THE GROUP
FINANCIAL INFORMATION
NOTE 1 ACCOUNTING POLICIES
BASIS OF PREPARATION
The consolidated financial statements have been prepared in
accordance with the International Financial Reporting Standards
(IFRS) issued by the International Accounting Standards
Board (IASB) as adopted by the European Commission.
Recommendation RFR 1 Supplementary Accounting Rules for
Corporate Groups of the Swedish Financial Reporting Board has
also been applied, which means that certain additional disclo-
sures are provided in the consolidated financial statements. The
accounting policies presented in the following description have
be en applied consistently for all periods presented in the conso-
lidated financial statements. The policies have also been applied
consistently within the Group. The consolidated financial state-
ments are based primarily on historical costs, except in respect
of certain financial assets and liabilities, which are recognised
at fair value. The financial statements are prepared in Swedish
kronor, which is the reporting currency of New Wave Group.
Preparing financial statements in accordance with IFRS requires
that management make certain assessments, estimates and
assumptions. Critical estimates and assessments are often based
on historical experience and expected future events. Those which
are expected to have the biggest impact on earnings, assets and
liabilities relate to how trademarks, goodwill and taxes shall be
measured. Estimates, assessments and assumptions are reviewed
on a regular basis. Changes are reported in the period in which the
change is implemented and in future periods if these are affected.
Information on areas where applied estimates and assessments
contain an element of uncertainty is provided in Note 2.
Fixed assets, non-current liabilities and provisions consist essen-
tially of amounts that are expected to be recovered or paid later
than twelve months from the balance sheet date. Current assets
and current liabilities consist essentially of amounts that are
expected to be recovered or paid within twelve months of the
balance sheet date.
NEW AND AMENDED IFRS INTRODUCED
NEW ACCOUNTING PRINCIPLES FOR 2017
No new or revised IFRS, which came into force in 2017, have had
a significant impact on the Group’s or parent company’s financial
statements.
NEW ACCOUNTING PRINCIPLES FOR 2018 AND LATER
Starting from January 1, 2018, New Wave Group applies IFRS 9
Financial Instruments and IFRS 15 Revenues from agreements
with customers.
Below is a description of the impacts the standards will have on
the financial statements for the Group or Parent Company. None
of the other new or revised standards or IFRIC interpretations
published on December 31 2017 have any impact on the Group's
or Parent Company's financial reports.
IFRS 9 FINANCIAL INSTRUMENTS
IFRS 9 comprises accounting for financial assets and liabilities and
replaces IAS 39 Financial Instruments, Accounting and Valuation
62 | NWG 2017
The majority of New Wave Group’s financial instruments
are classified as loans and trade receivables valued at accrued
acquisition value. Derivatives are classified and valued at
fair value through profit and loss when hedge accounting is
not applied. New hedge accounting rules do not affect New
Wave Group since the hedge accounting applied is consistent
with the new standard. The new rules regarding classifi-
cation and valuation have no effect on New Wave Group.
The impacts of IFRS 9 relate to impairment and a new model
for expected credit losses. Compared with the Group's previous
model, the new model means that the credit losses are reported
earlier. The new model takes into account historical and forward-
looking information to calculate future expected credit losses.
New Wave Group estimates that the current loss reserve is suffi-
cient and necessary according to both the new and old model and
that no transition effects need to be presented.
IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS
IFRS 15 replaces all previously published standards and interpreta-
tions that handle revenue with a single revenue recognition model.
The standard is implemented with limited retroactivity, which
means that only contracts that have not yet been completed
as of January 1, 2018 are converted at the transition to the
new standard. New Wave Group's contracts with repurchase
agreements are expected to be impacted by the implementation
of IFRS 15, although the effects will be small. However, the iden-
tified contracts have not had any effect on equity at the time of
transition.
IFRS 16 LEASES
IFRS 16 Leases enters into force on January 1, 2019. The standard
has been adopted by the EU and will be applied by New Wave
Group as of January 1, 2019. IFRS 16 will not be applied with full
retroactivity but the cumulative transition effect is presented as an
adjustment to the opening balance of equity 2019.
During the year, the Group continued to evaluate the effects of the
standard that result in leased assets being reported in the balance
sheet. The Group currently has operational leases for mainly rental
of premises but also company cars and similar contracts. The new
standard will reflect the fact that New Wave Group, as a lessee,
is entitled to use an asset for a certain period of time together
with an obligation to pay for that asset. The right of utilization
and the leasing debt will be recognized at the present value of
expected future leasing fees. The cost of leased assets shall be
allocated between interest payments and depreciation of the asset.
There are some exceptions to the standard to take into account.
Low value assets or lease periods less than 12 months will continue
to be reported as operating expenses. Also service components
in leases will continue to be reported as operating expenses.
The effect of implementing IFRS 16 will be an increased balance
sheet total with higher tangible fixed assets and higher financial
debt. There will also be a shift in the consolidated income statement,
with a positive effect on the operating result compared to now. That
will be a result of the fact that parts of the lease payments instead
will impact the interest expenses and thus net financial income.