Earnings Release • Feb 12, 2014
Earnings Release
Open in ViewerOpens in native device viewer
(Compared to Q3 2013)
| (NOK IN MILLION) | Q4 2013 | Q4 2012 | 2013 | 2012 | Q3 2013 |
|---|---|---|---|---|---|
| Revenues | 743 | 756 | 2 453 | 3 063 | 705 |
| EBITDA | 164 | 17 | 298 | -292 | 36 |
| EBITDA margin | 22% | 2% | 12% | -10% | 5% |
| EBITDA excluding special items 1) | 164 | 53 | 183 | -476 | 36 |
| EBITDA margin excluding special items | 22% | 7% | 7% | -16% | 5% |
| EBIT before impairment charges | -35 | -235 | -452 | -1 325 | -152 |
| Impairment charges | -27 | -2 936 | -54 | -3 034 | -27 |
| EBIT | -62 | -3 171 | -506 | -4 359 | -179 |
| EBIT Margin | -8% | -420% | -21% | -142% | -25% |
| Profit/ loss before tax from continuing operations | -80 | -3 041 | -1 439 | -4 836 | -334 |
| Profit/loss from continuing operations | -28 | -2 034 | -940 | -3 461 | -220 |
| Profit/loss from discontinued operations, net of tax | 190 | -137 | -1 132 | -2 566 | -1 358 |
| Earning per share from continuing operations, diluted (NOK) | -0.01 | -1.00 | -0.42 | -2.10 | -0.10 |
1) Special items represent income from contract cancellations and supplier contract settlements
On October 25, 2013 REC Solar was sold and has been reported in discontinued operations. Results from discontinued operations, including gains and losses on disposal, are presented after tax in the income statement.
Subsequent to October 2013, REC Silicon (The Group) consisted of REC Silicon ASA and its subsidiaries (See Note 1). The consolidated statement of income has been re-presented for previous periods with the external income and expenses of REC Solar presented in discontinued operations. Internal transactions have been eliminated in consolidation but have not been re-presented in discontinued operations. Therefore, amounts presented for continuing operations do not reflect the performance of REC Silicon's continuing operations during prior periods or the performance likely to be achieved in future periods (See Note 10).
During the third quarter of 2012, the operations of REC Wafer were closed and have been similarly reported in discontinued operations (See Note 10). The table below illustrates revenues, EBITDA and EBIT for the segments of the REC Silicon Group:
The line item "Other & Eliminations" includes the elimination of internal profits in addition to expenses associated with REC Silicon ASA of NOK 13 million and NOK 94 million for the fourth quarter and 2014 respectively. Expense levels within REC Silicon ASA represent administration and staff sufficient to support the operation of a vertically integrated solar energy company for ten months during 2013 and one month during the fourth quarter. These expenses can be expected to continue at a reduced rate to reflect the operations of REC Silicon.
The segment "REC Silicon" continues to operate manufacturing facilities in the United States. However, REC Silicon, Inc. now represents the continuing operations of the former REC Silicon Group.
| Q4 2013 | Q3 2013 | DEC 31, 2013 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (NOK IN MILLION) | REVENUES | EBITDA | EBIT | REVENUES | EBITDA | EBIT | REVENUES | EBITDA | EBIT |
| REC Silicon | 752 | 187 | -39 | 738 | 80 | -135 | 2 543 | 492 | -312 |
| REC Solar excluding loss on disposal 3) | 328 | 27 | 11 | 917 | 59 | 26 | 3 061 | 111 | 11 |
| Other & eliminations excluding loss on disposal 1) | -9 | -11 | -11 | -33 | -35 | -35 | -90 | -94 | -94 |
| Total segments excluding gain/loss on disposal | 1 071 | 203 | -38 | 1 621 | 105 | -143 | 5 514 | 509 | -395 |
| Adjustment of gain on disposal REC Wafer | 0 | 85 | 85 | 0 | 1 | 1 | 0 | 84 | 84 |
| Loss on disposal of REC Solar 1) | 0 | -1 118 | -48 | 0 | -182 | -1 251 | 0 | -1 299 | -1 299 |
| Total operations | 1 071 | -829 | -2 | 1 621 | -75 | -1 393 | 5 514 | -706 | -1 610 |
| Re-presentation of discontinued operations 2) | -328 | 993 | -60 | -917 | 111 | 1 214 | -3 060 | 1 004 | 1 104 |
| Continuing operations 2) | 743 | 164 | -62 | 705 | 36 | -179 | 2 453 | 298 | -506 |
1) Eliminations in this table do not include gains/losses on disposal of discontinued operations. See note 10 for further information.
2) See note 10 for further information.
3) REC Solar figures are for ten months of 2013 (one month in the fourth quarter 2013).
REC Silicon produces polysilicon and silicon gas for the solar industry and the electronics industry at plants in Moses Lake, Washington and in Butte, Montana. REC Silicon targets polysilicon production of 19,400 MT in 2014 and employs approximately 740 people.
Fourth quarter 2013 performance compared to the previous quarter:
Fourth quarter 2013 total revenues increased to NOK 752 million from NOK 738 million in the third quarter. Increases in revenue can primarily be attributed to increases in the average selling prices for polysilicon.
For year 2013, revenues decreased to NOK 2,453 million from NOK 3,261 million in 2012. This decrease reflects mainly reduced sales volume and selling prices. Polysilicon sales volumes decreased by 13 percent in 2013 to approximately 19,000 MT compared to 2012. This decrease is mainly explained by the shutdown of Polysilicon I. REC Silicon's average annual selling price for Siemens and granular polysilicon declined 15 percent from 2012 to 2013.
Fourth quarter 2013 EBITDA increased to NOK 187 million from NOK 80 million in the third quarter. Increased EBITDA can be attributed to higher production, cost improvements, increased average selling prices for polysilicon, and higher sales volumes of silicon gas.
EBITDA excluding special items decreased to NOK 377 million from NOK 574 million in 2012.
Global demand increased from 2012 to 2013, however overcapacity put pressure on polysilicon prices through the beginning of 2013. Difficult market conditions reduced capacity utilization across the value chain and forced many players into insolvency. This in turn led to permanent closure of high cost capacity and abandonment or delay of new capacity.
Later in 2013, market demand for Solar panels improved generating higher polysilicon demand, which in turn lifted average selling prices from a historical low point at the beginning of 2013. Overall, industry analysts are estimating global PV installations in 2013 at approximately 36 GW, up from 32 GW in 2012.
While demand is stagnating in historically important European solar markets, it is growing in most other regions of the world. Towards the end of 2013 China, Japan and the US represented the strongest growth markets. China remains the largest market for solar grade polysilicon. However, a number of other countries are becoming important as REC Silicon's base is growing in Taiwan, Singapore, Korea and Japan.
According to multiple third-party indices, solar grade average selling prices began to rise in the fourth quarter after nearly two quarters of stagnation, showing an increase of nearly 3 percent from November to December. REC Silicon experienced strengthening demand for solar grade polysilicon and above normal demand for silicon gases during the fourth quarter.
| (NOK IN MILLION) | Q4 2013 | Q4 2012 | DEC 31, 2013 | DEC 31, 2012 | Q3 2013 |
|---|---|---|---|---|---|
| Internal revenues | 12 | 4 | 92 | 200 | 33 |
| External revenues | 740 | 757 | 2 450 | 3 062 | 705 |
| Total revenues | 752 | 761 | 2 543 | 3 261 | 738 |
| EBITDA | 187 | 105 | 492 | 758 | 80 |
| EBITDA margin | 25% | 14% | 19% | 23% | 11% |
| EBITDA excluding special items 2) | 187 | 105 | 377 | 574 | 80 |
| EBITDA margin excluding special items | 25% | 14% | 15% | 18% | 11% |
| Depreciation and amortization | -199 | -249 | -750 | -1 019 | -188 |
| EBIT before impairment charges | -12 | -144 | -258 | -261 | -108 |
| Impairment | -27 | -2 918 | -54 | -2 983 | -27 |
| EBIT | -39 | -3 062 | -312 | -3 244 | -135 |
| EBIT margin | -5% | -402% | -12% | -99% | -18% |
| Polysilicon production in MT (Siemens and granular) | 5 135 | 5 426 | 19 764 | 21 405 | 4 793 |
| Polysilicon sale in MT (Siemens and granular) | 4 961 | 5 885 | 18 947 | 21 702 | 5 482 |
| Silicon gas sale in MT | 778 | 340 | 2 229 | 1 467 | 665 |
1) 2012 figures are changed slightly from previous reports because net interest on net benefit liability now is presented as part of financial items (see note 1).
2) Special items represent income from contract cancellations
Markets for semiconductor grade polysilicon continue to suffer from more than two years of flat growth and excessive inventories. However, on December 3, 2013 REC Silicon announced the extension of a sales contract for delivery of high purity semiconductor grade polysilicon from the Butte facility. This secures a significant portion of REC Silicon's semiconductor grade polysilicon sales in 2014 at prices in line with those obtained in 2013.
Silicon gas markets are driven by Flat Panel Displays, Semiconductors and Crystalline PV cells. Fourth quarter demand was robust due to strong PV markets, market share gains, and spot transactions due to industry accidents.
REC Silicon's program for producing higher grade FBR polysilicon has resulted in the successful completion of a long term test of the FBR-B technology. This test achieved all primary targets and confirmed the potential viability of the FBR-B technology for production of semiconductor grade granular polysilicon.
Other consists primarily of the parent company REC Silicon ASA (previously Renewable Energy Corporation ASA) which employs approximately 10 people.
REC Silicon ASA has incurred, and will incur further costs related to the scale down of the headquarter functions in Norway and the retention of employees in the scale down period (through April 2014). Expense
amounts related to these functions are reflected in "EBITDA excluding gains/losses on discontinued operations" of NOK -13 million and NOK -94 million in the fourth quarter and 2013 respectively.
In addition, REC Silicon ASA incurred costs and losses related to the sale of REC Solar in the fourth quarter 2013 of NOK 418 million, partially offset by reversal of estimated costs of NOK 85 million related to the REC Wafer bankruptcy in 2012. On consolidation these net losses have been re-presented and included as part of discontinued operations for the Group (see note 10).
REC Solar produces wafers, cells and solar panels, and engages in project development in selected market segments. REC Solar operates an integrated site for wafer, cell and solar panel production in Singapore.
REC Solar was sold in October 2013.
Refer to the prospectus for the sale of REC Solar and listing of REC Solar ASA for further information. Additional information regarding the impact of the disposal or REC Solar can be found in Note 10.
