Anoto Group — Annual Report 2007

Apr 25, 2008

ANNUAL REPORT 2007

CONTENTS

ANOTO GROUP AT A GLANCE	3
2007 IN BRIEF	4
A WORD FROM THE CEO	6
APPLICATION AREAS	8
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
AUDITOR'S REPORT	45
BOARD AND ITS RULES OF PROCEDURE	46
BOARD OF DIRECTORS	47
GROUP MANAGEMENT	48
ANNUAL GENERAL MEETING	49

ANOTO GROUP AT A GLANCE

"Connecting pen and paper to the digital world"

Anoto Group AB has a world-leading technology in the area of digital pen and paper. The technology enables the rapid, reliable transmission of handwritten text to digital form and thereby streamlines paper-based processes.

The Group's unique solutions are based on camera technology and image processing in real time. They combine the intuitive advantages of pen and paper with the many benefits of digital communication.

BUSINESS CONCEPT

Anoto's business concept may be summed up as "connecting 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 collaboration with a global network of partners, the Group creates commercial solutions based on the Anoto technology platform. The solutions are for a number of different sectors, including healthcare, banking 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 of each other. As the number of partners grows and their sales volumes expand, Anoto's income also increases without requiring any additional costs. Anoto had approximately 300 partners at the end of the fi nancial year, primarily in Europe, the United States and Japan.

APPLICATION AREAS

Anoto is broken down into four application areas.

Forms Solutions

This application area concentrates on systems, products and services for companies and organisations that require efficient forms processing. Among

Anoto's partners are system integrators, software developers and IT consulting firms. The partners provide their customers with customised solutions based on Anoto technology. Meanwhile, Anoto obtains income per digital pen used.

Interactive Media

This application area uses Anoto technology in products that combine digital material such as books and cards with a digital pen. The approach enables an immediate response by means of speech, audio and the like. Among the uses of the concept are teaching media that are simple, intuitive and entertaining. For instance, such media make it more fun for children and teens to learn reading, writing and arithmetic.

Anoto Technology

Anoto Technology develops and markets Anoto's core technology (ASIC). The segment supplies or licenses Anoto modules, components and function blocks for integration into the customer's products or components. The products include equipment for digital video surveillance and mobile phone components.

C Technologies

C Technologies develops and markets the C-Pen, which scans and recognises printed text for further internal processing or transmission to a computer.

QUOTATION

The Anoto Group AB has been listed since 2000 and trades on the Small Cap list of the OMX Nordic Exchange Stockholm (ticker: ANOT).

2007 IN BRIEF

SALES AND EARNINGS IMPROVE

• Anoto's new strategy and organisational restructuring contributed to favourable fi nancial and business trends during the year.
• Net sales rose by 55 % to SEK 169 million (109).
• The loss after taxes totalled SEK -8 million (-133).
• Earnings per share were SEK -0.06 (-1.03) after full dilution.
• Cash fl ow was SEK -49 million (-32).
• The number of active forms users doubled from the previous year to 110,000.

• Orders were received for 20,000 pen licenses from Anoto's Japanese partner OMS, which develops systems for digital case notes and performs clinical trials for the Japanese healthcare and pharmaceutical sectors.

• Anoto and Dai Nippon Printing (DNP) in Japan entered into a license agreement worth EUR 3.5 million covering DNP's rights to develop products based on Anoto technology.

• Anoto signed an agreement with Livescribe in the United States worth USD 3.5 million covering Livescribe's rights to develop consumer products based on Anoto technology. The agreement also generates royalties on future sales.
• Anoto obtained a breakthrough order in the Chinese market for digital pens to be used in the labelling, inspection and maintenance of public fi re extinguishers.
• Anoto licensed its pen and paper technology to T-Systems in Germany for upgrading of mobile and electronic signature solutions.

Strong growth in the number of forms users

KEY RATIOS FOR THE GROUP

(SEK thousand) 2003	2003	2004	2005	2006	2007
Net sales	192,368	147,392	113,230	108,725	168,771
Gross profi t/loss	44,695	89,936	79,395	78,404	129,114
Operating profi t/loss	-323,185	-80,011	-79,775	-131,823	-9,665
Profi t/loss after tax	-310,219	-75,218	-13,884	-132,965	-7,549
Cash fl ow for the year	-44,949	-74,293	169,554	-31,649	-48,540
Earnings per share (SEK)	-2.81	-0.64	-0.11	-1.03	-0.06
Shareholders' equity per share (SEK)	4.09	3.27	4.39	3.56	3.52
Equity/assets ratio, %	79	80	79	80	81
Average no. of employees	182	132	110	121	103

NET SALES (SEK thousand)

EQUITY/ASSETS RATIO, %

CASH FLOW FOR THE YEAR (SEK THOUSAND) PROFIT/LOSS AFTER TAX (SEK THOUSAND)

ANOTO'S NEW STRATEGY IS STARTING TO PAY OFF

The Group's new strategy and the restructuring measures that were adopted brought major improvements in 2007. The number of forms users doubled, while substantial orders were received in both existing and new application areas. As a result, Anoto's fi nances are more stable, so that additional focus can be placed on strengthening both growth and profi tability.

Anoto's business is based on a unique proprietary technology distributed through a global network of partners. Anoto has worked with its partners over time to create many commercial solutions for various types of customers, particularly in the healthcare, banking and fi nance, transport and logistics, and education sectors.

It is with great satisfaction that I can report that Anoto has reversed several years of weak earnings growth to show favourable fi nancial and business trends.

New strategy

The favourable trends of 2007 stemmed from the new strategy that we adopted in the autumn of 2006 and the organisational restructuring that we have carried out since then.

Anoto's transformation from being highly technology oriented to a focus on sales has been crucial to its improved performance. We hired new employees in 2007, while building up an extremely effective sales organisation based in Sweden, the United States and Japan.

Forms Solutions is increasingly emphasising the development of fully developed applications instead of simply selling development tools to our partners. Our new structure allows us to develop and commercialise fully developed solutions faster. A research and development team develops and markets technology platforms, while most employees create new products in collaboration with our sales organisation and partners. As a result, our partners can devote more resources to selling to end-customers.

These changes have begun to generate favourable results and are expected to boost sales in 2008, as well as make it easier to identify new partners.

We have also signed agreements as a result of which Logitech's io2 pen, based on Anoto technology, will be part of our product assortment, along with our proprietary pen and a pen marketed by Maxell. We are also approaching major printer manufacturers with the goal of ensuring that all offi ce printers on the market support documents based on our technology.

Substantially higher sales and earnings

Anoto's new strategy and structure helped improve our fi nancial trends considerably in 2007. Sales were up by 55 % and the gross margin rose to 77 % (72).

Substantially higher sales and the continuation of good cost control considerably boosted earnings as well. Earnings after tax for the year ended up at -8 million (-133), while the profi t before depreciation and amortisation was SEK 6 million (-104).

Solid growth for a number of applications

The Group's application areas scored a number of successes during the year. Active users of Forms Solutions, our biggest area, doubled in number to almost 110,000, as the result of several larger orders and a number of small ones. The biggest order of the year was from Order-Made Souyaku (OMS) and covered 20,000 licenses for case notes in the healthcare sector. Anoto obtained a breakthrough order in the Chinese market for 5,000 licenses of pens to be used in the labelling, inspection and maintenance of public fi re extinguishers. We also licensed our digital pen and paper technology to T-Systems, which develops services in the area of mobile and electronic signature solutions. Those orders represent new application areas for Anoto technology.

In the Interactive Media area, our partner LeapFrog launched a new product based on Anoto technology. The company will introduce a new high-potential, product based on Anoto technology in 2008. We signed an agreement in early 2007 with Livescribe in

the United States covering its right to use Anoto technology for the development of consumer products. The agreement generated royalty income of USD 3.5 million, as well as royalties on future sales. Dai Nippon Printing in Japan acquired rights during the year for EUR 3.5 million to develop products based on our technology.

Sales of mobile phones containing Anoto video technology have begun to take off. Income from licensing of the technology rose signifi cantly in late 2007 and the trend is expected to persist in 2008.

The first generation of C Dictionary, a translation application with integrated C-Pen functionality, was launched in 2007.

Outlook for 2008

I am pleased to note that Anoto has now reached the point where its fi nances are increasingly stable, allowing us to place additional emphasis on growth and profi tability.

I am looking forward to the coming year with great confi dence. Our restructuring program and the new strategy are starting to show results. As a result of this Anoto expects that the number of active users of Forms Solutions will continue to grow strongly in 2008. For those end-products that contains Anoto video technology we predict a strong growth. Altogether, this will lead to greatly increased sales volumes and improved margins during 2008.

Lund, April 2008

Anders Norling CEO

APPLICATION AREAS

Anoto forms solutions

This application area sells user licenses and development tools for patented Anoto technology. Anoto's customers are a large number of partners (solution providers) that develop fi nal products for the end-customer. Demand comes from virtually every segment of the community that uses pen and paper and needs to transmit data to digital media. Sales totalled SEK 64.1 million (34.8) in 2007.

The most important end-customers are in the healthcare, transport, banking and insurance sectors. Among the uses of digital pen and paper is the simplifi cation of administrative routines for documentation and quality assurance of healthcare interventions. When it comes to transport, the driver can save time on receipts and more readily avoid misdeliveries. The advantages of digital pen and paper are faster paperbased processes, reduced risk of error, greater productivity and noticeable cost savings.

Anoto offers a unique, patented technology. Because the company does not have any direct rival in digital pen and paper, it competes with other technologies

such as Tablet PCs, PDAs and smartphones. Trends are being powered by increased knowledge and penetration of both new and existing markets.

The company operates on its own in Sweden, the United States and Japan, as well as through partners in the Americas, Europe, South Africa, Australia and Asia. Western Europe, Japan and the United States are its single largest markets.

Sales rose by 50 % in 2007. There are now almost 110,000 users of the various applications that contain patented Anoto technology. Among the largest orders of the year, were many from the Japanese healthcare sector, as well as a breakthrough in the Chinese public administration sector.

Swedish elderly care is increasingly using digital pen and paper to facilitate documentation, quality assurance and data transmission. The advances in home help services have helped spread the technology to other healthcare applications, such as mammographies, physical examinations and bedsore prevention.

