aNNUal REPORT

Bilia

aNNUal REPORT

07

So lb er g • P ri nt ed b y: S tr o ki rk -L an d st rö m s • T ra ns la te d b y: R ic ha rd N o rd T ra ns la ti o ns A B

CONTENTS

Directors’ Report 1

Proposed treatment of unappropriated earnings 6

Consolidated Income Statement 7

Consolidated Balance Sheet 9

Summary of changes

in consolidated equity 11

Consolidated Cash Flow Statement 12

Notes to the consolidated financial statements 13

Income Statement for Parent Company 53

Balance Sheet for Parent Company 54

Summary of changes

in Parent Company equity 56

Cash Flow Statement for Parent Company 57 Notes to the Parent Company financial statements 58

Signatures 68

Audit Report 69

Five-year review 70

Definitions 72

The Bilia share 73

Board of Directors 77

Corporate Governance Report 79

Management 82

Information on Annual General Meeting 84

Operations – general

Bilia is Scandinavia’s largest car chain, with a leading position in servicing and sales of cars and transport vehicles plus supplementary services. The Group has 111 facilities in Sweden, Norway and Denmark plus an online auction site, Netbil.

Bilia’s vision is to be the best service company in the business with the goal of having the most satisfied customers in our showrooms, our stores and our workshops. The customer should find dealing with Bilia a pleasant experience. Bilia has a well-developed range of services and products in the Service Business, which includes workshop services, spare parts, store sales and fuel sales. Bilia is constantly developing new services and service concepts to simplify car ownership for our custom- ers. Our Car Business includes sales of new and used cars, transport vehicles, customer financing and supplementary services. Bilia sells cars from Volvo, Renault, Ford, Land Rover, Hyundai, Nissan, Honda, BMW and Mini as well as transport vehicles from Renault, Ford, Hyundai and Nissan.

Ownership

Bilia had 25,282 shareholders at the end of 2007, compared with 26,497 a year earlier. The proportion of institutional owner- ship amounted to 15.4 per cent (18.3), while the proportion of foreign ownership amounted to 14.7 per cent (12.5).

In 2007 Bilia bought back a total of 1,000,000 shares (1,669,900), equivalent to 4.7 per cent of the share capital, for a total of SEK 115 M. As of 31 December 2007, the company’s holding of its own shares amounted to 1,000,000 shares (1,669,900).

The Bilia share

The total number of shares in the company is 21,459,255. 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 OMX Nordiska Börs and can be transferred freely there, subject to the rules of the exchange.

Board members Mats Qviberg and Sven Hagströmer control, directly and indirectly via Investment AB Öresund, approximately 39 per cent of the shares in the company, and the Chairman of the Board, Mats Qviberg, holds together with his family an additional 5 per cent or so of the company’s shares.

Bilia has no knowledge of any shareholders’ agreement between Bilia’s shareholders.

There are no special rules in the Articles of Association con- cerning their amendment or the appointment/dismissal of Board members. The 2007 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. A new authorisation will be proposed at the coming AGM.

In the event of significant changes in the company’s ownership structure that affect the premises or content of their jobs, the MD and certain top executives are entitled to terminate their own employment and obtain 24 months’ salary, less any salary received by the employee from other service during the last 12 months. The same right to compensation also exists in the event of termination by the company. Bilia’s service and distribution agreements all contain clauses entailing that the agreement will be terminated if the company is transferred to a new owner who is not an authorised dealer or workshop for the same brand;

however, the clauses cannot be applied as long as Bilia is listed on the stock exchange.

The Board of Directors and Managing Director of Bilia AB (publ), Corp. ID no. 556112-5690, hereby submit their annual report and consolidated financial statements for financial year 2007.

Key figures

Group 2007 2006 2005

Net turnover, SEK M 15,405 14,056 12,074

Operating profit, excluding items affecting comparability, SEK M 176 130 202

Operating margin, excluding items affecting comparability, % 1.1 0.9 1.7

Operating profit, SEK M 168 109 194

Profit before tax, SEK M 142 118 190

Net profit for the year, SEK M 100 93 190

Return on capital employed, % 7.8 6.2 10.0

Return on equity, % 6.3 6.3 15.8

Net debt/equity, times 0.81 –0.02 0.69

Cash flow from operating activities, SEK M –305 446 185

Equity/assets ratio, % 21 28 22

Earnings per share, SEK 4.75 4.15 8.20

Equity per share, SEK 74 78 56

DIRECTORS’ REPORT

Group and Parent Company

Market trend

Overall demand for new cars and service in Bilia’s market areas was at a good level. The market for new cars increased in Sweden by 8 per cent, in Norway by 18 per cent and in Denmark by 4 per cent.

Notable events during the year

• Bilia’s facility in Kista in northern Stockholm stopped selling Kia in March.

• Bilia started a joint venture in March with DnB NOR in Norway under the name Bilia Lease.

• Bilia acquired all the trading subsidiaries of Hans Persson Bil AB. The purchase price was SEK 329 M and these operations have been part of the Bilia Group since May.

• Bilia acquired the business in Bilgruppen i Enköping Sala AB and Bilgruppen i Kungsängen AB. The purchase price was SEK 28 M and these operations have been part of the Bilia Group since June.

• In accordance with the decision of the AGM, the share capital was reduced in July by SEK 16,699,000 by the withdrawal of 1,669,900 own shares. The number of registered shares after the withdrawal amounts to 21,459,255.

• Acting on the authorisation of the AGM, the Board of Dir­

ectors resolved to buy back Bilia shares. As of 31 December 2007, Bilia’s holding of its own shares amounted to 1,000,000 shares, with an average price of SEK 115 per share. The An- nual General Meeting has authorised the Board to acquire a total of 2,145,925 Bilia shares.

• In September, Investment AB Öresund issued share options for 210,000 shares in Bilia AB to Board members, members of the Group Management and a number of key employees.

