2021
ANNUAL REPORT
REC Silicon Annual Report 2021
BOARD OF DIRECTORS
ANNETTE MALM JUSTAD
Member of the Board of Directors since May
, Ms. Justad is currently a partner at
Recore, a Norwegian management consultant
company, and her experience includes a
substantial number of positions as non-
executive director and chair for public and
private companies. She has a master’s degree
in Chemical Engineering from the Norwegian
University of Science and Technology (NTNU)
and a master’s degree in Technology Manage-
ment from NTNU and MIT Sloan School of
Management.
AUDUN STENSVOLD
Member of the Board of Directors since May
. Mr. Stensvold is currently CEO of
Vinestor AS. Prior to his current position he held
various positions within the Aker group from
to , i.a. investment director at Aker
ASA and CFO and Investment Director at
Converto. Before joining Aker, Mr. Stensvold
worked as a strategy and finance consultant for
Selmer, and as a financial analyst for DnB NOR.
He has served on several boards and is currently
a board member i.a. of Havfonn AS. Mr.
Stensvold has a master’s degree in Business
and Economics from the Norwegian School of
Economics (NHH).
KRISTIAN RØKKE
Chairman of the Board of Directors since
December . Mr. Røkke is currently Chief
Executive Officer of Aker Horizons AS. Mr. Røkke
has experience from investment management,
offshore services and shipbuilding in several
companies in the Aker group. Before his current
position, he was Chief Investment Officer of Aker
ASA, Chief Executive Officer of Akastor ASA, a
publicly listed oil service investment company, and
spent several years in various operational and
executive roles at Philly Shipyard. Mr. Røkke is
currently chairman of the board of Philly Shipyard,
Inc., Akastor ASA and Plastic REVolution
Foundation, and serves as a director on the boards
of Aker Carbon Capture AS, Aker Offshore Wind
AS, American Shipping CompanyASA, Abelee AS
and TRG Holding AS. He has an MBA from The
Wharton School of the University of Pennsylvania.
LENE LANDØY
Member of the Board of Directors since March
. Ms. Landøy joined Aker ASA in and
is currently Investment Director and head of
Industrial Holdings. Before joining Aker, she was
part of the Aker BP executive team heading
Strategy and Business Development. Ms.
Landøy joined Aker BP in and before that
she led Statoil ASA’s business development unit
on the Norwegian continental shelf. She held
various positions in Statoil from to ,
in Technology and innovation, Finance, Natural
gas and infrastructure and Global business
development. Ms. Landøy holds a master’s
degree in finance from the Norwegian School of
Economics (NHH) and the University of Califor-
nia Los Angeles (UCLA). She also holds a
master’s degree in international finance from
the Skema Business School in France.
SEUNG DEOK ANDY PARK
Member of the Board of Directors since January
. Seung Deok (Andy) Park joined Hanwha
Group in , has served as Chief Strategy
Officer of Hanwha Solutions/Strategy Division
since September . Mr. Park held various
senior managerial positions, including Chief
Executive Officer of Hanwha General Chemical,
Head of Corporate Strategy Office at Hanwha
Chemical as well as Senior Vice President of
Operation at Hanwha Q CELLS, gaining expertise
in the solar and petrochemical business. Mr. Park
graduated from POSTECH with Master of Science
degree in Chemical Engineering.
Board of Directors
REC Silicon Annual Report 2021
Leer from the CEO
Letter from
the CEO
The past year has been very eventful for REC Silicon and will set the foundation for an
exciting and successful . First, I would like to acknowledge our long-term CEO Tore
Torvund for his numerous contributions to the Company. He became CEO during the
construction and commissioning of the FBR facility in Moses Lake and was instrumental in
proving the commercial capabilities of the FBR technology. He then guided the Company
through uncertainty as we lost access to markets and were forced to shut down our
operations in Moses Lake. Tore was also instrumental in seing up the circumstances which
I believe will allow us to restart the Moses Lake facility. He leaves a large void and will be
greatly missed. I appreciate the opportunity to serve as CEO and have high expectations
for the Company’s performance in .
REC Silicon’s Board of Directors also changed during .
We appreciate the leadership of our previous Chairman Kjell Inge
Røkke and we all look forward to continuing to work with our new
Board of Directors. Hanwha Solutions’ equity investment in REC
Silicon resulted in additional liquidity of approximately NOK
million, which was received in January . REC Silicon was also
able to resolve the last remaining legacy maer with the selement
of the indemnification loans in October of . The Company can
now turn its focus completely to the future, rather than the past.
The necessary building blocks to support the restart of the Moses Lake
facility are coming together. The proliferation of electric vehicles will
drive large scale demand for highly efficient baeries and many
companies are pursuing initiatives to develop silicon anode materials for
use in Lithium-Ion baeries for the automotive industry. For most of
these companies, Silane has become the raw material of choice to
introduce silicon into baery anodes and substantially improves the
efficiency and performance of baeries. While the exact timing
continues to be uncertain, baery materials forecasts indicate that large
scale manufacturing will be required by and that the current
capacity of silane gas production will not be sufficient to meet projected
demand. This will create an excellent opportunity for REC to capitalize
on its current production capacity and expertise.
Moreover, the solar market experienced a significant turnaround in
. REC Silicon’s FBR technology combines low cost, high quality
solar grade polysilicon with an ultra-low carbon footprint that is well
positioned for expected market growth. In addition to the potential
opportunity for a solar value chain to be located within the United
States, solar wafer manufacturing capacity is currently under
construction outside of China which may create opportunities for REC
Silicon to restart the FBR facility in Moses Lake.
REC Silicon’s semiconductor business continues to provide the Company
with stable cashflows and serves markets that are expected to grow
substantially in the future. We are working to position our product
portfolio to ensure that the Company reaps the benefits of this growth
through capital expansion projects.
“The Company can now turn its focus
completely to the future, rather than the
past. ”
REC Silicon Annual Report 2021
Leer from the CEO
Over the past several years, we have been able to mitigate the impact of
trade sanctions and adverse market conditions because of our talented,
capable, and resilient workforce. Our employees have continually
demonstrated the ability to take the necessary actions to preserve the
Company’s liquidity and to ensure that we maintained the capability to
succeed when we restart Moses Lake. Now that market conditions have
turned and we may have the opportunity to restart and expand
operations, these employees will ensure that we are successful in
resuming and maintaining operations.
I am confident in a bright and profitable future for REC Silicon!
James A. May II
President and CEO
REC Silicon Annual Report 2021
Board of Directors’ report
Board of Directors’ report
HIGHLIGHTS COMPARED TO
> Revenues of .M (.M in ) and EBITDA of
.M (.M in )
• EBITDA includes income of .M due to the forgiveness
of the C.A.R.E.S. Act loan in Q
• EBITDA included income of .M due to the selement
of the property tax dispute in Grant County Washington
> Cash balance of .M at December ,
• Cash decrease of .M in
• Cash outflows from operations of (.)M
• Working capital decrease of .M
• Interest payments of (.)M
> Silicon gas sales volumes of ,MT
• Compared to sales volumes of ,MT (. decrease)
• . Increase in average silicon gas prices
> Total polysilicon sales volumes of ,MT vs. ,MT in
• Semiconductor grade polysilicon sales of ,MT compared to
MT in
• Average semiconductor grade polysilicon price decrease of .
• Polysilicon inventory decrease of MT
> C.A.R.E.S. Act loans forgiven
• .M Solar Materials segment loan forgiven
• .M Semiconductor Materials segment loan forgiven
> Selement of indemnification loans
• Agreement reached on October ,
• Payment of selement of .M in February
• Payment includes .M from restricted cash
> Investment in REC Silicon by Hanwha Solutions
• Private placement of equity completed January ,
• . million shares issued (proceeds of NOK M)
• Result: Hanwha Solutions holds . ownership in REC Silicon
REC Silicon Annual Report 2021
Board of Directors’ report
BUSINESS ACTIVITIES
REC Silicon ASA was established in Norway on December , . The
Company is headquartered in Lysaker, Norway.
REC Silicon is a global leader in silane-based, high-purity silicon
materials, delivering high-purity polysilicon and silicon gases to the solar
and electronics industries.
REC Silicon operates manufacturing facilities in Moses Lake,
Washington and Bue, Montana in the USA. REC Silicon’s subsidiaries
include: REC Silicon Inc., REC Solar Grade Silicon LLC, and REC Advanced
Silicon Materials LLC in the United States. REC Silicon’s sales and
marketing activities for sales of solar grade polysilicon, semiconductor
grade silicon and silicon gases are carried out in China, Japan, Korea,
Taiwan, and in the United States. The Group’s investment in the Yulin JV
is held by REC Silicon Pte. Ltd. in Singapore.
STRATEGY AND OBJECTIVES
REC Silicon’s strategy is to maintain its position as a technological
innovator in the silicon materials industry.
REC Silicon intends to improve its competitive position and:
• Maintain financial flexibility
• Optimize efficiency of utilized assets
• Optimize semiconductor segment product offerings
• Control inventory by flexing production to match sales
and business conditions
• Develop solid plan to restart Moses Lake
• Focus on cost control
• Focus on continued quality improvements
• Support Yulin JV operations
SUMMARY
FINANCIAL HIGHLIGHTS
Key Financials - REC Silicon Group
USD IN MILLION
Revenues . .
EBITDA . .
EBITDA margin . .
EBIT excluding impairment charges -. -.
Impairment charges -. -.
EBIT -. -.
EBIT margin -. -.
Profit/loss from continuing operations before tax -. -.
Profit/loss from continuing operations -. -.
Profit/loss from discontinued operations, net of tax . .
Earnings per share, basic and diluted (USD) -. -.
Polysilicon production in MT (Siemens and granular) ,
Polysilicon sales in MT (Siemens and granular) , ,
Silicon gas sales in MT , ,
Revenues
Total revenues increased by . percent from USD . million in
to USD . million during . This increase is primarily due to
increased sales volume of polysilicon and an increase in average silicon
gas sales price. Nearly all revenues reported are in the Semiconductor
Materials segment and increased by . percent from USD .
million in to USD . million in .
REC Silicon Annual Report 2021
Operations
Impacts of Chinese tariffs on polysilicon manufactured in the United
States, uncertain market conditions, and reduced demand for the
Company’s solar grade polysilicon resulted in the shutdown of the FBR
polysilicon plant in Moses Lake, Washington on May , . Aer this
date, all polysilicon produced by REC Silicon was manufactured in the
Semiconductor Materials segment from its plant in Bue, Montana.
Total polysilicon production increased by MT (. percent) to
,MT in compared to MT in . All production in
and was from the semiconductor materials segment.
Total polysilicon inventories declined by MT in .
EARNINGS
Earnings Before Financial Items and Income taxes (EBIT) for was a
loss of USD . million. This represents a decreased loss compared to
an EBIT loss of USD . million in which included impairment
charges of USD . million.
EBITDA for was USD . million compared to an EBITDA of USD
. million in . EBITDA in included other income of USD .
million associated with the forgiveness of the C.A.R.E.S. Act loan.
EBITDA in included a non-cash adjustment of USD . million due
to the property tax selement with Grant County, Washington which
resulted in EBITDA of USD . million excluding items in other income.
The decrease in EBITDA compared to is the result of the above-
mentioned tax selement in along with higher operating costs
related to polysilicon in . EBITDA contributed by the
Semiconductor Materials segment declined by USD . million to USD
. million in due primarily to increased operating costs. In Other
and Eliminations, net operating costs increased by USD . million due
to inflation.
TECHNOLOGY, RESEARCH, AND DEVELOPMENT
REC Silicon’s long-term competitive position is based on cost efficiency
and industry leading product performance. REC Silicon’s research and
technology development activities are designed to enhance quality,
improve efficiency, and reduce production costs of our products to add
value to our customers and further enhance our competitive position.
However, research and development efforts have been limited due to the
shutdown of the FBR facility in Moses Lake. During , research and
development efforts were focused on maintaining minimum research lab
operations to support the silicon gas and semiconductor grade
polysilicon businesses.
Cash expenditures for research and development were USD . million
in compared to USD . million in . Total expenditures
including depreciation were USD . million in and USD . million
in .
SEGMENT INFORMATION
SEMICONDUCTOR MATERIALS SEGMENT
REC Silicon manufactures polysilicon and silicon gases for
semiconductor markets from its manufacturing facility in Butte,
Montana. This facility is the world’s largest supplier of silicon gases for
semiconductor, flat panel display, and solar applications. The facility
uses a silane-based Siemens polysilicon processing technology to
produce the highest quality (FZ) polysilicon for use in the semiconductor
industry. The Butte plant has a capacity of approximately ,MT of
silicon gas loading and ,MT polysilicon production.
Key financials - Semiconductor Materials
USD IN MILLION
Revenues . .
EBITDA contribution . .
Contribution margin . .
Polysilicon production in MT (Siemens) ,
Polysilicon sales in MT (Siemens) , ,
Silicon gas sales in MT , ,
Markets
Markets for semiconductor grade polysilicon are dominated by long-
term sales contracts. During the fourth quarter of , REC Silicon’s
total shipments were consistent with anticipated shipment paerns.
REC Silicon received an increase in requests for expedited shipments.
However, some opportunities for additional shipments were adversely
impacted by the ongoing global logistics logjam. Demand for silicon
wafers continues to grow; particularly for large diameter wafers
intended for use in memory and advanced logic applications. Although
capacity expansions have been announced, demand for large diameter
wafers is limited by wafer manufacturing capacity. Demand for smaller
diameter wafers has recovered but continues to be limited by
bolenecks in the value chain as fabrication capacity is currently the
potential limiter. Polysilicon inventories held by customers have reached
levels that are more consistent with normal supply chain replenishment
and flow.
Overall demand for silicon gases remained high due to demand in
semiconductor applications as production is at full capacity utilization.
Demand for silicon gases in high-end flat panel display applications was
muted relative to previous quarters. REC Silicon’s sales of silicon gases
continued to be adversely affected during the fourth quarter by delays in
returning containers due to global shipping delays, port congestion, and
availability of container booking. Demand for silicon gases in solar PV
and older technology flat panel display applications in China continues to
decline as manufacturers disengage from supply arrangements with the
United States where feasible. In addition, logistics bolenecks are
preventing the timely and cost-effective supply of materials required by
customers in China. However, REC Silicon continued to increase
shipments to locations outside of China. These shipments represent
existing and recently expanded manufacturing capacity which is
expected to result in increases in market share. However, these were
also subject to previously mentioned logistics challenges depending on
location.
Board of Directors’ report
REC Silicon Annual Report 2021
Financial Performance
In , revenues for the Semiconductor Materials segment were USD
. million compared to USD . million in ; an increase of
. percent.
Revenues from polysilicon sales increased by . percent in
compared to . Total polysilicon sales volumes increased by .
percent from ,MT in to ,MT in . The underlying
sales volumes of semiconductor grade polysilicon were MT during
compared to MT during . Average prices realized for
semiconductor grade polysilicon decreased by . percent primarily
due to a one-time sale of a specific lower value grade of semiconductor
polysilicon in .
Revenues from silicon gas sales increased by . in compared to
. Silicon gas sales volumes were ,MT, a . percent decrease
compared to ,MT in . Average annual prices for silicon gas
increased by . percent.
Total polysilicon production in the Semiconductor Materials segment
increased by MT to ,MT in compared to MT in .
The underlying production volumes of semiconductor grade polysilicon
increased by MT to MT for . Inventories of polysilicon in
the Semiconductor Materials decreased by MT in as the
company took advantage of additional sales.
The Semiconductor Materials segment contributed USD . million of
income to EBITDA during which included USD . million of other
revenue associated with the forgiveness of the C.A.R.E.S. Act loan. This
compares to an EBITDA of USD . million in .
Income contributed by the Semiconductor Materials segment
represents revenues less production costs for products sold during the
period and excludes depreciation, amortization, impairment, and selling,
general, and administrative expenses.
SOLAR MATERIALS SEGMENT
REC Silicon has the capability to manufacture polysilicon for the solar
energy markets from its manufacturing facility in Moses Lake,
Washington.
Key financials - Solar Materials
USD IN MILLION
Revenues . .
EBITDA contribution -. .
Contribution margin NA NA
Polysilicon production in MT (Siemens and granular)
Polysilicon sales in MT (Siemens and granular)
Impacts of Chinese tariffs on polysilicon manufactured in the United
States, uncertain market conditions, and reduced demand for the
Company’s solar grade polysilicon resulted in the shutdown of the FBR
polysilicon plant in Moses Lake, Washington during .
The Company expects to make a decision before year end to
restart production at the Moses Lake facility and will depend on when
Chinese markets for solar grade polysilicon re-open, a non-Chinese Solar
PV value chain is developed, silicon anode baery technology based on
silane gas is commercialized, and/or other significant positive
developments occur in solar grade polysilicon markets. (see Risk Factors
below).
Markets
During , demand for PV installations picked up and finished the
year strong despite feelings that high prices and supply limitations
would restrain the market. Several projects were delayed and moved
into due to concerns over pricing and project returns, along with
supply chain disruptions. Polysilicon prices increased throughout the
year and ended the year near USD ./kg. Polysilicon supply in China
was stable as most producers focused on inventory control, with
approaching seasonal declines in demand, near year end. Polysilicon
Board of Directors’ report
Sales Volumes (MT)
Silicon Gas Sales
0
200
400
600
800
1,000
Q4
2021
Q3
2021
Q2
2021
Q1
2021
Q4
2020
Q3
2020
Q2
2020
Q1
2020
Sales Volumes (MT)
Semiconductor Polysilicon Sales
0
100
200
300
400
Q4
2021
Q3
2021
Q2
2021
Q1
2021
Q4
2020
Q3
2020
Q2
2020
Q1
2020
REC Silicon Annual Report 2021
prices remained significantly higher at the end of compared to
prices near USD ./kg at the beginning of the .
Financial Performance
Revenues for the Solar Materials segment were USD . million during
compared to USD . million in . Sales during
represented the sales of MT of the remaining granular polysilicon
inventories.
Due to the shutdown of the FBR facility on May , , there was no
FBR production in or . The FBR plant is being maintained in a
non-operating status with maintenance expenditures to ensure safety
and to preserve the ability to restart the plant when market conditions
improve. REC is working towards having the ability to restart production
in . Capital projects for FBR upgrades were initiated in and
include the ability to produce ultrahigh purity granular.
The Solar Materials segment contributed a loss of USD . million to the
Company’s EBITDA during and included income of USD . million
from the forgiveness of the C.A.R.E.S. Act loan. This compares to an
income of USD . million in which included a non-cash adjustment
of USD . million due to the selement of the property tax dispute
with Grant County, Washington. Excluding items of other income, the
Solar Materials segment incurred a net expense of USD . million
during compared to net expense of USD . million in . The
Company anticipates that net expenditures will remain near these levels
until activities are undertaken to restart the facility.
The loss contributed by the Solar Materials segment represents
revenues less production costs for products sold and idle facility costs
during the period and excludes depreciation, amortization, impairment,
and selling, general, and administrative expenses.
OTHER AND ELIMINATIONS
Other includes general administrative and sales activities in support
of the manufacturing facilities in the United States and the Company’s
headquarters in Norway. It also includes costs associated with
the Company’s representative offices in Taiwan, Korea, China, and
the United States.
Key financials - Other and Eliminations
USD IN MILLION
Revenues . .
EBITDA contribution -. -.
Silicon gas sales in MT
Net operating costs in Other and Eliminations increased to USD .
million during compared to USD . million in .
INVESTMENT YULIN JV
The Group has an investment in China; Shaanxi Non-Ferrous Tian Hong
REC Silicon Materials Co., Ltd. (Yulin JV). REC Silicon’s ownership is
percent of the Yulin JV. The Company has designated the investment in
the Yulin JV as an equity security at fair value through profit/loss
(FVTPL).
Due to the continuing impact of operating losses and delays in realizing
designed production capacities the Yulin JV has accumulated long term
debt to maintain the operations. As a result, estimated enterprise value
less long-term debt results in a deficit equity value. Accordingly, REC
Silicon’s investment in the Yulin JV has been reported in the statement of
financial position at a value of zero which is unchanged from the prior
period.
During the Group’s review of impairment indicators, no impairment
indicators were identified that might give rise to a change in the
valuation of the Company’s investment in the Yulin JV.
REC Silicon has not made the final equity selement payment of USD
. million which was payable during December due to delinquent
invoices for services provided to the Yulin JV by REC Silicon and the
completion of performance testing specified in the Technology Transfer
Agreement (TTA). REC Silicon and the Yulin JV continue to seek a
resolution to these issues.
Board of Directors’ report
USD / kg
Polysilicon Spot Price Development
2020 2021
2015
* PV Insights – Mono-crystalline polysilicon prices
5
10
15
20
25
30
35
40
REC Silicon Annual Report 2021
FINANCIAL ITEMS
Financial items - REC Silicon Group
USD IN MILLION
Financial income . .
Interest expenses on borrowings -. -.
Interest expense on leases -. -.
Capitalized borrowing cost . .
Net change in fair value of financial equity
investment through profit and loss . -.
Expensing of up-front fees and costs -. -.
Other financial expenses -. .
Net financial expenses -. -.
Net currency gains/losses . .
Net financial items -. -.
Net financial items were an expense of USD . million in
compared to an expense of USD . million in .
During the fourth quarter of , the Company recognized a USD .
million loss due to changes in the fair value of financial equity investment
through profit and loss. This loss is associated with the Company’s
investment in the Yulin JV and has been described under investments
(Yulin JV) above and note to the consolidated financial statements.
Net currency gains/losses are primarily related to the impact of
exchange rate fluctuations on liabilities and cash deposits denominated
in NOK. In addition, net currency gains/losses include fluctuations
between transaction currencies and the USD which is the primary
currency for the group.
Interest expenses on borrowings were USD . million in
compared to USD . million in . Interest expense on borrowings
includes interest on the Company’s senior secured bonds for both years
presented. In addition, it includes interest expense on a note payable
associated with the selement of the property tax dispute with Grant
County, Washington. (See note to the consolidated financial
statements).
Interest expense on leases was USD . million in compared to
USD . million in . This increase can be aributed to the
modification of existing leases related to contractual increases in lease
payments tied to economic indices (See Note to the consolidated
financial statements).
Other financial expenses during includes the reversal of USD .
million of interest on unpaid taxes reported for prior periods associated
with the tax examination by the Norwegian Central Tax Office which was
dropped during the third quarter of . The remaining expense can be
aributed to interest on prepayments from customers and interest on
the pension obligation.
INCOME TAX
The losses before tax from continuing operations of USD . million in
and USD . million in resulted in no effective tax impact
since it is offset by changes in unrecognized deferred tax assets. These
losses represent an increase in the Company’s unrecognized deferred
tax asset. The losses will continue to be available to offset taxable
income during future periods.
The income tax benefit of USD . million for was a result of the
Norwegian Tax Administration informing REC Silicon that it had dropped
its examination regarding deductions taken by REC Silicon during tax
years through . In addition, the Norwegian Tax Administration
informed REC Silicon that aer a thorough examination, also considering
the elapsed time, they did not find a reason to move forward with other
issues raised in the dra decision including the classification of capital
inflows as equity deposits.
See note to the consolidated financial statements.
PROFIT AND LOSS
The loss from total operations was USD . million in compared
to USD . million in .
CASH FLOW
Net cash outflows from operating activities were USD . million in
compared to USD . million in . Operating cash flows during
included EBITDA of USD . million, which included USD .
million of other income from the forgiveness of the C.A.R.E.S.
(Coronavirus Aid, Relief, and Economic Security) Act loan. The decrease
in working capital of USD . million consisted of a decrease in
inventories of USD . million and an increase in accounts payable and
accruals of USD . million. These were offset by sales in excess of
customer collections of USD . million. Cash outflows included USD
. million of interest and a USD . million contribution to the defined
benefit pension plan in the United States.
Net cash outflows from investing activities were USD . million in
compared to cash inflows of USD . million in . Capital
expenditures were USD . million in and were primarily
associated the Dichlorosilane (DCS) gas expansion project and FBR
upgrades for ultrahigh purity granular. The DCS expansion project is
expected to cost approximately USD . million, take approximately
months to complete, and will result in an increase in DCS production
capacity of approximately MT per year. Costs associated with FBR
upgrades represent long lead activities to support the potential restart
of FBR production in Moses Lake (see risks and uncertainties).
Capital expenditures also include cost savings and improvement
initiatives, routine replacement of production equipment, and capital
necessary to maintain safe and reliable operations.
In addition, cash inflows included a decrease in restricted cash balances
of USD . million and USD . million due to the maturity of municipal
bonds held by the Company.
Board of Directors’ report
REC Silicon Annual Report 2021
Cash outflows from financing activities in were USD . million
and were payments of USD . million on the property tax note and USD
. million payments of long-term lease liabilities.
In total, cash balances decreased by USD . million in to USD
. million at December , .
FINANCIAL POSITION
Shareholders’ equity decreased to USD . million (. percent
equity ratio) at December , compared to USD . million (.
percent equity ratio) at December , .
This decrease was primarily the result of a loss from total operations of
USD . million. In the loss from operations included other
income of USD . million from the forgiveness of the C.A.R.E.S Act loan.
In addition, other comprehensive income in was a gain of USD .
million due to the re-measurement of defined benefit pension plans.
Net debt increased by USD . million to USD . million at December
, from USD . million at December , . This increase
was primarily the result of the decrease in cash balances of USD .
million discussed above. This was offset by decreases in debt due to the
C.A.R.E.S. Act loan of USD . million being forgiven as well as the
selement of the indemnification loans on October , , which
resulted in a decrease of USD . million in the outstanding liability.
Also, a USD . million decrease in the Grant County WA property tax
note. Lease liabilities decreased by USD . million. In addition, the
indemnification loan, which is denominated in NOK, decreased by USD
. million due to the effects of stronger USD relative to the NOK.
Net debt includes unamortized loan fees. Excluding unamortized
capitalized borrowing costs, nominal net debt was USD . million at
December , which represents an increase of USD . million
from USD . million at December , (See note to the
consolidated financial statements).
GOING CONCERN
The Board of Directors confirms that the Financial Statements have
been prepared under the assumption that the Company is a going
concern and that this assumption is appropriate at the date of the
accounts.
The Board of Directors also refers to the risk factors discussed in this
report. Specifically, the sections on the Company’s liquidity risk and the
impacts of tariffs imposed by China on US polysilicon and the impacts of
the COVID- pandemic which creates uncertainty for the Group, its
customers, certain other competitors, and the industry as a whole.
REC SILICON ASA NGAAP
Financial Review
REC Silicon ASA (the Company) prepares its financial statements
according to NGAAP. The Company is a holding company with corporate
management and financial functions.
REC Silicon ASA (the Company) prepares its financial statements
according to NGAAP. The Company is a holding company with corporate
management and financial functions.
In , REC Silicon ASA had a negative EBIT of USD . million
compared to a negative EBIT of USD . million in . The Company
recorded a net loss of USD . million in . The net loss included net
financial expenses of USD . million which includes impairment of loans
to US subsidiaries of USD . million, impairment of loan to REC Silicon
Pte Ltd of USD . million, and interest expenses of USD . million.
