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ANNUAL REPORT 2011
ANTICIPATE TOMORROW
75 YEARS OF INNOVATION FOR
A SAFER SOCIETY

Table of contents

  • Page 1
    ANNUAL REPORT 2011 ANTICIPATE TOMORROW 75 YEARS OF INNOVATION FOR A SAFER SOCIETY

  • Page 2
    ... 2011, we therefore established a stronger presence in a number of countries, e.g., through new research and development centres in India, the UK and Brazil. Pages 30-31 Proposed disposition of earnings 132 Audit report Corporate governance report Shareholder information Financial information 2012...

  • Page 3
    ... 37% 25% 22% 17% 18% 31% 8% 1% 19% Aeronautics Dynamics Electronics Defence Systems Security and Defence Solutions Support and Services Combitech Air Land Naval Civil security Commercial aeronautics Other Sweden EU excl. Sweden Rest of Europe North and South America Asia Africa Australia

  • Page 4
    ...on defence and civil security is expected to increase in coming years. Since the acquisition of Grintek in 2005, Saab has a strong position in South Africa. For more information see pages 34-35. North America The U.S. is the world's largest defence market, accounting for about 43 per cent of global...

  • Page 5
    ...per cent. At year-end 2011, the equity/assets ratio was 41.1 per cent (39.1). MSEK 25,000 20,000 15,000 10,000 5,000 0 % 15 12 9 6 3 0 % 50 40 30 20 10 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2 Trend line Goal Goal SAAB ANNUAL REPORT 2011 1

  • Page 6
    EVENTS BY QUARTER 2011 EVENTS IN 2011 t ćF4XFEJTI%FGFODF.BUFSJFM"ENJOJTUSBUJPO '.7 QMBDFE JAN-MARCH t "OPSEFSXPSUI.4&,XBTSFDFJWFEGPSUIFXFBQPOMPDBUJOH...PGSFTFBSDIBOEJOOPWBUJPOXBT t 5XPDPOUSBDUTXFSFTJHOFECZUIFIFMJDPQUFSPQFSBUJPOT0OF 2 SAAB ANNUAL REPORT 2011

  • Page 7
    EVENTS BY QUARTER 2011 t *O+VMZ BOPSEFSXBTSFDFJWFEGPS.4&, GSPN'.7GPS t 0VSPXOFSTIJQJOUFSFTU DPSSFTQPOEJOHUPQFSDFOUBę...OFX-POEPOPďDF XIJDI SPPNGPSNPSFUIBOFOHJOFFSTTQFDJBMJTJOHJOEFTJHO QSPEVDUJPOUFDIOPMPHZBOEEJNFOTJPOJOH SAAB ANNUAL REPORT 2011 3

  • Page 8
    ... other countries at the time. Saab's creation was a milestone for Sweden's non-aligned status and for the Swedish defence industry. An important factor for Saab has been its ability to cooperate with the Swedish armed forces and to constantly deliver cost-efficient, competitive products and services...

  • Page 9
    ... environmental and climate threats. Our systems can help countries to better meet security threats today and in the future, while promoting peace, democracy and development. The key to success is an approach that focuses on partnership, collaboration and information sharing. This is because it is...

  • Page 10
    ... strength Sweden has historically had an innovative business sector, where Saab is one of a number of key players. Saab has long been one of the country's most engineering focused and innovation focused companies, where around 20 per cent of sales is reinvested in research and development. This...

  • Page 11
    ...Sweden has historically had an innovative business sector where Saab is one of a number of key players. Saab has long been one of the country's most engineering focused and innovation focused companies, where around 20 per cent of sales is reinvested in research and development." SAAB ANNUAL REPORT...

  • Page 12
    ...QSPWJEJOHPOTJUFTVQQPSUXJUIJOTUBMMBUJPOBOEUSBJOJOHPGMPDBMQFSTPOOFM Active portfolio management 0VSHMPCBMQSFTFODFJODSFBTFEJOBOEXFIBWFTFFOHPPE SFTVMUTJO*OEJBBOE...BJSUSBďDNBOBHFNFOUBOETVSWFJMMBODFUFDIOPMPHZ BTXFMMBTSBEBSBOETFOTPST 8 SAAB ANNUAL REPORT 2011

  • Page 13
    ... 4XFEFO GPSFYBNQMFJO)ZEFSBCBE *OEJB In 2012 we celebrate Saab's 75th anniversary *UXBTZFBSTBHPUIF4XFEJTI1BSMJBNFOU...XBZTCFDBVTFPGPVS 4XFEFOPSJHJOT Talent management cannot become a problem )ÃŒLBO#VTLIF 1SFTJEFOUBOE$&0 0VSUFDIOPMPHJDBM...UJNF SAAB ANNUAL REPORT 2011 9

  • Page 14
    ... defence and security companies like Saab. Essentially, it is a question of which products and services we will offer the market and how we do it. According to the UN's World Population Clock, the global population passed 7 billion on 31 October 2011. In recent years, Africa, Asia and Latin America...

  • Page 15
    ... government budgets no longer allow for research and development to the same extent as before. To a growing extent, defence authorities around the world want access to the best the market has to offer regardless of country of origin, and they want it delivered on short notice. A larger share...

  • Page 16
    ... Saab's 75-year history, operations have grown from military aviation into a portfolio of products and solutions for defence and civil security. These systems can help countries develop their capacity to meet current and future security threats. 12 SAAB 12 SAAB ANNUAL ANNUALREPORT REPORT 2011 2011

  • Page 17
    ... to develop further as new technologies become available. Cost-effective system Gripen is designed for minimal cost in terms of procurement, logistics support and maintenance. The cost of ownership was catered for in the aircraft design from the very beginning, since this was one of the driving...

