NOTE — Annual Report 2011

Apr 4, 2012

Contents

Introduction

This is NOTE	1
Milestones in NOTE's history	2
The year in brief	4
CEO's statement	6
Operations
Vision, business concept and goals	8
Business model	10
Market and competitors	12
Risk management	14
Quality, environment and ethics	15
Human resources	16
Organisation and group management	18
Five-year summary	20
Financial definitions	21

The NOTE share Share data and shareholders	22
Formal Annual Accounts
Corporate Governance Report	25
Report of the Directors	32
Consolidated accounts	36
Parent company accounts	54
Audit Report	63
Addresses	64

Shareholder information

Annual General Meeting

The AGM (Annual General Meeting) will be held at 1:00 p.m. on Wednesday, 25 April at Spårvagnshallarna, Birger Jarlsgatan 57 A, Stockholm, Sweden. Information on the notification procedure for the Meeting will be uploaded to the website www.note.eu coincident with the invitation to the Meeting by no later than four weeks prior to the Meeting.

Notification

Shareholders intending to participate in the AGM must be recorded in the share register maintained by Euroclear Sweden AB by 19 April, and notify NOTE of their intention to participate by no later than 4:00 p.m. on 19 April.

Business

Information on the agenda of the AGM is published in the Swedish Official Gazette and will be available on NOTE's website. Documentation is also available from NOTE coincident with notification of intention to participate at the Meeting.

Dividend

The Board of Directors is proposing to the AGM that a dividend of SEK 0.30 (0.0) per share is paid for the financial year 2011.

Nomination Committee

The Nomination Committee has the following members:

Kjell-Åke Andersson (representing proprietary holding)

Bruce Grant (representing Garden Growth Capital LLC)

Daniel Nyhrén (representing Creades AB)

Peter Zonabend (representing Banque Carnegie Luxembourg S.A.)

Financial information

Calendar

Interim Report, Jan–Mar 2011 25 Apr 2012 Interim Report, Jan–Jun 2011 17 Jul 2012 Interim Report, Jan–Sep 2011 19 Oct 2012

Ordering financial information

Financial and other relevant information can be ordered from NOTE. Out of consideration for the environment, a subscription service is readily available from NOTE's website.

• Website: www.note.eu
• Tel: +46 (0)8 568 99000
• Fax: +46 (0)8 568 99099
• Address: NOTE AB, Box 711, 182 17 Danderyd, Sweden

Investor Relations contacts

Peter Laveson, Chief Executive Officer & President Tel: +46 (0)8 568 99006, +46 (0)70 433 9999 e-mail: peter.laveson@note.eu

Henrik Nygren, Chief Financial Officer Tel: +46 (0)8 568 99003, +46 (0)70 977 0686 e-mail: henrik.nygren@note.eu

This is NOTE

NOTE offers manufacturing services for electronics products across product lifecycles—from design to after-sales.

NOTE is one of the leading manufacturing partners for electronics production in the Nordics. It has especially strong market positioning in the high mix/low volume market segment, i.e. for products in small to medium-sized series that require high technology competence and flexibility. NOTE produces PCBs, subassemblies and box build products. NOTE's offering covers the whole product lifecycle, from design to after-sales.

NOTE's business is organised to address the differing needs of its customers optimally. NOTE's Nearsourcing Centres deliver production technology services in close collaboration with customers, such as selecting materials, developing test equipment, prototyping and serial production. NOTE's Industrial Plants deliver cost-efficient volume production in Europe and Asia.

Customers are mainly in the engineering and communication industries in the Nordics and UK.

Key facts

• Production units: Sweden, Norway, Finland, UK, Estonia and China.
• Number of employees as of 31 December 2011: 862.
• Sales in 2011: 1,209 MSEK.
• Share: Quoted on NASDAQ OMX Stockholm (Small Cap/Industrial Goods & Services). At year-end 2011, the share price was SEK 6.60. Market capitalisation was SEK 191 m, divided between 28,872,600 shares.

Milestones in NOTE's history

1999 Company founded on the business concept of producing electronics-based products in Central Europe for Swedish customers jointly with collaboration partners. The gateway to this European region is opened through the start-up of an operation in Gdansk, Poland.

2000 Merger with an electronics producer in Norrtälje, Sweden. A well-established enterprise in Torsby, Sweden, is also quickly acquired. The current goal is to grow and conduct an IPO of the group within five years.

2001 NOTE takes the initiative for a multinational network of independent electronics producers in Europe, South and North America and Asia. The goal: to help growth customers find production alternatives close to the markets where they want to expand.

2004 NOTE's IPO on the Stockholm Stock Exchange.

2005–2006 More acquisitions in Sweden, Norway, Finland and Estonia.

2001–2003 NOTE Components formed to co-ordinate the group's global sourcing. NOTE makes a number of acquisitions in Sweden, which also bring a presence in Lithuania.

2007 NOTE's production capacity extended through joint ventures in China and Poland. NOTE opens one of Sweden's most advanced electronics plants in Norrtälje.

2008 Acquisition of an electronics enterprise in the UK and a mechanics enterprise in Sweden. The financial crisis and following recession hit the

sector hard.

2009 Another acquisition in Norway. A series of rationalisation measures are taken in the group to address the recession.

2010 Fundamental reorientation and concentration of the business that started post-financial crisis in 2008 results in the closure of more operations or their relocation to other parts of the group.

2009/2010 The Chinese operation becomes a wholly owned subsidiary at year-end. NOTE's operation in Skellefteå, Sweden, is sold off after one customer discontinues a major telecommunication product.

2011 Closure of the operation in Lithuania. NOTE now has Nearsourcing Centres in Sweden, Norway, Finland and the UK, and Industrial Plants in Estonia and China.

2010/2011 Holding in the joint venture in Krakow, Poland, sold at year-end.

The year in brief

January–December

• Sales were SEK 1,208.9 (1,210.7) million.
• Operating profit was SEK 64.4 (–48.2) million. The profit for the first three quarters of 2010 included structural and other non-recurring costs of approximately SEK –47 million.
• The operating margin was 5.3 (–4.0) percent. Adjusted for the previous year's non-recurring costs of some SEK –47 million, the operating margin increased by 5.4 percentage points.
• Profit after financial items was SEK 56.3 (–59.4) million.
• Profit after tax was SEK 39.4 (–62.0) million, corresponding to SEK 1.36 (–2.55) per share.
• Cash flow after investments improved by SEK 70.1 million to SEK 56.5 (–13.6 million, corresponding to SEK 1.96 (–0.56) per share.
• Dividend—the Board is proposing a dividend to shareholders of SEK 0.30 (0.00).

Overview of 2011, SEK m	Full year	Q1	Q2	Q3	Q4
Sales	1,208.9	311.8	326.8	272.5	297.7
Operating profit	64.4	12.3	23.5	13.5	15.1

CEO's statement

2011 was a successful year for NOTE. After strong progress—now five consecutive quarters of positive operating profit and cash flow—we were one of the most profitable companies of our listed Nordic sector peers again last year.

The fairly extensive restructuring program concluded in 2010 was fundamental to our positive performance. We concentrated electronics production on fewer units, in Sweden and internationally. Unprofitable operations were sold off or closed down, and central costs were adapted to prevailing market conditions. Parts of our electronics production were relocated to other units in the group –primarily to our plants in Estonia and China. In this way, we increased the capacity utilization of the group simultaneous with reducing costs.

Pleasingly, we can conclude that in 2011, we beat our target of improving our operating profit by at least SEK 50 million per year by a good margin.

Methodical improvement work pays off

Another important contributor to NOTE's positive progress is that with the restructuring program under our belts, we were able to intensify our methodical improvement work. This work is conducted in a number of central projects, but primarily local at each unit, starting from our core processes and using the catchphrase "right from the start." This is ongoing and intensive work that takes time and requires strong local support and ownership.

Our clear focus is to create the prospects for greater efficiency and superior delivery precision and quality– the consistent aim being to develop an even stronger customer offering. Our key performance indicators for quality and delivery precision progressed very positively, and offer clear evidence that our hard work is paying off.

We also have an important duty to manage our own and our customers' working capital effectively. Accordingly, we have a sharp focus on working methods in areas including sourcing, inventory control and logistics.

Against the background of the challenges facing NOTE in recent years, we have put a lot of energy into enhancing the trust of existing and new customers. Discussions with many of our customers clearly show that we are also succeeding here, even if I had hoped for an even better impact in the form of more new business secured in 2011.

Challenges in the market

In the first half-year 2011, we saw stable and good demand, but the period was not without its concerns. Japan was affected by an earthquake and the following tsunami, which left the whole sector quaking in fear that this would have major consequences for the supply of materials. The effects were mitigated thanks to hard work alongside our customers, but also by Japan's good contingency planning and the supply of materials was secured from other parts of Asia. Looking back, we can conclude that we handled the situation well, and were thus able to satisfy our customer needs.

But concerns about Japan had hardly settled before the next worry arose–the European debt crisis. For NOTE, this resulted in growth in the first half-year grinding to a halt in the third quarter, to then go negative in the final quarter of the year. Uncertainty exacerbated, and in the autumn, like many of our customers, we saw lower volumes.

Ready to increase market shares

In terms of capacity, we are wellequipped to manufacture electronics products that require high competence and flexibility for large parts of product lifecycles. Our Nearsourcing business model is strong and tailored to the high mix/low volume segment. It builds on close partnerships with customers and developing business in Nearsourcing Centres in Sweden, Finland, Norway and the UK in close partnership with customers, while more labour-intensive volume production is usually located in our Industrial Plants in Estonia and China. We still see good prospects of developing this business. With decisiveness, we are now benefiting from our strong competitiveness, to gradually increase our market shares. As part of this process, we strengthened our commercial capacity in the autumn to enable direct business from our industrial plants in Estonia and China.

The future

Obviously, we are pleased and proud of the success we achieved in 2011–thanks to our skilled and committed people. Meanwhile, we face forthcoming market progress and our customers' future plans with great humility. We have the following overall priorities for 2012:

Increase market shares. With the improved cost structure we have achieved so far, and the support of our ongoing improvement work, we see good prospects of getting an even better payoff from our positive customer relations and capacities.

"With decisiveness, we are now benefiting from our strong competitiveness, to gradually increase our market shares."

• Continued cost savings. We are continuously reviewing our efficiency to ensure the best possible cost structure based on market conditions.
• Improvements to quality and delivery precision. Even though we are already regarded as one of the top performers in our market segment, we are putting a greater emphasis on continuously improving our quality and delivery precision to customers.
• Working capital.

Going forward, we will keep a sharp focus on actions that rationalize the utilization of working capital and strengthen our liquidity. In this way, we also reduce the risks in our business.

Our goal is for NOTE to keep growing, but profitability is our priority. Our positive progress in 2011 is a strength. My hope and definite ambition is that our methodical work will result in increased value growth for shareholders, and a continuously developing working environment for our people.

Peter Laveson

Vision, business concept and goals

Vision

NOTE – the customer's obvious manufacturing partner.

Business concept

NOTE is a local production partner with an international platform for manufacturing electronics-based products that require high technology competence and flexibility across large parts of product lifecycles.

Business goals and strategy

NOTE will be the best collaboration partner in the sector with high delivery precision and quality for a competitive total cost. To achieve the market's most competitive offering, NOTE should achieve good profitability, actively contribute to ensuring safeguarding the customer's value chains and sharpen competitiveness through flexibility, competence and professional conduct.

Financial goals

Growth goal NOTE will increase its market shares organically and through acquisitions.

Profitability goal

NOTE will grow with profitability. Its goal is for a minimum return on operating capital of 20 percent. For the long term and over a business cycle, profitability will also exceed the average of other mid-sized international and comparable competitors.

Capital structure goal

The minimum equity ratio should be 30 percent.

Dividend goal

Dividends should be adapted to average profit levels over a business cycle, and for the long term, be 30–50 percent of profit after tax. Dividend should also be usable for modifying the capital structure.

Business model

NOTE is a specialised manufacturing partner for producing electronics-based products that require high technology competence and flexibility. NOTE produces PCBs, sub-assemblies and box build products. Its business offering builds on flexible solutions based on the customer's needs across product lifecycles, from design to after-sales.

A manufacturing partner with a strong total offering

NOTE's business model starts from a holistic view and consists of two central components: Nearsourcing Centres close to customers and Industrial Plants in Eastern Europe and Asia. NOTE's focus is to deliver customers the right product at the right time, for a competitive cost. Cost of materials represents most of the total cost of a finished product. Accordingly, one important mission for NOTE is to offer competitive pricing and efficient logistics solutions for electronics components and other production materials.

NOTE's offering is especially focused on the high mix/low volume segment, which entails high flexibility in production and good product documentation. This focus contributes to somewhat more stable market progress through longer product lifecycles and longlasting customer relations. NOTE's customers are mainly in the engineering and communication industries, which in the latter, include complex systems for monitoring, amplification and security.

In box build products, NOTE develops electronic and mechanical solutions in close collaboration between the customer and the affected units of NOTE.

To sharpen competitiveness, NOTE puts a sharp focus on continuously monitoring and improving NOTE's business processes and customer interfaces to enhance efficiency, delivery precision and quality.

Nearsourcing™ creates the right conditions from the start

NOTE's Nearsourcing Centres work on creating and enhancing NOTE's customer relations. Advanced production technology engineering services are conducted at Nearsourcing Centres in Sweden, Norway, Finland and the UK. The focus is on providing expertise at the design and development stage. Materials selection, producability analysis and developing test equipment, with the consistent aim of creating the best feasible product and production process for the customer, takes place in close collaboration with customers. Product prototypes and pilot series are also manufactured to determine the product's final design. Nearsourcing Centres offer services through complete product lifecycles, which also cover the industrialisation of production processes, serial production and logistics and after-sales solutions, based on customer needs.

