I.A. Hedin Bil - Annual Report 2018 1
KEY EVENTS DURING THE YEAR RISKS On April 1st, se
ven dealerships were acquired in and around Ghent in Belgium from Mercedes-Benz in Belgium. The business consists of sales and aftermarket services of Mercedes-Benz passenger cars, commercial vehicles, trucks and Smart passenger cars. On March 30th, an agreement was signed to acquire five additional Mercedes-Benz dealerships around Antwerp, Belgium. The acquisition was completed on August 22nd. An agreement to acquire Motorcentralen i Eskilstuna AB was signed on April 16th and completed on May 3rd. The company conducts sales and aftermarket dealership of Ford passenger cars and commercial vehicles. The business was transferred to Hedin Mölndal Bil AB on July 1st. On April 25th, an agreement was signed to acquire AB Englunds Bil & Motorverkstad, with completion on May 9th. The company conduct sales and aftermarket service for BMW in Luleå. The business was transferred to Bavaria Sverige Bil AB on November 1st. On June 21st, the remaining shares in GS Bildeler AS was acquired. The company is then a wholly owned subsidiary of Hedin Automotive AS. Bavaria Sverige Bil AB entered into an agreement on July 13th to acquire an automotive dealership in Östersund. the acquisition was completed on August 31st. The dealer retails BMW and Nissan. Skadecenter in Borås AB was acquired on September 28th. The business, which consists of a body and paint workshop, was transferred to Hedin Göteborg Bil AB on November 1st. KW Cars AB transferred its operations to Hedin Göteborg Bil AB on November 1st, consisting of sales and aftermarket service for Jeep in Grimbodalen, Göteborg. GS Bildeler AS acquired 67 percent of Conlogo AS on October 5th, a Norwegian import and wholesale company. On August 22nd, an agreement was signed to acquire two full service dealerships near Ghent and Antwerp. The business consists of the sale and aftermarket service of Mercedes-Benz passenger cars, commercial vehicles and trucks. The access is conditional on the approval of the Belgian Competition authority, and is expected to take place during the second quarter, 2019. EVENTS AFTER THE END OF THE FINANCIAL YEAR On February 18th, a body and paint shop was acquired, close to the existing Hedin Automotive dealership outside Antwerp in Belgium. EXPECTED FUTURE DEVELOPMENT The operations for the Group are expected to continue to grow by acquisitions in the forthcoming years. The overall market has been strong in recent years. For next year a decline in our markets is expected, but still remaining at a historically high level. Profit is expected to improve next year and with stable earnings performance and good profitability, the Group is financially and economically well prepared for the future. Car sales are dependent on the economic climate and this creates sensitivity in Group sales. Effective processes and control of the inventory situation are required with the purpose of reducing the sensitivity in profitability. Agreements with importers are on a rolling two-year or five-year term. This highlight even further the importance of maintaining a good relationship and to build long-term partnership between the importer and the dealer. Hedin Group aims to be a strategic partner for each of its importers and to build up a strong sense of trust between the parties. The creation of a complete concept that includes financing, insurance, servicing, credit cards and different forms of ownership, is a key factor in promoting customer loyalty. Through a wide range of brands, the risks arising from excessive exposure on individual brands also decrease. At the same time, the expansion of recent years has mainly taken place in the premium segment and in well-functioning markets, which made it possible to spread the risks in a positive way. Opportunities are created to widen and spread the risks, through Group operations in several sectors of the automotive industry, including sales, service centres, car rental and spare parts. CORPORATE GOVERNANCE REPORT The supreme decision-making body in I.A. Hedin Bil Group is the Shareholders General Meeting. The Shareholders General Meeting appoints the board, which has the ultimate responsibility to ensure that the internal control functions are working satisfactorily so that the quality of the financial reporting can be ensured. The Board of directors is responsible to ensure that the company's organization is designed in such a way that the accounting, funds management and the company's financial conditions are controlled in a satisfactory manner. The Board regularly evaluates the CEO's work. The CEO's task, together with the CFO, is to examine and ensure the quality of the financial reporting. Clear guidelines are communicated to the subsidiaries to ensure applied rules and principles are followed within the Group's companies. The Group's external auditors report to the Board if necessary, and at least once a year. Shareholders General Meeting The company's largest shareholder is Anders Hedin Invest AB, with a holding of 91% of the shares. Anders Hedin Invest AB is wholly owned by Anders Hedin, who is also President and CEO of I.A. Hedin Bil AB. The remaining 9% is owned by Ingemar Hedin. There are 100 shares of series A, each share entitling to ten votes, and 900 shares of series B, each share entitling to one vote. There are no restrictions on how many votes each shareholder can cast at a shareholders general meeting. All shares of series A are held by Anders Hedin Invest AB. There are no special regulations in the Articles of Association for the appointment or dismissal of Board members, or amendments to the Articles of Association. 52 I.A. HEDIN BIL AB / ANNUAL REPORT / 2018