Other major remaining items of net financial items were net currency gains
of USD . million and other financial income related to the selement of
the indemnity loan in the amount of USD . million. Interest income
from subsidiaries was suspended for and due to the financial
position and outlook of the borrowing companies. In the net loss
included net financial expenses of USD . million which included
impairment of loans to subsidiaries of USD . million, impairment of
shares in REC Silicon AS of USD . million, and interest expenses of
USD . million. Other major remaining items of net financial items were
net currency gains of USD . million and other financial expenses of USD
. million. the net loss included USD . million due to the impairment
of REC Silicon ASA’s loans to its subsidiaries in the United States and USD
. million due to the impairment of REC Silicon Pte. Ltd. (See note M to
the financial statements for REC Silicon ASA).
Total equity for the parent Company was USD . million at December
, compared to USD . million at December , . This
decrease is a result of the net loss of USD . million discussed above.
Allocation of the Net Loss for the Parent Company
The Board proposes that the net loss for the year of USD . million be
distributed to other equity.
Change of Control
The USD Senior Secured Bond agreement and the Indemnification loan
have change of control provisions. If a shareholder or a group of
shareholders gains control of more than percent of the share capital,
bondholders acquire a put option entitling them to cancel the
commitments and declare all outstanding amounts and accrued unpaid
interest due and payable. More detailed information can be obtained
from the bond trustee, Nordic Trustee ASA. Under the terms of the
indemnification loan, if a shareholder or a group of shareholders gains
control of more than percent of the share capital, the indemnified
parties may declare the loan due and payable.
RISK FACTORS
The Group’s activities expose it to a variety of financial risks, including
market risk, operational risk, liquidity risk, credit risk, currency risk,
interest-rate risk, refinancing risk, and others (See note to the
consolidated financial statements).
REC Silicon’s Board of Directors is responsible for determining the
acceptable risk profile for the Company. The Board oversees risk
management processes and conducts reviews of risks faced by the
company and internal control procedures.
REC Silicon’s management is responsible for reviewing and
operationalizing the defined risk profile by maintaining a system for risk
management. Management performs risk assessments and actively
monitors the development of material risks and initiates actions
accordingly.
Board of Directors’ report
REC Silicon Annual Report 2021
Risk assessments are performed periodically. The materiality of each
risk factor is determined by assessing the likelihood and consequence of
that risk. Risks are evaluated to determine whether the level is
acceptable or unacceptable and to prioritize activities to mitigate those
risks that have the greatest potential to impact Company performance.
Market risk
REC Silicon believes that there are significant uncertainties related to
market developments going forward. This uncertainty relates primarily
uncertain market conditions and Chinese tariffs on polysilicon produced
in the United States. These uncertain market conditions have forced REC
Silicon to shut down the FBR plant in Moses Lake, Washington. The
Company expects to restart the Moses Lake manufacturing facility when
Chinese markets for solar grade polysilicon re-open, a non-Chinese Solar
PV value chain is developed, silicon anode baery technology based on
silane gas is commercialized, and/or other significant positive
developments occur in solar grade polysilicon markets. If these events
do not materialize, REC Silicon may be unable to restart the FBR facility,
which could have a significant adverse effect on the Group’s business,
prospects, financial results, and results of operations.
Market disruptions caused by the COVID- pandemic are dissipating.
However, current global shipping delays and port congestion is expected
to result in the delay of shipments. REC Silicon has successfully
mitigated the impact of the COVID- pandemic on its operations.
However, increased infection rates in certain geographic regions and
industries are having an adverse impact on economic activity and have
affected markets serviced by REC Silicon.
Company management and the Board of Directors will continue to
monitor COVID- and take appropriate action as additional
developments occur.
Company management and the Board of Directors are monitoring the
Russian invasion of Ukraine and will take necessary action to minimize
market risk if required.
Operational risk
The Group’s production processes involve manufacturing, processing,
storage, use, handling, distribution and transport of silane gas and other
substances of an explosive or hazardous nature. Accidents or
mishandlings involving these substances could cause property damage
or injury, which could lead to significant liabilities and costs for the
Group. The occurrence of a catastrophic event at one of the Group’s
polysilicon production facilities could adversely impact production
capacity at such facility for a significant period of time. In addition, an
interruption in the supply of materials and services to one of the Group’s
manufacturing facilities could disrupt production capacity for a
significant period of time. Despite insurance coverage, the Group could
incur uninsured losses and liabilities arising from such events, and/or
suffer substantial losses in operational capacity, which could have a
significant adverse effect on the Group’s business, prospects, financial
results, and results of operations.
REC Silicon’s Moses Lake, Washington facility was shut down during the
second quarter of due to difficult market conditions and Chinese
tariffs on polysilicon produced in the United States. Accordingly,
operating costs and activities have been reduced to levels required to
safely maintain the facility in a non-operating status and to retain the
capability to restart the facility in .
The Company’s plans to reopen the Moses Lake facility are in part
dependent upon the restoration of access to polysilicon markets in
China, the creation of a non-Chinese solar value chain, or the
development and commercialization of technology for the use of silane
to manufacture silicon anode material for use in lithium-ion baeries.
The realization of these initiatives is subject to substantial uncertainty
and may depend upon the implementation of trade measures to
incentivize investments and will require REC Silicon to make additional
investments. Accordingly, plans to restart the facility in Moses Lake,
Washington is subject to substantial uncertainty.
Additional impairments and provisions would be required if the Moses
Lake facility is not restarted.
Liquidity risk
At December , the Group has sufficient available cash to meet
debt service and other anticipated operating cash flow requirements.
The selement of the strategic equity investment by Hanwha Solutions
was successfully completed on January , . Gross proceeds were
NOK million. Debt payments in include the indemnification
loan of USD . million, Grant County Washington property tax
selement of USD . million and interest of USD . million on the
senior secured bond (see note ).
Credit risk
Credit risk is primarily related to trade receivables and guarantees
provided for discontinued operations. In trade receivables, sources of
credit risk include geographic, industry and customer concentrations;
and risks related to the collection. Policies and procedures are in place
for managing credit risk, including obtaining securities where possible.
Market and customer specific developments affect credit risk.
Currency risk
The Company’s net cash flows from continuing operations are primarily
in USD. Debt is denominated in USD and NOK. Accordingly, the Group’s
currency risk on a consolidated basis relates primarily to the sufficiency
of net positive cash flows in USD to meet liabilities in NOK. The Group
does not currently hold any hedging instruments to offset the risk of
changes in exchange rates between the USD and NOK.
CORPORATE GOVERNANCE
Good corporate governance is essential to ensure that our business is
run in a way that protects the long-term interest of all stakeholders.
The Board of Directors has approved and implemented corporate
governance principles endorsing and complying with the Norwegian
Accounting Act and the Norwegian Code of Practice for Corporate
Governance. The Group’s compliance with the Code of Practice is
described in the report on Corporate Governance for which is
included in this Annual Report.
Board of Directors’ report
REC Silicon Annual Report 2021
The Company has directors and officers liability insurance. The insurance
covers the Board of Directors as well as officers of the company from
legal personal liability for financial damage caused by the performance
of their duties.
MARKET OUTLOOK
Market disruptions caused by the COVID- pandemic are dissipating.
However, current global shipping delays and port congestion is expected
to result in the delay of shipments. In addition, increases in infection
rates may adversely impact economic activities in certain geographic
areas and industries. The outlook for markets provided below is focused
on the long-term development of markets and assumes that economies
recover from the COVID- pandemic.
The company is monitoring the Russian invasion of Ukraine and will take
appropriate action as necessary to minimize risk.
Semiconductor supply chain participants and industry analysts continue
to indicate that demand for semiconductor devices is expected to
remain strong through the first quarter of . While visibility of
demand and order commitments are clear, order fulfillment and
execution may be adversely affected by delays in the global logistics
supply chain. However, REC Silicon will continue to take action to
mitigate any disruption to our customers and revenue expectations.
Demand for REC Silicon’s semiconductor grade polysilicon and silicon
gases are expected to increase in . Factors associated with data
transmission and storage, mobility, and increasing silicon content in
automobiles and other consumer goods are expected to result in
demand growth. The increasing trend towards electrification and the
adoption of new technologies is also expected to increase demand for
REC Silicon’s advanced silicon products.
Solar grade polysilicon prices increased to approximately USD ./kg
at the beginning of the first quarter of . Polysilicon supply will
increase through as new capacity comes online. While capacity
expansions have been announced that may result in oversupply,
opportunities to restart the Moses Lake FBR facility will be impacted by
the potential passage of the Solar Energy Manufacturing for America
(SEMA) act as well as current initiatives to develop PV supply chains
outside of China. These initiatives are expected to result in opportunities
for supply agreements for solar grade granular polysilicon and result in
the restart of the Moses Lake facility. Increases in wafer capacity and
increased demand for PV installations should result in strong demand for
solar grade polysilicon. Polysilicon supply is expected to remain
constrained in the first half of and become more balanced towards
the end of the year. Industrial analysts estimate global demand for PV
installations of approximately -GW.
In addition, developments with respect to silicon anode baery
materials appear to be taking shape. Developers continue to qualify their
silicon-based anode material in commercial applications. Developer
forecasts predict large scale silane demand by .
FORWARD LOOKING STATEMENTS
This report contains statements regarding the future in connection with
the Group’s growth initiatives, profit figures, outlook, strategies and
objectives. In particular, the section “Outlook” contains forward-looking
statements regarding the Group’s expectations. All statements
regarding the future are subject to inherent risks and uncertainties, and
many factors can lead to actual results and developments deviating
substantially from what has been expressed or implied in such
statements. These factors include the risk factors relating to REC
Silicon’s activities described in section “Risk Factors” above.
Board of Directors’ report
Lysaker, March ,
Board of Directors
Kristian Røkke
Chairman of the Board
Annee Malm Justad
Member of the Board
Audun Stensvold
Member of the Board
Lene Landøy
Member of the Board
Seung Deok Park
Member of the Board
James A. May II
President and CEO
REC Silicon Annual Report 2021
Board of Directors’ report
The Board of Directors and the Chief Executive Officer (CEO) have today
considered and approved the report from the Board of Directors and CEO,
the financial statements for the Group and for the parent company REC
Silicon ASA (the Company) for the year ending December , .
The consolidated financial statements of the Group have been prepared in
accordance with International Financial Reporting Standards as adopted
by the EU and additional disclosure requirements as stated in the
Norwegian Accounting Act that are applicable at December , . The
financial statements for the Company have been prepared in accordance
with the Norwegian Accounting Act and Generally Accepted Accounting
Principles in Norway that are applicable at December , . The report
from the Board of Directors and CEO, including the report on corporate
governance, for the Group and the Company has been prepared in
accordance with the Norwegian Accounting Act and the Norwegian
Accounting Standard no. applicable at December , .
We confirm that, to the best of our knowledge:
• The financial statements for the Group and the Company for the year
ending December , have been prepared in accordance with
applicable accounting standards, and
• The information in the financial statements gives a true and fair view of
the Group’s and the Company’s assets, liabilities, financial position, and
results of operations for the year ending December , , and
• The report from the Board of Directors for the year ending December
, includes a fair review of:
• The development, results of operations and position for the Group
and the Company, and
• The principal risks and uncertainties for the Group and the Company.
STATEMENT OF COMPLIANCE
Lysaker, March ,
Board of Directors
Kristian Røkke
Chairman of the Board
Annee Malm Justad
Member of the Board
Audun Stensvold
Member of the Board
Lene Landøy
Member of the Board
Seung Deok Park
Member of the Board
James A. May II
President and CEO
REC Silicon Annual Report 2021
INTRODUCTION
REC Silicon is a global leader in silane-based, high-purity silicon
materials, delivering high-purity polysilicon and silicon gases to the solar
and electronics industries. REC Silicon operates manufacturing facilities
in Moses Lake, Washington and Bue, Montana in the USA. The Group’s
sales and marketing activities for solar grade polysilicon, semiconductor
grade silicon and silicon gases are carried out in China, Japan, Korea,
Taiwan and in the United States. The Group also has a JV investment in
Yulin, China.
Through its products for the Solar PV industry, REC Silicon participates
in the global value chain for renewable energy. Furthermore, our products
for the semiconductor industry place the Group in the global value chain
for digitalization, a key driver for more efficient resource use in the
world. As such, REC Silicon is well integrated in the drive to make the
world more environmentally sustainable. Nevertheless, we recognize our
responsibility to ensure that our own operations and value chain
minimize its environmental footprint. REC Silicon strives to be
recognized as a safe and fair employer with proper aention to all
stakeholders and with a best-practice governance structure.
FOCUS AREAS
REC Silicon has conducted a materiality analysis to define focus areas
that are strategically important to the Group and its stakeholders. This
analysis is a combination of industry materiality analyses from the
Sustainability Accounting Standards Board (SASB) that cover “Solar
Technology & Project Developers” and “Chemicals”, as well as a more
granulated, internal analysis of key aspects where we believe aention
and focus is needed to ensure that REC Silicon has the right platform to
execute its strategy. The sustainability focus areas for REC Silicon going
forward are:
Sustainability report
Sustainability report
SAFETY ENERGY WATER ENVIRONMENT
EQUAL TREATMENT
AND HUMAN RIGHTS GOVERNANCE
• Health and safety of
personnel
• Safety in production
• Safety of products
• Safety in supply chain
• Energy use and mix
• Energy emissions
• Energy supply
• Water use
• Water discharge
• Waste production
• Waste treatment
• Waste recycling
• Raw materials sourcing
• Emissions to air
• Biodiversity
• Gender equality
• Human rights
• Community interaction
• Anti-corruption
• Whistleblower
• Accountability
• Transparency
• Stewardship
Target . Target . Target . Target . Target . Target .
Target . Target . Target . Target .
Target . Target . Target . Target .
Target .
Target . Target . Target .
Target .
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CLEAN WATER
AND SANITATION
AFFORDABLE AND
CLEAN ENERGY
DECENT WORK AND
ECONOMIC GROWTH
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
REDUCED
INEQUALITIES
SUSTAINABLE CITIES
AND COMMUNITIES
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
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ON LAND
PEACE, JUSTICE
AND STRONG
INSTITUTIONS
CLIMATE
ACTION
LIFE
BELOW WATER
PARTNERSHIPS
FOR THE GOALS
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NO
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AND WELL-BEING
QUALITY
EDUCATION
GENDER
EQUALITY
CLEAN WATER
AND SANITATION
AFFORDABLE AND
CLEAN ENERGY
DECENT WORK AND
ECONOMIC GROWTH
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
REDUCED
INEQUALITIES
SUSTAINABLE CITIES
AND COMMUNITIES
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
LIFE
ON LAND
PEACE, JUSTICE
AND STRONG
INSTITUTIONS
CLIMATE
ACTION
LIFE
BELOW WATER
PARTNERSHIPS
FOR THE GOALS
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FOCUS AREAS AND THE UNITED NATIONS
SUSTAINABLE DEVELOPMENT GOALS
REC Silicon Annual Report 2021
Safety
Safety for everyone involved in the production and use of REC Silicon’s
products is of top priority.
Energy
The production of polysilicon and silicon gases consumes substantial
volumes of energy, which has a direct impact on the environment, as well
as on costs.
Water
The production of polysilicon and silicon gases consumes and discharges
substantial volumes of water, which has a direct impact on water
resources and water quality if not managed correctly.
Environment
Our production processes generate significant volumes of waste, where
increased recycling will be important to reduce the environmental
footprint. Emissions to air are also important, as is the protection of
local biodiversity. REC Silicon needs access to raw materials with low
environmental impact, which make its value chain more resilient to
future, climate-related changes.
Equal treatment and human rights
The Group needs access to qualified personnel and strives to be seen as
an aractive workplace that respects all aspects of human rights and
gives everyone an equal opportunity to succeed.
Governance
REC Silicon adheres to the strictest principles of fair business behavior
and integrates the governance of sustainability maers along with the
overall corporate governance, which places the ultimate accountability
with the executive management and the Board of Directors.
FOCUS AREAS AND THE UNITED NATIONS
SUSTAINABLE DEVELOPMENT GOALS
REC Silicon supports the United Nations Sustainable Development
Goals (SDGs) and has identified seven SDGs that are particularly
relevant to our operations.
These are areas where we can contribute towards implementing the UN
Agenda for Sustainable Development by . Some of the above SDGs
are relevant to more than one of REC Silicon’s focus areas.
Each SDG has underlying targets, which we have aligned with our own
focus areas as illustrated below.
Furthermore, we have aempted to tie the SDGs to the key operational
and strategic parameters we use to set targets and measure
performance. This means that we can have a clear view of which of the
SDGs our efforts contribute to:
Based on this, we are developing a framework for our sustainability
strategy going forward. Importantly, we have identified a range of KPIs
grouped around each focus area, so that we can operationalize our
improvement efforts and initiatives with the appropriate focus and link
these to longer term goals.
It is the ambition of REC Silicon to develop a full suite of strategic
targets relating to sustainability during the coming year with associated
KPIs that are monitored on a regular basis and related to initiatives,
plans and programs set to improve our performance.
PERFORMANCE IN
This section outlines how REC Silicon performed during in relation
to established KPIs. These are reported monthly or quarterly and are
subject to audits on all levels in the organization.
Compared to previous years, we are now also expressing certain KPIs on
a per-unit-produced basis to get a beer understanding of the resource
efficiency of our production. This will be an important part of our
sustainability strategy going forward.
Sustainability report
FOCUS AREA KPI
Safety
LTI rate, Total Recordable Injuries rate
Safe job analyses
Sick hours
Hazard recognition audits
Serious incidents
Supply chain audits
Energy Energy use
Emissions from energy use
Energy mix
Energy efficiency
Reliability of energy sourcing
Water Water consumption
Waste-water discharge
Water use efficiency
Environment Waste production volumes, including hazardous waste
Waste recycling
Raw materials sourcing
Emissions to air
Initiatives to preserve biodiversity
Equal treatment and
human rights
women in workforce and management
Salary gap male vs female
Initiatives and programs to promote gender equality
Human rights audits and violations in supply chain
Donations and contributions to community
Governance Anti-corruption audits and violations
Number of whistleblower incidents
Transparency of ESG governance structure
Stewardship initiatives in value chain
REC Silicon Annual Report 2021
ENVIRONMENTAL DISCLOSURES UNIT CHANGE
Polysilicon production Mt ,
Silane gas production and other production Mt , ,
Total production Mt , ,
Energy
Heating Oil L , ,
Diesel L ,, ,,
Natural gas m
, , -
Gasoline L , ,
Propane L n.m.
Hydrogen m
n.m.
Other (Unleaded gasonline and propane) L n.m.
Direct Energy Consumption (Scope ) GWh
Indirect Energy Consumption (Grid Electricity) (Scope ) GWh
Total Energy Use GWh
GJ ,, ,,
Share from Grid Electricity
Share from Renewable Energy
Energy per produced unit MWh/Mt -
CO
emissions
Direct emissions (Scope ) tCO
e , ,
Indirect emissions from electricity (Scope ) tCO
e , ,
Total CO
emissions tCO
e , ,
CO
emissions per produced unit tCO
e/Mt -
Water
Municipal water consumption Mill m
. . -
Surface water consumption Mill m
. . -
Total water consumption Mill m
. . -
Waste water discharge Mill m
. .
Share of water from regions with High Water Baseline Stress
Share of water from regions with Extremely High Water Baseline Stress
Waste water share of water consumption
Water consumption per produced unit ' m
/Mt . . -
Waste water discharge per produced unit ' m
/Mt . . -
Waste
Recycled waste Mt -
Non-hazardous waste Mt , ,
Hazardous waste Mt
Total waste Mt
Recycled waste share of total waste
Hazardous waste share of total waste
Hazardous waste per produced unit Mt . .
Total waste per produced unit Mt . . -
Ecological Impacts
Total number of permit breaches
Number of serious incidents or environmental releases n.m.
REC Silicon Annual Report 2021
Environmental performance
The performance of the Group in relation to environmental objectives
are governed by a set of policies and plans. These include:
• Environmental and climate policy
• Pollution Prevention Plan
• Process Safety Management Plan
The production of polysilicon and silicon gases increased by percent
compared to the previous year. With the facility in Moses Lake still being
idled, all production took place at the Bue facility, which employed
percent of the Group’s employees.
Despite the production increase, REC Silicon saw only a moderate
increase in resource use. Energy use per produced unit fell by percent
year-on-year, while water use and waste production per produced unit
fell by - percent year-on-year. The CO
emissions per produced unit
were down by percent. This variation in intensities is related to some
reactors being held idle for some periods during the year but is within a
normal range.
The energy used in the production process is still nearly diesel,
which is something the Group would like to improve going forward. The
electricity consumed by the Group is grid electricity. The Moses Lake
facility uses electricity from hydropower, but until this is back in
production, the Company has no access to renewable electricity for its
production.
The number of environmental permit breaches was flat from last year at
, which is above the company’s target. Nevertheless, none of these
breaches were serious or involved any spills. REC Silicon’s discharged
water needs to be above drinking water standard and the Company uses
two test labs to ensure compliance. During , a program was
undertaken to pinpoint the reasons for test variability between the labs,
which in some cases may result in a recordable permit breach.
SOCIAL DISCLOSURES UNIT CHANGE
Number of Employees
Job Safety
Safe Job Analyses -
Hazard Recognition Audits -
Lost time injuries rate LTI/Mill hrs . .
Total recordable injuries rate TRI/Mill hrs . .
Sick hours , ,
Sick hours share . .
Workforce composition
Male
Female
Management composition
Male
Female
Human rights and corruption
On-site audits of suppliers on human rights
Self-directed audits of suppliers on human rights
Human Rights Violations
Corruption Violations
Local community interaction
Donations to Local Communities USD , ,
- Contribution by employees
Volunteer hours to programs and charitable organizations -
REC Silicon Annual Report 2021
Social performance
Health and safety have the highest priority and the Company aims to
prevent all work-related accidents, injuries, and occupational illnesses.
The target is zero incidents, zero injuries, and no harm to employees,
contractors, partners, customers, and communities.
The Company has an extensive set of HSE procedures, safety
departments at each facility, and employee-driven processes that
monitor, audit, and further develop safety procedures, practices, and
protocols. Policies and codes also cover equal opportunities, ethics and
human rights:
• Code of Conduct
• HSE Policy
• Job Safety Analysis
• Hazard recognition audits
• Compensation policy
• Supply chain standards and management
All employees have the right and the responsibility to stop unsafe
activities as needed.
The safety performance took a turn for the worse during . There
were four lost time injuries during , double that of the previous
year. Total recordable injuries numbered eight during the year, an
increase of two from . None of the injuries resulted in serious injury
to personnel. The number of Safe Job Analyses declined by percent,
while the number of Hazard Recognition Audits fell by percent. This
owes itself to the effects of the COVID- pandemic, which resulted in
the company encouraging reduced interaction between employees, and
in particular any exposure to the production employees.
REC Silicon’s compensation policy provides a benefit for paid time off
(PTO) for its employees. The policy accounts for different Sick PTO
regulations in the states of Washington and Montana. Designating PTO
as Sick PTO is voluntary rather than required in both states, but the total
sick hours designated are nevertheless disclosed below. The Company
maintains a health and wellness program which facilitates healthy
lifestyle choices and activities.
Although REC Silicon was affected by the global pandemic in the same
manner as the rest of the world, we were able to mitigate any production
interruptions or losses with internal policies to ensure people
maintained compliance with mandates and continued safe work
practices. REC Silicon is considered essential due to the hazardous
chemicals on site and therefore, there was no interruption in our
production. Employees were provided with masks, cleaning materials,
sanitizer, paid time away if sick, and social distancing was practiced
throughout the organization.
REC Silicon is commied to provide equal opportunities for all
employees in an inclusive work culture. All employees and applicants are
treated without regard to age, gender, sexual orientation, nationality,
race, religion, disability, marital situation, or any other protected status.
The gender composition of the workforce was unchanged during ,
while the female proportion at the management level was down year-on-
year due to an employee leaving the company without being replaced.
REC Silicon does not accept any form of harassment or discrimination. In
the United States, REC Silicon’s employment policies and practices are
in compliance with Title VII of the Civil Rights Act of ( U.S.C.
) as amended.
The Group’s standard terms through its supply chain require adherence to
standards on human rights, freedom of association, child and forced labor,
corruption, and occupational health and safety. All strategic suppliers had
contractual clauses or are subject to regulations regarding respect for
human rights. There were no human right violations reported in .
REC Silicon and its employees focus on local community participation.
Donations to local communities are made on a regular basis, and its
employees also contribute directly. Volunteer hours to programs and
charitable organizations continue at a reasonably high level but were
impacted by the COVID- restrictions during the year as most businesses
were shut down and fundraising in general was made more difficult.
Governance performance
REC Silicon sets high standards of integrity and believes that a sound
business must be based on value-based management and clear
guidelines on ethics and sustainability. The Code of Conduct, the Anti-
Corruption Policy and related procedures describe the behavior
expected of our employees. Every employee is required to sign the Code
of Conduct to acknowledge their commitment to adherence, and new
employees receive training on the Code of Conduct, including
information about REC Silicon’s Anti-Corruption Policy and procedures.
REC Silicon investigates all potential integrity concerns and cooperates
fully with the authorities. The Company takes every accusation of
corruption seriously, performs thorough investigations, reports to the
Board of Directors, and takes necessary action. No adverse action will be
taken against an employee due to complaints submied in good faith.
Complaints can be made anonymously.
No incidents of corruption were reported in . REC Silicon has a
whistleblower program in place, but there were no whistleblower
complaints recorded during the year.
REC Silicon endorses the Norwegian Code of Practice for Corporate
Governance (Code of Practice) issued by the Norwegian Corporate
Governance Board, most recently revised in . For additional
information on this, please refer to the Board of Directors Report on
Corporate Governance, which is a separate section in this Annual Report.
The composition of the Board of Directors remained unchanged from
at December , . There were four directors at December
, with the gender balance at percent female and percent
male. At the completion of the Hanwha investment in January , the
number of directors increased to five with the gender balance changed
to percent female and percent male.
The governance structure of REC Silicon is highlighted in the figure
below. As part of the process to expand its focus on sustainability, the
governance of sustainability maers will become more integrated into
the overall governance structure.
REC Silicon Annual Report 2021
Norwegian Accounting Act
Compensation Commiee
Board of Directors
External Auditors Nomination CommieeGeneral Assembly
Management
Risk Management System
HSE Monitoring Whistleblower monitoring
Sustainability policies and KPIs Anticorruption Policy
Risk Management Process
Risk Assesment
Audit Commiee
Norwegian Code of Practice for Corporate Governance
• Code of Conduct
• Sustainability KPIs
• HSE Procedures
• Job Safety Analysis
• Compensation Policy
• Employment Policy
• Supply Chain Standards
• Human Rights Policy
• Anti-corruption Policy
• US Civil Rights Act of
REC Silicon Annual Report 2021
REC Silicon ASA (the “Company”) and its subsidiaries (together
REC Silicon Group/the Group), endorses the Norwegian Code
of Practice for Corporate Governance (Code of Practice) issued
by the Norwegian Corporate Governance Board, most recently
revised on October , .
. IMPLEMENTATION AND REPORTING ON CORPORATE GOVERNANCE
The Board of Directors of REC Silicon (“Board”) has prepared the
following report that explains the Group’s corporate governance
practices and how it has complied with the Code of Practice in the
preceding year. The application of the Code of Practice is based on the
“comply or explain” principle and deviations from the code, if any, is
explained under the relevant item. The Group’s corporate governance
practices are subject to annual reviews and discussions by the Board.
