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Anoto Group — Annual Report 2008
Apr 7, 2009
3134_10-k_2009-04-07_6568600b-bda0-4e75-a3dc-ac3f9c63654e.pdf
Annual Report
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ANNUAL REPORT 2008
CONTENTS
| ANOTO GROUP AT A GLANCE | 1 |
|---|---|
| 2008 IN BRIEF | 2 |
| A WORD FROM THE CEO | 4 |
| APPLICATION AREAS | 6 |
| THE SHARE | 12 |
| FIVE-YEAR SUMMARY | 14 |
| MANAGEMENT REPORT | 16 |
| INCOME STATEMENT | 19 |
| BALANCE SHEET | 20 |
| CHANGE IN SHAREHOLDERS EQUITY |
22 |
| CASH FLOW STATEMENT | 24 |
| NOTES | 25 |
| AUDIT REPORT | 45 |
| CORPORATE GOVERNANCE REPORT 2008 |
46 |
| BOARD OF DIRECTORS | 49 |
| GROUP MANAGEMENT | 50 |
| ANNUAL GENERAL MEETING | 51 |
ANOTO 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. This technology enables the rapid, reliable translation of handwritten text into digital form thereby streamlining paper-based processes.
The Group's unique solutions are based on camera technology and real-time image processing. They combine the intuitive advantages of pen and paper with the many benefi ts of digital communication.
BUSINESS CONCEPT
Anoto's business concept may be summed up as '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 can be applied to 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 each other. As the number of partners grows and their sales volumes expand, Anoto's income also increases without requiring any additional expenditure. Anoto had approximately 350 partners at the end of the fi nancial year, primarily in Europe, the United States and Japan.
APPLICATION AREAS
Anoto is broken down into three application areas.
ANOTO PRODUCTS
Anoto Products focuses on systems, products and services, primarily in the fi eld of forms processing. Anoto employs an indirect business model and markets its products through partners, such as system integrators, software developers and IT consulting fi rms, all of
which offer customized solutions with Anoto Digital Pen and Paper technology to their corporate customers and fi eld users. The basis of this offering is the digital pen, which Anoto controls and sells since the acquisition of the Hitachi Maxell Digital pen division, together with the former Anoto Forms' solution platform. Turnkey products, such as existing scanning and translation pens, as well as newly developed products including Anoto penPresenter and Anoto penDocuments, may also be marketed through other sales and distribution channels.
TECHNOLOGY & LICENSING
Technology & Licensing develops and sells digital pen technology and digital pens on an OEM basis to marketleading customers. Customers develop their own product offers based on the technology components and pens provided by Anoto. Examples of customer products are learning toys, educational tools, visual communication equipment and personal productivity solutions. Several of these products are interactive, enabling real-time audio or visual feedback while writing or when touching interactive areas.
IMAGING TECHNOLOGY
Imaging Technology develops and markets basic Anoto technology, such as ASICs (Application-Specifi c Integrated Circuit) and IP blocks. It supplies and licenses imaging technology modules, components and function blocks for integration with customer products or components, including mobile phones, accessories and components.
QUOTATION
The Anoto Group AB has been listed since 2000 and trades on NASDAQ OMX Nordic Small Cap list under the ticker ANOT.
2008 IN BRIEF
IMPROVED SALES AND POSITIVE RESULTS
- The new strategy and organizational restructuring that was implemented at Anoto in 2006 is now starting to show positive results.
- Net sales rose by 26 per cent to MSEK 182 (145).
- The result after taxes totalled MSEK 33 (-8).
- Earnings per share were SEK 0.25 (-0.06) after full dilution.
- Cash fl ow was MSEK -32 (-49).
- Anoto introduced Anoto penPresenter, a program that enhances Microsoft PowerPoint® functionality, in cooperation with printer manufacturer OKI.
-
Anoto acquired Hitachi Maxell's division of digital pens. The transaction included intangible rights, production equipment and existing inventory. In connection with the acquisition, Hitachi Maxell acquired 20 per cent of the shares in Anoto Nippon KK, a wholly-owned subsidiary of Anoto.
-
Anoto entered into an agreement with Poly-Vison®, a world-leading global manufacturer of visual communication products in areas as whiteboards and fl ipcharts. In January 2009 PolyVision® introduced its ēno™ product.
- Anoto acquired Covelus' routing technology. The technology is now incorporated in the platform-product Anoto Forms Solution (AFS).
- Anoto signed an agreement with Group Hamelin in France for the delivery of 30,000 pens to its product Papershow.
- Anoto divested a major part of its application area Imaging Technology to the British company ARM. The transaction included the subsidiary Logipard AB and the long term contracts covering deliveries of IP-blocks. The total contract value to Anoto was MSEK 76, of which MSEK 68 was paid in December 2008. The remaining amount will be settled by mid 2010. The net income of the sale was MSEK 71.
KEY RATIOS FOR THE GROUP
| (SEK thousand) | 04 | 05 | 06 | 07 | 08 |
|---|---|---|---|---|---|
| Net sales | 147 392 | 113 230 | 108 725 | 144 691 | 182 204 |
| Other income | 19 180 | 71 387 | |||
| Gross profi t/loss | 89 936 | 79 395 | 78 404 | 129 114 | 201 329 |
| Operating profi t/loss | -80 011 | -79 775 | -131 823 | -9 665 | 39 707 |
| Profi t/loss after tax | -75 218 | -13 884 | -132 965 | -7 549 | 32 699 |
| Cash fl ow for the year | -74 293 | 169 554 | -31 649 | -48 540 | -31 957 |
| Earnings per share (SEK) | -0.64 | -0.11 | -1.03 | -0.06 | 0.25 |
| Shareholders' equity per share (SEK) | 3.27 | 4.39 | 3.56 | 3.52 | 3.80 |
| Equity/assets ratio, % | 80 | 79 | 80 | 81 | 81 |
| Average no. of employees | 132 | 110 | 121 | 103 | 127 |
NET SALES (SEK THOUSAND)
CASH FLOW FOR THE YEAR (SEK THOUSAND)
EQUITY/ASSETS RATIO %
PROFIT/LOSS AFTER TAX (SEK THOUSAND)
A WORD FORM THE CEO
CUSTOMER FOCUS BEARS FRUIT
In late 2006 we made a decision to reshape the business from being a technology and licensing oriented company to putting our customers' needs fi rst. This decision resulted in a strategy of taking increased responsibility for our products and for claiming a bigger part of the value chain.
As the ink dries on Anoto's 2008 annual report, we can look back on a period in which this decision has proved correct and the benefi ts have really started to show on the bottom line.
I'm pleased to say that the favourable trends we identifi ed in our 2007 report have progressed as planned.
Over the past year, Anoto has been able to capitalize on the solid platform for growth that we built through 2007.
During the year we acquired the pen production from Maxell, launched our Anoto Forms Solution platform and developed a strong sales organization. We entered into a number of signifi cant technology licensing partnerships in line with our new focus on delivering complete products that meet customer needs.
A key difference to the way we worked before is that we now assume the overall responsibility for developing pens and related technology, something that over time will tie partners and customers more closely to Anoto. This new cooperation will bring us continuous revenue over the coming years. With the divestment of most of our non-core imaging business, we are now in an even better shape to focus on developing attractive products and supporting our partners.
RECORD QUARTER ROUNDS OFF PROFITABLE YEAR
Anoto fi nished 2008 with the best quarterly sales results in the company's history. Net sales for the fourth quarter were up 25 per cent year-on-year, at SEK 56 million. Net sales for the full year came to SEK 182 million, also up 25 per cent on a year earlier.
This, combined with our continued cost control focus, meant that we ended 2008 in profi t. Net earnings after tax were SEK 33 million, compared with a net loss of SEK 8 million in 2007.
Selling our Logipard IP-block business to ARM, one of the world's leading semiconductor companies, made a positive contribution to our cash position, and the year ended at SEK 99 million.
FIRMER BUSINESS FOCUS
The business strategy and organizational restructuring started at the end of 2006 is now truly bearing fruit. Our improved performance can be traced back to our decision to change Anoto from being a highly technology-centric licensing business to one that is driving sales by meeting real customer needs through fully developed products.
As part of this transformation, Anoto strengthened its product portfolio signifi cantly during 2008.
The acquisition of the Hitachi Maxell Digital pen division in mid-2008 has put Anoto in control of the production and marketing of our digital pens. We have a steady fl ow of orders for pens and licenses from all over the world. In addition, we are winning a growing number of larger orders, including contracts for 1000-plus pens or licenses. Sales of the Anoto Forms Solution platform have developed according to plan and the fi rst customer installations are expected to start in 2009. During the year we also acquired routing technology from Covelus to enable our digital pen and paper technology to interact with different platforms and devices.
During the year we developed the Anoto penPresenter and Anoto penDocuments products, designed to be simple for everyone to install and use. Anoto penPresenter is an add-in for Microsoft PowerPoint® that lets people put real-time sketches and notes into their slides as they present them. In essence Anoto penPresenter functions as a personal digital whiteboard. With Anoto penDocuments people can make handwritten annotations on printed documents and have these implemented in the electronic version. Both products are being launched on the European market by our partner OKI, with other markets to follow later this year.
FLOURISHING PARTNERSHIPS
Anoto is supplying partners and customers with a wider range of products than ever before – including digital pens, licenses and a software platform. What they all have in common is that they enable easier and faster implementations of Anoto technology solutions.
All through 2008, and especially in the last quarter, we saw increasing business activity among our product partners.
We have intensifi ed our collaboration with major meeting-room solution partners. This initiative has resulted, for example, in follow-up pen orders from Hamelin for its
PaperShow product, as well as the launch of the ēno™ whiteboard by PolyVision in early January 2009.
During 2008 LeapFrog launched the Tag Reading System, a touch-and-talk reading system for children, while Livescribe launched the Pulse smartpen which links audio to what you write.
2008 also saw such key events as the deployment of Anoto technology by British Airways to help it keep to its fl ight schedule at London's busy Heathrow airport.
Furthermore, our technology was used by the UN Food and Agricultural Organization in Africa to help prevent the outbreak of animal diseases.
Yet another interesting deployment of our technology was with Würth in Sweden – where digital pens have helped sales representatives increase their productivity.
C-Pen continues to sell at a steady pace and has established customers around the world.
BUILDING ON OUR GROWING REPUTATION
The digital pen and paper market category is gaining signifi cant traction, not least as a result of Anoto's publicity efforts. In 2008, we continued to improve awareness of the Anoto brand through a proactive marketing and PR programme that has resulted in profi les in publications like the Financial Times and Le Figaro, along with numerous vertical sector trade media.
No-one is pretending that 2009 is going to be an easy time. However, by continuing to focus fi rmly on meeting customer needs with productivity-enhancing products, I believe Anoto is well positioned to build on the excellent results we achieved over the past year.
Anders Norling CEO
Lund, Sweden, March 2009
APPLICATION AREAS
Anoto offers a unique, patented technology. As the company does not have any direct competitors in the fi eld of Digital Pen and Paper, it mainly competes with other technologies, such as tablet PCs, PDAs and smartphones. Demand is being powered by increased knowledge and penetration in both new and existing markets as well as the need for cost-effi cient and user-friendly solutions. According to a study by the University of Applied Sciences Hamburg (2008), the Anoto Digital Pen and Paper technology is being rated as consider-ably more user-friendly compared to the alternative technologies listed above.
In terms of total cost of ownership (TCO) internal customer data shows that the Digital Pen and Paper technology has signifi cant cost advantages when benchmarked according to the same method that was used to estimate TCO in a 2007 Gartner report on PDA's and Smartphones.
Anoto has offi ces in Sweden, the United States and Japan and operates through partners in the Americas, Europe, South Africa, Australia and Asia-Pacifi c. Western Europe, Japan and the United States are the single largest geographical markets.
ANOTO PRODUCTS
Anoto Products focuses on systems, products and services, primarily in the fi eld of forms processing. Anoto employs an indirect business model and markets its products through partners, such as system integrators, software developers and IT consulting fi rms, all of which offer customized solutions with Anoto Digital Pen and Paper technology to their corporate customers and fi eld users. The basis of this offering is the digital pen which Anoto controls and
sells since the acquisition of the Hitachi Maxell Digital pen division, together with the Anoto Forms Solution platform. Turnkey products, such as existing scanning and translation pens, as well as newly developed products including Anoto penPresenter and Anoto pen-Documents, may also be marketed through other sales and distribution channels.
The market for Anoto Digital Pen and Paper techno-
logy includes virtually every segment of the community that uses pen and paper and needs to transmit data to digital media. Anoto focuses on a number of key areas to ensure ongoing expansion and profi tability improvements, and proactively strives to increase the number of partners, particularly system integrators, in order to increase market reach. The most important end-customer markets are the healthcare and clinical trials sectors, but there are also a number of digital pen solutions for inspections and reporting, for example in real estate, insurance and government. Within healthcare digital pen and paper is used to simplify administrative routines and for documenting and assuring the quality of healthcare interventions. Among the benefi ts of the technology are more effi cient paper-based processes, reduced risk of error, improved productivity and noticeable cost savings.
CASE STUDY SWEDISH GERIATRIC CARE
The Swedish geriatric care is using Anoto Digital Pen and Paper to facilitate documentation, quality assurance and data transmission. The solution is now being used in more than 30 Swedish municipalities, for example Sundbyberg, Kristianstad, Lomma and Karlskrona, and more are expected to follow. Altogether, 3,000 digital pens are being used by homecare personnel in Sweden.
The success in home care services has helped spread the technology to other areas of healthcare, such as breast cancer screening, physical examinations and bedsore prevention.The technology is also currently being deployed within emergency care and hospital environment.
CASE STUDY STÄDTISCHE KLINIKEN MÖNCHENGLADBACH, GERMANY
A recent deployment is that of the Städtische Kliniken Mönchengladbach, a municipal hospital in the northwest of Germany. The hospital is divided between two sites, with 600 beds for patient treatment and rehabilitation.
Whether they are being treated for broken bones or undergoing appendectomies or caesareans, patients often need to be treated under anaesthetic. Quick and accurate documentation of the entire anaesthetic process is critical, for medical and legal reasons. The core element of this documentation is the anaesthetic
log, that keeps track of administrative data, such as patient details as well as information on medication, anaesthetic procedures and supplementary measures.
Traditionally, anaesthetics staff had to fi ll out the log forms with normal pen and this information then had to be entered manually into the hospital's computer systems for further processing - a labour-intensive and time-consuming process, prone to errors. The hospital was looking for a technology solution to accelerate the documentation process and transfer handwritten information gathered during an anaesthetic procedure to the Hospital Information System (HIS) more effi ciently.
In order to achieve this, a range of solutions, including tablet PCs and document scanners were evaluated. As these technologies would have required an amendment of the documentation process, the hospital decided to choose a digital pen and paper solution. The digital pens are part of a comprehensive intensive care system solution that Anoto partner and digital pen and paper specialists, Diagramm Halbach, designed especially for the Städtische Kliniken.
Digital pen and paper captures and converts the handwritten information in the anaesthetists' logs into digital format, eliminating the need for separate registration post-surgery and resulting in less work for clinical and clerical staff. Among the range of benefi ts
that have been identifi ed, the clearest one is being able to continue the use of a pen and paper. Other benefi ts include faster and accurate information availability for other clinicians and accounting and research purposes.
The digital pens have made the anaesthetics operation more productive by helping optimise workfl ows and making day-to-day routines more effi cient – all while maintaining familiar ways of working.
