Sectra — Interim / Quarterly Report 2017

May 30, 2017

Year-end report 2016/2017:

High quality and customer satisfaction increase profitability

	The quarter				The period
SEK million	Q4	Q4	Change	Q1-4	Q1-4	Change
	2016/2017	2015/2016	%	2016/2017	2015/2016	%
Order bookings	349.6	447.8	-21.9	1,177.7	1,322.0	-10.9
Net sales	340.8	315.1	8.2	1,140.9	1,073.6	6.3
Operating profit (EBIT)	74.8	58.0	29.0	200.4	165.5	21.1
Operating margin, %	21.9	18.4	-	17.6	15.4	-
Profit before tax (EBT)	78.7	48.7	61.6	200.0	154.8	29.2
Profit margin, %	23.1	15.5	-	17.5	14.4	-
Profit after tax	58.8	43.3	35.8	152.8	125.7	21.6
Earnings per share, SEK 1	1.55	1.15	34.8	4.04	3.35	20.6
Cash flow 2	60.2	62.1	-3.1	235.2	185.9	26.5
Cash flow per share 2	1.59	1.65	-3.6	6.21	4.96	25.2
Number of employees 3	638	625	2.1	638	625	2.1

REPORT PRESENTATION

Time: May 30, 2017, at 12:00 noon (CET) Location: Operaterrassen in Stockholm, Sweden Register to participate here: financialhearings.com/event/6797 or follow online via: www.sectra.com/irwebcast

Sectra AB (publ)

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

¹ Prior to dilution. ² Ongoing operations after changes in working capital. ³ At the end of the period.

CEO'S COMMENTS

I am proud to announce that the past year was characterized by a continued high level of customer satisfaction, improved profitability, increased cash flow, strong market positions and innovative products in our niches of medical IT and cybersecurity. These areas represent changing, growing markets where agile, focused companies such as Sectra have the right conditions to succeed. Our results for the year show that we are on the right path.

As I look back on the 2016/2017 fiscal year, I am most pleased with the positive feedback we continue to receive from users around the world. After all, operating a business is all about keeping your customers and users happy – and being paid to do so. The market's view of Sectra reflects the high quality of our deliveries, regardless of where in the world our customers are located or the solutions they use. This high customer satisfaction is the result of our targeted efforts to understand our customers' environments and of our culture, with outstanding employyees who truly care about and assume responsibility for our customers.

Our profit increased, despite earnings being charged with several long-term investments in future growth. As the markets mature, our hope is that a number of these activities will contribute significantly to our growth. In the short term, however, Sectra's growth will mainly be dependent on our sales in our largest business area, Imaging IT Solutions, where our order bookings over the past year did not quite meet our expectations. This was partly due to the trend in the UK, where we faced a falling GBP rate and a shrinking market in local currency, as well as the fact that in certain countries we now have such a large market share in our main area of medical IT systems (PACS) for radiology that it is difficult to continue growing at the same rate as we have in the past. However, in the US, for example, where Sectra so far has a relatively small market share and thus significant potential, order bookings are growing sharply. To create the scope for further growth in Imaging IT Solutions, we are also focusing on establishing a presence in two new countries: France and Canada. However, we do not expect to see the results of this work until a few years from now, since we operate in a slowly evolving industry.

Strategic and business choices

For a medium-sized company such as Sectra, which competes with some of the largest companies in the world, it is important to have a clear profile and focus. In global terms, Sectra is still a relatively small player compared with its largest competitors. Since these large players

have much more extensive resources, it would be difficult and costly for Sectra to attempt to grow through conventional marketing activities. However, many of the largest companies find it difficult to maintain a high level of customer satisfaction, which is something we excel at. Sectra has therefore decided to focus on customer satisfaction—the best marketing a company can have. Our success is a testament to the fact that our PACS for radiology has received a top ranking for customer satisfaction for several years, both in the US and globally. This has enabled us to continue expanding our customer base in countries such as the Netherlands, Germany and, not least, the US.

Recurring revenue currently accounts for more than 50% of our sales. With every new customer, our recurring revenue increases since our contracts normally comprise either multiyear managed-services agreements or multiyear service and upgrade agreements. The proportion of managed-services agreements is also growing as customers are increasingly purchasing IT solutions as a service. In the global market for medical imaging management, which is currently our predominant product area, the proportion of revenue derived from services is currently estimated at only 10%, but this figure is growing.

Outlook

Sectra's customers operate in some of society's most critical functions. Our job is to help our customers become more efficient and give them the tools to in turn make people's lives healthier, safer and more secure. By following our vision, this is how we create value for our customers, our society and our shareholders.

In light of recent global cyberattacks, our corporate culture, where the needs of the customer are always our top priority, and our combination of niche areas are clear strengths. Healthcare and cybersecurity are growing and rapidly changing markets, where numerous opportunities are being created for companies such as Sectra. We are well positioned in these markets and we operate in segments where a strong brand, such as the Sectra brand, is an important and decisive factor. I therefore have high hopes when it comes to our ability to continue this positive trend over the years ahead.

Torbjörn Kronander, President and CEO

THE PERIOD IN BRIEF

Fiscal year

• Order bookings amounted to SEK 1,177.7 million (1,322.0). Order bookings for the fiscal year were 3.2% higher than net sales for the same period.
• Net sales totaled SEK 1,140.9 million (1,073.6), up 6.3%. Adjusted for currency fluctuations, growth was unchanged at 6.3%.
• Operating profit rose 21.1% to SEK 200.4 million (165.5), corresponding to an operating margin of 17.6% (15.4). Adjusted for currency fluctuations, operating profit increased 19.2%.
• Cash flow after changes in working capital increased to SEK 235.2 million (185.9).

Fourth quarter

• Order bookings amounted to SEK 349.6 million (447.8).
• Net sales totaled SEK 340.8 million (315.1), up 8.2%. Adjusted for currency fluctuations, sales increased 6.6%.
• Operating profit rose 29.0% to SEK 74.8 million (58.0), corresponding to an operating margin of 21.9% (18.4). Adjusted for currency fluctuations, operating profit increased 27.1%.
• Cash flow after changes in working capital amounted to SEK 60.2 million (62.1).

Events during the fourth quarter

• For the fourth consecutive year, Sectra was awarded a top ranking for its customer satisfaction among customers in the US and in the category of IT systems for managing and archiving of radiology images (PACS) at the global level. In addition to these prestigious awards, Sectra was also named "Category Leader" in the subcategories PACS in Europe and PACS Ambulatory in the US.
• Orders were received for medical IT systems from several new, prominent customers in the US, including the University of Pennsylvania, City of Hope and Cascade Medical Imaging, LLC.
• Danderyd Hospital in Sweden ordered Sectra's IT solutions for managing medical images and patient information. The solutions will be delivered as cloud services.
• Isala Hospital in the Netherlands signed a ten-year agreement with Sectra. The order pertains to Sectra's IT solution for reviewing medical images.
• NATO approved the secure mobile phone Sectra Tiger/S for use at the NATO SECRET level and the smartphone solution Sectra Tiger/R for use at the RESTRICTED level. Sectra Tiger/S has already been approved by the EU for use at the EU SECRET level, thus increasing the potential for a secure pan-European dialog, for example, with respect to crisis preparedness.

EVENTS AFTER THE END OF THE REPORTING PERIOD

• The Board and the President propose that the 2017 AGM resolve to distribute SEK 4.50 per share to the shareholders through a 2:1 share split in combination with a mandatory redemption process (refer to page 12). No ordinary dividend is proposed.
• Sectra is opening an office in Canada for direct sales of medical systems.
• Belgian healthcare provider AZ Delta ordered Sectra's multimedia archive (VNA) and solution for managing medical images.
• In mid-May, several healthcare providers in the UK were impacted by a ransomware attack. Sectra is a relatively large medical IT company in the UK market, with more than 50 customers in the country, including some of the largest healthcare providers. Several of these healthcare providers were impacted by the attack, including five where parts of Sectra's system were affected. Sectra worked intensively and successfully with these customers to quickly restore the systems to normal operation. No customers outside the UK were affected by the cyberattack.

