Annual General Meeting
The Annual General Meeting of Bilia AB is the highest decision-making body in the Bilia Group. At the AGM the shareholders exercise their right to vote in order to make decisions regarding the composition of the Board and in other important matters. The instructions issued by the AGM in 2006 are followed for the nomination of Board members. The AGM is regulated by the Swedish Companies Act, the Articles of Association and the Swedish Code of Corporate Governance.
Annual General Meeting 2006
At Bilia’s Annual General Meeting on 19 April 2006, the proposed cash dividend of SEK 8.00 per share (7.50) was approved, as was the spin-off in the form of a distribution of shares in the subsidiary Catena AB. The shareholders received one share in Catena AB for every two shares in Bilia. The record date was set at 24 April 2006.
The AGM decided to re-elect Heinrich Blauert, Jack Forsgren, Sven Hagströmer, Jan Pettersson, Jon Risfelt, Mats Årjes and Mats Qviberg and to elect Mats Holgerson, Ingrid Jonasson Blank and Eva Cederbalk for the first time. The AGM re-elected Mats Qviberg as Chairman.
The AGM decided unanimously to authorise the Board to buy back the company’s own shares and to approve the transfer of such acquired shares as payment in conjunction with a possible company acquisition. Furthermore, the Board of Directors was authorised to raise loans in accordance with Chapter 11 Section 11 of the Swedish Companies Act. A new Articles of Association was adopted, mainly to conform to the new Companies Act.
The Nominating Committee submits proposals to the AGM for Board members and auditors (if an election is forthcoming) and for fees to be paid to the Board members and the auditors. The committee is also supposed to propose fees for the work of Board members in special committees. The Nominating Committee has five members, including the Chairman of the Board, Mats Qviberg. Six months before the AGM, the four largest shareholders each appoint one person to the Nominating Committee. The members of the Nominating Committee appoint a chairman. Per-Erik Mohlin, SEB Fonder, Hans Hedström, HQ Fonder, Stefan Dahlbo, Investment AB Öresund, and Nils Petter Hollekim, Odin Fonder, were appointed along with Mats Qviberg to the Nominating Committee in October 2006.
The Nominating Committee welcomes proposals and viewpoints from shareholders and can most easily be contacted via Bilia’s website or by e-mail: firstname.lastname@example.org. Up until the writing of this annual report, the Nominating Committee has met two times. In the course of its work, the Nominating Committee has gathered information regarding the experience of Bilia’s Board members and their possible dependency on Bilia and has also examined the evaluation of the Board’s work that is compiled every year.
Board of Directors
The Board of Directors of Bilia AB consists of ten members elected by the AGM, including the Managing Director of Bilia AB, plus two members and two deputies who represent the employees. The AGM-elected members are elected for one year. There is no limit to how long a member can sit on the Board. The duties of the Board are regulated by the Swedish Companies Act and the Articles of Association. Bilia also complies with the Swedish Code of Corporate Governance; departures have been made from the Code regarding the minimum number of members of the Audit Committee (3.8.2 of the Swedish Code of Corporate Governance). The Board of Directors believes that the tasks of the committee can be performed by two members without compromising the quality of the committee’s work.
The work of the Board of Directors conforms to annually adopted rules of procedure governing the items of business to be dealt with at each ordinary meeting and the division of labour within the Board, with special duties for the Chairman and the committees appointed within the Board. The rules of procedure also include rules for financial reporting to the Board and more detailed rules regarding the Managing Director’s powers and responsibilities. The ultimate aim of the deliberations and decisions of the Board is to promote the interests of the shareholders in terms of value growth and return on investment. The Board of Directors is also responsible for judging risks and has rules governing decision-making procedures, financial reporting and financing. In addition, the Board has rules governing quality, environment, ethics, information, human resources, IT activities and security and special guidelines to ensure compliance with competition legislation. Measures to progressively strengthen the Bilia brand are also considered by the Board.
The work of the Board during 2006
One post-election meeting and five ordinary board meetings were held during 2006. All Board members were present at all meetings, with the exception of Mats Årjes, who was unable to attend one of the meetings. In addition to the above meetings, the Board also met by correspondence five times. 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, properties, acquisitions and follow-up of a dispute with the Swedish Competition Authority. During the year the Board decided to acquire the Norwegian Tronrud Group, which has added the makes BMW, Honda, Nissan and Mini to the Bilia Group’s product range. Bilia’s property company Catena AB was spun off and distributed to Bilia’s shareholders and listed on the stock exchange. A restructuring took place in Göteborg, resulting in closure of the facility on Hisingen. In Stockholm, Bilia will commence sales of Ford, and negotiations have been undertaken regarding acquisition of the business in Bilgruppen, which sells Ford and Mazda in the Stockholm region.
On one occasion the Board met the auditors, who shared their observations with the Board.
The Chief Financial Officer of Bilia AB, Gunnar Blomkvist, has been secretary of the Board since the end of 2004.
The Compensation Committee’s task is to submit proposals to the Board regarding terms of compensation, including bonus, for the Managing Director and other senior officers. The committee presents its conclusions to the AGM, which makes decisions regarding fees. The committee also submits proposals to the Board for variable compensation to senior officers in subsidiaries and a bonus system for other employees. The terms for bonuses are always related to that part of the company’s performance that lies within the individual’s control. All variable compensation has a maximum limit in relation to the fixed compensation. Mats Qviberg, Heinrich Blauert and Jack Forsgren were appointed members of the Compensation Committee during 2005. The chairman of the committee is Jack Forsgren. During the year the Compensation Committee held one meeting which was attended by all members.
