Sectra — Interim / Quarterly Report 2011

Mar 8, 2011

Sectra's Nine-month Report 2010/2011:

Sectra's mammography business continues to expand

IT and medical technology company Sectra continues to expand and the number of mammography systems delivered rose 50% during the third quarter compared with the corresponding quarter in 2009/2010. However, the performance of the Swedish krona had a negative impact on the Group's earnings.

"We expanded in Northern Europe and the Group's sales for the nine-month period increased in line with our growth target of 15%," says Jan-Olof Brüer, President and CEO of Sectra AB.

For the nine-month period, net sales rose 15.1% to SEK 682.6 million (592.9) compared with the corresponding period in the preceding year. Operating profit for the period amounted to SEK 1.8 million (14.0), corresponding to an operating margin of 0.3% (2.4). The result after net financial items was a loss of SEK 9.7 million (profit: 7.0). Exchange-rate fluctuations had a negative impact of SEK 12.4 million (neg: 4.5) on the Group's financial items.

For the third quarter, the Sectra Group's net sales rose 13.9% to SEK 229.1 million (201.2). Operating loss was SEK 5.9 million (loss: 2.5), corresponding to an operating margin that was negative 2.6% (neg: 1.2). The loss after net financial items for the quarter amounted to SEK 12.1 million (profit: 2.6).

"Since we do not hedge currency flows, exchange-rate fluctuations have a direct impact on our earnings. The stronger Swedish currency had a negative effect on the earnings for the period, but we maintain a strong cash balance and balance sheet," says Jan-Olof Brüer.

In its Medical Systems business area, Sectra entered the Canadian mammography market when Canada Health approved sales of Sectra MicroDose. Canada is an expanding market, where the transition from analog to digital mammography began only recently. The approval has already resulted in an order for four mammography systems from Trillium Radiology Associates' private diagnostic imaging facilities in Toronto and Mississauga, which is evidence of the importance of low radiation doses for customers in North America.

"Approval was obtained a little earlier than we had expected and, combined with the quick order, it means that women in Canada now can be offered lowest-dose mammography examinations," says Jan-Olof Brüer.

In the Secure Communications Systems business area, order bookings were strong during the third quarter.

"The debate on information leaks has resulted in increased interest in security. More authorities are reviewing their needs for secure communications solutions and we have received several important orders, nationally and internationally," says Jan-Olof Brüer.

The information in this press release is such that Sectra AB (publ) is obligated to disclose in accordance with the Swedish Securities and Clearing Operations Act. The information was submitted for publication on March 8, 2011, at 8:00 a.m. (CET).

Sectra AB (publ)

Teknikringen 20 SE 583 30 Linköping Tel: +46 (0)13 23 52 00 Fax: +46 (0)13 21 21 85 info@sectra.se www.sectra.se

Momsreg.nr SE556064830401

For further information, please contact: Jan-Olof Brüer, President and CEO of Sectra AB, Tel: +46 (0)13-23 52 09

About the Sectra Group

Sectra was founded in 1978 and conducts successful development and sales of high-technology products in the expansive niche segments of medical systems and secure communication systems. Sectra has offices in 12 countries and sells its products through partners worldwide. The head office is in Linköping, Sweden, and the company developed from research at Linköping University. Sales for the 2009/2010 full year amounted to SEK 848 million. Sectra is listed on the NASDAQ OMX Stockholm AB exchange. For more information about Sectra, visit our website at http://www.sectra.com.

Interim report Sectra AB (publ) for May 2010– January 2011

The figures for the year-earlier period are shown in parentheses.

The period in brief

• Order bookings amounted to SEK 590.4 million (669.4).
• Net sales increased 15.1% to SEK 682.6 million (592.9).
• Operating profit amounted to SEK 1.8 million (14.0), corresponding to an operating margin of 0.3% (2.4).
• The result after net financial items was a loss of SEK 9.7 million (profit: 7.0). Exchange rate fluctuations affected the Group's financial items negatively in the amount of SEK 12.4 million (neg: 4.5).
• Loss after tax amounted to SEK 7.7 million (profit: 6.9).
• Earnings per share before dilution were negative SEK 0.21 (pos: 0.19).

Third quarter in brief

• Order bookings amounted to SEK 230.2 million (240.6).
• Net sales rose by 13.9% to SEK 229.1 million (201.2).
• Operating loss was SEK 5.9 million (loss: 2.5), corresponding to an operating margin of negative 2.6% (neg: 1.2).
• Loss after net financial items amounted to SEK 12.1 million (profit: 2.6). Exchange-rate fluctuations affected the Group's financial items negatively in the amount of SEK 7.0 M (pos: 4.9)
• Loss after tax amounted to SEK 9.7 million (profit: 1.7).
• Earnings per share before dilution were negative SEK 0.26 (pos: 0.05).

Events during the third quarter

• Sectra, through its cooperation partner, secured a breakthrough order in Saudi Arabia for a system for the management of radiology images, Sectra PACS, from one of the country's largest university hospitals and academic research centers, King Abdul Aziz University Hospital.
• Sectra launched a unique visualization table, Sectra Visualization Table, enabling teams of physicians to work with three-dimensional radiology images in an entirely new manner.
• Sectra commenced cooperation with Xtron Imaging Inc for distribution of the Sectra MicroDose Mammography system in Canada.
• Norrbotten County Council ordered a county-wide IT solution for management of X-ray information, Sectra RIS, from Sectra. The order value is SEK 7 million.
• Sectra launched another model of its secure mobile telephone, Tiger.
• FMV, The Swedish Defense Materiel Administration, ordered several products for encrypted telephony from Sectra at an order value of SEK 36 million.

