Annual Report 2011 - Kongsberg Maritime - Kongsberg Gruppen

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2 INTRODUCTION 7 DIRECTORS’ REPORT AND 18 FINANCIAL STATEMENTS 64 CORPORATE GOVERNANCE 76 FINANCIAL CALENDAR AND ADDRESSES 10 KONGSBERG Annual Report 2011 new orders during this period. Kongsberg Maritime equipment are installed on over 14,000 sailing vessels. This has led to a continuous increase in activity related to the aftermarket and customer support. The activities within seabed mapping, inspection, oceanography and fisheries, together with the aftermarket activities, are to a limited extent affected by the level of contracting at the shipyards. Almost 60 per cent of Kongsberg Maritime’s deliveries are related to the oil and offshore market. The good contracting in this segment along with the satisfactory order backlog in the business area, diversified product portfolio and growing aftermarket, provides a stable basis for the next year. Kongsberg Maritime’s business model where parts of the value creation are established close to the customers’ activities and sailing pattern is a key element of the business strategy for growth and customer satisfaction. As a consequence Kongsberg Maritime has, in recent years, established new offices, including in India, China, Brazil, Greece, Mexico, Malaysia and Dubai. In 2011, a new factory in Zhenjiang, China, was opened. The factory has about 200 employees and the production includes cabinets, sensors and boards, which are important components of the deliveries of Kongsberg Maritime. Asia in general and China in particular, are important future growth area of Kongsberg Maritime. At the end of 2011 1,750 of the employees of Kongsberg Maritime worked outside Norway. The international establishments put Kongsberg Maritime in a stronger position to ensure quick and effective local support and meet the ever increasing international competition. The Norwegian marine and offshore industry has a strong position and is important for the export industry. The Board therefore emphasizes the need for industrial politics by the government that promotes growth and development in this sector, including competitive conditions and financing solutions. Kongsberg Defence Systems 2011 2010 Revenues 3 895 3 376 EBITA 263 245 EBITA-margin 6.8% 7.3% Kongsberg Defence Systems is in the implementation phase of large deliveries to the Poland coastal artillery, anti-aircraft to Finland and the Naval Strike Missile (NSM) to Norway. The projects have evolved as expected and have passed the important milestones in 2011. New orders were MNOK 4,061 in 2011, which is an increase of 44 per cent compared to 2010. Revenue was up 15 per cent in 2011 and EBITA margin was 6.8 per cent (7.3 per cent). The results for 2011 include MNOK 60 in negative impacts related to an arbitration proceeding in Hungary. Kongsberg Defence Systems commence 2012 with an order backlog of MNOK 7,953, which is MNOK 20 above the previous year. This provides a solid basis for the next few years. Kongsberg Defence Systems has a modern product portfolio with several newly developed systems and systems that are at the beginning of their life cycle. These include the anti-aircraft system NASAMS, the missiles Naval Strike Missile (NSM) and the Joint Strike Missile (JSM), which all have a significant potential in the international market. The business area operates, and is well positioned within niche markets that are, to a smaller extent, expected to be affected by the reductions seen in defence budgets in many countries. This is reflected in the increased level of new orders in 2011. Among the contracts that were signed are: • Upgrading of the NASAMS anti-aircraft systems in Norway • Contract extension for the delivery of additional Naval Strike Missiles to Poland • Development contract with the Norwegian Armed Forces for Step II of the Joint Strike Missile • Several upgrade contracts for sub-marine systems • Simulator-contract with Australia • Contracts for additional deliveries to the F-35 program • Deliveries of satellite ground station services to the U.S. company • Contract for development of BarentsWatch “The Group shall in 2012 ensure further strengthened competitiveness and capital efficiency while laying the basis for further growth.”
