Hi, and welcome to Hexagon Composites Third Quarter Results for 2020. My name is Karen Romer. I'm the SVP of Communications at Hexagon and will be moderating today. Today's presentation will the company update and market review, followed by a summary of group highlights and financials. Outlook will be then covered, and then we will open up for Q and A.
We ask those of you in the audience to submit your questions either through the tap in platform in the chat function or to submit it to irhexagongroup.com. And we will read the questions up at the end of the presentation to get answers from the CEO and CFO. And today, I'm reporting live from our Oslo streaming center in Oslo together with our CFO, David Vandela. And joining us from Olesund is our CEO, Jan Erik Engesetz. And without any further ado, I will hand over to Jan Erik.
Jan Erik?
If you go to the first page, please. So we are well into the Q4 of a regular year, but we feel quite good about where we stand at this point in time. So we have had impact of the COVID-nineteen. But fortunately, all the cases that we have had have either recovered or are recovering. So no direct serious effect on our employees, fortunately.
The business impact has been limited, no major supplier disruptions. And in the quarter, all our production facilities have remained open and have only been marginally affected. And the underlying market demand is very strong. Next slide, please. And that is not leased by the very favorable macro picture.
So the governments around the world continue to firm up their emission reduction targets. The EU has raised their target to 55 percent CO2 emission reductions by 2,030. China has now committed to full carbon neutrality by 2,060. And California bans all new cars and trucks from 2,035 to give some examples. Next slide, please.
And the customers are following suit. So they have equally or in many cases even more ambitious targets. Enelis and Busch have a plan to convert its entire long haul fleet to renewable energy in 5 years. UPS will has announced that they will acquire more than 6,000 natural gas vehicles in the next 2 years and waste management will cut their emissions by 45% by 2,030 8. And on the OEM side, there is also a lot of interesting things going on.
There was an announcement this morning. Our partner Hino has launched their future 0 emissions vehicles. They are part of the broader Toyota group that also has very ambitious targets. Next slide please. In the following slides, I will talk a little bit about some organizational changes that we will do in the coming months.
Maybe the most exciting one is that we build we will build on digital wave and establish a new business area where we will focus on digitalization solutions. So we have this unique model acoustic emissions technology, which you can say is a CT scanner for cylinders. And we've used that for a number of years now on mobile pipelines. And we have been working over the last few years on miniaturizing that technology. And our ambition is to make it so cost effective and applicable that we can have it in all the tanks that we deliver.
And that opens up a whole range of new digital opportunities for us, including artificial intelligence, algorithms and new business models based on that. Next slide, please. And for the customers, this technology is giving a lot of new values. Increased safety may be the most important. They will get real time data and warnings in case of any changes in the structures, increased lifetime of the tanks as a result and reduced total cost of ownership.
Next, please. Another organizational change we are in the process of doing is that we will now combine our mobile pipeline business area with Agility Fuel Solutions and that will, with effect from the 1st January, be renamed to Hexagon Agility. And this will enable us to utilize the volatility of mobile pipeline of the mobile pipeline business in an efficient way, free up capacity and optimize the utilization of the workforce and of capacities and even out the ups and downs that we have experienced in the mobile pipeline business. And at the same time, we will then coordinate the marketing resources in our continued endeavors to globalize the business of Agility. Next page, please.
And then Hexagon Puris is on track to being spun off and established or listed as a separate business on the Merkle Stock Exchange and that will allow that business its full potential. And we have prepared this over a long period of time. We feel very ready. It's a very strong case in our opinion and we look forward to launching that on the Mercury Exchange and allowing our investors to have a direct exposure to that opportunity. Next, please.
So with these changes, with the effect from the 1st January 2021, We will report Hexagon Agility together with Hexagon CNG Light Duty Vehicle. So the CNG business, which has been part of Hexagon Pieris, but which has been separated in connection with the preparation of the spin off of Hexagon Pieris. So Hexagon CNG LTV and Hexagon Agility will jointly be reported as g Mobility. Then we will start reporting on Hexagon Digital Wave as a separate business area and Hexagon Regasco as you know and then Hexagon Puris as separately listed company. And with that, I hand over to you, David.
Thank you, Jon Erik. Well, it looks like ExoComputers is setting its course. We look forward to the next big thing, which is digitalization, as John Erik mentioned, through our very own Hexagon Digital Wave. Let me first start off before we go into the numbers, just the financial impact of COVID-nineteen, quick update. In quarter 3, already we see recovery well in progress.
We will cover Agility shortly, but they did have a record very strong quarter. That's very pleasing. On the other side, mobile pipeline continues to be impacted given that the end customers contracts are mainly project based. General disclaimer, as we always do, it's difficult to assess or predict with precision the future broad effects of COVID-nineteen and the actual ongoing impact will depend on many factors beyond the company's control and knowledge. What we can say now is that we do expect, of course, overall negative impact to full year results in 2020.