Anoto technology has scored a breakthrough in the pharmaceutical industry, now that internationals like Novartis, Actelion Pharmaceuticals and Sanofi -Aventis have begun to use it successfully in a number of different areas. Among the pharmaceutical uses of digital pen and paper are documentation of data in clinical trials, data entry for the distribution of drug samples and streamlined ordering processes.

One of the main reasons for these advances is that Anoto partners are now better able to focus on the sale of fully developed products. The partners had previously devoted substantial resources to the development of applications and products. As a result, lead-times before the fully developed product reached the market were long.

Anoto will prioritise a number of key areas to ensure ongoing expansion and profi tability improvements. The company is proactively striving to increase the number of partners, particularly system integrators, from approximately 300 at the present. Generally speaking, the result will be greater penetration of new and existing markets, as well as sales to bigger customers in both private and public administration. Healthcare is a priority sector in which Anoto Technology is attracting growing attention. Banking and fi nance, as well as insurance, are promising sectors as well.

In addition, Anoto will increasingly develop fi nal platforms and products instead of simply selling licenses and development tools. That will allow both the company and its partners to shorten the selling process.

Interactive Media

Interactive Media develops and licenses technology modules for digital pens and applications. Anoto technology is used in products based on a combination of digital material (books, cards and the like) and a digital pen that permits immediate feedback by means of voice, audio, etc. Among the uses of the concept are teaching media that are simple, intuitive and entertaining. Interactive Media reported sales of SEK 57.4 million (13.0) for the year.

The application area's three main partners are Leap-Frog and Livescribe in the United States, as well as Dai Nippon Printing in Japan. Anoto develops and licenses technologies that the companies use in their products. Anoto's highest sales are currently in the Japanese and U.S. markets.

Not only is Anoto world-leading in the area, it has a technologically unique product. Competition comes from companies with products based on another technology that solves the same problems for users. While the technology is used primarily by the educational sector today, Anoto is looking for additional

areas – such as visual communication, graphic design, games and entertainment – in which it can be competitive.

Demand for Anoto products was noticeably stronger in 2007. LeapFrog began to sell the Fly Fusion Pentop Computer, its new product based on Anoto Technology. LeapFrog will expand its Anoto-based portfolio when it launches the Tag Reading System this summer. Tag is the replacement for LeapPad, which is Leap-Frog's biggest marketing success at more than 30 million units sold.

In collaboration with Maxell, Anoto developed a proprietary interactive pen platform that is now ready for demo and sale. The platform enables new interactive solutions for uses such as computers and mobile phones at an attractive cost.

Interactive Media's focus in 2008 will be on closer collaboration with existing partners and assurance of the agreements initiated in 2007. Meanwhile, the effort will continue to identify new areas in which the technology can be used.

Anoto Technology

Anoto Technology develops video technology in two different product areas. The fi rst area includes development and (through partners) manufacture of complete chips for digital surveillance cameras. The chips convert images to various video formats, such as MPEG4 and H264, for further distribution. The customers are surveillance equipment manufacturers.

The other product area focuses on components for video processing in mobile phone chips. The technology is sold to suppliers to the big mobile phone makers. Anoto Technology reported sales of SEK 33.8 million (16.3) for 2007.

Anoto Technology's customers are among the three leaders in their areas. The market is growing along with mobile phone capacity and the demand for surveillance equipment.

Trends were highly favourable in 2007 due to initial retail sales of the fi rst mobile phones with Anoto video technology. The phones, which contain fi rst generation technology developed by Anoto, generate royalties per unit sold. The fi rst contract was signed in 2007 to market third generation video technology for mobile phones.

The emphasis in 2008 will be on expanding with existing customers. The long-term objectives include broadening the customer base.

C Technologies

C Technologies develops and markets the C-Pen, which scans and recognises printed text for further internal processing or transmission to a computer. The C-Pen is sold through both retail outlets and directly to businesses in accordance with the OEM model. In 2007, C Technologies reported sales of SEK 13.5 million (22.8).

Customer value consists of 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 transmission of text.

C Technologies collaborated with C-Pen in 2007 for translation services in China, where deliveries are expected to begin in 2008 after some delays. Linguistic applications for the consumer market have also been developed and the fi rst version of C Dictionary was launched in late 2007.

THE SHARE

The Anoto Group has been listed on the Stockholm Stock Exchange (ticker: ANOT) since 16 June 2000. The share is listed on the Small Cap list of the OMX Nordic Exchange Stockholm. The share had previously traded on the New Market starting on 15 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 11 % from SEK 10.90 to 9.65 during the year. During the same period, the Affärsvärlden General Index was down by 7 % and the Stockholm Stock Exchange IT Index lost 41 %. Anoto Group's market capitalisation was SEK 1,241 million on 31 December 2007. On 10 March 2008, the share price was SEK 7.80 and the market capitalisation was SEK 1,003 million.

A total of 78,221,273 Anoto shares traded on the Stockholm Stock Exchange in 2007, for a turnover rate of 61 %.

SHAREHOLDERS

At the end of 2007, Anoto Group had 7,637 shareholders. Foreign shareholders controlled 57 %, the ten largest shareholders 59 %, and institutional and industrial investors 89 % 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 three outstanding option programmes (one of which involves stock options with underlying warrants and two of which are traditional warrant programmes) for employees. The 3,515,500 options that have been subscribed for expire on various dates between 30 November 2008 and 31 March 2010.

Full exercise of the options that have been subscribed for would result in subscription for no more than 3,515,500 new shares, increasing the company's share capital by SEK 70,310 and diluting existing shares by 2.7 %. The issue prices for options in these three programmes range from SEK 17.50 to SEK 31.35.

ANALYSTS

Anoto Group is covered by analysts at a number of banks and securities brokers, including Carnegie, Hagström & Qviberg and Kaupthing.

PER-SHARE DATA 2007

No. of shares	128,583,867
Number of outstanding options 1)	0
Average no. of shares	128,583,867
Average no. of outstanding options	0
Earnings per share (SEK)	-0.06
Earnings per share including options (SEK)	-0.06
Cash fl ow per share for the year (SEK)	-0,.38
Cash fl ow per share including options (SEK)	-0.38
Shareholders' equity per share (SEK)	3.52
Shareholders' equity per share including options (SEK) 3.52

1) Pursuant to IAS 33

LARGEST SHAREHOLDERS, 31 DECEMBER 2007

Name	%	Total
Norden Technology AS	17.6 %	22,638,065
Robur Fonder	9.8 %	12,624,817
SEB Enskilda ASA	8.5 %	10,906,250
DNB	7.5 %	9,570,581
Barclays Bank	4.1 %	5,287,500
First Securities	2.8 %	3,610,850
Christer Fåhraeus	2.7 %	3,500,000
Skandia Fonder	2.6 %	3,304,166
Banco Fonder	2.4 %	3,035,000
Nordea Bank	1.8 %	2,350,700
Other	40.2 %	51,755,938
Total	100.0 %	128,583,867

Shareholders by size, 31 December 2007

Holdings	Total no. of shareholders	% of total shareholders	Hold collectively no. of shares	% of share capital
1–1,000	6,026	78.91	2,134,492	1.66
1,001–10,000	1,306	17.10	5,696,265	4.43
10,001–100,000	273	2.94	7,882,191	6.13
100001–	86	1.13	112,870,918	87.78
	7,637	100.00	128,583,867	100.00

FIVE-YEAR SUMMARY1)

Summary of income statements

(SEK thousand) 2003 2004 2005 2006 2007 Net sales 192,368 147,392 113,230 108,725 168,771 Gross profi t/loss 44,695 89,936 79,395 78,404 129,114 Amortisation – intangible fi xed assets -60,901 -20,661 -22,680 -25,809 -13,710 Depreciation – property, plant and equipment -13,803 -7,825 -3,644 -1,709 -2,201 Operating profi t/loss -323,185 -80,011 -79,775 -131,823 -9,665 Profi t/loss on participations in Group companies 25,121 – 70,457 -769 -252 Profi t/loss on participations in associated companies -8,876 3,059 – – – Profi t/loss on other receivables that are non-current assets -10,912 – – – – Other fi nancial items 2,504 1,861 -4,446 794 3,269 Profi t/loss after fi nancial items -315,348 -75,091 -13,764 -131,798 -6,647 Tax -360 -127 -120 -1,208 -791 Minority share in profi ts 5 489 – – 41 -110 Profi t/loss after tax -310,219 -75,218 -13,884 -132,965 -7,549

Summary of balance sheets

(SEK thousand)	31 Dec 2003	31 Dec 2004	31 Dec 2005	31 Dec 2006	31 Dec 2007
Assets
Intangible fi xed assets	380,041	368,031	357,536	343,324	339,473
Property, plant and equipment	11,298	5,589	3,568	3,512	4,046
Financial fi xed assets	4,924	5,155	5,346	5,080	8,560
Total non-current assets	396,263	378,775	366,450	351,916	352,079
Inventory	3,006	1,671	1,517	1,936	5,960
Accounts receivable	31,175	20,337	36,780	27,615	24,062
Other current assets	22,041	29,384	15,667	15,669	51,132
Cash and bank balances, including current investments	116,033	41,740	211,490	179,841	131,301
Non-current assets for divestment			74,235	0	0
Total current assets	172,255	93,132	339,689	225,061	212,065
Total assets	568,518	471,907	706,139	576,977	564,382
Liabilities and shareholders' equity
Shareholders' equity	451,248	385,629	555,690	458,237	452,809
Minority shareholdings	—	—	—	1,959	2,069
Provisions
Non-interest-bearing	54,550	—	—	—
Long-term liabilities
Non-interest-bearing	—	13,692	4,231	4,728	626
Current liabilities
Non-interest-bearing	62,623	72,586	146,218	112,053	109,030
Interest-bearing	97	—	—	—
Total liabilities	117,270	86,278	150,449	118,740	111,573
Total liabilities and shareholders' equity	568,518	471,907	706,139	576,977	564,382

Summary of cash fl ow statements

(SEK thousand)	2003	2004	2005	2006	2007
Profi t/loss after fi nancial items	-315,348	-75,091	-13,764	-131,798	-6,647
Items that do not affect liquidity	155,038	8,787	-39,559	8,913	11,540
Change in working capital	-19,858	-4,949	60,251	73,642	-39,015
Cash fl ow from operating activities	-180,168	-71,253	6,928	49,243	-29,419
Cash fl ow from investing activities	-12,556	-7,633	-14,933	-14,190	-20,808
Total cash fl ow before fi nancing activities	-192,724	-78,886	-8,005	-63,433	-50,227
Cash fl ow from fi nancing activities	147,775	4,593	177,669	31,784	1,687
Cash fl ow for the year	-44,949	-74,293	169,554	-31,649	-48,540

1) The disclosures for 2004 to 2007 are in compliance with IFRS. The fi gures for 2003 have not been recalculated but are reported in accordance with the accounting policies in effect at the time.

