REC Silicon

Annual Report (ESEF) • Mar 25, 2025

REC Silicon ASA Annual report 2024 Advancing Materials, Advancing Technology REC Silicon is a global leader in silane-based, high-purity silicon materials. With two U.S.-based manufacturing facilities and sales support offices in both Asia and the United States, REC Silicon is leading energy and technology providers worldwide in shaping the future withadvanced silicon materials.   Year in brief 4 Highlights and key figures 4 Letter from the CEO 5 This is REC Silicon 7 Group management 11 Board of Directors 12 Board of Directors’ report 13 Sustainability 26 Corporate governance 71 Financials 79 Consolidated financial statements 80 Statement of compliance 130 Parent company financial statements 131 Auditor’s report 147 Definition of alternative performance measures 153 REC Silicon annual report 2024   Highlights and key figures Finalized Corporate Bank loans $300 million in term loans all guaranteed by Hanwha Solutions December 2024 cash balance of USD 10.3 million Unsuccessful qualification for ultra-high purity granular polysilicon Production of polysilicon discontinued at both the Moses Lake and Butte facilities Transitioning to pure play Silicon Gas producer REC Silicon Group – re-presented for discontinued operations USD IN MILLION 2024 2023 Revenues 140.8 140.8 EBITDA -17.9 -15.7 EBITDA margin -12.7% -11.2% EBIT excluding impairment charges -29.2 -28.6 Impairment charges -49.7 -7.0 EBIT -78.9 -35.5 EBIT margin -56.1% -25.2% Net financial items -25.3 131.5 Profit/loss before tax from continuing operations -104.2 95.9 Profit/loss from continuing operations -104.2 95.9 Profit/loss from discontinued operations, net of tax -353.1 -65.4 Profit/loss from total operations -457.4 30.5 Earnings per share, basic and diluted (USD) from continuing operations -0.25 0.23 Earnings per share, basic and diluted (USD) from total operations -1.09 0.07 Polysilicon production (Siemens) in MT 682 1,101 Polysilicon sales (Siemens) in MT 914 745 Silicon gas sales in MT 2,561 3,075 Revenues 140.8 USDm EBITDA -17.9 USDm REC Silicon annual report 2024 REC Silicon annual report 2024 4 4 Year in brief Year in brief | Highlights and key figures Year in brief | Highlights and key figures Letter from the CEO The year 2024 was challenging for REC Silicon on multiple fronts. As part of our strategic alignment, we exited the Electronic Grade Polysilicon market and ceased production in Butte due to persistently high electricity costs and the associated impact on necessary investment and profitability. While the decision was difficult, we expect it to enhance the overall profitability of our Butte operations in the long run. Despite substantial efforts and meaningful operational improvements, we also made the difficult decision to shut down our Moses Lake facility and discontinue our Granular Polysilicon operation. This decision was driven by uncertainties regarding the timing, cost, yield, consistency and volume impacts of the improvements needed to meet our product targets, specifications and the market requirements. The resulting operational and financial pressures led to several unfortunate consequences, including a sharp decline in our share price, the closure of the Moses Lake facility, and the regrettable layoff of many dedicated and talented employees as part of a broader restructuring and transition to silicon gases. These unfortunate events have impacted all our stakeholders including share- holders, employees, directors, management, and suppliers. While we acknowledge the difficulties of this situation, our team remains fully committed to executing the necessary steps for a successful turnaround. Encouragingly we are already seeing positive signs emerging from the deci- sive actions taken in response to the recent financial challenges. The Company success- fully extended its existing loan agreements and secured an additional $40M loan from Hanwha International LLC, an affiliate of our largest shareholders, to support the transition into a specialized silicon gas manufacturing company. While additional funding will be required, we continue to develop a compre- hensive financing plan aimed at restoring profitability. In parallel, we are actively identifying oppor- tunities to reduce costs and drive revenue growth by increasing sales volumes and optimizing pricing for our silicon gases. Our immediate focus is on enhancing operational efficiency at our Butte Montana facility and leveraging our strengths as a leading supplier in the industry. Through strategic cost-cutting REC Silicon annual report 2024 REC Silicon annual report 2024 5 5 Year in brief Year in brief | Letter from the CEO Year in brief | Letter from the CEO measures, operational streamlining, and market expansion initiatives, we will continue to stabilize the Company. While I am confident that better days lie ahead, I fully recognize the significant hurdles the Company must overcome in the near term to stabilize operations and restore stakeholder confidence. This objective remains our top priority. We are actively executing on all those initiatives that will together bring needed stability to the Company through this transi- tion. The Company remains laser focused on leveraging its core strengths and optimizing production capacity at our Butte, Montana facility. As a leading supplier of silicon gases, our competitive advantages and product differentiation are well known across the industry and by our customers. While our primary focus is on silicon gas production at Butte, we are also preserving the optionality of restarting the Moses Lake silane facility when market demand, particu- larly from silicon anode manufacturers or other emerging applications, reaches a level that justifies resuming production. Although this may take time to materialize, we are proactively taking the necessary steps now to ensure a seamless and successful restart when the opportunity arises. Despite recent setbacks, we firmly believe in the Company’s potential for a stronger and more resilient future. We are well positioned in a growing market, equipped with industry leading assets and technology, and remain confident that we will navigate the current challenges and emerge as an even stronger silicon gases manufacturing company. Kurt Levens President and CEO REC Silicon annual report 2024 REC Silicon annual report 2024 6 6 Year in brief Year in brief | Letter from the CEO Year in brief | Letter from the CEO This is REC Silicon With more than 40 years history in the industry, REC Silicon is leading energy and technology providers worldwide in shaping the future with advanced silicon materials From its two US-based manufacturing facilities in Moses Lake, Washington and Butte, Montana, REC Silicon is a leading producer of silane-based high purity silicon materials that is shaping the future with advanced materials. Silane gas - The core feedstock The core product for REC Silicon’s activities is silane gas (SiH4). It is the simplest and purest form of silicon and is used as a stand-alone product for use in semiconductors, flat panel displays, solar panels and as material for silicon anode batteries. It is also refined into specialty gases for advanced uses in the semiconductor industry. Growth trends within digitalization, renewable energy and electric mobility have placed REC Silicon in a position to seize upon market opportunities for the Company’s signature silane gas-based operations. 7 7 This is REC Silicon This is REC Silicon This is REC Silicon Strategy and business model REC Silicon is executing a strategic transition to a pure-play silicon gas producer positioning the Company for future growth. The production of polysilicon at the Butte facility was shut down in 2024 and the planned restart at Moses Lake was discontinued on December 30, 2024. This will allow the Company to capitalize on future silicon gas growth opportunities. The aim is to optimize the utilization of available silane gas capacity and to high grade the product portfolio to focus on higher value offerings where the Company has clear strength, market positioning and product differentiation in growing markets. REC Silicon will aggressively seek to cut costs to return to prof- itability. Operations will be optimized by shutting down non-core facilities, maintaining optionality and focusing on plant capacity loading. The capital structure will be optimized to position the Company for growth. The strategic priority is first to fill up the 7,400MT silane gas capacity at Butte with silane and specialty gases for the semi- conductor, flat panel display and solar PV industries. In addition, the Butte facility will supply monosilane for the silicon anode battery industry, where the first offtake agreement has already been signed. The 24,000MT silane gas capacity at Moses Lake will be kept in a safe and recoverable mode that incurs minimal interim costs, while allowing the facility to restart to capitalize on future demand for silicon anode materials or other gases. Value chain The key raw material for REC Silicon’s silane gas production is 98% pure metallurgical grade silicon (MGS), primarily sourced from the US, Brazil, and Australia. MGS is mined from quartz, the second most prevalent material in the earth’s crust. REC Silicon uses patented and proprietary hydrogenation and distillation processes that remove the impurities to levels meas- ured in parts per trillion. The process is closed loop, meaning continuous while also recycling byproducts of the chemistry A silicon materials company providing enabling materials for the digital revolution and energy industry REC Silicon annual report 2024 REC Silicon annual report 2024 8 8 This is REC Silicon This is REC Silicon This is REC Silicon process, resulting in optimal efficiency and reduced process waste. Other agents like natural gas, hydrogen and chemicals are supplied locally in the US, with some additional high-grade agents sourced from Asia. REC Silicon sources from about 200 suppliers, of which the 50 largest make up around 70% of the total vendor volume. Materials make up more than half of the vendor volume, manu- factured products about one quarter, while the rest is split between various types of services. Nearly half of the vendor volume is sourced in the US, while the rest is split between Brazil, Europe, Australia and Asia. The production processes require significant amounts of elec- tricity, which is supplied locally based on pre-agreed volumes with public utilities that cover all of the existing production capacity. The finished silane gas or specialty gases are distributed using a fleet of special silane gas containers, where REC Silicon owns the world’s largest fleet. REC Silicon annual report 2024 REC Silicon annual report 2024 9 9 This is REC Silicon This is REC Silicon This is REC Silicon Markets Substantial growth in US semiconductor capacity The semiconductor industry is a core market for REC Silicon, where silane and specialty gases are sold to clients in the US, Asia and Europe. To reduce reliance of foreign producers of critical components, US authorities has announced multiple supportive initiatives to support investments in domestic capacity. Thus, significant investments in US semiconductor manufacturing capacity have been announced, and the US semiconductor manufacturing capacity is expected to double from 2022 to 2032. REC Silicon enjoys a strong market position in the US with limited competi- tion from outside producers. Reshoring of US solar cell capacity Silane gas for solar cell manufacturing is currently a modest part of REC Silicon’s silane gas sales. As for semiconductors, there is a strong push to reshore solar cell production in the US. Current production capacity is 1 GW, but there are 12 GW of capacity under construction with announced capacity that could result in a 50-fold increase in total cell manufacturing capacity in the US. There is a similar strong legislative push in Europe to boost solar cell production, which could potentially grow 15 times towards 2030. REC Silicon’s position in both markets is strong with limited outside competition. Anode battery industry Improving battery performance and costs is key to accelerate the adoption of EVs globally. Next generation silicon anode materials are central to improve battery density, weight, costs and range and will start being supplied to battery and cell makers from 2025 and onwards. Several of the large automakers have already signed long-term supply agreements for next genera- tion silicon active anode materials. The main suppliers of such materials are all located near REC Silicon’s silane gas manufac- turing sites, where there is significant available capacity to grow volumes. REC Silicon annual report 2024 REC Silicon annual report 2024 10 10 This is REC Silicon This is REC Silicon This is REC Silicon Group management Kurt Levens President & CEO Mr. Levens joined the organization in 2002, CEO since September 2022. Education Bachelor of Science, United States. Military Academy at West Point. Career Mr. Levens has held executive and mana- gerial positions in Commercial, Operations and Maintenance, Projects and General Management in the Electronic Materials- Gases and Petroleum industries. Jack Yun CFO Mr. Yun joined the organization in 2022. Education MBA in Corporate Finance from the Ohio State University and MA in Economics from Yeonsei University, South Korea. Career Mr. Yun has held executive and managerial positions focusing on business development and strategy, executive management, and financial reporting and control. Prior to REC Silicon, he was Executive Vice President of Hanwha Solutions/Q-cells. Dylan Jung Chief Strategy Officer Mr. Jung joined the organization in 2022. Education Mr. Jung was educated at Seoul National University and CEIBS. Career Mr. Jung was previously in the Strategy Division at Hanwha Solutions Corporation and the Planning Section Leader, Sales for Renewable Energy Components at Hanwha Business Group. REC Silicon annual report 2024 REC Silicon annual report 2024 11 11 This is REC Silicon This is REC Silicon | Group management This is REC Silicon | Group management Board of Directors Tae Won Jun Chairman of the Board Key Experience Currently Chief Strategy Officer of the Strategy Division at Hanwha Corp. since 2019, and Chief Executive Officer at FutureProof since 2022. Previously Executive Director for Morgan Stanley PE Asia (2016-2019), and Director, M&A at Hanwha Group (2012-2016). Education MBA, Wharton School, and Bachelor in Finance, Korea University Jooyong Chung Director Key Experience Current Head of M&A and Executive Vice President Hanwha Aerospace. Previously Managing Director and Head of PE at UTC Investment, Daesang Group (2018-2021), Director, MBK Partners, (2008-2017), and Vice President, the Carlyle Group, (2004- 2008). Education MBA, Harvard Business School, and BA in Economics, Seoul National University Dr. Renate Oberhoffer-Fritz Director Key Experience Currently Vice Dean Talent Management and Diversity, and Professor, School of Medicine and Health, Technical University Munich, Advisory Board Member Fresenius University of Sustainability, Vienna Education MD, Ph.D., Mainz and Ulm University, and Fellowship at Imperial College London Vivian Bertseka Director Key Experience Currently Board Member of Transition Zero, Blue Layer. Previously Founding Partner & COO, Just Climate (2020-2022) Investment Director, Generator IM Global Equity, (2015-2020) Growth Equity (2011-2015) Education MBA (distinction) from INSEAD, and Artium Baccalaureus in Applied Mathematics, Harvard University Robert Neuhauser Director Key Experience Currently Board Member and Senior Advisor to Tech Companies. Various Global Executive Roles at Siemens AG, 2006-2024. Various Global Business & Leadership Roles at Infineon Technologies AG, 1999- 2005. Education Ph.D., Physical Chemistry, Master Physics Technical University, Munich Germany Massachusetts Institute of Technology M.I.T. PostDoc Fellowship REC Silicon annual report 2024 REC Silicon annual report 2024 12 12 This is REC Silicon This is REC Silicon | Board of Directors This is REC Silicon | Board of Directors Board of Directors’ report 2024 Highlights (compared to 2023) Revenues from continuing operations of $140.8M for both 2024 and 2023 EBITDA loss from continuing operations of ($17.9M) compared to loss of ($15.7M) in 2023 Cash balance of $10.3M on December 31, 2024 Cash decrease of $160.7M in 2024 Cash outflows from operations of $132.0M Cash outflows from investing activities of $89.6M Cash inflows from financing activities of $60.9M Silicon gas sales volumes of 2,561MT compared to 3,075MT in 2023 16.7% Decrease in sales volume 11.0% Increase in average silicon gas prices Total Siemens polysilicon sales volumes of 914MT compared to 745MT in 2023 Semiconductor grade polysilicon sales of 565MT compared to 524MT in 2023 Average semiconductor grade polysilicon price decrease of 0.2% Polysilicon inventory decrease of 233MT Finalized Corporate Bank loans $ 300M in term loans all guaranteed by Hanwha Solutions Production of polysilicon discontinued at the Moses Lake Facility Business Activities REC Silicon ASA was established in Norway on December 3, 1996. The Company is headquartered in Lysaker, Norway Subsidiaries of the Company including ownership and voting rights are presented below. Company Ownership/ voting right Business office REC Silicon AS 100% Bærum REC Silicon Inc 100% Moses Lake, USA REC Solar Grade Silicon LLC 100% Moses Lake, USA REC Advanced Silicon Materials LLC 100% Butte, USA REC Silicon Pte. Ltd. 100% Singapore REC Solar AS 100% Bærum REC Silicon is a leading producer of silane-based high purity silicon materials that is shaping the future with advanced materials. REC Silicon annual report 2024 REC Silicon annual report 2024 13 13 Board of Directors’ report Board of Directors’ report Board of Directors’ report REC Silicon operates a manufacturing facility in Butte, Montana and discontinued the operation of its manufacturing facility in Moses Lake Washington in the USA on December 30, 2024. REC Silicon’s subsidiaries include: REC Silicon Inc, REC Solar Grade Silicon LLC, and REC Advanced Silicon Materials LLC in the United States. The core product for REC Silicon’s activities is silane gas. Silane gas is used as a stand-alone product for use in semiconductors, flat panel displays, solar panels and as material for silicon anode batteries. It is also processed into solar and electronic grade polysilicon and refined into specialty gases for advanced uses in the semiconductor and solar industries. REC Silicon’s transparency statement for 2023 can be found at Corporate Governance | REC Silicon Growth trends within digitalization, renewable energy, and the energy storage transition have placed REC Silicon in a position to seize upon market opportunities for the company’s signature silane gas-based operations. Supported by key US legislative initiatives, the company has positioned itself with low carbon products, in value chains targeting energy transition megatrends. REC Silicon will continue to focus on upgrading its product port- folio, concentrating on silane and specialty gases. The shutdown of electronic-grade polysilicon will allow REC Silicon to capitalize on future silicon gas growth opportunities, including anode material for energy storage. Strategy and objectives REC Silicon’s strategy is to maintain its position as a technolog- ical innovator in the silicon materials industry. REC Silicon intends to improve its competitive position and: Transition to pure-play silicon gas producer Establish and continually improve profitable operations Create customer connections as a provider of valuable solutions Optimize efficiency of production assets Focus on cost control Focus on continued quality improvements Pursue opportunities for growth through organic means as well as investments Meet the targets as outlined in REC Silicon’s Sustainability Report 2024 Summary Financial highlights Key Financials – REC Silicon Group – re-presented for discontinued operations USD IN MILLION 2024 2023 Revenues 140.8 140.8 EBITDA -17.9 -15.7 EBITDA margin -12.7% -11.2% EBIT excluding impairment charges -29.2 -28.6 Impairment charges -49.7 -7.0 EBIT -78.9 -35.5 EBIT margin -56.1% -25.2% Profit/loss before tax from continuing operations -104.2 95.9 Profit/loss from continuing operations -104.2 95.9 Profit/loss from discontinued operations, net of tax -353.1 -65.4 Profit/loss from total operations -457.4 30.5 Earnings per share, basic and diluted (USD) from continuing operations -0.25 0.23 Earnings per share, basic and diluted (USD) from total operations -1.09 0.07 Polysilicon production (Siemens) in MT 682 1,101 Polysilicon sales (Siemens) in MT 914 745 Silicon gas sales in MT 2,561 3,075 REC Silicon annual report 2024 REC Silicon annual report 2024 14 14 Board of Directors’ report Board of Directors’ report Board of Directors’ report Revenues Revenues from continuing operations were USD 140.8 million for both 2024 and 2023. Increased revenue from polysilicon was offset by decreased revenue from silicon gas. Operations In December 2024, REC Silicon discontinued production of granular polysilicon at its Moses Lake facility. Additionally, during 2024, the Company shut down polysilicon production at its Butte Montana facility. Total granular polysilicon production was 4,037MT during 2024. However, none of the production reached the purity levels required by its offtake contract with QCells. Total Siemens polysilicon production decreased by 419MT (-38.1 percent) to 682MT in 2024, compared to 1,101MT in 2023. Total Siemens polysilicon inventories decreased by 233MT in 2024. Total loaded silicon gas production was 2,639MT in 2024 which was a decrease of 351MT from 2,990MT in 2023. Total silicon gas inventories increased by 78MT during 2024. Earnings EBITDA from continuing operations for 2024 was a loss of USD 17.9 million, compared to an EBITDA loss of USD 15.7 million in 2023. The decrease in EBITDA compared to 2023 is primarily the result of lower EBITDA from the Semiconductor Materials segment. EBITDA contributed by the Semiconductor Materials segment decreased by USD 1.1 million to USD 12.9 million in 2024, primarily due to decreased silicon gas sales. In Other and Eliminations, net operating costs increased by USD 1.1 million due to increased activities in 2024 compared to 2023. Earnings Before Financial Items and Income Taxes (EBIT) from continuing operations for 2024 was a loss of USD 78.9 million. This represents a increased loss compared to an EBIT loss of USD 35.5 million in 2023. Loss from total operations was USD 457.9 million in 2024; this compares to a gain from total operations of USD 30.5 million in 2023. The loss for 2024 is driven by a USD 353.1 million loss from discontinued operations. The loss re-presented from discontinued operations was USD 65.4 million for 2023. The total gain in 2023 was primarily the result of the sale of the Yulin JV which resulted in a gain of USD 135.5 million. 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 its products to add value to its customers and further enhance its competitive position. During 2024, research and development efforts were focused on lab operations to support silicon gas businesses. Cash expenditures for research and development were USD 3.0 million in 2024, compared to USD 1.3 million in 2023. Total expenditures, including depreciation, were USD 3.4 million in 2024 and USD 1.7 million in 2023. REC Silicon annual report 2024 REC Silicon annual report 2024 15 15 Board of Directors’ report Board of Directors’ report Board of Directors’ report 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 appli- cations. The facility uses a silane-based Siemens polysilicon processing technology to produce the highest quality (FZ) polysilicon for use in the semiconductor industry. On February 7, 2024, it was announced that REC Advanced Silicon Materials LLC would be shutting its polysilicon production capacity at its Butte, Montana facility. The production of polysilicon continued until mid-year 2024 to fulfill polysilicon supply obligations to the company’s customers. Key Financials – Semiconductor Materials USD IN MILLION 2024 2023 Revenues 140.7 140.6 EBITDA contribution 12.9 14.0 EBITDA contribution margin 9.2% 9.9% Polysilicon production in MT (Siemens) 682 1,101 Polysilicon sales in MT (Siemens) 914 745 Silicon gas sales in MT 2,561 3,075 Markets The end of 2024 showed improvement in semiconductor and flat panel display (FPD) gas demand. Impacts of tariffs and changes to CHIPS Act or IRA policies have the potential to shift global demand for wafers and materials. While market reports indicated consumer spending remained conservative, downstream value chain capital spending increased compared to previous quarters. Investments focused on equipment and AI systems that improve process efficiency and reduce manufacturing costs. Political instability in several major countries brought uncertainties in how the year finished compared to previously forecasted consumer demand. While GDP growth increased in 2024, the technology goods market showed mixed results. Semiconductor foundry revenue per wafer reached a record high in 2024. Strong demand for AI chips created a sharp rise in chip ASP. While this created a boom for TSMC and NVIDIA, the diversity of the global chip market dampened the effect on the materials sector. Advanced memory sales supporting AI were strong while DRAM and NAND demand was softer in 2024. Factory utilization in the Automotive and Power segments was soft due to low EV growth and lower-than-expected automobile sales globally. Additionally, PC and smartphone sales reached a low point in mid-2024. Overall, factory utilization is expected to have reached a bottom in 2024 and will continue to improve as chip inventories are corrected and global demand grows. REC Silicon annual report 2024 REC Silicon annual report 2024 16 16 Board of Directors’ report Board of Directors’ report Board of Directors’ report Semiconductor Capex between 2021 and 2024 was 8% higher than the previous ten years combined. This strong investment trend is creating an environment for high growth in wafer starts and the associated materials consumption. Focus on advanced logic and memory wafer capacity has a compounding effect on materials demand for silicon gases, as each new technology has higher chemical consumption than the previous node. Many of the new fabs’ start dates have been pushed back due to low utili- zation of existing fabs in 2024. This is expected to be corrected in 2025-2026, and new capacity will be brought online. FPD pricing continues to decline with overcapacity issues for TFT-LCD. Tied to PC and smartphone shipments, OLED demand has been weak. Recovery in smartphone demand is expected in 2025 and will drive higher OLED demand. While geopolitical issues continue to cause strain on the Asia PV markets, domestic US cell producers are expected to start operations in Q1 2025. This will drive new growth in silane sales in the US, with EU PV expansion in early stages as well. Tariff and policy changes in the PV sector could also have a positive effect on US and EU producers. Leading-edge memory and logic producers project continued growth in Q1, which will provide strong demand for our silicon gases products. FPD, Automotive and core memory producers are cautious for 2025 demand, indicating slow growth in these segments. In 2024, the Biden administration finalized the increased 301 tariffs for polysilicon and wafers from China, effective January 2025, However, with the outcome of the election in the United States, market discussion turned to potential changes to the Inflation Reduction Act and the credits for various green energy projects. The United States also announced preliminary duties on Southeast Asian countries. The expectation of these duties, along with increased inventory from oversupply, further drove the decline of the manufacturing base in Southeast Asia. Most of these affected companies have either shuttered operations or refocused on supplying demand from China, while some companies are working on relocating capacity to other coun- tries currently not impacted by the proposed tariffs. Silane gas demand for PV in Asia is experiencing a large oversupply situa- tion due to these factors. The market is not expected to improve in 2025. Financial Performance In 2024, revenues for the Semiconductor Materials segment were USD 140.7 million compared to USD 140.6 million in 2023, a decrease of 0.1 percent. Revenues from polysilicon sales increased by 8.4 percent in 2024 compared to 2023. Total polysilicon sales volumes increased by 22.6 percent from 745MT in 2023 to 913MT in 2024. The increased sales were the result of meeting customer contract requirements. The underlying sales volumes of semi- conductor-grade polysilicon were 565MT during 2024 compared to 524MT during 2023. Average prices realized for semicon- ductor grade polysilicon were nearly unchanged, decreasing by 0.2 percent from 2023. Revenues from silicon gas sales decreased by 7.5 percent in 2024 compared to 2023. Silicon gas sales volumes were 2,561MT, a 16.7 percent decrease compared to 3,075MT in 2023. Average annual prices for silicon gas increased by 11.0 percent. As mentioned, it was announced that REC Advanced Silicon Materials LLC shut down its polysilicon production capacity at its Butte, Montana facility during 2024. Total polysilicon production in the Semiconductor Materials segment decreased by 419MT to 682MT in 2024 compared to 1,101MT in 2023. The underlying production volumes of semiconductor grade poly- silicon decreased by 282MT to 422MT for 2024. Inventories of polysilicon in the Semiconductor Materials segment decreased by 233MT in 2024 as the company sold down inventory to customers. The Semiconductor Materials segment contributed USD 12.9 million of income to EBITDA during 2024. This compares to an EBITDA of USD 14.0 million in 2023. 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. REC Silicon annual report 2024 REC Silicon annual report 2024 17 17 Board of Directors’ report Board of Directors’ report Board of Directors’ report Solar Materials segment REC Silicon manufactured polysilicon for the solar energy markets from its manufacturing facility in Moses Lake, Washington. Key Financials – Solar Materials (Discontinued) USD IN MILLION 2024 2023 Revenues 0.0 0.0 EBITDA contribution 0.0 0.0 Polysilicon production in MT (Granular) 4,037 0 REC Silicon restarted the manufacturing of granular polysilicon for the solar energy markets from its facility in Moses Lake, Washington, during the fourth quarter of 2023. On December 30, 2024, the Company announced the shutdown of granular polysil- icon production for the photovoltaic industry at its manufacturing facility in Moses Lake, Washington. The Moses Lake facility has an annual capacity of 24,000MT of silane gas for its own use, however additional investment would be necessary to deliver to external customers. Financial Performance The Solar Materials segment was classified as discontinued from December 30, 2024. Revenue for 2024 was USD 2.8 million compared to USD 0.4 million in 2023. EBITDA was negative USD 150.9 million in 2024 compared to negative USD 64.8 million in 2023. 2024 saw impairment charges of USD 246.2 million, of which USD 196.4 million is related to polysilicon assets and is clas- sified as discontinued. USD 49.8 million is related to silane assets and is classified as continuing. Total loss from discontinued operations was USD 353.1 million for 2024 compared to a loss of USD 65.4 million for 2023. A re-presentation income statement analysis can be found in note 11 . 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 China. Key Financials – Other and Eliminations USD IN MILLION 2024 2023 Revenues 0.1 0.2 EBITDA contribution -30.8 -29.7 Other and Eliminations EBITDA decreased to negative USD 30.8 million during 2024 compared to negative USD 29.7 million in 2023. Costs exclude depreciation, amortization and impairment. Financial items Key Financials – REC Silicon Group – re-presented for discontinued operatoins USD IN MILLION 2024 2023 Financial income 3.1 3.4 Interest expenses on borrowings -21.3 -14.3 Interest expense on leases -4.2 -4.3 Capitalized borrowing cost 0.8 1.0 Expensing of up-front fees and costs -3.1 -1.8 Other financial expenses -0.7 -0.8 Net financial expenses -28.4 -20.1 Net currency gains/losses 0.1 12.7 Gain from sale of Yulin JV 0.0 135.5 Net financial items -25.3 131.5 Net financial items were a loss of USD 25.3 million in 2024 compared to a gain of USD 131.5 million in 2023. The gain in 2023 was largely the result of REC Silicon selling its share in the Yulin JV with a gain recorded in the amount of USD 135.5 million. For 2024, net financial items are primarily associated with interest on borrowing, loan fees and interest on leases, offset by interest income on bank accounts and capitalization of borrowing costs. Net currency gains/losses include fluctuations between trans- action currencies and the USD, which is the reporting currency for the group. Net currency gains/losses are primarily related to the impact of exchange rate changes on the repayment of REC Silicon annual report 2024 REC Silicon annual report 2024 18 18 Board of Directors’ report Board of Directors’ report Board of Directors’ report capital between REC companies. Additionally, there are currency impacts on liabilities and cash deposits denominated in NOK. Interest expenses on borrowings were USD 21.3 million in 2024 compared to USD 14.3 million in 2023. The company obtained USD 280 million in term loans during 2023 with additional loans of USD 70 million in 2024. USD 300 million in term loans are guaranteed by Hanwha Solutions, with an additional USD 50 million loan from Hanwha International. Expense related to guarantee fees were USD 3.1 million in 2024. Interest expense includes interest on a note payable associated with the settle- ment of the property tax dispute with Grant County, Washington. (See notes 17 and 25 to the consolidated financial statements). Interest expense from continuing operations on leases was USD 4.2 million in 2024 compared to USD 4.3 million in 2023. This decrease can be attributed to increased principal lease payments. (See Note 7 and 25 to the consolidated financial statements). Capitalized borrowing costs from continuing operations were USD 0.8 million in 2024 and are related to capitalized interest associated with long-term capital projects. Interest is capitalized at the blended effective external borrowing rate for the company of 7.5 percent. The remaining expense can be attributed to interest associated with asset retirement obligations and interest on the pension obligation. Income tax The loss before tax from total operations of USD 457.4 million in 2024 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. See note 18 to the consolidated financial statements. Profit and loss The loss from total operations was USD 457.4 million in 2024 compared to a gain of USD 30.5 million in 2023. The loss from continuing operations was USD 104.2 million in 2024 compared to a gain of USD 95.9 million in 2023. The difference in loss from total operations between 2024 and 2023 is largely impacted by the USD 246.2 impairment charge due to the shutdown of Moses Lake in 2024 along with sale of the Yulin JV in 2023 and the asso- ciated gain from the sale of USD 135.5 million. Cash flow Net cash outflows from operating activities were USD 132.0 million in 2024 compared to USD 86.0 million in 2023. During 2024, cash outflows included USD 30.3 million of interest payments for loans and leases. Net cash outflows from investing activities were USD 89.6 million in 2024 compared to cash outflows of USD 8.7 million in 2023. Proceeds from the sale of non-core assets were USD 1.6 million in 2024. Gross proceeds from the sale of the Yulin JV were USD 136.1 million in 2023. Payments of capital expenditures were USD 91.3 million in 2024 and were primarily associated with FBR modifications in Moses Lake. Other capital spending included cost savings and improvement initiatives, routine replacement of production equipment, and capital necessary to maintain safe and reliable operations. Cash inflows from financing activities were USD 60.9 million in 2024 and included a net increase of USD 70 million in borrow- ings. In the second quarter of 2024 REC Silicon Inc repaid and subsequently received USD 30 million from Standard Chartered Bank as part of a loan extension. In 2024, a USD 1.2 million prin- cipal payment was made for the property tax note. Additionally, cash payments of USD 7.9 million were lease related. For 2023, cash inflows from financing activities were USD 165.0 million and included USD 280.0 million from borrowings, partially offset by the repayment of the USD senior secured bond of USD 110 million and USD 1.1 million for the payment of the property tax note. Additionally, cash payments of USD 3.9 million were lease related. See note 17 to the consolidated financial statements for more information on borrowings. REC Silicon annual report 2024 REC Silicon annual report 2024 19 19 Board of Directors’ report Board of Directors’ report Board of Directors’ report There was a negative effect of USD 4.6 million in 2023 due to cash balances held in NOK and no effect in 2024. In total, cash balances decreased by USD 160.7 million in 2024 to USD 10.3 million on December 31, 2024. Financial position Shareholders’ equity decreased by USD 454.4 million to nega- tive USD 378.1 million on December 31, 2024, compared to USD 76.4 million on December 31, 2023. This decrease was primarily the result of the loss from total oper- ations of USD 457.4 million, offset by a remeasurement of the pension of USD 2.9 million. Net debt increased by USD 224.5 million to USD 407.3 million on December 31, 2024, from USD 182.8 million on December 31, 2023. This increase was primarily the result of the increase in loans of USD 70 million, the decrease in cash balance of USD 160.7 million, the payment of USD 1.2 million in the Grant County WA property tax note, and the decrease in lease liabilities of USD 4.8 million. Net debt includes unamortized loan fees. Excluding unamortized capitalized borrowing costs, nominal net debt was USD 407.8 million on December 31, 2024, which represents an increase of USD 224.6 million from USD 183.2 million on December 31, 2023 (See note 17 to the consolidated financial statements). Going concern Due to the shutdown of the polysilicon operations at the Moses Lake facility in December 2024, the polysilicon business has been classified as discontinued operations. Activities related to the removal of chemicals from the polysilicon production facilities and facility cleanup will continue until March 2025. Additionally, workforce restructuring activities will be completed by March 2025. The cash flow generation in 2025 will be driven by sales from the Butte facility, with investment activities primarily focused on the maintenance of the Butte facility. Management believes that the financial goals for 2025 are achievable, and the primary focus is on 2025 as it will be necessary to stabilize the Company’s opera- tions to actualize future financing and development opportunities in subsequent years. On January 24, 2025, the Company announced that it had entered into a USD 40 million term loan (the “credit Agreement”) with Hanwha International LLC, supporting REC Silicon’s capital needs during the shutdown process at Moses Lake and the Company’s transition into a pure-play silicon gas provider. As part of this agreement, USD 25.6 million was drawn in January, with the remaining USD 14.4 million drawn in March 2025. As part of the terms of the Credit Agreement, the Company and Hanwha International LLC (HWI) agreed to roll up the existing loans, which mature on February 2, 2025, for USD 25 million and on February 4, 2025, for USD 25 million, respectively, into the terms of the Credit Agreement. The Company and HWI amended the existing loan documentation to reflect the roll-up into the Credit Agreement on February 5, 2025. The term loan matures in January 2026. Additionally, USD 50 million loan from Standard Chartered Bank, which matures in June 2025, needs to be rolled over, and USD 30 million prepayment received under the offtake agreement with Hanwha QCells Georgia Inc. is waived for repayment without interest until January 2026, with the due date subject to extension upon mutual agreement of the parties. The Company will need additional funding to meet its debt obli- gations during the next 12 months, as debt obligations begin to mature in June 2025. Management acknowledges that the Company will not be able to generate sufficient cash flow from operations to support its operations for the next 12 months and meet these debt repayments. There is significant doubt around the Company’s ability to secure sufficient funding to sustain its operations and to meet debt repayment obligations for the next 12 months without the continued support of the major share- holder, Hanwha, or additional sources of capital. REC Silicon annual report 2024 REC Silicon annual report 2024 20 20 Board of Directors’ report Board of Directors’ report Board of Directors’ report This has resulted in material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern, which could have a substantial impact on its future operational capacity. However, management and the Board of Directors believe that the Company will be successful in obtaining the capital necessary to meet obligations and continue as a going concern. Management acknowledges the importance of assumptions related to the going concern assessment and has carefully projected the outlook for 2025. Management believes that the financial goals for 2025 are achievable. Given the cash flow esti- mates outlined above and the fact that Hanwha, as the largest shareholder and the primary creditor, has guaranteed all bank loans and provided the shareholder loans, management and the Board believe that the Company’s continued operations are aligned with Hanwha’s best interest. The Board considers the Company’s current liquidity position and the estimated results of operations sufficient to meet the operating cash flow requirements for remaining operations and to refinance the current bank loans for the upcoming years. 