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REC Solar â&#x20AC;&#x201C; Bankability pack

REC continuously climbs up in the top 10 ranking by increasing module shipments and thus its market share The M/S of the Top 10 players increased slightly to 47,3,% compared to 45,8% in Q4’11 Quarterly MW Shipments1) Ranking based on Q1’12 shipments

Q1’12 539

373

Yingli

Q4’11

508 495

First Solar

611 634

380 425 370

Trina Solar

379

520

Suntech 343

Canadian Solar

355 241 254

Sharp

582

436

319

196 203 240

Sunpower

5,1%

8,3%

7,6%

5,8%

7,1%

5,8%

5,9%

5,3%

3,5%

3,7%

2,8%

3,0%

REC Group

191 161 141

2,2%

2,9%

Kyocera

160 170 185

2,3%

2,5%

3,0%

2,3%

149

LDK

217

163

1) Branded and OEM module shipments; 2) Total market: Q4’11: 7,4 GW, Q1’12: 6,5GW Sources: IMS PV Modules, Cells, Wafers & Polysilicon - Supply & Demand - Quarterly - Q2'12 Edition

Q3’11

Market Share2) (%) Q4 2011 Q1 2012

As largest European player in modules, REC has reached the scale for sustainable success PV Module Supplier Shipments and Market Shares Annual Shipments1) in 2011 MW

Market Share2) 2011 (%)

Suntech

2,096

First Solar

1,953

Yingli

1,604

Trina Solar

1,512

Canadian Solar

1,322

Sharp

1,147

844

Hanwha SolarOne

7,1% 5,8% 5,5% 4,8% 4,2% 3,1%

Sunpower

766

2,8%

Jinko Solar

761

2,8%

Kyocera REC Group

630 594

1) Branded and OEM module shipments; 2) Total 2011: 27,6 GW Sources: IMS Q4â&#x20AC;&#x2122;2011 PV Modules tracker 3

7,6%

2,3% 2,2%

With the refinancing, REC is well positioned to weather a challenging market environment Through this refinancing REC’s shareholders and lending banks shows continued strong support Proforma Q1 2012 nominal net debt after proposed refinancing 1) 2)

Proforma Q1 2012 liquidity after proposed refinancing2)

NOKbn

7.0

6.5

5.5

5.0

4.5

1.45

4.0

3.5

3.0

5.0

2.5

Q1 drawn bank debt of 1.7bn vs new bank facility of NOK 2.0bn

6.0

1.9

2.0



No debt maturities until 2014



New financing package is well perceived within the industry and investors:

1.45

2.0

1.5

1.0

0.5

“The company will now have a very strong balance sheet and liquidity position to withstand the challenging market environment“ (Source: DNB Bank)

0.3

2.5 ~3.6

3.7 1.9

0.5

0.0

0.0 REC debt

REC significantly reduced its net debt and increased its liquidity

NOKbn

7.0

6.0



Cash

Net Net pro- Net debt debt Q1 ceeds proforma

Cash Q1 Net Undrawn Liquidity reported proceeds bank debt Q1 proforma

”The company is, in our view, well-positioned to weather difficult market conditions for several years. We reiterate our BUY recommendation.” (Source: DNB Markets Equity Research)

Notes: 1) Based on nominal values of bonds. Does not include fair-value adjustments of bonds and upfront fees. 2) Based on NOK 1.3bn Private Placement, NOK 250m subscription in the Subsequent Offering of up to NOK 375m, expected transaction costs of NOK 0.1bn and bank facility of 2.0bn 4

REC well positioned to weather challenging market ”REC reported better than expected Q2 results, driven by cost improvements and high volumes. Polysilicon costs decreased even further, and the Singapore plant is well on track to be in the black for H2 2012. […] The revised [refinancing] plan significantly bolsters the company’s balance sheet.” (Håkon Levy, DNB Markets, 19/07/2012)