REC Wafer has been deconsolidated since August 13, 2012, and consequently no amounts are reported in 2013. Some adjustments to the gain / loss on disposal of REC Wafer discontinued operations have been reported in REC Silicon ASA in 2013 (see note 10).
| (NOK IN MILLION) | Q4 2013 | Q4 2012 | DEC 31, 2013 | DEC 31, 2012 | Q3 2013 |
|---|---|---|---|---|---|
| Revenues | 4 | 8 | 12 | 57 | 2 |
| EBITDA | -346 | -40 | -428 | -558 | -31 |
| EBITDA excluding gains/losses on discontinued operations | -13 | -32 | -94 | -132 | -29 |
| EBIT | -346 | -60 | -428 | -624 | -31 |
| EBIT excluding gains/losses on discontinued operations | -13 | -52 | -94 | -197 | -29 |
1) Other consists primarily of REC Silicon ASA.
| (NOK IN MILLION) | Q4 2013 | Q4 2012 | DEC 31, 2013 | DEC 31, 2012 | Q3 2013 |
|---|---|---|---|---|---|
| Internal revenues | 0 | 0 | 0 | 5 | 0 |
| External revenues | 328 | 932 | 3 060 | 4 082 | 917 |
| Total revenues | 328 | 932 | 3 061 | 4 087 | 917 |
| EBITDA | -1 213 | -113 | -1 129 | -369 | 59 |
| EBITDA excluding loss on disposal and special items2) | 27 | -113 | 111 | -405 | 59 |
| EBIT before impairment charges | -1 228 | -142 | -1 222 | -673 | 31 |
| Impairment | -1 | -28 | -8 | -3 638 | -5 |
| EBIT | -1 229 | -171 | -1 230 | -4 310 | 26 |
1) Change in the accounting of joint ventures had a small effect on 2012 figures compared to 2012 annual financial statement and quarterly reports. See note 1 for further information.
2) Special items are supplier contract settlements in 2012.
3) REC Solar figures are for ten months of 2013 (one month in the fourth quarter 2013).
Interest expenses on borrowings include the relevant period's commitment fees on undrawn credit facilities. In connection with the reduction and termination of credit facilities and the repurchase of NOK bonds, the Group recognized additional expense for previously paid upfront fees throughout 2013.
Decreased interest bearing liabilities and borrowing costs contributed to decreased interest expenses in 2013 compared to 2012.
See note 6 for additional information on borrowings.
Net currency gains in 2013, primarily related to currency gains for REC Silicon ASA on internal loans (loans of approximately USD 0.9 billion at year end 2013) to REC Silicon in the US, are not eliminated on consolidation. These currency gains were partially offset by currency losses on the convertible EUR and USD bonds and net overdrafts in currency accounts in the Group account systems.
See note 3 for information regarding hedging instruments and derivates.
The fair value of the convertible EUR bond loan has increased during 2013, which is recognized as an expense in the consolidated financial statements. A decrease in the fair value of the convertible USD bond loan has been reported to income in the fourth quarter. See "equity and debt" below and note 6 to this report for further information.
REC has estimated income tax benefits from continuing operations of NOK 498 million for the year 2013. This is primarily a reduction in deferred tax liabilities in REC Silicon due to the loss for the period and calculation of deferred tax on the fair value adjustment of the convertible bonds. Calculation of deferred tax on a reclassification to other comprehensive income of the currency effect on a USD loan that is regarded as a part of the net investment in REC Silicon also had an effect.
See note 18 to the consolidated financial statements for 2012 for further information on the Group's tax positions and tax calculations.
Equity amounted to NOK 5.8 billion (63 percent equity ratio) at December 31, 2013, compared to NOK 5.7 billion (47 percent) at September 30, 2013 and NOK 7.1 billion (52 percent) at December 31, 2012. Comprehensive income was negative NOK 1,684 million for the year 2013 reflecting primarily the loss for the period and net translation differences of positive NOK 363 million.
Net debt was NOK 1.9 billion at December 31, 2013 down from NOK 2.6 billion at September 30, 2013 due to use of the proceeds from the sale of REC Solar. Net debt was NOK 1.8 billion at December 31, 2012.
Net debt includes convertible bonds at fair value. Including bond loans at nominal value, net debt was NOK 1.9 billion at December 31, 2013 down from NOK 2.6 billion at September 30, 2013 and NOK 2.5 billion at December 31, 2012.
See note 17 to the consolidated financial statements for 2012 and note 6 to this report for further information on interest bearing liabilities for the Group.
Cash balances decreased from NOK 1.2 billion at September 30, 2013 to NOK 0.4 billion at December 31, 2013. This decrease can be explained by the repurchase of debt of NOK 1.5 billion which was funded by the proceeds of NOK 800 million from the sale of REC Solar and cash on hand. The remaining decrease can be attributed to NOK 140 million in interest and derivative payments offset by inflows of approximately NOK 140 million associated with REC Silicon operations in the United States.
The consolidated statement of cash flows presents changes in cash balances with respect to total operations (continuing and discontinued) and therefore does not reflect the performance of REC Silicon's continuing operations during prior periods or the performance likely to be achieved in future periods (See Note 10).
| (NOK IN MILLION) | Q4 2013 | Q4 2012 | DEC 31, 2013 | DEC 31, 2012 | Q3 2013 |
|---|---|---|---|---|---|
| Financial income | 6 | 11 | 44 | 43 | 11 |
| Interest expenses on borrowings | -48 | -83 | -272 | -363 | -72 |
| Capitalized borrowing cost | 1 | 1 | 5 | 6 | 2 |
| Expensing of up-front fees and costs | -5 | -7 | -43 | -50 | -7 |
| Other financial expenses | -4 | -6 | -28 | -23 | -12 |
| Net financial expenses | -56 | -95 | -339 | -429 | -89 |
| Net currency gains/losses | 42 | -97 | 232 | -157 | -32 |
| Net gains/losses derivatives and fair value hedge | -39 | 65 | -211 | 483 | 34 |
| Impairment and gains/losses on financial instruments | 0 | 0 | 0 | -3 | 0 |
| Fair value adjustment convertible bonds | 29 | 245 | -659 | -415 | -79 |
| Net financial items | -19 | 130 | -933 | -477 | -155 |
1) The table excludes discontinued operations.
Please refer to the annual report for 2012 and the section "risk factors".
The solar trade dispute between the US and China could have a significant negative impact on REC Silicon's financial results. On July 18, 2013 the Chinese Ministry of Commerce ("MOFCOM") announced preliminary anti-dumping duties of 57 percent on polysilicon produced by REC Silicon in the US effective from July 24, 2013. These preliminary duties were affirmed by MOFCOM in its Final Determination announced on January 20, 2014.
REC Silicon has mitigated the impact of tariffs in China through working with customers to utilize options currently available under existing laws, including the "Process in Trade" available under Chinese customs laws. REC Silicon's ability to continue to mitigate the impact of tariffs along these lines will depend upon the development of the ongoing US-China solar trade disputes.
The US government is continuing to work towards a resolution of the trade dispute with China, in parallel with discussions between the US and China solar trade organizations and affected US and China companies for a resolution. The timing and potential outcome of these negotiations are highly uncertain.
Uncertainties related to potential further downward revisions of solar energy support schemes in important solar markets like Japan, China, the US and Germany continue to be a concern. Reductions and other changes to subsidy schemes may continue to put pressure on solar panel prices and may reduce overall demand, with negative effects on polysilicon prices and demand.
There is a risk that REC Silicon will not be able to refinance or repay the remaining convertible EUR bond and NOK bond maturing in 2014 using excess cash. REC Silicon intends to raise additional cash by obtaining a short term revolving credit facility and by re-issuing bonds if necessary to meet debt maturity requirements.
Market balance is expected to improve in the first quarter 2014, mainly due to shut downs of marginal producers, rationalization of older assets, and stronger solar installation markets particularly in Japan, USA and China.
Third party indices project modest increases in average solar grade polysilicon sales prices through the first quarter 2014. However, bureaucratic and administrative bottlenecks might negatively affect the pace of solar installations, and the potential for higher prices might encourage additional capacity to come on line.
In 2014, industry and equity analysts are estimating global PV demand in the range of 40-56 GW, up from an estimated 36 GW in 2013. The large band reflects the persistent uncertainty regarding the supply and demand balance for solar grade polysilicon in 2014 due to potential restarts or new capacity additions occurring in 2014.
First quarter 2014 demand for solar grade polysilicon currently appears to be stronger than anticipated despite seasonal fluctuations. However, uncertainty remains as to whether this demand is driven by increased solar installations or inventory build in expectation of upward pricing pressure later in the year.
Silicon gas market forecasts project a continuation of the strong growth experienced in the second half of 2013, mainly driven by the crystalline PV market and a marginally positive demand in flat panel displays compared to the past two years. First quarter 2014 demand already appears to be more robust than normal for the season.
Several competitors have experienced operational accidents. REC Silicon may see further temporary increases in demand for its products as these competitors evaluate repairs to damaged assets and re-start production. This demand effect will most likely subside by the second quarter.
| POLYSILICON PRODUCTION VOLUME | ACTUAL RESULTS Q4 2013 |
ACTUAL RESULTS 2013 |
TARGETS Q1 2014 |
TARGETS 2014 |
|---|---|---|---|---|
| FBR | 4 307 | 16 145 | 3 700 | 16 000 |
| Semiconductor Grade | 268 | 1 861 | 380 | 1 750 |
| Siemens Solar | 560 | 1 758 | 260 | 1 650 |
| Total | 5 136 | 19 764 | 4 340 | 19 400 |
| Silicon Gas sales volume | 778 | 2 229 | 700 | 2 500 |
| Cost targets | ||||
| FBR COST (USD/KG) | ACTUAL RESULTS Q4 2013 |
ACTUAL RESULTS 2013 |
TARGETS Q1 2014 |
TARGETS 2014 |
| Cash Production Cost | 10.50 | 12.30 | 12.80 | 11.70 |
The first quarter and 2014 production targets as well as the actual fourth quarter and 2013 production figures are summarized in a separate table.
REC Silicon targets first quarter 2014 polysilicon production of about 4,340MT. The reduction compared to fourth quarter 2013 is due primarily to outages in Silane II and IV.
Annual polysilicon production volume is targeted at 19,400 MT, a slight decrease compared to 2013. This decrease is driven by the shutdown of the Silane I facility and increasing silicon gas sales.
Production cost targets for the first quarter and 2014 as well as the actual fourth quarter and 2013 are presented in a separate table.
FBR cash production costs are expected to increase in the first quarter 2014 compared to the fourth quarter 2013 due primarily to silane outages.
FBR cash production costs targets for 2014 reflect cost structure improvements due to resource alignment offset slightly by lower volumes compared to 2013.
For 2014 total capex is expected to be approximately NOK 150 million.
This report contains statements regarding the future in connection with the Group's growth initiatives, profit figures, outlook, strategies and objectives. In particular, the section "Outlook" contains forward-looking statements regarding the Group's expectations. All statements regarding the future are subject to inherent risks and uncertainties, and many factors can lead to actual results and developments deviating substantially from what has been expressed or implied in such statements. These factors include the risk factors relating to the Group's activities described in section 'Risks and Uncertainties' above, in REC's Annual Report 2012, including the section Risk Factors in the Board of Directors' Report.
