and VOLVO

Financial and Operating Statistics 1978/79 VOLVO

l

VOLVO FINANCIAL AND OPERATING STATISTICS

Contents Page

Volvo in brief 1

Financial statistics, Consolidated 5 Financial Statistics, AB Volvo 13 Operating statistics, Consolidated 19

Administration 27

;

Notes

Figures in Swedish kronor (SEK) may be translatad at the approximate 1978 year-end exchange rates as follows:

GBP 1.00

=

SEK 8.70

USD 1.00

=

SEK 4.30

DEM 1 00 = SEK 235.-

FRF 1 00 - SEK 1 02.-

BEC 1 00

=

^{SEK 14.85}

BEF 1 00 = SEK 14.65

CHF 100

=

^{SEK 265.-}

NLG 100

=

^{SEK 217.-}

During the years 1969-1978, the inflation in Swed- en was as follows:

1969 1970 1971 1972 1973

4 percent 8 "

7 6

8

1974 1975 1976 1977 1978

11 percent 9 "

10 13 7

Volvoshares are traded on the stockhalm stock Exchange and on the exchanges in London, Frankfurt am Main, DOsseldorf, Hamburg and Oslo.

Financial Reports

These reports are published regularly by Volvo:

Preliminary Report on the year's operations Definite Report on the year's operations

AnnuaiReport

Interim Report, first quarter Financial and Ope(ating Statistics Interim Report, first six months Interim Report, first three quarters

end of January end of March early May end of May early July end of August end of November

The above reports as weil as other information ma y be obtained from:

Financial Relations Department AB Volvo

S-405 08 Gothenburg, Sweden

Volvo in brief

Page Histor1 and business 2

Sales organization Productloo faciiities 3 Cap!tal expendttures and tlnaneing

Parsonner 4 Genera~ ptans and guaJs Research and davetopment Shareholders

VOLVO IN BRIEF

The Volvo Group develops, produces and markats products and services for transport and transport related purposes. The Group manufaotures more than 1 00 products which are sold In mo re than 120 countries throughout the world.

History and business

AB Volvo commenced business as a wholly- owned subsidiary of AB Svenska Kullagerfabriken, SKF, in 1926 i.!l Gothenburg, Sweden, where the Group still has its headquarters and lts largest plant.- The first Volvo productian ear lett the as- sembly Iine on April 14, 1927, and the first truck in 1928. The original productian models were de- signed to withstand the rigors of Sweden's rough roads and cold temperatures. This emphasis on durability has been a feature of Volvo products ever since.

Following the acquisltlon in 1931 of Sköfde Gjuteri och Mekaniska Verkstad AB {now Volvo Skövde Plants), which manufaotures engines for the Volvo vehicles, the Company developed its business from an assembly to a manufacturing operation.

This was the first of a number of acquisitions of manufacturing companles, formingthe foundation for the daveropment of the Volvo Group. In 1941 AB Volvo acquired a majority holding in Svenska Flygmotor AB {now Volvo Flygmotor AB). Köpings Mekaniska Verkstads AB {now part of Volvo Com- po~ents Corporation) was acquired In 1942, AB Bol1nder-Munktell {now Volvo BM AB) in 1950 and Olofström AB {now Volvo Olofström Plants) in 1969. Volvo BM AB and Volvo Flygmotor AB re- main as subsidiaries, while the other campanies have been merged into the Parant Company.

In the 1960's Volvo's Swedish ear assembly, parts handling and Group head office were transferred to a new camplex at Torslanda, Gothenburg, which has since been expanded in several steps. The smaller Kalmar assembly plant, designed for com- pletely different productian methods and new forms of work organization, which in effect do away with assembly Iine techniques, was camplet- ad in 1974,

Trucks are assembled at the Lundby Plant and a new central warehouse was completed at nearby Tuve, In the Gothenburg area, in 1978.

A bus chassis plant in Borås startad productian in 1978.

Smaller factorias for the manufaoture of compo- nents have been acqulred or established in various communities throughout Sweden, a number of which were selected to meet Government localiza- tion policy requirements.

lncreased emphasis on productian outside Swed- en- up to now in the form of assembly operations, with the,main components being delivered from the Group's Swedish factorias- is in response to the need for close centact with major markets. lt also reflects the natural desire of same countries to have part of the manufacturing or assembly work carrled out locally. Today such plantsexist in Belgium, the Netherlands, Great Britain, Canada, Australia, Peru, Iran, lndonesia, Thailand and Mal- aysia.

The first staga of a planned assembly plant in Chesapeake, Virginia, the United States, was ready in 1976. The premises are used as an lnspection and transshipment point for imported Volvo cars and trucks for the eastern part of the United States.

Following a cooperation agreement concluded in November, 1972, Volvo acquired a one-third inter- est in DAF Car B.V., The Netherlands, in the begin- ning of 1973. In January, 1975, Volvo acquired additional shares in the company and the name was changed to Volvo Car B.V. Following a new agreement Volvo now holds a 55 percent interest Nationale Investeringsbank NV in the Netherlands has a 26 2/3 percent holding and the remaining 181/3 percent of the shares are heJd by OSM (Dutch state Mines). which is owned by the Dutch Government.

The Company has modern productian facilities and a product program featuring cars in the medi- um-size class, the Volvo 66 and the Volvo 340.

A truck and bus assembly plant is under construc- tion in Brazll and productian will start at the end of 1979.

The build up of capacity in Sweden and abroad has been matehed by a gradual growth and strengthening of the distribution and dealer net-

work. Outside Sweden the Group maintains sales companies, most of which have their own Import terminals, in Western Europe, North America, South America, Australia and the Far East, as weil as a service organization in these areas and in Eastern Europe.

To finance sales in important markets, Volvo has become a major shareholder In finance campanies in Sweden and Norway and owns finance campa- nies in Switzerland, The Netherlands and Belgium.

In Sweden, a subsidiary company, Försäkrings AB Volvia, sells Volvo ear ihsurance, partly as an ex- tension to the Volvo five-year "PV-guarantee" for cars sold and registered in Sweden.

Volvo acquired Jota AB, a Swedish sports equip- ment and small boat manufacturer in 1973 and Ryds Industri AB, a manufaoturer of fiberglass boats in 1974.

Sales organization

The Volvo Group has a worldwide sales network with its own sales campanies in Sweden, Danmark, Finland, Norway, Great Britain, West Germany, Switzerland, Austria, The Netherlands, France, ltaly, Spain, the United States, Canada, Argentina, Brazil, Peru and Australia. Through its wholly- owned subsidlary in Scandinavia, AB Volvator, Volvo owns or has interests in a number of dealer- ships in the Nordie countries, enabling it to partici- pata directly In the structural changes and growth of sales in these important market areas.

