Basic HTML Version
REC Annual Report 2011
17
The estimated values in use of REC’s operating assets are sensitive
to changes in prices and other key assumptions. There is a risk that the
price projections, cost targets etc. that were used in the impairment
tests at year end 2011 cannot be achieved. This can result in further
impairments.
See note 7 to the consolidated financial statements for further
information.
Financial items
Net financial items amounted to NOK 205million for 2011, compared
to net financial items of NOK 801million in 2010. Positive fair value
adjustments of the convertible bond and gains on currency derivatives
more than offset the financial expenses in both years.
Financial items – REC Group
(NOK INMILLION)
2011
2010
Share of loss of associates
-97
1
Financial income
51
35
Financial expenses
-705
-1 381
Capitalized borrowing cost
12
247
Net financial expenses
-693
-1 134
Net currency gains/losses
-7
544
Net gains/losses embedded derivatives
92
-80
Net gains/losses other derivatives and fair value hedge
16
955
Net gains/losses derivatives
108
875
Impairment and loss on financial assets
1
-1
Fair value adjustment convertible bonds
841
481
Net financial items
205
801
Decreased interest bearing liabilities and borrowing costs and lower
expensing of the remaining up-front fees and costs for the terminated
and repaid bank facilities contributed to decreased financial expenses in
2011 compared to 2010. Currency affected net financial items through
net currency gains/losses and net gains/losses on derivatives to a less
extent in 2011 than in 2010. Changes in the estimated fair value of a
EUR 320million convertible bond is recognized to profit or loss and
contributed to a gain both in 2011 and 2010.
See note 25 to the consolidated financial statements for further
discussion.
Profit/loss after tax from total operations
For 2011, loss after tax from total operations amounted to
NOK 10,030million compared to a profit of NOK 989million for 2010.
The profit from total operations for 2010 included net profit from
discontinued operations related to the sale of Sovello AG.
Basic EPS from total operations was a negative NOK 10.06 for 2011.
The corresponding amount was positive NOK 1.07 for 2010.
Diluted EPS from total operations was negative NOK 10.06 for 2011.
The corresponding amount was positive NOK 0.61 for 2010.
Consolidated statement of comprehensive income
Comprehensive income was negative NOK 9,955million for 2011,
reflecting primarily the loss for the period. Comprehensive income for
2010 was NOK 1,307million reflecting primarily profit and positive
currency translation differences.
STATEMENTOF FINANCIAL POSITION AND CASH FLOW
The developments in the statement of financial position during 2011
primarily reflect the significant impairments of fixed assets and
reduction of interest bearing debt.
Equity and debt
Equity amounted to NOK 12.2 billion (50 percent) at
December 31, 2011, compared to 22.2 billion (60 percent) at
year-end 2010.
Net debt was NOK 4.7 billion at December 31, 2011, a decrease of
NOK 3.2 billion from the year-end 2010. Net debt include convertible
bond at fair value and finance leases but exclude prepayments on which
interest is calculated. Currency fluctuations also affected net debt
development.
See note 17 to the consolidated financial statements for details of the
REC Group’s debt financing.
In March 2011 REC cancelled and repaid the NOK 1.3 billion loans from
Eksportfinans and REC cancelled NOK 1.4 billion of the NOK 10 billion
bank credit and guarantee facilities agreement. In April 2011, REC ASA
issued new senior unsecured bonds in the Norwegian market; NOK 500
million and NOK 700million with five and seven year tenors respectively.
As part of the bond offering, REC bought back NOK 600million of the
existing NOK 1,250million bond for a total of NOK 660million. The
primary purpose of the transactions was to extend the company’s debt
maturity profile.
Remaining undrawn amounts under the bank credit facility agreement
were NOK 6.5 billion at December 31, 2011.
Starting at the end of the first quarter 2012, the total amounts available
in the revolving bank credit facilities will be reduced by NOK 350million
quarterly. The residual principal amount shall be repaid at the end of the
second quarter 2013
See note 33 to the consolidated financial statements for amendments
to the bank credit facility agreement after the reporting period.
Cash flow
Net cash flow from operating activities was NOK 3,098million for 2011
compared to NOK 2,485million for 2010.
Net cash flow from operating activities in 2011 was higher than
EBITDA. Compared to EBITDA, net cash flow from operating activities
was positively affected by REC Silicon being repaid more than
NOK 300million income taxes. Recognition of provisions for
restructuring and onerous contracts did not have the corresponding
cash outflow in the period. Net interest paid was partially offset by cash
Report from the Board of Directors