The geographical proximity Nearsourcing Centres offer customers is highly significant when projects require ongoing contact and an extensive exchange of know-how between parties. Nearsourcing also shortens time to market, which reduces capital tied-up and offers competitive edges on the market.

Nearsourcing enables high flexibility in the introduction phase for customers, before the product or the market are ready for serial production. Meanwhile, NOTE's overall understanding of the product and its lifecycle, combined with

highly developed sourcing competence, offer good prospects of controlling production and the supply of materials so that the overall cost is favourable. In this way, NOTE creates value-added for customers by avoiding many costly mistakes and re-thinks.

Customer needs determine the location of serial production, at a Nearsourcing Centre or Industrial Plant. Needs may vary based on the customer's in-house competences, products' cost structure, logistics, the location of the product in its lifecycle, volume and geographical final market.

Cost-effective volume production at Industrial Plants

Manufacture at NOTE's Industrial Plants in Estonia and China is mainly high-volume. Products and production processes are industrialised at Industrial Plants in collaboration with Nearsourcing Centres, according to customer needs. These plants are modern with advanced production equipment, extensive manufacturing capacity and broad-based technological competence.

NOTE also has a well-developed methodology for transferring production between Nearsourcing Centres and Industrial Plants. These units work together in dedicated customer teams to monitor and track materials and information flows, and to offer continuous feedback to customers.

NOTE's offering covers the whole product lifecycle from design to after- sales services.

*New Product Introduction, a highly developed business process for customers on the verge of launching a new product on the market. NOTE actively supports the customer through this process bringing experience and know-how in selecting materials, sourcing, testing, production, quality and logistics.

Market and competitors

NOTE operates on the market for outsourced electronics production.

Background

Europe is a unique region on the global market for manufacturing services. Comparisons with the rest of the world show that there is no other continent with so many high-cost countries adjacent to countries with significantly lower cost levels. This has affected the structure and evolution of the European market.

The European part of the sector started in developed Western high-cost countries like France, Germany, Ireland, Sweden and the UK. Proceeding from these countries, the sector migrated east, starting up operations in low-cost countries like the Czech Republic, Estonia, Hungary, Lithuania and Poland. The purpose was to produce more cost-efficiently for Western European final markets. The European market consists of domestic European players and major global corporations. However, the majority of European players are smaller domestic companies with long histories, linked primarily to one or a few customers. Many of the global players starting up in Europe have located their operations in Eastern European countries.

Generally, the value Western European countries bring their customers can be considered as specialist services, while the value from players in Eastern Europe is linked to low-cost manufacture.

The market in 2011

In the first half-year particularly, NOTE experienced stable and good demand. But the market faced several challenges. The problematic component shortage on the global market continued early in the year.

When Japan was then affected by an earthquake and the following tsunami,

there was a risk that the supply of materials would be further exacerbated. Fortunately, the effects were mitigated due to Japan's good contingency planning and the supply of materials being arranged from other parts of Asia. The market for electronic components stabilized in the second half-year.

The European debt crisis emerged in the summer, which increased uncertainty, contributing to poorer volume growth in the second half-year.

Market trends, drivers and prospects

The market for outsourced electronics production has emerged and evolved as a consequence of greater interest in outsourcing, increased electronics components across a range of different products and greater underlying demand for manufactured products. The market experienced a sharp slump in volumes during the global recession of 2008–2009, linked primarily to a substantial demand downturn at the end-customer level. The market recovered to something more closely resembling normalised levels in 2010 and 2011, although uncertainty has increased once more as a consequence of global financial imbalances.

The market has undergone fundamental change in recent years. The most important drivers being price pressure on components, requirements for greater speed from idea to finished product, a higher share of outsourcing and strong economic progress in growth regions with the emergence of new final markets as a result. One driver gaining ground recently is a greater willingness to find climate-intelligent alternatives in segments including the

selection of materials, packaging and transportation. Another consequence is that increasingly, production is close to final markets.

High growth in Asia, and especially China, has favoured domestic consumption. In turn, this has triggered new demand for final products previously produced for export to Europe and the US. These new opportunities have also contributed to a still higher rate of change on the market, because increasing numbers of global corporations are now establishing long-term presences in Asia. This progress is expected to continue through the coming years. Of the major economies, India is expected to make similar progress to China, with more international investment.

Sector commentator Reed Electronics Research estimates that the European market for outsourced electronics production will grow by some four percent annually through the coming years, with the majority derived from central and eastern Europe.

This suggests that the primary drivers will remain the search for costefficient production and rationalization, as well as production transfers from west to east.

The market can be divided into segments in a range of perspectives, but often, the sector refers to:

Low mix/high volume. These products (such as mobile phones and TV sets) are often consumer products. In this segment, products are most often produced and sold in very high volumes with minimal changes to product design. Usually, product lifecycles are fairly short.

High mix/low volume.

These products (such as communication infrastructure, control systems, measurement instruments) are often industrial products, i.e. components that customers often embed into original products. The demand and level of adaptation varies, setting higher standards for the flexibility of the producing partner. The product lifecycles of industrial products are generally longer than for consumer products.

Outsourcing

NOTE judges that the share of outsourced production will continue to increase structurally over time. Globalisation and progressively accentuating competition means optimising core business and achieving shorter lead-times will become more important. This means that businesses need a strong and competent partner in segments like product development, supply chain, industrialisation, box build products and after-sales services. By turning to NOTE, customers get access to all this competence, simultaneous with economies of scale in manufacturing and sourcing.

Customer structure and regional split

NOTE's customer base consists of global corporations active on the world market and local customers that have their primary sales in northern Europe.

NOTE is perceiving increased demand for production in China. The market's view of outsourcing to China has become more nuanced, which has resulted in more suitable projects being located there, for example depending

Source: Reed Electronics Research

on products' geographical final markets, products requiring limited changes or where logistics solutions permit. NOTE's operation in China was started up a few years ago and is very well equipped to manage production transfers from Europe and new production start-ups.

For small and mid-sized customers that are locally based, NOTE has put a big emphasis on creating flexible concepts that suit companies with growth ambitions. This customer category has pressing needs for competence in new product introductions, effective sourcing and opportunities to find costefficient production at a reasonable distance from their final market.

Examples of customers that NOTE started up new partnerships with in the year include ATC Industrial Group, Energy Control Systems, Hectronic AB, Netcontrol Oy and Road Angel Group Ltd.

Overall, NOTE is well positioned to address the needs of customers that want to grow in Europe and Asia.

Competitors

Some of NOTE's larger competitors active on the Nordic market are Enics, Kitron and Partnertech. In addition, there is a range of regional or local players, often with a niche orientation, active on individual or several of NOTE's markets.

Risk management

Operational risks

Risk	Exposure and management
Customers The risk that a customer leaves NOTE or does not fulfil its obligations.	NOTE has a large number of active accounts, the 15 largest in sales terms represented over 59 percent of its sales in 2011. In most cases, NOTE manufactures a range of products for each customer. Usually, customers choose to place all their production of one product with the same supplier, so they can achieve economies of scale and limit material commitments and risks. NOTE's production volumes are closely linked to which products, and where in product life cycles, the customer's products lie. Accordingly, sales variations can be significant for individual customers. Usually, materials risk is regulated through agreements with customers. NOTE follows up on this continuously.
Environmental risks The risk that operations cause damage to the environment and costs for complying with new more stringent environmental directives.	Unlike the heavy engineering industry, NOTE's business has a fairly limited environmental impact. To comply with applicable environmental legislation, NOTE has essentially transferred to lead-free production, like the rest of the electronics industry.
Liability Risks in addition to the above environmental risks where NOTE can be liable for payment due to commitments in its business.	NOTE's role includes it being a collaboration partner to its customers, but not a product owner. Accordingly, NOTE's responsibility includes conducting the selection of material and production in accordance with the customer's specification. Usually, the standards applying to NOTE's documentation of services rendered are extensive and can be considered complex. Quality monitoring of suppliers and NOTE's production is a continuous process. Where possible, NOTE arranges insurance cover to minimise any damage caused by production faults.
Economic and seasonal variations	The market for outsourced electronics production is relatively young and usually considered fairly cyclical. NOTE's Nearsourcing business model is intended to promote profitable sales growth in combination with low investment and overhead costs in high-cost countries. NOTE sells to a large number of customers, who essentially, are active in the engineering and communication industries in the Nordics and UK. The 15 largest customers in sales terms represented 59 percent of consolidated sales in 2011. The ambition is to focus on sectors with more stable demand and relatively long product lifecycles and customer assignments.
Production downtime Downtime in production affecting deliveries to customers and causing extra costs.	Because NOTE conducts advanced manufacture of electronics, it is subject to high standards for efficient processes and state-of-the-art production equipment. The risk of production downtime is limited by production being of a similar nature across several of the group's units. Accordingly, NOTE can transfer production from one unit to another, and have its units interact on production, which limits its risks from long-term production downtime. Where possible, NOTE has insurance cover to minimise the loss of contributions caused by production downtime.
Competence The risk of not possessing sufficient competence in all parts of business.	NOTE's provides sophisticated production services which require high technical competence across several segments. NOTE endeavours for staff to achieve continuous competence development.
IT IT-related disruptions can cause production downtime, loss of invoicing or reduced efficiency in administration and sales.	NOTE's operations require IT systems that work well. NOTE has a selection of local applications and operating environments with varying functionality and capacity. To improve availability, cost-efficiency and business support, NOTE conducts initiatives to consolidate and standardize these systems. Work also commenced to improve security and control in the group's IT systems in the year.
Capacity risk The risk of not having sufficient capacity in plants.	NOTE has satisfactory production capacity. Because production is of a similar nature in several of the group's units, NOTE also has the prospects of transferring production from one unit to another, and for its units to interact in production.
Materials Price and supply of materials.	The price and supply of electronic components and other production materials vary significantly depending on market conditions. NOTE has a central organisation to deal with group-wide sourcing.
Inventories The risk of components and production materials not being consumed, and thus losing value.	NOTE has inventories corresponding to some 15–20 percent of sales. Sourcing on its customers' behalf is normally formalised through agreements with customers. Considering the complexity of electronics production and variations in demand, there is a close collaboration with customers to limit the risk of obsolescence in inventories. Obsoles cence risk is monitored continuously.

Financial risks

Risk	Exposure and management
Currency	Against the background of an increasing share of value-added being generated in foreign units and the purchasing
Currency risk means that a fluctuation in exchange	of electronic components and other production materials being largely in foreign currencies (EUR/USD), NOTE has ex
rates affects the group's profit, cash flow or balance	tensive currency management. With the aim of limiting currency risks, NOTE trades in instruments including currency
sheet negatively.	forwards and currency options.
Customer credit The risk that a customer is unable to pay its debt to NOTE.	Generally speaking, NOTE has a diversified customer base with the largest customer providing 8 percent of sales. In terms of NOTE's deal structures, there are some individual customers who confer relatively high exposure with regard to trade debtors and inventories. Were these customers' solvency to deteriorate, this could have an adverse impact on NOTE's profit. Evaluations and creditworthiness checks are run on new and existing customers. Ongoing financial reporting includes close monitoring of accounts receivable—trade and inventories.
Financing	NOTE has a substantial need for external finance, primarily linked to the working capital of operations. Different
The risk that refinancing loans is more difficult	sources of finance are continuously evaluated in close collaboration with NOTE's lenders. Considering the cyclicality
or costly, and that accordingly, NOTE's solvency	of its operations, funding costs and NOTE's prospects of re-financing are closely linked to market conditions and
is negatively affected.	NOTE's profitability and cash flow.

Quality, environment and ethics

Sustainability issues are integrated into NOTE's business activities and affect all units. Segments covered are quality issues, environmental impact, business ethics and human rights. This work is decentralized and coordinated using collective goals, guidelines and key performance indicators. NOTE is a member of the UN's Global Compact.

The complete picture raises standards

Taking an integrated approach to different sustainability issues is crucial to how effective overall results are. These matters involve everything from helping customers to select components with good environmental and quality performance, to locating manufacture close to final markets, so that the adverse environmental impact of transportation is limited. In tandem with improving customers' impact on the environment and society, NOTE actively works to limit the group's negative impact on its surroundings.

Quality policy and working methods

NOTE creates competitiveness for its customers by delivering the right quality at the right time and at the right price. To achieve this, NOTE continuously develops and improves its services in the endeavour of constantly satisfying applicable standards and expectations. The organisation works towards shared and measurable goals. For example, delivery precision and quality are continuously measured for both customers and suppliers.

NOTE utilises a portfolio of quality assurance tools and methods whose origins lie in the quality systems of the automotive and pharmaceutical industries.

ISO 9000 is a series of international standards used to direct the focus of corporate quality management systems. All the group's production units have ISO 9001 certification. Using its quality management system, NOTE can trace faults and continuously develop the company's methods and processes. NOTE ensures its work is functioning through regular audits, which monitor standards and procedures, by internal and external resources. An external party verifies and certifies its management system.

Examples of quality work

NOTE's units collaborate to identify improvements and learn from each other. A new collective fault management system for NOTE's units was introduced in Sweden and the UK in 2011. Experiences gathered are gradually transmitted to different units of the group.

Environmental policy and working methods

NOTE will strive for long-term and sustainable development by producing the minimum possible environmental impact. NOTE shall comply with, or exceed, applicable environmental legislation, work on continuous improvement and maintain an updated environmental policy.

Production units sort consumables and monitor energy consumption continuously. Other parts of operations also embed environmental considerations in areas such as sourcing, transportation and waste management. Environmental work also follows international ISO guidelines. The main series in the environmental segment is ISO 14000, and to date, a majority of the group's production units have ISO 14001 certification.

All the group's production units operate under an environmental management system which is audited with the aid of internal and external resources. Certification is awarded by an external party.

Examples of environmental work

NOTE started methodical environmental work back in 1996. NOTE Norrtelje AB was the first Swedish company in the sector to secure ISO 14001 certification, in 1997.