The options have a term of three years and the exercise price is SEK 120 per share.

• The main proceedings in the dispute between Bilia’s sub­

sidiary Säfveån and Pacta opened in the District Court of Gothenburg in October. The dispute stems from the business operations conducted by AB Probo (now Säfveån AB) in 1987. Säfveån insists that Pacta’s claim is largely unfounded and the company contests any tort liability both on formal grounds, on the merits of the case and with regard to the amount claimed.

In a judgement handed down on 20 February 2008, the District Court of Gothenburg completely dismissed Pacta’s claim against Säfveån AB. Säfveån was awarded compensa-

tion for litigation costs amounting to SEK 14 M.

• Bilia’s Board of Directors decided to sell properties in Denmark and Sweden. The sale is expected to be concluded

Sales and earnings

Net turnover amounted to SEK 15,405 M (14,056). Adjusted for exchange rate changes and comparable operations, net turnover increased by about SEK 190 M or 1 per cent. The increase is mainly attributable to increased sales of new cars.

Operating profit amounted to SEK 168 M (109). Items affect- ing comparability reduced the profit by SEK 8 M (reduction:

21). The improvement compared with last year, excluding items affecting comparability, was SEK 46 M. Operations acquired during the year, Hans Persson and Bilgruppen, are included in the profit in the amount of SEK 9 M after acquisition costs. The Car Business reported a better profit than last year, mainly due to a higher margin in car sales. The Service Business reported slightly lower earnings due to implemented restructurings in Norway, which had a negative impact on the service operation.

The result from customer financing, excluding gross profit attributable to rental income for long-term leasing of cars sold with repurchase agreements, amounted to SEK 97 M (95).

Items affecting comparability amounted to a net of SEK –8 M (–21) and consist of SEK –18 M (–11) in restructuring costs in Sweden and Norway and SEK –12 M (–9 M) in costs for disputes, mainly with the Swedish Competition Authority and Pacta.

Furthermore, Bilia’s Norwegian operation changed its pension plan from a defined-benefit to a defined-contribution plan for employees under 52 years of age, which increased the profit by SEK 22 M (—). Last year includes disposals in the amount of SEK –1 M.

Net financial items amounted to SEK –26 M (9). This includes a profit share of SEK 22 M (17) from the indirect shareholding in AB Volvofinans. Last year’s net financial items included gain from the sale of the shares in Viking Rednings- tjeneste in the amount of SEK 7 M. Higher net debt and inter- est level resulted in higher interest expenses compared with last year.

Net profit for the year amounted to SEK 100 M (93) and earnings per share to SEK 4.75 (4.15). Exchange rate changes only affected the profit marginally.

Group, SEK M 2007 2006

Operating profit, excluding

items affecting comparability 176 130 Items affecting comparability

Gain/loss from property sales — –1

Structural costs etc. –18 –11

Changed pension plan in Norway 22 —

Items affecting comparability

Investments and disposals

Investments and disposals amounted to SEK –64 M (275).

Re placement investments represented SEK 52 M (22), expan- sion investments SEK 48 M (45), environmental investments SEK 4 M (4) and investments in new construction and additions to properties SEK 31 M (3).

Net investments in leased vehicles and finance leases amounted to SEK –199 M (201).

Financial position

Total assets amounted to SEK 7,043 M (6,064). The acquisitions of Hans Persson and Bilgruppen increased total assets by about SEK 900 M. Interest-bearing assets decreased by about SEK 250 M, while operating assets increased by about SEK 330 M.

Cash flow from operating activities amounted to SEK –305 M (446). Cash flow after net investments amounted to SEK –590 M (48). Net debt increased by SEK 1,253 M during the year, amounting to SEK 1,222 M at year-end.

Equity amounted to SEK 1,507 M (1,684). Equity was affected during the quarter by a cash dividend to the shareholders of SEK 172 M and a buy-back of own shares amounting to SEK 115 M. The proposed dividend of SEK 8.00 per share makes use of SEK 164 M of equity.

The equity/assets ratio amounted to 21 per cent (28) at the end of the year.

Personnel

Skilled and motivated employees who are prepared to develop and step in when needed are a prerequisite for keeping Bilia’s customers satisfied and loyal, which is crucial for Bilia’s continued success.

The basis for the professional development of the employees is the performance appraisal interview they have at least once a year with their immediate superior. The point of departure for the employee interview is the individual’s existing know- ledge, skills and needs. Together, the employee and his superior arrive at a plan that will promote personal development, job satisfaction and efficiency in the day-to-day work.

Bilia Academy is the name of the Group’s internal training unit, which was started in 2001. Bilia Academy conducts regular surveys of the training need. Tailored trainings are then put together aimed at target groups with different duties in Bilia.

The training is aimed at enhancing competencies within specific areas, strengthening the corporate culture with Bilia’s

vision and core values, and at the same time contributing to an experience exchange and a broadened contact network for Bilia’s employees.

Bilia works continuously to improve the working environment at the Group’s facilities. A good working environment is a pre- requisite for healthy, happy and motivated employees.

The ambition in the workshops is to create environments that are light, airy, clean and quiet.

The average number of employees in the Group during the year amounted to 3,536 (3,063), of whom 2,287 (1,852) work in Sweden. The number of employees at 31 December 2007 was 3,961 (3,458).

Guidelines for remuneration to senior officers

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

The AGM for 2007 has decided on the following guidelines for compensation.

Remuneration to the Managing Director and other senior officers consists of basic salary, variable remuneration, other benefits and pension. By “other senior officers” is meant the five persons who, together with the Managing Director, make up the Group Management. For the composition of the Group Management, see Note 9, “Employees and personnel costs”.

The proportions of basic salary and variable salary should be commensurate with the individual’s powers and responsibilities.

The Managing Director’s variable remuneration should not exceed 53 per cent of his basic salary. The variable remunera- tion of other senior officers should not exceed 26–41 per cent of their basic salary. The variable remuneration is based on performance goals and individual goals.

