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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