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Anoto Group

Quarterly Report May 31, 2017

3134_10-q_2017-05-31_1bf98fa6-f9ea-4b1d-945f-4c70f43a8f3f.pdf

Quarterly Report

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QUARTERLY REPORT Q1/ 2017

© 2017 ANOTO

Anoto Group AB is a global leader in digital writing and drawing solutions. Its technology enables high-precision pen input on nearly any surface. Anoto is present around the world through a global network of strategic licensing partners that deliver user-friendly writing and drawing solutions for effective collection, transfer and storage of data. Anoto is traded on the Small Cap list of Nasdaq Stockholm under ANOT.

This report was published on May 31, 2017 at 23.15 CET

For more information: www.anoto.com

REPORT JANUARY – MARCH 2017

  • Net sales for the quarter were MSEK 46 (45).
  • Net losses after tax decreased substantially to 34 MSEK (62 Q1 2016) which includes one-time non-recurring write offs of 11 MSEK. One-time write offs in Q1 include non-recurring costs of 8.2 MSEK relating to closing the Lund and Norrköping offices announced in the quarter and other items totaling 3.0 MSEK including inventory write downs.
  • Gross margin in the quarter was 35% (40%) which is slightly higher than the 34% reported for Q4 2016 but lower than the gross margin of 40% achieved in Q1 2016. The year-over-year gross margin decrease is mainly due to the addition of Pen Generations to the group and the increasing portion of revenue that it represents.
  • Overhead costs in the quarter amounted to 48 MSEK (80). This is considerably lower than previous quarters and 40% lower than Q1 2016 due to the cost saving activities.
  • Earnings per share after dilution for the quarter were SEK -0.01 (-0.06).
  • Anoto has reached a new agreement with SMark Co., Ltd. (SMark) regarding Anoto DNA (ADNA). SMark will invest 5 million USD in Anoto and use Anoto's microdot pattern in all of its products. Anoto will receive 20% of all of SMark's ADNA revenue. This investment was completed in May.
  • Restructuring and cost reduction efforts are beginning to show positive signs in the financial results although Anoto still faces financial challenges in the near term. For further information, see "Risks and Uncertainties".
Key ratios 2017
Jan-Mar
2016
Jan-Mar
2016
Jan-Dec
Net sales, MSEK* 46 45 236
Gross profit/loss* 16 18 79
Gross margin, % 35 40 34
Operating margin, % Neg Neg Neg
Operating profit/loss, MSEK -32 -62 -239
EBITDA, MSEK -28 -57 -231
Profit/loss for the period,
MSEK* -34 -62 -242
Earnings per share
after dilution, SEK* -0,01 -0,06 -0,13
Cash flow for the period,
MSEK* 0 -2 -6
Cash at end of period, MSEK* 6 9 6

* Defined under IFRS

CEO COMMENTS:

Anoto's focus in 2017 continues to be on achieving profitability by concentrating on just three existing related business areas (Livescribe Retail business, Enterprise Forms and Education Business) and achieving growth through the Anoto DNA initiative.

In Q1 2017, we continued our initiatives to restructure the business and announced our decision to close down our Lund, Norrköping and Wetherby offices. This decision to close regional offices was motivated by the need to consolidate decision making and increase communication, as much as the need to reduce costs. The company suffered from the costs of miscommunication and the lack of communication. Customers were confused as to who to contact and accountability and responsibilities were not clear.

Anoto had ten offices worldwide last year. When the restructuring of the business is complete, Anoto will have two.

Interestingly, despite a reduction of over 100 in the headcount and the closing down of 7 offices globally over the previous year, gross revenue was not affected by the restructuring as it increased 2% vis-a-vis 2016 while costs were 40% lower than in Q1 2016.

Productization of Anoto DNA (ADNA) moved forward energetically in Q4 of 2016 and an enhanced release was made in Q1 of 2017. Business and technical cooperation with SMark has also continued and in Q1, we reached a new agreement with SMark regarding ADNA.