Key ratios

	2003	2004	2005	2006	2007
Sales growth, %	neg	neg	neg	neg	55
Gross margin, %	23	61	70	72	77
Operating margin, %	neg	neg	neg	neg	neg
Profi t margin, %	neg	neg	neg	neg	neg
Capital employed (SEK thousand)	451,345	385,629	555,690	460,196	454,878
Return on capital employed, %	neg	neg	neg	neg	neg
Return on shareholders' equity, %	neg	neg	neg	neg	neg
Proportion shareholders' funds, %	79	82	79	80	81
Equity/assets ratio, %	79	82	79	80	81
Net debt/equity ratio, multiple	-0.26	-0.11	-0.38	-0.39	-0.29
Interest coverage ratio, multiple	-168	-1,597	-1	-29	-3
Net debt (SEK thousand)	-115,936	-41,740	-211,490	-179,841	-131,301
Earnings per share (SEK)	-2.81	-0.64	-0.11	-1.03	-0.06
Earnings per share after dilution (SEK)	-2.81	-0.64	-0.11	-1.03	-0.06
Cash fl ow per share for the year (SEK)	-0.41	-0.63	1.42	-0.25	-0.38
Cash fl ow per share after dilution (SEK)	-0.41	-0.63	1.40	-0.25	-0.38
Shareholders' equity per share (SEK)	4.09	3.27	4.39	3.56	3.52
Shareholders' equity per share after dilution (SEK)	4.04	3.15	4.32	3.56	3.52
Average no. of employees	182	132	110	121	103
Sales per employee (SEK thousand)	1,057	1,117	1,029	899	1,639
Payroll expenses, incl. social security contributions (SEK thousand)	152,845	112,906	95,829	121,822	88,184
(of which, pension premiums)	14,915	14,006	11,030	10,925	10,588

DEFINITIONS

PROPORTION SHAREHOLDERS' FUNDS

Shareholders' equity, minority interests and deferred tax at the end of the year as a percentage of total assets

RETURN ON SHAREHOLDERS' EQUITY

Profi t for the year as a percentage of average shareholders' equity

RETURN ON CAPITAL EMPLOYED

Profi t after net fi nancial income/expense plus interest expense, as a percentage of average capital employed

GROSS MARGIN

Gross 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 SHARE

Shareholders' equity divided by the weighted average number of shares during the year

AVERAGE NUMBER OF EMPLOYEES

Average number of employees during the year

NET DEBT

Interest-bearing liabilities less liquid assets and current investments

NET DEBT/EQUITY RATIO

Net debt divided by shareholders' equity, including minority interests

SALES PER EMPLOYEE

Net sales divided by the average number of employees

SALES GROWTH

Increase in net sales as a percentage of net sales for the previous year

EARNINGS PER SHARE

Profi t after tax divided by the weighted average number of shares during the year

INTEREST COVERAGE RATIO

Profi t after net fi nancial income/expense plus interest expense, as a percentage of interest expense

OPERATING MARGIN

Operating profi t/loss after depreciation and amortisation as a percentage of net sales

CAPITAL EMPLOYED

Total assets less non-interest-bearing provisions and liabilities, including deferred tax liabilities

EQUITY/ASSETS RATIO

Shareholders' equity including minority interests as a percentage of total assets

PROFIT MARGIN

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

CASH FLOW PER SHARE FOR THE YEAR

Cash fl ow for the year divided by the weighted average number of shares during the year

MANAGEMENT REPORT

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 2007 fi nancial year.

GROUP STRUCTURE

Anoto Group AB is a holding company in the Group and performs group-wide functions. The Anoto AB and Anoto Inc. subsidiaries are responsible for most operating activities.

ORGANISATION

Anoto 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 organisation is broken down into the four application areas of Forms Solutions, Interactive Media, Anoto Technology and C Technologies. The entire business is based on digital camera technology and image processing in real time.

ANOTO BUSINESS UNIT

FORMS SOLUTIONS

This application area has a global partner network that focuses on user-friendly forms solutions for promoting effi cient capture, transmission and storage of data in sectors such as health care, banking and fi nance, transport and logistics, and education. The year showed another rapid increase in the number of Forms Solutions users – up 107 % from 2006. Anoto received a number of large orders during the year, including 20,000 licenses for Order-Made Souyaku (OMS) to use in the Japanese healthcare sector, 5,000 licenses for use by the Chinese fi re service, and a number of orders for 1,000 – 2,000 licenses.

INTERACTIVE MEDIA

The pillar of this application area is Anoto's partnership with LeapFrog, a U.S. company that markets and sells its FLY Pentop Computer based on Anoto technology. The learning tool product is an interactive digital pen that targets 8 – 12 year-olds, primarily in the United States. The application area and Dai Nippon Printing (DNP) began working together in 2005 starting with a license order worth approximately SEK 32 million (EUR 3.5 million). Additional license orders for approximately SEK 32 million (EUR 3.5 million) were obtained in 2007.

ANOTO TECHNOLOGY

This application area develops and markets video technology as ASICs and IP blocks. In late 2006, Anoto's development division for video technology was transferred to a subsidiary, 80 % of which is owned by Anoto and 20 % by the employees. New agreements worth SEK 8 million were entered into during the year.

C TECHNOLOGIES

The products of the C Technologies application area, of which the C-Pen scanning pen is the best known, are based on the integration of digital camera technology with leading-edge image processing in products characterised by energy effi ciency and high performance. Ever since late 1998, C Technologies has been establishing its technology platform in the global market by means of license and OEM partnerships, along with sales of proprietary products. Sales were poorer than expected in 2007, the business reporting a 40 % reduction in volume from 2006.

SHARES AND SHAREHOLDERS

The company had 128,583,867 shares as of year-end. According to VPC AB statistics, there were 7,637 shareholders on 31 December 2007, representing a decrease of approximately 18 % over the past 12 months. The largest shareholders were Norden Technology AS (17.6 % of the votes and capital) and Robur Fonder (9.8 % of the votes and capital).

EMPLOYEES

The average number of employees of the Group decreased from 121 to 103 in 2007. The Group had 111 employees at the end of the year.

REMARKS ON THE INCOME STATEMENT

Net sales for the year increased by 55 % from SEK 109 million to SEK 169 million. Sales for 2007 included license agreements with Livescribe and DNP generating a total income of SEK 52 million, as well as growth at Forms Solutions and increased use of Anoto video technology in mobile phones. The composition of net sales was substantially different than in 2006. Due to growth, primarily at Forms Solutions and Interactive Media, along with lower income at C Technologies and a one-time settlement for Anoto Taiwan (2006), Forms Solutions and Interactive Media accounted for 72 % of net sales, as opposed to 44 % in 2006.

Thirty eight percent of the Group's income is in U.S.

dollars and 31 % in euros. During the year, the Group hedged 100 % of its currency net fl ows in U.S. dollars and approximately 50 % of its currency fl ows in euros (refer to the section on risk management).

The Group's gross profi t for the year rose to SEK 129 million (78), while its gross margin was up to 77 % (72) due primarily to higher royalty and license income.

Owing wholly to the phase-out of the Anoto Content and Applications business unit in late 2006, overhead decreased during the year by more than 34 %. The Group capitalises non-customer fi nanced development expenses that meet IAS 38s criteria, a total of SEK 9 million (6) in 2007. The operating loss for the year was SEK -10 million (-132).

REMARKS ON THE BALANCE SHEET AND CASH FLOW STATEMENT

As the result of negative cash fl ow of SEK -49 million, total assets decreased by SEK 12 million and liquid assets fell to SEK 131 million. The main reason for negative cash fl ow was an increase in accrued income. Current liabilities decreased from SEK 110 million to SEK 107 million. Provisions for restructuring and other provisions amounted to SEK 2 million (7).

The Group's liquid assets, including current investments, decreased from SEK 180 million at the end of 2006 to SEK 131 million at the end of 2007.

Shareholders' equity of SEK 453 million on 31 December, as opposed to SEK 458 million a year before, represented an equity/assets ratio of 81 % (80).

Cash fl ow from operating activities was SEK -33 million (-49). Due to higher sales and accrued income (non-invoiced completed deliveries at year-end), working capital rose by SEK 39 million during the year. Investing activities consumed SEK 16 million (14), of which SEK 9 (6) million was for capitalised development expenses, during the year. Financing activities contributed SEK 1 million (32). Total cash fl ow for the year was SEK -49 million (-32).

INVESTMENTS

Net investments in 2007 for fi xed assets totalled SEK 16 million (14).

RESEARCH AND DEVELOPMENT

The Group's R&D effort is oriented toward upgrading and integrating electronic hardware and software for the development of digital pen and paper solutions. The Group spent SEK 63 million (149), or 45 % (71) of its total operating costs, on R&D in 2007. The fi gure included SEK 8 million (20) for amortisation of capitalised development expenses. Pursuant to its compliance with IAS 38, the Group capitalised SEK 9 million (6) in new development expenses during the year. Including capitalisation, the Group's total 2007 R&D costs thereby totalled SEK 67 million (157).

Anoto has an extensive patent portfolio. At the end of 2007, the Group had 338 active patent applications and 151 patent approvals.

DISPUTES

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

ENVIRONMENT

Anoto does not pursue any activities that require environmental permits. None of its units are environmentally certifi ed.

RISK MANAGEMENT

The Group sells primarily outside of Sweden, and most of its agreements are in euros or U.S. dollars. Because most costs are in Swedish kronor, margins and earnings are sensitive to fl uctuations in the price of the U.S. dollar and euro. The Anoto Group AB parent company handles all trading in fi nancial instruments. In 2007, approximately 32 % of total income was related to the U.S. dollar and 39 % to the euro The Group also had infl ows of approximately USD 2.5 million related to prepaid royalties.

Refer to Note 4 for a detailed description of the company's risk management policies.

BOARD AND ITS RULES OF PROCEDURE

The Anoto Group AB Board of Directors consists of seven ordinary members. Refer to page 46 of this annual report under the section entitled "Board of Directors and its rules of procedure" for a detailed account of the Board's composition and working methods.

