Sectra — Interim / Quarterly Report 2014

Sep 10, 2013

Interim report May – July, 2013 Top ranking for Sectra in US customer satisfaction poll

	The quarter			12 months
SEK million	Q1	Q1	Change	Q1	Q1	Change
	2013/2014	2012/2013	%	2013/2014	2012/2013	%
Order bookings	247.7	116.2	113.2	1 047.5	916.0	14.4
Net sales	175.3	171.0	2.5	821.3	817.0	0.5
Operating profit (EBIT)	13.9	4.1	239.0	95.6	85.9	11.3
Operating margin, %	7.9	2.4		11.6	10.5
Earnings before tax (EBT)	15.0	0.3	4 900.0	101.3	86.6	17.0
Profit margin, %	8.6	0.2		12.3	10.6
Profit/loss after tax	11.8	0.2	5 800.0	73.9	62.2	18.8
Earnings per share, SEK 1	0.32	0.01	3 100.0	1.99	1.68	18.5
Cash flow 2	-8.0	64.0	-112.5	119.2	191.2	-37.7
Number of employees 3	525	526		525	528

Before dilution. 2 Operations after changes in working capital. . ³ At end of period

CEO'S COMMENTS

1

"Although Sectra's first quarter is traditionally weak, a clear improvement could be seen compared with the year-earlier period. We more than doubled our operating profit and all business areas reported higher order bookings. For example, we signed several extensive managed service agreements with new customers in the UK where we conducted targeted growth initiatives in the preceding fiscal year. The US market appears more positive than previously and our North American operations tripled their order bookings compared with the year-earlier period. I can also state that we initiated partnerships in new markets in Asia and South American during the period. All of this was in line with our growth strategy.

"Unfortunately, we continue to see that our Secure Communications operations remain affected by delays in procurements and the implementation of planned projects in Sweden. Meanwhile, all of the attention surrounding advanced eavesdropping related to the Snowden case has meant that the importance of this area can be expected to increase. We are now analyzing how we can best leverage our strong brand and the broad expertise that we possess in this business area.

"We will deliver higher value to our customers than competitors by better understanding the everyday lives of our customers and better solving their problems. Part of this strategy involves purposely working toward having the highest customer satisfaction in the market. In the US, independent analyst company KLAS conducts regular, public customer satisfaction surveys. It is highly satisfying that our efforts to improve our customer service in the US have been successful and have led to top rankings in the two most important hospital segments in medical image management systems.

"Many of our medical customers are exposed to increasing financial pressure and Sectra provides products and services that are in demand when customers rationalize their operations. Accordingly, I envisage excellent opportunities for Sectra to continue to expand. We are making continued progress in our Business Innovation segment for future products and our two business areas – Imaging IT Solutions and Secure Communications – jointly have a stable underlying cash flow that helps to finance future profit growth.

Torbjörn Kronander, President and CEO

Teleconference with President Torbjörn Kronander and CFO Simo Pykälistö

September 10, 2013, 9:00 a.m. (CET). To participate, call: Sweden: +46 8 50556477 UK: +44 203364 5372 US: +1 8557161589 The presentation will be held in English and can also be followed online via: http://media.fronto.com/cloud/sectra/130910/

Sectra AB (publ)

Teknikringen 20 SE 583 30 Linköping Tel: +46 (0)13 23 52 00 info@sectra.se www.sectra.se VAT Reg. No. SE556064830401

FIRST QUARTER IN BRIEF

• Order bookings increased 113.2% to SEK 247.7 million. All business areas reported increased order bookings compared with the year-earlier period.
• Successful sales of region-wide medical IT systems contributed to net sales rising 2.5% to SEK 175.3 million.
• Operating profit amounted to SEK 13.9 million, up 239.0%. The completion of several customer projects and a higher level of investment in development projects that are activated, combined with ongoing efficiency enhancement projects and the restructuring that Sectra carried out in the preceding year, contributed to the earnings improvement.
• Cash flow after changes in working capital amounted to a negative SEK 8.0 million (pos: 64.0). Completion of customer projects has a major impact on cash flow and the variation between individual quarters can be substantial.

EVENTS AFTER THE QUARTER

• The Annual General Meeting held in June resolved to transfer SEK 4.50 per share, a total of SEK 166.9 million, to shareholders through a share redemption program. The transfer took place in August.
• The Board set a new growth target and decided on the relative priority of the financial targets set for the company. The new target is that average annual growth in operating profit (EBIT) per share of 10% over a five-year period.
• Sectra signed a ten-year managed service agreement with Barts Health NHS Trust in London, the UK's largest healthcare consortium, which has chosen to use Sectra's radiology IT system (PACS) and Vendor Neutral Archiving (VNA) solutions.
• The security authority in the Netherlands approved Panthon 3, Sectra's new solution for secure communication using smartphones.
• Several customers renewed their service agreements with Sectra. These included Blekinge County Council, which signed a nine-year agreement for the development, maintenance and support of region-wide IT solutions for the management of medical images and patient information.

OUTLOOK

Sectra has a strong technical platform and a business model based on long-term customer relations, combined with skilled employees who focus intensely on achieving a high level of customer satisfaction.

