Anoto Annual Report 2008

A N N UA L R E P O RT 2 0 0 8

CONTENTS

ANOTO GROUP AT A GLANCE 1

2008 IN BRIEF 2

A WORD FROM THE CEO 4

APPLICATION AREAS 6

THE SHARE 12

FIVE-YEAR SUMMARY 14

MANAGEMENT REPORT 16

INCOME STATEMENT 19

BALANCE SHEET 20

CHANGE IN SHAREHOLDERS EQUITY 22

CASH FLOW STATEMENT 24

NOTES 25

AUDIT REPORT 45

CORPORATE GOVERNANCE REPORT 2008 46

BOARD OF DIRECTORS 49

GROUP MANAGEMENT 50

ANNUAL GENERAL MEETING 51

ANOTO ANNUAL REPORT 2008 | 1

ANOTO GROUP AT A GLANCE

The Group’s unique solutions are based on camera

technology and real-time image processing. They

combine the intuitive advantages of pen and paper

with the many benefi ts of digital communication.

BUSINESS CONCEPT

Anoto’s business concept may be summed up as ’connec-

ting pen and paper to the digital world’ – in other words,

enabling the processing of handwritten text.

BUSINESS MODEL

Anoto uses a partner-driven business model. In colla-

boration with a global network of partners, the Group

creates commercial solutions based on the Anoto

technology platform. The solutions can be applied to a

number of different sectors, including healthcare, bank-

ing and fi nance, transport and logistics, and education.

Because Anoto’s partners upgrade its offering and add

their own expertise, applications for multiple markets

are developed alongside each other. As the number

of partners grows and their sales volumes expand,

Anoto’s income also increases without requiring any

additional expenditure. Anoto had approximately 350

partners at the end of the fi nancial year, primarily in

Europe, the United States and Japan.

APPLICATION AREAS

Anoto is broken down into three application areas.

ANOTO PRODUCTS

Anoto Products focuses on systems, products and ser-

vices, primarily in the fi eld of forms processing. Anoto

employs an indirect business model and markets its

products through partners, such as system integrators,

software developers and IT consulting fi rms, all of

which offer customized solutions with Anoto Digital Pen

and Paper technology to their corporate customers

and fi eld users. The basis of this offering is the digital

pen, which Anoto controls and sells since the acquisi-

tion of the Hitachi Maxell Digital pen division, together

with the former Anoto Forms’ solution platform.

Turnkey products, such as existing scanning and trans-

lation pens, as well as newly developed products in-

cluding Anoto penPresenter and Anoto penDocuments,

may also be marketed through other sales and distri-

bution channels.

TECHNOLOGY & LICENSING

Technology & Licensing develops and sells digital pen

technology and digital pens on an OEM basis to market-

leading customers. Customers develop their own

product offers based on the technology components

and pens provided by Anoto. Examples of customer

products are learning toys, educational tools, visual

communication equipment and personal productivity

solutions. Several of these products are interactive,

enabling real-time audio or visual feedback while

writing or when touching interactive areas.

IMAGING TECHNOLOGY

Imaging Technology develops and markets basic Anoto

technology, such as ASICs (Application-Specifi c Integrated

Circuit) and IP blocks. It supplies and licenses imaging

technology modules, components and function blocks

for integration with customer products or components,

including mobile phones, accessories and components.

QUOTATION

The Anoto Group AB has been listed since 2000 and

trades on NASDAQ OMX Nordic Small Cap list under

the ticker ANOT.

“Connecting pen and paper to the digital world.”

Anoto Group AB has a world-leading technology in the area of digital pen

and paper. This technology enables the rapid, reliable translation of hand-

written text into digital form thereby streamlining paper-based processes.

2 | 2008 ANOTO ANNUAL REPORT

2008 IN BRIEF

IMPROVED SALES AND POSITIVE RESULTS

• The new strategy and organizational restruc-turing that was implemented at Anoto in 2006 is now starting to show positive results.

• Net sales rose by 26 per cent to MSEK 182 (145).

• The result after taxes totalled MSEK 33 (-8).

• Earnings per share were SEK 0.25 (-0.06) after full dilution.

• Cash fl ow was MSEK -32 (-49).

• Anoto introduced Anoto penPresenter, a pro-gram that enhances Microsoft PowerPoint® functionality, in cooperation with printer manufacturer OKI.

• Anoto acquired Hitachi Maxell’s division of digital pens. The transaction included intangible rights, production equipment and existing in-ventory. In connection with the acquisition, Hitachi Maxell acquired 20 per cent of the shares in Anoto Nippon KK, a wholly-owned subsidiary of Anoto.

• Anoto entered into an agreement with Poly-Vison®, a world-leading global manufacturer of visual communication products in areas as whiteboards and fl ipcharts. In January 2009 PolyVision® introduced its ēno™ product.

• Anoto acquired Covelus’ routing technology. The technology is now incorporated in the platform-product Anoto Forms Solution (AFS).

• Anoto signed an agreement with Group Hamelin in France for the delivery of 30,000 pens to its product Papershow.

• Anoto divested a major part of its applica-tion area Imaging Technology to the British company ARM. The transaction included the subsidiary Logipard AB and the long term contracts covering deliveries of IP-blocks. The total contract value to Anoto was MSEK 76, of which MSEK 68 was paid in December 2008. The remaining amount will be settled by mid 2010. The net income of the sale was MSEK 71.


KEY RATIOS FOR THE GROUP

(SEK thousand) 04 05 06 07 08

Net sales 147 392 113 230 108 725 144 691 182 204

Other income 19 180 71 387

Gross profi t/loss 89 936 79 395 78 404 129 114 201 329

Operating profi t/loss -80 011 -79 775 -131 823 -9 665 39 707

Profi t/loss after tax -75 218 -13 884 -132 965 -7 549 32 699

Cash fl ow for the year -74 293 169 554 -31 649 -48 540 -31 957

Earnings per share (SEK) -0.64 -0.11 -1.03 -0.06 0.25

Shareholders’ equity per share (SEK) 3.27 4.39 3.56 3.52 3.80

Equity/assets ratio, % 80 79 80 81 81

Average no. of employees 132 110 121 103 127

NET SALES (SEK THOUSAND)

PROFIT/LOSS AFTER TAX

(SEK THOUSAND)

CASH FLOW FOR THE YEAR

(SEK THOUSAND)

EQUITY/ASSETS RATIO %

2008

2008

2008

2008


A WORD FROM THE CEO

In late 2006 we made a decision to reshape the busi-

ness from being a technology and licensing oriented

company to putting our customers’ needs fi rst. This

decision resulted in a strategy of taking increased

responsibility for our products and for claiming a bigger

part of the value chain.

As the ink dries on Anoto’s 2008 annual report, we

can look back on a period in which this decision has

proved correct and the benefi ts have really started to

show on the bottom line.

I’m pleased to say that the favourable trends we identi-

fi ed in our 2007 report have progressed as planned.

Over the past year, Anoto has been able to capitalize on

the solid platform for growth that we built through 2007.

During the year we acquired the pen production from

Maxell, launched our Anoto Forms Solution platform

and developed a strong sales organization. We entered

into a number of signifi cant technology licensing partner-

ships in line with our new focus on delivering complete

products that meet customer needs.

A key difference to the way we worked before is that

we now assume the overall responsibility for developing

pens and related technology, something that over time

will tie partners and customers more closely to Anoto.

This new cooperation will bring us continuous revenue

over the coming years. With the divestment of most

of our non-core imaging business, we are now in an

even better shape to focus on developing attractive

products and supporting our partners.

RECORD QUARTER ROUNDS

OFF PROFITABLE YEAR

Anoto fi nished 2008 with the best quarterly sales re-

sults in the company’s history. Net sales for the fourth

quarter were up 25 per cent year-on-year, at SEK 56

million. Net sales for the full year came to SEK 182 million,

also up 25 per cent on a year earlier.

This, combined with our continued cost control focus,

meant that we ended 2008 in profi t. Net earnings after

tax were SEK 33 million, compared with a net loss of

SEK 8 million in 2007.

Selling our Logipard IP-block business to ARM, one of

the world’s leading semiconductor companies, made a

positive contribution to our cash position, and the year

ended at SEK 99 million.

FIRMER BUSINESS FOCUS

The business strategy and organizational restructuring

started at the end of 2006 is now truly bearing fruit.

Our improved performance can be traced back to our

decision to change Anoto from being a highly tech-

nology-centric licensing business to one that is driving

sales by meeting real customer needs through fully

developed products.

As part of this transformation, Anoto strengthened its

product portfolio signifi cantly during 2008.

The acquisition of the Hitachi Maxell Digital pen division

in mid-2008 has put Anoto in control of the production

and marketing of our digital pens. We have a steady

fl ow of orders for pens and licenses from all over the

world. In addition, we are winning a growing number

of larger orders, including contracts for 1000-plus pens

or licenses. Sales of the Anoto Forms Solution platform

have developed according to plan and the fi rst customer

installations are expected to start in 2009. During the

year we also acquired routing technology from Covelus

to enable our digital pen and paper technology to inter-

act with different platforms and devices.

During the year we developed the Anoto penPresenter

and Anoto penDocuments products, designed to be

simple for everyone to install and use. Anoto

penPresenter is an add-in for Microsoft PowerPoint®

that lets people put real-time sketches and notes into

their slides as they present them. In essence Anoto

penPresenter functions as a personal digital whiteboard.

With Anoto penDocuments people can make hand-

written annotations on printed documents and have these

implemented in the electronic version. Both products

are being launched on the European market by our part-

ner OKI, with other markets to follow later this year.

FLOURISHING PARTNERSHIPS

Anoto is supplying partners and customers with a

wider range of products than ever before – including

digital pens, licenses and a software platform. What they

CUSTOMER FOCUS BEARS FRUIT


all have in common is that they enable easier and faster

implementations of Anoto technology solutions.

All through 2008, and especially in the last quarter,

we saw increasing business activity among our product

partners.

We have intensifi ed our collaboration with major meet-

ing-room solution partners. This initiative has resulted, for

example, in follow-up pen orders from Hamelin for its

PaperShow product, as well as the launch of the ēno™

whiteboard by PolyVision in early January 2009.

During 2008 LeapFrog launched the Tag Reading

System, a touch-and-talk reading system for children,

while Livescribe launched the Pulse smartpen which

links audio to what you write.

2008 also saw such key events as the deployment of

Anoto technology by British Airways to help it keep to

its fl ight schedule at London’s busy Heathrow airport.

Furthermore, our technology was used by the UN Food

and Agricultural Organization in Africa to help prevent

the outbreak of animal diseases.

Yet another interesting deployment of our technology

was with Würth in Sweden – where digital pens have

helped sales representatives increase their productivity.

C-Pen continues to sell at a steady pace and has

established customers around the world.

BUILDING ON OUR

GROWING REPUTATION

The digital pen and paper market category is gaining

signifi cant traction, not least as a result of Anoto’s publi-

city efforts. In 2008, we continued to improve awareness

of the Anoto brand through a proactive marketing and

PR programme that has resulted in profi les in publica-

tions like the Financial Times and Le Figaro, along with

numerous vertical sector trade media.

No-one is pretending that 2009 is going to be an easy

time. However, by continuing to focus fi rmly on meeting

customer needs with productivity-enhancing products,

I believe Anoto is well positioned to build on the excel-

lent results we achieved over the past year.

Anders Norling

CEO

Lund, Sweden, March 2009


ANOTO PRODUCTS

Anoto Products focuses on systems, products and

services, primarily in the fi eld of forms processing.

Anoto employs an indirect business model and

markets its products through partners, such as system

integrators, software developers and IT consulting

fi rms, all of which offer customized solutions with

Anoto Digital Pen and Paper technology to their

corporate customers and fi eld users. The basis of this

offering is the digital pen which Anoto controls and

sells since the acquisition of the Hitachi Maxell Digital

pen division, together with the Anoto Forms Solution

platform. Turnkey products, such as existing scanning

and translation pens, as well as newly developed pro-

ducts including Anoto penPresenter and Anoto pen-

Documents, may also be marketed through other

sales and distribution channels.

The market for Anoto Digital Pen and Paper techno-

APPLICATION AREAS

Anoto offers a unique, patented technology. As

the company does not have any direct competi-

tors in the fi eld of Digital Pen and Paper, it mainly

competes with other technologies, such as tablet

PCs, PDAs and smartphones. Demand is being

powered by increased knowledge and penetra-

tion in both new and existing markets as well as

the need for cost-effi cient and user-friendly solu-

tions. According to a study by the University of

Applied Sciences Hamburg (2008), the Anoto

Digital Pen and Paper technology is being rated

as consider-ably more user-friendly compared

to the alternative technologies listed above.

In terms of total cost of ownership (TCO) internal

customer data shows that the Digital Pen and

Paper technology has signifi cant cost advantages

when benchmarked according to the same method

that was used to estimate TCO in a 2007 Gartner

report on PDA’s and Smartphones.

Anoto has offi ces in Sweden, the United States

and Japan and operates through partners in the

Americas, Europe, South Africa, Australia and

Asia-Pacifi c. Western Europe, Japan and the

United States are the single largest geographical

markets.


logy includes vir tually every segment of the com-

munity that uses pen and paper and needs to trans-

mit data to digital media. Anoto focuses on a number

of key areas to ensure ongoing expansion and profi -

tability improvements, and proactively strives to in-

crease the number of partners, particularly system

integrators, in order to increase market reach. The

most important end-customer markets are the

healthcare and clinical trials sectors, but there are also

a number of digital pen solutions for inspections and

reporting, for example in real estate, insurance and

government. Within healthcare digital pen and paper

is used to simplify administrative routines and for

documenting and assuring the quality of healthcare

interventions. Among the benefi ts of the technology

are more effi cient paper-based processes, reduced

risk of error, improved productivity and noticeable

cost savings.

CASE STUDY SWEDISH GERIATRIC CARE

The Swedish geriatric care is using Anoto Digital Pen

and Paper to facilitate documentation, quality assur-

ance and data transmission. The solution is now being

used in more than 30 Swedish municipalities, for

example Sundbyberg, Kristianstad, Lomma and Karls-

krona, and more are expected to follow. Altogether,

3,000 digital pens are being used by homecare person-

nel in Sweden.

The success in home care services has helped spread

the technology to other areas of healthcare, such as

breast cancer screening, physical examinations and

bedsore prevention.The technology is also currently

being deployed within emergency care and hospital

environment.

CASE STUDY STÄDTISCHE KLINIKEN

MÖNCHENGLADBACH, GERMANY

A recent deployment is that of the Städtische Kliniken

Mönchengladbach, a municipal hospital in the north-

west of Germany. The hospital is divided between

two sites, with 600 beds for patient treatment and

rehabilitation.

Whether they are being treated for broken bones or

undergoing appendectomies or caesareans, patients

often need to be treated under anaesthetic. Quick

and accurate documentation of the entire anaesthetic

process is critical, for medical and legal reasons. The

core element of this documentation is the anaesthetic


log, that keeps track of administrative data, such as

patient details as well as information on medication,

anaesthetic procedures and supplementary measures.

