Volvo 2002 Annual Report Download - page 46

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The Volvo Group
Notes to consolidated financial statements
The Volvo Group has transactions with some of its associated com-
panies. As of December 31, 2002, the Group’s net receivables from
associated companies amounted to 230 (31; 358).
The market value of Volvo’s holdings of shares and participations
in listed companies as of December 31, 2002 is shown in the table
below. No write-downs have been made since the fair value of the
investments is considered to be higher than the quoted market price
of these investments.
Book value Market value
Scania AB 24,026 15,276
Bilia AB 710 965
Deutz AG 670 104
Henlys Group 524 157
Total holdings
in listed companies 25,930 16,502
Holdings in non-
listed companies 1,562
Total shares and
participations 27,492
Scania AB
During 1999, Volvo acquired 43,5% of the capital and 28,6% of the
voting rights in Scania, one of the world’s leading manufacturers of
trucks and buses. As from 2000, Volvo’s holding in Scania is 45,5%
of the capital and 30,6% of the voting rights. As a concession in
connection with the European Commission’s approval of Volvo’s
acquisition of Renault V.I. and Mack Trucks Inc., Volvo undertook to
divest its holding in Scania within a time period of three years follow-
ing approval of the transaction by the United States Department of
Justice. The United States Department of Justice formally approved
Volvo’s acquisition of Renault V.I. and Mack Trucks Inc. during April
2001. The book value amounts to SEK 264 per share, which largely
corresponds to the average acquisition value. At year-end 2002, the
price of the Scania B share was SEK 168.50 per share and the
average price during 2002 was SEK 177. If Scania would be valued
at the year-end price, a write-down of SEK 8,750 M would be nec-
essary. For U.S. GAAP, see further note 33.
Volvo intends to divest the holding in Scania, and discussions are
held with a number of industrial buyers. Volvo’s assessment is that a
combined block of shares represents a higher value than the listed
price on the stock exchange. Combined with valuations based on
external assessments of Scania’s future earnings capacity, this indi-
cates a value at a level corresponding to the reported value. The
value of the item is difficult to assess, but Volvo considers that the
above factors combined justify that the book value is retained
unchanged.
Eddo Restauranger AB
In 2002, Volvo divested its entire holding in Eddo with a capital gain
of 32.
Mitsubishi Motors Corporation (MMC)
In 2001, Volvo divested its holding and all rights and obligations
relating to MMC, which resulted in a capital gain of 574, net of ter-
mination costs of 194.
AB Volvofinans
In 2001, Volvo divested its entire holding in Volvofinans for a total
purchase price of 871 and with a capital gain of 61.
Arrow Truck Sales
In 2001, Volvo increased its holding to 100% and Arrow thereby
became a subsidiary of Volvo.
SM Motors Pte Ltd
In 2001, Volvo divested its entire holding in SM Motors with a capital
loss of 13.
Shanghai Sunwin Bus Corporation
In 2000, Volvo and the Chinese vehicle manufacturer, Shanghai
Automotive Industry Corporation, signed agreeements covering
establishment in Shanghai of a joint-venture company, Shanghai
Sunwin Bus Corporation, for the manufacture and sale of city and
commuter buses. Each party owns 50% of the company.
Changes in the Volvo Group’s holdings of shares and participations: 2000 2001 2002
Balance sheet, December 31, preceding year 29,213 30,481 27,798
Acquisitions and divestments, net 1,641 (2,844) 97
New issue of shares and shareholders’ contributions 122 94 89
Share of income in associated companies, after tax 208 8 76
Dividends (741) (74) (64)
Write-downs (60) (11) (9)
Previously equity method companies, now consolidated – – (210)
Translation differences 92 97 (203)
Other 647(82)
Balance sheet, December 31 30,481 27,798 27,492
Note 14 Long-term customer-financing receivables
2000 2001 2002
Installment credits 12,115 13,668 14,239
Financial leasing 10,082 11,534 10,341
Other receivables 712 873 627
Total 22,909 26,075 25,207