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 was realistic at the date of the accounts. The Board intends to monitor these condi- tions and is prepared to take appropriate action as necessary. Accordingly, these financial statements have been prepared under the assumption that the Company is a going concern. REC Silicon ASA (NGAAP) Financial review In 2024, REC Silicon ASA had a negative EBIT of USD 2.2 million compared to a negative EBIT of USD 2.7 million in 2023. The Company recorded a net loss of USD 228.0 million in 2024. The net loss included net financial expenses of USD 225.7 million which includes impairment of internal loans of USD 217.4 million, interest income of USD 0.4 million and interest expenses of USD 8.7 million. Interest income from subsidiaries was suspended for 2024 and 2023 due to the financial position and outlook of the borrowing companies. The Company recorded a net income of USD 55.6 million in 2023. The net income included net financial income of USD 58.3 million which includes reversal of impairment of internal loans of USD 72.1 million, interest income of USD 0.7 million and interest expenses of USD 9.9 million. Other major remaining items of net financial items were net currency losses of USD 4.6 million due to cash balances held in NOK. (See note M to the financial statements for REC Silicon ASA). Total equity for the parent Company was USD 16.1 million on December 31, 2024, compared to USD 244.1 million on December 31, 2023. This decrease is a result of the net loss of USD 228.0 million discussed above. Allocation of Net Loss for the Parent Company The Board proposes that the net loss for the year of USD 228.0 million be distributed to other equity. 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, and others (See note 3 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. 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. REC Silicon annual report 2024 REC Silicon annual report 2024 21 21 Board of Directors’ report Board of Directors’ report Board of Directors’ report Market risk While the global economy is expected to grow in 2025, there is still significant uncertainty around economic and geopolitical policy. The consumer electronics market demand is expected to remain weak but increase in the second half of 2025 and primarily from data centers supporting cloud computing and AI. In the United States, trade policy of the new Trump administra- tion will steer demand and timing of the markets. While interest rates are projected to continue declining, we anticipate invest- ments to remain stalled pending outcomes of US industrial policy changes. Trade friction with China will continue to affect overall market demand, but growth in other countries outside the EU and US should stabilize some of these fluctuations. REC Silicon’s customer base is heavily concentrated with three customers in 2024. 68.5 percent of REC Silicon’s revenue was dependent on these customers. Disruption to any of these customers will have an impact on REC Silicon sales going forward. 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 the silane gas production facilities at Butte 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 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. The production process for the Butte facility is energy intensive and subject to risk from high energy prices. Liquidity risk Debt maturities in 2025 include USD 50 million for the Standard Chartered term loan, which needs to be rolled over, USD 1.8 million for the undiscounted Grant County Property Tax note and USD 16.4 million for undiscounted lease liabilities. On December 31, 2024, the Group does not have sufficient avail- able cash to meet debt service and other anticipated operating cash flow requirements. Management acknowledges that additional sources of capital are required to meet obligations. The Company is actively negotiating securing additional financing aiming to close in the first half of 2025. Furthermore, the Company is looking to sell noncore assets during 2025. Management estimates future cash requirements can be met from the previously mentioned additional funding, along with cash flows generated by operations from the Semiconductor segment. On January 24, 2025, REC Silicon ASA entered into a USD 40 million term loan with Hanwha International LLC, supporting REC Silicon’s capital needs during the shutdown process at Moses Lake and the Company’s transition into a pure play silicon gas provider. The term loan has a maturity date of January 2026. Further, the bridge loans of USD 25 and USD 25 million with Hanwha International LLC rolled into this loan at their maturity dates on February 2 and February 4, 2025, respectively. Hanwha International LLC is an affiliate of the company’s two largest shareholders Hanwha Solutions and Hanwha Corporation. (see notes 7 , 10 , 17 , 29 and 33 to the consolidated financial statements). Moving forward, REC Silicon is focused on driving costs out of its silicon gas as-sets and optimizing production at the Butte facility. REC Silicon’s legacy business is a leading producer of silicon gas and has a strong market position for silane and specialty gases in the semiconductor and solar PV industries. Further, maintaining silane capacity at Moses Lake in a recov- erable mode, gives the Company the flexibility to leverage future customer demand for Silicon Anode or other gases. The Company is working to capitalize on these industry presences and ultimately return to profitability. The Company’s day-to-day operations, including ongoing initiatives to cease production at Moses Lake, may require addi- tional financing beyond the loan. As previously disclosed, REC Silicon is undergoing a strategic review to address financial and operational challenges and is therefore considering additional cost reduction activities, financing options, and other mitigative actions. REC Silicon annual report 2024 REC Silicon annual report 2024 22 22 Board of Directors’ report Board of Directors’ report Board of Directors’ report Credit risk Credit risk is primarily related to trade receivables and guaran- tees 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. 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 offsetting 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 28.1 million on December 31, 2024. The guarantees will decrease starting in 2025 and will expire entirely by 2039. Currency risk The Company’s net cash flows from continuing operations are primarily in USD. Debt is denominated in USD. The Group’s currency risk relates primarily to cash balances held in curren- cies other than USD. 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 2024 which is included in this Annual Report. 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. Sustainability REC Silicon’s sustainability report is presented separately in its own section of REC’s annual report. Market outlook While the global economy is expected to grow in 2025, there is still significant uncertainty around economic and geopolitical policy. The consumer electronics market demand is expected to remain weak but increase in the second half of 2025 and primarily from data centers supporting cloud computing and AI. In the United States, trade policy of the new Trump administra- tion will steer demand and timing of the markets. While interest rates are projected to continue declining, we anticipate invest- ments to remain stalled pending outcomes of US industrial policy changes. Trade friction with China will continue to affect overall market demand, but growth in other countries outside the EU and US should stabilize some of these fluctuations. Fab Utilization is expected to have reached its lowest point in 2024 from the 2022 peak as AI and HBM memory are driving record revenue and profits for leading edge chip makers. Automotive and Power device sales have been in decline since 2022 and are expected to have reached a low point in 2024 with inventory to shipment ratios improving in Q4. In 2025, wafer starts are expected to grow in single digit percentages with some upside in new US capacity in Q3 2025. Global fab expansion delays have impacted the growth of semiconductor materials markets overall. As Fab Utilization improves, new capacity is positioned to start quickly for advanced nodes. As this capacity comes online, we expect stronger demand for our silicon gases than market growth due to usage in advanced Logic and Memory chips, which use more material per wafer than older nodes. REC Silicon annual report 2024 REC Silicon annual report 2024 23 23 Board of Directors’ report Board of Directors’ report Board of Directors’ report Strong demand for iPhones and competing phones shows promise for advanced FPD demand and slight growth in 2025. Additional demand in OLED displays shows a positive outlook for 2025. However, decline in legacy TFT-LCD pricing will temper demand slightly. PC shipments have been in a decline since 2023. Forward- looking projections indicate refresh cycles and IT spending will increase for this segment in 2025. Stronger PC demand will boost foundry, memory and FPD demand. Uncertainty in the new Trump administration’s approach to EV and green energy will impact the timing and scale of advanced Silicon Anode battery start-ups as well as US and EU PV cell producer expansions. Many companies have adopted a “wait and see” approach through Q4 to better manage their exposure with the administration change in January. However, we are seeing strong signals that US production will proceed in 2025 for PV Cell and battery anode materials. Global PV installations for 2025 are projected to increase compared to 2024 despite the decline in subsidy support. Many EU countries have cut feed-in tariffs or general subsidies support due to fiscal deficits. The outlook for the United States is unclear pending direction of IRA support and energy policy guidance from the new Trump administration. Even at current reduced production rates, the supply of PV materials will be sufficient for projected market growth. This has impacted Asia silane demand and created a significant oversupply situation. New United States PV cell manufacturing is coming online in 2025 and will create demand for domestic silane. New proposed tariffs and duties to help offset imbalances in the energy or critical minerals sectors could improve US/EU manufacturing demand. PV Wafer capacity will continue to remain limited in the near term as markets wait to understand US and European policy changes. The United States, depending on policy support, should see increased growth in at least the PV cell and module capacities, with some modest expansion in wafer. Events after the balance sheet date On January 24, 2025, REC Silicon announced that it entered into a USD 40 million term loan with Hanwha International LLC, supporting REC Silicon’s capital needs during the shutdown process at Moses Lake and the Company’s transition into a pure play silicon gas provider. Further, the bridge loans of USD 25 million and USD 25 million with Hanwha International LLC rolled up into this loan at their maturity dates on February 2 and February 4, 2025, respectively. The terms of the loan are generally in line with the financial terms of the Company’s existing bank loan agreements, secured by the assets of the Company. The maturity date is January 24, 2026. REC Silicon also announced that its US affiliate and QCells, its customer for granular polysilicon produced at Moses Lake, entered into a mutually agreeable termination agreement. Per the agreement, the reimbursement of the prepayment of USD 30 million by REC Silicon to QCells has been delayed for one year without interest and without any further obligation by either party, including the payment of any liquidated damages. Together, both the loan and the termination of the Polysilicon Supply Agreement are important steps that will enable the Company to concentrate on its silicon gas business. Proceeds from the loan will strengthen REC Silicon’s liquidity position and provide it with the capital necessary to close operations at Moses Lake safely and in compliance with applicable regulations. REC Silicon annual report 2024 REC Silicon annual report 2024 24 24 Board of Directors’ report Board of Directors’ report Board of Directors’ report 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 “Market 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. Lysaker, March 24, 2025 Board of Directors Document is signed electronically Tae Won Jun Chairman of the Board Jooyong Chung Deputy Chair Vivian Bertseka Member of the Board Robert Neuhauser Member of the Board Dr. Renate Oberhoffer-Fritz Member of the Board William K. Levens President and CEO REC Silicon annual report 2024 REC Silicon annual report 2024 25 25 Board of Directors’ report Board of Directors’ report Board of Directors’ report Sustainability report General disclosures 27 Strategy 30 Impact, risk and opportunity management 33 Climate change 41 Pollution 47 Water and marine resources 50 Waste management 53 Human Capital 55 Supply chain management 64 Local communities 66 Business Conduct 67 Appendix – Transparency Act Statement 70 REC Silicon annual report 2024 26 26 Sustainability Sustainability General disclosures About this report (basis for preparation) REC Silicon’s Sustainability Report for the fiscal year 2024 (1 January 2024 to 31 December 2024) is based on the European Union’s Corporate Sustainability Reporting Directive (CSRD) and the accompanying European Sustainability Reporting Standards (ESRS). This report has been reviewed by the Company’s Audit Committee before being approved by the Board of Directors. The report has not been subject to limited assurance. The report has been prepared on a consolidated basis equal to the consolidation of the Company’s financial statements. The report covers certain aspects related to the upstream and down- stream value chains, however, in accordance with the transitional provisions provided by ESRS, some information related to the value chain is omitted as no data with satisfactory integrity is available at the time of reporting. REC Silicon’s sustainability reporting generally follows the time horizons defined in ESRS for medium- and long-term horizons. Short-term is defined as one year, medium-term 2-4 years and long-term more than 4 years. The basis for preparation of metrics and value chain data is described in the relevant chapters, along with actions planned for improvement where applicable. Data for CO 2 e emissions from grid electricity are based on annual reports from the US Environmental Protection Agency (EPA) for location-based emissions and from Green-e for market based. These data are reported with a two-year time lag and the 2024 report thus refer to 2022 emission factors. Sustainability governance The role of the Board of Directors The ultimate responsibility for sustainability-related matters lies with the Board of Directors. The Board considers sustainabili- ty-related impacts, risks and opportunities as an integral part of strategic planning and decision-making. The composition of the Board of Directors is detailed in the Corporate Governance Report ( page 74 ) and the roles and responsibilities of the board members are outlined on page 75 . REC Silicon Board of Directors Independent Directors 3 Total Directors 5 % Independent 60% Female Directors 3 % Female 60% Employee representation 0% The members of the Board have strong sustainability creden- tials, either as executives of renewable energy companies or as experts and advisors within climate-related and renewable energy-related NGOs and investment businesses. The Audit Committee is appointed by the Board of Directors and is the highest governing body responsible for sustainability matters. This includes oversight of the Company’s sustainability reporting and reporting process, liaising with the auditors on sustainability reporting matters, review of sustainability risks as part of the overall risk framework and oversight of the implemen- tation of any management measures relating to sustainability and climate risk. REC Silicon annual report 2024 REC Silicon annual report 2024 27 27 Sustainability Sustainability The Audit Committee meets and considers sustainability matters at least quarterly including performance metrics and general policy, sustainability reporting, projects or strategic matters of relevance. Integration with management The responsibility for the implementation of sustainability-related policies and actions and for performance lies with the CEO, while the CFO has responsibility for the sustainability reporting. Sustainability information to and addressed by the Board of Directors Sustainability-related IROs are integrated into the overall plan- ning, with strategic long-range business plans updated once per year. There is quarterly reporting to the Audit Committee on sustainability related KPIs, such as energy use, GHG emissions, pollution metrics, water use and waste metrics. Supply chain due diligence processes are also reported quarterly to the Audit Committee. Progress towards compliance with the ESRS has also been considered on a quarterly basis. The below table outlines the frequency of the Board of Directors and the Audit Committee’s consideration of sustainability matters during 2024 and which items that are generally on the agenda: Sustainability Matters Quarterly Annually The Board of Directors / Audit Committee • Restart of Moses Lake • Supply chain due diligence • Whistleblower system • Training on human rights • Training on Code of Conduct • Sustainability Reporting • ESRS Compliance • Climate KPIs • Environmental KPIs Other sustainability-related matters are considered on a case- by-case basis. Sustainability-related incentive schemes The Company has not adopted incentive schemes that specif- ically include sustainability-related performance. However, there is a very strong link between the strategic targets of REC Silicon and the performance on climate-related metrics. The performance-related incentive schemes include several KPIs for the successful penetration of energy transition markets with the Company’s products, such as silane gas and specialty gases. Statement on due diligence Sustainability due diligence refers to the ongoing process of identifying, preventing, mitigating, accounting for, and addressing actual and potential adverse impacts that REC Silicon’s activities may have on the people and environment. REC Silicon adheres to the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct and seek to base the sustainability due diligence process on the OECD’s six-step due diligence framework. REC Silicon annual report 2024 REC Silicon annual report 2024 28 28 Sustainability Sustainability Information on how REC Silicon conducts sustainability due diligence can be found in various parts of this Sustainability Report: Due diligence core elements Paragraphs and page reference a) Embedding due diligence in governance, strategy and business model • Sustainability governance ( page 27 ) • Strategy, business model and value chain ( page 30 ) b) Engaging with affected stakeholders in all key steps of the due diligence • Interests and views of stakeholders ( page 31 ) c) Identifying and assessing adverse impacts • Double Materiality Assessment ( page 33 ) • Supply chain management ( page 64 ) d) Taking actions to address those adverse impacts • Climate change ( page 42 ) • Pollution ( page 48 ) • Water ( page 51 ) • Health and safety ( page 56 ) • Supply chain management ( page 64 ) • Local communities ( page 66 ) e) Tracking the effectiveness of these efforts and communicating • Performance metrics ( pages 44 , 49 , 52 , 54 , 57 , 61 ) Risk management and internal controls over sustainability reporting REC Silicon has assigned an internal champion responsible for being the lead for information gathering, content and validation of data. A team of employees collect data and submit these on a quarterly basis, which is then subject to review by the CEO and CFO and thereafter approved by the Audit Committee. This collaborative effort has been established and provides a seam- less collection of information for compliance and continuous improvement processes. REC Silicon annual report 2024 REC Silicon annual report 2024 29 29 Sustainability Sustainability Strategy Strategy, business model and value chain REC Silicon is a global leader in silane-based high purity silicon materials, with more than 40 years history in the industry. From its two US-based manufacturing facilities in Moses Lake, Washington and Butte, Montana and sales support offices in both Asia and the United States, the Company has the largest capacity outside China for silane gas and specialty gases. Silane gas (SiH4) is the simplest form of silicon, and therefore the purest, making it the material of choice from memory processes to lithium-ion battery production, as well as thin film deposition uses. It is also refined into specialty gases for advanced uses in the semiconductor, solar PV and EV battery industries. Secular growth trends within in digitalization, renewable energy and electric mobility place REC Silicon in a strong position to seize upon market opportunities. This is further enhanced by substantial legislative support for the development of US-based value chains in key digitalization and energy transi- tion industries. REC Silicon is therefore transitioning its business to target US based value chains in the semiconductor and electronics industries, the solar PV market and the EV battery industry with silane and specialty gases from its two facilities. The Company is in a relatively concentrated value chain where the key, and abundant, raw material, metallurgical grade silicon, is sourced both in the US and internationally, while most other inputs and services are sourced inside the US, with some components from Asia. Going forward, the strategic direction means that a majority of revenues is expected to originate in US, representing a break with the past where about two-thirds of revenues have been in Asia. A full description of the strategy, business model and value chain can be found in the Company Description on pages 8–9 in this report. REC Silicon annual report 2024 REC Silicon annual report 2024 30 30 Sustainability Sustainability Interests and views of stakeholders Stakeholder engagement is a continuous process at REC Silicon, which has taken a more strategic and structured direction in recent years due to enhanced reporting requirements and the ongoing strategic redirection of the Company. Consultation with clients and financial stakeholders was key to the Moses Lake restart project, both in its start-up phase, as well when deciding to discontinue polysilicon production at the end of 2024. Consultation with employees and local communities have been central in the process to shut down polysilicon production at both Butte and Moses Lake. A project to assess key risks in the supply chain has been ongoing for two years, providing valuable strategic insights. Finally, the Double Materiality Assessment conducted in 2024 provided an additional platform for more formal engagement with key groups such as employees and local communities. These processes are further described in the relevant chapters. Stakeholder group Type of engagement Key focus in 2024 Actions for 2025 Employees Monthly safety meetings Quarterly roundtable meetings Bi-annual town hall meetings Employee Sustainability Survey Safety, health and wellbeing of workforce Employee engagement in connection with DMA Continue with regularly scheduled updated meetings, monthly safety meetings and roundtable meetings. Implement bi-annual meetings with operations, maintenance and the management team Suppliers Human rights engagement Supplier Sustainability Survey Business Partner Code of Conduct sign-off for top 50 suppliers Supplier engagement in connection with DMA Roll-out of BPCoC signoff Preparation for audits of high-risk suppliers Local communities Employee voluntary work Various local initiatives Recruitment drive in Moses Lake Dialogue with Moses Lake community in relation to lay-offs from polysilicon shutdown Investors Investor meetings Update on Moses Lake start-up Strategic direction Provided timely information of restart process Provided insights into relevant market developments Clients Qualification process Product development Off-take agreement for FBR polysilicon Off-take agreement for silane gas for battery anodes Qualification processes for new semiconductor facilities in the US. Further off-take agreements for battery anodes Authorities Regular permit compliance processes Liaison with Montana Dept of Environmental Quality, Washington State Dept of Ecology, OSHA, WISH Continuation of engagement processes Regulators and policymakers Participating in various initiatives to promote US manufacturing Impact of US trade policy and imports from Chinese manufacturers Impact of trade policies from the new US presidential administration Collaborations Membership in various relevant industry associations Environmental labelling scheme for ultra low carbon solar panels Review of collaboration initiatives following new business plan REC Silicon annual report 2024 REC Silicon annual report 2024 31 31 Sustainability Sustainability Material IROs and their interaction with strategy and business model REC Silicon has exposure to broad energy transition themes. This exposure is both positive, in terms of providing business opportunities, and negative through the Company’s contribution to impacts on people and the environment, such as pollution and greenhouse gas emissions. Production of silane gas and its derivatives requires inputs that are in parts highly energy-intensive, represent high amounts of embedded GHG emissions, as well as pollution risk. Some of these inputs are sourced from areas prone to human rights risks. REC Silicon’s production process involves high process safety risks and exposes workers to possible health and safety hazards, and the environment to potential pollution hazards. The produc- tion also consumes significant amounts of energy. The downstream value chain contributes positively to the green energy transition. Digitalisation enables more efficient resource use, solar energy represents clean energy, while electric mobility is expected to be a key driver for reducing transport-related carbon emissions. Despite the positive contribution to climate change mitigation, the semiconductor industry is highly energy- and water inten- sive. The growing appetite for generative AI, which is driving the semiconductor industry, is taking energy consumption through the roof, cannibalising on the efforts to make the global energy system cleaner. Deployment of solar panels consume acreage and can be at odds with agriculture and nature preservation. Production of battery packs for electric vehicles is highly energy intensive and consumes large and scarce mineral resources, such as lithium and cobalt. Political and regulatory frameworks, including trade policies, are becoming increasingly important and can imply conflicts of interest. The graphic below illustrates the material impacts, risks and opportunities across REC Silicon’s value chain. Not all are equally important across the entire value chain, at least seen in the context of their potential impact on REC Silicon’s business and which impacts that can be deemed to be under reasonable influence by the Company. REC Silicon has reasonably good resilience towards the risks in the medium to long term through secure and stable access to energy, energy efficient production processes, good process safety performance and a skilled workforce. REC Silicon annual report 2024 REC Silicon annual report 2024 32 32 Sustainability Sustainability Impact, risk and opportunity management Double Materiality Assessment REC Silicon conducted a Double Materiality Assessment (DMA) in 2024 pursuant to the principles of the ESRS with corresponding guidance from EFRAG. The main purpose of the DMA was to conclude on the ESRS Disclosure Requirements (DRs), which the Company will be subject to from the financial year 2025, as preparation for an ESRS-compliant 2025 Sustainability Report. An ancillary purpose was to inform corporate strategy and decision- making. The DMA is planned to be updated during 2025 to incorporate the new strategic direction of REC Silicon. The process used a four-step approach: Selection of inputs to determine relevant sustainability topics Top-down assessment of relevant sustainability topics Bottom-up assessment of relevant business topics Assessment of impacts, risks and opportunities Step 1: Selection of inputs The ESRS longlist of sustainability topics served as the basis for establishing relevant sustainability topics. This was processed through three phases: a) Laws and regulations Relevant laws and regulations were assessed to indicate relevant sustainability topics. Since REC Silicon has all its operational activities in the US, the process focused on relevant federal and state laws governing a broad set of aspects. Such aspects included promotion of the energy transition (such as the Inflation Reduction Act, the CHIPS Act and the Bipartisan Infrastructure Bill), pollution prevention legislation, laws and regulations governing wages and labor relations, the protection of human rights, as well as business ethics. The legal landscape thus provided relevant input to determine both the relevance and importance of sustainability topics. b) Stakeholder engagement The stakeholders provided essential inputs to the DMA process. Employees and suppliers were engaged through online questionnaires. Direct interviews were conducted with select employees and local community representatives. Investor feedback on sustainability matters was sampled from investor meetings logged in the Company’s CRM-system. Client feed- back was sampled from supplier or product qualification forms from key clients. The views and interests of the relevant author- ities were distilled from a review of relevant initiatives, policies, laws and regulations at both state and federal levels. Finally, initiatives from industry collaborations, where REC Silicon has commitments, were reviewed for relevance. c) Scenario inputs In line with the ESRS recommendations, several scenarios were assessed to enhance the understanding of relevant topics. Four climate-scenarios were assessed to highlight both physical climate risks and maximum transition risks, as well as economic impacts. Supplementary research for key markets where REC Silicon is active was also considered. A summary of the stakeholder inputs, including laws and regu- lation is presented below. This shows the importance of each matter to the different stakeholder groups. REC Silicon annual report 2024 REC Silicon annual report 2024 33 33 Sustainability Sustainability Step 2: Top-down assessment Based on the inputs from laws and regulations, stakeholders and scenarios, the relevant topics were aligned with the ESRS hier- archy to facilitate the further process into the Double Materiality Assessment. Step 3: Bottom-up assessment This stage involved defining relevant business matters within each topic, both within own operations and throughout the value chain. These were defined at least at the sub-topic level and preferably at the sub-sub-topic level in the ESRS hierarchy. The purpose was to enable proper assessment of impacts, risks and opportunities within the context of REC Silicon’s strategy, business and value chain. All impacts were also assessed for financial materiality to strengthen granularity. The interaction between step 2 and 3 is illustrated below. REC Silicon - Stakeholder inputs General topic ESRS reference Employees Suppliers Laws and regulations Clients Local communities Investors Climate change E1 Energy supply E1 Pollution E2 Water E3 Biodiversity E4 Materials sourcing E5 Waste E5 Working conditions S1, S1 Fair employment and wages S1, S2 Diversity, equity and inclusion S1 Human rights S1, S2 The local community S3 Ethical business conduct G1 Corruption and bribery G1 Supplier relationships G1 Political framework G1 Color scale: Low importance Medium importance Important Blank: No input REC Silicon annual report 2024 REC Silicon annual report 2024 34 34 Sustainability Sustainability Environmental matters Material ESRS topics Top-down themes Bottom-up issues Impacts Risks & opportunities E1 Climate change Climate change Energy use GHG emissions Energy use Enabling the energy transition Carbon tax Energy prices Damage to assets Technology and market risks Energy transition growth E2 Pollution Pollution Emissions to air, water and soil Accidental spills, releases or discharges Cost of permit compliance Cost of permit breaches E3 Water and marine resources Water Water consumption Water availability downstream E4 Biodiversity and ecosystems Biodiversity Loss of ecosystems and biodiversity Reputational loss from contribution to nature loss E5 Resource use and circular economy Materials sourcing Waste Raw materials use Waste Plastics waste Availability of critical materials Recycling requirements Cost of waste disposal Social matters Material ESRS topics Top-down themes Bottom-up issues Impacts Risks & opportunities S1 Own workforce Working conditions Diversity, Equity, Inclusion Fair employ-ment Human rights Health and safety Compensation and pay Work-life balance Diversity Training Human rights Job security Ability to preserve human capital S2 Workers in the value chain Human rights Health and safety Human rights breaches Reputational loss from human rights breaches S3 Affected communities Human rights The local community Human rights breaches Job security Dependencies on local communities for human capital and infrastructure Governance matters Material ESRS topics Top-down themes Bottom-up issues Impacts Risks & opportunities G1 Business conduct Political framework Corruption, Bribery Ethical business conduct Supplier relations Corruption and bribery incidents Regulatory environment Supplier relationships Reputational loss Policy changes Non-compliance with laws/regulations Whistleblower protection Cyber security REC Silicon annual report 2024 REC Silicon annual report 2024 35 35 Sustainability Sustainability Step 4: Impact, risk and opportunity assessment a) Impact assessment All matters were assessed according to the ESRS criteria for severity (scale, scope and irremediability) based on EFRAG guid- ance, while potential impacts also reflected the added dimension of likelihood. The assessment included where in the value chain the impact occurs or could occur, and whether the impact is positive or negative. The assessment was processed through several workshops with relevant external experts and management resources to analyse the rationale behind the assessments, as well as to calibrate the results to ensure consistency. b) Financial materiality All impacts were assessed for financial materiality, where the definitions were “converted” to better fit into a financial context, or in some cases grouped together for the same reason. In addi- tion, several additional risks and opportunities were assessed. The default methodology was a DCF analysis, where the mate- riality thresholds were based on the anticipated impact of an issue or factor on the Enterprise Value (EV) of the Company. For some issues assessed, it was straightforward to establish clear factors such as impact on operating costs. For other issues, the variables were more conceptual, such as the possible impact on growth or on the cost of capital (i.e. the discount rate used). The financial materiality was assessed based on when the triggers could be reasonably expected to emerge, with those emerging in the long-term attributed lower weight than those in the short- to medium-term: Short term: 0-1 years Medium term: 2-4 years Long term: 5 years or more These broadly correspond to the ESRS definitions and fit within the Company’s strategic planning horizon. The likelihood of the triggers emerging were assessed inde- pendently for each time horizon, using the same likelihood concepts as for the impact assessment. The identification of triggers of financial materiality and the appropriate thresholds were concluded through several work- shops with external experts and management. The calibration of the DCF assessments was conducted by the finance department of REC Silicon with inputs and validation by independent external experts. For 2024, the Company only presents financial materiality through qualitative analyses, but is well prepared