Bilia — Interim / Quarterly Report 2016

Jul 27, 2016

• Net turnover amounted to SEK 11,866 M (10,096).

• The Group's net profit for the period was SEK 336 M (320) and earnings per share SEK 6.60 (6.35).

• Net turnover amounted to SEK 6,433 M (5,381).

• Operational earnings amounted to SEK 240 M (195).
• The Group's net profit for the period was SEK 193 M (297) and earnings per share SEK 3.80 (5.90).
• Operating cash flow amounted to SEK 313 M (198).

In a comment on the second quarter, Bilia's Managing Director Per Avander says:

"Demand for both cars and service was better compared with last year and we reported strong operational earnings (see definition on pages 5 and 23). The earnings improvement is mainly attributable to the Service Business, which boosted underlying turnover by more than 12 per cent and operational earnings by SEK 44 M. The Car Business also reported a better profit compared with last year. The order backlog of new cars declined during the quarter, but was substantially higher than last year at the end of the quarter. The Group generated an operating cash flow of SEK 313 M, and its financial position remained strong. We believe that demand for cars and service during the third quarter of 2016 will be slightly better compared with the same quarter last year."

	Second quarter		First six months		July 15 -	Full year
	2016	2015	2016	2015	June 16	2015
Continuing operations
Net turnover, SEK M	6,433	5,381	11,866	10,096	22,213	20,443
Operational earnings, SEK M 1)	240	195	435	356	844	765
Operational margin, %	3.7	3.6	3.7	3.5	3.8	3.7
Operating profit, SEK M	241	384	426	541	814	929
Operating margin, %	3.7	7.1	3.6	5.4	3.7	4.5
Oiperational profit before tax, SEK M 1)	240	194	433	352	850	769
Profit before tax, SEK M	241	383	424	537	820	933
Net profit for the period / year, SEK M	193	296	336	421	646	731
Earnings per share, SEK 2)	3.80	5.85	6.60	8.35	12.75	14.50
The Bilia Group
Net profit for the period / year, SEK M	193	297	336	320	663	647
Earnings per share, SEK 2)	3.80	5.90	6.60	6.35	13.10	12.85

1) Items affecting comparability are shown in the table on page 5.

2) The number of shares used in the calculation is shown in the table on page 16.

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

The Bilia Group's earnings in 2015 were charged with closure costs for the Danish operation, see page 10. The profit also included a gain on redemption of the PRI liability, see page 5.

Second quarter

• On 9 May 2016, Bilia concluded an agreement to acquire Philippe Emond, a BMW and MINI dealer in Belgium located near the border with Luxembourg. The date of possession was 1 July 2016. The business has an annual turnover of about SEK 730 M and has reported an average operating profit of SEK 24 M during the past two years. The purchase consideration was around SEK 245 M, of which about SEK 62 M was paid in cash and the remaining approximately SEK 183 M in newly issued shares in Bilia Holding. Bilia Holding owns 100 per cent of the shares in the newly acquired BMW and MINI business in Luxembourg and 100 per cent of the shares in Philippe Emond. After the issue, Bilia owns 66.2 per cent and the seller 33.8 per cent of the shares in Bilia Holding. The Bilia Group's net debt will increase by about SEK 100 M as an effect of the deal.
• On 27 May 2016, Bilia sold 94 000 warrants to senior officers, mainly in Sweden. The warrants give their holders the option of purchasing a Bilia share for SEK 231 during the period 1 March 2019 to 26 March 2019.The price of the warrants was SEK 12 apiece.
• On 31 May 2016, Bilia carried out a new share issue comprising 699,242 shares. Bilia's share capital increased by SEK 3,496,210 as an effect of the new issue, and the number of outstanding shares amounts to 51,399,976 after the issue.

First quarter

• On 28 January 2016, Bilia concluded an agreement to acquire three car dealerships that conduct BMW, MINI and Toyota operations in Sweden. The companies have a combined annual turnover of about SEK 750 M, and operating profit is estimated at about SEK 14 M per year. The date of possession was 1 March 2016.
• Bilia issued unsecured bonds worth a total of SEK 500 M with a term to maturity of five years. The bond issue carries a floating interest rate of STIBOR (3 months) plus 220 basis points and has a final maturity date in March 2021.
• On 11 March 2016, Bilia concluded an agreement to sell its Ford operations in Gothenburg, Kungsbacka and Stockholm to Hedin Bil. The date of possession for the operations in Gothenburg and Kungsbacka was 1 May 2016, and for the Stockholm operation not later than 31 December 2017.

Further information on the above events and other press information is available at bilia.com.

Demand for cars and service was better compared with the same quarter last year.

Net turnover amounted to SEK 6,433 M (5,381). For comparable operations and adjusted for exchange rate changes, net turnover increased by about SEK 400 M or 8 per cent. The increase is attributable to both car sales and service.

Operating profit amounted to SEK 241 M (384). Last year's profit includes a gain of SEK 197 M on redemption of the Swedish pension liability. Operational earnings amounted to SEK 240 M (195). The improvement is mainly attributable to the Service Business, which boosted underlying turnover by about 12 per cent. The Car Business reported slightly better earnings compared with last year. Underlying Group overheads increased by about 4 per cent compared with last year. Overheads amounted to 11.9 per cent in relation to net turnover, which was 0.5 percentage point lower compared with last year. In view of the earnings level during the quarter, provision was made for employee bonuses of SEK 5 M (5).

Net financial items amounted to SEK 0 M (-1).

Tax for the period amounted to SEK -48 M (-87), and the effective tax rate was 20 per cent (23).

Net profit for the period amounted to SEK 193 M (297) and earnings per share SEK 3.80 (5.90). Last year's profit was affected by a gain of SEK 154 M on redemption of the Swedish pension liability, equivalent to SEK 3.05 per share. Exchange rate changes reduced the profit by SEK 3 M.

