Fiven Annual Report 2020

Note 25 Financial risk Fiven operates in an international and cyclical industry which exposes the business to a variety of financial risks. The finan- cial risks are related to (1) market risk consisting of risk factors to currency, price and interest rates, (2) counterpart credit risk related to the financial ability of customers and lastly, (3) liquidity risk related to the risk that Fiven will encounter difficulties in meeting financial obligations. 1 Market Risks 1.1 Currency Risks Fiven has revenues and operating costs denominated in various currencies. The largest trading currencies are EUR and USD, but also BRL, GBP and JPY are currencies in which Fiven trade. Fiven is using natural hedge to the extent possible by matching inflows and raw materials purchases to be denominated in the same currencies as well as entering into forward foreign exchange contracts to cover surplus currency risks. Fiven Norway has virtually no sales in local currency, and USD and EUR are the dominant ones. Raw material contracts like pet coke, sand and energy accounting for the majority of costs of goods sold, are signed in corresponding currencies to reduce impact on risk from currency inflows. Fiven Belgium external sales are in EUR. Import of crude silicon carbide from Fiven Venezuela is USD based. Through a barter trade agreement Fiven Belgium is also paying all USD denominated purchases (mainly pet coke) on behalf of Fiven Venezuela offsetting cur- rency risk on the crude. Fiven Brazil has mainly a currency inflow exposure as raw materials purchases are paid in local currency. In 2020 approximately 60 per cent of total sales were in foreign currency, and the risk were covered through hedging instru- ments. The parent company Fiven ASA has EUR as functional currency as main in- and outflows are EUR denominated. Currency exposure affecting the consolidated statement of income: The table below shows assets and liabilities denominated in for- eign currencies different from the entities functional currency, where changes in currency rates will affect profit and loss. The table includes notional amount of foreign exchange contracts. Amounts in Euro 1000 USD EUR JPY NOK Other Total 2020 Total 2019 Other non current (financial) assets - - - - - - 7,745 Receivables 14,923 7,631 197 4,261 288 27,300 27,535 Other current (financial ) assets - - - - - - - Cash and cash equivalents 934 3,273 - 80 94 4,382 4,802 Total monetary assets 15,858 10,904 197 4,342 382 31,682 40,082 Interest bearing liabilities 1,369 2,080 59 - -3 3,504 - Other liabilities - 66 - - - 66 - Trade payables 14,160 2,338 - - 236 16,734 13,601 Total monetary liabilities 15,528 4,484 59 - 234 20,305 13,601 Derivatives notional value 2,070 5,949 - - - 8,020 6,837 Net currency exposure financial position -1,741 470 139 4,342 148 3,358 19,644 Sensitivity: 10% appreciation -174 47 14 434 15 336 10% depreciation 174 -47 -14 -434 -15 -336 Sensitivity 2019: 10% appreciation 595 241 29 1,101 -3 1,964 10% depreciation -595 -241 -29 -1,101 3 -1,964 Kapittelnavn   67 Fiven Annual Report 2020