For more details on these events, visit: www.sectra.com/news

OUTLOOK

The world needs more efficient healthcare and increased security in society's communication and IT systems. Sectra plays a key role in meeting the needs in both of these areas, which also offer significant scope for expansion.

IT support for more efficient care

To maintain a high quality of care despite today's population development, the healthcare sector is being forced to accomplish more with the same or fewer resources. With IT solutions and services for medical diagnostic imaging and medical education, Sectra is helping the healthcare sector to increase its efficiency, consolidate patient information and facilitate cooperation between various healthcare providers.

Society also needs to improve how it takes care of age-related diseases. Sectra offers several products and services that enhance the efficiency of care for some of the most costly diseases primarily affecting older people. For example, the company's offering facilitates cancer diagnostics as well as planning and monitoring of orthopaedic surgeries. Sectra's work enables hospitals across the world to become more efficient, and thus take care of more patients and save more lives.

IT solutions for a more stable and safer society

The secure transfer of information plays a key role in maintaining the stability of many of society's functions. Sectra develops products and services that protect some of society's most sensitive information and communications. The offering includes secure voice and data communications, with solutions certified at the national level and by the EU and NATO. For the past year, Sectra has also offered cybersecurity for critical IT systems used in the production and supply of energy and water. By helping customers to provide increased security for society's most critical communication and control systems, Sectra contributes to a more stable and safer society.

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GROUP

Order bookings, sales and earnings

Sweden

Netherlands

Fiscal year

The Group's order bookings for the fiscal year totaled SEK 1,177.7 million, down 10.9% from the comparative period. The Secure Communications and Business Innovation segments reported increased order bookings. Within Imaging IT Solutions, order bookings in Norway, the UK and Sweden were lower than in the comparative year. The decline in the UK is attributable to exchange-rate movements for the British pound (GBP) as well as a shrinking market in local currency after most healthcare providers procured new systems in 2014-2016, when their previous agreements expired. In Sweden and Norway, Sectra holds such a large market share in its main area of medical IT systems for radiology that it will be difficult for the company to grow at the same rate as it has in the past in these countries. On the other hand, Sectra's order bookings in the Netherlands and the US increased more than 10%.

Net sales rose 6.3% to SEK 1,140.9 million. Adjusted for currency fluctuations, growth was unchanged at 6.3%. Imaging IT Solutions, Secure Communications and Business Innovation contributed to this increase. The outcome in the UK was adversely impacted by major currency fluctuations in the GBP. The positive trend in the Rest of Europe segment was mainly attributable to continued growth in Norway and Germany.

Sales-related Group eliminations amounted to negative SEK 166.5 million (neg: 187.1). This change was due to a lower percentage of completed managed-services agreements than in the comparative period. The eliminations mainly pertained to Group-financed managed-services agreements with customers in the Imaging IT Solutions business area. Within this business area, most of the revenue and earnings from managed-services agreements are recognized in conjunction with installation and deployment at the customer's site. At the same time, these agreements are eliminated at the Group level, with external revenue and earnings instead recognized over the duration of the managed-services agreements, which is normally five to ten years. As projects move to the operational phase, they are taken over by Sectra Customer Financing and contribute to a stable long-term trend.

The Group's operating profit rose 21.1% to SEK 200.4 million. While this increase primarily pertains to Imaging IT Solutions, Business Innovation also reported higher operating profit. Within Secure Communications, the loss from the preceding year was turned into a profit this year. Adjusted for currency fluctuations, operating profit increased 19.2%. The operating margin rose 2.2 percentage points to 17.6%, which exceeded Sectra's financial goal. This improved margin was mainly attributable to a higher sales volume. Operating profit includes the reversal of a contingent consideration amounting to SEK 12.4 million and impairment of goodwill and other intangible assets totaling

Operating profit trend per operating area, SEK million

a negative SEK 12.3 million. These items had a net effect of SEK 0.04 million on operating profit. The items pertain to the third quarter and are attributable to Sectra's acquisition of RxEye in 2015. Due to changes in the local strategy within the product segment where Sectra offers services for cooperation and information sharing within the healthcare sector, the forecast synergy effects from the acquisitions have been reduced and the assumptions regarding the growth rate have been revised.

The Group's net financial items increased SEK 10.3 million to an expense of SEK 0.4 million. Currency fluctuations had a negative impact of SEK 0.4 million (neg: 10.5) on the Group's financial items. Changes in the GBP accounted for the largest currency effects. Profit after net financial items increased SEK 45.2 million to SEK 200.0 million, corresponding to a profit margin of 17.5%. Earnings per share totaled SEK 4.04.

Fourth quarter

The Group's order bookings for the quarter totaled SEK 349.6 million, down 21.9% from the comparative period. There was a significant variation in order bookings between the quarters. Although order bookings in the UK market were lower than in the corresponding quarter in the preceding year, Sectra's operations in the UK, along with the operations in the US, posted the highest order bookings during the fourth quarter.

Net sales rose 8.2% to SEK 340.8 million. Adjusted for currency fluctuations, sales increased 6.6%. Imaging IT Solutions and Secure Communications made the largest contribution to this increase. Sectra Customer Financing reported a weaker result than in the comparative quarter due to negative currency effects in the GBP. Sales-related Group eliminations amounted to negative SEK 37.1 million (neg: 38.7).

The earnings trend was in line with Sectra's traditional seasonal pattern, with the majority of earnings generated in the latter part of the fiscal year. The Group's operating profit rose 29.0% to SEK 74.8 million. Imaging IT Solutions contributed to this positive earnings trend through an increased proportion of service and license sales. The operating margin increased 3.5 percentage points to 21.9%. Adjusted for currency fluctuations, operating profit increased 27.1%.

The Group's net financial items increased SEK 13.1 million to SEK 3.9 million. Currency fluctuations had an impact of SEK 3.4 million (neg: 9.1) on the Group's financial items. Profit before tax increased SEK 30.0 million to SEK 78.7 million, corresponding to a profit margin of 23.1% and earnings per share of SEK 1.55.

Equity/assets ratio

Operating margin (EBIT), rolling 12 month basis

Growth in operating profit per share over a five-year period

Sectra's financial goals All of the financial goals had been achieved as of the balance-sheet date. The financial goals are (in order of priority):

New offices and subsidiaries

During the fourth quarter, Sectra registered a new subsidiary in Canada. After the balance-sheet date, Sectra announced its plans to increase its focus on growth in the Canadian market by opening an office for direct sales of medical systems. The office will be located in Toronto and is expected to be operational by September 2017. Sectra is already active in the country through its office in the US. The company has highly satisfied Canadian customers, but so far a relatively small market share in the country.

Sectra also opened an office for direct sales in France in the first quarter of 2016/2017. Sectra has been active in the French market via partners since 2006 and already has a number of minor installations of IT systems for mammography throughout the country. The establishment of the office has allowed Sectra to extend its sales of medical IT solutions in the French market to include most of the company's portfolio of medical products and services.

Financial position

Sectra has a strong cash balance and balance sheet. After adjustment for exchange-rate differences, the Group's cash and cash equivalents at the end of the reporting period amounted to SEK 273.2 million (239.8). The equity/assets ratio was 47.7% (49.5). During the second quarter, Sectra distributed SEK 169.6 million (168.8) to shareholders through a redemption program.

