SAAB — Annual Report 2011

Mar 16, 2015

ANTICIPATE TOMORROW 75 YEARS OF INNOVATION FOR A SAFER SOCIETY

CONTENTS

Saab in brief

Saab 2011	1
Events by quarter 2011	2–3
Saab 75 years	4–5
Chairman's statement	6–7
CEO comment	8–9
Market and driving forces	10–11
Saab's core competence	14–15
Strategic goals	16–17
– Profitable growth	18–21
– Performance	22–23
– Portfolio	24–27
– People	28–29
Market segments	32–33
Markets by region	34–35
Saab's responsibilities – Sustainability Saab's responsibilities –	36–37
Business ethics Saab's responsibilities –	38
Employees	39–41
Saab's responsibilities – Society Saab's responsibilities –	42–43
Environment	44–47
Financial review 2011	48–49
Business areas	50–61
Risks and risk management	62–65
Other information	66–68
Financial statements	69–81
Notes	82–130
Dividend motivation	131
Proposed disposition of earnings 132
Audit report	133
Corporate governance report	134–144
Shareholder information Financial information	145–151
2012 and contact details	152
Glossary	153

While every care has been taken in the translation of this annual report, readers are reminded that the original annual report, signed by the Board of Directors, is in Swedish.

2011 – An important year for Gripen

Gripen's success in 2011 demonstrates the system's world-leading capabilities to meet the tough demands of the international market in terms of function, quality and cost.

Local presence around the world

A local presence is vital to success. In 2011, we therefore established a stronger presence in a number of countries, e.g., through new research and development centres in India, the UK and Brazil.

Innovative technology and cost efficiency for 75 years

Saab has been supplying innovative, cost-effective and competitive products and systems to customers around the world for 75 years. The key to success is to focus on partnerships, alliances and information sharing.

Sensis – Bridgehead to a global market

The acquisition of Sensis of the U.S. is fully in line with Saab's strategic priorities to create profitable growth, increase its geographical presence and continuously adapt to portfolio.

OUR COMPETENCE MAKES SOCIETY S

Saab offers world-leading solutions, products and services for military defence and civil security. We develop, adapt and improve new technology to meet our customers' changing needs. We are represented in around 30 countries, while our solutions, products and services are sold to more than

100 countries. Our most important marke Australia and North America. We have aro sales amount to around SEK 23 billion, of to research and development.

BUSINESS AREAS

Our operations are conducted in six business areas that work together to utilise the Group's competencies as effectively as possible.

Aeronautics

Offers a product portfolio comprising the Gripen fighter and Unmanned Aerial Systems (UAS). Aeronautics also manufactures components for Saab's own aircraft and

for passenger aircraft manufactured by others. Examples of products: Gripen and Skeldar.

Dynamics

Offers a product portfolio with ground combat weapons, missile systems, torpedoes and signature management systems for armed forces. The business area also

offers military and civil niche products from spinoffs such as rremotely operated vehicles for the offshore industry and mapping solutions for the defence market. Examples of products: Carl-Gustaf, RBS 70 and Rapid 3D Mapping.

Electronic Defence Systems

Offers a product portfolio comprising airborne, land-based and naval systems in radar, signals intelligence and selfprotection. The business area also supplies

civil and military customers with avionics to increase flight mission efficiency and flight safety. Examples of products: Giraffe AMB, Erieye and Arthur.

Security and Defence Solutions

Offers a product portfolio comprising C4ISR systems, airborne early warning systems, training and simulation, air traffic management, maritime safety, security and

monitoring systems, and solutions for safe, robust communication. Examples of products: 9LV (combat management system), remotely operated towers (RT) and tactical systems for communication integration.

Support and Services

Offers mainly support solutions, technical maintenance and logistics, as well as products, solutions and services for military and civil missions in locations with limited infrastructure.

Combitech

Combitech is an independent, wholly owned subsidiary that offers technical and operational consulting services with an emphasis on techncal

systems. Combitech combines technology with

For more information see pages 50–61.

environmental and safety thinking.

SALES DISTRIBUTION 2011

SAFER

ets are Europe, South Africa, Asia, ound 13,000 employees. Annual f which about 22 per cent is related

GEOGRAPHICAL MARKETS

The defence market is expected to decline in the West in the coming years as a result of the sovereign debt crisis and changing defence priorities. At the same time, the global market for civil security and commercial aeronautics is expected to grow.

Sweden and rest of Nordic region

The Nordic region accounts for about one per cent of global defence spending, a figure that is expected to rise slightly in the years ahead. Sweden is the single largest market for Saab, and it is where the majority of our research and development is conducted.

Rest of Europe

After the U.S., Europe is the largest defence market in the world, representing about 23 per cent of global spending. Economic uncertainty and the sovereign debt crisis have led to delays in many defence projects, due to which the market is expected to shrink in the coming years. France, Germany and the UK are expected to account for the largest relative cutbacks. The civil security market is anticipating growth. A large share of our sales is to the rest of Europe, and in 2011 it strengthened our position in the UK through our new office in London.

North America

The U.S. is the world's largest defence market, accounting for about 43 per cent of global spending. The market is expected to shrink due to the sovereign debt crisis and changing defence priorities. The U.S. civil security market is also the largest in the world and is expected to continue to grow. We strengthened our U.S. position in 2011 through the acquisition of Sensis.

Central and South America

The South American defence market is relatively modest in size. Brazil, one of the strongest economies in the region, represents the largest market. We have been established in the region for many years. In 2011, we strengthened our presence by opening a new research centre in Brazil.

Asia, Middle East and Australia

The region has maintained its strong economic growth. Military spending is expected to continue to increase in the years ahead. The civil security market is relatively immature and strong growth is expected, driven in part by increasing infrastructure needs. A growing share of our sales is in the region, and in 2011 we strengthened our presence in India.

Africa

The African continent has experienced positive economic growth in recent years. Several countries face political turbulence and tough economic situations, however. Spending on defence and civil security is expected to increase in coming years. Since the acquisition of Grintek in 2005, Saab has a strong position in South Africa.

For more information see pages 34–35.

MARKET SEGMENTS

Saab's market segments differ in terms of drivers and needs. Our offerings are partly based on the same basic technologies. Thanks to our expertise in system integration, we can offer our customers entire systems comprised of various products and solutions that cover the needs of every market segment.

Air

Driven by alliances and political decisions. Purchasing decisions are made at the highest national level, where customers demand fighter aircraft that offer highperformance, flexibi-

lity, economic efficiency and upgradability.

Land

Complex conflicts, including in urban environments, are driving demand for new materiel systems and technology. The growing number of multinational missions and

alliances between national forces and different types of forces are placing high demands on system integration, interoperability and command and control capabilities.

Naval

The trend toward broader industrial alliances is making integration and lifecycle commitments more important. Since over 90 per cent of global trade is transported

by sea, the need to protect these trade flows is growing. Technological advances are also driving development, including ships with smaller crews and more sensors, which are used, e.g., to monitor and record traffic along coasts and in harbours.

Civil security

Investments in civil security are made to protect citizens, critical facilities and transports of goods and people. The market is driven by the growing awareness of

society's vulnerability, tighter regulations and a realisation that disruptions to society's flows are costly. This places demands on sustainability, flow efficiency and interoperability.

Commercial aeronautics

The market fluctuates in pace with the economy and is characterised by long development cycles. High fuel prices and new environmental requirements are creating greater de-

mand for fuel-efficient aircraft models. The market has few dominant players, which are now being challenged by companies from China and elsewhere.

For more information see pages 32–33.

SAAB 2011

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OUTLOOK FOR 2012:

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Key financial ratios (MSEK)	2011	2010
Sales	23,498	24,434
EBITDA	4,088	2,187
EBITDA margin, %	17.4	9.0
Operating income (EBIT)	2,941	975
Operating margin (EBIT margin), %	12.5	4.0
Income after financial items	2,783	776
Net income	2,217	454
Operating cash flow	2,477	4,349
Earnings per share, SEK (after dilution)	20.38	3.97
Operating cash flow per share, SEK	22.69	39.84
Dividend per share, SEK	$4.50^{1}$	3.50
Return on equity, %	18.1	4.1
Equity/assets ratio, %	41.1	39.1
Order bookings	18,907	26,278
Order backlog at year-end	37,172	41,459
Total research and development (R&D)
expenditures	5,116	5,008
Internally financed R&D	1,355	1,203
No. of employees at year-end	13,068	12,536
Share of women, %	22.0	22.0
Academic degree, %	54.1	51.4

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LONG-TERM FINANCIAL GOALS AND RESULTS

SALES GROWTH

Long-term goal: Our organic sales growth will average five per cent over a business cycle.

In 2011, organic growth was -4 per cent (-1).

OPERATING MARGIN

Long-term goal: Our margin goal is formulated as an average over a business cycle. The operating margin after depreciation/amortisation (EBIT) will be at least 10 per cent.

In 2011, the operating margin after depreciation/ amortisation (EBIT) was 12.5 per cent (4.0).

EQUITY/ASSETS RATIO

Long-term goal: Our goal is an equity/ assets ratio exceeding 30 per cent.

At year-end 2011, the equity/assets ratio was 41.1 per cent (39.1).

EVENTS IN 2011

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INNOVATIVE TECHNOLOGY AND COST EFFICIENCY – 75 YEARS OF SAAB

This year marks the 75th anniversary of Saab's founding in 1937 through a resolution by the Swedish Parliament.

When it created Saab, the Parliament was of the opinion that Sweden should have its own capability to design fighter aircraft, since defence materiel were difficult to obtain from other countries at the time.

Saab's creation was a milestone for Sweden's non-aligned status and for the Swedish defence industry.

An important factor for Saab has been its ability to cooperate with the Swedish armed forces and to constantly deliver cost-efficient, competitive products and services. Doing more with less has been Saab's motto for years. It has shaped Saab and the way we work.

The Gripen fighter aircraft system is an example of this: efficient internal processes, close cooperations with partners and a limited number of carefully selected suppliers. Together with the Swedish armed forces and the FMV, we have succeeded in improving per-

Market development

The concept of security policy has been broadened and today includes dimensions other than defence. Military attacks are certainly still relevant from a long-term perspective, and localised military incidents and operations in the near term cannot be ruled out either. International crises and conflicts will also continue to call for both civil and military responses. But society's basic functions are becoming more complex, which is accelerating questions of vulnerability. Saab has therefore continuously broadened its operations to include civil applications to address this expanded threat scenario, which today also includes impacts on our environment.

MARKET DEVELOPMENT

HISTORIC MILESTONES FOR SAAB

First B17 delivered First order – RBS 15 First laser simulator BT 46 ANZAC combat management system for Australia's frigates First Gripen delivered First order from U.S. from BOL

formance at the same time that operating expenses are significantly lower than similar systems.

Today this capability extends beyond Gripen to include our entire portfolio of products and solutions for a range of situations from military attacks and multinational missions to civil security and environmental and climate threats. Our systems can help countries to better meet security threats today and in the future, while promoting peace, democracy and development.

The key to success is an approach that focuses on partnership, collaboration and information sharing. This is because it is not about the number of technologies and systems; it is about having the right technology and systems for each customer's specific needs – the right capabilities at the right price delivered in time.

This is our history and our future.

A COMPLEX WORLD WITH CHALLENGES AND OPPORTUNITIES

The sovereign debt crisis, which has been a problem for the West, especially Europe, for some time, further intensified in 2011. The global economy recovered after the financial crisis in 2008-2009, but reversed course in 2011 driven by the growing crisis in the euro zone. Fiscal constraints have contributed for several years to shrinking defence budgets, a trend which was exacerbated last year.

At the same time, global security conditions have become more complex, causing major transformations, especially in North Africa and the Middle East, which are not only important to the world's energy supplies but also to global trade. This has also affected Sweden, in part because it decided to participate in the NATO operation in Libya with aerial surveillance and related support resources. The mission was carried out with five Gripen aircraft.

2011 was a breakthrough year for the Gripen system by the fact that the Swiss Armed Forces announced its selection of Gripen in a major international procurement. The main reason mentioned was the one generally cited as Saab's biggest competitive advantage: its solutions provide better value for the money. As part of the offer, Sweden is also able to offer extensive industrial collaborations with Swiss companies, so-called offsets, which will create value for both Swiss and Swedish businesses.

Innovative capabilities are crucial to our competitiveness

Sweden has historically had an innovative business sector, where Saab is one of a number of key players. Saab has long been one of the country's most engineering focused and innovation focused companies, where around 20 per cent of sales is reinvested in research and development. This has not only led to major export successes and new jobs in our operations but also created a number of new operating areas and spinoffs, where technologies that originated in defence solutions have found broad civil application, e.g., in road tolls and web-based mapping solutions. In this way, Saab has served as an incubator for Swedish high-tech innovation. It is important that we remain one.

Staying innovative in a changing financial, geopolitical and market landscape is a challenge for both Sweden and Saab. It is in no small measure a question of access to capital for the necessary investments in R&D and development work. Faced with shrinking defence budgets, we must increasingly finance this work ourselves. This and the large customer projects we are working on are two big reasons why Saab has built up a strong balance sheet and cash reserves. Continued success also requires that we can build on the many international alliances and relationships we have established, especially in 2011, when Saab's internationalisation was advanced

through acquisitions and expansion in accordance with our strategic goals. This includes the acquisition of the U.S. company Sensis, which strengthens our existing product portfolio and improves our market presence globally and in the US.

Saab is an open and transparent company that actively takes part in establishing global guidelines and rules on business ethics. Our code of conduct is an important part of how we work and was

developed based on the OECD's guidelines for multinationals. We also abide by the UN's Global Compact and its principles on human rights, labour conditions, the environment and anti-corruption.

We have to maintain our financial strength

Our long-term financial goals remain firm, and our strong financial position is an important asset in the current market climate. Saab will continue to focus on strengthening profitability and generating strong operating cash flow, which will be needed in the future to invest in research and development. This is critical if we are going to maintain a high technological level, further improve our competitive advantages and create long-term value for our shareholders.

I am convinced that Saab has major opportunities going forward. Saab's strength is being able to deliver high-quality solutions that are cost-efficient to buy, operate and maintain, making them competitive in a world where fiscal and economic conditions remain uncertain.

Stockholm, February 2012

Marcus Wallenberg

Chairman of the Board

"Sweden has historically had an innovative business sector where Saab is one of a number of key players. Saab has long been one of the country's most engineering focused and innovation focused companies, where around 20 per cent of sales is reinvested in research and development."

WITH A STRONG BALANCE SHEET WE CAN IMPLEMENT OUR STRATEGY

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Profitable organic growth

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Active portfolio management

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Cost efficiency is one of our biggest competitive advantages

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Talent management cannot become a problem

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In 2012 we celebrate Saab's 75th anniversary

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A CHANGING MARKET IS DRIVING SAAB'S BUSINESS

Competition for resources and living standards is a strong driver of social development and is clearly impacting defence and security companies like Saab. Essentially, it is a question of which products and services we will offer the market and how we do it.

According to the UN's World Population Clock, the global population passed 7 billion on 31 October 2011. In recent years, Africa, Asia and Latin America have seen the largest population gains and economic growth, in contrast to the U.S. and Europe, where the population growth and economic growth has been lower. Economic growth is important to social development, and economic stability and social stability are closely interlinked.

Competition for raw materials, resources and living standards is a strong driver of social development. As society develops, competition increases for resources such as capital and people, which are critical to drive innovation and growth.

The competitive picture has become more complex of late. The old world order, where the North and West had the upper hand over the South and East, no longer applies. While Western Europe and North America are struggling with tough challenges and slow economic growth, Africa, Latin America and Asia also face challenges, but are experiencing higher growth. When this competitive dynamic changes, conflict patterns change as well.

In addition, new economic centres are being created around the world such as China, India and Brazil, which are growing in prominence through a combination of population density, education and vigorous growth, and are leading the way to a multipolar world.

The primary drivers in Saab's markets are threat scenarios and security needs. This applies to the defence sector and civil society as well as the grey zone in between. Understanding the development of, and overlap between, the two main dimensions of security policy is critical to also understanding the opportunities, breadth and potential in Saab's market.

One dimension of Saab's markets focuses on traditional security policy, the purpose of which is to maintain national sovereignty by defending borders. Another dimension stresses the vulnerability of civil society, where supply chains and infrastructure must be protected to safeguard society's essential functions.

The first dimension is dominated by national governments and military organisations, while the second is dominated by cities, companies, organisations and individuals. Urban security, efficiencies and sustainability are essential to a well-functioning society.

The three areas of training, command and control, and maintenance are "links" as well as the lowest common denominator between these two security dimensions. For Saab, these areas originate in a traditional border-protecting military context, but are just as relevant and possible to implement in an urban-centred, flow-protecting environment.

New security and functionality needs

Society today contains global flows of capital, goods and people (flow society), which are strongly interdependent. As a result, major crises can quickly spread through the system. This is exemplified by the sovereign debt crisis, which is now threatening the financial system and global growth.

The trend toward a global flow economy has increased security needs in the civil sector, creating greater demand for systems to monitor and protect critical flows and hubs such as airports, ports, railways, highways, and information and energy systems. As ICT, information and communication technology, has become more important to society's infrastructure, our vulnerability has increased. ICT is also an important driver behind the integration of military and commercial technology, where there is a growing overlap, especially in surveillance and control.

In times of limited resources, the focus is not only on security but functionality and efficiency. Customers in both military and civil markets increasingly want broad-based, integrated solutions that include more services: education, training, support and maintenance. Solutions are evaluated based on not only performance but also in terms of cost of ownership and operation. The trend is shifting toward full operational and functional commitments covering the entire lifecycle. Outsourcing of activities that had previously been performed internally is becoming more common, including in the military field.

Reduced defence budgets and shift toward emerging countries

The deficits and sovereign debts in many major Western economies require comprehensive austerity programs, which are triggering defence cuts. The U.S. and Canada accounted for the largest share of global defence spending in 2010, approximately 43 per cent, according to the Stockholm International Peace Research Institute (SIPRI). The U.S. is expected to reduce its spending in the coming years. The biggest increases in defence spending are in China and other countries in Asia, and the trend going forward is expected to favour emerging markets over traditional markets. Purchasing habits have also changed. Demand is increasing for proven systems that offer "more bang for the buck" and work in combination with other systems.

New cooperation and alliances with a regional focus

International cooperation is important to ensure cross-border flows and keep conflict zones under control. The long-term trend is still toward alliances for peacekeeping and economic development purposes. Right now, however, it is toward regional alliances and bilateral agreements. Moreover, large defence orders almost always include extensive offsets through industrial partnerships. Large development projects are increasingly part of public-private partnerships.

New conditions for R&D

International cooperation and system partnerships require open systems that can be coordinated and integrated operationally. This is why a growing share of development work is being done collaboratively. As a result, the defence industry can expect less financing through national defence budgets, alongside the fact that shrinking government budgets no longer allow for research and development to the same extent as before. To a growing extent, defence authorities around the world want access to the best the market has to offer regardless of country of origin, and they want it delivered on short notice. A larger share of research and development (R&D) therefore has to be financed by the industry itself. On the other hand, governments around the world are devoting more research resources to civil security, energy, the environment and sustainable urban development. Access to energy is a critical factor in the development of living standards and energy security and hence is central to both military and civil strategies. Developing new sources of energy is now a high priority in both old and new economies. The aim is to become less dependent on undesirable and politically sensitive sources, capitalise on the economic benefits of new technology and reduce global environmental risks. Development and security go hand in hand in this area as well.

Local presence is decisive

Despite the trend toward international alliances, the need for a strong local presence is critical to success in both the military and civil markets. Customers want integrated solutions from companies that understand local conditions and can adapt their solutions accordingly. This makes it important to be established locally, build local competence and understand local conditions if you hope to be successful. It significantly increases your chances of being selected as a supplier or subcontractor and to have a portion of your development financed through government appropriations.

A YEAR FOCUSED ON GRIPEN

At the start of 2011, the first six Gripen were delivered from Sweden to the Royal Thai Air Force, as planned. Thailand has ordered a further six Gripen C/D aircraft, which are in production.

Last spring, Gripen was involved in a conflict situation for the first time when the Swedish Air Force joined the NATO-led operation in Libya.

"We received confirmation that both the aircraft and the unit performed well. We provided what was asked of us without any damage or losses. For me, this is an affirmation that practice makes perfect – with realistic training, we can assist in such actions," said Lt Col Anders Segerby, who was Chief of Operations for the unit in Libya, FL01.

In April, the Indian Ministry of Defence announced that Gripen would no longer be included in the Indian Multi-Role Combat Aircraft (MMRCA) procurement programme. India remains one of Saab's most important markets and we see great business potential within the aviation, defence and security industries.

In November, the Swiss government announced that it had chosen Gripen as a potential future combat aircraft – a clear acknowledgement that Gripen is a world-class and highly cost-effective combat aircraft system. Besides the Gripen system being offered, the programme also includes a long term industrial cooperation between Switzerland and Sweden.

Gripen's successes in 2011 are indicators of the Gripen system's world-leading ability to meet the international market's demands – in terms of function, quality and cost.

Gripen is operated by the air forces in Sweden, South Africa, Thailand, the Czech Republic and Hungary. The UK's Empire Test Pilots' School (ETPS) uses Gripen for training test pilots from across the world. Gripen's development is supported by the Swedish government and Armed Forces, which has stated that Gripen will form the backbone of the Swedish Air Force until at least 2040.

Countries that have been offered Gripen are: Brazil, Bulgaria, Denmark, the Netherlands, India, Croatia, Switzerland and Romania.

Throughout Saab's 75-year history, operations have grown from military aviation into a portfolio of products and solutions for defence and civil security. These systems can help countries develop their capacity to meet current and future security threats.

GRIPEN – today and in the future

Gripen is the world's first new generation multirole fighter that can perform a complete range of different roles. It is suitable for reconnaissance and monitoring (air policing) missions as well as air-to-air and air-to-ground operations. Gripen was designed with ease of handling in mind – both for the pilot and ground crew.

The Gripen system

The Gripen system was designed for continuous development. New sensors and weapons are easy to integrate, thus making Gripen flexible and cost-effective to develop further as new technologies become available.

Cost-effective system

Gripen is designed for minimal cost in terms of procurement, logistics support and maintenance. The cost of ownership was catered for in the aircraft design from the very beginning, since this was one of the driving requirements set by the Swedish customer. Operating costs are low due to:

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Air combat

Gripen is one of the most agile fighters around. Its highly developed aerodynamic construction and triplex digital flight control system, combined with its world-beating new-generation weapons system, gives it enormous advantages in air combat.

Digital cockpit

Gripen has a state-of-the-art, fully integrated digital cockpit with clear, manageable displays and Hands-On-Throttle and Stick (HOTAS) controls. This, along with the on-board integrated data link capability, gives the Gripen pilot total Situational Awareness and, with its advanced weaponry, the pilot has a decisive edge in combat situations.

Gripen Next Generation

Gripen NG is the next generation of Gripen, an enhanced version of the well-established multirole fighter. It is the next and natural step in the successful development of Gripen, which will secure the system's life span and competitiveness beyond 2040. Gripen NG is equipped with a more powerful engine, increased range, new AESA (Active Electronically Scanned Array) radar and a new avionic system, giving the user new and improved capabilities in the battle arena.

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Gripen E/F Facts:

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SYSTEMS EXPERTISE IS OUR CORE BUSINESS

We address the global market and meet traditional defence needs as well as the needs of the growing market for civil security. Our core offering consists of systems know-how in products and systems to safeguard national borders as well as the functional and security needs of the global flow society.

OUR VIEW OF THE MARKET

Our customers increasingly want integrated solutions that meet local requirements. These solutions are evaluated based on performance as well as the cost to own and operate. Demand is increasing for proven systems that offer "more bang for the buck" and can be combined with other systems.

OUR CORE COMPETENCE

Our core competence is systems engineering, i.e., understanding and being able to integrate complex systems: our own and others'. At the same time we have developed world-leading technologies in a number of important areas and today work with open systems as far as possible.

OUR MARKET POSITION

Our strongest position and good growth opportunities are in fighter aircraft, command and control systems, radar, reconnaissance and surveillance systems, including Airborne Early Warning (AEW) systems, tactical weapon and missile systems, and Command, Control, Computing Intelligence, Surveillance and Reconnaissance (C4ISR) systems.

We also have a strong niche position in commercial aviation and in selected regions in civil security, support and services, training and underwater systems, as well as in niche segments such as signals intelligence and countermeasure systems. Geographically we have a strong position in Sweden and good positions in South Africa and Australia.

OUR VISION It is a human right to feel safe.

OUR MISSION

To make people safe by pushing intellectual and technological boundaries.

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 for military defence, commercial aviation and civil security.

OUR VALUES

Expertise – We combine a strong history of knowledge with constant learning.

Trust – We are global citizens, honest and reliable and we keep our promises.

Drive – We have a passion for innovation, we are open to change and we are committed to being fast and flexible.

OUR STRATEGIC HOUSE

Since 2010, our strategy has focused on four priority areas. Our aim is to create long-term value by accomplishing these strategic priorities. We will also maintain a solid balance sheet, focus on capital efficiency and generate strong cash flow.

Our long-term financial goals since 2011 relate to organic sales growth, the operating margin after depreciation/amortisation (EBIT) and the equity/assets ratio; see also page 48.

Profitable growth

We continuously evaluate our positioning and identify growth opportunities. We focus on areas with a strong market position and on strengthening in areas with good growth opportunities.

Portfolio

We adapt our portfolio to areas with strong competitive advantages and growth opportunities. We also target areas with a strong market position or leading technology.

Performance

We work with efficiencies and continuous improvements.

People

We want to be an employer of choice in the global market. Our employees are the backbone of our offering and our growth.

DELIVERING ON STRATEGIC GOALS

Saab's four strategic priorities are profitable growth, performance, a focused portfolio and people. In 2011, we took a number of important steps toward meeting them.

1. PROFITABLE GROWTH

Activities during the year

During the year, we focused on expanding operations in priority markets, including through focused acquisitions. Among other things, we expanded in the UK through a new office and a design centre for the development of Sea Gripen. We also strengthened our presence in the US, through the acquisition of Sensis Corporation. In addition, we established a research centre in Brazil and a product and technological development centre in India, where we also signed a number of strategic agreements with partners. adjustments must be made. PROFITABLE GROWTH PORTFOLIO GROWTH PERFORMANCE

Outcome/goal attainment

Sales decreased in 2011 compared to 2010 as a result of lower activity levels in major projects and the challenging business climate in South Africa.

Priorities 2012

In 2012, we will continue to focus on a number of key markets, including the US, Sweden, India and the UK. Our priority is to increase local competence and establish a stronger local presence in selected markets.

Long-term financial goals and outlook for 2012, see page 1.

2. PERFORMANCE

Activities during the year

We have continued to focus on standardising operations and our functional processes to achieve functional synergies. Our improved processes for project implementation and risk management have enabled us to identify savings and improve our forecasting abilities. Our cost base is now more transparent, which has given us greater flexibility when cost

Outcome/goal attainment

Profitability increased in 2011 compared to 2010. This included capital gains MSEK 1,169 (14), compared to structural costs of MSEK 616 in 2010. Underlying profitability increased in 2011, with successful project execution as one of the most important drivers.

Priorities 2012

In 2012, we will continue to focus on improving tied-up capital and generating strong cash flow. It is important to us to have a strong balance sheet and sound profitability to facilitate growthenhancing investments.

Long-term financial goals and outlook for 2012, see page 1.

3.PORTFOLIO

Activities during the year

We completed several transactions during the year in order to focus operations. This included streamlining the corporate portfolio, acquiring companies in growth areas and divesting non-core operations. The divestments included the shares in the 3D mapping company C3 Technologies AB and the Norwegian company Aker Holding AS, where we exercised an option. In the US, Sensis Corporation was acquired, a transaction that strengthens our offering in air traffic management as well as radar and sensors. In the Czech Republic, we acquired E-COM, a company active in training and simulation.

In total, more than 10 transactions were completed.

Transactions

First half-year 2011:

• t Investment in Scandinavian Air Ambulance
• t Acquisition of E-COM of the Czech Republic
• t Divestment of interest in Grintek Ewation
• t Divestment of interest in Denel Saab Aerostructures (Pty) Ltd
• t Additional consideration was received from the sale of Saab Space in 2008
• t Divestment of interest in Image Systems AB
• t Exercise of option to sell Aker Holding AS
• t Investment in ISD Technologies Int AB

Second half-year 2011:

• t Acquisition of Sensis Corporation in the US
• t Divestment of shares in the 3D mapping company C3 Technologies AB

Priorities 2012

We will continue to invest in product development and renewal as well as prioritise and strengthen our current competitive position in a number of selected markets and a number of technological specialties. In several markets, we are cooperating with selected partners to build a local presence and gain better access to the market.

4. PEOPLE

Activities during the year

During the year, we started building Saab Academy to ensure we have the competence needed to grow now and in the future.

We are continuously evaluating our employees. During the year, we implemented a uniform performance management process.

Results 2011

HR goals	Results 2011
Employer of choice – internally (index)	67
Employer of choice – externally (ranking by Universum)	12th place
Communicative leadership (index)	68
Employee reviews, %	84
Development plans, %	72
Percentage of female managers, %	21

Priorities 2012

We will continue to develop Saab Academy.

We will improve long-term talent management.

We will develop HR support globally and locally.

1. PROFITABLE GROWTH

GROWTH THROUGH MARKET FOCUS

Our business targets markets with strong demand where our technologies and solutions can meet security needs. During the year, we continued to deliver on our strategic goal to focus on key existing markets and strengthen our presence in selected markets.

Saab has a strong position in Sweden. While we expect this to continue, the large share of future growth will come from outside the country. Becoming a more international business – in both military and civil security, through investments in selected markets and a deeper market presence – is also one of our principal strategies. Our sales outside Sweden have gradually increased in recent years. Today, Sweden and the rest of Europe currently account for slightly over 56 per cent of sales.

Profitable growth is one of our financial goals. Our organic sales growth will amount to five per cent over a business cycle. In 2011, our sales decreased slightly compared to 2010 as a result of lower activity levels in major projects and the challenging business climate in Africa. Despite the decrease, we took a series of steps in line with our strategic goals to create a stronger platform for growth.

Priorities 2011: Measures to increase our global presence

To create profitable growth, we are gradually building our global presence in priority markets by giving employees in Sweden the opportunity to work abroad and by recruiting local competence. In 2011, we signed important agreements in markets where we are expanding our local presence, e.g., with the Thai Royal Navy, and in key markets such as the U.S. and Asia.

We acquired Sensis Corporation in the US, broadening our foundation for growth in the North American market and globally. Sensis has a strong local presence in the U.S. in radar and sensors and a world-leading position in the market for air traffic management systems; see also page 20.

During the year we also acquired the Czech company E-COM, which specialises in the development and production of virtual simulators. We have also established research and development centres in the strategically important markets of India, Brazil and the UK; see also pages 30–31.

Priorities 2012–2016: Clearer market focus

Through acquisitions to support our financial goals in defence and civil security, we will continue to build a strong presence in key markets. A focused Gripen strategy is also critical.

Our customers can be found in around 100 countries, at the same time that the majority of order bookings come from around 30 countries where for the most part we also have our own operations. We will concentrate our efforts primarily on these countries.

Decisions where we operate around the world are based on extensive market analyses of political, regulatory and competitive conditions and growth potential. We also look at how our product portfolio fits the local market's needs.

A stronger local presence is necessary to meet our goals. This includes everything from marketing to joint ventures, partnerships, industrial cooperations and technology transfers. Our local presence can also be strengthened through acquisitions, with the acquisition of Sensis Corporation in the U.S. in 2011 being a prime example.

Naturally we continue to do business in other countries where the conditions are right.

We will also be intensifying efforts to find applications for our know-how and technologies in new areas such as green technology.

At year-end 2011, we had 13,068 employees, about 79 per cent of whom are in Sweden, five per cent in the U.S. and 11 per cent in South Africa and Australia.

SALES TREND BY MARKET SEGMENT SALES TREND BY MARKET REGION

FOCUS ON SELECTED MARKETS

OUR EXPANDING OPERATIONS IN THAILAND

One of our criteria to establish in a new geographical market is that there is a demand for our products, services and solutions. We want there to be in a growing market or a market where we can gain a strong position. There have to be opportunities to build partnerships with authorities and businesses. In addition, we have to have access to engineers and other skilled workers. Another important factor is that the business environment, in both the state and private sectors, is transparent and complies with international- ly accepted principles.

Our operations in Thailand are a successful example where we have found excellent opportunities for our civil and military products and services.

Thailand has ordered twelve Gripen in two batches, two Saab 340 Erieye AEW (Airborne Early Warning), one Saab 340B and an air command and control system – a complete air defence concept. Moreover, we received an order in 2011 for the upgrade of combat management and fire control systems.

A cornerstone of our Thai venture was becoming part-owner of the Thai company Aviasatcom, which develops and supplies products to the Thai defence forces. This consolidates our presence in the country and gives us good opportunities to support customers locally.

Our presence and the deals we have finalised also open up other business opportunities in Thailand and the region.

SENSIS – BRIDGEHEAD TO A GLOBAL MARKET

In 2011, Saab acquired the U.S. company Sensis Corporation (Sensis), a leading provider of air traffic management solutions and surveillance technology. The acquisition is fully in line with our strategic priorities to create profitable growth, increase our geographical presence and continually adapted our portfolio.

Sensis has a strong position in the U.S. in radar and sensors and is a world leader in air traffic management, an important complement to Saab's existing offering. For example, Sensis has a strong position with major airports, while Saab is a leader in Remote Towers for small airports. With this combination, the Group creates a stronger product portfolio – and new growth opportunities in a growing global market.

The acquisition of Sensis also gives us a growth platform in the important North American market, where a local presence is critical to success. We have also identified operational synergies in both the medium and long term, which we are currently working to capitalise on.

Sensis has developed and distributed air traffic management and air defence systems since 1985. It maintains a global base of more than 200 installations among over 60 customers in 35 countries on six continents. Operations rest on two divisions: Air Traffic Management, which accounts for about 75 per cent of sales and has installations at more than 85 airports, and Defence & Security Systems, which works with defence organisations around the world.

Stronger position in important market

Through the Sensis acquisition, we strengthen our offering in advanced air traffic management and surveillance. There are several factors driving demand in this market:

• t Demand for air traffic management and infrastructure is driven by growth between and within regions.
• t Global air traffic is growing, increasing congestion. By 2030, around 50 per cent of growth is expected to come from travel to, from and within Asia.
• t Higher fuel prices and increased security demands.
• tA desire among customers to meet future security, capability and environmental needs.
• tAccess to new technology.

The Air Traffic Management (ATM) market is cyclical, programme-driven, dominated by increased automation and characterised by limited growth in Europe and North America. Emerging regions, on the other hand, will account for a large share of market growth, since growing traffic volumes are creating demand for new systems. At the same time, it remains a fact that existing systems will not be able to satisfy future needs. A large number of players are now planning to modernise their systems and implement new technology.

Saab Sensis' products and systems are installed with over 60 customers in 35 countries on six continents.

Strategy for civil security

Investments in products and solutions for civil security are increasing around the world. We have good positions in Sweden, Central Europe, South Africa and Australia, e.g., through the new security system SAFE (Situation Awareness For Enhanced Security), which covers every security need for the protection of critical infrastructure, prisons and emergency services . For more information on SAFE, see page 27.

We are well-positioned in the area and our offering is based on expertise in military technology, with an emphasis on situational control as well as efficient, safe and secure trade flows.

Our civil security strategy is also based on our role as a system supplier and integrator with a focus on airports and aviation, ports and shipping, as well as on having a competitive portfolio of solutions to measure-analyse-act.

Security & Safety

2. PERFORMANCE

IMPROVED COMPETITIVENESS THROUGH COST EFFICIENCY

We will continue at a rapid pace to improve efficiencies in the ways we work throughout the Group. The goal is to become even more competitive.

An efficient business means creating the right conditions to be the most competitive partner possible for our customers and to pave the way for growth. In our daily work this means continuously developing and refining our processes and work methods.

We are working in a structured manner to increase harmonisation and standardisation within the Group. We also continuously re-evaluate and prioritise our activities to ensure the highest possible return on our efforts. The work is measured, followed up and communicated internally. To succeed, we have to promote a culture that puts the entire Group's best first.

Priorities 2011: Organisation and implementation

• tIn 2011, we strengthened cash flow by further improving our processes for managing capital employed, finalising divestments and maintaining our programme to sell account receivables. An efficient organisation is especially important to project implementation, which we focused on in 2011 and which will remain a priority.
• t Due to the long lead times between order bookings and the receipt of revenue, it is critical that we can do more for less, which is already one of our strengths. We have also continued to improve R&D efficiency through a uniform lifecycle process for our products. This work requires that our organisation and management model support product development.
• t Since the cost-cutting programme was completed in 2010, we have continued to work with improvements in day-to-day operations. An important element are our centres of excellence in research and development, which we began opening in 2010. They will support our collective actions while increasing internal efficiency.

FIVE PRIORITIES

Priorities in our efficiency improvement efforts:

• t Standardise and harmonise operations to achieve functional synergies.
• t Focus on contract quality, project implementation and risk management to improve project results and forecasting abilities.
• tIncrease the flexibility in our cost base to quickly adapt to variations in volume.
• t Focus on cash flow and tied-up capital to facilitate investments for growth and acquisitions, R&D and marketing.
• t Develop uniform processes for product management and development to optimise R&D efficiency.

PRIORITIES 2011

• t Strengthen cash flow through divestments
• t Successful project implementation
• t R&D efficiency
• tContinuous improvements

SUCCESSFUL CENTRES OF EXCELLENCE

To increase operating efficienc, not least by eliminating redundancies, we established centres of excellence within various areas of the Group in 2010. The goal is to make important knowledge more widely available and in that way maintain our desired level of competence in certain areas while improving it in others. The resources that are freed up will be used for investments in our future. After a short time, the benefits of the centres have become increasingly evident.

"We can already safely say that the centres which are furthest along in their development, such as the Optics Design Centre, have lowered their fixed and variable costs and are seeing greater cooperation between business areas," said Göran Johansson, who is leading the effort to create Saab's centres of excellence. "This means that we are erasing the dividing lines within Saab and creating synergies."

In addition to the Optics Design Centre, Saab established three other centres of excellence in 2010. As planned, seven new centres were added in 2011. All of them are in different stages of development.

"Before establishing each centre, we analyse detailed calculations and arguments," Göran Johansson continued. "In some cases, we have found commercial applications, where customers have shown interest in utilising the competence."

The work is now continuing. In 2012, around four more centres will be established, and those already in operation will be re-evaluated according to various criterias.

Centres of excellence that Saab has established

2010

• t Optics Design Centre
• t Common Component Sourcing Centre
• t Geo Data Centre (digital maps) in a portal, a central geodata library
• t Power Electronics Design Centre
• 2011 t Power t Aerodynamics t ILS t Antenna EM Field
• t Technical Publications t Test Equipment
• t Rugged Computers
• t Ballistics

CASH FLOW FROM OPERATING ACTIVITIES

OUR PRIORITY 2012–2016: CONTINUOUS IMPROVEMENTS

To achieve our goal of an operating margin after depreciation/amortisation of at least ten per cent, we have to work in a structured manner with continuous efficiency improvements. Maintaining a stable cash flow and high capital efficiency make us more competitive and facilitate investments that drive growth. Payment plans in tenders/contracts, resource-efficient project execution and reductions in working capital, for example in account receivables and inventories are important aspects.

3. PORTFOLIO

DEVELOPMENT OF OUR CORE COMPETENCE

Maintaining a product portfolio that meets our customers' current needs and develops based on their future needs is critical if we are to reach our overarching goals in the short and long term. The ability to continuously supply sought-after defence and security solutions is also one of our biggest strengths.

Our strategic priority of a "focused portfolio" refers to how we develop our offering in defence and security. Our focus is on developing products and services in areas where we have a leading position or the potential to secure one. Our product portfolio and geographical presence create growth potential in a number of areas, from complex systems to niche products. The Gripen system and ERIEYE radar system, and their further development, are two of our best examples of strategic offerings.

Examples of investments in leading niche products that we sell individually or as part of more complex systems include the weapon systems Carl-Gustaf, AT4 and NLAW, the RBS 70 ground-based air defence system, the unmanned helicopter Skeldar, the Arthur and Giraffe AMB radar systems, and our unmanned underwater vehicles. Niche products also include combat training, where we have a leading position.

One niche area that was strengthened during the year was Air Traffic Management (ATM), partly through the launch of the Remote Tower concept and partly through the acquisition of Sensis, a leader in the market segment. In terms of development, we are well-positioned through our participation in the Single European Sky ATM Research Program (SESAR).

We are also seeing increased demand for solutions based on open systems as well as systems that can be integrated with those of different suppliers. We have positioned ourselves as a supplier that can meet these needs.

PRIORITIES 2011:

Acquisitions and streamlining

Through the acquisition of US-based Sensis in 2011 we have complemented our portfolio in Air Traffic Management (ATM), radar and sensors. The acquisition of the Czech company E-COM further strengthens our offering in training and education. Moreover, we have maintained the focus on our core areas by divesting our shares in the 3D mapping company C3 Technologies AB.

Research and development

Our research and development has been focused on the further development of products and services that support our core portfolio. Work on the Group-wide product management process established in 2010 has continued. We are now seeing major benefits from having every business area work and follow up their results in a uniform manner.

This will increase efficiencies in development work, create synergies between projects, reduce costs and shorten development times. As part of this work, we are increasingly using model-based development for complex software and software systems.

Every research and product development investment is preceded by a careful analysis where customer benefits, future market potential and profitability are the decisive criteria.

We develop and supply products and services in both the short term (about 12 months) and the longer term. Short-term projects include the area of civil security, where Saab is developing security management systems for prisons and airports.

A typical example of a long-term research project is the European research collaboration Clean Sky, which is designed to promote

Reduced balance sheet risk and stable foundation for future profitability

As of 1 January 2009, we changed the application of the accounting principles for development costs. As a result of this more conservative view, development costs are capitalised at a later stage in all projects and all capitalised development costs are amortised over a maximum of 10 years. Consequently, capitalised development costs have decreased by 46 per cent, from MSEK 3,628 at year-end 2008 to MSEK 1,950. This means we have reduced our exposure to unexpected write-downs.

OUR FOCUS 2012: STRENGTHENED CORE PORTFOLIO

greener air transports. Saab's role in the project is to develop a new, energy-efficient smart wing, which will be launched on the market in 2020-2025. This type of long-term project accounts for about ten per cent of Saab's self-financed research and development budget.

Acquisitions and collaborations

To strengthen our core portfolio while maintaining our desired ratio between development costs and sales, we continue to take strategic measures. This includes everything from divestments to international partnerships and acquisitions.

Research and development

During the period, we are planning to increase the rate of investment in many of our product segments. Investments in the development of the Gripen system are expected to remain extensive depending on whether we receive addition orders for Gripen. The large part of these investments will be customerfinanced. In other product segments, we expect future product development to be self-financed to varying degrees.

We will continue to improve our product management process by introducing a uniform product portfolio process in 2012. The purpose of the process is to be able to analyse gaps in the portfolio and prioritise potential investments.

SAAB VENTURES

Saab is a research and development focused company. Some of our development projects result in product ideas that fall outside our core areas. These projects have been consolidated in a corporate portfolio, where Saab Ventures' role is to initially drive and develop the businesses together with other co-investors before finding a natural home for each company.

Saab Venture's other purpose is to find and invest in small, rapidly growing companies that could eventually complement Saab's core portfolio.

In 2011, new investments were made in C-leanship and ISD Technologies AB. In November, Svenska Tracab AB filed for bankruptcy. Saab Ventures' holding in the company was 6.49 per cent.

Since 2001, Saab Ventures has divested eleven companies. During the year, the shares in C3 Technologies AB, which specialises in 3D-mapping and in Image Systems AB, which specialises in technology based on image processing, were sold.

Core portfolio

Company	Specialisation	Ownership interest, %
C-leanship Aps	Hull Cleaning Vehicles	27
Cold Cut Systems AB	Cutting Fire Extinguisher	29
ISD Technologies AB	Virtual Training & Simulation	33
Opax AS	Intelligent Video Surveillance	100
Protaurius AB	Mobile Ballistic Protection	6

Spin-offs

Company	Specialisation	Ownership interest, %
Minesto AB	Tidal Energy Solution	14
Lemon Planet AB	Software	17
Wrap International AB	Spectrum Management	23

Saab's offering

1) Command, Control, Computing, Communication, Intelligence, Surveillance and Reconnaissance 2) ATM – Air Traffic Management

SAFE – THE NEXT GENERATION OF SECURITY SYSTEMS IS HERE

Situation Awareness for Enhanced Security (SAFE) is totally new type of security system for enhanced situation awareness among multiple users. SAFE can handle any type of incident, store data and statistics, and even make its own decisions. For customers this translates into significantly less administration and more time to focus on their core business. The system is also easy-to-use, scalable and robustly designed to optimise security and business flows.

SAFE is based on a powerful command and control system and an advanced integration platform. The system covers every security need to protect critical infrastructure, prisons and emergency services. Today it is installed at a number of Sweden's largest power plants, correction facilities and Arlanda Airport, as well as used by first responders. It is also a clear example of how Saab's experience, development and existing IT solutions are integrated in a new software program that now offers an attractive solution in civil security.

4. PEOPLE

COMPETITIVE STRENGTH IS CREATED BY EMPLOYEES

To remain on the forefront of technological developments, we must have employees who take responsibility for making the company a market leader.

Saab is a global company with strong ties to Sweden. We are active in a highly competitive market where our customers' needs are constantly changing. An emphasis on business thinking is crucial to our success and to reach our goals. We need to be attentive and develop close cooperations with our customers in order to understand their needs and develop attractive solutions in terms of both technology and cost efficiency.

Technologies are developing at a rapid and our business conditions are constantly changing. This means that we, like other companies, face the challenge of maintaining and recruiting the right competence. We want to be the natural choice in the global market,

and our employees are the backbone of our offering and our growth. Our philosophy as an employer is to create a stimulating, enriching climate and to develop and support our managers in their role as leaders.

One of our goals is a more even gender distribution. At the management level we want 30 per cent of managers to be female by 2015. We are engaged in a structured effort to reach this goal, which begins with the recruitment of new talents. We are convinced that a more even gender distribution will make us more successful in our business thinking and in our ability to deliver attractive solutions for customers. This applies to both our civil and military offerings.

SAAB ACADEMY – DEVELOPING COMPETENCE

In the highly competitive global market where we are active, educated employees with the right competence are an important success factor. At the same time, our employee demographics are changing. A large group born in the 1940s is retiring and a new generation is taking their place. This will change the demands we face as a company and employer. In several areas we face major recruitment needs. Finding the right talents and building on those already in the company is one of the keys to our continued growth.

We are making an ambitious effort to remain the natural choice for tomorrow's talents. Competition for the top talents is great, however. Two concrete measures now being taken to ensure that Saab has the right competence to meet the future and achieve its business goals are the newly formed Saab Academy and a trainee programme. Saab Academy is an international venture which will be adapted to the needs of each country where Saab is active. Skills training will be provided on multiple fronts, including by improving and broadening the internal programmes already in place, developing cooperations with schools, institutes of technology and universities, and, not least, working even harder with individual programmes to further develop certain key positions.

FEMALE ENGINEER OF THE YEAR – ANNA PERNESTÅL

A self-described nerd won the Saab-sponsored award for Sweden's female engineer of the year in 2011. A project manager at Scania and former Uppsala student, Anna Pernestål impressed the jury with her dedication to engineering sciences and her inspirational drive.

Today slightly over 20 per cent of Saab's employees in Sweden are female. This percentage will rise. With the award, Saab is trying to stimulate interest in engineering and to encourage women to choose it as a career path. When she received the award in October, Anna felt it was a strong acknowledgement that she is headed in the right direction.

CLOSE COOPERATION WITH SCHOOLS AND UNIVERSITIES

We collaborate with around 50 schools, universities and institutes of technology. The aim is to keep children and young people interested in education and technology, drive research projects and show what we can offer as an employer. Learn more on page 43.

GUIDING VALUES

Expertise, trust and ambition. Our code of conduct describes how we work internally and externally. Learn more on page 38.

LOCAL PRESENCE AROUND THE WORLD

In 2011, we established new research and development centres in several locations worldwide: India, the UK and Brazil. They are important to future product development and a stronger presence in strategically important markets.

Major investment in the US

In 2010 we opened an office in Washington, DC to strengthen our local presence on a continent that accounts for half of the global market for defence and civil security.

All our business areas will eventually be represented here as part of a cohesive team. Starting with our current product portfolio, growth will be achieved organically through industrial partnerships as well as through acquisitions.

As part of these efforts, Saab acquired Sensis Corporation in 2011. Read more on page 20.

Research and development in Brazil

In São Bernardo do Campo, Brazil, we were the driving force behind the Swedish-Brazilian Centre for Research and Innovation (CISB). The aim is to create innovations that will find commercial application in Brazil and internationally. Modelled on the Lindholmen Science Park in Göteborg, CISB brings together representatives from the public sector, academia, and industry. The goal is that the centre will be self-financed and its research will focus on defence & security, energy & the environment, transportation & logistics and sustainable urban development. To date, the centre has attracted over 40 partners that are helping to select research projects. In November 2011, we signed an agreement to offer around 100 Brazilian scholarship winners the opportunity to study at Swedish universities.

The UK: A priority market

In London, Saab has established both a new head office for its UK operations and the Saab Design Centre, where around ten engineers from Sweden and the UK will initially work on the development of an aircraft carrier-based version of Gripen, Sea Gripen. This is a new area for Saab, where the aim is to utilise British experience.

Sweden

Saab is the first company in the world to supply an airport with a Remote Tower for air traffic management, which reduces costs and allows several different airports to be managed from a single centre. The first installations at the airports in Sundsvall and Örnsköldsvik represent a paradigm shift. The system is expected to be placed in operation in 2012, when air traffic at both will be is managed from a Remote Tower in Sundsvall.

The UN: A future market

The United Nations (UN) has quickly become an important and growing market for Saab. The journey that culminated in the UN becoming a market began in earnest in 2009. An initial order was received in May 2010. The same year a more extensive contract was signed to supply maintenance and technical services for the UN's missions in East Africa. Three of Saab's six business areas are participating and initially have focused on logistics and training for peacekeeping missions – in particular, solutions for energy, water and waste management.

One of the biggest reasons why Saab's business relationship with the UN has grown is our local presence. Saab already has an office in Nairobi, Kenya and is now looking at opportunities to increase its presence Entebbe, Uganda as well. At the same time, the UN's operations in New York are monitored from Saab's North American

South Africa

Saab has a multi-faceted commitment to South Africa. At the same time that we supply the country with cutting-edge defence and security technologies, we are investing heavily in local industry to drive growth. With over 1,000 employees on site, we can combine a local presence with our international organisation to promote prosperity and improve the nation's defence. Together with the South African Army and Bakenberg Traditional Council, Saab has donated MZAR 2 to finance the iLab classroom for schools in Limpopo province to give students access to computer training.

