Mikla Group Annual Report 2016 by Miklagruppen AS

Annual Report 2016

Annual Report

2016

Mikla Group Annual Report 2016 4 Mikla Group 5 Organization 6 2016 in Large and Small 7 Key Figures 8 Objectives and Means 9 Strategy 12 Comment from the CEO 17 Board of Directors 18 Group Management 20 Historical Highlights 22 Ownership 25 Bavaria Norway 26 Bavaria Sweden 28 Porsche Centers in the Nordics 29 KC Motors 30 GS Bildeler

32 34 37 38 44

Income Statement Balance Sheet Cash Flow Statement Audit Report Notes to Financial Statements

Mikla Group Company Profile The story of Mikla Group (Miklagruppen) is one of unparalleled success in the Norwegian automotive industry. The company was founded as a single BMW dealership by the Øgreid and Ertvaag families in Stavanger in 1996. Today, the Mikla Group counts as one of the largest dealership groups in the Nordics.

The establishment was motivated by the Group’s owners’ dissatisfaction with the dealership representing BMW in the region at the time. Putting the customer first and always pushing the company to deliver “Next Level” experiences has therefore been in Mikla Group’s DNA from day one. Today, the Mikla Group employs 850 people working across 27 dealerships in Norway and Sweden, representing some of the finest car brands in the world. The Mikla Group’s largest car brand is BMW, in which the Group holds an approximate market share of 30% in Norway and an approximate market share of 18% in Sweden. In Norway, Bavaria – the Mikla Group’s brand for the BMW and the MINI business – is represented all along the southern coast, as well as in Oslo. In Sweden, Bavaria’s operations are focused in and around Stockholm. The Group also acquired the Burlin Group in May 2017, ensuring a foothold with BMW in Skellefteå in Northern Sweden. In total, the Mikla Group’s BMW and MINI business constituted about 80% of the total turnover. The Mikla Group is the largest Porsche dealership group in Norway with close to 40% of the market shares. In Sweden, the Group represents KIA through its fully owned KC Motor business operating in Stockholm and Malmö. Through its acquisition of the Burlin Group, the Mikla Group now also represents Toyota in Northern Sweden (Umeå, Skellefteå, Piteå and Luleå). The company holds a

* Mikla Real Estate is in the process of being incorporated into the Mikla Group

52% share in GS Bildeler (car parts), a 51% share in Mikla Supercars, and a minority share in the largest peer-to-peer car sharing platform in Norway, Nabobil.no. The Mikla Group is organized in five business units: Bavaria Norway, Porsche Centers in the Nordics, Bavaria Sweden, KC Motors, and Toyota/ Burlin. The Group has a strong business support team consisting of a CFO, a CDO/CMO, and HR & Communications and Real Estate* resources, all reporting to the Group’s CEO. The Group’s course towards a successful future was set in 1996 when a distinctive business model ensuring premium customer experience was defined. The Mikla Group has always “led the way”, and has proven robust in continuously changing market conditions. The Mikla Group is set out to be the most professional and innovative dealership group in its markets. The company aims to be the preferred choice for buyers of cars, auto equipment, and services. In striving to build strong and sustainable relationships with its partners, all developments and expansions have always been conducted with a clear agreement from key OEM partners.

Organization Brand Structure

Mikla Group Finance & Procurement Marketing & Digitalization

HR & Communications Mikla Real Estate*

** Mikla Supercars

GS Bildeler

Bavaria Norway

Bavaria Sweden

Brand Manager MINI Norway

Brand Manager MINI Sweden

KC Motors

(2018)

* Mikla Real Estate is in the process of being incorporated into the Mikla Group ** Established May 2017

2016 in Large and Small

17 000 new and used cars sold inc. BMWi

850 employees

977 MNOK Gross Profit

9 150 new cars sold inc. BMWi

6 103 000 000 NOK revenue

27 outlets throughout Norway and Sweden 8

7 850 used cars sold

Key Figures Highlights 2016

Revenues

2016

2015

% change

MNOK 6.103

MNOK 5.508

11 %

Gross Profit Gross Profit % EBITDA

MNOK 977 16 % MNOK 149

MNOK 862 15.6 % MNOK 91

13 %

EBITDA % Profit before tax Profit before tax %

2.4 % MNOK 102 1.7 %

MNOK 38 0.7 %

168 %

Working capital*

MNOK 999

MNOK 769

30 %

17.000

14.300

26 %

Cars sold

1.7 %

64 %

*Inventory + accounts receivable - accounts payable

Objectives and Means Business Concept In 1996, three entrepreneurs in Stavanger had a vision of delivering an exceptional customer experience. Starting with one BMW dealership and seven employees, the Mikla Group (then Bavaria) set out on a path to deliver a surprisingly different, noticeably better customer experience. Today, the Mikla Group is still fuelled by the same spirit, now expressing it as delivering CUSTOMER JOY. Not customer satisfaction, but CUSTOMER JOY.

In the Mikla Group, we recognize that the “product” of a car dealer is all the experiences involved in buying, maintaining, servicing and selling a car – not just the delivery of the amazingly engineered pieces provided by our partner manufacturers. We strongly believe that understanding this is the only way for dealerships to maintain relevance for the customer in the future. We also recognize that CUSTOMER JOY is not a “one solution fits all” concept. Our customers have different needs and

preferences, and adapting our approach to each individual customer is essential. Always delivering CUSTOMER JOY is therefore a necessary mindset for all employees to position the Mikla Group for the future in the automotive and mobility industry. All brands handled by the Mikla Group are treated with the exclusivity they deserve. As a result, the company does not own any multibrand dealerships. Today’s customers are using online services to a large extent, and therefore often know what they want before visiting the dealer. Hence, multibrand dealerships are diminishing. We believe that through exclusive single brand dealerships, and through a user-friendly online presence, we are more capable of providing our customers with a premium experiences and CUSTOMER JOY. We also believe in the power of local knowledge, presence and adaptability, and threrefore will

only standardize processes or approaches, when necessary, to realize economies of scale. We call our dealership heads “local heros”, and ensure that they are fully responsible for the operation and performance of their units; no excuses. At the same time, we expect our local heros and all our employees, to act as one group. The Mikla Group needs to extract operational synergies to a larger extent as we grow, both cost-reducing measures across the group as well as revenue-enhancing initiatives. In the Mikla Group we believe that we can excel in customer experience – CUSTOMER JOY – through best practice sharing across the group, as well as delivery of better profitability through selected coordinated activities across the group.

out the Group’s units in different locations, are an absolute necessity to deliver on the Group’s strategy. The Mikla Group takes the development of its organization very seriously, and strongly believes in developing and exciting its valuable employees through Group-specific trainings, leader development programs, and employee Ambassador programs. Furthermore, the company aims at ensuring the best possible working and learning environment every day. The Mikla Group believes in the power of the individual, and their ability to perform at their best when given the responsibility. We believe in valuebased leadership and do our utmost every day to uphold this.

