Note 25 Financial risk Fiven operates in an international and cyclical industry which exposes the business to a variety of financial risks. The financial 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 currency risk on the crude. Fiven Brazil has mainly a currency inflow exposure as raw materials purchases are paid in local currency. In 2021 approximately 53 percent of total sales were in foreign currency, and the risk were covered through hedging instruments. 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 foreign 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. 31 December 2021 Amounts in EUR thousand USD EUR BRL NOK Other Total 2021 Other non current (financial) assets - 2 990 - 15 - 3 005 Receivables 21 675 9 373 714 9 671 153 41 586 Other current (financial ) assets 35 - - 129 - 164 Cash and cash equivalents 1 508 1 081 - 410 90 3 089 Total monetary assets 23 218 13 445 714 10 224 243 47 844 Interest bearing liabilities 2 695 2 825 - - - 5 520 Other liabilities - - - 1 806 - 1 806 Trade payables 11 141 7 142 - 162 6 18 451 Total monetary liabilities 13 836 9 968 - 1 968 6 25 777 Derivatives notional value 4 277 6 909 - - - 11 187 Net currency exposure financial position 5 105 (3 432) 714 8 257 237 10 880 Fiven Annual Report 2021 Financial statements 71
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