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Volvo Treasury AB (pub!) Corp. Reg. No. 556135-4449
Annual Report and Consolidated Financial Statements for the 2019 fiscal year
The Board ofDircetors and the President of Volvo Treasury AB (pub!), (556135-4449) hereby submit the folbwing Annual Report and Consoli<late<l Financial Statement~.
Content
Board ofDirectors' report .. ... .. . .. . .......................... .... ... ............. . ............... 2 Consolidated statement of income ....................... ... ..... .... .... ..... ..... ......... ..... 4 Consolidated cash-llow statement. ............. . .... , ... .. ... . ........... .. ..... .. .............. . 8 Income statement, Parent company ....................... .. .... ........ ......... .. ... , ........ ... 9 Balance sheet, Parent company .......... ............ ... ...... . .......... ............. . .. ........ I 0 Changes in shareholders' equity, Parenl company ... . ... , ......................... , .......... 12 Cash-tlow statement, Parent company ....................... , . ........... ........ .............. 13 N otcs - Grou? and Parent Company ....... .... ............................. . ...... ... ....... .. 14 Auditor's report ......... . ...... ...... .... ... ............ , .......................... ... .......... .... 43 Corporate governance report ..................................................................... 47 Auditor's report on the Corporate Governance Statement. .............. , .................... SO
,-uKr
IZ: --= ... < -- ,, ::. )>
-:;, ....... _~ ~ R862
This is a true and accurate translation of the rigirial document
(Certified),~.::;;,::.~ .. !:': ... ~ .. :;;;.~.;,: . .,;;; ... ~_ .... __
J6hn lightowfer Authorized Transl.!tor
All muou1.1l~ '"e ~liuw11 i11 11iill iou, (If' Swcili,l., krv1101 (SEK l'vf) unle~~ ut.ltc:, wist: tilalt:ll. T he: amounts withir: parentheses refer to the ]>receding. year.
I (50) [Trons.t.1tofs.Nvtc: Tits n::pon is n tr~1mlt?tion oftlJIJ Swi::dish languag? 01ig.1n.1L In tJic tvt;,nt of auydjff~tt\l!..::,; bi:ltw~t'l Lhis Lt,1~latwn ~u~J tbe. Sw-OOish nrif';in81, the Jaau:r ~haU prev:!1l The uablc.'i m thi'i tr.:1n,;tntirin have hccn rrovidcd by Volvo TmisJry AB and h,.1vc oot blX'J) tmMI.Ucd, rhc Audirnr',; Rc:pnrl has lxcn pnwid<.-d by 1>d,1itk I
Volvo Treasury All (publ) Corp. Reg. No. 556135-4449
Board of Dh-ectors' report
Volvo Treasury AB (publ) is a wholly owned subsidi,iry of AB Volvo (pub!) Gothenburg (556012-5790). The Company is the Parent Company of Volvo Treasury Asia Lld, which in tum is the Parent Company of Volvo Treasury Australia Pty Ltd ("Volvo Trea~u~y Group").
Volvo TreasuyY AB is a uni! with in the Group fonction, Volvo Group Treasury. Volvo Group Treasury is the Volvo Group's internal bank with responsibility for the Volvo Group's botr<>wing and operational financial risk management, including_ external banking relations. Volvo Group Treasury is also responsible for ensuring and developing an eflicient financial infrastructure for the Volvo Group\ operations. Most of the Volvo Group's financial transactions are conducted through Volvo Treasury Group or one of the Volvo Group's other treasury er,tities in America or Asia. All financial transactions in Volvo Treasury Group, and between Volvo Treasmy Group and other companies wflhin the Volvo Group, are carried out 011 market terms.
Mandates and limits for Volvo Group Treasury's management, monitoring and repo11ing of operational financial 1isks are ~e( by the Board and CFO of the Volvo Group or in certain cases by the Senior Vice President, Group Treru,,uy & Corporate Finance. A more detai led description of these risks and the manner in which they arc managed is prnsen!ed in Note 3 Financial risks below. Sec alsi) the Annual Report for !he Volvo Group for infonnation on employee policie.s.
Corporate Governance Report Volvo Treasmy AB has prepared a Corporate Governance Report that is separate from the Annu,11 Report, which •~an be found after the Annual Repon in this document.
Operations during 2019
Volvo Treasury Croup - Summary The Group's operating income hy company is pre$ented in the table below.
2019 1018 2017 2016 201S
Volvo Treasury AB 167.l 16.4 472.1 1,010.3 728.3 Volvo Treasury Asia Ltd 16.3 24.S 42.5 70.8 63.5
Grout> total 183.4 40.9 514.6 1,081.. 1 791.8
Duling the year, net lending to companies within the Volvo Group decreased SEK 3.3 billion as a consequence of increased financing by customers. An improved cash flow wi thin tbc industrial business was reflected in the increase in cash and cash cquivalenl~ of SEK 7.4 billion. At the same time, growth in customer financing operations resulted in an increuse in extern.al financing of SEK 10. 9 billion.
Doth interest income from companies in the Volvo Gmup and irlerest expens1:1s for ex.temul interest-bearing Li.abi lities and derivative contract~ have incre11sed year-on-year, which was due to higher lending lo cu.' ".:..-..._:,; · rations and increased costs for managing cash and cash equivalents.
Thi · accurate I nal document
2 (50) [f1tu1S)ator\~. Nole! 1llis rtp(u u~1g1:rnriginul. In the eve ~ ~ .. \ ... . · . s timt.and.lJJ.( •.. Sw~di~h 01iginaf, the hn~r sha · n lt.1ve b~~n pn),·i<lt<J Au<limr's Rcpon h.,s h:cn pro
11 · 'rc:asury AH and h:t\'C m11 h-.-en imn-'11:ttl,.'(1 1 John llghtowler
Authorized Translator
Volvo Treasury AB (publ) Corp. Reg. No. 556135-4449
Financial instnuneuts measured at fair value. through profit and loss (FVTPL) negatively impacted camings, albeit to a lesser extent than fast year. The under.lying cause of the negative impact was higher market interest rates, primarily for the EUR and SEK as well as lower market interest rates for th.e USD.
The Volvo G:oup's hedging of commercial cash nows is ma11age0 by and reported in Volvo Treasury Gri)tlp. The result from operations was negative SEK 487.5 M, which ,~as primarily a conseyueoce of the weaker Swedish krona. The effect of the hedge is included under Other financial income and expenses.
Income derived lrom loan commitments issued to Volvo Financial Services to.taled SEK 133 M w1d were included under the item Other operating income. Costs derived from issued loan commitments were included under the Administrative expenses item.
The prepared Am1ual Report states that a Group contribution of SEK 350.0 M was distributed to Sotrof AB, while a Group contribution of SEK 500.0 M was received from AB Volvo.
Proposed disposition of un>1ppropriatccl c>1roi.ngs
According to the balance sheet of Volvo Treasury AB'$ Parent Company, the Anirnal General Meeting has at its disposal the following earnings of SEK 15,400. l6 l\,f, The B◊,lnl (if Directors and the CEO propose that the above earnings of SEK 15,400.16 M be carried forward. Read more in Note 28, Proposed disposition of lllrnppropriatcd eamings.
This is a true and accurate translaiion of th riginal document
(Certifred): ....... ...
John llghtowler Authorized Translator
3 (50) [Trn,~lawf s Note: Tu.i tei,XiJl is a h'ilnsknic,o uf lhe Sw~l:,,h IJnguage llrigimd. tn LJ1c evenl of an)' differ:n.:e1; hetwecn tJn:,, tr.mslati;,n and 1hc Swodish 01·igim1!, ·tht. 1:utc-r shnll prc.,·aiJ. The tabks in tJli-s: tram,lation have bem pro\i<led by Volvo Tre-.u.i.uy AB a.11J ba\'c 1101 b«n tr.ni:,.lattd. Tiie Anduor's RC_J}f)rt has teen providcxi hy l>doim.~.J
Volvo Treasury AB (pub!)
Consolidated statement of income
IJiterest in~ome
iJlrerest expense.
Financial instruments measured at FVTPL
Net interest income
Other financial income and expenses
Gross income
Other operating income
A<lmirtistrative expenses
Other opcmting <Kpeoscs
Operating income
Tax on income for the year
Net income
Other compnhensive income
Net income
Items that will not be rec/a,s/f,ed 10 profit anc/ loss:
Remeasurement of defined-benefir pensions
hems thm may b~ subsequemly reclassified 10 projir and loss:
F.xchangc~ratc <lilicrcncc.s on transl"1tion .of foreign opcr:dions
Comprehensive income for the ycnr
Total nCL income altribuLahlc to Parent Company sharchvldcrs
Total comprehensive income anribu1able to Parent Company shareholder~
Corp. Reg. No. 556135-4449
Note
4
s
.l.2}
6.2.1
2019
3)~58.3
-3, 112,l
-111.7
634.~
-380.7
253.8
133.4
-175.3
-28.5
183.4
-45. 1
138.2
138.2
- 12.2
42.4
168.4
138.2
168.4
2018
2,999.0
-2,512. l
-1219
365,0
-256.5
108.4
130.9
-165.0
-33.4
40,9
-16.9
24,0
24.0
• 7.3
47.8
64.5
24.0
64.5
This is a true and accurate translation of inal document
4 (50) !Tmnsl.'lltlJ ·s Not~ Th.£- n:p,;:,11 fa: :, uao.slatiou or the Swedish l~ngua,ge o,~gi.nal. ln lht' e\'t't1l ofunydiffot\--ncc.-- hc:rwccn 1hi,; tran~,:lfu:in and ,he .Swc<lish orig111.:il, rlw la~c;r shall pr~w,il. ·rhc: tables 111 {hi, tmnsl.1rion h.!1vc: been ptovid\'d by Volvo T1~as.uy :\D a.nJ htive nut bo::n tr.m .. -.f.:lt'd. The Auditnr's Rc:pcin has ~ n J)m-.:idOO by l>ckmu:. I
Volvo Treasury AB (publ) Corp. Reg. No. 556135-4449
Consolidated balance sheet
Note Dec. 31, 2019 Dec. 31, 2018
ASSETS
Non-current assets
lntaugible assets
Software development
Tangible ,1ssets
Equipme,11
Financial assets
10
I I
Rece i,,ahlcs from Gtoup companies (within the Volvo Uroup) 23.25
Other long term receivables 1J
Total flnancia I assets
Dcf'crl'cd Taxes 9
Total non-current assets
Cu rrcn t asset~
Current receivables
Receivables fro1".l Group cornpar1ies (wilhin the Volvo Group) 2,.is Tax assets. 9
Other current recei vahles 1 /\UKro-9.
1·1
Total current reccivublcs l,s a ("~
a: «•>> ~ Ma rkelublc sc<:uritics < 111 .... :J) I) ~ "' ~ :;
Cas h and cash cquirnlents 15
¾R 862
Total cuncn.t assets This is a true and accurate
translation of lh ginal document TOTAL ASSETS
5 (50)
0.0 0.0
1.4 0.5
66,435.8 70.191.3
1,073.2 1,450.5
67,509.0 71,641.8
22,6 16.l
67,533.1 71,658.4
I 09,431.0 89,768.5
(l.0 0.0
2,206.6 2,358.4
111,637.6 92,126.9
40,216.0 32,800.3
1S1.853.6 124,927.2
219,386.7 196,585.6
ITmnsl:1l-:ir', , (It~· Thi, r~poct is a ll'ltllslauoJl of 1.be SwOOisld,mguagt' oriE:,-inal, In 1hc: cvc:nt -0f auy d1fk 1tut;ts lxlw<~n Lhis tmnsl<.1-tmn and the Swe<li~h nrigin::il, lh~•lctMr -.hall pr,':'.•~il. The ml)les i1) d\i,; 11~11sl~11.ki11 h-avc b«:-u prm·idcd by Vnlvn l 'r,::a~\JC}' AB a11d b3\l't' not b«>n lltn:tlated. The Auditor'.-; Repun h;is bren pnwid:..-d hy Ddcune. J
Volvo Treasury AB (puhl) Corp . .Reg. No. 556135-4449
S£1ARF:HOLDF.RS' EQUITY AND LIABTLITIES
Sharehuhl•rs' e11uit)·
Share capital
Reserves
Recained eamings
Net income
Total shareholders' equity
Non- current liabilities
Bond loans
Otlier liabilities to credit institutions
Other non-c.urrentJiabilities
Liabilities 10 Gmup companie~ (witl1in the Volvo Group)
l'ro,isions for pensions and similar obligations
Total non-currc.nt liabilities
Current liabilities
Liabilities to credit insitutions
Li,1bi]i1ics LO Group companies (within the Vol vu Group)
Accounts payable - trade
Current tax. liah:li1.ics
Other cwTent liabilities
Other prnvis ions
Tomi current liabilities
TOTAL SHAREHOLOEL{S' EQUITY AND LlABLLlTIILS
i>-Ul<7'.
a
J\ote Dec. 31, 2019 0~-c. 31, 2018
500.0 500.0
221.5 179. 1
15,i25.8 15,596.0
138.2 24.0
16,585.5 16,299.1
18.23 .65,754.1 59,1 15.3
18.23 9,688.2 8,167.1
19 2 14.0 145.8
2J.25 0.0 0.0 17 61.3 52.'7
75,717.6 67,480.9
20 34,906.5 33,340.1
23.25 91,441.3 78,880.7
23 2.3 1.7
9 6.6 5.1
2t 726.8 577.9
l27,0R3.5 112,805.6
219,386.7 196,585.6
... ... a: :D
"i lli ~ ~
Thrs is a trte and accurate translation oi original document
~~ "' '7t,.,
• IVR 862
lCetli f1
6 (50)
John Ughtowler Authorized Transla!Qr
fTn.msfatur·~ Not.:: Ths teyurt j=, t1 llan:i.L1tio11 of tl1e Swt:di~, la11gu:.1ge.origiu:.1l. bl lht'. twc-nt of any diffo~n::c,', hcrwct:n thi,; tran~ll111(ln and 1t1c Swedish orig,inal. t.b~ fancr sl)all f)lt'W-til. The tabks in lhis: tmosl:'1tion lt.-ivc hcch piovid-.>d by Vo(\'OTn~il•i.ny AO and tui,1e Ml been lninsl11t,c<I The Au<lito(-s Rct>M hM ken provided by DcloiTT¢.J
Volvo Treasu11• AB (pu bl)
Changes in shareholders' equity, Group
Corp. Reg. No. 556135-4449
(t1·,mslatjon TotaJ
Retained shareholders' Kotc Shaft Ci'pit;al diflertnl·ts) earnings equily
Nd income for the year
Other comprehe11th•e incume
Translation differtnces
Remcasun.;mcnt of defined.benefit pen,-:ions
Torn/ compreltf!tt$/ve iflcome fur the year
Tram;ncti()n$ will, shareholders/related parties
Group contrihutions g;amecl and received
Tax e.ffecl of Group contributions gr-<.mtcd .and received
Totul tranS(t('iirms with shore!to/1/erslrelated parties
Jl9l:i11ce •• December 31, 2018
Nel income for lht year
Other l'll1ttprel1e1t•i~e iJlcome
Tr.msla.tion dilfrrcnccs
Remea$lll'etnieu1 of de lined-benefit pcru.ions
Tul(I/ comprelums!ve income for the year
Trt11tsoctio11s w/Jh slwrelwl1ferslrelate1J parties
(iroup comrihmlors t!'?lr'litd anJ n::celvOO
Ta.x ~ll¢ct 1.lJ" Gruu? contributions granted -and received
I Mal lrt11ticwtions w;J/1 sl111reliolders/re/oicd parties
ll•Jnucc at Dctcmber Jt, 2019
500.0 130.4
4?.8
17
.f 7.8
16
Q
,oo.o 179.1
42.'I
17
I I,
9
500,0 221.S
1S,S3l.5
24.0
-7.3
16.7
92.0
-20.2
71.8
l5,6.20. I
DS.2
• 12.2
126.0
150.0
-J.2.l
117.9
15.864.0
16,162.')
