Example_Complete Model of Eng Management Report

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Please notice the information on the preparation of this document, the disclaimer, the advice regarding possible conflicts of interests, and the mandatory information required by 34b WpHG (Securities Trading Law) atthe end of this document. This financial analysis in accordance with 34b WpHG is exclusively intended for distribution to individuals that buy or sell financial instruments at their own account or at the account of othersinconnection with their trading activities, occupation, or employment.

Alphaform AG

Recommendation:

BUY (Initial Coverage)Risk:

HIGH (-)Price Target:

EUR 2.30 (-)

Growth drivers for the company are the

automotive and the orthopaedic sector

The business model of Alphaform is based on contract manufacturing ofprototypes and series production for national and multinational companies

in the medical, automotive, aviation and aerospace industry as well as for

electronics and telecommunications companies. Alphaforms manufacturing

process of prototypes is characterized by using technologies of additive

manufacturing.

The combination of the cyclical Automotive segment and the non-cyclicalMedical segment has a stabilising effect on the groups business

development.

IHS Global Insight and LMC Automotive predict the car industry to growalso in the mid-term. Given Alphaforms exposure to the automobile OEMs,

the company will benefit from this development.

The orthopaedic market has shown a continuous and strong growth overthe last decade and will grow further in the future due to an aging

population, an increasing obesity rate as well as people wishing to remain

active at an advanced age and therefore more sport and activity related

injuries. Given Alphaforms exposure to the orthopaedic sector, the

company will also benefit from this development.

For FY 2012E the company expects revenue growth in the single-digitpercentage range and a significant EBIT improvement compared to the

previous year. For the current fiscal year (31 December 2012) we expect

sales of approximately EUR 28.2m (+7.0% yoy) and an EBIT of EUR +0.8m

(PY: EUR -1.3m). For the next financial years we expect a continuing sales

growth and improvements on income level.

Our valuation models lead to a fair value of EUR 2.30. We start our

coverage on Alphaform with a EUR 2.30 price target and a BUYrecommendation.

06 November 2012

Source: Alphaform AG; CBS Research AG

Key data

FY 12/31, EURm 2008 2009 2010 2011 2012E 2013E 2014E

Sales 21.4 19.4 20.7 26.3 28.2 30.1 32.2

EBIT -0.5 -3.8 -1.5 -1.3 0.8 1.2 1.5

Net result -0.7 -3.8 -1.6 -1.6 0.5 0.9 1.1

EPS -0.12 -0.71 -0.29 -0.30 0.10 0.16 0.21

DPS 0.00 0.00 0.00 0.00 0.00 0.00 0.00

EBITDA margin 6.2% -7.3% 2.9% 3.6% 8.0% 8.9% 9.5%

EBIT margin -2.3% -19.4% -7.1% -4.9% 3.0% 3.9% 4.5%EV/EBITDA 8.1 -6.7 17.3 11.8 5.0 4.2 3.7

EV/EBIT neg. neg. neg. neg. 13.4 9.6 7.8

P/E neg. neg. neg. neg. 19.0 12.0 9.2

Shares outstanding (m):

daily trading volume (3 m., no. of shares):

Absolute performance (12 months):

Relative performance vs. CDAX:

1 month

3 months

6 months

12 months

Shareholders:

Management

Other management

Axxion

Multiadvisor Sicav

IPConcept Fund Management

Supervisory board and families

Free Float

Financial calendar:

3Q Report 9 November 2012

German Equity Forum 12 November 2012

Author: Daniel Kukalj (Analyst)

Close Brothers Seydler Research AG

Phone: +49 (0) 69-977 84 56 0

Email: [email protected]

www.cbseydlerresearch.ag

4.5%

32.6%

-5.3%

2.4%

7.4%

8.8%

8.8%

35.5%

7.9%

14.5%

7.4%

Low 52 weeks (EUR): 1.45

0.3%

Performance data:

High 52 weeks (EUR): 1.98

2,769

5.3

Market capitalisation (EUR m): 10.4

Enterprise value (EUR m): 11.3

Share price (EUR, latest closing price): 1.95

Share data:

Alphaform AG designs, develops, manufactures

prototypes (Additi ve Manufacturing) and offers series

production for different industries (e.g. orthopaedic and

automotive sector) in Europe.

Reuters: ATFG.DE Bloomberg: ATF GY

Short company profile:

WKN: 548795 ISIN: DE0005487953

Internet: alphaform.de Sector: Industrials

-EPS 0.10 - 0.16 - 0.21

EBIT 0.8 - 1.2 - 1.5 -

-Sales 28.2 - 30.1 - 32.2

Share price (dark) vs. CDAX

Source: CBS Research AG, Bloomb erg, Alphaform AG

new old new old new old

Change 2012E 2013E 2014E


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Alphaform AG

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 2

Table of contents

Investment thesis ...................................................... 3

SWOT analysis ........................................................... 4

Strengths ...................................................................................................... 4

Weaknesses ........................................................... ...................................... 4

Opportunities................................................................................................. 5

Threats ......................................................... ................................................. 5

Valuation.................................................................... 6

Valuation summary ....................................................................................... 6

Peer group analysis ...................................................................................... 6

Peer group ................................................................................................. 6

DCF model .............................................................. ...................................... 9

Company profile ....................................................... 10

Company structure ............................................................ .......................... 10

Company history ................................................................ ......................... 11

Management team ............................................................ .......................... 11

Management board ........................................................ .......................... 11

Supervisory Board .......................................................... .......................... 12

Shareholder structure ................................................................................. 12

Business Model ........................................................ 13

Additive manufacturing, rapid prototyping, rapid tooling ............................. 13

Business segments ........................................................... .......................... 14

Rapid Tooling and Rapid Prototyping ....................................................... 14

Alphaforms Medical division ................................................................... 16

Revenue distribution ................................................................................ 17

Customers ............................................................ .................................... 18

Strategy ................................................................... 19

Competitive Landscape ........................................... 20

Market environment ................................................ 22

Orthopaedic Industry ................................................................. ............... 22

Additive manufacturing market ............................................................. .... 24

Automotive ........................................................... .................................... 25

Financials ................................................................ 29

9M (1 January 201230 September 2012) results .................................... 29

Historical financial development of the last quarters ................................... 29

Financial forecast ............................................................... ......................... 30

Balance sheet outlook ....................................................... .......................... 31

Cash flow outlook ............................................................... ......................... 31

Appendix .................................................................. 32

Financials ..................................................... ............................................... 32


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Alphaform AG


Investment thesis

Alphaform AG designs, develops, manufactures prototypes (Additive

Manufacturing) and offers series production for different industries (e.g. orthopaedic

and automotive sector) in Europe. The main business comprises the manufacturing

of medical implants, medical instruments and trauma products. Furthermore, the

company provides various services ranging from the production and assembly of

plastic-, carbon-, or metal-based design and functional models, through the

manufacturing of pre-production models and components, to the production of small

series components to the automotive sector. Alphaform also serves customers in

aerospace, electronics, plant construction, household appliances, engineering, and

telecommunications industries.

The competitive landscape is characterized by small, mid and large global producers.

With about 7% market share, Alphaform is one of the leading service providers in

Europe in the Rapid Prototyping / Rapid Manufacturing market.

According to Wohlers the Additive Manufacturing (AM) industry is expected tocontinue strong double digit growth over the next several years. The AM industry is

forecast to reach USD 2.0bn in 2012. Sales of AM products and services will reach

worldwide USD 3.7bn by 2015 and USD 4bn in 2016. Assuming the industry is not

affected by larger influences, such as another global economic recession or natural

disasters, AM market volume is expected to surpass the USD 6.5bn mark by 2019.

IHS Global Insight expects that car sales will rise to 103.1m (2011: 75.6m) units in

2018. This corresponds to a compound annual growth rate of 4.5% (CAGR: period

2011 - 2018). The forecasted light vehicle sales can only be realized by more car

models and derivatives to approach more customers. Therefore, the variety is further

forwarded by the OEM to meet country- and customer-specific needs. OEMs like

BMW, Audi, Daimler and others prepare to increase its car models and derivatives in

the next years. Given Alphaforms exposure to the OEM sector, the company will

benefit from this development with its products and solutions.

The focus of Alphaformsstrategy is based on further growth in terms of geography

and alternative industries and the dissemination and establishment of additive

manufacturing.

In 9M 2012 consolidated sales rose by 6.0% yoy to EUR 20.84m. Compared to the

same period in the previous year, the net result of the Alphaform Group improved by

EUR 0.71m from EUR -0.19m in 9M 2011 to EUR +0.52m in the first nine months of

FY 2012.

For FY 2012E the management expects a revenue slightly over previous year level

and a positive net result.

For the current fiscal year (31 December 2012) we expect sales of approximately

EUR 28.2m (+7.0% yoy). Owing to the positive sales development we believe EBIT-

margin to be at +3.0% (2011: -4.9%) for fiscal year 2012E.