for the quan- tification of potential, financial impacts to meet the reporting requirements when they come into effect. c) DMA outcome The outcome of the DMA was a shortlist of 19 material topics, each deemed to be material from an impact perspective, a finan- cial perspective, or both. For reporting purposes and reader accessibility, the topics have been grouped based on similarities, internal governance struc- tures and, in some cases, stakeholder feedback and insights. The result is the list of 16 material sustainability topics that form the body of this Sustainability Report. REC Silicon annual report 2024 REC Silicon annual report 2024 36 36 Sustainability Sustainability DMA Conclusions The graphic to the right shows a high level, condensed illustration of the materiality across REC Silicon and its value chain. Further details and granularity can be found in the relevant topic chapters. Key rating illustrations Level of positive impact High Medium Low Level of negative impact High Medium Low Time frame Sort term Medium term Long term REC Silicon - Materiality ESRS Relevant topics considered Material topic Upstream Production Downstream Timeframe E1 Climate change E2 Pollution (accidental spills, discharges and releases) E3 Water and marine resources E4 Biodiversity and ecosystems E5 Circular economy S1 Own workforce S2 Workers in the value chain S3 Affected communities G1 Business conduct Entity specific Cyber security REC Silicon annual report 2024 REC Silicon annual report 2024 37 37 Sustainability Sustainability Disclosure Requirements Material ESRS topics Sub-topics Sub-sub-topics Disclosure requirements ESRS Reference Page General disclosures Basis for preparation BP-1 27 Disclosure in relation to specific circumstances BP-2 27 Governance The role of the Board of Directors (BoD) GOV-1 27 Information provided to and addressed by the BoD GOV-2 28 Integration of sustainability-linked incentive schemes GOV-3 28 Statement on due diligence GOV-4 28 Strategy Strategy, business model and value chain SBM-1 30 Interests and views of stakeholders SBM-2 31 Material IROs and their interaction with strategy and business model SBM-3 32 Impact, risk and opportunity management Disclosure requirements in ESRS covered by the sustainability statement IRO-2 38 E1 Climate change Climate change adaption Climate change mitigation Energy Integration of sustainability-related performance in incentive schemes GOV-3 41 Transition plan for climate change mitigation E1-1 41 Material IROs and their interaction with strategy and business model SBM-3 41 Policies related to climate change adaption and mitigation E1-2 42 Actions and resources in relation to climate change policies E1-3 42 Targets related to climate change mitigation and adaption E1-4 43 Energy consumption and mix E1-5 44 Scope 1, 2 and 3 GHG emissions E1-6 45 E2 Pollution Pollution of air Pollution of water Pollution of soil Pollution of living organisms Policies related to pollution E2-1 47 Actions and resources related to pollution E2-2 48 Targets related to pollution E2-3 48 Pollution of air, water and soil E2-4 49 REC Silicon annual report 2024 REC Silicon annual report 2024 38 38 Sustainability Sustainability Material ESRS topics Sub-topics Sub-sub-topics Disclosure requirements ESRS Reference Page E3 Water and marine resources Water Water consumption Water withdrawals Water discharges Policies related to water E3-1 50 Actions and resources related to water E3-2 51 Targets related to water E3-3 51 Water consumption E3-4 52 S1 Own workforce Working conditions Secure employment Working time Adequate wages Work-life balance Health and safety Interests and views of stakeholders SBM-2 56 Material IROs and their interaction with strategy and business model SBM-3 56 Policies related to own workforce S1-1 56 , 58 , 60 Processes for engaging with own workforce S1-2 55 , 56 , 58 Processes to remediate negative impacts and channels for own workforce to raise concerns S1-3 58 , 60 Taking action on material impacts on own workforce S1-4 59 Targets related to managing material IROs S1-5 59 Characteristics of the undertaking’s employees S1-6 59 , 61 Characteristics of non-employees in own workforce S1-7 59 , 61 Equal treatment and opportunities for all Gender equality and equal pay Training and skills development Measures against violence and harassment in the workplace Diversity Collective bargaining and social dialogue S1-8 59 Diversity metrics S1-9 61 Adequate wages S1-10 60 Social protection S1-11 60 Persons with disabilities S1-12 60 Training and skills development metrics S1-13 62 Health and safety metrics S1-14 57 Work-life balance metrics S1-15 62 Remuneration metrics S1-16 63 Incidents, complaints and severe human rights impacts S1-17 63 REC Silicon annual report 2024 REC Silicon annual report 2024 39 39 Sustainability Sustainability Material ESRS topics Sub-topics Sub-sub-topics Disclosure requirements ESRS Reference Page S2 Workers in the value chain Working conditions Health and safety Interests and views of stakeholders SBM-2 64 Material IROs and their interaction with strategy and business model SBM-3 64 Policies related to value chain workers S2-1 64 Processes for engaging with value chain workers S2-2 65 Other work-related rights Adequate wages Child labor Forced labor Processes to remediate negative impacts and channels for value chain workers to raise concerns S2-3 65 Taking action on material impacts on value chain workers S2-4 65 Targets related to managing material IROs S2-5 65 S3 Affected communities Communities’ economic, social and cultural rights Interests and views of stakeholders SBM-2 66 Material IROs and their interaction with strategy and business model SBM-3 66 Policies related to affected communities S3-1 66 Processes for engaging with affected communities about impacts S3-2 66 Processes to remediate negative impacts and channels for affected communities to raise concerns S3-3 66 Taking action on material impacts on affected communities S3-4 66 Targets related to manage material IROs S3-5 66 G1 Business conduct Corporate culture Protection of whistleblowers The role of the Board of Directors GOV-1 67 Business conduct policies and corporate culture G1-1 68 Protection of whistleblowers 68 Political engagement Political influence and lobbying activities G1-5 68 Management of relationships with suppliers Management of relationships with suppliers G1-2 65 Corruption and bribery Prevention and detection of corruption and bribery, including training Prevention and detection of corruption and bribery G1-3 68 Incidents of corruption and bribery Incidents of corruption and bribery G1-4 68 Entity Specific Cyber Security 69 REC Silicon annual report 2024 REC Silicon annual report 2024 40 40 Sustainability Sustainability Climate change E1 - Climate change Impact Financial risk and opportunity Sub-topics Material Upstream Production Downstream Actual Potential Upstream Production Downstream Timeframe GHG emissions Enabling the energy transition Energy (mix and availability) Sustainability-linked incentive schemes The Company has not adopted incentive schemes that specifi- cally include sustainability-related performance. Please see the disclosure under Section 1 – General Disclosures, page 27 for additional details. REC Silicon’s approach to climate change The Company’s strategy and business model has been subject to significant change in recent years. This goes for both opera- tions, product mix and target markets. For the operations, it has been important to reduce the energy intensity of the products in response to higher energy prices. For the product mix, REC Silicon is now exiting polysilicon production, which is significantly more energy- and carbon intensive than the production of silane gas. The Company is now focusing on silane gas and specialty gases, which is low in both energy and carbon intensity. Going forward, REC Silicon is targeting the solar PV industry, the EV battery industry and the semiconductor and electronics industries. REC Silicon does not have a separate climate transition plan, but the issue of climate change mitigation is implicitly embedded into the corporate strategy. Material climate-related IROs These were assessed during the DMA in the context of the entire value chain. The three main impacts are: 1. Greenhouse gas emissions The value chains for solar energy and the semiconductor industries contribute to about 0.6 gigatons of GHG emissions per year according to research, which represent close to 2% of global industrial manufacturing emissions. This is set to rise going forward due to rapid deployment of solar PV panels, growth in the electric mobility markets and rising demand for semiconductors. 2. Energy use All parts of the value chains are highly energy-intensive, and the sourcing of energy in the value chains is only partly from renewable sources. 3. Enabling the energy transition A positive impact through providing low-carbon inputs to key value chains driving the energy transition. Level of positive impact/impact of financial opportunity High Medium Low Level of negative impact/Impact of financial risk High Medium Low Time frame Sort term Medium term Long term REC Silicon annual report 2024 REC Silicon annual report 2024 41 41 Sustainability Sustainability The material risks and opportunities are closely related to this: 1. Energy pricing, availability and sourcing In 2024, REC Silicon consumed about 480 GWh of electricity. With the announced shut-down of operations in Moses Lake, this is set to be significantly reduced in the medium term. However, if the revised strategy is successfully implemented, growth will resume in the coming years and energy consump- tion will rebound. There is a growing competition for energy where REC Silicon’s facilities are located, particularly for renewable power, coming from growth in data-centers and energy-transition industries in general. This could impact costs and growth in the long-term, although the energy requirements for the current production capacity are secured through agreements with the local utilities. 2. Green transition growth The success of REC Silicon’s current strategy depends on continued growth in industries and markets that are driven by the energy transition, such as solar PV panels, electric mobility, as well as digitalisation trends. With the Company’s strategy being focused on energy transition trends, there are more transition opportunities than there are transition risks for REC Silicon. Physical climate risks for the Company’s operations are low, while certain aspects of the upstream and downstream value chains could be at risk in the long term. The process to identify the IROs was based on inputs from clients, investors, authorities, employees and suppliers, as well as from the management based on the existing strategy. The assessment of the impacts for materiality was based on available information from the Company’s own operations and research into the up- and downstream value chain emission and energy characteristics. The assessment of financial risks and oppor- tunities was generally based on how the triggers for such risks and opportunities could impact the Company’s 2024 long-range business plan. Policies related to climate change REC Silicon has a Code of Conduct and Sustainability Policy that forms the overriding framework for the management of climate-related impacts, risks and opportunities. The Code sets goals and commitments for: Increasing the use of renewable energy in the production processes Sourcing of raw materials from suppliers using low-carbon production methods Seeking ways to reduce the use of fossil fuels and energy consumption at all levels of the operations The objective of The Code is to minimize the impact of the Company’s operations on the climate and the environment in general, including any impact on the local communities where the Company operates. The Code also represents an overall framework for making the Company future-fit to manage risks related to climate and the environment, as well as capture opportunities for growth. The Code applies to all the Company’s operations. Much of REC Silicon’s strategy follows the ambitions of the Inflation Reduction Act, the CHIPS Act and the Bipartisan Infrastructure Law, aiming to take advantage of the incentives that are built into these two initiatives. These include funding arrangements for the development of energy transition products and technologies and incentives to establish low-carbon and US-based value chains within the energy transition. Actions and resources The primary objective of the revised strategy is to exploit oppor- tunities through targeting energy transition industries in markets where REC Silicon has significant market position. The key actions are: 1. Butte reconfiguration The production of the energy-intensive electronic grade polysilicon was discontinued in 2024. Some of the freed-up silane gas capacity will target existing markets for silane gas, while the remainder will be used to provide monosilane to the EV battery industry in line with recent offtake contracts with leading, next generation EV battery producers. In parallel, capacity for specialty gases like DCS, MCS and Di Silane has been increased. REC Silicon annual report 2024 REC Silicon annual report 2024 42 42 Sustainability Sustainability 2. Moses Lake reconfiguration Having been mothballed since 2019, the facility was restarted in 2023 to produce solar grade polysilicon. Despite securing a ten-year offtake contract for all polysilicon volumes, the restart was unsuccessful as the facility could not produce the required levels of purity by the customer. At the end of 2024, a decision was therefore made to shut down the facility once again. The 24,000-ton monosilane capacity will instead be kept ready for growth in the EV battery industry and be restarted once there is sufficient market demand. The purpose of these actions is to target markets where REC Silicon has a distinct competitive edge and strong existing market positions. Further details on this can be found in the Company Description in the Annual Report ( page 7 ). These steps will also significantly reduce the carbon intensity of the product portfolio. Targets The company has two specific targets relating to climate change: 1. Reducing the Scope 1 and 2 carbon intensity per ton of product by 40% by 2027 (baseline 2021) The target was based on the restart of the Moses Lake facility, which was intended to result in a high growth in overall polysil- icon production compared to previous years, but at a significant reduction in energy-use per ton produced. The decision to shut down polysilicon production at Moses Lake will reduce both energy-use and volumes produced and thus have a positive effect on the performance against the target. The positive performance relative to the target in 2024 was due to the shutdown of polysilicon production at Butte, which was completed in mid-2024. At the same time, the ramp-up process at Moses Lake added more volumes of low-energy and low-emission production. Going forward, there will be an additional positive effect from the shut-down of polysilicon production at Moses Lake, as well as from a gradual ramp-up of production of silane gases at Butte. The target and performance are illustrated in the chart below. 2. Mapping upstream Scope 3 emissions to reduce value chain carbon intensity REC Silicon has an intention to work directly with the major suppliers to calculate the carbon footprints of the products and/ or services delivered to the Company and use internal data where applicable and possible. The Company plans to adhere to the GHG Corporate Value Chain Accounting in calculating upstream Scope 3 emissions. In the context of the process to manage the substantial strategic re-direction of the company this work is likely to be somewhat deferred due to lack of adequate internal resources. REC Silicon annual report 2024 REC Silicon annual report 2024 43 43 Sustainability Sustainability Performance metrics Energy Unit 2022 2023 2024 Change Fuel consumption from coal and coal products MWh 0 0 0 Fuel consumption from crude oil and petroleum products MWh 527 901 1,433 59% Fuel consumption from natural gas MWh 180,236 241,649 492,974 104% Fuel consumption from other fossil sources MWh 21 80 212 165% Consumption of purchased or acquired electricity, heat, steam, or cooling from fossil sources MWh 595,022 618,248 481,955 -22% Total fossil energy consumption MWh 775,806 860,878 976,573 13% Percentage of fossil sources in total energy consumption % 100% 100% 100% Total energy consumption from nuclear sources MWh 0 0 0 Share of energy consumption from nuclear sources % 0% 0% 0% Fuel consumption from renewable sources MWh 0 0 0 Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources MWh 0 0 0 Consumption of self-generated non-fuel renewable energy MWh 0 0 0 Total renewable energy consumption MWh 0 0 0 Percentage of renewable sources in total energy consumption % 0% 0% 0% Total energy consumption MWh 775,806 860,878 976,573 13% Non-renewable energy production MWh 0 0 0 Renewable energy production MWh 0 0 0 Energy intensity from activities in high climate impact sectors MWh/USDm 5,249 6,101 6,941 Energy intensity in own operations MWh/Mt 179 205 134 Total energy consumption from activities in high climate impact sectors MWh 775,806 860,878 976,573 Net revenue from activities in high climate impact sectors USDm 148 141 141 Net revenue from activities other than in high climate impact sectors USDm 0 0 0 REC Silicon annual report 2024 REC Silicon annual report 2024 44 44 Sustainability Sustainability GHG emissions Unit 2022 2023 2024 Change Scope 1 GHG Emissions Gross Scope 1 GHG emissions tCO 2 e 32,799 49,100 100,073 104% Share of Scope 1 GHG emissions from regulated emission trading schemes % 0% 0% 0% Scope 2 GHG Emissions Gross location-based Scope 2 emissions tCO 2 e 162,960 178,144 138,872 -22% Gross market-based Scope 2 emissions tCO 2 e 167,311 177,952 138,722 -22% Significant Scope 3 Emissions Fuel and energy-related activities (not included in Scope 1 and 2) tCO 2 e 14,990 17,343 21,602 25% Waste generated in operations tCO 2 e 75 90 169 88% Total Scope 3 Emissions tCO 2 e 15,065 17,433 21,771 25% Total GHG emissions (Location Based) tCO 2 e 210,824 244,678 260,717 7% Total GHG emissions (Market Based) tCO 2 e 215,175 244,485 260,566 7% GHG emission intensity Net revenue USDm 147.8 141.1 140.7 0% GHG emissions intensity - location based, Scope 1+2+3 tCO 2 e/USDm 1,426 1,734 1,853 7% GHG emissions intensity - market based, Scope 1+2+3 tCO 2 e/USDm 1,456 1,733 1,852 7% Metric tons produced Mt 4,343 4,196 7,272 73% GHG emissions intensity - location based, Scope 1 + 2 tCO 2 e/Mt 45.1 54.2 32.9 -39% GHG emissions intensity - market based, Scope 1 + 2 tCO 2 e/Mt 46.1 54.1 32.8 -39% REC Silicon annual report 2024 REC Silicon annual report 2024 45 45 Sustainability Sustainability Production numbers Unit 2021 2022 2023 Change Polysilicon production Mt 1,453 1,187 5,454 359% Net Silane gases production Mt 2,890 3,009 1,818 -40% Total production Mt 4,343 4,196 7,272 73% Climate-related targets Unit 2024 Target Target Year 24 vs Target Carbon Intensity per ton of product (Scope 1 + 2, Market Based) tCO 2 e/Mt 46.1 25.4 2027 181% Upstream Scope 3 emissions mapped Percentage 0% 75% 2027 n.m. Total production Mt 4,343 4,196 7,272 73% REC Silicon annual report 2024 REC Silicon annual report 2024 46 46 Sustainability Sustainability Pollution E2 - Pollution Impact Financial risk and opportunity Sub-topics Material Upstream Production Downstream Actual Potential Upstream Production Downstream Timeframe Pollution of air, water and soil Accidental spills, releases or discharges REC Silicon’s approach to pollution The production of silane gas results in air emissions of SO x , NO x , CO, VOCs and particular matter. The operations also require significant amounts of water and results in a water discharge that contain various substances. REC Silicon uses a variety of measures to keep emissions at a minimum in its operations, such as scrubbers to capture air pollutants, and filters to reduce water emissions. Emissions and water discharges are subject to strict, state-wide permits. Moreover, REC Silicon’s production processes are subject to the risk of accidents, which could release potentially hazardous substances into the environment and represent harm to both employees and people in the local communities. The issue of pollution is therefore two-fold; i) to stay within existing permits, and; ii) to avoid accidental spills, releases or discharges. In the context of double materiality, pollution has been assessed primarily in the context of the Company’s own operations, since value chain data have to date been difficult to obtain. Emissions to air, water and soil is an actual impact that is gener- ally within the limits set by the authorities and the cost of staying within the permits is moderate. It is therefore not considered to be material. On the other hand, accidental spills, releases or discharges are potential impacts that could have significant negative consequences for people and the environment and therefore considered a material impact. The financial conse- quences in the form of fines, penalties or damages to affected parties, as well as reputational loss, could be substantial. Hence, accidental spills, releases or discharges are considered finan- cially material. Policies related to pollution REC Silicon’s overarching pollution ambition is to have zero permit breaches and zero accidental spills, releases and discharges. This is outlined in the Code of Conduct and Sustainability Policy. The Code specifies an obligation to operate within environmental permits as specified by national and/or local regulations and to use third party certifications to document the performance. Several requirements for the management of emissions, as well as hazardous materials are in the Code. There is a strict Level of positive impact/impact of financial opportunity High Medium Low Level of negative impact/Impact of financial risk High Medium Low Time frame Sort term Medium term Long term REC Silicon annual report 2024 REC Silicon annual report 2024 47 47 Sustainability Sustainability obligation to employ measures to avoid accidents and manage safety hazards. REC Silicon enforces the obligations of the Code through a Pollution Prevention Plan and a Process Safety Management Plan. REC Silicon holds company-wide multisite certifications for two management standards, ISO 9001 (Quality Management) and ISO 14001 (Environmental Management). REC Silicon is subject to statewide legislation in Montana (Montana Department of Environmental Quality) and Washington State (Department of Ecology) for air emission permits, water permits and stormwater management permits. Adequate policies and procedures regarding pollution, process safety and accident prevention are also normally part of any qualification process with existing or prospective clients of the Company. Actions and resources As part of the ongoing pollution control, REC silicon uses scrub- bers to capture air pollution from its production processes. Solid waste recovered from the scrubbers is disposed of as non-hazardous waste. The emissions to air in Moses Lake are measured by a 3 rd party and reported to the state authorities at least annually. The emissions to air at Butte are tracked by facility staff and reported to the State authorities on an annual basis. The emissions to air of non-GHG gases are reported in the performance metrics section. Actions and resources related to water discharges are described in Chapter 4 – Water, please refer to page 51 . Targets related to pollution REC Silicon targets zero breaches of environmental permits relating to water discharges or air pollution. In recent years there have been a few cases each year of breaches. The breaches have generally been for technical reasons, and none have been material, resulting in penalties or fines. REC Silicon has maintained a track record of zero spills and zero leakages for several years, in line with its target. To date, there have been no initiatives to develop further pollution-related targets other than staying within the environ- mental permits. Actions Facility Pollution aspect Mitigation hierarchy Impact Pollution Prevention Plan All All pollution Control Avoiding unwanted pollution Process Safety Management Plan All Accidental spills, releases or discharges Control Avoiding accident-related pollution Air scrubbers All Air pollution Reduce Keeping air emissions within permits Water discharge filters All Water effluents Reduce Reduction or elimination of contamination potential REC Silicon annual report 2024 REC Silicon annual report 2024 48 48 Sustainability Sustainability Performance metrics ESRS E2 - Pollution Unit 2022 2023 2024 Change Emissions to air by pollutant SO x sulphur dioxide emissions Mt 0.4 0.4 32.4 7129% NO x nitrogen oxides emissions Mt 50.8 100.3 50.4 -50% CO carbon mono x ide emissions Mt 30.4 39.3 34.9 -11% Volatile organic compounds (VOC) Mt 2.1 1.92 7.50 290% Particulate matter Mt 13.6 57.3 27.6 -52% Coarse particulate matter (PM10) Mt 5.2 4.7 23.0 392% Fine particulate matter (PM2.5) Mt 2.9 2.7 18.8 605% Other Mt 4.6 4.6 4.4 -4% REC Silicon annual report 2024 REC Silicon annual report 2024 49 49 Sustainability Sustainability Water and marine resources E3 - Water and Marine Resources Impact Financial risk and opportunity Sub-topics Material Upstream Production Downstream Actual Potential Upstream Production Downstream Timeframe Pollution of air, water and soil Accidental spills, releases or discharges REC Silicon’s approach to pollution Water is essential in the production processes and primarily used for cooling purposes in the production units. Most of the water consumption is surface water withdrawn from freshwater. About 60% of the water withdrawal is discharged back to surface water, which is filtered to remove effluents and to ensure that the water quality is within permit levels. The wastewater discharges are subject to regular, third-party inspections. The solid waste from the water filters is collected and disposed of as non-hazardous waste. The Company’s value chain is water-intensive, more so in the downstream part due to high water use associated with the production of wafers and microchips, as well as in the cleaning of solar PV panels. In the context of double materiality, water has been assessed both in the context of the Company’s own operations and in the downstream value chain. Water discharge is an actual impact that is generally within the limits set by the authorities and the cost of staying within the permits is moderate. It is therefore not considered to be material in the context of the Company’s operations. Water consumption from REC Silicon’s own operations is considered to have a medium impact since the company does not operate any facili- ties in areas of high water-stress. Water consumption in the downstream value chain is considered to have a high impact due to the water-intensive operations in wafer and microchips manufacturing, as well as in the produc- tion of solar panels. Globally, a meaningful part of these value chains is in areas of water stress or areas that are subject to periods of drought with corresponding restrictions on water use. There is some financial risk in the long-term attached to water consumption, particularly for the semiconductor industry and leading credit-rating agencies have now started to regard water availability as a key credit risk for such companies. Policies related to water The Code of Conduct and Sustainability Policy recognises that REC Silicon’s operations result in water emissions and includes an obligation to operate within environmental permits and to use third party certifications to document performance. Following the Double Materiality Assessment, the Code has been amended to include specific requirements related to: Level of positive impact/impact of financial opportunity High Medium Low Level of negative impact/Impact of financial risk High Medium Low Time frame Sort term Medium term Long term REC Silicon annual report 2024 REC Silicon annual report 2024 50 50 Sustainability Sustainability Managing water consumption to minimise stress on local water resources Manage wastewater discharges to reduce effluents and avoid contamination of soil and water Ensure the safe treatment and disposal of all forms of waste, including solid waste from water treatment solutions. REC Silicon is subject to statewide legislation in Montana (Montana Department of Environmental Quality) and Washington State (Department of Ecology) for water permits and storm management permits. Actions and resources Wastewater from the Butte facility is treated to enhance solids removal and ensure that the effluents are in compliance with permit limits designed to protect the beneficial uses of the receiving surface waters. This discharge is subject to monthly whole effluent toxicity (WET) testing by a 3 rd party, which is reportable to the state authorities. Any solid waste recovered from the wastewater treatment process is disposed of as non-hazardous waste. The Butte facility maintains five stormwater basins designed to manage stormwater from non-process areas surrounding the facility. These basins are subject to the same environmental permit regime to protect the beneficial uses of the receiving surface water. Wastewater from the Moses Lake facility is discharged to sepa- rate on-site containment basins for evaporation. Remaining solid waste is recovered and disposed of. The facility is a zero-dis- charge site. Water discharges at Butte has been reduced because of the shut-down of polysilicon production at the facility. However, this also results in imbalances in the existing wastewater system, which is being addressed. The first part is to use a once-through cooling concept to maintain water temperature for cooling purposes, which also allows for a significant reduction in chem- ical additives. The second part is planned for 2025 and involves possible aluminate addition to provide a source of sodium, while reducing calcium, chloride and heavy metals. Targets related to water REC Silicon maintains a target to always stay within the prevailing water permits. With regards to actual water consumption or discharges there are no hard targets at the time being and the strategic redirection of the Company will likely delay the process to potentially establish such targets. Actions Facility Pollution aspect Mitigation hierarchy Impact Water discharge filters All Water effluents Reduce Reduction or elimination of contamination potential Stormwater basin Butte Water effluents Control Prevent flooding Evaporation basin Moses Lake Water effluents Reduce Reduction or elimination of contamination to soil Solid waste recovery All Water effluents Reduce Reduction or elimination of contamination to soil Once-through cooling Butte Water effluents Reduce Reduce chemical additives in wastewater Aluminate addition Butte Water effluents Reduce Reducing chemical additives and heavy metals in wastewater REC Silicon annual report 2024 REC Silicon annual report 2024 51 51 Sustainability Sustainability Performance metrics ESRS E3 - Water and Marine Resources Unit 2022 2023 2024 Change Water Surface water withdrawn from freshwater Mill m 3 2.4 2.4 2.2 -8% Produced water withdrawn from freshwater Mill m 3 0.1 0.1 0.2 85% Total water withdrawal Mill m 3 2.5 2.5 2.4 -4% Water discharge to surface water Mill m 3 1.5 1.5 1.4 -5% Water discharge to groundwater Mill m 3 0.0 0.0 0.0 Water discharge to third-party water Mill m 3 0.0 0.0 0.0 Total water discharge Mill m 3 1.5 1.5 1.4 -5% Total water consumption Mill m 3 1.0 1.0 1.0 -3% Total water recycled and reused Mill m 3 n.a. n.a. n.a. Total water stored Mill m 3 n.a. n.a. n.a. Changes in water storage Mill m 3 n.a. n.a. n.a. Share of water from regions with High Water Baseline Stress % 0 0 0 Share of water from regions with Extremely High Water Baseline Stress % 0 0 0 Water discharge share of water withdrawal % 59% 59% 58% Water consumption per produced unit '000 m 3 /Mt 0.24 0.25 0.14 -44% Waste water discharge per produced unit '000 m 3 /Mt 0.34 0.35 0.19 -45% REC Silicon annual report 2024 REC Silicon annual report 2024 52 52 Sustainability Sustainability Waste management E5 - Waste management Impact Financial risk and opportunity Sub-topics Material Upstream Production Downstream Actual Potential Upstream Production Downstream Timeframe Raw materials use Waste REC Silicon’s approach to resource use and waste management Metallurgical grade silicon (MGS) is the key raw material used in operations and is mined from quartz, the second most prevalent material in the Earth’s crust. This material is not regarded as a critical raw material and not likely to be subject to any form of future supply restrictions. The typical waste generated from the operations are solid waste types from air pollution scrubbers and wastewater discharge filters, both regarded as non-hazardous waste. The volume of hazardous waste has traditionally been only a fraction of the total waste volumes, but there was a substantial increase in 2024. In the past two years, the Moses Lake restart project has resulted in an increase in waste volumes, both hazardous and non-hazardous, related to the activities, which is expected to be significantly reduced going forward as the polysilicon production at the facility is discontinued. In the context of the DMA process neither raw materials use, nor waste (in general) were regarded as material impacts, and they are not expected to represent material financial risks going forward. Policies related to waste management The Code of Conduct and Sustainability Policy outlines an obli- gation to reduce waste of all types at the source or by practices wherever possible and consider modifications, substitution, conservations, recycling and re-using of materials to reduce potential harm to the environment. The objective is to reduce the overall amount of waste and to increase the amount of recycled waste from its production. REC Silicon is subject to local state regulations for waste handling, including waste handling fees. Actions and resources There are currently no ongoing actions pertaining to waste volumes or waste management. Level of positive impact/impact of financial opportunity High Medium Low Level of negative impact/Impact of financial risk High Medium Low Time frame Sort term Medium term Long term REC Silicon annual report 2024 REC Silicon annual report 2024 53 53 Sustainability Sustainability Performance metrics ESRS E3 - Resource use and Circular Economy Unit 2022 2023 2024 Change Waste Hazardous waste generated Mt 1.1 0.1 1,730.5 n.m. Hazardous waste diverted from disposal Mt 0.1 0.1 1.3 n.m. Hazardous waste directed to disposal Mt 1.0 0.0 1,729.2 n.m. Non-hazardous waste generated Mt 5,209 5,934 12,033 103% Non-hazardous waste diverted from disposal Mt 95 82 3,912 n.m. - Non-hazardous waste diverted from disposal due to preparation for reuse Mt n.a. n.a. n.a. - Non-hazardous waste diverted from disposal due to recycling Mt 32 39 2,064 n.m. - Non-hazardous waste diverted from disposal due to other recovery operations Mt 63 42 1,847 n.m. Non-hazardous waste directed to disposal Mt 5,115 5,853 8,121 39% Total waste generated Mt 5,210 5,934 13,763 132% Total waste diverted from disposal Mt 95 82 3,913 n.m. Total waste directed to disposal Mt 5,116 5,853 9,850 68% Non-recycled waste Mt 5,179 5,813 7,786 34% Recycled waste Mt 32 39 2,064 n.m. Percentage non-recycled waste % 99% 98% 57% -42% Waste Intensity Hazardous waste per produced unit Mt 0.0 0.0 0.2 n.m. Total waste per produced unit Mt 1.2 1.4 1.9 34% Ecological Impacts Total number of permit breaches # 6 3 6 100% Number of serious incidents or environmental releases # 0 0 1 n.m. REC Silicon annual report 2024 REC Silicon annual report 2024 54 54 Sustainability Sustainability Human Capital S1 - Human Capital Impact Financial risk and opportunity Sub-topics Material Upstream Production Downstream Actual Potential Upstream Production Downstream Timeframe Injuries, fatalities and ill health Employment Working conditions Equal treatment and opportunities REC Silicon’s approach to human capital The workforce at the end of 2024 consisted of the employees at REC Silicon’s two facilities and non-employee workers supplying labor through contractual relationships as defined by ESRS. This section describes how REC Silicon preserves and develops its human capital to ensure that adequate and qualified personnel is available to meet its objectives. Engagement with the workforce is regular and part of normal operations, primarily centred around health and safety, process safety and training. The DMA process facilitated a broader understanding of the interests and views of the employees. The process included both direct interviews with employees, as well as a company-wide employee survey on sustainability matters. This provided valuable input and contextual information to the DMA process. Investors and clients put significant emphasis on REC Silicon’s ability to maintain adequate product quality, where both personnel qualifications and certifications are important. Health and safety are essential, including everything that drives perfor- mance, such as process safety systems, reasonable working hours and safety training. All human capital and workforce matters are highly regulated by laws and regulations in the US. The stakeholder inputs were assessed to determine the most important matters, determining the scale of impacts, how wide- spread these are in the context of the workforce and how easy it is to provide remedy. The financial materiality was assessed through the lens of potential failure to preserve the human capital, which could restrict growth, negatively impact produc- tion processes and result in reputational loss. While bottom-up impacts were assessed at a granular level, the material impacts have been grouped into four different cate- gories, with a corresponding financial risk and opportunity set attached: Level of positive impact/impact of financial opportunity High Medium Low Level of negative impact/Impact of financial risk High Medium Low Time frame Sort term Medium term Long term REC Silicon annual report 2024 REC Silicon annual report 2024 55 55 Sustainability Sustainability 1. Injuries, fatalities and ill health Due to the nature of its operations, which involves potential exposure to dangerous chemicals and gases, and is prone to accidents and injuries, this is always the number one priority for REC Silicon. Maintaining strong health and safety performance is also important to personnel attraction and retainment, as well as to process safety and quality, and thus client retention. 2. Employment This includes job security, which has been an issue for the Company in recent years, first with the shut-down at Moses Lake in 2019, the shut-down of polysilicon production at Butte in 2024 and the recently announced shut-down of Moses Lake polysilicon production, all involving personnel redundancies. Moreover, compensation and pay are becoming increasingly important to retain human capital due to stronger competition for people on the back of the growing presence of industries related to the green transition and digitalisation in both Butte and Moses Lake. This could have material financial conse- quences in the medium- to long-term and personnel turnover became an issue during 2024. 