THE GROUP AND THE PARENT COMPANY
NOTES
ACCOUNTING PRINCIPLES
This report is prepared in accordance with IAS 34 Interim Financial Reporting and the Annual Accounts Act. The
interim report for the Parent Company has been prepared according the Annual Accounts Act as well as RFR 2
“Reporting for Legal Entities”. New accounting principles for 2018 are described in the Annual Report for 2017,
"Note 1 Accounting Policies" under "New and amended IFRS introduced ". Applied accounting principles are
otherwise consistent with the 2017 annual report.
NEW ACCOUNTING PRINCIPLES FOR 2018
NEW ACCOUNTING PRINCIPLES FOR 2019
On 1 January 2018, IFRS 15 Revenue from contracts with customers
and IFRS 9 Financial Instruments came into force.
As of January 1, 2019, IFRS 16 Leases replaces the current standard
IAS 17 Leases. The standard removes the splitting of leases into either
operational or financial leasing for the lessee, as required by IAS 17,
and instead introduces a common model for reporting of all leases.
IFRS 16 will result in virtually all leases being recognized onto the
balance sheet. According to the new standard, lessees must report
the obligation to pay the leasing fees as a leasing debt in the balance
sheet. The right to utilize the underlying asset during the lease term is
reported as a right of use asset. Depreciation of the asset is recognized
in the profit and loss statement, as well as an interest expense on the
lease debt. Leasing fees paid are reported partly as interest expenses
and partly as amortization of the lease debt.
IFRS 9 "Financial Instruments" has been applied by the Group since
1 January 2018. The transition to IFRS 9 has not resulted in any
differences in the Group's valuation of financial assets and liabilities.
The Group’s hedge accounting is consistent with the new hedge
accounting rules.
Under IFRS 9, credit losses are reported earlier than under the group’s
previous model. New Wave Group applies the simplified model of
expected credit losses for accounts receivable under which total
expected credit losses for the remaining maturity of the receivable
are reported. When assessing future expected credit losses, historical
and forward-looking information is taken into account.
The standard excludes leasing agreements with a lease term of less
than 12 months (short-term lease agreements) and leasing agreements
for assets that have a low value. The Group has chosen to use these
relief rules. The Group has also chosen to apply the simplification
rule for the definition of leasing agreements and include non-leasing
components as part of the right of use assets and the leasing debt.
For a more detailed description of the new accounting principles,
see the Annual Report for 2017, "Note 1 Accounting Policies" and
"New and amended IFRS introduced".
IFRS 15 "Revenue from Contracts with Customers" has been applied
by the Group since 1 January 2018 and has been implemented with
limited retroactivity.
The Group will apply the simplified transition method and will not
recalculate the comparative figures. The simplification rule, that the
right of use asset shall correspond to the leasing debt, has been applied
at the transition.
Most of New Wave Group's revenue comes from sales of goods,
which is reported when the control of the goods is transferred to
the customer. Variable compensation such as discounts, bonuses and
returns is estimated and part of the transaction price.
During the past year, the Group has reviewed all of the Group's leasing
agreements as a result of the new rules in IFRS 16. The standard will
primarily affect the accounting of the Group's operating leases, which
for the most part consist of lease agreements for office premises, ware-
houses and cars.
Revenues from commission, royalties, licenses, and membership fees
for customer clubs constitute performance commitments that are met
over time as the control is transferred to the customer.
RISKS AND RISK CONTROL
New Wave Group’s international operations mean that it is
continuously exposed to various financial risks. The financial risks
are currency, borrowings and interest rate risks, as well as liquidity
and credit risks. In order to minimize the impact these risks may have
on earnings, the Group has established a financial policy. For a more
detailed description of the Group’s risk management please refer to
the Annual Report 2017, note 17, p.81–85. www.nwg.se.
The Group’s policy is to have short fixed-interest agreements resulting
in quick effects on the Group’s net interest as the short-term interest
rate changes.
The Group’s reported risks are deemed to be essentially unchanged.
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