CASE PHARMACEUTICAL INDUSTRY
Anoto technology is also making an impact in the pharmaceutical industry, where international pharma companies like Novartis, Actelion Pharmaceuticals, Sanofi -Aventis and GlaxoSmithKline are using it successfully in a number of different areas. Within the pharmaceutical industry digital pen and paper is used for documentation of data in clinical trials, data entry for the distribution of drug samples and streamlining of ordering processes. For pharmaceutical companies, every successful effort to improve effi ciency and quality in the clinical trials process directly contributes to continued competitiveness of the company and can be measured in actual revenue. Anoto Digital Pen and Paper technology helps to achieve this through benefi ts, such as easy deployment, ensured traceability of collected data and reduction of the time it takes for a drug to get to market, which may represent millions of euro in revenue.
PRODUCTS
The development of customized platforms and products, such as Anoto Forms Solution, Anoto penPresenter and Anoto penDocuments enables both Anoto and its partners to facilitate the sales process and reduce time to market.
The Anoto Forms Solution includes all components required to set up and use digital pen and paper in order to capture, transfer and incorporate handwritten information from paper forms into any back-end system - enabling rapid implementation and use of digital pen and paper in commercial services. Sales of the new Anoto Forms Solutions platform that was launched in 2008 has developed well and new partnerships are expected to start generating end-customer installations in 2009. As a result increased penetration of new and existing markets is predicted, as well as sales to larger customers in both private and public administration.
The Anoto penPresenter is a personal digital whiteboard that captures every word that is written. By simply projecting a blank PowerPoint® slide, a digital whiteboard is created and, using Digital Pen and Paper, everything that is written is automatically captured. PowerPoint presentations turn interactive by writing on the slides during a presentation.
Anoto penDocuments is an entry-level product allowing the user to create electronic copies of handwritten
documents instantly. Anoto penDocuments digitally captures handwriting while writing. Documents can be saved, stored and distributed immediately, which means no more scanning, faxing or using couriers. For smaller businesses, simply requiring a method of keeping track of handwritten documents, this is an attractive offering.
C TECHNOLOGIES
C Technologies develops and markets the C-Pen, which scans and recognizes printed text for further internal processing or transmission to a computer. The main customer benefi t is the ease with which printed information and text can be transmitted to digital media. The two most common areas of use are electronic payment systems and generic capture, recognition and transmission of text. Linguistic applications for the consumer market have also been developed and the fi rst version of C Dictionary was launched in mid-2008.
The C-Pen is sold through both retail outlets and directly to businesses using the OEM model.
ANOTO PRODUCTS
| MSEK | Net sales | Gross profi t |
|---|---|---|
| 2008 | 85 | 59 |
| 2007 | 78 | 66 |
TECHNOLOGY & LICENSING
Technology & Licensing develops and sells digital pen technology and digital pens on an OEM basis to marketleading customers. The customers develop their own product offers based on the technology components and pens provided by Anoto. Examples of customer products are learning toys, educational tools, visual communication equipment and personal productivity solutions. Several of these products are interactive, enabling real-time audio or visual feedback while writing or when touching interactive areas.
Currently Anoto has two customers that develop their own pens using technology components from Anoto, LeapFrog and Livescribe, both based in the United States. During 2008 LeapFrog launched the Tag Reading System, a touch-and-talk reading system for children, while Livescribe launched the Pulse smartpen that links audio to what you write. Both products have built-in audio capabilities, enabling real-time audio feedback from paper. During 2009 LeapFrog will expand their Anoto based product portfolio and launch Tag Junior for toddlers.
In 2008 Anoto fi nalized the development of the new pen, DP301, which streams data in real-time to computers and mobile phones. With DP301, Anoto can address interactive application areas, initially within the educational and offi ce market segments. DP301 is offered to customers on an OEM basis and is also included in Anoto penPresenter.
During 2008, a number of partners launched innovative new products based on the Anoto technology.
Groupe Hamelin launched Papershow, an interactive paper digital writing product which enables people to project handwritten notes directly on the screen during meetings.
DNP started commercial sales of its interactive classroom product OpenNOTE to Japanese schools in November 2008.
Anoto signed an agreement with PolyVision in 2008 and worked to enable Anoto functionality with PolyVision e3 environmental ceramicsteel™- interactive whiteboards. PolyVision launched the ēno™, a revolutionary new interactive whiteboard in January 2009. ēno™ by PolyVision is the fi rst result of applying Anoto´s pattern technology in the area of visual communication products, such as whiteboards and fl ipcharts. A combination of the Anoto Bluetooth-enabled digital pen (DP301), an ēno™ interactive whiteboard and a simple projector will enable teachers to move from ink to the Internet or from markers to multimedia, in an instant and without the need for power or data cables.
The focus of Technology & Licensing in 2009 will be on close collaboration with existing customers in order to ensure the development and delivery of pens and technology as well as on supporting the establishment
and growth of products based on Anoto technology within different market areas. Technology & Licensing will continue to establish new partnerships with market-leading companies and identify new application areas for Anoto technology. Examples of potential new application areas are pen tablets, games and entertainment products.
TECHNOLOGY & LICENSING
| MSEK | Net sales | Gross profi t |
|---|---|---|
| 2008 | 37 | 24 |
| 2007 | 34 | 23 |
IMAGING TECHNOLOGY
Imaging Technology develops and markets basic Anoto technology, such as ASICs and IP blocks. It supplies and licenses imaging technology modules, components and function blocks for integration with customer products or components, including mobile phones, accessories and components.
Imaging Technology develops and markets video technology in two different product areas. The fi rst area includes the development and (through partners) the manufacture of complete chips for digital surveillance cameras. The chips convert images to various video formats, such as MPEG4 and H264, for further distribution. The main customers are surveillance equipment manufacturers.
Anoto sold its subsidiary Logipard AB and its existing contracts for video technology to ARM, the world's leading semiconductor intellectual property supplier.
The value of the transaction was MSEK 76, of which MSEK 68 was paid upon signing. The outstanding amount will be settled by mid 2010. The net result of the transaction was MSEK 71. According to the contract, Anoto has transferred most of its imaging technology business, including customer contracts and Anoto's 80 per cent shareholding in Logipard, to ARM. Anoto is retaining the ASIC sales, which correspond to approximately 40 per cent of this year's volume within the Imaging Technology application area.
IMAGING TECHNOLOGY
| MSEK | Net sales | Gross profi t |
|---|---|---|
| 2008 | 60 | 45 |
| 2007 | 34 | 21 |
THE SHARE
The Anoto Group has been listed on the NASDAQ OMX Stockholm Stock Exchange (ticker: ANOT) since 16 June 2000. Today the share is listed on the Small Cap list of the NASDAQ OMX Nordic Exchange Stockholm. The share had previously traded on the New Market starting on15 March 2000. Anoto Group's share capital of SEK 2,571,677 is allocated among 128,583,867 shares. Each share entitles the holder to one vote at general meetings and all shares provide equal rights to participation in the company's assets and profi ts.
SHARE PRICE PERFORMANCE AND TRADING
The price of the Anoto Group share declined by 81 per cent from SEK 9.65 to 1.81 during the year. During the same period, the Affärsvärlden General Index was down by 42 per cent and the Stockholm Stock Exchange IT Index lost 30 per cent. Anoto Group's market capitalisation was SEK 232 million on 31 December 2008. On 25 March 2009, the share price was SEK 4,55 and the market capitalization was SEK 585 million.
A total of 68,776,269 Anoto shares traded on the NASDAQ OMX Stockholm Stock Exchange in 2008, for a turnover rate of 54 per cent.
SHAREHOLDERS
At the end of 2008, Anoto Group had 7,439 shareholders. Foreign shareholders controlled 62 %; the ten largest shareholders 54 per cent; and institutional and industrial investors 88 per cent of the shares.
DIVIDEND POLICY
No dividend will be considered over the next few years. The company's future dividend policy will refl ect its earnings, fi nancial position and fi nancing needs. Dividend proposals will be examined in the light of shareholder demands for a reasonable return and the company's internal fi nancing requirements.
OPTION PROGRAMMES
The parent company currently has one outstanding stock option program with underlying warrants for employees. The 585,000 options that have been subscribed for expire on 31 March 2010.
Full exercise of the options that have been subscribed for would result in subscription for no more than 585,000 new shares, increasing the company's share capital by SEK 11,700 and diluting existing shares by 0,5 per cent. The issue prices for options are SEK 18.00.
ANALYSTS
Anoto Group is covered by analysts at a number of banks and securities brokers, including Carnegie, Hagströmer & Qviberg and Redeye.
PER-SHARE DATA 2008
| No of shares | 128 583 867 |
|---|---|
| No of outstanding options | 0 |
| Average no of shares | 128 583 867 |
| Average number of outstanding options | 0 |
| Earnings per share (SEK) | 0.25 |
| Earnings per share incl options (SEK) | 0.25 |
| Cash fl ow per share for the year (SEK) | 0.25 |
| Cash Flow per share incl options (SEK) | 0.25 |
| Shareholders equity per share (SEK) | 3.80 |
| Shareholders equity per share incl options (SEK) | 3.80 |
LARGEST SHAREHOLDERS DECEMBER 31, 2008
| NAME | % | TOTAL |
|---|---|---|
| Essensor AS | 11.1% | 14 205 603 |
| Norden Technology AS | 7.4% | 9 500 000 |
| Swedbank Robur Fonder | 6.4% | 8 202 297 |
| Tor Aksel Voldberg | 5.1% | 6 500 000 |
| Michael Mathile | 4.9% | 6 300 000 |
| Barclays Bank | 4.8% | 6 188 150 |
| DnB NOR Bank | 3.8% | 4 925 900 |
| Carnegie Norway Branch | 3.8% | 4 832 500 |
| Banco Fonder | 3.1% | 4 035 000 |
| Chister Fåhraeus | 2.7% | 3 500 000 |
In January 2009, Michael Mathile increased his shareholding to 10.0% of total number of shares.
SHAREHOLDERS BY SIZE, DECEMBER 31, 2008
| Holdings | Total no.of shareholders |
% av total shareholders |
Hold collectlively number of shares |
% of share capital |
|---|---|---|---|---|
| 1-1000 | 5 710 | 76.8 | 1 679 481 | 1.3 |
| 1001-10000 | 1 380 | 18.6 | 4 867 834 | 3.8 |
| 10001-100000 | 271 | 3.6 | 8 055 024 | 6.3 |
| 100001- | 78 | 1.0 | 113 981 528 | 88.6 |
| 7 439 | 100 | 128 583 867 | 100 |
FIVE-YEAR SUMMARY
Summary of income statements
| (SEK thousand) | 2004 | 2005 | 2006 | 2007 | 2008 |
|---|---|---|---|---|---|
| Net sales | 147 392 | 113 230 | 108 725 | 144 691 | 182 204 |
| Other income | – | – | – | 19 180 | 71 387 |
| Gross profi t/loss | 89 936 | 79 395 | 78 404 | 129 114 | 201 328 |
| Amortization – intangible fi xed assets | -20 661 | -22 680 | -25 809 | -13 710 | -12 159 |
| Depreciation – property, plant and equipment | -7 825 | -3 644 | -1 709 | -2 201 | -3 011 |
| Operating profi t/loss | -80 011 | -79 775 | -131 823 | -9 665 | 39 706 |
| Profi t/loss on participations in Group companies | – | 70 457 | -769 | -252 | 0 |
| Profi t/loss on participations in associated companies | 3 059 | – | – | – | – |
| Profi t/loss on other receivables that are non-current assets | -2 431 | ||||
| Other fi nancial items | 1 861 | -4 446 | 794 | 3 269 | -5 974 |
| Profi t/loss after fi nancial items | -75 091 | -13 764 | -131 798 | -6 647 | 31 302 |
| Tax | -127 | -120 | -1 208 | -791 | -853 |
| Minority share in profi ts | – | – | 41 | -110 | 2 250 |
| Profi t/loss after tax | -75 218 | -13 884 | -132 965 | -7 549 | 32 699 |
Summary of balance sheets
| (SEK thousand) | 2004-12-31 | 2005-12-31 | 2006-12-31 | 2007-12-31 | 2008-12-31 |
|---|---|---|---|---|---|
| Assets | |||||
| Intangible fi xed assets | 368 031 | 357 536 | 343 324 | 339 473 | 364 025 |
| Property, plant and equipment | 5 589 | 3 568 | 3 512 | 4 046 | 5 279 |
| Financial fi xed assets | 5 155 | 5 346 | 5 080 | 8 560 | 30 599 |
| Total non-current assets | 378 775 | 366 450 | 351 916 | 352 079 | 399 903 |
| Inventory | 1 671 | 1 517 | 1 936 | 5 960 | 37 329 |
| Accounts receivable | 20 337 | 36 780 | 27 615 | 24 062 | 32 564 |
| Other current assets | 29 384 | 15 667 | 15 669 | 51 132 | 32 304 |
| Cash and bank balances, including current investments | 41 740 | 211 490 | 179 841 | 131 301 | 99 344 |
| Non-current assets for divestment | 74 235 | 0 | 0 | 0 | |
| Total current assets | 93 132 | 339 689 | 225 061 | 212 455 | 201 541 |
| Total assets | 471 907 | 706 139 | 576 977 | 564 534 | 601 444 |
| Liabilities and shareholders' equity | |||||
| Shareholders' equity | 385 629 | 555 690 | 458 237 | 452 809 | 488 474 |
| Minority shareholdings | — | — | 1 959 | 2 069 | -160 |
| Provisions (Non-interest-bearing) | 0 | 0 | 0 | 54 | 0 |
| Long-term liabilities (Non-interest-bearing) | 13 692 | 4 231 | 4 728 | 50 089 | 41 891 |
| Current liabilities (Non-interest-bearing) | 72 586 | 146 218 | 112 053 | 59 513 | 71 239 |
| Total liabilities | 86 278 | 150 449 | 118 740 | 111 725 | 112 970 |
| Total liabilities and shareholders' equity | 471 907 | 706 139 | 576 977 | 564 534 | 601 444 |
Summary of cash fl ow statements
| (SEK thousand) | 2004 | 2005 | 2006 | 2007 | 2008 |
|---|---|---|---|---|---|
| Profi t/loss after fi nancial items | -75 091 | -13 764 | -131 798 | -6 647 | 31 302 |
| Items that do not affect liquidity | 8 787 | -39 559 | 8 913 | 16 243 | 28 337 |
| Change in working capital | -4 949 | 60 251 | 73 642 | -39 015 | -9 317 |
| Cash fl ow from operating activities | -71 253 | 6 928 | 49 243 | -29 419 | 50 322 |
| Cash fl ow from investing activities | -7 633 | -14 933 | -14 190 | -20 808 | -40 257 |
| Total cash fl ow before fi nancing activities | -78 886 | -8 005 | -63 433 | -50 227 | 10 065 |
| Cash fl ow from fi nancing activities | 4 593 | 177 669 | 31 784 | 1 687 | -42 022 |
| Cash fl ow for the year | -74 293 | 169 554 | -31 649 | -48 540 | -31 957 |
Key ratios
| 2004 | 2005 | 2006 | 2007 | 2008 | |
|---|---|---|---|---|---|
| Sales growth, % | neg | neg | neg | 33 | 26 |
| Gross margin, % | 61 | 70 | 72 | 76 | 71 |
| Operating margin, % | neg | neg | neg | neg | 16 |
| Profi t margin, % | neg | neg | neg | neg | 21 |
| Capital employed (SEK thousand) | 385 629 | 555 690 | 460 196 | 454 878 | 488 314 |
| Return on capital employed, % | neg | neg | neg | neg | 7 |
| Return on shareholders' equity, % | neg | neg | neg | neg | 7 |
| Proportion shareholders' funds, % | 80 | 79 | 80 | 81 | 81 |
| Equity/assets ratio, % | 82 | 79 | 80 | 81 | 81 |
| Net debt/equity ratio, multiple | -0.11 | -0.38 | -0.39 | -0.29 | -0.20 |
| Interest coverage ratio, multiple | -2 264 | -1 | -29 | -3 | 5 |
| Earnings per share (SEK) | -0.64 | -0.11 | -1.03 | -0.06 | 0.25 |
| Earnings per share after dilution (SEK) | -0.64 | -0.11 | -1.03 | -0.06 | 0.25 |
| Cash fl ow per share for the year (SEK) | -0.63 | 1.42 | -0.25 | -0.38 | 0.25 |
| Cash fl ow per share after dilution (SEK) | -0.63 | 1.40 | -0.25 | -0.38 | 0.25 |
| Shareholders' equity per share (SEK) | 3.27 | 4.39 | 3.56 | 3.52 | 3.80 |
| Shareholders' equity per share after dilution (SEK) | 3.15 | 4.32 | 3.56 | 3.52 | 3.80 |
| Average no. of employees | 132 | 110 | 121 | 103 | 127 |
| Sales per employee (SEK thousand) | 1 117 | 1 029 | 1 029 | 1 405 | 1 435 |
| Payroll expenses, incl. social security contributions (SEK thousand) | 112 906 | 95 829 | 121 822 | 88 184 | 106 075 |
| (of which, pension premiums) | 14 006 | 11 030 | 10 925 | 10 588 | 13 337 |
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, divided with 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 amortization 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 2008 financial year.