Sandvika, February 11, 2014 Board of Directors
| (NOK IN MILLION) | NOTES | DEC 31, 2013 | SEP 30, 2013 | DEC 31, 2012 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Goodwill | 0 | 0 | 0 | |
| Other intangible assets | 2 | 109 | 113 | 127 |
| Intangible assets | 2 | 109 | 113 | 127 |
| Land and buildings | 2 | 482 | 483 | 828 |
| Machinery and production equipment | 2 | 5 857 | 5 881 | 6 205 |
| Other tangible assets | 2 | 146 | 142 | 214 |
| Assets under construction | 2 | 69 | 109 | 147 |
| Property, plant and equipment | 2 | 6 555 | 6 615 | 7 394 |
| Prepaid lease, non-current | 0 | 0 | 143 | |
| Government grant assets | 689 | 737 | 675 | |
| Equity accounted investments | 0 | 0 | 151 | |
| Other non-current receivables | 59 | 58 | 142 | |
| Other derivatives | 3 | 93 | 54 | 100 |
| Financial assets and prepayments | 152 | 113 | 393 | |
| Deferred tax assets | 0 | 0 | 8 | |
| Total non-current assets | 7 505 | 7 577 | 8 741 | |
| Current assets | ||||
| Inventories | 4 | 579 | 599 | 1 295 |
| Prepaid lease, current | 0 | 0 | 7 | |
| Trade and other receivables | 698 | 607 | 1 720 | |
| Current tax assets | 21 | 18 | 26 | |
| Current derivatives | 3 | 27 | 26 | 63 |
| Restricted bank accounts | 70 | 84 | 3 | |
| Cash and cash equivalents | 375 | 1 188 | 1 907 | |
| Assets held for sale 2) | 0 | 2 034 | 0 | |
| Total current assets | 1 770 | 4 555 | 5 020 | |
| Total assets | 9 275 | 12 132 | 13 761 |
| (NOK IN MILLION) NOTES |
DEC 31, 2013 | SEP 30, 2013 | DEC 31, 2012 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Shareholders' equity | |||
| Share capital | 2 314 | 2 314 | 2 114 |
| Other paid-in capital | 17 043 | 17 043 | 16 875 |
| Paid-in capital | 19 357 | 19 357 | 18 989 |
| Other equity and retained earnings | -11 468 | -11 423 | -5 827 |
| Profit and loss for the period from total operations | -2 073 | -2 234 | -6 027 |
| Total shareholders' equity | 5 816 | 5 700 | 7 135 |
| Non-current liabilities | |||
| Retirement benefit obligations | 87 | 123 | 124 |
| Deferred tax liabilities | 551 | 588 | 969 |
| Provisions 5 |
0 | 4 | 344 |
| Other derivatives 3 |
31 | 32 | 55 |
| Non-current financial liabilities, interest bearing 6 |
1 370 | 2 491 | 3 760 |
| Non-current prepayments, interest calculation | 41 | 46 | 40 |
| Total non-current liabilities | 2 080 | 3 284 | 5 292 |
| Current liabilities | |||
| Trade payables and other liabilities | 418 | 500 | 1 211 |
| Provisions 5 |
8 | 11 | 47 |
| Current tax liabilities | 0 | 0 | 1 |
| Other derivatives 3 |
26 | 31 | 17 |
| Current financial liabilities, interest bearing 6 |
872 | 1 304 | -29 |
| Current prepayments, interest calculation | 55 | 69 | 88 |
| Liabilities held for sale 2) | 0 | 1 234 | 0 |
| Total current liabilities | 1 379 | 3 149 | 1 334 |
| Total liabilities | 3 459 | 6 433 | 6 626 |
| Total equity and liabilities | 9 275 | 12 132 | 13 761 |
1) At January 1, 2013 the Group adopted a number of new and amended standards and interpretations. The effect on the statement of financial position is a change in the accounting of joint ventures, see note 1 for further information. These changes had a small effect on 2012 figures.
2) Assets and liabilities held for sale at September 30, 2013 were related to REC Solar which was sold in October 2013.
| (NOK IN MILLION) | NOTES | Q4 2013 | Q4 2012 | DEC 31, 2013 | DEC 31, 2012 |
|---|---|---|---|---|---|
| Revenues | 743 | 756 | 2 453 | 3 063 | |
| Cost of materials | 4 | -165 | -238 | -628 | -1 618 |
| Changes in inventories and write downs | 4 | -3 | -32 | 96 | 91 |
| Employee benefit expenses | -149 | -149 | -622 | -683 | |
| Other operating expenses | -263 | -318 | -1 111 | -1 335 | |
| Other income and expenses | 7 | 1 | -2 | 109 | 190 |
| EBITDA 1) | 164 | 17 | 298 | -292 | |
| Depreciation | 2 | -195 | -230 | -736 | -945 |
| Amortization | 2 | -4 | -21 | -14 | -88 |
| Impairment | 2 | -27 | -2 936 | -54 | -3 034 |
| Total depreciation, amortization and impairment | -226 | -3 187 | -804 | -4 067 | |
| EBIT | -62 | -3 171 | -506 | -4 359 | |
| Share of profit/loss of equity accounted investments | 0 | 0 | 0 | 0 | |
| Financial income | 6 | 11 | 44 | 43 | |
| Net financial expenses | -56 | -95 | -339 | -429 | |
| Net currency gains/losses | 42 | -97 | 232 | -157 | |
| Net gains/losses derivatives and fair value hedge | -39 | 65 | -211 | 483 | |
| Impairment and gains/losses on financial assets | 0 | 0 | 0 | -3 | |
| Fair value adjustment convertible bonds | 29 | 245 | -659 | -415 | |
| Net financial items | -19 | 130 | -933 | -477 | |
| Profit/loss before tax from continuing operations | -80 | -3 041 | -1 439 | -4 836 | |
| Income tax expense/benefit from continuing operations | 52 | 1 007 | 498 | 1 376 | |
| Profit/loss from continuing operations | -28 | -2 034 | -940 | -3 461 | |
| Profit/loss from discontinued operations, net of tax 4) | 190 | -137 | -1 132 | -2 566 | |
| Profit/loss from total operations | 161 | -2 170 | -2 073 | -6 027 | |
| Attributable to: | |||||
| Owners of REC ASA | 161 | -2 170 | -2 073 | -6 027 | |
| Earnings per share (In NOK) | |||||
| From continuing operations | |||||
| -basic | -0.01 | -0.96 | -0.42 | -2.10 | |
| -diluted | -0.01 | -1.00 | -0.42 | -2.10 | |
| From total operations | |||||
| -basic | 0.07 | -1.03 | -0.93 | -3.65 | |
| -diluted | 0.06 | -1.06 | -0.93 | -3.65 | |
| 1) EBITDA includes special items (continuing operations) | |||||
| Contract settlements | 0 | -36 | 115 | 184 | |
| Total | 0 | -36 | 115 | 184 |
2) At January 1, 2013 the Group adopted a number of new and amended standards and interpretations. The effect on the statement of income is a change in the accounting of joint ventures. Further, the Group has chosen to present net interest on net benefit liability as part of financial items instead of pension costs. These changes had a small effect on 2012 figures. See note 1 for further information.
3) The statements of income for previous periods have been re-presented for REC Solar discontinued operations, see note 10.
4) Profit/loss from discontinued operations includes income and expense from Group external transactions of REC Solar and REC Wafer and net gain or loss on disposal. Discontinued operations are shown as a single amount in the statement of income for the Group. This re-presentation does not represent the activities or indicate the profit earned or loss incurred by continuing or discontinued operations as if they were standalone entities, for past periods or likely to be earned or incurred in future periods. See note 10 to this report and note 9 to the consolidated financial statements for 2012.
| (NOK IN MILLION) | Q4 2013 | Q4 2012 | DEC 31, 2013 | DEC 31, 2012 |
|---|---|---|---|---|
| Profit/loss for the period | 161 | -2 170 | -2 073 | -6 027 |
| Other comprehensive income, net of tax: | ||||
| Items that will not be reclassified to profit or loss: | ||||
| Actuarial gain/loss on defined benefit pension schemes | 25 | -33 | 25 | -33 |
| Sum items that will not be reclassified to profit or loss | 25 | -33 | 25 | -33 |
| Items that may be reclassified subsequently to profit or loss: | ||||
| Currency translation differences | ||||
| - taken to equity | 29 | -113 | 464 | -632 |
| - transferred to profit/loss for the period 1) | -101 | 0 | -101 | 0 |
| Sum items that may be reclassified subsequently to profit or loss | -72 | -113 | 363 | -632 |
| Total other comprehensive income for the period | -47 | -145 | 388 | -665 |
| Total comprehensive income for the period | 115 | -2 315 | -1 684 | -6 692 |
| Total comprehensive income for the period attributable to | ||||
| Owners of REC Silicon ASA | 115 | -2 315 | -1 684 | -6 692 |
1) Currency translation differences transferred to profit/loss in 2013 are related to the sale of REC Solar at the end of October. The amount is included in the statement of income in the line item "profit/loss from discontinued operations".
| ATTRIBUTABLE TO EQUITY HOLDERS OF REC SILICON ASA | |||||||
|---|---|---|---|---|---|---|---|
| (NOK IN MILLION) | SHARE CAPITAL |
SHARE PREMIUM |
OTHER PAID-IN CAPITAL |
TOTAL PAID-IN CAPITAL |
OTHER EQUITY |
COMPREHENSIVE INCOME |
TOTAL EQUITY |
| Year 2012 | |||||||
| At January 1, 2012 | 997 | 16 073 | 283 | 17 353 | 1 087 | -6 249 | 12 192 |
| Equity share option plan | 0 | 0 | 0 | 0 | -2 | 0 | -2 |
| Share issue | 1 117 | 519 | 0 | 1 636 | 0 | 0 | 1 636 |
| Total comprehensive income for the period | 0 | 0 | 0 | 0 | 0 | -6 692 | -6 692 |
| At December 31, 2012 | 2 114 | 16 592 | 283 | 18 989 | 1 086 | -12 940 | 7 135 |
| Year 2013 | |||||||
| At January 1, 2013 | 2 114 | 16 592 | 283 | 18 989 | 1 086 | -12 940 | 7 135 |
| Equity share option plan | 0 | 0 | 0 | 0 | -2 | 0 | -2 |
| Share issue | 200 | 168 | 0 | 368 | 0 | 0 | 368 |
| Total comprehensive income for the period | 0 | 0 | 0 | 0 | 0 | -1 684 | -1 684 |
| At December 31, 2013 | 2 314 | 16 760 | 283 | 19 357 | 1 084 | -14 624 | 5 816 |
| (NOK IN MILLION) | TRANSLATION DIFFERENCES |
TAX | PENSION | ACQUISITION | CHANGE IN ACCOUNTING PRINCIPLE |
PROFIT/LOSS | TOTAL |
|---|---|---|---|---|---|---|---|
| Year 2012 | |||||||
| Accumulated at January 1, 2012 | 111 | 11 | -22 | 234 | -50 | -6 533 | -6 249 |
| Loss for the period | 0 | 0 | 0 | 0 | 0 | -6 027 | -6 027 |
| Other comprehensive income: | |||||||
| Items that will not be reclassified to profit or loss: | |||||||
| Actuarial gain/loss on defined benefit pension schemes | 0 | 0 | -33 | 0 | 0 | 0 | -33 |
| Sum items that will not be reclassified to profit or loss Items that may be reclassified to profit or loss: |
0 | 0 | -33 | 0 | 0 | 0 | -33 |
| Currency translation differences | |||||||
| - taken to equity | -647 | 16 | 0 | 0 | 0 | 0 | -632 |
| Sum items that may be reclassified to profit or loss | -647 | 16 | 0 | 0 | 0 | 0 | -632 |
| Total other comprehensive income for the period | -647 | 16 | -33 | 0 | 0 | 0 | -665 |
| Total comprehensive income for the period | -647 | 16 | -33 | 0 | 0 | -6 027 | -6 692 |
| Accumulated at December 31, 2012 | -536 | 27 | -54 | 234 | -50 | -12 560 | -12 940 |
| Year 2013 | |||||||
| Accumulated at January 1, 2013 | -536 | 27 | -54 | 234 | -50 | -12 560 | -12 940 |
| Loss for the period | 0 | 0 | 0 | 0 | 0 | -2 073 | -2 073 |
| Other comprehensive income: | |||||||
| Items that will not be reclassified to profit or loss: | |||||||
| Actuarial gain/loss on defined benefit pension schemes | 0 | 0 | 25 | 0 | 0 | 0 | 25 |
| Sum items that will not be reclassified to profit or loss | 0 | 0 | 25 | 0 | 0 | 0 | 25 |
| Items that may be reclassified to profit or loss: Currency translation differences |
|||||||
| - taken to equity | 483 | -19 | 0 | 0 | 0 | 0 | 464 |
| - transferred to profit/loss for the period 1) | -101 | 0 | 0 | 0 | 0 | 0 | -101 |
| Sum items that may be reclassified to profit or loss | 382 | -19 | 0 | 0 | 0 | 0 | 363 |
| Total other comprehensive income for the period | 382 | -19 | 25 | 0 | 0 | 0 | 388 |
| Total comprehensive income for the period | 382 | -19 | 25 | 0 | 0 | -2 073 | -1 684 |
| Accumulated at December 31, 2013 | -154 | 8 | -29 | 234 | -50 | -14 633 | -14 624 |
| Total comprehensive income for the period attributable to | |||||||
| Owners of REC Silicon ASA | 382 | -19 | 25 | 0 | 0 | -2 073 | -1 684 |
1) Currency translation differences transferred to profit/loss in 2013 are related to the sale of REC Solar at the end of October. The amount is included in the statement of income in the line item "profit/loss from discontinued operations".
