Annual report 2016

Directors' Report	2
Corporate Governance Statement	9
Board of Directors	12
Group Management	14

The Bilia share 15

Financial information
Contents	18
Consolidated Statement of Income and Other Comprehensive Income	19
Consolidated Statement of Financial Position	21
Consolidated Statement of Changes in Equity	23
Consolidated Statement of Cash Flows	24
Notes to the Consolidated Financial Statements	26
Income Statement for Parent Company	73
Balance Sheet for Parent Company	74
Statement of Changes in Equity for Parent Company	76
Cash Flow Statement for Parent Company	77
Notes to the Parent Company Financial Statements	78

Directors' Report, continued
Signatures	88

Auditor's report	89
Five-year Review	92


Defi nitions/alternative performance measures	94
Information on Annual General Meeting	95
Articles of Association	96

This information has been made public in accordance with the Securities Market Act on 24 March 2017.

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 2016.

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 one of Europe's largest car dealership chains, with a leading position in servicing and sales of cars and transport vehicles plus supplementary services. Bilia has 122 facilities in Sweden, Norway, Germany, Luxembourg and Belgium, 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 always find dealing with Bilia a pleasant experience. Bilia has a well-developed range of services and products in the Service Business, which includes workshop services, spare parts, store sales and e-commerce. Bilia is constantly developing new services and service concepts to simplify car ownership for its customers. Our Car Business includes sales of new and used cars and transport vehicles, customer financing and supplementary services. Bilia sells cars from Volvo, BMW, Toyota, Renault, Ford, Lexus, MINI, Dacia and Hyundai cars and transport vehicles from Renault, Ford, Toyota and Dacia. The Fuel Business comprises the sale of fuels.

The Bilia share

The total number of shares in the company at 31 December 2016 was 51,399,976. 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 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 2016 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 2016, 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 Deputy MD of Bilia AB and one top executive in a subsidiary are entitled to terminate their own employment

Key figures

In addition to financial definitions according to IFRS, alternative performance measures are used to describe the performance of the underlying business and obtain better inter-period comparability. For definitions, see page 94.

	2014	2015	2016
Continuing operations
Net turnover, SEK M	18,446	20,443	23,906
Operational earnings, SEK M	563	765	887
Operational margin, %	3.1	3.7	3.7
Operating profit, SEK M	562	929	841
Profit before tax, SEK M	555	933	833
Profit for the year from continuing operations, SEK M	452	731	657
Ratio of net debt to EBITDA, times	–0.1	0.4	0.7
Interest coverage ratio, times	15.0	32.9	13.6
Earnings per share, SEK	9.00	14.50	12.85
Bilia Group
Loss from discontinued operation, net after tax, SEK M	–67	–84	–21
Net profit for the year, SEK M	385	647	636
Return on capital employed, %	19.8	36.2	26.4
Return on equity, %	21.0	33.2	27.9
Net debt/equity, times	–0.04	0.16	0.31
Operating cash flow, SEK M	748	212	464
Equity/assets ratio, %	27	28	25
Earnings per share, SEK	7.65	12.85	12.45
Equity per share, SEK	37	41	49
Number of employees, 31 December	3,521	3,613	4,327

and receive 24 months' salary, less any salary received from other service during the last 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 28 January 2016, Bilia concluded an agreement to acquire three car dealerships that conduct BMW, MINI and Toyota operations in Sweden. The date of possession was 1 March 2016.

On 11 March 2016, Bilia concluded an agreement to sell its Ford operations in Gothenburg, Kungsbacka and Stockholm to Hedin Bil. The date of possession for the operations in Gothenburg and Kungsbacka was 1 May 2016, and for the operation in Stockholm it was in the beginning of January 2017.

In March, Bilia issued unsecured bonds worth SEK 500 M with a term to maturity of five years. The bond issue carries a floating interest rate of STIBOR (3 months) plus 220 basis points and has a final maturity date in March 2021.

On 9 May 2016, Bilia concluded an agreement to acquire Philippe Emond, a BMW and MINI dealer in Belgium located near the border with Luxembourg. The date of possession was 1 July 2016.

On 27 May 2016, Bilia sold 94,000 warrants to senior officers, mainly in Sweden. The warrants give their holders the option of purchasing a Bilia share for SEK 231 during the period 1 March 2019 to 26 March 2019. The price of the warrants was SEK 12 apiece, which was the market value for the warrants.

On 31 May 2016, Bilia issued 699,242 new shares to the seller of the BMW and MINI operation in Luxembourg as partial payment of the purchase consideration. Bilia's share capital increased by SEK 3,496,210 as an effect of the new issue, and the number of outstanding shares amounts to 51,399,976 after the issue.

On 15 August 2016, Bilia concluded an agreement to acquire Schäfer GmbH Automobile, a dealer for BMW and MINI in Germany. The business is run from four facilities that are concentrated northwest of Frankfurt and border on Bilia's operation in Germany. The operation has been a part of the Bilia Group since 1 August 2016.

On 7 October 2016, Bilia's Board of Directors decided to supplement the financial goals with a goal for net debt. The ratio of net debt to EBITDA shall not exceed 2.0 times over the long term.

Notice of termination of the distribution agreements with Hyundai in Sweden was given on 8 November 2016. Hyundai is represented at four facilities in Stockholm, one in Eskilstuna and one in Köping. Annual turnover amounts to about SEK 200 M. The period of notice of termination is 2 years, and turnover is expected to decline gradually during this period, ceasing entirely by the end of 2018. This decision is expected to have a marginal positive impact on Bilia's earnings per share.

On 28 November 2016, Bilia concluded an agreement to acquire Metro Auto Group's Toyota operation in Sweden, MW Gruppen Stockholm AB. The business is run from five facilities: three just south of Stockholm in Nacka, Haninge and Kungens Kurva, one in Södertälje and one in Eskilstuna. Annual turnover amounts to about SEK 700 M and operating profit has averaged SEK 28 M for the past two years. The operation's capital employed, plus agreed-on surplus values, amounts to about SEK 170 M. The agreement also includes acquisition of the five properties housing the business, worth a total of about SEK 165 M. The deal will increase the Bilia Group's capital employed and net debt by a total of about SEK 335 M.

In December, Bilia issued unsecured bonds worth SEK 250 M. The bond issue carries a floating interest rate of STIBOR (3 months) plus 150 basis points and has a final maturity date in March 2021.

Sales and earnings

Net turnover amounted to SEK 23,906 M (20,443). For comparable operations and adjusted for exchange rate changes, net turnover increased by about SEK 900 M or 4 per cent. The increase is attributable to both car sales and service.

Operating profit amounted to SEK 841 M (929). Adjusted for structural and acquisition costs, operational earnings amounted to SEK 887 M (765). The improvement is mainly attributable to the Service Business, which boosted underlying turnover by about 7 per cent. Underlying Group overheads increased by about 2 per cent compared with last year. Overheads amounted to 12.6 per cent in relation to net turnover, which was 0.3 percentage point lower compared with last year. In view of the earnings level and customer satisfaction during the year, provision was made for employee bonuses of SEK 19 M (25).

Net financial items amounted to SEK –8 M (4). The decrease is mainly attributable to higher net debt.

Tax for the year amounted to SEK –176 M (–202), and the effective tax rate was 21 per cent (22).

Loss from discontinued operation, net after tax (Denmark) amounted to SEK 21 M (loss: 84) and stems partly from a SEK 1 M loss from the sale of a site and partly from SEK 20 M in accumulated exchange losses. The operation was liquidated in December 2016, which means that accumulated exchange losses are reversed as a positive translation difference in other total comprehensive income, while the exchange loss is charged to loss from discontinued operation.

Net profit for the year was SEK 636 M (647) and earnings per share SEK 12.45 (12.85). Exchange rate changes affected the profit marginally.

Bilia's financial goals were fulfilled as follows: Operating margin 3.5 per cent (goal 2.5), return on capital employed 26.4 per cent (goal 17.0), return on equity 27.9 per cent (goal 18.0), growth 16.9 per cent (goal 5–10) and ratio of net debt to EBITDA 0.7 times (goal not over 2.0).

Acquisition of non-current assets

Acquisition of non-current assets amounted to SEK 268 M (164). Replacement investments represented SEK 75 M (57), expansion investments SEK 50 M (37), environmental investments SEK 2 M (3) and investments in new construction and additions to properties SEK 112 M (58), while finance leases amounted to SEK 29 M (9).

	Operating profit		Profit before tax
Performance analysis, SEK M	2016	2015	2016	2015
Operational earnings	887	765	879	769
Items affecting comparability Gain from sale of operation, other	21	6	21	6
Redemption of pension liability	6	197	6	197
Structural costs etc.	–7	–5	–7	–5
Acquisition costs Acquisition-related costs and value adjustments	–11	–2	–11	–2
Amortisation of surplus values	–55	–32	–55	–32
Accounting profit	841	929	833	933

Financial position

Total assets increased by SEK 2,703 M during the year, amounting to SEK 10,132 M. The increase is mainly attributable to acquisitions of operations and leased vehicles.

Equity increased by SEK 455 M during the quarter, amounting to SEK 2,511 M. The equity/assets ratio amounted to 25 per cent (28).

Operating cash flow amounted to SEK 464 M (212). After acquisitions and disposals of operations and change in interestbearing receivables, cash flow amounted to SEK 317 M (–11). Net debt increased by SEK 452 M during the year, amounting to SEK 775 M.

Financial goals

Bilia's overall financial goals are to achieve:

an operating margin of at least 2.5 per cent
a return on capital employed of at least 17 per cent
a return on equity of at least 18 per cent
growth of 5–10 per cent
a ratio of net debt to EBITDA that does not exceed 2.0 times over the long term.

Goals and goal fulfillment

Return on equity, %

Ratio of net debt to EBITDA, times

2.0		Goal,
1.5		max.
1.0		2.0 times
0.5
0.0
–0.5
	14 15 16

Cars – divided into Service, Car and Fuel Businesses

		Net turnover, SEK M 1)			Operating profit, SEK M			Operating margin, %
	2014	2015	2016	2014	2015	2016	2014	2015	2016
Service Business	3,981	4,491	5,319	415	496	600	10.4	11.0	11.3
Car Business		14,132 15,694 18,565		197	303	324	1.4	1.9	1.7
Fuel Business	1,051	1,021	1,031	18	24	25	1.7	2.4	2.4

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.

		Deliveries			Order backlog
Number of new cars	2014	2015	2016	2014	2015	2016
Sweden		29,463 32,546 34,896		5,442	6,692	8,032
Norway	8,281	8,311	9,097	1,099	2,488	2,278
Western Europe	—	245	3,999	—	124	1,017
Total		37,744 41,102 47,992		6,541		9,304 11,327

Total market

Sweden Norway Western Europe 04 05 06 07 08 09 10 11 12 13 14 15 16

	Operating assets, %
--	---------------------

		Net turnover, SEK M			Operating profit, SEK M			Operating margin, %
Key figures	2014	2015	2016	2014	2015	2016	2014	2015	2016
Sweden		13,110 14,513 15,763		471	644	719	3.6	4.4	4.6
Norway	5,324	5,738	6,278	159	177	200	3.0	3.1	3.2
Western Europe	—	173	1,858	—	2	30	—	1.2	1.6
Total		18,434 20,424 23,899		630	823	949	3.4	4.0	4.0

		Operating capital employed, SEK M			Return on operating capital employed, %			Turnover rate, times
Key figures	2014	2015	2016	2014	2015	2016	2014	2015	2016
Sweden	1,214	1,366	1,479	39.5	58.4	53.0	11.0	12.4	11.6
Norway	27	240	556	58.9	68.3	43.5	24.8	34.2	16.2
Western Europe	—	137	304	—	5.9	18.7	—	5.1	9.8
Denmark	155	—	—	–10.5	—	—	7.0	—	—
Total	1,396	1,743	2,339	37.9	59.9	46.8	12.6	15.0	12.3

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.

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 operates mainly in countries with extensive rights to parental leave that include 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.

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. In the workshops, efforts are focused on creating environments that are safe, bright, airy, clean and have a low noise level.

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 3,804 (3,374). The number of employees at 31 December 2016 was 4,327 (3,613).

Key figures	2014	2015	2016
Average number of employees	3,154	3,374	3,804
Turnover per average number of employees, SEK '000	5,848	6,059	6,285
Value added per average number of employees, SEK '000	843	882	880
Profit before tax per average number of employees, SEK '000	176	277	219
Average age	40	42	41

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 2016 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 other members of the Group Management consists of basic salary, variable remuneration, other benefits and pension. By "other members of the Group Management" is meant the Deputy Managing Director, the CFO, the Chief Legal Counsel and Business Development and Purchasing Manager of Bilia AB, and the Managing Director of Bilia Personbilar as, Norway. For the composition of the Group Management and remuneration, see Note 9, "Employees, personnel costs and remunerations 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 2017 AGM that the above compensation principles should continue to apply up to the 2018 AGM.

Environment

The goal of Bilia's environmental efforts is that products and services should have as little impact on the environment as possible. 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.

The process of converting to energy-saving and mercury-free LED light sources has continued during the year. Previously, Bilia has also invested in modernised ventilation. Water-based paints have been used for several years in all paint coats except for the clear coat. Bilia's system for video and telephone conferences has successfully contributed to reducing travel within the Group, and thousands of hours of meetings per year are held today via video.

There are well-established routines for managing waste. All waste oil from the service departments is collected and recycled, as are worn-out tyres that have been replaced at Bilia's tyre centres. Old car batteries and car windows are also recycled in a safe manner. All waste water at Bilia's car washes is treated to eliminate the risk that heavy metals, oil and chemicals will leak out into the environment. Many of the car washes are eco-labelled.

Most of Bilia's operations are environmentally certified to ISO 14001. The Group conducts activities that are subject to notification in accordance with the Environmental Code, such as fuel sales, car washing and auto painting.

Bilia reports to CDP, an organisation that provides information to investors and other stakeholders all over the world on the climate impact of listed corporations and what they are doing to reduce carbon emissions.

Read more about Bilia's environmental work at bilia.com.

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, subsidies and restrictions on the products Bilia sells can influence both demand for and the valuation of cars in stock and cars sold with guaranteed residual values.

Basis of representation

Bilia's core business consists of distribution and servicing of cars and transport vehicles in Sweden, Norway, Germany, Luxembourg and Belgium. 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. If 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 28 "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 10,000,000 warrants entitling the bearer to subscribe for an equal number of Series A Bilia shares at SEK 10 per share (adjusted for the 2:1 share split that was carried out in 2015). Between 2009 and 2015, inclusive, 9,517,542 warrants were exercised to subscribe for shares, resulting in a new issue totalling SEK 95 M. During 2016, 264,682 warrants were exercised to subscribe for new shares, resulting in a new issue of SEK 2 M. During 2016, Bilia sold 94,000 warrants to senior officers, which corresponded to a new issue of SEK 1 M. This did not lead to any dilution effect at year-end. During 2016, a private placement of 699,242 shares was carried out, corresponding to SEK 115 M, as partial payment of the purchase consideration for an acquisition.

For further information see Note 14 "Earnings per share".

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. Provided that the Annual General Meeting resolves in accordance with this proposal, the record date will be at the beginning of June 2017.

Disclosure of acquisition, transfer and holding of own shares

The 2016 AGM gave the Board of Directors a new authorisation to both buy back and sell the company's own shares. As of 31 December 2016, Bilia held none of its own shares. No shares were bought back in 2016. Bilia's shares have a quotient value of SEK 5.

Directors' Report cont'd.

Parent Company

Bilia AB is responsible for the Group's management, strategic planning, purchasing, public relations, business development, HR, real estate activities, accounting and financing. The Parent Company's operating loss amounted to SEK 60 M (loss: 69).

Future outlook

Industry analysts predict that the car markets in Sweden and Norway will be slightly smaller in 2017 compared with the situation in 2016. 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 earningsimpacting factors is provided in the sensitivity analysis in Note 28, "Financial risks and risk management".

Proposed treatment of unappropriated earnings

The Board of Directors proposes that the earnings available for distribution, SEK 1,098 M, be disposed of as follows:

SEK M

Total	1,098
To be carried forward	687
Cash dividend, SEK 8.00 per share 1)	411

1) Based on the number of shares outstanding at 31 December 2016, 51,399,976.

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 (IFRS). 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 8.00 per share, totalling SEK 411 M. The Group's equity/assets ratio will thereafter amount to about 21 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 17 March 2017.

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 Statement

This Corporate Governance Statement 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 Statement applies to calendar year 2016. For up-to-date information on changes in 2017, the reader is referred to bilia.com.

Shareholders

Bilia had 34,482 shareholders at the end of 2016. Bilia's biggest shareholder is Investment AB Öresund, followed closely by Mats Qviberg and family, whose holdings were 10.1 and 9.9 per cent, respectively, as of 31 December 2016. The next-biggest shareholders at year-end were SEB Investment Management and Anna Engebretsen and family, whose holdings were 4.2 and 4.1 per cent, respectively.

The proportion of institutional ownership was 8.8 per cent (8.4), while the proportion of foreign ownership was 30.7 per cent (38.7).

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 2016 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 next AGM are urged to contact Bilia in writing in the form of a letter addressed to the Managing Director no later than 1 March 2017. 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 2016

Bilia's Annual General Meeting of 8 April 2016 re-elected the following members of the Board: Ingrid Jonasson Blank, Anna Engebretsen, Jack Forsgren, Mats Holgerson, Gustav Lindner, Jan Pettersson, Jon Risfelt and Mats Qviberg. Eva Cederbalk and Laila Freivalds were elected to the Board for the first time. 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 firm for the period up until the next AGM. The AGM passed a resolution to pay a cash dividend of SEK 7.50 per share, for a total of SEK 380 M, and resolved that the remaining earnings

of SEK 433 M should be carried forward to a new account. Furthermore, a resolution was passed approving a directed share issue (private placement) to Arnold Kontz as partial payment for the acquisition of BMW companies in Luxembourg, an incentive programme was introduced for the issue of warrants to employees, and revised instructions to the Nominating Committee were adopted. 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 acquisition or by direct sale on the stock exchange. The fees paid to the members of the Board and the auditors were determined, and principles for compensation to the Group Management were approved.

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.

Prior to the Annual General Meeting in the spring of 2017, the Nominating Committee consisted of the following persons, who were appointed in October 2016: Öystein Engebretsen (Chairman), representing Investment AB Öresund, Mats Qviberg, representing the Qviberg family and in his capacity as Chairman of the Board of Bilia AB, Eva Cederbalk, representing Anna Engebretsen with family, and Helen Fasth Gillstedt, representing Handelsbanken Funds.

In the course of its work, the Nominating Committee had gathered information regarding the experience of Bilia's Board members and their possible dependency relationship with Bilia and had also reviewed 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 by e-mail at [email protected].

Auditors

The auditors of Bilia AB are elected by the AGM, and in 2016 KPMG AB was re-elected as the public accounting firm for the period up to the 2017 AGM. Jan Malm was appointed as auditor in charge. At the upcoming AGM, auditors will once again be elected and a new auditor in charge will be appointed. Audit mainly involves continuous auditing and examination of the annual accounts.

KPMG AB 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 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. The employee representatives are appointed by their respective trade-union organisations. 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 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 fully during 2016.

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 2016

Eleven Board meetings were held during 2016: one statutory meeting and five ordinary meetings, plus five meetings by correspondence. Eva Cederbalk was unable to attend the statutory meeting, but otherwise all members have attended all Board meetings. In the spring of 2016, Dragan Mitrasinovic was appointed employee representative, having previously been a deputy representative, Lennart Welin retired and left his deputy post, and two new deputy employee representatives were appointed, Anders Bejmar and Isak Ekblom.

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 2016, besides dealing with routine matters, the Board of Directors dealt with matters relating to technological trends and regulatory issues. Among other things, the Board passed resolutions concerning: raising and supplementing the financial goals, Bilia's first bond issue worth SEK 500 M with subsequent increase, and the acquisition of several BMW & MINI dealers in Belgium, Germany and Sweden plus Toyota dealers in Sweden. 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), Gustav Lindner and Jon Risfelt. 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 and other formalities. During 2016, the committee drafted a proposal for an incentive programme which was adopted by the AGM, whereby warrants have been issued and offered to certain employees. In the case of other senior officers in the Group, who are not members of the Group Management, the committee presents to the Board the general principles for fixed and variable remuneration. The variable remuneration is always related to those aspects of the company's performance that the person in question can influence. All variable compensation has a maximum limit in relation to the fixed compensation. In 2016 the Compensation Committee held three meetings in which all members participated.

Audit Committee

The Audit Committee has three members: Jon Risfelt (Chairman), Mats Holgerson and Gustav Lindner. 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. The following matters were also dealt with during 2016: risk analysis and management, bond issues, supplementation of the financial goals with net debt as a new parameter, and, last but not least, evaluation of measures taken in response to the EU's new audit regulation (EU 537/2014). The committee also considered proposals for public accounting firms, whereby KPMG AB was re-elected at the 2016 AGM, and the committee will consider the matter once again prior to the next election of auditors. 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 MD, 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 has regular contact with the company's auditor separately.

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 controls. This responsibility cannot be delegated but always rests ultimately 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 submit reports regarding the audit work. The audit plan is evaluated regularly and was last updated in May 2016.

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.

The evaluation is performed by having the members themselves make an anonymous assessment of the work of the Board by rating a number of areas/aspects, after which the results are compiled. This year's evaluation 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 remain satisfied with how the committees handle their respective areas of responsibility.