Traditionally, anaesthetics staff had to fi ll out the log

forms with normal pen and this information then had

to be entered manually into the hospital’s computer

systems for further processing - a labour-intensive and

time-consuming process, prone to errors. The hospital

was looking for a technology solution to accelerate

the documentation process and transfer handwritten

information gathered during an anaesthetic procedure

to the Hospital Information System (HIS) more

effi ciently.

In order to achieve this, a range of solutions, including

tablet PCs and document scanners were evaluated.

As these technologies would have required an amend-

ment of the documentation process, the hospital

decided to choose a digital pen and paper solution.

The digital pens are part of a comprehensive intensive

care system solution that Anoto partner and digital pen

and paper specialists, Diagramm Halbach, designed

especially for the Städtische Kliniken.

Digital pen and paper captures and converts the

handwritten information in the anaesthetists’ logs into

digital format, eliminating the need for separate regi-

stration post-surgery and resulting in less work for

clinical and clerical staff. Among the range of benefi ts

that have been identifi ed, the clearest one is being

able to continue the use of a pen and paper. Other

benefi ts include faster and accurate information

availability for other clinicians and accounting and

research purposes.

The digital pens have made the anaesthetics opera-

tion more productive by helping optimise workfl ows

and making day-to-day routines more effi cient – all

while maintaining familiar ways of working.

CASE PHARMACEUTICAL INDUSTRY

Anoto technology is also making an impact in the

pharmaceutical industry, where international pharma

companies like Novartis, Actelion Pharmaceuticals,

Sanofi -Aventis and GlaxoSmithKline are using it suc-

cessfully in a number of different areas. Within the

pharmaceutical industry digital pen and paper is used

for documentation of data in clinical trials, data entry

for the distribution of drug samples and streamlining

of ordering processes. For pharmaceutical companies,

every successful effort to improve effi ciency and quality

in the clinical trials process directly contributes to

continued competitiveness of the company and can

be measured in actual revenue. Anoto Digital Pen

and Paper technology helps to achieve this through

benefi ts, such as easy deployment, ensured traceability

of collected data and reduction of the time it takes

for a drug to get to market, which may represent

millions of euro in revenue.


PRODUCTS

The development of customized platforms and pro-

ducts, such as Anoto Forms Solution, Anoto penPre-

senter and Anoto penDocuments enables both Anoto

and its partners to facilitate the sales process and

reduce time to market.

The Anoto Forms Solution includes all components

required to set up and use digital pen and paper in

order to capture, transfer and incorporate handwrit-

ten information from paper forms into any back-end

system - enabling rapid implementation and use of

digital pen and paper in commercial services. Sales of

the new Anoto Forms Solutions platform that was

launched in 2008 has developed well and new partner-

ships are expected to start generating end-customer

installations in 2009. As a result increased penetration

of new and existing markets is predicted, as well as

sales to larger customers in both private and public

administration.

The Anoto penPresenter is a personal digital white-

board that captures every word that is written. By

simply projecting a blank PowerPoint® slide, a digital

whiteboard is created and, using Digital Pen and Paper,

everything that is written is automatically captured.

PowerPoint presentations turn interactive by writing

on the slides during a presentation.

Anoto penDocuments is an entry-level product allowing

the user to create electronic copies of handwritten

documents instantly. Anoto penDocuments digitally

captures handwriting while writing. Documents can be

saved, stored and distributed immediately, which means

no more scanning, faxing or using couriers. For smaller

businesses, simply requiring a method of keeping track

of handwritten documents, this is an attractive offering.

C TECHNOLOGIES

C Technologies develops and markets the C-Pen,

which scans and recognizes printed text for further

internal processing or transmission to a computer.

The main customer benefi t is the ease with which

printed information and text can be transmitted to

digital media. The two most common areas of use

are electronic payment systems and generic capture,

recognition and transmission of text. Linguistic appli-

cations for the consumer market have also been

developed and the fi rst version of C Dictionary was

launched in mid-2008.

The C-Pen is sold through both retail outlets and

directly to businesses using the OEM model.

ANOTO PRODUCTS

MSEK Net sales Gross profi t

2008 85 59

2007 78 66



Technology & Licensing develops and sells digital pen

technology and digital pens on an OEM basis to market-

leading customers. The customers develop their own

product offers based on the technology components

and pens provided by Anoto. Examples of customer

products are learning toys, educational tools, visual

communication equipment and personal productivity

solutions. Several of these products are interactive,

enabling real-time audio or visual feedback while

writing or when touching interactive areas.

Currently Anoto has two customers that develop

their own pens using technology components from

Anoto, LeapFrog and Livescribe, both based in the

United States. During 2008 LeapFrog launched the Tag

Reading System, a touch-and-talk reading system for

children, while Livescribe launched the Pulse smartpen

that links audio to what you write. Both products have

built-in audio capabilities, enabling real-time audio feed-

back from paper. During 2009 LeapFrog will expand

their Anoto based product portfolio and launch Tag

Junior for toddlers.

In 2008 Anoto fi nalized the development of the new

pen, DP301, which streams data in real-time to com-

puters and mobile phones. With DP301, Anoto can

address interactive application areas, initially within

the educational and offi ce market segments. DP301

is offered to customers on an OEM basis and is also

included in Anoto penPresenter.

During 2008, a number of partners launched innova-

tive new products based on the Anoto technology.

Groupe Hamelin launched Papershow, an interactive

paper digital writing product which enables people

to project handwritten notes directly on the screen

during meetings.

DNP started commercial sales of its interactive class-

room product OpenNOTE to Japanese schools in

November 2008.

Anoto signed an agreement with PolyVision in 2008 and

worked to enable Anoto functionality with PolyVision

e3 environmental ceramicsteel™- interactive whiteboards.

PolyVision launched the ēno™, a revolutionary new

interactive whiteboard in January 2009. ēno™ by

PolyVision is the fi rst result of applying Anoto´s pattern

technology in the area of visual communication products,

such as whiteboards and fl ipcharts. A combination of

the Anoto Bluetooth-enabled digital pen (DP301), an

ēno™ interactive whiteboard and a simple projector

will enable teachers to move from ink to the Internet

or from markers to multimedia, in an instant and with-

out the need for power or data cables.

The focus of Technology & Licensing in 2009 will be

on close collaboration with existing customers in order

to ensure the development and delivery of pens and

technology as well as on supporting the establishment


IMAGING TECHNOLOGY

Imaging Technology develops and markets basic Anoto

technology, such as ASICs and IP blocks. It supplies and

licenses imaging technology modules, components and

function blocks for integration with customer products

or components, including mobile phones, accessories

and components.

Imaging Technology develops and markets video

technology in two different product areas. The fi rst

area includes the development and (through partners)

the manufacture of complete chips for digital surveil-

lance cameras. The chips convert images to various

video formats, such as MPEG4 and H264, for further

distribution. The main customers are surveillance

equipment manufacturers.

Anoto sold its subsidiary Logipard AB and its existing

contracts for video technology to ARM, the world’s

leading semiconductor intellectual property supplier.

The value of the transaction was MSEK 76, of which

MSEK 68 was paid upon signing. The outstanding

amount will be settled by mid 2010. The net result

of the transaction was MSEK 71. According to the

contract, Anoto has transferred most of its imaging

technology business, including customer contracts and

Anoto’s 80 per cent shareholding in Logipard, to ARM.

Anoto is retaining the ASIC sales, which correspond

to approximately 40 per cent of this year’s volume

within the Imaging Technology application area.

IMAGING TECHNOLOGY


2008 60 45

2007 34 21

and growth of products based on Anoto technology

within different market areas. Technology & Licensing

will continue to establish new partnerships with mar-

ket-leading companies and identify new application

areas for Anoto technology. Examples of potential new

application areas are pen tablets, games and entertain-

ment products.



2008 37 24

2007 34 23


THE SHARE

LARGEST SHAREHOLDERS DECEMBER 31, 2008

NAME % TOTAL

Essensor AS 11.1% 14 205 603

Norden Technology AS 7.4% 9 500 000

Swedbank Robur Fonder 6.4% 8 202 297

Tor Aksel Voldberg 5.1% 6 500 000

Michael Mathile 4.9% 6 300 000

Barclays Bank 4.8% 6 188 150

DnB NOR Bank 3.8% 4 925 900

Carnegie Norway Branch 3.8% 4 832 500

Banco Fonder 3.1% 4 035 000

Chister Fåhraeus 2.7% 3 500 000

In January 2009, Michael Mathile increased his shareholding

to 10.0% of total number of shares.

PER-SHARE DATA 2008

No of shares 128 583 867

No of outstanding options 0

Average no of shares 128 583 867

Average number of outstanding options 0

Earnings per share (SEK) 0.25

Earnings per share incl options (SEK) 0.25

Cash fl ow per share for the year (SEK) 0.25

Cash Flow per share incl options (SEK) 0.25

Shareholders equity per share (SEK) 3.80

Shareholders equity per share incl options (SEK) 3.80

The Anoto Group has been listed on the NASDAQ

OMX Stockholm Stock Exchange (ticker : ANOT) since

16 June 2000. Today the share is listed on the Small

Cap list of the NASDAQ OMX Nordic Exchange

Stockholm. The share had previously traded on the

New Market starting on15 March 2000. Anoto Group’s

share capital of SEK 2,571,677 is allocated among

128,583,867 shares. Each share entitles the holder to

one vote at general meetings and all shares provide

equal rights to participation in the company’s assets

and profi ts.

SHARE PRICE PERFORMANCE

AND TRADING

The price of the Anoto Group share declined by 81

per cent from SEK 9.65 to 1.81 during the year. During

the same period, the Affärsvärlden General Index was

down by 42 per cent and the Stockholm Stock Ex-

change IT Index lost 30 per cent. Anoto Group’s market

capitalisation was SEK 232 million on 31 December

2008. On 25 March 2009, the share price was SEK 4,55

and the market capitalization was SEK 585 million.

A total of 68,776,269 Anoto shares traded on the

NASDAQ OMX Stockholm Stock Exchange in 2008,

for a turnover rate of 54 per cent.

SHAREHOLDERS

At the end of 2008, Anoto Group had 7,439 share-

holders. Foreign shareholders controlled 62 %; the ten

largest shareholders 54 per cent; and institutional and

industrial investors 88 per cent of the shares.

DIVIDEND POLICY

No dividend will be considered over the next few

years. The company’s future dividend policy will refl ect

its earnings, fi nancial position and fi nancing needs.

Dividend proposals will be examined in the light of

shareholder demands for a reasonable return and the

company’s internal fi nancing requirements.

OPTION PROGRAMMES

The parent company currently has one outstanding

stock option program with underlying warrants for

employees. The 585,000 options that have been sub-

scribed for expire on 31 March 2010.

Full exercise of the options that have been subscribed

for would result in subscription for no more than

585,000 new shares, increasing the company’s share

capital by SEK 11,700 and diluting existing shares by

0,5 per cent. The issue prices for options are SEK 18.00.

ANALYSTS

Anoto Group is covered by analysts at a number

of banks and securities brokers, including Carnegie,

Hagströmer & Qviberg and Redeye.


SHAREHOLDERS BY SIZE, DECEMBER 31, 2008

Holdings Total no.of % av total Hold collectlively % of share

shareholders shareholders number of shares capital

1-1000 5 710 76.8 1 679 481 1.3

1001-10000 1 380 18.6 4 867 834 3.8

10001-100000 271 3.6 8 055 024 6.3

100001- 78 1.0 113 981 528 88.6

7 439 100 128 583 867 100

The share

0

10

20

30

40

50

2004 2005 2006 2007 2008 2009

Anoto share OMXSPI OMX SX45

2004 2005 2006 2007 2008 2009

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

No. of shares traded, Thousands


FIVE-YEAR SUMMARY

Summary of income statements(SEK thousand) 2004 2005 2006 2007 2008

Net sales 147 392 113 230 108 725 144 691 182 204

Other income – – – 19 180 71 387

Gross profi t/loss 89 936 79 395 78 404 129 114 201 328

Amortization – intangible fi xed assets -20 661 -22 680 -25 809 -13 710 -12 159

Depreciation – property, plant and equipment -7 825 -3 644 -1 709 -2 201 -3 011

Operating profi t/loss -80 011 -79 775 -131 823 -9 665 39 706

Profi t/loss on participations in Group companies – 70 457 -769 -252 0

Profi t/loss on participations in associated companies 3 059 – – – –

Profi t/loss on other receivables that are non-current assets -2 431

Other fi nancial items 1 861 -4 446 794 3 269 -5 974

Profi t/loss after fi nancial items -75 091 -13 764 -131 798 -6 647 31 302

Tax -127 -120 -1 208 -791 -853

Minority share in profi ts – – 41 -110 2 250

Profi t/loss after tax -75 218 -13 884 -132 965 -7 549 32 699

Summary of balance sheets(SEK thousand) 2004-12-31 2005-12-31 2006-12-31 2007-12-31 2008-12-31

Assets

Intangible fi xed assets 368 031 357 536 343 324 339 473 364 025

Property, plant and equipment 5 589 3 568 3 512 4 046 5 279

Financial fi xed assets 5 155 5 346 5 080 8 560 30 599

Total non-current assets 378 775 366 450 351 916 352 079 399 903

Inventory 1 671 1 517 1 936 5 960 37 329

Accounts receivable 20 337 36 780 27 615 24 062 32 564

Other current assets 29 384 15 667 15 669 51 132 32 304

Cash and bank balances, including current investments 41 740 211 490 179 841 131 301 99 344

Non-current assets for divestment 74 235 0 0 0

Total current assets 93 132 339 689 225 061 212 455 201 541

Total assets 471 907 706 139 576 977 564 534 601 444

Liabilities and shareholders’ equity

Shareholders’ equity 385 629 555 690 458 237 452 809 488 474

Minority shareholdings — — 1 959 2 069 -160

Provisions (Non-interest-bearing) 0 0 0 54 0

Long-term liabilities (Non-interest-bearing) 13 692 4 231 4 728 50 089 41 891

Current liabilities (Non-interest-bearing) 72 586 146 218 112 053 59 513 71 239

Total liabilities 86 278 150 449 118 740 111 725 112 970

Total liabilities and shareholders’ equity 471 907 706 139 576 977 564 534 601 444

Summary of cash fl ow statements(SEK thousand) 2004 2005 2006 2007 2008

Profi t/loss after fi nancial items -75 091 -13 764 -131 798 -6 647 31 302

Items that do not affect liquidity 8 787 -39 559 8 913 16 243 28 337

Change in working capital -4 949 60 251 73 642 -39 015 -9 317

Cash fl ow from operating activities -71 253 6 928 49 243 -29 419 50 322

Cash fl ow from investing activities -7 633 -14 933 -14 190 -20 808 -40 257

Total cash fl ow before fi nancing activities -78 886 -8 005 -63 433 -50 227 10 065

