Bilia — Annual Report 2019

Mar 23, 2020

Annual Report 2019

A better experience

Content

Year in brief 2

Net turnover amounted to SEK 29,508 M (28,382). Operational earnings amounted to SEK 1,239 M (1,034), with a margin of 4.2 per cent (3.6). Reported growth in the Service Business amounted to 9 per cent (8).

Statement by the Managing Director 4

Bilia's highest result ever. A strong result in the Service Business and record results in sales of used cars. Lower results in sales of new cars.

Internal strategy 6

Strong leadership is a success factor for Bilia. A leadership with focus on dedication and competence make proud and considerate employees which leads to satisfied customers.

Business model and growth strategy 8

Bilia is a full-service supplier, with a wide range of services. A One Stop Shop offering everything related to owning a car.

Vision and values 10

Bilia's vision is to be the best service company in the business – through consideration for our customers and colleagues. We strive for continuous development, to be a little better each day, whatever our position and duties.

The value creation model 12

Bilia creates value for it's stakeholders, owners, customers, employees, financiers and suppliers as well as for the society and environment.

Directors' Report 14

Service Business	18
Car Business	20
Fuel Business	22
Risks	24

Sustainability Report 28

Bilia's sustainability work includes systematic and active work with concern for the business and employees, the outside world and the relationship with the customer.

Corporate Governance Statement 34 Bilia works to ensure that the company is managed in a way that is sustainable, responsible and efficient for the shareholders.

Group Management	39
Board of Directors	40
The Bilia share	42

The Bilia share has been listed on the Nasdaq Stockholm exchange since 1984. The share is traded under the ticker code BILI A. At 31 December 2019, the share capital amounted to SEK 10.9 Bn.

Financial information 45

Consolidated Statement of Income
and Other Comprehensive Income	46
Consolidated Statement of Financial Position	48
Consolidated Statement of Changes in Equity	50
Consolidated Statement of Cash Flows	51
Notes to the Consolidated Financial Statements	53
Income Statement for Parent Company	93
Balance Sheet for Parent Company	94
Statement of Changes in Equity
for Parent Company	96
Cash Flow Statement for Parent Company	97
Notes to the Parent Company Financial Statements	98
Signatures	108
Auditor's Report	109
Five-year Review	112
Definitions and Performance Measures	114
Information on Annual General Meeting	115
Articles of Association	116

This information has been made public in accordance with the Securities Market Act on 23 March 2020.

This is Bilia

One of Europe's largest car chains

BUSINESS AREAS

Service

• Service centres
• Damage centres
• Spare parts
• Stores and e-commerce
• Tyre centres
• Tyre hotels
• Glass centres
• Accessory services
• Car dismantling

KEY FIGURES 2019

Car

• Sales of new and used cars
• Financing and insurance
• Sales of accessories

Fuel

• Fuel sales
• Car washes

MARKET CAPITALISATION SEK 10.9 Bn TOTAL TURNOVER SEK 29.5 Bn EMPLOYEES 4,978 REPORTED GROWTH IN THE SERVICE BUSINESS 9 % SOLD CARS, NEW & USED, ABOUT 99,000 TURNOVER OUTSIDE OF SWEDEN 40 % OUR EIGHT CAR BRANDS

Here is Bilia

1

1

17

3

2

11

1

1 1

1

3

1 3

7

2

2

3

11

3

1

TOTAL NUMBER OF FACILITIES

35

15 5

NUMBER AND TURNOVER BY COUNTRY

	Number	Share of turnover
Sweden	94	60 %
Norway	28	26 %
Germany	7	5 %
Luxembourg	2	4 %
Belgium	5	5 %

Year in brief

YEAR IN BRIEF

2019 was a year of continued strong growth in the Service Business and record results in sales of used cars.

FIRST QUARTER

• Bilia opened two new facilities as a part of its strategic focus in sales of older used cars, of all car brands, under the name Netbil Begagnat. The facilities are located in Stockholm and Malmö, Sweden.
• Bilia concluded an agreement to acquire Jensen & Scheele Bil AS. The business is a full-service Volvo dealership located in Halden south of Oslo, Norway. The date of possession was 1 April 2019.

THIRD QUARTER

• Netbil Begagnat opened yet another facility for sales of used cars in Gothenburg, Sweden.
• Bilia's Board of Directors has reached an agreement with MD and CEO Per Avander that he may remain in his current position until 2026.
• Bilia concluded an agreement to acquire En Bättre Däckaffär Scandinavia AB. The date of possession was 1 October 2019.

FOURTH QUARTER

• Bilia's Board of Directors decided to repurchase own shares. The maximum number of shares was 1,000,000. During the fourth quarter, 817,210 shares were repurchased for a total purchase price of SEK 79 M.

Our highest result ever

RECORD RESULTS. I am extremely proud and delighted over what we in the Bilia family have achieved together in 2019. We have once again reported record results, over SEK 1 billion. We have seen strong growth in our Service Business and substantially improved results from the sale of used cars. We have continued our strategic focus on used cars and have added new businesses through acquisition.

"The Service Business contributes to stability in our profitability across the business cycles"

T he Service Business is an important part of our business strategy to be a full-service supplier, a One Stop Shop that provides everything a car owner needs. In 2019 this business area was a key contributor to our record results, mainly thanks to our strong reported growth of a full 9 per cent. During 2019, our service subscriptions have increased by 8 per cent. The Service Business feels relatively little impact from shifts in the economy, and contributes to stability in our profitability. As part of our growth strategy, we have during the year acquired a company that provides wheel storage services for car dealers. The acquisition brings us opportunities to grow and strengthen our position in the wheel business, and we have raised our goal for the number of wheels stored within the Group from 350,000 to 600,000 wheels. The Bilia Group currently stores around 348,000 wheels for its customers. Our new strategic focus on used cars, older than three years and of all car brands, encompasses two different sales channels: online auctions and showrooms. Our aim is to have seven facilities within five years. In 2019 we opened three new facilities in Sweden, which means we now have a total of five facilities in Sweden and Norway. We also acquired a Volvo dealership in Halden, Norway, during the year. The facility provides servicing and sales of new and used cars.

At Bilia our vision is to be the best service company in the business – through consideration for our customers and colleagues. At Bilia we all try to go that bit further for our customers, whether over the phone, at the workshop or in the showroom. We want our customers to leave us with a positive feeling of having been looked after, a better experience than they expected. We take a survey of how satisfied our customers are and it is pleasing to note that once again in 2019 we achieved record results, which show that we are delivering a considerably better experience compared with the rest of the industry. Our internal strategy is based on a strong corporate culture with dedicated, proud and

considerate leaders and co-workers, and I am convinced this is fundamental in offering a better experience and ensuring satisfied loyal customers. Every year we take a survey of what our employees think about working with us, and the 2019 results were improved once again and well above those of comparable companies.

Sustainability at Bilia is characterised by consideration for the business, employees, the wider world, and our customer relations. The choice of car is vital to a sustainable society in the future. We want to understand our customers' needs and circumstances, and our sales staff then help our customers to choose the best car from a sustainability perspective. Crucial aspects are where the customer lives, the mileages involved, and whether they can charge a plug-in hybrid or electric car. For Bilia, sustainability is an integral part of good corporate citizenship and of creating long-term solutions. Under our business model we follow the car through its entire life cycle, from new to used car, and finally to our car dismantling facilities where salable parts are reused. Along with the brands we have chosen to work with – Volvo, Renault, Dacia, Alpine, BMW, MINI, Toyota and Lexus – we want, together with our customers, to help create a sustainable future.

Industry analysts forecast that the car markets in our operating countries will be strong in 2020, if slightly weaker than in 2019. Demand for servicing in 2020 is expected to remain high, given strong car sales in recent years.

All in all, I am tremendously proud of our work in 2019, and I look forward to, together with all our customers and employees, continue to develop Bilia further.

Gothenburg, March 2020

Per Avander CEO and Managing Director

Bilia opened another three sales centres for used cars in 2019. In total, Bilia now has five facilities, which in the next few years are expected to grow to seven facilities.

114,000

We now have more than 114,000 service subscriptions, and we are aiming to increase to 130,000 within two years.

348,000 NUMBER OF STORED WHEELS IN THE GROUP

Proud and considerate employees assure success

EMPLOYEES. Strong leadership is a success factor for Bilia. A leadership with focus on dedication and competence leads to proud and considerate employees, which in turn leads to satisfied customers. Satisfied customers are fundamental to sustainable profit develop-

Dedicated, skilled employees are vital to Bilia's continued success. At Bilia all employees should have the ability to develop, and the working climate should create dedication to achieve set goals. All of this requires good leadership, and at Bilia we place a premium on identifying and developing the Group's leaders. The internal strategy is based on a leadership that creates proud and considerate employees.

Bilia applies situational leadership, whereby employees are supported in developing and achieving their optimum level of performance in every phase of their development. Being a good manager requires being open to personal development, and all managers are responsible for supporting and promoting the well-being of employees and teams. The foundation of professional development within the company is the

regular performance appraisal which all employees have with their immediate manager. To

ensure that the internal strategy is working, annual employee surveys are carried out using an independent research company. These surveys reveal strong results, as well as a positive trend over time. All the indexes, such as leadership, commitment, team efficiency and psychosocial work environment, are above average both in general and in comparison with the industry.

ment, which keeps shareholders satisfied. "The employee survey qualified Bilia in top 5 for the award 'Powered by People'"

Moreover, all the indexes increased in 2019. As to whether employees would recommend Bilia as a workplace to someone they know, Bilia's result is almost three times the average. Follow-up of the employee survey with regard to improvement measures is a priority. All of the company's departments draw up action plans. The aim is to identify areas with potential for improvement, and to strive to be even better. The strong results qualified Bilia for the research company Brilliant's Powered by People Employee Experience Award Top 5 awards, in the category of best employee experi-

ence for service organisations.

Strong leadership Satisfied

customers

Satisfied shareholders Proud

employees

A full-service supplier for car ownership

ALL UNDER ONE ROOF. Bilia is a full-service supplier with a wide range of services. A One Stop Shop offering everything related to owning a car. Customers are treated as guests and we aim always to create a better experience.

Bilia's business model is based on the customer's need for a new or used car. Contact with Bilia takes place online and/or in a visit to one of our showrooms. Bilia offers private and business customers a wide range of models and fuel options to suit different requirements. In connection with a car purchase, customers are offered financing and insurance solutions. In Sweden customers are offered Bilia's payment card and the CarPay mobile app to finance their car ownership. Customers are also offered services to simplify their car ownership, such as service and wheel stor-

NUMBER OF SERVICE SUBSCRIPTIONS

9,000 customers had service subscription in 2011. Eight years later the number was 114,000. The goal in 2021 is 130,000 service subscriptions. age subscriptions. Service subscriptions make life easy for the customer, with a fixed monthly cost. For Bilia's part they enable efficient planning and a well-balanced workload in its Service Business. Bilia has the chance to meet the customers repeatedly during the subscription period, thus strengthening relations and presenting opportunities to offer further car-related services. The wheel storage service simplifies wheel changes and makes storage easier for the customer, while also giving Bilia more chances to check if the car needs anything else. There has been a strong upward trend in both service and wheel storage subscriptions. In 2019 Bilia had 114,000 service subscriptions and 348,000 wheel storage subscriptions.

Bilia offers services for everything related to car ownership throughout its life cycle, from new to used car, to recycling parts at the vehicle's end-of-life. For instance Bilia offers fuel, car washing, rental cars, tyres and wheels, car accessories, car care, servicing and repairs, paintwork and window treatment, and dent removal. Bilia has regular contact with its customer base through customer-specific offers related to car ownership. The business model puts the customer in focus and is developed in line with customer needs and requirements.

BUSINESS MODEL AND GROWTH STRATEGY

Finansiering, försäkring, biliakort, Car purchase Bilköp Bilköp Bilköp

serviceabonnemang, däckhotell, lackbehandling samt tillbehörs- & däckförsäljning. Financing, insurance, the Bilia-card, service subscriptions, tyre hotels, paint shops, accessory and tyre and wheel sales. Finansiering, försäkring, biliakort, serviceabonnemang, däckhotell, lackbehandling samt tillbehörs- & däckförsäljning. Finansiering, försäkring, biliakort, serviceabonnemang, däckhotell, lackbehandling samt tillbehörs servicetekniker och reparationerDrivmedel och biltvätt. Finansiering, försäkring, biliakort, serviceabonnemang, däckhotell, lackbehandling samt tillbehörs- & däckförsäljning. Bilköp

Tillbehör, reservdelar och e-handel.

Finansiering, försäkring, biliakort, serviceabonnemang, däckhotell, lackbehandling samt tillbehörs- & däckförsäljning.

Tillbehör, reservdelar och e-handel.

Tillbehör, reservdelar och e-handel.

Tillbehör, reservdelar och e-handel.

Accessories, spare parts and

Glasbehandling, glasreparation och vindrutebyten.

Glasbehandling, glasreparation och vindrutebyten.

Glass treatment, glass repair and windscreen replacement.

Tillbehör, reservdelar och e-handel.

Glasbehandling, glasreparation

Glasbehandling, glasreparation och vindrutebyten.

Butik

Butik

Butik

Store

Glascenter

Glascenter

Glascenter

e-commerce.

Däckcenter Däckhotell, däckbyte, däck-

Däckcenter Däckhotell, däckbyte, däck-

Glascenter

Tyre centres

Servicecenter Originalservice, personlig

Servicecenter Originalservice, personlig servicetekniker och reparationer Service centres Original service, personal service technicians and repairs.

Bilvård

Stationer Drivmedel och biltvätt.

StationerDrivmedel och biltvätt.

Drivmedel och biltvätt.

Originalservice, personlig

Fuels and car washes.

Originalservice, personlig

Däckhotell, däckbyte, däck-

försäljning och verkstadstjänster. Originalservice, personlig servicetekniker och reparationer försäljning och verkstadstjänster. Telefon och online. försäljning och verkstadstjänster. Servicecenter Uthyrning och FlexleaseGlass centres försäljning och verkstadstjänster. Servicecenter wheel sales and workshop services. Stationer Stations Glasbehandling, glasreparation och vindrutebyten. Däckcenter

Tyre hotels, wheel change, tyre and

Däckhotell, däckbyte, däck-

och vindrutebyten.Däckhotell, däckbyte, däck-

Skadecenter Vägassistans, plåtverkstad, lackverkstad, buckelborttagning och Bilvård Rekonditionering och AC- rengöring Car care Reconditioning and AC-cleaning. Bilvård och AC- Vägassistans, plåtverkstad, Rekonditionering och AC- rengöring Vägassistans, plåtverkstad, lackverkstad & buckelborttagning Stationer Drivmedel och biltvätt.

Rekonditionering och AC- rengöring

och biltvätt.

Uthyrning och Flexlease Vägassistans, plåtverkstad, lackverkstad, buckelborttagning och bildemontering. buckelborttagning och bildemontering.Roadside assistance, body shop, paint shop and dent removal. Vägassistans, plåtverkstad, lackverkstad, buckelborttagning och bildemontering. Uthyrning & Flexlease Rekonditionering och AC- rengöring

Kundservice Hyrbilar HyrbilarUthyrning och Flexlease Hyrbilar Uthyrning och FlexleaseRental cars Rentals and Flexlease. Kundservice Telefon & online. Skadecenter Vägassistans, plåtverkstad, lackverkstad, buckelborttagning och

Kundservice Telefon och online. Kundservice Telefon och online. Reuse Bildemontering & bildelar Car dismantling Dismantling, reuse and sales of used car parts. Hyrbilar Uthyrning och Flexlease

Kundservice Telefon och online. Customer service Telephone and online.

Growth strategy

In the past eight years Bilia has acquired 25 companies, which has led to expansion in new countries, new brands and new business areas. Bilia has a strategy to grow by 5–10 per cent a year. From 2009 to 2019, Group turnover more than doubled and the number of employees increased by almost 50 per cent.

Several acquisitions in recent years have been in Belgium, Luxembourg and Germany, which has resulted in Bilia moving into new countries with the car brands BMW and MINI.

January 2019 saw the addition of the Furubakken service workshop in Norway. In April 2019 Volvo dealership Jensen & Scheele Bil AS in Halden, Norway joined the Group, along with its service workshop. En Bättre Däckaffär Scandinavia AB in Stockholm, Sweden was added in October 2019.

Bilia opened three new facilities during 2019, as part of the new strategic initiative for used cars, older than three years and of all car brands, under the names Netbil Begagnat and Bilia Outlet. All in all Bilia has five facilities in Sweden and Norway, with plans to increase to seven in the years to come.

Also in 2019 Bilia has continued to increase the number of newly recruited technicians to meet the higher demand for servicing, which is the result of strong car sales in recent years. BILIA ÅRSREDOVISNING 2019 7

Bilia can see opportunities for further acquisitions in Sweden, Norway and the rest of Europe. As regards future acquisitions outside of the Nordics, Bilia is primarily focusing on countries such as Luxembourg, Belgium, Poland, the Baltics and Switzerland.

Growth from 2012 to 2019

67%

Aim in growth per year

A better experience for customers and colleagues

EXPERIENCE. At Bilia we strive for continuous development, to be a little better each day, whatever our title or position. Working in a goal-conscious way founded on our vision, values and customer promise creates a positive spiral, enabling us to exceed expectations and provide a better experience for customers and colleagues alike.

VISION

The best service company in the business – through consideration for our customers and colleagues.

Biliastrives to be the best service company in the business, with full-service workshops, showrooms offering high availability and customer service that is available every day, around the clock. Through consideration and professional pride, Bilia establishes a relationship with the customer that is crucial to the customer's choice. Our customer relations distinguish us from other competitors in the business.

CULTURE AND CORE VALUES

Dedication, Competence, Genuine, Respect.

Bilia's culture and core values govern our attitude and the way we interact. At Bilia we are engaged in the meeting with customers, with each other and with suppliers. We show competence by using our expertise to find solutions and suggestions that benefit the customer the most. Being genuine and showing mutual respect build confidence in Bilia and its employees.

CUSTOMER PROMISE

A better experience.

Through management by objectives, monitoring and quality processes, Bilia works goal-consciously to be a little better every day. Our general goal is to create an experience that exceeds the customer's expectations, and adds value that distinguishes Bilia from its competitors.

"Visiting us should feel like visiting a good friend"

CUSTOMER SATISFACTION. Maja Lillnor-Olsen is a familiar face at Bilia Toyota in Kungens Kurva, outside Stockholm. As a Service Advisor she not only helps customers with their queries, she is also the face of a modern, customer-oriented service company.

How do you feel that Bilia's corporate culture affects you and your colleagues?

– One advantage of working in a large organisation is that there are structures and processes for everything. Everything is very organised, which means things run smoothly and you can focus exclusively on your work tasks. I also think this is noticeable from outside, since we're always focused on helping our guests in the best way possible. In our line of work we have

to be dedicated and solution-oriented, which I think is what make's Bilia's culture stand out.

Personal relations

Maja says that as a Service Advisor, she has a personal relationship with many customers. When customers come up to her to say thanks and show their appreciation, this is a clear sign that we at Bilia can make a difference by making

MAJA LILLNOR-OLSEN

care of Bilia's visitors:

Role: Service Advisor at Bilia Toyota, Kungens Kurva. Background: Stable groom, courier driver and vehicle inspection technician. Service Advisor for the past two years. people's everyday easier. – Often when my col-

leagues and I simply have done our job, but when customers give us such great feedback we realise we're delivering an experience that exceeds their expectations. Because we maintain such a high level of service, this often leads to good, long-term customer relations.

Vision platform lays the foundation

Bilia's vision platform, which encompasses all Bilia companies and countries, contains guidelines on how we should think and act to distinguish Bilia from others in the industry. This is particularly true of the way we take

– We don't talk about 'our customers' any more, we talk about 'our guests'. This is more personal, and our guests appreciate it as much as we do. Visiting us should feel like visiting a good friend. This approach makes a big difference and permeates the way we meet and greet all our guests, from the initial welcome to handing over the car.

Being receptive to our guests' wishes

Competition is tough in the service market, and to distinguish ourselves from other companies we need something extra, something that means we don't have to compete on price and product alone. At Bilia we constantly strive to deliver a better experience for our guests.

– One key factor is being receptive to what the customers who come to us like and expect. One example is our high availability via our customer services. They're open around the clock, and our customers appreciate this as they can contact us whenever it suits them. Regardless of the service we've provided or the action we've taken, guests should feel that they're important to us. We do our best to provide a positive experience whoever they are, or however long they've been with us," Maja concludes, clearly proud of her work and the company.

How Bilia create value

VALUE CREATION. Our resources, vision and business model create lasting value for our customers and stakeholders.

Bilia's resources

Vision and business model

Relational capital

Customers, general agents, manufacturers, property owners, business partners and decisionmakers that Bilia meets face-to-face, by video, and also by digital media as our website, on Facebook, Instagram, LinkedIn and Twitter.

Intellectual capital

114,000 service subscriptions and 348,000 wheels stored in our tyre hotels to create a favourable offering for the customers, ensuring simplicity of car ownership. Through our business partners we have access to products and services in line with technological developments, benefiting our customers and employees.

Human capital

4,978 employees in five countries, Sweden, Norway, Germany, Luxembourg and Belgium, all actively helping to provide our customers with a better experience and evolve Bilia further, enabling the Group to achieve its financial goals. Employees work mainly in the Service Business, Car Business, and Fuel Business.

Material capital

136 facilities in five countries, where customers can meet us to get help to buy a new or used car, purchase car accessories, buy vehicle fuel and wash, service or repair of their car and other services that simplify owning a car.

Financial capital

SEK 8,349 M invested capital from shareholders, lenders and lessors. SEK 1,906 M reinvested into the operation in the form of facilities, machinery and equipment.

114,000 service subscriptions

4,978 employees in five countries

136 facilities in five countries

8,349 SEK M invested

capital

Bilia's vision is to be "The best service company in the business – through consideration for our customers and colleagues".

Bilia's business model is to be a full-service supplier, a One Stop Shop with a wide range of products and services that evolve in line with the customers' requirements and wishes. Customers should have access to support for everything related to owning a car. At Bilia we aim to treat our customers as guests and create a better experience.

Bilia offers

Proud and considerate employees who help our customers 5 Sales in five countries 1 Eight car brands with different fuel options 2 Sales and customer service via telephone and digital channels 4 Easily accessible and modern facilities to visit 3

Sustainable value creation

Shareholders

• Profit for the year SEK 807 M
• Dividend of SEK 483 M
• Market capitalisation of
• SEK 10,928 M

Customers

• A better experience
• Simple car ownership
• A considerate service company

Employees

• Jobs
• Professional and personal development
• Pay, pension and benefits

Financiers and suppliers

• Long-term, mutually beneficial partnerships
• Lease payments of around SEK 524 M
• Interest payments of around SEK 71 M

Society and the environment

• Reduced energy consumption and emissions to land, water and air
• Focus on a safe, healthy working environment
• Strives to contribute to sustainable production and consumption

35.4 %

Total return on the Bilia share

4.5

percentage points higher customer satisfaction compared to other dealers in Sweden and Norway.

85 % Employee dedication index compared to 78 % for benchmark.

1.3 times. The ratio of net debt to EBITDA, exluding IFRS 16, compared to our financial goal of 2.0

times

75 % Share of ISO-certified facilities in Sweden and Norway

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 2019. 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 new and used cars and transport vehicles plus supplementary services such as financing and insurance. Bilia has 136 facilities in Sweden, Norway, Germany, Luxembourg and Belgium plus two online auction sites, one in Sweden and one in Norway.

Bilia's vision is to be the best service company in the business – through consideration for our customers and colleagues. Bilia strives continuosly to be the best service company in the business through full-service workshops and showrooms, with high availability and a customer service that is there to help around the clock, every day.

Bilia's Service Business includes a well-developed range of services and service concepts that are continuously developed to simplify the car ownership for the customers. The Service Business includes workshop services, spare parts, store sales and e-commerce.

Bilia's Car Business includes sales of both new and used cars and transport vehicles, plus supplementary services such as financing and insurance. Bilia sells cars from Volvo, BMW, Toyota, Renault, Lexus, MINI, Dacia and Alpine and transport vehicles from Renault, Toyota and Dacia.

Bilia's Fuel Business comprises the sale of fuels and car washes.

The Bilia share

The total number of shares in the company at 31 December 2019 was 102,799,952, including holdings of own shares of 2,666,210. 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 2019 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. Bilia has exercised the authorisation during 2019 to buy back Bilia shares and has during the year repurchased 817,210 of its own shares at the end of the year, which is 2.6 per cent of the total number of shares. 1,849,000 shares were repurchased in 2017.

Key figures

In addition to financial definitions according to IFRS standards, key ratios are used as performance indicators to enable investors and Bilia's management to gauge Bilia's performance. For definitions, see page 114.

2017	2018	2019
27,492	28,382	29,508
1,006	1,034	1,239
1,006	1,034	1,193
3.7	3.6	4.2
923	943	1,125
923	943	1,079
896	922	1,014
691	734	807
6.75	7.25	8.00
1.0	1.3	1.3
23.4	20.5	15.8 1)
27.0	26.5	26.5
355	542	577 2)
24	24	20 3)
26	29	32
4,708	4,785	4,978

1) Return on capital employed amounted to 20.8 per cent, excluding IFRS 16.

2) Operating cash flow amounted to SEK 423 M, excluding IFRS 16.

3) Equity/assets ratio amounted to 24 per cent, excluding IFRS 16.

Notable events during the year

● Netbil Begagnat AB (Netbil), a company in the Bilia Group that sells older used cars, of all car brands, via two different sales channels – online auctions and showrooms – opened a further two facilities in the first quarter: Netbil in Kungens Kurva, southern Stockholm and Netbil in Jägersro, Malmö.

● In February Bilia signed an agreement to acquire Jensen & Scheele Bil AS. The business is located in Halden, Østfold, south of Oslo in Norway. Jensen & Scheele Bil AS comprises a complete Volvo dealership, a body shop and a facility for sales of used cars including a service workshop. The company joined the Group on 1 April 2019. During the 2018 financial year, Jensen & Scheele Bil AS's turnover amounted to approximately NOK 370 M, with an average operating margin of around 3.5 per cent over the past four years.

● Netbil Begagnat AB (Netbil) opened a further facility for sales of used cars in Gothenburg during the third quarter.

Five out of seven

facilities are now opened as a part of the new strategic focus on sales of used cars older than thre years, of all car brands.

● Bilia's Board of Directors reached an agreement with Managing Director and CEO Per Avander that he may remain in his current position until 2026.

● An agreement was signed to acquire En Bättre Däckaffär Scandinavia AB, which had a turnover of approximately SEK 14 M in 2018 and 3 employees. The capital employed in the operation plus agreed surplus value amounts to approximately SEK 6 M. Bilia took over the operation on 1 October 2019.

● Bilia's Board decided to buy back the company's own shares. The maximum number of shares was 1,000,000. During the fourth quarter, 817,210 shares were bought back for a total purchase price of SEK 79 M.

Sales and earnings

Net turnover amounted to SEK 29,508 M (28,382). For comparable operations and adjusted for exchange rate fluctuations, net turnover was on a par with last year.

Operating profit amounted to SEK 1,125 M (943) and SEK 1,079 M excluding IFRS 16. Operating profit for 2019 was negatively affected by a one-off write-down of intangible assets in Western Europe, Germany, which amounted to SEK 20 M. The operational earnings amounted to SEK 1,239 M (1,034) and SEK 1,193 M excluding IFRS 16. The operational margin was 4.2 per cent (3.6) and 4.0 per cent excluding IFRS 16.

The Service Business reported a profit higher than last year, mainly attributable to strong demand.

The Car Business recorded a profit that was higher than last year. The improvement can be attributed to sales of used cars.

The Group's underlying overheads were just under 2 per cent higher compared with last year. Overheads amounted to 12.9 per cent of net turnover, which was 0.1 percentage points higher than last year. As a result of the profit level and customer satisfaction during the year, a provision totalling SEK 29 M (24) was made for employee bonuses in Sweden.

The operation in Sweden reported a profit of SEK 950 M (769) and SEK 923 M excluding IFRS 16. The margin amounted to 5.3 per cent (4.3) and 5.2 per cent excluding IFRS 16. Profit in the Norwegian operation amounted to SEK 277 M (258) and

SEK 262 M excluding IFRS 16. The margin was 3.7 per cent (3.5) and 3.5 per cent excluding IFRS 16. The operation in Western Europe reported a profit of SEK 91 M (73) and SEK 88 M excluding IFRS 16. The margin was 2.2 per cent (2.3) and 2.2 per cent excluding IFRS 16. The operating loss for the Parent Company for the whole year amounted to SEK –84 M (–70).

Profit for the year amounted to SEK 807 M (734) and SEK 838 M excluding IFRS 16. Earnings per share amounted to SEK 8.00 (7.25). Exchange rate fluctuations did not have a material impact on profit.

Acquisition of non-current assets

Acquisitions of non-current assets amounted to SEK 246 M (271) excluding lease vehicles and SEK 1,906 M (1,718) including lease vehicles. Replacement investments represented SEK 48 M (67), expansion investments SEK 67 M (75), environmental investments SEK 45 M (7), investments in new construction and additions to properties SEK 53 M (86), leases SEK 33 M (36) and lease vehicles SEK 1,660 M (1,447).