Group Management

Bilia's Group Management remained unchanged during the year. At the end of 2016, the Group Management consisted of Per Avander, Managing Director and CEO, Stefan Nordström, Deputy Managing Director, Gunnar Blomkvist, CFO, Per Ovrén, Business Development and Purchasing Manager, and Jennifer Tunney, Chief Legal Counsel at Bilia AB, plus Frode Hebnes, Managing Director of Bilia Personbil as, Norway. The Group Management is responsible for formulating the Group's overall strategy, business management and allocation of financial resources, as well as for the Group's financing, capital structure and risk management. It's duties also include executing 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	Jan Pettersson	Ingrid Jonasson Blank	Eva Cederbalk	Anna Engebretsen	Jack Forsgren	Laila Freivalds
Born 1953. Chairman.	Born 1949. Deputy Chairman.	Born 1962. Board member.	Born 1952. Board member.	Born 1982. Board member.	Born 1945. Board member. Chairman of the Compensation Committee.	Born 1942. Board member.
Elected 2003.	Elected 2003.	Elected 2006.	Elected 2016.	Elected 2010.	Elected 2003.	Elected 2016.
			Education
M.Sc. in Business Administration from the Stock holm School of Economics.	Degree in economics from Stockholm University 1973.	M.Sc. in Business Administration from the School of Business, Economics and Law in Gothenburg.	M.Sc. in Business Administration from the Stock holm School of Economics.	Norwegian School of Management in Oslo, M.Sc. in Business and Economics.	M.Sc. in Political Science from the University of Gothenburg 1968.	Bachelor of Laws, Uppsala University.
			Work experience
SEB 1976–84, Carnegie 1984–90.	Active in the automotive industry since 1973, Kinnevik Group 1982–86, MD of Toyota and Svensk Motor AB 1986–2002, MD and CEO of Bilia AB 2003–2011.	Active in the ICA Group 1986–2010, most recently as deputy MD of Ica Sverige AB.	MD of SBAB and Netgiro Inter national AB and various executive positions at SEB, Skandia and If.	Project Manager at OMD (Omnicom Media Group) and marketing and spon soring at Skistar AB.	MD and CEO of Möln lycke AB and Nobel Biocare AB.	Minister for Foreign Affairs, Director of Swedish Performing Arts Association, Minister of Justice, attorney-at-law, Director-General, Consumer Ombuds man, Head of Division and Reporting Clerk to the Court of Appeal.

			Posts 2016
Deputy chairman of Investment AB Öresund and AB Custos. Deputy Chairman of Fabege AB.	Chairman of Active Driving AB and Trosta Park AB.	Member of the board of Ambea Sweden Group AB, Fiskars Oyj, Musti ja Mirri Group Oy, Ma tas A/S, Orkla ASA, Royal Unibrew A/S, ZetaDisplay AB, Martin & Servera AB and Matse AB.	Member of the boards of Ikano Group S.A., Nation al Bank of Greece Ltd and Svolder AB.	Member of the boards of MQ Hold ing AB, Investment AB Öresund and Fabege AB.	Member of the boards of Maquire AB and Jerrie AB. Deputy chairman of the Swedish Exhibi tion Centre and 2nd Deputy Chairman of the Presiding Coun cil of the Swedish Exhibition Centre.	Chairman of Dansalliansen AB and KF's Avtals nämnd as well as Deputy Chairman of Investment AB Öresund.
			Independence
Dependent on Bilia's major shareholders.	Dependent on Bilia.	Yes	Yes	Dependent on Bilia's major shareholders.	Yes	Yes
			Attendance at Board meetings, %
100	100	100	91	100	100	100
—	—	—	Attendance at committee meetings, % —	—	100	100
			Number of shares in Bilia
5,068,816 1)	500,000 1)	20,000	—	2,126,670 1)	32,400	—
1) With family.

A total of six ordinary Board meetings were held during 2016, including one statutory meeting. In addition, five Board meetings were held by correspondence. All holdings in Bilia AB are as of 31 December 2016. Composition of the Board of Directors as of 31 December 2016. See also Group Note 9 "Employees, personnel costs and remunerations for senior officers".

Mats Holgerson Born 1953. Board member. Member of the Audit Committee.

Elected 2006.

ics.

M.Sc. in Business Administration from the Stockholm School of Econom-

1998–2005, MD of Menigo Foodservice 2006–08 and Chief Operating Offi cer of ICA AB 2008–13.

Education Education

Gustav Lindner Born 1978. Board member. Member of the Compensation and Audit Committees.

Elected 2014.

M.Sc. in Business Administration from the Stockholm School of Econom-

Jon Risfelt Born 1961. Board member. Chairman of the Audit Committee. Member of the Compensation Committee.

Elected 2003.

ogy.

M. Eng. in Chemical Engineering, Royal Institute of Technol-

Patrik Nordvall Born 1967. Employee representative. Elected 2004. Appointed by the PTK (Federation of Salaried Employees in Industry and Services) locals in the Bilia Group.

Process engineering studies and IHM Business School Senior.

since 1986.

Dragan Mitrasinovic

Born 1958. Employee representative.

Elected 2005. Appointed by the LO (Swedish Trade Union Confederation) locals in the Bilia Group. Elected 2016. Appointed by the PTK (Federation of Salaried Employees in Industry and Services) locals in

Anders Bejmar Born 1960. Deputy employee representative.

the Bilia Group.

Isak Ekblom

Born 1988. Deputy employee representative.

Elected 2016. Appointed deputy member by the LO locals in the Bilia Group.

— Auto body technician, Motorbranschens Tekniska Gymnasium.

Esso 1976–85, Statoil 1985–96 (MD of Statoil Norge 1994–96), MD of Dial Försäkring 1996–98, MD of Statoil Detaljhandel Skandinavia Swedbank sequently CEO of FR & R Sverige.

ics.

HQ Bank Corporate Finance 2006–10, 2010–14, Account Manager and sub-Gambro Renal.

Ericsson, SAS, American Express, Nyman & Schultz, Europolitan and

Work experience Work experience Employed by Bilia AB

Employed by Bilia AB since 1976.

Vocational training in automotive technol-

ogy.

Employed by Bilia AB since 2005. Eneqvist

Bil 1998–2005. Employed by Bilia AB

since 2007. Position of trust at IF Metall.

			Posts 2016
	Managing Director of Investment AB Öresund. Member of the board of Bulten AB.	Chairman of Bisnode AB, Ixat Intressenter AB (Cabonline) and Smartfi sh AS. Mem ber of the boards of Boule Diagnostics AB, Dialect AB, Excanto AB and Knowit AB.	Shop steward for Unionen at Bilia and head of the real estate department in Stockholm.
			Independence
	Dependent on Bilia's major shareholders.	Yes	—
			Attendance at Board meetings, %
	100	100	100
			Attendance at committee meetings, %
	100	100	—
			Number of shares in Bilia
12,730	2,000		252

Auditors

KPMG AB was re-elected as the Group's public accounting fi rm by the 2016 AGM for the period up until the 2017 AGM. Jan Malm, born 1960, Authorised Public Accountant, KPMG AB and member of FAR. Auditor in charge at Bilia since 2010.

Group Management

Per Avander	Gunnar Blomkvist	Frode Hebnes	Stefan Nordström	Per Ovrén	Jennifer Tunney
Born 1961. Managing Director and CEO of Bilia AB.	Born 1955. CFO, Bilia AB.	Born 1972. Managing Director of Bilia Personbil as, Norway.	Born 1966. Deputy Managing Director, Bilia AB.	Born 1977. Business Develop ment and Purchasing Manager, Bilia AB.	Born 1974. Chief Legal Counsel of Bilia AB.
		Education
School of economics graduate.	M.Sc. in Business Administration from the School of Busi ness, Economics and Law in Gothenburg.	Graduate of Norwegian School of Marketing.	School of economics graduate, IFL.	MSc. Eng. in Industrial Economics, Institute of Technology at Linköping University, plus studies at Technische Univer sität München and Stockholm University.	Master's degree in Commercial Law, Jönköping International Business School, stud ies in Commercial Law at University of Abertay, Dundee, Scotland.
		Work experience
Active in banking 1981–83, automo tive industry since 1983. MD of Din Bil Göteborg AB 1995–99, MD of Din Bil Stockholm Norr 1999–2001. Bilia 2001–.	Employed by Bilia AB since 1984.	Volvo Personbiler Norge 1997–2001, Volvo Car Corpo ration Göteborg 2001–2004, Volvo Personbiler Norge AS 2004–2006. Employed by Bilia Personbil as since 2006. MD since December 2008.	Employed by Bilia AB since 1986.	Bain & Company 2003– 2006, Investment AB Öresund 2006–2009, The Boston Consulting Group 2009. Employed by Bilia AB since 2010.	Real estate agent, Svensk Fastighets förmedling 1999, Treasury Support, Volvo Treasury AB 2003, Treasury Center, Bilia AB 2003–2004, Legal Counsel, Bilia AB 2005–2009.
		External posts 2016
Member of the boards of Volvofinans Bank AB, the Swedish Automobile Servicing and Retailing Employ ers' Association (MAF) and Alignment Systems AB.	—	Deputy member of the boards of Expon AS and Expon Holding AS.	Member of the board of Tanka Sverige AB.	—	—
		Number of shares in Bilia
28,000	64,710	—	12,000	—	—
		Number of warrants
15,000	6,000	—	10,000	5,000	—

The Group Management consists of 83.3 per cent men and 16.7 per cent women.

All holdings in Bilia AB are as of 31 December 2016. Composition of Group Management as of 31 December 2016.

The Bilia share

The Bilia share has been listed on the NASDAQ 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 2016, the share capital amounted to SEK 257 M (252), divided among 51,399,976 Series A shares. The quotient value is SEK 5 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 14 per cent in 2016

The OMX Stockholm Consumer Services PI fell by 13.7 per cent in 2016. The Bilia share rose from SEK 192.00 to SEK 209.50 during the year. The highest price paid, SEK 225.50, was quoted on 27 July 2016. The lowest price paid, SEK 142.50, was quoted on 9 February 2016.

Bilia's shareholders received a total return of 14 per cent (68) in 2016. The calculation is based on share price performance.

Bilia's market capitalisation at year-end was SEK 10,768 M (9,684), based on the total number of shares outstanding. A total of 20.8 million Bilia shares (26.3) were traded in 2016 at a value of SEK 3,911 M (4,078). This turnover represented 41 per cent (52) of the weighted average number of shares.

The P/E ratio based on earnings in 2016 was 17 (15).

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 1.00. This means that the price fluctuations for the Bilia share have been equal to the average price fluctuations on NASDAQ Stockholm.

Number of shareholders declined

Bilia had 34,482 shareholders at the end of 2016, compared with 35,183 a year earlier. Most shareholders own relatively small lots. Of the shareholders, 92.3 per cent (92.2) owned fewer than 1,000 shares. The proportion of institutional ownership was 8.8 per cent (8.4), while the proportion of foreign ownership was 30.7 per cent (38.7).

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 8.00

Bilia's Board of Directors proposes to the Annual General Meeting of 19 April 2017 that an ordinary dividend be paid in the amount of SEK 8.00 per share (7.50). The proposed dividend

corresponds to 65 per cent (59) 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 26 April 2017.

Stock split

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 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.

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.

Major shareholders, board members, the secretary to the board, auditors, the 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: • Mats Liss, Swedbank Markets, +46 8 58 59 18 00

Stefan Hellström, Nordea Markets, +46 10 156 59 72
Andreas Lundberg, ABG Sundal Collier, +46 8 56 62 86 00
Erik Paulsson, Pareto Securities, +46 8 402 50 00
Mikael Löfdahl, Carnegie Investment Bank AB, +46 8 676 88 00.

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 to Bilia on Bilia's website.

The Bilia share cont'd.

Data per Share	2012	2013	2014	2015	2016
Earnings, SEK	3.15 2)	5.85 3)	7.65 4)	12.85 5)	12.45 6)
Equity, SEK 1)	32.15	36.25	36.70	40.75	48.85
Operating cash flow, SEK	9.00 2)	1.70 3)	14.85 4)	4.20 5)	9.10 6)
Share price at year-end, SEK	46.75	82.00	118.75	192.00	209.50
P/E ratio, times	15	14	15	15	17
Price/equity ratio, %	145	226	324	471	429
Dividend yield, %	5.5	7.3	6.1	4.8	4.3
Dividend, SEK	3.00	4.50	6.00	7.50	8.00 7)
Payout ratio, % 8)	99	79	79	59	65

1) Calculated based on the number of shares outstanding at the end of each year. For 2016, the number of shares outstanding was 51,399,976, for 2015 it was 50,436,052, for 2014 it was 50,348,066, for 2013 it was 50,279,184, and for 2012 it was 49,315,212.

2) Calculated after exercised warrants corresponding to 68,142 shares during 2012, buy-back of 1,124,626 shares during May–September 2012, and acquisition of 1,241,640 Bilia shares, giving a weighted average number of shares of 49,495,454.

3) Calculated after exercised warrants corresponding to 50,986 shares during 2013 and 912,986 sold own shares, for a weighted average number of shares of 49,529,174.

4) Calculated after exercised warrants corresponding to 68,882 shares during 2014, resulting in a weighted average number of shares of 50,309,526.

5) Calculated after exercised warrants corresponding to 87,986 shares during 2015, resulting in a weighted average number of shares of 50,405,986.

6) Calculated after exercised warrants corresponding to 264,682 shares during 2016 and 699,242 sold own shares, for a weighted average number of shares of 51,130,747.

7) Proposed dividend.

8) Calculated after full exercise of the warrants, resulting in 51,399,976 outstanding shares for 2016, 50,918,510 for 2015, 2014 for 2013 and 50,005,524 for 2012.

All years have been recalculated after the 2:1 stock split in 2015.

Change in share capital

Number of shares			Change, SEK M	Reason
15,000,000		300
21,000,000	6,000,000	420	120	Bonus issue
21,032,486	32,486	421	1	New issue at conversion
21,046,667	14,181	421	0	New issue at conversion
21,076,925	30,258	422	1	New issue at conversion
31,674,669	10,597,744	634	212	New issue at conversion
28,554,512	–3,120,157	571	–63	Reduction
25,699,061	–2,855,451	514	–57	Reduction
60,845,603	35,146,542	608	94	Share buy-back/reduction/lowering of par value of share/subordinated shares, Series C
23,129,155	–37,716,448	231	–377	Redemption subordinated shares, Series C
21,459,255	–1,669,900	215	–16	Reduction
25,293,574	3,834,319	253	38	Exercised warrants
24,883,946	–409,628	249	–4	Exercised warrants/reduction
25,080,028	196,082	251	2	Exercised warrants
25,114,099	34,071	251	0	Exercised warrants
25,139,592	25,493	251	0	Exercised warrants
25,174,033	34,441	252	1	Exercised warrants
50,436,052	25,262,019	252	0	Exercised warrants/stock split
51,399,976	963,924	257	5	Exercised warrants/new share issue
			Change Share capital, SEK M

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

Distribution of shares, 31 December 2016

Shareholding	Total number of shareholders	Percentage of total no. of shareholders	Combined number of shares owned	Percentage of share capital
1–1,000	31,836	92.3	5,386,475	10.5
1,001–10,000	2,346	6.8	5,965,227	11.6
10,001–100,000	221	0.7	6,081,849	11.8
100,001–	79	0.2	33,966,425	66.1
Total	34,482	100.0	51,399,976	100.0

The 15 largest shareholders at 31 December 2016	Total	Stake, per cent
Investment AB Öresund	5,210,350	10.1
Mats Qviberg with family	5,068,816	9.9
SEB Investment management	2,143,345	4.2
Anna Engebretsen with family	2,126,670	4.1
Handelsbanken funds	2,022,711	3.9
CBNY-Norges Bank	1,367,053	2.7
JP Morgan Chase NA 1)	1,239,838	2.4
Swedbank Robur funds	1,105,654	2.1
JP Morgan Bank Luxemburg SA	928,017	1.8
SSB CL Omnibus AC	912,444	1.8
NTC various funds, Chicago 2)	774,333	1.5
Försäkringsaktiebolaget Avanza pension	733,378	1.4
Clients Accounts-DCS	699,552	1.4
CBNY-DFA-INT SML CAP V	568,340	1.1
Livförsäkringsbolaget Skandia, mutual	540,916	1.1
Total	25,441,417	49.5
Remaining shareholders	25,958,559	50.5
Total	51,399,976	100.0

1) JPM Chase NA has 11 funds with the same name and address. They have been aggregated in the table above. 2) NTC has 10 funds with the same name and address. They have been aggregated in the table above.

Ownership by categories at 31 December 2016, %

Foreign shareholders	31	(39)
Swedish private > 500	31	(33)
Swedish unit trusts	14	(4)
Öresund	10	(10)
Swedish institutions	9	(8)
Swedish private < 500	5	(6)

Turnover of Bilia share

Source: NASDAQ

Financial information			Page
Consolidated Statement of Income and Other Comprehensive Income			19
Consolidated Statement of Financial Position			21
Consolidated Statement of Changes in Equity			23
Consolidated Statement of Cash Flows			24

Note Bilia Group	IFRS standard		Page
1 Key accounting principles			26
2 Revenue	IAS 18	Revenue	28
3 Result from customer financing			29
4 Operating segments	IFRS 8	Operating Segments	29
5 Discontinued operation	IFRS 5	Non-current Assets Held for Sale and Discontinued Operations	32
6 Business combinations	IFRS 3	Business Combinations	33
7 Other operating income			38
8 Other operating expenses			38
9 Employees, personnel costs and remunerations for senior officers	IAS 19	Employee Benefits	38
10 Fees and cost reimbursement to auditors			41
11 Operating expenses classified by nature of expense			41
12 Net financial items	IAS 18	Revenue	41
	IAS 39	Financial Instruments: Recognition and Measurement
13 Taxes	IAS 12	Income Taxes	42
14 Earnings per share	IAS 33	Earnings Per Share	44
15 Intangible assets	IAS 38	Intangible Assets	45
16 Property, plant and equipment	IAS 16 IAS 17	Property, Plant and Equipment Leases	51
17 Interests in associated companies	IAS 28	Investments in Associates	54
18 Financial investments	IAS 39	Financial Instruments: Recognition and Measurement	55
19 Long-term receivables and other receivables			55
20 Inventories	IAS 2	Inventories	55
21 Prepaid expenses and accrued income			55
22 Interest-bearing liabilities	IAS 17 IAS 39	Leases Financial Instruments: Recognition and Measurement	56
23 Pensions	IAS 19	Employee Benefits	57
24 Provisions	IAS 37	Provisions, Contingent Liabilities and Contingent Assets	61
25 Other liabilities			62
26 Accrued expenses and deferred income			62
27 Financial instruments	IAS 32 IAS 39 IFRS 7	Financial Instruments: Presentation Financial Instruments: Recognition and Measurement Financial Instruments: Disclosures IFRS 13 Fair Value Measurement	62
28 Financial risks and risk management	IFRS 7	Financial Instruments: Disclosures IFRS 13 Fair Value Measurement	64
29 Operating leases	IAS 17	Leases	69
30 Capital commitments	IAS 16 IAS 38	Property, Plant and Equipment Intangible Assets	69
31 Pledged assets and contingent liabilities	IAS 37	Provisions, Contingent Liabilities and Contingent Assets	69
32 Related parties	IAS 24	Related Party Disclosures	70
33 Cash and cash equivalents and specifications for cash flows	IAS 7	Statement of Cash Flows	70
34 Events after the balance sheet date	IAS 10	Events After the Reporting Period	72
35 Information about the Parent Company			72
Income Statement for Parent Company			73
Balance Sheet for Parent Company			74
Statement of Changes in Equity for Parent Company			76
Cash Flow Statement for Parent Company			77
Notes to the Parent Company Financial Statements			78

Consolidated Statement of Income and Other Comprehensive Income

SEK M	Note		2016	2015
Continuing operations
Net turnover	2, 3, 4, 6		23,906	20,443
Cost of goods sold	3, 6, 11, 20		–20,069	–17,076
Gross profit			3,837	3,367
Other operating income	7		38	217
Selling expenses	11		–2,451	–2,144
Administrative expenses	10, 11		–556	–493
Other operating expenses	8, 11		–27	–18
Operating profit	4, 9, 29		841	929
Financial income			28	4
Financial expenses			–66	–30
Share in profits of associated companies	17		30	30
Net financial items	12		–8	4
Profit before tax			833	933
Tax	13		–176	–202
Profit for the year from continuing operations			657	731
Discontinued operation
Loss from discontinued operation, net after tax	5		–21	–84
Net profit for the year			636	647

Other comprehensive income Items that cannot be reclassified to profit or loss
Revaluation of defined-benefit pension plans	23		—	–120
Tax attributable to items that cannot be reclassified to profit or loss	13		—	26
			—	–94
Items that can be reclassified to profit or loss
Translation differences attributable to foreign operations			55	–45
Translation differences transferred to the net profit for the year			20	—
			75	–45
Other comprehensive income after tax			75	–139
Comprehensive income for the year			711	508
Net profit for the year attributable to:
Parent Company's shareholders			636	647
Comprehensive income for the year attributable to:
Parent Company's shareholders			711	508
Earnings per share, SEK	14
Basic earnings per share			12.45	12.85
Diluted earnings per share			12.45	12.75
Continuing operations
Basic earnings per share			12.85	14.50
Diluted earnings per share			12.85	14.40

		Operating profit		Profit before tax
Performance analysis, SEK M	2016	2015	2016	2015
Operational earnings	887	765	879	769
Items affecting comparability
Gain from sale of operation, other	21	6	21	6
Redemption of pension liability	6	197	6	197
Structural costs etc.	–7	–5	–7	–5
Acquisition costs
Acquisition-related costs and value adjustments	–11	–2	–11	–2
Amortisation of surplus values	–55	–32	–55	–32
Accounting profit	841	929	833	933

Net turnover

Continuing operations

Net turnover increased during the year by SEK 3,463 M to SEK 23,906 M, an increase of 17 per cent. If turnover is adjusted for comparable operations and exchange rate changes, net turnover increased by just over 4 per cent. The improvement is attributable to both the Car and Service Businesses.

