Hexagon Composites — Investor Presentation 2020

Aug 12, 2020

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 12 August 2020, 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

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

COVID- 19 Impact

• As of August 11, 2020
  • 14 Cases YTD
    • 3 recovering
    • 11 recovered
    • 0 work related

• Business impact

• No major supplier disruptions
• Several segments impacted in Q2, but high market activity points towards recovery from Q3

6

COVID-19: Moving from containment to recovery

"Governments have a once-in-alifetime opportunity to reboot their economies and bring a wave of new employment opportunities while accelerating the shift to a more resilient and cleaner energy future."

Dr. Fatih Birol, IEA Executive Director

IEA Sustainable Recovery Plan

Over 3 years:

• Invest USD 1 trillion annually
• Produce 1.1 percent global economic growth annually
• Create 9 million jobs each year
• Reduce annual energy emissions by 4.5 billion tons

Funding the shift to clean energy

• EU Recovery plan for Europe
• US Department of Energy's H2@Scale
• Germany allocated \$10 billion of its recovery budget to "green hydrogen"
• Italy has implemented an "ecobonus" program
• France has pledged €15bn of "new" green funding
• The California Air Resources Board (CARB) has adopted a first-in-the-world rule
• China's 'new infrastructure' concept
• Australia has adopted eight future of hydrogen international standards
• Korea's "New Deal" and "Hydrogen Law"

Hexagon is well positioned to capture the opportunities

Hexagon is well positioned to capture the opportunities

Multifaceted approach to low-carbon/no-carbon fuel adoption

"Trucking and logistics companies are incrementally adopting clean fuel technologies that reduce tailpipe pollutants and greenhouse gas emissions."

Mike Roeth, Executive director for the North American Council for Freight Efficiency (NACFE)

G-mobility is in the fast lane

More than 23 million Natural Gas Vehicles on roads worldwide today

In 2019, 25% of UPS natural gas deployment was renewable - by next year, 50%

Cummins commits to reducing emissions from new products by 25%

The Climate Pledge – commitment by Amazon to have net zero carbon across their business by 2040

Hexagon is well positioned to capture the opportunities

Global leader in Type 4 cylinder technology

14

Light-weight Durable Non-

Highpressure

corrosive

*

We deliver storage systems and e-drive integration

From vision to reality

16

Vision to reality

Several ongoing H2 bus projects

Delivered 700 bar tanks to Mercedes GLC-FCELL

Highest capacity distribution module worldwide

In the push to decarbonize, hydrogen is ready for scale

Average CO2 emission need to decrease by 70% per passenger km

Hydrogen powered FCEV make up 20% of total vehicle fleet

Hydrogen locomotives replace 20% of diesel locomotives

* Targets by 2050 Source: «Path to hydrogen competitivness. A cost perspective». Hydrogen Council 01-20

Strong growth in FCEVs and hydrogen infrastructure expected in China over the next decade

750,000 FCEVs in 2030

3,000 H2 refueling stations in 2030

25% of new car sales to be zeroemissions by 2025

"We will sort out the factors that have been hindering the development of fuel cell vehicles." Wang Gang, Vice Chairman of China's national advisory for policy making

26

EU H2 Strategy: Aims to be world leading region in Hydrogen

6GW of renewable hydrogen electrolysers

1 million tons of renewable H2

Today - 2024

H2 integrated into energy system. 40GW of renewable H2

10 million tons renewable H2.

2025-2030 2030-

Hydrogen deployed at a large scale across all hardto-decarbonize sectors

• June 3 3 June: Hexagon Purus awarded contract by Toyota for hydrogen powered electric heavy -duty trucks

18 July: Hexagon Purus receives first contract to provide hydrogen transport modules in the US

21 July: Hexagon granted funding by the U.S Department of Energy

• July 29 29 July: Hexagon Purus to produce high-pressure cylinders for a major new aerospace customer

Hexagon Purus is well positioned to benefit from the growth of zero-emission mobility

