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About HEXAGON composites
CORPORATE GOVERNANCE
BOARD OF DIRECTORS' REPORT
FINANCIAL STATement
KEY FIGURES
(NOK 1 000)
REVENUES AND PROFIT
Operating income
2012
2011
2010
2009
2008
1 032 984
991 791
845 974
867 542
767 273
Operating profit before depreciation (EBITDA)
87 799
108 048
111 241
128 639
105 633
Operating profit (EBIT)
24 587
35 307
36 207
71 985
59 624
Profit before tax
8 241
28 357
27 254
86 385
-9 769
Profit after tax
5 447
19 063
18 298
61 439
-9 808
Total assets
887 971
796 606
908 099
758 648
806 150
Equity
259 488
264 898
253 580
257 900
200 869
29.2 %
33.3 %
27.9 %
34.0 %
24.9 %
116 295
117 360
41 834
139 033
95 971
Operating margin (2)
2.4 %
3,6 %
4.3 %
8.3 %
7.8 %
Return on equity (3)
2.1 %
7.4 %
7.2 %
26.8 %
- 4.8 %
Total rate of return (4)
2.7 %
5.5 %
6.8 %
14.8 %
2.6 %
NIBD/EBITDA (5)
3.2 %
3.1 %
3.6 %
2.3 %
3.4 %
CAPITAL 31.12
Equity ratio (1)
PROFITABILITY AND RATE OF RETURN
Cash flow from operations
SHARES
Share capital
13 329
13 329
13 329
13 329
13 329
133 294 868
133 294 868
133 294 868
133 294 868
133 294 868
Earnings per share (6) (NOK)
0.04
0.14
0.14
0.46
- 0.07
Cash flow per share (7) (NOK)
0.87
0.88
0.31
1.04
0.72
Equity per share (8) (NOK)
1.95
1.99
1.90
1.93
1.51
Total number of shares per 31.12
DEFINITION OF KEY FIGURES
1) Shareholders’ equity as a percentage of total assets.
2) Operating profit as a percentage of operating income.
3) Profit after tax divided by average shareholders’ equity.
4) Profit after tax + interest expense divided by average total assets.
5) Net interest-bearing debt devided by EBITDA.
6) Net profit for the year divided by average number of shares outstanding.
7) Net cash flow from operations divided by average number of shares outstanding.
8) Shareholders’ equity divided by average number of shares outstanding.
4
OPERATING INCOME
FINANCIAL STATement
EBITDA
MNOK
MNOK
MNOK
MNOK
1 000
1 000
800
160
800
160
600
120
600
120
400
80
400
80
200
40
200
40
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
EBIT
EQUITY RATIO
MNOK
%
MNOK
%
50.0
80
50.0
80
40.0
60
40.0
60
30.0
30.0
40
20.0
40
20.0
20
10.0
20
10.0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
RETURN ON EQUITY
TOTAL RATE OF RETURN
%
%
%
%
30.0
30.0
18.0
18.0
20.0
14.0
20.0
14.0
10.0
10.0
10.0
10.0
8.0
8.0
0.0
2.0
0.0
2.0
-10.0
-10.0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
5
FINANCIAL STATement
Hexagon Devold Lithuania UAB
RUGASCO (49/51)
COMPOSITE CYLINDERS
LPG cylinders for households, catering
kitchens, leisure activities and
forklift trucks
PPG-Devold LLC (50/50)
HIGH-PRESSURE CYLINDERS
High-pressure CNG cylinders for
vehicles and bulk transport
COMPOSITE REINFORCEMENTS
For lightweight constructions
NEW VISUAL PROFILE
As part of the strategy, Hexagon Composites has carried out
a re-branding of the entire Group. A uniform market profile
will strengthen both the subsidiaries and the Group through
increased visibility, recognition and knowledge. The Hexagon
symbol is a strong symbol associated with composite tech-
6
nology and the market we operate in. By retaining the recognised company names, we also retain an important part of our
identity. These names have a strong position in the market
with accrued value and brand recognition.
FINANCIAL STATement
this is
HEXAGON COMPOSITES
Hexagon Composites ASA is a global market leader in lightweight composite
cylinders for the storage of gas and an international supplier of stitched fibre
reinforcements for wind turbine blades.
Hexagon Composites ASA is a listed Group with its head office
in Ålesund, Norway. The Group has more than 500 employees
and posted a turnover of NOK 1 033 million in 2012. The market
has a strong interest in our products and solutions. This applies
in particular to CNG cylinders, an area in which we experienced
considerable growth in 2012. We are well-positioned for continued profitable growth in international niche markets with strong
and long-term growth trends.
BRIEF SUMMARY OF COMPOSITES
Composites consist of fibre reinforcements in glass and/or carbon
and a hardening plastic material (resin). Composites are distingu-
ished by their combination of light weight, high level of strength
and the fact that they are not susceptible to corrosion. Composite
cylinders are lighter than steel cylinders. Large wind turbine
blades could not be produced without the use of composites.
Hexagon Composites' light-weight solutions comply with
strict environmental and safety requirements. The high demand
demonstrates that our products and solutions cover the requirements in a cost-effective manner.
OUR PRODUCTS AND MARKETS
LPG cylinders
Propane cylinders for households, leisure activities, catering
kitchens and forklift trucks. The principal markets are in Europe,
the Middle East and South America.
transfer to natural gas both in the western world and in developing countries. In addition to this, the increased environmental
requirements are an important market driver. New technology
for the extraction of shale gas in the US entails that there will
most likely continue to be a considerable difference in price to
the benefit of gas as an energy source for several decades to
come. The strong focus in Europe on the use of cleaner energy
sources will increase the use of gas-powered vehicles, particularly for buses, in the short term.
Our solutions assist in making the transition more costeffective for the users.
INNOVATION AND COST-EFFECTIVE PRODUCTION
The Group's technology and expertise are in demand. Much
of this is due to increased awareness concerning the need to
reduce harmful emissions. Energy gases are cleaner than liquid
fuels.
Innovation therefore occurs in cooperation with the market
players that will sell the products or use them in their own pro
ducts, for example, cars, buses, heavy-duty vehicles and wind
turbines. This further strengthens our expertise and innovation
rate. In parallel with this we have consciously built up expertise
and capacity with a view to cost-effective production at highly
automated facilities. This provides competitiveness in pricefocussed markets.
Strategy
CNG cylinders
High-pressure cylinders for natural gas, biogas and hydrogen.
The cylinders are used as fuel tanks for gas-powered vehicles
and as tanks for the transport and/or storage of gas. The principal
markets are in the US, Europe, Asia and South America.
Composite reinforcements
Stitched fibre reinforcements in carbon and/or gas fibres. Used
primarily in wind turbines for which special requirements are
stipulated for weight and speed. The principal markets are in
Europe and the US.
The most important growth driver for Hexagon Composites is
the difference between the oil and gas prices. A stable, high
price difference will contribute to an increasingly larger market
Hexagon Composites shall build shareholder value and achieve
growth and increased profitability within all business units.
We shall be the global leader within selected niches in the
composite industry. The Group shall take market shares from
traditional materials such as steel and aluminium by developing
innovative and cost-effective composite solutions that are competitive in terms of price. Highly automated production, optimal
product design and high capacity utilisation shall give us the best
competitiveness in the market. We shall have the most effective
cost structure in the market.
Innovation and product development are important parts
of our strategic basis. We work together with the customers to
develop the best solutions.
7
Employees
Innovation, ambition and expertise are decisive for success in
our industry. We must continually ensure that our talented employees are able to develop and create specialist environments
that competent and interested people want to be part of. This
concerns involvement and visibility, which require flat organisational structures and short distances between employees and
decision-makers.