  • Page 18
    ..., support and services, training and underwater systems, as well as in niche segments such as signals intelligence and countermeasure systems. Geographically we have a strong position in Sweden and good positions in South Africa and Australia. Read more on pages 10-11 14 SAAB ANNUAL REPORT 2011

  • Page 19
    ...OUR BUSINESS CONCEPT Saab constantly develops, adopts and improves new technology to meet changing customer needs. Saab serves the global market of governments, authorities and corporations with products, services and solutions for military defence, commercial aviation and civil security. OUR VALUES...

  • Page 20
    ...PORTFOLIO Priorities 2012 In 2012, we will continue to focus on a number of key markets, including the US, Sweden, India and the UK. Our priority is to increase local competence and establish a stronger local presence in selected markets. EBIT % 20 16 12 8 4 0 2009 2010 2011 Long-term financial...

  • Page 21
    ... Universum) Communicative leadership (index) Employee reviews, % Development plans, % Percentage of female managers, % Results 2011 67 12th place 68 84 72 21 Priorities 2012 We will continue to develop Saab Academy. We will improve long-term talent management. We will develop HR support globally and...

  • Page 22
    ...in the market for air traffic management systems; see also page 20. During the year we also acquired the Czech company E-COM, which specialises in the development and production of virtual simulators. We have also established research and development centres in the strategically important markets of...

  • Page 23
    ... > PROFITABLE GROWTH SALES TREND BY MARKET SEGMENT SALES TREND BY MARKET REGION MSEK 12,000 MSEK 12,000 9,000 9,000 6,000 6,000 3,000 2010 2011 3,000 2010 2011 0 Air Land Naval Comm. Other Civil Security Aeronautics Sweden Rest of North Central and Asia, Africa and Europe America...

  • Page 24
    .... There are several factors driving demand in this market: Demand for air traffic management and infrastructure is driven by growth between and within regions. Saab Sensis' products and systems are installed with over 60 customers in 35 countries on six continents. 20 SAAB ANNUAL REPORT 2011

  • Page 25
    ...PROFITABLE GROWTH Strategy for civil security Investments in products and solutions for civil security are increasing around the world. We have good positions in Sweden, Central Europe, South Africa and Australia, e.g., through the new security system SAFE (Situation Awareness For Enhanced Security...

  • Page 26
    ...R&D efficiency t Continuous improvements PRIORITIES 2011 t Focus on cash flow and tied-up capital to facilitate investments t Develop uniform processes for product management and development to optimise R&D efficiency. for growth and acquisitions, R&D and marketing. 22 SAAB ANNUAL REPORT 2011

  • Page 27
    ... and reductions in working capital, for example in account receivables and inventories are important aspects. MSEK 1,400 MSEK 2,000 MSEK 5,000 1,050 1,500 3,750 700 1,000 2,500 350 500 1,250 0 2009 2010 2011 0 2009 2010 2011 0 2009 2010 2011 SAAB ANNUAL REPORT 2011 23

  • Page 28
    ... we are increasingly using model-based development for complex software and software systems. Every research and product development investment is preceded by a careful analysis where customer benefits, future market potential and profitability are the decisive criteria. 24 SAAB ANNUAL REPORT 2011

  • Page 29
    ...2008 2009 2010 2011 Self-financed research & development Depreciation, amortisation and write-downs of capitalised development costs We develop and supply products and services in both the short term (about 12 months) and the longer term. Short-term projects include the area of civil security...

  • Page 30
    ... security and traffic management systems (incl. ATM2) Radar and electronic warfare SERVICES TECHNICAL CONSULTANCY AND SUPPORT AND SERVICE 1) Command, Control, Computing, Communication, Intelligence, Surveillance and Reconnaissance 2) ATM - Air Traffic Management 26 SAAB ANNUAL REPORT 2011

  • Page 31
    ..., correction facilities and Arlanda Airport, as well as used by first responders. It is also a clear example of how Saab's experience, development and existing IT solutions are integrated in a new software program that now offers an attractive solution in civil security. SAAB ANNUAL REPORT 2011 27

  • Page 32
    ... and develop close cooperations with our customers in order to understand their needs and develop attractive solutions in terms of both technology and cost efficiency. Technologies are developing at a rapid and our business conditions are constantly changing. This means that we, like other companies...

  • Page 33
    ... interested in education and technology, drive research projects and show what we can offer as an employer. Learn more on page 43. GUIDING VALUES Expertise, trust and ambition. Our code of conduct describes how we work internally and externally. Learn more on page 38. SAAB ANNUAL REPORT 2011 29

  • Page 34
    ... to strengthen our local presence on a continent that accounts for half of the global market for defence and civil security. All our business areas will eventually be represented here as part of a cohesive team. Starting with our current product portfolio, growth will be achieved organically through...

  • Page 35
    The UK: A priority market In London, Saab has established both a new head office for its UK operations and the Saab Design Centre, where around ten engineers from Sweden and the UK will initially work on the development of an aircraft carrier-based version of Gripen, Sea Gripen. This is a new area ...

  • Page 36
    ... and air defence systems, and training solutions. Our sales amounted to MSEK 7,201 (7,611). SALES MSEK 12,000 9,000 SHARE OF TOTAL SALES SALES MSEK 12,000 9,000 SHARE OF TOTAL SALES 6,000 45% 6,000 31% 3,000 3,000 0 2009 2010 2011 0 2009 2010 2011 32 SAAB ANNUAL REPORT 2011

  • Page 37
    ...Africa and Australia. Our sales amounted to MSEK 1,479 (1,427). We are a supplier to the world's leading aircraft manufacturers, including Boeing and Airbus, mainly of durable, lightweight aerostructures, avionics, operating systems, structural and system integration services, and support solutions...

  • Page 38
    ... decrease in North America in the coming years, at the same time that investments in civil security continue to rise rapidly. Brazil, one of the stronger economies in South America, accounted for the large share of its defence spending. 750 0 2010 Sales 2011 2010 2011 Order bookings MARKET TRENDS...

