Hexagon Composites — Investor Presentation 2015

Jun 4, 2015

COMPOSITES

INTEGRITY & DRIVE

DISCLAIMER AND IMPORTANT NOTICE

This company presentation (the "Presentation") has been prepared by Hexagon Composites ASA ("Hexagon" or the "Company"). The Presentation has not been reviewed or registered with, or approved by, any public authority, stock exchange or regulated market place. The Company makes no representation or warranty (whether express or implied) as to the correctness or completeness of the information contained herein, and neither the Company nor any of its subsidiaries, directors, employees or advisors assume any liability connected to the Presentation and/or the statements set out herein. This presentation is not and does not purport to be complete in any way. The information included in this Presentation may contain certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or its advisors or any of their parent or subsidiary undertakings or any such person's affiliates, officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company and its advisors assume no obligation to update any forward-looking statements or to conform these forward-looking statements to the Company's actual results. Investors are advised, however, to inform themselves about any further public disclosures made by the Company, such as filings made with the Oslo Stock Exchange or press releases. This Presentation has been prepared for information purposes only. This Presentation does not constitute any solicitation for any offer to purchase or subscribe any securities and is not an offer or invitation to sell or issue securities for sale in any jurisdiction, including the United States. Distribution of the Presentation in or into any jurisdiction where such distribution may be unlawful, is prohibited. This Presentation speaks as of 7th May 2015, and there may have been changes in matters which affect the Company subsequent to the date of this Presentation. Neither the issue nor delivery of this Presentation shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of the Company have not since changed, and the Company does not intend, and does not assume any obligation, to update or correct any information included in this Presentation. This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo City Court as exclusive venue. By receiving this Presentation, you accept to be bound by the terms above.

LEADING SINCE 1963

GROWTH

TYPE 4 COMPOSITE CYLINDERS OFFER WEIGHT, CORROSION AND SAFETY ADVANTAGES

• •Product development
• •Cost reductions
• •Marketing & Branding

2015

A LIGHTER WORLD

SOURCES OF HEXAGON'S COMPETITIVE ADVANTAGE

Automated production

Scale

Procurement

HEXAGON RAGASCOA BETTER PATTERN FOR YOUR BUSINESS

Skjalg S. Stavheim, Managing Director Hexagon Ragasco 4th of June, 2015 – Capital Markets Day

AGENDA

• •Introduction
• •Products
• •Value proposition
• •Markets

Hexagon Ragasco will further strengthen its global leader position worldwide in composite LPG cylinders

FACILITIES

• •Located at Raufoss Industrial Park, Norway
• •110 employees
• •International sales representatives
• •4000 m² manufacturing space
• •Plant built in 2000 – expansions in 2006 and 2009

HISTORIC VOLUME DEVELOPMENT'000 UNITS

OUR COMPOSITE LPG CYLINDERS

• •Composite pressure vessel since 1985
• •LPG cylinders since 2000
• •Over 10 million units sold worldwide
• • Adding value for customers in over 60 countries
• •Industry-leading safety record

TECHNICAL SPECIFICATIONS

1 Sp i f ica t io ec ns	5, 0 kg	7, 5 kg	1 0, 0 kg	1 0, 7 kg	1 1, 2 kg	1 4, 0 kg
Pr Ca i ty ( kg ) op an e p ac	5, 0	7, 5	1 0, 0	1 0, 7	1 1, 2 kg	1 4, 0
Bu ta Ca i ty ( kg ) ne p ac	6, 0	8, 5	1 2, 0	1 2, 8	1 3, 4 kg	1 6, 5
2 ( Em ty ig h t kg ) p we	3, 4	4, 1	5, 0	5, 1	5, 3	6, 3
W te te t ( L ) a r c on n	1 2, 5	1 8, 2	2 4, 5	2 6, 2	2 7, 4	3 3, 5
He ig h t ( ) m m	3 8 4	4 6 8	5 7 1	5 9 5	6 2 2	7 1 5
D iam te ( ) e r m m	3 0 5	3 0 5	3 0 5	3 0 5	3 0 5	3 0 5