The Group's debt/equity ratio was 0.14 (0.14). Interest-bearing liabilities amounted to SEK 77.6 million (75.0) and pertained to convertible loans held by employees and Board members. During the period, convertible loans totaling SEK 22.5 million were converted to shares and new convertible loans amounting to SEK 25.0 million were raised (refer to page 12).

The Group's cash flow from operations after changes in working capital amounted to SEK 235.2 million (185.9). This change was primarily the result of improved cash flow from accounts receivable. Cash flow per share increased to SEK 6.21 (4.96) for the period.

Cash flow from investing activities was a negative SEK 59.6 million (neg: 108.7) for the period. These investments mainly pertained to assets in long-term Group-financed customer projects and development projects. The change was primarily attributable to lower investments in Groupfinanced customer projects compared with the preceding year, when Sectra deployed a larger number of customer projects.

The Group's total cash flow amounted to SEK 29.5 million (neg: 69.4), of which SEK 47.8 million (33.3) pertained to the fourth quarter. The trend in working capital and lower investments in customer-financed projects contributed to this improvement.

Investments, depreciation and amortization

Group investments during the period amounted to SEK 59.6 million (108.7), of which SEK 12.5 million (28.2) was attributable to the fourth quarter. Investments primarily pertained to customer projects in the Group's financing activities and capitalized development costs. Depreciation/ amortization for the period amounted to SEK 58.3 million (51.5), of which SEK 14.6 million (14.7) pertained to the fourth quarter. In addition, impairment losses attributable to Sectra's acquisition of RxEye in 2015 were recognized in an amount of SEK 12.3 million during the fiscal year.

Hardware-related investments in Group-financed customer projects during the period totaled SEK 18.9 million (43.0), of which a negative SEK 1.3 million (neg: 13.6) was attributable to the impact of currency fluctuations on the size of the investment amounts. At the end of the period, the net carrying amount for Group-financed customer projects totaled SEK 120.1 million (145.5).

Capitalization of development costs during the period amounted to SEK 29.4 million (33.8), of which SEK 6.2 million (10.8) pertained to the fourth quarter. Amortization of capitalized development projects during the period amounted to SEK 16.8 million (13.6), of which SEK 4.1 million (3.1) pertained to the fourth quarter. At the end of the period, capitalized development costs totaled SEK 98.1 million (85.5).

Seasonal variations

Sectra's seasonal variations entail that most of the company's invoicing and earnings are traditionally generated at the end of the fiscal year. However, these seasonal variations have diminished somewhat in recent years since a major portion of sales is derived from pay-per-use or pay-by-month agreements with long durations. In many cases, the equalization effect resulting from long-term managed-services agreements that are financed internally within the Group does not impact the business areas; instead it is essentially managed through the Parent Company's financing activities. The variations in order volumes in individual quarters can be substantial when customers sign extensive, multiyear agreements with the company, for example, for medical IT projects or for the development of encryption systems.

	Q4 Feb-Apr 2017	Q4 Feb-Apr 2016	Full-year May-Apr 2016/2017	Full-year May-Apr 2015/2016
Sales, SEK million	285.8	270.1	970.5	957.8
Operating profit, SEK
million	92.7	61.4	210.6	185.4
Operating margin, %	32.4	22.7	21.7	19.4
Number of employees at end of period	471	470	471	470

Sales and earnings

Imaging IT Solutions reported a strong end to the fiscal year following the deployment of IT systems and services at several major customer sites and progress in ongoing installation projects. Sales for the fiscal year increased 1.3%. In accordance with Sectra's expectations, the outcome in the UK was lower than in the comparative year. During the early quarters of 2015/2016 and the preceding year, the business area reported strong growth in the UK market. However, this effect was nonrecurring in nature since many healthcare providers' previous agreements expired during this period.

Operating profit rose 13.6% to SEK 210.6 million for the fiscal year, corresponding to an operating margin of 21.7% (19.4). In accordance with Sectra's aim, sales of goods for resale (licenses and hardware from sub-suppliers) are decreasing and being replaced by service and license sales. This has had a positive impact on the earnings trend of the business area. The business area is also implementing long-term growth initiatives in new product areas, such as digital pathology, and an expansion into additional geographic markets through the establishment of its own operations and through new distributors. These activities were charged to operating profit for the year, but have the potential to contribute to an ongoing positive performance going forward.

Operating profit Results in SEK million Rolling 12 months

Market

Sectra's market segment in the area of medical IT systems and services is continuing to grow as a result of the population trend, the consolidation of healthcare resources and the increased use of medical diagnostic imaging. To enable healthcare providers to provide better, faster and more patient-centered care, Sectra offers systems and services for the management and archiving of both radiology and non-radiology medical images, particularly in the new field of digital pathology. A key component of the business area's strategy for the future is medical imaging management in cancer diagnosis, a field of diagnostics expected to grow rapidly in the future. While most users in this area are currently active in the fields of radiology and mammography, the number of customers in the field of histopathology is increasing at a rapid rate.

More than 1,700 healthcare providers worldwide use Sectra's medical systems and services, with customers including some of the largest healthcare providers in the world. The business area holds a strong position in IT systems for managing radiology images. Sectra has won the industry's most prestigious award for customer satisfaction for four consecutive years in this product segment, where the business area currently holds a market-leading position in the Netherlands, Norway, Portugal and Sweden. Sectra is also the market leader in other countries in the niche of breast imaging management. In the UK, where the business area is now the secondlargest player after securing a number of major long-term customer contracts in recent years, the market is now relatively stagnant. This is because most healthcare providers procured new systems in 2014-2016 when their previous agreements expired. While Sectra's market share in the US is still relatively small, its order bookings are favorable and its growth in the past three years exceeded the market growth rate by a broad margin.

The way forward

Offering customers stable, efficient and future-proof solutions for managing and communicating all types of medical images. Examples of the business area's focus activities:

• Maintain high customer satisfaction by continuously measuring and monitoring customer opinions about Sectra's support and products.
• Grow within radiology and other areas of medical imaging management by adding new customers in regions where Sectra already has an established customer base. This includes an increased focus on the US.
• Develop partnerships with existing customers through which Sectra's existing products and services can contribute to further efficiency enhancements. For example, sales of solutions for digital pathology and multimedia archives (VNA).
• Contribute to greater efficiency for customers by responding to demand for deliveries of cloud-based IT solutions, primarily in the form of software as a service (SaaS).
• Continued product development and broadening of the product portfolio. Special focus on medical imaging management in cancer diagnostics, not least in the field of digital histopathology.
• Greater internal efficiency. Partly by establishing a service-oriented organization that can support the sale of cloud solutions and partly through increased centralization and globalization to ensure optimal utilization of Sectra's specialist expertise.
• Continued geographic growth. During 2016/2017, the business area started its own organizations in France and Canada, and initiated new partnerships in South Africa, Poland and Russia.

Sales Operating profit Results in SEK million Rolling 12 months

SECURE COMMUNICATIONS

	Q4 Feb-Apr 2017	Q4 Feb-Apr 2016	Full-year May-Apr 2016/2017	Full-year May-Apr 2015/2016
Sales, SEK million	33.7	23.2	105.7	87.2
Operating profit/loss,
SEK million	-1.6	-2.8	1.7	-3.7
Operating margin, %	-4.8	-12.1	1.6	-4.2
Number of employees at	70	64	70	64
end of period

Sales and earnings

The trend for Secure Communications is cautiously positive. Sales increased 21.2% and the business area turned its loss from the preceding year into a profit. This sales increase was largely linked to deliveries of Tiger products for secure mobile communications after the business area obtained security approvals in the EU and the Netherlands earlier in the fiscal year. The results were charged with ongoing growth initiatives to broaden the business area's offering to include new customer segments and expand into additional geographic markets.