FINANCIAL STATement
HISTORy
1999
The Flakk Group became the largest owner of the publicly listed
Norwegian Applied Technology ASA for which Comrod's business
operation (composite antennas) was a major part. The Flakk Group
was already the principal owner of Devold AMT AS, a world leader
in multiaxial glass and carbon fibre reinforcements and therefore
saw the opportunities for growth in the composite industry.
Strength through diversity
At Hexagon Composites we believe that innovation and dynamics
are best when people with different approaches and experience
are able to work together. It is therefore a declared goal to have a
work force that represents different backgrounds and both genders. The prerequisite is that they have the necessary expertise.
Working environment
As an employer we contribute to a good working environment
with good management, organised conditions, compliance with
regulations and correct remuneration. Health Safety and the Environment (HSE) is an area of focus and is of great importance to
efficiency and quality. Good internal routines and arrangements
are fundamental elements and everyone is familiar with these.
2000
Norwegian Applied Technology ASA was merged with Devold
AMT AS. Unprofitable business activities were discontinued and
a new board was elected. Establishment of new administration,
head office moved from Stavanger to Ålesund and the Group
changed its name to Hexagon Composites ASA. The aim was to
achieve a listed group which had the strength to make further
acquisitions of industrial companies with composites expertise
and global potential within niche markets.
2001
The Group acquired Ragasco AS (previously Raufoss Compo
sites AS) a leading player within the development and production
of composite LPG cylinders.
VALUES
Hexagon Composites' operations, production and management
shall be carried out in compliance with the highest ethical stan
dards and in accordance with the regulations of each country.
2003
The Group acquired Raufoss Fuel Systems which produces highpressure cylinders for gas-powered buses with a market focus in
Europe. The business area was acquired by Raufoss ASA.
2005
Lincoln Composites Inc., located in Nebraska USA, was acquired
from General Dynamics. This company operates in the same
business area as Raufoss Fuel Systems, with its main focus on
the American and Asian markets.
Trustworthy
We shall have confidence in
the market and a solid
reputation among customers
and our own employees.
Entrepreneurial
Creativity and innovation
are the backbone of the
Group's business operations.
We promote cooperation both
internally and with partners.
Responsive
We shall be responsive,
proactive and focussed
towards our customers,
shareholders and partners.
Responsible
Hexagon Composites is a
Group that takes responsibility
both in managing its own
resources and the environment
in a sustainable manner.
8
2006
Comrod acquired Eltek Defence from Eltek ASA. Comrod later
acquired the French company Lerc S.A. Devold AMT established two new production companies, UAB AMT Baltija in
Lithuania and the joint venture company PPG-Devold LLC in
the US to exploit the growth expected in Devold AMT AS' most
important market segment, the wind power industry.
2007
The business area for composite antennas is demerged and listed
separately as Comrod Communication ASA.
2010
Hexagon acquired Composite Scandinavia, a Swedish company
that develops and produces composite LPG cylinders.
2012
Remaining production of composite reinforcements at Lange-
våg is relocated to the company's factory in Lithuania. The
product area CNG passenger cars was demerged from Ragasco
and merged with Hexagon Raufoss. Streamlining of LPG cylinders will give increased focus and effectiveness. Production of
LPG cylinders at Composite Scandinavia in Sweden is dis-
continued.
2013
Hexagon Composites is carrying out a re-branding of the entire
Group and implementing a uniform profile that will strengthen
both the subsidiaries and Group through increased visibility,
recognition and knowledge. The production equipment from
Composite Scandinavia is moved to Russia for the production of
LPG cylinders in a JV that has been established with a partner in
Russia (Autocomponent).
FINANCIAL STATement
INTERNATIONAL MARKET LEADER
WITH GLOBAL PRESENCE
LPG cylinders
Hexagon Ragasco, Raufoss, Norway
CNG cylinders
Hexagon Lincoln, Lincoln,
Nebraska, US
PPG-Devold LLC, Shelby,
North Carolina, US
CNG cylinders
Hexagon Raufoss, Raufoss, Norway
HEXAGON COMPOSITES ASA
Head Office, Ålesund, Norway
LPG cylinders
Rugasco, Nìzjnìj Novgorod, Russia
Hexagon Devold Lithuania UAB
Kursenai, Lithuania
Hexagon Devold, Head Office,
Langevåg, Norway
HEXAGON ADMINISTRAtion and PRODuction sites
Sales representatives
Sweden, Denmark, Spain, India, Singapore, Chile and the US
9
FINANCIAL STATement
BOARD OF DIRECTORS
Knut Flakk
Chairman
M.Sc. (BI Norwegian Business School)
and MBA (London Business School).
Knut Flakk owns the Flakk Group and
has extensive experience from establishing, developing and operating
industrial companies both in Norway
and internationally. He has been the
CEO of the Flakk Group since 1996 and
serves as Chairman of the Board of all
the Group's main subsidaries.
Kristin krohn Devold
Deputy Chair
M.Sc. (NHH, Norwegian School of
Economics). General Secretary of the
Norwegian Trekking Association and
board member for a number of large
technology and industrial companies.
Defence Minister from 2001 until 2005
and has solid and extensive experience
from various positions and offices in
politics and business.
Independent board member.
Number of shares: 51 417 236 Number of shares: 0 Kristine Landmark
Board member
Economics). Managing Director of
Slettvold Møbler AS. Kristine Landmark
has extensive experience from various
management positions within the
banking and furniture industries. She
sits on several boards of corporate
groups, companies and associations.
Jan Magne Galåen
Board member
Degree in Civil Engineering from
Norwegian University of Science and
Technology (NTNU). Portfolio manager
at Rasmussengruppen and represents
his employer on the board. Has extensive experience as a financial analyst at
Fearnley Fonds and First Securities and
as portfolio manager at Rasmussengruppen.
Sverre narvesen
Board member
Civil Engineer Managing Director of
SINTEF Raufoss Manufacturing AS and
head of Norwegian Centres of Expertise,
Raufoss. Has 15 years' experience from
various management positions at
Raufoss ASA. Board positions in several
industrial companies and experience
from building up innovative groups.
Number of shares: 0
Number of shares: 15 268 000 *)
Number of shares: 0 *)
10
See Note 28
FINANCIAL STATement
MANAGEMENT
Tore J. Fjell
Acting CEO
M.Sc. (Business)/BA. Has extensive
experience from various management
positions at Elkem and Orkla and as
Director of Oslo Stock Exchange with
responsibility for the listed companies.
Has previously been a board member at
Hexagon Composites.
Number of shares: 771 044
tor olsen husø
CFO
Economics). Tor Olsen Husø has been
CFO at the Group since 2000. He is an
employee of the Flakk Group and has
previous experience from Vital Forsikring, UNI Storebrand Factoring and
DNB Finans.
Trond Seth
Purchasing Manager and Project Director
Engineering graduate (Møre and Romsdal
College of Engineering). Employed at the
Flakk Group since 2009 and is hired in
part time as purchasing manager. Broad
experience from various positions in the
maritime industry, including as strategic
purchasing manager at Rolls-Royce
Marine AS. Number of shares: 2 000
Solveig Maria Drøpping Sæther
Communication Manager
Bachelor of Marketing (Norwegian
Marketing School/BI Norwegian
Business School). Solveig Sæther has
been employed since 2010 and has 10
years' experience within marketing and
communication from the Wilh. Wilhelmsen Group. Number of shares: 0
GEIR J. TORSET
Group Controller
State Authorised Public Accountant
(NHH, Norwegian School of Economics).
Geir J. Torset is employed at the Flakk
Group and has been hired in part time
at Hexagon Composites since 2005. He
has previously worked as an auditor and
has extensive experience from the
auditing company KPMG. Number of
shares: 30 000
kristin waatland kestler
Company Secretary
Hired in part time from the Flakk Group
as company secretary. Has previous
experience from Royal Viking Line and
group management at Alcan Aluminium-
werke GmbH.