Finally, the foundation of the Mikla Group, and the only way to achieve its ambitions of delivering CUSTOMER JOY, rests on its people. Enthusiastic and hard-working employees and leaders through-

Direction of Development

The automotive manufacturing and retail industry is facing changes in the future, fueled by the convergence of connectivity, electrification, and changing customer needs. Technology, emission standards, and new business models are some factors shaping the industry more than ever before and maybe even more so in the Mikla Group’s key markets; Norway and Sweden. The acronym “ACES” – Autonomous, Connected, Electrified and Shared – summarizes the mega trends that the automotive and mobility industry is facing. The Mikla Group believes that in the not-too-distant future, the personal car population will decrease. However, the cars’ utilitzation will increase in parallel, leading to higher mileage per car. For the Mikla Group, the implications of the automotive revolution is creating the necessity to deliver CUSTOMER JOY.

The Mikla Group strives to exceed its competitors in meeting shifting customer needs and will implement the necessary technology solutions to provide exceptional omnichannel customer experiences. This means that the Mikla Group will need to constantly adapt its business model to the customer needs. Further, the Group will continue to explore new and alternative business models in a market defined as “mobile” rather than “automotive”.

Strategy Customer Joy The Mikla Groupâ&#x20AC;&#x2122;s 2020 strategy is summarized in the illustration below:

CUSTOMER JOY

Improve

Expand

Innovate

Employee Joy NOK

10 billion

3% pre-tax profit margin

Whereas the Mikla Group’s financial targets are NOK 10 billion turnover in 2020, and a 3% pretax profit margin, at the very top of our strategy is the goal of delivering CUSTOMER JOY. Regardless of how the automotive industry develops, we exist only because we serve our customers better than anyone else.

in Sweden. Toyota was added to the brand portfolio though the recent acquisition of the Burlin Group in Northern Sweden. The Mikla Group is also selectively exploring geographical expansion, as well as aiming to include one or two other world-class brands in its portfolio.

Innovate The three pillars of the Mikla Group’s strategy are Improve, Expand, and Innovate:

Improve The Mikla Group will never rest on its past success. We always strive to improve our business, whether with respect to the customer experience, the co-worker development, or profitability. Not improving is not an option. Examples of ongoing improvement initiatives are as follows: A group-wide performance management process eliminating our historical annual budget process, replacing it with a KPI and goal process An extensive Procurement program that aims at delivering substantial cost benefits, as well as reaping commercial benefits where identified Best-practice sharing systems and incentives, inclusive use of Yammer as internal communication platform as well as the revamp of the Group’s bonus system incentivizing best practice sharing.

Expand The Mikla Group believes that size matters. Size is an important pre-requisite for cost and revenue synergies, as well as the ability to develop the Group in the fast-paced changing world. Our ambition of a NOK 10 billion turnover in 2020 is a step in this direction. In order to fulfill our size ambitions, we will continue to grow in our core markets with our existing strong partners: BMW, MINI, Porsche, KIA (in Sweden), and of late Toyota

Delivering CUSTOMER JOY in a rapidly changing world means innovating. The Mikla Group is determined to lead the way, taking the industry to the Next Level. Innovating in the Mikla Group means innovating solutions to improve today’s core product – the customer experience around buying, maintaining, servicing, and selling a car. Developing digital solutions for customers as well as for internal processes will become increasingly more important going forward. Innovating also means exploring new business ideas and models. Staying relevant means challenging current core business and being willing to place bets on future development in the automotive and mobility industry. One example is the investment in Norway’s leading peer-to-peer car sharing platform, Nabobil.no (“neighbor car”). Not only has this investment positioned the Mikla Group for a potential future landscape where more and more cars are being shared, in particular in the world of autonomous cars, but it also has enabled the development of new, exciting concepts such as “MINI for FREE”. “MINI for FREE” allows customers to lease a MINI, and then sublet it on peer-to-peer sharing platforms. This subsidizes the monthly leasing cost, thereby providing a “MINI for FREE” if rented out only six to seven days in a month. Finally, the absolute foundation for the above strategies to succeed are the leaders and employees of the Mikla Group. As outlined earlier in the “business concept” section the Mikla Group always has and will continue to, attract, develop, excite, and retain exceptional people. This most certainly holds true for the future, albeit with adjusted competency schemes as the core business develops, as well as for any future ventures into the “mobility space”.

Comment from the CEO 2016 - a Year of Change The Mikla Group achieved record results, refined its strategy and initiated the journey to grow bigger, more professional, more profitable and ever more relevant as the automotive retail and mobility landscape changes.

after a start-up period and is being enhanced by the dedicated focus of a Managing Director, I am confident for the future of KC Motors. KC Motors opened its stand-alone facility in Malmö in September 2016, and also acquired Lundqvist Bil in Norrtälje outside Stockholm in February 2017.

In 2016, the Mikla Group surpassed the NOK 6 billion turnover mark and recorded its first ever three digit pre-tax profits. Since the Group’s inception in 1996, turnover has increased every year, and 2016 was no exception, despite the sale of the Sandven Group, representing MNOK 500 in revenue.

Lastly, GS Bildeler (car parts) contributed a whopping NOK 22 million to the Mikla Group’s pre-tax profit in 2016. With additional efficiency measures, including an automated picking facility, I look forward to seeing how GS Bildeler will continue to deliver strong results.

The general market conditions in Norway and Sweden were solid in 2016. Continued strong economic development and low interest rates led to the total new car market in Norway growing by 2.6% to 154,603 cars being sold in 2016. In Sweden, the total new car market grew by 7.9% to a total of 372,318 cars being sold in 2016. In this context, BMW – the Mikla Group’s most important brand – increased its market share from 6.3% to 7.8% in Norway and from 5.7% to 5.9% in Sweden.