Market

IT developments in society, political instability in the world and the growth of cybercrime are creating a greater need for Sectra's expertise and product offerings in cybersecurity. The ability to safely and efficiently transmit sensitive information is central to the stability and security of society, particularly when it comes to critical social functions and infrastructure. Sectra has extensive experience of protecting society's most critical communication and is a strong brand in the area of encryption and secure mobile communications. During the 2015/2016 fiscal year, the business area entered the fast-growing market for IT security for customers in the area of critical infrastructure. During the most recent fiscal year, several new agreements were signed with energy companies in the Nordic region. However, the critical infrastructure operations are still in the establishment phase but show considerable long-term potential.

Sweden and the Netherlands comprise the business area's largest markets. The business area's products for secure mobile communications are used in most European countries, and by the EU and NATO. This is the result of close and long-lasting partnerships with customers as well as national security authorities in many countries. Being trusted to protect a nation's most sensitive information requires that the customer have a high degree of confidence in Sectra as a provider.

The business area's growth strategy includes activities to broaden its offering to a new customer segment—cybersecurity for critical infrastructure—and expand into new geographic markets. One such market is Finland, where Sectra opened subsidiaries and acquired the security consulting company EXP Analytics Oy in 2015/2016.

The way forward

Offering customers stable, accessible and easy-to-use solutions for critical IT security. Examples of the business area's focus activities:

• Increased sales of security-approved communication solutions in Finland, the Netherlands and the rest of Europe. This is facilitated by the company's offering of a complete system concept with solutions for various security levels able to handle multiple security domains (groups of users with a regulatory right to access classified information) in a single unit, which simplifies user management.
• Partnership with Samsung to further develop the Sectra Tiger/R secure mobile telephony solution and enable the company's operations to be expanded into new customer segments for government authorities, critical infrastructure and private businesses.
• Growth in the area of critical infrastructure by offering security and threat analyses and system monitoring services for critical operating and control systems. Primarily focusing on the energy sector in the Nordic region and other areas of Northern Europe.

Rolling 12 months

BUSINESS INNOVATION

	Q4 Feb-Apr 2017	Q4 Feb-Apr 2016	Full-year May-Apr 2016/2017	Full-year May-Apr 2015/2016
Sales, SEK million	15.2	14.5	65.4	51.3
Operating profit/loss,
SEK million	-2.7	-2.7	5.0	-0.3
Operating margin, %	-17.8	-18.6	7.7	-0.6
Number of employees at	37	29	37	29
end of period

The Business Innovation segment comprises the Medical Education and Orthopaedics business units as well as Sectra's research department. Sectra's patent portfolio is managed and developed within Business Innovation.

Sales and earnings

Business Innovation's sales rose 27.5% to SEK 65.4 million, which contributed to a positive earnings trend.

Reorganization

On May 1, 2016, a reorganization was carried out within Business Innovation, incorporating the Osteoporosis business unit into the Orthopaedics business unit.

Market

Business Innovation is Sectra's incubator for early-stage business units, projects and ideas that are not yet large enough to become independent business areas and are not a natural match with the existing business areas. This is where Sectra evaluates and utilizes opportunities to commercialize new technologies and new segments in the Group's core and related areas. Through Business Innovation, Sectra participates in research that can lead to a better quality of life for the individual, increased customer value and cost savings for healthcare and society.

Within the Medical Education business unit, sales of Sectra's visualization table and accompanying cloud-based education portal increased in several markets. Sectra initiated cooperation with distribution partners in Argentina, the Philippines and Taiwan, and continued expanding its distribution network in the Middle East and South-East Asia. This means that Sectra now has sales channels in more than 40 countries within this product segment. During 2016/2017, a new hardware model was introduced for use in large lecture halls, comprising an 84-inch interactive whiteboard with the latest touch technology. This solution is a good complement to the visualization table and provides an even better base for interactive medical education and training.

Within the Orthopaedics business unit, customers in Sweden and the US chose to order Sectra's unique planning tool that allows orthopaedists to use 3D images to quickly diagnose and plan treatment for patients with serious physical injuries. The solution is already used by customers in the UK and Germany. New functionality was launched in 2016/2017 which facilitates planning and monitoring of pelvic fracture surgeries.

The way forward

Examples of focus activities in Business Innovation:

• Medical education grow in key markets, such as China and the US, and expand into new markets. Essentially all sales outside Sweden are conducted through distributors.
• Orthopaedics grow in the countries where the business unit has its own sales organization, increase sales of cloud-based services for planning joint replacement surgeries through collaboration with implant suppliers, and grow in the trauma segment through sales of new solutions for 3D image planning of acute surgical procedures.
• Research research projects in product areas and technologies with the potential to generate business within three to five years. The team is also responsible for key research partnerships with universities and colleges.

11 (23)

Operating profit Results in SEK million Rolling 12 months

Sales Operating profit Results in SEK million Rolling 12 months

SECTRA CUSTOMER FINANCING

	Q4	Q4	Full-year	Full-year
	Feb-Apr	Feb-Apr	May-Apr	May-Apr
	2017	2016	2016/2017	2015/2016
Sales, SEK million	30.9	35.2	120.3	119.2
Operating profit, SEK
million	1.3	0.7	4.7	4.3
Operating margin, %	4.2	0.2	3.9	3.6
Number of employees at	0	0	0	0
end of period

Sectra Customer Financing is Sectra's unit for the financing of major managed-services agreements with healthcare customers and asset management.

Sales and earnings

This segment has a significant exposure to the GBP, which had a negative impact on its performance during the fiscal year. Adjusted for currency fluctuations, sales increased 11.2% during the fiscal year. Since most of the financing activities pertain to multiyear customer contracts in the UK, the movement of the GBP in relation to the SEK also had a major impact on the operating area's forecast revenue.

The rapid growth in the area of the past three years is linked to Imaging IT Solutions' successful sales of multiyear managed-services agreements for medical IT systems, particularly in the UK. Financing of major managed-services agreements is usually handled by Sectra Customer Financing, which takes over projects after deployment and thereafter recognizes revenue and earnings over the duration of the managed-services agreement. Within Imaging IT Solutions, most of the revenue and expenses for managed-services agreements are recognized in conjunction with installation and deployment at the customer's site, which are then eliminated at the Group level.

OTHER OPERATIONS

	Q4 Feb-Apr 2017	Q4 Feb-Apr 2016	Full-year May-Apr 2016/2017	Full-year May-Apr 2015/2016
Sales, SEK million	12.3	10.8	45.5	45.2
Operating loss, SEK
million	-5.6	-4.3	-16.1	-9.0
Operating margin, %	-45.5	-39.8	-35.4	-20.0
Number of employees at end of period	60	62	60	62

Other Operations pertain to Sectra's joint functions for administration, Group finances, IT, regulatory affairs, marketing communication and investor relations activities.

Sales and earnings

Sales from Other Operations were on par with the comparative period. The earnings trend was impacted by an increase in international Group-wide initiatives and investments in IT security.

PARENT COMPANY

The Parent Company, Sectra AB, includes the operating segments Business Innovation and Sectra Customer Financing as well as the head office's functions for Group finances, IT, regulatory affairs, marketing communication and investor relations activities. The Parent Company's income statement and balance sheet are reported on page 20.

THE SHARE

Sectra's share redemption program 2016

During October 2016, Sectra carried out a share redemption program, whereby SEK 4.50 per share, a total of SEK 169.6 million, was distributed to shareholders through a 2:1 share split, combined with a mandatory redemption process and a bonus issue to restore the share capital. Payment was made on October 24, 2016.