Number of shares: 0
Jack Schimenti
Managing Director - Hexagon Lincoln
Bachelor Degree in Industrial Engineering. Employed at Hexagon Lincoln since
2005 and took over as Managing director
in 2010. Previously held the position of
Vice President Operations. Extensive
experience from production processes
for composites.
Kåre Dybvik
Managing Director - Hexagon Devold
B.Sc., Mechanical Engineering, Manufacturing Management and MBA (BI
Norwegian Business School). Employed
at Hexagon Devold since 1995 and has
had various management positions at the
company. Took over as Managing direc-
tor in 2010. Was previously assistant man-
aging director. Number of shares: 52 124
Business unit MANAGERS
SKJALG SYLTE STAVHEIM
Managing Director - Hexagon Ragasco
Degree in Business Administration from
BI Norwegian Business School. Employed
at Hexagon Ragasco since the start of
1996. Took over as Managing director in
2013. Was previously factory manager.
Has previous experience from Delta
Consult, Norbok and Raufoss ASA.
11
FINANCIAL STATement
WORDS FROM
THE CHAIRMAN
Hexagon Composites has a solid and ground-breaking product portfolio, cost-effective
production facilities and, not least, a group of dedicated and competent employees.
Hexagon Composites was established in 2000 with a clear ambition of taking market shares from traditional materials
such as steel and aluminium with innovative composite
solutions at competitive prices.
This targeted work for 13 years has given results. The
current product portfolio consists of multiaxial reinforcements
in glass and carbon fibres as well as lightweight composite
cylinders for the storage and transport of gas. There are many
areas of use and we are presently a global market leader in
several niche markets with significant growth potential.
A particular characteristic of the Hexagon Group is the
ability to develop and commercialise advanced composite
products that are both cost-effective and give clear benefits
compared with traditional solutions. Products with lighter
weight, better corrosion resistance and considerably longer
useful life also contribute to less impact on both humans and
the environment.
During 2012 Hexagon Composites has implemented an number
of measures that are expected to strengthen the Group's
long-term competitiveness:
• Hexagon Devold has discontinued its remaining production in Norway and has united all European production at the company's factory in Lithuania.
• Hexagon Ragasco has strengthened the sales organisation with the clear goal of increasing capacity utilisation at the company's fully automated production facility in Norway.
• Composite Scandinavia was closed down and the production equipment was sold to the Russian joint venture company Rug-
asco. Hexagon Ragasco's facilities in Norway have been given the volumes that were previously produced in Sweden.
• Hexagon Raufoss has instigated a number of measures to ensure the stable and profitable production of CNG cylinders for the passenger car market
• Hexagon Lincoln has strengthen its staff with a number of new employees to meet the strong market growth.
THE YEAR THAT HAS PASSED
2012 provided a positive, however still unsatisfactory result. The
most important reasons were a European market marked by
economic recession, significant challenges related to the
upscaling of production of CNG cylinders for passenger cars
and the one-time costs associated with relocating Hexagon
Devold's production to Lithuania. However, results in a number
of our European companies were offset by a record profit for
Hexagon Lincoln.
An important reason for the solid development in the US is
the strong growth in the market for natural gas-powered
vehicles. This is a direct consequence of the shale gas revolution that has made it much cheaper to use natural gas as fuel.
This applies in particular to heavier heavy-duty vehicles which
have high fuel consumption, however do not have the requirements that passenger cars have for filling stations that are in
close proximity to one another.
However, in Europe, where the gas price is currently
significantly higher than in the US, the conditions for converting
from diesel to gas are related much more to political environmental requirements. However, the economic situation in
Europe has significantly reduced the ability of governments to
invest and many of the incentive schemes have therefore been
reduced considerably.
POSITIONED FOR PROFITABLE GROWTH
The Hexagon Group has a solid and ground-breaking product
portfolio, cost-effective production facilities and, not least, a group
of dedicated and competent employees. We are therefore well
positioned to maintain and strengthen our market position in the
years ahead.
As part of the work on strengthening our global position, in
March this year we carried out a complete re-branding of the
Group in order for all the companies in the Group to have a
uniform market profile.
Several of our markets are expected to experience significant
growth and we have therefore strongly invested in increased
production capacity in these areas. When the approved
investments are made in summer 2013, it is expected that sales
could double compared with 2012 without further investments
within these areas.
In conclusion, I would like to thank all other shareholders for
the trust, support and patience you have shown the company
throughout the years. It has been an exciting journey so far,
however I still believe that the most promising years are still
ahead of us and I look forward to continuing the work on making
Hexagon Composites a success for all of us.
Sincerely
Knut Flakk
Chairman of the Board, Hexagon Composites ASA
12
About HEXAGON composites CORPORATE GOVERNANCE BOARD OF DIRECTORS' REPORT FINANCIAL STATement
Important events
in 2012
Q1
• Hexagon Devold decided to relocate the remaining production in Norway to the company's factory in Lithuania.
• The Group decided to demerge the CNG passenger cars product area from Hexagon Ragasco and merge it with
Hexagon Raufoss.
• Hexagon Lincoln received a special permit from the American authorities which approves the production and use of TITAN™ transport modules in the US.
Q2
• Composite Scandinavia decided to discontinue production of LPG cylinders at Piteå in Sweden.
• Hexagon Composites entered into a joint venture agreement with the Russian company Autocomponent to work together with LPG and CNG cylinders in Russia.
• Hexagon Lincoln was awarded a strategically important contract with SC Group in Thailand to supply 55 TITAN™ modules.
• Hexagon Lincoln received the first three orders for TITAN™ to the North American market which had a combined
value of NOK 75 million.
• Hexagon Devold completed the relocation of the remaining production from Langevåg to Lithuania.
Q3
• The product area CNG passenger cars was formally demerged from Hexagon Ragasco and merged with Hexagon Raufoss with effect from 1 October.
• After 11 years, CEO Erik Espeset resigned to take up the position of managing director at Tafjord Kraft AS from 1 January 2013.
Q4
• The High-pressure business unit achieved record sales in the fourth quarter.
Q1 2013
• Hexagon Raufoss signed an agreement with a leading American car manufacturer for the delivery of CNG
cylinders valued at NOK 90 million over four years.
• Tore J. Fjell became acting CEO with effect from 1 January 2013.
• Hexagon Composites implemented a new unified, visual profile for the entire Group.
• Jon Erik Engeset was employed as the new CEO at Hexagon Composites ASA taking up the position on
5 August 2013.
13
OBJECTIVES FOR HEXAGON COMPOSITES 2012
OBJECTIVES FOR 2012
MILESTONES 2012
Cover global market requirements
Sales and market developments in all business units
with a special focus on LPG cylinders and TITAN™
modules.
Achieved significant growth, market breakthrough and
a differentiated sales portfolio for TITAN™ in North and
South America and South-East Asia.
Stand out as a uniform and global group and build a
strong and recognisable brand.
Strengthening of the sales organisation in the US to
meet the strong growth in the American market.
Reorganisation of the sales organisation for LPG cylinders
was carried out in the second half of 2012.
Increased market focus at CNG passenger cars through
the separation from Hexagon Ragasco.
Implementation of a united visual profile for the Group
in March 2013.
Develop unique products
Continue to work on European approval for TITAN™.
A broader bulk-hauling and TITAN™ product portfolio
was developed.
Develop new TITAN™ configurations.
Initiate and manage development projects within hydrogen.
Manage the continued commercial development of risers
for the offshore industry.
Carried out focussed organisation to realise new hydrogen
development projects.
Continued development of riser project.
Achieve full capacity utilisation
Increase capacity utilisation and strengthen product
capacity in all business units.
Unite the production of LPG cylinders and European
production of composite reinforcements to achieve better production capacity and efficiency.