3. Working environment At Moses Lake, the FBR restart project resulted in excessive working hours for many employees and a lack of work-life balance. A meaningful part of the workforce regards the Company’s support for employee well-being and work-life balance as average at best, according to the employee sustainability survey, indicating that these matters should perhaps be better adressed. 4. Diversity, equity and inclusion REC Silicon maintains a workforce where women and ethnic minorities are underrepresented. There were some reports of harassment based on ethnic background and sexual orienta- tion in the employee sustainability survey. In the remaining sections of this chapter, policies, engagement, actions and performance will be split into separate sections that generally fit with the four key IROs outlined above. Health and safety Policy foundations for health and safety The Code of Conduct and Sustainability Policy has a section dedicated to health and safety. The Company puts safety first and follows the strategy that all accidents, injuries and occupa- tional illnesses are preventable. The target is always zero harm to employees, contractors, customers and members of the public. To enforce the objectives of the Code, REC Silicon has a Health Management System (HMS) based on risk analysis, risk and hazard mitigation and right management, which is followed up with training. The aspects covered by the HMS are: Health-related aspects Illness prevention Risk management Physical and mental well-being The Company’s management system is ISO 9001 and ISO 14001 certified. The Occupational Safety and Health Act represents the main legislation. Engagement on health and safety REC Silicon has ongoing engagement on all health and safety matters. The company holds monthly safety meetings at both facilities to discuss procedures, incidents and training. There are quarterly roundtable meetings for safety and production. All procedures are reviewed and updated annually. Health and safety management actions Most actions are continuous efforts that deal with: Design, engineering practices, administrative controls and safe work practices Personal protective equipment Educational materials and continuous safety training Obligation for employees to report all safety concerns REC Silicon annual report 2024 REC Silicon annual report 2024 56 56 Sustainability Sustainability On-site emergency teams and off-site back up response teams Safe job analysis and hazard recognition audits Visible safety information in all facilities with updated logs visible to all employees Workplace safety and health is communicated to all employees in the monthly safety meeting. Training courses on health and safety are online and cover a wide range of health and safety matters, where all employees are obligated to take courses annually. Such matters include: Safety awareness training Protection training Detection training Danger management training Hazardous waste training There is also annual training on the Quality Policy, the Process Safety Management system, and on the Environmental Management System. Performance metrics The Company recorded a significant jump in injuries during 2024, both recordable injuries and lost-time injuries. During the year, both locations experienced some turbulence, in Moses Lake in relation to the efforts that went into the FBR ramp-up, and in Butte in relation to the shutdown of polysilicon production. At times, such turbulence deters focus from safely performing work. Both production facilities had to put a strong emphasis on focused safety and to ensure that the employees were prior- itizing safety and ensuring that all job tasks were evaluated prior to starting the task. Daily line-out meetings continuously reminded employees to ensure safety and environmental stew- ardship were of the top focus areas each workday. Health and safety metrics Unit 2022 2023 2024 Change Percentage of own workforce covered by health and safety management system % n.a. 100% 100% 0% Number of fatailities as a result of work-related injuries or ill health # 0 0 0 - Own workforce # n.a. n.a. n.a. - Other workers on undertaking's site # n.a. n.a. n.a. Number of recordable work-related accidents for own workforce (TRI) # 8 7 17 143% Rate of recordable work-related accidents for own workforce (TRIF) # / mn hrs 13.5 8.2 14.1 73% Number of cases of recordable work-related ill health of employees # n.a. 0 0 n.m. Number of days lost to work-related injuries, fatalites or ill health (LTI) # 1 1 6 500% Rate of days lost to work-related injuries (LTIF) # / mn hrs 1.7 1.2 5.0 326% Serious incidents (SI) # 0 0 0 Serious incidents frequency (SIF) # / mn hrs 0 0 0 Hours worked for own workforce # 592,816 857,308 1,203,043 40% Safe Job Analyses # 281 1,250 897 -28% Hazard Recognition Audits # 349 503 383 -24% REC Silicon annual report 2024 REC Silicon annual report 2024 57 57 Sustainability Sustainability People strategy Policy foundations The Code of Conduct states REC Silicon’s support of internation- ally recognised human and labor rights standards as set out in: The International Bill of Human Rights The UN Guiding Principles on Business and Human Rights The ten principles of the UN Global Compact The ILO Declaration on Fundamental Principles and Rights and Work The Company regards its people as the fundamental factor for its success and therefore: Respect the freedom of association and collective bargaining, as defined by the National Labor Relations Act (NLRA) Provide fair working conditions in accordance with all appli- cable legislation to our employees; and Provide training to ensure the employees conduct business ethically, honestly and in compliance with all applicable laws and regulations The objectives of the Code are enforced through the Company’s Health Management System, which deals with physical and mental well-being aspects, in addition to health and safety matters. Continuous efforts are provided through Employee Assistance Programs, Wellness Programs and flexible working arrangements. The US legislative backdrop is substantial and reflected in: Wages and Fair Labor Standards Act First Amendment National Labor Relations Act Family and Medical Leave Act Pregnant Workers Fairness Act The ERISA Act People engagement REC Silicon holds town hall meetings twice a year in both Butte and Moses Lake, which is conducted by the CEO and serves as a platform to engage on general corporate matters. Management meetings are also held twice a year in both Butte and Moses Lake to address topics at the managerial level. The quarterly roundtable meetings discuss human resource matters, in addition to safety and production-related matters. During the DMA process, the Company conducted an employee sustainability survey to ensure input on a broad range of sustain- ability matters. This survey received 121 responses, equal to a 25% overall response rate. Whistleblower channel and grievance mechanisms REC Silicon maintains a whistleblower reporting system which is open to all employees and business partners. It is a confidential system where reports can be made anonymously and managed by an independent system provider. As part of a formal investigation process, all reports are submitted to a review manager for further dissemination to a relevant reviewer based on the nature of the report. Financial matters would be reported to the CFO and/or the Audit Committee, while operational matters will be reviewed by the relevant senior manager. The review includes interviews with persons involved with the matter. Subject to the severity of any report or incident, there will be corrective action, which could include the termination of employ- ment for severe cases. Remedy to any affected party will be determined on a case-by-case basis. During 2024, there were two whistleblower incidents, both from shareholders raising questions about conflicts of interest in connection with the process that led to the decision to shut down polysilicon production in Moses Lake. Both were processed through the appropriate channels and concluded as unfounded. REC Silicon annual report 2024 REC Silicon annual report 2024 58 58 Sustainability Sustainability Preserving human capital REC Silicon is experiencing increased competition for its personnel due to general industry activity growth both in Moses Lake and Butte and is therefore attentive towards preserving its human capital. 2024 has been a challenging year for REC Silicon and its work- force for several reasons: The restart of the FBR production at Moses Lake was an intensive effort that consumed substantial financial and human capital resources, resulting in significant overtime and stress on the organisation. The decision to shut down polysilicon production at Butte resulted in layoffs and redundancies. The recent decision to shut down polysilicon production at Moses Lake will result in more than 220 layoffs and redundan- cies that will be managed during 2025. The employee turnover has shown a steady increase in the past two years, from 4.6% in 2022 to 23.8% in 2024. To manage the FBR restart and ramp-up, the Company provided Employee Assistance Programs (EAP), which could be assessed by employees and their families via text therapy, digital support or self-guided sessions, or traditional therapies free of charge. The Company also sought to reduce individual workloads through hiring additional staff to evenly distribute workloads. Adequate work-life balance has been managed by providing flex- ible working arrangements (4/10 schedule and 9/80 schedule) to offer more flexibility by condensing work hours into fewer days, so that employees have extended time off. Through hybrid work options, employees have the option to work from home for up to 28 days per year, subject to their super- visors’ approval. Employees are covered by a mental health insurance and wellness programs are run through a volunteer committee of employees providing physical fitness activities for employees. The Company has also supported family-friendly activities. This will continue in 2025. The Butte shutdown has been managed through a hiring freeze and support for internal transfers of people. An early retirement program was provided, as well as opportunities for temporary assignment. So far, the efforts have reduced the number of people to be laid off from 41 to 20. There have been 12 internal transfers and ten early retirements. The hiring freeze and the efforts to promote internal transfer of employees will continue in 2025. Three employees affected by the reduction in workforce at Moses Lake have accepted positions in Butte. REC Silicon conducts a regular wage benchmarking process where the target is to maintain pay above industry average. This involves annual wage adjustments based on employee feedback on compensation and a new pay progression schedule for oper- ators and technicians based on performance rather than tenure. The ambition for 2025 is to introduce a new job grade and compensation structure. This will imply a transparent, perfor- mance-based compensation structure that allows employees to understand their job level, their earnings potential and the factors influencing pay in 2025. REC Silicon has an ambition to provide more training programs and improve regular skills assessments. During 2024, a LinkedIn Learning program was rolled out, with 30% of employees partic- ipating. This program provides a vast library of courses on topics like leadership, technology and soft skills. Workforce characteristics Non-employees in own workforce In connection with the Moses Lake project, some non-em- ployees have been recruited from outside providers to assist in the project. The number of non-employees were reduced during the year. Please see the information on page 61 . Collective bargaining coverage REC Silicon does not maintain any collective bargaining agree- ments with its workforce. However, the Code states that the right to collective bargaining is supported by the Company. REC Silicon annual report 2024 REC Silicon annual report 2024 59 59 Sustainability Sustainability Composition of own workforce The executive management consists of three males. The opera- tions management consists of eight, of which two are female and six are male. The age distribution of the general workforce is outlined in the data table on page 62 . Adequate wages and social protection All employees are paid adequate wages, and the entire work- force is covered by social protection measures. Percentage of workforce with disabilities REC Silicon does not have the legal right to obtain information on the employees’ disabilities. Work-life balance metrics 92% of the employees are entitled to take family-related leave and 3.8% of those took such leave during 2024. Remuneration metrics The female employees have an average salary equating to 95% of the average salary of male employees, unchanged from the prior year. The total remuneration ratio between the Company’s highest paid individual and the median remuneration ratio is 11.7 times, unchanged from the prior year. Human rights Policy foundations REC Silicon’s Code of Conduct is clear that the ambition is to: Treat everyone who works for REC Silicon with fairness, respect, and dignity; Provide a working environment free from any form of discrim- ination, abuse, harassment or intimidation by or towards our employees or others affected by our operations; Commit to the elimination of discrimination based on gender, race, ethnical background, sexual orientation, age, political beliefs, marital status, or any other status; Refuse all forms of child labor, human trafficking, modern slavery and compulsory or forced labor; Respect employees’ rights to freedom of opinion and expres- sion, freedom of thought, conscience, and religion; In addition to the relevant US legislation regarding general working conditions, the Equal Pay Act, the Disabilities Act, the Civil Rights Act and the Modern Slavery Act provide support for these ambitions. Whistleblower channel and grievance mechanisms Please refer to the information on page [x] for information on the whistleblower processes. During 2024, there were zero complaints regarding human rights breaches. Protecting human rights REC Silicon pays equal pay for equal work. The issue of equal pay is managed through conducting regular pay audits, including regular wage benchmarking and annual wage adjustments to ensure that the objective is met. The objective to ensure a safe, responsible and compliant workplace culture is managed through regular training and awareness programs, the whistleblower reporting system and clear reporting and investigation procedures. These processes are continuous and will continue in 2025. REC Sililcon provided training on diversity, equity and inclusion (DEI) in 2023 for Moses Lake. The plan is to conduct similar training for new managers and executives to ensure a good foundation for new workforce members with various back- grounds to create an inclusive workplace culture. Due to the significant changes to the Company in 2025, this is currently on hold. Training has been offered to employees on how to use the whistleblower reporting system. Incidents of human rights breaches There were no incidents of human rights breaches recorded during 2024, in line with previous years. REC Silicon annual report 2024 REC Silicon annual report 2024 60 60 Sustainability Sustainability ESRS S1 - Own workforce Unit 2022 2023 2024 Change Characteristics of own workforce Total number of permanent employees # 360 495 466 -6% - Female # 54 77 74 -4% - Male # 306 419 392 -6% Temporary employees # 5 12 0 - Female # n.a. 6 0 - Male # n.a. 6 0 Non-guaranteed hours employees # 0 0 0 - Female # n.a. n.a. n.a. - Male # n.a. n.a. n.a. Total new hires # 99 186 81 -56% Number of employee turnover (leavers) # n.a. 45 76 69% Permanent employee turnover rate % 4.6% 9.0% 15.8% Total number of non-employees in own workforce # n.a. 22 15 -32% - of which self employed people # n.a. 2 0 -100% - of which provided by undertakings primarily engaged in employment activities # n.a. 20 15 -32% Percentage of employees covered by collective bargaining agreements % n.a. n.a. n.a. Number of employees (head count) at top management level # 8 11 11 0% - Female % 20% 18% 18% - Male % 80% 82% 82% REC Silicon annual report 2024 REC Silicon annual report 2024 61 61 Sustainability Sustainability ESRS S1 - Own workforce Unit 2022 2023 2024 Change Employees - by age < 30 # 30 65 74 14% 30-50 # 171 230 222 -3% > 50 # 164 199 170 -15% < 30 % 8% 13% 16% 30-50 % 46% 47% 48% > 50 % 44% 40% 36% Percentage of employees that are paid an adequate wage % n.a. 100% 100% Percentage of employees covered by social protection % n.a. 100% 100% Percentage of employees with disabilities % n.a. n.a. n.a. Training and skills development Percentage of employees that participated in regular performance and carreer development review % n.a. 0% 0% - Female % n.a. n.a. n.a. - Male % n.a. n.a. n.a. Average number of training hours per employee # 19 98 31 -68% - Female # n.a. 85 31 -64% - Male # n.a. 101 32 -69% Work-life balance Percentage of employees entitled to take family-related leave % n.a. 92% 94% 2% Percentage of entitled employees that took family-related leave % n.a. 3% 7% 163% - Female # n.a. 1 11 1000% - Male # n.a. 11 57 418% REC Silicon annual report 2024 REC Silicon annual report 2024 62 62 Sustainability Sustainability ESRS S1 - Own workforce Unit 2022 2023 2024 Change Remuneration metrics Average annual pay female employees USD '000 101.8 Average annual pay male employees USD '000 95.2 Gender pay gap % 90% 95% 93% -2% Remuneration for the highest paid individual USD n.a. 863,156 863,156 Median annual remuneration for all employees USD n.a. 101,084 101,084 Annual total remuneration ratio % n.a. 854% 854% Incidents, complaints and severe human rights impacts Incidents of discrimination # 0 0 0 0% Number of complaints filed through channels for people in own workforce to raise concerns # n.a. 11 11 0% Amount of material fines, penalties and compensation for damages as a result of human rights violations USD '000 n.a. 0 0 0% REC Silicon annual report 2024 REC Silicon annual report 2024 63 63 Sustainability Sustainability Supply chain management S2 - Supply chain management Impact Financial risk and opportunity Sub-topics Material Upstream Production Downstream Actual Potential Upstream Production Downstream Timeframe Health and safety Human rights Working conditions REC Silicon’s approach to supply chain management The Company followed up its 2023 human rights risk mapping by developing a separate Business Partner Code of Conduct and a process to secure commitments to the principles of the Code from a majority of the suppliers. In connection with the DMA, a separate supplier sustainability survey was conducted among the top 50 suppliers to provide further insights into the spectrum of relevant sustainability matters and to provide suppliers with an opportunity to express their interests towards REC Silicon as a client. The survey recorded a 38% response rate. The DMA identified human rights breaches as a potentially negative material impact across the Company’s value chain. The risk mapping shows that the risk is medium, which is a sentiment echoed by both the own employees, as well as the suppliers. This topic of human rights breaches is also subject to several relevant laws and regulations, such as the Modern Slavery Act, the Civil Rights Act and more. While health and safety, as well as general working conditions are relevant and important, the DMA process did not identify these as material. Policy foundation The Business Partner Code of Conduct (BPCoC) builds on the Code of Conduct and Sustainability Policy and the principles therein. The objectives are to ensure that the suppliers follow the same principles as REC Silicon, and that the Company maintains adequate sourcing of critical materials and inputs. It is available online at www.recsilicon.c om . The BPCoC has eight key focus areas: Compliance with laws, rules and legal regulations Good working conditions and human rights Safety and health Environmental and climate protection Responsible sourcing Rights of local communities Supply chain due diligence Grievance and complaints mechanism The relevant legislative backdrop for REC Silicon includes the Modern Slavery Act and the Norwegian Transparency Act. There is also a proposed Washington State Supply Chains Act that may come into force in the future. Level of positive impact/impact of financial opportunity High Medium Low Level of negative impact/Impact of financial risk High Medium Low Time frame Sort term Medium term Long term REC Silicon annual report 2024 REC Silicon annual report 2024 64 64 Sustainability Sustainability REC Silicon has developed several procedures to enforce the objectives of the BPCoC, including a suppliers’ handbook, critical materials list, critical materials approval, risk assessment and business continuity plan. Supply chain engagement The objective for the engagement with the supply chain is to be an efficient, agile and reliable integration partner that fosters collaboration and enhances value for REC Silicon’s customers and stakeholders, supporting long-term sustainable growth. The engagement has been running in connection with the process to get sign off on the BPCoC and follows a three-year plan. REC Silicon follows the OECD Guidelines for Multinational Enterprises in its supply chain due diligence. Hence, this process is moving forward into the “cease, prevent or mitigate impacts” stage, where further engagement will take place with the most critical suppliers. Whistleblower channel REC Silicon’s whistleblower channel is available to all Business Partners and their employees. Judging by the responses in the Supplier Sustainability Survey, the existence of this service may not be sufficiently disseminated across the suppliers. There were no whistleblower reports from the supply chain during 2024. Supply chain actions and plans The objective for 2024 was to secure commitments to, or acknowledgements of, the BPCoC from the 50 largest suppliers, which represent approximately 80% of the total vendor volume. This was completed during the year, with 80% of these suppliers signing off on the Code and the remaining 20% having demon- strated the existence of a Code of Conduct that follows the same principles. The Supplier Sustainability Survey revealed that the five most important topics to the suppliers are: Working conditions (including health and safety) REC Silicon’s commitments to sustainability initiatives Supply chain traceability and transparency Prevention of corruption and bribery Responsible sourcing of materials A process to conduct a proper risk profiling of the top 15 critical suppliers will be targeted as part of an ambition to better under- stand the vulnerability of the supply chain. Supply chain targets REC Silicon has several targets for 2025 relating to supply chain management: Include sustainability principles as requirements in purchase orders terms and conditions 80% of vendor volume to have completed annual self-assess- ments Complete full risk profiling of the 15 most critical vendors Review top 6 critical procedures related to supplier risk management Complete audit of the top 5 suppliers Implement a supply chain risk management tool With the recent and ongoing restructuring of the Company, some of these processes may be put on hold due to lack of internal resources. REC Silicon annual report 2024 REC Silicon annual report 2024 65 65 Sustainability Sustainability Local communities S3 - Local communities Impact Financial risk and opportunity Sub-topics Material Upstream Production Downstream Actual Potential Upstream Production Downstream Timeframe Pollution of air, water and soil Accidental spills, releases and discharges Dependence on local workforce and infrastructure REC Silicon’s approach to local communities The DMA process highlighted that a more structured approach to the local communities is required. The Company has had an important role as a large employer in the communities where it operates. The issue of job security was felt in 2019, when the decision was made to shut down polysilicon production in Moses Lake and in 2024 when polysilicon production was shut down in Butte. Conversely, the decision to re-open production in Moses Lake in 2023 created hundreds of jobs in the area, but with the recent decision to shut down polysilicon production at Moses Lake, there will be a new period of redundancies, which will affect the local community. Both Moses Lake and Butte are attracting new business invest- ments, many relating to the technology and energy transition industries. This is spurring increased competition for skilled personnel, a problem somewhat exacerbated by limited local availability, and is resulting in increased wage demands. Therefore, REC Silicon’s dependency on local human resources represents a growing risk. Moreover, the growth in business in the areas puts pressure on available local infrastructure such as power supply and water resources. While REC Silicon is adequately supplied for its current capacities, there could be constraints longer term that could result in increased costs, or detrimental effects on growth. REC Silicon is therefore aiming to cement its relationships with its local communities and provide support that can help these communities solve some of the problems that could impact the Company in the long run. Policy foundation The Code of Conduct and Sustainability Policy states that REC Silicon’s business and people should make a positive impact on society and that the Company is obligated to maintain close relations and constant dialogue with local communities. The Code has been expanded to include more precise commitments, including commitments for engagement and dialogue, the mini- misation of health, safety and environmental impacts and risks, as well as contribution by REC Silicon and its employees to the local communities in the form of voluntary work and other forms of engagement and support. Full details of the Code can be found at www.recsilicon. com . Level of positive impact/impact of financial opportunity High Medium Low Level of negative impact/Impact of financial risk High Medium Low Time frame Sort term Medium term Long term REC Silicon annual report 2024 REC Silicon annual report 2024 66 66 Sustainability Sustainability Business Conduct G1 - Business Conduct Impact Financial risk and opportunity Sub-topics Material Upstream Production Downstream Actual Potential Upstream Production Downstream Timeframe Corporate culture Corruption and bribery Supplier relationships Political engagement Cyber security Governance structure The governance structure in general, as well as that pertaining to sustainability, is outlined in the Corporate Governance section in this Annual Report (please see page 72 ) REC Silicon’s approach to business conduct The stakeholder engagement in the DMA process resulted in very clear inputs on the materiality of business conduct-related topics. The concept of ethical business conduct is regarded as important to all stakeholder groups. This was highlighted by both the employee and supplier sustainability surveys, engagement and qualification processes with clients, investor feedback, as well as dialogue with the local communities. Overall, the ethical business standards of REC Silicon received very positive feedback and may therefore represent some- what of a competitive advantage for the company. Corruption and bribery prevention and detection is clearly material to all stakeholder groups, as well. Supplier relationships have a firm place, although for slightly different reasons among stakeholder groups. For suppliers themselves, it is important to retain close and constructive relationships with clients, like REC Silicon. Employees, clients and investors regard these relationships as important to ensure that REC Silicon always has access to timely and adequate supply of critical materials and components to ensure continuous and safe operations. Political engagement is becoming more important to REC Silicon as the regulatory incentives in the US, such as the Inflation Reduction Act, the CHIPS Act and the Bipartisan Infrastructure Law, are the strongest drivers for the current strategy of the Company. Several stakeholder groups regard continued regu- latory support as important for the Company’s prospects. The somewhat uncertain outlook going into 2025 when it comes to US trade policies and the issues of tariffs, as well as federal energy transition initiatives, also makes political engagement important to the Company Level of positive impact/impact of financial opportunity High Medium Low Level of negative impact/Impact of financial risk High Medium Low Time frame Sort term Medium term Long term REC Silicon annual report 2024 REC Silicon annual report 2024 67 67 Sustainability Sustainability The entity-specific topic Cyber Security has been included in the Business Conduct section, based on both stakeholder inputs and the Company’s recent history of cyber-attacks. Financial matters are more material than impacts for the busi- ness conduct matters. Typical financial risks that could emerge relate to reputational loss and loss of business relationships due to potential breaches of ethical business conduct principles or legislation, as well incidents of corruption and bribery and cyber security incidents. The financial risk related to supplier relation- ships could emerge from irregularities in production due to lack of materials and components. As explained above, the political and regulatory framework represent the backbone of the corpo- rate strategy and any changes to this could represent significant negative financial triggers. Policy foundation The Code of Conduct and Sustainability Policy prescribes clear guidelines for business conduct matters. REC Silicon supports the ten principles of the UN Global Compact and the OECD Guidelines for Multinational Enterprises and is subject to the US Foreign Corrupt Practices Act and the Federal Bribery Statute. The Company has zero tolerance for any form of corruption, without exception and treats non-compliance as a serious viola- tion and a disciplinary matter. REC Silicon sets high standards of integrity and believe that a sound business must be based on value-based management and clear guidelines on ethics and sustainability. The Company believes it creates value by supporting a competitive market, operating fairly and fighting illegal practices. All potential integ- rity concerns are investigated, and the Company will cooperate fully with relevant authorities if required. REC Silicon avoids conflicts of interest and practices related to the commission or participation in fraud. The principles are enforced through the Risk Management System, which contribute to spread a culture of risk manage- ment and control that allows the Company to run its business in a healthy, correct, and responsible manner. Corruption and bribery Employees undertake annual training on anti-corruption and anti-bribery as part of the training on the Code of Conduct and Sustainability Policy. REC Silicon does not maintain a particular system to prevent, detect and address allegations or incidents of corruption and bribery. Pursuant to the Code of Conduct, it is every employ- ee’s duty to report any violation of the principles of the Code of Conduct, and the whistleblower system exists for this purpose. Partnerships and political engagement REC Silicon political engagement efforts focus on various legis- lative means for policy changes to support market demand for the products of both REC Silicon and its customers. This involves pushing for industry standards that support demand, tax incen- tives to grow the industry, and trade rules to ensure a fair market for all players. REC Silicon is currently part of three groups that are working on promoting US manufacturing: 1. SEMA Coalition (Solar Energy Manufacturing for America). This group worked to get the IRA passed, which includes the 45X production tax credits that REC Silicon is set to receive for FBR solar grade polysilicon and silane for silicon anodes. With the decision to shut down solar grade polysilicon produc- tion at Moses Lake, it is expected that this engagement will be reduced. 2. BMTC (Battery Materials Technology Coalition). This group helped pass the Bipartisan Infrastructure Law, that had USD 6 billion in support for battery manufacturing in the US, providing funding for current and prospective US clients. The group works on protecting trade, increasing US battery manufacturing, improving permitting to allow for responsible mining of critical minerals in the US. REC Silicon annual report 2024 REC Silicon annual report 2024 68 68 Sustainability Sustainability 3. ULCSA (Ultra Low Carbon Solar Alliance) This group works on expanding market awareness and deployment of ultra-low carbon solar. The group has worked to create the ECO Epeat label for ultra-low carbon solar production and inputs to enable certification of purchased materials. There is also work to require the US government to purchase ultra-low solar products. REC Silicon has also had more sporadic alliances pertaining to specific trade matters, such as: America Alliance for Solar Manufacturing Trade Committee , which is a seven-member group that filed a trade petition against four Southeast Asia countries for illegal trade practices by allowing Chinese headquartered companies to circumvent US trade regulations. The alliance represents the leading manufacturers working to build and re-shore the US solar industry. Data protection and cyber security REC implemented significant measures in 2024 to enhance its cybersecurity program, addressing the evolving landscape of cyber threats. The Company has conducted a comprehensive review and enhancement of its cybersecurity policies, with the imple- mentation phase already underway and projected to continue throughout 2025. Leveraging new technologies and methodologies, REC Silicon has ensured that these policies are not only implemented but also effectively enforced. This proactive approach ensures that the Company remains resilient against current and future cyber challenges, maintaining the integrity and security of its opera- tions and data. An annual review of core security services has been performed, and REC is diligently working on incorporating the recommen- dations. Notably, the Company has prioritized advancements in remote access and authentication methods, with a particular emphasis on zero trust principles. These efforts are set to extend into 2025, ensuring robust and resilient cybersecurity defences. By continuously improving its cybersecurity posture and employing innovative technologies, REC Silicon demonstrates a commitment to protecting its assets and stakeholders, ultimately contributing to the Company’s long-term sustainability and success. REC Silicon annual report 2024 REC Silicon annual report 2024 69 69 Sustainability Sustainability Appendix – Transparency Act Statement REC Silicon Transparency Act Statement 2024 Introduction General description of the Company’s structure and area of operations, please see the following: Company description, pa ge 7 Material IROs and their interaction with strategy and business model, page 32 Descriptions of REC Silicon commitments to internationally recognized human and labor rights standards People Strategy, pag e 58 REC Silicon’s approach to supply chain management, pag e 64 Governance and oversight Sustainability governance, pag e 67 Policies REC Silicon’s approach to supply chain management, pag e 64 Impacts and risks REC Silicon’s approach to supply chain management, pag e 64 Actions and action plans Supply chain actions and plans, pag e 65 REC Silicon annual report 2024 REC Silicon annual report 2024 70 70 Sustainability Sustainability Board of Directors’ report on Corporate Governance REC Silicon ASA (the “Company” or “REC Silicon”) and its subsidiaries (together “REC Silicon Group” or 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 14, 2021. 1. 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 govern- ance 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 2024. These deviations pertained to separate proxy voting for candidates to the Board (Section 6) and separate regulations for takeover bids (Section 14). The following sections provides a discussion of the Company’s corporate governance in relation to each section of the Code of Practice. 2. Business REC Silicon is a leading producer of silane-based high purity silicon materials that is shaping the future with advanced mate- rials. REC Silicon operates US based manufacturing facilities in Moses Lake Washington and Butte Montana. The Company announced that it ceased production at its Moses Lake facility on December 30, 2024. REC Silicon also announced that the production of polysilicon was discontinued at the Moses Lake facility, while the equipment involved in production of silicon gases would be maintained in a safe and recoverable mode to allow for silane gas production to restart with reasonable notice to capitalize on future customer demand for silicon anode or other gases while minimizing near-term operational costs. The December 30, 2024, announcement follows the Company’s decision to shut down polysilicon production at its Butte, Montana facility in February 2024. With the shutdown of the Moses Lake facility, REC Silicon completely discontinued the production of commercial volumes of polysilicon at both facilities. REC Silicon annual report 2024 REC Silicon annual report 2024 71 71 Corporate governance Corporate governance Corporate governance Moving forward, REC Silicon will focus its business efforts on silicon gases as its core product where the Company has clear strength, market positioning, and product differentiation. The Company is prioritizing driving costs out of its silicon gas assets and optimizing production, with a goal to return to profitability. Silane gas is used as a stand-alone product for use in semi- conductors, flat panel displays, solar panels and as material for silicon anode batteries. It is also processed into solar and electronic grade polysilicon and refined into specialty gases for advanced uses in the semiconductor and solar industries. Growth trends within digitalization, renewable energy, and the energy storage transition have placed REC Silicon in a position to seize upon market opportunities for the Company’s signature silane gas-based operations. Supported by key US legislative initiatives, the Company has positioned itself with low carbon products, in value chains targeting energy transition megatrends. REC Silicon’s business corresponds with the purpose of the Company which is described in its Articles of Association § 3: “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 has defined clear strategies, business goals and a risk profile for the Company’s business activities, to create value for its shareholders in a sustainable manner considering finan- cial, 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 accept- able 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 Sustainability report in the annual report. The Company’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. 3. Equity and dividends The Group’s consolidated equity was negative USD 378.1 million on December 31, 2024. The debt-to-equity ratio on December 31, 2024, was negative 1.5. 