NWG // THE GROUP AND THE PARENT COMPANY
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Note 1 - Accounting policies Note 2 - Risks and risk control
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 . Applied accounting policies are otherwise consistent with the 2019 annual report .
New accounting policies for 2020
A number of amendments of current accounting standards have been published and are effective from 2020 and later . None of these has a material impact on New Wave Group ´ s financial statements .
Accounting for government grants
In the annual report for 2019 the Group has not described the accounting principles related to accounting for government grants due to that the amounts were insignificant . During 2020 the Group has received grants from governments around the world related to actions that have been introduced due to the outbreak of COVID-19 . Government grants are recognized in the Group ´ s consolidated balance sheet and the Group ´ s consolidated income statement when there is reasonable assurance that the entity will comply with the conditions attached to them and the grants will be received . Grants related to expenses are classified as other operating income in the Group ´ s consolidated income statement and is recognized on a systematic basis over the same period in which the Group recognizes the related costs for which the grants are intended to compensate .
During 2020 the Group has received government loans related to the actions that have been introduced due to the outbreak of COVID-19 . A government loan is initially measured at fair value less transaction costs and after the initial valuation measured at amortized cost by applying the effective interest method . If there is a possibility to receive loan forgiveness , an assessment is performed to determine whether it is reasonable certain that the Group will meet the requirements to receive a loan forgiveness . If the assessment is that there is reasonable assurance that the Group will meet the requirements , the government loan will be recognized as other operating income in the Group ´ s consolidated income statement .
New Wave Group ’ s international operations mean that it is continuously exposed to various financial risks . The financial risks are interest rate risks , currency , liquidity and credit risks . In order to minimize the effect these risks may have on earnings , the Group has a financial risk policy . For a more detailed description of the Group ’ s risk management please refer to the Annual Report 2019 , note 17 , p . 92-98 . The Annual Report is available at the Group ’ s headquarters in Gothenburg , Sweden , as well as at www . nwg . se .
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 .
During the first quarter of 2020 , the world was hit by a pandemic caused by COVID-19 . New Wave Group has been largely affected by the spread of COVID-19 and the demand for the Group ’ s products and services has been significantly reduced in particular during the second quarter of 2020 . Net sales for the Group was negatively affected during the third quarter as well , albeit to a slightly lesser extent than in the second quarter . It is still hard to assess the development for the coming quarters . Measures taken include , among other things , that the Annual General Meeting decided that no dividend for the 2019 financial year will be issued and that the Group has applied for and received government grants in several countries . The Group ’ s customers also suffer from the negative effects of the pandemic , which leads to an increased credit risk . The companies within the Group attach great importance to monitoring the customers ’ ability to pay and continuously make assessments regarding adequate credit risk provisions .
Besides the above , the Group ’ s reported risks are deemed to be essentially unchanged .
25 // Q3