1. All values are nominal. 2. Without valve

NEW DESIGN AND BRANDING POSSIBILITIES

CONSTRUCTION OF OUR CYLINDERS

1. Seamless polymer liner operates as a barrier for the gas

2. Fibre structure holds the pressure and prevents bursting of the pressure vessel

3. Fully-integrated outer casing protects the valve and the pressure vessel, and gives our cylinders its unique appearance

STATE OF THE ART MANUFACTURING PLANT

• • Advanced production plant in Raufoss – the only one of its kind in the world
• • Fully-automated, high-speed production line
• • High production utilization during 2014

VALUE PROPOSITION

TYPE IV OFFERS A CLEAR VALUE PROPOSITION

More convenient

Composite cylinders in general more convenient product

• •Easier to transport, lower weight
• • Transparent material makes it possible to see the LPG level

More flexible designs and forms

• •Nicer visual expression than steel
• • Opportunities to design for easier stacking, handling, transport, etc.

Increased safety

Steel cylinders may possibly explode in case of fires

• Highly dangerous in densely populated areas or high risk zones

Composites cannot BLEVE*

• • Composite material will melt instead, leaking the LPG
• • Large Iraqi sale partly based on increased safety from composites

Lower cylinder weight

Composites weigh ~half of steel Easier to transport No BLEVE* risk

Composite cylinders weight - 50% of steel cylinders

• • Reduces weight of filled cylinders by 25% (LPG and cylinder ~50/50)
• • Large size composite cylinders are more advantageous in terms of weight than smaller ones.

Advantageous if there are regulatory limits to maximum lifts or carry

• • E.g. forklift trucks with max weight above certain heights
• • Requirements on workers' safety or similar

*A boiling liquid expanding vapor explosion (BLEVE) is an explosion caused by the rupture of a vessel containing a pressurized liquid above its boiling point.

Safer

• • Pressure tests show our composite cylinders withstand more than 50% higher burst pressures than their steel counterparts
• •Unrivalled safety record
• •Our cylinders will not BLEVE*

*A boiling liquid expanding vapor explosion (BLEVE) is an explosion caused by the rupture of a vessel containing a pressurized liquid above its boiling point.

Lighter

• • Our composite cylinders are half the weight of their steel equivalents
• • Easier to handle and transport and ultimately less costly as you spend less money to haul more gas
• • For consumers, easier to lift, change and refill

Corrosion-free

• • Composite cylinders do not rust, corrode or deteriorate like steel
• •Longer lasting and cleaner in use

Translucent

• •Easy to see the liquid gas level
• •Easy to check gas level in use
• • Eliminates the need for inaccurate gauges
• • Unique feature for user-friendly use, builds customer trust and preference

CYLINDER TYPES AND ASSOCIATED APPLICATIONS

No substantial different in usage across cylinder types

www.hexagon.no

27

TOTAL CYLINDER MARKET IS LARGE, BUT DOMINATED BY STEEL CYLINDERS

Hexagon Ragasco by far the largest player in the market – approx 90% market share

Growth in Type IV segment will be driven by increased penetration...

• • Hexagon Ragasco composite LPG cylinders are changing the LPG industry in the Philippines with the introduction of safer, more convenient and more durable characteristics for home-use compared to steel cylinders. EC Gas customers have reported good reviews wherein they greatly appreciate the translucency of the cylinders and the appealing design. JC Martínez, Division Manager, Eastern Composite Gas, Philippines.
• • We introduced Kosangas Light (Hexagon Ragasco composite cylinders) into the Danish market in 2001. Since then a great number of customers have experienced the benefits of the composite gas cylinder branded under the tag line: Light, Clear and Safe. Kosangas Light has made life easier for our dealers, commercial and domestic customers – both for outdoors and indoors use.

The lightweight cylinder has had an enormous influence on the popularity of cylindered gas for home use and is today the first choice of gas cylinders; a success story.

Sanne Møller Nielsen, Nordic Marketing Manager, Kosan Gas a/s, Denmark, UGI Group.