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 3.3 regarding capital structure and financing and note 3.1 regarding financial risk and to the report of the Board. The Company will need to have additional funding to support its operations throughout 2025. A key challenge arises as debt obligations begin to mature in January 2026, and the Company will not be able to generate sufficient cash from operations to meet these repayments. The company may face challenges in generating adequate operating cash flows in the subse- quent period. Significant doubt has been raised regarding the Company’s ability to secure sufficient funding to sustain its oper- ations for the next 12 months without the continued support of the major shareholder, Hanwha, or additional sources of capital. Additional information is included in the going concern section of the annual report. Management and the Board of Directors believe that the Company will be successful in obtaining the capital necessary to meet obligations and believes that the financial goals for 2025 are achievable. Given the cash flow estimates outlined in this report and the fact that Hanwha, as the largest shareholder and the primary creditor, has guaranteed all bank loans and provided the shareholder loans, the Board and management of the Company further believe that continued operations are aligned with Hanwha’s best interest. The Board intends to monitor these condi- tions and is prepared to take appropriate action as necessary. 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 REC Silicon annual report 2024 REC Silicon annual report 2024 72 72 Corporate governance Corporate governance Corporate governance support committed 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 2006, and no proposed dividend payments for the financial year 2024. 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 on May 14, 2024 (the “AGM”), the Board was granted the following authorities: Authority to increase the share capital with up to NOK 84,125,000 through one or several share capital increases. The authorization to acquire shares may be used for one or more of the following purposes: in connection with investments, acquisitions, or other corpo- rate purposes for use for incentive programs for employees Authority to acquire treasury shares in the Company (up to a maximum of ten percent of the face value of the share capital). As of December 31, 2024, 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 2025 or no later than 15 months from the date of the 2024 AGM. For further information about the mandates given to the Board, reference is made to the minutes from the AGM, which are avail- able on the Company’s website ( www.recsilicon.c om ). 4. Equal treatment of shareholders and transactions with related parties The Company seeks to conform to the principles for equal treat- ment 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 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 2024. 5. Freely negotiable shares REC Silicon 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 trans- ferable. There are no restrictions on owning, trading, or voting for shares in the Articles of Association. 6. General meetings The Board shall ensure that as many of the Company’s share- holders as possible are able to exercise their voting rights at the Company’s general meetings, and that the general meeting is an effective forum for shareholders and the Board. Extraordinary general meetings (an “EGM”) can be called by the Board of Directors if deemed necessary or be requested by the Company’s auditor or shareholders representing at least 5% of the Company’s share capital. Notification The Board ensures that the resolutions and supporting infor- mation distributed are sufficiently detailed, comprehensive, and specific, allowing shareholders to form a view on all matters to be considered at the meeting. The notice of the general meeting and supporting documents are made available on the Company’s website no later than 3 weeks prior to the date of the meeting. The deadline for shareholders to give attendance REC Silicon annual report 2024 REC Silicon annual report 2024 73 73 Corporate governance Corporate governance Corporate governance notice is set as close to the date of the meeting as possible, and minimum 5 days prior to the general meeting. Shareholders may request that specific matters be considered by a general meeting by written notice to the Board within 7 days prior to the time limit for notice of the general meeting together with a proposal for resolution and reasons why the matter 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. Participation and execution The Chairman of the Board, the Board members, the auditor, and the members of the Nomination Committee are normally present at the general meeting. All Board members are encour- aged to attend the meeting. The Chairman of the Board nominates an independent chair for election to lead the meeting. The right to participate and vote at the general meeting may only be exercised by shareholders whose shareholdings are entered in the Norwegian Central Securities Depository (the “VPS”), on the fifth day prior to the general meeting, as stipulated by the Articles of Association in accordance with statutory law. Instead of participating at the general meeting, shareholders may vote in advance or grant a proxy, with or without voting instructions as further described in this notice. The annual general meeting 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 annual general meeting digitally. The 2024 AGM was held digitally on May 14 th , with 43.77% of the Company’s shares represented. Deviation from the Code of Practice The Code of Practice recommends separate voting for candi- dates 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 committee assignments. The nomination committee’s proposal is given with respect to such legislation. Should a situation arise where the composition of the Board might conflict with appli- cable 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. 7. Nomination committee The Nomination Committee is governed by the Articles of Association section 6. The 2023 AGM elected the following three members for the Nomination Committee for the period until the AGM in 2025: Mr. Junghey Chae (chair), Dr. Sungchoon Kang, and Dr. Jieun Lee. The Nomination Committee does not include any executive personnel or any member of the Board. Mr. Junghey Chae is an employee of the Company’s main shareholders. The remaining members of the Nomination Committee are independent of the Board and the executive management of the Company (“Group Management”). The general meeting stipulates the rules of procedure for the Nomination Committee and determines the Committees’ remu- neration. The Nomination Committee gives its recommendation for the general meeting on election of and compensation to members of the Board, in addition to election of members of the Nomination Committee. Each proposal is justified on an individual basis. All shareholders are entitled to nominate candidates to the Board, and information on how to propose candidates can be found on the Company’s website. 8. Board of Directors: Composition and independence Pursuant to the Articles of Association section 6, the Company’s Board shall consist of three to twelve members. On December 31, 2024, the Board consisted of five members (see table below), of which three were female and three were independent from the main shareholders. The directorsDirectors are elected by the general meeting for a term of one year and may be REC Silicon annual report 2024 REC Silicon annual report 2024 74 74 Corporate governance Corporate governance Corporate governance re-elected. Information concerning the Company’s policies for equality and diversity with respect to gender and other matters for the Company’s governing bodies are described in the sustainability reporting in the financial statements. The 2024 annual general meeting elected Tae Won Jun (Chair), Jooyong Chung (Deputy Chair), Renate Oberhoffer-Fritz, Paraskevi (Vivian) Bertseka and Robert Neuhauser as the Company’s Board for a period until the annual general meeting of 2025. All members of the Board are considered independent of Group Management and the Company’s material business contacts. The Company’s annual report and the website provides infor- mation to illustrate the expertise of the members of the Board. The Board considers its composition to be diverse and represent required competencies including financial and industrial expe- rience. Board members are encouraged to own shares in the Company. An overview of Board members’ share ownership in the Company is available in note 16 to the consolidated financial statements. 9. 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 matters that are to be decided by the Board and matters 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 administra- tion present. The Board has adopted guidelines to ensure it is informed of and how to handle potential transactions and matters 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. The Board has established two committees: an Audit Committee and a Compensation Committee. Audit Committee The Company’s Audit Committee is governed by the Norwegian Public Limited Liability Companies Act and the Audit Committee Charter, which sets out the tasks and rules of procedure of the Committee. The Audit Committee members are appointed by and among the Board. On December 31, 2024, the Audit Committee members were Ms. Jooyong Chung, Dr. Renate Oberhoffer-Fritz, and Ms. Paraskevi (Vivian) Bertseka. The Audit Committee held six meet- ings in 2024. The Audit Committee supports the Board with the assessment and control of financial risk, financial reporting, sustainability Overview of the Board on December 31, 2024 Name Role Considered independent of main share- holders Independent of Group Management Independent of material business contacts Served since Term expires Participation Board meetings 2024 Tae Won Jun Chair No Yes No 21-Oct-2022 AGM 2025 14 of 16 Jooyong Chung Deputy Chair No Yes No 14-May-2024 AGM 2025 14 of 16 Dr. Renate Oberhoffer-Fritz Board member Yes Yes Yes 02-May-2022 AGM 2025 16 of 16 Paraskevi (Vivian) Bertseka Board member Yes Yes Yes 21-Oct-2022 AGM 2025 16 of 16 Robert Neuhauser Board Member Yes Yes Yes 14-May-2024 AGM 2025 13 of 16 REC Silicon annual report 2024 REC Silicon annual report 2024 75 75 Corporate governance Corporate governance Corporate governance reporting, auditing, control, and prepares discussions and reso- lutions for Board meetings. It has no decision-making authority. The Audit Committee reviews complaints regarding accounting, internal controls, and auditing matters. In addition, under the whistle-blower procedure, complaints from employees and other concerned parties are received and followed up by the Audit Committee. The Audit Committee 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-au- dit-related services provided. Compensation Committee The Compensation Committee is governed by the Norwegian Public Limited Liability Companies Act and the Compensation Committee Charter, which sets out the tasks and procedures of the Committee. The Compensation Committee members are appointed by and among the Board of Directors. On December 31, 2024, the Compensation Committee members were Tae Won Jun and Robert Neuhauser, both independent of the Group Management. During 2024, the Compensation Committee met once. The Compensation Committee 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 matters. 10. Risk management and internal control The Group’s risk management system shall ensure that the Group has a systematic and uniform approach to risk manage- ment. 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 Committee and the Board. The Board performs a review of risks in connection with the approval of the annual budget. Group Management regularly updates the Board including operational reviews, HSE (Health, Safety and Environment) measures, financial highlights, and key performance indica- tors. Prior to each Board meeting, the Chief Executive Officer prepares a report to the Board, which includes this information in addition to any items requested by Board members and items requiring action by the Board. The Chief Executive Officer also has pre-meetings and informal discussions with the Board throughout the year. 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. To strengthen internal control, the Group has established an Anticorruption Policy and procedures, provided training to employees and managers, and performed a fraud risk assess- ment. Whistleblower complaints and other internal control activities are presented to the Audit Committee according to the Audit Committee charter. To ensure consistent financial reporting throughout the Group, financial information is reported through a computerized finan- cial 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 Committee in the presence of the external auditor. The Group’s financial risk management is described in the consolidated financial statements ( note 3 ). Reference is also made to the Board of Directors’ report that includes an analysis of the financial statements and the risk factors. REC Silicon annual report 2024 REC Silicon annual report 2024 76 76 Corporate governance Corporate governance Corporate governance 11. Remuneration of the Board of Directors The members of the Board receive remuneration in accordance with their individual roles. Prior to May 12, 2020, Board members who participate in the Audit Committee or the Compensation Committee received additional compensation. Board remuneration is not linked to Company performance and Board members are not granted share options. Details on the remuneration of the Board are disclosed in the consolidated financial statements ( note 1 6 ). Members of the Board and/or related 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, but if they do, this shall be disclosed to the full Board. The remuneration for such additional duties will be approved by the Board. There were no such assignments in 2024. 12. Remuneration of the Group Management The guidelines for salary and other compensation to Group Management was presented at the AGM in May 2024. The policy was last updated in 2023 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 §7-31b, is included in note 16 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. Details on the remuneration of the Chief Executive Officer and other members of Group Management are disclosed in the consolidated financial statements ( note 1 6 ). 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 2014 and includes a lock-up period for shares awarded and an absolute limit for the maximum gain in each calendar year, however, no shares were issued in 2024. Further details on the incentive program are disclosed in note 32 of the consolidated financial statements. The 2024 AGM voted separately on the compensation to leading employees and the statement regarding long-term incentive plans. 13. 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 infor- mation is provided in English. The Board adopted an Investor Relations (“IR”) policy speci- fying, 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 REC Silicon annual report 2024 REC Silicon annual report 2024 77 77 Corporate governance Corporate governance Corporate governance 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 distribution of consensus forecasts. The Investor Relations function oversees coordinating the Company’s communications to the market and to existing and potential investors of the Company. The IR Officer is an inde- pendent contractor that reports to the Chief Financial Officer. 14. Take-overs The Company has no defence mechanism to prevent take-over bids. The Board is open to initiatives that are commercially and financially attractive 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. 15. Auditor The Company’s external auditor was KPMG until May 14, 2024, at which time Deloitte was appointed external auditor. Both KPMG and Deloitte are 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, mate- rial 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 Committee and the Board at least 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 Committee and present the main features of the audit plan to the Audit Committee. 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 the audit. These guidelines include a list of services that are preapproved for fees up to NOK 500,000 and requires audit committee approval for all other non-audit services or if fees are more than NOK 500,000. For more information about remuneration to the auditor, see note 22 to the consolidated financial statements. The auditor participates at the AGM and presents the inde- pendent auditor’s report. REC Silicon annual report 2024 REC Silicon annual report 2024 78 78 Corporate governance Corporate governance Corporate governance Consolidated financial statements 80 Statement of compliance 130 Parent company financial statements 131 Auditor’s report 147 Definition of alternative performance measures 153 Financial statements REC Silicon annual report 2024 79 79 Financials Financials Financials Consolidated financial statements REC Silicon Group Consolidated statement of financial position 81 Consolidated statement of income 82 Consolidated statement of comprehensive income 83 Consolidated statement of changes in equity 84 Details of consolidated comprehensive income 85 Consolidated statement of cash flows 86 Notes to the consolidated financial statements 87 Note 01 General information 87 Note 02 Summary of significant accounting policies 87 Note 03 Financial risk management 92 Note 04 Critical accounting judgments and key sources of estimation uncertainty 94 Note 05 Segment and revenue information 95 Note 06 Fixed assets 98 Note 07 Leases 99 Note 08 Impairments of cash-generating units 101 Note 09 Investments 103 Note 10 Related party transaction 104 Note 11 Discontinued operations 104 Note 12 Receivables and prepayments 106 Note 13 Inventories 107 Note 14 Cash and cash equivalents and restricted bank accounts 107 Note 15 Shareholder information 108 Note 16 Management and Board of Directors’ compensation, loans, shares, bonds 109 Note 17 Borrowings 112 Note 18 Income tax expense and deferred tax assets and liabilities 115 Note 19 Retirement benefit obligations and expenses 117 Note 20 Trade payables, provisions and other liabilities 119 Note 21 Government grants 120 Note 22 Other operating expenses 121 Note 23 Other income and expenses 121 Note 24 Employee benefits 122 Note 25 Financial income and expenses 122 Note 26 Earnings per share 123 Note 27 Dividends per share 123 Note 28 Research and development 124 Note 29 Commitments, guarantees, pledges 124 Note 30 Other information financial instruments 125 Note 31 Claims, disputes, contingent liabilities and contingent assets and risks 127 Note 32 Share-based compensation 128 Note 33 Events after the reporting period 129 REC Silicon annual report 2024 REC Silicon annual report 2024 80 80 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Consolidated statement of financial position USD in million Notes 2024 2023 ASSETS Non-current assets Intangible assets 6 0.0 0.8 Land and buildings 6 31.1 33.6 Machinery and production equipment 6 31.0 40.2 Other tangible assets 6 2.3 4.0 Assets under construction 6 20.3 180.9 Property, plant and equipment 6 84.7 258.7 Right of use assets 7 23.4 32.2 Other non-current receivables 12 0.2 0.4 Financial assets and prepayments 0.2 0.4 Total non-current assets 108.3 292.2 Current assets Inventories 13 27.4 58.5 Trade and other receivables 12 16.2 21.9 Prepaid costs 12 9.4 8.7 Restricted bank accounts 14 0.6 0.6 Cash and cash equivalents 14 10.3 170.9 Total current assets 63.8 260.7 Total assets 172.1 552.9 USD in million Notes 2024 2023 EQUITY AND LIABILITIES Shareholders' equity 15 Paid-in capital 3027.7 3027.7 Other equity and retained earnings -3405.7 -2951.3 Total shareholders' equity -378.1 76.4 Non-current liabilities Retirement benefit obligations 19 3.3 7.0 Non-current provision, interest calculation 20 26.3 23.8 Non-current financial liabilities, interest bearing 17 251.6 253.0 Non-current lease liabilities 7 56.1 62.4 Non-current prepayments 20 33.4 24.9 Other non-current liabilities, not interest bearing 32 0.0 0.7 Total non-current liabilities 370.6 371.7 Current liabilities Trade payables and other liabilities 20 60.2 60.7 Provisions 20 8.2 0.0 Current financial liabilities, interest bearing 17 101.0 30.9 Current lease liabilities 7 9.0 7.5 Current prepayments 20 1.2 5.7 Total current liabilities 179.6 104.8 550.2 476.5 Total equity and liabilities 172.1 552.9 Lysaker, March 24, 2025 Board of Directors Document is signed electronically Tae Won Jun Chairman of the Board Jooyong Chung Deputy Chair Vivian Bertseka Member of the Board Robert Neuhauser Member of the Board Dr. Renate Oberhoffer-Fritz Member of the Board William K. Levens President and CEO REC Silicon annual report 2024 REC Silicon annual report 2024 81 81 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Consolidated statement of income USD in million Notes 2024 2023 Revenues 5 140.8 140.8 Cost of materials -20.7 -26.9 Changes in inventories -15.9 7.1 Employee benefit expenses 16 , 24 , 32 -43.6 -43.5 Other operating expenses 22 -77.8 -98.0 Other income and expenses 23 -0.7 4.7 EBITDA‌ 1 -17.9 -15.7 Depreciation 6 -8.7 -10.2 Amortization 6 0.0 0.0 Depreciation of right of use assets 7 -2.6 -2.6 Impairment 6 , 7 , 8 -49.7 -7.0 Total depreciation, amortization and impairment -61.0 -19.8 EBIT ‌ 2 -78.9 -35.5 Financial income 25 3.1 3.4 Net financial expenses 9 , 25 -28.4 -20.1 Net currency gains/losses 25 0.1 12.7 Gain from sale of Yulin JV 25 0.0 135.5 Net financial items -25.3 131.5 USD in million Notes 2024 2023 Profit/loss before tax from continuing operations -104.2 95.9 Income tax expense/benefit from continuing operations 18 0.0 0.0 Profit/loss from continuing operations -104.2 95.9 Profit/loss from discontinued operations 11 -353.1 -65.4 Profit/loss from total operations -457.4 30.5 Attributable to: Owners of REC Silicon ASA -457.4 30.5 Earnings per share Earnings per share (In USD) from continuing operations - basic 26 -0.25 0.23 Earnings per share (In USD) from continuing operations - diluted 26 -0.25 0.23 Earnings per share Earnings per share (In USD) from total operations - basic 26 -1.09 0.07 Earnings per share (In USD) from total operations - diluted 26 -1.09 0.07 1 EBITDA - EBIT excluding depreciation, amortization and impairment. 2 EBIT - Profit/loss excluding income tax expense/benefit, net financial items. REC Silicon annual report 2024 REC Silicon annual report 2024 82 82 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Consolidated statement of comprehensive income USD in million 2024 2023 Profit/loss -457.4 30.5 Other comprehensive income, net of tax: Remeasurement of defined benefit plans 2.9 0.9 Currency translation effects 0.0 0.0 Sum items that will not be reclassified to profit or loss 2.9 0.9 Items that may be reclassified subsequently to profit or loss: Currency translation differences 0.0 -15.4 Sum items that may be reclassified subsequently to profit or loss 0.0 -15.4 Total other comprehensive income 2.9 -14.5 Total comprehensive income -454.4 16.0 Total comprehensive income attributable to: Owners of REC Silicon ASA -454.4 16.0 REC Silicon annual report 2024 REC Silicon annual report 2024 83 83 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Consolidated statement of changes in equity Attributable to equity holders of REC Silicon ASA USD in million Notes Share capital Share premium Other paid-in capital Total paid-in capital Other equity Comprehensive income Total equity Year 2023 On January 1, 2023 59.2 2,926.7 41.8 3,027.7 539.0 -3,506.3 60.4 Total comprehensive income 0.0 0.0 0.0 0.0 0.0 16.0 16.0 On December 31, 2023 59.2 2,926.7 41.8 3,027.7 539.0 -3,490.3 76.4 Year 2024 On January 1, 2024 59.2 2,926.7 41.8 3,027.7 539.0 -3,490.3 76.4 Total comprehensive income 0.0 0.0 0.0 0.0 0.0 -454.4 -454.4 On December 31, 2024 59.2 2,926.7 41.8 3,027.7 539.0 -3,944.8 -378.1 REC Silicon annual report 2024 REC Silicon annual report 2024 84 84 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Details of consolidated comprehensive income USD in million Translation differences that can be transferred to profit and loss Acquisition Retained earnings Total Year 2023 Accumulated on January 1, 2023 28.8 20.9 -3,556.0 -3,506.3 Profit/loss 0.0 0.0 30.5 30.5 Other comprehensive income: Items that will not be reclassified to profit or loss: Remeasurement of defined benefit plans 0.0 0.0 0.9 0.9 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 0.9 0.9 Items that may be reclassified to profit or loss: Currency translation differences taken to equity -15.4 0.0 0.0 -15.4 Sum items that may be reclassified to profit or loss -15.4 0.0 0.0 -15.4 Total other comprehensive income for the period -15.4 0.0 0.9 -14.5 Total comprehensive income for the period -15.4 0.0 31.4 16.0 Accumulated on December 31, 2023 13.4 20.9 -3,524.6 -3,490.3 Year 2024 Accumulated at January 1, 2024 13.4 20.9 -3,524.6 -3,490.3 Profit/loss 0.0 0.0 -457.4 -457.4 Other comprehensive income: Items that will not be reclassified to profit or loss: Remeasurement of defined benefit plans 0.0 0.0 2.9 2.9 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 2.9 2.9 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 2.9 2.9 Total comprehensive income for the period 0.0 0.0 -454.4 -454.4 Accumulated at December 31, 2024 13.4 20.9 -3,979.0 -3,944.8 REC Silicon annual report 2024 REC Silicon annual report 2024 85 85 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Consolidated statement of cash flows USD in million Notes 2024 2023 Cash flows from operating activities Profit/loss before tax‌ 1 -457.4 30.5 Depreciation, amortization and impairment 6 , 7 , 8 270.9 22.4 Proceeds from sale of Yulin JV 9 0.0 -136.1 Changes in receivables, prepayments from customers etc. 12 9.6 25.1 Changes in inventories 13 31.1 -20.3 Changes in payables, accrued and prepaid expenses 20 4.3 3.0 Changes in provisions 20 8.2 0.0 Changes in VAT and other public taxes and duties 20 1.3 1.3 Currency effects not cash flow or not related to operating activities 25 0.0 -12.3 Other items -0.1 0.2 Net cash flow from operating activities -132.0 -86.0 Cash flows from investing activities Proceeds from sale of Yulin JV 9 0.0 136.1 Proceeds/Payments finance receivables and restricted cash 14 0.1 0.2 Proceeds from sale of property, plant and equipment and intangible assets 6 1.6 0.7 Payments for property, plant and equipment and intangible assets 6 -91.3 -145.7 Net cash flow from investing activities -89.6 -8.7 USD in million Notes 2024 2023 Cash flows from financing activities Payments of lease liabilities 7 -7.9 -3.9 Payments of borrowings and up-front/waiver loan fees 17 -31.2 -111.1 Proceeds from borrowings 17 100.0 280.0 Net cash flow from financing activities 60.9 165.0 Effect on cash and cash equivalents of changes in foreign exchange rates 25 0.0 -4.6 Net increase/decrease in cash and cash equivalents -160.7 65.7 Cash and cash equivalents at the beginning of the period 170.9 105.3 Cash and cash equivalents at the end of the period 10.3 170.9 1 Profit/loss before tax consists of Profit/loss before tax from continuing operations -104.2 95.9 Profit/loss before tax from discontinued operations 11 -353.1 -65.4 Profit/loss before tax from total operations -457.4 30.5 1 Profit/loss before tax from total operations includes Interest Paid -30.3 -16.5 Interest Received 3.1 3.6 REC Silicon annual report 2024 REC Silicon annual report 2024 86 86 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Notes to the consolidated financial statements Note 01 General information REC Silicon ASA was established in Norway on December 3, 1996. The Company is headquartered in Lysaker, Norway. The Company is a public limited liability company incorporated and domi-ciled in Norway. The address of its registered office is Lysaker Torg 5, 3. etg, Lysaker, Norway. Subsidiaries of the Company including ownership and voting rights are presented below. Subsidiaries of REC Silicon ASA Company Ownership/voting right Business office REC Silicon AS 100% Bærum REC Silicon Inc 100% Moses Lake, USA REC Solar Grade Silicon LLC 100% Moses Lake, USA REC Advanced Silicon Materials LLC 100% Butte, USA REC Silicon Pte. Ltd. 100% Singapore REC Solar AS 100% Bærum These consolidated financial statements have been approved for issue by the Board of Directors on March 19, 2025 and are subject to approval by the Annual General Meeting scheduled for May 8, 2025. Note 02 Summary of significant accounting policies The principal accounting policies applied in the preparation of these consol-idated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. 2.1 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 IFRS® Accounting Standards as adopted by the EU, relevant inter-pretations, and the Norwegian Accounting Act. The consolidated financial statements have been prepared under the historical cost convention except for shareholdings at fair value through profit or loss. 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 signifi-cant impact are disclosed in note 4. 2.2 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 100 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. REC Silicon annual report 2024 REC Silicon annual report 2024 87 87 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements 2.3 Segment reporting REC Silicon produces silicon gas for the semiconductor industries at its manufacturing facility in Butte, Montana. The Company restarted production of polysilicon for the photovoltaic industry at its manufacturing facility in Moses Lake, Washington in the fourth quarter of 2023. The company discon-tinued polysilicon production at its Moses Lake facility as of December 30, 2024. The Company’s organization structure, management team, operating strategy, and performance measurement reporting support the determi-nation that these businesses represent separate distinguishable operating segments. Accordingly, there are two operating segments: Solar Materials (Moses Lake, Washington) and Semiconductor Materials (Butte, Montana). The operating segments include revenues less cost of manufacturing. Cost of manufacturing includes direct and indirect manufacturing costs and does not include general, administrative, and selling expenses. Other includes general, administrative, and selling expenses which support both operating segments in addition to administrative costs for the Company’s headquar-ters 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 and EBIT for the Group. Group Management is headed by the Chief Executive Officer (CEO), and the CEO makes decisions regarding the allocation of resources and perfor-mance assessment for all segments. Accordingly, the CEO is regarded as the Chief Operating Decision Maker (CODM). 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. 2.4 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 trans-lated at the exchange rates on the reporting date. Foreign exchange gains and losses resulting from the settlement, 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 func-tional 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. On December 31, 2024, an intercompany loan from REC Silicon ASA to REC Silicon, Inc of USD 122.8 million was regarded as a part of the net investment. On December 31, 2023 this loan amount was USD 116.8 million. 2.5 Current/non-current Assets and liabilities are classified as current when they are expected to be realized or settled within 12 months after the reporting date. 2.6 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depre-ciation and un-reversed impairment losses. Cost includes expenditures that are directly attributable 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. 2.7 Intangible assets (A) Goodwill On December 31, 2024 and 2023 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. REC Silicon annual report 2024 REC Silicon annual report 2024 88 88 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements (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. 2.8 Impairment of assets Assets are reviewed for impairment whenever events or changes in circum-stances 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. 2.9 Financial assets and liabilities Financial assets are classified and subsequently measured at amortized cost, fair value through profit or loss, or fair value through other comprehen-sive 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 finan-cial liabilities (including derivatives) which are classified at fair value. 2.10 Accounting for derivative financial instruments and hedging activities On December 31, 2024 and 2023 the Group had no derivatives. 2.11 Trade receivables Trade receivables that do not have a significant financing component are recognized at transaction price 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 expe-rience adjusted for forward-looking factors specific to the debtors and the economic environment. In addition, provisions are recorded for accounts which are greater than 60 days past due unless there is a clear indication that payment will be received. Balances are written off when collection efforts have been exhausted and the probability of recovery is unlikely. 2.12 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. 2.13 Paid-in equity capital Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of any income tax, from the proceeds. 2.14 Borrowings Borrowings are recognized initially at fair value. Borrowings that are not maintained at fair value through profit or loss are recognized net of trans-action 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 instru-ments 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. 2.15 Inventories Inventories are stated at the lower of cost or net realizable value (NRV). Purchased inventories are stated at average cost less estimated obsoles-cence. 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. 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 labour, 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. 2.16 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. REC Silicon annual report 2024 REC Silicon annual report 2024 89 89 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements 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 settle 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 382 and 383 of the Internal Revenue Code of the United States in the event of a change in the Company’s ownership. 2.17 Provisions Provisions for product warranties, onerous contracts, asset retirement obligations, restructuring costs, termination benefits, environmental resto-ration, 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 settle 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. 2.18 Share-based compensation The Group grants synthetic share options to certain employees. The cost of these share-based options (settled in cash) is recalculated at each reporting date. using the Black Scholes option pricing model (see note 32). 2.19 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 compre-hensive income in the period in which they arise. Gains or losses on the curtailment or settlement of a defined benefit plan are recognized when the curtailment or settlement occurs. Obligations for contributions to defined contribution pension plans are recognized as an expense during the period incurred. 2.20 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 frame 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”. REC Silicon can receive prepayments in advance of fulfilling contractual obligations for delivering goods. This prepaid revenue is recorded as a liability until such time that revenue is recognized. 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 37 Provisions, Contingent Liabilities and Contingent Assets. REC Silicon does not have any other significant obligations for returns or refunds. 2.21 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 consider-ation. 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. REC Silicon annual report 2024 REC Silicon annual report 2024 90 90 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements 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 deter-mined, 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 12 months or less) are recognized as expense in profit or loss when incurred. 2.22 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 attached 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 unsettled 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 21). 2.23 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 activ-ities, 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. 