rec silicon asa · 9/26/2018 · effectively prevented the group from selling its solar grade...

REC Silicon ASA

Registration Document

Oslo, September 26, 2018

Joint Lead Managers:

REC Silicon ASA, prospectus of September 26, 2018 Registration Document

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Important information The Registration Document is based on sources such as annual reports and publicly available information and forward-looking information based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for the Company's and Guarantor’s (including subsidiaries and affiliates) lines of business. A prospective investor should consider carefully the factors set forth in chapter 1 Risk factors, and elsewhere in the Prospectus, and should consult his or her own expert advisers as to the suitability of an investment in the bonds. This Registration Document is subject to the general business terms of the Joint Lead Managers, available at their website https://www.dnb.no and www.arctic.com/secno) The Joint Lead Managers and/or affiliated companies and/or officers, directors and employees may be a market maker or hold a position in any instrument or related instrument discussed in this Registration Document, and may perform or seek to perform financial advisory or banking services related to such instruments. The Joint Lead Managers corporate finance department may act as manager or co-manager for this Company and/or Guarantors in private and/or public placement and/or resale not publicly available or commonly known. Copies of this Registration Document are not being mailed or otherwise distributed or sent in or into or made available in the United States. Persons receiving this document (including custodians, nominees and trustees) must not distribute or send such documents or any related documents in or into the United States. Other than in compliance with applicable United States securities laws, no solicitations are being made or will be made, directly or indirectly, in the United States. Securities will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The distribution of the Registration Document may be limited by law also in other jurisdictions, for example in Canada, Japan and in the United Kingdom. Verification and approval of the Registration Document by the Norwegian FSA (“Finanstilsynet”) implies that the Registration Document may be used in any EEA country. No other measures have been taken to obtain authorisation to distribute the Registration Document in any jurisdiction where such action is required. The Norwegian FSA has controlled and approved the Registration Document pursuant to the Norwegian Securities Trading Act, § 7-7. The Norwegian FSA has not controlled and approved the accuracy or completeness of the information given in the Registration Document. The control and approval performed by the Norwegian FSA relates solely to descriptions included by the Company according to a pre-defined list of content requirements. The Norwegian FSA has not undertaken any form of control or approval of corporate matters described in or otherwise covered by the Registration Document. The Registration Document was approved on September 27, 2018. The Registration Document is valid for 12 months from the approval date. The Registration Document together with a Securities Note included the Summary and any supplements to these documents constitutes the Prospectus. The content of the Prospectus does not constitute legal, financial or tax advice and potential investors should seek legal, financial and/or tax advice. Unless otherwise stated, the Prospectus is subject to Norwegian law. In the event of any dispute regarding the Prospectus, Norwegian law will apply.


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TABLE OF CONTENTS: 1 Risk factors .................................................................................................................... 4 2 Definitions .................................................................................................................... 13 3 Persons responsible ....................................................................................................... 16 4 Statutory Auditors ......................................................................................................... 17 5 Information about the Issuer and the Guarantors ............................................................... 18 6 Presentation of the Issuer and the Guarantors ................................................................... 27 7 Legal structure .............................................................................................................. 35 8 Trend information .......................................................................................................... 37 9 Administrative, management and supervisory bodies .......................................................... 38 10 Board practices ........................................................................................................... 43 11 Major shareholders ...................................................................................................... 45 12 Financial information concerning the issuer's assets and liabilities, financial position and profits and losses ....................................................................................................................... 47 13 Material contracts ........................................................................................................ 53 14 Documents on display .................................................................................................. 53 15 Cross reference list ...................................................................................................... 54 16 Disclaimers ................................................................................................................. 55 Appendix 1 Financial Report 2016 for REC Silicon AS .......................................................... 57 Appendix 2 Financial Report 2017 for REC Silicon AS .......................................................... 71 Appendix 3 Special Purpose Separate Financial Statements 2016 and 2017 for REC Silicon Inc . 87 Appendix 4 Special Purpose Individual Financial Statements 2016 and 2017 for REC Solar Grade

Silicon LLC ...................................................................................... 111 Appendix 5 Special Purpose Individual Financial Statements 2016 and 2017 for REC Advanced

Silicon Materials LLC .................................................................................... 134 Appendix 6 Financial Report 2016 for REC Silicon Pte Ltd .................................................. 156 Appendix 7 Financial Report 2017 for REC Silicon Pte Ltd .................................................. 175 Appendix 8 Articles of Association for REC Silicon ASA ...................................................... 196 Appendix 9 Articles of Association for REC Silicon AS ........................................................ 198 Appendix 10 Articles of Association for REC Silicon Inc ........................................................ 200 Appendix 11 Articles of Association for REC Solar Grade Silicon LLC ...................................... 202 Appendix 12 Articles of Association for REC Advanced Silicon Materials LLC............................ 218 Appendix 13 Articles of Association for REC Silicon Pte Ltd .................................................. 222


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1 Risk factors Investing in bonds issued by REC Silicon ASA and guaranteed by REC Silicon AS, REC Silicon Inc., REC Solar Grade Silicon LLC, REC Advanced Silicon Materials LLC and REC Silicon Pte Ltd involves inherent risks. For the purpose of this Registration Document, the risk factors for the Issuer and the Guarantors are deemed to be equivalent. Prospective investors should consider, among other things, the risk factors set out in the Prospectus, including those set out in both the Registration Document and the Securities Note(s), before making an investment decision. The risks and uncertainties described in the Prospectus are risks of which REC Silicon ASA is aware and that the Company considers to be material to its business. If any of these risks were to occur, the Company’s and/or the Guarantor’s business, financial position, operating results or cash flows could be materially adversely affected, and the Company and/or the Guarantors could be unable to pay interest, principal or other amounts on or in connection with the bonds. Prospective investors should also read the detailed information set out in the Registration Document dated September 26, 2018 and any accompanying Securities Note(s), and reach their own views prior to making any investment decision. An investment in the bonds is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of their investment. MACROECONOMIC, GEOPOLITICAL AND INDUSTRY RISK The Group’s business is dependent upon certain industries. Changes in market dynamics, technology, government regulation and incentives, and trade policy (inter alia) might have a significant negative impact on the Group. A material portion of the Group’s revenues is generated from the solar power industry. Demand for solar grade polysilicon and silicon gases is dependent upon demand for solar power (PV) installations. Demand for PV installations is impacted by interest costs, exchange rates, social policies, competing costs of other sources of energy, government incentives, trade barriers, sales prices, and availability of capital among other factors. In addition, volatility within the PV industry results in rapid changes to supply chain structures, participants, and economics. Supply chain volatility and/or changes in demand for PV installations could have a significant adverse impact on the Group’s business, prospects, financial results and results of operations. A material portion of the Group’s revenue is generated from the semiconductor and flat panel display industries. Demand for semiconductor polysilicon and silicon gases is dependent upon demand for consumer electronics products. A decline in demand for consumer electronics products could have a significant adverse impact on the Group’s business, prospects, financial results and results of operations. Changes in the legislation and regulatory framework in any of the jurisdictions in which the Group is active might have a significant negative impact on the Group. The Group is exposed to risks related to general changes in legislation and regulatory framework in the various jurisdictions in which the Group operates. Changes in the legislative and fiscal framework, both generally and related to the PV industry and the supply of polysilicon to the PV industry, could have a significant adverse impact on the Group’s business, prospects, financial results and results of operations. Trade barriers, trade restrictions and unfair trade practices has had a significant negative impact on the Group’s ability to sell its products. This may continue, which will adversely affect the Group’s performance. The Group’s performance will be adversely affected to the extent it is restricted from selling into important markets or competitors achieve unfair competitive advantages. The group’s products are subject to import tariffs on solar grade polysilicon imposed by China. These tariffs have effectively prevented the group from selling its solar grade polysilicon in China. Limited sales opportunities outside China have forced the Company to offer steep discounts to maintain sales and to reduce production capacity utilization. The Trump Administration has issued tariffs and quotas pertaining to solar cells and modules, which has contributed to the ongoing trade war between the United States and China, limiting the Group’s ability to sell its products in China. During the first week of June 2018, China announced an immediate and significant reduction in financial support for solar installations. This created uncertainty in the global market and caused polysilicon demand to decline sharply. In order to mitigate increases in inventories, producers quickly curtailed production across the value


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chain. REC Silicon responded by further curtailments to production capacity in Moses Lake, Washington and implemented a workforce reduction of approximately 30 percent. These tariffs and quotas could also impact the Groups ability to compete in other key markets due to retaliation by other countries. The continuance or expansion of trade restrictions, other trade barriers, and unfair market practices could have a significant adverse impact on the Group’s business, prospects, liquidity, and results of operations. Changes in technology and market structure could significantly alter the Group’s competitive position. Changes in technology and market structure could significantly alter the Group’s competitive position, which could have significant adverse impacts on the Group’s business, prospects, liquidity, and results of operations. Overcapacity in parts or all of the markets in which the Group operates could lead to a reduction in average selling prices and limit demand for the Group’s products. Difficulties in maintaining sufficient capacity utilization could result in a significant deterioration of profitability. Periods of oversupply can result in reduced capacity utilization at the Group’s production facilities, and therefore lead to higher manufacturing costs and/or layoffs and plant closures, which could have significant adverse impacts on the Group’s business, prospects, liquidity, and results of operations. The FBR facility in Moses Lake, Washington is currently operating at approximately 25 percent capacity in order to maintain inventory levels and to conserve liquidity. If markets do not recover, the Company will build inventory or will be forced to implement further capacity curtailments. The Group could be affected by changes in competitive dynamics and end user demand. The Group is a supplier to a wide range of end-uses, mainly in applications relating to photovoltaics (Solar Energy), electronics, flat panel displays, and semiconductors. Changes in competitive dynamics and end user demand in these markets could have significant adverse impacts on the Group’s business, prospects, liquidity, and results of operations. There are significant risks associated with the Group’s ability to grow. The Group may not be able to take advantage of market growth, to secure increased market share, or market demand may not expand. Markets in which the Group participates may not expand or the Group may be unable to participate in market expansion due to protective trade policies, market dynamics, changes in technology, and user demand among other factors. These conditions could have significant adverse impacts on the Group’s business, prospects, liquidity, and results of operations. RISKS RELATING TO THE GROUP AND THE BUSINESS The Group’s revenue is dependent upon relationships with a limited number of customers. If one or more of the Group's key customers were to default on sales terms, face liquidity constraints, or cease to purchase the Group’s products for other reasons the Group might be unable to find alternative buyers or be forced to sell at considerably lower prices. This could have significant adverse impacts on the Group’s business, prospects, liquidity, and results of operations. The Group has limited long-term agreements with its customers and accordingly is subject to short term fluctuations in demand, which could have significant negative impacts on its operating results. The Group is exposed to fluctuations in sales prices and volume, which could cause its operating results to fluctuate and could have significant adverse impacts on the Group’s business, prospects, liquidity, and results of operations. There are risks associated with associates. The Group is a participant in a joint venture in China. The value of the investment made by the Group is dependent on the completion of the project to build the manufacturing facility and the success of operations in Yulin, China. If the manufacturing facility is not successfully commissioned or operations result in losses, the Group could be required to (i) take part in the funding, and be subject to an increased financial exposure, or (ii) not take part in the funding and face dilution of the Group’s ownership share, or potentially face a loss of the investment. Either of these alternatives could have significant adverse impacts on the Group’s business, prospects, liquidity, and results of operations.


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On February 1, 2018, the company announced that had entered into an agreement to resolve REC’s outstanding capital contributions to the Yulin JV. This agreement reduced REC funding requirements and reduced the Group’s ownership percentage in the Yulin JV to 15 percent. Please see REC Silicon’s first quarter 2018 report and presentation. There are significant risks associated with the Group’s ability to grow. The Group may not be able to secure necessary financing for future investments. Expansion projects may be affected by cost overruns, schedule delays, technology risks, and defects. Developing appropriate internal organizational structures and management processes on an ongoing basis and the need to hire, integrate and retain an appropriate number of qualified employees represents a challenge for the Group. The Group may not succeed in securing the necessary financing for future investments. Future expansion projects may be significantly affected by cost overruns, schedule delays, technology risks and defects. This could have significant adverse impacts on the Group’s business, prospects, liquidity, and results of operations. The Group has structured its business operations based upon tax agreements and tax treaties in certain jurisdictions. Such agreements and treaties are subject to changes, which are typically outside the Group’s control. The Group has structured its business operations based upon tax agreements and tax treaties in certain jurisdictions. Changes to or renegotiations of these agreements and treaties may have significant adverse impacts on the Group’s business, prospects, liquidity, and financial results. Changes in economic conditions and/or financial markets may expose the Group to liquidity risk. There can be no assurance that the Group, over the long term, will be able to refinance and/or repay its debt as it matures. The Group’s ability to obtain additional debt financing on acceptable terms may have significant adverse impacts on the Group’s business, prospects, liquidity, and financial results. Included in REC Silicon ASA’s consolidated second quarter 2018 financial report was the following disclosure regarding going concern and liquidity risk:

On July 1, 2018 the Company announced a workforce reduction of approximately 85 of its employees due to the ongoing impacts of the solar trade war between China and the United States. Uncertain market conditions and reduced demand for the Company’s solar grade polysilicon have increased the Company’s liquidity risk.

The Company’s current liquidity position and cost reduction initiatives are considered sufficient to meet debt maturities of USD 1.5 million in September of 2018 and expected operating cash flow requirements for the next twelve months. Cash flow estimates used to arrive at this conclusion include assumptions that the Moses Lake FBR facility continues to operate at approximately 25 percent capacity utilization, solar markets stabilize near current spot price averages, and markets for the Company’s semiconductor polysilicon and silicon gas products remains strong. However, the Company’s liquidity is dependent upon increases in demand for solar grade polysilicon or a resolution to the solar trade war between China and the United States.

Accordingly, these financial statements have been prepared under the assumption that the Company is a going concern.

However, if conditions surrounding the call of the indemnity loan or the outcome of tax examinations are negative, the liquidity risk for the Company will increase. The indemnification loan was callable in February 2016. This loan has not been called and the due date is uncertain. The Company’s tax filings for prior years continue to be under examination by the Norwegian Central Tax Office and the timing and impact of a ruling remain uncertain.

Changes in the interest rates affect cash flows and the estimated fair values of assets and liabilities. The Company is exposed to interest rate risk through funding and cash management activities. Changes in interest rates affect the estimated fair values of financial assets and liabilities with fixed interest rates. When estimating value in use of assets, changes in interest rates may affect the discount rate and consequently the estimated fair values. Changes in interest rates also impact demand for PV installations which could in turn impact demand and price for the Group’s products. This could have significant adverse impacts on the Group’s business, prospects, liquidity, and financial results.