More than 2,500 dealers, some of whom have more than one outlet, sell Volvo cars to the ulti- mata customer. Approximately 6 percent of the dealerships are located in the Nordie area, 59 percent in Europe (excluding the Nordie area) and 22 percent in North America.

Volvo's share of the Swedish markel for cars in 1978 was about 25 percent, and for heavy trucks and buses over 50 percent Although Sweden is still the most important market for the Group, the trend has been towards a growing percentaga of sales in other markets. Out of the total increase in sales of Skr 8,600 million between 1974-1978 Skr 7,1 00 million, or 83 percent, occured in foreign m arkets.

VOLVO IN BRIEF

Divided inta market areas, 1978 Group sales were as follows:

Skr millions %

Sweden 4,874 25

Nordie area, excluding Sweden 2,453 13 Europe, excluding Nordie area 7,272 38

North America 2,357 12

Other markats 2,177 12

Total 19,133 100

The Group is attempting to lmprove the balance between the majormarket areas and to increase its penetration of additional markets.

In order to develop sales for all product groups in markats outside Europe and North and South Am- erica, the Group has created a subsidiary, Volvo International Oevelopment Corporation. This unit evaluates the particular requirements of develop- ing markets, includlng possibillties for local assam- bly or manufaoture of products. lt also markats the Group's products in these areas. The Group con- siders that its marketing organlzatlon is weil equipped to handie the increasing volume of sales expected in the future.

Production facilities

The Group's principal productian faoiiities are located in Sweden, where Volvo has 29 factories, including assembly plants for cars, trucks, buses, marine and industrial engines, construction equip- ment, farm and forest machlnery and aircratt en- gines, as weil as faotorles for productian of such vital components as engines, gearboxes, axlas, brakas and bodies.

Volvo has established wholly-owned assembly plants in Belgium, Great Britain, Canada and Aus- tralia, and partly owned plants in Iran, Malaysia, Thailand , Brazil and Peru.

Volvo Car B.V.'s faoiiities include three modern plants, in Barn and Oss in The Netherlands, and in St. Truiden in Belgium, as weil as an import facility at Beesd in the Netherlands.

Assembly work is also earriad out in other local faoiiities in Greece, Portugal, Morocco, Venezuela and lndonesia.

In cooperation with Renault and Peugeot, Volvo has a faotory at Oouvrln in France for the manufao- ture of ear engines.

Capita! expenditures and flnancing

.Over the five-year period 197 4-1978, the G ro up invested some Skr 3,900 mitlian in property, plant and equipment, the bulk or two-thirds of it in Swed- en. lnvestment in plant and company acquisitions has been in the rang e of 4 to 1 O percent of Group sales per year. Most investment has related to the gradual expansion of productive capacity, but investment in new facllitles for technological devel- opment, and for the strengthening of the marketing organization, has also been significant.

During the last two years investments by product groups were (Skr millions):

1978 1977

C ars 342 265

Trucks and buses 188 261

Construction equipment, farm

and forest machinery 65 74

Marine and industrial engines 27 19

Aircratt engines, etc 36 25

Other product groups 10 12

Group total 668 656

The Group's operations have in recent years been characterlzed by a continued high rate of expan- sion. During the past five years, Group sales rose by same 115 percent Warking capita! over the period has required considerable additions as the growing business volume and inflationary trends have made heavy demands on capita! for invento- ry and receivables.

Operating results and the Group's policy of con- solidatian have made possible a !arge measure of internally generatad financing of investments. The Group's untaxed reserves rese by so me Skr 1,600 milllon between 1974 and 1978.

VOLVO IN BRIEF

PersonneJ

Volvo Group, number of employees

Y ear-end

Product groups, etc. 1978 1977

C ars 29,750 27,800

Trucks 12,250 12,100

Buses and Public transport

systems 950 1,000

Construction equipment, farm

and forest machinery 5,800 5,900 Marine and industrial engines 2,550 2,450 Aircraft anginas, etc. 2,850 2,850 Volvator Group's dealers

(Nordlc countries) 4,700 4,700

Other products and central

services 2,800 3,050

Group total 61,650 59,850

General plans och goals

In 1978 the Volvo Group was the largest industrial organization in the Nordie area in terms of sales.

The Group's export sales from Sweden accounted for more than 9% of total Swedish exports in 1978. The Group is the largest manufaoturer of cars, trucks and buses in the Nordie area. At De- cember 31, 1978 the Group had 61,650 employees worldwide, 45,600 of whom were in Sweden.

As a result of its product development programs the Volvo Group has a competitive range of prod- ucts which is weil matehed to current market needs. lt Is the policy of the Group to continue to invest its resaureas in the development and im- provement of transportatlon products with the emphasis on greater economy, quality and safety.

At the same time, in order to take full advantage of its existing range of activities, the Group intends to achieve a better balance in the distribution of sales volume among its various product groups. ·

4

The Group has been able to save certaln product development costs as a result of associations with European automobils and truck manufacturers.

Research and devE!Iopment

The Volvo Group places great emphasis on the quality and safety of its products and maintains an extensive and continuous research program. A modern research center in Gothenburg currently employs a staff of about 1,000 people. In recent years expenditures för reserach·, development and tooling has been between 5 and 10% of Group sales revenue.

Volvo automotive products comply with the safety and environmental requirements currently appli- cable in the United states and other markats in which they are sold. The Company belleves that its safety and antipollution standards will keep pace with, or be in advance of, the automotive industry in general. lt accordingly expects that its automo- tive products will continue to be acceptable under the appllcabl.e safety and environmental require- ments of all major markets.

In addition to research and development related to automotive products, the Company has been a pionear in improving the working environment of its employees. In particular, new methods of as- sembly and new materials handling systems have been developed. The Company also markats its expertisa relating to the design and operation of assembly plants.

Shareholders

Volvo has approximately 126,000 shareholders. The company is free from deminating owner intar- ests, Volvo's shares have been Ilsted on the stock- halm Stock Exchange since 1935, on the London Stock Exchange since 1972 and on the Stock Ex- changes of Frankfurt/Main, Dusseldart and Ham- burg since 1974 and on the Oslo Stock Exchange since June, 1979.

In a survey in 1974 it was shown that 45 percent of the share capita! was owned privatsly and 20 per- cent by institutions. The remaining part, 35 percent of the share capita! was administered by banks etc on bahalf of owners. Less than five percent of the Volvo share capita! is owned by persons or institu- tions outside Sweden.