”REC surprised positively […] Faster than expected cost reductions, a small loss in the wafer division and slightly higher module prices explain the positive deviation. […] This impressive given the tough conditions both externally and internally.” (Preben Rasch-Olsen, Carnegie, 20/07/2012)

” Key highlights of the quarter [Q2’12] are the lower costs than expected in Poly of $12/kg and module cash costs to €71cts/w which come as positive surprises.” (Jean-Francois Meymandi, UBS, 19/07/2012) ” Still making money in the industry shake-out […] We believe REC has a good enough cost position, first of all within REC Silicon, to be among the companies that could survive the current shake-out or being acquired in the coming consolidation. The company has improved its balance sheet, giving it more financial headroom, and is well set to remain among the profit making Tier 1 players in the PV solar industry.”

“REC has been exposed to the woes of the solar sector, […] and has been quick to act. […] The financial restructuring should leave REC with a secure financial footing, cost-leading silicon activities in the US, and low-cost integrated downstream production in Singapore, all of which we believe should be able to generate material EBITDA margins. (Jason Channell, Citi Research, 13/07/2012)

(Truls Kolsrud Engene, SEB Enskilda, 19/07/2012)

Sources: DNB Markets, 19/07/2012; SEB Enskilda, 19/07/2012; Citi Research, 13/07/2012; Carnegie, 20/07/2012; UBS 19/07/2012 5

REC Market Intelligence

REC is among the leaders in the solar sector in terms of market capitalization

Market Capitalization by Company In EUR million (as of 30. July 2012) 1.021

368

357 268

262 230 184 138

REC

111

Yingli

Note: GCL Poly is excluded from the Market cap sample due to its power business, which can not be separated Exchange rates 30.07.2012: USD/EUR 0,81155; NOK/EUR 0,13422 Source: Bloomberg; Company websites 6

In revenue generation, REC is holding a leading position as well

Total Revenues 2011 by Company In EUR million 2.259 1.986

1.890 1.714

1.674

1.660

1.549

1.470

1.363 1.047 861 713

704 406

Note: GCL Poly revenues include only its Solar business (poly + wafer revenues) 2011 avg. exchange rates: USD/EUR 0,7178; HKD/EUR 0,0921; NOK/EUR 0,1282 Source: Bloomberg; Company websites 7

Industry restructuring is currently in progress Examples for recent bankruptcies, market exits and business model changes

2011

August 2011: Evergreen , Solyndra vand SpectraWatt filed for insolvency

December 2011: BP Solar pulls out of solar operations

December 2011: Solon announces insolvency

2012

February 2012: Shut down of Wafer and Cell operations by Conergy

Feb.-March 2012: Shut down of Wafer and Cell operations in Germany by Schott Solar

March 2012: Hanwha slides into losses in Q4 2011 and announces strategic shift into downstream

April 2012: FirstSolar pulls out of Germany, and scales back its operations in Malaysia

May 2012:Sovello and Inventux file for bankruptcy

April 2012: , Q-Cells SE filed for bankruptcy

June 2012: Solarwatt and Konarka file for insolvency protection

April 2012: SunPower closed its Philippine solar factory to cut costs

June 2012: Schott Solar announces surprise exit from c-Si manufacturing

REC Market Intelligence

REC Group - Financial highlights Revenues

EBITDA Margin Q1: 21%

NOK million 4,109 4,000 3,391 3,001

3,000

2,865

2,500

2,138

2,000 1,500 1,000 500 0

Q1’ 11

Q2’ 11

Q3’ 11

Q4’ 11

Q1’ 12

NOK million

1,500 1,449 1,400 1,300 1,200 1,100 1,000 871 900 800 700 600 500 400 300 200 100 0 Q1’ Q2’ 11 11 Margin

