Volvo 1997 Annual Report Download - page 49

47
Value in Value in Subsidiaries Value in
balance balance acquired balance Book value
Accum ulated sheet sheet Depre- Sales/ and Translation Reclassi- sheet in balance
depreciation 1995 1996 ciation2scrapping divested differences fications 1997 sheet 19973
Goodwill 820 811 196 — — 11 — 1,018 3,075
Patents 84 50 14 (2) — 2 — 64 47
Aircraft engine costs 990 1,053 43 — — 3 — 1,099 162
Total intangible assets 1,894 1,914 253 (2) — 16 — 2,181 3,284
Buildings 5,776 5,728 506 (57) 31 67 203 6,478 8,497
Land and land improvements 535 516 39 (3) 1 9 (8) 554 1,745
Machinery and equipment125,604 26,222 4,186 (1,493) 142 160 (198) 29,019 17,478
Construction in progress,
including advance payments — — — — — — — — 3,073
Total property,
plant and equipment 31,915 32,466 4,731 (1,553) 174 236 (3) 36,051 30,793
Assets under
operating leases 1,070 1,730 1,812 (964) 284 143 (19) 2,986 13,501
Total tangible assets 32,985 34,196 6,543 (2,517) 458 379 (22) 39,037 44,294
1 Machinery and equipment pertains mainly to production equipment.
2 Includes accumulated write-downs. 3 Acquisition value less accumulated depreciation.
Investments in intangible and tangible assets amounted to 9,863
(8,200; 6,491). Investments in assets under operating leases
amounted to 9,773 (3,851; 2,585).
Investments approved but not yet implemented at the end of 1997
amounted to SEK 20.0 billion (16.8: 17.7).
Replacement cost (unaudited information)
At year-end 1997, the replacement cost of buildings, machinery and
equipment, based on methods of calculation applied by Volvo and
which in certain cases involves the use of indexes, was estimated at
SEK 47.3 billion after calculated depreciation. The corresponding
value shown in the Volvo Group balance sheet was SEK 30.8 billion.
Calculated depreciation based on the present replacement cost
amounted to SEK 7.4 billion in 1997. The corresponding depreciation
in the consolidated income statement, which is based on historical
cost, was SEK 4.7 billion.
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13 Shares and participations
A specification of Group holdings of shares and participations ap-
pears on page 64. Call options with a total exercise price of – (5; 5)
have been issued on shares with book values of – (2; 2).
The Volvo Group has transactions with some of its associated
companies. As of December 31, 1997, the Group’s net receivables to
associated companies amounted to 4,575 (6,909; 5,814).
The market value of Volvo’s holdings of securities in listed compa-
nies as of December 31, 1997 is shown below.
Book value Market value
Pharmacia & Upjohn, Inc. 2,082 5,770
Bilia AB (formerly AB Catena) 505 1,277
Verimation AB 7 9
Total 2,594 7,056
The AGES Group, ALP
During 1996 Volvo Aero increased its holding in The AGES Group,
ALP, Air Ground Equipment Sales, an American company, from 5% to
25%. In 1997 the holding was further increased to 60% and AGES
thereby became a subsidiary of Volvo.
OmniNova Technology AB
In March 1997 Volvo Bus Corporation and TWR, an English engineer-
ing company, formed a jointly owned company to develop manufac-
turing processes for buses and some production of bus components.
The company is owned 35% by Volvo Bus Corporation and 65% by
TWR. Its operations are located in facilities adjacent to AutoNova in
Uddevalla, Sweden.
Régie Nationale des Usines Renault SA (Renault SA)
In July 1997 Volvo divested its entire holding in Renault, equal to
11.4% of both the share capital and voting rights in the company.
The proceeds amounted to 5,934 and the Group gain was 783.
Pripps Ringnes AB
Pripps Ringnes AB was formed in September 1995 through an
agreement with Orkla ASA (Norway). At year-end 1996 Volvo owned
49% of the shares and held a convertible debenture loan which upon
conversion would increase the holding to 55%. In February 1997
Volvo sold its holding in Pripps Ringnes to Orkla. Volvo received
4,515 from the sale, plus 100 in dividends, and the transaction yield-
ed a capital gain of 3,027 in the Volvo Group.
SAS Sverige AB
In June 1997 Volvo sold its entire holding in SAS Sverige AB, equal
to 4.7% of the share capital and voting rights. The amount of the sale
was 319 and the capital gain was 221.
Fabege AB
In November 1996 Volvo concluded an agreement covering the sale
of buildings to Fabege AB. Fabege paid two thirds of the purchase
price in cash and the remaining third in the form of newly issued
Fabege shares. Volvo’s holding in the company thereafter amounted
to 8.3% of the share capital and 7.5% of the voting rights. In 1997
the entire holding was sold, yielding a profit of 19.
Merkavim Metal Work s Ltd.
In January 1996 Volvo Buses acquired 26.5% of the share capital
and voting rights in Merkavim Metal Works Ltd. (Israel). The company
produces tourist, intercity and city buses, as well as articulated buses
and minibuses.