GROUP STRUCTURE
Anoto Group AB is the holding company in the Group and performs group-wide functions. The operational activities are performed by the subsidiaries Anoto AB, C Technologies AB, Anoto Inc and Anoto Maxell Ltd. Logipard AB, in which Anoto AB controlled 80 per cent of the shares, was sold on December 16, 2008.
ORGANIzATION
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 organization is broken down into three application areas, i.e. Anoto Products, Technology & Licensing and Imaging Technology. The entire business is based on digital camera technology and image processing in real-time.
ANOTO APPLICATION AREAS
ANOTO PRODUCTS
Anoto Products focuses on systems, products and services, primarily in the field of forms processing. Anoto operates by an indirect business model and markets its products through partners, such as system integrators, software developers and IT consulting firms, all of which offer customized solutions with Anoto Digital Pen and Paper technology to their corporate customers and field users. The base for this offering is the digital pen which Anoto controls and sells since the acquisition of the Hitachi Maxell Digital pen division, together with the former Anoto Forms' solution platform. Turnkey products, such as existing scanning and translation pens, as well as newly developed products including Anoto penPresenter and Anoto penDocuments, may also be marketed through other sales and distribution channels.
Anoto Products continues to show growth. European markets are developing well, with continued focus on applications within the healthcare and clinical trials sectors. The inflow of new partners is good and bodes well for the future. Increased media coverage is helping
to bring solutions based on Anoto Digital Pen and Paper technology to the attention of both end-users and new partners. The Japanese market, which did not perform as expected during the first three quarters, showed some signs of improvement in the last quarter, although major projects have been postponed until 2009.
Since the acquisition of the Hitachi Maxell digital pen division, Anoto controls and markets the digital pens. There is a steady flow of orders for smaller volumes of pens and licenses from all over the world. In addition to these orders, an increased activity in the market for pens and licenses in larger volumes can be noted. Sales of the new AFS platform that was launched last year has developed according to plan and is expected to start generating end-customer installations in 2009.
TECHNOLOGY & LICENSING
Technology & Licensing develops and sells digital pen technology and digital pens on an OEM basis to market leading customers. The customers develop their own product offers based on the technology components and pens provided by Anoto. Several of these products are interactive, enabling real-time audio or visual feedback while writing or when touching interactive areas. Examples of customer products are learning toys, educational tools, visual communication equipment and personal productivity solutions.
A major milestone this quarter has been the completion and introduction of the Anoto branded DP301 pen used by PolyVision for the product ēno™ being the result of developing Anoto technology in the direction of visual communication products, such as whiteboards and flipcharts.
IMAGING TECHNOLOGY
Imaging Technology develops and markets basic Anoto technology, such as ASICs and IP blocks. The application area supplies and licenses imaging technology modules, components and function blocks for integration with customer products or components, including mobile phones, accessories and their components.
Anoto sold its subsidiary Logipard AB and its existing contracts for video technology to ARM, the world's leading semiconductor intellectual property supplier. The value of the transaction was MSEK 76, of which MSEK 68 was paid upon signing. The outstanding
amount shall be settled within 18 months. The net result of the transaction was MSEK 71. Anoto is retaining the ASIC sales, which corresponds to approximately 40 per cent of this year's volume within the Imaging Technology application area.
Sales developed well during 2008, although slightly below expectations due to unforeseen delays in the market introduction of mobile phones using Anoto technology.
SHARES AND SHAREHOLDERS
The company had 128,583,867 shares as of year-end. According to VPC AB statistics, there were 7,439 shareholders on 31 December 2007, representing a decrease of approximately 3 per cent over the past 12 months. The largest shareholders were Essensor AS (11.1 per cent of the votes and capital) and Norden Technology AS (7.4 per cent of the votes and capital).
EMPLOYEES
The average number of employees within the Group increased from 103 to 127 in 2008. The Group had 105 employees at year-end. Logipard AB, which was sold in December 2008 had 15 employees.
REMARKS ON THE INCOME STATEMENT
Net sales for the year increased by 26 per cent, from MSEK 145 to MSEK 182. Other income in 2008 amounted to MSEK 71 and refers to the sale of long term contracts within Imaging Technology and the subsidiary Logipard AB. A major part of the transaction refers to the sale of shares in Logipard AB, which is exempted from taxation. The sale of contracts will reduce tax losses carried forward, but will not result in any taxation. Other income in 2007 of MSEK 19 refers to the sale of the Anoto US operations to Livescribe.
Forty per cent of the Group's income is in USD and 49 per cent in EUR. During the year, the Group hedged 50 per cent of its currency net flows in USD and approximately 50 per cent of its currency flows in EUR (refer to the section on risk management).
The Group's gross profit for the year rose to MSEK 201 (129), while its gross margin was 71 per cent (76). The major reason for the lower margin can be explained by the increased sale of digital pens and components.
Overhead costs increased by 19 per cent, primarily due to the larger organization as a result of the acquisition of the Hitachi Maxell digital pen division, an increased level of activity and the impact on currency fluctuations when converting costs of foreign subsidiaries into Swedish currency. The expansion of Logipard AB, sold in December 2008, represents a part of the increase in overhead costs. The Group capitalises non-customer financed development expenses that meet IAS 38s criteria, a total of MSEK 20 (9) in 2008. The operating result for the year was MSEK 40 (-10).
REMARKS ON THE BALANCE SHEET AND CASH FLOW STATEMENT
As the result of increased working capital in inventory of MSEK 31, accounts receivable and the increase of long term receivables on customer to MSEK 29, total assets increased by MSEK 37. The negative cash flow for the year was MSEK -32, reducing liquid assets to MSEK 99. The main reason for the negative cash flow is an increase in working capital and capital expenditures. Current and long term liabilities increased from MSEK 109 to MSEK 112 . Out of the total liabilities, MSEK 50 represent prepaid royalty, for which Anoto has no obligation to repay or deliver any services.
The Group's liquid assets, including current investments, decreased from MSEK 131 at the end of 2007 to MSEK 99 at the end of 2008.
Shareholders' equity of MSEK 488 on 31 December, as opposed to MSEK 453 past year, represented an equity/assets ratio of 81 per cent (81).
Cash flow from operating activities was MSEK 50 (-29). Due to the rise in sales coupled with the acquisition of the Hitachi Maxell digital pen division, working capital increased by MSEK 9, due to more inventory. Investing activities consumed MSEK 40 (21), of which MSEK 20 (9) was for capitalised development expenses during the year. Financing activities contributed MSEK -42 (2), mainly due to the conversion of certain accounts receivable into long term receivables (22 months maximum). Total cash flow for the year ended up at MSEK -32 (-49).
INVESTMENTS
Net investments in 2008 for fixed assets totalled MSEK 36 (15).
RESEARCH AND DEVELOPMENT
The Group's R&D efforts are focused on upgrading and integration of electronic hardware and software for the development of digital pen and paper solutions. The Group spent MSEK 69 (63), or 47 per cent (45) of its total operating costs, on R&D in 2008. The number
included MSEK 5 (8) for amortization of capitalized development expenses. Pursuant to its compliance with IAS 38, the Group capitalized MSEK 20 (9) in new development expenses during the year. Including capitalization, the Group's total 2008 R&D costs totalled MSEK 84 (64).
Anoto has an extensive patent portfolio. At the end of 2008, the Group had 308 active patent applications and 217 patent approvals.
DISPUTES
Anoto is currently not engaged in any disputes that are deemed to significantly affect its financial position.
ENVIRONMENT
Anoto does not pursue any activities that require environmental permits. None of its units are environmentally certified.
RISK MANAGEMENT
As the Group conducts the the main part of its sales internationally, a majority of the contracts are in EUR or USD. As a significant part of the costs are in SEK and USD, margins and earnings are sensitive to currency fluctuations. The Anoto Group AB parent company handles all trading in financial instruments. In 2008, approximately 40 per cent of the total income was related to USD and 49 per cent to EUR.
Refer to Note 4 for a detailed description of the company's risk management policies.
BOARD AND ITS RULES OF PROCEDURE
The Anoto Group AB Board of Directors consists of seven ordinary members. Refer to page 48 of this annual report under the section entitled "Corporate Governance report" for a detailed account of the Board's composition and working methods.
The 2008 Annual General Meeting authorized the Board to decide on one or more directed issues totalling no more than 12,000,000 shares prior to the next Annual General Meeting – as well as to depart from the preferential rights of shareholders in order to enable the acquisitions of businesses or operations by paying wholly or partially with shares.
GUIDELINES ON REMUNERATION FOR SENIOR EXECUTIVES
Remuneration for the CEO and senior executives in 2008 appears in Note 10, "Salaries and other remuneration". The Board has proposed to the
Annual General Meeting that the guidelines on remuneration for senior executives remain unchanged in 2009.
SIGNIFICANT EVENTS AFTER YEAR-END
The Livescribe Inc debt to Anoto of MSEK 20, 1 was settled in full in the middle of March 2009. The debt was the remaining payment from an agreement in early 2007 between Livescribe and Anoto, by which Anoto phased out its operation "Content and Applications" to Livescribe Inc.
No further significant events have occurred after the year-end.
OUTLOOK
The restructuring programme together with the new strategy implemented in 2008 is beginning to pay off. The uncertainty in the overall global economy makes it extremely difficult to predict market trends. Therefore, a market outlook for 2009 has been omitted in this report.
PROPOSED APPROPRIATION OF ACCUMULATED DEFICIT
Proposed appropriation of accumulated deficit in the parent company (SEK:
| Total | –945 119 |
|---|---|
| Loss for the year | –945 119 |
| Accumulated deficit | 0 |
The Board of Directors and CEO propose that the accumulated deficit of SEK -945,119 reduces the statutory reserve by the same amount.
With regard to the financial position of the Group and parent company, refer to the following accounts.
INCOME STATEMENT
| Group | Parent company | ||||
|---|---|---|---|---|---|
| (SEK Thousands) | Note | 2008 | 2007 | 2008 | 2007 |
| Net sales | 5 | 182 204 | 144 691 | 30 044 | 26 155 |
| Other income | 41 | 71 387 | 19 180 | - | - |
| Cost of goods and services sold | 12 | -52 262 | -34 751 | - | - |
| Gross profit/loss | 201 329 | 129 114 | 30 044 | 26 155 | |
| Selling expenses | 9,15 | -68 953 | -53 529 | -6 919 | -6 812 |
| Administrative expenses | 9, 10,11,15 | -18 620 | -21 716 | -17 048 | -15 135 |
| Research & development costs | 9,15 | -77 010 | -63 073 | -4 299 | -4 559 |
| Other operating income | 13 | 4 703 | 1 192 | 40 | - |
| Other operating costs | 14 | -1 742 | -1 653 | - | - |
| Operating profit/loss | 12 | 39 707 | -9 665 | 1 818 | -352 |
| Profit/loss on shares in group companies | 16 | - | -252 | - | -3 700 |
| Share of earnings in associated companies | -2 431 | ||||
| Interest income | 17 | 2 397 | 4 782 | 1 148 | 3 844 |
| Interest and similar expenses | 18 | -8 371 | -1 513 | -2 021 | -136 |
| Profil/loss after financial items | 31 302 | -6 648 | 945 | -344 | |
| Tax on profil/loss for the year | 19 | -853 | -791 | - | - |
| Net Profit for the year | 30 449 | -7 439 | 945 | -344 | |
| Allocation of net profit for the year | |||||
| Profit/loss attributable to minority interests | -2 250 | 110 | - | - | |
| Profit/loss attributable to shareholders of Anoto Group AB | 32 699 | -7 549 | 945 | -344 | |
| Earnings per share (SEK) 1) | 0.25 | -0.06 | 0.01 | 0.00 | |
| Earnings per share after dilution (SEK) 2) | 0.25 | -0.06 | 0.01 | 0.00 | |
| No of shares, weighted average for the year | 128 583 867 | 128 583 867 | 128 583 867 | 128 583 867 | |
| No of shares, weighted average for the year, including outstanding warrants 3) |
128 583 867 | 128 883 867 | 128 583 867 | 128 583 867 |
1) Profi/Loss for the year attributable to shareholders of Anoto Group AB divided by average number of shares during the year.
2) Profit/Loss for the year attributalble to shareholders of Anoto Group AB divided by sum of the weighted average number of shares during the year and the weihted average number of outstanding warrants whose exercise price was less than the closing share price for the year. Warrants give rise to a dilutive effect only when their conversion to shares generates poorer earnings per share (IAS 33, Earnings per share).
3) Only warrants whose exercise price is less than the closing price for the year are included.
