Sectra’s interim report for the three months ended July 31, 2005: Increased sales and continued strong order bookings for Sectra

Sectra reports an increase in order bookings, sales and profit for the first quarter. Order bookings rose 93.8% to SEK 115.5 million (59.6) and net sales grew 27.0% to SEK 100.8 million (79.4). Profit after net financial items increased to SEK 4.9 million (3.1), corresponding to a profit margin of 4.9% (3.9).

Profit after tax amounted to SEK 3.4 million (2.4) and earnings per share were SEK 0.09 (0.07). “We are reporting strong figures, with a significant improvement in first-quarter order bookings in our two largest markets, the US and Scandinavia, compared with the year-earlier period. However, the outcome would probably have been even better still if our altered relations with Philips had not distorted the picture during the latter part of the quarter,” says Jan-Olof Brüer, CEO and President of Sectra AB. Sectra’s largest partner, Philips Medical Systems, announced during the first quarter that it had acquired a US company that develops PACS (Picture Archiving and Communication Systems) – that is to say, the same type of system that Sectra has delivered to Philips since 1997. Philips has announced that this initially will affect sales to new customers in the US market. In Europe and Asia, Philips has indicated that it wishes to continue its cooperation with Sectra for the time being, since its own product is not yet adapted for these markets. “The change with regard to our cooperation with Philips provides us with an opportunity to start direct sales in several of our markets. This is the same business model that we use in Scandinavia, where we are the market leader. In combination with new strategic partners, this will strengthen our position in the medical systems market in the long term,” says Jan-Olof Brüer. Sectra is now focusing intensively on building out its distribution network in North America. In this market Sectra already conducts its own sales in the rapidly growing niche market for orthopedic PACS. In addition, Sectra cooperates with a number of regional PACS resellers and partners in the US. “We are engaged in talks with several companies that have expressed an interest,” says Jan-Olof Brüer. “We are also planning to reinforce our own service and support organization worldwide in order to be able to serve a greater number of partners and expand our direct service for end users,” he adds. After the close of the quarter, Sectra announced that it had strengthened its sales and support channels for breast imaging PACS in North America through expanded cooperation with the US company R2 Technology Inc. Sectra has also initiated a partnership with Kurt & Kurt AŞ, which will distribute Sectra’s medical systems products in Turkey. “Our investment in new marketing, sales and support channels will increase costs over a transition period of one to two years,” says Jan-Olof Brüer. Sectra’s Secure Communication Systems business area reports improved earnings compared with the year-earlier period. To reduce costs and improve efficiency in this business area, Sectra has taken cost-reduction measures during the first quarter and implemented a reorganization after the close of the quarter. This is expected to generate cost savings during the current fiscal year. “The cost-reduction measures we have taken within Secure Communication Systems are aimed at enabling the business area to operate at a profit by the end of the fiscal year. In conjunction with the reorganization, we also reduced our consultant costs, which has had a slightly positive effect on the business area’s earnings during the first quarter,” says Jan-Olof Brüer. “When the measures we implement within Medical Systems and Secure Communication Systems bear fruit, I am confident that Sectra will be even stronger than we are today,” concludes Jan-Olof Brüer.