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Hexagon Composites Investor Presentation 2016

May 12, 2016

3619_rns_2016-05-12_75e085ca-26ae-46e4-9e0a-654221c65776.pdf

Investor Presentation

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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 forwardlooking 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 forwardlooking 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 12 May 2016, 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.

AGENDA

  • •Group highlights
  • •Group financials & segment overview
  • •Outlook
  • •Q & A

LOW VOLUME IN THE QUARTER - UPTICK EXPECTED

HIGHLIGHTS Q1 2016

  • •Weak sales volumes in Mobile Pipeline™
  • •Strong growth in the LPG segment
  • •Hydrogen "on everybody's lips"
  • • Executed investment agreement and strategic alliance agreement with Mitsui & Co., Ltd.
  • • Agreed to acquire 67% of Brazilian bus systems builder
  • • Enhanced SMARTSTORE® approved by US DOT
  • • Cost reduction program completed and delivering above target

1ST QUARTER 2015 1ST QUARTER 2016 FINANCIALS

FINANCIAL HIGHLIGHTS Q1 2016

  • • Key factor impacting profits this quarter: Mobile Pipeline™ weakness
  • • Strong transit bus but softer refuse and truck sales in CNG North America
  • •Growing order book in Mobile Pipeline™
  • •Strong recurring sales base in LPG
  • • EBIT level profit in European Light-Duty Vehicles
  • •Positive operational cash generation
  • • Receipt of new equity proceeds at end of period
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Q1 2016 SUMMARY GROUP INCOME STATEMENT

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Q1 '16 V '15 INCOME STATEMENT HIGHLIGHTS

  • • Low-Pressure increase NOK 17 million (+17%)
  • • Low-Pressure increase NOK 6 million (21.4%

margin)

• Tax effect of NOK +19 million

Cost initiatives helped partially offset lower volumes in Mobile Pipeline™

SEGMENT SHARES Q1 2016

BEFORE GROUP ELIMINATIONS*

14920 4 122High-Pressure: CNG Automotive (Global) High-Pressure: Mobile Pipeline™ High-Pressure: Hydrogen Low-Pressure: LPG (Propane) SHARE OF OPERATING INCOME199100104High-Pressure: CNG Automotive (Global) High-Pressure: Mobile Pipeline™ Low-Pressure: LPG (Propane) Q1 2016 NOK403*millionNOK295*millionQ1 2015

www.hexagon.no

SEGMENT SHARES Q1 2016

BEFORE GROUP ELIMINATIONS*

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

High-Pressure: CNG Automotive, H2 and Mobile Pipeline™

Low-Pressure: LPG (Propane)

Q1: HIGH-PRESSURE CYLINDERS

  • • Very weak Mobile Pipeline™ sales; however stronger order book
  • • Strong transit bus demand in North America; somewhat slow in Rest of the World
  • • Somewhat slower Heavy-Duty and Refuse sales; One large expected order pushed out to Q3
  • •Profits in European Light-Duty Vehicles
  • •Hydrogen sales to ground storage applications
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Q1: LOW-PRESSURE CYLINDERS

  • • Recurring revenue growth mainly in European markets
  • •Continual penetration in Africa and South-America
  • • Real capacity improvements through targeted investments in 2015
  • •Continued focus on customised product offerings
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GROUP CASH MOVEMENTS Q1 2016

Positive operational cash generation; New equity proceeds received at end of Q1

FINANCIAL POSITION V PREVIOUS QUARTER

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New equity significantly delevers the Balance Sheet

•

  • Positive net operational cash generation
  • Large bulk Carbon fibre purchases effected on extended pay-terms
  • ̵ Modest Capital expenditures; Asset base reduction driven by currency effects

STRENGTHENED BALANCE SHEET

LIABILITIES AND EQUITY

FINANCIAL IMPACTS TO Q2

  • • Paid down NOK 383 million of debt after close of Q1 with proceeds of private placement
  • Reduced net assets
  • Higher equity ratio
  • ‒ Realized finance costs of NOK 4.7 million of previously capitalized costs
  • Deal fee estimates of NOK 18.6 million already included in net proceeds
  • • Exited remaining interest rate hedge – cash impact of NOK 4 million but no P&L impact

NORTH AMERICA MARKET DEVELOPMENTS

  • • The environmental benefits of CNG currently the main market driver
  • Attractive to larger fleets and urban applications
  • Urge to reduce NOx transportation emissions
  • • Increased oil prices starting to widen the diesel / natural gas price delta
  • • The North American market outlook for the rest of 2016 remains relatively positive

MOBILE PIPELINETM

  • • Low sales through Q2, but order backlog and prospect list point to a healthy recovery in second half
  • • North American market with positive signals for large scale and emission sensitive applications
  • • Execution of a large TITAN® order in Latin America in 2016
  • • Mobile filling stations and industrial applications in Asia targeted with new SMARTSTORE® and TITAN®
  • • Biogas opportunities starting to emerge in Europe
  • ‒First order taken in United Kingdom

CNG AUTOMOTIVE

  • • US transit bus systems market expected to remain strong for the remainder of the year
  • • European bus system market expected to pick up after a slow start
  • • Hexagon Brazil significantly strengthens competitive position for bus projects in the rest of the world
  • • Healthy refuse truck market expected after a soft Q1
  • •Other heavy-duty truck relatively flat
  • • Profitable growth expected from the light-duty segment, with new models being launched late Q3 and 2017 respectively

LPG CYLINDERS

  • • Sound market development in core European markets
  • Increasing penetration in existing and new markets
  • • Continued traction in markets outside Europe
  • Leading Pan African distributor considering new markets
  • • Technology investments executed in 2015 significantly improved productivity and have given more than 10% increased capacity
  • Now offering enhanced design and branding options to existing and new customers
  • Business area delivering on growth strategy

2020 TOKYO OLYMPICS –LAUNCH OF THE "HYDROGEN SOCIETY"

  • • Tokyo Environmental Master Plan 2030*
  • ‒200,000 Fuel Cell Vehicles (FCVs)
  • 150 Hydrogen Refueling Stations (HRS)
  • • Japanese OEMs targeting around 40,000 fuel cell vehicles on the roads for the Olympics in 2020
  • • Hexagon Composites, Mitsui & Co., Ltd. and Toray Industries, Inc. doing feasibility study of a jointly owned company in Japan for manufacturing and sales of hydrogen cylinders for fuel-cell vehicles (FCVs)

"The 1964 Tokyo Olympics left the Shinkansen high-speed train system as its legacy. The upcoming Olympics will leave a hydrogen society as its legacy."

* The Tokyo Metropolitan Government (TMG) Tokyo Governor Yoichi Masuzoe

FUEL CELL VEHICLES

Toyota Mirai*

Hyundai Tucson*

Mercedes Benz F-Cell Mercedes-Benz F 105

Toyota SUV

General Motors FCEV

Nissan TeRRA FCEV BMW Grand Turismo 5

www.hexagon.no

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QUESTIONS PLEASE

Jon Erik Engeset, CEO David Bandele, CFO

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