Hexagon Composites — Investor Presentation 2019

Oct 30, 2019

This company presentation (the "Presentation") has been prepared by Hexagon Composites ASA ("Hexagon" or the "Company").

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Agenda

• Company update: Hexagon Purus
• Summary Group highlights and financials
• Outlook
• Q & A
• Appendix: Segment financials & other material

Hexagon has solutions across the clean fuels spectrum

E-mobility; Battery electric, fuel cell electric and hybrid electric

• Battery electric: electrons come from the grid
• Series hybrid: electrons come from the generator
• Fuel cell hybrid: electrons come from the fuel cell

In all cases, the "motor" gets some (or all) electrons from an on-board battery pack

Hexagon Purus will deliver components, sub-systems and e-drive integration

Integrating the optimal solution for the e-mobility customers

Combining e-mobility activities

HEXAGON PURUS

AGILITY FUEL SOLUTIONS

Hydrogen & CNG Light-Duty Vehicles

• Compressed natural gas (CNG)
• Biogas/RNG
• Hydrogen cylinders

Medium and Heavy-Duty Vehicles

• Compressed natural gas (CNG)
• Biogas/RNG • Propane
• Hydrogen systems
• Battery electric systems

HEXAGON MOBILE PIPELINE

Gas Transportation LPG

• Compressed natural gas (CNG)

• Biogas/RNG

HEXAGON RAGASCO

• Propane and Butane

Hexagon Purus organization

Hexagon Purus pro-forma

*Pro-forma before eliminations Using spot rate of NOK 9.15: USD 1

Driving Energy Transformation

Investment phase

3rd

QUARTER 2019 FINANCIALS

Highlights from Q3 2019

• Solid Agility Fuel Solutions volumes
  • ‒ High Transit Bus volumes; >40% of total Agility revenues
• Continued strong CNG Light-Duty Vehicle volumes
• Dynamic Hydrogen market
  • ‒ 2 new hydrogen bus contracts in Europe
• Decent Mobile Pipeline volumes with 74% year-over-year growth
  • ‒ Stronger deliveries in Europe
  • ‒ RNG contracts in USA
• Satisfactory contributions from Digital Wave and MasterWorks
• Seasonal LPG sales volumes

Financial highlights Q3 2019 Hexagon Composites Group | Agility consolidated from 2019

276.7 770.3 +494 (+178%)

• Growth driven by inclusion of Agility contributing +NOK 410m, strong CNG LDV and Mobile Pipeline

Group margin adjusting for "start-up*" businesses | Q3 2019

11% Group EBITDA margin before investments in our start-up businesses

Revenue by segment Q3 2019 | Before Group eliminations*

Revenue Q3'18 (Proforma Agility & Digital Wave numbers)

• Agility Fuel Solutions (Heavy and Medium-Duty)
• Hexagon Purus (Hydrogen & CNG Light-Duty Vehicles)
• Hexagon Mobile Pipeline & Other
• Hexagon Ragasco LPG

Revenue Q3'19

NOKm, before group eliminations

• Agility Fuel Solutions (Heavy and Medium-Duty)
• Hexagon Purus (Hydrogen & CNG Light-Duty Vehicles)
• Hexagon Mobile Pipeline® & Other
• Hexagon Ragasco LPG

Group cash movements Q3 2019

Strong cash generation from operations

Balance sheet | Q3 2019 vs Q2 2019

NOK 1,136m Net Interest Bearing Debt & 46% Equity Ratio

Stable and strong Balance Sheet

X

SELECTED SEGMENT HIGHLIGHTS

• Agility business units
• Light-Duty Vehicles growth story
• Hydrogen results drivers

Agility business units

Heavy-Duty Trucks Medium-Duty Trucks

Hydrogen Trucks

Transit Buses

Refuse Trucks

Battery Electric Trucks

Agility Fuel Solutions: Q3 2019

• 30% growth in annual revenue YTD

• This quarter saw:
  • ‒ Continued growth in European Transit Bus market
  • ‒ Solid Heavy-Duty Truck volumes
  • ‒ Solid Refuse Truck volumes despite order volumes skewed to first half of 2019
• Margins for the quarter include the impacts of:
  • ‒ Investment in future growth of Heavy-Duty EV program NOK -3m
  • ‒ Investment in future growth of Medium-Duty business NOK -6m
  • 12% underlying EBITDA margin
• Self-funded and strongly cash generating
  • ‒ LTM Reported EBITDA of NOK 173m
  • ‒ Agility has higher working capital requirements than other Hexagon businesses

