REC Silicon Annual Report 2019

36 Notes to the consolidated financial statements, REC Silicon Group REC Silicon Annual Report 2019 NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS RECSILICONGROUP GENERAL INFORMATION REC Silicon ASA was established in Norway on December 3, 1996. The Company is headquartered in Fornebu, Norway. Company and its subsidiaries (together, “REC Silicon Group” or “Group”) have a presence in the international solar energy industry. Group operations are focused on the production of polysilicon and silicon gases for the solar and electronics industries. The Company is a public limited liability company incorporated and domiciled in Norway. The address of its registered office is Fornebuveien 84, Lysaker. These consolidated financial statements have been approved for issue by the Board of Directors onMarch 23, 2020 and are subject to approval by the Annual General Meeting scheduled forMay 12, 2020. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. 2.1 BASIS OF PREPARATION AND STATEMENTOF COMPLIANCE The financial statements are presented in USD, rounded to the nearest tenth of million, unless otherwise stated. As a result of rounding adjustments, the figures in one or more rows or columns included in the financial statements and notes may not add up to the total of that row or column. These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS), relevant interpretations, and the Norwegian Accounting Act. The consolidated financial statements have been prepared under the historical cost convention, as modified by the impairment of certain assets. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. Actual outcomes may differ substantially. It also requires management to exercise judgment in applying the Group’s accounting policies. Areas involving a high degree of judgment or complexity, and areas where assumptions and estimates have a significant impact are disclosed in note 4. 2.2 CONSOLIDATION (A) Subsidiaries Subsidiaries are entities controlled by the Group. The Company controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are consolidated from the date control is obtained until the date that control ceases. All subsidiaries are owned 100 percent and there are no non- controlling interests. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. (B) Joint ventures A joint venture is an arrangement where two or more parties have joint control. Joint control exists only when decisions require the unanimous consent of the parties sharing control. Investments in joint ventures are accounted for by the equity method of accounting. (C) Associates Associates are entities over which the Group has significant influence but not control. Investments in associates are accounted for by the equity method of accounting. 2.3 SEGMENT REPORTING REC Silicon produces silicon gas and polysilicon for the semiconductor industries at its manufacturing facility in Butte, Montana. The Company also produces polysilicon for the photovoltaic industry at its manufacturing facility in Moses Lake, Washington. The Company’s organization structure, management team, operating strategy, and performance measurement reporting support the determination that these businesses represent separate distinguishable operating segments. Accordingly, there are two operating segments: Solar Materials (Moses Lake, Washington) and Semiconductor Materials (Butte, Montana). The operating segments include revenues less cost of manufacturing excluding depreciation for products sold. Other includes general, administrative, and selling expenses which support both operating segments in addition to administrative costs for the Company’s headquarters in Fornebu, Norway. Eliminations include the reversal of the impact of transactions between group members and affiliates. The results of the operating segments plus Other and Eliminations taken together reconcile to total EBITDA for the Group. GroupManagement is headed by the Chief Executive Officer (CEO), and the CEOmakes decisions regarding the allocation of resources and performance assessment for all segments. Accordingly, the CEO is regarded as the Chief Operating Decision Maker (CODM). 2 1