NOTE Pärnu participated in the Environmental Act of the Year 2011. The Estonian environmental authority arranges this competition for private individuals,

institutions, businesses and other organisations that have contributed to a better environment. The goal of this competition is to draw attention to the best environmental activities in the year. NOTE Pärnu competed in one of the environmental work categories and was recognized for its environmental management system.

Although different countries' environmental legislation varies, NOTE's ambition is for all units to follow a common line of environmental work. NOTE puts a sharp focus on sorting waste at source, for example. Electronic scrap, glass and paper are recycled. Corrugated board and combustible waste are compacted to minimize the number of waste transportation runs affecting the environment.

NOTE units also have a system for exchanging experiences, best practice and proposals for improvement. NOTE also coordinates freight agreements in the transport segment to optimize transport, and thus limit energy consumption and CO2 emissions.

Ethics

NOTE endeavours to conduct responsible and sustainable operations. This also includes the company's social responsibility in all parts of the supply chain. In autumn 2011, NOTE affiliated to the UN's Global Compact.

NOTE's Code of Conduct was already based on the UN's Global Compact, and covers respect of human rights, freedom of association in trade unions, fair employment, safe working conditions, environmental consideration and rejection of discrimination, child labour and corruption.

Verification that NOTE units and strategic suppliers are complying with the Code of Conduct is conducted yearly by NOTE's central sourcing function. The complete Code of Conduct is at www.note.eu.

Human resources

The extensive restructuring program concluded in 2010 entailed significant staff reductions in Sweden and internationally. In 2011, methodical, continuous improvement work could be intensified in its place. This work is conducted with the catchphrase "right from the start" and focuses on creating the prospects for greater efficiency and superior delivery precision and quality.

NOTE has a global organisation with operations in northern Europe, the UK, Estonia and China. To rationalize the collaboration between units, work on harmonizing working methods, clear guidelines and measurement tools is ongoing. This work is conducted in several segments—such as quality, delivery precision, cost-efficiency and the utilization of working capital—and commits many employees across the group. Measurements of operational key performance indicators and ongoing central and local improvement projects are continuous efforts.

As a component in work to achieve more consistent working methods, all units also participated in a review of the group's collective values. The commercial capacity of Industrial Plants was also strengthened in the autumn. Initiatives were conducted to establish internal processes to manage

business direct from Industrial Plants.

As a result of reduced volumes, headcount reductions were conducted at several units through the autumn. The staff reductions mainly affected temporary employees, and reduced working-hours were also utilized.

To adapt operations to customer needs, the group's employee headcount has changed significantly in recent years. At year-end, over half of employees were employed in low-cost regions.

Staff turnover in the group overall was 22.7 percent, with the European units being 8.5 percent.

NOTE's values

• Professional
• Flexible
• Quality focused
• Committed
• Profitable

Employees	2011	2010
Average number of employees	939	1,000
Number of women	484	511
Number of men	455	489
Work attendance, %	96.2	95.3
Staff turnover, %	22.7	9.9

Employees at year-end

Organisation and group management

The group is organised in accordance with the company's strategy with a sharp focus on creating the prospects for group-wide collaboration and continuous improvement.

Organisation

NOTE's parent company and group management are stationed at Danderyd, near Stockholm.

NOTE has a decentralized organisational structure and each Nearsourcing Centre is responsible for sales and delivery to customers. Industrial Plants serve mainly as resource units for costefficient production.

Peter Laveson Chief Executive Officer & President. Born in 1973. Employed by NOTE since 2010. NOTE holdings: 10,000 shares.

Henrik Nygren Chief Financial Officer. Born in 1956. Employed by NOTE since 2006. NOTE holdings: 30 000 shares.

Robert Rosenzweig Chief Operating Officer. Born in 1967. Employed by NOTE since 2010. NOTE holdings: 10,000 shares.

Five-year summary

SEK m	2011	2010	2009	2008	2007
Summary Consolidated Income Statement Net sales	1,208.9	1,210.7	1,200.1	1,709.5	1,743.8
Gross profit/loss	133.0	60.5	26.4	123.0	224.6
Operating profit/loss	64.4	–48.2	–90.8	–3.8	111.9
Profit/loss after financial items	56.3	–59.4	–97.9	–14.4	103.8
Profit/loss after tax	39.4	–62.0	–81.0	–13.1	78.2
Summary Consolidated Balance Sheet
ASSETS
Non-current assets	147.8	180.9	234.6	247.1	200.6
Current assets	485.5	512.6	518.5	701.2	747.5
TOTAL ASSETS	633.3	693.5	753.1	948.3	948.1
EQUITY AND LIABILITIES
Equity	259.4	217.0	209.9	294.9	327.4
Non-current liabilities	5.5	7.1	30.5	98.4	140.1
Current liabilities	368.4	469.4	512.7	555.0	480.6
TOTAL EQUITY AND LIABILITIES	633.3	693.5	753.1	948.3	948.1
Cash flow, group
Cash flow from operating activities	37.5	–25.6	42.6	83.2	48.3
Cash flow from investing activities	19.0	12.0	–18.7	–58.1	–48.8
CASH FLOW	56.5	–13.6	23.9	25.1	–0.5
Cash and cash equivalents at beginning of period	33.7	24.4	35.9	38.5	18.8
Cash flow before financing activities	56.5	–13.6	23.9	25.1	–0.5
Cash flow from financing activities	–61.2	25.4	–34.6	–30.1	19.8
Exchange rate difference in cash and cash equivalents	0.3	–2.5	–0.8	2.4	0.4
CASH AND CASH EQUIVALENTS AT END OF YEAR	29.3	33.7	24.4	35.9	38.5
Consolidated key figures
The share
Earnings per share, SEK	1.36	–2.55	–5.14	–0.83	4.97
Cash flow per share, SEK	1.96	–0.56	1.52	1.59	–0.03
Market capitalization
Market capitalization at end of period Margins	191	240	205	217	698
Operating margin, %	5.3	–4.0	–7.6	–0.2	6.4
Profit margin, %	4.7	–4.9	–8.2	–0.8	6.0
Returns
Return on operating capital, %	17.7	–12.1	–18.8	–0.7	21.4
Return on equity, %	16.5	–29.1	–32.1	–4.2	26.3
Capital structure
Operating capital (average)	364.5	398.4	483.6	548.7	521.9
Interest-bearing net debt	109.9	142.7	239.9	247.2	246.3
Equity to assets ratio, %	41.0	31.3	27.9	31.1	34.5
Net debt/equity ratio, multiple	0.4	0.7	1.1	0.8	0.8
Interest coverage ratio, multiple	5.3	–3.4	–10.0	–0.1	7.1
Capital turnover rate (operating capital), multiple	4.6	3.0	2.5	3.1	3.3
Employees
Sales per employee	1,287	1,211	1,228	1,423	1,489

Financial definitions

Market capitalisation

Share price multiplied by total number of outstanding shares.

Equity per share

Equity divided by the number of shares at year-end.

Attendance

Attendance as a percentage of regular working-hours.

Average number of employees

Average number of employees calculated on the basis of hours worked.

Rate of capital turnover

(operating capital), multiple Sales divided by operating capital.

Net investments in property, plant and equipment

Investments in property, plant and equipment, excluding acquisitions of assets and liabilities, less sales and retirements for the year.

Net debt/equity ratio, multiple

Interest-bearing net debt divided by equity.

Sales per employee

Sales divided by the average number of full-time employees.

Operating capital

Total assets less cash and cash equivalents, non-interest bearing liabilities, provisions and minority interest.

Staff turnover

Number of employees whose employment was terminated voluntarily in the year as a percentage of the average number of employees.

Earnings per share

Profit after tax divided by the average number of shares.

Return on equity

Net profit for the year as a percentage of the average equity for the most recent twelve-month period.

Return on operating capital

Operating profit as a percentage of the average operating capital for the most recent twelve-month period.

Interest-bearing net debt

Interest-bearing liabilities and provisions less cash and interest-bearing receivables.

Interest coverage ratio, multiple

Profit after financial items plus financial expenses divided by financial expenses.

Operating margin

Operating profit as a percentage of net sales.

Equity to assets ratio

Equity as a percentage of total assets.

Profit margin

Profit after financial items as a percentage of net sales.

Share data and shareholders

The year 2011 was NOTE's eighth on the stock market.

Share price performance

NOTE's share price was SEK 6.60 (8.30) at the end of the year, a decrease of 20 percent. The high in the year was SEK 11.80, on 17 May. The low of the year of SEK 6.20 was on 27 December.

The stock exchange OMXSSCPI index decreased by 17 percent in the year. At the end of the year, NOTE's market capitalisation was SEK 191 (240) million.

At the end of the year, NOTE had 2,414 (2,568) shareholders.

Turnover

20,436,472 NOTE shares were traded in 2011, corresponding to a rate of turnover of 70 percent. An average of 80,777 shares were traded per day in 2011.

Dividend policy

The dividend should be adapted to average profit levels over a business cycle, and for the long term, comprise 30-50 percent of profit after tax. Dividends should also be usable to adapt the capital structure.

The Board of Directors is proposing a dividend to shareholders of SEK 0.30 (0.00) per share for the financial year 2011 to the AGM.

Trading

Quotation	NASDAQ OMX Stockholm
Segment	Small Cap
Sector	Industrial Goods & Services
Short name	NOTE
ISIN-kod	SE0001161654
Number of shares as of 31 December 2011	28,872,600

Share capital history

Year	Transaction	Increase in no. of shares	Increase of share capital (SEK)	Total no. of shares	Total share capital (SEK)	Quotient value (SEK)
1990	Incorporation	3,000	300,000	3,000	300,000	100.00
2000	Bonus issue	27,000	2,700,000	30,000	3,000,000	100.00
2000	Split 10:1	270,000	–	300,000	3,000,000	10.00
2002	New share issue	84,000	840,000	384,000	3,840,000	10.00
2003	New share issue	15,000	150,000	399,000	3,990,000	10.00
2004	Split 20:1	7,581,000	–	7,980,000	3,990,000	0.50
2004	Option exercise	310,200	155,100	8,290,200	4,145,100	0.50
2004	New share issue	1,334,000	667,000	9,624,200	4,812,100	0.50
2010	New share issue	19,248,400	9,624,200	28,872,600	14,436,300	0.50

10 largest shareholders as of 31 December 2011, by holding

Name	No. of shares	Proportion of capital/ votes, %
Investment AB Öresund	4,497,888	15.6
Banque Carnegie Luxembourg S.A.	3,025,096	10.5
Garden Growth Capital LLC	2,315,000	8.0
Avanza Pension	2,311,031	8.0
Nordnet Pensionsförsäkring AB	1,839,519	6.4
Kjell-Åke Andersson with family	1,385,040	4.8
Friends Provident International	955,325	3.3
Skandinaviska Enskilda Banken S.A., NQI	645,914	2.2
Danica Pension Försäkringsaktiebolag	474,594	1.6
Marcus Schiller	451,000	1.6
Total	17,900,407	62.0

Division by size, holdings by shareholder as of 31 December 2011

Size of holding	No. of shareholders	No. of shares	Proportion of capital/ votes, %
1 - 500	1,005	199,430	0.7
501 - 2000	718	794,546	2.8
2 001 - 5 000	313	1,096,617	3.8
5 001 - 20 000	266	2,699,704	9.4
20 001 - 50 000	64	2,084,120	7.2
50 001 - 500 000	40	5,808,410	20.1
500 001 - 5 000 000	8	16,189,773	56.0
Total	2,414	28,872,600	100.0

Corporate Governance Report

Introduction

The regulatory structure applied for governing and controlling NOTE is primarily the Swedish Companies Act, stock market rules for issuers, the Swedish Code of Corporate Governance (the Code), accounting legislation—including the Swedish Bookkeeping Act and Annual Accounts Act—and internal guidelines and policies.

Non-compliance with the Code

NOTE complies with the Code with the exception of the composition of its Audit Committee. This departure is reported and reasoned in the Corporate Governance Report in the Audit Committee section.

Articles of Association

The Articles of Association are approved by the Annual General Meeting (AGM) and includes a number of mandatory duties of a more fundamental nature in accordance with applicable legislation. The Articles of Association state items including the Board of Directors consisting of a minimum of three and a maximum of ten ordinary members. The Board members are elected annually at the AGM for the

period until the end of the following AGM. Resolutions on amending the Articles of Association are taken at Annual or Extraordinary General Meetings. Invitations to shareholders' meetings that are to deal with amendments of the Articles of Association should be issued at the earliest six and the latest four weeks prior to such meeting. The Articles of Association also stipulate items including the company's registered office, operations, the amount of share capital, the number of shares and how the AGM is convened.

Shareholders

At the end of 2011, NOTE had two shareholders representing more than one-tenth of the number of votes for the shares of the company, Investment AB Öresund, representing 15.6 percent and Banque Carnegie Luxembourg S.A. representing 10.5 percent. For more information on the share and shareholders, see The NOTE share on pages 22–23.

Shareholders Meeting

The Shareholders Meeting is the company's chief decision-making body, where

Laws and practice

More information on the laws and practice formalising Swedish corporate governance are available at sites including:

• The Swedish Corporate Governance Board, www.bolagsstyrning.se, where the Swedish Code of Corporate Governance is stated.
• NASDAQ OMX Stockholm AB, www.nasdaqomx.com, which states the rules for issuers.
• The Swedish Financial Supervisory Authority, www.fi.se, which states the Authority's statutes and information on insiders.

shareholders exercise their voting rights. All shareholders recorded in the share register on the record date, and that have notified the company of their participation in time, are entitled to participate in the Meeting and vote for their total holdings of shares, personally or by proxy. Each share corresponds to one vote. Individual shareholders that wish to have a matter considered at the Meeting can request this with NOTE's Board of Directors at the address published on the company's website, in good time before the meeting. Resolutions of the meeting are published after the Meeting in a press release and a report from the Meeting is published on the website www.note.eu. NOTE's AGM will be held in Danderyd or Stockholm, Sweden.