Development centre opened in India

In cooperation with Mahindra Satyam, we opened the Saab India Technology Centre (SITC) in Hyderabad during the year. SITC will be part of our global offering, while supporting operational excellence within the Group and facilitating an expansion in the Indian market. Its work will focus on aeronautics, defence systems and urban development, including civil security. The most important development areas are software, electrotechnology and mechanical engineering. The establishment of SITC is also a strategic measure to develop synergies between Mahindra Satyam's unique expertise in enterprise solutions, technical services, aerospace systems and integration and our expertise in aeronautics, network-centric warfare and specialised IT systems. In late 2011, Saab placed its first development order with the new centre.

Success for WISE in Australia

With WISE (Widely Integrated Systems Environment), our innovative software suite, users can quickly and easily integrate command and control systems from different domains and countries, thereby improving situational awareness and increasing efficiency.

Unlike conventional system integration, WISE communicates with linked systems through their own communication standards and protocols, eliminating the need to modify the integrated systems.

The software has been demonstrated for, among others, the Australian Department of Defence. We showed how advanced technology can produce major improvements in important defence areas. Our successful demonstration met the customer's stringent technical requirements and strict budget and time parameters.

A changing security market

We operate in five different market segments, where needs differ but the solutions are partly based on the same technologies.

AIR LAND DRIVERS Annual sales in the market segment for unmanned aerial vehicles are expected to grow from around SEK 270 billion to over SEK 340 billion in the next ten years. The UAV market is estimated at SEK 25–27 billion per year. t Growth is driven by nations that want new fighter aircraft with better performance, more flexibility and better overall economic efficiency. t Alliances and political factors affect the market. t Global economic turbulence has delayed a number of procurements. t Demands to reduce defence spending are making performance and life cycle costs more important. t Military aircraft are increasingly used in multinational operations on extended flights over long distances. t Aeronautics systems require open architecture and must be upgradable. t New types of military operations and technology are driving demand for training and education, often as part of multi-year turnkey commitments. Land combat is a broad segment and one of the fastest growing areas of the military market in recent years. The total market is estimated at SEK 550–580 billion. t Complex conflicts, often in urban environments, require new strategies, materiel systems and technology. t Reduced operational needs are expected to result in lower market growth in the next five years. t The increase in multinational missions requires cooperation between different countries' forces and different types of forces. t Higher demands are being placed on system integration, interoperability, and command and control capabilities. t As security threats grow, the need for training does as well. OUR POSITION We offer fighter systems, air C4I solutions, unmanned aerial vehicles, countermeasures and electronic warfare, avionics solutions, weapon systems, sensors, training solutions and aftermarket services. Gripen is a competitive single-engine fighter currently in service in five countries. During the year, Switzerland decided to continue negotiations on Gripen as its future fighter aircraft. Our sales amounted to MSEK 10,611 (10,393). We have leading positions in many segments of this market and offer, among other things, tactical weapon systems and highly sophisticated surveillance and command and control systems (C4I) as well as solutions for troop protection. Our offering includes sensors, signature management and countermeasures, reconnaissance and air defence systems, and training solutions. Our sales amounted to MSEK 7,201 (7,611). 3,000 6,000 9,000 12,000 MSEK 45% 3,000 6,000 9,000 12,000 MSEK 31% SALES SHARE OF TOTAL SALES SHARE OF TOTAL SALES SALES

0

2009 2010 2011

0

2009 2010 2011

The total naval market is estimated at SEK 300–370 billion per year.

• t The naval market is stable with growing demand for expeditionary and coastal capabilities.
• t More than 90 per cent of global trade is transported by sea, which has made the protection of trade flows increasingly important.
• t For navies and coast guards, the trend is toward broader-based industrial commitments with greater demand for integration and lifecycle solutions.
• t International alliances make the ability to act far from home more important.
• t There is growing interest in long-endurance ships with smaller crews, where sensors and combat management are the highest priority.
• t Public-private partnerships are becoming more common.
• t An extensive naval build-up is under way in the Middle East and Southeast Asia (mainly China).

We have a strong position in radar and early warning, command, control and communication systems (C4ISR), tactical weapons and underwater systems. Our sales amounted to MSEK 2,065

(2,278).

The civil security market currently generates slightly over SEK 400 billion a year and is anticipating annual growth of 10–11 per cent, divided equally between protection for borders, ports, energy systems and airports.

• t Growth is driven by new laws and the realisation of how costly disruptions to society's various flows can be.
• t Investments in national security to protect people, critical facilities and large flows are increasing around the world.
• t The continued growth and increased complexity of large cities is placing tougher demands on sustainability, flow efficiency and interoperability.

Our civil security offering is focused on monitoring and situational control as well as ensuring efficient flows, with an emphasis on airports and air travel, ports and shipping, and emergency response planning. Our position, while challenging, is good in Sweden, Central Europe, the US, South Africa and Australia. Our sales amounted to MSEK 1,479

(1,427).

NAVAL CIVIL SECURITY COMMERCIAL AERONAUTICS

The total market is growing by an estimated five per cent per year. For new commercial aircraft, the market is estimated at SEK 600 billion annually.

• t Growth fluctuates greatly with the economy, with commercial carriers currently in a recovery phase.
• t The market is exposed to the U.S. dollar and exchange rates.
• t The industry is capital-intensive with long development cycles and has consolidated into oligopolistic structures.
• t New players, especially from China, are challenging Boeing of the U.S. and Europe's Airbus in the market for large aircraft.
• t High fuel prices and new environmental requirements are strengthening demand for fuel-efficient aircraft models.
• t Subcontractors continue to face price pressure.
• t Delivery volumes are increasing significantly as new aircraft such as the B787 and A350 are introduced on the market.
• t New aircraft models contain larger modules than before, with systems content integrated into the structure.

We are a supplier to the world's leading aircraft manufacturers, including Boeing and Airbus, mainly of durable, lightweight aerostructures, avionics, operating systems, structural and system integration services, and support solutions. We have a track record of having built more than 4,000 aircraft. Our sales amounted to MSEK 1,309 (1,348).

SAAB – A SWEDISH GLOBAL SECURITY GROUP

Saab is a global group with operations on every continent. In recent years, we have sharpened our market focus with an aim to strengthen our local presence while increasing sales and market shares. In 2011, approximately 63 per cent of sales and 56 per cent of order bookings were generated outside Sweden.

AMERICAS

Saab's position Through the acquisition of Sensis, Saab strengthened its position in the important North American market. The order intake in the market increased in 2011 and included orders for the Carl-Gustaf man-portable weapon system and the Giraffe AMB multi-mission radar system.

MARKET TRENDS

North and South America accounted for nearly half of global defence spending in 2010, or about SEK 791 billion. Defence spending is expected to decrease in North America in the coming years, at the same time that investments in civil security continue to rise rapidly. Brazil, one of the stronger economies in South America, accounted for the large share of its defence spending.

AFRICA

Saab's position Since the acquisition of Grintek Defence in 2005, Saab has maintained a strong position in South Africa. The order intake and sales decreased in 2011 compared to 2010 due to challenging market conditions in South Africa.

MARKET TRENDS

In recent years, the African continent has experienced economic growth, although several countries are facing political turbulence. In 2010, defence spending in the region accounted for about 2 per cent of the global total.

Spending on defence and civil security is expected to increase in the coming years.

SWEDEN

Saab's position Since Saab was founded, Sweden has been its largest market and the majority of its research and development is conducted there. The order intake and sales both decreased slightly in 2011 compared to 2010.

MARKET TRENDS

Sweden accounted for less than a half per cent of global defence spending in 2010. Together, the Nordic countries' defence spending represented about one per cent of the global total in 2010. This figure is expected to rise slightly in the coming years.

REST OF EUROPE

Saab's position Important markets include the UK, France, Germany and Finland. In 2011, Saab strengthened its position in the UK by opening a new office and design centre. The order intake increased in 2011 compared to 2010 and included live training capabilities to the British Army.

MARKET TRENDS

Defence budgets are being reassessed in Europe in light of the current economic situation. Defence spending is expected to decline not only in Greece, Italy and Spain but also the UK, Germany and France, which accounted for about ten per cent of the global total in 2010. In total, Europe accounted for about 23 per cent of global defence spending in 2010. Defence appropriations are expected decline in the coming years.

Investments in civil security are expected to continue to rise at the same rate as previous years, i.e., by about ten per cent per year.

ASIA, MIDDLE EAST AND AUSTRALIA

Saab's position India and Thailand are two important markets for us in Asia, where our investments have given us a strong position. We have also been working for many years in Australia, where we today have a strong local presence in command and control systems and are growing in traffic management systems and civil security. Parts of the region represent markets that are not available to Saab for political reasons. The order intake decreased in 2011 compared to 2010 and sales rose due to a higher level of order activity. Orders included an upgrade of combat management and fire control systems from Thailand, the weapon locating system Arthur from Korea och ammunition to the Carl-Gustaf man-portable weapon system.

MARKET TRENDS

Defence budgets are expected to increase throughout the region in future years. In 2010, defence spending here accounted for about 26 per cent of the global total, with the Middle East accounting for about seven per cent. After China, Japan has the highest spending in the region, according to the Stockholm International Peace Research Institute (SIPRI).

Investments in civil security are expected to continue to grow in the region.

SUSTAINABILITY AT SAAB

Through its operations, Saab plays an important part in society's development. Our defence and security solutions contribute to a safer society. The actions we take are based on a set of values and ambitious goals to be a responsible business partner and employer..

Saab has played an important role in Sweden since the company was founded in 1937. The acquisition of Celsius added a unique industrial heritage dating back to the Bofors iron mill in 1646. In pace with globalisation and growing international trade, Saab's operations have become more international. Today the Group is active in around 30 countries and has around 13,000 employees. Our overarching goal is to contribute positively to society. We do so by providing systems and solutions that make society safer and more secure.

From a societal perspective, Saab is an innovation powerhouse for advanced Swedish technology. This produces positive effects in a number of areas and helps to keep Sweden on the map as a knowledge leader.

High expectations

Predicting the needs and expectations of our various stakeholders is critical to the long-term success of our operations. Saab's primary stakeholders are its customers, business partners, employees, shareholders and the society in which we operate.

Our customers and business partners expect us to offer costefficient solutions designed for their specific needs. They want a business relationship that develops over time, based on mutual trust. And they want there to be no question that we will comply with international regulations and treaties and maintain high ethical standards.

Our employees expect Saab to be an employer that utilises their skills and offers opportunities for professional development.

Our shareholders expect a consistently high return and transparency in our communication with the capital market.

The society in which we operate expects us to responsibly manage our business. This includes caring for the environment and contributing positively to our communities locally and globally.

OUR VALUES

EXPERTISE

We combine a strong history of knowledge with constant learning.

TRUST

We are global citizens, honest and reliable and we keep our promises.

DRIVE

We have a passion for innovation, we are open to change and we are committed to being fast and flexible

MANAGEMENT OF SUSTAINABILITY WORK

Overall responsibility for sustainability work rests with Saab's Board of Directors, which, through the CEO and other members of Group Management, ensures that sustainable development is incorporated into day-today operations. Group Management has assigned individuals responsibility for each of the four areas mentioned below.

Clear lines of responsibility for priority issues

BUSINESS ETHICS

The General Counsel has overarching responsibility for our code of conduct and for raising business ethics issues in the organisation. In the course of day-to-day operations, every employee has an individual and shared responsibility to comply with the code of conduct. If any confusion arises, it is the duty of the employee to bring it to the attention of his or her immediate supervisor. Saab has also established a whistleblower function as well as an ethics and compliance unit within the legal department, which is responsible for the Group's rules and ethical standards.

Our efforts are guided by our overall vision, business concept and values. Certain specific measures are governed by our sponsorship policy, which requires that sponsorship activities generally focus on education and technology.

BOARD OF DIRECTORS

MANAGEMENT

Aeronautics Dynamics

Electronic Defence Systems

Security and Defence Solutions Support and Services

Combitech

ENVIRONMENT

Responsibility for Saab's strategic development and oversight of environmental work rests with Group Quality & Environment. Operating issues are handled by the business areas, whose managers ultimately bear responsibility for compliance with environmental requirements. The goals that are set at the Group level are broken down by business area, work group, etc. The Group Environ mental Council coordinates and follows up environmental work within Saab.

EMPLOYEES

Saab's Senior Vice President and Head of Group Human Resources has overarching responsibility for HR work within the Group. Coordination and development of the Group's HR work is handled by the HR units within each business area under the leadership of the HR staff.

A CODE OF CONDUCT WITH CLEARLY DEFINED RULES

We have a code of conduct with guidelines that define how we are expected to act with each other as colleagues, in contacts with our customers and in our communities. We have a zero tolerance policy with regard to violations of any kind.

Goal

Saab will be a trustworthy and reliable partner that promotes an open and transparent market.

We are committed to acting ethically in everything we do on the basis of current laws, our values and code of conduct, and industry codes of conduct. We have developed our code based on the OECD's guidelines for multinationals and the UN Global Compact. In 2011, we introduced an updated version of our code of conduct.

Industry cooperation to fight corruption

Through the Aerospace and Defence Industry Association (ASD), the European defence industry has drafted Common Industry Standards to fight corruption. Saab participated actively in this work and has implemented the requirements and procedures in its own operations. The basic rules then served as the starting point for a more extensive cooperation between European and U.S. defence contractors as part of the International Forum on Business Ethical Conduct (IFBEC), which in 2011 arrived at its final form. IFBEC's mission is to develop and in various ways promote ethical standards within the global aerospace and defence sector. Saab is a member of IFBEC and participates in its Task Force. Through this international collaboration, the industry has clearly expressed its commitment to fighting every form of corruption through the use of best practices and uniform rules.

Business ethics at every level

In a global society, companies fill an important function by creating sustainable growth and doing business ethically. Trust and transparency are critical to future success. During the year, Saab updated and enhanced its code of conduct. All employees have been provided information on the new code and are expected to familiarise themselves with its contents and follow its guidelines.

Focus on business ethics throughout the sales organisation

In autumn 2011, around 150 people received training on our new code of conduct and Saab's zero tolerance of bribes. In addition, they were all taught that responsible officials are required to conduct a corruption risk assessment in connection with every business deal.

Saab will continue this extensive training within the marketing and sales organisation in 2012. All 500 employees will attend the programme. Everyone who completes it signs a document as proof that they have received training in Saab's business ethics.

Marketing consultants and other cooperations

The use of marketing consultants and other advisers is normal in a complex market. At Saab all such cooperations are analysed and evaluated centrally. Specific rules of procedure must be followed, and every decision must be preceded by a thorough analysis.

COMMITMENT AND COMPETENCE IN FOCUS

As a knowledge company, Saab is dependent on attracting the right talents today and in the future. We therefore strive to offer the right development opportunities for current employees and to be the first choice of future generations of Saab employees.

Goal

Our overall goal is to be an employer of choice for current and future employees.

Priorities 2011

Performance Management

During the year, we introduced a Group-wide process for goal-setting, development, monitoring and incentives. The aim is to ensure that all employees have explicit goals, plans and follow-ups.

Harmonised HR processes

We continued during the year to focus on creating uniform HR routines with the aim of increasing quality and cost efficiencies. For example, we have implemented a process to support HR and managers throughout the employment cycle: attract, recruit, introduce, develop and terminate. In terms of introductions, we have also launched a Group-level introductory programme that will be used for all new hires.

We have also implemented payroll efficiencies and signed a Group-wide occupational health agreement in Sweden. As a result, we have reduced 26 service providers to one, a cost reduction of about 25 per cent. The agreement also represents an opportunity to work more strategically with healthcare issues.

Culture and behaviours

Knowing and understanding our future direction is important to creating commitment and confidence in the future. In autumn 2011, Saab's business plan for 2012-2016 was therefore presented to the Group, and through the business areas to every employee.

During the autumn, the Group's employees received the updated code of conduct, which establishes a number of important principles, including that trust is the cornerstone of our business. Descriptions are provided of the rules that apply to the business as a whole, how we are expected to act in our workplaces, the importance of business ethics to building trust and how to communicate internally and externally.

Competence and leadership

We have continued to try to create the right opportunities for current employees to develop. By maximising the commitment and competence of every employee, Saab will be better able to meet its overarching goals.

During the autumn, 150 managers met to discuss the future. The topics included professionalism at every level of operations and Saab's foundation: its employees. By 2020, 50 per cent of the Swedish population will be born after 1978, which means that Saab's demographics will change as well. The managers received valuable insight on the new generation of employees and discussed the future demands on Saab's leadership and corporate culture. An important part of this work to attract new talents is our cooperations with institutes of technology and universities. Learn more on page 43.

During the year, around 300 managers, project leaders and young talents sharpened their leadership abilities while building skills and know-how through our management development programmes. The basic programme has been modified and will be launched in 2012. The new management development concept will focus on personal development, business knowledge and international business culture and will be open to all Saab managers around the world. We also offer international management development programmes, including the Advanced Corporate Management Network (ACMN), which has brought together participants from Sweden, South Africa, England and Australia. The purpose of the programme is to learn more about Saab's entire operations in order to develop as a leader in an increasingly international environment. After the recruiting process for Saab's new training programme was completed during the year, 15 trainees were hired to begin in the first quarter of 2012. During the year, competence mapping assessments were done in selected functions in order to harmonise development activities.

During the year, a decision was made to launch a global Saab Academy to give further attention to talent management and development in all of Saab's operations. Saab Academy will be started in 2012.

Priorities 2012

• tContinue to develop Saab Academy
• tImprove talent management
• t Develop HR support globally and locally

PERSONNEL DATA

	2011	2010	2009
Total number of employees	13,068	12,536	13,159
of whom in – Sweden	10,321	10,396	10,916
– South Africa	1,064	1,086	1,146
– USA	652	191	262
– Australia	324	348	378
– UK	147	117	118
– Czech Republic	143	21	-
– Denmark	68	72	79
– Finland	74	74	72
– Norway	55	50	47
Percentage of women, total	22%	22%	22%
Number of consultants	1,368	1,109	1,150
– of which external	1,044	826	906

GENDER DISTRIBUTION

EDUCATIONAL BACKGROUND

RESULTS 2011

HR-related goals	Results 2011	Results 2010 Goal 2015
Employer of choice – internally (Index)	67	69	75
Employer of choice – exter nally (Ranking by Universum)	12th place	10th place	5th place or better
Communicative leadership (Index)	68	67	73
Employee reviews, %	84	83	100
Development plans, %	72	71	100
Share of female managers, %	21	19	30

COMMENT

We had a high response rate in our annual employee survey, which we see as a sign of strong commitment. The survey was conducted during the first quarter, a time of significant changes and cost cuts. Although employees gave Saab a slightly lower overall rating compared to the previous year, they continued to respond positively in terms of the opportunities available and that Saab offers a good work-life balance.

In last year's Corporate Barometer, Saab fell from tenth to twelfth place compared to the previous year, but retained its position as an employer of choice among Swedish engineering students. In just a few years, the criteria students use to rank employers have changed appreciably. Now most feel that it is extremely important that an employer can offer a balance between work and life, an area that Saab's current employees rate highly.

The survey also shows that corporate culture is becoming more important. Engineering students want a creative, dynamic and welcoming work environment, leaders who support their development and contacts with international customers and colleagues.

The share of wage-setting female managers increased to 21 per cent. We remain focused on achieving our goal of 30 per cent by 2015.

^{2001 2003 2005 2007 2009 2011 0} 25 50 75 100 % Employees in Sweden Employees outside Sweden

PERCENTAGE OF EMPLOYEES

OUTSIDE SWEDEN

SAAB ANNUAL REPORT 2011 41

PARTNERSHIPS FOR SUSTAINABLE DEVELOPMENT

As one of Sweden's most research-intensive companies, we have contributed to technological development domestically and around the world. Today this remains an important component in industrial development in a global market.

Saab is a company that contributes to society on several dimensions beyond its basic business concept. For example, it creates job opportunities itself as well as through its subcontractors, in Sweden and our other home markets. Having access to the right skills is critical to our long-term development and success, which is why we have invested for years in collaborations and programmes to give children and young people the opportunity of a good education in Sweden and South Africa.

In Sweden, we have established alliances with several leading universities and institutes of technology. Our focus in South Africa is on assisting children and young people to receive an education and provide them with access to the right learning materials.

Goal

We create economic value where we operate. Our research and development helps to build competence and provides economic benefits in our own and others' businesses.

Priorities 2011

New innovation centre in Brazil

May 18 marked the opening of the Swedish-Brazilian research and innovation centre created on Saab's initiative. The main focus is on transportation and logistics, defence and security, and urban

FROM WET TO DRY

Saab has maintained a local presence in Thailand for several years. In connection with the flooding there in fall 2011, Saab received a request from the Thai Embassy for emergency assistance.

After analysing the situation, Saab's organisations in Thailand and Sweden donated two water treatment facilities, 300 tents and 100 electric generators for the Thai people.

Since Saab has the capacity, experience and local presence in Thailand, it was able to respond quickly.

Saab's many years of experience with infrastructure services and system solutions for defence, disaster and rescue missions is a vital asset for those in need. Efforts are coordinated as part of Project Relief.

About Project Relief

Project Relief is an initiative created by Saab to meet emergency needs and reduce human suffering caused by disasters. By utilising our technical expertise and long experience, we can make a difference. To build on this social responsibility work and at the same time be in position to respond quickly and effectively to future disasters, Saab has decided to create a permanent capability. The initiative is still in development. A previous project in Pakistan 2010 provided water treatment plant facilities for 15,000-20,000 people. Saab also donated money to Haiti after the earthquake in 2010.

development, specifically with regard to energy and the environment. The centre will bring together stakeholders from the public, academia and industry and give them the opportunity, using technology, to tackle important challenges in society. Learn more on page 30.

Structured assistance

Natural and man-made disasters have increased in number in the last 20 years. The demand for humanitarian aid in the aftermath of such catastrophes is high, especially in terms of shelters, potable

water, medical assistance and food. To meet this need, Saab has established Project Relief, through which it supplies technical expertise and experience to save lives in affected areas. With its resources, Saab can help to meet basic human needs and reduce suffering in the wake of disasters. As an example, we might donate material and provide organisational assistance with water treatment, cartography and technical support.

COLLABORATIONS

Saab collaborates with around 50 schools, institutes of technology and universities. The aim is to promote education and technology among children and young people, drive research projects and demonstrate that Saab is an attractive, stimulating employer.

Collaborations to promote education and technology

Examples include:

• t Saab Technical High School, which was established in 2009 to strengthen interest in engineering and the natural sciences among children and young people in Arboga and the surrounding area.
• t Cooperation with Arabyskolan in Växjö, where Saab is involved in the engineering and science curriculum.
• t The Royal Swedish Academy of Sciences' science and technology programme for preschool and primary school students.
• t Venture Cup
• t Kunskapsskolan
• t Female Engineer of the Year
• t Swedish Championship in Technology and "Technology Days" events
• t Åke Svensson's research grant at Linköping University
• t Long-term sponsorship agreement with the electrotechnology department at Chalmers.
• t Cooperation with First Lego League and Upptech to promote technology among young people.
• t A number of educational projects in South Africa, where we supply the materials and other equipment, participate in lectures and take our own teaching initiatives.
• t iLab Classroom, where we sponsor mobile computer labs that can easily be transported to schools where children today lack access to computers and IT.

Saab is engaged in a wide array of technological collaborations with Swedish and foreign universities, research institutes and companies, contributing to a number of research programmes and centres of excellence. In 2011, this included eight EU projects, four ETAP projects and 24 NFFP projects. Examples include:

• t Together with Linné University and Chalmers University of Technology, a doctoral project is under way on dynamic forecasting models. The aim is to measure aircraft vibrations and compare them with how aircraft perform in reality.
• t Saab is represented on the Governing Board of Clean Sky, one of the EU's largest research projects ever. Learn more on page 46.
• t Saab is a partner in Neuron, Europe's largest multinational military demonstrator project.
• t Saab is a partner in MidCAS, the European Defence Agency's (EDA) largest research project ever.
• t Saab is the lead partner in FAS4Europe, the first joint study of the future of European military aerospace.
• t Saab is one of the founding companies behind Compraser. Created in 2011, Compraser is a Swedish research centre for fiber composites, where member companies are cooperatively trying to find better, more efficient ways to produce, test and validate their products, mainly carbon fiber composites.
• t Several adjunct professors are dividing their time between Saab and their universities as a way to develop knowledge collaboratively.

REDUCING OUR ENVIRONMENTAL IMPACT

We are working actively to reduce our impact on the environment and climate change. An important part of our work is to collaborate with the industry to create sustainable solutions for the future.

Objective

Our overall objective is to reduce the impact of our operations and products on people's health, the environment and the climate. The most important environmental aspects for us are climate change, our products' environmental impact, hazardous chemicals and environmental risks; learn more on page 65. Our climate objective is to reduce relative CO2 emissions by 20 per cent during the period 2007-2020. Emissions are measured against our turnover in MSEK.

In the area of chemicals, we work actively with needs analyses, knowledge and communication internally within Saab and with our suppliers. All the business areas drafted strategy documents in 2011, where the use of hazardous substances in their products was identified. These strategies will serve as the basis for prioritising measures to replace hazardous chemicals. The work is monitored on a regular basis by the Group Environmental Council.

Priorities and results 2011

Climate change

During the period 2007-2010 relative CO2 emissions were reduced from 2.6 to 2.5 tons per MSEK. Vehicles, aircraft, business travel and goods transports account for 60 per cent of emissions, while 40 per cent is attributable to electricity and heating for our facilities, machinery and processes.

An extensive energy conservation project was launched in 2011 to cut energy consumption at Saab AB's properties in half by 2015. The measures include smaller facilities, more efficient operations, technological investments and increased awareness among employees about consumption from computers, lighting and projectors. In 2012, one of Saab's large cooling centres will be replaced by district cooling to reduce CO2 emissions by 3,000–4,000 tons per year while at the same time eliminating another smaller, energydraining system.

For the fifth consecutive year, Saab was ranked in the international Carbon Disclosure Project's (CDP) Carbon Disclosure Leadership Index. In its Nordic report, CDP ranks companies that excel at climate reporting. The focus is on greenhouse gas emissions, goals and results, measures to limit emissions, and the risks and opportunities companies see due to climate change. For more information on CDP and Saab's complete CDP report, see www.cdproject.net.

Hazardous substances

Certain hazardous chemicals are still necessary to meet security and technical performance requirements in the aerospace and defence industry. During the last ten years Saab has reduced its use of hazardous substances such as volatile organic solvents (VOC), trichloroethylene, brominated flame retardants, lead and cadmium. It has received an exemption from the Swedish National Chemicals Inspectorate to use trichloroethylene at the Swedish facilities in Tannefors and Järfälla. Beginning in 2010, four older facilities that used trichloroethylene to degrease metals have been replaced by two modern, enclosed plants, which offer many environmental benefits, including a reduction in trichloroethylene from over ten tons to about one ton per year. Trichloroethylene emissions to water have ceased and hazardous wastes have been reduced. In the process, energy and water consumption have decreased as well.

Although its products are not governed by the EU's RoHS directive (Restriction of the use of certain Hazardous Substances in electrical and electronic equipment), Saab is actively seeking to reduce consumption of these substances as stipulated in the directive. Moreover, we are working to adapt to the requirements of the EU's chemicals law, REACH (Registration, Evaluation and Authorisation of Chemicals). In 2011, Saab acquired and tested an IS/IT tool to structure information on the chemicals contained in its products. The tool will also be used to verify that the products meet current chemical requirements. Implementation will begin in 2012. We have long been using an effective Group-wide IS/IT system to manage chemical products in its operations.

Demands on suppliers

We have many suppliers around the world. Because a large share of the components and subsystems used in its products are purchased from other companies, they too have a great impact on our environmental work. We therefore require that our suppliers act responsibly and follow our requirements as well as those of the EU and our customers. Setting environmental requirements for suppliers and monitoring compliance is a continuous process. In 2011 this work was given higher priority, especially since we are currently introducing uniform processes and routines within Saab.

External environmental cooperations

We are one of the main suppliers to Clean Sky, a Joint Technology Initiative financed equally by the EU and the industry. The purpose of Clean Sky is to bring the European aviation industry together to meet the 2020 environmental goals set by the Advisory Council for Aeronautic Research in Europe (ACARE). This includes reducing

CO2 emissions per passenger km flown in European airspace by 50 per cent, nitrogen oxide by 80 per cent and noise levels around airports by half. The project is now halfway complete and the results are beginning to be released. In addition, we are helping to develop a future wing that will utilise innovative technology in terms of design and construction to reduce wind resistance, thereby cutting fuel consumption by up to eight per cent. Initial production testing was conducted in 2011. An aircraft with a full-scale wing is scheduled for testing in 2014–2015.

ELECTRICITY CONSUMPTION IN SAAB'S OPERATIONS

Saab works actively to more efficiently use electricity and heating energy. The reduction in electricity consumption is due to the coordination of operations and energy savings measures. The increase in heating energy consumption is due to the cold winter in 2010.

Heating

CO2 EMISSIONS BY SOURCE WITHIN SAAB IN 2010*, %

Group-owned boilers and accidents, 5 % Group-owned vehicles and aircraft, 25 % Purchased electricity, 25 % Purchased district heating, 12 % Purchased business travel 27 %

Purchased freight, 5 % Leased properties, 1 %

* Figures for 2011 were not available at the time this annual report was produced.

SUSTAINABLE SOLUTIONS TO REDUCE ENVIRONMENTAL IMPACTS

Environmental and climate challenges are global, and all our customer-countries face the daunting task of having to address them as a major priority.

In February 2011, the EU reaffirmed its goal to reduce greenhouse gas emissions by 80–95 per cent by 2050 to avoid a temperature increase of two degrees Celsius. Taking into account the measures developing countries will have to take, this represents a global reduction in emissions of 50 per cent by 2050. Moreover, 50 per cent of the world's population currently lives in urban environments. In 20 years, this is expected to grow to 60 per cent. Cities devour energy and resources and produce large volumes of waste. For escalating urbanisation to be sustainable, new solutions and ideas will be needed. Every industry is looking for ways to effectively transition to a more sustainable society. As a result, energy-efficient solutions are in growing demand, regardless of the energy source.

Information and communication technology (ICT) is thought to have excellent potential to reduce CO2 emissions if used optimally. In our business development we have already seen how our knowhow and solutions based on existing technology can help customers. This has facilitated a leap into the greentech market. Our Greentech Business Concept is to create and introduce sustainable solutions for various situations where people impact of the environment. This includes cities, energy supplies, transports and traffic on land, at sea and in the air.

Transports, energy, water, waste management and huge amounts of information flow in various directions. Several of the players responsible for this in society are customers of Saab. Our systems can optimise these flows and represent an important step toward a sustainable society. Examples include:

• tIntelligent transport solutions for air, land and sea
• t Solutions that improve logistical and maintenance efficiency
• tCommunication and decision-making systems
• t Surveillance systems for land and sea
• t Data processing and visualisation for better decision guidance
• t Waste and energy

Current examples include: :

• t Measuring cities Safe & Efficient Cities is a collaborative project by the Linköping municipal and technical authorities, Saab and Linköping University launched in 2008. Together we have demonstrated a sensor that measures drinking water in real time. Saab's contribution to the project is the control system that transmits the alarm from the sensors. The security system is currently being tested in Linköping and is expected to be available in the international market within a year.
• t Support for wind and solar power Saab offers complete maintenance and monitoring systems for wind farms, which means that operators can rely on us as their sole supplier of maintenance systems. The same offering is available for solar energy, where Saab supplies weather monitoring systems that control the wind park's functions. Customers include ABB and Cleanergy.
• t Telematic Fleet Maintenance Used at airports, for example, to monitor fuel consumption, emissions and costs per vehicle by collecting data from sensors in the vehicles. The system also handles data transfers between the backoffice and vehicles.
• t SESAR (Single European Sky Air Traffic Management Research), an EU collaboration focused on developing future air traffic management systems with less impact on the environment.
• t Clean Sky Saab's technology is contributing to lighter, more energy-efficient aircraft with lower wind resistance, thereby reducing energy consumption. New technology will gradually be incorporated into future generations of commercial cargo aircraft beginning in 2016.
• t BioFuel Saab participated in 2011 in a joint study with FMV and the Swedish military on the use of biofuels in the Gripen system.
• t C-lean Ship All ships collect algae and other unwanted material on their hulls, which makes them slower and increases fuel consumption. The bigger the ship, the more consumption increases. Most shipping companies wash the hulls once every three years, which will sideline a vessel for up to 48 hours. Saab has developed a robotic cleaning device, based on the remotely operated vehicles (ROV) from Dynamics, which can do the job in 6–8 hours. Maersk, for one, has seen savings of about MSEK 400 per year.
• t Minesto develops a new concept for a powergeneration through tidal water and ocean streams. It is a spin-off from Saab's expertise within aerodynamics. The powerplant, called Deep Green, has a unique ability to function in a cost-efficient manner at low speeds where no other known technology functions. In 2010 Time Magazine named Deep Green as one of the best inventions of the year.

IN THE FUTURE THE PLANTAGON GREENHOUSE WILL SUPPLY THE CITY WITH FRESH VEGETABLES

The World Expo in Shanghai in 2010 introduced one of the most spectacular greentech projects ever conceived. Plantagon is an enormous spherical greenhouse that could potentially supply cities with fresh produce.

The company Plantagon develops futuristic greenhouses with innovative functions. Thanks to its collaboration with Saab, an enormous glass ball with a spiral-shaped growing area may eventually be constructed just outside Linköping. The hope is that the greenhouse will supply a large section of the city's population with fresh fruit and vegetables in an environmentally sustainable way that eliminates practically all shipping. Combitech is the sole supplier of Plantagon's control systems.

FINANCIAL REVIEW 2011

Saab AB (publ.), corporate identity number 556036-0793, with its registered address in Linköping, Sweden. The address of the company's head office is Gustavslundsvägen 42, Stockholm, with the mailing address Box 12062, SE-102 22 Stockholm, Sweden, and the telephone number +46 8 463 00 00.

Saab has been listed on NASDAQ OMX Stockholm since 1998 and on the Large Cap list since October 2006. The principal owner is Investor AB, with 30 per cent of the shares, corresponding to 40.8 per cent of the votes. The total number of shares in the company is 109,150,344, distributed between 1,907,123 Series A shares with ten votes each and 107,243,221 Series B shares with one vote each. At year-end, a total of 3,818,386 Series B shares had been repurchased to guarantee the Group's various share matching plans. The repurchased shares are held as treasury shares.

In accordance with the Swedish Annual Accounts Act, Saab has prepared a corporate governance report separate from the annual report. It can be found in this document on pages 134-143. The corporate governance report contains the Board of Directors' report on internal control of financial reporting, which includes information for both the Parent Company and the Group. See pages 139-140 in this document.

Operations

As one of the world's leading high technology companies, Saab offers products, solutions and services for military defence and civil security. In 2011, we had customers in over 100 countries, while research and development are principally carried out in Sweden. We are primarily active in Europe, South Africa, Australia and the US. Saab is organised in six business areas: Aeronautics, Dynamics, Electronic Defence Systems, Security and Defence Solutions, Support and Services, and Combitech. Combitech, which provides consulting services, is an independent, wholly owned subsidiary of Saab and is reported as a business segment.

In addition to the business areas, Corporate comprises Group staff and departments and secondary operations. It also includes the leasing fleet of Saab 340 and Saab 2000 aircraft.

Long-term financial objectives

The long-term financial goals as of 2011 consist of goals for organic sales growth, operating margin after depreciation and amortisation (EBIT) and the equity/assets ratio.

LONG-TERM FINANCIAL GOAL PERFORMANCE IN 2011 Growth

Goal: Our organic sales growth will average 5 per cent per year over a business cycle.

Result 2011: In 2011, organic sales growth was -4 per cent (-1).

Sales decreased compared to 2010 as a result of lower activity levels in major projects and the challenging business climate in South Africa.

Operating margin

Goal: We have a margin goal formulated as an average over a business cycle. The operating margin after depreciation/amortisation will be at least 10 per cent.

Result 2011: The operating margin after depreciation/amortisation (EBIT) in 2011 was 12.5 per cent (4.0).

Operating income in 2011 included capital gains of MSEK 1,169. It also included structural costs for Saab Sensis totalling MSEK 27 and costs related to the acquisition process of Sensis of MSEK 25.

In 2010, operating income was impacted negatively by structural costs and other non-recurring items of MSEK 616 and capital gains of MSEK 14.

Equity/assets ratio

Goal: Our goal is an equity/assets ratio exceeding 30 per cent. Result 2011: At year-end 2011, the equity/assets ratio was 41.1 per cent (39.1).

The equity/assets ratio increased as a result of stronger income in 2011.

DIVIDEND AND DIVIDEND POLICY

Proposal for 2011 dividend and dividend policy

Saab's long-term dividend objective is to distribute 20–40 per cent of net income over a business cycle to shareholders.

For 2011, the Board of Directors proposes a dividend of SEK 4.50 per share (3.50). This would represent 21 per cent of net income in 2011 (85).

OUTLOOK 2012

In 2012, we estimate that sales will increase slightly compared to 2011.

We expect the operating margin in 2012, excluding material net capital gains, to be in line with the operating margin in 2011, excluding material net capital gains, of 7.5 per cent.

IMPORTANT EVENTS IN 2011

• t Saab announced it has signed a 5-year Multi-Currency revolving credit facility of SEK 4 billion to refinance the existing credit facility maturing in March 2012. The terms of the credit facility reflect Saab's strong financial position and contain no financial covenants. The credit margin is 0.65 per cent with a commitment fee of 35 per cent of the margin. The facility is self-arranged and the agreement was signed with a total of eight banks with an MSEK 500 commitment each.
• t Saab AB held its Annual General Meeting 2011 on Thursday, 7 April 2011 in Stockholm. Håkan Buskhe and Michael O'Callaghan were elected to the Saab Board of Directors and Johan Forssell, Sten Jakobsson, Per-Arne Sandström, Cecilia Stegö Chilò, Åke Svensson, Lena Treschow Torell, Marcus Wallenberg and Joakim Westh were re-elected as Board Members. Erik Belfrage and George Rose declined re-election. Marcus Wallenberg was re-elected as Chairman of the Board of Saab AB.
• t Saab announced it had received information from the Indian Ministry of Defence that Gripen has not been shortlisted for the Indian Medium Multi-Role Combat Aircraft (MMRCA) programme.
• t Saab launched an investigation after details emerged in the Swedish media about a contract with a South African consultant about which Saab had no prior knowledge. After having completed a review of the contract and the financial transactions of the company Sanip Pty Ltd during the period in question, it was revealed that approximately MZAR 24 had been paid from BAE Systems to Sanip. These payments were transferred to the South African consultant shortly thereafter. The investigation and assembled materials were submitted to the attorney Tomas Nilsson, who thereafter commented on the investigation and handed it over to the Swedish National Anti-Corruption Unit.

• t Saab announced that the Board has decided to utilise its authorisation to repurchase the company's own series B shares to hedge the company's share matching plans and performance share plans. Acquisitions will be made on NASDAQ OMX Stockholm at a price within the registered share price interval on each occasion. Acquisitions can be made as of 20 July 2011 until next year's Annual General Meeting. However, no acquisitions will be made during the 30-day period prior to the public release of quarterly results, including the date of release.

• t On 16 June 2011, it was announced that Board Member Michael O'Callaghan would immediately resign from his position as a result of BAE Systems' sale of its shareholding in Saab AB.

• t Saab formed its own Academy to focus more on employee training and competence development. The Academy is headed by Mikael Grodzinsky, who left his position as Head of Group Human Resources within the Group Management during autumn 2011.
• t Saab announced that Carina Brorman had been appointed as new Senior Vice President and Head of Group Communications. She assumed her new post on 1 October 2011.
• t Saab announced that Anne Gynnerstedt, Senior Vice President and Head of Group Legal Affairs, would leave her position in autumn 2011.
• t Saab announced the shareholder representatives who, together with the Chairman of the Board, constitute the Nomination Committee for the Annual General Meeting 2012: Marcus Wallenberg, Chairman of the Board of Saab AB; Petra Hedengran, Investor AB; Peter Wallenberg Jr, Knut and Alice Wallenberg Foundation; Thomas Eriksson, Swedbank Robur Funds; and Thomas Ehlin, Nordea Investment Funds. The Nomination Committee represents approximately 52 percent of the voting rights of Saab AB based on the ownership structure as of 31 August 2011. The Annual General Meeting of Saab AB will be held on Thursday, 19 April, 2012.
• t Switzerland announced that it had made a type-selection of Gripen for negotiations as a future multirole fighter aircraft for the Swiss Air Force.
• t Saab announced that Lena Eliasson had been appointed as new Senior Vice President and Head of Group Human Resources and that Annika Bäremo had been appointed new Senior Vice President, General Counsel and Head of Group Legal Affairs at Saab. Both are members of the Group Management.
• t Saab announced that Lars Granlöf, Senior Vice President and Chief Financial Officer, would leave his position at the end of February 2012. He thereafter is available to the company during a transition period.

AERONAUTICS

Aeronautics offers a product portfolio that includes the Gripen fighter and Unmanned Aerial Systems (UAS). Aeronautics also manufactures aircraft components for Saab's own aircraft as well as passenger aircraft produced by others. Products include Gripen, Skeldar and Neuron.

SALES, INCOME AND ORDERS

Orders received

Orders received in 2011 included several orders from FMV related to the Gripen system. For example, orders were received for development of the existing material system 39 (edition 19) and for maintenance and development studies of the Gripen system.

Orders received in 2011 were substantially lower than in 2010 mainly as 2010 included a large order from FMV for six Gripen aircraft intended for the Royal Thai Air Force of SEK 1.6 billion and an order for a Tactical Unmanned Aerial Vehicle system (TUAV) of MSEK 407.

Orders received where the order sum exceeded MSEK 100 represented 84 per cent (89) of total order bookings.

Sales

Sales in 2011 decreased mainly as a result of the lower activity of deliveries of Gripen to South Africa. All 26 aircraft ordered by South Africa have been delivered.

Markets outside Sweden accounted for 43 per cent (44) of sales.

Income and margin

In 2011, the ownership interest in Denel Saab Aerostructures (Pty) Ltd. was divested and generated a capital gain before tax of MSEK 58.

Structural costs of MSEK 98 in 2010 related to lay-offs as a consequence of the reorganisation of Aeronautics announced in 2009.

Operating cash flow

Operating cash flow improved during the year due to improved working capital.

Several projects entered into their final stages of completion in 2010 and 2011. These projects have been successfully delivered to the customer because Saab has managed to execute them at a lower cost level than originally planned. A final price adjustment of MSEK 680 was therefore made in the fourth quarter 2011.

KEY FIGURES
MSEK	2011	2010
Sales	6,351	6,741
Operating income	332	191
Adjusted operating margin, %	5.2	2.8
Order bookings	3,807	6,901
Order backlog at year-end	13,091	15,636
Operating cash flow	223	30
EBITDA	579	438
EBITDA margin, %	9.1	6.5

HIGHLIGHTS 2011

• t Neuron is a European collaboration project to develop a UCAV demonstrator, Unmanned Combat Aerial Vehicle. The aim is to develop expertise in advanced aeronautics. Saab is responsible for, among other things, low signature (stealth) technology, flight testing, aerodynamics, and the design and production of the main fuselage. The delivery to Dassault of France was made in January.
• tIn April, Sweden's Parliament decided to deploy fighter aircraft in Libya. The mission included between five and eight Gripen fighters, surveillance and support resources, personnel for information operations and an aircraft for air refuelling.
• tIn September, the first Boeing 787 was delivered to the airline ANA. Saab is supplying the doors and installation kits for the aircraft.
• t On November 30, the Swiss government announced its type-selection of Gripen and that it would begin negotiations on Gripen as a possible future multirole fighter aircraft for Switzerland.

STRATEGIC PRIORITIES

• tContinue to strengthen the Gripen programme in Sweden and through export contracts, including through an increased market presence.
• t Profitably grow the successful civil aerostructures operations through new and existing business.
• tIncrease sales and marketing activities in Unmanned Aerial Systems and build on a strong international position through cooperations in both research and technology and new development programmes.
• t Operational improvements through lean manufacturing and efficiency goals in product development and production.

PRODUCTS AND SOLUTIONS

• t The Gripen fighter, which offers continuous upgrades, high cost efficiencies and a level of performance that meets the high demands of armed forces.
• t The unmanned helicopter Skeldar, which offers a modular design and several optional features.
• t Airborne missile systems.
• t Subcontractor for commercial aircraft producers.

DYNAMICS

Dynamics offers a product portfolio with ground combat weapons, missile systems, torpedoes, unmanned underwater vehicles and signature management systems for armed forces as well as military and civil niche products from spin-offs such as unmanned underwater vehicles for the offshore industry and 3D mapping solutions for the defence market. Products include Carl-Gustaf, RBS 70 and Rapid 3D Mapping.

SALES, INCOME AND ORDERS

Orders received

Orders received in 2011 included several larger orders for ammunition to the Carl-Gustaf man-portable weapon system and contracts for further deliveries of components for the system. An order for the system was also received from the US Army. A large order for the AT4 man-portable weapon system was also received.

Orders received where the order sum exceeded MSEK 100 represented 59 per cent (61) of total order bookings.

Sales

Sales decreased as a result of a lower order intake during 2010 and consequently lower activity levels in the first half of 2011 compared to 2010.

Markets outside Sweden accounted for 82 per cent (81) of sales.

Income and margin

The operating margin in 2010 was impacted negatively by structural costs of MSEK 278, which were partly reversed in 2011.

Operating cash flow

Operating cash flow in 2011 was lower compared to 2010 due to timing differences of milestone deliveries in large projects.

2011	2010
4,335	4,741
484	322
11.2	6.8
4,246	3,312
5,460	5,546
588	1,044
652	516
15.0	10.9

HIGHLIGHTS 2011

• tContract with the US Army and US Special Operations Command for the Carl-Gustaf man-portable weapon system valued at a total of MSEK 209. This is the first time that the US Army is buying the Swedish recoilless rifle system.
• t Saab sold its interest in the 3D mapping company C3 Technologies AB. Saab will continue to offer 3D mapping applications for the military, government and geographical information systems (GIS) markets through the new unit R3DM (Rapid 3D Mapping) within Dynamics.
• tA significant order valued at MSEK 1,155 was received for ammunition for the Carl-Gustaf man-portable weapon system, with an option that could lead to additional orders of up to about MSEK 500. The order, comprising the production of antiarmour ammunition, is expected to create around 40 new jobs at Saab's production unit in Karlskoga, Sweden.
• tThe launch of the RBS 70 NG missile system, which, among other things, is equipped with a new sighting system and offers several new functions and capabilities, including lighter weight, night sight, automatic target tracking to assist the gunner during engagement, and built-in video recording of the gunner's view.

STRATEGIC PRIORITIES

• t To support the international expansion and future business, local operations and partnerships with selected companies will be established internationally, including by utilising Saab's own sales resources in selected markets such as India and North America.
• t Continued focus on operational development and introduction of lean manufacturing processes to increase efficiency and professionalism throughout the organisation.
• t Self-financed development is being increased, as in the case of RBS 70 NG. Investments to improve existing products and an increased focus on lighter missiles.

PRODUCTS AND SOLUTIONS

• t The installed base in more than 60 countries around the world includes support weapons, camouflage, 3D mapping, missiles, torpedoes and unmanned underwater vehicles.
• t Ground combat weapons such as NLAW, AT4, Carl-Gustaf and Bill 2.
• t Land-based air defence systems, e.g., RBS 70, Bamse and ASRAD-R.
• t Missile programs such as Meteor, Taurus and IRIS-T.

RBS 70 NG, the next generation of air defence system, was launched in September. The system has marketleading technology, unique flexibility and the ability to combat aircraft, missiles, unmanned aerial systems and tanks.

ELECTRONIC DEFENCE SYSTEMS

Electronic Defence Systems offers a product portfolio comprising airborne, land-based and naval systems in radar, signals intelligence and self-protection. The business area also supplies civil and military customers with avionics that increase flight mission efficiency and flight safety. Products include Giraffe AMB, Erieye, Arthur, BOL and IDAS.

SALES, INCOME AND ORDERS

Orders received

Orders received in 2011 included an airborne electronic warfare self-protection system (named IDAS, Integrated Defensive Aids Suite) and an order from LIG Nex1, the prime contractor in South Korea, for the weapon locating system Arthur. An order was also received for the Giraffe AMB multi-mission radar system and related services from the US Department of State.

Orders received where the order sum exceeded MSEK 100 represented 23 per cent (58) of total order bookings.

Sales

Sales in 2011 increased mainly as a result of a higher activity level in a significant airborne early warning project during the year. The project was finalised at the end of the year.

Markets outside Sweden accounted for 76 per cent (62) of sales.

Income and margin

Profitability increased in 2011 as a result of the divestment of the ownership interest of 42.4 per cent in the South African system engineering company Grintek Ewation to Cassidian, a division of EADS. The transaction generated a capital gain before tax of MSEK 122.

During the second half of 2011, operating income was negatively affected by structural costs related to the acquisition of Sensis.

In 2010, the operating margin was positively affected by a claim related to a finalised project where Saab reduced its estimated risk share.

Operating cash flow

In the fourth quarter the operating cash flow was negatively impacted by delays in a few projects.

Operating cash flow was positively impacted by MSEK 179 as a result of the divestment of the ownership interest in Grintek Ewation.

The acquisition of Sensis had a negative impact on operating cash flow of about MSEK 230.

Electronic Defence Systems was a supplier to several projects in Aeronautics that entered into their final stages of completion in 2010 and 2011. These projects have been successfully delivered to the customer and Saab has managed to execute them at a lower cost level than originally planned. A final price adjustment of MSEK 170 was therefore made in the fourth quarter 2011.

KEY FIGURES
MSEK	2011	2010
Sales	4,561	4,354
Operating income	297	99
Adjusted operating margin, %	6.5	2.3
Order bookings	3,229	5,494
Order backlog at year-end	6,855	8,240
Operating cash flow	413	594
EBITDA	785	589
EBITDA margin, %	17.2	13.5

HIGHLIGHTS 2011

• t Order for Saab's multi-mission radar Giraffe AMB and related services from the U.S. Department of State. The order value is about MSEK 155.
• t Order for the Arthur weapon locating radar from LIG Nex1, the prime contractor for the Defence Acquisition Program Administration in South Korea. The order is worth MSEK 450.
• t Order for the IDAS airborne self-defence system valued at about MSEK 250. The system improves security for aircraft, helicopters and crews in threat environments.
• t Divestment of the South African system engineering company Grintek Ewation to Cassidian.
• t Order together with Saab Sensis for the multi-role naval surveillance radar Sea Giraffe AMB as part of the U.S. Navy's Littoral Combat Ship Program.
• tAs part of ongoing efficiency improvements, changes have been made in electronics manufacturing, e.g., circuit board production has been outsourced to three subcontractors

STRATEGIC PRIORITIES

• t Focus on strengthening Saab's presence in selected markets, increasing sales to existing customers and developing operations in key markets that offer opportunities for repeat business.
• tThrough acquisitions, partnerships and collaborations, the electronic defence operations and product portfolio are being further enhanced. Products are kept attractive through spiral development, where we continuously upgrade the capabilities.
• tContinue to develop a more efficient organisation, including through lean manufacturing, and increase cost awareness in project implementation.