| (NOK IN MILLION) | Q4 2013 | Q4 2012 | DEC 31, 2013 | DEC 31, 2012 |
|---|---|---|---|---|
| Cash flows from operating activities | ||||
| Profit/loss before tax from total operations 1) 6) | 109 | -3 189 | -2 563 | -7 419 |
| Income taxes paid/received | 3 | -9 | -1 | 14 |
| Depreciation, amortization and impairment 6) | -828 | 3 246 | 904 | 7 640 |
| Fair value adjustment convertible bond | -29 | -245 | 659 | 415 |
| Equity accounted investments, impairment financial assets, gains/losses on sale 6) | -134 | -5 | -18 | -26 |
| Gains/losses on disposal of discontinued operations6) | 1 032 | 8 | 1 215 | -812 |
| Changes in receivables, prepayments from customers etc. | -151 | -156 | 110 | 118 |
| Changes in inventories | 5 | 165 | 21 | 865 |
| Changes in payables, accrued and prepaid expenses | -71 | -140 | -219 | -197 |
| Changes in provisions | -4 | -1 | -10 | 415 |
| Changes in VAT and other public taxes and duties | 12 | -25 | 13 | -2 |
| Changes in derivatives | -47 | 74 | 2 | 86 |
| Currency effects not cash flow or not related to operating activities | 9 | 104 | -158 | 173 |
| Other items2) | 1 | -2 | 37 | 35 |
| Net cash flow from operating activities | -91 | -174 | -7 | 1 306 |
| Cash flows from investing activities | ||||
| Cash proceeds for shares (incl. equity accounted investments) | 5 | 0 | 73 | 0 |
| Cash payments for shares (incl. equity accounted investments) | 0 | -13 | -25 | -61 |
| Proceeds from finance receivables and restricted cash 3) | 14 | 0 | 40 | 17 |
| Payments finance receivables and restricted cash 3) | -1 | -1 | -101 | -7 |
| Proceeds from sale of property, plant, equipment, intangible assets and prepaid lease | 0 | 1 | 39 | 4 |
| Payments for property, plant, equipment, intangible assets and prepaid lease | -53 | -33 | -220 | -298 |
| Proceeds from investment grants | 0 | 0 | 80 | 0 |
| Proceeds/payments from disposal of subsidiaries, net of cash disposed of | 520 | 0 | 520 | -69 |
| Net cash flow from investing activities | 485 | -45 | 406 | -414 |
| Cash flows from financing activities | ||||
| Increase in equity | 0 | -37 | 368 | 1 635 |
| Payments of borrowings and up-front/waiver loan fees4) | -1 563 | -1 | -2 579 | -2 982 |
| Proceeds from borrowings 4) | 0 | 34 | 269 | 776 |
| Net cash flow from financing activities | -1 563 | -4 | -1 942 | -571 |
| Effect on cash and cash equivalents of changes in foreign exchange rates | -1 | 2 | 12 | -9 |
| Net increase/decrease in cash and cash equivalents | -1 170 | -221 | -1 532 | 313 |
| Reclassification to/from assets held for sale | 357 | 0 | 0 | 0 |
| Cash and cash equivalents at the beginning of the period | 1 188 | 2 128 | 1 907 | 1 594 |
| Cash and cash equivalents at the end of the period | 375 | 1 907 | 375 | 1 907 |
| 1) Profit / loss before tax from total operations consists of | ||||
| Profit/loss before tax from continuing operations | -80 | -3 041 | -1 439 | -4 836 |
| Profit/loss before tax from discontinued operations | 190 | -148 | -1 124 | -2 583 |
| Profit/loss before tax from total operations | 109 | -3 189 | -2 563 | -7 419 |
2) Other items consist primarily of expensing of loan fees and costs related to debt financing.
3) Proceeds/payments from finance receivables and restricted cash include also loans and non-current receivables.
4) Proceeds from borrowings include prepayments, interest calculation. Payments of borrowings include fees and costs for issue and repurchase of interest bearing debt.
5) The statements of cash flow for the periods in 2012 have been affected by the change in presentation of joint ventures, see note 1
6) The loss for total operations in the third quarter and for the first nine months of 2013 included loss on REC Solar disposal group of NOK 1,384 million. These items were included in the line items "Depreciation, amortization and impairment" (NOK 1,069 million), "equity accounted investments, impairment financial assets, gains/losses on sale" (NOK 133 million) and "Gains/losses on disposal of discontinued operations" (NOK 182 million). In the fourth quarter 2013 these have been reversed in the same line items and replaced by a net loss on disposal of NOK 1,299 million. These amounts affected relevant line items in the table above. See note 10.
Renewable Energy Corporation ASA was renamed REC Silicon ASA at the end of October 2013. At the same time the segment REC Solar was sold.
REC Silicon ASA (the Company) and its subsidiaries (together REC Silicon Group/the Group) have a presence in the international solar energy industry. Subsequent to the sale of REC Solar in October 2013, Group operations are focused on the production of polysilicon and silicon gases for the solar and electronics industries.
Prior to the sale of REC Solar, the Group was also engaged in the manufacture of wafers, cells, and solar panels, and the development of PV systems.
The Company is a public limited liability company incorporated and domiciled in Norway.
The financial statements are presented in NOK, rounded to the nearest million, 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.
These consolidated interim financial statements, combined with other relevant financial information in this report, have been prepared in accordance with IAS 34. They have not been audited or subject to a review by the auditor. They do not include all of the information required for full annual financial statements of the Group and should be read in conjunction with the consolidated financial statements for 2012 and the first, second and third quarter 2013 reports. The consolidated financial statements for 2012 are available upon request from the Company's registered office at Sandvika or at www.recsilicon.com.
The Board of Directors has prepared these interim financial statements under the assumption that the company is a going concern and is of the opinion that this assumption was realistic at the date of the accounts. In this evaluation, the Board of Directors has assumed that the company will be able to satisfy debt maturity obligations in 2014 (see note 6). In addition, please refer to the section "risks and uncertainties" in this report for additional information.
The consolidated financial statements for 2012 were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and the Norwegian Accounting Act. The accounting policies adopted are consistent with those of the previous financial year. In addition, the Group has adopted new and amended standards and interpretations issued by the IASB and approved by the EU that are relevant to its operations and effective for annual reporting periods beginning on January 1, 2013. These were discussed in note 2.25 to the consolidated financial statements for 2012.
The following changes impacted classifications in the Group's consolidated financial statements for total operations for 2013:
Preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4 to the consolidated financial statements for 2012.
| (NOK IN MILLION) | LAND AND BUILDINGS |
MACHINERY AND EQUIPMENT |
OTHER TANGIBLE FIXED ASSETS |
ASSETS UNDER CONSTRUCTION |
TOTAL PROPERTY, PLANT AND EQUIPMENT |
TOTAL INTANGIBLE ASSETS |
TOTAL |
|---|---|---|---|---|---|---|---|
| Carrying value at January 1, 2013 | 828 | 6 205 | 214 | 147 | 7 394 | 127 | 7 521 |
| Exchange differences | 79 | 563 | 18 | 13 | 674 | 11 | 685 |
| Net additions 1) | 15 | 229 | -10 | -45 | 190 | 2 | 191 |
| Government grants 2) | 0 | 66 | 0 | 0 | 66 | 0 | 66 |
| Disposals - discontinued operations | -384 | -414 | -41 | -50 | -889 | -11 | -900 |
| Depreciation and amortization - continuing operations | -23 | -681 | -31 | 0 | -736 | -14 | -750 |
| Depreciation and amortization - discontinued operations | -19 | -60 | -4 | 0 | -83 | -4 | -88 |
| Impairment - continuing operations | -13 | -40 | 0 | 0 | -54 | 0 | -54 |
| Impairment - discontinued operations | -1 | -11 | 0 | 4 | -8 | 0 | -8 |
| Carrying value at December 31, 2013 | 482 | 5 857 | 146 | 69 | 6 555 | 109 | 6 664 |
| At December 31, 2013 | |||||||
| Cost price | 1 068 | 12 599 | 468 | 123 | 14 258 | 822 | 15 080 |
| Accumulated depreciation/amortization/impairment | -586 | -6 742 | -322 | -53 | -7 703 | -713 | -8 416 |
| Carrying value at December 31, 2013 | 482 | 5 857 | 146 | 69 | 6 555 | 109 | 6 664 |
1) Net additions include transfers from assets under construction.