The 2007 annual general meeting authorised 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 FOR REMUNERATION FOR SENIOR EXECUTIVES

Remuneration for the CEO and senior executives in 2007 appear in Note 10, "Salaries and other remuneration". The Board has proposed to the annual general meeting that the guidelines for remuneration for senior executives remain unchanged in 2008.

Signifi cant events after year-end No signifi cant events have occurred after year-end.

OUTLOOK

The restructuring programme and new strategy adopted during the year are beginning to pay off. Thus, Anoto anticipates new growth in the number of active Forms Solutions users during 2008. We forecast rapid growth for fi nal products containing Anoto video technology. All in all, sales volumes and margins will improve substantially this year.

PROPOSED APPROPRIATION OF ACCUMULATED DEFICIT

Proposed appropriation of accumulated defi cit in the parent company (SEK):

Total	–343,598
Loss for the year	–343,598
Accumulated defi cit	0

The Board of Directors and CEO propose that the accumulated delicit of SEK -343,598 reduce 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	2007	2006	2007	2006
Income/net sales	5,6	168 771	108 725	26 155	41 513
Cost of goods and services sold		-39 657	-30 321	-	-
Gross profi t/loss	6	129 114	78 404	26 155	41 513
Selling expenses	10,15,34	-53 529	-32 083		-
Administrative expenses	10,12,15,34	-21 716	-28 163	-26 507	-32 747
Research & development costs	10,15,34	-63 073	-149 134	-	-
Other operating income	13	1 192	1 495	-	4
Other operating costs	14	-1 653	-2 338	-	-
Share of earnings in associated companies	17	-	-4	-	-
Operating profi t/loss		-9 665	-131 823	-352	8 770
Profi t/loss on shares in Group companies	16	-252	-769	-3 700	-116 669
Interest income	18	4 782	5 197	3 844	4 879
Interest and similar expenses	19	-1 513	-4 403	-136	-9 116
Profi l/loss after fi nancial items		-6 648	-131 798	-344	-112 136
Tax on profi l/loss for the year	20	-791	-1208	-	-11
Loss for the year		-7 439	-133 006	-344	-112 147
Allocation of profi t/loss for the year
Profi t/loss attributable to shareholders of Anoto Group AB		-7 549	-132 965	-344	-112 147
Profi t/loss attributable to minority interests		110	-41	-	-
Earnings per share (SEK) 1)		-0,06	-1,03	0,00	-0,87
Earnings per share after dilution (SEK) 2)		-0,06	-1,03	0,00	-0,87
No of shares, weighted average for the year		128 583 867	127 912 871	128 583 867	127 912 871
No of shares, weighted average for the year, including outstanding warrants 3)		128 883 867	128 852 821	128 583 867	128 852 821

1) Loss for the year divided by average number of shares during the year

2) Loss for the year divided by sum of the weighted average number of shares during the year and the weighted 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

			Group		Parent company
(SEK thousands)	Note	2007-12-31	2006-12-31	2007-12-31	2006-12-31
ASSETS
Non-current assets
Intangible fi xed assets
Capitalized development expenditures	21	11 504	14 966	-	-
Patents	22	28 938	29 328	764	792
Goodwill	24	298 674	298 674	-	-
Brands	23	357	356	40	22
Total intangible fi xed assets		339 473	343 324	804	814
Property, plant and equipment
Equipment and tools	25	4 046	3 512	366	168
Total property, plant and equipment		4 046	3 512	366	168
Financial fi xed assets
Shares in Group companies	26	-	-	267 194	267 194
Shares in associated companies	27	4 071	215	-	-
Other long-term securities		3 371	3 743	-	-
Other long-term receivables		1 118	1 122	-	-
Receivables – Group companies			-	77 505	77 505
Total fi nancial fi xed assets		8 560	5 080	344 699	344 699
Total non-current assets		352 079	351 916	345 869	345 681
Current assets
Inventory
Finished goods and goods for sale		5 960	1 936	-	-
Current receivables
Accounts receivable	28	24 062	27 615	-	-
Receivables from subsidiaries		-	-	40 928	30 669
Other receivables		9 534	7 539	1 587	1 645
Prepaid expenses and accrued income	29	41 598	8 130	2 038	1 970
Total current receivables		75 194	43 284	44 553	34 284
Current investments
Casn and bank balances		74 229	126 626	64 335	125 681
Total current assets		57 072	53 215	3 561	17 889
Total assets		212 455	225 061	112 449	177 854
BALANCE SHEET		564 534	576 977	458 318	523 535

		Group		Parent company
(SEK thousands)	Note	2007-12-31	2006-12-31	2007-12-31	2006-12-31
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity (of which parent company's restricted equity of SEK 423 million and accumula
ted defi cit of SEK 28 million)
Share capital		2 572	2 572	2 572	2 572
Other capital contributed		448 508	560 665	-	-
Statutory reserve		-	-	419 953	532 100
Share premium reserve		-	-	28 555	28 555
Other reserves		-3 063	-1 418	-	-
Accumulated loss including loss for the year		4 792	-103 572	-	-
Profi t/loss for the year		-	-	-343	-112 147
Equity attributable to the shareholders of
Anoto Group AB		452 809	458 247	450 737	451 080
Equity attributable to minority interests		2 069	1 959	0	0
Long-term liabilities/Provisions
Provisions for taxes		54	-	-	-
Other provisions	32	-	4151	-	-
Other liabilities		572	578	-	-
Total long-term liabilities/Provisions		626	4 729	0	0
Current liabilities
Provisions restructuring	30	-	1476	-	-
Provisions for product warranties	31	1 573	1 529	-	-
Accounts payable		9 835	7 965	1 377	1 272
Liabilities to subsidiaries		-	-	-	64 932
Tax liabilities		835	852	-	-
Advance payments from customers		71 182	68 792	-	-
Other liabilities		8 643	8 536	1 655	1 875
Accrued expenses and prepaid income	33	16 962	22 902	4 549	4 376
Total current liabilities		109 030	112 052	7 581	72 455
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		564 534	576 987	458 318	523 535
Pledged assets	36	5 046	6 968	-	-
Contingent liabilities	37	-	-	-	-

CHANGE IN SHAREHOLDERS' EQUITY

(SEK thousands)	Share capital	Other capital contributed 2)	Reserves 1)	Minority shareholdings	Profi t/ loss	Total
GROUP EQUITY
Shareholders' equity January 1, 2006	2 531	952 665	-438	0	-399 068	555 690
Exchange rate differences 1)			-980			-980
Total change in shareholders' equity		0	-980			-980
Reduction of share premium reserve		-420 565			420 565	0
Adjustment, costs for options					7 896	7 896
New share issue	41	29 303				29 344
New share issue expenses		-748				-748
Change in minority shareholdings				1959		1 959
Loss for the year					-132 965	-132 965
Shareholders' equity Decmebr 31, 2006	2 572	560 655	-1 418	1 959	-103 572	460 196
Exchange rate differences 1)			-1 645			-1 645
Total changes in shareholders' equity not
reported in the income statement		0	-1 645	0	0	-1 645
						0
Reduction of share premium reserve		-112 147			112 147	0
Adjustment, costs for options					3 766	3 766
Change in minority shareholdings				110		110
Loss for the year					-7 549	-7 549
Shareholders' equity Decemeber 31, 2007	2 572	448 508	-3 063	2 069	4 792	454 878
1) From translation of fi nancial reporting from foreign subsidiaries
		2007	2006
Accumulated exchange rate differences at beginning of the year		-1 418	-438
Exchange rate differences for the year		-1 645	-980
Accumulated exchange rate differences at year-end		-3 063	-1 418

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

(SEK thousands)	Share Capital	Statutory reserve	Share premium reserve	Accumulated defi cit	Total
PARENT COMPANY'S EQUITY
Shareholders' equity January 1 2006	2 531	952 665	0	-420 565	534 631
New share issue	41		29 303		29 344
New share issue expenses			-748		-748
Appropriation of previous year's loss		-420 565		420 565	0
Loss for the year				-112 147	-112 147
Shareholders' equity December 31, 2006	2 572	532 100	28 555	-112 147	451 080
Appropriation of previous year's loss		-112 147		112 147	0
Loss for the year				-343	-343
Shareholders' equity December 31, 2007	2 572	419 953	28 555	-343	450 737

The change in number of shares and their par value, see below

All shares are fully paid and entitles the holder to an equal percentage of dividend.

		Par value/
no. of shares		share
	126 535 201	SEK 0,02
1 081 955	127 617 156	SEK 0,02
27 467	127 644 623	SEK 0,02
939 244	128 583 867	SEK 0,02
	128 583 867	SEK 0,02
Ökning av antalet aktier	Antal aktier	Nominellt värde/aktie
	128 583 867	SEK 0,02
	128 583 867	SEK 0,02
	Increase in	No. of shares

CASH FLOW STATEMENT

			Group		Parent company
(SEK thousands)	Note	2007	2006	2007	2006
OPERATING ACTIVITIES
Profi t/loss after fi nancial items		-6 647	-131 798	-344	-112 136
Change in provisions		-4 330	-26 215	-	-1 790
Depreciation and amortisation on tangible assets	15, 21-25	15 912	27 544	224	235
Disposal of tangible assets	15, 21-25	4 703	773	-	-
Costs for options		3 766	7 896	-	-
Share of earnings in associated companies		-	4	-	-
Profi t/loss on shares in subsidiares	17	252	-	3 700	115 900
Interest incomes	18	-4 782	-5 197	-3 844	-4 879
Interest costs	19	1 513	4 403	136	9 116
Tax Paid	20	-791	-295	-	-11
Cash fl ow from operating activities before
change in working capital		9 596	-122 885	-128	6 435
Cash fl ow from change in working capital
Change in operating receivables		-31 910	83 398	-40 938	-31 227
Change in inventory		-4 024	-419	-	-
Change in operating liabilities		-3 081	-9 337	-34 205	399
Total change in working capital		-39 015	73 642	-75 143	-30 828
Cash fl ow from operating activities		-29 419	-49 243	-75 271	-24 393
Capital expenditure
Capitalized development expenditures	21	-9 366	-5 953	-	-
Patents	22	-5 163	-5 563	-86	-145
Brands	23	-58	-81	-23	-24
Divesting of shares 1)		-	-	-	66 069
Equipments and tools	25	-2 365	-2 593	-302	-207
Shares in Group companies 2)	26	-	-	-3 700	-115 900
Shares in associated companies	27	-3 856	-	-	-
Cash fl ow from net capital expenditures		-20 808	-14 190	-4 111	-50 207
Total cash fl ow before fi nancing activities		-50 227	-63 433	-79 382	-74 600
Financing activities
Interest income	18	4 782	5 197	3 844	4 879
Interest expenses	19	-1 513	-4 403	-136	-9 116
Change in long-term libilities		-6	578	-	-
New share issues		-	28 596	-	28 596
Capital contributed by minority shareholdings		-	2 000	-	-
Translation differences		-1 576	-184	-	-
Cash fl ow from fi nancing activities		1 687	31 784	3 708	24 359
Cash Flow for the year		-48 540	-31 649	-75 674	-50 241
Liquid assets at beginning of the year		179 841	211 490	143 570	193 811
Liquid assets at year-end closing		131 301	179 841	67 896	143 570