  • Page 39
    ...REGION SWEDEN Saab's position Since Saab was founded, Sweden has been its largest market and the majority of its research and development is conducted there. The order intake and sales both decreased slightly in 2011 compared to 2010. REST OF EUROPE Saab's position Important markets include the UK...

  • Page 40
    ... an important part in society's development. Our defence and security solutions contribute to a safer society. The actions we take are based on a set of values and ambitious goals to be a responsible business partner and employer.. Saab has played an important role in Sweden since the company was...

  • Page 41
    ..., business concept and values. Certain specific measures are governed by our sponsorship policy, which requires that sponsorship activities generally focus on education and technology. BOARD OF DIRECTORS MANAGEMENT Electronic Defence Systems Security and Defence Solutions Support and Services...

  • Page 42
    ... In a global society, companies fill an important function by creating sustainable growth and doing business ethically. Trust and transparency are critical to future success. During the year, Saab updated and enhanced its code of conduct. All employees have been provided information on the new code...

  • Page 43
    ... offer the right development opportunities for current employees and to be the first choice of future generations of Saab employees. Goal Our overall goal is to be an employer of choice for current and future employees. Priorities 2011 Performance Management During the year, we introduced a Group...

  • Page 44
    ... future. In autumn 2011, Saab's business plan for 2012-2016 was therefore presented to the Group, and through the business areas to every employee. During the autumn, the Group's employees received the updated code of conduct, which establishes a number of important principles, including that trust...

  • Page 45
    ... of choice among Swedish engineering students. In just a few years, the criteria students use to rank employers have changed appreciably. Now most feel that it is extremely important that an employer can offer a balance between work and life, an area that Saab's current employees rate highly. The...

  • Page 46
    ... other home markets. Having access to the right skills is critical to our long-term development and success, which is why we have invested for years in collaborations and programmes to give children and young people the opportunity of a good education in Sweden and South Africa. In Sweden, we have...

  • Page 47
    ... University of Technology, a doctoral project is under way on dynamic forecasting models. The aim is to measure aircraft vibrations and compare them with how aircraft perform in reality. t Saab is represented on the Governing Board of Clean Sky, one of the EU's largest research projects ever. Learn...

  • Page 48
    ...2011, Saab acquired and tested an IS/IT tool to structure information on the chemicals contained in its products. The tool will also be used to verify that the products meet current chemical requirements. Implementation will begin in 2012. We have long been using an effective Group-wide IS/IT system...

  • Page 49
    ... Barracuda AB account for the largest share of emissions. Chlorinated VOCs consist of trichloroethylene, which is used within Aeronautics and Electronic Defence Systems. The reduction in consumption is due to the new degreasing facility Aeronautics used throughout the year. SAAB ANNUAL REPORT 2011...

  • Page 50
    ... of commercial cargo aircraft beginning in 2016. the Swedish military on the use of biofuels in the Gripen system. t SESAR - (Single European Sky Air Traffic Management Research), t Clean Sky - Saab's technology is contributing to lighter, more t BioFuel - Saab participated in 2011 in...

  • Page 51
    ...2010 introduced one of the most spectacular greentech projects ever conceived. Plantagon is an enormous spherical greenhouse that could potentially supply cities with fresh produce. The company Plantagon develops... is the sole supplier of Plantagon's control systems. SAAB ANNUAL REPORT 2011 47

  • Page 52
    ... high technology companies, Saab offers products, solutions and services for military defence and civil security. In 2011, we had customers in over 100 countries, while research and development are principally carried out in Sweden. We are primarily active in Europe, South Africa, Australia and...

  • Page 53
    ... BAE Systems' sale of its shareholding in Saab AB. t Saab formed its own Academy to focus more on employee training and competence development. The Academy is headed by Mikael Grodzinsky, who left his position as Head of Group Human Resources within the Group Management during autumn 2011. t Saab...

  • Page 54
    ... South Africa. All 26 aircraft ordered by South Africa have been delivered. Markets outside Sweden accounted for 43 per cent (44) of sales. SHARE OF SALES 2011, % SALES, MSEK 8,000 OPERATING INCOME AND MARGIN 350 280 210 10 8 6 4 2 0 25% 6,000 4,000 140 2,000 70 0 0 2009 2010 2011 2009...

  • Page 55
    ...forces. t The unmanned helicopter Skeldar, which offers a modular design and several optional features. t Airborne missile systems. t Subcontractor for commercial aircraft producers. The development of the unmanned helicopter Skeldar is an example of Saab's niche innovations. SAAB ANNUAL REPORT...

  • Page 56
    ...3D mapping solutions for the defence market. Products include Carl-Gustaf, RBS 70 and Rapid 3D Mapping. SALES, INCOME AND ORDERS Orders received Income and margin The operating margin in 2010 was impacted negatively by structural costs of MSEK 278, which were partly reversed in 2011. Operating cash...

  • Page 57
    ... weapon system valued at a total of MSEK 209. This is the first time that the US Army is buying the Swedish recoilless rifle system. gies AB. Saab will continue to offer 3D mapping applications for the military, government and geographical information systems (GIS) markets through the new unit R3DM...

  • Page 58
    ... Defence Systems was a supplier to several projects in Aeronautics that entered into their final stages of completion in 2010 and 2011. These projects have been successfully delivered to the customer and Saab has managed to execute them at a lower cost level than originally planned. A final price...

  • Page 59
    ... part of the U.S. Navy's Littoral Combat Ship Program. MSEK 250. The system improves security for aircraft, helicopters and crews in threat environments. increasing sales to existing customers and developing operations in key markets that offer opportunities for repeat business. electronic defence...

  • Page 60
    ... REPORT > SAAB'S BUSINESS AREAS SECURITY AND DEFENCE SOLUTIONS Security and Defence Solutions offers a product portfolio comprising defence reconnaissance systems, airborne early warning systems, training and simulation, air traffic management, maritime security, security and monitoring systems...

