Electrolux 2005 Annual Report Download - page 88

84 Electrolux Annual Report 2005
Stockholm on February 13, 2006
Michael Treschow
Chairman of the Board of Directors
Peggy Bruzelius
Deputy Chairman of the Board of Directors
Louis R. Hughes Tom Johnstone Aina Nilsson Ström Caroline Sundewall
Barbara Milian Thoralfsson Karel Vursteen Marcus Wallenberg
Malin Björnberg Ulf Carlsson Annika Ögren
Hans Stråberg
President and CEO
Proposed distribution of earnings
Thousands of krona
The Board of Directors and the President propose that income for the year 1,997,323
and retained earnings 12,498,452
Total 14,495,775
be distributed as follows:
A dividend to the shareholders of SEK 7.50 per share 1), totaling 2,201,325
An additional dividend to the shareholders of all shares of the
wholly-owned subsidiary Husqvarna AB including the underlying
group of companies mainly as set out on page 41 in the annual report 2) 608,471
To be carried forward 11,685,979
Total 14,495,775
The Board of Directors has proposed that the Annual General Meeting
2006 resolves on an appropriation of profits involving a dividend to the
shareholders of SEK 7.50 per share. The Board of Directors has also pro-
posed that the Annual General Meeting 2006 resolves on a dividend of all
shares in the wholly-owned subsidiary Husqvarna AB, including the under-
lying Group, mainly as set out on page 41 in the annual report. The total
amount of the proposed dividend is consequently SEK 2,809,796 thousand.
With reference to the Board of Directors’ proposed distribution of
earnings above, the Board of Directors hereby makes the following state-
ment according to Chapter 18 Section 4 of the Swedish Companies Act
(2005:551).
The retained earnings from the previous years amount to
SEK 12,498,452 thousand and the net income for the year amounts to
SEK 1,997,323 thousand. Provided that the Annual General Meeting 2006
resolves to allocate the results in accordance with the Board of Directors’
proposal, SEK 11,685,979 thousand will be carried forward. After distribu-
tion of the proposed dividend, there will be full coverage for the restricted
equity of the company, also taking into consideration the proposed autho-
rization for the Board of Directors to decide on repurchase of own shares.
It is the Board of Directors’ assessment that after distribution of the pro-
posed dividend, the equity of the company and the Group will be sufficient
with respect to the kind, extent and risks of the operations. The Board of
Directors has hereby considered, among other things, the company’s and
the Group’s historical development, the budgeted development and the
state of the market. If financial instruments currently valued at actual value
in accordance with Chapter 4 Section 14 a of the Swedish Annual Accounts
Act (1995:1554) instead had been valued according to the lower of cost or
net realizable value, the equity of the company would increase by
SEK 78,282 thousand.
The Board of Directors has made an assessment of the financial posi-
tion of the company and the Group as well as the possibilities of the com-
pany and the Group to comply with its obligations in a short term and long
term perspective. After the dividend, the equity/debt ratio of the company
and the Group is assessed to continue to be high in relation to the industry
in which the group is operating. The Board of Directors has hereby consid-
ered the assessed effect on the equity of the company and the Group of
the distribution of the Husqvarna group after reorganization.
The proposed dividend will not affect the ability of the company and
the Group to comply with its payment obligations. The company and the
Group has sufficient access to long-term, as well as short-term, credit
facilities, which can be used by short notice. The Board of Directors there-
fore finds that the company and the Group are well prepared to handle any
changes in respect of liquidity, as well as unexpected events.
The Board of Directors is of the opinion that the company and the
Group have the ability to take future business risks and also cope with
potential losses. The proposed dividend will not negatively affect the com-
pany’s and the Group’s ability to make further commercially motivated
investments in accordance with the strategy of the Board of Directors.
The Board of Directors and the President and CEO declare that, to the
best of our knowledge, the annual report is prepared in accordance with
generally accepted accounting principles for stock market companies,
that the information contained in the annual report is in accordance with
factual circumstances and that it contains no omission likely to affect the
representation of the company which is established by the annual report.
1) Calculated on the number of outstanding shares as per February 13, 2006. Currently, the
company holds 15,410,329 shares as treasury shares. Based on the resolution adopted
by the Annual General Meeting in April 2005, a maximum of 15,481,701 additional shares
may be repurchased prior to the Annual General Meeting in April 2006, thereby decreas-
ing the total dividend payment. The number of repurchased shares may decrease if
employees exercise their options, which would increase the total dividend payment. The
Board of Directors and the President propose April 27, 2006 as record day for the right to
cash dividend.
2) In the proposal for the appropriation of profits, the book value of Husqvarna AB in the
Parent Company is stated as per December 31, 2005. In order to prepare for the
distribution of the shares in Husqvarna AB, a reorganization of the legal structure is in
progress. This reorganization is expected to increase the free reserves in AB Electrolux
by approximately SEK 2,900m and the book value of the shares in Husqvarna AB to
approximately SEK 7,300m, at the day of distribution.
Husqvarna AB, including the underlying group of companies, mainly as set out on page
41 in the annual report, is expected to represent approximately SEK 4,700m of the equity
of the Group as per December 31, 2005, including the effects of the above mentioned
reorganization. The equity of the Husqvarna Group at the day of distribution is not
expected to exceed the sum of SEK 4,700m and the net income earned for the period.
Each share in AB Electrolux shall entitle to one share in Husqvarna AB. Holders of
shares of series A in AB Electrolux shall receive shares of series A in Husqvarna AB and
holders of shares of series B in AB Electrolux shall receive shares of series B in
Husqvarna AB. The Board of Directors is proposed to be authorized to determine the
record day for the dividend of the shares.