The Annual General Meeting should be held within six months of the end of the financial year. The AGM considers matters relating to items including dividend to shareholders, adopting the Income Statement and Balance Sheet, discharging the Board members and CEO from liability, electing Board members, the Chairman of the Board and Auditors, and approving the guidelines for remunerating senior management and fees for the Board of Directors and Auditors.

Annual General Meeting 2011

NOTE's AGM was held on 28 April 2011 at Spårvagnshallarna in Stockholm, Sweden. Shareholders representing a total of 32.9 percent of the capital and votes attended the Meeting. The Meeting resolved on matters including re-electing and electing Board members and approving fees in accordance with the Nomination Committee's proposal, and not to pay any dividends to shareholders for the financial year 2010. Against the background of an amendment to the Swedish Companies Act, the Meeting also resolved to amend the Articles of Association regarding invitations to shareholders' meetings.

Extraordinary General Meeting 2011

NOTE held an EGM on 21 June 2011 at its head office in Danderyd, Sweden. Shareholders representing a total of 21.2 percent of the capital and votes attended the Meeting.

The Meeting approved the Board of Directors' proposal to sell all the shares of NOTE Tauragé UAB, Lithuania.

Nomination Committee members for the AGM 2012

Nomination			No. of shares
Committee member	Representing	30 Sep 2011	31 Dec 2011	31 Jan 2012
Kjell-Åke Andersson	Own holding	1,385,040	1,385,040	1,385,040
Bruce Grant	Garden Growth Capital LLC	2,315,000	2,315,000	2,315,000
Daniel Nyhrén	Creades AB*	4,264,488	4,497,888	4,497,888
Peter Zonabend	Banque Carnegie Luxembourg S.A.	1,695,802	3,025,096	3,025,096

* Investment AB Öresund, NOTE's former principal owner, was demerged into two separate companies—Creades AB and Investment AB Öresund—at the beginning of 2012. Creades AB took over the shareholding of NOTE in January 2012, so prior to this, this holding relates to Investment AB Öresund. Stefan Charette, also the Chairman of NOTE's Board, is the CEO of Creades AB.

Nomination Committee

The AGM resolves on how the Nomination Committee is appointed. The AGM 2011 resolved that the Nomination Committee for the forthcoming AGM shall be formed by the four largest shareholders that wish to participate, each appointing a representative at least six months before the AGM, with the Chairman of the company's Board of Directors serving as convener. If one or more of the shareholders waives its right when Nomination Committee members are to be appointed, the next largest shareholder is then offered the corresponding opportunity.

The duty of the Nomination Committee is to consult on, and submit proposals to, the AGM regarding:

• Election of a Chairman of the Meeting.
• Election of the Chairman of the Board and Board members.
• Directors' fees for the Chairman, other Board members and potential remuneration for committee work.
• Where applicable, election and remuneration of external Auditor.
• Decision on principles of composition of the Nomination Committee for the next AGM.

A report on the work of the Nomination Committee will be presented at the AGM 2012. No special remuneration was paid to the members of the Nomination Committee.

Auditors

The AGM appoints the Auditors. The Auditors review the company's annual accounts, consolidated accounts and accounting records, and the administration by the Board of Directors and CEO. The Senior Auditor also presents an Audit Report to the AGM.

The AGM 2008 elected Öhrlings Price-WaterhouseCoopers AB as audit firm, with Magnus Brändström as Auditor in Charge and Anders Magnussen Joint Auditor for the period until the AGM 2012.

Board of Directors

The duty of the Board of Directors is to manage the company's affairs on behalf of the shareholders. The Board of Directors judges the group's financial situation on an ongoing basis, prepares budgets and annual financial statements. The Board of Directors is also responsible for formulating and monitoring the company's strategies through plans and objectives, decisions on acquisitions and divestments of operations, major investments, appointments and replacements of the CEO and senior management and ongoing monitoring of operations in the year.

Each year, the Board of Directors adopts an approvals list, finance policy, instructions for financial reporting and for the Board of Directors, and rules of procedure, which formalise matters including the division of responsibilities between the Board of Directors and the CEO, alongside the Instructions for the CEO. The Chairman of the Board leads the Board of Directors' work and ensures that it is conducted in accordance with the Swedish Companies Act and other relevant legislation. The Chairman is also responsible for maintaining ongoing contact with the group management, and for ensuring that the Board's decisions are implemented appropriately.

NOTE's Board of Directors has five members. The Board of Directors has a general composition of sector knowledge and competence from Board work and management of listed companies as well as finance, accounting, structural change and strategic development. The AGM 2011 re-elected Kjell-Åke Andersson, Stefan Charette, Bruce Grant and Henry Klotz and elected Stefan Johansson as Board members for the period until the next AGM. Stefan Charette was elected as Chairman of the Board.

One employee representative is a member of the Board.

Work of the Board of Directors in 2011

Each scheduled Board meeting conducts a review of operations, results of operations and financial position of the group and outlook for the remainder of the year. In addition, the Board takes a standpoint on overall issues such as the company's strategy, marketing and sales, financing, budget and long-term operational planning.

The Board held 10 Board meetings where minutes were taken in the year. Employees of the company participated in Board meetings to submit reports. The company's Auditor attended one Board meeting in the year. The company's CFO served as secretary.

Audit Committee

The members of the Audit Committee are appointed at the Board meeting following election for one year at a time. The main duty of the Audit Committee is to consult on matters for the Board of Directors' decision. Reporting to the Board on issues considered at Audit Committee meetings is either in writing or orally at the following Board meeting.

In the financial year, the Audit Committee members were Stefan Charette and Stefan Johansson. Accordingly, NOTE departs from the Code in terms of the Board of Directors creating an Audit Committee that should consist of at least three Board members. The Board of Directors judges that two members of the Audit Committee are sufficient considering the size of the company and its Board of Directors.

The duties of the Audit Committee are to:

• Work on quality-assuring financial reporting.
• Discuss the audit and the view of the company's risks with the Auditor.
• Follow up on external Auditors' reviews and appraise their work.
• Set guidelines for services in addition to auditing that the company may purchase from the Auditor.
• Support the Nomination Committee in preparing proposals for Auditors and their remuneration.
• Ensure that the company has systems for internal control.

The Audit Committee has a close and regular collaboration with the group's central accounting function regarding internal and external reporting of financial information. There is also a collaboration developed on matters of internal control, election and appraisal of auditing principles and models.

For the financial year 2011, the Audit Committee has monitored compliance with the adopted guidelines and held

two meetings with the company's Auditors where minutes were taken to discuss audit issues and internal controls. The Auditors' written reports were distributed to the whole Board after review and comments from the company. The following main issues were considered:

• Following up on the Auditor's reporting on the financial statement and ongoing reviews.
• Appraisal of the Auditor's audit effort in the year.
• Discussion of the company's structure.
• The internal control function's results of its reviews, with a special focus on valuations of inventories, accounts receivable—trade and goodwill, and auditing foreign subsidiaries this year.
• Discussions on the liquidity and financing situation.

Remuneration Committee

The members of the Remuneration Committee are appointed at the Board meeting following election for one year at a time. The Remuneration Committee consists of the whole Board since the Board meeting following election in 2011.

The duties of the Remuneration Committee are to:

• Consult on decisions in matters of remuneration principles, remuneration and other employment terms for group management.
• Monitor and evaluate ongoing programs and programs concluded in the year for performance-related pay for management.

Monitor and evaluate application of the guidelines for remuneration to senior management that the AGM has resolved on and applicable remuneration structures and remuneration levels in the company.

In the financial year, the Board of Directors discussed remuneration issues at two meetings and monitored compliance with adopted guidelines. The following main issues were considered:

• Evaluation and approval of remuneration structures for staff and salary reviews for management.
• Discussion and setting of performancerelated pay to the CEO in accordance with the program based on NOTE's profit performance which was resolved in 2010.

After an evaluation, the Remuneration Committee concluded that:

• NOTE is following the guidelines for remunerating senior management that the AGM 2011 resolved on.
• Applicable remuneration structures and levels are reasonable against the background of the company's operations.
• Performance-related pay has been paid to the CEO and other senior managers in 2011. There is a profitability-based, performance-related remuneration program for senior managers, subsidiary presidents and other key staff, which runs from the midpoint of 2011 and one year forwards. There are 15 participants in this program.

Board of Directors 2011		Non-affiliated
Board member	Position	To company and management	To company's major shareholders
Stefan Charette	Chairman	Yes	No*
Kjell-Åke Andersson	Member	Yes	Yes
Bruce Grant	Member	Yes	Yes
Stefan Johansson (elected 28 April 2011)	Member	Yes	Yes
Henry Klotz	Member	Yes	Yes
Göran Jansson (left 28 April 2011)	Member	Yes	Yes
Peter Laveson (left 28 April 2011)	Member	No**	Yes
Christoffer Skogh	Employee representative, member	Yes	Yes
Andreas Ollén	Employee representative, deputy	Yes	Yes

* CEO of Creades AB (and formerly of Investment AB Öresund) which is NOTE's biggest shareholder.

** CEO and President of NOTE since 16 July 2010.

Guidelines for remuneration and other benefits for senior management

For information on these guidelines, refer to the Formal Annual Accounts on page 34. For information on remuneration and other benefits, see note 7, Employees, personnel expenses and remuneration to senior management, on page 44.

The group's operational governance Chief Executive Officer

NOTE's CEO leads ongoing operations. This responsibility covers accounting issues, monitoring the group's strategies and business performance and ensuring that the Board of Directors receives the necessary information to be able to take well-founded decisions. Written instructions define the division of responsibility between the Board of Directors and the CEO.

The CEO reports to the Board of Directors, informing them on how operations are progressing based on the decisions they have taken. For more information on NOTE's CEO, see Operations on page 18.

Group management

The group management of NOTE consists of three members who have ongoing responsibility for different parts of operations. This responsibility covers the design and implementation of the group's overall strategies.

During the financial year, the group management held regular meetings to review results of operations, the conditions of operations and strategic and operational issues. For more information on group management, see Operations

on page 18.

Governance of subsidiaries Subsidiaries' operations are monitored monthly from a series of operational targets, financial targets and key figures.

Internal controls and risk management Control environment

The division of roles and responsibilities between the Board of Directors and CEO is determined annually at the Board meeting following election via the rules of procedure for the Board of Directors and CEO and instructions for financial reporting.

Ongoing work to maintain effective internal controls have been delegated to, and are managed primarily by, the CEO and the group's central accounting function. NOTE also works in close collaboration with its auditors.

The fundamental guidelines for internal control are managed via policies, instructions and similar governance documents. The content of these documents is updated and evaluated where necessary. The Board of Directors is responsible for key governance documents, and the group's central accounting function is responsible for other documents. NOTE has also developed an internal reporting package for financial information, which is monitored monthly within the group.

Risk assessment

Through its operations, the company is exposed to a number of operational and financial risks. NOTE's finance policy states the limits within which financial risks should be managed. The finance

policy is updated annually and adopted by the Board of Directors. NOTE also has a procedure for formalising management of the biggest risks in operations. The risks are evaluated from a matrix of probability and degree of financial effect. Existing control measures for the biggest risks in this matrix have been documented and additional

controls introduced where required. Updating guidelines and limits regarding risk assessments is conducted at least yearly. For more information on risks and risk management, see Operations on page 14 and note 24, Financial risks and finance policy on page 51.

Monitoring control activities

Against the background of an increasing share of production being conducted in NOTE's international units, the methodology for measuring profitability and reporting working capital has been enhanced in recent years.

Each unit within NOTE is monitored in a monthly review by group management. The matters considered at these meetings are financial information and controlling key ratios and monitoring of goal-oriented activities relating to quality, cost, delivery and growth.

The need for an internal audit function is evaluated yearly. Considering the group's limited size and scope, the Board of Directors considers that NOTE does not need a separate internal audit function. The practical management of internal controls is conducted by NOTE's central accounting function.

Attendance and remuneration to the Board of Directors Attendance statistics

Board member	Position	Board meetings	Remuneration Committee	Audit Committee	Directors' fees, SEK	Committee fees, SEK
Stefan Charette	Chairman	10/10	2/2	2/2	200,000	-
Kjell-Åke Andersson	Member	10/10	2/2	-	100,000	-
Bruce Grant	Member	8/10	2/2	-	100,000	-
Stefan Johansson (elected 28 April 2011) Member		7/10	1/2	2/2	100,000	60,000
Henry Klotz	Member	10/10	2/2	-	100,000	-
Göran Jansson (left 28 April 2011)	Member	1/10	1/2	-	-	-
Peter Laveson (left 28 April 2011)	Member	3/10	1/2	-	-	-
Christoffer Skogh	Employee representative, member	8/10	2/2	-	-	-
Andreas Ollén	Employee representative, deputy	10/10	2/2	-	-	-

Fees are for the mandate term May 2011 to April 2012, resolved by the AGM 2011.

Board of Directors and Auditors

Stefan Charette Chairman, elected in 2010.

Born in 1972.

Education: M.Sc. in Finance and B.Sc. (Eng.)

NOTE holdings*: 578,035 shares.

Other significant assignments: CEO of Creades AB. Chairman of the Board of Athanase Capital Partners AB, Concentric AB and Global Batterier AB. Board member of Bilia AB, Haldex AB and Transcom S.A.

Professional experience: Former CEO of AB Custos, Brokk Group and Investment AB Öresund. Adviser to multinational groups for Lehman Brothers and Salomon Smith Barney. Chairman of the Board of Johnson Pump AB, Johnson Pump Marine AB and Tigerholm Products AB. Board member of AB Custos and Brokk AB.

Kjell-Åke Andersson

Board member, elected in 2010. Born in 1946.