Cash fl ow from fi nancing activities 4 593 177 669 31 784 1 687 -42 022

Cash fl ow for the year -74 293 169 554 -31 649 -48 540 -31 957


Key ratios 2004 2005 2006 2007 2008

Sales growth, % neg neg neg 33 26

Gross margin, % 61 70 72 76 71

Operating margin, % neg neg neg neg 16

Profi t margin, % neg neg neg neg 21

Capital employed (SEK thousand) 385 629 555 690 460 196 454 878 488 314

Return on capital employed, % neg neg neg neg 7

Return on shareholders’ equity, % neg neg neg neg 7

Proportion shareholders’ funds, % 80 79 80 81 81

Equity/assets ratio, % 82 79 80 81 81

Net debt/equity ratio, multiple -0.11 -0.38 -0.39 -0.29 -0.20

Interest coverage ratio, multiple -2 264 -1 -29 -3 5

Earnings per share (SEK) -0.64 -0.11 -1.03 -0.06 0.25

Earnings per share after dilution (SEK) -0.64 -0.11 -1.03 -0.06 0.25

Cash fl ow per share for the year (SEK) -0.63 1.42 -0.25 -0.38 0.25

Cash fl ow per share after dilution (SEK) -0.63 1.40 -0.25 -0.38 0.25

Shareholders’ equity per share (SEK) 3.27 4.39 3.56 3.52 3.80

Shareholders’ equity per share after dilution (SEK) 3.15 4.32 3.56 3.52 3.80

Average no. of employees 132 110 121 103 127

Sales per employee (SEK thousand) 1 117 1 029 1 029 1 405 1 435

Payroll expenses, incl. social security contributions (SEK thousand) 112 906 95 829 121 822 88 184 106 075

(of which, pension premiums) 14 006 11 030 10 925 10 588 13 337

PROPORTION SHAREHOLDERS’ FUNDSShareholders’ equity, minority interests and deferred tax at the end

of the year as a percentage of total assets

RETURN ON SHAREHOLDERS’ EQUITYProfi t for the year as a percentage of average shareholders’ equity

RETURN ON CAPITAL EMPLOYEDProfi t after net fi nancial income/expense plus interest expense,

divided with of average capital employed

GROSS MARGINGross profi t as a percentage of net sales. Gross profi t is defi ned as

net sales less cost of goods sold

SHAREHOLDERS’ EQUITY PER SHAREShareholders’ equity divided by the weighted average number of

shares during the year

AVERAGE NUMBER OF EMPLOYEESAverage number of employees during the year

NET DEBTInterest-bearing liabilities less liquid assets and current investments

NET DEBT/EQUITY RATIONet debt divided by shareholders’ equity, including minority interests

SALES PER EMPLOYEENet sales divided by the average number of employees

DEFINITIONSSALES GROWTHIncrease in net sales as a percentage of net sales for the previous year

EARNINGS PER SHAREProfi t after tax divided by the weighted average number of shares

during the year

INTEREST COVERAGE RATIOProfi t after net fi nancial income/expense plus interest expense, as a

percentage of interest expense

OPERATING MARGINOperating profi t/loss after depreciation and amortization as a per-

centage of net sales

CAPITAL EMPLOYEDTotal assets less non-interest-bearing provisions and liabilities, inclu-

ding deferred tax liabilities

EQUITY/ASSETS RATIOShareholders’ equity including minority interests as a percentage of

total assets

PROFIT MARGINProfi t after fi nancial income/expense as a percentage of net sales

CASH FLOW PER SHARE FOR THE YEARCash fl ow for the year divided by the weighted average number of

shares during the year

16 | ANOTO ANNUAL REPORT 2008

The Board of Directors and CEO of Anoto Group AB (publ.), Corporate identity No. 556532-3929, hereby submit the annual accounts and consolidated accounts for the 1 January – 31 December 2008 fi nancial year.

GROUP STRUCTUREAnoto Group AB is the holding company in the Group and performs group-wide functions. The operational activities are performed by the subsidiaries Anoto AB, C Technologies AB, Anoto Inc and Anoto Maxell Ltd. Logipard AB, in which Anoto AB controlled 80 per cent of the shares, was sold on December 16, 2008.

ORGANIZATIONAnoto Group is a Swedish high-tech company that has developed a unique technology for digital pen and paper, enabling rapid, reliable transmission of handwritten text to digital media. The organization is broken down into three application areas, i.e. Anoto Products, Technology & Licensing and Imaging Technology. The entire business is based on digital camera technology and image processing in real-time.

ANOTO APPLICATION AREAS

ANOTO PRODUCTS Anoto Products focuses on systems, products and services, primarily in the fi eld of forms processing. Anoto operates by an indirect business model and markets its products through partners, such as system integrators, software developers and IT consulting fi rms, all of which offer customized solutions with Anoto Digital Pen and Paper technology to their corporate customers and fi eld users. The base for this offering is the digital pen which Anoto controls and sells since the acquisition of the Hitachi Maxell Digital pen division, together with the former Anoto Forms’ solution platform. Turnkey products, such as existing scanning and translation pens, as well as newly developed products including Anoto penPresenter and Anoto penDocuments, may also be marketed through other sales and distribution channels.

Anoto Products continues to show growth. European markets are developing well, with continued focus on applications within the healthcare and clinical trials sectors. The infl ow of new partners is good and bodes well for the future. Increased media coverage is helping

to bring solutions based on Anoto Digital Pen and Paper technology to the attention of both end-users and new partners. The Japanese market, which did not perform as expected during the fi rst three quarters, showed some signs of improvement in the last quarter, although major projects have been postponed until 2009.

Since the acquisition of the Hitachi Maxell digital pen division, Anoto controls and markets the digital pens. There is a steady fl ow of orders for smaller volumes of pens and licenses from all over the world. In addition to these orders, an increased activity in the market for pens and licenses in larger volumes can be noted. Sales of the new AFS platform that was launched last year has developed according to plan and is expected to star t generating end-customer installations in 2009.

TECHNOLOGY & LICENSINGTechnology & Licensing develops and sells digital pen technology and digital pens on an OEM basis to market leading customers. The customers develop their own product offers based on the technology components and pens provided by Anoto. Several of these products are interactive, enabling real-time audio or visual feed-back while writing or when touching interactive areas. Examples of customer products are learning toys, educational tools, visual communication equipment and personal productivity solutions.

A major milestone this quarter has been the completion and introduction of the Anoto branded DP301 pen used by PolyVision for the product ēno™ being the result of developing Anoto technology in the direction of visual communication products, such as whiteboards and fl ipcharts.

IMAGING TECHNOLOGYImaging Technology develops and markets basic Anoto technology, such as ASICs and IP blocks. The application area supplies and licenses imaging technology modules, components and function blocks for integration with customer products or components, including mobile phones, accessories and their components.

Anoto sold its subsidiary Logipard AB and its existing contracts for video technology to ARM, the world’s leading semiconductor intellectual property supplier. The value of the transaction was MSEK 76, of which MSEK 68 was paid upon signing. The outstanding

MANAGEMENT REPORT


amount shall be settled within 18 months. The net result of the transaction was MSEK 71. Anoto is retaining the ASIC sales, which corresponds to approximately 40 per cent of this year’s volume within the Imaging Technology application area.

Sales developed well during 2008, although slightly below expectations due to unforeseen delays in the market introduction of mobile phones using Anoto technology.

SHARES AND SHAREHOLDERSThe company had 128,583,867 shares as of year-end. According to VPC AB statistics, there were 7,439 shareholders on 31 December 2007, representing a decrease of approximately 3 per cent over the past 12 months. The largest shareholders were Essensor AS (11.1 per cent of the votes and capital) and Norden Technology AS (7.4 per cent of the votes and capital).

EMPLOYEESThe average number of employees within the Group increased from 103 to 127 in 2008. The Group had 105 employees at year-end. Logipard AB, which was sold in December 2008 had 15 employees.

REMARKS ON THE INCOME STATEMENTNet sales for the year increased by 26 per cent, from MSEK 145 to MSEK 182. Other income in 2008 amounted to MSEK 71 and refers to the sale of long term contracts within Imaging Technology and the subsidiary Logipard AB. A major part of the transaction refers to the sale of shares in Logipard AB, which is exempted from taxation. The sale of contracts will reduce tax losses carried forward, but will not result in any taxation. Other income in 2007 of MSEK 19 refers to the sale of the Anoto US operations to Livescribe. Forty per cent of the Group’s income is in USD and 49 per cent in EUR. During the year, the Group hedged 50 per cent of its currency net fl ows in USD and approximately 50 per cent of its currency fl ows in EUR (refer to the section on risk management).

The Group’s gross profi t for the year rose to MSEK 201 (129), while its gross margin was 71 per cent (76). The major reason for the lower margin can be explained by the increased sale of digital pens and components.

Overhead costs increased by 19 per cent, primarily due to the larger organization as a result of the acquisition of the Hitachi Maxell digital pen division,

an increased level of activity and the impact on currency fl uctuations when converting costs of foreign subsidiaries into Swedish currency. The expansion of Logipard AB, sold in December 2008, represents a part of the increase in overhead costs. The Group capitalises non-customer fi nanced development expenses that meet IAS 38s criteria, a total of MSEK 20 (9) in 2008. The operating result for the year was MSEK 40 (-10).

REMARKS ON THE BALANCE SHEET AND CASH FLOW STATEMENTAs the result of increased working capital in inventory of MSEK 31, accounts receivable and the increase of long term receivables on customer to MSEK 29, total assets increased by MSEK 37. The negative cash fl ow for the year was MSEK -32, reducing liquid assets to MSEK 99. The main reason for the negative cash fl ow is an increase in working capital and capital expenditures. Current and long term liabilities increased from MSEK 109 to MSEK 112 . Out of the total liabilities, MSEK 50 represent prepaid royalty, for which Anoto has no obligation to repay or deliver any services.

The Group’s liquid assets, including current investments, decreased from MSEK 131 at the end of 2007 to MSEK 99 at the end of 2008.

Shareholders’ equity of MSEK 488 on 31 December, as opposed to MSEK 453 past year, represented an equity/assets ratio of 81 per cent (81).

Cash fl ow from operating activities was MSEK 50 (-29). Due to the rise in sales coupled with the acquisition of the Hitachi Maxell digital pen division, working capital increased by MSEK 9, due to more inventory. Investing activities consumed MSEK 40 (21), of which MSEK 20 (9) was for capitalised development expenses during the year. Financing activities contributed MSEK -42 (2), mainly due to the conversion of certain accounts receivable into long term receivables (22 months maximum). Total cash fl ow for the year ended up at MSEK -32 (-49).

INVESTMENTSNet investments in 2008 for fi xed assets totalled MSEK 36 (15).

RESEARCH AND DEVELOPMENTThe Group’s R&D efforts are focused on upgrading and integration of electronic hardware and software for the development of digital pen and paper solutions. The Group spent MSEK 69 (63), or 47 per cent (45) of its total operating costs, on R&D in 2008. The number


included MSEK 5 (8) for amortization of capitalized development expenses. Pursuant to its compliance with IAS 38, the Group capitalized MSEK 20 (9) in new development expenses during the year. Including capitalization, the Group’s total 2008 R&D costs totalled MSEK 84 (64).

Anoto has an extensive patent portfolio. At the end of 2008, the Group had 308 active patent applications and 217 patent approvals.

DISPUTESAnoto is currently not engaged in any disputes that are deemed to signifi cantly affect its fi nancial position.

ENVIRONMENTAnoto does not pursue any activities that require environmental permits. None of its units are environ-mentally certifi ed.

RISK MANAGEMENTAs the Group conducts the the main part of its sales internationally, a majority of the contracts are in EUR or USD. As a signifi cant part of the costs are in SEK and USD, margins and earnings are sensitive to currency fl uctuations. The Anoto Group AB parent company handles all trading in fi nancial instruments. In 2008, approximately 40 per cent of the total income was related to USD and 49 per cent to EUR.

Refer to Note 4 for a detailed description of the company’s risk management policies. BOARD AND ITS RULES OF PROCEDUREThe Anoto Group AB Board of Directors consists of seven ordinary members. Refer to page 48 of this annual report under the section entitled “Corporate Governance report” for a detailed account of the Board’s composition and working methods.

The 2008 Annual General Meeting authorized the Board to decide on one or more directed issues totalling no more than 12,000,000 shares prior to the next Annual General Meeting – as well as to depart from the preferential rights of shareholders in order to enable the acquisitions of businesses or operations by paying wholly or partially with shares.

GUIDELINES ON REMUNERATION FOR SENIOR EXECUTIVESRemuneration for the CEO and senior executives in 2008 appears in Note 10, “Salaries and other remuneration”. The Board has proposed to the

Annual General Meeting that the guidelines on remuneration for senior executives remain unchanged in 2009.

SIGNIFICANT EVENTS AFTER YEAR-ENDThe Livescribe Inc debt to Anoto of MSEK 20, 1 was settled in full in the middle of March 2009. The debt was the remaining payment from an agreement in early 2007 between Livescribe and Anoto, by which Anoto phased out its operation “Content and Applications” to Livescribe Inc.

No further signifi cant events have occurred after the year-end.

OUTLOOKThe restructuring programme together with the new strategy implemented in 2008 is beginning to pay off. The uncer tainty in the overall global economy makes it extremely diffi cult to predict market trends. Therefore, a market outlook for 2009 has been omit-ted in this report.

PROPOSED APPROPRIATION OF ACCUMULATED DEFICITProposed appropriation of accumulated defi cit in the parent company (SEK:

Accumulated defi cit 0Loss for the year –945 119Total –945 119 The Board of Directors and CEO propose that the accumulated defi cit of SEK -945,119 reduces the statutory reserve by the same amount.

With regard to the fi nancial position of the Group and parent company, refer to the following accounts.


INCOME STATEMENT

Group Parent company

(SEK Thousands) Note 2008 2007 2008 2007

Net sales 5 182 204 144 691 30 044 26 155

Other income 41 71 387 19 180 - -

Cost of goods and services sold 12 -52 262 -34 751 - -

Gross profi t/loss 201 329 129 114 30 044 26 155

Selling expenses 9,15 -68 953 -53 529 -6 919 -6 812

Administrative expenses 9, 10,11,15 -18 620 -21 716 -17 048 -15 135

Research & development costs 9,15 -77 010 -63 073 -4 299 -4 559

Other operating income 13 4 703 1 192 40 -

Other operating costs 14 -1 742 -1 653 - -

Operating profi t/loss 12 39 707 -9 665 1 818 -352

Profi t/loss on shares in group companies 16 - -252 - -3 700

Share of earnings in associated companies -2 431

Interest income 17 2 397 4 782 1 148 3 844

Interest and similar expenses 18 -8 371 -1 513 -2 021 -136

Profi l/loss after fi nancial items 31 302 -6 648 945 -344

Tax on profi l/loss for the year 19 -853 -791 - -

Net Profi t for the year 30 449 -7 439 945 -344

Allocation of net profi t for the year

Profi t/loss attributable to minority interests -2 250 110 - -

Profi t/loss attributable to shareholders of Anoto Group AB 32 699 -7 549 945 -344

Earnings per share (SEK) 1) 0.25 -0.06 0.01 0.00

Earnings per share after dilution (SEK) 2) 0.25 -0.06 0.01 0.00

No of shares, weighted average for the year 128 583 867 128 583 867 128 583 867 128 583 867

No of shares, weighted average for the year, including outstanding warrants 3) 128 583 867 128 883 867 128 583 867 128 583 867

1) Profi /Loss for the year attributable to shareholders of Anoto Group AB divided by average number of shares during the year.2) Profi t/Loss for the year attributalble to shareholders of Anoto Group AB divided by sum of the weighted average number of shares during the year and the weihted average number of

outstanding warrants whose exercise price was less than the closing share price for the year. Warrants give rise to a dilutive effect only when their conversion to shares generates poorer earnings per share (IAS 33, Earnings per share).