Total assets increased by SEK 328 M during the quarter, amounting to SEK 8,856 M. The increase is mainly attributable to leased vehicles and cash and cash equivalents.

Equity decreased by SEK 48 M during the quarter, amounting to SEK 2,163 M. Dividends of SEK 380 M were paid to the shareholders. The equity/assets ratio amounted to 24 per cent (25).

Acquisition of non-current assets amounted to SEK 56 M (38). Replacement investments represented SEK 7 M (12), expansion investments SEK 17 M (8), environmental investments SEK 1 M (2) and investments in new construction and additions to properties SEK 25 M (16), while finance leases amounted to SEK 6 M (0).

Operating cash flow amounted to SEK 313 M (198). After acquisitions and disposals of operations and change in interest-bearing receivables, cash flow amounted to SEK 357 M (204). Net debt decreased by SEK 72 M during the quarter, amounting to SEK 663 M.

Liquidity remains good, and at the end of June cash and cash equivalents of SEK 331 M and a debt to the banks of SEK 479 M was reported. The combined credit limit with Nordea and DNB amounts to SEK 1,500 M.

The number of employees increased by 28, amounting to 3,988 persons.

Net turnover amounted to SEK 11,866 M (10,096). For comparable operations and adjusted for exchange rate changes, net turnover increased by about SEK 800 M or 8 per cent. The increase is attributable to both car sales and service.

Operating profit amounted to SEK 426 M (541). Last year's profit includes a gain of SEK 197 M on redemption of the Swedish pension liability. Operational earnings amounted to SEK 435 M (356). The improvement is mainly attributable to the Service Business, which boosted underlying turnover by about 10 per cent. The Car Business reported slightly better earnings compared with last year. Underlying Group overheads increased by about 3 per cent compared with last year. Overheads amounted to 12.2 per cent in relation to net turnover, which was 0.4 percentage point lower compared with last year. In view of the earnings level during the first six months, provision was made for employee bonuses of SEK 10 M (13).

Net financial items amounted to SEK -2 M (-4).

Tax for the period amounted to SEK -88 M (-116), and the effective tax rate was 21 per cent (22).

Net profit for the period was SEK 336 M (320) and earnings per share SEK 6.60 (6.35). Last year's profit was affected by a gain on redemption of the Swedish pension liability. Exchange rate changes reduced the profit by SEK 6 M.

Acquisition of non-current assets amounted to SEK 116 M (76). Replacement investments represented SEK 18 M (24), expansion investments SEK 25 M (12), environmental investments SEK 1 M (3) and investments in new construction and additions to properties SEK 61 M (35), while finance leases amounted to SEK 11 M (2).

Operating cash flow amounted to SEK 423 M (319). After acquisitions and disposals of operations and change in interest-bearing receivables, cash flow amounted to SEK 214 M (178). Net debt increased by SEK 340 M during the first six months, amounting to SEK 663 M. The increase is attributable to acquisitions of operations.

	Second quarter		First six months		July 15 -	Full year
Group, SEK M	2016	2015	2016	2015	June 16	2015
Operational earnings	240	195	435	356	844	765
Items affecting comparability
- Gain from sale of operation, other	21	0	21	4	23	6
- Redemption of PRI liability	0	197	0	197	0	197
- Structural costs etc.	-2	0	-2	0	-7	-5
Acquisition costs
- Acquisition-related costs and value adjustments	-5	0	-6	-1	-7	-2
- Amortisation of surplus values	-13	-8	-22	-15	-39	-32
Operating profit	241	384	426	541	814	929
Operational profit before tax	240	194	433	352	850	769
Items affecting comparability
- Gain from sale of operation, other	21	0	21	4	23	6
- Redemption of PRI liability	0	197	0	197	0	197
- Structural costs etc.	-2	0	-2	0	-7	-5
Acquisition costs
- Acquisition-related costs and value adjustments	-5	0	-6	-1	-7	-2
- Amortisation of surplus values	-13	-8	-22	-15	-39	-32
Profit before tax	241	383	424	537	820	933

The gain from sale of operation during the quarter pertains to the sale of the Ford operation in Gothenburg and Kungsbacka and the structural costs pertain to provision for rent in Sweden. The acquisition-related costs and value adjustments during the quarter pertain to the acquisition of the BMW and MINI business in Luxembourg. Last year's redemption of PRI liability pertains to the earnings effect before tax of the transfer of the Swedish pension liability to Alecta.

			Deliveries				Order backlog
No. of new	Second quarter		First six months		July 15 -	Full year	30 June
cars	2016	2015	2016	2015	June 16	2015	2016	2015
Sweden 1)	10,204	8,776	18,412	16,167	34,791	32,546	6,797	5,967
Norway	2,279	2,389	4,324	3,911	8,724	8,311	2,726	1,518
Western Europe 2)	878	0	1,109	0	1,354	245	796	0
Total	13,361	11,165	23,845	20,078	44,869	41,102	10,319	7,485

1) Kaiser Bil is included in deliveries during the quarter with 188 (-) and during the first six months with 313 (-) and with 134 (-) in order backlog. BMW-, MINI- and Toyota acquisitions is included in deliveries during the quarter with 359 (-) and during the first six month with 448 (-) and with 80 (-) in order backlog. 2) Germany is included in deliveries during the quarter with 214 (-) and during the first six months with 445 (-) and with 195 (-) in order backlog.

