Hexagon Composites — Investor Presentation 2019

Feb 13, 2019

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

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Agenda

• •Group highlights
• •Agility transaction update
• •Summary Group financials
• •Outlook
• •Q & A
• •Appendix: Segment & proforma financials

Highlights from Q4 2018

• • Signed agreement and subsequently completed NOK 1 billion acquisition of Agility Fuel Solutions
• • Strongest quarterly revenue of 2018 driven by Mobile Pipeline
• Second highest quarterly revenue of all time primarily from North America
• Received NOK 65 million order for UK market for delivery in 2019
• • Strong Agility Fuel Solutions profitability
• Heavy-Duty Truck sales continues an upwards cycle
• Extended long-term agreement with New Flyer with total value of NOK 640 million primarily for CNG bus systems
• • Very active Hydrogen market
• Increased deliveries to Heavy-Duty applications
• Received U.S. Department of Transportation permits for hydrogen transportation systems

Agility Update Impact of 2019 transaction

Full year pro-forma* 2018

*Preliminary unaudited estimates

Agility acquisition has effect of ~ doubling Group revenues with double-digit EBITDA margin

Expected accounting impacts in 2019*

• •Move away from equity accounting to consolidation of Agility's results from 2019 onwards
• •Gain on transaction, net of fees, estimated to be NOK 72 million*
• •Deferred tax accrual on gain = NOK 17 million*
• • Purchase price allocation exercise ongoing:
• This will determine the split between goodwill and depreciable intangibles

* Preliminary, unaudited estimates before final PPA

4thQUARTER 2018 FINANCIALS

Note: Agility Fuel Solutions only consolidated from Q1 2019

Financial highlights Q4 2018

9

Other Hexagon businesses vs Hydrogen results | Q4 2018

13% EBITDA margin from normalized non-H2 business

Agility Fuel Solutions: Q4 2018

Business Operating results

• • Continued increase in revenues and margin Driven by strong rebound in Heavy-Duty Truck sales
• • Continued strong year over year growth in Transit bus volumes in quarter
• • Strong Refuse Truck sales Continued upward trend in 2018 over 2017
• • Good Liquidity
• Fully-funded

Revenues and adjusted EBITDA

Balance sheet | Q3 2018 vs Q4 2018

NOK 383m Net Interest Bearing Debt & 59% Equity Ratio

NIBD increase driven by Digital Wave acquisition

Group cash movements Q4 2018

Working capital management balances capex and leasing pool requirements; Digital Wave acquisition part funded by loan drawings

Preliminary & unaudited Full Year 2018

Note: Agility Fuel Solutions only consolidated from Q1 2019

Full-year 20181 vs. 2017

Agility Fuel Solutions Full Year 2018

• • Continued increase in revenues and margin
• Year over Year growth in Refuse, Bus and Powertrain (Propane) systems
• Strong rebound in Heavy-Duty Truck sales in second half of year with good momentum into 2019
• • Transit Bus systems revenue continues to be largest segment and delivered 20% growth Good performances in both North America and Europe
• •Refuse Truck systems growth of 21%
• • Powertrain (Propane) systems growth of 84% and still in start-up mode

Revenues and adjusted EBITDA*

Agility impact to Group P&L*

*Preliminary and unaudited

2018 Financial Scorecard*

• • Double-digit EBITDA margins for non Hydrogen segments
• EBITDA dilution of NOK 55 million related to Hydrogen business units
• •40% revenue growth in Mobile Pipeline
• • 36% adjusted EBITDA growth in Agility Accretive investment doubling revenues on proforma basis
• •Record production volumes and 21% EBITDA margin in LPG
• • More than doubled net profit From NOK 70 to 146 million
• •Maintained a strong balance sheet

In 2018 we sharpened our focus on the significant opportunities within hydrogen resulting in our largest ever OEM contracts; in 2019, the Agility acquisition will drive value from increasing our portfolio of solutions for cleaner air

*2018 = Preliminary and unaudited

Driving energy transformation #1 clean fuel solutions provider

Ideal timing Secured 100% ownership in Agility

• •Global zero emission transportation trend
• • US production of natural gas up 40%* the last decade
• –and the growth will continue
• •Readily available technology and infrastructure
• • Adoption rate stimulated by availability, economics and environmental agenda

Waste Management Refuse Trucks Photo: Waste Management

Re-enforced global leadership position in clean fuel solutions

Source: *IHS Markit

Over 60,000 vehicles on the road with Agility's fuel systems….