PRODUCTS AND SOLUTIONS

• t The operations meet customer demand for solutions for surveillance and for detection, localization and protection against the various types of threats. The product portfolio includes airborne, land-based and naval systems in radar, signals intelligence and self-protection. The operations also comprise avionics that increase flight mission efficiency and flight safety.
• t The sensor systems ERIEYE, Carabas, Arthur and Giraffe AMB.
• t Electronic warfare systems, including IDAS, Camps, BOL and LEDS.
• t Avionics, including surveillance, display and digital recording systems.
• t Saab Sensis' expertise in various types of radar upgrades.

The weapon locating system Arthur is one of Saab's leading niche products and has been exported to the Czech Republic, Denmark, Greece, Norway, Spain, Sweden and the UK, among others.

SECURITY AND DEFENCE SOLUTIONS

Security and Defence Solutions offers a product portfolio comprising defence reconnaissance systems, airborne early warning systems, training and simulation, air traffic management, maritime security, security and monitoring systems, and solutions for safe, robust communications. Products include 9LV combat management and fire control systems, the Remote Tower air traffic management system and the Tacticall communication integration system.

SALES, INCOME AND ORDERS

Orders received

Orders received in 2011 included orders from the UK Ministry of Defence to enhance its existing provision of live training capabilities to the British Army in the UK and abroad. An order was also received from the Swedish Prison and Probation Service (Kriminalvården) for the communication solution Tacticall. The contract consists of ten operator positions for use in prisons around Sweden. Two orders were also received from the Royal Thai Navy to upgrade combat management and fire control systems on two frigates of the Naresuan class. Orders were received from FMV for hardware for the Hydra sonar system 135/137 and for modifications to the combat management system used by the Swedish Armed Forces' Gävleand Visby-class corvettes. In addition a framework agreement was secured with the US Army Program Executive Office of Simulation, Training and Instrumentation (PEO STRI). The framework agreement covers radio communication systems (LT 2-IRS) for live training.

Orders received where the order sum exceeded MSEK 100 represented 40 per cent (40) of total order bookings.

Sales

Sales declined as a result of a challenging market situation in South Africa.

Markets outside Sweden accounted for 77 per cent (77) of sales.

Income and margin

During the second half of 2011, operating income was negatively affected by structural costs related to the acquisition of Sensis.

During 2010, profitability was negatively impacted by costs of MSEK 290 related to a terminated contract and a write-down of capitalised development of MSEK 20.

Operating cash flow

The acquisition of Sensis had a negative impact on operating cash flow of about MSEK 730.

KEY FIGURES
MSEK	2011	2010
Sales	5,704	6,210
Operating income	394	137
Adjusted operating margin, %	6.9	2.2
Order bookings	4,582	6,647
Order backlog at year-end	7,712	8,434
Operating cash flow	584	1,066
EBITDA	502	265
EBITDA margin, %	8.8	4.3

HIGHLIGHTS 2011

• t Extended maintenance agreement valued at MSEK 150 signed with the British Army. The order covers the maintenance and support of delivered training systems used by the British Army and implementation of the OSAG 2.0 laser code.
• tAcquisition of the Czech company E-COM, with operations in training and simulation, and the US company Sensis a leading supplier of solutions for air traffic management and surveillance technology. The acquisition os Sensis strengthens Saab's presence in the US market and expands the product portfolio in air traffic management, radar and sensors. The company is Saab's Centre of Excellence in air traffic management.
• t Saab and Airservices Australia signed a contract to commence a trial of remotely operated air traffic control tower technology.
• t Two orders from the Royal Thai Navy for the upgrade of command combat and control systems on two frigates of the Naresuan class. The total order value is MSEK 454 and comprises the upgrade of the frigates with the latest generation of combat management and fire control systems.
• t Order from the (FMV) to upgrade a naval sonar system worth MSEK 400.

STRATEGIC PRIORITIES

• t Focus on growing internationally and in civil security. An expanded market presence is the key to global expansion and can be implemented in several ways, e.g., through increased marketing and local presence, as well as through collaborations and partnerships.
• tThe strategic growth areas are aviation, airport, port and coastal surveillance, and cyber security. Priority areas include security, efficiency, green flights, surveillance, automated air traffic control, safe harbours, cyber warfare and reliable communications.
• tThe product portfolio is a cornerstone to growth. We integrate military and civil technology to build a safer society.

PRODUCTS AND SOLUTIONS

• t Operations are concentrated on C4ISR (computerised command, control, communications and intelligence) systems, WISR solutions and security solutions, as well as training and simulation.
• t Remote air traffic control uses cameras and sensors installed around airports. All the information they record is linked in real time to the air traffic control centre and projected onto a 360-degree view. This cost-effective solution allows several airports to be monitored from a single location.
• t Airborne surveillance systems, e.g., AEW&C (Airborne Early Warning & Control).

Saab supplies the armed forces in North America and the UK, among others, with realistic combat training solutions. With Saab's systems, soldiers can see where each individual is and how they are acting, allowing them to practice tactics and improve their personal capabilities.

SUPPORT AND SERVICES

Support and Services primarily offers support solutions, technical maintenance and logistics, and products, solutions and services for military and civil missions in locations with limited infrastructure.

SALES, INCOME AND ORDERS

Orders received

Orders received in 2011 included an order related to the eight-year agreement signed with Scandinavian Air Ambulance Holding AB in December 2010 which came into force during the first quarter. A major order was also received from FMV for the support and maintenance of Helicopter 15 (Agusta 109 LUHS), operated by the Swedish Armed Forces. The Norwegian Defence Logistics Organisation placed an order for an upgrade of the steering control consoles on the ULA class submarine, which will ensure that new high technology components are used in the steering control consoles for autopilot functionality and integration.

Orders received where the order sum exceeded MSEK 100 represented 26 per cent (32) of total order bookings.

Sales

Sales were in line with 2010, despite lower orders received, due to a strong inflow of smaller orders in 2011.

Markets outside Sweden accounted for 24 per cent (26) of sales.

Income and margin

Profitability improved in 2011 as a result of improved project execution and finalisation of a major airborne early warning project.

Operating cash flow

Operating cash flow in 2011 was lower compared to 2010 due to timing differences of milestone payments.

KEY FIGURES
MSEK	2011	2010
Sales	3,428	3,403
Operating income	426	351
Adjusted operating margin, %	12.4	10.3
Order bookings	3,174	4,124
Order backlog at year-end	4,455	4,743
Operating cash flow	420	894
EBITDA	444	366
EBITDA margin, %	13.0	10.8

SHARE OF SALES 2011, %

HIGHLIGHTS 2011

• t Significant growth in small and medium-sized orders.
• t Teaming agreement signed with Sikorsky on services and training for the Swedish Black Hawk Programme.
• t Eight-year agreement with Scandinavian Air Ambulance to assume responsibility for technical and maintenance personnel and operations of helicopters and aircraft.
• t Five-year agreement with the South African Navy on maintenance of logistical solutions for various platforms.
• tThree employees from Support and Services spent two weeks in Thailand, where they assisted flood victims.

STRATEGIC PRIORITIES

• tContinued focus on the successful helicopter operations and on growing through Saab's current installed base of products and solutions.
• t Strengthening the marketing and sales organisation in growing markets such as the Sub-Sahara, North America and India, including by establishing harmonised support operations in several different countries.
• tImplement a streamlined organisational structure that consolidates capabilities and growth areas, while strengthening opportunities to win new business.

PRODUCTS AND SOLUTIONS

• t Integrated service solutions for operations in the air, on land and at sea, as well as civil security.
• t Offer a package solution for equipment maintenance and service, technical training, spare parts, logistical solutions and field support, and round-the-clock service centres.
• t Flexible, scalable, adaptable and upgradable solutions.
• t Operations are global and comprise Saab as well as other OEM systems and equipment.
• t Support and service of a large part of the Saab 340 and Saab 2000 operating globally today with 469 aircraft by 71 operators in 38 countries. Total of around 1,400 flights a day.

COMBITECH

Combitech, an independent subsidiary of the Saab Group, is one of Sweden's largest technology consulting firms. By combining technology with cutting-edge expertise in the environment and security, we create solutions for our clients' specific needs.

SALES, INCOME AND ORDERS

Orders received

Orders received increased in 2011 compared to 2010 as a result of higher demand in several areas and several major orders received. Important framework agreements were also signed during the year.

Sales

Sales increased as a result of a good order intake and about 100 new employees have been hired as a consequence of this. The highest growth rate was in the industry and defence segments. Sales with clients other than Saab accounted for 62 per cent (65).

Income and margin

The improved profitability is a result of increased sales volume, a high utilisation rate and higher efficiency.

Operating cash flow

Operating cash flow improved due to a higher sales volume.

2011	2010
1,000	915
92	81
	8.9
	964
	226
	65
	83
9.4	9.1
	9.2 1,118 344 87 94

SHARE OF SALES 2011, %

HIGHLIGHTS 2011

• t Several important framework agreements were signed during the year.
• tCombitech has announced plans to establish a development centre in Trollhättan with the capability to take on turnkey commitments.
• tIn a highly competitive recruiting market, Combitech managed well in recruiting engineers in particular. In total, 100 employees were added in 2011.
• tThe operations of Combitech's Norwegian subsidiary.
• t Sörman Information was acquired in early 2012. The acquisition is part of Combitech's strategy to expand its range of services and grow in the Nordic consulting market.

STRATEGIC PRIORITIES

• tContinued focus on the development of a Nordic technology consulting company.
• t Further additions to the range of services.
• tContinued focus on growth among existing clients and in priority market segments.

INDUSTRIES AND SERVICES

• t Combitech is active in the defence, aeronautics, telecom and other industries as well as the public sector. In 2011, sales grew fastest among defence and other industrial clients.
• t Combitech offers services in systems development, systems integration, information security, systems security, communications, mechanics and logistics. Demand in mechanics and systems development was especially favourable in 2011.

RISKS AND RISK MANAGEMENT

Saab's business generally entails significant investments, long periods of time and product development or refinement. In addition to customer and supplier relations, international operations involve joint ventures and other collaborations as well as the establishment of operations abroad.

All businesses entail risk. A risk can be specific to the company or related to a certain industry or market. Certain risks can be fully managed by the company, while others are out of its control. Saab's operations primarily involve the development, production and supply of technologically advanced hardware and software to customers around the world. The international part of the business is growing.

Operations entail significant risk-taking in various respects. The key risk areas are political, financial and operational risks. Pages 62–63 provide information on the political and financial risks. See pages 64–65 for more information on the operating risks.

MANAGING RISKS

Significant risks that are identified are managed continuously at all levels of the organisation and in strategic planning. Various policies and instruments govern the management of significant risks. In addition, Saab has an independent audit unit that serves as a dedicated resource to independently audit the effectiveness of internal control processes. Risks are also managed by procuring insurance. Saab has a Group-wide programme where insurance is obtained on the market or through the Group's own insurer, Lansen Försäkrings AB.

Risk analysis and activities 2011

In 2011, we worked on introducing a uniform risk evaluation process within the Group in line with international risk management standards. The process is designed based on an analysis in 2010 of various aspects of the risk processes used by the business areas and divisions. The work also included a review of the risk management process for long-term customer projects.

In 2011, we also began introducing an improved process for reporting financial controls within Saab. For more information, see the corporate governance report, pages 139–140.

RISK MANAGEMENT PRIORITIES 2010-2012

2010

• tAnalysis of business risks and risk processes
• tReview of financial controls

2011

tDesign and implementation of a harmonised rsk management process throughout the company

2012

tTraining, follow-up and completed introduction of the harmonised rsk management process

		POLITICAL RISKS
RISK	Part of Saab's sales is classified as strategic products which are regu lated by various laws.	Access to vital components and systems may be subject to export restrictions and regulations of various kinds.	Customers' inability to fulfil current contracts
SIGNIFICANCE	Amendments to national laws and ordinances, including international agreements, could affect Saab's sales.	Amendments to national laws and ordinances, including international agreements, could affect access to vital components in various systems and subsystems.	The risk consists of customers' in ability to fulfil current contracts due to economic, political or other circum stances such as natural disasters, an economic crisis, a shift in power or an embargo.
MANAGEMENT	Saab manages political risks through various types of export guarantees, insurance solutions and other instruments. It is impossible, however, to avoid losing business opportunities or incurring damage if political risks are realised.

	FINANCIAL RISKS
RISK	Foreign currency risk Interest rate risk Refinancing risk Credit and counterparty risks Commodity risk	Pension obligations
MANAGEMENT	Management of financial risks is governed by the Group Treasury Policy established by the Board of Directors. Learn more about financial risks in Note 41.	See below.

FINANCIAL RISKS

In its operations, Saab is exposed to various financial 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. Overarching responsibility for managing financial risks lies with Group Treasury.

Pension obligations

The Group's pension obligations are substantial, as indicated in Note 37. In the calculation of pension obligations, future pension obligations are discounted to present value. The size of the liability is dependent on the choice of discount rate: a low interest rate produces a high liability, and vice versa. To manage the pension liability, the Saab Pension Fund was established in 2006 and capitalised with the corresponding PRI liability. The Group's obligations are calculated on an actuarial basis each year, after which a comparison is drawn with the fund's assets. Deficits according to such calculations may require Saab to contribute additional funds. The Saab Pension Fund's objective is a real annual return of at least 4 per cent on invested capital. The fund invests in interest-bearing securities, equities and hedge funds.

The accounting principle IAS 19 Employee Benefits was amended in June 2011, due to which the Group will stop applying the "corridor approach" and instead recognise all actuarial gains and losses in other comprehensive income when they arise. Past service costs will be recognised immediately. Interest expenses and the expected return on plan assets will be replaced by net interest calculated with the help of the discount rate, based on the net surplus or net deficit in the defined benefit plan. The Group intends to apply the amended standard for financial years beginning on or after 1 January 2013. If the new standard had been applied in the annual accounts for 2011, retained earnings would have decreased by MSEK 2,000 and the pension obligation increased by MSEK 2,700. The year's actuarial loss amounted to MSEK 1,344, which would have affected other comprehensive income negatively.

Application of the standard changes the recognition of yield tax and special payroll tax. The effect of this change has not yet been evaluated.

The standard has not been adopted yet by the EU.

OPERATING RISKS

A number of significant areas have been identified with respect to operating risks, which are important in assessing the Group's results and financial position.

Develop and introduce new systems and products

The Group invests heavily in the research and development of its own products and systems as well as acquisitions of technology. Its biggest systems are the export version of Gripen, missile systems and electronic warfare systems. One example of acquired technology is the world-leading radar technology obtained through the acquisition of Ericsson Microwave Systems AB in 2006. Investments in new systems and products are made after a strategic and financial analysis and assessment of future business opportunities.

Management of development and introduction of new systems and products

Various measures were launched in 2011 to further improve efficiencies in development processes, including the continued establishment of centres of excellence within Saab for different aspects of development work. This means that we consolidate all development within the same area in one location.

Certain development costs are capitalised in accordance with established accounting principles. Amortisation of capitalised development costs is scheduled over the estimated production volume or an estimated period of use, though not more than five to ten years. If the estimated period of use is shorter than five years, the costs are amortised over the shorter period. Future business opportunities are periodically reassessed, which can lead to impairment losses. Capitalised development costs are shown in Note 16.

		OPERATING RISKS
RISK	Develop and introduce new system and products	Managing long-term customer projects	Environmental risks and liabilities	Liquidation of leasing operations
SIGNIFI CANCE	The risk is that Saab does not reach the levels of business required for its products to be profitable.	The risk is that Saab will be unsuccessful in meeting customer requirements, as a result of which the commit ment is not fulfilled.	In its operations, Saab handles a wide variety of chemical products that are classified as harmful to humans and the environ ment. The most important environmental risks involve hazardous chemicals, building and plant fires, and soil contamination.	Saab offers lease financing in connection with aircraft sales on the market. The risk in the portfolio is that Saab is unable to lease out the aircraft. The impact on Saab's profitability could be negative if the aircraft are not being used.
RESPONSI BILITY	The Group takes an ac tive approach to product management. A high degree of modularisation in project management allows Saab to reuse product solutions in its offerings.	Before a contract is entered into with a customer to supply a product, solution or service, a thorough analysis is always done of the condi tions and risks associated with the delivery using a pro ject management process established by Saab.	Saab has introduced strict routines for assessment, supervision and control of various environmental risks.	Part of the leasing fleet is fi nanced through US leverage leases, rents from which are insured through the Export Credits Guarantee Board (EKN) in Sweden. Part of the portfolio is financed internally and recognised as assets in the statement of financial position. Saab's direct risk taking in the leasing fleet has been managed primarily through various types of insurance.
2011	Various measures were launched in 2011 to further improve efficiencies in devel opment processes, including the continued establishment of centres of excellence for various aspects of develop ment work. Learn more on page 23.	A review was made of the project management pro cess in 2010 and a modified process for managing long term customer projects was introduced in 2011.	Only a few minor soil remediation projects were necessary in 2011, the total cost of which amounted to less than MSEK 0.5.	Saab's leasing portfolio consisted on 31 December 2011 of 82 turboprop Saab 340 and Saab 2000 aircraft. Of the portfolio, 42 aircraft are financed through US leverage leases. Reserves in the statement of financial position related to the leas ing portfolio and provisions for commitments for regional aircraft are considered suf ficient to cover the remaining risks.
2012	We will continue to improve our product managament process by introducing a uniform product portfolio pocess.	Follow-up and ensure implementation of the risk management process.	In 2012, Sensis and E-COM will be integrated in Saab's environmental risk work.	The leasing fleet is expected to be liquidated by 2015. Until then, Saab will carry out these operations in ac cordance with the terms and conditions of its insurance.

Long-term customer projects

Management of long-term customer projects involves risks. Saab's operations entail complex development projects on the leading edge of technology where the competitive situation is complex. Success depends on the ability to offer cost-effective high technology solutions, though also in some cases on participation in the customer-country's economy through various forms of industrial co-operation. The risk in managing long-term customer projects is that Saab will be unsuccessful in meeting customer requirements, as a result of which the commitment is not fulfilled.

Management of 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 is always done of the conditions and risks associated with the delivery using an established process within Saab for customer contracts.

Periodic reviews are subsequently made of the project during its implementation stage using the same process. An important aspect is to identify and assess risks, then take the measures needed to mitigate them with the help of a risk assessment method.

The Group applies the percentage-of-completion method to recognise revenue from long-term customer projects. An estimation of total costs is critical to revenue recognition and provisions for loss contracts as well as valuating inventories. The outcome of technical and commercial risks may affect income.

A review was made of the project management process in 2010, and we are now working continuously to improve this process and ensure its implementation.

Environmental risks and liabilities

The most important environmental risks are improper management of hazardous chemicals, fires in buildings and plants, and soil contamination. For more information on environmental risks and liabilities, see Note 48.

Management of environmental risks and liabilities

The operations in Linköping and Karlskoga are subject to Europe's Seveso law, which is designed to reduce risks in connection with the large-scale use of chemicals. Against this backdrop, we have introduced strict routines for risk assessment, supervision and control of chemicals for the entire Saab Group. Strict routines are also applied to purchases of chemical products. Health and environmental information on chemical products is available in the Group's chemical data system.

Saab works actively to assess and minimise fire risks in its operations. Since a fire in a production facility can cause extensive environmental damage to the local area, effective fire prevention is an important part of the efforts to reduce environmental risks. We analyse our operations and properties around the world to assess Saab's risk exposure resulting from soil contamination.

When a contaminated area is identified, liability is determined and an overall risk assessment is made. Information on contaminated areas is documented as it is received. An insurance solution to manage soil contamination cases has been in place since 2009.

Overall risk assessments are made to determine how operations are affected by climate change. These risks are reported within the framework of reporting for the Carbon Disclosure Project (CDP).

Divestment of the leasing portfolio

Saab decided in 1997 to discontinue the manufacture of turboprop aircraft.

As with other manufacturers, Saab had a business model that included lease financing in connection with aircraft sales on the market. The risk in the portfolio is that Saab is unable to lease out the aircraft. The impact on Saab's profitability could be negative if the aircraft are not being used.

Management of risks in connection with leasing operations Saab's direct risk-taking in the leasing fleet has been managed primarily through various types of insurance. The leasing fleet is expected to be divested by 2015. Until then, Saab will manage the operations in accordance with the terms of its insurance. Saab's leasing portfolio at 31 December 2011 consisted of 82 turboprop Saab 340 and Saab 2000 aircraft. Of the portfolio, 42 are financed through US leverage leases. Rents from these leases are insured through The Swedish Export Credits Guarantee Board (EKN). 40 aircraft are financed internally and recognised as assets in the statement of financial position.

Reserves in the statement of financial position related to the leasing portfolio and provisions for commitments associated with regional aircraft are considered sufficient to cover remaining risks.

OTHER INFORMATION

CORPORATE

Corporate reported operating income of MSEK 916 (-206). 2011 included a capital gain of MSEK 13 from the sale of Image Systems AB to Digital Vision AB and an additional consideration of MSEK 60 for the divestment of Saab Space. It also included a capital gain of MSEK 916 from the divestment of the shares in the 3D mapping technology company, C3 Technologies AB. C3 Technologies was created by Saab Ventures in 2008 and the technology is based on Saab's, in particular the business area Saab Dynamic's, more than 40 years of experience in image processing for target seekers and expertise in navigation systems.

Operating income also included costs of MSEK 25 related to the acquisition process of Sensis.

In addition, Saab Aircraft Leasing completed several sales involving Saab aircraft and booked reversals of risk provisions related to these transactions, which impacted earnings positively.

GUIDELINES FOR REMUNERATION AND OTHER TERMS OF EMPLOYMENT FOR SENIOR EXECUTIVES 2011

According to the Swedish Companies Act, the Board of Directors shall to each Annual General Meeting propose guidelines for determining salaries and other remuneration for the President and CEO and other senior executives in the Company. The Annual General Meeting 2011 adopted the Board of Directors' proposed guidelines for such remuneration. This group comprises the President and Chief Executive Officer and other members of the Group Management, as defined on the Company's website (www.saabgroup.com). In some special cases, these guidelines may also comprise Board Members of Saab AB, as described below.

Saab shall offer market terms, enabling the Company to recruit and retain senior executives. To the greatest extent possible, remuneration structures shall be characterized by predictability with respect to both the cost for the Company and the benefit for the employee. They shall be based on factors such as position, competence, experience and performance. Benchmarking shall be practiced regularly relative to comparable industries and markets.

The Board shall be entitled to divert from the guidelines, if there are reasonable grounds to do so in an individual case.

The Board's proposal is based mainly on agreements in effect between Saab AB and individual executives. No board fees are paid to members of the Group Management for participation on the boards of the business areas or Saab subsidiaries.

The Remuneration Committee is responsible for developing and reviewing remuneration and other employment terms for the Group Management.

These guidelines apply from the Annual General Meeting 2011. In terms of fixed salary, the guidelines shall apply from 1 January 2011.

Fixed remuneration

Cash remuneration shall consist of fixed salary. The fixed salary shall be reviewed annually as per 1 January for all members of the Group Management. The fixed salary shall be at market terms and based on factors such as position, competence, experience and performance.

Variable remuneration

It is important that senior executives have a long-term view and a long-term commitment in the Company's operations and profits. Therefore long-term incentive is especially well suited to Saab and its shareholders.

The President and CEO and senior executives are entitled to participate in the long-term incentive programs resolved by the Annual General Meeting.

In extraordinary cases, agreements of a one-time nature for variable cash remuneration may be made provided that such agreements are made solely on an individual base for recruitment or retention purposes, or as compensation for extraordinary efforts beyond the individual's ordinary assignment. Such remuneration shall never exceed the amount of the fixed annual salary and shall not be paid more than once a year per individual. Resolutions on such cash remuneration shall be made by the Board based on a proposal from the Remuneration Committee.

Variable cash remuneration shall not be paid in other cases.

Other benefits

All members of the Group Management are entitled to a company car according to Saab's regulations.

Pension

For pension agreements entered into after 1 January 2005, the pension age is 62. In addition to the ITP agreement, the pension is part of a defined contribution plan where provisions are made annually. For the President and CEO, the provision is equivalent to 35 per cent of his fixed salary, and for other executives the percentage is based on a set of regulations in the so-called Saab plan. The percentage is dependent on the number of years remaining until the age of retirement upon joining the plan.

Other terms

All executives in the Group Management, including the President, may terminate their employment with six months' notice. If the employment is terminated by Saab, the notice period is six months, and after the notice period, severance equal to one year's salary is paid. An additional year's salary is payable if no new employment has been obtained in the first 18 months from the time the notice of termination was served.

With respect to employment agreements made after 1 January 2005, and in cases where Saab terminates the employment, a maximum severance pay of 18 months is payable in addition to the six-month notice period. In both cases, any income from termination pay and severance pay will be deducted against income from other employment during the corresponding time.

Remuneration to Board Members

Board Members, elected by the Shareholders' Meeting, may in special cases receive a fee for services performed within their respective areas of expertise, separately from their Board duties and for a limited period time. Compensation for these services shall be paid at market terms.

Incentive programs proposed to the Annual General Meeting 2011

The Board of Directors proposed that the Annual General Meeting should resolve on the implementation of a Share Matching Plan 2011 and a Performance Share Plan 2011. The Annual General Meeting resolved in accordance with the Board's proposal.

THE BOARD OF DIRECTORS' PROPOSAL FOR GUIDELINES FOR REMUNERATION OF SENIOR EXECUTIVES TO APPLY AS OF THE NEXT ANNUAL GENERAL MEETING

Background and reasons

The Remuneration Committee has evaluated the application of the guidelines for remuneration for senior executives of Saab that were resolved at the Annual General Meeting in 2011 and the current remuneration structures and remuneration levels in the Company. The Remuneration Committee is of the opinion that the guidelines that were resolved in 2011 achieve their purposes to facilitate the recruitment and retention of senior executives.

The Remuneration Committee has recommended the Board of Directors to propose to the Annual General Meeting to adopt principles of remuneration whose terms and conditions in essence are the same as those that were resolved at the Annual General Meeting in 2011. However, in consideration of a general review of senior executive employment agreements, certain clarifications are proposed to be made in the guidelines pertaining to customary executive benefits and to the "Saab Plan" that regulates pension terms.

Proposal for guidelines

In light of the above background and reasons, the Board of Directors therefore proposes that the guidelines for remuneration of senior executives are changed.

In respect of fixed and variable remuneration, miscellaneous terms and consultant fees to members of the Board of Directors the guidelines are unchanged from 2011 except for minor linguistic adjustments.

The new guidelines are proposed to have the following wording regarding incentive programs proposed to the Annual General Meeting 2012, other benefits and pension.

The guidelines are proposed to apply from the Annual General Meeting 2012.

Incentive programs proposed to the Annual General Meeting 2012 The Board of Directors proposes that the Annual General Meeting resolves on the implementation of a Share Matching Plan 2012 and a Performance Share Plan 2012.

The terms and estimated costs for the Share Matching Plan 2012 and the Performance Share Plan 2012 are presented in the Board's complete proposal to the Annual General Meeting.

Other benefits

All members of the Group Management may be entitled to other benefits in accordance with local practice. The benefits shall contribute to facilitating the executive's discharge of his or her duties. These benefits shall not constitute a material part of the total compensation and shall be equivalent to what is considered reasonable in relation to market practice. Other benefits may for example be a company car, travels, overnight accommodation and medical insurance.

Pension

For pension agreements entered into after 1 January 2005, the pension age is 62. In addition to the ITP agreement, the pension is part of a defined premium based contribution plan where provisions are made annually. For the President and CEO, the provision is equivalent to maximum 35 per cent of the fixed salary. For other senior executives the percentage is based on a set of regulations in the so-called Saab plan. According to this plan, the percentage is dependent on the number of years remaining until the age of retirement upon joining the plan. The aggregate insurance balance should cover a targeted pension from 65 years of age of approximately 32.5 percent of salary levels between 20 and 30 basic income amounts and approximately 50 percent of segments above 30 basic income amounts.

All senior executives may also be entitled to strengthened disability pension and survivors' pension.

Information in the Annual Report note 37

Note 37 of the Annual Report includes a description of existing remunerations for senior executives, including fixed and variable compensation, long-term incentive programs and other benefits.

Deviation from the guidelines for remuneration for senior executives resolved at the Annual General Meeting 2011

The Board of Directors resolved to deviate from the guidelines during 2011.

The President and CEO has during 2011 received a benefit in the form of flight travels. The reason for this was that at the time of employment and for a period of time thereafter, the President and CEO had his residence in another place than the place of work. In addition, other customary benefits have been provided to members of the Group Management in order to facilitate the persons' discharge of his or her duties.

SHARE REPURCHASE

Share repurchase

In April 2007, Saab's Annual General Meeting resolved to offer employees the opportunity to participate in a voluntary share matching plan where they can purchase Series B shares in Saab during a 12-month period. Purchases are made through deductions of between 1 and 5 per 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. In 2008 it was expanded to include employees in Denmark, Germany, the UK, the U.S., Switzerland and Australia, and in 2009 it was expanded again to cover employees in South Africa. In April 2008, Saab's Annual General Meeting resolved to introduce a performance-based plan for senior executives and key employees entitling them to 2–5 matching shares depending on the category the employee belongs to. In addition to the requirement that the employee remain employed by Saab after three years, there is a requirement that earnings per share grow in the range of 5 to 15 per cent.

The Annual General Meetings in 2009, 2010 and 2011 resolved to renew the share matching plan and performance share plan. The 2011 share matching plan comprises all employees, including senior executives and key persons. The performance share plan for 2011, which is directed to senior executives and key persons entitles participants to 1–4 matching shares, depending on the category the employee belongs to.

In 2007, Saab repurchased 1 million shares, in 2008 and 2009 it repurchased 1,340,000 shares per year, and in 2010 it repurchased 838,131 shares to hedge the plans.

The Annual General Meeting on 7 April 2011 renewed the Board of Directors' mandate to repurchase up to 10 per cent of the Company's shares, of which 1,340,000 shares to hedge the share matching plan and performance share plan.

The purpose of the authorisation was to provide the Board with greater scope in working with the company's capital structure and enable acquisitions when considered appropriate, as well as to secure the Group's share matching plan. The mandate applied until the next Annual General Meeting. Repurchases may be effected over the stock exchange or through offerings to shareholders. It was also proposed that the Board's mandate include the possibility to transfer repurchased shares as allowed by law. Repurchased shares can also be transferred in connection with the company's share matching plan and performance share plan.

During the second quarter 2011, Saab announced that the Board had decided to utilise its authorisation for repurchases and that the repurchases could be made on NASDAQ OMX Stockholm at a price within the registered share price interval on each occasion.

No shares were repurchased in 2011.

NUMBER OF REPURCHASED SHARES

The number of repurchased B shares held in treasury on 31 December 2011 was 3,818,386, which was 614,229 shares fewer than at year-end 2010.

The Saab Pension Fund did not hold any shares in Saab on 31 December 2011.

DIVIDEND

The Board of Directors proposes that shareholders receive a dividend of SEK 4.50 per share (3.50), or a total of MSEK 474 (367). The proposed record day for the dividend is 24 April 2012, and the dividend is expected to be paid on 27 April 2012.

EVENTS AFTER THE BALANCE SHEET DATE

• t Saab announced that Combitech had acquired Sörman Information. The acquisition is part of Combitech's strategy to expand its range of services and grow in the Nordic consultancy market. Following the acquisition of Sörman, Combitech has an annual turnover of approximately SEK 1.1 billion and 1,100 employees.
• t Saab Sensis was selected by the US Federal Aviation Administration (FAA) for the Airport Surface Surveillance Capability (ASSC) program. FAA incrementally funded MSEK 34 (MUSD 5) of the MSEK 370 (MUSD 55) five-year contract. In addition, options for deliveries beyond the five-year period were valued at MSEK 442 (MUSD 65), for a total contract value of MSEK 825 (MUSD 119).
• t Saab received a framework order worth MSEK 98 from FMV concerning technical system support for materiel operated by the Swedish Armed Forces during 2012.
• t Saab received a multi-year contract for the next generation of laserbased training systems for the US Army's armoured combat vehicles. The order value was MSEK 116 (MUSD 17.2). The indefinite delivery/ indefinite quantity (ID/IQ) contract consists of this order and options that can be exercised over a time period of five years with a potential value of MSEK 600 (MUSD 90).

No other significant events have occurred after the closing date that affect the Group's results or financial position.

FINANCIAL STATEMENTS AND NOTES

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NOTES TO THE FINANCIAL STATEMENTS

1 Accounting principles	82
2 Assumptions in the application of the accounting
principles	90
3 Revenue distribution	90
4 Segment reporting	91
5 Other operating income	93
6 Other operating expenses	93
7 Government grants	93
8 Business combinations and divestments	93
9 Employees and staff costs	95
10 Auditors' fees and compensation	96
11 Operating expenses	96
12 Depreciation/amortisation and impairments	96
13 Financial income and expenses	97
14 Appropriations	97
15 Taxes	97
16 Intangible fixed assets	100
17 Tangible fixed assets	102
18 Lease assets and lease agreements	103
19 Biological assets	105
20 Investment properties	105
21 Shares in associated companies consolidated
according to the equity method	106
22 Shares in joint ventures consolidated according to
the proportional method	107
23 Parent Company's shares in associated
companies and joint ventures	107
24 Receivables from Group companies, associated
companies and joint ventures	108
25 Financial investments	108

26 Other long-term securities holdings	108
27 Long-term receivables and other receivables	108
28 Inventories	109
29 Accounts receivable	109
30 Prepaid expenses and accrued income	109
31 Liquid assets	110
32 Assets held for sale	110
33 Shareholders' equity	110
34 Earnings per share	111
35 Interest-bearing liabilities	111
36 Liabilities to credit institutions	111
37 Employee benefits	111
38 Provisions	116
39 Other liabilities	117
40 Accrued expenses and deferred income	118
41 Financial risk management and
financial instruments	118
42 Assets pledged and contingent liabilities	125
43 Transactions with related parties	126
44 Group companies	126
45 Untaxed reserves	127
46 Statement of cash flows,
supplemental information	127
47 Information on Parent Company	129
48 Environmental report	129
49 Exchange rates
used in financial statements	130
50 Definitions of key ratios	130

CONSOLIDATED INCOME STATEMENT

	1 January – 31 December
MSEK	Note	2011	2010
Sales	3, 4	23,498	24,434
Cost of goods sold		-16,791	-18,843
Gross income		6,707	5,591
Other operating income	5	1,351	222
Marketing expenses		-1,879	-1,727
Administrative expenses		-1,217	-1,235
Research and development costs		-1,928	-1,820
Other operating expenses	6	-77	-70
Share in income of associated companies	21	-16	14
Operating income	10, 11 ,12	2,941	975
Share in income of associated companies	21	4	26
Financial income		162	116
Financial expenses		-324	-341
Net financial items	13	-158	-199
Income before taxes		2,783	776
Taxes	15	-566	-322
Net income for the year		2,217	454
Attributable to:
Parent Company's shareholders		2,225	433
Non-controlling interest		-8	21
Earnings per share before dilution (SEK)	34	21.19	4.12
Earnings per share after dilution (SEK)	34	20.38	3.97

ORDERS

Order bookings for 2011 decreased by 28 per cent compared to 2010 to MSEK 18,907 (26,278).

The order intake was lower compared to the previous year, partly as a result of major orders in 2010 which included a large order from FMV (Swedish Defence Material Administration) for six Gripen aircraft intended for the Royal Thai Air Force of approximately SEK 2.2 billion and an order for an airborne surveillance system of approximately SEK 4.5 billion. 2011 did not include any orders of similar significant size. In addition, we saw further delays in customers' investment decision making processes during the second half of 2011 as a result of subdued global economic conditions.

The order backlog at the end of the year amounted to MSEK 37,172 (41,459).

During 2011, index and price changes had a positive effect on order bookings of MSEK 308 (377).

In all, 85 per cent (86) of order bookings were attributable to defence-related operations and 56 per cent (66) of order bookings are from customers outside Sweden.

Orders received where the order sum was larger than MSEK 100 represented 48 per cent (58) of total order bookings.

Order backlog duration :

2012: SEK 17.7 billion
2013: SEK 8.4 billion
2014: SEK 4.8 billion
2015: SEK 2.7 billion
After 2015: SEK 3.6 billion

SALES BY REGION

SALES BY MARKET SEGMENTS

MSEK	Jan-Dec 2011	Jan-Dec 2010	MSEK	Jan-Dec 2011	Jan-Dec 2010
Sweden	8,679	9,223	Air	10,611	10,393
EU excluding			Land	7,201	7,611
Sweden	4,514	4,737	Naval	2,065	2,278
Rest of Europe	320	368	Civil Security	1,479	1,427
Americas	1,899	2,199	Commercial
Asia	5,176	3,937	Aeronautics	1,309	1,348
Africa	1,789	2,833	Other	833	1,377
Australia, etc.	1,121	1,137	Total	23,498	24,434
Total	23,498	24,434

SALES

Sales decreased slightly compared to 2010 as a result of lower activity levels in major projects and the challenging business climate in South Africa.

Exchange rates had a 1 per cent negative impact on sales due to depreciation of the ZAR and USD to SEK.

Saab Sensis contributed to sales with MSEK 265.

In 2010, sales decreased with approximately MSEK 100 as an effect of lower revenue recognition related to a terminated contract in Security and Defence Solutions.

Sales in markets outside Sweden amounted to MSEK 14,819 (15,211), or 63 per cent (62) of total sales.

Of sales, 84 per cent (83) was related to the defence market.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		1 January – 31 December
MSEK	2011	2010
Net income for the year	2,217	454
Other comprehensive income: Translation differences	-60	16
Net gain/loss on cash flow hedges
Change in value	22	658
Reversed through profit and/or loss	-278	108
Tax attributable to net gain/loss on cash flow hedges	69	-201
Share of other comprehensive income in associated companies	-26	2
Other comprehensive income	-273	583
Net comprehensive income for the year	1,944	1,037

of which Parent Company's shareholders' interest	1,995	1,006
of which non-controlling interest	-51	31

The order backlog primarily includes :

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INCOME, MARGIN AND PROFITABILITY

In 2011, the gross margin was positively impacted by several sales transactions by Saab Aircraft Leasing and reversals of risk provisions related to these transactions.

Operating income in 2011 included capital gains of MSEK 1,169. It also included structural costs for Saab Sensis totalling MSEK 27 and costs related to the acquisition process of Sensis of MSEK 25.

Saab Sensis reported a loss before structural costs of MSEK -34 in 2011.

In 2010, operating income was impacted by structural costs and other nonrecurring items of MSEK 616 and capital gains of MSEK 14.

Total depreciation and amortisation amounted to MSEK 1,261 (1,358).

Depreciation and write-down of tangible fixed assets amounted to MSEK 352 (382), while depreciation of the leasing fleet amounted to MSEK 114 (146).

Total expenditure for research and development amounted to MSEK 5,116 (5,008). The expenditures in research and development that are internally funded amounted to MSEK 1,355 (1,203), of which a total of MSEK 15 (47) has been capitalised.

Amortization and write-down of intangible fixed assets amounted to MSEK 795 (830), of which amortization and write-down of capitalised development costs amounted to MSEK 588 (664). In 2010, it included a writedown of capitalised development costs of MSEK 20.

The share of income in associated companies, MSEK -16 (14), primarily relates to net income in Hawker Pacific Airservices Ltd.

FINANCIAL NET

MSEK	Jan–Dec 2011	Jan–Dec 2010
Project interest from unutilised advance payment	-30	-17
Net interest items	33	-40
Currency losses/gains	-32	57
Financial net related to pensions	-60	-168
Other net financial items	-69	-31
Total	-158	-199

Project interest on unutilised advance payment refers to orders that are financed to a significant extent with advance payment from customers. The effect on interest of advance financing is recognised in gross income and reduces financial net.

The currency losses/gains reported above related to the tender portfolio where the hedged part was valued at market value. Other net financial items consisted of income from shares in associated companies and other exchange rate effects. Other exchange rate effects included an accounting loss related to a pre-maturity closing of an interest rate swap.

Current and deferred taxes during the year amounted to MSEK -566 (-322), or an effective tax rate of 20 per cent (41). Tax-exempt income in 2011 led to a lower tax rate in the year.

The pre-tax return on capital employed was 22.2 per cent (7.9) and the after-tax return on equity was 18.1 per cent (4.1), both measured over a rolling 12-month period.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

			as of 31 December
MSEK	Note	2011	2010
Assets
Intangible fixed assets	16	6,699	6,413
Tangible fixed assets	17	3,272	3,052
Lease assets	18	771	1,154
Biological assets	19	305	299
Investment properties	20	224	236
Shares in associated companies	21	288	251
Financial investments	25	197	203
Long-term receivables	27	1,046	856
Deferred tax assets	15	86	-
Total fixed assets		12,888	12,464
Inventories	28	4,334	4,100
Derivatives	41	520	1,105
Tax assets		23	46
Accounts receivable	29	3,153	3,052
Other receivables	27	3,579	3,630
Prepaid expenses and accrued income	30	829	680
Short-term investments	25	4,555	1,544
Liquid assets	31	1,918	2,544
Total current assets		18,911	16,701
Assets held for sale	32	-	113
TOTAL ASSETS		31,799	29,278

STATEMENT OF FINANCIAL POSITION

Since the beginning of 2011, the net cash position has increased by MSEK 2,042 to MSEK 5,333 at the end of 2011. Major reasons for the improvement in the net cash position are an increased profitability, an increased level of customer advances and milestone payments.

Intangible assets increased as a result of the acquisition of Sensis.

As of 1 January 2009, Saab changed its view on the application of the accounting principles for development costs. As a result of this more conservative view, development costs are capitalised at a later stage in all projects and all capitalised development costs are amortised over maximum ten years.

Inventories are recognised after deducting utilised advances.

Other receivables decreased as a result of the divestment of the shares in Aker Holding AS.

Short-term interest-bearing liabilities decreased by MSEK 69 from the beginning of the year.

Provisions for pensions amounted to MSEK 12 (5). During 2011, the Saab Pension Fund was capitalised with a total of MSEK 102 (108). The fund was set up in 2006 with the overall objective to secure the Group's defined-benefit pension plans and at the same time hedge the interest rate volatility of the pension liability and reduce the overall cost of pensions.

For more information on the reporting of Saab's pension obligations, see Note 37.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

			as of 31 December
MSEK	Note	2011	2010
Equity	33
Capital stock		1,746	1,746
Other capital contributions		543	543
Other reserves		457	687
Retained earnings		10,204	8,298
Equity attributable to Parent Company's shareholders		12,950	11,274
Non-controlling interest		119	170
Total equity		13,069	11,444
Liabilities
Long-term interest-bearing liabilities	35	1,218	1,117
Other liabilities	39	439	294
Provisions for pensions	37	12	5
Other provisions	38	1,728	2,207
Deferred tax liabilities	15	1,012	803
Total long-term liabilities		4,409	4,426
Short-term interest-bearing liabilities	35	520	589
Advance payments from customers		1,022	643
Accounts payable		1,785	1,799
Derivatives	41	628	750
Tax liabilities		244	265
Other liabilities	39	747	819
Accrued expenses and deferred income	40	8,629	7,751
Provisions	38	746	792
Total current liabilities		14,321	13,408
Liabilities attributable to assets held for sale	32	-	-
Total liabilities		18,730	17,834
TOTAL EQUITY AND LIABILITIES		31,799	29,278

For information on the Group's assets pledged and contingent liabilities, see Note 42.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

			Other reserves
MSEK	Capital stock	Other capital contributions	Net result of cash flow hedges	Translation reserve	Revaluation reserve	Retained earnings	Total equity attributable to Parent Company's shareholders	Non controlling interest	Total equity
Opening balance, 1 January 2010	1,746	543	84	-21	51	8,139	10,542	140	10,682
Net comprehensive income for the year	-	-	564	9	-	433	1,006	31	1,037
Transactions with shareholders:
Repurchase of shares	-	-	-	-	-	-80	-80	-	-80
Share matching plan	-	-	-	-	-	43	43	-	43
Dividend	-	-	-	-	-	-237	-237	-	-237
Acquisition and sale of non-controlling interest	-	-	-	-	-	-	-	-1	-1
Closing balance, 31 December 2010	1,746	543	648	-12	51	8,298	11,274	170	11,444
Opening balance, 1 January 2011	1,746	543	648	-12	51	8,298	11,274	170	11,444
Net comprehensive income for the year	-	-	-191	-39	-	2,225	1,995	-51	1,944
Transactions with shareholders:
Share matching plan	-	-	-	-	-	47	47	-	47
Dividend	-	-	-	-	-	-367	-367	-	-367
Acquisition and sale of non-controlling interest	-	-	-	-	-	1	1	-	1
Closing balance, 31 December 2011	1,746	543	457	-51	51	10,204	12,950	119	13,069

For a definition of other reserves, see Note 33.

CONSOLIDATED STATEMENT OF CASH FLOWS

	1 January – 31 December
MSEK	Note	2011	2010
Operating activities
Income after financial items		2,783	776
Transferred to pension fund		-132	-147
Adjustments for items not affecting cash flow	46	141	2,317
Income tax paid		-450	-196
Cash flow from operating activities before changes in working capital		2,342	2,750
Cash flow from changes in working capital
Increase(–)/Decrease(+) in inventories		-243	586
Increase(–)/Decrease(+) in current receivables		-96	855
Increase(+)/Decrease(–) in advance payments from customers		409	194
Increase(+)/Decrease(–) in other current liabilities		610	399
Increase(+)/Decrease(–) in provisions		-630	-297
Cash flow from operating activities		2,392	4,487
Investing activities
Investments in intangible fixed assets		-26	-70
Capitalised development costs		-15	-47
Investments in tangible fixed assets		-325	-262
Investments in lease assets		-1	-2
Sale of tangible fixed assets		23	11
Sale of lease assets		301	65
Investments in and sale of short-term investments		-2,967	-993
Sale of and investments in other financial assets		306	-6
Investments in operations and associated compa nies, net effect on liquidity	8, 46	-1,135	-
Sale of subsidiaries and associated companies, net
effect on liquidity	8, 46	1,264	161
Cash flow from investing activities		-2,575	-1,143
Financing activities
Repayment of loans		-50	-1,950
Repurchase of shares		-	-80
Dividend paid to Parent Company's shareholders		-367	-237
Cash flow from financing activities		-417	-2,267
CASH FLOW FOR THE YEAR	46	-600	1,077
Liquid assets at beginning of year		2,544	1,463
Exchange rate difference in liquid assets		-26	4
Liquid assets at year-end	46	1,918	2,544

CAPITAL EXPENDITURES

Gross capital expenditures in property, plant and equipment, excluding lease assets, amounted to MSEK 325 (262).

Investments in intangible assets amounted to MSEK 41 (117) of which MSEK 15 (47) are related to capitalised product development and MSEK 26 (70) to other intangible assets.

CASH FLOW

Operating cash flow amounted to MSEK 2,477 (4,349) in 2011. The lower level compared to 2010 was mainly caused by certain projects in Aeronautics which entered into their final stages in 2010 and 2011. These projects were successfully delivered to the customer, and Saab managed to execute them at a lower cost than originally planned. Therefore a final price adjustment was made in the fourth quarter 2011 of about MSEK 850. This had a negative impact on the operating cash flow of both Aeronautics and Electronic Defence Systems.

Operating cash flow was distributed between cash flow from core operating activities of MSEK 2,123 (4,043), acquisitions and divestments of operations and associated companies of MSEK 129 (161) and the leasing aircraft business of MSEK 225 (145). See table on page 76.

Saab has an established programme to sell accounts receivable to strengthen its financial position and increase financial flexibility. The accounts receivable sold are in most cases related to customers with high credit worthiness, and one hundred per cent of the value of the receivables is sold at favourable funding levels. As per 31 December 2011, receivables of MSEK 872 were sold, compared to MSEK 1,409 at 31 December 2010. Hence it had a negative impact of MSEK 537 on cash flow for the year.

For more detailed information on operating cash flow, refer to Note 46.

For Saab's operating cash flow, see Note 46 and page 76.

Specification of operating cash flow 2011

MSEK	Saab excl acquisi tions /divest ments and SAL	Acquisitions and divestments	Saab Aircraft Leasing	Total Group 2011	Total Group 2010
Cash flow from operating activities before changes in working capital	2,178	-	164	2,342	2,750
CASH FLOW FROM CHANGES IN WORKING CAPITAL
Inventories	-245	-	2	-243	586
Current receivables	-98	-	2	-96	855
Advance payments from customers	409	-	-	409	194
Other current liabilities	762	-	-152	610	399
Provisions	-538	-	-92	-630	-297
Change in working capital	290	-	-240	50	1,737
Cash flow from operating activities	2,468	-	-76	2,392	4,487
INVESTING ACTIVITIES
Investments in intangible fixed assets	-41	-	-	-41	-117
Investments in tangible fixed assets	-325	-	-	-325	-262
Investments in lease assets	-1	-	-	-1	-2
Sale of tangible fixed assets	23	-	-	23	11
Sale of lease assets	-	-	301	301	65
Investments in and sale of financial assets	-1	-	-	-1	6
Investments in operations and associated companies, net effect on liquidity	-	-1,135	-	-1,135	-
Sale of subsidiaries and associated companies, net effect on liquidity	-	1,264	-	1,264	161
Cash flow from investing activities excluding change in short-term investments and other interest-bearing
financial assets	-345	129	301	85	-138
OPERATING CASH FLOW1)	2,123	129	225	2,477	4,349

1) For a reconciliation of operating cash flow to cash flow for the year, see Note 46.

PARENT COMPANY INCOME STATEMENT

1 January – 31 December

MSEK	Note	2011	20101)
Sales	3, 4	15,415	14,745
Cost of goods sold		-11,785	-11,650
Gross income		3,630	3,095
Marketing expenses		-1,220	-1,114
Administrative expenses		-664	-727
Research and development costs		-1,143	-1,024
Other operating income	5	219	82
Other operating expenses	6	-3	-16
Operating income		819	296
Result from financial items:	13
Result from shares in Group companies		1,410	1,171
Result from shares in associated companies/joint ventures		59	32
Result from other securities and receivables held as fixed assets		81	107
Other interest income and similar items		182	114
Interest expenses and similar items		-207	-173
Income after financial items		2,344	1,547
Appropriations	14	-293	-83
Income before taxes		2,051	1,464
Taxes	15	-462	-423
Net income for the year		1,589	1,041

1) The income statement for the parent company has been restated for the year 2010 due to a correction of classification and valuation of intangible and financial fixed assets.

The income statement for the year 2010 has also been restated due to changes in accounting principles regarding group contributions paid to subsidiaries

SALES AND INCOME

The Parent Company includes units within the business areas Aeronautics, Electronic Defence Systems, Security and Defence Solutions, and Support and Services. Group staffs and Group support are included as well. The Parent Company's sales in 2011 amounted to MSEK 15,415 (14,745). Operating income was MSEK 819 (296). Operating income included expenses of approximately MSEK 330 regarding increased pension obligations according to the FPG/PRI system due to changed mortality assumptions; see also Note 37.

Operating income in 2010 included expenses of MSEK 290 mainly related to a terminated contract in Security and Defence Solutions and structural costs of MSEK 98 in Aeronautics related to lay-offs announced in January 2010 as well as the reorganisation announced in 2009.

