Saab 2011 Annual Report Download - page 87

e updated standard will be applied retroactively as of the rst quarter of
. For Saab, this means an immediate increase in its net pension liability
(classied as a nancial liability) and a corresponding decrease in retained
earnings aer taking into account the tax eects. If the standard had been
applied as of  December , the net pension obligation would have been
about  , higher and retained earnings about  , lower. e
eect on operating and net results for  would not have changed signi-
cantly. e updated standard also contains rules on the reporting of the spe-
cial employer’s contribution and tax on returns from pension funds. ere
remains uncertainty with regard to the Swedish portion of the net pension
debt about the reporting of the special employer’s contribution and tax on
returns from pension funds. e eect on the reporting of this has not been
factored into the above amounts.
Other standards and interpretations are not expected to have a material
eect on the consolidated nancial statements.
Operating segments
Segment information is presented based on management’s view, and operat-
ing segments are identied based on internal reporting to the company’s
chief operating decision maker. Saab has identied the Chief Executive
Ocer as its chief operating decision maker, while the internal reports used
by the  to oversee operations and make decisions on allocating resources
serve as the basis of the information presented. e segments are monitored
at the operating income level. e accounting principles for reportable seg-
ments conform to the principles applied by the Group as a whole.
e Group had six reportable segments in :
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Complementing the six segments is Corporate, which comprises Group stas
and departments as well as other non-core operations.
Sales of goods and services between segments are made on market terms.
A detailed description of the segments, together with the factors used to
identify segments, can be found in note  and on pages –.
Classification of assets and liabilities
Current assets 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 xed assets or long-term liabilities.
Consolidation principles
Group companies
Group companies are companies in which Saab  has a decisive inuence
through a direct or indirect shareholding amounting to more than  per
cent of the votes, other than in exceptional circumstances where it can be
clearly demonstrated that such ownership does not constitute a decisive
inuence. Decisive inuence also exists when the parent owns not more than
half of the voting power of an entity but otherwise has a decisive inuence
over more than half the voting rights or the power to govern the company’s
nancial and operating policies under a statute or agreement. When deter-
mining whether a decisive inuence exists, potential voting shares that can be
exercised or converted without delay are taken into account.
Subsidiaries and acquired operations (business combinations) are recog-
nised according to the purchase accounting method. is means that a busi-
ness combination is treated as a transaction whereby the Group indirectly
acquires the business’s assets and takes over its liabilities and contingent liabil-
ities. e Group’s cost is determined through an acquisition analysis with
regard to the acquisition of operating entities. Cost is comprised of the sum of
the fair value of what of is paid in cash on the acquisition date through the
assumption of liabilities or shares issued. Contingent consideration is
included in cost and recognised at its fair value on the acquisition date. e
subsequent eects of revaluations of contingent consideration are recognised
in prot or loss. Acquired identiable assets and assumed liabilities are ini-
tially recognised at their acquisition-date fair value. e exceptions to this
principle are acquired tax assets/liabilities, employee benets, share-based
payment and assets held for sale, which are valued in accordance with the
principles described in the sections below for each item. Exceptions are also
made for indemnication assets and repurchased rights. Indemnication
assets are valued according to the same principle as the indemnied item.
Repurchased rights are valued based on the remaining contractual period
regardless of whether other market players might consider opportunities for
contract extensions in connection with valuations. Recognised goodwill con-
sists of the dierence between, on the one hand, the cost of Group company’s
interests, the value of non-controlling interests in the acquired company and
the fair value of the previously owned interest and, on the other, the carrying
amount of the acquired assets and assumed liabilities in the acquisition analy-
sis. Goodwill is recognised according to the section on intangible xed assets.
Non-controlling interests are recognised on the acquisition date either at fair
value or their proportionate share of the carrying amount of the acquired
company’s identied assets and liabilities. Acquisitions of non-controlling
interests are recognised as transactions aecting the owners’ equity.
e nancial reports of Group companies are included in the consoli-
dated accounts from the point in time when a decisive inuence arises
(acquisition date) until this inuence ceases. When decisive inuence over
the Group company ceases but the Group retains an interest in the company,
the remaining shares are initially recognised at fair value. e gain or loss that
arises is recognised in prot or loss.
Associated companies
Associated companies are companies over which the Group has a signicant
(but not decisive) inuence over operating and nancial controls, usually
through a shareholding of between  and  per cent of the votes. From the
point in time when the signicant inuence arises, the shares in the associ-
ated company are recognised according to the equity method in the consoli-
dated accounts. e equity method is applied until the point in time when the
signicant inuence ceases. e equity method means that the carrying
amount of the shares in the associated company corresponds to the Group’s
share of the company’s equity based on an application of the Group’s account-
ing principles as well as Group goodwill and any remaining Group surplus or
decit values. “Share in income of associated companies” in the income state-
ment comprises the Group’s share of the net income aer tax and the non-
controlling interest in associated companies adjusted for any depreciation,
impairment loss or dissolution of acquired surplus and decit values deter-
mined in the same way as for operating acquisitions. Dividends received
from the associated company reduce the carrying amount of the investment.
If the Group’s share of the accumulated decit in an associated company
exceeds the carrying amount of the shares in the Group, the value of the shares
is reduced to nil. Losses are also oset against long-term uncollateralised nan-
cial balances that in their economic signicance represent part of the owner-
company’s net investment in the associated company. Subsequent losses are not
recognised as a liability in the consolidated accounts as long as the Group has
not issued any guarantees to cover losses arising in the associated company.
When decisive inluence over the associated company ceases but the Group
retains an interest in the company, the remaining shares are initially recog-
nised at fair value. e gain or loss that arises is recognised in prot or loss.
Joint ventures
Companies in which the Group, through a cooperative agreement with one
of more parties, shares a decisive inuence over operating and nancial con-
trols are recognised in the consolidated accounts according to the propor-
tional method. For joint ventures, this means that the Group’s share of the
companies’ revenue and expenses and their assets and liabilities is recognised
in the consolidated income statement and statement of nancial position
based on application of the Group’s accounting principles. is is done by
combining Saab’s share of revenue and expenses and assets and liabilities in
the joint venture with the corresponding items in the consolidated accounts.
When a joint venture is terminated but the Group retains an interest in the
company, the remaining shares are initially recognised at fair value. e gain
or loss that arises is recognised in prot or loss.
FINANCIAL INFORMATION > NOTES
SAAB ANNUAL REPORT 2011 83