…across all main alternative fuel technology platforms

• CNG cylinders •
• CNG fuel systems

Hydrogen fuel systems

Battery packs

• •Electric drivetrain integration
• Propane fuel systems and engines

Environmental agenda drives demand

• • Continued very strong growth in the European Transit Bus segment in Q1
• •Strong, stable US Transit Bus and Refuse Truck demand
• • Long-term agreement with New Flyer extended ‒Total estimated value MUSD 75 (approx. MNOK 640)
• • Heavy-Duty Truck continues its positive trend from second half of 2018

13,000+ New Flyer CNG buses equipped with Agility fuel systems - reduced CO2 emissions by approx. 4.4 million tons compared to diesel Photo: New Flyer

Riding the e-mobility megatrend

There will not just be the one and only powertrain technology (…) execs globally believe in a fairly even split of BEVs (30%), Hybrids (25%), FCEV (23%) and ICEs (23%) by 2040.

KPMG Global Automotive Executive Survey 2019

South Korea's shift to hydrogen economy

• • Ambitious plans by the South Korean government
• 81,000 Fuel Cell Electric Vehicles in 2022 1.8 million by 2030
• 2,000 hydrogen buses by 2022
  • 820 police buses beginning in 2021
• 310 hydrogen fueling stations by 2022 up from 86 in 2019
• • Hyundai Motor Group 'FCEV Vision 2030'
• Produce 700,000 fuel-cell systems annually
• Invest around USD 6.8 billion creating 51,000 jobs

South Korean President Moon declares move toward hydrogen economy

Maritime hydrogen wave building up

• • Four Norwegian publicly funded hydrogen projects
• Samskip: Short sea ships
• Havyard: Coastal cruise
• ZEFF/SelfaArtic: Fast ferry
• Flying Foil: Fast ferry
• • HYON engaged in two of the projects
• Samskip: Short sea ships
• ZEFF/SelfaArtic: Fast ferry

ZEFF/SelfaArtic fast ferry

Samskip short sea shipping

CNG Light-Duty Vehicles

28

WLTP* challenges resolved – high growth expected

• • Strongly positive market sentiment
• WLTP* bottleneck easing out
• Golf, Seat Leon and Skoda Octavia CNG models WLTP approved and available
• • Q1'19 expected to be on par with Q4'18
• Steep ramp-up from Q2

"Driving on natural gas is not only good for your wallet, it is also good for the environment. Compared to petrol or diesel, natural gas contains a significantly higher amount of energy and a lower carbon fraction. This means that driving in CNG mode produces around 25% fewer CO2 emissions than with petrol." Source: Volkswagen Group

*Worldwide Harmonised Light Vehicle Test Procedure (WLTP) 29

Good start to the year

• • Q1 volumes similar to Q1'18
• Challenging product mix affecting margins
• • NOK 75 million capex program complete, on time and on budget
• Expecting fully ramped up run rate from Q2'19
• Unique LPG liner technology
• Permeation approaching zero

New building extension at Hexagon Ragasco

Mobile Pipeline® finding its way to new customers and applications

• •Strong fundamentals
• •Solid backlog for Q1'19
• • Order from Certarus of ~ NOK 70 million to supply CNG to constrained or under-served areas
• • Rest of the world project pipeline continues to increase

