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ANNUAL REPORT 2010
SECURITY IN A CHANGING WORLD
SAAB ANNUAL REPORT 2010

Table of contents

  • Page 1
    ANNUAL REPORT 2010 SECURITY IN A CHANGING WORLD

  • Page 2
    ... Board of Directors, is in Swedish. ORGANISATION CEO, EVPS & COO GROUP STAFFS MARKETORGANISATION Shared functions Marketing & Business Development Aeronautics * Combitech is reported as part of Corporate. Dynamics Electronic Defence Systems Security and Defence Solutions Support and Services...

  • Page 3
    ...: 21% of sales (24) Number of employees: 432 (408) Africa: 12% of sales (14) Number of employees: 1,141 (1,171) Asia: 15% of sales (19) Number of employees: 31 (14) Americas: 9% of sales (8) Number of employees: 211 (272) Australia and other countries: 5% of sales (4) Number of employees: 349 (378...

  • Page 4
    ... Return on equity, % Equity/assets ratio, % Order bookings Order backlog at year-end Total research and development (R&D) expenditures Internally financed R&D No. of employees at year-end Share of women, % Academic degree, % Sick leave2), % 1) Proposal by Board of Directors 2) Saab in Sweden 2010...

  • Page 5
    ... that it may mothball a number of costly weapons projects and instead utilise existing technologies and systems to cut spending. It will buy more proven products and systems and may consider dealing more with international suppliers if they offer better value for money. 2 SAAB ANNUAL REPORT 2010

  • Page 6
    ...in the defence industry. In the final analysis, it is a question of developing and supporting the ever-present and ever-important mission of protecting people and society from various threats and risks. This has been Saab's mission since it was founded nearly 75 years ago. SAAB ANNUAL REPORT 2010 3

  • Page 7
    .... But they are just as relevant and applicable in an urban-centered flow-protecting context. Aeronautics and defence as well as urban development and security fit well together, and Saab's experience working with complex systems is a big advantage in both markets. 4 SAAB ANNUAL REPORT 2010

  • Page 8
    ... development leads to a broad security concept DEFENDING TERRITORY There are three lowest common denominators between the two security concepts. This creates momentum between markets and technology . TRAINING C4I SUPPORT & SERVICES SECURING FUNCTIONS IN THE SOCIETY SAAB ANNUAL REPORT 2010...

  • Page 9
    ... are forcing countries to buy costeffective solutions that offer value for the money - in this case, defence capabilities. HB: A growing number of customers in the defence market want to buy the best solutions available regardless of the country of origin. Smaller national budgets mean that...

  • Page 10
    ...the US for many years. Saab is currently one of the twenty-five largest defence and security companies in the world, and probably one of the three or four top in terms of international market coverage. We have sales in around 90 countries and our own presence in around 30. SAAB ANNUAL REPORT 2010 7

  • Page 11
    ... where their countries are spending less on defence, and they have to compete internationally more than before. This gives us a head start in terms of both presence and efficiency. We have lived with cost constraints for some time, and today it isn't only the performance of our products that is...

  • Page 12
    ... and trade patterns. 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 ranging from military defence to civil security...

  • Page 13
    ... other political alliances steer and govern a large part of the defence and security-oriented civil market. Climate change is an area where the EU has taken important initiatives. The EUfinanced research project Clean Sky, which is designed to promote greener air transports, and SESAR, whose purpose...

  • Page 14
    ... area is toward increased commercialisation, including the further development of proven products and systems. In Saab's case, its defence business is also limited by export restrictions in a number of markets. Public opinion influences security policy in Sweden and many other countries. Sweden...

  • Page 15
    ...our long-term sales growth goal, we will stay focused in coming years on markets where we are already established: the Nordic region, many European countries, South Africa and Australia. In addition, we will establish a stronger local presence in selected markets such as North America, the UK, South...

  • Page 16
    ...of employees in the organisation were women, and the share of female managers is 19 per cent (17). Saab was named Sweden's best workplace during the year by the business magazine Veckans Affärer, which made gender equality an important part of its evaluation. LONG-TERM FINANCIAL GOAL PERFORMANCE IN...

  • Page 17
    ... As of 1 January 2010, Saab's operations are divided into five business areas: Aeronautics, Dynamics, Electronic Defence Systems, Security and Defence Solutions, and Support and Services. A large part of business operations are conducted by the Parent Company and the rest by the Group's wholly and...

  • Page 18
    ...the future. Our core business is our unique technology and ability to integrate products and systems in advanced solutions. We have been one of the leading technology companies in Sweden for over 70 years. It is not so strange, therefore, that around 50 per cent of our employees has a college degree...

  • Page 19
    ...regulatory, competitive and industrial conditions, local business models SALES BY REGION 2010 SALES BY MARKET SEGMENT 2010 38% 19% 2% 9% 15% 12% 5% (31%) (23%) (1%) (8%) (19%) (14%) (4 %) Sweden EU excl. Sweden Rest of Europe North and South America Asia and Middle East Africa Australia 42% 31...