3) Only warrants whose exercise price is less than the closing price for the year are included.


BALANCE SHEET


(SEK Thousands) Note 2008-12-31 2007-12-31 2008-12-31 2007-12-31

ASSETS

Non-current assets

Intangible fi xed assets

Capitalized development expenditures 20 26 580 11 504 - -

Patents 21 28 866 28 938 675 764

Goodwill 24 302 496 298 674 - -

Brands 22 334 357 36 40

Other intangible assets 23 5 749 - - -

Total intangible fi xed assets 364 025 339 473 711 804

Property, plant and equipment

Equipment and tools 25 5 279 4 046 356 366

Total property, plant and equipment 5 279 4 046 356 366

Financial fi xed assets

Shares in group companies 26 - - 267 194 267 194

Shares in associated companies 27 1 640 4 071 - -

Other long-term securities 28 - 3 371 - -

Other long-term recievables 29 28 959 1 118 - -

Receivables - group companies - - 77 505 77 505

Total fi nancial fi xed assets 30 599 8 560 344 699 344 699

Total non-current assets 399 903 352 079 345 766 345 869

Current assets

Inventory

Finished goods and goods for sale 37 329 5 960 - -

Current receivables

Accounts receivable 30 32 564 24 062 63 -

Receivables from subsidiaries - - 116 040 40 928

Other recievables 16 777 9 534 1 118 1 587

Prepaid expenses and accrued income 31 15 527 41 598 2 091 2 038

Total current receivables 64 868 75 194 119 312 44 553

Current investments

Short-term securities 36 185 74 229 - 64 335

Cash and bank balances 63 159 57 072 897 3 561

Total current assets 201 541 212 455 120 209 112 449

TOTAL ASSETS 601 444 564 534 465 975 458 318



(SEK Thousands) Note 2008-12-31 2007-12-31 2008-12-31 2007-12-31

LIABILITIES AND SHAREHOLDERS EQUITY

Shareholders equity

Share capital 2 572 2 572 2 572 2 572

Other capital contributed 448 508 448 508 - -

Statutory reserve - - 419 610 419 953

Share premium reserve - - 28 555 28 555

Other reserves -152 -3 063 - -

Accumulated loss including loss for the year 37 546 4 792 - -

Profi t/loss for the year - - 945 -343

Equity attributible to the shareholders of Anoto Group AB 488 474 452 809 451 682 450 737

Equity attributible to minority interests -160 2 069 0 0

Long-term liabilities/Provisions

Provisions for taxes - 54 - -

Other provisions 34 - - - -

Other liabilities 41 891 50 089 - -

Total long-term liabilities/Provisions 41 891 50 143 0 0

Current liabilities

Provisions restructuring 32 - - - -

Provisions for product warranties 33 800 1 573 - -

Accounts payable 12 034 9 835 983 1 377

Liabilities to subsidiaries - - -

Tax liabilities 813 835 - -

Advance payments from customers 12 400 21 665 - -

Other liabilities 23 979 8 643 7 318 1 655

Accrued expenses and prepaid income 35 21 213 16 962 5 992 4 549

Total current liabilities 71 239 59 513 14 293 7 581

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 601 444 564 534 465 975 458 318

Pledged assets 38 8 542 6 196 - -

Contingent liabilities 39 4 721 7 025 - -


CHANGES IN SHAREHOLDERS EQUITY

(SEK Thousands) Share capitalOther capital contributed 2) Reserves 1)

Profi t for the year

Shareholders equity contributable to

the shareholders of Anoto Group AB

Minority interest

Total shareholders equity kapital

GROUP EQUITY

Shareholders equity January 1, 2007 2 572 560 655 -1 418 -103 572 458 237 1 959 460 196

Translation differences for the year 1) - - -1 645 - -1 645 - -1 645

Reduction of share premium reserve - -112 147 - 112 147 0 - 0

Total changes in shareholders equity reported directly against equity, excluding transactions with shareholders 0 -112 147 -1 645 112 147 -1 645 0 -1 645

Profi t for the year - - - -7 549 -7 549 110 -7 439

Total changes in shareholders equity excluding transactions with shareholders - -112 147 -1 645 104 598 -9 194 110 -9 084

Adjustment costs for options - - - 3 765 3 765 - 3 765

Shareholders equity December 31, 2007 2 572 448 508 -3 063 4 791 452 808 2 069 454 877

Translation differences for the year 1) - - 2 911 - 2 911 21 2 932

Total changes in shareholders equity reported directly against equity, excluding transactions with shareholders 0 0 2 911 0 2 911 21 2 932

Profi t for the year - - - 32 699 32 699 -2 250 30 449

Total changes in shareholders equity exclu-ding transactions with shareholders - - 2 911 32 699 35 610 -2 229 33 381

Adjustment costs for options - - - 56 56 - 56

Shareholders equity December 31, 2008 2 572 448 508 -152 37 546 488 474 -160 488 314

1) From translation of Financial reporting from foreign subsidiaries.

2008 2007

Accumulated exchange rate difference at beginning of the year -3 063 -1 418

Exchange rated differences for the year 2 911 -1 645

Accumulated exchange rate differences at year end -152 -3 063

2) Includes parent company statutory reserve and premium reserve from share issues. For changes in these items references are made to Changes in parent company equity below.


(SEK Thousands) Share capitalStatutory

reserveShare premium

reserve Profi t Total equity

PARENT COMPANY’S EQUITY

Adjustment costs for options 2 572 532 100 28 555 -112 147 451 080

Appropriation of previous year´s loss - -112 147 - 112 147 -

Loss for the year - - - -343 -343

Shareholders equity December 31, 2007 2 572 419 953 28 555 -343 450 737

Appropriation of previous year´s loss - -343 - 343 -

Profi t for the year 945 945

Shareholders equity December 31, 2008 2 572 419 610 28 555 945 451 682

The change in number of shares and their par value, see below.All shares are fully paid and entitles the holder to an equal per centage of dividend.

Increase in no. of shares No. of shares Par value/ share

Registered opening balance January 1, 2007 128 583 867 SEK 0.02

Registered closing balance December 31, 2007 128 583 867 SEK 0.02

Increase in no. of shares No. of shares Par value/ share

Registered opening balance January 1, 2008 128 583 867 SEK 0.02

Registered closing balance December 31, 2008 128 583 867 SEK 0.02


CASH FLOW ANALYSIS


(SEK Thousands) Note 2008 2007 2008 2007

OPERATING ACTIVITIES

Profi t after fi nancial items 31 302 -6 647 945 -344

Change in provisions -907 -4 330 - -

Depreciation and amortization on assets 15, 20-25 15 170 15 912 235 224

Disposal of assets 20-25 6 313 4 703 - -

Cost for options 56 3 766 - -

Share of earings in associated companies - - - -

Profi t on shares in subsidiaries 16 - 252 - 3 700

Sale of business 41 2 584 - -

Interest income 17 -2 397 -4 782 -1 148 -3 844

Interest costs 18 8 371 1 513 2 021 136

Tax paid 19 -853 -791 -6 -

Cash fl ow from operating activities before change in working capital 59 639 9 596 2 047 -128

Cash fl ow from change in working capital

Change in operating receivables 10 326 -31 910 -74 759 -40 938

Change in inventory -31 369 -4 024 - -

Change in operating liabilities 11 726 -3 081 6 712 -34 205

Total change in working capital -9 317 -39 015 -68 047 -75 143

Cash fl ow from operating activities 50 322 -29 419 -66 000 -75 271

Capital expenditure

Capitalized development expenditures 20 -20 134 -9 366 - -

Patents 21 -5 747 -5 163 -25 -86

Brands 22 -7 -58 - -23

Goodwill -3 822 - - -

Other intangible assets 23 -6 439 - - -

Equipment & tools 25 -4 108 -2 365 -105 -302

Shares in group companies 1) 26 - - - -3 700

Shares in associated companies 27 - -3 856 - -

Cash fl ow from net capital expenditures -40 257 -20 808 -130 -4 111

Total cash fl ow before fi nancing activities 10 065 -50 227 -66 130 -79 382

Financing activities

Interest income 17 2 397 4 782 1 148 3 844

Interest expenses 19 -8 371 -1 513 -2 021 -136

Change in long term liabilities -8 198 -6 - -

Change in long term receivables -27 841 - - -

Translation differences -9 -1 576 - -

Cash fl ow from fi nancing activities -42 022 1 687 -873 3 708

Cash fl ow for the year -31 957 -48 540 -67 003 -75 674

Liquid assets at beginning of the year 131 301 179 841 67 896 143 570

Liquid assets at end of the year 99 344 131 301 893 67 896

1) Unconditional shareholders contribution to Anoto AB.


NOTES (SEK thousand unless otherwise indicated)

The consolidated accounts of Anoto Group AB (Anoto) have been prepared in compliance with the Swedish Annual Accounts Act, International Financial Accounting Standards (IFRS), interpretations from International Financial Reporting Committee (IFRIC) as accepted by EU and the Swedish Financial Reporting Board recommendation RFR 1.1 ”complementary accounting stan-dards for group accounting. The parent company’s annual accounts have been prepared in compliance with the Swedish Annual Accounts Act (ÅRL) and the Swedish Financial Reporting Board recommendation RFR 2.1, Accounting for

Legal Entities. The consolidated and annual accounts, which are specifi ed in thousands of Swedish kronor, refer to1 January - 31 December for income statement items and 31 December for balance sheet items.

The annual report and consolidated accounts have been approved for distribution by the Board on 31 March 2009. The Group income statement and balance sheet will be subject to approval by the Annual General Meeting on 14 May 2009.

Note 1 | General accounting policies

THE GROUPOther than the revaluation of certain fi nancial instruments, the consolidated accounts are based on historical cost. The accounting policies applied by the Group are described below.

Consolidated accountsThe consolidated accounts cover Anoto Group AB (publ), the parent company, and the companies in which direct or indirect holdings at year-end represented more than 50 per cent of the votes, i.e., the parent company had a controlling interest. The consolidated accounts have been prepared in accordance with the purchase method. The historical cost is the sum of the fair values of assets paid, accrued or overtaken liabilities, as well as for the equity instruments that Anoto has issued in exchange for the controlling interest in the acquired unit, along with all costs directly attributable to the acquisition.

The historical cost is allocated among the unit’s identifi able assets, contingent and other liabilities that meet the criteria for accounting in accordance with IFRS 3, Business Combinations, reported at fair value. If the historical cost exceeds net acquired assets and liabilities in accordance with the above, the difference is reported as goodwill.

Deferred tax is calculated as 28 per cent of the difference between the fair values of assets and liabilities reported and tax residual values insofar as the

difference is not part of untaxed reserves. Group equity includes the Group’s participation in shareholders’ equity earned by group companies after acquisition, as well as minority shareholdings in the equity of group companies.

All intra-Group transactions are eliminated in the consolidated accounts. Intra Group transactions include internal sales, profi ts and balances, as well as shareholders’ contributions to group companies and impairment losses on participations in group companies.

A functional currency is assigned to each foreign subsidiary.The foreign subsidiaries that have a different functional currency than Anoto’s

functional currency (the Swedish krona) are recalculated at the exchange rate on the balance sheet date for all balance sheet items and at the average exchange rate for all income statement items.

The translation differences that arise stem from the difference between the average exchange rates in the income statement and the exchange rates on the balance sheet date, as well as the translation of net assets at a different exchange rate as of year-end than as of the beginning of the year. Translation differences are not reported in the income statement, but as a provision within shareholders’ equity.

Exchange ratesAt recalculation of foreign subsidiaries uses these exchange rates.

Note 2 | Anoto’s accounting policies

Average exchange rate On balance sheet dateCountry Currency 2008 2007 2008 2007

United States USD 6,5808 6,7607 7,7525 6,4675Japan JPY (100) 6,4023 5,7437 8,6000 5,7200

Associated companiesAssociated companies are those in which the Group controls 20-50 per cent of the votes or otherwise exerts signifi cant infl uence over operating and fi nancial management. Associated companies are reported based on equity accounting. In accordance with equity accounting, investments in associated companies are reported in the balance sheet at historical cost, adjusted for changes in the Group’s participation in the associated company’s net assets. The Group’s share of the associated company’s profi t/loss is reported in the consolidated income statement. The Group’s share of the associated company’s profi t/loss after fi nancial income/expense is included in theprofi t/loss on participations in associated companies item, whereas the Group’s share of the associated company’s tax expense is included in the tax on profi t/lossfor the year item.

Revenue recognitionRevenue is received from product sales, licenses, royalties and development projects. Revenue from product sales is recognised when essentially all risks and

rights associated with ownership have been transferred to the purchaser, normally at the time of delivery.

Revenue from non fi xed-term licenses is directly reported as of the invoice date.

For instance, license revenue may involve a certain degree of exclusivity or contributions for, or access to, a platform.

Royalties are reported during the same month as the partner makes the actual sale.cost.

Revenue attributable to development projects, Non Refundable Engineering (NRE), is recognised in the same period as the service is rendered. The extent to which each development project has been completed is normally based on a quarterly analysis. The project’s estimates are updated with the costs until the current date in order to determine the per centage of the total estimated costs that have accrued. An anticipated loss on a project is reported immediately as a cost.


Goodwill Goodwill, which is reported in connection with the acquisition of subsidiaries in accordance with the above, is initially reported as an asset at historical cost. Goodwill is not amortized but subject to an impairment test annually or whenever needed by calculating the recoverable amount of the corresponding cash-generating unit. The recoverable amount is defi ned as the asset’s net realisable value or value in use, whichever is higher. The impairment test allocates goodwill among the cash-generating units that are expected to benefi t from acquisition synergies. An impairment loss is recognized if the the value of the unit reported by the Group exceeds the recoverable amount. The impairment loss is charged to earnings for the year.

Intangible fi xed assets The Group complies with IAS 38, Intangible Assets. In accordance with IAS 38, expenditures for the development of new products are reported as assets only if the assets are highly likely to generate future fi nancial gains for the company.

