Annual Report 2014

Everything to do with your car. And then some.

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The Bilia share 13

Financial information
Contents	16
Consolidated Statement of Income and Other Comprehensive Income	17
Consolidated Statement of Financial Position	19
Consolidated Statement of Changes in Equity	21
Consolidated Statement of Cash Flows	22
Notes to the Consolidated Financial Statements	24
Income Statement for Parent Company	62
Balance Sheet for Parent Company	63
Statement of Changes in Equity for Parent Company	65
Cash Flow Statement for Parent Company	66
Notes to the Parent Company Financial Statements	67

Signatures	76
Auditor's Report	77
Five-year review	78

Defi nitions	80
Information on Annual General Meeting	81
Articles of Association	82

This information has been made public in accordance with the Securities Market Act on 18 March 2015.

Directors' Report

Group and Parent Company

The Board of Directors and Managing Director of Bilia AB (publ), Corp. ID no. 556112-5690, hereby submit their annual accounts and consolidated accounts for financial year 2014.

The Bilia Group is referred to as Bilia. When only the Parent Company is being referred to, it is called Bilia AB.

Operations – general

Bilia is Scandinavia's largest car chain, with a leading position in servicing and sales of cars and transport vehicles plus supplementary services. Bilia has 97 facilities in Sweden, Norway and Denmark plus an online auction site in Sweden called Netbil.

Bilia's vision is to be the best service company in the business with the goal of having the most satisfied customers in our showrooms, our stores and our workshops. The customer should find dealing with Bilia a pleasant experience. Bilia has a well-developed range of services and products in the Service Business, including workshop services, spare parts and store sales. Bilia is constantly developing new services and service concepts to simplify car ownership for its customers. The Car Business includes sales of new and used cars and transport vehicles, customer financing and supplementary services. Bilia sells cars from Volvo, BMW, Ford, Renault, Toyota, Dacia, Hyundai and MINI and transport vehicles from Renault, Ford, Dacia, Toyota and Hyundai. The Fuel Business involves sales of fuels.

The Bilia share

The total number of shares in the company at 31 December 2014 is 25,174,033. All issued shares are of Series A. It is also possible to issue B shares according to the Articles of Association, but this has not been done. All issued shares have equal rights in the company and are entitled to one vote at the Annual General Meeting (AGM). Bilia's shares are listed on NASDAQ OMX Stockholm and can be transferred freely there, subject to the rules of the exchange.

Bilia has no knowledge of any shareholders' agreements between Bilia's shareholders.

The 2014 AGM authorised the Board of Directors to buy back Bilia shares equivalent to no more than 10 per cent of the total number of shares. At the same time, the Board was also authorised to dispose of Bilia shares. At the end of 2014, Bilia did not hold any Bilia shares.

In the event of significant changes in the company's ownership structure that affect the conditions or content of their jobs, the MD and the CFO of Bilia AB, plus 2 top executives in the subsidiaries, are entitled to terminate their own employment and receive 24 months' salary, less any salary received by the employee from other service during the past 12 months. Bilia's bank, service and distribution agreements all contain clauses to the effect that the agreement may be terminated if the company is transferred to a new owner.

Notable events during the year

On 8 December, Bilia concluded an agreement with Kverneland Bil AS concerning the sale of Bilia's dealership operation for Volvo and Ford in Stavanger. The purchase consideration amounted to about SEK 70 M and the pre-tax profit is estimated at about SEK 4 M. The date of possession was 1 January 2015. It is estimated that the Group's capital employed will decrease by about SEK 40 M, while net debt will decrease by about SEK 44 M.

On 30 September 2014, Bilia concluded an agreement with Fastighets AB Balder on the sale of the property company that was acquired in connection with the acquisition of the Toyota operation, see below. The purchase consideration amounted to SEK 48 M and the capital gain after tax was just under SEK 13 M. Bilia's net debt declined by SEK 72 M.

On 20 January 2014, Bilia concluded an agreement with Toyota Sweden Holding AB on the acquisition of a property company and Toyota's operation in Malmö, Trelleborg and Lund. The date of possession was 1 March 2014. The Bilia Group's capital employed and net debt increased by about SEK 104 M as an effect of the acquisition.

Events after the balance sheet date

Bilia AB's Board of Directors resolved on 2 March 2015 that the operation in Denmark will be sold or shut down. The background of the decision is that the operation has been reporting a loss for a long time and that the competition from other dealers in the Copenhagen area who sell the same brands has increased in recent years. The assessment is that the business will not be able to live up to the Group's profitability goal. Over the past ten years, Bilia's Danish operation has reported an average pre-tax loss of about SEK 34 M. The cost of selling or winding up the operation is estimated to be about SEK 150 M after tax, which will be charged to first-quarter earnings in 2015. The sale or closure will have only a marginal effect on cash flow.

Key ratios

Group	2014	2013	2012
Net turnover, SEK M	19,473	17,656	17,662
Operating profit, excluding items affecting comparability, SEK M	538	395	331
Operating margin, excluding items affecting comparability, %	2.8	2.2	1.9
Operating profit, SEK M	500	368	270
Profit before tax, SEK M	488	367	253
Net profit for the year, SEK M	385	290	156
Return on capital employed, %	19.8	17.7	12.3
Return on equity, %	21.0	17.0	9.1
Net debt/equity, times	–0.04	0.14	0.28
Operating cash flow, SEK M	748	83	446
Equity/assets ratio, %	27	30	27
Earnings per share, SEK	15.35	11.70	6.30
Equity per share, SEK	73	72	64
Number of employees, 31 December	3,521	3,401	3,431

Sales and earnings

Net turnover amounted to SEK 19,473 M (17,656). For comparable operations and adjusted for exchange rate changes, net turnover increased by about SEK 1,660 M or 9 per cent. The increase is mainly attributable to car sales.

Operating profit amounted to SEK 500 M (368). If items affecting comparability are excluded, the profit was SEK 538 M (395). The improvement is attributable to both the Car and Service Businesses, which reported earnings that were SEK 89 M and SEK 64 M better than last year, respectively. Underlying Group overheads increased by about 4 per cent compared with last year. Overheads amounted to 13.0 per cent in relation to net turnover, which was 0.5 percentage point lower compared with last year. In view of the earnings level during the year, provision was made for employee bonuses of SEK 21 M (16).

Net financial items amounted to SEK –12 M (–1). Income from associated companies decreased by SEK 9 M, mainly due to an earnings-related non-recurring effect during 2013 that was attributable to changed income tax in Sweden.

Tax for the year amounted to SEK –103 M (–77). The tax corresponds to a tax rate of 23 per cent (23) if the tax-free share in the earnings of associated companies and the gain from property sales are excluded.

Net profit for the year amounted to SEK 385 M (290) and earnings per share to SEK 15.35 (11.70). Exchange rate changes reduced the profit by SEK 5 M.

Acquisition of non-current assets

Acquisition of non-current assets amounted to SEK 195 M (105). Replacement investments represented SEK 46 M (31), expansion investments SEK 41 M (43), environmental investments SEK 1 M (2) and investments in new construction and additions to properties SEK 94 M (20), while finance leases amounted to SEK 13 M (9).

Performance analysis

	Operating profit	Profit before tax
SEK M	2014	2013	2014	2013
Profit excluding items affecting comparability	538	395	526	394
Items affecting comparability Gain from sale of operation, other	13	2	13	2
Structural costs etc.	–47	–25	–47	–25
Impairment loss	–4	–4	–4	–4
Accounting profit	500	368	488	367

Financial position

Total assets increased by SEK 860 M, amounting to SEK 6,955 M. The increase was mainly attributable to cash and cash equivalents, which increased by SEK 461 M, and to leased vehicles, which increased by SEK 248 M.

Equity increased by SEK 26 M, amounting to SEK 1,849 M. Dividends were paid to shareholders in the amount of SEK 226 M. The equity/assets ratio amounted to 27 per cent (30).

Operating cash flow amounted to SEK 748 M (–83). After acquisitions and disposals of operations and change in interest-bearing receivables, cash flow amounted to SEK 715 M (118). Net debt decreased by SEK 330 M during the year, and a net receivable of SEK 70 M was reported at year-end. The definition of net debt/ receivable has been changed, see "Comments on the Consolidated Statement of Financial Position".

Financial goals

Bilia's overall financial objectives are to achieve:

an operating margin of at least 2.2 per cent
a return on capital employed of at least 14 per cent
a return on equity of at least 15 per cent
growth of 5–10 per cent

Goals and goal fulfillment

Operating Return on capital

Return on equity, % Total growth, %

Goal,

Personnel

Skilled, motivated and committed employees are a prerequisite for keeping Bilia's customers satisfied and loyal, which is crucial for Bilia's continued success. Bilia respects freedom of association and signs collective agreements.

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Bilia's employees have opportunities to influence their job situation, and some positions offer the option of working part-time or with some flexibility regarding working hours. Bilia only operates in countries with extensive rights to parental leave for both parents. The right to leave is granted at certain important junctures in life. Suitable legislation in combination with applicable collective agreements allow a reasonable balance to be struck between work and leisure. More than 90 per cent of Bilia's employees have permanent positions with open-ended terms of employment. Some are also employed under different kinds of temporary contracts, for example in seasonal jobs or as temporary holiday stand-ins. Consultants are also engaged to some extent, mainly for IT services.

The basis for the professional development of the employees is the performance appraisal interview each employee has with his/her immediate superior at least once a year. The performance appraisal interview is confidential and focuses on the individual's knowledge, skills and needs. Together, the employee and his superior arrive at a plan that will promote personal development, job satisfaction and efficiency in the day-to-day work.

Bilia Academy is the name of the Group's internal training unit, which was started in 2001. Bilia Academy conducts regular surveys of the training need and then puts together tailored trainings aimed at target groups with different duties in Bilia. The purpose of the training is to enhance skills within specific areas, and there are at present four different programmes intended to train and support the company's employees at different stages of their leadership.

Mechanics and sales personnel are given tailored trainings at a number of different levels. In addition, a number of regularly recurring specific courses are given in, for example, competition law and labour law aimed primarily at executives and managers.

Directors' Report cont'd.

Bilia works continuously to improve the working environment at the Group's facilities. A good working environment is a prerequisite for healthy, happy and motivated employees. The ambition in the workshops is to create environments that are light, airy, clean and quiet.

Bilia measures the employees' job satisfaction in regular surveys, where the results are presented and possible improvements are

discussed in concerned working groups. The surveys show that job satisfaction is very good.

The average number of employees in the Group during the year was 3,154 (3,109). The number of employees at 31 December 2014 was 3,521 (3,401).

Cars – divided into Service, Car and Fuel businesses

Service, Car and Fuel Businesses

		Net turnover, SEK M 1)			Operating profit, SEK M			Operating margin, %
	2012	2013	2014	2012	2013	2014	2012	2013	2014
Service Business	3,960	4,050	4,253	268	351	415	6.8	8.7	9.8
Car Business	13,233	13,254	14,945	89	67	156	0.7	0.5	1.0
Fuel Business	1,185	1,067	1,051	13	20	18	1.1	1.9	1.7

Service includes workshop services, spare parts and accessories. The Car Business includes sales of new and used cars and customer financing.

1) Net turnover does not include eliminations for internal sales.

Number of new cars Total market

		Deliveries			Order backlog
	2012	2013	2014	2012	2013	2014
Sweden	23,729	24,273	29,463	3,473	4,348	5,442
Norway	7,610	7,796	8,281	1,077	1,245	1,099
Denmark	3,217	3,558	3,523	333	430	330
Total	34,556	35,627	41,267	4,883	6,023	6,871

Key figures

					Operating profit/loss,
			Net turnover, SEK M SEK M				Operating margin, %
	2012	2013	2014	2012	2013	2014	2012	2013	2014
Sweden	11,136	11,567	13,110	293	342	458	2.6	3.0	3.5
Norway	5,403	5,087	5,324	124	116	147	2.3	2.3	2.8
Denmark	1,121	997	1,027	–47	–20	–16	–4.2	–2.0	–1.5
Total	17,660	17,651	19,461	370	438	589	2.1	2.5	3.0

		Operating capital employed, SEK M			Return on operating capital employed, %			Turnover rate, times
	2012	2013	2014	2012	2013	2014	2012	2013	2014
Sweden	1,400	1,417	1,412	22.8	25.9	32.9	8.8	8.9	9.4
Norway	480	512	217	23.6	21.3	31.0	11.7	10.1	12.7
Denmark	137	163	155	–20.5	–13.2	–10.5	5.1	6.6	7.0
Total	2,017	2,092	1,784	18.2	21.7	29.2	9.0	9.0	10.0

Key figures

	2012	2013	2014
Average number of employees	3,186	3,109	3,154
Turnover per average number of employees, SEK '000	5,544	5,679	6,174
Value added per average number of employees, SEK '000	733	761	835
Profit before tax per average number of employees, SEK '000	74	118	155
Average age	41	41	40

Guidelines for remuneration to senior officers

A fee decided on by the Annual General Meeting is paid to the Chairman and members of the Board.

The AGM for 2014 has decided on the following guidelines for compensation to the management. For detailed information, see the minutes of the Annual General Meeting of Shareholders at the company's website, bilia.com.

Remuneration to the Managing Director and members of Group Management consists of basic salary, variable remuneration, other benefits and pension. The Group Management consists of the CFO, the Chief Legal Counsel, the Business Development and Purchasing Manager and the Financial Manager of Bilia AB, the MD of Bilia Personbilar AB (Sweden), the MD of Bilia Personbil as (Norway) and the MD of Bilia Personvogne A/S (Denmark). For the composition of the Group Management and remuneration, see Note 8, "Employees, personnel costs and remuneration for senior officers".

The distribution between basic salary and variable salary should be commensurate with the Group Management's powers and responsibilities. The variable remuneration paid to the Managing Director and other members of the Group Management may not exceed 50 per cent of the individual's basic salary. The variable remuneration is based on performance goals and individual goals.

Premium-based pension benefits and other benefits for the Managing Director and other senior officers are payable as a part of the total remuneration.

The Board of Directors will propose to the 2015 AGM that the above compensation principles should continue to apply up to the 2016 AGM.

The environment

Bilia works towards the goal of a sustainable society. The Group has rules and routines for how employees and cooperation partners should act in matters relating to the environment, corruption, competition and social responsibility. Bilia's environmental policy states that the Group's services and products should have as little impact on nature as possible. The environmental work should be pursued within the framework of the business concept and be governed by a holistic approach in which technology, economics and ecology are weighed together.

Of Bilia's facilities, 87 are environmentally certified to ISO 14001. Reduced energy use has been a priority goal during the year, with a focus on modernised ventilation and switching to LED light bulbs. Environmentally hazardous waste is managed in accordance with carefully planned procedures. Bilia also has systems, both proprietary and developed together with its partners, for managing and recycling waste from service work and residual products from damage repair. Water-based paints have been used for several years in all paint coats except for the clear coat. All waste water at Bilia's car washes is treated to eliminate the risk that heavy metals, oil and chemicals reach the sewage treatment plants. Bilia washes nearly 100,000 cars a year in car washes that carry the Nordic ecolabel (the Swan). There are well-established routines for managing waste. Bilia's employees are given training in environmental issues and receive environmental information regularly.

Bilia has defined environmental goals. Bilia will work to reduce pollution of land, water and air and has a system that provides data for comparative analysis and sounds the alarm if a measurement result is off the mark. Bilia will reduce its consumption of energy and water, reduce its use of non-renewable resources and raise awareness among employees and customers. In the past two years, the number of chemicals used in Bilia's operations has been reduced by about 3,500 to 1,700 products. Some of these products have been replaced with similar products with a lower environmental impact.

Bilia reports to the global organisation CDP, which provides information to investors and markets all over the world on the climate impact of listed corporations and what they are doing to reduce their carbon emissions.

The Group conducts activities that are subject to notification in accordance with the Environmental Code. A total of 88 facilities are obligated to submit notification to the authorities. Of these, 42 are petrol stations where all emissions are prohibited, 12 are car washes that must report discharges to water, and 49 are facilities that must report solvent emissions to the atmosphere. The biggest car washes carry the Nordic Ecolabel (the Swan).

Risks

Bilia's business operations are associated with risks. Bilia can influence certain factors, while others are beyond the Group's control. But the ambition is to identify threats and possibilities at an early stage so that steps can be taken quickly to avoid problems.

The risks described in detail by Bilia are judged to constitute the most significant risks.

Market trend

Demand for Bilia's products and services is influenced by fluctuations in the business cycle. In recessionary periods, some customers choose to postpone their car purchase. Diminished demand for cars can also affect the value of stock in hand and guaranteed residual values. Factors that influence the market trend include the labour market situation, stock market performance, opportunities for customers to obtain financing, interest rates and fuel prices. The positioning of Bilia as a service company stabilises earnings to some extent. Collaboration with Volvofinans Bank AB and similar car financing companies is positive for Bilia and stabilises earnings, since a portion of the financial profit is realised over several years. The Service Business is less cyclical than the Car Business, since cars require service and repairs regardless of the state of the economy. However, a deep recession also affects the Service Business.

Regulatory decisions that lead to changes in taxes, charges and subsidies on the products Bilia sells can influence both demand for and the valuation of cars in stock and cars sold with guaranteed residual values.

Directors' Report cont'd.

Basis of representation

Bilia's core business consists of distribution and servicing of cars and transport vehicles in Sweden, Norway and Denmark. The Block Exemption for new car sales expired in June 2013, which means there are no longer any special rules governing competition for new-car sales in the EU. Changes in the regulatory framework have led to changes in the competitive situation for Bilia in cases where manufacturers or general agents have chosen to renegotiate the agreements. Due to this renegotiation process, Bilia's potential for growth in the Car Business is dependent on the approval of the respective general agent. There is always a risk that a manufacturer or a general agent will decide to revoke the authorisation and cancel the agreements, or even become insolvent, leading to uncertainties in the market. Volvo is Bilia's single most important business partner, which means that changes in the relationship between the parties can have a significant influence on Bilia's business.

Competitiveness of the products

Bilia is dependent on the ability of the Group's business partners to develop competitive products.

Development of own services

To maintain and strengthen its competitiveness, Bilia must develop services that appeal to the customers. Bilia's ability to develop new services also helps strengthen the suppliers' brands. This development work requires resources. Bilia is confident that the Group has the size, structure and financial strength required to remain in the forefront of service development.

Key persons

In order to continue developing as a service company and thereby achieve growth and profitability, Bilia must be able to attract and develop qualified employees, both management and other staff. There is no guarantee that Bilia will succeed in the future in recruiting or keeping the people they need to run and develop the company.

Facilities and environment

Bilia leases virtually all its facilities. In the event contamination should be discovered at any of Bilia's facilities, Bilia may be held responsible for decontamination of the facility. Decontamination may be associated with considerable costs. As a tenant, Bilia always runs the risk that of not having its lease renewed at the end of the rental period, which would mean that Bilia would lose strategic business locations.

For financial risks see Note 27 "Financial risks and risk management".

Share issues

In late 2008 and early 2009, Bilia raised a total of SEK 100 M by an issue of subordinated debentures in the amount of SEK 100 M and an associated issue of 5,000,000 warrants entitling the bearer to subscribe for an equal number of Series A Bilia shares at SEK 20 per share. Between 2009 and 2013, inclusive, 4,680,337 warrants were exercised to subscribe for shares, resulting in a new issue totalling SEK 93 M. During 2014, 34,441 warrants were exercised to subscribe for new shares, resulting in a new issue of SEK 1 M. If the remaining warrants are exercised, the number of outstanding shares will increase by 285,222. Other than these, there are no other outstanding instruments that could cause future dilution effects. For further information see Note 13 "Earnings per share". Notification of subscription for shares can be made up to and including 5 January 2016.

Disclosure of acquisition, transfer and holding of own shares

The 2014 AGM gave the Board of Directors a new authorisation to both buy back and sell the company's own shares. As of 31 December 2014, Bilia held none of its own shares. No shares were bought back in 2014. Bilia's shares have a quotient value of SEK 10.

Parent Company

Bilia AB is responsible for the Group's management, strategic planning, financing, purchasing, public relations and business development. Furthermore, Bilia AB conducts training, real estate and IT activities, mainly for companies in the Group. The Parent Company's operating loss amounted to SEK 50 M (loss: 45).

Future outlook

Industry analysts predict that the car markets in Bilia's market areas during 2015 will be slightly smaller compared with the situation in 2014. Owing to the fact that Bilia's earnings are affected by various factors beyond the company's control, no earnings forecast is made. A review of the most important earnings-impacting factors is provided in the sensitivity analysis in Note 27, "Financial risks and risk management".

Proposed treatment of unappropriated earnings

The Board of Directors proposes that the earnings available for distribution, SEK 850 M, be disposed of as follows:

SEK M

Total	850
To be carried forward	548
Cash dividend, SEK 12.00 per share 1)	302

1) Bilia has outstanding warrants that expire on 5 January 2016. If the warrants are fully exercised, the dividend will amount to SEK 306 M.

Statement of Board of Directors regarding proposed distribution of profits

The Group's equity has been calculated according to the accounting rules set forth in the International Financial Reporting Standards (IFRSs). The Parent Company's equity has been calculated in accordance with the Swedish Financial Reporting Board's recommendation RFR 2, "Accounting for Legal Entities".

The proposed dividend consists of a cash dividend of SEK 12.00 per share, totalling SEK 306 M if the warrants are fully exercised. The Group's equity/assets ratio will thereafter amount to about 22 per cent.

The proposed cash dividend is consistent with Bilia's dividend policy, which states that at least 50 per cent of the net profit for the year should be distributed to the shareholders, and that Bilia should have an optimal capital structure at any given time.

It is the judgment of the Board of Directors that the company's and the Group's equity after the proposed dividend will be sufficiently large in relation to the nature, scope and risks of the business and the terms of the lenders. The Board has also taken into account the Group's history, liquidity and investment plans, as well as the general economic situation.

Approval of the financial statements

The financial statements were approved for publication by the Parent Company's Board of Directors on 11 March 2015.

For further details concerning the company's results and financial position, please refer to the following Consolidated Statement of Income and Other Comprehensive Income and the Consolidated Statement of Financial Position with accompanying comments.

Corporate Governance Report

This Corporate Governance Report has been prepared in accordance with the Swedish Code of Corporate Governance and the Annual Accounts Act and has been examined by Bilia's auditors. The Corporate Governance Report applies to calendar year 2014. For up-to-date information on changes in 2015, the reader is referred to bilia.com.

Shareholders

Bilia had 35,282 shareholders at the end of 2014. Bilia's biggest shareholders are Investment AB Öresund and the Qviberg family, each of which had a holding of 10.1 per cent as of 31 December 2014. There was no other single shareholder with a holding in excess of 10 per cent. The next-biggest shareholder at year-end was Anna Engebretsen with family, whose holding amounted to 4.2 per cent.

The proportion of institutional ownership was 9.5 per cent (9.6), while the proportion of foreign ownership was 35.9 per cent (35.8).

General Meeting of Shareholders

The Annual General Meeting of Bilia AB is the highest decisionmaking body in the Bilia Group. At the AGM the shareholders exercise their right to vote in order to make decisions regarding the composition of the Board and other important matters. Only shares of Series A are issued in the company, and each share entitles the holder to one vote, with no limits on how many votes a shareholder can cast. According to the Articles of Association, the company's Board of Directors shall consist of at least seven and at most ten members.

There are no special restrictions in the Articles of Association for appointing or removing board members or amending the Articles of Association. The instructions issued by the AGM are followed for the nomination of Board members. The nominating committee instructions were last revised at the 2014 AGM and apply until further notice. The instructions are posted on bilia.com under the tab "The Company," heading "Corporate Governance". Shareholders who wish to have a matter on the agenda at the AGM are urged to contact Bilia in writing in the form of a letter addressed to the Managing Director no later than 24 February 2015. The AGM is subject to the Swedish Companies Act, the Articles of Association and the Swedish Code of Corporate Governance. Bilia's Articles of Association are shown at the end of the annual report and are also available on the company's website. For more information on the Swedish Code of Corporate Governance, see bolagsstyrning.se.

Annual General Meeting 2014

Bilia's Annual General Meeting of 10 May 2014 re-elected the entire Board of Directors consisting of the following members: Per Avander, Ingrid Jonasson Blank, Anna Engebretsen, Jack Forsgren, Fredrik Grevelius, Mats Holgerson, Svante Paulsson, Jan Pettersson, Jon Risfelt and Mats Qviberg. The AGM also re-elected Mats Qviberg as Chairman, after which the Board appointed Jan Pettersson as Deputy Chairman. KPMG AB was once again re-elected as the Group's public accounting for the period up until the next AGM. The AGM passed a resolution to pay a cash dividend of SEK 9 per share, for a total of SEK 226 M, and decided that the remaining earnings of SEK 650 M should be carried forward to a new account. The Board was authorised to buy back the company's own shares and to approve the transfer of such acquired shares as payment in conjunction with a possible company acquisition or by direct sale on

the stock exchange. The fees paid to the members of the Board and the auditors were determined, principles for compensation to the Group Management were approved and revised nominating committee instructions were adopted.

Extraordinary shareholders meeting 2014

An extraordinary shareholders meeting was held on 5 December, at which Fredrik Grevelius resigned from the Board and the meeting elected Gustav Lindner to replace him, in accordance with the Nominating Committee's proposal. Gustav Lindner was elected to the Board up until the 2015 AGM. The meeting also determined how the director's fee would be split between the outgoing and incoming members. There was no other change to the Board of Directors.

Nominating Committee

The Nominating Committee submits proposals to the AGM for Board members and auditors and for fees to be paid to the Board members and the auditors. The committee also proposes fees for the work of Board members in special subcommittees. The Nominating Committee has four members, including the Chairman of the Board. Not later than six months before the AGM, the three to four largest shareholders who wish to take an active part in the nominating work each appoint one person to the Nominating Committee. The members of the Nominating Committee appoint a chairman.

In September 2014 the following persons were appointed to the Nominating Committee: Öystein Engebretsen (Chairman) for the Qviberg family and Anna Engebretsen, Mikael Norbäck for Investment AB Öresund, Jan Särlvik for Nordea Investment Funds, and Mats Qviberg, Chairman of Bilia. The Nominating Committee held a meeting in November to propose a replacement for Fredrik Grevelius, who resigned at the extraordinary shareholders meeting held in December. The Nominating Committee proposed that Gustav Lindner be elected as a replacement on the Board of Directors until the next AGM, and the Nominating Committee's account of its work and the reasons for its decision were presented on Bilia's website and at the meeting.

Prior to the 2014 AGM, the Nominating Committee consisted of the following persons: Marcus Wahlberg, Investment AB Öresund (Chairman), Öystein Engebretsen for the Qviberg family, Egil Stenshagen for Stenshagen Invest AS, Jan Pettersson (Deputy Chairman of Bilia AB) for the Pettersson family, and Mats Qviberg, Chairman of Bilia AB.

In the course of its work, the Nominating Committee has obtained information regarding the experience of Bilia's Board members and their possible dependency on Bilia and has also examined the evaluation of the Board's work that is compiled every year.

When the Nominating Committee presents its proposals, it also submits an account of its work and a written explanation of the reasons for its proposals. Information from the Nominating Committee can be read at bilia.com. Each year the Nominating Committee welcomes proposals and viewpoints from shareholders and can most easily be contacted via e-mail at [email protected].

Auditors

The auditors of Bilia AB are elected by the AGM, and in 2014 KPMG AB was re-elected as the public accounting firm for the period up to the 2015 AGM. Jan Malm was appointed as auditor in charge. Auditors will once again be elected at the upcoming AGM.

Corporate Governance Report cont'd.

Audit mainly involves continuous auditing and examination of the annual accounts. KPMG also assists Bilia with advice on accounting matters. During the past three years this has mainly involved questions pertaining to accounting practices in accordance with IFRS standards. No circumstance relating to this advisory role has been judged to influence the impartiality and independence of the auditors.

Board of Directors

Bilia's Board of Directors consists of ten members (including the Managing Director of Bilia AB) elected by the AGM and two additional members who represent the employees, plus two deputy employee representatives. The AGM-elected members are elected for one year. There is no limit to how long a member can sit on the Board. Information about the members of the Board can be found under the heading "Board of Directors" in the annual report and at bilia.com. This information includes shareholding, other posts and possible dependency.

The duties of the Board are regulated by the Companies Act, the Articles of Association and the Code of Corporate Governance. The Swedish Code of Corporate Governance has been applied during 2014, with one exception. When notice was given of the extraordinary shareholders meeting, the Nominating Committee's complete proposal could not be presented, as is mandated in the Code 2.6. The notice was issued hastily and the Nominating Committee did not have enough time. The proposal was completed a week later and was therefore presented in a separate press release and on Bilia's website.

The Board of Directors is also subject to Bilia's Code of Conduct, which applies to all employees in the Group. The Code of Conduct, which is posted on bilia.com, was issued in 2006 and most recently revised in 2012.

The work of the Board of Directors conforms to annually adopted rules of procedure governing the items of business to be dealt with at each ordinary meeting and the division of labour within the Board, with special duties for the Chairman and the committees appointed within the Board. Based on the rules of procedure, the Board of Directors prepares a detailed annual plan each year for the Board meetings so that all important items are dealt with during the year. The rules of procedure also include rules for financial reporting to the Board and more detailed rules regarding the Managing Director's powers and responsibilities. The ultimate aim of the deliberations and decisions of the Board is to promote the interests of the shareholders in terms of value growth and return on investment. Measures to progressively strengthen the Bilia brand are also considered by the Board.

The work of the Board during 2014

Seven board meetings were held during 2014: two statutory meetings and five ordinary meetings. With the exception of Svante Paulsson, who was unable to attend one statutory meeting, all members were present at all meetings.