Financial position

The balance sheet total increased by SEK 4,010 M during 2019 and amounted to SEK 16,081 M. The increase can mainly be attributed to the introduction of the new accounting standard IFRS 16 Leases, which increased the balance sheet total by SEK 2,597 M, but the increase could also be attributed to higher car inventories compared with last year, mainly related to new tax regulations in Sweden.

Equity increased by SEK 271 M during 2019, amounting to SEK 3,186 M. A dividend of SEK 483 M was paid to the shareholders during the year. During the year, Bilia bought back 817,210 of its own shares at an average price of SEK 97 per share, which equates to a total purchase price of SEK 79 M.

The equity/assets ratio amounted to 20 per cent (24), and 24 per cent excluding IFRS 16.

Net debt increased by SEK 2,890 M in 2019 and amounted to SEK 4,493 M. The increase can mainly be explained by the introduction of the new accounting standard IFRS 16 Leases, which affected net debt by SEK 2,620 M. Excluding lease liabilities attributable to IFRS 16, net debt amounted to SEK 1,873 M, an increase of SEK 270 M since December 2018. A dividend of SEK 483 M was paid to shareholders during the year, which is why net debt adjusted for this payment decreased by SEK 213 M. The ratio of net debt to EBITDA excluding IFRS 16 was 1.3 times.

Liquidity remained good, and at the end of December a receivable of SEK 55 M (37) was reported from the banks (Nordea and DNB). Bilia's combined credit limit with Nordea and DNB amounts to SEK 1,500 M.

GROUP DIVIDED INTO SERVICE, CAR AND FUEL BUSINESS

Operational
		Net turnover, SEK M 1)			earnings, SEK M				Margin, %
	2017	2018	2019	2017	2018	2019	2019 2)	2017	2018	2019	2019 2)
Service Business	5,998	6,453	7,052	704	766	945	920	11.7	11.9	13.4	13.0
Car Business	21,607	21,988	22,678	333	304	348	328	1.5	1.4	1.5	1.4
Fuel Business	1,141	1,297	1,338	32	30	25	25	2.8	2.3	1.8	1.8
Parent Company, other	–1,254	–1,356	–1,560	–63	–66	–79	–80	—	—	—	—
Total	27,492	28,382	29,508	1,006	1,034	1,239	1,193	3.7	3.6	4.2	4.0

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

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

2) Excluding IFRS 16.

GROUP

		Net turnover, SEK M			earnings, SEK M				Margin, %
	2017	2018	2019	2017	2018	2019	2019 1)	2017	2018	2019	2019 1)
Sweden	17,235	17,742	17,811	773	769	950	923	4.5	4.3	5.3	5.2
Norway	7,324	7,473	7,526	243	258	277	262	3.3	3.5	3.7	3.5
Western Europe	2,923	3,143	4,146	53	73	91	88	1.8	2.3	2.2	2.2
Parent Company, other	10	24	25	–63	–66	–79	–80	—	—	—	—
Total	27,492	28,382	29,508	1,006	1,034	1,239	1,193	3.7	3.6	4.2	4.0

1) Excluding IFRS 16.

STATISTICS CAR AND SERVICE BUSINESS

Growth in the Service		Sweden			Norway		Total
Business, %	2017	2018	2019	2017	2018	2019	2017	2018	2019
Change from last year	13.1	5.2	7.1	5.7	10.3	9.4	12.8	6.2	7.7
Underlying turnover	7.5	4.1	6.9	4.3	3.8	5.3	6.6	4.0	6.6
Calendar effect	0.8	0.4	0.0	0.8	0.8	0.0	0.8	0.5	0.0
Adjusted turnover	8.3	4.5	6.9	5.1	4.6	5.3	7.4	4.5	6.6

		Deliveries, new cars			Deliveries, used cars		Order backlog, new cars
Number of cars	2017	2018	2019	2017	2018	2019	2017	2018	2019
Sweden	36,853	34,960	32,998	32,951	33,787	33,981	7,715	6,528	8,218
Norway	9,940	9,896	9,006	10,301	9,800	10,638	2,792	2,065	2,231
Western Europe	6,103	5,468	6,666	4,381	4,526	5,745	739 1)	1,053	1,318
Total	52,896	50,324	48,670	47,633	48,113	50,364	11,246 1)	9,646	11,767

1) Earlier figures published for Western Europe have been corrected.

BILIA'S DELIVERIES OF NEW CARS BROKEN DOWN BY BRAND, %

BILIA'S SHARE OF EACH BRAND'S SALES, %

	Volvo		BMW		Toyota		Renault		MINI		Lexus		Dacia		Alpine
	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018
Sweden	24	25	25	27	20	21	25	25	25	26	34	37	13	18	100	—
Norway	34	35	32	32	9	9	—	—	30	8	23	22	—	—	—	—
Western Europe	—	—	2	1	—	—	—	—	2	2	—	—	—	—	—	—

Financial goals

Bilia's financial goals apply over a business cycle.

Bilia's overall financial goals were achieved 2019, as below:

• Operational margin 3.8 per cent (goal 2.5)
• Return on equity 26.5 per cent (goal 18.0)
• Payout ratio 65 per cent (goal over 50)
• Total growth 4.0 per cent (goal 5–10)
• Ratio of net debt to EBITDA, excluding IFRS 16, 1.3 times (goal not over 2.0)

During 2019 and 2018 Bilia did not achieve the goal for growth, attributable to the Car Business. The average growth over the past five years was 10 per cent. Goal fulfillment for net debt in relation to EBITDA, times, is measured excluding IFRS 16.

Goals and goal fulfillment

0

5

10

15

17 18 19

Goal, 5–10 %

Strong growth in the Service Business in 2019

SERVICE. The Service Business includes services and concepts that simplify car ownership. These encompass workshop services, spare parts, wheel storage, car dismantling, store sales and online sales.

Market and business environment

As a result of high new car sales in recent years, the overall stock of cars is increasing, which in turn increases demand for services. The reported turnover in 2019 for the Service Business increased by approximately 9 per cent. Adjusted turnover increased by about 6 per cent compared with last year, for Sweden by 7 per cent, for Norway and Western Europe by 5 per cent. The operational margin for the year amounted to 13.4 per cent and was the company's highest ever operational margin. Service subscriptions simplify car ownership for the customer and also allow Bilia regular meetings with its customers. These subscriptions had good growth during the year of 8 per cent. The aim is to have 130,000 service subscriptions within two years.

Events during the year

On 1 January Bilia took over the service workshop, Furubakken in Norway. On 1 October the Group took over En Bättre Däckaffär Scandinavia AB as part of its focus on growing and strengthening Bilia's position in the wheel business. Tyre hotel subscriptions increased by 12 per cent during the year. The goal has been raised from 350,000 to 600,000 stored wheels. During the year, the number of service subscriptions sold for used cars increased, as a result of Bilia's new strategic initiative in older used cars, of all car brands, under the names Netbil Begagnat and Bilia Outlet.

Result development

Result development for the Service Business remained positive in 2019 and operational earnings, excluding IFRS 16, increased by SEK 154 M or 20 per cent compared with last year. Operational earnings, excluding IFRS 16, amounted to SEK 920 M (766), with a margin of 13.0 per cent (11.9). The improved profit was primarily attributable to higher turnover compared with last year.

Challenges and opportunities

There is a continued need to recruit more technicians to meet the demand for servicing. New technologies place demands on ongoing employee training. Bilia invests heavily in training every year alongside general agents, to ensure that we can offer the latest expertise. One long-term challenge is that electric cars are believed to bring lower servicing turnover than cars that run on fossil fuels. The number of electric cars sold is expected to increase in the years ahead, provided the tax systems are favourable. However, electric cars currently comprise only around 1 per cent of the car stock in Sweden and around 6 per cent in Norway. For this reason, the knock-on effects for the Service Business in the years to come are expected to be limited. We will gradually adapt our business in line with the changing stock of cars.

SERVICE BUSINESS DIVIDED INTO GEOGRAPHIC MARKET

	Net turnover, SEK M 1)			Operational earnings, SEK M		Margin, %
	2019	2018	2019	2019 2)	2018	2019	2019 2)	2018
Sweden	4,442	4,148	674	659	520	15.2	14.8	12.5
Norway	1,786	1,632	205	197	176	11.5	11.0	10.8
Western Europe	824	673	66	64	70	8.1	8.0	10.4
Total	7,052	6,453	945	920	766	13.4	13.0	11.9

1) Net turnover includes internal deliveries.

2) Excluding IFRS 16.

SHARE OF BILIA´S NET TURNOVER 2019

SHARE OF BILIA´S OPERATIONAL EARNINGS 2019

THIS IS THE SERVICE BUSINESS

• Tyre hotel

• Accessory services • Car dismantling

• Service centres
• Damage centres • Glass centres
• Spare parts
• Stores and e-commerce
• Tyre centres

OUR BRANDS

SWEDEN

Adjusted turnover in the Service Business in Sweden increased by 6.9 per cent and operational earnings, excluding IFRS 16, increased by SEK 139 M and amounted to SEK 659 M (520). The number of mechanics in Sweden increased slightly during the year, but we still have a need to employ more mechanics.

NORWAY

Adjusted turnover in the Service Business in Norway increased by 5.3 per cent and operational earnings, excluding IFRS 16, increased by SEK 21 M and amounted to SEK 197 M (176).

WESTERN EUROPE

Adjusted turnover in the Service Business in Western Europe increased by 5.1 per cent and operational earnings, excluding IFRS 16, decreased by SEK 6 M and amounted to SEK 64 M (70).

SERVICE BUSINESS

	2019	2018
Net turnover, SEK M 1)	7,052	6,453
Share of net turnover, % 1)	24	23
Growth, %	9.3	7.6
Operational earnings, SEK M	945	766
Operational earnings excluding IFRS 16,SEK M	920	766
Margin, %	13.4	11.9
Margin excluding IFRS 16, %	13.0	11.9
Number of employees	3,358	3,238
Number of facilities	108	107
Number of service subscriptions	114,188	105,359
Number of wheels in storage	348,244	310,738

1) Net turnover includes internal deliveries.

Highest used car result ever

CAR. In its Car Business, Bilia sells eight attractive brands of new and used cars and transport vehicles. The car sale often leads on to financing, insurance, servicing, tyre hotel and other services during the car ownership.

Market and business environment

The market for new cars remained at a historically high level during 2019, although slightly below the past two years. Demand for used cars was very strong during the year, while the demand for new cars was lower than in previous years. In Sweden, demand for electric and hybrid cars increased during the year, which can be explained by new tax systems. In Norway the demand for electric cars remained high, there as a result of the prevailing tax system. In Germany, there continues to be stiff competition among the German brands for new cars. In Belgium and Luxembourg the market remained strong overall in 2019, but the premium segment that includes BMW has seen somewhat weaker development.

Events during the year

Three new facilities for used cars were opened in Sweden, in Stockholm, Malmö and Gothenburg, under the name Netbil Begagnat. There are now five of a total of seven planned facilities in Bilia's new strategic focus on sales of older used cars, of all car brands. During 2019 more used cars than new cars were sold.

In April 2019 Bilia took over a Volvo dealership for new and used cars in Halden, Norway.

Result development

The Car Business's deliveries of new cars and transport vehicles for comparable operations decreased by 6 and increased by 17 per cent respectively. Deliveries of used cars increased by 2 per cent compared with last year. Turnover for the Car Business increased by 3 per cent on last year.

Operational earnings, excluding IFRS 16, for the Car Business were SEK 24 M higher than last year. Profit from sales of used cars, excluding IFRS 16, was SEK 172 M higher than last year, mainly attributable to a higher turnover and gross profit margin. Profit from sales of new cars, excluding IFRS 16, was SEK 148 M lower than last year, mainly attributable to fewer delivered cars and to a lower gross profit margin in Sweden.

Challenges and opportunities

Sales of new cars are expected to remain at historically high levels in 2020, if slightly lower than in the previous three years. If the current economic boom starts to slow, this could have an adverse effect on sales of new cars. Sales of used cars do however tend to increase in a market with lower sales of new cars.

77% NET TURNOVER 2019

SHARE OF BILIA´S

SHARE OF BILIA´S OPERATIONAL EARNINGS 2019

28%

THIS IS THE CAR BUSINESS

• Sales of new and used cars
• Financing and insurance
• Sales of accessories

OUR BRANDS

CAR BUSINESS DIVIDED INTO GEOGRAPHIC MARKET

	Net turnover, SEK M 1)			Operational earnings, SEK M		Margin, %
	2019	2018	2019 2019 2) 2018			2019	2019 2)	2018
Sweden	13,052	13,143	251	239	219	1.9	1.8	1.7
Norway	6, 204	6,300	72	65	82	1.2	1.0	1.3
Western Europe	3,422	2,545	25	24	3	0.7	0.7	0.1
Total	22,678	21,988	348	328	304	1.5	1.4	1.4

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

2) Excluding IFRS 16.

SWEDEN

The Car Business in Sweden reported an operational earnings, excluding IFRS 16, of SEK 20 M higher than last year, attributable to the sale of used cars. The operational earnings from the sale of used cars amounted to SEK 190 M (93), mainly attributable to higher gross profit margin. The lower result from the sale of new cars and transport vehicles was attributable to a lower gross profit margin and higher relative costs compared with last year.

NORWAY

The Car Business in Norway reported an operational earnings, excluding IFRS 16, of SEK 17 M higher than last year, attributable to the sale of new cars. The result from the sale of used cars amounted to SEK 41 M (–8), mainly attributable to higher gross profit margin.

WESTERN EUROPE

The Car Business in Western Europe reported an operational earnings, excluding IFRS 16, of SEK 21 M higher than last year, mainly due to higher turnover and gross profit margin in the sale of used cars. The result from the sale of used cars amounted to SEK 3 M (–22).

CAR BUSINESS

internal sales.

	2019	2018
Net turnover, SEK M 1)	22 ,678	21,988
Share of net turnover, % 1)	77	77
Growth, %	3.1	1.8
Operational earnings, SEK M	348	304
Operational earnings excluding IFRS 16,SEK M	328	304
Margin, %	1.5	1.4
Margin excluding IFRS 16, %	1.4	1.4
New cars delivered	48,670	50,324
Used cars delivered	50,364	48,113
Number of employees	1,149	1,109
Number of facilities	96	95

1) Net turnover does not include eliminations for

Stable sales in the Fuel Business

FUEL. Bilia wants to follow the customer throughout the life of their car ownership, including washing and refuelling. Fuel sales and car washes mainly operate in Sweden under the brand names Tanka and Tvätta.

Market and business environment

Sales of fuel increased during the year, despite sharp rises in fuel prices. Sweden has rules whereby fuel retailers are obliged to help reduce climate impact. This should be achieved by adding biofuel, HVO, to the petrol and diesel they sell. By adding Add-blue for newer diesel cars, the environmental impact is reduced. Bilia is working on implementing HVO and Add-blue on its service stations. Bilia uses suppliers that comply with the necessary regulations.

Events during the year

Bilia has continued its efforts to renew the Tanka concept, make the service stations attractive, safe and accessible to customers. At all our Tanka stations in Sweden, customers can now pay using the CarPay mobile app. The work on introducing HVO at our Tanka stations is ongoing and now HVO is offered in the petrol and diesel sold at three stations.

Result development

The Fuel Business is concentrated to Sweden and profit for 2019 amounted to SEK 25 M (30). Sales of fuels increased by 3.2 per cent. Bilia's customers did 160,000 car washes during the year.

Challenges and opportunities

It's a challenge getting approval for new locations so as to extend service and replace facilities that have been closed. The focus for the Tanka operations is to increase the share of renewable energy in order to contribute to a more sustainable society. The increasing number of electric and hybrid cars could affect fuel sales in the longer term, but could also present an opportunity to open our own charging stations in the future. The market for automated service stations for car washes is growing and we believe that the future car owners will want to wash their car in environmentally friendly car washes.

"Bilia strives to offer sustainable fuels by adding biofuels at its service stations"

FUEL BUSINESS

	Net turnover, SEK M 1)		Operational earnings, SEK M		Margin, %
	2019	2018	2019	2018	2019	2018
Total	1,338	1,297	25	30	1.8	2.3

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

SHARE OF BILIA´S OPERATIONAL EARNINGS 2019

2%

THIS IS THE FUEL BUSINESS

• Fuel sales
• Car washes

OUR BRANDS

SWEDEN

Fuel sales and car washes primarily operate in Sweden under the brand names Tanka and Tvätta.

FUEL BUSINESS

	2019	2018
Net turnover, SEK M 1)	1,338	1,297
Share of net turnover, % 1)	4	5
Growth, %	3.2	13.7
Operational earnings, SEK M	25	30
Margin, %	1.8	2.3
Number of washed cars	160,037	166,966
Number of employees	30	32
Number of facilities	51	50

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

Risks

● Risks and risk takings are a natural part of Bilia's business operations. A good understanding of the risks together with an efficient way of identifying, evaluating and managing the risks are important for Bilia's short-term and long-term success. Properly handled risks can add value and business benefits.

Bilia has a yearly formal process on Group level to identify, plan and reduce identified risks in the business. Some of the identified risks Bilia can influence while others are beyond the Group's control.

The following pages include a description of the risks that have been identified within the framework of Bilia's risk management process together with a short description of the opportunities associated with the risk area and the measures taken to manage these risks.

For financial risks see Note 28 "Financial risks and risk management".

RISK	RISK DESCRIPTION	OPPORTUNITIES AND MANAGEMENT
Market risks	Demand for Bilia's products and services are influenced by fluctuations in the business cycle. The Car Business is the part of the operations that are influenced most by changes in the busi ness cycle. In a recession, some customers choose to postpone or cancel their car purchase. Factors that influence the business cycle and the market trend include the labor market situation, stock market performance, opportunities for customers to obtain financing, interest rate levels and fuel prices. Events, such as natu ral disasters and pandemics, can have significant consequences for Bilia's turnover, through direct or indirect consequenses such as product shortage, economic down turn and/or impact on own production. Reduced demand for cars may also affect the value of cars in stock and cars sold with guaranteed residual values.	The Service and Fuel Businesses are less impacted by changes in the business cycle since cars require service, repairs and fuel regardless of the state of the economy. Sales of used cars are less affected by changes in the business cycle as customers choose a used car over a new car in these situations. However, a deep recession could also affect the Service Business and sales of used cars. Bilia continuously work close to the general agents to understand the market development in order to iden tify activities to secure sustainable sales and profitability.
Risks related to authorisation agreements	Bilia's core business consists of distribution and servicing of cars and transport vehicles in five countries. For new car sales through new and existing facilities, Bilia needs the approval from the respective general agent, as there is no special rules govern ing competition for new car sales in the EU. A car manufacturer and/or general agent can unilaterally recall a sales authorisation and terminate the sales agreements with Bilia. Further, a car manufacturer and/or general agent can become insolvent with disturbance in deliveries and uncertainties in the market as a result. Volvo, BMW and Toyota are the largest car manufacturers/ general agents for Bilia why a recall or termination of authorisa tion agreements, a changed content and/or balance between the manufacturer/general agent and Bilia could have significant negative impact on Bilia's operations.	Good relations with car manufacturers/general agents gives op portunities for continued expansion and reduce the risk for recall of sales authorisation for new car sales. Bilia is not dependent on one single manufacturer/general agent but instead has several collaboration partners, which reduce the risk compared to being dependent on one single manufacturer/general agent. Sales of used cars and the Service Business are not subject to the approval from the general agents for establishment and ex pansion of business. Bilia continuously works on strengthening and developing its customer relationship to maintain a strong position on the market.
Risks related to authority decisions and opinion position	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. Bilia's operations can be effected by the general opinion and authority decisions mostly regarding queries on the car's part in the society in relation to climate and environmental issues.	New regulatory decisions and changes in opinion can result in an improved or lower demand for Bilia's products and services. Adapting the operations to changes in laws and regulations is an ongoing process and are achieved by monitoring relevant regulatory changes and analyses of possible measures. Adjust ments to products and services are made ongoing on the basis of changes in opinion.

RISK	RISK DESCRIPTION	OPPORTUNITIES AND MANAGEMENT
Risks for alternative sales channels	Bilia mainly operates through its own facilities, which are visited by the customers in connection with sale of cars and services. Bilia also has digital sales channels for used cars and accessories. These digital sales channels does not comprise a significant part of Bilia's net sales. One car manufacturer/ general agent has established an own digital sales channel and announced a future target for direct sales of cars to customers. If the car manufacturers/general agents, which Bilia is collabo rating with, should move, fully or partly, into own sales channels then Bilia's operations could be impacted negatively.	Bilia follows the development of alternative sales channels closely and will in the future make whatever adjustments assessed required. Bilia continuously works on strengthening and developing its customer relationship to maintain a strong position on the market.
Risks related to competitiveness and technological development of the products	Bilia is dependent on the ability of the Group's business partners to develop competitive products that incorporate the techno logical advances. One example is development of car models in line with the ongoing discussion about sustainable fuel alterna tives. The current tax systems on environmental friendly cars, especially in Sweden and Norway, increase the demand on car models that fulfills these requirements. Future technological de velopment of the products can influence Bilia's Service Business for example in relation to the complexity of the products and/or motor technique.	Bilia's business partners currently offer several environmental friendly cars and assesses to be well equipped to follow the technological development in long-term. Our business partners currently offer environmental friendly cars, which match the current tax systems from the governments, and new launches are planned. Bilia's business partners are financially well estab lished businesses with resources to long-term assure the com petitiveness and technological development of the products.
Risks related to development of own concepts and services	To maintain and strengthen its competitiveness, Bilia must develop concepts and services that appeal to the customers. Bilia's ability to develop new concepts and services also helps to strengthen the suppliers' brands and create customer loyalty.	Bilia continuously develops products and services based on the customers need and requests. One example of own concepts and services is wheel storage subscriptions. This development work requires resources. Bilia is confident that the Group has the resources required to remain in the forefront of service development.
Risks related to key persons and coworkers	There is a future risk that Bilia will not be successful in recruit ing or keeping the competent people to the extent that is requested. Both management and coworkers contribute with knowledge about the business and the operation and actively participate in developing own concepts and services. People with a vehicle technical competence is a scarce resource, which may influence future growth within the Service Business negatively.	Bilia has good results in the annual employee survey compared to other companies. Bilia focus on keeping and further improve the environment for our key persons and coworkers to be an attractive employer. Bilia works actively together with schools to contribute to make the vehicle technician profession more attractive and to contribute to a good quality on the education that is offered.
Risks related to facilities and environment	Bilia leases most of the facilities for the operations. As a tenant, Bilia may become dismissed from the lease at the end of the rental period, which would mean that Bilia would lose strategic business locations. If contamination should be confirmed at any of Bilia's facilities, there is a risk that Bilia may be held responsible for decontami nation of the facility. Such decontamination may be associated with considerable costs.	To lease facilities give Bilia flexibility to adjust the number of facilities and the location of the facilities to be favourable for the operations. Bilia works, as an integrated part of its opera tions, to minimise the negative effect on the environment. 75 per cent of the facilities in Sweden and Norway are certified according to ISO 14001. These certifications mean clear processes to discover and act on any deviations.
Risks related to acquisitions	As part of realising BIlia's strategic growth target, businesses are acquired. If the status of the acquired operations were to differ significantly from what was known before the acquisition, or if the integration of the operations would fail, it could influence Bilia negatively.	Through acquisitions, Bilia improves its operations from a stra tegic and financial perspective. New operations are continu ously integrated and follow-up versus expected performance is made during the integration period to early identify and act on any deviations.
IT related risks	Bilia's operations are dependent on a well working IT-environ ment. A centralised and coordinated IT-environment gives the Group advantages but at the same time mean higher sensitiv ity for disturbances such as for example downtime of significant operational systems. Further, there is a risk for external attacks on the IT-environment through viruses or hacking, alternatively trespassing and information theft.	A centralised and coordinated IT-environment gives the Group advantages such as lower costs and centralised competence, which favors the development work within the IT-area. Actions have been taken to minimise effects of downtime and external attacks on the IT-environment. Bilia works continuously to update the processes to manage external attacks on the IT environment and analyses existing and new risks and threats.
Risks related to non-compliance of laws and rules	A number of laws and rules regulates Bilia's operation. Bilia's ability to comply with laws and rules and deliver high quality in all customer relations is crucial for the customer confidence. An inability to comply with laws and rules and deliver high quality to customers may result in legal or regulatory penalties, finan cial losses and a negative impact on the customer confidence in the Bilia brand.	To comply with laws and rules and to minimise the risk exposure Bilia has developed a framework, which includes the Bilia Code of Conduct, Competition code, group policies and steering documents. For certain areas such as competition and integrity protection there are special compliance programs with training for the Group's coworkers.

Guidelines for remuneration to senior officers

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

The AGM for 2019 has decided on the following guidelines for compensation to the management. For detailed information, see the minutes of the AGM at the company's website, bilia.com.

Remuneration to the Managing Director (MD) 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 MD, the CFO of Bilia AB, and the MD of Bilia Personbil AS, Norway. For the composition of the Group Management and remuneration, see Note 8, "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 MD 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 MD and Deputy MD are payable as a part of the total remuneration.

The Board of Directors will propose to the 2020 AGM, in accordance with new requirements in the Swedish Companies Act, to adopt new guidelines for remuneration to the Group Management that apply until the 2024 AGM.

In the event of significant changes in the company's ownership structure that affect the conditions or content of their jobs, the Deputy MD of Bilia AB and one top executive in a subsidiary are entitled to terminate their own employment 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.

Share issues

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 as the warrants expired in 2019 without any allocation.

For further information see Note 13 "Earnings per share".

Holding of own shares

The 2019 AGM gave the Board of Directors a new authorisation to buy back the company's own shares. During 2019 a total of 817,210 shares were repurchased for a total price of SEK 79 M, which amounts to an average price per share of SEK 96.70. No shares were repurchased during 2018. A total of 1,849,000 shares were repurchased during 2017 for a total price of SEK 147 M, which amounts to an average price per share of SEK 79.50. Total holding of own shares amounts to 2,666,210. Bilia's shares have a quotient value of SEK 2.50.

"Industry analysts predict that the car markets where Bilia is represented will be at a slightly lower level in 2020 than in 2019, but still at a high level from a historical perspective"

Parent Company

Bilia AB is responsible for the Group's management, strategic planning, law, purchasing, public relations, business development, marketing, HR, real estate activities, accounting and financing. The Parent Company's operating loss amounted to SEK 84 M (loss: 70).

Future outlook

Industry analysts predict that the car markets where Bilia is represented will be at a slightly lower level in 2020 than the last three years, but still at a high level from a historical perspective. The service markets, where Bilia is represented, are expected to remain at the same level in 2020 as they were in 2019. 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 1,064 M, be disposed of as follows:

SEK M

Total	1,064
To be carried forward	538
Cash dividend, SEK 5.25 per share 1)	526

1) Based on the number of shares outstanding at 31 December 2019, 100,133,742 (excluding holdings of own shares, 2,666,210).

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 5.25 per share, totalling SEK 526 M. The dividend is divided into two payment occations. The Group's equity/assets ratio will thereafter amount to about 17 per cent.

The proposed cash dividend is consistent with Bilia's goal, which is that at least 50 per cent of the net profit per share 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 10 March 2020.

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.

Sustainability Report

SUSTAINABILITY. Bilia's business is characterised by systematic, active sustainability management with consideration for the operation and employees, the wider environment and customer relations. For Bilia, sustainability work is an integral part of good corporate citizenship and of creating sustainable, long-term solutions.

Organisation, responsibility and monitoring

The Bilia Group CEO is ultimately responsible for the Group's sustainability work, overriding goals, action plans and performance measures. In the business planning process, responsibility for goal achievement and action plans is delegated to the MD of each company.

Once the goals are broken down, the companies' managers and personnel step in to implement and follow up the goals, as well as detailed action plans.

Bilia's sustainability work is monitored by internal audits, supplier assessments, systematic health and safety work, annual performance appraisals and case management. This Sustainability Report is examined by Bilia's external auditor, KPMG. A digital employee survey is conducted annually, and this enables the results to be benchmarked within and beyond Bilia's industry.

In Sweden the Parent Company Bilia AB and the subsidiaries Bilia Group AB and Bilia Personbilar AB are certified to ISO 9001 and ISO 14001. During the year, parts of Bilia Center Metro AB were also added. In Norway, a further 19 facilities in Bilia Personbil AS were certified. Bilia has the ambition to extend its Group certification to include more subsidiaries.

During 2019, 75 per cent of Bilia's sites in Sweden and Norway were certified to both ISO 9001 and ISO 14001.

Code of Conduct and whistleblower system

Sustainability work is based on the Group's Code of Conduct, which applies to all employees and Board members of the Bilia Group. The Code of Conduct covers areas such as human rights, social conditions and employees, the environment and anti-corruption.

Bilia has a number of policies, rules and guidelines which reflect the values established in its Code of Conduct. For example there is an occupational health policy and an equal treatment policy. These policies cover areas such as non-discrimination, harassment, gender equality and diversity.

All employees in Bilia's companies are able to anonymously report violations of the Code of Conduct or any other irregularities in an external, digital whistleblower system. Implemented over the past three years, this system has replaced the old way of dealing with these issues internally. During 2019 seven incidents were reported to the system, and these have been dealt with and deemed to be unqualified. The number of reports has been assessed and is deemed to be at a normal level for comparable companies.

