85 Cloudberry Annual report 2021 Corporate Governance investment decisions and continuously monitors changes in the political landscape and includes this in the relevant discussions. The power industry is a highly regulated sector, and thus subject to political risk. The high power prices observed during H2 2021 and so far in 2022 has increased political calls for further regulations of the power market in both countries the Group operates in. Political and public support for wind and hydro projects fluctuates over time, and may affect the Group’s ability to obtain concessions for both or either technologies. In Norway, there has been an effective ban on filing for new land-based wind power projects since 2019, and the new set of concession regulations are still not in effect by the time of writing. There is therefore unclear how the Norwegian wind power market will develop in the years to come. 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. Covid-19 During 2021, Covid-19 continued to impact operations across the Group. Travel bans, mandatory quarantine and disruptions to the supply chain has, 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. For further information on the Company’s financial risk and risk management, reference is made to the Group Financial Statement note 6 Covid-19, note 7 Market related risks, note 8 Commercial and operational risks and note 9 Financial risks. Deviations from Section 10 of the Corporate Governance Code: None 11. Remuneration of the Board of Directors Cloudberry has established guidelines for salary and other remuneration for executive personnel, which also covers guidelines for remuneration to the Board of Directors. The guidelines have been prepared in accordance with Section 6-16a of the Public Limited Companies The remuneration of the Board of Directors is resolved by the Company’s General Meeting and should reflect the Board of Directors’ responsibly, experience, time spent and the complexity of the Company`s activities. The Board of Directors’ remuneration is not linked to the performance and the Board of Directors hold no options in the Company. The Board of Directors members who participate in the Audit Committee, the Compensation Committee and the ESG Committee receive separate compensation for these appointments, which are approved separately by the Company’s General Meeting. Detailed information on the remuneration of the Board of Directors can be found in the Financial Statements, note 13.
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