Good thing is though, we see these as delays in sales across the board rather than any cancellations of orders. Also, we don't expect any material impacts in the balance sheet. As of quarter 3, we had undrawn committed facilities of NOK 653,000,000. In addition, we had NOK 957,000,000 in cash after the successful private placement in August this year, which returned NOK 907,000,000 euros in gross proceeds. So that leaves our net interest bearing debt at a very low €500,000,000 and that's just 6% of market capitalization depending on the day you measure that.
We continue to have very flexible arrangements with our principal financier. We had a long relationship with them. And these arrangements continue to provide good headroom and they've been necessary through a challenging 2020, but also into 2021. So we're in very good shape there. Sneak look at the Hino XL7, this is a heavy duty battery electric vehicle powered by Hexagon Purus and that should take us into the Q3 highlights.
So once again, top billing really goes to Agility. They had revenues and exceptional EBITDA. And this was really driven by the further deliveries on our major logistics customers, so the truck heavy duty truck business and also European Transit Bus Businesses. And G Mobility in general is in good shape, strong momentum when you include the Anheuser Busch order we got in the quarter for $8,000,000 to be delivered in subsequent quarters. Mobile Pipeline, as we mentioned, continued to be impacted by COVID-nineteen.
We've used the quarter well, production geared towards the $7,000,000 order that we received early in the year for deliveries now in the Q4. For CNG, light duty vehicle volumes relatively low. The good news is that production restarted after Volkswagen successfully relocated their CNG assembly plant and call offs have restarted in the quarter. For Puris, the e mobility market remains really heated. We were nominated for a serial production contract towards fuel cell electric vehicle, SUV, with an estimated sales value of €25,000,000 very pleased with that one.
And of course, the big news is that we announced in the quarter the intended spin off and public listing, which as John Eric mentioned is on track. For LPG, Hexagon Regasco, a very robust performance in the quarter. Remember, quarter 3 and quarter 4 for Ragasco are seasonally low quarters. However, good profitability there. One item is we are very pleased to see our first deliveries to Bangladesh since the pandemic.
Europe remains strong. This is where COVID-nineteen has had a positive impact, market entry into Argentina in the quarter. So let's go over to the numbers. Q3 2020 for the group, we did revenues of £770,000,000 again, record Agility revenue is driving that and that's counterbalancing the weak mobile pipeline volumes. So we actually had the same top line as last year, so flat growth year over year.
However, from quarter 2, we've seen substantial recovery in our top line. Despite that flat growth, if we go over to EBITDA in the center, we grew EBITDA by 32%, so that's significant, to NOK65 1,000,000. And again, this recovery from COVID-nineteen, but also the great cost control in the quarter has helped to boost the profitability. And if you bear in mind that within that NOK 65,000,000, we're still absorbing the e mobility ramp up effects of minus NOK28 1,000,000 in the quarter, and the same quarter last year was minus CHF20 1,000,000. If we go over to the right, we look at profit after tax, we made a loss after tax of minus CHF46 1,000,000 this quarter versus a profit of CHF 56,000,000 in the same quarter last year.
Big difference is really there was exceptional favorable foreign exchange movements in the same quarter last year, not quite the same very modest effects this year. So year over year, you have that big difference of a CHF94 1,000,000 year over year effect. And the other effect we've had is some adverse movements in tax charges related to movements in deferred tax assets. Taking a look at revenue by segment for the Q3. First of all, just to point out, the graph on the left is 2019.
This is a pro form a view, meaning that it's not exactly how we reported in quarter 3 2019, but it's actually apples to apples to how the business is organized and reported in 2020. So looking at 2020 to the right, you see Agility with €540,000,000 significant increase over last year's €389,000,000 And again, like I said, the heavy duty truck orders are really coming through the second half of the year and being delivered successfully. Also throughout the year, European Transit Bus has been really, really, really, really exceptional. They have also been impacted in the 2nd quarter by COVID-nineteen, but we see the OEMs ramping up now, and we expect that momentum to continue. If we go over to Puris, recorded €97,000,000 in top line versus €143,000,000 the same year before.
The real difference there is, again, the CNG light duty volumes, which continue to be reported in Purist through 2020. The CNG light duty vehicles will then be reported in G Mobility in 2021. But for now, you can see CNG light duty vehicles had a great quarter last year, and of course, it's just coming back from the Volkswagen relocation impacts this quarter this year. Going over to Mobile Pipeline, they recorded 57,000,000 in revenue, again a weak quarter similar to quarter 2. And if you look at quarter 3 2019, we see SEK 132,000,000 was the top line last year.
