Financial goals and strategies

The Sectra Group’s goals and strategies are aimed at building financially sound operations. This provides Sectra with opportunities to create customer value and thereby contribute to long-term growth in shareholder value.

FINANCIAL GOALS

All three financial goals has been met as of the balance-sheet date April 30, 2017. Financial goals in order of priority:

1. Stability

The equity/assets ratio is to be at least 30%.

Status 2016/2017

This high equity/assets ratio has had a positive impact on customer confidence in the company. Although Sectra has distributed more than SEK 800 million to shareholders over the past five years, the equity/assets ratio exceeds the strategic goal.

Stability target

Why this goal

A strong financial position provides security for customers and enables investments in products and areas that create additional value. A strong balance sheet also enables Sectra to finance managed-services agreements with customers, which is a major advantage since demand for these solutions has grown in recent years.

2. Profitability

The operating margin (EBIT margin) is to be at least 15%.

Status 2016/2017

Profitability has displayed a positive trend in recent years through structural changes, a higher proportion of license and service sales, product development and a more efficient delivery organization.

Target profitability

Why this goal

A healthy operating margin means that the business transactions in which Sectra can provide the most value are given higher priority than devoting resources to areas in which such value is lower. Favorable profitability enables
Sectra to implement growth initiatives that generate a strong long-term return for its shareholders.

3. Growth

Operating profit (EBIT) per share is to grow by at least 50% over a five-year period.

Status 2016/2017

Growth is a result of Sectra long-term efforts to boost cost-efficiency while increasing the proportion of higher- margin products, such as software licenses.

Target growth

Why this goal

The goal for profit growth puts development for individual shareholders first. A goal of achieving higher sales is not as relevant for the company since the proportion of software, services and deliveries via the internet increases at the expense of hardware deliveries, for example. The goal is calculated per share in order to include the effects of potential acquisitions paid for with treasury shares and other dilution effects. This also places the focus on ensuring that each acquisition results in higher operating profit per share, which is in the best interests of the shareholders.

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 the customers’ problems and meet – and in many cases, to exceed – their expectations.
  • Close collaboration with universities and research institutions to capture ideas and new product areas that Sectra’s customers may find useful.

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