Bilia's most Significant Environmental Aspects

From a lifecycle perspective, procurement of products and services are significant to Bilia's direct and indirect environmental impact. Setting demands on procurement ensures that the supplier's ability to provide environmentally sound products and services is taken into account. With conscious purchasing, Bilia can choose products of good quality with lower environmental impact.

Combustion of fossil fuels leads to climate change and impacts on the air, land and water. Bilia's direct environmental impact is linked to business travel and internal transportation. In addition there are greenhouse gas emissions from transport carried out by general agents and suppliers. Bilia's system for internal video and teleconferences has successfully helped to reduce business travel in the Group, and emissions of climate-affecting gases and substances have fallen.

Correct management of commercial waste in the final stage of the life cycle limits hazardous emissions, while also creating the conditions for goods to be reused and the materials recycled. Waste is separated at source at Bilia's facilities. The environmental aspect is significant as large amounts of hazardous waste are handled as part of the operation.

Sales and servicing of used cars contribute to the reuse of products throughout their life cycle. Up until 2018, Bilia mainly focused on the sale of cars up to three years old. Older models have a higher environmental impact than new models. Most customers change to a newer car than their current one when they buy a used car. Our car dismantling operations take care of the vehicle at the end of its life cycle, while also reusing as many parts as possible.

Environment

Bilia strives to foster a good environment and to minimise the negative environmental impact of its operations. Some of Bilia's activities such as fuel sales, car washing, paint shops and large workshops must be reported under the Swedish Environmental Code. Bilia has decided to apply the same environmental principles in all its operations, whether or not the operation is subject to a reporting requirement.

The Group's purchasing department works in close cooperation with the environmental department. By placing demands on suppliers and other business partners, Bilia works actively to promote a good environment and to increase environmental awareness in its value chain.

Environmental aspects

During 2019, a process started to standardise Bilia's process for classifying and rating the operation's environmental aspects, both positive and negative. Significant Environmental Aspects should be representative of the operation and should consider the expectations and requirements of the wider world. Bilia's car dismantling facilities have a positive environmental impact by making use of car parts by material recycling.

waste water runs into the drainage system and often straight

Reduced emissions to land, water and air When a car is washed on a driveway or on the street, the

into the nearest lake or watercourse. Some 160,000 car washes take place at Bilia's car washes every year. The car washes are designed to reuse water and reduce water consumption. The waste water from these facilities passes through separators to eliminate the risk of heavy metals, oil and chemicals leaking out into the natural landscape. Similar heavy metals, oil and chemicals can occur in the waste water from our wheel washers and scrubbers. Bilia and its business partners face a challenge in finding more effective solutions to replace the conveyance of residual water classified as hazardous waste.

Bilia works with waste management contractors to find sustainable waste solutions with a higher recycling and recovery rate. For example, with one of its suppliers, in 2019 Bilia in Sweden has helped to reduce CO2 emissions by around 10,770 tonnes. These reductions relate to the following waste groups:

In 2019, Bilia did not report climate statistics to the Climate Disclosure Standards Board (CDP), as no benchmarking information was available for Bilia's field of operations. Bilia will report certain CDP information, Scope 1 and Scope 2, in its 2020 Annual Report.

Stakeholder analysis

One prerequisite for long-term value creation is that Bilia understands the demands and expectations of its stakeholder groups. An analysis has been conducted to determine which stakeholder groups have the greatest influence on and/or are most affected by Bilia's business activities and sustainability work. The four most important stakeholder groups were identified as being employees, customers, general agents and suppliers. In 2019, Bilia's management decided to evolve the process for stakeholder dialogue, and this work will be carried out during 2020.

Bilia has high demands on business partners, who are expected to meet the requirements of ISO 9001 and ISO 14001. When Bilia enters into agreements with suppliers, they must also comply with requirements based on the ten principles of the UN Global Compact.

This requirement has helped to enhance the cooperation with suppliers. Several of Bilia's suppliers have gained better knowledge of legislation, as well as better opportunities for improved environmental work. Bilia has also contributed to greater interest in sustainability issues. Positive feedback has been received from Bilia's suppliers.

Global Sustainable Development Goals 2030

Bilia contributes to several of the UN's 17 global Sustainable Development Goals (SDGs) 2030. Bilia focuses on the three which are currently deemed to be of the greatest relevance and importance to its operations, and to be linked with the highest demands and expectations from its stakeholders. These are Good Health and Well-Being (Goal 3), Quality Education (Goal 4), and Responsible Consumption and Production (Goal 12).

Björn Brodin, Sales Manager, Business Sales, Bilia Personbilar AB, Region Stockholm

What do you do to support business customers from an environmental perspective?

"We keep them constantly updated on how different fuels and powertrains affect both the environment and costs. The new tax system in Sweden (Bonus Malus) and the new measurement method for carbon dioxide emissions (WLTP) have had a tremendous impact on the choice of car, and on our job of guiding customers in the right direction."

What is important when it comes to choosing a car?

"A needs analysis is important in our role as an advisor. It gives us information about how the car will be used, driving distances, charging opportunities and acceptable costs. In certain situations a pure electric car may be the perfect choice, but in others a rechargeable hybrid might be better. A diesel car, which can now run on sustainable biofuels (HVO) could be an excellent eco-friendly choice for someone who drives long distances as th emissions are low. We constantly train our sales staff in environmental and financial issues related to choosing a car from an environmental perspective."

Focus on three UN global SDGs

Drugs are believed to be behind much of the rising crime involving violence, threats and shootings. Drug use is a problem for both the individual and the

company. Together with the occupational health service, Bilia has held training courses to highlight the problems associated with abuse and dependency. Bilia's drug and misuse policy contains guidelines on how to help and support employees who have been identified as having a problem.

No cash is handled at Bilia so as to minimise the risk of robbery, and to maintain a good, safe working environment.

Bilia also contributes to the goal by actively substituting environmentally hazardous substances. In 2019, Bilia has substituted chemical products and thus reduced the number of chemicals classed as carcinogenic, mutagenic and reprotoxic (CMR). CRMclassified products comprised just 0.15 per cent of all products used at Bilia in Sweden and Norway in 2019.

The car industry, including Bilia, faces a challenge in recruiting new employees to the Service Business. The challenges currently facing the company are a high

number of retirements, combined with low student numbers at high schools. One strategy is to attract and recruit technicians directly from high school. Bilia has therefore developed the Bilia Student Programme, which aims to ensure that students enjoy a safe and solid period of work experience with Bilia. The mentors who deal with the students are specially certified with an official qualification from the Swedish National Agency for Education. Bilia supports schools with programmes, material and training so that teachers have knowledge of the latest technical developments.

Bilia works with general agents who can and want to meet the requirements for sustainable production and consumption. During their life cycle, the products

and services that Bilia provides contribute to negative environmental impact, by using fossil fuels and producing emissions that can have an adverse impact on the climate, environment and health. Bilia has a responsibility to its customers and employees to describe the effects of its operations, products and services, and how adverse effects can be mitigated by making sustainable choices. We help customers to make decisions about their environmental impact by suggesting products based on an analysis of their needs, wishes and circumstances. We work closely alongside our suppliers, and help to disseminate knowledge and positive environmental actions in their organisations. At Bilia we work with the car throughout its life cycle, from factory, through several owners, and finally to car dismantling.

Social conditions and personnel

Competent, dedicated employees are vital to Bilia's continued success and long-term sustainability. With this in mind, the Group pursues an active and systematic personnel policy with an endeavour to be a responsible employer and a good corporate citizen.

Bilia respects freedom of association and signs collective agreements. Employees have the potential to influence their job situation, and some positions offer the option of working part-time or having some flexibility in working hours. Bilia primarily operates in countries with extensive rights to parental leave that include both parents.

Applicable legislation in combination with prevailing collective agreements lay the foundation for a reasonable work/life balance. More than 90 per cent of Bilia's employees have permanent positions, while others have some kind of temporary contract, such as seasonal jobs or holiday cover. Consultants are also brought in to some extent, mainly for IT services.

The average number of employees (FTE) in the Group during the year was 4,298 (4,221). The number of employees on 31 December 2019 was 4,978 (4,785).

Performance measures	2017	2018	2019
Average number of employees (FTE1) )	4,090	4,221	4,298
Turnover per average number of employees, KSEK	6,722	6,724	6,866
Value added per average number of employees, KSEK	951	964	1,032
Profit before tax per average number of employees, KSEK	219	219	236
Average age	40	39	39

1) Full-time employees

Creating dedicated employees through good leadership

Good leadership is fundamental to an employee's dedication and ability to perform. All managers at Bilia are responsible for supporting and fostering the well-being of groups and individuals. During 2019, Bilia launched Group-wide leadership expectations based on five basic principles: leading by example, taking ownership, building commitment, carrying through on decisions, and driving results. As part of efforts to strengthen leadership, internal leadership training is pursued continuously, which covers areas such as core values and the psychosocial work environment. In addition Bilia has an internal training unit for leaders called Bilia Academy.

Based on the annual employee survey, a leadership index and an employee dedication index are produced for the Group as a whole and for each individual company. Bilia's index is well above the benchmark both for the industry and in general, and the 2019 results also improved on the previous year. The employee dedication index measures dedication in the form of energy and clarity. Energy is linked to the employees' motivation, inspiration and pride. Clarity is linked to goals on an individual and group level, as well as to overriding goals. Here too Bilia's results far exceed the benchmark and have further increased during 2019.

In 2019, Bilia launched an upgraded introduction for new employees, based on our core values and compass.

Professional development

All employees should have opportunities for professional development. The basis for professional development is the performance appraisal held at least once a year. Together, the employee and their immediate manager arrive at a plan to

"Bilia provides ongoing customised training courses aimed at target groups with different positions and training requirements at Bilia"

promote personal development, job satisfaction and efficiency in the day-to-day work.

Bilia provides ongoing customised training courses aimed at target groups with different positions and training requirements at Bilia. In addition, technicians and sales personnel attend specially tailored training at a number of different levels. Furthermore, Bilia has a number of regularly recurring specific courses in e.g. competition law and labour law, aimed primarily at executives and managers.

Two personnel funds have been set up for Swedish employees; one for white collar and one for blue collar employees. All Swedish employees can apply for grants from the funds for a professional development activity, which does not have to be directly related to Bilia or their job.

A safe and healthy physical work environment

Bilia works continuously to improve the working environment at its various facilities. The main health risks among blue collar employees are hearing loss, vibration and ergonomic injuries, as well as allergies caused by exposure to chemicals. Occupational health and safety in the workshops is therefore aimed at ensuring that correct work practices are used by means of information, training and providing the right equipment. Full-time union representatives, The local management along with full-time union representatives and the organisation as a whole, deal with health and safety issues systematically, resolutely and expertly.

Study of vibration injuries

Since 2015, Bilia has been representing the automotive industry in an external study, with the aim of reducing vibration injuries in the workplace. The project is now in the phase of

testing machines that have been refurbished so as to reduce non ISO-weighted vibrations (high-frequency vibrations) by approximately 90 per cent.

Organisational and social work environment

All Bilia Group companies must work to ensure that the working environment is good both for the operation, and for the well-being of the employee.

Bilia's procedures for the Swedish operation with regard to the organisational and social work environment include setting annual goals and targeted safety inspections, as well as risk assessments where appropriate.

Gender equality and diversity enrich the organisation

Bilia strives for gender equality in its organisation, whereby men and women alike are represented in all professional categories. At present there are more men than women working at Bilia. In total, there are 15 per cent or 770 women and 4,208 men. Bilia is convinced that a more even gender distribution has positive effects on both the work environment and profitability, and would therefore like to recruit more women. There is a raft of initiatives under way, such as a stronger recruitment policy, regular follow-up and an external in-depth study. The goal is to have 20 per cent women employees by 2020.

Prioritised professional categories are in car sales, management, coaching, auto parts and car hire. Equal opportunity and treatment regardless of gender is a fundamental principle for Bilia. The HR department has central responsibility for gender equality issues, and among other things this includes work on pay monitoring and the gender equality plan.

As a further step in efforts to boost diversity in the Group, Bilia is working actively to recruit people from different ethnic backgrounds. Today around 30 different languages are spoken throughout the Group.

Key personnel and a skilled workforce

One challenge faced by Bilia is securing professional skills in the future. In light of this, Bilia pursues joint projects with Swedish automotive engineering schools, and offers students work experience and apprenticeships.

Bilia's vision is to offer the best student programme in the industry. In 2019, the Student Programme has grown further in Sweden. A certification programme for high school students is also being offered in Sweden in partnership with the Swedish Automobile Association (Motormännens Riksförbund). Certification entails that the student's know-how and skills are tested in the real world during a work practice period.

Charity

The Group supports the World Childhood Foundation, for example by making a donation for every new Volvo sold. In keeping with tradition, Bilia's Facebook followers vote each year for a recipient of a Christmas gift. The choice in 2019 was Vid din sida – Stockholm, an organisation that supports elderly homeless people in Stockholm.

Human rights and anti-corruption

Bilia supports internationally recognised human rights, as well as norms and initiatives for good business ethics.

Zero tolerance of discrimination and harassment

Bullying and degrading treatment are not permitted at Bilia, whatever form these may take. There is zero tolerance of all forms of discrimination and harassment. This was further highlighted in the leadership expectations issued to all managers in 2019.

Zero tolerance of bribery and corruption

Bilia has zero tolerance of bribery and corruption. Management clearly denounces these practices in the Code of Conduct.

Via formal attestation rules, the Code of Conduct, internal audits and its whistleblower system, Bilia has implemented procedures for counteracting and preventing bribery and corruption.

Competition on equal terms

Bilia is well aware of the rules governing competition on equal terms and operates in a way that is compatible with competition laws in all of the countries in which we operate. Bilia has formulated and implemented a competition code by which all employees are bound. Managers undergoing training and persons in senior executive positions sign a pledge every year to comply with this competition code.

Requirement specification in the supply chain

Bilia has a Group-wide procurement policy governing central and local agreements. A procedure for signing local agreements is in place, the aim being to highlight Bilia's demands on the environment and social conditions as well as sustainability aspects. The supply chain must comply with requirements regarding human rights, anti-corruption and the UN Global Compact. The requirements in the Code of Conduct apply to the entire value chain in which Bilia's products and services are included.

Corporate Governance Statement

CORPORATE GOVERNANCE. Bilia AB (publ) is a Swedish public limited liability company listed on Nasdaq Stockholm, Mid Cap. The company applies the Swedish Corporate Governance Code and hereby submits its Corporate Governance Report for the year 2019.

The Group's corporate governance is, in addition to that set out in Swedish law, based on the Swedish Corporate Governance Code (the Code), Nasdaq Stockholm AB's Rules for Issuers and the Swedish Securities Council's rulings on what constitutes good practice on the Swedish stock market. This report summarises how the corporate governance is structured and how it has been managed and developed within the Group during the 2019 financial year. Bilia complies with the rules of the Code and has provided explanations below for instances where it has deviated from the Code's rules in 2019.

Corporate governance at Bilia

Good corporate governance is about ensuring on behalf of the shareholders that Bilia is managed in a sustainable and responsible way, and as efficiently as possible. Bilia strives for a clear division of responsibilities, for transparency towards the owners and the market and for efficient governance and control of the Group's operations to ensure that the Group fulfils its commitments towards shareholders, customers, employees, suppliers, credit providers and society. It also endeavours to ensure that the operations follow set goals, applicable legislation and other regulatory frameworks, both external and internal. External regulatory frameworks include, among others, the Swedish Companies Act, the Swedish Annual Accounts Act and other relevant laws, Nasdaq Stockholm's Rules for Issuers and the Code. Internal regulatory frameworks include the Articles of Association adopted at the Annual General Meeting, the rules of procedure for the Board of Directors and the instructions for the Managing Director, including instructions on financial reporting, and instructions for the Board Committees, policies and guidelines, and Bilia's Code of Conduct.

Shareholders

At the end of 2019 Bilia had 38,670 shareholders. Bilia's largest shareholder is Mats Qviberg and family, whose holding amounted to 12.1 per cent on 31 December 2019. The nextlargest shareholders at year-end were Investment AB Öresund, State Street Bank and Trust Co, W9 and Anna Engebretsen with family, whose holdings amounted to 8.7, 6.3 and 5.0 per cent respectively. The proportion of institutional ownership amounted to 9.4 per cent (11.5) and the proportion of foreign ownership was 33.0 per cent (28.8).

General meeting of shareholders

Shareholders' influence is exercised at the Annual General Meeting (AGM) and, where applicable, at Extraordinary General Meetings, which are Bilia's highest decision-making bodies. All shareholders who are registered in the print-out of the share register at a certain point in time before the meeting and who have registered their participation in the meeting before the deadline set out in the notice are entitled to participate in

the meeting with full voting rights. Shareholders who are unable to attend in person may be represented through a proxy. Any shareholder who would like an issue to be dealt with at a general meeting of shareholders must submit a written proposal to the Board in sufficient time so that the proposal can be included in the notice to attend the meeting.

The 2019 AGM

The 2019 AGM was held on 8 April at the IVA Conference Center in Stockholm. A total of 262 shareholders participated in the meeting, who jointly represented 42.2 per cent of the number of shares and votes in the company. The Chairman of the Board, Mats Qviberg, was elected chairman of the AGM. All of the Board members elected by the meeting were present except for Laila Freivalds. The minutes from the AGM can be found on Bilia's website, www.bilia.com. The AGM passed resolutions on the following, among other matters:

• adoption of the Parent Company and consolidated income statements and balance sheets for the 2018 financial year in the Annual Report,
• dividend in accordance with the Board proposal of SEK 4.75 per share for the 2018 financial year,
• granting discharge from liability for the Board's members and the Managing Director for the 2018 financial year,
• re-election of all Board members, except for Laila Freivalds who

declined re-election, and the new election of Eva Eriksson,

• re-election of Mats Qviberg and Jan Pettersson as Chairman of the Board and Deputy Chairman respectively,
• determining remuneration for the Board and auditors,
• establishing guidelines for remuneration for senior officers,
• election of KPMG AB as the company's auditor for the period up until the end of the 2020 financial year, and
• authorisation for the Board to decide on acquisitions or transfers of the company's own shares on one or more occasions during the period up until the next AGM, but the shares may not correspond to more than 10 per cent of the total number of shares in the company.

Nominating Committee

The Nominating Committee is tasked with submitting proposals ahead of the AGM on resolutions regarding the election of the Chairman at the AGM, the election of the Chairman and other members of the Board, remuneration for the Board and for committee work, the election of auditors (where applicable), fees for auditors and changes in the procedure for appointing the Nominating Committee. In accordance with a resolution at Bilia's 2016 AGM, the Nominating Committee shall comprise Bilia's Chairman of the Board along with representatives of the two to four largest shareholders at the turn of the month before the Committee is appointed. Prior to 2019, the Nomination Committee consisted of the following persons, appointed in September 2018, Tim Floderus (Chairman of the Nomination Committee), representative of Investment AB Öresund, Mats Qviberg, representative of the Qviberg family and as Chairman of the Board of Bilia AB, Lisen Oliw, representative of Anna Engebretsen and Åsa Nisell, representative of Swedbank Robur Fonder.

Every year the Nominating Committee evaluates the Board and its work. The Committee then prepares a proposal for a new Board and proposals for remuneration for the Board, proposals that are submitted in connection with the notice to attend the

upcoming AGM. Ahead of the 2019 AGM, the Nominating Committee proposed the re-election of all Board members, except for Laila Freivalds who declined re-election, and the new election of Eva Eriksson. The Nominating Committee's motivating statement ahead of the 2019 AGM states that it applied rule 4.1 of the Code about diversity policy when drawing up its proposal for the Board. The aim of the policy is to ensure that the Board has a composition appropriate to the company's operations, phase of development and general circumstances that is characterised by diversity and breadth with regard to expertise, experience and background, in addition to which an even gender distribution should be striven for. The 2019 AGM decided to appoint Board members in accordance with the Nominating Committee's proposals, which means that ten members were elected, comprising three women and seven men. Bilia's Nomination Committee, prior to the 2020 Annual General Meeting, consists of Tim Floderus (Chairman of the Nomination Committee), representative of Investment AB Öresund, Mats Qviberg, representative of the Qviberg family and as Chairman of the Board of Bilia AB, Hans Ek, representative of SEB Investment Management, and Evert Carlsson, representative of Swedbank Robur Fonder.

Shareholders who wish to submit proposals for Bilia's Nominating Committee in 2020 can contact the Committee by e-mail at nominering@bilia.se.

Auditors

Bilia's auditors are elected by the AGM. The auditor inspects the annual accounts, accounting records and consolidated accounts as well as the Board of Director and Managing Director's administration in accordance with good auditing practice. After each financial year, the auditor submits an auditor's report for the Parent Company and an auditor's report for the Group to the AGM. At the 2019 AGM, the registered public accounting firm KPMG AB was re-elected as the company's accountant with authorised accountant Johan Kratz as the auditor in charge. The current

mandate period runs up to the 2020 AGM. The auditors report the findings of their inspection to the Audit Committee and the Board. In addition to regular accounting tasks, KPMG AB assists with advisory and investigatory assignments. Such assignments are submitted in accordance with the rules decided by the Audit Committee for approving the nature and scope of the services as well as remuneration. The assignments conducted are not deemed to cause a conflict of interest. See note 9 "Fees and cost reimbursement for auditors" for information on remuneration for auditors.

Board of Directors

The Board of Directors' main duty is to be responsible for the company's organisation and the management of the company's business. The Board has to consider the interests of all shareholders in carrying out its duties. The Board is also responsible for ensuring that this Corporate Governance Report is prepared. The Articles of Association stipulate that the Board shall comprise at least seven and at most ten members. The Board members are elected annually at the AGM for the period up until the end of the next AGM. Employees are entitled to appoint two representatives and two deputies to the Board. In 2019, Bilia's Board comprised ten members elected by the AGM. The MD and the CFO participate in the Board meetings, the later also as a secretary. Furthermore, other senior officers take part as required.

The Board of Directors' work is mainly governed by the Swedish Companies' Act, the Code and the Board's rules of procedure.

Staffing of comittees and the rules of procedure are adopted annually at the Board meeting following election. The current Articles of Association state that the Board should have at least five ordinary meetings between each AGM, including the Board meeting following election. The Articles of Association also set out the division of work and responsibilities between the Board of Directors, Chairman of the Board, the Board Committees and the MD.

Mats Qviberg was re-elected Chairman of the Board at the 2019 AGM. The Chairman of the Board is responsible for managing and assigning the Board's work and for ensuring that this is done in an efficient, well-organised way. This entails, for example, ensuring that the Board fulfills its obligations, monitoring the operation's development and making sure that the Board always has the information it requires so that it can carry out its work while maintaining quality standards in accordance with the applicable rules and regulations. The Chairman of the Board does not take part in the operational management of the company.

The Code states that a majority of the members of the Board elected at the AGM must be independent of the company and its management, and at least two of these members must also be independent of the company's major shareholders. The Nominating Committee has judged that the Board composition of Bilia meets the requirements on independence set out in the Code. Individual Board members' shareholdings, their independence in relation to the company, the executive management and the company's major shareholders as well as other assignments in other companies are shown in the tables and in the presentation of Board members on pages 40–41.

The work of the Board in 2019

The Board of Directors held its Board meeting following election on 8 April 2019 and ten Board meetings were held during the year. The Board dealt with standing items at its regular meetings that follow from the Board's rules of procedure, such as business situation, budget, annual accounts and interim reports. In addition, the Board dealt with overarching issues relating to corporate acquisitions and other investments, disposals, long-term strategies, financial issues, quality issues, compliance, internal control and risk management, along with organisation and structure. The work of the Board was conducted in accordance with the illustration on page 36.

Board subcommittees Compensation Committee

In 2019, Bilia's Compensation Committee comprised the Board members Jack Forsgren (Chairman) and Gunnar Blomkvist, and until the AGM by Jon Risfelt when he was replaced and Eva Eriksson instead took a seat on the committee. Aside from Gunnar Blomkvist, who as a former CFO is not considered to be independent of the company and the executive management, the members of the Compensation Committee are independent in relation to the company and the executive management. The situation of Gunnar Blomkvist being appointed a member of the Compensation Committee even though he is not deemed to be independent of the company or the executive management is a deviation from the Code. The reason for the deviation is that as a former CFO of many years, Gunnar Blomkvist is well acquainted with the company's conditions and circumstances regarding issues concerning remuneration structures and competence supply, for example.

The Committee held four minuted meetings during 2019 and has ongoing informal contact. The members' attendance at committee meetings is reported in tables on pages 40–41. The Compensation Committee, which follows written instructions, is charged with drafting matters concerning remuneration principles as well as remuneration and other terms of employment for the Managing Director and other members of the Group Management. The Committee also prepares the Board's proposed guidelines on remuneration for senior officers, which the Board presents for a resolution at the general meeting of shareholders. In addition, the Committee shall

monitor and evaluate ongoing programmes and programmes completed during the year regarding variable remuneration for the Group Management and the application of the guidelines on remuneration for senior officers decided on at the AGM.

Audit Committee

In 2019, Bilia's Audit Committee comprised the Board members Jon Risfelt (Chairman), Mats Holgersson and Gunnar Blomkvist. The Committee held four minuted meetings and had informal contact between the meetings as necessary in 2019. The members' attendance at committee meetings is reported in tables on pages 40–41. The company's auditors took part in all of the Audit Committee's meetings. The Committee and the auditors discussed and established the scope for the audit. The Audit Committee is a drafting body in contacts between the Board and the auditors, and continuously submits reports to the Board regarding its work. The Audit Committee follows written instructions and shall through its operations meet the requirements set out in the Swedish Companies Act and the EU's Audit Regulation. The Committee's duties include:

• monitoring the company's financial reporting, the efficiency of the company's internal control and risk management and ensure that the Group's nine-month report and annual accounts are reviewed by the Group's auditors,
• staying informed about the audit of the annual accounts and consolidated accounts and examining and monitoring the auditor's impartiality and independence,
• helping to draw up proposals for decisions made by the general meeting of shareholders about electing auditors and audit fees.

In 2019, the following issues were addressed: guaranteed residual values, the result of the adoption of IFRS 16, impairment testing of intangible assets, risk analysis for the Group's operations, newly acquired facilities and refinancing issues.

Property Committee

At the Board meeting following the 2019 AGM, the Board set up a Property Committee which during the year comprised Eva Eriksson (Chairman) and Gunnar Blomkvist. The Committee held two minuted meetings and had informal contact between the meetings as necessary in 2019. The members' attendance at committee meetings is reported in tables on pages 40–41.

The Property Committee, which follows written instructions, is tasked with, among other things, preparing property-related decisions such as investments in new facilities and assisting with other property-related issues in the business or in connection with acquisitions

Evaluating the work of the Board

The Board's work is evaluated annually using a model that covers 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 carry out 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 evaluates the work of the Committees each year and whether other members remain satisfied with how the Committees manage their respective areas of responsibility. The results of the evaluation have been presented to and discussed in the Board and reported to the Nominating Committee by the Chairman of the Board. The evaluation forms the basis for the Nominating Committee's various proposals regarding the Board.

Group Management

Per Avander is the MD and CEO of Bilia and he leads Bilia's ongoing operations. The MD is responsible for implementing and ensuring implementation of the strategies, business plans and operational goals decided by the Board of Directors. The MD is also responsible for ensuring that the Board of Directors is given information and the necessary data to make decisions, for presenting reports at the Board meetings and for continuously informing the Board of Directors and Chairman of the Group and company's financial position and development.

The MD is assisted by the Group Management, which

comprises managers of business areas and functions. In addition to the Managing Director, at the end of 2019 the Group Management consisted of Stefan Nordström (Deputy MD), Kristina Franzén (CFO) and Frode Hebnes (MD of Bilia Personbil AS, Norway). The Group Management held ten meetings in 2019. The meetings mainly focused on the Group's strategic and operational development as well as on budget follow-up and quality issues.

Central functions

There are central functions within Bilia for co-ordinating finance, HR, IT, law, marketing and communica-

tion. These functions are responsible for developing applicable Group-wide policies, priorities and action plans in their respective areas of responsibility and for driving, supporting and controlling development in the organisation on the basis of their respective expertise.

The Board's report on internal control

This report is prepared in accordance with the Swedish Annual Accounts Act. It is limited to internal control and risk management relating to financial reporting and encompasses the entire Group. The Board bears ultimate responsibility for ensuring that Bilia's internal control works satisfactorily and that adequate financial reports are presented. Under the Swedish Companies Act, the Board is responsible for Bilia's organisation and management. The Board is responsible for ensuring that Bilia's accounting, fund management and financial situation in general includes satisfactory controls. This responsibility cannot be delegated, rather it always rests ultimately with the Board.

Bilia's control environment is based on communicating clear guidelines to all subsidiaries to ensure that the same rules and policies are applied in the Group's companies and business areas and that the subsidiaries have the necessary tools to report back to Bilia AB in an accurate and uniform manner. The management performs a risk analysis which, following discussions in the Audit Committee and Board, decides, along with other considerations, the focus areas of the internal control.

Internal control work

As a complement to manager responsibility and other control procedures, Bilia has a function for risk management which includes internal control and internal audit work that reports to the company's CFO, who also approves the audit plan. The result of the audit is reported directly to Bilia's CFO and the Audit Committee. The audit plan is continuously evaluated and was last updated in September 2019.

Work to secure the internal control is an ongoing process that is subject to constant review, follow-up and improvement.