Hexagon Lincoln achieved full capacity utilisation for
TUFFSHELL™ throughout the entire year and full capa-
city utilisation for TITAN™ in the second half of 2012.
Production at Composite Scandinavia was discontinued
in the third quarter to achieve a better balance between
demand and capacity in the European LPG market. The
facility was taken over by the joint venture company
Rugasco in Russia.
Ensure financial stability
Adapt to the cost level in the market by uniting all Euro-
pean production of composite reinforcements in Lithuania.
All European capacity for composite reinforcements
was united in Lithuania in the third quarter of 2012
to ensure better utilisation of capacity and low cost
production.
Organisation and personnel
We want to attract and develop motivated employees
with relevant expertise and interest.
European production of composite reinforcements was
successfully united in the first half of 2012.
Increased focus on market organisation through separation of CNG passenger cars from Hexagon Ragasco.
Considerable increase in staff at Hexagon Lincoln and
new management at CNG passenger cars.
14
Deviations 2012
FOCUS AREAS 2013
Cover global market requirements
Realised lower sales of LPG cylinders than expected.
Establish more customer arrangements with stable LPG
customers.
Meet the continued strong growth in the US with
adapted products.
Grow in selected global markets.
Establish customer arrangements with more motor
vehicle producers.
Establish more customer arrangements for composite
reinforcements.
Develop Hexagon Composites as a strong brand in the
global market.
Develop unique products
European approval of TITAN™ has not been achieved.
This is a long-term project with a five year horizon.
The development within hydrogen has been focused on
existing projects, and commercialisation is considered
demanding, but feasible.
Continued development of customer-adapted CNG
products with a particular focus on new customers in
the US and motor vehicle producers in the EU.
Increase focus on our unique expertise within hydrogen
cylinders.
Achieve full capacity utilisation
Weaker than expected capacity utilisation on the LPG
line in the second half of 2012.
Double production capacity for CNG cylinders and
TITAN™ at Hexagon Lincoln.
Establish stable production of CNG cylinders for
passenger vehicles at Hexagon Raufoss.
Commence production of LPG cylinders at Rugasco
(JV) in Russia.
Ensure financial stability
Challenges related to establishment of a stable and satisfactory quality situation for CNG passenger cars.
Focus on improved and good profitability in all
business units.
Organisation and personnel
Increased focus on leadership development.
15
FINANCIAL STATement
Protected valve
The design ensures that
the valve is protected
against external impact.
Lightweight
50% lighter weight than
a steel cylinder with
equivalent volume gives
unique handling ability.
Award winning design
The design gives a softer and
friendlier impression and a
better user experience.
Easy to see gas level
CORROSION-RESISTANT
The cylinder does not rust, a factor that is crucial to the lifetime and safety.
16
The cylinder does not rust,
a factor that is crucial to
the useful life and safety.
FINANCIAL STATement
HEXAGON RAGASCO
Hexagon Ragasco (previously Ragasco) is a global supplier of
composite, lightweight cylinders for propane (LPG) for households,
leisure activities, catering kitchens and forklift trucks.
THE RESULT
Hexagon Ragasco had combined sales of NOK 338.6 million
(435.8) in 2012. The business unit achieved an operating result
(EBIT) in 2012 of NOK - 5.4 (22.8) million.
The lower sales in 2012 were due to a very low number of
completed deliveries to markets outside Europe. Deliveries to
European customers remain stable, but are however influenced
by the difficult financial situation in Southern Europe. The result
was negatively affected by the costs associated with the closure
of Composite Scandinavia, as well as the costs from increasing
production of CNG cylinders for passenger vehicles.
The result is unsatisfactory and significant measures were
taken in 2012 to strengthen the company's competitive position.
2012
2011
Turnover
338 605
435 792
EBITDA
24 265
71 742
EBIT
-5 414
22 816
EBIT %
-1.6 %
5.2 %
IMPORTANT EVENTS
The need for capacity adjustment and more cost-effective
production resulted in production at Composite Scandinavia in
Piteå being discontinued at the end of the third quarter in 2012.
The customer base was moved to Hexagon Ragasco and the
production equipment was transferred to the Russian joint
venture company Rugasco for production for the Russian
market. This production is planned to commence at the end of
the first half of 2013 under the direction of Rugasco.
The product area CNG passenger vehicles was demerged
from Hexagon Ragasco and merged with Hexagon Raufoss with
effect from the 4th quarter of 2012. Streamlining of LPG cylinders
will give increased focus and effectiveness.
The sales and marketing work was strengthened and inten-
sified through, among other things, organisational changes and
increased presence in established and new markets.
PRODUCTION & PRODUCT DEVELOPMENT
Production takes place at Raufoss in Norway. Production is fully
automated and was primarily operated in three shifts in 2012. The
production efficiency and unit costs are the basis for effective ope-
ration and improvement programmes are continually being run.
The company has product development programmes in
progress at all times. Streamlining of production and optimisation
of the existing market portfolio are ongoing.
THE MARKET
Our market is leading distributors of LPG for household
consumption, primarily in Europe, Latin America and the
Middle East. These distributors purchase and administer large
stocks of gas cylinders that are part of exchange centres. The
end user pays a one-time fee and exchanges the empty cylinder
with a filled cylinder. Our cylinders are somewhat more
expensive than steel cylinders, but have a number of user
benefits as shown on the opposite page. For the first time we
have carried out market initiatives together with the customers
to better demonstrate the benefits of the product to end users.
The cylinders are now sold in more than 40 countries. Work is
being continually carried out to obtain type approval and
authorisation to sell in new countries.
Fuel tanks for forklift trucks have the same technology and
customer base, however require separate type approvals. North
America is considered to be the most interesting market and
the cylinder is approved in the US and Canada.
17
SHARE OPERATING INCOME
HExagon ragasco
economic Development
HExagon ragasco
■ Composite cylinders ■ Composite reinforcements
■ High-pressure cylinders
■ Operating income ■ EBIT FINANCIAL STATement
— EBIT%
MNOK
EBIT %
600
20.0%
17%
15.0%
400
32%
10.0%
200
51%
5.0%
0.0%
0
2008
COMPETITORS
Hexagon Ragasco is a leader in composite cylinders and is the
only supplier of pure composite cylinders that can lay claim to
more than 10 years of production. Hexagon Ragasco is presently
considered to be the leading supplier in terms of cost and quality
in this market segment.
The largest competitor is traditional steel cylinders. They are
cheaper, but are heavier and corrode, do not show the gas level
and do not have the same safety from explosion as our composite
cylinders.
There are competing lightweight cylinders in all of our
markets; however none of these provide noticeable competition
at the present time. Hexagon Ragasco maintained its market
shares in 2012. There was no change in the division between
composite and steel.
MARKET OUTLOOK
In large parts of the world LPG supplied in transportable
cylinders is the most important energy source for cooking.
Increased prosperity is expected to increase the willingness to
pay for better solutions in both the short and long terms. Work is
continually being carried out with market development in
existing and new markets.
STRATEGY AND OBJECTIVES
Hexagon Ragasco shall be number one in the development and
supply of mass-produced, cost-effective composite cylinders for
LPG. The company has the industry's highest safety standards
and shall be the industry's most reliable supplier.
18
2009
2010
2011
2012
-5.0%
The following important objectives were achieved in 2012:
•
•
•
•
Demerged CNG passenger cars from Hexagon Ragasco to streamline the product area for LPG cylinders
Increased focus on sales and the market, including organisational changes to strengthen sales and market work
Closure of production at Composite Scandinavia, sale of production equipment to the company's JV in Russia and relocation of production volumes to Hexagon Ragasco
Capacity adjustments and measures to increase production efficiency.