2.24 Adoption of new and revised standards and interpretations The Group, in practice, adopts new and amended standards and interpre-tations, issued by the IASB and approved by the EU, that are relevant to its operations as effective. New standards that were effective beginning January 1, 2024 did not have a material effect on the Group’s financial statement. REC Silicon annual report 2024 REC Silicon annual report 2024 91 91 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 03 Financial risk management 3.1 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, 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 objec-tives, 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. On December 31, 2024, the Group’s working capital is a combination of USD and NOK, equity is in NOK, and debt is in USD. Currency risk arises from transactions in currencies other than the Group’s reporting currency and cash denominated in NOK. Currency risk relates primarily to a portion of cash balances 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 24 months. The purpose is to reduce the currency risk of expected future net cash flows. The Company manages currency risk on an overall level. On December 31, 2024, and 2023, 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 (see note30) (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 4, 17, and 30). Debt maturities in 2025 include USD 50 million for the Standard Chartered term loan, which needs to be rolled over, USD 1.8 million for the undiscounted Grant County Property Tax note and USD 16.4 million for undiscounted lease liabilities. On January 24, 2025, the Company announced a new credit agreement with Hanwha International. As part of the terms of the Credit Agreement, the Company and Hanwha International LLC (HWI) agreed to roll up the existing loans, which mature on February 2, 2025, for USD 25 million and on February 4, 2025, for USD 25 million, respectively, into the terms of the Credit Agreement. On December 31, 2024, the Group does not have sufficient available cash to meet debt service and other antic-ipated operating cash flow requirements. Management acknowledges that additional sources of capital are required to meet obligations. The Company is actively negotiating securing additional financing aiming to close in the first half of 2025. Furthermore, the Company is looking to sell noncore assets during 2025. Management estimates future cash requirements can be met from the additional funding described below, along with cash flows generated by operations from the Semiconductor segment. (see notes 7,17, 29and 33to the consolidated financial statements). Due to the shutdown of the polysilicon operations at the Moses Lake facility in December 2024, the polysilicon business has been classified as discon-tinued operations. Activities related to the removal of chemicals from the polysilicon production facilities and facility cleanup will continue until March 2025. Additionally, workforce restructuring activities will be completed by March 2025. The cash flow generation in 2025 will be driven by sales from the Butte facility, with investment activities primarily focused on the maintenance of the Butte facility. Management believes that the financial goals for 2025 are achievable, and the primary focus is on 2025 as it will be necessary to stabilize the Company’s operations to actualize future financing and devel-opment opportunities in subsequent years. On January 24, 2025, the Company announced that it had entered into a USD 40 million term loan (the “credit Agreement”) with Hanwha International LLC, supporting REC Silicon’s capital needs during the shutdown process REC Silicon annual report 2024 REC Silicon annual report 2024 92 92 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements at Moses Lake and the Company’s transition into a pure-play silicon gas provider. As part of this agreement, USD 25.6 million was drawn in January, with the remaining USD 14.4 million drawn in March. As part of the terms of the Credit Agreement, the Company and Hanwha International LLC (HWI) agreed to roll up the existing loans, which mature on February 2, 2025, for USD 25 million and on February 4, 2025, for USD 25 million, respectively, into the terms of the Credit Agreement. The Company and HWI amended the existing loan documentation to reflect the roll-up into the Credit Agreement on February 5, 2025. The term loan matures in January 2026. Additionally, USD 50 million loan from Standard Chartered Bank, which matures in June 2025, needs to be rolled over, and USD 30 million prepayment received under the offtake agreement with Hanwha QCells Georgia Inc. is waived for repayment without interest until January 2026, with the due date subject to extension upon mutual agreement of the parties. The Company will need additional funding to meet its debt obligations during the next 12 months, as debt obligations begin to mature in June 2025. Management acknowledges that the Company will not be able to generate sufficient cash flow from operations to support its operations for the next 12 months and meet these debt repayments. There is significant doubt around the Company’s ability to secure sufficient funding to sustain its operations and to meet debt repayment obligations for the next 12 months without the continued support of the major shareholder, Hanwha, or additional sources of capital. This has resulted in material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern, which could have a substantial impact on its future operational capacity. However, management and the Board of Directors believe that the Company will be successful in obtaining the capital necessary to meet obligations and continue as a going concern. Management acknowledges the importance of assumptions related to the going concern assessment and has carefully projected the outlook for 2025. Management believes that the financial goals for 2025 are achievable. Given the cash flow estimates outlined above and the fact that Hanwha, as the largest shareholder and the primary creditor, has guaranteed all bank loans and provided the shareholder loans, management and the Board believe that the Company’s continued operations are aligned with Hanwha’s best interest. The Board considers the Company’s current liquidity position and the estimated results of operations sufficient to meet the operating cash flow requirements for remaining operations and to refinance the current bank loans for the upcoming years. 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 was realistic at the date of the accounts. The Board intends to monitor these conditions and is prepared to take appropriate action as necessary. Accordingly, these financial statements have been prepared under the assumption that the Company is a going concern. (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, both in REC Silicon ASA and REC Silicon Inc. Cash in bank accounts and liabilities have primarily carried variable interest rates. 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 30for 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 2024 no hedges were in place. 3.2 Fair value estimation Fair value estimation is discussed in notes 9and 30. 3.3 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 oper-ating cash flow requirements and to meet debt service obligations. REC Silicon annual report 2024 REC Silicon annual report 2024 93 93 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 04 Critical accounting judgments and key sources of estimation uncertainty 4.1 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 20). (D) Discontinued operations As a result of shutting down operations in Moses Lake, the Solar Materials segment has been reported as discontinued operations as of December 30, 2024. Management is required 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 REC Group’s financial statements and related disclo-sures 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 critical accounting estimate is one which is both important to the portrayal of the company’s financial condition and results and requires management to make estimates about the effect of matters that are inherently uncertain. Management evaluates such estimates on an ongoing basis, based upon historical results and expe-rience utilizing trends and other methods considered reasonable. 4.2 Key sources of estimation uncertainty – critical accounting estimates The preparation of financial statements in accordance with IFRS® Accounting 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 recov-erable amounts of the Group’s assets are sensitive to small changes to key assumptions. The Company uses internal business plans that include estimates on raw material and energy prices, discount rates, and external market and industry analysis. There could be changes in environmental regulations impacting the company going forward, but no related legislation has been passed at the current time that is expected to impact the group. (notes 6, 7and 8). 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 The company has an obligation for eventual cleanup of its manufacturing operations in Moses Lake, Washington and Butte Montana. 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. The restoration of production sites is subject to significant uncertainty due to variability in restoration requirements that may be imposed by regulatory authorities as well as timing of the restoration. In addition, estimates of provisions are sensitive to changes in discount rates used to calculate provisions for AROs reported by the Group. (note20) REC Silicon annual report 2024 REC Silicon annual report 2024 94 94 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 05 Segment and revenue information Revenues from customers constituting more than ten percent of total revenues for year ended December 31, 2024 Semiconductor materials Solar materials Other REC Silicon USD in million % % % % Customer 1 44.9 31.9% 44.9 31.9% Customer 2 33.3 23.7% 33.3 23.7% Customer 3 18.2 12.9% 18.2 12.9% Revenues from customers constituting more than ten percent of total revenues for year ended December 31, 2023 Semiconductor materials Solar materials Other REC Silicon USD in million % % % % Customer 1 32.8 23.4% 32.8 23.4% Customer 2 27.6 19.6% 27.6 19.6% Customer 3 17.9 12.7% 17.9 12.7% Geographic distribution of revenues based on customer location for year ended December 31, 2024 Semiconductor materials Solar materials Other REC Silicon USD in million % % % % Denmark 44.9 31.9% 0.0 0.0% 0.0 0.0% 44.9 31.9% USA 29.7 21.1% 0.0 0.0% 0.1 100.0% 29.8 21.1% China 18.5 13.1% 0.0 0.0% 0.0 0.0% 18.5 13.1% Korea 18.3 13.0% 0.0 0.0% 0.0 0.0% 18.3 13.0% Taiwan 10.0 7.1% 0.0 0.0% 0.0 0.0% 10.0 7.1% Japan 5.3 3.7% 0.0 0.0% 0.0 0.0% 5.3 3.7% Singapore 3.4 2.5% 0.0 0.0% 0.0 0.0% 3.4 2.4% Vietnam 2.6 1.9% 0.0 0.0% 0.0 0.0% 2.6 1.9% France 2.3 1.7% 0.0 0.0% 0.0 0.0% 2.3 1.7% Malaysia 2.0 1.5% 0.0 0.0% 0.0 0.0% 2.0 1.5% Belgium 1.0 0.7% 0.0 0.0% 0.0 0.0% 1.0 0.7% India 0.7 0.5% 0.0 0.0% 0.0 0.0% 0.7 0.5% Other 0.7 0.5% 0.0 0.0% 0.0 0.0% 0.7 0.5% Thailand 0.6 0.4% 0.0 0.0% 0.0 0.0% 0.6 0.4% Ireland 0.3 0.2% 0.0 0.0% 0.0 0.0% 0.3 0.2% Czech Republic 0.3 0.2% 0.0 0.0% 0.0 0.0% 0.3 0.2% Total revenues 140.7 100.0% 0.1 100.0% 140.8 100.0% REC Silicon annual report 2024 REC Silicon annual report 2024 95 95 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Geographic distribution of revenues based on customer location for year ended December 31, 2023 Semiconductor materials Solar materials Other REC Silicon USD in million % % % % Denmark 27.6 19.6% 0.0 0.0% 0.0 0.0% 27.6 19.6% China 27.5 19.5% 0.0 0.0% 0.0 0.0% 27.5 19.5% USA 18.0 12.8% 0.0 0.0% 0.2 100.0% 18.2 12.9% Singapore 16.8 12.0% 0.0 0.0% 0.0 0.0% 16.8 11.9% Korea 16.2 11.6% 0.0 0.0% 0.0 0.0% 16.2 11.5% Taiwan 15.4 11.0% 0.0 0.0% 0.0 0.0% 15.4 11.0% Japan 10.4 7.4% 0.0 0.0% 0.0 0.0% 10.4 7.4% Other 6.1 4.3% 0.0 0.0% 0.0 0.0% 6.1 4.3% Belgium 0.9 0.6% 0.0 0.0% 0.0 0.0% 0.9 0.6% France 0.7 0.5% 0.0 0.0% 0.0 0.0% 0.7 0.5% Czech Republic 0.6 0.4% 0.0 0.0% 0.0 0.0% 0.6 0.4% Norway 0.1 0.1% 0.0 0.0% 0.0 0.0% 0.1 0.1% Germany 0.1 0.1% 0.0 0.0% 0.0 0.0% 0.1 0.1% Canada 0.1 0.1% 0.0 0.0% 0.0 0.0% 0.1 0.1% Total revenues 140.6 100.0% 0.2 100.0% 140.8 100.0% 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 31, 2024 Semiconductor materials Solar materials Other REC Silicon USD in million % % % % Silicon gas 81.1 57.6% 0.0 0.0% 0.0 0.0% 81.1 57.6% Polysilicon 59.7 42.4% 0.0 0.0% 0.0 0.0% 59.7 42.4% Other 0.0 0.0% 0.0 0.0% 0.1 100.0% 0.1 0.0% Total revenues 140.7 100.0% 0.0 0.0% 0.1 100.0% 140.8 100.0% Revenues by category for year ended December 31, 2023 Semiconductor materials Solar materials Other REC Silicon USD in million % % % % Silicon gas 86.6 61.6% 0.0 0.0% 0.0 0.0% 86.6 61.5% Polysilicon 54.0 38.4% 0.0 0.0% 0.0 0.0% 54.1 38.4% Other 0.0 0.0% 0.0 0.0% 0.2 100.0% 0.2 0.1% Total revenues 140.6 100.0% 0.0 0.0% 0.2 100.0% 140.8 100.0% The amounts for 2023 are re-presented for discontinued operations, see note11. REC Silicon annual report 2024 REC Silicon annual report 2024 96 96 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements The segment results in the tables below are the primary results used by the Chief Operating Decision Maker (CODM) to evaluate performance and allocate resources. EBITDA contribution includes all items that are included in EBITDA for the segments. The solar materials segment has been discontinued, however assets related to silane gas have potential future use and will be part of continuing segment going forward. For 2024 USD 49.8 million of impairment is for silane gas assets. The segment “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. Segment information for the year ended December 31, 2024 USD in million Semiconductor materials Solarmaterials Other Total Revenues 140.7 0.0 0.1 140.8 Cost of materials -20.6 0.0 -0.1 -20.7 Change in inventories -15.8 0.0 -0.1 -15.9 Employee benefit expense -30.3 0.0 -13.3 -43.6 Other operating expenses -60.6 0.0 -17.2 -77.8 Other income and expenses -0.6 0.0 -0.1 -0.7 Total current costs -127.8 0.0 -30.8 -158.7 EBITDA contribution 12.9 0.0 -30.8 -17.9 Depreciation of fixed Assets -8.3 0.0 -0.4 -8.7 Amortization 0.0 0.0 0.0 0.0 Depreciation of leased Assets -2.6 0.0 0.0 -2.6 Impairment 0.1 -49.8 0.0 -49.7 Total depreciation, amortization, and impairment -10.8 -49.8 -0.5 -61.0 EBIT contribution 2.1 -49.8 -31.3 -78.9 Segment information for the year ended December 31, 2023 USD in million Semiconductor materials Solar materials Other Total Revenues 140.6 0.0 0.2 140.8 Cost of materials -26.8 0.0 -0.1 -26.9 Change in inventories 7.2 0.0 -0.1 7.1 Employee benefit expense -30.1 0.0 -13.4 -43.5 Other operating expenses -81.3 0.0 -16.7 -98.0 Other income and expenses 4.4 0.0 0.3 4.7 Total current costs -126.6 0.0 -29.9 -156.5 EBITDA contribution 14.0 0.0 -29.7 -15.7 Depreciation of fixed Assets -9.8 0.0 -0.5 -10.2 Amortization 0.0 0.0 0.0 0.0 Depreciation of leased Assets -2.6 0.0 0.0 -2.6 Impairment -7.0 0.0 0.0 -7.0 Total depreciation, amortization, and impairment -19.3 0.0 -0.5 -19.8 EBIT contribution -5.4 0.0 -30.2 -35.5 The amounts for 2023 are re-presented for discontinued operations, see note11. Substantially all of the Group’s non-current assets are located in the United States. The following table disaggregates revenues by category and reconciles to total revenues. USD in million 2024 2023 Silicon gas 81.1 86.6 Polysilicon 59.7 54.1 Other 0.1 0.2 Total revenues 140.8 140.8 REC Silicon annual report 2024 REC Silicon annual report 2024 97 97 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 06 Fixed assets 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 on January 1, 2024 33.6 40.2 4.0 180.9 258.7 Net additions‌1 -0.1 57.9 2.9 25.3 86.0 Disposals 0.0 -0.3 -0.7 0.0 -1.0 Depreciation and amortization -2.0 -6.1 -0.6 0.0 -8.7 Depreciation and amortization - discontinued operations -0.3 -10.7 -0.6 0.0 -11.7 Impairment -0.1 -12.6 0.0 -29.6 -42.3 Impairment - discontinued operations‌2 -0.1 -37.3 -2.6 -156.3 -196.4 Carrying value on December 31, 2024 31.1 31.0 2.3 20.3 84.7 On December 31, 2024 Historical cost 104.5 1,674.3 63.8 73.8 1,916.4 Accumulated depreciation/amortization/impairment -73.4 -1,643.2 -61.6 -53.5 -1,831.7 Carrying value on December 31, 2024 31.1 31.0 2.3 20.3 84.7 Carrying value on January 1, 2023 31.1 24.6 2.7 62.4 120.9 Net additions‌1 5.1 24.3 1.8 126.1 157.2 Disposals -0.3 0.0 0.0 0.0 -0.4 Depreciation and amortization -2.2 -7.4 -0.6 0.0 -10.2 Depreciation and amortization - discontinued operations 0.0 -0.7 0.0 0.0 -0.7 Impairment‌ 0.0 -0.6 0.0 -7.5 -8.1 Impairment - discontinued operations 0.0 0.0 0.0 0.0 0.0 Carrying value on December 31, 2023 33.6 40.2 4.0 180.9 258.7 On December 31, 2023 Historical cost 145.4 2,179.7 72.1 230.0 2,627.2 Accumulated depreciation/amortization/impairment -111.7 -2,139.5 -68.1 -49.1 -2,368.4 Carrying value on December 31, 2023 33.6 40.2 4.0 180.9 258.7 Specification of useful lives and depreciation At year-end 2024, estimated useful lives by asset class were as follows: •Land and Buildings 0-30 years (weighted average approximately 14.6 years) •Machinery and equipment 0-20 years (weighted average approximately 13.7 years) •Other tangible fixed assets (weighted average approximately 9.0 years) With the Solar Materials Segment being discontinued the above useful lives relate to assets within the Semiconductor Materials Segment. Assets under construction are not yet ready for their intended use or have not reached a condition capable of operating in the manner intended by management and depreciation has not started. Reviews of estimated useful lives of property, plant, and equipment for 2024 and 2023 resulted in only minor changes. 1 Net additions include transfers from assets under construction. 2 Impairment for discontinued operations recorded in 2024 is related to the write down of assets in the solar materials segment because of the announced exit from the granular polysilicon business line. Impairment of discontinued operations for assets under construction is related to the Moses Lake restart project that remained in under construction as the facility had not reached a condition capable of operating in the manner intended by management. REC Silicon annual report 2024 REC Silicon annual report 2024 98 98 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Intangible assets USD in million Assets under development Other Total intangible assets Carrying value on January 1, 2024 0.5 0.3 0.8 Disposals -0.5 -0.2 -0.8 Depreciation and amortization - discontinued operations 0.0 0.0 0.0 Carrying value on December 31, 2024 0.0 0.0 0.0 On December 31, 2024 Historical cost 0.0 45.1 45.1 Accumulated amortization/impairment 0.0 -45.1 -45.1 Carrying value on December 31, 2024 0.0 0.0 0.0 Carrying value on January 1, 2023 0.6 0.3 1.0 Internal Development -0.1 0.0 -0.1 Amortization 0.0 0.0 0.0 Carrying value on December 31, 2023 0.5 0.3 0.8 On December 31, 2023 Historical cost 0.8 67.9 68.7 Accumulated amortization/impairment -0.3 -67.6 -67.9 Carrying value on December 31, 2023 0.5 0.3 0.8 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. Disposed Intangible asset under develop were related to internally developed software. Historical cost intangible assets are the result of internally developed software that continues to be in use, but is fully amortized. Reviews of estimated useful lives of intangible assets for 2024 and 2023 resulted no changes. Note 07 Leases Right of use Assets USD in million Land and buildings Machinery Gas plants Other Total Balance at January 1, 2024 0.0 0.4 31.7 0.1 32.3 Depreciation -0.2 -0.1 -2.2 -0.2 -2.6 Depreciation - discontinued operations 0.0 0.0 -1.7 0.0 -1.7 Additions 1.3 0.0 0.1 0.7 2.2 Modification of existing leases 0.1 0.0 0.7 0.0 0.8 Impairment -1.2 -0.3 -5.3 -0.7 -7.5 Balance at December 31, 2024 0.0 0.0 23.4 0.0 23.4 Balance on January 1, 2023 0.0 0.5 29.9 0.0 30.4 Depreciation -0.1 -0.1 -2.4 0.0 -2.6 Depreciation - discontinued operations 0.0 0.0 -0.8 0.0 -0.8 Additions 0.0 0.0 0.1 0.1 0.3 Adjustments 0.1 0.0 4.9 0.0 5.0 Balance on December 31, 2023 0.0 0.4 31.7 0.1 32.3 Adjustments during 2023 consist of USD 5.0 million related to contractual increases in lease payments tied to economic indices. REC Silicon annual report 2024 REC Silicon annual report 2024 99 99 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Lease Liabilities USD in million 2024 2023 Maturity analysis - contractual undiscounted cash flows Less than 1 year 16.4 15.6 1 - 2 years 16.3 15.6 2 - 3 year 16.3 15.5 3 - 4 years 16.1 15.5 4 - 5 years 6.0 15.5 More than 5 years 25.1 30.4 Total undiscounted lease liabilities on December 31 96.3 108.2 Lease liabilities included in the statement of financial position on December 31 65.1 70.0 Current 9.0 7.5 Non-current 56.1 62.5 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 13.2 percent on December 31, 2024 and December 31, 2023. Leases recognized in profit or loss USD in million 2024 2023 Interest 4.2 4.3 Interest - discontinued operations 4.2 4.2 Depreciation 2.6 2.6 Depreciation - discontinued operations 1.7 0.8 Impairment 7.5 0.0 Gain(-)/loss(+) due to terminations, purchases, impairments, and other changes 0.0 0.0 Expenses relating to short-term leases 0.6 0.6 Expenses relating to short-term leases - Discontinued 0.9 0.5 Right-of-use assets associated with contracts with a term less than 12 months at the time of initiation are expensed in accordance with the low-value assets and short-term lease exemptions. In 2024, the Group made lease payments totalling USD 16.2 million, comprised of USD 7.9 million of lease liability payments and USD 8.3 million imputed interest. See note 25below. In addition, payments of USD 1.5 million related to leases for low-value-assets and short-term durations which are exempt under IFRS 16 have been expensed in 2024. See notes 11and 22below. REC Silicon annual report 2024 REC Silicon annual report 2024 100 100 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 08 Impairments of cash-generating units 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 written down to the recoverable amount which is the greater of fair value less cost to sell and value in use (discounted cash flows). Cash-generating units REC Silicon consisted of two cash generating units on December 31, 2024 and 2023. 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 REC Silicon’s management has continuously assessed impairment indica-tors, considering both factors related to the company and the markets in which it operates, as well as current transactions and events. Management has determined that the shutdown of the polysilicon facility in the Solar Materials CGU is a significant factor that might impact the value of the company or its ability to operate. Management has determined that the rising costs of raw materials and increased manufacturing expenses, leading to a decline in profitability, combined with changes to the discount rate, are sufficient to indicate a potential change in the valuation of the long-lived assets of the Semiconductor Materials CGU. Consequently, impairment testing for both the Solar Materials CGU and the Semiconductor materials CGU were conducted as of December 31, 2024. The current carrying value of the Solar Materials CGU is -60.2 million USD as of December 31, 2024. The assets related to polysilicon were impaired to zero due to the recognition of a 100 percent impairment loss. As a result, the value of the related assets became lower than the amount of the associated liabilities, leading to a negative carrying value. Management considers this scenario appropriate for use in supporting the carrying value of the Solar Materials CGU and has performed impairment testing using this forecast. The carrying value of the Semiconductor materials CGU was USD 88.0 million as of December 31, 2024. The analysis conducted estimates the net present value (NPV) of the Semiconductor Materials CGU, including the deduction of lease liabilities, to exceed the carrying value of the Semiconductor Materials CGU and no impairment is necessary. REC Silicon management believes that the assumptions in this analysis are reasonable and represent their best estimate of the results the Semiconductor Materials CGU will achieve for the periods presented. Basis for the impairment tests The calculation reflects the expected development in the cost of emission quotas based on the current regulatory framework. There could be changes in environmental regulations impacting the company going forward, but no related legislation has been passed at the current time that is expected to impact the group. The impairment assessment is based on the expectation that any increase in cost due to new legislation will be covered by increased sales prices. 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 6-year period with the last year used as a basis for estimating terminal value. Future cash flows are estimated based on the budget for the next year and the subsequent five forecast years. A terminal value is calculated from the estimated cash flows generated in the last forecast year. A growth rate of one percent has been used during the terminal period for both the 2024 and 2023 analysis. 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 committed 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, right of use assets, intangible assets, and net working capital only. Discount rate The discount rate used for this analysis was prepared by a 3rdparty subject matter expert. This discount rate was prepared on a basis consistent with its status as a standalone company with the majority of it cash flows generated in the US but with its stakeholders located in Norway. The methodology to arrive at this estimate has not changed from that used by the Company for prior periods. REC Silicon annual report 2024 REC Silicon annual report 2024 101 101 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements The discount rate used for this analysis is 13.1 percent. This rate was esti-mated using the entity’s after tax weighted average cost of capital (WACC) as a starting point. The study used to arrive at this estimate of WACC resulted in a range from 11.8 percent to 14.4 percent. REC management believes that the discount rates are reasonable for use in this analysis.. The discount rates used on December 31, 2024 and 2023 are reflected in the table below: Discount rates (%) 2024 2023 Post-tax Pre-tax Post-tax Pre-tax Solar Materials and Semiconductor Materials CGU 13.1 15.0 12.7 13.9 Key assumptions and sensitivities Key assumptions for the solar materials segment include no future sales. REC Silicon will incur maintenance costs to maintain the Moses Lake silane facilities in a state that would allow for the restart of silane production. However, there are currently no legally binding sales contracts or approved binding investment plans. Key assumptions for the semiconductor materials segment include increased sales in the US due to new semiconductor fab capacity being brought online. The tables below present the estimated change in impairment for each CGU due to an isolated change in the key assumption for all years. Spending includes variable manufacturing costs, fixed manufacturing costs, selling general and administrative expenses, and capital expenditures in total. The estimates are based on the assumptions used in the December 31, 2024 impairment analysis. Sensitivities for 2024 Solar Materials CGU USD in million Change Estimated changein impairment Post-tax discount rate +/-1% point -6.7/+5.7 Sales prices +/-2% NA Volume (production and sales) +/-2% NA Spending +/-2% -/+11.4 Semiconductor Materials CGU USD in million Change Estimated changein impairment Post-tax discount rate +/-1% point -18.3/+21.5 Sales prices +/-2% +/-21.2 Volume (production and sales) +/-2% +/-15.1 Spending +/-2% -/+11.4 Negative amounts represent an estimated increase in impairment. REC Silicon annual report 2024 REC Silicon annual report 2024 102 102 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Carrying value The tables below reflect the development of carrying values for each cash generating unit. On December 31, 2024 USD in million Semiconductor materials Solar Materials Other Total Trade and other receivables 14.4 5.4 5.8 25.5 Inventories 22.2 5.2 0.0 27.4 Current assets 36.6 10.6 5.8 52.9 Long term assets 97.9 5.1 5.1 108.1 Trade payables and other current liabilities -13.7 -41.9 -9.3 -64.9 Long term liabilities -3.3 0.0 0.0 -3.3 Allocation of other 1.5 0.0 -1.5 0.0 Subtract leasing -31.0 -34.0 0.0 -65.1 Carrying values 88.0 -60.2 0.0 27.8 On December 31, 2023 USD in million Semiconductor materials Solar Materials Other Total Trade and other receivables 24.1 1.1 5.4 30.7 Inventories 35.9 22.7 0.0 58.5 Current assets 60.0 23.7 5.4 89.2 Long term assets 94.2 190.5 6.2 291.0 Trade payables and other current liabilities -16.4 -32.0 -10.5 -59.0 Long term liabilities -7.0 0.0 0.0 -7.0 Allocation of other 0.4 0.6 -1.1 0.0 Subtract leasing -32.3 -37.6 0.0 -69.9 Carrying values 99.0 145.2 0.0 244.3 Note 09 Investments Other investments In the fourth quarter of 2023 The Group closed the sale of its 15 percent equity interest in the Shaanxi Non-Ferrous Tian Hong REC Silicon Materials Co., Ltd joint venture, Yulin JV. REC Silicon received gross proceeds of USD 136.1 million. Proceeds were reduced by transaction costs of USD 0.6M. This sale generated a non-recurring gain for the company in 2023 in the amount of USD 135.5 million. Ater the close of this transaction the group has no investments. REC Silicon annual report 2024 REC Silicon annual report 2024 103 103 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 10 Related party transaction 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 note16. Related companies Hanwha Solutions together with its affiliate Hanwha Corporation control 33.3 percent of the shares in REC Silicon ASA and is represented at the board of directors by Tae Won Jun, CSO Hanwha Corporation, as the board chair and Jooyong Chung, Head of M&A and Executive Vice President of Hanwha Aerospace, as deputy chair. On August 2, 2024, REC Silicon Inc entered a USD 25 million short-term loan with Hanwha International LLC. On November 4, 2024, REC Silicon Inc, and REC Silicon Inc’s wholly owned subsidiaries entered an additional USD 25 million short-term loan with Hanwha International LLC. Hanwha International LLC is an affiliate of the company’s two largest shareholders Hanwha Solutions and Hanwha Corporation. Interest paid to Hanwha international for these two loans amounted to USD 0.7 million in 2024. (see note 17) On January 24, 2025, REC Silicon ASA entered into an additional USD 40 million term loan with Hanwha International LLC, supporting REC Silicon’s capital needs during the shutdown process at Moses Lake and the Company’s transition into a pure play silicon gas provider. The term loan has a maturity date of January 2026. Further, the bridge loans of USD 25 and USD 25 million with Hanwha International LLC rolled into this loan at their maturity dates on February 2 and February 4, 2025, respectively. In 2024, REC Silicon paid Hanwha Solutions USD 3.1 million for guarantee and letter of credit fees related to bank loans. In 2023, REC Silicon paid Hanwha Solutions USD 2.0 million for guarantee and letter of credit fees related to bank loans. (see note 17) REC Silicon has an agreement with Hanwha Solutions and Hanwha subsidiaries to provide services to REC Silicon. In 2023 REC Silicon received USD 2.9 million in services. In 2023 REC Silicon received USD 1.4 million in services. Note 11 Discontinued operations On December 30, 2024, the Company announced that it ceased production at its Moses Lake, Washington facility, abandoning all of its polysilicon assets, which constitute a major line of business. In the financial statement for the year ended December 31 2024, results and cash flows of the polysilicon business are treated as discontinuing operations. The equipment involved in the production of silicon gases will be maintained in a safe and recoverable mode that incurs minimal interim costs, allowing the unit to restart with reasonable notice. This will give the Company the flexibility to capitalize on future customer demand for Silicon Anode or other gases while minimizing near-term operational costs. Due to this, the silicon gas assets are not abandoned and the impairment is presented as continuing business. This announcement follows the Company’s decision to shut down polysilicon production at its Butte, Montana facility in February 2024. The production facilities were completely halted by the end of December 2024, and clean-up activities have commenced, including the removal of remaining raw materials from the facilities. Moving forward, REC Silicon will focus its business efforts on silicon gases where the Company has clear strength, market positioning, and product differentiation. The Company is prioritizing driving costs out of its silicon gas assets and optimizing production, with a goal to return to profitability. The shutdown of the Moses Lake facility follows numerous, previously disclosed efforts to improve the level of some key impurities that resulted primarily from the post-reactor product finishing and handling systems. Initiatives included changing contact materials, procedures, operating conditions and parameters, passivation measures and bypassing equipment; and bringing in third-party resources to assist in evaluating and mitigating the situation. However, the Company was unsuccessful in its attempts to fully rectify the issues and ultimately received an unsuccessful qualifica-tion test, as announced on December 17, 2024 (see note8). The following statement of income is an analysis of discontinued operation. REC Silicon annual report 2024 REC Silicon annual report 2024 104 104 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Analysis of discontinued operations Consolidated statement of income Dec 31, 2024 Dec 31, 2023 USD in million Total operations Of which discontinued Continued Total operations Of which discontinued Continued Revenues 143.6 2.8 140.8 141.1 0.4 140.8 Cost of materials -56.1 -35.4 -20.7 -30.5 -3.6 -26.9 Changes in inventories -27.9 -11.9 -15.9 12.5 5.4 7.1 Employee benefit expenses -80.7 -37.1 -43.6 -69.6 -26.2 -43.5 Other operating expenses -144.1 -66.4 -77.8 -142.9 -45.0 -98.0 Other income and expense -3.6 -3.0 -0.7 9.0 4.2 4.7 EBITDA -168.8 -150.9 -17.9 -80.5 -64.8 -15.7 Depreciation -20.4 -11.7 -8.7 -10.9 -0.7 -10.2 Amortization 0.0 0.0 0.0 0.0 0.0 0.0 Depreciation of right of use assets -4.3 -1.7 -2.6 -3.4 -0.8 -2.6 Impairment -246.1 -196.4 -49.7 -8.1 -1.1 -7.0 Total depreciation, amortization and impairment -270.9 -209.8 -61.0 -22.4 -2.6 -19.8 EBIT -439.7 -360.7 -78.9 -102.9 -67.4 -35.5 Financial income 3.1 0.0 3.1 3.6 0.2 3.4 Net financial expenses -20.8 7.6 -28.4 -18.3 1.8 -20.1 Net currency gains/losses 0.1 0.0 0.1 12.7 0.0 12.7 Gain from sale of Yulin JV 0.0 0.0 0.0 135.5 0.0 135.5 Net financial items -17.7 7.6 -25.3 133.5 2.0 131.5 Profit/loss before tax -457.4 -353.1 -104.2 30.5 -65.4 95.9 Income tax expense/benefit from continuing operations 0.0 0.0 0.0 0.0 0.0 0.0 Profit/loss from continuing operations -104.2 95.9 Profit/loss from discontinued operations -353.1 -65.4 Profit/loss from total operations -457.4 30.5 Total Discontinued Continuing Total Discontinued Continuing Profit/loss attributable to owners of REC Silicon ASA -457.4 -353.1 -104.2 30.5 -65.4 95.9 Comprehensive income attributable to owners of REC Silicon ASA -454.4 -353.1 -101.3 16.0 -65.4 81.4 Earnings per share (In USD) -basic -1.09 -0.84 -0.25 0.07 -0.16 0.23 -diluted -1.09 -0.84 -0.25 0.07 -0.16 0.23 REC Silicon annual report 2024 REC Silicon annual report 2024 105 105 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Cashflows of discontinued operations The following table shows the cashflows of the Solar Materials Segment for 2024 and 2023. It includes cashflows to and from REC Silicon Inc as the US entities of REC Silicon have a cash pooling arrangement and net cash from REC Silicon Inc to the Solar Materials segment is reported in the line Net cash flow from financing activities. USD in million 2024 2023 Net cash flow from operating activities -113.6 -41.1 Net cash flow from investing activities -77.2 -125.6 Net cash flow from financing activities 190.5 166.7 Cash and cash equivalents at the beginning of the period 0.2 0.2 Cash and cash equivalents at the end of the period 0.0 0.2 Note 12 Receivables and prepayments USD in million 2024 2023 Trade receivables and accrued revenues 12.7 24.7 Provision for loss on trade recivables -0.7 -2.7 Trade receivables - net 12.1 21.9 Prepaid costs 9.4 8.7 Other non-current and current receivables 4.1 0.0 Total receivables and prepayments 25.5 30.7 Specification of provision for loss on trade receivables USD in million 2024 2023 On January 1 -2.7 -9.6 Change in provisions 2.1 6.9 On December 31 -0.7 -2.7 The provision for doubtful accounts includes the review of expected credit losses (ECL) based upon historical experience. In the fourth quarter of 2024 REC Silicon exhausted efforts to collect from previously impaired customers. As a result, the company wrote off USD 2.1 million in receivables as well as reversed the provision for the same amount. This resulted in a net zero change to receivables. There was no bad debt expense recorded in 2024. The remaining provi-sion of USD 0.7 million is the result of expected credit loss. On December 31, 2024, the review of the provision included the fact that the Company has not experienced any bad debt since 2018. REC Silicon annual report 2024 REC Silicon annual report 2024 106 106 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 13 Inventories Inventories in the statement of financial position Inventories have been written 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. 2024 2023 USD in million Before writedowns Writedowns After writedowns Before writedowns Writedowns After writedowns Stock of materials, merchandise, production supplies 6.6 0.0 6.6 18.1 0.0 18.1 Spare parts 51.4 -45.5 5.8 44.3 -33.1 11.2 Work in progress 8.6 -5.7 2.9 12.8 -2.3 10.5 Finished goods 74.6 -62.5 12.1 25.1 -6.4 18.7 Total 141.2 -113.7 27.4 100.4 -41.8 58.5 Note 14 Cash and cash equivalents and restricted bank accounts Cash and cash equivalents are primarily bank deposits. Restricted bank accounts (not included as cash and cash equivalents) USD in million 2024 2023 Restricted bank accounts current 0.6 0.6 Total restricted bank accounts 0.6 0.6 On December 31, 2024 and 2023 restricted bank accounts consisted of USD restricted cash for the US subsidiaries of USD 0.6 million. REC Silicon annual report 2024 REC Silicon annual report 2024 107 107 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 15 Shareholder information The following shareholders held one percent or more of the total outstanding shares in REC Silicon ASA on December 31. 2024 2023 Name of shareholders No. of shares Ownership No. of shares Ownership HANWHA‌1 140,208,552 33.33% 140,208,552 33.33% MORGAN STANLEY & Co. LLC‌2 Nominee 30,244,369 7.19% 22,028,592 5.24% NORDNET LIVSFORSIKRING AS Nominee 4,149,382 0.99% 4,367,214 1.04% SKANDINAVISKA ENSKILDA BANKEN AB Ordinary 0 0.00% 4,219,281 1.00% TOTAL SHARES OUTSTANDING 420,625,659 420,625,659 1Hanwha Solutions and Hanwha Corporation, (together “Hanwha”) holds shares via two nominee accounts, Citibank N.A. 89,733,473 shares, Hongkong and Shanghai Banking Corp 50,475,079 shares. 2On December 31, 2024 Water Street Capital Inc holds 22,602,654 shares through a nominee account with Morgan Stanley. The list of shareholdings above is based on the VPS shareholder register on December 31, 2024 and 2023. Actual shareholding may deviate due to the use of nominee accounts, share lending, forward contracts or other contractual arrangements. On December 31, 2024, REC Silicon ASA had 31,883 shareholders (34,318 on December 31, 2023). The total number of outstanding shares was 420,625,659 on December 31, 2024, and December 31, 2023, each with a par value of NOK 1. At the Annual General Meeting on May 14, 2024, the Board was authorized to increase the share capital with up to NOK 84,125,000, which was approximately 20 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). Shares may be acquired at minimum NOK 1 per share and maximum NOK 150 per share. The authorization to acquire treasury shares has not been used and remained available on December 31, 2024. Both authorizations were valid until the 2025 Annual General Meeting, but in any event not longer than 15 months. REC Silicon annual report 2024 REC Silicon annual report 2024 108 108 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 16 Management and Board of Directors’ compensation, loans, shares, bonds 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 REC Silicon’s board has prepared proposed guidelines for the company’s executive remuneration policy in accordance with the provision in section 6-16 (a). The proposed guidelines, which provide a broader and deeper discussion of the principles for remuneration to key management, were effective from 2021 onwards. The guidelines are available on REC Silicon’s website. The executive management remuneration report in accordance with regulations will be prepared for the for the Annual General Meeting in 2025. The guidelines for determination of salary and other compensation for leading employees, as outlined in the annual general meeting in 2024, have been complied with in 2024. See www.recsilicon.com/investors/agmfor the Remuneration Report. The Board of Directors had previously implemented incentive programs during previous periods whereby employee entitlements are linked to the share price development of the Company’s shares. There were no shares granted in 2024. See note 32for details of share-based compensation programs. Salary and other compensation to the Group’s Board of Directors and Management for 2024 and 2023 are described below. Compensation of the Group Management for 2024 Amounts in USD Name Base salary Bonus earned and max % Share based compensation earned Share based compensation paid Pension benefits Other taxable benefits Kurt Levens 765,000 0 -92,906 13,708 34,500 77,517 President and CEO 50% Jack Yun 156,020 0 0 0 0 256,280 CFO NA Dylan Jung 88,683 0 0 0 0 143,962 Chief Strategy Officer NA Total 2024 1,009,703 0 -92,906 13,708 34,500 477,760 REC Silicon annual report 2024 REC Silicon annual report 2024 109 109 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Compensation of the Group Management for 2023 Amounts in USD Name Base salary Bonus earned and max % Share based compensation earned Share based compensation paid Pension benefits Other taxable benefits Kurt Levens 643,653 165,237 -60,491 82,418 33,000 103,822 President and CEO 50% Jack Yun 196,402 84,472 0 0 0 163,591 CFO NA Dylan Jung 92,304 25,227 0 0 0 103,859 Chief Strategy Officer NA Total 2023 932,360 274,936 -60,491 82,418 33,000 371,271 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 32. The esti-mated fair value of the options is expensed over the estimated vesting periods. The amounts shown above as earned 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 2024 there was a total of USD 0.1 million in cash payments made with respect to share-based compensation to all eligible participants, and USD 0.7 million in 2023. 