CNG AUTOMOTIVE PRODUCTSFORWARD ENGINEERING

Jack Schimenti, Managing Director Hexagon Lincoln 4th of June, 2015 – Capital Markets Day

AGENDA

• •History
• •Products
• •Applications
• •Value Proposition
• •Q&A

CYLINDER HISTORY

• • Experience manufacturing composite cylinders dating back to 1963 for the US defense industry
• • TUFFSHELL® cylinders became the first Type 4 to be certified to ANSI/AGA NGV2 in 1993 as a commercial product offering
• • Production shifted from Type 3 and 4 to all Type 4 cylinders in 2005
• • Spawned the TITAN™ Mobile Pipeline™ product launch in 2010 and is largest Type 4 commercial pressure vessel in the world

WHY WE ARE SUCCESSFUL

•Scale

• ̵ Hexagon has a unique position of scale. We procure fiber by the truckload and resin by the ton
• We produce more filament wound pressure vessels (CNG type 3 and 4) than anyone in the world
• Speed of production in unmatched
• •#1 direct purchaser of high strength carbon fiber
• • Products
• ̵Type 4 solutions represent most efficient production
• ̵Light weight and large sizes provide efficient vehicle performance
• Variety of products to support multiple applications ("One Stop Shopping") and leveraged scale

FACILITY GROWTH

• •Hexagon Lincoln Facility
• •Modern, largely automated composites production lines
• •2014 expansion of facility added a 3rd production line
• • 2015 expansion project underway to support continued growth with a 4th, specialized production line incorporating higher levels of automation

PRODUCTS

TYPE 1- 4 CNG CYLINDERS

• • Type 1 – All metal (aluminum or steel)
• • Type 2 – Metal liner reinforced by composite wrap (glass or carbon fiber) around the middle (hoop wrapped)
• • Type 3 – Metal liner reinforced by composite wrap around entire tank
• • Type 4 – Plastic gastight liner reinforced by composite wrap around the entire tank

MANUFACTURING TYPE 4 CYLINDERS

• • Incoming materials: Start with dry carbon fiber filaments, plastic pellets, metallic stock and resin components 1
• • Forming: Machine metal components, mold plastic and form polymer liner 2
• • 'Assembly': Add resin to fiber and wind over liner to create structural winding, layer by layer 3
• • Cure and test: Add heat to cure resin and finish the composite. Proof and leak finished cylinder

TUFFSHELL® TYPE 4 CYLINDER

2

Our tanks are 70% lighter than steel tanks.

• TUFFSHELL® Composite: High-strength fiber and hybrid construction reduces impact damage and fatigue 1

Liner: Polymer liner is corrosion free

Metallic Boss: Precision-machined valve interface ensures leak free operation, mount isolates tank from torsional forces 3

TUFFSHELL® DEVELOPMENTS

New 27" product: Largest Natural Gas Vehicle cylinders available increase volume on-board by 7% with a 25% reduction in weight

Newest TUFFSHELL® Solutions: Product enhancements combine on traditional products to yield up to a 37% reduction in weight for Heavy Duty applications

Volume: Packaging creativity increases volume 5% in the same installed space

Design for Manufacture: Newest product improvements reduce production time by 20%

TUFFSHELL® DEVELOPMENTS

Lightweight: New solutions allow reduced weight and higher volume for more payload and range than ever before

Efficient: Packaging flexibility ensures minimal impact on aerodynamics and a diesel-like experience

Durable: Corrosion free, toughness in cycle and impact resistance

Scalable: Production methods are highly scalable to keep pace with industry expansion

APPLICATIONS

OUTLOOK

TUFFSHELL® FOR TRANSIT BUS

• • Economical: lower fuel consumption and increased range
• • Environmental: CNG and Biogas represent a cleaner alternative
• • Safe: enhanced handling and drivability, corrosion free, fire resistant, better performance in crashes
• • Adaptable: low-cost custom sizing, optimize existing space and capacity
• • Easy to Install: fit in existing tank space, lightweight rooftop or chassis mount

