesser

Leif Andersson

Eva Halldén

Mark Lyons

Five-year review

CONDENSED INCOME STATEMENTS 1)

Amount, SEK million	2008	2007	2006	2005	2004
Net sales	1,285.9	1,314.7	1,219.6	1,088.3	1,025.4
Cost of services sold	–986.3	–1,000.1	–906.5	–802.9	–839.3
Gross profit	299.6	314.6	313.1	285.4	186.1
Selling expenses	–52.1	–53.8	–44.6	–41.9	–36.6
Administrative expenses	–194.8	–180.4	–164.2	–146.4	–143.4
Research and development costs	–44.8	–41.8	–39.8	–35.5	–34.6
Other operating income	2.8	25.1	14.3	19.8	1.7
Other operating expenses	–6.5	–1.6	–7.5	–2.6	–0.1
Pre-tax result from participation in associated company	8.5	-	-	-	2.6
Operating profit	12.7	62.1	71.3	78.8	–24.3
Interest income and similar profit/loss items	7.4	8.7	23.1	8.5	7.6
Interest expense and similar profit/loss items	–19.4	–24.8	–37.3	–11.1	–15.1
Profit after financial items	0.7	46.0	57.1	76.2	–31.8
Tax on profit for the year	0.4	1.2	–22.3	–28.7	56.1
Profit from discontinued operations	-	-	-	13.6	–90.8
NET PROFIT FOR THE YEAR	1.1	47.2	34.8	61.1	–66.5

1) The Strategic Business Areas Irradiation Services and Nuclear Medicine were discontinued in 2005. Comparative figures for 2005 and 2004 have been adjusted accordingly. These operations are reported as Profit/loss from discontinued operations.

CONDENSED BALANCE SHEETS

Amount, SEK million	2008	2007	2006	2005	2004
Assets
Goodwill	363.0	311.7	304.7	127.4	120.8
Other non-current assets	661.5	530.9	523.6	476.1	420.8
Trade receivables	201.7	206.0	189.2	167.3	139.9
Other non-interest bearing current assets	136.9	120.5	92.3	89.1	151.4
Cash and cash equivalents and short-term investments	147.7	176.9	247.6	323.4	319.2
Total assets	1,510.8	1,346.0	1,357.4	1,183.3	1,152.1
Equity and liabilities
Equity	610.5	568.4	558.7	566.6	443.4
Minority interests	0.3	3.4	-	-	-
Non-current interest-bearing liabilities	350.5	196.4	307.4	192.8	186.3
Non-current non interest-bearing liabilities	137.0	110.2	109.7	172.2	251.8
Current interest-bearing liabilities	37.7	122.3	39.8	0.1	7.8
Current non interest-bearing liabilities	374.8	345.3	341.8	251.6	262.8
Total equity and liabilities	1,510.8	1,346.0	1,357.4	1,183.3	1,152.1

CONDENSED CASH FLOW STATEMENTS

Amount, SEK million	2008	2007	2006	2005	2004
Operating profit	12.7	62.1	71.3	92.4	–119.7
Reversal of depreciation/amortization	67.2	60.1	53.8	47.1	78.3
Other non-cash items	–6.2	–22.6	–3.1	–6.5	146.4
	73.7	99.6	122.0	133.0	105.0
Financial items – net	–13.0	–16.1	–14.1	–4.8	–8.0
Taxes	1.2	–6.8	–2.4	–28.2	–12.5
Cash flow before changes in working capital	61.9	76.7	105.5	100.0	84.5
Changes in working capital	–32.4	–37.7	–1.4	–82.0	19.9
Cash flow before investments	29.5	39.0	104.1	18.0	104.4
Investments	–103.3	–122.4	–344.7	–45.0	–52.4
Cash flow after investments	–73.8	–83.4	–240.6	–27.0	52.0

DATA PER SHARE

	2008	2007	2006	2005	2004
After new share issue and shareholders' contribution
Number of shares at close of period	8,218,611	8,218,611	8,218,611	8,218,611	8,116,611
Average number of shares	8,218,611	8,218,611	8,218,611	8,167,611	8,115,411
Earnings per share before dilution, SEK	–0.05	5.65	4.24	7.48	–8.19
– of which from continuing operations	–0.05	5.65	4.24	5.81	2.99
Earnings per share after dilution, SEK	–0.05	5.65	4.24	7.48	–8.09
– of which from continuing operations	–0.05	5.65	4.24	5.81	2.95
Equity per share, SEK	74.32	69.58	67.97	68.90	54.60

KEY FINANCIAL FIGURES AND RATIOS

	2008	2007	2006	2005	2004
Margins
Operating margin before depreciation/amortization, %	6.2	9.3	10.3	11.6	4.7
Operating margin before goodwill amortization, %	6.2	9.3	10.3	7.2	neg
Operating margin, %	1.0	4.7	5.8	7.2	neg
Profit margin, %	0.1	3.5	4.7	7.0	neg
Return on investment
Return on operating capital, %	1.6	9.0	13.0	20.9	neg
Return on capital employed, %	2.1	7.9	11.3	12.5	neg
Return on equity, %	0.2	8.2	6.2	12.1	neg
Capital structure
Operating capital, SEK million	851.3	713.6	658.3	436.2	318.0
Capital employed, SEK million	999.0	890.5	905.8	759.5	637.2
Equity, SEK million	610.8	571.8	558.7	566.6	443.4
Net interest-bearing debt, SEK million	240.5	141.8	99.6	–130.4	–125.2
Net debt/equity ratio	0.4	0.2	0.2	–0.2	–0.3
Interest coverage ratio	1.0	2.9	2.5	7.9	neg
Equity-assets ratio, %	40.4	42.5	41.2	47.9	38.5
Cash flow
Self-financing ratio	0.2	0.3	0.3	0.4	2.1
Investments, SEK million	108.4	127.3	344.7	45.0	52.4
Employees
Average number of employees	1,130	1,141	1,279	1,278	1,353
Net sales per employee, SEK million	1.1	1.2	1.0	0.9	0.8

Definitions of key figures and ratios

MARGINS

Operating margin before depreciation/amortization Operating profit before depreciation/ amortization as a percentage of net sales.