  • Page 20
    ..., Saab supplies training systems as well as support and services to the U.S. and command and control systems to the Canadian Navy through a partnership with Lockheed Martin. North America is also home to the large part of Saab Aircraft Leasing, a business that owns and manages the more than 100 Saab...

  • Page 21
    ... marketing. Saab has been working for some time to be a more integrated company in terms of goals, priorities and processes. The reorganisation into five distinct business areas at the start of 2010 was an important step. It makes it easier for us to capitalise on functional synergies and financial...

  • Page 22
    ... employee can search and order data. Part of the Aeronautics business area. - Power Electronics Design Centre Provides design solutions, promotes reuse and reviews designs for all business areas. Located in Göteborg and part of the Electronic Defence Systems business area. SAAB ANNUAL REPORT 2010...

  • Page 23
    .... An important part of our product strategy is to have a clear plan which products and solutions to offer in each market. Sustainable product innovation - by increasing our own investments and in collaboration with customers, universities and industrial partners - is a key if Saab is to maintain...

  • Page 24
    ...segments of the underwater security market. Saab has a strong offer in naval security for both defence and civil purposes. The operations are part of the Dynamics business area and are run by UK-based Saab Seaeye, which was integrated into Saab Underwater Systems in 2010. The combined operations now...

  • Page 25
    ...part. Investments in cutting-edge technology tions, we have to develop solutions that meet the needs of many customers. This means that we have to be better at understanding the needs of not only the Swedish defence forces but also our most important international customers. Project management work...

  • Page 26
    ...Saab's product portfolio through new key technologies. 1) The unit is managed by the Dynamics business area. Spin-offs Company Wrap International AB C3 Technologies AB Minesto AB Svenska Tracab AB Image Systems Specialisation Spectrum management software 3D mapping technology Tidal energy solution...

  • Page 27
    ... solution The advanced maintenance systems that Saab has developed and supplies to its customers are an important factor for Gripen customers, for example. As a result, support and service costs can be maintained at a highly compeitive level throughout the product lifecycle. 24 SAAB ANNUAL REPORT...

  • Page 28
    ... not only in but also outside our core businesses. This is the reason for Saab Ventures, whose purpose is to create and initially run companies with new products for new applications. Saab has spun off 13 companies since 2001. For more information, see page 23. SAAB ANNUAL REPORT 2010 25

  • Page 29
    ... and control systems (C4I) as well as solutions for troop protection. The offering includes sensors, signature management and countermeasures, reconnaissance and air defence systems, and training solutions. Saab's sales in the area amounted to MSEK 7,611 (7,239) in 2010. 26 SAAB ANNUAL REPORT 2010

  • Page 30
    ... a systems integrator. Though still small in size, its positions are good in Sweden, Central Europe, South Africa and Australia. Saab's invoicing in the area totalled MSEK 1,427 (1,718) in 2010. Saab is a supplier to the world's leading aircraft manufacturers, including Boeing and Airbus, mainly of...

  • Page 31
    ... mapping, and work is under way to market these products in the Middle East. The African continent accounted for about 12 per cent (14) of total sales in 2010. THE UN - A NEW AND GROWING CUSTOMER Within the framework of its Global Field Support Strategy, the United Nations (UN) is working to make...

  • Page 32
    ... region. North America currently accounts for about 9 per cent (8) of Saab's sales. In South America, Brazil is Saab's most important growth market. SOUTH AMERICA IS A FUTURE MARKET Saab has good references in Brazil, including having sold five ERIEYE aircraft that are being used for surveillance...

  • Page 33
    ... in a global operating environment," said Per Ahl, sales manager for Saab's air traffic control solutions. Basically, remote air traffic control uses cameras and sensors installed around an airport. Everything they record is linked in real time to the air traffic control centre and projected onto...

  • Page 34
    ...'S NEW TECHNOLOGIES SWEDISH DEFENCE FORCES USE SAAB'S THREE-DIMENSIONAL MAPS ON NATIONAL AND INTERNATIONAL MISSIONS The technology in Ripid 3D Mipping is bised on Siib's more thin 40 yeirs of experience in imige processing for tirget seekers ind expertise in nivigition systems. Through its close co...

  • Page 35
    ...and development are principally carried out in Sweden. We are primarily active in Europe, South Africa, Australia and the US. Since 1 January 2010, we are organised in five business areas: Aeronautics, Dynamics, Electronic Defence Systems, Security and Defence Solutions, and Support and Services. In...

  • Page 36
    ... part of a long-term strategic adjustment to changing market conditions, Saab decided in November to reorganise the operations of the Dynamics business area. Notice was served to more than 200 employees. Moreover, efficiency improvements were launched in the Electronic Defence Systems business area...

  • Page 37
    ADMINISTRATION REPORT > SAAB'S BUSINESS AREAS BUSINESS AREAS Since 2010, Saab's operations are divided into five business areas: Aeronautics, Dynamics, Electronic Defence Systems, Security and Defence Solutions, and Support and Services. The five business areas work together, so that the Group's ...

  • Page 38
    ... and South Africa, compared to last year. SALES, MSEK 8,000 OPERATING INCOME AND MARGIN 500 0 -500 10 3 -4 -11 -18 -25 SHARE OF SALES 2010, % 6,000 26% 4,000 -1,000 2,000 -1,500 -2,000 0 2007 2008 2009 2010 2007 2008 2009 2010 Margin, % Operating income, MSEK SAAB ANNUAL REPORT 2010...