REC Silicon Group deviated from the recommendations in the Code of
Practice on two sections at year-end . These deviations pertained
to separate proxy voting for candidates to the Board (Section ) and
separate regulations for takeover bids (Section ).
. BUSINESS
REC Silicon believes the solar industry plays a key role as a long-term
supplier of sustainable energy and its business is focused on the
production of polysilicon and silicon gases for the solar and electronics
industries. To make solar electricity competitive with traditional energy
sources, the Group focuses on product improvements and cost
reductions through the introduction of new process and product
technologies as well as continuous productivity enhancement and
technology development.
The Group’s business corresponds with the purpose of the Company
which is described in its Articles of Association § : “The Company’s
purpose is development and sale of products and services related to
renewable energy sources, and to perform other financial operations
related to such. The Company may, through subscription of shares or in
any other ways, including granting of loans, acquire interests in other
companies with identical or similar purposes”.
The Board of Directors has defined clear strategies, business goals and
risk profile for the Group’s business activities, to create value for its
shareholders in a sustainable manner considering financial, social and
environmental factors. This includes efficient and responsible utilization
of resources to the benefit of all its stakeholders.
Sustainability is at the core of REC Silicon’s business model and the
Company acknowledges its responsibilities toward the environment,
society and the local communities in which it operates. The Board carries
the responsibility to secure acceptable sustainability performance and
has implemented various policies providing business practice guidance
and reporting procedures to ensure continuous improvement. An
account of the company’s sustainability performance is included in the
Board of Directors’ report in the annual report.
The Group’s strategies, business goals and risk profile are reviewed on
an annual basis and presented in the annual report, quarterly reports,
and at various investor meetings.
. EQUITY AND DIVIDENDS
The Group’s consolidated equity was USD . million at December ,
, which represented . percent of total assets. The debt-to-
equity ratio was .. The Board monitors the Group’s capital structure
and takes actions necessary to ensure that it is appropriate for the
current objectives, strategy, and risk profile. Reference is also made to
the consolidated financial statements note . regarding capital
structure and financing and note . regarding financial risk and to the
report of the Board of Directors.
Board of Directors’ report on
Corporate Governance
Board of Directors’ report on corporate governance
REC Silicon Annual Report 2021
Board of Directors’ report on corporate governance
The Group’s ambition is to give its shareholders a high and stable return
on their investment and to be competitive compared with alternative
investment opportunities with comparable risk.
To support commied investments and productivity improvements, the
Board’s view so far has been that retained earnings should be used within
the Company. Accordingly, there has been no distribution of dividends to
the shareholders since the Company was publicly listed in , and no
proposed dividend payments for the financial year .
The Board will continue to assess the capital structure based on the
goals, strategies, risk profile, and the financial situation of the Company.
At the Annual General Meeting (AGM) on May , , the Board was
granted the following authorities:
• Authority to increase the share capital with up to NOK ,,
which equals approximately twenty percent of the existing share
capital. The authorization covers both cash and non-cash
considerations, including mergers. Under this authorisation, the
company on November , , announced the issuance of
,, new shares at NOK . per share and is a direct
placement towards Hanwa Solutions. Completion of the transaction
occurred on January , .
• Authority to acquire treasury shares in the Company (up to a
maximum of ten percent of the face value of the share capital) to
increase return on investment for the Company’s shareholders. As of
December , , the authorization has not been used.
These authorities were restricted for defined purposes and each
mandate was considered separately. They are valid until the AGM in
or no later than months from the date of the AGM.
For further information about the mandates given to the Board, reference
is made to the minutes from REC Silicon’s AGM and EGM, which are
available on the Company’s website (www.recsilicon.com).
. EQUAL TREATMENT OF SHAREHOLDERS AND
TRANSACTIONS WITH CLOSE ASSOCIATES
The Company seeks to conform to the principles for equal treatment of
shareholders.
In the event of a share capital increase based on authorization from the
general meeting, where the pre-emptive rights of shareholders are set
aside, grounds will be provided in the stock exchange notice in which the
share capital increase is announced.
In the event of a share buy-back program, the Board will aim to ensure
that all related transactions are carried out either through the trading
system or at prevailing prices at Oslo Børs. The Board will consider
company’s and shareholders’ interests and aim to maintain transparency
and equal treatment of all shareholders. In the event of limited liquidity
in the Company’s shares, the Company shall consider other ways to
ensure equal treatment of all shareholders. There were no transactions
in own shares during .
. FREELY NEGOTIABLE SHARES
REC Silicon ASA has one class of shares and each share confers one
voting right at the General Meetings. The Company’s shares are listed on
the Oslo Stock Exchange, where they are freely transferable. There are
no restrictions on owning, trading or voting for shares in the articles of
association.
. GENERAL MEETINGS
The General Meeting is the Company’s highest authority, and open to all
shareholders. The Company encourages shareholders to participate and
exercise their rights. To aend and vote at the General Meeting, shares
must be registered in the Central Securities Depository (VPS) by the
fih business day prior to the General Meeting.
The AGM is held by the end of June every year in the municipality where
the Company has its registered business address or in Oslo. If required,
the Board may hold the AGM as an electronic meeting. The Annual
General Meeting was held on May , in Oslo, with . percent
of the Company’s shares represented.
The Board, auditor, or shareholders representing at least percent of
the shares can call for Extraordinary General Meetings when deemed
necessary. In , the Board called for EGMs on March to name Kjell
Inge Røkke as board chair and Annee Malm Justad as deputy chair of
REC Silicon. A total of . percent of the company’s shares were
represented. Additionally in , the board called for an EGM on
December to name Kristian Monsen Røkke as board chair and Seung
Deok Park as board member. A total of . percent of the company’s
shares were represented.
The notice of the General Meeting and supporting documents are made
available on the Company’s website no later than weeks prior to the
date of the meeting. Shareholders may request the documents by mail.
Efforts are made to ensure that proposed resolutions and supporting
information are sufficiently detailed and comprehensive to allow the
shareholders to form a view on all maers to be considered at the
meeting. The notice includes information about shareholders’ rights. The
notice period, right to aend and agenda proposals are regulated in the
Articles of Association.
Shareholders may request that specific maers be considered by a
general meeting by wrien notice to the Board within days prior to the
time limit for notice of the General Meeting together with a proposal for
resolution and reasons why the maer is proposed for consideration. If
the notice has already been distributed, a new notice shall be distributed
if the time limit for notice to the General Meeting has not expired.
Shareholders wishing to participate at the General Meeting shall notify
the Company within a specific time limit, and a minimum days prior to
the General Meeting. Shareholders who have not given notice within the
time limit may be denied participation at the meeting.
Shareholders who cannot aend the General Meeting may vote by proxy.
They may elect a proxy of their choice, and the Company also nominates
a person that shareholders may elect as a proxy. Information about the
REC Silicon Annual Report 2021
Board of Directors’ report on corporate governance
procedure shareholders must observe to participate and vote is given
together with the notice of the meeting. A proxy form is prepared in a
way that allows separate voting instructions to be given for each maer
considered. The Articles of Association allow the Board to accept
wrien advance votes subject to the existence of a satisfactory method
for verifying the identity of the shareholder.
The Articles of Association also allow the Board to accept votes cast
through electronic communication.
The Chairman of the Board, the Board members, the auditor, and the
members of the Nomination Commiee are normally present at the
General Meeting. All Board members are encouraged to aend the
meeting.
The General Meeting is opened by the Chairman of the Board who
nominates an independent chair for election to lead the meeting.
Deviation from the Code of Practice:
The Code recommends separate voting for candidates to the Board.
However, it is not possible to vote separately on each candidate
nominated to the Board because the composition of the Board must be
in accordance with applicable legislation regarding gender
representation and qualifications for commiee assignments. The
nomination commiee’s proposal is given with respect to such
legislation. Should a situation arise where the composition of the Board
might conflict with applicable legislation, the situation and
consequences of electing a board contrary to legislation should be
discussed at the General Meeting and shareholders should base their
votes on the views discussed.
. NOMINATION COMMITTEE
The Nomination Commiee is governed by the Articles of Association
section . The AGM on May , , elected the following three
members for the Nomination Commiee for the period until the AGM in
: Mr. Engebret G. Hisdahl (chair), Ms. Liv Nona Stubholdt, and Mr.
Kjetil Kristiansen.
The nomination commiee does not include any executive personnel or
any member of the company’s Board of Directors. Mr. Kjetil Kristiansen
currently holds the positions as head of HR at Aker BP ASA, a subsidiary
of Aker ASA and a related company to Aker Horizons AS, which is the
main shareholder of REC Silicon. The remaining members of the
Nomination Commiee are independent of the Board of Directors and
Group Management.
The General Meeting stipulates the rules of procedure for the
Nomination Commiee and determines the Commiees’ remuneration.
The Nomination Commiee gives its recommendation to the general
meeting on election of and compensation to members of the Board of
Directors, in addition to election of members of the Nomination
Commiee. Each proposal is justified on an individual basis. All
shareholders are entitled to nominate candidates to the Board of
Directors, and information on how to propose candidates can be found
on the company’s website.
. BOARD OF DIRECTORS:
COMPOSITION AND INDEPENDENCE
Pursuant to the articles of association section , the company’s Board of
Directors shall consist of three to twelve members. On December
, the Board of Directors consisted of four members (see table
below), of which two were female. The directors are elected by the
General Meeting for a term of one year and may be re-elected.
The EGM on March , , elected Kjell Inge Røkke and Lene Landøy as
new Board members, replacing Inger Berg Ørstavik and Espen Klitzing.
Kjell Inge Røkke is the principal owner of Aker ASA, the parent company
of REC Silicon’s main shareholder Aker Horizons AS. Lene Landøy was at
the time employed by Aker BP, and is currently employed by Aker ASA,
both companies within the Aker group.
The AGM on May , , elected Kjell Inge Røkke as Chair of the
Board, Anee Malm Justad was elected Deputy Chair, while Lene Landøy
and Audun Stensvold were elected members of the board, all for a term
until the AGM in .
The EGM on December , , elected Seung Deok Park as a new
member of the Board and Kristian Monsen Røkke as the Chair of the
Board, replacing Kjell Inge Røkke who resigned. The election of Kristian
Monsen Røkke was effective immediately, while the election of Seung
Deok Park was effective from January , , with the notification of
the completion of Hanwha Solutions Corporation’s subscription and
acquisition of ,, shares in the Company.
Overview of the Board at December , :
NAME ROLE
CONSIDERED
INDEPENDENT
OF MAIN
SHAREHOLDERS
INDEPENDENT OF
GROUP MANAGEMENT
AND MATERIAL
BUSINESS CONTACTS SERVED SINCE TERM EXPIRES
PARTICIPATION
BOARD MEETINGS
Kristian Monsen Røkke Chair (from December ) No Ye s Dec AGM NA
Anette Malm Justad Board Member (Chair until March , ) Yes Ye s May AGM of
Audun Stensvold Board member Yes Ye s May AGM of
Lene Landøy Board member No Ye s Mar AGM of
REC Silicon Annual Report 2021
All members of the Board of Directors are considered independent of
the company’s executive management and material business contacts.
The company’s annual report and the website provides information to
illustrate the expertise of the members of the Board of Directors. The
Board of Directors considers its composition to be diverse and
represent required competencies including financial and industrial
experience. Board members are encouraged to own shares in the
company. An overview of board members’ share ownership in the
Company is available in note to the consolidated financial
statements.
. WORK OF THE BOARD OF DIRECTORS
The Board has the ultimate responsibility for the management of the
Company and the Group and for supervising Group Management.
The Board has adopted “Rules of procedures for the Board of Directors”,
which regulates the Board’s responsibilities, duties and administrative
procedures as well as the tasks and duties of the Chief Executive Officer.
The Board has also adopted a Chart of Authority regulating maers that
are to be decided by the Board and maers that may be decided by
Group Management. The Chart of Authority distinguishes between
investment decisions, customer contracts, procurement contracts,
compensation, and finance and is reviewed on an annual basis. The Board
holds at least one meeting per year with the auditor and without any
members of Group Management or administration present.
The Board has adopted guidelines to ensure it is informed of and how to
handle potential transactions and maers to be considered by the
Board, in which members of the Board, Group Management or close
associates are involved. The Board must review and approve all
transactions between the Group and Group Management or the Board of
Directors.
The Company uses independent third-party valuations in case of
significant transactions with closely related parties which are not to be
considered by the General Meeting. There was one agreement
announced in between the Group and its shareholders, directors,
Group Management or other related parties that could be described as a
material transaction. Details on the related-party transaction are
disclosed in the consolidated financial statements, note .
The Board has established two commiees: an Audit Commiee and a
Compensation Commiee.
Audit Commiee
The Company’s Audit Commiee is governed by the Norwegian Public
Limited Liability Companies Act and the Audit Commiee Charter, which
sets out the tasks and rules of procedure of the Commiee.
The Commiee members are appointed by and among the Board of
Directors. At December , , the audit commiee members were
Mr. Audun Stensvold (chair) and Ms Lene Landøy, both considered
independent of Group Management. The Audit Commiee held
meetings in .
The Commiee supports the Board with the assessment and control of
financial risk, financial reporting, auditing, control, and prepares
discussions and resolutions for Board meetings. It has no decision-
making authority. The Commiee reviews complaints regarding
accounting, internal controls, and auditing maers. In addition, under the
whistle-blower procedure, complaints from employees and other
concerned parties are received and followed up by the Commiee.
The Commiee makes recommendations to the Board with respect to
the Group auditor and the auditor’s fees, as assessing the auditor’s
independence, including considering any non-audit-related services
provided.
Compensation Commiee
The Compensation Commiee is governed by the Norwegian Public
Limited Liability Companies Act and the Compensation Commiee
Charter, which sets out the tasks and procedures of the Commiee. The
Commiee members are appointed by and among the Board of
Directors. At December , , the compensation commiee
members were Annee Malm Justad and Kristian Røkke, both
independent of the Group Management. During , the Commiee
met times.
The Compensation Commiee supports the Board by preparing
resolutions on the terms and conditions of employment for the Chief
Executive Officer and the general principles and strategies for
compensation of Group Management including bonus and share based
compensation as well as other personnel maers.
. RISK MANAGEMENT AND INTERNAL CONTROL
The Group’s risk management system shall ensure that the Group has a
systematic and uniform approach to risk management. The system
defines roles, responsibilities, processes and procedures, standards,
tools and documentation, including considerations related to integrating
stakeholders in relation to the Company’s value creation.
Group Management sets the context in which risks are managed and
supervises the risk management process. Group Management performs
separate risk evaluations based on a top-down approach. Risk
assessments are presented to the Audit Commiee and the Board of
Directors. The Board performs a review of risks in connection with the
approval of the annual budget.
Group Management regularly updates the Board of Directors including
operational reviews, HSE (Health, Safety and Environment) measures,
financial highlights and key performance indicators. Prior to each Board
meeting, the CEO prepares a report to the Board of Directors, which
includes this information in addition to any items requested by Board
members and items requiring action by the Board of Directors.
Because the Group operates internationally, it is required to comply with
numerous national and international laws and regulations. All business
activities and processes must be conducted in accordance with laws, and
regulations.
Board of Directors’ report on corporate governance
REC Silicon Annual Report 2021
Board of Directors’ report on corporate governance
To strengthen internal control, the Group has established an
Anticorruption Policy and procedures, provided training to employees
and managers, and performed a fraud risk assessment. Whistleblower
complaints and other internal control activities are presented to the
Audit Commiee according to the Audit commiee charter.
To ensure consistent financial reporting throughout the Group, financial
information is reported through a computerized financial reporting
system utilizing a common chart of accounts and procedures designed
to ensure the consistency of information reported. Subsidiaries
accumulate transactional information, period end balances, and
performance statistics through ERP systems designed to meet the
business requirements of each operation. Quarterly and year-end
reporting processes are expanded to meet various supplementary
requirements.
The quarterly and yearly reporting process and significant accounting
and reporting issues are discussed with the Audit Commiee in the
presence of the external auditor.
The Group’s financial risk management is described in the consolidated
financial statements (note ). Reference is also made to the Board of
Directors’ report that includes an analysis of the financial statements
and the risk factors.
. REMUNERATION OF THE BOARD OF DIRECTORS
The members of the Board receive remuneration in accordance with
their individual roles. Prior to May , , Board members who
participate in the Audit Commiee or the Compensation Commiee
received additional compensation.
Board remuneration is not linked to Company performance and members
are not granted share options.
Details on the remuneration of the Board of Directors are disclosed in
the consolidated financial statements (note ).
Members of the Board of Directors and/or companies with which they
are associated should not take on specific assignments for the Company
in addition to their appointment as a member of the Board of Directors,
but if they do, this shall be disclosed to the full Board. The remuneration
for such additional duties will be approved by the Board of Directors.
There were no such assignments in .
. REMUNERATION OF THE GROUP MANAGEMENT
The guidelines for salary and other compensation to Executive
Management was presented at the AGM in May . The policy was
last updated in and was approved by the general meeting. The
Board determines remuneration of the Chief Executive Officer while
remuneration of Group Management is determined according to
guidelines. The Board’s statement regarding compensation of leading
employees, required by accounting act act §-b, is included in note
of the consolidated financial statements.
The remuneration of the Group Management consists of a basic salary,
relevant additional benefits and membership in the Company’s pension
and insurance schemes. The remuneration also includes performance
bonuses for selected individuals based on an annual performance
related compensation system. In addition, the Board has adopted an
incentive program for retaining key personnel. The performance bonuses
are linked to the Group’s financial performance and defined KPI’s over
time and includes incentives related to performance the employees can
influence. There are absolute limits for the performance-related
remuneration, where maximum performance bonus pay-out for the
management varies between and percent of the annual basic
salary.
Details on the remuneration of the Chief Executive Officer and other
members of Group Management are disclosed in the consolidated
financial statements (note ).
The Board extended the long-term incentive program for retaining key
personnel, whereby employees’ entitlements are linked to the share
price development of the Company’s shares. The share-based program
was introduced in and includes a lock-up period for shares
awarded and an absolute limit for the maximum gain in each calendar
year. Further details on the incentive program is disclosed in note of
the consolidated financial statements.
The AGM voted separately on the compensation to leading
employees and the statement regarding long-term incentive plans.
. INFORMATION AND COMMUNICATION
The Company treats its investors equally. Timely information is
published simultaneously to all investors in accordance with applicable
legislation and regulation in order to provide the best possible basis for
evaluation of Company performance. All information is provided in
English.
The Board has adopted an Investor Relations (IR) policy specifying,
among other things, who is entitled to speak on behalf of the Company
on various subjects and with guidelines for the Company’s contact with
shareholders other than through General Meetings.
Interim reports are published on a quarterly basis, in line with Oslo Stock
Exchange’s recommendations. Interim reports include presentations to
provide an overview of operational and financial developments, market
outlook, and the Company’s prospects. The presentations are open to
the public and made available through a webcast. The Chief Executive
Officer, the Chief Financial Officer and the IR Officer are normally
present at the quarterly presentations. Furthermore, the Company
keeps an ongoing dialogue with its investors and makes presentations to
analysts and investors through various conferences and events.
The Company observes a “Silent Period” extending from the last day of
the quarter until operating results are released publicly. During this
period, Group Management is not available for discussions with
investors or analysts. The IR Officer is available on a limited basis to
provide material previously released and to facilitate the collection and
REC Silicon Annual Report 2021
distribution of consensus forecasts. The Investor Relations function is in
charge of coordinating the Company’s communications to the market
and to existing and potential investors of the Company. The Investor
Relations Officer is an independent contractor that reports to the Chief
Financial Officer.
. TAKEOVERS
The Company has no defence mechanism to prevent take-over bids. The
Board is open to initiatives that are commercially and financially
aractive for the shareholders. The Board will assess potential offers in
accordance with applicable legislation and Code of Practice
requirements in due course.
Any transaction that effectively constitutes a disposal of a majority of
the Company’s activities will be decided by the General Meeting.
Deviation from the Code of Practice:
The Board has not established separate guidelines in the event of a take-
over bid as recommended by the Code of Practice. Take-over bids are
usually specific, one-off, events which makes preparation of guidelines
challenging. In the event of a take-over process, the Board will ensure
that the Company’s shareholders are treated equally, and that the
Company’s activities are not unnecessarily interrupted. The Board will
further seek to comply with the relevant recommendations from the
Code of Practice.
. AUDITOR
The Company’s external auditor, KPMG, is appointed by the General
Meeting and is independent from the Company.
The auditor participates at Board meetings with respect to the Annual
Financial Statements. The auditor comments on any material changes in
the Company’s accounting principles, material estimates used to
calculate accounting figures, and reports disagreements between the
auditor and Group Management.
The auditor presents significant identified weaknesses and proposals
for improvements of the internal control procedures annually to the
Board with an annual confirmation that the auditor has satisfied the
requirements for independence together with a summary of all services
provided to the Group. The auditor meets with the Audit Commiee and
the Board once a year without the Chief Executive Officer or any other
member of the Group Management present.
The auditor is also required to participate in meetings of the Audit
Commiee and present the main features of the audit plan to the
Commiee.
Remuneration of the auditor is approved by the General Meeting. The
auditor provides a break-down between audit and non-audit services,
and information is provided to the General Meeting about non-audit
services provided by the auditor. The Board has issued guidelines
regarding Group Management’s use of the auditor for services other
than audit. These guidelines include a list of services that are
preapproved for fees up to NOK , and requires audit commiee
approval for all other non-audit services or if fees are more than NOK
,. For more information about remuneration to the auditor, see
note to the consolidated financial statements.
The auditor participates at the AGM and presents the independent
auditor’s report.
Board of Directors’ report on corporate governance
REC Silicon Annual Report 2021
REC Silicon Annual Report 2021
FINANCIAL STATEMENTS
REC Silicon Group
& REC Silicon ASA
REC SILICON GROUP
Consolidated statement of financial position
Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Details of consolidated comprehensive income
Consolidated statement of cash flows
Index of the notes to the consolidated financial statements
Notes to the consolidated financial statements
REC SILICON ASA
Balance sheet (NGAAP)
Income statement (NGAAP)
Statement of cash flows (NGAAP)
Index of the notes to the financial statements
Notes to the financial statements
REC Silicon Annual Report 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
REC SILICON GROUP
USD IN MILLION NOTES
ASSETS
Non-current assets
Intangible assets 6 0.9 1.0
Land and buildings 6 33.3 35.6
Machinery and production equipment 6 34.7 50.5
Other tangible assets 6 2.6 3.1
Assets under construction 6 12.5 6.1
Property, plant and equipment 6 83.1 95.4
Right of use assets 7 33.2 35.7
Other non-current receivables 12 0.0 1.1
Financial assets and prepayments 0.0 1.1
Total non-current assets 117.3 133.3
Current assets
Inventories 13 33.1 41.3
Trade and other receivables 12 29.6 27.5
Restricted bank accounts 14 4.4 4.5
Cash and cash equivalents 14 110.5 134.9
Total current assets 177.6 208.2
Total assets 294.9 341.4
REC Silicon Annual Report 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
REC SILICON GROUP
USD IN MILLION NOTES
EQUITY AND LIABILITIES
Shareholders' equity
Paid-in capital 2,918.2 2,918.2
Other equity and retained earnings -2,884.9 -2,859.2
Total shareholders' equity 33.3 59.0
Non-current liabilities
Retirement benefit obligations 19 13.4 18.9
Non-current provision, interest calculation 20 20.2 14.7
Non-current financial liabilities, interest bearing 17 115.2 118.0
Non-current lease liabilities 7 67.9 69.7
Other non-current liabilities, not interest bearing 32 1.6 1.6
Total non-current liabilities 218.2 222.9
Current liabilities
Trade payables and other liabilities 20 29.4 26.1
Derivatives 11 0.0 1.5
Current financial liabilities, interest bearing 17 11.3 29.8
Current lease liabilities 7 2.6 2.1
Current prepayments, interest calculation 20 0.2 0.0
Total current liabilities 43.5 59.6
Total liabilities 261.6 282.5
Total equity and liabilities 294.9 341.4
Lysaker, March ,
Board of Directors
Kristian Røkke
Chairman of the Board
Annee Malm Justad
Member of the Board
Audun Stensvold
Member of the Board
Lene Landøy
Member of the Board
Seung Deok Park
Member of the Board
James A. May II
President and CEO
REC Silicon Annual Report 2021
CONSOLIDATED STATEMENT OF INCOME
REC SILICON GROUP
USD IN MILLION NOTES
Revenues 5 143.2 122.1
Cost of materials -17.1 -16.0
Changes in inventories -8.9 -4.7
Employee benefit expenses 16, 24, 32 -41.7 -39.4
Other operating expenses 22 -75.6 -55.1
Other income and expenses 21, 23 7.9 16.9
EBITDA
)
Depreciation 6 -25.2 -36.7
Amortization 6 0.0 -0.1
Depreciation of right of use assets 7 -3.0 -2.9
Impairment 6, 7, 8 -0.3 -23.0
Total depreciation, amortization and impairment -28.5 -62.7
EBIT
)
-20.8 -38.9
Financial income 25 0.1 0.3
Net financial expenses 9, 25 -23.6 -35.2
Net currency gains/losses 25 0.8 4.5
Net financial items -22.7 -30.4
Profit/loss before tax from continuing operations -43.5 -69.3
Income tax expense/benefit from continuing operations 18 0.0 22.6
Profit/loss from continuing operations -43.5 -46.7
Profit/loss from discontinued operations, net of tax
)
17, 30 13.4 0.0
Profit/loss from total operations -30.1 -46.7
Attributable to:
Owners of REC Silicon ASA -30.1 -46.7
Earnings per share (In USD)
From continuing operations
-basic 26 -0.12 -0.16
-diluted -0.12 -0.16
Earnings per share (In USD)
From total operations
-basic 26 -0.08 -0.16
-diluted 26 -0.08 -0.16
)
EBITDA - EBIT excluding depreciation, amortization and impairment.
)
EBIT - Profit/loss excluding income tax expense/benefit, net financial items, and profit/loss from investments in associates.
