Fiven Annual Report 2022 Financial Review Presentation of accounts Fiven’s consolidated financial statements have been prepared 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. The valuation of hedged power contracts in Norway is based on a fair value assessment under IFRS 9 Financial Instruments. As a consequence, comparative numbers for 2021 have been corrected and restated as per requirements in IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors. For more information, please refer to Note 30. Operating Profit and profitability 2022 saw the best financial performance in Fiven history and was largely commercially driven with strong increases in revenues from both standard and specialty products. There are significant positive impacts from the sales of hedged power contracts and from the fair value assessment of financial instruments for future power hedges. The total consolidated revenues for the 12-month period reached 192.3 mEUR, a Year-on Year improvement by 51 percent (2021: 127.4 mEUR). In terms of revenues by customer location, Europe revenues at 77.9 mEUR increased by 33 percent from previous year, North America reported at 29.7 mEUR were up by 59 percent, the 75.5 mEUR revenues from South America represented a YoY improvement of 79 percent, whilst Asian revenues were 9.1 mEUR, up from 2021 levels by 15 percent. As for products, the Standard products increased by 55 percent to 144.4 mEUR, and the Specialty products grew by 39 percent to 47.9 mEUR. The Operating Profit for the period ended at 84.0 mEUR (2021: 21.8 mEUR). The operating result includes gains from the sales of power hedge contracts for years 2022/23 for an amount of 15.2mEUR and gain from the fair value assessment of future power hedge contracts of 22.4 mEUR with no cash effect. The Operating Profit is negatively impacted by a 5mEUR inventory write-off in Belgium. The Net Finance expenses of 9.0 mEUR (2021: 8.6 mEUR). Net Income of the year was 53.7 mEUR (2021: 7.4 mEUR). Fiven uses Adjusted EBITDA to measure operating performance at the Group and segment level. The Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization including the positive impact from IFRS 16 and excluding non-recurring/ non-financial items, monitoring costs and sales of hedged power contracts for year 2023) showed 61.5 mEUR (2021: 24.4 mEUR). The improvement in Adjusted EBITDA is driven by increased sales (51% YoY) and price adjustment to cater for pressures from raw material and energy increases as well as general inflation. In the first half of the year there was also a strong increase in demand after coming out of Covid, but the outbreak of the Ukranian war as well the European energy crises and the slower growth rates in the global economies have softened demand, in particular in the second half of the year. The strong BRL and USD against the EUR have befitted Fiven profits. The result is also favorably impacted by the sales of power hedge contracts for 2022 by 7.2mEUR, and negatively impacted by a 5mEUR inventory write-off. Cash Flow and Liquidity reserve Total cash and cash equivalents at year-end were 18.9 mEUR, down from 23.6 mEUR for year-end 2021. In December Fiven executed a one-off payment to owners in agreement with bondholders impacting the cash balance by 29.3mEUR including fees. Cash flow from operating activities was 41.5 mEUR (2021: 15.2 mEUR). The sales of hedged power contracts had a positive impact to cash flow by 17.3mEUR. The cash flow from investing activities amounted to -7.6 mEUR (2021: -5.4 mEUR). Progressively more of the Fiven capex has been channeled to emission control and other HSE measures, but in 2022 Fiven has also invested into production capacity expansion, product development, productivity improvements as well as into necessary maintenance needed to run the factories. The full year cash flow from financing activities was -38.7 mEUR (2021: -9.4 mEUR). In December bondholders accepted the request for a one-off distribution of cash in the company through a written procedure. This enabled Fiven to execute repayments of a shareholder loan of EUR 24.2m (including accrued interests), pay a dividend of EUR 2.8m and a bondholder consent fee of EUR 2.0m. Including the advisory fees, the total impact from the written procedure on the financial cash flow was EUR– 29.3m. Debt and financial position Fiven’s total liabilities at 31.12.2022 were 139.2 mEUR in comparison to 150.5 mEUR year-end 2021. The non-current liabilities decreased from 98.1mEUR at YE 2021 to 80.0mEUR thanks to repayment of the shareholder loan. Included in the non-current liabilities are a 69.1mEUR bond loan with maturity date June 2024. The current liabilities increased from 52.3mEUR at year end 2021 to 59.3mEUR YE 2022 due to higher utilization of export credit funding in Brazil, higher income tax payables as a result of higher taxable profits and increase in other payables. Board of Directors’ Report 19
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