Net financial income and expenses amounted to MSEK 1,525 (1,251). After appropriations of MSEK -293 (-83) and taxes of MSEK -462 (-423), net income for the year amounted to MSEK 1,589 (1,041).

PARENT COMPANY COMPREHENSIVE INCOME

1 January – 31 December

MSEK	Note	2011	2010
Net income for the year		1,589	1,041
Other comprehensive income		-	-
Net comprehensive income for the year		1,589	1,041

PARENT COMPANY BALANCE SHEET

			as of 31 December
MSEK	Note	2011	20101)
ASSETS
Fixed assets
Intangible fixed assets	16	1,938	2,273
Tangible fixed assets	17	2,137	2,205
Financial fixed assets
Shares in Group companies	44	6,407	5,770
Receivables from Group companies	24	911	557
Shares in associated companies and joint ventures	23	552	491
Receivables from associated companies and joint ventures	24	17	32
Other long-term securities holdings	26	24	1,457
Other long-term receivables	27	34	10
Deferred tax assets	15	233	417
Total financial fixed assets		8,178	8,734
Total fixed assets		12,253	13,212
Current assets
Inventories, etc.	28	3,152	2,782
Current receivables
Accounts receivable	29	1,424	1,338
Receivables from Group companies		2,280	2,107
Receivables from associated companies and joint ventures		6	26
Tax assets		-	-
Other receivables	27	2,045	1,991
Prepaid expenses and accrued income	30	640	512
Total current receivables		6,395	5,974
Short-term investments		4,511	1,544
Cash and bank balances		1,237	1,935
Total current assets		15,295	12,235
TOTAL ASSETS		27,548	25,447

1) The balance sheet for the parent company has been restated for the year 2010 due to a correction of classification and valuation of intangible and financial fixed assets

LIQUIDITY, FINANCE, CAPITAL EXPENDITURE

AND NUMBER OF EMPLOYEES

The Parent Company's net liquidity amounted to MSEK 516 at 31 December 2011 compared to a net debt of MSEK 2,395 at 31 December 2010. The change in net liquidity is related to strong operating cash flow and the divestment of shares in Aker Holding AS that impacted the net cash position positively by approximately MSEK 1,500 as well as the divestment of the shares in C3 Technologies AB that impacted the net cash position positively

by MSEK 149. Gross capital expenditures in property, plant and equipment amounted to MSEK 168 (150). Investments in intangible assets amounted to MSEK 22 (68).

At the end of 2011, the Parent Company had 7,873 employees, compared to 7,915 at the beginning of the year.

PARENT COMPANY BALANCE SHEET

		as of 31 December
MSEK	Note	2011	20101)
EQUITY AND LIABILITIES
Equity	33
Restricted equity
Capital stock		1,746	1,746
Revaluation reserve		713	718
Statutory reserve		543	543
Unrestricted equity
Retained earnings		2,399	1,673
Net income for the year		1,589	1,041
Total equity		6,990	5,721
Untaxed reserves	45	795	502
Provisions
Provisions for pensions and similar commitments	37	469	192
Other provisions	38	1,034	1,465
Total provisions		1,503	1,657
Liabilities
Liabilities to credit institutions	36	1,100	2,223
Liabilities to Group companies		7,697	7,084
Advance payments from customers		471	98
Accounts payable		1,247	1,034
Liabilities to associated companies and joint ventures		51	69
Tax liabilities		101	83
Other liabilities	39	487	671
Accrued expenses and deferred income	40	7,106	6,305
Total liabilities		18,260	17,567
TOTAL EQUITY AND LIABILITIES		27,548	25,447
1) The balance sheet for the parent company has been restated for the year 2010 due to a correction of classification and valuation of intangible and financial fixed assets.
Assets pledged	42	10	110
Contingent liabilities	42	5,829	5,918

STATEMENT OF CHANGES IN EQUITY FOR THE PARENT COMPANY

	Restricted equity				Unrestricted equity
MSEK	Capital stock	Revaluation reserve	Statutory reserve	Retained earnings	Net compre hensive income	Total equity
Opening balance, 1 January 2010	1,746	724	543	3,103	-	6,116
Restatement due to a correction of classification and valuation of intangible and financial fixed assets1)	-	-	-	-1,162	-	-1,162
Adjusted opening balance, 1 January 2010	1,746	724	543	1,941	-	4,954
Items reported directly in equity:
Change in revaluation reserve	-	-6	-	6	-	-
Net comprehensive income for the year	-	-	-	-	1,041	1,041
Transactions with shareholders:
Dividend to shareholders	-	-	-	-237	-	-237
Repurchase of shares	-	-	-	-80	-	-80
Share matching plan	-	-	-	43	-	43
Closing balance, 31 December 2010	1,746	718	543	1,673	1,041	5,721
Opening balance, 1 January 2011	1,746	718	543	2,714	-	5,721
Items reported directly in equity:
Change in revaluation reserve	-	-5	-	5	-	-
Net comprehensive income for the year	-	-	-	-	1,589	1,589
Transactions with shareholders:
Dividend to shareholders	-	-	-	-367	-	-367
Share matching plan	-	-	-	47	-	47
Closing balance, 31 December 2011	1,746	713	543	2,399	1,589	6,990

1) Other balance sheet items that have been restated through the correction of the opening balance for 2010 are intangible fixed assets, by MSEK 2,473, from MSEK 96 to MSEK 2,569, and shares in Group companies, by MSEK -3 635, from MSEK 9,520 to MSEK 5,885. See also Note 16 and Note 44.

PARENT COMPANY STATEMENT OF CASH FLOWS

			1 January – 31 December
MSEK	Note	2011	2010
Operating activities
Income after financial items		2,344	1,547
Adjustments for items not affecting cash flow	46	-642	-296
Income tax paid		-328	-
Cash flow from operating activities before changes in working capital		1,374	1,251
Cash flow from changes in working capital
Increase(–)/Decrease(+) in inventories		-329	441
Increase(–)/Decrease(+) in current receivables		-296	1,149
Increase(+)/Decrease(–) in advance payments from customers		373	-93
Increase(+)/Decrease(–) in other current liabilities		1,045	553
Increase(+)/Decrease(–) in provisions		-559	-324
Cash flow from operating activities		1,608	2,977
Investing activities
Shareholders' contributions paid		-718	-25
Investments in intangible fixed assets		-22	-68
Investments in tangible fixed assets		-168	-151
Sale of tangible fixed assets		17	2
Investments in and sale of short-term investments		-2,967	-993
Sale of and investments in financial assets		1,176	223
Investments in operations		-41	-
Investments in subsidiaries		-215	-2
Sale of subsidiaries		2	-
Cash flow from investing activities		-2,936	-1,014
Financing activities
Change in receivables/liabilities, Group companies		128	857
Repurchase of shares		-	-80
Repayment of loans		-396	-2,415
Dividend paid to shareholders		-367	-237
Group contributions and dividends received		1,297	1,223
Group contributions paid		-32	-164
Cash flow from financing activities		630	-816
CASH FLOW FOR THE YEAR		-698	1,147
Liquid assets at beginning of year		1,935	788
Liquid assets at year-end	46	1,237	1,935

ACCOUNTING PRINCIPLES

Operations

Saab ab is a Swedish limited company with its registered address in Linköping. The company's shares are listed on the nasdaq omx 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) are divided into six business areas: Aeronautics, Dynamics, Electronic Defence Systems, Security and Defence Solutions, Support and Services, and Co mbitech. The operations in each business area are described in Note 4.

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 10 February 2012, 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 19 April 2012 for adoption.

Conformity to standards and laws

The consolidated accounts have been prepared in accordance with the International 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 requirements 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 Safeguarding Pension Commitments and in certain cases current tax rules. Significant differences 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.

Assets and liabilities are carried at historical cost, with the exception of certain financial assets and liabilities, investment properties and biological assets, which are carried at fair value or amortised cost. Derivatives are carried 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 classified as held for sale.

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 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 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 adjustments in financial reports in subsequent years are described in more detail in Note 2.

The accounting principles described below for the Group 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

The International Accounting Standards Board (iasb) and the International Financial Reporting Interpretations Committee (ifric) have issued and the eu has adopted the following new and revised standards, which apply as of the financial year 2011:

• t Amendment to ias 32 Financial Instruments: Classification of Rights Issues
• t ifric 19 Extinguishing Financial Liabilities with Equity Instruments
• t Amendment to ifrs 1 First-time Adoption of ifrs
• t Revised ias 24 Related Party Disclosures
• t Amendment to ifric 14 "ias 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction"

iasb annual improvements projects 2010

• t ifrs 1 First-time Adoption of ifrs
• t ifrs 3 Business Combinations
• t ifrs 7 Financial instruments: Disclosures
• t ias 1 Presentation of Financial Statements
• t ias 27 Consolidated and Separate Financial Statements
• t ias 34 Interim Financial Reporting
• t ifric 13 Customer Loyalty Programmes

These new and amended standards and interpretations have not had any effect on the Group's financial reports for 2011.

New and amended standards and interpretations that have not yet entered into force

The International Accounting Standards Board (iasb) has issued the following new and amended standards that have not yet entered into force and the International Financial Reporting Interpretations Committee (ifric) has published the following new and amended interpretations that have not yet entered into force and have not yet been adopted by the eu:

Standards	Will apply to financial years beginning:
Amendments to ias 19 Employee Benefits	1 January 2013
Amendment to ifrs 7 Disclosures: Transfers of Financial assets	1 July 2011
ifrs 9 Financial Instruments	1 January 2015
ifrs 10 Consolidated Financial Statements	1 January 2013
ifrs 11 Joint arrangements	1 January 2013
ifrs 12 Disclosures of interests in other entities	1 January 2013
ifrs 13 Fair value measurement	1 January 2013
ifrs 1 First-time Adoption of ifrs	1 July 2011
ias 1 Presentation of Financial Statements	1 July 2012
ias 12 Income Taxes	1 January 2012
ias 27 Separate Financial Statements	1 January 2013
ias 28 Investments in Associates and Joint Ventures	1 January 2013

The effect on Saab of the application of ifrs 9 and ifrs 11 has not yet been determined.

Effects of amendments to IAS 19 Employee Benefits

Saab applies the current standard's option to apply the so-called corridor approach. This means that the effects 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 1 and Note 37). The updated standard eliminates this option. This means that changes in actuary of assumptions, e.g., discount rates, are recognised directly in other comprehensive income. The updated standard also requires the company to use the same interest rate to discount pension liabilities as in the calculation of the projected return on assets under management. The updated standard will be applied retroactively as of the first quarter of 2013. For Saab, this means an immediate increase in its net pension liability (classified as a financial liability) and a corresponding decrease in retained earnings after taking into account the tax effects. If the standard had been applied as of 31 December 2011, the net pension obligation would have been about msek 2,700 higher and retained earnings about msek 2,000 lower. The effect on operating and net results for 2011 would not have changed significantly. The updated standard also contains rules on the reporting of the special employer's contribution and tax on returns from pension funds. There 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. The effect on the reporting of this has not been factored into the above amounts.

Other standards and interpretations are not expected to have a material effect on the consolidated financial statements.

Operating segments

Segment information is presented based on management's view, and operating segments are identified based on internal reporting to the company's chief operating decision maker. Saab has identified the Chief Executive Officer as its chief operating decision maker, while the internal reports used by the ceo to oversee operations and make decisions on allocating resources serve as the basis of the information presented. The segments are monitored at the operating income level. The accounting principles for reportable segments conform to the principles applied by the Group as a whole.

• The Group had six reportable segments in 2011:
• t"FSPOBVUJDT
• t%ZOBNJDT
• t&MFDUSPOJD%FGFODF4ZTUFNT
• t4FDVSJUZBOE%FGFODF4PMVUJPOT
• t4VQQPSUBOE4FSWJDFT
• t\$PNCJUFDI

Complementing the six segments is Corporate, which comprises Group staffs 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 4 and on pages 50–61.

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 agreement. 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 principle 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 the sections below for each item. Exceptions are also made for indemnification assets and repurchased rights. Indemnification assets are valued according to the same principle 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 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 analysis. Goodwill is recognised according to the section on intangible fixed 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 identified assets and liabilities. Acquisitions of non-controlling interests are recognised 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) until this influence ceases. When decisive influence over the Group company ceases but the Group retains an interest in the company, the remaining shares are initially recognised at fair value. The gain or loss that arises is recognised in profit or loss.

Associated companies

Associated companies are companies over which the Group has a significant (but not decisive) influence over operating and financial controls, usually through a shareholding of between 20 and 50 per cent of the votes. From the point in time when the significant influence arises, the shares in the associated company are recognised according to the equity method in the consolidated accounts. The equity method is applied until the point in time when the significant influence ceases. The 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 accounting principles as well as Group goodwill and any remaining Group surplus or deficit values. "Share in income of associated companies" in the income statement comprises the Group's share of the net income after tax and the noncontrolling interest in associated companies adjusted for any depreciation, impairment loss or dissolution of acquired surplus and deficit values determined 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 deficit 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 offset against long-term uncollateralised financial balances that in their economic significance represent part of the ownercompany'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 inflluence over the associated company ceases but the Group retains an interest in the company, the remaining shares are initially recognised at fair value. The gain or loss that arises is recognised in profit or loss.

Joint ventures

Companies in which the Group, through a cooperative agreement with one of more parties, shares a decisive influence over operating and financial controls are recognised in the consolidated accounts according to the proportional 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 financial position based on application of the Group's accounting principles. This 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. The gain or loss that arises is recognised in profit or loss.

Eliminated transactions

Intra-Group receivables and liabilities, revenue or expenses, and gains or losses that arise from transactions between Group companies are eliminated in their entirety in the preparation of the consolidated accounts.

Gains that arise from transactions with associated companies and joint ventures are eliminated to an extent corresponding to the Group's ownership interest in the company. Losses are eliminated in the same way as gains, but only to the extent there that is no impairment loss.

Foreign currency

Functional currencies are the currencies in each primary economic environment where units of the Group conduct their operations.

Transactions and assets and liabilities in foreign currency

Transactions in foreign currency are recognised in the functional currency at the exchange rate on the transaction day. Monetary assets and liabilities are translated to the functional currency on the closing day at the exchange rate then in effect. Exchange rate differences that arise through these translations are recognised in profit and loss. Non-monetary assets and liabilities recognised at fair value are translated to the functional currency at the rate in effect at the time of valuation at fair value. Changes in exchange rates are then recognised in the same way as other changes in value of the asset or liability.

Translation of financial reports of foreign operations to sek

Assets and liabilities in operations with a functional currency other than sek are translated to sek at the closing day exchange rate. Revenue and expenses in foreign operations are translated to sek at the average rate. Translation differences that arise through currency translations are recognised directly in other comprehensive income. The amount is recognised separately as a translation reserve in equity.

Revenue

Revenue is measured at the fair value of what is received or will be received after deducting sales tax, returns, discounts or other similar deductions.

Sales of goods

Revenue from the sale of goods is recognised in profit or loss when the significant risks and benefits associated with ownership have transferred to the buyer, when it is considered likely that payment will be received and the revenue and related expenses can be calculated reliably.

Service assignments

Revenue from service assignments is recognised when the services are rendered. Revenue from services rendered as part of fixed-price contracts is recognised in accordance with the principles that apply to long-term customer contracts; see below. Revenue is recognised only if it is likely that the economic benefits will accrue to the Group.

Long-term customer contracts

A large part of the Group's operations comprises long-term customer contracts. Long-term customer contracts relate to the development and manufacture of complex systems that stretch over several reporting periods. When such contracts concern development and hardware that can be reliably calculated, revenue and expenditures attributable to the assignment are recognised in the consolidated income statement in relation to the assignment's stage of completion, i.e., according to the percentage of completion method.

The stage of completion is based on a determination of the relationship between expenditures incurred for services rendered as of the closing day and estimated total expenditures. Of the estimated total revenue for an assignment, the portion corresponding to the stage of completion is recognised in each period. The stage of completion can also be determined in certain cases based on milestones or deliveries. With regard to orders that are financed to a significant extent with advance payment from customers, the effect on interest of advance financing is recognised in gross income. The interest amount that affected gross income is indicated in Note 13.

An anticipated loss is recognised in profit or loss as soon as it is identified. Recognised subcontracting revenue for which the customer has not yet been invoiced is recognised as a receivable from that customer. All projects in progress from customers for whom invoiced amounts exceed project expenses and reported profits are recognised as liabilities to those customers.

Operating expenses

The income statement is classified according to function as follows:

• t Cost of goods sold comprises costs for material handling and manufacturing costs, including salary and material costs, purchased services, premises, and the depreciation/amortisation and impairment of intangible and tangible fixed assets. Customer-financed research and development is recognised in cost of goods sold.
• t Administrative expenses relate to expenses for the Board of Directors, Group Management and staff functions.
• t Marketing expenses comprise expenses for the in-house marketing and sales organisation as well as external marketing and selling expenses.
• t Research and development costs are recognised separately and comprise the cost of self-financed new and continued product development as well as amortisation of capitalised development costs; see below.
• t Other operating revenue and expenses relate to secondary activities, exchange rate differences on items of an operating nature, changes in the value of derivatives of an operating nature and capital gains/losses on the sale of tangible fixed assets. Also included at the Group level are capital gains/losses on the sale of subsidiaries and associated companies.

Government grants

Government grants are recognised in the statement of financial position as prepaid or accrued income when there is reasonable certainty that the grant will be received and that the Group will meet the conditions associated with the grant. Grants are systematically recognised in the income statement in the same way and over the same periods as the expenses for which the grants are intended to compensate. Government grants related to assets are recognised in the statement of financial position as a reduction in the asset's carrying amount.

Financial revenue and expenses

Financial revenue and expenses consist of interest income on bank balances, receivables and marketable securities, interest expenses on loans, dividends, exchange rate differences, unrealised and realised gains on financial investments, amortisation of actuarial gains and losses on pensions, and derivatives used in financial operations.

Intangible fixed assets

Goodwill

Goodwill is distributed among cash-generating units and tested annually for impairment in the fourth quarter. Goodwill arising through the acquisition of associated companies is included in the carrying amount of the shares in the associated company.

In acquisitions where the cost is less than, on the one hand, the net of the cost of the Group company's shares, 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 analysis, the difference is recognised directly through profit or loss.

Research and development

Expenditures for research undertaken in an effort to gain new scientific or technological knowledge are expensed when incurred.

Expenditures for development, where the research results or other knowledge is applied to new or improved products or processes, are recognised as an asset in the statement of financial position from the time when the product or process in the future 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 expenditures for material, direct expenditures for salaries and, if applicable, other expenditures that are considered directly attributable to the asset. Other expenditures for development are recognised in profit for loss as an expense when they arise. Development expenditures are recognised in the statement of financial position at cost less accumulated amortisation and any

impairment losses. Customer-financed research and development is recognised in cost of goods sold rather than capitalised.

Other intangible fixed assets

Other acquired intangible fixed assets, which include acquired assets such as trademarks and customer relations, are recognised at cost less accumulated amortisation and any impairment losses.

Amortisation

Amortisation is recognised in profit or loss over the intangible fixed assets' estimated periods of use, provided such periods can be determined. Intangible fixed assets, excluding goodwill and other intangible fixed assets with indeterminate periods of use, are amortised from the day they are available for use. Estimated periods of use and amortisation methods are as follows:

• t Patents, trademarks, customer relations and other technical rights: 5-10 years on a straight line basis
• t Capitalised development costs: Self-financed capitalised development costs are amortised based on estimated production volume, but over a maximum period of 5 years. Production volume is set using future sales projections according to a business plan based on identified business opportunities. Acquired development costs are amortised on a straight line basis over a maximum of 10 years.
• t Goodwill: In the Parent Company, goodwill is amortised over a maximum 20 years. Goodwill is not amortised in the Group.

Periods of use are tested annually and unfinished development work is tested for impairment at least once a year regardless of any indications of diminished value.

Tangible fixed 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 of the asset can be reliably estimated.

Tangible fixed assets are recognised at cost after deducting accumulated depreciation and any impairment. 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 consulting 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 economic 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 recognised as other operating income/expenses.

Incremental expenditures

Incremental expenditures are added to cost only if it is likely that the future economic 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 replaced components, or parts of components, is disposed of and expensed in connection with the replacement. Repairs are expensed as incurred.

Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset and takes a substantial period of time to prepare for its intended use or sale is capitalised as part of the asset's cost when it is likely that they will lead to future economic benefits for the Group and the expenditures can be measured reliably. Other borrowing costs are expensed in the period in which they arise.

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 estimated period of use. Land is not depreciated. Component depreciation is applied, which means that fixed assets consisting of various components or where significant parts have different periods of use are depreciated as separate assets based on their periods of use.

Estimated periods of use:

• t Operating properties: 20–90 years
• t Property, plant and equipment: 5–10 years
• t Equipment, tools, installations and computers: 3–10 years
• t Aircraft: 20–25 years

Each asset's residual value and period of use are estimated annually. Periods of use are unchanged compared with the previous year.

Lease assets

Lease assets mainly refer to 40 aircraft owned by legal entities within Saab Aircraft Leasing and leased out via operating leases. Saab Aircraft Leasing's fleet consists of 82 Saab 340 and Saab 2000, of which 42 aircraft are leased in through operating leases and leased out through operating leases.

Leasing is classified in the consolidated accounts as either finance or operating leasing. Finance leasing exists when the economic risks and benefits tied to ownership are essentially transferred to the lessee; otherwise it is operating leasing.

For anticipated or established deficits according to current leases with respect to aircraft financing in Saab Aircraft Leasing, provisions are allocated at an amount corresponding to the obligation. See also Note 18.

Saab as lessor

At year-end 2011, Saab only had operating leases. Leasing revenue is recognised on a straight-line basis over the leasing period. Direct expenditures that arise by entering into an operating lease are expensed on a straight-line basis over the leasing period.

Saab as lessee

At year-end 2011, Saab only had operating leases. Leasing fees for operating leases are expensed on a straight-line basis over the leasing period.

Biological assets

Biological assets in the form of forests are carried at fair value after deducting estimated selling expenses. Fair value is based on the valuation of an independent appraiser.

Investment properties

Investment properties are properties held to earn rental income, for capital appreciation or a combination of both. Investment properties are carried in the statement of financial position at fair value. Fair value has been determined by calculating net rental income, which then serves as the basis of a valuation of fair value.

Assets held for sale

When an asset is classified as held for sale, it means that its carrying amount will be recovered primarily through a sale rather than through use. In order to classify a fixed asset as an asset held for sale, the asset must be available for immediate sale and it has to be highly likely that a sale will take place.

Immediately before classification as held for sale, the recognised value of the assets is determined according to the Group's accounting principles.

Upon initial classification as held for sale, assets are recognised at the lower of their carrying amount and fair value less selling expenses.

Assets are not depreciated/amortised after they are classified as held for sale.

Impairment

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 indication exists, the asset's recoverable amount is calculated. A description of impairment principles for available-for-sale financial assets is provided below.

For goodwill and other intangible fixed assets with an indeterminate period of use and intangible fixed assets not yet ready for use, recoverable values are calculated annually in the fourth quarter.

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 interest 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 recoverable value. Impairment losses are charged against the income statement.

Impairment losses attributable to a cash-generating unit (pool of units) are mainly allocated to goodwill, after which they are divided proportionately among other assets in the unit (pool of units).

Impairment of goodwill is not reversed. Impairment losses from other assets are reversed if a change has occurred in the assumptions that served as the basis for determining recoverable value. Impairment is reversed 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 impairment had not been recognised, taking into account the depreciation or amortisation that would have been recognised.

Financial assets and liabilities and other financial instruments

Financial instruments recognised in the statement of financial position include, on the asset side, liquid assets, accounts receivable, shares, loans receivable, bonds receivable, derivatives and part of accrued income and other receivables. Liabilities include trade accounts payable, loans payable, derivatives and certain accrued expenses and other liabilities. Financial assets are recognised as of their settlement date.

Financial instruments are initially recognised at cost, corresponding to the instrument's fair value plus transaction expenses for all financial instruments with the exception of those in the category financial assets at fair value through profit or loss. The instruments are subsequently recognised at fair value or amortised cost, depending on how they have been classified as follows. The fair value of listed financial assets and liabilities is determined using market prices. Saab also applies various valuation methods to determine the fair value of financial assets and liabilities traded on an inactive market or unlisted holdings. These valuation methods are based on the valuation of similar instruments, discounted cash flows or accepted valuation models such as Black-Scholes. Amortised cost is determined based on the effective interest rate calculated on the acquisition date.

A financial asset or financial liability is recognised in the statement of financial position when the company becomes party to the instrument's contractual terms. Accounts receivable are recognised in the statement of financial position when an invoice has been sent. Liabilities are recognised when the counterparty has performed and there is a contractual obligation to pay, even if an invoice has not yet been received. Accounts payable are recognised when an invoice is received.

A financial asset is removed from the statement of financial position when the rights in the agreement are realised, expire or the company loses control over them. The same applies to part of a financial asset. A financial liability is removed from the statement of financial position when the obligation in the agreement has been discharged or otherwise extinguished. The same applies to part of a financial liability.

On each reporting date, Saab evaluates whether there are objective indications that a financial asset or pool of financial assets is in need of impairment. Financial assets and liabilities are offset and recognised as a net amount in the statement of financial position when the there is a legal right to a set-off and when the intent is to settle the items with a net amount or to realise the asset and settle the liability at the same time.

Financial assets and liabilities are classified in one of the following categories:

• t Financial assets and liabilities at fair value through profit or loss: Assets and liabilities in this category are carried at fair value with changes in value recognised in profit or loss. This category consists of two subgroups: financial assets and liabilities held for trading and other financial assets and liabilities that the company initially chose to recognise at fair value through profit or loss. A financial asset is classified as held for trading if it is acquired for the purpose of selling in the near term. Derivatives are always recognised at fair value through profit or loss, unless hedge accounting is applied.
• t Held-to-maturity investments:

Financial assets in this category relate to non-derivative assets with predetermined or determinable payments and scheduled maturities that the company intends and has the ability to hold to maturity. They are valued at amortised cost.

• t 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 the debtor without the intent to trade its claim. The category also includes acquired receivables. Assets in this category are recognised after acquisition at amortised cost.

Accounts receivable are recognised at the amount expected to be received based on an individual valuation. Accounts receivable have a short maturity, due to which they are recognised at their nominal amount without discounting. Impairment losses on accounts receivable are recognised in operating expenses. Saab has an accounts receivable sales programme with an independent party. When a receivable is sold, the entire credit risk is transferred to the counterparty, because of which the proceeds received are recognised as liquid assets. Other receivables are receivables that arise when the company provides money without the intent to trade its claim.

t Other financial liabilities:

Liabilities classified as other financial liabilities are initially recognised at the amount received after deducting transaction expenses. After acquisition, the loans are carried at amortised cost, according to the effective rate method.

Trade accounts payable are classified in the category other financial liabilities. Trade accounts payable have a short expected maturity and are carried without discounting at their nominal amount.

Calculation of recoverable value

The recoverable value of financial assets in the categories held-to-maturity investments, loans receivable and accounts receivable measured at amortised cost is calculated using the present value of future cash flows discounted by the effective interest rate in effect when the asset was initially recognised. Assets with a maturity of less than one year are not discounted.

Impairment of held-to-maturity investments and loans receivable and accounts receivable recognised at amortised cost is reversed if a subsequent increase in recoverable value can objectively be attributed to an event occurring after the impairment.

Liquid assets

Liquid assets consist of cash and cash equivalents, immediately accessible balances with banks and similar institutions, and short-term liquid investments with a maturity from acquisition date of less than three months, which are exposed to no more than an insignificant risk of fluctuation in value.

Financial investments

Financial investments comprise either financial fixed assets or short-term investments, depending on the intent of the holding. If the maturity or the anticipated holding period is longer than one year, they are considered financial fixed assets, and if it is shorter than one year they are short-term investments.

With recognition at fair value through profit or loss, changes in value are stated in financial revenue and expenses.

Valuation principles

The fair value of listed financial assets is determined using market prices. Furthermore, Saab applies various valuation methods to determine the fair value of financial assets that are traded on an inactive market or unlisted holdings. These methods are based on the valuation of similar instruments, discounted cash flows or customary valuation methods such as Black-Scholes. See Note 41.

Derivatives and hedge accounting

Derivatives include forward exchange contracts, options and swaps utilised to cover risks associated with changes in exchange rates and exposure to interest rate risks. Derivatives are recognised on their acquisition date at cost and subsequently at fair value.

Derivatives with positive values are recognised as assets and derivatives with negative values are recognised as liabilities under the heading derivatives in the statement of financial position. Gains and losses on a derivative arising due to a change in fair value are recognised in profit or loss if the derivative is classified among financial assets and liabilities at fair value through profit or loss.

In hedge accounting, derivatives are classified as fair value hedges or cash flow hedges. The recognition of these hedging transactions is described below.

Cash flow hedges

Certain forward exchange contracts and currency swaps (hedge instruments) entered into to hedge future receipts and disbursements against currency risks are accounted for according to the rules for cash flow hedging. Derivatives that protect future receipts and disbursements are recognised in the statement of financial position at fair value. Changes in value are recognised in other comprehensive income and separately recognised in the hedge reserve in equity until the hedged cash flow meets the operating profit or loss, at which point the cumulative changes in value of the hedging instrument are transferred to profit or loss to meet and match the effects on earnings of the hedged transaction.

Interest rate exposure from future variable-rate liabilities is hedged with interest rate swaps. In its reporting, Saab applies cash flow hedging, which means that the change in value of the interest rate swap is recognised in other comprehensive income and separately recognised in the hedge reserve in equity. The change in value is recognised in financial revenue and expenses when transferred to profit or loss.

When the hedged future cash flow refers to a transaction that will be capitalised in the statement of financial position, the net gain or loss on cash flow hedges in equity is dissolved when the hedged item is recognised in the statement of financial position. If the hedged item is a non-financial asset or a nonfinancial liability, the reversal from the net gain or loss on cash flow hedges in equity is included in the original cost of the asset or liability. If the hedged item is a financial asset or financial liability, the net gain or loss on cash flow hedges in equity is gradually reversed through profit or loss at the same rate that the hedged item affects earnings.

When a hedging instrument expires, is sold or is exercised, or the company revokes the designation as a hedging relationship before the hedged transaction occurs and the projected transaction is still expected to occur, the recognised cumulative gain or loss remains in the net gain or loss on cash flow hedges in equity and is recognised in the same way as above when the transaction occurs.

If the hedged transaction is no longer expected to occur, the hedging instrument's cumulative gains and losses are immediately recognised in profit or loss in accordance with principles described above for derivatives.

Fair value hedges

Certain forward exchange contracts and currency swaps (hedge instruments) entered into to hedge future receipts and disbursements for currency and interest rate risk are accounted for according to the rules for fair value hedging. These hedges are recognised at fair value in the statement of financial position with regard both to the derivative itself and the future receipt or disbursement (hedge item) for the risk being hedged. The change in fair value of the derivative is recognised in the profit and loss together with the change in value of the hedged item.

Hedge of currency exposure in assets and liabilities

Currency exposure from an asset or liability is hedged with forward exchange contracts. No hedge accounting is applied, due to which both the hedged item and hedging instrument are recognised with respect to currency risk at fair value with changes in value through profit or loss. Changes in the value of operations-related receivables and liabilities are recognised in operating income, while changes in the value of financial receivables and liabilities are recognised in financial revenue and expenses.

Inventories

Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in continuing operations after deducting estimated expenses for completion and expenses incurred in selling.

Cost is calculated by applying the first-in first-out method (fifo) and includes expenses to acquire inventory assets and bring them to their 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.

Dividends

The dividend proposed by the Board of Directors reduces earnings available for distribution and is recognised as a liability when the Annual General Meeting has approved the dividend.

Employee benefits

The Group has two types of pension plans: defined-contribution and definedbenefit pension plans.

Defined-contribution plans

In defined-contribution plans, pensions are based on the premiums paid. Obligations with regard to defined-contribution plans are expensed in the income statement.

Defined-benefit plans

In defined-benefit plans, pensions are based on a percentage of the recipient's salary. Saab has around ten different types of defined-benefit plans. The predominant plan is the itp plan, which accounts for approximately 80 per cent of the total obligation. The second largest plan refers to the state-funded retirement pension and vested pensions in Affärsverket ffv when it was incorporated on 1 January 1991.

The Group's net obligation for defined-benefit plans is calculated separately for each plan by estimating the future compensation that employees have earned through employment in present and previous periods. This compensation is discounted to present value. Saab has secured main part of the obligation through provisions to a pension fund, and the fair value of the fund's assets is offset against the provision for the pension obligation at present value in the statement of financial position. The discount rate to calculate the commitment at present value has been determined based on the interest rate on the closing day for a first-class mortgage bond with a maturity corresponding to the pension obligation. The calculation is made by a qualified actuary using the projected unit credit method.

When the compensation terms in a plan improve, the portion of the increased compensation attributable to the employees' services in previous periods is expensed through the income statement on a straight-line basis over the average period until the compensation is fully vested. If the compensation is fully vested, an expense is recognised directly through profit or loss.

The obligation is estimated on the closing day, and if the calculated amount deviates from the estimated commitment an actuarial gain or loss arises. All actuarial gains and losses as of 1 January 2004, the date of transition to ifrs, are recognised in equity and other items in the statement of financial position. For actuarial gains and losses that arise from the calculation of the Group's obligation for different plans after 1 January 2004, the so-called corridor method is applied. This means that the portion of the cumulative actuarial gains and losses exceeding 10 per cent of the higher of the commitments' present value and the fair value of assets under management is recognised over the expected average remaining period of employment of the employees covered by the plan. Actuarial gains and losses otherwise are not taken into account.

If pension obligations are lower than assets under management and actuarial losses, this amount is recognised as an asset.

When there is a difference in how the pension cost is determined for a legal entity and the Group, a liability or receivable for the special employer's contribution arises based on this difference.

Severance

A provision is recognised in connection with termination of personnel only if the company is obligated to terminate an employment before the customary time, e.g., when compensation is paid in connection with a voluntary termination offer. In cases where the company terminates personnel, a detailed plan is drafted containing at the minimum the workplaces, positions and approximate number of individuals affected as well as compensation for each personnel category or position and a schedule for the plan's implementation.

Share-based payment

Share-based payment refers solely to remuneration to employees, including senior executives. Share-based payment settled with the company's shares or other equity instruments is comprised of the difference between the fair value at the time these plans were issued and the consideration received. This remuneration is recognised as staff costs during the vesting period. To the extent the vesting conditions in the plan are tied to market factors (such as the price of the company's shares), they are taken into consideration in determining the fair value of the plan. Other conditions (such as earnings per share) affect staff costs during the vesting period by changing the number of shares or share-related instruments that are expected to be paid.

Share matching plan for employees

Saab has a Global Share Matching Plan where all employees are entitled to participate. The payroll expenses for matching shares in the plan are recognised during the vesting period based on the fair value of the shares. The employees pay a price for the share that corresponds to 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 are paid on the value of the employee's benefit when matching takes place. During the vesting period, provisions are allocated for these estimated social security expenses. Share repurchases to fulfil the commitments of Saab's share matching plans are recognised in equity.

In addition, a plan was introduced for senior executives entitling them to 2–5 matching shares depending on the category the employee belongs to. In addition to the requirement that the employee remain employed by Saab after three years, there is also a requirement that earnings per share grow in the range of 5 to 15 per cent. See also, Note 37.

Provisions

A provision is recognised in the statement of financial position when the Group has a legal or informal obligation owing to an event that has occurred and it is likely that an outflow of economic resources will be required to settle the obligation and a reliable estimate of the amount can be made. Where it is important when in time payment will be made, provisions are estimated by discounting projected cash flow at a pre-tax interest rate that reflects current market estimates of the time value of money and, where appropriate, the risks associated with the liability.

Regional aircraft

A provision for an aircraft lease is recognised when future lease receipts are less than unavoidable lease disbursements.

Restructuring

A provision for restructuring is recognised when a detailed, formal restructuring plan has been established and the restructuring has either begun or been publicly announced. No provision is made for future operating losses.

Loss contracts

A provision for a loss contract is recognised when anticipated benefits are lessthan the unavoidable costs to fulfil the obligations as set out in the contract.

Guarantees

A provision for guarantees is normally recognised when the underlying products or services are sold if a reliable calculation of the provision can be made. The provision is based on historical data on guarantees for the products or similar products and an overall appraisal of possible outcomes in relation to the likelihood associated with these outcomes.

Soil remediation

In accordance with the Group's publicly announced environmental policy and applicable legal requirements, periodic estimates are made of Saab's obligations to restore contaminated soil. Anticipated future payments are discounted to present value and recognised as an operating expense and a provision.

Contingent liabilities

A contingent liability exists if there is a possible commitment stemming from events whose occurrence is dependent on one or more uncertain future events and there is a commitment that is not recognised as a liability or provision because it is unlikely that an outflow of resources will be required or the size of the obligation cannot be estimated with sufficient reliability. Information is provided as long as the likelihood of an outflow of resources is not extremely small.

Taxes

Income taxes consist of current tax and deferred tax. Income taxes are recognised in profit or loss unless the underlying transaction is recognised in other comprehensive income, whereby the related tax effect is also recognised in other comprehensive income.

Current tax is the tax paid or received for the current year, applying the tax rates that have been set or essentially set as of the closing day to taxable income and adjusting for current tax attributable to previous periods.

Deferred tax is calculated according to the balance sheet method based on temporary differences that constitute the difference between the carrying amount of assets and liabilities and their value for tax purposes. Deductible temporary differences are not taken into account in the initial reporting of assets and liabilities in a transaction other than a business combination and which, at the time of the transaction, do not affect either the recognised or taxable result. Moreover, temporary differences are not taken into account if they are attributable to shares in subsidiaries and associated companies that are not expected to be reversed within the foreseeable future. The valuation of deferred tax is based on how the carrying amounts of assets or liabilities are expected to be realised or settled. Deferred tax is calculated by applying the tax rates and tax rules that have been set or essentially are set as of the closing day.

Deferred tax assets from deductible temporary differences and tax loss carry forwards are only recognised to the extent it is likely that they will be utilised. The value of deferred tax assets is reduced when it is no longer considered likely that they can be utilised. Deferred tax assets are set off against deferred tax liabilities when the receivable and liability refer to the same tax authority.

Significant differences between the Group's and the Parent Company's accounting principles

The Parent Company follows the same accounting principles as the Group with the following exceptions.

Business combinations

Transaction costs are included in the cost of business combinations.

Associated companies and joint ventures

Shares in associated companies and joint ventures are recognised by the Parent Company according to the acquisition value method. Revenue includes dividends received.

Intangible fixed assets

All development costs are recognised in profit or loss.

Tangible fixed assets

Tangible fixed assets are recognised after revaluation, if necessary. All leases are recognised according to the rules for operating leasing.

Borrowing costs

The Parent Company recognises borrowing costs as an expense in the period in which they arise.

Investment properties

Investment properties are recognised according to acquisition cost method.

Financial assets and liabilities and other financial instruments

The Parent Company carries financial fixed assets at cost less impairment and financial current assets according to the lowest value principle. If the reason for impairment has ceased, it is reversed.

The Parent Company does not apply the rules for setting off financial assets and liabilities.

Derivatives and hedge accounting

Derivatives that are not used for hedging are carried by the Parent Company according to the lowest value principle. For derivatives used for hedging, recognition is determined by the hedged item. This means that the derivative is treated as an off balance sheet item as long as the hedged item is recognised at cost or is not included on the balance sheet. Receivables and liabilities in foreign currency hedged with forward contracts are valued at the forward rate.

Employee benefits

The Parent Company complies with the provisions of the Law on Safeguarding of Pension Commitments and the regulations of the Swedish Financial Supervisory Authority, since this is a condition for tax deductibility.

Untaxed reserves

The amounts allocated to untaxed reserves constitute taxable temporary differences. Due to the connection between reporting and taxation, the deferred tax liability is recognised in the Parent Company as part of untaxed reserves.

Group contributions and shareholders' contributions

Shareholders' contributions are recognised directly in the equity of the recipient and capitalised in the shares and participating interests of the contributor, to the extent impairment is not required.

Group contributions received and paid are recognised through profit or loss in financial income and expenses.

ASSUMPTIONS IN THE APPLICATION OF THE ACCOUNTING PRINCIPLES

The Board of Directors and Group Management together have identified the following areas where estimates and assumptions in the application of the accounting principles may have a siginificant impact on the accounting of the Group's results of operations and financial position and may result in significant adjustments in subsequent financial reports. Developments in these areas are monitored continuously by Group Management and the Board of Directors' audit committee.

UNCERTAINTIES IN ESTIMATES AND ASSUMPTIONS

Long-term customer contracts

A majority of all long-term customer contracts contain significant development aspects, which are associated with risks. Before a contract is signed with a customer on delivery of a product, solution or service, a thorough analysis is always made of the prerequisites and risks of the delivery through a project management process established within Saab. In the execution stage, continuous reviews are then made of the work in the project according to the same process. An important aspect is to identify risks and assess them and the measures that are taken to mitigate the risks with the help of a risk assessment method.

The Group applies the percentage of completion method to recognise revenue from long-term customer contracts. An estimation of total costs is critical in revenue recognition and provisions for loss contracts as well as inventory valuations, and the outcome of technical and commercial risks may affect income.

Recovery of value of development costs

The Group has invested significant amounts in research and development. The reported amounts in the statement of financial position are primarily due to development projects relating to exports of Gripen, electronic warfare systems, missile systems, Air Traffic Management (atm), radar and sensors. Capitalised development costs amount to msek 1,950 (2,428). The recognition of development expenditures as an asset on the statement of financial position requires an assumption that the product is expected to be technically and comercially usable in the future and that future economic benefits are likely. Capitalised development costs are amortised over the estimated production volume or period of use, up to a maximum of 5 years, with the exception of acquired development costs, where the maximum period of use is 10 years. Projected production volumes and periods of use may later be reassessed, which could necessitate impairment.

Impairment testing of goodwill

In the calculation of cash-generating units to determine whether there has been an impairment of goodwill, assumptions have been made with regard to the calculation of value in use, which is based on discounted cash flow projections. A significant deviation in the conditions will affect the value of goodwill. The carrying amount for goodwill amounts to msek 4,223 (3,470).

Pensions

Saab has two types of pension plans: defined-benefit and defined-contribution. In defined-benefit plans, post-employment compensation is based on a percentage of the recipient's salary. The present value of defined-benefit obligations amounts to msek 6,541 (5,233). The value of the pension obligation is determined through a number of actuarial assumptions, because of which the obligation can significantly increase or decrease if the actuarial assumptions change. Due to the revisions to the reporting standard ias 19, which enter into force in 2013, the so-called corridor approach will disappear. This means changes in actuarial gains and losses directly affect the pension obligation and hence the Group's financial position.

NOTE 3

REVENUE DISTRIBUTION

Revenue by significant source

		Group	Parent Company
MSEK	2011	2010	2011	2010
Sale of goods	3,999	4,359	1,669	1,670
Long-term customer contracts	13,811	13,826	9,653	8,836
Service assignments	5,684	6,246	4,090	4,237
Royalties	4	3	3	2
Total	23,498	24,434	15,415	14,745

Sale of goods

The sale of goods includes sales of goods manufactured by Saab and goods purchased for resale, e.g., spare parts and other equipment which is sold separately.

Long-term customer contracts

Long-term customer contracts relate to the development and manufacture of complex systems that stretch across several accounting periods.

For long-term customer contracts on development and hardware that can be calculated reliably, revenue and expenditures attributable to the assignment are recognised as income and expenses in the consolidated income statement in relation to the assignment's stage of completion, i.e. according to the percentage of completion method.

Service assignments

Service assignments refer to the performance of a service on behalf of a customer during a contractual period, e.g. consulting and support services.

Royalties

Royalties include revenue from outside parties for the use of Saab's assets such as patents, trademarks and software.

SEGMENT REPORTING

Saab is one of the world's leading high technology companies, operating principally in the areas of defence, aeronautics and civil security. Operations primarily comprise well-defined areas in defence electronics and missile systems as well as military and civil aeronautics. Saab is also active in technical services and maintenance. Saab has a strong position in Sweden and the large part of sales is generated in Europe. In addition, Saab has a local presence in South Africa, Australia, the u.s. 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. As of 2011 Combitech is also reported as a business area and an operating segment. The comparative year is restated accordingly. The business areas are described below. Complementing them is Corporate, which comprises Group staffs and departments as well as other non-core operations.

Aeronautics

Aeronautics engages in advanced development of military and civil aviation technology. The product portfolio includes the Gripen fighter and Unmanned Aerial Systems (uas). Aeronautics also manufactures aircraft components for Saab's own aircraft as well as passenger aircraft produced by others.

Dynamics

Dynamics offers a highly competitive product range comprising ground combat weapons, missile systems, torpedoes, unmanned underwater vehicles and signature management systems for armed forces as well as spin-off niche products for the civil and the defence market, such as unmanned underwater vehicles for the off-shore industry and 3D-mapping for the defence market.

Electronic Defence Systems

The operations are based on Saab's close interaction with customers requiring efficient solutions for surveillance and for threat detection, location and protection. This has created a unique competence in the area of radar and electronic warfare, and a product portfolio covering airborne, land-based and naval radar, electronic support measures and self-protection systems. For increased flight mission efficiency and flight safety we supply mission avionics and safety critical avionics computers for both civil and military customers.

Security and Defence Solutions

The operations comprise products and solutions in the areas of military command and control, airborne early warning, training and simulation, air traffic management, maritime security, security and surveillance, and secure, robust communication.

Support and Services

Support and Services 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 military and civil missions in locations with limited infrastructure.

Combitech

Combitech, an independent subsidiary of the Saab Group, is one of Sweden's largest technology consulting firms. They create solutions for our customers' specific needs through a combination of high technology and expertise on the environment and security.

Significant items not affecting cash flow

No significant items not affecting cash flow arose during the year.

Restructuring expenses not affecting cash flow amounted to msek 477 in 2010 and are divided by operating segment as follows: Aeronautics msek 31 , Dynamics msek 240, Electronic Defence Systems msek 55, Security and Defence Solutions msek 36, Support and Services msek 50, and Corporate msek 65.

Information on major customers

Saab has one customer, the Swedish Defence Materiel Administration (fmv), which accounts for 10 per cent or more of the Group's revenue. fmv is a customer of every business area, generating total revenue of msek 6,555 (6,404) in 2011.

Information on geographical areas

External sales are distributed to the market where the customer is domiciled, while fixed assets are distributed to the market where the asset is geographically located.

FINANCIAL INFORMATION > NOTES

NOTE 4, CONT.

Group		Aeronautics		Dynamics		Electronic Defence Systems		Security and Defence Solutions		Support and Services		Combitech		Corporate		Eliminations		Group
MSEK	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010		2011 2010	2011	2010	2011	2010	2011	2010
External revenue	6,168	6,482	4,219	4,648	3,928	3,366	5,507	6,086	3,143	3,084	618	595	-85	173	-	-	23,498	24,434
Internal revenue	183	259	116	93	633	988	197	124	285	319	382	320	1	-3	-1,797	-2,100	-	-
Total revenue	6,351	6,741	4,335	4,741	4,561	4,354	5,704	6,210	3,428	3,403	1,000	915	-84	170	-1,797	-2,100	23,498	24,434
Operating income be fore share in income of associated compa nies	332	191	482	300	297	90	394	137	426	351	92	81	934	-189	-	-	2,957	961
Share in income of as sociated companies	-	-	2	22	-	9	-	-	-	-	-	-	-18	-17	-	-	-16	14
Operating income	332	191	484	322	297	99	394	137	426	351	92	81	916	-206	-	-	2,941	975
Share in income of as sociated companies	-	-	6	3	-	-	-	-	-	-	-	-	-2	23	-	-	4	26
Financial income	52	18	16	7	15	-	34	28	3	3	1	1	234	199	-193	-140	162	116
Financial expenses	-88	-111	-20	-43	-36	-40	-80	-72	-29	-31	-2	-5	-262	-179	193	140	-324	-341
Income before taxes	296	98	486	289	276	59	348	93	400	323	91	77	886	-163	-	-	2,783	776
Taxes	-96	-67	-135	-72	92	72	-54	-107	-26	-3	-25	-20	-322	-125	-	-	-566	-322
Net income for the year	200	31	351	217	368	131	294	-14	374	320	66	57	564	-288	-	-	2,217	454
Assets	6,104	7,303	4,104	4,117	8,698	7,970	6,503	5,131	2,403	2,250	567	522	19,170	15,183	-15,750	-13,198	31,799	29,278
Of which shares in as sociated companies	-	-	55	53	11	124	-	-	-	-	-	-	222	74	-	-	288	251
Liabilities	5,945	7,214	2,535	2,575	4,400	3,852	4,088	4,064	1,638	1,541	274	258	8,659	5,907	-8,809	-7,577	18,730	17,834
Operating cash flow	223	30	588	1,044	413	594	584	1,066	420	894	87	65	162	656	-	-	2,477	4,349
Capital employed	2,103	2,118	2,359	2,496	5,037	4,584	3,309	2,282	1,243	1,248	381	355	7,328	5,693	-6,941	-5,621	14,819	13,155
Investments	35	63	102	53	92	70	27	33	2	15	3	2	106	145	-	-	367	381
Depreciation and am ortisation	247	247	168	156	488	490	108	108	18	15	2	2	209	277	-	-	1,240	1,295
Impairments	-	-	-	38	-	-	-	20	-	-	-	-	21	5	-	-	21	63

Geographical areas

Group	Sweden			Rest of EU		Rest of Europe		North America		Latin America
MSEK	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
External revenue 1)	8,679	9,223	4,514	4,737	320	368	1,803	2,083	96	116
as % of revenue	37	38	19	19	1	2	8	9	-	-
Fixed assets	9,530	10,066	115	139	29	34	2,377	1,088	5	5

Group		Asia		Africa		Australia, etc.	Total
MSEK	2011	2010	2011	2010	2011	2010	2011	2010
External revenue 1)	5,176	3,937	1,789	2,833	1,121	1,137	23,498	24,434
as % of revenue	22	15	8	12	5	5	100	100
Fixed assets	19	17	550	825	263	290	12,888	12,464

1) External sales are distributed according to the market where the customer is domiciled.

Revenue by operating segment

Parent Company

MSEK	2011	2010
Aeronautics	6,178	6,401
Electronic Defense Systems	3,631	2,534
Security and Defence Solutions	2,538	2,846
Support and Services	3,068	2,964
Total	15,415	14,745

Revenue by geographical market

Parent Company

MSEK	2011	2010
Sweden	7,380	7,623
Rest of EU	1,857	1,997
Rest of Europe	51	54
North America	916	832
Latin America	33	51
Asia	3,793	2,490
Africa	851	1,380
Australia, etc.	534	318
Total	15,415	14,745

NOTE 5

OTHER OPERATING INCOME

		Group		Parent Company
MSEK	2011	2010	2011	2010
Gain on sale of Group companies	976	13	-	-
Gain on sale of associated companies	193	24	-	-
Exchange rate gains on operating receivables/ liabilities and change in value of derivatives	52	27	16	11
Gain from other operating activities	47	29	-	2
Trading result	32	35	32	35
Government grants	23	26	21	26
Change in fair value of biological assets	6	43	-	-
Gain on sale of intangible and tangible fixed assets	4	-	148	-
Other	18	25	2	8
Total	1,351	222	219	82

Trading result refers to the result in Saab Treasury from trading in currency and money market instruments according to the risk mandate approved by the Board of Directors; see note 41.