Events after the end of the period

• Canada Health approved Sectra's MicroDose Mammography system.
• Trillium Radiology Associates, which operates private diagnostic imaging facilities in Toronto and Mississauga, was the first customer on the North American continent to order Sectra MicroDose. The order comprises four mammography systems.
• The Ministry of Defense of the Netherlands signed a three-year framework agreement with Sectra. The agreement pertains to deliveries of Tiger products that are used to protect voice and data communication from eavesdropping.

THE GROUP'S ORDER BOOKINGS, SALES AND EARNINGS

Nine-month period, May 2010 - January 2011

The Group's order bookings for the period amounted to SEK 590.4 million (669.4). The lower order bookings compared with the year-earlier period were mainly attributable to the Scandinavian market, where there were no major medical IT project procurement processes finalized during the period. Sectra's operations in the Netherlands, the UK and Australia reported increased order bookings compared with the year-earlier period.

The Group's net sales for the period rose 15.1% to SEK 682.6 million (592.9). This growth was in line with Sectra's target level. Both of Sectra's business areas, Secure Communications Systems and Medical Systems, recognized sales growth. The increase was primarily related to Sectra's operations in Northern Europe and Australia.

Operating profit for the period was SEK 1.8 million (14.0), corresponding to an operating margin of 0.3% (2.4). Compared with the year-earlier period, earnings were charged with depreciation and other expenses related to capitalized development projects and Groupfinanced customer projects that have been completed and transitioned to the operational phase. For a transition period, earnings are impacted by the major program in progress to upgrade existing installations to Sectra's new generation of PACS, which is an entirely new platform for handling medical images.

The result after financial items amounted to a loss of SEK 9.7 million (profit: 7.0). Exchangerate fluctuations affected the Group's financial items negatively in an amount of SEK 12.4 million (neg: 4.5), mainly due to the Swedish krona strengthening against the USD and the GBP during the period.

Loss after tax amounted to SEK 7.7 million (profit: 6.9). Earnings per share were negative SEK 0.21 (pos: 0.19).

Third quarter, November 2010 - January 2011

The Group's order bookings for the quarter amounted to SEK 230.2 million (240.6). Medical Systems' order bookings did not achieve the same levels as in the year-earlier period, but Secure Communications Systems reported strong order bookings during the quarter.

The Group's net sales for the quarter rose 13.9% to SEK 229.1 million (201.2). It was primarily the Medical Systems business area's operations in Northern Europe and Australia that recognized increased sales compared with the corresponding period in the preceding year.

Operating loss for the period was SEK 5.9 million (loss: 2.5), corresponding to an operating margin of negative 2.6% (neg: 1.2). All business segments recognized reduced operating profit compared with the year-earlier period.

Loss after net financial items amounted to SEK 12.1 million (profit: 2.6). Exchange-rate fluctuations had a negative impact on the Group's financial items in an amount of SEK 7.0 million (pos: 4.9), mainly due to the Swedish krona strengthening against the US dollar and the UK pound during the period.

Loss after tax was SEK 9.7 million (profit: 1.7). Earnings per share were negative SEK 0.26 (pos: 0.05).

Seasonal variations

Sectra is affected by seasonal variations, which means that most invoicing and earnings are traditionally generated during the last part of the fiscal year. Variations in order volumes, in terms of individual quarters, can be significant, since Sectra has a number of major customers that enter into extensive, long-term agreements with the company, pertaining to medical IT projects or the development of crypto systems, for example.

Diagram

Bars - per quarter Line – 12-months rolling

Operating profit/loss Profit/loss after net financial items

Comments on the diagrams

In recent years, operating profit has been affected by an extensive build-out of the proprietary international sales and support organization, and the development and launch of the Sectra MicroDose Mammography system. The mammography investment entails an increase in production operations. The current business mix, with a higher share of hardware-product deliveries, generated a lower operating margin than the previous mix, which to higher extent was dominated by IT-system deliveries.

Since Sectra has chosen not to hedge currency flows, exchange-rate fluctuations have a direct impact on order bookings, net sales and profit. The stronger Swedish krona has had a negative effect on these items for the current fiscal year.

SEGMENT REPORTING

Net sales by business segment
(SEK M)	3 months	3 months	9 months	9 months	12 months	Full-year
	Nov 2010	Nov 2009	May 2010	May 2009	Feb 2010	May - April
	- Jan 2011	- Jan 2010	- Jan 2011	- Jan 2010	- Jan 2011	2009/2010
Medical Systems	210.8	199.7	620.5	566.1	864.5	810.1
Secure Communication
Systems	25.6	29.1	80.5	72.6	107.5	99.6
Other operations 1)	14.4	16.5	45.8	64.3	63.0	81.5
Group eliminations	-21.7	-44.1	-64.2	-110.1	-96.9	-142.8
Total	229.1	201.2	682.6	592.9	938.1	848.4

Operating profit/loss by business segment
(SEK M)	3 months	3 months	9 months	9 months	12 months	Full-year
	Nov 2010	Nov 2009	May 2010	May 2009	Feb 2010	May - April
	-Jan 2011	- Jan 2010	- Jan 2011	- Jan 2010	- Jan 2011	2009/2010
Medical Systems	-4.9	-3.8	-4.3	5.9	16.3	26.5
Secure Communication
Systems	3.3	4.0	12.1	10.8	16.4	15.1
Other operations 1)	-1.3	-1.1	-3.7	-2.0	-5.4	-3.7
Group eliminations	-3.0	-1.6	-2.3	-0.7	-5.3	-3.7
Total	-5.9	-2.5	1.8	14.0	22.0	34.2