REC Silicon Annual Report 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
REC SILICON GROUP
USD IN MILLION
Profit/loss -30.1 -46.7
Other comprehensive income, net of tax:
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit plans 4.3 -1.1
Currency translation effects 0.0 0.0
Sum items that will not be reclassified to profit or loss 4.4 -1.1
Items that may be reclassified subsequently to profit or loss:
Currency translation differences
- taken to equity 0.0 0.0
Sum items that may be reclassified subsequently to profit or loss 0.0 0.0
Total other comprehensive income 4.3 -1.1
Total comprehensive income -25.7 -47.7
Total comprehensive income attributable to:
Owners of REC Silicon ASA -25.7 -47.7
REC Silicon Annual Report 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
REC SILICON GROUP
ATTRIBUTABLE TO EQUITY HOLDERS OF REC SILICON ASA
USD IN MILLION NOTES
SHARE
CAPITAL
SHARE
PREMIUM
OTHER PAIDIN
CAPITAL
TOTAL PAIDIN
CAPITAL
OTHER
EQUITY
COMPREHENSIVE
INCOME
TOTAL
EQUITY
Year
At January , 43.4 2,727.0 41.8 2,812.3 539.0 -3,350.5 0.8
Share issue 10.2 95.7 0.0 105.9 0.0 0.0 105.9
Total comprehensive income 0.0 0.0 0.0 0.0 0.0 -47.7 -47.7
At December , 53.6 2,822.7 41.8 2,918.2 539.0 -3,398.2 59.0
Year
At January , 53.6 2,822.7 41.8 2,918.2 539.0 -3,398.2 59.0
Share issue 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total comprehensive income 0.0 0.0 0.0 0.0 0.0 -25.7 -25.7
At December , 53.6 2,822.7 41.8 2,918.2 539.0 -3,423.9 33.3
REC Silicon Annual Report 2021
This table presents details of comprehensive income
USD IN MILLION
TRANSLATION DIFFERENCES
THAT CAN BE TRANSFERRED TO
PROFIT AND LOSS ACQUISITION
RETAINED
EARNINGS TOTAL
Year
Accumulated at January , 27.9 20.9 -3,399.3 -3,350.5
Profit/loss 0.0 0.0 -46.7 -46.7
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit plans 0.0 0.0 -1.1 -1.1
Currency translation effects 0.0 0.0 0.0 0.0
Sum items that will not be reclassified to profit or loss 0.0 0.0 -1.1 -1.1
Items that may be reclassified to profit or loss:
Currency translation differences taken to equity 0.0 0.0 0.0 0.0
Sum items that may be reclassified to profit or loss 0.0 0.0 0.0 0.0
Total other comprehensive income for the period 0.0 0.0 -1.1 -1.1
Total comprehensive income for the period 0.0 0.0 -47.7 -47.7
Accumulated at December , 27.9 20.9 -3,447.0 -3,398.2
Year
Accumulated at January , 27.9 20.9 -3,447.0 -3,398.2
Profit/loss 0.0 0.0 -30.1 -30.1
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit plans 0.0 0.0 4.3 4.3
Currency translation effects 0.0 0.0 0.0 0.0
Sum items that will not be reclassified to profit or loss 0.0 0.0 4.4 4.4
Items that may be reclassified to profit or loss:
Currency translation differences taken to equity 0.0 0.0 0.0 0.0
Sum items that may be reclassified to profit or loss 0.0 0.0 0.0 0.0
Total other comprehensive income for the period 0.0 0.0 4.4 4.3
Total comprehensive income for the period 0.0 0.0 -25.7 -25.7
Accumulated at December , 27.9 20.9 -3,472.7 -3,423.9
REC Silicon Annual Report 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
REC SILICON GROUP
USD IN MILLION NOTES
Cash flows from operating activities
Profit/loss before tax
)
-43.5 -69.3
Less: Government grant (forgiveness of C.A.R.E.S. Act Loan) -8.3 0.0
Income taxes paid/received 18 0.0 2.8
Depreciation, amortization and impairment 6, 7, 8 28.5 62.7
Equity accounted investments, impairment financial assets, gains/losses on sale 9 0.0 18.0
Changes in receivables, prepayments from customers etc. 12 -2.4 -1.7
Changes in inventories 13 7.9 6.4
Changes in payables, accrued and prepaid expenses 20 4.6 -3.2
Changes in VAT and other public taxes and duties 20 -0.6 -16.6
Currency effects not cash flow or not related to operating activities 25 -0.7 -1.1
Other items 22 0.0 -0.3
Net cash flow from operating activities -14.6 -2.2
Cash flows from investing activities
Proceeds/Payments finance receivables and restricted cash 14 1.5 1.1
Proceeds from sale of property, plant and equipment and intangible assets 6 0.0 0.2
Payments for property, plant and equipment and intangible assets 6 -8.3 -1.3
Net cash flow from investing activities -6.8 0.1
Cash flows from financing activities
Increase in equity 15 0.0 105.9
Payments of lease liabilities 7 -2.1 -3.9
Payments of borrowings and up-front/waiver loan fees 17 -0.9 -2.8
Proceeds from borrowings 17 0.0 8.3
Net cash flow from financing activities -3.0 107.5
Effect on cash and cash equivalents of changes in foreign exchange rates 25 0.0 0.0
Net increase/decrease in cash and cash equivalents -24.4 105.5
Cash and cash equivalents at the beginning of the period 134.9 29.4
Cash and cash equivalents at the end of the period 110.5 134.9
)
PROFIT/LOSS BEFORE TAX FROM CONTINUING OPERATIONS INCLUDES
Interest Paid -22.3 -20.5
Interest Received 0.1 0.3
Profit/loss before tax from continuing operations does not include non-cash gain from the settlement of the indemnification agreement of USD . million
(see notes and ).
REC Silicon Annual Report 2021
INDEX OF THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
REC SILICON GROUP
NOTE PAGE
General information
Summary of significant accounting policies
Financial risk management
Critical accounting judgments and key sources of
estimation uncertainty
Segment information
Fixed assets
Leases
Impairments of cash-generating units
Investments
Related party transactions
Derivative financial instruments
Receivables
Inventories
Cash and cash equivalents and restricted bank accounts
Shareholder information
Management and Board of Directors’ compensation,
loans,shares,bonds
Borrowings
Income tax expense and deferred tax assets and liabilities
Retirement benefit obligations and expenses
Trade payables, provisions and other liabilities
Government grants
Other operating expenses
Other income and expenses
Employee benefits
Financial income and expenses
Earnings per share
Dividends per share
Research and development
Commitments, guarantees, pledges
Other information financial instruments
Claims, disputes, contingent liabilities and contingent assets
Share-based compensation
Events aer the reporting period
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
REC SILICON GROUP
The Company is headquartered in Lysaker, Norway .
Company and its subsidiaries (together, “REC Silicon Group ” or
“Group”) have a presence in the international solar energy industry.
Group operations are focused on the production of polysilicon and
silicon gases for the solar and electronics industries.
The Company is a public limited liability company incorporated and
domiciled in Norway . The address of its registered office is Lysaker
These consolidated financial statements have been approved for
issue by the Board of Directors on March 24, 2022 and are subject to
approval by the Annual General Meeting scheduled for May 11, 2022.
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies
have been consistently applied to all years presented, unless
otherwise stated.
. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE
The financial statements are presented in USD, rounded to the
nearest tenth of million, unless otherwise stated. As a result of
rounding adjustments, the figures in one or more rows or columns
included in the financial statements and notes may not add up to the
total of that row or column.
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the EU (IFRS), relevant interpretations, and the
Norwegian Accounting Act. The consolidated financial statements
have been prepared under the historical cost convention, as
modified by the impairment of certain assets.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. Actual
outcomes may differ substantially. It also requires management to
exercise judgment in applying the Group’s accounting policies.
Areas involving a high degree of judgment or complexity, and areas
where assumptions and estimates have a significant impact are
disclosed in note .
. CONSOLIDATION
(A) Subsidiaries
Subsidiaries are entities controlled by the Group. The Company
controls an investee when it is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee.
Subsidiaries are consolidated from the date control is obtained
until the date that control ceases.
All subsidiaries are owned percent and there are no non-
controlling interests.
Intercompany transactions, balances, and unrealized gains on
transactions between group companies are eliminated.
(B) Joint ventures
A joint venture is an arrangement where two or more parties have
joint control. Joint control exists only when decisions require the
unanimous consent of the parties sharing control. Investments in
joint ventures are accounted for by the equity method of
accounting.
(C) Associates
Associates are entities over which the Group has significant
influence but not control. Investments in associates are accounted
for by the equity method of accounting.
. SEGMENT REPORTING
REC Silicon produces silicon gas and polysilicon for the
semiconductor industries at its manufacturing facility in Bue,
Montana. The Company also produces polysilicon for the
photovoltaic industry at its manufacturing facility in Moses Lake,
Washington. The Company’s organization structure, management
team, operating strategy, and performance measurement reporting
support the determination that these businesses represent separate
distinguishable operating segments. Accordingly, there are two
operating segments: Solar Materials (Moses Lake, Washington) and
Semiconductor Materials (Bue, Montana). The operating segments
include revenues less cost of manufacturing excluding depreciation
for products sold. Other includes general, administrative, and selling
expenses which support both operating segments in addition to
administrative costs for the Company’s headquarters in Lysaker,
Norway. Eliminations include the reversal of the impact of
transactions between group members and affiliates. The results of
the operating segments plus Other and Eliminations taken together
reconcile to total EBITDA for the Group.
Group Management is headed by the Chief Executive Officer (CEO),
and the CEO makes decisions regarding the allocation of resources
and performance assessment for all segments. Accordingly, the
CEO is regarded as the Chief Operating Decision Maker (CODM).
GENERAL INFORMATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
An operating segment is a distinguishable component of the Group
that is engaged in providing products that are subject to similar
risks and returns and corresponds to management reporting.
. FOREIGN CURRENCY TRANSLATION
(A) Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”).
The Group’s reporting currency continues to be USD. Accordingly,
these consolidated financial statements are presented in USD.
(B) Transactions and balances
Transactions in foreign currencies are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Monetary assets and liabilities denominated in
foreign currencies are translated at the exchange rates on the
reporting date. Foreign exchange gains and losses resulting from
the selement, or the translation of monetary assets and liabilities
are recognized in the statement of income, except when deferred in
equity as qualifying hedges or as a part of a net investment.
(C) Group companies
The results and financial position of all the Group entities that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(i) Assets and liabilities for each statement of financial position
presented are translated at the closing rate;
(ii) Income and expenses for each statement of income are
translated at average exchange rates for the reporting period
(based on monthly average rates); and
(iii) All resulting exchange differences from translation are
recognized as a separate component of other comprehensive
income (OCI).
On consolidation, exchange differences arising from the translation
of the net investment in subsidiaries, including monetary items that
are regarded as a part of the net investment, are included in OCI.
When a subsidiary is disposed of, exchange differences are
recognized in the statement of income as part of the gain or loss on
sale. At December , and , an intercompany loan to
REC Silicon, Inc. of USD million was regarded as a part of the
net investment in REC Silicon Inc.
. CURRENT/NONCURRENT
Assets and liabilities are classified as current when they are
expected to be realized or seled within months aer the
reporting date.
. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated
depreciation and un-reversed impairment losses. Cost includes
expenditures that are directly aributable to the acquisition,
construction, or installation of the item. Borrowing costs incurred
for the construction of qualifying assets are capitalized during the
period required to complete and prepare the asset for its intended
use. Costs are included in an asset’s carrying amount when it is
probable that future economic benefits associated with the item
will flow to the Group and costs can be measured reliably.
Depreciation is calculated using the straight-line method based on
the costs of the assets less any residual value over their estimated
useful lives.
. INTANGIBLE ASSETS
(A) Goodwill
Goodwill represents the excess of the cost of an acquisition over
the fair value of the Group’s share of the net identifiable assets.
Goodwill is carried at cost less accumulated impairment losses.
Goodwill related to equity accounted investments is included in the
carrying value of investments. At December , and the
Group had no goodwill.
(B) Other intangible assets
Other intangible assets that have finite useful lives are carried at
cost less accumulated amortization and un-reversed impairment.
Amortization is calculated using the straight-line method on the
costs of assets over their estimated useful lives from the date they
are available for use. The Group has no intangible assets with
indefinite useful lives.
(C) Research and development
Research expenditures are recognized in expense as incurred.
Development expenditures (relating to the design, construction and
testing of a chosen alternative for new or improved materials,
devices, products, processes, or systems) are capitalized when it is
probable that the project will be successful considering its
commercial and technological feasibility. Costs expensed in prior
reporting periods are not later capitalized. Other development
expenditures are recognized in expense as incurred.
. IMPAIRMENT OF ASSETS
Assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amounts may not be
recoverable. An impairment loss is recognized in the statement of
income for the amount by which the asset’s carrying amount
exceeds its estimated recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell or value in use.
For the purpose of assessing impairment, assets are grouped at the
lowest level for which cash inflows that are largely independent
from the cash inflows associated with other assets can be identified
(cash-generating units). Generally, any impairment is allocated to
goodwill first, then proportionately to other non-current assets
within a cash-generating unit. Assets other than goodwill that
suffered impairment are reviewed for possible reversal of the
impairment at each reporting date.
Impairment includes losses associated with assets determined to
have no future economic benefits and assets that are replaced prior
to the end of their useful lives.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
. FINANCIAL ASSETS
Financial assets are classified and subsequently measured at
amortized cost, fair value through profit or loss, or fair value
through other comprehensive income based on both the use of the
assets within the entity’s business model and the nature of the cash
flows. A financial asset is derecognized when expired or when the
entity no longer has control of the cash flows related to the assets.
Any rights or obligations retained in any transfer of assets are
booked separately as assets or liabilities. Financial liabilities are
classified and subsequently measured at amortized cost, except for
financial liabilities (including derivatives) which are classified at fair
value.
Financial assets are assessed at each reporting date to determine
whether there is objective evidence of impairment. Objective
evidence that financial assets are impaired includes default or
delinquency by a debtor; indications that a debtor or issuer will
enter bankruptcy; and adverse changes in the payment status of
borrowers or issuers.
The Group considers evidence of impairment for financial assets
measured at amortized cost at both an individual asset and a
collective level. All individually significant assets are individually
assessed for impairment. Those found not to be impaired are then
collectively assessed for any impairment that has been incurred but
not yet individually identified. Assets that are not individually
significant are collectively assessed for impairment. Collective
assessment is carried out by grouping together assets with similar
risk characteristics.
In assessing collective impairment, the Group uses historical
information on the timing of recoveries and the amount of loss
incurred and makes an adjustment if current economic and credit
conditions are such that the actual losses are likely to be greater or
lesser than suggested by historical trends.
An impairment loss is calculated as the difference between an
asset’s carrying amount and the present value of the estimated
future cash flows discounted at the asset’s original effective
interest rate. Losses are recognized in profit or loss and reflected in
an allowance account. When the Group considers that there are no
realistic prospects of recovery of the asset, the relevant amounts
are wrien off. If the amount of impairment loss subsequently
decreases and the decrease can be related objectively to an event
occurring aer the impairment was recognized, then the previously
recognized impairment loss is reversed through profit or loss.
. ACCOUNTING FOR DERIVATIVE FINANCIAL
INSTRUMENTS AND HEDGING ACTIVITIES
Derivatives are recognized at fair value on the date a derivative
contract is entered into and are subsequently measured for
changes in fair value. Derivatives are carried as assets when the fair
value is positive and as liabilities when the fair value is negative
unless the Group has the intention and ability to sele the contracts
net. The method of recognizing resulting gains or losses depends on
whether the derivative is designated and qualifies as a hedging
instrument and the nature of the item being hedged. Derivatives are
categorized as held for trading unless they are designated and
qualify as hedging instruments. See note .
. TRADE RECEIVABLES
Trade receivables are recognized initially at fair value and
subsequently measured at amortized cost, less impairment. A
provision for the impairment of trade receivables is recognized
based upon lifetime expected credit losses (ECLs). The Group
calculates ECLs based upon the Group’s historic credit loss
experience adjusted for forward-looking factors specific to the
debtors and the economic environment. In addition, provisions are
recorded for accounts which are greater than days past due
unless there is a clear indication that payment will be received.
Balances are wrien off when collection efforts have been
exhausted and the probability of recovery is unlikely.
. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, demand deposits
at banks, and money market funds with terms less than three
months.
. PAIDIN EQUITY CAPITAL
Incremental costs directly aributable to the issue of new shares
are shown in equity as a deduction, net of any income tax, from the
proceeds.
. BORROWINGS
Borrowings are recognized initially at fair value. Borrowings that are
not maintained at fair value through profit or loss are recognized
net of transaction costs and subsequently stated at amortized cost.
Any difference between the proceeds (net of transaction costs) and
the redemption value is recognized in the statement of income over
the period the borrowings are outstanding using the effective
interest method. Commitment fees for bank credit facilities are
recognized as part of interest expenses as incurred.
A financial liability is removed from the statement of financial
position when the obligation is discharged, cancelled, or expires.
Substantial modifications to the terms of existing financial
liabilities or an exchange of debt instruments with an existing lender
at substantially different terms are treated as extinguishments of
the original liability. The difference between the carrying amount of
a financial liability and the consideration paid to extinguish the
liability is recognized in profit or loss.
. INVENTORIES
Inventories are stated at the lower of cost or net realizable value
(NRV).
Purchased inventories are stated at average cost less estimated
obsolescence. Reserves for obsolescence include the write down of
items no longer required (held for disposal) and the estimated
decline in NRV caused by slow moving items.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
The cost of finished goods and work in progress inventories are
determined on a first in, first out basis and consists of raw
materials, direct labor, other direct costs, and related indirect
overheads. Costs associated with abnormal waste or unused normal
operating capacity are not included in inventories. NRV is the
estimated sales price less incremental costs to complete and sell
the item. Net adjustments to reduce inventory to the lower of cost
or NRV are recognized in inventory changes in the statement of
income.
. INCOME TAX
Income tax expense (benefit) includes current and deferred tax.
Income tax expense (benefit) is recognized in profit or loss except
to the extent it relates to items recognized directly in equity or in
other comprehensive income.
Current tax is the estimated tax payable or receivable on the
taxable income or loss for the year, and any adjustments to tax
payable for previous years. Deferred tax includes the effect of
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their tax bases.
Deferred tax also includes the carry forward of unused net
operating losses and credits.
Current and deferred tax amounts are determined using rates and
laws that have been enacted or substantially enacted at the
reporting date or are expected to apply when temporary
differences reverse. Net deferred tax assets are recognized to the
extent that it is probable that future taxable profit will be available
against which deferred amounts can be utilized.
Deferred income tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets and liabilities
and the Group intends to sele its current tax assets and liabilities
on a net basis.
Utilization of net operating losses and tax credit carry forwards are
subject to certain limitations under Section and of the
Internal Revenue Code of the United States in the event of a change
in the Company’s ownership.
. PROVISIONS
Provisions for product warranties, onerous contracts, asset
retirement obligations, restructuring costs, termination benefits,
loss on financial guarantees, environmental restoration, and legal
claims are recognized when: The Group has a present or
constructive obligation as a result of past events; it is probable that
an outflow of resources will be required to sele the obligation; and
the amount has been reliably estimated. Provisions are discounted
only when the effect is material and the distribution in time can be
reliably estimated.
. SHAREBASED COMPENSATION
The Group grants synthetic share options to certain employees. The
cost of these share-based options (seled in cash) is determined by
the fair value of the option at the date when the grant is made using
the Black Scholes option pricing model (see note ).
. PENSION/POST RETIREMENT OBLIGATIONS
A defined benefit plan is a pension plan that defines an amount of
pension benefit that an employee will receive on retirement, usually
dependent on one or more factors such as age, years of service and
compensation. The liability recognized in the statement of financial
position in respect of defined benefit pension plans is the present
value of the defined benefit obligation at the reporting date less the
fair value of plan assets.
Re-measurements arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity
via other comprehensive income in the period in which they arise.
Gains or losses on the curtailment or selement of a defined
benefit plan are recognized when the curtailment or selement
occurs.
Obligations for contributions to defined contribution pension plans
are recognized as an expense during the period incurred.
. REVENUE RECOGNITION
REC Silicon’s primary performance obligation is related to sale of
goods in which the performance obligations are the delivery of an
agreed volume of products within an agreed specification. REC
Silicon has both short term and long-term contracts. Spot market
sales, normally one month, cover delivery of an agreed volume at
market price at the date the order is placed. The short-term
contracts cover a period of a few months and up to one year, where
the prices normally are fixed within a volume range. REC Silicon also
has some long-term contracts that cover a period longer than one
year. In these contracts the prices are normally negotiated on an
annual basis.
Revenue is recognized when control of the goods is transferred to
the customer at an amount that reflects the consideration to which
REC Silicon expects to be entitled in exchange for those goods or
services. Control is transferred to the buyer, according to the
agreed delivery term for each sale. Delivery terms are based on
Incoterms specified within sales contracts. Generally, the main
terms are “Ex Works” and “FCA”.
The Group recognizes a provision for discounts and expected
returns when a discount provisions or a right of return is specified in
purchase contracts. The Group recognizes revenue from the sale of
goods measured at the fair value of consideration received or
receivable, which includes a provision of allowances for discounts
and expected returns.
Goods are normally sold with standard warranties that the goods
comply with the agreed-upon specifications. These standard
warranties are accounted for using IAS Provisions, Contingent
Liabilities and Contingent Assets. REC Silicon does not have any
other significant obligations for returns or refunds.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
. LEASES
At the inception of a contract, the Group assesses whether a
contract is, or contains a lease. A lease exists if the contract
conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. The Group recognizes
a right-of-use asset and a lease liability at the lease commencement
date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of the costs to
dismantle and remove the underlying assets or to restore the
underlying asset or the site on which it is located, less any lease
incentives received.
Right-of-use assets are subsequently depreciated using the
straight-line method from the commencement date to the end of
the lease term. In addition, right-of-use assets are periodically
adjusted for impairment losses, if any, and for certain
remeasurements of the associated lease liability.
The lease liability is initially measured at the present value of the
lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, the Group’s incremental borrowing
rate. Generally, the Group uses its incremental borrowing rate as the
discount rate.
Lease payments are amortized to interest expense and to reduce
the associated lease liability based upon the present value
calculation used at inception to determine the lease liability.
Leases of ’low-value’ assets and short-term leases (lease terms of
months or less) are recognized as expense in profit or loss when
incurred.
. GOVERNMENT GRANTS
Government grants are recognized at their fair values when there is
reasonable assurance that the grants will be received and that the
Group will comply with aached conditions. Government grants
related to assets are presented in the statement of financial
position as a reduction to the carrying amount of the assets and
reduce depreciation in the statement of income. Government grants
relating to income are listed separately under other income.
Government grant assets are recognized for the unseled portions
of grants and are discounted if the effect of discounting is
significant. Significant changes to estimates of timing of utilization
or discount rates are recognized as a change in the grant asset and
offset to production assets or expenses based on the classification
at the inception of the grant (see note ).
. STATEMENT OF CASH FLOWS
The Group presents the statement of cash flows using the indirect
method. Cash inflows and outflows are shown separately for
investing and financing activities, while operating activities include
both cash and non-cash line items. Interest received and paid are
reported as a part of operating activities, except borrowing costs
capitalized as part of the construction of a non-current asset that
are included in investing activities, and payment of up-front and
loan fees that are reported as part of financing activities.
Operating activities include all cash flow effects from derivatives.
Currency gains and losses are recognized in the statement of
income. Amounts related to borrowing (financing activities), non-
current financial assets and investments (investing activities) and
unrealized gains or losses on cash and cash equivalents held at the
end of the periods are reclassified in a separate line item under
operating activities.
Financing activities include the repayment of prepayments received
from customers on which interest is calculated.
The consolidated statement of cash flows presents changes in cash
balances with respect to total operations (continuing and
discontinued) and therefore does not reflect the performance of
continuing operations during prior periods or the performance that
is likely to be achieved in future periods.
. ADOPTION OF NEW AND REVISED
STANDARDS AND INTERPRETATIONS
The Group, in practice, adopts new and amended standards and
interpretations, issued by the IASB and approved by the EU, that are
relevant to its operations as effective. A number of new standards
were effective beginning January , but they did not have a
material effect on the Group’s financial statement.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
. FINANCIAL RISK FACTORS
The Group’s activities expose it to a variety of financial risks,
including currency risk, interest-rate risk, liquidity risk, credit risk,
refinancing risk and others.
The goals for the Group finance policy and the treasury operations
are primarily to minimize the risk of financial distress, secure long-
term funding, manage currency risk of expected future net cash
flows, and manage interest rate risk. The Company’s finance policy
sets the framework and limits for hedging activities in the Group. It
defines risk management objectives, responsibilities, and
operational requirements.
The disclosures that are required regarding financial risks below
focus on the risks that arise from financial instruments and how
they have been managed. Derivative financial instruments may be
used to reduce risks from commercial transactions; the existence of
derivative financial instruments exposes the Company to additional
risks.
(A) Currency risk
The Company operates internationally and is exposed to currency
risk. At December , , the Group’s working capital is almost
exclusively in USD, equity is in NOK, and debt is in NOK and USD.
Currency risk arises from transactions in currencies other than the
Group’s reporting currency and borrowings denominated in NOK.
Currency risk relates primarily to the sufficiency of net positive
cash flows in USD to meet liabilities denominated in NOK.
Net cash flow is defined as the consolidated external cash flows of
the Group. The Group’s policy provides the ability to hedge external
net cash flows with a maximum time horizon of months. The
purpose is to reduce the currency risk of expected future net cash
flows. The Company manages currency risk on an overall level.
At December , and , the Group did not hold any
derivative financial instruments related to mitigating currency risks.
(B) Credit risk
Credit risk is the risk of loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligation and is primarily related to trade receivables and
guarantees provided for discontinued operations. The Group
maintains policies to ensure that credit is extended to customers
with appropriate liquidity and credit histories in combination with
requiring guarantees when appropriate.
(C) Liquidity risk and going concern
Liquidity risk is measured by subtracting the Group’s liabilities from
cash considering historic and anticipated operating results.
Liquidity risk management requires maintaining sufficient available
cash or access to capital markets to compensate for anticipated
volatility in operating cash flows or to fund additional investments.
Liquidity risk is impacted by changes in market conditions, potential
claims against the Company, and uncertainty associated with
critical judgements used to arrive at accounting estimates. In
addition, the Company’s access to capital markets may be impacted
by overall market conditions (notes , , and ).
The Company’s liquidity has been adversely impacted by contingent
liabilities, market conditions, and the shut-down the FBR facility in
Moses Lake, Washington. During , affected parties entered
into an agreement to sele claims related contingent liabilities
associated with the indemnification loan (see note ). During
, contingent liabilities associated with an examination by the
Norwegian Tax Administration (see note ) and a dispute with
Grant County, Washington regarding property taxes (see notes
and ) were resolved.
Accordingly, the Board of Directors confirms that the Financial
Statements have been prepared under the assumption that the
Company is a going concern, and that this assumption is appropriate
at the date of the accounts.
(D) Interest rate risk
Changes in market interest rates affect the fair value of assets and
liabilities or the variability in cash payments. The Group is exposed
to interest rate risk through funding and cash management
activities, primarily in REC Silicon ASA. Cash in bank accounts and
liabilities have primarily carried variable interest rates. The
Company has borrowings through bonds and indemnification loans.
Interest income and interest expense in the statement of income, as
well as interest receipts and payments, are influenced by interest
rate changes for financial instruments that carry variable interest
rates. See note for interest rate sensitivity.
(E) Hedging of risk related to supply of raw material/commodities
When the Group is exposed to changes in the total costs from
specific input factors it may hedge the associated risk. As of year-
end and , no hedges were in place, except certain
forward energy purchase contracts.
. FAIR VALUE ESTIMATION
Fair value estimation is discussed in notes and .
. CAPITAL STRUCTURE AND FINANCING
In determining the appropriate capital structure for the Group,
various factors have been considered. These include risks
associated with the Group’s business profile and the fact that the
polysilicon production has high capital intensity.
The Group’s goal is to maintain sufficient capital to maintain current
operating cash flow requirements and to meet debt service
obligations. Taking into account market volatility and risk related to
future cash flows, the Group aims to maintain a capital structure
with a high ratio of equity funding.
FINANCIAL RISK MANAGEMENT
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
. CRITICAL JUDGMENTS IN APPLYING THE GROUP’S
ACCOUNTING POLICIES
Management’s judgments in applying the Group’s accounting
policies which have the most significant effect on the financial
statements are discussed below and in the relevant notes.
