Studsvik — Annual Report 2016

Apr 18, 2017

Annual Report 2016

Information to shareholders

ANNUAL GENERAL MEETING OF SHAREHOLDERS, APRIL 27, 2017

The Annual General Meeting will be held in Stockholm, World Trade Center, Klarabergsviadukten 70 / Kungsbron 1, on Thursday, April 27, 2017, at 4 p.m.

Notification

Shareholders wishing to participate must be registered in the share register kept by Euroclear Sweden AB by Friday, April 21, 2017, and must give notification of their intention to attend by Friday, April 21 at the latest:

• by telephone +46 155 22 10 25,
• by mail to Studsvik AB, SE-611 82 Nyköping, Sweden,
• by email to studsvik@studsvik.se,
• by fax on +46 155 26 30 70, 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 Friday, April 21, 2017.

Nomination Committee

Studsvik's Nomination Committee consists of:

• Sven Ericsson, representative of the Karinen family (chair)
• Stina Barchan, Briban Invest AB
• Carina Heilborn, Peter Gyllenhammar AB
• 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.

FORTHCOMING FINANCIAL INFORMATION 2017

• Report on the first quarter as at March 31	April 27, 2017
• Report on first half year as at June 30	July 21, 2017
• Report on the three first quarters as at September 30	October 20, 2017
• Year-end report 2017	February 2018
• Annual report 2017	April 2018

The reports will be available at www.studsvik.com on the publication dates.

Contents

Facts about Studsvik	3
President's comments	5
Our responsibility	6
Administration report	9
Fuel and Materials Technology	13
Consultancy Services	15
Risk management	17
Proposed distribution of profit	19
The Studsvik Share	19
Financial statements	22
Group	22
Parent Company	26
Notes to the consolidated accounts	30
Notes to the parent company accounts	55
Auditor's report	59
Corporate Governance	62
Board of Directors and Auditors	66
Executive Group Management	68
Five-year review	70
Definitions of key figures and ratios	72

Facts about Studsvik

THIS IS STUDSVIK

Studsvik delivers world-leading technical solutions to customers in the nuclear industry and other industries exposed to radiation. With 70 years' experience in nuclear technology and services in a radiological environment, Studsvik can offer the global market world-leading expertise and function as a reliable partner to our customers.

We develop, sell and deliver innovative technical solutions that create considerable customer value by optimizing reactor operation and reducing costs and risks. Our broad offer of qualified consulting and engineering services includes testing materials and reactor fuel, fuel optimization software and core monitoring, expert advice on handling, transport and storage of radioactive material and waste, expert advice in connection with decommissioning nuclear plants and design of production processes for dealing with radioactive waste.

Our sound experience has given us a good understanding of our customers' needs and we challenge them to join with us in creating solutions that advance sustainable development in the energy sector.

2016 IN BRIEF

• Continued sound profitability in the Fuel and Materials Technology business area
• Restructuring of the Consultancy Services business area
• Operations in the Waste Treatment business area were sold to EDF
• A joint venture was established with Kobe Steel Ltd to commercialize THOR technology in the Japanese market
• Agreement with AREVA on continued consultancy services related to the use of THOR technology
• New heads of business areas for Studsvik Scandpower and Consultancy Services.

Sales, SEK million	758.8	721.2
Operating profit, SEK million	24.7	36.6
Profit/loss after net financial items, SEK million	8.3	18.9
Earnings per share, SEK	2.07	1.78
Operating margin, %	3.2	5.1
Debt/equity ratio, %	0.8	45.0
Equity per share, SEK	42.41	36.30
Average number of employees	687	708

STUDSVIK'S VISION

"Leading innovation for sustainable nuclear solutions"

Studsvik's endeavor is to always be at the forefront of innovative solutions that optimize processes and increase safety in nuclear power plants while contributing to a more sustainable energy supply. We supply the global market with the latest technology, analyses and material tests as well as consultancy services that pave the way for new solutions in future nuclear technology.

OUR MARKETS

We offer innovative solutions for all phases of the life cycle of reactor fuel and nuclear power plants; from research and development, design and operation, to decommissioning, dismantling and waste treatment. We also provide expert advisory services to companies outside the nuclear power market, such as oil, gas and mineral extraction industries and the mining industry on risk management of radioactive material. We have a strong market position, a good reputation and a well-known brand.

PRODUCTS AND SERVICES

We focus on products and services that optimize operation and reduce risks for our customers. We conduct our own technology and methods development based on our customers' needs.

PARTNERS AND COLLABORATION

We operate as an independent agent in the market, but develop proprietary services in close collaboration with customers and public authorities. Where necessary, Studsvik can develop new products and services and strengthen its competitiveness by entering into strategic partnerships, either with specialized niche actors or with global companies.

ORGANIZATION

Our organization has short decision lines and a clear management structure with a strong focus on profitability and customer satisfaction. Key figures 2016 ²⁰¹⁵

"Despite continued tough market conditions in 2017 we are cautiously optimistic that our actions in 2016 and earlier are increasingly starting to show results in the form of profitable growth"

STUDSVIK AB (PUBL) ANNUAL REPORT 2016

Profitable growth and customer value

In many ways 2016 was eventful. We sold our remaining Waste Treatment business to EDF, France, thus taking another step towards streamlining operations. This enables us to focus on our offers in advanced engineering and Consultancy Services, combined with unique assets and processes for actors in the nuclear power segment, as well as operations that extract and process oil, gas and minerals.

At the time of the sale we also decided to organize operations in three business areas: Fuel and Materials Technology, Studsvik Scandpower and Consultancy Services, starting in January 2017.

During the year we continued rationalizations, mainly in administration in Sweden and Consultancy Services in the United Kingdom, which was partly due to a need to adapt continuing operations after selling Waste Treatment.

We also appointed new business area heads for Studsvik Scandpower and Consultancy Services, as well as changing managements in Germany and the United Kingdom to further increase focus on customer value and profitable growth.

The new Consultancy Services management has developed a new and clear organization and strategic focus aimed at the entire value chain for managing radioactive waste.

We continued our work of developing the Studsvik facility with the aim of attracting establishment of operations that primarily work on testing materials and systems.

The operating profit excluding items affecting comparability increased somewhat, to about SEK 42 million (about SEK 37 million). The operating margin improved to 5.5 (5.1) per cent.

Fuel and Materials Technology excluding Studsvik Scandpower reported good profitability and growth.

However, Studsvik Scandpower did not develop as planned during the year, which is mainly due to delays in sales of software and services.

Consultancy Services, excluding items affecting comparability, improved its performance somewhat. Our THOR technology had something of a break-through with license revenues from the USA, France and Japan. In Japan we also signed a joint venture agreement with Kobe Steel Ltd, focusing on design of facilities to treat Japanese radioactive waste. Our operations in the United Kingdom and Germany performed negatively due to weak demand. The Swedish operations, however, reported positive performance.

During the year we made major advances in the continued development of a customer-based culture and further improved our understanding of customers' needs, which resulted in a clearer future focus:

We develop, sell and deliver innovative technical solutions that create considerable customer value by optimizing reactor operation and reducing both costs and risks. Our broad offer of qualified consulting and engineering services includes:

• • testing of materials and reactor fuel
• • fuel optimization software and core monitoring
• • expertise in treatment, transport and storage of radioactive material and waste
• • expertise in connection with decommissioning of nuclear facilities
• • design of production processes for treatment of radioactive waste.

We challenge our customers to join with us in creating innovative, technical solutions that advance sustainable development in the energy sector.

Despite continued tough market conditions in 2017 we are cautiously optimistic that our actions in 2016 and earlier are increasingly starting to show results in the form of profitable growth.

Stockholm February 2017 Michael Mononen

Our responsibility

Safety, sustainable development and environmental responsibility are integrated parts of the Group's business strategy. For Studsvik this entails a commitment to follow the principles of sustainable development, which also cover economy, environment, health and safety as well as ethical and social aspects. The goal is to minimize the environmental impact of operations and Studsvik's own facilities, both as regards emissions and use of resources. Diagram högsta enskilda effektiva helkroppsdos Godkända utsläpp Studviks högsta tillåtna värde

Since the 1960s Studsvik has owned nuclear facilities where operations are conducted with safety and environmental protection as the highest priority. We work continually on improvements to reduce as far as is reasonable and possible the impact of our operations on the environment and human health and safety. As a supplier to the nuclear power industry, Studsvik's operations are governed by laws, regulations and licenses. It is in Studsvik's interest to actively contribute to their development, in dialogue with the authorities. Diagram Kollektivdos 2014 2015 Studviks utsläpp 2016

Our ambition is to conduct operations in a responsible manner in the best interests of our customers, investors, employees and other stakeholders. ^{158 171 159}

ENVIRONMENTAL RESPONSIBILITY

Studsvik aims to set a good example in the environmental area and use the best possible technology that is economically warranted to minimize the environmental impact of its operations. The ambition is also to maintain good communication on environmental issues with those living nearby, the authorities, customers, the mass media, employees and other stakeholders. 2014 2015 2016

Studsvik conducts operations either in its own nuclear laboratories or at our customers' facilities. The facilities that Studsvik previously owned in Sweden and the United Kingdom for treatment of waste were sold in 2016 to the French company EDF.

Studsvik's facilities are relatively small and use effective technology for treatment, which has been improved during the year so that treatment takes place as close to the source as possible. Consequently, emissions are also small and the surrounding area is only marginally affected. Conventional emissions are in some cases so low that they are difficult to measure. The emissions are normally below the applicable limit and target values.

Releases of radioactive substances (refers to Sweden)

Radioactive releases to air and water are analyzed and monitored on a continuous basis. Radioactive releases may not give a radiation dose of more than 0.1 mSv to any individual. Studsvik's internal target limit is 0.0001 mSv. On average Studsvik's releases to air and water are 0.000035 mSv/year. This can be compared with a normal radiation dose for an average Swede of about 3.0 mSv/ year. That radiation dose is from medical examinations, food, potassium-40 in the body, cosmic radiation, radon, ground and building material and other radiation.

Variations in operations mean that the extent and effect of releases may vary from year to year. The radioactive releases are very small in relation to other sources of radiation in society.

Normal radiation dose per year for an average Swede Normal stråldos per år för en genomsnittlig svensk

EMISSIONS OF SUBSTANCES THAT CONTRIBUTE TO THE GREENHOUSE EFFECT

The greatest source of substances that contribute to the greenhouse effect in the Group are fossil fuels used to fuel transport and travel. Electricity consumption also contributes somewhat to carbon dioxide emissions. Studsvik works to reduce energy consumption and thus carbon dioxide emissions from both the facility and travel.

ENERGY AD NATURAL RESOURCE ECONOMY

Consumption of environmental resources

The Studsvik Group uses energy for various purposes, such as heating premises, ventilation, pumps and process tools and for lighting.

Water consumption

Water is used for different processes in the operations. The Studsvik facility runs its own waterworks.

Consumption of chemicals

A number of different chemicals are used at our laboratories in their operations, in the conventional waste water and in the active waste water.

SOCIAL RESPONSIBILITY

Studsvik is dependent on the rest of the world. We are aware of that dependence and the consequences of Studsvik's operations on society. Studsvik endeavors to maintain good and open communications with regions, municipalities, authorities and other stakeholders.

Code of conduct

The Group has a Code of Conduct that describes how Studsvik and its employees act in relation to the rest of the world and each other. The aim is to provide guidance to employees and business partners, minimize risks, strengthen the corporate culture and convey Studsvik's core values. Studsvik's Code of Conduct is available on the company's website.

Anti-corruption

Studsvik's good reputation depends on how we conduct our operations. All employees, business partners and representatives of our company must follow all applicable laws and statutes in all places where we operate. We want our business partners, representatives and employees to know that we conduct our operations in an ethically justifiable manner. Even if an unethical act is accepted in a country, this does not mean that Studsvik accepts it. Studsvik's anti-corruption policy is available on the company's website.

Whistleblowing

Studsvik, including its subsidiaries and joint ventures, must maintain the highest possible standards as regards transparency, honesty and accountability. We encourage our employees and business partners that suspect irregularities in the company to report this to us. Anonymous reports are accepted by the Group and a whistleblowing function is available to all staff via the company's intranet.

Human rights

Studsvik respects fundamental human rights under the UN Declaration. We do not accept child labor, forced labor or work in hazardous work environments. Studsvik values and encourages diversity in the organization in a way that reflects the diversity in our markets. Studsvik does not tolerate any discrimination due to gender, ethnicity, disability, religion, sexual orientation or opinion. No form of harassment is allowed and will be actively opposed by the company and its managers.

Health and safety

Studsvik's ambition is to offer its employees a healthy work environment and a good work-leisure balance. In keeping with Studsvik's policies and guidelines the aim is to maintain a high standard of health and safety work, in which local laws and ordinances constitute the lowest acceptable level.

Work-related accidents leading to sickness absence

	Germany Sweden		United Kingdom	USA	Total
Fatal	1	0	0	0	1
Sickness absence > 3 days	2	0	0	0	2
Sickness absence 1-3 days	4	0	0	0	4
Sickness absence 0 days	0	2	0	0	2
Accidents on way to/from work, sickness absence > 3days	4	0	0	0	4
Accidents on way to/from work, sickness absence 0-3days	4	1	0	0	5

In December one of our employees died in a workplace accident in Germany at a customer's facility. Existing working procedures have been evaluated and updated on the basis of the findings of the investigation carried out together with the authorities and the customer.

The average number of employees in the Group in 2016 was 687 (708).

	Women	Men
Sweden	51	101
United Kingdom	11	28
USA	4	30
Germany	36	397
France	1	0
Switzerland	1	26
Japan	0	1
	104	583

FINANCIAL RESPONSIBILITY

Responsibility for decommissioning and operational waste The operations at Studsvik's nuclear facilities in Sweden are conducted under license pursuant to the Swedish Act on Nuclear Activities and it is therefore Studsvik's responsibility to decommission the facilities. Under the Act the holder of the license has both the technical and the financial responsibility for decommissioning. Studsvik generates a limited volume of own waste that impacts the environment. When Studsvik processes radioactive waste on behalf of a customer it is the customer that is responsible for the radioactive residual products.

Risks

The fact that Studsvik operates in the nuclear sector entails special risks that are regulated and supervised by national authorities and international bodies. An overall risk assessment must include all parts of the operations and a general business environment assessment. Studsvik's risk management is described on pages 17-19. Financial risks are dealt with in the section "Financial risk management", note 2.

Financial contributions for stakeholders

Studsvik's operations generate financial value that is distributed to many different stakeholders.

Stakeholder	SEK M	Comment
Suppliers	190	Payment for materials and services
Employees	474	Wages and benefits
Shareholders	0	Dividend
Credit institutions	18	Interest expense
Society	8	Income tax paid

Administration report

The Board of Directors and the President of Studsvik AB (publ), company registration number 556501-0997, submit the annual accounts for 2016.

BUSINESS ACTIVITIES OF THE GROUP

Studsvik delivers services to the international nuclear power industry. Its customers are mainly nuclear power plants and suppliers to the nuclear industry. Operations are conducted at Studsvik's own facilities in Europe as well as at customer sites. The services cover the entire life cycle of the nuclear power plants as regards waste management, consultancy services and fuel and materials technology.

During the year the Waste Treatment operations were sold to EDF. Earnings from this transaction are reported under operations held for sale.

The company's share is listed on NASDAQ Stockholm.

MARKET

Continued focus on cost effectiveness and efficiency improvement

Profitability in the nuclear power industry in Western Europe and the USA continues to be strained due to low energy prices. However, global demand for electricity is expected to grow by more than 30 per cent in the next 25 years, with rising demand from non-OECD countries where demand from Asia, and mainly China, makes up a considerable part. The percentage of renewable and nuclear electrical energy is expected to grow, at the expense of fossil fuels.

The overall conditions for nuclear power are governed to a great extent by national political decisions. The decisions are made on the basis of each country's financial situation, energy supply, environmental guidelines and public acceptance of nuclear power. Many governments see nuclear power as a reliable source of energy with low carbon dioxide emissions. Nuclear power is also seen as a way to balance dependence on energy imports from other countries, which leads to reduced economic and political risks. In addition to this, the economic conditions for nuclear power are governed by other factors, such as energy prices, financing costs and costs of safety and waste management.

In the longer term, the outlook for nuclear power at global level is positive, with 8 new reactors coming on line in 2016 (5 in China, 1 in Pakistan, 1 in India, 1 in South Korea), 60 new nuclear power plants under construction (22 in China, 7 in Russia, 5 in India, 4 in the United Arab Emirates and 4 in the USA) and 164 at the planning stage. Of the existing 447 operating reactors, 80 per cent are in OECD countries and about 75 per cent of these are more than 25 years old. The number of new facilities under construction in developing countries corresponds in principle to the number of older reactors closed in Western Europe and the USA, where about 60 reactors are expected to be closed by 2030. For economic and political reasons, the work of replacing old reactors is slow, which leads to increased focus on extending the life and increasing the power output of existing reactors where economically feasible. The long-term challenge for Europe and the USA is how the electricity generated today by nuclear power plants is to be replaced when old plants reach their maximum life, as

well as when and how these plants will then be decommissioned. With the current low energy prices the market is focusing on continued reduction of costs. Conditions change rapidly, which leads to increased demand for services in such areas as cost reduction through fuel optimization, management of used nuclear fuel and consultancy services related to decommissioning.

Studsvik's market position

Studsvik offers services to the global nuclear power industry but also to other industries that deal with radioactivity and radioactive material and has customers throughout the world.

We develop, sell and deliver innovative technical solutions that create considerable added value by optimizing operation and reducing risks. We offer innovative solutions for all phases of the life cycle of reactor fuel and nuclear power plants; from research and development, design and operation, to decommissioning, dismantling and waste treatment.

Studsvik holds a strong market position based on 70 years' experience. With our unique laboratories at the Studsvik facility as its base, the Fuel and Materials Technology business area is a world leader in nuclear hot cell technology, fuel and materials performance testing and analysis, and corrosion and water chemistry studies. Fuel and Materials Technology helps customers to optimize fuel, reactor performance and reactor life, as well as supplying solutions for handling damaged fuel.

Studsvik Scandpower offers tools, analysis and technology for fuel and reactor optimization. The business area currently supports more than 200 commercial nuclear power plants around the world.

Consultancy Services is a global supplier of services focused on advanced technology for optimizing our customers' radiological programs. Our experience and expertise provides safe solutions for our customers, stakeholders, the environment and future generations.

STUDSVIK'S AREAS OF OPERATION

Fuel and Materials Technology

Studsvik's expertise in Fuel and Materials Technology contributes to better operating economy and improved safety in the nuclear industry. A long life and sound fuel economy are central for achieving good profitability in operating a nuclear power plant.

Fuel and Materials Technology supplies innovative technical solutions for testing and evaluating material in our flexible test facilities in Studsvik. The results give our customers a basis for effectively and safely optimizing construction material and fuel for both operation and re-investment.

There is an increased demand for services regarding spent fuel management, i.e. services for intermediate and final storage.

Studsvik Scandpower supplies world-leading software for fuel and core optimization and monitoring. The software increases burn-up of reactor fuel and thus the power output, while not jeopardizing operating safety. As of 2017 Studsvik Scandpower will be a third business area in the Group.

Consultancy Services

Studsvik's Consultancy Services contribute to improved profitability and safety in nuclear power and other industries that handle radioactive material. We assist our customers throughout the life cycle with strategies, policies and plans for management and storage of waste arising in nuclear facilities and handling naturally occurring radioactive material (NORM), mainly in the oil, gas and mining industries.

Consultancy Services also include radiation protection such as measurement and analysis of radiation levels and measures to minimize the dose when working in classified environments. Studsvik's services in decommissioning and dismantling nuclear power facilities cover everything from feasibility studies, planning and project management to practical dismantling and subsequent waste treatment. Apart from this, we offer engineering services and advisory services in design, safety, technology, maintenance, fuel, core and material issues. The Group has developed its own pyrolysis process, THORSM, which can be used to treat both dry and wet low-level and intermediate-level waste.

Waste Treatment

The business area was sold in 2016 to the French company EDF and is reported as operations held for sale in the report. The sale gave a positive cash flow of SEK 206 million and a net profit of SEK 107 million. The final settlement will be in the first half of 2017.

SALES AND EARNINGS

Sales were SEK 758.8 (721.2) million, an increase in local currencies of 5 per cent. The operating profit was SEK 24.7 (36.6) million, including non-recurring items of SEK –17 (0) million. Adjusted for non-recurring items the operating profit was SEK 41.7 (36.6) million.

Fuel and Materials Technology excluding Studsvik Scandpower increased sales with retained margins. Sales of software in Studsvik Scandpower decreased during the year as a consequence of delays in customers' decision-making processes and licensing.

The Consultancy Services business area is experiencing great interest in licensing of THOR technology, while capacity utilization was weak in engineering services in England and the USA, as well as in maintenance services in Germany. Profit was also reduced by costs for rationalization programs in Germany and England.

There is an ongoing readjustment program within the Group to adapt the cost level to the remaining operations.

PROFITABILITY

The operating margin for the Group was 3.2 (5.1) per cent. Adjusted for non-recurring items the operating margin was 5.5 (5.1) per cent. Return on capital employed was 7.3 (12.0) per cent.

CASH FLOW

Cash flow from operating activities was SEK –56.1 (–6.6) million and the free cash flow (before financing activities) was SEK 129.6 (–29.8) million.

FINANCING

In February 2016 Studsvik issued a senior, unsecured corporate bond of SEK 300 million with a maturity of three years in the Swedish market, with final maturity in February 2019. The bond has a framework amount of SEK 350 million. The bond bears a variable interest rate of STIBOR 3m + 6.50 percent. The issue proceeds were used to refinance Studsvik's earlier outstanding bond of SEK 200 million, which matured in March 2016.