Last Twelve Months (LTM) Revenues*

Agility Fuel Solutions: Composition and pattern of revenues

• The 3 core established business units are Heavy-Duty Truck, Refuse and Transit
  • ‒ Constitute most of Agility's current revenues
• Volumes in Truck have been influenced by:
  • ‒ New near zero NG engine introduction in Q2 2018 for North America
  • ‒ Major customer order patterns and sustainability drives
• Volumes in Refuse have been influenced by:
  • ‒ Major customer order patterns
• Volumes in Transit have been influenced by:
  • ‒ Accelerating European market due to EU Clean Air directives
• Medium-Duty is in early growth phase offering one-stop shop solutions for multiple alternative fuels
  • ‒ New orders for UPS (CNG) will begin Q4 2019
  • ‒ Propane customer-base established
• Other includes the growing businesses using BEV and FCEV (Hydrogen) applications
  • ‒ Both are currently servicing multiple funded pilot programs

Revenues by Business Units*

NOKm, *2018 = Pro-forma on reported basis. 2019 = Segment reported

CNG Light-Duty Vehicles: A growth story

• Exceptional growth
  • ‒ Driven by Volkswagen focus on reduction in fleet emissions, expanding range of CNG and RNG models especially within Europe
• Volume increases also justify further investment into capacity and automation/productivity
• Potential to export our Type-4 technology into other geographies targeted by Volkswagen
• Looking to be a NOK 500m revenue business by 2021

Revenues CNG LDV vehicles (NOKm)

Hexagon Purus: Comparing LDV and Hydrogen businesses

• Strong growth over and above the recovery from the global WLTP testing program bottlenecks which impacted volumes in Q3 2018

• Revenues are split between multiple longer-term development programs and commercial product sales (60%:40% YTD)
• Healthy gross margins on commercial sales and modest margins on cost plus development activities
• However gross margins do not cover impact of investing in personnel and infrastructure for future growth

OUTLOOK

Agility Fuel Solutions Medium and Heavy-Duty Vehicles

26

Positive development across all segments

• Lower Refuse Truck volumes following strong 1H 2019
  • ‒ Full year volumes in 2019 remain at high levels
• Solid activity in Heavy-Duty Truck in smaller fleets, while Medium-Duty picking up in demand

27

Agility signed its largest ever LTA with UPS

3-year exclusive agreement worth USD 65-95 million

• To supply CNG fuel storage and management systems for medium and heavy-duty & terminal tractors
• UPS to buy more than 6,000 CNG trucks between 2020 and 2022
  • ‒ Investing USD 450 million in its alternative fuel fleet and supporting infrastructure
  • ‒ Providing additional capacity for expanding the use of renewable natural gas (RNG)

Contract value

"Our goal is to run 25% of the vehicles we purchase in 2020 on alternative fuels." David Abney, Chairman and CEO of UPS

Hexagon Purus Hydrogen

29

High activity within European hydrogen public transport

• Expanding our partnership with Solaris
  • Supplying hydrogen fuel systems to 12 buses for Bolzano, Italy
  • Up to 350 km driving range on a single fill, parity with diesel
  • Delivery in third quarter of 2020
• Awarded hydrogen fuel systems order from Portuguese CaetanoBus
  • Two initial prototypes delivered within 2019

Source: Solaris

Caetano launched H2.City Gold in Oct 2019

"Hydrogen fuel cell and battery electricity technologies will complement each other perfectly and will benefit from the technological progress of electric drivelines and their components." Mateusz Figaszewsk, Director of E-mobility Dept., Solaris Bus & Coach S.A.