Financial Statistics, Consolidated

lnoome ~ 196§:1978 6

Bataooe

Sheet 1969--1978 7 Gross irwestments by market areas 197.0--1 978

statements

o4

ohaoges in F~ P06itioo 197 4-1978 8 Capltalizatton

Dec.

1 978 9

p~ 1973-1978 10

Pro{llt matgiD 1971-1978 Key Fanandal Ratios 197 4-1978

Sal86 by product groops 1969-1976 11 Sa!P..s by marl<et areas 1969-1978

Exports frOOl Sweden 1969-1978

Ouarterly ui$S and income

1977-1979 1 2

FINANCIAL STATISTICS, CONSOLIDATED

1969 1970 1971 1972 1973 1974 1975 1976 1977 1978

lncome statement for 1969-1978 (Skr millions)

Sales 4,400 5,324 6,104 7,346 8,986 10,537 13,692 15,743 16,168 19,133

Less: Cost of operations 3,780 4,772 5,496 6,389 7,834 9,477 12,563 14,430 14,935 17,625

Operating income before depreciation 620 552 608 957 1,152 1,060 1,129 1,313 1,233 1,508

Less: Provision for depreciation 124 131 166 237 285 358 488 558 599 658

Operating income atter depreciation

according to plan 496 421 442 720 867 702 641 755 634 850

Add: Interest received less paid 56 37 19 36 40 {7) {142) {173) (170) {175)

Other income/{expenses) 1 1 2 2 2 421) 2

o

^{(113)2) (29)3)}

lncome before allocations and taxas 553 459 463 758 909 737 501 582 351 646

Less: Allocation to/(reallocation from):⁴

General inventory reserv~s .. 57 167 85 102 179 384 375 343 49 122

Extra depreciation {23) 12 39 21 41 (11) 32 3 (21) (74)

Write-down of shares 11 10 20 10 23

lnvestment reserves (including in-

ventory investment reserves) 174 37 89 212 191 30 42 91 103

Other allocations⁵ 118 (8) (14) 6 20

lncome before taxes 334 243 240 403 488 193 60' 159 317 475

Less:Taxes 166 112 113 228 240 86 74 112 130 151

Minority interests in net results 1 2 2 (22) (16) {11) 12

Net lncome 168 131 127 174 246 105 8 63 198 312

1)1n this amount an extraordinary profit made by Volvo BM on sale of fixed assets is included. (Skr 40 mil- lion)

2lin this amoun1 extraordinary capita! gains on sales of flxed assets of Skr 40 million and extraordinary ex- change losses on loans of Skr 15'4 million have been included.

3ltn this amount exchange losses of Skr 31 million have been included.

4)AII allocations except the wrlt~down of shares re- present untaxed reserves provided by the legislatian in Sweden and some other countries.

5)Special lnvestment reserve, work environment re- serve and extra appropriation to insurance reserve.

ANANCIAL STATISTICS, CONSOUDATED

1969 1970 1971 1972 1973 1974 1975 1976 1977 1978

Balance Sheet at year-end 1969-1978 (Skr millions)

Assets Current assets

Cash, bank and short-term nates 982 603 981 1,298 1,578 1.414 1,589 1,837 1,868 2,385

Accounts receivable 929 1,011 1,222 1,481 1,743 2,102 2,918 3,336 3,929 3,888

lnventories 1,204 1,628 1,857 2,014 2,588 3,922 5,137 6,015 6,643 6,903

Current assets 3,115 3,242 4,060 4,793 5,909 7.438 9,644 11,188 12,440 13,176

Blocked investment accounts

with Bank of Sweden 36 57 20 32 128 127 115 93 115 54

Fixed assets 1 '111 1,405 1,851 2,326 2,777 3,271 4,273 4,424 4,435 4,482

Total assets 4,262 4,704 5,931 7,151 8,814 10,836 14,032 15,705 16,990 17,712

Liabilities and shareholders' equity

Current liabilities 1,704 1,834 2,534 2,894 3,717 4,749 6,081 6,898 7,174 7,295

Long-term liabilities 355 406 648 883 1,049 1,447 2,583 2,923 3,661 3,867

Untaxed reserves 1,329 1,577 1,776 2,109 2,581 3,115 3,563 3,984 4,019 4,194

Minority interests in capita/ 4 5 11 8 10 80 65 185 199

Shareholders' equity 874 883 968 1,254 1,459 1,515 1,725 1,835 1,951 2,157

Totalliabilities and shareho/ders' equity 4,262 4,704 5,931 7,151 8,814 10,836 14,032 15,705 16,990 17,712

Assets pledged 705 620 1,029 1,049 1,523 1,876 2,151 2,361 2,833 2,758

Conlingent tiabilities 136 171 385 303 213 402 621 531 855 1,304

lnvestments approved¹ 967 1,068 923 1,239 1,171 1,051 956 1,006

Gross investments by market areas 197~1978 (Skr millions)

Sweden 410 487 466 507 607 674 407 448 418

Nordie area, excluding Sweden 6 11 14 36 27 12 4 19 66

Europe, excluding Nordie area 27 83 128 80 107 265 197 153 170

North America 9 17 35 37 43 54 86 19 11

Other markats 8 14 9 18 38 29 10 17 3

Total 460 612 652 678 822 1,034 704 656 668

11nvestments and expenses for property, plant and equlpment decided on, but not yet provided for, at the end of the year.

1974 19752)

Statement of Changes in Financial Position 1974-1978¹1 (Skr millions)

Funds supp/ied

lncome betare allocations and taxas + 737 + 501

Deprei::iation charged against income + 358 + 487

Minority interests in income 1 + 22

Taxas 86 74

Withdrawals from/allocations to blocked

accounts in Bank of Sweden + 1

+

¹²

Funds supplied from year's operations 1,009 948

l nerease in- long-term liabilities + 398 + 851

Minority interest in shareholders'

equity of subsidiaries + 2 3

Changes in composition of Group etc. + 7 25

New issue of shares + 100 + 183

Total funds supplied 1,516 1,954

App/icstion of funds

lovestments in property, plant and

equipment, including company acquisitions + 871 + 1,034

lovestments in shares and participations + 81

+

⁴

Less: Residua! value of assets sold and scrapped 65 65

lncrease in long-term receivables

+

j1

+

²¹

Dividend paid + 75 + 79

Total funds applied 993 1,073

Chsnge in working capita/ + 523 + 881

Specification of chsnge in working capita/

loventories +1,334 + 887

Current receivables + 387 + 663

Current liabilities (minus indicates an increase) -1,033 772 Bank accounts, -cash and short-term nates 165 + 103

Total change in working capital + 523 + 881

The degree of self financing may be expressed as:

Funds supplied from year's operations, less dividend

x

100 ==

. lovestments in property, plant, equipment, shares net

1lThe Gompanles Act 1975 came into force on Jan·

uary 1, 1977. The new layout of this statement is used here for the years 1974-1978. In the

1973-1977 editions of Volvo Financial and Operating statistles another layout was used of the Statement of Changes In Financial Position for the years 1968-1977.