24.0
47.8
-7.3
M.5
92.0
-20.2
71.8
16,299.1
l382
42.4
-12.'2
168.4
150.0
-32.1
117. 9
16,585.5
This I; a troc and accurate translation of ori •inal document
7 (50)
John lightowler Autborized T ransJator
lTranstntor"sNote: Tit~ 1\'p\)rl i:. a Lrn:n::.lali1in of Uw Swrtfo.,h lunguagi: origir...il Jn lh-: even, -o.f aoy drff.:.-ttm:.ts bttwee1t lb1s lr~u)sl,1i.k,u anJ th..$wodi$.h original, th~ Jam:: sbail p1\!\>11il. Tht-t:iblei U1 Lb.is lltt0Sfo1ion lwve hl'eu pnwnlcd hy V.:)lw1 l'r.:::cisi11;• AH a1,d ha\'C 001 beef\ tra11Sfal11"d. Tho Au,litm'o; Rcpilrl h3s !;«on pmvtckd by Ddoinc.J ·
Volvo Treasury AB (puhl)
Consolidated cash-flow statement
ACTlVlTIES DURING THE YEAR
Interest received
Interest pai<l
Other financial .tra1isaetions
Income tax pa,d
Payments to suppliers and employees
Cash-tlow frl)m operating_ activities before changes in operating receivables.and lia.bilities
Increase ( • )/de;rcase ( +) in marketable securities
Increase (-)/de:rease (+) in c.urrent receivables
Increase (+)!decrease(-) in current liabilidcs
Increase (+)/decrease (-) in provisions
Increase (-)lde.;rease (+) in lending to"Group companies
Increase (+)!decrease(·) iu borrowing from Group companies
Increase (-)/decrease(+) in non-current rectJivablcs
Cash-flow from operating activities
Cash-Oow from investing activities
Group contributions received
Group. contributions granted
Issue or interest-bca1ing securities
Repayment ofinterest-beariog securities
.Note
4
5
10
15
22
26
?.6
19.21
Increase in other bonowing 19,21
Decrease in other borrowing 19.2 1
Cash-flow from financing acth•ities 30
"cash-flow du nng the year 16
Revaluation differences on cash and cash equivalents
Cash and cash eq u i valcnts. beginning of the year 16
C-a~h a ut1 l'.aslt cquh·alcnt~, cuJ t'1fyea1· 16
Corp. Reg. No. 556135-4449
2019 2018
1,8,21.0 2,945.3
-2,964.3 -2,.544.5
597.6 -59.4
-75.8 -424.1
-71.9 -40.1
1,306.6 -122.8
0.0 0.0
-1 , I 04.7 88.0
1.0 -l.9
0.0 0.0
-l 5,910.0 477.0
12,237.6 7,J89.5
-6.5 -0.8
.J,476.0 7,829.0
692.0 291.0
-600.0 -700.0
42.453.7 41,517.6
-29,22l.2 -]6,775.5
13,414.6 34_, 158.6
-16,04l.5 -35,967.8
10,697.6 2,523.9
7,218.6 10,352.9
197.0 0.3
32,800.4 22,447.0
40,216.0 32,800.4
This is a true and accurate transla1ion of th ginal document
8 (50) rrr.mslutor '~ Nvtc: Tlis rq,ort is a lr.11.1slution of tl1~ Swedish hu1i uage 6dtiti;il lu the O:\'~tl t f <iny Ji flt' ,~J>£'.:"''l"'P 1t1is trd.l\,;Jution .and the Sw~Jish ol'igi.i'ial. lhe latter shall prevail. The rabks jnlbis traosfa1Jon have been ()l'O\'idcd l>y :oivo Trc . 1ry A~l!HiJkllf:!StJtf-l~l~& lr.insklto:d. The Auditoc's Repon h,'.IS b-:co p1'0\'idod by O-.-:foit1c,J Authorize<l T~sl;,tor
Volvo Treasury AB (publ)
Income statement, Parent com paoy
Interest income
!merest expense
Finru1cial insln1ments at FVTPL
Net interest income
Other financial income and expenses
.Gross income
Other operating income
Administrative expenses
Other operating ex1)et1ses
Operatiog income
Allocations
Income before tax
Tax ou income for the yea,·
Net income
Other comprehensive income
Total comprel1ensiYe income for the year
9 (5Q)
Corp. Reg. No. 556135•4449
Note
4
5
3.23
(>.23
7.$
I/
2019
3,739.9
-3,041.4
-104.0
594.5
-381.2
213.3
133.2
• I 59.4
-24.5
162.6
150.0
312.6
-59.9
252.8
252.8
2018
2,872.7
-2,432.4
-I J 5.2
325.J
-266.1
59.0
130.8
-144.5
-28.6
16.7
92.0
108.7
-24.6
84.2
84 .2
This rs a lrue and acturate translation of origin.ii document
(Certifi-'<l'. ····••·····-· ··············••-t>••·······
John Ugf-ttowler ,',uthonred Translator
{Trnn~l111ur'.s S11te: Thi<: 1:cp:in ii. 11 tran!.l:'ltion oftlh.-- S•A1\\fisll l.wg,uag.it otig.l1hll In lh(" C\'~nl ohny tliffcn:n.::cs hct\.\oC'.Cll llli,s: ll~msl.uicm .;uni tll~ Swedish original. llle IJtter shall pre\·ail. The l:tbfc-s in this translation hl'\\'Obccl\ µ1 ovil1 ,::,J b~ Volrn Trea.-.u~· All and have not been m1mlatcd. TI1c At1diior's R<po1t Wt:::. bxn p1t1\•idc:d by Dduittt-.1
Volvo Treasury AB (puhl)
RaJance sheet, Pare1it company
ASSF.TS
lnt,ingible assets
Sofhvarc development
T angible asset,
P.qui11mcnl
Financial a$sets
Porticipa1ions in ;ubsidiaries
Receivables frotr. Group companies (within the Volvo Group)
Other non-current receivables
Total linancial l.lssets
Deferred ta•
Total uou-curre,u assets
Currct1 t assets
Current receivables
Other current receival:>les
Total current re-..--eivables
Mark~hlhle securitie.-s
Cash and cash equi,·alcnts
T otal current asset's This is ;i true and accurate
Corp. Rt.-g. No. 556135-4449
Note Dec. 31, 2019 Dec. 31,2018
JO
I I
12
13.25
1.1
2~.25
9·
14
I.S
0.0
0.4
224.6
65,932.8
1,072.4
67,229.8
6.1
(17,23(i.J
107,897.9
1.2
2, 165.5
I 10,064.5
40,182.1
150,H6.7
0.0
0.4
224.6
69,483.0
1,448.2
71,155.8
5.1
71,161.4
87,207.6
0.0 2,340.3
89,547.9
32,781.5
122-.329.4
translatio11 .()i r' · al document
TO-fAL ASSETS ·-John lightowfer Authnrized Tran.s lator
IO (50)
217,483.0 193,490.8
LTmm J:uor·s }\'o.te: Tll.S l'epotl i~ a lfim:.1alfon uf lh t> Swi:di.)(h kmg.uagt' ut1.,timd. In ll1c e•;cnt of any Lliff1.t1m::.es hetwce:n 1his 1ransl:nion ~nd th~ Swcd1,;fl orig inal. 1lsc llm:,r shall pa:vail The trjbl~ [n this tt'allSlaliou ha\·~ l>ot"il provldeJ. by Voh•u T1-ea.-.11ry AO ~nd lld\'enut born lrnn.~lnlcd. ' l'bc Au<litor' ll k~port hss ~x:n (l n,vi(lcrl l)y Dclo itt~-1
Volvo Treasury AB (publ)
SIIAREIIOLDtRS' EQUITY AND LIABILITIES
SJ1arebolders' equity
Res tricted equity
Share capital (5,000,000 Series A shares, quotient value SEK 100)
Legal resen<es
Total restrlctcd equity
Unrestricted equ ity
Retained eam.ing, brought forward
Ner income
Total unrestricted equity
Total s hareholders' equity
Nonacurr~nl liabiliti~
Flo11tl loans
01.hcr liabili1ics 1o, crooi1 instilvtions
OU,er non-current liabilitios
Liabililies to Group companies (within lhc V.olvo Grnup)
Provisions for pe:1sions
Total 11011-currcnt liabilities
Current liabilities
Liabiliries ro credit institutions
Liabilities ro GrO'.lp companies (within the Volvo Group)
Ac.coums payable ~ trade This is a true and accurate Tax liabilities translation of the ipi al document
Otl1er current liabiliries
Otl1er provisions
Total current liabilities John I ightowler
Authnnz,t1 . .d Tr"n~hnor
TOT AL SHAREHOLIH: RS' EQUITY ANO UARJUT IES
11 (50)
Corp. Reg. No. 556135-4449
Note Dec. 31, 2019 Dec. 31 , 2018
IS.23
IR.2.l
19
2.l.25
19
2(J
23..25
23
10
21
500.0
100.0
600.0
15,147.4
252.8
15,400.2
16,000.2
65,754.1
S,3R6.~
200.0
&53.2
0.0
75,194.1
34,475.8
91.098.4
2.0
712.6
126,288.8
217,-183.0
500.0
100.0
600.0
15,063.3
84.2
15,147.5
15,747.5
59, 11 5.3
7,5 16. 1
143.6
0.0
2.3
66,777.2
30,792.5
79,618.5
1.5
2.9
550.8
ll 0,966.J
193,490.8
rr,,mslator•:,; Nole: Tllh l't'port i~ a ll~Slation urth,e Swedish Jan1-~uuse nriiinal. fn lh,:; l\\'(:UI ('It' On),' cliffc1\'0Ce.s Uetwei:n thi.s lrJ!tSkU1~n am.lth~ Swedish origim1I, th<' lottct' shall i't'C••ail. 11ie tablt"S iu llliS lrJ.11:'J:ition J1a\'e bm> provided hy Vol\'o Trea~ury AH aixd h.1vc (101 bec11 WU)S1aled Tit~ Au<litor's XcJ>On: htls b:x-n t>N>vidOO by Ocloittc.J
Volvo Treasury AB (publ) Corp. Reg. No. 556135-4449
Chauges in shareholders' equity, Parent company
Balance at Oeceo11l>er :11, 2017
Nt.1 income f()r the year
Other compreh-eJ:Sfre income
Total cm11prehe11Jive inc(Jmefo.r the year
lfalance :ii December 31, 2018
~ et income for the year
Other cr,mpreltensive income
Tutu/ L'(Jt11prehe1nive incmue fnr the year
nalancc at December 3.1.2019
Shart c;1pit;1l Resen·e-s
500.0 100.0
500.0 100.0
500.0 100.0
This ls a true and acc~rate translation of I riginal document
John Lightowler Authorized Trarislatol
Total Rrtaioed sh:treholders· earning~ C(Juity
15.06l.3 15,663.3
84.2 ls4.2
84.2 84.2
15, 14'1.4 15,747.4
252.8 252.8
:B2.,9 2S2.8
15,400.2 16,000.2
12 (50) rr~1tsl<1tot':. Nmt':Th:. r~porl is a tnm:-.la11nn ( \f the Swc.-dJ!-.h ltmgung,c origm,11, In the ~1,,em oJ' .-iny tlifli!«m.:ts hetwecn th1:, oan.slaticin and 1he Sw~disb origiuaJ. 1ht. fal~J·slwll pl~v.'lil. Ttt~ 1:tbles i.n lltii. tmn.,;luliun hJH! been pr0\'ld1..'fl by Volvo T1c.H111~ AB tulll ha\'e m11 Dl.'Cn tran:-latcd, fho .Au<lito,·s Rcpon has Lwo provided by Ot'loin\".]
Volvo Treasury AB (publ)
Cash-flow statement, Parent company
ACTTVTTTES DURJNG THE YJ);,-\R
ln(crcst received
Interest paid
Income tax paid
Payments to suppliers and employees
Other financia: Lransactions Cash-llow from operating activities before changes in operating ,·eceivables and Jiabilii-ies
4
5
10
l.ncrcasc (-)/decrease(+) in current receivahles 14
IJ1crease (+)/decrease(-) in cwnml liabi lities 21
Increase (-)/decn:,asc (-'-) in lending to Group• companies 25
Increase (+)/decrease(-) in.borrowing from ~roup companies 25
Increase(· )/decrease ( +) in non-current recei~ables
Cash-flow from operating activities p.UKT
Cash-fl ow from investing activil'ies • ~ (fJ i
; l)J - {\\ ;
Group contri bi:lions received
Group con1ribnioos granted NR862
Issue of interest-bearing securities 18. 20
Repayment of interest-bearings' , .. ' · This is a 1rue ,ind accurate
Increase in other borrowing transl.itio11 of -- riginal docu~e1iq Decrease in other horrowi11g ..-:::t:.-7'~---- 1s, 20
John Lightowler Cash-llow from financing ad ,:.:'i.:.:ti"'c.:;.s_....;.A;.:;u.:;th.:;or;;:l•:::"";..:;lr;;:•"'='•:::to::.r_~2,:.6~-1
Cash-Oow during the year
Revaluation di llerences on cash and cash e-quivalents
Cash and cash equivalenls, beginning of the year
Cash and cash equivalents, December 31
13 (50)
15
15
15
Corp. Reg. No. 556135-4449
2019 2018
3,586.5 2,832.3
-2,779.5 -2,473.3
-61.7 - 19.2
-50.6 -42.4
608.0 -539.2
1,302.8 -241.8
-1, 106.3 86.4
0.6 -1.0
-17,335.0 563.9
I 1,994.6 6,206.0
-3.2 -0.8
-"i, 146.5 6,612.6
692.0 291.0
-600.0 -700.0
42,453.7 41 ,517.6
-29.221.2 -36,775.5
I 3,435.6 32.863.7
-14,406.6 -33,464.7
12,353.4 3,732.2
7,203.8 10,344.8
196.8 o.o 32,781.5 22,436.7
40.182.2 32,781.5
rrr.m.'illllur's ~ut::: l'h1s .rcpon 1-;. 1;1 trnnslati('IO of 1ho Sw,>.1ish langu~gc otigiuaL Lu the ,:vent ol' any chffon:ncc:s l.x.'1W~n 1hjs uallslafo,,u a.nJ 01,: Swedi~h o,·igiu.sl. lht' b llt.'n haU pn-:w.1il. The l:th!~ in lhi~ translminn h.1vc bc.::n pro\'idcd by Votvo'Tre'<1S·Jf)' AB·und hnvi.!n(I\ b..-;cn m nsl:ucd. The: Auditor's Rt-po1i ha~ b~ n rmvi<l.,..J by Dduille.1
Volvo Treasury AB (publ) Corp. Reg. No. 556135-4449
Notes - Group and Parent Companr
Note l Accounting and valuation policies The consolidated itnancial su1tements for Volvo Treasury AB and its subsidiaries ("Volvo Treasury Group") have been prepared in accordance with the International financial Reporting Standards (TFRS) issu.ed by the lntcmational Accounting Standards Board (!ASB), as adopted by the EU. This mlllual repott is prepared in accordance with !AS !, Presen1a1ion of Financial Statements, and in accordance with the Swedish Annual Accounts Act (1995:1554). The income statement has been adapted to pn:vide a relevant presentation or Lhe results of the operations. In addition, RFR 1 Supplementa,y Rules fhr Groups, issued by the Swedish Finaneia; Reporting Board, has been applied.
To the extent deemed appropriate, Volvo Treasury AB describes its account111g policies in Note !. 1n some cases, the accounting pol ic,ies are described in C()nnection with certain notes to provide increased understanding of the respective accounting areas.
Consolidated financial statements The consolidated financial statements comprise the Parent Company and subsidiaries in which Volvo Treasur; AB has a controlJing influence. The consolidated fi:ianeial statements have been prepare<] in accOJdancc v.rith the policies set forth in l11RS l 0, Consolidwed Financial Srate.menrs. Intra-Group transactions are eliminated.
li·anslalion lo 3-,,v~dish kronor, when con.rolidt1/ing companies usingfo,·eign currencie.,· The· functional currency of each Group eompany is determined based on ll1e primary economic environment in which the company operates. The primary economic em>ironment is normally the one in which the co111pa11y pri1muily generates and expend~ cash and· cash equivalents. Volvo Treasury's fundional cutTency is Swedish kronor. fn most cases, the functional currency is the CLmency of th~ country wJ1erc the company is located. In preparing the co11soliclate1.l fimmcial statements, all items in the income statements of foreign subsidiaries are transl&ted to Swedish kronor at average exchange rates. All assets ,u1d liabilities item$ in th~ balance sheet are translated at exchange rates at the respective year ends (closing-day ·rates). Th:e changes in consolidated sharel1olders' equity arising as a result of year-on-year variations between closing-day exchange rates a.re recogt:izcd in Other comprehensivtl income and cumulative differences in provisions Ulldcr Shareholders' equity.
Receivables and liabilities in foreign currency Receivables and liabilities in currencies other than the functional currency are translated to the functional currency at the ck>sing-day exchange rates, bo1l1 in the individual Group company and in the Group's fo1ancial Statements. Translation difference~ peitaioing to financial assets and liabilities are classiJie<l to Profit/loss from other financial transactions ..
Financial instnnnents used to hedge currency and interest-rate risk are marked lo markeL Forei6'11
exchange gains are recognized as receivables and losses are recognized as liabilities. Depending on the maturity of tl1e financial instrument, these items are recognized as current or non-current in the bala WR!r, e impac.t on earnings on remeasurement is r · ial
This ls a true and accurate translaticn of th ri inal document
Volvo Treasury AR (pub)) Corp. Reg. No. 556.1.35-4449
The exchange rates used in tht; coos<Jlidated financial statements arc as follows:
Average rate A vcrage rate A, pe.r Dec. :u As per Dec. 31
Country Currency 2019 2018 2019 2018
Singi,pore 1 SGD 6.93269 6.44390 6.90430 656050 Australia LAUU 6.)7244 ().49:>i~ 6.S I :!50 6.32450
Vuluati.on, depreciation, amortization and impairment' of intangible un<l tangible fixed assets Volvo Treasmy Group recognize.~ intangihle and t:ungible fixed asset; a\ cost less depreciation and amortization. Depreciation and amortization is based on the historical ;;{ .&1lithf7ilSSets, udj~ted in appropriate cases by impairment and estimated uscfol livc.~. ...,"-'() & ''<'-',.,
Depreciation periods Software develup111ent Equipment
5 yem-s 5 years
j'' {(OJ) ·~:;~ fl ~ ...,..,.~ .. ~ \,,,1 1'
'lb- ..._ _ _... 0 y
F. . 1 · • N .. ~ m:mcrn ms trumcnts A e62 Volvo Treasury Group applies the accounting policies contai11ed in IFRS , lFRS 9. and !AS 32, Financiol lnstrumems. as well as IFRS 13, Fair Value Measurement. Depending on the maturity of the financial instnrmcnl, these items are recognized as current or nor.-cmrcnt in Ll1e balance sheet. Gains and losses on financial instruments are recognized in profit-and loss.
Purchases and sales of financial assets and liabilities are recognized on the settlement date, arid subsequent re-valuation between the c-011trnc1 date and tl1e scttlemcm date is recognized in profit and loss. Transaction <-'<J~l~ are included in the carrying amounts of assets except where the value changes are recogni;r,ed in profit and loss. Transaction costs in connection with borrowing arc amortized.over the period of the loan as a financial expense LLSing the effective-interest-rate method.
A financial asset is derccognize<l from the balance sheet when all ,ignificar1t risks and benefits linked to the asset have been transferred to an external party. Financial liabilities are derecognized from the balance sheet when the obligation has been met, annlllled or extinguished,
Fair values arc established for assets basecl on quoted market prices where these are available. If market prices are not available, fair values are established for individual assets using different valuation techniques.
financial instruments are classified based on the extent to which market data ha~ been used io the calculation of fair value. All of Volvo Treasury's financial instruments lhat are measured at fair value through profit and loss (FVTPL) arc classified as held for tradii:g in accordance with level 2. The valuation of level 2 instnrrnents is based on market conditions ming observable market prices for cxehru1ge rates and interest rates av,1ilable in the active market at each balance-sheet date. Observable market prices are primarily derived from official capital market quoted rates or prices. The basis for the interest is the zero-coupon-curve in eacl, c~•mmcy, from which the present value of estimated future cash tlows is calculated. Cun·ency forwards me the forward rate for each currency's spoi price and future date at the balance-sheet date. Based on Lhe a J licable forward rates, a presem-value calculation is then made on the balance-sheet dat~. this Is n true and accurare
(::~~' .. ~.::::;,., J 5 ( 50) Jah11 L,ghtowler
[T,~m ... Jator•~ Nole: Thi;. rt'porl i~ a lr,m~l.ntmn l\f 1hc ~wctfo:h f~mi uagc <.lri$10,1I, h) 1h~ cvrn1 <•r aoy diHitn·n t'!!• betwo::n thi:A\Uk~l!'Hf~~omitor Swedish (lfiginal. 1lw. laut 1 s b:.lll J)l'l:'\•.lil. The: l.iblt:.,; in this lr.ms1ull0n have bt'cn pmv1dod b)' V('l!V(I l'rcas•r)' AB and b;-1v\' uOt bt:cn tr.m;-;latl'(. 1c Audiror·s Rc1xi11 bas l>x-n pJo~ided by ~ 1\>ill~.]
Volvo Treasury AB (puhl) Corp. Reg. No. 556.135-4449
Financial assets and liahilities measured at F1,TPL Volvo Treasury Group's financial instruments that are held for trading are measured at FVTPL. These instrnmcnts cornprise derivative instrnments used lo hedge inte:est rates and currencies.
Realized and unrealized interest-rate gains/losses pertaining to derivatives used lo hedge interestl1earing asset-S and investments, and \tnrea)ize,l interest-rate gains/lesses pertaining to derivatives held to hedge financial assels and fobilities are recognized in Net interest income,
Financial instruments used to hedge currency risk in contracted commercial cash flows are recognized in Gross profi t.
Volvo Treasury AB has decided not to apply hedge accounting for these financial instruments, and gains or losses on these are recognized i11 profit and loss.
Financial asse,:5 measured at amorrized cost Receivables to Group companies and other financial receivables- are held as part of a business model that aims lo gather cootnwtual cash flows. TI1c contractual cash flows solely comprise payment~ or principal and interest, and arc measured at amortized cost pursuant to the effectiveinlerest-rnte method. Gains and losses ate recognized in profit and loss when Lhe lo,111:; or receivables arc divested or impaired, as well as ia pace with the recognition of accrued interest.
Financial liahililies measured fl/ amol'lized cos1 Proceeds from borrowings arc measured at amortized cost pursuant to the effective-interest-rate method. Transaction costs in connection with raising financial Liahihhes are .imortized over the loan's duration as a financial expense using the effective-interest-rate method. Issued hybrid bor1ds are eategmized ~ liabilities in the accounts since they entail ~ contrac;tual obligation to make interest payments and to repay the nominal debt to the holder. for more infonnation. see Kote 23, Financial instruments.
Leases Leases wh·ere Volvo Trcasmy Group is the lessee are recognized pursuant to TFRS 16 Leases, which entails !:lat furncc lea.se payments pertaining primarily to rented premises and company cars are recognized as right-of:use assets under equipment and as inleresl-bearing liabilities tmdcr other liabilities. Under RFR 2, the provisions contained in !FRS 16 do net need to be applied in legal entities (Parent Company). The Parent Company recognizes all leases where the P<1rent Company is the lessee as operating. leases, which means that lease payments are recognized in profit and loss as administration costs in tl1e period in which they arise.
Pensions and similar obligations Volvo Trcasmy Group applies IAS 19 Employee Benef/1.1, for pensioJs and similar obligations. In accordance with fAS 19, actum-ial calculations must be made for all defined-benefit plans in order LO detem1ine the present value. of Volv0 Treasury Group's commitments pertaining to unvested benefits for current and fonner employees. The actuarial calculations are prepared annually and arc based on actuarial assumptions that m·e detennined at the balance-sheet date. Changes in the present value of commitmems due to ,· acmarial assumptions and experience-based assumphons comprise remeasuremer1ts. \Y~"I 1'UKro~,~
__,t,; ' <",s, This fs a true and accurate ff ab) 1, translation of rhe ri inal document
~ ~ ,E {S()) lu,rt,ti. r rrnn~l;uor's ;-.°ON' Tltls l~pOfl is .:i ll' ~ iM/ f ·. u· ~< 'gm:il, In th..: CVi.'fll ';lny di r;i . • , icJ'ffi'd""" Swtxlish urigin:il, lhc faq.;rst.mll pn,;\<, ·~\.ct, . · ii ..tl'Dj@i:· e been r,mndt'(i hy :ol\•Q Tf , .. . ·,, , _ ~l,~f,~ tnm,;hucd. n,c Auu.itor's Re;,urt hi.s b-:icn pm,;1rl.-d Cly ~.~ c. -b. · A,
1 , '1t., O y ._ ___ .......; __ ,_, __ .11 __ ,:•r ___ _,J
• ------ -6 NR 862 •
Volvo Treasury AB (publ) Corp. Reg. No. 556135,4449
Provisions for pensions and s imilar obligations in Volvo Treasury Group's balance sheet correspond to the present value of the conunitments at the balance•sheet date, less the fair value of plan assets . According to !AS J 9, the discount rate of interest is applied in calculating the net interest income/expense on the net pension liability (lhe asset). All changes in the net pension liability .(the asset) are recognized as they occur; service costs and net interest expense (income) are recognized in profit and loss, while remeasurements, such as actuarial gains and losses are recognized in Other comprehensive income. The special employers' -~ontribution is included in the pension liability and pertains to the Swedish plan.
For defined-contribution plans, premiwns are expensed as incurred.
Cnder RFR 2, the provisions contained in !AS 19 that apply to definel-benefil pension plans do not tieed to be applied in legal entities (Parent Company). lloweve1, disclosures must be made regarding the relevant parts of LA.S I 9. RFR 2 refers to the provisions in the Swedish Pension Obligations Ve$ting Act regarding provisions to pensions and similar obligations, and to the recogn ition of plan assets in pension foundations.
