Fiven Annual Report 2021 Fiven’s plant in Lillesand, Norway, is required to comply with air emission limits linked to its operating license, and also tracks emissions of substances to water. Compliance with limits is a strong focus and actions are continuously taken to meet current good practice standards and regulatory requirements at all sites. Compared to the previous years, the Company has increased its capital expenditures in relation with emissions control in order to secure and achieve overall compliance with laws and permits. Safety is a key priority to Fiven, and the manufacturing locations have established routines and procedures designed to minimize overall operational risk. KPIs are recorded, analyzed and actioned systematically. Health, environment and safety performance is reviewed monthly on management level and with owners. Political risk Since the Group is present in several geographic markets, Fiven is also subject to external risks, such as political risks in for example Venezuela. The Group's operations in Brazil are subject to detailed regulation and complicated rules regarding, inter alia, tax, labor, financing, the environment and other regulatory requirements. The complexity of the legislative framework, may expose the Group to risks such as legal uncertainties, increased costs in the compliance work and a lack of foreseeability, which could have a material adverse effect on the Group's business and financial position. The Group has managed well the challenges in Brazil, and 2021 was a very strong year for the local entity in Brazil. The Group operates in Venezuela where the business climate constitutes a challenge for foreign and domestic companies operating in the country. The general uncertainty in the country, due to the political instability, exposes the Group to risks such as legal uncertainties and a lack of foreseeability, which could have a material adverse effect on the Group's business, earnings and financial position. For most of 2020 and up to September 2021, the Venezuelan plants were mothballed. In September last year, the Group decided to restart production in Venezuela. However, the mothball period demonstrated that the Group was able to swap production among plants and that the good 2021 financial results were derived with limited supplies from Venezuela. Financial risk Fiven is exposed to different risks in the various market it operates. The objective is to minimize the impact from such risks to the financial statement. Fiven operates in an international industry which exposes the business to a variety of financial risks. Through its global operations, Fiven is impacted by fluctuations in exchange rates of other currencies. Major trading currencies are USD, EUR and BRL. Fiven Group’s reporting currency is EUR, and the Group both hedges through financial instruments and actively uses natural hedge to reduce the risk for currency exposure. Similarly, denomination of currency for loans and bonds seeks to reduce the impact of fluctuations in exchange rates. Customer credit risk is considered low, and credit management ensures that a big portion of the receivables is insured against credit risk. Fiven Norge and Fiven Belgium (Matériaux Céramiques S.A) have a factoring arrangement where there is no recourse. Liquidity risk is related to difficulty in meeting financial obligations. In 2021 the Group was refinanced through a new Bond of 70 mEUR being listed on the NASDAQ Stockholm and Frankfurt Open Market stock exchanges. The long- term financing of the Group is also secured through a Shareholder Loan. In parallel, the factoring agreement for Fiven Norge and Fiven Belgium constitutes another source for funding. There is also an export credit facility in Brazil. Other than that, liquidity needs are covered through cash generated from operation. Insurance for board members and general manager The Group has procured Directors and Officers liability insurance on behalf of the members of the Board of Directors and Fiven management. This is standard insurance to protect against certain risks including (but not limited to) civil fines and penalties, emergency costs, public relations expenses, tax extensions, foreign corruption and securities claims. Corporate Social Responsibility General In order to create a stronger link between our operations and how they affect the environment that we operate in, and also to better align the objectives of our Environmental Roadmap with Fiven’s financing strategy, in 2021, Fiven has entered into a Sustainability Link Bond financing. This means we have linked our financing to the improvement of environmental indicators, critical for our industry, over the next years. These indicators are CO2 and SO2 emissions (expressed in tons/ tons of crude produced), volume of water withdrawals (in absolute value). Our objective is to reduce these emissions by respectively 9 %, 15 % and 10 % by 2025. 2021 achievements are reported in the Sustainability Linked Bond progress report 2021 attached to this report. More information is available in the sustainability linked bond framework. (www.fiven.com/ company-information/investor-relations/reports) In 2021, Fiven has subscribed to a three-year service agreement with the company EcoVadis. EcoVadis is granting certification on the CSR performance of companies. The certification is based on four axes: environment, social, business ethics and sustainable purchasing. This tool will help us to better organize our action plan in order to improve our CSR roadmap and action plan. 22 Board of Directors’ Report
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