Anoto Group — Interim / Quarterly Report 2009

Jul 31, 2009

Anoto Group January – June 2009 Interim report

• Net sales in the first sixth months of 2009 amounted to MSEK 107 (59*). Second quarter net sales were MSEK 44 (33*).
• The gross margin for January-June was 68 % (71*) and the gross profit MSEK 73 (42*). Second quarter gross margin was 73 % (73*) and the gross profit was MSEK 32 (24*).
• Earnings Before Interests and Taxes (EBIT) in the first half-year was MSEK -4 (-33*). For the second quarter it was MSEK -6 (-16*).
• The first half-year result after tax was MSEK -4 (-35*). The second quarter result after tax was MSEK -6 (-18*).
• Earnings per share for the first half-year were SEK -0.03 (-0.27*). The second quarter earnings were SEK -0.04 (-0.14*).
• The cash flow during the first half-year amounted to MSEK 10 (-57*). The second quarter cash flow amounted to MSEK -14 (-36*).

*) Comparable numbers for 2008 are reported in accordance with the new format for presenting the profit and loss statement. The numbers exclude the impact of those operations in 2008 that have been divested.

Summary of activities during the second quarter 2009

• Sales improved by 35 % compared to the same period last year. Net Sales amounted to MSEK 44.
• The gross margin improved to 73 % in the second quarter.
• LeapFrog launched Tag Junior, a toddler sized "book explorer" for two to four years old children.
• First deliveries of digital pens to PLUS Vision, Japan. PLUS Vision launched in June 2009 the world's first portable interactive whiteboard.

Comments by CEO Anders Norling

Continued sales growth with pen sales playing an important role

Sales in the first half of 2009 amounted to MSEK 107, corresponding to a growth of 80 % compared to the same period last year. Digital pens now represent more than 40 % of our total sales and amounted to MSEK 46 in the first half of 2009 compared to MSEK 18 a year ago. This development shows the strategic importance of the acquisition in 2008 of the digital pen business from Hitachi Maxell.

In early 2009 Polyvision launched the first interactive whiteboard based on Anoto technology.

In June the Japanese company PLUS Vision Corporation launched the world's first portable sheet-type interactive display with a digital pen, 'PLUS Wireless Interactive Panel UPIC, also based on technology provided by Anoto. www.plus-vision.com/en. PLUS is Japan's largest company within office supply and also have extensive operations outside Japan. We are optimistic about the future market potential of interactive whiteboards and the partnerships with Polyvision and Plus Vision.

Anoto digital pen and forms partners maintain a high activity level. However leasing and financing support has become an increasing concern for some partners and the general financial downturn is affecting them. We are convinced that Anoto digital pen and paper solutions are an attractive cost effective method of maintaining or increasing efficiency. However, it is still difficult to predict the future development.

Our cash position continues to be strong. During the first half-year 2009 we have had a positive cash flow of MSEK 10 and our closing balance in Q2 2009 was MSEK 109. Livescribe repaid its debt to Anoto of MSEK 20 in March. During the same period the working capital has increased and long term liabilities have been reduced by totally MSEK 7.

Cash flow 2007 - 2009

Organization

The Anoto organization is divided into three areas:

• Anoto Products
• Technology and Licensing
• Imaging Technology

These three application areas generate income in five different categories - licensing, royalty, digital pens, components and NRE (Non-recurring engineering ).

Net sales per income category

Amounts MSEK	April-June 2009	April-June 2008	January-June 2009	January-June 2008
Licensing fees	11	8	25	13
Royalty fees	4	7	9	9
Digital pens *	21	10	46	18
Components	4	5	16	11
NRE and others	4	3	11	8
Total	44	33	107	59

* Digital pens include C-Pen

Anoto Products

Amounts MSEK	April-June 2009	April-June 2008	January-June 2009	January-June 2008
Net sales	32	21	70	38
Gross profit	24	14	49	26

Anoto Products focuses on systems, products and services that target businesses, primarily in the field of forms processing. Anoto has an indirect business model and markets its products through partners, such as system integrators, software developers and IT consulting firms, all of which offer customized solutions with Anoto technology to their corporate customers. Turnkey products, such as existing scanning and translation pens, as well as newly developed products including Anoto penPresenter, may also be marketed through other sales and distribution channels.