SMark will invest 5 million USD in Anoto and SMark will use Anoto's microdot pattern in all of its products. Anoto will also receive 20% of all of SMark's ADNA revenue. Anoto will pay 20% of its revenue to SMark only if Anoto uses technology developed by SMark in relation to printing and copy protection. This investment was finalised on May 4th .

OUTLOOK

With most of the cost-reduction and efficiency-enhancement activities initiated in April 2016 now completed, Anoto's focus is shifting to profitable growth. Sales activities are concentrating on highgrowth areas such as emerging markets and governments. To support these accelerating sales Anoto is investing in a new platform approach to pen hardware and ongoing software innovation to meet the needs of changing business environments. Anoto has recently released V1 of ADNA for select developers and an ADNA demo app will shortly be widely available to support the various parties with whom we are working to commercialize this business. Anoto is also hosting a global solutions roundtable in Seoul in June 2017 where Anoto partners will convene to share their latest technological developments and solutions. We believe this increased collaboration will further stimulate growth through geographic expansion.

The key theme for 2016 was "cost"; the key theme for 2017 is "profitable growth".

Joonhee Won CEO, Anoto Group AB (publ)

ANOTO GROUP IN THE FIRST QUARTER 2017

Total sales in the quarter amounted to 45.8 MSEK (45.1) and Operating profit amounted to -31.6 MSEK (-61.6). The Operating loss for Q1 includes -11.2 MSEK of one-time, non-recurring charges related to the closure of the Lund and Norrköping offices.

Following the recent structural changes in the group, the first quarter of 2017 shows a significant reduction (40%) in operating expenses when compared to the same period in 2016.

Performance in Asia continues to be strong. Revenue in the USA was lower than budgeted and overall costs were higher than anticipated due, in part, to a combination of one-time charges and a slower than expected decline in operating expenses. New demand generation activities and positive seasonality in the USA are expected to bring performance back within range over coming periods. The global market for forms, although slow in Q1, is showing signs of recovery. There is a pipeline of strong deals, particularly in emerging markets' public sectors via well-established partners. These are potentially large deployments that we hope to close within 2017.

Pen Generations, Inc., acquired by Anoto in June 2016, contributed 17.4 MSEK in revenue for the quarter but its operating profit did not have a material impact at the group level. This revenue represents a 60% increase over the prior quarter's revenue of 10.9 MSEK.

Operating cash flow for the quarter was 0.3 MSEK (-21.7). Investments in Fixed assets amounted to 0.2 MSEK (10.4) including capitalised expenses of 0.0 MSEK (6.7). Cash flow after financial activities was 0.4 MSEK (-2.4).

Net sales per product group 2017 2016 2016
MSEK Jan-Mar Jan-Mar Jan-Dec
Licenses and royalties 3 3 11
Digital Pens 33 38 196
Other 10 4 29
Total 46 45 236

ACCOUNTING POLICIES

This interim report was prepared in accordance with IAS 34, Interim Financial Reporting and applicable parts of the Swedish Annual Accounts Act. Disclosures in accordance with IAS 34 are presented either in notes or elsewhere in the report. This interim report for the parent company was prepared in accordance with Swedish Annual Accounts Act chapter 9. For information about the accounting policies applied, refer to the 2015 annual report. The accounting policies applied and the judgments in the Interim Report are consistent with those applied in the Annual Report for 2015 except for disclosure of ESMA´s guidelines on alternative performance measures that is applied as of July 3, 2016 and implies disclosures related to financial measures not defined under IFRS.

No new or amended standards or interpretations have had an impact on the Group's financial position, results, cash flows or disclosures. The new and revised standards and interpretations that have been issued by the International Accounting Standards Board (IASB) and IFRS Interpretations Committee (IFRIC) but which only come into effect for financial years beginning on or after 1 January 2018 have not yet been applied by the Group.

Goodwill arising on consolidation was reviewed for impairment in Q3 of 2016 and adjustments made to write down Goodwill. No further provision for impairment of Goodwill was considered necessary in Q4 2016 or Q1 2017.