TUFFSHELL® FOR PASSENGER CAR

• •Hexagon supplies 70% of European natural gas vehicles using composite
• •Installed by many qualified vehicle modifiers and OEM's worldwide
• • Still represents a very small % of the world's natural gas vehicle population leaving considerable growth potential

TUFFSHELL® FOR HEAVY DUTY TRUCK

• • No Range Anxiety with a single, behind-the-cab system
• • 160 DGE with 6.5mpg provides near 1,000 miles of range. Side rail mounts can be added if more is desired
• •Agility Hexagon Joint Venture
• • Additional side rail mounted cylinders can be added if more storage/range is desired

TUFFSHELL® HEAVY DUTY SYSTEMS

• •Serving the 200 bar TUFFSHELL® European market
• •Specializes in roof-mounted tanks and systems for transit buses
• •Production capacity thousands of systems annually

VALUE PROPOSITION

ENVIRONMENTAL BENEFITS

H D t V h i l e a e c e s v y u y -	C b I t i t a r o n n e n s y f F l o e u ( C 0 2 / M J ) g e	E E R	T t l o a	R d t i e u c o n s R l t i t e a e o v G l i a s o n e
D i l F l e s e e u	9 4 7 1	1	9 4 7	N A
C N G	6 8	0 9	6 7 5	2 0 %
C G B i t h N o m e a n e	1 1. 2 6	0 9	1 2 3 8	% 8 7
C N G 2 0 % B i h t o m e a n e	6 6 0 2 5	0 9	6 2 9	3 4 %

Source: NGV America

NATURAL GAS VEHICLE COST BENEFITS

• • Private Fleet Owned Stations range \$1.45-\$1.95/DGE
• • Anchor Tenant Public Stations range \$1.60- \$2.00/DGE
• • Public Access Stations average \$2.00/DGE
• • Can realize NGV payback in as little as 24 months

Source: GNA clean transportation energy consultants

• Current oil commodity price is very low making a narrow gap between traditional liquid fuels and CNG today but has proven highly volatile

REFUSE/TRANSIT CASE STUDIES

• •Classic "S"-curve pattern
• • Adoption of Refuse is stabilizing after a period of rapid growth. At the point of stabilization, replacement units will be needed.
• • Transit hit a plateau (2011) and is now increasing again.
• ~40% of new transit bus RFP's are CNG. (historic levels were 25%)
• ~30% of new transit bus orders are CNG (historic levels were 20-25%)

0%10%20%30%40%50%60%010002000300040005000600070002008 2009 2010 2011 2012 2013 2014 Natural GasDiesel Nat Gas %

Number of refuse trucks sold

CNG INFRASTRUCTURE GROWS STEADILY

• • Today's Infrastructure can support regional fleets
• • Focus has shifted toward high-flow, Class 8 capable infrastructure to support future mass adoption
• • Increased scale will reduce investment barriers further

CNG Fueling Station Count

LNG FALLING BEHIND PLANS

• • Infrastructure is a bigger hurdle (<70 public stations across the US) and isn't increasing at a pace that will support mass adoption
• • Liquefaction infrastructure very capital intensive –more complex distribution
• •CNG observed as the preferred choice on Nat Gas vehicle applications

LNG Fueling Station Count

HEAVY-DUTY FUELING INFRASTRUCTURE

• • HD CNG stations
• ̵Existing Private and Public 1001
• ̵Existing Current Public 585
• ̵Planned private and public 138
• • HD LNG Stations
• Existing Private and Public 104
• ̵Existing Public 67
• Planned Private and Public 69

Heavy Duty Fueling Stations

Source: NGV America Infrastructure

www.hexagon.no

HEAVY DUTY CNG - NORTH AMERICA

• • Position of strength in key growth areas in the marketplace
• • LNG or CNG dedicated vehicles, CNG will be majority
• • Cummins/Westport delivered ~10 200 engines (8.9L &
• 11.9L) in 2014
• ̵Projected at least that level in 2015

Market Shares

Hexagon Composites SCI/Luxfer Qauntum Fuel Systems

THE MOBILE PIPELINE™ COMPRESSED NATURAL GAS DELIVERED

Frank Haeberli • VP Mobile Pipeline™ • Hexagon Lincoln Inc. Capital Markets Day • June 4th, 2015

THE MOBILE PIPELINE™

You have this...