2) Positive amounts for government grants are adjustments to previously recognized grants.
| (NOK IN MILLION) | REC SILICON | REC SOLAR | GROUP |
|---|---|---|---|
| Carrying value at January 1, 2013 | 6 727 | 793 | 7 521 |
| Translation differences | 602 | 83 | 685 |
| Additions 2) | 81 | 110 | 191 |
| Government grants 2) | 57 | 9 | 66 |
| Disposals - discontinued operations | 0 | -900 | -900 |
| Depreciation - continuing operations | -736 | 0 | -736 |
| Depreciation - discontinued operations | 0 | -83 | -83 |
| Amortization - continuing operations | -14 | 0 | -14 |
| Amortization 1) - discontinued operations | 0 | -4 | -4 |
| Impairment - continuing operations | -54 | 0 | -54 |
| Impairment - discontinued operations | 0 | -8 | -8 |
| Carrying value at December 31, 2013 | 6 664 | 0 | 6 664 |
| Of which | |||
| Property, plant and equipment | 6 555 | 0 | 6 555 |
| Intangible assets | 109 | 0 | 109 |
| Payments of PP&E and intangibles, net of investment grants 2) | 107 | 33 | 140 |
| 1) Amortization of prepaid lease in the statement of income for total operations not included in the table above - discontinued operations |
0 | -5 | -5 |
2) The differences between additions and payments in 2013 for property, plant and equipment and intangible assets relate primarily to government grants and prepaid capital expenditure. For REC Silicon and the Group, the net addition has been reduced by the transfer of spare parts from property, plant, and equipment to inventory in the amount of NOK 25 million in the first quarter 2013, as a partial adjustment of the reclassification in the fourth quarter 2012 to property, plant and equipment with net carrying values of NOK 105 million for the Group in total.
REC Silicon has updated key assumptions of the impairment test, and at December 31, 2013 estimates the recoverable amount to approximate carrying amount.
Consequently, no additional impairment has been recognized for the REC Silicon cash generating unit in 2013, besides NOK 54 million related to assets that are replaced or taken out of use before the end of their estimated useful lives.
The tables below for derivatives are updates of similar tables found in note 11 to the consolidated financial statements for 2012.
| DEC 31, 2013 | |||||
|---|---|---|---|---|---|
| (NOK IN MILLION) | ASSETS | LIABILITIES | ASSETS | LIABILITIES | |
| Foreign exchange forward and option contracts | 3 | 8 | 63 | 11 | |
| Interest rate swaps | 117 | 34 | 100 | 55 | |
| Option contracts | 0 | 15 | 0 | 7 | |
| Total | 120 | 57 | 162 | 72 | |
| - of which designated as hedging instruments 1) | 0 | 0 | 83 | 0 |
1) Hedging instruments were 'pay floating-receive fixed' interest rate swaps of the two NOK bonds REC01 (swap of NOK 650 million) and REC03 (swap of NOK 700 million) designated as fair value hedges. In connection with the partial buyback of REC01 and REC03 in November 2013 the Group revoked the designation and the fair value hedge relationships were terminated.
Option contracts are part of the indemnification agreements in connection with the REC Wafer bankruptcy, and the estimated fair value is subject to change. The change in estimated fair value has been reported as part of the gain/loss on disposal of discontinued operations, see note 10.
| (CURRENCY IN MILLION) | 2014 FX FORWARD |
|
|---|---|---|
| SOLD CURRENCY | USD/NOK | -120 |
FX Forward represents a foreign exchange forward contract. Amounts in the table represent inflows or outflows during 2014 in USD with settlement in NOK.
At December 31, 2013 the Group had used FX Forward contracts to change the currency exposure of interest bearing debt and interest payments from NOK to USD. The Group does not use hedge accounting for the FX Forwards contracts.
Compared to December 31, 2012 the Group has decreased the FX Forward contracts in accordance with currency forecasts and the finance policy.
Realization of FX Forward contracts have resulted in cash outflow in 2013 of approximately NOK 152 million.
| (NOK IN MILLION) | 2014 FX FORWARD |
|
|---|---|---|
| SOLD CURRENCY | USD/NOK | -5 |
The table above shows the fair value which equals the carrying amount of currency derivatives at December 31, 2013.
| (NOK IN MILLION) | PRINCIPAL AMOUNT (CURRENCY IN MILLION) |
FAIR VALUE (NOK IN MILLION) |
|
|---|---|---|---|
| PAY FIXED RATE | USD (2014) | 150 | -18 |
| NOK (2021) | 160 | -16 | |
| RECEIVE FIXED RATE | NOK (2014) | 650 | 14 |
| NOK (2018) 1) | 700 | 93 | |
| EUR (2014) | 60 | 10 | |
| Total | 83 |
1) In the fourth quarter 2013 NOK 26 million in accrued interest was paid in the NOK (2018) interest rate swap, which increased the fair value by the same amount.
The table above shows contractual principal currency amounts in interest rate swaps and specification of fair values, equaling carrying amounts, at December 31, 2013 distributed by year of maturity and currency. The interest rate swaps have one fixed interest rate against a floating interest rate and there are no other cash flows or principal amounts.
Interest rate swaps of NOK 650 million and NOK 700 million, where the Group is paying floating interest rate, were initially fair value hedges of the NOK bonds fixed interest rates. In connection with the partial buyback of NOK bonds in November 2013, the Group revoked the designation as fair value hedges.
Refer to note 13 to the consolidated financial statements for 2012 for description and further information. The tables below are updates of some of the tables in this note at December 31, 2013.
Total cost of materials and changes in inventories and writedowns in the statement of income from continuing operations
| (NOK IN MILLION) | DEC 31, 2013 | DEC 31, 2012 |
|---|---|---|
| Cost of materials | -628 | -1 618 |
| Change in finished goods | 166 | 418 |
| Write down of inventories | -69 | -327 |
| Total cost of materials and changes in inventories and writedowns | -531 | -1 527 |
| (NOK IN MILLION) | DEC 31, 2013 | DEC 31, 2012 |
| Writedowns of inventories start of period (statement of financial position) | -157 | -451 |
| Additional writedowns during the period from continuing operations (statement of income) | -69 | -327 |
Additional writedowns during the period from discontinued operations (statement of income) -48 -763 Realization of written down inventories in the period 148 1 367
Writedowns of inventories end of period (statement of financial position) -139 -157
Translation difference in the period -13 17
Included in "realization of written down inventories" in 2013 was approximately NOK 30 million associated with the sale of REC Solar.
Included in "realization of written down inventories" in 2012 was more than NOK 300 million associated with the deconsolidation of REC Wafer.
| (NOK IN MILLION) | RESTRUCTURING & EMPLOYEE TERMINATION BENEFITS |
WARRANTIES | ASSET RETIREMENT OBLIGATIONS |
ONEROUS CONTRACTS |
TOTAL |
|---|---|---|---|---|---|
| Continuing operations at January 1, 2013 | 5 | 0 | 1 | 2 | 8 |
| Discontinued operations at January 1, 2013 | 3 | 160 | 196 | 23 | 383 |
| At January 1, 2013 | 8 | 160 | 198 | 26 | 391 |
| Additional provisions continuing operations | 9 | 0 | 0 | 3 | 12 |
| Additional provisions discontinued operations | 5 | 24 | 0 | 1 | 30 |
| Unsed amounts reversed continuing operations | -1 | 0 | 0 | 0 | -1 |
| Unsed amounts reversed discontinued operations | 0 | -6 | 0 | 0 | -6 |
| Exchange differences continuing operations | 0 | 0 | 0 | 0 | 1 |
| Exchange differences discontinued operations | 0 | 16 | 14 | 2 | 31 |
| Increase in provisions due to interest discontinued operations | 0 | 0 | 3 | 0 | 3 |
| Recorded directly to statement of financial position discontinued operations | -6 | -190 | -213 | -5 | -414 |
| Used during the year continuing operations | -10 | 0 | 0 | -2 | -11 |
| Used during the year discontinued operations | -2 | -2 | 0 | -21 | -26 |
| At December 31, 2013 | 3 | 0 | 2 | 4 | 8 |
Refer to notes 4.2 (D) and 20 in the consolidated financial statements for 2012 for further information on provisions. In addition, see note 7 "other income and expenses" to this report.
Reduction of provisions recognized directly in the statement of financial position relate to the sale of REC Solar at the end of October 2013.
Refer to notes 3 and 17 to the consolidated financial statements for 2012 for further information on interest bearing liabilities.
On May 24, 2013 the Company repurchased half of the EUR 320 million convertible bond loan by cash payment of NOK 779 million and issue of additional NOK 426 million bonds (tap issue of NOK 213 million in REC02 and NOK 213 million in REC03).
On September 11, 2013 the Company repurchased EUR 79 million of the EUR convertible bond loan and issued a USD 110 million convertible bond loan maturing on September 13, 2018. The USD bonds are convertible into ordinary REC Silicon ASA shares with a strike price of NOK 3.60 per share (USD 0.62 with a fixed exchange rate), and have quarterly coupon payments of 6.5% annually. The buyback of EUR 79 million convertible bond was settled in cash for NOK 185 million and through the issuance of USD 74 million in the new 2018 USD convertible bond.
On November 5, 2013 the Company repurchased the following bonds:
On April 26, 2013 REC Silicon ASA reduced the revolving credit facility to NOK 400 million and received a new guarantee facility of an additional NOK 400 million. On September 4, both facilities were canceled. The revolving bank credit facility was undrawn. At the same time, the NOK 200 million "Indemnification loan" was renegotiated to remove all financial covenants and the maturity date of the loan was moved to February 2016.
In connection with the sale of REC Solar, the Group account system in DNB was terminated at the end of the third quarter 2013, see note 14 to the consolidated financial statements for 2012.
In connection with the sale of REC Solar, REC Silicon ASA granted a NOK 200 million loan commitment to REC Solar ASA. This loan commitment was cancelled by REC Solar ASA on November 29, 2013.
Carrying amounts of interest bearing liabilities at December 31, 2013 and contractual repayments (excluding interest payments) are specified in the table below.
| CARRYING AMOUNT | CONTRACTUAL PAYMENTS, EXCLUDING INTEREST | ||||||
|---|---|---|---|---|---|---|---|
| (NOK IN MILLION) 1) | CURRENCY | NOK | TOTAL | JUN 2014 | SEP 2014 | 2016 | 2018 |
| Unamortized upfront fees (NOK) | - 5 | - 5 | 0 | 0 | 0 | 0 | 0 |
| NOK bonds (NOK) 3) | 736 | 736 | 731 | 0 | 196 | 235 | 301 |
| EUR convertible bond (EUR)3) | 81 | 676 | 681 | 681 | 0 | 0 | 0 |
| USD convertible bond (USD) | 110 | 636 | 669 | 0 | 0 | 0 | 669 |
| Indemnification loan (NOK) 2) | 200 | 200 | 200 | 0 | 0 | 200 | 0 |
| Total | 2 242 | 2 280 | 681 | 196 | 435 | 970 |
1) All amounts in currency are translated to NOK using exchange rates at December 31, 2013.
2) The indemnification loan is related to the REC Wafer Norway AS bankruptcy, see note 9 to the consolidated financial statements for 2012. It is a loan commitment with the estimated indemnification amount reported as interest bearing liabilities as such that the loan amounts have not been drawn and interest not started to accrue. In the second quarter 2013 another indemnification loan was settled and paid.
3) The contractual repayment dates in 2014 are: EUR Convertible bond: June 4, 2014 and NOK01 bond: September 16, 2014.
The difference between carrying amounts and contractual repayments (excluding interest) of the EUR and USD convertible bonds are due to fair value adjustments. The difference for NOK bond is related to fair value hedges of market interest rates and the tap issue at fair value in May 2013. The fair value hedges were revoked in November 2013 and the remaining fair value adjustments are being amortized prospectively as part of the effective interest.
See note 29 to the consolidated financial statement for 2012.