In the 2017 Swedish tax assessment, the redemption of Sectra's redemption shares (designated SECT IL A and SECT IL B) is to be declared as a sale of shares on Form K4. According to the

Swedish Tax Agency's general recommendations, 96.9% of the acquisition cost of an original Class A or B share in Sectra AB should be assigned to a remaining share and 3.1% to the redemption share. Get help with your Swedish tax return: http://www.sectra.com/redemption2016.

Due to Sectra's share redemption program for 2016, the Board decided to recalculate conversion prices for outstanding convertibles and employee stock option programs. The recalculation means that the financial compensation to the holders of convertibles in relation to the shareholders is reasonable. For dilution effects and current conversion prices after the recalculation, refer to the information on Sectra's website: www.sectra.com/shareprograms.

Share-related incentive programs

On the balance-sheet date, Sectra's share capital totaled SEK 37,890,085, distributed between 37,890,085 shares. Of these shares, 2,620,692 were Class A shares and 35,269,393 were Class B shares. These figures include the redemption of convertibles (2011/2016, 2012/2016 and 2013/2016 programs) during the first and third quarters totaling SEK 22.5 million, corresponding to 386,750 Class B shares.

After the balance-sheet date, holders of convertibles redeemed convertibles (2012/2017 program) totaling SEK 2.5 million, corresponding to 44,916 Class B shares. After the conversion is registered, Sectra's share capital will amount to SEK 37,935,001, distributed between 37,935,001 shares. Of these shares, 2,620,692 are Class A shares and 35,314,309 are Class B shares.

The 2016 AGM resolved to issue additional convertibles to the Group's employees and external Board members. The convertibles could be subscribed during the period November 7-11, 2016. Employees were subsequently allocated 118,419 convertibles and external Board members were allocated 18,181 convertibles, corresponding to a total of 136,600 Class B shares at a combined nominal amount of SEK 25.0 million. The dilution effect of the two convertible programs is 0.4% of the share capital and 0.2% of the voting rights. The conversion price for convertibles to employees is SEK 181.80, and the duration is December 1, 2016-December 31, 2019. Conversion is possible December 9-13, 2019. The conversion price for convertibles to external Board members is SEK 192.50, and the duration is December 1, 2016-December 31, 2020. Conversion is possible December 10-16, 2020.

Authorization

The 2016 AGM authorized the Board, for the period until the next AGM, to decide on the new issue of not more than 3,700,000 Class 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 Class 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 publication of this interim report, the Board had not utilized this authorization.

2017 AGM, NOMINATION COMMITTEE AND PROPOSED REDEMPTION/DIVIDEND

Proposed share redemption program/dividend for 2017

For the 2016/2017 fiscal year, the Board and the President propose that the AGM resolve to distribute SEK 4.50 per share to the shareholders through a 2:1 share split in combination with a mandatory redemption process. The corresponding distribution to the shareholders in the preceding year was SEK 4.50 per share. No ordinary dividend is proposed.

The proposal is in line with Sectra's dividend policy. At the end of the fiscal year, the Group's equity/assets ratio was 47.7%. The dividend policy and Sectra's financial goals state that the equity/assets ratio is to exceed 30%, and it will continue to do so, by a healthy margin, following a resolution in favor of the Board's proposed redemption process. The Board deems that the company's current balance sheet and cash flow are of adequate strength to secure the development of the business, while providing the shareholders with a high return. Additional information regarding the proposed share split and mandatory redemption process will be published in the notice of the AGM and the full proposal to the AGM.

2017 Annual General Meeting

The 2016 AGM resolved to appoint a Nomination Committee comprising four members, one of whom is the Chairman of the Board and three of whom represent the largest shareholders in the company based on the number of votes. The Nomination Committee was formed based on known shareholdings in the company on October 31, 2016. In accordance with the resolution of the AGM, the following Nomination Committee was appointed:

• Carl-Erik Ridderstråle (Chairman of the Board)
• Torbjörn Kronander (largest shareholder and CEO)
• Jan-Olof Brüer (second-largest shareholder and Board member)
• Jan Särlvik (representing Nordea, the fourth-largest shareholder)

Jan-Olof Brüer, who is the company's second-largest shareholder in terms of votes, has been appointed Chairman of the Nomination Committee. Torbjörn Kronander, the company's largest shareholder in terms of votes, decided to abstain from the chairmanship due to his role as CEO of Sectra AB.

The AGM is scheduled for 3:30 p.m. on September 13, 2017 in Linköping. The Nomination Committee's proposals will be presented in the notice of the AGM. The Nomination Committee will prepare and submit proposals regarding:

• election of and fees to the Chairman of the Board and other Board members
• election of and fees to the auditors and deputy auditors
• resolution on principles governing the composition of the Nomination Committee
• Chairman of the AGM

Shareholders who wish to submit proposals to the Nomination Committee may do so in writing by e-mail: info.investor@sectra.com, or by mail: Sectra AB, Attn. Nomination Committee, Teknikringen 20, SE-583 30 Linköping, Sweden.

Shareholders are entitled to have a matter addressed by the AGM. Notice of the AGM is to be issued not earlier than six weeks and not later than four weeks prior to the AGM. To ensure that the company has time to include matters in the notice, requests for matters to be addressed by the AGM must be received by the company not later than seven weeks before the AGM. Requests to have matters addressed by the AGM are to be submitted to the Board in writing via e-mail: info.investor@sectra.com, or by mail: Sectra AB, Attn. Board of Directors, Teknikringen 20, SE-583 30 Linköping, Sweden.

Annual Report and Corporate Governance Report for 2016/2017

Sectra's Annual Report and Corporate Governance Report will be announced through a press release in the week of June 26, 2017 and will be published on the company's website: www.sectra.com/investor/annual\_reports

The printed version can also be ordered via:

• Sectra's website: www.sectra.com/subscribe
• Telephone: +46 (0)13 23 52 00
• E-mail: info.investor@sectra.se

To reduce the company's environmental impact, mail distribution will be limited exclusively to Europe; other stakeholders should refer to the digital version.

FINANCIAL STATEMENTS

Accounting policies

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 have been 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 Parent Company applies the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities. The Swedish Financial Reporting Board has amended RFR 2 in respect of the application of IAS 21. This amendment entails that exchange-rate differences arising on monetary items comprising part of a net investment in a foreign operation are to be recognized in profit and loss and not in other comprehensive income as they were in the past. The amendment applies to fiscal years starting January 1, 2016 or later. The amendment impacts financial income and expenses in the Parent Company. The 2015/2016 comparative year has

been restated due to this amendment. As in the past, exchange-rate differences in the consolidated financial statements are recognized in the translation reserve under equity.

The new rule in the Swedish Annual Accounts Act concerning the capitalization of development costs will impact the Parent Company and other Swedish legal entities in the Group as of the fiscal year starting May 1, 2016. The rule entails that when development costs are capitalized, the corresponding amount must be transferred from unrestricted equity to restricted equity under the "Development expenses fund," and is to be recognized separately in the balance sheet. In all other respects, the accounting policies and calculation methods remain unchanged compared with those applied in the 2015/2016 Annual Report. Any other new policies and amendments that have come into effect as of the 2016/2017 fiscal year have not had any material impact on the financial statements.

As of July 3, 2016, the European Securities and Markets Authority (ESMA) Guidelines on Alternative Performance Measures are applied. An alternative performance measures is a financial measure that is not defined or stipulated in applicable rules for financial reporting (such as IFRS or the Swedish Annual Accounts Act). Accordingly, alternative performance measures are to be explained in the financial reports. In accordance with these guidelines, the Group's alternative performance measures are defined on page 21 of the interim report. The Group applies alternative performance measures since the company believes they provide valuable supplementary information for management and investors given that they play a central role when it comes to understanding and evaluating the Group's operations.

