Anoto Group — Annual Report 2011

Apr 18, 2012

ANNUAL REPORT 2011

CONTENTS

2011 in brief	1
A word from the CEO	2
Anoto's customer offering	5
Anoto Pen Solutions	6
Customer solutions	10
Interactive Solutions	12
Customer solutions	13
C-Pen	15
Customer solutions	16
Technology	17
Global presence	18
Our goals and strategies	19
Business Overview 2011	21
Employees	23
Management Report	24
Consolidated Statement of Comprehensive Income	29
Consolidated Statement of Financial Position	30
Consolidated Statement of Cash Flows	32
Consolidated Statement of Changes in Shareholders' Equity 33
Parent Company Income Statement	34
Parent Company Balance Sheet	35
Parent Company Statement of Cash Flows	36
Parent Company Changes
in Shareholders' Equity	37
Notes	38
Audit Report	61
Corporate Governance Report	62
Board of Directors	67
Group Management	68
The Anoto share	70
Five-year Summary	72
Definitions	73
Annual General Meeting	74

THIS IS WHAT ANOTO DOES

Anoto develops pens that transform handwritten text and illustrations into digital information, enabling possibilities for quick and reliable distribution and storage. Anoto's digital pen technology also enables the transmission of interactive information.

OUR OFFERING

Together with our partners, we offer cost-saving, effective solutions for mobile data capture of handwritten text, Pen Solutions, and Interactive Solutions, primarily for education. All of this packaged in a complete system with software applications, digital pens and a unique pattern technology.

OUR CUSTOMERS

Our end customers work within many different segments where mobile, easy-to-use solutions are needed to capture handwritten information. Our applications are used, among other things, to keep records in the healthcare sector and within various types of field services. Other customers develop interactive conference and educational materials for businesses, students and preschool children.

OUR REVENUE

Anoto's revenue comes primarily from selling digital pens and from royalties associated with the use of our technology.

FIVE POWERFUL REASONS TO USE ANOTO TECHNOLOGY

• It feels just as natural and familiar as using pen and paper.
• It's mobile and can be used anywhere without large requirements on infrastructure, such as computers and networks.
• It's effective. There's no need for double registration because the information is available immediately, in digital and analog forms.
• It is secure but also cost-effective and environmentally efficient.
• It enables interactivity in an easy way.

2011 IN BRIEF

• Net sales for 2011 amounted to 192 MSEK (208)
• The result after tax was MSEK -243 (-77) including a goodwill write-down of MSEK 230
• Earnings per share amounted to -1,89 SEK (-0,60)
• Cash flow for the year was -57 MSEK (0)
• Digital pens accounted for 50 percent of net sales (58)
• Acquisition of 51 percent of the shares in Destiny Wireless Ltd. completed in the third quarter and two additional acquisitions completed in January 2012; 100 percent of the shares in Ubiquitous Systems Ltd. and Xpaper from Talario
• In the fourth quarter Anoto was awarded its largest single order ever within Business Solutions, including 9600 pens

RESULTAT EFTER SKATT (TSEK) PROFIT/LOSS AFTER TAX (SEK THOUSAND)

CASH FLOW FOR THE YEAR (SEK THOUSAND)

EQUITY/ASSETS RATIO %

KEY RATIOS FOR THE GROUP

(SEK thousand)	2007	2008	2009	2010	2011
Net sales	122,733	143,975	205,862	212,293	192,286
Other income	19,180	0	0	0	0
Gross profit/loss	111,145	98,662	142,472	143,970	136,567
Operating profit/loss	-19,592	-51,645	-20,848		-74,475 -242,980
Profit/loss after tax	-16,749	-60,903	-20,678		-77,326 -243,879
Cash flow for the year	-48,540	-31,957	-18,574	274	-57,103
Earnings per share (SEK)	0	0	0	-1	-2
Shareholders' equity per share (SEK)	4	4	4	3	1
Equity/assets ratio (%)	81	81	84	82	65
Average no. of employees	103	127	113	108	94

The future is in our own hands

ANOTO AND THE ART OF WRITING

Civilization has evolved by communication, and the invention of writing has played a central part in this. Second to speech, writing has for thousands of years been the most intuitive and natural way for humanity to communicate. We at Anoto are convinced that it will remain like this for the foreseeable future.

Anoto's ideas and products have all emerged from the art of writing. During Anoto's relatively short history, our efforts have been characterized by innovation and unique technology with the pen as the central component. We have managed to change and expand the view on handwriting, and we have shown how we can simply and efficiently combine traditional use of pen and paper with modern digital media and mobility.

We are proud to have contributed to this development for more than a decade, and we look forward to continuing to do so for many more years!

FROM ENGINEERING PIONEER TO CUSTOMER BENEFITS

Today Anoto is the world's leading supplier of technology for recording and processing information written or drawn by pens on paper or other types of passive surfaces. The idea of capturing handwriting may seem simple, but it has still been a challenge to get to the position where we are today.

Anoto started off with a few ideas on what was to become the "Anoto dot pattern" and the vision to connect pen and paper with the digital world. However, as with many other pioneering enterprises originating from a brilliant technology, we had to face the challenges associated with bringing such a technology to market and making the market (and, to some extent, ourselves) understand how the technology could be used. It has taken us more than ten years, but we have finally created a global awareness of our technology, and we also have a full understanding of and respect for the key to future success: True customer benefits.

On this journey, we have had help from more than 300 companies around the world that have teamed up with us as business partners. Together we have contributed to defining a growing category within the information technology industry: Digital solutions based on something as simple and intuitive as pen and paper.

ANOTO'S OFFERINGS

Anoto's strategy is to approach the markets together with business partners who specialize in interactivity and mobile information capture. We focus on the vertical markets of education, healthcare, and field services.

Paper and pen have been the predominant tools within education for centuries. However, during recent years there has been a strong move towards the use of digital tools and interactivity. Anoto's first opportunity to

contribute to this market surfaced when our partner PolyVision started to sell digital whiteboards based on Anoto's technology. During 2011, we also saw our partner TStudy launch a system for interactivity between teacher and students: Each student has a pen which can send written information either to the teacher's computer or to a projector, allowing the entire class to view what has been written.

We have also seen an ever-increasing need and acceptance of our technology within healthcare, field services, and other professional markets. We help organizations in these sectors quickly and easily capture handwritten data and integrate this information with back-end systems. Users can continue to work in the way they always have, while at the same time, subsequent information processing can be automated and made more effective.

STRATEGIC ACQUISITIONS STRENGTHENS ANOTO'S POSITION

During 2011, we took the first steps in our established plan to consolidate resources and expand our business to areas where we see major opportunities for long-term growth:

• In mid-2011, we entered into a joint venture with two Korean partners for the purpose of combining their knowledge of product development and business culture with Anoto's deep knowledge of the core technology.
• During the year, we also acquired 51% of Destiny Wireless, who has been for many years our best-selling business partner in the UK within the field of forms solutions.
• In the fourth quarter, we signed a purchase agreement with one of our other larger customers, US-based Talario. The deal means that Anoto has acquired the rights to a major part of Talario's product portfolio. The purchased products will be integrated in Anoto's base offerings during 2012. The purchase agreement was formally finalized in the beginning of January 2012.
• The end of 2011 also included the finalization of negotiations on the acquisition of 100% of the UK company Ubiquitous Systems (Ubisys). Ubisys, who is also active within the field of forms solutions, had been a customer of one of our other larger customers, but we have also had direct business relations with Ubisys for many years. This acquisition was also finalized in January 2012.

CONTINUED AND CLOSER COLLABORATIONS

Anoto's business partners have many years of experience and knowledge on how our technology can be used and integrated into various systems for information processing. We believe that we have much to gain by even closer cooperation with our partners. It gives us a stronger presence on the market, and it helps us understand the actual customer needs even better. Closer collaboration will also reduce the technical and commercial friction that might appear on the path from Anoto to the end user. We will continue to adapt our offers to make it even easier for partners, system integrators and resellers to use and distribute our products to the end users within our prioritized market verticals.

We look forward to continuing these activities during 2012, when we in particular intend to focus technical development towards usability and other customer benefits. We will also continue our efforts to coordinate marketing and sales activities with and between our business partners. This will further increase the awareness on the market of how digital pen solutions can increase productivity, simplify work flows, and save time and money, all in a secure way and with minimal effort for the end user of the technology.

SINCERE THANKS!

I am firmly convinced that Anoto has a unique position in an emerging category with significant value potential. A large part of this owes to the support of three key groups that I would like to mention here:

• I would like to thank each of our shareholders for their patience and support throughout the years. There would not be any Anoto today without your belief in the company and the business opportunities.
• I also wish to thank our loyal business partners who over the years have put noticeable effort into helping us find the markets for a ground-breaking technology and to create true benefits for the end users.
• Finally, I want to thank Anoto's invaluable employees for their enthusiasm, hard work, and understanding in a dynamic environment where we must always be prepared for rapid change, particularly when it comes to customer requirements.

Let's all keep working together on finding new opportunities to optimize and evolve handwritten communication!

Lund, April 2012

Stein Revelsby CEO Anoto Group

Natural data collection and interactivity

Anoto's two offerings are based on a joint technology that is primarily comprised of a pen with a built-in infrared camera and a unique dot pattern. The infrared camera in the pen effectively captures the dot pattern printed on various surface types, such as paper and metal. Information registered by the pen is sent in digital format for presentation in a computer.

THE TWO OFFERINGS ARE:

• Anoto Pen Solutions are based on our pens combined with dot pattern, tools and form applications.
• Anoto Interactive Solutions are based on customized pen products and solutions for customers in the interactive learning and education area.

Based on a unique pen technology, Anoto has formulated two offerings which via different partners addresses three growing market segments. Behind each offering are the application areas that form the basis of Anoto's report structure.

Anoto pen solutions for mobile data collection

For thousands of years, the ability for expression with the help of a pen has been the most natural way for human beings to communicate. Still today, in many situations, it is the fastest, simplest and sometimes the only way to communicate. Despite the pen's many advantages, for a long time there has been a need and desire to keep and save handwritten text in digital form. With its unique technology, its products and solutions, Anoto is the market leader in digital pen technology.

Virtually all written information that is created in the world needs to be saved or processed in a digital format. Furthermore, a large portion of the existing information is supplemented, signed or attested. In the offering Anoto Pen Solutions there are solutions for:

• Creating a form in digital format
• Digital processing of handwritten forms
• Automatic generation of a digital version of a document with handwritten signatures and notes.

THIS SMART DIGITAL PEN HAS MANY ADVANTAGES

Independent surveys and end users show how Anoto's technology for digital pens and paper are more user-friendly for data collection than any other available technology.

Compared with many other technologies for data collection, such as smart phones, tablets and computers, the digital pen has a host of confirmed customer advantages. It's easier, more intuitive to use, significantly more durable and less appealing to potential thieves. In addition, the pen always leaves a time stamp and a handwritten original, which for many user areas is an absolute necessity. The advantages of a solution based on a digital pen include time- and cost-savings, reduction of paper copies and increased data security. The handwritten text does not need to be entered via a keyboard on a computer, and the need for several paper copies becomes redundant, as all written text is stored in the pen until it's transmitted to a computer. All of this enables significantly higher efficiency in work processes surrounding a single document than other methods.

To go from using a pen and paper to using a digital pen and paper is natural. In most cases, users can maintain all of their usual routines. It doesn't require much training for an electronic product or a new computer system, which means introducing the digital pen into an organization goes quickly and smoothly.

There are other advantages beyond its being easy to use:

• The technology is durable and reliable and can withstand use in tough environments in the field.
• It's easy to carry and has a very long running time compared with comparable battery-driven products.
• It provides an immediate digital copy of the handwritten information.

ANOTO'S CUSTOMER OFFERING

FEW DIRECT COMPETITORS

Anoto's digital pen and paper technology has few direct competitors in the area of form-based data collection. In terms of the competition from similar products in the market, there are a couple of different solutions, but none of them have Anoto's benefits. Anoto has immense knowledge in this area, and has continuously improved and refined the technology and tools to best meet end user needs and high demands for reliability and functionality. For many years, Anoto has also been working with partners globally to develop different applications in several customer segments, which has created a large number of references for the use of the products.

Some of the areas in which Anoto's technology has comparative advantages include the following:

• Speed–data collection occurs without a time delay.
• Precision–every movement of the pen is registered with millimeter precision.
• Security–the stored information is encrypted.
• Verification–Anoto's pens can communicate directly with computers or wirelessly via cell phone or other wireless router. This makes it possible to transmit signatures and receipts from the field and enables immediate follow-up in the form of a delivery or an invoice. This saves valuable time.
• Traceability–All of the dot pattern paper surfaces are unique, which makes it possible to register and store additional information about the handwritten text, such as the time, which pen was used, and to which IP address the information is to be transmitted when it is transferred to the computer.
• Dynamic- Additions or updates to an existing physical document occurs automatically in the digital copy, since a connection between the physical and the digital documents ensures that that they are identical.

In summary, the advantages with the digital pen and paper and Anoto's technology include faster paper-based processes, less risk of error, increased productivity and noticeable cost-savings.

A COMPLETE SOLUTION THAT IS SIMPLE TO INSTALL AND USE

Anoto developed a business model to speed up the business process. Together with selected cooperating partners, we deliver a complete solution with a platform that in different ways can process captured data and turn it into usable information.

Anoto strives to simplify the process of buying our products and services for our customers. Towards that end, Anoto opened an online store where partners can buy pens and dot pattern.

Complete solutions that include a pen, Anoto's unique dot pattern, and a computer application are also available. With this solution, you can print out any Windows-based document in a dot pattern, use the Anoto pen technology and write on the document, and then automatically receive a digital copy of the document in PDF format with the handwritten information. In addition to the fact that the document doesn't need to be scanned, there are a host of other advantages:

• If additional notes are added to the document, the digital copy is updated automatically.
• Information regarding the time each handwritten notation is made is recorded.
• It's possible to define the recipient of the final document so that it's automatically sent to that recipient.

Best solution for natural, fast and secure data collection in the field

The pen can be used to its full potential when mobility, fast documentation and simplicity are essential. Often, it applies to a type of form used for surveys, interviews, tests and other items that must be documented onsite. The Anoto Pen Solution is primarily geared towards two market segments: Healthcare and Field Services

HEALTHCARE

In the market segment Healthcare there are a number of uses based on different types of forms. Typical use areas include the following:

• Record-keeping
• Documenting home visits in elderly care
• Documenting home pregnancy visits by midwives
• Documenting clinical trials
• Health control checks in disaster areas

With the digital pen solution, healthcare personnel avoid spending unnecessary time transferring information from paper forms to a computer. The advantage is that information is retrieved where the patient is, which reduces the risk of the wrong information getting stored. Experience shows that it takes an average of 15 minutes to learn the digital pen technology. This makes it even more suitable for the various activities within healthcare. But it's not just in the daily care that Anoto's solutions are used. The technology is also very suitable for clinical trials, for example, in which standardized forms are frequently used and the accuracy of the collected data is essential to the scientific results.

FIELD SERVICES

Uses in the Field Services market segment apply to data collection outside the permanent workplace, such as in different types of surveys and controls in which forms are frequently used.

More specifically, it can be used in the construction industry, the public sector, such as police, insurance and transport and logistics. Customized Anoto solutions and products can be found in all industries and tailored to meet the specific demands and needs to quickly transfer handwritten text and illustrations into a digital format, including:

• Crime scene investigations
• Various types of inspections, such as insurance injuries and cars in traffic
• Inventory of stock
• Verification and check lists for deliveries

A good example of an end customer in this market segment is the Police Service of Northern Ireland. The Police Service of Northern Ireland has a goal of creating a safer and more secure society for all, with modern, forward-thinking police work. In the work to make the information processing more effective, the police authority equipped 4,000 uniformed and investigative police with Anoto's digital pens and paper to digitally register witness testimonies. The handwritten witness testimonies can now be uploaded automatically when a police officer connects his pen to the police authority's secure network.

The results of the initiative have proven impressive, and thousands of witness testimonies have been registered through the system. The form is quickly uploaded and the information is available for all authorized personnel. This type of effective information processing is vital to the success of crime investigations. The Police Service of North Ireland has already seen a positive difference in the number of solved crimes.

BUSINESS MODEL

We have an established sales model in which our customers and partners pay a one-time sum for digital pens with associated licenses and recurring fees for various services and pattern. In this way, opportunities for income are established directly and over time.

Through good relations with our cooperating partners, we establish a foundation for the continuous development of our technology. It is to a great extent through our partners that we make contact with the market and our end customers. With a global network of partners, our digital pen technology is made available to a wide market – both geographically and within different industries and segments. The in-depth knowledge we and our partners have about the needs of the end customer helps us reach potential users for our digital pen technology. Many people use solutions and products based on Anoto's technology in their work, and many also benefit from them in their everyday lives outside the workplace.

A GROWING MARKET

No matter how digital the world may be, each year trillions of documents are still printed out and, as such, forms management will continue to grow in the foreseeable future. All of these documents and forms shift between paper and digital formats over time, with the constant need to add handwritten text.

The market development is driven by an increased knowledge of digital pen solutions and continued penetration of existing and new markets. In addition, the market is driven by the customer applications these solutions can generate when it comes to cost-effectiveness and user-friendliness.

A clear trend is that many electronic products, which in recent years have been exclusively navigated with fingers, now are being supplemented with pens. This can be for the purpose of navigating the product as well as painting, writing or drawing on it. This trend is particularly positive because it shows that a pen as a communications tool will continue to have a prominent role, which will increase interest in pen-based solutions. Furthermore, this opens up big opportunities for Anoto's pen-and-pattern technology, given our rigorous attention to precision and detail in the digital transmission of the written information, which is required by many users.

Another sign we clearly see is that there are many use areas in more extreme indoor and outdoor environments, such as within the chemical industry, which places high demands on work tools in terms of temperature, impact resistance, dust and moisture. Here we see a growing interest in facilitating and speeding up data collection without departing to any great extent from existing pen and paper routines. Anoto is going to be a key player in this context.

IMPROVING PRODUCTIVITY AMONG REPAIR TECHNICIANS

Challenge

Solution

Complex work process

Each year the US-based company Safelite® AutoGlass employs more than 3,700 field technicians to repair and replace windshields for more than 3.1 million Americans. Before, Safelite's work process centered on sending out technicians who managed the administrative reporting manually. Each day at the beginning of a shift, the technicians were forced to drive to the office for their assignments, and after the end of the shift they drove back to the office to complete the paperwork for the finished work. If a colleague needed a technician to inform him of changes in the assignment, he or she would call the technician's Nextel BlackBerry®. These calls interrupted the technician, especially if he was in the middle of a job. Changes to the visiting times and telephone numbers could be done at any time during the day, and assignment orders were printed out five times a day, which created an excessive amount of paper waste. The process required numerous steps for approval before the technician could start the work and process the payment. This delayed the issuing of claims reports to insurance companies and made it difficult to stay on top of the invoicing period at the office. Therefore, Safelite decided to create a solution that could enable the handling of field data wirelessly.

New solution revolutionizes fieldwork

Safelite chose ExpeData's® platform Enterprise Digital Writing, which is based on Anoto's digital pen and paper technology, to create a solution that would reduce the number of steps, telephone calls and paperwork previously needed. With the new solution – Mobile Resource Management – technicians use BlackBerry telephones to log on and receive the day's assignments. When the technician logs on, the customer information is shown on the screen. The technician calls the customer to let them know he or she is on the way, and with the help of the built-in GPS function, the technician receives an estimated time of arrival. When the technician arrives at the customer, he enters the mandatory information in his BlackBerry telephone to prepare for the job. With the information, a form is established in which the customer gives the technician permission to execute the work. With the help of a portable terminal and printer, the technician prints out the form, which is printed with Anoto's dot pattern. The customer signs the form with a digital pen from Anoto. The data is transferred from the pen via Bluetooth® to a BlackBerry telephone where it is processed and transmitted, with the help of ExpeData's software for routing, to Safelite's server. When the windshield is installed, the technician presses a button on the BlackBerry phone, and Safelite's tender appears on the screen. The technician draws the customer's credit card and receives approval right away. A receipt is printed, and the customer signs it with a digital pen. The pen transmits the information to the BlackBerry telephone, which then sends it to Safelite's server.