An agenda, along with in-depth information on important matters, is sent to each Board member in good time before each Board meeting. The Board dealt with such items of business as development opportunities, financial goals, follow-up of results, investments, properties, acquisitions and strategy. During 2014, besides dealing with routine matters, the Board of Directors evaluated future acquisition opportunities, and in addition discussed the situation in Denmark and the increased competition from other players in the Copenhagen area. The Board of Directors passed resolutions regarding, for example, the acquisition of Toyota dealers in southern Sweden with associated properties, disposal of acquired properties

by the sale of Motorspännet AB, acquisition of a small property in Norway and disposal of the operation in Stavanger, plus acquisition of the Toyota operation in Norway. During the year the Board of Directors also met with a number of senior officers who participated in individual items on the agenda. On one occasion the Board met with the auditors, who shared their observations with the Board. On this occasion the Board discussed internal control with the auditors without the presence of the company's officers. Bilia's CFO, Gunnar Blomkvist, has been secretary of the Board since 2004.

Board subcommittees

Compensation Committee

The Compensation Committee has three members: Jack Forsgren (Chairman) and members Gustav Lindner (from 5 December) and Jon Risfelt. Fredrik Grevelius was a member of the committee up until 5 December. The Compensation Committee's task is to submit proposals to the Board regarding terms of compensation for the Managing Director and other senior officers. The work of the Committee is presented to the AGM, which decides on guidelines for the compensation. The committee also submits proposals to the Board for fixed and variable remuneration for senior officers in subsidiaries. The variable remuneration is always related to that part of the company's performance that lies within the individual's control. All variable compensation has a maximum limit in relation to the fixed compensation. In 2014 the Compensation Committee held three meetings in which all members participated.

Audit Committee

The Audit Committee has three members: Jon Risfelt (Chairman) and members Mats Holgerson and Gustav Lindner (from 5 December). Fredrik Grevelius was a member of the committee up until 5 December. The principal duties of the Audit Committee are review of external risks and legal risks, review of the control environment with regard to internal and external audit, monitoring of the financial reporting, and review of the internal and external audit process. Each year a more detailed examination is made of one subsidiary in the Group, and in 2014 the newly acquired operation in the subsidiary Bilia Center Syd AB was scrutinised. The following matters were also dealt with during 2014: a compliance programme for competition law, a presentation of leasing and the pension liability, the Group's IT security, and proposals for a public accounting firm, whereby KPMG was re-elected at the 2014 AGM. The work of the committee has been based on material and information from the Group Management and the auditors. Bilia's internal auditors give an annual account of their work to the Audit Committee and Bilia's auditors. The Audit Committee held four meetings during the year. In addition to all members, the meetings were also generally attended by Bilia's auditors, the Managing Director, the CFO and additional co-opted persons. The Audit Committee also allots time for a private session with the company's CFO. In addition to the aforementioned meetings, the chairman of the Audit Committee meets separately with the company's auditor every year.

The Board's report regarding internal control

This report is prepared in accordance with the Annual Accounts Act. The report is limited to internal control and risk management regarding the financial reporting and includes the entire Group. The Board of Directors bears ultimate responsibility for ensuring that Bilia's internal control works satisfactorily and that adequate financial reports are presented. Under the Companies Act, the Board is responsible for Bilia's organisation and management. It is the responsibility of the Board that Bilia's accounting, management of funds and financial situation in general includes satisfactory con- trols. This responsibility cannot be delegated but always rests with the Board of Directors.

Bilia's control environment is based on the communication of clear guidelines to all subsidiaries to ensure that the same rules and principles are applied in the Group's different companies and within each business area and that the necessary tools are in place out in the subsidiaries to enable them to report back to Bilia AB in a correct and uniform manner. The management conducts a risk analysis which, following discussion by the Audit Committee and the Board of Directors, serves as a basis, along with other considerations, for focusing the internal control.

Internal control work

As a complement to manager responsibility and other control procedures, Bilia has a separate function for internal audit that reports to the company's CFO. Bilia's CFO has approved the audit plan presented by the internal auditors and the internal auditors report directly to Bilia's CFO. Bilia's internal auditors annually inform the Audit Committee concerning the audit plan and furnish regular reports regarding the audit work. The audit plan is regularly evaluated and was last updated in June 2014.

The work of assuring internal control is a continuous process that should be subject to constant review, follow-up and improvement.

Evaluation of the work of the Board

The work of the Board is evaluated annually according to a model that includes the following main areas:

Board of Directors (roles, planning, functions)
Board meetings
Board material, information and reports
Members of the Board
Chairman of the Board
Managing Director

This year's evaluation once again painted a positive overall picture of the work of the Board. The Board also performs an annual evaluation of the work of the committees, and other members are satisfied with how the committees handle their respective areas of responsibility.

Group Management

During 2014, Bilia's Group Management consisted of Per Avander, Managing Director, Gunnar Blomkvist, CFO, Per Ovrén, Business Development and Purchasing Manager, Hans Jörgen Möller, Financial Manager, and Jennifer Tunney, Chief Legal Counsel, all of Bilia AB, as well as Stefan Nordström, Managing Director of Bilia Personbilar AB, Sweden, Frode Hebnes, Managing Director of Bilia Personbil as, Norway, and Lars-Gunnar Jönsson, Managing Director of Bilia Personvogne A/S, Denmark. The Group Management is responsible for formulating the Group's overall strategy, business control and allocation of financial resources, as well as for the Group's financing, capital structure and risk management. It also executes major acquisitions and other major projects. Furthermore, the Group Management is responsible for the Group's financial reporting, communication with the stock market and a variety of other matters concerning the Group as a whole. The Group Management holds regular meetings under the leadership of Bilia's Managing Director and CEO.

Group operations are largely decentralised, and the different companies enjoy a large measure of autonomy. The relationship between the companies and the Group Management is mainly concerned with Group-wide projects and work on the boards of the various companies.

Board of Directors

Mats Qviberg born 1953

Chairman

Education: M.Sc. in Business Administration from the Stockholm School of Economics. Work experience: SEB 1976–84, Carnegie 1984–90.

Posts 2014: Deputy Chairman of Investment AB Öresund. Deputy Chairman of Fabege AB. Drives: Volvo XC40 and BMW 650.

Jan Pettersson born 1949 Deputy Chairman Education: Degree in economics from Stockholm University 1973. Work experience: Active in the motor vehicle industry since 1973, Kinnevik Group 1982–86, MD of Toyota and Svensk Motor AB 1986– 2002, MD and CEO of Bilia AB 2003–2011.

Posts 2014: Chairman of Active Driving AB and employed by Bilia AB for non-Board duties.

Drives: Volvo XC60.

Per Avander born 1961

Managing Director and CEO of Bilia AB Education: School of economics. Work experience: Active in banking 1981–83, motor vehicle industry since 1983. MD of Din Bil Göteborg AB 1995–99, MD of Din Bil Stockholm Norr 1999–2001. Bilia 2001–. Posts 2014: Managing Director and CEO of Bilia AB and member of the boards of Volvofi nans Bank AB, the Swedish Automobile Servicing and Retailing Employers' Association (MAF) and Alignment Systems AB. Drives: BMW X4 and Volvo V40.

Anna Engebretsen born 1982 Education: Norwegian School of Management in Oslo, MSc. in Business and Economics. Work experience: Project manager at OMD (Omnicom Media Group) media agency. Posts 2014: Marketing and sponsoring at Skistar AB. Member of the board of MQ Holding AB and Investment AB Öresund. Drives: BMW X5.

Ingrid Jonasson Blank born 1962 Education: M.Sc. in Business Administration from the School of Business, Economics and Law in Gothenburg.

Work experience: Active in the ICA Group 1986–2010, most recently as deputy managing director of Ica Sverige AB.

Posts 2014: Member of the boards of Ambea Vård & Omsorg AB, Fiskars Oyj, Musti ja Mirri Group Oy, Matas A/S, Orkla ASA, Royal Unibrew A/S, ZetaDisplay AB, Travel & Support Services AB and Norm Research & Consulting AB. Drives: Volvo XC60.

Jack Forsgren born 1945

Chairman of the Compensation Committee Education: M.Sc. (Political Science). Work experience: Managing Director and CEO of Mölnlycke AB and Nobel Biocare AB. Posts 2014: Chairman of Maquire AB. Deputy Chairman of the Swedish Exhibition Centre and Skäreleja AB. Drives: BMW 530.

Mats Holgerson born 1953

Education: M.Sc. in Business Administration from the Stockholm School of Economics. Work experience: Esso 1976–85, Statoil 1985–96 (MD of Statoil Norge 1994–96), MD of Dial Försäkring 1996–98, MD of Statoil Detaljhandel Skandinavia 1998–2005, MD of Menigo Foodservice 2006–08 and Chief Operating Offi cer of ICA AB 2008–13. Posts 2014: Chairman of Cervera AB. Member of the boards of Hemtex AB, Dialect AB, Global Batterier AB and Comfort Sverige Holding AB. Drives: BMW 335.

Svante Paulsson born 1972 Education: High school in the USA. Work experience: Hedin Bil (Mercedes-Benz/ Nissan), BMW Paulssons Bil, Porsche Center Syd, car sales, own companies. Posts 2014: Backahill AB, strategy and projects. Member of the boards of Fabege AB, DIÖS Fastigheter AB, Backahill AB and AB Cernelle.

Drives: Volvo V60 and Volvo XC70.

Gustav Lindner born 1978

Education: M.Sc. in Business Administration from the Stockholm School of Economics. Work experience: HQ Bank Corporate Finance 2006–10, Swedbank 2010–14, Account Manager and subsequently CEO of FR & R Sverige. Posts 2014: Managing Director of Investment AB Öresund. Drives: Volvo XC90.

Jon Risfelt born 1961 Chairman of the Audit Committee Education: M. Eng. in Chemical Engineering,

Royal Institute of Technology. Work experience: Ericsson, SAS, American Express, Nyman & Schultz, Europolitan and Gambro Renal.

Posts 2014: Member of the boards of Ticket Business Travel AB, Bisnode AB, Dialect AB and Smartfi sh AS. Member of the boards of Excanto AB, Knowit AB, Ortivus AB and Vanna AB. Drives: Hyundai i40.

Tommy Strandhäll born 1970 Education: Vocational training in vehicle technology.

Work experience: Employed by Bilia since 1988, training projects at Metall (Swedish Metalworkers' Union) and LO (Swedish Trade Union Confederation).

Posts 2014: President of local branch of Metall in Gothenburg and president of the Group-wide union Bilia LO locals Sweden.

Elected to the Board of Bilia AB: Appointed by the LO locals in the Bilia Group. Drives: Ford Focus.

Patrik Nordvall born 1967

Education: Process engineering and IHM Business School Senior. Work experience: Employed by Bilia AB since

1986. Posts 2014: Shop steward of Unionen at Bilia and head of the real estate department in Stockholm.

Elected to the Board of Bilia AB: Appointed by the PTK (Federation of Salaried Employees in Industry and Services) locals in the Bilia Group. Drives: Renault Scenic Xmod.

Dragan Mitrasinovic born 1958 Education: Vocational training in vehicle

technology. Work experience: Employed by Bilia since

1976.

Posts 2014: Shop steward of Bilia's local branch in Stockholm and car mechanic. Elected to the Board of Bilia AB: Appointed deputy member by the LO locals in the Bilia Group.

Drives: Volvo V70.

Lennart Welin born 1951

Education: Vocational school and IHM Senior training.

Work experience: Employed by Bilia AB since 1967.

Posts 2014: Quality and environmental coordinator at Bilia Personbilar AB, Region West and South.

Elected to the Board of Bilia AB: Appointed deputy member by the LO locals in the Bilia Group.

Drives: Renault Laguna.

Auditors

KPMG AB was re-elected as the Group's public accounting firm by the 2014 AGM for the period up until the 2015 AGM. Jan Malm, born 1960, Authorised Public Accountant, KPMG and member of FAR. Auditor in charge at Bilia since 2010.

					Attendance at Board meetings,	Attendance at commit tee meet	Number of shares
Board member	Position	Committees	Elected	Independence	%	ings, %	in Bilia
Mats Qviberg	Chairman		2003	Dependent on Bilia's major shareholders	100		— 2,536,408 1)
Jan Pettersson	Deputy Chairman		2003	Dependent on Bilia	100	—	228,000 1)
Per Avander	MD of Bilia AB, Board member		2011	Dependent on Bilia	100	—	14 ,000
Ingrid Jonasson Blank	Board member		2006	Yes	100	—	10,000
Anna Engebretsen	Board member		2010	Dependent on Bilia's major shareholders	100		— 1,063,335 1)
Jack Forsgren	Board member/Chairman Compensation Committee	Compensation	2003	Yes	100	100	16,200
Mats Holgerson	Board member	Audit	2006	Yes	100	100	5,610
Gustav Lindner	Board member	Compensation/ Audit	2014 2)	Dependent on Bilia's major shareholders	100	—	1,000
Svante Paulsson	Board member		2010	Yes	86	—	10,000
Jon Risfelt	Board member/Chairman Audit Committee	Compensation/ Audit	2003	Yes	100	100	6,365
Tommy Strandhäll	Employee representative		2004	—	100	—	—
Patrik Nordvall	Employee representative		2004	—	100	—	126
Dragan Mitrasinovic	Deputy employee representative		2005	—	100	—	7
Lennart Welin	Deputy employee representative		1993	—	100	—	2

1) With family.

2) Elected to Bilia's Board of Directors in December 2014.

A total of seven board meetings were held during 2014, including two statutory meetings.

All holdings in Bilia AB are as of 31 December 2014. Composition of the Board of Directors as of 31 December 2014.

See also Group Note 8 "Employees, personnel costs and remuneration for senior officers".

Group Management

Per Avander born 1961

Frode Hebnes born 1972

Marketing.

Stockholm.

Managing Director and CEO of Bilia AB Education: School of economics. Work experience: Active in banking 1981–83, motor vehicle industry since 1983. MD of Din Bil Göteborg AB 1995–99, MD of Din Bil Stockholm Norr 1999–2001. Bilia 2001–. External posts: Member of the boards of Volvofinans Bank AB, the Swedish Automobile Servicing and Retailing Employers' Association (MAF) and Alignment Systems AB. Drives: BMW X4 and Volvo V40.

Managing Director of Bilia Personbil as, Norway Education: Graduate of Norwegian School of

Work experience: Volvo Personbiler Norge 1997–2001, Volvo Car Corporation Göteborg 2001–2004, Volvo Personbiler Norge AS 2004–2006. Employed by Bilia Personbil as since 2006. Managing Director since December 2008. External posts: Deputy member of the boards of

Education: M.Sc. in Business Administration,

Work experience: Financial Manager of Scania Busser (Denmark), 1996-2000. Financial Manager at Din Car Sverige AB, 2000–2003.

Expon AS and Expon Holding AS. Drives: BMW X6 and Volvo V60.

Hans Jörgen Möller born 1959 Financial Manager, Bilia AB

Employed by Bilia AB since 2003. Drives: Volvo V60 and Volvo XC40.

Gunnar Blomkvist born 1955 CFO, Bilia AB Education: M.Sc. in Business Administration from the School of Business, Economics and Law in Gothenburg. Work experience: Employed by Bilia AB since 1984. Drives: Volvo XC70 and BMW X1.

Lars-Gunnar Jönsson born 1952 Managing Director of Bilia Personvogne A/S, Denmark

Education: Structural engineer and graduate marketing economist.

Stefan Nordström born 1966

Sweden

1986.

Sverige AB.

Managing Director of Bilia Personbilar AB,

External posts: Member of the board of Tanka

Drives: Volvo XC60 and Renault Megane.

Education: School of economics, IFL. Work experience: Employed by Bilia AB since

Work experience: Head of Sales and various functions in the motor vehicle business 1977–81, Managing Director of a company providing car financing 1981–1985, Mercuri Institute 1985-1990, Managing Director of Bilbranschen in Stockholm 1990-2011 (Mercedes, BMW, SAAB) and thereafter various board assignments in the motor vehicle business. Drives: Volvo V40.

Per Ovrén born 1977 Business Development and Purchasing Manager, Bilia AB Education: MSc. Eng. in Industrial Economics, Institute of Technology at Linköping University, plus studies at Technische Universität München and Stockholm University. Work experience: Bain & Company 2003– 2006, Investment AB Öresund 2006–2009, The Boston Consulting Group 2009. Employed by Bilia AB since 2010. Drives: Volvo V70.

Jennifer Tunney born 1974 Chief Legal Counsel of Bilia AB Education: Master's degree in Commercial Law, Jönköping International Business School 2003, studies in Commercial Law at University of Abertay, Dundee, Scotland 2002. Work experience: Real estate agent, Svensk Fastighetsförmedling 1999, Treasury Support, Volvo Treasury AB 2003, Treasury Center, Bilia AB 2003–2004, Legal Counsel, Bilia AB 2005–2009. Drives: Ford S-Max.

The Group Management consists of 87.5 per cent men and 12.5 per cent women.

Position	Number of shares in Bilia
Managing Director	14,000
CFO	32,355
Managing Director of Bilia Personbil as, Norway	2,500
Managing Director of Bilia Personvogne A/S, Denmark	—
Financial Manager	1,000
Managing Director of Bilia Personbilar AB, Sweden	6,000
Business Development and Purchasing Manager	1,168
Chief Legal Counsel	—

All holdings in Bilia AB are as of 31 December 2014. Composition of Group Management as of 31 December 2014.

The Bilia share

The Bilia share has been listed on the NASDAQ OMX Stockholm exchange since 1984. The share is traded under the ticker code BILI A and is included in the OMX Stockholm Mid Cap PI and OMX Stockholm Consumer Services PI indices.

At 31 December 2014, the share capital amounted to SEK 252 M (251), divided among 25,174,033 Series A shares. The quotient value is SEK 10 per share. Each share represents one vote. All Series A shares are entitled to an equal share in Bilia's assets and profits.

Total return 54 per cent in 2014

The OMX Stockholm Consumer Services PI index rose by 11.8 per cent in 2014. The Bilia share rose from SEK 164.00 to SEK 237.50 during the year. The highest price paid, SEK 242.50, was quoted on 5 December 2014. The lowest price paid, SEK 154.00, was quoted on 4 February 2014.

Bilia's shareholders received a total return of 54 per cent (78) in 2014. The calculation is based on share price performance.

Bilia's market capitalisation at year-end was SEK 5,971 M (4,123), based on the total number of shares outstanding. A total of 15.9 million Bilia shares (13.4) were traded in 2014 at a value of SEK 3,136 M (1,643). This turnover represented 63 per cent (54) of the weighted average number of shares.

The P/E ratio based on earnings in 2014 was 15, compared with 14 for 2013.

Beta coefficient

The volatility of the price of a single share compared with the volatility of the stock market as a whole is known as the beta coefficient, or beta. If the beta is greater than 1, this means that the share price fluctuates more than the average for the exchange. A value lower than 1 indicates that the share is less sensitive than the exchange as a whole.

The Bilia share's beta for the past five years is 1.42. This means that the price fluctuations for the Bilia share have been greater than the average price fluctuations on NASDAQ OMX Stockholm.

Number of shareholders increased

Bilia had 35,282 shareholders at the end of 2014, compared with 23,178 a year earlier. The increase is due to the fact that Investment AB Öresund, as a part of its dividend, distributed Bilia shares to its shareholders. Most shareholders own relatively small lots. Of the shareholders, 96.5 per cent (95.2) owned fewer than 1,000 shares. The proportion of institutional ownership was 9.5 per cent (9.6), while the proportion of foreign ownership was 35.9 per cent (35.8).

Dividend policy

Over a business cycle, Bilia's dividend should provide the shareholders with a competitive dividend yield in comparison with similar listed companies. Good dividend growth is also striven for, and the dividend should amount to at least 50 per cent of the net profit for the year.

Bilia's earning capacity, cash flow, investment needs and overall financial position are also taken into account when determining the size of the dividend. An effort is also made to ensure that Bilia has an optimal capital structure at any given time.

Proposed dividend SEK 12.00

Bilia's Board of Directors proposes to the Annual General Meeting of 14 April 2015 that an ordinary dividend be paid in the amount of SEK 12.00 per share (9.00). The proposed dividend corresponds to 79 per cent (79) of the net profit for the year. If the AGM approves this proposal, the dividend is expected to be paid by Euroclear Sweden AB on 21 April 2015.

Stock split

The Board of Directors proposes that the number of shares should be increased by dividing each share into two shares (a 2-for-1 stock split) for the purpose of increasing trade in the share.

Proposal for buy-back or disposal of own shares

The Board of Directors proposes that the AGM authorise the Board to resolve to buy back Bilia shares over NASDAQ OMX Stockholm, as long as the company's own holding never exceeds 10 per cent of the total number of shares. The proposal also includes authorisation to dispose of the shares.

Option programme

In December 2008, Investment AB Öresund sold call options for a total of 170,000 shares in Bilia AB to the Group Management and a number of key employees. The options expire in November 2015 and the exercise price is SEK 20.00 per share. The option programme does not entail any dilution for Bilia's shareholders. The senior officers paid SEK 2.00 per option, which was the estimated market value.

Persons with insider status

Trading in shares by persons with insider status in the company is called insider trading. The law requires such trading to be reported to the Swedish Financial Supervisory Authority. Bilia is obligated to report which persons have insider status to the Swedish Financial Supervisory Authority. These individuals must report their shareholdings and any changes in them. Certain closely-related natural persons and legal entities are also subject to the reporting obligation.

The major shareholders, board members, secretary to the board, auditors, management group and certain employees in the accounting and finance departments are considered to have insider status in Bilia. A complete list of persons with insider status can be found on the Swedish Financial Supervisory Authority's website at www.fi.se. There is a logbook for special events and interim reports. Special events may be discussions of major acquisitions and interim reports for personnel who receive information on the Group's earnings in conjunction with the quarterly financial statements.

Analyses of Bilia

The Bilia share is analysed above all by Swedish brokerage houses and banks. The following analysts cover Bilia regularly:

Stefan Cederberg, SEB Corporate Finance, +46 8 52 22 95 00
Mats Liss, Swedbank Markets, +46 8 58 59 18 00
Andreas Lundberg, ABG Sundal Collier, +46 8 56 62 86 00
Erik Paulsson, Pareto Securities, +46 8 402 50 00
Robin Santavirta, Handelsbanken Capital Markets, +358 10 444 11

Shareholder information

Bilia's information to the stock market and its shareholders should be characterised by correctness, relevance, openness and speed. Shareholders wishing to receive the annual report and half-year reports directly through the mail should notify Euroclear Sweden AB.

Bilia's press releases, quarterly reports and annual reports are available at www. bilia.com. Additional information on the company, its financial performance and the Bilia share can also be found there. It is also possible to subscribe to press releases and send queries directly to Bilia online.

The Bilia share cont'd.

Data per Share	2010	2011	2012	2013	2014
Earnings, SEK	16.502)	16.853)	6.304)	11.705)	15.356)
Equity, SEK 1)	69.90	73.85	64.30	72.50	73.40
Cash flow from operating activities, SEK	4.002)	32.903)	28.954)	15.105)	51.656)
Share price at year-end, SEK	129.50	96.75	93.50	164.00	237.50
P/E ratio, times	8	6	15	14	15
Price/equity ratio, %	185	131	145	226	324
Dividend yield, %	11.5	8.0	5.5	7.3	6.1
Dividend, SEK	12.00	9.50	6.00	9.00	12.007)
Payout ratio, %	75 8)	56 8)	99 8)	79 8)	798)

1) Calculated based on the number of shares outstanding at the end of each year. For 2014, the number of shares outstanding was 25,174,033, for 2013 it was 25,139,592, for 2012 it was 24,657,606, for 2011 it was 24,565,028, and for 2010 it was 24,883,946.

2) Calculated after exercised warrants corresponding to 590,372 shares during 2010, resulting in a weighted average number of shares of 24,698,104.

3) Calculated after exercised warrants corresponding to 196,082 shares during 2011, and after buy-back of 515,000 shares during August-September 2011, resulting in a weighted average number of shares of 24,873,852.

4) Calculated after exercised warrants corresponding to 34,071 shares during 2012, buy-back of 562,313 shares during May–September 2012, and acquisition of 620,820 Bilia shares, giving a weighted average number of shares of 24,747,727.

5) Calculated after exercised warrants corresponding to 25,493 shares during 2013 and 456,493 sold own shares, for a weighted average number of shares of 24,764,587.

6) Calculated after exercised warrants corresponding to 34,441 shares during 2014, resulting in a weighted average number of shares of 25,154,763. 7) Proposed dividend.

8) Calculated after full exercise of the warrants, resulting in 25,459,255 outstanding shares for 2014 and 2013, 25,002,762 for 2012, 24,944,255 for 2011 and 25,459,255 for 2010.

Change in share capital

Year	Number of shares	Change	Share capital, SEK M	Change, SEK M	Reason
1985	15,000,000		300
1987	21,000,000	6,000,000	420	120	Bonus issue
1988	21,032,486	32,486	421	1	New issue at conversion
1989	21,046,667	14,181	421	0	New issue at conversion
1990	21,076,925	30,258	422	1	New issue at conversion
1991	31,674,669	10,597,744	634	212	New issue at conversion
2001	28,554,512	–3,120,157	571	–63	Reduction
2002	25,699,061	–2,855,451	514	–57	Reduction
2004 1)	60,845,603	35,146,542	608	94	Share buy-back/reduction/lowering of par value of share/subordinated shares, Series C
2005	23,129,155	–37,716,448	231	–377	Redemption subordinated shares, Series C
2007	21,459,255	–1,669,900	215	–16	Reduction
2009	25,293,574	3,834,319	253	38	Exercised warrants
2010	24,883,946	–409,628	249	–4	Exercised warrants/share reduction
2011	25,080,028	196,082	251	2	Exercised warrants
2012	25,114,099	34,071	251	0	Exercised warrants
2013	25,139,592	25,493	251	0	Exercised warrants
2014	25,174,033	34,441	252	1	Exercised warrants

1) Of which subordinated shares, Series C, 37,716,448 shares, SEK 377 M.

Distribution of shares, 31 December 2014

Shareholding	Total number of shareholders	Percentage of total no. of shareholders	Combined number of shares owned	Percentage of share capital
1–1,000	34,054	96,5	4,044,426	16.1
1,001–10,000	1,068	3,0	2,700,104	10.7
10,001–100,000	125	0,4	4,210,606	16.7
100,001–	35	0,1	14,218,897	56.5
Total	35,282	100,0	25,174,033	100.0

The 15 largest shareholders at 31 December 2014

	Total	Stake, per cent
Investment AB Öresund	2,540,175	10.1
Qviberg family	2,536,408	10.1
Anna Engebretsen with family	1,063,335	4.2
Handelsbanken funds AB RE JPMEL	1,005,504	4.0
JPM Chase NA 1)	938,471	3.7
SSB CL Omnibus AC	561,139	2.2
MSIL IPB Client Account	523,992	2.1
Nordea investment funds	472,961	1.9
Försäkringsaktiebolaget Avanza pension	442,834	1.8
CBNY-DFA-INT SML CAP V	442,474	1.8
Goldman Sachs & Co, W9	394,209	1.6
NTC various funds, Chicago 2)	374,437	1.5
Fondita Nordic Micro Cap SR	280,000	1.1
SEB Investment management	269,012	1.1
Mellon US Tax exempt Account	263,738	1.0
Total	12,108,689	48.2
Remaining shareholders	13,065,344	51.8
Total	25,174,033	100.0

1) JPM Chase NA has 13 funds with the same name and address. They have been aggregated in the table above.

2) NTC has 6 funds with the same name and address. They have been aggregated in the table above.