  • Page 39
    ... Swedish Armed Forces for use in national as well as international operations. Orders received where the order sum was more than MSEK 100 represented 61 per cent (20) of total order bookings. Sales Sales increased mainly as a result of a higher activity level within the weapons system area. Markets...

  • Page 40
    ... 58 per cent (49) of total order bookings. Sales Despite structural costs, profitability improved in 2010. A major part of the improvement resulted from a claim related to a finalised project where Saab has reduced its estimated risk share. In the fourth quarter, a restructuring charge of...

  • Page 41
    ... REPORT > SAAB'S BUSINESS AREAS SECURITY AND DEFENCE SOLUTIONS These operations address both the military and civil security market with a competitive product portfolio of C4ISR (computerized command, control, communications and intelligence) systems, airborne early warning systems, civil security...

  • Page 42
    ADMINISTRATION REPORT > SAAB'S BUSINESS AREAS SUPPORT AND SERVICES These operations offer reliable, cost-effective service and support for all of Saab's markets. This primarily includes integrated support solutions, technical maintenance and logistics, and products, solutions and services for ...

  • Page 43
    ... in need of complex security solutions, government agencies responsible for protecting society's flows and enterprises in aviation, defence, telecom and other industrial segments. Combitech currently has around 800 employees, over 20 percent of whom are women. The company has grown strongly in...

  • Page 44
    ... to the reported operating margin. About 70 per cent of the cost reduction over the three year 2008- 2010 has been generated by reducing the cost of goods sold. A major part of the cost reductions have been achieved through an aligned and improved development process, increased production efficiency...

  • Page 45
    ...and relevance of the short-term variable remuneration (Short Term Incentive, "STI") for senior executives. Saab's operations are mainly characterized by technically advanced products and systems. They are marketed, further developed, produced and maintained during long periods of time, in some cases...

  • Page 46
    ... cent of the employee's monthly salary. If the employee retains the purchased shares for three years after the investment date and is still employed by the Saab Group, the employee will be allotted a corresponding number of Series B shares. The plan was introduced in autumn 2007 in Sweden and Norway...

  • Page 47
    ...CORE STAKEHOLDERS Customers and business partners Through research, development and production, Saab supplies products, solutions and services that meet the expectations customers place on quality, safety, economics and protection of the environment. We are committed to free trade, fair competition...

  • Page 48
    ... the four areas mentioned above. Aeronautics BOARD OF DIRECTORS MANAGEMENT Dynamics Electronic Defence Systems Security and Defence Solutions Support and Services Combitech* SUSTAINABILITY AT SAAB Business ethics * Combitech is reported as part of Corporate. Employees Society Environment...

  • Page 49
    ...US and European defence industry has led to the creation of the International Forum on Business Ethical Conduct (IFBEC), which provides information on the global principles and encourages companies to share best practices. Saab participates actively in IFBEC's operations. 46 SAAB ANNUAL REPORT 2010

  • Page 50
    ...rules and routines to ensure that accepted business practices are applied in day-to-day operations. The code is based on the OECD's guidelines for multinational companies and the ten principles of the UN's Global Compact. Our business ethics guide us in everything we do. SAAB ANNUAL REPORT 2010 47

  • Page 51
    ... Every time we sign a major international contract, industrial cooperations are generally involved. For example, we may agree with the customer to outsource some production or development work to the country or enter into industrial, commercial or research-related alliances. This often helps Saab to...

  • Page 52
    ... water treatment system to the city of Jamshoro, in Sindh province. The system has the capacity to provide water to around 20,000 people a day. In addition to delivering and installing the equipment, our employees trained local staff how to maintain and support the plant. SAAB ANNUAL REPORT 2010 49

  • Page 53
    ...drafted and currently managed by the HR staff in close cooperation with the business areas. Harmonisation work in 2010 also included areas such as employment conditions and principles, the launch of a uniform introductory programme for all new employees, the level of service we offer and a review of...

  • Page 54
    ...the global talent market. In addition, we have to retain our employees and help them to develop. During the year, we continued to improve long-term talent management, especially in terms of diversity. By treating differences as an asset, we create opportunities for better business. The 30/70 project...

  • Page 55
    ...Group and the business areas is facilitated by the Council on the Environment. ISO 14001 certified environmental management systems are used by Aeronautics (with few exceptions), Combitech, Corporate, Dynamics, Electronic Defence Systems, Security and Defence Solutions and Support and Services. Saab...

  • Page 56
    ... to measure, manage and reduce global climate change impacts. CDP's Carbon Disclosure Leadership Index (CDLI) lists the 20 companies that have most professionally managed climate issues. For the fourth consecutive year, Saab received a very high rating for its climate SAAB ANNUAL REPORT 2010 53

  • Page 57
    ... as well as the entire air transport system. At present, it is mainly the Aeronautics and Electronic Defence Systems business areas that are participating in Clean Sky. For their part, this includes developing a new smart wing with innovative, fuel-saving technology for the next generation of...