Product development must have reached the commercialization stage before the expenditures are reported as assets. All expenditures are carried as expenses on a current basis up until that point. Amortization schedules begin as of the market launch of each product. The amortization schedule is based on the product’s useful life of 3-5 years.

External expenditures for patents and brands are capitalized in the balance sheet with ten-year amortisation schedules.

Property, plant and equipment Property, plant and equipment consisting of equipment, computer equipment and computer programs is reported at accumulated depreciation according to plan and any impairment losses. Depreciation and amortization according to plan Depreciation and amortization according to plan are based on the historical costs and estimated economic useful lives of the assets in view of the following depreciation and amortization periods:

- Patents 10 years- Capitalized development expenditures 3-5 years- Equipment 5 years- Computer equipment and programs 3 years 1)

- Capital expenditure on rented assets 2-5 years 2)

1) Capitalized computer programs refer to CAD programs that are essential to the ongoing

product development effort. 2) Depreciations varies between 2 -5 years depending on lease terms.

Impairment losses If there is an indication that a Group asset has decreased in value, its recovera-ble amount is determined. The recoverable amount is defi ned as the asset’s net realizable value or value in use, whichever is higher. When determining the value in use, the present value of the future cash fl ows that the asset is expected to give rise to during its useful life is estimated. An impairment loss is recognized if the Group’s reported value exceeds the recoverable amount, and the impairment loss is charged to earnings for the year.

Leases Lease contracts are classifi ed as either fi nancial or operational leases. In a fi nancial lease, the fi nancial risks and benefi ts related to ownership are essentially trans-ferred to the lessee. If that is not the case, it is an operational lease. The Anoto Group has no signifi cant fi nancial lease contracts. Cost for operational leases are distributed evenly over the lease period.

Receivables and liabilities in foreign currenciesReceivables and liabilities in foreign currencies are reported at the exchange rate on the balance sheet date, and unrealised exchange gains and losses are included in earnings. Exchange gains/losses on operating receivables and liabilities are reported as other operating income/expenses. Exchange rate differences on fi nancial receivables and liabilities are reported as fi nancial items.

Financial instrumentsThe Group’s fi nancial instruments consist mostly of accounts receivable, liquid assets, accounts payable and fi nancial derivative instruments in the form of currency forward contracts.

Liquid assetsLiquid assets consist of cash and bank balances, as well as current investments. A current investment is classifi ed as a liquid asset if it can easily be converted to cash at a known amount and it is exposed to only a negligible risk of value fl uctuations.

Long-term receivables and accounts receivableLong-term receivables and accounts receivable are montary asstes which are not derivatives, that have defi ned payment plans or identifyable payments and which are not listed on an active market place. These assets are valued at historical cost. Accounts receivable are reported net after deduction of doubtful accounts receivable.

Accounts payableAccounts payable are reported at the amount the company plans to pay the supplier in order to liquidate the debt.

Currency forward contracts and hedge accountingThe Group uses currency forward contracts to hedge the net fl ow of foreign currencies up to 12 months. The size of each contract is based on rolling liquidity forecasts for following periods. The Group continually orders contracts in line with recieved payments in foreign currenzies. The primary purpose of hedging is to shield the Group from major changes in cross rates. Hedging does not meet the criteria of IAS 39, Financial Instruments: Disclosure and Presentation, for hedge accounting. Thus, changes in the value of all currency forward contracts are reported in the income statement as fi nancial income/expense.

InventoryInventory, consisting of fi nished products and critical components, is reported at historical cost (in accordance with FIFO) or net realizable value, whichever is lower.

Pensions and compensations to employeesAll pension commitments have been taken over by insurance companies and classifi ed as defi ned contribution pension plans. Pension premiums are carried as expenses in the period that employees rendered the associated services.

As part of incentive programmes, the Group has issued stock options and warrants to employees. The fair value of employee stock options on the distribution date are reported as a cost in the income statement. The fair value is calculated in accordance with the Black-Scholes Model. The total costs are allocated during the period in which the options are earned. The cost is reported under administrative expenses.

Taxes All tax deemed payable on reported earnings is reported in the income statement. The tax has been calculated in accordance with each country’s tax regulations and included in the tax on profi t/loss for the year item.

The Group’s total tax in the income statement consists of current tax on taxable earnings for the period and deferred tax. The Group’s tax consists primarily of current tax on taxable earnings of foreign subsidiaries for the period.

The Group uses the balance sheet method to calculate deferred tax assets and liabilities. In accordance with the balance sheet method, the calculation is based on tax rates as of the balance sheet date as applied to temporary differences between the reported and tax value of an asset or liability, as well as tax loss carry-forwards. Deferred tax assets are reported in the balance sheet only in amounts that can presumably be utilized within the foreseeable future. Reporting cash fl ow The cash fl ow statements are prepared in accordance with the indirect method, i.e., profi t/loss after fi nancial items is adjusted for transactions that have not given rise to payments or disbursements during the period, as well as for any income and expenses attributable to the cash fl ow of investing activities.


Provisions A provision is reported when there is a commitment as the result of an event, it is probable that an outfl ow of resources will be required to settle the commitment and an amount can be reliably estimated. The following provisions are reported in the balance sheet: restructuring, product warranties, taxes and other.

Contingent liabilities Contingent liabilities are reported if there is a possible commitment that is confi rmed only by multiple uncertain future events and it is unlikely that an outfl ow of resources will be required or that the size of the commitment will not be calculable with suffi cient precision.

Disclosures about related partiesFor disclosures about the company’s transactions with related parties, refer to Note 10 ”Remuneration for senior executives” and Note 42 ”Related party transactions. There were no other transactions with related parties.

Segment reportingAnoto have no primary or secondary segments. The actual performance of the activities are measured on the Group as a whole.

Changed Accounting principles Changes in accounting principles in accordance with IFRIC 11 ( IFRS - Trading in its own shares), IFRIC 12 ( Service Concession Agreements), IFRIC 14 ( IAS - The limit of an Defi ned Benefi t Asset) have had no impact on the fi nancial reporting of the Group during 2008.

New IFRS and interpretaions valid from 2009 ( not yet in force) Changes in IFRS 2( Sharerelated compensations), IFRS 3 (Business acqusitions), IAS 32 ( Finance instuments), IFRIC 13 ( customer loyalty schemes), IFRIC (Divestments of real estate), IFRIC 16 (heging of investments in foreign business), IFRIC 17 ( payment of assets as dividend to its shareholders) are deemed to have no impact on the fi nancial reporting of the Group during 2009.

Changes in IAS 1 (Layout of the structure of the fi nancial reporting) is deemed to have impact on fi nancial reports of the Group from 2009.

PARENT COMPANY For details of the parent company’s accounting policies, refer to the Group’s accounting policies above. The section below is limited to the parent company’s deviations from the Group’s policies.

LeasesIn accordance with RR 32, the parent company’s fi nancial lease contracts are reported as operational lease contracts.

Financial instrumentsThe parent company does not apply the presentation rules of IAS 39. The parent company reports fi nancial fi xed assets at historical cost less any impairment losses and fi nancial current assets at the lower of cost or net realizable value.

Holdings in subsidiaries and associated companies Holdings in group and associated companies are reported at historical cost. If the reported value of the investment exceeds the recoverable amount (refer to section above on impairment losses), an impairment loss is recognised.

Shareholders’ contributions Shareholders’ contributions are reported as an increase in the participations in group companies item, after which an impairment test is performed on the value of the shares.


Critical assessments when applying the company’s accounting policiesWhen applying the Group’s accounting policies (as described in Note 3), management has made the following assessments that have the most signifi cant impact on the amounts that appear in the fi nancial reports. Key sources of uncertainty in the estimates The information below concerns key assumptions about the future and other key sources of uncertainty in the estimates on the balance sheet date that entail signifi cant risk of substantial adjustments to reported assets/liabilities for the next fi nancial year.

Impairment tests for goodwillWhen testing for impairment losses, the value in use is calculated for the cash-generating unit to which goodwill has been allocated. The value in use is based on the estimated future cash fl ows that the cash-generating unit is expected to give rise to. The reported value for goodwill is 302 MSEK as of the balance sheet date. For additional information about impairment losses, refer to Note 24.

Impairment tests for capitalized development expendituresWhen testing for impairment losses, the remaining value in use is calculated for the cash generating of the technology or the products for which capitalized development expenditures has been allocated. The value in use is based on the estimated future cash fl ow that the relevant technology expects to give rise to.

Note 3 | Assessments when applying the Group’s accounting policies and the main sources of uncertain estimates

Note 4 | Risk management by the Group

Other risk areasOther areas covered by the fi nancial policy are:– interest rate risks Anoto has no external borrowing, as the result of which

there are no interest rate risks– fi nancing risks– guarantees and contingent liabilities

Other risk managementCredit riskThe management of credit risks can be broken down into commercial risks and fi nancial risks. The provisions set aside for bad debt losses as of the ba-lance sheet date have not identifi ed any commercial credit risks. The fi nancial credit risk is managed as part of the Group’s fi nance policy refer to liquidity policy above.

Insurance riskThe Group’s insurance coverage is reviewed annually with respect to traditional business insurance policies for property, liability, travel, etc. Anoto’s insurance policy for patent disputes expired in 2005 and has not beenrenewable on reasonable terms. However, claims fi led before the policy expired are still covered. The company plans to take out an insurance policy for patent disputes as soon as it can do so on reasonable commercial terms.

Patent risks, etc.Anoto continually expands its patent portfolio by applying for patents on innovations linked to Anoto technology in order to supplement previous patent applications and patents granted. Anoto cannot guarantee that all patent applications will be approved or that our intellectual property rights will not be called into question, declared null and void or circumvented. Third parties have claimed, and may do so in the future as well, that Anoto infringes their intellectual property rights. Defending Anoto against such assertions can be costly in terms of time, money and other resources. Legal disputes can compel Anoto to pay damages or other compensation, modify its products and technology or enter into license agreements. Anoto cannot guarantee that such licenses will be available at all or on reasonable terms.

Liquidity riskAnotos liquid assets, as cash and bank deposits, amounted at the end of 2008 to MSEK 99. The Group has neither any interest bearing Liabilities nor pledged Accounts Receivables, Inventory or Fixed assets. The Board of Anoto foresee that the operations during 2009 can be fi nanced by existing liquid assets without any borrowings from banks or other credit institutes. The unstable credit market and the limited availability of funds is deemed to have no impact on Anoto. We have no opnion which impact this limitation will have for Anotos customers.

The Anoto Board of Directors has adopted a fi nancial policy for : – Simplifying and harmonising the Group’s fi nancial activities – Defi ning rules for the fi nancial risks that are accepted by the Board– Adopting guidelines for the Group to operate independently – Delegating management of fi nancial risks to the CFO

The areas of the fi nancial policy that most affect Anoto’s management of risks are liquidity and currency. Liquidity policy In accordance with the Finance policy of the Group the cash need of the Group is continuously updated. These cash fl ow analyses gives information about cash planning, deposits, interest periods etc. In accordance with the liquidity policy, available cash shall consist of cash and negotiable securities with an offi cial credit rating equivalent to Moodys P1. Currency exposure and currency policy Transaction exposure Transaction exposure arises when income and expenses are in different currencies. Anoto has large exposure to the USD, EURO and JPY because most of its invoicing is in those currencies. In accordance with its 2008 currency policy, Anoto invested U.S. dollars in currency accounts equivalent to the expected net fl ow in U.S. dollars over the next 12 months. Expected net fl ows in EURO for following 6 months period are hedged by means of forward contracts.

Net flows by currency 2008

120

80

40

0

-40

-80

-120

Sensitivity analysisThe impact on profi t/loss before tax of a 5% change in exchange rates is:USD/SEK ’+/- 0.8 million EUR/SEK ’+/- 1.4 millionJPY/SEK ’+/- 1,6 million


Note 5 | Net sales

Group sales per application area and market in 2008:2008

Group2007

Sweden 77 507 38 435

Rest of EU 39 537 26 230

USA 40 123 15 453

Japan 7 642 52 881

Rest of Asia 5 260 7 241

Rest of the world 12 135 4 451

Total 182 204 144 691

Group sales per application area and market in 2007:2008

Group2007

Royalty 43 982 20 016

NRE 1) 19 216 37 938

Licenses 28 871 45 843

Components 27 495 15 756

Pen sales 57 099 18 328

Other 5 541 6 810

Total 182 204 144 6911) Revenues from software/hardware development of customers products.

Parent company sales to subsidiaries totals 30.044 (26.234) as compensation for intra-Group services.These revenues have been eliminated in the consolidated accounts and is thereby not included in the totals above.

Note 6 | Average number of employees

2008 2007

No. of employees Of which men No. of employees Of which men

Parent company 1) 11 5 10 5

Rest of Sweden 101 79 83 70

USA 7 4 4 3

Japan 8 5 6 4

Total 127 93 103 821) All employees of the parent company are employeed in Sweden.

Note 7 | Board of Directors and management split, by gender

2008 2007

No. of employees Of which men No. of employees Of which men

Board of Directors 1) 7 6 7 6

Management 6 5 6 5

Total 2) 13 11 13 111) Parent company.2) Including boardmembers of the parent company and management in group companies.

Note 8 | Sickness absence, Swedish companies

2008 2007

AGE CATEGORYTotal

absenceOf which more

than 60 daysTotal

absenceOf which more

than 60 days

Under 30 1.13 % 0.00 % *) *)

30 - 50 2.66 % 34.08 % 2.79 % 36.07 %

Above 50 *) *) *) *)

Women 6.43 % 47.58 % 5.21 % 78.44 %

Men 1.12 % 0.00 % 1.81 % 0.00 %

Total 2.37 % 30.39 % 2.50 % 33.18 %

* Not reported due to an exemption in the legislation to which disclosures may not be made if the number of employees in a group is less than 10 or if the information is attributable to a single individual. Group refers to both gender and age category.


Note 9 | Salaries and renumerations


2008 2007 2008 2007

SALARIES

Board of Directors and CEO 4 355 5 230 4 355 5 230

Other senior executives 1) 5 899 6 676 2 767 2 846

Other employees 61 851 48 482 5 388 3 676

72 105 60 388 12 510 11 752

PAYROLL OVERHEAD

Board of Directors and CEO 1 412 1 394 1 412 1 394

Other senior executives 1) 1 912 2 164 897 923

Other employees 17 309 13 650 1 747 1 238

20 633 17 208 4 056 3 555

PENSION EXPENSES

Board of Directors and CEO 913 686 913 686

Other senior executives 1) 1 530 1 463 636 628

Other employees 10 894 8 439 183 432

13 337 10 588 1 732 1 746

Total salaries and renumerations 106 075 88 184 18 298 17 053

Sweden 94 639 80 406 18 298 17 053

Japan 5 765 4 015 - -

United States 5 671 3 763 - -

Total 106 075 88 184 18 298 17 053

Salaries and other remunerations are included in the balance sheet’s headlines as follows

Selling expenses 44 445 14 109 4 483 4 775

Administrative expenses 11 986 12 346 11 034 9 720

Development expenses 49 643 61 729 2 781 2 558

Total 106 075 88 184 18 298 17 053

1) The Group has 6 (6) and the parent company has 4 (4) senior executives.

