Volvo 2003 Annual Report Download - page 73

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Board of Directors’ report
Corporate registration number 556012-5790.
In 2003, the truck and construction equipment operations of Bilia
were acquired through the exchange of Volvo’s 41% holding in Bilia
for 98% of the shares in the acquired operations, Kommersiella
Fordon Europa AB.
Income from investments in Group companies includes dividends
in the amount of 4,368 (770; 24,814), write-down of shares of
1,579 (531; 12,217) and transfer pricing adjustments and group
contributions delivered totaling 406 (3,835; 3,450). Income from
other shares and participations includes a write-down of shares in
Scania AB and Henlys Group Plc amounting to 3,901 and 429
respectively as well as a dividend from Scania AB of 501 (319; 637).
The carrying value of shares and participations in Group companies
amounted to 41,329 (38,950; 38,140), of which 40,060 (38,537;
37,725) pertained to shares in wholly owned subsidiaries. The corre-
sponding shareholders’ equity in the subsidiaries (including equity in
untaxed reserves but excluding minority interests) amounted to
51,395 (49,657; 39,752).
Shares and participations in non-Group companies included 1
(628; 659) in associated companies that are reported in accordance
with the equity method in the consolidated accounts. The portion of
shareholders’ equity in associated companies accruing to AB Volvo
totaled 98 (861; 844). Shares and participations in non-Group com-
panies included listed shares in Deutz AG, Henlys Group Plc and
Bilia AB with a carrying value of 790. The market value of these
holdings amounted to 339 at year-end. Based upon information pub-
lished by Henlys Group in February and March 2004, it was deter-
mined that Volvo’s holding in Henlys Group Plc was permanently
impaired at December 31, 2003. A write-down of 429 was charged
to income for the year, after which the carrying value of Volvo’s
shares in Henlys Group Plc amounted to 95, corresponding to the
market value of these shares at year-end 2003. No write-down has
been made of the holding in Deutz since the fair value of the invest-
ment is considered to be higher than the quoted market price of this
investment.
At year-end 2003, shares in Scania AB with a carrying value of
20,424 was accounted for among current assets, and a write-down
of 3,901 was charged to income. The carrying value of the holding of
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 holding of 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. Further information regard-
ing the holding in Scania is provided in Note 10.
Financial net debt amounted to 3,606 (assets 3,281; assets
12,207).
AB Volvo’s risk capital (shareholders’ equity plus untaxed
reserves) amounted to 62,296 corresponding to 89% of total assets.
The comparable figure at year-end 2002 was 85%.
Income statements
SEK M 2001 2002 2003
Net sales 500 441 458
Cost of sales (500) (441) (458)
Gross income ———
Administrative expenses Note 1 (424) (560) (498)
Other operating income and expenses 0 16 52
Income from investments in Group companies Note 2 9,599 (3,599) 1,812
Income from investments in associated companies Note 3 22 54 283
Income from other investments Note 4 1,258 326 (3,822)
Operating income (loss) 10,455 (3,763) (2,173)
Interest income and similar credits Note 5 455 503 139
Interest expenses and similar charges Note 5 (467) (261) (196)
Other financial income and expenses Note 6 (163) (34) (117)
Income (loss) after financial items 10,280 (3,555) (2,347)
Allocations Note 7 2—0
Income taxes Note 8 832 1,070 158
Net income (loss) 11,114 (2,485) (2,189)
Parent Company