HWA AG reports on the course of business in the 1st half-year 2019

-Dynamic sales development in the 1st half-year 2019

- Sales in 1st half-year above target and EBIT below target

- Targets for 2019 are ambitious

- Special devaluation burdens earnings in 2019

- Cash capital increase of EUR 7.1 million implemented in the first half of the year

- DTM commitment of R-Motorsport and HWA ends with the end of the 2019 season

Affalterbach, October 24, 2019 - HWA AG achieved a dynamic sales development in the first half of 2019. In this period, sales rose to EUR 67.9 million after 55.1 million in the same period of the previous year. EBIT in the first half of 2019 was negative at EUR 0.3 million following positive EBIT of EUR 2.2 million in the previous year. At the end of the first 6 months of the current year, HWA AG is above plan in sales and below its own expectations on the earnings side.

EBIT for the first half of 2019 was impacted by a special write-down of EUR 3.9 million. Without this negative one-off effect, EBIT would have been clearly positive. The reason for the special write-down is a devaluation on the joint venture Vynamic GmbH, which is also not consolidated in the consolidated financial statements of HWA AG. To date, Vynamic has not fulfilled the high expectations of the HWA Management Board and the write-down on the investment has therefore been made. HWA AG continues to pursue the goal of leading Vynamic to success. All options for the joint venture are currently being examined.

Independently of the development of Vynamic, the operative business of HWA AG is developing largely pleasingly. In the automobile racing segment, the company achieved notable sales from the Formula E racing series for the first time. In the coming season, HWA will be represented in Formula E together with Mercedes-Benz EQ. The company's commitment with its own team in the FIA Formula 3 and via a cooperation in the FIA Formula 2 Championship also developed positively. For the 2020 season, HWA will take over Team Arden in Formula 2 and operate it independently. In addition, preparations are underway for involvement in Formula E Extreme. Further revenues were generated from the development and other services for Vynamic and its involvement in the DTM. As has been the case for some years now, very pleasing growth is evident in the cars/vehicle components segment. Business is currently dominated by the continued delivery of the Mercedes-AMG GT3 and the Mercedes-AMG GT4. The very good cooperation with Mercedes-AMG will be continued with another project, Mercedes-AMG GT3 Evo.

For the year 2019 HWA AG has promised a slight improvement of the turnover for the Group. From today's perspective, the company will at least reach the high sales level again. Due to the expected non-consolidation of Vynamic, an additional contribution to sales will be omitted. As planned, Group EBIT will be significantly lower than in the previous year, but positive. On the basis of the individual financial statements, EBIT adjusted for the special write-down at Vynamic will improve slightly compared with the previous year.

In December 2018, the Management Board of HWA AG resolved and announced capital measures. In the first half of 2019 a cash capital increase with a volume of EUR 7.1 million was successfully completed. The shares were subscribed by companies of the Supervisory Board members Hans Werner Aufrecht and Willibald Dörflinger at a price of EUR 13.87. In addition, the Executive Board planned a further cash capital increase of up to 20% of the share capital in 2019. The implementation of this measure is currently under final review. As an alternative to this cash capital increase, the issue of a convertible bond or a bond is an option for the company. The new funds are intended to finance further growth. Above all in the area of vehicles/vehicle components and in particular for projects in the area of alternative drive technologies.

The DTM involvement of R-Motorsport and HWA AG ends after intensive, but ultimately unsuccessful discussions about a future cooperation with the end of the DTM season 2019. This affects the cooperation in the DTM, but not a cooperation in other areas of the automotive sector. Which projects AF Racing AG and HWA AG will continue to work together on is currently being negotiated.

Contact
Investor Relations/Presse
HWA AG
Volker Glaser
Benzstraße 8
71563 Affalterbach
Phone: + 49/ (0) 7144/ 8717- 279
Fax: + 49/ (0) 7144/ 8718- 111
[email protected]
www.hwaag.com

About HWA AG

HWA AG is an independent, 360 engineering specialist in the fields of automobile racing and high-performance cars. Formed in 1998 by Hans Werner Aufrecht, the company is based in Affalterbach (Germany) and employs around 300 highly-qualified members of staff. HWA AG offers all its products and services under the corporate slogan ENGINEERING SPEED: The company's objective is to develop the best possible high-quality solutions, in order to get its partners and customers to their destination quicker. The portfolio of services ranges from designing all vehicle components to assembling complete cars, together with the relevant logistics, after-sales and support services.