(A) Functional currencies
The Group’s presentation currency is USD. The functional currencies
of REC Silicon AS and REC Solar AS are NOK. The functional
currency of all other group companies is USD. The activities of the
Group are primarily in the subsidiaries in the USA. Functional
currency affects the reporting of currency gains and losses and
exchange differences as well as hedging strategies and effects.
Facts or circumstances may change in the future.
(B) Cash-generating units for impairment testing
The selection of cash generating units for impairment testing is a
critical and difficult judgement. For impairment testing REC Silicon
consisted of two cash generating units.
(C) Environmental liability
The Group’s operations are subject to environmental laws and
regulations. These laws and regulations and their interpretations
are subject to change. Changes may require investment and/or
increased costs to meet more stringent standards or to take
remedial actions related to past activities. The Company has
reported a provision for asset retirement obligations (AROs)
associated with the eventual cleanup and restoration of the
Company’s manufacturing sites in the United States (note ).
. KEY SOURCES OF ESTIMATION UNCERTAINTY
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with
International Financial Reporting Standards requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, as well as the disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates. Certain amounts included in or affecting the Group’s
financial statements and related disclosures must be estimated,
requiring management to make assumptions with respect to values
or conditions which cannot be known with certainty at the time the
financial statements are prepared.
(A) Impairments and bad debt provisions
Changes in facts and in management’s evaluations and assumptions
may give rise to further impairment losses, or reversals. The
estimated recoverable amounts of the Group’s assets are sensitive
to small changes to key assumptions (notes and ).
Financial assets are also periodically reviewed for impairment.
Provisions for losses on trade receivables have been made using a
provision matrix based on the Group’s historical credit loss
experience adjusted for forward-looking factors specific to the
debtors and the economic environment. Actual losses may turn out
significantly different from the evaluations made based on the
knowledge and assumptions at the time of approving the accounts.
(B) Asset retirement obligations
Changes in facts and in management’s evaluations and assumptions
may give rise to changes in provisions for asset retirement
obligations (AROs). Provisions may change due to changes in
amounts or timing of estimated expenditures to restore production
sites or changes in governmental regulations governing restoration
requirements. In addition, estimates of provisions are sensitive to
changes in discount rates used to calculate provisions for AROs
reported by the Group.
(C) Fair Value of the investment in the Yulin JV
Changes in facts and in management’s evaluations and assumptions
may give rise to changes in fair value estimates of the Company’s
investment in the Yulin JV. The estimate of fair value may change
due to changes in amounts or timing of cashflows generated by the
Yulin JV. In addition, estimates of fair value are sensitive to changes
in the discount rate used to arrive at estimates of fair value.
CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Revenues from customers constituting more than ten percent of total revenues for year ended December ,
SEMICONDUCTOR MATERIALS SOLAR MATERIALS OTHER REC SILICON
USD IN MILLION
Customer . . . .
Customer . . . .
Customer . . . .
Customer . . . . .
Customer . . .
Customer . . .
Revenues from customers constituting more than ten percent of total revenues for year ended December ,
SEMICONDUCTOR MATERIALS SOLAR MATERIALS OTHER REC SILICON
USD IN MILLION
Customer . . . .
Customer . . . .
Customer . . . .
Customer . . . .
Customer . . . .
Geographic distribution of revenues based on customer location for year ended December ,
SEMICONDUCTOR MATERIALS SOLAR MATERIALS OTHER REC SILICON
USD IN MILLION
China . . . . . . . .
Korea . . . . . . . .
Singapore . . . . . . . .
Taiwan . . . . . . . .
USA . . . . . . . .
Japan . . . . . . . .
Denmark . . . . . . . .
Other . . . . . . . .
Czech Republic . . . . . . . .
Belgium . . . . . . . .
France . . . . . . . .
Canada . . . . . . . .
Germany . . . . . . . .
Hong Kong . . . . . . . .
Switzerland . . . . . . . .
Total revenues . . . . . . . .
SEGMENT INFORMATION
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Geographic distribution of revenues based on customer location for year ended December ,
SEMICONDUCTOR MATERIALS SOLAR MATERIALS OTHER REC SILICON
USD IN MILLION
China . . . . . . . .
Korea . . . . . . . .
Singapore . . . . . . . .
USA . . . . . . . .
Taiwan . . . . . . . .
Japan . . . . . . . .
Denmark . . . . . . . .
Other . . . . . . . .
Czech Republic . . . . . . . .
France . . . . . . . .
Belgium . . . . . . . .
Canada . . . . . . . .
Hong Kong . . . . . . . .
Switzerland . . . . . . . .
Germany . . . . . . . .
Total revenues . . . . . . . .
Customer location is based on the sales ship-to address. Customers may distribute the products to other countries.
Revenues by category for year ended December ,
SEMICONDUCTOR MATERIALS SOLAR MATERIALS OTHER REC SILICON
USD IN MILLION
Silane gas . . . . . . . .
Polysilicon . . . . . . . .
Other . . . . . . . .
Total revenues . . . . . . . .
Revenues by category for year ended December ,
SEMICONDUCTOR MATERIALS SOLAR MATERIALS OTHER REC SILICON
USD IN MILLION
Silane gas . . . . . . . .
Polysilicon . . . . . . . .
Other . . . . . . . .
Total revenues . . . . . . . .
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Segment information for the year ended December ,
USD IN MILLION
SEMICONDUCTOR
MATERIALS
SOLAR
MATERIALS
OTHER &
ELIMINATIONS TOTAL
Revenues . . . .
Cost of materials -. -. . -.
Change in inventories -. . . -.
Employee benefit expense -. -. -. -.
Other operating expenses -. -. -. -.
Other income and expenses . . -. .
Total current costs -. -. -. -.
. . . .
EBITDA contribution . -. -. .
Depreciation of fixed assets -. -. -. -.
Amortization . . . .
Depreciation of leased assets -. -. . -.
Impairment . -. . -.
Total depreciation, amortization, and impairment -. -. -. -.
EBIT contribution . -. -. -.
Segment information for the year ended December ,
USD IN MILLION
SEMICONDUCTOR
MATERIALS
SOLAR
MATERIALS
OTHER &
ELIMINATIONS TOTAL
Revenues . . . .
Cost of materials -. -. . -.
Change in inventories -. . . -.
Employee benefit expense -. -. -. -.
Other operating expenses -. -. -. -.
Other income and expenses . . -. .
Total current costs -. . -. -.
EBITDA contribution . . -. .
Depreciation of fixed assets -. -. -. -.
Amortization . -. . -.
Depreciation of leased assets -. -. . -.
Impairment . -. . -.
Total depreciation, amortization, and impairment -. -. -. -.
EBIT contribution . -. -. -.
Substantially all of the Group’s non-current assets are located in the United States.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
The following table disaggregates revenues by contract type and reconciles to total revenues.
USD IN MILLION
Non-Contract Revenue . .
Structured (Regional/Volume pricing) . .
Tiered (Volume pricing) . .
Contract Revenue . .
Total . .
Property, plant and equipment
USD IN MILLION
LAND AND
BUILDINGS
MACHINERY AND
EQUIPMENT
OTHER TANGIBLE
FIXED ASSETS
ASSETS UNDER
CONSTRUCTION
TOTAL
PROPERTY,
PLANT AND
EQUIPMENT
Carrying value at January , . . . . .
Net additions
)
. . . . .
Disposals . . . . .
Depreciation and amortization -. -. -. . -.
Carrying value at December , . . . . .
At December ,
Historical cost . ,. . . ,.
Accumulated depreciation/amortization/impairment -. -,. -. -. -,.
Carrying value at December , . . . . .
Carrying value at January , . . . . .
Net additions
)
. . . . .
Disposals . . . . .
Depreciation and amortization -. -. -. . -.
Impairment -. . -. . .
Carrying value at December , . . . . .
At December ,
Historical cost . ,. . . ,.
Accumulated depreciation/amortization/impairment -. -,. -. -. -,.
Carrying value at December , . . . . .
Specification of useful lives and depreciation
At year-end , estimated useful lives by asset class were as follows:
• Land and Buildings -. years (weighted average approximately . years)
• Machinery and equipment -. years (weighted average approximately . years)
• Other tangible fixed assets (weighted average approximately . years)
Assets under construction are not yet ready for their intended use and depreciation has not started.
Reviews of estimated useful lives of property, plant, and equipment for and resulted in only minor changes.
FIXED ASSETS
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Intangible assets
USD IN MILLION
ASSETS UNDER
DEVELOPMENT OTHER
TOTAL
INTANGIBLE
ASSETS
Carrying value at January , . . .
Amortization . . .
Carrying value at December , . . .
At December ,
Historical cost . . .
Accumulated amortization/impairment -. -. -.
Carrying value at December , . . .
Carrying value at January , . . .
Disposals . -. -.
Amortization . -. -.
Carrying value at December , . . .
At December ,
Historical cost . . .
Accumulated amortization/impairment -. -. -.
Carrying value at December , . . .
Intangible assets above have estimated useful lives, over which the assets are amortized on a straight-line basis. Intangible assets under
development are not ready for their intended use, and consequently amortization has not started.
Intangible assets are primarily related FBR technology in REC Silicon (- years).
Reviews of estimated useful lives of intangible assets for and resulted in only minor changes.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Right of use Assets
USD IN MILLIONS
LAND AND
BUILDINGS MACHINERY GAS PLANTS
COMPUTER
HW/SW MOTOR VEHICLES
OFFICE
EQUIPMENT TOTAL
Balance at January , . . . . . . .
Depreciation . -. -. . . . -.
Additions . . . . . . .
Adjustments . -. . . . . .
Balance at December , . . . . . . .
Balance at January , . . . . . . .
Depreciation . -. -. . . . -.
Additions . . . . . . .
Impairment
)
. . -. . . . -.
Adjustments . . . . . . .
Balance at December , . . . . . . .
)
See note for details of impairment.
Adjustments during consist of USD . million related to contractual increases in lease payments tied to economic indices and USD
. million related to decreases in leased asset retirement obligation (ARO) estimates.
During , adjustments include USD . million associated with an -year extension of a long-term lease on the existing plant gas
facility in Moses Lake, WA, USD . million associated with the remeasurement of asset retirement obligations associated with leases, and
USD . million related to contractual increases in lease payments tied to economic indices.
Lease Liabilities
USD IN MILLIONS
Maturity analysis - contractual undiscounted cash flows
Less than year . .
- years . .
- year . .
- years . .
- years . .
More than years . .
Total undiscounted lease liabilities at December . .
Lease liabilities included in the statement of financial position at December . .
Current . .
Non-current . .
The Company includes rights to extend or terminate leases in the lease term when the Company intends to exercise a right to extend or
terminate a lease. The Company is not a party to any lease that includes material rights to extend or terminate the term of a lease.
The weighted average incremental borrowing rate applied to lease liabilities is . percent at December , and December ,
.
LEASES
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Leases recognized in profit or loss
USD IN MILLIONS
Interest on lease liabilities . .
Depreciation of right-of-use assets . .
Gain(-)/loss(+) due to terminations, purchases, impairments, and other changes . .
Expenses relating to short-term leases . .
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets . .
Right-of-use assets associated with contracts with a term less than months at the time of initiation are expensed in accordance with the
low-value assets and short-term lease exemptions available upon implementation of IFRS .
In , the Group made lease payments totaling USD . million, comprised of USD . million of lease liability payments and USD .
million imputed interest. See note below.
In addition, payments of USD . million related to leases for low-value-assets and short-term durations which are exempt under IFRS
have been expensed in . See note below.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
REC Silicon routinely monitors assets for indications that the
carrying values of assets are no longer recoverable. If impairment
indicators exist, impairment tests will be carried out to determine
whether the carrying value of affected assets can be justified. If
estimates conclude that asset values are no longer recoverable, the
assets are wrien down to the recoverable amount which is the
greater of fair value less cost to sell and value in use (discounted
cash flows).
CASHGENERATING UNITS
REC Silicon consisted of two cash generating units at December ,
and .
Management has performed an evaluation of the Company’s
operations and determined that the Group consisted of two cash
generating units (CGUs) based upon the Company’s operations and
management structures. This determination included consideration
for segment reporting which includes segments for Solar Materials
and Semiconductor Materials which were determined by
management to represent the smallest units for which cash flows
can be reasonably determined. Net Costs associated with Other
have been allocated to the individual CGUs based upon estimated
activity, volume, and revenue factors.
SUMMARY OF IMPAIRMENT TESTS
During , decreases in the market capitalization of the
Company, recurring net operating losses, and changes in the timing
of the anticipated restart of FBR production at the Moses Lake
facility were determined to be indicators of potential changes in
impairment for the Solar Materials Segment. Impairment testing
was performed at December , on the Solar Materials CGU
and resulted in estimated values in use that approximated the
carrying value of the Solar Materials CGU. Consequently, no
additional impairment or reversal of impairment was recognized in
.
Impairment review conducted at December , included
evaluating the estimated impacts of developing a non-Chinese
Solar PV value chain and to partner with G to develop a silicon
anode baery materials production facility. An increase in the Solar
CGU’s fair value due to these agreements is difficult to estimate
because the development of a functional non-Chinese Solar PV
value chain and/or the realization of demand for the Group’s
products for use in lithium-silicon baeries are subject to
substantial uncertainty. Enhancement of the FBR plants current
capabilities would be required to enable the production of
polysilicon for a supply chain outside of China or to deliver gases for
use in lithium-silicon baeries. REC is working towards maintaining
the ability to restart production of FBR in . Forecasts used to
arrive at estimated future cash flows include the assumption that
market conditions will support the restart of production in the
Moses Lake FBR facility at the beginning of .
During , increases in the market capitalization of the Company,
recurring net operating losses, and changes in the timing of the
anticipated restart of FBR production at the Moses Lake facility
were determined to be indicators of potential changes in
impairment for the Solar Materials Segment. Accordingly,
impairment testing was performed at March , , June ,
, and December , on the Solar Materials CGU. The net
carrying value of the Solar Materials CGU exceeded the resulting
value in use calculated at June , . Therefore, additional
impairments of USD . million were recognized in the statement
of income at June , . Because the increase in the carrying
value of the Solar Materials CGU is a result of the modification of a
long-term lease, impairments have been recorded against right of
use assets (see note leases above). Impairment testing performed
at March , and December , on the Solar Materials
CGU resulted in estimated values in use that approximated the
carrying value of the Solar Materials CGU. Consequently, no
additional impairment or reversal of impairment was recognized at
March , or December , .
Impairments charges are included in the line item “impairment” in
the statement of income.
BASIS FOR THE IMPAIRMENT TESTS
Recoverable amounts for each cash-generating unit subject to
impairment testing are based on value in use. Value in use has been
estimated using discounted cash flows over a -year period with
the last year used as a basis for estimating terminal value.
Future cash flows are estimated on the basis of the budget for the
next year and the subsequent four forecast years. A terminal value
is calculated from the estimated cash flows generated in the last
forecast year. A growth rate of zero has been used during the
terminal period for both years presented. EBITDA less capital
expenditures and changes in working capital have been used to
estimate future cash flows.
Assets under construction for which investment has been
commied are included with estimated expenditures to complete
and estimated cash flows from their operations.
The carrying amounts of cash-generating units include tangible
fixed assets, intangible assets, and net working capital only.
DISCOUNT RATE
The discount rate applied is based on the Company’s cost of capital
which has been estimated using the weighted average of the required
rates of return for the Company’s equity and debt (WACC). The
required rate of return for the Company’s equity is estimated using
the capital assets pricing model (CAPM). The required rate of return
on debt is estimated on the basis of a risk-free rate of return plus a
credit risk premium derived from analysis of the debt costs and
IMPAIRMENTS OF CASHGENERATING UNITS
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
loading of public companies similar to REC Silicon. The discount rate
is estimated on an aer-tax basis and adjusted to estimate the
equivalent before tax discount rate using the Company’s estimated
before and aer-tax cash flows and evaluated for reasonableness.
The discount rates used at December , and are
reflected in the table below:
Discount rates ()
POSTTAX PRETAX POSTTAX PRETAX
Solar Materials CGU . . . .
KEY ASSUMPTIONS AND SENSITIVITIES
Key assumptions include future revenues (sales prices and sales
volume), cost of major inputs, conversion costs and efficiency
(production volume), and maintenance capital expenditures.
Price trends are difficult to predict in the current market
environment and external views of anticipated market conditions
differ widely. When possible, REC Silicon has used third party
analyses to estimate product prices. When third party estimates
are not available or vary widely, REC Silicon uses internal estimates
based on experience and market intelligence to estimate market
conditions and prices. Estimates of long-term average solar grade
polysilicon prices used in this analysis are at levels which
management believes are sufficient to aract the capital necessary
for new cost-effective polysilicon capacity to support supply chain
expansion consistent with analysts’ estimates of growth in end use
demand for PV installations.
REC is working towards maintaining the ability to restart
production of FBR in , however estimates of future cash flows
include the assumption that market conditions will support a
restart of the Moses Lake FBR facility at the beginning of . If
access to solar grade polysilicon markets is not restored and idled
capacity is not restarted, additional impairment charges would be
required. Current market conditions result in negative cashflows
until FBR production is restarted. As a result, the estimated timing
of the increase in capacity utilization is a key assumption. If market
conditions do not improve or if REC Silicon does not regain access
to polysilicon markets in China, additional impairment would be
required. This sensitivity is reflected in the table of sensitivities
below in the line volume (production and sales).
Costs have been estimated using contractual obligations, third
party indexes when appropriate, and historical spending trends
adjusted for inflation.
Capital expenditures have been estimated using past experience
and an evaluation of anticipated replacement requirements of
specific items of equipment (useful lives of fixed assets).
The table below presents the estimated change in impairment of
the Solar Materials CGU due to an isolated change in the key
assumption for all years. Spending includes fixed manufacturing
costs, selling general and administrative expenses, and capital
expenditures in total. The estimates are based on the assumptions
used in the December , impairment analysis.
KEY ASSUMPTIONS FOR
USD IN MILLION CHANGE
ESTIMATED CHANGE
IN IMPAIRMENT
Post-tax discount rate +/- point -./+.
Sales prices +/- +/-.
Volume (production and sales) +/- +/-.
Spending +/- +/-.
Negative amounts represent an estimated increase in impairment.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
CARRYING VALUE
The tables below reflect the development of carrying values for each cash generating unit.
At December ,
USD IN MILLION
SEMICONDUCTOR
MATERIALS
SOLAR
MATERIALS OTHER TOTAL
Trade and other receivables . . . .
Inventories . . . .
Current assets . . . .
Long term assets . . . .
Trade payables and other current liabilities -. -. -. -.
Long term liabilities -. . . -.
Allocation of other . . -. .
Carrying values . . . .
At December ,
USD IN MILLION
SEMICONDUCTOR
MATERIALS
SOLAR
MATERIALS OTHER TOTAL
Trade and other receivables . . . .
Inventories . . . .
Current assets . . . .
Long term assets . . . .
Trade payables and other current liabilities -. -. -. -.
Long term liabilities -. . . -.
Allocation of other . . -. .
Carrying values . . . .
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
OTHER INVESTMENTS
The Group entered into a joint arrangement in China; Shaanxi Non-
Ferrous Tian Hong REC Silicon Materials Co., Ltd. (Yulin JV) in
February . On February , , REC Silicon Pte. Ltd (REC
Silicon) and Shaanxi Non-Ferrous Tian Hong New Energy Co. Ltd.
(SNF) entered into a supplemental agreement in relation to
outstanding capital contributions.
This supplemental agreement reduced REC Silicon’s equity
ownership to percent and REC Silicon agreed to pay interest of
USD . million to the Yulin JV and a penalty of USD . million to
SNF in annual installments. The remaining liability associated with
this agreement was USD . million at December , and
December , .
REC Silicon’s option to either buy back the percent equity
interest from SNF pursuant to a valuation and public bidding
process as required by PRC state-owned asset disposal regulations
expired in Q of . REC Silicon currently maintains its
previously reported percent equity interest in the Yulin JV.
The corporate governance of the Yulin JV remains unchanged from
previous reports. At the time that REC Silicon’s equity interest in
the Yulin JV was reduced to percent, the Board of Directors of
the Yulin JV was adjusted to five directors, of which four are
appointed by SNF and one is appointed by REC. REC nominates the
Chief Technology Officer while the remaining executive
management of the Yulin JV is nominated by SNF.
In accordance with International Financial Reporting Standards
(IFRS) , the carrying amount of the Yulin JV is reported at fair value
and the Company has designated the investment as an equity
security at fair value through profit and loss (FVTPL).
At year-end , REC Silicon performed an analysis to estimate
the fair value of its investment in the Yulin JV using discounted
estimated future cashflows. Due to the impact of continued delays
in realizing designed production capacities, and continued
deterioration in REC Silicon’s ability to influence business decisions,
increases in anticipated cashflows have not been realized. In
addition, the Yulin JV has accumulated additional long-term debt to
fund operating losses, to complete construction, and to maintain
operations. The market value of the investment was estimated
using the discounted estimated future cash flows from Yulin JV
operations over a -year period with the last year used as a basis
for the terminal value. A discount rate of . percent was
estimated on an aer-tax basis and adjusted to estimate the
equivalent before tax discount rate of . percent. As a result,
estimated enterprise value less long-term debt results in a negative
value of approximately USD . million for REC Silicon’s
percent equity interest. REC Silicon has no obligation to contribute
additional equity as a result of these deficits. Accordingly, REC
Silicon’s investment in the Yulin JV remains at a value of zero at
December , .
At year-end , REC Silicon performed an analysis to estimate
the fair value of its investment in the Yulin JV using discounted
estimated future cashflows. Due to the impact of continuing losses,
continued delays in realizing designed production capacities, and
continued deterioration in REC Silicon’s ability to influence business
decisions, increases in anticipated cashflows have not been
realized. In addition, the Yulin JV has accumulated additional long-
term debt to fund operating losses, to complete construction, and
to maintain operations. The market value of the investment was
estimated using the discounted estimated future cash flows from
Yulin JV operations over a -year period with the last year used as a
basis for the terminal value. A discount rate of . percent was
estimated on an aer-tax basis and adjusted to estimate the
equivalent before tax discount rate of . percent. As a result,
estimated enterprise value less long-term debt results in a negative
value of approximately USD . million for REC Silicon’s percent
equity interest. REC Silicon has no obligation to contribute
additional equity as a result of these deficits. Accordingly, REC
Silicon adjusted the investment in the Yulin JV to a value of zero and
recognized a loss of USD . million to income during the fourth
quarter of .
KEY ASSUMPTIONS FOR
USD IN MILLION CHANGE
ESTIMATED CHANGE IN
REC’S EQUITY VALUE
Post-tax discount rate +/- point -./+.
Sales prices +/- +/-.
Volume (production and sales) +/- +/-.
Spending +/- +/-.
INVESTMENTS
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
REC Silicon has not made the final payment of USD . million under the supplemental agreement to sele REC Silicon’s obligation to
contribute equity to the Yulin JV which was payable during December due to delinquent outstanding invoices for services provided to
the Yulin JV by REC Silicon and disagreements with respect to performance testing criteria and interpretation specified in the Technology
Transfer Agreement (TTA). REC Silicon is currently seeking a resolution to these issues.
The Yulin JV continues to increase production, quality performance, and is steadily increasing product sales. Both silane units and the FBR
reactors have demonstrated design capacities and utilization rates are increasing. The Yulin JV is increasing production of high purity
granular polysilicon using high purity liners as they are delivered.
The Group has related party relationships with its subsidiaries, associates, joint ventures and with its Group Management and Board of Directors.
Transactions with subsidiaries have been eliminated on consolidation and are not reported as related party transactions in the consolidated
financial statements for the Group.
KEY MANAGEMENT COMPENSATION, SHAREHOLDINGS, LOANS ETC.
Group Management and Board of Directors’ compensation, ownership of REC Silicon ASA shares, options and bonds, loan agreements and
guarantees are shown in note .
RELATED COMPANIES
REC Silicon Inc. invoiced the Yulin JV USD . million in and USD . million in for engineering and project services. In addition,
REC Silicon purchased small quantities of finished granular polysilicon from the JV for analytical purposes in .
Cognite, an Aker company, invoiced REC Silicon Inc. for consulting and soware in the amount of USD . million.
REC Silicon has not made the final payment of USD . million which was payable during December due to disagreements with
respect to performance testing and interpretation specified in the Technology Transfer Agreement (TTA) as well as delinquent receivables
of USD . million for services provided to the Yulin JV by REC Silicon. REC Silicon and the Yulin JV continue to seek a resolution to these
issues (See note above).
RELATED PARTY TRANSACTIONS
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
See note below for additional information on the fair value of financial instruments.
Fair values and carrying amounts
USD IN MILLION ASSETS LIABILITIES ASSETS LIABILITIES
Option contract . . . .
Total . . . .
In , derivatives consisted of an option contract which was a part of the indemnification agreement associated with the REC Wafer
bankruptcy and are denominated in NOK.
On October , , REC Silicon and Nordea entered into an agreement to sele claims associated with the indemnification loans. The
liability for the option contract related to the indemnification loan was reduced to zero (see note ).
Distribution of derivatives
USD IN MILLION ASSETS LIABILITIES ASSETS LIABILITIES
Total non-current derivatives . . . .
Total current derivatives . . . .
Total derivatives . . . .
Trade and other receivables
USD IN MILLION
Trade receivables and accrued revenues . .
Provision for loss on trade recivables -. -.
Trade receivables - net . .
Prepaid costs . .
VAT and other public taxes and duties receivables . .
Other non-current and current receivables . .
Total Trade and other receivables . .
Specification of provision for loss on trade receivables
USD IN MILLION
At January -. -.
Change in provisions . .
At December -. -.
The provision for doubtful accounts includes the impact of adopting IFRS which requires the Company to estimate expected credit losses
(ECL) based upon historical experience.
At December , Other non-current and current receivables are primarily related to municipal bonds of USD . million issued by a
local taxing district in the United States which are secured by future property tax payments made by the Company.
DERIVATIVE FINANCIAL INSTRUMENTS
RECEIVABLES
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Inventories in the statement of financial position
USD IN MILLION
BEFORE
WRITEDOWNS WRITEDOWNS
AFTER
WRITEDOWNS
BEFORE
WRITEDOWNS WRITEDOWNS
AFTER
WRITEDOWNS
Stock of materials, merchandise, production supplies . . . . . .
Spare parts . -. . . -. .
Work in progress . -. . . -. .
Finished goods . -. . . -. .
Total . -. . . -. .
Inventories have been wrien down to estimated net realizable values. Write-downs of materials and spare parts represent the estimated
obsolescence related to items held in inventories at cost. Write-downs of work in progress and finished goods have been estimated by
comparing the net realizable value of anticipated sales to the manufacturing costs of items held in inventory.
Cash and cash equivalents are primarily bank deposits.
Restricted bank accounts (not included as cash and cash equivalents)
USD IN MILLION
Restricted bank accounts non-current . .
Restricted bank accounts current . .
Total prepayments, interest calculation . .
At December , restricted bank accounts consisted of USD . million security for the indemnification loan, USD . million security
for bank guarantees for REC Solar AS (a subsidiary of the Company) and restricted cash for the US subsidiaries of USD . million. At
December , , restricted bank accounts consisted of USD . million security for the indemnification loan, USD . million security
for bank guarantees for REC Solar AS (a subsidiary of the Company) and restricted cash for the US subsidiaries of USD . million.