The positive cash flow from the sale of operations made an early repayment of the new bond of SEK 100 million possible in November 2016.

FINANCIAL TARGETS

Studsvik's overall financial targets are an average annual growth of 10 per cent, achieving an operating margin of 8 per cent and an equity/assets ratio of at least 40 per cent. In 2016 sales in local currencies increased, while the operating margin decreased to 3.2 (5.1) per cent. Adjusted for non-recurring items the operating margin in 2016 was 5.5 (5.1) per cent. The equity/assets ratio increased to 38.7 (30.0) per cent and the net debt/equity ratio decreased to 0.8 (45.0) per cent.

INVESTMENTS

The Group's capital expenditure investments amounted to SEK 15.3 (14.6) million. Most of the investments referred to the facilities in Sweden.

RESEARCH AND DEVELOPMENT

Development projects are initiated and implemented both in partnership 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 2016 total costs of company-funded research and development amounted to SEK 27.5 (25.0) million. The greatest resources were allocated to Studsvik's in-core fuel management codes and reactor operation. Within software development the expenditure is a combination of further development of existing software and new development.

Fuel and Materials Technology 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016

Sales amounted to SEK 282.9 (276.5) million, while the operating profit decreased to SEK 32.6 (40.9) million. Sales in local currencies increased by 2 per cent. Items affecting comparability impacted earnings for the year by SEK –0.8 million. The operating margin before items affecting comparability decreased to 11.8 (14.8) per cent. The operations contribute to improved operating economy and a higher level of safety in the nuclear power industry. From 2017 the operations will be run as two business areas; Fuel and Materials Technology, which is referred to below as Materials Technology and Studsvik Scandpower. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 18.0 17.1 19.8 41.5 19.9 22.9 25.1 31.1 -6 -3 0 3 9 12 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -2.7 -5.2 -2.9 2015 2016 -0.2 0.6 3.2 5.5

Materials Technology Operating profit excluding items affecting comparability

The business area offers services to nuclear power plants, reactor and fuel manufacturers, government authorities and organizations. Testing and analysis operations are conducted in Studsvik's facility in Sweden and sometimes in collaboration with universities and other higher education institutions and other international partners. The customer value based sales are continuing, with the aim of achieving long-term growth also on new markets such as China, Russia and Korea. -2.7 -5.2 -2.9 13.6 5.5

Sales amounted to SEK 196.3 (184.9) million, including sales to Studsvik Scandpower of SEK 6.7 (7.4) million. Sales in local currencies increased by 8.4 per cent. Testing and analysis operations continued to increase their sales to existing customers in 2016. The increase is from both extra sales of already established services, as well as sales of new services such as those related to management of spent fuel. The operating profit decreased somewhat to SEK 29.8 (31.8) million. Items affecting comparability impacted earnings for the year by SEK –0.8 (0) million. Adjusted for items affecting comparability, the operating margin decreased to SEK 15.6 (17.2) per cent. The poorer margin is explained by lower capacity utilization in ALARA Engineering and increased selling costs.

Percentage of sales 11%

Key figures and ratios

Amounts in SEK million	2016	2015
Sales	282.9	276.5
Operating profit	32.6	40.9
Operating margin, %	11.5	14.8
Items affecting comparability	0.8	0.0
Adjusted operating profit	33.4	40.9
Adjusted operating margin, %	11.8	14.8
Investments	11.8	5.9
Average number of employees	127	128

Studsvik Scandpower

Studsvik Scandpower is the only supplier of software for fuel optimization and core monitoring whose software is not linked to the fuel supplier. The software is also used to support spent fuel management. The operations are conducted at offices in Europe, the USA and Japan. The software development is based in the USA. Increased commercial focus drives sales and development of software and services in existing and new markets, mainly China and Russia. Key figures and ratios

Sales amounted to SEK 96.3 (99.0) million, including sales to Materials Technology of SEK 3.0 (0) million. In local currencies sales decreased by 1.6 per cent. The operating profit decreased to SEK 2.8 (9.1) million and the operating margin decreased to 2.9 (9.2) per cent. Sales mainly consist of software licenses, maintenance agreements and consultancy services linked to the software. Software is sold both as one-time licenses and annual fee subscriptions. When selling one-time licenses the license revenue and profit are reported in their entirety at the time of delivery. The substantial increase in sales in the fourth quarter of 2016 is due to sales of software, which amounted to SEK 17.1 (11.3) million in that quarter.

Consultancy Services 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015

Studsvik provides consulting and engineering services in the nuclear sector and industries where there is radioactive material. Customers are in Europe, North America, the Middle East and Asia. The service offer covers the life cycle from planning and design of facilities to management and final disposal of waste. The inspection and maintenance operations for nuclear facilities in Germany, Belgium and Switzerland are included in this business area. The business area also includes Consultancy Services and application of THORSM, the pyrolysis technology developed by Studsvik for radioactive waste that is difficult to treat. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 109.6 105.6 104.3 128.9 117.5 106.0 -6 -3 0 3 9 12 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -2.7 -5.2 -2.9 2015 2016 -0.2 0.6 3.2 5.5

The business area helps its customers to improve profitability and safety by developing and implementing strategy, policy and processes. Operating profit excluding items affecting comparability 2016

Sales in local currencies increased by 7 per cent to SEK 448.4 (417.5) million, while the operating profit decreased to SEK 14.0 (23.8) million. Items affecting comparability impacted the year's profit by SEK –13.4 million. Adjusted for items affecting comparability, the operating margin for 2016 was 6.1 (5.7) per cent. Demand for advanced Consultancy Services varied during the year. The positive performance is mainly explained by the license revenues received for the USA-based operations. A new contract involving THORSM was entered into with an American customer and a French customer decided to go ahead with a new project phase, which includes building a facility based on THORSM technology. A joint venture was started during the year with Kobe Steel Ltd. In connection with that joint venture a license fee was paid to Studsvik for the THORSM technology. The THOR-related contracts include consultant support with associated license revenues for construction -10 -5 5 10 15 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 12.4 -0.9 -5.5 7.9 2015 2016 1.6 4.9 13.2 4.0

Percentage of sales

2016

Key figures and ratios

Amounts in SEK million	2016	2015
Sales	448.4	417.5
Operating profit	14.0	23.8
Operating margin, %	3.1	5.7
Items affecting comparability	13.4	128.9 0.0
109.6 106.0 Adjusted operating profit 105.6	27.4 104.3	23.8
Adjusted operating margin, %	6.1	5.7
Investments	2.4	1.2
Average number of employees	523	522

Operating profit excluding items affecting comparability

of a THOR facility. During the year this led to increased demand for engineering services related to process technology. The German maintenance operations report weak earnings, though with good capacity utilization at times with customers in Germany and Switzerland. In the United Kingdom the consulting operations specializing in ventilation were discontinued due to weak demand. Nyckeltal

The business area has undergone a restructuring program and since the beginning of the year is adapted to prevailing demand. Demand for services in waste treatment and interest from the oil, mining and gas industries in services relating to NORM continue to increase. During the year consulting operations were evenly staffed in waste treatment and NORM, while the staff numbers in ventilation and maintenance have decreased. The work on customer value based sales is continuing, which over time will be reflected in customer satisfaction and a higher operating margin.

PARENT COMPANY

Operations in the parent company consist of coordination of the Group. Parent company sales were SEK 22.5 (10.6) million. Operating profit was SEK –16,3 (–28,9) million. Profit/loss after financial items was SEK –8.2 (8.0) million; this includes group contributions and dividend of SEK 14.3 (45.1) million.

Cash and cash equivalents amounted to SEK 43.9 (14.5) million and interest-bearing liabilities to SEK 200.0 (200.0) million.

BENEFITS TO SENIOR MANAGEMENT

The principles for benefits to senior management were adopted by the Annual General Meeting held on April 25, 2016.

Senior management executives will be offered a commercially competitive fixed salary based on the individual executive's responsibilities and powers. Salary will be fixed per calendar year. Senior management may be offered variable remuneration of a maximum of 50 per cent of fixed salary. Variable remuneration will be primarily based on the Group's financial targets. A plan for variable remuneration will be determined for the financial year.

Apart from the provisions of collective agreements or other agreements, senior management executives can choose pension solutions on an individual basis. Thus they can convert salary and variable remuneration to extra pension payments, given that the cost to Studsvik is unchanged over time

A maximum period of notice of 12 months from either senior management or Studsvik is applicable. Severance payment equivalent to a maximum of 6 months' salary may be made in addition to salary during the period of notice. There is more information concerning benefits to senior management in note 38.

The Board of Directors does not intend to propose any change in these principles at the 2017 Annual General Meeting.

EMPLOYEES

The average number of employees in the Group in 2016 was 687 (708). The decrease is due to a smaller number of employees in administration and in the German operations. Demand is increasing for Consultancy Services and Fuel and Materials Technology, which, together with the generational shift that the nuclear power industry is facing, further underlines the importance of creating attractive conditions for the Group's existing and potential employees.

Safe work environment

For Studsvik a safe work environment and the work of creating a strong safety culture have the highest priority. The ultimate target is to completely avoid work-related injuries. Studsvik has a program to reduce the number of work-related injuries and the number of injuries resulting in sickness absence has decreased in recent years. In 2016 the number of injuries (not accidents from/to work) resulting in sickness absence was 7 (12). In December one of our employees died in Germany in a workplace accident at a customer's facility. Existing working procedures have been evaluated and

updated on the basis of the findings of the investigation carried out together with the relevant authorities and the customer. Measures are being taken to eliminate physical work environment risks both at the Group's and customers' facilities. Improved knowledge of risks and influencing and changing attitudes and behavior are equally important. Part of this work is to encourage all employees to identify improvements and to report potential risks and risk behaviors.

Equal opportunities and diversity

Studsvik values and encourages diversity in the organization in a way that reflects the diversity in our markets. An organization made up of employees with different experience and backgrounds makes the business more innovative. The percentage of women was 15 (18) per cent. Studsvik does not tolerate any form of discrimination and all forms of harassment are actively opposed by the company and its managers.

SAFETY, SUSTAINABLE DEVELOPMENT AND THE ENVIRONMENT (CORPORATE RESPONSIBILITY)

Safety, sustainable development and environmental responsibility, i.e. Studsvik's corporate responsibility activities, are integrated parts of the Group's business strategy. For Studsvik this entails a commitment to follow the principles of sustainable development, which also cover economy, environment, health and safety as well as ethical and social aspects. The goal is to minimize the environmental impact of operations and Studsvik's own facilities, both as regards emissions and use of resources. Studsvik is to supply the global nuclear and radiological market with sustainable solutions for safe and environmentally friendly operations.

SOCIAL COMMITMENT

Studsvik endeavors to maintain good and open communications with regions, municipalities, authorities and other stakeholders. We also aim to support the local community through cooperation with organizations and municipal administrations on matters that are strategically important for Studsvik.

DECOMMISSIONING OF STUDSVIK'S NUCLEAR FACILITIES

The operations at Studsvik's nuclear facilities in Sweden are conducted under license pursuant to the Swedish Act on Nuclear Activities and it is therefore Studsvik's responsibility to decommission the facilities. Under the Act the holder of the license has both the technical and the financial responsibility for decommissioning.

In accordance with the Act on Financing the Handling of Certain Radioactive Waste etc. (1988:1597) (the Studsvik Act) the Swedish nuclear power producers pay a fee per generated kWh of electricity to the Nuclear Waste Fund to cover the costs of decommissioning the main part of Studsvik's nuclear facilities. Regular cost estimates are made to establish the extent of the commitment. These form the basis for determining the fee payable

to the Nuclear Waste Fund by the nuclear industry. Decommissioning in practice means that when Studsvik decides to permanently close down a facility covered by the Studsvik Act, ownership is transferred to a company owned by the nuclear power industry, which carries out the decommissioning at a time decided by that company.

The Group's Swedish facilities that are not covered by the Studsvik Act are governed by an Act that came into force in 2007 (2006:647). Under that Act Studsvik is financially liable to ensure future decommissioning of these facilities. This is done partly by paying a fee to the Nuclear Waste Fund, partly by pledging collateral to assure compliance. Cost estimates are made to determine the extent of Studsvik's commitment. These then form the basis for determining the fee to be paid by Studsvik to the Nuclear Waste Fund. In 2016 the fee to the Nuclear Waste Fund was SEK 882,000. Studsvik assesses that the annual fee will continue at that level. Provision is made in the accounts for the obligation Studsvik has under IAS 37, which also means that an annual cost of the obligation for the estimated economic life of the facility is recognized in income. The annual cost will be more or less equivalent to the fee paid to the Nuclear Waste Fund. The balance in the Nuclear Waste Fund is recorded as an asset in the accounts.

RISK MANAGEMENT

Studsvik operates in an international, competitive market. The responsibility for assessing operational and financial risks lies with each respective business area. The business areas' risk assessments are examined, compared and followed up by the parent company as well as being dealt with in connection with the regular follow-up in each business area.

An overall analysis of the Group's risks and how they are dealt with is presented annually to the Board of Directors of Studsvik AB and is followed up on a regular basis. 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 sector entails special risks that are regulated and supervised by national authorities and international bodies. An overall risk assessment must include all parts of the operations and a general business environment assessment. Selected risk factors are described below in no order of rank. Financial risks are dealt with in the "Financial risk management" section, note 2.

EXTERNAL RISKS

Licensing obligation and regulatory framework

Studsvik handles radioactive material and waste, which means that some of the operations must be licensed under the Swedish Environmental Code and are subject to official supervision and approval. 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 fulfill requirements. Studsvik may be notified by regulators of alleged infringements of licensing or regulations.

Studsvik fulfills the requirements imposed by such regulations. The Group's high security culture means it has a high capacity for adjustment to new rules and terms of reference. Working methods that reduce emissions and risks are continuously being enhanced.

Market

Demand for Studsvik's services is affected by a number of factors, and in the long term is dependent on developments in the nuclear power industry and the factors that influence them. By addressing its services to the nuclear power industry's needs throughout plant life cycles, 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 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.

Business activities focus on improving the safety profile of nuclear power. Its approach to the world around is characterized by dialogue and the principle of the greatest possible transparency.

OPERATIONAL RISKS

Technology

Software, laboratory activities, waste management 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.

The risk is managed through continuous product development in close cooperation with customers, as well as through largely offering customers package solutions, based on Studsvik's extensive experience, which makes Studsvik less sensitive to the replication of individual services or products. Studsvik also manages this risk by patenting its proprietary technology whenever it is considered possible and financially justifiable.

Transport

Part of Studsvik's business, 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 also requires official approval, special equipment and/or vehicles, resulting in the possibility of prolonged licensing

processes, which can lead to deferment or losses in earnings. Transportation 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. By maintaining a high level of expertise in our own transport organization, and through availability of our own transport packaging the risk is limited.

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 system, monitoring and maintenance systems, as well as competence development processes, are intended to minimize the risk of 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 staff development creates a high level of job satisfaction.

In accordance with Swedish legislation Studsvik has employee 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 limited by systematizing processes, recruitment and skills development.

Fixed price contracts

Studsvik sometimes agrees on a fixed price for large service contracts. These contracts require good risk management and project management. Studsvik trains its project managers and applies special procedures that are integrated into the Group's quality systems 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 fulfill requirements that a customer can rightfully impose, Studsvik risks loss of income and/or costs incurred for replacement or damages. Studsvik makes regular assessments of potential exposures and makes provision for identified risks.

Owner liability for waste

Studsvik has owner liability for waste arising from its own processes and operations. In addition, Studsvik has owner liability for a limited period for some waste from its customers. The Group aims to have

agreements with sub-contractors on the conditions for final disposal of this waste. Changes in regulatory or commercial conditions that necessitate amendments or supplements to these arrangements cannot be ruled out. The risk is managed through Studsvik periodically calculating the economic effects of these commitments, making provision in the balance sheet for future costs of final disposal, paying in fees in accordance with local regulations and receiving remuneration from customers for Studsvik's commitments.

Dependence on suppliers

Part of Studsvik's strategy is to develop customer offers together with selected partners. This can result in a measure of natural dependence on these partners. The design of Studsvik's contracts enables close relationships based on trust, while keeping alternative partners 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, mainly in the area of decommissioning. Delays in processing by the authorities and resulting delay in completion of contracts cannot be ruled out.

INSURABLE RISKS

Accidents and stoppages

Studsvik conducts its business 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 surveyed regularly and 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, all facilities are covered by property insurance and consequential loss insurance has been taken out for all strategic facilities.

Damage caused to a contracting party or third party

Error or negligence in performance of a service or delivery of a product can lead to a contracting party or third party suffering physical and/or financial damage. The concept of damage includes personal injury, material damage and financial damage. Third party liability insurance has been taken out to cover Studsvik against the financial risks and consequences its business entails. The business is insured from two risk perspectives; nuclear liability and non-nuclear liability.

In cases where the Group conducts nuclear activities subject to license, it is a licensing requirement that insurance has been taken out and maintained. This is regulated in the Nuclear Liability Act in Sweden and corresponding legislation in other countries. This legislation also regulates the insurance amounts, which are currently SDR 360 million (SDR = special drawing rights), equivalent to SEK 4.4 billion. Nuclear liability insurance for the Swedish operations is provided by Nordic Nuclear Insurers (NNI) and European Liability Insurers Limited (ELINI). The non-nuclear operations are insured through a global liability insurance policy with the insurance company IF P&C Insurance Ltd.

OTHER RISKS

Theft, sabotage or attack

A company handling radioactive material can never completely exclude the possibility of theft of this material. 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. Studsvik follows the plans drawn up by the licensing and supervisory authorities.

Cost liability for decommissioning

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.

Liability for operational waste

Studsvik generates a limited volume of own waste that impacts the environment. When Studsvik processes radioactive waste on behalf of a customer it is the customer that is responsible for the radioactive residual products.

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 about 66 per cent of total costs. The Group's currency exposure is greatest against EUR, GBP and USD.

Sensitivity analysis		Change	Effect on operating profit
Price to customer	1 %		+/– SEK 7.6 million
Personnel costs	1 %		+/– SEK 4.7 million
Exchange rate EUR/GBP/USD	10 %		+/– SEK 3.6 million

CORPORATE GOVERNANCE

The company has prepared a corporate governance report that is separate from the administration report, which can be found in the Corporate Governance section.

PROPOSED DISTRIBUTION OF PROFIT

For 2016 the Board proposes that a dividend of SEK 1.00 (0) per share be distributed. The total profits at the disposal of the Annual General Meeting comprise the parent company's non-restricted equity, SEK 53,275,476, consisting of retained earnings, SEK 57,366,740 and loss for the year, SEK –4,091,264. The Board's proposal means the following distribution of profit:

To the shareholders

SEK 1.00 per share, a total of	SEK 8,218,611
To be carried forward	SEK 45,056,865
Total non-restricted equity in the parent company	SEK 53,275,476

THE STUDSVIK SHARE

Share price and trading

The Studsvik share is listed on NASDAQ Stockholm. In 2016 the share price rose by 45 per cent from SEK 32.70 to SEK 59.50. At the close of the year the market value was SEK 489 million. During the year the price varied between a high of SEK 72 on June 3 and a low of SEK 25.90 on February 12.

In 2016, 4.6 million Studsvik shares were traded for a value of SEK 220.8 million. This corresponds to 51 per cent of the free float (the value of shares that are available for trading), to be compared with 55 per cent in the previous year. The free float refers to shares held by shareholders with less than 10 per cent of the capital.

Number of shares and share capital

On December 31, 2016 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 SEK 1.0 and the share capital amounted to SEK 8.2 million.

Shareholders

On December 31, 2016 Studsvik had 3,285 shareholders. The percentage of shares registered abroad was 25 per cent. The three largest owners, the Karinen family, Briban Invest AB and Peter Gyllenhammar AB, held 47.1 per cent of the shares and the ten largest shareholders 68.1 per cent. The shareholdings of the Board and the Executive Group Management are presented in the sections Board of Directors and auditors and Executive Group Management.

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, take into consideration Studsvik's expansion potential, the strength of its balance sheet, liquid funds and financial position in general. For 2016 the Board proposes that a dividend of SEK 1.00 per share be distributed.

Market maker

Remium AB has been appointed to act as market maker for the company's share.

ANALYSTS

The Studsvik share is monitored on a continuous basis by Remium.

INFORMATION ON THE ARTICLES OF ASSOCIATION ETC

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. The Board of Directors is not authorized to decide on the issue of new shares or acquisition of own shares.

SHAREHOLDERS

DECEMBER 31, 2016	Number of shares	Holding, %
Karinen Family	1,769,552	21.5
Briban Invest AB	1,285,492	15.6
Peter Gyllenhammar AB	825,000	10.0
Avanza Pensionsförsäkring AB	424,440	5.1
Credit Agricole Suisse SA	363,879	4.4
Malte Edenius	250,000	3.0
Invus Investment AB	216,594	2.6
Leif Lundin	190,190	2.3
Unionen	152,709	1.9
Nordnet Pensionsförsäkring AB	144,741	1.7
Total of the 10 largest shareholders – holdings	5,622,597	68.1
Other shareholders	2,596,014	31.9
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	Private placement	2,314,211	8,114 ,211	8,114 ,211
2004	New issue1)	2,400	8,116 ,611	8,116, 611
2005	New issue1)	102,000	8,218, 611	8,218, 611

1) Conversion of warrants.