Certarus Mobile Pipeline® modules

Group Outlook Q1 2019

APPENDIX

Q4 & FY 2018 Group income statement

N O K M I L L I O N	Q U A R T E R			1 F U Y E A R L L
	Q 4 2 0 1 8	Q 4 2 0 1 7	Va ia r nc e	F Y 2 0 1 8	F Y 2 0 1 7	Va ia r nc e
Re ve nu e	4 2 6. 8	3 8. 5 5	6 8. 3	1, 4 8 6. 5	1, 4 2 9. 4	5 7. 1
Op t in er a g ex p en se s	( 3 9 0. 0 )	( 3 1 8. 5 )	( 7 1. 4 )	( 1, 3 6 0. 5 )	( 1, 2 5 5. 4 )	( 1 0 5. 1 )
Ea t o b l ig t io l rn -o a n re ve rs a u	1 8. 4	0. 0	1 8. 4	1 0 8. 5	0. 0	1 0 8. 5
E B I T D A	2 5 5.	3 9. 9	1 5. 3	2 3 4. 6	1 4. 0 7	6 0. 6
De ia t io ta i b les p re c n on ng	( 1 2. 7 )	( 1 3. 5 )	0. 8	( 5 3. 2 )	( 5 2. 4 )	( 0. 8 )
Am t isa t io d im irm t or n an p a en	( 2 3. 3 )	( 6. 7 )	( 1 6. 6 )	( 4 1. 1 )	( 2 2. 3 )	( 1 8. 8 )
E B I T	1 9. 2	1 9. 7	( 0. 5 )	1 4 0. 2	9 9. 3	4 1. 0
S f p f / ( ) fro ha i t los ia te re o ro s m as so c s	1 8. 1	( 1 2. ) 5	3 0. 6	3 0. 5	( 3. 0 )	3 3. 5
f a Am t isa t io ia te in ta i b les or n o ss oc s ng	( ) 3. 5	( ) 3. 4	( 0. 1 )	( ) 1 3. 4	( ) 1 3. 6	0. 2
O f ( ) t he in ia l i te t r an c m s ne	7. 6	( ) 1. 6	9. 2	1 0. 3	( ) 3 4. 4	4 4. 7
Pr f i t / ( lo ) be fo ta o ss re x	4 1. 4	2. 2	3 9. 2	1 6 7. 6	4 8. 2	1 1 9. 4
Ta x ex p en se	( ) 1 4. 2	2 8. 6	( 4 2. ) 7	( ) 2 2. 1	2 1. 2	( 4 3. 4 )
Pr f i t / ( lo ) f te ta o ss a r x	2 7. 3	3 0. 8	( 3. ) 5	1 4 5. 5	6 9. 5	6. 0 7
E B I T D A %	1 2. 9 %	1 1. 1 %		1 8 % 5.	1 2. 2 %
E B I T %	4. 5 %	5. 5 %		9. 4 %	6. 9 %
Pr f i t / ( lo ) f te ta % o ss a r x	6. 4 %	8. 6 %		9. 8 %	4. 9 %

¹2018 = Preliminary and unaudited

Segment financial highlights Q4 2018

• • Flat quarter year-over-year with continued delayed LDV sales due to WLTP
• • Investing in future H2 growth dilutes EBITDA by NOK 13.6m

Strong sales volumes, particularly in North America

Segment financial highlights Q4 2018

• • Revenues primarily from Asian and core European markets
• • Product mix effects drives EBITDA lower year-overyear

• Good quarter in revenue terms with +19% growth vs. Q4 last year, and the strongest quarter reported in 2018

After all eliminations

Agility Fuel Solutions: Q4 2018

Result to Hexagon Group per equity accounting method

Q4 2018 AFS EBITDA to profit before tax

Agility impact to Q4 Group P&L

Proforma P&L for Agility Fuel Solutions acquisition

Preliminary estimates subject to final review, audit and PPA adjustment for end Q1 2019

Notes: 1: P&L converted quarterly at average USD:NOK for the relevant quarter; Balance Sheet converted at quarter end rate