BALANCE SHEET
| Group | Parent company | ||||
|---|---|---|---|---|---|
| (SEK Thousands) | Note | 2008-12-31 | 2007-12-31 | 2008-12-31 | 2007-12-31 |
| ASSETS | |||||
| Non-current assets | |||||
| Intangible fixed assets | |||||
| Capitalized development expenditures | 20 | 26 580 | 11 504 | - | - |
| Patents | 21 | 28 866 | 28 938 | 675 | 764 |
| Goodwill | 24 | 302 496 | 298 674 | - | - |
| Brands | 22 | 334 | 357 | 36 | 40 |
| Other intangible assets | 23 | 5 749 | - | - | - |
| Total intangible fixed assets | 364 025 | 339 473 | 711 | 804 | |
| Property, plant and equipment | |||||
| Equipment and tools | 25 | 5 279 | 4 046 | 356 | 366 |
| Total property, plant and equipment | 5 279 | 4 046 | 356 | 366 | |
| Financial fixed assets | |||||
| Shares in group companies | 26 | - | - | 267 194 | 267 194 |
| Shares in associated companies | 27 | 1 640 | 4 071 | - | - |
| Other long-term securities | 28 | - | 3 371 | - | - |
| Other long-term recievables | 29 | 28 959 | 1 118 | - | - |
| Receivables - group companies | - | - | 77 505 | 77 505 | |
| Total financial fixed assets | 30 599 | 8 560 | 344 699 | 344 699 | |
| Total non-current assets | 399 903 | 352 079 | 345 766 | 345 869 | |
| Current assets | |||||
| Inventory | |||||
| Finished goods and goods for sale | 37 329 | 5 960 | - | - | |
| Current receivables | |||||
| Accounts receivable | 30 | 32 564 | 24 062 | 63 | - |
| Receivables from subsidiaries | - | - | 116 040 | 40 928 | |
| Other recievables | 16 777 | 9 534 | 1 118 | 1 587 | |
| Prepaid expenses and accrued income | 31 | 15 527 | 41 598 | 2 091 | 2 038 |
| Total current receivables | 64 868 | 75 194 | 119 312 | 44 553 | |
| Current investments | |||||
| Short-term securities | 36 185 | 74 229 | - | 64 335 | |
| Casn and bank balances | 63 159 | 57 072 | 897 | 3 561 | |
| Total current assets | 201 541 | 212 455 | 120 209 | 112 449 | |
| Total Assets | 601 444 | 564 534 | 465 975 | 458 318 |
| Group | Parent company | |||||
|---|---|---|---|---|---|---|
| (SEK Thousands) | Note | 2008-12-31 | 2007-12-31 | 2008-12-31 | 2007-12-31 | |
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||
| Shareholders equity | ||||||
| Share capital | 2 572 | 2 572 | 2 572 | 2 572 | ||
| Other capital contributed | 448 508 | 448 508 | - | - | ||
| Statutory reserve | - | - | 419 610 | 419 953 | ||
| Share premium reserve | - | - | 28 555 | 28 555 | ||
| Other reserves | -152 | -3 063 | - | - | ||
| Accumulated loss including loss for the year | 37 546 | 4 792 | - | - | ||
| Profit/loss for the year | - | - | 945 | -343 | ||
| Equity attributible to the shareholders of Anoto | ||||||
| Group AB | 488 474 | 452 809 | 451 682 | 450 737 | ||
| Equity attributible to minority interests | -160 | 2 069 | 0 | 0 | ||
| Long-term liabilities/Provisions | ||||||
| Provisions for taxes | - | 54 | - | - | ||
| Other provisions | 34 | - | - | - | - | |
| Other liabilities | 41 891 | 50 089 | - | - | ||
| Total long-term liabilities/Provisions | 41 891 | 50 143 | 0 | 0 | ||
| Current liabilities | ||||||
| Provisions restructuring | 32 | - | - | - | - | |
| Provisions for product warranties | 33 | 800 | 1 573 | - | - | |
| Accounts payable | 12 034 | 9 835 | 983 | 1 377 | ||
| Liabilities to subsidiaries | - | - | - | |||
| Tax liabilities | 813 | 835 | - | - | ||
| Advance payments from customers | 12 400 | 21 665 | - | - | ||
| Other liabilities | 23 979 | 8 643 | 7 318 | 1 655 | ||
| Accrued expenses and prepaid income | 35 | 21 213 | 16 962 | 5 992 | 4 549 | |
| Total current liabilities | 71 239 | 59 513 | 14 293 | 7 581 | ||
| TOT AL LIABILITIES AND SHAREHOLDERS EQUITY |
601 444 | 564 534 | 465 975 | 458 318 | ||
| Pledged assets | 38 | 8 542 | 6 196 | - | - | |
| Contingent liabilities | 39 | 4 721 | 7 025 | - | - |
CHANGES IN SHAREHOLDERS EQUITY
| Shareholders equity | |||||||
|---|---|---|---|---|---|---|---|
| Other capital | Profit for | contributable to the shareholders of |
Minority | Total shareholders |
|||
| (SEK Thousands) | Share capital | contributed 2) | Reserves 1) | the year | Anoto Group AB | interest | equity kapital |
| GROUP EQUITY |
|||||||
| Shareholders equity January 1, 2007 | 2 572 | 560 655 | -1 418 | -103 572 | 458 237 | 1 959 | 460 196 |
| Translation differences for the year 1) | - | - | -1 645 | - | -1 645 | - | -1 645 |
| Reduction of share premium reserve | - | -112 147 | - | 112 147 | 0 | - | 0 |
| Total changes in shareholders equity | |||||||
| reported directly against equity, excluding | |||||||
| transactions with shareholders | 0 | -112 147 | -1 645 | 112 147 | -1 645 | 0 | -1 645 |
| Profit for the year | - | - | - | -7 549 | -7 549 | 110 | -7 439 |
| Total changes in shareholders equity excluding transactions with shareholders |
- | -112 147 | -1 645 | 104 598 | -9 194 | 110 | -9 084 |
| Adjustment costs for options | - | - | - | 3 765 | 3 765 | - | 3 765 |
| Shareholders equity December 31, 2007 | 2 572 | 448 508 | -3 063 | 4 791 | 452 808 | 2 069 | 454 877 |
| Translation differences for the year 1) | - | - | 2 911 | - | 2 911 | 21 | 2 932 |
| Total changes in shareholders equity | |||||||
| reported directly against equity, | |||||||
| excluding transactions with shareholders | 0 | 0 | 2 911 | 0 | 2 911 | 21 | 2 932 |
| Profit for the year | - | - | - | 32 699 | 32 699 | -2 250 | 30 449 |
| Total changes in shareholders equity exclu ding transactions with shareholders |
- | - | 2 911 | 32 699 | 35 610 | -2 229 | 33 381 |
| Adjustment costs for options | - | - | - | 56 | 56 | - | 56 |
| Shareholders equity December 31, 2008 | 2 572 | 448 508 | -152 | 37 546 | 488 474 | -160 | 488 314 |
1) From translation of Financial reporting from foreign subsidiaries.
| 2008 | 2007 | |
|---|---|---|
| Accumulated exchange rate difference at beginning of the year | -3 063 | -1 418 |
| Exchange rated differences for the year | 2 911 | -1 645 |
| Accumulated exchange rate differences at year end | -152 | -3 063 |
2) Includes parent company statutory reserve and premium reserve from share issues. For changes in these items references are made to Changes in parent company equity below.
| Statutory | Share premium | ||||
|---|---|---|---|---|---|
| (SEK Thousands) | Share capital | reserve | reserve | Profit | Total equity |
| PARENT COMPANY'S EQUITY |
|||||
| Adjustment costs for options | 2 572 | 532 100 | 28 555 | -112 147 | 451 080 |
| Appropriation of previous year´s loss | - | -112 147 | - | 112 147 | - |
| Loss for the year | - | - | - | -343 | -343 |
| Shareholders equity December 31, 2007 | 2 572 | 419 953 | 28 555 | -343 | 450 737 |
| Appropriation of previous year´s loss | - | -343 | - | 343 | - |
| Profit for the year | 945 | 945 | |||
| Shareholders equity December 31, 2008 | 2 572 | 419 610 | 28 555 | 945 | 451 682 |
The change in number of shares and their par value, see below.
All shares are fully paid and entitles the holder to an equal per centage of dividend.
| Increase in | |||
|---|---|---|---|
| no. of shares | No. of shares | Par value/ share | |
| Registered opening balance January 1, 2007 | 128 583 867 | SEK 0.02 | |
| Registered closing balance December 31, 2007 | 128 583 867 | SEK 0.02 | |
| Increase in | |||
| no. of shares | No. of shares | Par value/ share | |
| Registered opening balance January 1, 2008 | 128 583 867 | SEK 0.02 | |
| Registered closing balance December 31, 2008 | 128 583 867 | SEK 0.02 |
CASH FLOW ANALYSIS
| Parent company | |||||
|---|---|---|---|---|---|
| (SEK Thousands) | Note | 2008 | 2007 | 2008 | 2007 |
| OPE RATING ACTIVITIES |
|||||
| Profit after financial items | 31 302 | -6 647 | 945 | -344 | |
| Change in provisions | -907 | -4 330 | - | - | |
| Depreciation and amortization on assets | 15, 20-25 | 15 170 | 15 912 | 235 | 224 |
| Disposal of assets | 20-25 | 6 313 | 4 703 | - | - |
| Cost for options | 56 | 3 766 | - | - | |
| Share of earings in associated companies | - | - | - | - | |
| Profit on shares in subsidiaries | 16 | - | 252 | - | 3 700 |
| Sale of business | 41 | 2 584 | - | - | |
| Interest income | 17 | -2 397 | -4 782 | -1 148 | -3 844 |
| Interest costs | 18 | 8 371 | 1 513 | 2 021 | 136 |
| Tax paid | 19 | -853 | -791 | -6 | - |
| Cash flow from operating activities before | |||||
| change in working capital | 59 639 | 9 596 | 2 047 | -128 | |
| Cash flow from change in working capital | |||||
| Change in operating receivables | 10 326 | -31 910 | -74 759 | -40 938 | |
| Change in inventory | -31 369 | -4 024 | - | - | |
| Change in operating liabilities | 11 726 | -3 081 | 6 712 | -34 205 | |
| Total change in working capital | -9 317 | -39 015 | -68 047 | -75 143 | |
| Cash flow from operating activities | 50 322 | -29 419 | -66 000 | -75 271 | |
| Capital expenditure | |||||
| Capitalized development expenditures | 20 | -20 134 | -9 366 | - | - |
| Patents | 21 | -5 747 | -5 163 | -25 | -86 |
| Brands | 22 | -7 | -58 | - | -23 |
| Goodwill | -3 822 | - | - | - | |
| Other intangible assets | 23 | -6 439 | - | - | - |
| Equipment & tools | 25 | -4 108 | -2 365 | -105 | -302 |
| Shares in group companies 1) | 26 | - | - | - | -3 700 |
| Shares in associated companies | 27 | - | -3 856 | - | - |
| Cash flow from net capital expenditures | -40 257 | -20 808 | -130 | -4 111 | |
| Total cash flow before financing activities | 10 065 | -50 227 | -66 130 | -79 382 | |
| Financing activities | |||||
| Interest income | 17 | 2 397 | 4 782 | 1 148 | 3 844 |
| Interest expenses | 19 | -8 371 | -1 513 | -2 021 | -136 |
| Change in long term liabilities | -8 198 | -6 | - | - | |
| Change in long term receivables | -27 841 | - | - | - | |
| Translation differences | -9 | -1 576 | - | - | |
| Cash flow from financing activities | -42 022 | 1 687 | -873 | 3 708 | |
| Cash flow for the year | -31 957 | -48 540 | -67 003 | -75 674 | |
| Liquid assets at beginning of the year | 131 301 | 179 841 | 67 896 | 143 570 | |
| Liquid assets at end of the year | 99 344 | 131 301 | 893 | 67 896 | |
1) Unconditional shareholders contribution to Anoto AB.
Notes (SEK thousand unless otherwise indicated)
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), interpretations from International Financial Reporting Committee (IFRIC) as accepted by EU and the Swedish Financial Reporting Board recommendation RFR 1.1 "complementary accounting standards for group accounting. The parent company's annual accounts have been prepared in compliance with the Swedish Annual Accounts Act (ÅRL) and the Swedish Financial Reporting Board recommendation RFR 2.1, Accounting for
Legal Entities. The consolidated and annual accounts, which are specified in thousands of Swedish kronor, refer to1 January - 31 December for income statement items and 31 December for balance sheet items.
The annual report and consolidated accounts have been approved for distribution by the Board on 31 March 2009. The Group income statement and balance sheet will be subject to approval by the Annual General Meeting on 14 May 2009.
Note 2 | Anoto's accounting policies
THE GROUP
Other than the revaluation of certain financial 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 per cent of the votes, i.e., the parent company had a controlling interest. The consolidated accounts have been prepared in accordance with the purchase method. The historical cost is the sum of the fair values of assets paid, accrued or overtaken liabilities, as well as for the equity instruments that Anoto has issued in exchange for the controlling interest in the acquired unit, along with all costs directly attributable to the acquisition.
The historical cost is allocated among the unit's identifiable assets, contingent and other liabilities that meet the criteria for accounting in accordance with IFRS 3, Business Combinations, reported at fair value. If the historical cost exceeds net acquired assets and liabilities in accordance with the above, the difference is reported as goodwill.
Deferred tax is calculated as 28 per cent of the difference between the fair values of assets and liabilities reported and tax residual values insofar as the difference is not part of untaxed reserves. Group equity includes the Group's participation in shareholders' equity earned by group companies after acquisition, as well as minority shareholdings in the equity of group companies.
All intra-Group transactions are eliminated in the consolidated accounts. Intra Group transactions include internal sales, profits 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 | 2008 | 2007 | 2008 | 2007 |
| United States | USD | 6,5808 | 6,7607 | 7,7525 | 6,4675 |
| Japan | JPY (100) | 6,4023 | 5,7437 | 8,6000 | 5,7200 |
Associated companies
Associated companies are those in which the Group controls 20-50 per cent of the votes or otherwise exerts significant influence over operating and financial 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 profit/loss is reported in the consolidated income statement. The Group's share of the associated company's profit/loss after financial income/expense is included in theprofit/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 profit/lossfor 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 fixed-term licenses is directly reported as of the invoice date.
For instance, license revenue may involve a certain degree of exclusivity or contributions for, or access to, a platform.
Royalties are reported during the same month as the partner makes the actual sale.cost.
Revenue attributable to development projects, Non Refundable Engineering (NRE), is recognised in the same period as the service is rendered. The extent to which each development project has been completed is normally based on a quarterly analysis. The project's estimates are updated with the costs until the current date in order to determine the per centage of the total estimated costs that have accrued. An anticipated loss on a project is reported immediately as a cost.
Goodwill
Goodwill, which is reported in connection with the acquisition of subsidiaries in accordance with the above, is initially reported as an asset at historical cost. Goodwill is not amortized but subject to an impairment test annually or whenever needed by calculating the recoverable amount of the corresponding cash-generating unit. The recoverable amount is defined 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 benefit from acquisition synergies. An impairment loss is recognized if the the value of the unit reported by the Group exceeds the recoverable amount. The impairment loss is charged to earnings for the year.
Intangible fixed 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 financial gains for the company.
Product development must have reached the commercialization stage before the expenditures are reported as assets. All expenditures are carried as expenses on a current basis up until that point. Amortization schedules begin as of the market launch of each product. The amortization schedule is based on the product's useful life of 3-5 years.
External expenditures for patents and brands are capitalized in the balance sheet with ten-year amortisation schedules.
Property, plant and equipment
Property, plant and equipment consisting of equipment, computer equipment and computer programs is reported at accumulated depreciation according to plan and any impairment losses.
Depreciation and amortization according to plan
Depreciation and amortization according to plan are based on the historical costs and estimated economic useful lives of the assets in view of the following depreciation and amortization periods:
| 10 years |
|---|
| 3-5 years |
| 5 years |
| 3 years 1) |
| 2-5 years 2) |
1) Capitalized computer programs refer to CAD programs that are essential to the ongoing product development effort.
2) Depreciations varies between 2 -5 years depending on lease terms.
Impairment losses
If there is an indication that a Group asset has decreased in value, its recoverable amount is determined. The recoverable amount is defined as the asset's net realizable value or value in use, whichever is higher. When determining the value in use, the present value of the future cash flows that the asset is expected to give rise to during its useful life is estimated. An impairment loss is recognized if the Group's reported value exceeds the recoverable amount, and the impairment loss is charged to earnings for the year.