SHAREHOLDER STRUCTURE, DECEMBER 31, 2016

Shareholding	Number of shareholders	Number of shares	% of total shares
1 – 500	2,827	267,241	3.4
501 – 1 000	207	175,584	2.1
1 001 – 5 000	166	388,329	4.7
5 000 – 10 000	22	166,071	2.0
10 001 – 15 000	16	116,849	2.4
15 001– 20 000	6	116,849	1.4
20 001 –		41 6,907,040	84.0
Total	3,307	8,218,611	100.0

DATA PER SHARE

Amount, SEK	2012	2013	2014	2015	2016
Number of shares at close of period	8,218,611	8,218,611	8,218,611	8,218,611	8,218,611
Average number of shares	8,218,611	8,218,611	8,218,611	8,218,611	8,218,611
Price, December 31	29.50	37.80	32.80	32.70	59.50
Earnings per share from continuing operations before and after dilution	–1.65	–2.78	0.63	1.78	2.07
Earnings per share from operations to be sold before and after dilution	–4.17	–21.15	–2.09	–1.49	5.60
Equity per share	58.19	34.83	35.64	36.30	42.41
P/E ratio	neg	neg	neg	112	7.8

Consolidated statement of profit or loss and other comprehensive income

Continuing operations	Note	2016	2015
Sales revenues	4	758,771	721,181
Costs of services sold	7	–535,279	–527,483
Gross profit		223,492	193,698
Selling and marketing costs	7	–44,416	–36,388
Administrative expenses	7, 8	–112,789	–103,857
Research and development costs	7	–27,534	–25,068
Profit share from associated companies and joint ventures	17, 18	4,145	11,608
Other operating income	5	8,195	6,948
Other operating expenses	6	–26,403	–10,370
Operating profit	4, 5, 6, 7, 8, 9	24,690	36,571
Financial income	10	128	224
Financial expenses	10	–24,957	–13,607
Fair value gain/loss (realized and unrealized)	10, 12	8,474	–4,287
Profit/loss before tax		8,335	18,901
Income tax	11	8,666	–4,258
Profit/loss for the year from continuing operations		17,001	14,643
Operations held for sale
Profit/loss for the year from operations held for sale	39	46,003	–12,220
NET PROFIT/LOSS FOR THE YEAR		63,004	2,423
Other comprehensive income
Items that may later be reversed in the income statement
Translation differences on foreign subsidiaries	28	–13,458	2,584
Cash flow hedges		781	482
Income tax on items recognized in other comprehensive income		–172	–106
Other comprehensive income for the year, net after tax		–12,849	2,960
Total profit or loss and other comprehensive income for the year		50,155	5,383
Income for the year attributable to
Parent company's shareholders	27	63,004	2,423
Non-controlling interests		–	–
Total comprehensive income attributable to
Parent company's shareholders		50,125	5,310
Non-controlling interests		30	73
Earnings per share calculated on income attributable to the parent
company's shareholders during the year (SEK)
Earnings per share before and after dilution	13
Profit/loss from continuing operations		2.07	1.78
Profit/loss from operations to be sold NET PROFIT/LOSS FOR THE YEAR		5.60 7.67	–1.49 0.29

Group statement of financial position

Note 2016	2015
ASSETS
Non-current assets
Property, plant and equipment 15 113,317	344,797
Intangible assets 16 178,037	181,407
Holdings in associated companies and joint ventures 17, 18 9,254	4,849
Deferred tax assets 89,902 31	86,139
Financial assets at fair value through profit or loss 19, 23 29,938	33,794
Derivative financial instruments 19, 21, 23 –	144
Trade and other receivables 19, 22 26,676	2,777
Total non-current assets 447,124	653,907
Current assets
Inventories 24 1,967	2,381
Trade and other receivables 19, 22 254,329	259,935
Financial assets at fair value through profit or loss – 19, 23	0
Derivative financial instruments 19, 21, 23 2,246	2,344
Cash and cash equivalents 19, 25 195,363	74,914
Total non-current assets 453,905	339,574
Assets in operations held for sale 39 –	–
TOTAL ASSETS 901,029	993,481
EQUITY
Capital and reserves attributable to parent company's shareholders
Share capital 8,219 26	8,219
Other contributed capital 26 225,272	225,272
Other reserves 28 2,663	15,512
Retained earnings 27 111,933	48,929
Equity attributable to the parent company's shareholders 348,087	297,932
Non-controlling interests 374	344
Total equity 348,461	298,276
LIABILITIES
Non-current liabilities
Borrowings 19, 30 198,250	1,012
Derivative financial instruments 19, 21, 23 1,139	2,062
Deferred tax liabilities 31 32,156	29,963
Pension obligations 32 5,525	5,478
Other provisions 33 107,721	161,292
Trade and other payables 29 15,180	39,115
Total long-term liabilities 359,971	238,922
Current liabilities
Trade and other payables 29 179,486	236,414
Current tax liabilities 5,704	6,073
Borrowings 19, 30 –	208,243
Derivative financial instruments 19, 21, 23 4,790	4,695
Other provisions 33 2,617	858
Total current liabilities 192,597	456,283
Liabilities in operations held for sale 39 –	–
Total liabilities 552,568	695,205
TOTAL EQUITY AND LIABILITIES 901,029	993,481

Consolidated statement of changes in equity

Amounts in SEK '000	Share capital	Other contributed capital	Other reserves	Retained earnings	Equity attribu table to parent company shareholders	Non controlling interests	Total equity
Opening balance at January 1, 2015	8,219	225,272	12,625	46,506	292,622	271	292,893
Other comprehensive income			2,887	–	2,887	73	2,960
Net profit/loss for the year			–	2,423	2,423	–	2,423
Closing balance at December 31, 2015	8,219	225,272	15,512	48,929	297,932	344	298,276
Opening balance at January 1, 2016	8,219	225,272	15,512	48,929	297,932	344	298,276
Other comprehensive income			–12,849	–	–12,849	30	–12,819
Net profit/loss for the year			–	63,004	63,004	–	63,004
Closing balance at December 31, 2016	8,219	225,272	2,663	111,933	348,087	374	348,461

Group statement of cash flow

Total operations	Note	2016	2015
Cash flow from operating activities
Operating profit		70,005	24,352
Adjustment for non-cash items	34	–43,660	28,699
		26,345	53,051
Interest received		128	224
Interest paid		–25,552	–11,725
Income tax paid		–8,289	–6,881
Cash flow from operating activities before changes in working capital		–7,368	34,669
Change in working capital
– Current assets		–32,738	–5,469
– Other current liabilities		–16,051	–35,781
Cash flow from operating activities	39	–56,157	–6,581
Cash flow from investing activities
Sale of subsidiaries		206,147	–
Acquisition of financial assets		–12,072	–
Disposals of financial assets	23	–	–
Acquisition of property, plant and equipment	15	–17,571	–28,557
Proceeds from sale of property, plant and equipment	15	361	–
Purchases of intangible assets	16	–967	–7,374
Dividend from associated companies	17	9,768	12,704
Cash flow from investing activities	39	185,666	–23,227
Free cash flow		129,509	–29,808
Cash flow from financing activities
Loans raised	30	300,000	6,158
Repayments of loans	30	–310,658	–22,828
Dividend	27	–	–
Cash flow from financing activities	39	–10,658	–16,670
Change in liquid assets		118,851	–46,478
Cash and cash equivalents at beginning of the year		74,914	120,074
Translation difference		1,598	1,319
Cash and cash equivalents at end of the year	25	195,363	74,914

Parent company income statement

	Note	2016	2015
Sales revenues	42	22,453	10,580
Costs of services sold	44	–2,779	–2,925
Gross profit		19,674	7,655
Administrative expenses	44	–36,849	–36,686
Other operating income	46	997	189
Other operating expenses	46	–134	–98
Operating profit	42, 43, 44, 45, 46, 47	–16,312	–28,940
Profit/loss from participations in group companies	48	14,311	45,100
Interest income and similar items	49	18,864	17,702
Interest expense and similar items	50	–25,012	–25,901
Profit/loss before tax		–8,149	7,961
Appropriations	51	–	–
Income tax	52	4,058	–1,194
Net profit/loss for the year		–4,091	6,767
Parent company statement of comprehensive income
Net profit/loss for the year		–4,091	6,767
Other comprehensive income		–	–
Total comprehensive income for the year		–4,091	6,767

Parent company balance sheet

Note	2016	2015
ASSETS
Non-current assets
Intangible assets 53	2,571	3,261
Property, plant and equipment
– Equipment and tools	–	–
Financial assets 54
– Deferred tax assets	7,917	3,859
– Shares in subsidiaries 56	383,740	371,813
– Participations in associated companies and joint ventures 54	12,073	–
– Receivables from subsidiaries 54	222,711	205,683
Financial assets at fair value through profit or loss 54	26,450	25,880
Derivative instruments 61	–	78
Total non-current assets	655,462	610,574
Current assets
Inventories and goods for resale	539	579
Trade and other receivables	5,842	3,935
Derivative financial instruments 61	–	–
Receivables from group companies	9,788	45,780
Prepaid expenses and accrued income 55	7,901	1,496
Cash and cash equivalents	43,938	14,498
Total non-current assets	68,008	66,288
TOTAL ASSETS	723,470	676,862
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	57,367	50,599
Net profit/loss for the year	–4,091	6,767
Total non-restricted equity	53,276	57,366
Total equity	286,767	290,857
Untaxed reserves	–	–
LIABILITIES
Non-current liabilities
Amounts owed to credit institutions 57	198,250	–
Deferred tax liabilities	–	–
Liabilities to group companies	54,550	91,712
Other liabilities	14,191	14,975
Total long-term liabilities	266,991	106,687
Current liabilities
Liabilities to group companies	155,533	66,541
Trade payables	2,315	1,398
Amounts owed to credit institutions 57	–	200,111
Derivative financial instruments 61	–	69
Other liabilities	3,123	3,089
Accrued expenses and deferred income 58	8,741	8,110
Total current liabilities	169,712	279,318
Total liabilities	436,703	386,005
TOTAL EQUITY AND LIABILITIES	723,470	676,862

Parent company statement of changes in equity

	Share capital	Other contributed capital	Retained earnings	Equity attributable to parent company shareholders	Total equity
Opening balance at January 1, 2015	8,219	225,272	50,600	284,091	284,091
Comprehensive income
– Net profit/loss for the year			6,767	6,767	6,767
Closing balance at December 31, 2015	8,219	225,272	57,367	290,858	290,858
Opening balance at January 1, 2016	8,219	225,272	57,367	290,858	290,858
Comprehensive income
– Net profit/loss for the year			–4,091	–4,091	–4,091
Closing balance at December 31, 2016	8,219	225,272	53,276	286,767	286,767

Parent company cash flow statement

	Note	2016	2015
Cash flow from operating activities
Operating profit		–16,312	–28,940
Adjustment for non-cash items	63	–564	167
		–16,876	–28,773
Interest received		2,924	5,125
Interest paid		–25,003	–33,660
Income tax paid		–	–
Cash flow from operating activities before changes in working capital		–38,955	–57,308
Change in working capital
– Current assets		27,720	1,512
– Other current liabilities		87,284	–47,195
Cash flow from operating activities		76,049	–102,991
Cash flow from investing activities
Group contribution received		14,311	42,807
Acquisition of property, plant and equipment	53	–	–3,505
Acquisition of financial assets	54	–23,034	–
Loans to group companies	54	–37,886	41,996
Cash flow from investing activities		–46,609	81,298
Cash flow from financing activities
Loans raised		300,000	639
Repayments of loans		–300,000	–
Dividend paid		–	–
Cash flow from financing activities		–	639
Change in liquid assets		29,440	–21,054
Cash and cash equivalents at beginning of the year		14,498	35,552
Cash and cash equivalents at end of the year		43,938	14,498

NOTES TO THE CONSOLIDATED ACCOUNTS Notes

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 Reporting Board recommendation RFR 1, Supplementary accounting rules for groups, International Financial Reporting Standards (IFRS) and interpretations by the IFRS Interpretations Committee (IFRIC) as adopted by the EU. The consolidated accounts have been prepared in accordance with the historical cost method except as regards financial assets and liabilities 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

None of the IFRS and IFRIC interpretations that are compulsory for the first time in the financial year starting on January 1, 2016 apply to the Group. Other standards, amendments and interpretations that come into force for the financial year starting on January 1, 2016, have no material impact on the Group's financial statements.

New and amended standards applied by the Group

The following standards will be applied by the Group for the first time for the financial year starting on January 1, 2016:

• Accounting for acquisitions of interests in joint operations Amendments to IFRS 11 • Clarification of acceptable methods of depreciation and amortization – Amendments to IAS 16 and IAS 38
• Annual improvements to IFRS standards, 2012-2014 cycle, and Disclosure Initiative: Amendments to IAS 1

The application of these amendments has not had any impact on the Group's accounting policies or disclosures for the current financial year or the previous financial year and neither is it expected to have any impact on coming periods.

A number of new standards and interpretations will come into force for financial years starting on or after January 1, 2016 and have not been applied when preparing these financial statements. These new standards and interpretations are expected to impact the Group's financial statements as follows:

IFRS 9 Financial instruments

IFRS 9 deals with classification, measurement and accounting for financial assets and liabilities and introduces new rules for hedge accounting. The full version of IFRS 9 was published in July 2014. It replaces the parts of IAS 39 that deal with classification and measurement of financial instruments and introduces a new impairment model.

The Group has started its analysis of the effects of future application of the standard. In the event that the analysis results in the probability of material effects arising, disclosures on this will be made in reporting during 2017, at the very latest in the annual report for 2017.

Even if the Group has not yet made any detailed evaluation of the debt instruments that at present are classified as financial assets available for sale, they seem to meet the requirements for measurement at fair value through other comprehensive income, based on the company's business model for these assets. Consequently accounting for these assets will not be changed.

The standard is effective from January 1, 2018. Under the transition rules in the full version of IFRS 9, early application was permitted for financial years starting before February 1, 2015. After that date the rules must be applied in their entirety. The Group does not intend to opt for early application of IFRS 9.

IFRS 15 Revenue from contracts with customers

IFRS 15 is the new standard for revenue recognition. IFRS 15 replaces IAS 18 "Revenue" and IAS 11 "Construction contracts".

IFRS 15 is based on the principle that revenue is recognized when the customer obtains control over a good or service, a principle that replaces the earlier principle that revenue is recognized when risks and rewards have been transferred to the buyer.

A company can choose between a "full retroactive" application or prospective application with further disclosures.

The management is currently evaluating the effect of the new standard and intends to make a detailed evaluation in the coming year. At present the Group cannot estimate the quantitative effect of the new rules on the financial statements. The Group will provide information on the quantitative effect when the analysis is complete.

The standard is effective from January 1, 2018 and is expected to be applied by the Group from January 1, 2018.

IFRS 16 Leases

IFRS 16 was published in January 2016. Implementation of the standard will mean that almost all leases will be recognized in the balance sheet, as no differentiation is made any longer between operating and finance leases. Under the new standard an asset (the right to use a leased asset) and a financial liability to make lease payments must be recognized. Short-term leases and leases of low-value assets are exempted. Lessors' accounting will essentially be unchanged.

The standard will mainly impact reporting of the Group's operating leases. On the balance sheet date the Group's non-cancellable operating leases amounted to SEK 23,216 thousand, see note 36. However, the Group has not yet evaluated the extent to which these obligations will be recognized as assets and liabilities and how this will affect the Group's earnings and classification of cash flows.

Some obligations may be covered by the exemption for short-term leases and leases of low-value asset and some obligations may refer to arrangements that are not to be recognized as leases under IFRS 16.

The standard is effective from January 1, 2019 and at present the Group does not intend to opt for early application. The standard has not yet been adopted by the EU.

1.2 CONSOLIDATED ACCOUNTS

Subsidiaries

Subsidiaries are all companies over which the Group has a controlling interest (note 56). The Group controls a company when it is exposed, or has rights, to variable returns from its involvement with the company and has the ability to affect those returns through its power over the company. 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 acquisition method of accounting is used to account for the Group's business combinations. The purchase price for the acquisition of a subsidiary consists of the fair value of transferred assets, liabilities and shares issued by the Group. The purchase price also includes the fair value of all assets and liabilities that are a consequence of an agreement on contingent purchase price. Acquisition related costs are recognized as expenses when they arise. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date. For each acquisition the Group determines if all non-controlling interests in the acquired company are to be measured at fair value or at their proportionate share of the acquiree's identifiable net assets. The excess of the purchase price, any non-controlling interest and fair value on the acquisition date of prior shareholdings over the fair value of the Group's share of identifiable net assets acquired is recognized as goodwill. If the amount is less than the fair value for the acquired subsidiary's assets in the case of a "bargain purchase", the difference is recognized directly in the statement of comprehensive income.

Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Transactions with non-controlling interests

The Group treats transactions with non-controlling interests as transactions with the Group's shareholders. For acquisitions from non-controlling interests the difference between the purchase price paid and the actual acquired share of the carrying amount of the subsidiary's net assets is recognized directly in equity. Gains and losses on sales to non-controlling interests are also recognized in equity.

When the Group no longer has a controlling interest or significant influence, each remaining holding is revalued to fair value and the change in the carrying amount is recognized in the income statement. The fair value is used as the first carrying amount and forms the basis of continued accounting treatment of the remaining holding as an associated company, joint venture or financial asset. All amounts referring to the entity sold, which were previously recorded in other comprehensive income, are recorded as though the Group had sold the related assets or liabilities directly. This may mean that amounts previously recorded in other comprehensive income are reclassified to profit or loss.

If the participating interest in an associated company decreases, but a significant influence nevertheless remains, where relevant only a proportional share of the amounts previously recorded in other comprehensive income is reclassified to profit or loss.

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 other comprehensive income is recognized in other comprehensive income. 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.

Unrealized gains on transactions between the Group and its associated companies are eliminated in relation to the Group's holding in the associated company. Unrealized losses are also eliminated, unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associated companies have been amended where necessary to ensure consistency with the policies adopted by the Group. Dilution gains and losses on participations in associated companies are recognized in the income statement.

Joint ventures

For joint ventures, where there is a common controlling interest, the equity method is applied. Interests in a joint venture are initially recognized at cost at the time of acquisition and adjusted on a current basis by its share of changes in the equity of the entity under common control.

The Group's share of the profit from the entity under common control is recognized in the consolidated statement of comprehensive income. If the Group's share of accumulated losses is equal to or more than the Group's share of the equity of the entity under common control, the Group does not recognize further losses.

1.3 SEGMENT REPORTING

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

1.4 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 on the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. An exception is when the transactions qualify as cash flow hedges, in which case the gains/losses are recognized in other comprehensive income.

Foreign exchange gains and losses attributable to loans and cash and cash equivalents are recognized in the income statement as financial income or expense. All other foreign exchange gains or losses, mainly on trade receivables and trade payables, are recorded in the items 'Other operating income' and 'Other operating expenses' 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 through profit or loss, 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 as functional currency) that have a functional currency different from the presentation currency are translated into the Group's presentation currency as follows:

• Assets and liabilities for each balance sheet presented are translated at the closing rate.
• Income and expenses for each income statement are translated at average exchange rates.
• All foreign exchange differences arising are recorded in other comprehensive income.

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 recognized in other comprehensive income. 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.

1.5 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is recorded at historical cost less depreciation. The Group applies depreciation of components, where each part of an item of property, plant and equipment with a cost of acquisition that is significant in relation to the total cost of the item is to be depreciated separately. The cost of acquisition includes expenses 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. Dismantling and restoration costs during the useful life of the asset are calculated annually on the basis of the evaluation made on each date of estimate. Any adjustments of the future costs adjust the cost of acquisition of the asset.

Subsequent costs are 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:

• Buildings and land improvements	20–50 years
• Plant and machinery	3–20 years
• Equipment and tools	3–20 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 operating income' and 'Other operating expenses' in the income statement.

1.6 INTANGIBLE ASSETS

Goodwill

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.

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.

Contractual customer relations and similar rights

Contractual customer relations and similar rights consist mainly of customer relations and contracts as well as some tenancy rights. 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. Contractual customer relations are amortized over 15 years The amortization period for other rights varies.

1.7 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.

1.8 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 derivatives for hedging. The classification depends on the purpose for which the financial asset was acquired. The management determines the classification of financial assets at the time of initial recognition.

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 if they are expected to be settled within 12 months. Otherwise they are classified as non-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 (notes 22 and 25).

Derivatives for hedging

Derivatives that are classified as hedging instruments are designated as hedges and qualify for hedge accounting treatment. The Group normally only enters into derivatives contracts when they qualify for hedge accounting treatment. The Group's derivatives are recorded as current and long-term assets and liabilities.

Recognition and measurement

Purchases and sales of financial assets are recognized on the trade date – the date on which the Group commits to purchase or sell the asset Financial instruments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets recognized at fair value through profit or loss are initially recognized at fair value, while related transaction costs are recognized in the income statement. Financial assets are derecognized when the rights to receive cash flows from the instruments have expired or have been transferred and the Group has transferred substantially all risks and benefits of ownership.

Financial assets at fair value through profit or loss are subsequently carried at fair value after the date of acquisition. Loans and trade receivables are carried at amortized cost after the acquisition date, applying the effective interest method. Trade receivables with short maturities are recognized at nominal value.

Gains and losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category, are presented in the income statement in the period in which they arise under the items 'Other operating income' and 'Other operating expenses'.

1.9 OFFSET OF FINANCIAL INSTRUMENTS

Financial assets and liabilities are offset and recognized net in the balance sheet only if there is a legally enforceable right to set off the recognized amounts and an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. The legal right may not be contingent on a future event and it must be legally enforceable on the company and the counterparty, both in the normal course of business or in the event of default, insolvency or bankruptcy.

1.10 IMPAIRMENT LOSSES ON FINANCIAL ASSETS

Assets carried at amortized cost

The Group assesses at the close of each accounting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired, and impairment losses are recognized, only if there is objective evidence as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and this event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably measured.