Luxembourg is included in deliveries during the quarter with 664 (-) and during the first six months with 664 (-) and with 601 (-) in order backlog.
			Net turnover									Operational earnings, operating margin
	Second quarter		First six months			July 15 - Full year		Second quarter				First six months			July 15 -	Full year
SEK M	2016	2015	2016		2015 June 16	2015	2016	%	2015	%	2016	%	2015	%	June 16	2015	%
Sweden	4,341	3,729	8,194	7,194	15,513	14,513	189	4.4	148	4.0	349	4.3	290	4.0	703	644	4.4
Norway	1,622	1,636	3,063	2,884	5,917	5,738	60	3.7	58	3.6	104	3.4	93	3.2	188	177	3.1
Western Europe	469	0	606	0	779	173	11	2.3	0	-	13	2.1	0	-	15	2	1.2
Total Cars	6,432	5,365	11,863	10,078	22,209	20,424	260	4.0	206	3.8	466	3.9	383	3.8	906	823	4.0
Parent Company, other	1	16	3	18	4	19	-20	-	-11	-	-31	-	-27	-	-62	-58	-
Total	6,433	5,381	11,866	10,096	22,213	20,443	240	3.7	195	3.6	435	3.7	356	3.5	844	765	3.7

Strong earnings in Sweden

Big order backlog

The market for new cars increased during the quarter by 13 per cent in Sweden, 4 per cent in Norway and 9 per cent in our markets in Western Europe.

The Group reported an operational earnings of SEK 240 M (195) and an operating margin of 3.7 per cent (3.6). The Service Business reported a profit that was SEK 44 M better, while the Car Business reported a profit that was SEK 10 M better, compared with last year. The order backlog decreased by 1,052 cars during the quarter, amounting to 10,319 cars at the end of the quarter.

The operation in Sweden reported an operating profit of SEK 189 M (148), with an operating margin of 4.4 per cent (4.0). The Service Business reported a profit that was SEK 34 M better than last year. The improvement is mainly attributable to higher turnover. The Car Business reported a profit that was SEK 8 M better than last year. The profit from sales of new cars improved, while the profit from sales of used cars declined. Stocks of used cars remained at a good level.

The operating profit in Bilia's Norwegian operation was SEK 60 M (58), with an operating margin of 3.7 per cent (3.6). The Service Business continues to develop favourably. Earnings were SEK 5 M better compared with last year, with an operating margin of 11.8 per cent. The improvement is mainly attributable to higher turnover. The profit from sales of new cars improved, while the profit from sales of used cars declined. There has been a strong focus on reducing stocks of used cars, which has had a negative effect on the gross profit margin. The profit from sales of used cars declined by SEK 8 M to SEK 4 M. Stocks of used cars were slightly too high at the end of the quarter.

Operations in Western Europe reported a profit of SEK 11 M. The Luxembourg business, which is consolidated in the Group from the second quarter of 2016, reported earnings on a level with expectations. Earnings in the Car Business amounted to SEK 6 M, and in the Service Business SEK 5 M. The Service Business's operating margin was 5.5 per cent, which is substantially lower than the Group's operating margin of 11.1 per cent.

	Net turnover 1)						Operational profit, operating margin
	Second quarter		First six months		July 15 -	Full year	Second quarter		First six months		July 15 -	Full year
SEK M	2016	2015	2016	2015	June 16	2015	2016	2015	2016	2015	June 16	2015
Service Business	1,361	1,124	2,584	2,172	4,903	4,491	151	107	286	213	569	496
- margin, %							11.1	9.5	11.0	9.8	11.6	11.0
Car Business	5,057	4,139	9,276	7,776	17,194	15,694	103	93	166	156	313	303
- margin, %							2.0	2.2	1.8	2.0	1.8	1.9
Fuel Business	273	279	497	506	1,012	1,021	6	6	14	14	24	24
- margin, %							2.3	2.3	2.9	2.9	2.4	2.4

Service includes workshop services, spare parts and accessories.

The Car Business includes sales of new and used cars and customer financing.

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

Growth in the Service Business

		Second quarter			First six months
Per cent	Sweden	Norway	Total	Sweden	Norway	Total
Change from last year
Underlying turnover	11.5	12.0	11.7	8.9	11.7	9.7
Calendar effect	-3.3	-5.1	-3.8	-0.8	-0.8	-0.8
Adjusted turnover	8.2	6.9	7.9	8.1	10.9	8.9

Higher earnings and strong growth in the Service Business

Lower earnings from sales of used cars

The Service Business reported a profit that was SEK 44 M better than last year, with an operating margin of 11.1 per cent (9.5). The improvement is mainly attributable to higher sales and lower relative costs. Sweden's adjusted turnover increased by 8 per cent and Norway's by 7 per cent. There were 2 working days more in Sweden and 3 days more in Norway compared with the same quarter last year.

The Car Business's deliveries of new cars increased by 7 per cent for comparable operations during the quarter, while deliveries of used cars increased by 5 per cent compared with last year. Orders received for new cars increased by 15 per cent compared with last year. Earnings from sales of new cars improved by SEK 27 M, due mainly to higher turnover and lower relative costs. Earnings from sales of used cars declined by SEK 17 M, due mainly to a lower gross profit margin, amounting to SEK 26 M. Stocks of used cars increased slightly for comparable operations during the quarter but are at good levels overall. The turnover rate for used cars decreased, amounting to 10.4 times per year.

The Fuel Business is concentrated to Sweden, and earnings amounted to SEK 6 M (6).

All values in the above graphs pertain to isolated quarters.

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

BMW – Trollhättan, Uddevalla and Strömstad

MINI – Trollhättan

Toyota – Kristianstad, Västerås, Enköping, Borlänge, Falun and Ludvika

The companies have a combined annual turnover of about SEK 750 M and operating profit is estimated at about SEK 14 M per year. The purchase consideration was SEK 58 M. The entire purchase consideration was paid in cash. There is no contingent purchase consideration.