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The Group is exposed to exchange rate risks which influence the relative cost position of the Group and the estimated fair values of assets and liabilities. The Group operates internationally and is exposed to currency risk arising from commercial transactions and assets and liabilities in currencies other than the entities’ functional currencies. The Group’s competitors are situated in diverse geographic locations and are exposed to different currencies from the Group. Therefore, the relative development of the Group’s costs and revenues compared to its competitors could be significantly influenced by changes in currency exchange rates. This could potentially make the Group’s production facilities uncompetitive and could have significant adverse impacts on the Group’s business, prospects, liquidity, and results of operations. The Group could become involved in disputes and legal or regulatory proceedings. The Group will from time to time be involved in disputes and legal or regulatory proceedings. Such disputes and legal or regulatory proceedings may be expensive and time-consuming, and could divert management’s attention from the Group’s business. Furthermore, legal proceedings could be ruled against the Group and the Group could be required to, inter alia, pay damages or fines, halt its operations, stop the sale of its products, etc., which could have a significant adverse impact on the Group’s business, prospects, and results of operations. The Group is dependent on certain third-party suppliers/contractors for key raw materials, supplies, components and services. Any disruption to supply could have a significant adverse impact. The timely delivery, availability, quality, and cost of raw materials, components, consumables, and/or services is critical to the Group’s manufacturing operations. Supply interruptions, quality excursions, and/or cost increases could negatively impact the Group’s ability to manufacture products if it is unable to obtain acceptable alternative sources for affected raw materials, components, consumables and/or services. This could have a significant adverse impact on the Group’s business, prospects, and results of operations. The Norwegian Central tax Office is conducting an examination of the Company’s tax returns for the fiscal years 2009, 2010 and 2011 and has issued a draft decision challenging the deduction of certain losses. The Company received a draft decision dated June 30, 2017 from the Norwegian Central Tax Office (CTO) regarding tax returns for tax years 2009 through 2011. The CTO challenged the deductibility of losses on loans and guarantees provided to subsidiaries and affiliates. The Company has filed a response with supporting arguments and documentation opposing the conclusions reached in the CTO’s draft decision. The Company believes that the losses are deductible and that the Company’s position will eventually prevail. However, the timing and amount of any potential outcome is subject to substantial uncertainty. Please see note 31 to the 2017 REC Silicon Annual Report. An unfavorable final ruling by the CTO could have a significant adverse impact on the Group’s financial results and liquidity. REC Solar Grade Silicon LLC has appealed property taxes assessed by Grant County Washington (USA). REC Silicon has contested Grant County’s valuations of taxable property. The 2012 assessment year is subject to an appeal currently pending before the Thurston County Superior Court. Assessment for the years 2013 through 2015 have also been appealed. Please see note 31 to the 2017 REC Silicon Annual Report. An unfavorable outcome in these appeals could have a significant adverse impact on the Group’s financial results and liquidity. On August 17, 2018, the Thurston County Superior Court issued a bench ruling affirming Grant County’s valuation of REC Silicon’s property for assessment year 2012. The Court ruled from the bench so the decision is not official until an order is presented by the parties and signed by the judge. There has not yet been an agreed order presented to the judge. After the order is signed, REC will have 30 days to appeal to the Washington Court of Appeals. The company intends to appeal this ruling to the Court of Appeals of Washington. The ruling will not affect amounts reflected in the company’s financial statements and the company will not be required to pay the disputed tax amounts until all appeals are exhausted. The Group relies upon external subcontractors and suppliers of goods and services to meet agreed or generally accepted standards. The Group’s manufacturing operations rely on external subcontractors and suppliers of goods and services. Actions by subcontractors and suppliers which violate standards for environmental compliance, human rights, labor relations and product quality (inter alia) could place the Group’s reputation, goodwill, and branding at risk. The failure of suppliers/contractors to meet acceptable business and social standards could have a significant adverse impact on the Group’s business, prospects, and results of operations.


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The Group’s results of operations may be significantly affected by changes in energy prices and availability. Electricity represents a key component of the Group’s production cost. Significant increases in the cost of electricity at the Group’s manufacturing facilities could have a significant adverse impact on the Group’s business, prospects, financial results and results of operations. Metallurgical grade silicon (MGS) represents a key component of the Group’s production cost. The production of MGS is dependent upon the availability and cost of energy. Changes in energy costs could impact the cost and availability of MGS and could have a significant adverse impact on the Group’s business, prospects, financial results and results of operations. The Group’s revenues and costs are dependent upon the stability, quality, and maintenance of its manufacturing facilities. If the Group does not achieve acceptable production volumes or production efficiencies due to maintenance of its manufacturing facilities, instability in manufacturing processes, or excursions in product quality and yields, the Group’s business, prospects, financial results and results of operations could be adversely impacted. The Group relies upon the protection of intellectual property and trade secrets to maintain its ability to compete and generate revenue. The Group maintains processes to protect important proprietary manufacturing processes, documentation, drawings, and other intellectual property primarily under patent, trade secret and copyright laws. It also typically requires employees, consultants and companies that have access to its proprietary information to execute confidentiality agreements. The steps taken by the Group to protect its proprietary information may not be adequate to prevent misappropriation of its technology. In addition, the Group’s proprietary rights may, inter alia, not be adequately protected because:

people may not be deterred from misappropriating its technologies despite the existence of laws or contracts prohibiting misappropriation;

policing unauthorized use of the Group’s intellectual property is difficult, expensive and time-consuming,

and the Group may be unable to determine the extent of any unauthorized use; and

the laws of certain countries in which the Group markets or plans to market its products may offer little or no protection for its proprietary technologies.

patent applications may not be filed by the Group or may not result in issued patents, and even if patents are issued, the patents may not contain the scope necessary to sufficiently protect the Group’s intellectual property.

patents may be challenged, invalidated or declared unenforceable due to competing patent filings by competitors.

Competitors could develop similar or more advantageous technologies on their own or design around the Group’s patents.

patent protection in certain countries may not be available or may be limited in scope in certain jurisdictions causing any patents to not be as readily enforceable in all jurisdictions.

the Group may choose not to protect certain innovations that later turn out to be important.

the Group may receive information subject to confidentiality agreements regarding the intellectual property of others which may hinder the Group’s ability to develop and/or protect similar intellectual property.

These factors among others, could enable third parties to benefit from the Group’s technologies and could harm the Group’s ability to compete, to generate revenue, and/or to expand its business. This could have a significant adverse impact on the Group’s business, prospects, and results of operations. The Group’s intellectual property indemnification practices may adversely impact its business significantly. The Group may be required to indemnify customers and third party intellectual property providers for certain costs and damages of patent infringement in circumstances where its products create an infringement liability for these


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customers or these third-party providers. These indemnifications may subject the Group to significant claims and could have a significant adverse impact on the Group’s business, prospects, and results of operations. The Group could become involved in intellectual property disputes. The Group may be required to defend its rights to its intellectual property due to the infringement competitors or due to claims by competitors of infringement by the Group. Intellectual property litigation is expensive, time consuming, and could divert management’s attention from the Group’s business. In addition, an unsuccessful defense of could result in the loss of intellectual property rights and/or substantial penalties for infringement. This could have a significant adverse impact on the Group’s business, prospects, and results of operations. The Group may incur significant costs to comply with, or as a result of, changes to health, safety, environmental, and other laws and regulations. The Group’s operations are subject to numerous environmental requirements under the laws and regulations of the jurisdictions in which it conducts business. Such laws and regulations govern, among other matters, air pollution emissions, wastewater discharges, solid and hazardous waste management, and the use, composition, handling, distribution and transportation of hazardous materials. These laws and regulations are subject to change and the Group may be required to make substantial changes to its manufacturing facilities to continue operations or to mitigate the impacts of prior practices. These changes may result in substantial costs to reach compliance and/or to operate in compliance with new laws and regulations. These laws have become increasingly stringent and costs of compliance can be expected to increase over time. The Group’s manufacturing processes in Moses Lake, Washington and Butte, Montana involve manufacturing, processing, storage, use, handling, distribution and transport of silane gas and other substances of a hazardous nature. Accidents or mishandling of these materials could cause severe damage and/or injury to property and human health. Such events could result in litigation and/or regulatory enforcement proceedings, both of which could lead to significant liabilities. Any damage to persons, equipment or property or other disruption of the Group’s ability to produce or distribute the Group’s products could result in significant additional costs to replace or repair and insure the Group’s assets, could have a significant adverse impact on the Group’s business, prospects, and results of operations. The Group also incurs considerable expenditures to install, maintain, and monitor equipment designed to safely manage hazardous materials, to limit and manage air emissions, to limit and manage waste water discharge, and to limit and manage solid waste generated by the Group’s operations. The Group depends on various discharge permits granted by authorities. Any breach of conditions set out in these permits may have a significant effect on the Group’s operations and may result in orders to suspend operations, fines and/or penalties, and may require the Group to take corrective measures. Laws or regulations relating to health, safety, the environment or other concerns are subject to change. In addition, changes may occur in the ways that such laws or regulations are administered, interpreted, or enforced. These changes could be expensive, time consuming, and could divert management’s attention from the Group’s primary business objectives. Failure to maintain compliance could result in fines, penalties, or other substantial constraints on the Group’s ability to operate. Failure to comply with health, safety, environmental, and other laws and regulations could have a significant adverse impact on the Group’s business, prospects, and results of operations. The Group depends on certain key officers and employees to maintain its operations and to develop technology. The loss of key officers and employees could negatively impact the Groups ability to continue operations, develop technologies, or to market its products. In addition to the loss of expertise, the loss of key personnel could facilitate access to proprietary knowledge by competitors. Employment contracts have been executed for certain key personnel which protect the Group’s interest and limit the actions of former employees should these losses occur. However, the existence of such agreements may not be effective in protecting the Group’s interest. In additions, there is a risk that qualified employees will be recruited by competitors and that the Group will be unable to recruit a sufficient number of qualified new employees. The Group may not be successful in retaining and recruiting qualified personnel to meet operating requirements. Any conditions resulting in a shortage of qualified personnel could have a significant adverse impact on the Group’s business, prospects, and results of operations.


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The Group could be harmed by catastrophic events due to natural disasters, consequences of climate change, operational disruptions, and/or deliberate sabotage. The occurrence of a catastrophic event could threaten, disrupt, and/or destroy a portion or all of the Group’s manufacturing facilities. The production facilities are also dependent upon a stable supply of electricity. Accordingly, an interruption in the supply of electricity at one of the Group’s manufacturing facilities could disrupt the Group’s production capabilities. In addition, the occurrence of industrial sabotage or a terrorist attack at one of the Group’s manufacturing facilities could threaten, disrupt or destroy a significant portion of the Group’s production capacity. Finally, a catastrophic event could disrupt the supply of materials, supplies, and services provided to the Group by vendors and contractors. The Group maintains insurance coverage to protect against financial losses associated with these events. However, the Group could incur uninsured losses and liabilities arising from such events, including damage to the Group’s reputation, and/or substantial losses in operational capacity, which could have a significant adverse impact on the Group’s business, prospects, and results of operations. The Group could be seriously harmed by incidents resulting in damages not covered by insurance. The Group operates internationally. There is a risk that incidents can occur resulting in damages not covered by insurance which could have a significant adverse impact on the Group’s business, prospects, and results of operations. Changes in insurance coverage available to the Group may result in additional risk. The Group renegotiates and renews its insurance policies on a regular basis. Changes in the terms, conditions, and scope of insurance coverage available to the Group may result in changes in the type and magnitude of events which will be insured. Changes to insurance policies held by the Group could have a significant adverse impact on the Group’s business, prospects, and results of operations. The markets in which the Group operates are competitive. The Group’s existing and potential competitors may have access to resources and funding that may enable them to respond more quickly than the Group to changes in market dynamics. For these and other reasons, the Groups competitors may be able to commit more resources to the development, promotion, and sales of their products. The Group relies on sales of its products to maintain its operations, competitors with more resources may be better positioned to withstand changes in markets and may gain a significant competitive advantage over the Group. New competitors or alliances among existing competitors could emerge and could have a significant adverse impact on the Group’s business, prospects, and results of operations. There are risks related to unanticipated technology problems and deliberate attacks to the Group's telecommunications and information technology systems. The Group is dependent on advanced computer databases and telecommunications technology as well as upon its ability to protect its telecommunications and information technology systems against damage or system interruptions from human error, natural disasters, telecommunications failures, sabotage, vandalism and/or computer viruses. A temporary or permanent loss of the Group's systems or networks could cause significant disruption to the Group's operations. Unauthorized access to or a failure of the Group’s servers, data, information systems, and communications systems could have a significant adverse impact on the Group’s business, prospects, and results of operations. The Groups business decisions are based upon estimates that are inherently uncertain, unpredictable, and subject to volatility. Operating decisions made by the group are based upon estimates available at the time of the decision. These estimates are inherently uncertain, difficult to predict, and are subject to volatility. Decisions made based upon inaccurate estimates or parameters that change substantially could have a significant adverse impact on the Group’s business, prospects, and results of operations. The Group’s financial reporting is based upon estimates that are inherently uncertain, unpredictable, and subject to volatility. The preparation of the Group’s consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Changes in key assumptions could lead to the recognition of additional expense and losses. Changes in the estimates of the useful lives of assets will change amounts related to depreciation and amortization. The Group is subject to


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income taxes in multiple jurisdictions. Judgment is required in determining the provision for income taxes, and actual tax liabilities may be different from the amounts that were initially recorded. The Group estimates provisions for liabilities of uncertain amount and timing, including warranty provisions, provisions for restructuring, onerous contracts, and asset retirement and restoration obligations. Management believes that the assumptions are reasonable, but they are inherently uncertain and unpredictable and, as a result, future estimates and actual results may differ from the current estimates. Please see note 4 to the 2017 REC Silicon Annual Report. The Group’s assets may be subject to additional impairments to asset values. During prior periods, the Group has recognized asset impairments due to provisions in IFRS which require the write-down of carrying values to the estimated recoverable amounts. Recoverable amounts have been estimated using the present value of estimated future cash flows (value in use). Estimates of values in use of the Group’s operating assets are sensitive to changes in prices, discount rates, sales volumes, and other key assumptions. Changes in estimates of key assumptions could result in additional impairments or reversals of impairment. Please see notes 4, 6, and 7 to the 2017 REC Silicon Annual Report. FINANCIAL RISK FACTORS The Group’s activities expose it to a variety of financial risks, including currency risk, interest-rate risk, liquidity risk, credit risk, refinancing risk, and others. The disclosures that are required regarding financial risks below focus on the risks that arise from financial instruments and how they have been managed. Derivative financial instruments may be used to reduce risks from commercial transactions; the existence of derivative financial instruments exposes the Company to additional risks. Currency risk The Company operates internationally and is exposed to currency risk. At June 30, 2018, the Group’s working capital is almost exclusively in USD, equity is in NOK, and interest-bearing liabilities are denominated in USD and NOK. The Group’s currency risk primarily arises from transactions in currencies other than the USD. Changes in currency values can impact the relative prices of goods purchased and sold and could increase costs and/or decrease revenues. Competitors may gain competitive advantage due to changes in currency values. Changes in foreign exposure, currency rates, or activities to manage currency risk could have a significant adverse impact on the Group’s business, prospects, and results of operations. Credit risk Credit risk is the risk of loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligation. The Group maintains policies to ensure that credit is extended to customers with appropriate liquidity and credit histories in combination with requiring guarantees when appropriate. Changes in market dynamics for the Group’s products could increase the Group’s exposure to credit risk. The Group’s exposure to credit risk arises primarily from transactions for the sales of the Group’s products. Increases in credit risk could have a significant adverse impact on the Group’s business, prospects, and results of operations. Liquidity risk Liquidity risk is measured by subtracting the Group’s liabilities from cash considering historic and anticipated operating results. Liquidity risk management requires maintaining sufficient available cash or access to capital markets to compensate for anticipated volatility in operating cash flows or to fund additional investments. Liquidity risk is impacted by changes in market conditions, potential claims against the Company, and uncertainty associated with critical judgements used to arrive at accounting estimates. In addition, the Company’s access to capital markets may be impacted by overall market conditions. In its second quarter 2018 financial reporting, the Group disclosed that its liquidity is dependent upon increases in demand for solar grade polysilicon or a resolution to the trade war between China and the United States. However, the Company’s current liquidity and planned cost reduction initiatives are considered sufficient to meet requirements to prepare financial reports under the assumption that the Company is a going concern. Changes in liquidity risk could change this conclusion and could have a significant adverse impact on the Group’s business, prospects, and results of operations. In addition, the 11.50 % senior secured USD 110,000,000 callable bond issued by REC Silicon ASA in April 2018 (ISIN NO0010820590) contain a maintenance covenant requiring minimum liquidity of USD 15 million cash. Should cash drop below USD 15 million, REC Silicon ASA would be in default of this covenant.