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 are provided in the Administration Report in the Group's Annual Report for the 2015/2016 fiscal year and in Note 30 on page 67. No significant events have occurred that would alter the conditions reported therein.

ASSURANCE

The Board of Directors and the President of Sectra AB (publ) hereby assure that the year-end report for the period May 2016-April 2017 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, May 30, 2017

Torbjörn Kronander President, CEO and Board member	Carl-Erik Ridderstråle Chairman	Erika Söderberg Johnson Board member
Anders Persson Board member	Christer Nilsson Board member	Jakob Svärdström Board member
Jan-Olof Brüer Board member	Deborah Capello Board member, employee representative	Fredrik Häll Board member, employee representative

This report was not reviewed by the company's auditor.

FOR FURTHER INFORMATION

Contact Sectra's CEO Torbjörn Kronander, telephone +46 (0)13 23 52 27 or e-mail info.investor@sectra.com.

Presentation of the year-end report

A presentation will be held by Torbjörn Kronander, President and CEO of Sectra AB, and Mats Franzén, CFO of Sectra AB. Marie Ekström Trägårdh, President of Imaging IT Solutions and Executive Vice President of Sectra AB, will participate and answer any questions. The presentation will be held in English.

Time: May 30, 2017, at 12:00 noon (CET).

Location: Operaterrassen in Stockholm, Sweden

Register to participate here: www.financialhearings.com/event/6797

The report presentation can also be followed live online: www.sectra.com/irwebcast. You can also click on this link to view a recorded version after the conference.

Financial calendar, IR events and AGM

Handelsebanken Mid/Small Cap seminar June 8, 2017 Annual Report 2016/2017 Publication scheduled for week of June 26, 2017 Three-month interim report September 12, 2017 at 8:00 a.m. (CET) 2017 AGM September 13, 2017 at 3:30 p.m. (CET) in Linköping Six-month interim report December 8, 2017 at 8:00 a.m. (CET) Nine-month interim report March 6, 2018 at 8:00 a.m. (CET) Year-end report 2017/2018 May 29, 2018 at 8:00 a.m. (CET)

For information on Sectra's financial reports and events, visit: http://www.sectra.com/investor/calendar/

This information constitutes information that Sectra AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and/or the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 8:00 a.m. (CET) on May 30, 2017.

GROUP FINANCIAL SUMMARY

Consolidated income statements

SEK thousand	3 months	3 months	Full-year	Full-year
	Feb-Apr	Feb-Apr	May-Apr	May-Apr
	2017	2016	2016/2017	2015/2016
Net sales	340,838	315,118	1,140,922	1,073,560
Capitalized work for own use	6,216	10,807	29,369	33,836
Reversal of contingent consideration	0	0	12,355	0
Other operating income	835	1,540	2,398	3,452
Goods for resale	-48,311	-54,644	-166,349	-153,798
Personnel costs	-142,308	-138,909	-542,464	-521,855
Other external costs	-67,864	-61,232	-205,251	-218,185
Depreciation/amortization and	-14,606	-14,666	-70,575	-51,493
impairment
Operating profit	74,800	58,014	200,405	165,517
Net financial items	3,882	-9,266	-404	-10,749
Profit after net financial items	78,682	48,748	200,001	154,768
Taxes	-19,833	-5,435	-47,215	-29,071
Profit for the period	58,849	43,313	152,786	125,697
Profit for the period attributable to:
Parent Company owners	58,849	43,313	152,786	125,697
Non-controlling interest	0	0	0	0
Earnings per share
Before dilution, SEK	1.55	1.15	4.04	3.35
After dilution, SEK	1.53	1.13	3.98	3.29
No. of shares
Before dilution	37,890,085	37,503,335	37,890,085	37,503,335
After dilution 1	38,499,139	38,341,746	38,499,139	38,341,746
Average, before dilution	37,890,085	37,503,335	37,772,864	37,483,975
Average, after dilution	38,499,139	38,341,746	38,420,443	38,249,201

1. Dilution of the number of shares is based on the convertible programs issued in 2012/2013 (44,918), 2013/2014 (49,574), 2014/2015 (158,226), 2015/2016 (219,736) and 2016/2017 (136,600). On full exercise of convertibles, the number of shares will increase by 609,054.

Consolidated statement of comprehensive income

SEK thousand	3 months Feb-Apr 2017	3 months Feb-Apr 2016	Full-year May-Apr 2016/2017	Full-year May-Apr 2015/2016
Profit for the period	58,849	43,313	152,786	125,697
Items that may be reclassified to profit and loss Change in translation differences for the period from translating foreign subsidiaries	7,877	-13,114	3,256	-26,736
Total other comprehensive income	7,877	-13,114	3,256	-26,736
for the period
Total comprehensive income for the period	66,726	30,199	156,042	98,961

Consolidated balance sheets

SEK thousand	Apr 30,	Apr 30,
	2017	2016
Assets
Intangible assets	182,053	187,439
Tangible assets	103,205	112,565
Financial assets	1,799	1,798
Deferred tax assets	30,283	36,489
Total fixed assets	317,340	338,291
Other current assets	571,903	524,789
Cash and cash equivalents	273,216	239,768
Total current assets	845,119	764,557
Total assets	1,162,460	1,102,848
Equity and liabilities
Equity (incl. profit for the period)	554,515	545,603
Provisions	30,318	49,140
Deferred tax liabilities	45,720	45,906
Long-term liabilities	56,611	52,565
Current liabilities	475,296	409,634
Total equity and liabilities	1,162,460	1,102,848

No changes have occurred in pledged assets and contingent liabilities since the 2015/2016 Annual Report.

Consolidated statement of changes in equity

Settlement of share-related payments Equity at end of period	22,458 554,515	3,492 545,603
Dividend/redemption of shares	-169,588	-168,765
Share-related payments	0	140
Comprehensive income for the period	156,042	98,961
Equity at start of period	545,603	611,775
	2016/2017	2015/2016
	May-Apr	May-Apr
SEK thousand	Full-year	Full-year

Consolidated cash-flow statements

SEK thousand	Full-year	Full-year
	May-Apr	May-Apr
	2016/2017	2015/2016
Cash flow from operations before changes in working capital	221 058	163,838
Cash flow from operations after changes in working capital	235,185	185,853
Investing activities	-59,553	-108,668
Financing activities	-146,084	-146,626
Total cash flow for the period	29,548	-69,441
Change in cash and cash equivalents
Cash and cash equivalents, opening balance	239,768	307,076
Exchange-rate difference in cash and cash equivalents	3,900	2,133
Cash and cash equivalents, closing balance	273,216	239,768
Unutilized credit facilities	15,000	15,000

18 (23)

Key figures for the period and full-year

	Full-year	Full-year
	Apr 30,	Apr 30,
	2017	2016
Order bookings, SEK million	1,177.7	1,322.0
Operating margin, %	17.6	15.4
Profit margin, %	17.5	14.4
Average number of employees	616	587
Cash flow per share, SEK	6.21	4.96
Cash flow per share after full dilution, SEK	6.11	4.85
Value added, SEK million	742.9	687.4
P/E ratio, multiple	40.2	33.0
Share price at end of period, SEK	162.5	110.75
Return on equity, %	27.8	21.7
Return on capital employed, %	32.2	24.2
Return on total capital, %	17.8	14.2
Equity/assets ratio, %	47.7	49.5
Liquidity, multiple	1.8	1.9
Equity per share, SEK	14.63	14.55
Equity per share after full dilution, SEK	14.40	14.23

Exchange rates for the period and full-year

Currency	Average rates in SEK			Closing rates in SEK
	Q1-4	Q1-4	Change	April 30,	April 30,	Change
	2016/2017	2015/2016	12 months	2017	2016	12 months
US dollar, 1 USD	8.76	8.39	4.4%	8.81	8.01	10.0%
Euro, 1 EUR	9.55	9.28	2.9%	9.61	9.15	5.0%
British pound, 1 GBP	11.27	12.56	-10.3%	11.38	11.74	-3.1%