Synergies can be found in a higher inventory turnover rate, which is expected to reduce capital employed by about SEK 30 M in 2016.

The businesses have about 115 employees and will continue to be operated from the present-day facilities.

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

Effects of the acquisitions

The acquisitions have the following effects on the Group's assets and liabilities. Since the final accounts as per 29 February 2016 are not yet definite, the acquired net assets and purchase consideration specified below are preliminary.

	Carrying amounts in BMW, MINI, Toyota	Fair value	Fair value recognised in
SEK M	dealership operations	adjustment	Group
Intangible assets	2	9	11
Property, plant and equipment	7	28	35
Deferred tax asset	0		0
Inventories	152	2	154
Trade receivables and other receivables	24		24
Cash and cash equivalents	4		4
Interest-bearing liabilities	103		103
Trade payables and other liabilities	78	30	108
Deferred tax liability		2	2
Net identifiable assets and liabilities	8	7	15
Consolidated goodwill			43
Purchase consideration paid, cash			58
Less: Cash and cash equivalents in aquired operations			4
Net effect on cash and cash equivalents			54

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

On 31 March 2016, Bilia took possession of Arnold Kontz's BMW and MINI operation in Luxembourg. The operation, which is centrally located in Luxembourg, accounts for about 50 per cent of total BMW sales in Luxembourg. The operation has an annual turnover of about SEK 1.1 bn with an operating profit of about SEK 45 M per year. The purchase consideration was SEK 314 M. Of the total purchase consideration, SEK 198 M was paid in cash and the remaining SEK 116 M was paid in the form of newly issued Bilia shares. The exercise price was set at 95 per cent of the price of a Bilia share during the period 18-22 April 2016. The value of the discount, SEK 6 M, has increased the value of consolidated goodwill. Payment with the new shares was effected by offsetting of the debt to the seller. There is no contingent purchase consideration.

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

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

Acquisition-related expenses amounting to SEK 0.7 M consist of fees to consultants for due diligence and have been recognized as "Other operating expenses".

Effects of the acquisition

The acquisition has the following effects on the Group's assets and liabilities. Since the parties have not yet approved the final accounts as per 31 March 2016, the acquired net assets and purchase consideration specified below are preliminary.

	Carrying amounts in Arnold Kontz dealer-	Fair value	Fair value recognised in
SEK M	ship operation	adjustment	Group
Intangible assets		188	188
Property, plant and equipment	41		41
Inventories	132	3	135
Trade receivables and other receivables	65		65
Cash and cash equivalents	10		10
Interest-bearing liabilities	55		55
Trade payables and other liabilities	138	6	144
Deferred tax liability		57	57
Net identifiable assets and liabilities	55	128	183
Consolidated goodwill			131
Purchase consideration paid, cash			314
Less: Payment in the form of newly issued Bilia shares			116
Less: Cash and cash equivalents in aquired operation			10
Net effect on cash and cash equivalents			188

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

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

	First six months		Full year
SEK M	2016	2015	2015
Revenues	-	450	468
Expenses	-	-661	-609
Loss before tax	-	-211	-141
Tax	-	110	57
Loss after tax from dicontinued operation	-	-101	-84
Discontinued operation
Basic earnings/loss per share, SEK	-	-2.00	-1.65
Diluted earnings/loss per share, SEK	-	-1.95	-1.65

SEK M	30/6 2016	30/6 2015	31/12 2015
Property, plant and equipment	-	28	-
Inventories	-	37	-
Trade receivables and other receivables	-	93	-
Cash and cash equivalents	-	180	-
Total assets	-	338	-

SEK M	30/6 2016	30/6 2015	31/12 2015
Trade payables and other liabilities Deferred tax liability	- -	382 -	- -
Total liabilities	-	382	-

	First six months		Full year
SEK M	2016	2015	2015
Cash flows from operating activities	-	-68	-137
Cash flows from investing activities	-	57	146
Cash flows from financing activities	-	198	-4
Net cash flows from discontinued operation	-	187	5

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

The Parent Company's operating loss for the second quarter amounted to SEK -21 M (loss: 24). The profit has been charged with SEK 5 M in special payroll tax attributable to value increases on endowment policies. Last year's profit has been charged with SEK 13 M pertaining to redemption of PRI liability.

As a result of its operations, the Bilia Group is exposed to both operating risks and financial risks.

The operating risks include:

• Development of the market for new cars.
• Diminished demand for cars can also affect the value of stock in hand and guaranteed residual values.
• Reduced demand for service and repairs.
• Increased competition in the markets where Bilia is active.
• The ability of suppliers to offer competitive products.
• Automotive suppliers become insolvent or terminate retailer agreements with Bilia.
• Regulatory decisions that lead to changes in taxes and charges on the products Bilia sells can influence both demand for and the valuation of cars in stock and cars sold with guaranteed residual values.

The financial risks include liquidity risks, interest rate risks, credit risks and currency risks.

Bilia works continuously with risk identification and risk assessment. For further information about the risks that affect the Group, please refer to the 2015 Annual Report.

The 2016 Annual General Meeting resolved to authorise the Board of Directors to increase the company's share capital and to issue new shares to be transferred to Société de Participations Financiéres Groupe Arnold Kontz (the company). The background is an agreement where Bilia acquires Arnold Kontz's BMW and MINI operation in Luxembourg, for which partial payment will be made with shares in Bilia. Payment will be made for the new shares by offsetting of the debt to the company of EUR 12,500,000. The debt was converted to SEK and the exercise price will be set at 95 per cent of the average price of the Bilia share during the period 18-22 April 2016. On 31 May 2016, 699,242 new shares were issued, after which the total number of outstanding shares amounts to 51,399,976. At the same time, the share capital increased by SEK 3,496,210 to SEK 256,999,880.