On August 1, 2016, the Mikla Group changed its CEO, for the first time in its 20-year history. Since the Group’s inception in 1996, Svein Å. Strøm has

This development, along with a strong after-market performance – particularly in Norway – led to an increase in operating profits in Bavaria Norway by 1.6% to 2.2% and was stable in Bavaria Sweden at 2.0%. In total, the BMW and MINI businesses constituted 80% of the Mikla Group’s turnover. The Mikla Group’s Porsche business delivered approximately 40% of the total new Porsche car sale in Norway and contributed a NOK 540 million turnover as well as a NOK 7 million pre-tax profit. I am confident in the exceptional brand strength of Porsche for the future as well. The Mikla Group’s entry into KIA, with KC Motors in Sweden, resulted in a SEK 8 million loss in 2016. However, as the KIA business is ramping up

Jacob Tveraabak CEO

steadily led the Group from being one single dealer in Stavanger to being one of the largest automotive retailers in the Nordics. Svein Å. Strøm had no past experience in automotive retailing when he started at Bavaria, but he did know what great customer experience meant. Delivering great customer service, and being very conscious about the resources to deliver this customer experience – the company’s co-workers – has been instrumental in shaping what has today become the Mikla Group. I am very thankful for and humbled at having been granted the opportunity to take the Mikla Group on the next leg of its journey. Like Svein Å. Strøm, I have no automotive retail experience, but I do have an obsession for meeting customer demands. And for creating CUSTOMER JOY. Going into 2017, the Group has conducted many other changes. For starters, the Group changed its name from Bavaria Nordic to the Mikla Group (Miklagruppen). The new brand underlines the Group’s strategy to expand its portfolio beyond BMW and MINI. Bavaria is a strong brand in its core markets and is synonymous with BMW. As such, with the Group announcing its expansion with Porsche into Sweden, continuing its KIA operations in Sweden under the KC Motors brand, and lastly, moving into Toyota through the Burlin Group acquisition, the Group was in dire need of a brand name that would encompass all these businesses. The Group’s BMW and MINI operations, however, would still be branded Bavaria. In addition, in 2016, the Mikla Group invested in the peer-to-peer car sharing platform Nabobil. no (“neighbor car”), and in April 2017, the Mikla Group launched its super car division, Mikla Supercars. Looking ahead, the Mikla Group’s two immediate focus areas are Professionalism and Profitability. Professionalism is all about delivering the premium service that our customers should expect when buying, maintaining, servicing, or rading in their most valuable asset which is – other than their house – the car. For the Mikla Group, along with nurturing and believing in the “local heros” at each dealer site, we also need to ensure a consistent service throughout our dealer network. This means ensuring an increased level of universal service level across our dealer network. Further,

having reached a considerable operations size, the Mikla Group is also in a position to push new, innovative services to the market to stand out as one of the most professional players in the market. Having reached record high profits in 2016, focusing on profitability may seem odd. However, despite reaching a three digit pre-tax profit, the pre-tax profit percentage of 1.7% is only close to half of the Group’s target of 3.0%. Further, with all-time high markets on new cars sales in both Norway and Sweden, the Group at least needs to prepare for a slower 2017. Lastly, the Mikla Group recognizes that too few synergies are reaped across the Group, and a focus to realize these is vital. As such, both Performance Management programs and Procurement programs have been initiated. Recognizing the breadth of the Mikla Group’s portfolio, and being committed to delivering CUSTOMER JOY, the Group is reorganizing itself to reflect this. The operating units are being spearheaded by dedicated Managing Directors, rather than by Country Directors. Further, the supporting organization has been strengthened with a Chief Digital and Marketing Officer (CDO/CMO) with a focus on improving “the Customer Journeys”, while being an aide in spotting and developing new business models for the Mikla Group. Last but not least, the Mikla Group is very proud to have its largest business unit, Bavaria Norway, obtaining the “Great Place To Work” certification in its first year of participating in the survey. We believe these results are the consequence of years of employee focus and the belief that no strategy is any good unless you have the right people to deliver on it.

Jacob Tveraabak

Chief Executive Officer

Board of Directors

Knut Øgreid

John Arild Ertvaag

Sindre Ertvaag

Svein Å. Strøm

Chariman of the Board

Member of the Board

Halvor Øgreid

Member of the Board

Group Management

Jacob Tveraabak

Stig SĂŚveland

Stefan Burlin

Morten Westby

CEO

Managing Director Toyota / Burlin Motor

CFO

Managing Director KC Motors

PĂĽl Petersen CDO / CMO

Sissel Wiedenmann

Acting Director of HR and Communications

Johan Frisk

Managing Director Bavaria Sweden

Helge Ellingsen

Managing Director Bavaria Norway and Acting Director of Miklaâ&#x20AC;&#x2122;s Porsche Business

2015 Bavaria acquires 51% of Porsche Center Son.

Historical Highlights Major Milestones 2014 Establishes KC Motors, a KIA dealership, in Stockholm.

1996 Bavaria is established as a dealer of BMW, Rover, and Land Rover. In the years up to 2003, Bavaria is a single primary dealer.

2014 Sells Bavaria Copenhagen to Jan Nygaard.

2003 Bavaria becomes the first Norwegian BMW dealership to be awarded the Quality Management Autohaus trophy, BMW’s gold standard.

2012 Bavaria gets seven BMW Art Cars to Stavanger Art Museum. Koons’ M3 is lifted up on to Pulpit Rock in a breakneck helicopter stunt.

2005 Bavaria aquires dealerships in Kristiansand and Arendal, and becomes the sole dealer for BMW and MINI in the Southwest region. Bavaria is now the largest dealer in Norway outside Oslo.

2010

2001

Bavaria buys BMW Stockholm from BMW AG and thereby, takes the first step into Scandinavia.

Bavaria becomes a MINI dealer. The year after, Land Rover is taken out of Bavaria’s range.

2004

Bavaria Haugesund is established in direct competition with an established BMW dealership.

2007 2006 Bavaria takes over 51% of Sandven AS in Bergen and GS Bildeler in Molde.

Bavaria aquires two dealerships in the Oslo region, thereby securing the position as “the biggest in Norway“ Porsche Center Stavanger is opened, the first in Norway outside Oslo.

2016 Bavaria acquires Novation AB in Uppsala, Sweden.

2017 Bavaria acquires the KIA dealership Lundqvist Bil, Sweden.

2017 Bavaria Nordic changes its name to the Mikla Group, reflecting the strategy of including new brands in the portfolio.

2017 The Mikla Group acquires the Burlin Group in Umeå, Skellefteå, Piteå og Luleå, and as a result becomes a Toyota dealership group in Sweden.

2012 Bavaria buys Bayern Auto Group, Copenhagen, and becomes the “biggest in Scandinavia”.

2008 The automotive industry crowns Bavaria the Dealership of the Year award in Norway, regardless of brand

2017 Establishes Mikla Supercars to invest in rare high-end cars

Ownership Active and Financially Strong Owners

Ă&#x2DC;greid 50%

Camar 50%

Camar is a family-owned investment company which was established in 1994. Today, the company, with its four employees, is headed by John Arild Ertvaag from the head office in Stavanger. Investments are industry independent, and Camar usually has a financial focus in its processes. The company’s resources are mainly dedicated to active, long-term investments. All investments outside of asset management require that Camar has an active ownership role and influence on the management of the company.