Sectra's niche areas: IT for medical imaging and secure communication are markets with substantial scope for continued expansion. The need to enhance efficiency continues to increase in healthcare as part of efforts to cope with the consequences of the demographic trend and increasing needs for care. Imaging IT Solutions develops and sells systems and services for medical diagnostic imaging that help to develop healthcare while simultaneously making it more efficient. Society needs to improve upon how it deals with diseases affecting elderly. Sectra has a number of projects in Business Innovation that can positively impact care efficiency and the treatment of some of the most costly age-related illnesses.

In the security field, government agencies, the defense and private sectors are increasingly exposed to security threats and eavesdropping attempts. Heightened awareness of eavesdropping could contribute to boosting interest in the type of security product supplied by Sectra. The company is entrusted to deliver products that protect classified information at the highest secrecy levels and our Secure Communications products are approved by the EU, NATO and many national security agencies.

GROUP

New organizational structure and distribution of segments

Sectra introduced a new organizational structure on May 1, 2013 encompassing the following segments:

Imaging IT Solutions (previously Radiology IT) offers efficient image management systems that help healthcare providers care for more patients while retaining the same or a higher level of quality. Sectra's IT systems for efficient diagnosis, planning, management, communication and visualization of medical images and patient information facilitate efficiency enhancements throughout the care chain and contribute to the development of healthcare. Although the main area is currently radiology, there is also rapidly rising interest from other diagnostic imaging areas in the healthcare sector.

Secure Communications (previously Secure Communication Systems) offers government authorities and defense organizations solutions and services that protect sensitive and confidential information from eavesdropping. The products are approved by the EU and NATO as well as several national security authorities.

Sectra utilizes Business Innovation as an incubator for projects and smaller operations that have the potential to be successful given time. In certain cases, the projects are smaller business units that while already being profitable need to grow larger before becoming a business area of their own. The projects are expected to become profitable within a period of three to seven years. This is where Sectra offers services and products that contribute to more efficient and enhanced care of osteoporosis and IT systems for planning and following up orthopaedic operations.

Other operations comprise Sectra's customer project financing operations, asset management, shared functions for administration, Group finances, IT, regulatory matters, market communication, and investor relations activities.

For additional information on the operations, refer to Sectra's 2012/2013 Annual Report.

Order bookings, sales and earnings

Results in SEK million excluding nonrecurring items bars- per quarter line - rolling 12 months

Sectra focuses primarily on growth in countries where the company has an existing market presence and through partners in selected growth markets. The Group's order bookings for the quarter totaled SEK 247.7 million, up 113.2% compared with the yearearlier period. All business areas reported increased order bookings. The operations in the UK, Sweden and the US accounted for the largest increases. Net sales rose 2.5%, primarily due to Sectra's sales successes in the UK.

The Group's operating profit rose 239.0% to SEK 13.9 million, equal to an operating margin of 7.9%. The earnings improvement was mainly attributable to increased productivity in the Imaging IT Solutions business area. Sectra's Secure Communications operations continued to be held back by delays in procurements and planned projects.

Net financial items amounted to SEK 1.1 million (expense: 3.8). Exchange-rate changes had a negative impact of SEK 0.6 million (neg: 4.1) on consolidated financial items. Profit before tax was SEK 15.0 million (0.3), equal to a profit margin of 8.6% (0.2).

Seasonal variations

Sectra is affected by seasonal variations, whereby most invoicing and earnings are traditionally generated at the end of the fiscal year. The variations in order volumes in terms of individual quarters can be substantial since Sectra has many large customers that sign comprehensive, long-term agreements with the company, for example, for medical IT projects or the development of encryption systems.

Financial position

Sectra has a strong cash balance and balance sheet. The equity/assets ratio was 65.2% at the close of the period and liquidity amounted to a multiple of 3.0. After adjustment for exchange-rate differences, the Group's cash and cash equivalents amounted to SEK 513.0 million. At the close of the period, the Group's interest-bearing liabilities totaled SEK 26.5 million and pertained to convertible debentures issued to employees and the Board of Directors.

The Group's cash flow from operations after changes in working capital was a negative SEK 8.0 million (pos: 64.0) for the quarter. The time of the completion of customer projects has a major impact on cash flow and the variation between individual quarters is substantial.

Cash flow from investment operations was a negative SEK 14.7 million (neg: 48.8). In the comparatives figure, a negative SEK 46.8 million pertained to the acquisition of the Burnbank companies in the UK. Cash flow from financing operations amounted to a SEK 0.0 million (neg: 17.3) for the quarter. The comparative figure pertains to the repayment of convertible loans. The Group's total cash flow for the quarter was a negative SEK 22.7 million (neg: 2.1).

Investments and depreciation/amortization

Group investments during the quarter amounted to SEK 14.7 million (48.8). The investments pertained principally to customer projects in the Group's financing activities and capitalized development costs. The comparative quarter included the acquisition of the Burnbank companies. Depreciation/amortization during the quarter amounted to SEK 9.8 million (11.3), of which SEK 4.3 million (3.8) was attributable to amortization of capitalized development projects.

