Interim report January – June 2016 Significant

Significant investments in technology and capacity Significant investments in technology and capacity · Net sales increased by 17 % to 307.6 (262.0) MSEK · Operating income amounted to 4.1 (23.5) MSEK · Net income amounted to 9.8 (16.7) MSEK · Earnings per share amounted to 0.47 (0.82) SEK · 28 (23) systems were delivered in the period · Order intake amounted to 15 (17) EBM systems For the second quarter: · Net sales amounted to 147.7 (150.6) MSEK · Operating income amounted to -4.8 (19.7) MSEK · Net income amounted to 1.5 (12.4) MSEK · 14 (14) EBM systems were delivered in the second quarter · Order intake amounted to 9 (7) systems Significant investments in technology and capacity The Arcam Group continues to grow and during the first six months the increase in sales was 17%. Sales for the period increased to 307.6 (262.0) MSEK and trailing twelve month sales amounts to 621.7 (490.0) MSEK. Operating income for the period was 4.1 (23.5) MSEK and trailing twelve month operating income amounts to 30.7 (49.0) MSEK. In the first 6 months we increased our delivery pace and we delivered 28 (23) EBM systems. The last twelve months we thus delivered 56 systems. Our metal powder manufacturer AP&C more than doubled its order intake compared to the same period 2015. In May we decided to add significant capacity by building a new powder manufacturing plant in Montreal. We continue to pursue and develop our long-term strategy to industrialize the EBM technology and simultaneously developing the metal powder manufacturing and contract manufacturing business. We invest significantly in technology, marketing and manufacturing capacity to meet our customers’ demands and growing expectations on productivity and reliability. Business status During the second quarter we delivered 14 EBM systems and the majority went to customers in the implant or the aerospace industry. The demand for EBM systems is driven by how quickly our customers in the aerospace and implant industry are moving towards production, a process that is dependent on both technical and commercial factors. In the period we received 9 new orders and the order book by the end of the quarter amounts to 14 systems. One of our new clients is the US based implant manufacturer Exactech. They produce EBM implants via a contract manufacturer since 2010 and they have decided to build its own manufacturing operation and placed an order of 2 EBM systems. During the quarter Arcam Q10plus and Arcam Q20plus were launched. The new systems are a significantly enhanced generation of the Arcam Q-series EBM systems for Additive Manufacturing. Arcam Qplus offers up to 25% higher productivity with significantly improved surface finish and precision. With Qplus Arcam also introduces Arcam xQam™, an X-ray based function for high precision auto-calibration and improved beam control. To meet the growing demand for AP&C’s high quality titanium powder for Additive Manufacturing, we continue to add significant capacity by building a new powder manufacturing plant. During the second quarter a new powder reactor was taken into account. Thus AP&C now has 6 reactors in operation, and we plan to have 8 reactors operating in our present plant Montreal by the end of this year. In May we also decided to increase further the capacity by building a new powder manufacturing plant outside Montreal, Canada. The investment is initially for 23 MCAD and we have through an agreement with Investissement Quebec received a total of 11.5 MCAD in loans and grants, of which 10 MCAD in interest-free loans and 1.5 MCAD in grants. The new facility will provide manufacturing redundancy, short term capacity increase and long term expansion capability. The new capacity increase follows on significant growth in 2015 and 2016 and a surge in demand for AP&C’s high quality titanium powders for additive manufacturing. With the present build-out AP&C will reach a capacity of at least 750 tons per year. The new plant will be built in modules and can in the long run be extended so that we reach a combined total capacity of over 1,200 tons per year in both production plants. Since February our contract manufacturer DiSanto has a new management. The business continues to be burdened by weak sales for implants made with traditional technology. In the period several new customer projects for EBM manufactured implants have been added. Revenues from this part of the business is increasing but is still not compensating for the weak sales within traditionally manufactured implants. Hence, we have in the period written down the parent company holding in DiSanto with 28 MSEK. This has no effect on the consolidated numbers for the group. Strengthened organization During the first half of the year, we strengthened our sales and support organization in Germany, Italy and in the USA with new sales people in the field and a strengthened sales management. A new sales office in Stuttgart will initially drive sales in Germany and in the future also serve as a local support office. The operation is led by Peter Jain, who has a solid background in the machine tool industry. On the important Italian market, we have strengthened the organization with local management where our former agent Fausto Asvisio now works full time for us. The office in Turin is responsible for sales and service and is working close to our important customers in Italy. With 14 machines in order, a stable aftermarket and a fast growing market for AM metal powders we are well positioned for a positive development in 2016. Mölndal, July 21, 2016 Magnus René, President and CEO This report contains information that Arcam AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication at 08.30 CEST on July 21, 2016. Telephone conference with CEO Magnus René and CFO Johan Brandt July 21, 2016 at 2.00 p.m. (CEST) Phone number to the conference: SE: +46 8 566 426 90 UK: +44 203 008 98 19 US: +1 855 753 22 35 Link to presentation: Arcam Q2 conference call (http://event.onlineseminarsolutions.com/r.htm?e=1210170&s=1&k=C8B472C5FFE9 D 6FFC37F8577CB44D4D3) For further information: Magnus René, CEO and President, Arcam Cell: 46 702 79 89 99 or 1 781 266 6957 E-mail: magnus.rene@arcam.com Arcam Group provides cost-efficient Additive Manufacturing solutions for production of metal components. Arcam’s Electron Beam Melting (EBM®) technology offers design freedom combined with excellent material properties and high productivity. Arcam is, through its solution orientation and comprehensive product offering, an innovative partner for advanced manufacturing, primarily for the aerospace and medical industries. Arcam offers EBM systems through Arcam AB in Sweden, powder metals through AP&C in Canada and implant contract manufacturing through DiSanto in the U.S.The company is listed on Nasdaq Stockholm and the Head Office is located in Mölndal, Sweden.  _______________________________________________________________________________ _ ________ Arcam AB • Krokslätts Fabriker 27A • SE-431 37 Mölndal, Sweden • 46-31-710 32 00 • www.arcam.com