Bank guarantees at December 31, 2013 amounted to NOK 137 million. Cash deposits related to these guarantees were NOK 40 million. In addition a cash deposit of NOK 30 million has been established for the indemnification loan.
Guarantees issued under the guarantee facility that was cancelled in September 2013 remain unaffected. The Group will release cash deposits as existing commitments are phased out, and at December 31, 2013 restricted cash deposits were NOK 70 million.
REC Silicon ASA and REC Solar AS have provided bank guarantees and parent company guarantees primarily related to the performance of solar panels and systems. REC Solar Group (REC Solar Holdings AS) provided REC Silicon with offsetting guarantees as part of the sale of the REC Solar division in October 2013. The bank guarantees amount to NOK 50 million (of which NOK 16 million is secured by cash deposits mentioned above) and run primarily through March 2014. The parent company guarantees are valid for the relevant warranty periods and are limited by warranties provided on solar panels and systems.
REC Silicon ASA has provided guarantees and indemnification agreements in connection with the bankruptcy of REC Wafer Norway AS in 2012. See above and note 10 below.
See note 30 to the consolidated financial statements for 2012 for information on estimation of fair values of financial instruments. The option contract contained in indemnification agreement associated with the REC Wafer Norway AS bankruptcy is subject to level 3 of the fair value hierarch of IFRS 13. The value of this option is estimated to have increased from NOK 7 million at December 31, 2012 to NOK 15 million at December 31, 2013.
The Group estimates that the carrying values of financial instruments approximate fair values, except for the NOK bonds REC01, REC02 and REC03.
| (NOK IN MILLION) | ||
|---|---|---|
| INSTRUMENT (NOMINAL AMOUNT) | CARRYING VALUE | ESTIMATED FAIR VALUE |
| REC01 (195.5) | 198 | 201 (103 %) |
| REC02 (234.5) | 226 | 221 (94.25 %) |
| REC03 (300.5) | 311 | 288 (95.75 %) |
The fair value of the remaining EUR convertible bond loan at December 31, 2013 is estimated at 99.3 percent of nominal value, up from 98 percent at September 30, 2013 and 68 percent at December 31, 2012.
The fair value of the USD convertible bond loan at December 31, 2013 is estimated at 95 percent of nominal value, down from 100.5 percent at September 30, 2013.
| (EUR IN MILLION) | DEC 31, 2012 | CHANGE Q4 2012 |
CHANGE YEAR 2012 |
SEP 30, 2013 | DEC 31, 2013 | CHANGE Q4 2013 |
|---|---|---|---|---|---|---|
| Nominal value | 320 | 0 | 0 | 81 | 81 | 0 |
| Value of the total loan | 218 | -34 | 48 | 80 | 81 | 1 |
| (NOK IN MILLION) | DEC 31, 2012 | CHANGE Q4 2012 PL |
CHANGE YEAR 2012 PL |
SEP 30, 2013 | DEC 31, 2013 | CHANGE Q4 2013 PL |
CHANGE YEAR 2013 PL |
|---|---|---|---|---|---|---|---|
| Nominal value | 2 349 | -9 | -132 | 659 | 681 | 22 | 154 |
| Value of the total loan | 1 597 | -254 | 282 | 646 | 676 | 30 | 847 |
| (USD IN MILLION) | ORIGINAL | SEP 30, 2013 | DEC 31, 2013 | CHANGE Q4 2013 |
CHANGE YEAR 2013 |
|---|---|---|---|---|---|
| Nominal value | 110 | 110 | 110 | 0 | 0 |
| Value of the total loan | 110 | 111 | 105 | -6 | -6 |
| (NOK IN MILLION) | ORIGINAL | SEP 30, 2013 | DEC 31, 2013 | CHANGE Q4 2013 PL |
CHANGE YEAR 2013 PL |
|---|---|---|---|---|---|
| Nominal value | 643 | 661 | 669 | 8 | 26 |
| Value of the total loan | 643 | 664 | 636 | -28 | -7 |
For changes affecting the statement of income ("PL" in the tables), the change in nominal value is currency gain/loss recognized in the parent company REC Silicon ASA (positive amount is a loss). The change in value of the total loan includes currency gain/loss, with the difference being the fair value adjustment recognized to profit or loss on Group level (in eliminations, a positive amount represents a loss).
| (NOK IN MILLION) | Q4 2013 | Q4 2012 | DEC 31, 2013 | DEC 31, 2012 |
|---|---|---|---|---|
| Restructuring cost and employee termination benefits | 0 | -1 | -8 | -4 |
| Onerous contracts | 0 | 0 | -3 | -3 |
| Other income | 1 | -2 | 120 | 197 |
| Gain/loss on disposal of non-current assets | 0 | 0 | 1 | 0 |
| Total other income and expenses | 1 | -2 | 109 | 190 |
Refer to note 23 to the consolidated financial statements for 2012 for further information on other income and expenses. See also note 5 "provisions" to this report.
In February 2013, REC Silicon received USD 27 million cash from a customer. Part of the amount is a compensation for volume commitments under a take or pay contract which was not fully met by the customer and was recognized as other income in the first quarter 2013. The remaining amount is related to future deliveries and has been deferred. Deferred amounts are included in "prepayments, interest calculation" on the statement of financial position.
Other income from continuing operations for 2012 related primarily to termination of a polysilicon sales contract in the first quarter and in the second quarter settlements with another customer.
| (NOK IN MILLION) | TOTAL FUTURE PAYMENTS 1) |
2014 | 2015 | 2016 | 2017 | 2018 | AFTER 2018 |
|---|---|---|---|---|---|---|---|
| Purchase of goods and services | |||||||
| REC Silicon | 1 262 | 785 | 119 | 61 | 116 | 78 | 102 |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total purchase of goods and services | 1 262 | 785 | 119 | 61 | 116 | 78 | 102 |
| Minimum operating lease payments | |||||||
| REC Silicon | 28 | 15 | 7 | 3 | 2 | 2 | 0 |
| Other | 4 | 2 | 2 | 1 | 0 | 0 | 0 |
| Total minimum operating lease payments | 33 | 16 | 9 | 4 | 2 | 2 | 0 |
1) Payments are undiscounted
See note 29 to the consolidated financial statements for 2012 for more information. The purchase obligations consist of significant items for which the Group is contractually obligated to purchase from a third party at December 31, 2013. Operating lease payments show contractual minimum future payments. Possibilities for termination of contracts have been taken into account. Contractual maturities of borrowings are shown in note 6 above.
The commitments above relate to the continuing operations of the Group only.
See note 31 to the consolidated financial statements for 2012 for a description of contingent liabilities and the main disputes at December 31, 2012. Issues related to REC Solar are no longer relevant for the Group subsequent to the sale.
REC Silicon ASA has previously received notices of reassessment from the Central Tax office for large Enterprises (CTO) regarding the tax returns for fiscal years 2009 and 2010. The CTO has questioned the deductibility of losses on loans to REC ScanModule AB in 2009 and losses on loans and guarantees to Sovello GmbH in 2009 and 2010. On August 21, 2013 REC ASA received notice of reassessment from the CTO regarding the deductibility on losses on loans to REC Wafer Norway AS, REC Solar AS and REC ScanCell AS that were claimed in the tax return for fiscal year 2011.
REC Silicon ASA has opposed the notices by filing legal assessments of the cases and presented supporting documentation.
Currently, no decision has been communicated from the CTO. Should the CTO make a decision denying the deductibility of the losses, any reassessed tax is generally due for payment two weeks after the decision, whether or not such decision is appealed or brought to the judiciary courts. In such a case, REC Silicon ASA believes that the amounts should be adjusted for group contributions and carry back of tax losses, reducing the potential tax effect (excluding any interest) to approximately NOK 230 million.
REC Silicon ASA believes the losses are tax deductible and has made no provision for potential tax liabilities.
No further significant new items or developments have been identified at December 31, 2013.
See note 9 to the consolidated financial statements for 2012 for further information about discontinued operations. In the second quarter 2012, the remaining operations of REC Wafer were closed and REC Wafer was deconsolidated as of August 13, 2012. In the third quarter 2013 the company announced its intention to sell REC Solar and the sale was completed at the end of October.
The consolidated statement of income for continuing operations has been re-presented for previous periods. Discontinued operations remain consolidated in the financial statements for the periods prior to the loss of control, with internal transactions between continuing and discontinued operations eliminated in the consolidation. External income and expense items related to REC Solar and REC Wafer and gains and losses on disposal are included as discontinued operations.
Line items and results re-presented for continuing and discontinued operations do not represent the activities or indicate the profit earned or loss incurred by continuing or discontinued operations as if they were standalone entities, for past periods or likely to be earned or incurred in future periods. This is primarily because there has been significant trading between continuing and discontinued operations, and gains and losses on disposal. A part of REC Solar's and REC Wafer's income and expense are internal to the Group, and are consequently not represented as discontinued operations.
Reference is made to the line item "eliminations" (total operations) in note 13 Segment information.
In the third quarter 2013 the REC Solar disposal group was written down to the sales value of NOK 800 million, with a total loss of NOK 1,384 million included in eliminations. Of which NOK 182 million affected EBITDA for total operations and NOK 1,069 million was impairment of fixed assets giving an effect on EBIT of NOK 1,251 million. In addition NOK 133 million was impairment of equity accounted investments. The sale was completed in the fourth quarter and the losses on the disposal group have been reversed and are instead recognized in REC Silicon ASA and the REC Solar segment as well as in eliminations (for total operations). The reversal positively affected eliminations (total operations) in the fourth quarter with the same amounts and on the same line items as were negatively affected in the third quarter. For the year 2013, the total loss for the Group on sale of REC Solar is reported to NOK 1,299 million, of which a gain of NOK 359 million as part of EBITDA in eliminations (total operations). On consolidation this has been re-presented to discontinued operations for the Group.