Result Simplified business process means success

There are many benefits to the digital pen and paper solution. The new process is not as timeconsuming, and Safelite can now give its technicians more assignments each day. The technicians' total productivity has increased 7 percent, and since the technicians can now communicate more efficiently, the number of cancelled assignments has gone down by almost 25 percent. In addition to an enormous increase in productivity, there has also been a reduction of paperwork in the office. Customer queries are handled on the day they come in and assignment orders are handled more or less in real time. The solution has also proven to be more environmentally friendly. As the technicians no longer need to drive to the office every morning and evening, there has also been significant fuel savings. Furthermore, the amount of paper used in connection with orders has gone down 80 percent. Another advantage is the high technological impression Safelite leaves with its customers. "When customers see we are willing to invest in creative technology to provide the best possible service, it creates an invaluable environment based on trust and security," says Nate Beckman, project manager, Mobil Resource Management, Safelite. Today 5,300 digital pens are used by Safelite's technicians.

SETTING THE RECORD STRAIGHT

Cumbersome administrative process

Royal Wolverhampton Hospital's NHS Trust is located in West Midlands in the United Kingdom. It offers a comprehensive selection of health and medical care services to the population of Wolverhampton, the broader Black Country, South Staffordshire, North Worcestershire and Shropshire. Each doctor meets as many as 20 patients per day and enters about 10 key items of key information per patient on a form. After that, the doctor types in the information into a record system or delegates the task to administrative personnel. It was a lengthy manual process that consumed clinical time and increased the risk of mistakes. Royal Wolverhampton Hospital's NHS Trust realized that they needed to find a solution that would reduce the administrative load and free more clinical time for patient care and register information in time. In addition, the solution needed to facilitate the hospital's work to produce accurate and reliable statistics for reporting to the commissioners and suppliers for cost estimates, activity planning and clinical management.

More efficient flow of information

Initially the Royal Wolverhampton Hospital's NHS Trust considered portable computers to streamline the collection of patient information but discovered that the computers added more of a barrier between doctor and patient and that it took time away from the patient instead of adding time. Royal Wolverhampton Hospitals NHS Trust decided to find another solution, and they chose digital pen technology from Anoto's subsidiary destiny®. Thanks to the digital pen solution, the administrative work has eased significantly. The doctor prints a form with the patient's name, visitor number and reason for visit, and SNOMED codes. Each form automatically receives a time and date stamp. During the consultation, doctors fill out the form in exactly the same way they would using a regular pen. At the end of the day, the doctor docks the pen into the computer via a USB memory stick. The data captured by the pen transmits automatically from the pen on location to NHS' secure computer center, where the handwritten information is converted into text and validated. The information is then transmitted back to Royal Wolverhampton Hospital's NHS Trust and integrated automatically into the record system, while the administrators can review and edit the form through destiny's® secure web-based "Manage" service. Once the doctor has docked the pen, the entire process takes less than a minute to execute. Since the first pilot project at the anti-coagulation department, the digital pen and paper system has been launched in several different service areas at the Royal Wolverhampton Hospital's NHS Trust. Today the digital pen technology is used by close to 500 doctors.

Lower costs and more time for care

So far the Royal Wolverhampton Hospital's NHS Trust has lowered its administrative costs by about GBP 200,000 a year. What's even more significant is that the goal has been reached, freeing more time for care. Before, data entry was handled by a mix of doctors who entered their own data and those who handed the data entry over to administrative personnel. In both cases the digital pen technology helped free more time for patients. Accuracy has also improved, and the time used to enter data has gone down, in some areas between 28% and 90%. Before, the Royal Wolverhampton Hospital's NHS Trust was forced to spend time checking for errors, and sometimes the information entered by administrative personnel overlooked missing data that was mandatory. The current system's requirement for information from the source, and verification of the form, ensures that the data is correct from the start. The team checking the data quality can now look at forms that were rejected and quickly validate or correct them. With its increased focus on activity-based earnings, the Royal Wolverhampton Hospital's NHS Trust can now gather the needed information on time, correctly and knowing exactly what an individual nurse or doctor has done, which is an excellent point of departure for the work. Royal Wolverhampton Hospital's NHS Trust can generate income-related activity reports, but even more important, monitor each patient's progress based on individual information that gets updated every day. This, in turn, helps Royal Wolverhampton Hospital's NHS Trust achieve faster and better results.

Challenge

Solution

Result

Anoto interactive solutions for improved learning

Anoto offers leading OEM businesses (Original Equipment Manufacturer) in the education segment solutions based on Anoto's pen technology and unique dot pattern to increase interactivity between teachers and students and create a better learning environment.

Caption: Interactive solutions create a learning environment that is more oriented towards the individual and where the traditional classroom model is replaced by a more student-centric and interactive approach to teaching.

Solutions based on three interacting components:

• Pen technology comprising hardware and software components that can be integrated with other products or serve as the basis for new products
• Software modules for handling dot pattern and design, and printing. The pattern can be printed with a regular printer, digital and laser printers and also printed on surfaces, such as whiteboards.
• Software applications developed by Anoto's partners in the area of education.

The solutions for education are often packaged together with whiteboards, projectors and books to offer customers complete solutions.

BENEFITS OF ANOTO INTERACTIVE SOLUTIONS

The advantages of Anoto's technology compared with other solutions include cost-effectiveness, flexibility and performance. Surfaces such as whiteboards and books do not require built-in electronics, which keeps costs and complexity to a minimum. The intelligence lies in the pen, and the same pen can be used for different surfaces, and different pens can be used on one single surface. Anoto's digital pen technology offers maximum precision across the whole surface, irrespective of size.

With its offering Interactive Solutions, Anoto has entered into a few large cooperation agreements. The customers have their own marketing, distribution channels and sometimes unique market segments. The digital pens and solutions are adapted according to specific requirements from the market segment.

TStudy is an important customer with several interactive products: TNote, a solution that facilitates distance learning; Symphony, a solution for work in the classroom; and DOTnote, a simple and effective solution for taking notes. PolyVision, a company that makes interactive whiteboards based on Anoto's technology, has several products for, among other things, conference rooms and educational environments.

BUSINESS MODEL

Our sales primarily come from royalties, but in some cases also from one-time sums for purchased digital pens, modules and key components.

Business in Technology & Licensing and Interactive Solutions has been characterized by customized solutions that were developed during the year, and with specifications largely based on the requirements from the market segment Education, will meet the various customer needs with virtually the same products and solutions.

A GROWING MARKET

Anoto's digital pen technology replaces existing technical solutions in a more cost-effective and user-friendly way compared to other existing technologies. Often, the solution offers improved opportunities for interactivity and sometimes allows for whole new product categories, such as Livescribe's echo™ smartpen, which, with the help of Anoto's technology, can index sound files from lectures, for example. In this way, the user can add sound recordings to their notes from a lecture and listen to them over and over again.

In terms of interactive solutions, the business is largely driven by our customers, but we also have our own business development in the area. There is a growing demand for cost-effective education, and an interest in interactivity suggests a market poised for significant growth.

TURNING CLASSROOM LEARNING INTO TEAM WORK

Teaching takes a step into the digital age

In most classroom settings around the world, pen and paper, which have been used for centuries, are still the primary tools used. Teaching occurs in lecture format even though this method has proven limitations. As course plans become more focused on information and communications technology, there is growing pressure on educational systems to step into the digital age. To facilitate digital educational initiatives, the South Korean company TStudy developed Symphony, a modern interactive classroom teaching system that draws from the benefits of pen and paper connected to the digital world. Time Education, one of the first and most comprehensive education companies in Asia, saw an opportunity to transform its classrooms into cutting edge, interactive learning environments and decided to implement Symphony in all of its schools in Asia.

Enter the digital pen

The Symphony system is an interactive solution that aims at creating a one-on-one learning environment in the classroom. Symphony replaces the traditional classroom setting with a more student-centric, interactive and fun approach to learning. Students use a digital pen to take notes on paper imprinted with the Anoto dot pattern. Using the pen's integrated Bluetooth® module, their work is then transmitted to the teacher's PC and displayed on a screen or interactive whiteboard for the whole classroom to see. Teachers can evaluate each student's way of thinking and give targeted feedback, while students can compare their work with their classmates. All work can be stored electronically, enabling teachers to monitor the progress of their students more easily. Symphony can also administer exams, which Symphony then grades and analyzes automatically.

Challenge

Solution

Discussions and teamwork replace lecturing

Symphony enables a new style of classroom teaching. It enhances the motivation and creativity of the students because they participate actively, sharing and comparing their work in lively discussions. The system also makes it easier to address individual learning challenges, which can be difficult to manage in traditional classroom settings. Symphony's focus on teamwork makes learning more inspiring for the teacher and the students. The success of this approach has been highlighted in a study led by Hitachi Research Center and Tokyo University, which surveyed 5,000 students. It found that the use of digital pens improved exam grades by more than 40 percent and that the Symphony system was helping to cultivate logical thinking among students.

Result

OMVANDLING AV SPECIALUNDERVISNING

Challenge

Solution

Challenge: Inhibiting learning environments

The New Brighton Elementary School in Pennsylvania in the United States is a low-income school with 730 students. The classrooms are organized into open pods, each comprising three to four smaller classrooms. The special needs students are taught in mixed classrooms. They are taught by a regular teacher and a special needs educator. Because special needs vary, from autism to speech impediments, each student has individual learning needs. Special needs teacher Jodi Zuchelli found it was challenging to connect with so many different types of learners and at the same time keep students focused on lessons. Since Jodi's special needs classroom is an open pod, the learning environment was very distracting, especially for the students with attention deficit hyperactivity disorder. Every time a class left the pod or a student walked by, at least one student lost focus. Constant interruptions made it very difficult to make progress with the lessons. It was also difficult for the special needs students to fit in with their peers. Since the classrooms were mixed, the special needs students were often too intimidated to answer questions out of fear of embarrassment in front of their classmates. The school needed a solution that would turn the classroom into an environment where all students could reach their full potential.

The solution: An interactive whiteboard captures attention

The solution to the problem was PolyVision's ēno®, an interactive whiteboard. With the help of ēno, Jodi can adapt the teaching to each student's ability much easier than before. With a few clicks, she can now easily prepare lessons by retrieving pictures from the Internet and dropping them in a software for interactive teaching. Jodi keeps the class on task by allowing students to work together on the interactive whiteboard, while she works on skills with another group. Every morning Jodi presents different lunch alternatives on ēno. The students vote on the lunch they want and then the information is presented in a graph. The class interprets the diagram and then works on problem-solving based on the data in the graph. They also use educational software to count coins on ēno. The students approach the whiteboard, mark the touch points on the coins and count to arrive at the solution. Jodi has never seen such interest from her students. The children who were unwilling to answer difficult questions are now more self-confident and willing to try new things. "We draw names to determine whose turn it is next to go up to ēno. If the students are not paying attention, which now only happens on rare occasions, they lose their turn at the whiteboard. The students' eyes are glued to the board during lessons because each student wants a chance to go up to the whiteboard," says Jodi.

Result The result: Positive learning and teaching with the help of cutting edge technology

Positive learning and teaching with the help of cutting-edge technology. From the first day with ēno, Jodi saw dramatic changes in the classroom. The first time they used ēno, the students didn't know what to expect. They had never seen anything like it. When Jodi navigated through the various tools, and made some mistakes along the way, she was surprised at how captivated the students were. When she touched the wrong place on the magnetic strip they immediately saw where she should point instead. "Their increased attention and unshakable focus was remarkable to see. Before we started using ēno the students darted out of the classroom as soon as the school bell rang. Now they ask if they can stay after school and use ēno. They're eager to practice spelling and math all the time," says Jodi. Jodi's students think it's fun to share their skills with the help of ēno. The most important thing is that they come to school each morning and look forward to learning new things, and they stay positive during the classes. "PolyVision's technology has changed how teaching and learning occurs in the classroom. My students with special needs are much more interested now that we have tools and resources that address their individual needs," Jodi concludes. PolyVision's whiteboards are being used in half of the classrooms in New Brighton Elementary School, and there are plans to equip all of the classrooms in the district with ēno before the end of 2012.

C-Pen – a ready solution with a brand of its own

C Technologies is part of Anoto. C Technologies' main product is the C-Pen, a handheld scanner combined with character recognition that works like a highlighter pen. With the help of a C-Pen, the user can easily transfer printed text into a format that can be edited in computers or mobile devices. Data retrieval occurs line by line, and the user easily controls what is captured and transferred. The C-Pen technology is also used as a basis for several products from C Technologies business partners, primarily for teaching and learning programs.

The products are selling under a separate brand through a network of distributors and suppliers in a number of different countries, primarily in Europe. In other regions and in special markets, our products are being sold under a third-party brand (OEM) or co-branding.

C-PEN COMPATIBLE WITH ALL LEADING OPERATING SYSTEMS

The technological transfer occurs in part through graphic recognition, through OCR (Optical Character Recognition) into text and numbers, and partly through cable or wireless transfer to virtually all programs and operating systems, and to any computer, tablet or smart phone. In addition to Word and Excel, the solution also works with electronic dictionaries and translation programs. This flexibility is one of the biggest advantages with C-Pen.

For private individuals, it's easy and safe to enter long OCR numbers from invoices when these are registered for payment. Together with our cooperating partners in Switzerland, we have been very successful for ten years.

For professionals this is a significant benefit when transcribing data into a business system or collecting information, partly in combination with TTS (text-to-speech), partly with electronic dictionaries.

C-PEN ALONE IN WIRELESS TRANSFER

Today C Technologies is the only company with a product in the wireless category (Bluetooth®) which creates a unique product offering given the compatibility with smart phones via Bluetooth simplifying spontaneous use.

A COMPLETE SOLUTION

C-Pen products from C Technologies include hardware, the digital highlighter pen, and accompanying software designed with functions and resources to optimize user value.

The digital highlighter pen is based on patented technology and strengths in the areas of performance, durability and production, and software customized for compatibility and function.

A LEARNING SUPPORT

Primarily students use our products as a reading and study aide. Our digital highlighter pen offers speech synthesis and the possibility for multisensory learning (reading and listening together improve learning). The combination is also an established reading aide for people with dyslexia and vision impairment.

CLEAR BENEFITS

In addition to the fact that it's easy to use, there are several advantages to the C-Pen:

• Secure and risk-minimizing with transcriptions
• Multisensory learning
• Wireless transfer via Bluetooth
• Compatible with different programs, operating systems and computers, tablets and smart phones, and different applications, such as Google Docs

DIGITAL PEN COMPLETES THE SCHOOL BAG

Not everyone has the same capacities

The need to transfer information from paper into digital format has increased significantly in the past ten years, especially in the world of education. Given that computers, reading tablets and smart phones are becoming an ever more integrated part of school work for many students, there is a growing need to find simple solutions for transferring information from physical to digital formats. For students with reading and writing challenges, the need is especially big. The manual transfer of printed text to a digital tool can test students' capacity to concentrate, which reduces productivity and the quality of learning. The C-Pen scans and transcribes printed or written text by capturing it graphically. The text can then be transmitted to a digital medium like computers, reading tablets and smart phones. C-Pen significantly simplifies transcription, which enables increased personal productivity and minimizes the risk of error during transcription. C-Pen can work as an aide and support tool for students with or without reading- or writing impediments.

Highlighter pen that facilitates learning

For a while, the education and finance ministries in Denmark have provided a so-called IT Rucksack to students with reading and writing difficulties, especially for those who have been diagnosed with dyslexia. The IT Rucksack was launched as a toolkit to facilitate learning and increase productivity among students. Initially, the IT Rucksack contained a portable computer with software to make reading and writing easier, and a scanner to simplify the copying and transfer of entire texts to the computer. Since the summer of 2011, a C-Pen has also been included in the Danish IT Rucksack. With a C-Pen complementing the existing tools, dyslexics, for example, can more easily learn without the need for special learning materials. The highlighter pen works together with a large number of software programs and operating systems and makes it possible to read and listen, while the text is being scanned.

Challenge

Solution

Higher quality of learning and increased personal productivity

Introducing the C-Pen in the IT Rucksack in Denmark has proven to be a successful initiative, with a clear improvement in study results among the students who use the highlighter pen. With the help of C-Pen, students with dyslexia or other reading and writing difficulties can absorb more information and increase their rate of learning. The C-Pen has received positive feedback from teachers, parents and students who all see that the highlighter pen supports and enables learning. IT rucksacks with C-Pen have so far helped thousands of Danish children, and the goal for the project period is to double the number by 2015.

Result

The technology behind our offerings

Our basic business idea is to take full advantage of the benefits of the simple pen's handwritten text, which can be used anywhere, and the digital documents' possibilities when it comes to processing, storing and distributing information.

We have taken the benefits from the traditional pens and built them into Anoto's digital pens, which can register handwritten texts and illustrations. Compared with a traditional pen, our pen can transfer the entered data to a computer. This gives users the possibility of registering and transferring information directly at the source, without big demands on computers and networks. This reduces duplicate work and the risk of error. In short, we offer a simple, fast, secure, effective and mobile solution to make handwritten data easily accessible.

Our business is based on digital pens available in a variety of models. Most of them can be used for writing, but primarily the built-in infrared camera and image processing technology captures and stores entries and notations digitally – notations that via cable or Bluetooth and the global mobile phone network can be transmitted to a computer anywhere in the world.

The camera registers the pen's movements across a pattern of almost invisible dots on a writing surface, such as a paper form, whiteboard, flip chart or book. The dot pattern is supplied as a data file, enabling users to publish or print their unique dot pattern on regular paper or other writing surface.

THE COORDINATE SYSTEM ALLOWS FOR SOUND, TEXT AND IMAGE TRANSFER

The dot pattern makes it possible to attach voice comments captured by a built-in microphone on some of the pen models to a note or illustration. These comments, or for that matter other sound files, can also be played back with small speakers that come with some of the pen models.

Anoto's unique dot pattern consists of tiny, nearly invisible dots printed on a grid. The dot pattern codes x and y coordinates in a large contained area. Anoto's dot pattern can be printed on regular paper with the help of a regular printer. Images and text can be printed on top of the unique pattern.

We are also taking our technology a step further by working together with partners to apply our unique dot pattern to other writing surfaces, such as educational texts, whiteboards, flip charts and notebooks.

We patent our solutions to protect them and so that our partners feel secure in their cooperation with us. Because patent management is so central to our business, we have a dedicated internal patenting department, which in addition to registering new patents and protecting existing patterns, also monitor our more than 380 patents and 130 patent applications.

Anoto's unique dot pattern is made up of small black dots that are read by the digital pen. On one A4 page, there are about 700,000 dots.

TECHNOLOGICAL DEVELOPMENT AND FUNCTIONALITY

We are continuously refining our primary innovation from absolute positioning to digital pens for different types of surfaces. In 2012 we will also conduct a comprehensive review of our product positioning, product packaging and brand presence. Several new pen products will be developed with improved functionality for existing customer segments but also more differentiated pen products for new niche markets with a focus on fieldwork.

Anoto is close to customers

Anoto has its own sales organization with representatives in Sweden, Japan, the United States and the United Kingdom. The organization works largely via a global partner network with primarily Business Solutions but also directly towards customers in Technology & Licensing.

