Fiven Annual Report 2021 Corporate governance Fiven ASA does not have a corporate assembly, and therefore the general meeting elects the Board. Fiven’s board consists of 4 members, and the Board of Directors elects its own chair. The composition of the Board of Directors attends to the interests of the shareholder and to meet the Fiven’s need for expertise through executive personnel. In accordance with the Norwegian Public Limited Liability Act (Allmennaksjeloven) and supplementary policies and procedures provided by the shareholder, the Board of Directors exercises the overall governance of Fiven ASA. In 2020 an Audit Committee was formed. The Audit Committee reports to the Board of Directors following the mandate prepared and approved by the Board of Directors. The appointment of the Executive Chairman of the Board of Directors facilitates the reporting to the shareholder of Fiven ASA. Two of the four directors are executive personnel, employed by Fiven Norge AS, assuring that the Board of Directors has sufficient operational expertise as well as comprehensive knowledge of the business conducted in the Fiven Group. The General Manager of Fiven ASA, currently also being the Fiven Group CFO, is responsible for the day-to-day management of Fiven ASA. The General Manager governs the operations through policies and procedures, management meetings, Board meetings and through the Audit Committee interaction. The General Manager of Fiven ASA meets with the extended management team of the Fiven Group. These management meetings are called by the Chairman, and in addition to the executive management team, include also the Chief Operating Officer, production site general managers and Chief Sustainability Officer. The purpose of the meetings is to monitor the status of the operations and key performance indicators. The market situation and business development issues are also addressed, as well as health, environment, safety and security indicators and human resource issues. These meetings are a vehicle for scrutiny of the segment units’ performance relative to budgets and targets. The market situation, order intake, new opportunities and other significant items at the time are also addressed. The internal controls over financial reporting are governed by the Group Accounting Policies and a set of procedures and internal controls. The Audit Committee reinforces the focus on internal controls over financial reporting. In 2021 the implementation of a consolidation tool was completed which has enabled faster and higher quality reporting, increasing the controls over financial reporting. Monthly management reporting is submitted by the management team of each segment to assist the Board in its work on monitoring and controlling the Group’s operations. The reports cover financial information of the Group’s key figures, matters related to health and safety, market development, operations and financial performance, and the status of other business-related matters. Quarterly and annual financial statements are reviewed by the Audit Committee and the Board. Risk Factors and risk management Market risk Automotive and construction are two of the largest markets to Fiven. The board monitors the implications of unsettling trends such as lack of semiconductors in automotive, and material cost inflation and supply chain disruption in the construction market. To reduce these risks, the board focuses heavily on developing new specialty products and diversifying into other markets, which shield the group from any acute risk on revenue. The Asian competition can exert intense pressure by suddenly reducing standard products' prices. In Europe, the market is dynamic, with many players competing in an inflationary cost environment and sudden changes in demand. In addition, the geopolitical tensions on the Ukrainian and Russian borders could cause spikes in energy prices and fuel inflation. Globally, Fiven will keep facing fierce competition from players in Germany, China, Spain, and the US. However, Fiven will continue to counter the risk through its customer-centricity, superior delivery performance, and innovation. Operational risk The Group’s business includes several operational risks associated with the running of the industrial factories. The manufacturing of silicon carbide is highly depending on raw material such as petroleum coke, electric energy and sand. Through long term contracts on energy, Fiven entities are able to secure a stable supply of power for production. For petroleum coke and sand there is no forward market, but through multiple sourcing, the group has what is considered a steady supply. The Group’s high consumption of petroleum coke in the production of silicon carbide has led to exposure against different types of emission such as dust, PAH, B(a)P and SO2 and related costs to satisfy local laws and regulation. Fiven is also exposed to other risk of liability under, for example, environmental laws and regulations due to the silicon carbide production. In 2021, The Group has again invested significantly into measures to control and reduce emissions. In Fiven Norge AS, three new furnace groups were closed in December 2021, marking a significant step forward in the full cleaning project, which involves cleaning all exhaust gases from the furnaces. Board of Directors’ Report 21
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