The Øgreid family has been in business since 1876 and has played a role as an active investor in its region for the last 30 years. Øgreid AS is the incorporated family office that manages the family’s wealth for current and future generations. Along with a long-term perspective, they have an outspoken willingness to remain invested indefinitely. Øgreid AS is one of the largest commercial real estate owners in central Stavanger.

Bavaria Norway BMW and MINI

Bavaria Stavanger

Bavaria Haugesund

Bavaria Kristiansand

Bavaria Arendal

Bavaria Oslo

Bavaria Gardermoen

Bavaria Farsund

Bavaria Bryne

Bavaria LillestrĂ¸m

Bavaria Oslo MINI Vika

Bavaria Sweden BMW and MINI

Bavaria Solna

Bavaria Uppsala

Bavaria Tyresö

Bavaria Vällingby

Bavaria Danderyd

Porsche Centers in the Nordics Porsche

Porsche Center Stavanger

Porsche Classic Center Son

Porsche Center SĂ¸r

Porsche Center Son

KC Motors Kia

KC Motors Täby

KC Motors Malmö

Lundqvist Bil Nortälje

GS Bildeler Car Parts

GS Bildeler Bud

GS Bildeler SirevĂĽg

GS Bildeler Skien

GS Bildeler Trondheim

GS Bildeler Oslo

GS Bildeler Bergen

Income Statement 2016 Company

Group

2015 2016 Notes Notes Revenues - - Revenues 13 1 040 001 17 313 000 Other operating income 1 040 001

2015

6 008 263 826 94 991 736

5 426 533 240 81 516 127

17 313 000 Total revenues 6 103 255 562

5 508 049 367

Operating costs - - Cost of goods sold 5 258 316 11 032 598 10 Payroll and related costs 10 10 571 566 24 084 689 10 Other operating expenses 10 9 800 91 778 3 Depreciation 3 - - Impairment

5 106 077 377 486 334 708 361 613 196 33 035 042 -

4 646 469 607 449 768 908 320 791 728 31 243 319 1 570 000

15 839 681

35 209 065 Total operating costs 5 987 060 322

5 449 843 562

-14 799 681

-17 896 065 Operating profit 116 195 239

58 205 805

37 460 000 20 155 000 7 643 532 2 988 963 1 460 400 757 368 1 902 232 -579 332 -14 979 -691 776 -228 687 -11 041 163 -2 338 074

Financial items Income investments in subsidiaries Interest income Interest income, group Other financial income Interest costs Interest costs, group Other financial costs

- 1 221 391 - 2 694 474 -16 966 959 - -1 250 756

1 704 698 4 947 906 -15 998 330 -11 099 461

28 901 704 14 102 023

Net financial items

-14 301 850

-20 445 186

3 040 359 Profit before tax 101 893 389

37 760 619

-44 317

14 057 706

20 936 424

-706 710

-26 072 843

-14 642 780

2 333 649 PROFIT/GROUP PROFIT 75 820 546

23 117 839

14 057 706

Tax

Minority share of profit

-12 033 686

-664 502

2 333 649 PROFIT FOR THE YEAR 63 786 860

22 453 338

14 057 706 2 333 649

2016

Allocated as follows: Transfer to other equity

2 333 649 TOTAL ALLOCATED

Balance sheet per December 31, 2016 Company

Group

12.31.15 12.31.16 Notes Notes ASSETS Intangible assets 3 332 1 988 8 Deferred tax assets 8 - 575 500 3 IT system 3 - - Goodwill

3 332

12.31.16

12.31.15

4 571 863 575 500 186 744 864

8 597 088 140 246 763

577 488 Total intangible assets 191 892 227

148 843 851

Fixed assets - - Furniture and fixtures - 61 000 3, 9 Machinery/equipment

3, 9 3, 9

4 612 239 52 389 428

5 656 321 52 766 598

- 61 000 Total tangible fixed assets 57 001 667

58 422 919

Long-term investments 29 794 733 30 553 894 4 Shares in subsidiaries - 4 996 080 Shares and participations in other companies 50 278 597 29 656 154 15 Other group receivables

- 5 117 828 35 200

756 248 51 200

80 073 330

65 206 128 Total financial fixed assets 5 153 028

807 448

80 076 662

65 844 616 Total fixed assets 254 046 923

208 074 219

Current assets - - Total inventories 919 432 458

822 154 512

- 261 853 69 495 608 69 757 461

262 817

6 483 095 6, 9 71 250 40 570 280 15

246 403 114 80 024 651 -

172 771 716 115 027 025 -

47 124 625 Total receivables 326 427 765

287 798 741

1 616 448

Account receivables 6, 9 Other receivables 16 Group receivables

34 399 578

41 217 628

70 020 278

48 741 073 Total current assets 1 280 259 802

1 151 170 881

150 096 940

114 585 689 TOTAL ASSETS 1 534 306 724

1 359 245 100

Cash and cash equivalents

Company

Group

12.31.15 12.31.16 Notes Notes EQUITY AND LIABILITIES Equity 12 837 000 12 837 000 2 Share capital 2 10 000 10 000 Share premium 12 847 000 92 956 375 - 92 956 375 105 803 375

12.31.15

12 837 000 10 000

12 847 000 Total restricted equity 12 847 000 95 319 477 -

Other equity / fonds Minority interest

12 847 000

273 252 520 34 407 843

201 152 757 42 145 092

95 319 477 Non-restricted equity 307 660 363

243 297 850

108 166 477 1 Total Equity 1 320 507 363

Provisions - - Deferred tax liability -

256 144 850

15 891 913

12 214 692

- Total provisions 15 891 913

12 214 692

Long-Term Liabilities - - Mortgage loan 9 39 097 000 2 765 402 Intercompany debt - - Other long-term liabilities 39 097 000

12.31.16

179 671 064 - 8 144 769

112 695 499 21 946 744

2 765 402 Total long-term liabilities 187 815 833

134 642 243

Current liabilities - - Interest-bearing loans and borrowings 9 1 468 565 954 066 Accounts payable - - 8 Current tax payable 8 - 1 463 088 Public duties payable - - Dividends/group contribution 3 728 000 1 236 657 Other current liabilities

