Hexagon Annual Report 2019

79 Board of Directors' Report 2019 AT A GLANCE FROM THE BOARD ROOM FINANCIAL STATEMENTS KEY DEVELOPMENTS • Awarded contract from Audi to supply hydrogen tanks for development and small FCEV serial production • Nearly tripled the annual production volume of CNG LDV cylinders • Awarded two additional CNG LDV customer models; SEAT Leon and SKODA Octavia • Expanded capacity in Kassel, Germany with a total investment of around EUR 6 million (approx. NOK 74 million). Commissioned in second half of 2019 • Announced the ambition to combine all electric mobility (e-mobility) activities under Hexagon Purus SALES AND MARKET The continued strong gas mobility (g-mobility) push gener- ated demand for Hexagon’s lightweight cylinders for CNG light-duty vehicles. Hexagon Purus substantially increased its production capacity to meet the growing demand. The investment was around EUR 6 million (approx. NOK 58 million) to expand and modernize the production facilities in Kassel, Germany. The new production line was commis- sioned in the second half of 2019. In May Hexagon Purus entered into an agreement with Volkswagen to almost triple the annual production volume of CNG tanks. As the automotive industry is investing strongly in elec- tric drive this offers new and exciting opportunities for Hexagon. At the end of the year the company announced its desire to combine all its e-mobility efforts under Hexagon Purus, including battery electric and hydrogen fuel cell electric initiatives. In February 2019, Hexagon was selected by Audi AG to supply high-pressure tanks for a multi-year hydrogen tank development and small-serial production project. The hydrogen business with Hexagon Purus focused its efforts on a wide range of development projects, counting for over 50 development projects at the end of the year. PROFIT/LOSS For the full year 2019, revenues for the segment amounted to NOK 472.7 (293.4) million of which NOK 396.9 (193.3) million was generated from the CNG LDV business and NOK 75.8 (100.1) million from the Hydrogen business. Lower Hydrogen Distribution sales impacted revenues in 2019. EBITDA for the full year was NOK -35.2 (-48.8) million of which NOK -107.6 (-55.2) million was related to the Hydrogen business. Operating profit (EBIT) for the segment was NOK -80.2 (-90.6) million, which was impacted by continued investments in the Hydrogen business unit. These relate to expanding the organization as well as research and product development towards multiple customer contracts. HYDROGEN & CNG LIGHT-DUTY VEHICLES HEXAGON PURUS REVENUE MNOK Current segment reporting structure implemented in 2018. Pro-forma numbers prepared for 2017. EBITDA MNOK EBIT MNOK - - - - -