Saab 2011 Annual Report Download - page 122

NOTE 40
ACCRUED EXPENSES AND DEFERRED INCOME
Group Parent Company
MSEK 31-12-2011 31-12-2010 31-12-2011 31-12-2010
Accrued expenses
Accrued project costs 1,620 782 1,134 451
Vacation pay liability 787 807 584 607
Expected invoices 467 382 419 296
Social security expenses 444 475 321 357
Personnel liabilities 238 246 171 186
Accrued leasing costs 103 135 - -
Cost of customer commit-
ments in regional aircraft 95 108 95 108
Claims reserve 57 67 2 4
Royalties and commissions 35 28 22 16
Accrued interest 23 37 23 56
Other 223 228 50 111
Total accrued expenses 4,092 3,295 2,821 2,192
Deferred income
Liabilities to customers 4,038 3,883 3,628 3,437
Prepaid insurance
compensation 417 486 - -
Retained project interest 12 27 12 27
Capitalised changes in value
related to forward contract
rollovers - - 578 598
Other 70 60 67 51
Total deferred income 4,537 4,456 4,285 4,113
Total 8,629 7,751 7,106 6,305
Saab does not consider there to be a signicant dierence between book and
fair value.
NOTE 41
FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Saab’s nancial assets and liabilities and contractual obligations give rise to
nancial risks. ese risks are managed to a large extent with various nan-
cial instruments.
Financial risk management
e Board of Directors of Saab has approved a Group Treasury Policy, which
provides an overall description of the management of nancial risks and
treasury operations. e goal is to identify and actively manage nancial risks
in order to reduce the negative impact on the Group’s results, competitive
strength and nancial exibility.
e nancial risks are dened as follows:
t Foreign currency risk
t Interest rate risk
t Liquidity and nancing risk
t Commodity risk
t Credit and counterparty risk
Saab uses derivatives primarily to:
t convert anticipated commercial cash ows in foreign currency to 
t convert borrowings in , or surpluses in , to the currencies in
which assets are denominated (primarily relates to aircra that Saab
owns in its leasing eet)
t convert the xed interest periods in leases to coincide with leasing
revenue and the desired xed interest rates for other assets and liabili-
ties
Responsibility for managing the Group’s nancial risks and developing meth-
ods and principles to manage nancial risks is centralised in Group Treasury.
e operating business areas have directives and processes that describe how
nancial risks are managed. Furthermore, Group Management has issued
detailed directives and guidelines for Group Treasury’s operations.
Management of insurance is centralised in the Group’s insurance com-
pany, Lansen Försäkrings , where external transactions are handled as
well. Customer nance, guaranty and nance issues are also managed by
Group Treasury.
e Group’s internal bank, Saab Treasury, is responsible for the Group’s
cash management, nancing, management of interest rate and currency risks
and also electricity risks. Saab has an agreement with an external party to
manage the Group’s electricity risks through discretionary management.
Other commodity risk is managed primarily through contractual clauses.
To a limited extent, the Group Treasury Policy allows proprietary trading
in currency and xed income derivatives. e main purpose of this trading is
to gain access to qualitative market information and maintain a high level of
market expertise. Saab Treasury has a risk mandate expressed as VaR (Value
at Risk) of   (), which is divided between trading and management
of economic risks, expressed primarily in the Tender to Contract portfolio.
During the year, approximately   was allocated to the trading portfolio
and approximately   to the Tender to Contract portfolio.VaR is a
probability-based method based on historical price uctuations and correla-
tions and is considered a standard in the nancial industry. e method pro-
vides a measure of the probability of the maximum loss over a specic num-
ber of days. Saab uses three days and a -per cent probability. e Treasury
Risk Analysis unit reports each portfolio’s risk dened according to estab-
lished risk measures to Group Management on a daily basis.
Financial instruments
Financial assets in the Group mainly comprise accounts receivable, accrued
income, interest-bearing receivables, liquid assets, xed income investments
and derivatives with positive market values. Saab’s nancial liabilities mainly
comprise interest-bearing liabilities, accounts payable, accrued expenses and
derivatives with negative market values. e following tables show a sub-
divided statement of nancial position categorised and classied according
to  . A more detailed description of the categories can be found in note ,
Accounting principles.
FINANCIAL INFORMATION > NOTES
118 SAAB ANNUAL REPORT 2011