We applied a valuation based on a peer group and a Discounted Cash Flow (DCF)

model. On the basis of both results this approach resulted in a fair value of EUR 2.30

per share. In our view, the expected sales and earnings increases have not yet been

sufficiently reflected in the share price. Hence, we initiate our coverage with a BUY

recommendation and a EUR 2.30 price target.

A niche player in the

field of Additive

Manufacturing

One of the leading

service providers in

Europe

AM industry isexpected to grow

further

Further growth in the

car industry predicted

Alphaforms strategy

Improved financial

figures

Expected positive net

result in FY 2012E

Expected sales growth

and positive operating

result

PT EUR 2.30, BUY


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Alphaform AG


SWOT analysis

Strengths

Alphaform offers a large product portfolio and is able to specifically adjust the

services and products towards customers needs through its well proven know -

how and production capabilities.

The combination of the cyclical Automotive segment and the Medical segment

has a stabilising effect on the groups business development. Revenues of

medical technology are characterized by medium-to long-term contract maturities,

a stable demand and rather robust growth.

Reputation is underlined through a large customer base within the automotive

and medical industry.

Solid Balance sheet figures: By the end of June 2012 equity ratio was at 61.7%.

The company has an industry experienced management.

Weaknesses

Rapid prototyping / Rapid tooling are characterized by rather short-term projects

and contract, thus there is a cyclical income of orders due to a high of percentage

of contracts belonging to automotive industry but also to the other industry

sectors including aerospace and mechanical engineering.

At the moment the company has a low market capitalisation.

No dividends are expected in the near future.


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Alphaform AG


Opportunities

International expansion could generate further sales and profit growth, especially

in Northern Europe.

Still large growth potential for the company with its products and solutions in themedical segment.

More and more Original Equipment Manufacturers (OEMs) are outsourcing their

production from the field of medical technology. This development could lead to

new orders for Alphaform

Threats

The future success of Alphaform depends on its ability to develop and bring to the

market new and improved products in a timely manner. Both the automotive and

the medical market entail technical challenges. Consequently, Alphaform may be

unable to adapt innovative products and solutions quickly enough.

Global production of vehicles and sales to OEMs are cyclical and depend, among

other things, on general economic conditions and consumer spending, which can

be affected by a number of factors, including fuel costs and the availability of

consumer financing. Future developments in the automobile markets are difficult

to predict and there is a risk that the facilities are underutilised or have insufficient

capacity to meet customer demand if the markets either decline or grow faster

than anticipated.

The customers of Alphaform are under continuing margin pressures and attempt

to pass it on to Alphaform.


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Alphaform AG


Valuation

Valuation summary

We applied a multiple valuation and a discounted cash flow (DCF) model to derive

the companys fair value. Our peer group comparison indicates a fair value of EUR

2.12 per share. We focused on the earnings multiples for 2012E to 2014E. Our DCF

model results in a fair value of EUR 2.42 per share.

Weighting DCF valuation result at 60% and Peer-group analysis with a smaller

weighting factor of 40%, we derive a final fair value of EUR 2.30.The rationale behind

this decision is the lack of suitable listed companies for Peer-group comparison.

Consolidation of valuation methods

Source: CBS Research AG

Peer group analysis

We have chosen German and international companies which have a similar or

partially similar business model. In line with its peers, Alphaform would be fairly

valued at EUR 2.12 per share.

Peer group

aap Implantate AG, a medical technology company, was incorporated in 1997 and is

headquartered in Berlin, Germany. The company engages in the research,

development, manufacture, and sale of implants, medical instruments, and

biomaterials for the areas of ortho/trauma/spine in Germany and internationally. The

company markets its products directly to hospitals, buying syndicates, and clinic

groups, as well as through a network of distributors.

Eckert & Ziegler AGmanufactures equipment for the pharmaceutical industry. The

company produces low-level radiation sources used to treat cancer, heart and other

diseases, and in equipment used to calibrate gamma cameras and positron emission

computer tomographs. Eckert & Ziegler also develops cancer drugs.

Greatbatch Inc.develops and manufactures power sources, feedthroughs, and wet

tantalum capacitors used in implantable medical devices. The company also

manufactures other components used in implantable medical devices. Greatbatch

provides pacemaker batteries, implantable cardiovascular defibrillator batteries, and

batteries for commercial applications.

Sandvik AB is a high-technology engineering group. The company develops,

manufactures, and markets tools for metalworking applications, machinery and tools

for rock excavation, stainless steel products, special alloys, and resistance heatingmaterials and process systems.

Weighting Fair value

factor per share (EUR)

Peer group valuation 40.0% 2.12

DCF valuation 60.0% 2.42

Fair value per share (EUR) 2.30

Valuation on the basis

of a DCF model and a

peer group comparison

Fair Value per share is

EUR 2.30

Peer group multiples

lead to EUR 2.12 per

share

aap Implantate

Eckert & Ziegler

Greatbatch

Sandvik


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Alphaform AG


Sanmina-SCI Corporation provides integrated electronics manufacturing services

worldwide. It offers product design and engineering services, including initial

development, detailed design, prototyping, validation, preproduction, and

manufacturing design. It provides its services to OEMs primarily in the

communication, enterprise computing and storage, multimedia, industrial and

semiconductor capital equipment, defense and aerospace, medical, clean

technology, and automotive industries.

Smith & Nephew Plcdevelops, manufactures, markets, and sells medical devices in

orthopaedics, endoscopy, and advanced wound management sectors worldwide.

Smith & Nephews Orthopaedics segment offers reconstruction implants, including

hip, knee, and shoulder joints, as well as ancillary products, such as bone cement

and mixing systems used in cemented reconstruction joint surgery.

Stryker Corporation develops, manufactures, and markets specialty surgical and

medical products. The company's products include implants, biologics, surgical,

neurologic, ear, nose and throat and interventional pain equipment, endoscopic,

surgical navigation, communications and digital imaging systems, as well as patienthandling and emergency medical equipment.

Symmetry Medical Inc. designs, develops, and produces implants and related

surgical instruments, and cases primarily to orthopaedic device manufacturers

worldwide. Further, the company engages in the design, engineering, and

manufacturing of aerospace products comprising net shaped aerofoils and non-

rotating aircraft engine forgings for the aerospace customers, as well as offers

aerospace machining capabilities.

Wright Medical Group Inc., an orthopaedic device company, specializes in the

design, manufacture, and marketing of reconstructive joint devices and bio-

orthopaedic materials. The company's joint devices are used to replace knee, hip,

and other joints that have deteriorated through disease or injury.

Zimmer Holdings Inc. engages in the design, development, manufacture, and

marketing of orthopaedic reconstructive devices, spinal and trauma devices, dental

implants, and related surgical products in the Americas, Europe, and the Asia Pacific.

The company also provides other healthcare related services.

Source: CBS Research AG, Bloomberg

Peer group: Margins

Company name

2012E 2013E 2014E 2012E 2013E 2014E 2012E 2013E 2014E

AAP IMPLANTATE 15.1% 15.1% 15.8% 6.5% 6.4% 7.9% 3.3% 3.3% 4.5%

ECKERT & ZIEGLER STRAHLEN UN 22.6% 23.1% 23.9% 16.9% 17.4% 18.2% 9.1% 9.8% 10.7%

GREATBATCH INC 20.0% 23.4% n.a. 5.5% 10.5% n.a. 6.4% 6.8% 6.3%

SANDVIK AB 19.4% 19.8% 20.5% 15.2% 15.4% 15.9% 9.9% 10.4% 11.1%

SANMINA-SCI CORP 4.7% 4.8% 4.8% 3.1% 3.3% n.a. 1.9% 2.2% 2.1%

SMITH & NEPHEW PLC 28.7% 29.4% 29.8% 21.5% 21.9% 22.7% 16.3% 16.2% 16.7%

STRYKER CORP 29.6% 30.7% 31.0% 24.1% 25.2% 25.8% 18.0% 18.3% 18.9%

SYMMETRY MEDICAL INC 19.6% 20.5% 20.8% 12.2% 12.7% 13.4% 5.2% 5.8% 5.9%

WRIGHT MEDICAL GROUP INC 13.3% 14.4% 15.0% 3.1% 5.3% 7.2% 1.7% 2.0% 4.2%

ZIMMER HOLDINGS INC 38.0% 37.5% 38.5% 29.6% 30.1% 31.0% 20.5% 21.0% 21.3%

Average 21.1% 21.9% 22.2% 13.8% 14.8% 17.8% 9.2% 9.6% 10.2%

Median 19.8% 21.8% 20.8% 13.7% 14.0% 17.1% 7.8% 8.3% 8.5%

EBITDA margin EBIT margin Net margin

Sanmina-SCI

Smith & Nephew

Stryker

Symmetry Medical

Wright Medical Group

Zimmer Holdings


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Alphaform AG


The next table shows current multiples:


We applied these multiples from the peer group to our financial forecasts forAlphaform. We deducted the companys net financial debt from the derived

enterprise values in order to get the fair value of equity. With the P/E, EV/EBIT and

EV/EBITDA multiples for 2012E to 2014E, we calculated the fair value of equity. The

peer group approach indicates a fair value of EUR 2.12.