Quarterly consolidated income statement and key figures

SEK million				2016/2017				2015/2016		2014/2015
	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4 1	Q3	Q2
Net sales	340.8	294.2	275.4	230.5	315.1	268.9	264.7	224.9	268.3	241.6	239.0
Capitalized work for own use	6.2	8.0	9.4	5.7	10.8	12.8	5.4	4.8	9.0	12.0	7.4
Reversal of contingent
consideration	0	12.4	0	0	0	0	0	0	0	0	0
Other operating income	0.8	1.1	0.1	0.4	1.5	0.4	0.4	1.0	0	0	0
Operating expenses	-258.4	-241.3	-224.1	-190.1	-254.7	-224.4	-225.1	-189.5	-225.5	-211.8	-200.0
Depreciation/amortization and
impairment	-14.6	-27.1	-14.4	-14.4	-14.7	-13.7	-13.3	-9.8	-9.4	-9.9	-10.9
Operating profit	74.8	47.1	46.4	32.1	58.0	44.0	32.1	31.4	42.4	31.9	35.5
Net financial items	3.9	-1.3	-2.0	-0.9	-9.3	-7.1	2.5	3.1	-2.8	11.6	1.8
Profit after net financial items	78.7	45.8	44.4	31.2	48.7	36.9	34.6	34.5	39.6	43.5	37.3
Tax on earnings for the period	-19.8	-10.8	-9.8	-6.9	-5.4	-8.1	-7.8	-7.8	-5.0	-15.2	-8.3
Profit for the period	58.8	35.0	34.6	24.3	43.3	28.8	26.8	26.7	34.6	28.3	29.0
Order bookings, SEK million	349.6	302.9	299.6	225.5	447.8	369.0	205.3	299.9	289.7	549.4	244.3
Operating margin, %	21.9	16.0	16.8	13.9	18.4	16.4	12.1	14.0	15.8	13.2	14.9
Cash flow per share, SEK	1.59	2.76	1.40	0.47	1.65	1.74	1.39	0.18	1.42	-0.63	0.75
Cash flow per share after full
dilution, SEK	1.56	2.72	1.37	0.46	1.62	1.70	1.36	0.17	1.39	-0.62	0.73
Earnings per share, SEK	1.55	0.92	0.92	0.65	1.15	0.77	0.72	0.71	0.93	0.76	0.78
Return on equity, %	10.7	6.8	7.0	4.1	7.5	5.1	4.8	4.2	5.7	4.8	5.1
Return on capital employed, %	12.6	7.8	7.9	4.8	7.7	5.9	5.7	5.1	6.0	6.8	6.1
Equity/assets ratio, %	47.7	45.8	45.4	52.7	49.5	49.5	54.1	60.8	56.1	56.7	57.0
Equity per share, SEK	14.63	12.87	11.73	15.37	14.55	13.74	13.61	17.68	16.44	15.28	14.27
Share price at end of period, SEK	162.50	153.00	139.50	133.00	110.75	105.75	105.00	119.00	119.50	124.75	95.00

¹ During 2016/2017, Sectra made a retroactive adjustment of negative SEK 78.9 million to order bookings for the quarter due to the renegotiation of a multiyear customer contract.

Five-year summary

	2016/2017	2015/2016	2014/2015	2013/2014	2012/2013
Order bookings, SEK million	1,177.7	1,322.0	1,471.5	925.7	916.0
Net sales, SEK million	1,140.9	1,073.6	961.4	853.8	817.0
Operating profit, SEK million	200.4	165.5	150.3	128.1	85.9
Profit after net financial items, SEK million	200.0	154.8	164.4	141.5	86.6
Profit for the period after tax, SEK million	152.8	125.7	126.1	103.9	62.2
Operating margin, %	17.6	15.4	15.6	15.0	10.5
Profit margin, %	17.5	14.4	17.1	16.6	10.6
Earnings per share before dilution, SEK	4.04	3.35	3.38	2.80	1.68
Earnings per share after dilution, SEK	3.98	3.29	3.31	2.73	1.64
Dividend/redemption program per share, SEK	4.50	4.50	4.50	4.50	4.50
Share price at end of year, SEK	162.5	110.75	119.5	77.75	53.0
P/E ratio, multiple	40.2	33.0	35.3	27.8	31.5
Return on equity, %	27.8	21.7	20.6	16.3	8.6
Return on capital employed, %	32.2	24.2	25.1	21.1	11.6
Return on total capital, %	17.8	14.2	15.8	13.7	7.9
Equity per share before dilution, SEK	14.63	14.55	16.44	16.49	17.94
Equity per share after dilution, SEK	14.40	14.23	16.01	16.05	17.53
Equity/assets ratio, %	47.7	49.5	56.1	60.7	61.4

OPERATING SEGMENTS

Sales by business segment
SEK million	3 months	3 months	Full-year	Full-year
	Feb-Apr	Feb-Apr	May-Apr	May-Apr
	2017	2016	2016/2017	2015/2016
Imaging IT Solutions	285.8	270.1	970.5	957.8
Sectra Customer Financing	30.9	35.2	120.3	119.2
Secure Communications	33.7	23.2	105.7	87.2
Business Innovation	15.2	14.5	65.4	51.3
Other Operations	12.3	10.8	45.5	45.2
Group eliminations	-37.1	-38.7	-166.5	-187.1
Total	340.8	315.1	1,140.9	1,073.6

Operating profit by business segment

SEK million	3 months	3 months	Full-year	Full-year
	Feb-Apr	Feb-Apr	May-Apr	May-Apr
	2017	2016	2016/2017	2015/2016
Imaging IT Solutions	92.7	61.4	210.6	185.4
Sectra Customer Financing	1.3	0.7	4.7	4.3
Secure Communications	-1.6	-2.8	1.7	-3.7
Business Innovation	-2.7	-2.7	5.0	-0.3
Other Operations	-5.6	-4.3	-16.1	-9.0
Group eliminations	-9.3	5.7	-5.5	-11.2
Total	74.8	58.0	200.4	165.5

Sales by geographic market

	3 months	3 months	Full-year	Full-year
SEK million	Feb-Apr	Feb-Apr	May-Apr	May-Apr
	2017	2016	2016/2017	2015/2016
Sweden	82.6	76.4	280.5	258.9
US	79.3	78.1	258.6	250.7
UK	62.2	59.8	184.8	199.2
Netherlands	24.1	19.0	86.6	69.2
Rest of Europe	76.4	62.7	268.9	235.0
Rest of world	16.2	19.1	61.5	60.6
Total	340.8	315.1	1,140.9	1,073.6

PARENT COMPANY

Parent Company income statements

SEK thousand	3 months	3 months	Full-year	Full-year
	Feb-Apr	Feb-Apr	May-Apr	May-Apr
	2017	2016	2016/2017	2015/2016
Net sales	28,857	24,948	108,828	95,614
Capitalized work for own use	1,789	1,356	4,405	3,624
Other operating income	486	212	1,836	1,035
Personnel costs	-14,631	-14,089	-49,251	-38,884
Other external costs	-20,707	-18,555	-69,346	-66,267
Depreciation/amortization	-1,376	-699	-4,696	-2,007
Operating loss	-5,582	-6,827	-8,224	-6,885
Net financial items 1	8,141	48,752	10,013	52,127
Profit after net financial items	2,559	41,926	1,789	45,242
Appropriations	117,151	88,097	117,151	88,097
Profit before tax	119,710	130,023	118,940	133,339
Tax on earnings for the period	-23,066	-15,180	-24,745	-19,430
Profit for the period	96,644	114,843	94,195	113,909
Comprehensive income for the period	96,644	114,843	94,195	113,909

¹Comparative figures have been restated due to an amendment of the accounting policies in RFR 2 with respect to IAS 21. This amendment had a negative impact of SEK 15,577 thousand on net financial items for the full year May-April 2015/2016, of which negative SEK 10,133 thousand pertained to the quarter February-April 2016. Refer to "Accounting policies" on page 13.