165 570 740 664 317 810 18 139 508 28 429 243 - 133 634 314

226 079 538 535 449 830 8 951 305 56 135 164 129 627 480

5 196 565

3 653 810 Total current liabilities 1 010 091 615

956 243 317

44 293 565

6 419 212 Total liabilities 1 213 799 361

1 103 100 251

150 096 940

114 585 689

TOTAL EQUITY AND LIABILITIES

1 534 306 724

1 359 245 100

Knut Øgreid

John Arild Ertvaag

Svein Å. Strøm

Halvor Øgreid

Sindre Ertvaag

Jacob Tveraabak

Chariman of the Board

Member of the Board

CEO

Cash Flow Statement 2016 Company 2015 2016 Cash flow from operating activites 14 102 023 3 040 359 Profit before tax - - Correction error in past years’ subsidiaries -37 460 000 -20 155 000 Received group contribution and dividends - - -703 620 Tax paid -619 704 10 429 399 Sale of fixed assets + Loss / - Gain 9 800 91 778 Depreciation - - Impairment - - Increased inventories 64 211 -6 292 492 Change in receivables -1 467 208 -514 499 Change in accounts payable 2 438 281 -697 373 Change in other accruals -22 932 597

2016

2015

101 893 389 - -17 489 263 -8 828 350 33 035 042 - -97 277 946 -38 629 024 128 867 980 -15 993 149

37 760 619 -7 457 333 -19 088 911 -6 455 401 31 243 319 1 570 000 -206 552 819 -42 498 450 115 940 750 -2 441 869

85 578 679

-97 980 095

22 486 000 7 059 153 -5 020 580 -86 626 043 -33 220 774 12 091 206 16 000

2 273 367 9 888 999 -8 854 001 -22 030 173 -31 983 499 15 072 128 33 462 778

4 281 949 Net cash flow from investing activities -83 215 038

-2 170 401

-14 801 449 Net cash flow from operating activities

Cash flow from investing activities - - Net proceeds of goodwill related to shares in subsidiaries 13 343 219 7 059 153 Payment on sale of shares -12 410 413 -6 048 926 Purchase of shares - - Purchase of value related to new subsidiary - -728 278 Purchase of tangible fixed assets - - Net proceeds of disposal of tangible fixed assets - - Net proceeds of long-term receivables

932 806

Group

Cash flow from financing activities - - Net change cash credit - - Paid dividend to minorities 23 345 418 52 203 674 Net payments on group loans - - New long-term dept 1 768 425 - Increased equity with merger/payment from minorities -79 800 -36 331 598 Repayment of loans -4 000 000 - Paid group contribution to subsidiary

-60 508 797 -1 847 540 - 75 959 034 - -22 785 444 -

76 653 391 -2 670 100 43 966 468 -28 050 861 -

21 034 043

-9 182 747

89 898 898

-965 748

15 872 076 Net cash flow from investing activities

1 352 576 Net cash flow -6 819 106 -10 251 598

Cash and cash equivalents at 875 395 262 817 the start of the period 41 217 629 353 171 1 055 Net cash change due to changes in subsidiary ownership 1 055 CASH AND CASH EQUIVALENTS 262 817 1 616 448 AT THE END OF THE PERIOD 34 399 578

45 613 591 5 855 636

41 217 629

Audit Report

Mikla Group Notes to the Financial Statements, 2016

Accounting principles The Financial Statements are prepared in accordance with the Norwegian Accounting Act and the Generally Accepted Accounting Principles in Norway (NRS). The preparation of the financial statements in conformity with the Generally Accepted Accounting Principles requires management estimates and assumptions that affect the reported assets and liabilities, revenues and expenses, and disclosures of contingent assets and contingent liabilities. Miklagruppen AS adopts the going concern basis in preparing the financial statements. Revenue and cost principles Revenues are recognized as incurred when the goods are delivered or the services are completed. Revenues are adjusted for VAT, discounts, and bonuses. When selling new cars with repurchase agreements, revenues from the sales are recognized as incurred when the car is delivered to the customer. Any purchase and sale of repurchased cars are booked as their own transactions. In case of selling new and used imported cars a specific “car tax” has to be paid to the government. The tax is no income, but is recognized as a short-term liability on the balance sheet. Costs that are aligned with the revenues, are recognized as expensed alongside the revenue when it is incurred. Any costs that can not be aligned with the revenues are recognized as expensed when accrued. Consolidation principles The consolidated accounts show the Group’s financial position, the closing year’s income statements, and the cash flows as one financial entity. If

necessary, the subsidiaries’ accounts are adjusted to fit the accounting principles of the Group. Intra-Group receivables and payables, revenue and expenses, and unrealized profits or losses arising from the intra-Group transactions between subsidiaries are eliminated in their entirety when the consolidated accounts are prepared. Any subisidiaries are consolidated from the point where the Group has gained control (time of the acquisition) up until the point where the control has ceased (subsidiary has been sold). Minorities are recognized both in the income statement, and on the balance sheet. In the income statement the minorities’ share of the year’s profit or loss are recognized. Any shares in subsidiaries are eliminated from the consolidated accounts according to the Acquisition method. This means that the acquired company’s assets and liabilities are valued to the fair value at the time of the acquisition, and any excess value is classified as goodwill. Currency The Parent Company presents the Financial Statements in Norwegian krone (NOK), which is the Company’s functional and presentation currency. The Group is exposed to the fluctuations in the currency exchange rates in SEK and EUR. Within the Group, there are loans in SEK. Foreign currency transactions are converted into the presentation currency using the exchange rates on the day of the transactions. Monetary assets on the balance sheet are converted into the presentation currency at the closing rates. The balance of the foreign subsidiaries are converted into the presentation currency at the closing rates and the income statements are converted into the presentation currency using the average exchange rates. Any large transactions are converted to the presentation currency using

the exchange rates on the day of the transactions. Translation differences regarding the foreign subsidiaries are recognized and posted directly to the Groupâ&#x20AC;&#x2122;s Equity. Cash Flow Statement The Cash Flow Statement is prepared according to the indirect model. Cash and cash equivalents include cash, deposits, and other financial shortterm instruments. Principles for valuation and classification of assets and liabilities Assets are classified as fixed assets if they are determined to have been owned or used for a longer period. Other assets are defined as current assets. Any receivables that are due for payment within a year, are classified as current assets. Regarding classification of liabilities, analogous criteria are applied. Fixed assets are valued at historical cost, less impairments, if not transitory. Any assets with limited financial duration are subject to planned depreciations. Long-term liabilities are capitalized to nominal value when established. Current assets are valued to the lowest of acquired cost or fair value. Short-term debts are capitalized to the nominal value when established. Some postings are, in accordance with the Norwegian Accounting Act, valued after specific valuation principles. These will be accounted for on the following page: Fixed assets Fixed assets are, less depreciations, based upon expected life cycle. And the depreciations are linearly distributed over the life cycle of the asset. Rental of buildings and equipment are defined as operational leasing. Operational leasing will not be defined on the balance, but will be recognized as part of the Income Statement under Other Operating Expenses. Annual leasing costs are shown under Note 3. Goodwill Any excess value derived from acquisitions that is not recognized as part of the assets and liabilities acquired, are classified as goodwill. Goodwill