Share•based payments Volvo Trea.~UJ)' Group applies TFRS 2, Share-based Payme11t.for shcwe-based incentive programs. The principle distiJ1guishes bet.ween "cash-set.tied" and "equ1ty-set1led" remuneration, in Volvo Treasury Group's case, shares in A13 Volvo. Volvo Treasury AB's President and two senior cxcc.L1tivcs of Volvo Trc.asury Group arc included in the Volvo Group's incentive program, which compr1ses both cash- and equity-settled remuneration.
l.lased on the fair value ·oftbe benefit at the allocation date., the cost ot this program is recognized m accordance with lfRS 2 over the vesting period and i~ expensed in profit and loss-. TI1e market value of this compensation is determined by taking tl1e share price at :he allocation date of the right and reducing this with the present value of expeuted dividends for tJ·.e period until the issuance of the slu1res. AB Volvo will iilVoice for the cost of the issued shares when the shares are issued.
long-term share-based incentive program 2014 2015. The 2014 Annual General Meeting resolved on a long-tenn, share-based incentive program for a maximum of 300 individuals on the Group Executive Board and. senior executives at the Volvo Group for the years 2014-2016. ln 2016, the Board decided to replace this program from and including 20 16, which resulted in this program ending one year early. The program was concluded in 2019 and the remaining share$ allocated under the pro6rmm were issued to the participants.
Lonf!. term incc-mive (LT!) proP,ram(,-0111 20 J 6. rn 2016, the Board decided lo introduce an L Tl program for the Vdvo Gn1up's 300 most senior executives, including the Group Ex.ecutive Board. This program will replace the previous Jong-tcnn share-based in~entive program from 2014 and is reported in accordance witl1 lAS 19 Ji,mployee Bene.fits. For further infonnation regarding the Volvo Group·s incenlive programs, please refer to the Volvo Group'·s Annual Report, Note 27 Employees. The cost of the incentive programs is recognized in pro tit <Ul(l loss as Adrn.inistrntion costs. Sec also Note 7 Employees.
The company also pays a benefit to all employees, a jubilee aw,u·ds plan, whereby employees are allocated a ce11ain number of shares based on tl1e• empl This plan is recognized in accordance with lfRS 2.
17 (50 l rr~nsta1nr'5 :,..ore· f'his rcpon it1," cr.m,,huinn ,,f 1hc ~,\·edish. l,1ng11-1.gc ongirud. , Swe¢fo.;h 01igirul, t.he l.Jlkrshutl prc:,,:.iil. The t.tbl.:s in this Lrun:.l.iti\)n huvl:' hc:c:n · AuJitur'ii Rep1.11t 11:i:. t•tt'n p1t•vided by D::loiuc:. )
'1862 •
accuratl? nal document
'fie . . . . ......... ~ ...... , ............................. . .. n 1 • 1rnnsta.tio1l and the hnve nnt ~ itmil«d~! m:olt-_~r
Authuri;,.=. 1' T1J1i!,Jntnr
Volvo Treasury AD (1>ubl) 49 :r
"Ott,. J;f (Ce~iric:· ,. '" "'' ...................... ..
Croup contributions -11,, • NR 862
• 'C-o" J, \ •: 001.rmvk•r Coder ce1iain ~ircumstances, profits 1 transferred i ,,u·~uJ:i~ · tween companies within the same group. Group contributions paid are normally a tax-clcdi1ctiblc cost for lhe giver and ,axable income for the receiver. Group contributions-are recognized in the Group in shareholders· equjty as a transaction with the owner in accordance with IA~ I, item IU<.J. Uroup contributions are recognized in the Parent Company in pro-fit and loss as an appropriation in accordance wi:h the alternative rule in RFR 2.
Income taxes Tax on income for the year C<)tnprises current and deterred tax. Tax~s ure recognized i11 profit and loss, except when the tax re!utes to items recognized in Other comprehensive income ot directly in Shareholders' equity, ln sucl1 -cases, the tax is also recognized in Other comprehensive income and Shareholders' ~quity.
Tax Jegislatiou in Sweden and other countries sometimes has mlcs other than those identified in generally accepted accounting policies, with respect to the liming of taxation and measurement of certain commercial transactions. Deterred taxes are recognized for the differences that arise between the taxable values and the carrying amounts of assets and liabi lities, .<;o-called temporary differences, as ,.veil as on tax loss carryforwards. \Vitb regard to the measuring of deferred tax. assets, that is, the value of future tax reductions, these items are recognized provided that it is probable that the amounts can be utilii.ed against future taxable surpluses.
Cash-flow s tatement The cash-flow sraremcnr is prepared in accordance with 1/\S 7 S tatemem .ofCctr/1 Flows, applying the direct method, showing rccogni,:ed changes in operating receivables and liabilities d11ring the period. The cash-0ow statement~ of foreign Group companies are translated at lhe average exchange rale and are included under the item Exchange rate differences in cash and cash equivalents, Cash and cash equivalents comprise cash and bank balances.
Segment reporting Volvo Treasur,r Gr()up comprbes a number of organiZ11tional units, with all units reporting to and being coordinated by Volvo Group Treasury' s head office, located at VoJv() Treasury AB (pub!) in Sweden. The company raises most of the Volvo Group's external tinancing for central finruicing pmposcs in the Group. Volvo Trea.~ury Asia Ltd in Singapore is the fimu1cing source ill the reginnaf market and treasury fi.tnction for the Group companies in Asia. The same applies to Volvo Treasury Australia Pty ltd, which has as its principal business serving as a financing source and treasury for the Group companies in Australia. The subsidiaries' operations do not differ from those of Volvo Treasury AB a11d in this sense, they are an exiension of the Parent Company in the regional markets. All V,ilvo Treasury activities in all units are controlled and coordinated by, and reported to and followed tp by the head office at Volvo Treasury AB (pub]) in '>weden, which is why Volvo Treasury Grom's operations are conducted in one segment and accordingly, no reporting is made by segment in accordance with rFRS 8 Operaling segmcmts.
Parent Company 111c Parc11t Cumpany applies the Swcdhh Annual Accounts Act (I 995: 1554) and RFR 2. Accounting fin· legal en1ilil!s. This recommendation entails that as a rnle, legal eotities whose securities are listed on rui authol'izcd marketplace should apply the IFRS/1 ASs that ru·c applied in
18 (50) rrr.mslauir·~ Nnlc: J h~ r~pnrt 1S a transl.irlon of the Swccllsh taogtiasc ongfoal lil lhC" ('Vl.filt of auy Jillit.t'.'ftl.:C:1> betwL-cn 1hl~ lmnslauon Mel ffiC Sw.:Jillh original. lhe IJtter shuU prcV'Jil. 'I he mhlcs rn thi11 1rar.slaLion luvc hc<-n pr,"lvidccl by Volvo T t~Sllry AB an<l h:J\:1: i,ut bten llmt\il:ncd l'h~ ,\ udit,.n··i> Rell",1. h.i:> b:t"11 pi:m•itl~J by Odpiue.1
Volvo Treasury AB (puhl) C1►rp. Reg. No. 556135-4449
the consolidated financial statements. Tn ce1iain cuses, the regulations allow exceptions to be made from the IFRS/IAS ,-egulations. For more information regarding any exceptio,ni.---+hM.J ave been a11plied, see also the sectio11s Leases, Group contributions, and Pensions and · d · A
New accounting policies in 2019 it :>, o.:Y~i \ When preparing the co~solidated financial _statements at Dcccmhcr 31, ~ . . 1 -· J w stai\dards and mterpretal:lons have been applted: ~ 'V\. t
.,.. (.J J:' -11,, 'y
IFRS 16 Leases * NA • -o0
From and including Janllary 1, 2019, Volvo Treasury Group applie~·TFRS 16 Le. 8 . 16 does
not imply any significant accounting changes for the lessor, but does entail accounting changes for the lessee. For Volvo Treasury Group, this means that the future lease payments for rented premises and company -:al'S arc -recognized in the balance sheet. The balance sheet recognizes the lessee's rights to use assets and its obligation to pay for these rights over a con-esponding period. The rightof~use for the asset and the obligation fo pay will he recognized at the present value of future lease payments.
By applying tl1e new lease aec-0unting for lessees, assets '<n1d interest-bearing liabi lities in the balance sheet have increased and part or the lease payments are recognized as interest expense instead of as administration costs.
Note 2 Key sources of estimation uncertainty ln conjunction with the preparation of these financial statements, made certain estimates and assumptions that affect tl1e carrying a1·b ~ ;.;s;.· o,;:·;:;.as~-s~e,:ts~· -=ru~1n1i::a2ibili'-:itirie:::s:-,-:a::s~ well as contingent liabi.lities at the balance-sheet date, and recognized income and expenses. The company management has made these estimates and assumptio11s using their best judgement after Wkiog into account their relevance and materiality. Since future results arc currently uncertain, these assessmc!lts may result i1t a difl'erencebetween the actual outcome and these estimates . .In accordance with IAS 1, the company must provide separate infonrnttion about which of the accounting polic-ies that may be significantly impacted hy the estimates and assumptions made and which, if actual results differ from said estimates, may have a material impact on the financial statements. The accounting policies applied by Volvo Treasury Group that are de-emed to meet these criteria pertain to the measurement of financial instrumen\li at fair value and to the assumptions on which this measurement is based. Refer to the section on financial instruments under Note l Accounting and valuation policies. Tn the same ,way that pensions and the actuaifal assumptions made to calculale the pension obligation arc reviewed each year ai1d adjustments made to these when it is deemed appropriate, sec more under Note I Accounting and valuation policies. (Translatoi"'s note: As per Swedish source text).
Note· 3 Financ.ial risks Volvo Treasuty (jroup is included in the Group Junction, Volvc Group Treasury, which is responsible for die Volvo Group's borrowing and OJJerational financial risk management, inclltdii1g external baukir.g relations. Volvo Group T[easury is also responsible for ensuring and developing
19 (50) lTrallsli\1or's :'{01e:: Tlii; ttpOJt i!i u translali,;>n oFthe SweJ1sh 1.an~•tmge rniiun:11, lo the C\•,rnl o fon}' <liffeit:nce.s hclwcen thHi tr;m~l.'lrii'ln :il)d tbc Swe<li"h ongin:11, 1hc t:m~r shaU 1m•·vail The tabl~s iu lhis u.111;:.latiu11 have- bccri pnw1dcd hy Volvo Trcas11Jy AB :.ml ha\'t' nol bei:n u.mi.laLcd. l he Audirnr's l{epnn hmrbx n llrovi,;fcd by Oclninc.J
Volvo Treasury All (publ) Corp. Reg. l'io. 556135-4449
an efficient financial infrasfructure for the Volvo Gr011p's operaticms. Most of the Volvo Group's fmancial transactions arc conducted through Volvo Treasury Group. These operations are carried otJt in order to reduce the currency, interest-rate, credit and liquidity risks to which the Volvo Group is exposed.
Volvo 1foasury Group is exposed, throi1gh its operations, lo various finai10ial risks. The following section describes the implication of different financial risks and the goals and policies involved in managing these ri sks.
Currency risk The balance sheet may he impacted by lluct~1ations in various exchange rates. C.,'urrcncy risks in Volvo Treasuty Group 's operations are related to changes in the value of loans and inve,~tments (financial currency exposure) and chailgcs in the value of assets and liabilities it1 foreign subsidiaries (currency exposure of shareholders' equity). The goal for Volvo Treasury Group's e.~change-rate-risk management is to secuce contracted flows through cun-ency hedging in ac;;ordance wi;,h the established policy for financial risks and to minimize exposure for financial items in the ba:ance s_hect.
Fincmcia/ cwnncy exposure Investments and borrowing occur mainly in SEK, EUR, LJSD and JPY. Lending to the Volvo Group's subsidiaries were made primari ly in local cunency. Usir,g derivatives such as crosscun-ency inlerest swaps aod currency swaps enables Volvo Treasmy Group to meet !he horroWiTlg aud lending requirements of Group companies in different currencies, without increasing the Volvo Group 's own risk.
Cammerciul Clirrency expo.wre Tn accordance with the Volvo Group's Financial risk policy, Volvo TrcasL1ry us~ currency derivatives to minimize the risk of cuJTency effects on the Volvo GroLµ ' s earnings. For commercial ·curreucy exposure in the Volvo Group, Volvo Treasury Group has a mandate to enter cunency derivatives with ex!emal coun!etparties on bel,alf l>f the Volvo Group without entering corre<;ponding -.:onLracts with Group companies (within the Volvo Group).
The Volvo Group's consolidated transaction exposmc in foreign currency is tJie value of the forecast future cash flows in foreign currency. Volvo Treasury Group only hedges that pa1i of forecast future cash llnws i.n lbreign currency that with the greatest probability will be real ized in so-caUed co11trncted flows, of which the largest po1iion within six months. Volvo Treasury Group uses forward contracts and currency options to hedge contrac:le-d 1i.1ture cash flows in foreign currencies. The hedged portion of contracLed li.1ture cash flows is contained withi:n the framework of the Volvo Group's i1nancial 1isk policy for all periods.
The table below shows tbc impacr on Volvo TreaSUI)' Group's gross earnings if the Swedish krona strengthens by I 0% oompared wi lh other crnTencies from the cun-ency level at December 31 , 2019.
"~ AUK ro e. ~-'" ''"· ~\:, ').,(,
;y a -·;-, 2 «t)) ~
l~~J:i -11,- 0..,,
• .___ ~--- 'O Np 862 • 20 (50)
This is a true and accura1e translation ur ti · ,;nu! document
John Llghtowlcr Authnrizecilr.1mliltor
lTrati~faror's i\'otc' ,.. n is a trnt~iauon o[lh.c Swodisll klngu::ige 01lgil)al. In the tv1:.ul of auyJlfft:-1'l!ri...:es bi:t\';'ren lhii.: tm11sliition 30d the Swcdl'ih ongirutl, 1.tu~ lart;r,;hall prevt1il. '!ht' mhfr:s m thi$ 1rnn!'>lmion hav(: ~~fl pfovidcd by VoJvo Treas1uy AB ;md h,1ve.m1t Ix-en rt"1tn:datccL l he Aud,u,r':-. Repon hasb~n rmwid:xl hy Od,,iw:. I
Volvo Treasury AB (publ) CtJrp. Reg. No. 556135-4449
~ote 3.1 Outstanding derivatives hedging commercial currency risk.~ ar December 31, 201 9
Ouc datc-202-0
f'. l !fVl;sn GRP/SF.K t:SD/8RL USOlKRW lJSO/Si':K ) 'lt1rkc1 ,·alut -24.4 J07.4 I J.-4 156.0 22S.4
2021 ......... - ............ ·-····-···-············-·-···--·--····· ·····--····· u.o ··········--· o.o ········--·-°·" .............. o.~ ····- .••••.. ciJt,_, ....... - ···-·
Al'tl'laj!;('-C(lnrrnct 1·att.
\ ·brktt \'l' lut in Sf.:h: of 0111siaudii1g forward
contr:td~
Currtncy if strcnitb,:ncd h~· IO%
The: impact 0 1, gro.11:·0$ l1Jf<nne in SEK jf h1:tlgt
-24.4 107.4
I.I 12.2
.J.2
1.3 13,5
13,-i l !'-6,0 228.4
J.8 1,171.4'
-i.5 305 .f6.5 71.1
4.2 1288.(, f0.4
currcnry stn:n2thtncd by 10"1.,-A 2.8 - 131.:1 -5.1 -J41U -21(1.? -4WJ.5
* Sen:::ilivity analy~:- for c-urr..-:m:y risks ~1r-c bas.:d on .simplific<l assumptie>ns. 1£ is not unMsonahle I() a~$ume 1Jim a currency wiH appreciate by I 0% in relation lO other currencie:::. fo reality, howevel'. es change r<11.e~ do not oonnally changt; atthc same date-and in che ~nme direc1.ion, a1ld the n:al tfiCCc cim dcviute;: frum th.: sensitivity analysis. The sensitivity anal:r·siii penainii L<> the change in lh~ marla:t vuluc that is calcu1atcd based oo the nominal value.
Curn!llcy e.xp<!sure ofshareholders 'equity The consolidated value of assets and liabilities in foreign sub~idiari~s is i-nlluenced by exchange rates in co1tjunetion with translation into Swedish kronor. Net assets u1 forei •u- ~bsidiarics amounted to ~EK 859 M at year-end 2019. Net assets in foreign subsidi · • -1\4\eilt:T1105. l!cdged through loans in foreign currencies, in line with the policy established by t ~ vo 2"ou 's .Bi,urd ofDirect<,>rs. ~ {tfJ) i.~
interest-rate risk ; /JI t'\\ :-; ~~ " lulercsl-rale risk refers w the risk that changes in interest rates will infl~ ~ · V~ if{ p's consolidated eu.rnings and cash flow (cash-flow risk) or the fair value l : ftl · and liabi lities (price risk). Lending to the Volvo Group's customer finance operations involves a rnnge of matm·ities and interest-fixing tcnns. This lending is fi nanced lhrough shOLt- and long-tcnn borrowing via the. capital markets al lloating and fixed interest rntes. Within the framework of established limits, financing must match lending in terms of maturities. Interest-fixing l.enns between borrowing and lending are matched through the use of such derivative instruments as interest-rate swaps, currency interest-rate swaps, forward contracts and standardized interest-rate forward contracts. Financial assets and liabilities related to the Volvo Group's customer finance operations are matched so a, to minimize the exposure to cash-flow risk and price risk.
Bon·owing and lending from and lo the im,luRtrial operations of the Volvo ·Group primarily take place through Group accounts in varitn1s cunencies. Volvo Treasury Group administrates Lhe Volvo Group accou11ts, which means that surpluses and deficits with respect to external banks are offset tlu-ough short-term currency trarisactions and that any .excess liquidity is invested in sliort-tenn money markets.
Fimmcing for the Volvo Group's industrial operations involves a fixed a.swell as a floating interest rate. Short- and long-tem1 borrowing is carried oul via the capital rn1rkcts and through bilateral loans. The LL~e of such derivative instruments as interest swaps and currency interest swaps creates an i11terest-tixiug term corresponding to between one to three months. Atier taking derivatives u1to account, the average effective interest rate at ycaT end on ·f1~·mll:let.m\'-ei:$!tl£fEl.i,ag-~,H~>-l.~"'1
T is 1; a I rue .101 accurate Group's industrial operali<)n~ was 4 .2"3%.
21 (50) ,ee r,'runsl;_1tor's :S-t,tc:.; Tlri..1'!:rx1rI is n tran'ilaurm nf Ih~ Swedish l,:mgu.1gc nriginal, In the c,,•euto a11y~11!,1:en::.n-«_,.ll hci\\t:C'n thii. 'tnti1slut,(;o·u~(fi1lC ....... SwcJish. (~rigin:,J. 1.ht- lau~r slull pre-.·ail. Th~ iabl..-s in <hi'> lJansla1i,,n have heen. pr<widct'I by ~,lv<i T re~lSII()' .. ~ . .ull.l tta"~ 11Q! •lt~:111~1.ated. Thl~ Audirol"s R<.'pon lltts ooetl p10.viJed by Ddoiuc.1 \ ,· . ., ; :1mlatnr ______ __,
Volvo Treasury A8 (publ) Corp. Reg. No. 556135-4449
Surplus liquidity within the Volvo Group is managed by Volvo Treasury Group. This management mainly involves deposits in bank accounts.
Al the end of 2019, the Volvo Treasury Group's interest-bearing assets comprised lending to Group compmries and cash and cash equivalents. The -average effective interest rate on these liquid assets, taking into account derivative instn1mcnts, was 0.02% as of December 31 , 2019,
Interest risk
Lt should be noted that the above assessment of profit sensitivity with regard to changes in market interes( rates ignores the possible impact of shorHem1 earnings effects arising when all derivatives are mm-Iced to market in profit and loss. Volvo Treasmy Group's accounting policies for derivatives are described in Note I.
The carrying amounts in U1e balance sheel fair valves and other specifications pertauung to derivative instruments use<l for managing currency and interest-rate risks related to frnanciaJ assets mid liabilities ,ire shown i.n Note 23.
Credit risk.~ Credil rish are defined as the ri~k that Volvo Treasu1y does not receive payments for recognized loans (comme:cial credit risk), that Volvo Treasury's investment, arc unable to be realized (frnancial credit risk) and that potential profit is not realized due Lo the counlerparty nol fulfilling its part of the contract when using derivatives (linam;ial 1:ounterpmty risk).
Volvo Treasury GrouP. has no financial assets that were due for paymcnt or impaired at year end,
Financial credit risk The Volvo Grcup's financial assets are to lru·ge extent managed by Volvo Treasury and invested in the money market and capital markets. The majority have been placec in accounts at hanks that the Volvo Group collaborates with. All investmenl~ must meet the requirements of low credit risk and higl, liquidi ty . .<\ccording to the Volvo Group's financfrll risk policy, countcrpruties for investments m1d derivate J;ransactions shoald have a rating better or , ,JI. established credit rating agencies or similar. This is a true and accurate
translation of the original document
Commerciaf cr?dit risk
22 (50) J,,hn I lghtowlcr LTranskn ..... rs Nmc· This rcpo11 is :'I. trnnslrition ~f tli.:- Swedish la1t,g.\l.l£:e original Lu Ut~ t-vent r at1y {)jffe-1'1:nl\!,s!:bet.,;.m il~titJn anJ \he Sw\~d1sh <,rif';inal, 1hc laucr slm11 pr~·•.:ml. I he mhlcs m thi<t trunslatjon h.!l \'C b-.~ provid.;d t>y ·,~ Auditor'1,: R.:port has ~n rmwided hy Ddoith!.l
Volvo Treasury AB (publ) Corp. Reg. No. 556135-4449
Lending to comp.anics within the Volvo Group complies with the limits established for the particular counteq,arty. CrediL 1;sk related to lending to Group companies is considered negligible and, accordingly, no collateral has been pledged for the re.ceivables. The Vt>lvo Treasury Group'$ receivable.s from Group compmi.ies on December 31 , 2019 amounted to 175,866.8 (159,959.8).
