Volvo 2006 Annual Report Download - page 156

152 Financial information 2006
Proposed disposition of unappropriated earnings
AB Volvo SEK M
Retained earnings 34,997
Income for the period 4,349
Total 39,345
The Board of Directors and the President propose that the above
sum be disposed of as follows:
SEK M
To the shareholders, a dividend of SEK 25.00 per share 10,120
To be carried forward 29,225
Total 39,345
In view of the Board of Director’s proposal to the Annual General
Meeting to be held 4 April 2007 to decide on the distribution of an
ordinary dividend of SEK 25 and on an automatic redemption of
shares, including a reduction of the share capital, and a reduction
of retained earnings, for repayment to the shareholders in amount
corresponding to SEK 25 per share, according to the Chapter 18
Section 4 and Chapter 20 Section 8 of the Swedish Company Act,
the Board hereby makes the following statement.1
The proposed ordinary dividend and the proposed reduction of
the share capital for repayment to the shareholders reduces the
Company’s solvency from 85.3 percent to 77.4 percent and the
Group’s, excluding Financial Services, solvency from 43.5 percent
to 37.2 percent, calculated as per year end 2006. The Board of
Directors considers this solvency to be satisfactory with regard to
the business in which the Group is active.
According to the Board of Directors’ opinion, the proposed ordi-
nary dividend and the proposed reduction of the share capital for
repayment to the shareholders will not affect the Company’s or the
Group’s ability to fulfi l their payment obligations and the Company
and the Group are well prepared to handle both changes in the
liquidity and unexpected events.
The Board of Directors is of the opinion that the Company and
the Group have capacity to take future business risks as well as to
bear contingent losses. The proposed ordinary dividend and the
proposed reduction of the share capital for repayment to the
shareholders will not negatively affect the Company’s and the
Group’s ability to make further commercially justifi ed investments
in accordance with the Board of Directors’ plans.
Göteborg, February 21, 2007
Finn Johnsson
Peter Bijur Per-Olof Eriksson
Tom Hedelius Leif Johansson Philippe Klein
Louis Schweitzer Ying Yeh
Martin Linder Olle Ludvigsson Johnny Rönnkvist
Our audit report was issued on February 21, 2007
PricewaterhouseCoopers AB
Göran Tidström Olov Karlsson
Authorized Public Accountant Authorized Public Accountant
Lead Partner Partner
In addition to what has been stated above, the Board of Direc-
tors has considered other known circumstances which may be of
importance for the Company’s and the Group’s fi nancial position. In
doing so, no circumstance has appeared that does not justify the
proposed ordinary dividend and the proposed reduction of the
share capital for repayment to the shareholders.
If the Annual General Meeting resolves in accordance with the
Board of Directors’ proposals regarding ordinary dividend, reduc-
tion of the share capital for repayment to the shareholders and
bonus issue, SEK 18,680 M will remain of the Company’s non-
restricted equity, calculated as per year end 2006.
The Board of Directors has the view that the Company’s and the
Group’s shareholders’ equity will, after the proposed ordinary divi-
dend and the proposed reduction of the share capital with repay-
ment to the shareholders, be suffi cient in relation to the nature,
scope and risks of the business.
Had the assets and liabilities not been estimated at their market
value pursuant to Chapter 4, Section 14 of the Swedish Annual
Accounts Act the company’s shareholders’ equity would have been
SEK 475,922,222 less.
1 The Board members Martin Linder, Olle Ludvigsson and Johnny Rönnkvist
opposed the Board of Directors’ proposals concerning dividends and
redemption of shares due to their view that the proposed amounts were
too high because the Company would need the capital for acquisitions
and other investments an to secure the development of the Company in
future downturns in the economy.
We hereby certify that, to the best of our knowledge, that
– the annual accounts have been prepared in accordance with
good accounting practices for a stock market company;
– the information is, an all material respects, consistent with the
actual conditions; and
– nothing of material importance has been omitted that could
affect the fi n ancial position of the company as presented in the
annual report.2
2 This certifi cation, which has been provided in accordance with Section
3.6.2 of the Swedish Code of Corporate Governance, does not mean that
the board of directors and the President of the Company assumes any
further responsibility than what follows from the Swedish Companies Act
(2005:551).