Hexagon Purus CNG Light-Duty Vehicles

Continued strong g-mobility support in Europe

• Good backlog for CNG Light-Duty Vehicles – On par with Q3
• Germany aims for 3 million natural gas vehicles on the road by 2030
  • Reported by the Federal Minister of Economy and Energy, Mr. Altmaier in "Dialogue Process Gas 2030" in October
• SEAT participating in project to generate RNG from waste

Source: SEAT

"This project will enable us to make headway in the development and research into biomethane as a fuel. Our ultimate aim is to guarantee zero environmental impact for CO2 emissions in the entire life cycle of vehicles." Andrew Shepherd, Responsible for SEAT's renewable gas project

Hexagon Mobile Pipeline

Challenging near term, but supportive underlying market drivers

• Solid market activity
  • ‒ Customer delays to Q1'20
  • ‒ Entry to new markets (RNG)
• New RNG project with U.S. Gain for USD 1.4 million (approx. NOK 13 million)
  • ‒ For transportation of RNG produced at dairy farms in Wisconsin, USA to access pipeline distribution systems
  • ‒ Deliveries in Q4'19
• Positive services contribution from Digital Wave

Source: U.S. Gain

Hexagon Ragasco LPG

35

Seasonal Q4, ending another good year

• Usual Q4 seasonality
  • ‒ Slowdown from leisure driven applications
  • ‒ Maintenance closure in December
• Potential postponement of volumes from some European customers
• Solid product penetration in Bangladesh
  • ‒ Contribution to recurring revenue base

Group outlook Q4 2019

The clean energy transformation is past the point of no return

38

APPENDIX

39

Q3 and YTD 2019 Group income statement

NOK MILLION	QUARTER			YEAR TO DATE 1			FULL YEAR
	Q3 2019	Q3 2018	Variance	YTD 2019	YTD 2018	Variance	FY 2018
Revenue	770.3	276.7	493.5	2 474.2	1 059.8	1 414.4	1 486.5
Operating expenses	(721.0)	(287.7)	(433.3)	(2 282.0)	(970.5)	(1 311.5)	(1 360.5)
Earn-out obligation reversal / gain on transaction	0.0	50.2	(50.2)	69.4	90.1	(20.7)	108.5
EBITDA	49.3	39.2	10.1	261.6	179.4	82.2	234.5
Depreciation on tangibles	(45.1)	(13.9)	(31.1)	(132.7)	(40.5)	(92.2)	(52.4)
Amortisation and impairment	(14.8)	(5.9)	(8.9)	(44.3)	(17.9)	(26.5)	(41.9)
EBIT	(10.6)	19.4	(29.9)	84.6	121.0	(36.4)	140.2
Share of profit/(loss) from associates	(0.2)	11.5	(11.7)	(0.8)	12.4	(13.3)	31.4
Amortisation of associates intangibles	0.0	(3.4)	3.4	0.0	(9.9)	9.9	(13.4)
Other financial items (net)	82.9	(1.6)	84.5	23.2	2.7	20.5	10.6
Profit/(loss) before tax	72.1	25.9	46.3	106.9	126.2	(19.2)	168.7
Tax expense	(16.6)	6.7	(23.3)	(10.3)	(7.9)	(2.4)	(27.3)
Profit/(loss) after tax	55.5	32.6	22.9	96.6	118.2	(21.6)	141.5
EBITDA %	6.4 %	14.2 %		10.6 %	16.9 %		15.8 %
EBIT %	-1.4 %	7.0 %		3.4 %	11.4 %		9.4 %
Profit/(loss) after tax %	7.2 %	11.8 %		3.9 %	11.2 %		9.5 %

Segment financial highlights Q3 2019 | I/III

• Moderate topline growth vs. a strong Q3 last year

• Very strong year-over-year revenue increase driven by CNG LDV
• Investing in future H2 growth impacts EBITDA by NOK - 19.5m
• Please see separate CNG and H2 figures on next slide

Segment financial highlights Q3 2019 | II/III

• Revenues are split between multiple longer-term development programs and commercial product sales (60%:40% YTD)
• Healthy gross margins on commercial sales and modest margins on cost plus development activities
• However gross margins do not cover impact of investing in personnel and infrastructure for future growth

Segment financial highlights Q3 2019 | III/III

• Solid contribution from Digital Wave, not consolidated in the numbers in 2018
• Relatively soft MP N America sales and stronger sales in Europe over a weak 2018

• Mainly lower volumes and lower production Y-o-Y