Leases
Lease contracts are classified as either financial or operational leases. In a financial lease, the financial risks and benefits 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 significant financial lease contracts. Cost for operational leases are distributed evenly over the lease period.
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 financial receivables and liabilities are reported as financial items.
Financial instruments
The Group's financial instruments consist mostly of accounts receivable, liquid assets, accounts payable and financial derivative instruments in the form of currency forward contracts.
Liquid assets
Liquid assets consist of cash and bank balances, as well as current investments. A current investment is classified 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 fluctuations.
Long-term receivables and accounts receivable
Long-term receivables and accounts receivable are montary asstes which are not derivatives, that have defined payment plans or identifyable payments and which are not listed on an active market place. These assets are valued at historical cost. Accounts receivable are reported net after deduction of doubtful accounts receivable.
Accounts 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 flow of foreign currencies up to 12 months. The size of each contract is based on rolling liquidity forecasts for following periods. The Group continually orders contracts in line with recieved payments in foreign currenzies. The primary purpose of hedging is to shield the Group from major changes in cross rates. Hedging does not meet the criteria of IAS 39, Financial Instruments: Disclosure and Presentation, for hedge accounting. Thus, changes in the value of all currency forward contracts are reported in the income statement as financial income/expense.
Inventory
Inventory, consisting of finished products and critical components, is reported at historical cost (in accordance with FIFO) or net realizable value, whichever is lower.
Pensions and compensations to employees
All pension commitments have been taken over by insurance companies and classified as defined contribution pension plans. Pension premiums are carried as expenses in the period that employees rendered the associated services.
As part of incentive programmes, the Group has issued stock options and warrants to employees. The fair value of employee stock options on the distribution date are reported as a cost in the income statement. The fair value is calculated in accordance with the Black-Scholes Model. The total costs are allocated during the period in which the options are earned. The cost is reported under administrative expenses.
Taxes
All tax deemed payable on reported earnings is reported in the income statement. The tax has been calculated in accordance with each country's tax regulations and included in the tax on profit/loss for the year item.
The Group's total tax in the income statement consists of current tax on taxable earnings for the period and deferred tax. The Group's tax consists primarily of current tax on taxable earnings of foreign subsidiaries for the period.
The Group uses the balance sheet method to calculate deferred tax assets and liabilities. In accordance with the balance sheet method, the calculation is based on tax rates as of the balance sheet date as applied to temporary differences between the reported and tax value of an asset or liability, as well as tax loss carry-forwards. Deferred tax assets are reported in the balance sheet only in amounts that can presumably be utilized within the foreseeable future.
Reporting cash flow
The cash flow statements are prepared in accordance with the indirect method, i.e., profit/loss after financial 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 flow of investing activities.
Provisions
A provision is reported when there is a commitment as the result of an event, it is probable that an outflow 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 confirmed only by multiple uncertain future events and it is unlikely that an outflow of resources will be required or that the size of the commitment will not be calculable with sufficient precision.
Disclosures about related parties
For disclosures about the company's transactions with related parties, refer to Note 10 "Remuneration for senior executives" and Note 42 "Related party transactions. There were no other transactions with related parties.
Segment reporting
Anoto have no primary or secondary segments. The actual performance of the activities are measured on the Group as a whole.
Changed Accounting principles
Changes in accounting principles in accordance with IFRIC 11 ( IFRS - Trading in its own shares), IFRIC 12 ( Service Concession Agreements), IFRIC 14 ( IAS - The limit of an Defined Benefit Asset) have had no impact on the financial reporting of the Group during 2008.
New IFRS and interpretaions valid from 2009 ( not yet in force)
Changes in IFRS 2( Sharerelated compensations), IFRS 3 (Business acqusitions), IAS 32 ( Finance instuments), IFRIC 13 ( customer loyalty schemes), IFRIC (Divestments of real estate), IFRIC 16 (heging of investments in foreign business), IFRIC 17 ( payment of assets as dividend to its shareholders) are deemed to have no impact on the financial reporting of the Group during 2009.
Changes in IAS 1 (Layout of the structure of the financial reporting) is deemed to have impact on financial reports of the Group from 2009.
PARENT COMPANY
For details of the parent company's accounting policies, refer to the Group's accounting policies above. The section below is limited to the parent company's deviations from the Group's policies.
Leases
In accordance with RR 32, the parent company's financial 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 financial fixed assets at historical cost less any impairment losses and financial current assets at the lower of cost or net realizable value.
Holdings in subsidiaries and associated companies
Holdings in group and associated companies are reported at historical cost. If the reported value of the investment exceeds the recoverable amount (refer to section above on impairment losses), an impairment loss is recognised.
Shareholders' contributions
Shareholders' contributions are reported as an increase in the participations in group companies item, after which an impairment test is performed on the value of the shares.
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 significant impact on the amounts that appear in the financial 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 significant risk of substantial adjustments to reported assets/liabilities for the next financial 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 flows that the cash-generating unit is expected to give rise to. The reported value for goodwill is 302 MSEK as of the balance sheet date. For additional information about impairment losses, refer to Note 24.
Impairment tests for capitalized development expenditures
When testing for impairment losses, the remaining value in use is calculated for the cash generating of the technology or the products for which capitalized development expenditures has been allocated. The value in use is based on the estimated future cash flow that the relevant technology expects to give rise to.
Note 4 | Risk management by the Group
The Anoto Board of Directors has adopted a financial policy for:
- Simplifying and harmonising the Group's financial activities
- Defining rules for the financial risks that are accepted by the Board
- Adopting guidelines for the Group to operate independently
- Delegating management of financial risks to the CFO
The areas of the financial policy that most affect Anoto's management of risks are liquidity and currency.
Liquidity policy
In accordance with the Finance policy of the Group the cash need of the Group is continuously updated. These cash flow analyses gives information about cash planning, deposits, interest periods etc. In accordance with the liquidity policy, available cash shall consist of cash and negotiable securities with an official credit rating equivalent to Moodys P1.
Currency exposure and currency policy
Transaction exposure
Transaction exposure arises when income and expenses are in different currencies. Anoto has large exposure to the USD, EURO and JPY because most of its invoicing is in those currencies. In accordance with its 2008 currency policy, Anoto invested U.S. dollars in currency accounts equivalent to the expected net flow in U.S. dollars over the next 12 months. Expected net flows in EURO for following 6 months period are hedged by means of forward contracts.
Net flows by currency 2008
Sensitivity analysis
| The impact on profit/loss before tax of a 5% change in exchange rates is: | |
|---|---|
| USD/SEK | '+/- 0.8 million |
| EUR/SEK | '+/- 1.4 million |
| JPY/SEK | '+/- 1,6 million |
Other risk areas
- Other areas covered by the financial policy are:
- interest rate risks Anoto has no external borrowing, as the result of which there are no interest rate risks
- financing risks
- guarantees and contingent liabilities
Other risk management
Credit risk
The management of credit risks can be broken down into commercial risks and financial risks. The provisions set aside for bad debt losses as of the balance sheet date have not identified any commercial credit risks. The financial credit risk is managed as part of the Group's finance 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 beenrenewable on reasonable terms. However, claims filed before the policy expired are still covered. The company plans to take out an insurance policy for patent disputes as soon as it can do so on reasonable commercial terms.
Patent risks, etc.
Anoto continually expands its patent portfolio by applying for patents on innovations linked to Anoto technology in order to supplement previous patent applications and patents granted. Anoto cannot guarantee that all patent applications will be approved or that our intellectual property rights will not be called into question, declared null and void or circumvented. Third parties have claimed, and may do so in the future as well, that Anoto infringes their intellectual property rights. Defending Anoto against such assertions can be costly in terms of time, money and other resources. Legal disputes can compel Anoto to pay damages or other compensation, modify its products and technology or enter into license agreements. Anoto cannot guarantee that such licenses will be available at all or on reasonable terms.
Liquidity risk
Anotos liquid assets, as cash and bank deposits, amounted at the end of 2008 to MSEK 99. The Group has neither any interest bearing Liabilities nor pledged Accounts Receivables, Inventory or Fixed assets. The Board of Anoto foresee that the operations during 2009 can be financed by existing liquid assets without any borrowings from banks or other credit institutes. The unstable credit market and the limited availability of funds is deemed to have no impact on Anoto. We have no opnion which impact this limitation will have for Anotos customers.
Note 5 | Net sales
| Group sales per application area and market in 2008: | Group | |
|---|---|---|
| 2008 | 2007 | |
| Sweden | 77 507 | 38 435 |
| Rest of EU | 39 537 | 26 230 |
| USA | 40 123 | 15 453 |
| Japan | 7 642 | 52 881 |
| Rest of Asia | 5 260 | 7 241 |
| Rest of the world | 12 135 | 4 451 |
| Total | 182 204 | 144 691 |
| Group sales per application area and market in 2007: | Group | |
|---|---|---|
| 2008 | 2007 | |
| Royalty | 43 982 | 20 016 |
| NRE 1) | 19 216 | 37 938 |
| Licenses | 28 871 | 45 843 |
| Components | 27 495 | 15 756 |
| Pen sales | 57 099 | 18 328 |
| Other | 5 541 | 6 810 |
| Total | 182 204 | 144 691 |
1) Revenues from software/hardware development of customers products.
Parent company sales to subsidiaries totals 30.044 (26.234) as compensation for intra-Group services.
These revenues have been eliminated in the consolidated accounts and is thereby not included in the totals above.
Note 6 | Average number of employees
| 2008 | 2007 | ||||
|---|---|---|---|---|---|
| No. of employees | Of which men | No. of employees | Of which men | ||
| Parent company 1) | 11 | 5 | 10 | 5 | |
| Rest of Sweden | 101 | 79 | 83 | 70 | |
| USA | 7 | 4 | 4 | 3 | |
| Japan | 8 | 5 | 6 | 4 | |
| Total | 127 | 93 | 103 | 82 |
1) All employees of the parent company are employeed in Sweden.
Note 7 | Board of Directors and management split, by gender
| 2008 | 2007 | |||
|---|---|---|---|---|
| No. of employees | Of which men | No. of employees | Of which men | |
| Board of Directors 1) | 7 | 6 | 7 | 6 |
| Management | 6 | 5 | 6 | 5 |
| Total 2) | 13 | 11 | 13 | 11 |
1) Parent company.
2) Including boardmembers of the parent company and management in group companies.
Note 8 | Sickness absence, Swedish companies
| 2008 | 2007 | |||
|---|---|---|---|---|
| AGE CATEGORY | Total absence |
Of which more than 60 days |
Total absence |
Of which more than 60 days |
| Under 30 | 1.13% | 0.00% | *) | *) |
| 30 - 50 | 2.66% | 34.08% | 2.79% | 36.07% |
| Above 50 | *) | *) | *) | *) |
| Women | 6.43% | 47.58% | 5.21% | 78.44% |
| Men | 1.12% | 0.00% | 1.81% | 0.00 % |
| Total | 2.37% | 30.39% | 2.50% | 33.18% |
* Not reported due to an exemption in the legislation to which disclosures may not be made if the number of employees in a group is less than 10 or if the information is attributable to a single individual. Group refers to both gender and age category.
Note 9 | Salaries and renumerations
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Salari es |
|||||
| Board of Directors and CEO | 4 355 | 5 230 | 4 355 | 5 230 | |
| Other senior executives 1) | 5 899 | 6 676 | 2 767 | 2 846 | |
| Other employees | 61 851 | 48 482 | 5 388 | 3 676 | |
| 72 105 | 60 388 | 12 510 | 11 752 | ||
| Payr oll overh ead |
|||||
| Board of Directors and CEO | 1 412 | 1 394 | 1 412 | 1 394 | |
| Other senior executives 1) | 1 912 | 2 164 | 897 | 923 | |
| Other employees | 17 309 | 13 650 | 1 747 | 1 238 | |
| 20 633 | 17 208 | 4 056 | 3 555 | ||
| Pension expenses | |||||
| Board of Directors and CEO | 913 | 686 | 913 | 686 | |
| Other senior executives 1) | 1 530 | 1 463 | 636 | 628 | |
| Other employees | 10 894 | 8 439 | 183 | 432 | |
| 13 337 | 10 588 | 1 732 | 1 746 | ||
| Total salaries and renumerations | 106 075 | 88 184 | 18 298 | 17 053 | |
| Sweden | 94 639 | 80 406 | 18 298 | 17 053 | |
| Japan | 5 765 | 4 015 | - | - | |
| United States | 5 671 | 3 763 | - | - | |
| Total | 106 075 | 88 184 | 18 298 | 17 053 | |
| Salaries and other remunerations are included in the balance sheet's headlines as follows | |||||
| Selling expenses | 44 445 | 14 109 | 4 483 | 4 775 | |
| Administrative expenses | 11 986 | 12 346 | 11 034 | 9 720 | |
| Development expenses | 49 643 | 61 729 | 2 781 | 2 558 | |
| Total | 106 075 | 88 184 | 18 298 | 17 053 |
1) The Group has 6 (6) and the parent company has 4 (4) senior executives.
The CEO is subject to a mutual period of notice of six months. He retains his salary and benefits during the period of notice. If the CEO's employment is terminated by the company in a manner that lacks an objective basis pursuant to Section 7 of the Security of Employment Act (1982:80), he is entitled to severance pay equivalent to 12 times the monthly salary in effect on the termination date.
The period of notice for other senior executives varies from six to nine months if the company terminates their employment.
No agreements have been entered into for pension commitments or the equivalent for either Board members or senior executives above and beyond that which is covered by notes. Apart from a salary during the period of notice, no senior executive other than the CEO receives financial 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 fixed monthly salary.
The retirement age for the CEO and other senior executives is 65. The pension premium is 35% of the pensionable salary for the CEO and 15-19% for other senior executives.
Guidelines for compensation to the Executives of the Company (Annual General meeting 2008)
The compensation level and structure shall be at market level. The total compensation shall be a balanced mix of fixed salaries, variable compensation, retirement and health plans, any other benefits 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 50% of the fixed salary. However, the variable compensation for the CEO may be at most 75% of the fixed salary.
The retirement plan shall be competitive. The CEO shall have a pension premium based retirement plan of 35% of the fixed salary.
The other executives shall have pension premium based retirement plans corresponding to the (Swedish) ITP plan.