1) Represents sale of 8 % of the shares in Älsbyhus AB (2006)

2) Unconditional shareholders contribution to Anoto AB

NOTES (SEK thousand unless otherwise indicated)

Note 1 | General accounting policies

The consolidated accounts of Anoto Group AB (Anoto) have been prepared in compliance with the Swedish Annual Accounts Act, International Financial Accounting Standards (IFRS) and Recommendation RR 30, Supplementary Rules for Consolidated Financial Statements, of the Swedish Financial Accounting Standards Council. The parent company's annual accounts have been prepared in compliance with the Swedish Annual

Note 2 | Anoto's accounting policies

THE GROUP

Other 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 accounts

The 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 % 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 % of the difference between the fair values of assets and liabilities reported and tax residual values insofar as the

Accounts Act and Recommendation RR 32, Accounting for Legal Entities, of the Swedish Financial Accounting Standards Council. The consolidated and annual accounts, which are specifi ed in thousands of Swedish kronor, refer to 1 January – 31 December for income statement items and 31 December for balance sheet items.

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 rates

At recalculation of foreign subsidiaries uses these exchange rates.

		Average exchange rate	On balance sheet date
Country	Currency	2007	2006	2007	2006
United States	USD	6.7607	6.8725	6.4675	7.3766
Hong Kong	HKD	*	0.8850	*	0.9495
Japan	JPY (100)	5.7437	5.7800	5.7200	6.3457

* Anoto Hong kong has been liquidated during 2007.

Associated companies

Associated companies are those in which the Group controls 20 – 50 % 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 the profi 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/loss for the year item.

Revenue recognition

Revenue 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.

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 percentage 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 amortised but subject to an impairment test annually or whenever needed by calculating the recoverable amount of the corresponding cashgenerating 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 recognised 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.

Research and development expenditures

Research expenditures are charged to operating earnings on a running basis. The Group capitalizes the development expenditures for new platforms that meet the criteria set by IAS 38, Intangible Assets. Expenditures for the development of platforms are deemed to improve the Group's earning capacity and shall thereby be reported as intangible fi xed assets in accordance with the standard.

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 commercialisation stage before the expenditures are reported as assets. All expenditures are carried as expenses on a current basis up until that point. Amortisation schedules begin as of the market launch of each product. The amortisation 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 historical cost, less accumulated depreciation according to plan and any impairment losses.

Depreciation and amortisation according to plan

Depreciation and amortisation according to plan are based on the historical costs and estimated economic useful lives of the assets in view of the following depreciation and amortisation periods:

- Patents	10 years
- Capitalized development expenditures	3-5 years
- Equipment	5 years
- Computer equipment and programs	3 years1)
- Capital expendture on rented assets	2-5 years2)

1) Capitalized computer programs refer to CAD programs that are essential to the ongoing product development effort.

2) Depreciation 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 recoverable amount is determined. The recoverable amount is defi ned as the asset's net realisable 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 recognised 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 transferred 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.

Receivables and liabilities in foreign currencies

Receivables 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 instruments

The 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.

Accounts receivable

Accounts receivable are reported net after deducting doubtful accounts receivable. Provisions for doubtful accounts receivable are based on an individual assessment in view of expected bad debt losses.

Liquid assets

Liquid 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.

Accounts payable

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

Currency forward contracts and hedge accounting

The Group uses currency forward contracts to hedge the net fl ow of EURO for six months at a time. The size of each contract is based on rolling liquidity forecasts for upcoming periods. The Group continually orders contracts in line with the actual infl ow of EURO. The primary purpose of hedging is to shield the Group from large, sudden declines in the value of the EURO. 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.

Inventory

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

Pensions

All 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.

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 utilised within the foreseeable future.

Share-based payments to employees

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.

Policy for 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 parties

For disclosures about the company's transactions with related parties, refer to Note 11, remuneration for senior executives. There were no other transactions with related parties.

Segment reporting

Anoto's primary segments are based on the Group's business units. In segment reporting, the various business units, regardless of legal entity or geographic location, are reported separately. The Anoto business unit includes income and expenses related to digital pens and paper, as well as sales of Anoto technology for use in intelligent image processing systems. The Content and Applications business unit focuses on the design of development tools and the construction of a network for third-party developers, as well as the marketing of proprietary and third-party applications for the next-generation interactive pen (Pentop). Anoto's activities may also be allocated among market areas, the Group's secondary segments. Anoto reports assets, liabilities and investments in noncurrent assets for secondary segments even when the segment accounts for less than 10 % of the Group's value. The secondary segments are based on geographic location.

PARENT COMPANY

For details of the parent company's accounting policies, refer to the Group's accounting policies above. The discussion below is limited to the parent company's deviations from the Group's policies.

Leases

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

Financial instruments

The 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 realisable 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.

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

Critical assessments when applying the company's accounting policies

When 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 goodwill

When testing for impairment losses, the value in use is calculated for the cashgenerating 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 SEK 299 million as of the balance sheet date. For additional information about impairment losses, refer to Note 24.

Note 4 | Risk management by the Group

• 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

Liquidity policy

are liquidity and currency.

In accordance with the liquidity policy, available liquidity shall consist of liquid assets 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 2007 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, 2007

Sensitivity analysis

The impact on profi t/loss before tax of a 5 % change in exchange rates is: USD/SEK +/- SEK 1,0 million EUR/SEK +/- SEK 0,7 million JPY/SEK +/- SEK 0,4 million

Other risk areas

• Other 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 management

Credit risk

The 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 balance 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 risk

The 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 been renewable 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.

Note 5 – Sales

Group sales per application area and market in 2007		Content &
	Anoto	Applications	Total
Sweden	38 435	-	38 435
Rest of EU	26 230	-	26 230
United States	39 533	-	52 881
Japan	52 881	-	7 241
Rest of Asia	7 241	-	39 533
Rest of the world	4 451	-	4 451
Total	168 771	0	168 771

Total	107 973	752	108 725
Rest of the world	13 225	-	13 225
Rest of Asia	23 170	-	23 170
Japan	10 553	-	10 553
United States	29 651	752	30 403
Rest of EU	13 945	-	13 945
Sweden	17 429	-	17 429
	Anoto	Applications	Total
Group sales per application area and market in 2006	Content &

Group sales by type of revenue 2007 Koncernen Royalty 52 577 32 744 NRE 1 34 034 10 517 Licenses 28 179 4 102 ASIC sales 28 843 13 785 Pen sales 4 953 - C Technologies 13 375 22 301 Other 6 810 25 276 Total 168 771 108 725

11) Revenues from software/hardware development of customers products

Parent company sales to subsidiaries totals 26.234 (41.513) as compensation for intra-Group services. These revenues have been eliminated in the consolidated accounts and is thereby not included in the totals above.

2006

Note 6 | Reporting by segment

		Content &
BUSINESS UNITS 2007	Anoto	application	Other	Total
Sales	168 771			168 771
Costs of goods and services sold	-39 657			-39 657
Gross profi t	129 114	0	0	129 114
Operating expenses	-138 779			-138 779
Operating profi t / loss	-9 665	0	0	-9 665
Net fi nancial income/expense	3 017			3 017
Profi t/loss after fi nancial items	-6 648	0	0	-6 648
Minority shareholdings	-110			-110
Taxes	-791			-791
Profi /loss for the period	-7 549	0	0	-7 549
Capital expenditure in tangible and intangible assets	16 402	-		16 402
Depreciation and amotisations for the period	15 912	-		15 912
Assets per segment	564 534	-		564 534
Liabilites per segment	109 656	-		109 656
		Content &
BUSINESS UNITS 2006	Anoto	application	Other	Total
Sales	107 973	752		108 725
Costs of goods and services sold	(29 786)	-535		-30 321
Gross profi t	78 187	217	0	78 404
Operating expenses	-158 131	-52 096		-210 227
Operating profi t / loss	-79 944	-51 879	0	-131 823
Net fi nancial income/expense			25	25
Profi t/loss after fi nancial items	-79 944	-51 879	25	-131 798
Minority shareholdings			41	41
Taxes			-1 208	-1 208
Profi /loss for the period	-79 944	-51 879	-1 142	-132 965
Capital expenditure in tangible and intangible assets	12 312	1 878		14 190
Depreciation and amotisations for the period	27 518	1 107		28 625
Assets per segment	568 875	8 102		576 977
Liabilites per segment	111 093	5 689		116 782

Total	168 771	564 534	16 402
Rest of the world	4 451		-
Rest of Asia	7 241		125
Japan	52 881	7 260	-
United States	39 533	4 491	343
Rest of EU	26 230	-	-
Sweden	38 435	552 783	15 934
MARKET AREAS 2007	Sales	assets	in assets
		Total	Capex

Total	108 725	576 978	14 190
Rest of the world	13 225	-	-
USA	39 646	8 012	1 878
Rest of Asia	10 553	1 048	-
Japan	30 403	16 303	-159
Rest of EU	13 945	-	-
Sweden	17 429	551 615	12 471
MARKET AREAS 2006	Sales	assets	in assets
		Total	Capex

Note 7 | Average number of employees

		2007		2006
	No. of employees	Of which men	No. of employees	Of which men
Parent company	10	5	11	6
Rest of sweden	83	70	88	78
United States	4	3	17	12
Japan	6	4	5	3
Total	103	82	121	99

Note 8 | Board of Directors and management split by gender

		2007		2006
	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
Totalt	13	11	13	11