Due to new, extensive managed service agreements with customers in the healthcare sector, investments in Group-financed customer projects during the quarter increased to SEK 9.5 million (1.8). At the close of the period, the Group's carrying amount for Groupfinanced customer projects was SEK 42.3 million (40.9).

Capitalization of development costs during the quarter amounted to SEK 6.4 million (0.3). At the close of the period, capitalized development costs totaled SEK 54.6 million (52.5), which mainly pertained to development projects in Imaging IT Solutions.

Revision of Sectra's financial targets

Sectra's Group-wide targets and strategies are aimed at building financially sound operations that provide Sectra with the opportunity to create customer value and thereby contribute to long-term value growth for shareholders. In parallel with a review of the financial targets, the Board decided to change the growth target and to assign priority between the targets. The new targets are listed below in order of priority:

• 1. Stability: The equity/assets ratio must be a minimum of 30% (unchanged)
• 1. Profitability: The operating margin (EBIT) must be a minimum of 15% (unchanged)
• 1. Growth: Operating profit (EBIT) per share must increase by an annual average of 10% over a five-year period (changed growth target, the previous target was that Sectra's sales should increase by an annual average of at least 15% over a sevenyear period)

When calculating the growth target, adjustments are made for any changes in the number of shares outstanding due to the cancellation of treasury shares or for bonus issues.

Over the past five-year period, Sectra has posted a negative average annual growth in EBIT per share; however, this negative trend has been broken in the last two years. Over the past two years, EBIT per share has increased by more than 8%. This is a result

Investments in Groupfinanced customer projects increased as a result of new, extensive service agreements with customers in the healthcare sector.

Equity/assets ratio 65.2%

Operating margin rolling 12 months 11.6%

Average growth in EBIT per share over a five-year period -7.4%

At the end of the period including nonrecurring item

of Sectra's long-term efforts to enhance cost-efficiency in parallel with increasing the number of higher-margin products, such as software licenses.

For information about the background to the revision of Sectra's financial targets, see Sectra's 2012/2013 Annual Report.

IMAGING IT SOLUTIONS

	Q1	Q1	12	Full-year
	May -	May -	months	May - April
	June	June	rolling	2012/2013
	2013	2012
Net sales, SEK million	177.2	148.6	737.8	709.2
Operating profit, SEK million	25.9	4.6	124.5	103.2
Operating margin, %	14.6	3.1	16.9	14.6
Number of employees at	397	387	397	387
end of period

Sales and earnings

Sales for Sectra's Imaging IT Solutions business area rose 19.2% to SEK 177.2 million. The business area's operations in the UK accounted for the largest increase. Operating profit increased 463.0% to SEK 25.9 million, corresponding to an operating margin of 14.6%. Higher sales and increased organizational efficiency contributed to the earnings improvement.

Market

The market for medical IT systems and services continues to expand as a result of the considerable need for systems that enhance efficiency and the increased use of medical images by healthcare providers. Scandinavia, North America and the UK are Sectra's largest markets. In the domestic market in Scandinavia, Sectra is by far the largest provider of IT systems for efficient and secure communications and management of medical images (PACS) and patient information (RIS).

Focus 2013/2014

Grow in regions in which Sectra has an established customer base

Medical Systems increased its order bookings in the fourth quarter through long-term service agreements for IT systems that contribute to enhanced healthcare efficiency. The successes pertained principally to the UK, Sweden and the US, which are all countries where Sectra has an established market presence. For example, Barts Health NHS Trust in London, the UK's largest healthcare consortium, signed a ten-year managed service agreement for the use of Sectra's radiology IT system (PACS) and Vendor Neutral Archiving (VNA) solutions.

In many other countries, the uncertain economic trend and the need for government austerity measures had a dampening effect on growth, particularly in Europe. Sectra's long-term assessment is that demand will recover, since the need to streamline and reduce costs continues to increase in healthcare.

Retain existing customers and broaden the product portfolio with systems and services that contribute to further efficiency enhancements for customers

Several customers renewed their service agreements with Sectra during the quarter. One customer was Blekinge County Council, which signed a nine-year service agreement for the development, maintenance and support of region-wide IT solutions for the management of medical images and patient information.

Imaging IT Solutions has several new products in development that will start to be delivered to customers during the fiscal year. One of these products is the new service for dose monitoring, Sectra DoseTrack, which attracted widespread attention in the media and at various trade fairs during the summer.

Successful sales in the UK, Sweden and the US during the quarter.

The new product Sectra DoseTrack received widespread media attention.

Continue to grow in selected growth markets through partners

Continued establishment of partnerships in a group of selected countries. As part of its investments in visualization for medical education, Sectra signed a partnership agreement with distributors for the Sectra Visualization Table in several growth countries in Asia and South America. After the first quarter, Sectra entered into a partnership with Tellyes Scientific, which manufactures and sells medical simulation products, for sales of the Visualization Table in China.