  • Page 61
    ... REPORT > SAAB'S BUSINESS AREAS HIGHLIGHTS 2011 t Extended maintenance agreement valued at MSEK 150 signed STRATEGIC PRIORITIES t Acquisition of the Czech company E-COM, with operations in with the British Army. The order covers the maintenance and support of delivered training systems used...

  • Page 62
    ... Markets outside Sweden accounted for 24 per cent (26) of sales. SHARE OF SALES 2011, % SALES, MSEK 4,000 OPERATING INCOME AND MARGIN 500 400 300 200 100 0 15 12 9 6 3 0 14% 3,200 2,400 1,600 800 0 2009 2010 2011 2009 2010 2011 Operating income, MSEK Operating margin, % 58 SAAB ANNUAL...

  • Page 63
    ... were signed in 2011 with military and commercial customers. Saab is responsible for maintenance and support of the Swedish Armed Forces' latest helicopter systems - Helicopter 15 and Helicopter 16 - and has also signed an eight-year agreement with the commercial company Scandinavian Air Ambulance...

  • Page 64
    ... REPORT > SAAB'S BUSINESS AREAS COMBITECH Combitech, an independent subsidiary of the Saab Group, is one of Sweden's largest technology consulting firms. By combining technology with cutting-edge expertise in the environment and security, we create solutions for our clients' specific needs. SALES...

  • Page 65
    ... other industries as well as the public sector. In 2011, sales grew fastest among defence and other industrial clients. t Combitech offers services in systems development, systems integration, information security, systems security, communications, mechanics and logistics. Demand in mechanics and...

  • Page 66
    ... review of the risk management process for long-term customer projects. In 2011, we also began introducing an improved process for reporting financial controls within Saab. For more information, see the corporate governance report, pages 139-140. RISK MANAGEMENT PRIORITIES 2010-2012 2010 tAnalysis...

  • Page 67
    ... by the EU. OPERATING RISKS A number of significant areas have been identified with respect to operating risks, which are important in assessing the Group's results and financial position. Develop and introduce new systems and products The Group's pension obligations are substantial, as indicated...

  • Page 68
    ... with the terms and conditions of its insurance. RESPONSIBILITY The Group takes an active approach to product management. A high degree of modularisation in project management allows Saab to reuse product solutions in its offerings. Before a contract is entered into with a customer to supply...

  • Page 69
    ...Long-term customer projects Management of long-term customer projects involves risks. Saab's operations entail complex development projects on the leading edge of technology where the competitive situation is complex. Success depends on the ability to offer cost-effective high technology solutions...

  • Page 70
    ...shall be reviewed annually as per 1 January for all members of the Group Management. The fixed salary shall be at market terms and based on factors such as position, competence, experience and performance. Variable remuneration According to the Swedish Companies Act, the Board of Directors shall to...

  • Page 71
    ... time. Compensation for these services shall be paid at market terms. Incentive programs proposed to the Annual General Meeting 2011 The Board of Directors proposed that the Annual General Meeting should resolve on the implementation of a Share Matching Plan 2011 and a Performance Share Plan 2011...

  • Page 72
    ... the category the employee belongs to. In 2007, Saab repurchased 1 million shares, in 2008 and 2009 it repurchased 1,340,000 shares per year, and in 2010 it repurchased 838,131 shares to hedge the plans. The Annual General Meeting on 7 April 2011 renewed the Board of Directors' mandate to repurchase...

  • Page 73
    ...cash ï¬,ows, supplemental information 47 Information on Parent Company 48 Environmental report 49 Exchange rates used in financial statements 50 Definitions of key ratios 130 130 127 129 129 108 108 109 109 109 110 110 110 111 111 111 111 116 117 118 118 125 126 126 127 SAAB ANNUAL REPORT 2011 69

  • Page 74
    ... (15,211), or 63 per cent (62) of total sales. Of sales, 84 per cent (83) was related to the defence market. MSEK Sweden EU excluding Sweden Rest of Europe Americas Asia Africa Australia, etc. Total MSEK Air Land Naval Civil Security Commercial Aeronautics Other Total 70 SAAB ANNUAL REPORT 2011

  • Page 75
    ... the hedged part was valued at market value. Other net financial items consisted of income from shares in associated companies and other exchange rate effects. Other exchange rate effects included an accounting loss related to a pre-maturity closing of an interest rate swap. Current and deferred...

  • Page 76
    ...2006 with the overall objective to secure the Group's defined-benefit pension plans and at the same time hedge the interest rate volatility of the pension liability and reduce the overall cost of pensions. Assets held for sale 32 - 113 TOTAL ASSETS 31,799 29,278 72 SAAB ANNUAL REPORT 2011

  • Page 77
    ... 4,426 589 643 1,799 750 265 819 7,751 792 13,408 Liabilities attributable to assets held for sale Total liabilities 32 18,730 17,834 TOTAL EQUITY AND LIABILITIES 31,799 29,278 For information on the Group's assets pledged and contingent liabilities, see Note 42. SAAB ANNUAL REPORT 2011 73

  • Page 78
    ... 564 -21 9 51 - MSEK Opening balance, 1 January 2010 Net comprehensive income for the year Transactions with shareholders: Repurchase of shares Share matching plan Dividend Acquisition and sale of non-controlling interest Closing balance, 31 December 2010 Capital stock 1,746 - Total equity 10,682...

  • Page 79
    ... to the customer, and Saab managed to execute them at a lower cost than originally planned. Therefore a final price adjustment was made in the fourth quarter 2011 of about MSEK 850. This had a negative impact on the operating cash ï¬,ow of both Aeronautics and Electronic Defence Systems. Operating...

  • Page 80
    FINANCIAL INFORMATION > FINANCIAL STATEMENTS Specification of operating cash ï¬,ow 2011 Saab excl acquisitions /divestments and SAL 2,178 Acquisitions and divestments Saab Aircraft Leasing 164 Total Group 2011 2,342 Total Group 2010 2,750 MSEK Cash ï¬,ow from operating activities before changes ...