Other operating activities consist of results from subsidiaries that fall outside core operations and net rental income from property rentals.

Gain on sale of Group companies primarily refers to C3 Technologies ab.

NOTE 6

OTHER OPERATING EXPENSES

		Group		Parent Company
MSEK	2011	2010	2011	2010
Loss from other operating activities	-33	-33	-	-8
Revaluation of investment properties	-12	-	-	-
Change in value of deriva tives	-3	-	-	-
Loss on sale of tangible fixed assets	-3	-7	-3	-7
Loss on sale of Group companies	-	-22	-	-
Other	-26	-8	-	-1
Subtotal	-77	-70	-3	-16
Change in fair value of deriv atives	6	50	-	-
Change in value of contracted flows	-6	-50	-	-
Subtotal	-	-	-	-
Total	-77	-70	-3	-16

Other operating activities consist of results from subsidiaries that fall outside core operations.

NOTE 7

GOVERNMENT GRANTS

Saab receives government grants, mainly various grants from eu related research and development projects. For 2011, msek 78 (112) has been received. msek 85 (91) has been recognised through profit or loss by reducing research and development expenditures and as other operating income. In the statement of financial position at year-end, msek 44 is recognised as prepaid income.

Saab and the Ministry of Enterprise, Energy and Communications have reached an agreement with the National Debt Office to co-finance Saab's participation in the Airbus A380 project. The co-financing is in the form of a royalty loan maximised at msek 350. Repayment will take the form of a royalty on each delivery to Airbus. Through 2011, the National Debt Office has paid out a net of msek 263 (263), which reduces inventory in the financial statements.

No contingent liabilities or contingent assets are reported.

NOTE 8

BUSINESS COMBINATIONS AND DIVESTMENTS

On 29 June 2011, Saab announced a definitive agreement to acquire us. company Sensis Corporation. Sensis is a leading provider of air traffic management (atm) solutions and surveillance technologies. The acquisition was completed on 12 August for approximately musd 150, about msek 962 (effect on liquid assets). In addition, the parties agreed on a maximum potential earn out payment of musd 40. Saab has estimated the earn out payment at musd 36.

The acquisition of Sensis strengthens Saab's existing offer within radar, sensors, atm, and defence solutions and establishes a stronger market presence globally as well as in the u.s. The acquisition provides a growth platform from which Saab can build on the combined installed base and skills in systems engineering, design and integration. Sensis' customers and partners will benefit from Saab's product portfolio and global support operations.

NOTE 8, CONT.

Preliminary purchase price analysis for Sensis: Purchase consideration

	MUSD	MSEK
Purchase price paid 12 August	170	1,089
Contingent consideration	36	231
Total consideration	206	1,320

Effect on liquid assets

	MUSD	MSEK
Purchase price paid	170	1,089
Less; liquid assets in the acquired company	-20	-127
Effect on liquid assets	150	962

The fair value of the identifiable assets and liabilities of Sensis as at the date of the acquisition were:

Acquired assets and liabilities

	MUSD	MSEK
Intangible fixed assets:
Developed technologies	17	110
Customer relationships	18	115
Trademarks	2	13
Other intangible fixed assets	1	6
Tangible fixed assets	42	270
Inventories	7	45
Other current assets	51	324
Liquid assets	20	127
Total assets	158	1,010
Interest-bearing lease obligation	16	102
Provisions	5	32
Current liabilities	40	256
Deferred tax liabilities	6	38
Total liabilities	67	428
Total identifiable net assets at fair value	91	582
Goodwill	115	738
Purchase consideration	206	1,320

The goodwill of msek 738 comprises the value of expected synergies through the consolidation of the operations of the Saab Group and Sensis arising from the acquisition. None of the acquired goodwill is expected to be deductible for income tax purposes.

The fair value of intangible fixed assets amounted to msek 244.

Terms for calculation of earn out merger consideration:

The seller and the buyer have agreed on a two-year earn out period between 1 July 2011 and 30 June 2013. The contingent consideration of musd 40 is split into two parts: one if determined EBIT targets are achieved and one depending of the order intake for new technologies.

Of the purchase price, musd 20 is deposited in an escrow account to cover warranties and representations.

From the date of the acquisition Sensis has contributed msek 265 to sales and msek -66 to income before taxes. If Sensis had been consolidated as of 1 January 2011, sales would have increased by approximately msek 560 and income before taxes would have decreased by approximately msek 140.

The transaction costs of msek 25 have been expensed and are included in administrative expenses. In the statement of cash flow, they are included in cash flow from operating activities.

Other acquisitions

On 14 December 2010, Saab announced the signing of an eight-year agreement with Scandinavian Air Ambulance Holding ab. In addition, Saab acquired inventories and equipment. The purchase price amounted to msek 41 and was paid on 1 March 2011.

Saab also acquired assets from the Czech company e-com, with its main operations in the development and production of virtual simulators. The purchase price amounted to msek 17 and was paid on 1 May 2011.

These acquisitions have only had a minor impact on the consolidated income and financial position.

The fair value of the identifiable assets and liabilities as at the date of the acquisition were:

Purchase consideration in summary

MSEK	Scandinavian Air Ambulance	E-COM
Intangible fixed assets	24	1
Tangible fixed assets	3	13
Inventories	14	4
Other current assets	-	1
Total assets	41	19
Provisions	-	2
Total liabilities	-	2
Total identifiable net assets at fair
value	41	17
Goodwill	-	-
Purchase consideration	41	17

Divestments

On 14 March, Saab signed an agreement to divest its ownership share of 42.4 per cent in South African system engineering company Grintek Ewation to Cassidian, a division of eads. The transaction generated a capital gain before tax of msek 122 and positive cash flow of msek 179.

In the second quarter, Saab divested its 20 per cent share in the South African company Denel Saab Aerostructures (Pty) Ltd. The transaction generated a capital gain of msek 58 and positive cash flow of msek 61.

On 8 April, Saab announced it had received additional consideration of msek 60 for the divestment of Saab Space.

On 19 April, Saab announced it had divested its 36 per cent share in the image processing company Image Systems ab to Digital Vision ab. Image Systems ab had been a part of Saab Venture's portfolio since 2008. The price received was approximately msek 17, which impacted cash flow positively. The transation generated a capital gain of msek 13.

On 16 May, Saab announced it intended to utilise its option to divest its shares in Aker Holding as, which were acquired in 2007. The divestment generated cash of msek 400 to Saab and had a positive impact on the operating cash flow and net liquidity by msek 130. The transaction had no impact on results.

On 14 July, Saab announced it had agreed to divest its shares, corresponding to 57.8 per cent on a fully diluted base, in the 3D mapping company C3 Technologies ab. The consideration amounted to msek 1,007 and generated a capital gain of msek 916.

Overview of capital gains 2011

MSEK	Jan–Dec
C3 Technologies	916
Grintek Ewation	122
Saab Space	60
Denel Saab Aerostructures	58
Image Systems	13
Total	1,169

No other significant acquisitions or divestments were made during 2011.

EMPLOYEES AND STAFF COSTS

Average number of employees

		of whom		of whom
	2011	men	2010	men
Parent Company
Sweden	7,566	80%	7,656	80%
United Arab Emirates	15	93%	14	93%
South Africa	12	92%	6	100%
Thailand	6	83%	1	100%
Brazil	6	83%	1	100%
USA	4	100%	5	100%
India	4	50%	3	67%
Canada	3	100%	2	100%
Saudi Arabia	3	100%	1	100%
France	3	100%	1	100%
Czech Republic	2	100%	1	100%
Belgium	1	100%	2	50%
Chile	1	100%	1	100%
South Korea	1	100%	1	100%
Poland	1	100%	1	100%
Australia	1	100%	1	100%
Germany	1	100%	-	-
UK	1	100%	-	-
Parent Company, total	7,631	80%	7,697	80%
Group companies
Sweden	2,435	79%	2,498	78%
South Africa	1,081	71%	1,115	71%
USA	698	74%	233	55%
Australia	320	80%	354	78%
Czech Republic	137	76%	14	64%
UK	135	80%	115	79%
Finland	73	75%	74	76%
Denmark	71	86%	76	86%
Norway	51	86%	50	88%
Switzerland	48	100%	49	100%
India	37	78%	6	83%
Kenya	33	100%	31	100%
Germany	22	91%	33	91%
Canada	12	92%	11	91%
Nigeria	4	75%	24	71%
South Korea	4	75%	4	75%
Netherlands	4	100%	4	100%
Hungary	2	50%	2	50%
Chile	2	50%	2	50%
Slovenia	2	100%	2	100%
United Arab Emirates	1	-	1	-
Japan	1	100%	1	100%
Singapore	1	-	1	-
Greece	1	100%	1	100%
France	-	-	3	100%
Group companies, total	5,175	76%	4,704	76%
Joint ventures
Sweden	8	88%	25	88%
Joint ventures, total	8	88%	25	88%
Group total	12,814	79%	12,426	79%

The average number of employees has been calculated as the average of the number of full-time equivalents. The term full-time equivalents excludes long-term absentees and consultants. Part-time employees and probationers are however included in the calculation.

Gender distribution of corporate management

Share of women, per cent	2011	2010
Parent Company
Board of Directors	22	20
Other senior executives	29	23

Salaries, other remuneration and social security expenses

	2011		2010
MSEK	Salaries and other remu neration	Social security expenses	Salaries and other remu neration	Social security expenses
Parent Company	3,960	2,043	3,861	1,689
of which pension costs	-	1,066 1)	-	5091)
Group companies	2,443	225	2,355	885
of which pension costs3)	-	-174	-	503
Joint ventures	5	2	11	4
of which pension costs	-	1	-	2
Group, total	6,408	2,270	6,227	2,578
of which pension costs	-	8932)	-	1,0142)

1) Of the Parent Company's pension costs, MSEK 8 (6) refers to the Board and President, including deputies and Executive Vice Presidents. The company's outstanding pension obligations for these individuals amount to MSEK 45 (47), of which MSEK 45 (47) refers to former Board members and Presidents, including deputies and Executive Vice Presidents.

2) Of the Group's pension costs, MSEK 18 (15) refers to the Group's boards and Presidents, including Group companies. The Group's outstanding pension obligations for these individuals amount to MSEK 48 (49), of which

MSEK 45 (47) refers to former board members and Presidents. 3) Adjustment according to different accounting principles regarding defined-benefit plans between Parent Com-

pany and Group. See also note 1.

Salaries and other remuneration distributed between Board members, President and Vice Presidents and other employees

	2011		2010
MSEK	Board, President and Vice Presidents	Other employees	Board, President and Vice Presidents	Other employees
Parent Company	20	3,940	27	3,834
of which variable remuneration	-		2
Group companies	68	2,375	58	2,297
of which variable remuneration	6		6
Joint ventures	-	5	1	10
Group total	88	6,320	86	6,141
of which variable remuneration	6		8

Of the salaries and remuneration paid to other employees in the Group, msek 43 (38) refers to senior executives other than Board members and the President.

For information on post-employment compensation and share-related compensation, see Note 37.

AUDITORS' FEES AND COMPENSATION

		Group	Parent Company
MSEK	2011	2010	2011	2010
PwC
Audit assignments	15	1	7	-
Audit work in excess of the audit assignment	5	-	5	-
Tax advice	1	-	-	-
Other services	1	-	1	-
Ernst & Young
Audit assignments	-	10	-	4
Audit work in excess of the audit assignment	-	1	-	1
Tax advice	-	2	-	1
Other services	-	2	-	1
Deloitte
Audit assignments	-	3	-	-
Audit work in excess of the audit assignment	-	1	-	1
Tax advice	-	-	-	-
Other services	-	1	-	1
Other
Audit assignments	1	1	-	-
Total	23	22	13	9

Audit assignments refer to expenses for the statutory audit, i.e. the work that was necessary to issue the audit report as well as advice in connection with the audit assignment.

Audit work in excess of the audit assignment relates to expenses for opinions and other assignments associated to a fairly high degree with audits and which are normally performed by the external auditor, including consultations on advisory and reporting requirements, internal control and the review of interim reports.

Other services relate to expenses that are not classified as audit assignments, audit work in excess of the audit assignment and tax advice.

The Annual General Meeting on 7 April 2011 elected the registered accounting firm PricewaterhouseCoopers ab as the new auditor for a period of four years. Håkan Malmström has been appointed auditor in charge.

NOTE 11

OPERATING EXPENSES

Group

MSEK	2011	2010
Raw materials, materials and consumables	5,135	6,390
Subsystems and equipment	1,567	2,305
Purchased services	2,717	2,691
Change in inventory of finished goods and work in progress, excluding write down	267	-21
Personnel costs	8,678	8,805
Depreciation and amortisation	1,126	1,149
Impairments	-73	193
Other expenses	2,398	2,113
Total	21,815	23,625

Operating expenses refer to cost of goods sold, marketing expenses, administrative expenses and research and development costs. Depreciation and amortisation in the leasing operations (Saab Aircraft Leasing) are not included in depreciation and amortisation above.

NOTE 12

DEPRECIATION/AMORTISATION AND IMPAIRMENTS

Group
MSEK	2011	2010
Depreciation/amortisation
Capitalised development costs	-588	-644
Other intangible fixed assets	-186	-161
Operating properties	-80	-83
Property, plant and equipment	-172	-145
Equipment, tools and installations	-99	-114
Leasing aircraft	-114	-146
Other lease assets	-1	-2
Total	-1,240	-1,295
Impairments
Goodwill	-21	-5
Capitalised development costs	-	-20
Operating properties	-	-33
Property, plant and equipment	-	-2
Equipment, tools and installations	-	-3
Total	-21	-63

In 2011, goodwill impairment of msek 21 was recognised for companies in the venture portfolio. In 2010, impairments of msek 38 were recognised on buildings, machinery and equipment in connection with the restructuring of the underwater operations in Dynamics. Impairments of capitalised development costs of msek 20 were recognised for projects in Security and Defence Solutions, while goodwill impairments amounted to msek 5 for companies in the venture portfolio.

Parent Company

MSEK	2011	2010
Depreciation/amortisation
Capitalised development costs	-200	-200
Goodwill	-39	-39
Other intangible fixed assets	-146	-125
Buildings	-58	-60
Property, plant and equipment	-108	-110
Equipment, tools and installations	-50	-48
Total	-601	-582

FINANCIAL INCOME AND EXPENSES

Group
MSEK	2011	2010
Interest income on loans receivable	186	61
Financial income from revaluation of financial assets and liabilities measured at fair value through profit or loss	-	65
Dividends	5	6
Other financial income	1	1
Less project interest applied to gross income	-30	-17
Financial income	162	116
Interest expenses on loans and financial liabilities	-140	-104
Financial expenses from revaluation and disposal of financial assets and liabilities measured at fair value
through profit or loss	-110	-52
Financial expenses related to pensions	-60	-169
Other financial expenses	-14	-16
Financial expenses	-324	-341
Share in income of associated companies	4	26
Net financial income and expenses	-158	-199

Parent Company	Result from shares in	Group companies	Result from shares in associated compa nies/joint ventures
MSEK	2011	2010	2011	2010
Dividends	543	419	2	5
Group contributions received	1,087	1,039	-	-
Group contributions paid	-144	-28	-	-
Capital gain on sale of shares	68	1	43	20
Impairments	-128	-283	-	-
Other	-16	23	14	7
Total	1,410	1,171	59	32

Parent Company		Result from other securities and receivables held as fixed assets		Other interest income and similar profit/loss items
MSEK	2011	2010	2011	2010
Interest income, Group companies	-	-	66	114
Other interest income	-	-	146	16
Capital gain on sale of shares	112	-	-	-
Impairment	-4	-23	-	-
Dividends	26	27	-	-
Translation differences	43	113	-	-
Net change in value from revaluation of financial assets/liabilities	-77	15	-	-
Less project interest applied to gross income	-	-	-30	-16
Other	-19	-25	-	-
Total	81	107	182	114

Parent Company	Interest expenses and similar profit/loss items
MSEK	2011	2010
Interest expenses, Group companies	-120	-53
Other interest expenses	-87	-120
Total	-207	-173

NOTE 14

APPROPRIATIONS

Parent Company
----------------	--	--

MSEK	2011	2010
Buildings and land	17	19
Property, plant and equipment as well as tools and installations	40	-102
Total difference between tax depreciation and deprecia tion according to plan	57	-83
Tax allocation reserve	-350	-
Total	-293	-83

NOTE 15

TAXES

Tax recognised through profit or loss

Group
MSEK	2011	2010
Current tax expense (-)/tax income (+)
Taxes for the year	-442	-350
Adjustment for taxes related to previous years	18	2
Total	-424	-348
Deferred tax expense (-)/tax income (+)
Deferred tax related to temporary differences	-186	312
Deferred tax related to value of tax loss carry forwards capitalised during the year	48	9
Deferred tax expense due to utilisation of previously capitalised tax value in tax loss carry forwards	-2	-276
Deferred tax related to previous years	-2	-19
Total	-142	26
Total recognised tax in Group	-566	-322

The Group's table, "Change in deferred tax in temporary differences and tax loss carry forwards", on page 99 specifies how deferred tax affects income. The net change in the tax loss carry forwards for the year excluding acquisition/divestment of operations amounts to msek 46, which is the sum of the deferred tax on the capitalised tax value of tax loss carry forwards, msek 48, and the deferred tax expense resulting from the utilisation of the previously capitalised value of tax loss carry forwards, msek -2.

The remaining amount in the table's column, "Recognised in profit or loss", amounts to msek -188, which is the sum of deferred tax related to temporary differences and deferred tax related to previous years. In total, the Group's deferred tax amounts to msek -142 (26) and current tax expense for the year to msek -424 (-348) which generate a total reported tax of msek -566 (-322) in the consolidated income statement.

Parent Company
MSEK	2011	2010
Current tax expense (-)/tax income (+)
Taxes for the year	-278	-168 1)
Adjustment for taxes related to previous years	-	17
Total	-278	-151
Deferred tax expense (-)/tax income (+)
Deferred tax related to temporary differences	-184	8
Deferred tax expense due to utilisation of previously capitalised tax value in tax loss carry forwards	-	-274
Deferred tax related to previous years	-	-6
Total	-184	-272
Total recognised tax expense in Parent Company	-462	-423

1) The current tax expense for 2010 has been restated due to a change in the application of tax in Group contributions.

Reconciliation of effective tax

Group

MSEK	2011 (%)	2011	2010 (%)	2010
Income before taxes		2,783	-	776
Tax according to current tax rate for Parent Company	-26.3	-732	-26.3	-204
Effect of other tax rates for foreign Group companies	0.6	15	-2.7	-21
Non-deductible expenses	-4.9	-135	-8.4	-65
Tax-exempt income	10.1	280	5.8	45
Revaluation of deferred tax assets from the leasing portfolio	-	-	-5.0	-39
Tax on additional, uncapital ised tax loss carry forwards	-0.4	-12	-2.3	-18
Tax related to previous years	0.6	18	-2.1	-16
Other	-	-	-0.5	-4
Reported effective tax rate	-20.3	-566	-41.5	-322

Operations divested during the year have generated tax-exempt capital gains totaling msek 952 (13). In connection with dividends from Group companies in certain non-European countries, taxation may exceed normal company tax. The dividend paid to shareholders has no tax consequences.

Parent Company

MSEK	2011 (%)	2011	2010 (%)	2010
Income before taxes	-	2,051	-	1,464
Tax according to current tax rate for Parent Company	-26.3	-539	-26.3	-385
Tax related to previous years	-	-	0.8	11
Non-deductible expenses	-6.8	-140	-12.2	-178
Tax-exempt income	10.6	217	8.8	129
Reported effective tax rate	-22.5	-462	-28.9	-423

Income before taxes for the Parent Company, Saab ab, has been restated for 2010 due to a change in accounting principles for Group contributions to subsidiaries. Income before taxes has also been restated for 2010 due to a correction in the classification and valuation of intangible and financial assets. As a result, the tax on non-deductible expenses has increased and the reported effective tax rate is -28.9%, compared with -23.6% previously.

Deferred tax assets and liabilities

Group	Deferred tax assets	Deferred tax liabilities	Net
MSEK	31-12-2011	31-12-2011
Intangible fixed assets	1	-646	-645
Tangible fixed assets	20	-504	-484
Lease assets	5	-105	-100
Biological assets	-	-52	-52
Long-term receivables	-	-38	-38
Inventories	243	-2	241
Accounts receivable	6	-	6
Prepaid expenses and accrued income	30	-3	27
Long-term liabilities	91	-2	89
Provisions for pensions	167	-458	-291
Other provisions	617	-14	603
Tax allocation reserves	-	-94	-94
Contingency reserve attributable to Lansen Försäkrings AB	-	-357	-357
Accrued expenses and deferred income	169	-	169
Other	55	-197	-142
Tax loss carry forwards	142	-	142
Tax assets/liabilities	1,546	-2,472	-926
Set-off	-1,460	1,460	-
Tax assets /liabilities, net	86	-1,012	-926

Group	Deferred tax assets	Deferred tax liabilities	Net
MSEK	31-12-2010	31-12-2010
Intangible fixed assets	11	-745	-734
Tangible fixed assets	23	-465	-442
Lease assets	19	-189	-170
Biological assets	-	-51	-51
Long-term receivables	22	-52	-30
Inventories	193	-16	177
Accounts receivable	5	-	5
Prepaid expenses and accrued income	15	-2	13
Long-term liabilities	82	-22	60
Provisions for pensions	152	-279	-127
Other provisions	800	-19	781
Tax allocation reserves	-	-2	-2
Contingency reserve attributable to Lansen Försäkrings AB	-	-357	-357
Accrued expenses and deferred income	229	-12	217
Other	67	-243	-176
Tax loss carry forwards	33	-	33
Tax assets/liabilities	1,651	-2,454	-803
Set-off	-1,651	1,651	-
Tax assets /liabilities, net	-	-803	-803

In the company's view, the tax value of future taxable surpluses will exceed reported deferred tax assets. In the u.s. there are approximately msek 200 in tax loss carry forwards, of which approximately msek 120 is expected to be offset against future taxable earnings. The tax loss carry forwards attributable to the u.s. operations can be utilised through 2029, but partly expire as of 2021.

Parent Company	Deferred tax assets	Deferred tax liabilities	Net
MSEK	31-12-2011	31-12-2011
Tangible fixed assets	-	-240	-240
Inventories	87	-	87
Accounts receivable	1	-	1
Prepaid expenses and accrued income	3	-	3
Provisions for pensions	107	-	107
Other provisions	238	-	238
Accrued expenses and deferred income	37	-	37
Tax assets/liabilities	473	-240	233
Set-off	-240	240	-
Tax assets/liabilities, net	233	-	233

Parent Company	Deferred tax assets	Deferred tax liabilities	Net
MSEK	31-12-2010	31-12-2010
Tangible fixed assets	-	-242	-242
Inventories	77	-	77
Accounts receivable	2	-	2
Long-term receivables	22	-	22
Prepaid expenses and accrued income	13	-	13
Provisions for pensions	92	-	92
Other provisions	383	-	383
Accrued expenses and deferred income	70	-	70
Tax assets/liabilities	659	-242	417
Set-off	-242	242	-
Tax assets/liabilities, net	417	-	417

The change in deferred tax assets and liabilities in the Parent Company, Saab ab, has been recognised in profit or loss.

Estimated utilisation dates of recognised deferred tax assets

MSEK	Group	Parent Company
Deferred tax assets expected to be recovered within one year	62	13
Deferred tax assets expected to be recovered after one year	1,484	460

Estimated utilisation dates of recognised deferred tax liabilities

MSEK	Group	Parent Company
Deferred tax liabilities due for payment within one year	39	6
Deferred tax liabilities due for payment after one year	2,433	234

Change in deferred tax in temporary differences and tax loss carry forwards

Group MSEK	Opening balance 1 Jan. 2011	Recog nised in profit or loss	Recog nised in the com prehen sive income	Acquisi tion/di vestment of opera tions	Transla tion dif ference	Closing balance 31 Dec 2011
Intangible fixed as sets	-734	195	-	-98	-8	-645
Tangible fixed assets	-442	-2	-	-37	-3	-484
Lease assets	-170	78	-	-	-8	-100
Biological assets	-51	-1	-	-	-	-52
Long-term receiva bles	-30	-8	-	-	-	-38
Inventories	177	64	-	-	-	241
Accounts receivable	5	15	-	-13	-1	6
Prepaid expenses and accrued income	13	14	-	-	-	27
Long-term liabilities	60	-	-	27	2	89
Provisions for pensions	-127	-164	-	-	-	-291
Other provisions	781	-186	-	7	1	603
Tax allocation re serves	-2	-92	-	-	-	-94
Contingency reserve attributable to Lansen Försäkrings AB	-357	-	-	-	-	-357
Accrued expenses and deferred income	217	-60	-	12	-	169
Other	-176	-41	69	6	-	-142
Tax loss carry for wards	33	46	-	58	5	142
Total	-803	-142	69	-38	-12	-926

The Group's total deferred tax expense in the 2011 income statement amounted to msek -142. The Group's total deferred tax income in the statement of comprehensive income amounted to msek 69. The closing balance on 31 December 2011, msek -926, consisted of deferred tax assets of msek 86 and tax liabilities of msek -1,012, see table on page 98.

The tax items in the column Acquisition/divestment of operations primarily relates to the acquisition of Sensis Corporation.

Group MSEK	Opening balance 1 Jan. 2010	Recog nised in profit or loss	Recog nised in the com prehen sive income	Acquisi tion/di vestment of opera tions	Transla tion dif ference	Closing balance 31 Dec 2010
Intangible fixed as sets	-929	195	-	-	-	-734
Tangible fixed assets	-417	-25	-	-	-	-442
Lease assets	-240	70	-	-	-	-170
Biological assets	-39	-12	-	-	-	-51
Long-term receivables	-10	-20	-	-	-	-30
Inventories	123	54	-	-	-	177
Accounts receivable	9	-4	-	-	-	5
Prepaid expenses and accrued income	1	12	-	-	-	13
Long-term liabilities	83	-23	-	-	-	60
Provisions for pensions	-199	72	-	-	-	-127
Other provisions	757	24	-	-	-	781
Tax allocation re serves	-7	5	-	-	-	-2
Contingency reserve attributable to Lansen Försäkrings AB	-357	-	-	-	-	-357
Accrued expenses and deferred income	267	-50	-	-	-	217
Other	11	21	-201	-	-7	-176
Tax loss carry for wards	326	-293	-	-	-	33
Total	-621	26	-201	-	-7	-803

The Group's total deferred tax income in the 2010 income statement amounted to msek 26. The Group's total deferred tax expense in the statement of comprehensive income amounted to msek -201. The closing balance on 31 December 2010, msek -803, consisted of deferred tax assets of msek 0 and tax liabilities of msek -803; see table on page 98.

Tax items recognised directly against other comprehensive income

Group
MSEK	2011	2010
Cash flow hedges	69	-201
Total	69	-201

NOTE 16

INTANGIBLE FIXED ASSETS

		Group	Parent Company
MSEK	31-12-2011	31-12-2010	31-12-2011	31-12-2010
Goodwill	4,223	3,470	571	610
Capitalised development costs	1,950	2,428	1,056	1,256
Other intangible assets	526	515	311	407
Total	6,699	6,413	1,938	2,273

Goodwill

	Group			Parent Company
MSEK	2011	2010	2011	2010
Acquisition value
Opening balance, 1 January	4,146	4,128	784	784
Acquired through business acquisitions	738	19	-	-
Reclassification	-	8	-	-
Translation differences	36	-9	-	-
Closing balance, 31 December	4,920	4,146	784	784
Amortisation and impairments
Opening balance, 1 January	-676	-671	-174	-135
Amortisation for the year	-	-	-39	-39
Impairments for the year	-21	-5	-	-
Closing balance, 31 December	-697	-676	-213	-174
Carrying amount, 31 December	4,223	3,470	571	610

Acquired through business acquisitions 2011 relates to Sensis. Goodwill impairments of msek 21 (5) in 2011 related to companies in the venture portfolio.

Capitalised development costs

		Group		Parent Company
MSEK	2011	2010	2011	2010
Acquisition value
Opening balance, 1 January	5,457	5,406	2,000	2,000
Acquired through business acquisitions	110	-	-	-
Internally developed assets	15	47	-	-
Disposals and reclassifications	-	-3	-	-
Translation differences	-31	7	-	-
Closing balance, 31 December	5,551	5,457	2,000	2,000
Amortisation and impairments
Opening balance, 1 January	-3,029	-2,368	-744	-544
Amortisation for the year	-588	-644	-200	-200
Impairments for the year	-	-20	-	-
Disposals and reclassifications	-	3	-	-
Translation differences	16	-	-	-
Closing balance, 31 December	-3,601	-3,029	-944	-744
Carrying amount, 31 December	1,950	2,428	1,056	1,256

Acquired through business acquisitions 2011 relates to Sensis. Capitalised development costs of msek 20 in 2010 related to a project in Security and Defense Solutions.

Other intangible assets

	Group			Parent Company
MSEK	2011	2010	2011	2010
Acquisition value
Opening balance, 1 January	1,551	1,500	1,376	1,310
Acquired through business acquisitions	160	1	24	-
Investments	26	70	22	68
Disposals and reclassifications	3	-9	4	-2
Translation differences	9	-11	-	-
Closing balance, 31 December	1,749	1,551	1,426	1,376
Amortisation and impairments
Opening balance, 1 January	-1,036	-887	-969	-846
Amortisation for the year	-186	-161	-146	-125
Disposals and reclassifications	-	9	-	2
Translation differences	-1	3	-	-
Closing balance, 31 December	-1,223	-1,036	-1,115	-969
Carrying amount,

Acquired through business acquisitions 2011 largely relates to Sensis and comprises customer relations and trademarks.

31 December526 515 311 407

Amortisation is included in the following lines in income statement

	Group			Parent Company
MSEK	2011	2010	2011	2010
Cost of goods sold	185	161	185	164
Marketing expenses	1	-	-	-
Research and developmentcosts	588	644	200	200

Impairments are included in the following lines in income statement

		Group	Parent Company
MSEK	2011	2010	2011	2010
Other operating expenses	21	5		-
Research and developmentcosts	-	20		-

Development costs

The significant items in total capitalisation are development costs for radar and sensors, electronic warfare systems, air traffic management (atm), the export version of Gripen and the anti-ship missile rbs15 mk3.

Development costs are capitalised only in the consolidated accounts. In legal units, all costs for development work are expensed. Capitalised development costs in the Parent Company relate to acquired development costs.

Other intangible fixed assets

Significant items in the carrying amount are attributable to the acquisitions of Ericsson Microwave Systems and Sensis and relate to expenses incurred for customer relations, trademarks and values in the order backlog. Of the carrying amount, msek 526, msek 413 is attributable to acquired values and msek 113 to licenses for operating systems etc.

Impairment tests for goodwill

In connection with business combinations, goodwill is allocated to the cashgenerating units that are expected to obtain future economic benefits in the form, for example, of synergies from the acquisition. Saab's business areas have been identified as separate cash-generating units. The following cashgenerating units have significant recognised goodwill values in relation to the Group's total recognised goodwill value. Goodwill in every cash-generating unit has been tested for impairment.

Goodwill in the Parent Company relates to acquired goodwill from Saab Microwave Systems.

MSEK	31-12-2011	31-12-2010
Dynamics	572	571
Electronic Defence Systems	2,253	1,988
Security and Defence Solutions	999	491
Support and Services	240	240
Combitech	159	159
Other units, aggregated	-	21
Total goodwill	4,223	3,470

Impairment testing for cash-generating units is based on the calculation of value in use. This value is based on discounted cash flow forecasts according to the units' business plans.

VARIABLES USED TO CALCULATE VALUE IN USE

Volume/growth

Growth in the cash-generating units' business plans is based on Saab's expectations with regard to development in each market area and previous experience. The first five years are based on the five-year business plan formulated by Group Management and approved by the Board. For cash flows after five years, the annual growth rate has been assumed to be 0 (0) per cent.

Operating margin

The operating margin is comprised of the units' operating income after depreciation and amortisation. The units' operating margin is calculated against the backdrop of historical results and Saab's expectations with regard to the future development of markets where the units are active. The business areas Dynamics, Electronic Defence Systems and Security and Defence Solutions have a substantial order backlog of projects that stretches over a number of years. The risks and opportunities affecting the operating margin are managed through continuous cost forecasts for all significant projects.

Capitalised development costs

In the five-year business plans, consideration is given to additional investments in development considered necessary for certain units to reach the growth targets in their respective markets.

Discount rate

Discount rates are based on the weighted average cost of capital (wacc). The wacc rate that is used is based on a risk-free rate of interest in five years adjusted for operational 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 this respect is considered equivalent. However, units with a significant share of the business plan's invoicing in the order backlog have been discounted at an interest rate that is slightly lower units with a short order backlog.

The following discount rates have been used (pre-tax):

	Pretax discount rate (WACC)
Per cent	2011	2010
Dynamics	11	11
Electronic Defence Systems	11	11
Security and Defence Solutions	11	11
Support and Services	13	13
Combitech	13	13

Sensitivity analysis

Group Management believes that reasonable possible changes in the above variables would not have such a large impact that any individually would reduce the recoverable amount to less than the carrying amount.

TANGIBLE FIXED ASSETS

	Group		Parent Company
MSEK	31-12-2011	31-12-2010	31-12-2011	31-12-2010
Operating properties/ buildings and land1)	2,050	2,033	1,410	1,464
Property, plant and equipment	799	636	460	531
Equipment, tools and installations	292	315	149	158
Construction in progress	131	68	118	52
Total	3,272	3,052	2,137	2,205

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 land 1)

		Group		Parent Company
MSEK	2011	2010	2011	2010
Acquisition value
Opening balance, 1 January	4,822	4,824	1,881	1,853
Acquired through business acquisitions	112	-	-	-
Investments	38	35	14	28
Other reclassifications	-34	-46	4	-
Divestments	-27	-	-27	-
Translation differences	-12	9	-	-
Closing balance, 31 December	4,899	4,822	1,872	1,881

Depreciation and impairments

Closing balance,

Opening balance, 1 January	-2,789	-2,719	-1,314	-1,254
Depreciation for the year	-80	-83	-58	-60
Impairments for the year	-	-33	-	-
Acquired through business acquisitions	-32	-	-	-
Reclassifications	42	46	-	-
Divestments	13	-	13	-
Translation differences	-3	-	-	-
Closing balance, 31 December	-2,849	-2,789	-1,359	-1,314
Revaluations
Opening balance, 1 January	-	-	897	897

31 December	-	-	897	897
Carrying amount,
31 December	2,050	2,033	1,410	1,464

1) In the Group, the reported amount refers to operating properties. In the Parent Company, the reported amount refers to buildings and land.

Acquired through business acquisitions largely relates to Sensis. In 2010 impairments of msek 33 related to buildings were recognised in the Group as a consequense of the reorganisation of the underwater operations in Dynamics.

Operating properties include a property leased by u.s. company Saab Sensis, which was acquired during the year. The finance lease extends through 2025. The carrying amount is msek 111. The property is depreciated on a straightline basis over its period of use through 2025.

Total future minimum lease fees amount to msek 139, of which msek 9 is due within one year, msek 39 after one year but within five years, and msek 91 after five years. The present value of future minimum lease fees is msek 111.

Property, plant and equipment

		Group		Parent Company
MSEK	2011	2010	2011	2010
Acquisition value
Opening balance, 1 January	2,504	2,465	1,909	1,897
Acquired through business acquisitions	400	-	3	-
Investments	118	77	35	61
Other reclassifications	-7	35	2	23
Divestments	-61	-78	-56	-72
Translation differences	8	5	-	-
Closing balance, 31 December	2,962	2,504	1,893	1,909
Depreciation and impairments
Opening balance, 1 January	-1,868	-1,772	-1,378	-1,318
Depreciation for the year	-172	-145	-108	-110
Impairments for the year	-	-2	-	-
Acquired through business acquisitions	-197	-	-	-
Other reclassifications	15	-13	-	-13
Divestments	58	66	53	63
Translation differences	1	-2	-	-
Closing balance, 31 December	-2,163	-1,868	1,433	-1,378
Carrying amount,

Acquired through business acquisitions largely relates to Sensis. Equipment impairments of msek 2 were recognised in 2010 in connection with the restructuring of the underwater operations in Dynamics.

31 December 799 636 460 531

Equipment, tools and installations

		Group		Parent Company
MSEK	2011	2010	2011	2010
Acquisition value
Opening balance, 1 January	2,134	2,092	1,290	1,271
Acquired through business acquisitions	12	-	-	-
Acquisitions from compa nies within the Group	-	-	-	8
Investments	83	125	40	46
Reclassifications	4	-11	4	-11
Sales	-132	-72	-63	-24
Translation differences	-20	-	-	-
Closing balance, 31 December	2,081	2,134	1,271	1,290

Depreciation and impairments

Opening balance, 1 January	-1,819	-1,784	-1,132	-1,115
Depreciation for the year	-99	-114	-50	-48
Impairments for the year	-	-3	-	-
Acquired through business acquisitions	-5	-	-	-
Acquisitions from compa nies within the Group	-	-	-	-7
Reclassifications	-	14	-1	14
Sales	116	68	61	24
Translation differences	18	-	-	-
Closing balance, 31 December	-1,789	-1,819	-1,122	-1,132
Carrying amount, 31 December	292	315	149	158

Acquired through business acquisitions largely relates to Sensis. Equipment impairments amounted to msek 3 in 2010 in connection with the restructuring of the underwater operations in Dynamics.

Construction in progress

		Group		Parent Company
MSEK	2011	2010	2011	2010
Acquisition value
Opening balance, 1 January	68	68	52	49
Investments	86	25	79	15
Reclassifications	-23	-25	-13	-12
Carrying amount, 31 December	131	68	118	52

Collateral

On 31 December 2011 property with a carrying amount of msek 0 (0) was pledged as collateral for bank loans.

NOTE 18

LEASE ASSETS AND LEASE AGREEMENTS

As the former manufacturer of the regional aircraft Saab 340 and Saab 2000, Saab has a great interest in ensuring that these aircraft maintain high capacity utilisation. Over 500 aircraft have been delivered and 82 are included in Saab's leasing fleet, of which 40 aircraft are owned by Saab. Leasing operations are carried out in the global market. Operating lease terms conform to customary terms in the international aircraft leasing market, which may entail the right to early termination, purchases and extensions, as well as security, geographical and tax-related limitations on the allocation of the aircraft in question. No aircraft are held via finance leases, nor is Saab the lessor in any finance leases. The operations are carried out in usd.

Owned aircraft are depreciated on a straight-line basis over 20–25 years. The leasing fleet is expected to be divested around 2015.

Leasing aircraft obtained for leasing purposes

MSEK	2011	2010
Acquisition value
Opening balance, 1 January	3,792	4,224
Sales	-1,514	-158
Reclassifications	-	-145
Translation differences	58	-129
Closing balance, 31 December	2,336	3,792
Depreciation
Opening balance, 1 January	-2,238	-2,337
Sales	991	93
Reclassifications	-	89
Depreciation for the year	-114	-146
Translation differences	-12	63
Closing balance, 31 December	-1,373	-2,238
Impairments
Opening balance, 1 January	-404	-427
Sales and revaluations	208	22
Translation differences	1	1
Closing balance, 31 December	-195	-404
Total	768	1,150
Other lease assets
Opening balance, 1 January	4	4
Acquisitions	1	2
Depreciation for the year	-1	-2
Translation differences	-1	-
Closing balance, 31 December	3	4
Carrying amount, 31 December	771	1,154

Leasing fees for aircraft obtained/leased via operating leases

MSEK	Payments to lessors	Payments from air lines1)	Payments from air lines2)
Outcome
2010	264	59	199
2011	238	66	126
Contracted
2012	254	76	12
2013	249	68	5
2014	100	25	4
2015	-	-	3
2016	-	-	-
2017 and forward	-	-	-
Total contracted	603	169	24

1) Receipts from airlines for aircraft held via operating leases and leased out via operating leases.

2) Receipts from airlines for owned aircraft leased out via operating leases.

The leasing fleet is periodically valuated in terms of the present value of the future payments it is expected to generate. The inflow is represented by projected receipts from customers and the Export Credits Guarantee Board

(ekn) in Sweden. Disbursements consist of fees to the lessee and for technical, legal and administrative activities directly related to management of the fleet. Insurance 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. Income from leasing operations (Saab Aircraft Leasing) is recognised net through profit and loss on the line cost of goods sold after offsetting the loss risk reserve. Saab Aircraft Leasing's income statement and balance sheet are largely usd-related, since its agreements on the sale and lease of aircraft are in usd, which is its functional currency. The exchange rates used for translation of the financial statements are indicated in Note 49.

Income statement Saab Aircraft Leasing

MSEK	2011	2010
Leasing revenue	276	328
Interest income	55	40
Other revenue	378	216
Total revenue	709	584
Leasing expenses	-216	-239
Interest expenses	-19	-31
Depreciation	-114	-146
Other expenses	-455	-227
Total expenses	-804	-643
Utilisation of loss risk reserve	145	84
Operating income	50	25

Financial position Saab Aircraft Leasing

MSEK	31-12-2011	31-12-2010
Assets
Lease assets	768	1,150
Receivables from Group companies	1,501	1,575
External receivables	326	297
Inventories	15	16
Liquid assets	15	11
Total assets	2,625	3,049
Equity and liabilities
Equity	1,168	1,414
Provisions	811	851
Other liabilities	646	784
Total equity and liabilities	2,625	3,049

Leasing fees for other assets obtained via operating leases1)

Other leasing fees refer to premises, computers and cars.

Group MSEK	Premises and buildings	Machinery and equip ment
Outcome
2010	239	83
2011	281	104
Contracted
2012	253	93
2013	214	69
2014	178	26
2015	169	2
2016	160	2
2017 and forward	790	1
Total contracted	1,764	193

Parent Company	Premises and	Machinery and equip
MSEK	buildings	ment
Outcome
2010	172	62
2011	195	78
Contracted
2012	172	72
2013	164	57
2014	146	21
2015	137	1
2016	136	-
2017 and forward	786	-
Total contracted	1,541	151

1) The Group has a finance lease on a building; see Note 17.

BIOLOGICAL ASSETS

Group
MSEK	2011	2010
Living forest
Carrying amount, 1 January	299	256
Change in fair value	15	53
Less fair value logging	-9	-10
Carrying amount, 31 December	305	299
Of which fixed assets	305	299

On 31 December 2011, biological assets consisted of approximately 403,000 m³ of spruce, 637,000 m³ of pine and 69,000 m³ of hardwood. Forest growth is estimated at 35,000–40,000 m³ timber per year. During the year, approximately 23,200 m³ of timber was felled, which had a fair value in the Group, after deducting selling expenses, of msek 9 on the felling date.

The valuation of forests has been done with the help of independent appraisers. The forestry property has been valued according to the market comparison method. In the valuation according to the market comparison method, the environmental impact on the firing range has not been taken into account. An adjustment for the environmental impact has been made by reducing fair value by an amount corresponding to the market value of the size of the firing range (4,457 hectares) less the value of the timber.

NOTE 20

INVESTMENT PROPERTIES

Information on fair value of investment properties in the Group

In the Group, investment properties are reported according to the fair value method.

Group

2010
25
211
-
236

Investment properties are recognised in the statement of financial position at fair value, while changes in the value of these properties are recognised in the income statement; see also Note 1.

Investment properties comprise a number of rental properties leased to outside tenants. Leases on offices and production space are normally signed for an initial period of 2–6 years. Prior to expiration, renegotiations are held with the tenant on the rent level and other terms of the agreement, provided the lease has not been terminated.

Fair values have been determined by analysing rental income and expenses for each property, thereby producing a net rental income figure. Net rental income has then served as the basis of a valuation of fair value with a yield of 8 per cent. The yield requirements corresponds to the risk in net rental income. Fair value is not based on the valuation of an independent appraiser.

The 2010 reclassification refers to a real estate company that was previously recognised as an asset held for sale.

Group MSEK 2011 2010 Effect on net income/net rental income Rental income 26 26 Direct costs for investment properties that generated rental income during the year -10 -12 Effect on net income /net rental income 16 14

Information on fair value of investment properties in Parent Company

In the Parent Company, investment properties are recognised as buildings according to the acquisition cost method. Investment properties in the Parent Company are leased out to other companies in the Group and are therefore classified as operating properties in the Group.

Parent Company

MSEK	2011	2010
Accumulated fair value
Opening fair value, 1 January	159	159
Revaluation	6	-
Closing fair value, 31 December	165	159

Parent Company

MSEK	2011	2010
Effect on net income/net rental income
Rental income	27	24
Direct costs for investment properties that generated rental income during the year	-9	-11
Effect on net income /net rental income	18	13

Information on carrying amount of investment properties in Parent Company

Parent Company
MSEK	2011	2010
Accumulated acquisition value
Opening balance, 1 January	127	127
Closing balance, 31 December	127	127
Accumulated depreciation according to plan
Opening balance, 1 January	-87	-83
Depreciation according to plan for the year	-4	-4
Closing balance, 31 December	-91	-87
Accumulated revaluations
Opening balance, 1 January	73	73
Closing balance, 31 December	73	73
Carrying amount, 31 December	109	113

SHARES IN ASSOCIATED COMPANIES CONSOLIDATED ACCORDING TO THE EQUITY METHOD

Group

MSEK	2011	2010
Carrying amount, 1 January	251	356
Acquisition of associated companies	104	-
Sale of associated companies	-4	-25
Share in associated companies' income 1)	-12	40
Hedge reserve	-	2
Reclassifications to assets held for sale	-	-113
Other reclassifications	-	-4
Translation differences and internal gains	-1	1
Dividends	-50	-6
Carrying amount, 31 December	288	251

1) Share in associated companies' net income and non-controlling interests.

Results from Wah Nobel (Pvt) Ltd. are recognised as financial income and expenses through profit or loss. Other associated companies are held for operating purposes, i.e., they are related to operations of the business units or in the venture portfolio and are therefore recognised in operating income.

During the first half of 2011, Saab sold all its shares in the associated company Grintek Ewation (Pty) Ltd. (42.4 per cent) to Cassidian, a division of eads. These shares were classified as assets held for sale in 2010. It also sold all the shares in the associated company Image Systems ab (36 per cent) to Digital Vision ab and all its shares in the associated company Denel Saab Aerostructures (Pty) Ltd (20 per cent).

Acquisitions of shares in associated companies mainly refer to 36.6 per cent in Avia Satcom Co., Ltd. In addition, Saab invested msek 11, representing more than 30 per cent of total shares, in the Swedish systems development company isd Technologies Int ab.

Shares in associated companies as of 31 December 2011 include goodwill of msek 61 (8).

The Group's share of sales, income, assets, liabilities and the carrying amount of shares in associated companies is as follows.

2011			Share in associated companies'
MSEK	Country	Sales	income
Associated companies
Hawker Pacific Airservices Ltd	Hong Kong	540	-17
Wah Nobel (Pvt) Ltd	Pakistan	16	4
Taurus Systems GmbH	Germany	50	2
S.N. Technologies SA	Switzerland	15	-
Industrikompetens i Östergötland AB	Sweden	46	-
Omnigo (Pty) Ltd	South Africa	26	1
Kontorsbolaget i Karlskoga AB	Sweden	21	1
Sörman Intressenter AB	Sweden	40	3
FFV Services Private Limited	India	-	-
Avia Satcom Co.Ltd	Thailand	21	-
Other associated companies in the venture portfolio		11	-6
Total		786	-12

2010			Share in associated companies'
MSEK	Country	Sales	income
Associated companies
Hawker Pacific Airservices Ltd	Hong Kong	638	-16
Wah Nobel (Pvt) Ltd	Pakistan	17	3
Taurus Systems GmbH	Germany	163	12
S.N. Technologies SA	Switzerland	19	8
Industrikompetens i Östergötland AB	Sweden	44	1
Omnigo (Pty) Ltd	South Africa	21	-2
Kontorsbolaget i Karlskoga AB	Sweden	15	2
Sörman Intressenter AB	Sweden	36	-
Grintek Ewation (Pty) Ltd	South Africa	247	9
Denel Saab Aerostructures (Pty) Ltd 1)	South Africa	49	-
Other associated companies in the venture portfolio		25	-
Reversal provision related to Eurenco SA		-	23
Total		1,274	40

1) Our share of the company's result amounted to MSEK -61.

31-12-2011 MSEK	Assets	Liabilities	Booked value, shares in associated companies	Ownership interest, %
Associated companies
Hawker Pacific Airservices Ltd	291	181	110	32.3
Wah Nobel (Pvt) Ltd	31	7	24	27.2
Taurus Systems GmbH	58	55	3	33.0
S.N. Technologies SA	21	10	11	50.0
Industrikompetens i Östergötland AB	18	7	11	33.0
Omnigo (Pty) Ltd	16	8	8	40.0
Kontorsbolaget i Karlskoga AB	126	121	5	50.0
Sörman Intressenter AB	18	14	4	25.3
FFV Services Private Limited	25	12	13	49.0
Avia Satcom Co.Ltd	106	28	78	36.6
Other associated companies in the venture portfolio	26	5	21	-
Total	736	448	288	-

31-12-2010			Booked value, shares in associated	Ownership
MSEK	Assets	Liabilities	companies	interest, %
Associated companies
Hawker Pacific Airservices Ltd	310	152	158	33.0
Wah Nobel (Pvt) Ltd	28	6	22	27.2
Taurus Systems GmbH	91	76	15	33.0
S.N. Technologies SA	20	9	11	50.0
Industrikompetens i Östergötland AB	21	11	10	33.0
Omnigo (Pty) Ltd	15	6	9	40.0
Kontorsbolaget i Karlskoga AB	124	119	5	50.0
Sörman Intressenter AB	16	14	2	25.3
Denel Saab Aerostructures (Pty) Ltd 2)	88	172	-	20.0
Other associated companies in the venture portfolio	24	5	19	-
Total	737	570	251	-

2) Saab is confident that the negative equity will not affect its results and liquidity.

NOTE 22

SHARES IN JOINT VENTURES CONSOLIDATED ACCORDING TO THE PROPORTIONAL METHOD

The Group has a 50 per cent holding in the joint venture Gripen International kb, whose principal activity is to offer, market and provide services for aircraft, military materiel and related equipment. The Group's remaining holdings in joint ventures are of an insignificant amount.

The Group's financial reports include the following items that constitute the Group's ownership interest in the joint venture's sales, income, assets and liabilities.

Gripen International KB

MSEK	2011	2010
Sales	42	96
Net income	70	110
MSEK	31-12-2011	31-12-2010
Fixed assets	-	6
Current assets	821	793
Total assets	821	799
Current liabilities	387	435
Total liabilities	387	435
Net assets	434	364

NOTE 23

PARENT COMPANY'S SHARES IN ASSOCIATED COMPANIES AND JOINT VENTURES

Parent Company
MSEK	2011	2010
Accumulated acquisition value
Opening balance, 1 January	491	528
Acquisitions	78	7
Divestments	-68	-154
Reclassifications	-19	-
Share of net income for the year in limited partnerships	70	110
Closing balance, 31 December	552	491
Accumulated impairments
Opening balance, 1 January	-	-98
Divestments	-	98
Closing balance, 31 December	-	-
Carrying amount, 31 December	552	491

Specification of Parent Company's (co-owner's) directly owned holdings of shares in associated companies and joint ventures.