Education: B.Sc. (Eng.)

NOTE holdings*: 1,385,040 shares.

Other significant assignments: Consultant in corporate management. Chairman of the Board of Cervitrol AB, Domitech AB and MedicPen AB. Board member of Mekatronik Konsult i Lund AB and Softhouse Nordic AB.

Professional experience: 40 years in industry, over 30 years in the EMS sector. Various positions including development engineer, production manager and CEO for companies including Electrolux and NOTE.

Bruce Grant

Board member, elected in 2007. Born in 1959.

Education: Ph.D. and B.Sc. (Econ.)

NOTE holdings*: 2,315,000 shares.

Other significant assignments: Executive Chairman and principal owner of Garden Growth Capital LLC and Applied Value LLC. Chairman of the Board of Human Care HC AB (publ). Board member of Robust AB, Stille AB and the Swedish-American Chamber of Commerce in New York.

Professional experience: Former Board member and adviser on profitability improvements and more efficient capital structures for Investment AB Kinnevik, Korsnäs AB, Metro International S.A., Transcom WorldWide S.A. and Tele2 AB (Chairman).

Stefan Johansson

Board member, elected in 2011. Born in 1958.

Education: B.Sc. (Econ.)

NOTE holdings: 10,000 shares.

Other significant assignments: CFO of ÅF AB (publ).

Professional experience: Former CFO and COO of Haldex AB. CFO of ABB Stal AB, Duni AB, Linjebuss AB, Sanmina Corporation AB and Segerström & Svensson AB. Broad experience of strategic and operational work in a number of sectors, primarily manufacturing. Many years' experience of corporate development and change work.

Henry Klotz

Board member, elected in 2010. Born in 1944.

Education: Engineer and economist.

NOTE holdings: 0 shares.

Other significant assignments: Executive Vice Chairman of CLS Holdings plc. Chairman of Bulgarian Land Development plc and Catena AB. Board member of CLS Holdings plc subsidiaries.

Professional experience: Various executive positions in the CLS group including heading up the Swedish operation and identifying new business opportunities for the group.

* Holdings include related party holdings.

Employee representatives

Christoffer Skogh

Board member, Employee Representative, Unionen, appointed in 2009. Born in 1975.

Education: Senior high school graduate, social sciences.

NOTE holdings: 500 shares.

Assignment: Key Account Manager. Previously held positions in supplier development, sourcing and project management. Employee of a company NOTE acquired in 2000 since 1996, active in trade union in 2001–2005 and from 2009 onwards.

Andreas Ollén

Deputy Board member, Employee Representative, Unionen, appointed in 2009. Born in 1981.

Education: Senior high school graduate, electronics.

NOTE holdings: 0 shares.

Assignment: Production Manager, NOTE employee since 2001, active in trade union since 2005.

Auditors

Öhrlings PricewaterhouseCoopers AB (PwC) was elected Auditor of NOTE AB by the AGM 2008. The next election of Auditors will be at the AGM 2012.

Magnus Brändström

Anders Magnussen

Authorised Public Accountant and Partner of PwC. Senior Auditor. Born in 1962.

Authorised Public Accountant and Partner of PwC. Born in 1966.

Report of the Directors

OPERATIONS—GENERAL

NOTE is one of the leading manufactoring partners for outsourced electronics production in the Nordics. NOTE's offering covers the complete product lifecycle, from design to after-sales.

The group consists of the parent company, plus wholly owned subsidiaries in Sweden, Norway, Finland, the UK, Estonia and China.

OPERATIONS IN 2011

2011 was a successful year for NOTE. After strong progress—now five consecutive quarters of positive operating profit and cash flow—NOTE was one of the most profitable companies of its listed Nordic sector peers again in 2011.

The fairly extensive restructuring program concluded in 2010 was fundamental to this positive performance. NOTE concentrated electronics production on fewer units, in Sweden and internationally. In this way, the capacity utilization of the group increased simultaneous with reducing costs—costs reduced by over 16 percent in the year.

Another important contributor to NOTE's positive progress is that with the restructuring program concluded, it was able to intensify its methodical improvement work. Everything currently ongoing is intended to create the prospects for greater efficiency and superior delivery precision and quality—the consistent aim being to develop an even stronger customer offering. Very positive progress of the group's key performance indicators for quality and delivery precision are a clear indication of positive operational progress.

Against the background of the challenges facing NOTE in recent years, a lot of energy has been put into enhancing the trust of existing and new customers. NOTE's positive progress is also crucial here.

There are still good prospects of developing NOTE's business. Accordingly, with decisiveness, NOTE is putting a lot of energy into benefiting from its stronger competitiveness to gradually increase market shares. As part of this process, in the autumn, commercial capacity was strengthened to enable direct business from NOTE's Industrial Plants in China and Estonia.

Significant events in the financial year

Sale of NOTE Tauragé UAB An EGM on 21 June 2011 approved to the Board of Directors' proposal to sell all the shares of NOTE Tauragé UAB, in Lithuania. As part of the restructuring measures, electronics production at NOTE Tauragé was discontinued at year-end 2010. The transaction was conducted to accelerate the closure of this legal entity cost-efficiently.

Strengthening Industrial Plants The commercial capacity of NOTE's Industrial Plants was strengthened in the autumn. The ambition is to create the prospects for sales growth by enabling business directly from Industrial Plants. Responsibility for this initiative rests with the former subsidiary Presidents in China and Estonia.

New subsidiary Presidents with sector experience were hired with the primary duty of continuing to manage efficiency and development issues in the operations in China and Estonia.

SALES AND RESULTS OF OPERATIONS Group

Sales 2011

The demand for outsourced electronics manufacture continued to progress positively in the first half-year. Activity at the customer level was high through the year, but volumes on several ongoing customer assignments were lower after the midpoint of the year. Sales were SEK 1,208.9 (1,210.7) million. In like-for-like terms, after the sale of the 50 percent holding in NOTEFideltronik at year-end 2010, this meant a sales increase of some 4 percent.

NOTE sells to a large customer base, who essentially are active in the engineering and communication industries in the Nordics and UK. The 15 largest customers in sales terms represented 59 (54) percent of consolidated sales.

Sales in autumn 2011 essentially progressed as planned, but were at a lower level than the previous year.

Results of operations 2011

NOTE decided to intensify its structural transformation in early 2010. Its objective was to execute savings and rationalization actions to produce a minimum annualized profit effect of SEK 50 million. As a consequence of the executed actions, the group's capacity utilization increased. Competitiveness sharpened.

Adjusted for structural and other non-recurring costs in 2010, costs were down by over 16 percent on the previous year.

Mainly as a result of executed cost rationalizations, gross margins expanded by 2.8 percentage points to 11.0 (8.2) percent adjusted for non-recurring items in the previous year.

In addition, and essentially as a result of structural actions, sales and administration overheads reduced by some 29 percent, corresponding to 5.6 percent of sales for the year. Adjusted for non-recurring items in the previous year, overheads were 7.9 percent of sales last year.

Operating profit adjusted for non-recurring items in the previous year, increased by SEK 65.8 million to SEK 64.4 (–1.4) million, corresponding to an operating margin of 5.3 (–0.1) percent. The sale of NOTE Tauragé executed in the second quarter had only a marginal positive impact on operating margin in the year.

Mainly as a result of reduced net debt and improved funding terms, net financial income/expense reduced to SEK –8.1 (–11.2) million. The profit after financial items was SEK 56.3 (–59.4) million. The profit after tax was SEK 39.4 (–62.0) million, or SEK 1.36 (–2.55) per share.

Parent company

Parent company NOTE AB (publ) is primarily focused on the management, coordination and development of the group. In the period, revenue was SEK 33.8 (40.5) million and mainly related to intra-group services. Profit after tax was SEK 24.2 (–99.2) million. The deficit in 2010 mainly related to impairment of shares in subsidiaries which were terminated or sold off in the year.

As a result of the sale of the CAD operation and the 50% holding in NOTE-Fideltronik in 2010, at year-end, interestbearing receivables in the parent company were some SEK 6.1 (30.5) million.

FINANCIAL POSITION AND LIQUIDITY

Cash flow

Competing successfully in the high mix/ low volume segment sets high standards for an effective supply chain, inventory control and logistics. Accordingly, NOTE faces a significant challenge in continuously improving business methods and internal processes in these areas. This challenge is especially clear in rapid demand upturns and downturns, and relates primarily to the complexity of the

supply of materials and varying leadtimes for electronic components.

In the first half of the year, the global market for electronic components was characterized by a continued shortage with extended lead-times resulting for certain components. In addition, the natural disaster in Japan exacerbated uncertainty on the market for electronic components. Accordingly, substantial work efforts alongside customers and suppliers were necessary to dimension inventories levels and maintain delivery precision at a satisfactory level. However, the situation on the component market stabilized significantly in the autumn. At year-end, inventories were 5 percent higher than at year-end 2010.

Mainly as a result of volume contraction in the fourth quarter, accounts receivable—trade at year-end were down 3 percent year on year. But the number of outstanding days of credit were somewhat higher than the previous year-end.

Accounts payable—trade, primarily consisting of purchases of electronic components and other production materials, were down 11% on the previous year-end.

Cash flow (after investments) increased by SEK 70.1 million to SEK 56.5 (–13.6) million, corresponding to SEK 1.96 (–0.56) per share. The repayment of interest-bearing receivables linked to the sale of the 50 percent holding in NOTEFideltronik had a positive effect on investing activities of some SEK 24 million.

Equity to assets ratio

At the end of the period, the equity to assets ratio was 41.0 (31.3) percent, implying an increase of 9.7 percentage points. The increase primarily relates to positive profit performance in the year.

Liquidity

The problematic situation on the global market for electronics components combined with sales growth in the first half-year placed increased demands on working capital and generated significant strains on the group's liquidity from time to time. NOTE is maintaining a sharp focus on actions to further enhance the group's liquidity and cash flow.

Available cash and cash equivalents, including unutilised overdraft facilities, were SEK 64.9 (67.0) million at year-end. Factored accounts receivable—trade were some SEK 181 (188) million.

INVESTMENTS

Investments in property, plant and equipment, excluding sales, were SEK 6.9 (4.2) million in the year, or 0.6 (0.3) percent of sales. Depreciation was SEK 19.8 (31.9) million.

RESEARCH AND DEVELOPMENT ACTIVITIES

Through its operations, NOTE is closely involved in its customers' development processes, including contributing to the industrialisation phase and guiding and developing production processes for its customers. These activities are continuous and not reported separately in the accounts.

No development processes were capitalised in the Balance Sheet in the year.

THE NOTE SHARE

The total number of shares of the company is 28,872,600. All shares are of the same class and have a quotient value of SEK 0.50 per share.

There are no limitations on transferring shares in the form of pre-emption clauses or similar that the company is aware of. As of the reporting date there were two shareholders with a shareholding of more than 10%, Investment AB Öresund with 15.6 (11.1) percent of the votes and Banque Carnegie Luxembourg S.A. with 10.5 (5.8) percent of the votes.

The company's Board members are elected annually by the AGM, which also approves amendments of the Articles of Association. Otherwise, there are no known circumstances that could affect possibilities to acquire the company through a public takeover bid for the shares of NOTE.

For more information on the share and shareholders, see The NOTE share on pages 22–23.

HUMAN RESOURCES

The average number of full-time employees was 939 (1,000) in the year, 484 (511) of them being women and 455 (489) men. At year-end 2011, NOTE had 862 (942) employees.

Work attendance in the group was 96.2 (95.3) percent of regular workinghours and staff turnover was 22.7 (9.9) percent.

For more information on the employees, see Operations on pages 16–17.

GUIDELINES FOR REMUNERATING SENIOR MANAGERS

Senior management means the President and members of NOTE AB's management.

For 2012, the following unchanged guidelines for remunerating management are proposed: basic salary will consider individual responsibilities, experience and performance and will be subject to annual review.

Performance-related pay is dependent on individual satisfaction of quantitative and qualitative goals subject to a maximum of 100 percent of basic salary.

Pensionable age is 65. NOTE offers benefits similar to the ITP scheme (supplementary pensions for salaried employees). The dismissal pay and severance pay of a manager may not exceed an aggregate maximum of remuneration over 24 months. The Board is entitled to depart from these guidelines if there are special circumstances in individual cases.

Remuneration to the management of NOTE in 2011 was decided in accordance with the adopted guidelines formulated by the Board of Directors, which were then approved by the AGM 2011. For more information on remuneration, see note 7, Employees, personnel expenses and remuneration to senior management, on page 44.

ENVIRONMENT

Reporting obligation and certification

The group conducts business in a Swedish subsidiary, holding permits in accordance with the Swedish ordinance on environmentally hazardous activities and health (reference SFS 1998:899). Two facilities are subject to permits and one Swedish facility is partially subject to a permit.

Seven of the group's facilities have ISO 14001 environmental certification.

EU directives

The WEEE directive regulates the processing of electronic waste. Because NOTE does not have producer liability, no provisioning for processing electronic waste from consumer electronics has been made in accordance with IFRIC 6. This responsibility rests with the product owners.

The EU REACH regulation formalises the usage of chemicals. NOTE is classed as a downstream user and/or end-user of chemicals, and is only subject to the obligation to register substances and prepare risk assessments in those cases where the company uses what are known as SVCH materials.

For more information on environmental matters, see Operations on page 15.

SIGNIFICANT RISKS OF OPERATIONS Operational risks

NOTE is one of the leading manufacturing partners for electronics production in the Nordics. It has especially strong market positioning in the high mix/low volume market segment, i.e. for products in small to medium-sized batches that require high technology competence and flexibility. NOTE produces PCBs, sub-assemblies and box build products. NOTE's offering covers the whole

product lifecycle, from design to aftersales. NOTE's role includes it serving as a collaboration partner to customers, but not a product owner.