Net turnover in the Service Business increased by SEK 828 M or 18 per cent and amounted to SEK 5,319 M. Adjusted for comparable operations and exchange rate changes, net turnover increased by 7 per cent. The underlying increase in Sweden was 6 per cent (6) and in Norway 11 per cent (6).

Net turnover in the Car Business increased SEK 2,871 M or 18 per cent to SEK 18,565 M. If net turnover is adjusted for comparable operations and exchange rate changes, the increase was 5 per cent. Underlying net turnover increased in Sweden by 2 per cent (12) and in Norway by 12 per cent (unchanged).

Net turnover in the Fuel Business increased by SEK 10 M to SEK 1,031 M or 1 per cent. If net turnover is adjusted for comparable operations and exchange rate changes, the increase was 2 per cent. The entire increase is attributable to Sweden.

Revenues from customer financing amounted to SEK 555 M (447), an increase of SEK 108 M or 24 per cent. Revenues from long-term leases increased by SEK 73 M (40), while commissions from finance companies increased by SEK 35 M (17).

Operating profit

The Group's operating profit amounted to SEK 841 M (929).

Operational earnings increased by 16 per cent, amounting to SEK 887 M, while the operational margin was unchanged at 3.7 per cent (3.7).

Operational earnings in the Car Business increased by SEK 75 M to SEK 719 M in Sweden, and by SEK 23 M to SEK 200 M in Norway. Operational earnings in Western Europe amounted to SEK 30 M (2). The operational margin in Sweden amounted to 4.6 per cent (4.4), in Norway to 3.2 per cent (3.1) and in Western Europe to 1.6 per cent (1.2).

The operating loss for the Parent Company amounted to SEK 60 M (loss: 69).

Operating profit in the Service Business increased by SEK 104 M to SEK 600 M. The main reason for the increase was higher turnover and lower relative costs.

Operating profit in the Car Business increased by SEK 21 M to SEK 324 M. The increase is mainly attributable to sales of new cars.

Operating profit in the Fuel Business amounted to SEK 25 M (24). The improvement is mainly attributable to a slightly higher gross profit margin.

The Service Business's operating margin increased to 11.3 per cent (11.0), while the Car Business's operating margin decreased to 1.7 per cent (1.9). Deliveries in the Car Business increased by 17 per cent (9). Adjusted for comparable units, the increase was 3 per cent and orders received decreased by 1 per cent (13). The order backlog increased by 22 per cent or 2,023 cars, amounting to 11,327 cars at year-end.

Net financial items

Net financial items amounted to SEK –8 M (4). The decrease from last year is mainly attributable to higher net debt.

Profit before tax

Profit before tax decreased by SEK 100 M, amounting to SEK 833 M. Last year's profit includes a gain of SEK 197 M on redemption of the Swedish pension liability.

Operational earnings before tax increased by SEK 110 M, amounting to SEK 879 M.

Tax for the year

Tax for the year amounted to SEK –176 M (–202), and the effective tax rate was 21 per cent (22).

Net profit for the year

Profit for the year from continuing operations amounted to SEK 657 M (731). This is equivalent to basic earnings per share (before dilution) of SEK 12.85 (14.50), based on an average number of outstanding shares. After dilution, earnings per share amounted to SEK 12.85 (14.40). The profit margin amounted to 2.7 per cent (3.6).

Net profit for the year for the Bilia Group was SEK 636 M (647). This is equivalent to basic earnings per share (before dilution) of SEK 12.45 (12.85), based on an average number of outstanding shares. After dilution, earnings per share amounted to SEK 12.45 (12.75). The profit margin amounted to 2.7 per cent (3.2).

Other comprehensive income/loss

Other comprehensive income/loss amounted to an income of SEK 75 M (loss: 139) and stems from translation differences attributable to foreign operations of SEK 55 M (–45) and translation differences posted to the net profit for the year of SEK 20 M (—).

Comprehensive income for the year

Comprehensive income for the year amounted to SEK 711 M (508).

Performance analysis

Items affecting comparability

Items affecting comparability had a net effect on the profit of SEK 20 M (198). "Gain from sale of operation" amounted to SEK 21 M (6) and derives from the sale of the Ford operations in Gothenburg and Kungsbacka. Last year this item pertained to the sale of a property in Norway, which brought in SEK 2 M, and disposal of the operation in Stavanger in southwest Norway, which brought in SEK 4 M.

"Redemption of pension liability" pertains to a gain of SEK 6 M that was recognised when the Norwegian operation changed the rules for employees who had previously not switched from a defined-benefit to a defined-contribution pension plan. Last year this item pertained to the earnings effect before tax, amounting to SEK 197 M, of the transfer of the Swedish pension liability to Alecta.

"Structural costs etc." pertains to provision for rent in Sweden and Norway. Last year this item pertained to a provision, amounting to SEK 5 M, for an insurance loss in Sweden.

Acquisition costs

Earnings were affected by acquisition costs of SEK 66 M (34). Acquisition-related costs and value adjustments amounted to SEK –11 M (–2) and amortisation of surplus values amounted to SEK –55 M (–32).

Consolidated Statement of Financial Position

SEK M	Note	31/12/16	31/12/15
Assets	6, 27, 30
Non-current assets
Intangible assets	15
Intellectual property		550	271
Goodwill		657	368
		1,207	639
Property, plant and equipment	16
Land and buildings		235	131
Construction in progress		19	8
Equipment, tools, fixtures and fittings		427	331
Leased vehicles		2,744	2,048
		3,425	2,518
Long-term investments
Interests in associated companies	17	381	377
Financial investments	18	7	7
Long-term receivables	19	1	0
		389	384
Deferred tax assets	13	84	128
Total non-current assets		5,105	3,669
Current assets
Inventories
Merchandise	20	3,451	2,564
Current receivables
Current tax assets	13	99	48
Trade receivables	28	879	669
Prepaid expenses and accrued income	21	262	232
Other receivables	19, 28	232	148
Cash and cash equivalents	28, 33	104	99
		1,576	1,196
Total current assets		5,027	3,760
Total assets	4	10,132	7,429

Consolidated Statement of Financial Position

SEK M	Note	31/12/16	31/12/15
Equity and liabilities	6, 27, 30
Equity
Share capital		257	252
Other contributed capital		167	48
Reserves		–24	–99
Retained earnings including net profit for the year		2,111	1,855
Total equity		2,511	2,056
Non-current liabilities
Bond issue	22, 28	751	—
Non-current interest-bearing liabilities	22, 28	174	75
Other non-current liabilities	25	1,635	1,211
Provisions for pensions	23	3	8
Other provisions	24	172	44
Deferred tax liabilities	13	267	175
Total non-current liabilities		3,002	1,513
Current liabilities
Debenture loan	22, 28	—	28
Current interest-bearing liabilities	22, 28	334	688
Trade payables	28	1,722	1,259
Current tax liabilities		179	129
Other liabilities	25, 28	1,448	995
Accrued expenses and deferred income	26	934	759
Other provisions	24	2	2
Total current liabilities		4,619	3,860
Total liabilities		7,621	5,373
Total equity and liabilities	4	10,132	7,429

Pledged assets and contingent liabilities for the Group, see Note 31.

Comments on the Consolidated Statement of Financial Position

The Group's balance sheet total increased by SEK 2,703 M, amounting to SEK 10,132 M. Business acquisitions and leased vehicles are the foremost reasons for the increase. Leased vehicles increased by SEK 696 M, mainly due to the fact that private leasing has increased sharply in Sweden.

Financing

Net debt increased by SEK 452 M during the year, amounting to SEK 775 M. At the end of 2016 the Group had a positive bank balance of SEK 27 M, whereas it had a negative bank balance of SEK 432 M at the end of 2015. During the year, Bilia issued unsecured bonds worth SEK 750 M, which mature in March 2021. The ratio of net debt to EBITDA was 0.7 times (0.4).

Equity

Equity amounted to SEK 2,511 M, an increase of SEK 455 M. Dividends of SEK 380 M were paid to shareholders during the year. A new share issue in conjunction with the acquisition of the operation in Luxembourg increased equity by SEK 115 M. Comprehensive income for the year amounted to SEK 711 M. See the Consolidated Statement of Changes in Equity for details on the change in equity.

Key figures

Return on capital employed amounted to 26.4 per cent (36.2). The Group's goal is 17 per cent. Return on equity amounted to 27.9 per cent (33.2). The Group's goal is 18 per cent.

The rate of capital turnover declined slightly compared with last year, amounting to 2.70 times (2.96).

The equity/assets ratio amounted to 24.8 per cent (27.7). Equity per share before dilution amounted to SEK 48.85

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. 2015	25,174,033	252	47	–54	1,604	1,849
Comprehensive income/loss for the year
Net profit for the year	—	—	—	—	647	647
Other comprehensive income/loss for the year	—	—	—	–45	–94	–139
Total comprehensive income/loss for the year	—	—	—	–45	553	508
Transactions with the Group's owners
Exercised warrants	87,986	0	1	—	—	1
Stock split	25,174,033	—	—	—	—	—
Dividend (SEK 6.00 per share)	—	—	—	—	–302	–302
Total transactions with the Group's owners	25,262,019	0	1	—	–302	–301
Closing equity 31 Dec. 2015	50,436,052	252	48	–99	1,855	2,056
Opening equity 1 Jan. 2016	50,436,052	252	48	–99	1,855	2,056
Comprehensive income/loss for the year
Net profit for the year	—	—	—	—	636	636
Other comprehensive income/loss for the year	—	—	—	75	—	75
Total comprehensive income/loss for the year	—	—	—	75	636	711
Transactions with the Group's owners
Exercised warrants	264,682	1	1	—	—	2
Sold warrants	—	—	1	—	—	1
New share issue	699,242	4	111	—	—	115
Discount/issue at discounted price	—	—	6	—	—	6
Dividend (SEK 7.50 per share)	—	—	—	—	–380	–380
Total transactions with the Group's owners	963,924	5	119	—	–380	–256
Closing equity 31 Dec. 2016	51,399,976	257	167	–24	2,111	2,511

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 translation 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.

Reconciliation, translation reserve	2016	2015
Opening translation reserve	–99	–54
Exchange rate difference for the year	55	–45
Translation differences transferred to the net profit for the year	20	—
Closing translation reserve	–24	–99

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.

Stock split

The company's existing shares are divided and adjusted retroactively for the years reported.

Consolidated Statement of Cash Flows

SEK M	Note	2016	2015
Operating activities	5, 33
Profit before tax from continuing operations		833	933
Loss before tax from discontinued operation		–21	–141
Depreciation/amortisation and impairment losses from continuing operations		522	404
Depreciation/amortisation and impairment losses from discontinued operation		—	2
Other items not affecting cash		2	–58
Tax paid		–153	–59
Cash flow from operating activities before change in working capital		1,183	1,081
Change in inventories		–311	–496
Change in operating receivables		–9	–9
Change in operating liabilities		791	259
Cash flow from operating activities		1,654	835
Investing activities
Acquisition of non-current assets (intangible and tangible)		–268	–164
Disposal of non-current assets (intangible and tangible)		19	44
Acquisition of leased vehicles		–1,680	–1,156
Disposal of leased vehicles		739	653
Operating cash flow		464	212
Investment in financial assets		–9	–26
Disposal of financial assets		65	27
Acquisition of subsidiary/operation, net		–250	–284
Disposal of subsidiary/operation, net		47	55
Disposal of discontinued operation, net		—	5
Cash flow after net investments		317	–11
Financing activities
Borrowings		1,466	1,000
Repayment of loans		–866	–900
Change in overdraft facility		–538	–304
Exercised warrants/debenture loan		2	1
Sold warrants		1	—
Dividend paid to Parent Company's shareholders		–380	–302
Cash flow from financing activities		–315	–505
Change in cash and cash equivalents, excluding translation differences		2	–516
Exchange difference in cash and cash equivalents		3	–1
Change in cash and cash equivalents		5	–517
Cash and cash equivalents at start of year		99	616
Cash and cash equivalents at year-end		104	99

Operating activities

Cash flow from operating activities, before change in working capital, amounted to SEK 1,183 M (1,081). Profit before tax from continuing operations decreased by SEK 100 M, while loss before tax from discontinued operation improved by SEK 120 M and depreciation/amortisation and impairment losses from continuing operations increased by SEK 118 M.

Change in working capital increased the cash flow by SEK 471 M (decrease: 246). Higher operating liabilities were 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 –1,190 M (–623). Net investments in non-current assets increased by SEK 129 M, while net investments in leased vehicles increased by SEK 438 M.

Operating cash flow

Operating cash flow amounted to SEK 464 M, compared with SEK 212 M last year.

Cash flow after net investments

Cash flow after net investments amounted to SEK 317 M (–11). This includes investment in and disposal of financial assets in the net amount of SEK 56 M (1).The net effect on cash flow of acquisition and disposal of operations was SEK –203 M (–224).

Financing activities

Cash flow from financing activities amounted to SEK –315 M (–505). Dividend to shareholders increased by SEK 78 M to SEK 380 M.

Net debt/receivable

Net debt amounted to SEK 775 M (323), an increase of SEK 452 M.

Specification of interest-bearing net debt/receivable:

SEK M	2016	2015
Current interest-bearing liabilities	334	716
Non-current interest-bearing liabilities	924	75
Pension liabilities	3	8
Cash and cash equivalents	–104	–99
Interest-bearing assets	–1	0
Interests in associated companies	–381	–377
Non-current lease assets	0	0
Net debt(+)/receivable(–) at end of year	775	323

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 17 March 2017. The Consolidated Statement of Income and Other Comprehensive Income, the Consolidated Statement of Financial Position, the Parent Company Income Statement and the Parent Company Balance Sheet will be subject to adoption at the Annual General Meeting on 19 April 2017.

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 2016 have not had any significant effect on the consolidated accounts.

Alternative performance measures

The ESMA's (European Securities and Markets Authority) "Guidelines on Alternative Performance Measures (APMs)" is applied for financial reports submitted after 3 July 2016. As a result, additional information is disclosed regarding financial performance measures not defined in the IFRS standards. Alternative performance measures published in this report should not be regarded as a substitute for financial measures defined in accordance with IFRS standards, but rather as a complement, and they do not have to be comparable with similarly entitled performance measures or key figures presented by other companies.

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.

Starting in 2018, IFRS 15 Revenue from Contracts with Customers will replace existing IFRS standards related to revenue recognition, such as IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. Bilia does not plan to apply IFRS 15 prospectively. IFRS 15 is based on recognising revenue when control over a good or service is transferred to the customer, which differs from the existing principle of revenue recognition based on transfer of risks and rewards. IFRS 15 introduces new ways to determine how and when revenue should be recognised, which entails new ways of thinking compared with how revenue is recognised today.

Evaluation of the effects on Bilia's accounts when IFRS 15 begins to be applied is under way. It has not yet been possible to estimate the effects in figures. In cases where there are demarcation issues between selling and leasing, IFRS 15 and IFRS 16 are being analysed simultaneously. But it has not been decided whether IFRS 16 will be applied prospectively or not. Choices regarding transitional methods will be made when the analysis of IFRS 15 has reached a more advanced phase.

Starting in 2019, IFRS 16 Leases will replace existing IFRS standards related to accounting of leases, such as IAS 17 Leases and IFRIC 4 Determining Whether an Arrangement Contains a Lease. Bilia has not yet decided whether IFRS 16 should be applied prospectively starting in 2018, at the same time as IFRS 15 is introduced, or whether it should be applied starting in 2019.

IFRS 16 mainly affects lessees, and the main effect is that all leases that are accounted for today as operating leases will be accounted for in a way that resembles current accounting of finance leases. This means that assets and liabilities need to be recognised for operating leases as well, with associated recognition of costs for depreciation and interest – in contrast to today when there is no recognition of a leased asset and its related liability, and when the lease payments are recognised as an expense on a straight-line basis over the term of the lease.

As an operating lessee, Bilia will be affected by the adoption of IFRS 16. Calculations of the exact effects of IFRS 16 and choices of transitional methods have not yet been made. The information provided in Note 29 "Operating leases" give an indication of the type and scope of the leases that currently exist.

Other future changes, such as IFRS 9 Financial Instruments, 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 per cent 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. Revenues 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.

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

Source of uncertainty	Note
Goodwill	15	Intangible assets
Leases	16, 25, 26	Property, plant and equipment, Other liabilities, Accrued expenses and deferred income
Valuation of used cars	20	Inventories
Pensions	23	Pensions
Service subscriptions	25	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 hire-purchase 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 pre-guaranteed 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 16 "Property, plant and equipment," and as liability, see Note 25 "Other liabilities". Future unrealised revenue amounted at year-end to SEK 108 M (81), see Note 26 "Accrued expenses and deferred income".

	2016	2015
Net turnover
Workshop	2,197	1,907
Spare parts	3,072	2,558
Other	50	26
Total Service Business	5,319	4,491
Sale of goods	17,878	15,124
Rental income Repurchase agreements and Rental cars	473	391
Commissions	214	179
Total Car Business	18,565	15,694
Fuels	1,031	1,021
Total Fuel Business	1,031	1,021
Rental income	249	236
IT and training services	150	124
Eliminations	–1,408	–1,123
Total	23,906	20,443

Note 3 Result from customer financing

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

The Finance Business consists of long-term leases, hirepurchase contracts, current net return on financial contracts transferred to finance companies, and other commissions associated with financing that has been transferred to finance companies.

	2016	2015
Rental income, Repurchase agreements	341	268
Commissions received from finance companies	214	179
Amortisation, Repurchase agreements	–282	–214
Other	–15	–14
Total	258	219
Of which:
Finance Business	199	165
Repurchase agreements	59	54

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 dayto-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
Western Europe

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

Cars

Sweden
Norway
Western Europe

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, purchasing, public relations, business development, marketing, HR, real estate activities, accounting and financing, 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							Total		Segment
		Service	Cars			Fuels	Cars		reconciliation		Group
	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Net turnover
External sales			4,303 3,709 18,565 15,694				1,031 1,021 23,899 20,424		7		19 23,906 20,443
Internal sales	1,016	782					1,016		782 –1,016	–782	—	—
Total net turnover			5,319 4,491 18,56515,694					1,031 1,021 24,915 21,206 –1,009			–763 23,906 20,443
Depreciation/amortisation	–83	–53	–402	–277	–4	–4	–489	–334	–31	–58	–520	–392
Operating profit/loss	600	496	324	303	25	24	949	823	–108	106	841	929
Interest income											28	4
Interest expenses											–66	–30
Share in profits of associated companies			30	30			30	30			30	30
Profit before tax											833	933
Tax expense for the year											–176	–202
Profit for the year from continuing operations											657	731
Loss from discontinued operation,
net after tax											–21	–84
Net profit for the year											636	647
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	15	3	6	3			21	6			21	6
– Redemption of pension liability	2	13	4	52			6	65		132	6	197
– Structural costs etc.	–1		–6	–5			–7	–5			–7	–5
Items of a non-recurring nature	16	16	4	50	—	—	20	66	—	132	20	198
Acquisition costs
– Acquisition-related expenses
and value adjustments	–6	–1	–5	–1			–11	–2			–11	–2
– Amortisation of surplus values	–26	–16	–29	–16			–55	–32			–55	–32
Acquisition costs	–32	–17	–34	–17	—	—	–66	–34	—	—	–66	–34
Material items not affecting cash besides depreciation/amortisation:
Other	–51	–47	–6	–6	0	0	–57	–53	59	–5	2	–58
Total	–51	–47	–6	–6	0	0	–57	–53	59	–5	2	–58
Assets
Interests in associated companies			381	377			381	377			381	377
Deferred tax assets											84	128
Other assets											9,667	6,924
Total assets			381	377			381	377			10,132	7,429

Investments in non-current assets	103	64	1,765	1,205	13	3	1,881	1,272	67	48	1,948	1,320
Liabilities
Equity											2,511	2,056
Liabilities											7,621	5,373
Total liabilities and equity											10,132	7,429

				Service					Cars
			Sweden Norway			Western Europe 1)	Sweden		Norway		Western Europe 1)
	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Net turnover
External sales			2,889 2,575 1,042 1,034		372		100 11,849 10,938 5,230 4,683 1,486					73
Internal sales	615	565	358	215	43	2
Total net turnover			3,504 3,140 1,400 1,249		415		102 11,849 10,938 5,230 4,683 1,486					73
Depreciation/amortisation	–51	–39	–13	–13	–19	–1	–350	–263	–32	–14	–20	0
Operating profit/loss	422	358	153	132	25	6	272	261	47	46	5	–4
Share in profits of associated companies							30	30
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	15			3			6			3
– Redemption of pension liability		13	2					52	4
– Structural costs etc.	1		–2				–2	–5	–4
Items of a non-recurring nature	16	13	0	3	—	—	4	47	0	3	—	—
Acquisition costs
– Acquisition-related costs and value adjustments	–1			–1	–5		–1				–4	–1
– Amortisation of surplus values	–9	–7	–8	–9	–9		–9	–8	–8	–8	–12
Acquisition costs	–10	–7	–8	–10	–14	—	–10	–8	–8	–8	–16	–1
Material items not affecting cash besides depreciation/amortisation:
Other	–48	–45	–3	–2	0	0	–11	–11	5	5	0	0
Total	–48	–45	–3	–2	0	0	–11	–11	5	5	0	0
Assets
Interests in associated companies							381	377
Investments in non-current assets	62	33	37	31	4	—	1,471	1,046	242	159	52	—

		Revenue from external customers		Non-current assets
	2016	2015	2016	2015
Geographical segments
Sweden	15,772	14,535	4,457	3,459
Norway	6,278	5,738	985	815
Germany 1)	819	173	63	53
Luxembourg 1)	730	—	615	—
Belgium 1)	309	—	271	—
Segment reconciliation	–2	–3	–1,370	–786
Total	23,906	20,443	5,021	3,541

1) Germany is included as from 1 October 2015. Luxembourg is included as from 1 April 2016. Belgium is included as from 1 July 2016.

