Volvo 2006 Annual Report Download - page 149

Financial information 2006 145
Shares and participations in Group companies
During the fi r st quarter of 2006, 491 was transferred to the newly-
formed company Volvo Automotive Finance (China) Ltd for the Volvo
Group’s future customer-fi nancing activites in China.
Shareholders’ contributions were made with 34 to ZAO Volvo
Vostok, with 300 to Volvo Information Technology AB and with 27 to
Volvo Italia Spa.
The redemption of preference shares in VNA Holding Inc
decreased the holding by 1,053.
Write-downs were carried out at year-end on the holdings in Volvo
Information Technology AB, 32 and Kommersiella Fordon Europa
AB, 160.
2005: All shares in Volvo Lastvagnar AB, 8,678, were received as
dividend from Volvo Global Trucks AB, after which the shares in
Volvo Global Trucks AB were written down by 8,420 and sold inter-
company for book value.
The holding in the service company Celero Support AB with a
book value of 25 was sold.
Shareholders’ contribution was made with 183 to Volvo Financial
Services AB.
2004: The remaining 2% of the shares in Kommersiella Fordon
Europa AB was acquired for 28 by compulsory acquisition. The
acquisition costs of the stockholding increased with 4 and at year-
end the holding was written down by 643.
25% of the shares in VFS Servizi Financiari Spa was acquired
inter-company for 101.
The holdings in seven dormant Group companies with a total book
value of 82 were transferred internally within the Group.
Shareholders’ contributions were made to Alviva AB, 2 and to
Celero Support AB, 10, whereupon the shareholdings were written
down by the corresponding amounts.
Shareholders’ contributions were also made to Volvo Bussar AB,
18, to Volvo Global Trucks AB, 1 and to Volvo Financial Services AB,
345.
Write-downs were carried out at year-end on the holdings in
Sotrof AB, 600, Volvo China Investment Co Ltd, 99 and Volvo Penta
UK, 10.
Shares and participations in non-Group companies
On March 21 2006, AB Volvo acquired 40 million shares, corres-
ponding to 13% of the shares, in the Japanese truck manufacturer
Nissan Diesel from Nissan Motor, with an option on Nissan Motor’s
remaining 6% within four years. The purchase price amounted to
1,505. The holding is reported as an associated company, since
Volvo believes that substantial infl uence exists.
During the third quarter, AB Volvo exercised its option to purchase
an additional 6% of the shares in Nissan Diesel from Nissan Motor
for 496. AB Volvo now owns a total of 19% of the shares in Nissan
Diesel. In addition, AB Volvo has acquired all 57.5 million preference
shares in Nissan Diesel from Nissan Motor and Japanese banks for
a total of 3,493. The purchase price for the preference shares has
been added to the value and is reported as investments in associ-
ated companies. The preference shares that Volvo has acquired may
during the period 2008–2014 be converted to shares in install-
ments. It is the intention of Volvo to convert the preference shares.
After full conversion, the preference shares will represent 165.1 mil-
lion shares that combined with the current holding of 19% will corres-
pond to 46.5% of the votes and capital in Nissan Diesel. The total
purchase consideration for 46.5% of the shares and votes in Nissan
Diesel amounts to 5,494.
During the year, the newly-formed partnership Blue Chip Jet II HB
has been capitalized with 148.
Henlys Group Plc has been liquidated during 2006. The holding
has been fully written down since 2004.
As of January 1, 2005, the Parent Company applies IAS 39
Financial Instruments: Recognition and Measurement, and accord-
ingly all investments in listed companies, except if these investments
are classifi ed as associated companies, should be reported in the
balance sheet at fair value. The revaluation of AB Volvo’s ownership
in the listed company Deutz AG has increased the value by 392 dur-
ing 2006. In addition, the holding has increased by 95 through con-
version into shares.
2005: AB Volvo’s investment in Deutz AG was valuated to market
value. The effect of this transition at January 1, 2005, amounted to
negative 501, after which the value increased by 83 during the year.
Also see Note 1 Accounting principles.
2004: Volvo’s holding of Scania B shares was sold to Deutsche
Bank for an amount of 14,905. As a consequence of the divestment,
the Scania holding was written down in the fourth quarter of 2003.
The transaction was carried out as part of Volvo’s commitment to the
European Commission to divest the Scania shares not later than
April 23, 2004. After the sale Volvo owned 27.3 million A shares in
Scania AB. The holding was revaluated to market value on April 15,
resulting in an income of 915 in 2004. At the Annual General Meet-
ing on April 16, 2004, the Board’s proposal to transfer all A shares
in Scania to Ainax and thereafter to distribute the shares in Ainax to
Volvo’s shareholders was approved. The value of the distribution of
Ainax was 6,310. The shares in Ainax were distributed to Volvo’s
shareholders on June 8, 2004.
During 2004 Volvo’s holding in Henlys Group Plc was fully written
down and a write-down of 95 was thereby charged to the income
statement.
The holding in Bilia AB with a book value of 25 was sold.
The participations in Blue Chip Jet HB were written down by 1.
Group companies Non-Group companies
2004 2005 2006 2004 2005 2006
Balance December 31, previous year 41,329 40,393 40,812 813 691 271
Transition effect on shares in listed companies – – – – (501) –
Acquisitions/New issue of shares/Dividends 133 8,682 491 – – 5,737
Divestments (81) (26) (1,053) (25) (2) –
Shareholder contributions 376 183 361 – – –
Write-downs (1,364) (8,420) (192) (97) 0 –
Revaluation of shares in listed companies – – – 83 392
Balance, December 31 40,393 40,812 40,419 691 271 6,400
Note 12 Investments in shares and participations
Holdings of shares and participations are specifi ed in AB Volvo’s holding of shares (pages 149–151). Changes in holdings of shares and
participations are shown below.