Anoto Products shows growth in all markets in comparison to the same period last year, but less than in the first quarter of 2009, primarily due to delays in larger installations. Most transactions are within applications for the healthcare and clinical trial sectors, but there is also an increased interest within facility management. The inflow of new partners continues to be good.

The order inflow was stable during the period with many small orders. However, several larger projects were delayed.

During the period we have focused our partner recruitment activities to Sweden and France, attracting new partners in areas where we may expand into new market segments, thus broadening our distribution channels. The Anoto Forms Solution (AFS) platform is an important enabler for these activities and improves Anoto´s position in the value chain considerably. A new generation, AFS 2.0 with extended functionality, is planned for launch during Q4.

Sales of the Anoto penPresenter and penDocuments continue to be slower than expected. During the second quarter a distribution agreement for Anoto penPresenter was signed in the US with Douglas Stewart, the largest distributor of computer products, consumer electronics and school supplies exclusively serving the education market.

Sales of C Technologies' C-Pen products, under our own brand and as OEM, continue to be stable and contribute to Anoto's overall result in a positive way. Second quarter sales for C Technologies were much stronger than expected. In the second quarter C Technologies delivered components to be installed in devices for reading water supply.

Technology and Licensing

Amounts MSEK	April-June 2009	April-June 2008	January-June 2009	January-June 2008
Net sales	10	9	27	11
Gross profit	7	8	18	10

Customers within Technology Licensing develop and sell products based on technology and digital pens provided by Anoto. The customers of the end products are both individual consumers and enterprises.

Such 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.

Technology & Licensing sales are developing well. PLUS Vision Corporation, Japan, (www.plus-vision.com/en) has during the period become a new partner to Anoto.

In June, PLUS Vision Corporation launched the world's first foldable sheet-type interactive panel with a digital pen, 'PLUS Wireless Interactive Panel UPIC', with technology provided by Anoto.

The PLUS UPIC is an interactive panel, allowing the user to operate a computer directly from a projected image by using a digital pen. The back of the panel is magnetic, making it easily attachable to different surfaces. During the second quarter the first deliveries of pens to PLUS were shipped.

Anoto delivered additional pens to PolyVision (www.polyvision.com) during the second quarter to be used with ēno™, an interactive whiteboard with an Anoto digital pen.

Livescribe (www.livescribe.com) royalty fees from the first quarter 2009 are included in this period, at a lower level than expected however.

The LeapFrog Tag Reading System (www.leapfrog.com/tag/) is selling according to expectation, but has no impact on our cash flow, since LeapFrog paid the royalty in advance. The prepaid amount is reduced by an equal monthly amount as income over the term of the royalty agreement.

LeapFrog launched Tag Junior, toddler sized "book explorer", for two to four years old children to engage with books, enhancing the narrative with carefully chosen sounds and activities. Tag Junior uses Anoto technology.

Imaging Technology

Amounts MSEK	April-June 2009	April-June 2008	January-June 2009	January-June 2008
Net sales	2	3	10	10
Gross profit	1	2	6	6

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

Sales within Imaging Technology fell steeply during the second quarter and amounted to MSEK 2. Major customers have decreased their orders during the period due to lower demand of their own products.

The second quarter 2009 in figures

Sales and earnings for the second quarter (April - June)

Second quarter revenues were MSEK 44 (33*).

The gross profit was MSEK 32 (24*), and the gross margin was 73 % (73*).

Sales and administration expenses, together with research costs, amounted to MSEK -41 (-39*), of which depreciation, amortization and write-downs accounted for MSEK -4 (-7*).

The second quarter Earnings Before Interests and Taxes (EBIT) was MSEK -6 (-16*).

Cash flow for the second quarter (April-June)

Cash flow from operating activities totaled MSEK -8 (-21) for the second quarter. Net cash flow amounted to MSEK -14 (-36*), of which net investment affected the quarter's cash flow by MSEK -4 (-15).