2011 MSEK	% of votes and capital	Carrying amount
Associated companies
Hawker Pacific Airservices Ltd, Hong Kong	32.3	22
Industrikompetens i Östergötland AB, 556060-5478, Linköping	33.0	2
Sörman Intressenter AB, 556741-2233, Stockholm	25.3	3
Avia Satcom Co Ltd, Thailand	36.6	78
Joint ventures
Gripen International KB, 969679-8231, Linköping	50.0	434
Industrigruppen JAS AB, 556147-5921, Stockholm	80.0	4
Avia Tech Systems Co. Ltd., Thailand	40.0	9
Total		552

2010 MSEK	% of votes and capital	Carrying amount
Associated companies
Hawker Pacific Airservices Ltd, Hong Kong	33.0	22
Industrikompetens i Östergötland AB, 556060-5478, Linköping	33.0	2
Sörman Intressenter AB, 556741-2233, Stockholm	25.3	3
Denel Saab Aerostructures (Pty) Ltd, South Africa	20.0	64
Vingtec Saab AS, Norway	49.0	-
Image Systems AB, 556550-5400, Linköping	35.8	4
Joint ventures
Saab Natech AB, 556627-5003, Jönköping	51.0	7
Gripen International KB, 969679-8231, Linköping	50.0	365
Gripen Venture Capital AB, 556298-6629, Linköping	50.0	12
SAAB-BAE SYSTEMS Gripen AB, 556527-6721, Linköping	50.0	-
Saab Ericsson NBD Innovation AB, 556628-6406, Stockholm	60.0	-
Industrigruppen JAS AB, 556147-5921, Stockholm	80.0	3
Avia Tech Systems Co. Ltd., Thailand	40.0	9
Total		491

RECEIVABLES FROM GROUP COMPANIES, ASSOCIATED COMPANIES AND JOINT VENTURES

Parent Company		Receivables from Group companies		Receivables from associated companies and joint ventures
MSEK	2011	2010	2011	2010
Accumulated acquisition value
Opening balance, 1 January	557	760	32	116
Acquisitions	642	2	1	-
Sales	-288	-205	-16	-84
Closing balance, 31 December	911	557	17	32

NOTE 25

FINANCIAL INVESTMENTS

Group
MSEK	31-12-2011	31-12-2010
Financial investments held as fixed assets
Financial assets measured at fair value through profit or loss:
Shares and participations	54	56
Investments held to maturity:
Interest-bearing securities	143	147
Total	197	203

Short-term investments classified as current assets

Financial assets measured at fair value through profit or loss:

Interest-bearing securities	4,555	1,544
Total	4,555	1,544

Investments in interest-bearing securities consist of government, mortgage and corporate bonds, corporate and bank commercial paper, and mortgage credit certificates, as well as Floating Rate Notes. The fair value of interestbearing securities held to maturity amounts to msek 145 (147).

NOTE 26

OTHER LONG-TERM SECURITIES HOLDINGS

Parent Company
MSEK	2011	2010
Accumulated acquisition value
Opening balance, 1 January	1,468	1,529
Acquisitions	1	2
Divestments	-1,431	-63
Closing balance, 31 December	38	1,468
Accumulated impairments
Opening balance, 1 January	-11	-34
Impairments for the year	-3	-18
Divestments	-	41
Closing balance, 31 December	-14	-11
Carrying amount, 31 December	24	1,457

Divestments in 2011 relate to the holding in Aker Holding AS.

NOTE 27

LONG-TERM RECEIVABLES AND OTHER RECEIVABLES

Group
MSEK	31-12-2011	31-12-2010
Long-term receivables held as fixed assets
Receivables from associated companies, interest-bearing	70	130
Receivables from associated companies, non interest bearing	2	2
Receivables from joint ventures, interest-bearing	-	8
Other interest-bearing receivables	29	12
Other non interest-bearing receivables	945	704
Total	1,046	856

Other non interest-bearing receivables primarily consist of net receivables attributable to pensions according to ias 19.

Saab does not consider there to be a significant difference between book and fair value.

Group
MSEK	31-12-2011	31-12-2010
Other receivables held as current assets
Receivables from associated companies, non interest bearing	22	43
Receivables from joint ventures, non interest-bearing	37	3
Advance payments to suppliers	58	80
Other interest-bearing receivables	368	617
Other non interest-bearing receivables	451	415
Subtotal	936	1,158
Receivables from customers
Assignment revenue	3 438	4,153
Less utilised advance payments	-795	-1,681
Subtotal	2 643	2,472
Total	3 579	3,630

The decrease in other interest-bearing receivables mainly relates to the divestment of Aker Holding as.

Assignment revenue refer to assignment costs incurred plus reported gross income less any losses attributable to the work performed. Unutilised advance payments amount to msek 1,022 (643).

Costs attributable to assignment revenue amounted to msek 2,481 (3,150). Reported gross income amounted to msek 957 (1,003).

Parent Company

MSEK	31-12-2011	31-12-2010
Other long-term receivables
Interest-bearing receivables	25	1
Non interest-bearing receivables	9	9
Total	34	10

Parent Company

MSEK	31-12-2011	31-12-2010
Other receivables held as current assets
Non interest-bearing receivables	286	126
Subtotal	286	126
Receivables from customers
Assignment revenue	2,194	2,741
Less utilised advance payments	-435	-876
Subtotal	1,759	1,865
Total	2,045	1,991

Assignment revenue refer to assignment costs incurred plus reported gross income less any losses attributable to the work performed. Unutilised advance payments amount to msek 471 (98).

Costs attributable to assignment revenue amounted to msek 1,583 (2,100). Reported gross income amounted to msek 611 (641).

Parent Company

MSEK	2011	2010
Long-term receivables
Accumulated acquisition value
Opening balance, 1 January	10	44
Incremental receivables	25	1
Deductible receivables	-1	-35
Closing balance, 31 December	34	10

NOTE 28

INVENTORIES

Group

MSEK	31-12-2011	31-12-2010
Raw materials and consumables	2,109	1,681
Work in progress	1,470	1,534
Finished goods and goods for resale	755	885
Total	4,334	4,100

Saab and the Swedish Ministry of Enterprise, Energy and Communications have reached agreement with the National Debt Office to co-finance Saab's participation in the Airbus A380 project. The co-financing is in the form of a royalty loan maximised at msek 350. Repayment will take the form of a royalty on each delivery to Airbus. Through 2011, the National Debt Office has paid out a net of msek 263 (263), which reduces inventory in the financial statements.

The Group's cost of goods sold includes inventory impairments of msek 16 (145). The reversal of previous impairments amounts to msek 89 (0). The value of inventories measured at fair value less selling expenses amounts to msek 100 (59). Of inventories, msek 407 is expected to be realised more than twelve months after the closing day.

Parent Company

MSEK	31-12-2011	31-12-2010
Raw materials and consumables	1,518	1,263
Work in progress	1,059	948
Finished goods and goods for resale	519	540
Advance payments to suppliers	56	31
Total	3,152	2,782

Cost of goods sold for the Parent Company includes inventory impairments of msek 11 (66) after the reversal of previous impairments of msek 86 (0). The value of inventories measured at fair value less selling expenses amounts to msek 100 (59). Of the Parent Company's inventories, msek 282 is expected to be realised more than twelve months after the closing day.

NOTE 29

ACCOUNTS RECEIVABLE

Accounts receivable in the Group amount to msek 3,153 (3,052). In 2011, Saab sold receivables as part of the sales programme arranged in 2009 to strengthen its financial position and increase financial flexibility. Customers in most cases are nations with high credit worthiness.

The receivables were sold in their entirety at a favourable funding level. This reduced accounts receivable at year-end by msek 872 (1,409) and also has a negative effect on cash flow of msek -537 (620). During the year, accounts receivable were written down by msek 5 (12). Reversals of previous write-downs amounted to msek 3 (15).

Accounts receivable in the Parent Company amount to msek 1,424 (1,338). During the year, receivables were written down by msek 4 (3). Reversals of previous write-downs amounted to msek 2 (8). See also Note 41.

NOTE 30

PREPAID EXPENSES AND ACCRUED INCOME

	Group			Parent Company
MSEK	31-12-2011	31-12-2010	31-12-2011	31-12-2010
Prepaid expenses	367	399	275	347
Accrued service income	143	148	73	87
Other accrued income	319	133	292	78
Total	829	680	640	512

Prepaid expenses relate to pension premiums, rents, licenses and insurance, among other things.

LIQUID ASSETS

Group
MSEK	31-12-2011	31-12-2010
Cash and bank balances	681	703
Bank deposits	1,083	1,830
Funds in escrow accounts	139	-
Deposits held on behalf of customers	15	11
Total according to statement of financial position	1,918	2,544
Total according to statement of cash flows	1,918	2,544

Bank deposits relate to short-term investments, the large part of which has a maturity of less than one month. Funds in escrow accounts relate to cash deposited with independent third parties until contractual terms are met. The Group's unutilised account overdraft facility amounted to msek 118 (131) at year end. With regard to the Group's other loan facilities, refer to Notes 36 and 41.

NOTE 32

ASSETS HELD FOR SALE

The Group holds no assets or liabilities for sale. Assets held for sale in 2010 amounted to msek 113 and included an associated company within Electronic Defence Systems, Grintek Ewation. Saab's interest in Grintek Ewation was divested during the second quarter to Cassidian, a division of EADS; see note 8.

NOTE 33

SHAREHOLDERS' EQUITY

The shares in the Parent Company are divided into two series, a and b. Both classes of shares carry equal rights, with the exception that each Series a share is entitled to ten votes and each Series b share one vote. The shares have a quota value of sek 16.

Outstanding shares as of 31 December 2011	Number of shares	Per cent of shares	Per cent of votes
Series A	1,907,123	1.8	15.6
Series B	103,424,835	98.2	84.4
Total	105,331,958	100.0	100.0

Outstanding shares as of 31 December 2010	Number of shares	Per cent of shares	Per cent of votes
Series A	1,907,123	1.8	15.6
Series B	102,810,606	98.2	84.4
Total	104,717,729	100.0	100.0

Change in number of

outstanding shares 2011	Series A	Series B	Total
Number of outstanding shares as of 1 January	1,907,123	102,810,606	104,717,729
Early share matching	-	55,352	55,352
Share matching plan	-	558,877	558,877
Number of outstanding shares as of 31 December	1,907,123	103,424,835	105,331,958

In 2011 no Series b shares were repurchased on the market to secure Saab's Share Matching Plan and Performance Share Plan. During the year, 614,229 shares were matched in Saab's Share Matching Plan. A total of 3,818,386 shares are held in treasury.

The dividend to shareholders amounted to msek 367 (237), or sek 3.50 (2.25) per share.

Management of the Group's capital

The Group's capital under management consists of equity. The Group's capital management goal is to facilitate continued operating growth and to remain prepared to capitalise on business opportunities. The long-term equity/asset goal is at least 30 per cent.

Net result of cash flow hedges

The net result of cash flow hedges comprises the effective share of the cumulative net change in fair value of a cash flow hedging instrument attributable to hedge transactions that have not yet taken place.

Translation reserve

The translation reserve comprises exchange rate differences that arise from the translation of financial reports from operations that have prepared their reports in a currency other than the currency that the Group's financial reports are presented in. The Parent Company and the Group present their financial reports in sek. The translation reserve at year-end amounts to msek -51 (-12). Of the translation reserve msek -4 (2) has been reclassified to gains/losses.

Revaluation reserve

The revaluation reserve comprises the difference between the fair value and carrying amount of operating properties reclassified as investment properties.

PARENT COMPANY

Restricted reserves

Restricted reserves may not be reduced through profit distributions.

Revaluation reserve

When a tangible or financial fixed asset is revaluated, the revaluation amount is allocated to a revaluation reserve.

Legal reserve

Provisions to the legal reserve has previously amounted to at least 10 per cent of net income for the year, until the legal reserve corresponded to 20 per cent of the Parent Company's capital stock. As of 2006 provisions are voluntary and the Parent Company makes no provisions to the statutory reserve.

Unrestricted equity

Retained earnings

Consists of previous year's unrestricted equity after profit distribution and Group contributions paid. Retained earnings together with net income for the year comprise unrestricted equity, i.e., the amount available for distribution to the shareholders.

EARNINGS PER SHARE

	2011	2010
Net income for the year attributable to Parent Company's shareholders (MSEK)	2,225	433
Weighted average number of common shares outstanding :
before dilution (thousands)	104,982	105,218
after dilution (thousands)	109,150	109,150
Earnings per share, before dilution (SEK)	21.19	4.12
Earnings per share, after dilution (SEK)	20.38	3.97

The weighted average number of shares outstanding before dilution refers to the total number of shares in issue less the average number of repurchased treasury shares. The weighted average number of shares outstanding after dilution refers to the total number of shares in issue.

NOTE 35

INTEREST-BEARING LIABILITIES

Group
MSEK	31-12-2011	31-12-2010
Long-term liabilities
Liabilities to credit institutions	1,103	1,103
Other interest-bearing liabilities	115	14
Total	1,218	1,117
Current liabilities
Liabilities to credit institutions	46	78
Liabilities to joint ventures	449	428
Other interest-bearing liabilities	25	83
Total	520	589
Total interest-bearing liabilities	1,738	1,706

Terms and repayment schedules

Collateral for bank loans amounts to msek 0 (0). Of the long-term liabilities, msek 1,128 (1,110) falls due between one and five years of the closing day and msek 90 (7) later than five years of the closing day.

Liabilities to credit institutions largely consist of Medium Term Notes (mtn), and in the previous year of commercial paper as well. For more information on financial risk management, refer to Note 41.

The fair value of mtns and commercial paper exceeds book value by msek 13 (8). Saab otherwise does not consider there to be a significant difference between book and fair value.

NOTE 36

LIABILITIES TO CREDIT INSTITUTIONS

Parent Company
MSEK	31-12-2011	31-12-2010
Current liabilities
Overdraft facilities: Available credit/limit	118	1,254
Short-term portion of bank loans: Unutilised portion	-118	-131
Utilised credit amount	-	1,123
Short-term borrowing from credit institutions	-	-
Total	-	1,123
Long-term liabilities
Overdraft facilities: Available credit/limit	4,000	4,000
Long-term portion of bank loans: Unutilised portion	-4,000	-4,000
Utilised credit amount	-	-
Long-term borrowing from credit institutions	1,100	1,100
Total	1,100	1,100

Total liabilities to credit institutions 1,100 2,223

In December 2009, Saab established a mtn programme of sek 3 billion in order to enable the issuance of long-term loans on the capital market. Under the terms of this programme, Saab has issued bonds and Floating Rate Notes (frn) for msek 1,100.

The Parent Company had mnok 975 in financing arranged in connection with the acquisition of 7.5 per cent of the shares in Aker Holding as in 2007. Saab's investment amounted to approximately nok 1.2 billion, of which about 80 per cent was financed through the above mentioned loans.

Saab has exercised the option which gave it the right to sell its shares in Aker Holding as. The loan was amortised and the interest rate swap was terminated. The net amount in nok was hedged through forward contracts. The sale had a positive effect on cash flow in the Parent Company of approximately msek 1,500 and on net liquidity in the Group of approximately msek 130.

EMPLOYEE BENEFITS

NOTE 37

Saab has two types of pension plans: defined-benefit and defined-contribution. In defined-benefit plans, post-employment compensation is based on a percentage of the recipient's salary. Saab has around ten types of defined-benefit plans. The predominant plan is the itp plan, and the second largest plan refers to state-funded retirement pension. Saab's defined-benefit plans are secured in three ways: as a liability in the balance sheet, in pension funds or funded through insurance with mainly Alecta. The Saab Pension Fund, that secured part of the itp plan, had assets of msek 4,050 (3,969) as of 31 December 2011, compared to an obligation of msek 5,866 (4,675) according to ias 19, or a solvency margin of 69 per cent (85).

The portion secured through insurance with Alecta refers to a definedbenefit plan that comprises several employers and is reported according to a pronouncement by the Swedish Financial Reporting Board, ufr 3. For fiscal year 2011, the Group did not have access to the information that would make it possible to report this plan as a defined-benefit plan. The itp pension plan, which is secured through insurance with Alecta, is therefore reported as a defined-contribution plan. Alecta's surplus can be distributed to policyholders and/or insureds. At year-end 2011, Alecta's surplus in the form of the collective funding ratio amounted to 113 per cent (146). The collective funding ratio is the market value of Alecta's assets as a percentage of the insurance obligations calculated according to Alecta's actuarial assumptions, which does not conform to ias 19.

In defined-contribution plans, pensions are based on the premiums paid and return on assets.

Group
MSEK	31-12-2011	31-12-2010
Wholly or partially funded obligations
Present value of defined-benefit obligations	6,319	4,969
Fair value of assets under management	-4,446	-4,298
Net wholly or partially funded obligations	1,873	671
Present value of unfunded defined-benefit obligations	222	264
Present value of net obligation	2,095	935
Unreported actuarial losses	-2,678	-1,404
Net obligation employee benefits	-583	-469

The net amount is reported in the following items in the statement of financial position

Provisions for pensions	12	5
Long-term receivables	595	474
The net amount is divided among plans in the followingcountries
Sweden	-523	-413
USA	-72	-61
Germany	5	5
Switzerland	7	-

Unreported actuarial losses amount to msek 2,678 (1,404). Actuarial losses are calculated as the difference between pension obligations and the liability according to the statement of financial position. If the actuarial losses are more than 10 per cent of the pension obligation, the portion exceeding 10 per cent is amortised over the remaining period of employment for employees covered by defined-benefit plans. According to the above table, the actuarial losses exceed the pension obligation for 2011 by more than 10 per cent. This means that the difference between msek 654 and msek 2,678 will be distributed over anticipated remaining years in service.

Net amount in the statement of financial position -583 -469

During 2012, amortisation will be approximately msek 183.

Unreported actuarial losses

Group	31 December
MSEK	2011	2010	2009	2008	2007
Present value of defined-benefit obligations	-6,541	-5,233	-5,577	-5,004	-4,679
Fair value of assets under man agement	4,446	4,298	3,907	3,356	3,565
Net obligation in the statement of financial position	-583	-469	-475	-424	101
Losses	-2,678	-1,404	-2,145	-2,072	-1,013

The unreported actuarial loss amounted to msek 1,344 in 2011, primarily due to two negative factors. The return on assets under management was lower than expected at -0.7 per cent, compared to an anticipated 6 per cent, which produced an actuarial loss of msek 290. The actuarial loss on pension obligations amounted to msek 1,048, which was due to a 130 bp lower discount rate. The actuarial loss was amortised by msek 70 during the year. The net loss increased by msek 1,274.

Changes in net obligation for defined-benefit plans reported in the statement of financial position

Group

MSEK	2011	2010
Net obligation for defined-benefit plans, 1 January	-469	-475
Compensation paid	-208	-189
Deposits to pension fund and other funding	-132	-170
Cost reported in income statement	216	339
Settlement/Translation difference	-9	3
Withdrawals from pension fund	19	23
Net obligation for defined-benefit plans, 31 December	-583	-469

Change in pension obligation

Group

MSEK	2011	2010
	5,233
Opening fair value, 1 January		5,577
Benefits vested during the year	156	170
Interest expense	249	226
Pension disbursements	-208	-189
Settlement	56	-14
Actuarial gain/loss	1,048	-523
Translation differences	7	-14
Closing fair value, 31 December	6,541	5,233

Change in assets under management

Group

MSEK	2011	2010
Opening fair value, 1 January	4,298	3,907
Assumed return	259	201
Withdrawals	-19	-23
Settlement	60	-14
Contributions	132	170
Actuarial gain/loss	-290	68
Translation differences	6	-11
Closing fair value, 31 December	4,446	4,298

Cost reported in income statement

Group

MSEK	2011	2010
Costs for employment during current year	156	170
Interest expense for obligation	249	226
Assumed return on assets under management	-259	-201
Amortised actuarial losses	70	144
Cost of defined-benefit plans in income statement	216	339
Cost of defined-contribution plans	531	490
Payroll tax	146	185
Total cost of post-employment compensation	893	1,014

The cost is reported on the following lines in the income statement:

Group

MSEK	2011	2010
Cost of goods sold	630	685
Marketing expenses	76	59
Administrative expenses	48	56
Research and development costs	79	45
Financial expenses	60	169
Total cost of post-employment compensation	893	1,014

Interest expense and amortisation of actuarial losses less the assumed return on assets under management is classified as financial expense. Other pension costs are divided by function in the income statement in relation to how payroll expenses are charged to the various functions.

Return on assets under management

Group
MSEK	2011	2010
Actual return on assets under management	-31	269
Assumed return on assets under management	-259	-201
Actuarial result from assets under management during the year	-290	68

Assumptions for defined-benefit obligations

2011	2010	2009	2008	2007
3.50	4.80	4.00	4.25	4.50
6.00	6.00	5.00	5.00	5.00
3.00	3.00	3.00	3.00	3.00
2.00	2.00	2.00	2.00	2.00
3.00	3.00	5.00	5.00	5.00
12.9	13.0	11.2	11.2	11.3

1) Refers to Sweden since essentially all defined-benefit plans are in Sweden.

The following assumptions serve as the basis of the valuation of Saab's pension liability:

Discount rate: The valuation is based on covered Swedish mortgage bonds (aaa). Each assumed cash flow is discounted using an interest rate for the corresponding maturity.

Assumed return on assets under management: Of the assets managed by the Saab Pension Fund, 50 per cent is invested in interest-bearing bonds and 50 per cent in equities and hedge funds. The risk premium above current interest rate levels, which has historical support and is used by many companies for shares, is approximately 3-6 per cent above interest rates. For bonds, the interest rate used is the same as the discount rate less a risk premium for mortgage bonds. The assumed rate of return is 3 per cent (4) on the interestbearing bonds and 9 per cent (8) on equities and hedge funds. Saab's pension fund does not own any Saab shares.

Long-term salary increase assumption: Assumed to be as high as the increase in the basic income amount. This means that Saab expects the same salary increases as the national average.

Long-term increase in basic income: Data from Statistics Sweden on current wage increases in the private sector provide an historical average during the period 1974–2000 of approximately 1 per cent above inflation.

Long-term rate of inflation: Based on the Riksbank's inflation target of 2 per cent.

Mortality: Mortality is the same assumption recommended by the Financial Supervisory Authority (fffs 2007:31), based on Makeham formulas for men and women.

Marriage: Marriage is the same assumption recommended by the Financial Supervisory Authority (fffs 2001:13).

Employee turnover: The likelihood that an individual ends his/her employment is assumed to be 3 per cent per year.

Parent Company's pension obligations

Funds allocated for pensions according to the balance sheet correspond to the net present value of existing pension obligations less funds that are secured by Saab's pension fund.

Parent Company

MSEK			31-12-2011	31-12-2010
FPG/PRI pensions			309	75
Other pensions			88	44
Other provisions for pensions			72	73
Total			469	192
Of which credit guarantees via FPG/PRI			389	107
	Group			Parent Company
MSEK	2011	2010	2011	2010
Amount of provision expected to be settled after more than 12 months	12	5	333	67

Share Matching Plan

In April 2007, Saab's Annual General Meeting resolved to offer employees the opportunity to participate in a Global Share Matching Plan. The Board considers it important that Saab's employees share a long-term interest in the appreciation of the company's shares. Employees who participate in the plan can have up to 5 per cent of their gross base salary withheld to purchase shares on the nasdaq omx Stockholm during a twelve-month period. 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.

In April 2008, Saab's Annual General Meeting resolved to introduce a performance-based plan for senior executives and key employees entitling them to 2–5 matching shares depending on the category the employee belongs to. In addition to the requirement that the employee remain employed by Saab after three years, there is a requirement that earnings per share grow in the range of 5 to 15 per cent. The Annual General Meeting 2011 amended the terms of the Performance Share Plan 2011, compared to previous years' programs, so that those who are eligible may also participate in Saab's Share Matching Plan 2011, and that the Performance Share Plan 2011 entitles participants to 1-4 matching shares, depending on the category to which the employee belongs.

2007 Share Matching Plan

In 2008, employees purchased 673,235 Series b shares, corresponding to the total number of matching shares. The number of participants from the start was 5,104. Matching shares were issued on four occasions in 2011. In total, 633,479 shares have been matched by the plan, corresponding to 94 per cent of the shares that have been purchased.

2008 Share Matching Plan

In April 2008, Saab's Annual General Meeting resolved to offer employees a new Share Matching Plan with similar terms as the 2007 plan. In 2009, employees purchased 680,267 Series b shares, corresponding to the maximum number of matching shares. The number of participants from the start was 3,194. Matching shares will be issued on four occasions in 2012, beginning in January.

2009 Share Matching Plan

In April 2009, Saab's Annual General Meeting resolved to offer a third Share Matching Plan with similar terms as the previous years' plans. In 2010, participants purchased 462,877 Series b shares, corresponding to the total number of matching shares. The number of participants from the start was 2,841.

2010 Share Matching Plan

In April 2010, Saab's Annual General Meeting resolved to offer a fourth Share Matching Plan with similar terms as the previous years' plans. In 2011, participants purchased 303,033 Series b shares, corresponding to the total number of matching shares. The number of participants from the start was 2,315.

2008 Performance Share Plan

In the first Performance Share Plan, around 280 senior executives and key employees were invited to participate. The number of participants from the start was 193. Participants in the plan purchased 123,590 shares, corresponding to about 275,000 matching shares. After the end of the measurement period, on 30 September 2011, it was determined that the growth requirement of 5 to 15 per cent had not been reached, due to which no matching will be issued in 2012.

2009 Performance Share Plan

In the second Performance Share Plan, the 138 participating employees purchased 62,633 shares in 2010. The maximum number of matching shares is about 140,000.

2010 Performance Share Plan

In the third Performance Share Plan, the 115 participating employees purchased 46,972 shares in 2011. The maximum number of matching shares is about 110,000.

2011 Share Matching Plan and Performance Share Plan

In April 2011, Saab's Annual General Meeting resolved to offer employees a new Share Matching Plan and a new Performance Share Plan. The Share Matching Plan for 2011 comprises all employees, including senior executives and key persons. The Performance Share Plan for 2011, which is designed solely for senior executives and key persons, entitles participants to 1-4 matching shares, depending on the category to which the employee belongs. The plans start in January 2012 and continue through the calender year 2012. The maximum number of matching shares in these two plans is 1,040,000.

Share Matching Plan		2007 plan 2008 plan 2009 plan 2010 plan			Total
Number of matching shares at beginning of the year	582,381		628,913 456,056		- 1,667,350
Allotted during the year (treasury shares)	-	-	-	303,033	303,033
Less early matching	-18,883	-22,766	-12,501	-1,202	-55,352
Ordinary matching	-558,877	-	-		- -558,877
Forfeited matching shares	-4,621	-17,351	-11,859	-2,559	-36,390
Number of matching shares eligible at year-end	-		588,796 431,696		299,272 1,319,764
Number of participants, 31 Dec. 2011	-	2,805	2,638	2,272
% of total number of employees	-	21	20	17
Average remaining maturity, years	-	0.4	1.7	2.7
Performance Share Plan				2009 plan 2010 plan	Total
Number of matching shares at beginning of the year			61,023	-	61,023
Allotted during the year (treasury shares)			-	46,972	46,972
Forfeited matching shares			-5,754	-322	-6,076
Number of matching shares eligible at year-end			55,269	46,650	101,919
Number of participants, 31 Dec. 2011			123	110
Average remaining maturity, years			1.7	2.7
Recognised expense for above-mentioned plan,
including social security expenses				2011	2010
Share Matching Plan 2007				22	33
Share Matching Plan 2008				25	23
Share Matching Plan 2009				20	8
Share Matching Plan 2010				4	-
Performance Share Plan 2008				-	-4
Performance Share Plan 2009				5	2
Performance Share Plan 2010				1	-

The fair value of the services rendered is based on the share price of the matching shares that are expected to be allotted. The share price is deter-

Total 77 62

mined at the time of the participants' investment adjusted by the dividend that does not accrue to the employee during the vesting period.

The expense for the share plans is included in operating income and is recognised in the balance sheet as equity and accrued expenses (social security fees). Administrative expenses for the share matching plans amounted to msek 5 (4) in 2011.

SENIOR EXECUTIVES' BENEFITS

Remuneration to Board members

In accordance with the resolution of the Annual General Meeting, the fees paid to the members of the Board amount to sek 4,075,000 (4,075,000), consisting of sek 1,100,000 (1,100,000) to the Chairman and sek 425,000 (425,000) to each of the other members elected by the Annual General Meeting, with the exception of the President. The member nominated by bae Systems, Michael O'Callaghan, an employee of bae Systems, stepped down from his position on the Board during the year after bae Systems sold its shares in Saab. Michael O'Callaghan has declined his fees with reference to bae Systems' policy.

For audit committee work, committee chairman Per-Arne Sandström also received fees of sek 150,000 (150,000) and committee members Johan Forssell and Joakim Westh sek 100,000 (100,000) each.

For compensation committee work, committee chairman Lena Treschow Torell also received fees of sek 135,000 (135,000) and committee members Marcus Wallenberg sek 80,000 (80,000) and Sten Jakobsson sek 80,000 (0).

In his capacity as a consultant, Board member Åke Svensson received sek 106,334 from Saab ab through 31 March 2011 for assisting the new President and ceo and the Group Management. Hence the assignment has been completed.

Remuneration to the President

The salary paid to the President and ceo consists of a fixed portion. The previous short-term variable portion has been discontinued as of 2011 in accordance with the resolution of the Annual General Meeting. The preparation process for compensation issues regarding the President is handled by the Board's Remuneration Committee according to the principles laid down by the Annual General Meeting and then voted on by the Board.

Håkan Buskhe has participated since 1 September 2010 in the Saab Global Performance Share Plans approved by the 2009 and 2010 Annual General Meetings.

Outstanding matching rights in the Saab Global Performance Share Plan 2009 amount as of 31 December 2011 to sek 260,329 (14,237) and in the Saab Global Performance Share Plan 2010 to sek 275,318 at a estimated outcome.

During the period 1 January through 31 December 2011, Håkan Buskhe received salary and other benefits totalling sek 10,341,508 (2,958,466), of which other benefits, including performance share plans, amounted to sek 1,678,261 (31,326).

Pension terms

The retirement age for the President is 62. The President has a defined-contribution pension plan. He may decide himself on the payment term, though within the provisions of Swedish income tax law. The pension cost for Saab consists of pension premiums amounting to 30 per cent of fixed salary until the President turns 50, after which the pension premium will amount to 35 per cent of fixed salary. Pension premiums are paid as long as the President remains an employee of the company, but not beyond the age of 62. During his first five years of employment, the President also receives an extra pension contribution of sek 440,000, payment of which is made annually and is conditional on Håkan Buskhe remaining an employee at the time.

To this is added the cost of pension premiums according to the itp plan. The pension commitment is vested.

For 2011, the cost of President Håkan Buskhe's pension, including itp, was sek 3,187,551 (1,391,089).

Severance terms

If terminated by the company, the President will receive a salary and pension benefits for a period of six months (period of notice). Thereafter he will receive severance pay equivalent to one year of salary, based on his current fixed salary. If the President does not obtain new employment, he will receive an additional six months of severance pay. The salary during the period of notice and severance will be deducted from income received from other employment

during the same period. If the President resigns voluntarily, there is a sixmonth period of notice with salary and pension benefits, but no severance pay. The President's agreement contains a non-compete clause.

Remuneration to other senior executives

The group of other senior executives included 13 individuals (13) in 2011, consisting of the Executive Vice Presidents, heads of the business areas and heads of Group staffs. Carina Brorman took over as the new Head of Group Communications on 1 October. At the turn of 2011/2012, Group Management therefore consisted of 14 persons, including the ceo.

The salaries paid to other senior executives consist of a fixed portion. The previous short-term variable portion has been discontinued as of 2011 in accordance with the resolution of the Annual General Meeting. Compensation issues regarding the other senior executives are prepared by the Head of Group Human Resources and presented to the President, who makes a decision pending the approval of the Compensation Committee and 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. The Saab Share Matching Plan 2007 was concluded in November 2011. Since November 2008 all eligible executives have participated in the Saab Global Performance Share Plans approved by the Annual General Meetings in 2008, 2009 and 2010. Outstanding matching rights in the Saab Global Performance Share Plan 2008 amount to sek 0 (0) as of 31 December 2011, while the Saab Global Performance Share Plan 2009 amounts to sek 2,373,575 (587,843) and the Saab Global Performance Share Plan 2010 amounts to sek 668,333 at a estimated outcome.

During the year, three members of Group Management received total variable cash remuneration of sek 2,393,866 before tax for their extraordinary performance in 2011.

In 2011, the other senior executives received salaries and other benefits totalling sek 48,405,129 (37,880,302), of which other benefits, including performance share plans, accounted for sek 4,112,686 (684,594).

Pension terms

As of 1 January 2005, a pension age of 62 years applies to new executives. Among other senior executives, two individuals have a pension age of 60 years.

Summary of compensation and other benefits during 2011

In addition to itp or its equivalent, 13 members of the group (13) are affiliated with the Saab plan, which is defined-contribution and vested. The Saab plan provides pensions benefits over and above itp or its equivalent on salary levels between 20 and 30 basic amounts as well as on salary segments over 30 basic amounts. The individuals themselves can decide on the payment term, though within the provisions of Swedish income tax law. Moreover, an insurance policy finances the period between the ages of 60 or 62 years and 65 years.

The pension cost for Saab consists of pension premiums, which are based on a percentage of qualifying salaries. The percentage rate is determined by each executive's time remaining until the pension age, 60 or 62 years, when joining the plan. The aggregate insurance balance should cover a targeted pension from 65 years of approximately 32.5 per cent of salary levels between 20 and 30 basic amounts and approximately 50 per cent of segments over 30 basic amounts of qualifying salaries. Premium payments continue as long as the individuals remain in their positions or as employees of the company.

Pension obligations are vested. In 2011, pension costs for other senior executives, including itp and its equivalent, amounted to sek 16,127,093 (14,076,215). Other senior executives are entitled, or obliged if the company so requests, to retire on pension as of the age of 60 or 62 years.

Severance terms

If terminated by the company, the group of other senior executives will receive a salary and pension benefits for six months (period of notice). Thereafter they will receive severance pay equivalent to 18 months of salary, based on their fixed salary. Severance is paid monthly with the first payment in the month after employment has ended. Severance is not paid for the period that falls after the contractual pension age. Employees hired before 1 January 2005 who have reached the age of 55 are entitled to another six months of severance.

The salary during the period of notice and severance will be deducted from income received from other employment during the same period. If they resign voluntarily, there is a six-month period of notice with salary and pension benefits, but no severance pay.

Other benefits

All senior executives have a company car and medical insurance. Several senior executives also have benefits in the form of overnight housing and travel.

SEK	Base salary/ Board and Committee fee	Variable compen sation	Performance Share Plan	Other benefits 6)	Pension cost	Total	Provisions 2011 for long-term variable compensation at estimated outcome
Chairman of the Board
Marcus Wallenberg	1,180,000	-	-	-	-	1,180,000	-
Deputy Chairman
Sten Jakobsson	505,000	-	-	-	-	505,000	-
Other Board members 1)
Åke Svensson	425,000	-	-	-	-	425,000	-
Johan Forssell	525,000	-	-	-	-	525,000	-
Per-Arne Sandström	575,000	-	-	-	-	575,000	-
Cecilia Stegö Chilò	425,000	-	-	-	-	425,000	-
Lena Treschow Torell	560,000	-	-	-	-	560,000	-
Joakim Westh	525,000	-	-	-	-	525,000	-
Michael O'Callaghan 7)	-	-	-	-	-	-	-
President and CEO Håkan Buskhe 4)	8,663,247	-	520,042	1,158,219 2)	3,187,551	13,529,059	535,647
Other senior executives 4)	41,898,577 5)	2,393,866 3)	2,365,683	1,747,003	16,127,093 5)	64,532,222	3,041,908
Total	55,281,824	2,393,866	2,885,725	2,905,222	19,314,644	82,781,281	3,577,555

1) Excluding consultant's fee payed to member of the Board.

2) Including benefits for air travel described in the administration report on page 68.

3) Including remuneration to two senior executives, which, according to their contracts, was paid in the form of pension premiums.

4) In addition, cash payments related to bonuses for 2010 were made in the amount of SEK 3,665,530. 5) Including estimated remuneration allocated for seniors executives who leave Group Management in 2012.

6) Including compensation for the additional costs the benefits lead to.

7) Employed by BAE Systems. Resigned on June 16 2011, as a result of BAE System's sale of its shareholding in Saab.

Guidelines for remuneration and other benefits for senior executives are described in the financial review.

Summary of compensation and other benefits during 2010

	Base salary/					Provisions 2010 for long-term variable
SEK	Board and Committee fee	Variable compen sation	Other benefits	Pension cost	Total	compensation at estimated outcome
Chairman of the Board
Marcus Wallenberg	1,180 000	-	-	-	1,180,000	-
Deputy Chairman
Sten Jakobsson	425,000	-	-	-	425,000	-
Other Board members1)
Åke Svensson	-	-	-	-	-	-
Erik Belfrage	425,000	-	-	-	425,000	-
Johan Forssell	525,000	-	-	-	525,000	-
George Rose	-	-	-	-		-
Per-Arne Sandström	575,000	-	-	-	575,000	-
Cecilia Stegö Chilò	425,000	-	-	-	425,000	-
Lena Treschow Torell	560,000	-	-	-	560,000	-
Joakim Westh	525,000	-	-	-	525,000	-
President and CEO Åke Svensson	5,933,537	1,123,200	15,178	1,626,631	8,698,546	-
President and CEO Håkan Buskhe	2,927,140	-	31,326	1,391,089	4,349,555	14,237
Other senior executives	34,534,548	2,661,160	684,594	14,076,215	51,956,517	1,210,056
Total	48,035,225	3,784,360	731,098	17,093,935	69,644,618	1,224,293

1) Excluding consultant's fee paid to Board member.

NOTE 38

PROVISIONS

Group
MSEK	31-12-2011	31-12-2010
Provisions that are long-term liabilities
Obligations related to regional aircraft	1,119	1,199
Expenditures for restructuring measures	89	290
Loss contracts	245	401
Other	275	317
Total	1,728	2,207
Provisions that are current liabilities

Obligations related to regional aircraft	12	102
Expenditures for restructuring measures	115	254
Loss contracts	160	97
Other	459	339
Total	746	792

Parent Company

MSEK	31-12-2011	31-12-2010
Obligations related to regional aircraft	320	451
Expenditures, for restructuring measures	78	248
Loss contracts	358	490
Other	278	276
Total	1,034	1,465

Obligations related to regional aircraft

MSEK	Group	Parent Company
Opening balance, 1 January 2011	1,301	451
Amount utilised during the year	-190	-131
Translation differences and other	20	-
Closing balance, 31 December 2011	1,131	320

Expenditures for restructuring measures

MSEK	Group	Parent Company
Opening balance, 1 January 2011	544	248
Provisions allocated during the year	76	50
Amount utilised during the year	-316	-197
Reversal of unutilised amount	-83	-5
Reclassification	-17	-18
Closing balance, 31 December 2011	204	78

Loss contracts

MSEK	Group	Parent Company
Opening balance, 1 January 2011	498	490
Provisions allocated during the year	182	142
Amount utilised during the year	-301	-293
Reversal of unutilised amount	-34	-21
Reclassification	52	40
Translation differences and other	7	-
Closing balance, 31 December 2011	404	358

Other provisions

MSEK	Group	Parent Company
Opening balance, 1 January 2011	656	276
Provisions allocated during the year	306	147
Amount utilised during the year	-194	-137
Reversal of unutilised amount	-20	-5
Reclassification	8	-3
Translation differences and other	-21	-
Closing balance, 31 December 2011	735	278

Total provisions

MSEK	Group	Parent Company
Opening balance, 1 January 2011	2,999	1,465
Provisions allocated during the year	564	339
Amount utilised during the year	-1,001	-758
Reversal of unutilised amount	-137	-31
Reclassification	43	19
Translation differences and other	6	-
Closing balance, 31 December 2011	2,474	1,034

Regional aircraft

Commitments regarding regional aircraft refer to anticipated deficits related to lease agreements. Saab expects the leasing portfolio to be divested around 2015.

Restructuring

Structural costs primarily relate to the costs to adapt resources and changeover costs. The expenditure is expected to fall in 2012-2015.

Project losses

Provisions for project losses on the closing day primarily relate to Helicopter 14, command and control projects and certain other military projects. The provisions are utilised in pace with the project's completion.

Other provisions

Other provisions primarily relate to provisions for guarantees and remaining costs in projects as well as for environmental commitments.

NOTE 39

OTHER LIABILITIES

Group
MSEK	31-12-2011	31-12-2010
Other long-term liabilities
Long-term prepaid revenue	49	82
Other	390	212
Total	439	294
Other current liabilities
Liabilities to associated companies	6	21
Value-added tax	240	358
Withholding tax	129	163
Deposits in leasing operations	31	17
Other	341	260
Total	747	819

Liabilities due for payment more than five years after closing day 32 133

Parent Company

MSEK	31-12-2011	31-12-2010
Value-added tax	163	297
Withholding tax	73	110
Other	251	264
Total	487	671

Liabilities due for payment more than five years after closing day 12 -

Other liabilities in the Parent Company include both interest-bearing and non-interest-bearing liabilities. For a comparison with the Group, see also Note 35.

Saab does not consider there to be a significant difference between book and fair value.

ACCRUED EXPENSES AND DEFERRED INCOME

		Group	Parent Company
MSEK	31-12-2011	31-12-2010	31-12-2011	31-12-2010
Accrued expenses
Accrued project costs	1,620	782	1,134	451
Vacation pay liability	787	807	584	607
Expected invoices	467	382	419	296
Social security expenses	444	475	321	357
Personnel liabilities	238	246	171	186
Accrued leasing costs	103	135	-	-
Cost of customer commit ments in regional aircraft	95	108	95	108
Claims reserve	57	67	2	4
Royalties and commissions	35	28	22	16
Accrued interest	23	37	23	56
Other	223	228	50	111
Total accrued expenses	4,092	3,295	2,821	2,192
Deferred income
Liabilities to customers	4,038	3,883	3,628	3,437
Prepaid insurance compensation	417	486	-	-
Retained project interest	12	27	12	27
Capitalised changes in value related to forward contract rollovers	-	-	578	598
Other	70	60	67	51
Total deferred income	4,537	4,456	4,285	4,113
Total	8,629	7,751	7,106	6,305

Saab does not consider there to be a significant difference between book and fair value.

NOTE 41

FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

Saab's financial assets and liabilities and contractual obligations give rise to financial risks. These risks are managed to a large extent with various financial instruments.

Financial risk management

The Board of Directors of Saab has approved a Group Treasury Policy, which provides an overall description of the management of financial risks and treasury operations. The goal is to identify and actively manage financial risks in order to reduce the negative impact on the Group's results, competitive strength and financial flexibility.

The financial risks are defined as follows:

• t Foreign currency risk
• t Interest rate risk
• t Liquidity and financing risk
• t Commodity risk
• t Credit and counterparty risk

Saab uses derivatives primarily to:

• t convert anticipated commercial cash flows in foreign currency to sek
• t convert borrowings in sek, or surpluses in sek, to the currencies in which assets are denominated (primarily relates to aircraft that Saab owns in its leasing fleet)
• t convert the fixed interest periods in leases to coincide with leasing revenue and the desired fixed interest rates for other assets and liabilities

Responsibility for managing the Group's financial risks and developing methods and principles to manage financial risks is centralised in Group Treasury. The operating business areas have directives and processes that describe how financial risks are managed. Furthermore, Group Management has issued detailed directives and guidelines for Group Treasury's operations.

Management of insurance is centralised in the Group's insurance company, Lansen Försäkrings ab, where external transactions are handled as well. Customer finance, guaranty and finance issues are also managed by Group Treasury.

The Group's internal bank, Saab Treasury, is responsible for the Group's cash management, financing, management of interest rate and currency risks and also electricity risks. Saab has an agreement with an external party to manage the Group's electricity risks through discretionary management. Other commodity risk is managed primarily through contractual clauses.

To a limited extent, the Group Treasury Policy allows proprietary trading in currency and fixed income derivatives. The main purpose of this trading is to gain access to qualitative market information and maintain a high level of market expertise. Saab Treasury has a risk mandate expressed as VaR (Value at Risk) of msek 50 (50), which is divided between trading and management of economic risks, expressed primarily in the Tender to Contract portfolio. During the year, approximately msek 10 was allocated to the trading portfolio and approximately msek 40 to the Tender to Contract portfolio.VaR is a probability-based method based on historical price fluctuations and correlations and is considered a standard in the financial industry. The method provides a measure of the probability 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

Financial assets in the Group mainly comprise accounts receivable, accrued income, interest-bearing receivables, liquid assets, fixed income investments and derivatives with positive market values. Saab's financial liabilities mainly comprise interest-bearing liabilities, accounts payable, accrued expenses and derivatives with negative market values. The following tables show a subdivided statement of financial position categorised and classified according to ias 39. A more detailed description of the categories can be found in note 1, Accounting principles.

2011 Financial assets Financial investments - 54 143 - - - - 197 199 Long-term receivables - - - 1,046 - - - 1,046 1,046 Derivatives Forward exchange contracts 15 - - - - 430 21 466 466 Currency options 29 - - - - - - 29 29 Interest rate swaps 1 - - - - - - 1 1 Electricity derivatives 23 - - - - 1 - 24 24 Total derivatives 68 - - - - 431 21 520 520 Accounts receivable and other receivables - - - 7,136 - - - 7,136 7,136 Short-term investments - 4,555 - - - - - 4,555 4,555 Liquid assets - - - 1,918 - - - 1,918 1,918 Total financial assets 68 4,609 143 10,100 - 431 21 15,372 15,372 Financial liabilities Interest-bearing liabilities - - - - 1,738 - - 1,738 1,751 Derivatives Forward exchange contracts 15 - - - - 492 8 515 515 Currency options 43 - - - - - - 43 43 Interest rate swaps 31 - - - - - - 31 31 Electricity derivatives 22 - - - - 17 - 39 39 Total derivatives 111 - - - - 509 8 628 628 Other liabilities - - - - 6,201 - - 6,201 6,201 Total financial liabilities 111 - - - 7,939 509 8 8,567 8,580 2010 Financial assets Financial investments - 56 147 - - - - 203 203 Long-term receivables - - - 856 - - - 856 856 Derivatives Forward exchange contracts 88 - - - - 801 21 910 910 Currency options 24 - - - - - - 24 24 Interest rate swaps 80 - - - - - - 80 80 Electricity derivatives - - - - - 74 - 74 74 Other derivatives 17 - - - - - - 17 17 Total derivatives 209 - - - - 875 21 1,105 1,105 Accounts receivable and other receivables - - - 6,883 - - - 6,883 6,883 Short-term investments - 1,544 - - - - - 1,544 1,544 Liquid assets - - - 2,544 - - - 2,544 2,544 Total financial assets 209 1,600 147 10,283 - 875 21 13,135 13,135 Financial liabilities Interest-bearing liabilities - - - - 1,706 - - 1,706 1,714 Derivatives Forward exchange contracts 57 - - - - 504 14 575 575 Currency options 8 - - - - - - 8 8 Interest rate swaps 84 - - - - 39 - 123 123 Electricity derivatives - - - - - 44 - 44 44	Classification and categorisation of	Fair value through profit and loss for	Designated as at fair value through profit and	Held-to maturity invest	Loans receivable and accounts	Financial	Derivatives identified as cash flow	Derivatives identified as fair value	Total financial assets	Measured at
	financial assets and liabilities	trading	loss	ments	receivable	liabilities	hedges	hedges	and liabilities	fair value
	Total derivatives	149	-	-	-	-	587	14	750	750
Other liabilities - - - - 5,078 - - 5,078 5,078 Total financial liabilities 149 - - - 6,784 587 14 7,534 7,542

Outstanding derivatives

Currency derivatives				Fair value 2011				Fair value 2010
Million	Cur rency	Nominal currency	Asset SEK	Liability SEK	Net	Nominal currency	Asset SEK	Liability SEK	Net
Maturity up to one year	EUR	-299	160	46	114	-255	224	87	137
	USD	-342	57	160	-103	-310	202	126	76
	Other	-	67	79	-12	-	166	80	86
Outstanding currency derivatives with maturities up to one year, total			284	285	-1		592	293	299
Maturity one to three years	EUR	-119	78	39	39	-160	149	37	112
	USD	-186	46	115	-69	-142	59	125	-66
	Other	-	12	17	-5	-	57	45	12
Outstanding currency derivatives with maturities of one to three years, total			136	171	-35		265	207	58
Maturity three to five years	EUR	-32	22	11	11	-36	28	17	11
	USD	-172	27	49	-22	-143	27	48	-21
Outstanding currency derivatives with maturities of three to five years, total			49	60	-11		55	65	-10
Maturity over five years	EUR	-30	20	-	20	-19	18	3	15
	USD	-59	7	15	-8	-139	24	21	3
Outstanding currency derivatives with maturities over five years, total			27	15	12		42	24	18
Currency derivatives, total1)			496	531	-35		954	589	365

1) Retained premiums on open contracts amount to MSEK 28 (13).

Interest derivatives				Fair value 2011				Fair value 2010
Million	Cur rency	Nominal currency	Asset SEK	Liability SEK	Net	Nominal currency	Asset SEK	Liability SEK	Net
Maturity up to one year	SEK	600	-	4	-4	200	-	3	-3
	USD	-	-	2	-2	-	-	-	-
Outstanding interest derivatives with maturities up to one year, total			-	6	-6		-	3	-3
Maturity one to three years	SEK	1,021	1	22	-21	1,256	2	5	-3
	NOK	-	-	-	-	500	104	111	-7
	USD	-	-	-	-	10	-	9	-9
Outstanding interest derivatives with maturities of one to three years, total			1	22	-21		106	125	-19
Maturity three to five years	SEK	100	-	6	-6	150	1	1	-
	USD	20	-	16	-16	25	-	24	-24
Outstanding interest derivatives with maturities of three to five years, total			-	22	-22		1	25	-24
Maturity over five years	SEK	-	-	-	-	30	1	-	1
Outstanding interest derivatives with maturities over five years, total			-	-	-		1	-	1
Interest derivatives, total2)			1	50	-49		108	153	-45

2) Market value includes accrued interest of MSEK -19 (-17) and retained premiums on open contracts of MSEK -0 (-1).

