REC Silicon Annual Report 2019

REC Silicon Annual Report 2019 5 Letter from the CEO subsidies. The less reliance on economic incentives will generate far more stable long-term growth and a more diversified geographical market for the solar energy in the future. The forecasted growth of PV installations coupled with the available capacity of polysilicon indicates that the polysilicon market should be in balance by the end of 2020 and will gradually require new capacity. REC Silicon owns 15 percent of a JVplant located in Yulin in the Shaanxi Province of China. This Yulin JVplant successfully qualified our FBR B reactors that are semiconductor grade capable and optimal for monocrystalline PVapplications. Qualifications are also in process with customers for Siemens production from the facility. Operational improvements continue to be made that will ensure the long-term success of this plant. REC Silicon continues to support the Yulin JV with our best qualified employees. Financially, it has been a very demanding year for REC Silicon. The trade dispute with China together with the general market situation resulted in negative cash flow through 2019. The share price development followed the negative financial situation and fell about 60 percent. Layoffs and cost cutting have been necessary and, unfortunately, the financial situation has not permitted the continued development of business opportunities. In May, we raised equity through the issuance of new shares that added new liquidity of about USD 19million. Semiconductor and solar markets were expected to gradually improve during the second half of 2020. However, the COVID-19 outbreak has created great uncertainty about the near-term outlook. Until the economic consequences of COVID-19 are better understood, we will closely monitor the situation and take the steps necessary to maintain the financial stability of the Company. The decision to restart the FBR facility in Moses Lake will be postponed until we are confident that we can access markets in China and that there will be sufficient demand for solar grade granular polysilicon. Our long term and dedicated largest shareholder, UMOE, decided to divest its shareholding in December and the shares were acquired by Aker Capital. The whole REC Silicon organization looks forward to working with Aker and our other shareholders to develop and position the company for future growth. The shutdown of the Moses Lake facility was of course difficult for REC Silicon’s entire organization, in addition to the repercussions felt by the local community, our suppliers, and our customers. We lost a lot of very talented people that were dedicated to REC Silicon’s success. Despite this reduction in the workforce, REC Silicon still possesses talented and dedicated employees that will allow both the successful restart of the Moses Lake facility when conditions are optimal and will also allow the Butte facility to maintain excellence in operations and consistent financial results. Tore Torvund President and CEO