Peer Group: Multiples

Company name

2012E 2013E 2014E 2012E 2013E 2014E 2012E 2013E 2014E

AAP IMPLANTATE 8.9 8.8 7.4 20.7 20.5 14.9 32.5 32.5 21.7ECKERT & ZIEGLER STRAHLEN UN 4.1 3.9 3.5 5.5 5.1 4.6 11.2 10.0 8.7

GREATBATCH INC 5.8 4.8 n.a. 21.0 10.7 n.a. 13.0 12.4 12.0

SANDVIK AB 7.6 7.5 7.1 9.7 9.7 9.2 12.1 11.9 10.9

SANMINA-SCI CORP 4.3 4.0 3.8 6.5 5.9 n.a. 6.4 5.5 4.8

SMITH & NEPHEW PLC 4.8 4.6 4.4 6.4 6.2 5.8 8.4 8.0 7.6

STRYKER CORP 7.0 6.5 6.2 8.7 8.0 7.4 13.0 12.2 11.2

SYMMETRY MEDICAL INC 6.8 6.1 5.8 10.8 9.8 8.9 16.9 11.5 n.a.

WRIGHT MEDICAL GROUP INC 12.0 10.8 9.9 50.9 29.5 20.4 108.3 95.9 54.4

ZIMMER HOLDINGS INC 6.9 6.7 6.3 8.9 8.4 7.9 12.4 11.5 10.5

Average 6.8 6.4 6.0 14.9 11.4 9.9 23.4 21.1 15.7

Median 6.8 6.3 6.2 9.3 9.0 8.4 12.7 11.7 10.9

EV / EBITDA EV / EBIT P / E

EURm, except EPS (EUR)

2012E 2013E 2014E 2012E 2013E 2014E 2012E 2013E 2014E

2.3 2.7 3.1 0.8 1.2 1.5 0.10 0.16 0.21

Applied multiples: Peer group median 6.8 6.3 6.2 9.3 9.0 8.4 12.7 11.7 10.9

Enterprise value (derived) 15.4 16.9 18.9 7.9 10.7 12.2 - - -

+ Excess cash 1.1

- Financial debt -2.1

Market capitalization (derived) 14.4 15.9 18.0 6.9 9.7 11.3 6.9 10.1 12.2Median 11.3

Premium (discount) vs. Peer Group 0%

Fair market capita lization (a fter discount) 11.3

Number of shares (m) 5.3

Fair value per share (EUR) 2.12

Alphaform AG: Financial estimates CBS Research

EBITDA EBIT EPS


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Alphaform AG


DCF model

Our DCF model indicates a fair value of EUR 2.42 for Alphaform. Our assumptions

are as follows:

Phase 1 (2012-14E):We estimated the free cash flows (FCF) of Phase 1 according

to our detailed financial forecasts for this period stated in the financials section.

Phase 2 (2015-21E):For Phase 2, we started off, using more general assumptions.

We assumed a sales growth of 10% annually at the beginning and then decreasing

sales growth rates. In the midterm we forecast improvements of EBIT margins, but at

the end of Phase 2 we expect that the company will face higher costs and thus

experience a negative impact on EBIT-margin development.

Phase 3: For the calculation of the terminal value, we applied a long-term FCF

growth rate of 2.0% which equals the estimated long-term inflation rate.

Based on these assumptions, we calculated a fair value of the operating business ofEUR 13.9m. We deducted Alphaforms net debt (cash minus financial debt). The

resulting fair value of equity is EUR 12.9m. The fair value per share amounts to EUR

2.42 according to our DCF model.

Discounted Cash Flow Model


PHASE 1 PHASE 2 PHASE 3

EURm 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E8

Sales 28.2 30.1 32.2 35.5 39.0 42.9 47.2 50.5 53.0 54.6

YoY grow th 7.0% 7.0% 7.0% 10.0% 10.0% 10.0% 10.0% 7.0% 5.0% 3.0%

EBIT 0.8 1.2 1.5 1.8 2.3 3.0 3.1 3.0 2.7 2.7EBIT margin 3.0% 3.9% 4.5% 5.0% 6.0% 7.0% 6.5% 6.0% 5.0% 5.0%

Income tax on EBIT (cash tax rate) 0.0 0.0 0.0 0.0 -0.2 -0.8 -0.8 -0.8 -0.7 -0.7

Depreciation and amortisation 1.4 1.5 1.6 1.8 1.9 2.1 2.4 2.5 2.7 2.7

Change in long-term provisions 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Change in net working capital -0.8 -0.5 -0.6 -0.9 -1.0 -1.2 -1.3 -1.1 -0.9 -0.7

Net capital expenditure -1.4 -1.5 -1.6 -1.8 -1.9 -2.1 -2.4 -2.5 -2.7 -2.7

Free cash flow 0.0 0.7 0.9 0.8 1.1 1.1 1.0 1.2 1.1 1.4

Present values 0.0 0.6 0.8 0.6 0.7 0.7 0.6 0.6 0.5 0.6 8.2

Present value Phase 1 1.4 Risk free rate 3.50% Target equity ratio 60.0%

Present value Phase 2 4.3 Equity risk premium 6.00% Beta (fundamental) 1.45

Present value Phase 3 8.2 Debt risk premium 3.00% WACC 9.27%

Total present value 13.9 Tax shield 25.0% Terminal growth 2.0%

+ Excess cash 1.1

- Financial debt -2.11.0% 1.5% 2.0% 2.5% 3.0%

Fair value of equity 12.9 WACC 8.3% 2.61 2.74 2.89 3.07 3.28

8.8% 2.40 2.51 2.64 2.79 2.96

Number of shares (m) 5.3 9.3% 2.22 2.32 2.42 2.54 2.68

9.8% 2.06 2.14 2.23 2.33 2.45

Fair value per share (EUR) 2.42 10.3% 1.92 1.99 2.07 2.15 2.25

Sensitivity analysis

Terminal growth (Phase 3)

DCF model leads to a

fair value of EUR 2.42

Phase 1 according to

detailed estimates

Phase 2 characterised

by 10% sales growth

per year at the

beginning and then

decreasing

Phase 3: Terminal

value growth at 2%


10/38

Alphaform AG


Company profile

Alphaform AG offers solutions and services for contract manufacturing of complex

components and the production of small batch sizes. The company was founded in

1996 and derived from a spin-off of EOS GmbH. Initial business activities comprised

prototype planning and manufacturing as well as the production of small batches.

Since 1 December 2008 a medical technology segment has been added to the

business activities due to the acquisition of MediMet GmbH. Most of Alphaforms

clients are located in the medical and automotive industry but the company has also

customers in the aerospace, household appliance and telecommunication industry.

Alphaform mainly performs its sales activities with customers from Germany and

other European countries, especially Great Britain, Switzerland, Italy, Scandinavian

countries and Turkey. Relevant sales markets can be divided into two areas: on the

one hand contract manufacturing services using additive manufacturing technologies

(3D printing) and on the other hand contract manufacturing for medical technology.

Company structure

Founded in 1996, Alphaform Group is represented in Germany with three locations.

The headquarter of the parent company Alphaform AG is located in Feldkirchen near

Munich. Primary operative focus is on rapid prototyping and metal coating, especially

for the automotive industry.

In November 2008, Alphaform acquired MediMet Precision Casting and Implants

Technology GmbH (henceforth MediMet) based in Stade / Lower Saxony. MediMet is

specialized in the production of implants and medical instruments.

Alphaform Claho GmbH is a service company for engineering, rapid tooling, tool

series and thermoplastic injection molding for small series. The company was

founded as Claho engineering GmbH in 1997 and belongs to Alphaform since the

beginning of 2001. The company is based in Eschenlohe and acts supportively for

MediMet through the production of small series and different manufacturingtechnologies.

Further subsidiaries are located in Rusko, Finland, and Newbury, England. Both

subsidiaries are mainly active in the field of rapid prototyping and production of small

batches. At the end of 2009 the latest subsidiary was established in Stockholm,

Sweden and commenced operations in 2010. The following illustration provides an

overview of the companys organizational structure:

Company structure

Source: Alphaform AG, CBS Research AG

Alphaform-RPI Oy

Rusko I Finland

Alphaform-Claho GmbH

Eschenlohe I Germany

Alphaform Ltd.

Newbury I UK

MediMet Precision Casting and

Implants Technology GmbH

Stade-Wiepenkathen I Germany

Feldkirchen I Germany

100%

100%

100%

100%

Alphaform Sweden AB

Stockholm I Sweden

100%

Alphaform AG engages in

the process of additive

manufacturing of

complex prototypes,

tools, single components

and small series

Alphaform group

consists of five

companies


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Alphaform AG


Company history


Management team

Management board

Dr. Thomas Vetter, CEO

Thomas Vetter qualified as an electrical engineer and holds a PhD from the

Technical University of Darmstadt. He began his career in the plastics processing

industry. He worked at Carl Schenck AG, and later at Rieter Holding AG. While he

worked for Sarnamotive Europe Division he was appointed to the management

board. Before he joined Alphaform in early 2008, he was General Manager at

Johnson Controls, one of the world's largest automotive suppliers.