Our partners in Business Solutions are primarily suppliers of solutions for pen-based applications which means there are often additional operators, such as systems integrators, participating in the process. These systems integrators are a component of the sales process, especially with specific customer segments, as they are knowledgeable in the systems used within healthcare, for example. But they are also a target group for closer cooperation with Anoto in the future.

Clear strategies lead to a clear vision

We were pioneers in developing a natural tool – the pen – for data capturing. Now our vision is to digitalize all handwriting, which offers a number of benefits when it comes to storing and spreading the data. We want to set the global standard in this field. This will help us strengthen our leading position and keep us "top of mind" among customers and end users and increase our sales. We will also have significant external advantages that reduce our costs.

We will achieve our vision through our mission: Becoming the leading mobile data capture solution for handwriting that offers the best result and saves time and money. We call it Anoto Solutions – a concrete offering that is easy to purchase, install and use.

Vision
		Mission
Anoto Solutions
Active global sales	Development	Shorter route to end users	Vertical integration

THE STRATEGIES

Our work to reach the vision can be summarized in four main strategies:

Active global sales

We work actively towards the private and public market segments where our technology can achieve the maximum benefits – in healthcare and field services. We are also focusing on the global OEM companies working in the field of education.

During the year, we strengthened our focus in the above-mentioned markets by positioning dedicated people in each respective segment with global responsibility for packaging the offerings, the sales strategies, market activities, etc. The work to establish a partner network in the education sector in Europe has begun and is an important component in how we approach schools and universities with our offerings.

Development/offering

We continuously develop the most intuitive mobile data capturing solution – the digital pen that transmits data wirelessly. We also develop software applications to offer business customers a complete solution and tool for partners who want to develop their own solutions for their end users.

Through acquisitions this year in the United Kingdom and the United States, we have strengthened our internal sales force, expanded our offerings and gained better insight into end user needs and expectations.

A shorter path to the end users

In order to better be able to deliver complete, finished solutions to users, we are seeking a closer cooperation with selected customers and partners. This will allow us to better use parts of already developed software platforms and industrialize the development processes. This will give end users a more attractive price, while it secures our margins and our partners' margins. It also enables a direct dialog with end users, which in turn speeds up the decision-making process in connection with new business deals and the development of our products.

Vertical integration through acquisitions

We will also continue our work with strategic acquisitions. The focus will be on selected partners in our prioritized market segments that can offer a complete solution for data capturing. This moves us closer to the end users and their needs. We can also consolidate a fragmented market and set the standard for the industry, which will positively affect our partners' profitability.

In 2011 we acquired 51 percent of Destiny Wireless Ltd. in the United Kingdom, which means that we can now offer a software platform for digital pens and a complete solution for data capturing to business customers.

At the end of the period, we acquired 100 percent of the shares in the unlisted British company Ubiquitous Systems Ltd. (Ubisys). The company has been a partner in Anoto's network for many years. With this acquisition, the Group takes a step up the value chain and a step closer to the end users.

We also acquired Xpaper technology from the US-based company Talario, with the aim of integrating Talario's application for document printing and components for document capture in our offering. This makes it possible for general use of Anoto's technology with documents or forms that can be printed from any kind of software program. This means faster and easier adaptation to personal and professional work flows.

THE CAPACITY TO DELIVER

We have good opportunities to successfully implement our strategies. We know the market and our proposed partners well. In addition, we have a competent organization that can analyze the alternatives. We also have the financial strength to handle a limited number of acquisitions. These plans are bolstered by the possibility to, in the same way as with the Destiny acquisition, offer the whole or part of the purchase sum with buy-backs or new emissions, in step with Anoto's market value development.

Business Overview 2011

During 2011 more than 40 000 people started using solutions for mobile data collection based on Anoto digital pen and paper technology. The solutions are sold through our worldwide network of partners and system integrators. The needs of businesses and governments to reduce their expenses related to document management is greater than ever and more and more businesses realize that the digital pen and paper is a cost effective way to collect data.

Sales for the period fell from 208 to 192 million. The decrease is primarily attributable to the sale of pens to customers who work with interactive solutions and C-Pen clients.

Gross margin increased as a result of a product mix with a higher proportion of licensing and royalty revenues, from 67 to 71 percent, which resulted in gross profit being only 3 million lower than last year.

Despite an improved EBITDA, from -4 to 5 million the cash flow was -57 million. A significant proportion, 15 million, relate to payments made in 2011 from the restructuring program implemented in 2010, in order to reduce the Group's operating expenses. Furthermore, investment, and the increase of customer receivables contributed to the negative cash flow. Profit after tax amounted to -244 (-77) million, including impairment of goodwill of SEK 230 million.

Excluding this year's writedowns and restructuring costs, the loss is 4 million, which represents an improvement of 23 million compared to last year. See table on the following page.

BUSINESS OVERVIEW 2011

Application
area:	Business Solutions	Technology Licensing	C Technologies
Highlights: 2011	Business Solutions focus on business to business solutions, services and prod ucts, primarily within digitized forms handling Destiny Wireless was awarded a contract with British Airways for	Customers within Technology Licensing primarily develops and sells their own products based on Anoto technology and digital pens A JV (Pen Generations) was founded in South Korea together	C Technologies develops and markets C-Pen® which captures and transfers printed information to computers and smartphones New relationships with retailers who has a focus within education
	550 users within aircraft turn around Digitalpen Corporation have installed 700 pens in Swiss hostpitals In the fourth quarter Anoto was awarded its largest single order so far (a Japanese insurance company) The Northern Irish police have continued the implementation of the digital pen solution and now has more than 4,000 active users in its police force Acquisition of our bestselling partner, Destiny Wireless, during the third quarter 9,000 pens were used in the French Socialist party´s primary election	with TStudy and Amicus Wireless. The JV will work alongside with Anoto on product and business development 30,000 modules for USB pens delivered during the year During the fourth quarter 13,000 pens were delivered to interactive whiteboard customers Development of DP-601 for education completed in coopera tion with our JV, Pen Generations, in South Korea. The pen is now ready for mass production New agreement with our US partner Livescribe opening up new markets to them	have been established in Sweden and UK Product development including an embedded text to speech engine for dyslectics and visually impaired people completed Launch of C-Pen Mobile with Android support During the fourth quarter we received a new order from Crealogix of 1 MEUR
Net sales: 2011:	MSEK 100	MSEK 63	MSEK 19
Gross profit 2011:	MSEK 75	MSEK 48	MSEK 9

Business Solutions Technology Licensing C Technologies

Flexible employees with a clear focus

Anoto operates in a market environment where developing products with high customer value is conditioned upon the ability to quickly adapt to changes in the world around us. It's about being receptive and able to adapt activities to technological leaps and changing customer behaviors.

We have four clear values that infuse everything we do. By working together, focused and effectively with our partners' best interest in mind, we will be successful.

• We act with integrity
• We value knowledge
• We work pragmatically
• We put the customer in focus

GUIDELINES KEEP US HEADED IN THE RIGHT DIRECTION

To realize our business concept, we need diverse and competent employees who are committed to their work and have a good understanding of communicating with people from different cultures and with a variety of backgrounds, regardless of gender. We want to be a good employer and offer a developing and creative workplace where employees are under no circumstances discriminated against. We have a clear policy with regards to equality, gender equality and anti-discrimination. At Anoto we also try to foster and preserve an open and direct communication with all of our stakeholders.

PRIORITIES INCLUDE CONTINUOUS DEVELOPMENT AND KNOWLEDGE TRANSFER

The competency of our employees is the company's single most important asset, and we strive to apply our employees' competencies in the best possible way. Anoto works in part to secure competence development at the level of the individual, and also in the company in general. Individual development opportunities create a good foundation for a career at Anoto. At the same time, the company prioritizes projects that aim to increase and foster knowledge transfer among colleagues. Anoto's employees are well-educated; 90 percent of the employees have a higher degree. We also have a good gender balance, even if our employees on the technical side reflect the male dominance that still exists at universities and colleges. In 2011 the gender balance was 28 (31) percent women and 72 (69) percent men. At the end of the year the total number of employees was 94 (87) people.

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 January 1 – December 31, 2011 financial year.

GROUP STRUCTURE

Anoto Group AB is the parent company in the corporate business group, performing group-wide functions only to its subsidiaries. The operational activities including sales are performed by the subsidiaries Anoto AB, C Technologies AB, Anoto Inc., Anoto-Maxell K.K. and Destiny Wireless Ltd. From here on we refer to the entire business group as "Anoto", unless otherwise follows from the context.

ENTERPRISE

Anoto is high-tech company that has developed a unique technology for digital pen and paper, enabling rapid, reliable conversion of handwritten text and illustrations to digital form. The organization is divided into three application areas: "Business Solutions", "Technology Licensing" and "C Technologies". The entire business is based on digital camera technology and image processing in real time.

ANOTO APPLICATION AREAS

BUSINESS SOLUTIONS

Business Solutions focuses on systems, products and services that primarily target the field of forms processing within enterprises. Anoto has an indirect business model where we market and sell our products through business partners, often working together with system integrators, software developers and IT consulting firms. These partners then offer customized solutions based on Anoto's technology to their customers.

Business Solutions had a positive development during the year. The Net sales increased by MSEK 20 compared to the previous year and totaled MSEK 100 in 2011. The business of Destiny Wireless Ltd. has been included in the consolidation of Anoto from the 1st of September, contributing with a total Net sales of MSEK 16. Excluding this business, the underlying growth within Business Solutions was accordingly MSEK 4.

With the acquisition of a majority of the shares in Destiny Wireless Ltd., Anoto has taken a step up in the value chain, thereby being in closer contact with the end users of our products and services. Through the acquisition, Anoto now has gained access to a platform for managing development and operation of individual customer forms management, rendering volume based and recurring revenue streams.

One of our Japanese partners awarded us with our largest single order ever within Business Solutions. The order, originating from a Japanese insurance company, is an important milestone on the Japanese market which will contribute to increased attention to our digital pen technology.

In the fourth quarter we agreed to acquire software technology named Xpaper from US based Talario, LLC. The Xpaper software solution makes it easy to apply Anoto's digital pen and paper technology to standardized software applications and associated documents. The objective is to incorporate the Xpaper technology in our basic offerings, making it easy for end users to print virtually any document and subsequently capture what's written with a digital pen on the document in PDF format. The acquisition was completed during January 2012.

TECHNOLOGY LICENSING

Customers within Technology Licensing develop and sell products based on technology and digital pens provided by Anoto.

These 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 in books, on paper, whiteboards and flipcharts. The end customers are individual consumers as well as enterprises.

The Net sales within Technology Licensing was MSEK 18 below previous year, totalling MSEK 63. The partnership that was initialized in late 2009, with TStudy Co Ltd in South Korea, has developed as planned throughout the year and Anoto has delivered a large number of pens to TStudy for use within education solutions. Anoto has during the year, together with Pen Generations, completed the development of DP601, a digital pen with buffer memory and Bluetooth. This pen will be used together with Symphony, TStudy´s software for use in a classroom environment.

The development within whiteboard applications, using Anoto technology, were not in line with our expectations for the year. One of our customers purchased, in the fourth quarter of 2010 and the first quarter of 2011, a large quantity of pens, hoping to be in a position for winning a couple of large public tenders. As the customer did not succeed in winning any of the tenders a significant inventory was built up, affecting our sales to this customer during the second and third quarter. During the fourth quarter Anoto again delivered pens for use within the whiteboard market.

Partners having developed their own products based on Anoto technology, i.e. Livescribe and Leapfrog, have during the experienced a development somewhat below our expectations. Total royalty income, including royalty from Whiteboard customers were still MSEK 2 above previous year.

C TECHNOLOGIES

C Technologies develops, manufactures and sells handheld scanner solutions with character recognition software. The products capture printed information such as text, numbers and codes, interpret the images to characters, and transfer the characters to other applications in personal computers and smart-phones. The products are available under the C-Pen brand as well as in OEM-branded versions.

The Net sales within C Technologies was MSEK 17 below previous year, totaling MSEK 19 in 2011.The lower revenue depends on a weak development within consumer retail sales along with orders from OEM customers being below our expectations.

New reseller channels targeting the educational sector have been established in Sweden and UK during the year. The product offer has also been updated to incorporate a text-to-speech engine, making the product both an easy-to-use and flexible reading tool for dyslectics and visually impaired people, and moreover a tool to boost learning and reading comprehension by combining visual and audio perception. The user can thereby easily and simultaneously read and listen to text in almost any publication without any need for pre-produced digital material.

Product development, marketing and channel development within the consumer retail business are targeted at dyslectics, students and schools. Geographically, the focus remains on Scandinavia, UK and Germany.

Within the OEM business, the effort to help our existing customers to grow their respective markets remains our main focus. As a result of these efforts, as already mentioned in the year end report, we received an order worth approximately MSEK 10 from Crealogix AG in Switzerland. We have also received an order from a Chinese OEM customer for our new Android compatible solution targeting the continuously growing market of tablets and smart-phones.

SHARES AND SHAREHOLDERS

There were as per end of 2011 130,316,055 issued Anoto shares. According to Euroclear Sweden AB's statistics, there were 5,427 shareholders on December 31, 2011, representing a decrease of approximately 9 per cent over the past 12 months.

As part of the consideration related to the acquisition of the majority of shares in Destiny Wireless, Ltd., 1,732,188 Anoto shares were issued to the shareholders of Destiny Wireless.

The largest shareholders were Aurora Investment, Ltd. (23,1 per cent of the votes and capital) and Essensor AS (11.7 per cent of the votes and capital).

EMPLOYEES

The average number of employees within the Group decreased from 108 to 94 in 2011. The Group had 94 employees (87) at the year-end, including employees in the acquired Group company Destiny Wireless Ltd.

REMARKS ON THE STATEMENT OF COMPREHENSIVE INCOME

Net sales for the year decreased by eight per cent from MSEK 208 to MSEK 192.

Anoto's gross profit for the year decreased to MSEK 137 (140), and the gross margin was 71 per cent (67). The gross margin is more or less unchanged in spite of a greater portion of sold hardware, i.e. primarily digital pens. The portion of sold digital pens now represents 50 percent (58) of the total net sales.

Overhead costs decreased during 2011 by MSEK 29 compared to the previous year. The major reasons for the decrease are the restructuring of Anoto's organization during 2010 and 2011.

Anoto capitalizes non-customer financed development- and patent expenses meeting the IAS 38 criteria.A total of MSEK 4 (12) was capitalized in 2011.

The profit before depreciations and amortizations (EBITDA) in the period was MSEK 4 (-28).

In the third quarter closing Anoto made a substantial write down of the goodwill value, in total MSEK 230. The rationale behind this write down was a combination of market growth not being in line with earlier expectations combined with the changed climate on the global financial markets. Further write downs of MSEK 3 were executed in relation to the quarterly reviews of our patent portfolio.

The operating result for the year was MSEK -243 (-74).

REMARKS ON THE STATEMENT OF FINANCIAL POSITION AND THE STATE-MENT OF CASH FLOWS

The total assets decreased by MSEK 244, mainly because of the result of the year including the MSEK 233 write downs. The cash flow for the year was MSEK -57 (0). Closing cash at end of year was MSEK 24. Short term and long term liabilities have increased by MSEK 8 to MSEK 96. The liabilities include prepaid royalties of MSEK 20 for which there is no obligation for repayment or other performance .

The long term liabilities per end of 2011 include loans of MSEK 16. These loans were part of the acquired balances in Destiny Wireless.

Group Equity at the end of the year amounted to MSEK 153 compared to MSEK 395 in previous year. The equity/debt ratio at year end is 65 percent (82).

The cash flow from operating activities was MSEK -48 (15). Working capital decreased by MSEK 50 (+43). Cash flow from investment activities during the year was MSEK -9 (-15), of which MSEK -3 (-4) are related to capitalized patent expenses. The cash flow from financing activities was 0 (0). Total cash flow for the year was MSEK -57 (0).

INVESTMENTS

The net investments for the year totalled MSEK 9, of which MSEK 5 was related to the acquisition of Destiny Wireless Ltd.

RESEARCH AND DEVELOPMENT

Anoto's R&D efforts are focused on upgrading and integration of hardware and software for solutions within digital data capture using digital pens. The R&D expenses during the year were MSEK 64 (69) equivalent to 41 percent (36) of the total operating expenses. The number includes amortization of capitalized development of MSEK 1 (5).

Pursuant to its compliance with IAS 38, the Group capitalized MSEK 0 (8) during 2011. Including capitalization, the Group´s R&D expenses totaled MSEK 64 (77) for the year.

Anoto has an extensive patent portfolio. At the end of 2011, the Group had 130 active patent applications and owned 380 registered patents within the area of digital pen and paper technology.

DISPUTES

Anoto is currently not engaged in any dispute 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

LIQUIDITY AND FINANCING RISK

Anoto´s liquid assets, as cash and bank deposits, amounted at the end of 2010 to MSEK 24 (81).

The Group has, through the acquisition of Destiny Wireless Ltd, borrowings of MSEK 16. These loans are secured against the current assets of Destiny Wireless Ltd. There are no other loans in the Group and apart from the recently acquired business the Group has neither any interest bearing liabilities nor pledged accounts receivables, inventory or fixed assets. The Board of Anoto expect that the operations during 2012 can be financed by existing liquid assets without any additional borrowings from banks or other credit institutes. There are no credit promises or liquidity reserve, e.g. overdraft facilities.

CURRENCY EXPOSURE

Anoto conducts the main part of its sales internationally, and a majority of the invoicing is in EUR, USD and JPY. A significant part of the costs are in SEK and USD. Margins and earnings are sensitive to currency fluctuations, mainly against the Euro. The subsidiary Anoto AB handles all trading in financial instruments aiming at reducing the business group's currency exposure. In 2011, 51 percent of the total income was in USD and 23 per cent was in EUR. Refer to Note 4 for a detailed description of the company's risk management policies.

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. For additional information about credit risks in accounts receivable, refer to Note 27. The financial credit risk is managed as part of the Anoto's finance policy.

INSURANCE RISK

Anoto's insurance coverage is reviewed annually with respect to traditional business insurance policies for property, liability, travel, etc. Anoto's insurance policy for patent disputes expired in 2005 and has not been renewable on reasonable terms.

However, claims 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's 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 that Anoto infringes their intellectual property rights, and may do so also in the future. 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, to modify its products and technology, and/or to enter into license agreements with licensors. Anoto cannot guarantee that such licenses will be available at all or be possible to obtain on reasonable terms. Anoto cannot guarantee that such licenses will be available at all or be possible to obtain on reasonable terms.

EMPLOYEE POLICIES

To realize Anoto's business concepts, we depend on a multitude of skilled employees who are wholeheartedly engaged in their work and who have a good understanding of the communication between people from different cultures and backgrounds. We strive to make use of all of our employees' competences in best possible ways. No employee should under any circumstance be discriminated against. We apply a clear policy on gender equality, equal opportunities and anti-discrimination. We strongly encourage an environment of respect and honesty, with open and clear communication by and between all parties involved in Anoto's business.

In a knowledge based company like Anoto, employee competences are our most important assets. Without constantly adding knowledge to the workforce and allowing the transfer of knowledge between colleagues, the company cannot develop. Competence development is therefore a priority at Anoto. Development plans are determined individually to ensure that the goals and ambitions of both the employees and the company are aligned.

THE BOARD AND ITS RULES OF PROCEDURE

The Anoto Group AB Board of Directors consists of five regular members. Refer to the section entitled "Corporate Governance Report" for a detailed account of the Board's composition and working methods.

The 2011 Annual General Meeting authorized the Board to decide on one or more directed share issues totaling 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 2011 appears in Note 9, "Salaries and other remunerations". The Board has proposed to the Annual General Meeting that the guidelines on remuneration for senior executives remain unchanged in 2012.