The company applies the general approach together with the application of the exemption for low credit 1;sk on intra-Group receivable$ recognized at amortized cost. The calculation is hased on an estimate of the companies' probability of default.. Exposure at default and loss given defoull are estimated using the exposure at the balance-sheet date and the circumstance.s prevailing. When assessing prohahility <)[ default, consideration is given to forward-looking factors, such as the compa11y's level of capitalization and its ability to absorb any future losses i11cuned by the compm1y.
Financial counte171arry risk The use of derivative instruments leads to a counterparty risk, mem1ing that a potential loss cannot he settled (in part or in full) against a potential gain if the countcrparty does not fulfill its part of the conLTacL The Volv\l Trnasury (',roup works actively with limits per cotmterparty to rnduce risk for high net amou1ts toward individual c-ouuterparties. To minimize tl:is exposure. Volvo Treusury Group enters into netting agreements (lSDA agreements) with all countcrpartics that could pmentially be involved in derivative transactions. The netting agreements entail that receivables and liabilities can be ollset again,l each other in certain siltrations, ~uch as in the evenl of the coonterparty's insolvency. These ISDA agreements are often accompanied by a credit supporr annex (CSA). The CSAs establish the terms and conditions for when the patties are liable to execute cash transfers between each other to reduce exposure to open net positions. However, these netting agreerr;ents have no impact on Volvo Treasury Group 's recognized earnings and balance sheet, since th~ derivative transactions are recog1fr1.ed in gr(>S-5 wn\>unts. Volvo Tre~ury Group's gross exposure of derivatives with positive values muounts to 1,976.9 (3,606.9), which was reduced 1,371.6 (1,394.3) through netting agreements and a further 376.: (1,581.4) through liquidity transfers, yielding a total reduction of 88% (83%) to 229.0 (630.1 ). For further infonnation regarding gross exposure per lype. of derivative, see Nole 23 Financial instruments.
Effect of oftlselting agrtfmtnts 11nd casb lr.Ht.sfers o,, Voh·o Tre-.nsury Group•s gl'O&S derh•afive positions at Dec 31. 2019
<.iro-s3 amNinT NCfling. agc.xmtnl Cash 1ranst~rs NCI J)osition
As.«:ci'> 1,975 -1r11S- -371'l 227
- uabTlitii:,s 2.469 -1 ,40'1 -775 2~$
Oiallgc.i.n %
88% f.:S%
Nnlt' 3..3 showi. lhe dft'(.'l of nettin:; u;,rreemmts un<l cash lr.am,fon; tin lh1: Volvo Tn:a.-;u.ry C;n,up' :-. b'TO.>S cxpu:-;-u.n:. frum inler.::.;l• ll.nd curn:ncy-n:J.. t.1<:-iivatl\•e-s <IUBlaudi.tt_.
Li<1uJdity risk, Liquidity risk is defined as the risk that Volvo Treasury would be unable to finance or refinance its assets or fulfill its payment obligations.
TI1e following list shows expected future cas)l flows including derivatives related to financial liabilities based on the market's expected future interest rates and foreign exchange rates that applied on the balancc-shccl date. Expected capital flows pertain to receipts and payments-on loans and derivatives, Expected interest llows are based on f'ulure market intere~l rates and j)ertain to receipts ,md payments of intere.;,--t on loans and derivatives. Interest flows are recognized in the cash flow from operating activities. Future cash flows in foreign cum<ncy arc based on the rcspqctivc exchange rates at the balance-sheet date. CrnTent liahililies lo Group companies (within the Volvo Group) pertain to borrowing thxough group accou))ts, which are not included in capi\al flows. During 2019, ~urrent and non-current receivables for Volvo Group companies amounted to SEK 175.9 billion (160.0) while current and non-current liabilities to Volvo Group companies amounted to SEK 91.4 billion (78.9).
Most of the loan manirities in 2019 and 2020 arc part of the nonr.al business .operations or the Volvo Treasury Gr\iup, in which the Volvo Group's customer finance l1as a shorter muturity structure t11an the Volvo Group's industrial operations. Financial assets and liabilities related to the Volvo Group's customer finance operations are matched so as to minimize the exposure to cashflow risk and price risk. Within the framework of established limits, financing musl matc.h lending in te1m~ ol'malu.rilies. For practical and bLL~iness reasons, Volvo Treasury AB has a mandate tl> go down to a match rate of80%. At the end of 2019, this match rate was 95.4% (93.2%).
Some of Volvo Treasury' s long-term Joan agreements contain clauses stipulating a right for the lender to rcque.~t early repayment following a change in control of lhe b<mower. It has been deemed necessary in certain cases lo accept the~e conditilms lo receive financing on acceptable teous. 1n 2014, AB Volvo issued a £UR 1.5 billion hybrid boud tl1rough Volvo Treasu1y Ail with the aim of strengthening the Volvo Group's balance sheet and extending the maturity profile of the debt portfolio. The bond was issued in two components: ElJR 0.9 billion with the first redemption occasion in 2020 an<l linal 111aturity in 2075, and EUR 0.6 billion, with the fost redemption occasion in 2023 and final maturity in 2078. The hybrid bond is re.cognized its a Jom1 and has an average maturity of 57.6 years, and is subordinated to other existing - ' . I I' I 'I'•
This is ,1 l'rii" :';)hd ~ccurate
Nt1te 3.3 Future cash flows including de,·iva1ive~ related to non-transl al ior> i I.'., · · :r, I dDCl}ment
~urrcnt a~1 financial liabilities {Certifie~<On ......... .,, ......
Group ' L, .. 1 •• ,.
Caoltal now lnkrc.s.• n,,<v ·. ,~ I · n ·' -
Derivative Derivative s Oerh•;\tive s Dcrin,th·e
Loans¼ (liability) s (asset) Loans* (liabilil)') s (asset) 2020 -l2f,Ol2.5 -334.4 645.4 -0.8 2020 -1.504.3 -711.5 -38:7 0.0 .. 2021 -32,468£> -51 6.9 332.8 -0.2 202) -778 .6 -355.9 - l~.O 0.0 2022 -1 >,425.3 -367.2 I S5.2 2022 -558.1 -157.6 34.9 2023 -7,144.8 -525.7 63.6 2023 -483.9 -46.7 64.2 2024 -2,.767.7 - 103.t 18.0 2024 -118.1 -12.9 5."L I
2025 -573.8 -7.0 5.1 2025 -73.5 -4.I 34.l 2026-· · -17,541.0 -0.9 0.J 2026-.. -l1S.6 -0.4 36.9
Total -199,934.0 -1.855.1 1,250.1 -1.0 Total -3.635.8 -1,289.0 166.5 0.0
24 (50) lTrnoslat~r"s Note Tl\ls 1-c1x:,11 L> o uansl.:uio1) oftb~Swcdi,;h l;lng\s.~c Qrigjn(II In the c\•cnt of :'I I)>' ditl'cronl~Cs b<?tween tJ1is tl'"J.uskltim am.I tht! .Sw~ iish nriiinal, 1h.-- l:1ttcr .c:hJll f)l'CV41il. I h,:; t1Jhlcs m this ll!lnsl~lioo hit\'C hccn pu,,,.idt"d hy Vol\•o Tn:a\ll,y .AR ~nd h:t\'c nN lh .. cn trnnsfah~d. The Allditnr",'i Rcp0n has hoen pnwick·d h)· Odorttc.1
Volvo Treasury AR (publ) Corl). Reg. No. 556135•4449
.Parent Comoany Caoital flow Lulercst now
Oeriv3tive Derivative i. Oerivntive s Oerh•~th•c
Loansj: (liabilil)') s (asset) Loans~ (liahility} s (asset)° 2020 -1 2(,, J j I.? -330.5 631 S -0.3 2020 • l, 194.6 ·697.6 ·44,6 .O.IJ 2◊21 -3~.195.7 ·516.9 332.8 -0.1 2021 -671.3 •347.G •l8.0 0.0 . 2022 ·13,271.1 ·367.2 185.2 2022 ·536.1 •153.0 34.9 202l .,.J23.8 ·525.8 63.6 202'.1
·-----479J •44.1 64.2
2024 •l,914.5 . 10,.1 18.0 2024 · l l 5.7 ·11.5 5'.l. I 2025 -573.8 •7.2 5.1 2025 -73.5 ·3.6 34.1 2026·•· -li,541.0 .o.9 0.1 2026 ... · llS.6 •0.4 36.9
Total • 19S,i31.8 .J,851.3 1,236.5 ·0.3 Total ·3,189.J -l,257.7 J60.5 0.0
* The interest payments on clle hybrid bond a1-e included in a f(1tal ::im<1uot l'II' 1,608.9 (2,271 :>)► which i?i:rtain$ 10 th~ pcliud through the fies~ redempl ion Oet.:as.ion, whfoh is 2020. •as well a:s 2023. The int<..-rcst payments rhaf follow in the event an opporrunity to
redeem the bond is nor utilized have a~ yet noL heen e::.tahli$hed. «"'Includes F.tJR 1,5 hi Ilion for lhc hybrid bond, TI1i.: b1.>nd \1/tlS issued in hvo components: ECR 0, 9 billion wirh the- fir.n redemption occa,sion in 2020 aid final maniriry in 2075. and EL-R 0.6 billil)ll, with tl1e fifflL 1-eden1ption l)Cc;.1.~ion i11 2023 bnd firnil muturily in .l.07R.
~ote4
2019 2018
P:iren I Comp,my
2019 2018
· --··· 3,858.3 ·····-·-2,999.0 ··-·-··~'.~2:'.>_ ..... _ 2,872.7
Total 3,858.3 2,999.0 .l,739.9 2,872.7
Of the above stated amount, 3,804.7 (2, 951,5) pertains lo interest received for the Group from other companies within the Volvo Group. The com::sponding amounts for the Pare11t. Company arc 3,686.5 (2,825.3).
Note 5 interest exl)ense lnterest expenses pertain to accrued m1(l realized interest on in:erest-bcariug liabilities and derivatives hel<l to hedge krnn rec:-eivables and financial liabilities.
This is a true and ,1ccurate translation oft >'iginnl document Group Parent Company
2019 2018 2019 2018 .... ., ....... _. ·••· ......................... .
[nterest John Lightowler ---··3,J l2. J ·······- •2,512. l •... - ... . J,041.4 ······-· •2,432.4 •·· ··········L;.;,_· ·---·--~•--A;.:;::M!,:=o::,:li::;""::_l:_;'TTOO:.'."::!!!'~~""'T~,:_- ,:_•• .. ·,:_·· .. ·•--·J Total ·3,112.1 -2,512.1 ·3,041.4 -2,432.4
or the above stated amount, 297.8 (194.0) pertain~ to interest received for the Group from other (;()mpanies within the Volvo Group. The corresponding amounts for the Parent Company are 306.8 (207.7).
25 (50) [Tr,mskii..i-r's Nvte: This report Is a lran.-:Jmiun uf Lhe Swc:dlsh lanfl.Uil,SC mi~nal In 1hc cv,:nt ('If All}' chffo<<'llC~ bc1wC<'1l lhis 1mnsklti6ll tuul lht' Sw1;dishiJdgirn1.I, t111: l2.(w1· sh.all ptevail. TI,e wblt::i iu lhl:. -tnm!'.:ilati<1n ba\•C been pn•vtded by Vo,h<o l~rcus111y AU nn..-1 hi!VC no1 llccn rr;1nsl:}iCd, Th-i: AudiiO•''s Rcpo11. b.'1S boo.u p1T>\'ided by Deloitte J
Volvo Treasury AB (pub!) Corp. Reg. No. 556135-4449
Notc6 ·other financial revenue and expenses
Interest and cur~~cy derivatives -·-·-HHHuno•un
Ca.~h and cash ctjui valents ·-·····-··-··------------ --Loans originmec by the company ruid finandal liabilities valued at amortized cost
.............. M ........... . ............. ............................. ,. .......... _.. .... . .......... .
Total
Note7 Employees
Note 7.1 Avcr.igc number of employees
Parent Company
Gothenburg··-·-·····-··························-··· Total
Subsidia1ics outside Sweden
Croup
2019 2018
Parent company
2019 2018
3,305.0 1,37).0 3,278.5 1,371.6 ......... ····--···-................................... __ ...................................... ~ ................ ... -380.7 •256.5 ·381.2 ·266.J
2019 :-lo. of
employees of whom, men
30
30
17
17
2018 No. of
employees of whom, men
31
31
20
20
I I 4 ll 4 Singapore ···-···-···-····················-······- -...................... ,_ .................................................................................................... ~--· Total 1l 11 4
Group total 41 21 42 24
This is a truP ~,,,_, ,,translation of th ,
26 (50)
i 1;,ht:1wfer Aull 1v. 1.1..cU l'ranslaior
':;~umcnt
lTn,·nsk1ror' s. Not~ Thi.s r,:pon is a tr;msl,uion or rhc Sw\idisb fongu;tg~ origin."11. In lhc event of m>y ditl'cr.;~<S bc1wccn 1hss tfa11slaliun au.d the Sw..:dish origin:11, chi:. l~der shull JUt:\'ail. Thi: tables in lh,s mmsl:itrnn huv~ b~cn r m•,:1.lt-d h}· Vol\'O Tn:mu ry AH and h:i\'c no, h~cn tr.'\nfla100, rhr Auditor\ . Ref'knt ha, l:t"en Pro\'i<letl by Od1fitte.J
Volvo Treasury AB (publ) Corp. Reg. No. 556135-4449
Note 7.2 Board members and senior executives
Parent Company Sweden -------···----Tot~I
Suhsidiaries outside Sweden Sin_gapon;
No. of Board mcnd)c1-s*
4
4
3
of whom,
men 4
4
3
2fl19 No. or senior
executives:*
4
4
3
or whom, men
4
4
/\uslralia ·- ...• . 4 • . 4 . 1 l
Total 7 7 4 l
Group total 11 II 8 6
<+: The same persons are to a ce11ain exce.nt rcprcsenrCd in the figures for the. different companit".S. Excluding this a.sp<..-cr, the total numb..-rof 80'1rd mt..-·rnbt:tl) i)) t-i£hl (of whom eigl11 <•n:·,11en) i:aod the nu1Jlber(,f ~eoior-e.Xecutive.i; i~ ~eyen (of whom five a.~ men).
Nol:e 7.3 Salaries, remuneration, social securi~' expenseS' and pension costs li'.-.1,.., s .. 11,lduiry f.tuur, l'm\'111 SttbsilllAr, c,..i11 ,1
'{,!,Z~~~-;j~ :in:1<>:M!l'r:r-r.tn:1:m m lkotd ::1.~het!~.1.'1_~!•t:ei~ 111 ____ _
W~ s ~olh~,-~"!,JIJ.llt 1\/}':l•P.k'.(~\'..~_ ,~•""'''"'''l.'llo• .... TOlill
5::t:fal f UI~
Pc1tJ:«t1t«,'".'; i,1,:,;h\JT,T.•litiittf&ir:Jr,;i /JOOi:l'i,lfa,ff•Yiiibl1.1;,! }'1t<!id/11~
, 11,16('f111: ,rom1~ ~, u 11,puir 0,,. ,11, 10111 ?illi' 1019 1013 1018 }Of$
,3.} ...\.5 tS ·,~·'.I -1.2 · '.1.1 .:,-.(- .::_; .J.1 .JA ~it ;J.'I
---~1--.. ··•!·~:----~-~----•;c~;;~--~·•~•--~-Jtf
-1 :u,1 . i:.~ ll .U •ll,-1
••- · 11/JI ·•--... :~◄ __ , __ 03 .. -••--•· \9.1 ../J,9 .JJA f/J . .'J,j
\y-,i;,~ . .aV,ri('ll-VdO(..:, ~ "'""t "•iu,,rn11ie I'.,.-~·•~"~"----------- ____ .:~~'----',-'-> ---·',.,'~--~·'·'"---·~'°~· __ ........,•7,l ~.,.,.,,,....,.., , t.(o l ! i, t.~ __ .;l ~ ·11oe (A'1Qof<lll\'r1111"!.lll.hr:t.J:•iµfon cr:i~1t.11tllllc~i:le...: •~+•·-- ·---- -· _ -0.J UO .o..2 0.2 O.? (\~ vft'-~"'""~f"~ htll.,'i)IHi'l ' lot 1'1$(..e,11 ..... , __ , __ _c,;c,0_· __ ..c,·0.c.i" __ _c<c_• ·~---'""'''---".(J".\ ___ =!l.) W:ii;~ • .fl!:sri(:,.,~\(;lho:V!-"l"".',:rdti\ ... t,J J\;s,."li 1111'.!lll'<.'!1$ _ .,. .... ..,:fw, ... 1'?1¢ r<1r!i(!W, lloUJUin.11.!!l,t (lj:MI~!' MA.f.!1~ 1:1. lhlll Bt:.nt lt'lffllbcn ('~'tl.t)r l".l.~"J\'O!(•h<:% l,~~•(l111,,{lo,:;R1t1:I, m.:mt,cn. _______ _
!!~, ~~t_"S ~!Ml ulb:.• rem 11~.r,,•i~~ -~ • ..r.lltf .fci!Wr~;'.~~"l,)(ln~,
--------------·------. .J.~ - :Ir --------~:~-1,--------
__ ...c,-1:,,.,_ . __ . ___ ,, .(,'l
\'.t111c:c 10 111r. 1e-..1 n an,d'-iainunrht 1•r"Jl"ilfflJl r a,.cn1 Ct111pan1 Subsidn,W, Q,'"liJUntlll C1111u p11~ Sub~ tlari"n Cr,110 .!IWJ !lll'.l '.!1)19 !-:i.$. 1911. ~b.t
Co.:!-t µ!r 1h11C1:1111-'U1o' u:~i,""1)00 in lhe \'o,i,h'O On.:v¢~ 1i.,t pt(l,:n1111 UJH O I) !).;! V, (l Oo.:au.~illl! ~h- ri;i:11nWl'fi1i«:.al en die~~ lheb!:•~'tlS ttl'tm;,M '61i O O 02~t o; 0 , \l bullt:fli,;;0.:iri~UC yeu O O O C, 0 0 !wSt1$!;,u.·•H&~l•:tlllO,\)~! l(,17 II O ~14 0 0 ferf,:i1tJ,\::r..:tn11G,;.w;ici;llx>'(:i1 u u I> I) ti o <ln:mp imet'fl~ lr.lndtiMI O C O O O 0 <.,Mii.l'l/lll!Ur,,.)-',l;,'rie;limq.~tlr.11nl 11n 1h:l. jll(t(lll'o lft~tnd nnheJClr !I fl 0- 4tl1 0 0
Total costs for salaries and remuneration include 0.2 (0.2) in respect of the company's participation in lhe Volvo Group's incentive programs. Shareholder rights outstanding that arc conditional in accordance with the program amounted to 4,617 (13,231) shares at the start of the year. During Lhe year. no allocation was made and distrib.ution of 4,617 shares was carried out. No shares were forfeited/expired during the year. No intra-Group transfers were made during the year. At year end. I.he number of shareholder right~ outstanding amounted to 0.0. See also Share-based payments under Note l Accounting and valuation policies.
· - President has a notice of termination of six mon , m1ination rrom Volvo Treasury AB. T is is a true a~r accu t
translation of 1ht! or1zin.1l documen
(CertifieiJ~ ... ···.••"' ... , l.C2 .... ., ................... .
27 (50) · / · owler on ls.a lt.lJ.lS l..'l li<>llOf thc Swedish lilllSuage oO.g_ln:il. In lhcevcol ofa · .. . ~ ~- m\~pud 1he . h:lll prcv.lil, rhc 1i.bl'C5 in (his 1r,1n:1l::ir1on h1:1vc hccn pro\'idcrl by V(II ..... pmvidc,1 f'.)' Udni11-;, I
Volvo Trci,sury AB (puhl) Corp. Reg. No. 556135-4449
Notc8 Fees a nd oth·er rem unei-ation to auditors Fees and other rem unerations to -auditors
P1·icewaterhouseCoor>ers
Deloitte
------------·-.. -------··-----------------------... -............. .. Tax services Other assignments
Pa rent Company Grou11
2019 2018
0.0
2019 2018
0.0
Parent Company Gro up 2019 2018 2019 2018
I A :D 1.0 0.3 0.3 0.3 " ............. -.................................................................................. -...................................... .. 0.0 0.0 0.0
I. 7 1.3 1.3 0.9
Audit involves examinalion of Lhe annuafreport and fi nancial accounting and the administration hy the J3oard of Directors and tbi;: President. Audit-related assig11ments mean other quality assurance services required by enactment, the Articles of Association. regulations or ab•Teement. Tax services include both tax consultancy and tax compliance services. AU other services arc clcfincd as other assignments.