The Group first assesses whether there is objective evidence of impairment.

The impairment is estimated as the difference between the carrying amount of the asset and the present value of estimated future cash flows (excluding future credit losses that have not yet occurred), discounted at the original effective interest rate of the financial asset. The carrying amount of the asset is written down and the impairment loss is recognized in the consolidated income statement. If a loan or investment held to maturity has a variable interest rate, the current contractual effective interest rate used as the discount rate when impairment has been established. As a practical solution, the Group can establish impairment loss on the basis of the fair value of the instrument using an observable market price.

If the impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was recognized (for example an improvement in the debtor's creditworthiness), the previously recognized impairment loss is reversed through the consolidated income statement.

1.11 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 hedge of the fair value of a recognized asset or liability or a firm commitment (fair value hedge),
• 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 21. 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.

Fair value hedging

The Group only applies fair value hedging for certain financial non-current assets and borrowing.

Cash flow hedging

The effective portion of the change in fair value of a derivative instrument identified as a cash flow hedge and satisfying the criteria for hedge accounting, is reported in other comprehensive income. The gain or loss referring to the ineffective portion is recognized immediately in the income statement in the items 'Other operating income' or 'Other operating expenses'- net. When a hedging instrument matures or is sold or when the hedge no longer fulfills 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 transaction is 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 items 'Other operating income' or 'Other operating expenses' - net.

1.12 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.

1.13 TRADE RECEIVABLES

Trade receivables are reported in the amount expected to be paid in after deduction for individually assessed doubtful receivables. The expected maturity of trade receivables is less than twelve months and therefore the value has been recognized at the nominal amount without discounting. Impairment losses in trade receivables are recognized in the item 'Selling and marketing costs'.

1.14 CASH AND CASH EQUIVALENTS

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

1.15 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.

1.16 TRADE PAYABLES

Trade payables are recognized at fair value and are commitments to pay for goods or services acquired from suppliers in the operating activities. Trade payables have a short expected maturity and are classified as current liabilities.

1.17 BORROWINGS

Borrowings are recognized at fair value, net after transaction costs.

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.

1.18 CURRENT AND DEFERRED INCOME TAX

Tax expense for the period includes current and deferred tax. Tax is reported in the income statement, except when the tax refers to items reported in other comprehensive income or directly in equity. In that case the tax is also reported in other comprehensive income and equity respectively.

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 assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend to settle current tax liabilities and assets on a net basis.

1.19 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. 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 other comprehensive income in the period in which they arise. Past service costs are recognized directly in the income statement.

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 at the earlier of the following dates, a) when the Group can no longer withdraw the offer of those benefits, and b) when the company recognizes the costs for a restructuring within the scope of IAS 37 that includes the payment of termination benefits. In cases where the company has made an offer to encourage voluntary redundancy, the termination benefits are calculated on the basis of the number of employees expected to accept the offer.

Profit sharing and variable salary components

The Group recognizes a liability and an expense for variable salary 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.

1.20 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. See note 33, 'Other provisions'.

1.21 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 Group uses the percentage of completion method to determine the appropriate amount to recognize in a given period. Only contract costs incurred for work performed on the balance sheet date are recognized as expenses.

Revenue for the software developed by the Group is received through contract revenue, sales of software and through license fees.

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.

1.22 LEASES

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (less any lease incentives) are recognized as expenses in the income statement on a straightline basis over the lease term.

The Group leases some property, plant and equipment. Leases on non-current assets, in which the Group holds the financial risks and rewards incident to legal ownership, are classified as finance leases. At the start of the lease term finance leases are recorded in the balance sheet at the lower of the leased asset's fair value and present value of the minimum lease payments.

Each lease payment is allocated between amortization of the debt and financial costs for achieving a fixed rate of interest on the reported debt. The corresponding payment liabilities, less financial expenses, are included in the balance sheet items 'Non-current borrowing' and 'Current borrowing'. The interest component of the financial expenses is allocated over the lease term in the income statement so that each accounting period is charged with an amount equivalent to a fixed interest rate on the reported debt in the respective period. Non-current assets held as finance leases are depreciated over the shorter of the useful life of the asset and the lease term.

1.23 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.

1.24 PARENT COMPANY

The Parent Company has prepared its annual accounts in accordance with the Swedish Annual Accounts Act and Swedish Financial Reporting Board recommendation RFR 2, Accounting for Legal Entities. RFR 2 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 the Act on Safeguarding Pension Obligations 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:

Formats

The income statement and balance sheet follow the format of the Annual Accounts Act. This entails differences compared with the consolidated accounts, mainly as regards financial income and expense, the statement of comprehensive income, provisions and the statement of changes in equity.

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 and recorded in the item 'Profit/loss from participations in Group companies'. Dividend received is reported as financial income.

Income

The Parent Company's income includes dividends and group contributions 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 shareholders' contributions and group contributions in accordance with statements from the Swedish Financial Reporting Board, RFR 2. 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 from subsidiaries are reported as financial income as is normal dividend from subsidiaries. Tax on group contributions is reported in accordance with IAS 12 in the income statement.

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 nonderivative financial instruments and investment of surplus liquidity.

Market risk

Price risk

The Group's largest single cost item is personnel costs, which accounts for 66 (67) per cent of the total costs of operations. Other expenses are 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 euro, all other variables being constant, the year's profit for continuing operations as at December 31, 2016 would have been SEK 1.4 million lower (SEK 13.3 million higher) as the Group's total revenue in EUR is lower than the corresponding revenues in EUR. Equity would have been SEK 1.4 million lower (SEK 13.0 million 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 for continuing operations as at December 31, 2016 would have been SEK 1.1 million lower (SEK 5.2 million lower), as the Group's total expenses in GBP are greater than the corresponding revenues in GBP. Equity would have been SEK 1.1 million (SEK 5.0 million lower), mainly due to translation of the Group's net investments in the United Kingdom.

If the Swedish krona had weakened by 10 per cent against the US dollar, all other variables being constant, the year's profit from continuing operations as at December 31, 2016 would have been SEK 1.1 million lower (SEK 2.5 million higher), mainly as a result of Scandpower Inc's operations. Equity would have been SEK 1.2 million lower (SEK 2.5 million higher), mainly due to translation of the Group's net investments in the USA.

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. The Group's contractual repricing dates for interest rates are shown in note 30.

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 pre-tax earnings of a change of 0.1 percentage point would be a maximum increase or decrease respectively of SEK 0.2 (0.2) million.

If the interest rates on borrowing in SEK as at December 31, 2016 had been 0.5 percentage points higher/lower, all other variables being constant, the pre-tax earnings for the financial year would have been SEK 1.4 (1.1) million lower/higher, mainly as an effect of higher/lower interest expense in connection with changes in reference rates.

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 A+ 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 20.

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 company has a bond loan of SEK 200 000 thousand, which falls due on February 22, 2019. The loan carries interest of 6.5% + STIBOR 3 months. Expected interest expense is estimated as SEK 13,000 thousand for 2017, SEK 13,000 thousand for 2018 and SEK 1,900 thousand for 2019, amounting to SEK 27,900 thousand to the maturity date. In addition, the cost of the bond arrangement, already paid, SEK 3,250 thousand, will be amortized over the period.

The management also carefully follows rolling forecasts of the Group's liquidity reserve, consisting of unutilized loan assurances (note 30) and cash and cash equivalents (note 25), 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 cash flows.

As at December 31, 2016	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	More than 5 years
Bank loans	–	–	–	–
Bond loans	13,000	13,000	201,900	–
Derivative instruments	4,790	1,072	67	–
Trade and other payables	179,486	1,500	4,500	9,180
As at December 31, 2015	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	More than 5 years
Bank loans	8,243	1,012	–	–
Bond loans	200,000	–	–	–
Derivative instruments	4,695	1,602	460	–
Trade and other payables	236,414	3,408	7,805	27,902

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 contractual, undiscounted cash flows. The amounts that mature within 12 months have not been discounted, since the discount effect is immaterial.

As at December 31, 2016	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	27,893	9,610	922	–
As at December 31, 2015	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	73,007	7,332	4,058	–

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. The Group assesses the capital on the basis of debt/equity ratio and equity/assets ratio. Studsvik has an overall goal of an equity/assets ratio of 40 per cent. The equity/assets ratio at the close of the year was 38.6 (30.0) per cent.

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 'Current borrowing' and 'Noncurrent borrowing' in the consolidated balance sheet) less cash and cash equivalents. Equity is calculated including non-controlling interests.

	2016	2015
Total borrowing (note 30)	198,250	209,255
Less cash and cash equivalents (note 25)	–195,363	–74,914
Net debt	2,887	134,341
Total equity	348,461	298,276
Debt/equity ratio	0.8%	45.0%

The change in debt/equity ratio in 2016 was mainly a consequence of higher cash and cash equivalents after receipt of the purchase price from the sale of Waste Treatment. Borrowing decreased during the year and the cash flow after investments was positive. The sale of Waste Treatment is the main reason for higher equity.

2.3 FAIR VALUE ESTIMATION

The table below shows financial instruments at fair value on the basis of their classification in the fair value hierarchy. The different levels are defined as follows:

• Level 1 Quoted prices (unadjusted) on active markets for identical assets or liabilities.
• Level 2 Other observable market data for the asset or liability other than quoted prices included in level 1, either direct (i.e. as quoted prices) or indirect (i.e. derived from quoted prices).
• Level 3 Data on the asset or liability not based on observable market data (i.e. unobservable inputs).

The following table shows the Group's assets and liabilities measured at fair value as at December 31, 2016.

	Level 1	Level 2	Level 3
Assets
Financial assets at fair value through profit
or loss	–	–	12,259
– Unlisted shareholdings	–	14,191	–
– Capital insurance	–	3,488	–
– Long-term bank deposits	–	2,246	–
Derivatives used for hedging	–	19,925	12,259
Total assets
Liabilities	–	5,929	–
Derivatives used for hedging	–	5,929	–

Total liabilities

The following table shows the Group's assets and liabilities measured at fair value as at December 31, 2015.

	Level 1	Level 2	Level 3
Assets
Financial assets at fair value through profit
or loss
– Unlisted shareholdings	–	–	11,324
– Capital insurance	–	14,556	–
– Long-term bank deposits	–	7,914	–
Derivatives used for hedging	–	2,488	–
Total assets	–	24,958	11,324
Liabilities
Derivatives used for hedging	–	6,757	–
Total liabilities	–	6,757	–

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices from a stock exchange, broker, industrial group, pricing service or supervisory authority are easily and regularly available, and these prices represent actual and regularly occurring market transactions at arm's length. The Group does not currently hold such assets or liabilities.

Fair value of financial instruments not traded on an active market (for example OTC derivatives) is established using valuation techniques. These techniques use market information as far as possible when this is available, while company-specific information is used as little as possible. If all material inputs required for fair value measurement of an instrument are observable the instrument is found at level 2.

In the cases where one or more material inputs are not based on observable market information the instrument concerned is classified at level 3.

• Specific valuation techniques used to measure financial instruments include:
• Quoted market prices or brokers' quotations for similar instruments.
• The fair value of interest swaps is calculated as the present value of estimated future cash flows based on observable yield curves.
• The fair value of forward exchange contracts is determined using quoted forward exchange rates at the balance sheet date, where the resulting value is discounted to present value.
• Other techniques, such as estimating discounted cash flows, are used to determine the fair value of remaining financial instruments.

The following instruments at level 3 refer to our holdings in nuclear insurance companies. They are valued at acquisition cost plus our share of their surplus.

STUDSVIK AB (PUBL) ANNUAL REPORT 2016

The following table shows changes for instruments at level 3 in 2015.

Total gains or losses for the period included in profit or loss for assets held at the end of the reporting period
Closing balance	11,324
Gains recognized in the income statement	77
Acquisitions of shares	–
Opening balance	11,247
	Level 3

The following table shows changes for instruments at level 3 in 2016.

	Level 3
Opening balance	11,324
Acquisitions of shares	–
Gains recognized in the income statement	935
Closing balance	12,259
Total gains or losses for the period included in profit or loss for assets held at the end of the reporting period

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 ACCOUNTING ESTIMATES AND ASSUMPTIONS

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 calculating value in use. Certain estimates must be made for these calculations (note 16).

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

Income taxes

The Group is liable to pay tax in 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. Moreover, estimates and assumptions are made to determine the value of the deferred tax asset and deferred tax liability on the balance sheet date. Future amendments to tax legislation and the development of the business climate affect the company's future taxable profit and thus the ability to use the deferred tax asset on tax loss carry forwards.

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 in continuing operations would increase by SEK 5.6 (3.8) million if the percentage of completion had increased, or decrease by SEK 5.6 (3.8) million if the percentage of completion had decreased.

Provisions

The operations at Studsvik's facilities in Sweden are subject to local licensing requirements and Studsvik is liable to decommission facilities, manage waste and restore land. The Group makes provision in its own balance sheet for these future decommissioning costs. The Group also provides collateral in the form of bank guarantees and deposits blocked funds. The Group makes regular assessments of its technical and financial obligations and revises the value of these provisions annually. The commitment consists of discounted values of future cash flows.

If the actual estimate of the future decommissioning cost were to deviate by 10 per cent from the management's assessment, the result would have been SEK 2.5 (1.2) million lower for a higher estimate of future costs. Changes in estimates of future costs refer to repository costs for waste treated in the Group's Swedish facility, which affect future cash flows. Other changes in estimated future costs are capitalized as property, plant and equipment and thus only affect future depreciation.

Changes in the Group's provisions are presented in note 33.

Note 4 Segment reporting

Operating segments have been established on the basis of information dealt with by the Board of Directors and the President and used to make strategic decisions. The Board of Directors and the President assess operations mainly from a business area perspective, and therefore the segments consist of the Group's two business areas, which are described on pages 13 and 15.

The Board of Directors and the President assess the operating segments' performance on the basis of operating profit.

Operating segment assets refer to all non-current assets and current assets allocated by segment. Operating segment liabilities refer to all long-term and current liabilities allocated by segment.

Interest income and expenses are not allocated to the segments, since they are affected by measures taken by the central treasury, which handles the Group's cash liquidity. Reclassification of income, earnings and employees was made between segments for the comparison year to achieve comparability with 2016.

Financial year 2016	Waste Treatment	Consultancy Services	Fuel and Materials Technology	Other	Eliminations	Group
Sales revenues	0	448,419	282,876	71,928	–44,451	758,771
External sales revenue	0	435,116	279,885	43,770	0	758,771
EBITDA before non-recurring items	0	28,972	41,667	–15,490	–	55,149
Non-recurring items	0	–16,247	–783	0	–	–17,030
Depreciation/amortization and impairment	0	–2,857	–8,338	–6,379	–	–17,574
Earnings from associated companies and joint ventures	0	4,124	21	0	–	4,145
Operating profit	0	13,992	32,567	–21,869	–	24,690
Net financial items						–16,355
Taxes						8,666
Profit/loss for the year from continuing operations						17,001
Share of equity in associated companies and joint ventures	0	–1,922	69	11,107	–	9,254
Other operating segments	0	427,042	277,832	476,268	–289,367	891,775
Assets in disposal group held for sale						0
Total assets	0	425,120	277,901	487,375	–289,367	901,029
Operating segment liabilities	0	353,091	171,106	317,738	–289,367	552,568
Equity						348,461
Liabilities in disposal group held for sale						0
Total equity and liabilities						901,029
Investments from continuing operations	0	2,427	11,825	1,059		15,311
Average number of employees from continuing operations	0	523	127	37		687
			Fuel and

Financial year 2015	Waste Treatment	Consultancy Services	Materials Technology	Other	Eliminations	Group
Sales revenues	–	417,492	276,562	39,942	–12,815	721,181
External sales revenue	–	416,062	276,162	28,957	–	721,181
EBITDA before non-recurring items	–	13,946	49,915	–20,048	–	43,813
Non-recurring items	–	–	–	–	–	–
Depreciation/amortization and impairment	–	–1,820	–9,017	–8,013	–	–18,850
Earnings from associated companies and joint ventures	–	11,608	–	–	–	11,608
Operating profit	0	23,734	40,898	–28,061	–	36,571
Net financial items						–17,670
Taxes						–4,258
Profit/loss for the year from continuing operations						14,643
Share of equity in associated companies and joint ventures	–	4,801	48	–	–	4,849
Other operating segments	320,891	390,014	234,061	344,205	–300,539	988,632
Assets in disposal group held for sale						0
Total assets	320,891	394,814	234,109	344,205	–300,539	993,481
Operating segment liabilities	226,843	319,346	98,318	351,237	–300,539	695,205
Equity						298,276
Liabilities in disposal group held for sale						0
Total equity and liabilities						993,481
Investments from continuing operations	–	1,173	5,924	7,502	–	14,599
Average number of employees from continuing operations	–	523	128	57	–	708

Note 4 (cont.)

External sales revenue per product area	2016	2015
Consulting and engineering services	171,746	147,301
Health physics services	121,152	109,603
Transport and logistics	6,356	21,449
Decommissioning services	0	23,154
Operational and outage support	168,551	167,974
Fuel and materials performance	123,548	101,012
Corrosion and water chemistry studies	48,430	39,822
Fuel optimization software	75,163	79,572
Other operations	43,825	31,294
Total	758,771	721,181

Other operations include the parent company and the part of the Swedish company Studsvik Nuclear AB that is not part of the Consultancy Services or Fuel and Materials Technology segments.

External sales revenue		2016	2015
based on the customer's country of location	SEK thousand	Per cent	SEK thousand	Per cent
Sweden	180,373	23,8	144,727	20.1
Europe excluding Sweden	424,903	56,0	438,605	60.8
North America	101,480	13,4	105,048	14.6
Asia	30,614	4,0	26,799	3.7
All other countries	21,401	2,8	6,002	0.8
Total	758,771	100,0	721,181	100.0

In 2016 the Group had no customers that accounted for 10 per cent of total sales.

		2016	2015
Non-current assets per country	SEK thousand	Per cent	SEK thousand	Per cent
Sweden	183,613	41.1	259,308	39.7
Europe excluding Sweden	159,014	35.6	293,497	44.9
North America	99,766	22.3	101,011	15.4
Asia	4,731	1.1	91	0.0
Total	447,124	100.0	653,907	100.0

Note 5 Other operating income

Other income	2016	2015
Sale of property, plant and equipment	38	214
Insurance compensation	19	56
Revaluation of holding in mutual insurance company	934	77
Other	4,323	889
Total	5,314	1,236
Other gains	2016	2015
Other financial assets measured at fair value through profit or loss
– Fair value gains	1,364	3,569
Forward exchange contracts
– Foreign exchange differences	1,517	2,143
Total	2,881	5,712

Note 6 Other operating expenses

Other costs	2016	2015
Sale of property, plant and equipment	0	0
Non-recurrent structural costs	17,030	0
Other	5,877	177
Total	22,907	177
Other losses	2016	2015
Other financial assets measured at fair value through profit or loss
– Fair value losses	2,156	5,844
Forward exchange contracts
– Foreign exchange differences	1,340	4,349
Total	3,496	10,193

Non-recurring structural costs amount to SEK 17,030 thousand and consist of costs for termination of staff and closure of offices in the United Kingdom of SEK 9,116 thousand, costs of termination of staff in Germany of SEK 3,689 thousand, in the USA of SEK 665 thousand and in Sweden of SEK 3,560 thousand.

Note 7 Costs by nature of expense

	2016	2015
Purchases of material and services	190,785	172,945
Personnel costs	473,857	462,835
Energy	11,171	19,476
Depreciation/amortization and impairment	15,843	18,877
Other costs	28,362	18,663
Total	720,018	692,796

Note 8 Remuneration to auditors

	2016	2015
PricewaterhouseCoopers
– Audit assignments	1,950	3,305
– Audit business in addition to audit	1,471	272
– Tax consultancy	975	935
– Other services	1,394	130
Total	5,790	4,642
Other auditors
– Audit assignments	52	312
– Audit business in addition to audit	171	120
– Tax consultancy	288	295
– Other services	0	320
Total	511	1,047
Group, total	6,301	5,689

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. Other services consist mainly of fees referring to sale of the Waste Treatment operations.

Note 9 Employee benefits

Employee benefits	2016	2015
Salaries	376,237	451,126
Social security contributions	76,872	93,953
Pension costs – defined contribution based	29,789	31,252
Pension costs – defined benefit based	437	1,609
Total	483,335	577,940
Of which continuing operations	446,168	507,316
Of which operations held for sale	37,167	70,624

Salaries and other remuneration distributed between board members and president as well as other employees			2016			2015
	Board and President	Of which Variable remuneration	Other employees	Board and President	Of which Variable remuneration	Other employees
Parent company	6,027	200	6,438	6,008	–	7,356
Subsidiaries in Sweden	2,201	0	92,606	1,273	–	99,500
Subsidiaries abroad	12,795	47	229,780	12,948	355	270,636
Total, subsidiaries	14,996	47	322,386	14,221	355	377,492
Operations for sale	0	0	26,143	–	–	53,050
Total for Group	21,023	247	354,967	20,229	355	430,542

			2016			2015
Average number of employees	Men	Women	Total	Men	Women	Total
Parent company	3	4	7	6	4	10
Subsidiaries in Sweden	98	47	145	106	58	164
Subsidiaries abroad
– Germany	397	36	433	390	40	430
– United Kingdom	28	11	39	24	11	35
– USA	30	4	34	33	3	36
– Japan	1	0	1	1	0	1
– Switzerland	26	1	27	30	1	31
– France	0	1	1	0	1	1
Total, subsidiaries	580	100	680	584	114	698
Operations for sale	37	9	46	98	23	121
Total for Group	620	113	733	688	141	829
				2016		2015

Gender breakdown in the Group (including subsidiaries) for members of the Board and other senior management	Number on balance sheet date	Of which men	Number on balance sheet date	Of which men
Board members	10	6	11	7
President and other senior management	7	5	7	5
Total for Group	17	11	18	12

All the Board Members and the President belong to continuing operations. For information on benefits to senior management, see note 38.