Other benefits, 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 CEO 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 10 | Remunerations to Board of Directors and CEO
| Board of Directors |
Salaries/Remu | Pension | Other | Options awarded | Value of | ||
|---|---|---|---|---|---|---|---|
| and CEO, 2008 | nerations | Bonus | premiums | remunerations | Total | for the year | options |
| Anders Norling | 2 855 | - | 913 | - | 3 768 | - | - |
| Christer Fåhraeus | 175 | - | - | - | 175 | - | - |
| Märtha Josefsson | 175 | - | - | - | 175 | - | - |
| Stein Revelsby | 175 | - | - | - | 175 | - | - |
| Håkan Ericsson | 175 | - | - | - | 175 | - | - |
| Bernard Gander | 175 | - | - | - | 175 | - | - |
| Yoshioka Hiroshi | 175 | - | - | - | 175 | - | - |
| Hans Otterling | 450 | - | - | - | 450 | - | - |
| Total 1) | 4 355 | 0 | 913 | 0 | 5 268 | - | - |
1) Total compensation may originate from different group companies.
| Board of Directors |
Salaries/Remu | Pension | Other | Options awarded | Value of | ||
|---|---|---|---|---|---|---|---|
| and CEO, 2007 | nerations | Bonus | premiums | remunerations | Total | for the year | options |
| Anders Norling | 2974 | 756 | 560 | - | 4 290 | - | - |
| Christer Fåhraeus | 175 | - | - | - | 175 | - | - |
| Märtha Josefsson | 175 | - | - | - | 175 | - | - |
| Lars Jarnryd | 175 | - | - | - | 175 | - | - |
| Stein Revelsby | 175 | - | - | - | 175 | - | - |
| Håkan Ericsson | 175 | - | - | - | 175 | - | - |
| Bernard Gander | 175 | - | - | - | 175 | - | - |
| Hans Otterling | 450 | - | - | - | 450 | - | - |
| Total 1) | 4 474 | 756 | 560 | 0 | 5 790 | - | - |
1) Total compensation may originate from different group companies.
| Salaries/Remu | Pension | Other | Options awarded | Value of | |||
|---|---|---|---|---|---|---|---|
| Manag ement 2008 |
nerations | Bonus | premiums | remunerations | Total | for the year | options |
| Group Management | 5 899 | - | 1 530 | - | 7 429 | - | - |
| Total | 5 899 | - | 1 530 | - | 7 429 | - | - |
| Salaries/Remu | Pension | Other | Options awarded | Value of | |||
| Management 2007 | nerations | Bonus | premiums | remunerations | Total | for the year | options |
| Group Management | 5 816 | 1 018 | 1 463 | - | 8 297 | 200 000 | 204 |
Total 5 816 1 018 1 463 - 8 297 - -
Note 11 | Audit fees
Audit fees are charged to earnings for the year as follows;
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Auditing | |||||
| Deloitte AB | - | 375 | - | 140 | |
| KPMG AB | 350 | - | 350 | - | |
| Other assignments | 252 | 161 | 252 | 34 | |
| Total | 602 | 536 | 602 | 174 |
An auditing assignment involves examining the annual accounts and accounting records, as well as the management of the company by the Board of Directors and CEO, other tasks that the company's auditor is obligated to perform, and advisory services and other assistance occasioned by observations made during said examination or performance of said tasks. Other assignments refer to everything else.
Note 12 | Operating costs by type
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Raw materials and supplies | -20 893 | -38 781 | - | - | |
| Change in inventories | -31 369 | 4 024 | - | - | |
| Personnel cost | -106 075 | -88 184 | - | - | |
| Depreciation | -15 170 | -15 912 | - | - | |
| Other external costs | -43 338 | -34 943 | - | - | |
| Other operating costs | -1 742 | -1 653 | - | - | |
| Total | -218 587 | -175 449 | - | - |
Note 13 | Other operating income
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Exchange gains | 3 625 | 128 | - | - | |
| EU contribution | 357 | 686 | - | - | |
| Profit/loss on sale of fixed assets | - | 338 | - | - | |
| Other | 721 | 41 | 40 | - | |
| Total | 4 703 | 1 193 | 40 | - |
Note 14 | Other operating expense
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Exchange losses | -1 742 | -1 011 | - | - | |
| Other | - | -642 | - | - | |
| Total | -1 742 | -1 653 | - | - |
Note 15 | Depreciation and amortization
Depreciation of property, plant and equipment, and amortization of intangible fixed assets, are included in the individual items of the income statement as follows:
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Selling expenses | |||||
| Administrative expenses | -4 975 | -3 755 | - | - | |
| Development expenses | -411 | -308 | -235 | -222 | |
| Total | -9 784 | -11 849 | - | - | |
| Total | -15 170 | -15 912 | -235 | -222 |
Note 16 | Profit /loss on participations in group companies
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Impairment loss on shares in Anoto AB 1) | - | - | - | -3 700 | |
| Impairment loss on shares in Anoto Communications KK 1) | - | -122 | - | - | |
| Impairment loss on shares in Anoto Hong Kong Ltd 1) | - | -130 | - | - | |
| Total | 0 | -252 | 0 | -3 700 |
1) Unconditional shareholders contribution to the subsidiary Anoto AB. The shareholders contribution was made to cover
the subsidiary's loss for the year and restore its equity to the levelof share capital.
2) The impairment loss at an amount corresponding the groups share in the equity.
3) The impairment loss in connection with winding-down of Anoto Hong Kong Ltd.
Note 17 | Interest income
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Interest on current investments | 1 079 | 3 707 | 1 017 | 3 564 |
| Interest on bank deposits | 1 318 | 1 075 | 131 | 280 |
| Total | 2 397 | 4 782 | 1 148 | 3 844 |
Note 18 | Interest and similar expense
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Loss on currency forward contracts | -5 398 | -150 | -1 979 | -136 | |
| Other | -2 973 | -1 363 | -42 | - | |
| Total | -8 371 | -1 513 | -2 021 | -136 |
Note 19 | Taxes
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Current tax 1) | -853 | -791 | - | - | |
| Total | -853 | -791 | - | - |
1) Primary foreign subsidiaries.
Correlation between tax expense for the year and reported profit/loss before tax:
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Reported profit/loss before tax | 31 302 | -6 648 | 945 | -344 |
| Tax in accordance with current tax rate of 28% | -8 764 | 1 861 | -265 | 96 |
| Tax impact of non-deductible expenses | ||||
| Intra-group adjustments that disregard deferred tax | -1 559 | -2 915 | - | - |
| Impairment loss on shares in subsidiaries | - | - | - | -1036 |
| Other non-deductible expenses | -347 | -275 | -220 | -205 |
| Other adjustments | -932 | 26 | - | - |
| Tax impact of non-taxable income | 12 992 | -67 | 8 | 6 |
| Adjustment for tax rates in foreign group companies | -1 737 | 347 | - | - |
| Increase/decrease of tax deficits without corresponding | ||||
| capitalization | -506 | 232 | 477 | 1 139 |
| Tax reported | -853 | -791 | 0 | 0 |
Tax deficit
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Opening balance | -446 564 | -448 780 | -30 085 | -34 561 | |
| Tax deficit of the year | -2 532 | 1 809 | 1 703 | 4 069 | |
| Adjustment due to changed taxation | - | 407 | -322 | 407 | |
| Closung tax deficit | -449 096 | -446 564 | -28 704 | -30 085 | |
| Nominal amount, tax asset | 125 747 | 125 038 | 8 037 | 8 424 |
There are no temporary differences.
The nominal value of tax assets (28%) in accordance with the above have been reported at 0 in the balance sheet. Due to the fact that the group still reports a loss, the nominal value of tax assets is not reported in the balance sheet.
Tax deficits above refers to the Swedish companies, and are not limited in time. Further tax deficits in Anoto Maxell, Japan accounts to approx MSEK 7.
Note 20 | Capitalized development expenditures
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Acc umulated his torica l costs |
|||||
| Opening accumulated historical costs | 119 256 | 115 893 | 24 218 | 24 218 | |
| Acquisitions for the year | 20 134 | 9 366 | - | - | |
| Disposals for the year | -6 003 | - | - | ||
| Closing accumulated historical costs | 139 390 | 119 256 | 24 218 | 24 218 | |
| Acc umulated amortIZAtionsacc ordi ng to plan |
|||||
| Opening accumulated amortizations | -107 752 | -100 927 | -24 218 | -24 218 | |
| Amortizations for the year according to plan | -5 058 | -8 125 | - | - | |
| Disposals for the year | 1 300 | - | - | ||
| Closing amortizations according to plan | -112 810 | -107 752 | -24 218 | -24 218 | |
| Closing residual value | 26 580 | 11 504 | - | - |
Note 21 | Patents
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Acc umulated his torica l costs |
||||
| Opening accumulated historical costs | 67 137 | 61 974 | 13 886 | 13 800 |
| Acquisitions for the year | 5 901 | 5 163 | 25 | 86 |
| Disposals for the year | -154 | - | ||
| Closing accumulated historical costs | 72 884 | 67 137 | 13 911 | 13 886 |
| Acc umulated amortIZAtionsacc ordi ng to plan |
||||
| Opening accumulated amortizations | -38 199 | -32 646 | -13 122 | -13 008 |
| Amortizations for the year according to plan | -5 838 | -5 553 | -114 | -114 |
| Disposals for the year | 19 | - | - | - |
| Closing amortizations according to plan | -44 018 | -38 199 | -13 236 | -13 122 |
| Closing residual value | 28 866 | 28 938 | 675 | 764 |
Patents are subject to improvment test annually or whenever indicated. Refer to Note 24 Goodwill.
Note 22 | Brands
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Accumulated historical costs | ||||
| Opening accumulated historical costs | 507 | 505 | 47 | 80 |
| Adjustment of Opening balance | - | -56 | - | -56 |
| Acquisitions for the year | 30 | 58 | - | 23 |
| Sale of business | -23 | - | - | - |
| Closing accumulated historical costs | 514 | 507 | 47 | 47 |
| Accumulated amortizations according to plan | ||||
| Opening accumulated amortizations | -150 | -149 | -7 | -58 |
| Adjustment of Opening balance | - | 56 | - | 56 |
| Amortizations for the year according to plan | -34 | -57 | -4 | -5 |
| Sale of business | 4 | - | - | - |
| Closing amortizations according to plan | -180 | -150 | -11 | -7 |
| Closing residual value | 334 | 357 | 36 | 40 |
Note 23 | Other intangible assets
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Opening accumulated historical costs | |||||
| Adjustment of Opening balance | - | - | - | - | |
| Acquisitions for the year | 6 439 | - | - | - | |
| Closing accumulated historical costs | 6 439 | 0 | 0 | 0 | |
| Opening accumulated amortizations | |||||
| Adjustment of Opening balance | - | - | - | - | |
| Amortizations for the year according to plan | -690 | - | - | - | |
| Closing amortizations according to plan | -690 | 0 | 0 | 0 | |
| Closing residual value | 5 749 | 0 | 0 | 0 |
Note 24 | Goodwill
| Group | ||
|---|---|---|
| 2008 | 2007 | |
| Acc umulated his torica l costs |
||
| Opening accumulated historical costs | 381 301 | 381 301 |
| Acquisitions for the year | 3 822 | - |
| Disposals for the year | - | - |
| Closing accumulated historical costs | 385 123 | 381 301 |
| Acc umulated amortiza tionsacc ordi ng to plan |
||
| Opening accumulated amortizations | -82 627 | -82 627 |
| Amortizations for the year according to plan | - | - |
| Disposals for the year | - | - |
| Closing amortizations according to plan | -82 627 | -82 627 |
| Closing residual value | 302 496 | 298 674 |
Anoto technology and products are sold by all sales companies within the group, i.e. the group has only one branch of business. The focus of management reporting is the level of sales within the different application areas. These application areas are not independent cash generating units and the impairment testing of intangible assets is performed based on cash flow projections from group totals.
Impairment testing of goodwill is performed annually or when an indication of decline in value occurs. The recoverable value for group business is defined based on calculations of value in use.
The value in use for goodwill attributable to Anoto is based on discounted cash flows 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 flows for the first year are based on the budget adopted by the Board of Directors. For the subsequent period, the increase in cash flows has been estimated per application area. The annual rate of growth, which has been determined on the basis of informations and forecasts from Partners and own assessments which varies per application area and over time. Price reductions of 0-15% have been assumed. The calculation of the value in use for Anoto has used a 15% pre-tax discount rate of interest based on the company's weighted average cost of capital
(WACC).
The assumption that has the greatest impact on the impairment test as growth of the application area Anoto Products. If Forms Solutions were to grow 30% less than forecast per year during the calculation period, an impairment loss would be recognized.
Note 25 | Equipment and tools
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Acc umulated his torica l costs |
||||
| Opening accumulated historical costs | 15 755 | 13 514 | 940 | 638 |
| Acquisitions for the year | 5 459 | 2 365 | 109 | 302 |
| Sale of business | -1 775 | - | - | - |
| Disposals for the year | -80 | - | - | - |
| Translation difference | 1 012 | -124 | - | - |
| Closing accumulated historical costs | 20 371 | 15 755 | 1 049 | 940 |
| Acc umulated deprecia tions acc ordi ng to plan |
||||
| Opening accumulated depreciations | -11 709 | -10 002 | -574 | -470 |
| Depreciations for the year according to plan | -3 550 | -1 742 | -119 | -104 |
| Sale of business | 119 | - | - | - |
| Disposals for the year | 48 | - | - | - |
| Translation difference | - | 35 | - | - |
| Closing depreciations according to plan | -15 092 | -11 709 | -693 | -574 |
| Closing residual value | 5 279 | 4 046 | 356 | 366 |
Note 26 | Participation in group companies
| Parent company | ||
|---|---|---|
| 2008 | 2007 | |
| Par ent Company |
||
| Opening balance | 267 194 | 267 194 |
| Opening shareholders contribution | 464 603 | 460 903 |
| Shareholders contribution for the year 1) | - | 3 700 |
| Opening accumulated impairment losses | -464 603 | -460 903 |
| Impairment losses for the year 2) | - | -3 700 |
| Total | 267 194 | 267 194 |
1) Shareholders contribution to Anoto AB.
2) Writedown of shares in Anoto AB.
| Total no. of | % of capital | Shareholders | Carrying | |||
|---|---|---|---|---|---|---|
| Company | Reg.nr. | Domicile | participation | and votes | equity | amount |
| Anoto AB | 556320-2646 | Lund | 5 000 | 89.0% 1) | 43 238 | 267 005 |
| Anoto Licensiering AB | 556665-4306 | Lund | 1 000 | 89.0% 1) | 97 | 89 |
| Anoto Administration AB | 556591-2481 | Malmö | 1 000 | 100.0% | 2 302 | 100 |
| 267 194 |
The Anoto Group contains sub-groups consisting of the following companies: Anoto, Inc., USA Anoto Maxell Ltd, Japan FAB Licensiering AB, Sweden
1) The remaining 11% are held by Anoto Administration.
Note 27 | Participation in associated companies
| Group | ||
|---|---|---|
| 2008 | 2007 | |
| Group | ||
| Opening balance | 4 071 | 215 |
| Acquisition for the year 1) | - | 4 071 |
| Share of profits in associated company | -2 431 | - |
| Reclassification 2) | - | -215 |
| Total | 1 640 | 4 071 |
1) During 2007 has 20% of the shares in i Anoto Taiwan Corporation been acquired.
2) Anoto AB has acquired additional 40% of the shares in Anoto Communications KK. The shareholding has been reclassified to group company.
| Total no. of | % of capital | Shareholders | Carrying | |||
|---|---|---|---|---|---|---|
| Company | Reg.nr. | Domicile | participation | and votes | equity | amount |
| Anoto Taiwan Corporation | 28316992 | Taiwan | 10 000 000 | 20.0 % | 8 200 | 1 640 |
Note 28 | Other long term investments
| Group | ||
|---|---|---|
| 2008 | 2007 | |
| Group | ||
| Opening balance 1) | 3 371 | 3 743 |
| Writedown | -3 371 | -372 |
| Total | 0 | 3 371 |
1) Shares in Destiny Wireless.
Note 29 | Other long term receviables
| Group | ||
|---|---|---|
| 2008 | 2007 | |
| Group | ||
| Opening balance | 1 118 | 1 122 |
| Reclassification 1) | 19 381 | - |
| Other changes 2) | 8 460 | -4 |
| Total | 28 959 | 1 118 |
1) Reclassification of receivable on Livescribe into a long-term interest bearing recievable.
2) Including 10% of the purchse price from the sale of Imaging Technology to ARM Ltd.