Financing and liquidity

At the close of the quarter, the group's total cash amounted to MSEK 109 (74).

Anoto Group AB

As a pure holding company, Anoto Group AB has a limited number of corporate functions. Sales for the second quarter were MSEK -1 (8), while the pre-tax profit was MSEK 0 (1). At the close of the quarter liquid assets, including current investments amounted to MSEK 1 (17). Investments came to MSEK 0 (0).

Accounting policies

This interim report was prepared in accordance with IAS 34, Interim Financial Reporting. For information about the accounting policies applied, refer to the 2008 annual report. The accounting policies are unchanged from those applied in 2008.

Risk factors and uncertainties

No significant additional risks are deemed to have arisen beyond those described in the 2008 annual report for the Anoto Group. (Please see Note 2 for a detailed presentation of the company's risk exposure and management.)

Share data

The company's share is listed on the NASDAQ OMX Nordic Small Cap List in Stockholm.

Shares numbered 128,583,867 at the end of the second quarter, in addition to which 585,000 warrants were outstanding, of which none were deemed to have a value as of June 30, 2009.

Option programs

The parent company has issued options as part of various incentive programs. Full exercise of all remaining programs would result in a dilution of about 0.5 %.

Outlook

Anders Norling, CEO

Due to the uncertainty in the global economy it is still difficult to assess the future. In the longterm, I continue to see a growth potential for Anoto digital pen and paper technology and I look to the future with confidence.

Reporting schedule

Third quarter report	November 3, 2009
Year-end report 2009	February 4, 2010
Annual General Meeting	May 14, 2010

Lund, July 31, 2009

Chairman

Hans Otterling Håkan Eriksson Leif Eriksrød

Charlotta Falvin Stein Revelsby Anders Norling

CEO

This report has not been reviewed by the company auditors.

Anoto Group AB may be required to disclose the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 08.30 on July 31, 2009.

For more information

You are welcome to participate in Anoto's teleconference for financial analysts and the media at 10.00 CET on July 31, 2009.

Date:	Friday, July 31, 2009
Time:	10.00 CET
Phone:	+44 (0) 20 7162 0025
Specify:	Anoto

Or phone: Anders Widesjö CFO +46 46 540 12 34

Anoto Group AB (publ), corporate identification no. 556532-3929 Emdalavägen 18 SE-223 69 Lund Phone: +46 46 540 12 00 www.anoto.com

Consolidated income statement in summary

(SEK thousand)	Note	Q2		Half year		Full year
Ongoing operations		April - June 2009	April - June 2008	Jan - June 2009	Jan - June 2008	Jan - Dec 2008
Net sales		44 466	32 866	106 588	59 268	143 975
Cost of goods and services sold		-12 175	-8 911	-33 823	-17 275	-46 313
Gross profit		32 291	23 955	72 765	41 993	97 662
Sales, administrative and R&D costs		-41 090	-39 163	-82 149	-72 808	-152 003
Other operating income/cost		3 164	574	5 793	-669	2 961
Operating profit/loss		-5 635	-14 634	-3 590	-31 484	-51 380
Share of earings in group companies		-323	0	-323	0	0
Writedown of shares in associated companies		-50	-1 686	-428	-1 686	-2 431
Other financial items		266	-1 618	719	-973	-6 239
Profit/loss before taxes		-5 742	-17 938	-3 622	-34 143	-60 050
Taxes		-1	9	14	-859	-853
Profit/loss for the period		-5 743	-17 929	-3 609	-35 002	-60 903
Closed operations
Profit from closed operations	1	0	2 878	0	6 449	91 352
Profit/loss for the period (including Closed operations)		-5 743	-15 051	-3 609	-28 553	30 449