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Interest rate risk Changes in market interest rates affect the fair value of assets and liabilities or the variability in cash payments. The Group is exposed to interest rate risk through funding, cash management activities, and end market dynamics. Cash in bank accounts and liabilities primarily carry variable interest rates. The Company has borrowings through bonds which has a fixed interest rate. End use demand for solar energy module is dependent upon project financing. Increases in interest rates could adversely impact project returns and lower the demand for solar energy modules and in turn lower the demand for polysilicon. Changes in interest rates could have a significant adverse impact on the Group’s business, prospects, and results of operations. OTHER RISK FACTORS The Group is exposed to other risk factors including, but not limited to, fair value estimation, capital structure, and financing. In addition, the Group might use derivative financial instruments and hedges to manage exposure to certain risks. Please see notes 3, 4, and 30 to the 2017 REC Silicon Annual Report.


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2 Definitions Board of Directors The board of directors of the company Company/Issuer/ REC Silicon REC Silicon ASA, The Company is a public limited liability company

incorporated and domiciled in Norway. Company Annual Report 2016 The Company's annual report for 2016 Company Annual Report 2017 The Company's annual report for 2017 Company Financial Report Q1 2018 The Company's quarterly report for the first quarter of 2018 Company Financial Report Q2 2018 The Company's quarterly report for the second quarter of 2018 Group Means the Issuer and its Subsidiaries from time to time. Group Company Means any person which is a member of the Group. Guarantor Means each Original Guarantor and any Group Company which

subsequently becomes a Material Group Company. IFRS International Financial Reporting Standards ISIN International Securities Identification Number Joint Lead Managers DNB Bank ASA and Arctic Securities AS NOK Norwegian kroner Original Guarantor Means each of:

a) REC Silicon AS, a limited liability company incorporated in Norway with registration number 883 770 382

b) REC Silicon Inc., a corporation registered in the United

States with registration number 36-4521628

c) REC Solar Grade Silicon LLC, a limited liability company registered in the United States with registration number 46-0493746;

d) REC Advanced Silicon Materials LLC, a limited liability

company registered in the United States with registration number 20-3097239 (the Butte Subsidiary); and

e) REC Silicon Pte Ltd, a limited liability company incorporated

in Singapore with registration number 201408979G. REC Silicon AS Annual Report 2016 The REC Silicon's annual report for 2016 REC Silicon AS Annual Report 2017 The REC Silicon's annual report for 2017 REC Silicon Pte Ltd Annual Report 2016 The REC Silicon Pte Ltd's annual report for 2016 REC Silicon Pte Ltd Annual Report 2017 REC Silicon Pte Ltd's annual report for 2017 REC Silicon Inc Financial Years 2016 and 2017 REC Silicon Inc Special Purpose Separate Financial Statements

2016 and 2017 REC Advanced Silicon Materials LLC REC Advanced Silicon Materials LLC Special Purpose Individual Financial Years 2016 and 2017 Financial Statements 2016 and 2017


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REC Solar Grade Silicon LLC REC Solar Grade Silicon LLC Special Purpose Individual Financial Financial Years 2016 and 2017 Statements 2016 and 2017 Prospectus The Registration Document together with a Securities Note inclusive

the Summary constitutes the Prospectus. Registration Document This document dated September 26, 2018 Securities Note A document describing bonds to be offered and/or listed. Summary: A summary of the Prospectus VPS or VPS System The Norwegian Central Securities Depository, Verdipapirsentralen Yulin JV Shaanxi Non-Ferrous Tian Hong REC Silicon Materials Co. Ltd Metallurgical Grade Silicon Silicon of 95 to 99% purity. Primary feedstock used by REC Silicon to

produce Silane Gas. Polysilicon An abbreviated term for poly crystalline (multiple crystals) silicon. Silane Gas The hydride of silicon (SiH4), which, in pure form, is used to make

poly silicon. It is a gas at room conditions but can be liquefied at high pressures and refrigerated temperatures.

Silicon Gas Includes Silane Gas precursors and derivatives manufactured by the

Company as well as Silane Gas. Precursors include Monochlorosilane (MCS) and Dichlorosilane (DCS). Derivatives include DiSilane (Si2H6).

Fluidized Bed Reactor A type of reactor where gases are passed upward through an

unrestrained bed of solids at such velocity that the solid particles are lifted up and separated slightly from each other. This fluid agitation allows the particles to move about in the bed, improving heat transfer and reactivity. Referred to as FBR. FBR is used to produce granular polysilicon. The FBR polysilicon plant in Moses Lake, Washington and the plant owned by the Company’s associate in Yulin, China are the only operating commercial scale granular polysilicon plants the world.

Siemens Reactor A type of reactor where gases thermally decompose to silicon

crystals on a heated element. The resulting product is a rod of polysilicon which is then processed based upon desired product type (solar grade , electronic grade, CZ, FZ, etc.)

Solar Grade Polysilicon Polysilicon that meets specification for use in the photovoltaic (solar

power). Semiconductor Any compound that has a sufficiently high electrical resistance so as

to pass only a limited amount of current, depending on other electrical conditions imposed on it. It is midway, electrically, between a conductor and an insulator.

Semiconductor Polysilicon Polysilicon that meets specification for use in the semiconductor

industry. Electronic Grade Polysilicon Interchangeable with semiconductor poloysilicon. Float Zone Polysilicon A method of purifying a silicon rod by passing it through a molten

zone. Impurities are concentrated at the bottom of the rod, dependent on both their total concentration in the rod and solid-liquid solubility. Referred to as FZ Polysilicon.


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FZ polysilicon has the highest quality characteristics and is produced by only a few polysilicon producers including REC Silicon.

Czochralski Polysilicon method of producing crystals named after the Polish inventor of the

process. Referred to as CZ polysilicon. Photovoltaic A property of a small group of solids that allows the generation of DC

current when exposed to radiant light. Silicon is the most common photovoltaic material used in photovoltaic solar cells or photo cells.


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3 Persons responsible

3.1 Persons responsible for the information Persons responsible for the information given in the Registration Document are as follows: REC Silicon ASA, Fornebuveien 84, 1324 Lysaker Norway.

3.2 Declaration by persons responsible Responsibility statement: REC Silicon ASA confirms that, taken all reasonable care to ensure that such is the case, the information contained in this Registration Document is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import.

Fornebu, September 26, 2018

REC Silicon ASA

________________________ James A. May II

Chief Financial Officer


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4 Statutory Auditors

4.1 Names and addresses Company Auditor Year(s) Name Address Professional bodyREC Silicon ASA 2016 and

2017 KPMG AS Sørkedalsveien 6

Postboks 7000 Majorstuen, 0306 Oslo, Norway

KPMG AS is member of the Norwegian Institute of Public Accountants

REC Silicon AS 2016 and 2017

KPMG AS Sørkedalsveien 6 Postboks 7000 Majorstuen, 0306 Oslo, Norway


REC Silicon Inc. 2016 and 2017



REC Solar Grade Silicon LLC, 2016 and 2017



REC Advanced Silicon Materials LLC,

2016 and 2017



REC Silicon Pte Ltd 2016 and 2017

KPMG LLP 16 Raffles Quay Hong Leong Building Singapore 048581, Singapore

KPMG LLP is a member of the Institute of Singapore Chartered Accountants


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5 Information about the Issuer and the Guarantors

5.1 History and development of the Issuer and the Guarantors

5.1.1 Name, registration and date of formation Legal Name Commercial name Place of

registration Registration number

Date of organization

REC Silicon ASA REC Silicon The Norwegian Companies Registry

977 258 561 December 3, 1996

REC Silicon AS REC Silicon AS The Norwegian Companies Registry

883 770 382 September 15, 2001

REC Silicon Inc. REC Silicon Inc The State of Delaware (USA)

36-4521628 August 2, 2002

REC Solar Grade Silicon LLC, REC Solar Grade Silicon

The State of Delaware (USA)

46-0493746 June 30, 2003

REC Advanced Silicon Materials LLC,

REC Advanced Silicon Materials

The State of Delaware (USA)

20-3097239 March 10, 2000

REC Silicon Pte Ltd REC Silicon Pte The Singapore Company Registry

201408979G 28 March 2014

5.1.2 Domicile, legal form, address and telephone

The Issuer The Issuer is a public limited liability company organized under the laws of Norway, including the Limited Liability Companies Act. The Issuer's registered address is:

REC Silicon ASA Fornebuveien 84 1324 Lysaker Norway

The Company's telephone number is +47 407 24 086. See section 7.1 (“Description of Group that Company is part of”).

The Guarantors REC Silicon AS REC Silicon AS is a limited liability company organized under the laws of Norway, including the Limited Liability Companies Act. REC Silicon AS’s registered address is:

REC Silicon AS Fornebuveien 84 1324 Lysaker Norway

The Company's telephone number is +47 407 24 086. REC Silicon Inc. REC Silicon Inc.is a corporation duly formed and existing under the general corporate laws of the State of Delaware (USA). REC Silicon Inc’s registered address is 3322 Road “N“ NE, Moses Lake, Washington (USA) 98837 and the telephone number is +1 509 765 2106.


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REC Solar Grade Silicon LLC REC Solar Grade Silicon is a limited liability company organized in the State of Delaware (USA). REC Solar Grade Silicon LLC’s registered address is 3322 Road “N“ NE, Moses Lake, Washington (USA) 98837 and the telephone number is +1 509 765 2106. REC Advanced Silicon Materials LLC REC Advanced Silicon Materials LLC is a limited liability company organized in the State of Delaware (USA). REC Advanced Silicon Materials LLC,’s registered address is 119140 Rick Jones Way, Silver Bow, Montana 59750 and the telephone number is +1 406 496 9898. REC Silicon Pte Ltd REC Silicon Pte Ltd is a limited liability company incorporated in Singapore. REC Silicon Pte Ltd’s registered address is 80 Robinson Road #02-00, Singapore 068898, SINGAPORE and the telephone number is +65 6236 3333.

5.1.3 Recent events On April 26, 2018, the Group released operating results for the first quarter of 2018 including quarterly financial statements in accordance with International Accounting Standard (IAS) 34. Please see REC Silicon’s first quarter 2018 report and presentation. On July 19, 2018, the Group released operating results for the second quarter of 2018 including quarterly financial statements in accordance with International Accounting Standard (IAS) 34. Please see REC Silicon’s second quarter 2018 report and presentation. During the second quarter of 2018, demand for solar grade polysilicon declined sharply due to the curtailment of incentives for the installation of solar energy in China. REC Silicon’s ability to respond to changes in markets was limited by the effects of the solar trade war between China and the United States. In response, REC Silicon reduced its workforce by approximately 85 employees on July 2, 2018. In addition, REC Silicon reduced its production at Moses Lake, Washington to approximately 25 percent of its total production capacity. Please see REC Silicon’s second quarter 2018 report (page 2 Market Development, page 7 Market Outlook, page 8 Guidance, and note 13) and presentation (slides 12 through 18 Market Outlook and slide 28 Business strategy).

5.1.4 Objectives and purposes

The Issuer The Issuer's purpose is the 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. Please see Memorandum of Association for the Issuer, article 3, attached as appendix 8 to this Registration Document.

The Guarantors REC Silicon AS The purpose of REC Silicon AS is development, production, marketing and sale of silicon based raw materials for the solar energy industry and electronic industry, and other operations related to such, including ownership in such operations. Please see Articles of Association for REC Silicon AS, article 3, attached as appendix 9 to this Registration Document. REC Silicon Inc. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Laws of Delaware.


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Please see Memorandum of Association for REC Silicon Inc., article II, attached as appendix 10 to this Registration Document. REC Solar Grade Silicon LLC The purpose and business of the Company shall be the conduct of any business or activity that may be conducted by a limited liability company organized pursuant to the Delaware Limited Liability Company Act, as amended from time to time. Please see Memorandum of Association for REC Solar Grade Silicon LLC, article II, attached as appendix 11 to this Registration Document. REC Advanced Silicon Materials LLC The purpose and business of the Company shall be the conduct of any business or activity that may be conducted by a limited liability company organized pursuant to the Delaware Limited Liability Company Act, as amended from time to time. Please see Memorandum of Association for REC Advanced Silicon Materials LLC, article 2, attached as appendix XX 12 this Registration Document.

REC Silicon Pte. Ltd. The purpose of REC Silicon Pte. Ltd. is to hold the Group’s investment in the Yulin JV (Shaanxi Non-Ferrous Tian Hong REC Silicon Materials Co., Ltd.). Please see Memorandum of Association for REC Silicon Pte. Ltd. attached as appendix 13 to this Registration Document.

5.2 Investments

5.2.1 Recent principal investments Neither the issuer nor the guarantors have made any material investments since June 30, 2018. Investments prior to June 30, 2018 were reported in the Group’s second quarter release on July 19, 2018. Please see REC Silicon’s second quarter 2018 report (page 8 Investment and Expansion Activities) and presentation.