  • Page 58
    ... environmental management system, which centralises the procurement process, will make it easier to set requirements on suppliers. Saab and the green market Environmental aspects are increasingly part of the product development process at Saab. Several current and potential customer-countries face...

  • Page 59
    ..., work has begun to further improve the risk management process for the group in general and specifically for long-term customer projects, which will result in updated processes in 2011. The assessment of all of the company's financial controls in 2010 has resulted in changes in the reporting...

  • Page 60
    ... forms of industrial co-operation. Managing long-term customer projects A majority of all long-term customer projects contains significant development work, which is associated with risks. Before a contract is entered into with a customer to supply a product, solution or service, a thorough analysis...

  • Page 61
    ... risks such as foreign currency, interest rate, refinancing, credit and commodity risks. Management of financial risks is governed by the Group Treasury Policy established by the Board of Directors. Moreover, detailed directives and processes are in place for operating management of each area...

  • Page 62
    SAAB ANNUAL REPORT 2010 59

  • Page 63
    ... defence market. MSEK Sweden EU excluding Sweden Rest of Europe Americas Asia Africa Rest of the World Total MSEK Air Land Naval Civil Security Commercial Aeronautics Other Total As of 1 January 2010, Joint Operations are no longer reported as a separate market area. 60 SAAB ANNUAL REPORT 2010

  • Page 64
    ...290 that were not reported as a non-recurring item related to projects in Security and Defence Solutions which impacted profitability negatively in the year. Within Electronic Defence Systems a claim related to a finalized project where Saab reduced its estimated risk share impacted profitability...

  • Page 65
    ... companies Financial investments Long-term receivables Deferred tax assets Total fixed assets Inventories Derivatives Tax assets Accounts receivable Other receivables Prepaid expenses and accrued income Short-term investments Liquid assets Total current assets 29 27 30 25 31 28 41 16 17 18 19 20...

  • Page 66
    ... STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION as of 31 December MSEK Equity Capital stock Other capital contributions and other reserves Retained earnings Equity attributable to Parent Company's shareholders Note 33 1,746 1,230 8,298 11,274 1,746 657 8,139 10,542 2010 2009 Short-term...

  • Page 67
    ... Closing balance, 31 December 2010 1,746 - 543 - 84 564 -21 9 51 - 8,139 433 10,542 1,006 140 31 10,682 1,037 1,746 543 648 -12 51 -80 43 -237 8,298 -80 43 -237 11,274 -1 170 -80 43 -237 -1 11,444 For a definition of other reserves, see Note 33. 64 SAAB ANNUAL REPORT 2010

  • Page 68
    ... associated companies of MSEK 161 (-57) and the leasing aircraft business of MSEK 145 (416). In 2009, Saab launched an accounts receivable sales programme to strengthen its financial position and increase financial ï¬,exibility. The accounts receivable sold are in most cases related to customers...

  • Page 69
    ... and divestments Saab Aircraft Leasing 74 Total Group 2010 2,750 Total Group 2009 2,438 MSEK Cash ï¬,ow from operating activities before changes in working capital CASH FLOW FROM CHANGES IN WORKING CAPITAL Inventories Current receivables Advance payments from customers Other current liabilities...

  • Page 70
    FINANCIAL INFORMATION > FINANCIAL STATEMENTS PARENT COMPANY INCOME STATEMENT 1 January - 31 December MSEK Sales Cost of goods sold Gross income Marketing expenses Administrative expenses Research and development costs Other operating income Other operating expenses Operating income Result from fi...

  • Page 71
    ... 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 72
    ... 543 1,746 724 543 33 Note 2010 2009 Untaxed reserves Provisions Provisions for pensions and similar commitments Other provisions Total provisions Liabilities Liabilities to credit institutions Liabilities to Group companies Advance payments from customers Accounts payable Liabilities to associated...

  • Page 73
    FINANCIAL INFORMATION > FINANCIAL STATEMENTS STATEMENT OF CHANGES IN EQUITY FOR THE PARENT COMPANY Restricted equity Unrestricted equity Net comprehensive income - MSEK Opening balance, 1 January 2009 Items reported directly in equity: Group contributions Tax attributable to Group contributions ...

  • Page 74
    ... assets Investments in and sale of short-term investments Investments in and sale of financial assets Investments in subsidiaries Sale of subsidiaries Cash ï¬,ow from investing activities Financing activities Change in receivables/liabilities, Group companies Repurchase of shares Repaymnet of loans...

  • Page 75
    ...Group companies ...118 46 Untaxed reserves ...119 47 Statement of cash ï¬,ows, supplemental information ...120 48 Information on Parent Company ...121 49 Environmental report ...121 50 Exchange rates used in financial statements ... 122 51 Definitions of key ratios ...122 72 SAAB ANNUAL REPORT...

  • Page 76
    ... of Saab AB with its subsidiaries, joint ventures and associated companies (jointly referred to as Saab or the Group) have been divided since 1 January 2010 into five business areas: Aeronautics, Dynamics, Electronic Defence Systems, Security and Defence Solutions, and Support and Services. The...