Group - Statement of comprehensive income for the period

(SEK thousand)	April - June 2009	April - June 2008	Jan - June 2009	Jan - June 2008	Jan - Dec 2008
Translation differences for the year	1 604	-159	848	-65	2 932
Other comprehensive income/cost for the period	1 604	-159	848	-65	2 932
Total comprehensive income for the period	-4 139	-15 210	-2 761	-28 618	33 381
Total comprehensive income for the period attributable to:
Shareholders of Anoto Group AB Minority shareholders	-3 703 -436	-14 717 -493	-1 937 -824	-28 072 -546	35 610 -2 229
Total comprehensive income for the period	-4 139	-15 210	-2 761	-28 618	33 381
Key ratios:
Gross margin Operating margin	72,6% Neg	72,9% Neg	68,3% Neg	70,9% Neg	67,8% Neg
Earnings per share Earnings per sharee (kr) 2 Earnings per share after dilution (kr) 2	-0,04 -0,04	-0,12 -0,12	-0,03 -0,03	-0,22 -0,22	0,24 0,24
Earnings per share from ongoing operations Earnings per sharee (kr) 2 Earnings per share after dilution (kr) 2	-0,04 -0,04	-0,14 -0,12	-0,03 -0,03	-0,27 -0,22	-0,47 -0,47
Average number of shares Before dilution After dilution	128 583 867 128 583 867	128 583 867 128 583 867	128 583 867 128 583 867	128 583 867 128 583 867	128 583 867 128 583 867

Disposal of business

2 Based on the weighted average number of shares and outstanding warrants for each period. Only warrants for which outstanding warrants for each period. Only warrants for which the present value of the issue price

is lower than the fair value of the ordinary share are included in the calculation.

Consolidated balance sheet in summary

(SEK thousand)	2009-06-30	2008-06-30	2008-12-31
Intangible fixed assets Tangible assets Financial fixed assets Total fixed assets Inventories	363 711 5 079 10 937 379 727 38 013	355 857 4 263 5 160 365 280 20 376	364 025 5 279 30 599 399 903 37 329
Accounts receivable Other current assets Total short-term receivables	32 136 30 971 63 107	20 054 41 712 61 766	32 564 32 304 64 868
Liquid assets, including current investments	109 022	74 076	99 344
Total current asstes	210 142	156 218	201 541
Total assets	589 869	521 498	601 444
Equity attributable to shareholders of Anoto Group AB Equity attributable to minority interests	0 486 428 -984	0 428 811 1 509	0 488 474 -160
Long term liabilities	36 447	48 321	41 891
Current provisions Other current liabilities Total current liabilities	975 67 003 67 978	396 46 461 46 857	800 70 439 71 239
Total liabilities and shareholders' equity	589 869	525 498	601 444

Change in shareholders' equity

		Other capital		Profit for	Shareholders	Minority	Total shareholders
	Share capital	contributed	Reserves	the year	equity	shareholders	equity
Opening balance 1st of Januari 2008	2 572	448 508	-3 063	4 791	452 808	2 069	454 877
Total comprehensive income for the period	0	0	2 911	32 699	35 610	-2 229	33 381
Adjustment costs for share options	0	0	0	56	56	0	56
Shareholders equity 31st of December 2008	2 572	448 508	-152	37 546	488 474	-160	488 314
Total comprehensive income for the period	0	0	848	-2 785	-1 937	-824	-2 761
Adjustment costs for share options	0	0	0	-109	-109	0	-109
Shareholders equity 31st of March 2009	2 572	448 508	696	34 652	486 428	-984	485 444

-

Consolidated Cash flow statement in summary

(SEK thousand)		April - June 2009	April - June 2008	Jan - June 2009	Jan - June 2008	Jan - Dec 2008
Profit/loss after financial items		-5 742	-15 060	-3 622	-27 694	31 302
Depreciation, amortisation and write-downs		3 883	6 505	6 742	10 101	21 483
Other items not included in cash flow		-748	1 773	-992	-1 345	6 854
Totla items not included in cash flow Cash flow from operating activities		3 135	8 278	5 750	8 756	28 337
before change in working capital		-2 607	-6 782	2 128	-18 938	59 639
Change in working capital		-5 561	-13 912	-1 891	-16 248	-9 317
Cash flow from operating activities		-8 168	-20 694	237	-35 186	50 322
Cash flow from investment activities		-4 284	-14 743	-5 777	-22 836	-40 257
Total cash flow before financing activities		-12 452	-35 437	-5 540	-58 022	10 065
Cash flow from financing activities		-1 128	-73	15 218	797	-42 022
Cash flow for the period		-13 580	-35 510	9 678	-57 225	-31 957
Liquid assets at the beginning of the period*		122 602	109 586	99 344	131 301	131 301
Liquid assets at the end of the period*		109 022	74 076	109 022	74 076	99 344
Cash flow from ongoing operations		-13 580	-36 464	9 678	-61 640	-116 199
Cash flow from closed operations	2	-	954	-	4 415	84 242