Objectives for 2013-2014
•
•
•
•
Increase the market shares with existing customers and sales to new markets
Focus on the initiatives in Europe, the Middle East and North and South America
Utilise available production capacity
Commence production of LPG cylinders in Russia through the joint venture company Rugasco.
Hexagon Ragasco AS is located in Raufoss, Norway and has 72
employees. The company has sales representatives in Sweden,
Denmark, Spain, the US, Chile, India and Singapore.
FINANCIAL STATement
Hexagon Ragasco shall be number one in the development and supply of mass-produced, cost-effective composite cylinders for LPG.
The LPG cylinder from Hexagon Ragasco has half the weight of steel cylinders, something that provides major benefits to end users.
Propane delivered in transportable cylinders is the most important energy
source for cooking in large parts of the world.
19
Lightweight
The high-pressure cylinders weigh up to 70% less
than steel cylinders. This
is extremely important
for the vehicle's stability,
among other things.
CORROSION-RESISTANT
The cylinders do not
rust, something that is of
crucial importance to the
useful life and safety.
Better fuel economy
Lower combined weight
and greater storage
capacity give better fuel
economy.
Operational
efficiency
Greater economic efficiency through less
maintenance and lower fuel
consumption.
20
FINANCIAL STATement
FINANCIAL STATement
HEXAGON lincoln
hexagon Raufoss
The business unit for high-pressure cylinders (Hexagon Lincoln and Hexagon Raufoss)
is the market leader within complete composite storage and transportation systems.
The business unit includes fuel cylinders for passenger vehicles, buses and heavy
vehicles as well as transport and storage cylinders (natural gas and hydrogen).
THE RESULT
The business unit had total sales of NOK 545.1 million (386.5) in
2012 and achieved an operating profit (EBIT) in 2012 of NOK
50.6 million (25.4).
The increase in sales was primarily due to strong growth in
the US in the areas of bulk transport solutions and fuel tanks for
heavy vehicles. In Europe the economic situation in Southern
European countries has, on the whole, resulted in lower sales
of fuel tanks for gas-powered buses.
Hexagon Raufoss
The production of CNG passenger vehicle tanks was transferred
from Hexagon Ragasco. After a running-in period, the desired
efficiency increase was achieved.
In the 4th quarter a framework agreement was signed for
the delivery of fuel tanks to South America to an American
passenger vehicle manufacturer worth a potential NOK 90
million. The tanks shall be delivered over a four year period.
PRODUCTION AND PRODUCT DEVELOPMENT
2012
2011
Turnover
545 126
386 548
EBITDA
75 483
40 245
EBIT
50 611
25 408
9.3 %
6.6 %
EBIT %
IMPORTANT EVENTS
Hexagon Lincoln
TITAN™ bulk transport modules received a special permit from
the American authorities for use in the US. This resulted in more
contracts. Two new and larger TITAN™ variants, TITAN™ 5 and
TITAN™ Magnum, were launched. These represent an increase
in capacity of up to 30% and have raised interest from gas
transporters over the entire world.
A considerable increase in capacity in TITAN™ production
was achieved through improved work flow and certification of
the operators to carry out more operations. The production of
CNG fuel tanks increased by almost 50% in 2012.
Funds have been allocated and work commenced on further
capacity expansion for TITAN™ and tanks for motor vehicles
and buses. From summer 2013 capacity will be almost doubled
from the 2012 level.
In 2012 a new plastic inner liner was developed that reduces
permeability (i.e. flow of gas through the inner plastic cylinder)
to practically zero. This is an important innovation as the
emission requirements from vehicles become more stringent.
Important development projects are continually ongoing.
The development of fuel tanks largely occurs in close
cooperation with the car and bus manufacturers. An internal
development programme has the objective of standardising the
use of components. Efficiency gains have already been achieved
and this work continues with a view to better purchase agreements and routines.
THE MARKET
The most important market driver for the business areas in 2012
was the major increase in the use of natural gas in the US. Cheap
shale gas is making it profitable to drive heavy vehicles on CNG
and fleet owners are converting to become competitive. This
development looks set to increase in the years ahead.
Bulk transport
The backbone in this segment is our TITAN™ transport modules.
Low weight and high capacity make TITAN™ superior in areas
and countries without pipe-based infrastructure, regardless of
the development level. TITAN™ Magnum, which is the largest
type, makes it possible to transport 12,057 Sm³ of gas (prior to
compression). This entails the need for fewer transport modules,
21
FINANCIAL STATement
HExagon Lincoln/Hexagon Raufoss
HExagon Lincoln/Hexagon Raufoss
■ High-pressure cylinders
■ Composite cylinders ■ Composite reinforcements
■ Operating income ■ EBIT — EBIT%
MNOK
EBIT %
10.0%
17%
600
8.0%
32%
6.0%
400
4.0%
200
51%
2.0%
0
0.0%
2008
something which in itself makes gas transport more efficient
both financially and environmentally.
The transport of such amounts of gas by road is subject to
strict national approval arrangements. The American approval
is important because it is considered that this will reduce the
processing time in new countries. Thus far the solution has
been approved and used in Malaysia, Vietnam, Thailand,
Colombia, Australia, The Dominican Republic, Peru and the US.
In Europe it is currently not permitted to transport such large
amounts of gas in one cylinder. A legal amendment would be
expected to take 3-5 years. In this market, our SMARTSTORE™
cylinders of up to 450 litres are sold to, among others, biogas
transporters in Scandinavia.
CNG CYLINDERS FOR VEHICLES
Buses
With TUFFSHELL® roof-mounted fuel tanks, the Group is a
dominant supplier to gas-powered bus producers in the US and
Europe. While there is a great deal of activity in the US where
natural gas used as a fuel gives financial benefits, the market is
weaker in crisis-plagued Europe. Investments in new gas-powered buses are low. There was a good level of activity in the
Nordic and Baltic regions during 2012.
Heavy-duty vehicles
In the US an increasing percentage of heavy-duty vehicles and
long-haul transport vehicles are converting to CNG. While this
has thus far involved rebuilding new vehicles, the major truck
manufacturers are now starting to supply vehicles with newlydeveloped gas engines and factory-installed CNG tanks. With
considerable cost reductions as the driving force, this development is expected to intensify in the years ahead.
22
2009
2010
2011
2012
Passenger vehicles
Development is progressing and Western Europe is ahead of the
US due to environmental requirements and better developed
infrastructure for filling stations for the passenger vehicle market.
We are currently supplying to three major international, motor
vehicle manufacturers and we are the dominant supplier of
composite gas cylinders.
The Asian market is extremely price-oriented and the
cheapest solution is often selected even if this has disadvantages (higher weight, vulnerable to corrosion, risk of explosion).
An example is gas-powered buses. Low-floor buses are also
coming to Asia, however they are choosing roof-mounted,
heavy steel tanks at a low price, despite the fact that this is to
the detriment of the bus' stability.
Hydrogen cylinders
Hydrogen under high pressure is considered to be the best and
most cost-effective solution for the use of hydrogen as an energy
carrier for vehicles. Germany and Japan are the leaders in the
development of hydrogen-powered cars and related infrastructure. Hexagon Composites is involved in a number of development projects. One of these projects is under the direction of
the American Department of Energy (DOE) and concerns the
reduction of the costs related to storage systems for hydrogen.
The Group is a technology leader in storage tanks for stationary
filling stations that permit pressure of 950 bar. The cylinders are
used in Germany, Denmark, Norway, the US and Canada.
COMPETITORS
In the bus market in the western world low weight is decisive
because roof-mounted tanks on low-floor buses impact on the
bus' stability. In the US and Europe the Group's market shares
are high: 80% and 60% respectively. The competitors in the US
are primarily North American producers of cylinders with alumi-
FINANCIAL STATement
The lightweight cylinders from Hexagon Raufoss are up to 70% lighter than steel cylinders. Lower combined weight and greater storage capacity give better
fuel economy.
nium inner liner (Type 3), and some smaller European producers
with Type 4. The situation in Asia is described under "The Market".