SIGNIFICANT EVENTS AFTER YEAR-END

ACQUISITION OF UBIQUITOUS SYSTEMS LTD

On the 12th of January 2012, Anoto acquired 100% of the shares in the unlisted company Ubiquitous Systems Ltd., payable in shares in Anoto Group AB corresponding to a value of MSEK 12.8. Ubiquitous Systems has been a long standing partner within the Anoto network, active within the application area Business Solutions. Through the acquisition, Anoto moves further up in the value chain and takes another step closer to the end-user markets where Anoto's services and products areutilized. The estimated effect on Anoto's Net sales from this acquisition is MSEK 10 p.a. The balance sheet is not yet finalized but the estimated effect on Anoto's goodwill from this acquisition is MSEK 12.8. Anoto issued 4,706,324 shares as consideration for the acquisition of the shares in Ubiquitious Systems Ltd.

ACQUISITION OF XPAPER

On the 16th January 2012, the Board of Anoto decided to issue shares in Anoto Group AB for the acquisition of Xpaper technology from US partner Talario, LLC. corresponding to a value of MSEK 5.1. The Xpaper software makes it easy to apply Anoto's pen and paper technology to standardized software applications and associated paper documents. The objective is to incorporate Talario's document management technology in Anoto's core offerings. The estimated initial effect on Anoto's Net

sales from this acquisition is MSEK 2 p.a. The acquired software will be booked as an intangible asset and amortized over the estimated useful lifetime. Anoto issued 2,014,702 shares as consideration for the acquisition of the Xpaper technology.

OUTLOOK

During 2011 the Anoto management team has worked out a revised strategy with the purpose of achieving a stronger position on the mobile data capture market. As a part of this strategy Anoto has during 2011 acquired 51 percent of the shares in our bestselling UK based partner Destiny Wireless Ltd. After the end of the year we have completed two additional acquisitions positioning ourselves for taking an active role in driving the development and packaging of offerings for mobile data capture solutions within markets and verticals where we see a great potential for the use of our technology, We will going forward continuously review potential strategic acquisitions and partnerships alongside and continue the development of our product portfolio.

Anoto´s weak cash flow during 2011 is mainly related to the restructuring during 2010, payments related to acquisitions and an increase in working capital. However, we expect improved cash flow as a consequence of previous cost reductions and improved sales. We have received orders for delivery in the first half of 2012 and combined with new products within Education as well as higher activity within Business Solutions we expect sales to increase in 2012. The Board´s and the management team´s view is that Anoto's cash position will be sufficient to support our business in the coming twelve months

PROPOSED APPROPRIATION OF ACCUMULATED RESULT

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

Total	-234,563,307
Loss for the year	-239,702,392
Profit brought forward	0
Share premium reserve	5,139,085

The Board of Directors and CEO propose that the accumulated deficit of SEK 234,563,307 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.

STATEMENT OF COMPREHENSIVE INCOME

			Group
(SEK Thousand)	Note	2011	2010
Net sales	5	192,286	208,395
Cost of goods and services sold	11	-55,719	-68,303
Gross profit/loss		136,567	140,092
Selling expenses	8, 9, 14, 31, 33	-65,281	-96,457
Administrative expenses	8,9,10,14,31,33	-25,975	-23,188
Research & development costs	8, 9, 14, 33	-62,649	-68,826
Other operating income	12	10,816	4,727
Other operating costs	13	-236,458	-30,823
Operating profit/loss	11	-242,980	-74,475
Financial income	16	155	420
Financial cost	16	-1,024	-3,217
Profil/loss before taxes		-243,849	-77,272
Taxes	17	-30	-54
Profit/Loss for the year		-243,879	-77,326
Other comprehensive income/cost
Translation differences for the year		-1,253	1,049
Tax attributable to items in other comprehensive income/cost		0	0
Other comprehensive income/cost for the year		-1,253	1,049
Total comprehensive income/cost for the year		-245,132	-76,277
Total profit/loss for the year attributable to:
Shareholders of Anoto Group AB		-246,274	-75,527
Non-controlling interest		2,395	-1,799
Total profit/loss for the year		-243,879	-77,326
Total comprehensive income/cost for the year attributable to:
Shareholders of Anoto Group AB		-246,949	-74,342
Non-controlling interest		1,817	-1,935
Total comprehensive income/cost for the year		-245,132	-76,277
Earnings per share before and after dilution (SEK)1) 2)		-1,89	-0,60
Earnings per share on total comprehensive income/cost before and after dilution (SEK)1) 2)		-1,89	-0,59
Weighted average number of shares		129,161,263	128,583,867
Weighted average number of shares after dilution		129,161,263	128,583,867

1) Profi/Loss for the year attributable to shareholders of Anoto Group AB divided by the average number of shares during the year

2) Profit/Loss for the year attributable to shareholders of Anoto Group AB divided by the sum of the weighted average number of shares during the year and the weighted average number of outstanding warrants whose exercise price was less than the closing share price for the year.Warrants give rise to a dilutive effect only when their conversion to shares generates poorer earnings per share (IAS 33, Earnings per share).There were no outstanding warrants at the year end 2010.

STATEMENT OF FINANCIAL POSITION

	Group
(SEK Thousand) Note	2011-12-31	2010-12-31
ASSETS
Non-current assets
Intangible fixed assets
Capitalized development expenditures 18	3,100	3,060
Patents 19	15,355	22,221
Goodwill 22	96,875	298,674
Brands 20	858	762
Other intangible assets 21	2,551	3,897
Total intangible fixed assets	118,739	328,614
Property, plant and equipment
Equipment and tools 23	6,910	8,943
Total property, plant and equipment	6,910	8,943
Financial fixed assets
Other long-term securities 25	200	373
Other long-term receivables 26	1,286	1,768
Total financial fixed assets	1,486	2,141
Total non-current assets	127,135	339,698
Current assets
Inventory
Finished goods and goods for sale	27,236	25,306
Current receivables
Accounts receivable 27	39,138	19,139
Other receivables	7,286	9,102
Prepaid expenses and accrued income 28	11,363	5,501
Total current receivables	57,787	33,742
Liquid assets	23,941	81,044
Total current assets	108,964	140,092
TOTAL ASSETS	236,099	479,790

STATEMENT OF FINANCIAL POSITION

		Group
(SEK Thousand)	Note	2011-12-31	2010-12-31
SHAREHOLDERS´ EQUITY AND LIABILITIES
Shareholders´ equity	38
Share capital		2,606	2,572
Other capital contributed		453,648	448,508
Other reserves		433	1,108
Profit brought forward and Profit/loss for the year		-303,699	-57,425
Equity attributable to the shareholders of Anoto Group AB		152,988	394,763
Non-controlling interest		-13,074	-3,160
Long-term liabilities/Provisions
Long-term interest bearing liabilities	32	15,695	0
Advance payments from customers		9,903	19,806
Total long-term liabilities/provisions		25,598	19,806
Current liabilities
Provisions for product warranties	31	240	829
Accounts payable		20,470	15,562
Advance payments from customers		14,871	19,150
Other liabilities		6,790	7,384
Accrued expenses and deferred income	30	28,216	25,456
Total current liabilities		70,587	68,381
TOTAL SHAREHOLDERS´ EQUITY AND LIABILITIES		236,099	479,790
Pledged assets	34	2,745	30,933
Contingent liabilities	35	2,140	2,002

STATEMENT OF CASH FLOWS

.

			Group
(SEK Thousand)	Note	2011	2010
OPERATING ACTIVITIES	39
Profit after financial items		-243,849	-77,272
Change in provisions		-589	123
Depreciation and amortization on assets	18, 19, 20, 21, 22, 23	13,600	15,924
Impairment losses of fixed assets	18, 19, 20, 21, 22, 23	233,329	33,701
Tax paid	17	-30	-54
Cash flow from operating activities before change
in working capital		2,461	-27,578
Cash flow from change in working capital
Change in operating receivables		-23,426	37,302
Change in inventory		-1,930	4,226
Change in operating liabilities		-24,950	1,358
Total change in working capital		-50,306	42,886
Cash flow from operating activities		-47,845	15,308
Capital expenditure
Capitalized development expenditures	18	-398	-7,943
Patents	19	-2,657	-4,096
Brands	20	-220	-252
Equipment and tools	23	-810	-2,743
Shares in group companies	40	-5,173	0
Cash flow from net capital expenditures		-9,258	-15,034
Total cash flow before financing activities		-57,103	274
Financing activities
Change in long-term receivables		0	0
Change in long-term liabilities		0	0-
Cash flow from financing activities		0	0
Cash flow for the year		-57,103	274
Liquid assets at beginning of the year		81,044	80,770
Liquid assets at end of the year		23,941	81,044

STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY

	Share	Other capital	Translation	Profit brought forward incl. profit	Shareholders´ equity contributable to the shareholders of	Non controlling	Total share holders´
(SEK Thousand)	capital	contributed 1)	reserve 2)	for the year	Anoto Group AB	interest	equity
SHAREHOLDERS´ EQUITY
Shareholders´ equity January 1, 2010	2,572	448,508	-77	18,102	469,105	-1,225	467,880
Total profit/loss for the year		-	-	-75,527	-75,527	-1,799	-77,326
Other comprehensive income/cost		-	1,185	0	1,185	-136	1,049
Total comprehensive income/cost for the year		0	1,185	-75,527	-74,342	-1,935	-76,277
Shareholders´ equity December 31, 2010	2,572	448,508	1,108	-57,425	394,763	-3,160	391,603
Total profit/loss for the year				-246,274	-246,274	2,395	-243,879
Other comprehensive income/cost			-675		-675	-578	-1,253
Total comprehensive income/cost for the year		0	-675	-246,274	-246,949	1,817	-245,132
Acquisitions for the year					0	-11,731	-11,731
New share issue	34	5,140			5,174		5,174
Shareholders´ equity December 31, 2011	2,606	453,648	433	-303,699	152,988	-13,074	139,914

1) 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.

2) From translation of Financial reporting from foreign subsidiaries

INCOME STATEMENT

			Parent company
(SEK Thousand)	Note	2011	2010
Net sales		9,128	4,509
Cost of goods and services sold		0	0
Gross profit/loss		9,128	4,509
Selling expenses	8, 9, 14, 31, 33	0	0
Administrative expenses	8, 9, 10, 14, 31, 33	-8,262	-4,106
Research & development costs	8,14, 33	0	0
Other operating income	12	0	4
Other operating costs	13	0	0
Operating profit/loss	11	863	407
Profit/loss on shares in group companies	15	-240,570	-46,000
Interest and similar income	16	4	3
Interest and similar expenses	16	0	0
Profil/loss before taxes		-239,703	-45,590
Taxes	17	0	0
Profit/loss for the year		-239,703	-45,590

STATEMENT OF COMPREHENSIVE INCOME

			Parent company
(SEK Thousand)	Note	2011	2010
Profit/loss for the year		-239,703	-45,590
Other comprehensive income/cost		0	0
Total comprehensive income/cost		-239,703	-45,590

BALANCE SHEET

			Parent company
(SEK Thousand)	Note	2011-12-31	2010-12-31
TILLGÅNGAR
ASSETS
Non-current assets
Intangible fixed assets
Patents	19	344	463
Brands	20	37	44
Total intangible fixed assets		381	507
Property, plant and equipment
Equipment and tools	23	27	49
Total property, plant and equipment		27	49
Financial fixed assets
Shares in group companies	24	70,136	267,194
Receivables - group companies		110,000	77,505
Total financial fixed assets		180,136	344,699
Total non-current assets		180,544	345,255
Current assets
Current receivables
Receivables from subsidiaries		0	62,215
Other receivables		4	3
Prepaid expenses and accrued income	28	229	155
Total current receivables		233	62,373
Liquid assets		325	1,042
Total current assets		558	63,415
TOTAL ASSETS		181,102	408,670
SHAREHOLDERS´ EQUITY AND LIABILITIES
Shareholders´ equity	38
Restricted equity
Share capital		2,606	2,572
Statutory reserve		404,690	419,610
Total restricted equity		407,296	422,182
Non restricted equity
Share premium reserve		5,140	28,555
Profit brought forward		0	2,115
Profit/loss for the year		-239,703	-45,590
Total non restricted equity		-234,563	-14,920
Equity attributable to the shareholders of Anoto Group AB		172,733	407,262
Current liabilities
Accounts payable		922	22
Liabilities to group companies		4,370	0
Other liabilities		1,512	363
Accrued expenses and prepaid income	30	1,565	1,023
Total current liabilities		8,369	1,408
TOTAL SHAREHOLDERS´ EQUITY AND LIABILITIES		181,102	408,670
Pledged assets	34	0	0
Contingent liabilities	35	0	0

CASH FLOW STATEMENT

	Parent company
(SEK Thousand)	Note	2011	2010
OPERATING ACTIVITIES	39
Profit after financial items		-239,702	-45,590
Depreciation and amortization on assets 14, 18-23		147	189
Impairment of shares in group companies	15	240,570	46,000
Cash flow from operating activities before change in working capital		1,015	599
Cash flow from change in working capital
Change in operating receivables		19,775	45,847
Change in operating liabilities		6,353	-46,686
Total change in working capital		26,128	-839
Cash flow from operating activities		27,143	-240
Patents	19	0	-4
Brands	20	0	0
Equipment and tools	23	0	0
Acquisitions of shares in Group companies		-33,000	0
Cash flow from net capital expenditures		-33,000	-4
Total cash flow before financing activities		-5,857	-244
New share issue		5,140	0
Cash flow from financing activities		5,140	0
Cash flow for the year		-717	-244
Liquid assets at beginning of the year		1,042	1,286
Liquid assets at end of the year		325	1,042

CHANGES IN SHAREHOLDERS´ EQUITY

			Total	Share	Profit brought	Total
(SEK Thousand)	Share capital	Statutory reserve	Restricted equity	premium reserve	forward incl profit for the year	unrestricted equity	Total equity
Shareholders´ equity January 1, 2010	2,572	419,610	422,182	28,555	2,115	30,670	452,852
Total profit/loss for the year			0		-45,590	-45,590	-45,590
Other comprehensive income/cost			0			0	0
Total comprehensive income/cost
for the year	0	0	0	0	-45,590	-45,590	-45,590
Shareholders´ equity December 31, 2010	2,572	419,610	422,182	28,555	-43,475	-14,920	407,262
Total profit/loss for the year					-239,703	-239,703	-239,703
Other comprehensive income/cost					0	0	0
Total comprehensive income/cost
for the year	0	0	0	0	-239,703	-239,703	-239,703
Vinstdisposition		-14,920	-14,920	-28,555	43,475	14,920	0,
New share issue	34		34	5 140		5 140	5 174
Shareholders´ equity December 31, 2011	2,606	404,690	407,296	5,140	-239,703	-234,563	172,733

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

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

		Parent company
(SEK Thousand)	2010	2009
Registered opening balance	128,583,867	128,583,867
New share issues	1,732,188	-
Registered closing balance	130,316,055	128,583,867
Par value (SEK)	0,02	0,02

NOTES (SEK thousand unless otherwise indicated)

Note 1 | General accounting policies

The consolidated accounts of Anoto Group AB (publ.) (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 "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, "Accounting for legal entities". In addition, Swedish Financial Reporting Board statements applicable for listed

companies are observed. The consolidated and annual accounts, which are specified in thousands of Swedish kronor (SEK Thousand), refer to January 1 – December 31 for income statement items and December 31 for balance sheet items.

The annual report and consolidated accounts have been approved fordistribution by the Board and the CEO on April 17, 2012. The Group´s statement of comprehensive income and statement of financial position, and the parent company´s income statement and balance sheet, will be subject to approval by the Annual General Meeting on May 10, 2012.

Note 2 | Anoto's accounting policies

THE GROUP

Significant accounting policies applied

Other than the revaluation of certain financial instruments, assets and liabilities are based on historical cost.

The parent company´s functional currency, Swedish kronor (SEK), is also the reporting currency for the Group.

Below is a summary of the accounting principles used by the Group. The accounting principles have, with the exceptions described, been applied consequently to all periods presented, in the Group´s financial reports. The Group accounting policies have been applied accordingly by all Group companies.

Assessments and applications in the financial reports

Preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, revenues and expenses.Actual results may differfrom these estimates.

Estimates and assumptions are reviewed periodically. Changes in estimates are recognized in the period in which it is revised if the revision affects only that period, or the period in which the revision is made and future periods if the revision affects both current and future periods.

Classification etc.

Fixed assets and financial liabilities consist of amounts expected to be recovered or settled after more than twelve months from the closing date. Current assets and currentliabilities consist of amounts to be recovered or paid within twelve months from the closing date.

Consolidated accounts

The consolidated accounts cover Anoto Group AB (publ.), the parent company, and the companies in which the parent company has a controlling interest. Controlling interest means the direct or indirect right to outline a company´s financial and operational strategies in order to achieve economic benefits. In determining whether a controlling influence exists, potential voting rights that are exercisable or convertible are considered.

Acquisitions as from January 1, 2010

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. Transaction costs that arise, with the exemption of transaction costs arising from issues of equity instruments or debt instruments, are recognized directly in profit or loss for the year.

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. When the difference is negative, a so called bargain purchase, this is recognized directly in profit or loss for the year.

Transferred consideration in connection with the acquisition does not include payments that applies to settlement of previous business relations. This type of settlement is recognized in profit or loss.

Contingent payments are reported at fair value on the acquisition date. In cases where a contingent payment is classified as an equity instrument, no revaluation is done, and settlement is done in equity. Other contingent payments are revalued at every reporting date, and the change is recognized in profit or loss for the year.

In companies that are not wholly owned subsidiaries, non-controlling interests are recognized. There are two alternative ways for reporting noncontrolling interests, either as the proportionate share of net assets or at fair value meaning that goodwill is included in the non-controlling interest. The choice of method can be made individually for each acquisition.

Acquisitions made between January 1, 2004 and December 31, 2009 Acquisitions made between January 1, 2004 and December 31, 2009 and when the historical cost exceeds the fair value of assets paid and overtaken liabilities as well as contingent liabilities, which are recognized separately, the difference is reported as goodwill. When the difference is negative, this is recognized directly in profit or loss for the year. Transaction costs, with the exemption of transaction costs arising from issues of equity instruments or debt instruments, have been capitalized as part of the acquisition.

Acquisitions made before January 1, 2004 (date of first-time adoption of IFRS) On acquisitions made before January 1, 2004 goodwill has, after impairment testing, been reported to a historical cost equivalent to recognized value according to previous accounting policies. The classification and the handling in the accounts of the acquisitions made before January 1, 2004 has not been reviewed in accordance with IFRS 3 when preparing the opening balance of the Group according to IFRS on January 1, 2004.

Financial statements of subsidiaries are consolidated from the date of acquisition until the date that control ceases.

In cases where the subsidiary's accounting policies do not comply with Group accounting policies, adjustments are made to the Group's accounting policies.

Losses attributable to non-controlling interest is distributed even in cases where non-controlling interest will be negative.

Acquisition of non-controlling interest

Acquisition by non-controlling interest is recognized as a transaction in equity, i.e. between the owners of the parent company (within retained earnings) and non-controlling interest.Therefore, no goodwill arise on these transactions.The change in non-controlling interest is based on its proportionate share of net assets.

Divestment to non-controlling interest

Sales to non-controlling interest, in which control remains, reported as a transaction inequity, i.e. between parent company and non-controlling interest. The difference between the price received and the non-controlling interests proportionate share of net assets acquired is recognized in retained earnings.

Elimination of intra-Group transactions

All intra-Group transactions are eliminated in the consolidated accounts. IntraGroup transactions include internal sales, profits and balances, as well as shareholders' contributions to Group companies and impairment losses on participations in Group companies.