Markus Axtner

Markus Axtner works as managing director at Alphaform AG and is responsible for

production and development (rapid prototyping and plastics). He had previously been

employed by Raylase GmbH as deputy development manager.

1996 Founded in Feldkirchen near Munich as a spin-off of the laser specialist EOS GmbH

2006 Disposal of Alphaform-OHP GmbH, Weilburg

Disposal of business operations Alphaform-Spacecast GmbH, Aachen

Opening of a production facility in Newbury, England

2001 Purchase of Claho engineering GmbH, Grainau

1998 European leader in the field of rapid prototyping

2000 Purchase of Rapid Product Innovations Oy in Rusko, Finland

Establishment of London office

1999 Purchase of metal foundry Spacecast GmbH in Herzogenrath near Aachen

Buy-out of the OHP GmbH Mannesmann VDO

Change of company name to Alphaform Enabling Technologies & Services

2003 Admission to the Prime Standard of the Frankfurt Stock Exchange

2010 Opening of the new Metal Competence Centre at the site Eschenlohe

2009 Repositioning as a contract manufacturer specializing in medical technology

MilestonesYear

2008 Acquisition of MediMet GmbH


12/38


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Alphaform AG


Business Model

Alphaform AG designs, develops, manufactures prototypes (Additive

Manufacturing) and offers series production for different industries (e.g. orthopaedic

and automotive sector) in Europe. The main business comprises the manufacturing

of medical implants, medical instruments and trauma products which result in a

collaboration of both subsidiaries Alphaform Claho (Rapid Tooling) and MediMet.

Furthermore, the company provides various services ranging from the production and

assembly of plastic-, carbon-, or metal-based design and functional models, through

the manufacturing of pre-production models and components, to the production of

small series components to the automotive sector. Alphaform also serves customers

in aerospace, electronics, plant construction, household appliances, engineering, and

telecommunications industries.

Additive manufacturing, rapid prototyping, rapid

tooling

The term "additive manufacturing" (AM) signifies manufacturing technologies whichare able to build parts of a structure layer by layer directly from a computer model.

Similarly to today's paper printer, in the near future parts of plastic or metal can be

produced directly by pressing a button from the computer. Additive manufacturing

processes allow the production of components with no product-specific means (e.g.

molds) and without geometric constraints. These production processes meet the

flexibility and customizability of prototype production across all industries for future

market needs and may enhance the competitiveness.

But for large quantities AM is still too expensive. There are two reasons: First, the

machines are relatively slow, since the components are built up gradually from up to

100 micrometer thin layers. In addition, the materials are usually very expensive. But

especially with smaller series AM offers cost advantages: It saves time and cost of

molds, furthermore a clever design can reduce the number of items and the

installation costs.

Process of additive manufacturing


Rapid Prototyping (RP)

This technology is using a layer construction method with different Laser methods to

develop prototypes which can be used by the customer as a test product. Finished

3D-CAD Model STL Model

Repeated layer

manufacturing

Component

Lower building

platform

Layer coating

Slicing

Scanning mirror

Laserbeam

Layers

Plattform

and piston

Laser

Solified Layers

3D printer

Alphaform is a

specialist for rapid

prototyping, rapid

tooling and series

production

Structures are builtlayer by layer by a 3D

printer

But AM has still some

disadvantages

Production of

prototypes


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Alphaform AG


models are formed from the curing of powder or liquid resin. Main customers are from

the automotive, racing and the consumer goods industry.

Rapid Manufacturing (RM)

Today, not only single prototypes, but small batches are produced directly and

without tools. Used materials in the generative process are polyamide, stainless- and

hot-work steel and titanium and nickel alloy. The more functions are incorporated in a

component or the more complex the geometry of the product is, the more efficient it

can be produced by RM.

Rapid Tooling

Rapid Tooling refers to all processes for the production of tools and molds for

prototypes and also for prefabrication and series production. Rapid tooling CAD

(computer-aided design) data often cant be used directly in the production process:

they must be reviewed again for technical reasons (e.g. drafts, shrinkage factors).

Business segments

Alphaformsbusiness is divided into three divisions. The division "Rapid Prototyping"

uses layer construction methods, which in turn are executed by different laser

procedures, to developed prototypes of various products and designs. Afterwards

they can be used by the customers as test products.

The division Rapid Tooling comprises all processes for producing molds and tools.

Similar techniques as in rapid prototyping are used in rapid tooling.

In the division precision casting implants, instruments and trauma products are

offered to customers in various stages of the production progress: as a largely

unprocessed casting, machined part (blank or fully polished) and precision laser-

printed final product.

Business segments and provided technologies


Products and Services

Rapid Tooling and Rapid Prototyping

Both business segments Rapid Tooling and Rapid Prototyping include the

manufacturing of prototypes and small batches for various industries.

In addition Alphaform offers several supporting services: individual counseling

services include support with concepts and choice of production methods and

materials. Engineering services offer support with digitalization of design models

Division Rapid Prototyping and Rapid Tooling Precision casting

Layer construction Moulding methods Surface finishing Medical manufacturing

Technologies

Stereolithography (SLA)

Selective laser sintering

(SLS)

PolyJet method (3D

printer)

3DP MAX

Injection moulding

CNC machining

Vacuum casting

Reaction injection

moulding (RIM)

Laminating process

Lacquering

Metal Coating

Chrome vapour deposition

coating

Vacuum arc melting

casting

Centrifugal casting under

protective gas

atmosphere

Heat treatment

Automotive

Architecture

Medical technology

Comsumer goods

Science

Energy

Motorsport

Art

Engineering

Aviation and aerospace

Orthopaedic industry

Other medicalApplication

area

Production of small

batches

Production of tools

Alphaform is divided

into three business

segments

Production and

services are offered

within these segments


15/38

Alphaform AG


and modification of geometries and tools. Technical services contain training of

employees, optimization and maintenance for steroelithographie machineries, laser

calibration and software testing.

Manufacturing processes used in the two segments are:

Layer construction

Stereolithography (SLA)

For the production of designer components, data control models, functional

models and rapid manufacturing

With SLA, components of a model are constructed layer by layer in a tank with

liquid epoxy resins and, step by step, a 3D product emerges. At Alphaform 15

different materials are used. A computer-controlled laser exposes the contours of

the model and hardens them.

Selective laser sintering (SLS)

For the production of functional prototypes and rapid manufacturing

With SLS, models are constructed layer by layer in a thermal process.

Polyamide powder is selectively melted by a laser and solidified by cooling. PolyJet method (3D printer)

For the production of designer parts and 2K parts

In this printing process, geometrical shapes of the model are built layer by layer

by the mixing of two materials. This can be produced either in a homogeneous

material blend or with local varying areas, the so-called 2K parts (two different

types of plastics are combined in a process to form a complex shaped part).

3DP MAX

For the production of light models, designer dummies, complex geometrical

shapes with thicker walls and reverse engineering

In this printing method, geometrical shapes are constructed layer by layer by the

coat application of a particle material (PMMA), which selectively solidifies with

the aid of a binder.

Moulding methods

Injection moulding

For the quick production of prototypes and small series

In an injection moulding machine, the plastic material is plasticized in an injection

unit and subsequently injected into an in-mould. The cavity of the mould

determines the shape and surface structure of the component. The material for

series production can already be used for the prototype.

CNC machining

For the manufacture of tools and finishing of components

Free-forming surfaces in dimension and shape and tools can be made from

plastic or metal

Vacuum casting

For the production of designer components, function prototypes and small series

production

The foundation of this method is the silicon cast. This original mould is filled with

liquid polyurethane in a vacuum chamber. Final machining (finishing) of the

component takes place after the hardening. Vacuum casting is a quick and

economical possibility to produce a very small series.

Reaction injection moulding (RIM)

For the production of designer components, functional prototypes and small

series productionIn the RIM method, also called low pressure injection moulding, a type of

polyurethane is filled in an enclosed plastic mould under storage condition.


16/38


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Alphaform AG


Value-added chain of Alphaforms Medical division


Manufacturing processes used in Alphaforms Medical division are:

Investment casting under protective gas atmosphere

For manufacture of joint implants and instruments

Enhanced by the use of a protective gas during the inductive melting process,

this classical method of investment casting or lost wax guarantees that the

components of the alloy are unaltered. This ensures a consistently high quality of

all castings.

Vacuum arc melting casting

For making joint implants for allergic patients

This method is mainly used for the melting of titanium. Due to its high

biocompatibility and low weight, titanium is increasingly used in the medical

sector.

Centrifugal casting under protective gas atmosphere

For manufacture of bone clamps and bone screws

This inductive method is especially suited for making complicated small parts.

Here, the molten metal is flung into a prepared mould through centrifugal force

under protective gas.

Heat treatment

The highly stressed cobalt-chrome-molybdenum alloys, stainless steel alloys and

titanium alloys are subjected to a heat treatment after casting.