INVESTMENTS

For Q1 2017 there were no additional development costs capitalised in intangible assets. In 2016 intangible assets were evaluated and costs previously capitalised on projects were written off where those projects were no longer proceeding. Intangible assets on the balance sheet as at 31 March 2017 are related to one remaining project which has as its purpose to deliver a common, future pen platform for the Group.

In March 2017, Anoto Group AB acquired a further tranche of shares in XMS Penvision AB. 2,869,884 Anoto shares were issued to acquire 19,355 XMS shares representing a further 2.98% of XMS Penvision AB for an agreed price of 437,316 SEK. Anoto now holds 93.22% of XMS Penvision AB.

RELATED PARTY TRANSACTIONS

As at March 31, 2017, Anoto Group AB had loans from Inhye Kim, wife to CEO at Anoto, to a total value of 2.4m Singapore Dollars. These short-term loans incur 3.5% annual interest. In addition, Inhye Kim subscribed for the convertible bonds that were issued in December 2016. 9.2 MSEK of this loan will be transferred to convertible bonds in Q2 of 2017.

FINANCING

In Q1, we reached a new agreement with SMark regarding ADNA. SMark will invest 5 million in Anoto and use Anoto's microdot pattern in all of its products. This investment was received in May 2017.

RISK FACTORS AND UNCERTAINTIES

In 2017 Anoto Management continues to address a number of risks facing the company. In particular, these risks have included a cost structure that was too high relative to sales and a lack of strategic focus. Multiple cost-cutting activities were carried out in 2016 and the corporate strategy was refined through the imposition of focus.

In March 2017, Anoto announced the closure of the Lund and Norrköping offices to further reduce the business's cost base. The expectations are that the refocusing of strategy, combined with the substantial reduction in costs, will put Anoto in a cash-generating position in 2017.

Anoto is now organized into four business divisions, based in the US; the Livescribe retail business, in the UK; a global enterprise forms business, in Korea; Pen Generations the education business, and the revenue for ADNA will be booked in Sweden. The purpose of the restructuring program is to create four profitable business divisions.

The cost reduction programme will be completed by 3Q of 2017 and should by then be delivering the full benefits. In the meantime, Anoto will focus on monitoring cash flow forecasts to appropriately manage any stresses on working capital and liquidity that may arise from increased demand for pens and from the investments being made in product development. Anoto will source additional funding to accommodate development costs, above-plan growth, and fluctuations in operating expenses as required.

While financing remains an important concern for Anoto, it is the opinion of management and the Board that, the cash flow from the above activities, together with any additional funding to accommodate product development and above-plan growth, is likely to provide the liquidity required by Anoto in 2017. This perspective takes into account the cash-on-hand as of the 31st of March 2017, the receipt of funds from NeoLAB in April 2017, an investment of \$5.0m, by SMark in May and the improved operating cash flow expected from cost reductions and increasing sales.

SEGMENT REPORTING

During the last few months, the Group has been reorganized to become a more unified global entity. As a consequence, the previous reported segments are no longer valid, and instead group expenses are categorized by function and applied to the Group as a whole. Consequently, there is no comparable financial information for the legacy fields of application and the Group has therefore chosen to discontinue this reporting. Anoto will prepare appropriate segmental reporting when the reorganization is complete.

EMPLOYEES

As of March 31, 2017 Anoto Group had a total of 78 employees as compared to 96 at year-end 2016. When the announced restructuring plans have been completed a further 38 employees will have been removed from the Group.

OPTION PROGRAMS

At present, Anoto Group has the following valid option programs:

4.6 million share-options have been granted to former CEO Stein Revelsby under the Anoto Incentive Scheme 2014/17 at a subscription price of 0.61 SEK. The share-options will mature during 2017.

In Q4 of 2016 an incentive scheme for senior executives was issued that comprises a maximum of 51.8 million stock options at a subscription price of 0.26. The maximum number of stock options to be allocated to each of the senior executives shall be 15.0 million. The share-options will mature during 2019. This incentive scheme is replacing the Anoto Employee Incentive Programme from 2015.