Note 5 Discontinued operation

➤ Accounting principle

Bilia applies IFRS 5 Non-current Assets Held for Sale and Discontinued Operations in accounting for discontinued operations.

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. An asset (or disposal group) is classified as held for sale if it is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. These assets (or disposal groups) are recognised on a separate line as current assets or current liabilities in the Statement of Financial Position. On initial classification as held for sale, non-current assets (and disposal groups) are recognised at the lower of carrying amount and fair value less costs to sell.

Cars Denmark

Bilia decided in March 2015 to discontinue its entire operation in Denmark. As of 31 December 2015, all five facilities had been disposed of.

Loss from discontinued operation during 2016 stems partly from a SEK 1 M loss from the sale of a site in Denmark and partly from SEK 20 M in accumulated translation differences in Denmark. The operation in Denmark was liquidated in Decem-

Loss from discontinued operation	2016	2015
Revenue	—	468
Expenses	–21	–609
Loss before tax	–21	–141
Tax	—	57
Loss after tax from discontinued operation	–21	–84
Discontinued operation
Basic earnings per share, SEK	–0.40	–1.65
Diluted earnings per share, SEK	–0.40	–1.65

A discontinued operation is a component of the Group's business that represents a separate business segment or major line of business within a geographical area of operations or a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or, if earlier, when the operation meets the criteria to be classified as held for sale.

Profit or loss after tax from a discontinued operation is reported on a separate line in the Statement of Income and Other Comprehensive Income. When an operation is classified as discontinued, the presentation of the Consolidated Statement of Income and Other Comprehensive Income for the comparative year is changed so that the discontinued operation is recognised as if it had been discontinued at the start of the comparative year. The presentation of the Statement of Financial Position for the current and preceding year is not changed in a corresponding manner.

ber 2016, which means that accumulated translation differences are reversed as a positive translation difference in other total comprehensive income, while the exchange loss is charged to loss from discontinued operation. Comprehensive income for the year for the Bilia Group is thus unaffected by the above accumulated translation differences in Denmark.

See also Note 33 "Cash and cash equivalents and specifications for cash flows".

Net cash flows from discontinued operation	2016	2015
Cash flows from operating activities	—	–137
Cash flows from investing activities	—	146
Cash flows from financing activities	—	–4
Net cash flows from discontinued operation	—	5

Note 6 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 consideration 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 pre-

Effects of acquisitions in 2016

BMW, MINI and Toyota operations in Sweden On 1 March 2016, Bilia acquired three car dealerships that conduct BMW, MINI and Toyota operations in Sweden. The dealerships are located in the following towns:

BMW Trollhättan, Uddevalla and Strömstad
MINI Trollhättan
Toyota Kristianstad, Västerås, Enköping, Borlänge, Falun and Ludvika.

In 2016, the operations contributed approximately SEK 735 M in turnover and about SEK 11 M in operating profit. On a full-year basis, this is equivalent to a turnover of about SEK 880 M and an operating profit of about SEK 13 M. The purchase consideration was SEK 58 M. The entire purchase consideration was paid in cash. There is no contingent purchase consideration.

existing business relationships. Such amounts are recognised in profit or loss.

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

Non-controlling interests in the Group's total equity are recognised in an amount equivalent to the minority shareholders' share of the identifiable net assets in concerned subsidiaries, i.e. excluding goodwill. In certain acquisitions, non-controlling interests are instead recognised initially at fair value, i.e. including goodwill, according to the full goodwill method. Put options issued for shares held by parties without a controlling interest are recognised as a financial liability equivalent to the present value of the estimated exercise price. Bilia has opted to apply the principles of the Anticipated Acquisition Method when recognising the liability. Under this method, a non-controlling interest is not recognised in the Group's total equity, but is instead replaced by a liability to the holder of the non-controlling interest equivalent to the present value of the exercise price for the shares according to the put option.

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

Synergies can be found in a higher rate of inventory turnover, which is expected to reduce capital employed by about SEK 30 M.

The businesses have about 115 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

Below is the final acquisition analysis, and the differences between the final acquisition analysis and the preliminary version that was presented during the second quarter of 2016 are shown in a separate column. The acquisitions have the following effects on the Group's assets and liabilities.

The acquired operations' net assets at the acquisition date	Carrying amounts in BMW, MINI, Toyota operations	Fair value adjustment	Fair value recognised in Group	Difference vs. preliminary acquisition
Intangible assets	2	9	11	0
Property, plant and equipment	24	11	35	0
Deferred tax asset	3	–	3	3
Inventories	146	2	148	–6
Trade receivables and other receivables	31	–	31	7
Cash and cash equivalents	4	–	4	0
Interest-bearing liabilities	103	–	103	0
Trade payables and other liabilities	98	11	109	1
Deferred tax liability	–	2	2	0
Net identifiable assets and liabilities	9	9	18	3
Consolidated goodwill			40	–3
Purchase consideration paid, cash			58	0
Less: Cash and cash equivalents in acquired operations			4	0
Net effect on cash and cash equivalents			54	0

Acquired customer relations totalling SEK 9 M are recognised as intangible assets. These customer relations will be amortised over 10 years.

Note 6 cont'd.

BMW and MINI operation in Luxembourg

On 31 March 2016, Bilia took possession of Arnold Kontz's BMW and MINI operation in Luxembourg. The operation, which is centrally located in Luxembourg, accounts for about 50 per cent of total BMW sales in Luxembourg. The operation contributed about SEK 730 M in turnover and about SEK 14 M in operational earnings in 2016. On a full-year basis, this is equivalent to a turnover of about SEK 970 M and an operational earnings of about SEK 19 M. The purchase consideration was SEK 389 M. Of the total purchase consideration, SEK 273 M was paid in cash and the remaining SEK 116 M was paid in the form of newly issued Bilia shares. The exercise price was set at 95 per cent of the average price of a Bilia share during the period 18–22 April 2016. The value of the discount, SEK 6 M, has increased the value of consolidated goodwill. Payment with the new shares was effected by offsetting of the debt to the seller. There is no contingent purchase consideration.

The acquisition gives Bilia a good platform for increasing the Group's presence in the region.

The business has about 145 employees and will continue to be operated from the present-day facilities.

Acquisition-related expenses amounting to SEK 1.0 M consist of fees to consultants for due diligence and have been recognized as "Other operating expenses".

Effects of the acquisition

Below is the final acquisition analysis, and the differences between the final acquisition analysis and the preliminary version that was presented during the third quarter of 2016 are shown in a separate column. The acquisition has the following effect on the Group's assets and liabilities.

The acquired operation's net assets at the acquisition date	Carrying amounts in Arnold Kontz dealership operation	Fair value adjustment	Fair value recognised in Group	Difference vs. preliminary acquisition
Intangible assets	—	188	188	0
Property, plant and equipment	20	—	20	–21
Inventories	112	3	115	–20
Trade receivables and other receivables	134	–1	133	68
Cash and cash equivalents	23	—	23	13
Interest-bearing liabilities	—	—	—	–55
Trade payables and other liabilities	161	7	168	24
Deferred tax liability	—	57	57	0
Net identifiable assets and liabilities	128	126	254	71
Consolidated goodwill			135	4
Purchase consideration paid, cash			389	75
Less: Payment in the form of newly issued Bilia shares			116	0
Less: Cash and cash equivalents in acquired operation			23	13
Net effect on cash and cash equivalents			250	62

Acquired customer relations totalling SEK 188 M are recognised as intangible assets. These customer relations will be amortised over 10 years.

BMW and MINI operation in Belgium

On 1 July 2016, Bilia acquired Philippe Emond SA's BMW and MINI dealership in Belgium. The business is situated close to the border with Luxembourg, which is expected to result in synergies worth about SEK 6 M per year. The synergies are mainly attributable to cost reductions and efficiency improvements. The operation contributed about SEK 310 M in turnover and about SEK 5 M in operational earnings in 2016. On a full-year basis, this is equivalent to a turnover of about SEK 620 M and an operational earnings of about SEK 10 M. The purchase consideration was SEK 249 M. Of this amount, SEK 66 M was paid in cash and the remainder, SEK 183 M, in the form of newly issued shares in Bilia AB's subsidiary Bilia Holding S.à r.l.. After the acquisition, Bilia Holding S.à r.l. will own 100 per cent of the shares in the newly acquired company Philippe Emond SA. There is no contingent purchase consideration. Due to the fact that part of the purchase consideration was paid in the form of shares in Bilia AB's subsidiary Bilia Holding S.à r.l., Bilia Holding S.à r.l. will be 66.2 per cent owned (previously 100 per cent) by Bilia AB and 33.8 per cent owned by the seller of Philippe Emond. Since the acquisition also includes the issuance of a put option to the seller combined

with a call option for Bilia, a liability of EUR 12.8 M converted to SEK has been recognised, equivalent to the present value of the estimated future exercise price of the put option. The exercise prices for the put and call options are variable as determined by a formula stipulated in the purchase agreement based mainly on future earnings in the Bilia Holding Group. The liability recognised for the obligation under the put option replaces the item "non-controlling interests" in the Group's total equity (according to the principles of the Anticipated Acquisition Method).

The business has about 105 employees and will continue to be operated from the present-day facilities.

Acquisition-related expenses amounting to SEK 2.4 M consist of fees to consultants for due diligence and have been recognized as "Other operating expenses".

Effects of the acquisition

The acquired operation's net assets at the acquisition date	Carrying amounts in Philippe Emond's dealership operation	Fair value adjustment	Fair value recognised in Group	Difference vs. preliminary acquisition
Intangible assets	—	97	97	0
Property, plant and equipment	68	5	73	0
Inventories	95	2	97	–1
Trade receivables and other receivables	122	–2	120	–1
Cash and cash equivalents	19	—	19	0
Interest-bearing liabilities	32	—	32	–1
Trade payables and other liabilities	179	–2	177	–1
Deferred tax liability	—	36	36	0
Net identifiable assets and liabilities	93	68	161	0
Consolidated goodwill			88	0
Purchase consideration paid, cash			249	0
Less: Payment in the form of newly issued Bilia Holding shares			183	0
Less: Cash and cash equivalents in acquired operation			19	0
Net effect on cash and cash equivalents			47	0

Acquired customer relations totalling SEK 97 M are recognised as intangible assets. These customer relations will be amortised over 10 years.

BMW and MINI dealership in Germany

Bilia acquired Schäfer GmbH Automobile's BMW and MINI dealership in Germany. The operation has been a part of the Bilia Group since 1 August 2016. The business is run from four facilities that are concentrated northwest of Frankfurt and border on Bilia's operation in Germany. The operation contributed about SEK 230 M in turnover and about SEK 4 M in operational earnings in 2016. On a full-year basis, this is equivalent to a turnover of about SEK 560 M and an operational earnings of about SEK 10 M. The purchase consideration was SEK 26 M. The entire purchase consideration was paid in cash. There is no contingent purchase consideration.

The acquisition gives Bilia a good platform for increasing the Group's presence in the region.

The acquisition is expected to result in synergies, mainly cost reductions of approximately SEK 13 M per year and reductions

in tied-up capital, mainly in inventories, of nearly SEK 20 M. The synergies are expected to be fully realised by the 3rd quarter of 2017.

The business has about 120 employees and will continue to be operated from the present-day facilities.

Acquisition-related expenses amounting to SEK 1.5 M consist of fees to consultants for due diligence and have been recognized as "Other operating expenses".

Effects of the acquisition

The acquired operation's net assets	Carrying amounts in		Fair value	Difference vs.
at the acquisition date	Schäfer's dealership operation	Fair value adjustment	recognised in Group	preliminary acquisition
Property, plant and equipment	8	—	8	4
Inventories	111	—	111	18
Trade receivables and other receivables	37	—	37	–3
Cash and cash equivalents	10	—	10	–4
Interest-bearing liabilities	27	—	27	–76
Trade payables and other liabilities	114	–1	113	91
Net identifiable assets and liabilities	25	1	26	0
Consolidated goodwill			0	0
Purchase consideration paid, cash			26	0
Less: Cash and cash equivalents in acquired operation			10	–4
Net effect on cash and cash equivalents			16	4

Effects of acquisitions in 2015

Toyota Hell Bil AS and Toyota Horten-Tønsberg AS

On 2 March 2015, Bilia acquired all the shares in Toyota Hell Bil AS and Toyota Horten-Tønsberg AS. The business is run from seven facilities and is concentrated to Trondheim and Tønsberg outside Oslo. During 2015, the operation contributed SEK 888 M in turnover and SEK 22 M in operating profit. On a full-year basis, this is equivalent to a turnover of about SEK 1,050 M and an operating profit of about SEK 26 M. The purchase consideration was SEK 196 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 and Lexus brands in Norway. Toyota, along with Volkswagen, is the market leader in Norway.

The business has about 225 employees and will continue to be operated from the present-day facilities.

Acquisition-related expenses amounting to SEK 0.4 M consist of fees to consultants for due diligence and have been recognized as "Other operating expenses".

Effects of the acquisitions

Below is the final acquisition analysis, and the differences between the final acquisition analysis and the preliminary version that was presented during the first quarter of 2015 are shown in a separate column. The acquisitions have the following effects on the Group's assets and liabilities.

The acquired operations' net assets at the acquisition date	Carrying amounts in Toyota Hell Bil AS and Toyota Horten-Tønsberg AS	Fair value adjustment	Fair value recognised in Group	Difference vs. preliminary acquisition
Intangible assets	—	84	84	0
Property, plant and equipment	37	267	304	3
Long-term investments	0	—	0	0
Deferred tax asset	2	—	2	0
Inventories	80	0	80	0
Trade receivables and other receivables	33	—	33	–5
Cash and cash equivalents	1	—	1	1
Trade payables and other liabilities	102	301	403	3
Net identifiable assets and liabilities	51	50	101	–4
Consolidated goodwill			95	–1
Purchase consideration paid, cash			196	–5
Less: Cash and cash equivalents in acquired operation			1	1
Net effect on cash and cash equivalents			195	–6

Acquired customer relations totalling SEK 62 M are recognised as intangible assets. These customer relations will be amortised over 10 years.

Acquired distribution rights totalling SEK 22 M are recognised as intangible assets. Distribution rights will be amortised over 10 years.

Lexus dealership operation in Stockholm and Malmö On 1 October 2015, Bilia acquired the Lexus dealer Kaiser Bil AB. The business is run from four facilities in Stockholm and Malmö and accounts for about 42 per cent of Lexus's total sales in Sweden. During 2015, the operation contributed SEK 97 M in turnover and SEK 5 M in operating profit. On a full-year basis, this is equivalent to a turnover of about SEK 385 M and an operating profit of about SEK 20 M. The purchase consideration was SEK 85 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 Lexus brand in Sweden.

The business has about 45 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 acquisition

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

The acquired operation's net assets at the acquisition date	Carrying amounts in Lexus dealership operation	Fair value adjustment	Fair value recognised in Group
Intangible assets	—	42	42
Property, plant and equipment	16	2	18
Inventories	18	0	18
Trade receivables and other receivables	18	—	18
Cash and cash equivalents	21	—	21
Trade payables and other liabilities	63	12	75
Net identifiable assets and liabilities	10	32	42
Consolidated goodwill			43
Purchase consideration paid, cash			85
Less: Cash and cash equivalents in acquired operation			21
Net effect on cash and cash equivalents			64

Acquired customer relations totalling SEK 32 M are recognised as intangible assets. These customer relations will be amortised over 10 years.

Acquired distribution rights totalling SEK 10 M are recognised as intangible assets. Distribution rights will be amortised over 10 years.

BMW and MINI dealership operation in Germany

On 1 October 2015, Bilia acquired the BMW and MINI dealer Dörr & Hess in Germany. The business is run from four facilities, which are concentrated in an area north of Frankfurt. During 2015, the operation contributed SEK 173 M in turnover and SEK 1 M in operating profit. On a full-year basis, this is equivalent to a turnover of about SEK 690 M and an operating profit of about SEK 6 M. The purchase consideration was SEK 32 M. The entire purchase consideration was paid in cash. There is no contingent purchase consideration.

Through the acquisition, Bilia can continue to expand and grow on the European market.

The business has about 120 employees and will continue to be operated from the present-day facilities.

Acquisition-related expenses amounting to SEK 0.8 M consist of fees to consultants for due diligence and have been recognized as "Other operating expenses".

Effects of the acquisition

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

The acquired operation's net assets at the acquisition date	Carrying amounts in BMW and MINI dealership operation	Fair value adjustment	Fair value recognised in Group
Intangible assets	—	12	12
Property, plant and equipment	25	6	31
Inventories	71	0	71
Trade receivables and other receivables	25	—	25
Cash and cash equivalents	7	—	7
Trade payables and other liabilities	116	9	125
Net identifiable assets and liabilities	12	9	21
Consolidated goodwill			11
Purchase consideration paid, cash			32
Less: Cash and cash equivalents in acquired operation			7
Net effect on cash and cash equivalents			25

Acquired customer relations totalling SEK 9 M are recognised as intangible assets. These customer relations will be amortised over 10 years. Acquired distribution rights totalling SEK 3 M are recognised as intangible assets. Distribution rights will be amortised over 10 years.

Note 7 Other operating income

	2016	2015
Gain on disposal of non-current assets	2	0
Gain from sale of operation, other	21	6
Redemption of pension liability	6	197
Other	9	14
Total	38	217

"Other operating income" includes items affecting comparability pertaining to a gain from the sale of Bilia's Ford operations in Gothenburg and Kungsbacka in the amount of SEK 21 M, redemption of the remaining pension liability in Norway in the amount of SEK 6 M and gross accounting of an insurance loss in Sweden in the amount of SEK 4 M. Last year's figures include items affecting comparability pertaining to gain from the sale of Bilia's operation in Stavanger and properties in Norway in the amount of SEK 6 M, redemption of the pension liability in Sweden in the amount of SEK 197 M, and gross accounting of an insurance loss in Sweden in the amount of SEK 7 M.

Note 8 Other operating expenses

	2016	2015
Loss on disposal of non-current assets	–1	0
Structural costs	–11	–12
Acquisition-related costs and value adjustments	–11	–2
Other	–4	–4
Total	–27	–18

"Other operating expenses" includes items affecting comparability pertaining to provision for rent in Sweden and Norway in the amount of SEK 3 M and SEK 5 M, respectively, gross accounting of an insurance loss in the amount of SEK 2 M and closure costs relating to Hyundai in Sweden in the amount of SEK 1 M. Last year's figures include structural costs of SEK 12 M in Sweden stemming from gross accounting of an insurance loss.

Note 9 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 profitsharing 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	2016	2015
Wages, salaries and other remunerations	1,841	1,659
Pension costs 1)	160	153
Social security contributions	458	400
Total	2,459	2,212

1) For further information see Note 23 "Pensions".

Average number of employees	2016	of whom men	2015	of whom men
Parent Company
Sweden	119	48	97	46
Total in Parent Company	119	48	97	46
Subsidiaries
Sweden	2,185	1,951	2,104	1,856
Norway	976	918	929	861
Germany	259	219	137	103
Luxembourg	154	133	—	—
Belgium	111	88	—	—
Denmark, discontinued operation	—	—	107	93
Total in subsidiaries	3,685	3,309	3,277	2,913
Group total	3,804	3,357	3,374	2,959

The Group Management consists of five men and one woman (16.7 per cent women).

The Board of Directors consists of four women and six men (40 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

	2016			2015
Parent Company	Senior officers (19 persons)	Other employees	Total	Senior officers (16 persons)	Other employees	Total
Wages, salaries and other remunerations	18	55	73	16	47	63
(of which bonus etc.)	(5)	(2)	(7)	(4)	(1)	(5)
Social security contributions 1)	15	30	45	18	24	42
(of which pension costs) 1)	(9)	(8)	(17)	(13)	(9)	(22)

"Senior officers" includes Bilia AB's Board of Directors, 14 persons (13), including two deputies.

1) Special payroll tax on company-owned pensions is included in the amount of SEK 4 M (9). Tax expense for the year has simultaneously been reduced by SEK 4 M (9) 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

	2016	2015
	Senior officers (20 persons)	Senior officers (18 persons)
Wages, salaries and other remunerations	22	22
(of which bonus etc.)	(6)	(5)
Pension costs 1)	10	15
Pension obligations	140	144

"Senior officers" includes Bilia AB's Board of Directors, 14 persons (13), including two deputies.

Remuneration 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. The AGM further decides on guidelines for remuneration to senior officers.

The Board of Directors has appointed the Compensation Committee to propose compensation terms for the MD and other senior officers in the Group Management. By "other members of the Group Management" is meant the Deputy MD, the CFO, the Chief Legal Counsel and the Business Development and Purchasing Manager of Bilia AB, and the MD of Bilia Personbil as.

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

Parent Company 2016	Director's fee/Basic salary (excl. social sec. contr.)	Bonus	Pension costs	Other benefits	Total	Pension obligations
Chairman (Mats Qviberg)	320	—	—	—	320	—
Board members (9) 1)	1,920	—	—	—	1,920	—
Audit and Compensation Committee (4)	190	—	—	—	190	—
Employee representatives:
Appointed (2)	76	—	—	—	76	—
Deputies (2)	46	—	—	—	46	—
MD, Per Avander	4,406	2,160	2,869	159	9,594	8,806
Other senior officers (4)	6,217	2,437	4,040	250	12,944	2,376
Former senior officers (MDs)	—	—	—	—	—	156,744
Total	13,175	4,597	6,909	409	25,090	167,926

1) Jack Forsgren, Anna Engebretsen, Ingrid Jonasson Blank, Leila Freivalds, Eva Cederbalk, Jon Risfelt, Mats Holgerson, Jan Pettersson and Gustav Lindner. Four of the members are also members of the Audit and Compensation Committee.

Note 9 cont'd.

