REC Silicon Annual Report 2019

REC Silicon Annual Report 2019 7 Board of Directors’ report BUSINESS ACTIVITIES REC Silicon ASA was established in Norway on December 3, 1996. The Company is headquartered in Fornebu, Norway. REC Silicon is a global leader in silane-based, high-purity silicon materials, delivering high-purity polysilicon and silicon gases to the solar and electronics industries. REC Silicon operates manufacturing facilities in Moses Lake, Washington and Butte, Montana in the USA. REC Silicon’s subsidiaries include: REC Silicon Inc., REC Solar Grade Silicon LLC, and REC Advanced Silicon Materials LLC in the United States. REC Silicon’s sales and marketing activities for sales of solar grade polysilicon, semiconductor grade silicon and silicon gases are carried out in China, Japan, Korea, Taiwan, and in the United States. The Group’s investment in the Yulin JV is held by REC Silicon Pte. Ltd. in Singapore. STRATEGYAND OBJECTIVES REC Silicon’s strategy is to maintain its position as a low-cost leader and technological innovator in the silicon materials industry. REC Silicon intends to improve its competitive position and: • Maintain liquidity (retain cash) • Optimize efficiency of utilized assets • Manage inventories by adjusting production capacity utilization • Focus on cost control – mitigate the effects of FBR curtailment • Focus on continued quality improvements • Optimize semiconductor polysilicon product offerings • Support Yulin JV 2019 SUMMARY FINANCIAL HIGHLIGHTS Key Financials - REC Silicon Group (USD INMILLION) 2019 2018 Revenues 160.2 221.2 EBITDA -12.9 -4.9 EBITDA margin -8.0% -2.2% EBIT excluding impairment charges -62.2 -66.5 Impairment charges -20.4 -340.5 EBIT -82.6 -407.1 EBITmargin -51.6% -184.0% Profit/loss before tax -127.0 -348.0 Profit/loss -127.0 -341.6 Earnings per share, basic and diluted (USD) -0.47 -0.13 Polysilicon production in MT (Siemens and granular) 3,109 9,280 Polysilicon sales in MT (Siemens and granular) 5,892 7,784 Multicrystalline brick sales in MT 0 2 Silicon gas sales in MT 3,380 3,600 Revenues Total revenues declined by USD 61.0million to USD 160.2million in 2019 compared to USD 221.2million during 2018, a decrease of 27.6 percent. The decrease is primarily a result of 24.3 percent lower sales volumes of polysilicon. In addition, total average sales prices in 2019 for polysilicon decreased by 23.5 percent due to lower average solar grade polysilicon prices which declined by 37.1 percent compared to 2018. Silicon Gas sales volumes decreased by 6.1 percent and average sales prices for silane gas declined by 3.5 percent.