And really, again, you can see the difference given the reduction in online I'm sorry, on onshore oil and gas revenues, but also the COVID-nineteen impacts year over year. For Regasco, pretty much the same level of top line at $116,000,000 I will say that the EBITDA was significantly higher year over year, some of that with favorable currency effects. Looking at our balance sheet. On the left, you can see the asset side. That's really boosted mainly by the cash received from the private placement, hence the high cash balance.
The other effect is in our receivables, the light gray area, quite an expansion in receivables. Again, this is mainly due to Agility recovering from quarter 2 to quarter 3, and we should see those receivables turn into cash in the subsequent quarters going forward. And then on the right hand side, the equity position you can see has increased significantly to 3,000,000,000 and that leaves an equity ratio of about 50%. So much stronger balance sheet, of course, after the private placement. So in summary, very strong results, very strong profitability given that we are still recovering from the COVID-nineteen impacts that were most severe in the Q2 of this year and also that we are not fully up to speed with Volkswagen call offs in the CNG light duty vehicle volumes.
So great quarter and again, top billing goes to Agility Fuel Solutions, now Hexagon Agility. So let's look at the outlook. Short term outlook, Q4 for Agility. It's hard to keep breaking records, but we would, of course, hope to maybe match Q4. So we're looking for a similar quarter as we had for Q3, Q3, pretty much driven by the same things European transit bus and heavy duty truck.
If we go over to Puris, very pleased to say we've been working on train contracts since Alstom and we have a few others in the pipeline. But we just signed a contract with Stadler Rail from Switzerland and we will be producing hydrogen cylinder storage systems for what should be then the 1st hydrogen powered commuter train in the U. S. So these are obviously longer term projects. The building and testing will continue in Europe, mainly in Switzerland through to 2023 before being transferred to California for operation.
In quarter 3, we were working with at least 5 OEMs on battery electric and fuel cell electric contracts. I'm very pleased to say that we were awarded the contract to provide a full a full electric drive system to Hino's Project Z. So Hino is a Toyota Group company and deliveries are expected in the first half of twenty twenty one. And deliveries continue to other major OEMs as we've seen in Q3, and that's what we expect in Q4. And when we look at the fuel cell electric vehicles, so hydrogen powered buses, we will continue deliveries to Caitano Bus and also continue to ship product to Solaris.
So excitement in the fuel cell and battery electric vehicle heavy duty space. And when we look at our full project pipeline, we've now included the full e mobility spectrum. So previously, we've reported mainly just on the hydrogen projects, but now we include, of course, all the battery electric and other types of projects within Puris, the new Puris. These include automotive projects, as you see, from light duty through to medium and heavy duty vehicles, distribution of these gases, marine, rail, as we've just seen, ground storage, mobile refueling and even aerospace, as you've seen us report previously. So very high number of hydrogen and battery electric development contracts in quite a variety of segments.
CNG Light Duty Vehicles, as I mentioned, Volkswagen have started up production. That's good for us. So we have call offs in Q3. We're hoping that that ramps up even more in Q4, but we don't see that it will be to the same levels or run rate as we had in 2019. And that's primarily due to some lingering effects of COVID-nineteen, but also a subsequent delay of the Sierra Leone launch, the new facelift, that's the car that you see pictured there.
That will be produced in Spain and then we expect then to have follow on orders then for Q1 of 2021. Hexagon Mobile Pipeline. So we have been focusing on opportunities in new segments for a while. We've reported previously that the RNG segment is something that we've developed significantly and that's helped us to diversify away from oil and gas exposure. So COVID-nineteen and those oil related exposures continue to weigh on mobile pipeline.
But for example, mobile refueling units, that's something we saw sales to in Q3, and that's a relatively new segment for us. We expect more orders in quarter 4. We expect a better quarter in quarter 4, as I mentioned, due to our deliveries for units to virtual connect projects, some RNG and also energy intensive applications. So far, they predict a cold winter, which is very good then for the Virtual Connect market, particularly in the Northeast of U. S.
When we look at Hexagon Regasco, so demand for LPG domestic use recovering and there's been stable demand from Europe. We expect that to continue in Q4. We've made deliveries to Argentina, the new market that opened up in Q3 for us. And also, we would expect deliveries then to our major customer in Bangladesh for Q4. So in summary, I would say that barring any unfavorable COVID-nineteen developments, we're expecting that stronger market outlook of the second half of the year to continue in quarter 4.
As we've seen with generic, the COVID recovery is sparing significant green funding, incentive programs and also new regulations that are focused on cleaner fuel solutions around the world. So that is very good for Hexagon. We have strong liquidity and business resilience. And of course, we are very well prepared for the spin off of Hexagon Puris. Thank you very much.