The Company's Board of Directors has also authorized the issuance of a 9.0 million share-options grant to the Chairman of the Board of Directors Jörgen Durban at a subscription price of 1.43 SEK and the issuance of 21.75 million share options at a strike price of 0.38 SEK. Both programmes will mature in 2018. In addition, the company's CEO Joonhee Won has been granted 21.75 million share options at a strike price of 0.38 SEK that will mature in 2018.

In Q4 the Company's Board of Directors authorized the issuance of a 6.0 million share-options grant to the Board member Henric Ankarcrona at a subscription price of 0.26 SEK. The share-options will mature during 2019. Henric Ankarcrona will leave the board at the 2017 Annual general meeting and his Options will be reduced to 3.0 million share options.

PARENT COMPANY

Anoto Group AB is a pure holding company that has a limited number of corporate functions.

SHARE DATA

The Anoto share is listed on the NASDAQ OMX Nordic Small Cap List in Stockholm. The total number of shares at the end of the period was 2,343,701,992.

TRANSACTIONS AND ACTIVITIES AFTER MARCH 31, 2016

On April 12, 2017, Anoto and NeoLAB announced the resolution of their legal disputes and formed a mutually beneficial strategic relationship, which included a multi-faceted cross-licensing agreement and an intention for NeoLAB to provide Anoto with hardware design and supply capabilities relating to the ADNA business.

On April 13, 2017, Anoto and Trata E Systems (Trata) expanded their previously announced relationship to establish Trata as Anoto's master distributor in India. The estimated transaction value based on expected sales performance in the rapidly expanding Indian market approaches USD 100 million over three years.

On May 8, 2017, Anoto announced that it had received a total of USD 6 million from licensing and collaboration agreements announced in April 2017. USD 5 million relates to investment in Anoto Group AB shares in connection with the collaboration agreement with SMark Co., Ltd. (SMark); Anoto Group AB issued 212,500,000 new shares to SMark Co., Ltd. USD 1 million is the first tranche of proceeds from the licensing agreement with NeoLAB Convergence Inc. (NeoLAB).

On May 8, 2017, Anoto converted 29.8 MSEK of the convertible bonds issued in December 2016 and issued 220,740,740 new shares in Anoto Group AB. Following this conversion there are 9.2 MSEK of Convertible bonds outstanding.

LEGAL ACTIVITIES

In 2016, the Company filed patent infringement suits in Japan against NeoLAB Corporation ("NeoLAB"), a subsidiary of NeoLAB Convergence, and Uchida Yoko Co. Ltd. Anoto was seeking all available remedies, including (but not limited to) injunctive relief against importation of NeoLAB's pen products and notebooks. The lawsuits, filed with the Civil Division of the Tokyo District Court, were based on Anoto's Japanese patents 4245474, 4928696, and 4613251. The suits are focused on Anoto's patented methods for digital pen design and optical pattern processing. The lawsuit was ongoing as of March 31, 2017.

In April 2017, the Company reached a comprehensive global settlement of the patent infringement with NeoLAB and Uchida Yoko Co. Ltd. In accordance with the settlement terms, Anoto and NeoLAB each granted the other a comprehensive, royalty-free and non-transferable license to its patent portfolio, as well as a general release and waiver of any and all patent-related claims globally. Anoto received a payment of US\$1 million from NeoLAB on April 28, and expects to receive another \$1 million within nine months of the date of the Agreement.

Anoto is currently involved in a dispute with LeapFrog Enterprises (and its affiliates), a U.S. (Delaware) company headquartered in Emeryville, California ("LeapFrog"), in Sweden.

The dispute is related to two requests for arbitration filed by LeapFrog in Sweden, the first at the Stockholm Chamber of Commerce ("SCC Arbitration") and the second at the International Chamber of Commerce ("ICC Arbitration"). In both the SCC Arbitration and the ICC Arbitration, LeapFrog is seeking indemnification and defence from Anoto with respect to patent infringement claims filed by Celebrate LLC in U.S. federal court in Delaware. On December 19, 2016, both Parties agreed to a sixmonth voluntary stay of both the ICC Arbitration and SCC Arbitration proceedings, which were accepted by the authorities, in order to explore an amicable resolution to the issues in both cases.