Note 9 Income tax Distribution ofi11co111c
Cuni:nL tax for Lhc p<..-rio
This is a true and accurate translation of ti gin I docume(lt
;;..-=;~a:::::::~.e;: ... ;; ... '.?. ... :'.':'. ............... 6 ·oup Parent Company 201 2018 2019 2018
-40.4 -4.4 -60.9 -24.1
Current tax for.ptior pc~iods······-········- •"••······· Defen·ed tax arisii)g or reversed dt1ringJhe£eriod _
___________ -8. 1 _____ ,, ______ ,).0 _______________ 0.0 ·--------2·0 3.4 -12.5 1.0 -0.G
Totnl -45.1 -16.9 -59.9 -24.6
Tax attri butab:c to Group contributions has increased the Group's unrestricted reserves by 32.1 (20.2) and ii1creased the Parenl Company's eyuity with 32.1 (20.2).
The main reasons for differences between tax according to the applicable tax rate of 21.4% (22%) and recognize<: income tax for the period are slated in lhe table below.
Sptdficntioo ofi11ro11e t:n: Group P;H'tnt Comp~ny WI!> 201~ 201c, 2t)l8
tn<:ome lxfort• tnvt's 1H3.4 40.4) 3 12.7 l08.7 . ·rax. ilCCOrd1ns Lil lllX_Ttlt'. ·····--·····••H•--·-·-·--..... _, __ __________ , ______ , ____________ 40.4 ............ •9.0 ········-··- •66.9 ····----···· •13.'f . Oiffrre"nr.r:'111~111 dif1~1\~111 t'('ot11ll tij>;s · 1:i:.: mtP.~.~-·----····-··-·····- -·-···· .. ········-"1 6 .. _ .... _ .. _ 4.l ·····--··- -···-········-- ··- · ···· -
Qthcf n9n-d.;dur.til!!C~'Xl"""'!l.~.~InJ,i_,!nc.... · ····-·· · . _ .. ..... . . _ tt . H •• :~.1 __ ...... 7.;\ _ __ H •• ~n.2 ._"f;;ixe.~ rel.tlt'J to·_prior.,'<-"'J.J-____ ........ _. _ ____ ........... _________ ... ................ ___ ... .... . -8.4 ............ -OJ .. .............. -0.2 ................. 0.0.
2~1~!,.'!~!..... U.Q -11.7 llll ~\.5_ Tola I -15.l -16.9 -59.9 -14.6·
28 (50) (Tnmslawr's Xote: Tlri~ repurt fs ;;i lr"<1.n:;Jution of lfo! SwtXfo.h languag~origi1~al. In lh~ cHml <ir any dilft:1t'n1.·o. bet\l/een lb.is hUUslaliuu and 01e Swc-Jish ori,g,i1~I. the htl6l' shall l)fC\·ail Th? rnblcs in this t•anstmiOo b:rvc bcc-•t 1.m.>vided by Volvo T•\-&W<>' AB "fKl lKWC 001 been 11".1n;;Jatcd Tllt' Audi1or•s Rt pon bas been provided by Dcloil.tc,J
Volvo Treasury AB (publ)
Deferred fax
Changes in dcfrrrcd tax ,1ssets/liahililies, net•
(Jptning balance:: -- -------.. ~---nH•--..----····------ ....... Deferred taxes rtcognised. in ihe yea1.-s income -···· Of which recognised in Other comprehensive income, Remeas,rements of ddincd•i1Cncfi t plan·s
Deferred t.ax as,ets/liahilities, net, as of l)ecemher 31••
Corp. Reg. No. 556)35-4449
-=: \ "' f\\ l
862 up Parent Company
Dec.31,2019 Dcc.31,2018 Dcc.31,2019 Oec.31,2018
••••••••••••• lo. l · ·-···-·---· l4.7 ·------·--· ·--· 5.1 ________________ 5.6_ 5. 1 1).0 1.0 -0.5 ----------------------------------·-------------------------------.................. .
............... 1 .4 ··------·-··-' '~·····--··----· · 0.0 -·-·--·-······ ·-·--·
22.6 16.1 6.1 5.1
*Tile deferred ta~ a1~(.:; nmt IAx liabilit_ii;:; ~h1lcd ~bovc urc rccognizc.-d iu the VoJvo Treas:Uf)' G1·oup's balance $beet, in p:trl 1leL oflLT
laking .off~t:tting op')Ortunitics 'into account Defer.red tax a~sets.. and tax .fiabili1 i~s tmvc been 1oen;:,:ured using t.hc t'..:tX nttes cXp,t.-ctod to apply during the period when 1..he ;use, ).$ re:llj:t(:tl or the fo,bility is- settled i1ccording to the tax rates and tax regulatioos tha1 have. been decided or adopted on the bahmcc•shcct date. **Of which, temporary dil'ferences peruainhlg 1(1 pro\•isions for p.;,-nsions in the Group WCJ\; the most significaJll and -a1nount:ed to 18.7 (15.5).
J\ote JO Intangible assets
Capil~li:ml development costs
9Pcning m.:9.ui-s ition cost ......... 0
.................... 4
.... H•lo•
Closing amortized cost
Opt,uiJ1g3\i\.:wnuJalCU 1m1oniz.ation ______ .. ____ _ _
Amortization forche-year ·-···········-·-···--··· Closing accumulntcd amortization
Closing balance
Note 11
(Cettif Equipmeu
Tnngihle assets
John Lightow(cr 0 · · • · Aothon.a?ti T r.:111-:;tatot
• _penmi a·-··-·'---- . -----------·-·-···-··----Purchscs ------ -------------------------........ -......................... . Sales and s~U}![>,llljt ••••••••. ············-·····-· ······· Rcght of use asse:s ------ ·-··-·--···--·'l'n,nslation difference. Closiug amortized ~~st
Oyenin!\ accumulated depreciation ·-···---··--·····
Sales_ and scrnpping ···----·-··-·---········-····· pepreci.~tion foi- t[1e year ·······-·--·--·--------Translation diITerence Closini.: 11ccumulated dcprccintiou
Closing bnlnncc
Croup Parent Company
Dec. 31,2019 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2018
~s ms ms ~5 20.5 2(!.5 20.5 20.5
---·-··· -20 . .5 •••••••••••• -I S.6 -----·-···· ·20.5 --------· • 19.o o.o .c.9 o,o -0.9
-20.5 -20.5 ·20.S -20.5
0.0 0.0 o.o o.o
Croup Parent Company
Dec.31,2019 Dcc,,31,2018 Occ.31,2019 Dcc.31,2018
LS 1.7 0.5 0.5 ---- ----- ----·----.. ---·-···-·····~ .. ---------... --......... _ .... __ -------
2.0 - 0.0 • • O. ] •• C. L
3.9 1.8 o.s 0.5
• '-3 -1.2 -0.1 ·0. 1 ·----------- ....... -- ___ .,_...,. __ .,,._ .......... -..... ______ ------------------ -l.O 0.0
.0.1 -0.1 --·-----···---:i:,1-·--·-··· .. -=i.3 ·O. I -0.1
1.4 0.5 0.4 0.4
29 (50) rTrani-l!.tlo.r'.s Nme: l'hij rcp m ,s ~l lr:mslm;:lon of 1hv Swedish languag.~ orighl.'ll 1d lhe eveulof any J.ilfi:rtm.:t:s between this tmn:-:llltinn »nd 1hcSwedfa.h-01:igi1i:.1l lhe l..Ud' :;h.a.11 p;evai1. The tahle.s in lhis mm:-lutlon have been p1\)v(dt.'Q by Voh•o Tt\?i\!11u'}' AB J.ud l.J.1ve not OOCTl lrdru.lated. 1 h~ Audilor"s Jl-.>poll l.t:1s be,e,n p1twi~ by Ddoille,)
Volvo Treasury All (publ) Corp. Reg. No. 556135-4449
Note 12 Financial assets P,trent Company
rartic"i1h1tions in $nbsid iarics Oec. 31. 20i9 Oec. 31, 2018
............ 21.i:li --·········· 224.6 Closin.e; accumulated acqui.sition cos.t 2?4.6 Z24.6
Carryl11g Percentage \.'(lfing l\o. •f t•ight!- :1mount Sh:m!holdtr' s
kSEK tquil~• kSF-K H.tg--isttred .office in holdiu:i::, sbare pnrtkit"nUions I sharts
224,608 633,922
Note 13 Other non-current receivables Group Parent. Company
Ike. 31 , 20!9 nee. 31, 2018 0cc. 31, 2019 Dee. 31. 20 J 8
_Q~~~!~~~!ng inteft§t «!~~-£~1rr~1!£i· <leri \'atives _____ _ _ ........ 1,073.2 ..... - • .1 ,450.t .......... 1,072.4 ............ 1,448.2 .
Total 1,073.2 L,45•).5 1,072.4 1,448.2
Note 14 Other current receivables Group Parent Company
Ile,:. 3.1, 2019 nee. 31. 2018 nee. 31,201.9 D«. 31, 2018
_Q~~~~t~~-<;!i~Jt~!~_rcsr and currency dctivacives
Accrued inka:~ l in:.:.omc and ere-paid ia lerc~l expenses ·--
0Lher UC<;"Ued income and prepaid expenses •.•. - ..... . _. ------····-58.2 ............... u.o ............... 58.1 .............. 51.8 Other receivable.., -··--···· ........... 0 ... ~ ............. u ............. -.- ................ 0.9 -· o.s 0.9········--.. - ~,~ Othcr imcrcst hc~ui n~ rccci\'ahles ............ ~'"·-----···-·---- -----· I 178.0 ······-······· 7§. I·---····· I \ 78.0 ............... 7?. I.
2.206.6 2,358.4 2,165.5 2,.l40.3
Note 1 Th ,1, 11!!6 JHlJill&.;JltOO.llents translafio11 <Jf tlw • igin~I document Group Parent Company
(C,,M1t1ed). • ...... - ..................................... . Dec. 3J , 2019 Dec. 31, 2018 llec. 31, 2019 Dec. 31, 20l8
Cash in >anks John Ughtow,ler --------- -------· ---Authe~-T,;i~;;itol-- . . ----- . ... ... J I, 180.5 ........ 26,239.2 ......... 31,146.6 ........ 26,2?0.4 Ti med . • . . --------- -------- ·---· ·-- ------_______ ,,, ______ .,,, __ _ .......... 9,-035.? ••••• .•• 5,534.') •••••.••. 9,035.5 .......... 5,534.0 Reverse repur clnse agreements ............ ·-··· ······-·-·· o.o ......... 1 ,021.0 ................ 0.0 ._ ....... 1:op .o Tola! 40,216.0 32,800.3 40,182.1 32,781.5
Note 16 Group contributions Group contrihulions or 500.0. (692.0) were received (paid) by AB Volvo and 350.0 (600.0) were pa.id to (received from) Sotrof AB.
30 (50) L l'i'tlnstators Note; Th~ 1).;pon is a cransl:ition <'fd tc Swedish faug,iagc-0tiginaL In tht cvem 6f tiuy dine1tuces betweeu Lil.is uanslatiuu anJ lhc: Swedish migtnal, lhe J:uccr shall pn.,-vaiL The l&hle.a. in rhic; lraT1sladon have h.::c:n rro\'idcd b)· Vo!v<:1 TrcaSJI)' AR !.lOd twva oot b-..<\.'t\ transfat<'d. Tiie Auditor's Report h;:,s bx:n pmridt"d by Ddrntk·.1
a: <
· AB (puhl) Corp. Reg. No. 556135-4449
\ rovisions for pensions and similar obligations
~"1 :;.,,.,.4-,~ nt benefits, such as pensions and other remuneration are mainly settled by means of its to independent aqthorities or bodies that assume pension conuJJitments for
rough defined-contribution plans. The remaining po1tion is fulfilled through definedbenefit phns (i!ppli es only in Sw&.,-JP.n), wh&.r&. th,~ c.ommi rm~nts r~m~in w ithin th~ Volvo Group or are transferred to pension trusts.
Del!ned-henefil plans are plans whereby the company's commitment is to pay predetermined amount.s to the employee at or after retirement. These plans are secured through provisions in the balairce sheet and tlu·ough transfers of funds to pension ·foun(h1tion~. A credit insurance has also been procured to cover the value of issued obligations. The main defmed-benefit pension plan is the ITP2 plan, which is based on final salary. This plan is partly closed, which means that only new employees bou before 1979 are able to choose tbe ITP2 solution. The proprietary ITP2 plan for the comp.any is part-financed thro~1gh the Volvo pension foundation. The pension liability is calculated annually on the balance-sheet date ba~ed (111 actuarial assumptions.
The defined-benefit obligations ai·e calculated based oo applicable sa,ary levels as per the balancesheet date, with a djscount interest rate of3.84% (3.84%) regarding ITP2 and 0.7% (0.6%) for other pension liabil ities. Annu~l yiel(] and mortality estimates are estahli~hcd by PRI for ITP2 (Translator's note: Swedish 01iginal has "IPT2") or Pinansinspektionen (Sweden'~ -financial supervisory authority) for other pension liabilities.
The Volvo Pe:msion Foundation was fotTned in 1996 lo secure pension obligations m1der the ITP plan. Since its formation. the company has provided plan capital in a ,et amourtl of SEK 33.0 Mt(> t11c E'oundatio11. The return on plan assets during 2019 was 14.21% (-1.67%).
Provisions lilr pensi,ms and similar obligat ions in the company's balance sheet correspond to 1hc JJresenl value of the obligations al the balance-sheet dale, less the fair value of plan assets,
The Volvo Group applies LAS 19 Employee Benefirs in its financial repoiting. Tl1is results in differences that can be material in the recognition of defined-benefit plans pertaining to pensions ,UJd when recognizing plan assei.s placed in Lhe Volvo Pension Foundmion.
Accounting po:icics for defined-benefit plans differ from !AS 19 primarily because: - The calculation of the pension liability according to Swedish accounting policies does not take into account ti.tture pay i rn;reases. - The discount interest rate for calculating the Swedish liability is detem,ined by PRI Pensionsgaranti and Frnansinspektioncn. -Changes in lite discount interest rate. real return on plan assets and other acn1arial-asstunptions arc recognized directly in profit aod loss, and i n lhe balance sheet. - Deficits must either be recovered through payments to the plan or be recognized as a liability in the balance sheet. - Surpluses cannot he recognized as an asset but can, in.ccttain cases, be credited to the company to reduce pension costs. In the tables on the following page, disclosures are provided regarding the cjefined-benefit pension pfon. Volvo recognizes the difference between outstanding obligations and the value of lhe plan assets in the balance ~heel. The disclosures pertain to the assumptions applie<.I in the actuarial computations, recognized costs during the reporting period und th 'ta l.%H i~ ·_Iii® · rfl'ijlll
31 (50) translation o,.'..f~t ~~=.....,==::.:.:.+ fl'ransb.1tor~ Nul~: 'l"h.-: repun is a ll<1ask1tio11 of tbi:Swttfo:h langrn.1g.t" origui:,L In th.: '.'V<"!)Lttf auy dil ertw::e:ibct . Swo:!i:th mig,inal. tfo: l.:tt1e1• shall ptevail 1lh! M.\11<:;s in lhjs ln'l1\3lation h;ivc: f.~cn l)t\Wtd.;id by VolYO Tr :tt)R~•fvRl AuWtor's Repon lw OOe11pt'Cl\tidod by Ddojnc,J
Jor.11 L,ghtowler A,uhn,1.::i:.·:·i Tr,1r.,;b!m '--------
Volvo Treasury A:8 (publ) Corp. Reg. No. 556135-4449
a,ssets at the. end of the period. ln addition, changes in the value. cf obligations and plap assets during the period are specified.
Note 17.1 Pnwisions for pensions ;md similar obligntions
Pension costs during the ye;1r
Cunent service costs -----------------------------------------------------------'----·------Interest costs Interest income
Totnl pension costs for defined-benefit plans Pension costs for defined-contribution plans _______________ _ _
Total pension costs
Dec. 31, 2019 Dec. 31, 2018
-1.4 -2.5 -------------------... -... ---- -----------2.8 -2.4 1.2
-3.0 -7.3
-1 ().3
1.3
-3.6 -6.1
-9.7
This is a true and accurate transl.ttion of the .. rigin.11 document
32 (50) [Tn1nsl~t,;,, r's Ncit~: Tits 1cpoo i3 11 U,\11sJ31fon orth.,;- Swc<iif-h laoguag,c nriginal. hl me (VCJ1t ot'any dilleru~cs: be1wccn thiS tr,11\slmkm tuid dtc Swe<fo:;h n riiin..11, 1he btw r ,;h11II prcvait. ' lhc t 1hlc:s in rhis tmn.,;1mioo have hc..:n pmvklcd hy Vnlvn ' I re;L'-.11}' AH :-'Ind h.1wc ni,r l,cr;n trnn,.la1r;d rll(; A:uJi1or's kepvn has 1:ccn prp\•idL-d hy l>dmtte.1
Volvo Treasury AB (publ) Corp. Reg. No. 556135-4449
Note 17.2 Provisions for pensions and s imilar obligations Applicable aisumptions for actuarial calculations (Sweden) Dec. 3 1,.2019 Dec, 31, 2018
Discount rate Expected salary increase Inflation
Obligations iA defined-benefit plans
Obligations at January 1
_De_fined-benefits eamcd _duri;/1 the year ·····-------·--------Interest costs ---------------·-·· ......... ----·-_ .. ____ ---· ............................................................. .. Remeasurements -Effect o~cha11g_e in demographic assumptions __________ _ -Effect of cha11ges in fina11cial assumptions
............................................. - .. .i... ........................ _ ............. __ ...... ____ _
-Ejfecl of exp..i·ience adjustments .................................... .
Benefits _paid--------------···-·- 1 -------------·-·-·--···-· Obligations at December 31 Ofwhieh, funded defined-benefit plans
Fair value of plan assets in funded plans
Pl;m a.sselS ,~lJanuary 1 •••.••.•••••. 1 ···-······················· Interest inc'Ome Remeasurements ------------------. ---- -----------·----------· -~ - --· ........... . Employer eomri butiou. ______________________ . ----·--·····-·
Plan assets at December 31
1.7 2.9 1.8
2.5 2.9 1.8
Dec. 31,2019 Dec. 31 , 2018
·--·--------·2?:2 ....... _ ............ 89. I _ 1.4 2.5
·--------------- ----- ------------- -----2. 8 2.4
- --------0. 0 --···-----······ 0. 21.3 4.6 -1.2 2.3 -1.0 -1.0 . _____ ........... ,._ ..................... -........ __. ----?• ---
123. 2 99.9 123.2 99.9
Dec. 31, 2019 Dec. 31, 2018
47. 1 47.7
1.2 1.3 ----------------- -----5.7 -l.9
, ....................... "'l ............ _ .............. -·-
8.0
62.0 47.1
This is a true ~rid accurnte translation of ri i,ul document
(Cemlied): .. >, S,~~::2~=--·
33 (50)
John Llghtowler Authori:recl Translator
ITnm.'ilalm's l\ntc: '1 flis rqx\rt is a t.r.mslallun uilhe SwcJ<sh languai,;.cH~rigim.iL Lu t1le ..:\Jt1ll of m1y JdfoK•uces lx:twe~.ll dus tratl.S.latioa actd 11\e &wc:Jish origin:111 Ou: latter shall prev.iit The tttbl~~fo this ua1Ula1ioo have been pro\:jde-.d l>y Volvo Tf{:il~11y :\B :rn<I havo not i:>cc-t) 1rnn$l-utOO. ·n lcAuJitor's R,eplut bas. l•t't'U p1.o,:ided by Dck,itH' ]
Volvo Treasury AB (puhl) Corp. Reg. No. 556135-4449
Note 17.3 Netpro,,isions for pensions and similar ohligati\lns
Group Dec. 31 , 2019 Dec. 31, 2018
Net provisions for post-employment bcnclils ai December 31 61.3 52.7
Parent c.omp:tny
Obligations in defined-benefit plans
Obli ations o euin balance 2018
AU1<7o~A
'I:- «' "<;,0 Funded
46.0 Unfunded
o.o. Total
4-0.0 Servi.cc costs ........ _ •.••• _ .......... _. __ . __ ._ . . . . llll1?(¢Sl CO.SIS
Pensions paid ____ .. _____ __ . _____________ ______ . __ _
()l)li · at ions rt$ of llcccmb<r 31. 2018
Service cos ts ·············---------------------- ·---------------------------··········-lntcrcst costs J>ens-ious paill ____________________ ___ .... ______ • _ •• . __ . • __ • __ •• __ . __ .•••. _
Obligations as of December 3 1. 2019
Fair ,·alue or plan assets in funded plnns
Pl::tn :i.'.lSl.!tS ttJ)-Cning l.,al~nc;~ 20l8
Actual return. onplan assets. __ ___ • _____ .. __ . __ . __ . __ . __ _ . .. _ .. _ ... _____ . __
0)n(rib\Jlion~ and i:OmpcnsiJtion Co/ from lhc fond .... . ................... . Plan nssers as ofDecember JI, 2018
Ac urn I «:Him <>n plan <t!i:~cts .. __ ___ ______ • __ • __ ...... _ ..................... . Concrlhutfon~ and cr1mpen:::ario11 to / frolil lhe fund_. __ _ ._ .. . _. ___ ____ . __ . __ P l:rn nssets as of December 3J , 2019
2.5 O.() 2.5 . -. -- . -- ... -. . --. -.. -- .. -... -- . -- . --- . ------... J.9 0.0 1.9 . -- . -- .. ····--~--. -· ......... --........... -- . -- .. -
·0.9 0.0 -0.9 49.5 0.0 49.5
2.6 0.0 2.6 ·-.. -. -- .. --·. --. --------. ----•. ·-... -.. --.. -. --- . 2. 1 0.0 2. 1 . --. --. --- . -- . --. --. --. --- .. -.. ---· -- ...... -. --- .