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

Parent Company 2015	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 (1) 2)	60	—	—	—	60	—
Deputies (2)	40	—	—	—	40	—
MD, Per Avander	4,225	2,070	2,794	152	9,241	6,882
Other senior officers (3) 3)	5,060	1,477	2,846	270	9,653	19,449
Former senior officers (MDs) 4)	—	—	—	—	—	127,927
Total	11,370	3,547	5,640	422	20,979	154,258

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

2) One employee representative terminated his employment with Bilia in 2015 and has not yet been replaced.

3) One senior officer terminated his employment in 2015 and has not been replaced. Remuneration has been obtained through February 2015 and is included in basic salary, pension costs and other benefits.

4) Jan Pettersson (former MD) was employed with the company up to and including the 2015 AGM and lifted a salary plus benefits (mainly company car) amounting to SEK 319,000 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 200,000 (180,000) was paid to each of the other Board members, except for the Deputy Chairman, who received SEK 320,000 (300,000). Regarding the Deputy Chairman's fee for non-Board duties, see last year footnote 4) under the above table. Altogether, fees totalling SEK 1,920,000 (1,560,000) were paid to the Board members elected by the AGM, in accordance with the decision of the 2016 AGM. The AGM further decided that Audit Committee Chairman Jon Risfelt should receive a fee of SEK 75,000 (50,000) and that other members of the Audit Committee (Gustav Lindner and Mats Holgerson) should receive SEK 35,000 each, for a total of SEK 70,000 (50,000). It was decided that the chairman of the Audit Committee (Jack Forsgren) should receive SEK 25,000 (25,000), while the other members of the Compensation Committee (Gustav Lindner and Jon Risfelt) should receive SEK 10,000 each, for a total of SEK 20,000 (—). Fees totalling SEK 122,000 (100,000) were paid to the employee representatives on the Board. Altogether, the total fees paid to the Board members amounted to SEK 2,552,000 (2,085,000).

Bonus for the MD, the CFO, the Chief Legal Counsel and the Business Development and Purchasing Manager is based on the Group's profit. Bonus for the Deputy MD of Bilia 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 2016 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 Managing Director's occupational 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.

The Deputy Managing Director's occupational 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 65 years. The pension agreement states that the employee's pension premium shall amount to 32 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.

A pension premium of 28 per cent of the pensionable salary is paid for the Group's CFO. 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 retirement. 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.

A pension premium amounting to 6.9 per cent of the pensionable salary is paid for the Managing Director of the Norwegian company Bilia Personbil as.

Severance pay

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

For information on post-employment employee benefits and share-based employee benefits, see Note 23 "Pensions" and Note 32 "Related parties".

Profit-sharing system for employees

A total of SEK 19 M (25), including payroll overhead, was allocated in the annual accounts for 2016 to cover profit shares for employees.

Note 10 Fees and cost reimbursement to auditors

SEK '000	2016	2015
KPMG AB
Auditing assignment	–3,823	–2,403
Auditing activities other than the auditing
assignment	–482	–662
Tax advice	–227	–134
Other assignments	–972	–300
Other
Auditing assignment	–191	–84
Other assignments	–86	—

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 11 Operating expenses classified by nature of expense

	2016	2015
Merchandise	–18,880	–16,181
Other external expenses	–1,122	–888
Personnel costs	–2,554	–2,252
Depreciation/amortisation	–520	–392
Impairment losses	–2	–12
Other operating expenses	–25	–6
Total	–23,103	–19,731

Note 12 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 plus realised and 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 plus realised and 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.

	2016	2015
Interest income 1)	3	3
Other exchange gains	25	1
Financial income	28	4
Interest expenses 1)	–41	–19
Interest costs on defined-benefit pension obligations	0	–6
Loss currency swaps	–5	–3
Other exchange losses	–20	–2
Financial expenses	–66	–30
Share in profits of associated companies	30	30
Net financial items	–8	4

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

	2016	2015
Current tax expense (–)/tax income (+)
Tax expense/income for the year	–137	–112
Adjustment of tax attributable to previous years	0	0
	–137	–112
Deferred tax expense (–)/tax income (+)
Deferred tax pertaining to temporary differences	–33	–74
Deferred tax pertaining to appropriations	–6	–16
	–39	–90
Total tax expense recognised	–176	–202

	2016		2015
	Amount	%	Amount	%
Reconciliation of effective tax
Profit before tax	833		933
Tax according to tax rate applicable to Parent Company	–183	22.0	–205	22.0
Effect of foreign tax rates	–4	0.5	–7	0.8
Tax attributable to previous years	0	0.0	0	0.0
Tax effect of non-deductible expenses	–13	1.5	–5	0.5
Tax effect of non-taxable revenues	15	–1.8	12	–1.3
Tax effect of changed tax rate	1	–0.1	—	—
Utilisation of previous uncapitalised tax-loss carryforwards	8	–1.0	3	–0.3
Standard interest on tax allocation reserve	0	0.0	0	0.0
Effective tax recognised	–176	21.1	–202	21.7

Current tax assets amount to SEK 99 M (48) and represent the recoverable amount of current tax on the net profit for the year.

		2016		2015
Tax attributable to other comprehensive income	Before tax	Tax	After tax	Before tax	Tax	After tax
Revaluation of defined-benefit pension plans	—	—	—	–120	26	–94
Translation differences for the period on translation of foreign
financial statements	55	—	55	–45	—	–45
Translation differences transferred to the net profit for the year	20	—	20	—	—	—
Other comprehensive income/loss	75	—	75	–165	26	–139

Recognised in Statement of Financial Position

	Deferred tax asset			Deferred tax liability		Net
Deferred tax assets and liabilities	2016	2015	2016	2015	2016	2015
Deferred tax assets and liabilities recognised
Deferred tax assets and liabilities are attributable to the following:
Intellectual property	–14	–12	123	38	–137	–50
Land and buildings	2	1	5	3	–3	–2
Plant and equipment	–1	1	—	—	–1	1
Leased vehicles	23	17	—	—	23	17
Financial investments	—	—	0	1	0	–1
Inventories	10	6	—	—	10	6
Trade receivables	0	0	—	—	0	0
Untaxed reserves	—	—	140	133	–140	–133
Pension provisions	49	47	—	—	49	47
Other provisions	10	8	—	—	10	8
Operating liabilities	4	3	–1	0	5	3
Tax-loss carryforwards	1	57	0	0	1	57
Tax assets/liabilities	84	128	267	175	–183	–47

Unreported deferred taxes recoverable

Deferred tax assets pertaining to deductible temporary differences and tax-loss carryforwards that 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 tax-loss carryforwards in Denmark amounted last year to SEK 9 M.

	2016	2015
Temporary differences	—	—
Tax-loss carryforwards	—	9
Total	—	9

Change in deferred tax in temporary differences and tax-loss carryforwards	Balance as per 1 Jan. 2015	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. 2015
Intellectual property	–23	8	—	—	–35	–50
Land and buildings	–1	–1	—	—	—	–2
Plant and equipment	2	–2	—	—	1	1
Leased vehicles	11	2	—	—	4	17
Financial investments	–1	—	—	—	—	–1
Inventories	6	0	—	—	0	6
Trade receivables	1	–1	—	—	0	0
Untaxed reserves	–116	–16	—	—	–1	–133
Pension provisions	99	–78	26	—	—	47
Other provisions	10	–2	—	—	—	8
Operating liabilities	1	1	—	—	1	3
Tax-loss carryforwards	0	—	—	—	57	57
Translation difference for the year	—	–1	—	1	—	—
Tax assets/liabilities	–11	–90	26	1	27	–47

Change in deferred tax in temporary differences and tax-loss carryforwards	Balance as per 1 Jan. 2016	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. 2016
Intellectual property	–50	8	—	—	–95	–137
Land and buildings	–2	0	—	—	–1	–3
Plant and equipment	1	–3	—	—	1	–1
Leased vehicles	17	6	—	—	0	23
Financial investments	–1	1	—	—	0	0
Inventories	6	6	—	—	–2	10
Trade receivables	0	0	—	—	0	0
Untaxed reserves	–133	–6	—	—	–1	–140
Pension provisions	47	2	—	—	—	49
Other provisions	8	2	—	—	—	10
Operating liabilities	3	1	—	—	1	5
Tax-loss carryforwards	57	–59	—	—	3	1
Translation difference for the year	—	3	—	–3	—	—
Tax assets/liabilities	–47	–39	—	–3	–94	–183

Note 14 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 27 "Financial instruments".

		Basic earnings per share		Diluted earn ings per share
	2016	2015	2016	2015
Earnings per share	12.45	12.85	12.45	12.75

The calculation of earnings per share for 2016 is based on the net profit for the year attributable to the Parent Company's ordinary shareholders, amounting to SEK 636 M (647), and on a weighted average number of shares outstanding. During 2016, the weighted average number of shares was 51,130,747 (50,405,986), 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	2016	2015
Net profit for the year attributable to the Parent Company's ordinary shareholders	636	647
Profit attributable to the Parent Company's ordinary shareholders, basic	636	647
Profit attributable to the Parent Company's ordinary shareholders, diluted	2016	2015
Profit attributable to the Parent Company's ordinary shareholders	636	647
Effect of interest on warrants attached to debenture loan	0	0
Profit attributable to the Parent Company's ordinary shareholders, diluted	636	647
Weighted average number of ordinary shares outstanding, diluted, thousands	2016	2015
Weighted average number of ordinary shares outstanding during the year, basic	51,131	50,406
Effect of outstanding warrants attached to debenture loan, weighted average	17	513
Weighted average number of ordinary shares during the year, diluted	51,148	50,919

95 M. During 2016, 264,682 warrants were exercised to subscribe for new shares, resulting in a new issue of SEK 2 M. During 2016, Bilia sold 94,000 warrants to senior officers, which corresponded to a new issue of SEK 1 M. This did not lead to any dilution effect at yearend. During 2016, a private placement of 699,242 shares was carried out, corresponding to SEK 115 M, as partial payment of the purchase consideration for an acquisition.

Note 15 Intangible assets

➤ 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 for 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 through 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 through 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 the case of 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 straight-line 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 of 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 cashgenerating unit, see below.

	Software, inter nally developed		Software, acquired		Customer relations		Distribution rights
	2016	2015	2016	2015	2016	2015	2016	2015
Accumulated costs
At start of year	9	21	132	131	292	217	54	24
Business combinations	—	—	0	—	309	103	—	35
Purchases	13	0	16	23	—	—	—	—
Disposals and retirements	—	–12	–1	–22	—	–12	—	—
Reclassifications	—	—	–38	—	—	—	–23	—
Translation differences for the year	—	—	—	—	17	–16	2	–5
	22	9	109	132	618	292	33	54
Accumulated amortisation and impairment losses
At start of year	–9	–21	–78	–84	–105	–90	–24	–22
Disposals and retirements	—	12	1	22	—	9	—	—
Reclassifications	—	—	38	—	—	0	23	—
Amortisation for the year	–4	0	–15	–16	–51	–27	–3	–4
Translation differences for the year	—	—	—	—	–4	3	–1	2
	–13	–9	–54	–78	–160	–105	–5	–24
Carrying amount at year-end	9	0	55	54	458	187	28	30

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
	2016	2015	2016	2015	2016	2015	2016	2015
Cost of goods sold	–4	0	–15	–16	–51	–27	–3	–4

No impairment losses have been recognised.

		Trademarks		Total intellectual property		Goodwill
	2016	2015	2016	2015	2016	2015
Accumulated costs
At start of year	7	8	494	401	370	261
Business combinations	—	—	309	138	267	149
Purchases	—	—	29	23	—	—
Disposals and retirements	—	—	–1	–46	—	–17
Reclassifications	–7	—	–68	—	—	—
Translation differences for the year	—	–1	19	–22	22	–23
	—	7	782	494	659	370
Accumulated amortisation and impairment losses
At start of year	–7	–7	–223	–224	–2	–2
Disposals and retirements	—	—	1	43	—	—
Reclassifications	7	—	68	—	—	—
Amortisation for the year	—	–1	–73	–48	—	—
Translation differences for the year	—	1	–5	6	—	—
	—	–7	–232	–223	–2	–2
Carrying amount at year-end	—	—	550	271	657	368

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
	2016	2015	2016	2015	2016	2015
Cost of goods sold	—	–1	–73	–48	—	—

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 carrying amounts for goodwill:

	2016	2015
Bilia Personbilar AB	72	72
Bilia Group Stockholm AB	58	58
Bilia Personbil as	109	99
Toyota Bilia AS	92	83
Bilia Group Göteborg AB	20	2
Bilia Center Syd AB	8	0
Bilia Center Stockholm AB	43	43
Bilia Center Bergslagen AB	15	—
Autohaus Bilia GmbH & Co. KG	12	11
Bilia Emond Luxembourg	133	—
S.A. Bilia Emond Belgium	89	—

Bilia Personbilar AB

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 2017 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 7.12 per cent (7.89) before tax.

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

Management judges that plausible changes in margins in car sales, demand for service and repair work and the discount rate 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 for new cars was assumed to be slightly lower than in 2016. 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

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 2017 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 7.21 per cent (7.44) before tax.

The recoverable amount for Bilia Group Stockholm AB exceeds the carrying amount by a substantial 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

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 2017 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 8.02 per cent (8.52) before tax.

The recoverable amount for Bilia Personbil as exceeds the carrying amount by a substantial margin.

Note 15 cont'd.

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

Toyota Bilia AS

Impairment testing for Toyota Bilia 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 2017 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 7.74 per cent (7.87) before tax.

The recoverable amount for Toyota Bilia AS exceeds the carrying amount by a substantial 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

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 2017 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 7.29 per cent (7.94) before tax.

The recoverable amount for Bilia Group Göteborg AB exceeds the carrying amount by a substantial 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 Center Syd AB

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 2017 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 7.11 per cent (7.70) before tax.

The recoverable amount for Bilia Center Syd AB exceeds the carrying amount by a substantial 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 Center Stockholm AB

Impairment testing for Bilia Center 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 2017 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 7.14 per cent (—) before tax.

The recoverable amount for Bilia Center Stockholm AB exceeds the carrying amount by a substantial 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 Center Bergslagen AB

Impairment testing for Bilia Center Bergslagen 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 2017 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 7.05 per cent (—) before tax.

The recoverable amount for Bilia Center Bergslagen AB exceeds the carrying amount by a substantial 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 cont'd.

Autohaus Bilia GmbH & Co. KG

Impairment testing for Autohaus Bilia GmbH & Co. KG 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 2017 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 7.81 per cent (—) before tax.

The recoverable amount for Autohaus Bilia GmbH & Co. KG exceeds the carrying amount by a good margin.

Management judges that minor plausible changes in margins in car sales, demand for service and repair work and the discount rate 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 for new cars was assumed to be on a level with 2016. 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

Bilia Emond Luxembourg

Impairment testing for Bilia Emond Luxembourg 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 2017 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 7.34 per cent (—) before tax.

The recoverable amount for Bilia Emond Luxembourg exceeds the carrying amount by a substantial 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

Demand for new cars has historically followed the business cycle, while demand for service and repair work has been more stable. The market for new cars was assumed to be better than in 2016. 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

S.A. Bilia Emond Belgium

Impairment testing for S.A. Bilia Emond Belgium 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 2017 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 7.84 per cent (—) before tax.

The recoverable amount for S.A. Bilia Emond Belgium exceeds the carrying amount by a substantial 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

Demand for new cars has historically followed the business cycle, while demand for service and repair work has been more stable. The market for new cars was assumed to be lower than in 2016. 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

➤ 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.

Construction in progress

Construction in progress consists primarily of conversion projects in Segeltorp, Kungälv and Nacka in Sweden and Nidda in Germany.

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 non-current 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.

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 15 "Intangible assets".

➤ Important accounting estimates and judgements

See Note 2 "Revenue" regarding Repurchase agreements.

		Land and buildings		Construction in progress
	2016	2015	2016	2015
Accumulated costs
At start of year	233	179	8	7
Business combinations	135	26	—	0
Purchases	84	361	11	2
Disposals and retirements	–25	–325	—	—
Reclassifications	–9	—	—	–1
Translation differences for the year	10	–8	0	—
	428	233	19	8
Accumulated depreciation
At start of year	–100	–75	—	—
Business combinations	–62	–6	—	—
Disposals and retirements	4	1	—	—
Depreciation for the year	–30	–24	—	—
Translation differences for the year	–5	4	—	—
	–193	–100	—	—
Accumulated impairment losses
At start of year	–2	–4	—	—
Disposals and retirements	2	2	—	—
Translation differences for the year	0	0	—	—
	—	–2	—	—
Carrying amount at year-end	235	131	19	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
	2016	2015	2016	2015
Cost of goods sold	–12	–10	—	—
Selling expenses	–17	–13	—	—
Administrative expenses	–1	–1	—	—
Total	–30	–24	—	—

No impairment losses have been recognised.

		Equipment, tools, fixtures and fittings		Leased vehicles
	2016	2015	2016	2015
Accumulated costs
At start of year	983	974	2,458	1,963
Business combinations	90	75	45	301
Purchases	145	76	1,680	1,177
Disposals and retirements	–88	–111	–964	–916
Reclassifications	1	3	—	–2
Translation differences for the year	34	–34	43	–65
	1,165	983	3,262	2,458
Accumulated depreciation
At start of year	–652	–653	–394	–307
Business combinations	–62	–31	–9	—
Disposals and retirements	69	79	227	167
Depreciation for the year	–80	–66	–337	–254
Reclassifications	8	—	—	—
Translation differences for the year	–21	19	–1	0
	–738	–652	–514	–394
Accumulated impairment losses
At start of year	0	0	–16	–19
Disposals and retirements	—	—	12	3
Impairment losses for the year	—	—	—	—
	0	0	–4	–16
Carrying amount at year-end	427	331	2,744	2,048
Finance leases (included above)
Cost	51	42	238	220
Accumulated depreciation	–13	–10	–49	–69
	38	32	189	151
Lease payments during the financial year	–6	–7	–39	–36
Contractual future minimum lease payments:
Within one year	–10	–10	–32	–25
– Present value	–9	–10	–31	–24
Between one and five years	–6	–3	–4	–7
– Present value	–6	–3	–4	–7

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
	2016	2015	2016	2015
Cost of goods sold	–35	–26	–337	–254
Selling expenses	0	–1	—	—
Administrative expenses	–45	–39	—	—
Total	–80	–66	–337	–254

No impairment losses have been recognised.

Note 17 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 share in the associated companies' profit or loss after tax is 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.

	2016	2015
Carrying amount at start of year	377	370
Share in profits of associated companies 1)	4	7
Carrying amount at year-end	381	377

1) Share in profits of associated companies profits after tax. A dividend of SEK 26 M (23) 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
	2016	2015
Operating revenue	4,440	4,057
Earnings	12	1,032
Other comprehensive income	—	—
Total comprehensive income	12	1,032
Current assets	581	550
Lending	16,412	15,150
Non-current assets	16,935	13,993
Current liabilities	2,073	1,763
Borrowing	27,579	23,981
Non-current liabilities	626	546
Net assets	3,650	3,403
Dividend to AB Volverkinvest	47	257
Total net assets before dividend 1)	3,697	3,660

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

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 2015 to 30 September 2016 (1 October 2014 to 30 September 2015). 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.

Note 18 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 27 "Financial instruments".

	2016	2015
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	6	6
Deposits, cash and cash equivalents 1)	—	0
Total	7	7

1) The deposits are not available and are therefore classified as availablefor-sale financial assets.

Note 19 Long-term receivables and other receivables

	2016	2015
Long-term receivables classified as non-current assets
Interest-bearing
Hire-purchase receivables	1	0
Total	1	0
Other receivables classified as current assets
Non-interest-bearing
Work in progress	19	20
Value added tax	29	31
Bonus/support	34	25
Construction projects	42	—
Derivatives	1	1
Other	107	71
Total	232	148
Interest-bearing
Hire-purchase receivables	0	0
Total	232	148

Impairment losses of SEK 5 M (1) were recognised on receivables during the year.

Note 20 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 cases where 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 realizable value. Net realizable value 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 realizable value by SEK 13 M (15).

The cost of goods sold includes write-down of used cars by SEK 14 M (5).

The item "Merchandise" consists of:

	2016	2015
New cars	1,670	1,218
Used cars	971	771
Demonstration cars	606	390
Spare parts	183	165
Other	21	20
Total	3,451	2,564

Note 21 Prepaid expenses and accrued income

	2016	2015
Bonus	85	79
Prepaid expenses	108	101
Accrued income	69	52
Total	262	232

Note 22 Interest-bearing liabilities

➤ Accounting principle

Bilia applies IAS 17 Leases in accounting for finance lease liabilities. Bilia applies IAS 39 Financial Instruments: Recognition and Measurement in accounting for financial instruments. For an explanation of the accounting principle, see Note 27 "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 28 "Financial risks and risk management".

	2016	2015
Non-current liabilities
Bank loans	35	—
Bond issue 1)	751	—
Personnel fund	5	5
Finance lease liabilities	77	70
Other loans	57	—
	925	75
Current liabilities
Debenture loan	—	28
Overdraft facility	—	6
Current portion of bank loans	181	568
Current portion of finance lease liabilities	153	114
	334	716
Total	1,259	791

Terms and repayment periods

Collateral for bank loans has been pledged in the form of floating charges in the amount of SEK 597 M (597) and in the form of pledged assets in the amount of SEK 376 M (363).