1) Parent company

Note 9 | Sickness absence, Swedish companies

		2007		2006
	Total	Of which more	Total	Of which more
AGE CATEGORY	Absence	than 60 days	Absence	than 60 days
Under 30	*)	*)	*)	*)
30 – 50	2,79 %	36,07 %	1,94 %	21,89 %
Above 50	*)	*)	*)	*)
Women	5,21 %	78,44 %	1,00 %	0,00 %
Men	1,81 %	0,00 %	2,15 %	21,21 %
Total	2,50 %	33,18 %	1,97 %	19,54 %

* 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 10 | Salaries and renumerations

		Group		Parent Company
	2007	2006	2007	2006
SALARIES
Board of Directors, CEO and Deputy CEO	5 230	5 046	5 230	5 046
Other senior executives 1	6 676	4 391	2 846	2 622
Other employees	48 482	77 303	3 676	8 677
	60 388	86 740	11 752	16 345
PAYROLL OVERHEAD
Board of Directors, CEO and Deputy CEO	1 394	1 629	1 394	1 629
Other senior executives 1	2 164	1 417	923	846
Other employees	13 650	21 111	1 238	2 801
	17 208	24 157	3 555	5 276
PENSION EXPENSES
Board of Directors, CEO and Deputy CEO	686	473	686	473
Other senior executives 1	1 463	1 074	628	518
Other employees	8 439	9 378	432	897
	10 588	10 925	1 746	1 888
Total salaries and renumerations	88 184	121 822	17 053	23 509
Salaries and other renumeartions are included in the balance sheet's headlines as follows:
Selling expenses	14 109	19 492	4 775	6 583
Administrative expenses	12 346	17 055	9 720	13 400
Development expenses	61 876	85 275	2 558	3 526
Total	88 184	121 822	17 053	23 509

1) The Group has 6 (5) and the parent company has 3 (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 maximum period of notice for other senior executives is six months upon mutual termination and three months of retained salary after the period of notice 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

The compensation level and structure shall be at market level. The total compensation shall be a balanced mix of fi xed salary, variable compensation, retirement and health plans, any other benefi ts and terms for dismissal and severance payments. The compensation may also comprise stock related long 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 most be fi fty

per cent of the fi xed salary. However, the variable compensation for the President may be at most seventy fi ve per cent of the fi xed salary. The retirement plan shall be competitive. The President shall have a pension premium based retirement plan of thirty-fi ve percent 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 period in case Anoto gives notice. The President shall have a mutual notice period of six months and a severance payment of twelve months salary in case Anoto terminates the employment without juste cause.

Note 11 | Renumerations to Board of Directors and CEO

BOARD OF DIRECTORS AND	Salaries/		Pension-	Other		Options awarded	Value of
CEO, 2007	Renumerations	Bonus	premiums	renumerations 2)	Total	for the year	options
Anders Norling, CEO	2 974	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 som diffrent Group companies.

BOARD OF DIRECTORS AND	Salaries/		Pension-	Other		Options awarded	Value of
CEO, 2006	Reniumarations	Bonus	premiums	renumerations 2)	Total	for the year	options
Anders Norling, CEO 4 months	885	563	283	-	1 731	-	-
Örjan Johansson, CEO 6 months	968	-	146	-	1 114	-	-
Mats Blom, CEO 2 months	361	60	44	-	465	-	-
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	-	-	709	1 159	-	-
Total 1)	3 714	623	473	709	5 519	-	-

1) Total compensation may originate som diffrent Group companies.

2) Transactions with related parties are reported under Other renumerations and consist of consulting fee to Hans Otterling.

MANAGEMENT 2007	Salaries/ Renumerations	Bonus	Pension- premiums	Other renumerations 2)	Total	Options awarded for the year	Value of options
Group Management	5 816	1 018	1 463	-	8 297	200 000	204
Total	5 816	1 018	1 463	-	8 297	-	-
	Salaries/		Pension-	Other		Options awarded	Value of

Total	4 196	194	1 074	-	5 464	0	0
Group Management	4 196	194	1 074	-	5 464	-	-
MANAGEMENT 2006	Renumerations	Bonus	premiums	renumerations 2)	Total	for the year	options

Note 12 | Audit fees

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

		Group
	2007	2006	2007	2006
Auditing
Deloitte AB	375	315	140	135
Other assignments
Deloitte AB	161	157	34	107
Total	536	472	174	242

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 13 | Other operating income

	Group		Parent Company
	2007	2006	2007	2006
Exchange gains	128	-	-	-
EU contribution	686	913	-	-
Profi t/loss on sale of fi xed assets	338	268	-	-
Other	40	314	-	4
Total	1 192	1 495	-	4

Note 14 | Other operating expense

	Group			Parent Company
	2007	2006	2007	2006
Exchange losses	1 011	-2 334	-	-
Other	641	-4	-	-
Total	1 652	-2 338	-	-

Note 15 | Depreciation and amortisation

Depreciation of property, plant and equipment, and amortisation of intangible fi xed assets, are included in the individual items of the income statement as follows:
	Group			Parent Company
	2007	2006	2007	2006
Selling expenses	-3 755	-1 976	-	-
Administrative expenses	-308	-429	-222	-235
Development expenses	-11 849	-26 220	-	-
Total	-15 912	-28 625	-222	-235

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

		Group		Parent Company
	2007	2006	2007	2006
Impairment loss on shares in Anoto AB 1)	-	-	-3 700	-115 900
Impairment loss on shares in Anoto Communications KK 2)	-122	-	-	-
Impairment loss on shares in Anoto Hong Kong Ltd 3)	-130	-	-	-
Deconsolidation of Älvsbyhus AB 4)	-	-769	-	-769
Totalt	-252	-769	-3 700	-116 669

1) Unconditional shareholders contribution to the subsidiary Anoto AB. The shareholders contribution was made to cover the subsidiary's

loss for the yearand 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.

4) Impact on earnings of deconsolidation of Älvsbyhus AB (2005) and adjusted purchase price due to corrected loss carry-forward (2006)

Note 17 | Share in profi t/loss of associated companies

	Group			Parent Company
	2007	2006	2007	2006
Participation in Anoto Communications KK 1)	-	-4	-	-
Total	-	-4	-	-

1) The particpation in Anoto Communications KK has been reclassifi ed to Group company as further 40 % of the shares in the company has been acquired.

Note 18 | Interest income

	Group			Parent Company
	2007	2006	2007	2006
Interest on current investments	3 707	4 427	3 564	4 417
Interest on bank deposits	1 075	770	280	462
Totalt	4 782	5 197	3 844	4 879

Note 19 | Interest and similar expense

		Group		Parent Company
	2007	2006	2007	2006
Loss on currency forward contracts	-1 513	-4 403	136	-9 116
Total	-1 513	-4 403	136	-9 116

Note 20 | Taxes

	Group			Parent Company
	2007	2006	2007	2006
Current tax 1)	-791	-1 208	-	-11
Total	-791	-1 208	-	-11

1) Primary foreign subsidiaries.

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

		Group		Parent Company
	2007	2006	2007	2006
Reported profi t/loss before tax	-6 757	-131 757	-344	-112 136
Tax in accordance with current tax rate of 28 %	1 892	36 892	96	31 398
Tax impact of non-deductible expenses
Intra-Group adjustments that disregard deferred tax	-2 946	-8 086		-
Impairment loss on shares in subsidiaries	-71	-	-1 036	-32 452
Other non-deductible expenses	-275	-149	-205	-
Other adjustments	26		-
Non-taxable income	4	6	6	4
Adjustment for tax rates
in foreign Group companies	347	820		-
on loss carry forwards	232	-30 691	1 139	1 187
Tax reported	-791	-1 208	0	137

Tax defi cit

	Group			Parent Company
	2007	2006	2007	2006
Opening balance	-448 780	-339 128	-34 561	-38 802
Tax defi cit of the year	1 809	-109 652	4 069	4 241
Adjustment due to changed taxation	407	-	407	0
Closing tax defi cit	-446 564	-448 780	-30 085	-34 561
Nominal amount, tax asset	125 038	125 658	8 424	9 677

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 refers to the Swedish companies and are not limited in time.

Note 21 | Capitalized development expenditures

	Group			Parent Company
	2007	2006	2007	2006
ACCUMULATED HISTORICAL COSTS
Opening accumulated historical costs	115 893	112 107	24 218	24 218
Acquisitions for the year	9 366	5 953	-	-
Disposals for the year	-6 003	(1 304)	-	-
Adjustment of Opening balance due to intra-group transfers	-	(863)	-	-
Closing accumulated historical costs	119 256	115 893	24 218	24 218
ACCUMULATED AMORTISATION ACCORDING TO PLAN
Opening accumulated amortisation	-100 927	-82 444	-24 218	-24 218
Amortisation for the year accoring to plan	-8 125	531	-	-
Disposals for the year	1 300	-19 877	-	-
Adjustment of Opening balance due to intra-group transfers		863	-	-
Closing amortisation according to plan	-107 752	-100 927	-24 218	-24 218
Closing residual value	11 504	14 966	-	-

Note 22 | Patents

		Group		Parent Company
	2007	2006	2007	2006
ACCUMULATED HISTORICAL COSTS
Opening accumulated historical costs	61 974	59 054	13 800	13 655
Acquisitions for the year	5 163	5 563	86	145
Adjustment of Opening balance due to intra-group transfers		(2 643)	-	-
Closing accumulated historical costs	67 137	61 974	13 886	13 800
ACCUMULATED AMORTISATION ACCORDING TO PLAN
Opening accumulated amortisation	-32 646	-30 181	-13 008	-12 903
Amortisation for the year accoring to plan	-5 553	-5 108	-114	-105
Adjustment of Opening balance due to intra-group transfers		2 643	-	-
Closing amortisation according to plan	-38 199	-32 646	-13 122	-13 008
Closing residual value	28 938	29 328	764	792

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

Note 23 | Brands

	Group			Parent Company
	2007	2006	2007	2006
Accumulated historical costs
Opening accumulated historical costs	505	484	80	56
Adjustment of Opening balance	-56	(60)	(56)	-
Acquisitions for the year	58	81	23	24
Closing accumulated historical costs	507	505	47	80
Accumulated amortisation according to plan
Opening accumulated amortisation	-149	-158	-58	-56
Adjustment of Opening balance	56	60	56	-
Amortisation for the year accoring to plan	-57	-51	-5	-2
Closing amortisation according to plan	-150	-149	-7	-58
Closing residual value	357	356	40	22

Note 24 | Goodwill

		Group
	2007	2006
ACCUMULATED HISTORICAL COSTS
Opening accumulated historical costs	381 301	381 301
Acquisitions for the year	-	-
Disposals for the year	-	-
Closing accumulated historical costs	381 301	381 301
ACCUMULATED AMORTISATION ACCORDING TO PLAN
Opening accumulated amortisation	-82 627	-82 627
Closing amortisation according to plan	298 674	298 674
Goodwill is allocated among the Group´s cash generating units identifi ed by business unit
Anoto	298 674	298 674
Content & Application	-	-
	298 674	298 674

Goodwill is subject to an impairment test annually or whenever indicated. The recoverable amount for cash-generating units is based on calculations of values in use. Tests for decline in value have been performed at the lowest level at which separable cash fl ows were identifi ed. Tests for decline in value of Goodwill and Patents have been based on forecasted cash fl ows from the application areas Forms Solution, Anoto technology and Interactive Media.