NOTE's Nearsourcing business model, which is designed to increase sales growth combined with reduced cost of overheads and investments in high-cost countries, is a way to reduce the risks of operations.

For more information on operational risks, see operations on page 14.

Financial risks

Through its operations, the group is exposed to different forms of financial risk, such as borrowing and interest risk, currency risk, as well as liquidity and credit risks. The group is financed essentially through equity, loans and accounts payable—trade. Depending on economic and market conditions, NOTE's prospects of securing the required funding and liquidity should be considered as a significant risk.

The group's currency risk is mainly due to purchasing of production material, where the majority of the group's invoicing is denominated in SEK. Expenses denominated in foreign currency are hedged partly through binding agreements, where the customer bears the currency risk, and partly through cash flow hedges. The hedged currencies are USD and EUR. For more information on risks, see operations on page 14 and note 24, Financial risks and finance policy, on page 51.

POST-BALANCE SHEET EVENTS

One of NOTE's customers reported profitability problems and impending restructuring measures in the first quarter of 2012. In light of the situation, NOTE is continuing deliveries in close dialogue with this customer.

EXPECTATIONS OF FUTURE PROGRESS

NOTE puts a big emphasis on continuously improving quality and delivery precision for customers.

The visibility of future volume progress is relatively short, and as for many of NOTE's customers, market conditions remain hard to assess.

In the short term, NOTE has sharpened its focus on improving cash flow and liquidity. With its current, improved cost structure, and with the support of ongoing change work, NOTE has secured stronger positioning to increase market shares.

The goal is for NOTE to keep growing, with profitability as its top priority.

PROPOSED APPROPRIATION OF PROFITS

The Board of Directors and CEO propose that profit be appropriated as follows (SEK):

Brought forward	4,919,307
Profit after tax	24,155,722
Total	29,075,029
Distributed to shareholders	8,661,780

Carried forward 20,413,249 Total 29,075,029

BOARD OF DIRECTORS' STATEMENT REGARDING PROPOSED DIVIDENDS

The proposed dividend to shareholders amounts to 30 percent of the company's profits as of the reporting date and will reduce the group's equity ratio to 39.6 percent. The opinion of the Board of Directors is that the proposed dividend is consistent with the principle of prudence of the Swedish Companies Act, and accordingly, is justifiable in terms of the requirements set by the company's equity, investment requirement, liquidity and financial position, and the risks associated with the type and scale of operations.

Regarding NOTE's results of operations and financial position otherwise, the reader is referred to the following Income Statements and Balance Sheets with the associated notes. NOTE's financial year is the period 1 January to 31 December inclusive. All amounts are in thousands of Swedish kronor (SEK 000) unless otherwise stated.

Consolidated Income Statement

SEK 000	NOTE	2011	2010
Net revenue	2, 3	1,208,852	1,210,716
Cost of goods sold and services		–1,075,805	–1,150,205
Gross profit		133,047	60,511
Selling expenses		–36,301	–53,544
Administrative expenses		–32,180	–49,810
Other operating revenue	4	21,490	18,315
Other operating expenses	5	–21,683	–23,637
Operating profit	3, 6, 7, 8, 26	64,373	–48,165
Financial income		5,102	2,172
Financial expenses		–13,202	–13,438
Net financial income/expense	9	–8,100	–11,266
Profit before tax		56,273	–59,431
Tax	10	–16,881	–2,527
Profit after tax*		39,392	–61,958
Basic and diluted earnings per share, SEK	18	1.36	–2.55

*No minority interests for the financial year or comparative year

Consolidated Statement of Comprehensive Income

SEK 000	2011	2010
Profit after tax	39,392	–61,958
Other comprehensive income:
Translation difference	2,954	–10,184
Cash flow hedges	77	–159
Total other comprehensive income, net after tax	3,031	–10,343
Total comprehensive income for the year	42,423	–72,301

Consolidated Balance Sheet

SEK 000	NOTE	31 Dec 2011	31 Dec 2010
Assets
Intangible assets	11	70,594	70,714
Property, plant and equipment	3, 12	56,934	72,757
Long-term receivables	14	4,488	8,444
Deferred tax assets	10	15,781	28,982
Total non-current assets		147,797	180,897
Inventories	3, 15	202,326	192,579
Accounts receivable—trade	24, 25	226,853	234,350
Tax receivables		4,614	5,859
Other receivables	14, 25	11,710	35,124
Prepaid expenses and accrued income	16	10,737	11,041
Cash and cash equivalents	25, 29	29,297	33,682
Total current assets		485,537	512,635
TOTAL ASSETS		633,334	693,532
Equity	17
Share capital		14,436	14,436
Other paid-up capital		217,862	217,862
Reserves		–1,526	–4,557
Retained profit		28,663	–10,728
Equity		259,435	217,013
Liabilities
Long-term interest-bearing liabilities	19, 24, 25	2,148	4,666
Pension commitments	20	–	–
Deferred tax liabilities	10	3,387	2,410
Total non-current liabilities		5,535	7,076
Current interest-bearing liabilities	19, 24, 25	143,117	202,240
Accounts payable—trade	24, 25	152,978	171,945
Tax liabilities		710	810
Other liabilities	22, 25	22,627	33,575
Accrued expenses and deferred income	23	47,575	43,958
Other provisions	21	1,357	16,915
Total current liabilities		368,364	469,443
TOTAL EQUITY AND LIABILITIES		633,334	693,532

For information on the group's pledged assets and contingent liabilities see note 27 on page 52.

Consolidated Statement of Changes in Equity

SEK 000	Share capital	Other paid-up capital	Reserves	Retained profit	Total equity
Opening equity, 1 Jan. 2010	4,812	148,100	5,786	51,230	209,928
Comprehensive income
Profit after tax	–	–	–	–61,958	–61,958
Other comprehensive income
Exchange rate differences	–	–	–10,184	–	–10,184
Cash flow hedges	–	–	–159	–	–159
Total comprehensive income	–	–	–10,343	–61,958	–72,301
Transactions with equity holders
New share issue	9,624	76,994	–	–	86,618
Costs relating to new share issue	–	–7,232	–	–	–7,232
Closing equity, 31 Dec. 2010	14,436	217,862	–4,557	–10,728	217,013

SEK 000	Share capital	Other paid-up capital	Reserves	Retained profit	Total equity
Opening equity, 1 Jan. 2011	14,436	217,862	–4,557	–10,728	217,013
Comprehensive income
Profit after tax	–	–	–	39,392	39,392
Other comprehensive income
Exchange rate differences	–	–	2,954	–	2,954
Cash flow hedges	–	–	77	–	77
Total comprehensive income	–	–	3,031	39,392	42,423
Closing equity, 31 Dec. 2011	14,436	217,862	–1,526	28,663	259,435

Consolidated Cash Flow Statement

SEK 000	NOTE	2011	2010
	29
Operating activities
Profit before tax		56,273	–59,431
Reversed depreciation and amortisation		19,827	31,916
Other non-cash items		–291	–6,622
Tax paid		–2,095	–1,946
		73,714	–36,083
Change in working capital
Increase (–)/decrease (+) in inventories		–8,809	2,702
Increase (–)/decrease (+) in trade receivables		14,772	–11,203
Increase (+)/decrease (–) in trade liabilities		–42,221	18,964
		–36,258	10,463
Cash flow from operating activities		37,456	–25,620
Investing activities
Purchase of property, plant and equipment		–6,947	–4,191
Sale of property, plant and equipment		929	5,891
Purchase of intangible assets		–	–191
Purchase of subsidiaries/operations, net liquidity effect		615	5,921
Sale of financial assets		24,407	4,596
Cash flow from investing activities		19,004	12,026
Financing activities
New share issue		–	79,386
Borrowings		1,800	39,173
Amortisation of loans		–62,986	–93,148
Cash flow from financing activities		–61,186	25,411
Cash flow for the year		–4,726	11,817
Cash and cash equivalents
At beginning of period		33,682	24,416
Cash flow before financing activities		56,460	–13,594
Cash flow from financing activities		–61,186	25,411
Exchange rate difference in cash and cash equivalents		341	–2,551
Cash and cash equivalents at end of period		29,297	33,682

Notes on the consolidated financial statements

Note 1 Critical accounting principles

Consistency with standards and law

The consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), as endorsed by the EU and interpretation statements from the International Financial Reporting Interpretations Committee (IFRIC). RFR's (Rådet för finansiell rapportering, the Swedish Financial Reporting Board) recommendation RFR 1, Supplementary Accounting Rules for Groups, has been applied.

Basis of preparation of the consolidated financial statements

The parent company's functional currency is the Swedish krona, which is also the presentation currency for the parent company and group. Unless otherwise stated, all amounts are rounded to the nearest thousand.

Judgements made by management when applying IFRS that have a significant impact on the financial statements and estimates made that may imply significant adjustments to following years' financial statements are reviewed in more detail in note 31.

The following accounting principles for the group have been applied consistently for all periods presented in the consolidated accounts, unless stated otherwise below. The group's accounting principles have been applied consistently on reporting and consolidating the parent company and subsidiaries.

The annual accounts and consolidated accounts were approved by the Board for issuance on 30 March 2012. The Consolidated Income Statement and Balance Sheet will be subject to adoption at the AGM (Annual General Meeting) on 25 April 2012.

Group

Amended accounting principles

None of the IFRS or IFRIC interpretation statements that are mandatory for the first time for the financial year that began on 1 January 2011 or later are expected to have any material impact on the group.

New IFRS and interpretation statements that have not yet been adopted

The following new standards, amendments to standards and interpretation statements come into effect from the financial year 2012 onwards and have not been adopted when preparing these financial statements.

IFRS 9, "Financial Instruments" deals with the presentation, measurement and recognition of financial liabilities and assets. IFRS 9 was issued in November 2009 for financial assets, and in October 2010 for financial liabilities, and replaces those parts of IAS 39 that relate to the presentation and measurement of financial instruments. IFRS 9 states that financial assets should be classified in two different categories; measurement at fair value or measurement at amortised cost. This classification is determined on first-time recognition based on the company's business model and characteristic qualities of the contracted cash flows. For financial liabilities, there are no major changes compared to IAS 39. The largest change relates to liabilities, which are recognised at fair value. For these, the change in fair value that relates to their own credit risk should be recognized in other comprehensive income instead of profit or loss, providing this does not cause an accounting mismatch. The group intends to apply the new standard by no later than the financial year that begins on 1 January 2015 and has not yet evaluated its effects. This standard has not yet been endorsed by the EU.

IFRS 10 "Consolidated Financial Statements" builds on existing principles because it identifies control as the decisive factor to determine whether a company should be included in the consolidated accounts. The standard offers further guidance on determination of control when this is hard to judge. The group intends to apply IFRS 10 for the financial year that begins on 1 January 2013 and has not yet evaluated the full effect on its financial statements. This standard is not yet endorsed by the EU.

IFRS 12 "Disclosures of Interests in Other Entities" covers disclosure requirements for subsidiaries, joint arrangements, associated companies and non-consolidated structured entities. The group has not yet evaluated the full impact of IFRS 12 on the financial statements. The group intends to apply IFRS 12 for the financial year that begins on 1 January 2013 and has not yet evaluated the full effect on the financial statements. The standard has not yet been endorsed by the EU.

IFRS 13 "Fair Value Measurement" is intended for fair value measurements to become more consistent and less complex through the standard including an exact definition and common source of IFRS for fair value measurement and the associated disclosures. The standard does not extend the application for when fair value should be applied but offers guidance on how it should be applied when other IFRS already require or permit fair value measurement. The group has not yet evaluated the full effect of IFRS 13 on its financial statements. The group's intention is to apply the new standard for the financial year that begins on 1 January 2013. The standard has not yet been endorsed by the EU.

Segment reporting

Operating segments are reported in a manner consistent with internal reporting submitted to the chief operating decision maker. The chief operating decision maker is that function with responsibility for allocating resources and judging the results of an operating segment. In the group, this function has been identified as the CEO, who takes strategic decisions.

Classification, etc.

Essentially, the non-current assets and non-current liabilities of the group exclusively comprise amounts expected to be recovered or paid after more than 12 months from year-end. Essentially, the current assets and current liabilities of the group only comprise amounts expected to be recovered or paid within 12 months of the reporting date.

Consolidation principles

Subsidiaries

Subsidiaries are companies under the controlling influence of NOTE AB. A controlling influence implies the direct or indirect right to formulate a company's financial and operational strategies with the aim of receiving economic rewards. When judging whether a controlling influence exists, potential shares conferring voting rights that can be exercised or converted without delay are considered.

The group comprises the parent company and 14 wholly owned companies. Subsidiaries are reported in accordance with acquisition accounting. Acquisition accounting means that acquisition of a subsidiary is considered as a transaction whereby the group indirectly acquires the subsidiary's assets and takes over its liabilities and contingent liabilities. The consolidated cost is determined using an acquisition analysis relating to the acquisition. This analysis determines partly the cost of participations or operation, and partly the fair value of acquired identifiable assets and liabilities and contingent liabilities taken over on the acquisition date. The cost of subsidiary shares and operations is the total of the fair value of assets paid, liabilities arising or taken over, and for equity instruments issued that are submitted as payment in exchange for the acquired net assets. In business combinations where the acquisition cost exceeds the fair value of acquired assets and liabilities and contingent liabilities taken over that are recognised separately, the difference is recognised as goodwill. When the difference is negative, this is recognised directly in the Income Statement. Subsidiary financial statements are consolidated from the acquisition date until the date the controlling influence ceases. For acquisitions until 2009 inclusive, transaction expenses directly attributable to the acquisition were also included in cost. For acquisitions from 2010 onwards, transaction costs are recognized in the Income Statement.

Transactions to be eliminated on consolidation

Intra-group receivables and liabilities, revenues or costs and un-realised profits or losses arising from intra-group transactions are eliminated wholly when the consolidated accounts are prepared. Un-realised gains that arise from transactions with joint ventures are eliminated to the extent corresponding to the group's participating interest in the company. Un-realised losses are eliminated in the same way as un-realised gains, but only to the extent there is no value impairment.