8

102% 87%

2lln January 1975 AB Volvo increased ils holding of shares In Car BV to 75 per cent. The 1975 figures have been shown on the basis of a 75 per cent.

holding by AB Volvo of shares in ear BV as at 31st December 1974. This means !hat the above state- ment shows lunds supplled and applicatlon of funds for the Group In 1975 excluding the acqulsition of Volvo Car BV.

1976 1977

+582 +351

+558 +599

+ 16 + 11

- 112 -130

+ 22 - 22

1,066 8093)

+340 +739

- 15 +120

+ 7

+

33

+137

1,535 1,701

+740 +656

+ 10 + 26

57 - 67

+ 21 + 5

+ 94 +106

808 726

+727 +975

+878 +628

+418 +592

-817 -276

+248 + 31

+727 975

136% 113%

3lln evaluatlog lunds supplied from the years operations and the degree of self-financing, il should be notad that income before allocations and taxes was charged with write-ups on long-term loan liabilities in the amount of SEK 129 m.

1978

+646 +658 - 12 -151 + 61 1.202 +206 + 13 14 1,407

+677 + 24 - 40 + 25 +106 792 +615 +260 - 41 - 121 +517 615

160%

FINANCIAL STATISTICS, CONSOLIDATED

Capitalization at December 31, 1978

The tollowing table sels out the capitalization of the Volvo Group showing long-term debt and shareholders' equity as at December 31, 1978.

SEK

Long-term debt of the Volvo Group millions

Parent Company Unsecured

CHF 60 million 8% Bond s 1975/90 at a price of 991/2% 153 CHF 30 million 41/2% Nates 1977/82 at a price of 100% 80 SEK 75 million 71/2% B onds 1971/91 at a price of 100% 57 SEK 100 million 7 3/4% B onds 1974/89 at a price of 100% 78 SEK 1 00 million 91/4% B onds 1975/90 at a price of 100% 73 SEK 100 million 93/4% B onds 1977/93 at a price of 100% 93 USD 25 million 8% B onds 1972/87 at a price of 100 1/2% 101 USD 25 million 91/2% Sonds 1975/85 at a price of 991/2% 101 USD 6 million 93/4% B onds 1975/85 at a price of 100% 22

USD 35 million 8% Bands 1977/87 at a price of 100% 128

NLG 50 million 83/4% Sonds 1975/85 at a price of 100% 109

NLG 22.5 million 9% Bank loan 1974/89 49

NLG 15 million 815/16% Bank loan 1974/86 31

NLG 25 million 97/8% Bank loan 1976/91 54

NLG 25 million 97/8% Bank loan 1976/91 54

BEF 150 million 81/4% BankJoan 1978/82 22

BEF 1 00 million 81/3% Bank loan 1978/82 15

LUF 250 million 8% Bank loan 1978/86 37

Other 102

Total unsecured 1,359

Secured 254

Subsidiary Campanies Unsecured

Volvo BM AB

SEK 50 million 91/4% Bond s 1976/91 at a price of 100% 40 SEK 75 million 93/4% Sonds 1977/92 at a price of 100% 65

Other 40

Volvo Car B.V.

NLG 25 million 85/8% Private loan 1970/85 33

NLG 25 million 73/4% Private loan 1971/86 38

NLG 25 million 71/4% Private loan 1972/87 43

NLG 25 million 11% Private loan 1974/94 54

NLG 50 million 91/2% Private loan 1975/2000 109

NLG 25 million 91/4% Private loan 1976/91 54

NLG 25 million 8718% Private loan 1977/92 54

BEC 300 million 93/4% Private loan 1974/85 27

BEC 300 million 93/4% Private loan 1976/87 37

FRF 61.6 million 83/8% Export credit 1975/81 22

Other 55

Other subsidiaries 314

Total unsecured 985

Secured 509

Total long-term debt of the Volvo Group 3,107

Totallang-term debt of the Volvo Group

Pension liabilities

Daterred income tax Hability Minority interests

Shareholders' equity Share capita!

Legal reserves Retainad earnings Special allocations

Less deferred income tax Ilability Total capitallzation

761 2,223

199

883 717 557 4,194 (2,223)

Maturities of the total long-term debt are due in:

1980 307

1981 319

1982 390

1983 273

1984 and thereatter 1,81

a

Total 3,107

3,107

3,183

4,128 10,418

9

1971 1972

Profitability11, 1973-1978 (percent) C ars

Trucks and buses

Construction equipment, farm and forest machinery Marine and industrial engines

Aircraft engines, hydraulic machines, etc.

Group total

Profit margin³> 1971-1978 (percent)

C ars 8 11

Trucks and buses 10 11

Construction equipment, farm and forest machinery 3 ₅ Marine and industrial engines

Aircraft engines, hydraulic machines, etc.

Group total

Key Financial Ratios 1974-1978 Interest coverage (multiple)^6>

Pre-tax return on capital employed (percent)?>

Atter-tax return on equity (percent)⁸>

Cashflowas percentaga of sales⁹>

Net borrowing (Skr m.)

Percentaga of self-financing, total capitaP⁰>

Equity ratio (percent)^11>

Equity ratio (percent)¹²l Capital tumover (multiple)13l lnventory as percentaga of sales

Accounts receivable as _percentage of sales lnvestments as percentaga of sales

1 trhe protitabi/ity of the product groups has been calculated on the basis of a modal developed within the Volvo Group whereby product group earnings are related to capita\ employed. Extraordinary income and expenses are not inc\uded in the earn- ings figures.

In determining capita\ emp\oyed for each product group, all assets except cash and short-term nates have been included with no deduction for liabilitles.

Assets have been determined on the basis of the net current rep\acement value of property, plant and equipment.

The staled prolitabil ity for the Group shows the return on total capita\ employed, including cash and snort-term nates.