Ownership by categories at 31 December 2014, %

Foreign owners, 36 (36) Swedish private > 500, 29 (24) Öresund, 10 (18) Swedish private < 500, 10 (9) Swedish institutions, 9 (9) Swedish unit trusts, 6 (4)

Turnover of Bilia share

				Financial information
--	--	--	--	-----------------------	--

Consolidated Statement of Income and Other Comprehensive Income	17
Consolidated Statement of Financial Position	19
Consolidated Statement of Changes in Equity	21
Consolidated Statement of Cash Flows	22

Note	Bilia Group	IFRS standard
1	Key accounting principles			24
2	Revenue	IAS 18	Revenue	26
3	Result from customer financing			27
4	Operating segments	IFRS 8	Operating Segments	27
5	Business combinations	IFRS 3	Business Combinations	29
6	Other operating income			31
7	Other operating expenses			31
8	Employees, personnel costs and remunerations for senior officers	IAS 19	Employee Benefits	31
9	Fees and cost reimbursement to auditors			34
10	Operating expenses classified by nature of expense			34
11	Net financial items	IAS 18 IAS 39	Revenue Financial instruments: Recognition and Measurement	34
12	Taxes	IAS 12	Income Taxes	35
13	Earnings Per Share	IAS 33	Earnings Per Share	37
14	Intangible assets	IAS 38	Intangible Assets	38
15	Property, plant and equipment	IAS 16 IAS 17	Property, Plant and Equipment Leases	41
16	Interests in associated companies	IAS 28	Investments in Associates	44
17	Financial investments	IAS 39	Financial instruments: Recognition and Measurement	45
18	Long-term receivables and other receivables			45
19	Inventories	IAS 2	Inventories	45
20	Prepaid expenses and accrued income			45
21	Interest-bearing liabilities	IAS 17 IAS 39	Leases Financial instruments: Recognition and Measurement	46
22	Pensions	IAS 19	Employee Benefits	47
23	Provisions	IAS 37	Provisions, Contingent Liabilities and Contingent Assets	51
24	Other liabilities			52
25	Accrued expenses and deferred income			52
26	Financial instruments	IAS 32 IAS 39 IFRS 7 IFRS 13	Financial Instruments: Presentation Financial Instruments: Recognition and Measurement Financial Instruments: Disclosures Fair Value Measurement	52
27	Financial risks and risk management	IFRS 7 IFRS 13	Financial Instruments: Disclosures Fair Value Measurement	54
28	Operating leases	IAS 17	Leases	58
29	Capital commitments	IAS 16 IAS 38	Property, Plant and Equipment Intangible Assets	59
30	Pledged assets and contingent liabilities	IAS 37	Provisions, Contingent Liabilities and Contingent Assets	59
31	Related parties	IAS 24	Related Party Disclosures	60
32	Cash and cash equivalents and specifications for cash flows	IAS 7	Statement of Cash Flows	60
33	Events after the balance sheet date	IAS 10	Events After the Reporting Period	61
34	Information about Parent Company			61
	Income Statement for Parent Company Balance Sheet for Parent Company Statement of Changes in Equity for Parent Company Cash Flow Statement for Parent Company			62 63 65 66
	Notes to the Parent Company Financial Statements			67

Consolidated Statement of Income and Other Comprehensive Income

SEK M	Note	2014	2013
Group
Net turnover	2, 3, 4, 5	19,473	17,656
Cost of goods sold	3, 5, 10, 19	–16,421	–14,883
Gross profit		3,052	2,773
Other operating income	6	20	11
Selling expenses	10	–2,063	–1,958
Administrative expenses	9, 10	–454	–428
Other operating expenses	7, 10	–55	–30
Operating profit	4, 8, 28	500	368
Financial income		6	34
Financial expenses		–44	–70
Share in profits of associated companies	16	26	35
Net financial items	11	–12	–1
Profit before tax		488	367
Tax	12	–103	–77
Net profit for the year		385	290
Other comprehensive income/loss Items that cannot be reclassified to profit or loss
Revaluation of defined-benefit pension plans	22	–172	75
Tax attributable to items that cannot be reclassified to profit or loss	12	39	–17
		–133	58
Items that can be reclassified to profit or loss
Translation differences attributable to foreign operations		–1	–31
		–1	–31
Other comprehensive income after tax		–134	27
Comprehensive income for the year		251	317
Net profit for the year attributable to:
Parent Company's shareholders		385	290
Comprehensive income for the year attributable to:
Parent Company's shareholders		251	317
Earnings per share, SEK	13
Basic earnings per share		15.35	11.70
Diluted earnings per share		15.15	11.55

Performance analysis

	Operating profit	Profit before tax
SEK M	2014	2013	2014	2013
Profit excluding items affecting comparability	538	395	526	394
Items affecting comparability
Gain from sale of operation, other	13	2	13	2
Structural costs etc.	–47	–25	–47	–25
Impairment loss	–4	–4	–4	–4
Accounting profit	500	368	488	367

Comments onConsolidated Statement of Income and Other Comprehensive Income

Net turnover

Net turnover increased by SEK 1,817 M during the year and amounted to SEK 19,473 M (17,656). If turnover is adjusted for comparable operations and exchange rate changes, the increase is 9 per cent or about SEK 1,660 M. The increase is mainly attributable to increased car sales.

Net turnover amounted to SEK 4,253 M (4,050), an increase of SEK 203 M or 5 per cent. If turnover is adjusted for comparable operations and exchange rate changes, the increase is 3 per cent or about SEK 120 M. The underlying increase in net turnover in Sweden was 4 per cent (5) and in Norway 4 per cent (3), while it decreased by 11 per cent (decrease: 15) in Denmark.

Net turnover in the Car Business increased by SEK 1,691 M to SEK 14,945 M (13,254). If net turnover is adjusted for comparable operations and exchange rate changes, the increase was about SEK 1,600 M or 12 per cent. Underlying net turnover increased by 16 per cent (3) in Sweden and 7 per cent in Norway (decrease: 1), while net turnover in Denmark was unchanged (decrease: 9).

Net turnover in the Fuel Business decreased by SEK 16 M to SEK 1,051 M or 1 per cent. If net turnover is adjusted for comparable operations and exchange rate changes, the decrease was SEK 6 M or 1 per cent. Net turnover decreased by 1 per cent (decrease: 7) in Sweden.

Revenues from customer financing amounted to SEK 405 M (356), an increase of SEK 49 M or 14 per cent. Revenues from long-term leases increased by SEK 20 M (decrease: 35), while commissions from finance companies increased by SEK 29 M (17).

Operating profit

The Group's operating profit amounted to SEK 500 M (368), an increase of SEK 132 M, while the operating margin increased to 2.6 per cent (2.1).

Operating profit excluding items affecting comparability increased by 36 per cent, amounting to SEK 538 M (395), while the operating margin increased to 2.8 per cent (2.2).

In Sweden, operating profit in the Car Business increased by SEK 116 M to SEK 458 M (342), in Norway by SEK 31 M to SEK 147 M, and in Denmark by SEK 4 M to a loss of SEK 16 M (loss: 20). The operating margin in Sweden amounted to 3.5 per cent (3.0), in Norway to 2.8 per cent (2.3) and in Denmark to –1.5 per cent (–2.0).

The operating loss for the Parent Company amounted to SEK 50 M (loss: 45).

Operating profit in the Service Business increased by SEK 64 M to SEK 415 M (351). The main cause of the increase was higher sales and a slightly higher gross profit margin.

Operating profit in the Car Business amounted to SEK 156 M (67), an increase of SEK 89 M. The increase is attributed to higher sales of new cars in particular and lower costs in relation to turnover.

The Fuel Business's operating profit amounted to SEK 18 M (20). Lower turnover is the main reason for the decrease.

The Service Business's operating margin increased to 9.8 per cent (8.7), while the Car Business's operating margin increased to 1.0 per cent (0.5). Deliveries in the Car Business increased by 16 per cent (3). Adjusted for comparable units, the increase was 14 per cent. Orders received increased by 15 per cent (7), and the order backlog increased by 14 per cent or 848 cars and amounted to 6,871 at year-end.

Net financial items

Net financial items amounted to SEK –12 M (–1). The poorer net result is mainly attributable to lower income from associated companies, due to an earnings-related non-recurring effect during 2013 when the corporate income tax rate in Sweden was lowered from 26.3 per cent to 22.0 per cent.

Profit before tax

Profit before tax increased by 33 per cent, amounting to SEK 488 M (367).

Profit before tax excluding items affecting comparability increased by SEK 132 M, amounting to SEK 526 M (394).

Tax for the year

Tax for the year amounted to SEK –103 M (–77). If the tax-free share in the profits of associated companies and the gain from property sales are excluded, the tax rate is 23 per cent (23) .

Net profit for the year

Net profit for the year amounted to SEK 385 M (290). This is equivalent to basic earnings per share (before dilution) of SEK 15.35 (11.70), based on a weighted number of outstanding shares. After dilution, earnings per share amounts to SEK 15.15 (11.55). The profit margin amounted to 2.0 per cent (1.6).

Other comprehensive income/loss

Other comprehensive income/loss amounted to a loss of SEK 134 M (income: 27) and is attributable to revaluation of defined-benefit pension plans by SEK –172 M (75), tax attributable to items affecting comparability that cannot be reclassified to profit or loss of SEK 39 M (–17) and translation differences attributable to foreign operations of SEK –1 M (31).

Comprehensive income for the year

Comprehensive income for the year amounted to SEK 251 M (317).

Items affecting comparability

Items affecting comparability had a net effect on the profit of SEK –38 M (–27). The gain from the sale of an operation amounted to SEK 13 M and pertains to the sale of the property company included in the acquisition of the Toyota operation in southern Sweden. Last year this item pertained to the sale of a property in Norway and amounted to SEK 2 M. Structural costs etc. pertain to a provision for rental contracts in Denmark amounting to SEK 40 M and structural costs amounting to SEK 7 M. Last year, structural costs etc. amounted to SEK 25 M and pertained to measures to reduce future costs by SEK 18 M plus revaluation of reserves by SEK –7 M for structural costs recognised in the Danish operation during 2012. The impairment loss pertains to a cooperative unit (a workshop) where the carrying amount exceeded the value obtained from an external market valuation by SEK 4 M. Last year this item pertained to impairment of land in Denmark in the amount of SEK 4 M.

Return on capital employed excluding items affecting comparability amounted to 21.2 per cent (18.7).

Consolidated Statement of Financial Position

SEK M	Note	31/12 2014	31/12 2013
Assets	5, 26, 29
Non-current assets
Intangible assets	14
Intellectual property		177	190
Goodwill		259	259
		436	449
Property, plant and equipment	15
Land and buildings		100	94
Construction in progress		7	8
Equipment, tools, fixtures and fittings		321	297
Leased vehicles		1,637	1,389
		2,065	1,788
Long-term investments
Interests in associated companies	16	370	348
Financial investments	17	11	14
Long-term receivables	18	25	27
		406	389
Deferred tax assets	12	118	66
Total non-current assets		3,025	2,692
Current assets
Inventories
Merchandise	19	2,250	2,268
Current receivables
Current tax assets	12	24	19
Trade receivables	27	722	663
Prepaid expenses and accrued income	20	196	209
Other receivables	18, 27	122	89
Cash and cash equivalents	27, 32	616	155
		1,680	1,135
Total current assets		3,930	3,403
Total assets	4	6,955	6,095

Consolidated Statement of Financial Position

SEK M	Note	31/12 2014	31/12 2013
Equity and liabilities	5, 26, 29
Equity
Share capital		252	251
Other contributed capital		47	47
Reserves		–54	–53
Retained earnings including net profit for the year		1,604	1,578
Total equity		1,849	1,823
Non-current liabilities
Debenture loan	21, 27	28	28
Non-current interest-bearing liabilities	21, 27	64	122
Other non-current liabilities	24	920	603
Provisions for pensions	22	721	530
Other provisions	23	94	19
Deferred tax liabilities	12	129	109
Total non-current liabilities		1,956	1,411
Current liabilities
Current interest-bearing liabilities	21, 27	188	162
Trade payables	27	1,404	1,228
Current tax liabilities		48	52
Other liabilities	24, 27	802	772
Accrued expenses and deferred income	25	694	610
Other provisions	23	14	37
Total current liabilities		3,150	2,861
Total liabilities		5,106	4,272
Total equity and liabilities	4	6,955	6,095
Pledged assets and contingent liabilities for the Group
Pledged assets	30	1,122	1,104
Contingent liabilities	30	4,577	4,155

Comments onthe Consolidated Statement of Financial Position

The Group's balance sheet total amounted to SEK 6,955 M (6,095), an increase of SEK 860 M. Cash and cash equivalents increased by SEK 461 M and leased vehicles increased by SEK 248 M, which were the main reasons for the increase.

Financing

The definition of net debt/receivable has been changed. Share in profits of associated companies, which has been recognised in net financial items and as a financial investment in the Consolidated Statement of Financial Position, has been reclassified and included among interest-bearing assets. Furthermore, short-term leases, which have been recognised in the Consolidated Statement of Financial Position under leased vehicles, have also been reclassified and excluded from interest-bearing assets. The net effect of the above changes has reduced net debt by SEK 177 M as of year-end 2014. Net debt decreased by SEK 330 M during the year, amounting to SEK –70 M, a net receivable. At year-end 2014, the Group had a positive bank balance of SEK 550 M (49). The ratio of net debt to equity was –0.04, compared with 0.14 last year.

Equity

Equity amounted to SEK 1,849 M (1,823), an increase of SEK 26 M. Dividends of SEK 226 M were paid to shareholders during the year. Comprehensive income for the year of SEK 251 M is included, and exercised warrants have resulted in a new issue of SEK 1 M. See the Consolidated Statement of Changes in Equity for details on the change in equity.

Key figures

Return on capital employed amounted to 19.8 per cent (17.7). The Group's goal is 14 per cent. Return on equity amounted to 21.0 per cent (17.0). The Group's goal is 15 per cent.

The rate of capital turnover was unchanged from with last year at a multiple of 3.06, and the rate of turnover of capital employed was also unchanged from last year at a multiple of 7.1.

The equity/assets ratio amounted to 26.6 per cent (29.9).

Equity per share before dilution amounted to SEK 73.40 (72.50), based on 25,174,033 shares outstanding (25,139,592).

Consolidated Statement of Changes in Equity

SEK M	Number of shares	Share capital	Other contributed capital	Reserves, translation reserve	Retained earnings incl. net profit for the year	Total equity
Opening equity 1 Jan. 2013	25,114,099	251	47	–22	1,310	1,586
Comprehensive income for the year
Net profit for the year	—	—	—	—	290	290
Other comprehensive income/loss for the year	—	—	—	–31	58	27
Total comprehensive income/loss for the year	—	—	—	–31	348	317
Transactions with the Group's owners
Disposal of own shares	—	—	—	—	68	68
Exercised warrants	25,493	0	0	—	—	0
Dividend (SEK 6.00 per share)	—	—	—	—	–148	–148
Total transactions with the Group's owners	25,493	0	0	—	–80	–80
Closing equity 31 Dec. 2013	25,139,592	251	47	–53	1,578	1,823
Opening equity 1 Jan. 2014	25,139,592	251	47	–53	1,578	1,823
Comprehensive income for the year
Net profit for the year	—	—	—	—	385	385
Other comprehensive income/loss for the year	—	—	—	–1	–133	–134
Total comprehensive income/loss for the year	—	—	—	–1	252	251
Transactions with the Group's owners
Exercised warrants	34,441	1	0	—	—	1
Dividend (SEK 9.00 per share)	—	—	—	—	–226	–226
Total transactions with the Group's owners	34,441	1	0	—	–226	–225
Closing equity 31 Dec. 2014	25,174,033	252	47	–54	1,604	1,849

Other contributed capital

When shares are issued at a premium, i.e. when the price paid for the shares is more than their quotient value, an amount corresponding to the amount obtained in excess of the shares' quotient value shall be posted to "Other contributed capital".

Translation reserve

The translation reserve includes all exchange rate differences that arise when translating the financial statements of foreign entities that have prepared their financial statements in another currency than the currency in which the consolidated financial statements are presented. The Parent Company and the Group present their financial statements in Swedish kronor. The equity items in foreign entities are recognised at the historical rate.

Reconciliation, translation reserve	2014	2013
Opening translation reserve	–53	–22
Exchange rate difference for the year	–1	–31
Closing translation reserve	–54	–53

Retained earnings including net profit for the year

Retained earnings including net profit for the year includes earnings in the Parent Company and its subsidiaries. Previous provision to the statutory reserve, including transferred share premium reserves, is included in this equity item.

Equity

Buy-back of own shares

Acquisition of own shares is recognised as a deduction from equity. Any transaction costs are recognised directly in equity.

Dividends

Dividends are recognised as a liability after the AGM has approved the dividend.

Consolidated Statement of Cash Flows

SEK M	Note	2014	2013
Operating activities	32
Profit before tax		488	367
Depreciation/amortisation and impairment losses		349	330
Other items not affecting cash		10	–30
Tax paid		–106	–65
Cash flow from operating activities before change in working capital		741	602
Change in inventories		70	–286
Change in operating receivables		–67	–58
Change in operating liabilities		555	115
Cash flow from operating activities		1,299	373
Investing activities
Acquisition of non-current assets (tangible and intangible)		–195	–105
Disposal of non-current assets (tangible and intangible)		78	4
Acquisition of leased vehicles		–1,105	–700
Disposal of leased vehicles		671	511
Operating cash flow		748	83
Investment in financial assets		–7	0
Disposal of financial assets		8	27
Acquisition of subsidiary/operation, net		–42	–27
Disposal of subsidiary/operation, net		8	35
Cash flow after net investments		715	118
Financing activities
Borrowings		400	—
Repayment of loans		–400	—
Change in overdraft facility		–29	55
Exercised warrants		1	0
Disposal of own shares		—	68
Dividend paid to Parent Company's shareholders		–226	–148
Cash flow from financing activities		–254	–25
Change in cash and cash equivalents, excluding translation differences		461	93
Exchange difference in cash and cash equivalents		0	0
Change in cash and cash equivalents		461	93
Cash and cash equivalents at start of year		155	62
Cash and cash equivalents at year-end		616	155

Comments on the Consolidated Statement of Cash Flows

Operating activities

Cash flow from operating activities, before change in working capital, amounted to SEK 741 M (602). Profit before tax increased by SEK 121 M and was the main reason for the change.

Change in working capital increased the cash flow by SEK 558 M (decrease: 229). An increase in trade payables and other operating liabilities was the main reason for the change during the year.

Investing activities

Net acquisitions and disposals of non-current assets and leased vehicles amounted to SEK –551 M (–290). Net investments in noncurrent assets increased by SEK 117 M, while net investments in leased vehicles increased by SEK 434 M.

Operating cash flow

Operating cash flow amounted to SEK 748 M, compared with SEK 83 M last year.

Cash flow after net investments

Cash flow after net investments amounted to SEK 715 M (118). The net effect on cash flow of acquisition and disposal of operations was SEK –34 M (8).

Net debt/receivable

The net receivable amounted to SEK 70 M as compared to a net debt last year of SEK 260 M, equivalent to a decrease in net debt of SEK 330 M.

Specification of change in interest-bearing net debt/receivable:

	2014	2013
Net debt at start of year 260,438	260	438
Increase(+)/decrease(-) of current interest-bearing liabilities	26	–37
Increase(+)/decrease(-) of non-current interest bearing liabilities	–58	24
Increase(+)/decrease(-) of pension liabilities	161	–49
Increase(-)/decrease(+) of cash and cash equivalents	–461	–93
Increase(-)/decrease(+) of interest-bearing assets	1	26
Increase(-)/decrease(+) of interests in associated companies Increase(-)/decrease(+) of non-current leased	–22	–31
assets	23	–18
Net debt(+)/receivable(-) at start of year	–70	260

Notes to the Consolidated Financial Statements

Amounts in SEK M unless otherwise stated.

Note 1 Key accounting principles

The consolidated accounts have been prepared in accordance with International Financial Accounting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the EU. Furthermore, the Swedish Financial Reporting Board's recommendation RFR 1 Supplementary Accounting Rules for Groups has been applied.

The Group accounting principles have been consistently applied to all periods presented in the consolidated financial statements, unless otherwise stated below.

The annual accounts and the consolidated accounts were approved for publication by the Board of Directors and the Managing Director on 11 March 2015. The Consolidated Statement of Income and Other Comprehensive Income, the Statement of Financial Position and the Parent Company Income Statement and Balance Sheet will be subject to adoption at the Annual General Meeting (AGM) on 14 April 2015.

Bilia describes the accounting principles in connection with each note for the purpose of providing a better understanding of the accounting area in question. Bilia focuses on describing the accounting choices that have been made within the framework of the applicable IFRS principle and avoids repeating the text of the standard unless it is considered particularly important for an understanding of the content of the note.

Valuation criteria applied in preparation of Parent Company and consolidated financial statements

Assets and liabilities are measured at cost, except for certain financial assets and liabilities, which are measured at fair value. Financial assets and liabilities that are measured at fair value consist of derivative instruments measured at fair value through profit or loss and available-for-sale financial assets.

Functional currency and reporting currency

The Parent Company's functional currency is the Swedish krona, which is also the reporting currency for the Parent Company and the Group. This means that the financial statements are presented in Swedish kronor.

Revised accounting principles

New and revised IFRSs with application as from 2014 have not had any significant effect on the consolidated accounts.

New IFRS standards that have not yet begun to be applied

A number of new or revised IFRSs do not enter into effect until during the coming financial year and have not been applied in the preparation of these financial statements. New or amended provisions with future application are not planned to be applied prospectively. IFRS 15 Revenue from Contracts with Customers. The purpose of a new revenue standard is to have a single principle-based standard for all sectors that will replace existing standards and statements regarding revenue. IFRS 15 enters into force in 2017, and earlier application is permitted providing the EU has adopted the standard. The EU is expected to approve IFRS 15 during the second quarter of 2015. The effects of IFRS 15 have not yet been evaluated. Other

coming changes are not judged to have any significant effect on the financial statements.

Presentation etc.

Non-current assets and non-current liabilities consist for the most part of amounts that are expected to be recovered or paid more than twelve months after the balance sheet date. Current assets and short-term liabilities consist for the most part of amounts that are expected to be recovered or paid within twelve months of the balance sheet date.

Consolidation principles

The consolidated accounts are prepared according to the principles set forth in IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements. Intra-Group transactions and profits from transactions with associated companies are eliminated. The consolidated accounts include the Parent Company, subsidiaries and associated companies.

By "subsidiaries" is meant companies in which Bilia owns more than 50 percent of the voting rights or over which it otherwise exercises a controlling influence.

By "associated companies" is meant companies over which Bilia has a significant influence, in the normal case when Bilia's holding corresponds to more than 20 per cent but less than 50 per cent of the voting rights. Holdings in associated companies are reported according to the equity method.

In cases where the subsidiaries' and the associated companies' accounting principles do not agree with the Group's accounting principles, adjustments have been made to the Group's accounting principles.

Transactions eliminated on consolidation

Intra-Group receivables and liabilities, revenue or expenses and unrealised profits or losses arising from intra-Group transactions between subsidiaries are eliminated in their entirety when the consolidated accounts are prepared.

Financial statements of foreign entities

IAS 21 The Effects of Changes in Foreign Exchange Rates is applied for translation of the financial statements of foreign entities.

Assets and liabilities in foreign entities, including goodwill and other corporate fair value adjustments, are translated to Swedish kronor at the rate prevailing on the balance sheet date. Revenue and expenses in foreign entities are translated to Swedish currency at an average rate which constitutes an approximation of the rates prevailing at the time of the transaction. Translation differences that arise when translating the accounts of foreign entities are recognised in other comprehensive income and accumulated in a separate component of equity, called the translation reserve.

On disposal of a foreign entity, the cumulative translation differences attributable to the foreign equity are realised, whereby they are reclassified from the translation reserve in equity to profit or loss for the year.

Transactions in foreign currencies

IAS 21 The Effects of Changes in Foreign Exchange Rates is applied for translation of the financial statements of foreign entities.

Transactions in foreign currencies are translated to the functional currency at the exchange rate prevailing on the transaction date. Monetary assets and liabilities in foreign currencies are translated to the functional currency at the rate prevailing on the balance sheet date. Exchange rate differences arising from translations are recognised in profit or loss for the year. Non-monetary assets and liabilities recognised at cost are translated at the exchange rate prevailing at the time of the transaction.

Accounting estimates and judgements in the financial statements

Preparing the financial statements in accordance with IFRS requires management to make accounting estimates and judgements as well as assumptions that influence the application of the accounting principles and the carrying amounts of assets, liabilities, revenue and expenses. Actual outcomes may differ from these estimates and judgements.

The estimates and judgements are regularly reviewed. Changes in estimates are reported in the period in which the change is made if the change affects only that period, or in the period in which the change is made and future periods if the change affects both the current and future periods.

Judgements by management related to the application of IFRSs that have a significant impact on the financial statements and estimates that may entail significant adjustments in the financial statements of subsequent years are presented in notes. The following table shows in which notes management's estimates and judgements are presented.

Source of uncertainty	Note
Goodwill	14	Intangible assets
Leases	15, 24, 25	Property, plant and equipment, other liabilities, accrued expenses and deferred income
Valuation of used cars	19	Inventories
Pensions	22	Pensions
Service subscriptions	24	Other liabilities

Note 2 Revenue

➤ Accounting principle

Bilia applies IAS 18 Revenue in accounting for revenue.

Sale of goods

Revenue from the sale of goods is recognised in profit or loss for the year when the significant risks and rewards of ownership have been transferred to the buyer. The revenue is recognised at the fair value of what has been received or is expected to be received. Revenue is not recognised if it is probable that the economic benefits will not flow to the Group. If considerable uncertainty exists regarding payment, associated costs or the risk of returns, revenue is not recognised.

In cases where the sale of a product is combined with a future repurchase commitment at a guaranteed residual value (repurchase agreement), the transaction is reported as an operating lease, provided that Bilia retains significant risks. The revenue from the transaction is not recognised at the time of sale, but is allocated on a straight-line basis from the time of sale to the time of repurchase. Up until the time of repurchase, this sale is recognised as other liabilities, "liability pertaining to cars sold with repurchase agreements", and the profit is recognised as deferred income.

Rendering of services

Revenue from the rendering of services is recognised when the service is rendered. Revenue from the rendering of services is recognised in profit or loss for the year based on the stage of completion on the balance sheet date (percentage-of-completion method). The stage of completion is determined by an assessment of services rendered and material employed at the balance sheet date.

Leasing of cars

Revenue from leased vehicles is recognised on a straight-line basis during the lease period.

Commissions on transferred financial assets

Commissions on transferred financial assets are recognised on a straight-line basis during the lease period and are calculated on the outstanding instalment and lease portfolios for which recourse liability exists.

Customer loyalty programme

Bilia's customers can participate in a customer loyalty programme. The customer receives vouchers for future purchases based on purchases made during previous periods. Not all issued vouchers are redeemed, however. Every sale under the loyalty programme is reduced by the fair value of future voucher redemptions. The customer's probable future voucher redemptions are then taken into consideration.

➤ Important accounting estimates and judgements Repurchase agreements

Bilia sometimes enters into repurchase agreements entailing that Bilia undertakes to buy back a sold good at a preguaranteed residual value. These agreements are recognised as operating leases. The agreements entail that Bilia has a residual value risk in that Bilia may be forced in the future to dispose of used cars at a loss if the value of these cars is less than had been foreseen when the agreement was entered into. Judgements are regularly made regarding a future net realizable value for these vehicles. If the residual value is less than the net realizable value, this is adjusted by depreciation or impairment of the value of the assets to the extent the shortfall cannot be offset by future unrealised revenue. These vehicles are recognised as leased vehicles, see Note 15 "Property, plant and equipment," and as liability, see Note 24 "Other liabilities". Future unrealised revenue amounted at year-end to SEK 66 M (58), see Note 25 "Accrued expenses and deferred income".

	2014	2013
Net turnover
Workshop	1,888	1,790
Spare parts	2,338	2,232
Other	27	28
Total Service Business	4,253	4,050
Sale of goods	14,415	12,771
Rental income repurchase agreements and rental cars	353	335
Commissions	177	148
Total Car Business	14,945	13,254
Fuels	1,051	1,067
Total Fuel Business	1,051	1,067
Rental income	249	229
IT and training services	124	121
Eliminations	–1,149	–1,065
Total	19,473	17,656

Note 3 Result from customer financing

Result from customer financing consists of the Finance Business and repurchase agreements.

finance companies, and other commissions associated with financing that has been transferred to finance companies.

The Finance Business consists of long-term leases, hire purchase contracts, current net return on financial contracts transferred to

	2014	2013
Rental income repurchase agreements	228	208
Commissions received from finance companies	177	148
Amortisation repurchase agreements	–177	–168
Impairment losses repurchase agreements	–6	—
Other	–15	–14
Total	207	174
Of which:
Finance Business	166	134
Repurchase agreements	41	40

Note 4 Operating segments

➤ Accounting principle

Bilia applies IFRS 8 Operating Segments in accounting for operating segments.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses and for which discrete financial information is available. An operating segment's operating results are regularly reviewed by the company's chief operating decision maker for the purposes of allocating resources to the segment and assessing its performance.

The Group's operations are organised in such a manner that the Group Management can review the operating profit or loss generated by the Group's different products and services. Each operating segment has a manager who is responsible for its day-to-day operations and who regularly reports the outcome of the segment's performance and its need of resources to the country manager, who is in turn a member of the Group Management. Since the Group Management reviews the operating results and makes decisions about resource allocation based on the products and services provided by the Group, these products and services constitute the Group's operating segments.

The Group's internal reporting is therefore structured so that the Group Management can review the performance and earnings of all products and services. It is on the basis of this internal reporting that the Group's segments have then been identified by subjecting the different components to a process aimed at aggregating similar segments. This means that the regions in a given country have been aggregated when they have similar economic characteristics such as similar gross profit margins, products, customers and modes of distribution, and when they operate in a similar regulatory environment.

The following seven operating segments have been identified: Service

Sweden
Norway
Denmark

Service includes products and services within workshop and spare parts as well as store sales.

Cars
Sweden
Norway
Denmark

New and used cars and transport vehicles as well as supplementary services such as financing and insurance are offered in all markets.

Fuels

"Fuels" includes sales of petrol, diesel, ethanol and compressed gas. The "Fuels" segment is not subdivided geographically.

The Parent Company Bilia AB is responsible for the Group's management, strategic planning, financing, purchasing, public relations and business development. Furthermore, Bilia AB conducts training, real estate and IT activities, mainly for companies in the Group.

The Parent Company is accounted for under "segment reconciliation".

Intra-Group transactions consist primarily of lending, interest, and property and IT activities. Other transactions between Group companies are of a marginal scope. Internal prices between the different segments of the Group are set based on the assumption of arm's length transactions between knowledgeable, willing parties. Interest rates are based on Bilia AB's borrowing rate at any given time plus a small margin.

The segment's earnings include directly attributable items and items that can be allocated among the segments in a reasonable and reliable manner. Segment reconciliation consists of general administrative expenses where all items are attributable to the Parent Company.

The segments' investments in property, plant and equipment and intangible assets include all investments except investments in expendable equipment and equipment of minor value.

Note 4 cont'd.