Note 10 Financial income and expense

	2016	2015
Financial income
Current bank balances	19	11
Fair value gains (realized and unrealized)	8,930	9,138
Other financial income	109	213
Total	9,058	9,362
Financial expenses
Bank loans	–17,969	–10,409
Fair value losses (realized and unrealized)	–456	–13,425
Other financial expenses	–6,988	–3,198
Total	–25,413	–27,032
Net financial items	–16,355	–17,670

Note 11 Income tax

	2016	2015
Current tax
Current tax on profit for the year	–3,947	–8,092
Adjustment for previous years	–106	–251
Total	–4,053	–8,343
Deferred tax (note 31)
Origination and reversal of temporary differences	12,719	4,085
Total	12,719	4,085
Total income tax	8,666	–4,258

The Swedish income tax rate is 22 (22) 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.

	2016	2015
Profit/loss before tax	8,334	6,681
Tax in accordance with the current tax rate	–3,509	–2,947
Non-taxable revenue	867	2,346
Expenses not deductible for tax purposes	–898	–764
Unrecognized tax asset in respect of loss carry forwards	–	–2,642
Recognized tax asset related to losses	12,312	–
Adjustment for previous years' tax assessment	–106	–251
Other effects	–	–
Tax expense	8,666	–4,258

The weighted average tax rate was –104 (64) per cent.

Other comprehensive income only includes tax effects on cash flow hedges and on December 31 these amounted to SEK 172 (–106) thousand. Other comprehensive income also includes foreign exchange differences, but they have no tax effect.

Note 12 Foreign exchange differences – net

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

	2016	2015
Other gains and losses – net (notes 5 and 6)	–615	–4,481
Financial items (note 10)	8,474	–4,287
Total	7,859	–8,768

Note 13 Earnings per share

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.

Earnings per share before and after dilution is calculated by dividing the profit for the year by the weighted average number of shares in issue (note 26).

Before and after dilution,

continuing operations	2016	2015
Net profit/loss for the year	17,001	14,643
Weighted average number of ordinary shares in issue	8,218,611	8,218,611
Diluted and undiluted earnings per share
(SEK per share)	2.07	1.78
Before and after dilution,
operations held for sale	2016	2015
Net profit/loss for the year	46,003	–12,220
Weighted average number of ordinary shares in issue	8,218,611	8,218,611
Earnings per share before and after dilution
(SEK per share)	5.60	–1.49
Before and after dilution, total operations	2016	2015
Net profit/loss for the year	63,004	2,423
Weighted average number of ordinary shares in issue	8,218,611	8,218,611
Earnings per share before and after dilution
(SEK per share)	7.67	0.29

Note 14 Earnings per share

Dividend paid in 2016 and 2015 was SEK 0 (0) per share. At the Annual General Meeting on April 27, 2017 it will be proposed that dividend of SEK 1 per share be distributed.

Note 15 Property, plant and equipment	Buildings	Plant and	Equipment	Construction in pro gress and advance payments for pro perty, plant and
	and land	machinery	and tools	equipment	Total
As at December 31, 2014
Cost of acquisition	319,882	227,490	138,837	33,845	720,054
Accumulated depreciation and impairment	–114,808	–147,432	–107,795	–	–370,035
Book value	205,074	80,058	31,042	33,845	350,019
January 1 – December 31, 2015
Opening book value non-divested companies	205,074	80,058	31,042	33,845	350,019
Foreign exchange differences	2,368	264	317	–	2,949
Investments	1,751	1,850	2,080	20,305	25,986
Capitalization of future restoration cost	–	–	–	–	–
Redistributions	274	3,908	910	–5,604	–512
Disposals and retirements	–	–1,225	–17	–	–1,242
Depreciation/amortization	–8,844	–15,901	–7,658	–	–32,403
Impairment losses for the year	–	–	–	–	–
Closing book value	200,623	68,954	26,674	48,546	344,797
As at December 31, 2015
Cost of acquisition	324,223	229,916	140,004	48,546	742,689
Accumulated depreciation and impairment	–123,600	–160,962	–113,330	–	–397,892
Book value	200,623	68,954	26,674	48,546	344,797
January 1 – December 31, 2016
Opening book value non-divested companies	200,623	68,954	26,674	48,546	344,797
Foreign exchange differences	–11,854	–855	183	0	–12,526
Investments	–	3,658	825	13,088	17,571
Capitalization of future restoration cost	3,669	–	–	–	3,669
Redistributions	3,836	13,803	4,381	–21,694	326
Disposals and retirements	–167,214	–50,433	–3,825	–750	-222,222
Depreciation/amortization	–3,645	–9,030	–5,623	0	–18,298
Impairment losses for the year	–	–	–	–	–
Closing book value	25,415	26,097	22,615	39,190	113,317
As at December 31, 2016
Cost of acquisition	83,356	124,965	124,157	39,190	371,668
Accumulated depreciation and impairment	–57,941	–98,868	–101,542	0	258,351
Book value	25,415	26,097	22,615	39,190	113,317

Depreciation costs include SEK 17,503 (30,614) thousand in 'Cost of services sold', SEK 78 (136) thousand in 'Selling and marketing costs', SEK 435 (1,093) thousand in 'Administrative expenses' and SEK 282 (560) thousand in 'Research and development costs'. Interest of SEK 5,128 (5,701) thousand is included in the cost of acquisition of buildings, plant and machinery. The value of finance leases capitalized as property, plant and equipment is presented in note 36.

Note 16 Intangible assets		Contractual customer relations and
	Goodwill	Software rights	similar rights	Total
As at December 31, 2014
Cost of acquisition	208,746	25,153	23,739	257,638
Accumulated depreciation and impairment	–34,862	–23,966	–21,632	–80,460
Book value	173,884	1,187	2,107	177,178
January 1 – December 31, 2015
Opening book value	173,884	1,187	2,107	177,178
Foreign exchange differences	–1,885	–92	–30	–2,007
Investments	–	3,835	3,539	7,374
Depreciation/amortization	23	–167	–994	–1,138
Impairment losses for the year	–	–	–	–
Closing book value	172,022	4,763	4,622	181,407
As at December 31, 2015
Cost of acquisition	205,626	29,360	28,323	263,309
Accumulated depreciation and impairment	–33,604	–24,597	–23,701	–81,902
Book value	172,022	4,763	4,622	181,407
January 1 – December 31, 2016
Opening book value	172,022	4,763	4,622	181,407
Foreign exchange differences	5,202	68	27	5,297
Investments	–	968	0	968
Disposals and retirements	–3,541	–	–3,604	–7,145
Depreciation/amortization	–1	–1,772	–717	–2,490
Impairment losses for the year	–	–	–	–
Closing book value	173,682	4,027	328	178,037
As at December 31, 2016
Cost of acquisition	208,620	30,637	17,768	257,025
Accumulated depreciation and	–34,938	–26,610	–17,440	–78,988
impairment
Book value	173,682	4,027	328	178,037

Contractual customer relations and similar rights consist mainly of customer relations / contracts, as well as some tenancy rights. Amortization of SEK 1,781 (1,138) thousand 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 Totalry of the goodwill allocation is presented below.

	2016	2015
Consultancy Services	173,682	168,086
Other	0	3,936
Total	173,682	172,022

Goodwill is tested annually to identify any impairment loss. Acquired operations are integrated with other operations after acquisition. Impairment testing is therefore carried out at segment level. The segments are identified as cash generating units.

The cash-generating units' recoverable amount is based on value in use. These values are based on estimated future cash flows based on business plans approved by the Board of Directors for the next five years. The management has established the budgeted gross margin on the basis of previous earnings and its expectations concerning market developments. The rate of growth is estimated for each cash-generating unit on the basis of market position and development. Cash flows beyond the five-year period are extrapolated with an estimated annual rate of growth. A weighted cost of capital for borrowed capital and equity is applied as the discount rate, as presented below.

Material assumptions used for calculating value in use:

	Gross margin, %	Rate of growth after year 5, %	Discount rate, %
Consultancy Services 2016	14.0	2.5	9.9
Consultancy Services 2015	13.0	2.5	9.0

The cost of borrowed capital has been determined individually for each segment, thereby taking into consideration differences in market rates between the markets in which the various units operate. The cost of equity is calculated as the return on riskfree investments for each segment, plus a market risk premium. The weighted cost of capital used in calculating the recoverable amount is 14 (11) per cent before tax.

A sensitivity analysis was made in which a possible reasonable change in the discount rate of two percentage points or a possible reasonable marginal deterioration of 25 per cent were tested. Based on these assumptions and estimates and other estimates made, there is no impairment loss on goodwill.

The company management has also assessed that even a greater change in the parameters specified above could take place without any impairment loss arising. There are no other specific circumstances that have affected impairment testing.

Note 17 Investments in associated companies

	2016	2015
As at January 1	3,886	2,940
Share in earnings	10,684	,12,368
Dividend received from associated companies	–9,768	–11,044
Foreign exchange differences	–792	–378
As at December 31	4,010	3,886

The Group's holding in the two unlisted associated companies KraftAkademin AB and UK Nuclear Waste Management Ltd. Both companies have ordinary shares that are owned directly by the Group.

		Participating
2016	Operating site	interest %	Valuation method
KraftAkademin AB	Sweden	25	Equity method
UK Nuclear Waste Management Ltd	United Kingdom	15	Equity method
2015	Operating site	Participating interest %	Valuation method
KraftAkademin AB	Sweden	25	Equity method

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.

UK Nuclear Waste Management Ltd United Kingdom 15 Equity method

UK Nuclear Waste Management Ltd (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 United Kingdom.

Obligations and contingent liabilities

Obligation to contribute capital to both associated companies if necessary.

Financial information for the Group's associated companies

A financial Totalry of the Group's associated companies in which the equity method is applied is given below.

Balance sheet		KraftAkademin AB*	UK Nuclear Waste Management Ltd*		Total
	2016	2015	2016	2015	2016	2015
Current
Cash and cash equivalents	459	212	1,534	1,493	1,993	1,705
Other current assets	409	117	1,601	1,559	2,010	1,676
Total non-current assets	868	329	3,135	3,052	4,003	3,381
Financial liabilities (excluding trade payables)	–	–	–	–	–	–
Other current liabilities (including trade payables)	592	133	17,574	17,113	18,166	17,246
Total current liabilities	592	133	17,574	17,113	18,166	17,246
Non-current
Non-current assets	–	–	40,714	39,646	40,714	39,646
Total non-current assets	–	–	40,714	39,646	40,714	39,646
Financial liabilities	–	–	–	–	–	–
Other long-term liabilities	–	–	–	–	–	–
Total long-term liabilities	–	–	–	–	–	–
Net assets	276	196	26,275	25,586	26,551	25,782
Statement of comprehensive income	2016	2015	2016	2015	2016	2015
Income	2,552	1,730	85,396	86,972	87,948	88,702
Depreciation/amortization	–	–	–	–	–	–
Interest income	–	2	–	–	–	2
Interest expense	–	–	–	–	–	–
Profit/loss before tax	158	–36	71,087	82,453	71,245	82,417
Income tax	–21	–	–	–	–21	–
Net profit/loss for the year	137	–36	71,087	82,453	71,224	82,417
Other comprehensive income	–	–	–	–	–	–
Total comprehensive income	137	–36	71,087	82,453	71,224	82,417

The information above reflects the figures presented in the associated companies' financial statements adjusted for differences in accounting rules between the Group and the respective associated company.

* KraftAkademin's financial year runs from September 1 to August 31, and UKNWM's financial year runes from April 1 to March 31. The figures are estimated on the basis of information available at the year-end closing in 2015 and 2016.

Reconciliation of the financial information

Reconciliation of the financial information to the carrying amount of the Group's participations in associated companies.

		KraftAkademin AB		UK Nuclear Waste Management Ltd		Total
	2016	2015	2016	2015	2016	2015
Net assets as at January 1	139	175	25,586	19,280	25,725	19,455
Net profit/loss for the year	137	–36	71,087	82,453	71,224	82,417
Dividend	–	–	–65,121	–73,627	–65,121	–73,627
Capital contributions from owners	–	–	–	–	–	–
Foreign exchange differences	–	–	–5,277	–2,520	–5,277	–2,520
Other comprehensive income	–	–	–	–	–	–
Net assets as at December 31	276	139	26,275	25,586	26,551	25,725
Participating interest associated companies	69	35	3,941	3,838	4,010	3,873
Carrying amount	69	48	3,941	3,838	4,010	3,886

Note 18 Interests in joint ventures

	2016	2015
As at January 1	963	3,158
Share in earnings	–805	–760
Investments for the year	6,338	–
Dividend received from joint ventures	–	–1,660
Foreign exchange differences	–1,251	225
As at December 31	5,245	963

The Group's share in earnings of the joint ventures in which the company has interests, all of which are unlisted, and its share of assets (including goodwill and liabilities) is as follows.

2016		Non-current assets	Current assets	Current liabilities	Net assets	Income	Results	Participating interest
THOR Treatment Technologies, LLC	USA	–	1,116	502	615	17,227	–409	50
KOBELCO STUDSVIK Co., Ltd	Japan	5,444	5,304	34	10,714	0	–396	49
Total		5,444	6,421	536	11,329	17,227	–805
2015		Non-current assets	Current assets	Current liabilities	Net assets	Income	Results	Participating interest
THOR Treatment Technologies, LLC	USA	–	1,470	504	966	693	–760	50
Total		–	1,470	504	966	693	–760

THOR Treatment Technologies, LLC (TTT), 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. KOBELCO STUDSVIK Co., Ltd is a joint venture in Japan with Kobe Steel, Ltd, focusing on design of facilities for treatment of Japanese radioactive waste. Under a cooperation agreement the companies have a joint controlling interest.

Obligations and contingent liabilities

The Group has an obligation to contribute capital to TTT if necessary. The Group has no obligations regarding KOBELCO STUDSVIK Co., Ltd.

Financial information for the Group's joint ventures

A summary is given below of the Group's joint venture companies in which the equity method is applied.

Balance sheet	KOBELCO STUDSVIK Co. Ltd	THOR Treatment Technologies LLC
	2016	2016	2015
Current
Cash and cash equivalents	10,825	2,456	2,170
Other current assets	0	0	163
Total non-current assets	10,825	2,456	2,334
Financial liabilities (excluding trade payables)	–	–	–
Other current liabilities (including trade payables)	69	1,391	1,014
Total current liabilities	69	1,391	1,014
Non-current
Non-current assets	11,110	165	607
Total non-current assets	11,110	165	607
Financial liabilities	–	–	–
Other long-term liabilities	–	–	–
Total long-term liabilities	–	–	–
Net assets	21,866	1,230	1,927
Share of net assets	10,714	615	963
Elimination of intra-group profit against share of equity	–6,084	–	–
Carrying amount	4,630	615	963

Statement of comprehensive income	KOBELCO STUDSVIK Co. Ltd		THOR Treatment Technologies LLC
	2016	2016	2015
Income	0	34,455 1,386
Depreciation/amortization	–	–	–
Interest income	–	–	–
Interest expense	–	–	–
Profit/loss before tax	–809	–818 –1,520
Income tax	–	–	–
Net profit/loss for the year	–809	–818 –1,520
Other comprehensive income	–	–	–
Total comprehensive income	–809	–818 –1,520

The information above reflects the figures presented in THOR Treatment Technologies, LLC, KOBELCO STUDSVIK Co., Ltd, financial statements adjusted for differences in accounting rules between the Group and the joint venture company.

Note 19 Financial instruments by category

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

		Assets at
	Loans and	fair value through	Derivatives for
	trade receivables	profit or loss	hedging	Total
As at December 31, 2016
Assets on the balance sheet
Derivative instruments	–	–	2,246	2,246
Trade and other receivables	254,329	–	–	254,329
Other financial assets measured at fair value through profit or loss	–	56,614	–	56,614
Cash and cash equivalents	195,363	–	–	195,363
Total	449,692	56,614	2,246	508,552

	Liabilities at fair value through profit or loss	Other financial liabilities	Derivatives for hedging	Total
Liabilities on the balance sheet
Borrowings	–	198,250	–	198,250
Derivative instruments	–	–	5,929	5,929
Total	0	198,250	5,929	204,179

		Assets at
	Loans and	fair value through	Derivatives for
	trade receivables	profit or loss	hedging	Total
As at December 31, 2015
Assets on the balance sheet
Derivative instruments	–	–	2,488	2,488
Trade and other receivables	262,712	–	–	262,712
Other financial assets measured at fair value through profit or loss	–	33,794	–	33,794
Cash and cash equivalents	74,914	–	–	74,914
Total	337,626	33,794	2,488	373,908

	Liabilities at fair value through profit or loss	Other financial liabilities	Derivatives for hedging	Total
Liabilities on the balance sheet
Borrowings	–	209,255	–	209,255
Derivative instruments	69	–	6,688	6,757
Total	69	209,255	6,688	216,012

Note 20 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.

	2016	2015
Trade receivables
Counterparties without external credit rating
– New customers (less than 6 months)	645	1,944
– Existing customers with no defaults in the past	149,030	193,846
– Existing customers with some delayed payments in the past	1,065	681
Total	150,740	196,471
Loans to related parties
Existing related party with no previous defaults	1,876	2,777
Total	1,876	2,777
No repayment of loans to related parties was made during the year.
Bank balances and short-term borrowing
AA- and A+	195,363	74,914
Total	195,363	74,914
Derivative instruments
AA- and A+	2,246	2,488
Total	2,246	2,488

Note 21 Derivative instruments

	2016		2015
	Assets	Liabilities	Assets	Liabilities
Forward exchange contracts – Cash flow hedges	2,246	5,929	2,488	6,727

The entire fair value of a derivative instrument designated as a hedging instrument is classified as a long-term 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 is less than 12 months. Revaluation of forward exchange contracts designated as hedges is through equity. Other forward contracts are revalued through profit or loss.

The ineffective portion, recognized in the income statement, referring to cash flow hedges, amounts to SEK 177 thousand (notes 5 and 6).

The hedged, highly probable forecast transactions in foreign currency are expected to occur at varying dates during the coming 36 months. Gains and losses on forward exchange contracts as at December 31, 2016, recognized in the hedging reserve in equity (note 28), are recognized in the income statement in the period or periods during which the hedged forecast transaction affects the income statement.

Outstanding forward exchange contracts on December 31, 2016

		INFLOW CURRENCIES		OUTFLOW CURRENCIES
		EUR	GBP	USD	EUR	JPY
Förfalloår		000	000	000	000	000
2017	Amount	–	–	4,067	–	–
	Rate 1	–	–	6.858	–	–
2018	Amount	–	–	1,233	–	–
	Rate 1	–	–	7.794	–	–
2019	Amount	–	–	116	–	–
	Rate 1	–	–	7.948	–	–
	Remeasured at fair value, SEK thousands	–	–	41,985	–	–

¹ Average contractual rate

The nominal amount for outstanding forward exchange contracts is SEK 38,425 (84,369) thousand.

Note 22 Trade and other receivables

	2016	2015
Trade receivables	152,000	197,730
Less – Provision for impairment of receivables	–1,260	–1,259
Trade receivables – net	150,740	196,471
Loans to related parties (note 37)	1,876	2,777
Other receivables	24,800	–
Service contracts in progress	53,537	26,303
Tax assets	11,470	7,996
Other receivables	7,396	7,396
Prepaid expenses and accrued income
– Accrued income	2,959	13,191
– Prepaid rent	626	1,208
– Prepaid lease charges	0	–
– Prepaid insurance premiums	2,516	910
– Other prepaid expenses	25,084	6,460
Total	281,005	262,712
Long term portion	26,676	2,777
Current portion	254,329	259,935
Total	281,005	262,712

	2016	2015
Less than 3 months	37,275	41,244
3 to 6 months	1,459	993
More than 6 months	118	18
Total	38,852	42,255

The reserve for doubtful receivables amounted to SEK 1,260 (1,258) thousand as at December 31, 2016.

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

	2016	2015
SEK	169,747	71,387
EUR	67,775	84,598
GBP	10,917	66,176
USD	24,500	26,038
Other currencies	8,066	14,513
Total	281,005	262,712

Changes in the reserve for doubtful receivables:

	2016	2015
As at January 1	–1,829	–1,098
Translation difference	0	33
Provision for doubtful receivables	0	–667
Receivables written off as unrecoverable	367	237
Unused amounts reversed	201	237
As at December 31	–1,261	–1,258

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.

The book value for trade and other receivables is the fair value.

The effective interest rate on long-term receivables is as follows.

	2016	2015
Loans to related parties (Note 37)	2.0 %	2.0 %

As at December 31, 2016 trade receivables of SEK 38,852 (42,255) thousand were overdue without any impairment loss being identified. These refer to a number of independent customers who have not previously had payment difficulties. An age analysis of these trade receivables is given below.

Note 23 Financial assets at fair value through profit or loss

	2016	2015
Unlisted shareholdings	12,259	11,324
Capital insurance	14,191	14,556
Long-term bank deposits	3,488	7,914
Total	29,938	33,794

The statement of cash flows includes financial assets measured at fair value through profit or loss in the category 'Cash flow from operating activities' as part of the change in working capital. This does not, however, apply to bank deposits recorded as 'Cash flow from financing activities'. The Group makes regular payments to blocked bank accounts for future waste management costs. Blocked bank funds in the Nuclear Waste Fund amount to SEK 2,467 (6,356) thousand and are recorded as long-term bank deposits.

The fair value of capital insurance is based on current market prices.