INVENTORIES
CASH AND CASH EQUIVALENTS AND RESTRICTED BANK ACCOUNTS
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
The following shareholders held one percent or more of the total outstanding shares in REC Silicon ASA at December .
NAME OF SHAREHOLDERS NO. OF SHARES OWNERSHIP NO. OF SHARES OWNERSHIP
AKER HORIZONS HOLDING AS Ordinary ,, . ,, .
MORGAN STANLEY & Co. LLC Nominee ,, . .
BNP PARIBAS Nominee ,, . .
NORDNET LIVSFORSIKRING AS Ordinary ,, . ,, .
FAZAJU AS Ordinary ,, . ,, .
SKANDINAVISKA ENSKILDA BANKEN AB Nominee ,, . ,, .
VERDIPAPIRFONDET DNB MILJØINVEST Ordinary ,, . ,, .
CACEIS BANK Nominee ,, . ,, .
VERDIPAPIRFONDET DNB TEKNOLOGI Ordinary . ,, .
J.P. MORGAN SECURITIES PLC Ordinary . ,, .
TOTAL SHARES OUTSTANDING ,, ,,
The list of shareholdings above is based on the VPS shareholder
register at December , and . Actual shareholding may
deviate due to the use of nominee accounts, share lending, forward
contracts or other contractual arrangements.
At December , , REC Silicon ASA had , shareholders
(, at December , ). The total number of outstanding
shares was ,, at December , and December ,
, each with a par value of NOK .
PRIVATE PLACEMENT OF EQUITY
On November , , the Company announced that Aker
Horizons Holding AS, REC Silicon and Hanwha Solutions
Corporation entered into an agreement pursuant to which REC
Silicon shall issue, and Hanwha Solutions shall subscribe for,
,, new shares in REC Silicon at a subscription price of
NOK per share, totaling approximately NOK million in
proceeds in a directed share issue. The Share Issue was
implemented based on the existing authorization granted to the
board of REC Silicon. Aker Horizons sold and Hanwha Solutions
shall acquire ,, existing shares in the Company at a price
of NOK per share simultaneously with the Share Issue. At
completion of the Share Issue and Share Purchase, Aker Horizons
and Hanwha Solutions will each own approximately . percent
of the shares in REC Silicon. This transaction seled on January ,
. Aer the selement of the transaction in The new
share capital of the Company is NOK ,,, divided into
shares ,,, each with a par value of NOK .
On October , , the Company raised approximately NOK
, million in gross proceeds through the Private Placement of
,, new shares, at a price per share of NOK .. The
Private Placement consisted of two separate tranches: one tranche
with ,, new shares in the Company and a second tranche
with ,, new shares. The selement of Tranche occurred
on October , , and the selement for Tranche occurred on
November , , following approval by an Extraordinary
General Meeting in the Company of the issuance of the New Shares
under Tranche . The completion of Tranche was subject to
approval by the Company’s Board of Directors pursuant to the
authorization granted by the Company’s Annual General Meeting
held on May , . The registration of the new shares issued in
Tranche was completed on October , , and the Company
received proceeds of NOK . million (approximately USD .
million) net of the brokers fee on October , . Subsequent to
this registration, the new share capital of the Company was NOK
,,, divided into ,, shares of NOK par value.
The registration of the new shares issued in Tranche was
completed on November , , and the Company received
proceeds of NOK . million (approximately USD . million)
net of the brokers fee on November , . Subsequent to this
registration, the new share capital was NOK ,, divided
into ,, shares of NOK par value.
At the Annual General Meeting on May , , the Board was
authorized to increase the share capital with up to NOK
,,, which was approximately percent of the share
capital at that time, through one or more increases in the share
capital. The Annual General meeting also authorized the Board to
acquire treasury shares in the Company (up to a maximum of ten
percent of the nominal value of the existing share capital). The
authorization to acquire treasury shares has not been used and
remained available at December , . Both authorizations
were valid until the Annual General Meeting, but in any event
not longer than months.
SHAREHOLDER INFORMATION
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
The Board’s statement on executive management remuneration
(the “statement”) has been prepared in accordance with the
provisions of the Norwegian Public Companies Act (PLA), the
Norwegian Accounting Act, and the Norwegian Code of Practice for
Corporate Governance. Following amendments to the PLA, the
statement is now subject to new and more detailed requirements
for determining salaries and other remuneration. From January ,
, the board is required to prepare both guidelines for such
determinations (section - (a)) and a report that provides an
overview of paid and outstanding remuneration (section -(b)).
The guidelines will be forward-looking and will be adopted by the
Annual General Meeting through a binding vote, while the report will
be retrospective and will be subject to an advisory vote at the
Annual General Meeting. The deadline for adoption of the new
guidelines for the company was October , , while the deadline
for the first presentation of the report is the Annual General
Meeting in .
REC Silicon’s board has prepared proposed guidelines for the
company’s executive remuneration policy in accordance with the
provision in the new section - (a). The proposed guidelines,
which provide a broader and deeper discussion of the principles for
remuneration to key management, were effective from
onwards. The new guidelines were presented to the Annual General
Meeting in , where a binding vote on these guidelines was held
in accordance with the new regulations. The guidelines are available
on REC Silicon’s website. The executive management remuneration
report in accordance with the new regulations will be prepared for
the first time for the Annual General Meeting in and will have
effect for the financial year .
The guidelines for determination of salary and other compensation
for leading employees, as outlined in the annual general meeting in
, have been complied with in . See www.recsilicon.com/
investors/agm for the Statement of Remuneration.
The Board of Directors has implemented incentive programs during
previous periods whereby employee entitlements are linked to the
share price development of the Company’s shares. See note for
details of share-based compensation programs.
Salary and other compensation to the Group’s Board of Directors
and Management for and are described below.
Compensation of the Group Management for
AMOUNTS IN USD
NAME BASE SALARY
BONUS
EARNED AND
MAX
SHARE BASED
COMPENSATION
EARNED
SHARE BASED
COMPENSATION
PAID
PENSION
BENEFITS
OTHER
TAXABLE
BENEFITS SEVERANCE
Tore Torvund , , , , , ,
President and CEO to November ,
James A. May II , , ,
President and CEO from December ,
James A. May II , , , , , ,
CFO to November ,
Douglas Moore , , ,
CFO from December , .
Total ,, , , , , , ,
Compensation of the Group Management for
AMOUNTS IN USD
NAME BASE SALARY
BONUS
EARNED AND
MAX
SHARE BASED
COMPENSATION
EARNED
SHARE BASED
COMPENSATION
PAID
PENSION
BENEFITS
OTHER
TAXABLE
BENEFITS SEVERANCE
Tore Torvund NA
President and CEO
James A. May II NA
CFO
Total NA
MANAGEMENT AND BOARD OF DIRECTORS’ COMPENSATION, LOANS,SHARES,BONDS
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
All amounts are exclusive of social security tax. There were no
payments and benefits from the Group for services outside their
functions as Group Management. Base salary represents the
amount, including holiday pay that was paid in the year.
Bonus amounts represent bonuses earned during each year and are
normally paid and reported as taxable income for the employee in
the subsequent year.
Share-based compensation amounts represent synthetic share
option programs further described in note . The estimated fair
value of the options is expensed over the estimated vesting periods.
The amounts shown above are the amounts expensed in the
relevant year. Amounts reported as share-based compensation
earned are derived using the Black Scholes option pricing model and
may not match actual payments made depending upon the market
value of the Company’s stock on the exercise date. During
there were USD . million in cash payments made with respect to
share-based compensation, and zero in .
Pension benefits include benefits earned with respect to defined
benefit plans and contributions related to defined contribution
plans.
Other taxable benefits include housing, company car / coverage of
automobile expenses / vehicle allowance, telephone and internet
service, newspapers, health club memberships, reimbursement of
home-office related expenses, cash in lieu of paid time off, and
certain other benefits. The benefits vary, and the amounts in the
table are the amounts that are taxable based on rules and
regulations in the relevant tax jurisdictions.
At December , and , members of the Group
Management have contracts that entitle them to severance
benefits beyond the normal notice period if employment is
terminated by the Group. These severance payments are equal to
three months of salary for Mr. May and Mr. Moore.
Compensation of the Board of Directors paid in
AMOUNTS IN USD
NAME
BOARD
COMPENSATION
COMPENSATION FOR
COMMITTEES
Annette Malm Justad ,
Auden Stensvold ,
Espen Klitzing ,
Inger Berg Orstavik ,
Total ,
Compensation of the Board of Directors accrued in (to be paid in )
AMOUNTS IN USD
NAME
BOARD
COMPENSATION
COMPENSATION FOR
COMMITTEES
Kjell Inge Røkke ,
Lene Landøy ,
Total ,
Compensation of the Board of Directors paid in
AMOUNTS IN USD
NAME
BOARD
COMPENSATION
COMPENSATION FOR
COMMITTEES
Jens Ulltveit-Moe , ,
Espen Klitzing , ,
Raghnild Wiborg , ,
Inger Berg Ørstavik , ,
Total period May , - May , , ,
Annette Malm Justad ,
Espen Klitzing ,
Inger Berg Østavik ,
Audun Stensvold ,
Total period May , - December , ,
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
LOANS AND GUARANTEES FOR GROUP MANAGEMENT, BOARD OF DIRECTORS AND SHAREHOLDERS
At December , and there were no outstanding loans or guarantees to members of Group Management, Board members or
shareholders or their closely related parties.
SHAREHOLDINGS, OPTIONS AND BONDS
The number of shares and options owned by members of the Board of Directors and the Group Management, including closely related
parties, are shown in the table below. The table includes board members and key management at December , and . Refer to
note for details of the share option program.
OPTIONS SHARES
NAME
Tore Torvund Group Management ,, ,, , ,
James A. May II Group Management , , , ,
Douglas Moore Group Management
Kjell Inge Røkke Related Party NA NA ,,
Kristian Røkke Related Party ,, NA
Annette Malm Justad Board of Directors , ,
Auden Stensvold Board of Directors
Lene Landøy Board of Directors NA NA
Espen Klitzing Board of Directors NA NA ,
Inger Berg Orstavik Board of Directors NA NA ,
Details of options outstanding at December , .
NUMBER OF OPTIONS
NAME TORE TORVUND JAMES A. MAY II DOUGLAS MOORE STRIKE PRICE NOK
Program , , .
Program , , .
Program , , .
Program , , .
Program , , .
Total ,, ,
November , , Mr. Torvund retired from REC Silicon maintaining all awarded options. January Mr. Torvund passed away wherein
the options were bestowed to his estate. See note for additional information.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Financial liabilities, interest bearing
USD IN MILLION
Non-current financial liabilities, interest bearing
Senior Secured Bond . .
Capitalized Borrowing Cost
)
-. -.
C.A.R.E.S. Act loan (USD) . .
Grant County WA tax settlement (USD) . .
Total non-current financial liabilities, interest bearing . .
Current financial liabilities, interest bearing
Indemnification Loan (NOK) . .
Capitalized Borrowing Cost
)
-. -.
C.A.R.E.S. Act loan (USD) . .
Grant County WA tax settlement (USD) . .
Total current financial liabilities, interest bearing . .
)
Amortized as part of effective interest.
Movements in borrowing
USD IN MILLION
INDEMNIFICATION
LOAN
USD SENIOR
SECURED BOND
C.A.R.E.S ACT
LOAN
TAX SETTLEMENT
NOTE TOTAL
Balance at January , . . . . .
Payments of borrowings . . . -. -.
Change capitalized borrowing cost . . . . .
Effect of changes in foreign exchange rates . . . . .
Forgiveness of borrowings . . -. . -.
Settlement -. . . . -.
Balance at December , . . . . .
BORROWINGS
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
On October , , the Company entered into a selement
agreement with Grant County, Washington seling its property tax
dispute for tax years through . REC Silicon agreed to pay
Grant County USD . million by December , , and USD .
million each year for the next six years. The selement resulted in the
recognition of a note payable using an interest rate of . percent
used to impute the value of the liability. The note is effectively
secured, as a maer of law, by the real property at the Moses Lake
plant. At December , , the remaining fair value of the property
tax note was USD . million. Total remaining undiscounted
payments on the property tax note are USD . million.
On May , , REC Silicon executed promissory notes guaranteed
by the Government of the United States as part of the Coronavirus
Aid, Relief, and Economic Security Act (C.A.R.E.S. Act) of USD .
million for REC Solar Grade Silicon LLC and USD . million for REC
Advanced Silicon Materials LLC. On June , , the Company
received notification that the C.A.R.E.S. Act loan held by REC Solar
Grade Silicon LLC of USD . million plus accrued interest of USD
. million had been repaid by the US Government. On July , ,
the Company was notified that its application for forgiveness of the
C.A.R.E.S. Act loan of USD . million plus accrued interest of USD
. million held by REC Advanced Silicon Materials LLC had been
approved by the US Government. Accordingly, grant income of USD
. million was reported on the other income and expense line of the
consolidated statement of income (see note and ).
The indemnification loan is related to the bankruptcy of a former
subsidiary in . On October , , REC Silicon and Nordea
entered into an agreement to sele claims associated with the
indemnification loans. Under the agreement, Nordea releases all
claims against REC Silicon for NOK million (USD . million)
resulting in income from discontinued operations, net of tax, of NOK
. million (USD . million). The selement will consist of
approximately NOK million (USD . million) to be seled
through an existing escrow account, which REC Silicon currently
holds with Nordea, with the balance seled in one payment of
approximately NOK million (USD . million) made on February
, . At December , , the indemnification loan is NOK
million (USD . million)
The Company and certain subsidiaries are jointly and severally liable
for the USD Senior Secured Bond (REC, ISIN NO).
REC Silicon ASA, REC Silicon AS, REC Silicon, Inc., REC Solar Grade
Silicon, LLC., REC Advance Silicon Materials, LLC., and REC Silicon
Pte. Ltd. have provided a guarantee. In addition, the equity and
substantially all of the tangible and intangible assets of REC
Advanced Silicon Materials, LLC. have been pledged as security in
the bond agreement. The net book value of net assets pledged as
security was approximately USD . million at December ,
and approximately USD . million at December , .
Covenants imposed by the bond include a requirement to maintain
minimum liquidity of USD million and include a change of control
provision which grants the bondholders a put option entitling them
to cancel the commitments and declare all outstanding amounts and
accrued unpaid interest due and payable if a shareholder or a group
of shareholders gains control of more than percent of the share
capital. In addition, the bond agreement provides limitations on
borrowing, asset sales, and other transactions under certain
conditions. The bond agreement includes a cross default clause
should the Company default on any financial indebtedness above
certain threshold amounts. Please see the registration document at
www.recsilicon.com for additional details.
At December , and , the Company had complied with
all financial covenants and other restrictions in the loan.
The following are the contractual maturities of financial liabilities at December ,
MATURITY ANALYSIS
USD IN MILLION
CARRYING
AMOUNT
MONTHS
MONTHS
AFTER
Retirement benefit obligations . . . . . .
USD Senior Secured Bond . . . . . .
Grant County WA tax settlement . . . . . .
Trade payables and other liabilities . . -. . . .
Accrued finance cost . . . . . .
Indemnification loan . . . . . .
Lease Liabilities . . . . . .
Total . . . . . .
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
The following are the contractual maturities of financial liabilities at December ,
MATURITY ANALYSIS
USD IN MILLION
CARRYING
AMOUNT TOTAL
UNDETERM
INED MONTHS
MONTHS
AFTER
Retirement benefit obligations . . . . . . . .
USD Senior Secured Bond . . . . . . . .
C.A.R.E.S Act loans . . . . . . . .
Grant County WA tax settlement . . . . . . . .
Trade payables and other liabilities . . . . . . . .
Accrued finance cost . . . . . . . .
Derivatives . . . . . . . .
Indemnification loan . . . . . . . .
Lease Liabilities . . . . . . . .
Total . . . . . . . .
For further information regarding lease liabilities see note .
The following are the contractual maturities of borrowing:
AT DECEMBER , MATURITY ANALYSIS CONTRACTURAL PAYMENTS TO BE MADE, INCLUDING INTEREST
USD IN MILLION
CARRYING
AMOUNT TOTAL
MONTHS
MONTHS
AFTER
Capitalized Borrowing Cost -.
Senior secured bond . . . . .
Grant County WA tax settlement . . . . . . .
Indemnification loan . . .
Total . . . . . . . . .
AT DECEMBER , MATURITY ANALYSIS CONTRACTURAL PAYMENTS TO BE MADE, INCLUDING INTEREST
USD IN MILLION
CARRYING
AMOUNT TOTAL
MONTHS
MONTHS
AFTER
Capitalized Borrowing Cost -.
Senior secured bond . . . . . .
C.A.R.E.S. Act loans . . . . .
Grant County WA tax settlement . . . . . . . .
Indemnification loan . .
Total . . . . . . . . .
The differences between carrying amounts and total expected payments in the tables above are due primarily to the effect of discounting.
Interest payments are estimated using the interest rates at December , and . All cash flows are undiscounted. Amounts in other
currencies than USD are translated at the exchange rates at December , and , respectively.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
The nominal interest rates and currency distribution at December , were as follows
INTEREST RATE CURRENCY AMOUNTS IN MILLION BORROWER
USD Senior Secured Bond . Fixed USD . REC Silicon ASA
Grant County WA tax settlement . Fixed USD . REC Solar Grade Silicon
Indemnification loans . Variable NOK . REC Silicon ASA
The nominal interest rates and currency distribution at December , were as follows
INTEREST RATE CURRENCY AMOUNTS IN MILLION BORROWER
USD Senior Secured Bond . Fixed USD . REC Silicon ASA
C.A.R.E.S. Act loan . Fixed USD . REC Advanced Silicon Materials
C.A.R.E.S. Act loan . Fixed USD . REC Solar Grade Silicon
Grant County WA tax settlement . Fixed USD . REC Solar Grade Silicon
Indemnification loans . Variable NOK . REC Silicon ASA
Recognized income tax expense
USD IN MILLION
Current income tax expense (-) / benefit (+) . .
Deferred tax expense (-) / benefit (+) . .
Total income tax expense (-) / benefit (+) in the statement of income . .
Relationship of income tax expense/benefit to profit/loss from continuing operations
USD IN MILLION
Profit/loss before tax -. -.
Tax calculated at domestic tax rates applicable to profits /losses in the respective countries . .
Effects of changes in tax rates and use of another tax rate for parts of profits /losses -. .
Expenses not deductible for tax purposes . -.
Effects of not recognized deferred tax assets, including reversal of previous years -. -.
Tax losses, tax credits + temp diff for which no def tax has been rec. this year -. .
Change in estimates of prior years income taxes . .
Other permanent differences -. .
Total income tax expense (-) / benefit (+) in the statement of income -. .
Effective tax rate
During the third quarter of , REC Silicon was informed by the Norwegian Tax Administration through legal counsel that issues raised to deny
deductions taken by REC Silicon during tax years through had been dropped. As a result, the Company recognized an income tax
benefit of USD . million which represents the reversal of estimated tax expense previously reported by the Company due to this examination.
The remaining tax benefit of USD . million is related to changes in the United States related to an adjustment of refunds previously received.
Other permanent differences in and are related to tax calculations in REC Silicon ASA where the tax balances are denominated in NOK
and the Financial Statements are in USD. This gives rise to differences in profit/loss between the tax calculation and the Financial Statement.
The income tax calculation for the Group is primarily based on blended corporate income tax rates of percent in Norway and approximately
. percent in the USA.
Income tax for REC Silicon in the USA is based on nominal percent federal tax rate plus estimated state taxes. The effective tax rate for REC
Silicon in the USA was percent in and .
INCOME TAX EXPENSE AND DEFERRED TAX ASSETS AND LIABILITIES
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Income tax assets and liabilities in the statement of financial position
USD IN MILLION
Current tax assets . .
Current tax liabilities . .
Net current tax assets (+) / liabilities (-) . .
Deferred tax assets . .
Deferred tax liabilities . .
Net deferred tax assets (+) / liabilities (-) . .
Deferred tax assets and liabilities, based on classification as current and non-current are as follows
USD IN MILLION
Deferred tax assets
Deferred tax asset to be recovered after months . .
Deferred tax asset to be recovered within months . .
Offset deferred tax assets and liabilities -. -.
Total . .
Deferred tax liabilities
Deferred tax liability to be settled after months . .
Offset deferred tax assets and liabilities -. -.
Total . .
Net deferred tax liabilities . .
Tax losses and tax credit carryforwards are presented as deferred tax assets to be recovered aer months in the table above.
The following are the major deferred tax liabilities (-) and assets (+) recognized by the Group and movements during 2021
USD IN MILLION
BALANCE
JAN
RECOGNIZED IN
INCOME
RECOGNIZED IN
OCI/EQUITY
TRANSLATION
DIFFERENCE
BALANCE
DEC
Total non-current assets -. . . . -.
Total non-current liabilities -. . . . -.
Total current liabilities . -. . -. .
Tax losses and tax credits carry-forward recognized . . . -. .
Total . . . . .
The following are the major deferred tax liabilities (-) and assets (+) recognized by the Group and movements during
USD IN MILLION
BALANCE
JAN
RECOGNIZED IN
INCOME
RECOGNIZED IN
OCI/EQUITY
TRANSLATION
DIFFERENCE
BALANCE
DEC
Total non-current assets -. . . -. -.
Total current assets . . . . .
Total non-current liabilities -. . . -. -.
Total current liabilities . . . . .
Tax losses and tax credits carry-forward recognized
)
. -. . . .
Total . . . . .
)
Tax losses and tax credit carry-forwards recognized at December , related to REC Silicon in the USA were USD . million and USD . million related to
REC Silicon ASA. Tax losses and tax credit carry-forwards recognized at December , related to REC Silicon in the USA were USD . million and USD .
million related to REC Silicon ASA.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Accumulated income taxes recognized to equity at December
USD IN MILLION
Effect of transition to IAS at January , . .
Effect of actuarial gains and losses -. -.
Effect of conversion of convertible bonds -. -.
Effect of costs for capital increase . .
Effect of translation differences on loans as part of net investment . .
Total deferred tax -. -.
Current tax - effect of costs for capital increase . .
Total -. -.
Amounts in table above exclude translation differences on deferred tax. Negative numbers are a reduction to equity.
The following main deferred tax assets have not been recognized at December
USD IN MILLION
Total non-current assets . .
Total current assets . .
Total non-current liabilities . .
Total current liabilities . .
Tax losses carry forward . .
Total . .
Distribution of the deferred tax assets that have not been recognized at December
USD IN MILLION
REC Silicon ASA (Norway) . .
REC Solar AS (Norway) . .
REC Silicon US operations . .
Other . .
Total . .
The deferred tax asset in the United States was generated due to net operating losses on a tax basis, the accelerated reversal of book to tax
differences for depreciation caused by the recognition of impairment (financial statement only), and other taxable temporary differences
which are expected to reverse on a more definite schedule. The deferred tax asset in the United States associated with net operating losses
was USD . million at December , includes USD . million associated with net operating losses generated in and prior
years which expire between and . Deferred tax assets of USD . million are due to net operating losses generated aer
which do not expire.
The deferred tax asset in Norway was generated due to net operating losses on a tax basis and other taxable temporary differences which
are expected to reverse on a more definite schedule. In Norway, net operating losses do not expire.
Deferred tax assets have not been recognized due to requirements in IAS for convincing evidence of available future taxable income to
offset prior tax losses.
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
The cost of defined pension benefit plans is expensed in the period that the employee renders services and becomes eligible to receive
benefits. The cost of defined contribution plans is expensed as contributions become payable.
REC Silicon has an employer-sponsored defined contribution retirement plan ( (k)) for employees in the United States. The REC Silicon
subsidiary REC Advanced Silicon Materials LLC (ASiMI) in the United States had defined benefit plans at the time it was acquired in .
At that time, these plans were frozen, and no future benefits are accruing to the members of the plans. Previous pension rights remain
unchanged and are fully vested. The tables below for defined benefit plans are related to Advanced Silicon Materials LLC only.
For defined benefit plans, the plan assets and the projected benefit obligations were measured at December , and . An
independent actuary performed actuarial calculations. The present value of the projected defined benefit obligation, and the related current
service cost, were measured using the projected unit credit method.
Defined benefit plans
USD IN MILLION
Gross retirement benefit obligations at January . .
Interest cost on pension obligations . .
Remeasurements recognized through OCI -. .
Benefits paid, paid-up policies and disability obligation -. -.
Gross retirement benefit obligations at December . .
Fair values of plan assets at January . .
Actuarial return on plan assets . .
Pension premiums . .
Benefits paid, paid-up policies and disability reserve -. -.
Fair value of plan assets at December . .
Funded status at December . .
Net retirement benefit obligations at December . .
The plan assets relate to one of three ASiMI plans and are currently invested in a mix of equity funds and fixed income funds.
Retirement benefit obligations in the statement of financial position
USD IN MILLION
Net retirement benefit obligations at January . .
Net periodic benefit costs including net interest . .
Remeasurements recognized through OCI -. .
Pension premiums and benefits paid -. -.
Net retirement benefit obligations at December . .
The amounts recognized in the statement of income are as follows
USD IN MILLION
Total benefit plans . .
Defined Contribution . .
Total contribution expenses (see note ) . .
Net interest expense . .
RETIREMENT BENEFIT OBLIGATIONS AND EXPENSES
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Remeasurements of the net defined benefit liability recognized through Other Comprehensive Income (gains (-)/losses (+))
USD IN MILLION
Experience adjustments -. .
Effects of changes in assumptions -. .
Total remeasurements (gains (-)/losses (+)) on gross retirement benefit obligations -. .
Return on plan assets, excluding amounts included in interest -. -.
Total remeasurements (gains (-)/losses (+)) recognized through Other Comprehensive Income -. .
During the effects of changes in assumptions were due to an increase in discount rate and changes in financial and demographic
assumptions for the ASiMI plans.
The cumulative re-measurement loss recognized to equity through other comprehensive income was USD . million before income taxes
at December , . Of this, a loss of USD . million was related to ASiMI (excluding translation difference).
At December , , the mortality table was updated from the Pri- total dataset mortality table with projection scale MP- to
the MP- report. The Society of Actuaries (SOA) is an actuarial organization that periodically reviews mortality data and publishes
mortality tables and improvement scales. MP- is the most recent improvement scale published by the SOA in .
The principal actuarial assumptions used to determine retirement benefit obligations at December
Discount rate . .
Future salary increases NA NA
Future pension increases NA NA
Future increase in social security base amount NA NA
Future turnover NA NA
The assumptions used to determine the benefit cost for the year are determined at the beginning of the year. The expected return for the
ASiMI plans equals the discount rate.
The expected remaining service life (average, in years) of the defined benefit obligation for the ASiMI plans are approximately at
December , and . at December , . Pension premiums of USD . million are expected to be paid during to the ASiMI
defined benefit plans.
For the ASiMI benefit plans, a one percentage point increase (decrease) in discount rate is estimated to decrease (increase) the pension
obligation by approximately USD – . (.) million at December , .
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Non-financial liabilities, interest calculation
USD IN MILLION
Current portion of prepayments interest calculation . .
Total prepayments, interest calculation . .
Trade payables and other liabilities
USD IN MILLION
Trade and other payables . .
Accrued costs for capex - external . .
VAT and other public taxes and duties payables . .
Accrued operating costs - external . .
Accrued finance costs - external . .
Other non-interest bearing liabilities
)
. .
Trade payables and other liabilities . .