Pension benefits and other benefits for the Managing Director and other senior officers are payable as a part of the total remuneration.

The Board of Directors will propose to the 2008 AGM that the above compensation principles should apply for 2008.

Risks

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

Financial goals

Bilia’s overall financial objectives are to achieve:

• an operating margin of at least 2.2 per cent Goals and goal fulfilment

10 15 20

5

0 05 06 07

Return on capital employed, %

10 15 20

5

0 05 06 07

Return on equity, %

07 05 06 4 3 2 1 0

Operating margin, %

Market trend

Demand for Bilia’s products and services is influenced by fluctuations in the business cycle. In recessionary periods, some customers choose to put off their car purchases. Factors that influence the market trend include the labour market situation, stock market performance, interest rates and fuel prices.

The positioning of Bilia as a service company stabilises earn- ings. The Service Business is less cyclical than the Car Business, since cars require service and repairs regardless of the state of the economy.

Increased competition

The EU’s former Block Exemption for the motor vehicle industry was abolished as of 30 September 2003, after a transition period of one year. On 1 October 2005, the so-called location clause that had enabled the manufacturers to decide where the distributors could be established was also abolished. The new rules influence competition conditions in the industry and enable the manufacturers to appoint additional distributors in the locations where Bilia is established. Given its size and strong position on the market, Bilia is confident that this will give the Group new opportunities to develop its operations.

Bilia’s size will take on added importance, for example in connection with purchasing. Multi-brand capacity and having an own strong brand will also increase in importance.

Competitiveness of the products

Bilia is dependent on the ability of the Group’s business partners to develop competitive products. Bilia’s business partners have launched a number of new products in recent years. Volvo, the most important single business partner, will launch a new model in 2008, the XC60. Ford will launch a new

Fiesta, a new Focus and a new model, the Kuga. BMW will launch five new models, including a new model, the X6, and a new car in the 7 series. Renault will launch seven new models, Hyundai will launch two new models, one of which is the new i10 green car, which is particularly important for the Stockholm market. This, together with other brands in the Group, means that Bilia has access to an attractive product range.

Development of own services

To maintain and strengthen its competitiveness, Bilia must develop services that appeal to the customers. Bilia’s ability to develop new services also helps strengthen the suppliers’

brands. This development work requires resources. Bilia is confident that the Group has the size, structure and financial strength that are required to remain in the forefront of service development.

Key persons

In order to continue developing as a service company and thereby achieve growth and profitability, Bilia must be able to attract and develop skilled employees, both management and other staff. Bilia is an employer that encourages personal advancement by offering employees interesting work duties, individualised training programmes, bonus programmes and personal involvement in the development of the Group.

For financial risks see Note 30 “Financial risks and finance policies”.

Environment

Bilia’s environmental policy states that the Group’s services and products should have as little impact on nature as possible and thereby contribute to sustainable development. The environ mental work should be pursued within the framework

Distribution of employ- ees by function, %

Distribution of employ- ees by country, %

Sweden, 66 Norway, 20 Denmark, 14

Age structure, number of employees, %

Length of employment, %

0–9 years, 51 10–19 years, 20 20–29 years, 12 30–39 years, 13

>40 years, 4

<29 years, 23 30–49 years, 47 50–60 years, 23

>61 years, 7 Sales, 18

Workshop, 57 Spare parts, 15 Administration, 10

Distribution of employ- ees by education, %

Comprehensive school/

upper secondary school, 85 University education, 4 Post-secondary educ, 11

Personnel

of the business concept and be governed by a holistic approach in which technology, economics and ecology are weighed together.

Waste separation is another priority. Environmentally hazardous waste is managed in accordance with carefully planned procedures. Bilia also has systems, both proprietary and developed together with its partners, for managing and recycling waste from service and residual products from repairs. Bilia’s employees are given training in environmental issues and receive environmental information regularly. All of

The Group conducts activities that are subject to notification in accordance with the Environmental Code. In Sweden, 55 facilities are obligated to submit notification to the authorities due to petrol sales where no emissions may occur, 14 car washes due to effluents, and 9 facilities due to solvent emissions to the atmosphere. Activities requiring notification represent a small portion of Bilia’s total operations.

History of car sales

in Sweden, Norway and Denmark

05 03

96 97 98 99 00 01 02 04 06 07

400,000 300,000 200,000 100,000 0

Sweden Norway Denmark

Number of new cars

Return on operational Key figures Net turnover, SEK M Operating profit, SEK M Operating margin, % capital employed, %

2007 2006 2005 2007 2006 2005 2007 2006 2005 2007 2006 2005

Sweden 9,783 8,717 8,346 222 206 234 2.3 2.4 2.8 21.7 28.6 34.4

Norway 3,548 3,331 2,293 15 –5 14 0.4 –0.2 0.6 2.3 –0.9 4.8

Denmark 2,065 1,997 1,433 –11 –10 8 –0.5 –0.5 0.6 –2.6 –2.5 3.3

Total Cars 15,396 14,045 12,072 226 191 256 1.5 1.4 2.1 10.6 11.4 19.4 Number of new cars

Deliveries

Order backlog

2007 2006 2005 2007 2006 2005 Sweden 23,336 21,231 18,925 2,991 2,507 3,091

Norway 6,459 5,644 4,063 1,231 692 377

Denmark 6,719 6,909 4,242 514 475 460

Total Cars 36,514 33,784 27,230 4,736 3,674 3,928

1)

As from 2007, transport vehicles are included in the reported number of units. The comparative figures have also been adjusted for transport vehicles.