Machining

For turning, cutting, milling, polishing and grinding

Revenue distribution

In the two business segments Rapid Prototyping (55% of total sales) and Precision

Casting (34% of total sales) about 89% of total sales are generated. The revenue

share of the Rapid Tooling segment amounted to 11% in FY 2011.

Revenue distribution in 2011 by :


Concept Pre-ProductionProduct

Manufacturing

Post-production

IntegratedServices

Prototyping Casting

Forging

Laser

sintering

Laser

marking

Cleaning

Package

Shipping

Tooling

Validation

Turning

Cutting

Milling

Polishing

Grinding

36.5%

38.8%

24.7%

Industries

Automotive

Medical

Non-Automotive

47.5%

7.1%9.5%

13.0%

22.9%

Geography

Germany Finland

UK Rest of Europe

Outside Europe

55.3%10.5%

34.2%

Segments

Rapid Prototyping

Rapid Tooling

Precision Casting

Three business

segments


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Alphaform AG


Approximately 36% of Alphaformss revenues are generated within the automotive

industry. 39% of the revenues resulted from businesses within medical industry

(machining and precision casting) and the remaining 25% is generated with

companies from other industries (e.g. energy, consumer products, aerospace).

By geography, Germany is the main market for Alphaform with a share of

approximately 47% in fiscal year 2011, followed by European countries with 30% and

non-European countries with a share of 23%.

Customers

Sales of Alphaform are focused on the major premium automotive manufacturers and

suppliers (well-known manufacturers include Porsche, Audi, BMW and Daimler).

Alphaforms Medical division customer list includes Stryker, Biomet and smith &

nephew. These customers are market leaders in the orthopaedic industry.

Example of customers of Alphaform


Automotive and

medical industry as

core sales markets

Germany is the main

market

Well-known costumer

base


19/38

Alphaform AG


Strategy

The focus of Alphaforms strategy is based on further growth in terms of geography

and alternative industries and the dissemination and establishment of additive

manufacturing. Proposed guiding principles are:

Expansion in the most attractive sectors: medical technology,automotive, consumer and industrials

Medical technology sector

Further development and market share gains in the orthopaedic market

through subsidiary MediMet.

Development of new production processes through the combined

expertise in additive manufacturing from Alphaform Claho and MediMet.

Focus on the production of more complex structures (e.g. spinal and

trauma implants).

Exploration of additional materials in the field of medical technology: in

particular titanium (and cement-free implants).

Expansion in this industry will also reduce the proportion of short-termprojects in the area of rapid prototyping.

Automotive sector

There is a high demand for new developments and prototypes in the

area of electric and hybrid vehicles (due to increased demands on

emission reduction and lightweight of vehicles).

Additive manufacturing will play a crucial role for research and

development in the automotive industry.

Further development of existing technologies will reduce the time from

concept to market launch.

Consumer and Industrials

The company seeks the expansion of RP applications in rapid

prototyping and the development of RM applications for niche markets,

leading to objective of mass customization.

Mergers and acquisitions

Alphaform is seeking acquisition opportunities with preference to sound

technological know-how and established market access to medical

technology and volume/ batch production.

Extension in the field rapid manufacturing

In the coming years the increasing standard production by means of additive

manufacturing (rapid manufacturing)will offer strong growth opportunities

for Alphaform. An ever increasing number of industries are deploying rapidmanufacturing for the implementation of customized small production runs.

Thus, Alphaform will expand its business in the field of rapid manufacturing.

With a combination of modern manufacturing technologies, medical

licensing and direct customer access, Alphaform is able to take complex

components and products made of plastic and metal through to the series

production stage and manufacture them in short production runs.

Geographic expansion

Expansion of business activities particularly in Northern Europe

(Expansion of business in Sweden though Alphaforms indirect

subsidiary).


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Alphaform AG


Competitive Landscape

The relevant Rapid Prototyping/Rapid Manufacturing market has a fragmented global

competitive landscape, most of the companies are not listed public. With about 7%

market share, Alphaform is one of the leading service providers in Europe. In the

Medical Contract Manufacturing segment, the competitive landscape is characterized

by small, mid to large global companies.

Short overview of major competitors of Alphaform in the Medical Contract

Manufacturing segment:

Accellent Holdings Corp. was founded in 2005 and is based in Wilmington,

Massachusetts. The company, through its subsidiary, offers design and engineering

services, including product design engineering, design for manufacturability,

analytical engineering, rapid prototyping, pilot production and provides outsourced

precision manufacturing and engineering services to the medical device industry.

Greatbatch Inc. was founded in 1970 and designs and manufactures medicaldevices and components, as well as provides technology solutions. The company

operates its business in two segments, Greatbatch Medical and Electrochem

Solutions. The Medical segment designs and manufactures medical devices and

components primarily for the cardiac rhythm management (CRM), neuromodulation,

vascular access, and orthopaedic markets. In the Electrochem Solutions segment

Greatbatch provides pacemaker batteries, implantable cardiovascular defibrillator

batteries, and batteries for commercial applications.

Paragon Medical Inc. was founded in 1991 and is headquartered in Pierceton,

Indiana. The company designs, validates, and manufactures custom and standard

cases and trays, surgical instrumentation, and implantable components for the

medical device marketplace worldwide. The companys cases and trays are primarily

made of metals and polymers. The company also offers branding, design for

manufacturing, dryness verification, inventory management, logistics, project

management, prototyping, RFID, sterilization validation and testing services.

Sandvik AB was founded in 1862 and operates as an engineering company in

tooling, materials technology, and mining and construction industries worldwide. The

company offers tools for metal cutting, machinery and tools for rock excavation,

stainless materials, special alloys, metallic and ceramic resistance materials, as well

as process systems. The company has operations in approximately 130 countries. In

the Tooling segment the company provides tools and tooling systems for cutting

operations, as well as wear parts and components in cemented carbide. In the Miningand Construction segment the company offers equipment, tools, service and

technical solutions for mineral exploration, mining and processing of rock and

minerals in the mining and construction industries. In the Materials Technology

segment the company offers high-value-added products based on advanced metallic

materials, process equipment based on steel belts, production of orthopaedic

implants and instruments, and systems to generate, control, measure or protect

against heat.

SAS Maurice MARLE was founded in 1964 and is based in Odival, France. It

engages in the forging of orthopaedic implants. It offers orthopaedic implants, such

as prostheses for the hip, shoulder, knee, spine, cupules, tibial plates, ancillary

instruments, including bone scrapers and socket holders. The company also provides

products for aeronautics, sports and leisure, motor racing applications, titanium alloy,

nickel based alloy, light alloy, stainless alloy and alloyed steel engine parts.


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Alphaform AG


Symmetry Medical Inc.was founded in 1976 and is a leading provider of implants,

related instruments and cases to orthopaedic device manufacturers. The company

also designs, develops and produces these products for companies in the dental,

osteobiologic, endoscopy and other segments of the medical device market, as well

as providing specialized products and services to the aerospace market.

Short overview of major competitors of Alphaform in the Rapid Prototyping/

Rapid Manufacturing segment:

3D Systems Corporationwas founded in 1986 and is headquartered in Rock Hill,

South Carolina. It engages in the design, development, manufacture, marketing, and

servicing of 3D printers and related products, print materials and services. Its

subsidiary Z Corporation provides 3D printing and 3D scanning solutions for

productive designers and engineers. Its products include high-definition 3D printers to

produce physical 3D models from digital data in color, portable 3D laser scanners

that digitize 3D surfaces in real time, and prototyping systems to evaluate product

designs prior to production, and to create concept models to enable communication

and refine designs. 3D Systems serves e.g. manufacturers of automotive, aerospace,computer, electronic, defense, consumer, energy and healthcare products.

ARRK Corporation was founded in 1948 and is headquartered in Osaka, Japan.

The company provides various services related to the development of new products,

including manufacturing and marketing industrial design models. Furthermore ARRK

provides planning, designing, and engineering new products; engineering and

manufacturing a range of tooling products; production and marketing small-lot

moldings; and planning, designing, engineering, manufacturing, and marketing other

models and related businesses. ARRK produces sample models for major

companies in the automobile manufacturing and electronics industries.

Materialise NV, was founded in 1990 and is based in Leuven, Belgium. It has

subsidiaries in Europe, Asia, and the United States. The company, through its

subsidiaries, provides prototyping, software, medical and dental solutions in Belgium

and internationally.

Stratasys Inc. was founded in 1989 and is headquartered in Eden Prairie,

Minnesota. It engages in the development, manufacture, marketing and servicing of

3D printers, rapid prototyping systems and related consumable materials for office-

based rapid prototyping and direct digital manufacturing markets. The companys

products are used by design and manufacturing organizations in aerospace,

architecture, automotive, business machines, consumer products, defense, direct

digital manufacturing of custom parts, electronics, jewelry, medical systems anddental markets.