10

11 16

10 11

7.6 10.3

2lExc1uding products from Volvo ear B .V. the return on investments Is 4 percent

3lProfit margin shows the respective product groups' shares of Volvo Group income after financlal income and expenses (before 1976: income betare alloca- tians and laxes) as a percentaga of the Group's invoiced sales.

4lExcluding products from Volvo ear B.V. the income is 3 percent

5)Excluding capita\ gain made by Volvo BM.

1973 1974 1975 1976

14 6 22) 2

15 13 11 11

9 14 11 7

18 12 3 5

11 11 11 10

12 9 6 6

9 3 14) 1

12 11 7 9

g 12^5> 9 3

15 9 -1 1

15 15 15 19

10.1 6.6⁵) 3.7 3.7

4.2 2.3 2.2

9.3 7.3 7.2

11.6 7.5 7.8

9.6 6.9 6.8

1,003 1,864 575

38 33 43

42.8 38.3 37.5

27.6 24.8 24.0

0.97 0.98 1.0

37 38 38

20 21 21

7.8 7.6 4.5

6llnterest coverage ratio is calculated as operating income alter depreciation, plus interest lncome, plus dividend income divided by interest expenses.

7)Aeturn on capita\ employed belare tax Is calculated as i n come before al\ocations and laxes adjusted for extraord lnary income and expenses, plus interest expenses divided by average total assets.

BlAeturn on shareholders' equity after laxes is calcula- ted as income before allocations, adjusted for extraordinary income and exponses and mulliplied by 0.47, dlvided by average shareholders' equity, minority Interests and 47 per cent. of untaxed reser- ves less dividend paid.

9Jcash flow equals lunds supplied from years opera- tions as shown in Statement of Changes in Financial Position on page 8.

1977 1978

o

4

11 11

3 - 1

4 - 3

13 10

5 5

-1 2

11 10

-1 - 5

1 - 5

21 18

2.9 3.4

1.8 2.2

6.4 7.1

5.8 7.5

5.0 6.3

497 -332

38 78

36.2 37.0

23.7 24.4

0.95 1.08

41 36

24 20

4.1 3.5

10tfhe degree of self-financing of total capita\ may be expressed as:

Funds supplied from year's operations, less dividend payment

- --- -- ---x100 lnvestments in fixad assets, shares etc.,

plus lncrease or decrease in inventories, accounts receivable and liquid lunds.

11 lEquity ratio is calculated as shareholder's equity, minority capita\, and untaxed reserves as a percen- . tage of total assets shown in balance sheet.

12lEquity ratio is calculated as shareholders' equity, minority capita!, and 47 per cent. of untaxed re- serves as a percentaga of total assets shown in balance sheet.

13lCaplta\ tumover is calculated as sales divided by total assets.

FINANCIAL STATISTICS, CONSOLIDATED

1969 1970 1971 1972 1973 1974 1975 1976 1977 1978

Sales by product groups 1969-1978 (Skr millions)

C ars 2,516 3,127 3,640 4,332 5,132 5,569 7,525 8,441 8,310 10,257

Trucks 914¹> 1,03Jll 1,127 1,396 1,854 2,307 2,990 3,634 4,059 4,830

Buses ^{1) 1)} 61 112 134 211 321 428 447 455

Construction equipment, ·farm and forest

machinery 583 680 745 819 986 1,349 1,588 1,778 1,729 1,773

Marine and industrial engines 177 202 256 335 424 507 601 747 802 911

Aircraft engines, hydrauiic machines, etc. 132 117 189 255 290 330 372 379 433 504

Other produets 78 161 86 97 166 264 295 336 388 403

Total 4,400 5,324 6,104 7,346 8,986 10,537 13,692 15,743 16,168 19,133

Sales by market areas 1969-1978 (Skr millions)

Sweden 1,736 1,856 1,923 2,209 2,703 3,385 3,993 5,009 4,716 4,874

Nordie area exeluding Sweden 739 850 947 1,043 1,258 1,388 1,625 2,069 2,266 2,453

Europe excluding Nordie area 822 1,150 1;487 2,054 2,543 2,594 3,848 4,741 5,382 7,272

North America 769 1,079 1,271 1,406 1,592 1,851 2,165 1,708 1,855 2,357

Other markets 334 389 476 634 890 1,319 2,061 2,216 1,949 2,177

Total 4,400 5,324 6,104 7,346 8,986 10,537 13,692 15,743 16,168 19,133

Exports from Sweden 1969-1978 (Skr millions)

2,071 2,578 3,058 3,728 4,477 5,448 6,789 6,850 7,081 9,013

11Buses included in the figure for trucks in 1969--1970.

11

FINANCIAL STATISTICS, CONSOLIDATED

Quarterly sales and income 1977-197911 Sales (Skr millions)

1st q u arter 2nd quarter 3rd quarter 4th quarter Whole year

lncome (Skr millions) 1st quarter

2nd quarter 3rd quarter 4th quarter Whole year

Whole year, income before allocations and taxes Profit margin (income as a percentage of sales) 1st quarter

2nd quarter 3rd quarter 4th quarter Whole year

Whole year, income before allocations and taxes as a percentaga of sales Adjusted income in Skr per sharef'J

1st quarter 2nd quarter 3rd quarter 4th quarter Whole year

Whole year, adjusted income before allocations and taxes lltn order to eliminale the effects of temporary

fluctuatlons In exchange rates on the quarterly operating results, "lncome" for the years 1977-79 is here - uniess otherwise staled - defined as "lncome alter financial lncome and expenses" excluding exchange differences on long-term toans. The quarterly resulls for the years 1973-76 included all exchange differences and are thus not fully comparable with the figures for 1977-79.

2lAtter allocation of a special grant from the Dutch Government to Volvo Car B.V., in total Skr 193 million, with 25% to each quarter.

3)After allocation of a special grant from the Dutch Govemment to Volvo Car ^B.V., Skr 199 million with 25% to each quarter.

1977 1978 1979

3,428 4,260 5,320

4,123 4,854 3,826 4,367 4,791 5,652 16,168 19,133

12921 1653) 23541 151 21 23Q3l

492) 144³1 13621 138³1

465 677

351 646

3.8 3.9 4.4

3.7 4.7

1.3 3.3

2.8 2.4

2.9 3.5

2.2 3.4

3.40 4.40 6.20

4.00 6.10 1.30 3.80

.3.60 3.70

12.30 18.00

9.30 17.20

4llncluding a special grant from the Dutch Government to Volvo Car B .V., Skr 11 million.

5)Adjusted income is reduced by a tax Hability of 53%. The calculation is based on the number of shares outstanding at the end of each period.