  • Page 81
    ...464 -423 1,041 SALES AND INCOME The Parent Company includes units within the business areas Aeronautics, Electronic Defence Systems, Security and Defence Solutions, and Support and Services. Group staffs and Group support are included as well. The Parent Company's sales in 2011 amounted to MSEK 15...

  • Page 82
    ... Fixed assets Intangible fixed assets Tangible fixed assets Financial fixed assets Shares in Group companies Receivables from Group companies Shares in associated companies and joint ventures Receivables from associated companies and joint ventures Other long-term securities holdings Other long...

  • Page 83
    ... LIABILITIES 1) The balance sheet for the parent company has been restated for the year 2010 due to a correction of classification and valuation of intangible and financial fixed assets. 27,548 25,447 Assets pledged Contingent liabilities 42 42 10 5,829 110 5,918 SAAB ANNUAL REPORT 2011 79

  • Page 84
    ...sheet items that have been restated through the correction of the opening balance for 2010 are intangible fixed assets, by MSEK 2,473, from MSEK 96 to MSEK 2,569, and shares in Group companies, by MSEK -3 635, from MSEK 9,520 to MSEK 5,885. See also Note 16 and Note 44. 80 SAAB ANNUAL REPORT 2011

  • Page 85
    ...in and sale of short-term investments Sale of and investments in financial assets Investments in operations Investments in subsidiaries Sale of subsidiaries Cash ï¬,ow from investing activities Financing activities Change in receivables/liabilities, Group companies Repurchase of shares Repayment of...

  • Page 86
    ... the Group) are divided into six business areas: Aeronautics, Dynamics, Electronic Defence Systems, Security and Defence Solutions, Support and Services, and Combitech. The operations in each business area are described in Note 4. Saab has a strong position in Sweden and the large part of its sales...

  • Page 87
    ... and current liabilities generally consist of amounts that can be recovered or paid within twelve months of the closing day. Other assets and liabilities are recognised as fixed assets or long-term liabilities. Consolidation principles Group companies Group companies are companies in which Saab ab...

  • Page 88
    ... fixed assets. Customer-financed research and development is recognised in cost of goods sold. t Administrative expenses relate to expenses for the Board of Directors, Group Management and staff functions. t Marketing expenses comprise expenses for the in-house marketing and sales organisation...

  • Page 89
    ... is set using future sales projections according to a business plan based on identified business opportunities. Acquired development costs are amortised on a straight line basis over a maximum of 10 years. t Goodwill: In the Parent Company, goodwill is amortised over a maximum 20 years. Goodwill is...

  • Page 90
    ... They are valued at amortised cost. t Loans receivable and accounts receivable: Loans receivable and accounts receivable are non-derivative financial assets with fixed payments which are not listed on an active market. Receivables arise when the company provides money, goods or services directly to...

  • Page 91
    ... than one year they are short-term investments. With recognition at fair value through profit or loss, changes in value are stated in financial revenue and expenses. Valuation principles The fair value of listed financial assets is determined using market prices. Furthermore, Saab applies various...

  • Page 92
    ...determining the fair value of the plan. Other conditions (such as earnings per share) affect staff costs during the vesting period by changing the number of shares or share-related instruments that are expected to be paid. Share matching plan for employees Saab has a Global Share Matching Plan where...

  • Page 93
    ...business combinations. Associated companies and joint ventures Shares in associated companies and joint ventures are recognised by the Parent Company according to the acquisition value method. Revenue includes dividends received. Intangible fixed assets All development costs are recognised in profit...

  • Page 94
    ...areas are monitored continuously by Group Management and the Board of Directors' audit committee. UNCERTAINTIES IN ESTIMATES AND ASSUMPTIONS Long-term customer contracts Revenue by significant source Group MSEK 2011 2010 Parent Company 2011 2010 Sale of goods Long-term customer contracts Service...

  • Page 95
    ... the defence market. Electronic Defence Systems Saab has one customer, the Swedish Defence Materiel Administration (fmv), which accounts for 10 per cent or more of the Group's revenue. fmv is a customer of every business area, generating total revenue of msek 6,555 (6,404) in 2011. Information on...

  • Page 96
    FINANCIAL INFORMATION > NOTES NOTE 4, CONT. Electronic Defence Security and Defence Solutions Support and Services Combitech Corporate Eliminations Group Group MSEK Aeronautics Dynamics Systems 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 ...

  • Page 97
    FINANCIAL INFORMATION > NOTES NOTE 4, CONT. Revenue by operating segment Parent Company MSEK 2011 2010 NOTE 6 OTHER OPERATING EXPENSES Aeronautics Electronic Defense Systems Security and Defence Solutions Support and Services Total 6,178 3,631 2,538 3,068 15,415 6,401 2,534 2,846 2,964 14,745 ...

  • Page 98
    ... 14 December 2010, Saab announced the signing of an eight-year agreement with Scandinavian Air Ambulance Holding ab. In addition, Saab acquired inventories and equipment. The purchase price amounted to msek 41 and was paid on 1 March 2011. Saab also acquired assets from the Czech company e-com, with...

  • Page 99
    ... The term full-time equivalents excludes long-term absentees and consultants. Part-time employees and probationers are however included in the calculation. Gender distribution of corporate management Share of women, per cent 2011 2010 Parent Company Sweden United Arab Emirates South Africa Thailand...

  • Page 100
    ... INFORMATION > NOTES NOTE 10 AUDITORS' FEES AND COMPENSATION Group MSEK 2011 2010 Parent Company 2011 2010 Operating expenses refer to cost of goods sold, marketing expenses, administrative expenses and research and development costs. Depreciation and amortisation in the leasing operations (Saab...