Note 30 | Ageing accounts receivable
| 2008 | 2007 | ||||
|---|---|---|---|---|---|
| Gross | Net | Gross | Net | ||
| Not due | 15 463 | 15 463 | 17 125 | 17 125 | |
| Due 1 - 30 days | 10 154 | 10 154 | 1 679 | 1 679 | |
| Due 31 - 60 days | 1 537 | 1 537 | 954 | 954 | |
| Due 61 - 90 days | 1 893 | 1 893 | 2 670 | 2 670 | |
| Due more than 90 days | 5 412 | 3 517 | 2 455 | 1 634 | |
| Total | 34 459 | 32 564 | 24 883 | 24 062 |
Assessment of the need of provisions of Accounts receivable due more than 90 days, are made on an individual basis.
Note 31 | Prepaid expenses and accrued income
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Par ent company and Group |
||||
| Prepaid rent | 1 370 | 1 280 | 1 370 | 1 180 |
| Prepaid leasing fees | 236 | 160 | 152 | 3 |
| Accrued interest income | 12 | 378 | - | 378 |
| Accrued income | 10 741 | 37 038 | - | - |
| Revaluation currency forward contracts | - | 370 | - | - |
| Other | 3 168 | 2 372 | 569 | 477 |
| Total | 15 527 | 41 598 | 2 091 | 2 038 |
Note 32 | Provisons for restructuring
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Provisions for rental charges | |||||
| Opening balance | - | - | - - |
||
| Amounts utilized | - | - | - - |
||
| New provisions | - | - | - - |
||
| Unutilized reversed amounts | - | - | - - |
||
| - | - | - - |
|||
| Provisions for personnel costs | |||||
| Opening balance | - | 1 476 | - - |
||
| Amounts utilized | - | -1 476 | - - |
||
| New provisions | - | - | - - |
||
| Unutilized reversed amounts | - | - | - - |
||
| - | - | - - |
|||
| Total provisions for restructuring | |||||
| Opening balance | - | 1 476 | - - |
||
| Amounts utilized | - | -1 476 | - - |
||
| New provisions | - | - | - - |
||
| Unutilized reversed amounts | - | - | - - |
||
| Total | - | 0 | - - |
Note 33 | Provisions for product warranty commitments
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Opening balance | 1 573 | 1 529 | - | - |
| Amounts utilized | -21 | - | - | - |
| New provisions | 748 | 44 | - | - |
| Unutilized reversed amounts | -1 500 | - | - | - |
| Total | 800 | 1 573 | - | - |
Note 34 | Other provisions
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Opening balance | - | 4 151 | - | - | |
| Amounts utilized | - | - | - | - | |
| New provisions | - | - | - | - | |
| Unutilized reversed amounts | - | -4 151 | - | - | |
| Total | - | - | - | - |
Note 35 | Accrued expenses and deferred income
| Group | Parent company | |||
|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | |
| Holiday pay libility | 3 911 | 4 391 | 472 | 355 |
| Payroll overhead libility | 1 342 | 1 557 | 239 | 179 |
| Pension costs overhead liability | 2 363 | 2 211 | 511 | 338 |
| Accrued salaries and remunerations | 5 452 | 2 391 | 4 150 | 1 312 |
| Revaluation forward exchange contracts | 3 892 | - | - | - |
| Other | 4 253 | 6 412 | 620 | 2 365 |
| Total | 21 213 | 16 962 | 5 992 | 4 549 |
Note 36 | Share-based payments to employees
As part of an incentive programme, the parent company and some sudsibiaries have issued various kinds of options since 1998. The current programmes are as follows:
| Issue price | Subscription | Fully excercised | ||||
|---|---|---|---|---|---|---|
| Optionprogramme | No. of options | Shares/ options | No. of options | SEK | period until | contributes MSEK |
| Programme 1 | 585 000 | 1 | 585 000 | 18.00 | 10-03-31 | 10.5 |
| 585 000 | 585 000 |
1) Employee stock option programme 2007.
1) The annual meeting , May 15, 2007 decided to issue 500,000 employee stock options and 500,000 warrants. The employee stock options were hedged by issuing of 650,000 warrants, which also included the payroll overhead. At the end of the year 440,000 had been awarded to employees and 145,000 had been awarded to a subsidiary to hedge against payroll overhead. The options which are tied to employment may be exercised from 1 September to 31 March 2010.
The fair value of each option issued is calculated in accordance with the BlackScholes model.
Full excercise of all programmes would result in total dilution of about 0,5% as of 31 December 2008. No programmes were deemed to have a value as of 31 December 2008. The dilution exposure and option program deemed to have no value may have changed until the date on which this annual report was distributed.
Change in outstanding option programmes during the year.
| 2008 | 2007 | |||||
|---|---|---|---|---|---|---|
| Weighted | Weighted | |||||
| No. of options | issue price | No. of options | issue price | |||
| Outstanding options at the begining of the period | 3 515 500 | 24.41 | 7 415 002 | 24.41 | ||
| Awarded during the period | - | - | 585 000 | 18 | ||
| Forfeited during the period | - | - | -3 125 242 | 19.6 | ||
| Redeemed during the period | - | - | - | - | ||
| Expired during the period | -2 930 500 | 24.36 | -1 359 260 | 31.35 | ||
| Outstanding at the end of the period | 585 000 | 18.00 | 3 515 500 | 23.22 | ||
| Redeemable at the end of the period | 0 | 0 |
*) No redemption has taken place during 2007 or 2008.
Note 37 | Significant leasing expenses
The amounts associated with equipment at the company´s disposal through leases are negligable. The Group´s committment for leased premesis totals to TSEK 7 718 for 2009 and TSEK 12 371 for 2010 - 2012.
Note 38 | Pledged assets
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Par ent company and gr oup |
|||||
| Blocked bank deposits | 8 542 | 6 196 | - | - |
Note 39 | Contingent liabiliites
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | ||
| Par ent company and gr oup |
|||||
| Contingent liabilites group companies | - | - | - | - | |
| Contingent liabilites other | 4 721 | 7 025 | - | - | |
| Total | 4 721 | 7 025 |
Note 40 | Financial instruments
| Financial assets revalued via income statement | ||||||
|---|---|---|---|---|---|---|
| Financial assets valued acc to fair value option |
Loans and accounts receivable |
Investments held until maturity |
Other assets & liabilities |
Total book value |
Fair value | |
| Group 2008 | ||||||
| Investments | 1 640 | - | - | - | 1 640 | 1 640 |
| Long term receivables | 7 640 | 21 319 | - | - | 28 959 | 28 959 |
| Accounts receivable | - | 32 564 | - | - | 32 564 | 32 564 |
| Other receivables | - | - | - | 16 777 | 16 777 | 16 777 |
| Current investments and securities | - | - | 36 185 | - | 36 185 | 36 185 |
| Liquid assets | 63 159 | - | - | - | 63 159 | 63 159 |
| Assets | 72 439 | 53 883 | 36 185 | 16 777 | 179 284 | 179 284 |
| Other long term liabilities | - | - | - | 41 891 | 41 891 | 41 891 |
| Accounts payable | - | - | - | 12 034 | 12 034 | 12 034 |
| Other liabilities | - | - | - | 20 087 | 20 087 | 20 087 |
| Unsettled loss on forward contracts | - | - | - | 3 892 | 3 892 | 3 892 |
| Liabilities | - | - | - | 74 012 | 74 012 | 74 012 |
| Financial assets revalued via income statement | ||||||
|---|---|---|---|---|---|---|
| Financial assets valued acc to fair value option |
Loans and ac counts receivable |
Investments held until maturity |
Other assets & liabilities |
Total book value |
Fair value | |
| Group 2007 | ||||||
| Investments | 8 798 | - | - | - | 8 798 | 8 798 |
| Long term receivables | - | 1 118 | - | - | 1 118 | 1 118 |
| Accounts receivable | - | 23 910 | - | - | 23 910 | 23 910 |
| Other receivables | - | - | - | 9 296 | 9 296 | 9 296 |
| Current investments and securities | - | - | 74 229 | - | 74 229 | 74 229 |
| Liquid assets | 57 072 | - | - | - | 57 072 | 57 072 |
| Assets | 65 870 | 25 028 | 74 229 | 9 296 | 174 423 | 174 423 |
| Other long term liabilities | - | - | - | 50 089 | 50 089 | 50 089 |
| Accounts payable | - | - | - | 9 385 | 9 385 | 9 385 |
| Other liabilities | - | - | - | 8 491 | 8 491 | 8 491 |
| Unsettled loss on forward contracts | - | - | - | 787 | 787 | 787 |
| Liabilities | - | - | - | 68 752 | 68 752 | 68 752 |
The principal rule as of 2005 is that financial instruments are reported at fair value. Anoto Group policy is to hedge the net flow 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 totaled EUR 8,000 thousand and USD 1,000 thousand at end of 2008.
Note 41 | Sale of business
GROUP
In December 2008 Anoto sold it´s shares in Logipard AB together with parts of Anoto´s activities within Imaging Technology to ARM Ltd.
| Total operating activiteis | 2 584 |
|---|---|
| Of which change in long term receivables *) | 7 640 |
| 66 331 | |
| Liquid assets in Logipard AB at time of sale | -200 |
| Selling costs | -2 229 |
| Retained part of selling price *) | -7 640 |
| Selling price | 76 400 |
| Effect on group liquid assets | |
| Cash flow from sale of business | |
| -71 387 | |
| Selling costs | 2 229 |
| Writedown of intangible assets in group accounts | 2 784 |
| Selling price | -76 400 |
| Profit from sale of business, added back in cash flow statement |
*) 90% of selling price paid at signing of contract, remaining 10% to be paid during 2010.
Net assets in Logipard AB at time of sale:
| 2008-12-15 | |
|---|---|
| Intangible fixed assets | 1 922 |
| Equipment | 1 499 |
| Accounts receivable | 6 301 |
| Other recievables | 608 |
| Liquid assets | 200 |
| Advances from customers | -3 238 |
| Accounts payable | -1 070 |
| Other current liabilities | -2 741 |
| Net assets | 3 481 |
Note 42 | Related parties
Summary of related party transactions.
Group
There has been no transactions with a net effect in group accounts.
| Par ent company Related party |
Selling of goods and services |
Purchasing of goods and services |
Receivable on related Other party on 31 December |
Liability to related party on 31 December |
||
|---|---|---|---|---|---|---|
| Group company | 2008 | 30 044 | - | 41 366 | 162 885 | - |
| Group company | 2007 | 26 155 | - | - | 91 475 | - |
For transactions with Board and Executives, see note 9.
Note 43 | Events after 31 December, 2008
Livescribe Inc's debt to Anoto of MSEK 20,1 was settled in mid-March 2009. The debt was the remaining payment from the agreement early 2007 between Livescribe and Anoto, when Anoto phased out its operation "Content and Applications" to Livescribe Inc.
Lund, 31 March 2009
Märtha Josefsson Hans Otterling Christer Fåhraeus
Chairman
Håkan Eriksson Bernard Gander Hiroshi Yoshioka
Stein Revelsby Anders Norling CEO
Our auditor's report was submitted on 31 March 2009 KPMG AB
Eva Melzig Henriksson Authorized Public Accountant
Audit Report
To the annual meeting of the shareholders of Anoto Group AB (publ) Corporate identity number 556532-3929
We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the managing director of Anoto Group AB (publ) for the year 2008. The annual accounts and the consolidated accounts of the company are included in the printed version of this document on pages 16-45. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the board of directors and the managing director and significant estimates made by the board of directors and the managing director when preparing the annual accounts and the consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the managing director. We also examined whether any board
member or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.
The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act and give a true and fair view of the group's financial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.
We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and the group be adopted, that the loss of the parent company be dealt with in accordance with the proposal in the statutory administration report and that the members of the board of directors and the managing director be discharged from liability for the financial year.
Malmö March 31, 2009
KPMG AB
Eva Melzig Henriksson Authorized Public Accountant
CORPORATE GOVERNANCE REPORT 2008
Anoto Group AB (publ) is governed by its Articles of Association and the Swedish Companies Act. Since Anoto is listed on NASDAQ OMX Stockholm, Anoto also applies NASDAQ OMX Stockholm's Rule Book for Issuers.
Since July 1, 2008, Anoto applies the Swedish Code of Corporate Governance ("the Code") which requires that a Corporate Governance Report be prepared. This is the fi rst Corporate Governance Report from Anoto. The report has not been reviewed by the Company's auditor and does not constitute a part of the formal annual report.
CORPORATE GOVERNANCE STRUCTURE
Anoto is governed and controlled by several bodies.
The shareholders exercise their voting rights at General Meetings of the Shareholders by electing the Board of Directors and external auditors and making decisions on other issues like the adoption of the annual report and stipulating how to appoint the Nomination Committee.
The Nomination Committee nominates candidates to the Board of Directors, Chairman of the Board and external auditors. A Nomination Committee is required by the Code, but not the Companies Act.
The Board is responsible for the appointment of the CEO, the developing of long-term strategy, and controlling and evaluating Anoto's day-to-day operations. Some duties of the Board are partly exercised by the Compensation Committee and the Audit Committee.
The CEO is in charge of and responsible for the daily operations and the management of Anoto in accordance with instructions and guidelines from the Board of Directors.
External auditors appointed by the shareholders at the Annual General Meeting examine the Company's annual report and accounts as well as the management by the Board of Directors and the CEO.
MEETINGS WITH SHAREHOLDERS
The Annual General Meeting is the corporate body where the shareholders in Anoto can exercise their rights by electing the Board of Directors and deciding on all other issues voted on at Annual General Meetings in accordance with the Companies Act and the Articles of Association.
The Annual General Meeting is held in Lund, normally in the fi rst half of May. The notice of the Annual General Meeting, together with the agenda, is published on Anoto's website and the Swedish newspaper Dagens Nyheter, and Post och Inrikes Tidningar (the Swedish Offi cial Gazette). As a courtesy, the date and place for the Annual General Meeting together with information on how to obtain the agenda is published in the Swedish newspaper Sydsvenska Dagbladet.
All information material for the Annual General Meeting is avail-
able in both Swedish and English. The Annual General Meeting is held in Swedish. To date, the composition of shareholders in Anoto has not given reasons to translate the Annual General Meeting into English.
ANNUAL GENERAL MEETING 2008
The Annual General Meeting (AGM) in 2008 took place in Lund on May 15, 2008. Hans Otterling, Christer Fåhraeus, Märtha Josefsson, Stein Revelsby, Bernard Gander and Hiroshi Yoshioka were present from the Board of Directors. Present were also Anoto's external auditors as well as the nominated external auditors to be elected for 2008 – 2012 and the Chairman of the Nomination Committee.
The Annual General Meeting made the following decisions: • The annual report was presented, and the consolidated income statements and balance sheets were adopted. The Board Members and CEO were discharged from liability. No dividends were to be paid.
• In accordance with the Nomination Committee's proposal, Board Members Hans Otterling, Christer Fåhraeus, Märtha Josefsson, Stein Revelsby, Bernard Gander, Håkan Eriksson and Hiroshi Yoshioka were re-elected Board Members until the end of the next Annual General Meeting. Hans Otterling was re-elected Chairman of the Board.
• KPMG Bohlins AB was elected auditor until the end of the Annual General Meeting 2012. The auditors were to be reimbursed according to invoice.
• The Nomination Committee's proposal on how to appoint members of the Nomination Committee, as well as the assignment for the Nomination Committee, was approved.
• The Board of Directors was authorized to, on one or several occasions prior to the next Annual General Meeting, resolve on an issue of a maximum of 12,000,000 new shares with provisions for non-cash payment or payment against set-off of claims or else on conditions enabling the waiving of shareholders' preferential rights.