Financial Statlstica, AB Volvo

Share capltal Ou~ of Votvo shares Data per shafe Numbsr of shar$holders

Dlstributioo of sherea

The~~s

Untaxed reseN86

1926-1978 1970-1979 1969-1978 1009-1978 Dec. 1978 AprU 1979

14 15 16 i7

FINANCIAL STATISTICS, AB VOLVO

AB Volvo, share capital1926-1978 (in Skr) The share capital of AB Volvo at December 31,

1978, Skr 882,569,250 was divided into 7,831,350

Share capital Number Dividend Dividend A-shares and 9,820,035 B-shares, each with a par

of shares pershare total· value of Skr 50. Each of theA-shares earrias one

vote and each of the B-shares earrias one-tenth of

1926 200,000 2,000 a vote but in all other respects they rank pari

1930 4,200,000 42,000 rights issue 20:1 Skr 100 passu with the A-shares.

19351) 13,000,000 260,000 2.50 650,000 rights issue

Out of Volvo's shares only 1,371,260 "A" shares 1937 18,200,000 364,000 2.50 910,000 rights issue 2:5 Skr 50

1938 18,200,000 364,000 3.- 1,092,000 and 2, 117,183 "B" s hares, known as free shares

(representing less than two-fifths of the share capi- 1942 20,000,000 400,00021 3.- 1,092,000 rights issue tal and carrying less than one-fifth of the votes for 1943 25,000,000 500,000 3.- 1,500,000 rights issue 1:4 Skr 50 the total share capital) may be acquired either by 1945 37,500,000 750,000 3.- 2,250,000 rights issue 1:2 Skr 50 subscription or transfer by

1951 56,250,000 1 '125,000 3.- 3,375,000 rights issue 1:2 Skr 50 _D any non-Swedish cltizen, corporation or institu-

1952 75,000,000 1,500,000 3.- 4,500,000 scrip issue 1 :3 t i on;

1954 75,000,000 1,500,000 3.60 5,400,000 ^D any Swedish trading partnership with a non-

Swedish partner,

1955 90,000,000 1,800,000 3.- 5,400,000 scrip issue 1 :5 D any Swedish cooperative association;

1959 108,000,000 2,160,000 3.- 6,480,000 scrip issue 1 :5 _D any Swedish lirnitad company issuing bearer.

1960 114,000,000 2,280,000 3.- 6,840,000 rights issue 31 shares; or

1961 114,000,000 2,280,000 3.75 8,550,000 D any other Swedish limited company whose Arti-

1962 142,500,000 2,850,000 rights issue 1 :4 Skr 60 cles of Association do not contaln certaln restric- 171,000,000 3,420,000 3.- 10,260,000 scrip issue 1 :5 tians on the acqulsltion of certaln assets.

1963 171,000,000 3,420,000 4.- 13,680,000

Free shares are designaled "Fria" on the relative 1964 228,000,000 4,560,000 3.- 13,680,000 scrip issue 1 :3

1965 228,000,000 4,560,000 3.90 17,784,000 share certificates. The remaining Volvo shares are

know as restricted shares and may only be ac- 1966 273,600,000 5,472,000 rights issue 1 :5 Skr 75 quired by subscription or transfer by Swedish citiz-

342,000,000 6,840,000 3.50 23,940,000 scrip issue 1 :4 ens and certaln Swedish campanies or associa- 1967 342,000,000 6,840,000 4.50 30,780,000 tians. These shares are designaled "Bundna" on

1968 342,000,000 6,840,000 5.50 37,620,000 the relative share certificates.

1969 342,000,000 6,840,000 6.- 41,040,000

1970 513,000,000 10,260,000 4.- 41,040,000 scrip issue 1 :2 A rights issue was announced on March 4, 1979 on the basis of 1 new share for every 5 shares held at 1972¹¹ 598,500,000 11,970,000 rights issue 1 :6 Skr 80 a price of Skr 60 per share. Subscrlption will take

607,180,000 12,143,600 rights issue 3l place during the period 20th June to 7th Septem-

613,430,000⁴1 12,268,600 4.- 49,074,400 rights issue 31 ber, ·1979. Payment for newshares subscribed for 1973 624,505,000 12.490,100 6.- 74,940,600 rights issue SJ under this issue can be made at any time between 1974¹¹ 653,755,000 13,075,100 6.- 78,450,600 non-public lssue 51 20th June to 19th October, 1979. The new shares 1975 784,506,000 15,690,120 6.- 94,140,720 rights issue 1 :5 Skr 70 will carry the right to any dividend payable in re- 1976 882,569,250 17,651,385 6.- 1 05,908,31

o

rights issue 1:8 Skr 70 spect of the financial year end i ng 31st December,

1978 882,569,250 17,651,385 7.- 123,559,695 1979 and subsequent years.

The number of shares will be increased by

11 The par value was originally Skr 100 but was changed to Skr 50 3) New Volvo shares lssued as payment for acqulsitlon of other 1 ,556,270 "A" shares and 1,964,007 "B" shares

in 1935. lntroductlon on the Stockholm Stock Exchange In 1935, companies. and the new share capltal will be Skr

on the London Stock Exchange in 1972, on Hamburg, Dussel-

4) The registared share capital of the Company amoun1ed to Skr 1 ,059,083,1 00.

dorf and Frankfurt stock Exchanges In 1974 and on Oslo Stock

5) A special non-public issue of new shares to the National Pen- Exchange in 1979. 612.680 milllon at the end ofthe year. Afler regisiratlon of all

2) Rights lssue shares not dividend bearing in 1942.

s hare i nereasas decided upon du ring 1972 the s hare capital amounts to Skr 613.430 million.

sion lnsurance F und. Fourth F und Managing Board at Skr 171.

14

FINANCIAL STATISTICS, AB VOLVO

Quotations of Volvo ahares on the Stockholm Stock Exchange, 1970-April1979.

(closing price, highs and lows per months, in Skr)

ISP

~ Scrip i ss u e 1:2 ! Rights issue

l 1 1 ,,_ao JOO

p; n l 300 T""''

''il~'il ... •l

i

u

~n n l

l2

^!L

z so

;r•IJ •• _{l 'l}

_350

.1 •. . _{h •• l} ^l ·~

^{l 2 !:w}

! 'l

poo _l

J! ^t~·· _IU ^{···]···· ..} _)11•1

^,

.. _l ^'-

^l

i

^{' 150}

zoo

1 ¹

^l

^·~t - ! iii

¹²⁵

^••

¹⁵⁰

^.