are depreciated linearly in accordance with the expected life cycle. For partially owned subsidiaries, the Groupâ&#x20AC;&#x2122;s share of the goodwill is included in the balance sheet, whereas for common acquired subsidiaries, the goodwill is showed as a total. Shares in a subsidiary Investments in subsidiaries are valued at acquired cost. Impairments are made when the change in value is not transitory. Dividends from a subsidiary are only recognized in the income statement at the same time as the subsidiary proposes dividends. Shares and stakes in other companies Other shares are valued at the historical cost. Any received dividends or other receivables from the companies are recognized as other financial income at the time of the transaction/payment. Inventory The inventory largely consists of new and used cars, and spare parts. Used cars and spare parts are valued to the lowest of the acquired cost and fair value. New cars are valued to the acquired cost. Receivables Account receivables and other receivables are valued to the net value less depositions for expected loss. The depositions for expected loss are based upon an individual assessment of the specified receivables. In addition, there is an unspecified deposition for expected loss on other accounts receivables. Pension liabilities The companies within the Group pay contributions to a pension fund in accordance with a defined contribution pension plan. The Group pays a premium to an insurance company based upon a percentage of the employeeâ&#x20AC;&#x2122;s salary. Derivative financial instruments Interests related to the interest rate swap gains and losses are booked under Net Financial Items in the income statement. Any unrealized losses related to the interest swap agreement are accounted for in the income statement based upon a valuation of the agreement on the balance sheet dated December 31, 2016 on the part of the

agreement that is not efficient. The subsidiaryâ&#x20AC;&#x2122;s interest rate swap agreement uses a fixed interest rate as a security for the companyâ&#x20AC;&#x2122;s liabilities with floating interest rates. When exchange rates swaps are used to secure assets and liabilities, and the security is efficient, both the security and the secured item are valued at the net value, and any gains or losses are booked in the income statement. Taxes The taxes consist of current and deferred taxes. The calculations of the current income taxes are based upon the fiscal profit of the year. Deferred taxes are calculated based upon the annual changes in temporary differences. Deferred taxes are calculated at a percentage rate of 24 % (22 % in Sweden) on temporary differences and any taxable losses on the balance sheet closing date. Net deferred tax assets are recognized on the balance sheet for each tax country, given that there is a probability it will be utilized. If there are changes in the income tax rate in the consecutive year, the new tax rate will be used for the calculation of the deferred taxes. Current income taxes and deferred taxes are booked directly towards the equity as per the degree to which the taxes are related to any equity transactions. Any deferred taxes are not calculated on goodwill gained through acquisitions. Guarantees and repurchase commitments Commitments related to guarantee repairs and repurchases connected to sales are valued at the estimated cost. The estimate is calculated based upon historical data for guarantees and repurchases. It is recognized as a liability on the balance sheet. Total repurchase commitments are not recognized on the balance sheet, see Note 7. Revenues The Groupâ&#x20AC;&#x2122;s revenues from sales of cars, goods, and services are recognized as incurred according to the delivery and completion. When selling new cars with repurchase agreements, revenues from the sales are recognized as incurred when the car is delivered to the customer. Any purchase and sales of repurchased cars are booked as their own transactions.

A car tax has to be paid to the government on selling new and used imported cars. This is not income, but is recognized as a short-term liability on the balance sheet.

Mikla Group Notes to the Financial Statements, 2016

NOTE 1: EQUITY Share Share premium Parent Company Capital reserve

Retained earnings

Total Equity

Equity balance as of 12.31.2015 12 837 000 10 000 Merger with Bavaria Investor - Profit for the year

92 956 375 29 453 2 333 649

105 803 375 29 453 2 333 649

95 319 477

108 166 477

Equity balance as of 12.31.2016 12 837 000

10 000

Share Share premium Group Capital reserve Funds Minorities

Total Equity

Equity balance as of 12.31.2015 12 837 000 10 000 201 152 758 42 145 093 256 144 850 Correction of error in previous statutory account 920 048 -920 048 Paid dividend to minorities -756 560 -1 847 540 -2 604 100 Sale of subsidiary 426 070 426 070 Adjustments regarding last year in subsidiary group 17 003 348 -17 003 348 Group’s profit for the year 63 786 860 12 033 686 75 820 546 Translation differences (loss) -9 280 003 - -9 280 003 Equity balance as of 12.31.2016 12 837 000 10 000 273 252 520 34 407 843 320 507 363

NOTE 2: EQUITY The company’s share capital is MNOK 12.8 consisting of 1 283 700 with a face value of NOK 10 each. There is one share class with equal voting rights. The company’s shareholders as of 12.31 .2016 are: Camar AS Verket Investering AS Total

Number of shares 641 850 641 850 1 283 700

% of all shares 50,00 % 50,00 % 100,00 %

NOTE 3: ASSETS Parent Company

IT Projects (Intangible)

Tangible assets

Total

Cost as of 01.01.2016 0 47 100 47 100 Increase of assets this year 653 695 74 583 728 278 Decrease of assets this year 0 0 0 Cost as of 12.31.2016 653 695 121 683 775 378 Accumulated depreciations as of 01.01.2016 0 47 100 47 100 Depreciations this year 78 195 13 583 91 778 Reversed depreciations this year 0 0 0 Accumulated depreciations 12.31.2016 78 195 60 683 138 878 Net assets as of 12.31.2016

575 500

Depreciation rate

33% linear

61 000

Tangible assets Fixed incl. IT project Group assets (intangible) Sum Goodwill Cost as of 01.01.2016 10 888 759 Increase through acquisition of subsidiary Increase of assets this year 121 889 Decrease through sale of subsidiary this year -

145 018 386 8 847 820 28 529 639 -30 280 421

636 500

20% linear

155 907 145 8 847 820 28 651 528 -30 280 421

242 105 203 86 626 043 - -42 714 943

Total 398 012 348 95 473 863 28 651 528 -72 995 364

Cost as of 31.12.2016 11 010 648 152 115 424 163 126 072 286 016 303 449 142 375 Accumulated depreciations 01.01.2016 5 232 438 94 615 412 99 847 850 104 021 910 203 869 760 Increase in former depreciations due to acquisition 4 278 574 4 278 574 - 4 278 575 Depreciations this year 1 165 971 19 131 840 20 297 811 12 737 232 33 035 042 Reversed depreciations through sale of subsidiary this year - -18 152 328 -18 152 328 -20 228 943 -38 381 271 Accumulated depreciations 12.31.2016 6 398 409 99 873 498 106 271 907 96 530 199 202 802 106 OB foreign exchange rate differences 2 363 624 2 363 624 2 163 470 4 527 094 Translation differences this year (loss) 0 -1 640 622 -1 640 622 -4 904 710 -6 545 332 Net assets as of 12.31.2016 4 612 239 52 964 928 57 577 167 186 744 864 244 322 031 Depreciation rate