The Audit Committee consists of two members: Heinrich Blauert and Jack Forsgren. The principal duties of the Audit Committee are review of business environment and legal risks, review of the control environment with regard to internal and external audit, monitoring of the financial reporting, and review of the internal and external audit process. The Audit Committee held three meetings during the year. Bilia’s auditors participated at all the meetings. The work of the committee has been based on material and information from the Group Management and the auditors as well as from the company’s legal counsel and its insurance advisers. The meetings were held in the presence of the Group’s Managing Director and Chief Financial Officer.
The work was characterised by knowledge, transparency and insight.
The Board’s statement regarding internal control
This statement has been prepared in accordance with the Swedish Code of Corporate Governance and complies with the application instruction issued by the Swedish Corporate Governance Board on 5 September 2006. The statement is limited to internal control regarding financial reporting and does not constitute a part of the formal annual accounts. The Board of Directors bears ultimate responsibility for ensuring that Bilia’s internal control works satisfactorily and that adequate financial reports are presented.
Under the Swedish Companies Act, the Board is responsible for Bilia’s organisation and management. It is the responsibility of the Board that Bilia’s accounting, management of funds and financial situation in general includes satisfactory controls. This responsibility cannot be delegated but always rests with the Board of Directors. Bilia’s control environment is based on the communication of clear guidelines to all subsidiaries to ensure that the same rules and principles are applied in the Group’s different companies and within each business area and that the necessary tools are in place out in the subsidiaries to enable them to report back to Bilia AB in a correct and uniform manner. A balanced risk analysis is performed by the Board, and significant risks within the Group are identified. Guidelines are issued within the Group to inform and instruct concerned persons how to manage and minimise or, if possible, eliminate these risks. Some control is exercised manually, while other control procedures are built into the system solutions that are used within the organisation. The information flow within the Group is channelled to the right persons at the right time to ensure that mistakes are avoided. All concerned personnel shall have access to correct information in order to make well-balanced decisions and ensure that the financial reporting is always up-to-date and in keeping with the latest directives. Issued handbooks and guidelines etc. are subject to continuous review and updating to take into account changes in the business or external circumstances.
The Bilia Group does not have a specially designated function for internal audit. The audit function has instead been delegated to different personnel within the organisation, who make sure that audit is performed regularly. The need for a special function for internal audit is not judged to be immediate, and the existing allocation of audit duties is considered to be satisfactory for the present. However, the Board may reconsider its position if a future need should arise. An extensive audit project has been initiated where all of the Group’s essential processes will be documented, analysed, risk-assessed and improved, where necessary.
Since last year’s annual report was prepared, five processes have been thoroughly reviewed and a large number of processes have been identified and will be overseen in the course of the next few years. The processes that have been examined are work in progress, service and security agreements, handling of complaints, delivery support for new cars and the handling of used cars. The results for the processes that have been examined have shown that the processes are functional and are more or less equivalent in the different Group companies. As a result of the review process, the analysed discrepancies have been corrected and the documentation of the processes has been developed. The working groups have been composed of operational managers for the various processes and financial managers and controllers from the subsidiaries and the Parent Company. The working groups have held a number of meetings on each process, finishing up with a final report meeting. This will be followed by follow-up work. The work of assuring internal control is a continuous process that should be subject to constant review, follow-up and improvement.
Evaluation of the work of the Board
The work of the Board is evaluated annually according to a model that includes the following main areas:
This year’s evaluation gave a very positive picture of the work of the Board and its competence. The Board also performs an annual evaluation of the work of the committees, which has given high ratings to the work of the committees.
Bilia’s Group Management, consisting of the MD and the CFO of Bilia AB and the MD of Bilia Personbilar AB, is stationed in Göteborg. In keeping with the rules of procedure governing the relationship between the MD and the Board, the Group Management is responsible for formulating the Group’s overall strategy, business control, the allocation of financial resources among the operations, and the Group’s financing, capital structure and risk management. It also deals with issues pertaining to acquisitions that affect the whole Group and other major projects. Furthermore, the Group Management is responsible for compiling the Group’s financial reports, for communication with the stock market, and for a variety of other matters concerning the Group as a whole. The Group Management holds regular meetings under the leadership
of the MD.
Management of subsidiaries
Group operations are largely decentralised, and the different companies enjoy a large measure of autonomy. Relations between the companies and the Group Management mainly have to do with Group-wide projects and work on the boards of the various companies. The Managing Director and CEO of Bilia, Jan Pettersson, is chairman of all subsidiary boards.
The auditors of Bilia AB are elected by the AGM for a period of four years. The 2004 AGM re-elected KPMG as the company’s auditors, with Caj Nackstad as auditor in charge and Lars Bertén as chief of audit. Audit mainly involves continuous auditing and examination of the annual accounts. KPMG also assists Bilia with advice on auditing matters. During the past three years this has involved questions pertaining to the adoption of accounting practices in accordance with IFRS and the dispute with KFAB. No circumstance relating to this advisory role has been judged to influence the impartiality and independence of the auditors. Caj Nackstad, born 1945, Authorised Public Accountant, was elected for the first time in 2000. Lars Bertén, born 1948, Authorised Public Accountant, has been a deputy auditor for Bilia since 1987. The next election of auditors will be at the 2008 AGM.
|This Corporate Governance Report has not been subject to special examination by Bilia’s auditors, nor has the Board’s statement on internal audit, which is integrated in the above report, been subject to examination by the auditors.|