  • Page 77
    ... applied by the Group as a whole. The Group had five reportable segments in 2010: • Aeronautics • Dynamics • Electronic Defence Systems • Security and Defence Solutions • Support and Services Sales of goods and services between segments are made on market terms. A detailed description of...

  • Page 78
    ... is expected to be technically and commercially usable, the company has sufficient resources to complete development and subsequently use or sell the intangible asset, and the product or process is likely to generate future economic benefits. The carrying amount includes SAAB ANNUAL REPORT 2010 75

  • Page 79
    ... value and period of use are estimated annually. Periods of use are unchanged compared with the previous year. Lease assets Tangible fixed assets are recognised as an asset in the statement of financial position if it is likely that the future economic benefits will accrue to the Group and the cost...

  • Page 80
    .... They are valued at amortised cost. 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 81
    ...present location and condition. For finished and semifinished goods, cost consists of direct manufacturing expenses and a reasonable share of indirect manufacturing expenses as well as expenses to customise products for individual customers. Calculations take into account normal capacity utilisation...

  • Page 82
    ... the share price on the investment date. Three years after the investment date, employees are allotted as many shares as they purchased three years earlier provided that they are still employees of the Saab Group and that the shares have not been sold. In certain countries, social security expenses...

  • Page 83
    ... are recognised by the recipient directly in retained earnings taking into account the effect on current tax. The contributor recognises Group contributions and the effect on current tax as an investment in shares in Group companies with subsequent impairment testing. 80 SAAB ANNUAL REPORT 2010

  • Page 84
    ... areas are monitored continuously by Group Management and the Board of Directors' audit committee. UNCERTAINTIES IN ESTIMATES AND ASSUMPTIONS Long-term customer projects Revenue by significant source Group MSEK 2010 2009 Parent Company 2010 2009 Sale of goods Long-term customer contracts Service...

  • Page 85
    ...Africa, Australia, the us and other selected countries. As a result of a reorganisation as of 1 January 2010, Saab is divided into five business areas, which also represent operating segments, Aeronautics, Dynamics, Electronic Defence Systems, Security and Defence Solutions, and Support and Services...

  • Page 86
    ...NOTES NOTE 4, CONT. Electronic Security and Defence Solutions Support and Services Corporate Eliminations Group Group MSEK Aeronautics Dynamics Defence Systems 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 External revenue Internal revenue Total...

  • Page 87
    ... Aeronautics Electronic Defense Systems Security and Defence Solutions Support and Services Total 6,401 2,534 2,846 2,964 14,745 7,179 3,006 2,434 2,766 15,385 Group MSEK 2010 2009 Parent Company 2010 2009 Loss from other operating activities Loss on sale of Group companies Loss on sale of...

  • Page 88
    ...Lease assets Receivables from Group companies External receivables Inventories Liquid assets Total assets 1,150 1,575 297 16 11 3,049 1,460 1,597 277 12 16 3,362 Average number of employees 2010 of whom men 2009 of whom men Parent Company Sweden United Arab Emirates South Africa USA India 7,656 14...

  • Page 89
    ...789 - Parent Company Board of Directors Other senior executives 20 23 15 30 of which variable compensation South Africa United Arab Emirates Salaries, other remuneration and social security expenses 2010 Salaries and other remuneration Social security expenses USA Belgien 2009 India Canada Saudi...

  • Page 90
    .... Sick leave in Parent Company Per cent 2010 2009 Audit assignments involve examination of the annual report and financial accounting as well as the administration by the Board and the President, other tasks related to the duties of the company's auditors and consultation or other services that may...

  • Page 91
    ... a project in Security and Defence Solutions and msek 8 for buildings. Parent Company MSEK 2010 2009 Parent Company MSEK Result from shares in Group companies 2010 2009 Result from shares in associated companies/joint ventures 2010 2009 Dividends Group contributions received Capital gain on sale...

  • Page 92
    ... Group's deferred tax amounts to msek 26 (-94) and current tax expense for the year to msek -348 (-183) which produce a total reported tax of msek -322 (-277) in the consolidated income statement. Parent Company MSEK 2010 2009 Income before taxes Tax according to current tax rate for Parent Company...

  • Page 93
    ...MSEK Group Parent Company Deferred tax liabilities due for payment within one year Deferred tax liabilities due for payment after one year 30 2,424 6 236 Tax loss carry forwards attributable to us operations can be utilised through 2029, but partly expire as of 2021. 90 SAAB ANNUAL REPORT 2010

  • Page 94
    ... -208 -247 -20 -267 Change in deferred tax in temporary differences and tax loss carry forwards Opening balance 1 Jan. 2010 Recognised in profit or loss Closing balance 31 Dec. 2010 Parent Company MSEK Tangible fixed assets Inventories Accounts receivable Long-term receivables Prepaid expenses...

  • Page 95
    ... lines in income statement Group MSEK 2010 2009 MSEK 2010 Group 2009 Parent Company 2010 2009 Cost of goods sold Research and development costs 161 644 187 671 37 - 33 - Parent Company 2010 2009 Other operating expenses Research and development costs 5 20 15 - - 92 SAAB ANNUAL REPORT...