5 - 20% linear

10 - 33% linear

4%, 10% linear

From 2009 and onward the Group it depreciating the Group’s goodwill for 25 years. Depreciation rate is based on a a long-term perspective with the brands Bavaria, GS Bildeler and Porsche Center Son. The Group’s annual rental costs (in KNOK)

2016

Duration:

Equipment etc (incl. demo cars) 18 608 1 - 7 years Property 118 885 1 - 15 years

NOTE 3: ASSETS (CONTINUES) Specification of goodwill acquired through acquisitions of subsidiaries. Time of Business area acquisition

Goodwill Cost

Acc. depreciations

Net Goodwill

Depreciations this year

Dealerships in Sweden 2016 86 626 3 403 79 086 Dealerships in Norway 2015 21 294 1 703 19 590 Dealerships in Norway 2012 6 507 1 303 5 205 Dealerships in Norway 2010 1 603 1 024 579 Dealerships in Sweden 2010 18 013 13 228 6 182 Dealerships in Norway 2008 1 619 492 1 127 Dealerships in Norway 2007 90 350 42 633 47 717 Dealerships in Norway 2006 60 003 32 745 27 259 Total Goodwill through acquisitions of subsidiaries 286 016 96 530 186 745

3 403 852 260 160 2 038 63 3 372 2 589 12 737

NOTE 4 : INVESTMENTS IN SUBSIDIARIES TNOK TNOK Company name Result Equity Business Year of Stake 2016 12.31.16 location establishment Subsidiaries: DS: Bavaria Norge AS 32 896 115 613 Stavanger 2010 100 % Bavaria Stavanger AS Stavanger 2006 100 % Bavaria Finans AS Stavanger 2006 100 % Bavaria Haugesund AS Haugesund 2006 100 % Bavaria Kristiansand AS Kristiansand 2006 100 % Bavaria Arendal AS Arendal 2006 100 % Bavaria Oslo AS Oslo 2007 100 % Bavaria Gardermoen AS Gardermoen 2007 100 % Bavaria Lillestrøm AS Gardermoen 2012 100 % Bavaria Bryne AS Bryne 2008/2013 100 % Porsche Center Stavanger AS Stavanger 2006 100 % Porsche Center Son AS Vestby 2015 51 % DDS: 9XX Automotive GmbH Germany 2010 51 %* Bavaria Sverige Holding AB 17 454 25 341 Stockholm 2010 100 % Bavaria Sverige Bil AB Stockholm 2010 100 % (Novation AB was acquired and merged with Bavaria Sverige Bil AB in 2016) KC Motors AB Stockholm 2014 100 % SWABIA AS

* Owned through Porsche Center Son

-21 100

Stavanger

2013

100 %

TNOK TNOK Company name Result Equity Business Year of Stake 2016 31.12.16 location acquisition Subsidiaries: DS: Gule og Skrivarhaug Holding AS 3 307 40 470 Stavanger 2007/16 52 % GS Bildeler AS Bud 2007 100 % GS Bildeler Dep. Skien AS Skien 2010 78 % (Bavaria Investor AS was merged with Miklagruppen AS as of 01.01.2016) Other shares: Nabobil.no AS Oslo 2016 9%

NOTE 5: INVENTORY Parent Company

Group 2016

Group 2015

Cost of new cars 326 935 209 315 261 099 Adjustment for obsolescence - -679 104 Inventory of new cars in balance sheet 326 935 209 314 581 995 Cost of used cars 388 799 121 322 696 375 Adjustment for obsolescence -8 475 849 -7 505 064 Demo cars 68 345 517 39 220 318 Inventory of used cars in balance sheet 448 668 789 354 411 629 Spare parts and other goods 148 991 037 156 065 176 Adjustment for obsolescence -5 162 578 -2 904 288 Inventory of spare parts and other goods in balance sheet 143 828 459 153 160 888 Total Inventory 919 432 458 822 154 512

NOTE 6: ACCOUNTS RECEIVABLE Parent Company

2016

2015

Net value of accounts receivable 6 483 095 Depositions for expected loss - Accounts receivable total 6 483 095 -

Group Net value of accounts receivable 248 285 115 174 664 319 Depositions for expected loss -1 882 000 -1 892 602 Accounts receivable total 246 403 115 172 771 716

NOTE 7: REPURCHASE COMMITMENTS The Group has commitments related to repurchases to leasing companies and leasing customers. These commitments are valued at MNOK 568 for the Group.

NOTE 8: TAXES Specification of permanent and temporary differences between profit before taxes and the tax basis:

Parent Company Group 2016 2015 2016 2015 Profit before taxes 3 040 359 14 102 023 101 893 389 37 760 617 Permanent differences -3 028 330 -13 938 875 5 620 844 8 146 117 Changes in temporary differences -11 357 6 593 -2 609 231 -6 037 440 Last year’s used tax loss -672 -169 741 -22 506 -169 741 Tax basis this year 0 0 104 882 497 39 699 553 Current income tax in the income statement – 25 % 0 0 24 760 799 15 065 706 Estimated tax in sold subsidiary - - 682 370 -1 233 865 Tax on pensions and residual tax in Sweden - - -7 303 661 -4 880 536 Current income tax on the balance sheet 0 0 18 139 508 8 951 305 This year’s tax expenses Current income taxes -0 - 24 773 289 15 065 706 Taxes from previous years 703 620 - 703 353 Changes in deferred taxes 3 091 44 317 596 200 -422 926 Tax in the income statement 706 710 44 317 26 072 843 14 642 780 (Share of taxes from Sweden)

9 051 000

7 188 000

Deferred taxes are calculated on temporary differences between the accounted and taxable values on the balance sheet closing date. The company has the following temporary differences: 01.01.16 01.01.15 01.01.16 01.01.15 Accounts receivable - - -2 063 459 -2 157 848 Inventory - - -7 247 858 -4 408 002 Fixed assets -1 471 -12 829 75 661 089 11 620 908 Warranties and repurchase commitments - - -6 682 900 -11 482 969 Depositions - - -6 469 797 42 217 373 Taxable deficit for transfer -6 814 -500 -10 540 -36 034 882 Total temporary differences -8 285 -13 329 53 186 534 -245 420

