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Notes to the consolidated financial
statements, REC Group
REC Annual Report 2011
Finance leases included in property, plant and equipment at December 31
(NOK INMILLION)
LAND AND
BUILDINGS
MACHINERY
AND EQUIPMENT
TOTAL
Carrying value at January 1, 2010
249
458
707
Net additions
319
325
644
Depreciation
-53
-118
-171
Carrying value at December 31, 2010
515
665
1 180
Cost - capitalized finance leases
606
875
1 481
Accumulated depreciation and impairment
-91
-210
-301
Carrying value at December 31, 2010
515
665
1 180
Carrying value at January 1, 2011
515
665
1 180
Net additions
0
105
105
Depreciation
-28
-69
-97
Impairment
-422
-701
-1 123
Carrying value at December 31, 2011
65
0
65
Cost - capitalized finance leases
606
980
1 586
Accumulated depreciation and impairment
-541
-980
-1 522
Carrying value at December 31, 2011
65
0
65
Finance leases at December 31, 2011 and 2010 were primarily leases of production equipment and part of the building structure for
production and recovery of exhausted slurry for RECWafer and a lease of the second cell plant in REC ScanCell.
Slurry is the cutting fluid used when sawing silicon blocks into wafers. The slurry plants are built adjacent to RECWafer’s plants at Herøya
and Glomfjord, Norway. The agreements are capacity agreements in which RECWafer at inception expected to take all of the output from
the plants (see note 29). The finance lease elements of the agreements are for the machinery and part of the building structure and are fixed
according to the total capital expenditures incurred. The carrying values were zero and NOK 994million at December 31, 2011 and 2010,
respectively. The minimum contract terms for the total contracts are until December 31, 2018, and shall be prolonged automatically for
two-year periods unless terminated by either party with twelve months notice. The assets under the financial leases are paid over five to ten
years. Assets paid over five years have an extension option that is included as part of estimated lease term.
The cell plant was completed at the end of 2007. The minimum contract term is until 2022. The lease agreement has a renewal option of two
periods of five years each. The carrying values were NOK 65million and NOK 186million at December 31, 2011 and 2010, respectively.
The assets under finance leases are depreciated over the shorter of estimated useful lives and lease term.