Parent Company balance sheets

SEK thousand	Apr 30,	Apr 30,
	2017	2016
Assets
Intangible assets	10,765	7,692
Tangible assets	15,477	9,627
Financial assets	285,663	285,591
Total fixed assets	311,905	302,910
Other current assets	423,799	474,223
Cash and cash equivalents	221,099	202,177
Total current assets	644,898	676,400
Total assets	956,803	979,310
Equity and liabilities
Equity (incl. profit for the period)	383,087	436,021
Untaxed reserves	174,817	168,351
Long-term liabilities	56,611	52,565
Current liabilities	342,288	322,373
Total equity and liabilities	956,803	979,310

Pledged assets and contingent liabilities

SEK thousand	Apr 30, 2017	Apr 30, 2016
Chattel mortgages	11,000	11,000
Total pledged assets	11,000	11,000
Guarantees on behalf of Group companies	190,948	321,544
Total contingent liabilities	190,948	321,544

DEFINITIONS OF KEY FIGURES

Adjusted equity	Reported shareholders' equity plus 78% of untaxed reserves.
Capital employed	Total assets reduced by non-interest-bearing liabilities.
Cash flow per share	Cash flow from operations after changes in working capital divided by the number of shares at the end of the period.
Cash flow per share after full dilution	Cash flow from operations after changes in working capital divided by the number of shares after full dilution.
Debt/equity ratio	Interest-bearing liabilities divided by equity.
Earnings per share	Profit after tax divided by the average number of shares. This key figure is defined in accordance with IFRS.
Earnings per share after dilution	Profit after tax divided by the average number of shares at the end of the period after dilution.
Earnings per share before dilution	Profit after tax divided by the average number of shares at the end of the period.
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.
Equity per share after full dilution	Adjusted equity divided by the number of shares after full dilution.
Growth in operating profit per	Operating profit per share on the balance-sheet date less operating profit per share on the
share over a five-year period	balance-sheet date five years earlier divided by operating profit per share on the balance-sheet date five years earlier.
Liquidity	Current assets divided by current liabilities.
Operating margin	Operating profit after depreciation as a percentage of net sales.
Operating profit	Profit before net financial items and income tax.
Order bookings	Value of new orders received or changes to earlier orders during the reporting period.
P/E ratio	Share price at the end of the period in relation to the latest 12-month period's earnings per share.
Profit margin	Profit after net financial items as a percentage of net sales.
	Return on capital employed (ROCE) Profit before tax plus financial expenses as a percentage of average capital employed.
Return on equity	Profit after tax as a percentage of average adjusted equity.
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.

GLOSSARY

Cloud

Cloud computing, meaning that computer power is distributed over the Internet or company-specific intranets and not on individual computers.

Critical infrastructure

Basic infrastructure that is essential for the functioning of society, such as roads, bridges and electricity and water supply.

Crypto

Equipment that uses mathematical manipulations (algorithms and keys) to encrypt information, so that it can be interpreted or read only by the intended recipient. In order to read encrypted information, the recipient must have the correct key and algorithm.

Integrated diagnostics

Diagnostic collaboration between different medical specialties, for example, between pathologists and radiologists for diagnosing, treating and monitoring cancer patients.

Mammography

Mammography is an examination procedure used to detect breast cancer at an early stage in asymptomatic women.

Orthopaedics

A surgical specialty for disorders affecting the musculoskeletal system.

Osteoarthritis

Also referred to as arthrosis. A disease resulting from the breakdown (degeneration) of joint cartilage, primarily affecting older and overweight individuals. Strain and movement causes pain. Most commonly affects the wrist, hip, knee and toe joints. Common cause of joint replacement surgery.

Osteoporosis

Commonly referred to as "brittle bone disease," a skeletal disease that causes increased brittleness of the bones and a risk for fractures.

GLOSSARY, CONTINUED

PACS (Picture Archiving and Communication System)

A system for managing medical images, primarily digital radiology images.

Pathology/histopathology/microscopy

A specialized medical area that uses tissues and body fluids for diagnostic purposes.

Radiology

A health science discipline and medical specialty that uses technologies for imaging the human body, such as X-ray, magnetic resonance imaging (MRI) and ultrasound.

RIS (Radiology Information System)

An IT system for managing radiology patient data, such as appointment bookings and patient information at radiology clinics.

VNA (Vendor-Neutral Archive)

IT solution for managing and archiving files such as medical images, audio files and film sequences in a shared multimedia archive.

ABOUT SECTRA

Mission statements

To increase the effectiveness of healthcare, while maintaining or increasing the quality of care.

To strengthen the stability and efficiency of society's most important functions through solutions for critical IT security.

Business areas/business models

Imaging IT Solutions helps hospitals across the world to become more efficient, enabling them to care for more patients and save more lives. Increased use of medical images and aging populations that are living longer pose huge challenges to healthcare. Sectra's IT solutions and services for medical diagnostic imaging enable greater efficiency and contribute to healthcare advancements. Sectra has more than 1,700 installations of medical IT systems, and customers include some of the largest healthcare providers in the world.

Secure Communications helps society's critical functions to use modern technology to exchange information securely, thereby contributing to a stable and secure society. Sectra's solutions and services protect some of society's most sensitive information and communications. Several of the business area's products are approved by the EU, NATO and national security authorities.

Business Innovation gathers smaller activities that could eventually lead to major growth in Sectra's main areas or related niches. This area includes products and services that contribute to more efficient and effective care for the effects of osteoarthritis, one of society's most costly diseases, and medical education.

Sectra Customer Financing is where the company's strong financial position is used to finance major managed-services agreements with healthcare customers.

Your feedback is important to us! Please take the time to answer nine questions in Sectra's shareholder survey at: www.sectra.com/shareholder2016

Group-wide strategies

• Customers and customer satisfaction are always assigned top priority in order to enable long-term growth.
• International expansion mainly in areas and regions where Sectra holds an established position. This will primarily be achieved through organic growth, supplemented by acquisitions that also strengthen the Group's organic growth.
• Expansion into new geographic markets following thorough analysis and at a controlled pace as Sectra achieves a strong position in existing markets.
• Close relationships with demanding customers to ensure that Sectra's solutions meet market demands for quality, functionality and usability.
• A strong, innovative corporate culture to attract and retain talented employees with the ability to solve our customers' problems and meet—and in many cases, exceed—their expectations.
• Close collaboration with universities and research institutions to capture ideas and new product areas that

Ten good reasons to invest in Sectra Sectra's customers may find useful.

• Growth potential in the healthcare, secure communications and critical infrastructure sectors.
• Established brand in niche areas, where customer confidence is a critical success factor.
• Stable, profitable company, with more than 50% of sales comprising recurring revenue from long-term customer contracts.
• Multinational reach and thousands of customers worldwide.
• High level of customer satisfaction and the aim to make customers even more satisfied.
• Products and services that contribute to improved quality of life and a safer society.
• Self-financed portfolio of exciting innovation projects with reported and controlled costs. While some of these projects are unlikely to succeed, a single success story would be sufficient to add significant value.
• Members of management are shareholders.
• Principal owner dedicated to the long-term development of the company.
• A very strong corporate culture based on the employees' expertise and attitudes and their drive to solve customer problems.