A former Anoto employee has filed a civil lawsuit against the Company in Los Angeles, CA, alleging wrongful termination, unpaid wages/expenses and gender discrimination. After Anoto successfully removed this case to U.S. federal court, the Parties have commenced pre-trial discovery. Anoto believes the former employee's claims are meritless and intends to defend the case vigorously. A mandatory settlement conference (MSC) between the Parties, required by law, was held in March but did not produce a settlement The Parties completed discovery proceedings on May 8, 2017, and Anoto expects to move for summary judgment and dismissal of the case this summer.

Anoto is also a defendant in a lawsuit filed by a technology company, APOLOGIC Information Applications, in the commercial court of St. Malo Commercial Court. Anoto believes that the claim by APOLOGIC, alleging breach of commercial contract, is wholly without merit and furthermore that the court lacks both personal and subject matter jurisdiction over Anoto. Anoto's attorneys have moved for dismissal of the case, arguing that the case should be referred to the Arbitration Institute of the Stockholm Chamber of Commerce. The St. Malo Commercial Court is expected to issue its decision on June 27.

This interim report has not been subject to review by the auditors.

Anoto Group AB discloses the information provided herein pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication at 23.15 on May 31, 2017.

CALENDAR 2017

Annual Report June 8 2017

Annual General meeting June 30 2017

FOR MORE INFORMATION

Please contact:

Joonhee Won, CEO Email: [email protected]

Anoto Group AB (publ.), Corp. Id. No. 556532-3929 Mobilvägen 10 SE-223 62 Lund, Sweden Phone: +46 46 540 12 00 www.anoto.com

FINANCIAL REPORTS

2017 2016 2016
TSEK Jan-Mar Jan-Mar Jan-Dec
Net sales 45,791 45,183 235,657
Cost of goods and services sold -29,776 -26,886 -156,264
Gross profit 16,015 18,297 79,393
Sales, administrative and R&D costs -47,718 -79,891 -344,348
Other operating income/cost 59 4 26,295
Operating profit/loss -31,644 -61,590 -238,660
Sale of financial assets 0 0 -1,133
Other financial items -5,784 -1,501 -6,184
Profit before taxes -37,468 -63,091 -245,977
Taxes -37 839 4,445
Profit/loss for the period -37,465 -62,252 -241,532
Other comprehensive income
Translation differences for the period 9,791 -353 -1,283
Other comprehensive income for the period 9,791 -353 -1,283
Total comprehensive income for the period -27,674 -62,605 -242,815
Total Profit/loss for the period attributable to:
Shareholders of Anoto Group AB -37,487 -61,249 -233,932
Non controlling interest 22 -1,003 -7,600
Total Profit/loss for the period -37,465 -62,252 -241,532
Total comprehensive income for the period attributable to:
Shareholders of Anoto Group AB -27,696 -61,602 -236,489
Non controlling interest 22 -1,003 -6,326
Total comprehensive income for the period -27,674 -62,605 -242,815
Key ratios:
Gross margin 35% 40.5% 33.7%
Operating margin Neg Neg Neg
Earnings per share after dilution -0.01 -0.06 -0.13
Average number of shares after dilution 2,436,182,108 1,060,749,383 1,792,711,313

Condensed consolidated balance sheet

TSEK 2017-03-31 2016-03-31 2016-12-31
Intangible fixed assets 236 754 263 754 236 810
Tangible assets 5 134 8 585 8 414
Financial fixed assets 18 738 6 188 18 855
Total fixed assets 260 626 278 527 264 079
Inventories 42 129 54 858 49 478
Accounts receivable 22 395 23 036 34 825
Other current assets 29 978 41 479 35 356
Total short-term receivables 52 373 64 515 70 181
Liquid assets 5 923 9 272 5 553
Total current assets 100 425 128 645 125 212
Total assets 361 051 407 172 389 291
Equity attributable to shareholders' of Anoto Group AB 184 321 226 855 213 258
Non controlling interest -426 -10 733 -1 689
Total equity 183 895 216 121 211 569
Long term provisions 5 048 11 339 6 900
Long term loans 29800 - 28 000
Other long term liabilities 6 907 313 131
Total long-term liabilities 41755 11 652 35 031
Short term provisions 0 0 1 312
Short term loans 27424 27 296 29 019
Other current liabilities 107 977 152 103 112 360
Total current liabilities 135 401 179 399 142 691
Total liabilities and shareholders' equity 361 051 407 172 389 291