Service and Car Business

Net turnover, SEK M Operating profit/loss, SEK M Operating margin, % 2007 2006 2005 2007 2006 2005 2007 2006 2005

Service Business 4,792 4,461 4,118 233 246 288 4.9 5.5 7.0

Car Business 11,388 10,325 8,466 –7 –55 –33 –0.1 –0.5 –0.4

Cars divided into Service and Car Businesses

Share of Cars’ net turnover, %

Share of Cars’

employees, %

07 05 06 25 20 15 10 5 0

Growth, Service, %

07 05 06 25 20 15 10 5 0

Growth, Car, %

Service, 80 Car, 20 Service, 30

Car, 70

Cars

Disclosure of acquisition, transfer and holding of own shares

During 2006, Bilia acquired 1,669,900 of its own shares for a total of SEK 164 M, equivalent to a shareholding of 7.2 per cent. Bilia’s own shareholding at the time of the AGM was 1,669,900 shares. The 2007 AGM decided to reduce the share capital by SEK 16,669,000 by withdrawal of 1,669,900 own shares.

The purpose of the reduction was to free restricted capital for the benefit of non-restricted funds. The reduction was implemented during the summer, leaving Bilia with no holding of its own shares.

The 2007 AGM also gave the Board of Directors a new authorisation to buy back no more than 10 per cent of the company’s own shares.

A new share buy-back programme was initiated in August 2007, and since then Bilia has acquired 1,000,000 for a total of SEK 115 M. Bilia’s holding of own shares as of 31 December 2007 amounted to 1,000,000 shares, equivalent to a share- holding of 4,7 per cent. Bilia’s shares have a quotient value of SEK 10. The purpose of all buy-backs has been to optimise the company’s capital structure.

The work of the Board

One post-election meeting and five ordinary board meetings were held during 2007. In addition to the above meetings, the Board also met once by correspondence. An agenda, along with in-depth information on important matters, is sent to each Board member in good time before each Board meeting. The Board dealt with such items of business as strategy, financial goals, follow-up of results, investments, property, acquisitions and follow-up of a dispute with the Swedish Competition Authority and Pacta.

During the year the Board decided to acquire Hans Persson, Bilgruppen and Bilforum.

Parent Company

Bilia AB is responsible for the Group’s management, strategic planning, financing, accounting, public relations and business development. Furthermore, Bilia AB conducts training and IT activities, mainly for companies in the Group. The Parent com- pany’s operating loss amounted to SEK 50 M (loss: 60). Last year’s operating loss includes SEK 2 M in costs for disputes.

Future outlook

Bilia predicts that the total market in Sweden, Norway and

Events after the balance sheet date

Bilia sold a property in Västerås to Aspholmen Fastigheter AB.

The capital gain after tax is estimated at about SEK 5 M and total assets are reduced by about SEK 50 M.

A judgement in the dispute between Bilia’s subsidiary Säfveån and Pacta was announced on 20 February 2008. The District Court of Gothenburg completely dismissed Pacta’s claim for damages against Säfveån. Säfveån was awarded compensation for litigation costs amounting to SEK 14 M.

Proposed treatment of unappropriated earnings The Board of Directors proposes that the earnings available for distribution, SEK 886 M, be disposed of as follows:

SEK M

Cash dividend, SEK 8.00 per share 164

To be carried forward 722

Total 886

Statement of Board of Directors regarding proposed distribution of profits

The Group’s equity has been calculated according to the accounting rules set forth in the International Financial Reporting Standards (IFRSs). The Parent Company’s equity has been calculated according to the Swedish Financial Accounting Standards Council’s recommendation RR 32:06,

“Accounting for Legal Entities”.

The proposed dividend consists of a cash dividend of SEK 8.00 per share, totalling SEK 164 M. The Group’s equity/

assets ratio amounts to about 20 per cent after the proposed dividend totalling SEK 164 M.

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

It is the judgment of the Board of Directors that the com- pany’s and the Group’s equity after the proposed distribution of profits and shares 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 and investment plans and the general economic situation.

The financial statements were approved for publication by

the Parent Company’s Board of Directors on 27 February

SEK M Note 2007 2006 Continuing operations

Net turnover 2, 3, 6 15,405 14,056

Cost of goods sold 6 –13,021 –11,869

Gross profit 2,384 2,187

Other operating revenues 7 23 11

Selling expenses –1,775 –1,629

Administrative expenses 10 –442 –446

Other operating expenses 8 –22 –14

Operating profit 3, 9, 11 168 109

Financial income 97 99

Financial expenses –145 –107

Shares in profits of

associated companies 17 22 17

Net financial items 12 –26 9

Profit before tax 142 118

Tax 13 –42 –30

Profit for the year from

continuing operations 100 88

Profit from discontinued

operation, net after tax 4 — 5

Net profit for the year 100 93

Attributable to:

Parent Company’s shareholders 100 93

Earnings per share, SEK 14

Group

Basic and diluted earnings per share 4.75 4.15 Proposed dividend per share 8.00

Continuing operations

Basic and diluted earnings per share 4.75 3.90 Proposed dividend per share 8.00

Performance analysis, Group

Operating profit Profit before tax

SEK M 2007 2006 2007 2006

Profit excluding items affecting comparability 176 130 150 132

Items affecting comparability

Gain from sale of property/shares — –1 — 6

Structural costs etc. –18 –11 –18 –11

Changed pension plan in Norway 22 — 22 —

Disputes –12 –9 –12 –9

07 05 06 15,000 10,000 5,000 0

Net turnover, SEK M

Net turnover increased by 10 per cent to SEK 15,405 M. The increase is attributable for the most part to the acquisitions made during the year. Net turnover excluding acquisitions and currency effects increased by 1 per cent or SEK 190 M. The increase is mainly attributable to sales of new cars.

07 05 06

0 –10 –20 10

–30

Net financial items, SEK M

Net financial items decreased to SEK –26 M (9). The decrease is mainly due to higher net debt and a higher interest level resulting in increased interest expenses. The profit share from the indirect holding in Volvo- finans amounted to SEK 22 M (17).