SECURE COMMUNICATIONS

	Q1 May - June 2013	Q1 May - June 2012	12 months rolling	Full-year May - April 2012/2013
Net sales, SEK million	13.4	21.7	90.7	99.0
Operating profit, SEK
million	-2.5	0.9	-2.0	1.4
Operating margin, %	-18.7	4.1	-2.2	1.4
Number of employees at end of period	61	68	61	66

Sales and earnings

Sales for Secure Communications declined compared with the year-earlier period. This was primarily due to the Swedish market continuing to be affected by delays in procurements and in the implementation of planned projects in Sweden. Operating profit was also impacted by delays in major, ongoing product development projects due to changes in Swedish regulations governing handling of classified information.

Market

The market is driven by telecommunications eavesdropping becoming easier than ever, changes in regulations governing the handling of classified information and the fact that increasing numbers of authorities are choosing to protect their confidential, yet unclassified, information. As a consequence of greater collaboration between government agencies in European countries, customers are increasingly calling for products that support cross-border collaboration. Sectra offers products that are approved by the EU, NATO and by several national security agencies. Sweden and the Netherlands comprise Sectra's largest markets for secure communication systems. The widespread attention directed to eavesdropping in the past quarter could, in the future, boost demand for security products provided by non-US companies.

Focus 2013/2014

Restore profit levels

The business area's earnings capacity has been affected by slow procurement and decision-making processes among customers in the Swedish market and Sectra is reviewing the possibility of broadening the customer base and its offering in the field of security. The Secure Communications operations were restructured at the end of the preceding fiscal year. The changes that have been made are expected to successively contribute to an increase in the business area's earnings.

Develop the business area's operations in Sweden, the Netherlands and other countries in which Sectra has an established customer base

The business area increased its order bookings compared with the year-earlier period, primarily as a result of maintenance agreements with customers in Sweden. After the quarter, the Dutch state extended its framework agreement with Sectra, whereby it purchases secure communication as a subscription service provided under the name of VECOM. The service is used for both for national and international communication and means that Sectra supply a total solution of Tiger products for secure mobile and fixed voice communication, operations and secure administration, as well as support and

customized training for end users. Under the new agreement, users will also have the opportunity to switch to Sectra's new, secure Tiger 7401 mobile phone, which was approved by the Dutch security authority in April 2013. An evaluation is currently under way to secure EU approval for the Tiger 7401 product.

During the quarter, the security authority in the Netherlands approved Sectra's new solution for secure communication using smartphones. The solution, known as Panthon 3, has been approved for secure calls and secure text messaging at the Restricted classification level for smartphones using the Android operating system, which accounts for about 70% of the smartphone market. Sectra already has its first customers using the product, which is now under evaluation for approval by the EU and NATO Restricted.

BUSINESS INNOVATION

	Q1	Q1	12	Full-year
	May -	May –	months	May - April
	June	June	rolling	2012/2013
	2013	2012
Net sales, SEK million	6.6	3.5	20.8	17.7
Operating profit/loss, SEK
million	1.9	-2.1	-3.0	-7.0
Operating margin, %	28.8	-60.0	-14.4	-39.5
Number of employees at	19	18	19	19
end of period

Business Innovation comprises projects and smaller operations that have future potential. This segment includes services and products that contribute to more efficient and enhanced care of osteoporosis and IT systems for planning and following up orthopaedic operations.

Sales and earnings

Advances are continuously being made in Sectra's future projects and smaller business lines. Sales for Business Innovation increased 88.6% to SEK 6.6 million. Operating profit rose to SEK 1.9 million, corresponding to an operating margin of 28.8%.

OTHER OPERATIONS

	Q1 May - June 2013	Q1 May - June 2012	12 months rolling	Full-year May - April 2012/2013
Net sales, SEK million	22.9	14.7	76.2	68.0
Operating loss, SEK
million	-0.4	-2.1	-4.3	-6.0
Operating margin, %	-1.7	-14.3	-5.6	-8.8
Number of employees at end of period	48	53	48	53

Other operations pertain to Sectra's operations for the financing of customer projects, asset management, shared functions for administration, Group finances, market communication, IT, regulatory issues and investor relations activities.

Sales and earnings

Sales from Other operations increased 55.8% to SEK 22.9 million. The increase was attributable to Sectra's operations for the financing of customer projects. An operating loss of SEK 0.4 million (loss: 2.1) was reported.

THE PARENT COMPANY SECTRA AB

The Parent Company includes the head office's functions for Group finance, market communication, IT, regulatory issues and investor relations activities. The Parent Company's income statement and balance sheet are reported on page 16.

Due to the new organizational structure, the Parent Company's sales rose through the invoicing of internal services. Net sales in the Parent Company for the quarter amounted to SEK 20.1 million (5.2) and an operating loss of SEK 0.2 million (loss: 4.3) was reported. Profit after net financial items was SEK 5.8 million (loss: 2.8). Exchange-rate changes had a negative impact of SEK 0.5 million (neg: 1.9) on financial items.

THE SHARE

Sectra's share redemption program 2013

During July and August 2013, Sectra carried out a share redemption program whereby SEK 4.50 per share, a total of SEK 166.9 million, was distributed to shareholders through a 2:1 share split, combined with a mandatory redemption process and a stock dividend to restore the share capital. Payment was made on August 5, 2013.