Bilia's Code of Conduct applies to all employees of the Group and the Board members. The Code of Conduct, which is available at bilia.com, was issued in 2006 and revised in 2019.

GROUP MANAGEMENT

Per Avander Born 1961. Managing Director and CEO of Bilia AB.	Kristina Franzén Born 1966. CFO, Bilia AB.	Frode Hebnes Born 1972. Managing Director, Bilia Personbil AS, Norway.	Stefan Nordström Born 1966. Deputy Managing Director, Bilia AB.
		EDUCATION
School of economics graduate.	M.Sc. in Business Administration from Högskolan i Växjö. Executive MBA from the School of Business, Economics and Law in Gothenburg.	Graduate of Norwegian School of Marketing.	School of economics graduate, IFL.
		WORK EXPERIENCE
Active in banking 1981–83, automotive industry since 1983. MD of Din Bil Göteborg AB 1995–99, MD of Din Bil Stockholm Norr 1999–2001. Employed by Bilia since 2001.	PriceWaterhouse 1989– 1993, Arthur Andersen 1993–1996, AB SKF 1996–2017. Employed by Bilia since 2017.	Volvo Personbiler Norge 1997–2001, Volvo Car Corporation 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.
EXTERNAL POSTS 2018
Chairman of the board of Volvohandlarförenin gen and member of the board of Volvofinans Bank AB.	—	Member of the boards of Expon AS, Expon Holding AS and My Private Label AS.	—
NUMBER OF SHARES IN BILIA
64,000	4,000	2,775	25,740

The Group Management 31 December 2019 consisted of 25 per cent women and 75 per cent men. As per 6 March 2020 the Group Management was extended with four persons, Elin Delvert (HR Director Bilia AB), Magnus Karlsson (CIO Bilia AB), Mathias Nilsson (MD Bilia Personbilar AB) and Anders Rydheimer (Director of Marketing Communication and Digital Bilia AB),

The Group Management's composition, external posts and holdings of shares and warrants applied at 31 December 2019.

BOARD OF DIRECTORS

Mats Qviberg	Jan Pettersson	Ingrid Jonasson	Gunnar Blomkvist	Anna Engebretsen	Eva Eriksson	Jack Forsgren
Born 1953. Chairman.	Born 1949. Deputy Chairman.	Blank Born 1962. Board member.	Born 1955. Board member. Member of the Compensation, Property and Audit Committees.	Born 1982. Board member.	Born 1959. Board member. Chairman of the Property Commit tee and member of the Compensation Committee.	Born 1945. Board member. Chairman of the Compensation Committee.
Elected 2003.	Elected 2003.	Elected 2006.	Elected 2017.	Elected 2010.	Elected 2019.	Elected 2003.
			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 Gothen burg.	M.Sc. in Business Administration from the School of Business, Economics and Law in Gothen burg.	M.Sc. in Business and Economics, Norwegian School of Management in Oslo.	M. Eng, Royal Insti tute of Technology.	M.Sc. in Political Science from the University of Gothenburg 1968.
			WORK EXPERIENCE
SEB, Carnegie.	Active in the auto motive industry, Kinnevik Group, MD of Toyota and Svensk Motor AB, MD and CEO, Bilia AB.	Active in the ICA Group, most recently as deputy MD of Ica Sverige AB.	Employed by Bilia AB, most recently as CFO.	Project Manager at OMD (Omnicom Media Group) and marketing and spon soring at Skistar AB.	Kungsfiskaren Bygg & Fastighets AB, Föreningsbanken AB, JM AB, Norgani Hotels ASA.	MD and CEO of Mölnlycke AB and Nobel Biocare AB.
			POSTS 2019
Chairman of Investment AB Öresund. Deputy Chairman of Fabege AB.	Chairman of Active Driving AB and Trosta Park AB.	Member of the board of Musti Group Oy, Orkla AS, Nordic Morning Group Oy, Kjell & Co AB, Bygghemma AB, Haypp Group AB, Forenom Oy, Nordic Morning Oy, ZetaDisplay AB and Astrid Lindgrens AB.	—	Member of the boards of MQ Holding AB and Investment AB Öresund.	Member of the boards of Fabege AB and OBOS, Norge.	Member of the boards of Maquire AB, Jerrie AB and Svenska Mässans huvudmannaråd.
		INDEPENDENT IN RELATION TO THE COMPANY AND THE COMPANY MANAGEMENT
Yes	Yes	Yes	No	Yes	Yes	Yes
		INDEPENDENT IN RELATION TO MAJOR SHAREHOLDERS OF THE COMPANY
No	Yes	Yes	Yes	No	Yes	Yes
			ATTENDANCE AT ORDINARY BOARD MEETINGS (5), %
100	100	100	100 ATTENDANCE AT EXTRA BOARD MEETINGS (10), %	100	100	80
100	100	90	100	100	100	100
			ATTENDANCE AT COMMITTEE MEETINGS, %
—	—	—	100	—	100	100
			NUMBER OF SHARES / WARRANTS IN BILIA
12,425,515 1)	1,150,000 2)	40,000	75,598	5,089,360 1)	—	71,400

1) With family.

2) Of which 970,000 shares are endowment insurance and 180,000 are directly registered.

A total of 15 Board meetings were held during 2019; one statutory meeting, five ordinary meetings, four extra meetings plus five meetings by correspondence. Composition of the Board of Directors and all holdings in Bilia AB as of 31 December 2019. See also Group Note 8 "Employees, personnel costs and remunerations for senior officers".

Mats Holgerson	Nicklas Paulson	Jon Risfelt	Patrik Nordvall	Dragan Mitrasinovic	Anders Bejmar	Isak Ekblom
Born 1953. Board member. Member of the Audit Committee.	Born 1970. Board member.	Born 1961. Board member. Chairman of the Audit Committee.	Born 1967. Employee representative.	Born 1958. Employee representative.	Born 1960. Deputy employee representative.	Born 1988. Deputy employee representative.
Elected 2006.	Elected 2018.	Elected 2003.	Elected 2004. Appointed by the PTK (Federation of Salaried Employees in Industry and Services) locals in the Bilia Group.	Elected 2005. Appointed by the LO (Swedish Trade Un ion Confederation) locals in the Bilia Group.	Elected 2016. Appointed by the PTK locals in the Bilia Group.	Elected 2016. Appointed by the LO locals in the Bilia Group.
			EDUCATION
M.Sc. in Business Administration from the Stock holm School of Economics.	M.Sc. in Business Administration from the Stockholm University.	M. Eng. in Chemical Engineering, Royal Institute of Technology.	Process engineer ing studies and IHM Business School Senior.	Vocational train ing in automotive technology.	—	Auto body technician, Motorbran schens Tekniska Gymnasium.
			WORK EXPERIENCE
MD Statoil Norge, Statoil Detaljhandel Skandinavia and Menigo Foodservice and Chief Operating Officer ICA AB.	Carnegie, Alfred Berg, ABN AMRO and Swedbank.	Ericsson, SAS, American Express, Nyman & Shultz, Europolitan and Gambro Renal.	Employed by Bilia AB .	Employed by Bilia AB .	Employed by Bilia AB. Eneqvist bil AB.	Employed by Bilia AB. Position of trust at IF Metall.
			POSTS 2019
Member of the boards of Trophi Fastighets AB and Nordward Seafood Holding AB.	MD of Investment AB Öresund. Mem ber of the boards of Bahnhof AB, Bulten AB and Ovzon AB.	Chairman of Bisnode AB, Bisnode Business Informa tion Group AB, Cabonline Group Holding AB and CAB Group AB. Member of the boards of Boule Diagnostics AB, Elos Medtech AB and Knowit AB.	Shop steward for Unionen at Bilia and Property management developer.	Shop steward of Bilia's local branch in Stockholm and car mechanic.	Shop steward for Ledarna at Bilia Personbilar AB, as well as Ledarna lokala klubben Stockholm in Teknik & Motor Öst and member of the board in Teknik & Motor.	Shop Steward for IF Metall Gothenburg.
				INDEPENDENT IN RELATION TO THE COMPANY AND THE COMPANY MANAGEMENT
Yes	Yes	Yes	—	—	—	—
				INDEPENDENT IN RELATION TO MAJOR SHAREHOLDERS OF THE COMPANY
Yes	No	Yes	— ATTENDANCE AT ORDINARY BOARD MEETINGS (5), %	—	—	—
100	100	100	100	100	100	80
			ATTENDANCE AT EXTRA BOARD MEETINGS (10), %
80	100	100	100	100	90	100
			ATTENDANCE AT COMMITTEE MEETINGS, %
100	—	100	—	—	—	—
			NUMBER OF SHARES
22,440	2,000	25,940	504	28	274	—

Auditors

KPMG AB was re-elected as the Group's public accounting firm by the 2019 AGM for the period up until the 2020 AGM. Johan Kratz, born 1963, Authorised Public Accountant, KPMG AB and member of FAR. Auditor in charge at Bilia since 2017.

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.

At 31 December 2019, the share capital amounted to SEK 257 M (257), divided among 102,799,952 Series A shares, including repurchased own shares of 2,666,210. The quotient value is SEK 2.50 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

The OMX Stockholm Consumer Services PI rose by 38 per cent in 2019. The Bilia share increased from SEK 82.85 to SEK 106.30 during the year. The highest price paid, SEK 109.80, was quoted on 20 December 2019. The lowest price paid, SEK 75.10, was quoted on 8 February 2019.

Bilia's shareholders received a total return of 35 per cent (11) in 2019. The calculation is based on share price performance.

Bilia's market capitalisation at year-end was SEK 10,928 M (8,517), based on the total number of shares outstanding. A total of 58.4 million Bilia shares (86.9) were traded in 2019 at a value of SEK 4,974 M (6,676). This turnover represented 58 per cent (86) of the weighted average number of shares.

The P/E ratio based on earnings in 2019 was 13 (11).

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 0.60. This means that the price fluctuations for the Bilia share have been less than the average price fluctuations on Nasdaq Stockholm.

Number of shareholders decreased

Bilia had 38,670 shareholders at the end of 2019, compared with 43,020 a year earlier. Most shareholders own relatively small lots. Of the shareholders, 86.2 per cent (86.1) owned fewer than 1,000 shares. The proportion of institutional ownership was 9.4 per cent (11.5), while the proportion of foreign ownership was 33.0 per cent (28.8). Bilia's holding of repurchased shares amounted to 2.6 per cent.

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 5.25

Bilia's Board of Directors proposes to the Annual General Meeting of 17 April 2020 that an ordinary dividend be paid in the amount of SEK 5.25 per share (4.75), divided into two payment occasions. The proposed dividend corresponds to 65 per cent (65) of the net profit for the year. If the AGM approves this proposal, the first part of the dividend of SEK 2.75 per share, is expected to be paid by Euroclear Sweden AB on 24 April 2020. The second part, SEK 2.50 per share, is paid by Euroclear Sweden AB on 23 October 2020.

Stock split

During 2017, in accordance with a resolution by the AGM, the number of shares was increased by dividing each share into two shares (a 2-for-1 stock split) for the purpose of increasing trade in the share. The record date for the stock split was 7 June 2017.

Analyses of Bilia

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

• Mats Liss, Kepler Cheuvreux, +46 8 723 51 18
• Andreas Lundberg, SEB, +46 8 763 85 33
• Mika Karppinen, Handelsbanken Capital Markets, +358 10 444 27 52

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.

Data per Share	2015	2016	2017	2018	2019
Earnings, SEK	6.45 2)	6.20 3)	6.75 4)	7.25 5)	8.00 6)
Equity, SEK 1)	20.40	24.40	25.95	28.85	31.80
Operating cash flow, SEK	2.10 2)	4.55 3)	3.45 4)	5.35 5)	5.70 6)
Share price at year-end, SEK	96.00	104.75	80.00	82.85	106.30
P/E ratio, times	15	17	12	11	13
Price/equity ratio, %	471	429	308	287	334
Dividend yield, %	4.8	4.3	5.3	6.2	6.2
Dividend, SEK	3.75	4.00	4.50	4.75	5.25 7)
Payout ratio, % 8)	59	65	66	65	65

1) Calculated based on the number of shares outstanding at the end of each year. For 2019, the number of shares outstanding was 100,133,742, for 2018 and 2017 it was 100,950,952, for 2016 it was 102,799,952 and for 2015 it was 100,872,104.

2) Calculated after exercised warrants corresponding to 175,972 shares during 2015, resulting in a weighted average number of shares of 100,811,973. 3) Calculated after exercised warrants corresponding to 529,364 shares during 2016, and 1,398,484 new issue of shares which gives a weighted average number of shares of 102,261,494.

4) Calculated after buy-back of 1,849,000 shares during August–November 2017, resulting in a weighted average number of shares of 102,282,796. 5) Calculated on a weighted average number of shares 2018, 100,950,952.

6) Calculated after buy-back of 817,210 shares during November-December 2019, resulting in a weighted average number of shares of 100,858,864. 7) Proposed dividend.

8) Calculated after assigned performance shares within the frame of incentive programs, which gives 100,230,974 number of outstanding shares for 2019 and 101,054,370 for 2018. Calculated after full exercise of the warrants, which gives 100,950,952 number of outstanding shares for 2017, 102,799,952 for 2016 and 101,837,020 for 2015.

All years have been recalculated after stock split 2:1 in 2015 and 2017.

Change in share capital

Year	Number of shares		Change Share capital, SEK M	Change, SEK M	Reason
1985	15,000,000		300
1987	21,000,000	6,000,000	420	120	Bonus issue
1988	21,032,486	32,486	421	1	New issue at conversion
1989	21,046,667	14,181	421	0	New issue at conversion
1990	21,076,925	30,258	422	1	New issue at conversion
1991	31,674,669	10,597,744	634	212	New issue at conversion
2001	28,554,512	–3,120,157	571	–63	Reduction
2002	25,699,061	–2,855,451	514	–57	Reduction
2004 1)	60,845,603	35,146,542	608	94	Reduction/lowering of par value of share/subordinated shares, Series C
2005	23,129,155	–37,716,448	231	–377	Redemption subordinated shares, Series C
2007	21,459,255	–1,669,900	215	–16	Reduction
2009	25,293,574	3,834,319	253	38	Exercised warrants
2010	24,883,946	–409,628	249	–4	Exercised warrants/reduction
2011	25,080,028	196,082	251	2	Exercised warrants
2012	25,114,099	34,071	251	0	Exercised warrants
2013	25,139,592	25,493	251	0	Exercised warrants
2014	25,174,033	34,441	252	1	Exercised warrants
2015	50,436,052	25,262,019	252	0	Exercised warrants/stock split
2016	51,399,976	963,924	257	5	Exercised warrants/new share issue
2017	102,799,952	51,399,976	257	0	Stock split

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

Distribution of shares, 31 December 2019

Shareholding	Total number of shareholders	Percentage of total no. of shareholders	Combined number of shares owned	Percentage of share capital
1–1,000	33,346	86.2	6,813,182	6.6
1,001–10,000	4,899	12.7	12,586,030	12.3
10,001–100,000	344	0.9	9,471,597	9.2
100,001–	80	0.2	71,262,933	69.3
Total	38,669	100.0	100,133,742	97.4
Repurchased own shares	1	0.0	2,666,210	2.6
Total	38,670	100.0	102,799,952	100.0

The 15 largest shareholders at 31 December 2019	Total	Stake, per cent
Mats Qviberg with family	12,425,515	12.1
Investment AB Öresund	8,986,215	8.7
STATE STREET BANK AND TRUST CO, W9	6,511,053	6.3
Anna Engebretsen with family	5,089,360	5.0
Swedbank Robur funds	3,369,961	3.3
BNY MELLON NA (FORMER MELLON), W9	3,346,134	3.3
CBNY-Norges Bank	3,262,493	3.2
JP Morgan Chase NA 1)	2,793,508	2.7
Bilia repurchased shares	2,666,210	2.6
BNY MELLON SA/NV (FORMER BNY), W8IMY	2,308,078	2.2
JP Morgan Bank Luxemburg SA	1,932,735	1.9
DEUTSCHE BANK AG, W8IMY	1,401,055	1.4
Euroclear Bank S.a/N. V, W8-IMY	1,214,729	1.2
Jan Pettersson with family	1,150,000	1.1
Sten Dybeck	1,094,462	1.0
Total	57,551,508	56.0
Remaining shareholders	45,248,444	44.0
Total	102,799,952	100.0

1) JPM Chase NA has 9 funds with the same name and address. They have been aggregated in the table above.

Ownership by categories at 31 December 2019, %

2019 2018 Swedish private > 500 38 (40) Foreign shareholders 33 (29) Swedish institutions 9 (11) Investment AB Öresund 9 (8) Swedish unit trusts 5 (7) Swedish private < 500 3 (3) Repurchased shares 3 (2)

Turnover of Bilia share

Turnover, daily average per month, number of shares Turnover, daily average per month, SEK M

Source: Nasdaq

Total return of Bilia share Development of Bilia share

Contents

Financial information			Page
Consolidated Statement of Income and Other Comprehensive Income			46
Consolidated Statement of Financial Position			48
Consolidated Statement of Changes in Equity			50
Consolidated Statement of Cash Flows			51
Note Bilia Group	IFRS standard		Page
1 Key accounting principles			53
2 Revenue	IFRS 15	Revenue from Contracts with Customers	56
3 Income from supplementary services			57
in the Car Business
4 Operating segments	IFRS 8	Operating Segments	57
5 Business combinations	IFRS 3	Business Combinations	60
6 Other operating income			62
7 Other operating expenses			62
8 Employees, personnel costs and	IAS 19	Employee Benefits	63
remunerations for senior officers
9 Fees and cost reimbursement to auditors			66
10 Operating expenses classified by nature of expense			66
11 Net financial items	IAS 21	The Effects of Changes in Foreign Exchange Rates	66
	IAS 23	Borrowing Costs
	IAS 28	Investments in Associates and Joint Ventures
	IAS 37	Provisions, Contingent Liabilities
		and Contingent Assets
	IFRS 9	Financial Instruments
	IFRS 16	Leases
12 Taxes	IAS 12	Income Taxes	67
13 Earnings per share	IAS 33	Earnings Per Share	69
14 Intangible assets	IAS 38	Intangible Assets	70
15 Property, plant and equipment	IAS 16	Property, Plant and Equipment	74
	IFRS 16	Leases
16 Right-of-use assets	IFRS 16	Leases	77
17 Interests in associated companies	IAS 28	Investments in Associates and Joint Ventures	78
18 Financial investments	IFRS 9	Financial Instruments	78
19 Long-term receivables and other receivables			78
20 Inventories	IAS 2	Inventories	79
21 Prepaid expenses and accrued income			79
22 Interest-bearing liabilities	IFRS 9	Financial Instruments	79
	IFRS 16	Leases
23 Pensions	IAS 19	Employee Benefits	81
24 Provisions	IAS 37	Provisions, Contingent Liabilities	82
		and Contingent Assets
25 Other liabilities			83
26 Accrued expenses and deferred income			83
27 Financial instruments	IAS 32	Financial Instruments: Presentation	83
	IFRS 7	Financial Instruments: Disclosures
	IFRS 9	Financial Instruments
	IFRS 13	Fair Value Measurement
	IFRS 16	Leases
28 Financial risks and risk management	IFRS 7 IFRS 13	Financial Instruments: Disclosures Fair Value Measurement	85
29 Leases	IFRS 16	Leases	89
30 Capital commitments	IAS 16	Property, Plant and Equipment	90
	IAS 38	Intangible Assets
31 Pledged assets and contingent liabilities	IAS 37	Provisions, Contingent Liabilities	90
		and Contingent Assets
32 Related parties	IAS 24	Related Party Disclosures	91
33 Cash and cash equivalents and	IAS 7	Statement of Cash Flows	91
specifications for cash flows
34 Events after the balance sheet date	IAS 10	Events After the Reporting Period	92
35 Information about the Parent Company			92
Income Statement for Parent Company			93
Balance Sheet for Parent Company			94
Statement of Changes in Equity for Parent Company			96
Cash Flow Statement for Parent Company			97
Notes to the Parent Company Financial Statements			98

Consolidated Statement of Income and Other Comprehensive Income

SEK M	Note	2019	2018
Net turnover	2, 3, 4, 5	29,508	28,382
Cost of goods sold	3, 5, 10, 20	–24,588	–23,807
Gross profit		4,920	4,575
Other operating income	6	24	6
Selling expenses	10	–3,079	–2,988
Administrative expenses	9, 10	–721	–634
Other operating expenses	7, 10	–19	–16
Operating profit	4, 8, 29	1,125	943
Financial income		12	2
Financial expenses		–164	–64
Profit from shares in associated companies	17	41	41
Net financial items	11	–111	–21
Profit before tax		–1,014	922
Tax	12	–207	–188
Profit for the year		807	734
Other comprehensive income
Items that can be reclassified to profit or loss
Translation differences attributable to foreign operations		31	31
Other comprehensive income after tax		31	31
Comprehensive income for the year		838	765
Net profit for the year attributable to:
Parent Company's shareholders		807	734
Comprehensive income for the year attributable to: Parent Company's shareholders		838	765
Earnings per share, SEK	13
Basic earnings per share		8.00	7.25
Diluted earnings per share		8.00	7.25

Comments on Consolidated Statement of Income and Other Comprehensive Income

Net turnover

Net turnover increased by 4 per cent and amounted to SEK 29,508 M (28,382). Adjusted for comparable operations and exchange rate fluctuations, net turnover was on par with last year.

The increase was primarily attributable to the Service Business which increased net turnover by 9 per cent to SEK 7,052 M (6,453). Adjusted net turnover for the total service turnover (see definition on page 114) increased by 6 per cent (5). In Sweden, adjusted turnover increased by 7 per cent (5), in Norway by 5 per cent (5) and in Western Europe by 5 per cent (13).

Net turnover in the Car Business increased by 3 per cent to total SEK 22,678 M (21,988). Net turnover, for comparable operations and exchange rate fluctuations, decreased by 2 per cent (–1). In Sweden underlying turnover decreased by 2 per cent (1), in Norway by 6 per cent (–6) while underlying turnover in Western Europe inreased by 10 per cent (–3).

Income from supplementary services in the form of financing decreased by 2 per cent (2) to SEK 680 M (696). Income from long-term leases decreased by SEK 29 M (10) and commission from finance companies increased by SEK 13 M (6).

Net turnover in the Fuel Business increased by 3 per cent (14) to total SEK 1,338 M (1,297). The entire increase is attributable to Sweden.

Operating profit

Operating profit for the Group totalled SEK 1,125 M (943), an increase of 19 per cent.

Operational earnings increased by 20 per cent to total SEK 1,239 M (1,034), the margin amounted to 4.2 per cent (3.6).

Performance analysis, SEK M	2019	2018
Operational earnings	1,239	1,034
Gain from sale of property	8	—
Structural costs etc.	–4	–8
Acquisition-related costs and value adjustments	–3	–6
Amortisation/impairment losses of surplus
values	–115	–77
Operating profit	1,125	943

Profit from sale of property relates to a facility in Sweden that has been used in the Car and Service Businesses. Structural costs (see definition on page 114) relate to expenses for relocation of operations in Sweden and costs to reduce staff. Structural costs during 2018 primarily relate to costs to reduce staff. Acquisition-related expenses and value adjustments relate to costs for acquiring operations. Amortisation/ impairment of surplus values in 2019 includes a one-off write down of intangible assets in Western Europe, Germany, which amounted to SEK 20 M.

Operational earnings in the Swedish operation totalled SEK 950 M (769) with a margin of 5.3 per cent (4.3). In Norway earnings increased to SEK 277 M (258) with a margin of 3.7 per cent (3.5). In Western Europe earnings increased to SEK 91 M (73) with a margin of 2.2 per cent (2.3).

Operating profit for the Parent Company totalled SEK –84 M (–70).

Operational earnings for the Service Business increased to SEK 945 M (766), an increase of 23 per cent. The main factor behind the increase was higher turnover. The Service Business margin increased to 13.4 per cent (11.9).

Operational earnings for the Car Business increased by SEK 44 M and totalled to SEK 348 M (304). The increase was mainly due to sales and the gross profit margin of used cars. The profit from sales of used cars, excluding IFRS 16, increased by SEK 172 M to SEK 234 M (62). The Car Business margin increased to 1.5 per cent (1.4). Deliveries of new cars for comparable units decreased by 5 per cent (decrease: 5) and the order intake increased by 2 per cent (decrease: 9). The order backlog for new cars increased by 22 per cent, totalling 11,767 cars (9,646) at year-end.

Operational earnings for the Fuel Business totalled SEK 25 M (30). The decline was due to a lower gross profit margin.

Net financial items

Net financial items amounted to SEK –111 M (–21). The impairment against last year was mainly due to the new accounting standard, IFRS 16 Leases, by SEK –85 M.

Profit before tax

Profit before tax increased by SEK 92 M and totalled SEK 1,014 M (922).

Tax for the year

Tax for the year increased by SEK 19 M to total SEK –207 M (–188), and the effective tax rate was 20 per cent (20).

Profit for the year

Profit for the year totalled SEK 807 M (734). This equates to earnings per share of SEK 8.00 (7.25) based on the average number of outstanding shares. The profit margin was 2.7 per cent (2.6).

Consolidated Statement of Financial Position

SEK M	Note	31/12/19	31/12/18
Assets	5, 27, 30
Non-current assets
Intangible assets	14
Intellectual property		636	670
Goodwill		847	842
		1,483	1,512
Property, plant and equipment	15
Land and buildings		779	726
Construction in progress		42	83
Equipment, tools, fixtures and fittings		518	500
Leased vehicles		3,130	2,958
Right-of-use assets	16	2,682	—
		7,151	4,267
Long-term investments
Interests in associated companies	17	443	441
Financial investments	18	8	8
Long-term receivables	19	1	—
		442	449
Deferred tax assets	12	110	81
Total non-current assets		9,186	6,309
Current assets
Inventories
Merchandise	20	4,571	3,992
Current receivables
Current tax assets	13	172	46
Trade receivables	28	1,402	872
Prepaid expenses and accrued income	21	273	297
Other receivables	19, 28	241	241
Cash and cash equivalents	28, 33	236	314
		2,324	1,770
Total current assets		6,895	5,762
Total assets	4	16,081	12,071

Consolidated Statement of Financial Position

SEK M	Note	31/12/19	31/12/18
Equity and liabilities	5, 27, 30
Equity
Share capital		257	257
Other contributed capital		167	167
Reserves		24	–7
Retained earnings including net profit for the year		2,738	2,498
Total equity		3,186	2,915
Non-current liabilities
Bond issue	22, 28	1,289	1,281
Non-current interest-bearing liabilities	22, 28	2,417	282
Other non-current liabilities	25	1,621	1,481
Other provisions	24	222	205
Deferred tax liabilities	12	416	397
Total non-current liabilities		5,965	3,646
Current liabilities
Current interest-bearing liabilities	22, 28	1,446	776
Trade payables	28	2,298	1,882
Current tax liabilities		224	146
Other liabilities	25, 28	1,766	1,676
Accrued expenses and deferred income	26	1,192	1,029
Other provisions	24	4	1
Total current liabilities		6,930	5,510
Total liabilities		12,895	9,156
Total equity and liabilities	4	16,081	12,071

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

Comments on the Consolidated Statement of Financial Position

The consolidated balance sheet total increased by SEK 4,010 M, amounted to SEK 16,081 M (12,071). The main reason for the increase was the introduction of the new accounting standard IFRS 16, Leases, which increased the balance sheet by SEK 2,597 M. Even higher inventories for cars attributed to the increase related primarily to new tax regulations to promote the sale of environmentally friendly cars in Sweden.

Financing

Net debt increased by SEK 2,890 M during the year, amounted to SEK 4,493 M (1,603). The increase was mainly attrubutible to the introduction of the new accounting standard IFRS 16, Leases, which increased net debt by SEK 2,620 M. The Group had a net positive bank balance with Nordea and DNB of SEK 55 M (37) at the end of the year. Current interest-bearing liabilities, excluding IFRS 16, increased by SEK 264 M. Non-current interest-bearing liabilities, excluding IFRS 16, decreased by SEK 79 M, The ratio of net debt to EBITDA excluding IFRS 16, was 1.3 times (1.3).

Equity

Equity increased by SEK 271 M and amounted to SEK 3,186 M. A dividend of SEK 483 M was paid out to shareholders during the year. During the year Bilia repurchased 817,210 of its own shares at a purchase price of SEK 79 M. A revaluation of a put option reduced equity by SEK 6 M (–15). Comprehensive income for the year totalled SEK 838 M (765).

Details of changes in equity are referred to the Consolidated Statement of Changes in Equity.

Performance measures

Return on capital employed, excluding IFRS 16, amounted to 20.8 per cent (20.5). Return on equity, excluding IFRS 16, amounted to 27.4 per cent (26.5). The Group's target is 18.0 per cent.

Asset turnover fell slightly compared to last year, amounting to 2.04 times (2.49).

The equity/assets ratio amounted to 19.8 per cent (24.1). Equity per share before dilution amounted to SEK 31.80 (28.85) based on 100,133,742 outstanding shares (100,950,952).

