New Wave Group AB Annual report 2017 EN | Page 53

FINANCIAL INFORMATION

Inventories were written down by SEK 106.0 ( 115.1 ) million . Write-down related to merchandise on stock amounted to 4.1 ( 4.4 ) %.

Accounts receivable amounted to SEK 982.8 ( 906.2 ) million . The increase is turnover related .

INVESTMENTS , FINANCING AND LIQUIDITY

Consolidated cash flow from operating activities amounted to SEK 207.8 ( 448.9 ) million . The lower cash flow is related to higher purchases than last year and increased accounts receivable ( turnover related ). Product purchases are related to new basic collections and new warehouse in Canada . The net cash investments amounted to SEK -110.6 ( -89.6 ) million . During the year , a number of investments were made in tangible fixed assets , among others in new warehouses as well as new facilities in Kosta . We have also made more investments in intangible assets , which are attributable to IT .

Net debt decreased during the year by SEK 111.6 million to 1,637.3 ( 1,748.9 ) million . The decrease is primarily related to changes in currency exchange rates , which reduced the debt by SEK 88.9 million . Our net debt in relation to equity and working capital has decreased and amounted to 54.1 ( 62.1 ) % and 57.4 ( 64.7 ) % respectively .

The equity ratio improved by 2.5 percentage points and amounted to 50.9 ( 48.4 ) % as of 31 December .

The Group ’ s total credit facility as of 31 December amounted 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 term of between one and six years . The credit facility amount is limited to and dependent on the value of some underlying assets . The funding agreement means that financial ratios ( covenants ) must be fulfilled in order to maintain the credit facility .

Based on the present forecast , management estimates that the group will be able to meet these ratios with a satisfactory margin .

Work on a new financial agreement is being finalised and is expected to be completed in the beginning of the second quarter of 2018 .

INTANGIBLE ASSETS AND IMPAIRMENT TESTING

The Group ’ s intangible fixed assets consist mainly of goodwill and trademarks . The trademarks with the greater value recorded at cost are well known trademarks , such as Orrefors Kosta Boda in Gifts & Home Furnishings and primarily Cutter & Buck in Sports & Leisure . The Groups goodwill and trademarks are tested annual to asses whether any need for impairment exists . The assets value is determined by discounting values of cash flow forecasts for the next five years , including a terminal growth period , using a weighted cost of capital ( WACC ). The most significant assumptions when determining the value in use consists of growth rate , operating margin and WACC .

Based on the tests and analyses carried out , there is , in the current situation , no write-down requirement . Nor were there any write-down requirements for the comparison year . For more information about the Groups intangible assets and impairment testing , see note 8 .

PERSONNEL , ORGANISATION AND COMPENSATION

The number of employees as of 31 December 2017 amounted to 2,495 ( 2,396 ) of whom 52 % were female and 48 % were men . Of the total number of employees 631 ( 631 ) work in production . The production contained within New Wave group is attributable to Ahead ( embroidery ), Cutter & Buck ( embroidery ), Paris Glove , Orrefors Kosta Boda , Seger , Termo , Dahetra and Toppoint .

There is no specifically appointed remuneration committee for the management 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 2017 and up to the annual general meeting 2018 , and is even proposed at the annual general meeting May 16 , 2018 :

Remuneration to the Group CEO and senior management shall comprise a fixed salary at market rate .

No specific Board fees for work within Group companies will be paid to the senior management .

Variable remuneration , such as bonuses , may be permitted when it can be justified for the recruitment or retention of key employees , and to stimulate improvements in sales and profits , as well as for work to achieve the specific key ratios set by the Board . Variable remuneration shall be based on predetermined and measurable criteria such as the earnings trend for the New Wave Group , or the return on equity compared with fixed targets . Variable remuneration shall not exceed 50 % of the fixed remuneration . Total yearly cost cannot exceed SEK 10 million .

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