Transactions in foreign currencies

A functional currency is assigned to each foreign subsidiary. The functional currency is the currency of the primary economic environment in which the companies carry out their business.

Monetary assets and liabilities in foreign currencies are translated to the functional currency to the exchange rate in effect on the balance sheet date. Exchange rate differences arising from translation are recognized against profit or loss for the year. Non-monetary assets and liabilities recognized at historical costs are translated at the exchange rate at the time of the transaction. Nonmonetary assets and liabilities recognized at fair values are translated at the functional currency to the exchange rate applicable at the time of valuation to fair value.

The financial reports of 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, including goodwill and other consolidated surpluses and deficits and at the average exchange rate for all items included in the result.

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 reported separately in the statement of comprehensive income as translation differences for the period and are accumulated in the equity as translation reserve. In the event that the foreign operation is not wholly owned the translation difference is distributed to non-controlling interests based on its proportionate share of ownership. If control,significant influence or joint control ceases in a foreign operation, the translation differences attributable to the entity are realised and they are reclassified from revaluation reserve in equity to net income. In case of a divestment where control remains, a pro rata share of cumulative translation adjustments is transferred from revaluation reserve to non-controlling interest.

			Average exchange rate	On balance sheet date
Country	Currency	2011	2010	2011	2010
United States	USD	6,497	7,205	6,923	6,803
Japan	JPY (100)	8,166	8,221	8,918	8,345
Great Britain	GBP	10,52	11,126	10,677	10,548

Exchange rates used at recalculation of foreign subsidiaries, see table above.

Revenue recognition

Revenue is received from product sales, licenses, royalties and development projects. Revenue from product sales is recognized 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.

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

Financial income and expenses

Financial income includes interest income on funds invested (including available assets held for sale), dividend income, gains on disposals of financial assets held for sale, profits from the value of financial assets at fair value through profit and loss on hedging instruments recognised in result for the year.

Interest income on financial instruments is recognized using the effective interest method (see below). Dividend income is recognized when the right to receive payment is established. Profit from sale of financial instruments are recognized when the risks andbenefits associated with ownership of the instrument is transferred to the buyer and the Group no longer controls the instrument.

Financial expenses comprise of interest expense on borrowings, the effect of dissolving the present value of provisions, revaluation losses on financial assets valued at fair value through profit or loss, impairment of financial assets and losses on hedging instruments recognised in net income. Borrowing costs are recognised in earnings using the effective interest method, except to the extent they are directly attributable to the acquisition,construction or production of assets that take a substantial period of time to get ready for intended use or sale, in which case they are part of the acquisition value.

Exchange gains and losses are reported net.

The effective rate is the rate that exactly discounts estimated future cash payments undera financial instrument's expected life of the financial asset or liability's net carrying amount.The calculation includes all fees paid or received by the contractors who are part of the effective interest rate, transaction costs and all other premiums or discounts.

Intangible assets

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. As described in note 23 the Group has no independent cash-generating units and the Group as a whole is viewed as a cash-generating unit, thus there has been no split of the goodwill amount. 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.

Regarding goodwill acquired before January 1, 2004 : The Group has at the transition to IFRS not adopted IFRS retrospectively as per the transition date. Reported net book value thus equals net book value as per January 1, 2004 having considered periodic impairment testing.

Research and development

Expenses for research related to acquiring new scientific or technical knowledge are expensed immediately as they occur. Expenses for development, where the results from research or other knowledge are applied to achieve new or improved products, are reported as an asset in the statement of financial position if the product is technically or commercially useful and if the company has sufficient resources to complete the development and thereafter use or market the immaterial asset. The reported value includes all directly attributable expenses, such as material and services, payroll and registration of legal

rights. Other expenses related to development are expensed directly as they occur. In the statement of the financial position development expenses are reported at actual cost less accumulated amortization and write-downs.

Other intangible assets

Other intangible assets acquired by the Group mainly relates to patents, brands and licenses and are reported at acquisition cost less accumulated amortizations and write-downs.

Subsequent expenses

Subsequent expenditure on capitalized intangible assets are recognized as an asset in the statement of financial statement only when it increases the future economic benefits for the specific asset to which they relate.All other expenditure is expensed as incurred.

Tangible fixed assets

Property, plant and equipment consisting of equipment, computer equipment and computer programs is reported at accumulated depreciation according to plan and any impairment losses. Acquisition cost includes purchase price and expenses directly attributable to the bringing of the asset to its use as intended with the acquisition. Other expenses are added to the acquisition cost only if it is probable that such expenses will lead to future economic benefits and if such expenses can be calculated properly. Other related costs are reported as expenses as they occur.

Depreciation and amortization according to plan

Depreciation and amortization according to plan are based on the historical costs and are done on a straight-line basis over the estimated economic useful lives of the assets in view of the following depreciation and amortization periods:

– Patents	10 years
– Capitalized development expenditures	3 years
– Brands	10 years
– Equipment	5 years
– Capital expendture on rented assets	5 years

The depreciation and amortization methods used, residual values and useful life of assets are reassessed at the end of each year.

Impairment losses

Write-down of tangible and intangible fixed assets

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 realisable 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.

Write-down of financial assets

At the time of each reporting the company evaluates the existence of objective evidence of an impairment in financial assets, such as identifiable occurances having a negative effect on the possibilities to regain the acquisition cost.

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 leasee. 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.

Profit per share

The calculation of profit per share is based on the annual result in the Group attributable to the shareholders of the parent company and the weighted average of outstanding shares during the year. When calculating the profit per share after dilution the result and the average number of shares are adjusted in order to consider potential dilution from preference shares, which during the reporting periods relates to options granted to employees. The dilution from options affects the number of shares and occurs only when the strike price is below market price.

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.

Reporting of and derecognition from the statement of financial position A financial asset is recognized in the statement of financial position when the company becomes party to the instrument's contractual terms. A receivable is recognized when the company has performed and there is a contractual obligation on the counterpart to pay, even if the invoice has not been sent. Accounts receivable are recorded in the statement of financial position when the invoice is sent. Liabilities are recognized when the counterparty has performed and there is contractual obligation to pay, even if the invoice has not been received.Accounts payable are recognized when an invoice is received.

A financial asset is derecognized from the statement of financial position when the rights to the agreement are realized, expired or when the company loses control over them. The same applies to portions of financial assets. A financial liability is derecognized from the statement of financial position when the obligation in the agreement is fulfilled or become extinguished in some other way. The same applies for part of a financial liability.

A financial asset and a financial liability are offset and the net amount is recognized in the statement of financial position only when the company has a legal right to set off the amounts and intends either to settle the net amounts or at the same time realize the receivable and settle the liability.

Acquisition or divestment of financial assets are reported on the transaction day. The transaction day is the date on which the company commits to acquire or divest the asset.

Classification and valuation

Financial instruments, except for derivative instruments, are initially stated at cost, corresponding to the instrument´s fair value. Transaction costs are added to this for all financial instruments except for those belonging to the financial assets category, which are reported in the income statement at fair value. The classification of a financial instrument on the initial reporting depends on the intention of the acquirer. The classification decides how the financial instrument is valuated on the initial reporting date as described below.

Derivative instruments are reported initially at their fair value meaning that transaction costs are charged against profit or loss for the period. After the initial recognition, derivative instruments are reported as described below.

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.

Loan receivables and accounts receivable

Loan receivables and accounts receivable are monetary assets which are not derivatives, that have defined payment plans or identifiable 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.

Financial assets/liabilities valued at actual cost through result This category consists of two subgroups: Financial assets/liabilities held for trade and other financial assets/liabilities which the Group has chosen to report in this category. A financial asset is classified as held for trade if acquired with the intention to sell at short term. Derivatives are classified as held for trade. Assets/liabilities in this category are valued at market value and gains/losses are reported in the result. Derivatives held for trade by Anoto relate to securing of future (6 months) net cash flows in EUR, USD and JPY.

Unlisted shares

The company´s ownership of unlisted shares are valued at acquisition cost in accordance with the exception rule in IAS 39 related to equity instruments whose actual cost cannot be accurately determined.

Other financial liabilities

Loans and other financial liabilities, such as accounts payable, are included in this category.The liabilities are measured at accrued acquisition value.

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 received payments in foreign currencies. 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 result as other operating income/expense.

Inventory

Inventory, consisting of finished products and critical components, is reported at historical cost (in accordance with FIFO) or net realisable value, whichever is lower. The cost of inventories includes costs incurred to acquire inventory assets and transport them to their current site and condition.

Pensions and compensations to employees

All pension plans in the Group are classified as defined contribution pension plans, as Anotos´s obligation is limited to the contributions that the company has undertaken to pay. In those cases, the size of an employee´s pension depends on the contributions the company pays into a fund or to an insurance company and the capital return on those contributions. Consequently it is the employee who takes the actuarial risk (that the benefit becomes less than expected) and the investment risk (that the invested assets will be insufficient to support the expected benefit). The company´s commitments concerning service costs paid to defined contribution pension plans are charged against profit in pace with employees´performance of their service for the company during a period.

Short-term compensation paid to employees is calculated without discounting and is reported as an expense when the related services were received. A provision for estimated bonus payment is reported when the Group has a legal or constructive obligation to make such payments due to the fact that the services in question have been received from the employees and the provision amount can be estimated in a reliable manner.

A provision is recognized in conjunction with termination of employees only if the company is unquestionably obligated to terminate an employee prior to the normal date. When compensation is offered to encourage voluntary departures, an expense and provision are booked if it is likely that the offer will be accepted and the number of employees who will accept the offer can be reliably estimated.

Taxes

All tax deemed payable on reported earnings is reported in the annual result. 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 statement of comprehensive income 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 statement of financial position only in amounts that can presumably be utilized within the foreseeable future.

Temporary differences are not taken into consideration in consolidated goodwill or in difference attributed to initial recognition of assets and liabilities not classified as acquisitions of business operations that, at the time of transaction, did not affect either net profit or taxable profit.

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, and 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 statement of financial position: Product warranties.

Provisions for product warranty commitments relate to the sale of pens. The warranty time period is 12 months and the provision is classified as shortterm. As there is not yet any reliable history concerning the number of warranty issues, the provision is calculated with regard to the expected outcome during the existing warranty time period.

Disclosures about related parties

For disclosures about the company's transactions with related parties, refer to Note 9 "Remuneration for senior executives" and Note 38 "Related party transactions". There were no other transactions with related parties.

Segment reporting

The evaluation of the Group results is based on three application areas for which actual Net sales and Gross profit are disclosed. The application areas utilize common resources with regards to development and administration and a split of costs below Gross profit would be possible only if based on rough estimates. The same applies also to the Group assets & liabilities. Evaluation of Group expenses is applied to the Group as a whole and there is no independent fi nancial information available to the fields of application. The Group has consequently not identified any operating segments.

Changes in accounting policies resulting from new or amended IFRS standards

A number of changes in accounting principles applied by the Group as of 1st of January 2011.These amendments to IFRS with effect from 2011 have had no material effect on the consolidated financial statements.

New IFRSs not yet applied

A number of new or amended standards does not take effect until the next financial year and has not been applied in preparing these financial statements. New standards or amendments with future application are not planned for early application. Such changes in accounting policies with future application is judged not to have any material effect on consolidated financial statements.

PARENT COMPANY

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, "Accounting for Legal Entities". In addition, Swedish Financial Reporting Board statements applicable for listed companies are observed. Application of RFR 2 entails that the parent company, in the

annual report for the legal entity, shall comply with all EU-endorsed IFRSs and pronouncements as far as possible within the framework of the Annual Accounts Act, the Pension Obligations Vesting Act, and taking into account the connection between reporting and taxation. The recommendation indicates which exceptions from and amendments to IFRS are to be made.

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.

Changes to accounting principles

Unless otherwise stated below, the Parent Company has in 2011 made changes in accounting principles, in accordance with the above for the group.

As from 2011 group contributions received are reported as a dividend (financial income) and group contributions paid, as a financial expense in net income. Comparative figures for 2010 have been changed according to the new principles. Previously, group contributions were reported in accordance with UFR 2 Group contributions and shareholder contributions, directly in equity.

Classification and presentation format

An income statement and a comprehensive statement of income are presented for the parent company, whereas for the Group, these two financial statements form one comprehensive statement of income. In addition, for the parent company the titles balance sheet and cash flow are used for the financial statements which in the Group are titled statement of financial position and statement of cash flows, respectively. The income statement and balance sheet of the parent company are presented in accordance with the format prescribed in the Annual Accounts Act, whereas the statement of comprehensive income, statement of changes in equity and cash flow statement are based on IAS 1 Presentation of Financial Statements and IAS 7 Statement of Cash Flows. The differences in the parent company´s income statement and balance sheet compared with the Group´s financial statements consist mainly of the reporting of financial income and costs and the reporting of equity.

Leases

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 realisable value.

Holdings in subsidiaries and associated companies

Holdings in Group and associated companies are reported at historical cost. If the reported value of the investment exceeds the recoverable amount (refer to section above on impairment losses), an impairment loss is recognized. Transaction costs are included in the reported cost for the subsidiary. Contingent payments are measured according to the probability that the payment will be made. Any changes in the provision/receivable is added to/reduces the reported cost. Acquisition to a low price corresponding to future expected losses and costs is dissolved during the expected periods the losses and costs arise. Acquisition to a low price arising from other reasons is recognized as provision except for the share that exceeds fair value on acquired identifiable non-monetary assets. The share that exceeds this value is taken up as an income immediately. The part that does not exceed the fair value on acquired identifiable non-monetary assets is taken up as an income in a systematic way over a period that is calculated as the remaining weighted average useful life of the acquired identified assets and which can be depreciated.

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 2), 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 SEK 97 million as of the balance sheet date. For additional information about impairment losses, refer to Note 22.

Impairment tests for capitalized development expenditures When testing for impairment losses, the value in use is calculated for the tech-

nology and products developed by the company. The value in use is based upon the estimated future cash flows that the technology and products are expected to generate.

Note 4 | Risk management by the Group

The Anoto Board of Directors has adopted a financial policy for:

• Simplifying and harmonizing 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 give 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.

Liquidity and financing risk

Anoto´s liquid assets, as cash and bank deposits, amounted at the end of 2010 to MSEK 24 (81).

The Group has, through the acquisition of Destiny Wireless Ltd, borrowings of MSEK 16. These loans are secured against the current assets of Destiny Wireless Ltd. There are no other loans in the Group and apart from the recently acquired business the Group has neither any interest bearing liabilities nor pledged accounts receivables, inventory or fixed assets. The Board of Anoto expect that the operations during 2012 can be financed

by existing liquid assets without any additional borrowings from banks or other credit institutes. There are no

credit promises or liquidity reserve, e.g. overdraft facilities. No part of the borrowing is due for payment within the next twelve months.The only financial liabilities that will affect the cash flow are accounts payable and other current liabilities. All these liabilities fall due within 3 months.

Maturity structure financial liabilities: (KSEK)

		4-6	7-12
	0-3 months	months	months	1-5 years
Borrowings	466	456	848	15,695
Accounts payable	20,470	0	0	0
Other current liabilities	6,790	0	0	0

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, JPY and GBP because most of its invoicing is in those currencies.

In accordance with its 2010 currency policy, Anoto hedge its estimated currency exposure in these currencies over the next six months period by the means of currency forward contracts.

The surplus in EUR depends on the Group´s invoicing in mostly EUR on the European market and on almost no costs in this currency. The net exposure in EUR is expected to remain high and this risk is managed through forward contracts equivalent to the expected net flow for the next six months period.

The net exposure in USD is expected to increase somewhat during 2012 and this risk is managed through forward contracts equivalent to the net flow of USD for the next six months period.

The net exposure in JPY has decreased during 2011. The Group´s costs in JPY concerns the operation of the subsidiary in Japan. The currency risk in JPY is managed through forward contracts equivalent to the net flow for the coming six months period.

The net exposure in GBP during 2011 has been very limited. The Net sales in GBP is related to invoicing to customers in the UK by our UK based subsidiary and the costs in GBP is related to the operation of the UK business.

Hedge accounting under IAS 39 does not apply.

Sensitivity analysis exposure

The impact on profit/loss before tax of a 5% change in exchange rates is: USD/SEK +/- 0,6 MSEK

EUR/SEK	+/- 2,1 MSEK
JPY/SEK	+/- 0,3 MSEK
GBP/SEK	+/- 0,1 MSEK

Actual Net flows by currency

Translation exposure

Hedging of translation exposure is determined by the Group finance policy. Currently no hedging of the translation exposure is undertaken as the risk is limited. An annual analysis of the risk takes place in order to identify changes in exposure. The net assets in the subsidiaries in the US,Japan and UK amount to MSEK -5, MSEK -19 and MSEK -19 respectively.

The effect on the translation reserve with a 5 percent change of the exchange rate is:

USD/SEK	+/– 0,3 MSEK
JPY/SEKL	+/– 1,0 MSEK
GBP/SEK	+/– 1,0 MSEK

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.

For additional information about credit risk in accounts receivable, refer to Note 27. The financial credit risk is managed as part of the Group's finance policy, refer to Liquidity policy above.

Note 5 | Net sales

Group sales per market		Group
(KSEK)	2011	2010
Sweden	22,635	27,528
Rest of EU	51,227	33,335
USA	70,883	81,567
Japan	17,755	15,196
Rest of Asia	19,693	28,124
Rest of the world	10,093	22,645
Total	192,286	208,395

Other risk areas

• Interest rate risks • Financing risks

Other areas covered by the financial policy are:

• Guarantees and contingent liabilities

Group sales per product group		Group
(KSEK)	2011	2010
Royalty	22,635	27,528
NRE 1)	3,504	493
Licenses	33,915	34,387
Components	10,331	11,774
Digital pens	96,923	121,716
Other	16,082	9,937
Total	192,286	208,395

1) Revenues from software/hardware development of customer products

Group Net sales per revenue type Group

(KSEK)	2011	2010
Goods	22,635	27,528
Services	85,032	74,905
Total	192,286	208,395

Net sales of the parent company only consist of inter-company invoicing of shared services.

Note 6 | Average number of employees

	2011			2010
	No. of	Whereof No. of					Whereof
	employees	men	employees	men
Parent company	0	0	0	0
Group companies:
Sweden	77	55	91	63
USA	5	4	7	4
Japan	3	2	10	8
United Kingdom	9	7	-	-
Total	94	68	108	75

Note 7 | Board of Directors and management split by gender

	2011			2010
	No. of employees	Whereof men	No. of employees	Whereof men
Board of Directors Parent company	5	4	5	4
Management Parent company	0	0	0	0
Board of Directors Group companies	22	22	16	16
Management Group companies (Sweden) 1)	13	11	5	5
Total	40	38	26	25

1) Per den 31 dec 2011

Note 8 | Salaries and remunerations

	Group	Parent Company
(KSEK)	2011	2010	2011	2010
SALARIES
Board of Directors and CEO	5,364	4,030	1,650	1,100
Other senior executives1)	4,980	7,068	-	-
Other employees Sweden	30,187	45,804	-	-
Other employees USA	3,285	6,032	-	-
Other employees UK	8,054	-	-	-
Other employees Japan	4,142	9,104	-	-
Total salaries 2)	56,012	72,038	1,650	1,100
PAYROLL OVERHEAD
Board of Directors and CEO	1,685	2,824	518	346
Other senior executives 1)	1,362	2,579	-	-
Other employees Sweden	9,592	15,084	-	-
Other employees USA	221	1,126	-	-
Other employees UK	1,003	-	-	-
Other employees Japan	386	947	-	-
Total payroll overhead	14,249	22,560	518	346
PENSION EXPENSES
Board of Directors and CEO	1,790	4,817	-	-
Other senior executives 1)	1,256	1,881	-	-
Other employees Sweden	7,072	11,770	-	-
Other employees USA	197	389	-	-
Other employees UK	-	-	-	-
Other employees Japan	165	2,756	-	-
Total pension expenses	10,480	21,613	0	0
Total salaries and remunerations	80,741	116,211	2,168	1,446
Whereof:
Sweden	62,365	95,857	2,168	1,446
USA	4,693	7,547	-	-
UK	9,057		-	-
Japan	4,626	12,807	-	-
Total	80,741	116,211	62,365	1,446

Salaries and other remunerations are included in the statement

of comprehensive income headlines as follows:

Totalt	80,741	116,211	2,168	1,446
Research and development expenses	32,821	54,387	-	-
Administrative expenses	13,484	13,132	2,168	1,446
Selling expenses	34,436	48,692	-	-

1) As per the 31st of Dec 2011 the Group have 13(5)executives.

