New Wave Group AB Annual report 2017 EN | Page 84

THE GROUP

FINANCIAL INFORMATION

LIQUIDITY RISK Due to the relatively capital-intensive nature of its activities and its expansive growth strategy, New Wave Group has a need to secure its funding. For a growth company like New Wave Group it is essential to ensure that sufficient liquidity is available to fund future expansion and that there is a high degree of flexibility when acquisition opportunities present themselves. It is also substantial that a sound balance between equity and financing through debt is kept why New Wave Group’ s goal is to achieve an equity ratio in excess of 30 %. New Wave Group has a centralized finance function, which means that external borrowing is managed and administered centrally as far as possible. The liquidity generated in the Group is continually transferred to New Wave Group’ s treasury center through various pooling systems and reduces the total credit volume. New Wave Group has not made any financial investments.

The Group ' s funding agreement as of 31 December 2017 had a total credit facility amounting to SEK 2,539 million of which SEK 2,000 million runs until 10 February 2019, USD 35 million has a term that extends to 10 February 2024 and SEK 250 million has a maturity of one to six years. The credit facility amount is limited to and dependent on the value of some underlying assets. Work on a new financial agreement is being finalised and is expected to be completed in the beginning of the second quarter of 2018.

The principal agreement means that financial ratios( covenants) must be fulfilled in order to maintain the agreement. The covenants are met as of 31 December 2017. Based on the current forecast, management deems that the Group will be able to achieve these key performance indicators by a satisfactory margin

The below table displays the maturity analysis of the amortization of interest bearing liabilities including contractual and undiscounted interest payments Any planned future liabilities have not been included. Interest payements related to financial instruments with floating rate has been calculated based on the interest rate at year end.

The below table displays the maturity for the Group ' s outstanding currency futures och unrealized amounts per year-end, distributed per currency. All contracts mature within twelve months from year-end.

CREDIT RISKS Credit risk is defined as the Group’ s exposure to losses in the event that one party to a financial instrument fails to discharge an obligation. The Group is exposed to credit risk from its operating activities, primarily accounts receivables, and from its financing activities which includes deposits at banks and financial institutions, currency futures and other financial instruments. The Group ' s total exposure to credit risk amounted, at year-end, to SEK 1,257.3 million( SEK 1,184.9 million) which was based on the carrying value of all financial assets.

ACCOUNTS RECEIVABLES The risk that the Group’ s customers will fail to meet their obligations, i. e. that New Wave Group’ s accounts receivables will not be paid, constitutes a credit risk. New Wave Group has centrally adopted a finance policy and directives, based on which each company has drawn up a set of written procedures for credit checks. Information from external credit reference agencies is one stage of the process. Furthermore, companies in the group, based on the finance policy, have the option, when needed, to insure accounts receivables which means that if the customer fails to meet its payment the company will be reinbursed by the insurance company. The credit risk in the Corporate Promo operating segment is lower, as the resellers, which are New Wave Group’ s customers, make purchases based on orders that have already been placed by the end customers. The resellers are relatively small and large in number. In 2017 actual bad debts in Corporate Promo represented 0.08( 0.36) % of sales. In the Gifts & Home Furnishings and Sports & Leisure operating segments sales are made to selected resellers, and credit losses are small, although there is a higher concentration to a smaller number of customers compared to the promo market. In 2017 actual bad debts in these two operating segments represented 0.28( 0.42) % and 0.17( 0.08) % of net sales.

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