You don't need that...

Seven Days VT 27.05.2015:

International Paper in NY State now served by Mobile Pipeline™. If the biggest energy customers can get natural gas delivered via truck, is it really worthwhile to build an expensive, disruptive and controversial natural gas pipeline?

THE NEXT 20 MINUTES "COMPRESSED"….

I N T R O	T h e •	M b i l P i l i ™ o e p e n e
	O r u •	k t d i m a r e r e r s v
	T h e •	b i d l u s n e s s m o e
C O O G T E H N L Y	M o v •	G S l t t e a s n o e e –
	P r o •	d t O t i d S f t u c s, p e r a o n a n a e y
	M a r •	k h t e s a r e
C O S A P P L I A T I N	I d n u •	t i l d i l s r a a n c o m m e r c a
	O i l •	& G l i t a s e x p o r a o n
	H H •	P R i l a w a y s –
	N G •	V d h i t t t a u g e r s a o n s

•Market size

THE MOBILE PIPELINE™ – HOW IT WORKS

A SUCCESS STORY

• First road train with composite cylinders in 2005 in Australia

• • First SMARTSTORE™ built in 2006 for Indonesia
• • First TITAN™ market entry to Vietnam in 2010
• •US DOT approval in 2012
• • Global presence with
• •220 TITAN™units in NA
• •100 TITAN™ units in LA
• •140 TITAN™ units in SEA
• • 40 + SMARTSTORE™ in SEA, Europe and Russia

Hexagon Mobile Pipeline™ products globally

ECONOMIC DRIVERS FOR CNG

• • \$ 4-6 per mm Btu energy cost differential to Diesel and fuel oil
• •Quick start up/ min. approval level
• •Low up front expenditure for clients
• • Low up front commitment by end customer to capitalize on benefits
• • Flexibility/mobility in utilization of trailer equipment for the operators

Commodity prices based upon published prices, May 2015 (NYMEX, Mt. Belvue).

CNG handling costs include compression costs & transportation costs. Capital costs include amortized costs for compression, trailers and decompression equipment. LNG handling costs include liquefaction & transportation costs. Capital costs are for regasification equipment and cryogenic trailers.

THE BUSINESS MODEL

• •100 miles
• •2,1 Mio. mmbtu p.a.
• •US market
• • Abt. 10,2 USD/mmbtu with profit delivered

THE DECISION TREE

MOVE GAS, NOT STEEL – THE EVOLUTION

Portable volume in scm NG

STEEL OR COMPOSITE – CAPEX VS OPEX

LEADING PRODUCTS

SMARTSTORE™

• •up to 23,175 l/7,017 scm/1,712 DGE
• •15 MAGNUM™ tanks
• •Intermodal ISO 20´container
• •Highest volume in its class

TITAN™4

• •34,000 l/10,000 scm/ 2,440 DGE
• •4 TITAN™ tanks
• •Intermodal ISO 40´container
• • Best in class in USA meeting 80,000 lbs GVW limitation

TITAN™XL

• •49,250 l/14,912 scm/3,640 DGE
• •5 TITAN™/7 MAGNUM™ tanks
• •40´ road trailer
• •Largest CNG trailer globally
• • Meeting 90,000 lbs GVW SP limit in many US states

SUPERIOR VALUE PROPOSITION

Large tanks

• •Largest volumes
• •Lowest weight
• •Competitive cost

High-quality features

• •Simple, robust design
• •Practically unlimited lifetime
• •High flow
• •Superior fire safety
• • Less tanks = less connections = less maintenance

Strong brand

• • Recognized as the lead player known for highquality, reliable products
• • First entrant in the market: later entrants competing on price
• •Longest history in T4
• •Superior customer service

OPERATIONS – KEY SUCCESS FACTORS

• •Drying of gas before compression
• •Cooling of gas during/after compression
• •Heating of gas during offloading