Consolidated changes in shareholders' equity

Share Ongoing
share
Other
capital
Retained Shareholders Non
controlling
Total
TSEK capital issue contributed Reserves earnings equity interest equity
Opening balance 1 January 2016 21 064 12 943 057 -8 517 -677 690 277 926 -9 730 268 196
Profit/loss for the year -233 932 -233 932 -7 600 -241 532
Other comprehensive income -2 557 -2 557 1 274 -1 283
Total comprehensive income 0 0 0 -2 557 -233 932 -236 489 -6 326 -242 815
Private placement 27 March 260 10 091 10 351 10 351
Private placement 23 May
Acquisition of Pen Generation - 31
21 324 116 118 137 442 137 442
May 2 894 35 939 38 833 38 833
Ongoing Aquisition of XMS 12 854 866 -866 0
Private placement 18 Oct & 9 Nov 1 275 11 471 12 746 12 746
Debt Conversion -6 724 -6 724 -6 460 -13 184
Loss of control -21 693 -21 693 21 693 0
Closing balance 31 December 2016 46 817 24 1 117 530 -11 074 -940 039 213 258 -1 689 211 569
Opening balance 1 January 2017 46 817 24 1 117 530 -11 074 -940 039 213 258 -1 689 211 569
Profit/loss for the year -37 487 -37,487 22 -37,465
Other comprehensive income 9 791 9791 9791
Total comprehensive income 0 0 0 9 791 -37 487 -27 696 22 -27 674
Ongoing Acquisition of XMS 1) 57 -24 -1 274 0 -1 241 1 241 0
Closing balance 31 March 2017 46 874 0 1 116 256 -1 283 -977 526 184 321 -426 183 895

1) In March 2017, Anoto issued shares in connection with the ongoing acquisition of XMS Penvision AB, and has adjusted the share premium and reserves to reflect the number of shares now issued and the price paid for the shares acquired.

Consolidated Cash flow statement

2017 2016 2016
TSEK Jan-Mar Jan-Mar Jan-Dec
Profit/loss after financial items -37 468 -63 091 -245 977
Depreciation, amortisation 4 036 7 022 71 238
Other items not included in cash flow 17 966 1578 -20 325
Items not included in cash flow 22 002 8 600 50 913
Cash flow from operating activities
before changes in working capital -15 466 -54 491 -195 064
Change in operating receivables 17 809 52 306 45 681
Change in inventory 7 349 -10 269 20 298
Change in operating liabilities -9 407 -9 232 -46 994
Cash flow from operating activities 285 -21 686 -176 079
Intangible assets 0 -6 705 -7 259
Tangible fixed assets -235 -3 647 -6 351
Acquisition of subsidiaries net of cash 0 0 0
Disposal of minority interest 0 0 1 900
Financial assets 116 0 -11 299
Cash flow from net capital expenditures -119 -10 352 -23 009
Total cash flow before financing activities 166 -32 038 -199 088
New share issue 0 10 530 160 539
Convertible loan 1 800 0 28 000
Change in financial liabilities -1 596 19 151 4 473
Cash flow from financing activities 204 29 681 193 012
Cash flow for the period 370 -2 357 -6 076
Liquid assets at the beginning of the period 5 553 11 629 11 629
Liquid assets at the end of the period 5 923 9 272 5 553

Key ratios

2017-03-31 2016 2016
TSEK Jan-Mar Jan-Mar Jan-Dec
Cash flow for the period 370 -2 357 -6 076
Cash flow / share after dilution (SEK) 1 0,00 0,00 0,00
2017-03-31 2016-03-31 2016-12-31
Equity/assets ratio 51,0% 55,7% 54,8%
Number of shares 2 343 701 992 1 066 193 827 2 340 832 108
Shareholders' equity per share (kr) 0,08 0,21 0,09