For trucks in the US, weight and corrosion resistance are
important factors and solutions with composite cylinders are
the only solutions used. Our competitors in the bus market also
operate in the truck market.
To a certain extent, the same competitors can be found in the
passenger vehicle market as in the truck market. The use of pure
steel cylinders is also widespread in the EU. The new requirements
for the tax structure for passenger vehicles in the EU will entail
that weight will become a considerably more important factor.
In bulk transport, the Group's TITAN™ products are unique
and compete well because they permit considerably higher
volumes/maximum load and thereby significantly reduce
transporters' operating costs. However, there is significant compe-
tition from cheaper steel tank solutions despite their disadvant-
ages of heavier weight and lower volumes.
For the smaller SMARTSTORE™ cylinders, the weight in
some cases can be of lesser importance and steel cylinders are
a noticeable competitor, as well as smaller Type 4 cylinders.
MARKET OUTLOOK
A strong increase in sales of fuel cylinders for heavy vehicles is
expected in the US. The same applies to TITAN™ in the countries
where the solution has been approved and in the countries we
expect to obtain approval. The European bus market will most
likely also remain weak in 2013.
An increase is expected in the market for composite
cylinders for passenger vehicles as new models are launched.
The business unit shall be number one globally in the development and production of complete composite storage and transport
systems for gas under pressure. Hexagon Composites shall comply
with the strictest safety standards and be the industry's most relia-
ble supplier and the preferred cooperative partner for development.
The following important objectives were achieved in 2012
•
•
•
•
•
•
Major increase in production at Lincoln to meet the strong market growth in the US
Implementation of major expansion of capacity at Hexagon Lincoln
A considerable overall strengthening of the organisation to meet the large increase in sales
Establishment of new management for CNG passenger cars
The product area CNG passenger cars was demerged from Hexagon Ragasco and merged with Hexagon Raufoss
Challenges during the start-up period for CNG passenger cars have been resolved and good control of the production processes has been achieved.
•
•
•
•
•
•
Capture market shares with TITAN™ in Asia, South America and North America
Expand the growing American market for gas fuel cylinders.
Further develop our leading position in Europe for CNG transport with SMARTSTORE™
Strengthen our position as market leader in fuel tanks for gas-powered buses in the US and Europe
Reinforce our dominant position in the US for larger fuel cylinders for the heaviest vehicles that increase range
Maintain and further develop our position as the largest supplier of composite cylinders for passenger vehicles.
Hexagon Lincoln Inc. is located in Nebraska, USA and has 251
employees. Hexagon Raufoss is located in Raufoss, Norway and
has 41 employees. The companies have sales representatives
based in Singapore and India.
23
Low-cost production
Hexagon Devold is strategically positioned with
low-cost production in
Lithuania and the US.
24
FINANCIAL STATement
FINANCIAL STATement
HEXAGON devold
Hexagon Devold (previously Devold AMT) is a leading international
player within stitched, multiaxial composite reinforcements of glass and
carbon fibre. Large parts of the volume go towards the wind power
industry and production of wind turbine blades for which high
demands are set for weight and strength.
RESULT
Hexagon Devold had total sales in 2012 of NOK 176.1 million
(172.2). The business unit achieved an operating result (EBIT)
in 2012 of NOK - 7.4 (-1.5) million.
The loss was primarily due to restructuring costs in the first
half of the year associated with the closure of production at
Langevåg and the relocation of the remaining production
equipment to Lithuania. The company achieved an operating
profit in the second half of 2012.
A restructured and strengthened sales apparatus has been
implemented over the past few years. This ensures close
proximity to and better follow-up of customers as well as
increased resources for being able to continually work towards
gaining new customers and markets.
PRODUCTION & PRODUCT DEVELOPMENT
2012
2011
176 145
172 248
784
7 017
ISO-9001 approval for the factory in Lithuania was in place in
August and both of our factories are therefore ISO-9001 certified.
The company continually has product development
projects in cooperation with the customers. These types of
projects have the objective of finding solutions that optimise
the customers' production and/or provide product improvements that allow for larger or more robust wind turbine blades.
EBIT
-7 355
-1 453
the market
EBIT %
-4.2 %
-0.8 %
Turnover
EBITDA
IMPORTANT EVENTS
The most important milestone for the company in 2012 was the
relocation of the remaining production at Langevåg to the
company's factory in Lithuania. Hexagon Devold is now
well-positioned, with low-cost production in Lithuania and the
US, and the effect of this is evidenced by improved margins.
The challenge ahead is to increase sales and achieve better
capacity utilisation.
The US has had lower growth due to a temporary withdrawal
of the PTC (Production Tax Credit) on investments in the wind
power industry. The scheme will now be extended for one more
year as part of the "fiscal cliff" package. It is expected that this
will contribute to increased activity in the country.
Our market is primarily the wind turbine industry (90%) in
Europe and the US. The market is largely dependent on the
political guidelines and incentives that make development
profitable and wind power competitive.
The company has strengthened its position and become
more competitive through low-cost production, consolidation
of production in Europe and increased capacity utilisation.
In March 2011 the European Commission decided to
maintain the punitive duties on Chinese fibre for a further 5
years. The punitive duties, including import duties, amount to
21%. This is restrictive for the producers of reinforcements
within the EU in terms of access to reasonably priced raw
materials, while it gives an advantage to Chinese competitors.
25
HExagon Devold
HExagon Devold
■ Composite reinforcements ■ Composite cylinders ■ High-pressure cylinders
■ Operating income ■ EBIT FINANCIAL STATement
— EBIT%
MNOK
EBIT %
600
17%
400
22.0%
32%
12.0%
200
2.0%
-8.0%
51%
0
2008
COMPETITORS
In recent years the industry has been characterised by consolidation towards fewer and larger market players. With the
exception of China, no new competitors have emerged and
competitors have discontinued production in both Europe and
the US. This development is expected to continue and the
European customers are positive about our initiative in
Lithuania.
Quality is of increasing importance because wind turbine
blades are continually getting larger. The most important compe-
titive factors for producers of fibre reinforcements are product
quality, price and reliability of supply. Hexagon Devold is
considered to be competitive in terms of price, flexibility and
reliability of quality and supply. The company is consciously
working towards further strengthening its competitiveness
within these areas.
MARKET OUTLOOK
Hexagon Devold is totally dependent on the development of the
wind power industry. This development is largely based on political
objectives and incentive schemes intended to promote the envi-
ronment and/or the country's ability to supply itself with energy.
The challenge is that these political guidelines are regional
or national. Supranational guidelines would give better
predictability, however we have yet to see any such schemes
from, for example, the EU.
In 2012 wind power made up 2.6% of the world's electricity
production. It is expected that this share will increase to 7%-8%
in 2022.
26
2009
2010
2011
2012
-18.0%
By focusing on cost-effective production and an adapted and
flexible organisation, Hexagon Devold shall capture market
shares in segments that represent large volumes, including in
new geographical markets. This shall make us a profitable and
important player in the markets in which we operate.
The following important objectives were achieved in 2012
•
•
•
Completed the relocation of the remaining production from Langevåg to Lithuania.
Achieved positive operating results in both the 3rd and 4th quarters as a direct consequence of the relocation
Is well positioned with low-cost production in Lithuania and the US.
•
•
•
Strengthen our position and become a global, low-cost producer of high-quality reinforcements.
Develop partnerships and relationships that strengthen our position as the preferred supplier.
Find and develop relationships with new customers in the wind power industry. These shall be characterised by high volumes and repeated orders.
