Saab 2015 Annual Report Download - page 93

FINANCIAL INFORMATION – FINANCIAL STATEMENTS
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 this respect is considered equivalent.
Recent years’ order bookings have increased the share of projects across busi-
ness areas and changed the composition of the order backlog for certain units,
which complicates a differentiation of discount rates between business areas. As a
result, Saab has decided to apply a uniform discount rate in the impairment tests.
The discount rate (WACC) used in 2015 was 10 per cent (10) pre-tax.
Sensitivity analysis
Group Management believes that reasonable possible changes in the above vari-
ables would not have such a large impact that any individually would reduce the
recoverable amount to less than the carrying amount.
NOTE 18 TANGIBLE FIXED ASSETS
ACCOUNTING PRINCIPLES
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 of the asset can be reliably estimated.
Tangible fixed assets are recognised at cost after deducting accumulated
depreciation and any write-down. Cost includes the purchase price and costs
directly attributable to putting the asset into place and condition to be utilised in
accordance with the purpose of the purchase. Examples of directly attributable
expenditures included in cost are delivery and handling, installation, title and con-
sulting services.
The cost of fixed assets produced by Saab includes expenditures for material,
expenditures for employee benefits and, where applicable, other production
costs considered directly attributable to the fixed asset.
The cost of tangible fixed assets includes estimated costs for disassembly and
removal of the assets as well as restoration of the location or area where these
assets are found.
The carrying amount of a tangible fixed asset is excluded from the statement of
financial position when the asset is sold or disposed of or when no future econo-
mic benefits are expected from its use. The gain or loss that arises on the sale or
disposal is comprised of the difference between the sales price and the asset’s
carrying amount less direct selling expenses. Such gains and losses are recogni-
sed as other operating income/expenses.
Incremental expenditures
Incremental expenditures are added to cost only if it is likely that the future eco-
nomic benefits tied to the incremental expenditures will accrue to the Group and
the expenditures can be reliably estimated. All other incremental expenditures are
recognised as costs in the period they arise.
The determining factor whether an incremental expenditure is added to cost is
whether it relates to the replacement of identifiable components, or parts thereof.
If so, the cost is capitalised. Even in cases where a new component is created,
the expenditure is added to cost. Any undepreciated carrying amount of repla-
ced components, or parts of components, is disposed of and expensed in con-
nection with the replacement. Repairs are expensed as incurred.
Depreciation
Depreciation is booked on a straight-line basis based on the asset’s cost less
estimated residual value at the end of the period of use, over the asset’s estima-
ted period of use. Land is not depreciated. Component depreciation is applied,
which means that fixed assets consisting of various components or where signifi-
cant parts have different periods of use are depreciated as separate assets
based on their periods of use.
Estimated periods of use:
• Operating properties/buildings: 20–90 years.
• Plant and machinery: 5–10 years.
• Equipment, tools, installations and computers: 3–10 years.
• Aircraft: 17–25 years.
Each asset’s residual value and period of use are estimated annually.
Impairment of tangible assets
The carrying amount of fixed assets, with the exception of assets stated at fair
value, is tested on each closing day for any indication of impairment. If an indica-
tion exists, the asset’s recoverable amount is calculated.
The recoverable amount of an asset is the higher of its fair value less selling
expenses and value in use. Value in use is measured by discounting future cash
flows using a discounting factor that takes into account the risk-free rate of inte-
rest plus supplemental interest corresponding to the risk associated with the
specific asset.
If essentially independent cash flows cannot be isolated for individual assets,
the assets are grouped at the lowest levels where essentially independent cash
flows can be identified (cash-generating units). An impairment loss is recognised
when the carrying amount of an asset or cash-generating unit exceeds its reco-
verable value. Impairment losses are charged against the income statement.
Impairment losses are reversed if a change has occurred in the assumptions
that served as the basis for determining recoverable value. Impairment is rever-
sed only to the extent the carrying amount of the assets following the reversal
does not exceed the carrying amount that the asset would have had if the impair-
ment had not been recognised, taking into account the depreciation or amortisa-
tion that would have been recognised.
Group Parent Company
MSEK 31-12-2015 31-12-2014 31-12-2015 31-12-2014
Operating properties/
buildings and land1) 2,026 2,066 1,453 1,463
Plant and machinery 1,359 803 599 514
Equipment, tools and
installations 546 459 342 283
Construction in progress 541 374 488 314
Total 4,472 3,702 2,882 2,574
1) In the Group, the reported amount refers to operating properties. In the Parent Company,
the reported amount refers to buildings and land.
Operating properties/buildings and land1)
Group Parent Company
MSEK 2015 2014 2015 2014
Acquisition value
Opening balance,
1 January 4,858 4,881 2,087 1,928
Business combinations - 243 - -
Investments 48 91 39 84
Reclassifications 39 131 40 95
Divestments -36 -535 -43 -20
Translation differences -11 47 - -
Closing balance,
31 December 4,898 4,858 2,123 2,087
Depreciation and
write-downs
Opening balance,
1 January -2,792 -2,993 -1,521 -1,485
Depreciation for the year -95 -90 -60 -56
Business combinations - -164 - -
Divestments 19 467 14 20
Translation differences -4 -12 - -
Closing balance,
31 December -2,872 -2,792 -1,567 -1,521
Revaluations
Opening balance,
1 January - - 897 897
Closing balance,
31 D ecember - - 897 897
Carrying amount,
31 D ecember 2,026 2,066 1,453 1,463
1) In the Group, the reported amount refers to operating properties. In the Parent Company,
the reported amount refers to buildings and land.
Operating properties include a property leased by Saab Sensis in the US through a
financial lease. The financial lease extends through 2025. The carrying amount is
MSEK 95. The property is depreciated on a straight-line basis over its period of use
through 2025.
Note 17, cont.
SAAB ANNUAL REPORT 2015– 89