Group's operating segments			Cars Service			Fuels		Total Cars		Segment reconciliation		Group
	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013
Net turnover
External sales	3,465	3,330	14,945 13,254				1,051 1,067 19,461 17,651		12		5 19,473 17,656
Internal sales	788	720					788	720	–788	–720	—	—
Total net turnover	4,253	4,050	14,945 13,254				1,051 1,067 20,249 18,371		–776		–715 19,473 17,656
Depreciation/amortisation	–51	–55	–262	–250	–5	–5	–318	–310	–21	–16	–339	–326
Operating profit/loss	415	351	156	67	18	20	589	438	–89	–70	500	368
Interest income											6	34
Interest expenses											–44	–70
Share in profits of associated companies			26	35			26	35			26	35
Profit before tax											488	367
Tax expense for the year											–103	–77
Net profit for the year											385	290
Material items of income and expense of a non-recurring nature recognised in the Statement of Income and Other Comprehensive Income: Items affecting comparability
– Gain from sale of operation, other	7	2	6	0			13	2			13	2
– Structural costs etc.	–26	–19	–21	–6			–47	–25			–47	–25
– Impairment losses	–4	–2	0	–2			–4	–4			–4	–4
Items of a non-recurring nature	–23	–19	–15	–8	—	—	–38	–27	—	—	–38	–27
Material items not affecting cash besides depreciation/amortisation:
Other	–52	–31	12	–40	–3	–1	–43	–72	–3	–2	–46	–74
Total	–52	–31	12	–40	–3	–1	–43	–72	–3	–2	–46	–74
Assets
Interests in associated companies			370	348			370	348			370	348
Deferred tax assets											118	66
Other assets											6,467	5,681
Total assets			370	348			370	348			6,955	6,095
Investments in non-current assets	101	57	1,161	715	4	2	1,266	774	34	31	1,300	805
Liabilities
Equity											1,849	1,823
Liabilities											5,106	4,272
Total liabilities and equity											6,955	6,095

		Revenue from external customers		Non-current assets
	2014	2013	2014	2013
Geographical segments
Sweden	13,123	11,574	2,960	2,719
Norway	5,324	5,087	528	538
Denmark	1,027	997	91	85
Segment reconciliation	–1	–2	–672	–716
Total	19,473	17,656	2,907	2,626

				Service						Cars
		Sweden		Norway		Denmark		Sweden	Norway		Denmark
	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013
Net turnover
External sales		2,414 2,299	837	810	214	221		9,645 8,212		4,487 4,266	813	776
Internal sales	486	439	244	212	58	69
Total net turnover		2,900 2,738		1,081 1,022	272	290		9,645 8,212		4,487 4,266	813	776
Depreciation/amortisation	–40	–45	–8	–7	–3	–3	–231	–219	–25	–26	–6	–5
Operating profit/loss	319	283	83	60	13	8	121	38	64	57	–29	–28
Share in profits of associated companies							26	35
Material items of income and expense of a non-recurring nature recognised in the Statement of Income and Other Comprehensive Income: Items affecting comparability
– Gain from sale of operation, other	7			2			6			0
– Structural costs etc.		–7		–3	–26	–9		–2		–3	–21	–1
– Impairment losses	–4					–2						–2
Items of a non-recurring nature	3	–7	—	–1	–26	–11	6	–2	—	–3	–21	–3
Material items not affecting cash besides depreciation/amortisation:
Other	–41	–31	–4	–2	–7	2	–23	–23	3	1	32	–18
Total	–41	–31	–4	–2	–7	2	–23	–23	3	1	32	–18
Assets
Interests in associated companies							370	348
Investments in non-current assets	88	37	12	16	1	4	936	621	100	5	105	89

Note 5 Business combinations

➤ Accounting principle

Bilia applies IFRS 3 Business Combinations in accounting for acquisitions.

All acquisitions are accounted for by the acquisition method. The acquisition method entails that acquisition of a subsidiary is regarded as a transaction whereby the Group indirectly acquires the subsidiary's assets and assumes its liabilities. The acquisition analysis establishes the acquisition-date fair value of acquired identifiable assets and assumed liabilities as well as any non-controlling interests. Transaction costs that arise are recognised directly in profit or loss for the year. Transaction costs attributable to acquisitions occurring prior to 1 January 2010 have been included in the acquisition cost.

In business combinations where the fair value of the consider-

ation transferred exceeds the fair value of net identifiable assets acquired and liabilities assumed that are accounted for separately, the difference is allocated between intellectual property and goodwill. When the difference is negative, the resulting gain is recognised as a bargain purchase directly in profit or loss for the year.

The consideration transferred for the acquisition of a subsidiary does not include amounts related to the settlement of preexisting business relationships. Such amounts are recognised in profit or loss.

Contingent considerations are recognised at acquisition-date fair value and are remeasured at each report date and the change is recognised in profit or loss for the year.

The financial statements of subsidiaries are included in the consolidated accounts as from the acquisition date until the date when control no longer exists.

Effects of acquisitions in 2014

Toyota's dealerships in Malmö, Trelleborg and Lund On 1 March 2014, Bilia acquired Toyota's dealership operation in Malmö, Trelleborg and Lund. During 2014, the operation contributed SEK 280 M in turnover and SEK 8 M in operating profit. On a full-year basis, this is equivalent to a turnover of SEK 330 M and an operating profit of SEK 10 M. The purchase consideration was SEK 43 M. The entire purchase consideration was paid in cash. There is no contingent purchase consideration.

The acquisition enables Bilia to expand its offering with the Toyota brand, belonging to one of the world's most successful automakers. It is further hoped that the acquisition will create op- portunities for Bilia to grow with Toyota in the countries where Bilia does business.

The acquisition is expected to give rise to synergies valued at about SEK 3 M per year, with full effect from 2015. The business has 77 employees and will continue to be operated from the present-day facilities.

There are no external transaction costs or acquisition-related expenses attributable to the acquisition.

Effects of the acquisitions

The acquisition has the following effects on the Group's assets and liabilities.

Note 5 cont'd.

Acquiree's net assets at the acquisition date	Carrying amounts in Toyota's dealership operation	Fair value adjustment	Fair value recognised in Group
Intangible assets	13	—	13
Property, plant and equipment	11	27	38
Long-term investments	0	—	0
Deferred tax asset	—	0	0
Inventories	39	0	39
Trade receivables and other receivables	11	—	11
Cash and cash equivalents	1	—	1
Trade payables and other liabilities	32	27	59
Net identifiable assets and liabilities	43	0	43
Consolidated goodwill			0
Purchase consideration paid, cash			43
Less: Cash and cash equivalents in acquired operation			1
Net effect on cash and cash equivalents			42

Acquired customer relations totalling SEK 13 M are recognised as intangible assets. These customer relations will be amortised over 10 years.

Effects of acquisitions in 2013

Operation in Kverneland Bil Drammen AS

On 1 April 2013, Bilia acquired the operation in Kverneland Bil Drammen AS. The operation which Bilia acquired represents Volvo and Ford and has an annual turnover of about SEK 225 M. The number of cars sold annually is around 800. The purchase consideration was SEK 25 M. There is no contingent purchase consideration.

During the year, the acquired operation was moved to Bilia's existing facility in Drammen. The merger is expected to generate considerable economies of scale, with full effect from 2014.

Acquisition-related expenses amount to SEK 0.3 M and consist of fees to consultants for due diligence. These expenses have been recognized as administrative expenses in the Statement of Income and Other Comprehensive Income.

Effects of the acquisitions

The acquisition has the following effects on the Group's assets and liabilities.

Acquiree's net assets at date of acquisition	Carrying amounts in Kverneland's dealership operation	Fair value adjustment	Fair value recognised in Group
Intangible assets	—	17	17
Property, plant and equipment	1	90	91
Deferred tax asset	—	1	1
Inventories	13	0	13
Cash and cash equivalents	—	—	—
Trade payables and other liabilities	2	94	96
Deferred tax liability	—	1	1
Net identifiable assets and liabilities	12	13	25
Consolidated goodwill			—
Purchase consideration paid, cash			25
Less: Cash and cash equivalents in acquired operation			—
Net effect on cash and cash equivalents			25

Acquired customer relations totalling SEK 16 M are recognised as intangible assets. These customer relations will be amortised over 10 years.

Note 6 Other operating income

	2014	2013
Gain on disposal of non-current assets	1	0
Gain from sale of operation, other	13	2
Other	6	9
Total	20	11

"Other operating income" includes items affecting comparability pertaining to SEK 13 M in gain from the sale of the property company included in the acquisition of the Toyota operation in Malmö, Trelleborg and Lund. Last year's figures include SEK 2 M in gain from the sale of a property in Norway.

Note 7 Other operating expenses

2014	2013
–2	–1
–47	–25
–4	–4
–2	0
–55	–30

"Other operating expenses" includes items affecting comparability of SEK 47 M pertaining to structural costs in Denmark and SEK 4 M pertaining to impairment of a cooperative unit (a workshop) on Lidingö. Last year's figures include structural costs of SEK 25 M in Sweden, Norway and Denmark and SEK 4 M pertaining to impairment of land in Denmark.

Note 8 Employees, personnel costs and remunerations for senior officers

➤ Accounting principle

Bilia applies IAS 19 Employee Benefits in accounting for benefits to employees.

Short-term benefits

Short-term benefits are calculated without discounting and are recognised as a cost when the related services have been rendered.

A provision is recognised for the expected cost of profit-sharing and bonus payments when the Group has a present legal or constructive obligation to make such payments as a result of the fact that services have been rendered by employees and a reliable estimate of the obligation can be made.

Termination benefits

A cost for benefits in conjunction with termination of personnel is only recognised if the company is demonstrably committed by a formal detailed plan to terminate an employment before the normal retirement date, without a realistic possibility of withdrawal. When benefits are paid as an offer to encourage voluntary retirement, a cost is recognised if it is probable that the offer will be accepted and the number of employees that will accept the offer can be reliably estimated.

Costs for remunerations to employees

	2014	2013
Wages, salaries and other remunerations	1,571	1,492
Pension costs 1)	170	140
Social security contributions	354	340
Total	2,095	1,972

1) For further information see Note 22 "Pensions".

Average number of employees	2014	of whom men	2013	of whom men
Parent Company
Sweden	90	41	92	41
Total in Parent Company	90	41	92	41
Subsidiaries Sweden	1,996	1,789	1,929	1,726
Norway	824	773	802	754
Denmark	244	215	286	255
Total in subsidiaries	3,064	2,777	3,017	2,735
Group total	3,154	2,818	3,109	2,776

The Group Management consists of seven men and one woman (12.5 per cent women).

The Board of Directors consists of two women and eight men (20 per cent women), who are elected by the AGM. In addition there are four employee representatives, all men, two of whom are deputies.

Wages, salaries and other remunerations broken down between senior officers and other employees, plus social security contributions in the Parent Company

		2014			2013
Parent Company	Senior officers (18 persons)	Other employees	Total	Senior officers (18 persons)	Other employees	Total
Wages, salaries and other remunerations	16	43	59	16	42	58
(of which bonus etc.)	(4)	(1)	(5)	(4)	(1)	(5)
Social security contributions 1)	16	19	35	15	19	34
(of which pension costs) 1)	(11)	(6)	(17)	(10)	(6)	(16)

"Senior officers" includes Bilia AB's Board of Directors, 14 persons (14), including two deputies.

1) Special payroll tax on company-owned pensions is included in the amount of SEK 5 M (4). Tax expense for the year has simultaneously been reduced by SEK 5 M (4) due to increase in the value of the pensions.

Wages, salaries and other remunerations, pension costs and pension obligations for senior officers in the Group

	2014	2013
	Senior officers (21 persons)	Senior officers (20 persons)
Wages, salaries and other remunerations	24	22
(of which bonus etc.)	(5)	(4)
Pension costs 1)	13	11
Pension obligations	108	74

"Senior officers" includes Bilia AB's Board of Directors, 14 persons (14), including two deputies.

Remunerations to senior officers

The Annual General Meeting approved the payment of fees to the Board of Directors and subcommittee members. Fees are payable to the chairman and members of the Audit Committee and to the chairman of the Compensation Committee. No special fee is paid to the Managing Director for his work on the Board.

tee, which proposes compensation terms for the MD and other senior officers in the Group Management. By "other senior officers in the Group Management" is meant the CFO, the Chief Legal Counsel, the Business Development and Purchasing Manager and the Financial Manager of Bilia AB, the MD of Bilia Personbilar AB, the MD of Bilia Personbil as and the MD of Bilia Personvogne A/S.

The Board of Directors has appointed the Compensation Commit-

Wages, salaries and other remunerations to senior officers, SEK '000

Parent Company 2014	Director's fee/Basic salary (excl. social sec. contr.)	Bonus	Pension costs	Other benefits	Total	Pension obligations
Chairman (Mats Qviberg)	300	—	—	—	300	—
Board members (8) 1) (including Jan Pettersson 300)	1,560	—	—	—	1,560	—
Audit and Compensation Committee (4)	125	—	—	—	125	—
Employee representatives:
Appointed (2)	70	—	—	—	70	—
Deputies (2)	40	—	—	—	40	—
MD, Per Avander	4,041	1,901	2,260	134	8,336	4,946
Other senior officers (4)	5,738	1,953	3,167	341	11,199	17,341
Former senior officers (MDs) 2)	—	—	—	—	—	97,733
Total	11,874	3,854	5,427	475	21,630	120,020

1) Jack Forsgren, Anna Engebretsen, Ingrid Jonasson Blank, Svante Paulsson, Jon Risfelt, Mats Holgerson, Jan Pettersson and Fredrik Grevelius. Four of the members are also members of the Audit and Compensation Committee.

2) Jan Pettersson (former MD) was still employed with the company and lifted a salary plus benefits (mainly company car) amounting to SEK 245,000 for non-Board duties.

Wages, salaries and other remunerations to senior officers, SEK '000

Parent Company 2013	Director's fee/Basic salary (excl. social sec. contr.)	Bonus	Pension costs	Other benefits	Total	Pension obligations
Chairman (Mats Qviberg)	300	—	—	—	300	—
Board members (8) 1) (including Jan Pettersson 275)	1,500	—	—	—	1,500	—
Audit and Compensation Committee (4)	125	—	—	—	125	—
Employee representatives:
Appointed (2)	70	—	—	—	70	—
Deputies (2)	40	—	—	—	40	—
MD, Per Avander	3,782	1,860	2,715	124	8,481	3,289
Other senior officers (4)	5,091	1,705	2,094	276	9,166	7,030
Former senior officers (MDs) 2)	—	—	—	—	—	77,260
Total	10,908	3,565	4,809	400	19,682	87,579

2) Jan Pettersson (former MD) was still employed with the company and lifted a salary plus benefits (mainly company car) amounting to SEK 718,000 for non-Board duties.

The Chairman of the Board has not received any other remuneration aside from his director's fee. A fee of SEK 180,000 (175,000) was paid to each of the other Board members, except for the Deputy Chairman, who received SEK 300,000 (275,000). Regarding the Deputy Chairman's fee for non-Board duties, see footnote 2) under the tables above. Thus, fees totalling SEK 1,560,000 (1,500,000) were paid to the Board members elected by the AGM, in accordance with the decision of the 2014 AGM. The AGM further decided that Audit Committee Chairman Jon Risfelt should receive a fee of SEK 50,000 (50,000) and that other members of the Audit Committee (Fredrik Grevelius/Gustav Lindner and Mats Holgerson) should receive SEK 25,000 each, for a total of SEK 50,000 (50,000). The chairman of the Audit Committee (Jack Forsgren) should receive SEK 25,000 (25,000). Fees totalling SEK 110,000 (110,000) were paid to the employee representatives on the Board. Thus, the total fees paid to the Board members amounted to SEK 2,095,000 (2,035,000).

Bonus for the MD, the CFO, the Chief Legal Counsel and the Business Development and Purchasing Manager, as well as the Financial Manager, is based 50 per cent on the Group's profit and 50 per cent on Bilia Personbilar AB's profit. Bonus for the MD of Bilia Personbilar AB and the MD of Bilia Personbil as is based 20 per cent on the Group's profit and 80 per cent on the profits of the individual subsidiaries. The bonus for 2014 for the MD and other senior officers in the Group Management was maximised at 50 per cent of the individual's basic salary.

"Other benefits" pertains mainly to company cars.

Defined-contribution pension

The following agreement on pension benefits is in effect for the Managing Director.

The employee's retirement pension consists of a defined-premium pension, which means that Bilia undertakes to pay premiums to an insurance company and that the employee can determine how the insurance is designed and managed. Pension becomes payable at the age of 60 years. The pension agreement states that the employee's pension premium shall amount to 35 per cent of his pensionable salary. The pensionable salary consists of the monthly salary multiplied by 12.2 plus the bonus paid for the previous year. Pension is payable in an amount corresponding to the value of the insurance. An increase in value increases the employee's pension while a decrease in value reduces the employee's pension. The above premiums will be paid as long as Per Avander is employed as Managing Director of the company.

Pension for the Group's CFO becomes payable at the age of 60 years. The pension agreement states that the employee's pension premium shall amount to 28 per cent of his pensionable salary. The pensionable salary consists of the monthly salary multiplied by 12.2. Pension is payable in an amount corresponding to the value of the insurance at 60 years. Pension premium for supplementary old-age pension is paid in an amount corresponding to 20 per cent of the pensionable salary in excess of 30 income base amounts. The pensionable salary consists of the monthly salary multiplied by 12.2 plus an average of the past three years' bonuses. The size of the pension is based on the pension capital at retirement.

Other senior officers in the Group Management in Sweden follow the ITP plan and have a supplementary old-age pension. Pension premium for supplementary old-age pension is paid in an amount corresponding to 20 per cent of the pensionable salary in excess of 30 income base amounts. The pensionable salary consists of the monthly salary multiplied by 12.2 plus an average of the past three years' bonuses. The size of the pension is based on the pension capital at retirement. The Financial Manager of Bilia AB also has a retirement pension insurance to which a monthly premium of SEK 5,000 is paid.

Pension for the MD of the Norwegian company Bilia Personbil as becomes payable at the age of 67 years. The pension agreement states that the employee's pension premium shall amount to 6.9 per cent of his pensionable salary.

Severance pay

The employment contracts of the MD and other members of the Group Management contain special rules governing termination by the company. Four of the senior officers are entitled to 24 months' salary, less any salary received by the employee from other service during the past 12 months. In the event of significant changes in the company's ownership structure that affect the premises or content of their jobs, the four senior officers are also entitled to terminate their own employment with the right to 24 months' salary, less any salary received by the employee from other service during the past 12 months.

For information on post-employment employee benefits and equity compensation benefits, see Note 22 "Pensions" and Note 31 "Related parties".

Profit-sharing system for employees

A total of SEK 21 M (16), including payroll overhead, was allocated in the annual accounts for 2014 to cover profit shares for employees.

Note 8 cont'd.

Option programme

In December 2008, Investment AB Öresund sold call options for a total of 170,000 shares in Bilia AB to the Group Management and a number of key employees. The options expire in November 2015 and the exercise price is SEK 20.00 per share. The option programme does not entail any dilution for Bilia's shareholders. The senior officers paid SEK 2.00 per option, which was the estimated market value.

Note 9 Fees and cost reimbursement to auditors

SEK '000	2014	2013
KPMG AB Auditing assignment	–2,129	–2,274
Auditing activities other than the auditing assignment	–460	–755
Tax advice	–64	–51
Other assignments	–238	–877

By "auditing assignment" is meant statutory audit of the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and the Managing Director, plus auditing and other examination as agreed-on or contracted. This includes other tasks that are incumbent upon the company's auditor to perform plus advice or other assistance arising from observations in connection with such auditing or performance of such other tasks. All else is classified as "Auditing activities other than the auditing assignment", "Tax advice" and "Other assignments".

Note 10 Operating expenses classified by nature of expense

	2014	2013
Merchandise	–15,532	–13,979
Other external expenses	–950	–954
Personnel costs	–2,111	–2,010
Depreciation/amortisation	–339	–326
Impairment losses	–10	–4
Other operating expenses	–51	–26
Total	–18,993	–17,299

Note 11 Net financial items

➤ Accounting principle

Bilia applies IAS 18 Revenue and IAS 39 Financial Instruments: Recognition and Measurement in accounting for financial income.

Bilia applies IAS 39 Financial Instruments: Recognition and Measurement in accounting for financial expenses.

Financial income consists of interest income on invested funds, dividend income, gain on disposal of available-for-sale financial assets and realised or unrealised gains on hedging instruments.

Interest income on financial instruments is recognised according to the effective interest method. Dividend income is recognised when the right to receive dividend has been established. The gain or loss from sale of a financial instrument is recognised when the economic risks and rewards incidental to ownership have been transferred to the purchaser and the Group no longer has control over the instrument.

Financial expenses consist of interest expenses on loans, the effect of reversal of present value calculation of provisions, impairment of financial assets and realised or unrealised losses on hedging instruments. Borrowing costs are recognised in profit or loss with application of the effective interest method, except to the extent they are directly attributable to the acquisition, construction or production of a qualifying asset that takes a substantial period of time to get ready for its intended use or sale, in which case they are included in the cost of the assets.

Exchange gains and losses are offset.

The effective interest rate is the rate that discounts the estimated future receipts and payments through the expected life of a financial instrument to the net carrying amount of the financial asset or liability. The calculation includes all fees paid or received by the contracting parties that are a part of the effective interest, transaction costs and all other premiums or discounts.

2014	2013
6	7
—	15
0	12
6	34
–21	–22
–22	–17
–1	–22
0	–9
–44	–70
26	35
–12	–1

1) Attributable to items measured at amortised cost.

➤ Accounting principle

Bilia applies IAS 12 Income Taxes in accounting for taxes.

Income taxes consist of current tax and deferred tax. Income taxes are recognised in profit or loss for the year except when the underlying transaction is recognised directly in other comprehensive income or in equity, whereby the associated tax effect is recognised in other comprehensive income or equity.

Current tax is tax to be paid or received with respect to the current year, with the application of tax rates that have been enacted or substantively enacted by the balance sheet date. Current tax also includes adjustments of current tax attributable to earlier periods.

Deferred tax is calculated in accordance with the balance sheet method, based on temporary differences between carrying amounts and tax bases of assets and liabilities. Temporary differences are not taken into account in goodwill on consolidation,

nor are differences that arise on the initial recognition of assets and liabilities in a transaction that is not a business combination and at the time of the transaction affects neither accounting nor taxable profit. Furthermore, temporary differences attributable to interests in subsidiary and associated companies that are not expected to be reversed within the foreseeable future are not taken into account either. The valuation of deferred tax is based on how underlying assets or liabilities are expected to be realised or settled. Deferred tax is calculated using the tax rates and tax rules that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets pertaining to deductible temporary differences and tax-loss carryforwards are only recognised to the extent that it is likely that they will be able to be utilised. The value of deferred tax assets is reduced when it is no longer deemed likely that they can be utilised.

Recognised in the Statement of Income and Other Comprehensive Income

	2014	2013
Current tax expense (–)/tax income (+)
Tax expense/income for the year	–104	–80
Adjustment of tax attributable to previous years	7	–4
	–97	–84
Deferred tax expense (–)/tax income (+)
Deferred tax pertaining to temporary differences	16	16
Deferred tax pertaining to changed tax rate	—	0
Deferred tax pertaining to appropriations	–22	–7
Deferred tax expense resulting from utilisation of previously capitalised tax value in loss carryforwards	0	–2
	–6	7
Total tax expense recognised	–103	–77

	2014		2013
	Amount	%	Amount	%
Reconciliation of effective tax
Profit before tax	488		367
Tax according to tax rate applicable to Parent Company	–107	22.0	–81	22.0
Effect of foreign tax rates	–5	1.0	–5	1.3
Tax attributable to previous years	7	–1.4	–4	1.2
Tax effect of non-deductible expenses	–4	0.9	–11	3.0
Tax effect of non-taxable revenues	27	–5.7	33	–8.9
Tax effect of changed tax rate	—	—	0	0.0
Increase in tax-loss carryforwards without corresponding capitalisation of deferred tax	–20	4.1	–8	2.3
Utilisation of previous uncapitalised tax-loss carryforwards	—	—	0	0.0
Standard interest on tax allocation reserve	–1	0.2	–1	0.2
Effective tax recognised	–103	21.1	–77	21.1

Current tax assets amount to SEK 24 M (19) and represent the recoverable amount of current tax on the net profit for the year.

Note 12 cont'd.

Tax attributable to other comprehensive income	2014			2013
	Before tax	Tax	After tax	Before tax	Tax	After tax
Revaluation of defined-benefit pension plans	–172	39	–133	75	–17	58
Translation differences for the period on translation of foreign financial statements	–1	—	–1	–31	—	–31
Other comprehensive income/loss	–173	39	–134	44	–17	27

Recognised in Statement of Financial Position

Deferred tax assets and liabilities	Deferred tax asset		Deferred tax liability		Net
	2014	2013	2014	2013	2014	2013
Deferred tax assets and liabilities recognised
Deferred tax assets and liabilities are attributable to the following:
Intellectual property	–13	–11	10	12	–23	–23
Land and buildings	1	1	2	1	–1	0
Plant and equipment	2	3	—	—	2	3
Leased vehicles	11	3	—	—	11	3
Financial investments	—	—	1	2	–1	–2
Inventories	6	9	—	—	6	9
Trade receivables	1	1	—	—	1	1
Untaxed reserves	—	—	116	95	–116	–95
Pension provisions	99	52	—	—	99	52
Other provisions	10	7	—	—	10	7
Operating liabilities	1	1	0	–1	1	2
Tax-loss carryforwards	—	—	0	0	0	0
Tax assets/liabilities	118	66	129	109	–11	–43

Unreported deferred taxes recoverable

Deferred tax assets pertaining to deductible temporary differences and tax-loss carryforwards have not been recognised in the Consolidated Statement of Income and Other Comprehensive Income and the Consolidated Statement of Financial Position:

Deferred tax assets attributable to temporary differences in Denmark amount to SEK 26 M (15) and previous deductible tax-loss carryforwards in Denmark amount to SEK 66 M (57).

	2014	2013
Temporary differences	26	15
Tax-loss carryforwards	66	57
Total	92	72

Deferred tax assets have not been recognised for these items, since it is uncertain whether the Group will be able to utilise them for deduction from future taxable profits.

Change in deferred tax in temporary differences and tax-loss carryforwards

	Balance as per 1 Jan. 2013	Recognised in profit or loss for the year	Recognised in other total comprehensive income	Recognised in equity	Acquisition/ disposal of business entity	Balance as per 31 Dec. 2013
Intellectual property	–34	10	—	—	1	–23
Land and buildings	0	0	—	—	0	0
Plant and equipment	–7	10	—	—	0	3
Leased vehicles	4	–2	—	—	1	3
Financial investments	–2	0	—	—	—	–2
Inventories	9	0	—	—	0	9
Trade receivables	1	0	—	—	—	1
Untaxed reserves	–87	–8	—	—	—	–95
Pension provisions	66	3	–17	—	—	52
Other provisions	12	–5	—	—	—	7
Operating liabilities	2	–1	—	—	1	2
Tax-loss carryforwards	2	–2	—	—	—	0
Translation difference for the year	—	2	—	–2	—	—
Tax assets/liabilities	–34	7	–17	–2	3	–43

	Balance as per 1 Jan. 2014	Recognised in profit or loss for the year	Recognised in other total comprehensive income	Recognised in equity	Acquisition/ disposal of business entity	Balance as per 31 Dec. 2014
Intellectual property	–23	0	—	—	—	–23
Land and buildings	0	–1	—	—	—	–1
Plant and equipment	3	–1	—	—	—	2
Leased vehicles	3	8	—	—	0	11
Financial investments	–2	1	—	—	—	–1
Inventories	9	–3	—	—	0	6
Trade receivables	1	0	—	—	—	1
Untaxed reserves	–95	–21	—	—	—	–116
Pension provisions	52	8	39	—	—	99
Other provisions	7	3	—	—	—	10
Operating liabilities	2	–1	—	—	—	1
Tax-loss carryforwards	0	—	—	—	—	0
Translation difference for the year	—	1	—	–1	—	—
Tax assets/liabilities	–43	–6	39	–1	0	–11

Note 13 Earnings per share

➤ Accounting principle

Bilia applies IAS 33 Earnings Per Share in accounting for earnings per share.

Calculation of earnings per share is based on the consolidated net profit for the year attributable to the Parent Company's owners and on the weighted average number of shares outstanding during the year. In the calculation of diluted earnings per share, the earnings figure and the average number of shares are adjusted to take into account the diluting effects of potential ordinary shares deriving during reported periods from issued warrants attributable to the debenture loan. See Note 26 "Financial instruments".

		Basic		Diluted
	2014	2013	2014	2013
Earnings Per Share	15.35	11.70	15.15	11.55

The calculation of earnings per share for 2014 is based on the net profit for the year attributable to the Parent Company's ordinary shareholders, amounting to SEK 385 M (290), and on a weighted average number of shares outstanding. During 2014, the weighted average number of shares was 25,154,763 (24,764,587), which was affected by repurchases of own shares and exercised warrants.

Net profit for the year attributable to the Parent Company's ordinary shareholders, basic

	2014	2013
Net profit for the year attributable to the Parent Company's ordinary shareholders	385	290
Profit attributable to the Parent Company's ordinary shareholders, basic	385	290
Profit attributable to the Parent Company's ordinary shareholders, diluted
	2014	2013
Profit attributable to the Parent Company's ordinary shareholders	385	290
Effect of interest on warrants attached to debenture loan	0	0
Profit attributable to the Parent Company's ordinary shareholders, diluted	385	290
Weighted average number of ordinary shares outstanding, diluted
Thousands	2014	2013
Weighted average number of ordinary shares outstanding during the year, basic	25,155	24,765
Effect of outstanding warrants attached to debenture loan, weighted average	304	331

Weighted average number of ordinary shares during the year, diluted 25,459 25,096

In late 2008 and early 2009, a total of SEK 100 M was raised by the issuance of subordinated debentures in an amount of SEK 100 M and an associated issue of 5,000,000 warrants entitling the bearer to subscribe for an equal number of Series A Bilia shares at SEK 20 per share. Between 2009 and 2014, inclusive, 4,714,778 warrants were exercised to subscribe for shares, resulting in a new issue to- talling SEK 94 M. During 2014, 34,441 warrants were exercised to subscribe for new shares, resulting in a new issue of SEK 1 M. If the remaining warrants are exercised, the number of outstanding shares will increase by 285,222. Other than these, there are no other outstanding instruments that could cause future dilution effects.