This interim report in summary for the Group has been prepared in accordance with IAS 34 "Interim Financial Reporting" and applicable provisions of the Annual Accounts Act. The interim report for the Parent Company has been prepared in accordance with Chapter 9 of the Annual Accounts Act, "Interim Reports". The same accounting policies and calculation methods have been applied for the Group and the Parent Company as in the most recent annual report. New IFRS's that became effective during the year have not had any significant effect on the Group's or the Parent Company's financial reports.

Disclosures in accordance with IAS 34, paragraph 16, are made not only in the financial statements and notes, but also in other parts of the interim report.

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

No significant events have occurred after the end of the report period.

This interim report has not been subjected to special examination by the auditors.

The interim report for the third quarter of 2016 will be published on 28 October 2016.

This interim report provides a true and fair summary of the Group's and the Parent Company'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, 27 July 2016

Mats Qviberg Chairman

Jan Pettersson Ingrid Jonasson Blank Eva Cederbalk Deputy chairman Board member Board member

Anna Engebretsen Jack Forsgren Laila Freivalds Board member Board member Board member

Mats Holgerson Gustav Lindner Jon Risfelt Board member Board member Board member

Dragan Mitrasinovic Patrik Nordvall by employee organisation by employee organisation

Board member appointed Board member appointed

Gothenburg, 27 July 2016 Bilia AB (publ) Board of Directors

For further information, please contact Per Avander, Managing Director and CEO, or Gunnar Blomkvist, CFO, telephone +46 31 709 55 00.

Bilia AB (publ) Box 9003, SE-400 91 Gothenburg, Sweden Visiting address: Norra Långebergsgatan 3, Västra Frölunda Telephone: +46 31 709 55 00 bilia.com Corporate ID No.: 556112-5690

This report is being published by Bilia AB in compliance with the Securities Market Act. The information was submitted for publication on 27 July 2016 at 08:30 a.m..

Interim report Bilia AB (publ) 1 January – 30 June 2016 13 (24)

First six months

	Service		Car			Fuel	Total			Segment		Group
							Cars			reconciliation
SEK M	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Net turnover
External sales	2,090	1,796	9,276	7,776	497	506	11,863	10,078	3	18	11,866	10,096
Internal sales	494	376					494	376	-494	-376	-	-
Total net turnover	2,584	2,172	9,276	7,776	497	506	12,357	10,454	-491	-358	11,866	10,096
Depreciation/amortisation	-29	-24	-174	-129	-2	-2	-205	-155	-38	-28	-243	-183
Operating profit/loss	286	213	166	156	14	14	466	383	-40	158	426	541
Interest income											20	2
Interest expenses											-36	-14
Shares in profits of associated companies			14	8			14	8			14	8
Profit before tax											424	537
Tax expense for the period											-88	-116
Profit for the year from continuing operations											336	421
Loss from discontinued operation,
net after tax											-	-101
Net profit for the period											336	320
Material items of income and expense of a non-re
curring nature recognised in the Statement of
Income and Other Comprehensive Income:
Items affecting comparability
- Profit from sale of operation, other	15	2	6	2			21	4			21	4
- Redemption of PRI liability		13		52			0	65		132	-	197
- Structural costs etc.	-1		-1								-6	-
Items of non-recurring nature	14	15	5	54	-	-	21	69	-	132	15	201
Acquisition costs
- Acquisition-related costs and value adjustments	-3	-1	-3	0			-6	-1			-6	-1
- Amortisation of surplus values	-10	-7	-12	-8			-22	-15			-22	-15
Acquisition costs	-13	-8	-15	-8	-	-	-28	-16	-	-	-28	-16
Material items not affecting cash besides
depreciation/amortisation:
- Other	-31	-21	-5	-10	0	0	-36	-31	42	-59	6	-90
Total	-31	-21	-5	-10	0	0	-36	-31	42	-59	6	-90
Assets
Interests in associated companies			364	355			364	355			364	355
Deferred tax assets											137	70
Other assets											8,355	6,207
Assets held for sale											-	338
Total assets			364	355			364	355			8,856	6,970
Investments in non-current assets	47	33	777	538	2	1	826	572	33	16	859	588
Liabilities
Equity											2,163	1,765
Liabilities											6,693	4,823
Liabilities attributable to assets held for sale											-	382
Total liabilities and equity											8,856	6,970

		Revenue from		Non-current
	external customers			assets
SEK M	2016	2015	2016	2015
Geographical segments
Sweden	8,198	7,212	4,229	3,048
Norway	3,063	2,884	842	854
Germany	304	-	56	-
Luxembourg	302	-	342	-
Segment reconciliation	-1	0	-1,184	-679
Total	11,866	10,096	4,285	3,223

First six months

	Service					Car
		Sweden		Norway		Western Europe		Sweden		Norway	Western Europe
SEK M	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Net turnover
External sales	1,467	1,282	506	514	117		6,233	5,414	2,554	2,362	489
Internal sales	316	272	171	104	7
Total net turnover	1,783	1,554	677	618	124		6,233	5,414	2,554	2,362	489
Depreciation/amortisation	-21	-18	-3	-6	-5		-159	-122	-10	-7	-5
Operating profit/loss	205	155	74	58	7		131	121	29	35	6
Shares in profits of associated companies							14	8
Material items of income and expense of a non-re
curring nature recognised in the Statement of
Income and Other Comprehensive Income:
Items affecting comparability
- Profit from sale of operation, other	15			2			6			2
- Redemption of PRI liability		13						52
- Structural costs etc.	-1						-1
Items of non-recurring nature	14	13	0	2	0		5	52	0	2	0
Acquisition costs - Acquisition-related costs and value adjustments	-1			-1	-2		-1				-2
- Amortisation of surplus values	-4	-3	-4	-4	-2		-5	-4	-4	-4	-3
Acquisition costs	-5	-3	-4	-5	-4		-6	-4	-4	-4	-5
Material items not affecting cash besides
depreciation/amortisation:
- Other	-30	-20	-1	-1	0		-7	-11	2	1	0
Total	-30	-20	-1	-1	0		-7	-11	2	1	0
Assets
Interests in associated companies							364	355
Investments in non-current assets	31	10	16	23			703	474	74	64

