New Wave Group AB Annual report 2017 EN | Page 54

FINANCIAL INFORMATION With regard to each financial year, the Board shall evaluate whether a share or share price-related incentive programme which covers the year in question shall be proposed to the AGM or not. The AGM decides on such incentive programmes. Pension benefits shall correspond to the ITP plan (supple- mentary pensions for salaried employees) or, in the case of senior management outside Sweden, pension benefits that are customary in that country. A mutual notice period of a maximum of 6 months shall apply to all senior management and no severance pay will be paid. The Board may deviate from the proposed guidelines above in individual cases if there are specific reasons to do so. RELATED PARTY TRANSACTIONS There are lease agreements with related companies. Related companies to the CEO have bought merchandise and received payments for consulting services performed. In addition, there are transactions with related parties to immaterial values. All trans- actions are on market terms. For further description see Note 18. RISKS AND RISKMANAGEMENT The Group is exposed to credit risk from its operating activities, primarily accounts receivables, and from its 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 1 257.3 (1 184.9) million. For a more extensive description of the Group’s risk exposures and risk management see Note 17. ENVIRONMENT New Wave Group has a responsibility to ensure that our business operations, and the business operations of our suppliers, respect the legal provisions of different countries, as well as basic human rights and working conditions. New Wave Group works systema- tically with regard to supplier auditing, monitoring, and dialogue in order to ensure that our business operations are conducted in the most responsible manner possible with regard to people and the environment. New Wave Group understands how our business operations are so closely related to local and global environmental issues. As the Group grows in size, and as more customers buy our products, our environmental impact will increase. For this reason, New Wave Group is striving to develop environmentally sustainable solutions with regard to transport, packaging, and manufacturing. New Wave Group’s international operations mean that it is conti- nuously exposed to various financial risks. The financial risks are interest rate risks, currency and liquidity and credit risks. In order to minimize the affect these risks may have on earnings, the Group has established a financial policy. New Wave Group aims to be the industry leader in CSR (Corporate Social Responsibility). 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. For additional information see our Sustainability report and the section CSR & Sustainability on page 34. A significant portion of New Wave Group’s sales are made in foreign currency (approximately 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. translation 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 company like New Wave Group it is essential to ensure that sufficient liquidity is available to fund future expansion and that there is a high degree of flexibility when acquisition opportunities present themselves. 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 %. 54 | NWG 2017 The Group’s subsidiary Orrefors Kosta Boda AB conducts licensed operations under the Enviromental code. THE PARENT COMPANY Total income amounted to SEK 92.2 (123.3) million. Result before appropriations and taxes amounted to SEK 298.9 (406.2) million. The result was negatively affected by SEK 76.5 million regarding impairment of financial fixed assets. This is attributable to capital injections in subsidiaries. Net borrowing amounted to SEK 1,566.5 (1,726,0) million. The parent company's financing to subsidiaries amounted to SEK 2,040.2 (1,887.0) million. Net investments for the year amounted to SEK -63.5 (5.9) million. Last year included a repayment of share capital by subsidiaries of SEK 30.2 million and this year includes capital contribu- tions to subsidiaries of SEK 56.4 million. The balance sheet total amounted to SEK 3,813.5 (3,753.1) million. Shareholders' equity, including 78% of untaxed reserves, amounted to SEK 1,863.6 (1,588.7) million.