Volvo 2003 Annual Report Download - page 51

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The market values of Volvo’s holdings of shares and participations in
listed companies as of December 31, 2003 are shown in the table
below. When the carrying value of an investment exceeds its market
value, it has been assessed that the fair value of the investment is
higher than the quoted market price of this investment.
Carrying value Market value
Scania AB 20,424 18,459
Deutz AG 670 190
Henlys Group Plc 95 95
Bilia AB 28 54
Total holdings
in listed companies 21,217 18,798
Holdings in non-
listed companies 989 –
Total shares and
participations 22,206
Scania AB
During 1999 and 2000, Volvo acquired 45.5% of the capital and
30.6% of the voting rights in Scania AB, one of the world’s leading
manufacturers of trucks and buses. As a concession in connection
with the European Commission’s approval of Volvo’s acquisition of
Renault V.I. and Mack Trucks Inc. in 2001, Volvo undertook to divest
its holding in Scania not later than April, 2004. At year-end 2003,
the carrying value of Volvo’s holding in Scania AB was determined to
SEK 20.4 billion, and a write-down of SEK 3.6 billion was thereby
charged to operating income for the year. The carrying value of the
holding of the 63.8 million Scania B shares was determined based
upon the consideration received when Volvo divested those shares
to Deutsche Bank on March 4, 2004. The carrying value of the hold-
ing of 27.3 million Scania A shares was determined based upon the
closing share price of SEK 202 on December 31, 2003. In March,
2004, AB Volvo’s Board of Directors proposed that the Annual
General Meeting approve a dividend to AB Volvo’s shareholders of
99% of the shares in Ainax AB, a wholly owned subsidiary, which at
the time of the distribution would hold Volvo’s entire holding of
Scania A shares.
Henlys Group Plc
During 1998 and 1999, Volvo acquired 9.9% of the capital and vot-
ing rights in Henlys Group Plc at a total acquisition cost of 524.
Henlys Group is a british company involved in manufacturing and
distribution of buses and bus bodies in Great Britain and North
America. Volvo and Henlys Group jointly own the shares of the North
American bus operations Prévost and Nova Bus. In February and
March 2004, Henlys announced that its earnings for 2004 was
expected to be significantly lower than previously anticipated. As a
consequence of receiving this information, it was determined that
Volvo’s holding in Henlys Group Plc was permanently impaired at
December 31, 2003, and a write-down of 429 was charged to
income for the year. After this write-down, the carrying value of
Volvo’s shares in Henlys Group amounted to 95, corresponding to
the market value of these shares at year-end 2003. In the beginning
of March 2004, the market value of Volvo’s shares amounted to 24.
Bilia AB
In 2003, Volvo exchanged 41% of the shares in Bilia for 98% of the
shares in Kommersiella Fordon Europa AB. The capital gain was 188.
Effero AB
In 2003, Volvo divested its entire holding in Effero with a capital gain
of 59.
Shanghai Sunwin Bus Corp
As of 2003, Shanghai Sunwin Bus is reported in the Volvo Group
according to the proportionate method of consolidation.
Xian Silver Bus Corp
As of 2003, Xian Silver Bus is reported in the Volvo Group according
to the proportionate method of consolidation.
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.
Dec 31, 2002 Dec 31, 2003
Registration Percentage Carrying value Carrying value
Shares and participations in other companies number holding 1SEK M 2SEK M 2
Scania AB, Sweden 556184-8564 46/ 31 24,026 20,424
Deutz AG, Germany – 11 670 670
Henlys Group Plc, Great Britain – 10 524 95
Bilia AB, Sweden 556112-5690 2 – 28
Other holdings 615 626
Total shares and participations in other companies 25,835 21,843
Carrying value in accordance with Group balance sheet 27,492 22,206
1Where two percentage figures are shown, the first refers to share capital
and the second to voting rights.
2 Associated companies are reported in accordance with the equity method.
Other companies are reported at cost.
3From 2003 reported according to the proportionate method of consolidation.
4Volvo’s share of shareholders’ equity in associated companies (incl. equity in
untaxed reserves) amounted to 363 (1,629; 1,951). Excess values amount-
ed to 0 (28; 16).