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. 2018	102,799,952	257	167	–38	2,234	2,620
Comprehensive income/loss for the year
Net profit for the year	—	—	—	—	734	734
Other comprehensive income/loss after tax	—	—	—	31	—	31
Comprehensive income/loss for the year	—	—	—	31	734	765
Transactions with the Group's owners
Incentive programme	—	—	—	—	1	1
Revaluation of put option	—	—	—	—	–15	–15
Dividend (SEK 4.50 per share)	—	—	—	—	–456	–456
Total transactions with the Group's owners	—	—	—	—	–470	–470
Closing equity 31 Dec. 2018	102,799,952	257	167	–7	2,498	2,915

Opening equity 1 Jan. 2019	102,799,952	257	167	–7	2,498	2,915
Comprehensive income/loss for the year
Net profit for the year	—	—	—	—	807	807
Other comprehensive income/loss after tax	—	—	—	31	—	31
Comprehensive income/loss for the year	—	—	—	31	807	838
Transactions with the Group's owners
Incentive	—	—	—	—	1	1
Buy-back of own shares	———	—	——	—	–79	–79
Revaluation of put option	—	—	—	—	–6	–6
Dividend (SEK 4.75 per share)	—	—	—	—	–483	–483
Total transactions with the Group's owners	—	—	—	—	–567	–567
Closing equity 31 Dec. 2019	102,799,952	257	167	24	2,738	3,186

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".

Reserves, 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, SEK M	2019	2018
Opening translation reserve	–7	–38
Translation difference for the year	31	31
Closing translation reserve	24	–7

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.

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.

Revaluation of put option

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. The exercise price is set at current exchange rate and earnings per share.

Dividends

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

Consolidated Statement of Cash Flows

SEK M	Note	2019	2018
Operating activities	33
Profit before tax		1,014	922
Depreciation/amortisation and impairment losses		1,227	743
Other items not affecting cash		22	–39
Tax paid		–281	–180
Cash flow from operating activities before change in working capital		1,982	1,446
Change in inventories		–532	–442
Change in operating receivables		–565	128
Change in operating liabilities		552	–5
Cash flow from operating activities		1,437	1,127
Investing activities
Acquisition of non-current assets (intangible and tangible)		–246	–271
Disposal of non-current assets (intangible and tangible)		53	34
Acquisition of leased vehicles		–1,660	–1,447
Disposal of leased vehicles		1,271	1,099
Acquisition of right-of-use assets IFRS 16		–283	—
Disposal of right-of-use assets IFRS 16		5	—
Operating cash flow		577	542
Investment in financial assets		–6	–3
Disposal of financial assets		5	2
Acquisition of operation		–73	–334
Disposal of operation		0	—
Cash flow from investing activities		–934	–920
Cash flow after net investments		503	207
Financing activities
Borrowings		1,434	3,382
Repayment of loans		–1,238	–2,953
Repayment of lease liabilities		–64	–60
Repayment of lease liabilities IFRS 16, net		–154	—
Buy-back of own shares		–79	—
Revaluation of put option		—	–15
Dividend paid to Parent Company's shareholders		–483	–456
Cash flow from financing activities		–584	–102
Change in cash and cash equivalents, excluding translation differences		–81	105
Exchange difference in cash and cash equivalents		3	7
Change in cash and cash equivalents		–78	112
Cash and cash equivalents at start of year		314	202
Cash and cash equivalents at year-end		236	314

Comments on the Consolidated Statement of Cash Flows

Operating activities

Cash flow from operating activities before changes in working capital increased by SEK 536 M to SEK 1,982 M (1,446). Profit before tax increased by SEK 92 M, including interest expenses from IFRS 16 by SEK 85 M. Depreciation/amortisation and impairment losses increased by SEK 484 M, including depreciation of right-of-use assets according to IFRS 16 by SEK 451 M. Other non-cash items and taxes decreased the cash flow from operating activities by SEK 40 M.

The change in working capital reduced the cash flow by SEK 545 M (decrease: 319). Higher inventories were the primary cause of the change during the year.

Investing activities

Acquisitions and disposals of non-current assets and lease vehicles decreased by SEK 3 M to SEK –582 M (–585) net. Investments in non-current assets decreased by SEK 44 M net, and investments in lease vehicles increased by SEK 41 M net. Acqustion of right-of-use assets increased by SEK 278 M net.

Operating cash flow

Operating cash flow increased by SEK 35 M and totalled SEK 577 M (542).

Cash flow after net investments

Cash flow after net investments amounted to SEK 503 M (207). This includes acquisitions and disposals of financial assets in the amount of SEK –1 M (–1). Acquisitions and disposals of operations reduced the cash flow by SEK 261 M net and amounted to SEK –73 M (–334).

Financing activities

Cash flow from financing activities amounted to SEK –584 M (–102). Net borrowing and repayment of loans totalled SEK 196 M (429). Net borrowing and repayment of right-of-use assets from IFRS 16 totalled SEK –154 M (—). Buy-back of own shares amounted to SEK 79 M (—). Dividend to shareholders totalled SEK 483 M (456).

Net debt/receivable

Net debt increased by SEK 2,890 M (321), amounting to SEK 4,493 M (1,603). Net debt, excluding IFRS 16 increased by SEK 270 M (321), amounting to SEK 1,873 M (1,603).

Specification of interest-bearing net debt/receivable:

SEK M	2019	2018
Current interest-bearing liabilities	1,040	776
Non-current interest-bearing liabilities	1,503	1,582
Lease liabilities IFRS 16	2,620	—
Cash and cash equivalents	–236	–314
Interest-bearing assets	–1	—
Interests in associated companies	–433	–441
Net debt(+)/receivable(–) at end of year	4,493	1,603
Net debt(+)/receivable(–) at end of year,
excluding IFRS 16	1,873	1,603

Ratio of net debt to EBITDA:

SEK M	2019	2018
Operational earnings	1,239	1,034
Operational earnings, excluding IFRS 16	1,193	1,034
Total depreciation/amortisation	1,146	678
– Amortisation of surplus values	–95	–77
– Depreciation of right-of-use assets	–451	—
– Depreciation of leased vehicles with
repurchase agreements	–337	–366
Depreciation/amortisation added back	714	235
Depreciation/amortisation added back,
excluding IFRS 16	263	235
EBITDA	1,953	1,269
EBITDA, excluding IFRS 16	1,456	1,269
The ratio of net debt to EBITDA
rolling 12 months, times	2.3	1.3
The ratio of net debt to EBITDA
rolling 12 months, times, excluding IFRS 16	1.3	1.3

Liquidity remains good, and at the end of December a net receivable of SEK 55 M (37) was reported from the banks (Nordea and DNB). Bilia's combined credit limit with Nordea and DNB amounts to SEK 1,500 M.

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 Reporting Standards (IFRS) 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 policies have been consistently applied to all periods presented in the consolidated financial statements, unless otherwise stated below.

The annual accounts and consolidated accounts were approved for publication by the Board of Directors and Managing Director on 10 March 2020. The Consolidated Statement of Income and Other Comprehensive Income and the Parent Company's Income Statement and Balance Sheet will be subject to adoption at the AGM on 17 April 2020.

Bilia describes the accounting policies 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 policy 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 the preparation of Parent Company and consolidated financial statements

Assets and liabilities are recognised 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 financial assets.

Functional currency and presentation currency

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

Revised accounting policies

On 1 January 2019, IFRS 16 Leases replaced existing IFRS relating to accounting of leases. The standard removes the specification of leases into operating and finance leases for the lessee, as was required by IAS 17 Leases, and instead introduces a common model for reporting all leases. According to this model the lessee must report a) assets and liabilities for all leases running for more than 12 months, with the exception of low-value assets, b) depreciation of leased assets separately from the interest expense of leases in the result.

In the transition to IFRS 16 on 1 January 2019 Bilia has used a modified retroactive method, which means that the financial year 2018 is not restated. The lease liability was the total of the present value of all future lease fees until the lease comes to an end. The simplification rule that the right-of-use asset (before adjustments for any advance payments) should correspond to the lease liability has been applied in the transition. The discount rate was Bilia's marginal borrowing rate with regard to the duration of the lease. The simplification rule for definition of a lease has been applied, which means that all components in a lease have been regarded as a lease component. The exceptions for not reporting short-term leases and assets of low value has also been applied.

The opening balance of the lease liability and the right-ofuse asset amounted to SEK 2,793 M for existing leases. The class of asset for leases was properties, such as the facilities where Bilia conducts its business. Bilia's reported profit, financial position and cash flow were affected by the introduction of IFRS 16 Leases as described below, in note 16 "Right-of-use assets" and note 29 "Leases".

Consolidated Statement of Income and Other Comprehensive	Excluding IFRS 16	IFRS 16	Including IFRS 16
Income, summary	2019		2019
Net turnover	29,508	—	29,508
Gross profit	4,903	17	4,920
Other operating income	24	—	24
Selling and administrative
expenses	–3,829	29	–3,800
Other operating expenses	–19	—	–19
Operating profit	1,079	46	1,125
Net financial items	–26	–85	–111
Profit before tax	1,053	–39	1,014
Deferred tax	13	8	21
Tax	–228	—	–228
Profit for the year	838	–31	807
Translation differences
attributable to foreign operations	31	0	31
Comprehensive income for the
year	869	–31	838
Total amortisation/depreciation	–695	–451	–1,146

Consolidated Statement of Financial Position, summary	Excluding IFRS 16	IFRS 16	Including IFRS 16
	31/12/19		31/12/19
Assets
Intangible assets	1,483	—	1,483
Right-of-use assets	—	2,682	2,682
Other property, plant and equip ment	4,469	—	4,469
Long-term investments	442	—	442
Deferred tax assets	102	8	110
Total non-current assets	6,496	2,690	9,186
Total current assets	6,988	–93	6,895
Total assets	13,484	2,597	16,081
Equity and liabilities
Total equity	3,217	–31	3,186
Bond issue	1,289	—	1,289
Interest-bearing liabilities	203	2,214	2,417
Other liabilities and provisions	2,259	—	2,259
Total non-current liabilities	3,751	2,214	5,965
Interest-bearing liabilities	1,040	406	1,446
Other liabilities and provisions	5,476	8	5,484
Total current liabilities	6,516	414	6,930
Total equity and liabilities	13,484	2,597	16,081

Consolidated Statement of Cash Flows, summary	Excluding IFRS 16	IFRS 16	Including IFRS 16
	2019		2019
Profit before tax	1,053	–39	1,014
Amortisation/depriciation and
impairment losses	776	451	1,227
Other items not effecting cash	22	—	22
Tax paid	–281	—	–281
Change in inventories and opera ting receivables/liabilities	–565	20	–545
Cash flow from operating acti vities	1,005	432	1,437
Acquisition/disposal of non-cur
rent assets	–582	–278	–860
Operating cash flow	423	154	577
Investment/disposal in financial assets	–1	—	–1
Acquisition/disposal of subsidia ry/operation	–73	—	–73
Cash flow from investing activi ties	–656	–278	–934
Cash flow after net investments	349	154	503
Borrowings/Repayments of loans	132	–154	–22
Buy-back of own shares	–79	—	–79
Dividend paid to the company's
shareholders	–483	—	–483
Cash flow from financing acti vities	–430	–154	–584
Change in cash and cash equi
valents	–81	0	–81

Alternative performance measures

Bilia applies the new guidelines from the European Securities and Markets Authority (ESMA) concerning alternative performance measures (APMs). Even though these performance measures are not defined or specified by IFRS, Bilia believes that they provide valuable information to investors but also for Bilia's management as a complement to IFRS for better assessing Bilia's performance. Definitions and performance measures in this report are shown on page 114. Reconciliation of performance measures can be found at bilia.com/investors/financial-information.

New IFRS that have not yet been applied

New or revised IFRS to be used in future are not expected to have any material effect on the consolidated financial statements.

Classification 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 12 months after the balance sheet date. Current assets and current liabilities consist for the most part of amounts that are expected to be recovered or paid within 12 months of the balance sheet date.

Consolidation principles

The consolidated accounts have been prepared according to the principles in IFRS 10 Consolidated 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.

"Subsidiaries" refers to companies in which Bilia owns more than 50 per cent of the voting power or over which it otherwise exercises a controlling influence.

"Associated companies" refers to companies over which Bilia has a significant influence, usually when Bilia's holding corresponds to more than 20 per cent but less than 50 per cent of the voting power. Holdings in associated companies are reported according to the equity method.

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

Transactions eliminated on consolidation

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

Financial statements of foreign operations

IAS 21 The Effects of Changes in Foreign Exchange Rates is applied when translating the financial statements of foreign operations.

Assets and liabilities in foreign operations, including goodwill and other fair value adjustments on consolidation, are translated to Swedish kronor at the rate in effect on the balance sheet date. Income and expenses in foreign operations are translated into Swedish kronor at an average rate which is an approximation of the rates in effect at the time of each transaction. Translation differences that arise when translating the accounts of foreign operations are recognised in other

comprehensive income and accumulated in a separate component of equity, called the translation reserve.

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

Transactions in foreign currencies

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

Accounting estimates in the financial statements

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

The assumptions and accounting estimates are regularly reviewed. Changes in estimates are recognised 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 in future periods if the change affects both the current and future periods.

Assessments made by management in the application of IFRS that have a significant impact on the financial statements and estimates made, may also entail significant adjustments in subsequent years' financial statements. The table below shows in which notes management's accounting estimates are presented.

Source of uncertainty	Note
Customer relations	14	Intangible assets
Goodwill	14	Intangible assets
Leases	15, 16, 25, 26, 29	Property, plant and equipment, Right-of-use-assets, Other liabilities, Accrued ex penses and deferred income, Leases
Valuation of used cars	20	Inventories
Pensions	23	Pensions
Service subscriptions	25	Other liabilities

Note 2 Revenue

➤ Accounting principle

Bilia applies IFRS 15 Revenue from Contracts with Customers

Revenues in the normal course of the business consists of sale of goods or services. Service revenues are defined as business activities that do not include physical products or where the content of physical products is minor compared to the total business activity. Products that are not included in a service agreement is reported as a separate performance obligation and classified as revenues from products. Revenue from the sale of goods is recognised at a point in time when the control have been transferred to the purchaser.

Sale of goods

Revenue from the sale of goods is recognised at a point in time when the control over goods or a service have been transferred to the customer. 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.

In cases where the sale of a product is combined with a future repurchase commitment at a beforehand 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.

Sale of services

Revenue from services is recognised as a service revenue either at a point in time or over time. In those agreements where the service is delivered to the customer over time, the revenue is accounted for over the duration of the contract. Revenue is not recognised if it is probable that the economic benefit will not flow to the Group. 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. Rendering of services mainly include service subscriptions and tyre hotels.

Revenue from finance brokering

Revenue from finance brokering is recognised on a straightline basis during the lease period, since the service is recieved over the lease period.

Leasing of cars

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

Contract liabilities

Revenue pertaining to cars sold with repurchase agreements, service subscriptions and tyre hotels are recognised as contract liabilities until the control of the service has been transferred to the customer. See Note 26 "Accrued expenses and deferred income". Based on active service subscriptions, future estimated turnover during the contract period of 36 months is around SEK 450 M.

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.

➤ Important accounting estimates and judgements Revenue from cars sold with repurchase agreements When a car is sold with a repurchase agreement, Bilia undertakes to take back the car at a pre-guaranteed residual value. These agreements are recognised as operating leases. The agreements entail that Bilia has a residual value risk and that Bilia may in the future be forced to dispose of used cars at a loss if the net realisable value of these cars is lower than had been foreseen when the agreement was entered into. Estimates are made regularly of a future net realisable value for these vehicles. If the residual value is higher than the net realisable value, this is adjusted by depreciation or impairment of the value of the assets to the extent the shortfall cannot be offset by future unrealised revenue. These vehicles are recognised as leased vehicles, see Note 15 "Property, plant and equipment," and as liability, see Note 25 "Other liabilities". Future unrealised revenue pertaining to cars sold with repurchasing agreements amounted at year-end to SEK 101 M (82), see Note 26 "Accrued expenses and deferred income".

	2019	2018
Net turnover 1)
Workshop	3,008	2,705
Spare parts	3,949	3,665
Other	95	83
Total Service Business	7,052	6,453
Sale of goods	21,814	21,120
Revenue from cars sold with repurchase
agreements and rental cars	595	612
Revenue from finance brokering	269	256
Total Car Business	22,678	21,988
Fuels	1,338	1,297
Total Fuel Business	1,338	1,297
Rental income	349	322
IT and training services	195	181
Eliminations	-2,104	–1,859
Total	29,508	28,382

1) Net turnover for Workshop, Revenue from cars sold with repurchase agreements, Revenue from finance brokering and Rental income include revenue that is recognised over time.

Note 3 Income from supplementary services in the Car Business

Income from supplementary services in the Car Business consists of finance brokering and cars sold with repurchase agreements.

chase contracts, current net return on financial contracts and revenue from finance brokering that have been transferred to finance companies. This financing is aimed at Bilia's customers.

Finance brokering consists of long-term leases, hire-pur-

	2019	2018
Revenue for cars sold with repurchase agreements	411	440
Revenue from finance brokering	269	256
Amortisation on cars sold with repurchase agreements	–337	–366
Impairment on cars sold with repurchase agreements	—	–1
Other	–16	–16
Total	327	313
Of which:
Income from finance brokering and other	253	240
Income from cars sold with repurchase agreements	74	73
Total	327	313

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

The Group's internal reporting is 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 been identified by aggregating the different components to similar segments. The segments have similar economic characteristics such as gross profit margin, products, customers and modes of distribution, and 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, compressed gas and car washes. The Fuels segment is not subdivided geographically.

The Parent Company Bilia AB is responsible for the Group's management, strategic planning, law, 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, 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 operational 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

									Segment
	Service		Car			Fuel	Total		reconciliation		Group
	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018
Net turnover
External sales			5,467 5,073 22,678 21,988 1,338 1,297 29,483 28,358						25		24 29,508 28,382
Internal sales		1,585 1,380					1,585		1,380 –1,585 –1,380		—	—
Total net turnover			7,052 6,453 22,678 21,988 1,338 1,297 31,068 29,738 –1,560 –1,356 29,508 28,382
Depreciation/amortisation	–371	–113	–708	–516	–5		–5 –1,084	–634	–62		–44 –1,146	–678
Operational earnings/Operating profit	945	766	348	304	25	30	1,318	1,100	–193	–157	1,125	943
Interest income											12	2
Interest expenses											–164	–64
Profit from shares in associated
companies			41	41			41	41			41	41
Profit before tax											1,014	922
Tax expense for the year											–207	–188
Net profit for the year											807	734
Revenue and cost items that affect the comparability of the Group's operating profit: – Profit from sale of property	4		4				8				8
– Structural costs etc.	–1	–4	–3	–4			–4	–8			–4	–8
– Acquisition-related costs and value adjustments	–1	–3	–2	–3			–3	–6			–3	–6
– Amortisation/impairment losses of surplus values	–58	–39	–57	–38			–115	–77			–115	–77
Total	–56	–46	–58	–45	—	—	–114	–91	—	—	–114	–91
Assets
Interests in associated companies			433	441			433	441			433	441
Deferred tax assets											110	81
Other assets												15,538 11,549
Total assets			433	441			433	441				16,081 12,071
Investments in non-current assets	90	95	1,713	1,518	5	5	1,808	1,618	98	100	1,906	1,718
Liabilities
Equity											3,186	2,915
Liabilities											12,895	9,156
Total liabilities and equity												16,081 12,071

	Service				Car
	Sweden		Norway		Western Europe		Sweden		Norway		Western Europe
	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018
Net turnover
External sales			3,428 3,308 1,315 1,167		724			598 13,052 13,143 6,204 6,300 3,422 2,545
Internal sales	1,014	840	471	465	100	75
Total net turnover			4,442 4,148 1,786 1,632		824			673 13,052 13,143 6,204 6,300 3,422 2,545
Depreciation/amortisation	–215	–65	–97	–18	–59	–30	–542	–445	–111	–41	–55	–30
Operational earnings	674	520	205	176	66	70	251	219	72	82	25	3
Profit from shares in associated companies							41	41
Revenue and cost items that affect the comparability of the Group's operating profit: – Profit from sale of property	4						4
– Structural costs etc.	–1	–2	0	–1		–1	–2	–2	0	0	–1	–2
– Acquisition-related costs and value adjustments	–1	–1		0		–2	–1	–1	–1	–1	0	–1
– Amortisation/impairment losses of surplus values	–12	–12	–12	–10	–34	–17	–11	–12	–12	–9	–34	–17
Total	–10	–15	–12	–11	–34	–20	–10	–15	–13	–10	–35	–20
Assets Interests in associated companies							433	441
Investments in non-current assets	44	64	37	21	9	10	1,406	1,087	264	384	43	47

	Revenue from external customers		Non-current assets
	2019	2018	2019	2018
Geographical segments
Sweden	17,836	17,766	7,225	5,446
Norway	7,526	7,473	2,106	1,054
Germany	1,361	1,120	107	82
Luxembourg	1,312	1,202	605	610
Belgium	1,473	821	628	629
Segment reconciliation	0	0	–1,595	–1,593
Total	29,508	28,382	9,076	6,228

Note 5 Business combinations

➤ Accounting principle

Bilia applies IFRS 3 Business Combinations in accounting for acquisitions.

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

In business combinations where the purchase consideration exceeds the fair value of net identifiable assets acquired and liabilities assumed that are accounted for separately, any surplus values are allocated to acquired assets and liabilities based on fair value. If there is a remaining value it is called goodwill. When the value 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-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.

Effects of acquisitions in 2019

Jensen & Scheele Bil AS

On 1 April 2019, Bilia acquired Jensen & Scheele Bil AS, a Volvo dealership in Norway. The operation is in three nearby facilities in Halden, Østfold south of Oslo, Norway. Jensen & Scheele Bil AS consists of a complete Volvo facility, a body shop and a facility for sale of used cars with related service workshop. During 2019, the operation contributed with around SEK 278 M in turnover and with around SEK 9 M in operating profit. Calculated on a full-year basis this translates to around SEK 370 M in turnover and around SEK 12 M in operating profit. The purchase consideration was SEK 50 M. The entire purchase consideration was paid in cash. There is no contingent purchase consideration.

The acquisition means additional facilities in an attractive

area, where Bilia will offer customers high quality service. The company's expertise and experience will serve to further develop Bilia in Norway.

The operation has about 55 employees and will continue to be conducted from the present-day facility.

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

Effects of the acquisition

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

Acquiree's net assets at the acquisition date:

Intangible assets, customer relations	46
Property, plant and equipment	199
Long-term investments	0
Deferred tax asset	1
Inventories	52
Trade receivables and other receivables	14
Cash and cash equivalents	2
Interest-bearing liabilities	56
Trade payables and other liabilities	199
Deferred tax liability	9
Net identifiable assets and liabilities	50
Consolidated goodwill	—
Net identifiable assets and liabilities,including goodwill	50
Purchase consideration paid	50
Less: Cash and cash equivalents in acquired operation	–2
Net effect on cash and cash equivalents	48

Acquired customer relations totalling SEK 46 M are recognised as intangible assets. These customer relations will be amortised over 10 years.

The 2019 acquisitions of an autorised service centre in Furubakken, Norway and En Bättre Däckaffär Scandinavia AB, a wheel storage supplier for car dealers in Stockholm, Sweden did not have any material effect on the Group, which is why acquisition analyses have not been provided.

Effects of acquisitions in 2018

Bilsalongen AS

On 2 January 2018, Bilia acquired Bilsalongen AS, a BMW and MINI dealership in Norway. The operation is conducted in a facility in Skien and comprises sales of BMW and MINI cars plus service. During 2018, the operation contributed with around SEK 276 M in turnover and with around SEK 4 M in operating profit. The purchase consideration was SEK 58 M. The entire purchase consideration was paid in cash. There is no contingent purchase consideration.

The acquisition is expected to result in synergies with the rest of Bilia's BMW operation in Norway and will enable Bilia to grow with BMW in Norway while bringing MINI into the business as well.

The operation has about 30 employees and will continue to be conducted from the present-day facility.

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

Effects of the acquisition

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

Acquiree's net assets at the acquisition date:

Intangible assets, customer relations	22
Property, plant and equipment	60
Long-term investments	0
Deferred tax asset	1
Inventories	48
Trade receivables and other receivables	16
Cash and cash equivalents	7
Interest-bearing liabilities	7
Trade payables and other liabilities	102
Deferred tax liability	4
Net identifiable assets and liabilities	41
Consolidated goodwill	17
Net identifiable assets and liabilities,including goodwill	58
Purchase consideration paid	58
Less: Cash and cash equivalents in acquired operation	–7
Net effect on cash and cash equivalents	51

Acquired customer relations totalling SEK 22 M are recognised as intangible assets. These customer relations will be amortised over 10 years.

The goodwill item is attributable in its entirety to synergies resulting from the acquisition.

Note 5 cont'd.

Verstraeten NV och Gent Store by Verstraeten BVBA On 3 December 2018, Bilia acquired Verstraeten NV and Gent Store by Verstraeten BVBA, one BMW and one MINI dealership in Belgium. The operations are conducted in facilities in Flandern. In December 2018, the business contributed with around SEK 41 M in turnover and around SEK 3 M in operating profit. Calculated on a full-year basis this means a turnover of around SEK 490 M and operational profit of around SEK 35 M. The purchase consideration was SEK 434 M. The entire purchase consideration was paid in cash. There is no contingent purchase consideration.

The acquisition is expected to result in future synergies with Bilia's other operations in Belgium and Luxembourg.

The operation has about 60 employees and will continue to be conducted from the present-day facilities.

Acquisition-related expenses amounting to SEK 3.7 M consist of fees to consultants for due diligence and have been recognised as "Other operating expenses".

Effects of the acquisition

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

Acquiree's net assets at the acquisition date:

Intangible assets, customer relations	132
Property, plant and equipment	143
Long-term investments	0
Deferred tax asset	0
Inventories	106
Trade receivables and other receivables	36
Cash and cash equivalents	151
Interest-bearing liabilities	44
Trade payables and other liabilities	120
Deferred tax liability	57
Net identifiable assets and liabilities	347
Consolidated goodwill	87
Net identifiable assets and liabilities,including goodwill	434
Purchase consideration paid	434
Less: Cash and cash equivalents in acquired operation	–151
Net effect on cash and cash equivalents	283

Acquired customer relations totalling SEK 132 M are recognised as intangible assets. These customer relations will be amortised over 10 years.

The goodwill item is attributable in its entirety to synergies resulting from the acquisition.

Note 6 Other operating income

	2019	2018
Gain on disposal of non-current assets	8	0
Gain from sale of operation, other	8	—
Other	8	6
Total	24	6

"Other operating income" includes the disposal of a property relation to a facility in Sweden, used by both Car and Service Business.

Note 7 Other operating expenses

	2019	2018
Loss on disposal of non-current assets	–4	–2
Structural costs	–4	–8
Acquisition-related costs and value adjustments	–3	–6
Other	–8	0
Total	–19	–16

"Other operating expenses" includes structural costs for relocation of operations in Sweden and costs to reduce staff with SEK 4 M (8).

Note 8 Employees, personnel costs and remunerations for senior officers

➤ Accounting principle

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

Short-term benefits

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

A provision is recognised for the expected cost of 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	2019	2018
Wages, salaries and other remunerations	2,374	2,230
Pension costs 1)	227	208
Social security contributions	594	596
Total	3,195	3,034

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

Average number of employees	2019	of whom men	2018	of whom men
Parent Company
Sweden	188	85	188	85
Total in Parent Company	188	85	188	85
Subsidiaries
Sweden	2,450	2,176	2,480	2,171
Norway	1,123	1,007	1,019	914
Germany	203	159	206	163
Luxembourg	162	139	158	135
Belgium	172	145	170	140
Total in subsidiaries	4,110	3,626	4,033	3,523
Group total	4,298	3,711	4,221	3,608

The Group Management consists of one woman and three men (25 per cent women). The Board of Directors consists of three women and seven men (30 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

		2019		2018
Parent Company	Senior officers (17 persons)	Other employees	Total	Senior officers (17 persons)	Other employees	Total
Wages, salaries and other remunerations	17	101	118	16	99	115
(of which bonus etc.)	(4)	(5)	(9)	(4)	(4)	(8)
Social security contributions	22 1)	50	72	12	47	59
(of which pension costs)	(16) 1)	(19)	(35)	(7)	(16)	(23)

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

1) Special payroll tax on company-owned pensions is included with SEK 11 M. Tax expense for the year has been reduced by the corresponding amount due to the increase in value of pensions.

Note 8 cont'd.

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

	2019	2018
	Senior officers	Senior officers
	(18 persons)	(18 persons)
Wages, salaries and other remunerations	21	20
(of which bonus etc.)	(5)	(5)
Pension costs	17 1)	5
Pension obligations	216	165

"Senior officers" includes Bilia AB's Board of Directors, 14 persons (14), including two deputies, MD, Deputy MD, CFO and MD of Bilia Personbil AS.

1) Special payroll tax on company-owned pensions is included with SEK 11 M. Tax expense for the year has been reduced by the corresponding amount due to the increase in value of pensions.

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, CFO and MD of Bilia Personbil AS.