The CEO is subject to a mutual period of notice of six months. He retains his salary and benefi ts during the period of notice. If the CEO’s employment is terminated by the company in a manner that lacks an objective basis pursuant to Section 7 of the Security of Employment Act (1982:80), he is entitled to severance pay equivalent to 12 times the monthly salary in effect on the termination date.The period of notice for other senior executives varies from six to nine months if the company terminates their employment.

No agreements have been entered into for pension commitments or the equivalent for either Board members or senior executives above and beyond that which is covered by notes. Apart from a salary during the period of notice, no senior executive other than the CEO receives fi nancial compensation. The CEO’s and senior management employment contracts includes a bonus based on terms adopted by the Board of Directors and limited to no more than 50 % of his fi xed monthly salary. The retirement age for the CEO and other senior executives is 65. The pension premium is 35 % of the pensionable salary for the CEO and 15-19 % for other senior executives.

Guidelines for compensation to the Executives of the Company (Annual General meeting 2008)The compensation level and structure shall be at market level. The total compensation shall be a balanced mix of fi xed salaries, variable compensation, retirement and health plans, any other benefi ts and terms for dismissal and severance payments. The compensation may also comprise stock relatedlong term incentive programs. The variable compensation varies for the respective executive and shall primarily be related to Anoto´s result and operative goals and may at the mostbe 50 % of the fi xed salary. However, the variable compensation for the CEO may be at most 75 % of the fi xed salary.The retirement plan shall be competitive. The CEO shall have a pension premium based retirement plan of 35 % of the fi xed salary.The other executives shall have pension premium based retirement plans corresponding to the (Swedish) ITP plan.Other benefi ts, like health plans and company cars, shall be competitive. Executives shall have a mutual notice period of six months. Under certain conditions, some Executives may have an additional three months notice periodin case Anoto gives notice. The CEO shall have a mutual notice period of six months and a severance payment of twelve months salary in case Anototerminates the employment without juste cause.


Note 10 | Remunerations to Board of Directors and CEO

BOARD OF DIRECTORS AND CEO, 2008

Salaries/Remu-nerations Bonus

Pension premiums

Other remunerations Total

Options awarded for the year

Value of options

Anders Norling 2 855 - 913 - 3 768 - -

Christer Fåhraeus 175 - - - 175 - -

Märtha Josefsson 175 - - - 175 - -

Stein Revelsby 175 - - - 175 - -

Håkan Ericsson 175 - - - 175 - -

Bernard Gander 175 - - - 175 - -

Yoshioka Hiroshi 175 - - - 175 - -

Hans Otterling 450 - - - 450 - -

Total 1) 4 355 0 913 0 5 268 - -

1) Total compensation may originate from different group companies.

BOARD OF DIRECTORS AND CEO, 2007

Salaries/Remu-nerations Bonus

Pension premiums

Other remunerations Total

Options awarded for the year

Value of options

Anders Norling 2974 756 560 - 4 290 - -

Christer Fåhraeus 175 - - - 175 - -

Märtha Josefsson 175 - - - 175 - -

Lars Jarnryd 175 - - - 175 - -

Stein Revelsby 175 - - - 175 - -

Håkan Ericsson 175 - - - 175 - -

Bernard Gander 175 - - - 175 - -

Hans Otterling 450 - - - 450 - -

Total 1) 4 474 756 560 0 5 790 - -

1) Total compensation may originate from different group companies.

MANAGEMENT 2008Salaries/Remu-

nerations Bonus Pension

premiumsOther

remunerations TotalOptions awarded

for the yearValue of options

Group Management 5 899 - 1 530 - 7 429 - -

Total 5 899 - 1 530 - 7 429 - -

Management 2007Salaries/Remu-

nerations Bonus Pension

premiumsOther

remunerations TotalOptions awarded

for the yearValue of options

Group Management 5 816 1 018 1 463 - 8 297 200 000 204

Total 5 816 1 018 1 463 - 8 297 - -


Note 11 | Audit fees

Audit fees are charged to earnings for the year as follows;


2008 2007 2008 2007

Auditing

Deloitte AB - 375 - 140

KPMG AB 350 - 350 -

Other assignments 252 161 252 34

Total 602 536 602 174

An auditing assignment involves examining the annual accounts and accounting records, as well as the management of the company by the Board of Directors and CEO, other tasks that the company’s auditor is obligated to perform, and advisory services and other assistance occasioned by observations made during said examination or performance of said tasks. Other assignments refer to everything else.

Note 12 | Operating costs by type


2008 2007 2008 2007

Raw materials and supplies -20 893 -38 781 - -

Change in inventories -31 369 4 024 - -

Personnel cost -106 075 -88 184 - -

Depreciation -15 170 -15 912 - -

Other external costs -43 338 -34 943 - -

Other operating costs -1 742 -1 653 - -

Total -218 587 -175 449 - -

Note 13 | Other operating income


2008 2007 2008 2007

Exchange gains 3 625 128 - -

EU contribution 357 686 - -

Profi t/loss on sale of fi xed assets - 338 - -

Other 721 41 40 -

Total 4 703 1 193 40 -

Note 14 | Other operating expense


2008 2007 2008 2007

Exchange losses -1 742 -1 011 - -

Other - -642 - -

Total -1 742 -1 653 - -

Note 15 | Depreciation and amortization

Depreciation of property, plant and equipment, and amortization of intangible fi xed assets, are included in the individual items of the income statement as follows:


2008 2007 2008 2007

Selling expenses

Administrative expenses -4 975 -3 755 - -

Development expenses -411 -308 -235 -222

Total -9 784 -11 849 - -

Total -15 170 -15 912 -235 -222


Note 16 | Profi t /loss on participations in group companies


2008 2007 2008 2007

Impairment loss on shares in Anoto AB 1) - - - -3 700

Impairment loss on shares in Anoto Communications KK 1) - -122 - -

Impairment loss on shares in Anoto Hong Kong Ltd 1) - -130 - -

Total 0 -252 0 -3 700

1) Unconditional shareholders contribution to the subsidiary Anoto AB. The shareholders contribution was made to cover the subsidiary’s loss for the year and restore its equity to the levelof share capital.

2) The impairment loss at an amount corresponding the groups share in the equity.3) The impairment loss in connection with winding-down of Anoto Hong Kong Ltd.

Note 17 | Interest income


2008 2007 2008 2007

Interest on current investments 1 079 3 707 1 017 3 564

Interest on bank deposits 1 318 1 075 131 280

Total 2 397 4 782 1 148 3 844

Note 18 | Interest and similar expense


2008 2007 2008 2007

Loss on currency forward contracts -5 398 -150 -1 979 -136

Other -2 973 -1 363 -42 -

Total -8 371 -1 513 -2 021 -136


Note 19 | Taxes


2008 2007 2008 2007

Current tax 1) -853 -791 - -

Total -853 -791 - -

1) Primary foreign subsidiaries.

Correlation between tax expense for the year and reported profi t/loss before tax:


2008 2007 2008 2007

Reported profi t/loss before tax 31 302 -6 648 945 -344

Tax in accordance with current tax rate of 28 % -8 764 1 861 -265 96

Tax impact of non-deductible expenses

Intra-group adjustments that disregard deferred tax -1 559 -2 915 - -

Impairment loss on shares in subsidiaries - - - -1036

Other non-deductible expenses -347 -275 -220 -205

Other adjustments -932 26 - -

Tax impact of non-taxable income 12 992 -67 8 6

Adjustment for tax rates in foreign group companies -1 737 347 - -

Increase/decrease of tax defi cits without corresponding capitalization -506 232 477 1 139

Tax reported -853 -791 0 0

Tax defi cit


2008 2007 2008 2007

Opening balance -446 564 -448 780 -30 085 -34 561

Tax defi cit of the year -2 532 1 809 1 703 4 069

Adjustment due to changed taxation - 407 -322 407

Closung tax defi cit -449 096 -446 564 -28 704 -30 085

Nominal amount, tax asset 125 747 125 038 8 037 8 424

There are no temporary differences.

The nominal value of tax assets (28 %) in accordance with the above have been reported at 0 in the balance sheet.Due to the fact that the group still reports a loss, the nominal value of tax assets is not reported in the balance sheet.

Tax defi cits above refers to the Swedish companies, and are not limited in time.Further tax defi cits in Anoto Maxell, Japan accounts to approx MSEK 7.


Note 20 | Capitalized development expenditures


2008 2007 2008 2007

ACCUMULATED HISTORICAL COSTS

Opening accumulated historical costs 119 256 115 893 24 218 24 218

Acquisitions for the year 20 134 9 366 - -

Disposals for the year -6 003 - -

Closing accumulated historical costs 139 390 119 256 24 218 24 218

ACCUMULATED AMORTIZATIONS ACCORDING TO PLAN

Opening accumulated amortizations -107 752 -100 927 -24 218 -24 218

Amortizations for the year according to plan -5 058 -8 125 - -

Disposals for the year 1 300 - -

Closing amortizations according to plan -112 810 -107 752 -24 218 -24 218

Closing residual value 26 580 11 504 - -

Note 21 | Patents


2008 2007 2008 2007


Opening accumulated historical costs 67 137 61 974 13 886 13 800

Acquisitions for the year 5 901 5 163 25 86

Disposals for the year -154 -

Closing accumulated historical costs 72 884 67 137 13 911 13 886


Opening accumulated amortizations -38 199 -32 646 -13 122 -13 008

Amortizations for the year according to plan -5 838 -5 553 -114 -114

Disposals for the year 19 - - -

Closing amortizations according to plan -44 018 -38 199 -13 236 -13 122

Closing residual value 28 866 28 938 675 764

Patents are subject to improvment test annually or whenever indicated. Refer to Note 24 Goodwill.


Note 22 | Brands


2008 2007 2008 2007

Accumulated historical costs

Opening accumulated historical costs 507 505 47 80

Adjustment of Opening balance - -56 - -56

Acquisitions for the year 30 58 - 23

Sale of business -23 - - -

Closing accumulated historical costs 514 507 47 47

Accumulated amortizations according to plan

Opening accumulated amortizations -150 -149 -7 -58

Adjustment of Opening balance - 56 - 56

Amortizations for the year according to plan -34 -57 -4 -5

Sale of business 4 - - -

Closing amortizations according to plan -180 -150 -11 -7

Closing residual value 334 357 36 40

Note 23 | Other intangible assets


2008 2007 2008 2007

Opening accumulated historical costs

Adjustment of Opening balance - - - -

Acquisitions for the year 6 439 - - -

Closing accumulated historical costs 6 439 0 0 0

Opening accumulated amortizations

Adjustment of Opening balance - - - -

Amortizations for the year according to plan -690 - - -

Closing amortizations according to plan -690 0 0 0

Closing residual value 5 749 0 0 0


Note 24 | Goodwill

Group

2008 2007


Opening accumulated historical costs 381 301 381 301

Acquisitions for the year 3 822 -

Disposals for the year - -

Closing accumulated historical costs 385 123 381 301


Opening accumulated amortizations -82 627 -82 627

Amortizations for the year according to plan - -

Disposals for the year - -

Closing amortizations according to plan -82 627 -82 627

Closing residual value 302 496 298 674

Anoto technology and products are sold by all sales companies within the group, i.e. the group has only one branch of business. The focus of management reporting is the level of sales within the different application areas. These application areas are not independent cash generating units and the impairment testing of intangible assets is performed based on cash fl ow projections from group totals.

Impairment testing of goodwill is performed annually or when an indication of decline in value occurs. The recoverable value for group business is defi ned based on calculations of value in use.

The value in use for goodwill attributable to Anoto is based on discounted cash fl ows for 10 years. A period longer than 5 years has been used because the company’s products are at the beginning of a commercial phase. Cash fl ows for the fi rst year are based on the budget adopted by the Board of Directors. For the subsequent period, the increase in cash fl ows has been estimated per application area. The annual rate of growth, which has been determined on the basis of informations and forecasts from Partners and own assessments which varies per application area and over time. Price reductions of 0-15 % have been assumed.

The calculation of the value in use for Anoto has used a 15% pre-tax discount rate of interest based on the company’s weighted average cost of capital (WACC).

The assumption that has the greatest impact on the impairment test as growth of the application area Anoto Products. If Forms Solutions were to grow 30 % less than forecast per year during the calculation period, an impairment loss would be recognized.

Note 25 | Equipment and tools


2008 2007 2008 2007


Opening accumulated historical costs 15 755 13 514 940 638

Acquisitions for the year 5 459 2 365 109 302

Sale of business -1 775 - - -

Disposals for the year -80 - - -

Translation difference 1 012 -124 - -

Closing accumulated historical costs 20 371 15 755 1 049 940

ACCUMULATED DEPRECIATIONS ACCORDING TO PLAN

Opening accumulated depreciations -11 709 -10 002 -574 -470

Depreciations for the year according to plan -3 550 -1 742 -119 -104

Sale of business 119 - - -

Disposals for the year 48 - - -

Translation difference - 35 - -

Closing depreciations according to plan -15 092 -11 709 -693 -574

Closing residual value 5 279 4 046 356 366


Note 26 | Participation in group companies

Parent company

2008 2007

PARENT COMPANY

Opening balance 267 194 267 194

Opening shareholders contribution 464 603 460 903

Shareholders contribution for the year 1) - 3 700

Opening accumulated impairment losses -464 603 -460 903

Impairment losses for the year 2) - -3 700

Total 267 194 267 194

1) Shareholders contribution to Anoto AB.2) Writedown of shares in Anoto AB.

Company Reg.nr. DomicileTotal no. of

participation% of capital

and votesShareholders

equityCarrying amount

Anoto AB 556320-2646 Lund 5 000 89.0 % 1) 43 238 267 005

Anoto Licensiering AB 556665-4306 Lund 1 000 89.0 % 1) 97 89

Anoto Administration AB 556591-2481 Malmö 1 000 100.0 % 2 302 100

267 194

The Anoto Group contains sub-groups consisting of the following companies:Anoto, Inc., USAAnoto Maxell Ltd, JapanFAB Licensiering AB, Sweden

1) The remaining 11 % are held by Anoto Administration.

Note 27 | Participation in associated companies

Group

2008 2007

GROUP

Opening balance 4 071 215

Acquisition for the year 1) - 4 071

Share of profi ts in associated company -2 431 -

Reclassifi cation 2) - -215

Total 1 640 4 071

1) During 2007 has 20 % of the shares in i Anoto Taiwan Corporation been acquired. 2) Anoto AB has acquired additional 40 % of the shares in Anoto Communications KK. The shareholding has been reclassifi ed to group company.

Company Reg.nr. DomicileTotal no. of

participation% of capital

and votesShareholders

equityCarrying amount

Anoto Taiwan Corporation 28316992 Taiwan 10 000 000 20.0 % 8 200 1 640


Note 28 | Other long term investments

Group

2008 2007

GROUP

Opening balance 1) 3 371 3 743

Writedown -3 371 -372

Total 0 3 371

1) Shares in Destiny Wireless.