5.2.2 Principal future investments Neither the issuer nor the guarantors have commited any principal future investments.

5.2.3 Anticipated sources of funds Neither the issuer nor the guarantors intend to make substantial investments that will require sources of funds other than the Group’s current cash balances or funds generated by the Group’s operations.

5.3 Selected financial information Selected financial information for the Group is shown in clauses 5.3.1 and 5.3.2.

5.3.1 Selected historical financial information The following summary of consolidated financial data for REC Silicon ASA has been derived from the Company’s audited Consolidated Annual Financial Statements as of and for the years ended December 31, 2017 and 2016 prepared in accordance with IFRS as approved by the EU and the unaudited Interim Financial Statements as of and for the six months ended June 30, 2018 and 2017 prepared in accordance with International Accounting Standard 34 Interim Reporting. The following summary of financial data for REC Silicon AS and REC Silicon Pte Ltd has been derived from the audited Annual Financial Statements as of and for the years ended December 31, 2017 and 2016 prepared in accordance with Norwegian Generally Accepted Accounting policies and Singapore GAAP, respectively.

The following summary of financial data for REC Silicon Inc, REC Advance Silicon Material LLC and REC Solar Grade Silicon LLC has been derived from the audited Special Purpose Individual Financial Statements for each of these companies as of and for the years ended December 31, 2017 and 2016. These special purpose financial statements have been prepared using the Norwegian Accounting Act and accounting principles generally accepted in Norway, with the adaptions and adjustments as described in note B-1 "Basis for Preparation" in each


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of these special purpose financial statements. For information regarding the basis of preparation of these special purpose financial statements, see note B-1 "Basis for Preparation" in each of these special purpose financial statements.

The Issuer REC Silicon ASA The tables below set out a summary of the Company's consolidated income statement data, data from the statements of financial position and cash flows for the years ended 31 December 2017 and 2016:

The Guarantors REC Silicon AS The table below sets out a summary of the REC Silicon AS separate income statement data, balance sheet and cash flow data for the years ended 31 December 2017 and 2016:

INCOME

(USD IN MILLION) 2017 2016

Revenues 272.4 271.2

Operating profi t/loss ‐127.5 ‐216.0

Share of profi t/loss of associate ‐1.8 ‐2.9

Net financia l i tems ‐63.5 ‐29.2

Profi t/loss before tax ‐192.8 ‐248.1

Income tax expense/benefi t ‐157.8 100.7

Loss for the year ‐350.6 ‐147.4

ASSETS, LIABILITIES, AND EQUITY


Total non‐current assets 559.8 840.7

Total current assets 240.4 229.8

Total assets 800.2 1,070.6

Total shareholders ' equity 448.9 782.0

Total non‐current l iabi l i ties 69.6 208.6

Total current l iabi l i ties 281.7 80.0

Total equity and l iabi l i ties 800.2 1,070.6

CASH FLOWS


Net cash flow from operating activi ties 38.8 3.8

Net cash flow from investing activi ties ‐2.8 ‐14.4

Net cash flow from financing activi ties 0.0 ‐21.2

Effect of foreign exchange rates 2.8 2.2

Net increase/decrease in cash and cash equiva lents 38.8 ‐29.7


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REC Silicon Inc. The table below sets out a summary of the REC Silicon Inc.'s separate income statement data, balance sheet and cash flow data for the years ended 31 December 2017 and 2016:

INCOME

(NOK IN THOUSAND) 2017 2016

Revenues 0.0 0.0


Net financia l i tems ‐82,341.8 ‐225,537.9

Profi t/loss before tax ‐82,391.5 ‐225,584.4

Income tax expense/benefi t 0.0 0.0

Loss for the year ‐82,391.5 ‐225,584.4



Total non‐current assets 524,959.8 607,302.9


Total assets 525,157.5 607,548.4

Total shareholders ' equity 525,156.9 607,548.4



Total equity and l iabi l i ties 525,157.5 607,548.4

CASH FLOWS


Net cash flow from operating activi ties ‐47.8 99.7

Net cash flow from investing activi ties 0.0 ‐620.4

Net cash flow from financing activi ties 0.0 440.0

Net increase/decrease in cash and cash equivalents ‐47.8 ‐80.7

INCOME


Revenues 0.0 0.0


Profi t/loss of subs idiaries 24.7 ‐116.5






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REC Solar Grade Silicon LLC The table below sets out a summary of the REC Solar Grade Silicon LLC's individual income statement data, balance sheet and cash flow data for the years ended 31 December 2017 and 2016:





Total assets 129.5 141.5

Total shareholders ' equity ‐6.6 5.5



Total equity and l iabi l i ties 129.5 141.5

CASH FLOWS


Net cash flow from operating activi ties ‐34.9 ‐38.6

Net cash flow from investing activi ties 41.9 30.5



INCOME













Total shareholders ' equity ‐305.2 ‐119.4





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REC Advanced Silicon Materials LLC The table below sets out a summary of the REC Advanced Silicon Materials LLC's individual income statement data, balance sheet and cash flow data for the years ended 31 December 2017 and 2016:

REC Silicon Pte. Ltd. The table below sets out a summary of the REC Silicon Pte. Ltd.'s individual income statement data, balance sheet and cash flow data for the years ended 31 December 2017 and 2016:

CASH FLOWS






INCOME



Operating profi t/loss 29.7 11.5


Profi t/loss before tax 28.2 11.4


Loss for the year 28.2 11.4






Total shareholders ' equity 94.3 112.0




CASH FLOWS


Net cash flow from operating activi ties 47.1 51.2


Net cash flow from financing activi ties ‐45.9 ‐50.1

Net increase/decrease in cash and cash equiva lents 0.0 0.0


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5.3.2 Selected financial information for interim periods

The Issuer The following summary of consolidated financial data for REC Silicon ASA for the six months ended June 30, 2018 and 2017 prepared in accordance with International Accounting Standard 34 Interim Reporting. The Group regularly reports interim period financial information for the Group only. The results of the guarantors are consolidated to prepare the Group financial statements, however, separate financial information for each group member (guarantors) is not presented for interim periods. The tables below set out a summary of the Company's consolidated income statement data, data from the statements of financial position and cash flows for the first and second quarters of 2017 and 2018:

INCOME

(USD IN THOUSAND) 2017 2016

Revenues 0.0 0.0


Net financia l i tems ‐9,516.0 0.0

Profi t/loss before tax ‐9,533.6 ‐18.2

Income tax expense/benefi t 0.0

Loss for the year ‐9,533.6 ‐18.2



Total non‐current assets 75,000.0 75,000.0


Total assets 75,027.7 75,044.7

Total shareholders ' equity 65,502.4 75,036.0

Total non‐current l iabi l i ties 6,784.5 0.0

Total current l iabi l i ties 2,740.8 8.7

Total equity and l iabi l i ties 75,027.7 75,044.7

CASH FLOWS



Net cash flow from investing activi ties 0.0 0.0


Net increase/decrease in cash and cash equivalents ‐17.0 38.7


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REC Silicon ASA

INCOME

(USD IN MILLION) Q2'18 Q1'18 Q2'17 Q1'17

Revenues 58.9 69.6 61.4 57.5

Operating profi t/loss ‐370.1 ‐5.7 ‐19.0 ‐16.0

Share of profi t/loss of associate ‐0.1 73.3 ‐0.6 ‐0.5

Net financia l i tems ‐4.2 ‐7.6 ‐26.0 ‐7.3

Profi t/loss before tax ‐374.4 60.1 ‐45.6 ‐23.8

Income tax expense/benefi t 0.0 0.4 ‐16.4 6.6

Loss for the year ‐374.4 60.5 ‐62.0 ‐17.2



Total non‐current assets 216.3 579.8 812.6 823.4

Total current assets 173.5 259.1 230.1 239.4

Total assets 389.8 838.9 1,042.8 1,062.8

Tota l shareholders ' equity 133.5 511.4 711.4 758.9

Total current l iabi l i ties 137.3 30.7 165.8 216.5

Total l iabi l i ties 119.1 296.8 165.7 87.4

Total equity and l iabi l i ties 389.8 838.9 1,042.8 1,062.8

CASH FLOWS


Net cash flow from operating activi ties ‐7.1 7.4 ‐9.4 15.7

Net cash flow from investing activi ties ‐3.0 0.0 ‐1.5 ‐0.8

Net cash flow from financing activi ties ‐59.5 0.0 0.0 0.0

Effect of foreign exchange rates 0.0 0.0 1.4 0.2

Net increase/decrease in cash and cash equiva lents ‐69.6 7.4 ‐9.5 15.2


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6 Presentation of the Issuer and the Guarantors

6.1 Principal Activities of the Group (Issuer) PRINCIPAL ACTIVITIES REC Silicon ASA (Issuer, The Company) is a holding company with corporate management and financial functions. The Company and its subsidiaries (together, REC Silicon, or The Group) have a presence in the international solar energy and electronics industries. Group operations are focused on the production of polysilicon and silicon gases for 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, Singapore, and in the United States. Ownership of the Group’s associate company is held in REC Silicon Pte. Ltd. in Singapore. REC Silicon’s products help energy and technology providers shape the future via a comprehensive selection of solar and electronic grade polysilicon and silicon gases. Our trademark Signature Silane® gas (SiH4) and advanced operational techniques enable the production of Float Zone (FZ) polysilicon - the highest purity polysilicon. Expertise gained from over 30 years of solution-oriented silicon materials manufacturing and global support helps enhance customer satisfaction. REC Solar Grade Silicon is different from other polysilicon producers because it utilizes silane gas as the precursor material for polysilicon manufacturing. This enables the company to have a closed-loop process that can result in reduced cost and significantly reduces environmental impact. It also enables the company to produce the highest quality polysilicon in the world. The table below reflects the financial highlights of the consolidated Group:

STRATEGY AND 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 by:

Minimize the impact of the trade war between China and the US Develop market opportunities outside China Focus on cost control - match activity and spending to production Maximize throughput for utilized assets Maintain liquidity (retain cash) Focus on continued quality improvements

Key Financials ‐ REC Silicon Group

(USD IN MILLION) 1st Hal f 2018 1st Half 2017 Year 2017 Year 2016

Revenues 128.6 118.9 272.4 271.2

EBITDA 5.0 5.9 19.8 ‐30.8

EBITDA margin 3.9% 5.0% 7.3% ‐11.3%

EBIT excluding impairment charges ‐35.2 ‐34.9 ‐127.2 ‐123.0

Impairment charges ‐340.5 0.0 ‐0.3 ‐93.1

EBIT ‐375.7 ‐35.0 ‐127.5 ‐216.0

EBIT margin ‐292.2% ‐29.4% ‐46.8% ‐79.7%

Profi t/loss before tax ‐314.3 ‐69.3 ‐192.8 ‐248.1

Profi t/loss ‐313.9 ‐79.2 ‐350.6 ‐147.4

Earnings per share, bas ic and di luted (USD) ‐0.12 ‐0.03 ‐0.14 ‐0.06

Polys i l i con production in MT (Siemens and granular) 6,014 6,184 11,636 10,729

Polys i l i con sa les in MT (Siemens and granular) 4,981 5,469 13,503 13,067

Multicrys ta l l ine brick sales in MT 2 0 1 0

Si l i con gas sa les in MT 1,815 1,628 3,501 2,734


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Optimize semiconductor polysilicon product offerings Support Successful Startup of the Yulin JV

RESEARCH & DEVELOPMENT REC Silicon’s long-term competitive position is based on cost efficiency and industry leading product performance. REC Silicon’s research and technology development activities are designed to enhance quality, improve efficiency, and reduce production costs of our products to add value to our customers and further enhance our competitive position. Efforts related to REC Silicon’s proprietary FBR technology focused on continuing to enhance fundamental scientific knowledge along with yield and efficiency improvements to aid in achieving lower cash production costs while improving product quality in the Moses Lake FBR facility. For the Siemens polysilicon products, the focus remained on producing the highest quality Float Zone and CZ semiconductor polysilicon products with greater efficiency and lower cost. Efforts related to REC Silicon’s Silane production technology focused on continued fundamental scientific development, enhanced analytical techniques, and efficiency geared toward lowering costs and producing the highest quality Silane and Silicon gas products and feedstock for polysilicon production. Research and development activities and expenditures have been reduced due to current market conditions in order to maintain the Group’s liquidity. Going forward, research efforts will be focused on maintaining minimum research lab operations and advancing analytical methods for products sold by the Group. Research and development expenditures were USD 4.0 million in 2017 compared to USD 5.5 million in 2016. During the first half of 2018 research and development expenses were USD 1.7 million.

6.1.1 Operations The Group operates two U.S. based manufacturing facilities. REC Silicon produces solar grade polysilicon at the Moses Lake, WA facility, and electronic grade polysilicon and silicon gas at the Butte, MT facility. These plants product products that are raw materials for the solar and electronic industries. The Group’s products are used to produce consumer products such as solar panels, smart devices, flat panel displays, laptops, and hybrid electric vehicles. The Group is a party to a joint arrangement in China; Shaanxi Non-Ferrous Tian Hong REC Silicon Materials Co., Ltd. (Yulin JV or JV) in 2014. The JV was formed to develop a manufacturing facility in Yulin China with a focus on the manufacture and sales of super-purity silicon materials. Please see note 8 to the 2017 REC Silicon Annual Report and note 4 in the First and Second Quarter Reports for 2018. The illustration below provides additional information about the Group’s operations.


29

6.1.2 Sales Activities The Group conducts sales activities from its operating locations in Moses Lake, WA and Butte, MT and using representative offices outside of the United States. The Group Maintains representative offices in:

Seoul, Korea Shanghai, China PC Taipei, Taiwan Tokyo, Japan

6.1.3 Business Locations The illustration below depicts the location of the Group’s headquarters, operations, and representative offices:

6.2 Business Overview Competitive Environment REC Silicon’s primary product is silicon in varying forms for the solar and electronics industries. All manufacturing technologies employed by REC Silicon begin by process Metallurgical Grade Silicon to produce pure Silane Gas (SiH4). Silane gas is then used to produce polysilicon using the Siemens and FBR production processes. The graph below depicts the estimated global polycilicon supply and costs for 2018. The blue bar represents REC Silicon’s FBR plant in Moses Lake, Washington.

In addition, Silicon Gases are packaged for sale and distribution to end use markets for flat panel displays, semiconductor, and solar applications. Because REC Silicon uses silane gas to produce polysilicon while other producers use alternate production methods, it is the world’s largest producer of silane gases. REC Silicon has the capacity to load approximately 4,000MT of Silicon Gas and provides approximately 70% of the silane gases for the flat panel display and semiconductor industries which make REC Silicon the world’s largest supplier of silicon gases for semiconductor, flat panel display, and solar applications.