^{l 12~}

!

!

!

!

^- l ^' 100

:

l

!

i

l '

1' - ·l;i,

1 ..

l

L

'

l

^l

i

j Rights h:sue

• 1:5-70 ^{!Rights i}ssue 1:8-70

ho o

.

_l ^\01 - l

~ IZSO

l 250

.

. ---,

- . l

!zoo l

r-

^{!00 ;175}

- ·

¹⁷⁵

iu•l1 i.

l

lllj"J

^l

^P

^H12:

11 ·l.

,1"1 ni .

H

100 q u ^l

^{i •oo}

^{q o}

III ^{l t} ....

l

J ""l

80

J l ,11.11

150 ¹⁰⁰ l i ~o

···

l. ^~ ••• •1.1

^l

^'l

~

^{~ _j 80} 70 ^{' 70}

D<

III Il r·

^{J l}

80 l l

i60

l ^70_

... ... ...

i> O I l •

• 70

.

i

11

..100

r.---

⁶⁰ _{- - l}

_{~ ~o}

90 l 60 l ^{50 l}

l 11972 ~·~j'"

...

- - - ' 45

1970 1971 1973 1974 ₁₅

i i w

⁴⁰

!

Par value: Skr 50 ^{l975 19761 1977 t 78}

Source: Aktiv Placering ab

1969 1970 1971 1972 1973 1974 1975

Data per ₁Share 1969-1978 adjusted for issues of new shares

Restated net income, Skr¹> 21.1

o

^{17.60 17.70 25.20 29.60 21.70 14.20}

Dividend, Skr 3.14 3.14 3.14 3.46 5.19 5.19 5.68

Share price at year-end, Skr 176 121 181 241 177 106 131

P/E at year-end

a

^{7 10} 10 6 5 9

Dividend yield at year-end, percent 1.8 2.6 1.7 1.4 2.9 4.9 4.3

Growth rate of dividend, percent 9.4

o o

10.2 50.0

o

^9.4

Number of shareholders, Dec. 31 61,500 72,000 82,500 99,300 108,000 116,900 121,000

1 l Restated n et in come per sh are is defined as consoli- Adjustments for issues have been made. On calcu- dated income before allocations and taxes reduced lating the resulls for 197 4 a capita l gain of Skr 40 by a tax liability of 50 percent for 1969-1971 and 53 .. million by Volvo BM has been excluded. For 1977 a percent for 1972-1978. capital gain of Skr 40 million and exchange losses

on loans of Skr 154 million have been excluded.

l.l•

l".

·l

'

1979

1976 1977 1978

15.50 12.30 17.20

6.00 6.00 7.00

93 59 75

s

^{5 4}

6.5 10.2 9.3

5.6

o

^16.7

124,300 127,600 126,000

FINANCIAL STATISTICS, AB VOLVO

Distribution of shares, December 31, 1978

This-table has been compiled primarily from information No. of Percent of Total No. of Percent Averaga No.

provlded by Värdepapperscentralen VPC AB s hare- all share- shares owned of share of shares

{the Swedish Sacurities Register Center) holders holders in size class capital per holder

Volvo shareholders with:

Max 1 00 sh are s 99,500 79.0 3,264,000 18.5 33

Min 101, max 500 shares 22,500 17.8 4,717,000 26,7 209

Min 501, max 1,000 shares 2,400 1.9 1,683,000 9.5 703

Min 1,001, max 10,000 s hares 1,300 1.0 2,674,000 15.2 2,104

Mo re than 10,000 shares 80 0.1

Share coupon certificates not yet

5,304,000 30.0 68,884

exchanged, approx. 200 0.2 9,500 0.1 50

Total Approx 126,000 100.0 17,651,385 100.0 140

The largest shareholders in Volvo as in April 1979

Percent Percent

Number of of share of total

s hares capital votas

Allmänna Pensionsfonden, Fjärde Fondstyrelsen {The National

928,912 v

Pension lnsurance Fund, Fourth Fund Managing Board) 5.26 5.70

AB Custos (a Swedish investment company) 446,800J 2.53 3.97

Svenska Handelsbankens Pensionsstiftelse {pension fund of Svenska Handelsbanken) 431,942"" 2.45 3.84

Penslonsstiftelserna Praktikertjänst (private pension fund) 420,000" 2.38 1.61

Svenska Personal-Pensionskassan {one of the largest Swedish private pension funds) 272,200\/ 1.54 1.36

Broströms Rederi AB (a shipping company) 181,016V 1.03 2.05

Livförsäkrings AB Skandia (a Swedish Iife insurance company) 169,356\/ 0.96 1.03

Kredittjänst ek. för. (a private society) 163,250 .... 0.92 0.77

lnvestment AB Golleetor (a Swedish investment company) 161,870.1 0.92 1.84

Försäkrings AB Skandia (a Swedish insurance company) 117,990

v

^{0.67 0.64}

VADO Beheer BV (incorporated in the Netherlands) 110,000 ,/ 0.62 0.12

lnvestment AB Promotion (a Swedish investment company) 108,000

v

0.61 0.91

t

\

FINANCIAL STATISTICS, AB VOLVO

Untaxed reserves General

A brief presentation of "Special allocations"/"Un- taxed reserves" appears on page 44 of the 1978 Volvo Annual Report

For purposes of international camparisans be- tween companies, something more than halt of these reserves may be regarded as a deferred income tax liability, and something less than halt as retainad earnings.

The three most important reserves are described below in greater detail than in the Annual Report General inventory reserve

Volvo's inventories are valued at the lower of cost (FIFO) or market. This value is, however, adjusted for tax purposes through the General inventory reserve. The following figures are from page 34 of the 1978 Annual Report (Parent company's bal- ance sheet).

lnventories

General inventory reserve lnventory value for tax pur- poses

1978 Skr m.

2,881.6 100%

1,656.0 57%

1,225.6 43%

Swedish tax law permits the write-down of invento- ries to 40 percent of their basic value, or to a low- er figure in exceptional cases. There are two sup- plementary rules.

1 . If, at the end of a year, the value of inventories is lessthan the averaga of the corresponding values at the two preeecting year-ends, the company may write down its inventories by 60% of that average value.

2. Raw materials and staple commodities may be valued at 70% of the lowest market price during the preeecting ten years.

lt may also be noted that Swedish tax authorities normally permit a special deduction for obsoles- cence at a flat rate of 5%. The obsolescence re- serves are not shown separatsly in the balance sheet but are deducted directly from the value of inventories.