	Second quarter		First six months		July 15 -	Full year
SEK M	2016	2015	2016	2015	June 16	2015
Continuing operations
Net turnover	6,433	5,381	11,866	10,096	22,213	20,443
Costs of goods sold	-5,443	-4,531	-10,010	-8,481	-18,605	-17,076
Gross profit	990	850	1,856	1,615	3,608	3,367
Other operating income	24	199	25	204	38	217
Selling expenses	-621	-549	-1,180	-1,044	-2,280	-2,144
Administrative expenses	-144	-116	-264	-233	-524	-493
Other operating expenses	-8	0	-11	-1	-28	-18
Operating profit 1)	241	384	426	541	814	929
Financial income	13	1	20	2	22	4
Financial expenses Shares in profits of associated companies	-22 9	-5 3	-36 14	-14 8	-52 36	-30 30
Net financial items	0	-1	-2	-4	6	4
Profit before tax	241	383	424	537	820	933
Tax	-48	-87	-88	-116	-174	-202
Profit for the period from continuing operations	193	296	336	421	646	731
Discontinued operation
Loss from discontinued operation,
net after tax	0	1	0	-101	17	-84
Net profit for the period	193	297	336	320	663	647
Other comprehensive income/loss
Items that cannot be reclassified to profit or loss
Revaluation of defined-benefit pension plans	0	26	0	-125	5	-120
Tax attributable to items that cannot be reclassified
to profit or loss	0	-5	0	28	-2	26
	0	21	0	-97	3	-94
Items that can be reclassified to profit or loss
Translation differences attributable to foreign
operations	17	-11	27	-5	-13	-45
Tax attributable to items that have been or may be
reclassified to profit or loss	0	0	0	0	0	0
	17	-11	27	-5	-13	-45
Other comprehensive income/loss after tax	17	10	27	-102	-10	-139
Comprehensive income for the period	210	307	363	218	653	508
Net profit for the period attributable to:
Parent Company's shareholders	193	297	336	320	663	647
Comprehensive income for the period
attributable to:
Parent Company's shareholders	210	307	363	218	653	508
Weighted average number of shares, '000: - before dilution	51,054	50,406	50,859	50,386	50,641	50,406
- after dilution	51,054	50,919	50,893	50,919	50,906	50,919
Basic earnings/loss per share, SEK	3.80	5.90	6.60	6.35	13.10	12.85
Diluted earnings/loss per share, SEK	3.80	5.85	6.60	6.30	13.05	12.75
Continuing operations
Basic earnings/loss per share, SEK	3.80	5.85	6.60	8.35	12.75	14.50
Diluted earnings/loss per share, SEK	3.80	5.80	6.60	8.25	12.75	14.40
1) Straight-line amortisation/depreciation by asset class:
- Intellectual property	-18	-13	-31	-24	-55	-48
- Land and buildings	-5	-4	-9	-7	-26	-24
- Equipment, tools, fixtures and fittings	-22	-18	-42	-36	-72	-66
- Leased vehicles	-87	-59	-161	-116	-299	-254
Total	-132	-94	-243	-183	-452	-392

SEK M	30/6 2016	31/12 2015	30/6 2015
Assets
Non-current assets Intangible assets
Intellectual property	474	271	241
Goodwill	556	368	331
	1,030	639	572
Property, plant and equipment
Land and buildings	135	131	111
Construction in progress	17	8	7
Equipment, tools, fixtures and fittings	373	331	321
Leased vehicles 1)	2,357	2,048	1,847
	2,882	2,518	2,286
Long-term investments
Financial investments 1)	372	384	362
Long-term receivables 2)	1	0	3
	373	384	365
Deferred tax assets	137	128	70
Total non-current assets	4,422	3,669	3,293
Current assets
Inventories, merchandise	2,744	2,564	2,126
Current receivables
Other receivables 1)	1,359	1,097	1,032
Cash and cash equivalents 2)	331	99	181
Assets held for sale 1)	-	-	338
Total current assets	4,434	3,760	3,677
Total assets	8,856	7,429	6,970
Equity and liabilities
Equity
Share capital Other contributed capital	257 167	252 48	252 47
Reserves	-72	-99	-59
Retained earnings including net profit for the year	1,811	1,855	1,525
Total equity	2,163	2,056	1,765
Non-current liabilities
Debenture loan 3)	-	-	28
Bond issue 4)	496	-	-
Interest-bearing liabilities 3)	157	75	56
Other liabilities and provisions 4)	1,736	1,438	1,411
	2,389	1,513	1,495
Current liabilities
Debenture loan 3)	-	28	-
Interest-bearing liabilities 3)	692	688	471
Other liabilities and provisions	3,612	3,144	2,857
Liabilities attributable to assets held for sale 4)	-	-	382
	4,304	3,860	3,710
Total equity and liabilities	8,856	7,429	6,970
Assets
1) Of which interest-bearing	365	377	537
2) Interest-bearing	332	9 9	184
Liabilities
3) Interest-bearing	849	791	555
4) Of which interest-bearing	511	8	241

SEK M	30/6 2016	31/12 2015	30/6 2015
Opening balance	2,056	1,849	1,849
Cash dividend to shareholders	-380	-302	-302
Exercised warrants / debenture loan	2	1	0
Sold warrants	1	-	-
New share issue	115	-	-
Discount / issue at discounted price	6	-	-
Comprehensive income for the period	363	508	218
Closing balance	2,163	2,056	1,765