Net sales by geographic market
(SEK M)	3 months	3 months	9 months	9 months	12 months	Full-year
	Nov 2010	Nov 2009	May 2010	May 2009	Feb 2010	May - April
	- Jan 2011	- Jan 2010	- Jan 2011	- Jan 2010	- Jan 2011	2009/2010
Sweden	63.1	70.7	190.9	193.6	260.9	263.6
Rest of Europe	97.6	70.7	270.1	220.5	375.1	325.5
North America	51.0	56.6	163.5	163.9	224.2	224.6
Rest of world	17.4	3.2	58.1	14.9	77.9	34.7
Total	229.1	201.2	682.6	592.9	938.1	848.4

1) Other operations refer to Sectra's financing activities regarding customer projects and asset management, and to the Parent Company's internal debiting of Group-wide costs.

Medical Systems

The market

A total of approximately 52 million radiology examinations are conducted annually in Sectra's systems, which makes Sectra one of the world's leading suppliers of systems for the processing of digital radiology images. The market for medical systems continues to grow as a result of the substantial need for systems that enhance care efficiency.

Sectra's largest markets for Medical Systems are Scandinavia and the US. A significant portion of the business area's revenues derive from commitments to existing customers and the company's strategy is to grow in locations where Sectra already has a strong position. During the quarter, the business area had strong order bookings in Northern Europe, including the Netherlands. However, the markets of southern Europe were affected by the fact that many countries have social economic difficulties, which is currently restricting new sales of Sectra's products in this region.

Canada opens the door to the North American mammography market

One of Sectra's prioritized activities is to increase volumes in the mammography product division. One key requirement for being able to increase sales volumes of the Sectra MicroDose Mammography system in the next few years is that Sectra gains access to the North American mammography market. The national authority Canada Health was first in North America to approve Sectra MicroDose. In line with Sectra's strategy of using distributors in new markets, cooperation was initiated with the Canadian company Xtron Imaging Inc, which now sells Sectra MicroDose in Canada. Shortly after approval being received, Trillium Radiology Associates, which operates private diagnostic imaging facilities in Toronto and Mississauga, became the first on the North American continent to order Sectra MicroDose. The order comprises four mammography systems.

The transition from analog to digital mammography systems has only recently commenced in Canada, making this a growing market. For Sectra, Canadian customers will represent important references prior to the future launch of Sectra MicroDose in the US, which is subject to approval from the US FDA (Food and Drug Administration). Regarding Sectra's opportunities for selling Sectra MicroDose in the US, the FDA reclassified the approval process for mammography equipment during the quarter, which makes the approval process simpler. At the turn of the calendar year, Sectra submitted an application for Pre-market notification for Sectra MicroDose in accordance with the new process. According to Sectra's assessment, the possibility of obtaining FDA approval during the current fiscal year has increased as a result of the reclassification.

Activities for improved profitability

Measures that contribute to improving the business area's profitability have high priority and Sectra is implementing a number of activities to reduce costs, increase sales volumes and expand the product offering to existing customers, including:

• enhancing the cost-efficiency of the production of the mammography system Sectra MicroDose, for example, by relocating production of certain expensive components to subcontractors in Asia.
• efficiency-enhancement of work with installations and upgrades of Sectra's medical IT solutions. This is enabled by the customers' existing installations of digital imagemanagement systems being upgraded to the most recent generation of Sectra PACS.
• sales of mammography systems in further markets, such as Japan, the Middle East and North America.
• launch of new, innovative products that can add major benefits to healthcare by contributing to increased productivity and better quality of care. During the quarter, Sectra launched a globally unique visualization table that enables teams of physicians to work with three-dimensional radiology images in an entirely new manner. The product is the result of close cooperation with prominent researchers at Linköping University in Sweden.

Expert panel in the US recommends screening for osteoporosis

One of Sectra's product areas comprises online services for analysis of osteoporosis. Sectra's sales of analysis services are currently concentrated to a handful of countries in Europe, but are being successively extended to more markets. An interesting success in this niche area is the recommendation that was issued by the panel of experts, the U.S. Preventive Services Task Force (USPSTF) during the quarter. To ensure that women retain their health and quality of life, the USPSTF recommends that all women over 65, and from 50 years of age in certain risk groups, are regularly screened for osteoporosis. The aim of this is to reduce care costs for the disease through early diagnoses and preventive treatment. Using Sectra's analysis method, which has been approved by the US FDA, it is easy to screen for osteoporosis in conjunction with scheduled mammography screening. The method is highly cost-efficient and Sectra is now investigating whether it could be an alternative to more conventional method of screening for osteoporosis in the US.

Sales and earnings for the period, May 2010 – January 2011

Medical Systems' sales for the nine-month period increased 9.6% to SEK 620.5 million (566.1). Revenues from Medical IT products and services represented 84.5% of Medical Systems' sales and increased 4.0% to SEK 524.2 million (503.9). The Mammography product division accounted for SEK 96.3 million (62.2) of the business area's sales, an increase of 54.8% compared with the year-earlier period. In total, 63 Sectra MicroDose Mammography units (33) were delivered during the nine-month period, an increase of 90.9% compared with the corresponding period of the preceding year.

