Saab 2012 Annual Report Download - page 75

NOTE 1 Accounting Principles
Operations
Saab  is a Swedish limited company with its registered address in
Linköping. e company’s shares are listed on the   Stockholm’s
large cap list. e operations of Saab  with its subsidiaries, joint ventures
and associated companies (jointly referred to as Saab or the Group) are
divided into six business areas: Aeronautics, Dynamics, Electronic Defence
Systems, Security and Defence Solutions, Support and Services, and
Co mbitech. e operations in each business area are described in Note .
Saab has a strong position in Sweden and the large part of its sales are
generated in Europe, in addition to which Saab has a local presence in South
Africa, Australia, the U.S. and other selected countries.
On  February , the Board of Directors and the President approved
this annual report and consolidated accounts for publication, and they will be
presented to the Annual General Meeting on  April  for adoption.
Conformity to standards and laws
e consolidated accounts have been prepared in accordance with the Interna-
tional Financial Reporting Standards () issued by the International Account-
ing Standards Board () and the interpretations of the International Financial
Reporting Interpretations Committee () as approved by the . e consol-
idated accounts have also been prepared in accordance with the Swedish Finan-
cial Reporting Board’s recommendation   Supplementary Accounting Rules
for Groups, which contains certain additional disclosure requirements for Swed-
ish consolidated accounts prepared in accordance with .
e annual report for Saab  has been prepared according to the Annual
Accounts Act, the Swedish Financial Reporting Board’s recommendation  
Reporting by Legal Entities and the pronouncements of the Swedish Finan-
cial Reporting Board. Dierences between the accounting principles applied
by Saab  and the Group are the result of limitations on opportunities to
apply  by the Parent Company owing to the Annual Accounts Act, the
Act on Safeguarding Pension Commitments and in certain cases current tax
rules. Signicant dierences are described below under “Signicant dier-
ences between the Group’s and the Parent Company’s accounting principles.”
Assumptions in the preparation of the financial reports
e Parent Company’s functional currency is Swedish kronor (), which is
also the reporting currency for the Parent Company and for the Group. e
nancial reports are presented in . All amounts, unless indicated other-
wise, are rounded o to the nearest million.
Assets and liabilities are carried at historical cost, with the exception of
certain nancial assets and liabilities, investment properties and biological
assets, which are carried at fair value or amortised cost. Derivatives are car-
ried at fair value.
Non-current assets and disposal groups held for sale are carried at the
lower of their carrying amount and fair value less selling expenses at the time
they were classied as held for sale.
e preparation of the nancial reports in accordance with  requires
the Board of Directors and Management to make estimates and assumptions
that aect the application of the accounting principles and the carrying
amounts of assets, liabilities, revenue and expenses. Estimates and assump-
tions are based on historical experience and knowledge of the industry that
Saab operates in, and under current circumstances seem reasonable. e
result of these estimates and assumptions is then used to determine the carry-
ing amounts of assets and liabilities that otherwise are not clearly indicated
by other sources. Actual outcomes may deviate from these estimates and
assumptions.
Estimates and assumptions are reviewed regularly, and the eect of
changed estimates is recognised in prot or loss.
Estimates made by the Board of Directors and Management in applying
the accounting principles in compliance with  that may have a signicant
impact on the nancial reports as well as estimates that may necessitate
signicant adjustments in nancial reports in subsequent years are described
in more detail in Note .
e accounting principles described below for the Group have been
applied consistently for all periods presented in the Group’s nancial reports,
unless otherwise indicated below.
Application of new and revised accounting rules
 and  have issued and the  has adopted the following new and
revised standards, which apply as of the nancial year :
t   Financial instruments: Disclosures. Changes relate to the trans-
fer of nancial assets from the balance sheet.
t   Income taxes. Changes relate to deferred tax.
ese new and amended standards and interpretations have not had any
eect on the Group’s nancial reports for .
New and amended standards and interpretations that have not yet
entered into force
 has issued the following new and amended standards that have not yet
entered into force and  has published the following new and amended
interpretations that have not yet entered into force:
Standards
Will apply to financial
years beginning:
  Presentation of nancial statements  July 
(adopted by )
  Employee benets  January 
(adopted by )
  Financial Investments; Disclosures  January 
(adopted by )
  Consolidated Financial Statements  January *
(adopted by )
  Joint arrangements  January *
(adopted by )
  Disclosures of interests in other entities  January *
(adopted by )
  Fair value measurement  January 
(adopted by )
  Investments in Associates and
Joint Ventures
 January *
(adopted by )
  Financial instruments: Presentation  January 
(not adopted by )
  Financial instrument  January 
(not adopted by )
* Earlier application permitted
e eect on Saab of the application of   and   has not yet been
determined.
Eects of amendments to IAS 19 Employee Benets
Saab applies the current standard’s option to apply the so-called corridor
approach. is means that the eects of changes in so-called actuarial
assumptions about pension liabilities and assets under management are not
recognised directly but rather over the remaining period of employment (see
also Note  and Note ). e updated standard eliminates this option. is
means that changes in actuary of assumptions, e.g. discount rates, are recog-
nised directly in other comprehensive income. e updated standard also
requires the company to use the same interest rate to discount pension liabili-
ties as in the calculation of the projected return on assets under management.
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
 , higher (including special employer’s contribution of  ),
nancial assets   lower and retained earnings  , lower than
reported in . 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 special employer’s contribution and tax on returns from pen-
sion funds.
FINANCIAL INFORMATION > NOTES
SAAB ANNUAL REPORT 2012 71