In accordance with the main rule, the taxpayer may show a ciasing balance in the General inven- tory reserve of up to 60% of the basic value ?f the inventories. The difference between the openmg and ciasing balances is shown in the income statement

The movement of the Parent Company's General inventory reserve during 1978 was as follows:

Balance Dec 31, 1977

Charged to 1978 income statement Balance Dec 31, 1978

Extra depreciation

Skr m.

1,515 141 1,656

Extra depreciation represents the difference be- tween depreciation for tax purposes and deprecia- tion according to plan (i.e. financial depreciation).

Extra depreciation shown in the income statement is accumulated in the balance sheet as "Accul)"lu- lated extra depreciation."

Swedish tax law permits the depreciation of ma- chinery and equipment by 30% annually, using the decilning balance method, or by 20%, using the straight Iine method, whichever is more beneficial for the company in a given year. Small assets and assets with an economic Iife of lessthan three years are written off in the year of acquisition. No distinction is made between different types of ma- chinery and equipment.

With the exception of bulldings written down against the investment reserves, Volvo uses the same rates for both tax and financial depreciation on buildings.

Most of the accumulated extra depreciation re- presents write-downs against investment reserves.

(See below.) lnvestment reserve General

Allocations to this reserve are voluntary. The maxi- mum allocation allowed is 40% ofincome before allocations to investment reserves, donations and taxas, as shown in the income statement This is approximately illustraled by the following figures from the Parent Company's 1978 income state- ment:

lncome before allocations and taxes Group contributlons

General inventory reserve Extra depreciation

Recovery of allocation to Special in- vestment reserve and work environ- ment reserve

40% of 265.3 Actual allocation

Skr m.

321.5

+

^23.0

-141.0

+

59.0

+

2.8 265.3 106.0 100.0 Recoveries from inventory investment reserves may also be used for allocations to investment reserve s.

The allocation is deductible for tax purposes but the company must deposit 46% ofihe allocation in a non-interest-bearing account in the Bank of Sweden. The final date for filing the company's tax returns is also the final date for making this depos- it.

Permission to utilize the investment reserve may be obtained from the Government or the Swedish Labor Market Board when and where the eco- nomic and employment situation in Sweden so warrants. The investment reserve may be used for several purposes, the most important of which are the construction of bulldings and the acquisition of new machinery and equipment.

Amounts withdrawn from the reserve are used to write down the value of investments in such bulld- ings and machinery, as a result of which future depreciation for tax purposes is limited to the val- ue remaining following the write-down.

lmmediately following receipt of approval to utilize the investment reserve, 46% of the amount re- leasad may be withdrawn from the blocked ac- count in the Bank of Sweden.

There are two types of approvals which, depend- ing on the amount released from the investment reserve, may be designaled "1 00% approval" or

"75% approval."

17

FINANCIAL STATISTICS, AB VOLVO

Untaxed reserves continued

"1 00% approvals"

100% approvals give the Company a possibility to write down 100% of approved investments imme- diately. These approvals, which may be granled to all or selected Swedish companies, are mostly given for the purpose of stimulating the general economy in Sweden. The investments for which the approvals are granted must be made whithin a given period of time. Approvals of this type are always combined with an extra allowance of 10%

when investments are made in fixed assets. The extra allowance gives a reduction of the tax ex- pensa but is otherwise not shown on the books.

100% approvals will be granted generally for the year 1979.

"75% approvals"

With this type of approval, the company is permit- led to write down 75% of the investments against the investment reserve. Approvals of this type normally refer to investment projects covering a period of more than two years. In addition to permitting the use of funds already allocated to the investment reserve, approvals of this type often allow the use of up to 75% of future allocations, up to a certain amount.

"Free sector"

Five years after it has made an allocation to the investment reserve, a company may use 30% of the allocation- the so-called "free sector"- with- out spedal approval from the Government. If, how- evar, the company has already utilized a portion of the allocation, the free seetar is reduced by a ear- respanding amount. Of the funds released, 46%

may be withdrawn from the Bank of Sweden in the normal manner.

Accounting example

The fol.lowirm nates are designed to clarify the various entries involved. The example is based on a "75% approval."

a) An allocation, which is deductible for tax pur- poses, is made to the investment reserve. An application to utilize 75% of the allocation may already have been aproved by the autho- rities.

b) 46% of the allocation must be deposited in a blocked account in the Bank of Sweden.

c) 75% of the deposit may be withdrawn when final approval to utilize the investment reserve

18

has been granted. If the company has receiv- ed permission to utilize future allocations, approval is conlingent upon two conditlons and is therefore only preliminary:

The correct deposit must be made.

The company's tax returns must be approved.

When these two conditlons have been fulfilled, final approval is granted automatically. In practice, this means that 75% of the deposit often may be withdrawn after only a few weeks.

d-e) The investment may, for example, be financed in this way.

f) From a tax viewpoint, this entry represents a 75% write-down of the investment.

Property, plant and equipment Accumulated extra depreciation Residua! value for tax purposes

l

B alance she et accounts

Assets Liabilities

Skr m.

100 75 25

g) Although the investment is written down to Skr 25m. from a tax accounting viewpoint, depreciation according to plan is based on Skr 100m. as usual. For both tax and tinan- cia! purposes, 4% is a very common rate of depreciation of Volvo plants.

h) The residua! value for tax purposes, as shown in f), above, is Skr 25 m.

Tax depreciation of 4%

x

²⁵

=

^Skr 1 m.

(2 % additional depreciation is usually allowed during the first five years- disre- garded here).

This means that only Skr 1 m. out of the total financial depreciation of Skr 4 m. is deductible for tax purposes. Skr 3m. is therefore shown as recovered extra depre- ciation.

l n come statement accounts

Cash and banks

Blocked account with the Central

Bank of Sweden Allocation to

lnvestment reserve investment reseNe

dr er

bT 4,r (1 . c.·.r· c

15 .

d

Property, plant and equipment

dr er

Long-term liabilities

Accumulated extra depreciation

dr er

g

dr er dr er

a

:••J®,•,). ^•w,::'~'Q.ll:}

Depreciation accordlng to plan

l .

Operating Statistics, Consolidated

~e~~~ ~

Pro<:fuction 1969--1978 21 Productlon by ptant and country 1969-1978

Numbet of vemoles sokl 1969--1978 22

Reglwattons,

certaln mark&ts 1969-1978

Pur~asing 1969-1978 25

Numberof~ 1~1978

Sa!arieS, wages and sociaJ benetml 1969-1978 WOJ!d productioo of~ ,.969-1976