• • Minimum plumbing- short/large dia pipes and large dia valves supporting high flow

• • 2014 Polar Vortex test: ambient temperatures as low as -34˚ C

• •Defueling was no problem
• • "Customers are very happy." Steve Palmer, Manager Construction and Maintenance NG ADVANTAGE

MARKET SHARE

Competition North America LUXFER – GTM with T3 FIBA with T2 Globally XPERION with T4 LUXFER with T3 Chinese steel tubes HEX 72 %LUXFER 9 %XPERION 19 %

Global market share in composite MP in 2014

•

•

•

•

•

MOBILE PIPELINE™ - APPLICATIONS

PAYBACK

CNG GOES INDUSTRIAL

Before

• •3 Million mmbtu of fuel oil p.a.
• •Waited for pipeline 1 year
• •40 Mio USD annual spent on fuel oil

After

• •28 TITAN™ delivered per day
• •9 Mio. USD fuel savings
• •250 ton CO2 annually saved
• •Clear skies

INDUSTRIAL & COMMERCIAL - LARGE UNTAPPED POTENTIAL

Attractive regions

• New England:
• Densely populated
• High resistance to pipeline build-up
• High amount of off-thegrid fuel consumption
• Great Plains:
• Low population density
• Cheap gas available from North Dakota
• Low population density
• Cheap gas available from Rockies
• South-East:
• High population density
• • Cheap gas available from Pennsylvania

CNG DISTRIBUTION IN O&G EXPLORATION

• •Drilling - Fracking – Heating
• •Capture of flare gas
• •High flow requirements
• •Shortest payback
• • Lowcost field gas
• •Small footprint of equipment

CAN CNG WIN THE RAILWAY?

5 major railways in the US

• •Operate 30,000 locomotives
• •Each locomotive burns 200 to 300 k DG per year
• • Railways want to adapt NG both for cost and emission aspects
• •LNG cost is 0,5 to 1,5 USD higher per DGE than CNG
• •Long lifetime of the asset - ROI of 5 years not sensitive
• •Large tanks are considered safer in operation
• • TITAN™ is key to solve the range demands
• •100% NG for the Eastern railways or
• • Dual fuel replacing between 30% to 60% of the diesel fuel for the Western railways

NGV DAUGHTER STATIONS

Emerging countries

• • Conventional fuels are heavily subsidized
• •Possess large NG resources
• • Need to expand NGV refuelling infrastructure on «fast-track»
• • Congested metropolitans make pipeline installation difficult and expensive
• • Mobile Pipeline™ and mobile refuelling are the solutions

MARKET SIZE – THE CRYSTAL BALL

• •Average oil price 80 USD/bbl
• • Deregulation of CNG market for utilities
• • Competitors still 3 years behind in development of large T4 tank
• • Impact of rail could be significant (not part of the forecast)

THANK YOU!

HYDROGEN SOLUTIONS

Jack Schimenti, Managing Director Hexagon Lincoln 4th of June, 2015 – Capital Markets Day

CITY AIR POLLUTION – IT'S NOT GETTING CLEARER

Paris to limit pollution by cars Eiffel Tower in March

• • Limiting vehicles in Paris by license plate number or "clean" vehicles
• • Diesel and fossil fueled vehicles will be minimized or eliminated
• • Clean vehicles such as electric vehicles will be particularly advantageous

CITY POLLUTION – NOT JUST A PARISIAN ISSUE

London has worse air quality than Beijing! Big Ben

• • London is challenged with air pollution
• • In just 4 days, London's Oxford Street breached the legal NO2 for all of 2015
• • Elimination of fossil fueled vehicles again stand as primary action

• • London Mayor has been criticized for failure to deliver on promise of electric car revolution

• • The Strategic Energy Plan updated by Japan's Cabinet on 11 April 2014:

• ̵ As to future secondary energy, hydrogen is expected to play the central role on well as electric and heat. Hydrogen though it is necessary to secure safety in handling it, it has many superior characteristics such as excellent utility and energy efficiency and emits no greenhouse gas and is expected to be useful in time so emergency (Source: 4th Strategic Energy Plan, METI)
• • Action to acquire Energy Security as Strategic Energy Plan
• Promote stationary Fuel Cells
• Create preferable market conditions for FCV's commercialization
• Develop new application toward wider use of Hydrogen (H2gas-bassed power generation)
• ̵Develop large-scale hydrogen supply chain (production/storage/delivery)
• Develop H2/FC Roadmap toward Hydrogen Society (Source: Hydrogen and Fuel Cell utilization in Japan and NEDO's R&D activity for Hydrogen and Fuel Cell technology, NEDO (2014))

COMPOSITES

APPLICATIONS

FUEL CELL APPLICATIONS

THE HYDROGEN SOLUTIONS

WELL-TO-WHEEL ADVANTAGE FCEV

Extrememetech: Hands on with Hyundai Tucson Hydrogen Fuel Cell: runs just like a normal car (in SoCal), by Bill Howard, 31 March 2015)

HYDROGEN VEHICLE RANGE COMPARISON TO OTHER FUELS

INCREMENTAL VEHICLE COST COMPARISON

Source: Hydrogen-Powered Fuel Cell Electric Vehicles Compared to the Alternatives: Dr. C.E. (Sandy) Thomas

FCEV DEVELOPMENTS

• • Toyota
• Mirai means "future" in Japanese
• Available in California
• Target 1500 in 2015
• 60 month waitlist
• \$58,325
• • Hyundai
• Tucson
• Available in California
• 3 year lease of \$499 a month
• Hyundai picks up the Hydrogen-fuel tab

FUEL STATION LOCATIONS

California:

By the end of 2015, 20 refueling stations will be opened in California with another 28 stations by end of 2016.

Europe:

Germany has 18 stations today and will have 50 stations by end of 2016.

INDIA BACKUP POWER CASE STUDY*

	D i l t e s e g e n e r a o r	H d r o g e n y
R h d n o r s p e r a u u y	( ) 8 h 4 h b t t o r s o r s a e r u u y	1 2 h o r s u
C t o s	\$ / S 4 5 I N R 0 8 4 U D p e r L i t r e	\$ 4 0 0 I N R / 0 U S D k 7 5 p e r g
C t i	1 8 L i t h r e s p e r o u r	6 8 / H k W h g m s p e r r 2
o n s m p o n u	4 3 8 L i h t t r e s p e r m o n	4 2 1 9 k g
T l t o a e x p e n s e s p e r h t m o n	\$ / S 1 9 7 1 0 I N R 3 6 9 U D ,	\$ / S 1 6 8 7 8 I N R 3 1 6 U D ,
C b i i a r o n e m s s o n s p e r h t m o n	1 1 7 3 k g ,	Z e r o

*Intelligent Energy company website

VALUE PROPOSITION

WHY HYDROGEN VEHICLES?

• •Hydrogen is the most abundant element in the universe
• •Highly efficient fuel
• • Energy Security
• 71% of US petroleum consumption is used in transportation sector
• 33% of US petroleum consumed is imported
• • Environmental Benefits
• Produces no Green House Gases (GHG)
• Produces no air pollutants or particulates
• Lowest Well to Wheels Green House Gas (GHG) output
• • Renewable
• Solar, wind, nuclear can all be used to create H2
• Present source is Natural Gas

FUEL CELL ELECTRIC VEHICLE ADVANTAGES OVER BATTERY ELECTRIC VEHICLE (BEV)

• •Weighs less
• •Takes up less space
• •Generates less greenhouse gas
• •Costs less
• •Requires less well-to-wheels energy
• •Takes less time to refill
• •More range per filling

HEXAGON ADVANTAGES

• • Manufacturing Expertise
• Lower Cost
• High rate manufacturing
• Automation
• ̵Complex structures
• • Design
• World's leader in filament wound products
• ̵ Significant position in carbon fiber procurement
• Investment into Hydrogen effects on plastics
• • Product Portfolio
• Most diverse cylinder portfolio
• 350 and 700 bar cylinders for vehicular use
• 500 bar and 700 bar cylinders for transportation
• 950 bar cylinders for refueling station use

