Saab 2015 Annual Report Download - page 76

FINANCIAL INFORMATION – FINANCIAL STATEMENTS
NOTE 1 ACCOUNTING PRINCIPLES
OPERATIONS
Saab AB is a Swedish limited company with its registered address in Linköping.
The company’s Series B shares are listed on Nasdaq Stockholm’s large cap list.
The operations of Saab AB with its subsidiaries, joint ventures and associated
companies (jointly referred to as Saab or the Group) were divided into six business
areas in 2015: Aeronautics, Dynamics, Electronic Defence Systems, Security and
Defence Solutions, Support and Services, and Industrial Products and Services.
The operations in each business area are described in note 4.
On 26 February 2016, the Board of Directors and the President approved this
annual report and consolidated accounts for publication, and it will be presented to
the Annual General Meeting on 14 April 2016 for adoption.
CONFORMITY TO STANDARDS AND LAWS
The consolidated accounts have been prepared in accordance with the Internatio-
nal Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB) and the interpretations of the International Financial
Reporting Interpretations Committee (IFRIC) as approved by the EU.
The consolidated accounts have also been prepared in accordance with the
Swedish Financial Reporting Board’s recommendation RFR 1 Supplementary
Accounting Rules for Groups, which contains certain additional disclosure require-
ments for Swedish consolidated accounts prepared in accordance with IFRS.
The annual report for Saab AB has been prepared according to the Annual
Accounts Act, the Swedish Financial Reporting Board’s recommendation RFR 2
Reporting by Legal Entities and the pronouncements of the Swedish Financial
Reporting Board. Differences between the accounting principles applied by
SaabAB and the Group are the result of limitations on opportunities to apply IFRS
by the Parent Company owing to the Annual Accounts Act, the Act on Safeguar-
ding Pension Commitments and in certain cases current tax rules. Significant diffe-
rences are described below under “Significant differences between the Group’s
and the Parent Company’s accounting principles.”
ASSUMPTIONS IN THE PREPARATION OF THE FINANCIAL REPORTS
The Parent Company’s functional currency is Swedish kronor (SEK), which is also
the reporting currency for the Parent Company and for the Group. The financial
reports are presented in SEK. All amounts, unless indicated otherwise, are rounded
off to the nearest million.
The preparation of the financial reports in accordance with IFRS requires the
Board of Directors and Management to make estimates and assumptions that
affect the application of the accounting principles and the carrying amounts of
assets, liabilities, revenue and expenses. Estimates and assumptions are based on
historical experience and knowledge of the industry that Saab operates in, and
under current circumstances seem reasonable. The result of these estimates and
assumptions is then used to determine the carrying amounts of assets and liabili-
ties 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 effect of changed
estimates is recognised in profit or loss.
Estimates made by the Board of Directors and Management in applying the
accounting principles in compliance with IFRS that may have a significant impact on
the financial reports as well as estimates that may necessitate significant adjust-
ments in financial reports in subsequent years are described in more detail in note2.
The accounting principles described below for the Group and the accounting
principles concerning significant profit /loss and balance sheet items described in
respective note disclosure have been applied consistently for all periods presented
in the Group’s financial reports, unless otherwise indicated below.
APPLICATION OF NEW AND REVISED ACCOUNTING RULES
IASB and IFRIC have issued and the EU has adopted the following new and
revised standards, which apply as of the fiscal year 2015:
• Yearly improvements of IFRS standards, improvement cycle 2011-2013.
1. IFRS 1 First time IFRS is applied
2. IFRS 3 Business combinations
3. IFRS 13 Fair value measurement
4. IAS 40 Investment property
• IFRIC 21 Levies
The new and amended standards have not had a material effect on the Group’s
financial reports.
NEW AND AMENDED STANDARDS AND INTERPRETATIONS
THAT HAVE NOT YET ENTERED INTO FORCE
IASB has issued the following new and amended standards that have not
yet entered into force:
Standards
Will apply to financial
years beginning:
IFRS 9 Financial Instruments 1 January 2018 (not adopted by EU)
IFRS 15 Revenue from Contracts
with Customers 1 January 2018 (not adopted by EU)
IFRS 9 “Financial instruments” sets out the requirements for classification,
measurement and accounting of financial assets and liabilities and introduce new
accounting rules for hedge accounting. Saab has not yet evaluated the effects of
the introduction of the standard.
IFRS 15 Revenue from Contracts with Customers governs the recognition of
revenue. The principles that IFRS 15 are based on give users of financial statements
more useful information on the company’s revenue. The expanded disclosure
obligation means that information must be provided on the nature, timing and
uncertainty of revenue and cash flows arising from contracts with customers.
According to IFRS 15, revenue is recognised when customers obtain control over
purchased goods or services and are able to use and obtain benefits from the
goods or services. IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction
Contracts. Saab has started the work to evaluate the effects of the introduction
of the standard and a detailed evaluation will be made during 2016.
Other IFRS or IFRIC-interpretations that have not yet entered into force are not
expected to have any material effect on the Group´s financial reports.
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 fixed assets or long-term liabilities.
CONSOLIDATION PRINCIPLES
Group companies
Group companies are companies in which Saab AB has a decisive influence through
a direct or indirect shareholding amounting to more than 50 per cent of the votes,
other than in exceptional circumstances where it can be clearly demonstrated that
such ownership does not constitute a decisive influence. Decisive influence also
exists when the parent owns not more than half of the voting power of an entity but
otherwise has a decisive influence over more than half the voting rights or the power
to govern the company’s financial and operating policies under a statute or agree-
ment. When determining whether a decisive influence exists, potential voting shares
that can be exercised or converted without delay are taken into account.
Subsidiaries and acquired operations (business combinations) are recognised
according to the purchase accounting method. This means that a business
combination is treated as a transaction whereby the Group indirectly acquires the
business’s assets and takes over its liabilities and contingent liabilities. The 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. The subsequent effects of revaluations of contingent consideration
are recognised in profit or loss. Acquired identifiable assets and assumed liabilities
are initially recognised at their acquisition-date fair value. The exceptions to this prin-
ciple are acquired tax assets/liabilities, employee benefits, share-based payment and
assets held for sale, which are valued in accordance with the principles described in
respective note disclosure. Exceptions are also made for indemnification assets and
repurchased rights. Indemnification assets are valued according to the same princi-
ple as the indemnified 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 consists of the difference between, on the one hand, the
cost of Group company’s interests, the value of non-controlling interests in the acqui-
red 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
analysis. 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
identified assets and liabilities. Acquisitions of non-controlling interests are recogni-
sed as transactions affecting the owners’ equity.
The financial reports of Group companies are included in the consolidated
accounts from the point in time when a decisive influence arises (acquisition date)
72 – SAAB ANNUAL REPORT 2015