  • Page 96
    ...and market risks. The discount rate is in line with the external requirements placed on Saab and similar companies in the market. All units have sales of defence materiel, unique systems, products and support solutions in the international market as their primary activity, and their business risk in...

  • Page 97
    FINANCIAL INFORMATION > NOTES NOTE 17 TANGIBLE FIXED ASSETS Tax assessment values Group MSEK 31-12-2010 31-12-2009 Parent Company 31-12-2010 31-12-2009 Group MSEK 31-12-2010 31-12-2009 Parent Company 31-12-2010 31-12-2009 Tax assessment value, buildings (in Sweden) Tax assessment value, land (...

  • Page 98
    ... operations in Dynamics. Construction in progress Group MSEK 2010 2009 Closing balance, 31 December Parent Company 2010 2009 Impairments Opening balance, 1 January Sales and revaluations -427 22 1 -404 -465 36 2 -427 Acquisition value Opening balance, 1 January Investments Reclassifications...

  • Page 99
    ... protection limits Saab's risk. However, the internal distribution between expected receipts from customers and those from ekn will be affected in each instance by current projections. Group MSEK 2010 2009 Living forest Carrying amount, 1 January Change in fair value less selling expenses Carrying...

  • Page 100
    ... The reclassification from associated company to asset held for sale refers to Grintek Ewation (Pty) Ltd within Electronic Defence Systems. The Group's share of sales, income, assets, liabilities and the carrying amount of shares in associated companies is as follows. SAAB ANNUAL REPORT 2010 97

  • Page 101
    ....0 40.0 50.0 25.3 20.0 - 2) Saab is confident that the negative equity will not affect its results and liquidity. 2009 MSEK Country Sales Share in associated companies income 31-12-2009 MSEK Assets Liabilities Booked value, shares in associated companies Ownership interest, % Associated...

  • Page 102
    ... 556060-5478, Linköping Sörman Intressenter AB, 556741-2233, Stockholm Denel Saab Aerostructures (Pty) Ltd, South Africa Vingtec Saab AS, Norway Image Systems AB, 556550-5400, Linköping Joint ventures 33.0 33.0 25.3 20.0 49.0 35.8 22 2 3 64 4 Fixed assets Current assets Total assets 6 793 799...

  • Page 103
    ...RECEIVABLES Group Short-term investments classified as current assets Financial assets measured at fair value through profit or loss: Interest-bearing securities Total 1,544 1,544 551 551 MSEK 31-12-2010 31-12-2009 Long-term receivables held as fixed assets Receivables from associated companies...

  • Page 104
    ... with a legal right of set-off. Parent Company MSEK 31-12-2010 31-12-2009 Other long-term receivables Interest-bearing receivables Non interest-bearing receivables Total 1 9 10 35 9 44 Saab and the swedish Ministry of Enterprise, Energy and Communications have reached agreement with the National...

  • Page 105
    ... NOTE 32 ASSETS HELD FOR SALE Accounts receivable in the Group amount to msek 3,052 (2,837). In 2010, Saab sold receivables as part of the sales programme arranged in the third quarter of 2009 to strengthen its financial position and increase financial flexibility. Customers in most cases are...

  • Page 106
    FINANCIAL INFORMATION > NOTES NOTE 33, CONT. In 2010, 838,131 Series b shares were repurchased on the market to secure Saab's Share Matching Plan and Performance Share Plan. Following the year's repurchase, 4,432,615 shares are held in treasury. The Board of Directors of Saab have received requests...

  • Page 107
    ... that secure this part of the invested amount, because of which the transactions in the financial position for the Group are netted as a receivable. The current liability in the previous year also included a commercial paper programme of msek 1,800. The liabilities are valued at amortised cost. USA...

  • Page 108
    ...fit plans reported in the statement of financial position Group MSEK 2010 2009 The cost is reported on the following lines in the income statement: Group MSEK 2010 2009 Cost of goods sold Marketing expenses Administrative expenses Research and development costs Financial expenses Total cost of...

  • Page 109
    ... funds that are secured by Saab's pension fund. Parent Company MSEK 31-12-2010 31-12-2009 In April 2010, Saab's Annual General Meeting resolved to offer employees a new Share Matching Plan and a new Performance Share Plan with similar terms as the previous years' plans. The plans start in January...

  • Page 110
    ... the Board. During the period November 2007 through October 2008, other senior executives participated in the Saab Share Matching Plan approved by the 2007 Annual General Meeting for all company employees. From November 2008, all eligible executives participate in the Saab Global Performance Share...

  • Page 111
    ... in the financial review. Summary of compensation and other benefits during 2009 Provisions 2009 for long-term variable compensation at estimated outcome SEK Base salary/Board fee Variable compensation Other benefits Pension cost Total Chairman of the Board Other Board members President...

  • Page 112
    ...66 -74 276 Group MSEK 31-12-2010 31-12-2009 Other long-term liabilities Long-term prepaid revenue Other Total 82 212 294 114 173 287 Other current liabilities Total provisions MSEK Group Parent Company Liabilities to associated companies Liabilities to joint ventures Value-added tax Withholding...