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, cash in lieu of paid time off, and certain other benefits. The bene-fits vary, and the amounts in the table are the amounts that are taxable based on rules and regulations in the relevant tax jurisdictions. Compensation of the Board of Directors paid in 2024 Amounts in USD Name Member at December 31, 2024 Board compensation Tae Won Jun Yes 0 Jooyong Chung Yes 0 Renate Oberhoffer-Fritz Yes 86,116 Vivian Bertseka Yes 87,569 Robert Neuhauser Yes 52,698 Dong Kwan Kim No 0 Roberta Benedetti No 32,216 Total 2024 258,600 Compensation of the Board of Directors paid in 2023 Amounts in USD Name Member at December 31, 2023 Board compensation Tae Won Jun Yes 0 Dong Kwan Kim Yes 0 Renate Oberhoffer-Fritz Yes 86,647 Vivian Bertseka Yes 88,559 Roberta Benedetti Yes 86,055 Total 2023 261,261 Loans and guarantees for Group Management, Board of Directors and shareholders On December 31, 2024 and 2023 there was a loan in the amount of USD 40 thousand to Dylan Jung. The loan originated on December 13, 2022 in the amount of USD 40 thousand and has a term of forty months with and interest rate of zero. 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 on December 31, 2024, and 2023. Refer to note 32for details of the share option program. REC Silicon annual report 2024 REC Silicon annual report 2024 110 110 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements The table includes those that were members on December 31, 2024 Name Options Shares Kurt Levens Group Management 173,813 440 Jack Yun Group Management 0 0 Dylan Jung Group Management 0 0 Tae Won Jun Board of Directors 0 0 Jooyong Chung Board of Directors 0 0 Dr. Renate Oberhoffer-Fritz Board of Directors 0 0 Vivian Bertseka Board of Directors 0 0 Robert Neuhauser Board of Directors 0 0 The table includes those that were members on December 31, 2023 Name Options Shares Kurt Levens Group Management 255,613 440 Jeong Ryul Yun Group Management 0 0 Donglin Jung Group Management 0 0 Tae Won Jun Board of Directors 0 0 Dong Kwan Kim Board of Directors 0 0 Dr. Renate Oberhoffer-Fritz Board of Directors 0 0 Vivian Bertseka Board of Directors 0 0 Roberta Benedetti Board of Directors 0 0 Details of options outstanding on December 31, 2024 Information regarding the reported financial year Kurt Levens, CEO Opening balance During the year Closing balance Specification of plan Plan period Award date Vesting Dates End of holding period Shares previously awarded Shares awarded/ (expired) Shares exercised / Settled in Cash Shares subject to a performance condition Shares awarded and unexercised at year end subject to a holding period / Value 2021 Plan - Strike Price NOK 17.5 2021 - June 30 2026 May 11, 2021 June 30, 2024 33.33% July 1, 2026 133,279 0 0 133,279 133,279 June 30, 2025 33.33% $0 $4,572 June 30, 2026 33.33% 2020 Plan - Strike Price NOK 3.5 2020 - June 30 2025 May 12, 2020 June 30, 2023 33.33% July 1, 2025 81,068 0 40,534 40,534 40,534 June 30, 2024 33.33% $13,708 $5,490 June 30, 2025 33.33% 2019 Plan - Strike Price NOK 8.1 2019 - June 30 2024 May 9, 2019 June 30, 2022 33.33% July 1, 2024 41,266 -41,266 0 0 0 June 30, 2023 33.33% $0 $0 June 30, 2024 33.33% Total Shares 255,613 -41,266 40,534 173,813 173,813 Total USD $116,675 $13,708 $10,062 REC Silicon annual report 2024 REC Silicon annual report 2024 111 111 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 17 Borrowings Financial liabilities, interest bearing USD in million 2024 2023 Non-current financial liabilities, interest bearing Bank Loan - Hana Bank 110.0 110.0 Bank Loan - Hana Bank 100.0 100.0 Bank Loan - NongHyup 40.0 40.0 Grant County WA tax settlement (USD) 1.6 3.0 Total non-current financial liabilities, interest bearing 251.6 253.0 Current financial liabilities, interest bearing Capitalized Borrowing Cost‌1 -0.4 -0.4 Bank Loan - Standard Chartered 50.0 30.0 Related Party Loan - Hanwha International 50.0 0.0 Grant County WA tax settlement (USD) 1.4 1.2 Total current financial liabilities, interest bearing 101.0 30.9 1Amortized as part of effective interest. Movements in borrowing USD in million Bank loans Related party loan Tax settlement note Total Balance on January 1, 2024 279.6 0.0 4.2 283.8 Proceeds from borrowings 50.0 50.0 0.0 100.0 Payments of borrowings -30.0 0.0 -1.2 -31.2 Change capitalized borrowing cost 0.0 0.0 0.0 0.0 Balance on December 31, 2024 299.6 50.0 3.0 352.6 USD in million Bank loans USD senior secured bond Tax settlement note Total Balance on January 1, 2023 0.0 109.9 5.3 115.2 Proceeds from borrowings 280.0 0.0 0.0 280.0 Payments of borrowings 0.0 -110.0 -1.1 -111.1 Change capitalized borrowing cost -0.4 0.1 0.0 -0.2 Balance on December 31, 2023 279.6 0.0 4.2 283.8 In June 2024 REC Silicon Inc extended its USD 30 million facility loan from standard Chartered Bank in New York. The facility is fully guaranteed by REC Silicon’s largest shareholder Hanwha Solutions and will mature on June 13, 2025. On August 16, 2024, REC Silicon Inc entered into an additional USD 20 million facility loan from Standard Chartered Bank in New York through an amendment to the existing facility loan of USD 30 million. This additional facility loan is fully guaranteed by REC Silicon’s largest shareholder Hanwha Solutions and will mature on June 13, 2025, the same date as the existing facility loan. REC Silicon annual report 2024 REC Silicon annual report 2024 112 112 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements On August 2, 2024, REC Silicon Inc entered into a USD 25 million short-term loan with Hanwha International LLC, for the purpose of supporting the capital needs of REC Silicon. On November 4, 2024, REC Silicon Inc, and REC Silicon Inc’s wholly owned subsidiaries entered into a USD 25 million short-term loan with Hanwha International LLC to meet the near-term capital requirements. On January 24, 2025, REC Silicon ASA entered into a USD 40 million term loan with Hanwha International LLC, supporting REC Silicon’s capital needs during the shutdown process at Moses Lake and the Company’s transition into a pure play silicon gas provider. The term loan has a maturity date of January 2026. Further, the bridge loans of USD 25 and USD 25 million with Hanwha International LLC rolled into this loan at their maturity dates on February 2 and February 4, 2025, respectively. Hanwha International LLC is an affiliate of the company’s two largest shareholders Hanwha Solutions and Hanwha Corporation. See note 10 On October 14, 2020, the Company entered into a settlement agreement with Grant County, Washington settling its property tax dispute for tax years 2012 through 2015. REC Silicon agreed to pay Grant County USD 3.0 million by December 15, 2020, and USD 1.75 million each year for the next six years. The settlement resulted in the recognition of a note payable using an interest rate of 11.5 percent used to impute the value of the liability. The note is effectively secured, as a matter of law, by the real property at the Moses Lake plant. On December 31, 2024, the remaining fair value of the property tax note was USD 3.0 million. Total remaining undiscounted payments on the property tax note are USD 3.5 million. The Company does not have any financial covenants but is subject to restrictions on additional debt, pledging assets, and other actions that may affect repayment ability without preapproval from the lenders. The following are the contractual maturities of financial instruments excluding provisions and retirement benefit obligations: On December 31, 2024 Maturity analysis - contractural payments to be made, including interest USD in million Carryingamount Total 0-6Months 7-12 Months 2026 2027 2028 2029 After 2029 Bank Loan - KEB Hana Bank 110.0 110.0 0.0 0.0 110.0 Bank Loan - KEB Hana Bank 100.0 100.0 0.0 0.0 100.0 Bank Loan - Standard Chartered 50.0 50.0 50.0 Bank Loan - NongHyup 40.0 40.0 0.0 0.0 40.0 Related Party Loan - Hanwha International‌1 50.0 50.0 50.0 Grant County WA tax settlement 3.0 3.5 0.0 1.8 1.8 Accrued Finance Costs 3.6 3.6 3.6 Trade payables and other liabilities 60.2 60.2 60.2 Lease Liabilities 65.1 96.3 8.2 8.2 16.3 16.3 16.1 6.0 25.1 Total 481.8 513.6 172.0 9.9 268.1 16.3 16.1 6.0 25.1 1In January 2025 REC Silicon Inc and Hanwha agreed additional loans and to consolidate existing loans with a due date of January 2026 On December 31, 2023 Maturity analysis - contractural payments to be made, including interest USD in million Carryingamount Total 0-6Months 7-12 Months 2025 2026 2027 2028 After 2028 Bank Loan - KEB Hana Bank 110.0 110.0 0.0 0.0 0.0 110.0 Bank Loan - KEB Hana Bank 100.0 100.0 0.0 0.0 0.0 100.0 Bank Loan - Standard Chartered 30.0 30.0 30.0 Bank Loan - NongHyup 40.0 40.0 0.0 0.0 0.0 40.0 Grant County WA tax settlement 4.2 5.3 0.0 1.8 1.8 1.8 Accrued Finance Costs 1.6 1.6 1.6 Trade payables and other liabilities 44.8 60.7 60.7 0.0 0.0 0.0 Lease Liabilities 70.0 108.2 7.8 7.8 15.6 15.5 15.5 15.5 30.4 Total 400.6 455.8 100.2 9.6 17.3 267.3 15.5 15.5 30.4 For information regarding provisions see note 20. For information regarding retirement benefit obligations see note19. The differences between carrying amounts and total expected payments in the tables above are due to the effect of discounting. All cash flows are undiscounted. REC Silicon annual report 2024 REC Silicon annual report 2024 113 113 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements The nominal interest rates and currency distribution on December 31, 2024 were as follows Interest rate (%) Currency Amounts in million Maturity Borrower Bank Loan - Hana Bank 3 mon SOFR+1.8% USD 110.0 2026 REC Silicon ASA Bank Loan - Hana Bank 3 mon SOFR+1.5% USD 100.0 2026 REC Silicon Inc Bank Loan - Standard Chartered 1 mon SOFR+2.0% USD 50.0 2025 REC Silicon Inc Bank Loan - NongHyup 3 mon SOFR+2.0% USD 40.0 2026 REC Silicon Inc Related Party Loan - Hanwha International‌ 1 mon SOFR+2.2% USD 50.0 2025 REC Silicon Inc Grant County WA tax settlement 11.5% Fixed USD 3.0 2026 REC Solar Grade Silicon LLC The nominal interest rates and currency distribution on December 31, 2023 were as follows Interest rate (%) Currency Amounts in million Maturity Borrower Bank Loan - Hana Bank 3 mon SOFR+1.8% USD 110.0 2026 REC Silicon ASA Bank Loan - Hana Bank 3 mon SOFR+1.5% USD 100.0 2026 REC Silicon Inc Bank Loan - Standard Chartered 1 mon SOFR+2.2% USD 30.0 2024 REC Silicon Inc Bank Loan - NongHyup 3 mon SOFR+2.0% USD 40.0 2026 REC Silicon Inc Grant County WA tax settlement 11.5% Fixed USD 4.2 2026 REC Solar Grade Silicon LLC REC Silicon annual report 2024 REC Silicon annual report 2024 114 114 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 18 Income tax expense and deferred tax assets and liabilities Recognized income tax expense USD in million 2024 2023 Current income tax expense (-) / benefit (+) 0.0 0.0 Deferred tax expense (-) / benefit (+) 0.0 0.0 Total income tax expense (-) / benefit (+) in the statement of income 0.0 0.0 Relationship of income tax expense/benefit to profit/loss from total operations USD in million 2024 2023 Profit/loss before tax from total operations -457.4 30.5 Tax calculated at domestic tax rates applicable to profits /losses in the respective countries 96.2 -3.5 Effects of changes in tax rates and use of another tax rate for parts of profits /losses 8.0 2.4 Expenses not deductible for tax purposes -2.3 1.2 Effects of not recognized deferred tax assets, including reversal of previous years -101.8 -0.2 Total income tax expense (-) / benefit (+) in the statement of income 0.0 0.0 Effective tax rate 0% 0% The income tax calculation for the Group is primarily based on blended corporate income tax rates of 22 percent in Norway and approximately 23.1 percent in the USA. Income tax for REC Silicon in the USA is based on nominal 21 percent federal tax rate plus estimated state taxes. The effective tax rate for REC Silicon in the USA was 0 percent in 2024 and 2023. Income tax in the US is filed on a consol-idated basis under REC Silicon Inc with REC Solar Grade Silicon LLC and REC Advanced Silicon Materials LLC being considered disregarded entities. Income tax assets and liabilities in the statement of financial position USD in million 2024 2023 Current tax assets 0.0 0.0 Current tax liabilities 0.0 0.0 Net current tax assets (+) / liabilities (-) 0.0 0.0 Deferred tax assets 0.0 0.0 Deferred tax liabilities 0.0 0.0 Net deferred tax assets (+) / liabilities (-) 0.0 0.0 Accumulated income taxes recognized to equity on December 31 USD in million 2024 2023 Effect of transition to IAS 39 on January 1, 2005 2.3 2.3 Effect of actuarial gains and losses -4.8 -4.8 Effect of conversion of convertible bonds -61.0 -61.0 Effect of costs for capital increase 12.9 12.9 Effect of translation differences on loans as part of net investment 12.6 12.6 Total deferred tax -37.9 -37.9 Current tax - effect of costs for capital increase 13.1 13.1 Total -24.8 -24.8 Amounts in table above exclude translation differences on deferred tax. Negative numbers are a reduction to equity. REC Silicon annual report 2024 REC Silicon annual report 2024 115 115 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements The following main deferred tax assets have not been recognized on December 31 USD in million 2024 2023 Total non-current assets 143.6 82.4 Total current assets 1.2 -0.4 Total non-current liabilities -16.7 18.7 Total current liabilities -12.2 9.8 Tax losses carry forward 429.9 371.3 Total 545.8 481.7 Distribution of the deferred tax assets that have not been recognized on December 31 USD in million 2024 2023 REC Silicon ASA (Norway) 3.1 33.5 REC Solar AS (Norway) 145.6 154.3 REC Silicon US operations 393.6 289.9 Other 3.5 4.1 Total 545.8 481.7 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 208.7 million on December 31, 2024 includes USD 122.9 million associated with net operating losses generated in 2017 and prior years which expire between 2031 and 2037. Deferred tax assets of USD 85.8 million are due to net operating losses generated after 2017 which do not expire. In the United States, in the event of a change in the ultimate company’s ownership, utilization of net operating losses and tax credit carry forwards are subject to certain limitations under Section 382 of the Internal Revenue Code. The company initiated a study in 2022. The study was completed in 2023, and the table above represents the results of the study. 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. The Norwegian Tax office has changed the company’s income tax assessment for the years 2019-2022 during 2024. The basis for this change where an ongoing tax audit relating to whether interest should have been charged on loans provided from REC Silicon ASA to Rec Silicon Inc and Rec Solar Grade Silicon LLC. As a temporary measure, due to the financial situation in these subsidiaries, the company has not charged interest on the loans in the period 2019 to 2024. The company has not made any preliminary tax provisions for this matter in the periods 2023 and 2024 as the Norwegian Tax office has yet to review these years in their assessment with their estimates for the subsidiaries debt bearing capacity in this period. The company has not recognized any deferred tax asset relating to its tax losses carry forward. Deferred tax assets have not been recognized due to requirements in IAS 12 for convincing evidence of available future taxable income to offset prior tax losses. In Norway, net operating losses do not expire. REC Silicon annual report 2024 REC Silicon annual report 2024 116 116 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 19 Retirement benefit obligations and expenses 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 (401 (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 2005. 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 on December 31, 2024 and 2023. 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 2024 2023 Gross retirement benefit obligations on January 1 34.2 33.5 Interest cost on pension obligations 1.6 1.7 Remeasurements recognized through OCI -2.8 0.8 Benefits paid, paid-up policies and disability obligation -1.8 -1.7 Gross retirement benefit obligations on December 31 31.2 34.2 Fair values of plan assets on January 1 27.3 24.8 Actuarial return on plan assets 1.2 2.9 Pension premiums 1.3 1.3 Benefits paid, paid-up policies and disability reserve -1.8 -1.7 Fair value of plan assets on December 31 28.0 27.3 Funded status on December 31 3.3 7.0 Net retirement benefit obligations on December 31 3.3 7.0 The plan assets relate to one of three ASiMI plans and are currently invested in a mix of 45% equity funds and 55% fixed income funds. Retirement benefit obligations in the statement of financial position USD in million 2024 2023 Net retirement benefit obligations on January 1 7.0 8.6 Net periodic benefit costs including net interest 0.4 -0.5 Remeasurements recognized through OCI -2.9 -0.9 Pension premiums and benefits paid -1.2 -1.3 Net retirement benefit obligations on December 31 3.3 7.0 The amounts recognized in the statement of income are as follows USD in million 2024 2023 Total benefit plans 0.0 0.0 Defined Contribution 3.8 3.5 Total contribution expenses (see note24) 3.8 3.5 Net interest expense 0.4 0.5 REC Silicon annual report 2024 REC Silicon annual report 2024 117 117 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Remeasurements of the net defined benefit liability recognized through Other Comprehensive Income (gains (-)/losses (+)) USD in million 2024 2023 Experience adjustments -0.4 0.0 Effects of changes in assumptions -2.5 0.9 Total remeasurements (gains (-)/losses (+)) on gross retirement benefit obligations -2.8 0.8 Return on plan assets, excluding amounts included in interest -0.1 -1.7 Total remeasurements (gains (-)/losses (+)) recognized through Other Comprehensive Income -2.9 -0.9 During 2024 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 13.9 million before income taxes on December 31, 2024. Of this, a loss of USD 16.8 million was related to ASiMI (excluding transla-tion difference). On December 31, 2024, the mortality table was based on Pri-2012 total dataset base rate mortality table with projected generationally using MP-2021. The Society of Actuaries (SOA) is an actuarial organization that periodically reviews mortality data and publishes mortality tables and improvement scales. In October 2019, the SOA released the Pri-2012 Mortality Tables for private-sector retirement plans in the U.S. The Pri-2012 report contains different sets of mortality tables based on complete dataset or various subsets. The Total dataset base rate table was selected. The principal actuarial assumptions used to determine retirement benefit obligations on December 31 2024 2023 Discount rate 5.50 4.85 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 until retirement for participants of the defined benefit obligation for the ASiMI plans are approximately 7.3 years at both December 31, 2024 and December 31, 2023. Pension premiums of USD 1.5 million are expected to be paid during 2024 to the ASiMI defined benefit plans. The maturity profile includes the weighted average duration of the defined benefit obligations and includes items such as timing of the benefit payments. The weighted average duration of the defined benefit obligation is 11 years at both December 31, 2024 and December 31, 2023. 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 0.1/(0.1) million on December 31, 2024. REC Silicon annual report 2024 REC Silicon annual report 2024 118 118 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 20 Trade payables, provisions and other liabilities Non-financial liabilities USD in million 2024 2023 Non-current prepayments 33.4 24.9 Current portion of prepayments 1.2 5.7 Total prepayments 34.5 30.7 Trade payables and other liabilities USD in million 2024 2023 Trade and other payables 41.8 41.4 Accrued costs for capex 0.0 0.0 VAT and other public taxes and duties payables 5.5 4.2 Accrued operating costs 8.7 12.0 Accrued finance costs 3.6 1.6 Other non-interest bearing liabilities 0.8 1.5 Trade payables and other liabilities 60.2 60.7 Provisions USD in million 2024 2023 Provisions, current 8.2 0.0 Provisions non-current - interest bearing 26.3 23.8 Total provision 34.5 23.8 Specification of provisions USD in million 2024 2023 on January 1 23.8 19.3 Restructuring costs 8.2 0.0 Change in estimate in asset retirement obligation 1.3 3.5 Net periodic asset retirement obligation costs including net interest 1.3 1.0 on December 31 34.5 23.8 REC Silicon annual report 2024 REC Silicon annual report 2024 119 119 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Current provisions As a result of shutting down polysilicon production in Moses Lake in December 2024 the Company recorded a provision for employee termination benefits in the amount of USD 8.2 million. At the time of the announcement on December 30, 2024 the company had a detailed plan for the shutdown and restructuring of Moses Lake. Impacted employees were eligible for termination benefits ranging from 8-13 weeks of their salary. Payments to impacted employees will take place during the first half of 2025. Non-current provisions During 2024 the Company recorded an increased provision for asset retirement obligations (ARO) of USD 1.3 million. This was primarily due to a change in estimated cleanup costs. On December 31, 2024, the Company has recorded USD 26.3 million in AROs. These obligations consist of USD 3.0 million to restore leased wastewater containment ponds to conditions specified in the lease agreement and USD 23.3 million for the eventual cleanup of the Company’s manufacturing operations in Moses Lake, Washington and Butte, Montana. Estimates are sensitive to changes in discount rates used to calculate provisions for AROs. On December 31, 2024, a one percent increase to the discount rates would decrease the provision by USD 6.7 million, while a one percent decrease to the discount rates would increase the provision by USD 9.4 million. On December 31, 2024, the AROs represent the present value of estimated future costs discounted at 5.2 percent for 4 years for the wastewater containment ponds. The restoration of the production sites is discounted at 6.0 percent for 35.5 years. Total undiscounted amounts were USD 3.7 million for the ponds, and 183.9 million for the production sites. On December 31, 2023, the AROs represent the present value of estimated future costs discounted at 5.0 percent for 5 years for the wastewater containment ponds. The restoration of the production sites is discounted at 5.4 percent for 36.5 years. Total undiscounted amounts were USD 3.1 million for the ponds, and 133.5 million for the production sites. Relevant regulations to climate related risk have been considered in the calculation of the ARO. There could be changes in environmental regulations impacting the company going forward, but no related legislation has been passed at the current time that is expected to impact the group. 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. Note 21 Government grants There were no government grants receivables recognized on December 31, 2024. There was no Government grant income in 2024. Government grant income in 2023 was USD 6.0 million and was the result of refunds received from the United States Government for Employee Retention Credit. The Employee Retention Credit (ERC) – sometimes called the Employee Retention Tax Credit or ERTC – is a refundable tax credit for eligible businesses that had employees and were affected during the COVID-19 pandemic. The credit is a broad-based refundable tax credit designed to encourage employers to keep employees on their payroll. (see note 23). REC Silicon annual report 2024 REC Silicon annual report 2024 120 120 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 22 Other operating expenses USD in million 2024 2023 Freight, postage and transportation 3.1 3.6 Energy and water 31.3 52.6 Lease and rental expenses 0.7 0.6 Total operating, service and maintenance costs 22.1 19.7 Consultancy and auditor fees 12.3 12.1 Own work capitalized on fixed assets -0.6 -0.4 IT and telecommunications costs 2.4 3.0 Travel and entertainment costs 0.7 1.0 Insurance costs 3.5 3.5 Other operating costs 2.3 2.3 Other operating expenses 77.8 98.0 The amounts for 2023 are re-presented for discontinued operations, see note11. Auditor’s remuneration USD in million 2024 2023 Statutory Audit (only relating to statutory auditor) Deloitte 0.4 0.0 Statutory Audit (only relating to statutory auditor) KPMG 0.4 0.7 Other assurance services (only relating to statutory auditor) 0.0 0.1 Tax advisory services (only relating to statutory auditor) KPMG 0.0 0.0 Other non-audit services (only relating to statutory auditor) Deloitte 0.0 0.0 Total auditors remuneration 0.8 0.8 Note 23 Other income and expenses USD in million 2024 2023 Restructuring cost and employee termination benefits -1.8 0.0 Other 0.1 0.0 Employee Retention Credit 0.0 4.4 Insurance proceeds 0.0 0.0 Gains on disposal of non-current asset 1.0 0.3 Total other income and expenses -0.7 4.7 The amounts for 2023 are re-presented for discontinued operations, see note11. In 2024 other expense primarily relates to employee termination benefits as a result on shutting down polysilicon production in the Semiconductor Materials Segment in Butte. Gain on disposal of non-current asset is the result of selling non-core assets in 2024. REC Silicon annual report 2024 REC Silicon annual report 2024 121 121 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 24 Employee benefits USD in million 2024 2023 Salaries 32.3 30.8 Bonus and sales commission - employees 2.2 5.0 Share option expense -0.7 -0.6 Social security tax 2.2 2.4 Defined Contribution 3.8 3.5 Other employee related costs 3.9 2.3 Employee benefit expenses 43.6 43.5 The amounts for 2023 are re-presented for discontinued operations, see note11. Excluding the Solar Materials Segment the average number of permanent employees during 2024 was 249. The average number of permanent employees during 2023 was 260. There were loans provided to employees in the amount of USD 0.1 million on December 31, 2024 (see note 16) and 0.1 on December 31, 2023. There were no guarantees provided to employees on December 31, 2024 or 2023. Note 25 Financial income and expenses USD in million 2024 2023 Interest income from financial assets not at fair value through profit or loss 3.1 3.4 Total income from financial assets not at fair value through profit or loss 3.1 3.4 Interest expenses for USD Senior Secured Bond 0.0 -3.5 Interest expenses for Property Tax dispute -0.6 -0.6 Interest expenses for term loans -20.6 -10.2 Expensing of up-front fees and costs -3.1 -1.8 Interest on leaase liabilities -4.2 -4.3 Calculated/imputed interest other - added to principal - external -0.3 -0.3 Capitalization of borrowing costs 0.8 1.0 Other expenses from financial assets and liabilities -0.4 -0.4 Net financial expenses -28.4 -20.1 Net currency gains/losses 0.1 12.7 Gain from sale of Yulin JV 0.0 135.5 Net financial items -25.3 131.5 The amounts for 2023 are re-presented for discontinued operations, see note11. Interest income in 2024 includes interest on cash deposits of USD 3.1 million. Expensing of up-front fees and costs is primarily related to letter of credit and loan guarantee charged by Hanwha Solutions. (See notes 10and 17) Calculated interest is interest calculated on asset retirement obligations (see note 20). Additional information to the statement of cash flows on interest, up-front fees, and other costs paid Interest paid is approximately USD 30.3 million in 2024 and USD 16.5 million in 2023. REC Silicon annual report 2024 REC Silicon annual report 2024 122 122 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 26 Earnings per share Basic Basic earnings per share (EPS) is calculated by dividing the profit/loss attributable to equity holders of the Company by the weighted average number of ordinary shares issued during the year, excluding treasury shares. Earnings per share 2024 2023 Profit/loss from continuing operations (USD IN MILLION) -104.2 95.9 Profit/loss from discontinued operations (USD IN MILLION) -353.1 -65.4 Profit/loss from total operations (USD IN MILLION) -457.4 30.5 Weighted average number of ordinary shares in issue (IN MILLION) 420.6 420.6 Basic earnings per share from continuing operations (USD per share) -0.25 0.23 Basic earnings per share from discontinued operations (USD per share) -0.84 -0.16 Basic earnings per share from total operations (USD per share) -1.09 0.07 Diluted Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding. If the effect increases EPS from continuing operations, it is anti-dilutive and is then not included in diluted EPS. Dilutive EPS equals basic EPS for both years. Note 27 Dividends per share The Board of Directors did not propose any dividend payments for financial years 2024 or 2023. REC Silicon annual report 2024 REC Silicon annual report 2024 123 123 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 28 Research and development USD in million 2024 2023 Research and development expense 3.4 1.7 Development capitalized 0.0 0.0 Total research and development 3.4 1.7 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 its products to add value to its customers and further enhance its competitive position. During 2024, research and development efforts were focused on lab operations to support silicon gas businesses. Cash expenditures for research and development were USD 3.0 million in 2024, compared to USD 1.3 million in 2023. Total expenditures, including depreciation, were USD 3.4 million in 2024 and USD 1.7 million in 2023. Note 29 Commitments, guarantees, pledges Purchase obligations consist of significant items for which the Group is contractually obligated to purchase from third parties on December 31, 2024. 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 after 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 recog-nized for other assets, liabilities, and investments. Contractual purchase obligations and minimum operating lease payments on December 31, 2024 USD in million Total 2025 2026 2027 2028 2029 After 2029 Total purchase of goods, services 42.2 42.1 0.0 0.0 0.0 0.0 0.0 Total minimum operating lease payments 0.1 0.0 0.0 0.0 0.0 0.0 0.0 Total purchase obligations and minimum operating lease payments 42.3 42.2 0.1 0.1 0.0 0.0 0.0 Purchase obligations consist primarily of contracts for Metallurgical Grade Silicon. Operating leases are short-term or low-value leases that meet the exceptions in IFRS 16 Leases. Guarantees and pledges Bank guarantees on December 31, 2024, were zero and on December 31, 2023. 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 offsetting 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 28.1 million on December 31, 2024, and December 31, 2023. The guarantees will decrease beginning 2025 and by 2039 they will expire in their entirety. REC Silicon annual report 2024 REC Silicon annual report 2024 124 124 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 30 Other information financial instruments Fair values of financial instruments For all financial assets and liabilities, the carrying amounts represent a reasonable approximation of fair value. Credit risk The maximum credit risks related to financial assets are estimated in the table below. 2024 2023 USD in million Carrying amount Max. Exposure Carrying amount Max. Exposure Cash and bank (incl. restricted bank accounts) 10.9 10.9 171.5 171.5 Trade receivables and accrued revenues 12.1 12.1 21.9 21.9 Other non-current and current receivables 4.1 4.1 0.0 0.0 Finance receivables and short-term loans 0.0 0.0 0.0 0.0 Total 27.0 27.0 193.4 193.4 Shared characteristics that identify each concentration of trade receivables on December 31 Geographical 2024 2023 Sector 2024 2023 Industry 2024 2023 Europe 25% 43% Wholesale 72% 33% Electronic 100% 92% North America 24% 11% Manufacturing 28% 67% Solar 0% 8% Malaysia 19% 0% Other 0% 0% Other 0% 0% Korea 19% 17% Taiwan 6% 10% Japan 3% 11% Other Asia 2% 2% Singapore 1% 3% China 1% 4% Total 100% 100% 100% 100% 100% 100% The table above is calculated with respect to gross trade receivables The Group is dependent on a small number of customers. In 2024, three customers represented approximately 69 percent of revenue for the Group. In 2023 three customers represented 56 percent. Three customers represented approximately 84 percent of total trade receivables for The Group on December 31, 2023 (three customers represented approximately 64 percent on December 31, 2023). See note 5Segment Information above. REC Silicon annual report 2024 REC Silicon annual report 2024 125 125 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Amounts overdue but not impaired between 90 and 365 days were zero in 2023 and 2022. (see table below) Analysis of aging of receivables on December 31, 2024 Aging of receivables past due USD in million Total carryingamount Not due < 30Days >30<90 Days >90<365 Days >365 Days Trade receivables 12.7 7.7 4.7 0.3 0.0 0.0 Provision for loss on trade recivables -0.7 0.0 -0.4 -0.3 0.0 0.0 Other non-current and current receivables 4.1 4.1 0.0 0.0 0.0 0.0 Total receivables 16.2 11.8 4.3 0.0 0.0 0.0 Analysis of aging of receivables on December 31, 2023 Aging of receivables past due USD in million Total carryingamount Not due < 30Days >30<90 Days >90<365 Days >365 Days Trade receivables 24.7 15.6 4.0 2.3 0.0 2.7 Provision for loss on trade recivables -2.7 0.0 0.0 0.0 0.0 -2.7 Other non-current and current receivables 0.0 0.0 0.0 0.0 0.0 0.0 Total receivables 21.9 15.6 4.0 2.3 0.0 0.0 The provision for doubtful accounts includes the impact of expected credit losses (ECL) based upon historical experience. The Company has prepared analyses to calculate an ECL estimated at 0.21 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 that are collected. 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 60 days past due unless there is a clear indication that payment will be received. On December 31, 2024, approximately 2 percent of the not due receivables were secured by bank guarantees with no past due receivables secured by credit insurance. On December 31, 2023, approximately 19 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 3.4 (-3.4) million calculated on outstanding amounts on December 31, 2024. Exchange rate sensitivity The table below shows the estimated impact of a 10 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 calcu-lated 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 2024 and 2023. Exchange rate sensitivity on financial instruments on December 31 Change + 10% compared to functional currencies USD in million 2024 2023 Financial assets 0.1 0.1 Financial liabilities -0.1 -0.1 Total 0.0 0.0 Of which to equity USD receivables as part of net investment 0.0 0.0 Rest is to profit or loss 0.0 0.0 REC Silicon annual report 2024 REC Silicon annual report 2024 126 126 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 31 Claims, disputes, contingent liabilities and contingent assets and risks 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. Risk Factors Market risk In January 2025, REC Silicon announced that its US affiliate QCells, its customer for granular polysilicon produced at Moses Lake, entered into a mutually agreeable termination agreement. Per the agreement, the reimbursement of the prepayment of USD 30 million by REC Silicon to QCells has been delayed for one year without interest and without any further obligation by either party, including the payment of any liquidated damages. On February 7, 2024, REC Silicon announced that REC Advanced Silicon Materials LLC was shutting down its polysil-icon production capacity at its Butte, Montana facility. The polysilicon business continued to produce for approximately nine months to fulfill polysilicon supply obligations to the company’s customers. 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 the silane gas production facilities at Butte 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 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. The production process for the Butte facility is energy intensive and subject to risk from high energy prices. Liquidity risk Debt maturities in 2025 include USD 50 million for the Standard Chartered term loan, which needs to be rolled over, USD 1.8 million for the undiscounted Grant County Property Tax note and USD 16.4 million for undiscounted lease liabili-ties. On December 31, 2024, the Group does not have sufficient available cash to meet debt service and other anticipated operating cash flow requirements. Management acknowledges that additional sources of capital are required to meet obligations. The Company is actively negotiating securing additional financing aiming to close in the first half of 2025. Furthermore, the Company is looking to sell noncore assets during 2025. Management estimates future cash require-ments can be met from the previously mentioned additional funding, along with cash flows generated by operations from the Semiconductor segment. (see notes 7, 17, 29and 33to the consolidated financial statements). 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. 