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

	Director's fee/Basic
	salary		Pension	Other		Pension
Parent Company 2019	(excl. social sec. contr.)	Bonus	costs	benefits	Total	obligations
Chairman (Mats Qviberg)	358	—	—	—	358	—
Board members (9) 1)	2,214	—	—	—	2,214	—
Audit and Compensation Committee (5)	285	—	—	—	285	—
Employee representatives:		—	—			—
Appointed (2)	76	—	—	—	76	—
Deputies (2)	46	—	—	—	46	—
MD, Per Avander	4,828	2,370	2,867	221	10,286	16,518
Other senior officers (2)	4,869	1,719	2,552	224	9,364	3,300
Former senior officers	—	—	—	—	0	201,150
Total	12,676	4,089	5,419	445	22,629	220,968

1) Jack Forsgren, Anna Engebretsen, Ingrid Jonasson Blank, Eva Eriksson, Gunnar Blomkvist, Jon Risfelt, Mats Holgerson, Jan Pettersson and Nicklas Paulson. Five of the members are also members of the Audit, Property and Compensation Committees.

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

	Director's fee/Basic
	salary		Pension	Other		Pension
Parent Company 2018	(excl. social sec. contr.)	Bonus	costs	benefits	Total	obligations
Chairman (Mats Qviberg)	346	—	—	—	346	—
Board members (9) 1)	2,086	—	—	—	2,086	—
Audit and Compensation Committee (4)	265	—	—	—	265	—
Employee representatives:
Appointed (2)	76	—	—	—	76	—
Deputies (2)	46	—	—	—	46	—
MD, Per Avander	4,703	2,287	2,940	129	10,059	12,885
Other senior officers (2)	4,741	1,580	2,312	163	8,796	2,127
Former senior officers	—	—	—	—	—	154,819
Total	12,263	3,867	5,252	292	21,674	169,831

1) Jack Forsgren, Anna Engebretsen, Ingrid Jonasson Blank, Laila Freivalds, Gunnar Blomkvist, Jon Risfelt, Mats Holgerson, Jan Pettersson and Nicklas Paulson. Four of the members are also members of the Audit and Compensation Committees.

The Chairman of the Board has not received any other remuneration aside from his director's fee. A fee of SEK 232,000 (218,000) was paid to each of the other Board members, except for the Deputy Chairman, who received SEK 358,000 (346,000). Altogether, fees totalling SEK 2,214,000 (2,086,000) were paid to the Board members elected by the AGM, in accordance with the decision of the 2019 AGM. The AGM further decided that Audit Committee Chairman Jon Risfelt should receive a fee of SEK 120,000 (110,000) and that other members of the Audit Committee (Gunnar Blomkvist and Mats Holgerson) should receive SEK 60,000 each, for a total of SEK 120,000 (110,000). It was decided that the chairman of the Compensation Committee (Jack Forsgren) should receive SEK 25,000 (25,000), while the other members of the Compensation Committee (Gunnar Blomkvist and Eva Eriksson) should receive SEK 10,000 each, for a total of SEK 20,000 (20,000). Fees totalling SEK 122,000 (122,000) were paid to the employee representatives on the Board. No fee has been received by the chairmain of the Facility Commitee (Eva Ericsson) or the other member of the Facility Commitee (Gunnar Blomkvist). Altogether, the total fees paid to the Board members amounted to SEK 2,857,000 (2,819,000).

Bonus for the MD and CFO was based on the Group's profit and customer satisfaction. Bonus for the Deputy MD was based on the Group's profit, customer satisfaction and turnover of operating assets and for CFO also turnover on equity employed. Bonus for the MD of Bilia Personbil AS was based on Group's profit, profit of the Norweigan operation, customer satisfaction and turnover of operating assets. The bonus for 2019 for the MD and other senior officers was maximised at 50 per cent of the individual's basic salary.

"Other benefits" pertained mainly to company cars.

Incentive programme

The AGM 2018 resolved to establish a long-term incentive programme in the form of a share savings plan. The programme was aimed at some 40 senior officers and other key persons in the Bilia Group. In order to participate in the programme, the participant must have made a private investment by acquiring shares in Bilia AB (publ) savings shares equivalent to a maximum of 10 per cent of the participant's gross basic salary and at least SEK 25,000. For each savings share held within the framework of the programme, the participant can receive at most three performance shares gratuitously from Bilia if the goal established by the Board of Directors regarding total yield on Bilia's shares and increased earnings per share is met. In order to be allotted performance shares, the participant must retain his/her original savings shares from the start of the programme up until 31 March 2021 and must still be employed by the Bilia Group at this point in time. The maximum number of performance shares allotted to the participants in the programme is 118,000.

Defined-contribution pension

The MD'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 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 MD of the company.

The Deputy MD'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.

The CFO and other senior officers 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 penison premium amounting to 6.9 per cent of the pensionable salary is paid for the MD 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. MD is entiteled to 12 months' salary, less any salary received by the employee from other service. Two members in the Group Management are entitled to 24 months' salary, less any salary received by the employee from other service during the last 12 months. These two are, in the event of significant changes in the company's ownership structure that affect the premises or content of their jobs, 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 29 M (24), including payroll overhead, was allocated in the annual accounts for 2019 to cover profit shares for employees in Sweden. The profit-sharing system is based on result for each legal unit and customer satisfaction compared with other dealers in the country.

Note 9 Fees and cost reimbursement to auditors

SEK '000	2019	2018
KPMG AB Auditing assignment	–5,410	–4,617
Auditing activities other than the auditing assignment	–1,232	–413
Tax advice	–31	–34
Other assignments	–662	–496

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

Note 10 Operating expenses classified by nature of expense

	2019	2018
Merchandise	–23,611	–22,663
Other external expenses 1)	–366	–1,008
Personnel costs	–3,184	–3,015
Depreciation/amortisation 2)	–1,146	–678
Impairment losses	–81	–65
Other operating expenses	–19	–16
Total	–28,407	–27,445

1) Including IFRS 16, SEK 497 M. 2) Including IFRS 16, SEK –451 M.

Note 11 Net financial items

➤ Accounting principle

Bilia applies IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 23 Borrowing Costs, IAS 28 Investments in Associates and Joint Ventures, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, IFRS 9 Financial Instruments in accounting for financial income and expenses and IFRS 16 Leases (from 2019).

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. Effective from 2019 Financial expenses includes an interest expense calculated on the leasing liabilities according to IFRS 16. 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.

	2019	2018
Interest income	3	2
Other exchange gains	9	0
Financial income	12	2
Interest expenses	–71	–56
Interest expenses IFRS 16	–85	—
Cost currency swaps	–7	–7
Other exchange losses	–1	–1
Financial expenses	–164	–64
Profit from shares in associated companies	41	41
Net financial items	–111	–21

Note 12 Taxes

➤ 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

	2019	2018
Current tax expense (–)/tax income (+)
Tax expense/income for the year	–228	–200
Adjustment of tax attributable to previous years	0	1
	–228	–199
Deferred tax expense (–)/tax income (+)
Deferred tax pertaining to temporary differences	47	24
Refers to changed tax rates	0	11
Deferred tax pertaining to appropriations	–26	–24
	21	11
Total tax expense recognised	–207	–188

	2019		2018
	Amount	%	Amount	%
Reconciliation of effective tax
Profit before tax	1,014		922
Tax according to tax rate applicable to Parent Company	–217	21.4	–203	22.0
Effect of foreign tax rates	-6	0.6	–6	0.7
Tax attributable to previous years	0	0.0	1	–0.1
Tax effect of non-deductible expenses	–25	2.5	–5	0.5
Tax effect of non-taxable revenues	31	–3.1	14	–1.5
Tax effect of changed tax rate	0	0.0	11	–1.2
Standard interest on tax allocation reserve	–1	0.1	0	0.0
Direct deduction, buildings	11	–1.1	0	0.0
Effective tax recognised	–207	20.4	–188	20.4

Current tax assets amount to SEK 172 M (46) and represent the recoverable amount of current tax on the net profit for the year.

Note 12 cont'd.

	2019			2018
Tax attributable to other comprehensive income		Tax	After tax	Before tax	Tax	After tax
Translation differences for the period on translation of foreign financial
statements	31	—	31	31	—	31
Other comprehensive income/loss	31	—	31	31	—	31

Recognised in Statement of Financial Position

	Deferred tax asset		Deferred tax liability		Net
Deferred tax assets and liabilities	2019	2018	2019	2018	2019	2018
Deferred tax assets and liabilities recognised
Deferred tax assets and liabilities are attributable to the following:
Intellectual property	–6	–7	130	137	–136	–144
Land and buildings	2	1	65	59	–63	–58
Plant and equipment	–9	–8	2	—	–11	–8
Leased vehicles	21	16	—	—	21	16
Right-of-use assets IFRS 16	98	—	—	—	98	—
Financial investments	—	—	1	1	–1	–1
Inventories	11	14	–1	1	12	13
Trade receivables	1	1	0	—	1	1
Untaxed reserves	—	—	225	199	–225	–199
Pension provisions	61	47	—	—	61	47
Other provisions	19	11	—	—	19	11
Lease liabilities IFRS 16	–89	—	—	—	–89	—
Operating liabilities	—	5	–6	—	6	5
Tax-loss carryforwards	1	1	—	0	1	1
Tax assets/liabilities	110	81	416	397	–306	–316

Change in deferred tax in temporary differences and tax-loss carryforwards	Balance as per 1 Jan. 2019	Recognised in profit or loss for the year	Recognised in equity	Acquisition/ disposal of business entity	Balance as per 31 Dec. 2019
Intellectual property	–144	20	—	–12	–136
Land and buildings	–58	–5	—	—	–63
Plant and equipment	–8	–3	—	—	–11
Leased vehicles	16	5	—	—	21
Right-of-use assets IFRS 16	—	98	—	—	98
Financial investments	–1	0	—	—	–1
Inventories	13	–1	—	0	12
Trade receivables	1	0	—	—	1
Untaxed reserves	–199	–26	—	—	–225
Pension provisions	47	14	—	—	61
Other provisions	11	8	—	—	19
Lease liability IFRS 16	—	–89	—	—	–89
Operating liabilities	5	–1	—	2	6
Tax-loss carryforwards	1	0	—	—	1
Translation difference for the year	—	1	–1	—	—
Tax assets/liabilities	-316	21	-1	-10	-306

Change in deferred tax in temporary differences and tax-loss carryforwards	Balance as per 1 Jan. 2018	Recognised in profit or loss for the year	Recognised in equity	Acquisition/ disposal of business entity	Balance as per 31 Dec. 2018
Intellectual property	–135	30	—	–39	–144
Land and buildings	–32	1	—	–27	–58
Plant and equipment	–7	–1	—	—	–8
Leased vehicles	18	–3	—	1	16
Financial investments	–1	—	—	—	–1
Inventories	10	3	—	0	13
Trade receivables	1	0	—	—	1
Untaxed reserves	–176	–23	—	—	–199
Pension provisions	47	0	—	—	47
Other provisions	9	2	—	—	11
Operating liabilities	4	–2	—	3	5
Tax-loss carryforwards	1	0	—	—	1
Translation difference for the year	—	4	–4	—	—
Tax assets/liabilities	–261	11	–4	–62	–316

Note 13 Earnings per share

➤ Accounting principle

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

Calculation of earnings per share is based on the consolidated net profit for the year attributable to the Parent Company's owners and on the weighted average number of shares outstanding during the year. In the calculation of diluted earnings per share, the earnings figure and the average number of shares are adjusted to take into account the diluting effects of potential ordinary shares deriving during reported periods from issued warrants attributable to the debenture loan. See Note 27 "Financial instruments".

	Basic earnings per share		Diluted earnings per share
	2019	2018	2019	2018
Earnings per share	8.00	7.25	8.00	7.25

The calculation of earnings per share for 2019 is based on the net profit for the year attributable to the Parent Company's ordinary shareholders, amounting to SEK 807 M (734), and on a weighted average number of shares outstanding. During 2019, the weighted average number of shares was 100,858,864 (100,950,952).

Net profit for the year attributable to the Parent Company's ordinary shareholders, basic	2019	2018
Net profit for the year attributable to the Parent Company's ordinary shareholders	807	734
Net profit for the year attributable to the Parent Company's ordinary shareholders, basic	807	734
Net profit for the year attributable to the Parent Company's ordinary shareholders, diluted	2019	2018
Net profit for the year attributable to the Parent Company's ordinary shareholders	807	734
Net profit for the year attributable to the Parent Company's ordinary shareholders, diluted	807	734
Weighted average number of ordinary shares outstanding, diluted, thousands	2019	2018
Weighted average number of ordinary shares outstanding during the year, basic	100,859	100,951
Effect of outstanding warrants attached to incentive programme, weighted average	98	62
Weighted average number of ordinary shares during the year, diluted	100,957	101,013

In 2019 Bilia repurchased 817,210 of its own shares, amounting to SEK 79 M. In 2017, Bilia repurchased 1,849,000 of its own shares, amounting to SEK 147 M. During 2018 an incentive programme

was established which led to a dilution effect of 97,232 shares, corresponding to a dilution effect of SEK 2 M.

Note 14 Intangible assets

➤ Accounting principle

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

Software

Internally developed

Expenditures for development of software and improved business management systems are recognised as an asset in the Statement of Financial Position if the software is technically useful, and if Bilia has sufficient resources to complete development and thereafter intends to 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 Statement of Financial Position 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.

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 includes expected future profits from existing operations and expected synergies resulting from the acquisition.

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 recognised 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. Amortisation period is based on expected useful life considering historic experience and valid agreement.

Estimated useful lives:

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

Impairment testing of 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 such an 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 cashgenerating units in question. For important assumptions per cash-generating unit, see the following pages.

	Software, inter nally developed			Software, acquired		Customer relations
	2019	2018	2019	2018	2019	2018
Accumulated costs
At start of year	29	22	139	127	852	720
Business combinations	1	—	—	—	70	154
Purchases	6	—	12	13	—	—
Internally developed assets	—	7	—	—	—	—
Disposals and retirements	0	—	–8	–1	—	—
Reclassifications	0	—	—	—	–19	–38
Translation differences for the year	—	—	—	—	11	16
	36	29	143	139	914	852
Accumulated amortisation and impairment losses
At start of year	–13	–11	–90	–71	–267	–228
Disposals and retirements	0	0	5	1	—	—
Reclassifications	0	—	—	—	19	38
Amortisation for the year	–6	–2	–21	–20	–92	–74
Impairment for the year	—	—	—	—	–6	—
Translation differences for the year	—	—	—	—	–3	–3
	–19	–13	–106	–90	–349	–267
Carrying amount at year-end	17	16	37	49	565	585

Amortisation and impairment losses

Amortisation is included on the following lines in the Statement of Income and Other Comprehensive Income:		Software, inter Software, nally developed acquired				Customer relations
	2019	2018	2019	2018	2019	2018
Cost of goods sold	–6	–2	–21	–20	–92	–74

Impairment losses are included on the following lines in the Statement of Income and Other Comprehensive Income:	Software, inter nally developed			Software, acquired		Customer relations
	2019	2018	2019	2018	2019	2018
Cost of goods sold	—	—	—	—	–6	—

Note 14 cont'd.

	Distribution rights		Total intellectual property		Goodwill
	2019	2018	2019	2018	2019	2018
Accumulated costs
At start of year	32	32	1,052	901	844	725
Business combinations	—	—	71	154	6	104
Purchases	—	—	18	13	—	—
Internally developed assets	—	—	—	7	—	—
Disposals and retirements	—	—	–8	–1	—	—
Reclassifications	–1	—	–20	–38	—	—
Translation differences for the year	1	0	12	16	12	15
	32	32	1,125	1,052	862	844
Accumulated amortisation and impairment losses
At start of year	–12	–8	–382	–318	–2	–2
Disposals and retirements	—	—	5	1	—	—
Reclassifications	1	—	20	38	—	—
Amortisation for the year	–3	–4	–122	–100	—	—
Impairment for the year	–1	—	–7	—	–13	—
Translation differences for the year	—	0	–3	–3	—	—
	–15	–12	–489	–382	–15	–2
Carrying amount at year-end	17	20	636	670	847	842

Amortisation and impairment losses

Amortisation is included on the following lines in the Statement of Income and Other Comprehensive Income:		Distribution rights		Total intellectual property Goodwill
	2019	2018	2019	2018	2019	2018
Cost of goods sold	–3	–4	–122	–100	—	—

Impairment losses are included on the following lines in the Statement of Income and Other Comprehensive Income:		Software, inter nally developed		Software, acquired		Customer relations
	2019	2018	2019	2018	2019	2018
Cost of goods sold	–1	—	–7	—	–13	—

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

The following cash-generating units have carrying amounts for goodwill:

	2019	2018
Bilia Personbilar AB	72	72
Bilia Group AB	78	78
Bilia Center AB	43	43
Bilia Center Metro AB	84	84
Allbildelar Försäljning i Huddinge AB	8	8
Total Sweden	285	285
Bilia Personbil AS	132	124
Toyota Bilia AS	92	89
Total Norway	224	213
Autohaus Bilia GmbH & Co. KG	—	13
Bilia Emond Luxembourg	146	143
S.A. Bilia Emond Belgium	97	96
Bilia Holding Flanders group	88	85
Total Western Europe	331	337

Sweden

Impairment testing for operations in Sweden was based on calculation of the value in use.

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

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 2019. 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.

Assumptions for estimating values:

		Annual growth	Discount rate before tax
Per cent	2019	2018	2019	2018
Bilia Personbilar AB	2.0	2.0	5.16	6.74
Bilia Group AB	2.0	2.0	5.26	6.87
Bilia Center AB	2.0	2.0	5.18	6.72
Bilia Center Metro AB	2.0	2.0	5.18	6.73
Allbildelar Försäljning
i Huddinge AB	2.0	2.0	5.18	6.75

The recoverable amount for all operations in Sweden 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.

Norway

Impairment testing for operations in Norway was based on calculation of the value in use.

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

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 2019. 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.

Assumptions for estimating values:

	Annual growth		Discount rate before tax
Per cent	2019	2018	2019	2018
Bilia Personbil AS	2.0	2.0	6.79	8.15
Toyota Bilia AS	2.0	2.0	6.80	8.02
Jensen & Scheele Bil AS	2.0	—	6.54	—

The recoverable amount for all operations in Norway 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.

Western Europe

Impairment testing for operations in Western Europe was based on calculation of the value in use.

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

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 2019. 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.

Assumptions for estimating values:

	Annual growth		Discount rate before tax
Per cent	2019 2018		2019	2018
Autohaus Bilia GmbH & Co. KG	2.0	2.0	4.81	6.39
Bilia Emond Luxembourg	2.0	2.0	5.36	6.92
S.A. Bilia Emond Belgium	2.0	2.0	5.36	7.59
Bilia Holding Flanders group	2.0	—	5.36	—

The recoverable amount for operations in Luxembourg and Belgium 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 for operations in Luxembourg and Belgium to a value lower than the carrying amount.

During 2019 the operating profit has been charged with an impairment amounting to SEK 20 M related to intangible assets for the operations in Germany. An assessment of the recoverable amount with associated sensitivity analysis and a possible net sales price resulted in a need for an impairment. The goodwill value for Autohaus Bilia GmbH & Co. KG was SEK 13 M.

Note 15 Property, plant and equipment

➤ Accounting principle

Bilia applies IAS 16 Property, Plant and Equipment in accounting for property, plant and equipment and IFRS 16 Leases 2019 and IAS 17 for 2018.

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 Kungälv, Lund, Eskilstuna and Stockholm in Sweden.

Leased assets

Lessee

Leases are from 2019 reported as right-of-use assets in accordance with IFRS 16. The effect of the transistion is described in Note 1 "Key accounting principles" and Note 16 "Right-of-use assets". The method selected for for the transition to IFRS 16 means that 2018 has not been restated.

Before 2019 leases were 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.

Lessor

Assets that are leased out under operating leases are recog-

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

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 years
• Land and buildings 5–50 years
• Equipment, tools, fixtures and fittings 3–10 years
• Leased vehicles 1–4 years 1)

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

1) Leased vehicles are written down to an expected residual value at the end of the lease period.

Impairment losses

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

➤ Important accounting estimates and judgements See Note 2 "Revenue" from cars sold with repurchase agreements.

		Land and	Construction
		buildings	in progress
	2019	2018	2019	2018
Accumulated costs
At start of year	1,094	918	83	29
Business combinations		0 135	—	—
Purchases	127	35	6	55
Disposals and retirements	–28	–10	–47	—
Reclassifications	–47	4	—	–1
Translation differences for the year	10	12	—	0
	1,156	1,094	42	83
Accumulated depreciation
At start of year	–368	–319	—	—
Business combinations	—	–1	—	—
Disposals and retirements		6 4	—	—
Reclassifications	65	11	—	—
Depreciation for the year	–75	–58	—	—
Translation differences for the year	–5	–5	—	—
	–377	–368	—	—
Carrying amount at year-end	779	726	42	83

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
		2018	2019	2018
Cost of goods sold	–28	–22	—	—
Selling expenses	–45	–35	—	—
Administrative expenses	–2	–1	—	—
Total	–75	–58	—	—

No impairment losses have been recognised.

Note 15 cont'd.

		Equipment, tools,
	fixtures and fittings		Leased vehicles
	2019	2018	2019	2018
Accumulated costs
At start of year	1,321	1,241	3,674	3,634
Business combinations	5	25	162	62
Purchases	164	173	1,660	1,447
Disposals and retirements	–81	–116	–1,722	–1,486
Reclassifications	–11	–13	–12	10
Translation differences for the year	16	11	16	7
	1,414	1,321	3,778	3,674
Accumulated depreciation
At start of year	–821	–788	–698	–646
Business combinations	0	–14	—	—
Disposals and retirements	39	90	444	377
Depreciation for the year	–98	–93	–400	–427
Reclassifications	–7	–9	12	–2
Translation differences for the year	–9	–7	0	0
	–896	–821	–642	–698
Accumulated impairment losses
At start of year	0	0	–18	–22
Disposals and retirements	—	—	12	5
Reclassifications	—	—	—	—
Impairment losses for the year	—	—	—	–1
	0	0	–6	–18
Carrying amount at year-end	518	500	3,130	2,958
Finance leases (included above)
Cost	75	75	285	250
Accumulated depreciation	–23	–17	–71	–63
	52	58	214	187
Lease payments during the financial year	–6	–7	–49	–48
Contractual future minimum lease payments:
Within one year	–12	–13	–40	–40
– Present value	–11	–12	–39	–39
Between one and five years	–8	–11	–12	–10
– Present value	–8	–11	–11	–9

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 2019 2018 2019 2018 Cost of goods sold –44 –41 –400 –427 Selling expenses –10 –11 — — Administrative expenses –44 –41 — — Total –98 –93 –400 –427

Impairment losses are included on the following lines in the Statement of Income and Other Comprehensive Income:		Equipment, tools, fixtures and fittings Leased vehicles
	2019	2018	2019	2018
Cost of goods sold	—	—	—	–1

Note 16 Right-of-use assets

➤ Accounting principle

Bilia applies from January 1 2019 IFRS 16 Leases in accounting for right-of-use assets. The Group has selected to apply the modified retroactive method, which means among other things that no figures for 2018 have been restated.

Calculation of right-of-use assets

Right-of-use assets and lease liabilities has been accounted for based on the present value of all future lease fees for leases with a longer lease period than 12 months. The leases relates primarily to rental agreements for buildings.

At the implementation of IFRS 16 as at January 1 2019 the right-of-use assets was assessed to be equal to the amount of the lease liability, adjusted for the prepaid lease fees. The lease liability was calculated as the total of the present all future lease fees until the lease period comes to an end, discounted to a present value using the marginal interest rate for with consideration of the remaining duration of the lease.

Simplification rules has been applied at the transition to IFRS 16. These mean that the Group has;

• Applied the same discount rate for leases with similar conditions and
• Excluded leases with a lease period shorter than 12 months

At the transition to IFRS 16 as at January 1 2019 the Group reported right-of-use assets and lease liabilities amounting to SEK 2,793 M.

Principles of depreciations

Depreciations is straight-line over the lease period for the right-of-use assets and are reported as a cost of goods sold, selling expenses and administrative expenses. The average depreciation period was 8 years.

Purchases and disposals and retirements

Purchases includes the discounted present value of lease fee for new lease during the year and additional amounts for right-of-use assets related to current lease due to an assessment of utilisation of extension options. Disposals include during the year terminated leases.

➤ Important accounting estimates and judgements Assessments and judgments are made for exercise of extension option of leases which can have a significant impact on the amount of the asset.

Other

Other includes for example changes of the right-of-use assets related to index upgrades .

For a description of the effect on the Groups result, financial position and the cash flow please refer to Note 1 "Key accounting principles". For a description of lease liabilities related to the right-of-use assets please refer to and Note 22 "Interest bearing liabilities" and Note 29 "Leases".

	Right-of-use assets
	2019
Accumulated costs
At start of year	2,793
Business combinations	34
Purchases	283
Disposals	–5
Other	0
Translation differences for the year	20
	3,125
Accumulated depreciation and impairment losses
At start of year	—
Depreciation of the year	–451
Disposals	5
Translation differences for the year	3
	–443
Carrying amount at year-end	2,682

Depreciation and impairment losses

Depreciation is included on the following lines in the Statement of Income and Other Comprehensive Income:

	2019
Cost of goods sold	–167
Selling expenses	–273
Administrative expenses	–11
Total	–451

No impairment losses have been recognised.

Note 17 Interests in associated companies

➤ Accounting principle

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

Associated companies are those companies in which the Group has a significant, but not a controlling, influence. This is normally acquired 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 "Profit from shares in 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.

	2019	2018
Carrying amount at start of year	441	408
Profit from shares in associated companies	41	41
Dividend recieved from associated
companies	–49	–8
Carrying amount at year-end	433	441

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. Bilia's direct and indirect holdings in AB Volverkinvest amount to 20.6 per cent (20.6). AB Volverkinvest owns 50 per cent 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 associated company's revenue, profit, assets and liabilities are specified below.

		Volvofinans Bank AB
	2019 1)	2018 1)
Operating revenue	6,268	5,809
Profit/loss before appropriations and tax	510	477
Current assets	842	957
Lending	21,025	19,588
Non-current assets	22,391	22,767
Current liabilities	2,896	2,853
Borrowing	36,376	35,879
Non-current liabilities	883	777
Net assets	4,103	3,803
Dividend to AB Volverkinvest	99	479
Total net assets before dividend 2)	4,202	4,282

1) The data for the associate relate to the accounting period from 1 October 2018 to 30 September 2019 (1 October 2017 to 30 September

2018). Later information about the associate is not available in the preparation of the Bilia Group's financial statements. This year's dividend from Volvofinans Bank AB to AB Volverkinvest, not yet distributed to Bilia, has been included in the calculation of group values.

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

Note 18 Financial investments

➤ Accounting principle

Bilia applies IFRS 9 Financial instruments in accounting for financial investments. For an explanation of the accounting principle, see Note 27 "Financial instruments".

	2019	2018
Financial investments classified as non current assets
Shares and interests, unlisted holdings	3	2
Housing cooperative units	5	6
Total	8	8

Note 19 Long-term receivables and other receivables

	2019	2018
Long-term receivables classified as non-current assets
Interest-bearing
Hire-purchase receivables	1	—
Total	1	—
Other receivables classified as current assets
Non-interest-bearing
Work in progress	16	16
Value added tax	65	62
Bonus/support	71	84
Construction projects	1	4
Derivatives	5	4
Other	83	71
Total	241	241
Interest-bearing
Hire-purchase receivables	—	0
Total	241	241

Impairment losses of SEK 1 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 first-in, 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 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 realisable value. Net realisable value is determined on the basis of the estimated selling price less direct selling expenses. Used cars are included in the line item "Merchandise".

The cost of goods sold, in the Consolidated Statement of Income and Other Comprehensive Income, includes write-down of new cars by SEK 14 M (10) used cars by SEK 28 M (42) and spare parts by SEK 12 M (8).

The item "Merchandise" consists of:

	2019	2018
New cars	2,113	1,953
Used cars	1,536	1,192
Demonstration cars	687	607
Spare parts	214	219
Other	21	21
Total	4,571	3,992

Of which impairment of inventories in the Consolidated Statement of Financial Position:

	2019	2018
New cars	13	10
Used cars	36	49
Spare parts	14	13
Total	63	72

Not 21 Prepaid expenses and accrued income

	2019	2018
Bonus	91	70
Prepaid expenses	59	123
Accrued income	123	104
Total	273	297

Note 22 Interest-bearing liabilities

➤ Accounting principle

1

Bilia applies IFRS 9 Financial Instruments in accounting for financial instruments. Bilia applies since January 1 2019 IFRS 16 Leases. 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".

	2019	2018
Non-current liabilities
Bank loans	24	71
Bond issue 1)	1,289	1,281
Personnel fund	5	5
Lease liabilities IFRS 16	2,214	—
Other lease liabilities 2)	136	159
Other loans	38	47
	3,706	1,563
Current liabilities
Current portion of bank loans	900	683
Current portion of lease liabilities
IFRS 16	406	—
Current portion of other lease liabilities 2)	140	93
	1,446	776
Total	5,152	2,339

) In the Consolidated Statement of Financial Position, the bond issue amounts to SEK 1,289 M (1,281), calculated according to the effective interest method. In calculating key figures, SEK 1,300 M (1,300) is used without the net effect of the effective interest rate, which amounts to SEK –11 M (–19).

2 Other lease liabilities pertain primarily to rental cars and company cars.

Note 22 cont'd.

Terms and repayment periods

Collateral for bank loans has been pledged in the form of floating charges in the amount of SEK 595 M (593) and in the form of pledged assets in the amount of SEK 546 M (460).