Operating profit, excluding items affecting comparability, SEK M

SEK M

07 05 06 300 200 100 0

% 3 2 1 0

Operating profit excluding items affecting profitability increased to SEK 176 M from SEK 130 M. Sweden increased by SEK 27 M and Norway by SEK 20 M, while Denmark de crea sed by SEK 1 M. The operating margin increased from 0.9 per cent to 1.1 per cent.

Operating profit, excluding items affecting comparability, SEK M Operating margin, %

Operating profit, excluding items affecting comparability per quarter, SEK M

Q1 60

90

1 2 3

SEK M %

Q2 Q3 Q4

06 06 06 06

05 07 05 07 05 07 05 07

30

0 0

The Group’s operating profit for the individual quarters of 2007 was better compared with 2006, in particular for the first quarter. This was mainly attributable to a strong Car Business with a higher gross profit margin. The operating margin declined slightly during the fourth quarter compared with last year: 1.5 per cent compared with 1.6 per cent.

Operating profit, excluding items affecting comparability, SEK M Operating margin, %

CONSOLIDATED INCOME STATEMENT

Net turnover

Net turnover increased by 10 per cent to SEK 15,405 M (14,056). The increase is primarily attributable to the acquisi- tions of Bilgruppen and Hans Persson. If net turnover is adjusted for acquisitions and exchange rate changes, the increase was about SEK 190 M or 1 per cent. The primary cause of the increase is sales of new cars.

The Service Business increased net turnover by SEK 331 M to SEK 4,792 M or 7 per cent (8).

If acquisitions and exchange rate effects are excluded, net turnover was unchanged. The Swedish Service Business was unchanged (–2). The Danish Service Business declined by 2 per cent (–1), while the Norwegian Service Business increased by 4 per cent (11).

Net turnover in the Car Business increased by SEK 1,063 M to SEK 11,388 M, which is equivalent to 10 per cent (22). Ad- justed for comparable units and exchange rate effects, net turnover increased by 2 per cent. The Swedish Car Business was unchanged, the Norwegian increased by 4 per cent and the Danish increased by 5 per cent.

Operating profit

The Group’s operating profit amounted to SEK 168 M, an increase of SEK 59 M compared with last year. The operat- ing margin increased to 1.1 per cent compared with 0.8 per cent for 2006.

In Sweden, operating profit increased by SEK 16 M to SEK 222 M. If operating profit is adjusted for acquisitions, the increase was SEK 7 M. In Norway, the operating results increased from a loss of SEK 5 M to a profit of SEK 15 M.

The reason for the improvement was above all a better Car Business. In Denmark, the operating result was virtually unchanged, compared with last year: a loss of SEK 11 M.

A slightly weaker Service Business was compensated for by a marginally better Car Business.

The result from customer financing, excluding gross profit attributable to rental income from long-term leasing of cars sold with repurchase agreements, amounted to SEK 97 M (95).

Profit shares to employees in the Group reduced the oper- ating profit by SEK 17 M (14).

Items affecting comparability

Operating profit excluding items affecting comparability amounted to SEK 176 M, an increase of SEK 46 M or 35 per cent compared with last year. The operating margin increased from 0.9 per cent to 1.1 per cent.

Items affecting comparability reduced the profit by SEK 8 M (reduction: 21). The change relates to restructuring costs in Sweden and Norway of SEK 18 M (11) and costs for disputes, mainly with the Swedish Competition Authority and Pacta, of

Net financial items

Net financial items amounted to an expense of SEK 26 M (income: 9), which is SEK 35 M worse than last year. The profit share from the indirect holding in Volvofinans is included in the amount of SEK 22 M (17). Last year’s net financial items include SEK 7 M from the sale of shares in Viking Redningstjeneste in the Norwegian operation. Net debt increased by SEK 1,253 M during the year to SEK 1,222 M, which, together with a higher interest level, resulted in increased interest expenses.

Profit before tax

Profit before tax amounted to SEK 142 M (118), an increase of SEK 24 M or 21 per cent.

Items affecting comparability

Profit before tax excluding items affecting comparability amounted to SEK 150 (132), which is equivalent to an increase of 14 per cent.

Items affecting comparability reduced the profit before tax by SEK 8 M (reduction: 14). The change relates to restructuring costs in Sweden and Norway of SEK 18 M (11) and costs for disputes, mainly with the Swedish Competition Authority and Pacta, of SEK 12 M (9). Bilia’s Norwegian operation changed its pension plan from a defined-benefit to a defined-contribution plan for employees under 52 years of age, which increased the profit by SEK 22 M (—). Last year includes disposals in the amount of SEK –6 M.

Net profit for the year

Net profit for the year amounted to SEK 100 M (93). This is equivalent to earnings per share of SEK 4.90 (4.35), based on the number of shares outstanding. Last year’s profit was affected positively in the amount of SEK 5 M by the spin-off of Catena AB.

The tax expense was SEK 42 M (30), which is equivalent to 30 per cent (25). Corporate tax is based on the tax expense in the relevant country.

Key ratios

Return on capital employed increased from 6.2 per cent to 7.8 per cent. Return on equity was unchanged at 6.3 per cent.

Items affecting comparability

Return on capital employed, excluding items affecting comparability, increased from 6.9 per cent to 8.1 per cent.