	Second quarter		First six months		July 15 -	Full year
SEK M	2016	2015	2016	2015	June 16	2015
Operating activities
Profit before tax from continuing operations	241	383	424	537	820	933
Loss before tax from discontinued operation	0	-109	0	-211	70	-141
Depreciation and impairment losses from continuing operations	132	94	243	183	464	404
Depreciation and impairment losses from discontinued operation	0	0	0	2	0	2
Other items not affecting cash	6	-186	6	-90	38	-58
Tax paid	-28	-2	-79	-36	-102	-59
Change in inventories	227	111	126	129	-499	-496
Change in operating receivables	-192	30	-163	58	-230	-9
Change in operating liabilities	238	27	368	-113	740	259
Cash flow from operating activities	624	348	925	459	1,301	835
Investing activities
Acquisition of non-current assets (intangible and tangible)	-56	-38	-116	-76	-204	-164
Disposal of non-current assets (intangible and tangible)	15	23	15	34	25	44
Acquisition of leased vehicles	-458	-337	-743	-512	-1,387	-1,156
Disposal of leased vehicles	188	202	342	414	581	653
Operating cash flow	313	198	423	319	316	212
Investment in financial assets	-3	-22	-7	-23	-10	-26
Disposal of financial assets	5	22	5	22	10	27
Acquisition of subsidiary/operation, net	0	6	-249	-195	-338	-284
Disposal of subsidiary/operation, net	42	0	42	55	42	55
Disposal of discontinued operation, net	0	0	0	0	5	5
Cash flow after net investments	357	204	214	178	25	-11
Financing activities
Borrowings	100	400	1,216	400	1,816	1,000
Repayment of loans	-216	0	-866	0	-1,766	-900
Change in overdraft facility	288	-490	37	-521	254	-304
Exercised warrants / debenture loan	0	0	2	0	3	1
Sold warrants	1	0	1	0	1
Dividend paid to Parent Company's shareholders	-380	-302	-380	-302	-380	-302
Cash flow from financing activities	-207	-392	10	-423	-72	-505
Change in cash and cash equivalents, excl. translation
differences	150	-188	224	-245	-47	-516
Cash and cash equivalents recognised in assets held for sale	0	-179	0	-180	180	0
Exchange difference in cash and cash equivalents	8	-10	8	-10	17	-1
Change in cash and cash equivalents	158	-377	232	-435	150	-517
Cash and cash equivalents at start of period	173	558	99	616	181	616
Cash and cash equivalents at end of period	331	181	331	181	331	99

The carrying amount of financial instruments is a reasonable approximation of fair value.

Fair value is determined on the basis of the following three levels:

• Level 1: according to prices quoted on an active market for the same instrument.
• Level 2: based on directly or indirectly observable market inputs other than those included in level 1.
• Level 3: according to inputs not based on observable market data.

Currency derivatives that belong to financial assets and liabilities, valuation level 2, have been valuated to fair value. The value of the currency derivatives is not material and does not constitute a significant item. Fair value measurement has affected earnings by SEK 1 M.

The fair value of currency derivatives 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.

	3/14	4/14	1/15	2/15	3/15	4/15		1/16	2/16
Continuing operations
Net turnover, SEK M	4,299	5,037	4,715	5,381	4,597	5,750		5,433	6,433
Operational earnings, SEK M	125	210	161	195	162		247	195	240
Operational margin, %	2.9	4.2	3.4	3.6	3.5		4.3	3.6	3.7
Operating profit, SEK M	137	198	157	384	154		234	185	241
Operating margin, %	3.2	3.9	3.3	7.1	3.4		4.1	3.4	3.7
Profit before tax, SEK M	133	204	154	383	162		234	183	241
Interest coverage ratio, times 1)	8.3	15.0	17.8	30.9	41.3	32.9		28.6	16.9
The Bilia Group
Profit/loss for the period, SEK M	105	119	23	297	131		196	143	193
Rate of capital turnover, times 1)	3.10	3.06	2.99	2.99	2.98	2.96		2.93	2.93
Return on capital employed, % 1)	21.0	19.8	21.8	31.7	33.8	36.2		35.6	29.7
Return on equity, % 1)	22.2	21.0	18.5	30.5	31.6	33.2		39.7	32.9
Net debt/equity, times	-0.09	-0.04	0.05	0.04	-0.05	0.16		0.33	0.31
Equity/assets ratio, %	28	27	24	25	29		28	26	24
Data per share (SEK)
Earnings/loss for the period	2.10 2)	2.35 4)	0.45 6)	5.90 8)	2.60 10)		3.90 12)	2.80 14)	3.80 16)
Equity	36 3)	37 5)	35 7)	35 9)	37 11)		41 13)	44 15)	42 17)
Operating cash flow	11.90 2)	0.15 4)	2.40 6)	3.90 8)	2.45 10)		-4.55 12)	2.15 14)	6.15 16)

For continuing operations, Bilia's Danish operation has been excluded for year 2014.

1) Rolling 12 months.