The operating result for the period was a loss of SEK 4.3 million (profit: 5.9), corresponding to an operating margin of negative 0.7% (positive1.0). The operating result was charged with higher depreciation and other expenses related to capitalized development projects and Groupfinanced customer projects that have been completed and transitioned to the operational phase. During a transitional period, earnings will also be impacted by the major efforts under way to upgrade existing installations to Sectra's next-generation PACS, which is an entirely new platform for the processing of medical images. On completion of this generational shift, which is expected to require a further 15 months, future updates will be faster and more costefficient. The Mammography product division posted an operating loss of SEK 48.0 million (loss: 60.4). Adjusted for the loss in the Mammography division, the business area's operating profit was SEK 43.7 million (66.3), corresponding to an operating margin of 8.3% (13.2).

Sales and earnings for the third quarter, November – January 2011

Medical Systems' sales for the third quarter increased 5.6% to SEK 210.8 million (199.7) compared with the year-earlier period. Revenues from Medical IT products and services rose 3.2% to SEK 182.4 million (176.7). The Mammography product division accounted for SEK 28.4 million (22.9) of the business area's sales, up 24.0% compared with the year-earlier period. A total of 21 (14) Sectra MicroDose Mammography units were delivered during the third quarter, up 50.0% compared with the year-earlier period.

Operating loss for the third quarter was SEK 4.9 million (loss: 3,8), corresponding to an operating margin of negative 2.3% (neg: 1.9). Compared with the corresponding quarter in the preceding year, earnings were charged mainly by the effects of price pressure on digital mammography systems and activities related to the sales of mammography systems in new markets. The Mammography product division posted an operating loss of SEK 22.1 million (loss: 19.7). Adjusted for the loss in the Mammography division, the business area's operating profit was SEK 17.2 million (15.9), corresponding to an operating margin of 9.4% (9.0).

Secure Communications Systems

Market

Sectra's crypto products are deployed by decision makers, government officials and armed forces in 17 European countries to protect telephone calls from eavesdropping. This makes Sectra the leading supplier of encrypted telephony to European authorities and defense departments. Sweden and the Netherlands comprise Sectra's largest markets for crypto products. In Sweden, FMV, the Defense Materiel Administration, ordered more products for encrypted telephony from Sectra at an order value of SEK 36 million in the third quarter.

Growth in the market for Secure Communications Systems is driven by the fact that it is easier than ever to eavesdrop on phone calls. Increasing numbers of authorities are opting to protect their telephony. As a result of increased partnerships between authorities in European countries, customers require products that support cross-border partnerships. Sectra offers products that are approved by both the EU and NATO.

Sales and earnings for the nine-month period, May 2010 – January 2011

Secure Communications Systems reported continued solid growth and favorable earnings as a result of increased sales of Tiger products. Net sales for the nine-month period rose 10.9% to SEK 80.5 million (72.6) compared with the year-earlier period. Operating profit was up 12.0% to SEK 12.1 million (10.8), corresponding to an operating margin of 15.0% (14.9).

Sales and earnings for the third quarter, November – January 2011 Net sales for the third quarter amounted to SEK 25.6 million (29.1). Operating profit was SEK 3.3 million (4.0), corresponding to an operating margin of 12.9% (13.8).

Other operations

Other operations pertain to Sectra's operations for the financing of customer projects, asset management, and the Parent Company's functions for Group finances and stock-exchange, share and investor relations activities.

Sales and earnings for the period, May 2010 – January 2011

Net sales from Other operations for the nine-month period amounted to SEK 45.8 million (64.3). The change pertains partly to the Group's financing activities, which recorded lower sales related to medical projects for customers, and partly to internal invoicing for shared Group service functions. Operating loss for the period was SEK 3.7 million (loss: 2.0) and the change pertains to a decline of SEK 1.7 million in the Parent Company's earnings compared with the year-earlier period.

Sales and earnings for the third quarter, November 2010 – January 2011

Net sales from Other operations amounted to SEK 14.4 million (16.5) for the third quarter. Operating loss for the quarter was SEK 1.3 million (loss: 1.1), corresponding to an operating margin of negative 9.0% (neg: 6.7).

REVISED FINANCIAL TARGETS

The Board regularly addresses issues concerning the company's targets, strategies, structure and focus areas. As a result of the changes that have occurred in Sectra's operations and in the niche markets in which the company operates, the Board has revised the Sectra Group's long-term profit and growth targets. The new financial target levels, established in September 2010, are:

• To achieve an EBIT margin of not less than 15%. (Up from 10%)
• To grow an average of 15% annually during a seven-year period. (Lowered from 30%).
• To maintain an equity/assets ratio of at least 30%. (Unchanged)

The new profitability targets are on a par with the profit levels in sectors in which Sectra is active. The growth target is three times as high as the underlying average market growth in the niches in which Sectra operates. Based on the expected market development, Sectra's Board

deems that the company is favorably positioned to achieve the new target levels over a threeyear horizon.

OTHER INFORMATION

Financial position

Sectra has a strong cash balance and balance sheet.

Consolidated cash flow from operations after changes in working capital amounted to SEK 23.3 million (19.6) for the nine-month period. Total cash flow for the period was till negative SEK 8.8 million (neg: 9.9). After adjustment for exchange-rate differences in cash and cash equivalents, consolidated cash and cash equivalents amounted to SEK 189.9 million (186.7).

The equity/assets ratio at the end of the quarter was 63.5% (62.6) and liquidity amounted to a multiple of 2.3 (2.2).

At the end of the period, the Group's interest-bearing liabilities amounted to SEK 23.4 million (39.6) and pertained to convertible debentures.