• The guidelines for compensation to the CEO and other executives of the Company were adopted in accordance with the proposal by the Board of Directors.
• The proposal presented by the Board of Directors to adopt an incentive program for key employees covering stock options was approved.
ANOTO'S ANNUAL GENERAL MEETING 2009
Anoto's Annual General Meeting 2009 will take place on May 14, 2009 in Lund.
NOMINATION COMMITTEE
The Annual General Meeting 2008 resolved, in accordance with the proposal presented by the Nomination Committee, that the Chairman of the Board of Directors be assigned to contact
three of the Company's major shareholders, according to the list of shareholders at the end of September 2008, and ask them to appoint one representative each no later than six months prior to the Annual General Meeting 2009 to, together with him, form the Nomination Committee until a new Nomination Committee has been appointed. The Nomination Committee shall appoint a Chairman. The Chairman of the Board shall not be the Chairman of the Nomination Committee. The majority of the Nomination Committee members shall not be Board Members of Anoto.
The Nomination Committee formed for the Annual General Meeting 2009 was announced October 29, 2008 as folllows: Jan Andersson representing Swedbank Robur Fonder (Chairman of the Nomination Committee), Stein O. Revelsby representing Norden Technology AS, Audun W. Iversen representing Tor Aksel Voldberg, and Hans Otterling, Chairman of the Board. The Nomination Committee was in January 2009 extended with Leif Eriksröd representing Essensor AS, after Essensor AS having announced increased ownership in Anoto.
The Nomination Committee shall prepare and present to the Annual General Meeting 2009 proposals for the following issues:
-
- Chairman at the Annual General Meeting
-
- Chairman and other Members of the Board
-
- Fees to the Board of Directors
-
- Fees to the Auditors
-
- The Nomination Committee in respect of the Annual General Meeting 2010
The Nomination Committee's proposal for Board Members shall be presented in the notice for the Annual General Meeting 2009 as well as on the company's website.
THE BOARD OF DIRECTORS
The Board of Directors, which also appoints the CEO, is ultimately responsible for the organization of Anoto and the management of its operations. According to Anoto's Articles of Association, the Board shall consist of not less than three and not more than eight directors with not more than fi ve deputies. For information about the Board Members and their remuneration, please refer to page 49 in the Annual Report. All Board Members are independent of Anoto's management. They are also independent of Anoto and the larger shareholders in Anoto.
RULES OF PROCEDURES
The Board of Directors has adopted Rules of Procedures that outlines the work procedures and tasks for the Board, the Audit Committee and the Nomination Committee. However, the Rules of Procedure do not in any way change or alter the responsibility of the Board or individual Board Member according to applicable laws and NASDAQ OMX Stockholm's Rule Book for Issuers. The Rules of Procedures are reviewed and adopted at least once a year.
WORK OF THE BOARD OF DIRECTORS IN 2008
The Board of Directors consists of seven members elected by
the Annual General Meeting on May 15, 2008. Hans Otterling has served as Chairman of the Board. The CEO and CFO take part in board meetings. The Company's General Counsel is the Board's secretary. When appropriate, other employees of the company participate in reporting capacities concerning their particular areas of expertise.
The Board continuously evaluates the performance of Anoto, the CEO and Anoto's Management.
Eleven of the fourteen meetings in 2008 were part of the Board's annual schedule. In addition to the Board's ongoing effort to issue directives and monitor the company's activities – including the budget, state of the market and strategic direction – the main issues discussed at the meetings were as follows:
- February: Review of quarterly and annual accounts with the Company's auditor
- May: Review of quarterly accounts and meeting of the Board members following election at the Annual General Meeting
- June: The strategy for Anoto
- August: Review of quarterly accounts and discussion of Company's direction
- November: Review of quarterly accounts and discussion of Company's direction
- December: Adoption of 2009 budget
Documentation is normally distributed approximately one week prior to a meeting. The CEO submits a monthly written report to the Board. The Board has two Committees – an audit Committee and a Compensation Committee – that prepare items for the Board to take up and in certain cases reach decisions delegated to them by the Board.
The Board Members attendance at Board Meetings and Committee Meetings is set forth below as follows:
| Board Number of |
Number of Member: Board Meetings: Audit Committee Compensation Meetings: |
Number of Committee Meetings: |
|
|---|---|---|---|
| Hans Otterling | 14/14 | 1/1 | |
| Christer Fåhraeus | 13/14 | 2/2 | |
| Märtha Josefsson | 13/14 | 2/2 | |
| Stein Revelsby | 13/14 | 2/2 | |
| Bernard Gander | 10/14 | 1/1 | |
| Håkan Eriksson | 5/14 | 1/1 | |
| Hiroshi Yoshioka 5/14 |
AUDIT COMMITTEE
The Audit Committee – which consists of Märtha Josefsson (Chairman), Christer Fåhraeus and Stein Revelsby – deals with audits, their focus and their scheduling. The Committee also receives reports from Anoto's auditor. The Committee held two meetings in 2008. At the meetings, the auditor presented the schedule for the annual audit, discussed risk assessments and reported on reviews that had been completed.
Meetings held by the Committee are reported to the Board by the Chairman of the Audit Committee at the Board Meeting following the Committee meeting.
COMPENSATION COMMITTEE
The Compensation Committee – which consists of Håkan Eriksson (Chairman), Hans Otterling and Bernard Gander – handles remuneration for the CEO and management, as well as incentive programs. The Committee held one meeting in 2008.
Meetings held by the Committee are reported to the Board by the Chairman of the Compensation Committee at the Board Meeting following the Committee meeting.
The 2008 Annual General Meeting adopted guidelines for compensation to senior executives.
CEO AND MANAGEMENT
The Management Team consist of six persons, see Annual Report page 50, with the CEO in charge. The CEO and Management Team manage and control Anoto's daily operations.
INTERNAL CONTROL
The Board of Directors is responsible for the internal control under the Swedish Companies Act and the Swedish Code of Corporate Governance. This section on internal control is focused on the internal control of the fi nancial reporting. Given the size of Anoto, the Board has determined that there is no need for an internal audit department or function, and that Anoto's fi nance department suffi ciently can carry out the internal control in cooperation with the external auditors.
CONTROL ENVIRONMENT
The corporate culture of Anoto encourages initiatives while assuming responsibility for meeting the defi ned strategic objectives of Anoto. The culture is based on trust, confi dence and personal responsibility. Each employee at Anoto has a job description setting out tasks, responsibilities and authorizations.
Anoto has an "open door policy" and all employees can discuss any issue, concern or matter directly with the CEO or a member of the Management Team.
The CEO has adopted guidelines and policies for specifi c areas that the employees are required to follow.
Anoto has implemented a Code of Conduct that is applicable to Anoto and its suppliers. The Code of Conduct describes Anoto's requirements with respect to ethical behavior, child labor and the environment.
A detailed delegation plan has been drawn up with well-defi ned levels of attestation and decision levels. This is applied throughout Anoto.
RISK ASSESSMENT
Risk assessments are performed in order to identify, map and measure the root causes for risks. The most important risk factors for the internal control of the fi nancial reporting are identifi ed
at Group and Company level, as well as at regional level. The risk assessments also include the risk for inappropriate actions and fraud. The outcome of the risk assessments result in actions and tasks that support the internal control of the fi nancial reporting.
CONTROL ACTIVITES
The Board has implemented a system for control and risk management based on the Board's Rules of Procedure - that also include instructions for the CEO and reports that are to be made to the Board - and the Finance Policy. These rules constitute the framework for the internal control.
Anoto's processes and systems for ensuring effective internal controls are designed with the intention of managing and limiting the risks of material errors in the reporting of fi nancial data, thus ensuring that both strategic and operational decisions are based on accurate fi nancial information.
The operational work of controlling the day-to-day activities is carried out by the CEO and the Management Team. An authorization manual governs the requirements for authorizations to decision-making. In addition, there are several operational meeting forums like management meetings and steering committees that address specifi c control issues in the operational activities and effectively steer Anoto towards the defi ned strategic objectives.
MONITORING
There are general as well as detailed control activities, aimed at preventing, discovering and correcting faults and deviations. The control organization is evaluated by the CFO on an ongoing basis with the aim of ensuring quality and effi ciency. The CFO actively participates in the recruitment process of all qualifi ed controllers.
The CEO and the CFO continuously keep the Board informed of the Group's fi nancial position, performance and any areas of risk. Anoto's external auditors attend at least two Board meetings per year, at which the auditors provide their assessment and observations on the business processes, accounts and reports. The Chairman of the Board and the Chairman of the Audit Committee are also in regular contact with the auditors.
The Board continuously monitors Anoto's fi nancial performance by comprehensive reports, as well as information from the CFO at all Board Meetings. Regular follow-up, together with a high level of transparency of the reporting material and fi nancial processes ensures compliance with the Company's Finance Policy, thus identifying any defi ciencies in the internal control system.
A monthly management report is prepared for each application and geographic area, and is subject to follow up with line management. The internal control also includes detailed annual budgets split on application areas, geographic areas and cost-centers. Forecasts are delivered three times a year, May, August and November. The forecasting follows the same organizational set-up as the annual budget. In December, the Board adopts the budget for the following year.
In addition to the budgeting and forecasting, Anoto's Management Team continuously works with overall three-year strategic scenarios.
BOARD OF DIRECTORS
HANS OTTERLING Chairman of the Board
Born 1961 Board member since May 2006 Other positions: Chairman of the board of EpiServer AB. Deputy board member of Climatewell AB. Director of the board of the Swedish Private Equity & Venture Capital Association.
Shareholding: 100 000 shares in Anoto Group.
Education: Master of Business Administration, University of Massachusetts, School of Management, Amherst, MA, USA and Stockholm School of Economics, Stockholm, Sweden.
MÄRTHA JOSEFSSON Member of the Board Born 1947 Member since 2004 Other positions: Chairman of the board of Lärarfonder AB, and member of the boards of Fabege AB, Second National Pension Fund, Investment AB Öresund, Luxonen S.A., Skandia Fonder AB, Upsala Nya Tidning AB and Opus Group. Shareholding: 0 shares in Anoto Group AB. Education: B.A. in Economics, University of Uppsala, Sweden.
HIROSHI YOSHIOKA Member of the Board Born 1952 Member since May 2007 Other positions: Senior Vice President, Corporate Executive and President of TV Business Group within Sony Corporation. Shareholding: 0 shares in Anoto Group AB. Education: Bachelor of Engineering. Graduated Kyoto University.
BERNARD GANDER Member of the Board Born 1959 Board member since May 2006 Shareholding: 2000 shares in Anoto Group AB. Education: MBA Finance and International Business from University of San Francisco. Bachelor in Electrical Engineering from Fribourg School of Engineering.
HÅKAN ERIKSSON Member of the Board Born 1961 Member since May 2006 Other Positions: Boardmember Vestas AS. Shareholding: 0 shares in Anoto Group AB. Education: Master of Science, Electrical Engineering, Linköping University. Honorary PhD, Linköping University.
STEIN O. REVELSBY Member of the Board Born 1962 Board member since 2005 Other Positions: Chairman & CEO of Norden Technology AS. Norden Technology AS owns 9.5 million shares in Anoto Group AB. Boardmember GammaMedica-Ideas Inc., Industrial Advisor to Capman plc. Education: MBE, Norwegian School of Management.
CHRISTER FÅHRAEUS Company Founder, Member of the Board Born 1965 Board member since 1996
Other positions: Chairman of the boards of Agellis Group AB, Respiratorius AB and Flatfrog Laboratories AB, CEO of EQL Pharma AB. Member of the boards of Cellavision AB, Monkfi sh Instruments AB, Flatfrog Laboratories AB, Fårö Capital AB and EQL Pharma.
Shareholding: 3 500 000 shares in Anoto Group AB. Education: MS Bioengineering, BS,
PhD h.c.
GROUP MANAGEMENT
ANDERS NORLING CEO, Anoto Group AB Born 1951 Employed since 2006 Shareholding: 250 000 shares in Anoto Group AB. Education: Master of Science in Industrial Engineering, Linköping University.
ANDERS WIDESJÖ CFO, Anoto Group AB Born 1951 Employed since 2008 Shareholding: 30 000 shares in Anoto Group AB. Education: MBA, Gothenburg University.
LARS HERMANSEN EVP Sales & Marketing, Anoto Group AB Born 1958 Employed since 2006 Shareholding: 50 000 employee stock options in Anoto Group AB. Education: Master of Economics, Stockholm University.
EBBA ÅSLY FÅHRAEUS VP Sales & Marketing, Anoto Group AB Born 1963 Employed since 2000 Shareholding: 50 000 employee stock options and 35 900 shares in Anoto Group AB. Education: Master of Science in Business and Economics, Stockholm School of Economics.
MAGNUS HOLLSTRÖM EVP Technology Licensing, Anoto Group AB Born 1969 Employed since 2001 Shareholding: 10 000 employee stock options and 57 833 shares in Anoto Group. Education: Master of Science in Electrical Engineering, Lund University of Technology.
TORGNY HELLSTRÖM Senior Vice President & General Counsel, Anoto Group AB Born 1958 Employed since 2004 Shareholding: 50 000 employee stock options and 20 000 shares in Anoto Group AB. Education: LL.M., Stockholm University.
ANNUAL GENERAL MEETING
Anoto's Annual General Meeting will be held on 14 May 2009 at the Anoto premises at Emdalavägen 18 in Lund, Sweden. Any shareholder wishing to participate in the meeting must notify the company in one of the following ways:
- * Phone: +46 46 540 1200, Fax: +46 46 540 1202
- * E-mail to [email protected]
- * In writing to Emdalavägen 18, SE-223 69 Lund, Sweden
The notifi cation must reach the company by 12:00 noon on Wednesday, 8 May. To be entitled to participate, the shareholder must also be entered in the VPC AB share register by 8 May. Any shareholder who has registered his or her shares under a trustee must temporarily register them in his or her own name with VPC AB by Wednesday, 8 May. When submitting the notifi cation, please state your name, personal identity or corporate identity number, address, phone number and number of registered shares. If you are participating by proxy, you must submit the authorisation to the company prior to the meeting.
FINANCIAL REPORTING
Anoto Group's fi nancial reports are released in Swedish and English. The easiest way to obtain the reports is by downloading them from www.anoto.com, e-mailing a request to [email protected] or phoning +46 46 540 1200.
Following is the schedule of Anoto Group's fi nancial reports for its 2009 fi nancial year.
| January-March interim report | 7 May 2009 |
|---|---|
| January-June interim report | 31 July 2009 |
| January-September interim report | 4 November 2009 |
| 2009 year-end report | 4 February 2010 |
| 2009 annual report | April 2010 |
| 2009 Annual General Meeting | May 2010 |
Anoto Group AB
Emdalavägen 18 SE-223 69 LUND Sweden Phone +46 46 540 1200 Fax +46 46 540 1202
New adress from July 1st 2009: Traktorvägen 11 SE-226 60 LUND
Anoto Inc. 200 Friberg Parkway, Suite 3003 Westborough, MA 01581 United States Phone +1-508-983-9550 Fax +1-508-983-9551
Anoto Nippon K.K
7F Dai-3 Nishi Aoyama Bldg. 1-8-1 Shibuya, Shibuya-ku Tokyo Japan 150-0002 Phone +81 (0)3-5774-1212 Fax +81 (0)3-5774-1211
C Technologies
Traktorvägen 11 SE-226 60 LUND Sweden Phone +46 46 540 1200 Fax +46 46 540 1202