  • Page 101
    ... 26 Parent Company MSEK Result from other securities and receivables held as fixed assets 2011 2010 Other interest income and similar profit/loss items 2011 2010 Deferred tax related to previous years Total Interest income, Group companies Other interest income Capital gain on sale of shares...

  • Page 102
    ... from Group companies in certain non-European countries, taxation may exceed normal company tax. The dividend paid to shareholders has no tax consequences. Parent Company MSEK 2011 (%) 2011 2010 (%) 2010 Accounts receivable Prepaid expenses and accrued income Long-term liabilities Provisions...

  • Page 103
    ... 240 Deferred tax liabilities 31-12-2010 -240 87 1 3 107 238 37 233 233 Group MSEK Translation difference Closing balance 31 Dec 2011 Intangible fixed assets Tangible fixed assets Lease assets Biological assets Long-term receivables Inventories Accounts receivable Prepaid expenses and accrued...

  • Page 104
    ... 6,413 571 1,056 311 1,938 610 1,256 407 2,273 Carrying amount, 31 December 1,950 2,428 1,056 1,256 Acquired through business acquisitions 2011 relates to Sensis. Capitalised development costs of msek 20 in 2010 related to a project in Security and Defense Solutions. 100 SAAB ANNUAL REPORT 2011

  • Page 105
    ... in the following lines in income statement Group MSEK 2011 2010 Parent Company 2011 2010 Cost of goods sold Marketing expenses Research and development costs 185 1 588 161 644 185 200 164 200 The operating margin is comprised of the units' operating income after depreciation and amortisation...

  • Page 106
    .... In the Parent Company, the reported amount refers to buildings and land. Operating properties/buildings and land 1) Group MSEK 2011 2010 Other reclassifications Parent Company 2011 2010 Divestments Translation differences Closing balance, 31 December Acquisition value Opening balance...

  • Page 107
    ... Group MSEK 2011 2010 NOTE 18 Parent Company 2011 2010 LEASE ASSETS AND LEASE AGREEMENTS Acquisition value Opening balance, 1 January Acquired through business acquisitions Acquisitions from companies within the Group Investments Reclassifications Sales Translation differences Closing...

  • Page 108
    ...from customers and those from ekn will be affected in each instance by current projections. Income from leasing operations (Saab Aircraft Leasing) is recognised net through profit and loss on the line cost of goods sold after offsetting the loss risk reserve. Saab Aircraft Leasing's income statement...

  • Page 109
    ... in the Group In the Group, investment properties are reported according to the fair value method. Group MSEK 2011 2010 Information on carrying amount of investment properties in Parent Company Parent Company MSEK 2011 2010 Carrying amount, 1 January Reclassification from/to asset held for sale...

  • Page 110
    .... In addition, Saab invested msek 11, representing more than l0 per cent of total shares, in the Swedish systems development company isd Technologies Int ab. Shares in associated companies as of l1 December 2011 include goodwill of msek 61 (8). The Group's share of sales, income, assets, liabilities...

  • Page 111
    FINANCIAL INFORMATION > NOTES NOTE 21, CONT. Booked value, shares in associated companies NOTE 23 PARENT COMPANY'S SHARES IN ASSOCIATED COMPANIES AND JOINT VENTURES Ownership interest, % 31-12-2010 MSEK Assets Liabilities Parent Company MSEK 2011 2010 Associated companies Hawker Pacific ...

  • Page 112
    FINANCIAL INFORMATION > NOTES NOTE 24 RECEIVABLES FROM GROUP COMPANIES, ASSOCIATED COMPANIES AND JOINT VENTURES Receivables from associated companies and joint ventures 2011 2010 NOTE 26 OTHER LONG-TERM SECURITIES HOLDINGS Parent Company Receivables from Group companies 2011 2010 MSEK 2011 2010 ...

  • Page 113
    ...100). Reported gross income amounted to msek 611 (641). Parent Company MSEK 2011 2010 Accounts receivable in the Group amount to msek l,15l (l,052). In 2011, Saab sold receivables as part of the sales programme arranged in 2009 to strengthen its financial position and increase financial flexibility...

  • Page 114
    FINANCIAL INFORMATION > NOTES NOTE 31 LIQUID ASSETS Group MSEK 31-12-2011 31-12-2010 In 2011 no Series b shares were repurchased on the market to secure Saab's Share Matching Plan and Performance Share Plan. During the year, 614,229 shares were matched in Saab's Share Matching Plan. A total of l,...

  • Page 115
    ... closing day. Liabilities to credit institutions largely consist of Medium Term Notes (mtn), and in the previous year of commercial paper as well. For more information on financial risk management, refer to Note 41. The fair value of mtns and commercial paper exceeds book value by msek 1l (8). Saab...

  • Page 116
    ...3,907 201 -23 -14 170 68 -11 4,298 31 December 2009 2008 2007 Cost reported in income statement Group MSEK 2011 2010 Present value of defined-benefit obligations Fair value of assets under management Net obligation in the statement of financial position Losses -6,541 4,446 -583 -2,678 -5,233...

  • Page 117
    ... lines in the income statement: Group MSEK 2011 2010 Employee turnover: The likelihood that an individual ends his/her employment is assumed to be l per cent per year. Cost of goods sold Marketing expenses Administrative expenses Research and development costs Financial expenses Total cost of post...

  • Page 118
    ... Share Plan 2008 Performance Share Plan 2009 Performance Share Plan 2010 Total 22 25 20 4 5 1 77 33 23 8 -4 2 62 The fair value of the services rendered is based on the share price of the matching shares that are expected to be allotted. The share price is deter- 114 SAAB ANNUAL REPORT 2011

  • Page 119
    ... took over as the new Head of Group Communications on 1 October. At the turn of 2011/2012, Group Management therefore consisted of 14 persons, including the ceo. The salaries paid to other senior executives consist of a fixed portion. The previous short-term variable portion has been discontinued...