)
Includes payment penalty of USD . million in relation to outstanding capital contribution from REC Silicon to the Yulin JV (see note and ).
Provisions
USD IN MILLION
Provisions non-current - interest bearing . .
Total provision . .
Specification of provisions
USD IN MILLION
ASSET RETIREMENT
OBLIGATION TOTAL
At January , . .
Change in estimate in asset retirement obligation . .
Net periodic asset retirement obligation costs including net interest . .
At December , . .
Estimated fair values of the Group’s guarantees, indemnification loans and option contract related to the REC Wafer bankruptcy are not
reported as provisions but included in other line items in the statement of financial position.
NONCURRENT PROVISIONS
During the Company recorded additional provision for asset retirement obligations (ARO) of USD . million.
At December , the Company has recorded USD . million in AROs. These obligations consist of USD . million to restore leased
wastewater containment ponds to conditions specified in the lease agreement and USD . million for the eventual cleanup of the
Company’s manufacturing operations in Moses Lake, Washington and Bue, Montana.
The AROs represent the present value of estimated future costs discounted at . percent for years for the wastewater containment
ponds. The restoration of the production sites is discounted at . percent for . years. The restoration of production sites is subject to
significant uncertainty due to variability in restoration requirements imposed by regulatory authorities as well as the timing of restoration.
TRADE PAYABLES, PROVISIONS AND OTHER LIABILITIES
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
On June , , the Company received notification that the C.A.R.E.S. Act loan held by REC Solar Grade Silicon LLC of USD . million plus
accrued interest of USD . million had been repaid by the US Government. Accordingly, grant income of USD . million was reported on
the other income and expense line of the consolidated statement of income (see note and ).
On July , , the Company received notification that the C.A.R.E.S. Act loan held by REC Advanced Silicon Materials LLC of USD .
million plus accrued interest of USD . million had been repaid by the US Government. Accordingly, grant income of USD . million was
reported on the other income and expense line in the consolidated statement of income (see note and ).
At December , the C.A.R.E.S Act loans were reflected in total non-current and current financial liabilities in the amount of USD . million and
USD . million respectively.
USD IN MILLION
Freight, postage and transportation . .
Energy and water . .
Lease and rental expenses . .
Total operating, service and maintenance costs . .
Consultancy and auditor fees . .
Own work capitalized on fixed assets -. -.
IT and telecommunications costs . .
Travel and entertainment costs . .
Insurance costs . .
Other operating costs
)
. -.
Other operating expenses . .
)
Other Operating Costs include the reimbursement of expenses incurred on behalf of the JV (see note ).
Auditor’s remuneration
USD IN MILLION
Statutory Audit (only relating to statutory auditor) . .
Tax advisory services (only relating to statutory auditor) . .
Other non-audit services (only relating to statutory auditor) . .
Total auditors remuneration . .
GOVERNMENT GRANTS
OTHER OPERATING EXPENSES
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
USD IN MILLION
Restructuring cost and employee termination benefits -. .
Grant County WA tax settlement . .
FERC ruling refund . .
State of WA excise tax settlements . .
Employment matter legal settlement . -.
C.A.R.E.S. Act Loan Forgiveness . .
Gain/loss on disposal of non-current assets . .
Total other income and expenses . .
On June , , the Company received notification that the C.A.R.E.S. Act loan held by REC Solar Grade Silicon LLC of USD . million plus
accrued interest of USD . million had been repaid by the US Government. Accordingly, grant income of USD . million was reported on
the other income and expense line of the consolidated statement of income (see note and ).
On July , , the Company received notification that the C.A.R.E.S. Act loan held by REC Advanced Silicon Materials LLC of USD .
million plus accrued interest of USD . million had been repaid by the US Government. Accordingly, grant income of USD . million was
reported on the other income and expense line in the consolidated statement of income (see note and ).
USD IN MILLION
Salaries . .
Bonus and sales commission - employees . .
Share option expense . .
Social security tax . .
Defined Contribution . .
Other employee related costs . .
Employee benefit expenses . .
The average number of permanent employees during was . The average number of permanent employees during was .
There were no loans or guarantees provided to employees at December , or .
OTHER INCOME AND EXPENSES
EMPLOYEE BENEFITS
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
USD IN MILLION
Interest income from financial assets not at fair value through profit or loss . .
Total income from financial assets not at fair value through profit or loss . .
Interest expenses for CTO tax dispute . -.
Interest expenses for USD Senior Secured Bond -. -.
Interest expenses for Property Tax dispute -. -.
Interest expenses for PPP loan . -.
Interest expenses for financial liabilities not at fair value through profit or loss . .
Expensing of up-front fees and costs -. -.
Interest on leaase liabilities -. -.
Other calculated interest expenses . -.
Calculated/imputed interest other - added to principal - external -. -.
Capitalization of borrowing costs . .
Net change in fair value of financial equity investment through profit and loss . -.
Other expenses from financial assets and liabilities -. .
Net financial expenses -. -.
Net currency gains/losses . .
Net financial items -. -.
Interest income in includes interest on municipal bonds of USD . million.
Calculated interest is interest calculated on prepayments (see note ).
ADDITIONAL INFORMATION TO THE STATEMENT OF CASH FLOWS ON INTEREST, UPFRONT FEES, AND OTHER COSTS PAID
Interest paid is approximately USD . million in and USD . million in .
BASIC
Basic earnings per share (EPS) is calculated by dividing the profit/loss aributable to equity holders of the Company by the weighted average
number of ordinary shares issued during the year, excluding treasury shares.
EARNINGS PER SHARE
Profit/loss from continuing operations (USD IN MILLION) -. -.
Profit/loss from total operations (USD IN MILLION) -. -.
Weighted average number of ordinary shares in issue (IN MILLION) . .
Basic earnings per share from continuing operations (USD per share) -. -.
Basic earnings per share from total operations (USD per share) -. -.
DILUTED
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of
all dilutive potential ordinary shares from the employee share options. If the effect increases EPS from continuing operations, it is anti-
dilutive, and is then not included in diluted EPS.
The calculation shows that the share options are anti-dilutive for and . Consequently, dilutive EPS equals basic EPS for both
years.
FINANCIAL INCOME AND EXPENSES
EARNINGS PER SHARE
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
The Board of Directors did not propose any dividend payments for financial years or .
USD IN MILLIONS
Research and development expense . .
Development capitalized -. .
Total research and development . .
Research and development activities consist of improvements to current production processes and equipment as well as activities
designed to enhance quality, improve efficiency, and reduce production cost. Research and development expenses in the table above include
depreciation of USD . million in and .
DIVIDENDS PER SHARE
RESEARCH AND DEVELOPMENT
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Purchase obligations consist of significant items for which the Group is contractually obligated to purchase from third parties at December
, . Operating lease payments show contractual minimum future payments.
In cases where contracts can be terminated or reduced, the reduced amount has been included as estimated payments in the first period
subsequent to the reporting period. Consequently, the amounts presented in the table represent the estimated unavoidable portion of the
Group’s expected future costs related to purchase obligations and lease payments. It does not reflect the Group’s expected future cash
outflows.
Purchase obligations and operating lease payments are undiscounted and exclude the payment of amounts recognized for other assets,
liabilities, and investments.
Contractual purchase obligations and minimum operating lease payments at December ,
USD IN MILLION
TOTAL FUTURE
PAYMENTS AFTER
Total purchase of goods and services . . . . . . .
Total minimum operating lease payments . . . . . . .
Total purchase obligations and minimum operating lease payments . . . . . . .
Purchase obligations consist primarily of long-term contracts for
Metallurgical Grade Silicon. Operating leases are short-term or low-
value leases that meet the exceptions in IFRS Leases.
In , REC Silicon entered into a supplemental agreement in
relation to investment in the Yulin JV in China. The final equity
selement payment of USD . million, which was payable during
December , has not been made due to delinquent invoices for
services provided to the Yulin JV by REC Silicon and the completion
of performance testing specified in the Technology Transfer
Agreement (TTA). REC Silicon and the Yulin JV continue to seek a
resolution to these issues (See note above).
GUARANTEES AND PLEDGES
Bank guarantees at December , amounted to USD .
million, against which the Company has pledged USD . million of
restricted cash. This includes bank guarantees for the benefit of
REC Solar of USD . million with USD . million of restricted cash
as security. USD . million of restricted cash will be used as part
of the Nordea selement (see note ).
Bank guarantees at December , amounted to USD .
million, against which the Company has pledged USD . million of
restricted cash. This included bank guarantees for the benefit of
REC Solar of USD . million with USD . million of restricted cash
as security.
The Group provided parent company guarantees for the REC Solar
Group related to the performance of solar panels and systems and
the sale of REC ScanModule AB. The Group has been provided with
offseing guarantees by REC Solar Holdings AS. The guarantees
are valid for relevant warranty periods and are limited by warranties
provided on solar panels and systems. Parent company guarantees
for REC Solar were USD . million at December , and
. The guarantees will decrease from to when they
will expire in their entirety.
The Company has provided guarantees and indemnification
agreements in connection with the bankruptcy of a former
subsidiary (see notes , and ).
COMMITMENTS, GUARANTEES, PLEDGES
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
FAIR VALUES OF FINANCIAL INSTRUMENTS
The estimated fair values of the Group’s financial instruments are based on market prices and the valuation methods described below.
Financial instruments recognized at fair values (partially or in whole)
USD IN MILLION ASSETS LIABILITIES ASSETS LIABILITIES
Derivatives option related to REC Wafer bankruptcy . . . .
Determining the categorization of fair value measurements in
accordance with IFRS involves judgment.
Level
Option contract is part of the indemnification agreements in
connection with the REC Wafer Norway AS bankruptcy, and the
estimated fair value is subject to change. Changes in estimated fair
value, when they occur, are reported as part of the net gain on
disposal of discontinued operations. On October , , REC
Silicon and Nordea entered into an agreement to sele claims
associated with the indemnification loans. Under the agreement,
Nordea releases all claims against REC Silicon for NOK million
(USD . million). The selement will consist of approximately
NOK million (USD . million) to be seled through an existing
escrow account, which REC Silicon currently holds with Nordea,
with the balance seled in one payment of approximately NOK
million (USD . million) by the end of February . At December
, , the indemnification loan is NOK million (USD .
million) and the liability for the option contract related to the
indemnification loan was USD . million.
Other financial liabilities and assets
The USD Senior Secured bonds (REC) are traded on the Oslo
Stock Exchange. Although trading is limited, market values of the
bonds were estimated using trades near year-end (level in the fair
value hierarchy).
USD IN MILLION NOMINAL VALUE CARRYING VALUE
ESTIMATED
FAIR VALUE NOMINAL VALUE CARRYING VALUE
ESTIMATED
FAIR VALUE
REC . . . . . .
For all remaining financial assets and liabilities, the carry amounts represent a reasonable approximation of fair value.
CREDIT RISK
The maximum credit risks related to financial assets are estimated in the table below.
USD IN MILION CARRYING AMOUNT MAX. EXPOSURE CARRYING AMOUNT MAX. EXPOSURE
Cash and bank (incl. restricted bank accounts) . . . .
Trade receivables and accrued revenues . . . .
Other non-current and current receivables . . . .
Finance receivables and short-term loans . . . .
Total . . . .
The bank guarantees, parent company guarantees, and indemnification agreements (see note ) expose the Group to credit risk. The fair
values of bank and parent company guarantees are estimated at zero. The maximum amount of the indemnification agreements is NOK
million and has been recognized in liabilities for NOK million (USD . million) at December , .
OTHER INFORMATION FINANCIAL INSTRUMENTS
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
Shared characteristics that identify each concentration of trade receivables at December
GEOGRAPHICAL SECTOR INDUSTRY
China Manufacturing Electronic
North America Wholesale Solar
Taiwan Other Other
Europe
Singapore
Korea
Japan
Other Asia
Total
The table above is calculated with respect to gross trade receivables only. The provision for loss on trade receivables is exclusively
concentrated on customers in the solar industry in China and Taiwan.
The Group is dependent on a small number of customers. In , three customers represented approximately percent of revenue for
the Group. In three customers represented percent.
Approximately percent of the revenue in for the Semiconductor segment consisted of three customers in both and
percent in . The Solar Materials segment was represented by two customers in both and .
Four customers represented approximately percent of total trade receivables for The Group at December , (three customers
represented approximately percent at December , ).
Approximately percent of the trade receivables for the Semiconductor segment consisted of three customers in both and
percent in , while approximately percent of the trade receivables for the Solar Materials segment was represented by four
customers in both and . See note Segment Information above.
Generally, a more challenging and competitive market environment increases credit risk due to financially weaker customers and extended
payment terms. Amounts overdue but not impaired between and days were associated with one customer for and . (see
table below)
Analysis of aging of receivables at December ,
AGING OF RECEIVABLES
PAST DUE
USD IN MILLION
TOTAL CARRYING
AMOUNT NOT DUE DAYS DAYS DAYS DAYS
Trade receivables . . . . . .
Provision for loss on trade recivables -. . . . . -.
Other non-current and current receivables . . . . . .
Total receivables . . . . . .
Prepaid Costs .
Total trade and other receivables .
Analysis of aging of receivables at December ,
AGING OF RECEIVABLES
PAST DUE
USD IN MILLION
TOTAL CARRYING
AMOUNT NOT DUE DAYS DAYS DAYS DAYS
Trade receivables . . . . . .
Provision for loss on trade recivables -. . . . . -.
Other non-current and current receivables . . . . . .
Total receivables . . . . . .
Prepaid Costs .
Total trade and other receivables .
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
The provision for doubtful accounts includes the impact of adopting
IFRS which requires the Company to estimate expected credit
losses (ECL) based upon historical experience. The Company has
prepared analyses to calculate an ECL estimated at . percent of
sales. However, because expected credit losses are low and accounts
receivable consists of relatively large outstanding balances, use of
the ECL to record credit losses at the time of sale would result in
provisions for losses on trade receivables for future sales.
Therefore, the Company uses the ECL rate as a guideline and
evaluates the potential that balances will not be received based
upon days outstanding, customer payment histories, and other
information regarding past due balances. In general, provisions are
recorded for accounts which are greater than days past due
unless there is a clear indication that payment will be received.
At December , , approximately percent of the not due
receivables were secured by bank guarantees with no past due
receivables secured by credit insurance. At December , ,
approximately percent of not due trade receivables were secured
by bank guarantees.
SENSITIVITIES
Interest rate sensitivity
A change in interest rates will affect interest payments on variable
interest rate liabilities, cash, and restricted cash. The net effect of a
one percentage point increase (decrease) in interest rates is
estimated to affect profit or loss for the year by USD . (-.)
million calculated on outstanding amounts at December ,
and USD -. (.) million calculated on outstanding amounts at
December , .
Exchange rate sensitivity
The table below shows the estimated impact of a percent
increase in foreign currency rates compared to functional currencies
for each entity. A decrease in the same percentage would create the
opposite effect. The amounts calculated in the table below are for
REC Silicon ASA at period end and do not reflect fluctuations during
the year. The table below shows the effects of changes in exchange
rates on positions denominated in NOK for and .
Exchange rate sensitivity on financial instruments at December
CHANGE COMPARED TO FUNCTIONAL CURRENCIES
USD IN MILLION
Financial assets . .
Financial liabilities -. -.
Total . .
Of which to equity
USD receivables as part of net investment . .
Rest is to profit or loss . .
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
The Group is involved in legal disputes in the ordinary course of
business. Provisions are recognized for the expected outcomes in
accordance with applicable accounting rules. Provisions are based
on Group Management’s estimate of likely outcomes based on prior
experience, the source, and the facts and circumstances of a claim.
The final outcomes of such disputes and litigation are subject to
significant uncertainty and actual outcomes may vary from
provisions recognized. Provisions are adjusted to reflect the most
recent facts and circumstances.
IMPACT OF COVID GLOBAL PANDEMIC
Market disruptions caused by the COVID- pandemic are
dissipating. However, current global shipping delays and port
congestion is expected to result in the delay of shipments. REC
Silicon has successfully mitigated the impact of the COVID-
pandemic on its operations. However, increased infection rates in
certain geographic regions and industries are having an adverse
impact on economic activity and have affected markets serviced by
REC Silicon.
Company management and the Board of Directors will continue to
monitor the situation and take appropriate action as additional
developments occur.
ANTICIPATED RESTART OF FBR PRODUCTION
FACILITY IN MOSES LAKE
REC Silicon’s Moses Lake, Washington facility was shut down during
the second quarter of due to difficult market conditions and
Chinese tariffs on polysilicon produced in the United States.
Accordingly, operating costs and activities have been reduced to
levels required to safely maintain the facility in a non-operating
status and to retain the capability to restart the facility in the future.
The Company’s plans to reopen the Moses Lake facility are in part
dependent upon the restoration of access to polysilicon markets in
China, the creation of a non-Chinese solar value chain, or the
development and commercialization of technology for the use of
silane to manufacture silicon anode material for use in lithium-ion
baeries. The realization of these initiatives is subject to
substantial uncertainty and may depend upon the implementation
of trade measures to incentivize investments and will require REC
Silicon to make additional investments. Accordingly, plans to restart
the facility in Moses Lake, Washington is subject to substantial
uncertainty.
Additional impairments and provisions would be required if the
Moses Lake facility is not restarted.
If production at the Moses Lake facility is restarted, the reversal of
impairments might be required.
INDEMNIFICATION LOAN
The indemnification loan is related to the bankruptcy of a former
subsidiary in . On October , , REC Silicon and Nordea
entered into an agreement to sele claims associated with the
indemnification loans. Under the agreement, Nordea releases all
claims against REC Silicon for NOK million (USD . million). At
December , , the indemnification loan is NOK . million
(USD . million). For additional information regarding the
indemnification loan refer to note .
In , , , and ,, share options
were granted to certain key employees. These programs are for five
years. The first three years are a lock-up period. The vesting of the
options for eligible employees will take place in equal parts aer
the third, fourth and fih years of each program, on each June of
each year. The options were granted at a strike price of NOK .
for , NOK . for , . in , . in , and . in
. These option programs are synthetic programs; the options
will be seled in cash. Cash payments due to an eligible employee
following any disbursement date is limited to a maximum amount in
each calendar year equal to the employee’s base annual salary
effective January st in the year of the disbursement. Any
unexercised options are forfeited upon termination of employment,
unless the employee retires, in which case options are maintained.
Fair values were estimated using the Black-Scholes option price
model. Expected volatility was based on historical volatility and no
dividends were expected in the periods. Expected lifetime and
vesting periods were set at the time of allocation based on
expectations that employees would exercise options early due to
the structure of the programs, including the annual profit cap, and
the volatility of the Company’s share price.
CLAIMS, DISPUTES, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
SHAREBASED COMPENSATION
Notes to the consolidated financial
statements, REC Silicon Group
REC Silicon Annual Report 2021
OPTIONS OUTSTANDING AT DECEMBER ,
PROGRAM
EXERCISE
PRICE NOK NO. OPTIONS
TOTAL FAIR VALUE
USD MILLION
REMAINING
CONTRACTUAL
LIFE YEAR
TOTAL EXPENSED
USD MILLION
REMAINING TO BE
EXPENSED
USD MILLION
. , . . . .
. , . . . .
. ,, . . . .
. ,, . . . .
. ,, . . . .
Total ,, . . .
Differences between the number of options granted for each year
and the number of outstanding options in the table above are due to
options that have been forfeited upon termination of employment,
and also by options exercised. Options forfeited for and
were , and , respectively. During the total
amount of shares exercised were , from program year
, , from program year , and , from
program year .
The amount recognized in the statement of income for share-based
compensation was USD . million in and USD . million in
. At December , , USD . million has been reported in
the line other non-current liabilities on the statement of financial
position and USD . million in accrued operating costs (see note
). The liabilities associated with share-based compensation are
derived using the Black Scholes option pricing model and may not
match actual payments made depending upon the market value of
the Company’s stock on the exercise date. During there was
USD . million in cash payments made with respect to share-based
compensation, and zero in .
The selement of the previously announced strategic equity
investment by Hanwha Solutions was successfully completed on
January , . Gross proceeds of the selement were NOK
million (,, shares at NOK ). The new share capital of
the Company is NOK ,,, divided into shares
,,, each with a par value of NOK .
On March , Aker Horizons ASA’s wholly owned subsidiary
Aker Horizons Holding AS (“Aker Horizons”) entered into an
agreement with Hanwha Solutions Corporation and Hanwha
Corporation (together, “Hanwha”) to sell all of Aker Horizons’ shares
in REC Silicon ASA (“REC Silicon”). Aker Horizons will sell
,, shares in REC Silicon at a purchase price of NOK
per share, resulting in total proceeds to Aker Horizons of
approximately NOK , million. Following completion of the
transaction, Aker Horizons will no longer own any shares or hold any
voting rights in REC Silicon. Aer completion Hanwha will own
,, shares, . percent, of REC Silicon.
Completion of the transactions is expected to occur before the
annual general meeting in REC Silicon scheduled in May ,
subject to a customary anti-trust filing in the U.S. Kristian Røkke will
step down as chairman of the board of REC Silicon in connection with
completion of the transaction. An extraordinary general meeting in
REC Silicon will be called for to appoint new board members.
EVENTS AFTER THE REPORTING PERIOD
REC Silicon Annual Report 2021
BALANCE SHEET NGAAP
REC SILICON ASA
AT DECEMBER USD IN THOUSAND NOTES
ASSETS
Non-current assets
Equipment and intangible assets B
Investments in subsidiaries C
Non-current receivables from subsidiaries D , ,
Restricted bank accounts non-current E , ,
Total non-current assets , ,
Current assets
Other receivables from subsidiaries D ,
Other receivables
Restricted bank accounts current E
Total current receivables ,
Cash and cash equivalents E , ,
Total current assets , ,
Total assets , ,
REC Silicon Annual Report 2021
BALANCE SHEET NGAAP
REC SILICON ASA
AT DECEMBER USD IN THOUSAND NOTES
EQUITY AND LIABILITIES
Shareholders' equity
Share capital G , ,
Share premium G , ,
Total paid-in capital G , ,
Other equity and retained earnings G , ,
Total shareholders' equity G , ,
Non-current liabilities
Interest-bearing liablities F , ,
Total non-current liabilities , ,
Current liabilities
Trade payables
Social security tax, VAT and other taxes
Interest-bearing liabilities F , ,
Derivatives L ,
Other current liabilities L , ,
Total current liabilites , ,
Total liabilities , ,
Total equity and liabilities , ,
Lysaker, March ,
Board of Directors
Kristian Røkke
Chairman of the Board
Annee Malm Justad
Member of the Board
Audun Stensvold
Member of the Board
Lene Landøy
Member of the Board
Seung Deok Park
Member of the Board
James A. May II
President and CEO
REC Silicon Annual Report 2021
INCOME STATEMENT NGAAP
REC SILICON ASA
YEAR ENDED DECEMBER USD IN THOUSAND NOTES
Revenues
Employee benefit expenses H - -
Other operating expenses J -, -,
EBIT -, -,
Interest income, internal K
Interest income, external
Other financial income K ,
Interest expense, external K -, -,
Other financial expenses K - ,
Net currency gains/losses K ,
Impairment of financial assets M -, -,
Net financial items -, -,
Profit/loss before income tax -, -,
Income tax expenses I ,
Profit/ loss for the year -, -,
Profit/loss for the year is distributed as follows
Other equity (uncovered loss) G -, -,
Total distributed -, -,
REC Silicon Annual Report 2021
STATEMENT OF CASH FLOWS NGAAP
REC SILICON ASA
YEAR ENDED DECEMBER USD IN THOUSAND
Cash flows from operating activities
Profit/loss before tax -, -,
Impairment losses financial assets
)
, ,
Changes in receivables external - -
Changes in receivables internal
)
-,
Changes in payables -,
Reversal of derivatives and indemnification loan -,
Currency effects not cash flow or not related to operating activities
)
- -,
Other items
)
Net cash flow from operating activities -, -,
Cash flow from investing activities
Proceeds from finance receivables and restricted cash -
Net cash flow from investing activities -
Cash flow from financing activities
Increase in equity ,
Net cash flow from financing activities ,
Net increase/decrease in cash and cash equivalents -, ,
Cash and cash equivalents at the beginning of the period , ,
Cash and cash equivalents at the end of the period , ,
)
Impairment losses financial assets. See note M.
)
The Currency gains and losses are primarily related to liabilities in NOK.
)
Other items consist of the expensing of up-front loan fees and amortization of interests.
REC Silicon Annual Report 2021
INDEX OF THE NOTES TO THE FINANCIAL STATEMENTS
REC SILICON ASA
NOTE PAGE
A Summary of significant accounting principles and general
B Equipment and intangible assets
C Shares in subsidiaries
D Receivables from subsidiaries
E Cash and cash equivalents and restricted bank accounts
F Interest bearing liabilities
G Equity
H Employee benefits
I Income taxes
J Other operating expenses
K Interest and currency
L Derivatives, other current liabilities
M Impairment of financial assets
N Research and development
O Guarantees and indemnification agreements
P Related parties
Q Contingent liabilities
R Events aer the reporting period
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
NOTES TO THE FINANCIAL STATEMENTS
REC SILICON ASA
REC Silicon ASA (the Company) is a holding company with corporate
management and financial functions.
The financial statements have been prepared in compliance with
the Norwegian Accounting Act and Norwegian generally accepted
accounting principles (NGAAP) in effect at December , The
Company’s reporting and functional currency is in US Dollar (USD).
The reporting currency used in the consolidated financial
statements is US Dollar (USD). The consolidated financial
statements of the Group have been prepared in accordance with
IFRS. The Company’s accounting principles are similar to the
accounting principles for the Group unless otherwise noted.
Financial statement disclosures for the Company that are
substantially different from the disclosures for the Group are
shown below. See notes to the consolidated financial statements.
Group contributions and dividends that are subject to approval by
the Annual General Meeting are recognized according to IFRS in the
consolidated financial statements at the time of approval. For the
Company’s financial statements according to NGAAP, these are
recognized in the fiscal year they relate to. Group contributions to
subsidiaries are recognized as investment in shares in subsidiaries,
net of tax.
Subsidiaries, jointly controlled entities, and associates are carried
at the lower of cost or estimated recoverable amount in the
Company’s financial statements. In the consolidated financial
statements, these are consolidated or accounted for using the
equity method.
In the Company’s financial statements, payments expected to be
made during the next months on non-current financial assets or
liabilities are not reclassified to current financial assets or
liabilities. In the consolidated financial statements, these are
reclassified.
The financial statements are presented in USD, rounded to the
nearest thousand unless otherwise stated. As a result of rounding
adjustments, the figures in one or more rows or columns included in
the financial statements may not add up to the total of that row or
column.
The financial statements of the Company have been approved for
issue by the Board of Directors on March , and are subject
to approval by the Annual General Meeting scheduled for May ,
.
A SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND GENERAL
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
Equipment and intangible assets consist of office equipment and furniture.
There has been no addition and disposal during and . The tangible assets were fully depreciated at December , .
CARRYING AMOUNT
DECEMBER
USD IN THOUSAND
COMPANY OWNERSHIP/ VOTING RIGHT BUSINESS OFFICE
REC SILICON AS Bærum
REC SOLAR AS Bærum
Total
In the Company impaired the shares in REC Silicon AS with USD , thousand as a consequence of REC Silicon AS similar
impairment of their shares in REC Silicon Pte Ltd. See note M.