➤ Accounting principle

Bilia applies IAS 38 Intangible Assets in accounting for intangible assets.

Software

Internally developed

Expenditures for research on software are recognised as expense when they are incurred.

Expenditures for development of software and improved business management systems are recognised as an asset in the Statement of Financial Position if the process is technically useful, and if Bilia has sufficient resources to complete development and can subsequently use the intangible asset. The carrying amount includes costs of materials, direct costs for salaries, and overheads that can be attributed to the asset on a reasonable and consistent basis. Other expenditures for development are recognised in profit or loss as expense when they are incurred. Expenditures for development of software recognised in the Balance Sheet are stated at cost less accumulated depreciation and any impairment losses.

Business combinations

Software acquired via business combinations is recognised at fair value, which is equivalent to estimated replacement cost at the acquisition date less accumulated depreciation and any impairment losses.

Other acquisitions

Other investments in software are recognised at cost less accumulated amortisation and any impairment losses. The cost includes the purchase price plus costs directly attributable to the asset for bringing the asset to its location and to working condition for its intended use.

Customer relations

Customer relations that have been acquired via business combinations are recognised at fair value, which is equivalent to the cost calculated by cash flow valuation at the acquisition date less accumulated amortisation and any impairment losses.

Distribution rights

Distribution rights that have been acquired via business combinations are recognised at fair value, which is equivalent to the cost calculated by cash flow valuation at the acquisition date less accumulated amortisation and any impairment losses.

Trademarks

Trademarks that have been acquired via business combinations are recognised at fair value, which is equivalent to the cost calculated by cash flow valuation at the acquisition date less accumulated amortisation and any impairment losses.

Goodwill

Goodwill represents the difference between the cost of the business combination and the fair value of identifiable assets, assumed liabilities and contingent liabilities.

Goodwill is measured at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units and is subjected annually to impairment testing.

In connection with business combinations where the cost is less than the net value of identifiable assets, assumed liabilities and contingent liabilities, the difference is recognised directly in profit or loss.

Subsequent expenditures

Subsequent expenditures for capitalised intangible assets are only recognised as an asset in the Statement of Financial Position when they increase the future economic benefits for the specific asset to which they are attributable. All other expenditures are recognized as expenses when they are incurred.

Amortisation

Amortisation is recognised in profit or loss for the year on a straightline basis over the calculated useful lives of intangible assets, unless these useful lives are indefinite. Goodwill with an indefinite useful life is impairment tested annually or as soon as there are indications that the asset in question has declined in value. Amortisable intangible assets are amortised from the date they are available for use. Estimated useful lives:

• Software	3–10 years
• Customer relations	10 years
• Distribution rights	10 years
• Trademarks	10 years

Impairment testing of property, plant and equipment and intangible assets

Bilia applies IAS 36 Impairment of Assets in accounting for impairment.

The carrying amounts are tested at every balance sheet date for any indication of impairment. If any such indication exists, the asset's recoverable amount is calculated.

In the case of goodwill and other intangible assets that are not yet ready for use, the recoverable amount is calculated at least annually. An impairment loss is recognised when the carrying amount of an asset or a cash-generating unit exceeds the recoverable amount. An impairment loss is recognised in profit or loss for the year.

Impairment of assets attributable to a cash-generating unit is first allocated to goodwill. Then a pro rata impairment loss is recognised for the other assets included in the unit.

The recoverable amount is the higher of an asset's fair value less selling costs and its value in use. When calculating the value in use, future cash flows are discounted by a discount rate that takes into account the risk-free interest rate and the risk associated with the specific asset.

An impairment loss is reversed if there is an indication that the impairment no longer exists and there has been a change in the estimates used to determine the recoverable amount. Impairment losses relating to goodwill are never reversed, however. An impairment loss is only reversed to the extent the carrying amount of the asset after reversal does not exceed the carrying amount that would have been recognised, less amortisation where applicable, if no impairment loss had been recognised.

➤ Important accounting estimates and judgements

Impairment testing goodwill

Goodwill is impairment tested at least annually. Impairment testing is based on 5-year forecasts for the cash-generating units in question. For important assumptions per cash-generating unit, see below.

		Software, inter nally developed		Software, Customer acquired relations			Distribution rights
	2014	2013	2014	2013	2014	2013	2014	2013
Accumulated costs
At start of year	21	21	116	101	215	218	24	26
Business combinations	—	—	—	—	13	21	—	—
Purchases	—	0	15	15	—	—	—	—
Disposals and retirements	0	—	0	0	—	–15	—	—
Reclassifications	—	—	—	—	–10	—	—	—
Translation differences for the year	—	—	—	—	–1	–9	0	–2
	21	21	131	116	217	215	24	24
Accumulated amortisation and impairment losses
At start of year	–20	–20	–69	–58	–79	–59	–20	–18
Disposals and retirements	—	—	0	0	—	2	—	—
Reclassifications	—	—	—	—	10	—	—	—
Amortisation for the year	–1	0	–15	–11	–21	–23	–2	–3
Translation differences for the year	—	—	—	—	0	1	0	1
	–21	–20	–84	–69	–90	–79	–22	–20
Carrying amount at year-end	0	1	47	47	127	136	2	4

Amortisation and impairment losses

Amortisation is included on the following lines in the

Statement of Income and Other Comprehensive Income:		Software, inter nally developed		Software, acquired		Customer relations		Distribution rights
	2014	2013	2014	2013	2014	2013	2014	2013
Cost of goods sold	–1	0	–15	–11	–21	–23	–2	–3

No impairment losses have been recognised.

	Trademarks		Total intellectual property		Goodwill
	2014	2013	2014	2013	2014	2013
Accumulated costs
At start of year	8	9	384	375	261	283
Business combinations	—	—	13	21	0	—
Purchases	—	—	15	15	—	—
Disposals and retirements	—	—	0	–15	—	–9
Reclassifications	—	—	–10	—	—	—
Translation differences for the year	0	–1	–1	–12	0	–13
	8	8	401	384	261	261
Accumulated amortisation and impairment losses
At start of year	–6	–6	–194	–161	–2	–2
Disposals and retirements	—	—	0	2	—	—
Reclassifications	—	—	10	—	—	—
Amortisation for the year	–1	–1	–40	–38	—	—
Translation differences for the year	0	1	0	3	—	—
	–7	–6	–224	–194	–2	–2
Carrying amount at year-end	1	2	177	190	259	259

Amortisation and impairment losses

Amortisation is included on the following lines in the Statement of Income and Other Comprehensive Income:		Total intellectual Trademarks property Goodwill
	2014	2013	2014	2013	2014	2013
Cost of goods sold	–1	–1	–40	–38	—	—

No impairment losses have been recognised.

Impairment tests for cash-generating units containing assets with an indeterminate useful life (goodwill)

The following cash-generating units have considerable carrying amounts for goodwill in relation to the Group's total carrying amounts:

	2014	2013
Bilia Personbilar AB (goodwill)	72	72
Bilia Group Stockholm AB (goodwill)	58	58
Bilia Personbil as (goodwill)	127	127
Bilia Group Göteborg AB (goodwill)	2	2
Bilia Center Syd AB (goodwill)	0	—

Bilia Personbilar AB (Goodwill)

Impairment testing for Bilia Personbilar AB was based on calculation of the value in use. This value is based on cash flow forecasts for a total of 5 years, the first of which is based on the budget for 2015 adopted by management. The cash flows forecasted after the first 5 years have been based on an annual growth rate of 2.0 per cent. The present values of the forecasted cash flows have been calculated using a discount rate of 7.95 per cent (8.70) before tax.

The recoverable amount for Bilia Personbilar AB exceeds the carrying amount by a good margin.

Management judges that reasonably possible changes in margins in car sales and demand for service and repair work would not have such great effects that they would reduce the recoverable amount to a value lower than the carrying amount.

The important assumptions in the 5-year forecast and the methods used to estimate values are as follows:

Important variables and methods for estimating values Market share and growth

Demand for new cars has historically followed the business cycle, while demand for service and repair work has been more stable. The market situation has been assumed to be on a level with 2014. The forecast agrees with previous experience and external information sources.

Prices

Prices have been assumed to increase with the expected rate of inflation. The forecast agrees with previous experience and external information sources.

Personnel costs

The forecast for personnel costs is based on some increase in real wages and planned efficiency improvements in the operations. The forecast agrees with previous experience and external information sources.

Bilia Group Stockholm AB (goodwill)

Impairment testing for Bilia Group Stockholm AB was based on calculation of the value in use. This value is based on cash flow forecasts for a total of 5 years, the first of which is based on the budget for 2015 adopted by management. The cash flows forecasted after the first 5 years have been based on an annual growth rate of 2.0 per cent. The present values of the forecasted cash flows have been calculated using a discount rate of 7.68 per cent (9.76) before tax.

The recoverable amount for Bilia Personbilar AB exceeds the carrying amount by a good margin.

The important assumptions in the 5-year forecast and the methods used to estimate values are as follows:

Important variables and methods for estimating values Market share and growth

Prices

Prices have been assumed to increase with the expected rate of inflation. The forecast agrees with previous experience and external information sources.

Personnel costs

Bilia Personbil as (goodwill)

Impairment testing for Bilia Personbil as was based on calculation of the value in use. This value is based on cash flow forecasts for a total of 5 years, the first of which is based on the budget for 2015 adopted by management. The cash flows forecasted after the first 5 years have been based on an annual growth rate of 2.0 per cent. The present values of the forecasted cash flows have been calculated using a discount rate of 8.57 per cent (10.48) before tax.

The recoverable amount for Bilia Personbilar AB exceeds the carrying amount by a good margin.

The important assumptions in the 5-year forecast and the methods used to estimate values are as follows:

Important variables and methods for estimating values Market share and growth

Prices

Prices have been assumed to increase with the expected rate of inflation. The forecast agrees with previous experience and external information sources.

Personnel costs

Bilia Group Göteborg AB (goodwill)

Impairment testing for Bilia Group Göteborg AB was based on calculation of the value in use. This value is based on cash flow forecasts for a total of 5 years, the first of which is based on the budget for 2015 adopted by management. The cash flows forecasted after the first 5 years have been based on an annual growth rate of 2.0 per cent. The present values of the forecasted cash flows have been calculated using a discount rate of 7.94 per cent (7.32) before tax.

The recoverable amount for Bilia Group Göteborg AB exceeds the carrying amount by a good margin.

The important assumptions in the 5-year forecast and the methods used to estimate values are as follows:

Important variables and methods for estimating values Market share and growth

Prices

Prices have been assumed to increase with the expected rate of inflation. The forecast agrees with previous experience and external information sources.

Personnel costs

Note 15 Property, Plant and Equipment

➤ Accounting principle

Bilia applies IAS 16 Property, Plant and Equipment in accounting for property, plant and equipment and IAS 17 Leases in accounting for leases.

Owned assets

Property, plant and equipment are recognised at cost less accumulated depreciation and any impairment losses. The cost includes the purchase price plus expenses directly attributable to the asset for bringing the asset to its location and to working condition for its intended use.

Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of the qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Primarily, borrowing costs that have arisen on loans that are specific to the qualifying asset are capitalised. Secondarily, borrowing costs that have arisen on general loans that are not specific to any qualifying asset are capitalised.

Bilia Center Syd AB (goodwill)

Impairment testing for Bilia Center Syd AB was based on calculation of the value in use. This value is based on cash flow forecasts for a total of 5 years, the first of which is based on the budget for 2015 adopted by management. The cash flows forecasted after the first 5 years have been based on an annual growth rate of 2.0 per cent. The present values of the forecasted cash flows have been calculated using a discount rate of 7.73 per cent (—) before tax.

The recoverable amount for Bilia Center Syd AB exceeds the carrying amount by a good margin.

The important assumptions in the 5-year forecast and the methods used to estimate values are as follows:

Important variables and methods for estimating values Market share and growth

Prices

Prices have been assumed to increase with the expected rate of inflation. The forecast agrees with previous experience and external information sources.

Personnel costs

Construction in progress

Construction in progress consists of conversion projects in Segeltorp, Lund and Sisjön in Sweden.

Leased assets

Lessee

Leases are classified as either finance or operating leases. In the case of finance leases, the economic risks and rewards incidental to ownership are transferred substantially to the lessee. Otherwise the lease is classified as an operating lease.

Assets that are leased under finance leases are recognised as assets in the Statement of Financial Position and are initially measured at the lower of the fair value of the asset and the present value of the minimum lease payments at the commencement of the lease. Commitments to pay future lease payments are recognised as noncurrent and current liabilities. The leased assets are depreciated according to plan, while the minimum lease payments are recognised as interest and repayment of the liabilities. The interest expense is allocated over the lease period so that each accounting period is charged with an amount corresponding to a fixed rate of interest for the liability recognised during that period. Variable payments are recognised as expenses in the periods they are incurred.

Note 15 cont'd.

Lessor

Assets that are leased out under operating leases are recognised as property, plant and equipment. These assets consist of owned and rented cars that are leased out under operating leases, as well as sold cars combined with a future repurchase commitment at a guaranteed residual value.

Subsequent expenditures

Subsequent expenditures are added to the cost only if it is probable that the future economic benefits associated with the asset will flow to the company and the cost of the asset can be measured reliably. All other subsequent expenditures are recognised as expense in the period they are incurred.

A subsequent expenditure is added to the cost if the expenditure relates to replacements of identified components or parts thereof. The expenditure is also added to the cost in cases when a new component has been created. Any undepreciated carrying amounts on replaced components, or parts of components, are retired and recognised as expenses in conjunction with their replacement. Repairs are recognised as expenses when they occur.

Principles of depreciation

Depreciation is straight-line over the estimated useful life of the asset. Land is not depreciated.

Estimated useful lives:
• Computer equipment	3–5 years
• Other non-current assets,
excluding assets for lease	5–10 years
• Leased vehicles	4–7 years

An annual assessment is made of an asset's residual value and useful life.

Impairment losses

For an explanation of the accounting principle for impairment losses, see Note 14 "Intangible assets".

➤ Important accounting estimates and judgements See Note 2 "Revenue" regarding repurchase agreements.

	Land and buildings		Construction in progress
	2014	2013	2014	2013
Accumulated costs
At start of year	155	161	8	2
Purchases	93	19	1	8
Disposals and retirements	–72	–23	—	0
Reclassifications	2	2	–2	–2
Translation differences for the year	1	–4	—	0
	179	155	7	8
Accumulated depreciation
At start of year	–55	–40	—	—
Disposals and retirements	2	0	—	—
Depreciation for the year	–22	–17	—	—
Translation differences for the year	0	2	—	—
	–75	–55	—	—
Accumulated impairment losses
At start of year	–6	–2	—	—
Disposals and retirements	2	—	—	—
Impairment losses for the year	—	–4	—	—
Translation differences for the year	0	0	—	—
	–4	–6	—	—
Carrying amount at year-end	100	94	7	8

Depreciation and impairment losses

Depreciation is included on the following lines in the Statement of Income and Other Comprehensive Income:	Land and buildings	Construction in progress
	2014	2013	2014	2013
Cost of goods sold	–9	–7	—	—
Selling expenses	–12	–10	—	—
Administrative expenses	–1	0	—	—
Total	–22	–17	—	—

Impairment losses are included on the following lines in the Statement of Income and Other Comprehensive Income:		Land and buildings	Construction in progress
	2014	2013	2014	2013
Other operating expenses	—	–4	—	—

		Equipment, tools, fixtures and fittings		Leased vehicles
	2014	2013	2014	2013
Accumulated costs
At start of year	926	935	1,725	1,740
Business combinations	14	2	34	90
Purchases	86	72	1,105	700
Disposals and retirements	–54	–63	–902	–784
Reclassifications	—	7	—	—
Translation differences for the year	2	–27	1	–21
	974	926	1,963	1,725
Accumulated depreciation
At start of year	–629	–627	–323	–387
Business combinations	–10	—	—	—
Disposals and retirements	49	48	231	272
Depreciation for the year	–61	–61	–216	–210
Reclassification	—	–7	—	—
Translation differences for the year	–2	18	1	2
	–653	–629	–307	–323
Accumulated impairment losses
At start of year	0	0	–13	–14
Disposals and retirements	—	—	—	1
Impairment losses for the year	—	—	–6	—
	0	0	–19	–13
Carrying amount at year-end	321	297	1,637	1,389
Finance leases (included above)
Cost	38	33	214	210
Accumulated depreciation	–8	–8	–68	–50
	30	25	146	160
Lease payments during the financial year	–6	–6	–34	–39
Contractual future minimum lease payments:
Within one year	–11	–5	–24	–34
– Present value	–11	–5	–23	–32
Between one and five years	–6	–4	–5	–13
– Present value	–5	–3	–5	–12

Depreciation and impairment losses

Depreciation is included on the following lines in the Statement of Income and Other Comprehensive Income:		Equipment, tools, fixtures and fittings	Leased vehicles
	2014	2013	2014	2013
Cost of goods sold	–24	–26	–216	–210
Selling expenses	–1	–1	—	—
Administrative expenses	–36	–34	—	—
Total	–61	–61	–216	–210

Impairment losses are included on the following lines in the Statement of Income and Other Comprehensive Income:		Equipment, tools, fixtures and fittings		Leased vehicles
	2014	2013	2014	2013
Cost of goods sold	—	—	–6	—

Note 16 Interests in associated companies

➤ Accounting principle

Bilia applies IAS 28 Investments in Associates in accounting for interests in associated companies.

Associated companies are those companies in which the Group has a significant, but not a controlling, influence over operating and financial policy decisions, normally through shareholdings giving them between 20 and 50 per cent of the votes. As from the point in time when the significant influence is exercised, interests in associated companies are recognised in the consolidated accounts in accordance with the equity method. The equity method entails that the value of the shares in the

associated companies reported in the consolidated accounts is equivalent to the Group's share of the associated companies' equity plus goodwill on consolidation and any other remaining surplus or deficit values on consolidation. The Group's shares in the associated companies' profit or loss after tax are recognised in the net profit for the year as "Share in profits of associated companies". This share in profits, less dividends received from associated companies, comprises the principal change in the carrying amount of interests in associated companies.

The equity method is applied until such time as the significant influence ceases to exist.

	2014	2013
Carrying amount at start of year	348	317
Share in profits of associated companies 1)	22	31
Carrying amount at year-end	370	348

1) Share in profits of associated companies profits after tax. A dividend of SEK 4 M (4) has been received.

Bilia has less than a 20 per cent stake in the company, but because Bilia has owner representation on the Board of Directors and participates in the work with strategic matters, and because significant connections exist with the operations of this company, significant influence is judged to exist, so the holding is classified as an associated company.

Consolidated values pertaining to 100 per cent of the associated company's revenue, profit, assets and liabilities are specified below.

	Volvofinans Bank AB
	2014	2013
Operating revenue	3,833	3,665
Earnings	256	27
Other comprehensive income	—	—
Total comprehensive income	256	27
Current assets	710	762
Lending	14,896	15,667
Non-current assets	12,924	12,765
Current liabilities	1,684	1,711
Borrowing	22,711	23,389
Non-current liabilities	757	757
Net assets	3,378	3,337
Dividend to AB Volverkinvest	215	43
Total net assets before dividend 1)	3,593	3,380

Bilia's direct and indirect holdings in AB Volverkinvest amount to 20.6% (20.6). AB Volverkinvest owns 50% of Volvofinans Bank AB.

The main function of AB Volverkinvest is to own and manage shares in Volvofinans Bank AB on behalf of the Volvo dealers.

The figures for the associated company pertain to the accounting period 1 October 2013 to 30 September 2014 (1 October 2012 to 30 September 2013). More recent information on the associated company is not available at the time of preparation of the Bilia Group's consolidated accounts. This year's dividend from Volvofinans Bank AB to AB Volverkinvest, not yet further distributed to Bilia, has been included in the calculation of consolidated values.

1) The amount refers to equity including equity in untaxed reserves.

Note 17 Financial investments

➤ Accounting principle

Bilia applies IAS 39 Financial instruments: Recognition and Measurement in accounting for financial investments. For an explanation of the accounting principle, see Note 26 "Financial instruments".

	2014	2013
Financial investments classified as non-current assets
Available-for-sale financial assets
Shares and interests, unlisted holdings where fair value cannot be determined	1	1
Housing cooperative units, holdings where fair value cannot be determined 1)	6	10
Deposits, cash and cash equivalents 2)	4	3
Total	11	14

1) An impairment loss of SEK 4 M (—) was recognised on a housing cooperative unit during the year.

2) The deposits are not available and are therefore classified as available-forsale financial assets.

Note 18 Long-term receivables and other receivables

	2014	2013
Long-term receivables classified as non-current assets
Interest-bearing
Hire purchase receivables	5	7
Promissory note loan	20	20
Total	25	27

Other receivables classified as current assets

Non-interest-bearing

Total	122	89
Hire purchase receivables	2	2
Interest-bearing
Total	120	87
Other	76	53
Derivatives	0	0
Claims	—	1
Bonus/support	20	14
Value added tax	9	5
Work in progress	15	14

No impairment losses were recognised on receivables during the year (—).

Note 19 Inventories

➤ Accounting principle

Bilia applies IAS 2 Inventories in accounting for inventories.

Inventories are carried at the lower of cost and net realisable value. The cost of inventories is calculated by applying the firstin, first-out (FIFO) method and includes expenditures incurred in purchasing the inventory assets and bringing them to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. The risk of obsolescence has thereby been taken into account.

The company can reduce its risks and tied-up capital by purchasing cars on commission or consignment from certain of Bilia's main suppliers. These cars are not recognised in inventories. In the event a new car cannot be sold, Bilia can return it to the supplier, and a charge is paid to the supplier during the time the car is kept at Bilia.

➤ Important accounting estimates and judgements

Valuation of used cars

Used cars are valued at the lower of their cost and net selling price. Net selling price is determined on the basis of the estimated selling price less direct selling expenses. Used cars are included in the line item "Merchandise". At year-end, the cost exceeded the net selling price by SEK 18 M (19).

The cost of goods sold includes write-down of used cars by SEK 4 M (8).

The item "Merchandise" consists of:

	2014	2013
New cars	1,042	1,088
Used cars	724	690
Demonstration cars	321	327
Spare parts	144	141
Other	19	22
Total	2,250	2,268

Note 20 Prepaid expenses and accrued income

	2014	2013
Bonus	57	61
Prepaid expenses	96	108
Accrued income	43	40
Total	196	209

➤ Accounting principle

Bilia applies IAS 17 Leases in accounting for finance lease liabilities. Bilia applies IAS 39 Financial instruments: Recogni- tion and Measurement in accounting for financial instruments. For an explanation of the accounting principle, see Note 26 "Financial instruments".

The note contains information on Bilia's contractual terms regarding interest-bearing liabilities. For more information on Bilia's exposure to interest rate risk and risk of exchange rate changes, see Note 27 "Financial risks and risk management".

	2014	2013
Non-current liabilities
Debenture loan	28	28
Personnel fund	5	5
Finance lease liabilities	59	117
	92	150
Current liabilities
Overdraft facility	0	32
Current portion of bank loans	36	20
Current portion of finance lease liabilities	152	110
	188	162
Total	280	312

Terms and repayment periods

Collateral for bank loans has been pledged in the form of floating charges in the amount of SEK 587 M (587) and in the form of pledged assets in the amount of SEK 329 M (295).

		2014					2013
Lender	Currency	Nominal interest rate, %	Maturity	Nominal amount	Carrying amount	Nominal interest rate, %	Maturity	Nominal amount	Carrying amount
Debenture loan	SEK	7.00	2016	28	28	7.00	2016	28	28
Overdraft facility	SEK					1.83	2014	32	32
Nordea Finans	DKK	2.16	2015	12	12	2.10	2014	9	9
Renault Finance Nordic	DKK	3.58	2015	4	4	4.30	2014	2	2
Renault Finance Nordic	SEK	3.27	2015	1	1	4.54	2014	4	4
Forso Nordic	DKK	3.51	2015	19	19	6.02	2014	5	5
Personnel fund	SEK	1.11		5	5	1.83		5	5
Finance lease liabilities	SEK	2.80		211	211	3.77		227	227
Total					280				312

Finance lease liabilities		2014			2013
	Minimum lease payment	Interest	Principal	Minimum lease payment	Interest	Principal
Within one year	156	4	152	114	4	110
Between one and five years	61	2	59	122	5	117
Total	217	6	211	236	9	227

➤ Accounting principle

Bilia applies IAS 19 Employee Benefits in accounting for pensions.

Defined-contribution pension plans

Pension plans classified as defined-contribution plans are those where the company's obligation is limited to the contributions the company has undertaken to pay. In such cases, the size of the employee's pension is dependent on the contributions paid by the company to the plan or to an insurance company and the return on capital yielded by the contributions. Consequently, it is the employee who bears the actuarial risk (that the pension payment will be lower than expected) and the investment risk (that the invested assets will be insufficient to provide the expected payments). The company's obligations with regard to payments to defined-contribution plans are recognised as a cost in profit or loss for the year as they are earned by the employee's performance of services for the company during a period.

Defined-benefit pension plans

Sweden

Obligations for old-age pension and family pension for salaried employees in Sweden are secured through the PRI system and by insurance in Alecta.

According to a statement by the Swedish Financial Reporting Board UFR 3, insurance via Alecta is also a multi-employer definedbenefit plan. Bilia has not had access to information that makes it possible to account for this plan as a defined-benefit plan. The ITP pension plan that is secured via insurance in Alecta is therefore accounted for as a defined-contribution plan, but with supplementary information in accordance with UFR 6.

Norway

Most employees in Norway are covered by defined-contribution pension plans. During a transition period, a small number of employees are covered by defined-benefit pension plans.

Denmark

In Denmark, all employees are covered by defined-contribution pension plans.

General

Defined-benefit plans are other plans than defined-contribution plans for post-employment employee benefits.

The Group's net obligation regarding defined-benefit plans is calculated separately for each plan by estimation of the future benefit entitlement which the employees have earned by their employment in both the current and previous periods. The benefit entitlement is discounted to a present value. The discount rate is the year-end interest rate on a first-class corporate bond, including a mortgage bond, with a maturity corresponding to the Group's pension obligations. When there is no deep market in such corporate bonds, the market rate on government bonds with an equivalent maturity is

used instead. In the case of Swedish pension plans, the mortgage bond rate is used as a basis for determining the discount rate. The calculation is performed by a qualified actuary using the Projected Unit Credit Method. Furthermore, the fair value of plan assets is calculated at the reporting date.

The Group's net liability consists of the present value of the liability less the fair value of the plan assets adjusted for the asset ceiling, if any.

The net interest expense or income on the defined-benefit liability or asset is recognised in profit or loss for the year under "Net financial items". The net interest is based on the interest that arises when the net liability is discounted, i.e. the interest on the liability, the plan assets and the effect of the asset ceiling, if any. Other components are recognised in operating profit or loss.

Remeasurement effects consist of actuarial gains and losses, experience-based adjustments, the difference between the actual return on plan assets and the amount included in the net interest, and any change in the effect of the asset ceiling (excluding amounts included in the net interest). The remeasurement effects are recognised in other comprehensive income.

When the calculation leads to an asset for the Group, the carrying amount of the asset is limited to the lower of the surplus in the plan and the asset ceiling calculated by means of the discount rate. The asset ceiling consists of the present value of any future economic benefits in the form of reduced future contributions or cash refunds. In calculating the present value of future refunds or contributions, minimum funding requirements (if any) are taken into account.

Changes or reductions in a defined-benefit plan are recognised at the earliest of the following points in time: a) when the change in the plan or the reduction occurs, or b) when the company recognises related restructuring costs and termination benefits. The changes/ reductions are recognised directly in profit or loss for the year.

Special payroll tax, which is based on the difference between liability according to the Act on Safeguarding of Pension Obligations and IAS 19 Employee Benefits, has been included in the net liability. The portion of special payroll tax that is calculated on the basis of the Act on Safeguarding of Pension Obligations in a legal entity is recognised for the sake of simplicity as an accrued cost instead of as a part of the net liability/asset.

Yield tax is recognised as it arises in the profit or loss for the period to which the tax pertains and is thereby included in the liability calculation. In the case of funded plans, the tax is levied on the return on plan assets and is recognised in other comprehensive income. In the case of unfunded or partially funded plans, the tax is levied on profit or loss for the year.

➤ Important accounting estimates and judgements Bilia is of the opinion that a deep market exists in first-class mortgage bonds in Sweden and that the mortgage bond rate constitutes a first-class corporate bond. The mortgage bond rate is therefore used as a discount rate for Swedish defined-benefit pension plans.

	2014	2013
Defined-benefit pension plans
Present value of wholly or partially funded obligations	792	626
Present value of unfunded obligations	0	2
Total present value of defined-benefit obligations	792	628
Fair value of plan assets	–125	–122
Net of present value of obligations and fair value of plan assets	667	506
Net amount recognised regarding defined-benefit plans in Statement of Financial Position	667	506
The net amount for defined-benefit plans is recognised in the following items in the Statement of Financial Position:
Provisions for pensions	667	506
Net amount in Statement of Financial Position	667	506

Defined-benefit plans

The Group has two defined-benefit plans, one in Sweden and one in Norway, that pay benefits to employees when they retire.

The Swedish plan provides for benefits that are based on a certain percentage of the final salary.

The Norwegian plan provides for benefits that are based on number of employees, salary level and return on pension capital.

The defined-benefit plans are exposed to actuarial risks such as longevity, currency, interest rate and investment risks.