		2019				2018
		Nominal				Nominal
		interest		Nominal	Carrying	interest		Nominal	Carrying
Lender	Currency	rate, %	Maturity	amount	amount	rate, %	Maturity	amount	amount
Bank overdraft facilities	EUR	3.00	2020	1	1
Bank overdraft facilities	SEK					1.30	2019	42	42
Volvofinans Bank AB	SEK	2.65	2020	125	125	2.20	2019	113	113
BMW Financial Services	EUR	2.99	2024	38	38	2.99	2023	47	47
BMW Financial Services	EUR	2.99	2020	10	10
ING Bank	EUR	2.95	2025	2	2	2.95	2023	3	3
Pauschal kredit	EUR					1.63	2019	10	10
BMW Financial Services	EUR	1.50	2020	27	27	2.99	2019	7	7
BMW Financial Services	EUR	0.50	2020	15	15
BMW Financial Services	EUR	0.75	2020	27	27
BMW Bank	EUR					1.64	2019	210	210
VR Bank	EUR	4.90	2020	2	2	4.90	2023	2	2
ING Bank	EUR	4.18	2025	17	17	4.18	2024	18	18
ING Bank	EUR	1.50	2020	10	10
Nordea Finans	NOK	3.99	2020	334	334	3.35	2019	282	282
BMW Bank	EUR	5.70	2020	313	313	3.18	2019	11	11
Belfius	EUR	1.60	2020	32	32
Belfius	EUR	0.88	2020	1	1
Volksbank Mittelhessen	EUR	1.48	2024	5	5	1.48	2023	6	6
Volksbank Mittelhessen	EUR	1.48	2020	1	1	1.48	2019	2	2
Dexia	EUR					2.76	2024	15	15
Dexia	EUR					0.75	2024	27	27
Emprunt matériel Lib	EUR					2.49	2019	1	1
Emprunt bat Lib	EUR	4.18	2025	2	2	4.18	2019	2	2
Emprunt avance impôt	EUR					0.22	2019	3	3
Bond issue	SEK	2.30	2021	507	507	2.03	2021	504	504
Bond issue	SEK	1.30	2023	782	782	0.92	2023	777	777
Personnel fund	SEK	0.73		5	5	0.45		5	5
Lease liabilities IFRS 16, Sweden	SEK	2.47		1,769	1,769
Lease liabilities IFRS 16, Norway	NOK	3.79		775	775
Lease liabilities IFRS 16, Germany	EUR	2.19		51	51
Lease liabilities IFRS 16,
Luxembourg	EUR	2.42		6	6
Lease liabilities IFRS 16, Belgium	EUR	2.75		19	19
Other lease liabilities	SEK	3.00		276	276	2.55		252	252
Total					5,152				2,339

		2019		2018
Other lease liabilities	Minimum lease payment	Interest	Principal	Minimum lease payment	Interest	Principal
Within one year	144	4	140	95	2	93
Between one and five years	140	4	136	163	4	159
Total	284	8	276	258	6	252

Note 23 Pensions

➤ Accounting principle

Bilia applies IAS 19 Employee Benefits in accounting for pensions.

Defined-contribution pension plans

In 2016 all defined-contribution pension plans within the Group were closed and since then only defined contribution pension plans exist. Pension plans classified as definedcontribution 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 definedcontribution 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.

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 defined-benefit 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 employees are covered by defined-contribution pension plans.

Germany

In Germany, all employees are covered solely by definedcontribution pension plans.

Luxembourg and Belgium

The employees are not covered by any pension plan.

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 2019, Bilia has not had access to information that makes it possible to account for this plan as a definedbenefit 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 75 M (83). Bilia's share of the total savings premiums for ITP 2 in Alecta amounts to 0.18937 per cent (0.22137), and Bilia's share of the total number of active members in the plan amounts to 0.15219 per cent (0.15408).

The collective funding ratio is the market value of Alecta's assets as a percentage of their insurance obligations calculated according to Alecta's actuarial methods and assumptions, which do not agree with IAS 19. The collective funding ratio should normally be permitted to vary between 125 and 155 per cent. If Alecta's collective funding ratio falls short of 125 per cent or exceeds 155 per cent, measures shall be adopted

so that the collective funding ratio returns to the normal range. When the funding ratio is low, one possible measure is to raise the agreed-on price for new policies and benefit increases. When the funding ratio is high, one possible measure is to reduce premiums. At year-end 2019, Alecta's surplus in the form of the collective funding ratio 1) amounted to 148 per cent (142).

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

Defined-contribution plans

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

In other countries there are defined-contribution plans that are paid for in part by Bilia 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.

	2019	2018
Costs for the year for defined-contribution
plans 2)	227	202

2) Of which SEK 75 M (83) pertaining to ITP plan funded in Alecta.

Costs for defined-contribution plans in 2020 are SEK 212 M. Of which Alecta SEK 86 M.

Note 24 Provisions

➤ 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.

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 11 M (13).

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, 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
	2019	2018	2019	2018
Warranty obligations	59	47	4	1
Restoration costs	11	13	—	—
Put option	152	145	—	—
Total	222	205	4	1

	Warranty obligations		Restoration costs		Put option		Total
	2019	2018	2019	2018	2019	2018	2019	2018
Carrying amount at start of year	48	34	13	15	145	130	206	179
Provisions made during the year	87	71	—	—	7	15	94	86
Amounts utilised during the year	0	—	–2	–2	—	—	–2	–2
Unutilised amounts reversed during the year	–73	–57	—	—	—	—	–73	–57
Translation differences	1	0	—	—	—	—	1	0
Carrying amount at year-end	63	48	11	13	152	145	226	206

Payments	2019	2018
Amount by which the provision is expected to be paid after more than twelve months	222	205

Note 25 Other liabilities

➤ Accounting principle

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

For the accounting principle regarding "Derivatives," see Note 27 "Financial instruments".

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

	2019	2018
Other non-current liabilities
Liability pertaining to cars sold with
repurchase agreements	1,617	1,481
Additional purchase consideration on acquisitions	4	—
Total	1,621	1,481
Other current liabilities
Liability pertaining to cars sold with repurchase agreements	1,246	1,239
Value-added tax	102	99
Advance payments from customers	28	14
Tax deducted at source	74	66
Employer contributions, etc.	40	42
Derivatives	8	1
Demo cars	40	27
BMW Financial Services	119	117
Other	109	71
Total	1,766	1,676

Note 26 Accrued expenses and deferred income

➤ Important accounting estimates and judgements See Note 2 "Revenue" regarding Repurchase agreements and Service subscriptions.

	2019	2018
Accrued wages and salaries	371	338
Accrued social security contributions	236	209
Accrued interest	3	2
Accrued interest IFRS 16	8	—
Future unrealised revenue pertaining to
cars sold with repurchase agreements	101	82
Less bonus	40	12
Accrual of service subscriptions	219	235
Other accrued expenses and deferred
income	214	151
Total	1,192	1,029

Note 27 Financial instruments

➤ Accounting principle

For the accounting principle regarding financial instruments, Bilia applies IAS 32 Financial Instruments: Presentation, IFRS 7 Financial Instruments: Disclosures, IFRS 9 Financial Instruments, IFRS 13 Fair Value Measurement and IFRS 16 Leases.

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.

Financial instruments

A financial asset or liability is entered in the Statement of Financial Position when the Group becomes a party in a contractual relationship. Financial assets are removed from the Statement of Financial Position when the right to receive cash flows from the instrument has expired. Financial liabilities are removed from the Statement of Financial Position when the obligations of the contract have been met.

Financial assets and liabilities are offset and entered as a net amount in the Statement of Financial Position, only when a legal right exists to offset the recognised amounts and if there is an intention to settle them with a net amount or to simultaneously realise the asset and settle the liability.

Classification of financial instruments

All financial instruments are initially measured at their respective fair values plus transaction costs, apart from financial instruments that are measured at fair value through the Statement of Income and Other Comprehensive Income on

Note 27 cont'd.

an ongoing basis. With these assets, transaction costs are recognised as expenses on an ongoing basis.

Interest-bearing financial instruments

The classification and measurement of interest-bearing financial assets depends on the purpose of the financial asset. Interest-bearing financial assets are measured at either: • Amortised cost.

• Fair value in other comprehensive income.
• Fair value through profit or loss.

This category is comprised of hire-purchase receivables, accounts receivable and other receivables. Assets in this category are measured at amortised cost. All interest-bearing assets are held to obtain ongoing payments in the form of repayments and interest. For this reason, all interest-bearing assets are recognised and measured at their respective amortised cost in accordance with the effective interest rate method. Amortised cost is determined based on the effective interest rate calculated at the time of acquisition. Interest income is recognised in net financial items in the Statement of Income and Other Comprehensive Income. Any capital gains or losses arising when these assets are derecognised are recognised as other income and expenses. Bilia recognises the following interest-bearing assets in its Statement of Financial Position:

• 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.
• Trade receivables.
• Lease recievables, short- and long-term.
• Other long-term receivables.

Assets with a short duration are not discounted. Impairment losses are reversed if the previous reasons for write-down no longer apply and full payment is expected to be received from the customer.

Equity instruments

All equity instruments are entered at their respective fair values in the Statement of Income and Other Comprehensive In-

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:

come as other income and expenses. Bilia has unlisted shares and tenant-owner agreements that belong to this category of financial assets.

Derivative instruments

Financial derivatives are held only to manage the financial risks to which Bilia is exposed, see Note 28 "Financial risks and risk management". Bilia has financial derivative instruments in the form of currency hedging instruments (currency swaps) which are used to secure future currency flows. All the derivatives are measured at their respective fair value through the Statement of Income and Other Comprehensive Income. The derivatives that have positive values are recognised as assets in the Statement of Financial Position. Changes in the value of currency swaps are recognised in financial income or financial expenses. Hedge accounting is not applied.

Impairment of financial assets

For all interest-bearing financial instruments, including accounts receivable and lease receivables, a credit risk reserve is booked, and this is based on the future expected losses applicable to the individual assets. For accounts receivable, the credit risk reserve is calculated based on the asset's anticipated loss over the total life of the asset.

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 and December 2016 and January 2017 Bilia issued unsecured bonds worth SEK 500 M, repectively SEK 250 M and SEK 250 M within a total framework of SEK 1,000 M. The bond issue matures in five years (March 2021) and carries a variable interest rate of STIBOR (3 months) plus 220 basis points respectively 150 basis points and 140 basis points.

In October 2018 Bilia repurchased SEK 500 M of the outstanding unsecured bonds due in March 2021 to a price of 104 per cent. At the same time Bilia issued a new unsecured bond worth SEK 800 M. The new bond issue carries a variable interest rate of STIBOR (3 months) plus 140 basis points and matures in Octobre 2023.

The total new outstanding amount after the bond issue is SEK 1,300 M.

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.

Level 2	2019	2018
Financial assets measured at fair value through profit or loss/Currency swaps	5	4
Financial liabilities measured at fair value through profit or loss/Currency swaps	8	1

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

			2018
Note	Carrying amount	Fair value	Carrying amount	Fair value
19	5	5	4	4
19	1	1	—	—
28	1,402	1,402	872	872
19	171	171	175	175
33	236	236	314	314
18	3	—	2	—
18	5	5	6	6
25	8	8	1	1
22	1,289	1,289	1,281	1,281
22	2,620	2,620	—	—
22	67	67	123	123
22	900	900	683	683
22	276	276	252	252
24	152	152	145	145
	2,298	2,298	1,882	1,882
26	11	11	2	2
			2019

Fair Value Measurement

The following summarises 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.

Financial investments

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.

Financial instruments that are not measured at fair value

Interest-bearing liabilities and 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.

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.

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

Note 28 cont'd.

• 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 MD 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 MD 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 MD 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 hire-purchase receivables amounting to SEK 1 M (—).

The Group's current financial assets consist for the most part of SEK 1,402 M (872) in trade receivables and SEK 2 M (42) 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 3,186 M (2,915). Return on equity amounted to 26.5 per cent (26.5).

The 2019 AGM 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 2019, Bilia's lenders require that the ratio of EBITDAJ in relation to the net financial items 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 2019 the ratio of EBITDAJ to net financial items was 80.72 times, the ratio of interest-bearing net debt to EBITDAJ was 1.29 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 (1,500) , net, was unutilised at year-end. Bilia's financial liabilities amounted to SEK 7,469 M (4,241) at year-end, and the maturity structure of the debt is shown in the table "Maturity structure– Financial liabilities".

Credit facilities and loans	Currency	Nominal amount	Total amount	Utilised/ credited (–)	Available
Maturity	SEK	1,500	1,500	–55	1,555
Total			1,500	–55	1,555
Available cash and cash equivalents					236
Liquidity reserve					1,791

Maturity structure – Financial liabilities

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

		2019			2018
Lender	Currency	Total amount	<1 yr	1–5 yrs	>5 yrs	Total amount	<1 yr	1–5 yrs	>5 yrs
Bank overdraft facilities	EUR	1	1	—	—	—	—	—	—
Bank overdraft facilities	SEK	—	—	—	—	42	42	—	—
Volvofinans Bank AB	SEK	128	128	—	—	115	115	—	—
BMW Financial Services	EUR	43	1	42	—	49	0	49	—
BMW Financial Services	EUR	10	10	—	—	—	—	—	—
ING Bank	EUR	3	0	0	3	3	0	1	2
Pauschal kredit	EUR	—	—	—	—	10	10	—	—
BMW Financial Services	EUR	28	28	—	—	7	7	—	—
BMW Financial Services	EUR	15	15	—	—	—	—	—	—
BMW Financial Services	EUR	27	27	—	—	—	—	—	—
BMW Bank	EUR	—	—	—	—	211	211	—	—
VR Bank	EUR	2	2	—	—	2	0	2	—
ING Bank	EUR	22	1	3	18	21	0	10	11
ING Bank	EUR	10	10	—	—	—	—	—	—
Nordea Finans	NOK	347	347	—	—	283	283	—	—
BMW Bank	EUR	331	331	—	—	11	11	—	—
Belfius	EUR	33	33	—	—	—	—	—	—
Belfius	EUR	1	1	—	—	—	—	—	—
Volksbank Mittelhessen	EUR	5	5	—	—	6	0	5	1
Volksbank Mittelhessen	EUR	1	1	—	—	2	2	—	—
Dexia	EUR	—	—	—	—	17	0	2	15
Dexia	EUR	—	—	—	—	28	0	1	27
Emprunt matériel Lib	EUR	—	—	—	—	1	1	—	—
Emprunt bat Lib	EUR	2	0	0	2	2	2	—	—
Emprunt avance impôt	EUR	—	—	—	—	3	3	—	—
Personnel fund	SEK	5	0	0	5	5	0	5	0
Bond issue	SEK	1,367	25	1,342	—	1,377	23	1,354	—
Derivat		8	8	—	—	1	1	—	—
Trade payables		2,298	2,298	—	—	1,882	1,882	—	—
Lease liabilities IFRS 16, Sweden	SEK	2,013	272	673	1,068	—	—	—	—
Lease liabilities IFRS 16, Norway	NOK	964	130	221	613	—	—	—	—
Lease liabilities IFRS 16, Germany	EUR	57	9	2	46	—	—	—	—
Lease liabilities IFRS 16, Luxembourg	EUR	6	6	—	—	—	—	—	—
Lease liabilities IFRS 16, Belgium	EUR	23	1	16	6	—	—	—	—
Other lease liabilities	SEK	284	144	140	—	258	95	163	—
Total		8,034	3,834	2,439	1,761	4,336	2,688	1,587	61

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 portfolio means that large interest rate changes affect earnings almost immediately.

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

Note 28 cont'd.

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	2019	2018
Variable interest rate
Financial assets	236	314
Financial liabilities 1)	5,163	2,358

1) Including lease liabilities IFRS 16; SEK 2,620 M for 2019.

Sensitivity analysis

As of 31 December 2019, a general increase in the interest rate by 1 percentage point is expected to reduce the Group's profit before tax exclusive IFRS 16 by about SEK 19 M (reduction: 16). If the interest rate increase by 1 percent even for lease liabilities for IFRS 16, profit before tax would decrease by an additional SEK 26 M.

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 costeffective 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 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 and EUR against SEK, broken down by currency and year.

	2019		2018
Currency swaps	Currency		SEK Currency	SEK
NOK	–350	–370	–350	–359
EUR	–44	–461	–7	–72

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:

	2019		2018
Currency	Amount		% Amount	%
NOK	662	63	624	62
EUR	383	37	389	38

Bilia has 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 28 M (26) against the Norwegian krone and SEK 10 M (7) 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:

Maximum amount
500
900

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 before entering a transaction, 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.

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 gross are recognised after taking into account realised bad debt losses, which amounted to SEK 12 M (9). Impairment loss for the year amounts to SEK 6 M (1).

	2019		2018
Age analysis, trade receivables	Gross	Impairment	Gross	Impairment
Trade receivables not due	742	—	504	—
Overdue trade receivables 0–30 days	523	0	318	–1
Overdue trade receivables 31–90 days	115	–5	45	–3
Overdue trade receivables 91–180 days	25	–5	12	–3
Overdue trade receivables 181–360 days	10	–4	2	–2
Overdue trade receivables > 360 days	2	–1	1	–1
Total	1,417	–15	882	–10

Bilia's hire-purchase receivables amounts SEK 1 M (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 revenue for cars brokered to Volvofinans Bank AB. The revenue is received for the most part continuously over the term of the contracts, and unrecognised revenue attributable to financings with recourse liabilities not due amounts to SEK 171 M (178). Credit losses for financings with recourse liabilities have historically been on a very low level.

	2019		2018
Age analysis, recourse liabilities	Gross	Impairment	Gross	Impairment
Recourse liabilities not due	6,354	—	6,499	—
Overdue recourse liabilities 0–30 days	9	—	11	—
Overdue recourse liabilities 31–90 days	1	—	1	—
Overdue recourse liabilities 91–180 days	0	—	0	—
Overdue recourse liabilities 181–360 days	0	—	0	—
Overdue recourse liabilities > 360 days	0	—	0	—
Total	6,364	—	6,511	—

Concentration of credit risk

The three largest customers account for 23.0 per cent (16.7) of the trade receivables and 0.4 per cent (0.5) of the recourse liabilities. The credit risk among these customers is judged to be low.

	2019		2018
Allowance account	Trade receivables	Recourse liabilities	Trade receivables	Recourse liabilities
Opening balance	–10	—	–12	—
Reversal of previous impairment losses	1	—	3	—
Impairment losses for the year	–6	—	–1	—
Translation difference	0	—	0	—
Closing balance	–15	—	–10	—

Note 29 Leases

➤ Accounting principle

Bilia applies IFRS 16 Leases for 2019 and IAS 17 Leases for 2018.

Leases

Leases are from 2019 accounted for as right-of-use assets according to IFRS 16 Leases. The effect of the transition to IFRS 16 is described in Note 16 "Right-of-use assets". The method that the Group has selected to apply in the transition to IFRS 16 means that the comparative information for 2018 has not been restated.

Prior to 2019 leases were classified as either finance or operating leases. In the case of finance leases, the economic risks and rewards incidental to ownership were transferred substantially to the lessee. Otherwise the lease was classified as an operating lease.

Lessee

During 2019 the leases, in accordance with IFRS 16 been accounted for as a right-of-use assets and a lease liability based on the future present value of all lease fees until the lease period comes to an end.

Assets rented under leases are mainly facilities 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 facilities to subsidiaries and, to a lesser extent, external parties. At year-end 2019, the property leases covered about 480,000 square metres (499,000).

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. An

Note 29 cont'd.

assessment and judgement about the likelihood of an extension of the lease using an extension option is made when the extensible becomes current.

The operating lease at the beginning of the year have been re-calculated to a right-of-use asset and a lease liability according to IFRS 16.

	2019
Operating leases from IAS 17 1)	3,378
Short term leases and leases of low value	–9
Effect of discounting and others	–576
Lease liability according to IFRS 16 as per
January 1 2019	2,793

1) Previous years figure has been adjusted.

The lease liability specified as current and non current :

Lease liabilities as per IFRS 16 as at December 31	2019
Current	406
Non current	2,214
Lease liabilities included in the Consolidated
Statement of Financial Position	2,620

The right-of-use assets are depreciated on a straight-line basis over the lease period and is accounted for as cost of goods sold, selling expenses and administrative expenses. An interest expense is calculated based on the lease liability and included as financial expense.

The costs for leases specificed as:

Amounts included in the profit and loss as per IFRS 16 2019

Consolidated statement of Income	–536
Short-term lease and leases of low value	–7
Income from sublets of right-of-use assets	7
Interest expense on lease liabilities	–85
Depreciation of right-of-use assets	–451

Cash flow below includes all leases, both cash flow leases accounted for as lease liabilities and cash flow for short term lease and lease of low value.

Reported Cash Flow	2019
Cash flow related to leases	–524

During 2018 the costs for to operating leases were 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 ocurred.

Non-cancellable lease payments for 2018 according to IAS 17 amount to:

Total	–3,378
Later than five years	–1,303
Between one and five years	–1,568
Within one year	–507
Future lease payments 1)
Total lease costs for the year	–509
Minimum lease payments for the year	–509
	2018

1) Prior years figure has been adjusted.

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 and classified as Leased vehicles see Note 15 "Property, plant and equipment". These assets consist of:

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

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

	2019	2018
Lease payments for the year	546	559
Total lease payments for the year	546	559
Future lease payments
Within one year	457	476
Between one and five years	257	253
Later than five years	—	—
Total	714	729

A cost of SEK 17 M (18) is recognised for repairs and maintenance of leased cars and facilities.

Note 30 Capital commitments

During 2019 the Group concluded agreements to acquire SEK 73 M (122) 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	2019	2018
For own liabilities and provisions
Floating charges	595	593
Leased vehicles and hire-purchase receivables	222	199
Real property	22	22
Pledged assets
– Endowment policies	229	178
– Inventories	317	282
Total pledged assets	1,385	1,274

Contingent liabilities	2019	2018
Surety	1	1
Recourse liabilities	6,364	6,511
Total contingent liabilities	6,365	6,512

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 171 M (178). Credit losses for financings with recourse liabilities have historically been on a very low level.

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 MD and other senior officers. Disclosures regarding wages, salaries, options and other remunerations to key management personnel are presented in Note 8 "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 26 per cent (24) of the votes in the company. Board member Nicklas Paulson is MD in Investment AB Öresund. Board members Jan Pettersson and Gunnar Blomkvist hold an accrued pension that is reported as a pension obligation to former senior officers in Note 8 "Employees, personnel costs and remunerations for senior officers".

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	2019	1,580	293	180	179	30
Associated companies	2018	1,859	299	143	67	33
Contingent liabilities for associated companies	2019	6,364
Contingent liabilities for associated companies	2018	6,511
Key persons	2019	4	1
Key persons	2018	1	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.

	271
1	1
	42
236	314
	233 2

No short-term investments were made in 2019 (—).

Note 33 cont'd.

Interest paid and dividends received	2019	2018
Dividends received	49	8
Interest received	3	2
Interest paid	–156	–56
Total	–104	–46
Depreciation/amortisation and impairment losses	2019	2018
Depreciation/amortisation 1)	1,146	678
Impairment losses	81	65
Total	1,227	743

Acquired assets and liabilities	2019	2018
Intangible assets	76	257
Property, plant and equipment	200	203
Long-term investments	0	1
Deferred tax asset	1	0
Inventories	53	154
Operating receivables	16	52
Cash and cash equivalents	2	159
Total assets	348	826
Deferred tax liability	10	62
Operating liabilities	263	271
Total provisions and liabilities	273	333
Acquired net assets	75	493
Purchase consideration:	75	493
Purchase consideration, cash	75	493
Less: Cash and cash equivalents in
disposed business	2	159
Impact on cash and cash equivalents	–73	–334

Acquisition of subsidiaries and other business entities

1) Includes depreciation for IFRS 16 with SEK 451 M

Other items not affecting cash	2019	2018
Capital gain on sales of property, plant and equipment	–8	—
Profit from shares in associated companies	8	–33
Other provisions	17	26
Profit share to employees	29	24
Other	–24	–56
Total	22	–39

Reconciliation of liabilities deriving from financing activities

			Non-cash adjustments
	Opening liabilities 2019	Cash Flows	Acquisition of subsidiaries	Net changes in lease agre ements	Exchange rate differences	Closing liabilities 2019
Other loans	801	196	57	–88	–4	962
Personnel fund	5	0	—	—	—	5
Bond issue	1,300	—	—	—	—	1,300
Lease liabilities IFRS 16	2,793	–154	34	–81	28	2,620
Lease liabilities	252	–64	—	88	—	276
Total liabilities deriving from financing activities	5,151	–22	91	–81	24	5,163

Unutilised credit facilities	2019	2018
Unutilised credit facilities amount to	1,553	1,584

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 10 March 2020.

No significant events have occurred after the balance sheet date.

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 10 497 70 00 bilia.com Corporate ID No.: 556112-5690

The consolidated accounts for 2019 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	2019	2018
Net turnover	2	530	485
Administrative expenses	3, 4	–614	–555
Operating loss	20	–84	–70
Income/loss from financial items
Profit from shares in Group companies	5	117	57
Other interest income and similar line items	5	64	46
Interest expenses and similar line items	5	–43	–33
Profit after financial items		54	0
Appropriations	6	723	573
Profit before tax		777	573
Tax	7	–131	–112
Net profit for the year 1)		646	461

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

Balance Sheet for Parent Company

SEK M	Note	31/12/19	31/12/18
Assets	18, 21
Non-current assets
Intangible assets	8
Intellectual property		0	0
		0	0
Property, plant and equipment	9
Buildings		163	76
Construction in progress		36	82
Equipment, tools, fixtures and fittings		5	3
		204	161
Long-term investments
Shares in Group companies	10	1,328	1,328
Other securities held as non-current assets	11	1	1
Deferred tax asset	7	58	45
		1,387	1,374
Total non-current assets		1,591	1,535
Current assets
Current receivables
Trade receivables		1	3
Receivables from Group companies	23	2,130	1,922
Other receivables		115	19
Prepaid expenses and accrued income		80	77
		2,326	2,021
Cash on hand and demand deposits		55	82
Total current assets		2,381	2,103
Total assets		3,972	3,638

Balance Sheet for Parent Company

SEK M	Note	31/12/19	31/12/18
Equity and liabilities	18, 21
Equity	12
Restricted equity
Share capital (102,799,952 shares)		257	257
Statutory reserve		47	47
		304	304
Non-restricted equity
Share premium reserve		167	167
Retained earnings		251	348
Net profit for the year		646	461
		1,064	976
Total equity		1,368	1,280
Untaxed reserves	13	863	727
Provisions
Deferred tax liability	7	14	5
		14	5
Non-current liabilities
Bond issue	16, 19	1,289	1,281
Other liabilities	16, 19	5	5
		1,294	1,286
Current liabilities
Trade payables	19	88	86
Current liabilities	19	—	42
Current tax liability		136	33
Liabilities to Group companies	23	70	63
Other liabilities	16	11	4
Accrued expenses and deferred income	17	128	112
		433	340
Total equity and liabilities		3,972	3,638

Pledged assets and contingent liabilities for the Parent Company, see Note 22.