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6.2.1 Issuer REC Silicon ASA REC Silicon ASA is the parent company. It contains corporate management and financial functions. It contains expenditures for the Board of Directors and capital markets activities. It also holds all external equity and debt instruments for the Group.

6.2.2 Guarantors REC Silicon AS REC Silicon AS is a holding company for the Group’s investments in REC Silicon Inc. in the United States and REC Silicon Pte. Ltd. In Singapore. REC Silicon Inc. REC Silicon Inc. is the US holding company for the Group’s interest in the manufacturing facilities in the United States (REC Solar Grade Silicon LLC and REC Advanced Silicon Materials LLC). It also holds the management and executive level functions for the Group’s operations and sales functions. It contains expenditures for the shared sales, general, and administrative functions for the management, operation, and administration of the Group’s operations. It owns the technology and intellectual property for certain methods and process associated with the production of silane gas and production of polysilicon using the siemens method of production. REC Solar Grade Silicon LLC REC Solar Grade Silicon LLC is an operating company that holds the Group’s investment in the solar grade polysilicon production facility in Moses Lake, Washington. It owns the technology and intellectual property associated with the Fluidized Bed Reactor (FBR) method of producing polysilicon. In addition, it holds certain selling, general, and administrative expenses specific to the solar materials business as well as shared research and quality laboratory assets and expenditures. It also manufactures semi-finished products for use in the operations in Butte, Montana. REC Advanced Silicon Materials LLC REC Advanced Silicon Materials LLC is an operating company that holds the Group’s investment in the silicon gases and semiconductor grade polysilicon production facility in Butte, Montana. It owns certain elements of the technology and intellectual property associated with the production of its specific silicon gas products and high-quality semiconductor grade polysilicon products (FZ and CZ polysilicon). In addition, it holds certain selling, general, and administrative expenses specific to the semiconductor materials business as well as quality laboratory assets and expenditures specific to its operations. REC Silicon Pte. Ltd. REC Silicon Pte. Ltd. is a holding company for the Group’s investments in the Yulin JV in in China; Shaanxi Non-Ferrous Tian Hong REC Silicon Materials Co., Ltd.

6.3 Financial Reporting Structure and Relationships

6.3.1 Segments 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. Prior to 2018, the business was reported as one segment. Changes to the Company’s organization structure, management team, operating strategy, and performance measurement reporting led to the determination that these businesses represent separate distinguishable operating segments. Beginning in 2018, the Company reported two operating segments; Solar Materials and Semiconductor Materials. The operating segments include revenues less cost of manufacturing excluding depreciation for products sold while Other include 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. The Solar Materials segment consists exclusively of revenues less costs of manufacturing excluding depreciation of REC Solar Grade Silicon LLC. The Semiconductor Materials segment consists exclusively of revenues less costs of manufacturing excluding depreciation of REC Advanced Silicon Materials LLC. The Other segment consists of the sales, general, and administrative expenses contained within the operating companies, the net expenses contained in REC Silicon ASA (Issuer), REC Silicon AS, REC Silicon Inc., and REC Silicon Pte. Ltd. (Guarantors). Eliminations are the net effect of the elimination transactions between Group members and affiliates.


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The table below reconciles segment results to the revenue and EBITDA of the consolidated Group:

6.3.2 Solar Materials Segment PRINCIPAL ACTIVITIES REC Silicon manufactures polysilicon for the solar energy markets from its manufacturing facility in Moses Lake, Washington. This facility uses best-in-class proprietary Fluidized Bed Reactor (FBR) technology to produce low cost high purity polysilicon for the solar industry. The Moses Lake plant is one of the world’s largest producers of granular polysilicon with approximately 18,000MT of polysilicon production capacity. The table below reflects the financial highlights of the Solar Materials segment:

OPERATIONS REC Solar Grade Silicon LLC operates the Moses Lake, Washington manufacturing facility, originally constructed in 1984. It operates the only commercial Fluidized Bed Reactor polysilicon production facility. Fluidized Bed Reactor (FBR) REC Silicon has developed the unique Fluidized Bed Reactor (FBR) silicon refining process, a next-generation method of refining silicon. With the FBR process, we can produce solar-grade silicon at a lower cost, while using 80-90 percent less energy than the traditional Siemens method for converting silane gas to high purity silicon. The FBR polysilicon production technology lowers the cost of making solar products and saves large amounts of electricity. Photovoltaic solar energy is environmentally friendly. The FBR technology uses significantly less energy for producing high purity silicon used in photovoltaic cells and further lowers the carbon footprint of manufacturing equipment used to produce solar energy. Solar grade polysilicon REC Silicon produces, markets, and sells polysilicon for use as a raw material for use in the production of solar modules for the solar energy industry. As the only commercial FBR production facility, the granular form factor and affords customers a cost and efficiency advantage over chunk polysilicon products produced using the siemens production method. TECHNOLOGY AND PRODUCT DEVELOPMENT FBR technology offers significant benefits to the end-user that enable increased throughput, decreased cost and increased profit in the PV ingot manufacturing process. The word “Granular” is a reference to the size and geometry of the polysilicon material. This form factor offers several advantages over traditional Siemens chunk polysilicon. REC Silicon is working to further develop the FBR technology. It has developed the next generation FBR reactors (FBR B) which offers improvements in the quality of polysilicon produced. FBR(B) reactors have been installed at the production facility in Yulin, China by the Yulin JV. PRINCIPAL MARKETS REC Silicon produces, markets, and sells polysilicon for use as a raw material for use in the production of solar modules for the solar energy industry.

REC Group ‐ Reconciliation of Segments

(USD IN MILLION) Revenues EBITDA Revenues EBITDA Revenues EBITDA Revenues EBITDA

Solar Materia ls 53.1 ‐7.5 53.4 ‐5.5 127.8 ‐1.7 117.5 ‐44.7

Semiconductor Materia ls 76.3 32.0 65.8 25.1 147.5 55.3 153.7 42.4

Other 0.0 ‐19.0 0.0 ‐13.8 0.0 ‐32.7 0.0 ‐28.4

El iminations ‐0.9 ‐0.5 ‐0.3 0.0 ‐2.9 ‐1.2 0.0 0.0

Tota l 128.6 5.0 118.9 5.9 272.4 19.8 271.2 ‐30.8

Year 20161st Half 2018 1st Half 2017 Year 2017

Key Financials ‐ Solar Materials

(USD IN MILLION) 1st Half 2018 1st Half 2017 Year 2017 Year 2016

Revenues 53.1 53.4 127.8 117.5

EBITDA contribution ‐7.5 ‐5.5 ‐1.7 ‐44.7

Contribution margin ‐14.1% ‐10.2% ‐1.3% ‐38.1%

Polys i l i con production in MT (Siemens and granular) 5,206 4,797 9,380 7,880

Polys i l i con sa les in MT (Siemens and granular) 4,304 4,604 11,450 9,734

Multicrys ta l l ine brick sa les in MT 2 0 1 0


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Market Development Industry analysts estimate end use PV demand for the second 1st half of 2018 at approximately 54GW (IHS Markit Installations Tracker – Q2 2018). This represents an increase of approximately 6GW or 12.6 percent compared to the first half of 2017. PV demand began 2018 strong with an increase of approximately 13% compared to the second half of 2017 with the expectation that adjustments to Chinese feed in tariffs (FITs) would push PV installations higher. PV demand remained steady through May 2018. At the end of May, market visibility declined and inventories began to build as concerns mounted over PV demand in China. During the first week of June, China announced an immediate and significant reduction in financial support for solar installations. This created uncertainty in the global market and caused polysilicon demand to decline sharply. In order to mitigate increases in inventories, producers quickly curtailed production across the value chain. Declining demand placed downward pressure on solar grade polysilicon prices. Spot prices inside of China at the end of the second quarter were estimated at approximately USD 12.4/kg, a decrease of approximately USD 3.6/kg (23 percent) compared to spot prices at the end of the first quarter 2018. Spot prices outside of China ended the quarter at approximately USD 11.6/kg, a decrease of approximately USD 1.8/kg (13 percent). Solar grade polysilicon prices continue to be higher inside of China due to supply constraints caused by the solar trade war between China and the United States. However, this price differential declined substantially during the quarter to a discount of approximately 6 percent for prices outside of China at the end of the second quarter compared to 16 percent at the end of the first quarter. Market Outlook Revisions to solar incentives announced by China on June 1, 2018 are expected to reduce global PV demand by 10GW to 20GW for 2018. PV installations in China are currently forecast at approximately 30GW for 2018 compared to approximately 50GW before the change in solar incentives. Estimates of global PV demand are currently forecast from 85GW (GTM Global PV Supply Quarterly Briefing - July 2018) to 103GW (IHS Markit Installations Tracker – Q2 2018). This represents a decrease of 18GW and 10GW compared to previous forecasts, respectively. China is expected to continue to be the largest PV market, however, demand in China is predicted to decline as a percentage of the global PV market. PV Demand for second half of 2018 is expected to be near 50.3W (IHS Markit Installations Tracker – Q2 2018) compared to 53.5GW during the first half of 2018. As a result, demand for solar grade polysilicon will be soft during the third quarter with some improvement anticipated during the fourth quarter. To control polysilicon inventories, several major polysilicon manufacturers have announced decreases in production. Polysilicon prices inside China are expected to continue to decline while the price gap for polysilicon inside of China compared to outside of China will continue to narrow. Polysilicon prices outside China will continue to decline as demand for polysilicon remains soft. Accordingly, shipments of REC Silicon’s solar grade granular polysilicon will be lower as the market adjusts to reductions in global demand for PV installations and due to the rationalization of production FBR capacity utilization. Market Position The FBR plant’s capacity represents approximately 4 percent of the global market for polysilicon. However, due to the trade war between the United States and China, it has been restricted to markets outside of China which represent approximately 20% of the total available market. Accordingly, a large majority of the Solar Materials segment revenues are generated in Taiwan and the Group has been forced to offer discounts in order retain market share. FBR capacity utilization has been reduced to match production to sales and to prevent increases in finished goods inventories.

6.3.3 Semiconductor Materials Segment PRINCIPAL ACTIVITIES REC Silicon manufactures polysilicon and silicon gases for the semiconductor markets from its manufacturing facility in Butte Montana. This facility is the world’s largest supplier of silicon gases for semiconductor, flat panel display, and solar applications. The facility also uses a silane based siemens polysilicon processing technology to produce the highest quality Float Zone (FZ) polysilicon for use in the semiconductor industry. The Butte plant has a capacity of approximately 4,500MT of silicon gas loading and 2,000MT polysilicon production. The table below reflects the financial highlights of the Semiconductor Materials segment:

Key Financials ‐ Semiconductor Materials

(USD IN MILLION) 1st Half 2018 1st Half 2017 Year 2017 Year 2016

Revenues 76.3 65.8 147.5 153.7

EBITDA contribution 32.0 25.1 55.3 42.4

Contribution margin 41.9% 38.2% 37.5% 27.6%

Polys i l i con production in MT (Siemens) 808 1,387 2,256 2,850

Polys i l i con sa les in MT (Siemens) 677 880 2,093 3,333

Si l i con gas sa les in MT 1,814 1,628 3,582 2,734


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OPERATIONS REC Advanced Silicon Materials LLC operates the Butte, Montana manufacturing facility, originally constructed in 1984. It is the largest supplier of silicon gases and produces Float Zone (FZ) polysilicon - the highest purity polysilicon using the silane based siemens polysilicon method of polysilicon production. Because the plant’s polysilicon production uses silane gas as the primary input, the balance of production between silicon gases for the merchant market and polysilicon can be optimized based upon market dynamics. Siemens Polysilicon Because REC Silicon’s production process is based on the decomposition of silane gas, it results in the production of ultra-pure polysilicon that competitors trichlorosilane (TCS) based polysilicon production processes. This high purity polysilicon is ideal for Float Zone (FZ) and Czochralski (CZ) semiconductor grades of polysilicon. In addition, polysilicon consisting of rod ends and scraps as well as lower grade material are a normal part of the production process and are sold in the solar grade polysilicon market. Silicon gases Silane is the principal material used in the production of polysilicon and is also an essential material in the production of thin film PV, semiconductors, and flat panel displays. Silicon gases are also used to increase the efficiency of solar modules. REC Silicon produces silane gas derivatives and precursors (dichlorosilane (DCS), monochlorosilane (MCS), and disilane) for which applications are currently being developed and expanded. TECHNOLOGY AND PRODUCT DEVELOPMENT REC Silicon continues to advance this Siemens process capability to meet new market and customer needs with larger diameter, higher purity, and lower cost FZ products through innovative reactor designs and technology improvements. PRINCIPAL MARKETS REC Silicon produces silane gas (SiH4) and other specialty silicon gases for the electronics and solar energy industries. Silicon gases are used in semiconductor, flat panel display, and PV applications. It also produces semiconductor grade polysilicon for use by the electronics industry in consumer electronics and communications devices. The high quality (FZ) polysilicon is produced for use in high power management and motor control applications (i.e. electric cars and trains). Market Development Semiconductor grade polysilicon markets are dominated by long term fixed sales contracts. Due to the economic downturns, semiconductor inventories have increased sharply because of these long term fixed sales contracts. Fixed sales contracts have begun to expire and inventory levels are declining due to growing demand for semiconductor devices and the implementation of improved technology in the semiconductor and flat panel display industries. REC Silicon has increased sales volumes of semiconductor grade polysilicon as a result of successful product qualifications which have translated into firm orders. Silicon gas markets continue to expand due to the increased adoption electronic and communications devices by consumers. Demand within semiconductor applications continue to grow due to the development of new technology and the expansion of existing fabrication facilities to meet growing technology trends. In addition, higher utilization of silane in PV cell production as well as growing demand for PV cells has resulted in increased demand for silane. However, efforts by competitors to capture additional market share and increase capacity utilization has placed downward pressure on prices. Market Outlook Demand for semiconductor grade polysilicon is expected to grow during the remainder of 2018 as long term fixed contracts expire and inventories decline because of high semiconductor capacity utilization. The successful qualification of REC Silicon products are expected to continue to translate to increasing sales volumes throughout 2018. Macro demand factors associated with data transmission and storage, mobility, and increasing Silicon content in automobiles and other consumer goods are forecasted to continue to result in demand growth over the long term. Demand for silicon gases in semiconductor and flat panel display applications is expected to remain strong throughout 2018. However, volatility in solar markets is expected to translate to lower demand for silicon gases in the PV segment. Overall demand is expected to remain high due to capacity expansions for flat panel displays, and the continuing implementation of technology improvements in semiconductor applications. As a result of softer demand in the PV segment, prices for PV grade silane gas are expected to negatively impact average prices for the remainder of 2018. Market Position The semiconductor materials segment produced 844MT of semiconductor grade polysilicon in 2017 compared to a total available market of approximately 35,000MT. REC Silicon has been working to increase market share as long-term fixed contracts expire and through successful product qualifications at recently expanded production


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facilities. Approximately 25 percent of REC Silicon’s semiconductor grade polysilicon production is the highest quality Float Zone (FZ) polysilicon for which REC Silicon is one of only 2 producers. The Butte, Montana production facility delivers approximately 70 percent of the global demand for silicon gases for use in semiconductor devices and flat panel displays. It owns the largest ISO silane gas module fleet in the industry which is critical to the distribution of silane gases around the globe. The Group’s silicon gases are distributed through long term relationships with 2 of the three largest international gas distribution company’s which allows for industrial gas packaging to reach smaller customers. These factors give REC Silicon’s gas business a stable base and significant opportunities for growth.

