New Wave Group AB Annual_report_2018_EN_HQ | Page 97

NWG // FINANCIAL INFORMATION //
THE GROUP
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 from accounts recei-
vable, and from 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 1,485.2 million (1,257.3) which
was based on the carrying value of all financial assets.
Accounts recievable
The risk that the Group’s customers will fail to meet their obli-
gations, i.e. that New Wave Group’s accounts receivable 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
control. 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 receivable which means that if the customer
fails to meet its payment the company will be reimbursed by the
insurance company. The credit risk in the Corporate 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 2018 confirmed credit losses in
Corporate represented 0.09 (0.08) % 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 2018 confirmed
credit losses in these two operating segments represented
0.31 (0.28) % and 0.09 (0.17) % of net sales.
SEK million
Accounts receivable
Exposure
Credit risk reserve
Carrying amount
2018
1 121.2
- 37.1
1 084.1
2017
1 016.0
- 33.2
982.8
The table below shows the aging distribution of accounts recei-
vable and the credit risk reserve.
SEK million
2018
The reserve for expected credit risk in accounts receivable has
been changed as follows:
SEK million
Credit risk reserve for accounts receivable
Credit risk reserve at the beginning of the year
Reclassification
Reserve for expected credit risks
Confirmed losses
Translation difference
Credit risk reserve at year-end
2018
-33.2
0.0
-14.0
11.3
-1.2
-37.1
2017
-37.8
0.0
-10.2
14.1
0.7
-33.2
A description of credit risk exposures is given in the table below:
As of 31 December
2018
Exposure < 1 SEK million
Exposure 1 - 5 SEK million
Exposure > 5 SEK million
Total
As of 31 December
2017
Exposure < 1 SEK million
Exposure 1 - 5 SEK million
Exposure > 5 SEK million
Total
Number of
customers Percentage of
total customers Percentage of
portfolio
29 225
996 93.1
3.2 64.6
21.8
1 162 3.7 13.6
31 383 100.0 100.0
Number of
customers
Percentage of Percentage of
total customers
portfolio
28 996 95.1 68.0
636 2.1 18.5
839 2.8 13.5
30 471 100.0 100.0
Other financial assets
Other financial assets include derivatives, other receivables and
liquid assets. Credit risk related to balances at banks and other
financial institutions is managed by the Group's treasury center
in accordance with the Group's finance policy. The Group deals
only with well-established financial institutions. Other recei-
vables, which represents 6.0 (6.6) % of the total credit risk,
are managed locally on an ongoing basis in accordance with
the Group's finance policy and with support from the central
finance function. No credit risk reserve has been recorded for
other financial assets.
2017
Age analysis Accounts
receivable Credit risk
reserve Accounts
receivable Credit risk
reserve
< 30 days
30 - 90 days
> 90 days
Total 1 004.5
69.1
47.6
1 121.2 -2.3
-2.5
-32.4
-37.1 913.7
62.0
40.3
1 016.0 -1.7
-2.5
-29.0
-33.2
ANNUAL REPORT // 097