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 offsetting 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 28.1 million on December 31, 2024. The guarantees will decrease starting in 2025 and will expire entirely by 2039. Climate risk The Company evaluates the risks and opportunities arising from climate change, which may impact its financial state-ment items, including assets, liabilities, and profitability. The Company monitors the potential impact of climate-related policies, legal changes, and shifts in consumer trends on its financial statements. For the current fiscal year, no assets have been impaired, or costs recognized due to climate-related risks. Impairments may arise in the future due to changes in climate-related regulations and market conditions, and the company will continue to monitor these risks. REC Silicon annual report 2024 REC Silicon annual report 2024 127 127 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 32 Share-based compensation The share-based incentive program is intended to award and incentivize outstanding performance by eligible employees and to attract and retain strong talent in business-critical functions. The synthetic options under this Program entitle the holder to receive a cash payment equivalent to the difference between a specific number of options multiplied by the strike price for such options and the same number of REC shares multiplied by the weighted average market price of REC shares on the disbursement dates. The options entitle-ment does not need to be exercised by any action by the eligible employee and will be automatically disbursed by REC following the applicable disbursement date for such year. The cash payment is limited to a maximum amount in each calendar year. The maximum amount is each employee’s base salary effective January 1 in the year of the relevant disbursement date. The value of unvested options is calculated 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 2024 zero share options were granted. In 2019, 2020 and 2021, 1,200,000 share options were granted to certain key employees. The first three years are a lock-up period. The vesting of the options for eligible employees will take place in equal parts after the third, fourth and fifth years of each program, on each June 30 of each year. The options were granted at a strike price of NOK 8.1 in 2019, 3.5 in 2020, and 17.5 in 2021. Any unexercised options are forfeited upon termination of employment, unless the employee retires, in which case options are maintained. Fair values are estimated each reporting date using the Black-Scholes option price model. Options outstanding on December 31, 2024 Program Exerciseprice (nok) No. options Total fair value(USD million) Remaining contractual life (year) Total expensed(USD million) 2020 3.5 329,707 0.0 0.5 0.0 2021 17.5 1,089,900 0.0 1.5 0.0 Total 1,419,607 0.1 0.1 Options outstanding on December 31, 2023 Program Exerciseprice (nok) No. options Total fair value(USD million) Remaining contractual life (year) Total expensed(USD million) 2019 8.1 328,736 0.3 0.5 0.3 2020 3.5 659,415 0.6 1.5 0.5 2021 17.5 1,089,900 0.2 2.5 0.1 Total 2,078,051 1.2 0.9 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 by options exercised. Options forfeited for 2024 and 2023 were zero and 82,210 respectively. During 2024 the total amount of shares exercised were 329,708 from program year 2020. During 2024 328,736 options from program year expired. The amount recognized in the statement of income for share-based compensation was a credit of USD 0.7 million in 2024 and USD 0.6 million in 2023. On December 31, 2024, USD 0.0 million has been reported in the line other non-cur-rent liabilities on the statement of financial position and USD 0.1 million in accrued operating costs (see note 20). 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 2024 there was USD 0.1 million in cash payments made with respect to share-based compensation, and USD 0.7 million in 2023. REC Silicon annual report 2024 REC Silicon annual report 2024 128 128 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 33 Events after the reporting period On January 24, 2025, REC Silicon announced that it has entered into a USD 40 million term loan with Hanwha International LLC, supporting REC Silicon’s capital needs during the shutdown process at Moses Lake and the Company’s transition into a pure play silicon gas provider. Further, the bridge loans of USD 25 million and USD 25 million with Hanwha International LLC rolled up into this loan at their maturity dates on February 2 and February 4, 2025, respectively. The terms of the loan are generally in line with the financial terms of the Company’s existing bank loan agreements, secured by the assets of the Company. The maturity date is January 24, 2026. REC Silicon also announced that its US affiliate and QCells, its customer for granular polysilicon produced at Moses Lake, entered into a mutually agreeable termination agreement. Per the agreement, the reimbursement of the prepay-ment of USD 30 million by REC Silicon to QCells has been delayed for one year without interest and without any further obligation by either party, including the payment of any liquidated damages. Hanwha International LLC is an affiliate of the Company’s two largest shareholders, Hanwha Solutions and Hanwha Corporation. REC Silicon annual report 2024 REC Silicon annual report 2024 129 129 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Statement of compliance 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 31, 2024. 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 on December 31, 2024. 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 on December 31, 2024. The report from the Board of Directors and CEO, including the report on corporate governance and sustainability, for the Group and the Company has been prepared in accordance with the Norwegian Accounting Act and the Norwegian Accounting Standard no. 16 applicable on December 31, 2024. We confirm that, to the best of our knowledge: The financial statements for the Group and the Company for the year ending December 31, 2024 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 31, 2024, and The report from the Board of Directors for the year ending December 31, 2024 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. Lysaker, March 24, 2025 Board of Directors Document is signed electronically Tae Won Jun Chairman of the Board Jooyong Chung Deputy Chair Vivian Bertseka Member of the Board Robert Neuhauser Member of the Board Dr. Renate Oberhoffer-Fritz Member of the Board William K. Levens President and CEO REC Silicon annual report 2024 REC Silicon annual report 2024 130 130 Financials Financials | Statement of compliance Financials | Statement of compliance Parent company financial statements REC Silicon ASA Parent company balance sheet (NGAAP) 132 Parent company income statement (NGAAP) 133 Parent company statement of cash flows (NGAAP) 134 Notes to the Parent company financial statements 135 Note A Summary of significant accounting principles and general 135 Note B Equipment and intangible assets 135 Note C Shares in subsidiaries 136 Note D Receivables from subsidiaries 136 Note E Cash and cash equivalents and restricted bank accounts 137 Note F Interest bearing liabilities 137 Note G Equity 138 Note H Employee benefits 138 Note I Income taxes 139 Note J Other operating expenses 141 Note K Interest and currency 142 Note L Derivatives, other current liabilities 143 Note M Impairment of financial assets 143 Note N Research and development 144 Note O Guarantees and bond 145 Note P Related parties 145 Note Q Contingent liabilities 145 Note R Going concern 146 REC Silicon annual report 2024 REC Silicon annual report 2024 131 131 Financials Financials | Parent company financial statements Financials | Parent company financial statements Parent company balance sheet (NGAAP) On December 31 (USD in thousand) Notes 2024 2023 ASSETS Non-current assets Equipment and intangible assets B 30 30 Investments in subsidiaries C 133 133 Non-current receivables from subsidiaries D , M 125,492 336,820 Total non-current assets 125,655 336,983 Current assets Other receivables 327 375 Restricted bank accounts current E 12 13 Total current receivables 339 388 Cash and cash equivalents E 2,240 17,027 Total current assets 2,579 17,415 Total assets 128,234 354,398 On December 31 (USD in thousand) Notes 2024 2023 EQUITY AND LIABILITIES Shareholders' equity Share capital G 49,629 49,629 Share premium G 199,677 199,677 Total paid-in capital G 249,306 249,306 Other equity and retained earnings G -233,182 -5,223 Total shareholders' equity G 16,124 244,083 Non-current liabilities Interest-bearing liablities F 110,000 110,000 Total non-current liabilities 110,000 110,000 Current liabilities Trade payables 136 15 Social security tax, VAT and other taxes 34 57 Other current liabilities L 1,940 243 Total current liabilites 2,110 315 Total liabilities 112,110 110,315 Total equity and liabilities 128,234 354,398 Lysaker, March 24, 2025 Board of Directors Document is signed electronically Tae Won Jun Chairman of the Board Joo-Yong Chung Deputy Chair Vivian Bertseka Member of the Board Robert Nauhauser Member of the Board Dr. Renate Oberhoffer-Fritz Member of the Board William K. Levens President and CEO REC Silicon annual report 2024 REC Silicon annual report 2024 132 132 Financials Financials | Parent company financial statements Financials | Parent company financial statements Parent company income statement (NGAAP) Year ended December 31 (USD in thousand) Notes 2024 2023 Revenues 0 0 Employee benefit expenses H -328 -215 Other operating expenses J -1,921 -2,485 EBIT -2,249 -2,700 Interest income, external 386 722 Interest expense, external K -8,748 -9,920 Other financial expenses K 0 -8 Net currency gains/losses K 52 -4,592 (Impairment)/reversal of impairment of financial assets D , M -217,400 72,145 Net financial items -225,710 58,347 Profit/loss before income tax -227,959 55,647 Income tax expenses I 0 0 Profit/ loss -227 959 55 647 Profit/loss for the year is distributed as follows Other equity (uncovered loss) G -227,959 55,647 Total distributed -227,959 55,647 REC Silicon annual report 2024 REC Silicon annual report 2024 133 133 Financials Financials | Parent company financial statements Financials | Parent company financial statements Parent company statement of cash flows (NGAAP) Year ended December 31 (USD in thousand) 2024 2023 Cash flows from operating activities Profit (Loss) before tax -227,959 55,647 Impairment gains or losses on financial assets‌ 1 217,400 -72,145 Changes in receivables external 48 -13 Changes in payables 98 -170 Currency effects not cash flow or not related to operating activities‌ 2 1 183 Other items‌ 3 1,697 -2,641 Net cash flow from operating activities -8,715 -19,139 Cash flow from investing activities Proceeds from finance receivables and restricted cash 4,000 20,208 Payments of receivables internal‌ 1 -10,072 -74,883 Net cash flow from investing activities -6,072 -54,675 Cash flow from financing activities Increase in equity 0 0 Payment of loans 0 -110,000 Proceeds from new loans 0 110,000 Net cash flow from financing activities 0 0 Net increase/decrease in cash and cash equivalents -14,787 -73,814 Cash and cash equivalents at the beginning of the period 17,027 90,841 Cash and cash equivalents at the end of the period 2,240 17,027 1 Impairment gains and losses on financial assets. See not e M . 2 The Currency gains and losses are primarily related to bank accounts in NOK revalued. 3 Other items consist of the expensing of up-front loan fees and amortization of interests and other items. REC Silicon annual report 2024 REC Silicon annual report 2024 134 134 Financials Financials | Parent company financial statements Financials | Parent company financial statements Notes to the Parent company financial statements Summary of significant accounting principles and general 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 on December 31, 2024.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 substan- tially 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. While intercompany receivables are presented as assets in the company’s NGAAP financial statements, they are eliminated in the IFRS consolidated financial statements. Intercompany receivables are recognized at nominal value at initial recognition, adjusted for any identified losses or uncertainties regarding settlement. Intercompany receivables are assessed for impair- ment if there are indications of potential credit losses. Any impairment losses are recognized in the income statement when identified. In the Company’s financial statements, payments expected to be made during the next 12 months on non-current financial assets or liabilities are reclassified to current financial assets or liabilities. 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 19, 2025 and are subject to approval by the Annual General Meeting scheduled for May 8, 2025. Equipment and intangible assets Equipment and intangible assets consist of office equipment and furniture. There has been no addition and disposal during 2024 and 2023. The tangible assets were fully depreciated on December 31, 2020. REC Silicon annual report 2024 REC Silicon annual report 2024 135 135 Financials Financials | Parent company financial statements Financials | Parent company financial statements Shares in subsidiaries Carrying amount on December 31 (USD in thousand) Company Ownership/ voting right Business office 2024 2023 REC SILICON AS 100% Bærum 11 11 REC SOLAR AS 100% Bærum 122 122 Total 133 133 Sub-subsidaries Ownership/ voiting right Business office REC Silicon AS subsidiaries REC Silicon Inc 100% Moses Lake, USA REC Solar Grade Silicon LLC 100% Moses Lake, USA REC Advanced Silicon Materials LLC 100% Butte, USA REC Silicon Pte. Ltd. 100% Singapore Receivables from subsidiaries Non-current interest-bearing receivables from subsidiaries are USD loans to the subsidiaries with carrying value USD 125,400 thousand on December 31, 2024 and USD 336,800 thousand on December 31, 2023. In 2024 the Company impaired these receivables by USD 217,400 thousand. In 2023 the Company reversed the impairment of these receivables by USD 158,100 thousand. These loans are not interest-bearing and is deemed as part of the long-term financing of the US operation. See not e M . Other current receivables consist of receivable/ loan to REC Silicon Pte. Ltd. The Company had in previous years impaired the receivables/ loan to REC Silicon Pte. Ltd due to the subsidiary’s financial situation and obligations. In 2023 the impairment of USD 5,208 thousand was reversed as the receivable from REC Silicon Pte Ltd was repaid to REC Silicon ASA. See not e M . REC Silicon annual report 2024 REC Silicon annual report 2024 136 136 Financials Financials | Parent company financial statements Financials | Parent company financial statements Cash and cash equivalents and restricted bank accounts Cash and cash equivalents consist of bank deposits. Restricted bank accounts (not included as cash and cash equivalents) On December 31 (USD in thousand) 2024 2023 Current 12 13 Total restricted bank accounts 12 13 On December 31, 2024, current restricted bank accounts consist of USD 12 thousand to secure employees’ tax deductions in REC Silicon ASA. On December 31, 2023, current restricted bank accounts include USD 13 thousand to secure employees’ tax deductions in REC Silicon ASA. See note 14 to the consolidated financial statements for a description of restricted bank accounts. Interest bearing liabilities In March 2023 the company entered into a bank loan of USD 110 million from KEB Hana Bank. The maturity date for the loan is 3 April, 2026. The loan has an interest with basis rate 3-month SOFR plus the applicable margin of 1.8%.The loan from KEB Hana Bank was fully guaranteed by Hanwha Solutions, REC Silicon ASA´s major shareholder. In April 2023 the company repaid the REC 04 Bond loan of USD 110 million. On December 31 (USD in thousand) 2024 2023 Non-current USD bank loan 110,000 110,000 Total non-current interest bearing liabilities 110,000 110,000 Current Total non-current interest bearing liabilities 0 0 Total interest bearing liabilities 110,000 110,000 Covenants imposed by the loan include a change of control provision which grants the bank an option entitling them to cancel the commitments and declare all outstanding amounts and accrued unpaid interest due and payable if a share- holder or a group of shareholders gains control of the share capital other than the current main shareholder, Hanwha Solutions. In addition, the loan agreement provides limitations on borrowing, asset sales, and other transactions under certain conditions. The loan agreement includes a cross-default clause should the Company default on any financial indebted- ness above certain threshold amounts. On December 31, 2024 and 2023, the Company had complied with all financial covenants and other restrictions in the loan. See note 17 to the consolidated financial statements for details of the Company’s interest-bearing liabilities. REC Silicon annual report 2024 REC Silicon annual report 2024 137 137 Financials Financials | Parent company financial statements Financials | Parent company financial statements Equity USD in thousand Share capital Share premium Other equity and retained earnings (uncovered losses) Total Equity on January 1, 2023 49,629 199,677 -60,870 188,436 Profit for the year 0 0 55,647 55,647 Equity on December 31, 2023 49,629 199,677 -5,223 244,083 Loss for the year 0 0 -227,959 -227,959 Equity on December 31, 2024 49,629 199,677 -233,182 16,124 On December 31, 2024, REC Silicon ASA had 31,883 shareholders (34,318 on December 31, 2023). The total number of outstanding shares was 420,625,659 on December 31, 2024 and 2023, each with a par value of NOK 1. Employee benefits Employee benefit expenses USD in thousand 2024 2023 Payroll -290 -184 Social security tax -38 -31 Pension expense including social security tax 0 0 Other employee related costs 0 0 Employee benefit expenses -328 -215 The average number of employees measured in man-years was 1.0 during 2024 and 0.3 for 2023. There were no loans or guarantees to employees on December 31, 2024 and 2023. Payroll includes compensation to Board of Directors. The CEO of REC Silicon ASA is employed in REC Silicon Inc and receives remuneration from the subsidiary. For compensation and shareholdings for Group management and Board of Directors see note 16 to the consolidated financial statements. Additionally, the executive management remuneration report prepared in accordance with the provisions of the Norwegian Public Companies Act will be prepared for the Annual General Meeting in 2025. Pension plans On December 31, 2024, and 2023 the Company has one employee in Denmark and no employees located in Norway and had thereby stopped maintaining a defined contribution pension plan for employees. As long as the company had employees located in Norway, the company maintained a contribution plan that fulfilled the requirements of Norwegian law: “Lov om obligatorisk tjenestepensjon”. REC Silicon annual report 2024 REC Silicon annual report 2024 138 138 Financials Financials | Parent company financial statements Financials | Parent company financial statements Income taxes Recognized income tax expense USD in thousand 2024 2023 Current income tax benefit (+) / expense (-) for the year 0 0 Total deferred tax benefit (+) / expense (-) for the year 0 0 Changes in estimates related to prior years 0 0 Total income tax benefit (+) / expense (-) for the year in the income statement 0 0 Relationships between income tax expense/benefit to profit/loss before taxes USD in thousand 2024 2023 Profit/Loss for before taxes -227,959 55,647 Tax calculated at domestic tax rate of 22% 50,151 -12,242 Expenses not deductible for tax (-) /reversal (+)(permanent differences)‌ 1 0 0 Impairment gain (loss) (permanent differences)‌ 1 -47,828 15,872 Other permanent differences‌ 2 16,842 1,490 Effects of not recognized deferred tax assets, including reversal of previous years -19,165 -5,119 Current income tax benefit (+) / expense (-) for the year 0 0 Changes in estimates related to prior years 0 0 Total income tax benefit (+) / expense (-) for the year in the income statement 0 0 Effective tax rate 0% 0% 1 Impairment gains (losses) of financial assets. 2 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 2024 2023 Profit/Loss for before taxes -227,959 55,647 Impairment gains and losses on shares and loans - permanent differences 217,400 -72,145 Expenses not deductible for tax (+) / reversal (-) (permanent differences) 0 0 Other permanent differnces‌‌ 1 97,675 39,767 Changes in temporary differences -95,081 -47,598 Basis for income tax before utilization (-) / increase (+) of tax losses carried forward -7,965 -24,329 Utilization (-) / increase (+) of tax losses carried forward 7,965 24,329 Basis for current tax in the income statement 0 0 Estimated 22 percent current income tax 0 0 Current income tax benefit (+) expense (-) for the year 0 0 Basis for current tax in the income statement 0 0 Cost for capital increase 0 0 Tax loss caried forward 0 0 Basis for current tax in balance sheet 0 0 Current tax asset (+) / liability (-) 0 0 1 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. REC Silicon annual report 2024 REC Silicon annual report 2024 139 139 Financials Financials | Parent company financial statements Financials | Parent company financial statements Specification of temporary differences and tax losses, deferred tax assets and liabilities USD in thousand 2024 2023 Fixed assets -5 -14 Up-front fee and Capitalized borrowing cost 0 0 Interest bearing liabilities 0 0 Derivatives 0 0 Net urealized gains on non-current foreign exchange receivables and liabilities 451,023 402,977 Other -7,046 -7,864 Tax losses carried forward -457,417 -502,110 Total temporary differences and tax loss carried forward -13,446 -107,012 Tax percentage 22% 22% Deferred tax assets (-) / liabilities (+) -2,958 -23,543 Deferred tax assets not recognized 2,958 23,543 Deferred tax assets (-) / liabilities (+) in the balance sheet 0 0 Change in deffered tax assets (-)/ liabilities (+) in the balance sheet 0 0 Total deferred tax benefit (-)/ expense (+) for the year 0 0 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. The Norwegian Tax office has changed the company’s income tax assessment for the years 2019-2022 during 2024. The basis for this change where an ongoing tax audit relating to whether interest should have been charged on loans provided from REC Silicon ASA to Rec Silicon Inc and Rec Solar Grade Silicon LLC. As a temporary measure, due to the financial situation in these subsidiaries, the company has not charged interest on the loans in the period 2019 to 2024. The company has not made any preliminary tax provisions for this matter in the periods 2023 and 2024 as the Norwegian Tax office has yet to review these years in their assessment with their estimates for the subsidiaries debt bearing capacity in this period. The company has not recognized any deferred tax asset relating to its tax losses carry forward. The following are the temporary differences and movement during 2024 and 2023 USD in thousand Balance Jan 1, 2024 Recognized in income Recognized in equity Translation differences Balance Dec 31, 2024 Fixed assets -14 7 0 1 -5 Up-front fee and capitalized borrowing cost 0 0 0 0 0 Interest bearing liabilities 0 0 0 0 0 Net urealized gains on non-current foreign exchange receivables and liabilities 402,977 95,073 0 -47,027 451,023 Other -7,864 0 0 818 -7,046 Tax losses carried forward -502,110 -7,965 0 52,658 -457,417 Total 107,012 87,116 0 6,450 -13,446 USD in thousand Balance Jan 1, 2023 Recognized in income Recognized in equity Translation differences Balance Dec 31, 2023 Fixed assets -25 10 0 1 -14 Up-front fee and capitalized borrowing cost 115 -107 0 -8 0 Interest bearing liabilities 0 0 0 0 0 Net urealized gains on non-current foreign exchange receivables and liabilities 364,740 47,695 0 -9,459 402,977 Other -8,116 0 0 251 -7,864 Tax losses carried forward -492,086 -24,329 0 14,305 -502,110 Total 135,371 23,269 0 5,091 -107,012 REC Silicon annual report 2024 REC Silicon annual report 2024 140 140 Financials Financials | Parent company financial statements Financials | Parent company financial statements Other operating expenses Specification of other operating expenses USD in thousand 2024 2023 Operating lease expenses -22 -21 Audit remuneration -260 -326 Consultancy fee -1,045 -1,812 Insurance -203 -242 Other operating expenses -391 -84 Total Other operating expenses -1,921 -2,485 Audit remuneration USD in thousand 2024 2023 Statutory audit -234 -264 Other non-audit services -26 -62 Total auditor's remuneration expensed -260 -326 The auditor’s remuneration expensed for 2023 was in total related to KPMG. In 2024 Statutory audit consist of USD 171 thousand from Deloitte, elected as auditor on the general assembly in May 2024. The remaining USD 63 thousand In Statutory audit was relating to KPMG. Other non-audit services of USD 26 thousand were relating to KPMG. Future payment obligations The future aggregate minimum payment obligation is as follows. 2024 2023 USD in thousand Operating lease Other Total Operating lease Other Total No later the 1 year 0 69 69 0 69 69 Later than 1 year but not later than 5 years 0 0 0 0 0 Later than 5 years 0 0 0 0 0 0 Total 0 69 69 0 69 69 REC Silicon annual report 2024 REC Silicon annual report 2024 141 141 Financials Financials | Parent company financial statements Financials | Parent company financial statements Interest and currency Interest income, internal The Company conducts financing for the Group. The Company has loans to the US operation. See note D and M . In 2019 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 (2019 and 2020) no interest should be calculated and paid. In 2021 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 (2021 and 2022) no interest should be calculated and paid. The same addendum was applied in 2022 for 2023 and 2024 and in 2024 for 2025 and 2026. 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 the period from 2019 to 2024 Interest expenses, external Specification of interest expenses, external USD in thousand 2024 2023 Interest USD senior secured bond and bank loan -8,748 -9,920 Total Interest expenses, external -8,748 -9,920 Interest expenses include expensing of upfront fees, see note 25 to the consolidated financial statements. Currency gains and losses Specification of net currency gains and losses USD in thousand 2024 2023 Net currency gains / losses on other 52 -4,592 Total Net currency gains and losses 52 -4,592 REC Silicon annual report 2024 REC Silicon annual report 2024 142 142 Financials Financials | Parent company financial statements Financials | Parent company financial statements Derivatives, other current liabilities Derivatives REC Silicon ASA had no derivative contracts in 2024 and 2023. Specification of other current liabilities On December 31 (USD in thousand) 2024 2023 Accrued interest on interest-bearing liabilities 1,799 0 Accrued operating costs 141 243 Total Other current liabilities 1,940 243 Impairment of financial assets 2024 USD in thousand Shares in REC Silicon AS Receivables to US operations Receivables on REC Silicon AS Receivables related to REC Silicon Pte Ltd Par value / cost on January 1 267,976 986,928 20 0 Accumulated impairment on January 1 -267,965 -650,128 0 0 Carrying value on January 1 11 336,800 20 0 Addition 0 10,000 72 0 Repayment 0 -4,000 0 0 Conversion from loan to equity 0 0 Impairment / reversal (+) 0 -217,400 0 0 Carrying value on December 31 11 125,400 92 0 Par value / cost on December 31 267,976 992,928 92 0 Accumulated impairment on December 31 -267,965 -867,528 0 0 2023 USD in thousand Shares in REC Silicon AS Receivables to US operations Receivables on REC Silicon AS Receivables related to REC Silicon Pte Ltd Par value / cost on January 1 108,104 1,001,928 85,009 5,208 Accumulated impairment on January 1 -108,093 -808,228 -68,709 -5,208 Carrying value on January 1 11 193,700 16,300 0 Addition 159,872 74,883 0 Repayment 0 -15,000 -5,208 Conversion from loan to equity -159,872 Impairment / reversal (+) -159,872 158,100 68,709 5,208 Carrying value on December 31 11 336,800 20 0 Par value / cost on December 31 267,976 986,928 20 0 Accumulated impairment on December 31 -267,965 -650,128 0 0 REC Silicon annual report 2024 REC Silicon annual report 2024 143 143 Financials Financials | Parent company financial statements Financials | Parent company financial statements 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 2020 REC Silicon AS impaired the value of the shares in REC Silicon Pte Ltd with USD 12.9 million. As a consequence of the impairment loss in REC Silicon AS, REC Silicon ASA impaired their shares in REC Silicon AS. In 2023 REC Silicon Pte Ltd repaid the receivables of USD 5.2 million. The repayment was made due to proceeds from the successful sale of shares in Yulin JV. The receivables related to REC Silicon Pte Ltd previously fully impaired, there- fore in 2023 had an income of USD 5.2 million related to reversal of impairment of the loan. REC Silicon AS shares in REC Silicon Inc, were impaired to zero in 2016. The impairment loss in 2024 and gain in 2023 represents the book value in excess of the fair value of loans to REC Silicon ASA’s 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. Key assumptions in the model are represented by among other factors, the future sales volumes and prices relating to the company’s strategy for future investments and production. Management of the company has thoroughly reviewed all the assumptions presented in the model, and believe the model is reasonable and represent the best estimate for the future values that the company will achieve during in the specified future period for the model. However, the estimated values include judgement from management and may represent uncertainty as the factors put in the model consist of both observable factors in the market, historical assumptions and estimates. Research and development REC Silicon ASA did not conduct any activities associated with research and development during 2024 and 2023. REC Silicon annual report 2024 REC Silicon annual report 2024 144 144 Financials Financials | Parent company financial statements Financials | Parent company financial statements Guarantees and bond On December 31, 2024 and 2023 the company did not have any bank guarantees The Company 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 offsetting 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 28.1 million on December 31, 2023 and on December 31, 2022. The guarantees decrease from 2024 to 2039 when they will expire in their entirety. Related parties Related parties’ transactions for the Company are primarily loans to its subsidiaries (see note D and M )). These loans are included in non-current receivables from subsidiaries (see the balance sheet). Since 2019 there has been no interest income calculation, see note K . Guarantee fees to Hanwha Solutions, REC Silicon ASA´s largest shareholder, are related to financial guarantees from Hanwha Solutions for a USD 110 million bank loan to REC Silicon ASA from KEB Hana Bank in 2023. Group Management and Board of Directors’ compensation, ownership of shares and options, loan agree- ments and guarantees are shown in note 16 to the consolidated financial statements. Contingent liabilities REC had no contingent liabilities on December 31, 2024. REC Silicon annual report 2024 REC Silicon annual report 2024 145 145 Financials Financials | Parent company financial statements Financials | Parent company financial statements Going concern The Company has prepared its financial statements based on the going concern assumption. However, there is significant doubt about the Company’s ability to maintain sufficient liquidity to sustain its operations over the next 12 months without continued financial support from its major subsidiary, REC Silicon Inc., or access to additional sources of capital. The Company doesn’t have the capacity for cash flow generation from business operations and relies on repayments of intercompany loans from its US entities to cover its expenses and interest payments. The term loan of USD 110 million from KEB Hana Bank matures in April 2026 and needs to be rolled over or repaid. Management acknowledges that the Company will not be able to generate sufficient cash flow from its operations to cover its expenses and interest payments for the next 12 months and meet the debt repayment in April 2026. There is significant doubt about the Company’s ability to secure sufficient funding from its US entities for the next 12 months due to the shutdown of the polysilicon operations at the Moses Lake facility in December 2024. REC Silicon Inc has provided the Company with a support letter to confirm its commitment to ensuring that the Company continues as a going concern. However, there is uncertainty regarding the effectiveness of this support, as the cash flow generated by US entities is not sufficient to cover operating needs, and additional funding will be required. This has resulted in material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern, which could have a substantial impact on its future operational capacity. However, management and the Board of Directors believe that the Company will be successful in obtaining the capital necessary to meet the obligations and continue as a going concern. Management acknowledges the importance of assumptions related to the going concern assessment and has carefully projected the outlook for 2025. Management believes that its US entities’ financial goals for 2025 are achievable. Given the cash flow estimates outlined above and the fact that Hanwha, as the largest shareholder and primary creditor, has guaranteed all bank loans and provided shareholder loans, management and the Board believe that the Group’s continued operations are aligned with Hanwha’s best interests. The Board considers the Company’s current liquidity position and the estimated results of operations sufficient to meet the operating cash flow requirements. 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 was realistic at the date of the accounts. The Board intends to monitor these conditions and is prepared to take appropriate action as neces- sary. Accordingly, these financial statements have been prepared under the assumption that the Company is a going concern. REC Silicon annual report 2024 REC Silicon annual report 2024 146 146 Financials Financials | Parent company financial statements Financials | Parent company financial statements REC Silicon annual report 2024 REC Silicon annual report 2024 147 147 Financials Financials | Auditor’s report Financials | Auditor’s report REC Silicon annual report 2024 REC Silicon annual report 2024 148 148 Financials Financials | Auditor’s report Financials | Auditor’s report REC Silicon annual report 2024 REC Silicon annual report 2024 149 149 Financials Financials | Auditor’s report Financials | Auditor’s report REC Silicon annual report 2024 REC Silicon annual report 2024 150 150 Financials Financials | Auditor’s report Financials | Auditor’s report REC Silicon annual report 2024 REC Silicon annual report 2024 151 151 Financials Financials | Auditor’s report Financials | Auditor’s report REC Silicon annual report 2024 REC Silicon annual report 2024 152 152 Financials Financials | Auditor’s report Financials | Auditor’s report 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: EBITDA EBITDA is an acronym for Earnings Before Tax, Depreciation, and Amortization. EBITDA is EBIT excluding depreciation, amortization, and impairment. EBITDA from continuing operations is reflected on the consolidated statement of income on the line titled EBITDA. EBITDA has been reported as a loss of USD 17.9 million for the year ended December 31, 2024, and a loss of USD 15.7 million for the year ended December 31, 2023. 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 5 Segment Information, and in the key financials table in this report in lines similarly titled. EBITDA margin from continuing operations 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 represent revenues less cost of manufacturing excluding depreciation and amortization. For other, EBITDA contribution represents primarily operating costs. A table reconciling the EBITDA from continuing operations contribution of each operating segment along with other and eliminations to the Company’s total EBITDA can be found in note 5 Segment Information. 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 from continuing operations is reflected on the consolidated statement of income on the line titled EBIT. EBIT has been reported as a loss of USD 78.9 million for the year ended December 31, 2024, and a loss of USD 35.5 million for the year ended December 31, 2023. EBIT excluding impairment charges EBIT excluding impairment charges is calculated by taking EBIT and excluding impairment. For the year ended December 31, 2024 this is a loss of USD 29.2 million and for the year ended December 31, 2023 this is a loss of USD 35.5 million. 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 5 Segment Information, and in the financial highlight tables in this report in lines titled similarly. EBIT margin from continuing operations has been calculated and is reported in the key financials table for REC Silicon Group. 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 from continuing operations of each operating segment along with other and eliminations to the Company’s total EBIT can be found in note 5 Segment Information. REC Silicon annual report 2024 REC Silicon annual report 2024 153 153 Financials Financials | Definition of alternative performance measures Financials | Definition of alternative performance measures 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. On December 31, 2024, the equity ratio is negative 219.6 percent and is calculated by dividing negative USD 378.1 million total shareholders’ equity by USD 172.1 million in total assets. On December 31, 2023, the equity ratio is 13.8 percent and is calculated by dividing USD 76.4 million total shareholders’ equity by USD 552.9 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 17 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. On December 31, 2024, net debt was USD 407.3 million or USD 352.5 million total carrying value of the Company’s debt (from note 17 Borrowings) plus 65.1 million current and non-current lease liabilities (from the statement of financial position) less USD 10.3 million in cash in cash equivalents. On December 31, 2023, net debt was USD 182.8 million or USD 283.8 million total carrying value of the Company’s debt (from note 17 Borrowings) plus 69.9 million current and non-current lease liabilities (from the statement of financial position) less USD 170.9 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 17 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. On December 31, 2024, nominal net debt was USD 407.8 million or USD 353.0 million contractual repayment values of the Company’s debt plus 65.1 million current and non-current lease liabilities (from the statement of financial position) less USD 10.3 million in cash in cash equivalents. On December 31, 2023, nominal net debt was USD 183.2 million or USD 284.2 million contractual repayment values of the Company’s debt plus 69.9 million current and non-current lease liabilities (from the statement of financial position) less USD 170.9 million in cash in cash equivalents. REC Silicon annual report 2024 REC Silicon annual report 2024 154 154 Financials Financials | Definition of alternative performance measures Financials | Definition of alternative performance measures artbo x.no REC Silicon ASA Lysaker Torg 5, 3 etg. PO Box 63 1324 Lysaker Norway Phone +47 407 24 086 About REC Silicon REC Silicon ASA is a leading producer of advanced silicon materials, supplying high-purity polysilicon and silicon gases to the solar and electronics industries worldwide. We combine nearly 40 years experience and best-in-class proprietary technology to deliver on customer expectations. Our two U.S. based plants have a combined production capacity of more than 30,000 MT of high purity silane gas. REC Silicon is headquartered in Lysaker, Norway and listed on the Oslo stock exchange under the ticker: RECSI. 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