2) There have been no bonus payments during 2010/2011

The notice period for the CEO is one month from the company and four months from the employee.

The period of notice for other senior executives is three to six months if the company terminates their employment provided that the Security of Employment Act can be applied.

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 receives financial compensation.

The retirement age for the CEO and other senior executives is 65. The pension premium is 0% 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 2011)

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 programmes.

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 fifty percent 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.

As a main rule all of the 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.

Stock related incentive plans are to be determined by the AGM. Issues and transfers of securities determined by the AGM according to the rules of §16 in the Swedish Companies Act are not comprised by these guidelines in case the AGM has or will make such decisions.

The Board shall be entitled to deviate from these guidelines in a certain case should there be specific reasons.

The Board has deviated from the above guidelines when setting up yhe employment agreement with the CEO.

Note 9 | Remunerations to Board of Directors and CEO

BOARD AND CEO, 2011		Salaries/		Pension	Other
(KSEK)		Remunerations	Bonus	premiums	remunerations	Total
Torgny Hellström	- CEO until 30 Sept	3,214	-	1,790		5,004
Stein Revelsby	- Board member/		-	-	-
	CEO from 1 Oct	662				662
Jörgen Durban	- Chairman of the Board	925	-	-	-	925
Gunnel Duveblad	- Board member	100	-	-	-	100
Nicolas Hassbjer	- Board member	100	-	-	-	100
Andrew Hur	- Board member	100	-	-	-	100
Paddy Padmanabhan	- Board member	88	-	-	-	88
Charlotta Falvin	- Board member	88	-	-	-	88
Joonhee Won	- Board member	88	-	-	-	88
Total 1)		5,364	0	1,790	0	7,154

1) Compensation to Board members (Board fee) is paid from the parent company. Compensation to the CEO may originate from Group companies.

BOARD AND CEO, 2010		Salaries/		Pension	Other
(KSEK)		Remunerations	Bonus	premiums	remunerations	Total
Anders Norling	- COE until 8 July	1,994	-	4,582	-	6,576
Torgny Hellström	- CEO from 9 July	798	-	235	-	1,033
Jörgen Durban	- Chairman of the Board	450	-	-	-	450
Stein Revelsby	- Board member	175	-	-	-	175
Paddy Padmanabhan	- Board member	175	-	-	-	175
Charlotta Falvin	- Board member	175	-	-	-	175
Joonhee Won	- Board member	175	-	-	-	175
Hans Otterling	- Board member	88	-	-	-	88
Total 1)		4,030	0	4,817	0	8,847

1) Compensation to Board members (Board fee) is paid from the parent company. Compensation to the CEO may originate from Group companies.

MANAGEMENT 2011	Salaries/ Remunerations	Bonus	Pension premiums	Other remunerations	Total
Group management excluding CEO (KSEK)	4,980	-	1,256	-	6,236
	Salaries/		Pension	Other
MANAGEMENT 2010	Remunerations	Bonus	premiums	remunerations	Total
Group management excluding CEO (KSEK)	7,068	-	1,881	-	8,949

Compensation to Group management may originate from Group companies

Note 10 | Audit fees

	Audit fees are charged to earnings for the year by the company´s auditors, KPMG, as follows:

KPMG		Group		Parent Company
(KSEK)	2011	2010	2011	2010
Audit assignment	310	310	103	103
Other services	337	115	0	38
Total	647	425	103	141

An audit 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. Audit activities in addition to the audit assignment involves reviews as certificates etc. By tax advisory is meant advisory services related to taxes, VAT and fees. Everything else is other services.

Note 11 | Operating costs by type

		Group
(KSEK)	2011	2010
Raw materials and supplies	-53,789	-72,353
Change in inventories	-1,930	4,050
Personnel cost	-80,741	-116,211
External services	-25,801	-30,313
Rent	-9,829	-10,047
Travel expenses	-6,202	-5,047
Marketing and PR	-4,664	-7,335
Depreciation	-13,600	-15,924
Other external expenses	-13,068	-3,594
Total	-209,624	-256,774

Note 12 | Other operating income

		Group
(KSEK)	2011	2010
Result from trading in Financial instruments (derivatives)	-	2,310
Exchange gains	2,413	1,568
Write down vendor liabilities	4,839	-
Capitalisation patent expenses	777	-
Other	2,787	849
Total	10,816	4,727

Note 13 | Other operating cost

		Group
(KSEK)	2011	2010
Impairment of intangible assets	-232,985	-30,823
Impairment of tangible assets	-344	-
Result from trading in Financial instruments (derivatives)	-2,511	-
Exchange losses	-618	-
Total	-236,458	-30,823

Note 14 | Depreciation and amortization

Depreciation of property, plant and equipment, and amortization of intangible fixed assets are included in the statement of comprehensive income and income statement as follows:

		Group		Parent Company
(KSEK)	2011	2010	2011	2010
Amortization intangible fixed assets
Selling expenses	-4,709	-6,198	-	-
Administrative expenses	-286	-376	-125	-125
Research & development expenses	-4,816	-6,338	-	-
Total amortization intangible fixed assets	-9,811	-12,912	-125	-125
Depreciation tangible fixed assets
Selling expenses	-732	-582	-	-
Administrative expenses	-2,258	-1,795	-22	-64
Research & development expenses	-799	-635	-	-
Total depreciation tangible fixed assets	-3,789	-3,012	-22	-64
Total	-13,600	-15,924	-147	-189

Note 15 | Profit/loss on participations in group companies - Parent Company

(KSEK)	2011	2010
Impairment of shares in Anoto AB 1)	-230,070	0
Impairment of shares in Anoto AB 2)	-10,500	-46,000
Total	-240,570	-46,000

1) Refers to writedown related to impairment of Group goodwill linked to the value of the shares in Anoto AB

2) Refers to write-down related to 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 level of share capital.

Note 16 | Financial income and expenses - Group

		Group
(KSEK)	2011	2010
Financial income
Interest on current investments		317
Interest income bank deposits	149	103
Other interest income	6	-
Total financial income	155	420
Financial expenses
Interest expenses bankloans	-313	-
Interest expenses shareholds´ loan	-350	-
Write-down loan receivable	0	-2,379
Write-down unlisted shares	-173	-499
Other financial expenses	-188	-339
Total financial cost	-1,024	-3,217
Total financial net	-869	-2,797
Of which:
Interest income from instruments valued at accrued acquisition value	149	420
Interest expenses from instruments valued at accrued acquisition value	-663	0

	Parent Company
(KSEK)	2011	2010
Financial income
Interest on current investments	-	-
Interest income bank deposits	2	3
Total financial income	2	3
Financial expenses
Other financial expenses	0	0
Total financial cost	0	0
Total financial net	2	3

Note 17 | Taxes

	Group			Parent Company
(KSEK)	2011	2010	2011	2010
Current tax 1)	-30	-54	0	0
Total	-30	-54	0	0

1) Primary foreign subsidiaries.

Correlation between tax expense for the year and reported profit/loss before tax

		Group		Parent Company
(KSEK)	2011	2010	2011	2010
Reported profit/loss before tax	-243,849	-77,272	-239,702	-45,590
Tax in accordance with current tax rate of 26,3%	64,132	20,323	63,042	11,990
Tax impact of non-deductible expenses:
Intra-group adjustments that disregard deferred tax	-1,044	272		-
Other non-deductible expenses	-61,585	-8,880	-63,274	-12,100
Tax impact of non-taxable income	265	56		-
Adjustment for tax effects in foreign group companies	-1,476	-3,146		-
Increase/decrease of tax deficits without
corresponding capitalization	-322	-8,679	232	110
Tax reported	-30	-54	0	0

Tax deficit

			Parent Company
(KSEK)	2011	2010	2011	2010
Opening balance	-492,043	-457,759	-27,118	-27,536
Tax deficit of the year	-3,566	-34,284	882	418
Adjustment due to changed taxation	-	-	-	-
Closing tax deficit	-495,609	-492,043	-26,236	-27,118
Nominal amount, tax asset 26,3%	130,345	129,407	6,900	7,132

There are no temporary differences

The nominal value of tax assets (26,3%) 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 refers to the Swedish companies, and are not limited in time.

There are additional tax deficits in our foreign subsidiaries which amounts to approximately MSEK 129 and are not limited in time.

Note 18 | Capitalized development expenditures

		Group		Parent Company
(KSEK)	2011	2010	2011	2010
ACCUMULATED HISTORICAL COSTS
Opening accumulated historical costs	151,763	143,820	24,218	24,218
Acquisitions of Group companies 1)	2,341
Capitalizations for the year 2)	398	7,943		-
Impairment losses for the year		-		-
Translation difference	78
Closing accumulated historical costs	154,580	151,763	24,218	24,218
ACCUMULATED AMORTIZATIONS AND IMPAIRMENT LOSSES ACCORDING TO PLAN
Opening accumulated amortizations	-148,703	-117,370	-24,218	-24,218
Acquisitions of Group companies	-1,022
Amortizations for the year according to plan	-1,728	-5,003		-
Impairment losses for the year	0	-26,330		-
Translation difference	-27
Closing amortizations and impairment losses according to plan	-151,480	-148,703	-24,218	-24,218
Closing residual value	3,100	3,060	0	0

1) Acquisition of Group companies

2) Internally developed

Amortizations by function are shown in note 14.

Note 19 | Patents

	Group			Parent Company
(KSEK)	2011	2010	2011	2010
ACCUMULATED HISTORICAL COSTS
Opening accumulated historical costs	80,611	76,515	13,934	13,930
Capitalizations for the year 1)	2,657	4,096	0	4
Impairment losses for the year			0
Closing accumulated historical costs	83,268	80,611	13,934	13,934
ACCUMULATED AMORTIZATIONS AND IMPAIRMENT LOSSES ACCORDING TO PLAN
Opening accumulated amortizations	-58,390	-50,352	-13,471	-13,353
Amortizations for the year according to plan	-6,608	-6,510	-119	-118
Impairment losses for the year	-2,915	-1,528
Closing amortizations and impairment losses according to plan	-67,913	-58,390	-13,590	-13,471
Closing residual value	15,355	22,221	344	463

1) Internally developed

Amortizations by function are shown in note 14. Impairment losses are reported on line "Other operating costs, Note 13.

Note 20 | Brands

		Group	Parent Company
(KSEK)	2011	2010	2011	2010
Accumulated historical costs
Opening accumulated historical costs	1,104	852	69	69
Capitalizations for the year 1)	220	252	0
Closing accumulated historical costs	1,324	1,104	69	69
Accumulated amortizations and impairment losses according to plan
Opening accumulated amortizations	-342	-245	-25	-18
Amortizations for the year according to plan	-124	-97	-7	-7
Closing amortizations and impairment losses according to plan	-466	-342	-32	-25
Closing residual value	858	762	37	44

1) Internally developed

Amortizations by function are shown in note 14.

Note 21 | Other intangible assets

		Group
(KSEK)	2011	2010
Accumulated historical costs
Opening accumulated historical costs	10,261	10,261
Capitalizations for the year 1)
Closing accumulated historical costs	10,261	10,261
Accumulated amortizations and impairment losses according to plan
Opening accumulated amortizations	-6,364	-2,096
Impairment losses for the year		-1,302
Amortizations for the year according to plan	-1,346	-2,966
Closing amortizations and impairment losses according to plan	-7,710	-6,364
Closing residual value	2,551	3,897

1) Internally developed

Amortizations by function are shown in note 14.

Impairment losses are reported on line "Other operating costs", Note 13.

Not 22 | Goodwill

Goodwill attributable to the acquisition of:		Anoto AB		Destiny Wireless
(KSEK)	2 011	2 010	2011	2010
Accumulated historical costs
Opening accumulated historical costs	298,674	298,674	0	0
Acquisitions for the year	0	0	27,759	0
Translation differences	0	0	512	0
Closing accumulated historical costs	298,674	298,674	28,271	0
Accumulated historical costs
Opening accumulated write downs	0	0	0	0
Write downs for the year	-230,070	0	0	0
Closing accumulated write downs	-230,070	0	0	0
Closing net balance	68,604	298,674	28,271	0

Impairment testing

The goodwill balance consists of Goodwill from two acquisitions. In 2001 the Group acquired shares in Anoto AB resulting in a goodwill of 299 MSEK. During 2011 Anoto acquired Destiny Wireless Ltd, which resulted in an increase of the Group Goodwill value by 27,8 MSEK.

The Group thus performs impairment testing on two separate cash generating units.

During the third quarter of 2011 Anoto made a write-down of goodwill, attributable to the acquisition of Anoto AB, of SEK 230 million. The write-down included the Group's entire business, as it is the CGU to which impairment testing has been done and is therefore attributable to an assessment of the business prospects. During the year, Anoto has undertaken a strategic review of operations and implemented strategically related restructuring. In light of this strategic repositioning and taking into account that past sales and sales growth has not been in line with expectations, combined with the situation in the financial markets, Anoto's Board has determined that an impairment should be performed. The impairment is primarily due to a downward revision of future sales growth, the effects of changes in strategic direction and revenue losses attributable to restructuring. The impairment was based on a value in use calculation in which a discount rate of15% (15%) were used.

Impairment testing of goodwill is performed for each cash generating unit respectively 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.

In the calculation of value in use a discount factor of 15 % before tax has been applied. The measurement of value in use is based on management´s estimated cash flow forecast for a period of five years. Cash flow for the ensuing years has been extrapolated using an assumed annual growth of 2 %. As a precautionary measure when calculating the cash flow, the margins have been reduced with 2 % annually the first five years together with an increase of operating costs with 2-3 % annually during the same peiod.

Important variables Market growth	Method for estimating amounts Group management expects a long-term positive development on the markets where Anoto´s products are used. The growth forecasts are built on underlying forecasts and discussions with partners and customers together with the expected long-term growth.
Discount rate	The discount rate is determined with regards to the market conditions and the required return of the Group. Considering Anoto´s current tax position where the Group companies will not pay any tax over a forseeable time, the difference between discount rate before and after tax will be minimal.
Gross profit	The long-term forecasted gross profit is calculated with caution compared to present level, but it is reasonable to expect lower margins as the market matures. The ambition is however still to keep up the gross profit margin.
Cost increase	The Group has taken measures during 2010 and 2011 to reduce the costs, a work that is expected to give favourable effects . It is however

The recoverable value related to the acquisition of Anoto AB exceeds the reported value with MSEK 55 and the recoverable value related to the acquisition of Destiny Wireless Ltd exceeds the reported value with MSEK 4. The reported value does not include any depreciation.

reasonable to calculate with a general cost increase over time which in the forecast is expected to be in line with the inflation.

The variables used in the calculation of future value in use to estimate eternal cash flow and the changed values showing the recoverable value equal to reported value are the following:

		Anoto AB		DestinyWireless
Variable	Assumed value	Changed value *	Assumed value	Changed value *
Market growth	2,0%	0,0%	2,0%	0,0%
Discount rate after tax	15,0%	25,5%	15,0%	16,5%
Gross profit	68,0%	64,4%	58,0%	56,8%
Cost increase	3,0%	4,9%	2,0%	2,8%

* The variables´ assumed values have changed one by one respectively. When the value of one variable changes, possibly effects on other variables have been considered.

Note 23 | Equipment and tools

		Group		Parent Company
(KSEK)	2011	2010	2011	2010
Accumulated historical costs
Opening accumulated historical costs	26,196	25,532	749	749
Acquisitions of Group companies	3,518
Additions for the year	962	2,743
Disposals for the year	0	-2,160
Translation difference	232	81
Closing accumulated historical costs	30,908	26,196	749	749
Accumulated amortizations and impairment losses according to plan
Opening accumulated amortizations	-17,253	-16,348	-700	-636
Acquisitions of Group companies	-2,430
Amortizations for the year according to plan	-3,788	-3,012	-22	-64
Disposals for the year	-344	2,159
Translation difference	-183	-52		-
Closing amortizations and impairment losses according to plan	-23,998	-17,253	-722	-700
Closing residual value	6,910	8,943	27	49

Depreciation by function are shown in Note 14.

Note 24 | Participation in Group companies

		Parent Company
(KSEK)	2011	2010
Opening balance	267,194	267,194
Opening shareholders´ contribution	510,603	464,603
Opening accumulated impairment losses	-510,603	-464,603
Acquisition of shares in Group companies 3)	33,000	0
Shareholders´contribution 1)	10,500	46,000
Impairment loss for the year 2)	-240,558	-46,000
Total	70,136	267,194

1) Unconditional shareholders´contribution to Anoto AB.

2) Write-down of shares in Anoto AB.

3) The parent company has acquired 11% of the shares in Anoto AB and Anoto Licensiering AB from Anoto Administartion AB.

			Total No. of	% of capital	Shareholders´	Carrying
Company	Reg.No.	Domicile	participation	and votes	equity	amount
Anoto AB	556320-2646	Lund	5,000	100%	753	69,936
Anoto Licensiering AB	556665-4306	Lund	1,000	100%	92	100
Anoto Administration AB	556591-2481	Lund	1,000	100%	5,684	100
Total						70,136

The Anoto Group contains sub-groups consisting of the following companies

Anoto, Inc., USA

Anoto Maxell K.K., Japan

Destiny Wireless Ltd,UK

FAB Licensiering AB C Technologies AB

Note 25 | Other long-term investments

		Group
(KSEK)	2011	2010
Opening balance	373	872
Write-down 1)	-173	-499
Total	200	373

1) Write-down of shares in Anoto Taiwan.

Note 26 | Other long-term receivables

		Group
(KSEK)	2011	2010
Opening balance	1,768	1,963
Settlements	-552
Payments	70	-195
Translation difference	1,286	1,768
Totalt	1,286	1,768

The receivables concern deposits in full

Note 27 | Accounts receivable

		2011		2010
(KSEK)	Gross	Net	Gross	Net
Not due	28,818	28,818	6,602	6,602
Due 1 - 30 days	5,719	5,719	11,511	11,013
Due 31 - 60 days	3,277	3,277	998	619
Due 61 - 90 days	152	152	1,051	756
Due more than 90 days	1,689	1,173	4,095	149
Total	39,655	39,139	24,257	19,139

The risk that the Group´s customers will not fulfill their obligations, meaning that payments are not received from the customers, is a credit risk. The Group´s customers undergo credit checks whereby information about the customers´ financial position is obtained from various credit reporting agencies. The Group has drawn up a credit policy which stipulates how customer credits are to be handled.

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

No securities related to Accounts receivable are held by Anoto.

No individual receivable exceed 10% of total Accounts receivable.

