Proposed disposition of unappropriated earnings

AB Volvo SEK 
Retained earnings 26,787,875,659.22
Income for the period 2010 5,480,540,903.23
Total retained earnings 32,268,416,562.45
   
The Board of Directors and the President propose that the above sum be disposed of as follows:
  SEK 
To the shareholders, a dividend of SEK 3.00 per share 6,082,283,862.001
To be carried forward 26,186,132,700.45
Total 32,268,416,562.45

The record date for determining who is entitled to receive dividends is proposed to be Wednesday April 11, 2012.
 
In view of the Board of Directors’ proposal to the Annual General Meeting to be held April 4, 2012 to decide on the distribution of a dividend of SEK 3.00 per share, the Board hereby makes the following statement in accordance with Chapter 18, Section 4 of the Swedish Companies Act.

The Board of Directors concludes that the Company’s restricted equity is fully covered after the proposed dividend. The Board further concludes that the proposed dividend is justifiable in view of the parameters set out in Chapter 17, Section 3, second and third paragraphs of the Swedish Companies Act. In connection herewith, the Board wishes to point out the following.
 
The proposed dividend reduces the Company’s solvency from 54.7 per cent to 50.9 per cent and the Group’s solvency from 24.3 per cent to 22.9 per cent, calculated as per year end 2011. 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 dividend will not affect the Company’s or the Group’s ability to fulfil 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 assume future business risks as well as to bear contingent losses. The proposed dividend is not expected to adversely affect the Company’s and the Group’s ability to make further commercially justified investments in accordance with the Board of Directors’ plans.

In addition to what has been stated above, the Board of Directors has considered other known circumstances which may be of importance for the Company’s and the Group’s financial position. In doing so, no circumstance has appeared that does not justify the proposed dividend.

If the Annual General Meeting resolves in accordance with the Board of Directors’ proposal, SEK 26,186,132,700.45 will remain of the Company’s non-restricted equity, calculated as per year end 2011.

The Board of Directors has the view that the Company’s and the Group’s shareholders’ equity will, after the proposed dividend, be sufficient 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 a of the Swedish Annual Accounts Act, the company’s shareholders’ equity would have been SEK 34,680,896.00 less.


1The total dividend amount is based on the number of outstanding shares as of February 23, 2012, i.e. 2,027,427,954 shares. The total dividend amount may change before the record date for determining who is entitled to receive dividends due to transfer of treasury shares to participants in the company’s long-term, share-based incentive program.

                                                 _______________________

The Board of Directors and the President certify that the annual financial report has been prepared in accordance with generally accepted accounting principles and that the consolidated accounts have been prepared in accordance with the international set of accounting standards referred to in Regulation (EC) No 1606/2002 of the European Parliament and of the Council of July 19, 2002 on the application of international accounting standards, and give a true and fair view of the position and profit or loss of the Company and the Group, and that the management report for the Company and for the Group gives a fair review of the development and performance of the business, position and profit or loss of the Company and the Group, and describes the principal risks and uncertainties that the Company and the companies in the Group face.

 

Göteborg, February 23, 2012
           
           
    Louis Schweitzer    
    Board Chairman    
           
  Peter Bijur Jean-Baptiste Duzan  
  Board member  Board member   
           
Hanne de Mora Anders Nyrén Olof Persson
Board member Board member President, CEO and
      Board member  
         
           
Ravi Venkatesan Lars Westerberg Ying Yeh
Board member Board member Board member
           
   Peteris Lauberts Mikael Sällström Berth Thulin
  Board member Board member Board member
           
Our audit report was issued on February 23, 2012
           
  PricewaterhouseCoopers AB  
           
Göran Tidström Johan Rippe
Authorized Public Accountant Authorized Public Accountant
Lead Auditor