Hexagon Devold's head office is located in Langevåg, Norway
and has 10 employees. Hexagon Devold Lithuania is located in
Kursenal, Lithuania and has 95 employees. PPG-Devold LLC
joint-venture is located in Shelby, North Carolina, USA and has 35
employees.
FINANCIAL STATement
Hexagon Devold works with product development projects in cooperation with the customers. The projects have the objective of finding solutions that optimise
the customers' production and/or provide product improvements that allow for larger or more robust wind turbine blades.
Hexagon Devold is well positioned, with low-cost production in Lithuania and the United States, and the effect of this is evidenced by improved margins.
27
FINANCIAL STATement
The American
shale gas revolution
and its significance to HEXAGON COMPOSITES
It has long been known that enormous reserves of so-called shale gas are found
on most continents and that the commercialisation of this gas could have
far-reaching consequences for the world's energy supply. The challenge has
been to extract the gas in a cost-effective manner, however in recent years
there has been major technological progress in this field.
New production methods have turned the American gas market
on its head. The US, which was previously a major importer of
natural gas, is now overflowing with gas at extremely low prices.
For the Hexagon Group this has created significant opportunities
within the transport sector.
The low gas prices in North America provide major cost savings
when transitioning from diesel to natural gas as a fuel. This
applies in particular to heavier vehicles because these have the
highest fuel consumption, however smaller vehicles are also
converted to natural gas due to the cost savings and reduced
emissions of greenhouse gases. Fuel costs are one of the largest
cost elements for fleet operators and low natural gas prices enable major cost savings. In certain instances, the payback time
for natural gas-powered vehicles is as low as 12 months.
Access to gas engines with adequate tractive force and an under
developed network of filling stations have restricted market growth
thus far. However, the number of filling stations is increasing rapidly and already in 2013 an engine alternative will be launched
that is well suited to heavier vehicles. This is contributing to new
and major markets being opened up for Hexagon.
Hexagon Composites is a market leader
Hexagon Lincoln is presently the market leader in North America
for fuel tanks for natural gas-powered vehicles. In recent years
the market has been strongly driven by growth within the
"transit bus" and ”refuse hauler” segments. This type of vehicle
is generally operated regionally, however Hexagon Lincoln is
now also experiencing a major increase in demand from the
28
heavier vehicles (Class 8 trucks) within the long-haul transport
sector. With annual production of 200 000-250 000 vehicles, the
latter-mentioned market segment is considerably larger than the
markets that have traditionally been the most important for the
company. Hexagon has the clear objective of maintaining its
leading position within this growing market.
Strong market drivers
The most important reason for the increasing interest in the use
of natural gas as a fuel for vehicles is the major cost savings this
provides compared with diesel. In the US, diesel cost an average of $3.96/gallon1 in the 4th quarter of 2012 compared with
natural gas that cost $2.34/DGE2. The price difference will naturally vary over time, however due to the large amounts of shale
gas that are now available in the US there is a high probability
that natural gas will continue to remain a cheaper alternative to
diesel in the future.
In addition to the cost savings, natural gas also gives significant
environmental benefits compared with diesel. CO2 emissions
are reduced by 20-25%, while NOx and particle emissions can
be reduced by as much as 90%.
Last, but not least, the increased use of domestically produced
natural gas will contribute to lower oil imports. From the standpoint of the US, this is of course favourable in relation to the
balance of trade and national energy security.
1
2
Source: Clean Cities Alternative Fuel Price Report, January 2013
DGE = Diesel Gallon Equivalent
Shale gas fields in the us
Abundant reserves of cheap natural gas have become available due
to developments in horisontal drilling and fracking technology.
■ Current shale gas fields ■ Shale gas basins (Source: eia)
Montana
Thrust Belt
Williston
Basin
CODY
GAMMON
HILLIARD
BAXTER
MANCIOS
ANTRIM
Michigan
Basin
Greater Green
River Basin
Unit Basin
MANCOS
HERMOSA
Forrest City
Basin
PIERRE
San Juan
Basins
WOODFORD
Anadarko
Basin
Rato
Basin
Palo Duro
Basin
Permian
Basin
BARNETT
WOODFORD
Marfa
Basin
FAYETTVILLE
Arkoma Basin
BEND
UTICA
NEW
ALBANY
Cherokee Platform
Paradox Basin
LEWIS
MARCELLUS
Illinois
Basin
EXCELLO
MULKY
Piceance
Basin
CHATTANOOGA
Black Warrior
Basin
Ardmore Basin
BARNET
Ft. Worth
Basin
Maveric
PEARSALL Sub-Basin
EAGLE FORD
EAGLE
Appalachaian
Basin
DEVONIAN
(OHIO)
FLOYD
TEXAS
NEAL
LOUSIANA
MISSISSIPPI
Salt Basin
CONASAUGA
Valley & Ridge
Province
HAYESVILLE
BOSSIER
FORD
Rio Grande
Embayment
historical oil and gas prices
—– ICE Brent —– WTI Crude —– US Natgas
USD/BARREL
USD/MMBTU
Jan. 2 0 1 3
Jul. 2 0 1 2
Oct. 2 0 1 2
Jan. 2 0 1 2
Apr. 2 0 1 2
Jul. 2 0 1 1
0
Oct. 2 0 1 1
0
Jan. 2 0 1 1
2
Apr. 2 0 1 1
20
Jul. 2010
4
Oct. 2010
40
Jan. 2010
6
Apr. 2010
60
Jul. 2009
8
Oct. 2009
80
Jan. 2009
10
Apr. 2009
100
Jul. 2008
12
Oct. 2008
120
Jan. 2008
14
Apr. 2008
140
Freightliner Cascadia CNG trailer for bulk hauling.
(Source: dnb)
29
FINANCIAL STATement
SHAREHOLDER
INFORMATION
The increase in the share price during 2012 can be attributed largely to the strong growth
in the High-pressure area and the significant market opportunities associated with shale
gas in North America where Hexagon Composites is extremely well positioned.
FINANCIAL CALENDER
17 april 2013
Ordinary General
Meeting
30 april 2013
1st quarter
2013
22 august 2013
Half-year interim report
2013
14 february 2014
4th quarter
2013
Hexagon Composites ASA's objective is to ensure that the shareholders receive a competitive return over time. This return will
first and foremost come through increases in the price of the
Group's shares and partly through the payment of dividends.
Hexagon Composites ASA is listed on the Match Segment of
the Oslo Stock Exchange (OSE) under the ticker symbol HEX.
The share capital of Hexagon Composites ASA is NOK 13.3 million
and the nominal value per share is NOK 0.10. As of 31 December
2012, the Group had a market value of NOK 595.8 (327.9) million.
At the start of the year the share price was listed at NOK 2.55
and ended the year at NOK 4.47. The Hexagon shares therefore
increased by 74.6% (-61.9) in 2012 and were therefore one of the
year's winning stocks on the Oslo Stock Exchange. In comparison, the OBX Index increased by 14.8% (-10.7) and the industrial
index increased by 20.2% (-16.3).
After a period of decline in 2010-2011, the company experienced an increase of 74.6% in 2012. The main reason for the
decrease in the share price in the previous two years can be
viewed in connection with the reduced growth in the company's
sales of LPG cylinders. The increase during 2012 can primarily be
attributed to the strong growth in the High-pressure area and the
significant market opportunities associated with shale gas in North
America where Hexagon Composites is extremely well positioned.
Hexagon Composites ASA has one class of shares and all
shares are freely negotiable. In 2012, 16.8 million (6.7 million)
shares were traded with a turnover rate of 12.6% (5). These
shares were traded for 247 (234) of 251 (252) days. The liquidity
of the shares has developed positively and the Group is working
on increasing interest in the shares in the investor market. Regular investor presentations are held and four brokerage houses
have followed the Group with analyses.
price of the Group's shares and/or dividends related to financial
performance/investment requirements. Hexagon Composites did
not pay dividends in 2012. At the general meeting on 17 April 2013
it will be proposed that dividends of NOK 0.15 per share are paid.