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 information 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 is growth of the application area Forms Solutions. If Forms Solutions were to grow 30 % less than forecast per year during the calculation period, an impairment loss would be recognised.

Note 25 | Equipment and tools

	Group			Parent Company
	2007	2006	2007	2006
ACCUMULATED HISTORICAL COSTS
Opening accumulated historical costs	13 514	66 154	638	431
Acquisitions for the year	2 365	3 893	302	207
Divestments for the year		-1 724	-	-
Adjustment of Opening balance due to intra-group transfers		-54 390	-	-
Intra-group transfers		-188
Disposals for the year		-	-	-
Translation difference	-124	-231	-	-
Closing accumulated historical costs	15 755	13 514	940	638
ACCUMULATED DEPRECIATION ACCORDING TO PLAN
Opening accumulated depreciation	-10 002	-62 586	-470	-342
Depreciation for the year accoring to plan	-1 742	-2 507	-104	-128
Disposals for the year			-	-
Divestments for the year		423	-	-
Adjustment of Opening balance due to intra-group transfers		54 390	-	-
Intra-group transfer		188	-	-
Translation difference	35	90	-	-
Closing depreciation according to plan	-11 709	-10 002	-574	-470
Closing residual value	4 046	3 512	366	168

Note 26 | Participation in Group companies

		Parent Company
	2007	2006
PARENT COMPANY
Opening balance	267 194	267 194
Opening shareholders contribution	1 188 031	1 072 131
Shareholders contribution for the year 1)	3 700	115 900
Shareholders contribution from divested companies	-727 128	-727 128
Opening accumulated impairment losses	-1 502 142	-1 386 242
Impairment losses from divested companies	1 041 239	1 041 239
Impairment losses for the year 2)	-3 700	-115 900
Reversed impairment losses	0	0
Total	267 194	267 194

1) Refers to Anoto AB

2) Refers to write-down of shares in Anoto AB

Company	Reg.no.	Domicile	Total no. of participation	% of capital and votes	Shareholders equity	Carrying amount
Anoto AB	556320-2646	Lund	5 000	89,0 % 1)	557	267 005
Anoto Licensiering AB	556665-4306	Lund	1 000	89,0 % 1)	100	89
C Technologies AB	556591-2481	Malmö	1 000	100,0 %	2 307	100
						267 194

The Anoto Group contains sub-groups consisting of the following companies Anoto, Inc., United States Anoto Nippon K.K, Japan Anoto Communication KK, Japan FAB Licensiering AB, Sweden Anoto IP Lic HB, Sweden Logipard AB , Sweden

1) The remaining 11 % are held by C Technologies AB

Note 27 | Participation in associated companies

	Group
	2007	2006
GROUP
Opening balance	215	219
Acquisition for the year 1)	4 071	-
Reclassifi cation 2)	-215	-
Share of profi ts in associated company	-	-4
Total	4 071	215

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.

			Total	% of capital	Shareholders	Carrying
Company	Reg.no.	Domicile	participation	and votes	equity	amount
Anoto Taiwain Corporation	28316992	Taiwan	10 000 000	20,0 %	12.569	4 309

Note 28 | Ageing accounts receivable

	Group			Parent Company
	2007	2006	2007	2006
Not due	17 125	17 125	16 111	16 111
Due 1 - 30 days	1 679	1 679	8 259	8 259
Due 31 - 60 days	954	954	689	689
Due 61 - 90 days	2 670	2 670	922	922
Due more than 90 days	2 455	1 634	1 979	1 634
Total	24 883	24 062	27 960	27 615

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

Note 29 | Prepaid expenses and accrued income

	Group			Parent Company
	2007	2006	2007	2006
PARENT COMPANY AND GROUP
Prepaid rent	1 280	1 057	1 180	1 057
Prepaid leasing fees	160	83	3	-
Accrued interest income	378	376	378	376
Accrued income	37 038	4 567	-	-
Revaluation currency forward contracts	370	591	-	-
Other	2 372	1 456	477	537
Total	41 598	8 130	2 038	1 970

Note 30 | Provisons for restructuring

		Group		Parent Company
	2007	2006	2007	2006
Provisions for rental charges
Opening balance	-	11 638	-	-
Amounts utilised	-	-11 638	-	-
New provisions	-	-	-	-
Unutilised reversed amounts	-	-	-	-
	-	-	-	-
Provisions for personnel costs
Opening balance	1 476	8 463	-	-
Amounts utilised	-1 476	-8 106	-	-
New provisions	-	1 119	-	-
Unutilised reversed amounts	-	-	-	-
	-	1 476	-	-
Total provisions for restructuring
Opening balance	1 476	20 101	-	-
Amounts utilised	-1 476	-19 744	-	-
New provisions	-	1 119	-	-
Unutilised reversed amounts	-	-	-	-
Total	-	1 476	-	-

Note 31 | Provisions for product warranty commitments

	Group			Parent Company
	2007	2006	2007	2006
Opening balance	1 529	1 440	-	-
New provisions	44	89	-	-
Total	1 573	1 529	-	-

Note 32 | Other provisions

	Group			Parent Company
	2007	2006	2007	2006
Opening balance	4 151	10 630	-	1 790
Amounts utilised		-	-	-
New provisions		-	-	-
Unutilised reversed amounts	-4 151	-6 479	-	-1 790
Total	0	4 151	-	-
Of which, current provisions	-	1	-	-
Of which, long-term provisons	-	4 150	-	-

Note 33 | Accrued expenses and deferred income

	Group		Parent Company
	2007	2006	2007	2006
Holiday pay liability	4 391	5 628	355	733
Payroll overhead liability	1 557	1 473	179	261
Special employer's contribution liability	2 211	2 192	338	369
Accrued salaries and renumerations	2 391	-	1 312	-
Other	6 412	13 609	2 365	3 013
Total	16 962	22 902	4 549	4 376

Note 34 | Share-based payments to employees

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

	3 515 500		3 515 500
3	585 000	1	585 000	18,00	10-03-31	10,5
2	1 500 000	1	1 500 000	17,50	08-12-15	26
1	1 430 500	1	1 430 500	31,35	08-11-30	45
Option-programme	No. of options	Shares/ Aktier/ option	No. of shares	Issue price (SEK)	Subscription period until	Fully excercised contributes MSEK

1) Warrant programme 2005

2) Warrant programme 2006

3) Employee stock option programme 2007

1) The general meeting of 10 November 2005 decided to issue 2,000,000 warrants, 640,500 of which were subscribed for in the fourth quarter of 2005 and 790,000 in 2006. New shares may be subscribed for from 1 September to 30 November 2008.

2) The extra general meeting of 16 November 2006 decided to issue 1,500,000 warrants to the CEO. All of them were subscribed for in the ourth quarter of 2006. New shares may be subscribed for from 1 September to 15 December 2008

3) The annual meeting, May 15, 2007 decided to issue 500.000 employees stock options and 500.000 warrants. The employee stock options were hedge 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 2009 to 31 March 2010.

Full exercise of all programmes would result in total dilution of about 2.7 % as of 31 December 2007. No programmes are deemed to have a value as of 31 December 2007. The dilution exposure and option programmes deemed to have a value may have changed until the date on which this annual report was distributed.

Change in outstanding option programmes during the year

	2007			2006
		Weighted		Weighted
	No. of options	issue price	No. of options	issue price
Outstanding options at the beginning of the period	7 415 002	24,41	6 278 380	22,36
Awarded during the period	585 000	18	3 629 042	21,77
Forfeited during the period	-3 125 242	19,6	-443 754	26,12
Redeemed during the period	0	0	-2 048 666	13,09
Expired during the period	-1 359 260	31,35	0	0
Outstanding at the end of period	3 515 500	23,22	7 415 002	24,41
Redeemable at the end of the period	0		0

Options were awarded for programme 3 in 2007. The fair value of each option issued is calculated in accordance with the Black-Scholes Model.

	2007	2006
Weighted average share prrice	*)	19,2
Weighted average redemption price	*)	20,9
Expected volatility	*)	0,35
Risk-free interest	*)	0,033
Expected dividend	*)	0

The expected volatility has been calculated on the basis of an anslysis of historical volatility and comparisons with other companies in the sector.

*) No redemption has taken place during 2007

Note 35 | Signifi cant leasing expenses

The amounts associated with equipment at the company's disposal through leases are negligible. The Group's commitment for leased premises totals SEK 6,950 thousand for 2008 and SEK 21,180 thousand for 2009-11.

Note 36 | Pledged assets

	Group		Parent Company
	2007	2006	2007	2006
PARENT COMPANY AND GROUP
Blocked bank deposits	5 046	6 968	-	-

Note 37 | Contingent liabilties

	Group			Parent Company
	2007	2006	2007	2006
PARENT COMPANY AND GROUP
	-	-	-	-

Note 38 | Financial instruments

	Reported value			Fair value
	2007	2006	2007	2006
GROUP
Other securities	8 798	5 080	8 798	5 080
Accounts receivable	23 910	27 615	23 910	27 615
Other receivables	9 296	7 539	9 296	7 539
Current investments and securities	74 229	126 626	74 229	126 626
Liquid assets	57 072	53 215	57 072	53 215
Assets	173 305	220 075	173 305	220 075
Accounts payable	9 835	7 695	9 835	7 695
Other liabilities	8 491	8 536	8 491	8 536
Liabilities	18 326	16 231	18 326	16 231

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 months at a time by means of forward contracts in EURO. Forward contracts are reported on the balance sheet closing date at fair value.