For the year 2012 a gain of NOK 1,241 million was reported as part of EBITDA on deconsolidation of the net liabilities of REC Wafer. On consolidation the gain has been re-presented in discontinued operations for the Group.
| (NOK IN MILLION) | REC SILICON GROUP TOTAL OPERATIONS DEC 31, 2013 |
OF WHICH DISCONTINUED OPERATIONS DEC 31, 2013 |
REC SILICON GROUP RE-PRESENTED DEC 31, 2013 |
REC SILICON GROUP TOTAL OPERATIONS DEC 31, 2012 |
OF WHICH DISCONTINUED OPERATIONS DEC 31, 2012 |
REC SILICON GROUP RE-PRESENTED DEC 31, 2012 |
|---|---|---|---|---|---|---|
| Revenues | 5 514 | 3 060 | 2 453 | 7 484 | 4 421 | 3 063 |
| Cost of materials | -2 320 | -1 693 | -628 | -3 286 | -1 668 | -1 618 |
| Changes in inventories and write downs | 7 | -89 | 96 | -723 | -814 | 91 |
| Employee benefit expenses | -1 002 | -380 | -622 | -1 278 | -595 | -683 |
| Other operating expenses | -1 792 | -680 | -1 111 | -2 398 | -1 062 | -1 335 |
| Other income and expenses | 103 | -6 | 109 | 123 | -67 | 190 |
| Gains/losses on disposal of discontinued operation - Wafer | 84 | 84 | 0 | 812 | 812 | 0 |
| Gains/losses on disposal of discontinued operation - Solar | -1 299 | -1 299 | 0 | 0 | 0 | 0 |
| EBITDA | -706 | -1 004 | 298 | 734 | 1 026 | -292 |
| Depreciation | -819 | -83 | -736 | -1 224 | -279 | -945 |
| Amortization | -24 | -10 | -14 | -113 | -25 | -88 |
| Impairment | -61 | -8 | -54 | -6 304 | -3 269 | -3 034 |
| Total depreciation, amortization and impairment | -904 | -101 | -804 | -7 640 | -3 573 | -4 067 |
| EBIT | -1 610 | -1 104 | -506 | -6 906 | -2 547 | -4 359 |
| Share of profit/loss of equity accounted investments | 18 | 18 | 0 | -5 | -5 | 0 |
| Financial income | 47 | 2 | 44 | 50 | 7 | 43 |
| Net financial expenses | -348 | -9 | -339 | -470 | -41 | -429 |
| Net currency gains/losses | 201 | -31 | 232 | -191 | -33 | -157 |
| Net gains/losses derivatives and fair value hedge | -211 | 0 | -211 | 488 | 5 | 483 |
| Impairment and gain/loss on financial assets | 0 | 0 | 0 | 29 | 32 | -3 |
| Fair value adjustment convertible bond | -659 | 0 | -659 | -415 | 0 | -415 |
| Net financial items | -971 | -38 | -933 | -508 | -31 | -477 |
| Profit/loss before tax | -2 563 | -1 124 | -1 439 | -7 419 | -2 583 | -4 836 |
| Income tax expense/benefit | 490 | -8 | 498 | 1 392 | 17 | 1 376 |
| Profit/loss from continuing operations | NA | NA | -940 | NA | NA | -3 461 |
| Profit/loss from discontinued operations | NA | -1 132 | -1 132 | NA | -2 566 | -2 566 |
| Profit/loss from total operations | -2 073 | NA | -2 073 | -6 027 | NA | -6 027 |
| Profit/loss attributable to: | TOTAL | DISCONTINUED | CONTINUING | TOTAL | DISCONTINUED | CONTINUING |
| Owners of REC Silicon ASA | -2 073 | -1 132 | -940 | -6 027 | -2 566 | -3 461 |
| Earnings per share (in NOK) -basic |
-0.93 | -0.51 | -0.42 | -3.65 | -1.56 | -2.10 |
| -diluted | -0.93 | -0.51 | -0.42 | -3.65 | -1.56 | -2.10 |
| REC SILICON GROUP TOTAL OPERATIONS |
OF WHICH DISCONTINUED OPERATIONS |
REC SILICON GROUP RE-PRESENTED |
REC SILICON GROUP TOTAL OPERATIONS |
OF WHICH DISCONTINUED OPERATIONS |
REC SILICON GROUP RE-PRESENTED |
|
|---|---|---|---|---|---|---|
| (NOK IN MILLION) | Q4 2013 | Q4 2013 | Q4 2013 | Q4 2012 | Q4 2012 | Q4 2012 |
| Revenues | 1 071 | 328 | 743 | 1 687 | 932 | 756 |
| Cost of materials | -355 | -190 | -165 | -690 | -452 | -238 |
| Changes in inventories and write downs | 11 | 13 | -3 | -234 | -202 | -32 |
| Employee benefit expenses | -191 | -42 | -149 | -266 | -118 | -149 |
| Other operating expenses | -332 | -69 | -263 | -540 | -222 | -318 |
| Other income and expenses | 182 | 180 | 1 | 6 | 8 | -2 |
| Gains/losses on disposal of discontinued operation - Wafer | 85 | 85 | 0 | -8 | -8 | 0 |
| Gains/losses on disposal of discontinued operation - Solar | -1 299 | -1 299 | 0 | 0 | 0 | 0 |
| EBITDA | -829 | -993 | 164 | -46 | -62 | 17 |
| Depreciation | -209 | -13 | -195 | -255 | -25 | -230 |
| Amortization | -5 | -1 | -4 | -25 | -4 | -21 |
| Impairment | 1 041 | 1 068 | -27 | -2 965 | -29 | -2 936 |
| Total depreciation, amortization and impairment | 828 | 1 054 | -226 | -3 246 | -59 | -3 187 |
| EBIT | -1 | 60 | -62 | -3 291 | -121 | -3 171 |
| Share of profit/loss of equity accounted investments | 134 | 134 | 0 | 4 | 4 | 0 |
| Financial income | 6 | 0 | 6 | 15 | 4 | 11 |
| Net financial expenses | -57 | -1 | -56 | -98 | -3 | -95 |
| Net currency gains/losses | 38 | -4 | 42 | -130 | -33 | -97 |
| Net gains/losses derivatives and fair value hedge | -39 | 0 | -39 | 65 | 0 | 65 |
| Impairment and gain/loss on financial assets | 0 | 0 | 0 | 0 | 0 | 0 |
| Fair value adjustment convertible bond | 29 | 0 | 29 | 245 | 0 | 245 |
| Net financial items | -24 | -5 | -19 | 98 | -31 | 130 |
| Profit/loss before tax | 109 | 190 | -80 | -3 189 | -148 | -3 041 |
| Income tax expense/benefit | 52 | 0 | 52 | 1 018 | 11 | 1 007 |
| Profit/loss from continuing operations | NA | NA | -28 | NA | NA | -2 034 |
| Profit/loss from discontinued operations | NA | 190 | 190 | NA | -137 | -137 |
| Profit/loss from total operations | 161 | NA | 161 | -2 170 | NA | -2 170 |
| Profit/loss attributable to: | TOTAL | DISCONTINUED | CONTINUING | TOTAL | DISCONTINUED | CONTINUING |
| Owners of REC Silicon ASA | 161 | 190 | -28 | -2 170 | -137 | -2 034 |
| Earnings per share (in NOK) | ||||||
| -basic | 0.07 | 0.08 | -0.01 | -1.03 | -0.06 | -0.96 |
| -diluted | 0.06 | 0.08 | -0.01 | -1.06 | -0.06 | -1.00 |
| (NOK IN MILLION) | WAFER GROUP DISCONTINUED OPERATIONS DEC 31, 2013 |
SOLAR GROUP DISCONTINUED OPERATIONS DEC 31, 2013 |
REC SILICON GROUP DISCONTINUED OPERATIONS DEC 31, 2013 |
WAFER GROUP DISCONTINUED OPERATIONS DEC 31, 2012 |
SOLAR GROUP DISCONTINUED OPERATIONS DEC 31, 2012 |
REC SILICON GROUP DISCONTINUED OPERATIONS DEC 31, 2012 |
|---|---|---|---|---|---|---|
| Revenues | 0 | 3 060 | 3 060 | 339 | 4 082 | 4 421 |
| Cost of materials | 0 | -1 693 | -1 693 | -205 | -1 462 | -1 668 |
| Changes in inventories and write downs | 0 | -89 | -89 | -273 | -541 | -814 |
| Employee benefit expenses | 0 | -380 | -380 | -118 | -478 | -595 |
| Other operating expenses | 0 | -680 | -680 | -90 | -973 | -1 062 |
| Other income and expenses | 0 | -6 | -6 | -97 | 30 | -67 |
| Gains/losses on disposal of discontinued operation - Wafer | 84 | 0 | 84 | 812 | 0 | 812 |
| Gains/losses on disposal of discontinued operation - Solar | 0 | -1 299 | -1 299 | 0 | 0 | 0 |
| EBITDA | 84 | -1 088 | -1 004 | 368 | 658 | 1 026 |
| Depreciation | 0 | -83 | -83 | 0 | -279 | -279 |
| Amortization | 0 | -10 | -10 | 0 | -25 | -25 |
| Impairment | 0 | -8 | -8 | 247 | -3 516 | -3 269 |
| Total depreciation, amortization and impairment | 0 | -101 | -101 | 247 | -3 820 | -3 573 |
| EBIT | 84 | -1 188 | -1 104 | 615 | -3 162 | -2 547 |
| Share of profit/loss of equity accounted investments | 0 | 18 | 18 | 0 | -5 | -5 |
| Financial income | 0 | 2 | 2 | 0 | 7 | 7 |
| Net financial expenses | 0 | -9 | -9 | -26 | -15 | -41 |
| Net currency gains/losses | 0 | -31 | -31 | -6 | -28 | -33 |
| Net gains/losses derivatives and fair value hedge | 0 | 0 | 0 | 5 | 0 | 5 |
| Impairment and gain/loss on financial assets | 0 | 0 | 0 | 0 | 32 | 32 |
| Fair value adjustment convertible bond | 0 | 0 | 0 | 0 | 0 | 0 |
| Net financial items | 0 | -38 | -38 | -27 | -4 | -31 |
| Profit/loss before tax | 84 | -1 208 | -1 124 | 588 | -3 171 | -2 583 |
| Income tax expense/benefit | 0 | -8 | -8 | 0 | 17 | 17 |
| Profit/loss from discontinued operations | 84 | -1 216 | -1 132 | 588 | -3 154 | -2 566 |
| (NOK IN MILLION) | WAFER GROUP DISCONTINUED OPERATIONS Q4 2013 |
SOLAR GROUP DISCONTINUED OPERATIONS Q4 2013 |
REC SILICON GROUP DISCONTINUED OPERATIONS Q4 2013 |
WAFER GROUP DISCONTINUED OPERATIONS Q4 2012 |
SOLAR GROUP DISCONTINUED OPERATIONS Q4 2012 |
REC SILICON GROUP DISCONTINUED OPERATIONS Q4 2012 |
|---|---|---|---|---|---|---|
| Revenues | 0 | 328 | 328 | 0 | 932 | 932 |
| Cost of materials | 0 | -190 | -190 | 0 | -452 | -452 |
| Changes in inventories and write downs | 0 | 13 | 13 | 0 | -202 | -202 |
| Employee benefit expenses | 0 | -42 | -42 | 0 | -118 | -118 |
| Other operating expenses | 0 | -69 | -69 | 0 | -222 | -222 |
| Other income and expenses | 0 | 180 | 180 | 0 | 8 | 8 |
| Gains/losses on disposal of discontinued operations | 85 | 0 | 85 | -8 | 0 | -8 |
| Gains/losses on disposal of discontinued operations | 0 | -1 299 | -1 299 | 0 | 0 | 0 |
| EBITDA | 85 | -1 078 | -993 | -8 | -54 | -62 |
| Depreciation | 0 | -13 | -13 | 0 | -25 | -25 |
| Amortization | 0 | -1 | -1 | 0 | -4 | -4 |
| Impairment | 0 | 1 068 | 1 068 | 0 | -29 | -29 |
| Total depreciation, amortization and impairment | 0 | 1 054 | 1 054 | 0 | -59 | -59 |
| EBIT | 85 | -25 | 60 | -8 | -112 | -121 |
| Share of profit/loss of equity account investments | 0 | 134 | 134 | 0 | 4 | 4 |
| Financial income | 0 | 0 | 0 | 0 | 4 | 4 |
| Net financial expenses | 0 | -1 | -1 | 0 | -3 | -3 |
| Net currency gains/losses | 0 | -4 | -4 | 0 | -33 | -33 |
| Net gains/losses derivatives and fair value hedge | 0 | 0 | 0 | 0 | 0 | 0 |
| Impairment and gain/loss on financial assets | 0 | 0 | 0 | 0 | 0 | 0 |
| Fair value adjustment convertible bond | 0 | 0 | 0 | 0 | 0 | 0 |
| Net financial items | 0 | -5 | -5 | 0 | -31 | -31 |
| Profit/loss before tax | 85 | 104 | 190 | -8 | -139 | -148 |
| Income tax expense/benefit | 0 | 0 | 0 | 0 | 11 | 11 |
| Profit/loss from discontinued operations | 85 | 105 | 190 | -8 | -128 | -137 |
The table below shows the cash flows of REC Solar and REC Wafer. It includes cash flows to and from other REC Silicon Group companies. It includes REC Solar AS. Cash balances at the end of 2012 include NOK 74 million in REC Wafer at the time of deconsolidation and in 2013 NOK 293 million at time of deconsolidation of REC Solar.