The redemption of redemption shares is declared as sales of shares. Sectra has applied to the Swedish Tax Agency for general advice about how acquisition fees for shares are to be divided between original shares and redemption shares. Once such advice has been received later in the autumn, it will be made available on the Tax Agency's and Sectra's websites.

Incentive programs

The 2013 AGM resolved to issue new convertibles to the Group's employees and external Board members. The convertibles can be subscribed for during the September 23–October 4, 2013 period. The conversion price for employees is SEK 74.60 and the duration is November 1, 2013–November 30, 2016. Conversion is permitted from November, 7–10, 2016. The conversion price for external Board members is SEK 79.60 and the duration is November 1, 2013–November 30, 2017. Conversion is permitted from November, 6–9, 2017. At full exercise, the dilution effect of both convertible programs may not exceed 1% of the share capital.

The Meeting also resolved to issue not more than 100,000 call options to the Group's employees in North America and authorized the Board to make decisions regarding the issue of not more than 100,000 warrants carrying rights to subscription of not more than 100,000 Series B shares in the company in order to guarantee the performance of option commitments to employees. If these employee stock options are fully exercised, employees will acquire shares in the company corresponding to approximately 0.3% of the share capital and 0.2% of the voting rights.

Authorization

The 2013 AGM authorized the Board, for the period until the next AGM, to decide on the issue of not more than 3,700,000 Series B shares for consideration in the form of cash payment, offsetting of debt or contribution in kind whereby offsetting of debt and contribution in kind may deviate from shareholders' preferential rights. If the authorization is fully exercised, the dilution effect will be approximately 10% of the share capital and approximately 6% of the voting rights.

The AGM also resolved to authorize the Board, on one or more occasions, during the period until the next AGM, to make decisions on the acquisition and transfer of Series B treasury shares. A condition for the authorization is that the company's holding of treasury shares at no time exceeds 10% of all shares in the company.

At the time of the publication of this interim report, the Board had not utilized these possibilities.

Nomination Committee

The 2013 AGM resolved to appoint a Nomination Committee comprising four members, of whom the Chairman of the Board and three members are to represent the largest shareholders in the company. The composition of the Nomination Committee is based on known shareholdings in the company as of September 30, 2013. The Nomination Committee's proposal will be presented in the notice of the Annual General Meeting and be available on the company's website. The Nomination Committee will prepare and submit proposals regarding the:

• Election of and fees to be paid to the Chairman of the Board and other Board members
• Election of and fees to be paid to auditors and deputy auditors
• Resolution on principles governing the composition of the Nomination Committee
• Chairman of the General Meeting

FINANCIAL STATEMENTS

Accounting principles

This interim report has been prepared in accordance with IAS 34, Interim Financial Reporting, the Swedish 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) as approved by the EU Commission for application within the EU. The accounting policies and calculation methods are unchanged compared with those applied in the 2012/2013 Annual Report. New policies and amendments that have come into effect as of the 2013/2014 fiscal year have had no material impact on the financial statements.

Risks and uncertainties

Through its operations, Sectra is exposed to such business risks as dependence on major customers and partners, the effect of exchange rates on pricing in the markets in which the Group is active, and property and liability risks. Sectra is also exposed to various types of financial risks such as currency, interest-rate, credit 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 2012/2013 fiscal year, Note 31, page 48. No significant events have occurred that would alter the conditions reported therein.

EVENTS AFTER THE END OF THE REPORTING PERIOD

• Sectra signed an agreement with Spire Roding Hospital, which is part of a large, private healthcare group, Spire Healthcare, in the UK. Spire Roding will be the first hospital in the Spire group to use Sectra's online service for early stage identification of people at risk of sustaining osteoporotic fractures.
• Sectra entered into a partnership with the Chinese company, Tellyes Scientific, for the sale of the Visualization Table for medical education in China.
• The Dutch ministries extended their framework agreement with Sectra. The ministries purchase secure communication as a service provided under the name of VECOM and used for both national and international communication.

FOR FURTHER INFORMATION

Contact Sectra's CEO Torbjörn Kronander, tel: +46 (0)13 23 52 27

Presentation of the interim report

A teleconference with Torbjörn Kronander, CEO and President of Sectra AB, and Simo Pykälistö, CFO and Executive Vice President of Sectra AB, will be held on September 10, 2013 at 9:00 a.m. (CET). The presentation will be held in English. To participate, call one of the following numbers 5-10 minutes before the conference begins:

Sweden +46 8 50556477 UK: +44 203364 5372 US: +1 8557161589

A presentation will be given during the teleconference. The presentation can be followed online via:http://media.fronto.com/cloud/sectra/130910/

The presentation will also be available as a PDF about 15 minutes prior to the teleconference at the following link: http://www.sectra.com/corporate/investor/financial\_information/financial\_hearings.html

The recorded presentation will be made available at Sectra's website.