*Cash, bank balances and current investments with a duartion of less than 6 months ** Includes non-repayable advances from customer

Key ratios
------------	--

	April - June	April - June	Jan - June	Jan - June	Jan - Dec
	2009	2008	2009	2008	2008
Cash flow for the year (KSEK)	-13 580	-35 510	9 678	-57 225	-31 957
Cash flow per share (SEK) 2	-0,11	-0,28	0,08	-0,45	-0,25
Cash flow per share after dilution (SEK) 2	-0,11	-0,28	0,08	-0,45	-0,25

	2009-06-30	2008-06-30	2008-12-31
Equity/assets ratio	82,5%	82,2%	81,2%
Number of shares 3	128 583 867	128 583 867	128 583 867
Shareholders' equity per share (SEK) 3	3,78	3,33	3,80

2 Based on the weighted average number of shares and

outstanding warrants for each period. Only warrants for which the present value of the issue price

is lower than the fair value of the ordinary share are included in the calculation.

3 Including outstanding warrants (09-03-31: 0, 08-12-31)

Only warrants for which the present value of the issue price is lower than the fair value of the ordinary share are included in the calculation.

Parent company, summary of income statement

(SEK thousand)	April - June 2009	April - June 2008	Jan - June 2009	Jan - June 2008	Jan - Dec 2008
Net sales	-880	7 764	7 447	14 857	30 044
Gross profit	-880	7 764	7 447	14 857	30 044
Administrative costs	802	-7 344	-6 760	-13 553	-28 226
Operating profit	-78	420	687	1 304	1 818
Financial items	-2	293	-10	54	-873
Resultat efter finansiella poster	-80	713	677	1 358	945

Parent company, balance sheet in summary

(SEK thousand)			2009-06-30	2008-06-30	2008-12-31
Intangible fixed assets Tangible assets Financial fixed assets Total fixed assets			684 295 344 700 345 678	745 433 344 700 345 878	711 356 344 699 345 766
Other short-term receivables Liquid assets, including current investments Total current assets			118 581 922 119 503	94 539 16 713 111 252	119 312 897 120 209
Total assets			465 181	457 130	465 975
Equity Other current liabilities			452 359 12 822	452 090 5 040	451 682 14 293
Total liabilities and shareholders' equity			465 181	457 130	465 975
Note 1 Closed operations - Profit & Loss	April - June 2009	April - June 2008	Jan - June 2009	Jan - June 2008	Jan - Dec 2008
Net sales	0	8 322	0	16 333	38 229
Cost of goods & services	0	-1 060	0	-3 538	-5 949
Gross profit	0	7 262	0	12 795	32 280
Sales, administrative & R&D costs	0	-4 523	0	-6 568	-12 580
Other income	0	0	0	0	71 387
Operating profit	0	2 739	0	6 227	91 087
Financial items	0	139	0	222	265
Profit from closed operations	0	2 878	0	6 449	91 352

Note 2 Closed operations - Cash flow	April - June	April - June	Jan - June	Jan - June	Jan - Dec
	2009	2008	2009	2008	2008
Profit/loss after financial items	0	2 878	0	6 449	91 352
Depreciation	0	181	0	364	148
Taxes paid	0	-1 552	0	-1 609	-6 004
Investments	0	-553	0	-789	-1 254
Cash flow for the period from closed operations	0	954	0	4 415	84 242