·l.O 0.0 - 1.0 '\3.1 0.0 53.1
47.8 .Q,6
47;2
• ............................................ 6.9 7.9
62.0
This is a true and accurate translation of the: inal document
Pl'ovisions for post-emplo~·ment be·uefits
Obli&ations • ............. . .. . ............ . ..... . . . . ........ __ ........ ... . .Fair va]uc.of plan ~s .. ~ts ............... __ . __ . __ . ___ . __ . ___ . __ . __ .. __ . __ _ . _ .. Funded s1·~1u~ (when pla11 asset~ excet-d corres110.nding ()hlJgntionS)
jNet provisions for post-employment benefits 0
* 111c capital vu Ju.; (or ITP2 amounls ro negative 53.1 (negative: 49.5)
•• \1~1 r em:ion t.11:i ligatiori-s regarding ITP2 amounl to 0.0 (ncg3tivc: 2.3)
Pe11sion costs
l ........................................................................ . Pension costs for ·defined-benefit plans
S~cci::tl payf011 tax·,' yield Lax-+-+···· · ··-------------·--- ·--·--·····--····· Cos1 tm cr~il_ ia:,uram:~ fPG ____ _____ .. __ . _____ ____ . ___ . __ __ . __ •...•• . •M.
Total pension costs for the- pel'iod
34 (50)
Dec. 31 , 2019 Dec. 31, 2018 -53.1 -49.5 62.0 47.2 -. -- .. -- -. -.. -. --. -. --- -. -.. --- . ... --- -. --. ------8.8 ·2.3
•8,8 0.0 ·2.3
.. ............... __ Dec. 31, 2019 .. Dec. 31, 2018 .6.6 ·3.2 -4.7 •4.R -.}.4 .1.3 .. -- -- -. -- . -· . --- -. --. --. --. --- . ---·-. --. -.... -- .
.. .......................... :!':! ............ -0. 1 -14.8 -!).4
[T t".tJl:,fatol''i; Noh:: 17.fu 1~porl i:. .i u.:m.sfoti.on ul' the. SweJi:th language mi~-inaL rn tJ1e even.I of any i.l.ifform::-e.'i between tht:- 1r,m1;lnrk,ll and the SwOOisb oJ'jghtaJ. th~ l~ttcr sbaJJ ptX'Vl(il. The- tables ill this t1allhla1i9n have bt-eo provi,.k>d by Volvo Trea:r,uy AD ;ind h.3:\'e nol been Lmn~lntcd, 111:-: Auditor's Rl;pcin ha~ b, .. ~ n IH(WtdOO by 0.-:loim.:. I
Volvo Treas ury AB (pub!) Corp. R eg. No. 556135-4449
Note 18 Non-current liabilities 111e following list shows the Volvn Treasury Group's and Parent Company's non-cuJTent liabil ities in which the large.~! loans are distrihuted by currency and their carrying amounts. Tnfonnation on kian terms per1ai11s to the Group as ofDecembef 31, 2019.
U,,ud lmu o
J:UR 2Ul2-20 1 IJ:202}-2U78~
SEK 201S•2019'l021 •l07.J USU 20l9-20 !9;2ll21J•2029
NOK 2019-Z019:'l (o22,20.~2,,_4'--HKU 20 19-2019:'W24 .. 2024
OUt~r 1»1)\) loai;.;
Total
O tltl·r li.:tbilitic-s ti> crtdit iostituttlln
WY 20t'/-2019:'2024•:0::4
Acttml i11 t~ITl) l r:• lc t".rfc,:(h·,: iu t~,~~t.n,h: (01v1.111 P:.1n:u1 r.iuma,111•,>'
De<, JJ,2019 Dtt. J J.2019 Oe<.31,2019 r>ec. JJ.20iS Ot< .. ll.l019. Occ, Jl,2018
4·····-····-·· 0~;2.~.~6 _ .. _____ ,_ ....... o.m -4.S6_ •• *••·· 391373/t_ ... _ 37,964.5 ·-- 3'J,373.2 ..•.•..• 37,9(><1.,5.
o.os, 1.;1 o.os-1,;1 2J,#t.9 21.1; 0.s 2;.,.1.~ 21.1~0.s 0.6~) 0.60 465,-1) . ' - 465.lJ -
2,58•2,S5· 2,60H•2,SS06 J ,5'86.9 1.5$6.9 2,31 ·2,31
0.0 2,31-.2.31
o.o· 0.0 R6(d
0.0
6$;iS4.J
6.o
5-9,115.3
Actu;tl inh:rL'St natc l:rfl~tivc intcn:irt l':ttc (;nup Pat·cnt cemp:rn~• .0tC".3 f,?0£9 f>t<;, 3f,24W) Oet.31_,2fH9. Oec-.. H,l0t8 Dt<: .. H,20 19 Dtc.Jt, 201$
FL'R W J7~2018,'2022:202J. ..... 0.0(.-0,13 0.06,0.23 6,26(1 2 6.i6S.2 6.260.2 b.l6!-.1 : AUL) 20t7•10J<)/2U2l,~0:?3 .•..••.• 1.fst.J. ts, .... _.,, -·- ·).s t-1.J.~ .... •-•4 448.~. .. - ~2:?--- ... -tlSD 2Qt6-2016fWll:202 I )J.7-3.27 3,31,J3 I 605,6 583. l 61JS:~-·- ······ .. iiiT Otu.slaotdmgmten:s1'un.1_currt0fy Jedvatives _ ---··- _ , • ., , _ - ·········' .-5:?~:; ,--- i67.tJ •• 1.511.~ - · .. ·- 7()i.&
8,167.1 8.386.S
* Include; CUR 1.5 billion for the hybrid bond. 'J'he bond wa.~ Issued in 1v,.o cornpot1eiH$: EUil 0.9 hilliou With Lht:. firxt n::<li;.m ptioo cx:ca~io11 ir1 2020 um! 11.nt,1 mawrity in 2075, (md EUR 0.6 billiou, wilh du: l:i~t n.xlt:mption o<.:cusion in 2023 and final maniricy in 2078.
The following list shows the Group's and the Parent Company's maturity ~trncture for the aoncurrent liability:
Group 01l1e-r 0.fwhiclt1 r~rcm Con,pa1 Otlm· Of,vltif·h, liabilifit.s ro (/tr1'•(1tiue lhtbllilie-s to tlt!J'il'uti11e
Hnnd lo:tnll t'l't.tlit l'Q11.trat!1s Rcmrl loans trtdit C()fllf(tc'IS 011td111~ Ot•t\ JJ ,2019 De~.31,2019 Dt•c>. 3/,2019 Oor.d:ue Dc•:.JJ,2019 Occ .. U. 20l9 Der .. l l. 1"/IJ
2021 31.590.0•) l,3')5.66 5- 16.90 2021 :~ l,S'.10.(N 1,122..'i l 516,!Q_
?~?1,.·--··- ·· 10 !:U.:~.L- .. -~,.1SJ.44 ... -Af!.?~3.. -~~~~--.. ··--- 10,141.05 3,41J7.2(1 367.18
202,3 ______ ·~--··-•-··· 3/)93,.71 __ ·-··--~676.~7 ·-···· 52.S.7". 2023'--- 3.91J.1.71 ___ 3,6S$.$4 525.76 .20t.': 11?).1:4_5 ... ..:9~.6.2,9 •. . .. 1,03 91 .29_2~ - ··-•- _ 1,9144; __ .. 103.0V ...... ... IOJ.OQ 202l ·•··-•· ....... __ .•....•....... l~J,85 ............... 7.l j ... ··-•-·- _ 7.17 1!)25··-····- · --•·· ····-·-l ?J.SS -··- ··- 7.17 ···--··--· T, 17 ~Qt~ .. - ......... ·-·- . " .!J:t~Q,?.§ ... .. .,Q,~L ...... J>&t -~!(~6:.. .• .... ... !.?,!~)~% OJ.:' ..... _ .. _ . .?,§.; .
65,75J, I J.SZ0.7 To1"1 65;75-U 8,386.8 l,.m.o =~-----~==--==---- -==-Unrealized exchange-nite losses and market-v.ilue adjustments pertaining to derivative contracts with remaining maturities ofmorc than one year are also recognized under non-current liabi lities. The list below shows the currency distribution of the Group's and the Parent Company's long-term bon·owing as at December 31 , 2019.
Th,s is a true and accurate translation of lh ·ginal document
John Lightowler Au,horized Translator
Vo.lw Trca~ury AR (pub!)
Group
AUD Loan 448.4
EUR 45.633.4 -------.. ----------------------- ...... ---------------· JPY 853.2 -··---------------------------·------------ ~·· - . SEK 23.461.9 ............................................................................ ............... _Q?._.Q __ ··-·-······· ...............• 1,071.5 _Q~~-~~-<2~1!'.l'.~~-<2~~~---······· _ .. _ .. 2,453.2 Rig:it of use assets
.tntcrcst C~pct~SC •••••••••••••••••••••••• 0.2 ,
Total. 73,921.6
Cc1rp. Reg. No. 556135•4449
Parent Company Loan
AUD 0.0 __ ._ ___ --- ---- ---- ------------- --- -------------~!-.!-~---···· ·-· -· ··· --·· · ·· · · 45,633.4 JPY 0.0 ~§~.:.:.:::........ . .......... 23,461.9 usn 1,011.s Other currencies ................ 2;,is3_2:
Tot,11
0.0
12,619.9
Gran!ed but ~mu!iliY.ed non-cur:rent credit facilities that may be uti lized unconditionally amounted to SEK 43.0 billion at year end. These facilities consisted .of stand-by •facilities for loans with vurying maturities bct1vccn 2021 and 2024. A fee is charged for granted credit facilities, which is recognized under Administration cosL~ in the income statement and under Other current receivables in the balance sheet, see Note 14.
Note 19 Ot.her non-current liabilities
Outstanc1ins interest nnd c.urrenctierivatives ... _..... .. Olhe,· non cu1·re1,t ljnbilitie-s - ·------ --·---· ------·-- ·---------- ----- ------ ·--Total
Group Dec. 31, 2019 Dec. 31 , 2018
Zl-1.0 14S:8
Parent Compnny Dec. JI, 2019. Dec. 31 , 2018
200.0 143.6
Note 20 Current liabilities to credit inslillttions
Shon tern, bank Juans ,ind other Joans
Oul.sla11£!ns: inl~Tt!,l a;j C..l!rfl~l;~>: d~rivttlivc:S ....... Total
Group Dec.31, 2019 Dec.31,2018
Pnrent Company Dec. 31 , 2019 Dec. 31, 2018
34,572. I J2,944J 34.16<:l.3 30.41 1.0 334.4 395.8 315.5 381.5
34,906.5 33,:140.l 34,475.8 30, 7!12.5
Granted overdraft facilities amount to J .697 (2.521) in the Group and 972 (964) in the Parent Company.
36 (50)
This is a true and accurate translation of Lhe o · n~l document
f l'rnn~lator's Nole: 1'h1s RT1011 i:-.u lr<1.nsl<1tion of tht' Swedish langu;,,g~ origjwJI. In lhe t'\•eut \)fan>· lli fft<r~m.1t's b...«t\\•ccn 1hi!- uan:-.l,1tmn nnd lhc: SwcJi:.h 01igiual. lJlt' lallt'r :.k 1H p1c\rri iL Th,: labks -iJJ lhis.translation ltJ.vc been p1'Cwidc:d IJy Voh•o Tn:a:.01·y AD and kwe not b«n lliln:,.l.itt'J. The Audib)fs Rerxirt ha.s b..'"t'o pw-.ided by Octofnc.J
Volvo Treasury AB (publ)
Note 21 Other current liabilities
/\ccrnc<l interest cxpc-nsL'S antl prcpai<l inlerest incomt" OutstanWngintertsl and_cwrrency derivati\feS HUH--···· _\Vaftes1 s~l_?ries acd ta~-at;source .. .._ ....................... - ...... . Accrued exrensc~, and ~e.ferre.d income mH ____________ m
Othc.r cu1Tcnt Jiabilitics
Total
Note22 Cont ingent liabilities
Conting;ent liabilities on behalf of o1her Grou1>
Corp. Reg. No. 556135-4449
Koocerncn_ Mode1·holaget
Dec. 31, 2019 Dec. 31 , :018 Dec. 31, 2019 Det. 31, 2018
556.4 425. l 555.8 422.2 139 .s 123.6 i 31 :s - ··· .. ··-ros.o· 22.4 21.7 18.4 17.6
7.7 6.9 6.3 5:S
········-········ o.s ................. o. 1 ·--·········-· 0.3 ................. o.i . 726.8 'S/7.9 712.6 550.8
Group Parent Company Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2018
COnlj}a n 1 t:$ • ••• ••••• ••• _ ................... .. ······- · _ _ _ ____ •• _ .. __ ,5_~ J.c~ _ .. __ .. _ ... _ -~_J_]: ~ ..• ·• ....... ~~-!:? ........... _j .!?. : ~. Pension gua~anlees ......................... --.-... i . .............. 1. 1 ............... lj> ............... .!. l ............. _ 1 .0. Total contingent liabilities 52.2.7 5 14.8 522.7 514.8
Conli11gcnt liabililic~ rcc~'ivcd from otl,cr
Group companies, whicli reduce net obligations ••••••• ...:.~f.U'.L··-···· .5 J S,8 •.••••.•• -521.68 •••••.....• •513.8.
Tomi contingent li;1bilities, net 1.1 1.0 1.1 1.0
Note 23 Firuincial in~trumentS'
Disclo~ure$ o n ciu·rying amounts and fair va lues The carrying umounts and foir values of all of Volvo Treasury Group's financial instruments are compared iu tte following tables.
37 (50)
This is a true and accurate translation oft rigfnal document
,-.. ,, ......................... . John Llghtowlcr
Au1hofiz1:d Translator
n runst,!tcw'.s );nte; TI.t.-l rqx,11 i:: a t,~msfatil·)O or th< SwediJh fang.nag<' original In the cvrnt ('If .10}' ditYc:rn(:cs lxtW,'\:·fl this i:rnn:;lauon :ind 1hc $\-.t'Ji~h origiro1. dio Jltt,Jf sll,111 pre-..ail The tables in ,hi;; rr.msl:itinn hil\'e ~ n pnwirlcd hy VOivo Trcasu,1· AB .nnd have m,t hccn tnms.1.itc..-J. The Audi(or·s lk po11 ti;is fl~cn pro\·klcd by Odoiu..::. I
Volvo T reasury AB (pub)) Corp. Reg. No. 556135-4449
Note 23..1. Carrying amounts and faj n ,alues of financial instruments
,\s.~ds Ftruui<illl lljSCI-~ •• fa ir Vi h•r 1hr1,1llgl1 tht im:o>m< srn ld11tnt (luL11:Uld.in~.lfll•:rc.:t a11d CIU'fCJW}' 1isk
4,:ri,•ufr•es ' •
lln.am:illl ml>-fU 10\'Uuct•,J :U ;l.Jl,}l)r!htd
''"'
U 14
R«;e}vaQles \ml"I (j IV~ (rn 11p11ny _ ..... _,:as < )tl,i:r 1rJ;-n:.•t b.>:in_1.~ r1:c1i1.·:.blcs -.-•-·· . ...... _ I 'i
t.1111.Mliri« l-'i11and.._! liabiU(i~ at (;ii, vah,t Tlu-ouglt
1flr in,:11n1e ~rntffnllnl On1 mm,!in.1:. inten:S: 11111I ~'1m:11,;y m,\.,, IS.Iii,
C:r11up Ott. :H. ?OJ<>
<'.':'l.fr,\·l•~ V1dut
-t0,l t$.O
l~,1,rtnt l.'-Otlll)ill'.iy
Ott.ll, 2{lll)
C11;1'eyi1tg \ 'uh,1,:
MIIIIU ,Ul, t/11.1
Gtou.1> Otr. Jt, l!I I K
c:'11rr,i nJ! V:llur
Fllir,nlu.t-
J?.8011.3
l?•~nl <;om~nr Oto:. Jl, 2-0IS
( ,'Ull') iftJ!
V11htt
J5SG<. J.~6.6
l l .13 1.5 J?.7111:S
.~ .. • . .i.~~llvei:1 ···--····--10,1l .. ___ 1.2-0S.I l ,2~l' I ~\1~:;',~, .!,.12,~.~ ___d!.2.7 .,_ 1Al2.1 .. U9"7.l .,_ U~1,S __ _,2.,,,?".,,,.,_1 __ _.l,,_,?::,U1,_l,__-"'l,_el6e,7-".8'--~'°''"16:.c7e,.JS l,4Jl,7 UJ.l,j J,.l'9'1,$ J .191..S
!£!?.8IG17n lx11':>:I luun, :tm!llCl:C1 l.:i:11:. ___ IS ... '?.l ,92L6 ..... 151•422.4 12,619.9 . ,, 7~!11,~ .. ) ,Slxtntronboukl~Mdorherl,oom ,_ 20 _ l4,'i71. I .. _ H\5<J9.U J.J.161Ll .. _ 3-t,IS6.I) fll}1JbletoG1"/Jl1xrromri;E!/ ,. _______ 2S,J.:I ••• YL·Hl...3 ...... 92,191.4.. 9"l.9Sf.G ___ ?!.:ll.7
l t?.9.l~.ll. 20.? .?Ill.II 19S1Jf.K 2111,1117.1
Tr11d~ l\avnbl~ l.J l.l 2.0 ,., ,., 1.1 1.5
**The cr.:;dit risk is inclu<lt."Cl in the- mC<Jsurernt:nl (.If° 1ht:: H,ir value ()I' liahilit.l~ and loaris. as well as. receivables and liabilities from/tu (iroup rninpaoies. lond loan.:-, bank loans and mh.cr loans lo level 2. **Gross c.xposurc of <.foriv,1tiv~ with positive v.ilu~ lut.li heeo reduced by 8&% (83%) th:ough nctring 3grccmcnts. and liquidity u:ansfers Lo 229.0 (c30.1 ) . .t.*"ln tht.:. cQns\•lida.cl1 halnoce $heel, fina11cial liabiliucs include loan~rclatcd dt.Tivntivc instrum..mts vf 1.855. l ( I, 163. 7).
The oarrying amounts and fair values of the Volvo Treasury Group's financial instruments a.re eompaJ'ed in Table 23. The classification ofaccounl~ receivable, loan receivables and other interestbearing receivables has been changed frqm the category loan receivables and accounts receivable Id
lhe category financial assets measured at amortized cost.
This is a true and accurate translation of •~inal document
38 (50)
John Lighrowler Authod,:ed Translator
Cl'rnnsbun-·s Note: Ths repun i:,, a 1.rnm,laliun ol'lh~ S,-.:cdish ):)nguagc-Originat In 1hC,c\'Clll of any rliffr,c:n.-:cs \'lctwccn r.hi,; tu1ni;larion llnd 1hc Swedish original. tlle hllet' !,ball prev.1il. l'hc tables 111 chis tronsl-aiion huvc- h-.."eh pmvid.::d h>• V11lvo Trt>mury AO unt.l hu\'~ not bt'~n u-.msl.akd. Tue Audilor's Repor1 bas tcc,1 pro.,.·klccl by Ddrolttc, I
Volvo Treasury AB (publ) Corp. Reg. No. 556135-4449
Note 23.2 Income, cxpcuscs, gains and losses related to financial instruments The impact of gains and losses, as well as interest incomt:) and interest expense, on the Volvo Treasury Group' s gross earnings for the vari()US categoiies of the fmancial instrnments is shown in the table below.