Financial calendar

Six-month report	December 10, 2013
Nine-month report	March 4, 2014
Year-end report	May 27, 2014

Assurance

The Board of Directors and the President of Sectra AB (publ) hereby provide their assurance that the interim report for the period May-July 2013 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 uncertainties facing the Parent Company and other companies in the Group.

Linköping, Sweden, September 10, 2013 President and the Board of Directors of Sectra AB

This interim report has not been reviewed by the company's auditor.

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 September 10, 2013, at 8:00 a.m. (CET).

Sectra AB (publ)

Teknikringen 20 SE 583 30 Linköping Tel: +46 (0)13 23 52 00 info@sectra.se www.sectra.se VAT Reg. No. SE556064830401

Consolidated income statements

	3 months	3 months	12 months	Full-year
SEK thousands	May - July	May - July	Aug 2012 -	May-Apr
	2013	2012	July 2013	2012/2013
Net sales	175,343	170,955	821,342	816,954
Capitalized work for own use	6,417	263	18,364	12,210
Goods for resale	-28,884	-17,534	-138,183	-126,833
Personnel,costs	-96,731	-98,985	-413,929	-416,183
Other,external,costs	-32,425	-39,260	-147,492	-154,327
Depreciation/amortization	-9,804	-11,299	-44,460	-45,955
Operating profit	13,916	4,140	95,642	85,866
Net financial items	1,124	-3,868	5,680	688
Profit after net financial items	15,040	272	101,322	86,554
Taxes	-3,226	-81	-27,453	-24,308
Earnings for the period	11,814	191	73,869	62,246
Earnings/loss for the period
attributable to:
Parent Company owners	11,814	191	73,869	62,246
Non-controlling interest	-0	0	0	0
Earnings per share
Before dilution, SEK	0.32	0.01	1.99	1.68
After dilution, SEK	0.31	0.01	1.95	1.64
No. of shares
Before dilution	37,094,978	37,094,978	37,094,978	37,094,978
After dilution 2)	37,951,746	37,665,795	37,951,746	37,951,746
Average, before dilution Average, after dilution 2)	37,094,978	36,926,385	37,094,978	37,052,830
	37,951,746	37,832,940	37,882,617	37,852,915

1) Dilution of the number of shares is based on the convertible debentures programs issued in 2010/2011 (162,437), 2011/2012 (250,731) and 2012/2013 (143,600) and on employee stock options issued in 2010/2011 (100,000), 2011/2012 (100,000) and 2012/2013 (100,000).

2) Pertains to the number of shares excluding redemption shares with mandatory redemption process. On the record date of July 31, 2013, the redemption shares were automatically revoked and the number of outstanding shares subsequently amounted to 37,094,978, of which 2,620,692 were Series A shares and 34,474,286 Series B shares.

Consolidated Statement of Comprehensive Income

SEK thousands	3 months May – July 2013	3 months May - July 2012	12 months Aug 2012 - July 2013	Full-year May-Apr 2012/2013
Earnings for the period	11,814	191	73,869	62,246
Items that will be reclassified to profit and loss
Change in translation differences from	-1,256	254	-12,701	-11,191
translating foreign subsidiaries
Total other comprehensive income	-1,256	254	-12,701	-11,191
for the period
Total comprehensive income for the	10,558	445	61,168	51,055
period

Consolidated Balance Sheets

SEK thousands	July 31, 2013	July 31, 2012	Apr 30, 2013
Assets
Intangible assets	123,303	145,382	123,157
Tangible assets	54,034	49,575	48,670
Financial assets	1,924	3,630	4,204
Deferred tax assets	13,137	7,878	5,593
Total fixed assets	192,398	206,465	181,624
Other current assets	331,443	314,381	365,642
Cash and cash equivalents	513,008	600,769	536,291
Total current assets	844,451	915,150	901,933
Total assets	1,036,849	1,121,615	1,083,557
Equity and liabilities
Equity (including total comprehensive income for the period)	676,379	799,056	665,300
Provisions	18,895	33,813	17,575
Deferred tax liabilities	31,767	27,872	27,067
Long-term liabilities	20,412	17,259	26,503
Current liabilities	289,396	243,615	347,112
Total equity and liabilities	1,036,849	1,121,615	1,083,557

No changes have occurred in pledged assets and contingent liabilities since the 2012/2013 Annual Report.

Consolidated Statement of Changes in Equity

	3 months	3 months	Full-year
SEK thousands	May - July	May - July	May - Apr
	2013	2012	2012/2013
Equity at start of period	665,300	787,392	787,392
Comprehensive income for the period	10,558	445	51,055
Share-related payments	521	370	1,479
Redemption of shares	0	0	-185,475
Conversion to shares	0	10,849	10,849
Equity at the end of the period	676,379	799,056	665,300

Consolidated Cash-flow Statements

	3 months	3 months	Full-year
SEK thousands	May - July	May - July	May - Apr
	2013	2012	2012/2013
Cash flow from operations before changes in working capital	17,660	19,233	133,634
Cash flow from operations after changes in working capital	-8,024	64,017	191,216
Investing activities	-14,678	-48,781	-76,206
Financing activities	0	-17,315	-182,697
Cash flow for the period	-22,702	-2,079	-67,687
Change in cash and cash equivalents
Cash and cash equivalents, opening balance	536,291	605,757	605,757
Exchange-rate difference in cash and cash equivalents	-581	-2,909	-1,779
Cash and cash equivalents, closing balance	513,008	600,769	536,291
Unutilized credit facilities	15,000	15,000	15,000