REC Solar and REC Wafer have been members of the REC Group account systems (see note 14 to the consolidated financial statements for 2012). Their assets or liabilities in the Group account systems are receivables or payables to REC Silicon ASA and not included in cash and cash equivalents. During 2013, the DNB Group account system was settled. It had a positive cash balance. The change from the beginning of the year to zero is presented as part of financing activities (cash inflow). During the third quarter 2013 REC Solar also made net repayment of equity to REC Silicon ASA, included as cash payment in financing activities.
| (NOK IN MILLION) | 2013 | 2012 |
|---|---|---|
| Cash flows from operating activities | 203 | 157 |
| Cash flows from investing activities | 56 | -225 |
| Cash flows from financing activities | -76 | 161 |
| Effect on cash and cash equivalents of changes in foreign exchange rates | 0 | -3 |
| Net increase/decrease in cash and cash equivalents | 183 | 90 |
| Cash and cash equivalents at beginning of the period | 110 | 94 |
| Cash and cash equivalents at end of the period | 293 | 184 |
At September 30, 2013 assets and liabilities of REC Solar were reported in the statement of financial position as "assets held for sale" and "liabilities held for sale" for the Group. The net assets were written down to the net sale price of NOK 800 million for a pro-forma restructured balance in REC Solar at June 30 with net cash of NOK 300 million. A net loss of NOK 1,384 million was recognized for total operations in the third quarter. Of this, NOK 182 million was reported as onerous contracts for total operations (affecting EBITDA), NOK 1,069 million related to impairments of fixed assets (affecting EBIT) and NOK 133 related to impairments of equity investments (affecting share of profit/loss of equity accounted investments).
The sale was completed in the fourth quarter and the losses on the disposal group have been reversed and are instead recognized in REC Silicon ASA and REC Solar AS as well as in Group eliminations – total operations. The total loss, including costs to sell and currency translation gains of NOK 101 million, has been reported in the loss on disposal of REC Solar of NOK 1,299 million. On consolidation this loss has been re-presented to discontinued operations for the Group.
The table below includes only assets and liabilities external to the REC Silicon Group. The amounts are shown before presentation and remeasurement as "assets held for sale" and "liabilities held for sale" on the statement of financial position..
| (NOK IN MILLION) | |
|---|---|
| Intangible assets | 11 |
| Property, plant and equipment | 889 |
| Deferred tax assets | 8 |
| Prepaid lease and capex, non-current | 154 |
| Equity accounted investments | 133 |
| Other non-current financial assets | 14 |
| Total non-current assets | 1 209 |
| Inventories | 849 |
| Trade and other receivables and prepayments | 848 |
| Current income tax assets | 5 |
| Cash and cash equivalents | 293 |
| Total current assets | 1 995 |
| Total assets | 3 205 |
| Total non-current liabilities (provisions) | 395 |
| Trade payables and other liabilities | 524 |
| Provisions | 16 |
| Current tax liabilities | 4 |
| Total current liabilities | 544 |
| Total liabilities | 939 |
The net gain on deconsolidation for the year 2012 is due to de-recognition of liabilities of REC Wafer in excess of its assets. This was partially offset by losses on receivables, guarantees and indemnification agreements, primarily in REC Silicon ASA. Some net changes to the estimated liabilities related to REC Wafer were recognized in the fourth quarter and year 2013, affecting the net gain on disposal of discontinued operations.
The reported values of guarantees and indemnification agreements have been estimated. These values are subject to change and are dependent on the ultimate dividends from REC Wafer and the financial performance of the Group among other things. Values may not be finally determined and paid before February 2016. Loan agreements were established for the estimated amounts of the indemnification agreements, recognized as interest bearing liabilities, of which one was settled and paid in the second quarter 2013 (see note 6).
| (NOK IN MILLION) | 2013 |
|---|---|
| At January 1, 2013 | -63 |
| Change in provisions | -0 |
| Sale of subsidiaries | 21 |
| Exchange difference | -6 |
| At December 31, 2013 | -49 |
| Realized loss on trade receivables in 2013 for total operations | -3 |
| - of which is transferred to discontinued operations | -1 |
| Change in provision in 2013 for total operations | -0 |
| - of which is transferred to discontinued operations | -8 |
| Loss on trade receivables in the statement of income in 2013 | 6 |
| TOTAL CARRYING |
AGING OF RECEIVABLES THAT ARE NOT IMPAIRED PAST DUE |
||||||
|---|---|---|---|---|---|---|---|
| (NOK IN MILLION) | AMOUNT | NOT DUE | < 30 DAYS | >30<90 DAYS | >90<365 DAYS | >365 DAYS | IMPAIRED |
| Trade receivables and accrued revenues | 688 | 503 | 69 | 22 | 45 | 0 | 49 |
| Provision for loss on trade recivables | -49 | 0 | 0 | 0 | 0 | 0 | -49 |
| Other non-current and current receivables | 12 | 7 | 0 | 0 | 0 | 6 | 0 |
| Finance receivables and short-term loans | 65 | 65 | 0 | 0 | 0 | 0 | 0 |
| Total | 717 | 575 | 69 | 22 | 45 | 6 | 0 |
See note 10 to the consolidated financial statements for 2012.
At December 31, 2013 related parties of Jens Ulltveit-Moe (Chairman of the Board) owned REC NOK bonds with nominal value of just below NOK 1 million.
Related party transaction related to REC Solar (sold October 25, 2013) are as follows:
Refer to note 5 to the consolidated financial statements for 2012 for further information on segments.
| Segment information 1) | ||||
|---|---|---|---|---|
| (NOK IN MILLION) | Q4 2013 | Q4 2012 | DEC 31, 2013 | DEC 31, 2012 |
| Revenues | ||||
| REC Silicon | 752 | 761 | 2 543 | 3 261 |
| REC Wafer | 0 | 0 | 0 | 585 |
| REC Solar | 328 | 932 | 3 061 | 4 087 |
| Other | 4 | 8 | 12 | 57 |
| Eliminations | -13 | -14 | -102 | -506 |
| Total operations | 1 071 | 1 687 | 5 514 | 7 484 |
| Of which discontinued operations 2) | 328 | 932 | 3 060 | 4 421 |
| Total continuing operations | 743 | 756 | 2 453 | 3 063 |
| Revenues external | ||||
| REC Silicon | 740 | 757 | 2 450 | 3 062 |
| REC Wafer | 0 | 0 | 0 | 339 |
| REC Solar | 328 | 932 | 3 060 | 4 082 |
| Other | 3 | -1 | 3 | 1 |
| Total operations | 1 071 | 1 687 | 5 514 | 7 484 |
| Of which discontinued operations 2) | 328 | 932 | 3 060 | 4 421 |
| Total continuing operations | 743 | 756 | 2 453 | 3 063 |
| EBITDA | ||||
| REC Silicon | 187 | 105 | 492 | 758 |
| REC Wafer | 0 | 0 | 0 | -296 |
| REC Solar | -1 213 | -113 | -1 129 | -369 |
| Other | -346 | -40 | -428 | -558 |
| Eliminations 3) | 543 | 2 | 359 | 1 199 |
| Total operations | -829 | -46 | -706 | 734 |
| Of which discontinued operations2) | -993 | -62 | -1 004 | 1 026 |
| Total continuing operations | 164 | 17 | 298 | -292 |
| Depreciation, amortization and impairment REC Silicon |
-226 | -3 167 | -804 | -4 002 |
| REC Wafer | 0 | 0 | 0 | 247 |
| REC Solar | -16 | -58 | -101 | -3 942 |
| Other | 0 | -20 | 0 | -65 |
| Eliminations 3) | 1 069 | -1 | 0 | 122 |
| Total operations | 828 | -3 246 | -904 | -7 640 |
| Of which discontinued operations 2) Total continuing operations |
1 054 -226 |
-59 -3 187 |
-101 -804 |
-3 573 -4 067 |
| EBIT | ||||
| REC Silicon | -39 | -3 062 | -312 | -3 244 |
| REC Wafer | 0 | 0 | 0 | -49 |
| REC Solar | -1 229 | -171 | -1 230 | -4 310 |
| Other | -346 | -60 | -428 | -624 |
| Eliminations 3) | 1 612 | 2 | 359 | 1 321 |
| Total operations | -1 | -3 291 | -1 610 | -6 906 |
| Of which discontinued operations 2) | 60 | -121 | -1 104 | -2 547 |
| Total continuing operations | -62 | -3 171 | -506 | -4 359 |
1) At January 1, 2013 the Group adopted a number of new and amended standards and interpretations. These changes had a small effect on previous periods' statement of income figures related to change in the accounting of joint ventures and presentation of net interest on net benefit liability as part of financial items instead of pension costs. See note 1 for further information.
2) Profit/loss from discontinued operations includes income and expense from REC Silicon Group external transactions of REC Solar and REC Wafer and gains and losses on disposal. Discontinued operations are shown as a single amount in the statement of income for the Group. This re-presentation does not represent the activities or indicate the profit earned or loss incurred by continuing or discontinued operations as if they were standalone entities, for past periods or likely to be earned or incurred in future periods. See note 10 to this report and note 9 to the consolidated financial statements for 2012. 3) Refer to discussion of eliminations (total operations) in note 10 Discontinued operations.
Tore Torvund, CEO REC Silicon +1 (509) 855-8923
James A. May II, CFO REC Silicon +1 (509) 989-1023
Pål Elstad, REC Silicon +47 991 66 293 Email: [email protected]
Artbox AS
REC Silicon ASA Kjørboveien 29 PO Box 594 1302 Sandvika Norway Phone +47 67 57 44 50
REC Silicon ASA is a leading producer of advanced silicon materials, delivering high-purity polysilicon and silicon gas to the solar and electronics industries worldwide. We combine 25 years of experience and proprietary technology with the needs of our customers, and annual production capacity of more than 20,000 MT of polysilicon from our two US-based manufacturing plants. Listed on the Oslo Stock Exchange (ticker: REC), the company is headquartered in Moses Lake, Washington and employs approximately 740 people.
For more information, go to: www.recsilicon.com
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.