Forward contracts totalled EUR 2,000 thousand at the end of 2007.

Not 39 | Events after December 31, 2007

No material events or issues after the closing of 2007 are to be reported.

Lund, the 1st of April 2008

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 1 april 2008 DELOITTE AB

Per-Arne Pettersson Authorized Public Accountant

AUDITOR'S REPORT

To the annual general meeting of Anoto Group AB (publ) Corporate identity no. 556532-3929

We have examined the annual accounts, consolidated accounts, accounting records and the management of Anoto Group AB (publ) by the Board of Directors and the CEO for the 1 January – 31 December 2007 fi nancial year. The annual accounts are on pages 16-14 of the printed version of this document. The Board of Directors and CEO are responsible for the accounting records and management, as well as for ensuring compliance with the Swedish Annual Accounts Act when preparing the annual accounts and compliance with International Financial Accounting Standards as adopted by the European Union and the Swedish Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to state our opinion with respect to the annual accounts, the consolidated accounts and management, based on the results of our audit.

The audit has been performed in accordance with generally accepted auditing practices in Sweden. Thus, we have planned and conducted the audit in such a manner as to satisfy ourselves with great but not absolute assurance that the annual accounts and consolidated accounts are free of material misstatement. An audit includes examining a selection of the documents supporting the amounts and disclosures in the accounting records. An audit also includes examining the company's accounting policies, as well as the Board of Directors' and CEO's compliance with them, assessing the signifi cant estimates that the Board of Directors and CEO made when preparing the annual accounts and consolidated accounts, and evaluating the overall data contained in the annual accounts and consolidated accounts. As a basis for our statement granting discharge from liability, we have examined signifi cant decisions, actions and relationships within the company, with a view to determining whether any member of the Board of Directors or

the CEO may be liable to the company for damages, or may have in any other way acted contrary to the Swedish Companies Act, the Swedish Annual Accounts Act or the company's articles of association. We regard our audit as having provided us with reasonable grounds to state the following.

The annual accounts have been prepared in compliance with the Swedish Annual Accounts Act, and offer a true and fair representation of the company's performance and fi nancial position in accordance with generally accepted accounting practices in Sweden. The consolidated accounts have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and the Swedish Annual Accounts Act and offer a true and fair representation of the Group's performance and fi nancial position. The management report is consistent with the remaining portions of the annual accounts and consolidated accounts.

We recommend that the annual general meeting adopt the income statement and balance sheet of the parent company, as well as the consolidated income statement and balance sheet, appropriate the defi cit in the parent company in accordance with the proposal in the management report and discharge the members of the Board of Directors and CEO from liability for the fi scal year.

Malmö 1 april 2008

Deloitte AB

Per-Arne Pettersson Authorized Public Accountant

BOARD AND ITS RULES OF PROCEDURE

The Board of Directors of Anoto Group AB consists of seven members elected by the annual general meeting of 15 May 2007. One of the principal shareholders (Norden Technology AS) has a representative on the Board.

Hans Otterling has served as Chairman of the Board. The CEO and CFO take part in board meetings. The company's chief legal adviser is the board's secretary. When appropriate, other employees of the company participate in reporting capacities concerning their particular areas of expertise.

Eleven of the 15 meetings at which minutes were taken in 2007 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 questions 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
• 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 2008 budget

Documentation is normally sent out approximately one week prior to a meeting. The CEO submits a monthly written report to the Board.

The Board has two committees – an audit committee and a remuneration committee – that prepare items for the Board to take up and in certain cases reach decisions delegated to them by the Board.

AUDIT COMMITTEE

The audit committee – which consists of Märtha Josefsson (Chair), Bernard Gander and Stein Revelsby – deals with audits, their focus and their scheduling. The committee also receives reports from the company's auditor. The committee reports to Board meetings about its work. The committee held three meetings in 2007 at which minutes were taken.

At the meetings, the auditor presented the schedule for the annual audit, discussed risk assessments and reported on reviews that had been completed.

REMUNERATION COMMITTEE

The remuneration committee – which consists of Håkan Eriksson (chair), Bernard Gander and Christer Fåhraeus – handles remuneration for the CEO and management, as well as incentive programmes. The committee held two meetings, the results of which it reported to the Board, at which minutes were taken. The 2007 annual general meeting adopted guidelines for remuneration for senior executives.

NOMINATING COMMITTEE

The nominating committee is appointed in accordance with a resolution of the annual general meeting. The Chairman of the Board contacts the largest shareholders to appoint at least three and no more than fi ve representatives who, along with the chairman, constitute the nominating committee. The Chairman of the Board may not serve as Chair of the nominating committee. Prior to the 2007 annual general meeting, Britt Reigo (Swedbank Robur Fonder) (Chair), Christer Fåhraeus, Stein Revelsby (Norden Technology AS), Stephane Delorenzi (Logitech) and Sasja Beslik (Banco fonder) made up the nominating committee.

In accordance with a resolution of the 15 May 2007 annual general meeting, a nominating committee was set up to propose Board members to the 2008 annual general meeting. The nominating committee consists of Jan Andersson (Swedbank Robur Fonder) (Chair), Stein Revelsby (Norden Technology AS), Christer Fåhraeus, Sasja Beslik (Banco Fonder), Audun Iversen (Kjell Arne Hermansen and Tore Aksel Voldberg) and Chairman of the Board Hans Otterling.

REMUNERATION FOR THE BOARD OF DIRECTORS

The Board fee is SEK 1,500,000.

CODE OF CORPORATE GOVERNANCE

Anoto is not covered by the Code of Corporate Governance but followed most of it in 2007.

BOARD OF DIRECTORS

HÅKAN ERIKSSON

Born 1961 Member of the Board Member since May 2006 Holdings: 0 shares in Anoto Group AB.

STEIN O. REVELSBY

Born 1962 Member of the Board Member since 2005 Member of the board and CEO of Norden Technology AS, which holds 22,683,065 shares in Anoto Group AB. Other board positions: Member of the board of GM-Ideas Inc.

MÄRTHA JOSEFSSON

Born 1947 Member of the Board Member since 2004 Other board positions: Chairman of the board of Lärarfonder AB, and member of the boards of Fabege AB, Andra AP-fonden, Investment AB Öresund, Luxonen S.A., Skandia Fonder AB, Telelogic AB and Upsala Nya Tidning AB. Holdings: 0 shares in Anoto Group AB.

HIROSHI YOSHIOKA

Born 1952 Member of the Board Member since May 2007 Other board positions: Senior Vice President, Corporate Executive and President of TV Business Group within Sony Corporation. Holdings: 0 shares in Anoto Group AB.

HANS OTTERLING

Born 1961 Chairman of the Board Member since May 2006 Other board positions: Deputy chairman of the board of StreamServe Inc. Member of the board of the Swedish Private Equity & Venture Capital Association. Holdings: 500,000 call options in Anoto Group AB.

CHRISTER FÅHRAEUS

Born 1965 Founder, member of the Board Member since 1996

Other board positions: Chairman of the boards of Agellis Group AB and Respiratorius AB. CEO of EQL Pharma AB and FlatFrog Laboratories AB. Member of the boards of Cellavision AB, Monkfi sh Instruments AB, FlatFrog Laboratories AB and EQL Pharma. Holdings: 3,500,000 shares in Anoto Group AB. Mr Fåhraeus has also issued 500,000 call options in Anoto Group AB.

BERNARD GANDER

Born 1959 Member of the Board Member since May 2006 Holdings: 0 shares in Anoto Group AB.

GROUP MANAGEMENT

ANDERS NORLING Born 1951 CEO, Anoto Group AB Employed since 2006 Holdings: 100,000 shares and 1,500,000 warrants in Anoto Group AB

ANDERS WIDESJÖ Born 1951 CFO, Anoto Group AB Employed since 2008 Holdings: 20,000 shares in Anoto Group AB

LARS HERMANSEN Born 1958 EVP Sales & Marketing, Anoto Group AB Employed since 2006 Holdings: 50,000 employee stock options in Anoto Group AB

EBBA ÅSLY FÅHRAEUS Born 1963 VP Sales Marketing Forms, Anoto Group AB Employed since 2000 Holdings: 35,900 shares, 50,000 employee stock options and 215,000 warrants in Anoto Group AB

MIKAEL JAKOBSSON Born 1967 EVP R&D, Anoto Group AB Employed since 2001 Holdings: 50,000 employee stock options in Anoto Group AB

TORGNY HELLSTRÖM Born 1958 Senior Vice President & General Counsel, Anoto Group AB Employed since 2004 Holdings: 50,000 employee stock options and 100,000 warrants in Anoto Group AB

ANNUAL GENERAL MEETING

Anoto's annual general meeting will be held on 15 May 2008 at our Emdalavägen 18 premises 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 12 00, Fax: +46 46-540 12 02
• * E-mailing to maria.galvin@anoto.com
• * Writing to Emdalavägen 18, SE-223 69 Lund, Sweden

The notifi cation must reach the company by 12.00 noon on Wednesday, 9 May. To be entitled to participate, the shareholder must also be entered in the VPC AB share register by 9 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, 9 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 maria.galvin@anoto.com or phoning +46 46-540 12 00.

Following is the schedule of Anoto Group's fi nancial reports for its 2008 fi nancial year.

January-March interim report	7 May 2008
January-June interim report	7 August 2008
January-September interim report	7 November 2008
2008 year-end report	10 February 2009
2008 annual report	April 2009
2009 annual general meeting	May 2009

Anoto Group AB

Emdalavägen 18 SE-223 69 Lund Sweden Phone +46 46 540 12 00 Fax +46 46 540 12 02

Anoto Inc.

200 Friberg Parkway, Suite 3003 Westborough MA 01581 United States Phone +1 508 983 9550 Fax +1 508 983 9551

Anoto Nippon K.K

7F Dai-3 Nishi Aoyama Bldg. 1-8-1 Shibuya, Shibuya-ku Tokyo Japan 150-0002 Phone +81 3-5774-1212 Fax +81 3-5774-1211

C Technologies

Emdalavägen 18 SE-223 69 Lund Sweden Phone +46 46 540 12 00 Fax +46 46 540 12 02

Logipard AB

Lilla Fiskaregatan 12 SE-223 22 Lund Sweden Phone +46 46 540 12 00 Fax +46 46 540 12 02

www.anoto.com