  • Page 113
    ... of the maximum loss over a specific number of days. Saab uses three days and a 99-per cent probability. The Treasury Risk Analysis unit reports each portfolio's risk defined according to established risk measures to Group Management on a daily basis. Financial instruments Deferred income Advance...

  • Page 114
    ...856 203 856 203 856 2009 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 investments Liquid assets Total financial...

  • Page 115
    ... -220 -162 16 8 8 74 1,136 - 17 3 3 16 1,068 - Accrued interest and retained premiums, see Notes 1 and 2 above Netting accrued interest and premiums DERIVATIVES ACCORDING TO GROUP'S FINANCIAL POSITION -31 1,105 -5 -31 750 5 355 -66 1,002 -41 -66 1,181 41 -179 112 SAAB ANNUAL REPORT 2010

  • Page 116
    ...by bidding in the same currency as the Group unit's expenses. In cases where fixed-price tenders are issued in foreign currency, the net exposure is hedged with financial instruments. The foreign currency risk that arises for tenders are managed by Saab Treasury within the framework of the Tender to...

  • Page 117
    ... in market rates. Interest rate effects on advance financing affect gross income. Interest rate risks in the Group's financial investments are managed based on a short duration and high liquidity. Interest rate risks in the Group's funding are managed based on a benchmark with an 18-month duration...

  • Page 118
    ...-12-2010 31-12-2009 Liquidity and financing risk refers to the risk that the company will not be able to meet its payment obligations due to insufficient liquidity or difficulty raising external loans on acceptable terms. According to the Group Treasury Policy, Saab must always maintain unutilised...

  • Page 119
    ...(43), which is reported as other operating income. The average utilised risk mandate (VaR) during the year was msek 1 (1). Valuation methods for financial assets and liabilities The fair value of listed financial assets is determined using market prices. Furthermore, Saab applies various valuation...

  • Page 120
    .... MSEK 31-12-2010 % of total 31-12-2009 % of total Parent Company guarantees Bank guarantees Total guarantees 2,275 8,407 10,682 21 79 100 2,011 8,507 10,518 19 81 100 Pension fund The Saab Pension Fund was established in 2006 to secure the main part of the Group's pension obligation and...

  • Page 121
    ... company's Group company registered office, country Ownership share, per cent 2010 2009 Combitech AB Saab Barracuda AB Saab Barracuda LLC Saab Dynamics AB Saab Danmark A/S Saab Grintek Defence (Pty) Ltd Saab Seaeye Ltd Växjö, Sweden Västervik, Sweden USA Karlskoga, Sweden Denmark South Africa...

  • Page 122
    ... International AB, 556267-8994, Stockholm Saab Microwave Systems AB, 556028-1627, Mölndal Saab North America, Inc., USA Saab PerformIT AB, 556569-2919, Karlstad Saab Security Systems AB, 556627-4998, Järfälla Saab South Africa (Pty) Ltd, South Africa Saab Systems Oy, Finland Saab Supporter Ett AB...

  • Page 123
    ... 1,935 788 Interest paid and dividends received Group MSEK 2010 2009 Parent Company 2010 2009 -138 -249 Dividends received Interest received 12 49 -87 -26 15 80 -142 -47 236 130 -165 201 61 141 -293 -91 Operating cash ï¬,ow 4,349 1,447 Interest paid Total 120 SAAB ANNUAL REPORT 2010

  • Page 124
    ... head office is Saab ab, Box 70363, se-107 24 Stockholm, Sweden. The consolidated accounts for 2010 comprise the Parent Company and its Group companies, together referred to as the Group. The Group also includes the holdings in associated companies and joint ventures. NOTE 49 Current liabilities...

  • Page 125
    ...Sales divided by average capital employed. Net liquidity/net debt NOTE 50 EXCHANGE RATES USED IN FINANCIAL STATEMENTS Liquid assets, short-term investments and interest-bearing receivables less interest-bearing liabilities and provisions for pensions. Average rate 2010 2009 Year-end rate Country...

  • Page 126
    ...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 3.50 per share, corresponding to...

  • Page 127
    ... International Financial Reporting Standards (IFRS), 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...

  • Page 128
    ... the members of the board of directors and the managing director be discharged from liability for the financial year. Linköping,16 February 2011 Ernst & Young AB Erik Ã...ström Authorised Public Accountant Deloitte AB Tommy MÃ¥rtensson Authorised Public Accountant SAAB ANNUAL REPORT 2010 125

  • Page 129
    ... > CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE REPORT Introduction Saab ab is a Swedish public limited liability company listed on nasdaq omx Stockholm. Saab's corporate governance is based on Swedish legislation, primarily the Swedish Companies Act, the Swedish Annual Accounts Act, nasdaq...

  • Page 130
    ... been reviewed by the company's auditors pursuant to the Annual Accounts Act; see the auditors' report attached to the corporate governance report. Saab has not deviated from the provisions of the Code during 2010 and hence does not report any deviations from the Code. Ownership structure and number...

  • Page 131
    ...ö Chilò and Joakim Westh were elected as new board members at the Annual General Meeting. Marcus Wallenberg was elected Chairman of the Board of Directors. Ã...ke Svensson was President and ceo of Saab, and employed by the company until 31 August 2010. Information on the remuneration to the members...

