Cloudberry Annual report 2021 Board of Directors report 30 Financial risk Through its business activities, Cloudberry is mainly exposed to market risks including power prices, interest rate risk, currency risk, credit risk and liquidity risk. Financial risk management is based on the objective of reducing negative cash flow effects and, to a lesser extent, negative accounting effects of these risks. Currency and interest rate risks are regulated by means of mandates and managed by using hedging instruments. Cloudberry’s interest rate exposure is related to its debt portfolio and managed based on a balance between keeping interest cost low over time and contributing to stabilise the group’s cash flows. The construction of the Group’s project will normally be financed with a combination of equity and debt. As a result, any increase of interest rates will lead to higher financing costs, which in turn reduces the Group’s profitability. Subsequently, the Group is dependent on external financing. If the Group is not able to obtain required financing on a timely basis and on attractive terms, the result could be lost business opportunities, shortened lifetime of current assets and/or that the Group is forces to realise its interest in certain projects. Fluctuations in exchange rates could affect the Group’s cash flow and financial position. The Group presents its financial statements in NOK. However, power is traded at Nord Pool, where EUR is the trading currency. The Group is also exposed to SEK through its operations in Sweden, hence the Group is exposed to currency risk through fluctuations in exchange rates between NOK, SEK and EUR. For further details, please confer the Group Financial Statement, note 9 Financial risks. Climate risk Cloudberry is exposed to climate changes related to more extreme weather, primarily driven by increasingly warmer climate, wetter and more windy weather conditions, or simply changes in normal weather conditions in local geographic areas. Such climate risk can pose a significant threat to humans, wildlife and society as a whole. For Cloudberry it can possibly affect the use and damage on producing assets, increased costs of maintenance and other costs, change performance due to change in waterfalls or other disruptions of core activities. Cloudberry has assessed its potential climate-related risks and opportunities in accordance with the recommendations of the Task Force on Climaterelated Financial Disclosure (TCFD). The company continuously analyses and assesses its climate-related risk strategy to detect other risks and opportunities, and to ensure that the company makes the right decisions and assessments on how climate risks might affect Cloudberry. The climate-related risks will be further integrated into overall risk management structure in Cloudberry. The climate-related risks are further described in the Sustainability Report. Covid-19 During 2021, Covid-19 continued to impact operations across the Group. Travel bans, mandatory quarantine and disruptions to the supply chain have resulted in and may continue to result in delayed deliveries from the Group’s suppliers. It is currently not possible to predict the long-term consequences for the Group, but there is a risk that the ongoing pandemic will result in increased cost particularly to the Group’s development projects. See also further information in the Group Financial Statement, note 6 Covid-19. Outlook Cloudberry is financed to carry out our Nordic projects (close to 300 MW). The Company has built a strong and diversified shareholder base that makes us able to implement and finance our long-term growth strategy. In parallel to building a long-term portfolio of producing assets, the Company has succeeded in building an organization and attracting highly qualified employees who ensure that we can implement our plans and strategies. Through the acquisition and integration of Captiva, we ensure control over strategically important segments of our business model. We will further develop and offer many of Captiva’s services to other players in the industry. We have experienced and documented that our business model is scalable and gives the company access to significant growth opportunities in the Nordic region, within both wind and hydro power. We will continue to focus on our role as a local player, with a strong presence across the Nordics.
RkJQdWJsaXNoZXIy NTYyMDE=