SUBSUBSIDARIES OWNERSHIP/VOITING RIGHT BUSINESS OFFICE
REC Solar AS subsidiaries
Gitzeli Solar Energy Production S.A. Greece
REC Greece S.A. Greece
REC Silicon AS subsidiaries
REC Silicon Inc Moses Lake, USA
REC Solar Grade Silicon LLC Moses Lake, USA
REC Advanced Silicon Materials LLC Butte, USA
REC Silicon Pte. Ltd. Singapore
At December , , REC Solar AS’s subsidiaries were under liquidation.
B EQUIPMENT AND INTANGIBLE ASSETS
C SHARES IN SUBSIDIARIES
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
Non-current interest-bearing receivables from subsidiaries are USD loans to the subsidiaries in USA (REC Silicon Inc. and REC Solar Grade
Silicon LLC) with carrying value USD , thousand at December , and USD , thousand at December , . In
the Company impaired these receivables by USD , thousand and by USD , thousand in . See note M.
Other current receivables consist of receivable/ loan to REC Silicon Pte. Ltd. The Company has impaired the receivables/ loan to REC Silicon
Pte. Ltd due to the subsidiary’s financial situation and obligations. See note M.
Cash and cash equivalents consist of bank deposits.
Restricted bank accounts (not included as cash and cash equivalents)
AT DECEMBER USD IN THOUSAND
Non-current , ,
Current
Total restricted bank accounts , ,
The non-current restricted bank account of USD , thousand is an escrow account which the Company holds with Nordea and has been
used as a part of the selement of the indemnification loan by the end of February . See note F.
At December , current restricted bank accounts include USD thousand to secure employees’ tax deductions (board members) in
REC Silicon ASA.
At December , current restricted bank accounts include USD thousand to secure employees’ tax deductions in REC Silicon ASA.
D RECEIVABLES FROM SUBSIDIARIES
E CASH AND CASH EQUIVALENTS AND RESTRICTED BANK ACCOUNTS
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
AT DECEMBER USD IN THOUSAND
Non-current
USD senior secured bond , ,
Unamortized fees - -,
USD senior secured bond , ,
Total non-current interest bearing liabilities , ,
Current
Indemnification loan , ,
Total interest bearing liabilities , ,
On October , the Company and Nordea entered into an agreement to sele claims associated with the indemnification loans.
Under the agreement Nordea releases all claims against the Company for NOK million (USD . million). Consequently, NOK million
(USD . million) of total NOK million of the indemnification loans have been taken to profit and loss. The selement consists of
approximately NOK million (USD . million) to be seled through an existing escrow account which the Company holds with Nordea with
the balance seled in one payment of approximately NOK million (USD . million) by the end of February .
See note to the consolidated financial statements for details of the Company’s interest-bearing liabilities.
USD IN THOUSAND SHARE CAPITAL SHARE PREMIUM
OTHER EQUITY AND
RETAINED EARNINGS
UNCOVERED LOSSES TOTAL
Equity at January , , , ,
Share issue , , ,
Profit for the year -, -,
Equity at December , , , , ,
Profit for the year -, -,
Equity at December , , , , ,
At December , , REC Silicon ASA had , shareholders (, at December , ). The total number of outstanding shares
was ,, at December , and at December , , each with a par value of NOK .
CAPITAL INCREASE/PRIVATE PLACEMENT
No capital increase has taken place in . However, see note R Event aer reporting period, regarding private placement in January .
On October , , the Company raised approximately NOK , million in gross proceeds through the Private Placement of
,, new shares, at a price per share of NOK ..
The Private Placement consisted of two separate tranches: one tranche with ,, new shares in the Company and a second tranche
with ,, new shares. The selement of Tranche occurred on October , and the selement for Tranche occurred on
November , following approval by an Extraordinary General Meeting in the Company of the issuance of the New Shares under
Tranche . The completion of Tranche was subject to approval by the Company’s Board of Directors pursuant to an authorization granted
by the Company’s Annual General Meeting held on May , . The Board of Directors of REC resolved to issue ,, new shares
in the Company, referred to as the “Tranche ” shares.
F INTEREST BEARING LIABILITIES
G EQUITY
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
The registration of the new shares issued in Tranche with the Norwegian Register of Business Enterprises was completed on October ,
and the Company received proceeds of NOK . million (approximately USD . million) net of the brokers fee on October ,
. Subsequent to this registration, the new share capital of the Company was NOK ,,, divided into ,, shares of
NOK par value.
The registration of the new shares issued in Tranche with the Norwegian register of Business Enterprises was completed on November ,
and the Company received proceeds of NOK . million (approximately USD . million) net of the brokers fee on November ,
. Subsequent to this registration, the new share capital was NOK ,, divided into ,, shares of NOK par value.
Employee benefit expenses
USD IN THOUSAND
Payroll - -
Social security tax - -
Pension expense including social security tax -
Other employee related costs - -
Employee benefit expenses - -
The average number of employees measured in man-years was . during and . for . There were no loans or guarantees to
employees at December , and .
Payroll includes compensation to Board of Directors. For compensation and shareholdings for Group management and Board of Directors
see note to the consolidated financial statements.
PENSION PLANS
At December , the Company had no employees and had thereby stopped to maintain a defined contribution pension plan for
employees. As long as the company had employees, the company maintained a contribution plan that fulfilled the requirements of
Norwegian law: “Lov om obligatorisk tjenestepensjon” during .
H EMPLOYEE BENEFITS
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
Recognized income tax expense
USD IN THOUSAND
Current income tax benefit (+) / expense (-) for the year
Total deferred tax benefit (+) / expense (-) for the year
Changes in estimates related to prior years) ,
Total income tax benefit (+) / expense (-) for the year in the income statement ,
)
See note Q Contingent Liabilities in relation to the reversal of the estimated tax expense of USD , thousands in .
Relationships of income tax expense/benfit to profit /loss before taxes
USD IN THOUSAND
Profit/Loss for before taxes -, -,
Tax calculated at domestic tax rate of , ,
Expenses not deductible for tax (-) /reversal (+)(permanent differences)
)
,
Impairment loss (permanent differences)
)
-, -,
Other permanent differnces
)
, ,
Effects of not recognized deferred tax assets, including reversal of previous years -, -,
Current income tax benefit (+) / expense (-) for the year
Changes in estimates related to prior years ,
Total income tax benefit (+) / expense (-) for the year in the income statement ,
Effective tax rate
)
Reversal of prior years’ calculated interest on tax liability
)
Impairment of financial assets.
)
Other permanent differences consist of income and cost registered in USD financial statement, but not applicable for tax calculation, and income and cost registered
in NOK Tax financial statement, but not applicable for the USD financial statement.
Current income tax
USD IN THOUSAND
Profit/Loss for before taxes -, -,
Impairment and losses on shares and loans - permanent differences , ,
Expenses not deductible for tax (+) / reversal (-) (permanent differences) -,
Other permanent differnces
)
-, -,
Changes in temporary differences , ,
Basis for income tax before utilization (-) / increase (+) of tax losses carried forward -, -,
Utilization (-) / increase (+) of tax losses carried forward , ,
Basis for current tax in the income statement
Estimated percent current income tax
Current income tax benefit (+) expense (-) for the year
Basis for current tax in the income statement
Cost for capital increase -,
Tax loss caried forward ,
Basis for current tax in balance sheet
Current tax asset (+) / liability (-)
)
Other permanent differences consist of income and cost registered in USD financial statement, but not applicable for tax calculation, and income and cost registered
in NOK Tax financial statement, but not applicable for the USD financial statement.
I INCOME TAXES
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
Specification of temporary differences and tax losses, deferred tax assets and liabilities
USD IN THOUSAND
Fixed assets - -
Up-front fee and Capitalized borrowing cost
Interest bearing liabilities -, -,
Derivatives -,
Net urealized gains on non-current foreign exchange receivables and liabilities , ,
Other -, -,
Tax losses carried forward
)
-, -,
Total temporary differences and tax loss carried forward -, -,
Tax percentage
Deferred tax assets (-) / liabilities (+) -, -,
Deferred tax assets not recognized , ,
Deferred tax assets (-) / liabilities (+) in the balance sheet
Change in deffered tax assets (-)/ liabilities (+) in the balance sheet
Total deferred tax benefit (-)/ expense (+) for the year
)
Tax losses carried forward expressed in NOK have increased in , however due to translation differences, the tax losses carried forward have decreaased when
expressed in USD. See following table
The following are the deferred tax liabilities (+) and assets (-) recognized by the Company and movement during and
USD IN THOUSAND
BALANCE
JAN ,
RECOGNIZED
IN INCOME
RECOGNIZED
IN EQUITY
TRANSLATION
DIFFERENCES
BALANCE
DEC ,
Fixed assets - -
Up-front fee and capitalized borrowing cost - -
Interest bearing liabilities -, , -,
Derivatives -, ,
Net urealized gains on non-current foreign exchange receivables and liabilities , , -, ,
Other -, -,
Tax losses carried forward -, -, , -,
Total -, , , -,
USD IN THOUSAND
BALANCE
JAN ,
RECOGNIZED
IN INCOME
RECOGNIZED
IN EQUITY
TRANSLATION
DIFFERENCES
BALANCE
DEC ,
Fixed assets - -
Up-front fee and capitalized borrowing cost , -
Interest bearing liabilities -, - -,
Derivatives -, - -,
Net urealized gains on non-current foreign exchange receivables and liabilities , -, , ,
Other -, - -,
Interest limitation -, ,
Tax losses carried forward -, -, -, -, -,
Total -, -, -, -, -,
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
Specification of other operating expenses
USD IN THOUSAND
Operating lease expenses - -
Audit remuneration - -
Consultancy fee - -
Insurance - -
Other operating expenses - -
Total Other operating expenses -, -,
Audit remuneration
USD IN THOUSAND
Statutory audit - -
Other non-audit services -
Total auditor's remuneration expensed - -
Future payment obligations
The future aggregate minimum payment obligation are as follows
USD IN THOUSAND OPERATING LEASE OTHER TOTAL OPERATING LEASE OTHER TOTAL
No later than year
Later than year but not later than years
Later than years
Total
J OTHER OPERATING EXPENSES
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
INTEREST INCOME, INTERNAL
The Company conducts financing for the Group. The Company has loans to the US operation and minor receivables on REC Silicon Pte Ltd.
See note D and M. In the Company and the US borrowers agreed to make addendums to the loan agreements. Due to the borrowers’
financial position and outlook for the next two years ( and ) no interest should be calculated and paid. In the Company and
the borrowers agreed to make new addendums to the loan agreements. Due to the borrowers’ financial position and outlook for the next two
years ( and ) no interest should be calculated and paid. If the circumstances change during the period, the interest shall be
changed back to the interest described in the loan agreements. No interest has been recognized in , and .
OTHER FINANCIAL INCOME
Other financial income consists of reversal of derivatives and partly reversal of the indemnification loan.
On October , the Company and Nordea entered into an agreement to sele claims associated with the indemnification loans.
Under the agreement Nordea releases all claims against the Company for NOK million (USD . million). Consequently, NOK million
(USD . million) of total NOK million of the indemnification loans have been taken to profit and loss. The selement will consist of
approximately NOK million (USD . million) to be seled through an existing escrow account which the Company holds with Nordea with
the balance seled in one payment of approximately NOK million (USD . million) by the end of February .
INTEREST EXPENSES, EXTERNAL
Specification of interest expenses, external
USD IN THOUSAND
Calculated interest on tax liability -
Interest USD Senior Secured bond -, -,
Total Interest expenses, external -, -,
Interest expenses on USD Senior Secured bond include expensing of upfront fees, see note to the consolidated financial statements.
OTHER FINANCIAL EXPENSES
Other financial expenses of USD , thousand in , refers to reversal of accrued interest on tax liabilities solved in .
CURRENCY GAINS AND LOSSES
Specification of net currency gains and losses
USD IN THOUSAND
Net currency gains on liabilities denominated in NOK ,
Net currency gains / losses on other - mainly bank deposit ,
Total Net currency gains and losses ,
K INTEREST AND CURRENCY
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
DERIVATIVES
Derivatives consisted of an option contract as part of the indemnification agreement associated with the REC Wafer bankruptcy. On October
, the Company and Nordea entered into an agreement to sele claims associated with the indemnification loans. Consequently, the
derivative has been taken to profit and loss, NOK . million (USD . million). The liability for the option contract related to the
indemnification loans is zero at December , .
Specification of other current liabilities
AT DECEMBER USD IN THOUSAND
Accrued interest on interest-bearing liabilities , ,
Accrued operating costs
Total Other current liabilities , ,
Impairment of shares in REC Silicon AS
USD IN THOUSAND
At cost January , ,
New Shares
At cost December , ,
Accumulated impairment at January -, -,
Impairment -,
Accumulated impairment at December -, -,
Carrying value at December
REC Silicon ASA owns all the shares in REC Silicon AS which owns REC Silicon Inc. that is the holding company of the USA operations. In
addition, REC Silicon AS owns all the shares in REC Silicon Pte Ltd.
In REC Silicon AS impaired the value of the shares in REC Silicon Pte Ltd with USD . million. As a consequence of the impairment
loss in REC Silicon AS, REC Silicon ASA impaired their shares in REC Silicon AS.
REC Silicon AS shares in REC Silicon Inc, were impaired to zero in .
L DERIVATIVES, OTHER CURRENT LIABILITIES
M IMPAIRMENT OF FINANCIAL ASSETS
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
Impairment of loan to US operations
USD IN THOUSAND
Par value at January ,, ,,
Accumulated impairment at January -, -,
Carrying value at January , ,
Addition
Impairment -, -,
Carrying value at December , ,
Par value at December ,, ,,
Accumulated impairment at December -, -,
The impairment loss in represents the book value in excess of the fair value of loans to REC Silicon ASA’s US subsidiaries.
Estimates of the value of US operations were calculated using the fair values of financial assets and liabilities held by the US entities and
the net present value of cash flows of operations in the United States.
Impairment of receivables/loan to REC Silicon Pte Ltd (Singapore)
USD IN THOUSAND
Par value at January ,
Accumulated impairment at January
Carrying value at January ,
Addition ,
Impairment -,
Carrying value at December ,
Par value at December , ,
Accumulated impairment at December -,
The Company has impaired the receivables/loan to REC Silicon Pte. Ltd due to the subsidiary’s financial situation and obligations.
REC Silicon ASA did not conduct any activities associated with research and development during and .
N RESEARCH AND DEVELOPMENT
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
At December , bank guarantees amounted to USD , thousand (USD , thousand at December , ). These guarantees
were cosigned by REC Solar.
The Company and some of its subsidiaries are jointly and severally liable for certain loans established by the Company.
• Relevant loan agreement at December , was as follows:
– REC: USD Senior Secured Callable bond, USD million. The tenor is from April , to April ,
• The Company and the following subsidiaries of the Company are jointly and several liable for the above-mentioned loan at December ,
: REC Silicon AS, REC Silicon Inc., REC Advanced Silicon Materials LLC, REC Solar Grade Silicon LLC REC Silicon Pte. Ltd.
Related parties’ transactions for the Company are primarily interest income (see the income statement and note K) and loans to its
subsidiaries (see note D and M). These loans are included in non-current receivables from subsidiaries (see the balance sheet). Group
Management and Board of Directors’ compensation, ownership of shares and options, loan agreements and guarantees are shown in note
to the consolidated financial statements.
On September , , REC Silicon was informed by the Norwegian Tax Administration through legal counsel that issues raised to deny
deductions taken by REC Silicon during tax years through had been dropped. In addition, the Norwegian Tax Administration
informed that aer a thorough examination, also considering the elapsed time, they did not find a reason to move forward with other issues
raised in the dra decision including the classification of capital inflows as equity deposits. As a result, the tax benefit of USD . million
for represents the reversal of estimated tax expense previously reported by the Company as a result of this examination. In addition,
accrued interest of USD . million was reversed in .
CAPITAL INCREASE
On January , the Company successfully completed a private placement of Equity with a gross proceeds of NOK million
(,, shares at NOK ). The new share capital of the Company is NOK ,,, divided into ,, shares, each with a
par value of NOK .
O GUARANTEES AND INDEMNIFICATION AGREEMENTS
P RELATED PARTIES
Q CONTINGENT LIABILITIES
R EVENTS AFTER THE REPORTING PERIOD
Notes to the financial statements,
REC Silicon ASA
REC Silicon Annual Report 2021
REC Silicon Annual Report 2021
AUDITOR’S REPORT
KPMG AS
Sørkedalsveien 6
Postboks 7000 Majorstuen
0306 Oslo
Telephone
+47 45 40 40 63
Internet
www.kpmg.no
Enterprise
935 174 627 MVA
To the General Meeting of REC Silicon ASA
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of REC Silicon ASA, which comprise:
• The financial statements of the parent company REC Silicon ASA (the Company), which
comprise the balance sheet as at 31 December 2021, the income statement and statement of
cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, and
• The consolidated financial statements of REC Silicon ASA and its subsidiaries (the Group),
which comprise the consolidated statement of financial position as at 31 December 2021, the
consolidated statement of income, consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the consolidated financial statements, including a summary of
significant accounting policies.
In our opinion:
• the financial statements comply with applicable statutory requirements,
• the financial statements give a true and fair view of the financial position of the Company as at
31 December 2021, and its financial performance and its cash flows for the year then ended in
accordance with Norwegian Accounting Act and accounting standards and practices generally
accepted in Norway.
• the consolidated financial statements give a true and fair view of the financial position of the
Group as at 31 December 2021, and its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards as adopted by the
EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company and the
Group as required by laws and regulations and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 21 years from the election by the general meeting of the
shareholders on 14 May 2001 for the accounting year 2001.
Auditor’s report
REC Silicon Annual Report 2021
Independent Auditor's Report - REC Silicon ASA
2
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Asset Impairment
Refer to the section “Risk Factors” in the Board of Director's report, the accounting policies in note 2.8,
the critical accounting judgments and key sources of estimation uncertainty described in Note 4, and
Note 8 in the consolidated financial statements and parent company financial statements note M.
The Key Audit Matter
How the matter was addressed in our audit
The impairment assessment of the Solar
Materials CGU with a total carrying value of
USD 19,2 million is considered a risk area due
to decreases in the market capitalization of the
Company, recurring net operating losses, and
changes in the timing of the anticipated restart of
FBR production at the Moses Lake production
facility.
The recoverable amount is determined based on
value in use calculations which rely on external
factors, managements’ assumptions, and
estimated future performance. Key assumptions
applied in management's assumptions are future
revenues (sales prices and sales volume), cost
of major inputs, conversion costs and efficiency
(production volume), and maintenance capital
expenditures, in addition to the timing of restart
of the Moses Lake production facility.
Significant professional judgement is required
when evaluating whether management's
assessment are reasonable and supportable.
In the parent company financial statements, the
abovementioned impairment assessment
resulted in an impairment of loans to
subsidiaries of USD 25,7 million.
In the consolidated financial statements, no
additional impairment or reversal of impairment
was recognized.
Our audit procedures in this area included:
- We evaluated the historical accuracy of
management's budgets and forecasts and
challenged management on the current year
cash flow forecasts as well as the timing of
future cash flows;
- We evaluated the growth assumptions and
management's future business plan
assumptions;
- We engaged our own valuation specialists
to assess the mathematical and
methodological integrity of management's
impairment models and the discount rates
applied with reference to market data;
- We evaluated management’s sensitivity
analysis to determine the impact of
reasonably possible changes and by
comparing to our own sensitivity analysis;
- We considered the impairment disclosures
in light of the requirements and if information
regarding key assumptions and sensitivities
adequately reflected the underlying assets
impairment assessments; and
- We compared the carrying value of loans to
the subsidiaries with the calculated value of
the assets, to assess if valuation of loans is
consistent with the value of the assets.
Other Information
The Board of Directors and the Managing Director (management) are responsible for the information
in the Board of Directors’ report and the other information accompanying the financial statements. The
other information comprises information in the annual report, but does not include the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the information in the Board of Directors’ report nor the other information accompanying the financial
statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is to
consider if there is material inconsistency between the Board of Directors’ report and the other
Auditor’s report
REC Silicon Annual Report 2021
Independent Auditor's Report - REC Silicon ASA
3
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other accompanying
information otherwise appears to be materially misstated. We are required to report if there is a
material misstatement in the Board of Directors’ report or the other information accompanying the
financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
• is consistent with the financial statements and
• contains the information required by applicable legal requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Governance and Sustainability.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with the Norwegian Accounting Act and accounting standards and practices generally
accepted in Norway, and for the preparation and true and fair view of the consolidated financial
statements of the Group in accordance with International Financial Reporting Standards as adopted
by the EU, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's or the Group's internal control.
• evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• conclude on the appropriateness of management’s use of the going concern basis of
accounting, and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company and the
Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the
Auditor’s report
REC Silicon Annual Report 2021
Independent Auditor's Report - REC Silicon ASA
4
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company and the Group to cease to
continue as a going concern.
• evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves a true and fair view.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance with Regulation on European Single Electronic Format (ESEF)
Opinion
We have performed an assurance engagement to obtain reasonable assurance that the financial
statements with file name “549300VPZURYDFG0AB60-2021-12-31-en” have been prepared in
accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the
accompanying Regulation on European Single Electronic Format (ESEF).
In our opinion, the financial statements have been prepared, in all material respects, in accordance
with the requirements of ESEF.
Management’s Responsibilities
Management is responsible for preparing, tagging and publishing the financial statements in the single
electronic reporting format required in ESEF. This responsibility comprises an adequate process and
the internal control procedures which management determines is necessary for the preparation,
tagging and publication of the financial statements.
Auditor’s Responsibilities
Our responsibility is to express an opinion on whether the financial statements have been prepared in
accordance with ESEF. We conducted our work in accordance with the International Standard for
Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of
historical financial information”. The standard requires us to plan and perform procedures to obtain
reasonable assurance that the financial statements have been prepared in accordance with the
European Single Electronic Format.
Auditor’s report
REC Silicon Annual Report 2021
Independent Auditor's Report - REC Silicon ASA
5
As part of our work, we performed procedures to obtain an understanding of the company’s processes
for preparing its financial statements in the European Single Electronic Format. We evaluated the
completeness and accuracy of the iXBRL tagging and assessed management’s use of judgement. Our
work comprised reconciliation of the financial statements tagged under the European Single Electronic
Format with the audited financial statements in human-readable format. We believe that the evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Oslo, 24 March 2022
KPMG AS
Øyvind Skorgevik
State Authorised Public Accountant
Auditor’s report
REC Silicon Annual Report 2021
DEFINITION OF ALTERNATIVE PERFORMANCE MEASURES
An Alternative Performance Measure (APM) is a measure of historic or future financial performance, financial position, or cash flows other
than a financial measure defined or specified in the applicable financial reporting framework.
The Company has identified the following APMs used in reporting:
EBIT EBIT is an acronym for Earnings Before Tax and represents profit/loss excluding income tax expense/benefit, net
financial items, and share of profit/loss from investments in associates.
EBIT is reflected on the consolidated statement of income on the line titled EBIT. EBIT has been reported as a
loss of USD . million for the year ended December , and a loss of USD . million for the year ended
December , .
EBIT Margin EBIT margin is calculated by dividing EBIT by revenues. EBIT and revenues are reflected on the Company’s
statement of income, in note Segment Information, and in the financial highlight tables in this report in lines
titled similarly.
EBIT margin has been calculated and is reported in the financial highlight tables for REC Silicon Group.
EBIT margin has been calculated and is reported in the financial highlight tables for REC Silicon Group.
EBITDA EBITDA is an acronym for Earnings Before Tax, Depreciation, and Amortization. EBITDA is EBIT excluding
depreciation, amortization and impairment.
EBITDA is reflected on the consolidated statement of income on the line titled EBITDA. EBITDA has been
reported as a gain of USD . million for the year ended December , and a gain of USD . million for
the year ended December , .
EBITDA Margin EBITDA margin is calculated by dividing EBITDA by revenues. EBITDA and revenues are reflected on the
Company’s statement of income, in note Segment Information, and in the financial highlight tables in this report
in lines similarly titled.
EBITDA margin has been calculated and is reported in the financial highlight tables for REC Silicon Group, in the
key financials table for each operating segment.
EBITDA Contribution EBITDA contribution is used to describe the contribution of each of the operating segments, other, and
eliminations to the Company’s total EBITDA. For the operating segments, EBITDA contributions represents
revenues less cost of manufacturing excluding depreciation and amortization. For other, EBITDA contribution
represents primarily operating costs.
A table reconciling the EBITDA contribution of each operating segment along with other and eliminations to the
Company’s total EBITDA can be found in note Segment Information.
EBIT Contribution EBIT contribution is used to describe the contribution of each of the operating segments, other, and eliminations
to the Company’s total EBIT. For the operating segments, EBIT contributions represents revenues less cost of
manufacturing including depreciation and amortization. For other, EBIT contribution represents primarily
operating costs.
A table reconciling the EBIT contribution of each operating segment along with other and eliminations to the
Company’s total EBIT can be found in note Segment Information.
REC Silicon Annual Report 2021
Equity Ratio The equity ratio is calculated by dividing total shareholders’ equity by total assets. Total shareholders’ equity and
total assets are reflected on lines similarly titled on the Company’s statement of financial position.
At December , , the equity ratio is . percent and is calculated by dividing USD . million total
shareholders’ equity by USD . million in total assets.
At December , , the equity ratio is . percent and is calculated by dividing USD . million total
shareholders’ equity by USD . million in total assets.
Net Debt Net debt is the carrying value of interest-bearing debt instruments less cash and cash equivalents.
The carrying value of debt can be found in note Borrowings in the table under the caption carrying amount and
cash can be found in the statement of financial position on the line titled cash and cash equivalents.
At December , , net debt was USD . million or USD . million total carrying value of the
Company’s debt (from note Borrowings) plus . million current and non-current lease liabilities (from the
statement of financial position) less USD . million in cash in cash equivalents.
At December , , net debt was USD . million or USD . million total carrying value of the
Company’s debt (from note Borrowings) plus . million current and non-current lease liabilities (from the
statement of financial position) less USD . million in cash in cash equivalents.
Nominal Net Debt Nominal Net debt is the contractual repayment values of interest-bearing debt instruments (excluding interest)
less cash and cash equivalents.
The contractual repayment values of debt can be found in note Borrowings in the table under the caption
contractual repayments including interest and cash can be found in the statement of financial position on the line
titled cash and cash equivalents.
At December , , nominal net debt was USD . million or USD . million contractual repayment
values of the Company’s debt plus . million current and non-current lease liabilities (from the statement of
financial position) less USD . million in cash in cash equivalents.
At December , , nominal net debt was USD . million or USD . million contractual repayment
values of the Company’s debt plus . million current and non-current lease liabilities (from the statement of
financial position) less USD . million in cash in cash equivalents.
Graphic production: Artbox AS
REC Silicon ASA
Lysaker Torg 5, 3 etg.
PO Box 63
1324 Lysaker
Norway
Phone +47 407 24 086
About REC Silicon
gases to the solar and electronics industries worldwide. We combine over 30 years experience and best-in-class
proprietary technology to deliver on customer expectations. Our two U.S. based plants have a capacity of more
than 20,000 MT high-purity polysilicon. REC Silicon is headquartered in Lysaker, Norway and listed on the Oslo
stock exchange under the ticker: RECSI.
For more information, go to: www.recsilicon.com