1.3 Commodity prices Sand, power and pet coke are the main raw materials in the manufacturing of Silicon Carbide and account for a significant portion of the total production costs. Whilst there is a forward market for energy enabling Fiven to secure future needs with contracts signed today, pet coke and sand are purchased in the spot markets as no forward market exists. This means Fiven is exposed to fluctuation in the commodity markets for these raw materials. Fiven tries to keep multiple source options to avoid being overly depended on any particular supplier. Amounts in EUR thousand Power Petcoke Sand Total Sensitivity 2022 10% price increase (3 880) (3 872) (370) (8 122) 10% price decrease 3 880 3 872 370 8 122 Sensitivity 2021 10% price increase (2 946) (2 223) (297) (5 466) 10% price decrease 2 946 2 223 297 5 466 The sensitivity related to commodity prices impact on Fiven's profit or loss, is based on an increase/decrease of sand, power and petcoke by 10 percent compared to actual costs of 2022. If all the commodity prices had increased by 10%, the profit before tax would have decrease by 8122 kEUR. 1.4 Interest rate risk Fiven’s interest risks arises from interest bearing liabilities granted by external financial institutions and owners. Fiven liabilities are drawn in EUR and USD (export credit facility in Brazil). Fiven financing have four pillars; a bond, a shareholder loan (repaid in full in Dec-22), a factoring facility and an export credit facility. All four facilities have in common that they have floating interest, and hence are exposed to fluctuating interest rates. With floating interest rates the group will normally be in a position to benefit from lower interest rates in an economic downturn, but a floating rate policy will also leave the group exposed to higher future interest rates. An increase/decrease of interest rates by 1.0 points per annum would have impacted the Group’s financials expenses negatively/positively by 537 kEUR in 2022. 2 Trading partner risk Credit risk is the risk of financial losses to the group if a customer or counterparty fails to meet contractual obligations. For Fiven this arises mainly to trade receivables. Trade receivables are generally secured by credit insurance from a reputable credit insurance company. Credit limits for each customer and overdue receivables are monitored and built into the ERP systems and for customers where credit insurance cannot be obtained, other methods are generally used to secure the sales proceeds, such as prepayment or documentary credit. There is a non-recourse factoring agreement for Fiven Norge and Fiven Belgium enabling the two entities to sell up to 90 percent of the total ‘allowable receivables’ to the Factofrance. 3 Liquidity Risk Liquidity risk is the risk that the group will encounter difficulty in meeting the obligations associated with its financial liabilities. Fiven is exposed to liquidity risk related to its operations and financing. Fiven’s cash flow will fluctuate due to economic conditions and financial performance. In order to assess its future operational liquidity risk, short-term and long-term cash flow forecasts are provided. The short-term forecast is updated each week, and the long-term cash flow projection is updated as part of the planning cycles. Fiven has a non-recourse factoring facility which allows a funding of up to 90 percent of the total receivables transferred to the factoring company for a total amount not exceeding 15 mEUR for entities in Fiven Norge and Fiven Belgium. As per 31 December 2022, the utilization of the factoring facility was 6.1 mEUR. In Brazil, Fiven has an export credit facility based on confirmed export order intake to finance cost of production. The credit facility is covering up to 174 days, and at the end of December 2022 the total of the facility was 8.1 MEUR. The bond has maturity date 21 June 2024. Trade payables are payable in 2023. The factoring liabilities at 31 December 2022 matures in Q1 2023 and the export credit facility in Brazil in 1H 2023. The bond contains financial covenants further described in note 22 Interest Bearing liabilities. The group is in compliance with all covenants as of the reporting date. Fiven Annual Report 2022 Financial statements 73
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