DIVIDEND POLICY
Swedbank First Securities AS - Contact: Hans-Erik Jacobsen
Phone: +47 23 23 82 54, E-mail: hans.erik.jacobsen@ swedbank.no
The Group is focussing on high-growth markets and wants to carry
out the necessary investments to realise such growth. The Group's
dividend policy is that the shareholders shall receive competitive
returns on their shares, first and foremost through increases in the
34
31 october 2013
3rd quarter
2013
SHAREHOLDER STRUCTURE
As of 31 December 2012 Hexagon Composites ASA had 1 380
(1 385) shareholders, of whom 50 (49) were foreign. The number
of shares in foreign ownership was therefore 3.6% (3.5). The largest shareholder is the Flakk Holding AS with an ownership stake
totalling 38.5%. The 20 largest shareholders have a total ownership stake of 83.3% (85.0)
The company has a very stable ownership structure. The
principal shareholders are primarily industrial investors such as
the Flakk Holding AS, Rasmussengruppen AS and Bøckmann
Holding AS with a combined ownership stake of 70%. Institutional investors constitute 24% of the shareholders. The remaining
shareholders are principally private individuals and small and
medium-sized companies with a combined ownership stake of 6%.
ANALYSTS
The following analysts follow Hexagon Composites ASA:
DNB Bank ASA - Contact: Ole-Andreas Krohn
Phone: +47 24 16 92 11, Email: ole-andreas.krohn@dnb.no
Norne Securities - Contact: Tomas Skeivys
Phone: + 370 67 63 51 44, Email: ts@terramarkets.no
Pareto Securities AS - Contact: Thomas Nielsen
Phone: +47 24 13 21 54, Email: tn@paretosec.com
FINANCIAL STATement
HEXAGON SHARE VOLUME 2012
OSE PRICE TRENDS IN 2012
—– Hexagon Composites —– HEX Volume —– Hexagon Composites —– OSE20 Industrials —– OSEBX
PRICE
TURNOVER/VOLUME
% PRICE
700T
90.0%
4.4
600T
4.2
4.0
500T
80.0%
70.0%
60.0%
3.8
400T
3.6
3.4
300T
50.0%
40.0%
30.0%
3.2
200T
3.0
20.0%
10.0%
2.8
100T
2.6
OT
1/12
2/12
3/12
4/12
5/12
6/12
7/12
8/12
0.0%
-10.0%
1/12
9/12 10/12 11/12 12/12
2/12
3/12
4/12
5/12
6/12
7/12
8/12
9/12 10/12 11/12 12/12
(source: OSE)
(source: OSE)
Share price 2013
—– Hexagon Composites
PRICE
6.2
6.0
5.8
5.6
5.4
5.2
5.0
4.8
4.6
4.4
4.2
1/13
2/13
3/13
(source: OSE)
SHAREHOLDER STRUCTURE 2012
■
■
■
■
■
■
■
■
■
■
■
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
Knut Trygve Flakk and related* Lars Ivar Flydal
Terra Norge Spilka International AS Verdipapirfondet DNB SMB Skagen Vekst The Northern Trust Corp Bøckmann Holding AS MP Pensjon Rasmussengruppen AS
Flakk Holding AS*
0.0%
2008
2009
2010
2011
2012
* These shares are controlled by Knut Trygve Flakk.
35
FINANCIAL STATement
10 largest shareholders 31.12.2012
shareholder
number of shares
percent
Flakk Holding AS
51 285 988
38.48 %
Rasmussengruppen AS
15 268 000
11.45 %
MP Pensjon
12 903 097
9.68 %
Bøckmann Holding AS
11 547 531
8.66 %
The Northern Trust Corporation
2 957 500
2.22 %
Skagen Vekst
2 833 473
2.13 %
Verdipapirfondet DNB SMB
2 600 000
1.95 %
Spilka International AS
1 894 607
1.42 %
Terra Norge
1 383 000
1.04 %
Lars Ivar Flydal
1 273 325
0.96 %
103 946 521
77.98 %
29 348 347
22.02 %
133 294 868
100.00 %
Total 10 largest shareholders
Remaining
Total
key figures shares
2008
2009
2010
2011
2012
Closing price
2.45
9.70
6.53
2.46
4.47
High
6.94
10.20
9.80
7.10
4.47
Low
2.40
2.20
5.40
2.38
2.55
Total return
(64.1)
295.9
(30.6)
(61.9)
81.7
326 572
1 292 960
870 415
327 905
595 828
Turnover by value
88 148
89 549
73 019
27 686
61 731
Turnover by no. of shares
22 853
16 529
9 395
6 711
16 837
1 455
2 835
2 610
1 403
4 738
Market capitalisation
Number of transactions
Number of days
Turnover rate
Beta
P/E
P/B
230
245
234
247
12.4 %
7.0 %
5.0 %
12.6 %
0.26
0.16
0.34
0.50
0.61
-33.30
21.04
47.57
17.20
109.39
0.41
1.70
0.96
0.41
0.67
(0.07)
0.46
0.14
0.14
0.03
Cash flow from operations per share
0.72
1.04
0.31
0.88
0.92
Dividend per share
0.00
0.23
0.07
0.00
0.15
Equity per share
1.51
1.93
1.90
1.99
1.94
Earnings per share
Share capital
Closing number of shares*
Number of shareholders, Norwegian
Number of shareholders, foreign
Ownership share, foreign
*
36
226
17.2 %
NOK 1 000
13 329
13 329
13 329
13 329
13 329
133 290
133 290
133 295
133 295
133 295
1 266
1 450
1 346
1 336
1 330
46
52
42
49
50
4.2 %
4.4 %
3.0 %
4.4 %
3.6 %
GLOSSARY
ASA
Public Limited Company in Norway
Bar
Unit of pressure. 1 millibar = 100 N/m²
CHG
Compressed Hydrogen Gas
CNG
Compressed Natural Gas
TYPE 1
Steel cylinder
TYPE 2
Steel cylinder, composite-reinforced
TYPE 3
Composite cylinder with metal liner
TYPE 4
Composite cylinder with polymer liner
EBIT
Earnings before interests and taxes
EBITDA
Earnings before interest, taxes, depreciation and amortisation
HEX
Hexagon Composites ticker on Oslo Børs
HSE
Health, Safety & Environment. Collective term for activities relating to health protection, environmental protection, working environment and employee safety.
Hydrogen
Light, colourless gas (Symbol H), produced on an industrial scale
IA
Inclusive Workplace
ISO
International Organization for Standardization
- publishes standards in a large number of areas
Joint venture Legally signed contractual agreement whereby two or more parties undertake an economic activity
Composite
Combination of glass/carbon fibre and thermosetting plastic, exploiting the malleability of the plastic and the stiffness and strength of the glass/carbon fibre
LPG
Liquefied Petroleum Gas (propane gas)
Match
Equity segment on Oslo Børs
NGV
Natural Gas Vehicle
OEM
Original Equipment Manufacturer
OSE
Oslo Stock Exchange (Oslo Børs)
Resin
Chemical adhesives for strengthening glass and/or carbon fibre
Sm
Standard cubic metres. Unit for volumetric measurement of oil, natural gas and natural gas condensate at standard conditions defined in the ISO standard ISO 13443
3
Styren
Organic hydrocarbon used in the production of rubber and
plastic components
TITAN™
High-pressure composite cylinder for bulk transportation and storage of CNG
TUFFSHELL®
High-pressure CNG cylinder for heavy-duty vehicles
5S
Philosophy and way of organising and managing the workplace and workflow for the purpose of improving efficiency

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