Electricity derivatives			Fair value 2011				Fair value 2010
Million	Mega watt	Asset SEK	Liability SEK	Net	Mega watt	Asset SEK	Liability SEK	Net
Maturity up to one year	15	24	34	-10	17	66	42	24
Outstanding electricity derivatives with maturities up to one year, total		24	34	-10		66	42	24
Maturity one to three years	14	-	5	-5	16	8	2	6
Outstanding electricity derivatives with maturities of one to three years, total		-	5	-5		8	2	6
Electricity derivatives, total		24	39	-15		74	44	30
DERIVATIVES, TOTAL		521	620	-99		1,136	786	350
(of which derivatives used for cash flow hedges)		-	-	-78		-	-	288
Accrued interest and retained premiums, see Notes 1 and 2 above		-9	-	-9		-	-5	5
Netting accrued interest and premiums		8	8	-		-31	-31	-
DERIVATIVES ACCORDING TO GROUP'S FINANCIAL POSITION		520	628	-108		1,105	750	355

Foreign currency risk

The Group hedges the entire order backlog with the help of currency derivatives. As a result, changes in exchange rates do not affect the Group's future results with respect to the current order backlog. Future order bookings are exposed to fluctuations in exchange rates in terms of competitive strength. This is managed partly by Group Treasury, which hedges the economic exposure in fixed price tenders.

Definitions

Foreign currency risk refers to the risk that fluctuations in exchange rates will negatively affect income. Exchange rate fluctuations affect Saab's income and equity in various ways:

• t Income is affected when sales revenue and the cost of goods and services sold are in currencies other than the functional currency (economic and transaction exposure)
• t Income is affected when the income of foreign Group companies is translated to sek (translation exposure)
• t Income or equity is affected when the assets and liabilities of foreign Group companies are translated to sek (translation exposure)
• t Income can be affected by impairment tests of non-hedged future cash flows in foreign currency in unprofitable contracts (impairment testing)

Saab distinguishes between the above-mentioned types of exposure. Policy descriptions are provided under each exposure.

Framework agreements, which contain both transaction and economic exposures, are in place mainly for various civil aeronautics programmes.

Economic exposure

Fixed-price tenders in foreign currency entail a foreign currency risk that consitutes an economic exposure. The risk is limited primarily through contract formulations (foreign currency clauses) or 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 Contract portfolio. The purpose of the portfolio is to minimise the Group's foreign currency risk during the tender period and reduce hedging costs. The following table shows outstanding nominal net hedges by currency as of year-end.

	Forward contracts1)			Options2)	Total hedge
Net hedges (million)	2011	2010	2011	2010	2011	2010
USD	6	-79	-177	-63	-171	-142
EUR	-31	-43	-88	-49	-119	-92
GBP	-6	-20	-11	-29	-17	-49
CAD	-	-	-37	-	-37	-
CZK	35	-	-	-	35	-
THB	-1,382	-1,060	-	-500	-1,382	-1,560

1) Also contains sold call and put options.

2) Refers to the net of purchased call and put options.

The tender insurance portfolio is governed by a risk measure based on a probability-weighted VaR measure consisting of two parts. One part is the VaR measure for the internal hedges multiplied by the estimated probability of receiving the tenders. The other part relates to VaR for external hedges. A risk-neutral situation is defined as one where the sum of the probabilityweighted internal VaR measure and the external VaR measure amounts to nil, which means that the probability-weighted amount is hedged externally.

The VaR for tender hedges amounted to msek 24 (23) at year-end. Hedge accounting is not applied to the portfolio's hedges, due to which the Group's results are affected by the outcome of the tenders and the exchange rate for the underlying currency pair. The portfolio's effect on the Group's result in 2011 was msek -32 (57).

Transaction exposure

Future cash flows in foreign currency from the order backlog and framework agreements are hedged to safeguard gross margins. In 2011, countries outside Sweden accounted for 63 per cent (62) of Saab's sales. Since a large part of production takes place in Sweden with expenses denominated in sek, Saab has large net flows in foreign currency.

The order backlog contains contracted flows and therefore constitutes a transaction exposure. The predominant contract currencies in the order backlog of sek 37.2 billion (41.5) are sek, usd, eur and gbp. Of the total order backlog, 63 per cent (70) is in fixed prices with or without indexing, while the remaining 37 per cent (30) contains variable prices with index and/or currency clauses.

Netting is applied at the Group level to minimise the transaction exposure in foreign currencies, i.e., incoming currency is utilised to pay for purchases in the same currency. Currency clauses or transactions in the currency market with forward exchange contracts as hedging instruments are used as well. Hedges are normally arranged for each specific contract. The average forward rate is then used as the contract's rate of revenue recognition.

An analysis has been made of the currency sensitivity of the market value of outstanding external hedges for the order backlog and framework agreements. The effect of a change in exchange rates in the net result of cash flow hedges (pre-tax) where the sek depreciates (making foreign currency more expensive) or appreciates is shown in the following table.

	Market value 31-12-2011	SEK depreciation of 10%	SEK appreciation of 10%
Market value in MSEK	-45	-880	790
Change		-835	835

The currency sensitivity in the order backlog is shown in the table below, i.e., the effects of a changes in exchange rates when the krona depreciates or appreciates in value. In the table, the order backlog for foreign subsidiaries has been restated to msek.

	Order backlog 31-12-2011	SEK depreciation of 10%	SEK appreciation of 10%
Order backlog, MSEK	37,172	37,508	36,837
Change		336	-336

Hedge accounting according to ias 39 is applied to derivatives intended to hedge the transaction exposure. The inefficiency in the cash flow hedges that affected net income for the year amount to msek 1 (4).

The table below shows the cash flows corresponding to the derivatives recognised as cash flow hedges in 2011 and 2010 expressed in millions in local currency.

Cash flow hedges by currency

		CZK			EUR			GBP			NOK			THB			USD			ZAR
Million	Out flow	In flow	Net	Out flow	In flow	Net	Out flow	In flow	Net	Out flow	In flow	Net	Out flow	In flow	Net	Out flow	In flow	Net	Out flow	In flow	Net
< 90 days	-19	58	39	-43	116	73	-22	52	30	-2	5	3	-8	309	301	-91	199	108	-63	38	-25
91-180 days	-15	32	17	-26	65	39	-9	29	20	-1	2	1	-4	359	355	-36	97	61	-16	2	-14
181-210 days	-	4	4	-8	55	47	-7	21	14	-6	-	-6	-	22	22	-14	46	32	-12	-	-12
211-360 days	-	19	19	-12	39	27	-8	19	11	-	1	1	-34	280	246	-23	54	31	-13	-	-13
2013	-	25	25	-31	115	84	-5	29	24	-	-	-	-	988	988	-66	167	101	-25	1	-24
2014	-	6	6	-20	50	30	-	8	8	-	-	-	-	392	392	-13	111	98	-	-	-
2015	-	4	4	-9	23	14	-	-	-	-	-	-	-	-	-	-2	91	89	-	-	-
2016	-	-	-	-3	13	10	-	-	-	-	-	-	-	-	-	-	86	86	-	-	-
2017 and forward	-	-	-	-1	25	24	-	-	-	-	-	-	-	-	-	-	61	61	-	-	-
Total flows 2011	-34	148	114	-153	501	348	-51	158	107	-9	8	-1		-46 2,350	2,304	-245	912	667	-129	41	-88
Total flows 2010	-61	161	100	-230	585	355	-114	232	118	-15	6	-9	-	-	-	-439	1,120	681	-154	70	-84

Translation exposure

The translation exposure in the Group relates to the operations of foreign subsidiaries. Saab Aircraft Leasing's operations in Sweden have their economic environments in usd (functional currency) and are translated from the functional currency to sek. The translation exposure comprises net assets in foreign currency and arises in connection with acquisitions and divestments. The value of equity subject to translation exposure amounted to msek 2,704 (2,247) at year-end; see the table below:

Net assets translated to SEK

MSEK	31-12-2011	31-12-2010
USD	1,861	727
EUR	33	56
AUD	470	465
ZAR	573	664
Other currencies	433	335
Total	3,370	2,247

The effect on net assets of a change in exchange rates where the krona depreciates or appreciates is shown in the table below.

Sensitivity analysis of net assets

MSEK	Net assets 31-12-2011	SEK appreciation of 10%	SEK depreciation of 10%
USD	1,861	1,675	2,047
EUR	33	30	36
AUD	470	423	517
ZAR	573	516	630
Other currencies	433	391	476
Total	3,370	3,035	3,706

The foreign currency risk to the Group's income and equity from translation effects – the translation exposure – is not hedged according to the Group Treasury Policy.

Impairment tests

Long-term contracts in commercial aircraft programmes consist of an order backlog and estimated future orders (business case) with cash flows primarily in usd. Cash flows from the latter are normally hedged when they become confirmed orders. In connection with impairment tests of loss contracts, income is affected by the revaluation of future cash flows at spot rates. Larger changes in exchange rates, primarily in usd against sek, have a significant impact on income. This exposure is not hedged.

Interest rate risks

Interest rate risk refers to the risk that Saab will be negatively affected by changes in interest rate levels.

Interest rate risk has been identified in the following areas:

• t Saab is exposed to interest rate risk when the market value of certain items in the statement of financial position is affected by changes in underlying interest rates. Large such items refer to pension obligations and leasing operations.
• t Saab's net financial items are affected by changes 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 high liquidity and a duration of 12 months, with the option of deviating by +/– 12 months. As of year-end, the duration for investments was 18 months (4). Interest rate risks in the Group's funding are managed based on a benchmark with an 18-month duration, with the option of deviating by +/–18 months. As of year-end, the duration for financing was 14 months (18).

Interest rate futures and swaps are used for interest risk management to achieve the desired duration in the financing. For a sensitivity analysis, see also under liquidity and financing risk. Lending to subsidiaries in foreign currency is normally financed in sek, which is converted to the subsidiary's currency through swaps. Interest rate swaps in usd are used mainly for interest risk management in the leasing portfolio, where the interest rate risk is fully matched.

The pension liability, the present value of future pension obligations, is the largest interest rate risk due to the liability's long duration; see also the Saab Pension Fund.

Liquidity and financing risks

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 credit facilities or liquid assets corresponding to the higher of (but not less than msek 3,000):

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• tšŜQFSDFOUPGPVUTUBOEJOHPOEFNBOEHVBSBOUFFTGPSUIFUISFFMBSHFTU commitments

Liquidity and financing risks are minimised by diversifying financing sources and maturities.

Saab's policy is to insure on-demand guarantees for major projects against unauthorised use. This applies to contracts where the counterparty is classified as a developing country according to the definition of the Export Credits Guarantee Board (ekn). Insurance can be obtained from state guarantee institutions or the private insurance market.

Saab has access to the following credit facilities:

Loan facilities

MSEK	Facility	Utilised	Available
Club loan (matures 2016)	4,000	-	4,000
Total confirmed credit facilities	4,000	-	4,000
Commercial paper	5,000	-	5,000
Medium Term Notes (MTN)	3,000	1,100	1,900
Receivables financing	1,515	872	643
Total loan programmes	9,515	1,972	7,543
Total loan facilities	13,515	1,972	11,543

The club loan was renegotiated and extended one year before expiration. The club loan is a credit facility with an equivalent value of msek 4,000 evenly divided between eight banks and expiring in 2016. No financial covenants are attached to the club loan or the other credit facilities.

A commercial paper programme with a limit of msek 5,000 is available as well. Neither the commercial paper programme nor the club loan were used in 2011.

In 2009, Saab established a Medium Term Note programme (mtn) with a limit of msek 3,000 or an equivalent value in eur. The mtn programme provides access to financing for up to 15 years, which is an element in diversifying loan maturities.

During the year, the entire shareholding in Aker Holding as was divested and related loans of mnok 975 and derivatives were repaid.

Net liquidity

Net liquidity excluding interest-bearing receivables and provisions for pensions amounted to msek 4,735 (2,382) on 31 December 2011. Liquidity varied during the year, and surplus liquidity was placed as per the Group Treasury Policy. At year-end, placements in interest-bearing securities and bank deposits amounted to msek 5,638 (3,374).

Net liquidity

MSEK	Note	31-12-2011	31-12-2010
Assets
Liquid assets	31	1,918	2,544
Short-term investments	25	4,555	1,544
Total liquid investments		6,473	4,088
Short-term interest-bearing receivables	27	368	617
Long-term interest-bearing receivables	27	99	150
Long-term interest-bearing financial investments	25	143	147
Total interest-bearing assets		7,083	5,002

MSEK	Note	31-12-2011	31-12-2010
Liabilities
Short-term interest-bearing liabilities	35	520	589
Long-term interest-bearing liabilities	35	1,218	1,117
Provisions for pensions	37	12	5
Total interest-bearing liabilities		1,750	1,711
NET LIQUIDITY		5,333	3,291

As of 31 December 2011, net liquidity amounted to msek 5,333 (3,291) with an average during the year of msek 4,560 (890). The net of interest expenses paid and interest income received amounted to msek -70 (-89). Of the liquid investments of msek 6,473 (4,088), msek 10 (10) was pledged as trading security to omx. The sensitivity analysis below shows the effect on income of an increase in market interest rates and the credit margin of 1 basis point for Saab's investments.

Placements in interest-bearing securities and bank deposits Sensitivity analysis of financial risk

MSEK Maturities	Fixed interest	Effect of market in terest rate, 1%	Tied-up capital	Effect of credit spread, 1%	Effect on financial costs
1 year	2,632	26	1,992	20	46
2 years	1,348	13	1,785	18	31
3 years	697	7	900	9	16
4 years	730	7	730	7	14
5 years and forward	-	-	-	-	-
Total	5,407	53	5,407	54	107
Adjustment 1)	231	-	-	-	-
Total	5,638	-	-	-	-

1) Adjustment of nominal value compared to book value due to market valuation at a premium or discount.

Current interest-bearing liabilities mainly consist of liabilities to joint ventures of msek 449 (428). Long-term interest-bearing liabilities amount to msek 1,218 (1,117) and mainly consist of mtns in issue. Of the long-term interest-bearing liabilities, msek 1,128 (1,100) matures within 1-5 years and msek 90 (17) in more than 5 years.

The maturity structure of liabilities to credit institutions is indicated in the tied-up capital column of the "Sensitivity analysis of financial risk" table. The volume of tied-up capital includes interest rate swaps. The interest rate risk in the loans given a 1 basis point parallel shift in the yield curve was msek 21 (25) as of 31 December 2011. The sensitivity analysis below shows the impact on results of an increase in market interest rates and an equally large increase in the credit margin of 1 basis point for Saab's refinancing of credits.

Financing (refers to utilised credit facilities) Sensitivity analysis of financial risk

MSEK Maturities	Fixed interest	Effect of market in terest rate, 1%	Tied-up capital	Effect of credit spread, 1%	Effect on financial costs
1 year	-1,472	-15	-872	-9	-24
2 years	-250	-3	-1,100	-11	-14
3 years	-150	-2	-	-	-2
4 years	-100	-1	-	-	-1
5 years and forward	-	-	-	-	-
Total	-1,972	-21	-1,972	-20	-41

Commodity risks

Price risks are divided into two parts:

• t Commodity price risk refers to the risk that purchasing costs for material will rise.
• t Electricity price risk refers to the risk that Saab could be negatively affected by changes in electricity prices.

According to the Group's policy, commodity risk is minimised and managed primarily through contract clauses with customers/suppliers. To minimise the risk to Saab's operating margin, future electricity consumption is hedged. This is done by hedging projected consumption according to a model where 100 per cent of the next quarter's consumption is hedged. The hedging level then drops on a straight-line basis to 0 per cent in quarter 13. Swedish units consume around 156 GWh per year with a spot price risk of msek 1.6 per every time the price of electricity changes by sek 0.01. Electricity directives are managed through a discretionary management mandate, where the manager has the mandate to accept risks in relation to benchmarks (hedging strategy) at the equivalent of msek 1 (1) expressed in VaR. The market value of electricity derivatives as of year-end was msek -15 (30). After the introduction of additional price areas in Sweden on 1 November 2011, the name sto was changed to se3. Since 1 January 2010, electricity derivatives are used as cash flow hedges for the Stockholm price area (se3). The ineffectiveness that affected net income for the year amounted to msek 1 (-1).

Credit and counterparty risks

Credit risk is the risk that the counterparty in a transaction will not be able to fulfill the financial obligations of a contract. In the course of its day-to-day operations, Saab is exposed to credit risks as a result of transactions with counterparties in the form of customers, suppliers and financial players. The Group's aggregate credit risks consist of commercial credit risks and financial credit risks.

Commercial credit risks

According to the Group's policy, commercial credit risks are identified and actively managed on a case-by-case basis. Credit risks that arise in customer contracts are managed by utilising available banking, insurance or export credit institutions. According to the policy, credit risks that arise through advances paid to suppliers are managed by always maintaining bank-guaranteed security for any advances. Commercial credit risks consist of outstanding accounts receivable and advances paid to suppliers.

Accounts receivable

On 31 December 2011, the Group's outstanding accounts receivable amounted to msek 3,153 (3,052). The Receivables Financing Programme reduced accounts receivable at year-end by approximately msek 872 (1,409). Defencerelated sales accounted for 84 per cent (83) of total sales, where the counterparties in most accounts receivable are nations with high creditworthiness. The Group's receivables are mainly in the EU, which accounted for 48 per cent (51) of the total. Where counterparties' creditworthiness is deemed unsatisfactory, bank or insurance guarantees or guarantees from ekn are secured.

In connection with cash transactions, Saab generally requires that a letter of credit is opened in its name to ensure that payment is received.

Write-downs of accounts receivable amounted to msek 19 (22), corresponding to 0.5 per cent (0.5) of total accounts receivable. Write-downs of accounts receivable have changed as follows.

MSEK	2011	2010
Write-downs, 1 January	-22	-32
Write-downs for calculated losses	-5	-12
Reversal of previous write-downs	3	15
Actual credit losses	5	7
Write-downs, 31 December	-19	-22

The following table shows an age analysis of the Group's overdue receivables:

MSEK	31-12-2011	31-12-2010
<30 days	221	265
30 to 90 days	393	225
91 to 180 days	303	52
>181 days	125	102
Accounts receivable overdue	1,042	644
Accounts receivable not overdue	2,111	2,408
Total accounts receivable	3,153	3,052

Since accounts receivable are largely secured via bank or insurance guarantees or are from states, the commercial credit risk is low despite overdue receivables.

Advances paid to suppliers

Advances paid to suppliers constitute a credit risk, since the counterparty's services have not been fully rendered. As of 31 December 2011, the Group had paid its suppliers advances of msek 139 (282). As the Group's policy is to maintain bank-guaranteed security for any advances it pays, the commercial supplier credit risk is considered low.

Financial credit risks

Financial credit risk consists of exposures to banks through deposits, securities investments and/ or the market value of outstanding derivatives.

The Group's policy for managing financial credit risks is to:

• t Ensure that all financial counterparties have a long-term credit rating of no lower than A from Standard and Poor's or A3 from Moody's
• t Assign each financial counterparty a credit limit based on its longterm credit rating
• t Enter into isda master agreements with financial counterparties to net the positive and negative market values of outstanding derivatives

Credit risk is calculated on established and anticipated risks according to the recommendations of the Bank of International Settlements (bis I). On 31 December 2011, counterparty risks amounted to msek 5,859 (4,100), of which deposits with banks, mortgage institutions, companies and the Swedish state totalled msek 5,651 (3,300).

Trading

The Board has given Saab Treasury a risk mandate for trading in currency and money market instruments. During the year, msek 10 was allocated to trading expressed according to VaR. If the cumulative result for the year is negative, the mandate is reduced correspondingly. In 2011, trading income was msek 32 (35), which is reported as other operating income. The average utilised risk mandate (VaR) during the year was msek 3 (1).

Hedge accounting

Hedge accounting to fair value is applied to foreign exchange contracts and currency swaps, primarily for derivatives entered into before 31 December 2006. The market value of currency derivatives accounted for as fair value hedges and the market value of hedged items are indicated in the table below. For information on the impact on net income for the year of gains and losses on derivatives accounted for as fair value hedges, see Note 6 Other operating expenses.

Hedge accouting to fair value, MSEK	2011	2010
Foreign currency risk in order backlog (hedged item)	-13	-7
Currency derivatives (hedging instrument)	13	7

Cash flow hedges are applied to forward exchange contracts and currency swaps entered into after 31 December 2006 and to electricity derivatives.

Cash flows hedges are expected to affect profit and loss in the period hedged cash flows occur, with the exception of those related to the manufac-

turing of inventory, which affect profit and loss on the day delivery is made to the customer. The hedge reserve before tax amounted to msek 621 (872), of which the value of derivatives was msek -78 (288) and the effects arising from rollovers of derivatives were msek 699 (584).

The change in the hedge reserve in 2011 of msek -251 consists of a reversal to profit or loss of msek -278, the change in the value of existing derivatives of msek -13, the market value of hedges obtained during the year of msek -75, and the change that arose due to the extension of derivatives of msek 115. For information on the amount recognised in other comprehensive income, see consolidated net comprehensive income.

The inefficiency in cash flow hedges that affected net income for the year amounted to msek 2 (3).

Valuation methods for financial assets and liabilities

The fair value of listed financial assets is determined using market prices. Furthermore, Saab applies various valuation methods to determine the fair value of financial assets that are traded on an inactive market or are unlisted holdings. These valuation methods are based on the valuation of similar instruments, discounted cash flows or customary valuation methods such as Black-Scholes.

The following instruments were valued at fair value (unadjusted) on an active market on the closing date (Level 1):

• t Bonds
• t Electricity derivatives
• t Interest derivatives

The following instruments are valued at fair value according to accepted valuation models based on observable market data (Level 2):

• t Forward exchange contracts: Future payment flows in each currency are discounted by current market rates to the valuation day and valued to sek at year-end exchange rates
• t Options: The Black-Scholes option pricing model is used in the market valuation of all options
• t Interest swaps: Future variable interest rates are calculated with the help of current forward rates. These implicit interest payments are discounted on the valuation date using current market rates. The market value of interest rate swaps is obtained by contrasting the discounted variable interest payments with the discounted present value of fixed interest payments

Unlisted shares and participations: Valued according to accepted principles, e.g., for venture capital firms (Level 3).

As of 31 December 2011, the Group had the following financial assets and liabilities at fair value:

Assets at fair value

MSEK	2011	Level 1	Level 2	Level 3
Bonds and interest-bearing securities	4,555	4,555	-	-
Forward exchange contracts	466	-	466	-
Currency options	29	-	29	-
Interest rate swaps	1	-	1	-
Electricity derivatives	24	24	-	-
Shares and participations	54	-	-	54
Total	5,129	4,579	496	54

Liabilities at fair value

MSEK	2011	Level 1	Level 2	Level 3
Forward exchange contracts	515	-	515	-
Currency options	43	-	43	-
Interest rate swaps	31	-	31	-
Electricity derivatives	39	39	-	-
Total	628	39	589	-

Pension fund

The Saab Pension Fund was established in 2006 to secure the main part of the Group's pension obligation and is not consolidated in the Group.

The fund has a long-term real yield requirement of 4 per cent per year. The investment policy requires an asset distribution of a maximum of 50 per cent equities/alternative investments (hedge funds) and 50-100 per cent interest-bearing instruments. Investments are made in interest-bearing securities from issuers with a credit rating of no lower than bbb(Baa) according to Standard & Poor's and Moody's. Of the fund's capital at year-end, 53 per cent (50) was invested in interest-bearing assets and the remaining 47 per cent (50) in equity and alternative investments. The market value of the fund's assets as of 31 December 2011 was msek 4,050 (3,969) and the annual return was 0 per cent (7). In 2011, the fund was capitalised by msek 105 (124) and msek 3 (16) in refunds were paid. The table below shows the solvency margin for the pension fund.

MSEK	31-12-2011	31-12-2010	31-12-2009	31-12-2008
Fair value of assets under management	4,050	3,969	3,609	3,082
Present value of defined benefit obligations1)	5,866	4,675	5,002	4,432
Solvency margin	69%	85%	72%	70%
Pension obligation accord ing to PRI	4,489	4,042	3,844	3,678
Solvency margin	90%	98%	94%	84%

1) Refers to the pension obligation that the assets under management are designed to cover.

NOTE 42

ASSETS PLEDGED AND CONTINGENT LIABILITIES

	Group		Parent Company
MSEK	31-12-2011	31-12-2010	31-12-2011	31-12-2010
Assets pledged for own liabilities and provisions
Chattel mortgages	-	100	-	100
Bonds and other securities	10	10	10	10
Total	10	110	10	110
Contingent liabilities
Guarantees to insurance company, FPG/PRI	90	81	90	81
Guarantees for Group companies' commitments to customers	-	-	5,336	5,164
Contingent liabilities related to legal dispute1)	301	302	301	302
Sureties for joint ventures	6	6	-	-
Sureties for associated companies	8	2	102	371
Total	405	391	5,829	5,918

1) Saab has an ongoing legal dispute in Denmark with the Danish Defence Acquisition and Logistics Organization (DALO). The Maritime and Commercial Court in Copenhagen issued a judgment dismissing DALO's claim against Saab. DALO has filed an appeal against the judgment. DALO's counterclaim amounts to approximately MDKK 250.

The table below shows the total sum of guarantees that do not represent contingent liabilities and a distribution by category and issuer.

MSEK	31-12-2011	per cent of total	31-12-2010	per cent of total
Parent Company guarantees	1,540	21	2,275	21
Bank guarantees	5,674	79	8,407	79
Total guarantees	7,214	100	10,682	100
Bank guarantees:
On demand	5,014	88	5,700	68
Proprietary	660	12	2,707	32
Total bank guarantees	5,674	100	8,407	100
Type of guarantee:
Advances	3,177	44	4,127	39
Completion	3,365	47	3,666	34
Milestone payments	-	-	2,558	24
Tenders, credits and other	672	9	331	3
Total guarantees	7,214	100	10,682	100

With regard to the Group's so-called fulfilment guarantees for commitments to customers, the likelihood of an outflow of resources is extremely small and, as a result, no value is recognised.

NOTE 43

TRANSACTIONS WITH RELATED PARTIES

The Group's financial agreements conform to market principles. In January 2012, Combitech ab, a wholly owned subsidiary of Saab ab, acquired Sörman Information ab. The largest shareholder in Sörman was Investor ab. In Saab's view, the purchase price corresponds to market value. Saab otherwise did not have any material transactions with Investor. Neither does Saab have any significant transactions with Board members or members of

Group Management. For information on remuneration, see Note 37.

Of the Parent Company's sales, 3 per cent referred to sales to Group companies, while 14 per cent of the Parent Company's purchases were from Group companies.

Sales to and purchases from the Group's associated companies amounted to approximately msek 26 (26) and msek 120 (127), respectively.

During the year bae Systems divested its shares in Saab and is no longer considered a related party.

NOTE 44

GROUP COMPANIES

Significant Group company holdings

	Group company's		Ownership share, per cent
Group company	registered office, country	2011	2010
Combitech AB	Växjö, Sweden	100	100
Saab Barracuda AB	Västervik, Sweden	100	100
Saab Barracuda LLC	USA	100	100
Saab Czech s.r.o.	Czech Republic	100	100
Saab Dynamics AB	Karlskoga, Sweden	100	100
Saab Danmark A/S	Denmark	100	100
Saab Grintek Defence (Pty) Ltd	South Africa	75	75
Saab Seaeye Ltd	UK	100	100
Saab Sensis Corporation	USA	100	-
Saab Systems Oy	Finland	100	100
Saab Systems Pty Ltd	Australia	100	100
Saab Training Systems AB	Jönköping, Sweden	100	100
Parent Company
MSEK		2011	2010
Accumulated acquisition value
Opening balance, 1 January		16,321	16,362
New issues/shareholders' contributions		566	20
Acquisitions		203	14
Sales and liquidations		-23	-3
Reduction of purchase price		-	-72
Reclassifications		19	-
Closing balance, 31 December		17,086	16,321

Accumulated impairments

Carrying amount, 31 December	6,407	5,770
Closing balance, 31 December	-10,679	-10,551
Impairments for the year	-128	-74
Opening balance, 1 January	-10,551	-10,477

Impairment reversals and impairments for the year are reported in the income statement on the line "Result from shares in Group companies."

Specification of Parent Company's holdings of shares in Group companies

			31-12-2011
Group company/Corp. ID no./Reg. office	No. of shares	Share, per cent	Carrying amount, MSEK
Celsius AB, 556194-4652, Linköping	5,000	100.0%	144
Celsius Invest AB, 556164-6588, Stockholm	1,720,000	100.0%	155
Combitech AB, 556218-6790, Växjö	100,000	100.0%	994
EMC Services Elmiljöteknik AB, 556315-6636, Mölndal	2,000	100.0%	3
Fastighets AB Linköping Malmen 27, 556354-6349, Linköping	20,000	100.0%	4
Fastighets AB Odengatan Jönköping, 556378-6226, Järfälla	2,000	100.0%	-
Fastighets AB Solhusgatan, 556230-7404, Göteborg	1,000	100.0%	67
FFV Ordnance AB, 556414-8194, Karlskoga	100,000	100.0%	10
Gripen International AB, 556628-6380, Linköping	1,000	100.0%	5
Kockums Holdings AB, 556036-4100, Linköping	48,000	100.0%	5
Lansen Försäkrings AB, 516401-8656, Linköping	500,000	100.0%	51
Linköping City Airport AB, 556366-8333, Linköping	5,000	100.0%	3
Saab d.o.o., Slovenia	-	100.0%	-
Saab Aerospace Overseas AB, 556628-6448, Linköping	1,000	100.0%	3
Saab Aircraft Leasing Holdings AB, 556124-3170, Linköping	30,000	100.0%	1,500
Saab Barracuda AB, 556045-7391, Västervik	200,000	100.0%	84
Saab Czech s.r.o, Czech Republic	-	100.0%	24
Saab Danmark A/S, Denmark	-	100.0%	103
Saab Dynamics AB, 556264-6074, Karlskoga	500,000	100.0%	357
Saab India Technologies Private Limited, Indien	-	100.0%	-
Saab International AB, 556267-8994, Stockholm	50,000	100.0%	11
Saab Microwave Systems AB, 556028-1627, Mölndal	300,000	100.0%	49
Saab North America, Inc., USA	-	100.0%	1,141
Saab Precision Components AB, 556627-5003, Jönköping	2,000	100.0%	8
Saab Seaeye Holdings Ltd, UK	-	100.0%	194
Saab South Africa (Pty) Ltd, South Africa	-	95.0%	443
Saab Systems Oy, Finland	-	100.0%	103
Saab Surveillance Solutions AB, 556627-1929, Linköping	1,000	100.0%	-
Saab Surveillance Systems AB, 556577-4600, Järfälla	1,000	100.0%	-
Saab Training Systems AB, 556030-2746, Jönköping	150,000	100.0%	42
Saab Training Systems B.V., Netherlands	-	100.0%	6
Saab Training Systems Kenya Ltd, Kenya	-	100.0%	-
Saab Ventures AB, 556757-5211, Linköping	1,000	100.0%	-
Dormant companies etc.	-	-	898
Carrying amount at year-end			6,407

NOTE 45

UNTAXED RESERVES

Parent Company
MSEK	2011	2010
Tax allocation reserve:
Opening balance, 1 January	-	-
Provision for the year	350	-
Closing balance, 31 December	350	-
Accumulated accelerated depreciation
Buildings and land:
Opening balance, 1 January	65	84
Under depreciation for the year	-17	-19
Closing balance, 31 December	48	65
Machinery and equipment:
Opening balance, 1 January	437	335
Under/accelerated depreciation for the year	-40	102
Closing balance, 31 December	397	437
Total untaxed reserves, 31 December	795	502

NOTE 46

STATEMENT OF CASH FLOWS, SUPPLEMENTAL INFORMATION

The Group's operating cash flow and a reconciliation between operating cash flow and cash flow for the year are shown below. Operating cash flow differs in the following respect from the statement of cash flows on page 75:

t Investments in or sales of short-term investments and other interestbearing financial investments as well as interest-bearing receivables are not included in investing activities

OPERATING CASH FLOW

Group

MSEK	2011	2010
Operating activities
Income after financial items	2,783	776
Transferred to pension fund	-132	-147
Adjustments for items not affecting cash flow	141	2,317
Income tax paid	-450	-196
Cash flow from operating activities before changes in working capital	2,342	2,750
Working capital
Inventories	-243	586
Current receivables	-96	855
Advance payments from customers	409	194
Other current liabilities	610	399
Provisions	-630	-297
Change in working capital	50	1,737
Cash flow from operating activities	2,392	4,487

Group
MSEK	2011	2010
Investing activities
Investments in intangible fixed assets	-41	-117
Investments in tangible fixed assets	-325	-262
Investments in lease assets	-1	-2
Sale of tangible fixed assets	23	11
Sale of lease assets	301	65
Investments in operations and associated companies, net effect on liquidity	-1,135	-
Sale of subsidiaries and associated companies, net effect on liquidity	1,264	161
Investments in and sale of financial assets	-1	6
Cash flow from investing activities excluding change in short-term investments and other interest-bearing financial assets	85	-138

Operating cash flow 2,477 4,349

OPERATING CASH FLOW VS. CASH FLOW FOR THE YEAR IN STATEMENT OF CASH FLOWS

MSEK	2011	2010
Operating cash flow	2,477	4,349
Investing activities – interest-bearing:
Short-term investments	-2,967	-993
Other financial investments and receivables	307	-12
Financing activities:
Repayment of loans	-50	-1,950
Repurchase of shares	-	-80
Dividend paid to the Parent Company's shareholders	-367	-237
Cash flow for the year	-600	1,077

SUPPLEMENTAL INFORMATION ON STATEMENT OF CASH FLOWS

Liquid assets

Group
MSEK	31-12-2011	31-12-2010
The following components are included in liquid assets:
Cash and bank	681	703
Bank deposits	1,083	1,830
Funds in escrow account	139	-
Deposits on behalf of customers	15	11
Total according to the statement of financial position	1,918	2,544
Total according to statement of cash flows	1,918	2,544

Parent Company
MSEK	31-12-2011	31-12-2010
The following components are included in liquid assets:
Cash and bank balances	154	105
Bank deposits	1,083	1,830
Total according to balance sheet	1,237	1,935
Total according to statement of cash flows	1,237	1,935

Interest paid and dividends received

	Group		Parent Company
MSEK	2011	2010	2011	2010
Dividends received	55	12	226	236
Interest received	69	40	212	130
Interest paid	-139	-129	-198	-165
Total	-15	-77	240	201

Adjustments for items not affecting in cash flow

	Group		Parent Company
MSEK	2011	2010	2011	2010
Depreciation and amortisation	1,240	1,295	601	582
Impairments	21	63	-	-
Changes in the value of biological assets	-6	-43	-	-
Changes in the value of investment properties	12	-	-
Profit shares in associated companies	12	-40	-	-
Dividends from associated companies	50	6	-	-
Dividends and Group contributions from/to Group companies	-	-	-1,547	-1,457
Capital gains/losses from sales of Group companies, associated companies and other shares	-1,169	-15	-181	-9
Capital gains/losses on sales of tangible fixed assets	-1	7	2	7
Inventory impairment	-	60	-	-
Impairment of shares and receivables	9	26	128	290
Provisions	9	717	94	541
Provisions for pensions	-114	213	278	-187
Other	78	28	-17	-63
Total	141	2,317	-642	-296

Investments in operations and subsidiaries

Group
MSEK	2011	2010
Acquired assets and liabilities
Intangible fixed assets	1,007	1
Tangible fixed assets	286	-
Inventories	63	-
Current receivables	325	1
Liquid assets	127	-
Total assets	1,808	2
Provisions	34	-
Deferred tax liability	38	-
Interest-bearing liabilities	102	-
Current liabilities	256	2
Total liabilities	430	2
Purchase price paid	1,158	-
Less: Liquid assets in acquired operations	-127	-
Effect on the Group's liquid assets	1,031	-
Effect on the Group's net liquidity	929	-

Acquisitions in 2011 relate to Sensis Corporation of the US, assets from Scandinavian Air Ambulance Holding and assets from the Czech company E-COM. The acquisition in 2010 relates to the remaining 66.7 per cent of the shares in the associated company Opax as in Norway.

Acquisitions of associated companies

Group

MSEK	2011	2010
Acquired assets and liabilities
Financial fixed assets	104	-
Total assets	104	-
Purchase price paid	104	-
Effect on the Group's liquid assets	104	-

Acquisitions in 2011 primarily relate to 36.6 per cent in Avia Satcom Co. Ltd and shares in associated companies in the venture portfolio.

Sale of subsidiaries and associated companies

Group

MSEK	2011	2010
Divested assets and liabilities
Tangible fixed assets	11	-
Financial fixed assets	3	-
Current receivables	23	6
Assets held for sale	113	107
Liquid assets	8	-
Total assets	158	113
Current liabilities	8	12
Total liabilities	8	12
Sales price	1,272	161
Purchase price received	1,272	161
Less: Liquid assets in divested operations	-8	-
Effect on the Groups net liquidity	1,264	161
where of interest-bearing receivables	-	130
where of liquid assets	1,264	31

Divestments in 2011 relate to the shares in Grintek Ewation (Pty) Ltd, Denel Saab Aerostructures (Pty) Ltd, C3 Technologies ab and Image Systems ab. The divestment in 2010 relates to Saab Bofors Industrier ab and 16 per cent of the associated company Hawker Pacific Ltd.

NOTE 47

INFORMATION ON PARENT COMPANY

Saab ab (publ) is a limited company registered in Sweden, with its registered office in Linköping. The Parent Company's shares are registered on the nasdaq omx Stockholm. The address of the head office is Saab ab, Box 12062, SE-102 22 Stockholm, Sweden.

The consolidated accounts for 2011 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 48

ENVIRONMENTAL REPORT

Operations subject to permit requirements in the Parent Company

Production of aircraft and aircraft components by the Parent Company, Saab ab, in the Tannefors industrial zone in the municipality of Linköping is subject to licensing according to the Swedish Environment Code due to aeronautics operations, surface treatment processes, manufacturing of composite materials, handling of chemical substances and the size of the manufacturing facilities. The environmental impact of these operations primarily arises from emissions of volatile organic compounds (vocs) and aircraft emissions into the atmosphere and of metals into waterways, the generation of industrial wastes and noise disturbing local surroundings. The operations subject to licensing predominantly entail manufacturing. The National Licensing Board for Environmental Protection granted the license for aircraft manufacture in 1990. The supervisory authorities have decided on additional terms for these operations against the backdrop of the eu's ippc directive.

In Järfälla, Saab ab has operations involving the manufacture of advanced command and control systems, among other things, which are also subject to licensing according to the Environment Code. The licensing requirement is due to surface treatment processes and the size of the manufacturing facilities. The environmental impact of these operations primarily arises from voc emissions into the atmosphere and of metals into waterways. The National Licensing Board for Environmental Protection granted the license in 1990.

With the exception of a few exceeded limits, Saab ab did not exceed any conditions in its permits or injunctions in 2011.

Operations subject to permit requirements in subsidiaries

The operations carried on by Linköping City Airport ab are subject to licensing according to the Environment Code and are covered by the permit issued by the National Licensing Board for Environmental Protection in 1990 for Saab ab's collective operations in the Tannefors industrial zone in the municipality of Linköping. This permit also covers the operations of Saab Dynamics ab in the area, despite that they are not subject to licensing and notification requirements according to the Environment Code.

Saab Dynamics ab and Saab Bofors Test Center ab carry on operations in Karlskoga which are subject to licensing according to the Environment Code. Saab Dynamics ab carries on similar operations in Eskilstuna. In addition, Saab Barracuda ab carries on operations subject to licensing in Gamleby.

The environmental impact from subsidiaries subject to licensing primarily consists of emissions of vocs and emissions from aircraft into the atmosphere, emissions of metals and deicing solvents into waterways, generation of industrial wastes and noise disturbing local surroundings.

In 2011, none of Saab's subsidiaries exceeded any conditions of their permits or injunctions.

Operations subject to notification requirements

Saab ab has operations in Arboga, Gothenburg, Ljungbyhed, Malmslätt, Nyköping and Östersund which are subject to notification requirements in accordance with the Swedish Environment Code. Permits granted by the county boards in Arboga and Malmslätt in 1993 and 1994, respectively, still apply. The Group also has operations subject to notification requirements in the subsidiaries Saab Underwater Systems ab in Motala, Saab Training Systems ab in Huskvarna and Saab Precision Components ab in Jönköping. The environmental impact of these operations is very limited.

EXCHANGE RATES USED IN FINANCIAL STATEMENTS

				Year-end rate		Average rate
Country			2011	2010	2011	2010
Australia	AUD	1	7.03	6.92	6.70	6.61
Denmark	DKK	100	120.33	120.75	121.26	128.13
Euro	EUR	1	8.94	9.00	9.03	9.54
Canada	CAD	1	6.78	6.81	6.57	6.99
Norway	NOK	100	115.05	115.20	115.87	119.16
Switzerland	CHF	1	7.36	7.24	7.35	6.91
UK	GBP	1	10.68	10.55	10.41	11.13
South Africa	ZAR	100	85.08	103.00	89.72	98.41
Czech Republic	CZK	100	34.64	35.54	36.76	37.76
USA	USD	1	6.92	6.80	6.50	7.20

NOTE 50

DEFINITIONS OF KEY RATIOS

Gross margin

Gross income as a percentage of sales.

Operating margin

Operating income as a percentage of sales.

EBITDA margin

Operating income before depreciation, amortisation and impairments less depreciation and impairments of lease aircrafts as a percentage of sales.

Capital employed

Total capital less non-interest-bearing liabilities.

Return on capital employed

Operating income plus financial income as a percentage of average capital employed.

Return on equity Net income for the year as a percentage of average equity.

Profit margin

Operating income plus financial income as a percentage of sales.

Capital turnover

Sales divided by average capital employed.

Net liquidity/net debt

Liquid assets, short-term investments and interest-bearing receivables less interest-bearing liabilities and provisions for pensions.

Equity/assets ratio

Equity in relation to total assets.

Interest coverage ratio

Operating income plus financial income divided by financial expenses.

Earnings per share

Net income for the year attributable to Parent Company shareholders' interest , divided by the average number of shares before and after full dilution. There is no dilution impact if the result is negative.

Equity per share

Equity attributable to the Parent Company's shareholders divided by the number of shares, excluding treasury shares, at the end of the year.

Operating cash flow per share

Operating cash flow divided by the average number of shares after dilution.

Cash flow from operating activities per share

Cash flow from operating activities divided by the average number of shares after dilution.

DIVIDEND MOTIVATION

The Board of Directors' statement according to chapter 18, § 4 of the Companies Act with regard to the proposed dividend – Saab AB

Saab is one of the world's leading high-technology companies, because of which its operations are distinguished by complex development assignments 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 4.50 per share, corresponding to a total dividend of msek 474. Unrestricted equity amounts to msek 3,988 in Saab ab and profit carried forward in the Group before the dividend paid amounts to msek 10,204.

Net income for the year attributable to Parent Company's shareholders amounted to msek 2,225 for the Group and msek 1,589 for the Parent Company.

After paying the dividend to the shareholders, the Group's equity/ assets ratio amounts to 40.2 per cent, compared to the long-term objective of 30 per cent. Since the ipo in 1998, the equity/assets ratio has risen from 22 per cent to 41 per cent in 2011.

Saab's gross capital expenditure in 2011 amounted to msek 325, which is considered a good approximation of annual future investments in tangible fixed assets. Investments are also made in research and development, which in 2011 amounted to msek 1,355, of which msek 15 was capitalised in the balance sheet.

At year-end, Saab had a net cash position, which includes liquid assets, short-term investments and interest-bearing recei v ables less interest-bearing liabilities, including provisions for pensions, amounted to msek 5,333. Saab's ability to carry out its commitments is not affected by the proposed dividend either on a short- or a long-term basis.

The proposed dividend is considered justifiable with regard to what is stated in chapter 17, § 3, paragraphs two and three of the Companies Act (2005:551):

• 1. The demands that the company's nature, scope and risks place on the size of its equity, and
• 1. The company's consolidation needs, liquidity or financial position in other respects.

The Board of Directors of Saab ab

PROPOSED DISPOSITION OF EARNINGS

The Board of Directors and the President propose that the unappropriated earnings in the Parent Company at disposal of the Annual General Meeting, amounting to:

After the proposed disposition, equity in the Parent Company will be as follows:

SEK
Retained earnings	2,398,918,842
Net income for the year	1,589,444,977
Total	3,988,363,819
Be disposed as follows:
To the shareholders, a dividend of SEK 4.50 per share	473,993,811
Funds to be carried forward	3,514,370,008
Total	3,988,363,819

SEK Capital stock 1,746,405,504 Statutory reserve 542,471,135 Revaluation reserve 712,411,900 Retained earnings 3,514,370,008 Total 6,515,658,547

The company's policy is to issue a dividend of 20–40 per cent of net income over a business cycle. The Board of Directors and the President propose that msek 474 (367), or sek 4.50 per share (3.50) be issued as a dividend. Saab's equity/assets ratio is currently 41.1 per cent (39.1) and after the proposed disposition of earnings will be 40.2 per cent (38.3).

The undersigned certify that the consolidated accounts and the annual report have been prepared in accordance with 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 of the development of the operations, financial positions and results of the Group and the Parent Company and describes substantial risks and uncertainties that the Group companies faces.

Linköping, 10 February 2012

Marcus Wallenberg Chairman

Johan Forssell Sten Jakobsson Per-Arne Sandström Board member Board member Board member

Cecilia Stegö Chilò Joakim Westh Lena Treschow Torell Åke Svensson Board member Board member Board member Board member

Catarina Carlqvist Stefan Andersson Conny Holm Board member Board member Board member

Håkan Buskhe President and Chief Executive Officer (CEO) and Board member

Our audit report was submitted on 24 February 2012

Håkan Malmström

Authorised Public Accountant

AUDIT REPORT

To the annual meeting of the shareholders of Saab AB, corporate identity number 556036-0793

Report on the annual accounts and consolidated accounts

We have audited the annual accounts and consolidated accounts of Saab AB for the year 2011. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 48–132.

Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts

The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts and consolidated accounts in accordance with International Financial Reporting Standards , as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinions

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2011 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act, and the consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2011 and of their financial performance and cash flows in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group.

Other matters

The annual accounts and consolidated accounts for 2010were audited by other auditors who, in their audit report dated 16 February 2011, expressed an unmodified opinion on those annual accounts and consolidated accounts.

Report on other legal and regulatory requirements

In addition to our audit of the annual accounts and consolidated accounts, we have examined the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the Managing Director of ABC AB for the year 2011.

Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss, and the Board of Directors and the Managing Director are responsible for administration under the Companies Act.

Auditor's responsibility

Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.

As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss, we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.

As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinions

We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

Stockholm 24 February 2012

PricewaterhouseCoopers AB Håkan Malmström Authorised Public Accountant

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 omx Stockholm Rules – which also includes the Swedish Code of Corporate Governance – and other relevant Swedish and foreign laws and guidelines.

Swedish Code of Corporate Governance

The Saab shares are admitted to trading at nasdaq omx Stockholm and Saab must therefore follow good practices in the securities market, which includes an obligation to comply with the Swedish Code

of Corporate Governance ("the Code"). The Code is available at www.bolagsstyrning.se

Saab applies the Code and strives to maintain a high standard in its corporate governance. This Corporate Governance Report is in accordance with the Annual Accounts Act and the Code, and describes how Saab applied the Code during the financial year 2011. Moreover, the Annual General Meeting 2011 was carried out in accordance with the Code and the Annual General Meeting in 2012 will also be planned and carried out pursuant to the provisions of the Code. Saab's website has a special area for corporate governance issues, which is updated in accordance with the Code.

The Board annually issues a report on how the internal control of financial reporting is organised, which can be found at the end of this report.

* The internal boards handle and resolve issues within their respective areas on a Group level. They also prepare certain issues to be resolved by the Group Management.

Organisation 2011

This Corporate Governance Report has been reviewed by the company's auditor pursuant to the Annual Accounts Act, see the Auditor's Report attached to the Corporate Governance Report.

Saab has not deviated from the provisions of the Code during 2011 and hence does not report any deviations from the Code.

Ownership structure and number of shares

Saab's share capital amounted to sek 1,746,405,504 on 31 December, 2011 and consisted of 1,907,123 series a shares and 107,243,221 series b shares. Series a shares have ten votes each, while series B shares have one vote each. One series a share may, on demand of the owner, be converted into one series b share. The Saab shares are registered with Euroclear Sweden ab. The quota value per share is sek 16. The series B shares are listed on nasdaq omx Stockholm on the large cap list. The series a shares are not listed. A round lot consists of 100 shares. All series a shares are owned by Investor ab.

Largest shareholders, 31 December 2011

According to SIS Ownership Service	Share of capital, %	Share of votes, %
Investor AB, Sweden	30.0	40.8
Wallenberg Foundations, Sweden	8.7	7.7
Swedbank Robur funds, Sweden	4.8	4.3
Unionen, Sweden	2.5	2.2
AFA Insurance, Sweden	2.3	2.0
SEB funds, Sweden	2.1	1.9
Fourth AP Fund, Sweden	2.1	1.8
SHB funds, Sweden	2.1	1.8
Orkla ASA, Norway	1.6	1.5
Länsförsäkringar funds, Sweden	1.0	0.9
Total	57.2	64.9

At the end of December 2011, Saab held 3,818,386 own shares of series B shares, corresponding to approximately 3.5 per cent of the share capital. For additional information about the ownership structure, see pages 147 and 149. The Board of Directors has an authorisation from the Shareholders' Meeting to repurchase shares. See page 68 for further information.

Nomination Committee

The Annual General Meeting of Saab in April 2011 adopted a nomination committee process stating that Saab shall have a Nomination Committee consisting of one representative of each of the four shareholders or groups of shareholders with the greatest number of votes, along with the Chairman of the Board. The names of the four shareholder representatives and the shareholders they represent shall be announced at least six months prior to the Annual General Meeting based on known voting rights as per the last business day in August the year before the Annual General Meeting. The nomination committee

process includes procedures, where necessary, to replace a member who leaves the committee before its work has been completed.

According to the nomination committee process adopted at the Annual General Meeting 2011, the Nomination Committee shall provide proposals regarding the following issues, to be presented to the Annual General Meeting for resolution:

(a) the Chairman of the Shareholders' Meeting,

• (b) the Board of Directors,
• (c) the Chairman of the Board,
• (d) the remuneration to the members of the Board, allocated between the Chairman and other members of the Board, and remuneration for committee work,
• (e) election of auditors, if applicable, and
• (f) audit fees.

Before the Annual General Meeting of Saab AB on 19 April 2012, it was announced through a press release on 12 October 2011 that, in addition to Chairman of the Board, Marcus Wallenberg, the following shareholder representatives had been appointed to Saab's Nomination Committee (shareholder's name in parentheses): Petra Hedengran (Investor AB), Peter Wallenberg Jr (Knut and Alice Wallenberg Foundation), Thomas Eriksson (Swedbank Robur Funds) and Thomas Ehlin (Nordea Investment Funds). Petra Hedengran is the Chairman of the Nomination Committee.

These persons represent in the aggregate approximately 52 percent of the votes in Saab based on the ownership structure as of 31 August 2011.

The proposal of the Nomination Committee will be presented not later than in connection with the notice of the Annual General Meeting 2012.