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Alphaform AG


Market environment

Orthopaedic Industry

In 2011 orthopeadic industry remained under pressure due to accelerating pricing

degradation and a more difficult regulatory environment. Revenues increased by 5%

yoy to USD 43.1bn (2010: USD 41.0bn). Although growth in some submarkets astrauma, extremities and sports medicine remains strong or robust (between 5.4% yoy

and 9.9% yoy), sales growth from hips, knees and spine declined to a low single digit

range (~3% yoy). Regarding historical development, orthopaedic market has shown a

continuous and strong growth over the last decade (from USD 13.5bn in 2000 to USD

43.1bn in 2011) by posting a compound annual growth rate of 11.1%.

Estimated orthopaedic market growth

Source: CBS Research AG, William Blair & Company, Orthoworld Inc.

Orthopaedic companies trying to counteract decreasing market growth through cost

savings by aggressively pursued acquisitions or outsourcing of production. Other

orthopaedic companies are considering further diversification and relationships with

non-traditional partners (including payers, pharma and other large medical device

companies) and products/technologies that focus on repair and prevention.

Additionally many manufacturers are pushing pricing pressures down to their

suppliers.

Important factors for further growth within the orthopaedic industry in the next yearsare an aging population (in the western world), an increasing obesity rate as well as

people wishing to remain active at an advanced age and therefore more sport and

activity related injuries. Thus the orthopaedic industry is expected to grow further in

the mid- and long-term. The emerging markets also play an important role in terms of

market growth. Especially the Chinese, Indian and Brazilian markets are expected to

grow by 15% - 25% over the next decade. Given Alphaform s exposure to the

orthopaedic sector, the company will benefit from this development.

13.515.3

17.7

20.6

23.9

27.0

29.9

33.5

36.939.1

41.043.1

11%

13%

16% 16% 16%

13%

11%12%

10%

6%5% 5%

0.00%

5.00%

10.00%

15.00%

20.00%

0

5

10

15

20

25

30

35

40

45

50

Orthopaedic market in USD bn Growth rates

15.3%

19.5%

20.9%

9.4%

13.6%

21.4%

Worldwide orthopaedic market by segments

Hips

Knees

Spine

Dental Implants

Trauma

Other

CAGR 11.1%

Revenues reached USD

43.1bn in 2011

Strategies of

orthopaedic

companies

Market growth factorsare an aging

population, obesity and

sport injuries


23/38

Alphaform AG


Population aging is progressing rapidly in many industrialized countries, but also

developing countries with declining fertility rates are experiencing rapid increases in

their proportion of elderly people. According to UN estimates world population aged

over 65 will grow from 417m (6.9%) in 2000 to 1.45bn (15.6%) in 2050.

Looking at the worldwide population in terms of obesity and overweight, more than

1.4bn adults (20 and older) and more than 40m children under the age of five were

overweight in 2008 (WHO estimates). This figure has more than doubled since 1980.

All in all this development will offer interesting opportunities in the long term.

World population growth rates in terms of aging and obesity

Source: CBS Research AG, WHO, OECD, UN Population Division

Revenues from contract manufacturing are profiting as well from continuous growth

within the orthopaedic market. Worldwide contract manufacturing revenues had

increased by 6% yoy in 2010 (2009: -4.4% yoy). The compound annual growth rate

corresponds to 7.3% (CAGR: period 2005 - 2011).

Contract manufacturing market in USD bn

Source: CBS Research AG, Avicenne 2011

The global orthopaedic implants market had an approximately volume of USD 24.7bn

in 2009. The market is expected to touch the USD 30.5bn mark in 2012. By 2016

market volume is forecasted to grow to USD 41.8bn (CAGR 2009-2016: 7.8%). The

drivers for the orthopaedic implants market will be the aging population, technological

advancements in implant designs and materials which are resulting in improved

durability and younger patients undergoing surgery in the future.

7%

6%

9%

8%

11%

13%

15%

0%

2%

4%

6%

8%

10%

12%

14%

16%

1980 1985 1990 1995 2000 2005 2010

Percentage of obese population in OECD countries

131 232418

825

1,454

5.2% 5.7%

6.9%

10.4%

15.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

0

200

400

600

800

1,000

1,200

1,400

1,600

1950 1975 2000 2025 2050

Population aged over 65 in m.

Percentage of world population

0.7 0.80.9 1.0 0.9 0.9

0.30.3

0.40.4

0.4 0.4

1.01.1

1.2

1.31.4

1.5

0.000

0.500

1.000

1.500

2.000

2.500

3.000

2005 2006 2007 2008 2009 2010

Implants

Cases&trays

Instruments

Progressively growing

obesity rates and

proportion of elderly

people

Contract manufacturing

revenues amounted to

USD 23.8bn

Global orthopaedic

implants market will

grow further


24/38

Alphaform AG


Additive manufacturing market

Prototyping was among the earliest applications of additive manufacturing (AM)

technologies and remains one of the most powerful tools for product development. As

material quality, surface finish, and dimensional accuracy have improved, AM models

have been increasingly used for functional prototyping and for fit and assembly

testing. AM parts are also being used as patterns for tooling and metal castingprocesses. The demand for products and services from providers of AM equipment,

materials, and services has shown a positive development over the last 24 years.

The compound annual growth rate (CAGR) of worldwide revenues produced by all

products and services over this period is an impressive 26.4%. The CAGR over the

past eleven years was 10 %.

The global market for additive manufacturing (consisting of all products and services

worldwide) grew by 29.4% to USD 1.714bn (PY: USD 1.325bn) in 2011. The USD

1.714bn volume is comprised of revenues generated in the primary additive

manufacturing market which consists of all products and services directly associated

with AM processes worldwide. Products include AM systems, system upgrades,

materials, and aftermarket products, such as third-party software and lasers.

Services include revenues generated from parts produced on AM systems by service

providers, system maintenance contracts, training, seminars, conferences,

expositions, advertising, publications, contract research and consulting. Global

revenues from AM systems and materials amounted to USD 834.0m in 2011, an

increase of 28.0% from USD 651.6m in 2010. This market segment grew by 22.9%

yoy in 2010 after declining by 13.1% yoy in 2009. Furthermore, additive

manufacturing services grew by 30.7% yoy to USD 879.5m in 2011. In turn this

market segment grew by 25.3% yoy to USD 672.9m in 2010, but declined by 6.2%

yoy in 2009.

Overview and forecast of worldwide additive manufacturing market (in USD bn)

Source: Wohlers report, Alphaform AG, CBS Research AG

According to Wohlers the additive manufacturing industry is expected to continue

strong double digit growth over the next several years. The AM industry is forecast to

reach USD 2.0bn in 2012. Sales of AM products and services will reach worldwideUSD 3.7bn by 2015 and USD 4bn in 2016. Assuming the industry is not affected by

larger influences, such as another global economic recession or natural disasters,

AM market volume is expected to surpass the USD 6.5bn mark by 2019.

0.6 0.6 0.5 0.5 0.70.8 1.0

1.2 1.2 1.11.3

1.72.0

3.74.0

6.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2015E 2016E 2019E

Overview and forecast of worldwide car sales by core market(in m units)


25/38

Alphaform AG


Automotive

The sales trend on the automotive market

After the worldwide car sales (passenger cars and other light vehicles) had increased

by 13.3% in 2010 (2009: -3.0% yoy) there was an increase of 4.3% to 75.46m units in

2011 according to LMC Automotive (formerly JD Power). This development is

especially owed to China, the worlds largest car market (share of 24%) thatgenerated a sales increase of 4.6% to 18.00m units. In the US (share of 17%),

12.75m units were sold and, thus, 10.3% more cars, 1.19m units respectively, than in

2010. Comparatively, the Western European market (share of 19%) developed

clearly weaker (-0.6% to 14.34m units) due to fiscal measures in some countries (for

example, VAT increase in Great Britain). However, the development was quite

differentiated in the Western European countries (Great Britain: -4.4%; Spain:

-17.7%; Italy: -11.0%; France: -2.1%; Germany: +8.8%).

Worldwide automobile market trend*in 2011 (change yoy in %)

Source: LMC Automotive 2012, CBS Research AG

In the first nine months of 2012 worldwide car sales increased by 6.3% to 61.03m

(PY: 57.39m) units. This development is especially owed to USA (+14.6% yoy to

10.88m units), Japan (+38.4% yoy to 4.19m units), Eastern Europe (+6.6% yoy to

3.62m units) and other regions (+9.3% yoy to 12.66m units). On the other hand

Western Europe sales development (-8.4% yoy to 10.14m units) was very weak.

IHS Global Insight forecasts that global light vehicle sales will grow a further 4% in

2012 to nearly 78.7m units. For 2013 IHS forecasts an increase to approximately

82.1m units. LMC Automotive believes global sales will reach 81.0m units in 2012,

which would outpace 2011's record level of 76.8m units by 5.5%. In 2013, global

light-vehicle sales are expected to increase to nearly 85.0m units. With the economic

outlook for 2012 and 2013 looking ever gloomier, LMC Automotive forecasts for

Western Europe for this year a drop of around 7.7% to 11.83m units and for 2013 a

drop of around 0.5% to 11.78m units. Approximately 14.4m vehicles will be sold inthe US in 2012. Looking ahead to 2013, a higher level of uncertainty is impacting

overall volume growth, but the forecast remains at 15.0m units for total light-vehicles.

