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Notes to the consolidated financial
statements, REC Group
REC Annual Report 2011
IMPAIRMENTS OF CASH-GENERATING UNITS AND GOODWILL
Goodwill is allocated to the cash-generating units or groups of cash-generating units at December 31 as follows:
Carrying amount of goodwill at December 31
(NOK INMILLION)
2011
2010
REC Silicon
263
257
RECWafer Multi
0
330
Total REC Group
263
587
In 2011, goodwill related to RECWafer Multi was written down to
zero.
CASH-GENERATING UNITS
Recoverable amount shall be estimated for the individual asset. The
recoverable amount of an individual asset cannot be determined if
the asset’s value in use cannot be estimated to be close to its fair
value less costs to sell and the asset does not generate cash inflows
that are largely independent of those from other assets. In such
cases, value in use and, therefore, recoverable amount, can be
determined only for the asset’s cash-generating unit.
An asset’s cash-generating unit is the smallest group of assets that
includes the asset and generates cash inflows that are largely
independent of the cash inflows from other assets or groups of
assets. Identification of an asset’s cash-generating unit involves
judgment by the RECmanagement.
Management monitors the operations primarily by segments, but
also by product lines and by individual locations. The different
segments sell primarily products to external parties that are
different from products of the other segments. Part of REC Silicon’s
production of polysilicon is sold internally to RECWafer and
REC Solar, and RECWafer to some extent sell wafers to REC Solar.
REC Silicon and REC Solar produces intermediate products in its
own value chain. If an active market exists for the output produced
by an asset or group of assets, that asset or group of assets shall be
identified as a cash-generating unit, even if some or all of the output
is used internally. An active market is a market in which all the
following conditions exist: (a) the items traded within the market
are homogeneous; (b) willing buyers and sellers can normally be
found at any time; and (c) prices are available to the public.
Starting in the second quarter 2011, REC decided to temporary
close down the cell production in REC ScanCell Norway and parts of
the multi wafer production in Norway (the oldest plants). In the
fourth quarter 2011, REC decided on a permanent close down of
these. In connection with the second quarter 2011 impairment
tests, RECmanagement evaluated that changes in facts and
circumstances had lead to changes in cash-generating units. The
new cash-generating units are REC Silicon, RECWafer Multi
Norway, RECWafer Mono, REC Singapore and REC ScanCell. The
previous cash-generating units were REC Silicon, RECWafer Multi,
RECWafer Mono, REC Solar Cells (Norway), REC Solar Cells
(Singapore) and RECModules. Consequently, RECWafer Multi no
longer includesWafer production in Singapore. Cell production in
REC ScanCell is no longer included with REC Cells in Singapore,
and REC’s operations in Singapore are now regarded as one
cash-generating unit (including REC sales companies). The new
cash-generating unit definition had only a marginal effect on the
total impairment charges at June 30, 2011 and would have had no
effect on the impairment tests at year-end 2010.
REC Silicon produces polysilicon that is used in the electronic and
solar industry. REC Silicon also produces silane gas used in its
production of polysilicon and some is sold externally. REC Silicon
currently supplies a large percentage of the total silane gas market
in the world. Management has evaluated that it is currently not an
active market as defined in IAS 36 for the large amount of silane
that is used internally, and that the silane producing assets
consequently need to be grouped with polysilicon producing assets.
Management’s judgment is further that the polysilicon plants
constitute one cash-generating unit, as customer contracts can be
fulfilled by either plant, and REC can elect to produce the products
fromwhichever plant (with some adjustments). Therefore,
management judgment is that the future cash inflows for the
polysilicon plants cannot be determined individually. REC Silicon
is consequently regarded as one cash-generating unit.
RECWafer produces multi and mono wafers. Mono wafers have
higher solar efficiency, are sold separately frommulti wafers in
separate contracts and to different customers, are used in different
cell production, and can by REC only be produced at a separate plant
in Glomfjord. Management has evaluated that the multi and mono
wafers have separate cash inflows. Consequently, the mono wafer
plant in Glomfjord is a separate cash-generating unit.
RECWafer has through 2010 and 2011 primarily sold multi wafers
externally, but has also sold internally to REC Solar, primarily in
Norway (REC ScanCell) up to the middle of 2011 and some to
Singapore. REC Solar’s integrated plant in Singapore includes multi
wafer production lines that to a large extent are similar to the
newest multi wafer lines at Herøya. RECWafer and REC Solar is
headed by the same member of REC GroupManagement team. The
wafer production in Singapore started in 2010 and these wafers
are primarily used by REC’s cell production in Singapore. At the end
of 2010, RECmanagement still evaluated that shipments to
external customers and own use could be allocated between the
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