Parent Company Group 01.01.21 01.01.20 01.01.21 01.01.20 Loss due to merger as of 01.01.2016 - -6 985 - Basis for calculation of deferred taxes - asset(-)/liability(+) -8 285 -20 314 53 186 534 -245 420 Deferred taxes - asset(-)/ liability(+) 24 % -1 988 -5 079 11 320 049 3 617 605 as of 01.01.2016

Net deferred taxes - receivable – 24% / 25% -1 988 -5 079

-4 571 863

-8 597 088

Net deferred taxes abroad – 22 % 15 891 913

12 214 692

Additional net deferred taxes from sub-group (not capitalized) - -5 344 767 Effect of decrease tax rate on deferrede taxes – assets -83 -267 -190 494 -889 884

NOTE 9: MORTGAGES AND WARRANTIES Specification of permanent and temporary differences between profit before taxes and the tax basis: Parent Company

Group

2016 2015 2016 2015 Net debt secured by mortgages Liabilities to credit institutions - - 165 570 740 226 079 538 Accounts payable - - 583 363 744 453 981 265 Mortgage loan - - 179 671 064 112 695 499 Total liabilities secured by mortgage - - 928 605 548 792 756 301 Net assets given as security for debt and guarantees Accounts receivable Inventory Machinery and equipment Building decor Shares in subsidiaries

6 483 095 - - - 61 000 - - 30 553 894 29 794 733

246 403 114 919 432 458 52 389 428 4 612 239 -

172 771 716 822 154 512 52 766 598 5 656 321 -

Net mortgaged assets 37 097 989 29 794 733 1 222 837 239 1 053 349 147 Long-term liabilities due for payment more than 5 years after balance sheet closing date 5 516 17 000

NOTE 9: MORTGAGES AND WARRANTIES (CONTINUED) Guarantee: Miklagruppen AS has provided guarantee for a long-term loan taken by subsidiaries from a financial institution with:

9 562 500

Miklagruppen AS has etablished a group account system in SR-Bank. Bavaria Norge AS and wholly owned subsidiaries are jointly and solidarily liable. The amount granted at 31.12.16 is 140 MNOK. Bavaria Nordic AS has provided a guarantee of 5.5 MNOK for annual rent in a daughter subsidiary until 01.04.2020 to a real estate company which is a closely related party. Customs guarantee set by Norwegian daughter subsidiary in MNOK: 7 Guarantee set by Swedish daughter subsidiary in MNOK: 95

NOTE 10: PAYROLL COSTS, NUMBER OF EMPLOYEES, GENERAL MANAGER REMUNERATION

Specification of permanent and temporary differences between profit before taxes and the tax basis: Parent Company Group 2016 2015 2016 2015 Salaries 3 037 845 - 354 486 336 338 619 533 Payroll tax 455 202 76 242 506 66 228 955 Pension costs - - 17 274 584 14 077 687 *Other payroll costs 7 539 551 5 258 316 38 331 283 30 842 732 Total 11 032 598 5 258 316 486 334 708 449 768 908 Average number of FTEs 6* 3.5* 677 684 *Payroll cost for the parent company was, until september 2016 handled by the subsidiary Bavaria Stavanger AS and is here classified as “other payroll costs”. The company is covered by the Act on Compulsory Occupational Pensions and has fulfilled the statutory requirements with respect to pension schemes. The company has a defined contribution pension scheme, OTP, which is in “other payroll costs” in 2016 and 2015. Benefits to senior executives Salary and other remuneration to the CEOs (including performance-based bonus agreement and car scheme) 2 385 000

No board remuneration or other remunerations have been paid to the Board of Directors in 2016. There is no closing package in the company. Auditor Parent Company Group Expenses paid to the auditor 2016 2015 2016 2015 Audit fees 145 225 162 000 1 866 546 2 515 100 Additional services from auditor 103 180 176 000 326 312 741 500 Total 248 405 338 000 2 192 858 3 256 600

NOTE 11: RESTRICTED CASH As of 12.31.2016, the company has the following amount of restricted cash: The Group has NOK 24 105 000 in bound funds as of 12.31.2016

693 699

NOTE 12: DERIVATIVE FINANCIAL INSTRUMENTS The parent company entered into interest rate swaps in 2008, which were used to hedge the cash flow associated with future interest rate payments on the company’s long-term debt. The interest rate was secured at 5.85% of 50 million, which was transferred to Bavaria Norge AS. A part of the interest rate swap agreement is treated as cash flow hedge accounting and thus not recognized in the balance sheet. As of 12.31.2016 the fair value of the interest rate swap agreement for the subsidiaries amounted to NOK 3 775 070. as a result of interest rate downturns in the market. This agreement lasts until 07.02.2018. The interest rate swap agreement serves as a hedge for the company’s long-term bank loan of NOK 21 312 500. This is recognized in the accounts at NOK 2 438 861 as financial expenses in 2016, in relation to the interest rate swaps. In addition, as of 12.31.2016, a deposition of NOK 2 166 900 for the share of unrealized losses related to the interest rate swap agreement on the part of the agreement that is not considered effective are recognized as unrealized short-term debt.

NOTE 13: REVENUES PER LOCATION

Norway New-and used cars Aftersales Total Bavaria Norge Group 2 507 385 2 892 Gule & Skrivarhaug Group 251 251 Sandven Gruppen Group (first half of 2016) 194 61 255 Total Norway 2 701 697 3 398 Bavaria Sverige Group in Sweden 2 362 343 2 705 Total revenue for the Group 6 103

NOTE 14: TRANSACTIONS BETWEEN RELATED PARTIES - RENTAL CONTRACTS Most subsidiaries in the the Bavaria Norge AS Group and two businesses in Sweden have rented premises of related parties. The subsidiaries have long-term rental contracts at the respective locations. The rent and duration of contracts are set based on fair value. Miklagruppen AS rents premises of the subsidiary Bavaria Norge AS at a sublease of NOK 370 500 per year. Miklagruppen has also provided a guarantee for rent in a daughter subsidiary of a real estate company, which is a related party, see Note 9.

NOTE 15: INTERCOMPANY ELEMENTS Intercompany receivables - long-term Intercompany receivables - short-term Intercompany payables, including accounts payable

Parent Company

2016 2015 29 656 154 50 278 597 47 045 280 69 495 608 3 003 507 39 097 000

Group 2016 2015 - - - -

ÂŠ Miklagruppen 2017 Photo: BMW Group, Porsche AG, Fredrik Ringe, Minna Suojoki and Bitmap by Dag Myrestrand, Kim Laland, Markus Johansson, Inge Sigvaldsen & Eirik Anda.