Annual Report 2011 - Kongsberg Maritime - Kongsberg Gruppen

effects of currency fluctuations of up to two years.
For further description of the Group’s financial risk
management, we refer to Note 5 “Financial risk management
objectives and policies”
Operational risk
The Group’s value creation consists primarily of systems
with high technological complexity. Deliveries are generally
organized as projects. Effective management of projects is
a key success factor in reducing our operational risk.
KONGSBERG has established goals for the project
management based on internal and external “best practice”.
Project managers attend an internal training program.
The projects’ revenues are based on contracts, and the
uncertainty is mainly related to the assessment of the
remaining costs and determining the percentage of
completion. The Group has established principles for the
categorization of projects in terms of technological
complexity and development content. This forms the basis
for the assessment of “profit at risk” and recognition of
revenue in the projects. “Profit at risk” is the result retained
in the projects until the uncertainty is resolved.
Risk related to non-compliance by non-financial factors
KONGSBERG has recently established a Corporate
Compliance function. Rules and monitoring systems are
established for managing risks related to non-financial
issues such as anti-corruption, competition regulations,
health and safety, etc. This work is further strengthened in
2011. All business areas has, during the year, established
separate compliance functions and systematic reporting of
the status of compliance of non-financial conditions is
introduced. The key policy documents are reviewed and
updated. Training in the area of ethics and compliance are
implemented throughout the organization, both in Norway
and abroad.
Market-specific risk
Business risk is related to market conditions, competitors
and other general business conditions in the markets in
which KONGSBERG operates. KONGSBERG has good
positions in the shipping/offshore and defence markets and
has a high order backlog. Cancellations in the shipyard
industry, cutbacks in defence budgets in several countries
and a general, long-term economic downturn have increased
the Group’s risk which may impact the Group’s
level of activity over time. The Group operates in several
markets that are largely influenced by independent factors.
General economic trends will, in varying degree and at
different times, influence these markets.
Technology, Research and Development
A significant portion of the value created by KONGSBERG
consists of the development of high-tech solutions to the
domestic and international market. High competence and
knowledge sharing are essential to the competitiveness.
KONGSBERG’s extensive knowledge of dynamic position-
ing is due to the expertise developed in connection with
control systems for submarines and missiles. The Group’s
systems and products are mainly focused around four core
areas of competence: signal processing, system integration,
regulatory systems (cybernetics) and software development.
KONGSBERG continuously invests in product
development, both own-financed and customer-funded
programs. Over time, the total costs of product development
accounts for about 10 per cent of the operating
revenues.
Corporate Social Responsibility
KONGSBERG shall represent a sustainable development
characterised by a good balance between economic
performance and social responsibility. The Group’s corporate
social responsibility shall be in line with the general
national and international development on these topics.
The Board has paid special attention to the Storting
report No. 13 (2010-2012) - Active Ownership with respect
to the expectations placed on KONGSBERG by the largest
shareholder. In this connection, the Group’s corporate
social responsibility work has focused on anti-corruption,
development of procedures for monitoring supplier network
in relation to issues related to social responsibility, dialogue
with stakeholders, preparation of a climate strategy and
strategy for sustainability and social responsibility. These
areas will gain a lot of attention in 2012.
Reference is made to the report for corporate responsibility
for a more detailed description of the Group’s
corporate social responsibility work. The report has been
evaluated and approved by the Board.
Health, safety and the environment (HSE)
The Board ensures that health, safety and the environment
are handled in a manner that promotes considerable
job satisfaction and a good working environment. One basic
principle for working with HSE is that the work should be
preventative.
The Board is following up the HSE work closely reviewing
safety reports each quarter. During 2011 there has been
a focus on HSE training, and further improvement of HSE
reporting routines. The reporting routines of the foreign
subsidiaries are good, and figures on sickness absence and
accidents from the international offices are an obvious part
of the HSE report.
During 2011 there were 87 accidents within the Group.
Of these, 46 were near-accidents. The number of recorded
injuries resulting in absence was 3, while 14 injuries did not
lead to absence. 24 events led to treatment. There are no
registered occupational diseases or work-related fatalities
during 2011. Total absence due to illness was reduced from
2.5 per cent in 2010 to 2.2 per cent in 2011.
All employees in Norway have access to company health
services. This varies in accordance with local practices and
legislation in our foreign business activities.
KONGSBERG has many employees outside Norway and
the number has grown during 2011. This requires additional
2 INTRODUCTION
7 DIRECTORS’ REPORT AND
18 FINANCIAL STATEMENTS
64 CORPORATE GOVERNANCE
76 FINANCIAL CALENDAR AND ADDRESSES
KONGSBERG Annual Report 2011 15