Investments

Group investments in the nine-month period totaled SEK 37.4 million (44.0), of which SEK 13.1 million (14.3) pertained to the third quarter. Investments were primarily attributable to customer projects in the Group's financing activities and capitalized development expenditures.

Investments in Group-financed customer projects during the period were SEK 16.7 million (22.1), of which SEK 7.0 million (9.6) pertained to the third quarter. At the close of the quarter, the Group's investments in customer projects totaled SEK 54.7 million (39.4).

During the period, capitalized work for own use amounted to SEK 16.8 million (14.3), of which SEK 7.1 million (3.6) pertained to the third quarter. At the close of the period, capitalized development expenditures totaled SEK 180.9 million (192.7).

Depreciation/amortization during the period amounted to SEK 46.3 million (36.8), of which SEK 16.1 million (14.0) pertained to the third quarter. The increase was due to depreciation of initiated Group-financed customer projects and to capitalized development projects that have been completed and transitioned to the delivery phase.

Employees

The number of full-time employees at Sectra increased by seven during the third quarter. At the close of the period, there were a total of 611 (591) employees.

The share

Sectra's share capital at the end of the period amounted to SEK 36,842,088. At future full conversion and an exercise of the implemented incentive programs, the number of shares will increase by a maximum of 791,400, corresponding to 2.1% of the share capital and 1.3% of the voting rights. After dilution, the share capital will amount to SEK 37,633,488.

Incentive programs

During the period, pursuant to the Annual General Meeting's resolution, Sectra has issued convertibles to Group employees. The convertible loans can be subscribed for during the period September 27 – October 8, 2010. The conversion price was SEK 45.80, which corresponded to 135% of the average volume weighted mean of the listed price for the company's share on NASDAQ OMX Stockholm for each trading day during the period August 3 – August 18, 2010. The conversion to Series B shares may occur during May 26 – 30, 2014. In total, Group employees have subscribed for 133,000 convertibles, corresponding to 0.4% of the share capital and 0.2% of the voting rights.

During the period, pursuant to the Annual General Meeting's resolution, the Board also issued additional employee stock options for the Group's employees in the US. If these employee stock options are fully exercised, employees will acquire 100,000 Series B shares in the company corresponding to approximately 0.3% of the share capital and 0.2% of the voting rights. Options can be exercised three years from the date on which they were issued and have a conversion price of SEK 45.80.

Annual General Meeting 2011

The Annual General Meeting of Sectra AB will be held on Thursday, June 30, 2011, in Linköping. Shareholders who wish to have business addressed at the Annual General Meeting can submit proposals in writing to the Sectra Board of Directors by e-mail info.investor@sectra.se or by traditional mail to Sectra AB, Teknikringen 20, SE-583 30 Linköping, Sweden. To enable the Board to process submissions in a satisfactory manner, the request should be submitted not later than May 1, 2011. Notification will be available on the Company's website not less than four weeks prior to the Meeting.

Nomination Committee

The 2010 Annual General Meeting resolved to appoint a Nomination Committee consisting of four members – one of the members to be the Chairman of the Board of Directors and three members to be representatives of the Company's major shareholders. In accordance with the Annual General Meeting's resolution, a Nomination Committee was appointed following consultations with the Company's major shareholders. The Nomination Committee includes the following members:

• Carl-Erik Ridderstråle, Board Chairman (convener)
• Jan-Olof Brüer, CEO of Sectra AB and representative of the Company's largest shareholder (Chairman)
• Gündor Rentsch, representing Frithjof Qvigstad
• Thomas Ehlin, representing Nordea Funds

The Nomination Committee will prepare and present the following proposals to the Annual General Meeting:

• Election of and fees for the Chairman of the Board and other Board members
• Election of and fees for the auditor and deputy auditor (where applicable)
• Decisions regarding principles for the appointment of the Nomination Committee
• Chairman of the Meeting

Shareholders who wish to submit proposals can do so in writing to Jan-Olof Brüer by e-mail jan-olof.bruer@sectra.com or by traditional mail to Sectra AB, Teknikringen 20, SE-583 30 Linköping, Sweden.

Risks and uncertainties

Through its operations, Sectra is exposed to such business risks as dependence on major customers and partners, the effect of exchange-rate fluctuations on pricing in the markets in which the Group is active, and property and liability risks. In addition, Sectra is exposed to various types of financial risks, such as currency, interest, loan and liquidity risks.

A detailed description of the risks and uncertainties, as well as Sectra's strategies and tactics for minimizing risk exposure and limiting adverse effects, is provided in the Group's Annual Report for the 2009/2010 fiscal year, Note 30, Page 52. No significant events have occurred that would alter the conditions reported therein.

Outlook

Sectra has a strong technical platform. The products and system solutions that Sectra develop are aimed at markets with high growth potential. The Company's strong position in the home market provides a solid platform for ongoing international expansion.

PARENT COMPANY

The Parent Company Sectra AB

The Parent Company includes the head office's functions for Group finances, as well as stock exchange, share and investor relations activities.

Net sales in the Parent Company Sectra AB for the nine-month period amounted to SEK 15.3 million (19.4). Profit after net financial items was SEK 4.4 million (4.8).

In the third quarter, net sales in the Parent Company amounted to SEK 4.5 million (6.4). Profit after net financial items amounted to SEK 2.8 million (2.3).

The Parent Company's income statement and balance sheet are reported on page 14.