6.3.4 Other & Eliminations PRINCIPAL ACTIVITIES Other includes general administrative and sales activities in support of the manufacturing facilities in the United States and the Company’s headquarters in Fornebu Norway. It also includes costs associated with the Company’s representative offices in Taiwan, Korea, Singapore, China, and the United States. Other & Eliminations consists of general and administrative expenses for REC Solar Grade Silicon LLC and REC Advanced Silicon Materials LLC. in addition to the net expenses for the following legal entities:

REC Silicon ASA (Issuer) REC Silicon AS (Guarantor) REC Silicon Inc. (Guarantor) REC Silicon Pte. Ltd. (Guarantor)


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7 Legal structure

7.1 Description of group that issuer is part of The Issuer (REC Silicon ASA) is the leader of a Group of legal entities engaged in the solar energy and electronics industries. The Issuer is an investor in operating entities that are directly engaged in these endeavors and is therefore dependent upon them to carry out its business objectives. Please refer to item 6 above for an overview of the Group’s business activities and objectives. The illustration below depicts the legal entity and ownership structure of the Group:

The following table lists the subsidiaries of REC Silicon ASA:

Company Ownership Business Office

REC Silicon AS 100% Fornebuveien 84, 1324 Lysaker Norway REC Solar AS 100% Fornebuveien 84, 1324 Lysaker Norway

The following table lists the subsidiaries of REC Silicon AS and REC Solar AS:


REC Silicon AS REC Silicon Inc. (US) 100% 3322 Road “N“ NE

Moses Lake, Washington (USA) 98837 REC Silicon Pte Ltd. (Singapore) 100% 80 Robinson Road #02-00

Singapore 068898 REC Solar AS Gitzeli Solar Energy Production S.A. 100% Athens, Greece REC Greece S.A. 100% Athens, Greece


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The following table lists the subsidiaries of REC Silicon Inc.:


REC Silicon Inc. REC Solar Grade Silicon LLC

100% 3322 Road “N“ NE Moses Lake, Washington (USA) 98837

REC Advanced Silicon Materials LLC

100% 119140 Rick Jones Way Silver Bow, Montana (USA) 59750

7.2 Issuer dependent upon other entities All business operations of the Issuer are carried out by the Issuer's subsidiaries. Therefore, the Issuer is dependent on the results of the operations of the Issuer's subsidiaries.


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8 Trend information

8.1 Statement of material adverse changes During the second quarter of 2018, market visibility declined and inventories began to build as concerns mounted over PV demand in China. During the first week of June, China announced an immediate and significant reduction in financial support for solar installations. This created uncertainty in the global market and caused demand for solar grade polysilcion to decline sharply. In order to mitigate increases in inventories, producers quickly curtailed production across the value chain. Declining demand placed downward pressure on solar grade polysilicon prices. Spot prices inside of China at the end of the second quarter were estimated at approximately USD 12.4/kg, a decrease of approximately USD 3.6/kg (23 percent) compared to spot prices at the end of the first quarter 2018. Spot prices outside of China ended the quarter at approximately USD 11.6/kg, a decrease of approximately USD 1.8/kg (13 percent). In response, REC Silicon executed a layoff affecting nearly 30% of its current workforce in Moses Lake, Washington on July 2, 2018. This layoff impacted approximately 85 employees across the Company and is a direct result of the on-going solar trade war between China and the United States. REC Silicon reduced its production at Moses Lake to approximately 25% of total production capacity. These actions were taken to help maintain the Company's liquidity, its ability to meet financial obligations, and to maintain REC Silicon's capability to resume manufacturing operations when access to China's polysilicon markets is restored. The associated restructuring costs will be reported in the third quarter of 2018 and are expected to be approximately USD 2.7 million. For additional information regarding these developments, please see the Second Quarter 2018 Financial Report.

8.2 Outlook Revisions to solar incentives announced by China on June 1, 2018 are expected to reduce global PV demand by 10GW to 20GW for 2018. PV installations in China are currently forecast at approximately 30GW for 2018 compared to approximately 50GW before the change in solar incentives. Estimates of global PV demand are currently forecast from 85GW (GTM Global PV Supply Quarterly Briefing - July 2018) to 103GW (IHS Markit Installations Tracker – Q2 2018). This represents a decrease of 18GW and 10GW compared to previous forecasts, respectively. China is expected to continue to be the largest PV market, however, demand in China is predicted to decline as a percentage of the global PV market. PV Demand for third quarter of 2018 is expected to be near 20GW (IHS Markit Installations Tracker – Q2 2018) compared to 24GW in the previous forecast. As a result, demand for solar grade polysilicon will be soft during the third quarter with some improvement anticipated during the fourth quarter. To control polysilicon inventories, several major polysilicon manufacturers have announced decreases in production. Polysilicon prices inside China are expected to continue to decline while the price gap for polysilicon inside of China compared to outside of China continues to narrow. Polysilicon prices outside China will continue to decline as demand for polysilicon remains soft. Accordingly, shipments of REC Silicon’s solar grade granular polysilicon will be lower during the third quarter as the market adjusts to reductions in global demand for PV installations. Demand for semiconductor grade polysilicon is expected to grow during the remainder of 2018 as long term fixed contracts expire and inventories decline because of high semiconductor capacity utilization. The successful qualification of REC Silicon products are expected to continue to translate to increasing sales volumes throughout 2018. Macro demand factors associated with data transmission and storage, mobility, and increasing Silicon content in automobiles and other consumer goods are forecasted to continue to result in demand growth over the long term. Demand for silicon gases in semiconductor and flat panel display applications is expected to remain strong throughout 2018. However, volatility in solar markets is expected to translate to lower demand for silicon gases in the PV segment. Overall demand is expected to remain high due to capacity expansions for flat panel displays, and the continuing implementation of technology improvements in semiconductor applications. As a result of softer demand in the PV segment, prices for PV grade silane gas are expected to negatively impact average prices for the remainder of 2018.


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9 Administrative, management and supervisory bodies

9.1 Information about persons

Issuer Board of Directors The table below sets out the names of the members of the Board of Directors of the Issuer: (The table below also applies to REC Silicon AS, REC Silicon Inc., REC Solar Grade Silicon LLC, and REC Advanced Silicon Materials LLC.)

Name Position Business address

Jens Ulltveit-Moe Chairman REC Silicon ASA, Fornebuveien 84, 1324 Lysaker Norway Ragnhild Wiborg Board member REC Silicon ASA, Fornebuveien 84, 1324 Lysaker Norway Espen Klitzing Board member REC Silicon ASA, Fornebuveien 84, 1324 Lysaker Norway Terje Osmundsen Board member REC Silicon ASA, Fornebuveien 84, 1324 Lysaker Norway

Inger Berg Ørstavik Board member REC Silicon ASA, Fornebuveien 84, 1324 Lysaker Norway

Jens Ulltveit-Moe Chairman of the Board of Directors since November 2013, Mr. Ulltveit-Moe is currently CEO and Board member of Umoe Group, a company he established in 1984. Prior to Umoe, his career included McKinsey in New York and London, The Dutch SHV Group, and Knut Knutsen OAS. He has also served as Chairman of the Board for PGS, Kverneland, Sevan Marine and REC. Mr. Ulltveit-Moe has a Master degree in Business and Economics from the Norwegian School of Economics and Business Administration (NHH) and a Master degree in International Affairs from Colombia University. Ragnhild Wiborg Member of the Board of Directors since May 2013, Ms. Wiborg has over 30 years’ experience in financial markets and an extensive network both within the international and Nordic business communities. She has working experience from, CEO of Wiborg Kapitalforvaltning, CIO and fundmanager of Odin Fund Management and different positions in investment banks such as Pareto Securities, ABG Sundal & Collier and First Chicago. She is member of the BoD in several listed companies; Gränges AB, Intrum Justitia AB, IM Skaugen, Skandiabanken ASA, INSR ASA and as well as Chairman of the board of EAMSolar ASA. Ms. Wiborg has a Bachelor of Science in Economics (Civilekonom) with a major in International Business from Stockholm School of Economics and Business Administration as well as master studies from Fundacao Getulio Vargas, Brasil and from Sorbonne University. Espen Klitzing Board member since November 2013, Mr. Klitzing is CFO of Umoe Group, Chairman of the Board of several Group companies and Alliance Venture Polaris AS, as well as a board member of DNB Life Insurance and the Stock Exchange Appeals Committee. Prior to Umoe he was a Principal at McKinsey & Company, CFO and Deputy CEO at Norges Bank Investment Management, CEO of Petrojarl ASA and Storebrand Life Insurance, and held various management positions in Storebrand Group. Mr. Klitzing holds a degree in Business and Economics (Siviløkonom) from the Norwegian School of Economics and Business Administration (NHH). Terje Osmundsen Board member since May 2016, Mr. Osmundsen is founder and CEO of Empower New Energy AS. From 2009-2017, Terje was Senior Vice President for Business Development in Scatec Solar ASA. He has an extensive executive and senior leadership background in publishing, telecommunications (Alcatel), Oil & Gas (Saga Petroleum), the Confederation of Business and Industry (NHO) and government (Prime Minister’s office). Mr. Osmundsen has a post-graduate degree in political science from University of Oslo and American University, Washington DC. He is a non-executive Board member Quantafuel AS and board chairman of Caritas Norway. Inger Berg Ørstavik Board member since November 2013, Ms. Ørstavik is an associate professor at the Department of Private Law, University of Oslo. She has previously been a partner with Advokatfirmaet Schjødt AS and a lawyer at the office of the Attorney General for Civil Affairs. She taught international human rights law at Fudan University in Shanghai, China. Ms. Ørstavik has a law degree from the University of Oslo, a Ll.M. from Ruprecht-Karls-Universität in Heidelberg, Germany, and a Ph.D. from the University of Oslo in the areas of patent law and competition law.


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Management The table below sets out the name of the Management of the Issuer (Group):


Tore Torvund President & CEO REC Silicon ASA, Fornebuveien 84, 1324 Lysaker Norway James A. May Chief Financial Officer REC Silicon ASA, Fornebuveien 84, 1324 Lysaker Norway

Tore Torvund Mr. Torvund joined the organization in 2009. Mr. Torvund holds a Master of Science degree from the Norwegian University of Science and Technology. Prior to REC Silicon, Mr. Torvund held the position as Executive Vice President, Exploration & Production in StatoilHydro ASA, and Executive Vice President Oil and Energy in Norsk Hydro ASA. James A. May II Mr. May joined the organization in 2008. Mr. May holds Bachelor's degrees in Business Administration and Accounting from Boise State University. Prior to REC Silicon, Mr. May worked for Hewlett Packard, was a partner in a Pocatello, Idaho regional public accounting firm, and was the Director of Finance for European Operations and the Director of Financial Planning and Analysis for the Chemical Division of Kerr-McGee.


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Guarantors REC Silicon AS Board of Directors The table above for the Issuer’s Board of Directors sets out the names of the members of the Board of Directors of REC Silicon AS. Management The table above for the Issuer’s (Group) Management sets out the names of the members of the Board of Directors of REC Silicon AS.

REC Silicon Inc. Board of Directors The table above for the Issuer’s Board of Directors sets out the names of the members of the Board of Directors of REC Silicon Inc. U.S. Operations Management The table below sets out the name of the Management of U.S. Operations Management: (The table below also applies to REC Solar Grade Silicon LLC, and REC Advanced Silicon Materials LLC.)


Chuck Sutton Vice President - FBR Polysilicon Sales REC Silicon Inc. 3322 Road “N“ NE Moses Lake, Washington (USA) 98837

DeeAnna Worley Vice President of HSE, PSM, HR REC Silicon Inc. 3322 Road “N“ NE Moses Lake, Washington (USA) 98837

Jeff Johnson Vice President of Moses Lake Operations REC Silicon Inc. 3322 Road “N“ NE Moses Lake, Washington (USA) 98837

Francine Sullivan Vice President Business Development REC Silicon Inc. 3322 Road “N“ NE Moses Lake, Washington (USA) 98837

Kirt Johnson Vice President of Engineering REC Silicon Inc. 3322 Road “N“ NE Moses Lake, Washington (USA) 98837

Kurt Levens Sr. Vice President EG Polysilicon and Silicon Gases

REC Silicon Inc. 3322 Road “N“ NE Moses Lake, Washington (USA) 98837

Chuck Sutton (Vice President - FBR Polysilicon Sales) Mr. Sutton joined the organization in 1991. He has held progressive operational and managerial positions in manufacturing, quality, and commercial throughout his career with REC Silicon. His focus during the past ten years in the Commercial group has been product management, sales, and planning.

DeeAnna Worley (Vice President of HSE, PSM, HR) Ms. Worley joined the organization in 1998. She holds a Master Degree in Industrial Hygiene and a Bachelor Degree in OSHA from Montana Tech. Ms. Worley was previously the HSE Manager of the REC Silicon Butte facility, and prior to REC Silicon, Ms. Worley worked for Morrison Knudsen Corporation based out of Boise, Idaho.

Jeff Johnson (Vice President of Moses Lake Operations) Mr. Johnson joined the organization in 1995. He holds a Master of Science in Mechanical Engineering from Washington State University. He has held progressive managerial positions in engineering and manufacturing throughout his career with REC Silicon. Francine Sullivan (Vice President Business Development) Ms. Sullivan joined the organization in 2010. She holds a Bachelors of Commerce (Economics & Finance) and Bachelors of Laws (Honors), University of Melbourne, admitted to practice in NY and CA. Prior to joining the organization, Ms. Sullivan was a senior attorney in the Renewable Energy & Projects Group of Milbank Tweed


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Hadley & McCoy, a leading New York law firm, and has worked extensively on complex energy projects in the US, Europe, Asia, and Australia.

Kirt Johnson (Vice President of Engineering) Mr. Johnson joined the organization in 1996. He holds a Master of Science in Mechanical Engineering, Washington State University. Mr. Johnson has held progressive managerial positions in engineering, manufacturing, and technology throughout his career with REC Silicon’s organization. Kurt Levens (Sr. Vice President EG Polysilicon and Silicon Gases) Mr. Levens joined the organization in 2002. He holds a Bachelor of Science, United States Military Academy at West Point. Mr. Levens has held executive and managerial positions in Commercial, Operations and Maintenance, Projects and General Management in the Electronic Materials-Gases and Petroleum industries.