  • Page 132
    ... shall monitor the company's financial reporting, monitor the efficiency of the company's internal control, internal audit and risk control in respect of the financial reporting, keep the committee informed about the audit of the annual report and the group accounts, review Name Audit Committee...

  • Page 133
    ... with current laws and regulations, the external auditors examine the financial statements, group accounts, annual report, 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...

  • Page 134
    ... 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 project accounting, acquisitions...

  • Page 135
    ... 2011 The review of the internal control over financial reporting has resulted in changes in the reporting process. As of 2011, the status of all financial controls by business area will be reported on a monthly basis to Group Management compared to once per year previously. The annual assessment...

  • Page 136
    ... ON THE CORPORATE GOVERNANCE REPORT To the Annual General Meeting of the shareholders of Saab AB Corporate identity number 556036-0793 It is the board of directors who is responsible for the corporate governance report and that it has been prepared in accordance with the Annual Accounts Act. As...

  • Page 137
    ... Foreign Service, Lieutenant in Royal Swedish Naval Academy Shares in Saab: 85,150 ERIK BELFRAGE Member of the Board since 1991 Director of SEB Born 1946 MBA Shares in Saab: 3,900 JOHAN FORSSELL Member of the Board since 2010 Member of Saab's Audit Committee Managing Director Investor AB, Head of...

  • Page 138
    ... in Saab: 668 CONNY HOLM Member of the Board since 2008 and deputy Board member since 1995 Chairman of the Engineering Workers' Union local at Electronic Defence Systems, Jönköping Born 1947 Upper secondary engineering education Shares in Saab: 467 TOMMY MÃ...RTENSSON SAAB ANNUAL REPORT 2010 135

  • Page 139
    ... Area Security and Defence Solutions Born 1960, M.Sc. and PhD (Tec. Lic) Employed 2008 Shares in Saab: 1,185 LARS-ERIK WIGE Senior Vice President and Head of Business Area Support and Services Born 1954 Employed 2001 Shares in Saab: 1,045 LARS GRANLÃ-F Senior Vice President and Chief Financial...

  • Page 140
    ... Saab ab as indicated above. The Board of Directors is proposing a dividend of sek 3.50 per share and Tuesday, 12 April 2011 as the record day for the dividend. With this record day, Euroclear Sweden ab is expected to distribute the dividend on Friday, 15 April 2011. SAAB ANNUAL REPORT 2010...

  • Page 141
    ...General Index over a 48-month period. Saab's stock covariance was 0.257, which means that 25.7 per cent of the share's price performance is due to the market's development as a whole. Ownership structure Saab had 31,125 shareholders as of year-end 2010. Swedish investors accounted for 73.3 per cent...

  • Page 142
    ...BAE Systems, UK Orkla ASA, Norway Norweigan state Odin Funds, Norway Other foreign 10.2 1.5 0.7 0.4 13.9 EARNINGS AND DIVIDEND PER SHARE, SEK 20 15 10 5 0 -5 2006 2007 2008 2009 20101) 1) Proposal by Board of Directors Earnings after dilution Dividend per share SAAB ANNUAL REPORT 2010 139

  • Page 143
    SHAREHOLDER INFORMATION > THE SAAB SHARE Data per share 2005-2010 2010 Closing prices 1) at year-end, SEK high for the year, SEK low for the year, SEK Market capitalisation, MSEK 2) 2009 2008 2007 2006 2005 123.00 128.75 84.10 13,425 192,507 2.8 114 31.0 13.8 118.00 118.00 50.50 12,879 234,...

  • Page 144
    ... INFORMATION > THE SAAB SHARE Shareholders As of 31 December 2010 according to SIX Ägarservice Investor AB, Sweden BAE Systems, UK Wallenberg foundations, Sweden Nordea funds, Sweden Swedbank Robur funds, Sweden Fourth AP-fund, Sweden Länsförsäkringar funds, Sweden SEB funds, Sweden Orkla ASA...

  • Page 145
    ... 2010 Operating margin 2009 Operating margin Sales Aeronautics Dynamics Electronic Defence Systems Security and Defence Solutions Support and Services Corporate Internal sales Total Operating income Aeronautics Dynamics Electronic Defence Systems Security and Defence Solutions Support and Services...

  • Page 146
    ... per share after dilution, SEK 3) Dividend, SEK Gross capital expenditures for tangible fixed assets Research and development costs Number of employees at year-end 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...

  • Page 147
    ... 63 se-107 24 Stockholm, Sweden Phone: +46 8 463 00 00 Fax: +46 8 463 01 52 www.saabgroup.com For contact details to all offices, visit www.saabgroup.com se-581 88 Linköping, Sweden Visiting address: Bröderna Ugglas gata Phone: +46 13 18 00 00 Fax: +46 13 18 00 11 144 SAAB ANNUAL REPORT 2010

  • Page 148
    Production: Intellecta Corporate Printing: Larsson Offsettryck AB 2011 Photo: Peter Karlsson, Shutterstock, Getty Images and Saab's image bank

  • Page 149
    SAAB ANNUAL REPORT 2010