Consolidated Income Statements

	3 months	3 months	9 months	9 months	12 months	Full-year
SEK thousands	Nov 2010	Nov 2009	May 2010	May 2009	Feb 2010	May - Apr
	- Jan 2011	- Jan 2010	- Jan 2011	- Jan 2010	- Jan 2011	2009/2010
Net sales	229,073	201,230	682,643	592,921	938,079	848,357
Capitalized work for own use	7,113	3,638	16,809	14,335	18,623	16,149
Operating expenses	-225,894	-193,328	-651,425	-556,445	-875,530	-780,550
Depreciation and amortization	-16,145	-14,006	-46,268	-36,771	-59,255	-49,758
Operating profit after depreciation	-5,853	-2,466	1,759	14,040	21,917	34,198
and amortization
Net financial items	-6,230	5,048	-11,477	-7,063	-15,074	-10,660
Profit after net financial items	-12,083	2,582	-9,718	6,977	6,843	23,538
Taxes	2,405	-874	1,973	-43	-4,315	-6,331
Earnings for the period	-9,678	1,708	-7,745	6,934	2,528	17,207
Of which, attributable to:
Parent Company owners	-9,678	1,708	-7,745	6,934	2,528	17,207
Non-controlling interest	0	0	0	0	0	0
Earnings per share
Before dilution, SEK	-0.26	0.05	-0.21	0.19	0.07	0.47
After dilution, SEK	-0.26	0.05	-0.21	0.18	0.07	0.46
No. of shares
Before dilution	36,842,088	36,842,088	36,842,088	36,842,088	36,842,088	36,842,088
After dilution 1)	37,633,488	37,770,988	37,633,488	37,770,988	37,633,488	37,400,488
Average, before dilution	36,842,088	36,842,088	36,842,088	36,842,088	36,842,088	36,842,088
Average, after dilution 1)	37,633,488	37,770,988	37,504,044	37,510,766	37,539,905	37,544,946

1) Dilution is based on the convertible debentures programs issued in 2009/2010 (368,400) and 2010/2011 (133,000) and on employee stock options issued in 2008/2009 (90,000), 2009/2010 (100,000) and 2010/2011 (100,000).

Consolidated Statement of Comprehensive Income

	3 months	3 months	9 months	9 months	12 months	Full-year
SEK thousands	Nov 2010	Nov 2009	May 2010	May 2009	Feb 2010	May - Apr
	- Jan 2011	- Jan 2010	- Jan 2011	- Jan 2010	- Jan 2011	2009/2010
Earnings for the period	-9,678	1,708	-7,745	6,934	2,528	17,207
Other comprehensive income Change in translation differences from translating foreign subsidiaries	-5,105	3,274	-15,259	-9,344	-22,159	-16,244
Total other comprehensive income	-5,105	3,274	-15,259	-9,344	-22,159	-16,244
for the period
Total comprehensive income for the period	-14,783	4,982	-23,004	-2,410	-19,631	963

Consolidated Balance Sheets

SEK thousands	Jan 31,	Jan 31,	Apr 30,
	2011	2010	2010
Assets
Intangible assets	201,472	216,989	211,079
Tangible assets	67,350	58,862	72,780
Financial assets	4,786	4,293	3,931
Total fixed assets	273,608	280,144	287,790
Other current assets	451,407	488,116	487,861
Cash and cash equivalents	189,907	186,673	193,024
Total current assets	641,314	674,789	680,885
Total assets	914,922	954,933	968,675
Equity and liabilities
Equity (including total comprehensive income for the period)	581,367	598,228	602,568
Provisions	5,112	6,448	6,354
Deferred tax liabilities	16,507	20,071	16,141
Long-term liabilities	23,406	17,315	17,315
Current liabilities	288,530	312,871	326,297
Total equity and liabilities	914,922	954,933	968,675

No changes have occurred in pledged assets and contingent liabilities since the 2009/2010 Annual Report.

Consolidated Statement of Changes in Equity

	9 months	9 months	Full-year
SEK thousands	May 2010	May 2009	May - Apr
	- Jan 2011	- Jan 2010	2009/2010
Equity at start of period	602,568	599,114	599,114
Comprehensive income for the period	-23,004	-2,410	963
Tax effect due to changed tax rate	0	0	0
Share-related payments	1,803	1,524	2,491
Dividend paid	0	0	0
Equity at the end of the period	581,367	598,228	602,568

Consolidated Cash-flow Statements

	9 months	9 months	Full-year
SEK thousands	May 2010	May 2009	May - Apr
	- Jan 2011	- Jan 2010	2009/2010
Cash flow from operations before changes in working capital	21,431	19,651	37,631
Cash flow from operations after changes in working capital	23,347	19,606	47,780
Investing activities	-37,399	-44,029	-66,807
Financing activities	5,226	14,522	13,196
Change in cash and cash equivalents	-8,826	-9,901	-5,831
Cash and cash equivalents, opening balance	193,024	184,282	184,282
Exchange-rate difference in cash and cash equivalents	5,709	12,292	14,573
Cash and cash equivalents, closing balance	189,907	186,673	193,024
Unutilized credit facilities	15,000	15,000	15,000

Key Figures

	9 months	9 months	12 months	Full-year
	Jan 31,	Jan 31,	Jan 31,	Apr 30,
	2011	2010	2011	2010
Order bookings, SEK M	590.4	669.4	782.3	861.3
Equity/assets ratio, %	63.5	62.6	63.5	62.2
Liquidity, multiple	2.3	2.2	2.3	2.1
Operating margin, %	0.3	2.4	2.3	4.0
Profit margin, %	-1.4	1.2	0.7	2.8
Return on equity, %	-1.3	0.3	0.4	2.9
Return on capital employed, %	-1.4	0.5	1.3	3.9
Return on total capital, %	-1.0	0.3	0.9	2.5
Value added, SEK M	347.7	346.9	479.4	478.5
Average number of employees	599	552	596	584
Equity per share, SEK	15.78	16.24	15.78	16.36
Equity per share after full dilution, SEK	15.45	15.94	15.45	16.11
Cash flow per share, SEK	0.58	0.53	1.07	1.02
Cash flow per share after full dilution, SEK	0.57	0.52	1.05	1.01
P/E ratio, multiple	-	-	553.9	79.9
Share price at end of period, SEK	38.0	42.5	38.0	37.3