Foreign currency

Foreign currency transactions and balance sheet items

Foreign currency transactions are translated to the functional currency (SEK) at the rate of exchange ruling on the transaction date. Foreign currency monetary assets and liabilities are translated to the functional currency at the rates of exchange ruling at the reporting date. The exchange rate differences arising on translation are recognised in the Income Statement.

The exceptions are when the transactions are hedges that satisfy the requirements of hedge accounting, when the loss/gain is recognised in other comprehensive income. Exchange rate gains and losses relating to loans and cash and cash equivalents are recognised as financial revenue or expenses in the Income Statement. All other exchange rate gains and losses are recognised as other operating revenue or expenses in the Income Statement.

Financial statements of foreign operations

The assets and liabilities of foreign operations including goodwill and other consolidated surpluses and deficits are translated to Swedish krona at the rates of exchange ruling at the reporting date. The revenues and expenses of foreign operations are translated to Swedish krona at an average rate of exchange, which is an approximation of the rates of exchange ruling at each transaction date. Translation differences arising from the currency translation of foreign operations are recognised in other comprehensive income.

Revenues

Sales of goods and executing services assignments

Revenues from the sale of goods and manufacturing services are recognised to the Income Statement when the significant risks and rewards associated with ownership of the product have been transferred to the buyer and when it is probable that the future economic rewards will flow to the company and these rewards can be measured reliably. If there is significant uncertainty regarding payment, associated expenses or the risk of returns, and if NOTE retains a commitment in the ongoing management usually associated with ownership, no revenues are recognised. Revenues only include the gross inflows of economic rewards the company receives, or may receive, on its own behalf. Revenues are recognised at the actual value of what is received, or will be received, less deductions for discounting. Revenues for consulting services are recognised according to the percentage of completion method provided that the labour hours incurred are clearly identifiable and can be measured reliably.

Central government support

Central government support is recognised in accordance with IAS 20. Central government subsidies are recognised in the Income Statement and Balance Sheet when they are received. Central government subsidies received as remuneration for expenses that have already been charged to profits in previous periods are recognised in the Income Statement in the period when the receivable from central government arises. Central government subsidies for investments are recognised as a reduction of the carrying amount of the asset.

Lease arrangements and financial income and expenses

In the consolidated accounts, leases are classified as finance or operating leases. Finance leases occur when essentially, the financial risks and rewards associated with ownership transfer to the lessee. If this is not the case, the arrangement is an operating lease.

Operating leases

Payments for operating lease arrangements are recognised in the Income Statement on a straight-line basis over the lease term. Rewards received on signing a contract are recognised as a portion of the total lease expense in the Income Statement.

Finance leases

Assets held through finance lease arrangements are recognised as assets in the Consolidated Balance Sheet in accordance with the principles for owned assets. The obligation to pay future lease payments is recognised as long-term and current liabilities.

Minimum lease payments are allocated between interest expenses and amortisation of the outstanding liability. Interest expenses are allocated over the lease term so that each accounting period is charged with an amount corresponding to a fixed interest rate for the liability recognised in each period. Variable expenditure is expensed in the periods it occurs.

Financial income and expenses

Financial income and expenses comprise interest income on bank balances and receivables, interest expenses on loans, exchange rate differences and un-realised and realised gains on financial investments and derivative instruments used in financing activities. Interest income/ expenses are recognised according to the effective interest method. Effective interest is the interest that discounts estimated future payments received and made during the expected term of a financial instrument, at the financial asset's or liability's recognised net value. The calculation includes all expenditure paid or received from contract counterparties that is a part of effective interest, transaction expenses and all other premiums and discounts.

Financial instruments

Financial instruments recognised in the Balance Sheet include cash and cash equivalents, accounts receivable—trade, derivatives and loans receivable on the assets side. Accounts payable—trade, derivatives and borrowings are recognised under liabilities and equity.

A financial asset or financial liability is recognised in the Balance Sheet when the company becomes party to the instrument's contracted terms. Accounts receivable—trade are recognised in the Balance Sheet when invoices are sent. Liabilities are recognised when the counterparty has delivered and there is a contracted obligation to pay, even if no invoice has been received. Accounts payable—trade are recognised when invoices are received.

A financial asset is de-recognised from the Balance Sheet when the contracted rights are realised, mature or the company relinquishes control over them. The same applies to part of a financial asset. A financial liability is de-recognised from the Balance Sheet when the contracted commitment is satisfied or otherwise extinguished. The same applies to part of a financial liability.

A financial asset and financial liability is offset and recognised at a net amount in the Balance Sheet only when there is a legal right to offset the amount and there is an intention to settle the items at a net amount or to simultaneously realise the asset and settle the liability.

Purchases and sales of financial assets are recognised on the transaction date, which is the date the company undertakes to purchase or sell the asset.

NOTE conducts impairment tests for its financial assets at the end of each reporting period. A financial asset is only impaired if there is objective evidence that it is impaired due to "loss events" that affect future cash flows of the assets and can be measured reliably. The asset's impairment loss is recognised in the Income Statement.

Subsequent recognition then depends on the following classification. IAS 39 classifies financial instruments in categories. This classification depends on the purpose of the acquisition of the financial instrument. Management determines the classification at the original time of acquisition. The categories are as follows:

Loans receivable and accounts receivable—trade

"Loans receivable and accounts receivable—trade" are financial assets that are not derivatives with fixed payments or payments that can be determined, and are not listed on an active market. The receivables occur when the company supplies funds, goods or services directly to the borrower without the intention of conducting trade in the claim. This category also includes acquired receivables. These assets are initially recognised at fair value including transaction costs, and then at amortised cost by applying the effective interest method, less potential provisioning for impairment. "Loans receivable and accounts receivable—trade" are included in current assets apart from items with maturities of more than 12 months from the end of the reporting period, which are classified as non-current assets.

Other financial liabilities

Loans and other financial liabilities such as accounts payable—trade, are included in this category. Initially, these liabilities are recognised at fair value including transaction costs, and then at amortised cost by applying the effective interest method, less potential provisioning for value impairment.

Factoring

NOTE uses factoring as part of its external funding. A factored trade payable is recognised as a whole as a pledged asset in consolidated contingent liabilities. The factoring liability is recognised as a current interest-bearing liability in tandem with payment. Upon full payment from the customer, the amount of the accounts receivable—trade and the factoring liability are written down to zero, and NOTE's contingent liability ceases.

Cash Flow Hedging

Currency exposure regarding future forecast flows is partly hedged through currency forwards. Currency forwards that hedge future flows are recognised in the Balance Sheet at fair value. Changes to fair value while recognised in other comprehensive income and are reclassified from equity to profit or loss in those periods when the hedged item affects profit or loss.

When a forecast transaction is no longer expected to occur, the accumulated gain or loss recognised in other comprehensive income is immediately reclassified from equity to the Income Statement.

Cash and cash equivalents

Cash and cash equivalents consist of cash funds and immediately available balances with banks and corresponding institutions.

Property, plant and equipment

Property, plant and equipment are recognised in the group at cost less deductions for accumulated depreciation and potential impairment losses. The cost includes the purchase price and expenses directly attributable to bringing the asset into the location and condition for use in accordance with the purpose of its acquisition. The accounting principles for

impairment losses are reported below.

Property, plant and equipment that comprise components of differing useful lives are treated as separate components of property, plant and equipment.

The carrying amount of property, plant and equipment is de-recognised from the Balance Sheet on disposal or divestment, or when no future economic rewards are expected from using or divesting/disposing of the asset. Profits or losses arising upon disposal or divestment of an asset comprise the difference between the sales price and the asset's carrying amount less direct selling expenses. Profits and losses are recognised as other operating revenue/expenses.

Additional expenditure

Additional expenditure is added to cost only if it is likely that the future economic rewards associated with the asset will arise for the company, and the cost can be measured reliably. All other additional expenditure is recognised as a cost in the period it occurs. Additional expenditure is added to cost to the extent that the performance of the asset is improved in relation to the level applying when originally acquired. All other additional expenditure is recognised as a cost in the period it occurs. Whether expenditure relates to the exchange of identifiable components, or parts thereof, is decisive to evaluation of when additional expenditure is added to cost, whereupon such expenditure is capitalised. Even in those cases where new components are added, expenditure is added to cost. Potential carrying amounts not expensed on exchanged components, or parts of components, are made obsolete and expensed at exchange. Repairs are expensed on an ongoing basis.

Depreciation principles

Depreciation is on a straight-line basis over the estimated useful lives of assets. Land is not depreciated. The group utilises component depreciation, which means that the components' estimated useful lives are the basis for depreciation.

Estimated useful lives: Land improvements 20 years Buildings, real estate used in business operations see below Leasehold improvements—permanent equipment, servicing facilities etc. in buildings 5 years Leasehold improvements—permanent installation, buildings 20 years Permanent equipment, servicing facilities etc. in buildings see below

• Plant and machinery 5 years
• Equipment, tools fixtures and fittings 4 or 5 years

Real estate used in business operations comprises a number of components with differing useful lives. The main division is buildings and land. However, buildings comprise several components, whose useful lives vary. The useful lives of these components are assessed to vary between 10 and 100 years.

The following main groups of components have been identified and are the basis for depreciation on buildings:

Framework	100 years
Additions to framework, interior walls, etc.	20–40 years
Fixtures and fittings, heating, electricity, ventilation and sanitation, etc.	20–40 years
Exterior surfaces, frontage, external roofing, etc.	20–30 years
Interior surfaces, mechanical equipment, etc.	10–15 years

The depreciation methods applied and residual values and useful lives of assets are reevaluated at each year-end.

Intangible assets

Goodwill

Goodwill is the difference between the cost of a business acquisition and the fair value of acquired assets, liabilities taken over and contingent liabilities. Goodwill is recognised at cost less potential accumulated impairment losses. Goodwill from a business combination is allocated to the groups of cash generating units that are expected to benefit from the synergies of the business combination. NOTE allocates goodwill to the Nearsourcing and Industrial Plants business segments. Goodwill is subject to impairment tests at least yearly.

Other intangible assets

Other intangible assets acquired by the group are recognised at cost less accumulated amortisation (see below). Expenses incurred for internally generated goodwill and internally generated trademarks and brands are recognised in the Income Statement when the expense occurs.

Additional expenditure

Additional expenditure for capitalised intangible assets is recognised as an asset in the Balance Sheet only when it increases the future economic rewards for the specific asset to which it is attributable. All other expenditure is expensed as it occurs.

Amortisation

Amortisation is recognised in the Income Statement on a straight-line basis over the estimated useful lives of intangible assets, providing such useful lives are not indefinite. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are:

• Trademarks, brands and similar rights 5 years
• Capitalised expenditure on software 4 years Capitalised expenditure for process development 5 years

Inventories

Inventories are recognised at the lower of cost and net realisable value. Net realisable value is the estimated sales price in operating activities less estimated expenditure for completion and achieving a sale.

Cost is calculated by applying the FIFO (first in first out) method and includes expenditure arising from the acquisition of inventory items and their transportation to their current location and condition. The cost of producing finished goods and work in progress includes a reasonable proportion of indirect expenses based on normal capacity utilisation.

The cost of finished and semi-finished goods produced by the company includes direct production expenses and a reasonable proportion of indirect production expenses.

Valuations consider normal capacity utilisation. Inventories are recognised net of deductions for individually judged risk of obsolescence.

Impairment

With the exception of inventories and deferred tax assets, the carrying amounts of the group's assets are subject to impairment tests at each reporting date. If there is such indication, the asset's recoverable value is calculated. Assets exempted by the above are subject to impairment tests in accordance with the relevant standards. An impairment loss is recognised when an asset or cash-generating unit's carrying amount exceeds its recoverable value.

An impairment loss is posted to the Income Statement. Impairment losses on assets attributable to cash-generating units (group of units) are primarily assigned to goodwill. A proportional impairment loss of the unit's other constituent assets (group of units) is effected subsequently.

Measuring recoverable values

Recoverable values on accounts receivable—trade are calculated as the original receivable less the amounts not expected to be received. The recoverable value of other assets is measured as the greater of fair value less selling expenses and value in use.

Reversal of impairment losses

Impairment losses of accounts receivable—trade are reversed if a subsequent increase in recoverable value can be objectively attributed to an event that has occurred after the impairment loss was effected. Goodwill impairment losses are not reversed. Impairment losses on other assets are reversed if changes to the assumptions forming the basis for calculating the recoverable value have occurred. An impairment loss is only reversed to the extend the asset's carrying amount after reversal does not exceed the carrying amount the asset would have had if no impairment loss had been effected, considering the depreciation or amortisation that would then have been effected.

Share capital

Dividends

Dividends are recognised as a liability after the AGM has approved the dividends.

Employee benefits

Defined-contribution pension plans

Commitments regarding expenditure on defined-contribution plans are recognised as an expense in the Income Statement when they occur.

A defined contribution pension plan is a pension plan by which NOTE pays fixed charges to a separate legal entity. NOTE does not have any legal or informal obligation to pay further contributions if this legal entity does not have sufficient assets to pay all benefits to employees associated with employees' service during current or previous periods.

Defined-benefit pension plans

The group had one traditional assurance defined-benefit plan until 2009 inclusive, which was discontinued during 2010, and there were no defined benefit pension plans as of the reporting date.

Remuneration on notice of termination

A cost for remuneration coincident with the notices of termination to staff is recognised only if the company has demonstrably committed to terminate employment before the normal time, without the realistic possibility of withdrawing its decision, by a formal detailed plan. When remuneration is disbursed as an offering to encourage voluntary redundancies, a cost is recognised if it is probable that the offer will be accepted and that the number of employees who will accept the offer can be reliably estimated.

