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Notes to the consolidated financial
statements, REC Group
REC Annual Report 2011
DISCONTINUED OPERATIONS
In the first quarter 2010, the owners of Sovello AG entered into an agreement to sell all the Sovello shares and shareholders loans. The
acquirer is a fund under the management of Ventizz Capital Partners. The transaction was closed on April 22, 2010. No consideration was
received for the shares and shareholders loans. For practical purposes, Sovello has been deconsolidated as fromApril 1, 2010.
In connection with the sales agreement, Sovello has been reported as a discontinued operation in the consolidated financial statements of
REC for all periods presented.
Discontinued operations remain consolidated in the consolidated financial statements until it is disposed of, with the internal transactions
between continued and discontinued operations being eliminated in the consolidation. As a consequence, only income and expense from
external transactions are reclassified to discontinued operations.
Items that were disposed of or settled in connection with the sale in the second quarter 2010 (shareholder loans and remaining provisions
for losses on guarantees and undertakings) were included in assets and liabilities sold. The effects of these items on the statement of
income (interest income, currency gains and losses, provision for losses and estimated income taxes related to these) are included as a part
of discontinued operations in the statement of income. This means that the results presented will not represent the activities of Sovello on
a stand-alone basis. Most line items in the consolidated statement of income have been re-presented for previous periods.
Amounts for discontinued operations presented in one line item (profit/loss for the period from discontinued
operations, net of tax) in the consolidated statement of income
(NOK INMILLION)
2010
Revenues
114
EBITDA
1
Depreciation and amortization
0
Impairment
-6
EBIT
-5
Net financial items
-33
Loss before tax
-38
Income taxes
138
Profit /loss for the period from discontinued operations, net of tax
101
Profit from discontinued operations in 2010 amounted to NOK 101million. Of this, the result fromSovello was NOK -18million and the
remaining relates to recognition of net losses and tax benefits related to the sale of Sovello.
Tax benefits have been recognized in 2010 on the realization of losses on REC ASA’s shareholder loans to Sovello. In the consolidated
statement of income, these estimated tax benefits have been included as part of discontinued operations and has not affected the income
tax line as part of continuing operations.
The net cash flows of Sovello proportionally consolidated in the consolidated statement of cash flow for REC Group
(NOK INMILLION)
2010
Net cash flow from operating activities
-14
Net cash flow from investing activities
-50
Net cash flow from financing activities
7
Net cash flow in the period
-58
Cash and cash equivalent at January 1
60
Foreign currency effect on cash and cash equivalent
-2
Cash and cash equivalent at December 31
0
09