Fimuidssl Stlt<ict,; and l iabilities-at 1:vTfL 1:
Matkemble securitlc~
Grnui:, Lie<, JI. 201.9
I nfcn:;<;t I ntcn".4it
Gains l..,osscs inrome es.pe11se
Gn.rnv n,c. J 1, 2013
Interest tutertsl Gttins l.(I.S)l.t .;, int omc cxpcn:-c
,luteres:J. and cuuenc-y rah: <lerivatives ... ________ ~ -·---- ·-•-OM··-. -3,467, l·-~··••u • .• -1 .507 .9 . . .... 86.0 _-1;682.1 ___________ - _ - J , I Ii .7
l::tfect on G1·0~ inct mt
Financi:11 llSStfS and liabilifi~ HI f•'VTPL"•
___ 21.4. __ .. 3s1.1 __ .,SJ6 .... - ...•.••
4,295.8 -4,788.2 3.858.3 -3.112.1
1'n1•e·nt com1>11ny Oct•. 31, 201..9
lntere.st lntutst
4.638.o -5.016A 2.999.o . 2_,n.1
P~•·enl comp~oy OC't. J1 t 20 IS
lntcrc~t lntcrt.sl G.dns Lossti1 income t.tJ>tn.sc
Markciablc sccurili,:«c_ _____ _
_ [~;~!~~~~~~Y~l!!~.~-~I!.~-~!!i.:~. -~-~=~=~~-___ --J,433..1 __ ___ :_:..:.~~~-~?;? _ ,m.o -1,<,77.5 ···---"· '.::·°':::"c:co·:::s
<..::ish And c:isb tq_.!Jlvaknu, _____ ·-------- 2 1..1 ·351.7_, ___ 53.3 •••••••••.••. . ...• 20.3 •. - ISL~ - ·· 47ccA __ _
~i~~ ·-•-~!:~~!!~!!!$ \'thltd a!_a_mo!!_i~~ (0~~-·-··-- - 4,274:L ..... -995.9 ~..... • . •1.275.0 - 4",53;-:s--=fi60~r · ...... ..:.___:!&!.i
t: rrecr 011 G,•os, income 4,295.7 -4,7R 1.0 3.73!1.? .J,041.1 4,638.0 -5.019.4 2,sn.1 -2.432.4
* Accrued and rcali;:cd interest ls included in guins omt l1>~scs rdulc-1 t'J financial 355(.'tS and li1bilitics measured ~u FVTPI..
Below is an ac~ount of derivative lnstrnmcnts and o.ptions on financiil and c-0mn1ercial assets and liabilities, The nomina l amount represents the gro~s amount of the contract. The contracls outstanding have been rec<•gnized at market value. The stated market values represent the calculated values that wi II not necessarily be realized.
39 (50)
This is a trur, and accurar.e translation of U1, i:_:rnJ/ document
lCertifie<l): ..
John lfghtowler lwthorized'rransfator
[Trn11.~!,uof:i. Nol.:: Thi; n:1101·1 is.u 1mnsfll1tnn nf1h.; Swcclhh l{lngu,"'lgC oligjnat ln tJlt:<Cv~l\l ofuny Lliff!:rm.:i:s hclw<.~n thi:- m1nsl;1tkm :m<I llJC Swedish origi.oal, tile l~u~n;IK1IJ prevail. Th~ uiblcs in this 1.r.in~b t ion h1l\1C: 00(,n puwid.;:,;f by Vol\•o Treas,.uy -1\B aod hj\•e oOl bt:en lr,m:<.hllcd. ·1 he At1d\tor's Rcport has ~ 1l pw~·iU:.'d by Deloiu.t•. j
Volvo Treasury AB (pub!) Corp. Reg, No. 5S6135-4449
Note 23.3 Oursta v~strnments hedging currency and interest•rate risk <5.\
~ TI>> ~ ; IJ1 - :;;;\ s;' ~ """'-,.. ~
'--1 J! :y lnterest•rate sw&ps -. _ __.. ~o . receivable noiition R 862 •
.............. ~ .. ~-........ £ ....... - - ---- --------- ------·~--0
. • payttble positbn ............................... - •• Interest•ratc forw,inls and futures
• - receivable_p-0~tion ·······················-···-·· . · payable gositi,)ll ............................... _ .• l'orcign cxchani;e forward contracts
. - receivable position ·····--········-······--...... • - g~ynbleposition .... ............. ..... ·-·····---· Options purchased, caps and floors
. - recei vable p-0sition ······-···········---
. · pay2 ble posilion · ·- .. ···-•··-··················· Options written, caps and floors
. • rc'Cci vablc .Position ..................... ·-·--··
. - payable position .. - .. • .. ···-···················· Total
This is a true and accurate translation of ri ina
\Cerllfiecil::'.'.:~;;::::;:=.:i,...,,;,;;; .. ;!, ... .., .. ,., ..... ....... - ..
Croup Dec. 31, 20l9
Nominal Carrying A ll tVUJI(
Dec. 31, 2018 Nominal Amounl
Carr}i11g value
77,941.5 91 1.2 105,027.0 3,150.7
....... 177,961.7 ••••••••• ·2,087 .1 .......... 128,885.9 ...•.••• ·I,) 55.2 .
·-··--· 26,606.9 .......... 1,059.4 ·········-~?,~~.!.? .. _ .. __ ..... 456.0 ......... ~~} ?!!:~ ............ · 117.4 .......... 2 ],217.1 .. _ ........ -277 .5.
..... __ .. 428.2 _ ............. 5A .... _ ..... _. 286.1 ·---....... 0, l
........ ....... o.o ............... o.2 ·······--··~9.'!,! .. _ ........ _. o.o .
.•. _ ....... 405.4 --·---.. --. -3,9 ·-···-·--··· 307.1·-··--··· ·-··· 0.0
.231.2 2,174.1
Parent Company O«. 31, 2019 nee. 3 t., 2018
Nominal Ca11,'ing Nominal Carrying An1oum value Atnount value John Lightowler
fotctest;ra~Lc::,·.::_s\~V::·•£;•t!·A~utlv>~~ri!:zed;;!.;T~ra::n!!s!::ra:::10<::... ___ ~
• • receiv!l,_ble p-0s'.rio11 ·- · ----······· .. --·········. payable position ·-··--·-··-·--.. ----·-... Interest-rate ron•nrds and futures
77, 147.9 903.6 103,270.1 3-1 74.7
• receivable pos:tion
. • payable p-0silion ·····---·-· .... - ...... - . __ . Porcigu exchange forward contracts
• • recei vab~ posiri,)11 ... _ .. ·-· .. - .... ............ . . • payable £,!)Sit ion ................... ·-·-· .... - .. . Options purc}J~scd, caps and floors • receivable position
• · eay-~bJe.posttim ··---.. --·---·---· .. -·.-· ... Oplions written, caps and tloors . rccci vahlc po~ilion
. - _eaxable _l>!)Siticn ___ . .. _ .............. - .... ·-·
Total
.. ,,._i 76.37J.1 ......... -2,072.6 -·---- 126,853.9 ....... · l,191.4
23,487.7 1,042.6 22,849.0 411.7
.-...... 13,290.6 ---··· ·108.8 ... _____ _18,479.6 ........... -206.2 .
•••••••. - · 428.2 ...... ._ •• - •• 5;4 ............. . ~~.~:!·---··----·-· Q. I. 0.0 0.2 307. 1
•••••~ • --•••••-•••-••••••• ...... - .............. • ••-•-••••M••••-•-••••-.-•-••••••~••o0•
............ 405.4_·--··-- •3.0 .............. 30-z.1 - ........... .
·232.6 2,189.0
Note 24 Information aboul the Parent (;ompany T he Pru·ent Company of the Group of which Volvo T l'Cas-ury AB is a si1bsidiary and for which the consolidated accounts are prepared is AB Volvo (pub!) (556012--5790), with regi stered 9flice in GoLhenburg, Sweden.
40 (50) [f l".i.nsl:nor's ~ot~· Thi!> report i:- al.mn:-.1.!ltic,n or 1hc $wc:<lish langv.og._. OJ"igi11at rn fht' t=Yent of any dit'fc1\oocs b.:-tween tliij,i lr.mslation ,md 1he Swedish origf1)J), the la1t'r slJ;iJJ prt',·a.i l. Thc-tablt's m this u,mslati\ln ha\·~ b~"'tl J)(Olfid~J by Vol\'u Treasury AH":rnrf h=t,·l~ oot beet) lt:'.J..n:.. lat.:.ll. 1'hc Amlit,1fs kcpnn has t,Ol.':11 ptov,d,.>d b~• OduillC'. J
Volvo Treasury AB (pub!) Corp. Reg. No. 556135-4449
TI1e company is not presenting a sustainability report in accordance with Chapter 7 Section 31 of the Annual Accounts Act. AB Volvo (pub!) (556012-5790), with registered office in Got11cnburg, Sweden, prepares a sustainability report for the Group that includes the company.
Note 25 Transactioo_s with 1·elated parties All 11nancial transactions with companies within the Volvo Group are cap'ied out on market tcnns.
Receivables and liabilities outstanding to companies within the Volvo Group are shown in the balance sheet. Revenues 1md expenses attribmablc to companies within the Volvo Group are shown in Notes 4 and 5. The Croup' s income statements and balance sheets will be presented to the Annual General Meeting for approval.
Note 26 Cash-llow statement
Group Son c:,tsh items
t1nrt':tli7..:d
Cash-flow from financing acth .. itie$ ~ ote J ,January 20 t 9 Cash llow exc-ban~t nut effects 1-'V valuatiou Dec. 31 , 2019
Omup uu11tribmlon~ r~C"ivt <.J - - ··-Group conlpbutions gr:mted .~ ... ~~--..-fioud loa,is Other liabilities to credit instituliOJlS Other non- CUITtnl lfobilili~ -Current liabHirics to credit institutio,,~.
t<Group comributiors rcceived'granted m n:,co,guizt:d under tht: ill'Dl R<..'Cci ,.•ab.lc.:l iabilitfos with Group companies (in ~ht: Vt>Jvo Group) iu Lhc: hahmc.:- .;ht:t:1 mu.1 fflV mov I f · · : ~e { l) in lc;<nJi11g to (irnup companies (-md increase (+)i<.k:crcasc (-) in b,)11'0\vin from tf«>-µpjql),t!tf¥\[1Jc!~~Jr~tm1'8tiw11p co ribut.ions r<..'Ccive:1/gr a¾lted in 1he ca!l.h-llow <i h1lt:m1;.-nt.
Parent company (::::::~:.~.~=~~.'... ~o" cash itcnu
John Ughtowler l inn,-liml Aµtho.ri~ed Tr;;1tl$lat r e~ch:tnRt r·,ue
0 1sb-fiow from fin:mcin,,!.,,.,+;,.;;;,...➔~;:.::hi,,'mmi-~ttt<J,--emrlno," effocts Ji\' v11lustiou Dec. 31 , 2019
Grol1p comribuLions rcc~ivij,J __ _ Group COl!l"~ihution.,grant~-d ___ hm __ _
13ond loan, Other linhilides to cr~dh ins1itulion~---Oiher 11on-currc-m liabilities
Liahi1ities to~ ~redi1 i1,stitutions ····- ~-
692.0 ......... . --·········-·····-··· -600.o"··--- ···········-· ·-·· -··· -··-·····-···
I 8 .•. 5~, 115.J . ....... 0
8,131.2 .......•. -1.492..3 - · • . .•••••• 65, 754.1. IR 7,516.1 380.9 -26:1.4 753.2 8,386.8 J? 143.6 0.0 0.2 51i.2 200.0
10 ·······-··· 30,792.5 ... ...... 3.749) ....... - ·· -56.6 ............... -9:i .. _, __ 34.47J.8
12,353.4 •Gl'Oup t~)ntn.l)\Jllon~ nx.'.~1v1;,xl/granl1.,xl un:: rccogmzcd under the item Recei\•;1hle!liahilitit:$ wi1h Gn..iup companies (in rhe Volvo Group) in the h:1foncc sheet and are o,ov..::J l'rou, lhc ilcm~ ioc~ tsc (-):'dccrc:.1sc (+} in lending to GrnuJ• con1pdl"lit:-. muf incmtsc {+)idecl'ea..c::e (-) in b~'lm1wing fronl Group comJ.nmks torhc ht~m:::; Gl'OOJ) C(Hllfihutirin,; l'ttd\rt!<l/l-,rn•nte\l in the cash-flow statement.
41 (50) n ·ran1-l.-tor'~ Note: Thi~ rq>nrt •~ ft traoslmlon of th!! Sv.edish l:.m.guuge otigim1L In I.he event nf nny dlt'f,·n·ncc;s l>.::tw\X'n this l1ilu1>bliou ,m<l the SweJish original, the: U.Ui:'lr shall pre,·ail l'hc tablt"S in ,his trans.fation ll.lVC bel•n pru,·ide:.l by Volvo T re ... ~ry AH nnd h:w,:; nm bo.."'1> rniostated. TI1e Autlitor':,. Re-r1ort hiL'i b,cn provlc!al by Uclnillc. J
Volvo Treasury All (1mbl) Corp. Reg. N<►• 556135-4449
Kote 27 Events after the close of the fiscal year No events occurred after the close of the fiscal year that significmtly affected the eamings or position of the Group or the Parent Company.
Note 28 Proposed disposition of unappropriated earnings [Translator's note: tables u·pdatedfor new tables supplied by Volvo, these are accurate tTanslations of the original: The following earnings are at the disposal of the Annual General \<lccting:
P.UK.J (,,.
' '\ If 1'.IJ> ·. < - ;.. I · ta f
.r-'y
Retained earnings
Net income
15.147.370.061
252.785.377
SEK 15.400.155.438
The Board of Directors at ·-- ....... ==~ opose that the above sum be appropriated as follows:
To he carried !cirv;ard SEK 15.400.155.438
The Group's income statements and balance sheets will be presented to the AnuuaLGenernl Meeting for approval.
111c Board of Directors and the President certify that the consolidate\: accounts have been prepared in accordance with international financial reporting standards (lFRS) as adopted by the Ell and present a true and fair view of lhc Group's position and earnings. The Annual Report was prepared in accordance with generally am;epled accounting prnctice and presents a true and fair view of the Parent Company' s financial positi011 und eamings.
The Board of Directors' Report for the Group and Parent Company gives a fair review of the developmenl of the busine$S, position and earnings for the Group and Parent Company, and describes the significant 1isks and uncertainties facing the Parent Company and the companies included in the Group.
Gothenburg, March 13, 2020
Thomas Lesti n CEO
SLn1e W.arlinsson
Our Auditors' Report was submitted on March 13, 2020 Deloitte AB
Fredrik Jonsson Authotized Public Accountant
42 (50)
frcdcrikLju11gdahl Chainnan
Erik Annerstcdt
T1is is a true and accurate translation o e original document
--= =----···-···""·--John Llllhtowler
Authori2Ed TraralaiDr
[TrnnsJ..·nor·s Note: 11i s rcpon ts a n:t11shmM of the Swcdj;,;h !:mgu.,gc c:mg:inal. In the C\•cnt (\f any clifl'c1cnce.,; bC.lWCl~n dus lmnsla1ion and 1he Swcdi~h c:uigtn~I. lhc la.lier $.hal l prevail. ' fhc ruble-; in U\i.s lrunsJ:Jtic,n ha\'e b:!-ai pmvidt."d by Vol\'o Tn-aiuty AB anJ ha"~ m>t b~eu (r,uli.lattxl. Titc Audj1(,r·::.: Rcpoi1 hlL'i 1-c.:n rmvidt.-d by Ddoiut:,1
Volvo Treasury AB (puhl) Corp. Reg. No. 556135-4449
Auditor's report This auditor's repo1t is a translation of the Swedish language original. In the events of any differences bel\l\'een this translation and the Swedish original the latter shall prevail.
To the general meeting of the shareholders of Volvo Treasury AB (pub!) corporate identity number 556135-4449
Report on the annual accounts and consolidated accounts Opinions We h;,-ve 3lJdltcd the annual accounts and consolidated accounts of Volvo Treasury AB {publ) for the financial year 2019·0 1•0J - 2019-12-31. The annual accounts and consolidated accounts of the company are included on pages l .. 4 2 in this dOC\Jrnent.
In our opinion, the anm.1al accounts h(lve been prep;;,rod In accordance with the Annual A:counts Act and present fairty, in all material respects, :he financial position of t he parent company as of 3 1 December 2019 and its financial performance and cash flow for the year then ended in accordance \'l ith the <Annv~I Accounts Act. The consolidated accounts have been prepared in accordance with ti~ Anr11.1t1I Accounts Act and presenl· fairly, In all material respects, the :inancial position of the group as of 31 December 201s and their financial i:,erformance and c~sh flow for the year then ended in accordance with International Financial Reporting Stand<irds { JFRS), as adopted by the EU, and the Annual Accounts Act. The statutory administ ration report is consistE:mt with the ot her parts o f the a,,nual accounts and consolidated accounts.
We therefore reconmend that the general meeting of shareholders adopts the !ncorne statement and balance sheet for the parent company and the group.
Our opinions In this report on the annual accounts and consolidated accounts are consistent with the content of the additiooa1 report that has bet:n su brnltted to the parern company's Board of Directors in accordance with the A1.1dit Regulation (537/2014) Article l l.
Basis for Opinions We conducted our :1vdit in accordance with Irltematiollal Standal'ds on Auditing ( ISA) and generatly accepted auditing standards in Sweden. Our responsibilit ies ur1der those staodards arc further described in the Auditor's Respons;bilities section, 'Ne are ir1depender;t of the parent compa,w and the Qroup In accordance with professional ethics for accountants in Sweden and have,? otherwise fu lf illed our ethical responsibilities in accordance with these requirerrents. This includes that, based on the best of our- kncwfcdgc and belief, no prohibited.services referred to in the Audit Regliation (537 /2014) Article 5.1 have been provided to the audited company or1 where applicable, its parent company or its co:l trolled companies within the EU.
w.e believe th.:,t th~ .:,udit evidence we have obtained Is sufficient and appropriate to provide a basis For our opinions.
Key Audit Matters Key audit matters of the audit are those matters that, in our professional judgment, were of most si9nifi~1nce in our audit of the annual accounts and consolidated accounts of the current period. These matter~ were addressed if\ the co,,text of our audit of, and in fonnin9 our opinion thereon, the annual a,ccounts ,tuld consolid<"J ted ~ccounts as a \'/hole, but we do not provide a separate opinion on these matters.
Kl'V Audit Matter Volvo Treasury eoters de-01.s for financial derivative lnsttuincnts with credit institutes to h?dge risks for fluctuations in currency ex.chtH19e rates and Interest rates. The valuation of these financial instruments is an important area in our audit considering t he complexity involved .
Our audit procedures have included, but not ex.elusively, cornpnsed of;
• ·we have :.iudited relevant internal controls in the valuation process, including controls for input dat<l'! in valvation models, changes in models applied and validation of data output towards counter part;•.
Vie h;)VC :iudltcd the in►)Ut data applied by management to determioe valuation of the financial derivative portfolio,
• We have :11.1dited valuation of financial der ivative iostruinents by comparing carrying fair value to Independent valuat ion or counterparty.
• 'We have :iudited completeness and accuracy in the disclosures related to financial derivative instn.1ment:s.
Our spcci:1llst on floandal losuurncnts has been mvo1ved during the audit and performance of the audit procedures.
• We have, in collaboration with our specialists on IT•audit, cJuctited geoeral rr~controls aod relevant i.1Ppllcation controls b r the Treasmy system applied for vatuation of f inancial deriv<JtiVQ ulstrume1,ts.
43 (50) (Tr:mslah1r's Nute: Ths repmt is :.i 1r.uli>k1ti~)(1 of tJ,e SweJisb language ori,gi,..,,L In tht l;'Vem or ;rny dilforeoccs bctwcx·n this tra1ulation arKI the SwtJish original. t1lt: btlt"r sh,,ll p1e\·ail. TI1e tabl<tS in thjs translatioJ> have llccn pro\'id,~d by v,,lvo Trca'8Jry AH ~md have 001 been 1mnsl:uccl f'hc Auditor's Rt po11 has l:cco provided by Ocloittc,J
Volvo Treasury A8 (1mbl) Corp. Reg. No. 556135-4449
Responsibilities of the Board of Uirectors and the Managing Director The Board of Directors. and the Managing Okcctor are resp-onsible for the preparation of the annual accounts and consolidated
accounts and that they give a fair presentation in accordance with the Annual Accounts /I.ct and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The B0<1rd o f Directors and the Managing Director are also responsible for such internal contr ol as they determine is neccssarv lO eoable the preparation of annual accounts and consolid~tl:d accoL1nts that are free f rom m aterial misstateme11t, wh ether duo to fr.'Hld (Ir ~ rror.
In preparing the annual accounts and cor1solldatcd {ICCounts, The Board of Directors and the Managing Director are responsib le for the assessment of the company's and the group's ability t◊ continue as a going concern. They disclose, as applicable 1
matters related to going concern and using the going concern b-asis of accounting. The going concern basis o f accounting is however not applied if the Board of Director'S and the Managing Director intends to liquid:1te t he company, to cease operations, or has no r ealistic alternative but to do so.
Auditor's responsibility Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated ;:'ICCOunts <1s a whole. ore free from material misstatement, whether due to fraud or error, and to Issue ;:'In -Oudi:or's report that includes our opin ions. R.easo1H)ble assu"11ce is a h igh level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and 9e,,er-ally accepted auditing standards in Sweden will always detect a material misstatement when It exists. Misstatements can arise from fraud or error and are considered material if, individually or In the aggregate, :hey could reasonably be expected to lnflvence the economic decisions of users taken on the basis o f these annual accoullts an:J C(H"ISOlidated accounts.