Parent company, summary of income statement

2017 2016 2016
TSEK Jan-Mar Jan-Mar Jan-Dec
Net sales 0 945 13 681
Gross profit 0 945 13 681
Administrative costs -1 949 -853 -13 184
Operating profit -1 949 92 497
Profit/loss from receivables in Group companies 0 0 -151 000
Financial items 113 -6 749
Profit/loss for the period -1 836 86 -149 754

Parent company, balance sheet in summary

TSEK 2017-03-31 2016-03-31 2016-12-31
Intangible fixed assets 45 68 47
Financial fixed assets 457 237 391 556 652 673
Total fixed assets 457 282 391 624 652 720
Other short-term receivables 203 412 25 281 586
Liquid assets, including current investments 2 721 5 734 303
Total current assets 206 133 31 015 889
Total assets 663 415 422 639 653 609
Equity 439 748 393 264 445 314
Other long term liabilities 155 928 0 153 549
Long term loans 29 800 20 000 28 000
Short term loans 14 004 0 15 138
Other current liabilities 23 935 9 375 11 608
Total liabilities and shareholders' equity 663 415 422 639 653 609

Note 1 - Financial instruments

Loans and
accounts
receivable
Available for
sale financial
assets
Other financial
liabilities
Total book value Total fair
value
Group 31 March 2017
Investments 0 0
Long-term receivables 1 776 1 776 1 776
Accounts receivable 22 395 22 395 22 395
Other receivables 0 0
Cash 5 923 5 923 5 923
Short-term investments and securities 0 0
Assets 30 094 0 0 30 094 30 094
Borrowings 27 424 27 424 27 424
Accounts payable 49 280 49 280 49 280
Other liabilities 18 362 18 362 18 362
Liabilities 0 0 95 066 95 066 95 066
Loans and
accounts
receivable
Available for
sale financial
assets
Other financial
liabilities
Total book value Total fair
value
Group 31 March 2016
Investments 5 104 5 104
Long-term receivables 1 084 1 084 1 084
Accounts receivable 23 036 23 036 23 036
Other receivables
Cash 9 269 9 269 9 269
Short-term investments and securities
Assets 33 389 0 0 38 493 38 493
Borrowings 26 937 26 937 26 937
Accounts payable 89 370 89 370 89 370
Other liabilities 5 140 5 140 5 140
Liabilities 0 0 121 447 121 447 121 447

Disclosures on fair value classification

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

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.

Financial assets that can be sold

Financial assets that can be sold are valued on the basis of level 1.

Borrowings

Borrowings are measured at amortized cost.

Alternative performance measures

Anoto Group presents certain financial measures in this interim report that are not defined under IFRS. Anoto Group believes that these measures provide useful supplemental information to investors and the group´s management as they allow evaluation of the company´s performance. Because not all companies calculate these financial measures similarly, these are not always comparable to measures used by other companies. These financial measures should not be considered a substitute for measures defined under IFRS. Definitions of alternative measures used by Anoto Group that are not defined under IFRS are presented below.

GROSS MARGIN

Gross profit as a percentage of net sales. Gross profit is defined as net sales less cost of goods sold

OPERATING PROFIT/LOSS

Gross profit less costs for sales, administrative, R&D and other operating income/costs.

OPERATING MARGIN

Operating profit/loss after depreciation and amortization 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.

EQUITY /ASSETS RATIO

Equity attributable to shareholders of Anoto Group AB as a percentage of total assets

EBITDA

Operating profit/loss before depreciation and amortization.

EBITDA is considered to be a useful measure of the group´s performance because it approximate the underlying operating cash flow by elimination depreciation and amortization. A reconciliation from group operating profit/loss is set out below.

2017 2016 2015
TSEK Jan-Mar Jan-Dec Jan-Dec
Operating profit/loss -31 644 -238 660 -106 249
Depreciation and amortisation 4 036 71 238 7 321
EBITDA -27,608 -167 422 -98 928

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