Note 24 Inventories

	2016	2015
Raw material	–	–
Finished goods	1,967	2,381
Total	1,967	2,381

The expensed expenditure for inventories is included under 'Cost of services sold' and amounts to SEK 4,568 (4,789) thousand.

Note 25 Cash and cash equivalents

	2016	2015
Cash and bank balances	195,363	74,914
Total	195,363	74,914

Note 26 Share capital and other contributed capital

	Number of shares	Share capital	Other contributed capital
As at January 1, 2015	8,218,611	8,219	225,272
As at December 31, 2015	8,218,611	8,219	225,272
As at January 1, 2016	8,218,611	8,219	225,272
As at December 31, 2016	8,218,611	8,219	225,272

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

Note 27 Retained earnings

111,933
–
–
63,004
48,929
48,929
–
–
2,423
46,506

Note 28 Reserves

All the items below may be reclassified in the income statement.

	Currency translation reserve	Hedging reserve	Total reserves
As at January 1, 2016	20,050	–4,538	15,512
Foreign exchange differences
– Group	–13,458	–	–13,458
Cash flow hedges
– Currency translation reserve	–	609	609
As at December 31, 2016	6,592	–3,929	2,663
As at January 1, 2015	17,539	–4,914	12,625
Foreign exchange differences
– Group	2,511	–	2,511
Cash flow hedges
– Currency translation reserve	–	376	376
As at December 31, 2015	20,050	–4,538	15,512

Note 29 Trade and other payables

	2016	2015
Trade payables	31,799	34,287
Liabilities for work in progress	27,625	67,543
Social security and other taxes	37,171	37,846
Other liabilities	33,266	45,775
Accrued expenses and deferred income
– Deferred income	2,225	9,720
– Accrued interest expense	1,698	467
– Accrued wages and salaries	15,754	18,260
– Accrued pension costs	15,638	14,556
– Accrued consulting and service costs	8,773	25,489
– Accrued audit fees	1,518	1,503
– Other items	19,199	20,083
Total	194,666	275,529
Long term portion	15,180	39,115
Current portion	179,486	236,414
Total	194,666	275,529

Note 30 Borrowing

	2016	2015
Long term portion
Bank loans	–	1,012
Bond loans	198,250	–
Total	198,250	1,012
Short term portion
Bank loans	–	8,243
Bond loans	–	200,000
Total	–	208,243
Total borrowings	198,250	209,255

The bond loan bears an interest margin of 6.50 per cent plus stibor 3 months and matures in its entirety on February 22, 2019.

The exposure of the Group's borrowings to interest

rate changes and the contractual repricing dates at
the balance sheet date are as follows	2016	2015
0–6 months	–	208,243
6–12 months	–	–
1–5 years	198,250	1,012
More than 5 years	–	–
Total borrowings	198,250	209,255

Note 30 (cont.)

The bank loans mature in 2019. The total borrowing includes bank loans and other borrowing against collateral of SEK 70,952 (52,098) thousand. Shares in Studsvik Nuclear AB have been put up as collateral for the Group's bank loans.

Carrying amounts and fair value for non-current borrowing are presented below. The loans are at level 2 of the fair value hierarchy.

		FAIR VALUE		CARRYING AMOUNT
Maturities of borrowings	2016	2015	2016	2015
Less than 1 year		– 209,557		– 208,243
Between 1 and 2 years	–	1,012	–	1,012
Between 2 and 5 years	207,754	–	198,250	–
More than 5 years	–	–	–	–
Total		207,754 210,569		198,250 209,255

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

following currencies	2016	2015
SEK		198,250 206,269
USD	–	–
GBP	–	2,986
Total		198,250 209,255
The Group has the following unutilized credit facilities	2016	2015
Variable interest rate
– Matures within one year	–	–
Total	–	–

The lines of credit that mature within one year are one-year credit facilities that will be reviewed on varying dates in 2016.

Average effective interest rate

on balance sheet date, bank loans	2016	2015
SEK	6.50 %	3.32 %
GBP	–	3.00 %

Note 31 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.

Offset amounts			2016	2015
Deferred tax assets
Deferred tax assets to be utilized after more than 12 months			86,344	80,843
Deferred tax assets to be utilized within 12 months			3,558	5,296
Total			89,902	86,139
Deferred tax liabilities
Deferred tax liabilities to be paid after more than 12 months			30,403	28,599
Deferred tax liabilities to be paid within 12 months			1,753	1,364
Total			32,156	29,963
	Tax
Deferred tax assets	losses	Fair value gains	Other	Total
As at January 1, 2015	77,463	6,300	687	84,450
Recognized in the income statement	–753	–1,017	50	–1,720
Tax referring to components in other comprehensive income	–	–	–	–
Translation differences	4,160	–14	–737	3,409
As at December 31, 2015	80,870	5,269	0	86,139
Recognized in the income statement	13,317	240	–	13,557
Tax referring to components in other comprehensive income	–	–176	–	–176
Tax attributable to sold operations	–13,779	–	–	–13,779
Reposting to current tax	–	–	–	–
Translation differences	4,161	–	–	4,161
As at December 31, 2016	84,569	5,333	0	89,902
Deferred tax liabilities	Accelerated tax depreciation	Fair value gains	Other*	Total
As at January 1, 2015	7,096	2,861	28,100	38,057
Recognized in the income statement	–6,689	–	884	–5,805
Tax referring to components in other comprehensive income	–	–106	–	–106
Reposting to current tax	–	–	–	–
Translation differences	–	–2,624	441	–2,183
As at December 31, 2015	407	131	29,425	29,963
Recognized in the income statement	–407	–	1,244	837
Tax referring to components in other comprehensive income	–	–5	–	–5
Reposting to current tax	–	–	–	–
Translation differences	–	–	1,361	1,361
As at December 31, 2016	0	126	32,030	32,156

* Other deferred tax liabilities include deferred tax of SEK 29.5 (27.0) million referring to temporary differences from goodwill in the German operations.

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 deemed probable. Most of the Group's tax loss carry forwards are related to the operations in the USA, the UK and Germany. They amount to a total of USD 110.3 (110.7) million, which restated at the balance sheet rate is SEK 997.1 (918.5) million, to be utilized within a 20-year period in the USA, and GBP 3.5 (9.6) million in the United Kingdom, which restated at the balance sheet rate is SEK 39.0 (118.4) million, where there is no time limit on the right to apply tax loss carry forwards and EUR 0.7 million in Germany, which restated at the balance sheet rate is SEK 7.1 million. The Group's recognized deferred tax assets include tax loss carry forwards in the USA of SEK 58.5 (62.2) million, in the UK of SEK 3.6 (14.7) million, in Sweden of SEK 13.7 (0) million and of SEK 8.6 (3.9) million in Germany.

Note 32 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 considered to be not entirely immaterial are in Germany. Other pension obligations, which also exist in Germany and Japan, have not been regarded as having any material effect and have not been subject to actuarial calculation.

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 Reporting Board, UFR 10, this is a defined benefit plan covering several employers. For the 2016 financial year the Group has not had access to information that makes it possible to report this plan as a defined benefit plan. The pension plan under ITP, which is vested through insurance with Alecta, is therefore reported as a defined contribution plan. The year's contributions for pension insurance taken out with Alecta amount to SEK 5,288 (7,782) thousand. Alecta's surplus can be distributed to the policy holders and/or the insured. At the end of 2016 Alecta's surplus in the form of a collective solvency level was 148 (153) 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.

	2016	2015
Obligations in the balance sheet for
Pension benefits	5,525	5,478
Recognition in the income statement for (note 9)
Pension costs	30,226	32,861
Amounts recognized in the balance sheet	2016	2015
Present value of unfunded obligations	5,525	5,478
Total	5,525	5,478
Amounts recognized in the income statement	2016	2015
Defined benefit plans
Current service cost	239	43
Interest expense	75	75
Total	314	118

Of the total cost, SEK 314 (118) thousand was included in the items 'Cost of goods sold' and 'Administrative expenses'. The actual return on plan assets was SEK – (–) thousand.

Changes in the liability recognized

in the consolidated balance sheet	2016	2015
At the start of the year	5,478	7,517
Translation differences	–105	–2,012
Total expense recognized in the income statement	314	118
Contributions paid	–162	–145
At the end of the year	5,525	5,478

Total pension costs recognized

in the consolidated income statement	2016	2015
Total costs for defined benefit plans	314	118
Total costs for defined contribution plans	25,538	27,812
Costs of special employer's contribution and tax on
returns from pension funds	4,374	4,931
Total	30,226	32,861
Actuarial assumptions	2016	2015
Discount rate	1.5 %	2.0 %
Expected return on plan assets	0.0 %	0.0 %
Future salary increases	0.0 %	0.0 %
Future pension increases	1.0 %	1.0 %

Note 33 Other provisions

	Future waste
	management costs	Other provisions	Total
As at January 1, 2016	61,819	100,331	162,150
Recognized as an expense in the consolida
ted income statement
– Additional provisions	53,329	29,438	82,767
– Reversed provisions	–	–	–
Capitalized as property, plant and equipment
Transfers	–	–	–
Discount effect	–	–	–
Funds in sold operations	–49,164	–81,091	–130,255
Amount utilized during the period	–4,285	–39	–4,324
Translation difference	–	–	–
As at December 31, 2016	61,699	48,639	110,338
Long term portion	59,322	48,399	107,721
Current portion	2,377	240	2,617
Total	61,699	48,639	110,338

Future waste management costs

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 and also to some extent for decommissioning of facilities and the resulting decommissioning waste. Additional provisions in 2016 include provisions for waste generated in the operations sold in 2016. 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 Studsvik Act 1988:1597, through a charge on nuclear generated electricity. Fees paid in are administered by the Nuclear Waste Fund. The Group's total payments to the Nuclear Waste Fund amount to SEK 2,467 (6,356) thousand and are recorded as long-term bank deposits, see note 23.

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. Recognized provisions include management of waste in connection with decommissioning, SEK 61.7 million. Of the total provisions, SEK 2.6 million is expected to be utilized in 2017 and the rest is expected to be utilized successively and at the earliest starting in 2018.

Other provisions

Other provisions refer to future costs for decommissioning the Swedish and British waste management facilities. In addition to this, future costs of decommissioning other nuclear facilities in Sweden are included. Of the total provisions, SEK 0.2 million is expected to be utilized in 2017. The remaining part of the provisions is expected to be utilized only in connection with decommissioning operations.

Note 34 Cash flow from operating activities

Non-cash items	2016	2015
Depreciation/amortization	20,788	33,541
Impairment losses on property, plant and equipment	678	1,196
Proceeds from sale of property, plant and equipment	–	2,436
Proceeds from sale of subsidiaries and other business units –107,174		–
Share in earnings from associated companies	–4,145	–11,608
Revaluation of financial holdings	–550	–289
Other changes in provisions	46,743	3,423
Total	–43,660	28,699

Note 35 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 71,660 (52,098) thousand to third parties. No further payments are expected as at the date of these financial statements.

Note 36 Commitments

CAPITAL COMMITMENTS

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

	2016	2015
Property, plant and equipment	–	–
Total	–	–

OPERATING LEASE COMMITMENTS

Lease expenses for operating leases for the year amounted to SEK 14,168 (10,576) thousand.

Future aggregate minimum lease payments	2016	2015
Within 1 year	10,582	11,755
Between 1 and 5 years	12,484	20,909
More than 5 years	150	2,900
Total	23,216	35,564

Note 37 Transactions with related parties

Studsvik, Inc. owns 50 percent 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. The Studsvik Group owns 15 per cent of UK Nuclear Waste Management Ltd (NWM), where Studsvik, in a consortium together with other owner-partners, will manage and operate a repository for low level radioactive waste in the United Kingdom. Studsvik AB owns 49 % of KOBELCO STUDSVIK Co,. Ltd, a joint venture in Japan, focusing on design of facilities for treatment of Japanese waste.

Transactions with related parties	2016	2015
Sale of services
– THOR Treatment Technologies, LLC	17,227	693
– UK Nuclear Waste Management Ltd	10,663	4,643
– KOBELCO STUDSVIK Co., Ltd	5,736	–
Reported receivables from related parties
– THOR Treatment Technologies, LLC	1,609	199
– UK Nuclear Waste Management Ltd	5,273	481
– KOBELCO STUDSVIK Co., Ltd	0	–
Provision for doubtful trade receivables	–	–
Impairment loss on trade receivables	–	–
Total costs referring to provisions and impairment
losses recognized in the income statement	40,508	6,016

Loans receivable from related parties
– UK Nuclear Waste Management Ltd	1,876	2,777

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

There have been no transactions with other related parties, besides remuneration to the Board of Directors, President and senior management. Remuneration to the Board of Directors, President and senior management is described in note 9.

Studsvik holds 79 per cent of Studsvik Scandpower, Inc. The remaining 21 per cent is held by a private individual previously employed by the company. Studsvik owns 91 per cent of Studsvik Scandpower AB and its subsidiary Studsvik Scandpower GmbH. The remaining 9 per cent is held by the minority shareholder of Studsvik Scandpower, Inc.

The owners have agreed on how share transfers are to take place in the event of one of the parties wishing to relinquish or increase their holdings in the two companies. Studsvik can only increase its ownership through acquisition of the entire minority holding. The acquisition must be at market price. An acquisition must cover both companies. If the minority wishes to relinquish its ownership, the shares must be offered to Studsvik at market price. The market price will be determined by an independent valuation institute. In a situation where Studsvik AB wishes to relinquish its holding the minority has an option to acquire 12 per cent of the shares in Studsvik Scandpower AB at book value of equity.

Note 38 Information on the Board of Directors and senior management

Salaries and other benefits, 2016	Basic salary/ Board fee	Committee fee	Variable remuneration	Other benefits	Pension cost	Other remuneration	Total
Chairman of the Board
– Anders Ullberg	650	75	–	–	–	–	725
Members of the board (6)
– Jan Barchan	225	–	–	–	–	–	225
– Lars Engström	113	75	–	–	–	–	188
– Anna Karinen	225	–	–	–	–	–	225
– Alf Lindfors	225	–	–	–	–	–	225
– Peter Gossas	225	113	–	–	–	–	338
– Agneta Nestenborg	225	38	–	–	–	–	263
Employee representatives (4)	–	–	–	–	–	–	–
President	3,646	–	200	121	1,264	–	5,231
Other senior management (6)	8,443	–	303	332	1,921	–	10,999
Total	13,977	300	503	453	3,185	–	18,419

Salaries and other benefits, 2015	Basic salary/ Board fee	Committee fee	Variable remuneration	Other benefits	Pension cost	Other remuneration	Total
Chairman of the Board
– Anders Ullberg	650	62	–	–	–	–	712
Members of the board (6)
– Jan Barchan	225	–	–	–	–	–	225
– Lars Engström	225	125	–	–	–	–	350
– Anna Karinen	225	–	–	–	–	–	225
– Alf Lindfors	225	–	–	–	–	–	225
– Peter Gossas	225	63	–	–	–	–	288
– Agneta Nestenborg	225	–	–	–	–	–	225
Employee representatives (4)	–	–	–	–	–	–	–
President	3,608	–	–	140	1,609	–	5,357
Other senior management (6)	9,204	–	50	501	1,863	–	11,617
Total	14,812	250	50	641	3,472	–	19,223

Remuneration to the board of directors and other

senior management	2016	2015
Parent company
Salaries and other remuneration	9,342	8,045
– Of which variable remuneration	400	–
Pensions	2,054	2,190
Number of persons	13	14
Subsidiaries
Salaries and other remuneration	5,891	7,707
– Of which variable remuneration	103	50
Pensions	1,131	1,282
Number of persons	4	4
Group
Salaries and other remuneration	15,233	15,752
– Of which variable remuneration	503	50
Pensions	3,185	3,472
Number of persons	17	18

Principles

In 2016 the members of the Board of Directors did not receive any remuneration in addition to Board and Committee fees.

Variable remuneration

The President has the right to variable remuneration. The forms of the variable salary component are established annually. The variable remuneration paid for 2016 is solely based on the sale of the Waste Treatment operations. The variable salary component for other senior management for 2016 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 maximum variable salary component is payable of 10–30 per cent of the basic salary.

Other benefits and remuneration

Other benefits reported are company car, meal subsidies and other benefits such as health care. Other remuneration mainly includes severance pay.

Financial instruments

Under current employment contracts there are no share based payments.

Pension

The pensionable age of the President is 65 years. Apart from statutory national pension he has a defined contribution pension plan to which the company pays in a monthly pension premium equivalent to 35 per cent of fixed monthly salary. For other members of the Executive Group Management a pension is payable as a rule from the age of 65. The members of the Swedish Executive Group Management follow the ITP plan. In one case there is a defined contribution pension plan to which the company pays a premium equivalent to 25 per cent of fixed salary. Premium-based plans apply to Executive Group Management members outside Sweden.

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 monthly severance payment for 6 months after termination of employment, though no longer than until retirement age. The monthly severance payment will be equivalent to the fixed monthly salary received during the period of notice. Deduction is made for any salary from a new employer. 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 6 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 of up to 6 months' salary.

Note 39 Operations held for sale

Cash flow from operations held for sale	2016	2015
Cash flow from operating activities	–47,100	5,629
Cash flow from investing activities	–3,200	–18,900
Cash flow from financing activities	–1,607	–1,842
Total	–51,907	–15,113

Cash flow from operations held for sale is included in the Group's reported cash flows in the amounts above.

Assets in the disposal group classified as operations

held for sale	2016	2015
Property, plant and equipment	–	–
Goodwill	–	–
Other current assets	–	–
Total	–	–
Liabilities in the disposal group classified as opera tions held for sale	2016	2015
Trade and other payables	–	–
Provisions	–	–
Total	–	–

Accumulated income reported in other comprehen-

sive income referring to disposal group classified as
operations held for sale	2016	2015
Translation differences on foreign subsidiaries	4,137	–

Total 4,137 – Analysis of profit from operations held for sale and

accounting profit on revaluation of operations held

for sale	2016	2015
Sales revenues	71,629	174,189
Other operating income	–	–
Costs		–133,463 –186,409
Other operating expenses	–	–
Operating profit	–61,834	–12,220
Financial expenses	–594	–
Profit/loss from operations held for sale – before tax	–62,428	–12,220
Income tax	1,282	–
Profit/loss from operations held for sale – after tax	–61,146	–12,220
Proceeds of disposal	107,149	–
Income tax	–	–
Profit/loss from operations held for sale – after tax	46,003	–12,220

On July 28, 2016 the Waste Treatment business area was sold to EDF. The transaction generated a net gain of SEK 107 million.

Note 40 Events after the close of the reporting period

No events considered to be material as defined in IAS 10 have occurred after the close of the reporting period on December 31, 2016.

Note 41 Reconciliations of key ratio

Amounts in SEK million

Return on capital employed	2016	2015
Profit/loss after financial items	8.3	18.9
Financial costs according to the income statement	25.0	13.6
Fair value – foreign exchange losses	0.5	13.4
Total	33.8	45.9
Balance sheet total	686.6	–
Provisions and other long-term liabilities	–80.6	–
Trade and other payables	–224.3	–
Opening capital employed	381.7	–
Balance sheet total	901.0	686.9
Provisions and other long-term liabilities	–161.7	–80.6
Trade and other payables	–192.6	–224.3
Closing capital employed	546.7	381.7
Average capital employed	464.2	381.7
Return on capital employed	7.3	12.0
Return on equity	2016	2015
Net profit/loss for the year	63.0	2.4
Total	63.0	2.4
Opening equity	298.3	292.9
Closing equity	348.5	298.3
Return on equity	19.5	0.8
Net debt	2016	2015
Current borrowing	0	208.2
Non-current borrowing	198.2	1.0
Total liabilities	198.2	209.2
Cash and cash equivalents	195.4	74.9
Net debt	2.9	134.3

Definitions of key figures and ratios are presented on page 72.

NOTES TO THE PARENT COMPANY ACCOUNTS

For the parent company's accounting policies, see note 1.24.

Note 42 Sales revenue

Sales revenue by
geographical market	2016	2015
Sweden	9,543	5,432
Europe, not including Sweden	9,563	4,437
North America	3,347	711
Total	22,453	10,580

Note 43 Employee benefits

		2016		2015
	Salaries and other remuneration (of which variable remunera tion)	Social security expenses (of which pension costs)	Salaries and other remuneration (of which variable remunera tion)	Social security expenses (of which pension costs)
Board and President	6,027 (–)	3,457 (1,570)	6,008 (–)	2,837 (1,609)
Other employees	6,638	5,278 (2,497)	7,356 (–)	4,697 (2,389)
Total	12,665 (–)	8,735 (4,067)	13,364 (–)	7,534 (3,998)

See also note 38.

Note 44 Costs by nature of expense

	2016	2015
Purchases of material and services	19,640	22,497
Personnel costs	19,298	16,870
Depreciation/amortization	690	244
Total	39,628	39,611

Services include fees and remuneration to accounting firms as follows:

	2016	2015
PricewaterhouseCoopers
Audit assignments	465	1 325
Audit business in addition to audit	0	0
Tax consultancy	40	7
Other services	38	165
Total	543	1 497

Audit assignments refer 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 findings observations made through such examination or performance of such duties.