			2016				2015
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
Overdraft facility						1.04	2016	6	6
BMW Financial Services	EUR	2.99	2017	28	28
ING Bank	EUR	4.18	2017	27	27
Renault Finance Nordic	SEK	2.58	2017	10	10	3.27	2016	24	24
BMW Financial Services	EUR	2.99	2021	35	35
BMW Bank	EUR	2.01	2017	160	160	2.61	2016	97	97
DNB	SEK					1.30	2016	150	150
DNB	SEK					1.50	2016	51	51
Nordea	SEK					0.94	2016	225	225
BMW Bank	EUR					2.99	2016	13	13
VR Bank	EUR	4.90	2019	1	1	3.00	2016	4	4
Volksbank	EUR					7.65	2016	4	4
Belfius Bank	EUR	1.58	2017	3	3
Münchner Bank	EUR	5.50	2021	9	9
Bond issue 1)	SEK	1.76	2021	751	751
Personnel fund	SEK	0.33		5	5	1.11		5	5
Finance lease liabilities	SEK	2.10		230	230	1.90		184	184
Total					1,259				791

1) In the Consolidated Statement of Financial Position, the bond issue amounts to SEK 751 M, calculated according to the effective interest method. In calculating key figures, SEK 750 M is used without the net effect of the effective interest rate, which amounts to SEK 1 M.

Finance lease liabilities		2016
	Minimum lease payment	Interest	Principal	Minimum lease payment	Interest	Principal
Within one year	156	3	153	116	2	114
Between one and five years	79	2	77	71	1	70
Total	235	5	230	187	3	184

➤ 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 are secured by insurance in Alecta.

According to a statement by the Swedish Financial Reporting Board, UFR 10, insurance via Alecta is 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.

Norway

The remaining defined-benefit pension plan in Norway was redeemed in 2016. The employees are now covered by defined-contribution pension plans.

Germany

In Germany, all employees are covered solely by statutory pensions.

Luxembourg and Belgium

The employees are not covered by any pension plan.

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. This 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. 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.

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.

	2016	2015
Defined-benefit pension plans
Present value of wholly or partially funded obligations	—	119
Present value of unfunded obligations	—	0
Total present value of defined-benefit obligations	—	119
Fair value of plan assets	—	–113
Net of present value of obligations and fair value of plan assets	—	6
Net amount recognised regarding defined-benefit plans in Statement of Financial Position	—	6
The net amount for defined-benefit plans is recognised in the following items
in the Statement of Financial Position:
Provisions for pensions	—	6
Net amount in Statement of Financial Position	—	6

Defined-benefit plans

The Group did not have any defined-benefit plan at the end of 2016. The Norwegian plan was redeemed in 2016 and the Swedish plan in 2015 and they were replaced by defined-contribution plans.

Changes in the present value of the obligation for defined-benefit plans	2016	2015
Obligation for defined-benefit plans at 1 January	119	792
Benefits disbursed	—	–11
Service cost, current period	3	9
Interest expense	—	9
Remeasurements:
– Actuarial gains and losses due to changed financial assumptions	—	96
– Experience-based adjustments	—	–2
Redemption of pension liability Norway (last year Sweden)	–130	–762
Exchange rate differences	8	–12
Obligation for defined-benefit plans at 31 December	—	119

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

Active members	—	28.4
Paid-up policyholders	—	—
Retirees	—	71.6

Change in fair value of plan assets	2016	2015
Fair value of plan assets at 1 January	113	125
Redemption of pension liability Norway	–121	—
Interest income recognised in profit or loss	—	2
Benefits disbursed	—	–5
Service cost, current period	—	4
Actuarial gains and losses	—	–1
Exchange rate differences	8	–12
Fair value of plan assets at 31 December	—	113

The plan assets consist of the following, %	2016	2015
Shares	—	8.6
Properties	—	12.1
Funds	—	22.1
Hedge fund	—	2.2
Short-term bonds	—	7.5
Long-term bonds	—	45.2
Short-term investments	—	2.3
Total	—	100.0

Breakdown of plan assets 2015, %

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.

	2016	2015
Cost recognised in profit or loss for the year
Service cost	3	5
Net interest income (–)/interest expense (+)	0	6
Net cost in profit or loss for the year	3	11
The cost is recognised on the following lines included in the profit or loss for the year:
Cost of goods sold	1	–1
Selling expenses	1	5
Administrative expenses	1	1
Financial income/expense	0	6
Total	3	11
Actual return on plan assets, %	—	2.50
	2016	2015
Cost recognised in other comprehensive income/loss
Remeasurements:
Actuarial gains (–) and losses (+) due to changed financial assumptions	—	121
Experience-based adjustments	—	–2
Difference between actual return and return according to the discount rate on the plan assets	—	1
Net amount recognised in other comprehensive income/loss	—	120
Pension obligation Defined-benefit plans	—	6
Other pensions	3	2

Payroll tax — — Total 3 8

Assumptions for defined-benefit obligations

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

	2016	2015
Norway:
Discount rate	—	2.50
Expected return on plan assets	—	2.50
Future salary increases	—	2.50
Future pension increases	—	0.00

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):

	2016	2015
Norway:
Life expectancy assumptions at 60 years – for retired members:
Men	—	21
Women	—	24
Life expectancy assumptions at 60 years – for members who are 40 years of age:
Men	—	23
Women	—	26

Financing

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 10, this is a multi-employer defined-benefit plan. For financial year 2016, 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 defined-benefit 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 68 M (52). Bilia's share of the total savings premiums for ITP 2 in Alecta amounts to 0.21442 per cent (3.02515), and Bilia's share of the total number of active members in the plan amounts to 0.14541 per cent (0.13935).

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 agreedon price for new policies and benefit increases. When the funding ratio is high, one possible measure is to reduce premiums. At year-end 2016, Alecta's surplus in the form of the collective funding ratio1) amounted to 149 per cent (153).

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.

	2016	2015
Costs for the year for defined-contribution
plans 2)	158	135

2) Of which SEK 68 M (52) pertaining to ITP plan funded in Alecta.

➤ Accounting principle

Bilia applies IAS 37 Provisions, Contingent Liabilities and Contingent Assets in accounting for provisions.

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.

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 10 M (6).

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.

Put option

Pertains to the acquisition of Philippe Emond SA, Belgium, where Bilia has a liability calculated on the future exercise price in the issued put option held by non-controlling interests. The put option is recognised as a financial liability (according to IAS 32 and IAS 39), but is classified as a provision in the Consolidated Statement of Financial Position. The carrying amount is deemed to reflect fair value.

	Non-current		Current
	2016	2015	2016	2015
Warranty obligations	41	38	2	2
Restoration costs	10	6	—	—
Put option	121	—	—	—
Total	172	44	2	2

	pay	Severance		Claims	obligations	Warranty	Restoration costs		contracts	Onerous	Put option		Other		Total
		2016 2015		2016 2015		2016 2015		2016 2015		2016 2015		2016 2015		2016 2015		2016 2015
Carrying amount at start of year	—	1	—	3	40	37	6	3	—	63	—	—	—	1	46	108
Provisions made during the year	—	—	—	—	45	34	4	3	—	—	—	—	—	—	49	37
Business combinations	—	—	—	—	11	4	—	—	—	—	121	—	—	—	132	4
Amounts utilised during the year	—	–1	—	—	–15	—	—	—	—	—	—	—	—	–1	–15	–2
Unutilised amounts reversed during the year	—	0	—	–3	–42	–32	—	0	—	–62	—	—	—	—	–42	–97
Translation differences	—	—	—	0	4	–3	—	0	—	–1	—	—	—	—	4	–4
Carrying amount at year-end	—	—	—	—	43	40	10	6	—	—	121	—	—	—	174	46

Payments	2016	2015
Amount by which the provision is expected to be paid after more than twelve months	172	44

➤ 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 27 "Financial instruments".

➤ Important accounting estimates and judgements

See Note 2 "Revenue" regarding repurchase agreements and service subscriptions.

	2016	2015
Other non-current liabilities
Liability pertaining to cars sold with
repurchase agreements	1,635	1,211
Total	1,635	1,211
Other current liabilities
Liability pertaining to cars sold with
repurchase agreements	882	675
Value-added tax	118	55
Advance payments from customers	53	49
Tax deducted at source	35	39
Employer contributions, etc.	64	43
Derivatives	0	0
Demo cars	135	101
BMW Financial Services	109	—
Other	52	33
Total	1,448	995

Note 26 Accrued expenses and deferred income

➤ Important accounting estimates and judgements

See Note 2 "Revenue" regarding Repurchase agreements and Service subscriptions.

	2016	2015
Accrued wages and salaries	292	262
Accrued social security contributions	185	162
Accrued interest	8	3
Future unrealised revenue pertaining to repurchase agreements	108	81
Accrual of service and security agreements	177	132
Other accrued expenses and deferred
income	164	119
Total	934	759

Note 27 Financial instruments

➤ Accounting principle

For the accounting principle regarding financial instruments, 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.

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 receivables 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 liabilities are recognised when an invoice has been received.

A financial asset is derecognised in the Statement of Financial Position when the rights 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 a negligible risk of 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, hire-purchase 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.

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.

In March, Bilia issued unsecured bonds worth SEK 500 M within a total framework of SEK 1,000 M. The bond issue matures in five years (March 2021) and carries a floating interest rate of STIBOR (3 months) plus 220 basis points.

In December, Bilia issued additional unsecured bonds worth SEK 250 M within a total framework of SEK 1,000 M. The bond issue carries a variable interest rate of STIBOR (3 months) plus 150 basis points and matures in March 2021.

After the balance sheet date, Bilia issued additional unsecured bonds worth SEK 250 M within a total framework of SEK 1,000 M. The bond issue carries a variable interest rate of STIBOR (3 months) plus 140 basis points and matures in March 2021. The total new outstanding amount after the bond issue is SEK 1,000 M. All bond issues are listed on NASDAQ Stockholm.

DNB Markets and Nordea Bank AB (publ) have been financial advisers in connection with the bond issue, while Advokatfirman Vinge has provided legal advice.

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:

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: based on inputs that are not observable on the market.

2016	Level 2
Financial assets measured at fair value through profit or loss/Currency swaps	1
Financial liabilities measured at fair value through profit or loss/Currency swaps	0
2015	Level 2
Financial assets measured at fair value through profit or loss/Currency swaps	1
Financial liabilities measured at fair value through profit or loss/Currency swaps

Note 27 cont'd.

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

		2016		2015
	Note	Carrying amount		Fair value Carrying amount	Fair value
Financial assets measured at fair value through profit or loss
Other receivables/currency swaps	19	1	1	1	1
Loan receivables and other receivables
Long-term receivables, interest-bearing	19	1	1	0	0
Trade receivables	28	879	879	669	669
Other receivables	19	203	203	117	117
Cash and cash equivalents	33	104	104	99	99
Available-for-sale financial assets
Shares and interests	18	1	—	1	—
Housing cooperative units	18	6	6	6	6
Deposits, regarding cash and cash equivalents	18	—	—	0	0
Financial liabilities measured at fair value through profit or loss
Other liabilities/currency swaps	25	0	0	0	0
Provisions	24	121	121	—	—
Other financial liabilities
Debenture loan	22	—	—	28	24
Bond issue	22	751	751	—	—
Non-current interest-bearing liabilities	22	97	97	5	5
Current interest-bearing liabilities	22	181	181	574	574
Finance lease liabilities	22	230	230	184	184
Provision/put option	24	121	121	—	—
Trade payables		1,722	1,722	1,259	1,259
Accrued interest	26	8	8	3	3

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 28 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.

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.

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.

The financing operation in Bilia encompasses the following:

financing of the Group with loans and other operating liabilities
analysis, measurement and management of currency risks, interest rate risks and operating risks 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 Treasurer 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 cost-effective 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 1 M (0).

The average credit period for hire-purchase receivables is just under 3 years. A market rate of interest is charged on hirepurchase receivables. With regard to hire-purchase receivables, Bilia has collateral in the asset in question until full payment has been received.

The Group's current financial assets consist for the most part of SEK 879 M (669) in trade receivables and SEK 0 M (0) in hire-purchase receivables that are expected to be repaid during the coming financial year, plus SEK 16 M (57) in short-term investments. The average credit period for trade receivables is 21 days (22).

Capital management

The Group's equity, which is defined as total reported equity, amounted at year-end to SEK 2,511 M (2,056). Return on equity amounted to 27.9 per cent (33.2).

The 2016 Annual General Meeting gave the Board of Directors a mandate to resolve to acquire 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 2016, Bilia's lenders require that the ratio of EBITDAJ to net interest should be at least 3.5 times, the ratio of net debt to EBITDAJ should not exceed 3.5 times, and bank loans in relation to the sum of fixtures and fittings, interests in associated companies, inventories and net trade receivables should not exceed 50 per cent. In 2016 the ratio of EBITDAJ to net interest was 96.27 times, the ratio of interest-bearing net debt to EBITDAJ was 0.73 times, and the ratio of bank loans to the sum of fixtures and fittings, interests in associated companies, inventories and net trade receivables was –1 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. At least 50 per cent of the lines of credit shall have a remaining maturity of at least one year. Contracts have been signed for lines of credit totalling SEK 1,500 M (1,500). The lines of credit were extended in August 2015 up until July 2020, and SEK 1,500 M (1,068) was unutilised at year-end. Bilia's financial liabilities amounted to SEK 2,980 M (2,050) at year-end, and the maturity structure of the debt is shown in the table "Maturity structure– Financial liabilities". Note 28 cont'd.

		Nominal
Credit facilities and loans	Currency	amount	Total amount	Utilised	Available
Maturity	SEK	1,500	1,500	–27	1,527
Total			1,500	–27	1,527
Available cash and cash equivalents					104
Liquidity reserve					1,631

Maturity structure – Financial liabilities

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

					2016							2015
Lender	Cur 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	28	28	—	—	—	—
Overdraft facility		—	—	—	—	—	—	—	6	6	6	—	—	—	—
BMW Financial Services EUR		28	28	—	—	6	22	—	—	—	—	—	—	—	—
ING Bank	EUR	27	27	—	—	2	9	16	—	—	—	—	—	—	—
Renault Finance Nordic SEK		10	10	—	—	10	—	—	24	24	—	—	24	—	—
BMW Financial Services EUR		35	35	—	—	—	—	35	—	—	—	—	—	—	—
BMW Bank	EUR	—	—	—	—	—	—	—	97	97	—	—	97	—	—
DNB	SEK	—	—	—	—	—	—	—	150	150	150	—	—	—	—
DNB	SEK	—	—	—	—	—	—	—	51	51	51	—	—	—	—
Nordea	SEK	—	—	—	—	—	—	—	225	225	225	—	—	—	—
BMW Bank	EUR	160	160	4	—	156	—	—	13	13	13	—	—	—	—
VR Bank	EUR	1	1	—	—	—	1	—	4	4	4	—	—	—	—
Volksbank	EUR	—	—	—	—	—	—	—	4	4	4	—	—	—	—
Belfius Bank	EUR	3	3	—	1	2	—	—	—	—	—	—	—	—	—
Münchner Bank	EUR	9	9	—	—	—	—	9	—	—	—	—	—	—	—
Personnel fund	SEK	5	5	—	—	0	0	5	5	5	—	—	0	0	5
Bond issue	SEK	750	750	—	—	—	750	—	—	—	—	—	—	—	—
Derivatives		0	0	0	—	—	—	—	0	0	0	—	—	—	—
Trade payables			1,722 1,722 1,722		—	—	—	—		1,259 1,259 1,259		—	—	—	—
Finance lease liabilities	SEK	230	235	1	1	154	79	—	184	187	1	5	110	71	—
Total			2,980 2,985 1,727		2	330	861	65		2,050 2,053 1,741		5	231	71	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 market risks that affect the Group the most 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 portfo-

lio 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	2016	2015
Variable interest rate
Financial assets	105	99
Financial liabilities	1,258	763
Last year the debenture loan was not included in the above
financial liabilities. The principal of the loan amounted to

SEK 28 M and the interest rate was fixed at 7 per cent.

Sensitivity analysis

As of 31 December 2016, a general increase in the interest rate by 1 percentage point is expected to reduce the Group's profit before tax by about SEK 12 M (reduction: 3).

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 deemed 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, EUR and DKK against SEK, broken down by currency and year.

		2016
Currency swaps	Currency	SEK	Currency	SEK
NOK	—	—	–110	–106
DKK	—	—	–55	–68
EUR	–6	–59	—	—

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		2016
	Amount	%	Amount	%
NOK	510	61	452	108
DKK	—	—	–64	–15
EUR	329	39	31	7

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

Sensitivity analysis

If the Norwegian krone and the euro were strengthened by 10 per cent against the Swedish krona, the pre-tax profit on translation of foreign subsidiaries would be improved by SEK 20 M (16) against the Norwegian krone and SEK 3 M (1) against the euro.

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	250
DNB	500

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 liability 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 3 M (5). Impairment loss for the year amounts to SEK 5 M (6).

		2016		2015
Age analysis, trade receivables	Gross	Impairment	Gross	Impairment
Trade receivables not due	681	—	573	—
Overdue trade receivables 0–30 days	176	–1	87	0
Overdue trade receivables 31–90 days	22	–3	10	–3
Overdue trade receivables 91–180 days	6	–3	2	–1
Overdue trade receivables 181–360 days	3	–2	2	–1
Overdue trade receivables > 360 days	0	0	1	–1
Total	888	–9	675	–6

		2015
Age analysis, hire-purchase receivables	Gross	Impairment	Gross	Impairment
Hire-purchase receivables not due	1	—	0	—
Overdue hire-purchase receivables 0–30 days	0	—	0	—
Overdue hire-purchase receivables 31–90 days	0	—	0	—
Overdue hire-purchase receivables 91–180 days	0	—	0	—
Overdue hire-purchase receivables 181–360 days	0	—	0	—
Overdue hire-purchase receivables > 360 days	0	—	0	—
Total	1	—	0	—

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

Recourse liabilities

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-revenue commission attributable to financings with recourse liabilities not due amounts to SEK 182 M (158). Credit losses for financings with recourse liabilities have historically been on a very low level.

			2015
Age analysis, recourse liabilities	Gross	Impairment	Gross	Impairment
Recourse liabilities not due	5,822	—	5,101	—
Overdue recourse liabilities 0–30 days	11	—	9	—
Overdue recourse liabilities 31–90 days	0	—	1	—
Overdue recourse liabilities 91–180 days	0	—	0	—
Overdue recourse liabilities 181–360 days	0	—	0	—
Overdue recourse liabilities > 360 days	1	—	0	—
Total	5,834	—	5,111	—

Concentration of credit risk

The three biggest customers account for 18.8 per cent (25.3) of the trade receivables, 100.0 per cent (100.0) of the hire-purchase receivables and 0.2 per cent (0.4) of the recourse liabilities. The credit risk among these customers is judged to be low.

		2016		2015
Allowance account	Trade receivables	Hire-purchase receivables	Recourse liabilities	Trade receivables	Hire-purchase receivables	Recourse liabilities
Opening balance	–6	—	—	–17	—	—
Reversal of previous impairment losses	2	—	—	17	—	—
Impairment losses for the year	–5	—	—	–6	—	—
Translation difference	0	—	—	0	—	—
Closing balance	–9	—	—	–6	—	—

Note 29 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 2016, the property leases covered about 451,000 square metres (411,000).

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.

Non-cancellable lease payments amount to:

	2016	2015
Minimum lease payments for the year	–448	–410
Total lease costs for the year	–448	–410
Future lease payments
Within one year	–444	–400
Between one and five years	–1,524	–1,443
Later than five years	–1,134	–1,246
Total	–3,102	–3,089

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 16 "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:

2016	2015
464	400
464	400

202	199
521	399
6	5
729	603

A cost of SEK 14 M (12) is recognised for repairs and maintenance of leased cars and premises.

Note 30 Capital commitments

During 2016 the Group concluded agreements to acquire SEK 84 M (26) worth of intangible non-current assets and property, plant and equipment. These commitments are expected to be settled during the following financial year.

Note 31 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	2016	2015
For own liabilities and provisions
Floating charges	597	597
Leased vehicles and hire-purchase receivables	208	184
Real property	29	18
Pledged assets
– Endowment policies	176	163
– Inventories	200	200
Total pledged assets	1,210	1,162

Contingent liabilities	2016	2015
Recourse liabilities	5,834	5,111
Total contingent liabilities	5,834	5,111

Recourse liabilities

Note 32 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 remunerations to key

management personnel are presented in Note 9 "Employees, personnel costs and remunerations for senior officers".

Other transactions are reported in the table 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 (24) of the votes in the company.

Related party transactions

		Sales of goods and	Purchases of goods and	Commissions/	Claim on related party	Debt to related party
Related party relationship	Year	services to related party	services from related party	interest/ dividend	at 31 December	at 31 December
Associated companies	2016	2,237	233	145	81	24
Associated companies	2015	1,644	56	127	70	0
Contingent liabilities for associated companies	2016	5,834
Contingent liabilities for associated companies	2015	5,111
Key persons	2016	4
Key persons	2015	0

Transactions with key management personnel are priced on market terms.

Note 33 Cash and cash equivalents and specifications for cash flows

➤ Accounting principle

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

	2016	2015
The following items are included in cash and cash equivalents
Cash on hand and demand deposits	84	41
Cash on hand	4	1
Short-term investments, equivalent
to cash	16	57
Total according to Statement of Cash Flows	104	99

No short-term investments were made in 2016. The effective interest rate for short-term investments in 2015 was 0.34 per cent. The short-term investments had an average maturity of 1 day.