REC Solar Grade Silicon LLC Board of Directors The table above for the Issuer’s Board of Directors sets out the names of the members of the Board of Directors of REC Silicon AS. Management The table above for the Guarantor’s Management sets out the names of the members of the Board of Directors of REC Silicon Inc (US Operations Management).

REC Advanced Silicon Materials LLC Board of Directors The table above for the Issuer’s Board of Directors sets out the names of the members of the Board of Directors of REC Silicon AS. Management The table above for the Guarantor’s Management sets out the names of the members of the Board of Directors of REC Silicon Inc (US Operations Management).

REC Silicon Pte. Ltd. Board of Directors The table below sets out the names of the members of the Board of Directors of REC Silicon Pte Ltd:


Tore Torvund Director REC Silicon Pte. Ltd. 80 Robinson Road #02-00 Singapore 068898

Lee Wei Hsiung Director REC Silicon Pte. Ltd. 80 Robinson Road #02-00 Singapore 068898

Tore Torvund See above under REC Silicon ASA. Lee Wei Hsiung Mr. Lee joined the organization in 2014 when the company was formed. He has been in the corporate secretarial industry for more than 13 years and possesses a wide range of experiences in corporate secretarial matters. He was admitted as an Associate Member of the Institute of Chartered Secretaries & Administrators (ICSA) in 2005 and has been a Practising Chartered Secretary since 2007. Management REC Silicon Pte. Ltd. Functions as a holding company and has few day-to-day operational requirements. Therefore, the Board of Directors performs as management when required.


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9.2 Administrative, management and supervisory bodies conflicts of interest All members of the Board are independent of Group Management. All of the Board members are independent of material business contacts. Jens Ulltveit-Moe (Chairman of the Board of Directors) is a major shareholder of the Company. Espen Klitzing (Board member) currently holds positions as CFO of Umoe Group and Chairman of the Board of several of the Umoe Group companies. Mr. Ole Jacob Ræstad, a member of the Nomination Committee, currently holds positions as CEO of Umoe Gas Carriers AS and CFO of Knutsen OAS Shipping, both related to the Company’s largest shareholder, the Umoe Group. Please see note 10 (Related Party Transactions) to the 2017 REC Silicon Annual Report.


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10 Board practices

10.1 Audit committee The Audit Committee consists of two members of the Board both of which are independent of Group Management. The Committee collectively has the competence required in the Public Limited Liability Companies Act § 6-42. Both members are independent according to § 6-42 Public Limited Liability Companies Act, and both members have the required qualifications within accounting and auditing. The Committee supports the Board with respect to the assessment and control of financial risk, financial reporting, auditing, control, and prepares discussions and resolutions for Board meetings. It has no decision-making authority. In addition, under the whistle-blower procedure, complaints from employees and other concerned parties are received and followed up by the Committee. The Chief Financial Officer participates in the meetings of the Audit Committee. The Committee holds at least one meeting per year with the auditor and without the Chief Financial Officer or any other members of the Group Management and administration present. The Committee also assesses and monitors the auditor’s independence, including non-audit services provided by the auditor. The Committee makes recommendations to the Board with respect to appointment, retention and termination of the Group’s auditor as well as the auditor’s fees. The Committee reviews complaints regarding accounting, internal controls, and auditing matters. The tasks and rules of procedure of the Audit Committee are further regulated in the Audit Committee Charter. The audit committee members are currently Ms. Ragnhild Wiborg (chair) and Mr. Espen Klitzing.

10.2 Statement of compliance On April 4, 2018, the Board of Directors and the Chief Executive Officer confirmed, to the best of their knowledge:

The financial statements for the Group and the Company for the year ending December 31, 2017 have been prepared in accordance with applicable accounting standards, and

The information in the financial statements gives a true and fair view of the Group’s and the Company’s

assets, liabilities, financial position, and results of operations for the year ending December 31, 2017, and

The report from the Board of Directors for the year ending December 31, 2017 includes a fair review of:

o The development, results of operations and position for the Group and the Company, and o The principal risks and uncertainties for the Group and the Company.

On July 18, 2018, the Board of Directors and the Chief Executive Officer made the following confirmation:

We confirm that, to the best of our knowledge, the condensed set of financial statements for the first half year 2018 gives a true and fair view of the Group’s consolidated assets, liabilities, financial position, and results of operations. To the best of our knowledge, the first half year 2018 report includes a fair review of important events during the period and their effects on the condensed set of financial statements for the first half year 2018, together with a description of the principal risks and uncertainties for the remaining months of the financial year as well as transactions with related parties that have a material effect on financial position or the results for the period.

Compliance REC Silicon ASA (the “Company”) and its subsidiaries (together REC Silicon 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 30, 2014. The Board of Directors seeks to provide effective governance of business and affairs to ensure long-term benefits of REC Silicon’s stakeholders, and puts emphasis on transparency and equal treatment of its shareholders. Approved and implemented Corporate Governance principles are built on a set of rules and procedures, which, along with the charters and key practices of the Board Committees, provide the framework for the governance in REC Silicon. The Board will annually review the Corporate Governance policy.


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For more information about Corporate governance, please see: http://www.recsilicon.com/investors/corporate-governance The Responsibility Statement and the full Statement of Compliance can be found on pages 15 and 16 of the Group’s Annual Report 2017.


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11 Major shareholders

11.1 Ownership

The Issuer As of September 10, 2018, the share capital of REC Silicon ASA amounted to NOK 2,543,818,785 divided into 2,543,818,785 shares at a nominal value of NOK 1 each. Below is a list of the top 20 shareholders as at September 10, 2018.

REC Silicon ASA has one class of shares and each share confers one voting right at the General Meetings. The Articles of Association contain no restrictions on voting rights. The Issuer is listed on the Oslo Stock Exchange. All shares are without any restrictions and are freely tradable.


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The Guarantors

REC Silicon AS REC Silicon AS is fully owned by the Issuer

REC Silicon Inc. REC Silicon Inc. is fully owned by the Issuer through REC Silicon AS.

REC Solar Grade Silicon LLC REC Solar Grade Silicon LLC is fully owned by the Issuer through REC Silicon Inc.

REC Advanced Silicon Materials LLC REC Advanced Silicon Materials LLC is fully owned by the Issuer through REC Silicon Inc.

REC Silicon Pte Ltd REC Silicon Pte Ltd is fully owned by the Issuer through REC Silicon AS.

11.2 Change in control of the company There are no arrangements, known to the Issuer and the Guarantors, the operation of which may at a subsequent date result in a change in control of the Issuer or the Guarantors, respectively.


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12 Financial information concerning the issuer's assets and liabilities, financial position and profits and losses

12.1 Historical Financial Information

Issuer The consolidated financial statements for the issuer have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS), relevant interpretations, and the Norwegian Accounting Act. The accounting policies are shown in the Annual Report 2017, note 2, pages 32-36. According to the Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council, information in a prospectus may be incorporated by reference. Because of the complexity in the historical financial information and financial statements this information is incorporated by reference to the Q2 Report 2018, Q1 Report 2018, Annual Report 2017 and Annual Report 2016. Please see Cross Reference List for complete references. Q2 Report 2018

Unaudited Q1 Report 2018

Unaudited Annual Report

2017 Annual Report

2016 REC Silicon ASA (Consolidated IFRS) Consolidated statement of financial position Pages 10-11 Pages 8-9 Pages 24-25 Pages 24-25 Consolidated statement of income Page 12 Page 10 Page 26 Page 26 Consolidated statement of comprehensive income

Page 13

Page 11

Page 27

Page 27

Consolidated statement of cash flow Page 15 Page 13 Page 30 Page 30 Notes to the consolidates financial statements

Pages 16-25

Pages 14-22

Pages 32-71

Pages 32-70

REC Silicon ASA (Parent NGAAP) Balance Sheet Pages 72-73 Pages 72-73 Income statement Page 74 Page 74 Statement of cash flow Page 75 Page 75 Notes to the consolidates financial statements

Pages 77-86 Pages 77-86

Guarantors REC Silicon AS REC Silicon AS’s accounting policies is shown in REC Silicon AS Annual Report 2017, Note 1 pages 9-10. REC Silicon AS Annual Report 2016 and 2017 are attached as Appendix 1 and Appendix 2, respectively. Historical financial information for the financial years 2017 and 2016 is available on the pages in the annual reports as set out below.

Annual Report 2017 Annual Report

2016 REC Silicon AS (NGAAP) Balance Sheet Pages 5-6 Pages 6-7 Income statement Page 7 Page 5 Statement of cash flow Page 8 Page 8 Notes to the Financial statements Pages 9-13 Pages 9-12


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REC Silicon Inc REC Silicon Inc’s accounting policies are shown in the special purpose separate financial statements of REC Silicon, Inc. for the financial years 2016 and 2017, Note B pages 5-8. REC Silicon, Inc.’s special purpose separate financial statements for years 2016 and 2017 are attached as Appendix 3. Historical financial information for the financial years 2017 and 2016 is available on the pages in the financial statements set out below.

REC Silicon, Inc.’s special purpose separate

financial statements for years 2016 and 2017 REC Silicon Inc (NGAAP with adjustments) Balance Sheet Page 3 Income statement Page 2 Statement of cash flow Page 4 Notes to the Financial statements Pages 5-19

REC Solar Grade Silicon LLC REC Solar Grade Silicon LLC’s accounting policies are shown in the special purpose individual financial statements of REC Solar Grade Silicon LLC for the financial years 2016 and 2017, Note B pages 5-8. REC Solar Grade Silicon LLC’s special purpose individual financial statements for years 2016 and 2017 are attached as Appendix 4. Historical financial information for the financial years 2017 and 2016 is available on the pages in the financial statements set out below. REC Solar Grade Silicon, LCC’s special purpose

individual financial statements for years 2016 and 2017

REC Solar Grade Silicon LLC (NGAAP with adjustments) Balance Sheet Page 3 Income statement Page 2 Statement of cash flow Page 4 Notes to the Financial statements Pages 5-19

REC Advanced Silicon Materials LLC REC Advanced Silicon Materials LLC’s accounting policies are shown in the special purpose individual financial statements of REC Advanced Silicon Materials LLC for the financial years 2016 and 2017, Note B pages 5-8. REC Advanced Silicon Materials LLC’s special purpose individual financial statements for the years 2016 and 2017 are attached as Appendix 5. Historical financial information for the financial years 2017 and 2016 is available on the pages in the financial statements set out below. REC Advanced Silicon Materials LCC.’s special

purpose individual financial statements for years 2016 and 2017

REC Advanced Silicon Materials LLC (NGAAP with adjustments) Balance Sheet Page 3 Income statement Page 2 Statement of cash flow Page 4 Notes to the Financial statements Pages 5-19


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REC Silicon Pte Ltd REC Silicon Pte Ltd’s accounting policies is shown in Silicon Pte Ltd Annual Report 2017, Note 1 pages 9-10. REC Silicon Pte Ltd Annual Report 2016 and 2017 are attached as Appendix 6 and Appendix 7, respectively. Historical financial information for the financial years 2017 and 2016 is available on the pages in the annual reports as set out below. Annual Report 2017 Annual Report 2016 REC Silicon Pte Ltd (Singapore GAAP) Statement of financial position Page 7 Page 7 Statement of profit or loss and other Comprehensive income

Page 8 Page 8

Statement of cash flow Page 10 Page 10 Notes to the Financial statements Pages 11-20 Pages 11-19

12.2 Financial statements See section 12.1 Historical Financial Information.

12.3 Auditing of historical annual financial information

12.3.1 Statement of audited historical financial information

Issuer The historical financial information for 2016 and 2017 has been audited. A statement of audited historical financial information is given in Issuer’s Annual Report 2017 pages 88-92 and Issuers Annual Report 2016 pages 88-92.

Guarantors REC Silicon AS The historical financial information for 2016 and 2017 has been audited. A statement of audited historical financial information is given in the REC Silicon AS’ Annual Report 2016 pages 13-14 and REC Silicon AS’ Annual Report 2017 pages 14-16, available as Appendix 1 and 2.

REC Silicon Inc. The historical financial information for 2016 and 2017 has been audited.

Please notice following statements in auditor’s report. Emphasis of Matter - Basis of Accounting: We draw attention to note A and B to the Financial Statements, which describes the basis of accounting, including the approach to and the purpose for preparing them. The Special Purpose Separate Financial Statements are prepared for the purpose of presenting the balance sheet and income statement of the Company as part of the listing requirements on Oslo Stock Exchange for the new bond issued by REC Silicon ASA (ultimate parent company) on 13 April 2018. As a result, the Special Purpose Separate Financial Statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter.” Material Uncertainty Related to Going Concern: We draw attention to Note S and V to the Special Purpose Separate Financial Statements for the Company. The Company has stated that the Company's ability to continue as a going concern is dependent on the REC Silicon ASA Group's ability to operate as a going concern.


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The REC Silicon ASA Group ("Group") had a cash position of USD 42,4 million and current interest bearing debt of USD 25,8 million as per 30 June 2018. REC Silicon ASA has stated that the Group’s liquidity is dependent upon increases in demand for solar grade polysilicon or a resolution to the solar trade war between China and the United States. In addition, if conditions surrounding the call of the indemnity loan or the outcome of tax examinations in Norway for REC Silicon ASA are negative, the liquidity risk for the Group will increase. The indemnification loan was callable in February 2016. This loan has not been called and the due date is uncertain (see note V). The REC Silicon ASA’s tax filings for prior years continue to be under examination by the Norwegian Central Tax Office (see note V) and the timing and impact of a ruling remain uncertain. These matters indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter."

A statement of audited historical financial information is given in the special purpose separate financial statements of REC Silicon Inc. for the financial years 2016 and 2017, pages 22-24, available as Appendix 3.

REC Solar Grade Silicon LLC The historical financial information for 2016 and 2017 has been audited. Please notice following statements in auditor’s report. Emphasis of Matter - Basis of Accounting: We draw attention to note A and B to the Financial Statements, which describes the basis of accounting, including the approach to and the purpose for preparing them. The Special Purpose Individual Financial Statements are prepared for the purpose of presenting the balance sheet and income statement of the Company as part of the listing requirements on Oslo Stock Exchange for the new bond issued by REC Silicon ASA (ultimate parent company) on 13 April 2018. As a result, the Special Purpose Individual Financial Statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter.” Material Uncertainty Related to Going Concern: We draw attention to Note S and V to the Special Purpose Individual Financial Statements for the Company. The Company has stated that the Company's ability to continue as a going concern is dependent on the REC Silicon ASA Group's ability to operate as a going concern. The REC Silicon ASA Group ("Group") had a cash position of USD 42,4 million and current interest bearing debt of USD 25,8 million as per 30 June 2018. REC Silicon ASA has stated that the Group’s liquidity is dependent upon increases in demand for solar grade polysilicon or a resolution to the solar trade war between China and the United States. In addition, if conditions surrounding the call of the indemnity loan or the outcome of tax examinations in Norway for REC Silicon ASA are negative, the liquidity risk for the Group will increase. The indemnification loan was callable in February 2016. This loan has not been called and the due date is uncertain (see note V). The REC Silicon ASA’s tax filings for prior years continue to be under examination by the Norwegian Central Tax Office (see note V) and the timing and impact of a ruling remain uncertain. These matters indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter." A statement of audited historical financial information is given in the special purpose individual financial statements of REC Solar Grade Silicon LLC for the financial years 2016 and 2017, pages 21-23, available as Appendix 4.