COMMENTS ON THE CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

SEK M Note 2007 2006

Assets 5, 29, 32

Non-current assets

Intangible assets 15

Intellectual property 133 86

Goodwill 124 91

257 177

Plant, property and equipment 16

Land and buildings 315 47

Construction in progress 15 0

Equipment, tools, fixtures and fittings 357 299

Leased vehicles 1,811 1,922

2,498 2,268

Long-term investments

Interests in associated companies 17 238 186

Financial investments 18, 30 10 10

Long-term receivables 19 32 27

Deferred tax assets 13 92 79

372 302

Total non-current assets 3,127 2,747

Current assets Inventories

Merchandise 20 2,529 1,995

Current receivables

Current tax assets 13 23 16

Trade receivables 21 965 789

Deferred expenses and accrued income 22 111 152

Other receivables 19 92 101

Short-term investments 18, 30 99 143

Cash and cash equivalents 23 97 121

1,387 1,322

Total current assets 3,916 3,317

Total assets 3 7,043 6,064

CONSOLIDATED BALANCE SHEET

SEK M Note 2007 2006

Equity and liabilities 5, 29, 32

Equity

Share capital 215 231

Reserves 4 –6

Retained earnings including net profit for the year 1,288 1,459

Total equity 1,507 1,684

Non-current liabilities

Non-current interest-bearing liabilities 24, 30 717 142

Other non-current liabilities 27 944 1,028

Provisions for pensions 25 297 245

Other provisions 26 7 2

Deferred tax liabilities 13 189 115

Total non-current liabilities 2,154 1,532

Current liabilities

Current interest-bearing liabilities 24, 30 669 104

Trade payables 1,167 1,239

Current tax liabilities 14 2

Other liabilities 27 972 981

Accrued expenses and deferred income 28 519 488

Other provisions 26 41 34

Total current liabilities 3,382 2,848

Total liabilities 5,536 4,380

Total equity and liabilities 3 7,043 6,064

Pledged assets and contingent liabilities for the Group

Pledged assets 33 277 368

Contingent liabilities 33 4,306 3,628

The Group’s balance sheet total increased from SEK 6,064 M to SEK 7,043 M during the year, an increase of SEK 979 M.

Operations acquired during the year increased the balance sheet total by about SEK 900 M.

Operating assets increased by about SEK 330 M, mainly due to increased stocks of used cars. Interest-bearing assets decreased by about SEK 250 M.

Financing

Net debt amounted to SEK 1,222 M, compared with a net receivable of SEK 31 M last year. The increase of SEK 1,253 M

Equity

Equity decreased from SEK 1,684 M to SEK 1,507 M during the year, a decrease of SEK 177 M. Dividend to shareholders amounted to SEK 172 M, while buy-back of own shares am oun- ted to SEK 115 M. See the table on page 11 for details on the change in equity.

Key ratios

The rate of turnover of capital employed amounted to a multiple of 5.8, compared with 6.0 last year, while the rate of turnover of total capital was unchanged at 2.4.

COMMENTS ON THE CONSOLIDATED BALANCE SHEET

Shares Share Translation Retained earnings incl. Total

SEK M Outstanding capital reserve net profit for the year equity

Opening equity 1 Jan. 2006 23,129,155 231 5 1,050 1,286

Buy-back of own shares (1,669,900 shares) — — — –164 –164

Dividend (SEK 8.00 per share) — — — –185 –185

Spin-off, Catena

— — — 665 665

Exchange rate difference — — –11 — –11

Net profit for the year — — — 93 93

Closing equity 31 Dec. 2006 23,129,155 231 –6 1,459 1,684

Opening equity 1 Jan. 2007 23,129,155 231 –6 1,459 1,684

Buy-back of own shares (1,000,000 shares) — — — –115 –115

Dividend (SEK 8.00 per share) — — — –172 –172

Reduction of share capital –1,669,900 –16 — 16 —

Exchange rate difference — — 10 — 10

Net profit for the year — — — 100 100

Closing equity 31 Dec. 2007 21,459,255 215 4 1,288 1,507

1)

The spin-off utilised SEK 600 M of the Group’s equity.

Furthermore, an internal profit of SEK 1,265 M was realised at the time of the spin-off.

SUMMARY OF CHANGES IN CONSOLIDATED EQUITY

Translation reserve

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

Retained earnings including net profit for the year

Retained earnings including net profit for the year include

earnings in the Parent Company and its subsidiaries. Previous

provision to the statutory reserve, excluding transferred share

premium reserves, is included in this equity item.

Cash flow from operating activities

Cash flow from operating activities amounted to SEK –305 M, compared with SEK 446 M last year. Inventories increased by SEK 293 M and operating liabilities decreased by SEK 435 M.

Investing activities

Investments and disposals in non-current assets, including leased assets, amounted to SEK –64 M (275). Replacement

Remaining after net investments

Cash flow from operating activities was SEK –305 M (446), while cash flow from investing activities was SEK –285 M (–398), which means that cash flow after net investments amounts to SEK –590 M, compared with SEK 48 M last year.

Financing activities

Debts increased by SEK 802 M (499). Dividends to shareholders

COMMENTS ON THE CONSOLIDATED CASH FLOW STATEMENT

SEK M Note 2007 2006

Operating activities 35

Operating profit 168 109

Interest received 9 9

Interest paid –60 –23

Dividends received 0 0

Other financial items 25 23

Depreciation/amortisation and impairment losses 295 246

Other items not affecting cash 18 44

Tax paid –33 –40

Cash flow from operating activities

before change in working capital 422 368

Change in inventories –293 –54

Change in operating receivables 1 –136

Change in operating liabilities –435 268

Cash flow from operating activities –305 446

Investing activities

Investments and disposals in non-current assets 64 –275

Interest-bearing receivables 3 –16

Business combinations –352 –107

Cash flow from investing activities –285 –398

Remaining after net investments –590 48

Financing activities

Change in bank loans and other loans 802 499

Dividend to shareholders and share buy-back –287 –349

Cash and cash equivalents Catena — –18

Cash flow from financing activities 515 132

Change in cash and cash equivalents, excluding translation differences –75 180

Exchange difference in cash and cash equivalents 4 –5

Change in cash and cash equivalents –71 175

Cash and cash equivalents at start of year 258 83

Cash and cash equivalents at year-end 187 258

CONSOLIDATED CASH FLOW STATEMENT

Compliance with standards and legislation

The consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), as approved by the European Commission for application within the EU. Furthermore, the Swedish Financial Accounting Standards Council’s recommendation RR 30:06 “Supplementary Rules for Consolidated Financial Statements” has been applied.