Note 45 Depreciation

		2016		2015
	According to plan	Book	According to plan	Book
Equipment and tools	690	690	244	244
Total	690	690	244	244

Note 46 Other operating income and expense

Other operating income	2016	2015
Financial assets at fair value through profit or loss
– Fair value gains	934	77
Foreign exchange gains	63	112
Total	997	189
Other operating expense	2016	2015
Provision for severance payment	–	–
Foreign exchange losses	–134	–98
Total	–134	–98

Note 47 Operating leases

	2016	2015
Maturity within one year	440	272
Maturity after one year but within five years	60	135
Maturity after five years	–	–
Total	500	407

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

Note 48 Result from participation in group companies

	2016	2015
Dividend from group companies	8,000	–
Group contributions from subsidiaries	6,311	45,100
Result of recognition of impairment loss on shares in subsidiary	–	–
Total	14,311	45,100

Note 49 Interest expense and similar profit/loss items

	2016	2015
Interest	9,971	9,943
Exchange rate differences	8,893	7,759
Total	18,864	17,702
Of which, in respect of Studsvik Group companies
Interest	9,971	9,932
Total	9,971	9,932

Note 50 Interest expense and similar profit/loss items

	2016	2015
Interest	20,000	12,625
Exchange rate differences	5,012	13,276
Total	25,012	25,901
Of which, in respect of Studsvik Group companies
Interest	2,129	2,386
Total	2,129	2,286

Note 51 Appropriations

	2016	2015
Dissolution of tax allocation reserve	–	–
Total	–	–

Note 52 Income tax
	2016	2015
Current tax
Current tax on profit for the year	–	–
Adjustment for previous years	–	–
Total	0	0

Deferred tax

Total income tax	4,058	–1,194
Total	4,058	–1,194
Origination and reversal of temporary differences	4,058	–1,194

The Swedish income tax rate is 22.0 (22.0) per cent. The income tax on the parent company's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate for profits as follows.

	2016	2015
Profit/loss before tax	–8,149	7,961
Tax in accordance with the current tax rate	1,793	–1,751
Non-taxable revenue	2,241	2,001
Expenses not deductible for tax purposes	–216	–250
Revaluation to new tax rate	–	–
Tax referring to temporary differences	240	–1,194
Adjustment for previous years' tax assessment	–	–
Total	4,058	–1,194

The weighted average tax rate was 49.8 (–15.0) per cent.

Note 53 Intangible assets

	2016	2015
Equipment and tools
Opening cost of acquisition	3,261	–
Investments for the year	–	3,505
Closing accumulated cost of acquisition	3,261	3,505
Opening depreciation	–	–
Depreciation for the year	–690	–244
Closing accumulated depreciation	–690	–244
Closing residual value according to plan	2,571	3,261

Note 54 Financial assets

			2016	2015
Shares in subsidiaries
Opening cost of acquisition			1,024,067	1,024,067
New issue			11,927	–
Investment in subsidiaries			–	–
Closing cost of acquisition			1,035,994	1,024,067
Opening impairment losses			–652,254	–652,254
Impairment losses for the year			–	–
Closing impairment losses			–652,254	–652,254
Closing value			383,740	371,813
			2016	2015
Interests in joint ventures
Opening cost of acquisition			–	–
Investments for the year			12,073	–
Closing cost of acquisition			12,073	–
Number	Nominal value	Interest, %	Book value 31/12/16	Book value 31/12/15

Kobe Steel, Ltd. 3,000 98.000 YEN 49% 12,073 –

	2016	2015
Receivables from subsidiaries
Loans to Studsvik Holding, Inc. Group
– Opening cost of acquisition	109,346	95,043
– Repayment received	–	–
– New loans	0	7,650
– Change in accrued interest	–3,737	49
– Conversion to shareholders' contribution	–	–
– Foreign exchange differences	9,832	6,604
Closing value	115,441	109,346
	2016	2015
Loans to Studsvik Ltd
– Opening cost of acquisition	8,430	23,133
– Repayment received	–	–15,425
– New loans	8,333	262
– Change in accrued interest	–	–
– Foreign exchange differences	–1,360	460
Closing value	15,403	8,430

Note 54 (cont.)

Closing value	12,258	11,325
– Revaluation to fair value	933	77
– Acquisition of new shares	–	–
– Opening cost of acquisition	11,325	11,248
Financial assets at fair value through profit or loss Unlisted shareholdings
Closing value	90,916	86,996
– Foreign exchange differences	3,970	–3,657
– Change in accrued interest	–50	23
– New loans	–	–
– Opening cost of acquisition	86,996	90,630
Loans to Studsvik GmbH
Closing value	951	910
– Foreign exchange differences	41	–37
– Change in accrued interest	0	–1
– New loans	–	–
– Repayment received	–	–
– Opening cost of acquisition	910	948
Loans to Studsvik France SAS

Capital insurance – Opening cost of acquisition 14,555 14,266 – Items added – – – Reposting to current asset –197 – – Revaluation to fair value –166 289 Closing value 14,191 14,555

Note 55 Prepaid expenses and accrued income

Prepaid rent – Prepaid credit charges and fees – Prepaid pension premiums 206 Prepaid software licenses 826 Prepaid service charges – Accrued income 6,097 Other 772 Total 7,901	2016	2015
		–
		170
		47
		830
		2
		–
		447
		1,496

Note 56 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	24,042
Studsvik Nuclear AB	100	100	5,000	kSEK		50,000 223,400
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
Studsvik Instrument
Systems AB	100	100	17,000	kSEK	17,000	18,106
Studsvik France SAS	99	99	4,950	kEUR	5	43
Studsvik Limited	100		100 1,000,000	kGBP		1,000 115,687
Total						383,740

Information on subsidiaries' corporate identity numbers and registered offices

Corporate identity number	Registered office
556051-6212	Nyköping, Sverige
36-3088916	Boston, USA
556137-8190	Nyköping, Sverige
HRB 4839	Norderstedt, Tyskland
CH400.3.036.599-0	Fischbach-Göslikon,
	Schweiz
	Tokyo, Japan
35-3481732	Atlanta, USA
36-2999957	Atlanta, USA
20-2472653	Atlanta, USA
HRB 504467	Mannheim, Tyskland
HRB 504468	Mannheim, Tyskland
HRA 503411	Mannheim, Tyskland
556197-1481	Nyköping, Sverige
791 048 200 000 12	Paris, Frankrike
559019-2448	Nyköping, Sverige
09660060	Gateshead, England

Note 57 Liabilities to credit institutions

	2016	2015
Bank loans
Long term portion	198,250	0
Current portion	–	200,111
Total	198,250	200,111

Note 58 Accrued expenses and deferred income

	2016	2015
Holiday pay liability	1,186	858
Accrued wages and salaries	–	–
Accrued social security contributions	5,628	4,927
Accrued interest expense	1,408	473
Provision for severance payment	105	1,029
Other	414	823
Total	8,741	8,110

Note 59 Pledged assets

	2016	2015
Shares in subsidiaries	223,400	133,902
Total	223,400	133,902

Shares in Studsvik Nuclear AB have been put up as collateral for bank loans.

Note 60 Contingent liabilities

	2016	2015
Guarantees	–	–
Contingent liabilities referring to insurance	4,564	5,328
Total	4,564	5,328

In addition, the parent company has made a guarantee commitment for a subsidiary as for its own debt.

Note 61 Derivative instruments

	2016			2015
	Assets	Liabilities	Assets	Liabilities
Forward exchange contracts	–	–	78	69

Revaluation of forward exchange contracts is through profit or loss.

Note 62 Investments in non-current assets

	2016	2015
Patents	–	3,505
Equipment and tools	–	–
Total	0	3,505

Note 63 Cash flow from operating activities

Non-cash items	2016	2015
Depreciation/amortization	690	244
Fair value gains	–1,254	–77
Other items	–	–
Total	–564	167

Note 64 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.

	2016	2015
Purchases	24 %	26 %
Sales	100 %	100 %

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

Agreements on severance payments and other commitments to 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 6 months' salary. See also note 38.

Note 65 Number of employees

			2016	2015
Women			4	4
Men			3	5
Total			7	9
		2016		2015
Board members and senior management executives	Number on balance sheet date	Of which men	Number on balance sheet date	Of which men
Board members	10	6	11	7
President and other senior
management executives	3	2	3	2

Note 66 Investment in subsidiaries

	2016	2015
New issue	11,927	–
Total	11,927	–

The new issue refers to Studsvik Limited.

The consolidated income statements and balance sheets will be presented to the Annual General Meeting on April 27, 2017 for approval.

The Board of Directors and the President certify that 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, February 28, 2017

Anders Ullberg Anna Karinen Jan Barchan

Chairman Vice Chairman Board Member

Peter Gossas Lena Sivars Becker Board Member Employee representative

Alf Lindfors Roger Lundström Agneta Nestenborg Board Member Employee representative Board Member

Michael Mononen President

Our auditor's report was submitted on March 7, 2017 PricewaterhouseCoopers AB

Martin Johansson Authorized public accountant

Auditor's report

To the General Meeting of Shareholders of Studsvik AB (publ), corporate identity number 556501-0997

Report on the annual accounts and consolidated accounts

Opinions

We have audited the annual accounts and consolidated accounts of Studsvik AB (publ) for 2016. The company's annual accounts and consolidated accounts are included on pages 9-58 of this document.

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the Parent Company as at December 31, 2016 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the Group as at December 31, 2016 and of its financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the General Meeting adopt the income statement and balance sheet for the Parent Company and the Group.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the Parent Company and the Group in accordance with professional ethics for accountants in Sweden and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Our audit approach

AUDIT FOCUS AND SCOPE

We designed our audit by determining materiality and assessing the risk of material misstatement in the financial statements. In particular, we considered areas where the President and Board of Directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of systematic bias that represented a risk of material misstatement due to fraud.

We tailored our audit to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group, accounting processes and controls, and the industry in which the Group operates.

The Studsvik Group consists of a number of companies. Of these, operations in Sweden, Germany and the UK constitute significant units and are therefore included in our audit of the Group. The audit of these units and the Parent Company includes testing of details supplemented by analytical review of income statement and balance sheet items material to the Group. A majority of the subsidiaries in the Group are also subject to statutory audit under local requirements.

MATERIALITY

The scope and focus of our audit was influenced by our application of materiality. An audit is designed to achieve reasonable assurance that the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including for the financial statements as a whole. These, together with qualitative considerations, helped us to determine the focus and scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial statements as a whole.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the annual accounts and consolidated accounts for the current period. These matters were addressed in the context of the audit of, and in forming our opinion on, the annual accounts and consolidated accounts as a whole, and we do not provide a separate opinion on these matters.

Provisions for decommissioning, waste treatment and restoration of land (see the Group's accounting policies in note 1.20, material assumptions in note 3 and note 33)

The operations at Studsvik's facilities in Sweden and the facility in the UK now sold are subject to local licensing requirements and Studsvik is liable to decommission facilities, manage waste and restore land. The Group makes provision in its own balance sheet for these future decommissioning costs, as well as costs for handling waste.

At the close of 2016, provision of SEK 110 million (SEK 162 million in 2015) was made in the balance sheet for future waste costs and decommissioning and restoration.

The Group has a process for monitoring and measuring provisions for waste treatment, decommissioning and restoration. Determination of provisions has a significant influence on the audit of the Group as the assessment of the value of the size of provisions is influenced by the management's estimates and assumptions.

Valuation of deferred tax assets (see the Group's accounting policies in note 1.18, material assumptions in note 3 and note 31)

The Group reports deferred tax assets referring to tax loss carry forwards of SEK 85 million (SEK 81 million in 2015).

As valuation of tax loss carry forwards reported in the balance sheet depend on the management's estimates in the form of forecasts of future taxable profit, the determination of the value of the deferred tax assets has a significant influence on the audit.

Key audit matters How our audit addressed the key audit matter

We have audited the Group's process for identifying future waste and the process for valuation of the provision for treatment of waste, decommissioning and restoration of land.

Our audit procedures include evaluating whether the provisions comply with the Group's accounting policies.

Moreover, based on risk and materiality, we have cross-checked and assessed the parameters for calculating the provision against documentation in the form of agreements with external parties, where these exist, and internal calculations on which these are based.

In addition, we have tested the mathematical correctness of the provision calculations.

We have assessed whether the management's estimate of the carrying amount of deferred tax assets referring to tax loss carry forwards is based on the Group's budgets and forecasts regularly prepared by the management.

We have checked that the assumptions used in these budgets and forecasts of future taxable profits are in accordance with the management's strategic plans and intentions and that they are realistic on the basis of our experience of the business. This was done by analyzing how well previous years' assumptions were met, any adjustments made of assumptions from previous years as a consequence of developments in the operations, as well as external factors.

In addition, we have tested the mathematical correctness of the calculations for material deferred tax assets referring to tax loss carry forwards.

Accounting and disclosures in connection with the sale of the Waste Treatment segment (see note 39)

In 2016 the Group sold the waste treatment operations in Sweden and the United Kingdom to an external buyer. As a result of the transaction the Group reports a capital gain and reclassifies the waste treatment operations in the income statement for 2016 and 2015 in accordance with IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations.

As the sale constitutes a significant transaction and the calculation of the capital gain and subsequent reporting in accordance with IFRS entails estimates by the management, this implies a significant influence on our audit.

We have studied the Group's calculations concerning the capital gain and assessed them on the basis of documentation in the form of agreements with the buyer, minutes and reference material from the consolidated accounts.

Moreover, we have assessed whether the accounting policies applied by the Group in response to the sale and the disclosures made are in line with IFRS 5.

Information in the annual report additional to the annual accounts and consolidated accounts

This document contains information additional to the annual accounts and consolidated accounts, which can be found on pages 1–8. The Board of Directors and the President are responsible for this other information.

Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information. In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information in other respects appears to be materially misstated.

If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and President

The Board of Directors and President are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and President are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, the Board of Directors and the President are responsible for the assessment of the company's and the Group's ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is, however, not applied if the Board of Directors and the President intend to liquidate the company, to cease operations or have no realistic alternative but to do so.

The Board of Directors' Audit Committee shall, without prejudice to the Board of Director's responsibilities and tasks in other respects, among other things oversee the company's financial reporting process.

Auditor's responsibility

Our objectives are to obtain reasonable assurance on whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.

A further description of our responsibility for the audit of the annual accounts and consolidated accounts can be found on the website of the Supervisory Board of Public Accountants: www. revisorsinspektionen.se/rn/showdocument/documents/rev_dok/ revisors_ansvar.pdf. This description is part of the auditor's report.

Report on other legal and regulatory requirements

Opinions

In addition to our audit of the annual accounts and consolidated accounts, we have examined the administration of the Board of Directors and the President of Studsvik AB (publ) for 2016 and the proposed appropriations of the company's profit or loss.

We recommend to the General Meeting of Shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the President be discharged from liability for the financial year.

Basis for opinion

We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the Parent Company and the Group in accordance with professional ethics for accountants in Sweden and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of the Board of Directors and President

The Board of Directors is responsible for the proposed appropriations of the company's profit or loss. When proposing a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the Group's type of operations, size and risks place on the size of the Parent Company's and the Group's equity, consolidation requirements, liquidity and position in general.

The Board of Directors is responsible for the organization of the company and the administration of its affairs. This includes among other things continuous assessment of the company's and the Group's financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial affairs in other respects are controlled in a satisfactory manner. The President shall conduct the day-to-day management in accordance with the Board of Director's guidelines and instructions and take measures that are necessary to fulfill the company's accounting in accordance with law and handle the management of assets in a satisfactory manner.

Auditor's responsibility

Our objective concerning the audit of the administration, and thereby our opinion on discharge from liability, is to obtain audit evidence to assess with reasonable assurance whether any member of the Board of Directors or the President in any material respect:

• has undertaken any action or been guilty of any omission that may give rise to liability to the company,
• in any other way has acted in contravention of the Swedish Companies Act, the Annual Accounts Act or the Articles of Association.

Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion on this, is to assess with reasonable assurance whether the proposal is in accordance with the Swedish Companies Act.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company's profit or loss are not in accordance with the Swedish Companies Act.

A further description of our responsibility for the audit of the administration can be found on the website of the Supervisory Board of Public Accountants: www.revisorsinspektionen.se/ rn/showdocument/documents/rev_dok/revisors_ansvar.pdf. This description is part of the auditor's report.

Stockholm, March 7, 2017 PricewaterhouseCoopers AB

Martin Johansson Authorized public accountant

Corporate Governance

Corporate Governance

Studsvik AB is a Swedish public company with its registered office in Nyköping and is listed on Nasdaq Stockholm. 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, a number of Swedish and foreign laws and ordinances and the Swedish Code of Corporate Governance (the Code). Studsvik has no departures from the Code to report.

General Meeting of Shareholders

The General Meeting is the company's highest decision-making body, where the shareholders exercise their influence through discussions and decisions. An Annual General Meeting shall be held once a year to adopt the income statement and balance sheet, decide on dividend, elect a Board of Directors and auditors and decide on their remuneration.

The number of shareholders on December 31, 2016 was 3,285. The total number of shares was 8,218,611. All shares have an equal right to participate in the company's assets and profits. Information on shareholders, voting rights and the Articles of Association is presented in the annual report on pages 62–69.

At the Annual General Meeting in April 2016, 36 shareholders participated, representing a total of 47,5 per cent of all votes in the company. The Annual General Meeting adopted the consolidated income statement and balance sheet, adopted the Board of Directors proposal concerning dividend, discharged the Board of Directors and President from liability and appointed PricewaterhouseCoopers AB as auditor. All members of the Board of Directors were re-elected and Anders Ullberg was appointed as Chairman. The Meeting also established principles for benefits to senior management and appointed the Nomination Committee. 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 to the Annual General Meeting candidates for the Board of Directors, Chairman of the Board and auditors and their fees. The Nomination Committee is also to propose a new Nomination Committee.

As resolved by the Annual General Meeting, the Nomination Committee is to consist of the Chairman of the Board and representatives of each of the three largest shareholders. The Annual General Meeting appointed Stina Barchan (Briban Invest AB), Sven Ericsson (representative of the Karinen family), Carina Heilborn (Peter Gyllenhammar AB) and Anders Ullberg (Chairman of the Board) as members of the Nomination Committee. The Nomination Committee's term of office is until a new Nomination Committee is appointed. The composition of the Nomination Committee was announced on April 25, 2016 in a press release and on Studsvik's website.

Information on how shareholders can submit proposals to the Nomination Committee has been published on Studsvik's website. The work of the Nomination Committee focuses on ensuring that the Board of Directors is composed of members that together have the knowledge and experience that meet the requirements of the owners concerning Studsvik's highest governing body. In the process of preparing proposals for candidate members of the Board, the Chairman of the Board therefore presents to the Nomination Committee the evaluation made of the work of the Board of Directors in the past year.

Composition of the Board of Directors

The Board of Directors consists of six 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. The members of the Board of Directors are presented on pages 66–67 of the annual report and under Board of Directors and Auditors on the website.

The members elected by the Annual General Meeting are to be regarded as independent in relation to the company and the company management. All, apart from Jan Barchan and Anna Karinen, are independent of major shareholders.

Chairman

Anders Ullberg is the Chairman of the Board and leads the work of the Board. He has 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 regular contact with the President 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 specify 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 takes part in the work of the Board of Directors and other employees take part when this is called for. The Group's Chief Financial Officer acts as secretary to the Board.

In 2016 the Board of Directors held 8 meetings, including the inaugural meeting in connection with the Annual General Meeting. The attendance of the members is shown in the table below.

The Board of Directors receives information on the company's economic and financial situation through monthly reports and at board meetings. Operations in the various segments are monitored and discussed in accordance with a rolling plan, which means that the Board of Directors makes a detailed analysis of each business area at least once a year. Moreover, the Board of Directors agrees each year on a number of issues that are to be examined at a board meeting during the year. In 2016 a two-day meeting was held at which the Group's strategy and focus after the sale of the Waste Treatment business area and further development of operations in Consultancy Services and Studsvik Scandpower were discussed.

Ahead of each board meeting the Chairman and President go through the business to be dealt with at the meeting and supporting documentation for the Board's processing of the business is sent to the members about a week before each board meeting.

In 2016 the Board devoted particular attention to the Group's financing, the sale of the Waste Treatment operations, strategic alternatives for the consulting operations in Germany, increased customer focus in the software operations and cost savings in consulting operations and administration.

At one meeting during the year the company's auditors reported on their findings from the audit of the annual accounts and the company's administration. The Board of Directors was then also given the opportunity of discussions with the auditors without the company management being present. The Chairman ensures that the work of the Board of Directors is evaluated annually and that the Nomination Committee receives the information necessary concerning the results of the evaluation. The evaluation is discussed by the Board of Directors as a basis for planning the Board's work for the coming year.

Policies, guidelines and instructions

The Board reviews and adopts Group policies and guidelines and the Group's Code of Conduct. The Code of Conduct aims to provide guidance to employees and business partners, minimize risks, strengthen the corporate culture and convey Studsvik's core values.

The President adopts guidelines and operative instructions based on policies and guidelines established by the Board. Guidelines and operative instructions issued by the President primarily cover financial reporting and information technology (IT). All policies and guidelines are available to the Group's employees on Studsvik's intranet.

Audit Committee

The Board of Directors has set up an Audit Committee. The Committee monitors the effectiveness of the company's internal controls, management of the company's risks and assures the quality of the company's financial reporting. The Audit Committee consists of Peter Gossas (chairman), Agneta Nestenborg and Anders Ullberg.