As part of an audit in accordance with ISAs, we exercise profcssiono1 judgment and maintain professional scepticism throughout the aucit. \Ve also:
Identify and assess Lhe risks of inateriol misstatement of the annual accounts and consolidated accounts, v,hcther due to fraud or error, design and perform c,1udit PrQCedures responsive to those r isks, and ottain audit evidence that is sufficie,,t and appropriate to provide a basis for oor Opin ions, The risk of not detecting a materi:11 misstatement resulting from fraud is h igher than b r one resll lth,g from error, -OS fraud may involve collusion, forgery, in:en tional omissions, misrepresentations, or the ov-crridc of In ternal cootroL
Obt~in -00 under$tanding of the company's internal control refevant to our audit In order to design audit procedures that arc appropriate In the circumstances, bvt not for the purpose of expressing an opinion on the effectiveness of the company's Internal control.
Evaluate the appropriateness of accounting policies used and the rcaso1,abJcncss of ax.ounting estimates and related d i~cJOGl,Jr~S rn~(IQ by th9 Board of OiiE!Cl::OiS ~ nd th E! Managing Director.
Conclude on the appropriateness of the Board of Directors' and the Ma,raging Directo,'s use of the going concern basis of acco1.inting in preparing the annual accounts and consolidated accounts. We also draw a conclusion, based on the audit evidence obtained, as to whether any mater ial uncertainty exists related to events or conditions that may cast significant doubt on the CCl'npany's and the group's ability to continue as a going concern. If we :onclude th~t o material uncertainty exlsts, we are r~q1.1ired to drdw attention in our auditor's report to t he related disclosures in the an,1ual accounts and consolidated ac,:ounts or, if such discfosures are inadequate, to modify our opinion about the annual accounts and consolidated ac.:ounts. Our cood usioos ore based 011 the audit evidence obtained up to the date of our auditor's report. However, futur~ cvcrl tS or conditiOlls mcly cause a company and a g·roup to cease to continue as a going concer o.
Evaluate the o ... erall presentation, structure and content o f the annual accounts and m nsolidated accounts, including the disclosures. and whether the annual accounts and consolidated accounts represent th.;~ underlying t r-0nsactions and events in zi rnanner that achieves fair presentation.
Obtain sufficien: and appropriate audit ev-idence regardl119 tha fh'liJl'ICial Information of the entit ies or business activities within t he group to express an opinion on the consolidated acc:ounl$. w e <)re responsible for the direction, supervision and performance, o f the group audit . 'We remain sole,y responsible for our opin ions.
Vie must inform the Board of Directors of, a,nong other matters, the planned scope and trning of the atJdit. We mus! also inform of significant audit findings during out audil, lncludi1,9 any significan t deficiencies i1 internal control that we identlftcd.
We mvst also provi,je the Soard of D irectors with a statement that we have complied with relevant ethical requirements regarding h,depend2,,ce, al'ld to comm unicate with them alf relationships and other matters that ,nay reosonably be thought to bear on our lndcpcndcoce, and where applicable, related safeguarcts.
From th.e matters communicated with the Board of Directors, we determine those matter~ that were of most signif icance in the a1.1dit of the annual accounts and consolidated accounts, lndudlng the most important assessed risks for mater ial misstatement, and :ire therefore the key audit matters. We describe these matters in the auditor's report unless law or regulation precludes disclosure about the matter,
Report on other legal and regulatory requirements Opinions In addit ion to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of D irectors i nd the Managing Director o f Volvo Treasury AB {publ} for the fi1);)ncial year 2019-01-01 - 2019 -12-31 and
44 (50) rntlnslacor·s ~ote: Thjs t'\'pon is a h~u,sl:lt ion of the Sw~i:,.h laug_uagt' orig:inaL ln the evcm of any diff.:;rc11-:cs l:i~twccn ch.is 1mnsla1ion aod th~ Swcdi,;h original, 1hc lmcr shnll pn·vaJI Th.; 1:tblcs in 1his wanslmion have- b~.:u pmvi,kJ. by Vulv11 Trea.-.!11)' AO und have nol hccn cr;mslat.;d, llw AudiLor's R<.,1101t has h:en provided hy Ddnilfc.]
Volvo Treasury AB (publ) Corp. Reg. No. 556135-4449
the proposed appropriations of the company's profit or loss.
We recommend t◊ the ger,eral meeting of shareholders that the profit to be appropl'iated In accorda1)CC with the p r-OpOS-<"11 in the statutory ~dm inistratiOrl report and that the members of the Board of Directors and t"IC Managing Director be discharged From liability for th,~ nnand,11 y~1r .
Ra~is for Opini<)ns We conducted the audit in accordance with generally accepted auditing staodards in Sweden. Our respon.sibilit ies under those standards are turtt er described in the Auditor's Respo,1sibilities section. w e are indepenrent of t he parent company and the group m accordance with professional ethics for accountants in Sweden and have otherwiSe f\1lfilled our ethical responsibilities in ,:iccordance with these requirements.
'We believe that the audit evidence \'IC have obtained is sufficient and appr opriate to pro'vide a basis for our opinions.
Responsihilities of the 8(1nrd of Directors and the Managing Director The Soard of Directors is responsible for the proposal for appropriations of the cornptiny's prOftt or loss . At the proposal of a (1ividend, this includes an assessment of whether the dividend is justifiable oonsiderh19 the requirements which the company's and the group's type ot· operations, size and risks place on the size of the parent cornpan'/'s and the group's equtt:y, consolidation requirements, liquidity and position in general.
The Board of Directors is responsible for the company's organiz.i'ltion and the administ rati,, n of the company's affairs. This indudes among ott er chings continuous assessmer1t' or the cornpany's and the group's financial situation and ensur ing that fjl e company's organization Is designed so that Lhc accounting, mant>gernent of assets and the company's financial affairs other wise are cont,olled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of D irect,:>rs' guidelines and instructions and arnong other matters take measur~s that are necessary to ful fill the company's account ng in accordance with law and handle the mani:19ement of assets in a reassuring manner .
Auditor's res11onsihilily Our objec1,:ive concerning the audit of the administrat ion, and thereby our opinion about discharge from liability, is to obtain audit evider)ce to assess with a reasonab!e degree of assurance whether any member of the Board of Directors or the Managh,g Oir«tor irl tiny material respect:
has undertaken any action or been guilty of any omission which can give r ise to liabili:y to the company, or
• in any other way has acted in contravenuo,, of the Companies Act, the Annual Accourts Act or the Articles of Association.
Our obJecthte C01)oi;;r 1lin9 th¢ ovd,t of the propo::;cd ·.;ipproprk1tion~ of th-: comp.::iny's p rofit or loss, .::uld tht-::r<:by Qur ¢pinion about this, is to assess with (casonahle degree of ass1.1rc1nce whether the proposal is in accordance with the? Companies Act.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit ccnducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the prnposcd appropriations of the company's profit or loss are not in accordance with the Compa,1ics Act.
As part of an audit n accordance with generally accepted auditing standards in Swe(fen, we exercise professional judgment and maintain professional scepticism throughout the audit. The examination of the administration and the proposed apptoprlations of u~ cornPttny's profit or loss is based primarily on the audit of the accouots. Additional audit procedures performed are basOO on our p('Ofessional judgment with starting point In risk and inatcrlallty. 1'his means that we focus the examination on such (!Ctions, areas and relationships that are material for the operatioos :rnd where deviations and violations would have partlcubr i0:11>ortaoce for the company's situation. Vie examine and test decis ans undertaken, support for dccisio1)s, actions taken ar,(l other circumstances that are relevant to our opinion conceming discharge fro1n liability. As a basis for our opinlof'\ on ~he Bo(lrd of Diret.i:ors' proposed appropriations of the company's profi t or loss we examh,ed whether the proposal is In accordance with the Companies Act.
45 (50) [Tr.'11)Sl.nor·s N\~lc:: Tl1i~ r~porl is a trJrL,,;lalfon of lhe ~wccli1:,h languagc,m.gim1I, In {he ('vent of any diOeL\"uN'S between thi$ tmnslatfon :md the Swedish ong,l11al, th..:' ktl\:'1 shall p,x-vail. 1111.' tabki. in Otis tr,mi.k1tion fl.we been provided by Villvo Trcastl)' AB i'lnd lt;1ve not b~eo tJ:insfatcJ. The A~1ditor'$. Rcpo,1 h;ts lx\•n prO\'idcd by Deloitte.]
Volvo Treasury AB (publ) Corp. Reg. No. 556135-4449
Deloitte AB, was a,pointcd auditor of Vo1vo Treasury AB by the general meeting of the s1areholderson the 2018-04-13 and has been the company's auditor since 20Ui·04•13.
Gotnenburg Marcil um, :,w:.m
Deloitte AB
Fredrik Jonsson Authorized public accountant
46 (50) (Tt.:i.nslator's l'{otl:". Th.is l"<p0tl i~ a t•~ms!atiun of th.: Swctfo•h l,mguagc: nriginal. In 1hc cvcnl of any ctiffCr,·n~cs b,;-cwe..:-o IJliS tr',mslation anJ tht< -SwOOish origlr.al, •he 13u\· rsball pce-vaU, Tile 1::tble~ i.il this trauslatiou ha\'t-been p1v•oiJ.OO t,y Volvo 1' reasury AH 11nci have not been translated. Tht' Auditor·~ Rcpnn h::is b~r.n 1>rovidod by l)doinc,J
·,
B (publ) Corp. Reg. No. 556135-4449
rnance Report (pub)) has issued debt secu1ities which arc listed on a regulated market ,1nd the
ore required to prepar~ this. Corporate Governance Report in accordance·with the Annual Accou11ts Act ( l 995: 1554).
AB Volvo owns 100% of the shares of Volvo Treasury AB (pub!) and therefore holds all the voting rights at the shareholder's general meetings.
Introduction The Board of Directors of Volvo Treaswy AB (pub!) comprises four members \,i th no deputies. All of the members were elected at the scheduled general meeting of shareholders for a period of one year. The con-.pany's Articles of Agsqciation stipulate that the· general meeting may not appoint
• fewer than three and not more than ten Board members.
The company's A11iclcs of Association were adopted at the 2013 Annual General .\kcting. Tiie Articlc.s of Association may be amended through resolution by the general meeting of shareholders in the manner prescribed 11y the Companies Act and 110 further resLiclions apply as lo how such amendments are implemented.
The general meeting of shareholders of V,olvo Treasury AB (pub]) has not given the Board ,my mandate to <letide 011 the iss\:Je of 11ew shares or the buy back of !he company's own shares.
Volvo Treasury AB (pub I) has decided not tll establish an Audit Commincc. In light of the ahove, the Board of Directors of Volvo Treusw-y AB (pub!) is responsible fo: the performance of' the tasks speci lied in Chapter 8 Section 49(b) .of the Companies Act (2005:55 1) and lhe tasks of the Audit Committee pursuant to Regulation (EU) No 537/2014 o!' the European Parliament and of the Council of 16 April 2014 on specific req uirements regardil1g statutory audit of public-interest entities and rc~caling Commission Decision 2005i909/EC, in its original wording.
Tntcrnal control over financial reporting The Volvo Treasury Group' s system for internal control and risk management in connection with the financial reporting is designed in accmdance with the Volvo Group' s policies and guidelines. 111c fo llowi11g text describes how the internal control is organized within the Volvo Group in general. and wi thin the Volvo Treasmy Group with regard to financial reporting.
The Volvo Group has a specific. function fi1r internal control, whicl: aims to provide suppon for management groups withi.n the business 11reas and Grnup nmetions that wi ll allow them to continuously provide solid and improved internal controls relating to financial repo1ting. Work conducted through this function is based p1imarily on a methodology that aims to ensure compliance with directive::;_ and guidel ines, and to create effective conditions for specific contrnl activities in key processes related to financial reporting. J\B Volvo's Audit Committee is informed of the result of the work performed by the Internal Control ti.n1ction within the Volvo Grnup with regard to risks, coilttol activities and monitoring the financial reporting.
The Volvo C.r~nr ~!so h~s atl lnltmi~l A11tlil function with the pl'imary task of independently ensL)ri11g that mmpanies in the Group comply with the principk~ and rules that are stated in the Group's direcl.ives, guidelines and in.stmctions for financial repor ir.g. 'fliie ili#~tL&>Krlib.~d:!~
t·anslailon o~ •~ o!l!.r:4· µJ. ~.d0==it
IT1.i.11sl;:uor's ~'otc: TIU:. rl"poJt •s u lr,mslndon ofthi: Swtxlh,h hmi mlg!~ri~~~:~~ In 1hc c,•~1 ofo.ny di! {~~!1:·;~ •. c::n I u:>llam,1.ati-;.m and'iliC" ····•· .. ,., •• , .... Swedish 01·lg i1\:1I, ~be J~ttcr shall p1evail l1n_1 tal,1~> Ui lh.i~ lt,1ns!a1ion ha.,c bt'1.111 rm1,.·ilk·d hy Volv(I rr :t11111y . A:liJ l\l)VI? 1l<;.ll lx'en \L~n~Jllt.~ . The . .\udimr's Rcpon; h3S b:cn J'l'<'Vidl.\.1 by Ddoinc J ·
Volvo Treasury AB (pub!) Corp. Reg. No. 556135-44.49
Audit function reports directly to the CEO, the Group's Gcncrf.1 Counsel and to the Audit Cpmmittc.c ofthc Board of AB Volvo.
The Volvo Treasury Group's controller function has a specific function for uitexnal control, which aims to provide support to the Volvo Treasury Group's Board that will allow it to continuously prQvide solid md improved intcmal controls relating to financial reporting.
Control environment Fundamental to the Volvo Group 's control environment is the corporate culn1rc that is established within the Group, in which managers and employees operate. The V:)lvo Group works actively on communicntion and lraining pertaining to the company's core values as described in the Group's Code of Conduct., to ensuxe that good morals, ethics and integrity perncatc the organization.
111c foundation of the internal control process relating to the financial reportiJ1g is built up around the Group's directives, guidelines and instructions, as well as the existing responsibility and authority strncture. The principles for the Volvo Group's internal controls, as well as directives and guidcfu1cs for the financial reporting are contained in the V<1lvo Group Management System, a Group-wide management system that includes the Group's insu11ctions, mies and policie.s.
Risk assessment Risks pertaining to financial repocting are evaluated and overseen by the Volvo Group's Bom·d of Directors through its Audit Committee, 'aad by Volvo Treast1ry Group' s Board of Directors, by identifying significant risks and how they should be managed and c0untcractcd. The evaluation or the degree ofrisk that is required for errors to appear i1t the finaitcial reporting is ba.~ed on a number ofcrircria, for example the cornplexi1y of the acccmntingpolides, I.he valuation principles for assets and liabilities a.nd complex or changed bl.1$iness circ-umstances, etc. The identified risks, together with requisite mitigating control targets, are collected in a framework for internal control of finm1cial repo1i ing, Volvo Jnternal Control Standard (VICS).
Control activities The Volvo Gr()up's Board of Direc-tors and its Audit Committees as well as the Volvo Treasury Group's Boan\ of Directors constitute the overall supcrvisoty body for internal control. Several control activities arc applied in the ongoing business processes to ensure that potential emJrs or deviations in the financial reporting are prevented, dis.:overed and corrected by including control activities that match the control targets defined in the VlCS framework. Control activities range from review of outcome results at management group meetings to specific reconciliation oF accounts and a:1alyscs of the ongoing processes for .financial reporting,
Information and comurnnicatiou Guidelioes and instrnctions relating to the financial reporting arc updated and communicated on a regular basis from the Volvo Group's management to all employees concerned. The Volvo Group accounting department holds a direct operative responsibility for ongoing fmanciat accounting which is aimed at ensuring a uniform application of the Group's guidelines, policie.~ and instrnctio11s for the finru1cial reporting, and at identifying and communica(in shortcomings and areas of improvement in the rocesses for financial repo1iing. This is a true anrl accurate
~\ p.Uto 01 trnnslalft..iH ~,i lh .- -Jl"fin~I document ,.,}°:>~ :..---...;. I,;_\ '·
,y a <1-§ «IJ' .,,<:. - ,..,,,.,_;,:I John L.-.ht.)WflJr <Ai/l-- JJ -::i. •,, t\\ > 48 (50) Au1hnri2cu Tr.1nsfa1or
(Tfa.ttsfator's_ Not~: Thi~ I\: 1 a n. tO~ S ~ lai1~u~ge odg.i11~,1. ht lht' ~\'<!llt or any Jiff<:nmces belwa:n lln:- trnn~!:111nn an<l 1h.,: Swt.•,fr.;h nrigin~I, the l~ncr , cv ll)c tW; ~ tslaUOJ) hfw._, been 1>ro .. ·idOO by Volv..:, Tn.>.1:rury AD and ha\•<.' tl.Ol ~ n lr.m.sluh.tl n,~
Monitoring
Audiinr' s Rt-plrt ha!--~ :.~{l p 'I .. Deloitte _,..o •. V
IVR 862 •
Volvo Treasury AB {pub!) Corp. Reg. No. 556,135-4449
Ongoing rcsponsihility for fi>ll.owing up Volvo Treasury Gtot~)'$ inte111al control rests wi th the Volvo Treasury management group and controller ii.mctions in cooperation with the Volvo.Grot1p's accounting fi.mction. In additio11, the Internal Attdit and the Internal Control functions of the V<>lvo Group conduc: review and follow-up in accordance with what is described in the intr()duction of th.is repo1t. More specifically, the Internal Control function run, and coordinates evaluation activities through the. Volvo Group Internal Control Program, which aims to systematically evaluate the quality of the internal control over financial reporting on a yearly basis. An evaluation plan is settled annually and presented to the. Audit Committee. Th.is evaluation program comprises tlu·ee ma.in areas:
I. Group-wide controls Self-assessment procedure carried out by management teams at business area/Group-function levels as well as company level. The areas eval11;1ted are mainly compliance with the Group's financial. directives and guidelines that are collected in policies found in lhe Financial Policies and Procedures, as well as The Volvo Way and the Group 's Code of Condwt. 2. Process controls at transaction levels: Pr9cesses related to the financial reportiug are evaluated by testing of routines/contro ls based on a framework for intemal co11trol of financial reporting, VICS - Volvo .hitenial Control Standards, 3. General IT controls: Processes for maintenance, development and amhorization management pe1tain.ing to fi:1ancial applicalions m·e evaluated by testing routines/con1rols.
The results of tire evaluation activities arc reported tu the Volvo Group' s Hoard of Directors and its Audit Committees as well as to Volvo Treasury Group's Board of Directors.
Gothenburg, March 13, 2020
Volvo Treasury AB (publ)
Board of Dircmors
p.\JKTo,9 '<I'<':
• -s>.,,
~ ffl) ; ;111-~~
NR 862.
This Is a true and accurate translation of th )ral document
49 (50)
John Ugh tow er Authuclzed Transliror
[T1<1ns.lmot's Nol<: Thi>'. rcporl i'> .i tnin.,;lnrion of d).~ Swedish lapgoag<' ·od,giu:.11. In t.lw cvrnt of ;my (fiffcn:ncc~ between 1lijs tm1~l~lion a1hl thl." ~\\'OOJ:;h Qrigiu::tl. lhe b -h:r ~hri.ll prc-.va1I The LUbl~ 1n Liu!! u:inslalcc>n hnvc been 1mw!dell by Vo1vo T~m.111'}' All and luwc no1 been 1amskn~d. 11Jt! Aurlit,\r·s Rcpc1n has beie11 provilloJ by Deloiue.1
Volvo Tr·easury AD (1mbl) Corp. neg. No. 556135-4449
Auditor's report on tl1e Corporate Governance Statement
TI1is audi tor's report is a translation of the Swedish language original. In the event of any ditlerences be1ween dlis translation and rile Swedish original, the latter shall prevail.
To the general meeting of the shareholders of Volvo Treasury All, corporate identity numher 556135-4449
Engagement and responsibility TI1e Board of Directors who is responsible for the corporate governance statement for the financial year 2019-01-01 - 2019- 12-31 on pages 47 - 49 and that it has been prepared in accordance with the A1urnal Accounts Act.
The scope of the audit Our examination has been conducted in accordance with FAR's auditing standard RcvU 16 The auditor's examination of the corpornte governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with lntemational Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us wit11 sufficient basis for our opinions.
Opinions A corporate governance statement has been prepared. Disclosures in a•~cordancc wi th chapter 6 section 6 the second paragn1ph poi11ts 2-6 of the Annual Accounts Act and chapter 7 ,3ection 31 the second paragraph the same law are consistent with the annual accounts an<l the consolidated accounts and a:e in accordance with the i\nnual Accounts Act.
Gothenburg, Ill.arch 13th, 2020 Deloitte AB
F'redrik Jonsson Authorized Public Accountant
50 (50) f'rmnsintor·s Note: This rt~po1t 1s a transl.11fon of the Sw"1ish la1iguage l)l'iginal. In lite ~.,erit of any difl-<:Rnccs b .• "W'o.;n thi$ tr:mst.11ioll and Ille S·w..:diiih <1riginal, lhe h ttcr shall prc\'nil. rhc. mbl~ in 1his 1'rn,15latton h::i,-c been p1ovidcd by Voho Tn:asu.ry AO and have ruit h<.x-n trnnsk1 t..::d. Th¢ Auditor's Rep,mt Ju.,; b::en prm·lded by Udnittc.f