  • Page 120
    ...Group Parent Company Group MSEK 31-12-2011 31-12-2010 Opening balance, 1 January 2011 Amount utilised during the year Translation differences and other 1,119 89 245 275 1,728 1,199 290 401 317 2,207 Closing balance, 31 December 2011 1,301 -190 20 1,131 451 -131 320 Provisions that are long-term...

  • Page 121
    ... 2011 656 306 -194 -20 8 -21 735 276 147 -137 -5 -3 278 Group MSEK 31-12-2011 31-12-2010 Other long-term liabilities Long-term prepaid revenue Other Total 49 390 439 82 212 294 Other current liabilities Total provisions MSEK Group Parent Company Liabilities to associated companies Value...

  • Page 122
    ...-12-2011 31-12-2010 Parent Company 31-12-2011 31-12-2010 Saab's financial assets and liabilities and contractual obligations give rise to financial risks. These risks are managed to a large extent with various financial instruments. Financial risk management Accrued expenses Accrued project costs...

  • Page 123
    ...value 2011 Financial assets Financial investments Long-term receivables Derivatives Forward exchange contracts Currency options Interest rate swaps Electricity derivatives Total derivatives Accounts receivable and other receivables Short-term... 56 147 856 203 856 203 856 SAAB ANNUAL REPORT 2011 119

  • Page 124
    FINANCIAL INFORMATION > NOTES NOTE 41, CONT. Outstanding derivatives Currency derivatives Million Currency Nominal currency Asset SEK Fair value 2011 Liability SEK Net Nominal currency Asset SEK Fair value 2010 Liability SEK Net Maturity up to one year EUR USD Other -299 -342 - 160 57 67 284 ...

  • Page 125
    ...'s future results with respect to the current order backlog. Future order bookings are exposed to fluctuations in exchange rates in terms of competitive strength. This is managed partly by Group Treasury, which hedges the economic exposure in fixed price tenders. Definitions Foreign currency risk...

  • Page 126
    ... with acquisitions and divestments. The value of equity subject to translation exposure amounted to msek 2,704 (2,247) at year-end; see the table below: Net assets translated to SEK MSEK 31-12-2011 31-12-2010 Impairment tests Long-term contracts in commercial aircraft programmes consist of an order...

  • Page 127
    ...liquidity MSEK Note 31-12-2011 31-12-2010 1) Adjustment of nominal value compared to book value due to market valuation at a premium or discount. Current interest-bearing liabilities mainly consist of liabilities to joint ventures of msek 449 (428). Long-term interest-bearing liabilities amount to...

  • Page 128
    ...per cent (0.5) of total accounts receivable. Write-downs of accounts receivable have changed as follows. MSEK 2011 2010 The Board has given Saab Treasury a risk mandate for trading in currency and money market instruments. During the year, msek 10 was allocated to trading expressed according to VaR...

  • Page 129
    ... by current market rates to the valuation day and valued to sek at year-end exchange rates t Options: The Black-Scholes option pricing model is used in the market valuation of all options t Interest swaps: Future variable interest rates are calculated with the help of current forward rates. These...

  • Page 130
    ... purchase price corresponds to market value. Saab otherwise did not have any material transactions with Investor. Neither does Saab have any significant transactions with Board members or members of Group Management. For information on remuneration, see Note l7. Of the Parent Company's sales, l per...

  • Page 131
    FINANCIAL INFORMATION > NOTES NOTE 44, CONT. Specification of Parent Company's holdings of shares in Group companies 31-12-2011 No. of Share, shares per cent Carrying amount, MSEK NOTE 45 UNTAXED RESERVES Parent Company MSEK 2011 2010 Group company/Corp. ID no./Reg. office Celsius AB, 556194-...

  • Page 132
    ... FLOW VS. CASH FLOW FOR THE YEAR IN STATEMENT OF CASH FLOWS MSEK 2011 2010 Dividends and Group contributions from/to Group companies Capital gains/losses from sales of Group companies, associated companies and other shares Capital gains/losses on sales of tangible fixed assets Inventory impairment...

  • Page 133
    ... of associated companies Group MSEK 2011 2010 NOTE 47 INFORMATION ON PARENT COMPANY Acquired assets and liabilities Financial fixed assets Total assets 104 104 - Saab ab (publ) is a limited company registered in Sweden, with its registered office in Linköping. The Parent Company's shares are...

  • Page 134
    ... 49 EXCHANGE RATES USED IN FINANCIAL STATEMENTS NOTE 50 DEFINITIONS OF KEY RATIOS Year-end rate Country 2011 2010 Average rate 2011 2010 Gross margin Gross income as a percentage of sales. Operating margin Australia Denmark Euro Canada Norway Switzerland UK South Africa Czech Republic USA AUD...

  • Page 135
    ...on the cutting edge of technology. Over the years, Saab has conducted significant development projects and managed the associated risks with great success. See also risks and uncertainties in the annual report. The Board of Directors' proposed dividend amounts to sek 4.50 per share, corresponding to...

  • Page 136
    ...), as adopted for use in the European Union, and generally accepted accounting principles, and give a true and fair view of the financial positions and results of the Group and the Parent Company, and that the management report gives a fair review of the development of the operations, financial...

  • Page 137
    ... the annual accounts and consolidated accounts of Saab AB for the year 2011. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 48-1l2. Responsibilities of the Board of Directors and the Managing Director for the annual accounts...

  • Page 138
    ... the Code. Saab's website has a special area for corporate governance issues, which is updated in accordance with the Code. The Board annually issues a report on how the internal control of financial reporting is organised, which can be found at the end of this report. Organisation 2011 Nomination...

  • Page 139
    ... been reviewed by the company's auditor pursuant to the Annual Accounts Act, see the Auditor's Report attached to the Corporate Governance Report. Saab has not deviated from the provisions of the Code during 2011 and hence does not report any deviations from the Code. Ownership structure and number...