10.3%

2.0%

8.1%

-0.6%

22.7%

-15.6%

1.8%

7.7%

4.6%5.3%

4.3%

USA Canada Mexico WesternEurope

EasternEurope

Japan Korea Brasil/Argentina

China Other Global

*Passenger cars and l ight vehicles

Global car sales up by

4.3% in 2011

Sales increase of 6.3%

in the first nine months

2012

FY 2012E: global sales

growth of 4% - 6%


26/38

Alphaform AG


Overview and forecast of worldwide car sales by core markets (in m

units)

Source: IHS Global Insight 2012, CBS Research AG

IHS Global Insight expects that sales will rise to 103.1m units in 2018. This

corresponds to a compound annual growth rate of 4.5% (CAGR: period 2011 - 2018).

In the long term, China will remain the automotive industrys most important single

market. Global Insight forecasts that 29.1m cars (2011: 17.6m) will be sold in China

in 2018. Next to China, the expected global growth is mainly realized by North

America, Asia (including India) and Russia.

According to PricewaterhouseCoopers (PwC) global light vehicle production will rise

from 74.6m units in 2011 to 101.8m units in 2016.

Overview and forecast of worldwide light vehicle production by core

markets (in m units)

Source: PWC, DRR AG, CBS Research AG

15.3 18.4 19.5

14.4 13.8 15.4

17.6

22.8

29.14.1

4.6

4.4

3.0

4.1

6.1

4.0

4.6

6.0

5.5

6.4

8.0

11.7

12.7

14.6

2011 2014E 2018E


Rest of the world

South America

Eastern Europe (incl. Russia)

India

Japan

China (incl. HK)

Western Europe

North America

75.687.4

103.1

17.3 19.3 20.4 21.5 22.7 23.7

19.9 19.3 20.5 21.9

22.7 23.6

19.6 21.7

23.024.2

24.9 25.7

15.316.9

19.5

22.224.4

25.9

2.5

2.4

2.6

2.7

2.82.9

2011 2012E 2013E 2014E 2015E 2016E


Other

China

Asia (without China)

Europe

America

74.6

86.0

97.592.5

101.8

79.6


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Alphaform AG


Growth will come from BRIC states especially China with a high potential

In 2010, light-vehicle sales in emerging markets comprised 51% of global sales.

According to LMC Automotive the share of emerging markets is expected to increase

steadily to 60% in 2015. Sales in China in 2015 are projected to total 29.0m units,

with the US following with just 16.5m units. By 2020, global sales are projected to

total 125.0m units. Of this total, the BRIC countries are expected to account for

57.7m light vehicle sales (46% of the global total). Moreover, each of these countries

has high potential for exports, so their combined production should account for an

even greater percentage of global output in 2020.

According to a report by PwC, the automotive industry will have continuing strong

growth perspectives in the future, especially in China. Even though the economic

development in China should slow down, the demand for individual mobility, and

thus, for cars, should further increase. In 2017, about 28m vehicles shall be sold in

China. Unlike the car markets in Western Europe or the US, China is far from having

a saturated demand for cars for the time being. A calculation example displays how

large the sales potential in China still is: the car density in Germany is about 500 cars

per 1,000 people. To reach these figures, Chinas streets would have toaccommodate about 700m units - instead of currently 59m.

The worldwide premium segment is expected to grow further

According to IHS Global Insight the global premium segment will grow further in the

next years with a compound annual growth rate of 5.1% (CAGR: period 2011 - 2020).

Overview and forecast of worldwide premium segment by core markets

Source: IHS Global Insight, BMW AG, CBS Research AG

Emerging markets will

grow further

China market is not

saturated


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Alphaform AG


More car models and derivatives are needed to approach more customers

The forecasted light vehicle sales can only be realized by more car models and

derivatives to approach more customers. Therefore, the variety is further forwarded

by the OEM to meet country- and customer-specific needs. OEMs like BMW, Audi,

Daimler and others prepare to increase its car models and derivatives in the next

years. Given Alphaforms exposure to the OEM(e.g. BMW, Mercedes-Benz) sector,

the company will benefit from this development. The following illustrations provide an

overview of the companys car models and derivatives development and outlook.

Current models and lifecycle overview of BMW Group

Source: BMW AG, CBS Research AG

BMW plans to develop 10 to 12 compact models based on its new front-wheel-drive

platform. According to Mercedes-Benz the company plans to implement at least 10

additional model series by 2015.

Portfolio extension of Mercedes-Benz

Source: Daimler AG, CBS Research AG


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Alphaform AG


Financials

9M (1 January 201230 September 2012) results

According to preliminary key figures (reported on 5 November 2012) consolidated

revenues rose by 6.0% to EUR 20.84m (PY: EUR 19.66m). EBITDA increased in 9M

2012 to EUR 1.68m (PY: EUR 0.99m). Furthermore, in the first nine months of FY

2012 EBIT amounted to EUR 0.70m (PY: EUR 0.05m). Additionally, net income

improved from EUR -0.19m in 9M 2011 to EUR +0.52m in 9M 2012.

Cash flow statement

For the first nine months of FY 2012, cash flow from the operating activities

amounted to EUR +0.5m and thus improved significantly compared to 9M 2011 (EUR

-0.9m). The main reason for the improved cash flow compared to the previous year

period was a higher operating result and more efficient working capital management.

Outlook

For FY 2012E the management expects a revenue slightly above previous year leveland a positive net result.

Historical financial development of the last

quarters

During the period 1Q 2011-3Q 2012 the company increased top line growth on year-

over-year basis (except 3Q 2012 compared to 3Q 2011, figures stayed almost stable)

and managed to improve EBITDA and EBIT figures. During 4Q 2011 EBIT

development was mainly influenced by extraordinary expense resulting from a write-

down of the carrying amount of the subsidiary MediMet GmbH.

Development of important key figures on group level from 1Q 2011 to

3Q 2012


5.8

7.0 6.9 6.7 6.8

7.3

6.8

0.0

0.5 0.4

0.0

0.5 0.6 0.5

-0.3

0.2 0.1

-1.3

0.2 0.3 0.2

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Sales EBITDA EBIT

in EURm

Improved financial

figures in 9M 2012


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Alphaform AG


Financial forecast

Sales in fiscal year 2012E

For the current fiscal year (31 December 2012) we expect sales of approximately

EUR 28.2m (+7.0% yoy).


Despite the difficult economic environment in Europe we expect that this weak

environment should be compensated by sustained growth in North America and Asia.

For 2013E we expect a sales increase of about 7.0% to EUR 30.1m.


For fiscal year 2014E we estimate an increase in sales of approximately 7.0% to

EUR 32.2m because of improving market conditions in Europe and the continuing

economic growth in the BRIC countries and North America.

Overview and forecast of important financial figures from 2008 to

2014E


Development of EBIT-margins, net income and dividend payout

Owing to the positive sales development we believe EBIT-margin to be at +3.0%

(2011: -4.9%) for fiscal year 2012E. For fiscal year 2013E and 2014E, we anticipate

an improvement of EBIT margins.Assuming a tax rate of 0% due to enough loss carried forward, net income is

expected to be at EUR 0.5m in fiscal year 2012E. For fiscal year 2013E and 2014E,

we estimate net income of EUR 0.9m and EUR 1.1m.

In our view, Alphaform will not pay a dividend per share for FY 2012E. For 2013E

and 2014E we expect no dividend payments, too.

21.419.4

20.7

26.328.2

30.132.2

1.3

-1.4

0.6 1.02.3 2.7 3.1

-0.5

-3.8-1.5 -1.3

0.8 1.2 1.5

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2008 2009 2010 2011 2012E 2013E 2014E

Sales EBITDA EBIT

in EURm

Sales forecast 2012E:

EUR 28.2m

No expected dividend

per share for 2012E


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Alphaform AG


Balance sheet outlook

Development of Assets

By 30 June 2012, total assets amounted to EUR 20.5m. The biggest positions are

goodwill (26% of total assets) and property, plant and equipment (22% of total

assets). As at 31 December 2012 we estimate property, plant and equipment position

of EUR 4.6m. By the end of its 2012 fiscal year we expect cash and cash equivalents

to be at EUR 1.2m. Current assets may increase due to higher inventories and

accounts receivable, resulting from the increase in sales, to EUR 10.6m.

In the coming years we assume higher inventories, accounts receivables and cash

and cash equivalents due to the positive sales development.

Development of Equity & Liabilities

At the end of June 2012, equity amounted to EUR 12.6m which corresponds to an

equity ratio of 61.7%. We assume an increase to EUR 12.8m by 31 December 2012

with an equity ratio of 61.6%, due to good operating development. Based on

Alphaforms promising perspectives for the future, we expect an equity ratio of above60%. Total liabilities were at EUR 7.9m as at 30 June 2012. By the end of 2012 we

estimate total liabilities at EUR 8.0m.