Interest paid and dividends received	2016	2015
Dividends received	26	23
Interest received	3	3
Interest paid	–41	–25
Total	–12	1

Depreciation/amortisation and

Total	–522	–404
Impairment losses	–2	–12
Depreciation/amortisation	–520	–392
impairment losses	2016	2015

Other items not affecting cash	2016	2015
Capital gain on sales of property, plant and equipment	–21	–6
Share in profit/loss of associated companies	–4	–7
Other provisions	–12	1
Profit share to employees	19	25
Redemption of PRI liability	—	–197
Disposal of Danish operation	21	141
Other	–1	–15
Total	2	–58

Acquisition of subsidiaries and other business entities

Acquired assets and liabilities	2016	2015
Intangible assets	568	287
Property, plant and equipment	137	353
Long-term investments	56	0
Deferred tax asset	3	2
Inventories	471	169
Operating receivables	270	75
Cash and cash equivalents	78	29
Total assets	1,583	915
Deferred tax liability	97	30
Operating liabilities	1,158	572
Total provisions and liabilities	1,255	602
Acquired net assets	328	313
Purchase consideration:	750	313
Less: Payment in the form of newly issued Bilia shares	116	—
Less: Payment in the form of newly issued Bilia Holding shares	183	—
Less: Minority share, 33.8 %	123	—
Purchase consideration, cash	328	313
Less: Cash and cash equivalents in disposed business	78	29
Impact on cash and cash equivalents	–250	–284

Disposal of subsidiaries and other business entities

Disposal of assets and liabilities	2016	2015
Intangible assets	—	21
Property, plant and equipment	9	6
Inventories	23	26
Operating receivables	26	—
Cash and cash equivalents	—	—
Total assets	58	53
Capital gain	–21	–4
Operating liabilities	32	2
Total provisions and liabilities	11	–2
Sales price:	47	55
Purchase consideration received	47	55
Less: Cash and cash equivalents in disposed business	—	—
Impact on cash and cash equivalents	47	55

Disposal of discontinued operation

Disposal of assets and liabilities	2016	2015
Property, plant and equipment	—	78
Long-term investments	—	4
Inventories	—	194
Operating receivables	—	60
Cash and cash equivalents	—	—
Total assets	—	336
Capital gain	—	142
Loans	—	1
Operating liabilities	—	188
Total provisions and liabilities	—	331
Sales price:	—	5
Purchase consideration received	—	5
Less: Cash and cash equivalents in disposed business	—	—
Impact on cash and cash equivalents	—	5
Unutilised credit facilities	2016	2015
Unutilised credit facilities amount to	1,713	1,120

Note 34 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 17 March 2017.

On 3 January 2017, Bilia acquired the Toyota dealer MW Gruppen Stockholm AB plus three property companies. The business is run from five facilities, three of which are situated just south of Stockholm.

Effects of the acquisition

The acquisition has the following effect on the Group's assets and liabilities. The following figures for acquired net assets and purchase consideration are preliminary.

The acquired operation's preliminary net assets at the acquisition date	Carrying amounts in MW Gruppen Stockholm	Fair value adjustment	Fair value recognised in Group
Intangible assets	0	88	88
Property, plant and equipment	164	93	257
Long-term investments	8	—	8
Deferred tax asset	1	—	1
Inventories	77	1	78
Trade receivables and other receivables	42	—	42
Cash and cash equivalents	17	—	17
Interest-bearing liabilities	45	—	45
Trade payables and other liabilities	174	—	174
Deferred tax liability	6	40	46
Net identifiable assets and liabilities	84	142	226
Consolidated goodwill			61
Purchase consideration paid, cash			287
Less: Cash and cash equivalents in acquired operation			17
Net effect on cash and cash equivalents			270

In January, Bilia issued unsecured bonds worth SEK 250 M. The bond issue carries a floating interest rate of STIBOR (3 months)

plus 140 basis points and has a final maturity date in March 2021.

Note 35 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 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 2016 comprise the Parent Company and its subsidiaries, together called the Group. The Group also includes holding in associated company.

Income Statement for Parent Company

SEK M	Note	2016	2015
Net turnover	2	385	439
Administrative expenses	3, 4	–445	–508
Operating loss	21	–60	–69
Income/loss from financial items
Income/loss from interests in Group companies	5	41	–23
Other interest income and similar line items	5	58	24
Interest expenses and similar line items	5	–43	–13
Loss after financial items		–4	—81
Appropriations	6	683	345
Profit before tax		679	264
Tax	7	–133	0
Net profit for the year 1)		546	264

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

Balance Sheet for Parent Company

SEK M	Note	31/12/16	31/12/15
Assets	19, 22
Non-current assets
Intangible assets	8
Intellectual property		2	54
		2	54
Property, plant and equipment	9
Buildings		43	33
Construction in progress		15	8
Equipment, tools, fixtures and fittings		2	14
		60	55
Long-term investments
Shares and interests in Group companies	10	1,122	793
Other securities held as non-current assets	11	0	0
Other non-current receivables	12	—	—
Deferred tax asset	7	46	99
		1,168	892
Total non-current assets		1,230	1,001
Current assets
Current receivables
Trade receivables		6	0
Receivables from Group companies	24	1,486	1,179
Other receivables		113	25
Prepaid expenses and accrued income		77	92
		1,682	1,296
Cash on hand and demand deposits		27	1
Total current assets		1,709	1,297
Total assets		2,939	2,298

Balance Sheet for Parent Company

SEK M	Note	31/12/16	31/12/15
Equity and liabilities	19, 22
Equity	13
Restricted equity
Share capital (51,399,976 shares)		257	252
Statutory reserve		47	47
		304	299
Non-restricted equity
Share premium reserve		167	48
Retained earnings		385	501
Net profit for the year		546	264
		1,098	813
Total equity		1,402	1,112
Untaxed reserves	14	495	468
Provisions
Provisions for pensions and similar obligations	16	—	—
Deferred tax liability	7	3	3
		3	3
Non-current liabilities
Bond issue	17, 20	751	—
Other liabilities	17, 20	5	5
		756	5
Current liabilities
Debenture loan	20	—	28
Liabilities to credit institutes	15, 20	—	432
Trade payables	20	76	91
Current tax liability		86	19
Liabilities to Group companies	24	21	52
Other liabilities	17	5	4
Accrued expenses and deferred income	18	95	84
		283	710
Total equity and liabilities		2,939	2,298

Pledged assets and contingent liabilities for the Parent Company, see Note 23.

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. 2015	25,174,033	252	47	47	603	200	1,149
Reposting of last year's profit	—	—	—	—	200	–200	—
Dividend (SEK 6.00 per share)	—	—	—	—	–302	—	–302
Net profit for the year	—	—	—	—	—	264	264
New share issue	87,986	0	—	1	—	—	1
Stock split	25,174,033	—	—	—	—	—	—
Closing equity 31 Dec. 2015	50,436,052	252	47	48	501	264	1,112
Opening equity 1 Jan. 2016	50,436,052	252	47	48	501	264	1,112
Reposting of last year's profit	—	—	—	—	264	–264	—
Dividend (SEK 7.50 per share)	—	—	—	—	–380	—	–380
Net profit for the year	—	—	—	—	—	546	546
Exercised warrants	264,682	1	—	1	—	—	2
Sold warrants	—	—	—	1	—	—	1
New share issue	699,242	4	—	111	—	—	115
Discount/issue at discounted price	—	—	—	6	—	—	6
Closing equity 31 Dec. 2016	51,399,976	257	47	167	385	546	1,402

Cash Flow Statement for Parent Company

SEK M	Note	2016	2015
Operating activities	25
Loss after financial items		–4	–81
Other items not affecting cash		196	23
Tax paid		–85	–61
Cash flow from operating activities before change in working capital		107	–119
Change in operating receivables		–314	–279
Change in operating liabilities		–26	–573
Cash flow from operating activities		–233	–971
Investing activities
Acquisition of non-current assets (intangible and tangible)		34	–44
Operating cash flow		–199	–1,015
Shareholders' contributions paid		0	0
Investments in financial assets		–80	–19
Disposal of financial assets		0	20
Acquisition of subsidiaries, net		–433	–117
Cash flow after net investments		–712	–1,131
Financing activities
Borrowings		1,350	1,000
Repayment of loans		–750	–900
Change in overdraft facility		–194	332
Exercised/sold warrants		3	1
Dividend paid		–380	–302
Dividends received and Group contributions		709	450
Cash flow from financing activities		738	581
Change in cash and cash equivalents		26	–550
Cash and cash equivalents at start of year		1	551
Cash and cash equivalents at year-end		27	1

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 reporting 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.

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 revenue

	2016	2015
Net turnover/function
Rental income	249	236
IT and training services	41	124
Other	95	79
Total	385	439

Note 3 Employees and personnel costs

Information regarding the Parent Company's employees and personnel costs is furnished in the Group's Note 9 "Employees, personnel costs and remunerations for senior officers."

Note 4 Fees and cost reimbursement to auditors

SEK '000	2016	2015
KPMG AB
Auditing assignment	–200	–195
Auditing activities other than the auditing assignment	–96	–20
Tax advice	—	–31
Other assignments	–695	–71

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 5 Net financial items

	2016	2015
Income/loss from interests in Group companies
Gain from sale of shares in subsidiaries	1	—
Dividend	226	—
Impairment losses	–186	–23
Total	41	–23
Other interest income and similar line items
Interest income, Group companies	33	22
Interest income, other	—	1
Other exchange gains	25	1
Total	58	24
Interest expenses and similar line items
Interest expenses, Group companies	—	0
Interest expenses, other	–19	–8
Loss currency swaps	–5	–3
Other exchange losses	–19	–2
Interest costs on defined-benefit pension obligations	—	0
Total	–43	–13

Note 6 Appropriations

	2016	2015
Difference between recognised depre ciation/amortisation and depreciation/ amortisation according to plan:
Intellectual property	0	0
Building equipment	0	0
Equipment, tools, fixtures and fittings	7	–7
Tax allocation reserves:
Reversal of tax allocation reserve, allocated financial year 2009	—	23
Reversal of tax allocation reserve, allocated financial year 2010	87	—
Provision to tax allocation reserve, allocated financial year 2015	—	–98
Provision to tax allocation reserve, allocated financial year 2016	–120	—
Group contributions:
Group contributions received	719	442
Group contributions paid	–10	–15
Total	683	345

Recognised in the Income Statement 2016 2015 Current tax expense (–)/tax income (+) Tax expense/income for the year –80 –65 –80 –65 Deferred tax expense (–)/tax income (+) Deferred tax pertaining to temporary differences 4 8 Deferred tax income in tax value in loss carryforwards capitalised during the year — 57 Deferred tax expense resulting from utilisation of previously capitalised tax value in loss carryforwards –57 —

	–53	65
Total tax expense recognised	–133	0

	2016		2015
	Amount	%	Amount	%
Reconciliation of effective tax
Profit before tax	679		264
Tax according to tax rate applicable to Parent Company	–150	22.0	–58	22.0
Tax attributable to previous years	0	0.0	0	0.0
Tax effect attributable to impairment of Group companies	–41	6.0	–5	1.9
Tax effect of non-deductible expenses	–3	0.4	5	–1.9
Tax effect of non-taxable revenues	55	–8.1	1	–0.4
Capitalisation of previously uncapitalised tax-loss carryforwards	6	–0.8	57	–21.6
Standard interest on tax allocation reserve	0	0.0	0	0.0
Effective tax recognised	–133	19.5	0	0.0

Recognised in the Balance Sheet

Deferred tax assets and liabilities Deferred tax assets and liabilities recognised Deferred tax assets and liabilities are attributable to the following:	Deferred tax asset		Deferred tax liability		Net
	2016	2015	2016	2015	2016	2015


Building	0	0	3	3	–3	–3
Pension provisions	46	42	—	—	46	42
Tax-loss carryforwards	—	57	—	—	—	57
Tax assets/liabilities	46	99	3	3	43	96

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, internally Software, developed acquired
	2016	2015	2016	2015	2016	2015
Accumulated costs
At start of year	6	18	112	109	118	127
Purchases	0	0	7	23	7	23
Retirements	0	–12	–93	–20	–93	–32
	6	6	26	112	32	118
Accumulated amortisation
At start of year	–5	–17	–58	–62	–63	–79
Retirements	0	12	39	20	39	32
Amortisation for the year	0	0	–5	–16	–5	–16
	–5	–5	–24	–58	–29	–63
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	2	54	2	54

Amortisation and impairment losses

Amortisation is included on the following lines in the Income Statement:	Software, internally developed		Software, acquired		Total intellectual property
	2016	2015	2016	2015	2016	2015
Administrative expenses	0	0	–5	–16	–5	–16

No impairment losses have been recognised.

Note 9 Property, plant and equipment

		Construction Buildings in progress				Equipment, tools, fixtures and fittings
	2016	2015	2016	2015	2016	2015
Accumulated costs
At start of year	39	25	8	6	24	21
Purchases	19	14	7	2	1	6
Disposals and retirements	–6	—	—	—	–20	–3
	52	39	15	8	5	24
Accumulated depreciation according to plan
At start of year	–6	–2	—	—	–10	–10
Disposals and retirements	2	—	—	—	9	3
Depreciation for the year	–5	–4	—	—	–2	–3
	–9	–6	—	—	–3	–10
Carrying amount at year-end	43	33	15	8	2	14

Depreciation and impairment losses

Depreciation is included on the following lines in the Income Statement:	Buildings		Construction in progress		Equipment, tools, fixtures and fittings
	2016	2015	2016	2015	2016	2015
Administrative expenses	–5	–4	—	—	–2	–3

No impairment losses have been recognised.

Property, plant and equipment under construction

Conversion projects, primarily in Segeltorp, Kungälv, Smista and Nacka in Sweden.

Note 10 Shares and interests in Group companies

	2016	2015
Accumulated costs
At start of year	2,554	2,417
Acquisitions	441	118
Shareholders' contribution	80	19
Disposals	–6	—
	3,069	2,554
Accumulated impairment losses
At start of year	–2,151	–2,128
Impairment loss for the year	–186	–23
	–2,337	–2,151
Accumulated revaluation gains
At start of year	390	390
	390	390
Carrying amount at year-end	1,122	793

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

						Carrying amount
Subsidiaries	Country	Corporate ID no.	Domicile	Number of interests	Stake in %	2016	2015
Bilia Personbilar AB	Sweden	556063-1086	Gothenburg	1,000,000	100.0	310	310
.Netbil i Skandinavien AB	Sweden	556083-1108	Gothenburg
.Hedbergs Bilskrot AB	Sweden	556254-7488	Gothenburg
Bilia Holding S.à r.l.	Luxembourg B204406		Luxembourg	30,211	66.2	244	—
.Bilia Emond Luxembourg	Luxembourg B204743		Luxembourg
.S.A. Bilia Emond Belgium	Belgium	0412 804 284	Arlon
Bilia Personbil as	Norway	976 023 188	Oslo	150,000	100.0	197	197
.Toyota Bilia AS	Norway	980 648 915	Trondheim
Bilia Group Stockholm AB	Sweden	556402-6408	Stockholm	3,000	100.0	138	138
Autohaus Bilia GmbH & Co. KG	Germany	HRA 3167	Nidda	1	100.0	92	33
.Autohaus Bilia Verwaltungs GmbH	Germany	HRB 6551	Nidda
.Schäfer GmbH & Co. KG Automobile Idstein	Germany	HRA 6986	Idstein
.Schäfer GmbH Automobile Limburg-Diez	Germany	HRB 1756	Limburg a.d. Lahn
.Schäfer GmbH Automobile Weilburg	Germany	HRB 3025	Weilburg
.Schäfer GmbH Automobile Usingen	Germany	HRB 9780	Usingen
Bilia Center Stockholm AB	Sweden	556083-0084	Gothenburg	500	100.0	85	85
.Bilia Center Malmö AB	Sweden	556775-1309	Gothenburg
Bilia Center Bergslagen AB	Sweden	556059-5034	Gothenburg	10,000	100.0	21	—
Motorit AB	Sweden	556054-6573	Gothenburg	160,000	100.0	19	19
Bastborren Fastighets AB	Sweden	556229-8447	Västerås	1,000	100.0	9	—
Ejendomsselskabet Hørskætten A/S	Denmark	18 44 52 47	Taastrup	600	100.0	—	6
Sevonia AB	Sweden	556069-8531	Gothenburg	25,000	100.0	3	3
Fastighets AB Strängnäs Graniten 4	Sweden	559040-7846	Strängnäs	1,000	100.0	2	—
Bilia Group Göteborg AB	Sweden	556046-5659	Gothenburg	10,000	100.0	2	2
.Ana Bil AB	Sweden	556144-2731	Gothenburg
Bilia Center Syd AB	Sweden	556944-7609	Gothenburg	500	100.0	0	0
Motoria Bil AB	Sweden	556059-0803	Gothenburg	1,000	100.0	0	0
Bilia Personvogne A/S	Denmark	19 47 52 04	Taastrup	45,000	100.0	—	0
.Auto Property CPH A/S	Denmark	12 94 03 86	Copenhagen
Bilia Incentive AB	Sweden	556213-5664	Gothenburg	1,000	100.0	0	0
Carrying amount						1,122	793

Note 11Other securities held as non-current assets

	2016	2015
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 non-current receivables

	2016	2015
Accumulated costs
At start of year	—	20
Amortisation	—	–20
Carrying amount at year-end	—	—

Note 13 Equity

Share capital and premium

		Ordinary shares
Thousands of shares	2016	2015
Issued on 1 January	50,436	25,174
Exercise of warrants	265	88
New share issue	699	25,174
Issued on 31 December – paid	51,400	50,436

As of 31 December 2016, the registered share capital comprised 51,399,976 ordinary shares (50,436,052).

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.

Proposed treatment of unappropriated earnings

The Board of Directors proposes that the earnings available for distribution, SEK 1,098 M, be disposed of as follows:

SEK M

Total	1,098
To be carried forward	687
Cash dividend, SEK 8.00 per share 1)	411

1) Based on the number of shares outstanding at 31 December 2016, 51,399,976.

The Board of Directors' dividend proposal will be subject to adoption at the Annual General Meeting on 19 April 2017.

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

Stock split

Existing shares are divided and adjusted retroactively for the years reported.

Note 14 Untaxed reserves

	2016	2015
Tax allocation reserve, allocated financial year 2010	—	87
Tax allocation reserve, allocated financial year 2011	5	5
Tax allocation reserve, allocated financial year 2012	67	67
Tax allocation reserve, allocated financial year 2013	83	83
Tax allocation reserve, allocated financial year 2014	105	105
Tax allocation reserve, allocated financial year 2015	98	98
Tax allocation reserve, allocated financial year 2016	120	—
Accumulated depreciation in excess of plan	17	23
Total untaxed reserves	495	468

Note 15 Liabilities to credit institutions

	2016	2015
Current liabilities
Granted credit	1,500	1,500
Unutilised credit	1,500	1,068
Utilised credit	0	432

Note 16 Pensions

Net liability

	2016	2015
Pension liability	—	—
Total	—	—
Of which credit insured via FPG/PRI	—	—

Changes in net liability

Capital value of pension obligations pertaining to pensions under the company's own management at year-end	—	—
Redemption of PRI liability	—	–23
Pension disbursements	—	0
Cost recognised in the Income Statement for pensions under own management excluding taxes	—	1
Net liability at beginning of year pertaining to pension obligations	—	22

Note 17 Other liabilities

	2016	2015
Non-current liabilities
Bond issue	751	—
Personnel fund	5	5
Total	756	5
Current liabilities
Tax deducted at source	1	2
Other	4	2
Total	5	4
Liabilities that fall due for payment more
than five years after the balance sheet date	2016	2015
Personnel fund	5	5
Total	5	5

Net pension obligations

Costs for pensions	2016	2015
Pensions under own management
Cost excluding interest expense	—	1
Cost of pensions under own management	—	1
Pensions through insurance
Insurance premiums	15	10
Subtotal	15	11
Special payroll tax on pension costs	7	11
Cost for credit insurance	0	0
Pension cost for the year	22	22
Recognised net cost attributable to pensions	22	22

Of the recognised net cost, SEK 22 M (22) 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.

	2016	2015
Costs for the year for defined-contribution
plans 1)	22	21

1) Of which SEK 7 M (5) pertaining to ITP plan funded in Alecta.

The Parent Company estimates that SEK 22 M will be paid in 2017 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 0.02174 per cent (0.18454), and the Parent Company's share of the total number of active members in the plan amounts to 0.02181 per cent (0.01427).

For further information on pensions, share-based payments and benefits to senior officers, see the Group's Note 9 "Employees, personnel costs and remunerations for senior officers" and Note 23 "Pensions".

Note 18 Accrued expenses and deferred income

	2016	2015
Accrued wages and salaries	22	17
Accrued social security contributions	53	47
Accrued interest	8	3
Other accrued expenses	12	17
Total	95	84

Note 19 Financial instruments

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

	2016		2015
	Carrying amount	Fair value	Carrying amount	Fair value
Financial assets measured at fair value through profit or loss
Other assets/currency swaps	1	1	1	1
Loan receivables and other receivables
Trade receivables	6	6	0	0
Cash and cash equivalents	27	27	1	1
Financial liabilities measured at fair value through profit or loss
Other liabilities/currency swaps	0	0	0	0
Other financial liabilities
Debenture loan	—	—	28	24
Bank loans	—	—	432	432
Personnel fund	5	5	5	5
Trade payables	76	76	91	91
Bond issue	751	751	—	—

The tables at the right 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: based on inputs that are not observable on the market.

Fair Value Measurement

For a summary of the most important methods and assumptions that have been used to establish fair value, see Group Note 27 "Financial instruments".

2016	Level 2
Financial assets measured at fair value through profit or loss/Currency swaps	1
Financial liabilities measured at fair value through profit or loss/Currency swaps	0
2015	Level 2
Financial assets measured at fair value through profit

or loss/Currency swaps 1 Financial liabilities measured at fair value through profit or loss/Currency swaps 0

Note 20 Financial risks and risk management

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 28 "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.

		2016				2015
Lender	Currency	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
DNB	SEK	—	—	—	—	—	—	—	150	150	150	—	—	—	—
DNB	SEK	—	—	—	—	—	—	—	51	51	51	—	—	—	—
Nordea	SEK	—	—	—	—	—	—	—	225	225	225	—	—	—	—
Overdraft facility		—	—	—	—	—	—	—	6	6	6	—	—	—	—
Bond issue	SEK	750	750	—	—	—	750	—	—	—	—	—	—	—	—
Debenture loan	SEK	—	—	—	—	—	—	—	28	28	28	—	—	—	—
Personnel fund	SEK	5	5	—	—	0	0	5	5	5	—	—	0	0	5
Trade payables	SEK	76	76	76	—	—	—	—	91	91	91	—	—	—	—
Total		831	831	76	—	0	750	5	556	556	551	—	0	0	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 year-end 2016, the property leases covered about 280,000 square metres (276,000).

