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 4 KONGSBERG Annual Report 2011 VISION, OBJECTIVES AND STRATEGY VISION “WORLD CLASS – through people, technology and dedication” OBJECTIVES KONGSBERG is an international oriented technology group with headquarter in Norway. Stakeholders’ values will be maintained and increased by utilizing the Group’s high level of knowledge to develop attractive solutions for the market, and through continuous operational improvements. We are reliable people. We are responsible citizens. STRATEGY Important initiatives for achieving the objectives are: Culture and values KONGSBERG has a unique and strong corporate culture that has been built up over many years. The work done is clearly characterized by our shared values. The culture and values of KONGSBERG constitute an important part of the Group’s strategic platform. The market, internationalization and growth Over 80 percent of the Group’s revenue are from countries outside Norway and a growing share of the value created takes place outside Norway. Several customers demand local presence and contents. Strategic alliances are also crucial for success in several of KONGSBERG’s product areas. KONGSBERG is working continuously to develop market activities being able to satisfy customer needs. Being close to the customer is important to provide optimal service, both in terms of response time and performance. Acquisitions in our core areas are essential to KONGSBERG’s growth strategy. A continuous development of the Group’s strategic market position is a key element of our acquisition strategy. Competence Knowledge and expertise are KONGSBERG’s most important competitive parameters. Opportunities for development of expertise are important to achieve positive performance trends, making this a high priority. Emphasis is placed on offering attractive and challenging job responsibilities. The Group offers a systematic leadership development program. • Continuous improvement projects will be implemented in order to increase profitability. • Growth and profitability will be generated through organic growth, acquisitions and structural initiatives. • The Group will be organized in a way that takes advantage of relationships and synergies. • The business will be operated ethically, environmentally and socially responsible, and have a clear profile and a good reputation. Corporate Social Responsibility and Ethics KONGSBERG has focused on implementing a corporate Code of Conduct, an Environmental Policy and a Policy for Corporate Social Responsibility. These are basic elements in the efforts to achieve a corporate culture that supports profitable sustainable development. Technology Annual costs of product development represent around 10 percent of total operating revenue. A high level of activity within this area is necessary in order to maintain a profitable organic growth. Product development is financed out of own capital and by customers. It is always the market needs that govern the direction, ambitions and solutions for product development. KONGSBERG’s markets are characterized by high standards of performance, quality and operations. Collaboration with the end user is a critical success factor when developing the best solutions and to ensure that more value are created for our customers and a high utility value for their investments. KONGSBERG’s products are mainly based on the following core competencies: software development, engineering cybernetics, systems integration and signal processing. Financial strategy The Group emphasizes the importance of a strong solidity ensuring financial flexibility. Growth is to be funded mainly by earnings and by making capital available for this purpose. External funding is always based on a long-term perspective and in accordance with the Group’s business strategy. The Group’s financial policy is primarily aimed at increasing predictability and reducing risk.
PRESIDENT AND CEO WALTER QVAM KONGSBERG can look back on yet another good year. Activity levels ran high throughout 2011, and our backlog of orders was good at year end. All our business areas reported satisfactory earnings last year. We did this despite operating in a world characterised by growing financial unrest and uncertainty in 2011. Over time, public spending cuts will impact the framework conditions for some of our activities. Due to our intent focus on technology and operations and our long-term strategic efforts, many of our businesses managed to win market shares despite the market turmoil in 2011. As an international, high-technology corporation that operates in sectors with exceptionally stringent standards for reliability and leading solutions, it is important to have a good human competence and financial platform for our activities. This platform was further strengthened in 2011 by setting up businesses in new geographical areas, through new and further developed solutions, and through more than 1 000 new co-workers, accompanied by smooth operations and project management. In 2011, KONGSBERG opened offices and production facilities in Greece, China, Mexico and Canada, among other places. Our goal is to offer even better customer service and to improve the efficiency of our maritime operations as well as in the defence sector. Despite demanding markets, Kongsberg Maritime continued to gain market shares in 2011. We have invested heavily in product development, and that has brought results. We have established a strong position in the drilling market and for deliveries for LNG carriers. Moreover, we “Activity levels ran high throughout 2011, and our backlog of orders was good at year end. All our business areas reported satisfactory earnings last year.” Walter Qvam, President and CEO have strengthened our general position as a supplier to the merchant marine industries. We have built up Kongsberg Maritime Engineering and, in so doing, won turnkey EPC contracts in electrical engineering, instrumentation and telecommunications. We have acquired Evotec and thereby expanded our delivery profile to also include naval operations. Kongsberg Oil & Gas Technologies has grown con siderably over the past year, and it has signed several important contracts. Not least through the development and contract for CRIS (Capstan Reel Installation System), we make use of our specialist expertise to focus on the development of new technology. Here we are also ex pand ing our delivery profile in the direction of naval operations. Kongsberg Defence Systems also had a good year, with several important programmes in the start-up and production phases. We conducted important and successful test firings with the Naval Strike Missile (NSM), and the Joint Strike Missile programme is in a very important phase of development. Kongsberg Protech Systems had an eventful year. In February, the US Army announced that it would be con tinuing with KONGSBERG’s CROWS system for the tendering process scheduled for 2012. In December, we signed an important contract with the Norwegian and Swedish Armed Forces for delivery of the PROTECTOR weapon control system for a strategically important joint project. During the year, we further improved the organisation of our corporate social responsibility work and devoted more 2 INTRODUCTION 7 DIRECTORS’ REPORT AND 18 FINANCIAL STATEMENTS 64 CORPORATE GOVERNANCE 76 FINANCIAL CALENDAR AND ADDRESSES KONGSBERG Annual Report 2011 5
Page 1 and 2: ANNUAL REPORT 2011
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INCOME STATEMENT AND BALANCE SHEET
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1 The financial statements for Kong
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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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