Scania Annual Report 2011

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62 Risks and risk management Product launch risks Political decisions aimed at influencing the vehicle market in a given direction – for example, for environmental reasons – by such means as tax cuts and levies as well as regional environmental zoning rules – may lead to rapid changes in demand. This may require acceleration of product introductions and increases in research and development resources at an earlier stage. Scania manages this by integrating its business intelligence work into all its development and introduction projects. Throughout the development period, work occurs on a cross-functional basis to ensure that the results of business intelligence gathered by all units are taken into account and that Scania establishes the right priorities in its development portfolio. The product launch process includes carrying out risk analyses on a number of occasions in order to manage this type of risk. Product liability It is Scania’s objective to develop products that are reliable and safe to the user, the general public and the environment. However, if a product should show signs of technical shortcomings that might be harmful to people or property, that is dealt with by the Scania Product Liability Council. This body decides what technical solutions should be used in order to solve the problem and what marketing measures are needed. The Product Liability Council also conducts a review of the processes in question to ensure that the problem does not recur. Insurable risks Scania works continuously with the identification, analysis and administration of insurable risks, both at Group and local level. A corporate unit is responsible for the Group’s global insurance portfolio. Customary Group insurance policies to protect the Group’s goods shipments, assets and obligations are arranged in accordance with Scania’s Corporate Governance Manual and Finance Policy. Local insurance policies are obtained in accordance with the laws and standards of the country in question. When needed, Scania receives assistance from outside insurance consultancy companies in identifying and managing risks. Insurance is obtained only from well-reputed insurance companies, whose financial strength is continuously monitored. Risk inspections, mainly focusing on physical risks, are performed yearly in most cases at all production units and at numerous Scania-owned sales and services units/workshops according to the standardised Scania Blue Rating Fire Safety system. This work maintains a high claim prevention level and a low incidence of claims. LEGAL RISKS Contracts and rights Scania’s operations include a wide variety of intangible licensing agreements, patents and other intellectual property rights. Scania also concludes numerous commercial and financial contracts, which is normal for a company of Scania’s scale and type. Scania’s operations are not dependent on any single commercial or financial contract, patent, licensing agreement or similar right. Legal actions Scania is affected by numerous legal proceedings as a consequence of the company’s operating activities. This includes alleged breaches of contract, non-delivery of goods or services, producer liability, patent infringement or infringements related to other intellectual property or alleged violations of laws and regulations in force. Even if disputes of this kind should be decided in a favourable way without adverse economic consequences, they may adversely affect Scania’s reputation. For further information, see Note 2, page 94. Administration of contracts, essential rights, legal risks and risk reporting Administration of contracts, essential rights and legal risks occurs in the normal course of operations in accordance with the instructions described in Scania’s Corporate Governance Report (see pages 63–68). Scania has also introduced a Legal Risk Reporting system, according to which risks are defined and reported. At least once a year, a report on such risks is submitted to the Audit Committee of the Board. TAX RISKS Scania and its subsidiaries are the object of a large number of tax cases, as a consequence of the company’s operating activities. These cases mainly relate to the areas of transfer pricing and indirect taxes. For further information see Note 2, page 94. None of these cases is deemed capable of resulting in a claim that would substantially affect Scania’s financial position. Tax risks above a certain level are reported regularly to management. Once a year, a report is submitted to the Audit Committee of the Board. FINANCIAL RISKS Beyond business risks, Scania is exposed to various financial risks. Those that are of the greatest importance are currency, interest rate, refinancing and credit risks. Financial risks are managed in accordance with the Financial Policy adopted by Scania’s Board of Directors. See also the “Financial review”, page 78 and Note 30 on page 126. Report of the directors Scania 2011
CORPORATE GOVERNANCE REPORT 63 Corporate governance at Scania Scania’s ambition is that its corporate governance shall maintain a high international standard through the clarity and simplicity of its management systems and governing documents. Corporate governance at Scania is based on Swedish legislation, especially the Swedish Companies Act, the Annual Accounts Act, the rule book for issuers at the NASDAQ OMX Stockholm (“Stockholm Stock Exchange”) and the Swedish Code of Corporate Governance (“the Code”). Governing documents at Scania The most important governing documents at Scania are: ■ Scania’s Articles of Association (reproduced on page 69) ■ The Rules of Procedure of the Board of Directors, including the Board’s instruction to the President and CEO and guidelines for essential reporting processes at Scania ■ The rules of Procedure of the Audit Committee ■ How Scania is Managed ■ Strategy Update ■ Corporate Governance Manual ■ Scania Financial Manual ■ Communications Policy Application and deviations This Corporate Governance Report has been prepared in compliance with the Swedish Code of Corporate Governance. Companies applying the Code can deviate from individual rules but shall then provide an explanation reporting the reason for each deviation. Scania followed the Code without any exceptions in 2011. THE SHAREHOLDERS At the end of 2011, Scania had about 116,000 shareholders. Volkswagen AG was the largest shareholder, with a directly registered holding of 70.94 percent of voting power and 45.66 percent of shares. In addition, Scania shares equivalent to 0.87 percent of voting power and 3.63 percent of share capital, which are managed by credit institutions, must be counted as part of Volkswagen’s holding. Since November 9, 2011, MAN SE – which owned 17.4 percent of voting power and 13.4 percent of share capital in Scania – has been a subsidiary of Volkswagen AG, with Volkswagen AG controlling 55.9 percent of voting power in MAN. As a result of this, MAN’s holding in Scania shall be included in Volkswagen’s ownership in Scania. Volkswagen’s Governing documents Scania’s Articles of Association The Rules of Procedure of the Board of Directors, including the Board’s instruction to the President and CEO The Rules of Procedure of the Audit Committee How Scania is Managed Strategy Update Corporate Governance Manual organisation Shareholders Board of Directors President and CEO Executive Board Corporate Units Nomination Committee Auditors Audit Committee Remuneration Committee Corporate Departments Group Internal Audit Scania Financial Manual Communications Policy SCANIA Report of the directors Scania 2011
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ANNUAL REPORT 2011
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1 Operations 2-31 Statement of the
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SCANIA’S STRATEGY 3 Our solution
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The world of Scania Scania is a glo
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scania’s strategY 7 Scania’s st
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SCANIA’S STRATEGY 9 The change in
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Page 23 and 24: market - TRUCKS 21 Effective overal
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Page 27 and 28: 100 years of innovation In 2011, Sc
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Page 31 and 32: SCANIA’S STRATEGY 29 service tech
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Page 36 and 37: 34 MARKET Lastbilar nettoomsättnin
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Page 42 and 43: 40 RESEARCH AND DEVELOPMENT
Page 44 and 45: 42 RESEARCH AND DEVELOPMENT Scania
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Page 58 and 59: 56 Scania share data Scania share d
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Page 72 and 73: 70 BOARD OF DIRECTORS Board of Dire
Page 74 and 75: 72 EXECUTIVE BOARD AND CORPORATE UN
Page 76 and 77: financial reports Amounts in tables
Page 78 and 79: 76 group financial review Group fin
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Page 86 and 87: 84 Consolidated statement of change
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138 parent company financial statem
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140 notes to the parent company fin
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142 proposed guidelines for salary
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144 audit report Audit Report TRANS
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146 quarterly data Quarterly data,
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148 key financial ratios and figure
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150 multi-year statistical review M
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152 The Annual Report contains forw
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Scania AB (publ), SE-151 87 Södert
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Scania Annual Report 2011

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