The Parent Company applies the same accounting principles as the Group, except in the cases described in the section entitled “Parent Company accounting principles”.

The annual report and the consolidated accounts were approved for publication by the Board of Directors on 27 February 2008. The Consolidated Income Statement and Balance Sheet and the Parent Company Income Statement and Balance Sheet will be subject to adoption at the Annual General Meeting of Shareholders (AGM) that will be held on 17 April 2008.

Basic principles in preparation of Parent Company and consolidated financial statements

Assets and liabilities are measured at costs, 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 and financial assets classified as financial assets measured at fair value via the Income Statement or available-for-sale financial assets.

Non-current assets and disposal groups held for sale are carried at the lower of the previous carrying amount and the fair value less selling expenses.

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

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

The estimates and judgements are regularly reviewed.

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

Estimates by management related to the application of IFRSs that have a significant impact on the financial statements

and estimates that may entail significant adjustments in the financial statements of subsequent years are described in greater detail in Note 37, “Significant estimates and judge- ments”.

Key applied accounting principles

The Group accounting principles presented below have been consistently applied to all periods presented in the consolidated financial statements, unless otherwise stated below. The Group accounting principles have been applied consistently to the reporting and consolidation of parent companies, subsidiaries and associated companies.

Changed accounting principles

The following new standards and interpretations have been applied in the preparation of the financial statements for 2007:

IFRS 7 “Financial instruments: Disclosures” and related changes in IAS 1 “Presentation of Financial Statements” impose requirements on extensive disclosures concerning the impor- tance of financial instruments for the company’s financial posi- tion and performance as well as qualitative and quantitative disclosures concerning the nature and scope of risks. IFRS 7 and related changes in IAS 1 have entailed additional dis- closures in the consolidated financial statements for 2007 with respect to the Group’s financial goals and capital management.

The standard has not led to a change in accounting principle, but merely changes in the disclosure requirements regarding financial instruments.

IFRIC 10 “Interim Financial Reporting and Impairment” pro- hibits reversal of impairment losses that have been recognised in a previous interim period in respect of goodwill or an invest- ment in either an equity instrument or a financial asset carried at cost. IFRIC 10 will be applied in the consolidated financial statements for 2007. The interpretation will be applied prospec- tively from the time the Group first started applying the impair- ment rules in IAS 36 and the measurement rules in IAS 39, i.e.

in respect of goodwill 1 January 2004 and in respect of financial instruments 1 January 2005. Since no such reversals have taken place, the interpretation has no effects on the consolidated financial statements.

New IFRS standards and interpretations that have not yet begun to be applied

A number of new standards, changes in standards and inter- pretations enter into force as of financial year 2008 or 2009 and have not been applied in the preparation of these financial statements.

IFRS 8 “Operating Segments” defines what an operating segment is and what information must be disclosed about

NOTE 1 | ACCOUNTING PRINCIPLES

Amounts in SEK M unless otherwise stated.

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

Changes in IAS 23 “Borrowing Costs” state that borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that takes a substantial period of time to get ready for their intended use or sale must be capitalised. The standard is applicable to financial years starting on 1 January 2009 or later.

IFRIC 13 “Customer Loyalty Programmes” addresses accounting and measurement of a company’s obligations to provide customers with free or discounted goods or services if and when they choose to redeem loyalty award credits. The interpretation is applied to financial years starting on 1 July 2008 or later.

IFRIC 14 IAS 19 — “The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”

addresses how certain funding requirements interact with IAS 19 regarding the limit on a defined-benefit asset. The interpretation is applied to financial years starting on 1 July 2008 or later.

The above standards are not judged to have any effects on the consolidated financial statements.

Presentation etc.

Non-current assets and non-current liabilities in the Parent Company and the Group consist for the most part solely of amounts that are expected to be recovered or paid more than twelve months after the balance sheet date. Current assets and current liabilities in the Parent Company and the Group consist for the most part solely of amounts that are expected to be recovered or paid within twelve months of the balance sheet date. Any departure from this principle is reported in a note to the relevant line item.

Segment reporting

A segment is a distinguishable component of the Group that either provides products or services that are different from those of other segments (business segments), or products or services within a certain economic environment (geographical segments), and that is subject to risks and returns that are different from those of other segments.

The Group’s internal reporting system is designed to keep track of the rate of return on the Group’s sales of goods and services, which is why the business segments are the primary segment reporting format.

Segment information is disclosed in accordance with IAS 14 only for the Group.

Consolidation principles Subsidiaries

Subsidiaries are companies that are under the control of Bilia AB. Control is the power to govern, directly or indirectly, the financial and operating policies of an enterprise so as to obtain benefits from its activities.

Subsidiaries are accounted for by the purchase method.

The consolidated cost is established at the acquisition date in an acquisition plan. The difference between the cost of the subsidiary shares and the fair value of identifiable assets, liabilities and contingent liabilities constitutes goodwill on consolidation.

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

Associated companies

Associated companies are those companies in which the Group has a significant, but not a controlling, influence over the operational and financial direction of the company, normally through shareholdings giving them between 20 and 50 per cent of the votes. As from the point in time when the significant influence is exercised, interests in associated companies are recognised in the consolidated accounts in accordance with the equity method. The equity method entails that the value of the shares in the associated companies carried in the consoli- dated accounts is equivalent to the Group’s share of the asso- ciated companies’ equity plus goodwill on consolidation and any other remaining amounts of consolidated positive or nega- tive goodwill. The Group’s share of the associated companies’

net profits after tax and minority interest adjusted for amorti- sation, impairment or dissolution of acquired positive or nega- tive goodwill is recognised in the Consolidated Income State- ment as “Shares in profits of associated companies”. Dividends received from associated companies reduce the carrying amount of the investment.