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REC Advanced Silicon Materials LLC The historical financial information for 2016 and 2017 has been audited. Please notice following statements in auditor’s report. Emphasis of Matter - Basis of Accounting: We draw attention to note A and B to the Financial Statements, which describes the basis of accounting, including the approach to and the purpose for preparing them. The Special Purpose Individual Financial Statements are prepared for the purpose of presenting the balance sheet and income statement of the Company as part of the listing requirements on Oslo Stock Exchange for the new bond issued by REC Silicon ASA (ultimate parent company) on 13 April 2018. As a result, the Special Purpose Individual Financial Statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter.” Material Uncertainty Related to Going Concern: We draw attention to Note S and V to the Special Purpose Individual Financial Statements for the Company. The Company has stated that the Company's ability to continue as a going concern is dependent on the REC Silicon ASA Group's ability to operate as a going concern. The REC Silicon ASA Group ("Group") had a cash position of USD 42,4 million and current interest bearing debt of USD 25,8 million as per 30 June 2018. REC Silicon ASA has stated that the Group’s liquidity is dependent upon increases in demand for solar grade polysilicon or a resolution to the solar trade war between China and the United States. In addition, if conditions surrounding the call of the indemnity loan or the outcome of tax examinations in Norway for REC Silicon ASA are negative, the liquidity risk for the Group will increase. The indemnification loan was callable in February 2016. This loan has not been called and the due date is uncertain (see note V). The REC Silicon ASA’s tax filings for prior years continue to be under examination by the Norwegian Central Tax Office (see note V) and the timing and impact of a ruling remain uncertain. These matters indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter." A statement of audited historical financial information is given in the special purpose individual financial statements of REC Advanced Silicon Materials LLC for the financial years 2016 and 2017, pages 20-22, available as Appendix 5.

REC Silicon Pte Ltd The historical financial information for 2016 and 2017 has been audited. A statement of audited historical financial information is given in the REC Silicon Pte Ltd.’s Annual Report 2016 pages 4-6 and REC Silicon Pte Ltd.’s Annual Report 2017 page 4-6 available as Appendix 6 and 7.

12.4.1 Last year of audited financial information The last year of audited financial information is 2017 for the Issuer and for the Guarantors.

12.5 Legal and arbitration proceedings From time-to-time, during the normal course of business, the Company receives notices of purported claims which we believe to be without substantial or material foundation. Only those matters with substantial material foundation that have a consequential impact on the issuer or Guarantors are disclosed in financial reports published by the Issuer and Guarantors.

REC Silicon ASA (Issuer) The Norwegian Central tax Office is conducting an examination of the Company’s tax returns for the fiscal years 2009, 2010 and 2011 and has issued a draft decision challenging the deduction of certain losses. The Company received a draft decision dated June 30, 2017 from the Norwegian Central Tax Office (CTO) regarding tax returns for tax years 2009 through 2011. The CTO challenged the deductibility of losses on loans and guarantees provided to subsidiaries and affiliates. The Company has filed a response with supporting arguments and documentation opposing the conclusions reached in the CTO’s draft decision. The Company believes that the losses are deductible and that the Company’s position will eventually prevail. However, the timing and amount of any potential outcome is subject to substantial uncertainty. Please see note 31 to the 2017 REC Silicon Annual


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Report. An unfavorable final ruling by the CTO could have a significant adverse impact on the Group’s financial results and liquidity.

REC Solar Grade Silicon LLC (Guarantor) REC Solar Grade Silicon LLC has appealed property taxes assessed by Grant County Washington (USA). REC Silicon has contested Grant County’s valuations of taxable property. The 2012 assessment year is subject to an appeal currently pending before the Thurston County Superior Court. Assessment for the years 2013 through 2015 have also been appealed. Please see note 31 to the 2017 REC Silicon Annual Report. An unfavorable outcome in these appeals could have a significant adverse impact on the Group’s financial results and liquidity. On August 17, 2018, the Thurston County Superior Court issued a bench ruling affirming Grant County’s valuation of REC Silicon’s property for assessment year 2012. The Court ruled from the bench so the decision is not official until an order is presented by the parties and signed by the judge. There has not yet been an agreed order presented to the judge. After the order is signed, REC will have 30 days to appeal to the Washington Court of Appeals. The company intends to appeal this ruling to the Court of Appeals of Washington. The ruling will not affect amounts reflected in the company’s financial statements and the company will not be required to pay the disputed tax amounts until all appeals are exhausted. Please see note 31 (Claims, Disputes, Contingent Liabilities, and Contingent Assets) to the 2017 REC Silicon Annual Report. The Issuer and the Guarantors are not aware of any other ongoing, pending or threatened governmental, legal or arbitration proceedings during the previous 12 months that may have or have had in the recent past a significant effect on Issuer or Guarantors financial position or profitability.

12.6 Significant changes in financial or trading position Other than the ruling on the property tax appeal discussed above, there have been no significant changes in the financial or trading position of the Issuer or the Guarantors since the end of the last financial period for which annual and interim financial information has been published.


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13 Material contracts None of the Issuer or the Guarantors has entered into any material contracts outside the ordinary course of business for the two years prior to the date of this Prospectus.

14 Documents on display The following documents (or copies thereof) may be inspected for the life of the Registration document at the registered offices of the Issuers and the Guarantors, according to clause 5.1.4, respectively:

(a) the memorandum and articles of association of the company; (b) all reports, letters, and other documents, historical financial information, valuations and statements

prepared by any expert at the company's request any part of which is included or referred to in the Registration Document;

(c) the historical financial information of the Issuer and its subsidiary undertakings for each of the two financial years preceding the publication of the Registration Document.


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15 Cross reference list Reference in Registration Document

Refers to Details

12.1 Historical Financial Information

Issuers Q1 Report 2018 , available at: http://hugin.info/136555/R/2187481/845910.pdf

Consolidated statement of financial position, pages 8-9 Consolidated statement of income, page 10 Consolidated statement of comprehensive income, page 11 Consolidated statements of cash flow, page 13 Notes to the consolidated financial statements, pages 14-22

Issuers Q2 Report 2018 , available at: http://hugin.info/136555/R/2205977/857287.pdf

Consolidated statement of financial position, pages 10-11 Consolidated statement of income, page 12 Consolidated statement of comprehensive income, page 13 Consolidated statements of cash flow, page 15 Notes to the consolidated financial statements, pages 16-25

Issuer’s Annual Report 2017, available at: http://hugin.info/136555/R/2181919/842496.pdf

Consolidated income statements page 63 Consolidated Balance Sheet per 31 December, page 65 Consolidated statements of cash flow, page 68 Notes to the consolidated financial statements, pages 69-105 Statements of income, page 107 Balance Sheet per 31 December, pages 108-109 Statements of cash flow, page 111 Notes to the financial statements, pages 112-125


Consolidated income statements page 21 Consolidated Balance Sheet per 31 December, page 22-23 Consolidated statements of cash flow, page 24 Notes to the consolidated financial statements, pages 30 - 43 Statements of income, page 21 Balance Sheet per 31 December, pages 22-23 Statements of cash flow, page 24 Notes to the financial statements, pages 30-43

12.3.1 Statement of audited historical financial information


Auditors report, pages 88-92


Auditors report, pages 88-92


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16 Disclaimers

16.1 Lead Managers' disclaimer Arctic Securities AS and DNB Bank ASA, DNB Markets (the "Joint Lead) have assisted the Company in preparing this Registration Document. The Joint Lead Managers have not verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and the Joint Lead Managers expressly disclaim any legal or financial liability as to the accuracy or completeness of the information contained in this Registration Document or any other information supplied in connection with bonds issued by the Company or their distribution. The statements made in this paragraph are without prejudice to the responsibility of the Company. Each person receiving this Registration Document acknowledges that such person has not relied on the Joint Lead Managers or on any person affiliated with it in connection with its investigation of the accuracy of such information or its investment decision. Confidentiality rules and internal rules restricting the exchange of information between different parts of the Joint Lead Managers may prevent employees of the Joint Lead Managers who are preparing this Registration Document from utilizing or being aware of information available to the Joint Lead Managers and/or affiliated companies and which may be relevant to the recipient’s decisions.

Oslo, September 26, 2018

Arctic Securities AS DNB Bank ASA, DNB Markets


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Appendix 1 Financial Report 2016 for REC Silicon AS

Appendix 2 Financial Report 2017 for REC Silicon AS

Appendix 3 Special Purpose Separate Financial Statements 2016 and 2017 for REC Silicon Inc

Appendix 4 Special Purpose Individual Financial Statements 2016 and 2017 for REC Solar Grade Silicon LLC

Appendix 5 Special Purpose Individual Financial Statements 2016 and 2017 for REC Advanced Silicon Materials LLC

Appendix 6 Financial Report 2016 for REC Silicon Pte Ltd

Appendix 7 Financial Report 2017 for REC Silicon Pte Ltd

Appendix 8 Articles of Association for REC Silicon ASA

Appendix 9 Articles of Association for REC Silicon AS

Appendix 10 Articles of Association for REC Silicon Inc

Appendix 11 Articles of Association for REC Solar Grade Silicon LLC

Appendix 12 Articles of Association for REC Advanced Silicon Materials LLC

Appendix 13 Articles of Association for REC Silicon Pte Ltd

4/26/2018 Articles of Association - REC Silicon

http://www.recsilicon.com/investors/corporate-governance/articles-of-association 1/2

Articles Of Association§ 1 The name of the Company

The name of the Company is REC Silicon ASA. The Company is a public limited liability company.

§ 2 Business address

The Company's business address is in the municipality of Bærum, Norway.

§ 3 Purpose

The Company's purpose is development and sale of products and services related to renewable energy sources, and to perform otherfinancial 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.

§ 4 Share capital

The Company’s share capital is NOK 2,543, 818,785 divided into 2,543,818,785 shares, each with a nominal value of NOK 1 (NOK one).The shares shall be registered in the Norwegian Central Securities Depository.

§ 5 The Board

The Company's Board of Directors shall consist of five to twelve members. The Chairman of the Board shall be elected by the BoardMembers. In the event of an equality of votes, the Chairman has the casting vote. The Board Members are elected for a period of one yearat a time.

§ 6 Nomination Committee

The Company shall have a Nomination Committee. The Committee shall consist of three members. The members of the Committee shallbe elected by the Company’s General Meeting, who also appoints the Committee’s Chairman. The Ordinary General Meeting shall also laydown the rules of procedure for the Committee’s work.

§ 7 Signature

The right to sign on behalf of the Company is assigned to the Chairman and one Board Member jointly. The Board may grant power ofprocuration.

§ 8 Acquisition of shares

Transfer of shares is not conditioned upon the Board’s approval. The shareholders have no pre-emptive rights upon the transfer of thecompany’s shares.

§ 9 The General Meeting

The Ordinary General Meeting shall be held annually before the end of June. General Meetings shall be held in the municipality where theCompany has its registered business address or in Oslo.

The call shall specify the agenda for the meeting.

The General Meeting shall consider the following:1. Approve the financial statements and the annual report, including the allocation of profits or deficits.2. Determine remuneration to the Board of Directors and approve remuneration to the Auditor3. Elect Board Members and Auditor4. Other issues that shall be considered by the General Meeting according to law or the Articles of Association

§ 10 Extraordinary General Meeting

http://www.recsilicon.com/

4/26/2018 Articles of Association - REC Silicon

http://www.recsilicon.com/investors/corporate-governance/articles-of-association 2/2

Extraordinary General Meeting shall be held whenever the Board deems it necessary. The Board shall also call for an ExtraordinaryGeneral Meeting when the auditor or shareholders who together represent at least five percent of the share capital demand it in writing inorder to have a specific item considered.

The call shall specify the issues to be considered. The Board shall ensure that such General Meeting is held no later than one monthsubsequent to the date it was required to have such General Meeting. On the extraordinary General Meeting only the issues specified inthe call shall be considered, unless all shareholders approve otherwise.

§ 11 Publication of documentation related to general meetings on the company’s website

When documents pertaining to matters to be handled at a general meeting have been published at the Company’s website, therequirement in the Public Limited Liability Companies Act that such documents shall be distributed to the shareholders does not apply. Thisincludes documents that according to statutory requirements shall be distributed to the shareholders together with the notice of a generalmeeting. A shareholder may however request to receive the documents by mail.

§ 12 Participation at General Meetings and proposals for items on the agenda

The Company may in the notice of a General Meeting state that shareholders who wish to participate in the General Meeting, shall notifythe Company of this within a specific time limit. The time limit cannot expire earlier than five days prior to the General Meeting.Shareholders who have not given notice within the time limit may be denied participation.

A shareholder has the right to have matters considered at the General Meeting. The matter shall be provided to the Board in writing nolater than seven days prior to the time limit for notice of the General Meeting together with a proposal for resolution or reasons for why thematter is put on the agenda. If the notice has already been distributed, a new notice shall be distributed if the time limit for notice to theGeneral Meeting has not expired. A shareholder also has the right to put forward a proposal for resolution.

The Board of Directors may decide that shareholders may cast written votes in advance on items that are to be considered at theCompany’s general meetings. Such votes may also be cast through electronic communication. The possibility of voting in advance iscontingent upon the existence of a satisfactory method for verifying the identity of the voter. The Board of Directors may establish moredetailed guidelines for written advance votes. It shall be evident from the notice of the general meeting whether voting in writing in advanceof the general meeting is allowed, and which guidelines, if any, have been established for such voting.

In order for a shareholder to be entitled to exercise its rights to attend and to vote on the general meeting, the shareholder’s holdings ofshares must be registered with the Company’s share register the fifth (5th) business day prior to the day the general meeting is held (therecord date).

Latest amendment July 15, 2015.

(IN-HOUSE TRANSLATION)

Copyright © REC Silicon ASA Contact us AGM 2018 Disclaimer

http://www.recsilicon.com/home/contact-us

http://www.recsilicon.com/investors/agm

http://www.recsilicon.com/about-us/disclaimer