April 23, 2008

Oslo, Norway: REC Reports First Quarter 2008 Results

Renewable Energy Corporation ASA (REC) reported revenue of NOK 1,771 million in the first quarter 2008, an increase of 10 percent from NOK 1,616 million in the first quarter 2007 Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to NOK 742 million in the first quarter 2008, a decline of 15 percent from NOK 869 million in the first quarter 2007.

The EBITDA margin of 42 percent in the first quarter 2008 compares with 54 percent in the same quarter last year.

The operating profit (EBIT) was NOK 579 million in the first quarter, compared to NOK 737 million in the same quarter in 2007, and the EBIT margin decreased to 33 percent from 46 percent.

As described in the interim report for the fourth quarter 2007, REC has entered into three major USD-denominated contracts for wafer deliveries with customers for whom USD is not the functional currency. For accounting purposes, REC needs to treat these sales contracts as if they were denominated in NOK, whereas the embedded forward purchases of USD are separated and accounted for on a fair value basis, with changes in the fair value being charged to financial items.

As a result of a further decline of USD compared with NOK in the first quarter 2008, a loss of NOK 226 million was recognized on the total contract value as a part of financial items. Of this, NOK 22 million was realized and had a positive effect on EBITDA, based on sales against these contracts in the first quarter. The accounting method has no cash flow effect and the losses will be reversed in the Income Statement over the contract periods.

Including these effects, profit before tax was NOK 327 million in the first quarter 2008, compared to NOK 634 million in the first quarter 2007. Earnings per share were NOK 0.43 in the first quarter 2008. This compares to NOK 0.86 in the first quarter 2007, on both a basic and diluted basis.

REC, has also signed a long-term agreement for the supply of wafers with one of its major existing customers. The agreement is structured as a take-and-pay contract with pre-determined prices and volumes for the entire contract period. Deliveries of wafers under the new agreement will start in 2009 and run until 2013, with a total contract value of about NOK 2 billion. Supply under the new agreement comes in addition to the volumes delivered under the existing contract.

Further details about: REC Group