Changes in the present value of the obligation for defined-benefit plans

	2013
628	687
–20	–19
17	19
25	22

150	–64
–6	–2
0	–1
–2	–14
792	628
	2014

The present value of the obligation is distributed among the members of the plans as follows, %:

Sweden:
Active members	29.0	30.3
Paid-up policyholders	46.8	46.4
Retirees	24.2	23.3
Norway:
Active members	32.3	35.1
Paid-up policyholders	—	—
Retirees	67.7	64.9

Change in fair value of plan assets

	2014	2013
Fair value of plan assets at 1 January	122	134
Interest income recognised in profit or loss	5	3
Benefits disbursed	–5	–5
Service cost, current period	1	5
Actuarial gains and losses	3	–2
Exchange rate differences	–1	–13
Fair value of plan assets at 31 December	125	122

The plan assets consist of the following, %:

	2014	2013
Shares	9.2	13.2
Properties	8.7	11.4
Funds	24.0	13.4
Hedge fund	2.4	3.1
Short-term bonds	10.6	9.5
Long-term bonds	45.9	48.3
Short-term investments	–0.8	1.1
Total	100.0	100.0

Breakdown of plan assets, %

Long-term bonds, 45.9 Funds, 24.0 Short-term bonds, 10.6 Shares, 9.2 Properties, 8.7 Hedge fund, 2.4 Short-term investments, –0.8 An analysis of the matching strategy is performed by the pension plan's asset manager at the end of each report period to evaluate the investment policy.

	2014	2013
Cost recognised in profit or loss for the year
Service cost	16	14
Net interest income (–)/interest expense (+)	20	19
Net cost in profit or loss for the year	36	33
The cost is recognised on the following lines included in the profit or loss for the year:
Cost of goods sold	0	4
Selling expenses	11	7
Administrative expenses	5	3
Financial income/expense	20	19
Total	36	33
Actual return on plan assets, %	2.30	4.10
	2014	2013
Cost recognised in other comprehensive income/loss

Remeasurements:
Actuarial gains (–) and losses (+) due to changed financial assumptions	181	–77
Experience-based adjustments	–7	0
Difference between actual return and return according to the discount rate on the plan assets	–2	2
Net amount recognised in other comprehensive income/loss	172	–75
Pension obligation Defined-benefit plans	667	506
Other pensions	1	1
Payroll tax	53	23
Total	721	530

Assumptions for defined-benefit obligations

Significant actuarial assumptions at the balance sheet date in Sweden and Norway (expressed as weighted averages), %:

	2014	2013
Sweden:
Discount rate	2.60	4.00
Future salary increases	2.80	2.80
Employee turnover	6.50	5.00
Income base amount	2.80	2.80
Inflation	1.50	1.75
Norway:
Discount rate	2.30	4.10
Expected return on plan assets	2.30	4.10
Future salary increases	2.75	3.75
Future pension increases	0.00	0.60

Life expectancy assumptions are based on published statistics and mortality rates. The current life expectancy for which the obligation is calculated is shown in the table below (years):

	2014	2013
Sweden:
Life expectancy assumptions at 65 years – for retired members:
Men	23	23
Women	25	25
Life expectancy assumptions at 65 years – for members who are 45 years of age:
Men	22	22
Women	24	24
Norway: Life expectancy assumptions at 60 years – for retired members:
Men	21	21
Women	24	24
Life expectancy assumptions at 60 years – for members who are 40 years of age:
Men	23	23
Women	26	26

Sensitivity analysis

The table below presents possible changes in actuarial assumptions at the balance sheet date, other assumptions unchanged, and how these changes would affect the defined-benefit obligation.

1% change	Increase	Decrease
Sweden:
Discount rate	–114	150
Future salary increase	47	–32
Future increase in pensions	108	–87
Expected mortality (1 year's change)	23	–23

Financing

At 31 December 2014, the weighted average maturity for the obligation in Sweden was 29 years (29) and in Norway 11 years (14).

The Group estimates that SEK 20 M will be paid during 2015 to funded and unfunded defined-benefit plans that are recognised as defined-benefit plans and SEK 27 M will be paid during 2015 to the defined-benefit plans that are recognised as defined-contribution plans.

Obligations for old-age pension and family pension for salaried employees in Sweden are secured by insurance in Alecta. According to a statement by the Swedish Financial Reporting Board UFR 3, this is a multi-employer defined-benefit plan. For financial year 2014, Bilia has not had access to information that makes it possible to account for this plan as a defined-benefit plan. The ITP pension plan that is secured via insurance in Alecta is therefore accounted for as a defined-contribution plan. The premium for the definedbenefit old-age and family pension is individually calculated and is dependent on such factors as salary, accrued pension and expected remaining working life. The year's contributions for pension insurance policies taken out in Alecta amount to SEK 28 M (22). Bilia's share of the total savings premiums for ITP 2 in Alecta amounts to 0.04283 per cent, and Bilia's share of the total number of active members in the plan amounts to 0.13903 per cent.

The collective funding ratio is the market value of Alecta's assets as a percentage of their insurance obligations calculated according to Alecta's actuarial methods and assumptions, which do not agree with IAS 19. The collective funding ratio should normally be permitted to vary between 125 and 155 per cent. If Alecta's collective funding ratio falls short of 125 per cent or exceeds 155 per cent, measures shall be adopted so that the collective funding ratio returns to the normal range. When the funding ratio is low, one possible measure is to raise the agreed-on price for new policies and benefit increases. When the funding ratio is high, one possible measure is to reduce premiums. At year-end 2014, Alecta's surplus in the form of the collective funding ratio 1) amounted to 143 per cent (148).

1) Alecta publishes figures on its collective funding ratio every month on its website.

Defined-contribution plans

In Sweden the Group has defined-contribution pension plans for workers that are paid for entirely by the subsidiaries.

In other countries there are defined-contribution plans that are paid for in part by the subsidiaries and in part by contributions paid by the employees. Payments are made to these plans on a regular basis in accordance with the rules in each plan.

	2014	2013
Costs for the year for defined-contribution plans 2)	104	107

2) Of which SEK 28 M (22) pertaining to ITP plan funded in Alecta.

➤ Accounting principle

Bilia applies IAS 37 Provisions, Contingent Liabilities and Contingent Assets in accounting for pledged assets and contingent liabilities.

A provision differs from other liabilities in that uncertainty exists regarding the timing of the cash outflow or the size of the amount to settle the provision. A provision is recognised in the Statement of Financial Position when the Group has a present legal or constructive obligation as a result of a past event and it is probable (more likely than not) that an outflow of economic resources will be required to settle the obligation and a reliable estimate of the amount can be made.

Provisions are made in the amount that is the best estimate of the expenditure required to settle the present obligation on the balance sheet date.

When the effect of the timing of cash outflows is significant, provisions are calculated by discounting the expected future cash flow at an interest rate before tax that reflects current market assessments of the time value of money and, where applicable, the risks specific to the liability.

Restructuring

A restructuring provision is recognised when the Group has adopted a detailed and formal plan for the restructuring and the restructuring has either been commenced or been publicly announced.

No provision is made for future operating expenses.

Severance pay

A provision for severance pay is recognised when the Group has adopted a plan for layoffs.

Claims

A provision for claims is recognised on the basis of historical data concerning claims costs for similar products and services.

Warranty obligations

A provision for warranties is recognised when the underlying products or services have been sold. The provision is based on historical data on warranties and the weighing of all possible outcomes in relation to their associated probabilities.

Restoration costs

A provision for restoration costs regarding Bilia's fuelling stations is recognised when the Group estimates that it is more likely than not that a fuelling station will require site remediation. A provision of SEK 0.5 M per fuelling station has been made for a total provision of SEK 3 M.

Onerous contracts

A provision for onerous contracts is recognised when the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

Disputes

A provision for disputes is recognised when the Group has judged that the Group has an obligation and it is likely that an outflow of resources will be required to settle the obligation, and that a reliable estimate of the amount can be made.

Earnout

Earnout is deferred additional consideration that may be payable for the acquisition of an operation. Normally, the additional consideration is linked to some kind of performance measure. A probability assessment is made to determine the size of the provision for earnout. Measurement is made at fair value.

		Non-current		Current
	2014	2013	2014	2013
Restructuring	—	—	—	—
Severance pay	—	—	1	3
Claims	1	1	2	1
Warranty obligations	36	17	1	10
Restoration costs	3	—	—	—
Onerous contracts	54	—	9	23
Disputes	—	—	0	—
Earnout	0	1	1	0
Total	94	19	14	37

	Restruc turing		Severance pay		Claims		obligations	Warranty	Restora tion costs		Onerous contracts		Disputes		Earnout		Total
	2014 2013		2014 2013		2014 2013		2014 2013		2014 2013		2014 2013		2014 2013		2014 2013		2014 2013
Carrying amount at start of year	–	18	3	11	2	2	27	43	—	—	23	13	—	1	1	2	56	90
Provisions made during the year	—	3	7	5	1	0	49	42	3	—	41	11	0	—	0	—	101	61
Business combinations	—	—	—	—	—	—	—	2	—	—	—	—	—	—	—	—	—	2
Amounts utilised during the year		— –21		–9 –13	—	—		— –18	—	—	–4	–1	—	–1	—	–1		–13 –55
Unutilised amounts reversed during the year	—	—	0	—	—	—		–38 –39	—	—	—	—	—	—	—	—		–38 –39
Translation differences	—	0	0	0	0	0	–1	–3	—	—	3	0	—	0	—	—	2	–3
Carrying amount at year-end	—	—	1	3	3	2	37	27	3	—	63	23	0	—	1	1	108	56

Payments	2014	2013
Amount by which the provision is expected to be paid after more than twelve months	94	19

Note 24 Other liabilities

➤ Accounting principle

For the accounting principle regarding "Liability pertaining to cars sold with repurchase agreements," see Note 2 "Revenue". For the accounting principle regarding "Derivatives," see Note 26 "Financial instruments".

➤ Important accounting estimates and judgements

See Note 2 "Revenue" pertaining to repurchase agreements and service subscriptions.

	2014	2013
Other non-current liabilities
Liability pertaining to cars sold with repurchase
agreements	920	603
Total	920	603

Other current liabilities

Total	802	772
Other	50	32
Derivatives	0	0
Employer contributions, etc.	30	22
Tax deducted at source	32	43
Advance payments from customers	60	57
Value added tax	92	46
Liability pertaining to cars sold with repurchase agreements	538	572

Note 25 Accrued expenses and deferred income

➤ Important accounting estimates and judgements

See Note 2 "Revenue" pertaining to repurchase agreements and service subscriptions.

	2014	2013
Accrued wages and salaries	275	250
Accrued social security contributions	147	122
Accrued interest	3	2
Future unrealised revenue pertaining to repurchase agreements	66	58
Accrual of service and security agreements	104	74
Other accrued expenses and deferred income	99	104
Total	694	610

Note 26 Financial instruments

➤ Accounting principle

Bilia applies IAS 32 Financial Instruments: Presentation, IAS 39 Financial instruments: Recognition and Measurement, IFRS 7 Financial instruments: Disclosures and IFRS 13 Fair Value Measurement in accounting for financial instruments.

Financial instruments that are recognised in the Statement of Financial Position include, on the asset side, cash and cash equivalents, loans receivable, trade receivables, financial investments and derivatives with positive fair value. On the liability side they include trade payables, loans payable and derivatives with negative fair value.

Recognition and derecognition in the Statement of Financial Position

A financial asset or financial liability is recognised in the Statement of Financial Position when Bilia becomes a party to the contractual terms of the instrument. A receivable is recognised when Bilia has performed its contractual obligations and there is a contractual obligation for the counterparty to pay, even if no invoice has been sent. Trade debtors are recognised in the Statement of Financial Position when an invoice has been sent. A liability is recognised when the counterparty has performed its contractual obligations and there is a contractual obligation to pay, even if no invoice has been received. Trade creditors are recognised when an invoice has been received.

A financial asset is derecognised in the Statement of Financial Position when the entitlements in the contract are realised, mature, or fall outside the control of Bilia. The same applies to part of a financial asset. A financial liability is derecognised in the Statement of Financial Position when the obligation in the contract is discharged or otherwise extinguished. The same applies to part of a financial liability.

A financial asset and a financial liability are offset and the net amount is recognised in the Statement of Financial Position when, and only when, an entity has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The purchase or sale of financial assets is recognised on the trade date, which is the day when the company committed itself to purchase or sell the asset.

Classification and measurement

Financial instruments that are not derivatives are recognised initially at cost, equivalent to the fair value of the instrument plus transaction costs for all financial instruments except for those classified as financial assets that are recognised at fair value through profit or loss, exclusive of transaction costs. A financial instrument is classified on initial recognition based on e.g. the purpose for which the instrument was acquired. The classification determines how the financial instrument is measured after initial recognition as described below.

Derivative instruments are initially recognised at fair value, which means that transaction costs are recognised in profit or loss for the period. After initial recognition, derivative instruments are recognised in the manner described below.

Cash and cash equivalents consist of cash on hand and demand deposits at banks and similar institutions, as well as short-term, highly liquid investments.

Short-term investments have been classified as cash and cash equivalents based on the fact that they carry negligible risk for value fluctuations, they can easily be converted to cash and they have a maturity of not more than three months from their date of acquisition.

Financial assets measured at fair value through profit or loss

In this category Bilia has derivative instruments consisting of currency swaps, which are used to control the Group's equalisation of cash and cash equivalents in foreign currencies. All derivatives with positive fair value are recognised at fair value in the Statement of Financial Position under "Other current receivables". Changes in value of currency swaps are recognised in "Financial income" or "Financial expenses". Hedge accounting is not applied.

Loan receivables and other receivables

This category consists of promissory note loans, instalment receivables, trade receivables and other receivables. Assets in this category are measured at amortised cost. Amortised cost is determined on the basis of the effective rate of interest at the acquisition date.

These assets are recognised at the amount that is expected to be recovered less doubtful debts.

In connection with impairment testing, the recoverable amount is calculated as the present value of future cash flows discounted by the effective interest rate that applied when the asset was initially recognised. Assets with a short maturity are not discounted. Impairment losses are reversed if the former reasons for impairment no longer exist and full payment is expected to be received from the customer.

Available-for-sale financial assets

Available-for-sale financial assets include financial assets that have not been classified in any other category or financial assets that Bilia has initially chosen to classify in this category. Holdings of shares and interests in entities that are not recognised as subsidiaries or associated companies, housing cooperative units and deposits of cash and cash equivalents are recognised here. Assets in this category are measured at fair value, with changes in value during the period recognised in other comprehensive income. Bilia's shareholding in this category consists of unlisted shares. Since fair value cannot be calculated with sufficient reliability for these holdings and for housing cooperative units, these assets are measured at cost. When an asset is sold, gain or loss is recognised in profit or loss for the year.

Information on how fair value has been determined for the financial instruments that are measured at fair value in the Statement of Financial Position is furnished below. Fair value is determined on the basis of the following three levels:

Financial liabilities measured at fair value through profit or loss

In this category Bilia has derivative instruments consisting of currency swaps, which are used to control the Group's equalisation of cash and cash equivalents in foreign currencies. All derivatives with negative fair value are recognised at fair value in the Statement of Financial Position under "Other current liabilities". Changes in value of currency swaps are recognised in "Financial income" or "Financial expenses". Hedge accounting is not applied.

Other financial liabilities

Loans, including debenture loans, and other financial liabilities, for example trade payables, belong to this category. The liabilities are measured at amortised cost.

The debenture loan is recognised as a non-current liability in the Statement of Financial Position. The loan is represented by 1,416,457 subordinated debentures (1,419,240) with a nominal value of SEK 20 each or integral multiples thereof.

The term of the debenture loan is from 12 January 2009 to 12 January 2016, when it falls due for payment.

The annual interest rate on the debenture loan is 7 per cent. The interest falls due for payment in arrears on 12 January every year, the first time on 12 January 2010 and the last time on the date of maturity of the debenture loan, 12 January 2016. Each interest payment consists of interest for one year (360/360). If interest is to be calculated for a shorter period than one year, interest is calculated on the actual number of days in the interest period divided by 360 (365/360).

Subordinated debentures linked to the loan are listed on the NASDAQ OMX Stockholm Retail Bond List.

The warrants can be exercised to subscribe for one Bilia Series A share per warrant held. Notification of subscription for shares can be made up to and including 5 January 2016. Warrants not exercised within this period expire and thereby become worthless. Each warrant entitles the bearer to subscribe during the subscription period for one new Series A Bilia share for SEK 20.

When the warrants are exercised to subscribe for shares, Bilia receives SEK 20 per share. The new issue entails an increase in the share capital and other contributed capital.

Level 1: according to prices quoted on an active market for the same instrument.

Level 2: based on directly or indirectly observable market inputs other than those included in level 1.

Level 3: according to inputs not based on observable market data.

2014	Level 2
Financial assets measured at fair value through profit or loss/Currency swaps	0
Financial liabilities measured at fair value through profit or loss/Currency swaps	0

2013	Level 2
Financial assets measured at fair value through profit or loss/Currency swaps	0
Financial liabilities measured at fair value through profit or loss/Currency swaps	0

Note 26 cont'd.

Fair value and carrying amount for financial instruments and categorisation are presented below:

		2014		2013
	Note	Carrying amount	Fair value	Carrying amount	Fair value
Financial assets measured at fair value through profit or loss
Other receivables/Currency swaps	18	0	0	0	0
Loan receivables and other receivables
Long-term receivables, interest-bearing	18	25	25	27	27
Trade receivables	27	722	722	663	663
Other receivables	18	113	113	84	84
Cash and cash equivalents	32	616	616	155	155
Available-for-sale financial assets
Shares and interests	17	1	—	1	—
Housing cooperative units	17	6	6	10	10
Deposits, cash and cash equivalents	17	4	4	3	3
Financial liabilities measured at fair value through profit or loss
Other liabilities/currency swaps	24	0	0	0	0
Provisions	23	1	1	1	1
Other financial liabilities
Debenture loan	21	28	29	28	29
Non-current interest-bearing liabilities	21	5	5	5	5
Current interest-bearing liabilities	21	36	36	52	52
Finance lease liabilities	21	211	211	227	227
Trade payables		1,404	1,404	1,228	1,228
Accrued interest	25	3	3	2	2

Fair Value Measurement

The following summarizes the most important methods and assumptions that have been used to establish the fair value of the financial instruments in the above table.

Financial instruments measured at fair value

Currency swaps

For currency swaps, the fair value is determined on the basis of market rates. If such rates are not available, the fair value is calculated by discounting the difference between the contracted forward rate and the forward rate that can be obtained on the balance sheet date for the remaining contract period.

Available-for-sale financial assets

Bilia's holdings in this category consist of unlisted shareholdings, housing cooperative units and deposits. Since fair value cannot be calculated with sufficient reliability for unlisted shareholdings and housing cooperative units, these assets are measured at cost.

Note 27 Financial risks and risk management

➤ Accounting principle

Bilia applies IFRS 7 Financial instruments: Disclosures and IFRS 13 Fair Value Measurement in accounting for financial risks and risk management.

General

The main purpose of Bilia AB with subsidiaries is to sell new and used cars, and in conjunction with this also supply workshop services, spare parts, accessories and fuel.

The financing operation in Bilia encompasses the following:

• financing of the Group with loans and other operating liabilities

Financial instruments that are not measured at fair value

Interest-bearing liabilities and finance lease liabilities Fair value is largely equivalent to carrying amount, since the interest rate on outstanding liabilities is variable. Debenture loans carry a fixed interest rate. The closing price at 31 December, 101 (101), has been used to determine the fair value of the debenture loan.

Hire purchase receivables

Fair value essentially corresponds to carrying amount, since the interest rate on outstanding receivables is variable.

Trade receivables and trade payables

In the case of trade receivables and trade payables with a remaining life of less than one year, the carrying amount is deemed to reflect fair value. The carrying amount is deemed to reflect fair value in the case of trade receivables and trade payables with a life of more than one year as well, since variable interest is charged on the outstanding receivable/liability.

currency risks, interest rate risks and operating risks are continuously measured, analysed and managed in order to reduce these risks
administration of Group accounts and internal bank function in Bilia
oversight of credit granting by the subsidiaries to ensure compliance with an appropriate credit policy
Bilia's payment procedures and everything included in the concept of cash management
control, monitoring and reporting of the outcome of Bilia's financing operation based on guidelines issued by the Board of Directors.

Goals of the financing operation

The goals of Bilia's financing operation are to:

ensure that the Group has access to the requisite loan financing
secure the best possible terms for lending and investing
ensure that credit risks, interest rate risks, liquidity risks, currency risks and operating risks are always kept within the limits stipulated in Bilia's financing policy

Organisation and division of responsibilities The Parent Company Bilia AB

The Managing Director of Bilia AB is responsible for all financial activities in the Group and shall ensure that they are conducted in accordance with the finance policy adopted by the Board of Directors. The CFO is the head of the Finance Department and is responsible for ensuring that financing activities throughout Bilia are conducted in accordance with Bilia's policies, rules and instructions.

The Head of Treasury and Group Finance is in charge of the day-to-day activities of the Parent Company's Finance Department, which also has an internal bank function that is intended to serve all Group companies.

The overall objective of the finance function is to provide costeffective financing and to minimise the negative effects of currency fluctuations on the Group's earnings.

All investments of temporary excess liquidity must have high liquidity and low credit risk. Short-term investments may be made in instruments and with counterparties included in a list issued by the Managing Director of Bilia AB. The list is prepared to meet the following requirements:

Short-term investments may be made in Swedish government securities with high liquidity with no limit on amounts.
Short-term investments may be made in Swedish banks, no more than SEK 300 M per bank, with a commitment period of no more than 90 days. The bank must have a rating of at least A2 according to Moody's rating model or Standard & Poor's equivalent rating of A.
Short-term investments, in commercial paper or deposits in accounts, of no more than SEK 200 M and with a commitment period of no more than 30 days may be made in Volvofinans Bank AB.
Short-term investments may be made in securities assigned a rating of K1 by Nordisk Rating and with a remaining maturity of no more than 90 days, to an amount of no more than SEK 50 M per issuer.

Subsidiaries

The managing director of each subsidiary is responsible for ensuring that the granting of credit by the company takes place in accordance with a credit policy adopted by the company's board of directors and that financing activities are otherwise conducted in accordance with the guidelines set forth in special instructions from Bilia AB.

Financial receivables

The Group's non-current financial assets consist of hire purchase receivables amounting to SEK 5 M (7) and of promissory note loans amounting to SEK 20 M (20).

The average credit period for hire purchase receivables is just under 3 years. A market rate of interest is charged on hire purchase receivables. With regard to hire purchase receivables, Bilia has collateral in the asset in question until full payment has been received. The promissory note loans fall due in 2015 and 2016 and carry a market rate of interest.

The Group's current financial assets consist for the most part of SEK 722 M (663) in trade receivables and SEK 2 M (2) in hire purchase receivables that are expected to be repaid during the coming financial year, plus SEK 256 M (61) in short-term investments. The average credit period for trade receivables is 25 days (24).

Capital management

The Group's equity, which is defined as total reported equity, amounted at year-end to SEK 1,849 M (1,823). Return on equity amounted to 21.0 per cent (17.0).

The 2014 Annual General Meeting gave the Board of Directors a mandate to approve the acquisition of Bilia shares equivalent to no more than 10 per cent of the total number of shares.

According to Bilia's finance policy, one of the most important goals is to ensure that the Group has access to the requisite loan financing.

Bilia's dividend policy prescribes that at least 50 per cent of the net profit for the year be distributed to the shareholders. In addition to cash dividends, Bilia has made extra distributions in kind on two occasions: the spin-offs of Kommersiella Fordon (KFAB) in 2003 and Catena (property portfolio) in 2006.

There has been no change in the Group's principles for capital management during the year.

Financing agreements

For 2014, Bilia's lenders require that the ratio of EBITDA to net interest should be at least 4.5, the ratio of interest-bearing liabilities to equity should not exceed 1.15, the ratio of net debt to EBITDA should not exceed 3.0, and bank loans in relation to inventories and trade receivables should not exceed 40 per cent. In 2014 the ratio of EBITDA to net interest was 20.68, interest-bearing debt to equity 0.49, net debt to EBITDA –0.10, and bank loans to inventories and trade receivables –19 per cent. The lender is contractually entitled to cancel the lease for renegotiation or termination if the above requirements are not met.

Financial risks and risk limitation

Bilia is exposed through its business operations to various kinds of financial risks.

By "financial risks" is meant fluctuations in Bilia's earnings and cash flow as a result of changes in exchange rates, interest rates, refinancing risks and credit risks. Bilia's finance policy for managing financial risks has been formulated by the Board of Directors and comprises a framework of guidelines and rules in the form of risk mandates and limits for the financing activities.

The various financial risks to which Bilia is exposed are described below. These risks are managed by Bilia AB's internal bank at the head office in Gothenburg.

Liquidity risk

By liquidity risk (also called financing risk) is meant the risk that financing cannot be obtained at all, or only at excessively inflated costs, due to disruptions in the financial system. According to the finance policy, the goal is that there should be sufficient cash funds and guaranteed credits to cover the coming 12 months. In addition, contracts have been signed for lines of credit totalling SEK 900 M (900). The lines of credit were extended in December 2013 up until November 2016, and SEK 900 M was unutilised at year-end (900). Bilia's financial liabilities amounted to SEK 1,684 M (1,540) at year-end, and the maturity structure of the debt is shown in the table "Maturity structure".

Note 27 cont'd.

Credit facilities and loans	Currency	Nominal amount	Total amount	Utilised	Available
Maturity	SEK	900	900	—	900
Total			900	—	900
Available cash and cash equivalents					616
Liquidity reserve					1,516

Maturity structure – Financial liabilities

The following table shows the maturity structure of the financial liabilities on the balance sheet date, undiscounted cash flows.

		2014							2013
Cur Lender rency		Nominal amount SEK	Total amount	Within 1 mth	1–3 mths	3 mths– 1 yr	1–5 yrs	>5 yrs	Nominal amount SEK	Total amount	Within 1 mth	1–3 mths	3 mths– 1 yr	1–5 yrs	>5 yrs
Debenture loan	SEK	28	32	2	—	—	30	—	28	34	2	—	—	32	—
Overdraft facility	SEK	—	—	—	—	—	—	—	32	32	32	—	—	—	—
Nordea Finans	DKK	12	12	0	0	12	—	—	9	9	0	0	9	—	—
Renault Finance Nordic	DKK	4	4	0	0	4	—	—	2	2	0	0	2	—	—
Renault Finance Nordic	SEK	1	1	1	—	—	—	—	4	4	4	—	—	—	—
Forso Nordic	DKK	19	19	0	0	19	—	—	5	5	0	0	5	—	—
Personnel fund	SEK	5	5	—	—	0	0	5	5	5	—	—	0	0	5
Derivatives		0	0	0	—	—	—	—	0	0	0	—	—	—	—
Trade payables		1,404	1,404	1,404	—	—	—	—	1,228	1,228	1,228	—	—	—	—
Finance lease liabilities	SEK	211	217	35	12	109	61	—	227	236	37	13	64	122	—
Total			1,684 1,694 1,442		12	144	91	5		1,540 1,555 1,303		13	80	154	5

Market risk

Market risk is the risk that the fair value of, or future cash flows from, a financial instrument will fluctuate due to changes in market prices. Market risks are divided by IFRS into three types: interest rate risk, currency risk and other price risks. The main market risks that affect the Group are interest rate risks and currency risks.

Bilia's goal is to manage and control market risks within established parameters while simultaneously optimising the result of the risk-taking within given limits. The parameters are set for the purpose of ensuring that the market risks will, in the short term (6–12 months), have only a marginal effect on Bilia's earnings and position. In the longer term, however, lasting changes in exchange rates and interest rates will have an impact on the consolidated profit.

Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will vary due to changes in market rates. Interest rate risk can consist of change in fair value, known as price risk, and changes in cash flow, known as cash flow risk. A significant factor influencing interest rate risk is the fixed interest rate period.

A short average fixed interest rate period in Bilia's loan portfolio means that large interest rate changes affect earnings almost immediately.

A long fixed interest rate period, on the other hand, means that the financing cost may fall out of step with the general price and inflation trend and therefore deviate significantly from the current cost of financing generally applicable in the sector. Bilia's assets are primarily of a current nature. The goal of the finance policy is to minimize the effects of an interest rate change.

According to the finance policy, the goal is that at a net debt of less than SEK 500 M, the fixed interest rate period should be 0–6 months. If net debt exceeds SEK 500 M, the average fixed interest rate period should be no more than 9 months.

At the balance sheet date, the Bilia had the following interest rate profile on its financial instruments:

Carrying amounts in	2014	2013
Variable interest rate
Financial assets	643	184
Financial liabilities	252	284

The debenture loan is not included in the above financial liabilities. The loan amounts to SEK 28 M and carries a fixed interest rate of 7 per cent.

Sensitivity analysis

As of 31 December 2014, a general increase in the interest rate by 1 percentage point is expected to reduce the Group's profit before tax by about SEK 4 M (1).

Currency risk

Bilia is exposed to different types of currency risks. The foremost exposure comes from currency risk fluctuations on translation of the assets and liabilities of foreign subsidiaries to the Parent Company's functional currency, called translation exposure.

Derivative instruments such as interest rate swaps and forward exchange contracts are used to control Bilia's interest rate risk. They may only be used by Bilia AB or under its control and only to meet the requirements on minimising risk in a cost-effective manner as prescribed by the finance policy.

Subsidiaries

All companies in Bilia are restricted in their marketing and sales to their home market. Products are purchased according to price lists in the local currency. According to Bilia's instructions for financing in the subsidiaries, all financing must be in the local currency. In this way, no currency risk arises at the subsidiary level. In cases where currency risk nevertheless arises, it must be hedged, provided the currency risk on each occasion is not judged to be marginal.

Currency swaps are used to eliminate exchange rate risks that arise in conjunction with the offsetting of bank balances in different currencies.

The table below shows outstanding holdings of currency swaps where Bilia has sold NOK and bought DKK against SEK, broken down by currency and year.

