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REC Annual Report 2011
19
Organization
REC ASA had 56 employees as per year end 2011. The average number
of full time equivalents (FTE) was 57.4. Sickness rate in 2011 was just
below three percent. The work environment in 2011 has been influenced
by the restructuring of the organization in Norway, which also affected
the corporate centre. One injury with medical treatment was reported in
2011 where a temporary employee got a second degree burn on arm
from hot water.
REC ASA is focusing on equal opportunities irrespective of gender.
There should be no discrimination related to gender in cases such as
compensation, promotion or recruitment. In REC ASA the female share
is 38 percent and 31 percent of the managers are female. REC ASA
continues to focus on having compensation and working conditions that
do not discriminate neither gender nor nationality.
Change of control
The following information is relevant for REC ASA with reference to the
Norwegian Securities Trading Act section 5-8a.
The credit facility agreement (credit facility) has a change of control
provision applicable if a shareholder or a group of shareholders acting in
concert gains control of more than 50 percent of the share capital. Such
an event is a termination event under the agreement entitling the lenders
to cancel the commitments and declare all outstanding amounts and
accrued interest due and payable. The provision does not apply with
respect to shareholders that were controlling at least 10 percent of
the share capital at the time the agreement was entered into.
Thebond agreements (ISINNO00153650.01, ISINNO001060748.4and
ISINNO001060747.6) and the subordinated convertiblebond agreement
(ISINNO0010543457) haveprovisions similar to the change of control
provision in the credit facility conferring a put option on thebondholders if a
change of control event occurs. Moredetailed information can be obtained
fromthebond trustee, NorskTillitsmannASA.
REC ASA is party to certain ISDA agreements with provisions to the
effect that change of control under certain circumstances may entitle
the counterparties to early termination of the agreements.
Change of control of REC ASAmay also under certain circumstances
affect certain agreements entered into by subsidiaries directly or
indirectly controlled by REC ASA.
RISK FACTORS
REC is an industrial corporation exposed to various market and business
risks. REC is exposed to variations in prices on the products REC sells,
commodities and rawmaterials, currency exchange rates, interest rates
and a number of other risks.
If any of the risks described in this section materialize, individually or
together with other circumstances, they may substantially impair the
business of REC and have material adverse effects on the company’s
business prospects, financial condition or results of operations. The
order in which the individual risks are presented below is not intended
to provide an indication of the likelihood of their occurrence nor of the
severity or significance of individual risks. In addition to the following
risks, other risks of which the company is currently unaware, or which it
does not currently consider to be material, may materialize and have
adverse effects on the company’s business, prospects, financial
condition or results of operations.
Market and operational risk factors
The REC Group’s activities expose it to a variety of market and
operational risks factors.
REC evaluates that there are significant uncertainties related to the
PVmarket development going forward. The uncertainty primarily relates
to the effects of the changes in solar energy subsidy schemes in key
solar markets, and to potential changes in the market supply and demand
balance and prices going forward.
Germany and Italy represented 55 percent global solar module demand
in 2011. Further reductions of the subsidy schemes in these and other
markets are expected to continue to put pressure on PV systems- and
module prices, and may also reduce overall demand. Demand growth may
also be negatively affected by introduction of policies with a predefined
maximum of annual installed capacity qualifying for subsidies and by
complex permitting processes in emerging markets.
Reduced feed-in tariffs and continued oversupply may lead to further
price pressure across the solar value chain. Oversupply may also lead to
build-up of inventory through the value chain and reduced capacity
utilization in the industry. Such adverse market developments could have
significant negative impact on REC’s financial results and financial
position.
The share of sales of solar grade polysilicon to third party customers
has increased after RECWafer reduced wafer production in Norway. In
light of the current market conditions this is increasing the exposure to
short-term contracts and the spot market.
In 2011 and beginning of 2012 RECWafer has negotiated contract
terminations against cash compensation for most of the previous
existing long termwafer sales contracts. Consequently, RECWafer’s
exposure to the spot market has increased.
The solar industry has been and will continue to be subject to rapid
technological change, frequent improvements, new products and
services, and changing customer requirements. Competitors may launch
new products and services earlier or at more competitive prices,
implement and/or secure exclusive rights to new technologies.
With increased sales of solar modules, REC is more exposed to risks
associated with the industry-standard of up to 25 year product warranty
on modules. REC Solar has scaled up its efforts on product qualification
and quality assurance considerably to reduce the risks of product claims.
In general, optimization of equipment to increase production volume and
reduce costs is important for the future profitability of the company.
Financial risk factors
The goals for the REC Group finance policy and the treasury operations
are mainly to minimize the risk for financial distress, secure long term
Report from the Board of Directors