Fiven Annual Report 2020

Fiven Annual Report 2020 Financial review Presentation of accounts Fiven’s consolidated financial statements have been pre- pared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The parent company`s annual financial statements have been prepared in compliance with the Norwegian Accounting Act and accounting principles generally accepted in Norway. For further information, please refer to the financial statements and note disclosures. Consolidated Review On 14 May, 2019, the Group acquired 100 per cent of the shares and voting interests in SG Ceramic Materials AS (Norway), Matériaux Céramiques S.A (Belgium), Carbeto de Silicio SIKA Brazil Ltda (Brazil), SG Materiales Ceramicos CA (Venezuela) and Curburo del Caroni CA (Venezuela). The net final trans- action price was 80.7 MEUR finally concluded in March 2020 includes working capital and net financial debt adjustments. The Group`s operations in Venezuela are integrated cost centers under the current business model of the Belgian production facility. The two Venezuelan subsidiaries are controlled by the Group as defined in IFRS 10. Based on a thorough assessment, Fiven has concluded not to consolidate the two subsidiaries, as this has only immaterial impact on the consolidated financial statements. Operating Profit and profitability 2020 was the first full fiscal year for the Fiven Group. The total consolidated revenues and other income for the 12-month period reached 99.7 MEUR. The revenues from cus- tomers split by customer location show that 50 per cent came from Europe, 17 per cent from North America, 25 per cent from South America and the remaining 8 per cent from Asia. The Standard products (Abrasives, Refractory and Metallurgy) accounted for 63 per cent of the total Group revenues whilst the remaining 37 per cent came from Specialty products. The Operating Profit for the period ended at 10.5 MEUR. The Net Finance expenses of 11.9 MEUR include realized and unre- alized exchange losses of 2.9 MEUR and interest on debt of 8.3 MEUR as main elements. Net Loss of the year was 2.9 MEUR. Fiven uses Adjusted EBITDA to measure operating perfor- mance at the group and segment level. The consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of the period showed 15.2 MEUR whilst the EBITDA adjusted for IFRS 16 impact, the expensed non-recurring carve out cost and transaction costs from the acquisition showed 16.7 MEUR with a corresponding adjusted EBITDA margin of 16.8 per cent. The results include 0.5 MEUR of costs from restructuring actions executed in 2020. The outbreak of the COVID 19 Pandemic had a negative impact on the Fiven revenues and profits. The impact on the operating results was mitigated by a better product mix in sales, the local currency depreciation in Norway and Brazil against major trading currencies and cost reduction measures executed. The restructuring program launched in second quarter 2020 has lowered Fiven cost base and will bring full year effects in 2021. Cash Flow and Liquidity reserve Total cash and cash equivalents at year-end were 23.0 MEUR, up from 14.8 MEUR for year-end 2019. Restricted cash accounted for 0.3 MEUR of the total to cover for social taxes in Norway. Cash flow from operating activities was 15.0 MEUR. The cash flow from investing activities amounted to -3.7 MEUR of which -0.7 MEUR came from the adjustment of the final purchasing price with the former owner. The full year cash flow from financing activities was -1.1 MEUR. Debt and financial position Fiven’s total liabilities at 31.12.2020 was 133.2 MEUR in compar- ison to 121.1 MEUR year-end 2019. The Group’s current liabilities as of 31.12.20 comprised 27 per cent of total liabilities compared to 20 per cent year-end 2019. Included in the non-current liabilities there is a bond financing of 55.6 MEUR (net after amortized costs) and a shareholder loan of 34.7 MEUR (including capitalized interest), both with maturity dates in April 2022. Total assets and equity Total assets at year-end amounted to 120.1 MEUR compared to 120.5 MEUR year-end 2019. Equity reported at year-end was -13.1 MEUR compared to -0.6 MEUR at end of 2019. The impact on equity from changes in foreign currency translation reserve was -9.6 MEUR. Equity end of 2020 was hence –10.9 per cent. Going Concern Pursuant to Section 3-3a of the Norwegian Accounting Act, the Board of Directors confirms that the financial statements have been prepared on the assumption of going concern. The corona virus adds some uncertainty to future financial perfor- mance. The consolidated equity as per 31.12.2020 is negative by 13.1 MEUR, largely caused by a non-cash impact from the cumulative foreign currency translation reserve of 10.9 MEUR. The Fiven ASA equity is negative by 0.4 MEUR as of 31.12.2020. During 2020, Fiven has strengthened it liquidity position, from 14.8 MEUR year 2019 to 23 MEUR at 31.12.2020. Furthermore, Board of Directors’ Report   17