Statement of Changes in Equity for Parent Company

		Restricted equity		Non-restricted equity
SEK M	Number of shares Share capital		Statutory reserve	Share pre mium reserve	Retained earnings	Net profit for the year	Total equity
Opening equity 1 Jan. 2018	102,799,952	257	47	167	373	428	1,272
Reposting of last year's profit	—	—	—	—	428	–428	—
Dividend (SEK 4.50 per share)	—	—	—	—	–454	—	–454
Incentive programme	—	—	—	—	1	—	1
Net profit for the year	—	—	—	—	—	461	461
Closing equity 31 Dec. 2018	102,799,952	257	47	167	348	461	1,280

Opening equity 1 Jan. 2019	102,799,952	257	47	167	348	461	1,280
Reposting of last year's profit	—	—	—	—	461	–461	—
Dividend (SEK 4.75 per share)	—	—	—	—	–480	—	–480
Buy-back of own shares	—	—	—	—	–79	—	–79
Incentive programme	—	—	—	—	1	—	1
Net profit for the year	—	—	—	—	—	646	646
Closing equity 31 Dec. 2019	102,799,952	257	47	167	251	646	1,368

Cash Flow Statement for Parent Company

SEK M	Note	2019	2018
Operating activities	24
Profit after financial items		54	0
Other items not affecting cash		33	30
Tax paid		–124	–94
Cash flow from operating activities before change in working capital		–37	–64
Change in operating receivables		–33	–392
Change in operating liabilities		32	6
Cash flow from operating activities		–38	–450
Investing activities
Acquisition of non-current assets (intangible and tangible)		–62	–68
Operating cash flow		–100	–518
Shareholders' contributions paid		–10	—
Investments in financial assets		—	–1
Acquisition of subsidiaries, net		—	20
Cash flow from investing activities		–72	–49
Cash flow after net investments		–110	–499
Financing activities
Borrowings		—	2,300
Repayment of loans		—	–2,000
Change in overdraft facility		–36	18
Buy-back of own shares		–79	—
Dividend paid		–480	–454
Group contributions recieved		678	610
Cash flow from financing activities		83	474
Change in cash and cash equivalents		–27	–25
Cash and cash equivalents at start of year		82	107
Cash and cash equivalents at year-end		55	82

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 IFRS's 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

Total	530	485
Other	198	182
IT and educational services	8	8
Rental income	324	295
Net turnover/function
	2019	2018

Note 3 Employees and personnel costs

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

Note 4 Fees and cost reimbursement to auditors

SEK '000	2019	2018
KPMG AB
Auditing assignment	–595	–395
Auditing activities other than the auditing assignment	—	—
Tax advice	—	–34
Other assignments	–117	–50

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

	2019	2018
Profit/loss from shares in Group companies
Loss from shares in Group companies	–6	–12
Dividend	133	69
Impairment losses	–10	—
Total	117	57
Other interest income and similar line items
Interest income from Group companies	54	46
Other exchange gains	10	0
Total	64	46
Interest expenses and similar line items
Interest expenses from Group companies	0	0
Interest expenses, other	–36	–25
Loss currency swaps	–7	–7
Other exchange losses	0	–1
Total	–43	–33

Note 6 Appropriations

	2019	2018
Difference between recognised deprecia tion/amortisation and depreciation/amorti sation according to plan:
Intellectual property	0	0
Building equipment	0	0
Equipment, tools, fixtures and fittings	–8	–2
Tax allocation reserves:
Reversal of tax allocation reserve, allocated financial year 2012	—	67
Provision to tax allocation reserve, allocated financial year 2018	—	–170
Reversal of tax allocation reserve, allocated financial year 2013	83	—
Provision to tax allocation reserve, allocated financial year 2019	–211	—
Group contributions:
Group contributions received	872	686
Group contributions paid	–13	–8
Total	723	573

Note 7 Taxes

Recognised in the Income Statement

	2019	2018
Current tax expense (–)/tax income (+)
Tax expense/income for the year	–135	–112
Adjustment of tax attributable to previous years	—	0
	–135	–112
Deferred tax expense (–)/tax income (+)
Deferred tax pertaining to temporary differences	4	2
Deferred tax pertaining to changed tax rates	—	–2
	4	0
Total tax expense recognised	–131	–112

	2019		2018
	Amount	%	Amount	%
Reconciliation of effective tax
Profit before tax	777		573
Tax according to tax rate applicable to Parent Company	–166	21.4	–126	22.0
Tax attributable to previous years	—	—	0	0.0
Tax effect attributable to impairment of Group companies	–2	0.3	0	0.0
Tax effect of non-deductible expenses	–1	0.1	0	0.0
Tax effect of non-taxable revenues	29	–3.7	15	–2.6
Tax effect of changed tax rate	—	—	–2	0.3
Standard interest on tax allocation reserve	–1	0.1	0	0.0
Direct deduction, buildings	10	–1.3	1	–0.2
Effective tax recognised	–131	16.9	–112	19.5

Recognised in the Balance Sheet

		Deferred tax asset		Deferred tax liability		Net
Deferred tax assets and liabilities	2019	2018	2019	2018	2019	2018
Deferred tax assets and liabilities recognised
Deferred tax assets and liabilities are attributable to the following:
Building	0	0	14	5	–14	–5
Pension provisions	58	45	—	—	58	45
Tax assets/liabilities	58	45	14	5	44	40

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 developed		Software, acquired		Total intellectual property
	2019	2018	2019	2018	2019	2018
Accumulated costs
At start of year	5	5	27	27	32	32
Purchases	—	—	—	—	—	—
Retirements	—	—	—	—	—	—
Reclassifications	—	—	—	—	—	—
	5	5	27	27	32	32
Accumulated amortisation
At start of year	–4	–4	–27	–26	–31	–30
Retirements	—	—	—	—	—	—
Reclassifications	—	—	—	—	—	—
Amortisation for the year	0	0	0	–1	0	–1
	–4	–4	–27	–27	–31	–31
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	0	0	0	0

Amortisation and impairment losses

Amortisation is included on the following lines in the Income Statement:	Software, internally developed			Software, acquired		Total intellectual property
	2019	2018	2019	2018	2019	2018
Administrative expenses	0	0	0	–1	0	–1

No impairment losses have been recognised.

Note 9 Property, plant and equipment

	Buildings		Construction in progress		Equipment, tools, fixtures and fittings
	2019	2018	2019	2018	2019	2018
Accumulated costs
At start of year	103	90	82	28	6	5
Purchases	105	13	—	54	3	1
Disposals and retirements	0	0	–46	—	—	0
	208	103	36	82	9	6
Accumulated depreciation according to plan
At start of year	–27	–17	—	—	–3	–3
Disposals and retirements	0	0	—	—	—	0
Depreciation for the year	–18	–10	—	—	–1	0
	–45	–27	—	—	–4	–3
Carrying amount at year-end	163	76	36	82	5	3

Depreciation and impairment losses

Depreciation is included on the following lines in the Income

Statement:		Buildings		Construction in progress		Equipment, tools, fixtures and fittings
	2019	2018	2019	2018	2019	2018
Administrative expenses	–18	–10	—	—	–1	0

No impairment losses have been recognised.

Property, plant and equipment under construction

Conversion projects, primarily in Kungälv, Lund, Eskilstuna and Stockholm in Sweden.

Note 10 Shares in Group companies

	2019	2018
Accumulated costs
At start of year	3,282	3,302
Acquisitions	—	1
Shareholders' contribution	10	—
Disposals	—	–21
	3,292	3,282
Accumulated impairment losses
At start of year	–2,344	–2,344
Impairment loss for the year	–10	—
	–2,354	–2,344
Accumulated revaluation gains
At start of year	390	390
	390	390
Carrying amount at year-end	1,328	1,328

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

							Carrying amount
				Number of	Stake
Subsidiaries	Country	Corporate ID no.	Domicile	shares	in %	2019	2018
Bilia Personbilar AB	Sweden	556063-1086	Gothenburg	1,000,000	100.0	310	310
.Hedbergs Bilskrot AB	Sweden	556254-7488	Gothenburg
.EBD Scandinavia AB	Sweden	559003-6207	Stockholm
Bilia Holding S.à r.l.	Luxembourg	B204406	Luxembourg	30,211	66.2	244	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
.Jensen & Scheele Bil AS	Norway	960 968 727	Halden
Bilia Center Metro AB	Sweden	556656-0925	Gothenburg	10,000	100.0	184	184
Autohaus Bilia GmbH & Co. KG	Germany	HRA 3167	Nidda	1	100.0	92	92
.Autohaus Bilia Verwaltungs GmbH	Germany	HRB 6551	Nidda
Bilia Center AB	Sweden	556083-0084	Gothenburg	500	100.0	85	85
Fastighetsbolaget Ellipsvägen 4 AB	Sweden	556052-1956	Huddinge	1,000	100.0	61	61
Allbildelar Försäljning i Huddinge AB	Sweden	556355-3378	Gothenburg	3,000	100.0	51	51
Fastighetsbolaget Brunnsvägen 35 AB	Sweden	556035-5322	Södertälje	2,400	100.0	35	35
Motorit AB	Sweden	556054-6573	Gothenburg	160,000	100.0	19	19
Fastighetsbolaget Eskilstuna Navaren 7 AB	Sweden	556457-6949	Eskilstuna	4,000	100.0	17	17
Allbildelar i Huddinge AB	Sweden	556164-2710	Huddinge	1,300	100.0	12	12
Bastborren Fastighets AB	Sweden	556229-8447	Västerås	1,000	100.0	9	9
Dalskogen fastighets AB i Lysekil	Sweden	556972-6788	Uddevalla	50,000	100.0	4	4
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	2
Bilia Group AB	Sweden	556046-5659	Gothenburg	10,000	100.0	2	2
Bilia Holding Flanders NV	Belgium	0700 639 017	Lochristi	2,460	100.0	1	1
.Bilia Verstraeten NV	Belgium	0448 629 354	Lochristi
.Gent Store by Bilia Verstraeten BVBA	Belgium	0806 943 493	Gent
Netbil Begagnat AB	Sweden	556059-0803	Gothenburg	1,000	100.0	0	0
Bilia Incentive AB	Sweden	556213-5664	Gothenburg	1,000	100.0	0	0
Carrying amount							1,328 1,328

Note 11 Other securities held as non-current assets

	2019	2018
Accumulated costs
At start of year	8	7
Purchases	—	1
	8	8
Accumulated impairment losses
At start of year	–7	–7
	–7	–7
Carrying amount at year-end	1	1

Note 12 Equity

Share capital and premium

	Ordinary shares
Thousands of shares	2019	2018
Issued on 1 January	102,800	102,800
Issued on 31 December	102,800 102,800

As of 31 December 2019, the registered share capital comprised 102,799,952 ordinary shares (102,799,952).

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 1,064 M, be disposed of as follows:

Total	1,064
To be carried forward	538
Cash dividend, SEK 5.25 per share 1)	526

1) Based on the number of shares outstanding at 31 December 2019, 100,133,742 (excluding holdings of own shares 2,666,210).

The Board of Directors' dividend proposal will be subject to adoption at the Annual General Meeting on 17 April 2020.

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

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 transferred to the share premium reserve.

Stock split

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

Note 13 Untaxed reserves

	2019	2018
Tax allocation reserve, allocated financial year 2013	—	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	115	115
Tax allocation reserve, allocated financial year 2017	134	134
Tax allocation reserve, allocated financial year 2018	170	170
Tax allocation reserve, allocated financial year 2019	211	—
Accumulated depreciation in excess of plan	30	22
Total untaxed reserves	863	727

Note 14 Liabilities to credit institutions

	2019	2018
Current liabilities
Granted credit	1,500	1,500
Unutilised credit	1,500	1,500
Utilised credit	0	0

Note 15 Pensions

Net pension obligations

Costs for pensions	2019	2018
Pensions through insurance
Insurance premiums	18	17
Subtotal	18	17
Special payroll tax on pension costs	17	6
Pension cost for the year	35	23
Recognised net cost attributable to
pensions	35	23

Of the recognised net cost, SEK 35 M (23) 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.

	2019	2018
Costs for the year for defined-contribution
plans 1)	35	23

1) Of which SEK 10 M (10) pertaining to ITP plan funded in Alecta.

The Parent Company estimates that SEK 26 M will be paid in 2020 to the defined-contribution plans , of which Alecta SEK 13 M.

The Parent Company's share of the total savings premiums for ITP 2 in Alecta amounts to 0.02296 per cent (0.02588), and the Parent Company's share of the total number of active members in the plan amounts to 0.02437 per cent (0.02350).

For further information on pensions, share-based payments and benefits to senior officers, see the Group's Note 8 "Employees, personnel costs and remunerations for senior officers" and Note 23 "Pensions".

Note 16 Other liabilities

	2019	2018
Non-current liabilities
Bond issue	1,289	1,281
Personnel fund	5	5
Total	1,294	1,286
Current liabilities
Tax deducted at source	3	3
Other	8	1
Total	11	4

Liabilities that fall due for payment more

than five years after the balance sheet date	2019	2018
Personnel fund	5	5
Total	5	5

Note 17 Accrued expenses and deferred income

	2019	2018
Accrued wages and salaries	29	26
Accrued social security contributions	71	57
Accrued interest	3	2
Other accrued expenses	25	27
Total	128	112

Note 18 Financial instruments

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

	2019		2018
	Carrying amount		Fair value Carrying amount	Fair value
Assets measured to fair value through the Income Statement
Currency swaps	5	5	4	4
Interest-bearing assets measured to amortised cost
Trade receivables	1	1	3	3
Cash and cash equivalents	55	55	82	82
Debts measured to fair value through the Income Statement
Currency swaps	8	8	1	1
Debts measured to amortised cost
Personnel fund	5	5	5	5
Trade payables	88	88	86	86
Bond issue	1,289	1,289	1,281	1,281
Current liabilities	—	—	42	42

The table below 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".

Level 2	2019	2018
Financial assets measured at fair value through profit or loss/Currency swaps	5	4
Financial liabilities measured at fair value through profit or loss/Currency swaps	8	1

Note 19 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.

		2019				2018
Lender	Currency	Total amount	<1 yr	1–5 yrs	>5 yrs	Total amount	<1 yr	1–5 yrs	>5 yrs
Bank overdraft facilities	SEK	—	—	—	—	42	42	—	—
Bond issue	SEK	1,367	25	1,342	—	1,377	23	1,354	—
Personnel fund	SEK	5	0	0	5	5	0	0	5
Trade payables	SEK	88	88	—	—	86	86	—	—
Total		1,460	113	1,342	5	1,510	151	1,354	5

Note 20 Operating leases

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 2019, the property leases covered about 312,000 square metres (315,000).

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

Leases – Lessee

Non-cancellable lease payments amount to:

ments 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.

	2019	2018
Minimum lease payments for the year	–309	–302
Total lease costs for the year	–309	–302
Future lease payments
Within one year	–299	–307
Between one and five years	–837	–935
Later than five years	–952	–786
Total	–2,088	–2,028

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 noncancellable lease payments are as follows:

	2019	2018
Lease payments for the year	326	307
Total lease payments for the year	326	307

The contractual annual rent is SEK 326 M and the leases expire between 2021 and 2033.

Note 21 Capital commitments

During 2019 the Parent Company concluded agreements to invest SEK 65 M (111) in non-current assets for delivery in 2020.

Note 22 Pledged assets and contingent liabilities

Pledged assets	2019	2018
For own liabilities and provisions
Pledged assets
– Endowment policies	221	170
– Promissory note loan	447	447
Total pledged assets	668	617
Contingent liabilities	2019	2018
Rent guarantees 1)	71	69
Guarantee for the benefit of subsidiaries	1,338	1,227
Total contingent liabilities	1,409	1,296

1) The amount pertains to rent guarantees of SEK 71 M (69) 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 2021 and 2033.

Note 23 Related parties

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

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

Board members Mats Qviberg and Anna Engebretsen and

Related party transactions

their close family members control, directly and indirectly via Investment AB Öresund, approximately 26 per cent (24) of the votes in the company. Board member Nicklas Paulson is MD of Investment Ab Öresund. Board members Jan Pettersson and Gunnar Blomkvist hold an accrued pension that is reported as a pension obligation to former senior officers in the Group's Note 8 "Employees, personnel costs and remunerations for senior officers".

		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	2019	552	20	187	2,130	70
Subsidiaries	2018	478	20	115	1,922	63
Contingent liabilities for subsidiaries	2019	1,409
Contingent liabilities for subsidiaries	2018	1,296

Transactions with key management personnel are priced on market terms.

Note 24 Cash Flow Statement

Dividends received and Group contributions	2019	2018
Group contribution received	678	610
Total	678	610
Adjustment for non-cash items	2019	2018
Depreciation/amortisation	19	11
Impairment losses	10	—
Other line items not affecting liquidity	4	19
Total	33	30

Unutilised credit facilities	2019	2018
Granted credit	1,500	1,500
Utilised credit	0	0
Unutilised credit	1,500	1,500

Note 25 Events after the balance sheet date

The financial statements were approved for publication by the Parent Company's Board of Directors on 10 March 2020.

No significant events have occurred after the balance sheet date.

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, 10 March 2020
	Mats Qviberg Chairman
Jan Pettersson	Ingrid Jonasson Blank	Gunnar Blomkvist
Deputy Chairman	Board member	Board member
Anna Engebretsen	Eva Eriksson	Jack Forsgren
Board member	Board member	Board member
Mats Holgerson	Nicklas Paulson	Jon Risfelt
Board member	Board member	Board member
Dragan Mitrasinovic Board member appointed by employee organisation	Patrik Nordvall Board member appointed by employee organisation	Per Avander Managing Director

Our Audit Report was submitted on 11 March 2020 KPMG AB

Johan Kratz 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 10 March 2020. 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 17 April 2020.

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 the year 2019, except for the Corporate Governance Statement on pages 34–38 and the Sustainability Report on pages 28–33. The annual accounts and consolidated accounts of the Company are included on pages 14–27 and 45–108 in 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 2019 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 2019 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the Corporate Governance Statement on pages 34–38 and Sustainability Report on pages 28–33. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the General Meeting of shareholders adopts the Income Statement and Balance Sheet for the Parent Company and the Statement of Comprehensive Income and Statement of Financial Position for the Group.

Our opinions in this report on the the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company's Board of directors in accordance with the Audit Regulation (537/2014) Article 11.

Basis for Opinions

We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of 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.This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its Parent Company or its controlled companies within the EU.

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

Revenues from goods and services.

See Note 2 in the consolidated accounts for detailed information and description of the matter.

Description of key audit matter

The Group revenues for 2019 amounts to SEK 29,508 M. Total revenue from cutomers consist of delivering goods and services. In both cases revenue is recognised when control is tranfered to the costumer.

Lease income is recognised in accordance with contract terms. Revenue recognitions include a substantial amount of assumptions and professinal judgments perfomed by management.

Response in the audit

We have examined pertinent contract terms in order to assess the Group'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 controls regarding allocation and accrual of revenues.

We have also assedded the timing of recognition of revenues 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, both by testing samples and the precision of thos methodology based on historic outcome.

Valuation of inventory

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

Description of key audit matter

The value of Group's inventory amounts to SEK 4,571 M and 28 per cent of the Group's total assets, whereby we consider it a significant balance sheet item. The net fair value of the vehicle stock depends on numerous variables such as economic cycle, interest rate levels, current and upcoming model programs, regulatory requirements and time in stock. The difference between the purchase price and the net fair value can affect the Groups's earnings.

Response in the audit

We have assesed and tested the Group's controls and procedures for valuation of inventory. We have conducted our own analyses of the vehicles' time in stock and when necissary evaluated this against external transations and prevailing market conditions.

Other Information than the annual accounts and consolidated accounts

This document also contains other information than the annual accounts and consolidated accounts and is found on pages 2–13, 39–44 and 112–116. The Board of Directors and the Managing Director are responsible for this other information.

Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information.

Auditor's Report cont'd.

In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.

If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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 that they give 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 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, to cease operations, or has no realistic alternative but to do so.

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 scepticism 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.
• Conclude 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 represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient and appropriate audit evidence regarding the financial information of 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 inform of 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 to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the annual accounts and consolidated accounts, including the most important assessed risks for material misstatement, and are therefore the key audit matters. We describe these matters in the auditor's report unless law or regulation precludes disclosure about the matter.

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 2019 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 responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of 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. At the proposal of a dividend, this 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 general.

The Board of Directors is responsible for the company's organisation and the administration of the company's affairs. This includes among other things continuous assessment of the Company's and the Group's financial situation and ensuring that the Company's organisation is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner.

The Managing Director shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfill the Company's accounting in accordance with law and handle the management of assets in a reassuring manner.

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 assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:

• has undertaken any action or been guilty of any omission which can give rise to liability to the company, or
• in any other way has acted in contravention 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 reasonable degree of assurance whether the proposal is in accordance 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 to the company, or that the proposed appropriations of the company's profit or loss are not in accordance 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 scepticism 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. Additional audit procedures performed are based on our professional judgment with starting point in risk and materiality. This means that we focus the examination on such actions, areas and relationships that are material for the operations and where deviations and violations would have 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.

The auditor's examination of the corporate governance statement

The Board of Directors is responsible for that the corporate governance statement on pages 34–38 has been prepared in accordance with the Annual Accounts Act.

Our examination of the corporate governance statement is 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 is different and 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 the examination has provided us with sufficient basis for our opinions.

A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2-6 of the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act.

The auditor's opinion regarding the statutory sustainability report

The Board of Directors is responsible for the sustainability report on pages 28–33, and that it is prepared in accordance with the Annual Accounts Act.

Our examination has been conducted in accordance with FAR:s auditing standard RevR 12 The auditor's opinion regarding the statutory sustainability report. This means that our examination of the statutory sustainability report is different and 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 the examination has provided us with sufficient basis for our opinion.

A statutory sustainability report has been prepared.

KPMG AB, P.O. Box 11908, SE-40439 Göteborg, Sweden, was appointed auditor of Bilia AB (publ) by the Annual General Meeting of the shareholders on the 8th of April 2019. KPMG AB or auditors operating at KPMG AB have been the company's auditor since 2000.

Gothenburg, 11 March 2020 KPMG AB

Johan Kratz Authorised Public Accountant

Five-year Review

SEK M, unless otherwise stated.	2015	2016	2017	2018	2019
Consolidated Statement of Income and Other Comprehensive Income
Net turnover	20,443	23,906	27,492	28,382	29,508
Operational earnings	765	887	1,006	1,034	1,239
Operating profit	929	841	923	943	1,125
Net financial items	4	–8	–27	–21	–111
Profit obefore tax	933	833	896	922	1,014
Tax	–202	–176	–205	–188	–207
Profit for the year from continuing operations	731	657	691	734	807
Loss from discontinued operation, net after tax	–84	–21	—	—	—
Net profit for the year	647	636	691	734	807
Statement of Financial Position
Equity	2,056	2,511	2,620	2,915	3,186 1)
Balance sheet total	7,429	10,132	10,958	12,071	16,081 2)
Capital employed	2,855	3,771	4,511	5,272	8,349 3)
Net debt	323	775	1,282	1,603	4,493 4)
Ratio of net debt to EBITDA, excl. IFRS 16, times	0.4	0.7	1.0	1.3	2.3 5)
Statement of Cash Flows
Cash flow from operating activities	835	1,654	1,293	1,127	1,437
Investments and disposals in non-current assets,
including leased assets	623	1,190	938	585	582
Operating cash flow	212	464	355	542	577
Key ratios
Return on capital employed, %	36.2	26.4	23.4	20.5	15.8 6)
Return on equity, %	33.2	27.9	27.0	26.5	26.5
Operational margin, %	3.7	3.7	3.7	3.6	4.2 7)
Operating margin, %	4.5	3.5	3.4	3.3	3.8
Equity/assets ratio, %	27.7	24.8	23.9	24.1	19.8 8)
Per share data
Earnings per share, SEK	6.45	6.20	6.75	7.25	8.00
Equity per share, SEK	20.40	24.40	25.95	28.85	31.80
Operating cash flow per share, SEK	2.10	4.55	3.45	5.35	5.70
Dividend per share, SEK	3.75	4.00	4.50	4.75	5.25 9)
Share price at year-end, SEK	96.00	104.75	80.00	82.85	106.30
P/E ratio, times	15	17	12	11	13
Other information
Wages, salaries and other remunerations	1,659	1,841	2,159	2,230	2,374
Employees, average number	3,374	3,804	4,090	4,221	4,298

1) Equity decreased by SEK 31 M attributable to the introduction of IFRS 16.

2) Balance sheet total increased by SEK 2,597 M attributable to the introduction of IFRS 16.

3) Capital employed increased by SEK 2,589 M attributable to the introduction of IFRS 16.

4) Net debt increased by SEK 2,620 M attributable to the introduction of IFRS 16.

5) The ratio of net debt to EBITDA increased by 1.0 times attributable to the introduction of IFRS 16.

6) Return on capital emplyed, excluding IFRS 16 amounted to 20.8 per cent.

7) Operational margin increased by 0.2 percentage points attributable to the introduction of IFRS 16.

8) Equity/assets ratio, excluding IFRS 16, amounted to 23.8 per cent.

9) 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 and 2017.

Net turnover, SEK M

Operational earnings, SEK M

Net turnover increased by 4 per cent (3) in 2019 com-

Operational earnings in 2019 amounted to SEK 1,239 M (1,034), an increase of 20 per cent (3). The introduction of IFRS 16 affected by SEK 46 M during the year. Earnings for the first half-year increased by 5 per cent (decrease 2), while in the second half-year they increased by 34 per cent (9). The second, third and fourth quarters reported the best earnings for that quarter over the past five years. The fourth quarter had the strongest quarterly figures ever with earnings of SEK 415 M (296), which equates to 33 per cent (29) of operational earnings for the year.

Profit before tax in 2019 amounted to SEK 1,014 M (922), an increase of 10 per cent. The introduction of IFRS 16 affected by SEK –39 M during the year. The fourth quarter reported the highest percentage increase on the previous year, at 25 per cent. The second quarter decreased by 7 per cent while the first and third quarter increased by 2 and 20 per cent on last year respectively.

15 16 17 18 19 Q 1

Profit before tax, SEK M

Equity/assets ratio, %

Capital employed, SEK M

Capital employed increased by SEK 3,077 M (761), totalling SEK 8,349 M (5,272). The introduction of IFRS 16 increased capital employed by SEK 2,589 M.

The equity/assets ratio amounted to 19.8 per cent (24.1). 2019 the equity/ assets ratio was effected by the introduction of IFRS 16. The equity/assets ratio, excluding IFRS16 amounted to 23.9 per cent. Over the past five years, the equity/assets ratio has been 24.1 per cent (25.4) on average.

per cent.

15 16 17 18 19 Q 2

Return on equity was on par with last year to total 26.5 per cent (26.5). Over the past five years, return on equity has been 28.2 per cent (27.1) on average. The target for return on equity is at least 18.0

15 16 17 18 19 Q 3

Return on equity, % Net debt/EBITDA excl. IFRS 16, times

15 16 17 18 19 Q 4

The ratio of net debt to EBITDA was 1.3 times (1.3). Over the past five years, the ratio of net debt to EBITDA has been 0.9 times (0.7) on average. The target is for this ratio not to exceed 2.0 times in the long term.

Return on capital employed, %

Return on capital employed amounted to 15.8 per cent (20.5). 2019 return on capital employed was effected by the introduction of IFRS 16. Return on capital employed, excluding IFRS 16 amounted to 20.8 per cent. Over the past five years, return on capital employed has been 24.5 per cent (25.3) on average.

FIVE-YEAR REVIEW

Definitions and Performance Measures

Acquisition-related costs and value adjustments Pertains to costs for legal consultants and other external costs associated directly with an acquisition, as well as value adjustments regarding acquired inventory assets, which are depreciated during the asset's turnover time.

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 and for calendar effect.

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.

Deliveries Cars that have been physically turned over to the customer and invoiced and are included in reported net turnover.

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, excluding IFRS 16, reduced by acquisitionrelated costs and value adjustments.

EBITDAJ/net financial items 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.

Excluding IFRS 16 Information excluding the new accounting standard IFRS 16 Leases which means comparable information with 2018 according to IAS 17 Leases, see Note 1 "Key accounting principles".

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.

Liquidity Unutilised credit with the banks, Nordea and DNB, plus cash and cash equivalents.

Net debt Net debt consists of interest-bearing liabilities less cash and cash equivalents, interest-bearing current and longterm 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 cash flow Cash flow from operating activities plus investments in and disposals of intangible assets and property, plant and equipment.

Operating margin Operating profit in relation to net turnover.

Operational earnings Operating profit, excluding revenues and costs that affect comparability between accounting periods and/or operating segments. They include, but are not limited to, acquisition-related expenses, value adjustments, restructurings and amortisation of surplus values.

Operational margin Operational earnings in relation to net turnover.

Order backlog New cars ordered by the customer but not yet delivered.

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.

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 avarage equity.

Structural costs Costs that significantly alter the thrust and/ or scope of the operation. 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 21.4 per cent.

The ratio of net debt to EBITDA Net debt in relation to EBITDA.

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. including payroll overheads.

Information on Annual General Meeting

Annual General Meeting, 17 April 2020

The AGM of Bilia AB will be held on Friday 17 April 2020, at 2 p.m. at the IVA Konferenscenter, Grev Turegatan 16, Stockholm. To be entitled to participate in the Annual General Meeting, shareholders must:

• be registered in the share register on Thursday 9 April 2020
• have notified Bilia of their intention to participate, not later than Thursday 9 April 2020

Notification

Shareholders wishing to participate in the AGM can notify Bilia:

• by telephone at +46 10 497 73 04 (or +46 10 497 70 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

Nominee-registered shares

Bilia's share register is kept by Euroclear Sweden AB. Only holdings registered in their owners' names are entered in this register.

Shareholders whose shares have been registered to a nominee must arrange for their shares to be temporarily re-registered in their own name in order to be able to participate in the AGM. These shareholders should ask the bank or stockbroker that holds their shares in trust (the nominee) to temporarily re-register them (voting right registration) in good time prior to 9 April 2020. Nominees usually charge a fee for this service.

Proxies and assistants

A shareholder who is not personally present at the AGM may exercise his or her right through a proxy, 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. 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 5.25 per share (4.75) be paid in dividend to the shareholders, for a total of SEK 526 M (480). The dividend is divided into two payment occasions.

Board of Directors

The Nominating Committee has announced that they intend to propose to reduce the number of members to nine ordinary board members without deputies and propose re-election of the following members: Ingrid Jonasson Blank, Gunnar Blomkvist, Anna Engebretsen, Eva Eriksson, Jack Forsgren, Mats Holgerson, Nicklas Paulson, Jan Pettersson, Mats Qviberg and Jon Risfeldt. The Nominating Committee propose new election of Eva Eriksson as a member of the board. The Nominating Committee's proposal is available at bilia.com.

For complete information on the AGM, see the convening notice, which was issued in the middle of March 2020.

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 two hundred million kronor (SEK 200,000,000) and no more than eight hundred million kronor (SEK 800,000,000).

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 ninety million (90,000,000) and no more than three hundred sixty million (360,000,000).

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, Solna, 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 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 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, 19 April 2017.

Bilia is one of Europe's largest car chains with a leading position within service and sales of cars, transport vehicles and supplementary services as financing and insurance. Bilia has 136 facilities in Sweden, Norway, Germany, Luxembourg and Belgium and two internet based auction sites, one in Sweden and one in Norway.

Bilia's business concept is to offer servicing, car sales and related services that bring our customers lasting value and simplicity in car ownership – in short, a better experience for our customers.

Available around the clock: Bilia Nu +46771-400 000 bilia.com