• 2) Based on weighted average number of shares outstanding during third quarter, 50,318,925.
• 3) Based on number of shares outstanding at 30 September 2014, 50,330,722.
• 4) Based on weighted average number of shares outstanding during fourth quarter, 50,334,058.
• 5) Based on number of shares outstanding at 31 December 2014, 50,348,066.
• 6) Based on weighted average number of shares outstanding during first quarter, 50,366,845.
• 7) Based on number of shares outstanding at 31 March 2015, 50,393,016.
• 8) Based on weighted average number of shares outstanding during second quarter, 50,405,884.
• 9) Based on number of shares outstanding at 30 June 2015, 50,418,122.
• 10) Based on weighted average number of shares outstanding during third quarter, 50,419,599.
• 11) Based on number of shares outstanding at 30 September 2015, 50,424,016.
• 12) Based on weighted average number of shares outstanding during fourth quarter, 50,430,765.
• 13) Based on number of shares outstanding at 31 December 2015, 50,436,052.
• 14) Based on weighted average number of shares outstanding during first quarter, 50,662,922.
• 15) Based on number of shares outstanding at 31 March 2016, 50,700,734.
• 16) Based on weighted average number of shares outstanding during second quarter, 51,054,197.
• 17) Based on number of shares outstanding at 30 June 2016, 51,399,976.

	Second quarter		First six months		July 15 -	Full year
SEK M	2016	2015	2016	2015	June 16	2015
Net turnover	80	116	202	232	409	439
Administrative expenses	-101	-140	-232	-272	-468	-508
Operating loss 1)	-21	-24	-30	-40	-59	-69
Result from financial items
Income from interests in Group companies	109	0	35	0	12	-23
Interest income from Group companies	10	5	19	10	31	22
Other interest income and similar line items	12	0	19	1	20	2
Interest expenses to Group companies	0	0	0	0	0	0
Interest expenses and similar line items	-18	-3	-29	-5	-37	-13
Loss after financial items	92	-22	14	-34	-33	-81
Appropriations	0	0	0	0	345	345
Profit before tax	92	-22	14	-34	312	264
Tax	5	0	5	5	0	0
Net profit for the period	97	-22	19	-29	312	264
1) Straight-line amortisation/depreciation by asset class:
- Intellectual property	0	-5	-5	-9	-12	-16
- Buildings	-1	0	-2	-1	-5	-4
- Equipment, tools, fixtures and fittings	-1	-1	-2	-2	-3	-3
Total	-2	-6	-9	-12	-20	-23

Interim report Bilia AB (publ) 1 January – 30 June 2016 21 (24)

SEK M	30/6 2016	31/12 2015	30/6 2015
Assets
Non-current assets
Intangible assets Intellectual property	3	54	49
	3	54	49
Property, plant and equipment
Buildings	35	33	23
Construction in progress	17	8	6
Equipment, tools, fixtures and fittings	2	14	12
	54	55	41
Long-term investments Interests in Group companies	1,192	793	679
Other securities held as non-current assets	0	0	0
Deferred tax asset	104	99	38
	1,296	892	717
Total non-current assets	1,353	1,001	807
Current assets
Current receivables
Receivables from Group companies	66	1,179	40
Other receivables	157	117	108
Cash on hand and accrued deposits	416	1	861
Total current assets Total assets	639 1,992	1,297 2,298	1,009 1,816
Equity and liabilities
Equity
Restricted equity
Share capital	257	252	252
Statutory reserve	47	47	47
Non-restricted equity	304	299	299
Share premium reserve	161	48	47
Retained earnings including net profit for the year	404	765	472
	565	813	519
Total equity	869	1,112	818
Untaxed reserves	468	468	386
Provisions
Deferred tax liability	3	3	2
	3	3	2
Non-current liabilities
Debenture loan	-	-	28
Bond issue	496	-	-
Other liabilities	5 501	5 5	5 33
Current liabilities
Debenture loan	-	28	-
Liabilities to Group companies	1	52	-
Other loans	-	432	400
Other liabilities	150	198	177
	151	710	577
Total equity and liabilities	1,992	2,298	1,816
Pledged assets and contingent liabilities for Parent Company
Pledged assets	598	601	586
Contingent liabilities	858	986	945

Return on equity Net profit for the year in relation to average equity

Return on capital employed Operating profit plus interest expense included in the business and financial income in relation to average capital employed.

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.

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

Comparable operations Financial information and number of units that are adjusted for operations that have been acquired or disposed of during one of the periods.

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

Rate of capital turnover Net turnover in relation to average balance sheet total.

Liquidity Unutilised credit with the banks, Nordea and DNB, and cash and cash equivalents. Liquidity amounted to SEK 1,352 M at the end of the second quarter.

Net debt Net debt consists of interest-bearing liabilities less cash and cash equivalents, interest-bearing current and long-term receivables, interests in associated companies and leased vehicles, long-term.

SEK M	30/6 2016	31/12 2015	30/6 2015
Net debt(+) / receivable(-) at start of year	323	-70	-70
Increase(+)/decrease(-) of current interest-bearing liabilities	2	539	505
Increase(+)/decrease(-) of non-current interest-bearing liabilities	556	-28	0
Increase(+)/decrease(-) of pension liabilities	2	-660	-657
Increase(-)/decrease(+) of cash and cash equivalents	-232	517	256
Increase(-)/decrease(+) of interest-bearing assets	-1	27	22
Increase(-)/decrease(+) of interests in associated companies	13	-7	15
Increase(-)/decrease(+) of non-current leased assets	0	5	4
Net debt(+) / receivable(-) at end of year / period	663	323	75

Operational margin Operational earnings in relation to net turnover.

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

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

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

Interest coverage ratio Operating profit plus interest expense included in the business and financial income in relation to financial expenses plus interest expense included in operating expenses.

Operating margin Operating profit in relation to net turnover.

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

Structual costs Costs that are significant, non-recurring and are intended to reduce the operation's cost level. Examples of structural costs may be costs for reducing the number of employees and costs for vacating a leased facility before the expiration of the lease.

Capital employed Balance sheet total less non-interest-bearing current liabilities and provisions as well as deferred tax liabilities.

Growth Increase or decrease of net turnover in relation to the preceding year. Net turnover is adjusted for operations that have been acquired or disposed of during one of the periods. Adjustment is also made for exchange rate differences.

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