  • Page 140
    ... and CEO of Investor AB 2) President and CEO of Saab 3) Employed by Investor AB 4) Employed by BAE Systems. Resigned on June 16, 2011, as a result of BAE Systems' sale of its shareholding in Saab 5) Former President and CEO of Saab 6) Member of Investor AB's Board 136 SAAB ANNUAL REPORT 2011

  • Page 141
    .... In 2011, the Board of Directors has reviewed and adopted a budget and a business plan. The Board has also focused on the company's strategy and followed up on significant export opportunities and related marketing investments. Committee work represents an important part of the Board's work...

  • Page 142
    ..., the external auditor examines the financial statements, group accounts, annual report and administration and management of the company by the Board of Directors and the CEO and also the Corporate Governance Report. In addition, the Half-Year Report has been reviewed by the auditor. The auditor...

  • Page 143
    ...major part of sales are generated from countries outside of Sweden. As a rule, projects entail considerable sums of money, stretch over long periods of time and involve technological development or refinement of products. Based on Saab's operations, the material risk areas in financial reporting are...

  • Page 144
    ...basis in the Swedish operations in 2011. This process was also implemented during the year in Saab's operations in Australia and South Africa. Implementation has begun in the U.S. as well. Focus in 20 2 A self-assessment will be conducted at least twice in 2012 in all of Saab's business areas and an...

  • Page 145
    ... Systems AB, Vice President and General Manager, Airborne Radar Division, Ericsson Microwave Systems AB, Department Manager, Naval Command and Control Systems, Ericsson Microwave Systems AB The shares held by Board members include any holdings by closely affiliated persons. SAAB ANNUAL REPORT 2011...

  • Page 146
    ...Member 1995-2008 President of the Local Workers' Union IF Metall at Electronic Defence Systems, Saab AB, Jönköping Born 1947 Upper secondary engineering education Shares in Saab: 696 The shares held by Board members include any holdings by closely affiliated persons. 142 SAAB ANNUAL REPORT 2011

  • Page 147
    ... Area Security and Defence Solutions Born 1960, M.Sc. and PhD (Tec. Lic) Employed 2008 Shares in Saab: 1,913 LARS-ERIK WIGE Senior Vice President and Head of Business Area Support and Services Born 1954 Employed 2001 Shares in Saab: 1,642 LARS GRANLÃ-F Senior Vice President and Chief Financial...

  • Page 148
    ... of Saab AB Corporate identity number 556036-0793 It is the Board of Directors who is responsible for the Corporate Governance Report for 2011 on pages 1l4-14l and for ensuring that it has been prepared in accordance with the Annual Accounts Act. We have read the Corporate Governance Report and...

  • Page 149
    ... Sweden ab is expected to distribute the dividend on Friday, 27 April 2012. Distribution of the annual report The annual report will be available on Saab's website, www.saabgroup.com, approximately four weeks prior to the Annual General Meeting on 19 April. It can also be ordered from Saab's head...

  • Page 150
    ... the category the employee belongs to. In 2007, Saab repurchased 1 million shares, in 2008 and 2009 it repurchased 1,l40,000 shares per year, and in 2010 it repurchased 8l8,1l1 shares to hedge the plans. The Annual General Meeting on 7 April 2011 renewed the Board of Directors' mandate to repurchase...

  • Page 151
    ... State DFA Funds, USA Abu Dhabi Investment Authority, UAE Other Foreign owners 1.6 0.8 0.6 0.5 22.9 EARNINGS AND DIVIDEND PER SHARE, SEK 25 20 15 10 5 0 -5 2007 2008 2009 2010 20111) 1) Proposal by Board of Directors Earnings after dilution Dividend per share SAAB ANNUAL REPORT 2011 147

  • Page 152
    SHAREHOLDER INFORMATION > THE SAAB SHARE Data per share 2006-2011 2011 Closing prices 1) at year-end, SEK high for the year, SEK low for the year, SEK Market capitalisation, MSEK 2) 2010 2009 2008 2007 2006 142.40 155.00 104.20 15,543 186,060 3.2 116 7.0 5.3 123.00 128.75 84.10 13,425 192,...

  • Page 153
    ... state Foundation Asset Management AB, Sweden DFA funds, USA SHB, Sweden Abu Dhabi Investment Authority, UAA SEB Trygg Liv, Sweden Svolder AB, Sweden SEB AB, Sweden Subtotal, 20 largest shareholders Other Swedish shareholders Other international shareholders Repurchased shares Total Thousands of...

  • Page 154
    SHAREHOLDER INFORMATION > QUARTERLY INFORMATION QUARTERL Y INFORMATION January-March MSEK 2011 Operating margin 2010 Operating margin April-June 2011 Operating margin 2010 Operating margin Sales Aeronautics Dynamics Electronic Defence Systems Security and Defence Solutions Support and Services ...

  • Page 155
    ... for tangible fixed assets Research and development costs Number of employees at year-end 2011 18,907 37,172 23,498 63 84 2,941 12.5 2010 26,278 41,459 24,434 62 83 975 4.0 2009 18,428 39,389 24,647 69 83 1,374 5.6 2008 23,212 45,324 23,796 68 83 166 0.7 2007 20,846 47,316 23...

  • Page 156
    ...ägen 42 Phone: +46 8 46l 00 00 Fax: +46 8 46l 01 52 www.saabgroup.com For contact details to all offices, visit www.saabgroup.com Saab AB P.O. Box 14085 se-581 88 Linköping, Sweden Visiting address: Bröderna Ugglas gata Phone: +46 1l 18 00 00 Fax: +46 1l 18 00 11 152 SAAB ANNUAL REPORT 2011

  • Page 157
    ... Partnership Research and development Sweden's national communication system for collaboration and management Remote Tower Royal Thai Air Force Situation Awareness for Enhanced Security Single European Sky ATM Research Stockholm International Peace Research Institute Saab India Technology Centre...

  • Page 158