Key figures

	3 months	3 months	12 months	Full-year
	July 31,	July 31,	July 31,	Apr 30,
	2013	2012	2013	2013
Order bookings, SEK M	247.7	116.2	1 047.5	916.0
Operating margin, %	7.9	2,4	11.6	10.5
Profit margin, %	8.6	0.2	12.3	10.6
Average number of employees	520	510	529	527
Cash flow per share, SEK	0.48	0.52	3.56	3.60
Cash flow per share after full dilution, SEK	0.47	0.51	3.48	3.52
Value added, SEK M	110.6	103.1	509.6	502.1
P/E ratio, multiple	n/a	n/a	26.6	31.5
Share price at end of period, SEK	53.0	42.9	53.0	53.0
Return on equity, %	1.8	0.9	10.0	8.6
Return on capital employed, %	2.2	0.1	13.3	11.6
Return on total capital, %	1.4	0.0	9.5	7.9
Equity/assets ratio, %	65.2	71.2	65.2	61.4
Liquidity, multiple	3.0	3.8	3.0	2.6
Equity per share, SEK	18.23	21.54	18.23	17.94
Equity per share after full dilution, SEK	17.82	21.21	17.82	17.53

Quarterly consolidated income statement and key figures

	2013/2014				2012/2013				2011/2012
SEK Million	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2 1)	Q1
Net sales	175.3	248.1	205.2	192.7	171.0	238.5	196.1	219.2	169.3
Capitalized work for own use	6.4	4.1	3.5	4.4	0.3	1.6	2.6	5.7	0.7
Operating expenses	-158.0	-203.5	-175.0	-163.1	-155.9	-181.6	-182.4	-169.4	-153.4
Depreciation/amortization	-9.8	-11.1	-12.6	-11.0	-11.3	-11.7	-10.9	-10.6	-10.2
Operating profit	13.9	37.6	21.1	23.0	4.1	46.8	5.4	44.9	6.5
Net financial items	1.1	3.6	-0.8	1.8	-3.8	3.5	6.9	4.2	9.8
Earnings after net financial items	15.0	41.2	20.3	24.8	0.3	50.3	12.3	49.1	16.2
Tax on earnings for the period	-3.2	-13.8	-2.5	-7.9	-0.1	-13.4	-3.3	-14.0	-4.3
Earnings for the period from remaining
operations	11.8	27.4	17.8	16.9	0.2	36.8	9.0	35.1	11.9
Profit/loss from discontinued operations	0	0	0	0	0	0	0	310.0	-17.0
Earnings for the period	11.8	27.4	17.8	16.9	0.2	36.8	9.0	345.1	-5.1
Order bookings, SEK M	247.7	350.0	232.9	217.0	116.2	188.2	131.5	190.6	190.8
Operating margin, %	7.9	15.2	10.3	11.9	2.4	19.6	2.8	20.5	3.8
Cash flow per share, SEK	0.48	1.20	1.23	0.65	0.52	1.38	0.97	1.48	0.35
Cash flow per share after full dilution, SEK	0.47	1.18	1.19	0.64	0.51	1.34	0.94	1.44	0.34
Earnings per share, SEK	0.32	0.74	0.48	0.46	0.01	1.00	0.24	0.95	0.32
Return on equity, %	1.8	4.2	2.8	2.4	0.0	5.8	1.1	46.3	-0.9
Return on capital employed, %	2.2	6.1	3.2	3.4	0.1	6.3	1.5	47.8	-1.1
Equity/assets ratio, %	65.2	61.4	63.8	64.7	71.2	69.4	68.2	75.0	64.1
Cash flow per share, SEK	0.48	1.20	1.23	0.65	0.52	1.25	0.97	1.25	-0.13
Equity per share, SEK	18.23	17.94	17.13	16.94	21.54	21.37	20.34	24.94	15.55

1) Including discontinued operations.

Five-year summary

	2012/2013	2011/2012	2010/2011	2009/2010	2008/2009
Order bookings. SEK M	916.0	701.1	631.0	766.7	1 080.6
Net sales. SEK M	817.0	823.1	783.7	753.9	777.0
Operating profit. SEK M	85.9	103.5	72.5	115.7	120.4
Earnings after net financial items. SEK M	86.6	127.9	70.2	113.0	200.0
Earnings after tax from remaining operations.	62.2	92.8	48.3	84.0	143.9
SEK M
Operating margin. %	10.5	12.6	9.3	15.3	15.5
Profit margin. %	10.6	15.5	9.0	15.0	25.7
Earnings per share before dilution. SEK	1.68	2.52	1.31	2.28	3.90
Earnings per share after dilution. SEK	1.64	2.46	1.29	2.24	3.84
Dividend per share. SEK	4.50	5.00	5.00	0.00	0.00
Share price at year end. SEK	53.0	43.0	34.0	37.3	38.8
P/E ratio. multiple	31.5	17.1	26.0	16.4	9.9
Including discontinued operations:
Earnings for the period. SEK M	62.2	385.8	-9.6	17.2	50.5
Return on equity. %	8.6	58.0	-1.6	2.9	8.7
Return on capital employed. %	11.6	59.7	-1.1	3.9	11.6
Return on total capital. %	7.9	40.8	-0.7	2.5	7.4
Equity per share before dilution. SEK	17.94	21.37	15.46	16.36	16.26
Equity per share after dilution. SEK	17.53	20.77	15.13	16.11	16.06
Equity/assets ratio. %	61.4	69.4	61.0	62.2	59.4