In October, KONGSBERG acquired 100 per cent of the shares in Norspace AS. Norspace AS is a world leader in its segment for delivery of high-tech components and equipment for the international aerospace industry. The Norspace equipment can be found on 140 satellites for cus tomers worldwide. The acquisition strengthens KONGSBERG’s position in space and surveillance, and the Group is now among the largest Nordic companies within this segment. Kongsberg Defence Systems is currently in the development phase of the new missile Joint Strike Missile (JSM). JSM is planned adapted to the F-35 Lightning II (Joint Strike Fighter). The development has shown a good progress. The business area also delivers parts in composite and titanium materials to the F-35. There has been some delays in these deliveries compared the initial plans, mainly due to lower scaling rate in the total program. The Norwegian Armed Forces has over time in cooperation with KONGSBERG developed systems that have proven to be competitive internationally. It is of great importance to the Group that this national partnership continues. The cooperation gives the Norwegian Armed Forces a possibility to develop and deploy technology that is particularly suitable for Norwegian conditions and that have a quality and cost that allows it to succeed in the international competition. The modern and technologically leading product portfolio, combined with the market opportunities identified for our products means that the basis for growth is considered to be good for years to come. The international defence market is influenced by politics where customers of large defence systems are the defence authorities in the respective countries. These customers are considering national security and domestic economic development as a significant factor, in addition to product price and performance when purchasing defence equipment. This market is not subject to international free trade agreements and is often characterized by more national protectionism than we see in most other industries. It is important for the Norwegian defence industry that the emphasis is on securing good agreements in connection DISTRIBUTION OF REVENUES 25.8% Kongsberg Defence Systems 27.7% Kongsberg Protech Systems 44.2% Kongsberg Maritime 2.3% Other OPERATING REVENUES MNOK with the purchase of defence equipment from abroad - being repurchase agreements, joint development agreements and agreements that ensure market access. When the Norwegian Armed Forces make significant investments by foreign suppliers, this tie up a significant part of the defence budget and purchases from domestic suppliers may be negatively affected. To ensure military supplies that are well adapted to Norwegian conditions and a sustainable and competitive Norwegian defence industry, we emphasize the importance of Norwegian participation in such programs. Both the Government and the Parliament has underlined the importance of industrial participation for Norwegian industry and that this is in line with international practice. Such participation for KONGSBERG also means increased activities in many of the 1,500 Norwegian subcontractors of the business area. Predictability in the export regulations with respect to defence material and the application of the regulation constitutes an important framework condition for KONGSBERG. KONGSBERG will continue to emphasize partnerships with major defence contractors and a further increase the focus on supporting the local industry in our markets. Our position as an attractive defence supplier in the international market will continue to be based on close cooperation with the Norwegian Armed Forces. This cooperation is the platform to develop leading products that are necessary to a modern military defence. Kongsberg Protech Systems 2011 2010 Revenues 4 185 5 683 EBITA 755 995 EBITA-margin 18.0% 17.5% The business area has in the recent years multiplied its turnover for the remote-controlled weapons systems (RWS), and has been built up to become the world leader in its segment. It is so far delivered about 14,000 systems to 17 countries and more countries have shown interest. The U.S. is, both directly with the U.S. Army and by vehicle suppliers, the largest customer. 2 INTRODUCTION 7 DIRECTORS’ REPORT AND 18 FINANCIAL STATEMENTS 64 CORPORATE GOVERNANCE 76 FINANCIAL CALENDAR AND ADDRESSES KONGSBERG Annual Report 2011 11
Page 1 and 2: ANNUAL REPORT 2011
Page 3 and 4: KEY FIGURES 2011 Beløp i mill. kr
Page 5 and 6: PRESIDENT AND CEO WALTER QVAM KONGS
Page 7 and 8: http://www.kongsberg.com/en/kog/inv
Page 9: as there are several large contract
Page 13 and 14: The KONGSBERG share and shareholder
Page 15 and 16: effects of currency fluctuations of
Page 17 and 18: Salaries and other remuneration to
Page 19 and 20: CONSOLIDATED STATEMENT OF FINANCIAL
Page 21 and 22: CONSOLIDATED CASH FLOW STATEMENT 1
Page 23 and 24: control. Goodwill is calculated at
Page 25 and 26: of materials, direct payroll expens
Page 27 and 28: O) Equity (i)Treasury shares Own eq
Page 29 and 30: achieved by ensuring that the Group
Page 31 and 32: Geographical information In present
Page 33 and 34: Change in net pension liabilities r
Page 35 and 36: 11 INTANGIBLE ASSETS Amounts in MNO
Page 37 and 38: 13 FINANCIAL INCOME AND FINANCIAL E
Page 39 and 40: 18 RECEIVABLES Amounts in MNOK 31 D
Page 41 and 42: B) Currency risk and hedging of cur
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Page 45 and 46: F) Summary of financial assets and
Page 47 and 48: Treasury shares KONGSBERG held 74 9
Page 49 and 50: Elements of Management Remuneration
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Page 53 and 54: Norspace AS On 21 September 2011, K
Page 55 and 56: INCOME STATEMENT AND BALANCE SHEET
Page 57 and 58: 1 The financial statements for Kong
Page 59 and 60: approved annually by the Norwegian
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STATEMENT FROM THE BOARD OF DIRECTO
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2 INTRODUCTION 7 DIRECTORS’ REPOR
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REPORT ON CORPORATE GOVERNANCE KONG
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THE NORWEGIAN CODE OF PRACTICE The
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Guidelines for directors and execut
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management. The same applies relati
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describing how the requirements for
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Executive management The CEO appoin
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Design: Ludens Design. Print: RK Gr
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Annual Report 2011 - Kongsberg Maritime - Kongsberg Gruppen

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