Any difference on the date of acquisition between the cost of the holding and the investor’s share of the net fair value of the associated company’s identifiable assets, liabilities and contingent liabilities is recognised in accordance with IFRS 3,

“Business Combinations”.

When the Group’s share of recognised losses in the associ-

ated company exceeds the carrying amount of the investment

in the Group, the carrying amount of the investment is reduced

to zero. Deduction for losses is also made against long-term

financial dealings without security, whose financial implications

constitute part of the investor’s net investment in the associ-

ated company. Continued losses are not recognised unless the

Group has made guarantees to cover losses arising in the asso-

ciated company. The equity method is applied until such time

as the significant influence ceases to exist.

Transactions eliminated on consolidation

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

Foreign currencies

Transactions in foreign currencies

Transactions in foreign currencies are translated to the func- tional currency at the exchange rate prevailing on the trans- action date. Monetary assets and liabilities in foreign currencies are translated to the functional currency at the rate prevailing on the balance sheet date. Exchange rate differences arising from translations are recognised in the Income Statement.

Non-monetary assets and liabilities recognised at their costs are translated at the exchange rate prevailing at the time of the transaction. Non-monetary assets and liabilities recognised at fair value are translated to the functional currency at the rate prevailing at the time the fair value was established.

Financial statements of foreign entities

Assets and liabilities in foreign entities, including goodwill and other corporate fair value adjustments, are translated to Swedish kronor at the rate prevailing on the balance sheet date. Revenue and expenses in foreign entities are translated to Swedish currency at an average rate which constitutes an approximation of the rates prevailing at the time the transaction.

Translation differences that arise when translating the accounts of foreign entities are recognised immediately in equity as a translation reserve.

On disposal of a foreign entity, the accumulated translation differences attributable to the entity are recognised in the Consolidated Income Statement.

Since 1 January 2004, i.e. the date of transition to accounting according to IFRS, translation differences have been recognised in the translation reserve included in equity.

Revenue Sale of goods

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

In cases where the sale of a product is combined with a future repurchase commitment at a guaranteed residual value, the transaction is reported as a lease, provided that the seller 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.

Performance of service work

Revenue from service work is recognised in the Income Statement based on the stage of completion on the balance sheet date (percentage of completion method). The stage of completion is determined by an assessment of services rendered and material employed at the balance sheet date.

Leasing of cars

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

Commissions on financial assets

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

Leasing

Operating leases – Lessees

Costs pertaining to operating leases are recognised in the Income Statement on a straight-line basis over the lease period.

Benefits obtained in conjunction with the signing of a lease are recognised as a reduction in the lease payments on a straight- line basis over the term of the lease. Variable payments are recognised as expenses in the periods they are incurred.

Finance leases – Lessees

Minimum lease payments are allocated between interest expense and amortisation of the outstanding liability. The interest expense is allocated over the lease period so that each accounting period is charged with an amount corresponding to a fixed rate of interest for the liability recognised during that period. Variable payments are recognised as expenses in the periods they are incurred.

Financial income and expenses

Financial income consists of interest income on invested funds (including available-for-sale financial assets), dividend income, gain on disposal of available-for-sale financial assets, gain on change in value of financial assets measured at fair value via the Income Statement and gains on hedging instruments recognised in the Income Statement.

Interest income on financial instruments is recognised

according to the effective interest method (see below). Dividend

income is recognised when the right to receive dividend has

been established. The gain or loss from disposal 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 dissolution of present value calculation of provisions, loss on change in value of financial assets measured at fair value via the Income Statement, recognition of impairment of financial assets and losses on hedging instruments recognised in the Income Statement. All borrowing costs are recognised in profit or loss with application of the effective interest method, regardless of how the borrowed funds have been used.

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 asset to the net carrying amount of the financial asset. The calculation includes all fees paid or received by the contracting parties that are a part of the effective interest rate, transaction costs and all other premiums or discounts.

Result from customer financing

The Group’s customer financing is extensive and accounts for a considerable portion of consolidated profit. Concentration on the core operation has led to an increase in the importance of customer financing in terms of being able to both analyse the Group’s performance and forecast the Group’s future earnings potential.

Long-term leases, instalment receivables, current net return on financial contracts transferred to AB Volvofinans, and other commissions associated with financing that have been trans- ferred to finance companies are presented in Note 6, “Result from customer financing”.

Taxes

Income taxes consist of current tax and deferred tax. Income taxes are recognised in the Income Statement except when the underlying transaction is posted directly to equity, whereby the associated tax effect is recognised in 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.

This item 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. The following temporary differences are not taken into account:

temporary difference arising on initial recognition of goodwill, initial recognition of assets and liabilities that are not business

combinations and at the time of the transaction do not affect either recognised or taxable profit, and temporary differences attributable to interests in subsidiaries and associated com- panies that are not expected to be reversed in the foreseeable future. The valuation of deferred tax is based on how recog- nised values of 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 reported to the extent that it is likely that they will be able to be used. The value of deferred tax assets is reduced when it is no longer deemed likely that they can be used.

Financial instruments

Financial instruments that are recognised in the Balance Sheet include on the asset side cash and cash equivalents, loans receivable, trade receivables, financial investments and derivatives. Trade payables, loans payable and derivatives are posted on the liability side.

Recognition and derecognition in the Balance Sheet A financial asset or financial liability is recognised in the Balance Sheet when the company becomes a party to the contractual terms of the instrument. Trade debtors are recog- nised in the balance sheet when an invoice has been sent. A liability is recognised when the counterparty has performed its contractual obligations and there is a contractual obligation to pay, even if no invoice has been received. Trade creditors are recognised when an invoice has been received.

A financial asset is derecognised when the entitlements in the contract are realised, mature, or fall outside the control of the company. The same applies to part of a financial asset. A financial liability is derecognised 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 recognised in the Balance Sheet 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 acquisition or disposal of financial assets is recognised

on the trade date, which is the day when the company com-

mitted to acquire or dispose of the asset.