Concentration of credit risk		2011			2010
	No. of customers	% total No. of customers	% share of value	No. of customers	% total No. of customers	% share of value
Exposure < 1 MSEK	82	87%	20%	105	95%	35%
Exposure 1-10 MSEK	12	13%	80%	6	5%	65%
Exposure > 10 MSEK	0	0%	0%	0	0%	0%
Total	94	100%	100%	111	100%	100%

Note 28 | Prepaid expenses and accrued income

		Group	Parent Company
(KSEK)	2011	2010	2011	2010
Prepaid rent	1,627	1,852	-	-
Prepaid leasing fees	68	292	-	-
Prepaid insurance	417	254	178	-
Accrued interest income	7,416	1,709	-	-
Accrued income	1,835	1,394	51	155
Total	11,363	5,501	229	155

Note 29 | Provisions for product warranty commitments

		Group
(KSEK)	2011	2010
Opening balance	829	706
Amounts utilized	-384	-31
New provisions	240	357
Unutilized reversed amounts	-445	-203
Total	240	829

Provisions for product warranty commitments relate essentially to the sale of pens during 2011 and 2010. The provisions are based on calculations made on historical data for warranties related to the sale of pens. The whole amount is expected to be paid within 12 months.

Note 30 | Accrued expenses and deferred income

		Group		Parent Company
(KSEK)	2011	2010	2011	2010
Holiday pay liability	3,853	4,087	0	0
Accrued social security	2,706	1,291	236	152
Accrued social security pensions	5,771	5,266	188	188
Accrued salaries and remunerations	8,002	13,774	240	483
Deferred income	2,343	-	0	0
Other	5,541	1,038	900	200
Total	28,216	25,456	1,564	1,023

Note 31 | Share-based payments to employees

Change in outstanding option programmes

	2011			2010
	No. of options	Weighted issue price	No. of options	Weighted issue price
Outstanding options at the beginning of the period	0	0	585,000	18
Expired during the period	0	0	-585,000	0
Outstanding options at the end of the period	0	0	0	18
Redeemable at the end of the period	0		0

*) No redemption has taken place during 2010 or 2011

Note 32 | Long-term interest bearing liabilities

		Group
(KSEK)	2011	2010
Opening balance	0	0
Acquisition of Group companies	14,949
Additions for the year	279
Translation difference	467
Total interest bearing liabilities	15,695	0

				2011-12-31		2010-12-31
(KSEK)	Currency	Nominal interest	Maturity	Nom. value	Book value	Nom. value	Book value
Bankloan	GBP	12%	2013	7,403	7,403	0	0
Shareholders´loan	GBP	12%	2013	8,292	8,292
Total interest bearing liabilities				15,695	15,695	0	0

Bank loan

The loan i secured against current assets in the company where EFP has priority over other creditors. The loan is repayable on demand but the bank has agreed to extend the loan term for at least another twelve months.

Shareholders loan

The loan secured against current assets in the company. The loan is repayable on demand but the bank has agreed to extend the loan term for at least another twelve months.

Note 33 | Leasing expenses

The Group has no finance lease commitments. The amounts associated with equipment at the company´s disposal through leases are negligable. The Group´s commitment for leased premises totals to TSEK 7 562 for 2012 and TSEK 21 279 for 2013-2015.

Note 34 | Pledged assets

		Group
(KSEK)	2011	2010
Blocked bank deposists	2,745	30,933

Bank deposits are pledged as sequrity for Letters of Credit and Bank Guarantees

Note 35 | Contingent liabilities

	Group
(KSEK)	2011	2010
Contingent liability for group companies	2,140	2,002
Contingent liability, others
Total	2,140	2,002

Note 36 | Financial instruments

(KSEK)	Loans and accounts receivable	Borrowings	Financial assets measured at fair value in profit and loss: Held for trade 1)	Unlisted shares and participa tions	Other liabilities	Total book value	Fair value
GROUP 2011
Investments				200		200	200
Long-term receivables	1,268					1,268	1,268
Accounts receivable	39,138					39,138	39,138
Other receivables			304			304	304
Shor-term investments and securities						0	0
Assets	40,424	0	304	200	0	40,928	40,928
Borrowings		15,695				15,695	15,695
Accounts payable					20,470	20,470	20,470
Other liabilities					6,790	6,790	6,790
Liabilities	0	15,695	0	0	27,260	42,955	42,955

(KSEK)	Loans and accounts receivable	Borrowings	Financial assets measured at fair value in profit and loss: Held for trade 1)	Unlisted shares and participa tions	Other liabilities	Total book value	Fair value
GROUP 2010
Investments	-		-	373		373	373
Long-term receivables	1,768		-	-		1,768	1,768
Accounts receivable	19,139		-	-		19,139	19,139
Other receivables	-		2815	-		2,815	2,815
Shor-term investments and securities	-		-	-		0	0
Assets	20,907	0	2,815	373	0	24,095	24,095
Accounts payable					15,562	15,562	15,562
Other liabilities					7,384	7,384	7,384
Liabilities	0	0	0	0	22,946	22,946	22,946

1) Related to currency forward contracts only.

Anoto Group policy is to hedge the net flow of EURO , USD and JPY for six months at a time by means of forward contracts. Forward contracts are reported on the balance sheet closing date at fair value. Forward contracts totalled EUR 3.000 thousand, USD 1.500 thousand and JPY 200.000 thousand at end of 2011

Disclosures on fair value classification

Group 2011
	Level 1	Level 2	Level 3	Total
Short-term receivable - derivatives	-	304	-	304
Group 2010
	Level 1	Level 2	Level 3	Total
Short-term receivable - derivatives	-	2,815	-	2,815

Level 1: According to listed prices on an active market for similar instruments Level 2: According to directly or indirectly observable market data not included in level 1 Level 3: According to indata not observable on the market

Estimation of fair value Derivative instruments

Fair value for currency contracts are determined according to listed prices if available. Otherwise the fair value is determined by discounting of the difference between the agreed forward rate and the forward rate prevailing on closing day for the remaining contracts period. The discount rate is based on the risk-free interest rate of government bonds.

Accounts receivable and accounts payable

For accounts receivable and accounts payable with a remaining life of less than six months, recorded amount is deemed to reflect fair value. Accounts receivable and accounts payable with a due time over six months are discounted at the time of determining the fair value.

Note 37 | Related parties

Since the Annual Meeting in May 2011, Andrew Hur (TStone) joined as member of the Anoto Board, sales to TStudy and Pen Generations are classified as related parties transactions. All transactions have been made on normal commercial conditions.

Expedata is no longer classified as a related party as Double Day is no longer represented on the Board of Directors.

Summary of related party transactions

PARENT COMPANY Related parties (KSEK)			Selling of goods and services	Purchasing of goods and services	Other	Receivable on related party on December 31	Liability to related party on December 31
Group company	2011		9,128	0	-38,270	110,000	-
Group company	2010		4,509	0	-48,931	139,720	-
GROUP Related parties (KSEK)			Selling of goods and services	Purchasing of goods and services		Receivable on related party on December 31	Liability to related party on December 31
Shareholders:
TStudy (Tstone/Aurora)		2011	2,910		0	730	0
		2010	7,085		0	584	0
Pen Generations (Tstone/Aurora)		2011	6,206		0	0	0
		2010	0		0	0	0
Expedata (Double Day Acquisition LLC)		2011	0		0	0	0
		2010	3,164		0	1,314	0

For transactions with Board and Executives, see note 9.

Note 38 | Equity

Translation reserve
(KSEK)	2011	2010
Accumulated exchange rate differences at beginning of the year	1,108	-77
Exchange rate differences for the year	-675	1,185
Accumulated exchange rate differences at year end	433	1,108

Capital treatment

The Anoto Group has since being founded in 1999 worked on developing a digital pen enabling digital transfer of data written with a digital pen to a computer or similar. Development costs have been significant and since 1999 approximately MSEK 1 600 have been invested as capital by the shareholders. The company´s ambition is to achieve profitable growth and in the future be able to pay dividend on invested capital. Anoto Group has sofar not paid any dividend and will suggest to the Annual general meeting of 2012 that no dividend shall be paid out. The company has no outspoken targets regarding dividend, debt/equity ratio or other capital ratios other than the strive for profitability and positive cash flow. When solid profitability has been achieved targets for dividend, debt/equity ratio etc. will be determined.

Note 39 | Specification to Statement of Cash Flows

Liquid assets
		Group		Parent Company
(KSEK)	2011	2010	2011	2010
Cash and bank balances	23,941	81,044	325	1,042
Short-term placements comparable to cash and equivalents	0	0	0	0
Total	23,941	81,044	325	1,042

Interest paid and dividends received

		Group	Parent Company
(KSEK)	2011	2010	2011	2010
Dividend received	0	0		0
Interest received	0	420		3
Interest paid	-851	-339		0
Total	-851	81	0	3

Note 40 | Aquisitions for the year

The 31st of August the Group acquired 51% of the shares in the unlisted company Destiny Wireless Ltd for MSEK 15,5. Destiny Wireless has been a long standing partner to Anoto, active within application area Business Solutions. Through the acquisition the group moves up in the value chain and takes a step closer to the market where the group´s services and products are sold.

During the period up to 31st of December the acqureid entities contribution to Group Net sales amounted to MSEK 16,2. If the acquisition had taken place as per January 1st mangement estimates that the contribution to Group Net sales would have been MSEK 52,6."

Effects from acquistions 2011

The acquired company´s net assets at the time of acquisition:

(KSEK)	2011
Intangible assets	1,319
Tangible assets	1,088
Inventory	495
Current assets	22,545
Liquid assets	44
Interest bearing liabilities	-14,949
Current liablilities	-34,482
Net identifyable assets and liabilities	-23,940
Non controlling interest (49%)	11,731
Group goodwill	27,759
Consideration	15,550

The Group goodwill is based on a preliminary valuation of assets and liabilities.

Goodwill

The goodwill value includes additional sales recources, customer contacts and an increased precense on the UK market. No part of the goodwill is expected to be tax deductible.

Acquisition related expenses

Expenses related to the acquisition amounts to 2,8 MSEK and includes fees to consultants in relation to the due dilligence. These expenses have been accounted as operating expenses in the Condensed statment of comprehensive income.

Consideration

(KSEK)	2011
Liquid assets	5,173
Issued shares	5,174
Credit note	5,203
Total consideration	15,550

Fair value of the 1 732 188 shares issued as part of the total consideration paid for the shares in Destiny Wireless Ltd is based on the price for the Anoto share on the day of the transaction.

Note 41 | Events after December 31, 2011

Acquisition of Ubiquitous Systems Ltd:

The 12th of January 2012 the Group acquired 100% of the shares in the unlisted company Ubiquitous Systems Ltd for MSEK 12,8. Ubiquitous Systems Ltd has been a long standing partner within the Anoto network, active within application area Business Solutions. Through the acquisition the group moves up in the value chain and takes a step closer to the market where the group´s services and products are sold. The estimated effect on Anoto Group net sales from this acquisition is MSEK 10 p.a. The balance sheet is not yet finalized but the estimated effect on Group goodwill from this acquisition is MSEK 12,8 of which all is expected to be non tax-deductible.

	Ubiquitous Systems Ltd
Liquid assets (KSEK)	12,829
Issued shares	4,706,324

Aquisition of Xpaper from Talario LLC

The 16th January the Board of Anoto Group decided to issue shares for the acquisition of Xpaper technology from US partner Talario LLC for MSEK 5,1. The Xpaper software makes it easy to use Anoto´s pen and paper technology with any software application or paper document. The objective is to incorporate Talario´s document printing and docment capture components along with supporting web services in Anoto´s core offering. The estimated initial effect on Group net sales from this acquisition is MSEK 2 p.a. The acquired software will be booked as an intangible asset and amortized over the estimated useful lifetime.

Fair value of the 6,721,026 shares issued as consideration for the acquisitions of Ubiquitous Systems Ltd and Xpaper is based on the price for the Anoto share on the day of the transaction.

Note 42 | Parent Company details

Anoto Group AB (publ.) is a Swedish limited company with its registered office in Stockholm. The shares of the Parent Company are listed on the NASDAQ OMX Stockholm Stock exchange. The address of the head office is Traktorvägen 11, SE 226 60 Lund. The consolidated financial statements for 2011 relate to the Parent Company and its subsidiaries, jointly referred to as the Group.

Lund, April 17, 2012

Stein Revelsby Jörgen Durban Paddy Padmanabhan Board Member Chairman of the Board Board Member

Board Member Board Member CEO

Joonhee Won Charlotta Falvin Torgny Hellström

Our auditor´s report was submitted on April 17, 2012 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

REPORT ON THE ANNUAL ACCOUNTS AND CONSOLIDATED ACCOUNTS

We have audited the annual accounts and consolidated accounts of Anoto Group AB for the year 2011.

Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts. The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts and consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINIONS

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2011 and of its financial performance and its cash flows for the year then ended in accordance with Annual Accounts Act, and the consolidated accounts have been prepared in accordance with the Annual Account Act and present fairly, in all material respects, the financial position of the group as of 31 December 2011 and of their financial performance and cash flows in accordance with International Financial Reporting Standard, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and statement of comprehensive income and statement of financial position for the group.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In addition to our audit of the annual accounts and consolidated accounts, we have examined the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the Managing Director of Anoto Group AB for the year 2011.

RESPONSIBILITIES OF THE BOARD OF DIRECTORS AND THE MANAGING DIRECTOR

The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss, and the Board of Directors and the Managing Director are responsible for administration under the Companies Act.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.

As basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss, we examined whether the proposal is in accordance with the Companies Act.

As basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors 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 the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

OPINIONS

We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director are discharged from liability for the financial year.

Malmö, April 17, 2012 KPMG AB

Eva Melzig Henriksson Authorized Public Accountant

CORPORATE GOVERNANCE REPORT 2011

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 (see www.bolagsstyrning.se). Anoto is, in accordance with the Swedish Companies Act and the Swedish Code of Coroprate Governance required to present a Corporate Governance Report. The report has been reviewed by the Company's auditor.

CORPORATE GOVERNANCE STRUCTURE

Anoto is governed 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 make 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 by 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.

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.

ANNUAL GENERAL MEETING

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 first half of May.The notice of the Annual General Meeting, together with the agenda, is published on Anoto's website and in the Swedish newspaper Post och Inrikes Tidningar (the Swedish Official Gazette).As a cour tesy, the date and place for the Annual General Meeting together with information on how to obtain the agenda is published in the Swedish newspapers Dagens Nyheter and Sydsvenska Dagbladet.

All information material for the Annual General Meeting is available in both Swedish and English. The Annual General Meeting is held in Swedish.

The company does not, according to conditions in the Articles of Association, apply any special arrangements concerning the functionality of the AGM.

CORPORATE GOVERNANCE REPORT

ANNUAL GENERAL MEETING 2011

The Annual General Meeting (AGM) in 2011 took place in Lund on May 12. Jörgen Durban, Charlotta Falvin and Stein Revelsby were present from the Board of Directors. Present were also Anoto's external auditors and Jan Andersson, one of the members 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.
• Board Members Jörgen Durban and Stein Revelsby were re-elected as Board Members, and at the same time Gunnel Duveblad, Andrew Hur and Nicolas Hassbjer were elected as new Members of the Board until the end of the next Annual
• General Meeting. Joonhee Won, Paddy Padmanabhan and Charlotta Falvin had declined re-election.
• Jörgen Durban was re-elected Chairman of the Board.
• The proposal of the Nomination Committee 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 issueance 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 preferential rights of shareholders.
• The guidelines for compensation to the CEO and other executives of the Company were adopted in accordance with the proposal of the Board of Directors.
• The proposed amendments to the Anoto Group Articles of Association were approved.

ANOTO'S ANNUAL GENERAL MEETING 2012

Anoto's Annual General Meeting 2012 will take place on May 10, 2012 at Anoto´s office in Lund.

NOMINATION COMMITTEE

The Annual General Meeting 2011 resolved, in accordance with the proposal presented by the Nomination Committee, that the Chairman of the Board of Directors is assigned to contact the Company's three largest shareholders, according to the list of shareholders at the end of September 2011, and ask them to appoint one representative each no later than six months prior to the Annual General Meeting 2012 to, form the Nomination Committee for this meeting. If not otherwise resolved by the Nomination Committee, the representative of the largest shareholder shall be appointed as 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 2012 was announced on November 11, 2011, as folllows: Joonhee Won representing Aurora Investment Ltd (Chairman of the Nomination Committee), Per Boasson representing Essensor AS and Paddy Padmanabhan representing DoubleDay Holdings.

The Nomination Committee shall prepare and present to the Annual General Meeting 2012 proposals for the following issues:

• 1. Chairman at the Annual General Meeting
• 1. Chairman and other Members of the Board
• 1. Fees to the Board of Directors
• 1. Election of Auditors
• 1. Fees to the Auditors
• 1. The Nomination Committee in respect of the Annual General Meeting 2013

The Nomination Committee proposal for Board Members shall be presented in the notice for the Annual General Meeting 2012 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 five deputies.The Board of Anoto Group AB consists of five members, elected at the Annual General Meeting held on May 12th, 2011.The Board members are; Jörgen Durban who is the Chairman of the Board, Stein Revelsby who also is the CEO of the company, Andrew Hur, Gunnel Duveblad and Nicolas Hassbjer.

For information about the Board Members and their remuneration, please refer to Note 9 in the Annual Report. The members of the Board are independent of the management of the company, with the exception of Stein Revelsby who is the CEO of Anoto Group AB. The Board member Andrew Hur is dependent of the largest shareholder of Anoto, Aurora Investment Ltd, through his employement in Korean investment company TStone Corporation which controls Aurora Investment. Andrew Hur also has interests in Anoto´s daily busniess operations through Anoto´s business relations with several of TStone´s portfolio companies.The other Board members are independent in relation to Anoto and its largest owners. The company does therefore comply with the conditions of the Swedish Code of Corporate Governance requiring that a majority of the members elected by the Annual General Meetings are to be independent from the company and its management and that no less than two of the Board members are independent from the largest shareholders.

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 Compensation 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 2011

The Anoto Group AB CFO participated in the board meetings and was the secretary of the Board. When appropriate, other employees of the company participate in reporting capacities concerning their particular areas of expertise.

The Board continuously evaluated the performance of Anoto, the CEO and Anoto's management team. During the year the Board have appointed a new CEO. Twelve of the twentyone meetings in 2011 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: Review of the business strategy of Anoto
• August: Review of quarterly accounts and decision to acquire Destiny Wireless Ltd.
• November: Review of quarterly accounts and discussion of Company's direction
• December: Adoption of 2012 budget

Documentation was normally distributed approximately one week prior to a meeting. The CEO submited a monthly written report to the Board. The Board had, up until the 12th of May 2011 two Committees – an Audit Committee and a Compensation Committee –preparing items for the Board to deal with and in certain cases reach decisions delegated to them by the Board. Thereafter the work of these committees was performed by the Board as a whole. The CEO did not participate in matters concerning compensation to the Management of the company.

The Board Members attendance at Board Meetings and Committee Meetings is set forth below:

Board Member:	Number of board meetings:	Number of Audit Committee Meetings:	Number of compensation committee meetings
Jörgen Durban	21/21	1/1	1/1
Charlotta Falvin*	4/5	1/1	1/1
Paddy Padmanabhan*	5/5	1/1	1/1
Stein Revelsby	19/21	1/1	1/1
Joonhee Won*	3/5	1/1	1/1
Nicolas Hassbjer**	16/16	–	–
Gunnel Duveblad**	15/16	–	–
Andrew Hur**	16/16	–	–

*) Board Member until the end of the AGM 2011

**) Board Member elected at the AGM 2011

CORPORATE GOVERNANCE REPORT

AUDIT COMMITTEE

The Company had, up until the 12th of May 2011, an Audit Committee consisting of Paddy Padmanabhan, , Stein Revelsby and Charlotta Falvin.The tasks of the Audit Committee included the financial repor ting and the efficiency in the internal control of Anoto, internal audit and risk management, updates on the progress of the external audit, review and supervision of the impartiality and independence of the external auditors and assistance in proposing external auditors for the Annual General Meeting. During 2011 the Audit Committee had one meeting in which the committee discussed planning of the annual audit, risk assessment and follow up of the audits performed during the year. On the 30th of May 2011 the Board decided that the Board as a whole should attend to the tasks of the Audit Committee.