Operating margin before

goodwill amortization

Operating profit before goodwill amortization as a percentage of net sales.

Operating margin

Operating profit after depreciation/ amortization as a percentage of net sales.

Profit margin

Profit/loss after financial items as a percentage of net sales.

RETURN ON INVESTMENT

Return on operating capital

Operating profit as a percentage of average operating capital.

Return on capital employed

Profit/loss after financial items with financial expenses added back, as a percentage of average capital employed.

Return on equity

Profit for the year as a percentage of average equity.

CAPITAL STRUCTURE

Operating capital

Balance sheet total less non interest-bearing liabilities, current investments, cash and bank balances. Average operating capital has been calculated as opening balance plus closing balance of operating capital, divided by two.

Capital employed

Balance sheet total less non interest-bearing liabilities. Average capital employed has been calculated as opening balance plus closing balance of capital employed, divided by two.

Equity

The total of non-restricted and restricted equity at the end of the year. Average equity capital has been calculated as opening balance plus closing balance of equity capital, divided by two.

Net interest-bearing debt

Total of current and non-current interestbearing liabilities less current investments and cash and bank balances.

Net debt-equity ratio

Net interest-bearing liabilities divided by equity including minority interests. A negative net debt-equity ratio means that the total of current investments plus cash and bank balances exceeds interest-bearing liabilities.

Interest coverage ratio

Profit after financial income divided by financial expenses.

Equity-assets ratio

Equity including minority interests as a percentage of the balance sheet total.

CAPITAL TURNOVER RATE

Turnover rate of capital employed

Invoicing for the year divided by average capital employed.

CASH FLOW

Self-financing ratio

Cash flow before investments divided by investments.

Investments

Total of the acquisition of businesses/ subsidiaries plus acquisition of intangible assets and property, plant and equipment.

EMPLOYEES

Average number of employees

Average number of employees at the end of each month.

Net sales per employee

The year's net sales divided by the average number of employees.

DATA PER SHARE

Earnings per share

Profit for the year divided by the average number of shares. The average number of shares has been calculated as a weighted average of all shares in issue for the year.

Equity per share

Equity divided by the number of shares at the end of the period.

P/E ratio

The share price divided by earnings per share.

Worldwide

Studsvik AB

Visiting address: Västra Trädgårdsgatan 38 P.O. Box 556 SE-611 10 Nyköping Sweden Telephone +46 155 22 10 00 Fax +46 155 26 30 00 studsvik@studsvik.se www.studsvik.com

Studsvik UK Ltd

Unit 14, Princes Park Fourth Avenue Team Valley Trading Estate Gateshead Tyne & Wear NE11 0NF United Kingdom Telephone +44 191 482 1744 Fax +44 191 482 1747

Studsvik GmbH & Co. KG/ Studsvik Industrieanlagen GmbH & Co. KG Karlsruher Str.20 D-75179 Pforzheim Germany Telephone +49 7231 5 86 95 01 Fax +49 7231 5 86 95 02

Studsvik SAS Centre d'Affaires EURIPOLE 17 rue de Sancey ZA des Vauguillettes III F-89100 Sens France Telephone +33 3 86 66 60 75 Fax +33 3 86 66 60 76

Studsvik, Inc. 5605 Glenridge Dr., NE Suite 705 Atlanta, GA 20342 USA Telephone +1 404 497 4900 Fax +1 404 497 4901

Studsvik Processing Facility Memphis, LLC / Studsvik Logistics, LLC 2550 Channel Avenue P.O. Box 13143 Memphis, TN 38113 USA Telephone +1 901 775 0690 Fax +1 901 775 0629

Studsvik, Inc. / Studsvik Processing Facility Erwin, LLC 100 Nolichucky Avenue Erwin, TN 37650 USA Telephone +1 423 735 6300 Fax +1 423 735 4143

Studsvik Nuclear AB SE-611 82 Nyköping Sweden Telephone +46 155 22 10 00 Fax +46 155 26 30 70

Studsvik Scandpower, Inc. 1087 Beacon Street, Suite 301 Newton, MA 02459-1700 USA Telephone +1 617 965 7450 Fax +1 617 965 7549

Studsvik Japan Ltd Nakamura Bldg. 3F 2-7-14 Shibuya, Shibuya-ku Tokyo 150-0002 Japan Telephone +81 3 5464 3771 Fax +81 3 5464 3708

Studsvik AB (publ) Annual report 2008 Corporate identity number 556501-0997 © Studsvik AB (publ)

This report is a translation of the Swedish statutory report. In the event of any discrepancies between this document and the Swedish original, the latter shall govern.The content of this annual report may not, in whole or part, be reproduced or stored in a machine-readable medium without the previous permission of Studsvik AB (publ).

Production: Meze Design Group AB, Comir AB Photo: Jan Lindblad Jr, Mattias Bardå, Janne Höglund, Fredrik Ekenborg and others Printing: Trosa Tryckeri

Studsvik AB (publ)

Västra Trädgårdsgatan 38 P.O. Box 556 SE-611 10 Nyköping Sweden Telephone +46 155 2210 00 www.studsvik.com