Members of the Nomination Committee for the Annual General Meeting 2012

Member	Representing	% of votes 31-8-2011	% of capital 31-8-2011
Petra Hedengran	Investor AB	40.8	30.0
Peter Wallenberg Jr	Knut and Alice Wallenberg Foundation	7.7	8.7
Thomas Eriksson	Swedbank Robur Funds	2.8	3.1
Thomas Ehlin	Nordea Investment Funds	2.5	2.8
Marcus Wallenberg	Chairman of the Board, Saab AB	-	-

Board of Directors

Composition of the Board

According to Saab's Articles of Association, the Board of Directors shall, in addition to the employee representatives, consist of at least six and not more than twelve members. Members of the Board shall be elected each year by the Shareholders' Meeting. According to a resolution at the Annual General Meeting on April 7, 2011, Saab's Board of

Board of Directors, Saab AB.

Directors shall consist of ten members elected by the Shareholders' Meeting, with no deputies. In addition, the employee organisations appoint three Board Members, with an equal number of deputies.

At the Annual General Meeting on 7 April 2011, Johan Forssell, Sten Jakobsson, Per-Arne Sandström, Cecilia Stegö Chilò, Åke Svensson, Lena Treschow Torell, Marcus Wallenberg and Joakim Westh were re-elected. Håkan Buskhe and Michael O'Callaghan were elected as new board members at the Annual General Meeting. Erik Belfrage and George Rose declined re-election. Michael O'Callaghan later resigned from the Board of Directors on 16 June 2011 as a result of BAE Systems' divestment of its shareholding in Saab. The Saab Board of Directors has thereafter consisted of nine Board Members elected by the Shareholders' Meeting.

Marcus Wallenberg was elected Chairman of the Board of Directors. Only Håkan Buskhe, President and CEO of Saab, is employed by the company.

Information on the remuneration to the members of the Board as resolved by the Annual General Meeting 2011 is set forth in the Annual Report, note 37.

Members of the Board elected by the Shareholders' Meeting

Marcus Wallenberg	Per-Arne Sandström
Håkan Buskhe	Cecilia Stegö Chilò
Johan Forssell	Åke Svensson
Sten Jakobsson	Lena Treschow Torell
Michael O'Callaghan 1)	Joakim Westh

1) Resigned on 16 June 2011 as a result of BAE Systems' sale of its shareholding in Saab.

Other significant professional commitments, work experience, etc. are set forth in the presentation of the Board of Directors. See pages 141–142.

Employee representatives

Regulars Deputies Stefan Andersson Göran Gustavsson Catarina Carlqvist Jan Kovacs

Conny Holm Nils Lindskog

Independence requirement

The following table sets forth the members of the Board elected by the Shareholders' Meeting who, according to the provisions of the Code, are considered independent in relation to the company and the management, as well as in relation to the company's major shareholders.

Composition and independence of the Board in 2011

Board member	Elected	Independent of the company/ management	Independent of major share holders
Marcus Wallenberg	1992	Yes	No 1)
Håkan Buskhe	2011	No 2)	Yes
Johan Forssell	2010	Yes	No 3)
Sten Jakobsson	2008	Yes	Yes
Michael O'Callaghan 4)	2011	Yes	No4)
Per-Arne Sandström	2005	Yes	Yes
Cecilia Stegö Chilò	2010	Yes	Yes
Åke Svensson	2003	No 5)	Yes
Lena Treschow Torell	2005	Yes	No 6)
Joakim Westh	2010	Yes	Yes

1) Former President and CEO of Investor AB

2) President and CEO of Saab 3) Employed by Investor AB

4) Employed by BAE Systems. Resigned on June 16, 2011, as a result of BAE Systems' sale

of its shareholding in Saab

5) Former President and CEO of Saab 6) Member of Investor AB's Board

Accordingly, the company fulfils the requirements of the Code that a majority of the Board Members appointed by the Shareholders' Meeting are independent of the company and the management, and that at least two of them are independent of the major shareholders.

Work of the Board

According to the Board's rules of procedure, six ordinary meetings shall normally be held each year, in addition to the statutory meeting. The Board may also meet whenever circumstances demand. During 2011, the Board held one statutory meeting, six ordinary meetings and two extraordinary meetings, totalling nine meetings.

The Board annually adopts rules of procedure and an instruction on the allocation of work between the Board and the President and CEO, as well as an instruction on financial reporting to the Board.

The rules of procedure contain, i.a. provisions on the number of board meetings to be held, a list of matters to be considered at the meetings, reporting from the auditor and special decisions to be taken at the statutory meeting. The rules of procedure and special instruction for the CEO set forth the delegation of responsibilities between the Board and its two committees, the Remuneration Committee and the Audit Committee, as well as between the Board and the CEO. The instruction for the CEO sets out the CEO's duties and authority. The instruction also includes policies on investments, financing and reporting.

During the course of the year, the Board was assisted by the Secretary of the Board of Directors, General Counsel Anne Gynnerstedt, who is not a member of the Board. Anne Gynnerstedt left her position as General Counsel of Saab in January 2012.

The Board of Directors' meetings follow a determined and preapproved agenda. Prior to the meetings the Board Members receive documentation in support of the issues that are on the agenda. At each Board meeting, the CEO presents a Market and Operations Report. Financial reports are prepared monthly and submitted to the Board.

ATTENDANCE AND BOARD REMUNERATION IN 2011

The reports are presented at each Board meeting and before the quarterly reports and year-end report. Furthermore, the Board regularly reviews and considers investments, mergers and acquisitions and divestments. In 2011, the Board of Directors has reviewed and adopted a budget and a business plan. The Board has also focused on the company's strategy and followed up on significant export opportunities and related marketing investments.

Committee work represents an important part of the Board's work. After meetings of the Audit and Remuneration Committees, the issues that have been handled are reported to the Board, and resolutions are adopted on issues where the committees have prepared matters for resolution by the Board.

Board of Directors' committee work

Audit Committee

The Board of Directors has, in accordance with the principles set out in the Swedish Companies Act and the Code, appointed an Audit Committee consisting of three members. The work of the Audit Committee is mainly of a preparatory nature, i.e., it prepares matters for the ultimate resolution by the Board. However, the Audit Committee has certain limited decision-making power. The Audit Committee has e.g. established guidelines for services other than auditing that the company may procure from auditors.

Since the Annual General Meeting in April 2011, the Audit Committee has consisted of the following members: Per-Arne Sandström (Chairman), Johan Forssell and Joakim Westh, of whom Per-Arne Sandström and Joakim Westh are independent of the company and the management as well as of the major shareholders. All members of the committee have accounting competence and auditing competence. The General Counsel, Anne Gynnerstedt, was Secretary to the Audit Committee during 2011.

Name	Audit Committee	Remu neration Committee	Attendance Board meetings1)	Attendance Committee meetings 2)	Board fees, kSEK 3)	Audit Commit tee fees, kSEK	Remuneration Committee fees, kSEK	Total remu neration, kSEK
Marcus Wallenberg		X	9	3	1,100		80	1,180
Håkan Buskhe 4)			9		-			-
Johan Forssell	X		9	8	425	100		525
Sten Jakobsson 5)		X	8	2	425		80	505
Michael O'Callaghan 6)			1		-			-
Per-Arne Sandström	X		9	8	425	150		575
Cecilia Stegö Chilò			9		425			425
Åke Svensson			8		425			425
Lena Treschow Torell		X	7	3	425		135	560
Joakim Westh	X		9	8	425	100		525

1) Of a total of 9 meetings 2) Of a total of 8 meetings for Audit Committee and 3 meetings for Remuneration Committee

3) The President and CEO Håkan Buskhe does not receive a fee.

4) New election April 2011, Håkan Buskhe participated in the year's first two meetings as President and CEO.

5) Member of the Remuneration Committee since 7 April 2011, and thereafter two meetings of Remuneration Committee were held.

6) New election April 2011. Resigned from the Board on 16 June 2011

The Audit Committee's assignment is set forth in the Board's rules of procedure. Among other things, the Audit Committee 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 itself informed about the audit of the annual report and the group accounts, review and monitor the auditor's neutrality and independence, and assist the Nomination Committee in preparing proposal for the Shareholders' Meeting's decision on election of auditors. The company's internal and external auditors are both co-opted to the meetings of the Audit Committee. During 2011, the Audit Committee focused particularly on the financial reporting, the budget, Saab's business plan, and the recruitment of a new internal auditor.

The Audit Committee keeps minutes of its meetings, which are promptly distributed to the other members of the Board.

In 2011, the Committee held eight meetings.

Remuneration Committee

The Board of Directors has in accordance with principles set out in the Code appointed a Remuneration Committee consisting of three members: Marcus Wallenberg, Sten Jakobsson and Lena Treschow Torell. Lena Treschow Torell is Chairman of the committee. All of the members are independent of the company and the management. The General Counsel, Anne Gynnerstedt, was secretary to the committee during 2011.

The Remuneration Committee prepares Board matters concerning principles for remuneration, remunerations and other terms of employment for the Group Management, monitors and evaluates programmes for variable remuneration for the Group Management, both ongoing and those that have ended during the year, and monitors and evaluates the application of the guidelines for remuneration for the Group Management that the Annual General Meeting has adopted as well as the current remuneration structures and levels in the company. The Remuneration Committee shall also propose guidelines for remuneration of senior executives to be submitted to the Annual General Meeting following resolution by the Board of Directors. Matters concerning employment terms, compensation and other benefits for the CEO are prepared by the Remuneration Committee and adopted by the Board. It is the Remuneration Committee who is responsible for the interpretation and application of the guidelines of remuneration for senior executives. The Remuneration Committee has no decision-making powers of its own. During the year, the Remuneration Committee was particularly involved in a review of fixed and variable salaries and structuring the long term incentive programme for senior executives and strategic key employees.

The Remuneration Committee keeps minutes of its meetings, which are promptly distributed to the other members of the Board. In 2011, the Committee held three meetings.

Evaluation

The Chairman of the Board annually performs an evaluation of the quality of the Board's work and possible improvements to the forms and efficiency of its work. The members fill out a questionnaire on their opinions of how well the Board is functioning. The results are then compared with previous years. The questionnaire consists of five parts covering the breadth of competence represented in the Board, the manner in which its work is performed, the Chairman, the Board's composition and the co-operative atmosphere. The purpose of the evaluation is to understand the Board Members' opinion about the Board's work. The results are then discussed by the Board. No external consultants are involved in the evaluation.

The Nomination Committee is also informed of the results of the evaluation in connection with its analysis, evaluation and appointment of Board Members.

The Board continuously evaluates the CEO's work by monitoring business results in relation to established objectives. During 2011 the Board Members have also evaluated the CEO's work by responding to a questionnaire about the CEO within the areas of strategy, performance, organisation, people and leadership.

President and CEO

The President and CEO of Saab, Håkan Buskhe, is also a Member of the Board. His significant professional commitments outside the company, work experience, etc. are set forth in the presentation of the Board of Directors and the Group Management, see 141-143. Håkan Buskhe does not own shares in any company with which Saab has material business ties.

Guidelines for remuneration and other benefits for senior executives

The guidelines for remuneration and other benefits for senior executives can be found in the administration report.

Auditor

On behalf of the shareholders and in accordance with current laws and regulations, the external auditor examines the financial statements, group accounts, annual report and 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 by the auditor. The auditor also presents an Auditor's Report to the Annual General Meeting.

The Shareholders' Meeting elects the auditors. The firm that was elected as new auditor by the Shareholders' Meeting 2011 is the registered accounting firm PricewaterhouseCoopers. Previous auditors were the accounting firms Ernst & Young and Deloitte.

PricewaterhouseCoopers

• t Elected in 2011 for the term 2011-2015
• tAuditor in charge is Håkan Malmström
• t Other audit assignments: Gambro, Karo Bio, NCC and Nordstjernan

PricewaterhouseCoopers AB is a member of PwC's global network with operations in around 150 countries. PwC has competence and experience in areas important to Saab: auditing of large and listed companies, accounting issues, industry experience and experience in international business.

The Audit Committee is responsible for ensuring that the independent position of the auditor is maintained, i.a. by staying informed of ongoing consulting assignments. The Audit Committee has also established guidelines for the services other than auditing that the company may procure from its auditors.

Audit fees

Saab's auditor receives a fee according to approved invoices as resolved by the Shareholders' Meeting.

PricewaterhouseCoopers has during 2011 carried out services on behalf of the company in addition to their audit assignments, consisting of consultations closely associated with the audit, including accounting and tax issues.

Auditors' fees 2009–2011, the Group

MSEK	2011	2010	2009
Audit assignments:
PricewaterhouseCoopers AB	15	1	-
Ernst & Young AB	-	10	13
Deloitte AB	-	3	4
Other assignments:
PricewaterhouseCoopers AB	7	-	-
Ernst & Young AB	-	5	3
Deloitte AB	-	2	2
Other, audit assignments	1	1	3

Financial reporting

The Board documents the manner in which it ensures the quality of the financial reports and how it communicates with the company's auditor.

The Board ensures the quality of financial accounting through its Audit Committee, according to the report submitted above. The Audit Committee considers not only critical accounting questions and the financial reports presented by the company, but also matters of internal control, regulatory compliance, potential material uncertainty in reported values, post-statement events, changes in assessments and evaluations and other circumstances that may affect the quality of the financial statements. The auditors have participated in six regular meetings with the Audit Committee. They have not participated in meetings when the election of external auditors was discussed.

The entire Board reviews the interim reports before they are published.

The company's auditor attends the Board meeting at which the annual accounts are approved.

The Board has met with the auditor to discuss their review of the company for the financial year 2011. The Board has also met on one occasion with the auditor without the presence of the CEO or any other members of the Group Management.

The Board's report on internal control of financial reporting

According to the Swedish Companies Act and the Code, the Board is responsible for internal control. This report on internal control of the financial reporting has been drafted on the basis of the Swedish Annual Accounts Act.

Internal control over financial reporting

Saab's system of internal control is designed to assist the business achieve its goals and manage the associated risks. Internal control over financial reporting is a part of all internal control processes within Saab, the framework for which is developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Internal control over financial reporting aims to provide reasonable assurance of the reliability of external financial reporting and to ensure that it is prepared in accordance with legislation, applicable accounting standards and other requirements on listed companies.

Control environment

The delegation of responsibilities is based on the Board's rules of procedure and an instruction, which sets forth the roles, responsibilities and activities of the Board and the CEO.

Internal control is based on Saab's organisation, where operating responsibilities and powers are delegated to business areas and support units, which also receive support and are supervised by Group functions with specific competencies. These Group functions issue Group guidelines that clarify responsibilities and powers and constitute part of the internal control in specific areas such as finance, accounting, investments and tenders.

Risk assessment

Saab's operations are mainly characterised by the development, production and supply of technologically advanced hardware and software for customers around the world. The major part of sales are generated 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 and goodwill, development costs, hedging and other financial transactions, leasing operations, taxes and accounting for pensions. In addition to business risks, the processes are also assessed on the basis of the risk of exposure to any improprieties.

Group Finance continuously co-ordinates an overall risk assessment of the financial reporting. This process involves self-assessments by the Group functions and business areas. The current risk assessment is reviewed with Saab's Internal Audit, which adjusts its annual audit plan accordingly. Information on developments in

essential risk areas as well as a report on planned and executed activities in these areas are communicated regularly to Saab's Audit Committee. Saab's risk assessment is also communicated regularly to Saab's external auditors.

Information, communication and control activities

Internal control within Saab is based on clearly defined areas of responsibility and authority, issued Group guidelines, processes and controls.

Uniform handling of financial reporting is assured by adopting and issuing Group guidelines approved by the CEO or by function managers appointed by the CEO. All Group directives are updated on an ongoing basis, are clearly communicated and are available on the internal website.

Each business area designs its risk management routines and structure for internal control based on overall routines and Group guidelines.

The most significant risks identified as regards financial reporting are managed through control structures within the business areas and Group functions and are based on Saab's minimum requirements for good internal control in significant processes.

Monitoring and evaluation

All operating units report monthly and quarterly according to a standardised routine. Quarterly reports serve as the basis of Saab's external financial reporting. In operating reports, each business area's measures of profitability and financial position are consolidated to measure the Group's total profitability and financial position. Accounting managers and controllers are continuously in contact with Group Finance concerning any questions related to finance and accounting.

To assist in evaluating internal control in each business area, Saab uses an annual self assessment. In addition to the processes that

serve as a basis for the financial reporting, these assessments cover operating risks, reputational risks and compliance with laws, regulations and internal rules. This is also reported to the Audit Committee. The Internal Audit department, which is part of the internal control structure, is a dedicated resource for independent review of the effectiveness of internal control processes. At the same time, Internal Audit supports locally applied internal controls and the central controller staff. Together they serve as a resource to monitor financial reporting routines. Internal Audit's assignments are initiated by the Audit Committee, Group Management and its members, and on its own initiative.

Activities in 2011

During 2010, an extensive review was made of Saab's internal financial control system. Based on the evaluation of the risk controls, corrective measures were identified and evaluated. An independent evaluation of all identified controls launched at the end of 2010 was concluded in 2011. The analysis and evaluation of the internal controls in 2010 resulted in a modified reporting process in 2011.

Risk self-assessments were conducted on a continuous basis in the Swedish operations in 2011. This process was also implemented during the year in Saab's operations in Australia and South Africa. Implementation has begun in the U.S. as well.

Focus in 2012

A self-assessment will be conducted at least twice in 2012 in all of Saab's business areas and an independent assessment will be made at least once. At the same time, improvements to existing control systems are being made continuously.

The annual assessment process of internal financial controls as of 2011

BOARD OF DIRECTORS

MARCUS WALLENBERG

Chairman of the Board since 2006. Deputy Chairman of the Board 1993- 2006 and Member of the Board since 1992, Member of Saab's Remuneration Committee Born 1956 Bachelor of Science of Foreign Service Lieutenant in Royal Swedish Naval Academy Shares in Saab: 100,150

Other board commitments:

Chairman of SEB, Electrolux AB and LKAB. Deputy Chairman of Telefonaktiebolaget L M Ericsson Board member of AstraZeneca PLC, Stora Enso Oyj, the Knut and Alice Wallenberg Foundation and Temasek Holding Ltd.

Former employment

and positions: President and CEO, Investor AB Director, Stora Feldmühle AG, Düsseldorf Skandinaviska Enskilda Banken, Stockholm and London Citicorp (Hong Kong) Citibank N.A. (New York)

HÅKAN BUSKHE

Member of the Board since April 2011 President and Chief Executive Officer of Saab AB Born 1963 M.S.c., Licentiate of Engineering (Transportation & Logistics)

Shares in Saab: 9,817

Employed 2010

AB

Other board commitments: Chairman of Green Cargo AB Board member of the Association of Swedish Engineering Industries (Teknikföretagen) Board Member of Inlandsinnovation

Former employment and positions:

President and CEO of E.ON Nordic AB and E.ON Sverige AB Executive Vice President of E.ON Sverige AB, Senior Vice President of E.ON Sverige AB, CEO of Schenker North and member of the Schenker AG's Executive Management Production Manager Falcon Brewery

JOHAN FORSSELL

Member of the Board since 2010 Member of Saab's Audit Committee Managing Director Investor AB, Head of Core Investments Born 1971 M.Sc. in Finance, Stockholm School of Economics Shares in Saab: 7,000

Other board commitments: Board member of Atlas Copco

Former employment and positions:

Head of Research Core Investments, Investor AB, Head of Capital Goods and Healthcare Sector, Investor AB, Head of Capital Goods Sector, Investor AB, Analyst Core Holdings, Investor AB

STEN JAKOBSSON

Member of the Board since 2008 and Deputy Chairman since 2010 Born 1949 M.Sc.

Shares in Saab: 3,490

Other board commitments: Chairman of Power Wind Partners Board member of Stena Metall AB Board member of FLSmidth A/S Board Member of Xylem Inc

Former employment and

positions: President and CEO, ABB Sweden, Executive Vice President, Asea Brown Boveri AB, Sweden, Business Area Manager, Business Area Cables President, ABB Cables AB, President, Asea Cylinda, Production Manager, Asea Low Voltage Division, Asea central staff – Production, Asea trainee

PER-ARNE SANDSTRÖM

Member of the Board since 2005 Chairman of Saab's Audit Committee Born 1947 Upper secondary engineering school Shares in Saab: 3,000

Other board commitments:

Chairman of Infocare AS Board Member of TeliaSonera AB

Former employment

and positions: Deputy CEO and COO of Telefonaktiebolaget L M Ericsson, President and CEO, Ericsson Inc., USA, Vice President and General Manager, GSM business unit, Ericsson Radio Systems AB, Executive Vice President and Managing Director, Cellular Systems, Ericsson Ltd, UK, Vice President and General Manager, GSM Western Europe, Ericsson Radio Systems AB, Vice President and General Manager, Airborne Radar Division, Ericsson Microwave Systems AB, Department Manager, Naval Command and Control Systems, Ericsson Microwave Systems AB

The shares held by Board members include any holdings by closely affiliated persons.

CECILIA STEGÖ CHILÒ

Member of the Board since 2010 Adviser to management of corporations and organizations Born 1959 Studies in political science and economics Shares in Saab: 600

Other board commitments:

Chairman of Gotlands Bryggeri Board member of Spendrups Bryggerier Board member of Linköping University Holding AB

Board Member of the Expo Foundation

Former employment and positions:

Board member of AMF Fonder and Länsförsäkringar Liv,

Managing Director of the foundation Fritt Näringsliv, Head of the think tank Timbro, Cabinet member and Head of the Ministry of Culture, Editorial writer and foreign policy commentator at Svenska Dagbladet, Commentator at Sveriges Radio, Swedish Employer's Confederation Moderate Party

ÅKE SVENSSON

Member of the Board since 2003 Director General of the Association of Swedish Engineering Industries Born 1952 M.Sc. Shares in Saab: 9,425

Other board commitments:

Board member of Parker Hannifin Corporation, Board member of the Swedish Export Credit Corporation Board member of the Swedish National Agency for Higher Education Member of the Royal Swedish Academy of Engineering Sciences (IVA), Member of the Royal Swedish Academy of War Sciences, Member of IVA's Business Executives Council Board member of VA (Public & Science)

Former employment and positions:

President and CEO of Saab AB General Manager, Business Area Saab Aerospace, Saab AB General Manager, Business Unit Future Products and Technology, Saab AB

Project Manager for RBS15, Saab Dynamics AB Other positions in the Saab Group

LENA TRESCHOW TORELL

Member of the Board since 2005 Chairman of Saab's Remuneration Committee Professor in Physics Born 1946 B.Sc. and Ph.D. in Physics Shares in Saab: 5,400

Other board commitments:

Vice Chairman of ÅF AB and Micronic Mydata AB Board member of Investor AB, SKF AB and The Chalmers University of Technology Foundation Chairman of European Council of Applied Sciences, Technology and Engineering (Euro-CASE), the Foundation for Strategic Environmental Research (MISTRA) and the Royal Swedish Academy of Engineering Sciences (IVA)

Former employment and positions:

President of the Royal Swedish Academy of Engineering Sciences (IVA) Board member of Getinge AB, Telefonaktiebolaget L M Ericsson and Gambro AB, Director, Joint Research Centre, European Commission (Brussels) Vice President, Chalmers, Gothenburg, Professor of Material Physics, Chalmers, Professor of Solid State Physics, Uppsala University

JOAKIM WESTH

Member of the Board since 2010 Member of Saab's Audit Committee Born 1961 M.S.c. Shares in Saab: 8,000

Other board commitments:

Chairman of EMA Technology AB Board member of Rörvik Timber AB Board member of Absolent AB Board member of Swedish Match AB Board member of Intrum Justitia AB

Former employment

and positions: Chairman of Absolent AB, Board member of Telelogic AB and VKR Holding A/S, Deputy Board member of Sony Ericsson Mobile Communications AB, Senior Vice President, Group function Strategy & Operational Excellence and member of the Group Management Team, Ericsson, J Westh Företagsutveckling AB, Group Vice President and member of the Executive Management Group, Assa Abloy AB, Partner, McKinsey & Co, Inc

STEFAN ANDERSSON Member of the Board since 2008 President of the Local Industrial Salaried Employees' Association at Saab Dynamics AB, Linköping Born 1974 B.Sc Shares in Saab: 1 029

CATARINA CARLQVIST Member of the Board since 2007

Member of the Local Swedish Association of Graduate Engineers, Saab Dynamics AB, Karlskoga Born 1964 Luleå University of Technology Shares in Saab: -

CONNY HOLM

Member of the Board since 2008 and deputy Board Member 1995-2008 President of the Local Workers' Union IF Metall at Electronic Defence Systems, Saab AB, Jönköping Born 1947 Upper secondary engineering education Shares in Saab: 696

DEPUTIES, EMPLOYEE REPRESENTATIVES

GÖRAN GUSTAVSSON

Deputy Board member since 2008 President of the Local Workers' Union IF Metall at Saab AB, Linköping Born 1953 Shares in Saab: 734

NILS LINDSKOG

Deputy Board member since 2007 Member of the Local Swedish Association of Graduate Engineers at Saab AB, Göteborg Born 1955 M.S.E.E. from Chalmers University of Technology Shares in Saab: 354

JAN KOVACS

Deputy Board member since 2008 President of the Local Industrial Salaried Employees' Association at Saab AB, Linköping Born 1960 Upper secondary technical school Shares in Saab: 807

AUDITOR

PRICEWATERHOUSECOOPERS AB HÅKAN MALMSTRÖM

The shares held by Board members include any holdings by closely affiliated persons.

GROUP MANAGEMENT

HÅKAN BUSHKE President and Chief Executive Officer (CEO). Member of the Board of Saab AB since April 2011 Born 1963, M.Sc., Licentiate of Engineering (Transportation and Logistics) Employed 2010 Shares in Saab: 9,817

Other board commitments:

Chairman of Green Cargo AB Board member of Teknikföretagen Board Member of Inlandsinnovation AB

Former employment and positions:

President och CEO of E.ON Nordic AB and E.ON Sverige AB, Executive Vice President of E.ON Sverige AB, Senior Vice President of E.ON Sverige AB, CEO of Schenker North and member of Schenker Ag's Executive Management , Production Manager Falcon Brewery

LENA OLVING Deputy Chief Executive Officer and Chief Operating Officer (COO) Born 1956, M. Sc., Mechanical Engineering Employed November 2008 Shares in Saab: 5,549

GUNILLA FRANSSON Senior Vice President and Head of Business Area Security and Defence Solutions Born 1960, M.Sc. and PhD (Tec. Lic)

Employed 2008 Shares in Saab: 1,913

LENNART SINDAHL Executive Vice President and Head of Business Area Aeronautics Born 1956, M.Sc. Employed 1986 Shares in Saab: 4,211

TOMAS SAMUELSSON Senior Vice President and Head of Business Area Dynamics Born 1953, M.Sc. Employed 2000 Shares in Saab: 2,976

MICAEL JOHANSSON Senior Vice President and Head of Business Area Electronic Defence Systems Born 1960, B.Sc. Employed 1985 Shares in Saab: 1,873

LARS GRANLÖF Senior Vice President and Chief Financial Officer (CFO), Head of Group Finance Born 1962, MBA Employed 2007

Shares in Saab: 10,607

LENA ELIASSON Senior Vice President and Head of Group Human Resources Born 1967, M.Sc. Employed 2012 Shares in Saab: -

CARINA BRORMAN Senior Vice President and Head of Group Communications Born 1958, B.Sc. Employed 2011 Shares in Saab: -

ANNIKA BÄREMO Senior Vice President and Head of Group Legal Affairs, General Counsel, Secretary of the Board of Directors Born 1964, LLB Employed 2012 Shares in Saab: -

Born 1954 Employed 2001 Shares in Saab: 1,642

JONAS HJELM Executive Vice President and Chief Marketing Officer (CMO), Head of Group Marketing & Business Development Born 1971 Employed 2006 Shares in Saab: 3,090

DAN JANGBLAD Senior Vice President and Chief Strategy Officer (CSO), Head of Group Strategy Born 1958, M.Sc. Employed 2000 Shares in Saab: 7,807

PETER SANDEHED Senior Vice President and Head of Group Corporate Investments Born 1952, MBA Employed 1981 Shares in Saab: 12,973

In 2011, Group Management also included Anne Gynnerstedt, Senior Vice President, Head of Group Legal Affairs and Secretary of the Board of Directors, and Mikael Grodzinsky, Senior Vice President and Head of Group Human Resources. Lars Granlöf left his position at the end of February 2012. He thereafter is available to the company during a transition period.

AUDITOR'S REPORT 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 for 2011 on pages 134-143 and for ensuring that it has been prepared in accordance with the Annual Accounts Act. We have read the Corporate Governance Report and based on his reading and our knowledge of the company and the group are of the opinion that we have a sufficient basis for our statement. This means that our statutory review of the Corporate Governance Report has a

different approach and is of a significantly lesser scope than an audit according to the International Standards on Auditing and accepted auditing standards in Sweden.

In our opinion, a Corporate Governance Report has been prepared and its statutory content is consistent with the Annual Report and the consolidated accounts.

Stockholm, 24 February 2012

PricewaterhouseCoopers AB

Håkan Malmström Authorised Public Accountant

INFORMATION TO SHAREHOLDERS

Annual General Meeting

The Annual General Meeting will be held at 3:00 pm (cet) on Thursday, 19 April 2012 at Annexet, Stockholm Globe Arenas, Globentorget 2, Stockholm.

Notification

Shareholders must notify the company of their intention to participate in the meeting not later than Friday, 13 April 2012:

• t by telephone: +46 13 18 20 55
• t by mail with separate invitation
• t by mail: Saab Annual General Meeting, Box 7839, 103 98 Stockholm, Sw eden
• t online: www.saabgroup.com/arsstamma

Please indicate your name, personal ID number (Swedish citizens), address and telephone number. If you are attending by power of proxy, registration certificate or other authorisation, please submit your documentation well in advance of the meeting. The information you provide will be used only for the Annual General Meeting.

Shareholders or their proxies may be accompanied at the Annual General Meeting by a maximum of two people. They may only attend, however, if the shareholder has notified Saab ab as indicated above.

Right to participate

Only shareholders recorded in the share register maintained by Euroclear Sweden ab on Friday, 13 April 2012 are entitled to participate in the meeting.

Shareholders registered in the names of nominees through the trust department of a bank or a brokerage firm must temporarily reregister their shares in their own names to participate in the meeting. To ensure that this re-registration is recorded in the share register by Friday, 13 April 2012, they must request re-registration with their nominees several business days in advance.

Dividend

The Board of Directors proposes a dividend of sek 4.50 per share and Tuesday, 24 April 2012 as the record day for the dividend. With this record day, Euroclear Sweden ab is expected to distribute the dividend on Friday, 27 April 2012.

Distribution of the annual report

The annual report will be available on Saab's website, www.saabgroup.com, approximately four weeks prior to the Annual General Meeting on 19 April. It can also be ordered from Saab's head office, Investor Relations. A printed version of the annual report will be distributed to those who became shareholders in December 2011, January and February 2012, as well as other shareholders who request a printed version.

THE SAAB SHARE

Capital stock and number of shares

Saab's capital stock amounted to sek 1,746,405,504 on 31 December 2011 and consisted of 1,907,123 unlisted Series a shares and 107,243,221 listed Series b shares. Series a shares have ten votes each, while Series b shares have one vote each. The quota value per share is sek 16. The Series b share is listed on nasdaq omx Stockholm's Large Cap list. A round lot consists of 100 shares.

Saab's Series a shares are owned by Investor ab.

Saab's market capitalisation was sek 15.3 billion at year-end 2011. The price of the Series b share rose during the year by 16 per cent, compared to an increase of 17 per cent for the omx index. The total return on Saab's Series b share – i.e., the dividend plus the change in the share price – has been -24 per cent over the last five years.

Trading volume and statistics

A total of 47,073,222 Series b shares (48,704,378) were traded on nasdaq omx Stockholm in 2011, where approximately 80 per cent were traded. The marketplaces bats, boat, Burgundy, Chi- X and Turqouise accounted in total for about 20 per cent of turnover. The share's price reached a high of sek 155.00 on 11 May and a low of sek 104.20 on 25 November.

Ownership structure

Saab had 29,056 shareholders (31,125) as of year-end 2011. Swedish investors accounted for 73.6 per cent (73.3) of the capital stock and 76.5 per cent (76.1) of the votes.

Dividend and dividend policy

Saab's long-term dividend policy is to distribute 20–40 per cent of income after tax over a business cycle. For 2011, the Board of Directors is proposing a dividend of sek 4.50 (3.50) per share. This would correspond to 21 per cent of net income for 2011 (85).

Saab's Share Matching Plan

In April 2007, Saab's Annual General Meeting resolved to offer employees the opportunity to participate in a voluntary share matching plan where they can purchase Series B shares in Saab during a 12-month period. Purchases are made through deductions of between 1 and 5 per 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. In 2008 it was expanded to include employees in Denmark, Germany, the UK, the U.S., Switzerland and Australia, and in 2009 it was expanded again to cover employees in South Africa. In April 2008, Saab's Annual General Meeting resolved to introduce a performance-based plan for senior executives and key employees entitling them to 2–5 matching shares depending on the category the employee belongs to. In addition to the requirement that the employee remain employed by Saab after three years, there is a requirement that earnings per share grow in the range of 5 to 15 per cent.

The Annual General Meetings in 2009, 2010 and 2011 resolved to renew the share matching plan and performance share plan. The 2011 share matching plan comprises all employees, including senior executives and key persons. The performance share plan for 2011, which is directed to senior executives and key persons entitles participants to 1–4 matching shares, depending on the category the employee belongs to.

In 2007, Saab repurchased 1 million shares, in 2008 and 2009 it repurchased 1,340,000 shares per year, and in 2010 it repurchased 838,131 shares to hedge the plans.

The Annual General Meeting on 7 April 2011 renewed the Board of Directors' mandate to repurchase up to 10 per cent of the Company's shares, of which 1,340,000 shares to hedge the share matching plan and performance share plan.

The purpose of the authorisation was to provide the Board with greater scope in working with the company's capital structure and enable acquisitions when considered appropriate, as well as to secure the Group's share matching plan. The mandate applied until the next Annual General Meeting. Repurchases may be effected over the stock exchange or through offerings to shareholders. It was also proposed that the Board's mandate include the possibility to transfer repurchased shares as allowed by law. Repurchased shares can also be transferred in connection with the company's share matching plan and performance share plan.

During the second quarter 2011, Saab announced that the Board had decided to utilise its authorisation for repurchases and that the repurchases could be made on NASDAQ OMX Stockholm at a price within the registered share price interval on each occasion.

No shares were repurchased in 2011.

SAAB B, 1 JANUARY 2007–31 DECEMBER 2010 EQUITY PER SHARE, SEK

SHARE OF CAPITAL, %

250

Swedish owners
Investor	30.0
Wallenberg Foundations	8.7
Swedbank Robur funds	4.8
Unionen	2.5
AFA Insurance	2.3
SEB funds	2.1
Fourth AP Fund	2.1
Other Swedish owners	21.1

Foreign owners
Orkla ASA, Norway	1.6
Norweigan State	0.8
DFA Funds, USA	0.6
Abu Dhabi Investment Authority, UAE	0.5
Other Foreign owners	22.9

EARNINGS AND DIVIDEND PER SHARE, SEK

Data per share 2006–2011

	2011	2010	2009	2008	2007	2006
Closing prices 1)
at year-end, SEK	142.40	123.00	118.00	71.50	129.50	210.00
high for the year, SEK	155.00	128.75	118.00	180.00	216.50	218.00
low for the year, SEK	104.20	84.10	50.50	51.00	116.50	154.50
Market capitalisation, MSEK 2)	15,543	13,425	12,879	7,804	14,135	22,921
Average daily turnover, no. of shares1)	186,060	192,507	234,069	255,782	240,390	148,965
Yield, %	3.2	2.8	1.9	2.4	3.5	2.0
Price/equity, %	116	114	118	83	128	234
P/E ratio	7.0	31.0	18.8	-32.2	7.4	17.6
P/EBIT, multiple	5.3	13.8	9.4	47.0	5.4	13.1
Sales
before dilution, SEK	223.8	232.2	231.8	221.33	211.85	192.97
after full dilution, SEK	215.3	223.9	225.8	218.01	210.91	192.97
Net income for the year (attributable to Parent Company's shareholders)
before dilution, SEK	21.2	4.12	6.45	-2.31	17.68	11.91
after full dilution, SEK	20.4	3.97	6.28	-2.313)	17.60	11.91
Equity per share, SEK	122.94	107.66	99.91	86.49	101.53	89.80
Cash flow from operating activities
before dilution, SEK	22.78	42.65	15.95	8.87	-12.40	8.88
after full dilution, SEK	21.91	41.11	15.54	8.74	-12.34	8.88
Dividend (2011 proposal), SEK	4.50	3.50	2.25	1.75	4.50	4.25
Dividend /net income, %	21	85	35	-	25	36
Total dividend, MSEK	474	367	237	187	491	464
Dividend growth, %	29	55	27	-	6	6
Number of shareholders	29,059	31,125	32,555	32,164	28,181	29,413
Share of foreign ownership, capital, %	26	27	40	40	39	38
Share of foreign ownership, votes, %	24	24	35	34	34	32
Average number of shares before dilution	104,982,315	105,217,786	106,335,553	107,515,049	108,668,700	109,150,344
Number of shares, excluding Treasury shares, at year-end	105,331,958	104,717,729	105,511,124	106,829,893	108,150,344	109,150,344
Number of shares after full dilution	109 150 344	109,150,344	109,150,344	109,150,344	109,150,344	109,150,344

1) Saab B on NASDAQ OMX Stockholm.

2) At full dilution

3) No dilution effect if net income is negative.

Shareholders

As of 31 December 2011 according to SIS Ägarservice	Thousands of shares	Per cent of share capital	Per cent of votes
Investor AB, Sweden	32,778	30.0	40.8
Wallenberg foundations, Sweden	9,469	8.7	7.7
Swedbank Robur funds, Sweden	5,288	4.8	4.3
Unionen, Sweden	2,734	2.5	2.2
AFA Insurance, Sweden	2,465	2.3	2.0
SEB funds, Sweden	2,277	2.1	1.9
Fourth AP Fund, Sweden	2,258	2.1	1.8
SHB funds, Sweden	2,250	2.1	1.8
Orkla ASA, Norway	1,790	1.6	1.5
Länsförsäkringar funds, Sweden	1,081	1.0	0.9
Nordea funds, Sweden	1,003	0.9	0.8
RAM One Fund, Sweden	902	0.8	0.7
Norwegian state	840	0.8	0.7
Foundation Asset Management AB, Sweden	722	0.7	0.6
DFA funds, USA	674	0.6	0.6
SHB, Sweden	541	0.5	0.4
Abu Dhabi Investment Authority, UAA	529	0.5	0.4
SEB Trygg Liv, Sweden	472	0.4	0.4
Svolder AB, Sweden	454	0.4	0.4
SEB AB, Sweden	446	0.4	0.4
Subtotal, 20 largest shareholders	68,973	63.2	70.3
Other Swedish shareholders	11,392	10.4	9.3
Other international shareholders	24,967	22.9	20.4
Repurchased shares	3,818	3.5	-
Total	109,150	100	100

Distribution of shareholders

Number of shares	Number of share holders	Per cent of share holders	Number of shares	Per cent of share capital
1–500	24,703	85.01	2,887,703	2.64
501–1,000	2,711	9.33	2,039,287	1.87
1,001–5,000	1,244	4.28	2,266,004	2.07
5,001–10,000	113	0.39	825,260	0.76
10,001–15,000	61	0.21	761,829	0.70
15,001–20,000	17	0.06	303,452	0.28
20,001–	210	0.72	100,066,809	91.68
Total1)	29,059	100.00	109,150,344	100.00

1) Including 3,818,386 repurchased B shares

Shares and votes, 31 December 2011

Share class	Number of shares	Per cent of total shares	Number of votes	Per cent of votes
Series A	1,907,123	1.7	19,071,230	15.6
Series B	107,243,221	98.3	103,424,835	84.4
Total1)	109,150,344	100.0	122,496,065	100.0

1) The number of votes excludes 3,818,386 B shares which were repurchased to secure the Group's Share Matching Plan. The repurchased shares are kept as Treasury stock.

Share issues, etc.

		Increase in share capital, MSEK	Paid-in amount MSEK
2002, Conversion1)	50,699 shares	0.8	4.6
2003, Conversion1)	7,189 shares	0.1	0.7
2004, Conversion1)	2,632,781 shares	42.1	239.6

1) 1998 convertible debenture loan

ANALYSTS WHO COVER SAAB

ABG SUNDAL COLLIER, STOCKHOLM CARNEGIE, STOCKHOLM DANSKE MARKETS EQUITIES, STOCKHOLM

ENSKILDA SECURITIES, STOCKHOLM GOLDMAN SACHS, LONDON SWEDBANK, STOCKHOLM

ERIK PETTERSSON, erik.pettersson@abgsc.se MIKAEL LASÉEN, mikael.laseen@carnegie.se CARL GUSTAFSSON, cagu@danskebank.se BJÖRN ENARSON, bjorn.enarson@danskebank.se STEFAN CEDERBERG, stefan.cederberg@enskilda.se DAVID H. PERRY, david.perry@gs.com MATS LISS, mats.liss@swedbank.se

QUARTERLY INFORMATION

		January–March				April–June
MSEK		2011 Operating margin		2010 Operating margin		2011 Operating margin		2010 Operating margin
Sales
Aeronautics	1,508		1,703		1,835		1,698
Dynamics	962		986		1,084		1,167
Electronic Defence Systems	1,035		940		1,094		1,159
Security and Defence Solutions	1,303		1,200		1,272		1,427
Support and Services	907		743		781		834
Combitech	239		219		257		232
Corporate	4		-		4		1
Internal sales	-506		-407		-466		-525
Total	5,452		5,384		5,861		5,993
Operating income
Aeronautics	79	5.2%	53	3.1%	157	8.6%	18	1.1%
Dynamics	89	9.3%	85	8.6%	123	11.3%	174	14.9%
Electronic Defence Systems	36	3.5%	37	3.9%	181	16.5%	114	9.8%
Security and Defence Solutions	71	5.4%	-96	-8.0%	67	5.3%	-106	-7.4%
Support and Services	75	8.3%	56	7.5%	107	13.7%	119	14.3%
Combitech	28	11.7%	18	8.2%	20	7.8%	21	9.1%
Corporate	-10	-	-27	-	42	-	-64	-
Total	368	6.7%	126	2.3%	697	11.9%	276	4.6%
Net financial items	16		-27		-149		-65
Income before taxes	384		99		548		211
Net income for the period	277		72		418		174
Attributable to Parent Company's shareholders	279		69		425		177
Earnings per share after dilution	2.56		0.63		3.89		1.62
					109,150		109,150
No. of shares after dilution, thousands	109,150		109,150
		July-September				October–December
MSEK		2011 Operating margin		2010 Operating margin		2011 Operating margin		2010 Operating margin
Sales
Aeronautics	1,268		1,278		1,740		2,062
Dynamics	724		1,023		1,565		1,565
Electronic Defence Systems	979		905		1,453		1,350
Security and Defence Solutions	1,310		1,382		1,819		2,201
Support and Services	786		756		954		1,070
Combitech	200		187		304		277
Corporate	-		37		-		36
Internal sales	-429		-564		-488		-508
Total	4,838		5,004		7,347		8,053
Operating income
Aeronautics	22	1.7%	57	4.5%	74	4.3%	63	3.1%
Dynamics	60	8.3%	31	3.0%	212	13.5%	32	2.0%
Electronic Defence Systems	42	4.3%	6	0.7%	38	2.6%	-58	-4.3%
Security and Defence Solutions	109	8.3%	130	9.4%	147	8.1%	209	9.5%
Support and Services	79	10.1%	69	9.1%	165	17.3%	107	10.0%
Combitech	3	1.5%	7	3.7%	41	13.5%	35	12.6%
Corporate	902	-	22	-	-18	-	-137	-
Total	1,217	25.2%	322	6.4%	659	9.0%	251	3.1%
Net financial items	12		-48		-37		-59
Income before taxes	1,229		274		622		192
Net income for the period Attributable to Parent Company's	1,103 1,108		188 179		419 413		20 8
shareholders
Earnings per share after dilution	10.15		1.64		3.78		0.08

MULTI-YEAR OVERVIEW

MSEK, unless otherwise indicated	2011	2010	2009	2008	2007	2006	2005	2004 4)	2003
Order bookings	18,907	26,278	18,428	23,212	20,846	27,575	17,512	16,444	19,606
Order backlog at year-end	37,172	41,459	39,389	45,324	47,316	50,445	42,198	43,162	45,636
Sales	23,498	24,434	24,647	23,796	23,021	21,063	19,314	17,848	17,250
Foreign market sales, %	63	62	69	68	65	65	56	48	46
Defence sales, %	84	83	83	83	81	79	82	80	80
Operating income (EBIT)	2,941	975	1,374	166	2,607	1,745	1,652	1,853	1,293
Operating margin, %	12.5	4.0	5.6	0.7	11.3	8.3	8.6	10.4	7.5
Operating margin before depreciation/am ortisation and write-downs excluding
leasing (EBITDA), %	17.4	9.0	10.5	6.4	16.0	12.0	11.3	13.1	11.1
Income after financial items	2,783	776	976	-406	2,449	1,693	1,551	1,712	1,073
Net income for the year	2,217	454	699	-242	1,941	1,347	1,199	1,310	746
Total assets of which Saab Aircraft Leasing	31,799 2,625	29,278 3,049	30,430 3,362	32,890 3,226	33,801 3,415	32,771 3,397	30,594 4,887	27,509 5,314	28,704 6,181
of which advance payments, net	1,022	643	442	897	2,558	3,642	3,528	2,860	3,990
of which shareholders' equity	13,069	11,444	10,682	9,330	11,008	10,025	9,493	8,221	7,003
equity per share, SEK 1)	122.94	107.66	99.91	86.49	101.53	89.80	84.10	74.89	65.75
Net liquidity/Net debt excluding interest bearing receivables and after deduction of
provisions for pensions	4,735	2,382	-1,631	-3,061	-2,802	-261	5,144	3,211	3,149
Net liquidity/ debt	5,333	3,291	-634	-1,693	-1,627	605	2,856	781	495
Cash flow from operating activities	2,392	4,487	1,696	954	-1,304	969	2,541	865	1,348
Operating cash flow	2,477	4,349	1,447	659	-1,603	-1,900	2,645	325	545
Average capital employed	13,987	13,743	13,775	13,994	13,430	12,789	12,925	12,386	11,629
Return on capital employed, %	22.2	7.9	10.3	1.4	19.4	14.5	14.6	17.3	12.7
Return on equity, %	18.1	4.1	7.0	-2.4	18.5	13.8	13.5	16.7	10.8
Profit margin, %	13.21	4.47	5.78	0.82	11.4	8.83	9.73	11.74	8.5
Capital turnover rate, multiple	1.68	1.78	1.79	1.70	1.71	1.65	1.49	1.47	1.48
Equity/assets ratio, %	41.1	39.1	35.1	28.4	32.6	30.6	31.0	29.9	24.4
Interest coverage ratio, times	9.58	3.20	3.16	0.35	21.4	13.47	6.08	6.08	3.70
Earnings per share before dilution, SEK 2)	21.19	4.12	6.45	-2.31	17.68	11.91	10.89	11.78	7.00
Earnings per share after dilution, SEK 3)	20.38	3.97	6.28	-2.31	17.60	11.91	10.89	11.78	6.91
Dividend, SEK	4.50,5)	3.50 5)	2.25	1.75	4.50	4.25	4.00	3.75	3.50
Gross capital expenditures for tangible fixed assets	325	262	197	386	395	433	296	348	472
Research and development costs	5,116	5,008	4,820	4,141	4,523	3,537	3,546	3,929	3,690
Number of employees at year-end	13,068	12,536	13,159	13,294	13,757	13,577	12,830	11,936	13,414

1) Number of shares, excluding treasury shares, as of 31 December 2011: 105,331,958; 2010: 104,717,729; 2009: 105,511,124; 2008: 106,829,893; 2007: 108,150,344; 2006/2005/2004: 109,150,344 and 2003: 106,517,563. 2) Average number of shares 2011: 105,214,551; 2010: 105,217,786; 2009: 106,335,553; 2008: 107,515,049; 2007: 108,668,700, 2006/2005: 109,150,344; 2004: 108,234,126 and 2003: 106,513,969.

3) Average number of shares 2011/2010/2009: 109,150,344; 2008: 107,515,049; 2007/2006/2005: 109,150,344; 2004: 108,234,126; 2003: 109,247,175. Conversion of debenture loan concluded 15 July 2004. 4) Restated according to IFRS, previously not restated.

5) 2011 Board of Directors proposal.

FINANCIAL INFORMATION 2012

ANNUAL GENERAL MEETING 2012 19 APRIL INTERIM REPORT JANUARY–MARCH 2012 19 APRIL INTERIM REPORT JANUARY–JUNE 2012 19 JULY INTERIM REPORT JANUARY–SEPTEMBER 2012 18 OCTOBER

Financial information can be ordered by Telephone +46 13 16 92 08 or accessed online at www.saabgroup.com

Contact

Ann-Sofi Jönsson, Investor Relations, Telephone +46 8 463 02 14, ann-sofi.jonsson@saabgroup.com

CONTACT DETAILS

Headquarters

Saab AB p.o Box 12062 se-102 22 Stockholm, Sweden Visiting address: Gustavslundsvägen 42 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

Linköping

Saab AB P.O. Box 14085 se-581 88 Linköping, Sweden Visiting address: Bröderna Ugglas gata Phone: +46 13 18 00 00 Fax: +46 13 18 00 11

GLOSSARY

AESA	Active Electronically Scanned Array	LFV	Board of Civil Aviation
AEW&C	Airborne Early Warning & Control	MidCAS	Mid Air Collision Avoidance System
AMB	Agile Multi-Beam	MMRCA	Medium Multi-Role Combat Aircraft
ATM	Air Traffic Management	NATO	North Atlantic Treaty Organization
ASD	Aerospace and Defence Industry Association	NLAW	Next Generation Light Anti-tank Weapon
BOL	High capacity counter measure dispenser for chaff or flares	OECD	Organisation for Economic Co-operation and Development
C4I	Command, control, communications, computers and	PPP	Public-Private Partnership
	intelligence	R&D	Research and development
C4ISR	Command, control, communications, computers, intelligence and surveillance and reconnaissance	RAKEL	Sweden's national communication system for collaboration and management
CISB	Swedish-Brazilian Centre for Research and Innovation	RT	Remote Tower
EDA	European Defence Agency	RTAF	Royal Thai Air Force
ETPS	Empire Test Pilot's School	SAFE	Situation Awareness for Enhanced Security
FMV	The Swedish Defence Materiel Administration	SESAR	Single European Sky ATM Research
GIS	Geographic Information Systems	SIPRI	Stockholm International Peace Research Institute
HOTAS	Hands On Throttle And Stick	SITC	Saab India Technology Centre
ICT	Information and communications technology	STRiC	Operations Room and Air Surveillance
IDAS	Integrated self-defence for airborne platforms	TUAV	Tactical Unmanned Aerial Vehicle
IFBEC	Forum on Business Ethical Conduct	UCAV	Unmanned Combat Aerial Vehicle
ILS	Instrument Landing System	UN	United Nations
LEDS	Land Electronic Defense System	WISE	Widely Integrated Systems Environment