COMPENSATION COMMITTEE

Anoto had, up until the 12th of May 2011, a Compensation Committee consisting of Charlotta Falvin and Joonhee Won. The tasks of the committee included preparations for Board decisions concerning the principles of compensation, actual compensations and employment conditions for the management, enforcement of guidelines for compensation to management and the overall compensation structure and compensation levels within the company. The committee had one meeting during 2011. On the 30th of May 2011 the Board decided that the Board as a whole should attend to the tasks of the Compensation Committee. However, Stein Revelsby who is also the Anoto´s CEO, has not participated in the preparation of the decision on any of the above matters.

The 2011 Annual General Meeting adopted guidelines for compensation to senior executives, which can be found in Note 8 in the Annual report.

CEO AND MANAGEMENT

As of December 31, the Management Team consisted of 13 persons, with the CEO in charge. The CEO and Management Team manage and control Anoto's daily operations.

SHAREHOLDERS CONTROLLING MORE THAN ONE TENTH OF THE SHARES IN THE COMPANY

The following shareholders have a direct or indirect ownership of more than one tenth of the votes for all shares:

Aurora Investment Ltd 23,1% Essensor AS 11,7%

ANOTO´S ARTICLES OF ASSOCIATION

The company´s Articles of Association do not comprise limitations concerning the number of votes each shareholder can represent in the Annual General Meeting, or specific conditions related to appointment or dismissal of Board members or introduction of amendments to the Articles of Association.

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 financial repor ting. Given the size of Anoto, the Board has determined that there is no need for an internal audit depar tment or function, and that Anoto's finance depar tment sufficiently 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 defined strategic objectives of Anoto.The culture is based on trust, confidence 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 specific 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- defined levels of attestation and decision levels.This is applied throughout Anoto.

CORPORATE GOVERNANCE REPORT

RISK ASSESSMENT

Risk assessments are performed in order to identify and map risks. The most important risks for the internal control of the financial repor ting are identified at Group and Company level, as well as at a regional level.The outcomes of the risk assessments result in actions and tasks that suppor t the internal control of the financial repor ting.

CONTROL MEASURES

The Board has implemented a system for control and risk management based on the Board's Rules of Procedure - also including 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 repor ting of financial data, thus ensuring that both strategic and operational decisions are based on accurate financial information.

The operational work of controlling the day-to-day activities is carried out by the CEO and the Management Team. Specific guidelines govern the capacity for decision making on different issues. In addition, there are several operational meeting forums like management meetings and steering committees that address specific control issues in the operational activities.

These forums effectively steer Anoto towards the defined strategic objectives.

MONITORING

There are general as well as detailed control measures 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 efficiency.The CFO actively par ticipates in the recruitment process of all qualified controllers.

The CEO and the CFO continuously keep the Board informed of the Group's financial 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 Boardis also in regular contact with the auditors of the Group.

The Board continuously monitors Anoto's financial performance by comprehensive repor ts, 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 financial processes ensures compliance with the Company's Finance Policy, thus identifying any deficiencies in the internal control system.

A monthly management report is prepared for each application and geographic area. The report 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; in 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.

AUDITOR´S REPORT ON CORPORATE GOVERNANCE

To the annual meeting of the shareholdes in Anoto Group AB (publ.) corporate identity number 556532-3929.

It is the Board of Directors and the CEO who are responsible for the corporate governance report for the year 2011 including that it has been prepared in accordance with the Annual Accounts Act.

As a basis for our opinion that the corporate governance report has been prepared and is consistent with the annual accounts and the consolidated accounts, we have read the corporate governance report and assessed its statutory content based on our knowledge of the company. In our opinion, the corporate governance report has been prepared and its statutory content is consistent with the annual accounts and the consolidated accounts.

Malmö, April 17, 2012 KPMG AB

Eva Melzig Henriksson Authorized Public Accountant

BOARD OF DIRECTORS

Jörgen Durban

Gunnel Duveblad

Chairman of the Board Independent Born in 1956 Board member since 2010 Shareholding: 0 shares in Anoto Group AB Education: LL.M, Stockholm University, Sweden

GUNNEL DUVEBLAD

Member of the Board Independent Born in 1955 Board member since 2011 Other positions: Board member in amongst others PostNord, HiQ, Aditro and SWECO Shareholding: 20.000 shares in Anoto Group AB Education: Studies in Information Science, Umeå Universitet, Sweden

STEIN O REVELSBY

Member of the Board Not considered independent in relation to the management of Anoto Group Born in 1962 Board member since 2005 Other positions: Chairman of Abyssinia Resources Development AS, Board Member of Cenium AS Shareholding: 900,000 shares in Anoto Group AB Education: MBE, Norwegian School of Management, Norway

ANDREW HUR

Member of the Board Not considered in relation to larger shareholders Born in 1974 Board member since 2011 Other positions: Managing Director at TStone Corporation. TStone Corporation owns Aurora Investment Ltd, the largest shareholder in Anoto Group AB with 23,1% of the shares. Shareholding: 0 shares in Anoto Group AB Education: BA Economics, Korea University

NICOLAS HASSBJER

Technology

Member of the Board Independent Born in 1967 Board member since 2011 Other positions: Vice chairman of HMS Networks AB (publ). Chairman of Genomatix Software GmbH. Board member of Sigicom AB, Magnetic Components AB and the South Swedish Chamber of Commerce. Shareholding: 35.000 shares in Anoto Group AB Education: Tekn. Dr h.c. Information

SENIOR MANAGEMENT

SENIOR MANAGEMENT

STEIN REVELSBY

CEO Born in 1962 Employed since 2011 Shareholding: 900.000 shares in Anoto Group AB Education: MBA, Norweigan School of Management, Norway

JOAKIM NYDEMARK

EVP Sales & Marketing Born in 1971 Employed since 2011 Shareholding: - Education: M.Sc.E.E Lund University of Technology, Sweden

CHRISTIAN DELFIN

SVP Operations Born in 1970 Employed since 2001 Shareholding: 20.000 shares in Anoto Group AB Education: PhD, Lund University of Technology, Sweden

JAN SKOGLUND

Product Manager Born in 1956 Consultant Shareholding: 40.000 shares in Anoto Group AB Education: Business and administration, Stockholm university, Sweden, PA Education, Eskilstuna, Sweden

ANNA LIFFNER

Human Resource Manager Born in 1979 Employed since 2000 Shareholding: - Education: Bachelor of Social Science in Education, Lund University, Sweden

PIETRO PARRAVICINI

SVP Area Manager Americas Born in 1965 Employed since 2001 Shareholding: 1.500 shares in Anoto Group AB Education: Post-graduate degree in Corporate Accounting and Financial Management,AKAD Zurich, Switzerland

YUTAKA TAKAHASHI

VP Area Manager Japan Born in 1960 Employed since 2007 Shareholding: - Education: Bachelor degree in Physics, Nihon University, Japan

DAN WAHRENBERG

CFO Born in 1969 Employed since 2006 Shareholding: 25.000 shares in Anoto Group AB Education: Master of Science in Business Administration, Lunds University, Sweden

PETTER ERICSON

CTO Born in 1971 Employed since 1996 Shareholding: 160.000 shares in Anoto Group AB Education: Engineering Physics, Lund University of Technology, Sweden

JOHAN ZANDER

SVP R&D Born in 1974 Employed since 2001 Shareholding: - Education: M. Sc. Computer Science and Engineering, Lund University of Technology, Sweden

CECILIA PERKLEV

VP IPR Born in 1957 Employed since 2003 Shareholding: 266 shares in Anoto Group AB Education: M. Sc. Engineering Physics, Lund University of Technology, Sweden

PETER JOHANSSON

Managing Director C Technologies Born in 1965 Employed since 1999 Shareholding: 17.500 shares in Anoto Group AB Education: -

EDWARD BELGEONNE

CEO Destiny Wireless Ltd Born in 1962 Employed since 2011 (Founder of Destiny Wireless) Shareholding: 173.236 shares in Anoto Group AB Education: Imberhorne College, West Sussex, England

THE ANOTO SHARE

Anoto Group AB (publ.) has been listed on the NASDAQ OMX Stockholm Stock Exchange (ticker: ANOT) since June 16, 2000. Today the share is listed on the Small Cap list of the NASDAQ OMX Nordic Exchange Stockholm. The share was previously traded on the New Market starting on March 15, 2000. Anoto Group's share capital of SEK 2,606,321 is allocated among 130,316,055 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 profits.

SHARE PRICE PERFORMANCE AND TRADING

The price of the Anoto Group share decreased by four per cent from SEK 3,75 to 2,65 during the year. During the same period, the NASDAQ OMX Sweden All Share Index was down by 16 per cent and the NASDASQ OMX Sweden IT Index decreased by 11 per cent.Anoto Group's market capitalization was MSEK 345 on December 31, 2011.A total of 30,501,211 Anoto shares were traded on the NASDAQ OMX Stockholm Stock Exchange in 2011, at a turnover rate of 23 per cent.

SHAREHOLDERS

At the end of 2011, Anoto Group had 5,427 shareholders. Foreign shareholders controlled 65 per cent; the ten largest shareholders 74,8 per cent; institutional and industrial investors 92 per cent of the shares.

DIVIDEND POLICY

The company's future dividend policy will reflect its earnings, financial position and financing needs. Dividend proposals will be examined in the light of shareholder demands for a reasonable return and the company's internal financing requirements.

OPTION PROGRAMMES

The parent company currently has no outstanding stock option program.

ANALYSTS

Anoto Group is covered by analysts at a number of banks and securities brokers, including Carnegie and Redeye.

PER-SHARE DATA 2011
Number of shares	130,316,055
Number of outstanding options	0
Average number of shares	129,161,263
Average number of outstanding options	0
Earnings per share (SEK)	-1,89
Earnings per share incl. options (SEK)	-1,89
Cash flow per share for the year (SEK)	-0,44
Cash flow per share incl. options (SEK)	-0,44
Shareholders' equity per share (SEK)	1,17
Shareholders' equity per share incl. options (SEK)	1,17

LARGEST SHAREHOLDERS DECEMBER 31, 2011
NAME	%	TOTAL
Aurora Investment Ltd	23.1%	30,162,069
Essensor AS	11.7%	15,303,758
Double Day Holdings Ltd	9.9%	12,860,000
RS Platou	6.0%	7,843,042
Swedbank Robur Fonder	5.8%	7,512,805
Barclays Bank	4.9%	6,428,195
Home Capital AS	4.5%	5,802,261
Fougner Invest AS	3.8%	5,000,000
Carnegie Norway Branch	3.2%	4,210,000
Hitachi Maxell	1.8%	2,300,000
Total	74,8%	97,422,130

SHARE PRICE AND TRADING VOLUME JANUARY 2006 – MARCH 2012

0 2,000 4,000 6,000 8,000 0 2 4 6 8 Anoto Group OMX Stockholm_PI SX9000 OMX Stockholm Technology_PI No. of shares traded, in 000s/week Index No. of shares, 000s Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

SHAREHOLDERS BY SIZE, DECEMBER 31, 2011

Holdings	Total number of shareholders	% of total number of shareholders	Hold collectively number of shares	% of share capital
1-1,000	4,008	73,9	1,207,421	0,93
1,001-10,000	1,093	20,1	3,978,720	3,05
10,001-100,000	261	4,8	7,393,234	5,67
100,001-	65	1,2	117,736,680	90,35
Total	5,427	100,0	130,316,055	100,00

SHARE PRICE AND TRADING VOLUME JANUARY 2011 – DECEMBER 2011

FIVE-YEAR SUMMARY

Summary of comprehensive income statements

(SEK thousand)	2007	2008	2009	2010	2011
Net sales	122,733	143,975	205,862	212,293	192,286
Other income	19,180	-	-	-
Gross profit	111,145	97,662	142,472	143,970	135,567
Amor tization, intangible fixed assets	-13,110	-12,159	-12,540	-43,747	-9,811
Depreciation, property plant & equipment	-2,077	-3,011	-1,914	-3,014	-3,789
Operating profit/loss	-19,592	-51,645	-20,848	-75,324	-242,980
Profit/loss on par ticipations in Group companies	-252	-	-	-	-
Profit/loss on shares in associated companies	-	-2,431	-	-	-
Other financial items	3,269	-5,974	-87	-1,449	-869
Profit/loss after financial items	-16,121	-60,050	-20,935	-77,272	-243,489
Tax	-628	-853	257	-54	-30
Profit/loss after tax	-16,749	-60,903	-20,678	-77,326	-243,879

1) Incl. MSEK 230 for write-down of goodwill.

Summary of financial position statements

(SEK thousand)	2007.12.31	2008.12.31	2009.12.31	2010.12.31	2011.12.31
Assets
Intangible fixed assets	339,473	364,025	360,059	328,614	118,739
Tangible fixed assets	4,046	5,279	9,184	8,943	6,910
Financial fixed assets	8,560	30,599	2,835	1,794	1,486
Total non-current assets	352,079	399,903	372,078	339,351	127,135
Inventory	5,960	37,329	29,356	25,306	27,236
Accounts receivable	24,062	32,564	45,013	19,139	39,138
Other current assets	51,132	32,304	27,686	14,950	18,649
Cash & bank balances, incl current investments	131,301	99,344	80,770	81,044	23,941
Non-current assets held for divestment	-	-	-	-	-
Total current assets	212,455	201,541	182,825	140,439	108,964
Total assets	564,534	601,444	554,903	479,790	236,099
Liabilities and shareholders equity
Shareholders equity	452,809	488,474	469,105	394,763	152,988
Minority shareholdings	2,069	-160	-1,225	-3,160	-13,074
Long term liabilities
Non-interest bearing	50,143	41,891	31,007	19,806	9,903
Interest bearing	-	-	-	-	15,695
Current liabilities
Non-interest bearing	59,513	71,239	56,016	68,381	70,587
Interest bearing	-	-	-	-	-
Total liabilities	111,725	112,970	85,798	88,187	96,185
Total liabilities and shareholders equity	564,534	601,444	554,903	479,790	236,099

Summary of cash flow statements

(SEK thousand)	2007	2008	2009	2010	2011
Profit/loss after financial items	-6,647	-60,050	-20,935	-77,272	-243,849
Items that do not affect liquidity	16,243	113,715	15,554	49,632	246,310
Change in working capital	-39,015	-9,318	-17,641	45,002	-50,306
Cash flow from operating activities	-29,419	44,347	-23,022	17,362	-47,845
Cash flow from investing activities	-20,808	-40,257	-14,933	-17,088	-9,258
Total cash flow before financing activities	-50,227	4,090	-37,955	274	-57,103
Cash flow from financing activities	1,687	-36,047	19,381	-	-
Cash flow for the year	-48,540	-31,957	-18,574	274	-57,103

Key ratios

	2007	2008	2009	2010	2011
Sales growth, %	13	17	43	3	neg
Gross margin, %	89	68	69	68	71
Operating margin %	neg	neg	neg	neg	neg
Profit margin, %	neg	23	neg	neg	neg
Capita employed (TSEK)	454,878	488,314	467,880	391,603	139,914
Return on capital employed, %	neg	neg	neg	neg	neg
Return on shareholder´s equity, %	neg	neg	neg	neg	neg
Proportion shareholders´ funds, %	81	81	84	82	59
Equity/assets ratio, %	81	81	84	82	59
Net debt/equity ratio, multiple	-	-	-	-	-
Net debt (TSEK)	-131,301	-99,344	-80,770	-81,044	-23,941
Earnings per share (SEK)	-0.13	-0.47	-0.16	-0.60	-1.89
Earnings per share after dilution (SEK)	-0.13	-0.47	-0.16	-0.60	-1.89
Cash flow per share for the year (SEK)	-0.38	-0.25	-0.14	0.00	-0.44
Cash flow per share after dilution (SEK)	-0.38	-0.25	-0.14	0.00	-0.44
Shareholder´s equity per share (SEK)	3.52	3.80	3.65	3.07	1.17
Shareholders´s equity per share after dilution (SEK)	3.52	3.80	3.65	3.07	1.17
Average No. Of employees	103	127	113	108	94
Sales per employee (TSEK)	1,191	1,134	1,822	1,966	2,046
Payroll expenses incl. social security contribution (TSEK)	88,394	106,375	95,530	98,019	80,741
(of which pension premiums)	10,588	13,337	12,358	14,068	10,050

DEFINITIONS

PROPORTION SHAREHOLDERS' FUNDS

Shareholders' equity, non-controlling interest and deferred tax at the end of the year as a percentage of total assets

RETURN ON SHAREHOLDERS' EQUITY

Profit for the year as a percentage of average shareholders' equity

RETURN ON CAPITAL EMPLOYED

Profit after net financial income/expense plus interest expense, divided with an average of capital employed

GROSS MARGIN

Gross profit as a percentage of net sales. Gross profit is defined 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

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

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

OPERATING MARGIN

Operating profit/loss after depreciation and amor tization 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 non-controlling interest as a percentage of total assets

PROFIT MARGIN

Profit after financial income/expense as a percentage of net sales

CASH FLOW PER SHARE FOR THE YEAR

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

Anoto's Annual General Meeting will be held on May 10, 2012 at the Anoto premises traktorvägen 11 in lund

Anoto's Annual General Meeting will be held on May 10, 2012 at 1 p.m. at the Anoto premises, Traktorvägen 11 in Lund, Sweden. Any shareholder wishing to participate in the meeting must notify the company in one of the following ways:

• Phone: +46 46 540 12 00, Fax: +46 46 540 12 02
• E-mail to AGM.2012@anoto.com
• In writing to Anoto Group AB, Box 4106, SE -227 22 Lund, Sweden

The notification must reach the company by 12:00 noon on Friday, May 4, 2012.To be entitled to par ticipate, the shareholder must also be entered in the Euroclear Sweden AB share register by May 4, 2012. Any shareholder who has registered his or her shares under a trustee must temporarily register them in his or her own name with Euroclear Sweden AB by Friday, May 6, 2012.When submitting the notification, 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 financial repor ts are released in Swedish and English.The easiest way to obtain the repor ts is by downloading them from www.anoto.com or e-mailing a request to AGM.2012@anoto.com or phoning +46 46 540 12 00.

Following is the schedule of Anoto Group's financial repor ts for its 2012 financial year.

January-March interim report, April 27, 2012

January-June interim report, August 3, 2012

January-September interim report, November 2, 2012

2011 year-end report, February 8, 2013

Anoto Group was founded in 1999 and has created the first commercial system for digital pen and paper. Today, Anoto is world leading in digital pen technology, a technology that enables fast and reliable transmission of handwritten text and illustrations into digital format, not only from paper but also from surfaces such as whiteboards.

Anoto operates through a global partner network that focuses on user-friendly solutions for efficient capture, transmission and storage of data within different business areas, such as healthcare, banking & finance, transport & logistics, field service and education. Anoto has partners across all continents and in more than 50 countries.

Protecting innovation is central to Anoto and the company currently has more than 380 patents and 130 patent applications.

The Anoto Group has around 100 employees and is headquartered in Lund, Sweden. The company also has offices in Boston, Guilford and Wetherby (Great Britain) and Tokyo (Japan). www.anoto.com

Anoto Group AB Traktorvägen 11 SE-227 22 LUND Sweden Phone +46 46 540 1200 Fax +46 46 540 1202

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Anoto-Maxell K.K.

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The Croft Business Park, Kirk Deighton, Wetherby West Yorkshire LS22 5HG United Kingdom Phone +44 1937 858 170 Fax + 44 1937 585860

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Traktorvägen 11 SE-226 60 LUND Sweden Phone +46 46 540 1200 Fax +46 46 540 1202