Quarterly consolidated income statements and key figures

		2010/2011			2009/2010				2008/2009
SEK M	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Net sales	229.1	246.9	206.7	255.4	201.2	193.9	197.8	263.7	226.1	199.4	174.0
Capitalized work for own use	7.1	5.3	4.4	1.8	3.6	6.0	4.7	13.7	9.5	11.6	4.3
Operating expenses	-225.9	-228.7	-196.8	224.0	-193.3	-180.9	-182.2	-247.3	-225.2	-194.4	168.9
Depreciation and amortization	-16.1	-16.1	-14.1	-13.0	-14.0	-12.6	-10.2	-18.9	-9.0	-8.7	-8.5
Operating profit after	-5.9	7.4	0.2	20.2	-2.5	6.4	10.1	11.2	1.4	7.9	0.9
depreciation and amortization
Net financial items	-6.2	-6.9	1.7	-3.6	5.1	-5.5	-6.6	-3.8	14.4	34.1	5.3
Profit after net financial items	-12.1	0.5	1.9	16.6	2.6	0.9	3.5	7.4	15.8	42.0	6.2
Tax on earnings for the period	2.4	-0.3	-0.1	-6.3	-0.9	1.8	-0.9	-3.4	-3.8	-11.9	-1.8
Earnings for the period	9.7	0.2	1.8	10.3	1.7	2.7	2.6	4.0	12.0	30.1	4.4
Equity/assets ratio, %	63.5	63.6	64.7	62.2	62.6	65.6	65.1	59.4	60.7	61.5	60.4
Operating margin, %	-2.6	3.0	0.1	7.9	-1.2	3.3	5.1	4.2	0.6	4.0	0.5
Return on equity, %	-1.6	0.0	0.3	1.7	0.3	0.1	0.4	0.7	2.0	5.3	0.8
Return on capital employed, %	-2.0	0.1	0.3	2.6	0.5	0.2	1.6	1.2	2.6	7.1	1.1
Equity per share, SEK	15.78	16.16	16.40	16.36	16.24	16.09	16.20	16.26	16.06	15.74	14.94
Earnings per share, SEK	-0.26	0.0	0.05	0.28	0.05	0.07	0.07	0.11	0.32	0.82	0.12
Cash flow per share, SEK	0.13	0.16	0.28	0.49	0.37	0.10	0.06	1.36	0.87	0.93	0.27

Five-year summary

	2009/2010	2008/2009	2007/2008	2006/2007	2005/2006
Order bookings, SEK M	861.3	1,149.7	1,016.6	684.7	613.7
Net sales, SEK M	848.4	863.3	742.9	672.5	564.4
Profit after net financial items, SEK M	23.5	71.4	79.8	70.2	80.7
Profit after tax, SEK M	17.2	50.5	50.5	47.2	60.4
Operating margin, %	4.0	2.5	10.7	9.1	13.4
Profit margin, %	2.8	8.3	10.7	10.4	14.3
Return on equity, %	2.9	8.7	9.3	9.4	13.2
Return on capital employed, %	3.9	11.6	13.8	13.0	16.0
Return on total capital, %	2.5	7.4	8.9	8.6	10.9
Earnings per share before dilution, SEK	0.47	1.37	1.37	1.28	1.65
Earnings per share after dilution, SEK	0.46	1.35	1.34	1.26	1.61
Equity per share before dilution, SEK	16.36	16.26	15.22	14.12	13.24
Equity per share after dilution, SEK	16.11	16.06	14.93	13.84	12.97
Equity/assets ratio, %	62.2	59.4	56.9	60.8	58.9
Dividend per share, SEK	0.00	0.00	0.50	0.50	0.50
Share price at year end, SEK	37.3	38.8	58.5	76.0	58.8
P/E ratio, multiple	79.9	28.3	42.7	59.2	35.7

Parent Company Income Statements

	3 months	3 months	9 months	9 months	12 months	Full-year
SEK thousands	Nov 2010	Nov 2009	May 2010	May 2009	Feb 2010	May - Apr
	- Jan 2011	- Jan 2010	- Jan 2011	- Jan 2010	- Jan 2011	2009/2010
Net sales	4,481	6,389	15,348	19,379	21,773	25,804
Operating expenses	-6,137	-7,915	-21,091	-23,198	-29,700	-31,807
Depreciation and amortization	-56	-150	-176	-411	-323	-558
Operating loss after depreciation and	-1,712	-1,676	-5,919	-4,230	-8,250	-6,561
amortization
Net financial items	4,480	3,960	10,310	9,047	108,002	106,739
Profit after net financial items	2,768	2,284	4,391	4,817	99,752	100,178
Appropriations	-	-	-	-	15,700	15,700
Profit before tax	2,768	2,284	4,391	4,817	115,452	115,878
Tax on earnings for the period	-725	-331	-1,155	-1,012	-31,576	-31,433
Earnings for the period	2,043	1,953	3,236	3,805	83,876	84,445