	2014	2013
Currency swaps	Currency	SEK	Currency	SEK
NOK	–125	–131	165	175
DKK	52	66	65	78

Currency swaps fall due within a month of the balance sheet date.

Transaction exposure

Transaction exposure is limited by the fact that all sales and purchases take place in the local currency.

Translation exposure

Foreign net assets in Bilia are denominated in the following currencies:

Currency		2014
	Amount	%	Amount	%
NOK	386	87	348	86
DKK	60	13	59	14
EUR	0	0	0	0

Bilia has had a policy of not hedging translation exposures in foreign currencies.

Sensitivity analysis

If the Norwegian krone and the Danish krone were strengthened by 10 per cent against the Swedish krona, the Group's pre-tax profit on translation of foreign subsidiaries would be affected. The Group's profit before tax would be strengthened by SEK 15 M (12) against the Norwegian krone and weakened by SEK 2 M (–2) against the Denmark krone, since the operation in Denmark is running at a loss.

Credit risk

Financial activities

Financial risk management entails an exposure to credit risks. These are mainly counterparty risks associated with receivables from banks and other counterparties that arise in connection with purchases of derivative instruments.

By counterparty risk is meant the risk that the counterparty to an agreement will default on its financial obligations. Financial agreements may only be entered into with counterparties included on the list issued by the MD of Bilia AB.

List of permissible counterparties in currency swaps and forward exchange contracts:

Lender	Maximum amount
Nordea	350
DNB	350

Trade receivables

The risk that Bilia's customers will default on their obligations, in other words that payment will not be received for trade receivables, constitutes a customer credit risk. Credit checks are run on Bilia's customers, whereby information on the customers' financial status is requested from different credit agencies. Bilia has established a credit policy for handling customer credits. The policy stipulates decision levels for different credit limits and how credits and doubtful debts are to be rated.

In this context, "credit" is equated with responsibility for customers' solvency that may remain after the credit has been taken over by Volvofinans Bank AB or another credit institution.

The maximum exposure to credit risk is shown by the carrying amount for the financial asset in question in the table below. For concentration of credit risk, see below.

Based on historic data, Bilia does not find that any impairment of trade receivables not yet due is necessary at the balance sheet date. As far as provision for doubtful debts is concerned, an assessment is made in each individual case, taking into account the customer's credit history and historical experience of bad debt losses on similar receivables. Most of the outstanding trade receivables are customers previously known to the Group with good credit ratings.

Trade receivables are recognised after taking into account bad debt losses, which amounted to SEK 5 M (3). Impairment loss for the year amounts to SEK 1 M (6).

Age analysis, trade receivables	2014			2013
	Gross	Impairment	Gross	Impairment
Trade receivables not due	617	—	549	—
Overdue trade receivables 0–30 days	99	0	103	–5
Overdue trade receivables 31–90 days	10	–4	20	–6
Overdue trade receivables 91–180 days	6	–6	5	–4
Overdue trade receivables 181–360 days	3	–3	1	–1
Overdue trade receivables > 360 days	4	–4	1	—
Total	739	–17	679	–16

Note 27 cont'd.

Age analysis, hire purchase receivables		2013
	Gross	Impairment	Gross	Impairment
Hire purchase receivables not due	6	—	7	—
Overdue hire purchase receivables 0–30 days	1	—	0	—
Overdue hire purchase receivables 31–90 days	0	—	1	—
Overdue hire purchase receivables 91–180 days	0	—	1	—
Overdue hire purchase receivables 181–360 days	0	—	0	—
Overdue hire purchase receivables > 360 days	0	—	0	—
Total	7	—	9	—

Bilia has reservation of title on cars sold equivalent to the market value that is judged to be on a level with outstanding hire purchase receivables.

Recourse liability

Bilia has a repurchase commitment if lessees or borrowers default on their payment obligations for cars financed by Volvofinans Bank AB and brokered by Bilia. Bilia receives a commission for cars brokered to Volvofinans Bank AB. The commission is received for the most part continuously over the term of the contract, and non-reve- nue commission attributable to financings with recourse liability not yet due amounts to SEK 134 M (110). Credit losses for financings with recourse liability, which have historically been at a very low level, amounted to SEK 3 M in 2014 (2).

Age analysis, recourse liabilities		2013
	Gross	Impairment	Gross	Impairment
Recourse liabilities not due	4,541	—	4,127	—
Overdue recourse liabilities 0–30 days	25	—	19	—
Overdue recourse liabilities 31–90 days	1	—	1	—
Overdue recourse liabilities 91–180 days	1	—	0	—
Overdue recourse liabilities 181–360 days	0	—	0	—
Overdue recourse liabilities > 360 days	0	—	0	—
Total	4,568	—	4,147	—

Concentration of credit risk

The three biggest customers account for 16.7 per cent (18.6) of the trade receivables, 76.3 per cent (83.9) of the hire purchase receiva- bles and 0.7 per cent (0.5) of the recourse liabilities. The credit risk among these customers is judged to be low.

Allowance account		2014	2013
	Trade receivables	Hire purchase receivables	Recourse liabilities	Trade receivables	Hire purchase receivables	Recourse liabilities
Opening balance	–16	—	—	–18	—	—
Reversal of previous impairment losses	0	—	—	7	—	—
Impairment losses for the year	–1	—	—	–6	—	—
Translation difference	0	—	—	1	—	—
Closing balance	–17	—	—	–16	—	—

Note 28 Operating leases

➤ Accounting principle

Bilia applies IAS 17 Leases in accounting for leases.

Leases

Lessee

Costs pertaining to operating leases are recognised in profit or loss for the year on a straight-line basis over the lease period. Benefits obtained in conjunction with the signing of a lease are recognised in profit or loss for the year as a reduction in the lease payments on a straight-line basis over the term of the lease. Variable payments are recognised as expenses in the periods they are incurred.

Assets rented under operating leases are mainly premises used for sales and service of cars and office equipment. Bilia AB is the lessee on most of the Swedish property leases and sublets the premises

to the subsidiaries. At year-end 2014, the property leases covered about 389,000 sq m (386,000).

Non-cancellable lease payments amount to:

	2014	2013
Minimum lease payments for the year	–409	–399
Total lease costs for the year	–409	–399
Future lease payments
Within one year	–396	–399
Between one and five years	–1,481	–1,447
Later than five years	–1,111	–1,136
Total	–2,988	–2,982

Lessor

Revenue pertaining to operating leases is recognised in profit or loss for the year on a straight-line basis over the lease period.

Assets that are leased out under operating leases are recognised as property, plant and equipment, see Note 15 "Property, plant and equipment". These assets consist of:

owned cars that are leased out under operating leases
cars rented via finance leases that are leased out under operating leases
sold cars combined with a future repurchase commitment at a guaranteed residual value.

In addition, premises are rented via operating leases and then sublet via operating leases.

The past year's and future non-cancellable lease payments are as follows:

	2014	2013
Lease payments for the year	370	355
Total lease payments for the year	370	355
Future lease payments
Within one year	176	192
Between one and five years	305	213
Later than five years	7	8
Total	488	413

A cost of SEK 14 M (23) is recognised for repairs and maintenance of leased cars and premises.

Note 29 Capital commitments

During 2014 the Group concluded agreements to acquire SEK 44 M (31) worth of intangible non-current assets and property, plant and equipment. These commitments are expected to be settled during the following financial year.

Note 30 Pledged assets and contingent liabilities

➤ Accounting principle

Bilia applies IAS 37 Provisions, Contingent Liabilities and Contingent Assets in accounting for pledged assets and contingent liabilities.

A contingent liability is recognised when there exists a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events or when there exists an obligation that is not recognised as a liability or a provision due to the fact that it is not probable that an outflow of resources will be required.

Pledged assets

	2014	2013
For own liabilities and provisions
Floating charges	587	587
Leased vehicles and hire purchase receivables	206	222
Documents and deposits	0	0
Pledged assets
– Endowment policies	129	95
– Inventories	200	200
Total pledged assets	1,122	1,104

Contingent liabilities

Total contingent liabilities	4,577	4,155
Recourse liability	4,568	4,147
Warranty obligations, FPG/PRI	9	8
	2014	2013

Recourse liability

Bilia has a repurchase commitment if lessees or borrowers default on their payment obligations for cars financed by Volvofinans Bank AB and brokered by Bilia. Bilia receives a commission for cars brokered to Volvofinans Bank AB. The commission is received for the most part continuously over the term of the contract, and nonrevenue commission attributable to financings with recourse liability not yet due amounts to about SEK 134 M (110). Credit losses for financings with recourse liability, which have historically been at a very low level, amounted to SEK 3 M in 2014 (2).

Note 31 Related parties

➤ Accounting principle

Bilia applies IAS 24 Related Party Disclosures in accounting for related parties.

Key management personnel consist of Board members, the Managing Director and other senior officers. Disclosures regarding wages, salaries, options and other remuneration to key management personnel are presented in Note 8 "Employees, personnel costs and remunerations for senior officers".

Other transactions are reported below:

Board members Mats Qviberg and Anna Engebretsen and their close family members control, directly and indirectly via Investment AB Öresund, approximately 24 per cent (30) of the votes in the company.

Related party transactions

			Purchases		Claim on	Debt to
Related party relationship	Year	Sales of goods and services to related party	of goods and services from related party	Commissions/ interest/ dividend	related party at 31 December	related party at 31 December
Associated companies	2014	1,265	43	92	239	5
Associated companies	2013	990	48	70	52	2
Contingent liabilities for associated companies	2014	4,568
Contingent liabilities for associated companies	2013	4,147

Transactions with key management personnel are priced on market terms.

Note 32 Cash and cash equivalents and specifications for cash flows

➤ Accounting principle

Bilia applies IAS 7 Statement of Cash Flows in accounting for cash flows.

	2014	2013
The following items are included in cash and cash equivalents Cash on hand and demand deposits	358	91
Cash on hand	2	3
Short-term investments, equivalent to cash	256	61
Total according to Statement of Cash Flows	616	155

The effective interest rate for short-term investments in 2014 was 0.47 per cent (1.03). The short-term investments had an average maturity of 1 day (1).

Dividends received and Group contributions

	2014	2013
Dividends received	4	4
Interest received	6	7
Interest paid	–43	–39
Total	–33	–28

Depreciation/amortisation and impairment losses

Total	–349	–330
Impairment losses	–10	–4
Depreciation/amortisation	–339	–326
	2014	2013

Other items not affecting cash

	2014	2013
Capital gain on sales of property, plant and
equipment	–13	–2
Share in profit/loss of associated companies	–26	–31
Other provisions	16	–32
Profit share to employees	21	16
Other	12	19
Total	10	–30

Acquisition of subsidiaries and other business units

Acquired assets and liabilities	2014	2013
Intangible assets	13	21
Property, plant and equipment	38	92
Long-term investments	0	—
Deferred tax asset	0	1
Inventories	39	14
Operating receivables	11	—
Cash and cash equivalents	1	—
Total assets	102	128
Deferred tax liability	—	1
Operating liabilities	59	100
Total provisions and liabilities	59	101
Acquired net assets	43	27
Purchase consideration:	43	27
Purchase consideration	43	27
Less: Cash and cash equivalents in acquired business	1	—
Impact on cash and cash equivalents	–42	–27

Disposal of subsidiaries and other business units

Disposal of assets and liabilities	2014	2013
Intangible assets	—	22
Property, plant and equipment	8	27
Deferred tax asset	—	0
Inventories	—	35
Operating receivables	0	13
Cash and cash equivalents	—	2
Total assets	8	99
Capital loss	0	–2
Deferred tax liability	—	3
Loans	—	48
Operating liabilities	—	13
Total provisions and liabilities	0	62
Sales price:	8	37
Purchase consideration received	8	37
Less: cash and cash equivalents in disposed business	—	2
Impact on cash and cash equivalents	8	35

Unutilised credit facilities

	2014	2013
Unutilised credit facilities amount to	1,036	1,006

Note 33 Events after the balance sheet date

➤ Accounting principle

Bilia applies IAS 10 Events After the Reporting Period in accounting for events after the balance sheet date.

The financial statements were approved for publication by the Parent Company's Board of Directors on 11 March 2015.

On 21 January 2015, Bilia concluded an agreement to acquire all the shares in Toyota Hell Bil AS and Toyota Horten Tønsberg AS. Annual turnover is about SEK 1 bn, and for the past four years the operation has reported an operating profit of about SEK 25 M. The companies' capital employed, plus agreed-on surplus values, amounts to about SEK 210 M. The date of possession was 1 March 2015. Further information about the acquisition was not available when the annual report was approved. This information will be presented in the first quarterly report in 2015.

Bilia AB's Board of Directors resolved on 2 March 2015 that the operation in Denmark will be sold or shut down. The background of the decision is that the operation has been reporting a loss for a long time and that the competition from other dealers in the Copenhagen area who sell the same car brands has increased in recent years. The assessment is that the business will not be able to live up to the Group's profitability goal. Over the past ten years, Bilia's Danish operation has reported an average pre-tax loss of about SEK 34 M. The cost of selling or shutting down the operation is estimated at about SEK 150 M after tax. The sale or closure will have only a marginal effect on cash flow.

Note 34 Information about the Parent Company

Bilia AB (publ) is a Swedish-registered limited company domiciled in Gothenburg. The Parent Company's shares are registered on NASDAQ OMX Stockholm.

The postal address to the head office is: Bilia AB (publ) Box 9003 SE-400 91 Gothenburg, Sweden

Visiting address: Norra Långebergsgatan 3, Västra Frölunda Telephone: +46 31 709 55 00 bilia.com Corporate ID No.: 556112-5690

The consolidated accounts for 2014 comprise the Parent Company and its subsidiaries, together called the Group. The Group also includes holdings in associated companies.

Income Statement for Parent Company

SEK M	Note	2014	2013
Net turnover	2	444	401
Administrative expenses	3, 4	–494	–446
Operating loss	21	–50	–45
Income/loss from financial items
Income/loss from interests in Group companies	5	–45	–41
Other interest income and similar line items	5	25	53
Interest expenses and similar line items	5	–10	–40
Loss after financial items		–80	–73
Appropriations	6	341	272
Profit before tax		261	199
Tax	7	–61	–55
Net profit for the year 1)		200	144

1) Net profit for the year coincides with comprehensive income for the year.

Balance Sheet for Parent Company

SEK M	Note	2014	2013
Assets	19, 22
Non-current assets
Intangible assets	8
Intellectual property		47	46
		47	46
Property, plant and equipment	9
Building		23	11
Construction in progress		6	8
Equipment, tools, fixtures and fittings		11	9
		40	28
Long-term investments
Interests in Group companies	10	679	716
Other securities held as non-current assets	11	0	0
Other non-current receivables	12	20	20
Deferred tax asset	7	33	24
		732	760
Total non-current assets		819	834
Current assets
Current receivables
Trade receivables		0	2
Receivables from Group companies		493	715
Other receivables		19	11
Prepaid expenses and accrued income		79	81
		591	809
Short-term investments		200	—
Cash on hand and demand deposits		351	83
Total current assets		1,142	892
Total assets		1,961	1,726

Balance Sheet for Parent Company

SEK M	Note	2014	2013
Equity and liabilities	19, 22
Equity	13
Restricted equity
Share capital (25,174,033 shares)		252	251
Statutory reserve		47	47
		299	298
Non-restricted equity
Share premium reserve		47	47
Retained earnings		603	685
Net profit for the year		200	144
		850	876
Total equity		1,149	1,174
Untaxed reserves	14	386	277
Provisions
Provisions for pensions and similar obligations	16	22	19
Deferred tax liability	7	2	1
		24	20
Non-current liabilities
Debenture loan	17, 20	28	28
Other liabilities	17, 20	5	5
		33	33
Current liabilities
Liabilities to credit institutes	15, 20	—	32
Trade payables	20	83	73
Current tax liability		15	21
Liabilities to Group companies		204	24
Other liabilities	17	2	4
Accrued expenses and deferred income	18	65	68
		369	222
Total equity and liabilities		1,961	1,726
Pledged assets and contingent liabilities for the Parent Company
Pledged assets	23	567	534
Contingent liabilities	23	1,597	1,356

Statement of Changes in Equity for Parent Company

		Restricted equity			Non-restricted equity
SEK M	Number of	shares Share capital	Statutory reserve	Share premium reserve	Retained earnings	Net profit for the year	Total equity
Opening equity 1 Jan. 2013	25,114,099	251	47	47	654	111	1,110
Reposting of last year's profit	—	—	—	—	111	–111	—
Dividend (SEK 6.00 per share)	—	—	—	—	–148	—	–148
Net profit for the year	—	—	—	—	—	144	144
New issue	25,493	0	—	0	—	—	0
Disposal of own shares	—	—	—	—	68	—	68
Closing equity 31 Dec. 2013	25,139,592	251	47	47	685	144	1,174
Opening equity 1 Jan. 2014	25,139,592	251	47	47	685	144	1,174
Reposting of last year's profit	—	—	—	—	144	–144	—
Dividend (SEK 9.00 per share)	—	—	—	—	–226	—	–226
Net profit for the year	—	—	—	—	—	200	200
New issue	34,441	1	—	0	—	—	1
Closing equity 31 Dec. 2014	25,174,033	252	47	47	603	200	1,149

Cash Flow Statement for Parent Company

SEK M	Note	2014	2013
Operating activities	25
Loss after financial items		–80	–73
Other items not affecting cash		116	59
Tax paid		–75	–41
Cash flow from operating activities before change in working capital		–39	–55
Change in operating receivables		669	–20
Change in operating liabilities		–138	–30
Cash flow from operating activities		492	–105
Investing activities
Acquisition of non-current assets (tangible and intangible)		–32	–33
Operating cash flow		460	–138
Shareholders' contributions paid		–8	–37
Investments in financial assets		–71	–1
Acquisition of subsidiaries, net		14	0
Cash flow after net investments		395	–176
Financing activities
Borrowings		400	—
Repayment of loans		–400	—
Change in overdraft facility		–32	–21
Exercised warrants		1	0
Disposal of own shares		—	68
Dividend paid		–226	–148
Dividends received and Group contributions		330	360
Cash flow from financing activities		73	259
Change in cash and cash equivalents		468	83
Cash and cash equivalents at start of year		83	0
Cash and cash equivalents at year-end		551	83

Notes to the Parent Company financial statements

Amounts in SEK M unless otherwise stated.

Note 1 Key accounting principles

The Parent Company has prepared its annual accounts in accordance with the Swedish Annual Accounts Act (1995:1554) and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities. The statements regarding listed companies issued by the Swedish Financial Reporting Board are also applied. Under RFR 2, the Parent Company shall, in preparing the annual accounts for the legal entity, apply all IFRSs and statements adopted by the EU whenever this is possible within the framework of the Annual Accounts Act and the Act on Safeguarding of Pension Obligations, while taking account of the relationship between accounting and taxation. The recommendation stipulates which exceptions and additions shall be made to the IFRSs.

The Parent Company applies the same accounting principles as the Group, except in the cases described below.

The Parent Company's accounting principles have been applied consistently to all periods presented in the Parent Company's financial statements.

Presentation and formats

An Income Statement is presented for the Parent Company where a Consolidated Statement of Income and Other Comprehensive Income is presented for the Group. Furthermore, the designations Balance Sheet and Cash Flow Statement are used for the Parent Company for those statements which in the Group are entitled Consolidated Statement of Financial Position and Consolidated Statement of Cash Flows, respectively. The Income Statement and the Balance Sheet for the Parent Company follow the formats stipulated in the Annual Accounts Act, while the Consolidated Statement of Income and Other Comprehensive Income, the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows are based on IAS 1 Presentation of Financial Statements and IAS 7 Statement of Cash Flows. The differences in the Parent Company's Income Statement and Balance Sheet, compared with the consolidated statements, consist mainly of recognition of equity and the occurrence of provisions as a separate heading in the Balance Sheet.

Subsidiaries

Interests in subsidiaries are accounted for in the Parent Company according to the cost method. This means that transaction costs are included in the carrying amount of holdings in subsidiaries.

Contingent considerations are measured based on the probability that the purchase consideration will be paid. Any changes in the provision are added to the cost.

Revenue

Rental income

The Parent Company rents most of the properties in the Swedish part of the Group. The rents are further invoiced to the subsidiaries. Rental income and costs are recognised gross in the Parent Company in the period to which they are attributable.

Anticipated dividends

Anticipated dividend from a subsidiary is recognised in cases where the Parent Company alone is entitled to determine the size of the dividend and the Parent Company has made a decision on the size of the dividend before the Parent Company has published its financial statements.

Financial guarantees

The Parent Company's financial guarantee contracts consist in the main of guarantees for the benefit of Group companies. Financial guarantees require the company to reimburse the holder of a debt instrument for losses the latter incurs due to the fact that a stipulated debtor fails to make payment when due under the terms of the contract. In accounting for financial guarantee contracts, the Parent Company applies an exemption rule allowed by the Swedish Financial Reporting Board, compared with the rules in IAS 39. The exemption rule pertains to financial guarantee contracts issued for the benefit of subsidiaries. The Parent Company recognises financial guarantee contracts as provision in the Balance Sheet when the company has an obligation and an outflow of resources will probably be required to settle the obligation.

Leased assets

In the Parent Company, all leases are accounted for in accordance with the rules for operating leases.

Employee benefits

Defined-benefit plans

In the Parent Company, different rules are applied to the calculation of defined-benefit plans than those given in IAS 19. The Parent Company follows the provisions of the Swedish Act on Safeguarding of Pension Obligations and the regulations of the Swedish Financial Supervisory Authority, since this is a prerequisite for tax deductibility. The most important differences compared with the rules in IAS 19 concern how the discount rate is determined, that calculation of the defined-benefit obligation is based on the current salary level without the assumption of future salary increases, and that all actuarial gains and losses are recognised in the Income Statement when they are incurred.

Taxes

In the Parent Company, in contrast to the Group, untaxed reserves are recognised without being divided into equity and deferred tax liability. In a similar manner, in the Parent Company Income Statement, no reallocation of appropriations is made to deferred tax expense.

Group contributions and shareholders' contributions

Shareholders' contributions paid are capitalised in shares and interests, to the extent impairment loss is not recognised.

Group contributions paid and received are recognised as appropriations.

Note 2 Allocation of revenues

	2014	2013
Net turnover/function
Rental income	249	229
IT and training services	124	121
Other	71	51
Total	444	401

Note 3 Employees and personnel costs

Information regarding the Parent Company's employees and personnel costs is furnished in the Group's Note 8 "Employees, personnel costs and remunerations for senior officers."

Note 4 Fees and cost reimbursement to auditors

SEK '000	2014	2013
KPMG AB
Auditing assignment	–195	–195
Auditing activities other than the auditing
assignment	–62	–135
Tax advice	–40	–14
Other assignments	–68	–26

	2014	2013
Income/loss from interests in Group companies
Gain from sale of shares in subsidiaries	14	—
Dividend	56	—
Impairment losses	–115	–41
Total	–45	–41

Interest income and similar line items

Total	–10	–40
Interest costs on defined-benefit pension obligations	–1	–1
Other exchange losses	—	–8
Loss currency swaps	–1	–22
Interest expenses, other	–8	–9
Interest expenses, Group companies	0	0
Interest expenses and similar line items
Total	25	53
Other exchange gains	—	12
Gain currency swaps	—	15
Interest income, other	3	2
Interest income, Group companies	22	24

Note 6 Appropriations

	2014	2013
Difference between recognised depreciation/
amortisation and depreciation/amortisation
according to plan:
Intellectual property	0	0
Building equipment	0	0
Equipment, tools, fixtures and fittings	–4	0
Tax allocation reserves:
Reversal of tax allocation reserve,
allocated financial year 2007	—	33
Provision to tax allocation reserve,
allocated financial year 2013	—	–83
Provision to tax allocation reserve,
allocated financial year 2014	–105	—
Group contributions:
Group contributions received	450	330
Group contributions paid	—	–8
Total	341	272

Note 7 Taxes

Recognised in the Income Statement

	2014	2013
Current tax expense (–)/tax income (+)
Tax expense/income for the year	–69	–58
	–69	–58
Deferred tax expense (–)/tax income (+)
Deferred tax pertaining to temporary differences	8	3
Deferred tax resulting from changes in tax rates	—	—
	8	3
Total tax expense recognised	–61	–55

		2014		2013
	Amount	%	Amount	%
Reconciliation of effective tax Profit before tax	261		199
Tax according to tax rate applicable to Parent Company	–57	22.0	–44	22.0
Tax effect of changed tax rate	—	—	0	0.0
Tax attributable to previous years	—	—	–3	1.5
Tax effect attributable to impairment of Group companies	–25	9.7	–11	5.6
Tax effect of non-deductible expenses	5	–1.9	–2	1.0
Tax effect of non-taxable revenues	16	–6.6	5	–2.5
Standard interest on tax allocation reserve	0	0.3	0	0.0
Effective tax recognised	–61	23.5	–55	27.6

Recognised in the Balance Sheet

Deferred tax assets and liabilities

	Deferred tax asset		Deferred tax liability		Net
	2014	2013	2014	2013	2014	2013
Deferred tax assets and liabilities recognised
Deferred tax assets and liabilities are attributable to the following:
Building	0	0	2	1	–2	–1
Pension provisions	33	24	—	—	33	24
Tax assets	33	24	2	1	31	23

The change in the Parent Company between the years has been recognised as deferred tax expense/income in the Income Statement.

Note 8 Intangible assets

		Software, developed in-house		Software, acquired		Total intellectual property
	2014	2013	2014	2013	2014	2013
Accumulated costs
At start of year	18	18	93	78	111	96
Purchases	—	—	16	15	16	15
Retirements	—	—	—	0	—	0
	18	18	109	93	127	111
Accumulated amortisation
At start of year	–17	–17	–47	–35	–64	–52
Retirements	—	—	—	0	—	0
Amortisation for the year	0	0	–15	–12	–15	–12
	–17	–17	–62	–47	–79	–64
Accumulated impairment losses
At start of year	–1	–1	0	0	–1	–1
	–1	–1	0	0	–1	–1
Carrying amount at year-end	0	0	47	46	47	46

Amortisation and impairment losses

Amortisation is included on the following lines in the Income Statement:	Software, developed in-house		Software, acquired		Total intellectual property
	2014	2013	2014	2013	2014	2013
Administrative expenses	0	0	–15	–12	–15	–12

No impairment losses have been recognised.

Note 9 Property, plant and equipment

		Buildings		Construction in progress		Equipment, tools, fixtures and fittings
	2014	2013	2014	2013	2014	2013
Accumulated costs
At start of year	12	3	8	2	16	17
Purchases	11	9	—	6	5	3
Reclassifications	2	—	–2	—	—	—
Disposals and retirements	—	0	—	—	—	–4
	25	12	6	8	21	16
Accumulated depreciation according to plan
At start of year	–1	0	—	—	–7	–9
Disposals and retirements	—	0	—	—	—	4
Depreciation for the year	–1	–1	—	—	–3	–2
	–2	–1	—	—	–10	–7
Accumulated impairment losses
At start of year	—	—	—	—	0	0
	—	—	—	—	0	0
Carrying amount at year-end	23	11	6	8	11	9

Depreciation and impairment losses

Depreciation is included on the following lines in the Income Statement:

Statement:	Buildings		Construction in progress		Equipment, tools, fixtures and fittings
	2014	2013	2014	2013	2014	2013
Administrative expenses	–1	–1	—	—	–3	–2

No impairment losses have been recognised.

Property, plant and equipment under construction

Conversion projects in Segeltorp, Lund and Sisjön in Sweden.

Note 10 Shares and interests in Group companies

	2014	2013
Accumulated costs
At start of year	2,339	2,306
Acquisitions	34	0
Shareholders' contribution	78	37
Disposals	–34	–4
	2,417	2,339
Accumulated impairment losses
At start of year	–2,013	–1,972
Impairment loss for the year	–115	–41
	–2,128	–2,013
Accumulated revaluation gains
At start of year	390	390
	390	390
Carrying amount at year-end	679	716

Specification of Bilia AB's and the Group's holdings of shares and interests in Group companies

						Carrying amount
Subsidiary	Country	Corporate ID no.	Domicile	Number of interests	Stake in %	2014	2013
Bilia Personbilar AB	Sweden	556063-1086	Gothenburg	1,000,000	100.0	310	307
.Netbil i Skandinavien AB	Sweden	556083-1108	Gothenburg
Bilia Group Göteborg AB	Sweden	556046-5659	Gothenburg	10,000	100.0	2	2
Bilia Group Stockholm AB	Sweden	556402-6408	Stockholm	3,000	100.0	138	134
Bilia Personbil as	Norway	976 023 188	Oslo	150,000	100.0	197	197
Bilia Personvogne A/S	Denmark	19 47 52 04	Taastrup	45,000	100.0	—	44
Ejendomsselskabet Hörskatten A/S	Denmark	18 44 52 47	Taastrup	600	100.0	10	10
Bilia Holding AB	Sweden	556054-6573	Gothenburg	160,000	100.0	19	19
.Catena Automobile ALT HH GmbH	Germany	HRB 51565	Colonge
.Bilia Autopart AB	Sweden	556213-5664	Gothenburg
Motoria Bil AB	Sweden	556059-0803	Gothenburg	1,000	100.0	0	0
Sevonia AB	Sweden	556069-8531	Gothenburg	25,000	100.0	3	3
Bilia Center Syd AB	Sweden	556944-7609	Gothenburg	500	100.0	0	0
Carrying amount						679	716

Note 11 Other securities held as non-current assets

	2014	2013
Accumulated costs

At start of year	7	7
	7	7
Accumulated impairment losses
At start of year	–7	–7
	–7	–7
Carrying amount at year-end	0	0

Note 12 Other long-term receivables

	2014	2013
Accumulated costs
At start of year	20	25
Reclassification to short-term receivable	—	–5
Carrying amount at year-end	20	20

Note 13 Equity

Repurchased shares included in the equity item "Retained earnings"

	Number of shares		Carrying amount
	2014	2013	2014	2013
Opening repurchased shares	—	456,493	—	41
Disposal of own shares	—	–456,493	—	–41
Closing repurchased shares	—	—	—	—

Share capital and premium

Thousands of shares		Ordinary shares
	2014	2013
Issued on 1 January	25,140	25,114
Exercise of warrants	34	26
Issued on 31 December – paid	25,174	25,140

As of 31 December 2014, the registered share capital comprised 25,174,033 ordinary shares (25,139,592).