In some cases, lease payments are fixed for periods of three months based on STIBOR or CIBOR. In other cases, lease payments

Leases – Lessee

Non-cancellable lease payments amount to:

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.

	2016	2015
Minimum lease payments for the year	–246	–248
Total lease costs for the year	–246	–248
Future lease payments
Within one year	–244	–252
Between one and five years	–880	–893
Later than five years	–695	–816
Total	–1,819	–1,961

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:

	2016	2015
Lease payments for the year	248	241
Total lease payments for the year	248	241

The contractual annual rent is SEK 248 M and the leases expire between 2017 and 2032.

Note 22 Capital commitments

During 2016 the Parent Company concluded agreements to invest SEK 24 M (17) in non-current assets for delivery in 2017.

Note 23 Pledged assets and contingent liabilities

Pledged assets	2016	2015
For own liabilities and provisions
Pledged assets
– Endowment policies	168	154
– Promissory note loan	447	447
Total pledged assets	615	601
Contingent liabilities	2016	2015
Rent guarantees 1)	58	48
Guarantee for the benefit of subsidiaries	1,028	938
Total contingent liabilities	1,086	986

1) The amount pertains to rent guarantees of SEK 58 M (48) pledged for Bilia AB's subsidiaries in Norway and Sweden. The stipulated amount is the annual rent for leases of varying length. The leases expire between 2017 and 2032.

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 9 "Employees,

personnel costs and remunerations for senior officers". Other transactions are reported in the table 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 (24) of the votes in the company.

Related party transactions

		Sales of	Purchases of		Claim on	Debt to
		goods and	goods and	Commissions/	related party	related party
		services to	services from	interest/	at 31	at 31
Related party relationship	Year	related party	related party	dividend	December	December
Subsidiaries	2016	379	15	284	1,486	21
Subsidiaries	2015	417	4	22	1,179	52
Contingent liabilities for subsidiaries	2016	1,086
Contingent liabilities for subsidiaries	2015	986

Transactions with key management personnel are priced on market terms.

Note 25 Cash Flow Statement

Dividends received and Group contributions	2016	2015
Group contribution received	709	450
Total	709	450
Adjustment for non-cash items	2016	2015
Depreciation/amortisation	12	23
Impairment losses	186	23
Provisions for pensions	—	1
Redemption of pension liability	—	–23
Capital gain/loss from sale of subsidiary	–1	—
Other line items not affecting liquidity	–1	–1
Total	196	23
Unutilised credit facilities	2016	2015
Granted credit	1,500	1,500
Utilised credit	0	432
Unutilised credit	1,500	1,068

Note 26 Events after the balance sheet date

The financial statements were approved for publication by the Parent Company's Board of Directors on 17 March 2017.

On 3 January 2017, Bilia acquired the Toyota dealer MW Gruppen Stockholm AB plus three property companies. The business is run from five facilities, three of which are situated in the south of Stockholm. The preliminary purchase consideration amounted to SEK 287 M.

In January, Bilia issued unsecured bonds worth SEK 250 M. The bond issue carries a floating interest rate of STIBOR (3 months) plus 140 basis points and has a final maturity date in March 2021.

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 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.

Gothenburg, 17 March 2017

Mats Qviberg Chairman Jan Pettersson Ingrid Jonasson Blank Eva Cederbalk Deputy Chairman Board member Board member Anna Engebretsen Jack Forsgren Laila Freivalds Board member Board member Board member Mats Holgerson Gustav Lindner Jon Risfelt Board member Board member Board member Dragan Mitrasinovic Patrik Nordvall

Board member appointed Board member appointed by employee organisation by employee organisation

Our Audit Report was submitted on 20 March 2017 KPMG AB

Jan Malm Authorised Public Accountant

As is evident above, the annual accounts and consolidated accounts were approved for publication by the Board of Directors and the Managing Director on 17 March 2017. The Consolidated Statement of Income and Other Comprehensive Income, the Consolidated Statement of Financial Position, the Parent Company Income Statement and the Parent Company Balance Sheet will be subject to adoption at the Annual General Meeting on 19 April 2017.

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

Opinions

We have audited the annual accounts and consolidated accounts of Bilia AB (publ) for 2016, with the exception of the Corporate Governance Statement on pages 9–14. The annual accounts and consolidated accounts of the company are included on pages 18–87 of this document.

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 2016 and its financial performance and cash flow 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 2016 and its financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards, IFRSs, as adopted by the EU, and the Annual Accounts Act. Our opinions do not extend to the Corporate Governance Statement on pages 9–14. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.

We therefore recommend that the general meeting of shareholders adopt the Income Statement and the Balance Sheet for the Parent Company and the Consolidated Statement of Income and Other Comprehensive Income and the Consolidated Statement of Financial Position for the Group.

Basis for opinions

We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibility under these standards is further described in the "Auditor's responsibility" section. We are independent in relation to the Parent Company and the Group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts for the period in question. These matters were addressed in the context of our audit of, and in forming our opinion on, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.

Revenue recognition for goods and services See Note 2 in the annual accounts for detailed disclosures and a description of the matter.

Description of key audit matter

Group revenue for 2016 amounted to SEK 23,906 M. Total revenue derives from contracts with customers regulating delivery of both goods and services (including workshop service).

Revenue from goods is recognised in accordance with contractual judgements when significant risks and rewards as well as obligations for the good have been transferred to the buyer. Revenue from services is based on assumptions regarding how and when the service will be utilised. Leasing revenue is allocated in accordance with underlying contracts.

Revenue allocation and accrual thereby entail a considerable measure of judgement.

Response in the audit

We have examined pertinent contract terms in order to assess the company's identification of goods and services and the methodology for allocation of revenue to different goods and services based on their relative fair values.

We have tested checks regarding allocation and accrual of revenue. We have also assessed the timing of recognition of revenue from goods and services by considering when they have been delivered or are expected to be delivered as well as contractual conditions for the transaction, and by testing samples and the precision of this methodology based on historic outcome.

Valuation of inventory

See Note 20 in the annual accounts for detailed information and description of the matter.

Description of key audit matter

The value of the Group's inventory of merchandise amounts to SEK 3,451 M and comprises 34 per cent of the Group's total assets, whereby we consider it a significant balance sheet item. The net realizable value of the vehicle stock depends on numerous variables such as economic situation, interest rate level, current and upcoming model programmes, regulatory requirements and time in stock.

The difference between the estimated value of the inventory and the actual net realisable value can affect the Group's earnings.

Response in the audit

We have tested and assessed the Group's checks and procedures for valuation of inventory. We have conducted our own analyses of the vehicles' time in stock and when necessary have evaluated this against external transactions and prevailing market conditions.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and for ensuring that they provide a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine

Auditor's report cont'd.

is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, the Board of Directors and the Managing Director are responsible for the assessment of the company's and the Group's ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

The Audit Committee shall, without prejudice to the Board of Director's responsibilities and other duties, oversee the company's financial reporting process.

Auditor's responsibility

Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

identify and assess the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
obtain an understanding of the company's internal control relevant to our audit 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.
evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors and the Managing Director.
draw a conclusion on the appropriateness of the Board of Directors' and the Managing Director's use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts. We also draw a conclusion, based

on the audit evidence obtained, as to whether any material uncertainty exists related to events or conditions that may cast significant doubt on the company's and the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the annual accounts and consolidated accounts or, if such disclosures are inadequate, to modify our opinion about the annual accounts and consolidated accounts. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause a company and a Group to cease to continue as a going concern.

evaluate the overall presentation, structure and content of the annual accounts and consolidated accounts, including the disclosures, and whether the annual accounts and consolidated accounts present the underlying transactions and events in a fair manner.
obtain sufficient and appropriate audit evidence regarding the financial information for the entities or business activities within the Group to express an opinion on the consolidated accounts. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our opinions.

We must inform the Board of Directors of, among other matters, the planned scope and timing of the audit. We must also provide information on significant audit findings during our audit, including any significant deficiencies in internal control that we identified.

We must also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and inform them of all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Of the matters communicated to the Board of Directors, we determine which matters were of most significance in the audit of the annual accounts and consolidated accounts, including the most important assessed risks for material misstatement, and therefore comprise the key audit matters. We describe these matters in the auditor's report unless laws or regulations preclude disclosure of the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in the auditor's report because the adverse consequences of doing so are reasonably expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements Opinions

In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Bilia AB (publ) for the year 2016 and the proposed appropriations of the company's profit or loss.

We recommend to the general 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.

Basis for opinions

We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibility under these standards is further described in the "Auditor's responsibility" section. We are independent in relation to the Parent Company and the Group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

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. Our proposal of a dividend includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the Group's type of operations, size and risks place on the size of the Parent Company's and the Group's equity, consolidation requirements, liquidity and position in other respects.

The Board of Directors is responsible for the company's organization and the administration of the company's affairs.

This includes continuous assessment of the company's and the Group's financial situation and ensuring that the company's organisation is designed so that its accounting, management of assets and financial affairs are otherwise controlled in a reassuring manner.

The Managing Director shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and take such measures as are necessary to ensure that the company's accounting complies with the law and that its assets are managed satisfactorily.

Auditor's responsibility

Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to determine with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director has in any material respect:

undertaken any action or been guilty of any omission which can give rise to liability on the part of the company, or
acted in any other way in violation of the Companies Act, the Annual Accounts Act or the Articles of Association.

Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion about this, is to assess with a reasonable degree of assurance whether the proposal complies with the Companies Act.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect

actions or omissions that can give rise to liability on the part of the company, or that the proposed appropriations of the company's profit or loss are in compliance with the Companies Act.

As part of an audit in accordance with generally accepted auditing standards in Sweden, we exercise professional judgment and maintain professional skepticism throughout the audit. The examination of the administration and the proposed appropriations of the company's profit or loss is based primarily on the audit of the accounts. Deciding which additional audit procedures are to be performed is based on our professional judgment with regard to risk and materiality. This means that we focus the examination on such actions, matters and conditions that are material to the operations and where deviations and violations would have be of particular importance for the company's situation. We examine and test decisions undertaken, support for decisions, actions taken and other circumstances that are relevant to our opinion concerning discharge from liability. As a 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.

Auditor's examination of Corporate Governance Statement

The Board of Directors is responsible for the Corporate Governance Statement on pages 9–14 and for ensuring that it has been prepared in accordance with the Annual Accounts Act.

Our review was conducted in accordance with FAR's auditing standard RevU 16 The Auditor's Examination of the Corporate Governance Statement. This means that our examination of the Corporate Governance Statement has a different aim and is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that this examination provides us with a sufficient basis for our opinions.

A Corporate Governance Statement has been prepared. Disclosures in accordance with Chap. 6, Sec. 6, second paragraph, points 2–6 of the Annual Accounts Act and Chap. 7, Sec. 31, second paragraph of the same act are consistent with the other parts of the annual accounts and consolidated accounts and are in compliance with the Annual Accounts Act.

Gothenburg, 20 March 2017 KPMG AB

Jan Malm Authorised Public Accountant

Five-year Review

SEK M, unless otherwise stated.	2012	2013	2014	2015	2016
Consolidated Statement of Income and Other Comprehensive Income
Net turnover	17,662	17,656	18,446	20,443	23,906
Operational earnings	356	421	563	765	887
Operating profit	270	368	562	929	841
Net financial items	–17	–1	–7	4	–8
Profit before tax	253	367	555	933	833
Tax	–97	–77	–103	–202	–176
Profit for the year from continuing operations	156	290	452	731	657
Loss from discontinued operation, net after tax	—	—	–67	–84	–21
Net profit for the year	156	290	385	647	636
Statement of Financial Position
Equity	1,586	1,823	1,849	2,056	2,511
Balance sheet total	5,842	6,095	6,955	7,429	10,132
Capital employed	2,466	2,642	2,796	2,855	3,771
Net debt	438	260	–70	323	775
Net debt/equity, times	0.28	0.14	–0.04	0.16	0.31
Ratio of net debt to EBITDA, times	0.8	0.5	–0.1	0.4	0.7

Statement of Cash Flows
Cash flow from operating activities	716	373	1,299	835	1,654
Investments and disposals in non-current assets, including leased
assets	270	290	551	623	1,190
Operating cash flow	446	83	748	212	464
Key ratios
Return on capital employed excluding items affecting
comparability and acquisition costs, %	15.8	19.8	22.1	30.5	27.7
Return on capital employed, %	12.3	17.7	19.8	36.2	26.4
Return on equity, %	9.1	17.0	21.0	33.2	27.9
Operational margin, %	2.0	2.4	3.1	3.7	3.7
Operating margin, %	1.5	2.1	3.0	4.5	3.5
Interest coverage ratio, times	6.4	6.3	15.0	32.9	13.6
Profit margin, %	0.9	1.6	2.1	3.2	2.7
Equity/assets ratio, %	27.1	29.9	26.6	27.7	24.8
Rate of capital turnover, times	3.12	3.06	3.06	2.96	2.7
Per share data
Earnings per share, SEK	3.15	5.85	7.65	12.85	12.45
Equity per share, SEK	32.15	36.25	36.70	40.75	48.85
Operating cash flow per share, SEK	9.00	1.70	14.85	4.20	9.10
Dividend per share, SEK	3.00	4.50	6.00	7.50	8.00 1)
Share price at year-end, SEK	46.75	82.00	118.75	192.00	209.50
P/E ratio, times	15	14	15	15	17
Other information
Wages, salaries and other remunerations	1,504	1,492	1,571	1,659	1,841
Employees, average number	3,186	3,109	3,154	3,374	3,804

1) Proposed dividend.

For information on calculations of the number of shares, see "Data per share" under the section headed "The Bilia share". For the section "Per share data", all years have been recalculated after the 2:1 stock split in 2015.

Net turnover, SEK M

Net turnover increased by 17 per cent (11) during 2016 compared with last year. If acquisitions and currency effects are excluded, net turnover increased by 4 per cent (7) in 2016 or about SEK 900 M.

Operational earnings, SEK M

Operational earnings amounted to SEK 887 M (765), an increase of 16 per cent. It increased by 22 per cent (57) during the first half of the year, and by 11 per cent (24) during the second half of the year. The 4th quarter, which is historically the strongest quarter, was the best quarter in the past 5 years with earnings of SEK 265 M (247), equivalent to 30 per cent (32) of the operational earnings for the year.

Profit before tax, SEK M

Return on equity increased during the year and amounted to 27.9 per cent (33.2). The goal for return on equity is at least

18 per cent.

Profit before tax for the full year amounted to SEK 833 M (933). The 1st, 3rd and 4th quarters were on a level with or higher than last year. However, profit in the 2nd quarter declined by 37 per cent, due to the fact that the corresponding quarter last year includes the earnings effect of the redemption of the Swedish pension liability, SEK 197 M. If items affecting comparability and acquisition costs are excluded, total operational earnings before tax for the full year increased by SEK 110 M to SEK 879 M (769).

Equity/assets ratio, %

Capital employed, SEK M

Capital employed increased by SEK 916 M (59), amounting to SEK 3,771 M (2,855). Acquisitions and disposals have increased capital employed by a net amount of SEK 918 M.

The equity/assets ratio amounted to 24.8 per cent (27.7). Over the past five years the equity/assets ratio has averaged 27.2

per cent.

Return on equity, % Net debt/EBITDA, times

The ratio of net debt to EBITDA increased compared with last year, amounting to 0.7 times (0.4). The goal is that the ratio should not exceed 2.0 times in the long term.

Return on capital employed, %

Return on capital employed was 26.4 per cent, compared with 36.2 per cent last year. Return on capital employed excluding items affecting comparability amounted to 27.7 per cent (30.5). The goal for return on capital employed is at least 17 per cent.

Definitions/alternative performance measures

Acquisition-related costs and value adjustments Pertains to costs for legal consultants and other external costs associated directly with an acquisition, and value adjustments regarding acquired inventory assets, which are depreciated over a 3-month period.

Adjusted turnover Net turnover is adjusted for operations that have been acquired or disposed of during the year. Adjustment is also made for exchange rate differences.

Amortisation of surplus values Occurs in connection with acquisitions of operations and is recognised under intangible assets. Normally these surplus values are amortised over a 10-year period.

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.

Comparable operations Financial information and quantities that are adjusted for operations that have been acquired or disposed of during the year.

Dividend yield Dividend in relation to the average share price during the year.

EBITDA Operational earnings plus total depreciation/amortisation less amortisation of surplus values and depreciation of leased vehicles with repurchase agreements.

EBITDAJ EBITDA reduced by acquisition-related costs and value adjustments.

EBITDAJ/net interest income/expense EBITDAJ in relation to the net of financial income plus dividends received from associated companies and financial expenses.

Equity/assets ratio Equity in relation to balance sheet total.

Gain from sale of operation Difference between purchase consideration and the operation's consolidated carrying amount, less selling costs.

Growth Increase or decrease of net turnover in relation to the preceding year.

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.

Items affecting comparability Pertains to significant revenues or expenses that are non-recurring or are attributable to operational activities. Examples of items affecting comparability may be restructuring costs, costs for disputes, impairment of goodwill and gains or losses in connection with disposal of operations or assets.

Liquidity Unutilised credit with the banks, Nordea and DNB, plus cash and cash equivalents. Liquidity amounted to SEK 1,527 M at the end of the year.

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.

Performance measures that include interest-bearing liabilities are calculated excluding the effect of transaction costs and premium calculated according to the effective interest method.

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 acquired surplus values and non-interest-bearing current liabilities and provisions.

Operating margin Operating profit in relation to net turnover.

Operational earnings Operating profit adjusted for items affecting comparability, acquisition-related costs and value adjustments as well as amortisation of surplus values.

Operational margin Operational earnings in relation to net turnover.

Operational profit before tax Profit before tax adjusted for items affecting comparability, acquisition-related costs and value adjustments as well as amortisation of surplus values.

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 Operational earnings in relation to average operating capital employed (see definition above).

Structural costs Costs that are significant and non-recurring. Examples of structural costs may be costs for reducing the number of employees and costs for vacating a leased facility before expiration of the lease.

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.

Underlying values Values that are adjusted for operations that have been acquired or disposed of during the year. Adjustment is made for exchange rate differences, where applicable.

Value added Operational earnings plus payroll expenses, including payroll overheads.

Information on Annual General Meeting

Annual General Meeting, 19 April 2017

The AGM of Bilia AB will be held on Wednesday 19 April 2017, at 11:30 a.m. at the Biograf Sture (cinema), Salong 1, Birger Jarlsgatan 41 A, 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 reregister them (voting right registration) in good time prior to 11 April 2017. 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) weekdays 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. NOTE! only individuals.

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 Tuesday, 11 April 2017, 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 AGM that of the earnings available for distribution, SEK 8.00 per share (7.50) be paid in dividend to the shareholders, for a total of SEK 411 M (380).

Board of Directors

The Nominating Committee has announced that they intend to propose re-election of the following members: Ingrid Jonasson Blank, Eva Cederbalk, Anna Engebretsen, Jack Forsgren, Laila Freivalds, Mats Holgerson, Gustav Lindner, Jan Pettersson, Mats Qviberg and Jon Risfeldt. 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 resolve that such acquired own shares may be transferred. The purpose of the authorisation, which will be valid until the AGM in 2018, 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' preemption rights by sale via the stock exchange or in conjunction with the acquisition of an enterprise, whereby non-cash payment shall be possible.

Stock split

The Board of Directors proposes that the AGM pass a resolution to split the outstanding shares so that each existing share is divided into two new shares, a 2-for-1 stock split.

Change of Articles of Association

In order to make the stock split possible, it is proposed that the limits for the highest and lowest number of shares and share capital be adjusted in the Articles of Association.

For complete information on the AGM, see the convening notice, which was issued at the beginning of March 2017.

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 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;
1. Preparation and approval of the voting list;
1. Approval of the agenda;
1. Election of one or two persons to verify the minutes;
1. Determination of whether the meeting has been duly convened;
1. Presentation of the annual report and the audit report as well as the consolidated accounts and the audit report on the consolidated accounts;
1. 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;
1. 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);
1. Determination of fees to be paid to the Board of Directors and, where applicable, auditors;
1. 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.

AI assistant

Bilia — Annual Report 2016

2892_10-k_2017-03-24_55cd14db-bdf5-41a1-a487-87db4716188d.pdf

Annual report 2016

Contents

Directors' Report

Operations – general

The Bilia share

Key figures

Notable events during the year

Sales and earnings

Acquisition of non-current assets

Financial position

Financial goals

Goals and goal fulfillment

Ratio of net debt to EBITDA, times

Cars – divided into Service, Car and Fuel Businesses

Total market

Personnel

Guidelines for remuneration to senior officers

Environment

Risks

Market trend

Basis of representation

Competitiveness of the products

Development of own services

Key persons

Facilities and environment

Share issues

Stock split

Disclosure of acquisition, transfer and holding of own shares

Directors' Report cont'd.

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 Statement

Shareholders

General Meeting of Shareholders

Annual General Meeting 2016

Nominating Committee

Auditors

Board of Directors

The work of the Board during 2016

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

Auditors

Group Management

The Bilia share

Total return 14 per cent in 2016

Beta coefficient

Number of shareholders declined

Dividend policy

Proposed dividend SEK 8.00

Stock split

Proposal for buy-back or disposal of own shares

Persons with insider status

Analyses of Bilia

Shareholder information

The Bilia share cont'd.

Change in share capital

Distribution of shares, 31 December 2016

Ownership by categories at 31 December 2016, %

Turnover of Bilia share

Contents

Consolidated Statement of Income and Other Comprehensive Income

Net turnover

Operating profit

Net financial items

Profit before tax

Tax for the year

Net profit for the year

Bilia Annual Report 2016