FINANCIAL UPDATE IMPACTS OF COVID-19

COVID – 19 Impacts

Company position update

• Deeper financial impacts in Q2
  • Reduced Transit bus volumes in North America especially and Europe
  • Mobile Pipeline being project based also impacted
  • LPG so far robust though activities in Bangladesh are delayed
• Difficult to assess or predict with precision the future broad effects of COVID-19 and the actual ongoing impact will depend on many factors beyond a company's control and knowledge
  • Can expect overall negative impact to full year results in 2020
  • Do not expect any material impairments within balance sheet
• Liquidity is good and Hexagon remains financially robust. As of Q2 we have:
  • Undrawn committed facilities of NOK 655m (includes NOK 400m of acquisition facilities)
  • NOK 128m in cash
  • Adjusted Net Interest-bearing debt of NOK 1.32bn* = ~16% of market cap*
• Flexible arrangements with our principal financier
  • Provides headroom for continual investment in e-mobility through challenging 2020
• We have access to relevant government stimulus programs in Norway, Germany and USA

2nd

QUARTER 2020 FINANCIALS

Highlights from Q2 2020

• Lower revenues and EBITDA for Agility due to impacts of COVID-19
  • ‒ Major new customer secured in logistics sector
• Weak Mobile Pipeline volumes impacted by COVID-19
  • ‒ USD 7.3m order received in quarter
• Low Purus CNG Light-Duty Vehicle volumes
  • ‒ Mainly due to planned production relocation of major customer
• Heated Purus e-mobility market
  • ‒ Awarded contract on latest Toyota fuel cell electric truck
  • ‒ Signed term sheet with CIMC Enric for Chinese market entry
  • ‒ Strong international focus on hydrogen green-technology
• Strong LPG sales volumes
  • ‒ Sales to Europe, Middle East, Africa and South America

Financial highlights Q2 2020

Hexagon Composites Group

-77

H1 2020 | e-mobility & g-mobility financials* , NOKm

Solid base with profitable g-mobility business, supports major future growth in e-mobility

Balance sheet | Q2 2020 vs Q1 2020

Adjusted* Net Interest Bearing Debt NOK 1,316m (Unadjusted 1,380m) & Equity Ratio 43%

Strong balance sheet

X

*The bond was raised in NOK and remains ultimately an obligation to be settled in NOK, however the company entered into a currency swap hedging arrangement effectively converting the instrument to USD and is therefore accounted for as USD and subject to non-cash FX translation movements; such movements on the bond in total were NOK 64 million in the period

OUTLOOK

Agility Fuel Solutions Medium and Heavy-Duty Vehicles

Increased activity in Heavy and Medium-Duty g-mobility

• Heavy-Duty Truck business picks up in secondhalf of 2020
  • ‒ Additional orders expected in Q3
  • ‒ Large number of deliveries to major logistics supplier to be made in Q3 - and additional orders received
• European bus business expected to become stronger in second half of year – mainly due to ramp up after COVID-19
  • ‒ Slower year expected in transit bus sector for North America

Hexagon Purus e-mobility

• Signed first contract for hydrogen transport modules in the US
  • X-STORE transport modules to major US H2 fuel supplier and refueling station operator
  • Estimated value: USD 4.8 million (approx. NOK 45 million)
  • Includes additional purchase options if exercised, will bring the total value to approx. USD 7 million (approx. NOK 65 million)

Example of the X-STORE transport module where the hydrogen tanks are stored

Battery Electric Vehicle Systems in demand

• Toyota Motor North America doubles order for hydrogen systems for its prototype hydrogenpowered heavy-duty fuel cell electric trucks – Increased from 1 million to 1.9 million USD
• Battery electric drivetrain deliveries continue to major OEMs in Q3:
  • Daimler Innovation Fleet successfully exceeded 300,000 miles
  • Electric HINO XL7 prototype on the road

Freightliner announced that its eCascadias and eM2 trucks have accumulated more than 300,000 miles in real-world operation

CNG Light-Duty Vehicles

• VW production line ramp up starting in Q3 as expected
  • Supply levels returning to normal with call-offs to end of year
  • Run rate in 2H of the year estimated somewhat lower than 2019 level (due to COVID-19)

For illustration purposes. Credit:Volkswagen AG

Diversified hydrogen project pipeline

High number of hydrogen development projects across all segments

Hexagon Mobile Pipeline

Focusing on opportunities in new segments

• Continued COVID-19 and oil related impacts expected in Q3
  • Low activity in onshore oil and gas sector in North America and general risk of project delays due to capital constraints
• New opportunities with MicroCNG
  • Awarded X-Store module order for new segment in Indonesia
• Healthy development expected in mobile refueling business – Awarded SmartStore order with new customer, additional orders expected
• Additional orders for Virtual interconnect expected in Q3
  • Titan53 deliveries scheduled for Q4
• Positive trend for power generation business in Latin American market