Holders of ordinary shares are entitled to a dividend that is established from year to year, and their shareholding entitles them to exercise one vote per share at the AGM. All shares have the same right to Bilia's remaining net assets.

Cash dividend

After the balance sheet date, the Board of Directors has proposed the following dividend:

	2014	2013
SEK 12.00 per ordinary share (9.00)	3021)	226

1) Bilia has outstanding warrants that expire on 5 January 2016. If the warrants are fully exercised, the proposed dividend will amount to SEK 306 M.

The dividend proposal will be subject to adoption at the Annual General Meeting on 14 April 2015.

Restricted reserves

Restricted reserves may not be diminished by distribution of profits.

Statutory reserve

The purpose of the statutory reserve is to save some of the net profit for the year that is not used to cover loss brought forward.

Non-restricted equity

Retained earnings

Retained earnings consists of last year's non-restricted equity after distribution of profits (if any). Retained earnings and net profit for the year together comprise non-restricted equity, which is the amount that is available for distribution to the shareholders.

Share premium reserve

Note 14 Untaxed reserves

2013

23
87
5
67
83
—
12
277

Note 15 Liabilities to credit institutions

	2014	2013
Current liabilities
Granted credit	900	900
Unutilised credit	900	868
Utilised credit	—	32

Note 16 Pensions

Net liability

	2014	2013
Pension liability	22	19
Total	22	19
Of which credit insured via FPG/PRI:	22	19

Changes in net liability

Capital value of pension obligations pertaining to pensions under the company's own management at year-end	22	19
Other change in capital value	0	0
Pension disbursements	0	0
Cost recognised in the Income Statement for pensions under own management excluding taxes	3	2
Net liability at beginning of year pertaining to pension obligations	19	17

Net pension obligations

Costs for pensions	2014	2013
Pensions under own management
Cost excluding interest expense	2	3
Cost of pensions under own management	2	3
Pensions through insurance
Insurance premiums	8	7
Subtotal	11	10
Special payroll tax on pension costs	12	6
Cost for credit insurance	0	0
Pension cost for the year	23	16
Recognised net cost attributable to pensions	23	16

Of the recognised net cost, SEK 23 M (16) is in the operation and SEK 0 M (0) in net financial items.

Defined-contribution plans

The Parent Company has defined-contribution pension plans that are paid for entirely by the company. Payments are made to these plans on a regular basis in accordance with the rules in each plan.

	2014	2013
Costs for the year for defined-contribution plans 1)	7	7

1) Of which SEK 3 M (2) pertaining to ITP plan funded in Alecta.

The Parent Company estimates that SEK 0 M will be paid during 2015 to funded and unfunded defined-benefit plans that are recognised as defined-benefit plans and SEK 3 M will be paid during 2015 to the defined-benefit plans that are recognised as definedcontribution plans.

The Parent Company's share of the total savings premiums for ITP 2 in Alecta amounts to 0.00138 per cent, and the Parent Company's share of the total number of active members in the plan amounts to 0.01427 per cent.

For further information on pensions, share-based payments and benefits to senior officers, see the Group's Note 8 "Employees, personnel costs and remunerations for senior officers" and Note 22 "Pensions".

Note 17 Other liabilities

	2014	2013
Non-current liabilities
Debenture loan	28	28
Personnel fund	5	5
Total	33	33
Current liabilities
Tax deducted at source	1	1
Other	1	3
Total	2	4

Liabilities that fall due for payment more

than five years after the balance sheet date	2014	2013
Personnel fund	5	5
Total	5	5

Note 18 Accrued expenses and deferred income

	2014	2013
Accrued wages and salaries	16	15
Accrued social security contributions	39	33
Other accrued expenses	10	20
Total	65	68

Note 19 Financial instruments

Fair value and carrying amount for financial instruments and categorisation are presented below:
		2014	2013
	Carrying amount	Fair value	Carrying amount	Fair value
Financial assets measured at fair value through profit or loss
Other assets/currency swaps	0	0	0	0
Loan receivables and other receivables
Other long-term receivables	20	20	20	20
Trade receivables	0	0	2	2
Cash and cash equivalents	351	351	83	83
Financial liabilities measured at fair value through profit or loss
Other liabilities/currency swaps	0	0	0	0
Other financial liabilities
Debenture loan	28	29	28	29
Bank loans	—	—	32	32
Personnel fund	5	5	5	5
Trade payables	83	83	73	73

The following tables furnish information on how fair value has been determined for the financial instruments that are measured at fair value in the Statement of Financial Position. Fair value is determined on the basis of the following three levels:

Level 1: according to prices on an active market for the same instrument.

Level 2: based on directly or indirectly observable market data not included in level 1.

Level 3: according to inputs not based on observable market data.

2014	Level 2
Financial assets measured at fair value through profit or loss/Currency swaps	0
Financial liabilities measured at fair value through profit or loss/Currency swaps	0
2013	Level 2
Financial assets measured at fair value through profit or loss/Currency swaps	0
Financial liabilities measured at fair value through profit or loss/Currency swaps	0

Fair Value Measurement

For a summary of the most important methods and assumptions that have been used to establish fair value, see Group Note 26 "Financial instruments".

Bilia AB

Shares in subsidiaries

The Parent Company's shareholdings in the non-Swedish subsidiaries entail a currency exposure for Bilia. At present, Bilia AB does not hedge its shareholdings in foreign currencies.

For further information see Group Note 27 "Financial risks and risk management".

Maturity structure – Financial liabilities The following table shows the maturity structure of the financial liabilities on the balance sheet date, undiscounted cash flows.

	2014				2013
Cur Lender rency		Nominal amount SEK	Total amount	Within 1 mth	1–3 mths	3 mths– 1 yr	1–5 yrs	>5 yrs	Nominal amount SEK	Total amount	Within 1 mth	1–3 mths	3 mths– 1 yr	1–5 yrs	>5 yrs
Overdraft facility	SEK	—	—	—	—	—	—	—	32	32	32	—	—	—	—
Debenture loan	SEK	28	32	2	—	—	30	—	28	34	2	—	—	32	—
Personnel fund	SEK	5	5	—	—	0	0	5	5	5	—	—	0	0	5
Trade payables	SEK	83	83	83	—	—	—	—	73	73	73	—	—	—	—
Total		116	120	85	—	0	30	5	138	144	107	—	0	32	5

Leases for premises and office equipment

The Parent Company's leases mainly pertain to premises that have been sublet to the Swedish subsidiaries and office equipment. At yearend 2014, the property leases covered about 273,000 sq m (268,000).

In some cases, lease payments are fixed for periods of three months based on STIBOR or CIBOR. In other cases, lease payments are linked to a portion of the consumer price index or similar index. Leases can be extended in most cases. In order to gather the Group's property leases, Bilia AB has reached an agreement to take over the property leases for the Swedish companies. Starting in 2012, Bilia AB is the lessee on most of the Swedish property leases and sublets the premises to the subsidiaries.

Leases – Lessee

Non-cancellable lease payments amount to:

	2014	2013
Minimum lease payments for the year	–246	–238
Total lease costs for the year	–246	–238
Future lease payments
Within one year	–248	–238
Between one and five years	–892	–830
Later than five years	–846	–833
Total	–1,986	–1,901

Leases – lessor

Assets that are leased out under operating leases are recognised as property, plant and equipment. These assets consist of leasehold improvements. The past year's and future non-cancellable lease payments are as follows:

	2014	2013
Lease payments for the year	239	226
Total lease payments for the year	239	226

The contractual annual rent is SEK 239 M and the leases expire between 2015 and 2029.

Note 24 Related parties

Bilia AB has a related party relationship with its subsidiaries, see Note 10 "Shares and interests in Group companies".

Key management personnel consist of Board members, the Managing Director and other senior officers. Disclosures regarding wages, salaries and other remuneration to key management personnel are presented in the Group's Note 8 "Employees, personnel costs and

remunerations for senior officers". Other transactions are reported below:

Related party transactions

Related party relationship	Year	Sales of goods and services to related party	Purchases of goods and services from related party	Commissions/ interest/ dividend	Claim on related party at 31 December	Debt to related party at 31 December
Subsidiaries	2014	426	3	78	493	204
Subsidiaries	2013	395	2	23	715	24
Contingent liabilities for subsidiaries	2014	1,597
Contingent liabilities for subsidiaries	2013	1,356

Transactions with key management personnel are priced on market terms.

During 2014 the Parent Company concluded agreements to invest SEK 40 M (3) in non-current assets for delivery in 2015.

Not 23 Pledged assets and contingent liabilities

Pledged assets

	2014	2013
For own liabilities and provisions
Pledged assets
– Endowment policies	120	87
– Promissory note loan	447	447
Total pledged collateral	567	534

Contingent liabilities

Total contingent liabilities	1,597	1,356
FPG/PRI	0	0
Guarantee for the benefit of subsidiaries	1,524	1,284
Rent guarantees 1)	73	72
	2014	2013

1) The amount pertains to rent guarantees of SEK 73 M (72) pledged for Bilia AB's subsidiaries in Norway and Denmark. The stipulated amount is the annual rent for leases of varying length. The leases expire between 2015 and 2029.

Dividends received and Group contributions

	2014	2013
Anticipated dividend	—	82
Group contribution received	330	278
Total	330	360

Adjustment for non-cash items

	2014	2013
Depreciation/amortisation	19	15
Impairment losses	115	41
Provisions for pensions	3	3
Capital gain from sale of subsidiary	–14	—
Other line items not affecting liquidity	–7	—
Total	116	59

Unutilised credit facilities

Unutilised credit	900	868
Utilised credit	0	32
Granted credit	900	900
	2014	2013

Note 25 Cash Flow Statement Note 26 Events after the balance sheet date

The financial statements were approved for publication by Bilia AB's Board of Directors on 11 March 2015.

Bilia AB's Board of Directors resolved on 2 March 2015 that the operation in Denmark will be sold or shut down. The background of the decision is that the operation has been reporting a loss for a long time and that the competition from other dealers in the Copenhagen area who sell the same car brands has increased in recent years. The assessment is that the business will not be able to live up to the Group's profitability goal. Over the past ten years, Bilia's Danish operation has reported an average pre-tax loss of about SEK 34 M. The cost of selling or shutting down the operation is estimated at about SEK 150 M after tax. The sale or closure will have only a marginal effect on cash flow.

Signatures

The Board of Directors and the Managing Director ensure that the annual accounts have been prepared in accordance with generally accepted accounting principles in Sweden and that the consolidated accounts have been prepared in accordance with the international accounting standards referred to in Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards. The annual accounts and the consolidated accounts give a true and fair view of the Parent Company's and the Group's financial position and results of operations.

The Directors' Report for the Parent Company and the Group provides a true and fair summary of the development of the Parent Company's and the Group's activities, financial position and results of operations while describing significant risks and uncertainties faced by the Parent Company and the companies included in the Group.

Our Audit Report was submitted on 12 March 2015 KPMG AB

Jan Malm

Authorised Public Accountant

As evident above, the annual accounts and the consolidated accounts were approved for publication by the Board of Directors and the Managing director on 11 March 2015. The Consolidated Statement of Income and Other Comprehensive Income, the Statement of Financial Position and the Parent Company Income Statement and Balance Sheet will be subject to adoption at the Annual General Meeting (AGM) on 14 April 2015.

Auditor's report

To the annual meeting of the shareholders of Bilia AB (publ), Corp. ID no. 556112-5690

Report on the annual accounts and consolidated accounts

We have audited the annual accounts and consolidated accounts of Bilia AB (publ) for the year 2014. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 2–12 and 16–76.

Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts

The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts in accordance with the Annual Accounts Act and of the consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act, and present fairly, in all material respects, the financial position of the parent company as of 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Stand- ards, as adopted by the EU, and in accordance with the Annual Accounts Act. A corporate governance statement has been prepared. The statutory administration report and the corporate governance statement are consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the statement of income and other comprehensive income and statement of financial position for the group.

Report on other legal and regulatory requirements

In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the Managing Director of Bilia AB (publ) for the year 2014.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss, and the Board of Directors and the Managing Director are responsible for administration under the Companies Act.

Auditor's responsibility

Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.

As basis for our opinion on the Board of Directors proposed appropriations of the company's profit or loss we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.

As basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Opinions

We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

Gothenburg, 12 March 2015 KPMG AB

Jan Malm Authorized Public Accountant

Five-year Review

SEK M, unless otherwise stated.	2010	2011	2012	2013	2014
Consolidated Statement of Income and Other Comprehensive Income
Net turnover	16,257	18,160	17,662	17,656	19,473
Operating profit, excluding items affecting comparability	483	498	331	395	538
Operating profit	497	489	270	368	500
Net financial items	–10	–27	–17	–1	–12
Profit before tax	487	462	253	367	488
Tax	–80	–42	–97	–77	–103
Net profit for the year	407	420	156	290	385
Statement of Financial Position
Equity	1,739	1,813	1,586	1,823	1,849
Balance sheet total	5,078	5,506	5,842	6,095	6,955
Capital employed	2,452	2,526	2,466	2,642	2,796
Net debt	222	219	438	260	–70
Net debt/equity, times	0.13	0.12	0.28	0.14	–0.04
Statement of Cash Flows
Cash flow from operating activities	98	818	716	373	1,299
Investments and disposals in non-current assets, including leased assets	253	333	270	290	551
Operating cash flow	–155	485	446	83	748
Key figures
Return on capital employed excluding items affecting comparability, %	23.2	20.6	14.8	18.7	21.2
Return on capital employed, %	23.9	20.3	12.3	17.7	19.8
Return on equity, %	25.7	23.6	9.1	17.0	21.0
Operating margin, excluding items affecting comparability, %	3.0	2.7	1.9	2.2	2.8
Operating margin, %	3.1	2.7	1.5	2.1	2.6
Interest coverage ratio	12.7	9.4	6.4	6.3	8.8
Profit margin, %	2.5	2.3	0.9	1.6	2.0
Equity/assets ratio, %	34.2	32.9	27.1	29.9	26.6
Rate of capital turnover, times	3.39	3.41	3.12	3.06	3.06
Per share data
Earnings per share, SEK	16.50	16.85	6.30	11.70	15.35
Equity per share, SEK	69.90	73.85	64.30	72.50	73.40
Cash flow from operating activities per share, SEK	4.00	32.90	28.95	15.10	51.65
Dividend per share, SEK	12.00	9.50	6.00	9.00	12.001)
Share price at year-end, SEK	129.50	96.75	93.50	164.00	237.50
P/E ratio, times	8	6	15	14	15
Other information
Wages, salaries and other remunerations	1,414	1,483	1,504	1,492	1,571
Employees	3,011	3,166	3,186	3,109	3,154

1) Proposed dividend.

For information on calculations of the number of shares, see "Data per share" under the section headed "The Bilia share".

Net turnover, SEK M

Operating profit, excluding items affecting comparability, SEK M

Profit before tax, SEK M

Equity/assets ratio, %

Return on equity increased during the year and amounted to 21.0 per cent (17.0). The goal for return on equity is at least 15 per cent.

The equity/assets ratio amounted to 26.6 per cent (29.9). A revaluation of defined-benefit pension plans reduced equity by SEK 133 M (increase: 58). Over the past 5 years the equity/ assets ratio has averaged 30.1 per cent.

Net turnover increased by 10 per cent during 2014 compared with last year (unchanged). Net turnover increased by 12 per cent during the first half of the year (–7), while it increased by 9 per cent during the second half of the year. The increase during all quarters is mainly attributable to the Car Business. If acquisitions and currency effects are excluded, net turnover increased by 9 per cent in 2014 (1) or about SEK 1,660 M.

Net turnover amounted to SEK 538 M (395), an increase of 36 per cent. It increased by 53 per cent during the first half of the year (1), and by 27 per cent during the second half of the year (32). The 4th quarter was the best quarter of the year with a profit of SEK 204 M (159), equivalent to 38 per cent (40) of the operating profit for the year. The Service Business increased by SEK 22 M due to higher turnover and a higher gross profit margin. The Car Business increased by SEK 33 M, mainly due to higher turnover and lower costs in relation to net sales of new cars.

Profit before tax for the whole year amounted to SEK 488 M (367), an increase of about 33 per cent (45). The 4th quarter increased by only SEK 8 M (47) over last year, due to the fact that the quarter was charged with items of a non-recurring nature. If these items are excluded, the profit for the fourth quarter increased by SEK 51 M to SEK 208 M (157), and the total profit for the year to SEK 526 M (394).

The ratio of net debt to equity declined compared with last year, amounting to –0.04 (net receivable) (0.14). Over the past 5 years the ratio has averaged 0.13.

Return on capital employed, %

Return on capital employed was 19.8 per cent, compared with 17.7 per cent last year. Return on capital employed excluding items affecting comparability amounted to 21.2 per cent (18.7). The goal for return on capital employed is at least 14 per cent.

Capital employed, SEK M

Capital employed increased by SEK 154 M (176), amounting to SEK 2,796 M (2,642). Acquisitions and disposals have increased capital employed by a net amount of SEK 43 M.

Return on equity, % Net debt/equity, times

Definitions

Average number of employees Paid hours worked in relation to normal annual working hours worked in each country.

Capital employed Balance sheet total less non-interest-bearing current liabilities and provisions as well as deferred tax liability.

Dividend yield Dividend in relation to the average share price during the year.

EBITDA/net interest expense Operating profit excluding items affecting comparability plus depreciation (excluding depreciation attributable to repurchase agreements) in relation to net financial items excluding items affecting comparability and the portion of shares in the profits of associated companies that does not affect cash.

Equity/assets ratio Equity in relation to balance sheet total.

Interest coverage ratio Operating profit plus interest expense included in the business and financial income in relation to financial expenses plus interest expense included in operating expenses.

Net debt Net debt consists of interest-bearing liabilities less cash and cash equivalents, interest-bearing current and long-term receivables, interests in associated companies and leased vehicles, long-term.

Operating assets Intangible assets and non-interest-bearing property, plant and equipment, excluding cars sold with guaranteed residual values (leasing), plus non-interest-bearing current assets.

Operating capital employed All non-interest-bearing assets less noninterest-bearing current liabilities and provisions.

Operating margin Operating profit in relation to net turnover.

Payout ratio Dividend in relation to profit for the year.

Price/Earnings ratio Share price at year-end in relation to earnings per share.

Price/equity ratio Share price at year-end in relation to equity per share.

Profit margin Net profit for the year in relation to net turnover.

Rate of capital turnover Net turnover in relation to average balance sheet total.

Return on capital employed Operating profit plus interest expense included in the business and financial income in relation to average capital employed (see definition above).

Return on equity Net profit for the year in relation to average equity.

Return on operating capital employed Operating profit plus financial income, and a certain reduction for companies that include financing in their own balance sheet, in relation to average operating capital employed (see definition above).

Tax The division of untaxed reserves into deferred tax liability and retained earnings has been done on the basis of a tax rate of 22.0 per cent.

Turnover rate of capital employed Net turnover in relation to average capital employed.

Value added Operating profit excluding items affecting comparability plus payroll expenses, including payroll overheads.

Information on Annual General Meeting

Annual General Meeting, 14 April 2015

The Annual General Meeting of Shareholders in Bilia AB will be held at 11.00 a.m. on Tuesday, 14 April 2015 at Bilia's facility at Haga Norra, Frösundaleden 4, in Stockholm. To be entitled to participate in the Annual General Meeting, shareholders must:

be registered in the share register.
have notified Bilia of their intention to participate.

Registration in share register

Bilia's share register is kept by Euroclear Sweden AB. Only holdings registered in their owners' names are entered in this register.

Shareholders whose shares have been registered to a nominee must arrange for their shares to be temporarily re-registered in their own name in order to be able to participate in the AGM. These shareholders should ask the bank or stockbroker that holds their shares in trust (the nominee) to temporarily re-register them (voting right registration) in good time prior to 8 April 2015. Nominees usually charge a fee for this service.

Notification

Shareholders wishing to participate in the AGM can notify Bilia:

• by telephone at +46 31 709 55 04 (or +46 31 709 55 00) between the hours of 10 a.m. and 4 p.m.
by mail to Bilia AB, Box 9003, SE-400 91 Gothenburg, Sweden
at Bilia's website www.bilia.com
The following particulars must be stated:
name
personal or corporate identity number
address and telephone number.

Shareholders wishing to participate in the AGM must notify Bilia not later than Wednesday, 8 April 2015, when the notification period expires.

Proxies and assistants

A shareholder who is not personally present at the AGM may exercise his or her right through one or more proxies, who must have a written power of attorney signed by the shareholder. The power of attorney may not have a period of validity of more than five years and must specify what portion of the shares it applies to. A shareholder or a proxy may not bring more than two assistants to the AGM. If the shareholder wishes to bring an assistant, the company must be notified of this by the date indicated above under the heading "Notification".

Dividend

The Board of Directors proposes to the Annual General Meeting that of the earnings available for distribution, SEK 12.00 per share (9.00) be paid in dividend to the shareholders. At full exercise of the warrants to subscribe for new shares, the dividend amounts to SEK 306 M (229). Holders of warrants 2009/2016 must submit an application for subscription in order to be entitled to a dividend for new shares. Registration of new shares is done at Bilia's request by the Swedish Companies Registration Office. Bilia itself does not control this process. Bilia's judgement is that the application and the subscription payment must have been received by Carnegie Investment Bank not later than 4.00 p.m. on 9 April 2015 in order for the additional shares to be registered in time to be entitled to a dividend. Further information is available at www.bilia.com.

Stock split

The Board of Directors proposes that the number of shares be increased by dividing each share into two shares (a 2-for-1 stock split) for the purpose of increasing trade in the share.

Board of Directors

The Nominating Committee has announced that they intend to propose re-election of the entire Board of Directors and the Chairman. The Nominating Committee's proposal is available at bilia.com.

Buy-back of shares in Bilia

The Board of Directors proposes that the AGM authorise the Board of Bilia to buy back its own shares and to approve the transfer of such acquired own shares. The purpose of the authorisation, which will be valid until the Annual General Meeting in 2016, is to give the Board greater freedom in its work with the company's capital structure and to make it possible, if deemed appropriate, to acquire enterprises using the company's shares as payment. Acquisition of own shares may not exceed 1/10th of the number of issued shares in the company. Transfer of own shares shall not exceed the number acquired at the time of the transfer and shall be made possible by departure from the shareholders' pre-emption rights by sale via the stock exchange or in conjunction with the acquisition of an enterprise, whereby non-cash payment shall be possible.

For complete information on the Annual General Meeting, see the convening notice, which was issued at the beginning of March 2015.

Articles of Association

Article 1 Name of the company

The name of the company is Bilia AB. The company is a public company (publ).

Article 2 Registered office

The company's Board of Directors has its registered office in Gothenburg, Västra Götaland County.

Article 3 Object of the company

The object of the company is – directly or via subsidiaries – to

carry on trade and distribution activities with regard to means of transport
carry on manufacture, trade and distribution in other product areas as well
carry on sales of service and spare parts associated with the products
manage real and movable estate, including shares
carry on financing activities (except that the company shall not carry on such activities as are referred to in Banking Business Act, and that activities subject to the provisions of the Act on Credit Market Companies may only be carried on in subsidiaries), and
carry on other activities consistent with the above types of business.

Article 4 Share capital

The company's share capital shall be no less than one hundred and fifty-five million kronor (SEK 155,000,000) and no more than six hundred and twenty million kronor (SEK 620,000,000).

Shares may be issued in two series: series A and series B. If shares of more than one series are issued, each of the series may be issued to an amount equivalent to no more than ninety-nine hundredths of the total share capital. In voting at a General Meeting of Shareholders, series A shares confer one vote and series B shares one-tenth of a vote. Otherwise the shares are equal to each other.

In conjunction with a new issue of shares or an issue of warrants or convertibles for cash payment, the shareholders have a preferential right to subscribe for new shares in proportion to their stake in the company's share capital.

Article 5 Number of shares

The number of shares shall be no less than fifteen million five hundred thousand (15,500,000) and no more than sixty-two million (62,000,000).

Article 6 Board members

The Board of Directors shall consist of at least seven and at most ten members.

Article 7 Auditors

The company shall have one or two auditors and at most an equal number of deputy auditors or one or two registered public accounting firms.

Article 8 Location for General Meeting of Shareholders

The General Meeting of Shareholders shall be held at one of the following locations as determined by the Board of Directors: Stockholm, Gothenburg or Malmö.

Article 9 Notice convening a General Meeting of Shareholders

Notice to attend a General Meeting shall be given by advertisement in Post- och Inrikes Tidningar (the official Swedish gazette) and on the company's website. At the same time as notice convening the meeting is given, the company shall advertise in Dagens Industri that such notice has been given.

Article 10 Shareholders' right to attend a General Meeting of Shareholders

Shareholders wishing to participate in the proceedings at a General Meeting of Shareholders shall a) be listed in a printout or other presentation of the whole share register referred to in Chapter 7, Section 28, paragraph 3 of the Swedish Companies Act (2005:551) representing the situation five weekdays prior to the General Meeting, and b) notify the company by not later than on the date stipulated in the notice convening the meeting. The latter date may not be a Sunday or other public holiday, a Saturday, Midsummer's Eve, Christmas Eve or New Year's Eve and may not fall earlier than the fifth weekday prior to the meeting.

Article 11 Shareholder's assistant

An assistant may accompany the shareholder at the General Meeting if the shareholder has given notice to this effect in the manner stipulated in the preceding paragraph.

Article 12 Presence of outsider at General Meeting of Shareholders

Someone who is not a shareholder in the company may be entitled, under terms determined by the Board of Directors, to attend or otherwise follow the proceedings at the General Meeting of Shareholders.

Article 13 Annual General Meeting

The following matters shall be dealt with at the Annual General Meeting:

1. Election of Chairman of the meeting;
2. Preparation and approval of the voting list;
3. Approval of the agenda;
4. Election of one or two persons to verify the minutes;
5. Determination of whether the meeting has been duly convened;
6. Presentation of the annual accounts and the audit report as well as the consolidated accounts and the audit report on the consolidated accounts;
7. Resolutions concerning
a) adoption of the Income Statement and the Balance Sheet as well as the Consolidated Statement of Income and Other Comprehensive Income and the Consolidated Statement of Financial Position,
b) appropriations of the company's profit or loss according to the adopted Balance Sheet,
c) discharge of the members of the Board of Directors and the Managing Director from liability;
8. Determination of the number of members and deputy members of the Board of Directors as well as auditor and deputy auditor or public accounting firm (at meeting when auditor is elected);
9. Determination of fees to be paid to the Board of Directors and, where applicable, auditors.
10. Election of Board of Directors as well as auditor and deputy auditor or registered public accounting firm (at meeting when auditor is elected);

Other matters incumbent upon the General Meeting under the Companies Act or the Articles of Association.

Article 14 Financial year

The company's financial year shall be the calendar year.

Article 15 CSD clause

The company's shares shall be registered in a Central Securities Depository (CSD) register pursuant to the Financial Instruments Accounts Act (1998:1479).

Adopted at Annual General Meeting, 3 May 2011.

Everything to do with your car. And then some.

Bilia AB (publ)

Box 9003 +46 31 709 55 00 bilia.se SE-400 91 Gothenburg, Sweden [email protected] bilia.com

AI assistant

Bilia — Annual Report 2014

2892_10-k_2015-03-18_418814da-c171-45ec-9378-dba6f8516d69.pdf

Annual Report 2014

Everything to do with your car. And then some.

Contents

Directors' Report

Operations – general

The Bilia share

Notable events during the year

Events after the balance sheet date

Key ratios

Sales and earnings

Acquisition of non-current assets

Performance analysis

Financial position

Financial goals

Goals and goal fulfillment

Return on equity, % Total growth, %

Personnel

Directors' Report cont'd.

Cars – divided into Service, Car and Fuel businesses

Service, Car and Fuel Businesses

Number of new cars Total market

Key figures

Key figures

Guidelines for remuneration to senior officers

The environment

Risks

Market trend

Directors' Report cont'd.

Basis of representation

Competitiveness of the products

Development of own services

Key persons

Facilities and environment

Share issues

Disclosure of acquisition, transfer and holding of own shares

Parent Company

Future outlook

Proposed treatment of unappropriated earnings

SEK M

Statement of Board of Directors regarding proposed distribution of profits

Approval of the financial statements

Corporate Governance Report

Shareholders

General Meeting of Shareholders

Annual General Meeting 2014

Extraordinary shareholders meeting 2014

Nominating Committee

Auditors

Board of Directors

The work of the Board during 2014

Board subcommittees

Compensation Committee

Audit Committee

The Board's report regarding internal control

Internal control work

Evaluation of the work of the Board

Group Management

Board of Directors

Mats Holgerson born 1953

Gustav Lindner born 1978

Auditors

Group Management

The Bilia share

Total return 54 per cent in 2014

Beta coefficient

Number of shareholders increased

Dividend policy

Proposed dividend SEK 12.00

Stock split

Proposal for buy-back or disposal of own shares

Option programme

Persons with insider status

Analyses of Bilia

Shareholder information

The Bilia share cont'd.

Change in share capital

Distribution of shares, 31 December 2014

Bilia Annual Report 2014