Note 29 | Other long term receviables

Group

2008 2007

GROUP

Opening balance 1 118 1 122

Reclassifi cation 1) 19 381 -

Other changes 2) 8 460 -4

Total 28 959 1 118

1) Reclassifi cation of receivable on Livescribe into a long-term interest bearing recievable. 2) Including 10 % of the purchse price from the sale of Imaging Technology to ARM Ltd.

Note 30 | Ageing accounts receivable

2008 2007

Gross Net Gross Net

Not due 15 463 15 463 17 125 17 125

Due 1 - 30 days 10 154 10 154 1 679 1 679

Due 31 - 60 days 1 537 1 537 954 954

Due 61 - 90 days 1 893 1 893 2 670 2 670

Due more than 90 days 5 412 3 517 2 455 1 634

Total 34 459 32 564 24 883 24 062

Assessment of the need of provisions of Accounts receivable due more than 90 days, are made on an individual basis.

Note 31 | Prepaid expenses and accrued income


2008 2007 2008 2007

PARENT COMPANY AND GROUP

Prepaid rent 1 370 1 280 1 370 1 180

Prepaid leasing fees 236 160 152 3

Accrued interest income 12 378 - 378

Accrued income 10 741 37 038 - -

Revaluation currency forward contracts - 370 - -

Other 3 168 2 372 569 477

Total 15 527 41 598 2 091 2 038


Note 32 | Provisons for restructuring


2008 2007 2008 2007

Provisions for rental charges

Opening balance - - - -

Amounts utilized - - - -

New provisions - - - -

Unutilized reversed amounts - - - -

- - - -

Provisions for personnel costs

Opening balance - 1 476 - -

Amounts utilized - -1 476 - -



- - - -

Total provisions for restructuring


Amounts utilized - -1 476 - -



Total - 0 - -

Note 33 | Provisions for product warranty commitments


2008 2007 2008 2007

Opening balance 1 573 1 529 - -

Amounts utilized -21 - - -

New provisions 748 44 - -

Unutilized reversed amounts -1 500 - - -

Total 800 1 573 - -

Note 34 | Other provisions


2008 2007 2008 2007


Amounts utilized - - - -


Unutilized reversed amounts - -4 151 - -

Total - - - -

Note 35 | Accrued expenses and deferred income


2008 2007 2008 2007

Holiday pay libility 3 911 4 391 472 355

Payroll overhead libility 1 342 1 557 239 179

Pension costs overhead liability 2 363 2 211 511 338

Accrued salaries and remunerations 5 452 2 391 4 150 1 312

Revaluation forward exchange contracts 3 892 - - -

Other 4 253 6 412 620 2 365

Total 21 213 16 962 5 992 4 549


Note 36 | Share-based payments to employees

As part of an incentive programme, the parent company and some sudsibiaries have issued various kinds of options since 1998. The current programmes are as follows:

Optionprogramme No. of options Shares/ options No. of optionsIssue price

SEKSubscription period until

Fully excercised contributes MSEK

Programme 1 585 000 1 585 000 18.00 10-03-31 10.5

585 000 585 000

1) Employee stock option programme 2007.

1) The annual meeting , May 15, 2007 decided to issue 500,000 employee stock options and 500,000 warrants. The employee stock options were hedged by issuing of 650,000 warrants, which also included the payroll overhead. At the end of the year 440,000 had been awarded to employees and 145,000 had been awarded to a subsidiary to hedge against payroll overhead. The options which are tied to employment may be exercised from 1 September to 31 March 2010.

The fair value of each option issued is calculated in accordance with the BlackScholes model.

Full excercise of all programmes would result in total dilution of about 0,5 % as of 31 December 2008. No programmes were deemed to have a value as of 31 December 2008. The dilution exposure and option program deemed to have no value may have changed until the date on which this annual report was distributed.

Change in outstanding option programmes during the year.

2008 2007

No. of optionsWeighted

issue price No. of optionsWeighted

issue price

Outstanding options at the begining of the period 3 515 500 24.41 7 415 002 24.41

Awarded during the period - - 585 000 18

Forfeited during the period - - -3 125 242 19.6

Redeemed during the period - - - -

Expired during the period -2 930 500 24.36 -1 359 260 31.35

Outstanding at the end of the period 585 000 18.00 3 515 500 23.22

Redeemable at the end of the period 0 0

*) No redemption has taken place during 2007 or 2008.

Note 37 | Signifi cant leasing expenses

The amounts associated with equipment at the company´s disposal through leases are negligable. The Group´s committment for leased premesis totals to TSEK 7 718 for 2009 and TSEK 12 371 for 2010 - 2012.

Note 38 | Pledged assets


2008 2007 2008 2007


Blocked bank deposits 8 542 6 196 - -

Note 39 | Contingent liabiliites


2008 2007 2008 2007


Contingent liabilites group companies - - - -

Contingent liabilites other 4 721 7 025 - -

Total 4 721 7 025


Note 40 | Financial instruments

Financial assets revalued via income statement

Financial assets valued acc to fair

value option

Loans and accounts

receivable

Investments held until maturity

Other assets & liabilities

Total book value Fair value

GROUP 2008

Investments 1 640 - - - 1 640 1 640

Long term receivables 7 640 21 319 - - 28 959 28 959

Accounts receivable - 32 564 - - 32 564 32 564

Other receivables - - - 16 777 16 777 16 777

Current investments and securities - - 36 185 - 36 185 36 185

Liquid assets 63 159 - - - 63 159 63 159

Assets 72 439 53 883 36 185 16 777 179 284 179 284

Other long term liabilities - - - 41 891 41 891 41 891

Accounts payable - - - 12 034 12 034 12 034

Other liabilities - - - 20 087 20 087 20 087

Unsettled loss on forward contracts - - - 3 892 3 892 3 892

Liabilities - - - 74 012 74 012 74 012

Financial assets revalued via income statement

Financial assets valued acc to fair

value option

Loans and ac-counts

receivable

Investments held until maturity

Other assets & liabilities

Total book value Fair value

GROUP 2007

Investments 8 798 - - - 8 798 8 798

Long term receivables - 1 118 - - 1 118 1 118

Accounts receivable - 23 910 - - 23 910 23 910

Other receivables - - - 9 296 9 296 9 296

Current investments and securities - - 74 229 - 74 229 74 229

Liquid assets 57 072 - - - 57 072 57 072

Assets 65 870 25 028 74 229 9 296 174 423 174 423

Other long term liabilities - - - 50 089 50 089 50 089

Accounts payable - - - 9 385 9 385 9 385

Other liabilities - - - 8 491 8 491 8 491

Unsettled loss on forward contracts - - - 787 787 787

Liabilities - - - 68 752 68 752 68 752

The principal rule as of 2005 is that fi nancial instruments are reported at fair value. Anoto Group policy is to hedge the net fl ow of Euro for six monthsat a time by means of forward contracts in Euro. Forward contracts are reported on the balance sheet closing date at fair value.

Forward contracts totaled EUR 8,000 thousand and USD 1,000 thousand at end of 2008.


Note 41 | Sale of business

GROUP

In December 2008 Anoto sold it´s shares in Logipard AB together with parts of Anoto´s activities within Imaging Technology to ARM Ltd.

Profi t from sale of business, added back in cash fl ow statement

Selling price -76 400

Writedown of intangible assets in group accounts 2 784

Selling costs 2 229

-71 387

Cash fl ow from sale of business

Effect on group liquid assets

Selling price 76 400

Retained part of selling price *) -7 640

Selling costs -2 229

Liquid assets in Logipard AB at time of sale -200

66 331

Of which change in long term receivables *) 7 640

Total operating activiteis 2 584

*) 90 % of selling price paid at signing of contract, remaining 10 % to be paid during 2010.

Net assets in Logipard AB at time of sale:

2008-12-15

Intangible fi xed assets 1 922

Equipment 1 499

Accounts receivable 6 301

Other recievables 608

Liquid assets 200

Advances from customers -3 238

Accounts payable -1 070

Other current liabilities -2 741

Net assets 3 481

Note 42 | Related parties

Summary of related party transactions.

GROUP There has been no transactions with a net effect in group accounts.

PARENT COMPANYRelated party

Selling of goods and services

Purchasing of goods and services Other

Receivable on related party on 31 December

Liability to related party on 31 December

Group company 2008 30 044 - 41 366 162 885 -

Group company 2007 26 155 - - 91 475 -

For transactions with Board and Executives, see note 9.


Lund, 31 March 2009

Märtha Josefsson Hans Otterling Christer Fåhraeus Chairman

Håkan Eriksson Bernard Gander Hiroshi Yoshioka

Stein Revelsby Anders Norling CEO

Our auditor’s report was submitted on 31 March 2009 KPMG AB

Eva Melzig Henriksson Authorized Public Accountant

Note 43 | Events after 31 December, 2008

Livescribe Inc’s debt to Anoto of MSEK 20,1 was settled in mid-March 2009. The debt was the remaining payment from the agreement early 2007 between Livescribe and Anoto, when Anoto phased out its operation “Content and Applications” to Livescribe Inc.


AUDIT REPORT

To the annual meeting of the shareholders of Anoto Group AB (publ)Corporate identity number 556532-3929

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the managing director of Anoto Group AB (publ) for the year 2008. The annual accounts and the consolidated accounts of the company are included in the printed version of this document on pages 16-45. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international fi nancial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the board of directors and the managing di-rector and signifi cant estimates made by the board of directors and the managing director when preparing the annual accounts and the consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined signifi cant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the managing director. We also examined whether any board

member or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.

The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company’s fi nancial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international fi nancial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act and give a true and fair view of the group’s fi nancial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.

We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and the group be adopted, that the loss of the parent company be dealt with in accordance with the proposal in the statutory administration report and that the members of the board of directors and the managing director be discharged from liability for the fi nancial year.

Malmö March 31, 2009

KPMG AB

Eva Melzig HenrikssonAuthorized Public Accountant


Anoto Group AB (publ) is governed by its Articles of Associa-

tion and the Swedish Companies Act. Since Anoto is listed on

NASDAQ OMX Stockholm, Anoto also applies NASDAQ

OMX Stockholm’s Rule Book for Issuers.

Since July 1, 2008, Anoto applies the Swedish Code of Corpo-

rate Governance (”the Code”) which requires that a Corporate

Governance Report be prepared. This is the fi rst Corporate Gover-

nance Report from Anoto. The report has not been reviewed

by the Company’s auditor and does not constitute a part of the

formal annual report.

CORPORATE GOVERNANCE STRUCTURE

Anoto is governed and controlled by several bodies.

The shareholders exercise their voting rights at General Meet-

ings of the Shareholders by electing the Board of Directors and

external auditors and making decisions on other issues like the

adoption of the annual report and stipulating how to appoint

the Nomination Committee.

The Nomination Committee nominates candidates to the Board

of Directors, Chairman of the Board and external auditors.

A Nomination Committee is required by the Code, but not the

Companies Act.

The Board is responsible for the appointment of the CEO, the

developing of long-term strategy, and controlling and evaluating

Anoto’s day-to-day operations. Some duties of the Board are

partly exercised by the Compensation Committee and the Audit

Committee.

The CEO is in charge of and responsible for the daily operations

and the management of Anoto in accordance with instructions

and guidelines from the Board of Directors.

External auditors appointed by the shareholders at the Annual

General Meeting examine the Company’s annual report and

accounts as well as the management by the Board of Directors

and the CEO.

MEETINGS WITH SHAREHOLDERS

The Annual General Meeting is the corporate body where the

shareholders in Anoto can exercise their rights by electing the

Board of Directors and deciding on all other issues voted on at

Annual General Meetings in accordance with the Companies

Act and the Articles of Association.

The Annual General Meeting is held in Lund, normally in the fi rst

half of May. The notice of the Annual General Meeting, together

with the agenda, is published on Anoto’s website and the Swe-

dish newspaper Dagens Nyheter, and Post och Inrikes Tidningar

(the Swedish Offi cial Gazette). As a courtesy, the date and place

for the Annual General Meeting together with information on

how to obtain the agenda is published in the Swedish newspaper

Sydsvenska Dagbladet.

All information material for the Annual General Meeting is avail-

able in both Swedish and English. The Annual General Meeting

is held in Swedish. To date, the composition of shareholders in

Anoto has not given reasons to translate the Annual General

Meeting into English.

ANNUAL GENERAL MEETING 2008

The Annual General Meeting (AGM) in 2008 took place in Lund

on May 15, 2008. Hans Otterling, Christer Fåhraeus, Märtha

Josefsson, Stein Revelsby, Bernard Gander and Hiroshi Yoshioka

were present from the Board of Directors. Present were also

Anoto’s external auditors as well as the nominated external

auditors to be elected for 2008 – 2012 and the Chairman of

the Nomination Committee.

The Annual General Meeting made the following decisions:

• The annual report was presented, and the consolidated income

statements and balance sheets were adopted. The Board Members

and CEO were discharged from liability. No dividends were to

be paid.

• In accordance with the Nomination Committee’s proposal,

Board Members Hans Otterling, Christer Fåhraeus, Märtha

Josefsson, Stein Revelsby, Bernard Gander, Håkan Eriksson and

Hiroshi Yoshioka were re-elected Board Members until the end

of the next Annual General Meeting. Hans Otterling was

re-elected Chairman of the Board.

• KPMG Bohlins AB was elected auditor until the end of the

Annual General Meeting 2012. The auditors were to be reim-

bursed according to invoice.

• The Nomination Committee’s proposal on how to appoint

members of the Nomination Committee, as well as the

assignment for the Nomination Committee, was approved.

• The Board of Directors was authorized to, on one or several

occasions prior to the next Annual General Meeting, resolve on

an issue of a maximum of 12,000,000 new shares with provisions

for non-cash payment or payment against set-off of claims or

else on conditions enabling the waiving of shareholders’ prefe-

rential rights.

• The guidelines for compensation to the CEO and other

executives of the Company were adopted in accordance with

the proposal by the Board of Directors.

• The proposal presented by the Board of Directors to adopt

an incentive program for key employees covering stock options

was approved.

ANOTO’S ANNUAL GENERAL MEETING 2009

Anoto’s Annual General Meeting 2009 will take place on May 14,

2009 in Lund.

NOMINATION COMMITTEE

The Annual General Meeting 2008 resolved, in accordance with

the proposal presented by the Nomination Committee, that the

Chairman of the Board of Directors be assigned to contact

CORPORATE GOVERNANCE REPORT 2008


three of the Company’s major shareholders, according to the list

of shareholders at the end of September 2008, and ask them to

appoint one representative each no later than six months prior

to the Annual General Meeting 2009 to, together with him, form

the Nomination Committee until a new Nomination Commit-

tee has been appointed. The Nomination Committee shall ap-

point a Chairman. The Chairman of the Board shall not be the

Chairman of the Nomination Committee. The majority of the

Nomination Committee members shall not be Board Members

of Anoto.