Parent Company Statement of Comprehensive Income

	3 months	3 months	9 months	9 months	12 months	Full-year
SEK thousands	Nov 2010	Nov 2009	May 2010	May 2009	Feb 2010	May - Apr
	- Jan 2011	- Jan 2010	- Jan 2011	- Jan 2010	- Jan 2011	2009/2010
Earnings for the period	2,043	1,953	3,236	3,805	83,876	84,445
Other comprehensive income Change in translation differences from translating foreign subsidiaries	-5,292	5,122	-13,992	-9,053	-20,278	-15,339
Total other comprehensive income	-5,292	5,122	-13,992	-9,053	-20,278	-15,339
for the period
Total comprehensive income for the period	-3,249	7,075	-10,756	-5,248	63,598	69,106

Parent Company Balance Sheets

SEK thousands	Jan 31,	Jan 31,	Apr 30,
	2011	2010	2010
Assets
Tangible assets	613	2,000	1,878
Financial assets	172,632	210,027	167,862
Total fixed assets	173,245	212,027	169,740
Other current assets	335,366	243,402	340,934
Cash and cash equivalents	700,232	705,978	729,260
Total current assets	1,035,598	949,380	1,070,194
Total assets	1,208,843	1,161,407	1,239,934
Equity and liabilities
Equity (including earnings for the period)
	548,949	561,824	559,704
Deferred tax liabilities	25,731	29,860	25,731
Long-term liabilities	23,406	23,542	17,315
Current liabilities	610,757	546,181	637,184
Total equity and liabilities	1,208,843	1,161,407	1,239,934

Pledged assets and contingent liabilities

SEK thousands	Jan 31,	Jan 31,	Apr 30,
	2011	2010	2010
Pledged,assets	11,000	11,000	11,000
Total,pledged,assets	11,000	11,000	11,000
Guarantees on behalf of group companies	308,729	334,791	308,047
Total contingent liabilities	308,729	334,791	308,047

Definition of key figures

Adjusted equity	Reported shareholders' equity increased by 73.7% of untaxed reserves.
Capital employed	Total assets reduced by non interest-bearing liabilities.
Cash flow per share	Cash flow divided by the number of shares at the end of the period.
Earnings per share	Profit/loss after tax divided by the average number of shares.
Equity/assets ratio	Equity as a percentage of total assets.
Equity per share	Equity divided by the number of shares at the end of the period.
Liquidity	Current assets divided by current liabilities.
P/E ratio	Share price at the end of the period in relation to the 12-month period's earnings per share.
Profit margin	Profit after net financial items as a percentage of net sales.
Return on equity	Profit after tax as a percentage of average adjusted equity.
Return on capital employed (ROCE)	Profit before tax plus financial expenses as a percentage of average capital employed.
Return on total capital	Profit after net financial items plus financial expenses as a percentage of average total assets.
Value added	Operating profit plus labor costs.

Accounting principles

This interim report was prepared in accordance with IAS 34, Interim Financial Reporting, the Annual Accounts Act and the Swedish Securities Markets Act. The consolidated accounts were prepared in accordance with the International Financial Reporting Standards (IFRS) and statements from the International Financial Reporting Interpretations Committee (IFRIC) that were approved by the EU Commission for application within the EU.

The accounting policies and calculation methods are unchanged compared with those applied in the 2010/2011 Annual Report with the following exceptions. From the first quarter of the 2010/2011 fiscal year, IFRS 3, Business Combinations, and IAS 27, Consolidated and Separate Financial Statements, are applicable. New policies and amendments that have come into effect as of the 2010/2011 fiscal have had no impact on the financial statements.

Financial calendar

Year-end report 2010/2011	May 24, 2011
Annual General Meeting	June 30, 2011

For further information, please contact:

CEO Jan-Olof Brüer	Telephone +46 13 - 23 52 09

The Board of Directors and the President of Sectra AB (publ) hereby assure that the nine-month interim report for the period May 2010 – January 2011 provides a true and fair view of the Parent Company's and Group's operations, financial position and earnings and describes the significant risks and uncertainty factors facing the Parent Company and other companies in the Group.

Linköping, Sweden, March 8, 2011

Jan-Olof Brüer	Carl-Erik Ridderstråle	Erika Söderberg Johnson	Anders Persson
President and CEO	Chairman of the Board	Board member	Board member
Christer Nilsson	Torbjörn Kronander	Ann-Sofi Mikaelsson	Mats Björnemo
Board member	Board member	Employee representative	Employee representative

Report on Review of Interim Financial Information

Introduction

We have reviewed the interim report of Sectra AB (publ), corporate identity number 556064-8304, as of January 31, 2011 and for the nine month period then ended. The Board of Directors and the President are responsible for the preparation and fair presentation of this interim financial information in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim annual report based on our review.

Scope of Review

We conducted our review in accordance with the Standard on Review Engagements (SÖG) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the Standards on Auditing in Sweden RS and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Annual Accounts Act for the Group and in accordance with the Annual Accounts Act for the Parent Company.

Linköping March 8, 2011 Grant Thornton Sweden AB Peter Bodin Authorized Public Accountant

The information in this report is such that Sectra AB (publ) is obligated to disclose in compliance with the Securities and Clearing Operations Act and/or the Financial Instruments Trading Act. This information was released to the media for public disclosure on March 8, 2011 at 8:00 a.m. (CET).

Sectra AB (publ) Teknikringen 20 SE 583 30 Linköping Tel: +46 (0)13 23 52 00 Fax: +46 (0)13 21 21 85 info@sectra.se www.sectra.se Momsreg.nr SE556064830401