REC Silicon Annual Report 2019

REC Silicon Annual Report 2019 19 RECSilicon ASA (the “Company”) and its subsidiaries (together RECSilicon Group/the Group), endorses the Norwegian Code of Practice for Corporate Governance (Code of Practice) issued by the Norwegian Corporate Governance Board, most recently revised on October 17, 2018. 1. IMPLEMENTATION AND REPORTING ON CORPORATE GOVERNANCE The Board of Directors of REC Silicon (“Board”) has prepared the following report that explains the Group’s corporate governance practices and how it has complied with the Code of Practice in the preceding year. The application of the Code of Practice is based on the “comply or explain” principle and deviations from the code, if any, will be explained. The Group’s corporate governance practices are subject to annual reviews and discussions by the Board. REC Silicon Group deviated from the recommendations in the Code of Practice on two sections at year-end 2019. These deviations pertained to separate proxy voting for candidates to the Board (Section 6) and separate regulations for takeover bids (Section 14). 2. BUSINESS REC Silicon believes the solar industry plays a key role as a long-term supplier of sustainable energy and its business is focused on the production of polysilicon and silicon gases for the solar and electronics industries. To make solar electricity competitive with traditional energy sources, the Group focuses on cost reduction and improvements to products. This should be achieved through the introduction of new process and product technologies as well as continuous productivity improvement and technology development. The Group’s business corresponds with the purpose of the Company which is described in its Articles of Association § 3: “The Company’s purpose is development and sale of products and services related to renewable energy sources, and to perform other financial operations related to such. The Company may, through subscription of shares or in any other ways, including granting of loans, acquire interests in other companies with identical or similar purposes”. The Board of Directors has defined clear strategies, business goals and risk profile for the Group’s business activities, to create value for its shareholders and ensure that its resources are utilised in an efficient and responsible manner to the benefit of all its stakeholders. Sustainability is at the core of REC Silicon’s business model and the Company acknowledges its responsibilities toward the environment, society and the local communities in which it operates. The Board carries the responsibility to secure acceptable sustainability performance and has implemented various policies providing business practice guidance and reporting procedures to ensure continuous improvement. The Group’s strategies, business goals and risk profile are reviewed on an annual basis and presented in the annual report, quarterly reports, and at various investor meetings. 3. EQUITYAND DIVIDENDS The Group’s consolidated equity was USD 0.8million on December 31, 2019, which represented 0.3 percent of total assets. The debt-to-equity ratio was 341.7. The Board monitors the Group’s capital structure and takes actions necessary to ensure that it is appropriate for the current objectives, strategy, and risk profile. Reference is also made to the consolidated financial statements note 3.3 regarding capital structure and financing and note 3.1 regarding financial risk and to the report of the Board of Directors. The Group’s ambition is to give its shareholders a high and stable return on their investment and to be competitive compared with alternative investment opportunities with comparable risk. To support committed investments and productivity improvements, the Board’s view so far has been that retained earnings should be used within the Company. Accordingly, there has been no distribution of dividends to the shareholders since the Company was publicly listed in 2006, and no proposed dividend payments for the financial year 2019. BOARD OF DIRECTORS’ REPORT ON CORPORATE GOVERNANCE Board of Directors’ report on corporate governance