Hexagon Ragasco LPG

LPG demand for leisure use increases

• Significant increase in orders from markets where LPG is used for leisure purposes – mainly Northern and Central Europe
• Expect delays in orders for domestic use to countries significantly impacted by pandemic
• Orders for cylinders from new market in the Caribbean expected

Outlook summary

APPENDIX

Q2 2020 and YTD 2020 Group income statement

NOK MILLION	QUARTER			YEAR TO YEAR DATE TO DATE 1			FULL YEAR
	Q2 2020	Q2 2019	Variance	YTD 2020	YTD 2019	Variance	FY 2019
Revenue	682 9 ,	882 1 ,	(199 2) ,	1 508 0 ,	1 703 9 ,	(195 9) ,	3 416 1 ,
Operating expenses	(664 1) ,	(820 2) ,	156 1 ,	(1 5) 452 ,	(1 0) 561 ,	108 6 ,	(3 0) 126 ,
Earn-out obligation reversal / gain on transaction	0	0	0	0	69	(69	69
	0	0	0	0	4	4)	6
	,	,	,	,	,	,	,
EBITDA	18	62	(43	55	212	(156	359
	8	0	1)	6	3	7)	7
	,	,	,	,	,	,	,
Depreciation on tangibles	(48	(44	(3	(94	(87	(6	(182
	4)	8)	6)	4)	6)	8)	2)
	,	,	,	,	,	,	,
Amortisation and impairment	(16	(14	(2	(31	(29	(1	(57
	4)	3)	1)	1)	5)	6)	4)
	,	,	,	,	,	,	,
EBIT	(45	2	(48	(69	95	(165	120
	9)	9	9)	9)	2	1)	1
	,	,	,	,	,	,	,
Share of profit/(loss) from associates	(0	(0	0	(0	(0	0	(0
	1)	3)	1	6)	7)	1	7)
	,	,	,	,	,	,	,
Other financial items (net)	(39	(34	(5	66	(59	126	(8
	0)	0)	1)	5	7)	2	1)
	,	,	,	,	,	,	,
Profit/(loss) before tax	(85	(31	(53	(4	34	(38	111
	1)	3)	8)	0)	8	7)	2
	,	,	,	,	,	,	,
Tax expense	8	4	3	(11	6	(17	(3
	0	0	9	1)	3	4)	8)
	,	,	,	,	,	,	,
Profit/(loss) after tax	(77	(27	(49	(15	41	(56	107
	1)	3)	9)	0)	1	2)	5
	,	,	,	,	,	,	,
EBITDA %	2 8 % ,	7 0 % ,		3 7 % ,	12 5 % ,		10 5 % ,
EBIT %	-6 7 % ,	0 3 % ,		-4 6 % ,	5 6 % ,		3 % 5 ,
Profit/(loss) after tax %	-11 3 % ,	-3 1 % ,		-1 0 % ,	2 4 % ,		3 1 % ,

Revenue by segment Q2 2020 | Before Group eliminations*

Revenue Q2'19 (Proforma after internal reorganizations**)

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

Revenue Q2'20

NOKm, before group eliminations

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

Segment financial highlights Q2 2020 | (1/3)

• Positive FX movements partly offsetting YoY decline
• Medium-Duty (UPS contract) continues to contribute positively, albeit quarter is overshadowed by significant COVID-19 impacts in Transit segment

Hexagon Purus* (e-mobility, incl. MW & CNG LDV)

• Lower call-offs from VW Group following relocation of CNG vehicle assembly line coupled with COVID-19 shutdowns hit revenues in the CNG LDV segment
• Higher proportion of commercial hydrogen distribution revenues in Q2'20
• Please see separate CNG and e-mobility figures on next slide

Segment financial highlights Q2 2020 | (2/3)

• Higher proportion of commercial hydrogen distribution revenues lifts profitability somewhat

• Furloughing and other cost initiatives implemented in the quarter

Segment financial highlights Q2 2020 | (3/3)

• Macro impacts from COVID-19 & onshore US oil & gas slowdown had negative impact to sales of new modules in Q2'20
• FX impacts revenue but marginally hits EBITDA, which distorts margin

• Favourable FX movements in the quarter
• Solid YoY margin accretion on unchanged revenue driven by geographic market mix

Group cash Q2 2020

Drawing on liquidity to counter negative impacts of COVID-19