OUTLOOK

• • Vehicle cylinders
• Represent potential of \$2500-\$3500/vehicle
• Represents \$200m in Japan alone by 2025
• • Refueling station cylinders
• Represent potential \$75 000 to \$95 000/refueling station
• Represents \$20m worldwide by 2020
• • Transportation
• Represent potential \$100 000 to \$200 000/transport solution
• Represents \$50m worldwide by 2020
• • Back-up Power
• Represent potential of \$500 to \$2000/system
• Represents \$200m by 2020
• •Overall- Hydrogen has potential of \$1bn over the next 10 years

FINANCIAL BRIEF

David Bandele, CFO Hexagon Composites ASA 4th of June, 2015 – Capital Markets Day

AGENDA

• •Our Financial Position
• •Outlook 2015

RECORD YEAR IN 2014 . . .

OPERATING REVENUES

NOK Million

*Figures have been restated to exclude Composite Reinforcements, which was divested in January 2014

. . . SO FAR IN 2015

• •Group operating income NOK 401.6 million in Q1
• • EBITDA NOK 52.9 million in Q1, but at lower level than 2014
• • Strong underlying growth in CNG business North America v Q4 2014
• • Lower volumes impacting overall profitability in Mobile Pipeline™ and LPG businesses
• •Losses in Light-Duty Vehicles business unit
• • Generally higher cost base as we invest in development activities for the future
• NOK 18 million real growth v Q1 2014
• • Extraordinary refinancing costs in Q2
• NOK 21 million of Bond buy-back premium but will save NOK 10.5 million per year

• NOK 8 million in charges to the P&L of which NOK 7 million is noncash

• High-Pressure: CNG Automotive (Global)

• High-Pressure: Mobile Pipeline™
• Low-Pressure: LPG (Propane)

CAPITAL STRUCTURE

Continued Strong Cash and Equity position; Low leverage

NEW FINANCING STRUCTURE

• •2 Bank "Club Deal"
• •Facility A – NOK 685 million Multi Currency Revolving facility
• •Facility B – NOK 315 million Multi Currency Acquisition facility
• •Unsecured basis
• •Margins on Facility A from 125 bps to 175 bps
• •Margins on Facility B from 175 bps to 225 bps
• • Financial Covenants:
• ̵NIBD/EBITDA < 3
• Equity/Assets Ratio 30%

NIBD/EBITDA

*Figures up to 2012 includes Composite Reinforcements, which was divested in January 2014

HEAVY-DUTY TRUCKS

• • Very positive market development in light of the low diesel prices
• • Hexagon increasing market share
• • Orders of around USD 8 million related to the 27 inch cylinder
• ̵ increased storage volume and reduced weight

CONTINUED STRONG BUS MARKETS

• • Driven by environmental concerns around the world
• • The trend away from diesel gaining new momentum

TITAN™ ON THE MOVE

• •The prospect list is growing strongly
• • The market is new and many prospective end users are unfamiliar with the economics of natural gas
• ̵ Low diesel prices entail uncertainty while value proposition remains very solid
• • Shale oil & gas customers cutting back on CAPEX, but cost saving investments likely to be prioritized medium term

NG Advantage using TITAN™ supplying Ticonderoga International Paper plant in upstate New York

"the highest volume use of trucked CNG to-date in the U.S."NG Advantage

PUSH TO UNLOCK MARKET POTENTIAL

• •Several design innovations under way
• • Approaching new customers with partnership models to overcome the initial adoption barriers
• • Aiming at reducing dependence on "one off" orders to a minimum

OVERALL OUTLOOK

• •Heavy Duty looks solid
• • Mobile Pipeline™ soft next quarter or two, but very strong drivers expected to release demand when end customers have been able to process relevant facts
• • Healthy growth in most LPG markets, but lack of large one-off orders leaves a portion of 2015 production capacity unutilized
• • The Light-Duty Vehicle segment remains challenging Structural measures will be considered

THANK YOU

David Bandele