OPERATING SEGMENTS

Nets sales by segment

(MSEK)	3 months	3 months	12 months	Full-year
	May - July	May - July	Aug 2012	May - Apr
	2013	2012	- Jul 2013	2012/2013
Imaging IT Solutions	177.2	148.6	737.8	709.2
Secure Communications	13.4	21.7	90.7	99.0
Business Innovation	6.6	3.5	20.8	17.7
Other operations 1	22.9	14.7	76.3	68.1
Eliminations	-44.8	-17.5	-104.3	-77.0
Group total	175.3	171.0	821.3	817.0

Operating earnings by segment

(MSEK)	3 months	3 months	12 months	Full-year
	May - July	May - July	Aug 2012	May - Apr
	2013	2012	- Jul 2013	2012/2013
Imaging IT Solutions	25.9	4.6	124.5	103.2
Secure Communications	-2.5	0.9	-2.0	1.4
Business Innovation	1.9	-2.1	-3.0	-7.0
Other operations 1	-0.4	-2.1	-4.3	-6.0
Eliminations	-11.0	2.8	-19.6	-5.7
Group total	13.9	4.1	95.6	85.9

Net sales by geography

(MSEK)	3 months	3 months	12 months	Full-year
	May - July	May - July	Aug 2012	May - Apr
	2013	2012	- Jul 2013	2012/2013
Sweden	52.9	60.2	257.5	264.8
US	39.2	40.9	172.5	174.2
UK	28.9	22.2	111.7	105.0
Rest of Europe	45.8	37.4	220.1	211.7
Rest of world	8.5	10.3	59.5	61.3
Group total	175.3	171.0	821.3	817.0

¹Other operations pertain to Sectra's operations for the financing of customer projects, asset management, shared functions for administration, Group finances, market communication, IT, regulatory issues and investor relations activities.

PARENT COMPANY

Parent Company Income Statements

	3 months	3 months	12 months	Full-year
SEK thousands	May - July	May - July	Aug 2012 –	May - Apr
	2013	2012	July 2013	2012/2013
Net sales	20,114	5,191	35,129	20,206
Personnel costs	-11,567	-3,012	-19,375	-10,820
Operating expenses	-8,630	-6,460	-23,466	-21,296
Depreciation/amortization	-133	-52	-247	-166
Operating loss	-216	-4,333	-7,959	-12,076
Net financial items	6,011	1,580	78,598	74,167
Profit after net financial items	5,795	-2,753	70,639	62,091
Appropriations	0	0	-1,975	-1,975
Profit before tax	5,795	-2,753	68,664	60,116
Tax on earnings for the period Earnings for the period	-1,275 4,520	724 -2,029	-18,123 50,541	-16,124 43,992
Parent Company Statement of Comprehensive Income SEK thousands	3 months May - July	3 months May -	12 months Aug 2012	Full-year May - Apr
	2013	July2012	– July 2013	2012/2013
Earnings for the period	4,520	-2,029	50,541	43,992
Other comprehensive income
Fund for fair value Total other comprehensive income	-884 -884	1,224 1,224	-4,833 -4,833	-2,725 -2,725
for the period
Total comprehensive income for the	3,636	-805	45,708	41,267
period
Parent Company Balance Sheets
SEK thousands		July 31.	July 31.	Apr 30.
		2013	2012	2013
Assets
Tangible assets		635	324	238
Financial assets		80,825	133,661	106,492
Total fixed assets		81,460	133,985	106,730
Other current assets		167,581	185,994	168,667
Cash and cash equivalents		437,919	489,774	424,712
Total current assets		605,500	675,768	593,379
Total assets		686,960	809,753	700,109
Equity and liabilities
Equity (including earnings for the period)		523,461	663,229	519,825
Deferred tax liabilities		112,166	110,191	112,166
Long-term liabilities		20,412	18,629	26,503
Current liabilities		30,921	17,704	41,615
Total equity and liabilities		686,960	809,753	700,109
Pledged assets and contingent liabilities
SEK thousands		July 31.	July 31.	Apr 30.
Pledged. assets		2013 11,000	2012 11,000	2013 11,000
Total pledged assets			11,000	11,000

Total contingent liabilities 264,714 269,130 283,943

Definition of key figures

Adjusted equity	Reported shareholders' equity increased by 78% 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	Adjusted equity as a percentage of total assets.
Equity per share	Adjusted 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.