The Nomination Committee formed for the Annual General

Meeting 2009 was announced October 29, 2008 as folllows: Jan

Andersson representing Swedbank Robur Fonder (Chairman of

the Nomination Committee), Stein O. Revelsby representing

Norden Technology AS, Audun W. Iversen representing Tor Aksel

Voldberg, and Hans Otterling, Chairman of the Board. The

Nomination Committee was in January 2009 extended with

Leif Eriksröd representing Essensor AS, after Essensor AS having

announced increased ownership in Anoto.

The Nomination Committee shall prepare and present to the

Annual General Meeting 2009 proposals for the following issues:

1. Chairman at the Annual General Meeting

2. Chairman and other Members of the Board

3. Fees to the Board of Directors

4. Fees to the Auditors

5. The Nomination Committee in respect of the Annual

General Meeting 2010

The Nomination Committee’s proposal for Board Members

shall be presented in the notice for the Annual General Meeting

2009 as well as on the company’s website.

THE BOARD OF DIRECTORS

The Board of Directors, which also appoints the CEO, is ultimately

responsible for the organization of Anoto and the management

of its operations. According to Anoto’s Articles of Association,

the Board shall consist of not less than three and not more than

eight directors with not more than fi ve deputies. For information

about the Board Members and their remuneration, please refer

to page 49 in the Annual Report. All Board Members are inde-

pendent of Anoto’s management. They are also independent of

Anoto and the larger shareholders in Anoto.

RULES OF PROCEDURES

The Board of Directors has adopted Rules of Procedures that

outlines the work procedures and tasks for the Board, the Audit

Committee and the Nomination Committee. However, the

Rules of Procedure do not in any way change or alter the re-

sponsibility of the Board or individual Board Member according

to applicable laws and NASDAQ OMX Stockholm’s Rule Book

for Issuers. The Rules of Procedures are reviewed and adopted

at least once a year.

WORK OF THE BOARD OF DIRECTORS IN 2008

The Board of Directors consists of seven members elected by

the Annual General Meeting on May 15, 2008. Hans Otterling

has served as Chairman of the Board. The CEO and CFO take

part in board meetings. The Company’s General Counsel is the

Board’s secretary. When appropriate, other employees of the

company participate in reporting capacities concerning their

particular areas of expertise.

The Board continuously evaluates the performance of Anoto,

the CEO and Anoto’s Management.

Eleven of the fourteen meetings in 2008 were part of the Board’s

annual schedule. In addition to the Board’s ongoing effort to issue

directives and monitor the company’s activities – including the

budget, state of the market and strategic direction – the main

issues discussed at the meetings were as follows:

• February: Review of quarterly and annual accounts with

the Company’s auditor

• May: Review of quarterly accounts and meeting of the Board

members following election at the Annual General Meeting

• June: The strategy for Anoto

• August: Review of quarterly accounts and discussion of

Company’s direction

• November: Review of quarterly accounts and discussion

of Company’s direction

• December: Adoption of 2009 budget

Documentation is normally distributed approximately one week

prior to a meeting. The CEO submits a monthly written report

to the Board. The Board has two Committees – an audit Com-

mittee and a Compensation Committee – that prepare items

for the Board to take up and in certain cases reach decisions

delegated to them by the Board.

The Board Members attendance at Board Meetings and

Committee Meetings is set forth below as follows:

Board Number of Number of Number ofMember: Board Meetings: Audit Committee Compensation Meetings: Committee Meetings:

Hans Otterling 14/14 1/1

Christer Fåhraeus 13/14 2/2

Märtha Josefsson 13/14 2/2

Stein Revelsby 13/14 2/2

Bernard Gander 10/14 1/1

Håkan Eriksson 5/14 1/1

Hiroshi Yoshioka 5/14

AUDIT COMMITTEE

The Audit Committee – which consists of Märtha Josefsson

(Chairman), Christer Fåhraeus and Stein Revelsby – deals with

audits, their focus and their scheduling. The Committee also

receives reports from Anoto’s auditor. The Committee held two

meetings in 2008. At the meetings, the auditor presented the

schedule for the annual audit, discussed risk assessments and

reported on reviews that had been completed.


Meetings held by the Committee are reported to the Board by

the Chairman of the Audit Committee at the Board Meeting

following the Committee meeting.

COMPENSATION COMMITTEE

The Compensation Committee – which consists of Håkan Eriksson

(Chairman), Hans Otterling and Bernard Gander – handles

remuneration for the CEO and management, as well as incentive

programs. The Committee held one meeting in 2008.

Meetings held by the Committee are reported to the Board by

the Chairman of the Compensation Committee at the Board

Meeting following the Committee meeting.

The 2008 Annual General Meeting adopted guidelines for com-

pensation to senior executives.

CEO AND MANAGEMENT

The Management Team consist of six persons, see Annual Report

page 50, with the CEO in charge. The CEO and Management

Team manage and control Anoto’s daily operations.

INTERNAL CONTROL

The Board of Directors is responsible for the internal control

under the Swedish Companies Act and the Swedish Code of

Corporate Governance. This section on internal control is focused

on the internal control of the fi nancial reporting. Given the size

of Anoto, the Board has determined that there is no need for an

internal audit department or function, and that Anoto’s fi nance

department suffi ciently can carry out the internal control in co-

operation with the external auditors.

CONTROL ENVIRONMENT

The corporate culture of Anoto encourages initiatives while

assuming responsibility for meeting the defi ned strategic objecti-

ves of Anoto. The culture is based on trust, confi dence and per-

sonal responsibility. Each employee at Anoto has a job description

setting out tasks, responsibilities and authorizations.

Anoto has an “open door policy” and all employees can discuss

any issue, concern or matter directly with the CEO or a member

of the Management Team.

The CEO has adopted guidelines and policies for specifi c areas

that the employees are required to follow.

Anoto has implemented a Code of Conduct that is applicable

to Anoto and its suppliers. The Code of Conduct describes

Anoto’s requirements with respect to ethical behavior, child labor

and the environment.

A detailed delegation plan has been drawn up with well-defi ned

levels of attestation and decision levels. This is applied throughout

Anoto.

RISK ASSESSMENT

Risk assessments are performed in order to identify, map and

measure the root causes for risks. The most important risk factors

for the internal control of the fi nancial reporting are identifi ed

at Group and Company level, as well as at regional level. The risk

assessments also include the risk for inappropriate actions and

fraud. The outcome of the risk assessments result in actions and

tasks that support the internal control of the fi nancial reporting.

CONTROL ACTIVITES

The Board has implemented a system for control and risk ma-

nagement based on the Board’s Rules of Procedure - that also

include instructions for the CEO and reports that are to be

made to the Board - and the Finance Policy. These rules consti-

tute the framework for the internal control.

Anoto’s processes and systems for ensuring effective internal

controls are designed with the intention of managing and limiting

the risks of material errors in the reporting of fi nancial data,

thus ensuring that both strategic and operational decisions are

based on accurate fi nancial information.

The operational work of controlling the day-to-day activities is

carried out by the CEO and the Management Team. An authori-

zation manual governs the requirements for authorizations to de-

cision-making. In addition, there are several operational meeting

forums like management meetings and steering committees that

address specifi c control issues in the operational activities and

effectively steer Anoto towards the defi ned strategic objectives.

MONITORING

There are general as well as detailed control activities, aimed at

preventing, discovering and correcting faults and deviations. The

control organization is evaluated by the CFO on an ongoing basis

with the aim of ensuring quality and effi ciency. The CFO actively

participates in the recruitment process of all qualifi ed controllers.

The CEO and the CFO continuously keep the Board informed

of the Group’s fi nancial position, performance and any areas of

risk. Anoto’s external auditors attend at least two Board meet-

ings per year, at which the auditors provide their assessment and

observations on the business processes, accounts and reports.

The Chairman of the Board and the Chairman of the Audit

Committee are also in regular contact with the auditors.

The Board continuously monitors Anoto’s fi nancial performance

by comprehensive reports, as well as information from the CFO

at all Board Meetings. Regular follow-up, together with a high level

of transparency of the reporting material and fi nancial processes

ensures compliance with the Company’s Finance Policy, thus

identifying any defi ciencies in the internal control system.

A monthly management report is prepared for each application

and geographic area, and is subject to follow up with line manage-

ment. The internal control also includes detailed annual budgets

split on application areas, geographic areas and cost-centers.

Forecasts are delivered three times a year, May, August and Nov-

ember. The forecasting follows the same organizational set-up as

the annual budget. In December, the Board adopts the budget for

the following year.

In addition to the budgeting and forecasting, Anoto’s Management

Team continuously works with overall three-year strategic scenarios.


BOARD OF DIRECTORS

HIROSHI YOSHIOKA

Member of the Board

Born 1952

Member since May 2007

Other positions: Senior Vice

President, Corporate Executive

and President of TV Business

Group within Sony Corporation.

Shareholding: 0 shares in

Anoto Group AB.

Education: Bachelor of

Engineering. Graduated Kyoto

University.

HÅKAN ERIKSSON

Member of the Board

Born 1961

Member since May 2006

Other Positions: Boardmember

Vestas AS.


Anoto Group AB.

Education: Master of Science,

Electrical Engineering, Linköping

University. Honorary PhD,

Linköping University.

BERNARD GANDER

Member of the Board

Born 1959

Board member since May 2006


Anoto Group AB.

Education: MBA Finance and Inter-

national Business from University

of San Francisco. Bachelor in

Electrical Engineering from Fribourg

School of Engineering.

CHRISTER FÅHRAEUS

Company Founder,

Member of the Board

Born 1965

Board member since 1996

Other positions: Chairman of the

boards of Agellis Group AB, Respi-

ratorius AB and Flatfrog Laborato-

ries AB, CEO of EQL Pharma AB.

Member of the boards of Cellavision

AB, Monkfi sh Instruments AB, Flatfrog

Laboratories AB, Fårö Capital AB

and EQL Pharma.

Shareholding: 3 500 000 shares in

Anoto Group AB.

Education: MS Bioengineering, BS,

PhD h.c.

STEIN O. REVELSBY

Member of the Board

Born 1962

Board member since 2005

Other Positions: Chairman &

CEO of Norden Technology AS.

Norden Technology AS owns

9.5 million shares in Anoto

Group AB. Boardmember

GammaMedica-Ideas Inc., Indus-

trial Advisor to Capman plc.

Education: MBE, Norwegian

School of Management.

HANS OTTERLING

Chairman of the Board

Born 1961

Board member since May 2006

Other positions: Chairman of the

board of EpiServer AB. Deputy

board member of Climatewell

AB. Director of the board of the

Swedish Private Equity & Venture

Capital Association.

Shareholding: 100 000 shares

in Anoto Group.

Education: Master of Business

Administration, University of Mas-

sachusetts, School of Management,

Amherst, MA, USA and Stockholm

School of Economics, Stockholm,

Sweden.

MÄRTHA JOSEFSSON

Member of the Board

Born 1947

Member since 2004

Other positions: Chairman of

the board of Lärarfonder AB, and

member of the boards of Fabege

AB, Second National Pension Fund,

Investment AB Öresund, Luxonen

S.A., Skandia Fonder AB, Upsala

Nya Tidning AB and Opus Group.


Anoto Group AB.

Education: B.A. in Economics,

University of Uppsala, Sweden.


ANDERS NORLING

CEO, Anoto Group AB

Born 1951

Employed since 2006

Shareholding: 250 000 shares in

Anoto Group AB.

Education: Master of Science in Industrial

Engineering, Linköping University.

ANDERS WIDESJÖ

CFO, Anoto Group AB

Born 1951

Employed since 2008

Shareholding: 30 000 shares in

Anoto Group AB.

Education: MBA, Gothenburg

University.

LARS HERMANSEN

EVP Sales & Marketing, Anoto Group AB

Born 1958

Employed since 2006

Shareholding: 50 000 employee

stock options in Anoto Group AB.

Education: Master of Economics,

Stockholm University.

EBBA ÅSLY FÅHRAEUS

VP Sales & Marketing, Anoto Group AB

Born 1963

Employed since 2000


stock options and 35 900 shares

in Anoto Group AB.

Education: Master of Science in Business

and Economics, Stockholm School of

Economics.

MAGNUS HOLLSTRÖM

EVP Technology Licensing, Anoto Group AB

Born 1969

Employed since 2001



in Anoto Group.

Education: Master of Science in Electrical

Engineering, Lund University of Technology.

TORGNY HELLSTRÖM

Senior Vice President & General Counsel,

Anoto Group AB

Born 1958

Employed since 2004



in Anoto Group AB.

Education: LL.M., Stockholm University.

GROUP MANAGEMENT

ANNUAL GENERAL MEETINGAnoto’s Annual General Meeting will be held on 14 May 2009 at the Anoto premises

at Emdalavägen 18 in Lund, Sweden. Any shareholder wishing to participate in the

meeting must notify the company in one of the following ways:

* Phone: +46 46 540 1200, Fax: +46 46 540 1202

* E-mail to [email protected]

* In writing to Emdalavägen 18, SE-223 69 Lund, Sweden

The notifi cation must reach the company by 12:00 noon on Wednesday, 8 May. To be

entitled to participate, the shareholder must also be entered in the VPC AB share re-

gister by 8 May. Any shareholder who has registered his or her shares under a trustee

must temporarily register them in his or her own name with VPC AB by Wednesday,

8 May. When submitting the notifi cation, please state your name, personal identity or

corporate identity number, address, phone number and number of registered shares.

If you are participating by proxy, you must submit the authorisation to the company

prior to the meeting.

FINANCIAL REPORTING

Anoto Group’s fi nancial reports are released in Swedish and English. The easiest

way to obtain the reports is by downloading them from www.anoto.com, e-mailing

a request to [email protected] or phoning +46 46 540 1200.

Following is the schedule of Anoto Group’s fi nancial reports for its 2009

fi nancial year.

January-March interim report 7 May 2009

January-June interim report 31 July 2009

January-September interim report 4 November 2009

2009 year-end report 4 February 2010

2009 annual report April 2010

2009 Annual General Meeting May 2010

Anoto Group AB

Emdalavägen 18

SE-223 69 LUND

Sweden

Phone +46 46 540 1200

Fax +46 46 540 1202

New adress from July 1st 2009:

Traktorvägen 11

SE-226 60 LUND

Anoto Inc.

200 Friberg Parkway, Suite 3003

Westborough, MA 01581

United States

Phone +1-508-983-9550

Fax +1-508-983-9551

Anoto-Maxell K.K.

7F Dai-3 Nishi Aoyama Bldg.

1-8-1 Shibuya, Shibuya-ku Tokyo

Japan 150-0002

Phone +81 (0)3-5774-1212

Fax +81 (0)3-5774-1211

C Technologies

Traktorvägen 11

SE-226 60 LUND

Sweden

Phone +46 46 540 1200

Fax +46 46 540 1202

www.anoto.com

Anoto Annual Report 2008

Documents

Transcript of Anoto Annual Report 2008