Cash flow outlook

Cash flow from operating activities was EUR 1.7m in FY 2011 and EUR 0.5m in 9M

2012. For the current fiscal year we assume operating cash flow to be approximately

EUR 1.3m. For FY 2013E we expect an increase to EUR 2.2m. Free cash flow is

expected to be in 2012 approximately EUR -0.1m (PY: EUR 1.2m).

Cash and cash

equivalents at the end

of 2012 forecast: EUR1.2m

Equity ratio by 30 June

2012: 61.7%

Positive operating

cash flow from

operating activities


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Alphaform AG


Appendix

Financials

Alphaform AG

Profit and loss account

(31 December) IFRS EURm 2008 2009 2010 2011 2012E 2013E 2014E

Sales 21.4 19.4 20.7 26.3 28.2 30.1 32.2YoY grow th -3.2% -9.2% 6.8% 26.8% 7.0% 7.0% 7.0%

Change in inventories 0.1 0.1 0.6 0.0 0.0 0.0 0.0

Other work performed 0.0 0.0 0.1 0.0 0.0 0.0 0.0

Total output 21.6 19.5 21.4 26.3 28.2 30.1 32.2

Material expenses -8.0 -6.9 -7.5 -9.2 -9.6 -10.2 -10.8

Staff expenses -7.5 -9.2 -8.9 -10.7 -11.1 -11.6 -12.4

Other operating income 0.4 0.5 1.0 0.5 0.7 0.8 0.8

Other operating expenses -5.2 -5.3 -5.5 -5.9 -5.9 -6.3 -6.8

EBITDA 1.3 -1.4 0.6 1.0 2.3 2.7 3.1

Amortization, depreciation and impairment -1.8 -2.3 -2.1 -2.2 -1.4 -1.5 -1.6

EBIT -0.5 -3.8 -1.5 -1.3 0.8 1.2 1.5

in % of sales -2.3% -19.4% -7.1% -4.9% 3.0% 3.9% 4.5%

Net financial result 0.4 -0.3 -0.3 -0.3 -0.3 -0.3 -0.4

EBT -0.1 -4.1 -1.8 -1.6 0.5 0.8 1.1in % of sales -0.4% -20.8% -8.7% -6.0% 1.9% 2.8% 3.4%

Income taxes -0.6 0.3 0.3 0.0 0.0 0.0 0.0

Net income including minorities -0.7 -3.8 -1.5 -1.6 0.6 0.9 1.1

Minority interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net income attributable to shareholders -0.7 -3.8 -1.6 -1.6 0.5 0.9 1.1

in % of sales -3.1% -19.5% -7.6% -6.0% 1.9% 2.9% 3.5%

Shares outstanding (in millions) 5.3 5.3 5.3 5.3 5.3 5.3 5.3

Earnings per share (EUR) -0.12 -0.71 -0.29 -0.30 0.10 0.16 0.21

Dividend per share (EUR) 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Source: CBS Research AG, Alphaform AG


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Alphaform AG


Alphaform AG

Balance Sheet

IFRS EURm 2008 2009 2010 2011 2012E 2013E 2014E

Assets

Noncurrent assets 13.9 15.8 13.7 10.2 10.2 10.2 10.1

as % of total assets 50.5% 59.4% 55.9% 49.5% 48.8% 45.2% 41.7%

Property, plant and equipment 6.0 5.2 5.4 4.5 4.6 4.8 4.9

Intangible assets 7.9 7.2 6.3 5.2 5.1 4.9 4.7

Others 0.0 3.4 2.0 0.5 0.5 0.5 0.5

Current assets 13.6 10.8 10.8 10.3 10.6 12.3 14.2as % of total assets 49.5% 40.6% 44.1% 50.5% 51.2% 54.8% 58.3%

Inventories 3.7 3.2 3.7 4.0 4.3 4.6 4.9

Receivables and other assets 4.7 3.9 4.9 4.3 5.1 5.5 5.9

Cash and cash equivalents 5.2 3.7 2.2 2.1 1.2 2.3 3.4

Total Assets 27.5 26.6 24.5 20.5 20.8 22.5 24.4

Shareholders equity and liabilities

Shareholders equity 19.2 15.4 13.8 12.3 12.8 13.7 14.8as % of total equity and liabilities 69.8% 57.8% 56.4% 59.8% 61.6% 60.9% 60.8%

Subscribed capital 5.3 5.3 5.3 5.3 5.3 5.3 5.3

Capital reserves 11.3 11.3 11.3 11.3 11.3 11.3 11.3

Accumulated profit/loss 2.5 -1.3 -2.8 -4.4 -3.8 -3.0 -1.8

Accumulated other comprehensive loss 0.1 0.0 0.0 0.0 0.0 0.0 0.0

Minority interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Noncurrent liabilities 2.5 5.1 3.6 1.9 1.6 1.9 2.0

as % of total equity and liabilities 9.2% 19.3% 14.5% 9.3% 7.7% 8.3% 8.4%

Long-term financial debt 0.1 4.1 3.1 1.6 1.3 1.5 1.7

Finance lease obligations 0.0 0.1 0.4 0.3 0.3 0.4 0.4

Liabilities from MediMet purchase 1.9 0.7 0.0 0.0 0.0 0.0 0.0

Others 0.6 0.3 0.0 0.0 0.0 0.0 0.0

Current liabilities 5.8 6.1 7.2 6.3 6.4 6.9 7.5as % of total equity and liabilities 20.9% 22.9% 29.1% 30.9% 30.6% 30.8% 30.8%

Trade accounts payable 2.2 2.1 2.6 2.7 3.0 3.1 3.3

Current financial debt 0.7 0.9 1.7 0.8 0.9 0.9 1.0

Others 2.9 3.2 2.8 2.8 2.5 2.8 3.2

Total equity and liabilities 27.5 26.6 24.5 20.5 20.8 22.5 24.4

Source: CBS Research AG, Alphaform AG


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Alphaform AG


Alphaform AG

Cash flow statement

IFRS EURm 2008 2009 2010 2011 2012E 2013E 2014E

Net income/loss -0.7 -3.8 -1.5 -1.6 0.6 0.9 1.1

Depreciation and amortisation 1.8 2.3 2.1 2.2 1.4 1.5 1.6

Deferred taxes 0.5 -0.3 -0.3 0.0 0.0 0.0 0.0

Bad debt allowances 0.2 0.2 -0.1 0.1 0.0 0.0 0.0

Currency translation differences 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Gain/loss on disposal of property, plant and equipment 0.2 0.2 0.3 0.3 0.2 0.2 0.2

Movements in working capital: -0.3 0.5 -0.6 0.7 -0.8 -0.4 -0.4

Change in inventories -1.2 0.5 -0.5 -0.3 -0.3 -0.3 -0.3Change in trade and other receivables -0.8 0.8 -1.1 1.9 -0.8 -0.4 -0.4

Change in trade accounts payable 0.4 -0.1 0.5 0.2 0.3 0.1 0.2

Change in Payments received on account of orders 0.0 -0.1 0.0 0.0 0.0 0.0 0.0

Change in provisions -0.1 0.2 -0.1 0.2 0.3 0.3 0.4

Change in other positions 1.4 -0.7 0.6 -1.2 -0.3 -0.2 -0.2

Cash flow from operating activities 1.9 -0.8 -0.2 1.7 1.3 2.2 2.6

Capital expenditures for intangibles assets and PPE -10.9 -1.7 -2.7 -0.6 -1.4 -1.5 -1.6

Acquisitions of subsidiaries -5.2 -0.7 0.0 0.0 0.0 0.0 0.0

Others 8.8 -3.3 1.4 0.0 0.0 0.0 0.0

Cash flow from investing activities -7.3 -5.7 -1.2 -0.5 -1.4 -1.5 -1.6

Proceeds from capital increase 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Purchase of treasury stock 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Increase/Decrease in debt position -0.4 4.1 -0.4 -2.7 -0.2 0.3 0.2

Dividends paid -0.8 0.0 0.0 0.0 0.0 0.0 0.0

Cash flow from financing activities -1.2 4.1 -0.4 -2.7 -0.2 0.3 0.2

Net increase (decrease) in cash&cash equivalents for period -6.7 -2.4 -1.8 -1.5 -0.3 1.0 1.2

Cash at the beginning of the period from discontinuing operations 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Restricted cash 0.0 0.0 0.0 2.1 0.0 0.0 0.0

Cash, cash equivalents and short term investments at beginning of period 11.9 5.2 2.8 1.0 1.6 1.2 2.3

Cash and cash equivalents at the end of the period 5.2 2.8 1.0 1.6 1.2 2.3 3.4

of which cash and cash equivalents as reported in the balance sheet 5.2 3.7 2.2 2.1 1.2 2.3 3.4

of which bank borrowings repayable on demand 0.0 -0.9 -1.2 -0.5 0.0 0.0 0.0

Source: CBS Research A G, Alphaform AG

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