And now we'll go to the questions that we are receiving in on the tap in platform in platform to start with. And John Eric will join us on screen here with David and myself. So, from Amnes Rosenblend, I think this is the 3rd time you've made changes to the structure. Is this it? I imagine that's for you, Jan Erik.
I think we, over the years, have probably made more changes to the structure than 3 times. But of course, the integration of Agility, the focus on the hydrogen opportunity through Hexagon Puris has made it necessary to adjust the structure accordingly. So it's true. But that said, I think we will now for quite a while remain with the new structure. Okay.
Amnesh had a second question. Please provide an update on the progress or the lack of such towards reaching an agreement with Enric, which was previously indicated as being completed within Q3?
Yes. So the discussions are ongoing, very good dialogue with our Chinese friends. Of course, the COVID-nineteen situation has made it impossible for us to travel and do ordinary due diligence in China. So that has caused some delays, but we remain optimistic that we will reach an agreement.
Okay. Also continuing on the purist front, Mikken Nihalt Smetseng. In purist, what is the likelihood of signing a decent sized serial contract within the next 6 to 12 months?
Well, let me first remind you that we did sign quite recently a very decent sized serial contract in Northeast Asia. And without going into a lot of detail, we have a lot of opportunities out there now. So the market is very vibrant and dynamic. So it depends, of course, on what one means by decent, but certainly, we think that there will be important breakthroughs. That said, the near years will be short series predominantly and then we are preparing for long series from 2020 3, 2024 onwards in the heavy duty segments.
But a lot of very interesting and encouraging stuff is ongoing and we expect to land quite a lot of business in the coming months years.
Okay. From Paul from Anko, what is the timing for the hydrogen spin off?
So we have indicated previously that we expect to complete that process by the end of this year, And that is our maintained expectation and ambition.
On the same topic, how much additional funds do you plan to raise for the hydrogen business in 2021? And do you plan to issue more shares to support that separation of the business?
So we would not want to go into too much detail on that at this stage. We will keep the investors updated and informed as we take those decisions. What I can say is that with the capital raise that we did in Hexagon Composites ASA in August, we have well funded Hexagon Pieris. So we are not in need of any near term capital addition. But of course, we will continue to make sure that, that business is well funded for its opportunities going forward.
He continued with several more questions, which I think you've basically covered, but I'll just repeat them to make sure that we've answered them all. Percentage of the business will be kept by Hexagon's existing shareholders? And any remaining issues, I. E. Debt holders?
And can existing shareholders participate in spin off share issuance?
So we will revert to all of those questions hopefully in the near future. But for now, we are not able to give more detail on the specifics of the restructuring or the spin off and the listing.
Okay. Now from Mikkel Nehalp, Smetseng again. Still early in the quarter, but do you expect Agility to report a somewhat similar level of EBITDA in Q4?
Yes, I can take that. Short answer is yes.
Okay. Another question from Mikkel. VW CNG volumes guided to recover to normal run rate during Q4. Please elaborate and draw lines to respective quarters in 2019 when EBITDA was trending €100,000,000 to €120,000,000 but now being loss making?
Yes. I would say I think I hope I was clear to say that we don't expect the same run rate as 2019 in Q4, but we do expect to see the ramp up continue. So we had a return restart of production in Q3. We hope to
see that ramp up
then part of that delay, as we mentioned, is due part of that delay, as we mentioned, is due to the delay of the launch of the SEAT Leon facelift. And once that is launched, I think you will see a fairly decent run rate again through in 2021.
Okay. Then, if this is for you, Jan Erik, how large do you expect the digital wave business opportunity to become?
I think that can become major without wanting to quantify it at this stage, but also our business need to digitalize. So we see some extremely attractive opportunities there. And we will revert to that in the coming quarters, of course, but certainly, we see major opportunities.
We then have a question again from Amdesh Rosenlund, where you sent out a save the date for CMD on November 17th. That date is approaching. What should we expect? What will the agenda be? I perhaps can answer that question.
So, the agenda will cover the entire Hexagon business, so all the business areas, including Digital Wave, will give our investors a good deep dive into what we expect from that part of the business. And the date, November 17th, there will be issued an announcement later, just moving that slightly to adjust some scheduling internal scheduling challenges with all the processes we have going on. But we will cover all parts of the business and we encourage all of our investors to participate in the virtual presentation. Anything you'd like to add, gentlemen?
I think you covered that.
Okay. And I think that is we'll give them another second here to see if we've I think that covers the questions from the audience. So, I think what we'll do there is we'll call it a rep and thank everybody for joining us for our Q3 presentation.
Thank you.
Thank you.
Thank you.