Margin Q1: 3%

NOK million

4,500

3,500

EBIT

35%

26%

1,000

772

500

EBIT before impairment

202

-98

-288

-500 -1,000 -1,282

-1,500 -2,000 455 370

-2,500 -2,738

-3,000 178

-6,000 -6,500

Q3’ 11 12%

Q4’ 11 6%

Q1’ 12 21%

Margin

-6,260 Q1’ 11

Q2’ 11

Q3’ 11

Q4’ 11

Q1’ 12

19%

-185% -43% -96% 3%

REC shows the highest balance sheet strength among its c-Si peers, well above the average level Quick ratio (Liquidity ratio) by company In Q1 2012 1,98

1,57

1,97



Chinese balance sheets coming under increased scrutiny



In general, the higher the ratio, the greater the company's liquidity



Suntech, Jinko, Yingli, and Canadian under most stress



Low ratio implies potential need to raise additional capital and restructuring of debt, or “forgiveness” of part of credit from Chinese banks as cash flow prospects in 2012 are weak

Ø 1,05

1,29 1,07

0,87 0,75

0,75

0,70 0,47

Note: Quick ratio (or liquidity ratio) = (near-liquid assets ÷ short-term liabilities); A company with a Quick Ratio of less than 1 cannot currently pay back its current liabilities; In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current obligations using liquid assets). Source: Greentech Media, Q1 2012 Insight call 10

REC continuous to show a healthy debt/equity ratio Debt/equity ratios are for most players on the high side, whereas REC displays a healthy balance  

Leading solar industry players are increasing their D/E ratio, REC shows a healthy ratio with 0,50 in Q4 2011 and 0,51 in Q1 2012 compared to the majority of industry peers,

ESTIMATES; BASED ON PUBLIC DATA

Debt / Equity Ratio* comparison REC peers

Q4 2010

Quarterly

Q4 2011

Q1 2012

7,7 6,7

3,4 3,5 2,8

0,4 0,5 0,5

1,4 0,9 1,0 0,9 0,9 0,9 0,5 0,5

1,6

1,6 1,8

2,0 2,0 1,2

0,8

2,1 2,1 1,2

2,6

2,8

2,7

2,1 1,1

1,2

1,1

* Calculation incl. bonds payable, notes payable and convertibles as part of debt Source: Company statements 11

REC Market Intelligence

REC Group is continuously reducing its net debt Net debt levels of the top solar producers are rising Q-o-Q Net Debt level development of the Top Solar Manufacturers In EUR million .REC reduced net debt level continuously over five quarters

Q4 2010 Q4 2011

2.680

REC Group - Net debt development In EUR million 2.049 -41%

934

839 682

605

1.273

553

1.013

891 738

686

666 447

Q1 ’11 Q2 ’11 Q3 ’11 Q4 ’11 Q1 ’12

317

288 138

252 37

171 30

104

-139 Jinko CanadianSuntech Yingli Note: EUR/USD exchange rate of 1,41 in 4Q10, 1,35 in 4Q11 Source: Company reports 12

Solar- Renesola JA Sunpower Trina world Solar

REC Silicon –Cash production costs of $13/Kg FBR production is the lowest cost in the industry Silicon – FBR

SG&A and R&D

USD/kg

Depreciation

“REC’s cash cost targets for silicon imply a healthy EBITDA margin and would currently place REC as the lowest cost producer in the industry” (Citi Group, Feb 2012)

Cash production cost

-39%

EXTERNAL ANALYSIS

42 4

Polysilicon supply curve as of April 2012 USD/kg - variable cost including SG&A = cash cost

-13%

16 26 4

23 3

12.5

Q4’11

Q1’12

Q4’12 Target

Q3’10



FBR cash production cost of 12.5 USD/kg



FBR production target of 15,000 MT in 2012, 40 percent above design capacity



2012 total production target up 1,000 MT to 21,500 MT

Notes: 1) Assumes thin film supply of approximately 2,5 GW, 6,25 g/watt per module. Semiconductor demand at 28.000 MT Source: Citi Investment Research and Analysis, 21.02.2012; Bloomberg New Energy Finance 13