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REC Annual Report 2011
16
REC Solar
RECSolar produces wafers, solar cells andmodules, and engage in
project development in selected segments of PVsystems. RECSolar
operates an integrated site for wafers, solar cells andmodules production
in Singapore. RECSolar targets to produce 750MWof modules in 2012
and employs approximately 1,900 people.
(FINANCIAL FIGURES – NOK INMILLION)
2011
2010
Revenues
5 856
5 624
EBITDA
-30
228
EBITDA - margin
-1%
4%
EBITDA excluding special items*
35
255
EBITDA - margin excluding special items
1%
5%
Depreciation and amortization
-874
-796
EBIT before impairment charges
-904
-568
Impairment charges
-4 206
-21
EBIT
-5 110
-589
EBIT - margin
-87%
-10%
Module production in MW
644
491
Contract manufacturing in MW
55
11
Module sale in MW**
594
425
Expansion costs
0
17
*
Special items include junction box expenses, costs for onerous contracts and
write-down of inventories due to capacity shutdowns, restructuring costs and gain
on sale of subsidiary
** Module sale 2010 restated to include realized module sales through REC Systems
For the year 2011, REC Solar revenues amounted to NOK 5,856million,
up four percent from2010. The increase reflects significantly increased
production and sales volumes, which were partly offset by lower average
selling prices.
Total module production amounted to 699MW in 2011, up from
502MW in 2011. The production growth comes from the continued
optimization of the integrated wafer, cell and module plant in Singapore.
Module sales amounted to 594MW.
Due to the weak market conditions the 180MWsolar cell production
facility in Narvik, Norway was permanently shut down in 2011.
The Singapore plant has been performing well throughout the year with
respect to production volume, yield, and cell efficiency. REC Solar has
significantly improved cost position in Singapore and built market
presence in newmarkets.
EBITDA was negative NOK 30million for the year 2011, compared
to positive NOK 228million in 2010. The EBITDA decline reflects
significant price declines and inventory write downs, partly offset
by increased sales volume and reduced unit production costs.
Eliminations – REC Group
(NOK INMILLION)
2011
2010
Elimination revenues
-2 580
-3 995
Elimination EBITDA
234
-91
Elimination of internal profit depends on internal sales and
intercompany inventory changes.
Elimination EBITDA is primarily unrealized internal silicon profit.
The positive amount in 2011 was primarily due to reduced inventories
in RECWafer and reduced unrealized internal profits due to write-downs
of inventories.
FINANCIAL REVIEW
See above for discussion of revenues, EBITDA and segment results
Depreciation, amortization and impairment
For the year 2011, depreciation, amortization and impairment amounted
to NOK 12,375million, compared to NOK 2,514million for 2010.
Impairment charges in 2011 were NOK 10,097million.
Impairment reviews
Steep price declines in 2011 led market participants, analysts and
REC to change their long termmarket views. Negative shift in estimated
future sales prices was the main change in key assumptions that led to
the significant impairments in 2011. The decisions to close down parts
of the production capacity in Norway (REC ScanCell and parts of
RECWafer Multi Norway) and the uncertainties related to the continuing
wafer operations in Norway also contributed to the impairments.
If a decision is taken in a subsequent period to close down further
production capacity, further losses on contractual commitments should
be expected, and the value of working capital may also be negatively
affected. On March 20, 2012, REC decided to permanently close down
the 300MWmonocrystalline wafer plant in Glomfjord.
Report from the Board of Directors
Specification of impairments for 2011
(NOK INMILLION)
LAND AND
BUILDINGS
MACHINERYAND
EQUIPMENT
OTHER
TANGIBLE FIXED
ASSETS
ASSETS UNDER
CONSTRUCTION
GOODWILL
OTHER
INTANGIBLES
TOTAL
REMAINING PPE
& INTANGIBLES
DEC 31
REC Silicon
0
20
0
0
0
0
20
11 269
RECWafer Multi Norway
1 962
2 410
19
24
330
54
4 799
34
RECWafer Mono
406
595
0
0
0
7
1 008
0
REC Singapore
2 211
1 544
63
1
0
44
3 863
4 617
REC ScanCell
129
192
5
0
0
17
343
85
Other operations
-2
3
0
0
0
63
64
82
Total impairments
4 705
4 764
88
24
330
185
10 097
16 087