Board members	Elected	Attendance	Remuneration	Audit	Independent of company	Independent of shareholders	Fee SEK thousand
Anders Ullberg, Chairman	2007	8/8	1/1	6/6	Yes	Yes	725
Anna Karinen, deputy Chairman	2003	8/8	1/1		Yes	No	225
Jan Barchan	2004	8/8	1/1		Yes	No	225
Lars Engström1	2008	4/8		3/6	Yes	Yes	188
Peter Gossas	2013	8/8		6/6	Yes	Yes	338
Alf Lindfors	2006	6/8			Yes	Yes	225
Agneta Nestenborg	2010	8/8		3/6	Yes	Yes	263
Roger Lundström (Employee rep)	2005	8/8
Per Ekberg (Employee rep) alternate	2006	8/8
Lena Sivars Becker (Employee rep)	2015	7/8
Eva Gimholt (Employee rep) alternate 2	2015	5/8

Member of the Board until April 25, 2016,2 Alternate member of the Board until August 25, 2016, 3 Member of the Board from November 15, 2016

Linda Ekstrand 3 2016 1/8

The presenter on the Committee is the Chief Financial Officer. Apart from the Group's quarterly reports, during the year the Committee has taken note of and dealt with reports from the follow-up of internal controls. In addition, the Committee has been updated on the development of major current fixed price contracts, dealt with accounting matters, with particular focus on impairment calculations, as well as continually following the progress of the Group's legal disputes. The company's auditors reported to the Committee on their findings from the six-monthly accounts, the hard-close and internal control, conducted at the time of the second and third quarter closings, and the audit of the annual accounts. The Committee meets before each reporting date and on more occasions if necessary. The Committee held six meetings during the year. The Audit Committee works in accordance with the instructions adopted annually by the Board of Directors and reports on its work to the Board of Directors.

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 of Directors' proposals to the General Meeting concerning principles of remuneration and other conditions of employment for the Executive Group Management. The Committee held one meeting during the year. The Remuneration Committee works in accordance with the instructions adopted annually by the Board of Directors and reports on its work to the Board of Directors. The Remuneration Committee consists of Anders Ullberg (chairman), Jan Barchan and Anna Karinen.

A description of benefits to senior management is given in note 38 on page 52.

Board fees

The total board fee paid by Studsvik AB for 2016 amounted to SEK 2,189,000 (2,250,000). In accordance with a resolution passed by the Annual General Meeting, the Chairman of the Board receives SEK 650,000 per year and ordinary members SEK 225,000 per year. No fee is paid to members appointed by the employee organizations. The chairman of the Audit Committee receives a fee of SEK 150,000 per year and the members SEK 75,000 per year. No fee is paid to the Remuneration Committee. Board fees paid are presented in note 38 on page 52.

Auditors

At the 2016 Annual General Meeting the registered public accounting firm PricewaterhouseCoopers AB was elected as auditor for the period up to and including the 2017 Annual General Meeting. The auditor in charge is authorized public accountant Martin Johansson. PricewaterhouseCoopers conducts the audit of all the Group's material companies. The audit is based on an audit plan and during the year the auditor regularly reports findings to the Audit Committee and on at least one occasion to the Board of Directors. The auditor obtains views from the Audit Committee concerning Studsvik's risks, which are thereafter given particular consideration in the audit plan. The auditor also participates in the Annual General Meeting to present the auditor's report and describe the audit work and findings.

In addition to the audit assignment, Studsvik has consulted PricewaterhouseCoopers in the area of taxation and on various accounting and financial issues. PricewaterhouseCoopers is obliged to test its independence prior to every decision to provide advice to Studsvik unrelated to the audit assignment. Advisory services in excess of SEK 50,000 are to be approved in advance by the chairman of the Audit Committee. Remuneration to the company's auditors is paid in accordance with an approved invoice on agreed terms. For information concerning remuneration in 2016 please refer to notes 8 and 44.

President/CEO and Executive Group Management

The President is responsible for the day-to-day management of the company. He leads the operative business and prepares information and data for decision-making for the Board of Directors and is the presenter at Board meetings. In 2016 the Executive Group Management consisted of the President/Chief Executive Officer, the Chief Financial Officer, the Head of Business Development, the Senior Vice President for HR and the heads of the two business areas. In November a new head was appointed of Studsvik Scandpower, the organization responsible for software operations. The operations that were previously reported as part of the Fuel and Materials Technology business area will be reported as a separate business area from January 2017. The new head of the business area will be part of the Executive Group Management from November. The Executive Group Management is presented on pages 68–69 of the annual report and on the website under Executive Group Management.

The Executive Group Management meets every month to follow up the operative and financial developments in the segments. On two to three occasions during the financial year the Executive Group Management meets to deal in more detail with matters of an operative, strategic or long-term nature.

The President/CEO and Group functions are located in Stockholm. In accordance with 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, risk management and human resources. The tasks also include questions of Group wide acquisitions and disposals, certain major projects, the Group's financial reporting, communication with the stock market and other internal and external communication.

Operative management

The Group's operative business was conducted in 2016 in subsidiaries of Studsvik AB, which are included in the three business areas. Operations in the business areas were followed up partly through business area reviews, partly through active board work in the subsidiaries. The business area reviews, which take place quarterly, not only analyze and discuss financial developments, but also market developments, risks and CR issues, among other things. The management groups for the business areas follow the business areas' day to day activities on a monthly basis. Business plans and budgets are prepared by each business area in consultation with the Executive Group Management. The business is carried on in accordance with the rules, guidelines and policies established by the parent company, and local rules established by the respective local board. The heads of business areas have budget responsibility and are to ensure growth in their operations as well as being responsible 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' interests are protected,
• that external financial reporting reflects the actual situation with reasonable certainty,
• that 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 that guarantee internal control and the quality of financial reporting are in place. Studsvik has no special internal audit function. The audit and internal control is conducted by an external consultant on the instructions of the Chief Financial Officer, which the Board has found to be appropriate.

The review is based on an overall risk analysis at Group level and on checklists and question lists in material for self-assessment that is subsequently verified from the point of view of materiality through direct audit. The audit is conducted via interviews and spot checks and is summarized in a report to the Audit Committee, where it is dealt with. A detailed description of the Group's risks and how they are managed is presented in the Administration Report on pages 17–19. An account of the Group's financial risks can be found in note 2 on pages 34–36.

The outcome of the examination is reported to the Audit Committee and the Board. The company's financial situation is discussed at every board meeting and the management makes a monthly analysis of the financial reporting at a detailed level. At its meetings the Audit Committee follows up the financial reporting and receives a report from the auditors.

Statement by the auditor on the corporate governance report

To the General Meeting of Shareholders of Studsvik AB (publ), corporate identity number 556501-0997

Assignment and division of responsibilities

The Board of Directors is responsible for the corporate governance report for 2016 on pages 62–65 and for its preparation in accordance with the Annual Accounts Act.

Focus and scope of the examination

Our examination was conducted in accordance with FAR's statement RevU 16 The auditor's examination of the corporate governance report. This means that our examination of the corporate governance report is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions.

Opinion

A corporate governance report has been prepared. Disclosures in accordance with Chapter 6, Section 6, second paragraph, points 2–6 of the Annual Accounts Act and Chapter 7, Section 31, second paragraph of the same Act are consistent with the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act.

Stockholm, March 7, 2017 PricewaterhouseCoopers AB

Martin Johansson Authorized public accountant

Board of Directors and Auditors

Anders Ullberg

Danderyd, born in 1946 Chairman since 2007 Former President and CEO of SSAB, Svenskt Stål. Chairman of the board of Boliden, Eneqvist Consulting and Natur & Kultur, and member of the board of Atlas Copco, Beijer Alma and Valedo Partners. Chair of the Swedish Financial Reporting Board and board member of the European Financial Reporting Advisory Group Education: M.Sc. (Business and Economics) Holding: 60,000 shares

Anna Karinen

Sparreholm, born in 1963 Member since 2003, Vice Chairman since 2007 Self-employed, in commercial real estate

management, member of the board of the Flen local branch of Handelsbanken. Education: Bachelor of laws Holding: 1,327,492 shares

Jan Barchan

Malmö, born in 1946 Member since 2004 President of Briban Invest AB, member of the board of Audiodev AB and member of the board of Assistera AB, Net Insight AB, Trianon AB and Trialbee AB Education: M.Sc. (Business and Economics) Holding: 1,285,492 shares

Peter Gossas

Mora, born in 1949 Member since 2013 Previously President of the Sandvik Materials Technology business area Chairman of the board of Maintpartner Group OY and Motor Group AB. Member of the board of Höganäs AB. Industrial Advisor at Peter Gossas AB and KIGO Business Development. Education: M.Sc. Engineering physics Holding: 2,000 shares

Alf Lindfors

Östhammar, born in 1946 Member since 2006 Senior advisor, former head of the Electricity Generation business area and Vice President of Vattenfall AB Education: M.Sc. (Engineering) and post-graduate qualification in reactor technology Holding: 0 shares

Agneta Nestenborg

Kävlinge, born in 1961 Member since 2010 Director, Project Support & Administration, European Spallation Source ERIC Education: Ph.D. and MBA Holding: 2,000 shares

EMPLOYEE REPRESENTATIVES

Lena Sivars Becker

Nyköping, born in 1974 Member since 2015 Representative of the Swedish Association of Graduate Engineers. Works in the consultancy operations at Studsvik Consulting AB Education: Ph.D. Holding: 0 shares

Roger Lundström

Nyköping, born in 1966 Member since 2005, alternate 2003–2005 Representative of Unionen. Works in microscopy and damage analysis at Studsvik Nuclear AB Education: Mechanical engineer Holding: 0 shares

Per Ekberg

Nyköping, born in 1959 Alternate since 2006 Representative of Unionen. Works in the materials research department at Studsvik Nuclear AB Education: Power generation technology Holding: 100 shares

Linda Ekstrand

Nyköping, born in 1982 Alternate since 2016 Representative of the Swedish Association of Graduate Engineers. Works in the consultancy operations at Studsvik Consulting AB Education: M.Sc. Holding: 65 shares

AUDITOR

PricewaterhouseCoopers AB

Auditor in charge: Martin Johansson Year of birth 1967 Auditor of Studsvik since 2016 Other assignments: Melker Schörling AB, Endomines AB, Orio AB and Toyota Industries Europe AB

ANDERS ULLBERG

JAN BARCHAN

PETER GOSSAS

ALF LINDFORS

AGNETA NESTENBORG

LENA SIVARS BECKER

ANNA KARINEN ROGER LUNDSTRÖM

PER EKBERG

LINDA EKSTRAND

Executive Group Management

Michael Mononen

President and Chief Executive Officer Education: M.Sc. (Civil engineering) Born in: 1958 Year of employment: 2013 Background: Several different roles in the Sapa Group, Group Vice President Sapa AB, President of Sapa Heat Transfer AB Directorships: Member of the board of Mobile Climate Control Holding: 45,000 shares

Pål Jarness

Chief Financial Officer Education: M.Sc. (Business and Economics) Born in: 1964 Year of employment: 2013 Background: Chief Financial Officer at Actic, Goodyear Dunlop Nordic and Kraft Foods Nordic as well as various positions in treasury and human resources at Philip Morris. Holding: 37,500 shares

Camilla Hoflund

Head of Fuel and Materials Technology business area Education: Mining engineer, Materials technology Born in: 1969 Year of employment: 1994–2000, 2003 Background: Consultant and business developer at Det Norske Veritas and other senior positions in the group Holding: 0 shares

Stefan Bergström

Head of the Consultancy Services business area Education: M.Sc. (Engineering) Born in: 1963 Year of employment: 2016 Background: Several leading roles in the Swedish Trade and Invest Council and the ABB Group. Holding: 0 shares

Steven Freel

Head of the Studsvik Scandpower business area Education: BSc Mechanical Engineering and MBA Born in: 1964 Year of employment: 2016 Background: Administrative and technical manager at GSE Systems Inc. and other leading positions in SAIC and Raytheon Holding: 0 shares

Sam Usher

Head of Business Development Education: MEng Chemical Engineering, MSc Engineering Management, CEng Chartered Engineer Born in: 1969 Year of employment: 2008 Background: Plant Manager BNFL Sellafield, Business, Project and Strategic Development Manager, AMEC and other leading positions in the Group Holding: 2,042 shares

Elisabeth Fahle Gårdebäck

Head of Human Resources Education: M.Sc. in Business and Economics Born in: 1968 Year of employment: 2015 Background: Positions as HR Manager at Wallenius Wilhelmson, Medtronic, Allergan and Becton Dickinson. Holding: 0 shares

MICHAEL MONONEN PÅL JARNESS CAMILLA HOFLUND

STEFAN BERGSTRÖM STEVEN FREEL SAM USHER

ELISABETH FAHLE GÅRDEBÄCK

Five year review

CONDENSED INCOME STATEMENT

Amounts in SEK million	2012	2013	2014	2015	2016
Sales revenues	1,012.9	1,001.3	909.6	721.2	758.8
Cost of services sold	–771.2	–742.1	–660.5	–538.2	–535.3
Gross profit	241.7	259.1	249.1	183.0	223.5
Selling and marketing costs	–45.2	–46.5	–47.6	–36.4	–44.4
Administrative expenses	–149.9	–142.0	–146.9	–93.1	–112.8
Research and development costs	–25.4	–26.6	–25.8	–25.1	–27.5
Participation in associated company's profit before tax	5.4	7.3	11.5	11.6	4.1
Other net	–11.4	–31.9	–9.8	–3.4	–18.2
Operating profit	15.2	16.0	30.5	36.6	24.7
Net financial items	–13.8	–18.8	–18.9	–17.7	–16.4
Profit/loss after financial items	1.4	–2.8	11.6	18.9	8.3
Income tax	–15.0	–20.1	–6.4	–4.3	8.7
Profit/loss for the year from continuing operations	–13.6	–22.9	5.2	14.6	17.0
Operations held for sale
Profit/loss for the year from operations held for sale	–34.2	–173.9	–17.2	–12.2	46.0
NET PROFIT/LOSS FOR THE YEAR	–47.8	–196.8	–12.0	2.4	63.0

CONDENSED BALANCE SHEETS

Amounts in SEK million	2012	2013	2014	2015	2016
Assets
Goodwill	300.9	158.8	173.9	172.0	173.7
Other non-current assets	608.0	448.2	481.7	481.9	273.4
Trade receivables	169.1	151.7	183.3	196.6	150.8
Other non-interest bearing current assets	122.6	92.6	73.0	68.1	107.7
Cash and cash equivalents and short-term investments	115.8	151.4	129.4	74.9	195.4
Assets in operations held for sale	–	260.7	–	–	–
Total assets	1,316.4	1,263.4	1,041.3	993.5	901.0
Equity and liabilities
Equity	477.9	286.0	292.6	297.9	348.1
Non-controlling interests	0.3	0.3	0.3	0.3	0.4
Long-term interest-bearing liabilities	131.0	264.8	203.0	1.0	198.2
Long-term non-interest-bearing liabilities	263.9	222.7	242.3	238.0	161.7
Short-term interest-bearing liabilities	99.3	42.3	22.8	208.2	–
Short-term non-interest-bearing liabilities	344.0	275.4	280.3	248.1	192.6
Liabilities in operations held for sale	–	171.9	–	–	–
Total equity and liabilities	1,316.4	1,263.4	1,041.3	993.5	901.0

CONDENSED CASH FLOW STATEMENTS

Refers to total operations
----------------------------	--

Amounts in SEK million	2012	2013	2014	2015	2016
Operating profit	–19.4	–165.3	17.9	24.4	70.0
Reversal of depreciation/amortization	64.0	63.5	33.5	33.5	20.8
Other non-cash items	–72.8	89.7	–16.2	–4.8	–64.4
Cash flow from operating activities	–28.2	–12.1	35.2	53.1	26.4
Net financial items	–13.4	–18.5	–17.6	–11.5	–25.5
Taxes	–27.5	–13.3	1.1	–6.9	–8.3
Cash flow before changes in working capital	–69.1	–43.9	18.7	34.7	–7.4
Changes in working capital	61.8	19.3	–39.5	–41.3	–48.7
Cash flow before investments	–7.3	–24.6	–20.8	–6.6	–56.1
Investments	–9.1	–15.3	70.7	–23.2	185.6
Cash flow after investments	–16.4	–39.9	49.9	–29.8	129.5
DATA PER SHARE	2012	2013	2014	2015	2016
Number of shares at close of period	8,218,611	8,218,611	8,218,611	8,218,611	8,218,611
Average number of shares	8,218,611	8,218,611	8,218,611	8,218,611	8,218,611
Earnings per share from continuing operations before and after
dilution, SEK	–1.65	–2.78	0.63	1.78	2.07
Earnings per share from operations held for sale before and after
dilution, SEK	–4.17	–21.15	–2.09	–1.49	5.6
Earnings per share before and after dilution, SEK	–5.82	–23.93	–1.46	0.29	7.67
Equity per share, SEK	58.19	34.83	35.64	36.30	42.41
KEY FINANCIAL FIGURES AND RATIOS	2012**	2013**	2014	2015	2016
Margins
Operating margin, %	1.5	1.6	3.3	5.1	3.2
Profit margin, %	0.1	–0.3	1.3	2.6	1.1
Return on investment*
Return on operating capital, %	5.3	4.5	7.7	8.9	6.3
Return on capital employed, %	5.0	3.5	5.5	12.0	7.3
Return on equity, %	–2.6	–6.0	1.8	0.8	19.5
Capital structure
Operating capital, SEK million	287.5	353.2	398.6	432.6	351.3
Capital employed, SEK million	403.3	504.6	518.7	507.5	546.7
Equity, SEK million	478.2	286.3	292.9	298.3	348.5
Net interest-bearing debt, SEK million	114.5	155.7	105.7	134.3	2.9
Net debt-equity ratio, %	23.9	54.4	36.1	45.0	0.8
Interest coverage ratio, multiple	1.1	–0.9	1.8	1.8	1.3
Equity-assets ratio, %	36.3	26.2	28.1	30.0	38.7
Cash flow
Self-financing ratio, multiple	0.9	0.5	–	–	–
Investments, SEK million	48.9	20.1	32.8	14.6	15.3
EBITDA	44.6	49.8	50.7	51.2	40.0
EBITDA/Net financial items	3.4	2.7	3.2	2.9	2.4
Employees
Average number of employees	1,031	988	895	708	687
Net sales per employee, SEK million	1.0	1.0	1.0	1.1	1.1
* Calculation based on closing balance 2012 and 2013.

** Calculation based on continuing operations

Definitions of key figures and ratios

EBITDA

Operating result before amortization and impairment.

EBITDA/Net financial items

Operating result before amortization and impairment divided by net financial items.

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.

Equity per share

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

Sales revenue per employee

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

Investments

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

Average number of employees

Average number of employees at the end of each month.

Net debt

Total long-term and short-term borrowing less cash and cash equivalents.

Net debt-equity ratio

Interest-bearing net debt divided by equity including non-controlling interests.

Operating capital

The 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.

P/E ratio

Share price divided by earnings 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.

Return on equity

Profit for the year as a percentage of average equity.

Return on operating capital

Operating result 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.

Net interest-bearing debt

Total of current and long-term interest-bearing liabilities less current investments and cash and bank balances.

Interest coverage ratio

Profit after financial income divided by financial expense.

Operating margin

Operating result after amortization as a percentage of net sales.

Self-financing ratio

Cash flow before investments divided by investments.

Equity-assets ratio

Equity including non-controlling interests as a percentage of the balance sheet total.

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.

Profit margin

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

SWEDEN

Studsvik AB SE-611 82 Nyköping Visitor's address: Studsvik Tel: +46 155 22 10 00 Fax: +46 155 26 30 70

Studsvik Nuclear AB SE-611 82 Nyköping Visitor's address: Studsvik Tel: +46 155 22 10 00 Fax: +46 155 26 30 70

Studsvik Consulting AB SE-611 82 Nyköping Visitor's address: Studsvik Tel: +46 155 22 10 00 Fax: +46 155 26 30 70

Studsvik Nuclear AB / ALARA Engineering Stensborgsgatan 4 SE-721 32 Västerås Tel: +46 155 22 10 00

Studsvik Scandpower AB Stensborgsgatan 4 SE-721 32 Västerås Tel: +46 21 41 57 83

FRANCE

Studsvik France SAS 166, Boulevard du Montparnasse F-75014 Paris France Tel: +33 1 4279 5130 Fax: +33 1 4279 5131

UNITED ARAB EMIRATES Studsvik Ltd. Middle East c/o UMG, Sky Tower, #604, Reem Island

Abu Dhabi, United Arab Emirates Tel: +971 2 6777102 Fax: +971 2 6777108

JAPAN Studsvik Japan, Ltd Rinku Gate Tower Building 1409, 1 Rinku Oraikita, Izumisano-city, Osaka, 598-0048 Japan

Tel / Fax: +81 (0)72 493 7418

CHINA

Studsvik Scandpower, Inc. Room 2501, Tower 3 888 Yu Yuan Road Chang Ning District, Shanghai, 200050, China Tel +86 13524572096

SWITZERLAND Studsvik Suisse AG Klausenstrasse 21 CH-5525 Fischbach-Göslikon Switzerland Tel: +41 79 319 1501

UNITED KINGDOM Studsvik Ltd Ribble House Meany Gate Bamber Bridge, Preston, PR5 6UP, United Kingdom Tel: +44 (0) 1772 646880 Fax: +44 (0) 1772646899

GERMANY

Studsvik Scandpower GmbH Rathausallee 28 DE-22846 Norderstedt Germany Tel: +49 40 3098 088 10 Fax: +49 40 3098 088 88

Studsvik GmbH & Co. KG Karlsruher Str. 20 DE-75179 Pforzheim Germany Tel: +49 7231 58695 01 Fax: +49 7231 58695 02

USA

Studsvik Scandpower, Inc. 309 Waverley Oaks Road Waltham, MA 02452 USA Tel: +1 617 965 7450 Fax: +1 617 965 7549

Studsvik, Inc. 5605 Glenridge Dr Suite 705 Atlanta, GA 30342 USA Tel: +1 404 497 4900 Fax: +1 404 497 4901

Studsvik AB (publ) Annual Report 2017 Corporate identity number 556501-0997

© Studsvik AB (publ)

Studsvik AB (publ)

SE-611 82 Nyköping Sweden Telephone: +46 155 221000 www.studsvik.com