New Wave Group AB Annual_report_2018_EN_HQ | Page 62

NWG // FINANCIAL INFORMATION
The assets' value is determined by
discounting cash flow forecasts for the
next five years, including a terminal
growth period, using a weighted average
cost of capital (WACC). The most
important assumptions in determining
the value in use include growth rate,
operating margin and WACC.
Based on the tests and analyses
carried out, there is, in the current situ-
ation, no need for impairment. Nor were
there any impairment requirements for
the comparison year. For more infor-
mation about the Group's intangible
fixed assets and impairment testing, see
note 8.
Personnel, organisation
and remuneration
The number of employees as of 31
December 2018 amounted to 2,605
(2,495) of whom 52 % were female and
48 % were men. Of the total number
of employees 603 (631) work in
production. The production contained
within New Wave group is attributable
to AHEAD (embroidery), Cutter & Buck
(embroidery), Dahetra, Orrefors Kosta
Boda, Paris Glove, Seger, Termo and
Toppoint.
There is no specifically appointed
remuneration committee for the mana-
gement of salary levels, pension benefits,
incentive matters, and other terms of
employment for the CEO as these issues
are addressed by the Board as a whole.
The terms of employment for other
members of Group Management are
decided on by the CEO and Chairman of
the Board.
Shown below are New Wave Group’s
guidelines for compensation to senior
executives. The guidelines have been
applied during 2018 and up to the
annual general meeting 2019, and is
even proposed at the annual general
meeting May 17, 2019:
# # Remuneration to the Group CEO
and other members of Group
062 // ANNUAL REPORT
management comprises fixed
salaries at competitive market
rates.
# # Variable remunerations such as
bonuses may be paid when this
is justified in order to be able to
recruit and maintain key staff so
as to stimulate improvements in
sales and profits as well as the work
involved in achieving specific key
figures set by the Board. Variable
remunerations shall be based
on predetermined, measureable
criteria such as performance of
New Wave Group or return on
equity compared to fixed targets.
The variable remuneration shall
not exceed 50 % of the fixed remu-
neration. Total yearly cost for the
performance based remuneration
cannot exceed SEK 10 million.
# # The Board shall in respect of each
financial year consider whether
a share or share price related
incentive program which covers the
year in question shall be proposed
to the AGM or not. The AGM makes
the final decision regarding such
incentive programs.
# # There shall be no special fee for
Board work in Group companies for
senior executives.
# # Pension benefits shall be equi-
valent to an ITP plan or, for senior
executives outside Sweden, pension
benefits which are standard in the
relevant country.
# # A mutual notice period of no more
than six months and no severance
pay shall apply for all senior execu-
tives.
The Board may deviate from the
proposed guidelines above in individual
cases if there are specific reasons to
do so.
No deviations have been made from
the guidelines during the current year.
Related party
transactions
There are lease agreements with related
companies. Related companies to the
CEO have purchased merchandise
and received payments for consulting
services performed. In addition, there
are transactions with related parties to
immaterial values. All transactions are
on market terms. For further description
see Note 18.
Risks and risk
management
New Wave Group’s international opera-
tions mean that it is continuously exposed
to various financial risks. The financial
risks are interest rate risks, currency
and liquidity and credit risks. In order to
minimize the effect these risks may have
on earnings, the Group has a financial
policy.
The Group’s policy is to have short
fixed-rate interest periods, which means
that fluctuating short-term interest rates
have a rapid impact on the Group’s net
interest income.
A significant portion of New Wave
Group’s sales are made in foreign currency
(76 %). The Group is exposed to changes
in exchange rates in the future flows of
payments related to firm commitments
and to loans and investments in foreign
currencies, i.e. transaction exposure.
The Group’s accounts are also affected by
translating the results and net assets of
foreign subsidiaries into SEK, i.e. trans-
lation exposure.
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
Group like New Wave Group it is essential
to ensure that sufficient liquidity is avai-
lable to fund future expansion and that
there is a high degree of flexibility when
acquisition opportunities occur. It is also
important that a sound balance between
equity and financing through debt is
kept, as New Wave Group’s goal is to
achieve an equity ratio in excess of 30 %.
The Group is exposed to credit risk
from its operating activities, primarily
accounts receivable, and from its
financing activities which include