Internal Control

General

According to the Swedish Companies Act, the Board is responsible for internal control. The aim of internal control is to create a clear structure of responsibility and an effective decision-making process. The Board has defined a number of basic documents of importance for financial reporting in order to guarantee an effective control environment. The Board’s rules of procedure and the instructions for the CEO serve to guarantee a clear allocation of roles and responsibilities, with the aim of operational risks being managed effectively. The Board has also drawn up a number of basic guidelines and policies that are important for internal control, such as a Corporate Governance policy, Financial risk policy, Anti-corruption policy and Information policy. The basic control documents are subject to review on an ongoing basis. An effective control environment also requires an adequate organizational structure and ongoing reviews of this. Company management reports to the Board on a regular basis following defined routines. Company management is responsible for the system of internal controls that is required to deal with significant risks in operating activities. Managers at various levels within the Group have clearly defined authority and responsibilities with regard to internal control.

Financial risk assessment

The material risks New Wave Group have identified in connection with the financial reporting are inaccuracies in the reporting and valuation of stock, intangible assets, accounts receivable, interestbearing liabilities, tax, currencies and the risk of fraud, loss or embezzlement of assets. The greatest financial risks in terms of value in the balance sheet are:
  • Stock, which accounts for around 42 % of the value of the Group’s assets
  • Intangible assets (mainly goodwill and trademarks), which account for 18 % of the value of the Group’s assets
  • Accounts receivable, which account for around 14 % of the value of the Group’s assets
  • Interest-bearing liabilities, which account for around 40 % of the Group’s balance sheet total


Control environment

The foundations of the internal control in relation to the financial reporting consist of the general control environment with organization, decision-making paths, authority and responsibilities that have been documented and communicated. Within New Wave Group some of the most important constituent parts of the control environment are documented in the form of policies, e.g. Corporate Governance policy, IT policy, Financial risk policy, Environmental policy as well as instructions, such as authorization instructions, manuals and financial reporting manual.

Corporate Governance policy

The different corporate governance aspects of the Group are summarized in the Corporate Governance policy, which is also a governing document for other Group policies.

Financial risk policy

The Group’s finance function works according to a policy established by the Board that sets out frameworks for how the Group’s operations shall be financed and how, for example, currency risks and interest rate risks shall be dealt with.

IT policy

The Group’s IT policy describes the Group’s principles for application and safety within IT.

Information policy

The Group’s Information policy is a document that describes the Group’s rules for handling and communication of information, both internally within the Group as well as externally.

Insider policy

The Group’s Insider policy sets out rules for handling and communication of insider information.

Environmental policy

The Group’s environmental policy sets out guidelines for the environmental work within the Group.

Anti-corruption policy

The Group’s anti-corruption policy describes the Group’s principles for work against corruption.

Control activities

In order to ensure the internal control, there are both automatic controls in IT systems, which handle authority and authorization rights, as well as manual controls in the form of reconciliations and physical counts. Detailed economic analyses of the result plus follow-up of plans and forecasts supplement the controls and provide a general confirmation of the quality of the reporting.

The Group performs reviews of the companies’ accounting, which are reported to Group management. No CEO is permitted to appoint or dismiss a finance manager, and finance managers’ report directly to the Group’s CFO. The Group’s risks with regard to financial reporting lay in the risk that material misstatements may occur when reporting the company’s financial position and results. The company’s accounting instructions and manuals, together with established follow up routines, serve to minimize these risks.

Information and communication

The most important control documents in the form of policies and instructions are updated regularly and communicated via relevant channels electronically and/or in printed form. For communication with external parties, there is an Information policy which specifies guidelines for how this communication should take place. The purpose of the policy is to ensure that all information obligations are fulfilled correctly and in full.

Follow-up

Finance personnel and management at company and Group level analyze the financial reporting in detail every month. New Wave Group’s decentralized corporate structure means that each company's financial department is responsible for ensuring that the financial reporting from each unit is correct, complete and on time. Processes and risk elements are evaluated by means of self-assessment, internal Board meetings and via the company’s external auditors. Several processes are fully or partly centralized at Group level, such as purchasing, logistics, payments, financing, IT, consolidation and reporting. The Group’s central finance organization is responsible for implementing, further developing and maintaining the Group’s control routines, and for performing internal controls of business critical matters. The Board receives financial reports on an ongoing basis, and at each Board meeting the financial situation facing the Group and the various companies is discussed. During the year the Board also receives reports from the company’s auditors detailing their observations.

The companies

New Wave Group’s organization is decentralized, with a high degree of independence and self-determination being delegated to company management. The objective is for the companies to be run in an entrepreneurial spirit, while at the same time enjoying the benefits of belonging to a large group of companies. The Group therefore consists of a large number of operational companies, approximately 70 in total. Board meetings are normally held three times a year in each company or sub-group. The composition of the Boards depends on the company’s direction and its stage of development. In addition to Group management, the expertise of CEOs in “mature” companies are utilized in the Boards of local subsidiaries. The organizational model chosen by New Wave Group provides for effective benchmarking of profitability, capital tied up and growth between companies, brands and markets.
 

Operating segments

The Group divides its operations into three operating segments: Corporate, Sports & Leisure, and Gifts & Home Furnishings. Within Group management there are managers with responsibility for each operating segment in order to coordinate operations. The products for each brand follow the operating segments, but have separate sales teams for the different sales channels, promo and retail.

Sales channels

The Group’s products are sold via two sales channels, promo and retail.

Concept groups

Within each operating segment there are a number of concept groups responsible for strategic direction, product development and marketing strategy for one or more brands.