Provisions

Provisions are recognised in the Balance Sheet when the group has a commitment, and it is likely that an outflow of economic resources will be necessary to settle the commitment and the amount can be reliably measured. Provisions are measured at the present value of the amounts expected to be required to settle the commitment.

Restructuring and other non-recurring expenses

A restructuring provision is recognised when the group has determined an executable and formal restructuring plan, and the restructuring has either begun or been publicly disclosed.

Non-recurring expenses mean expenses of significant amounts, and simultaneously, of such a nature that they can be considered as non-operating and not recurrent each year. For example, non-recurring expenses are impairment of assets in disputes and expenses relating to changing CEOs.

Tax

Income tax comprises current tax and deferred tax. Income tax is recognised in the Income Statement apart from when the underlying transaction is recognised directly in other comprehensive income or directly against equity, whereupon the associated tax effect is recognised in other comprehensive income or directly in equity.

Current tax is tax to be paid or received for the current year, applying the tax rates enacted or substantively enacted as of year-end, which also includes adjustments to current tax attributable to previous periods.

Deferred tax is calculated according to the balance sheet method, proceeding from temporary differences between carrying amounts and taxable values of assets and liabilities. The following temporary differences are not considered; for temporary differences arising in the first-time accounting of goodwill, the first-time recognition of assets and liabilities that are not business combinations, and that at the time of the transaction neither influence reported nor taxable profits. Nor are temporary differences attributable to participations in subsidiaries not expected to be reversed within the foreseeable future considered

The measurement of deferred tax is based on how the carrying amounts of assets or liabilities are expected to be realised or settled. Deferred tax is calculated by applying the tax rates and tax regulations that are enacted or substantively enacted as of the reporting date.

Deferred tax assets on taxable temporary differences and loss carry-forwards are only recognised to the extent it is likely that they will be utilised. The value of deferred tax assets is reduced when it is no longer considered likely that they can be utilised.

Earnings per share

The measurement of earnings per share is based on the consolidated profit for the group for the year and on the weighted average number of shares outstanding in the year. When measuring earnings per share after dilution, the average number of shares is adjusted to take into account effects of any diluting ordinary shares, which, in the relevant reporting period, derive from options issued to senior management.

Contingent liabilities

A contingent liability is recognised when there is a possible commitment resulting from events that have occurred and whose incidence is only confirmed by one or more uncertain future events, or when there is a commitment that is not recognised as a liability or provision because it is not likely that an outflow of resources will be necessary or the size of the commitment can be reliably measured.

Note 2 Allocation of revenue

All group sales are derived from EMS operations, i.e. contract manufacture services for electronics products.

Note 3 Segment reporting

Significant key figures for NOTE's operating segments are in the following table, in accordance with the application of IFRS 8. Essentially, these consist of Nearsourcing Centres and Industrial Plants. Nearsourcing Centres are the selling units in Sweden, Norway, Finland and the UK, where development-oriented work is conducted close to customers. Industrial Plants are manufacturing units in Estonia, Lithuania, Poland and China. Other units consist of business-support, group-wide operations.

		OTHER UNITS AND NEARSOURCING CENTRES INDUSTRIAL PLANTS TOTAL ELIMINATIONS
	2011	2010	2011	2010	2011	2010	2011	2010
REVENUES
External sales	1,120,091	1,137,569	88,761	72,311	–	836	1,208,852	1,210,716
Internal sales	21,789	58,766	290,535	448,648	–312,324	–507,414	–	–
Revenues	1,141,880	1,196,335	379,296	520,959	–312,324	–506,578	1,208,852	1,210,716
Operating profit
Operating profit	75,019	48,246	–1,904	–70,909	–8,742	–25,502	64,373	–48,165
Operating profit	75,019	48,246	–1,904	–70,909	–8,742	–25,502	64,373	–48,165
Financial income and expenses—net							–8,100	–11,266
Profit before tax							56,273	–59,431
Significant assets by segment
Property, plant and equipment	31,051	29,193	25,851	43,513	32	51	56,934	72,703
Inventories	110,933	123,431	91,392	69,148	–	–	202,325	192,579
Total assets	474,568	553,924	199,641	236,376	–40,875	–96,768	633,334	693,532
Other information
Investments in property, plant and equipment	5,821	1,496	1,126	2,695	–	–	6,947	4,191
Depreciation and amortisation	–11,130	–12,657	–8,606	–17,502	–91	–1,757	–19,827	–31,916
Other non-cash items (excl. depreciation and amortisation)	4,121	4,114	–7,771	14,178	3,359	–24,914	–291	–6,622
Average number of employees	440	417	483	573	16	10	939	1,000

NOTE's registered office is in Sweden. Net revenues from external customers in Sweden were SEK 664.1 (672.3) million, and from other countries SEK 544.8 (538.4) million. Non-current assets in Sweden (excluding eliminations) were SEK 382.8 (378.2) million, in Estonia SEK 16.5 (19.5) million, the UK SEK 11.9 (13.2) million, Norway SEK 10.8 (11.9) million and in other countries SEK 9.2 (36.0) million as of the reporting date. Deferred tax assets in Sweden were SEK 2.1 (11.7) million, in Norway SEK 6.7 (6.9) million, the UK SEK 6.1 (6.1) million and other countries SEK 0.9 (4.3) million as of the reporting date.

Note 4 Other operating revenue

Note 6 Operating expenses by type

	2011	2010
Exchange gains on trade receivables/liabilities	17,549	15,716
Other	3,941	2,599
	21,490	18,315

	2011	2010
Cost of goods and materials	–758,302	–724,425
Personnel expenses	–250,972	–284,967
Depreciation and amortisation	–19,827	–31,916
Other	–136,868	–235,888
	–1,165,969	–1,277,196

Note 5 Other operating expenses

	2011	2010
Exchange losses on trade receivables/liabilities	–21,642	–22,739
Other	–41	–898
	–21,683 –23,637

Note 7 Employees, personnel expenses and remuneration to senior management

Expenses for employee benefits
	2011	2010
Salaries and benefits	–189,609	–219,807
Pension expenses, defined-benefit plans (more information in note 20)	–	–328
Pension expenses, defined-contribution plans	–13,546	–16,256
Social security contributions	–47,817	–48,576
	–250,972	–284,967

Restructuring costs

Salaries and benefits include restructuring costs of SEK – (–2.8) million for NOTE's restructuring program. Restructuring costs also include consulting fees of SEK – (5.2) million for the previous CEO.

Group total	939	48%	1,000	49%
Lithuania	1	71%	72	30%
Poland	–	–%	108	61%
China	253	42%	164	43%
Estonia	229	26%	229	27%
Finland	41	37%	37	65%
UK	37	48%	30	57%
Norway	41	47%	43	47%
Sweden	337	70%	317	65%
		2011 Of which men		2010 Of which men
Average number of employees

Division between sexes in group management

	2011 Share of women	2010 Share of women
Board members, Presidents	6%	4%
Other senior management, 2 (5) people*	0%	0%

*The total number of senior managers in the year.

Senior management's remuneration

Remuneration and other benefits, 2011		Basic salary, Directors' fees	Performance related pay	Other benefits	Pension expense	Total
Chairman of the Board:	Stefan Charette	200	–	–	–	200
Board members:	Kjell Åke Andersson	520	–	–	–	520
	Bruce Grant	100	–	–	–	100
	Göran Jansson, left 28 April 2011	33	–	–	–	33
	Stefan Johansson, elected 28 April 2011	107	–	–	–	107
	Henry Klotz	100	–	–	–	100
CEO:	Peter Lavesson, left 28 April 2011	1,827	450	–	379	2,656
Other senior management (2 people)		2,528	130	82	810	3,550
		5,415	580	82	1,189	7,266

Comments on the table:

Salary, benefits and Directors' fees are remuneration charged to consolidated profit for 2011. Un-paid remuneration to the departing CEO was SEK 0.2 (4.3) million at year-end, of which SEK – (0.4) million was benefits and pensions. The Board members line includes invoiced fees from their companies of SEK 0.4 (0.2) million. There is a profitability-based, performancerelated remuneration program for senior managers, subsidiary presidents and other key staff, which runs from the midpoint of 2011 and one year forwards. This program has 15 participants. In 2011, an estimated outcome of SEK 1.5 million was charged to the group's profit or loss, of which SEK 0.5 million relates to senior managers, who are not included in the above table. The Report of the Directors states details of guidelines for remunerating senior management.

Senior management's remuneration

Remuneration and other benefits 2010		Basic salary, Directors' fees	Performance related pay	Other benefits	Pension expense	Total
Chairman of the Board:	Stefan Charette, elected 27 April 2010	145	–	–	–	145
Board members:	Kjell Åke Andersson, elected 27 April 2010	283	–	–	–	283
	Bo Andersson, left 27 April 2010	33	–	–	–	33
	Håkan Gellerstedt, left 27 April 2010	33	–	–	–	33
	Göran Gezelius, left 27 April 2010	33	–	–	–	33
	Bruce Grant, Chairman until 27 April 2010 incl.	146	–	–	–	146
	Göran Jansson, CEO until 16 July 2010 incl.	2,049	–	–	–	2,049
	Henry Klotz, elected 27 April 2010	79	–	–	–	79
	Per-Arne Sandström, left 27 April 2010	33	–	–	–	33
	Göran Sigfridsson, left 27 April 2010	33	–	–	–	33
CEO:	Peter Laveson, elected to the Board 27 April 2010, took up position as CEO 16 July 2010	771	–	–	186	957
	Knut Pogost, left 25 January 2010	5,541	–	–	–	5,541
Other senior management (5 people)*		3,871	–	228	1,002	5,101
		13,050	–	228	1,188	14,466

Comments on the table:

Salary, benefits and Directors' fees are remuneration charged to consolidated profits for 2010. Un-paid remuneration to the resigning CEO was SEK 4.3 (4.7) million at the end of the year, of which SEK 0.4 (1.3) was benefits and pensions. The CEO line includes consulting fees for CEOs not employed by the group. The Board members line includes invoiced fees from their own companies of SEK 0.2 (–) million. The Report of the Directors states the details of guidelines for remunerating senior managers.

* The total number of senior managers in the year, for the period quarter 1-2, a total of 4 people, quarter 3 a total of 3 people and quarter 4 a total of 2 people.

Note 8 Auditors' fees and reimbursement

	2011	2010
PwC
Auditing assignment	–1,100	–1,100
Auditing in addition to audit assignment	–100	–70
Tax consultancy	–279	–4
Other services	–140	–665
Other Auditors
Auditing assignment	–278	–375
Auditing in addition to audit assignment	–29	–
Tax consultancy	–62	–20
Other services	–531	–644

Auditing of the consolidated accounts was conducted through the whole year. No separate fees were payable for reviewing interim reports.

Note 9 Net financial income/expense

	2011	2010
Interest income on bank balances	71	621
Exchange rate gains	4,936	1,394
Other	95	157
Financial income	5,102	2,172
Interest costs on financial liabilities measured at amortised cost	–6,658	–7,586
Bank charges	–3,595	–4,410
Exchange rate losses	–2,575	–1,416
Other	–374	–26
Financial expenses	–13,202 –13,438
Net financial income/expense		–8,100 –11,266

Note 10 Tax

Reported in Income Statement	2011	2010
Current tax expense (–)/tax revenue (+)
Tax expense for the period	–3,374	–4,520
Adjustment of tax attributable to previous year	–5	–48
Deferred tax expense (–)/tax revenue (+)
Deferred tax relating to temporary differences/appropriations	–4,600	–1,991
Deferred tax revenue/expense in capitalised/utilised tax value in loss carry-forward	–8,848	7,095
Adjustment of tax attributable to the previous year	–54	–3,063
Total reported tax in group	–16,881	–2,527

Reconciliation of effective tax	%	2011	%	2010
Profit before tax		56,273		–59,431
Tax at applicable rate for parent company		–26.3 –14,800	26.3	15,630
Effect of other tax rates for foreign subsidiaries	0.7	408	–8.9	–5,298
Non-deductible expenses	–3.2	–1,784	–1.6	–942
Non-taxable revenue	3.4	1,915	2.1	1,266
Tax attributable to previous year	–0.1	–59	–5.2	–3,112
Un-reported tax revenue on loss for the year	–4.5	–2,560		–17.4 –10,319
Other	–0.0	–1	0.4	248
	–30.0 –16,881			–4.3 –2,527

	Deferred tax asset Deferred tax liability			Net
Reported in Balance Sheet	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010		31 Dec 2011	31 Dec 2010
Property, plant and equipment	430	1,630	2,350	2,410		–1,920	–780
Derivatives measured at fair value	–	146	8	–		–8	146
Loss carry-forwards	12,313	21,247	–	–		12,313	21,247
Provisions	3,038	5,959	–	–		3,038	5,959
Untaxed reserves	–	–	1,029	–		–1,029	–
Tax receivables/liabilities	15,781	28,982	3,387	2,410		12,394	26,572

Deferred tax assets on loss carry-forwards

Deferred tax assets are recognised in deductible loss carry-forwards to the extent it is likely that they can be utilised against future taxable profits. None of the loss carry-forwards are subject to time limitation, SEK 1.4 million is expected to be utilized in 2012. Deductible temporary differences and tax loss carry-forwards for which deferred tax assets have not been reported in the Income Statement and Balance Sheet amounted to SEK –19.6 (–54.4) million.

Provisions for deferred tax	31 Dec 2011 31 Dec 2010
Carrying amount at beginning of period	2,410	3,590
Amount provisioned in period	1,239	–
Amounts utilised in period	–262	–1,180
	3,387	2,410

Change in deferred tax in temporary differences and loss carry-forwards

	Balance as of 1 Jan 2010	Reported in Income Statement	Reported against com prehensive incomet	Reported directly in equity	Balance as of 31 Dec 2010
Property, plant and equipment	–3,270	2,471	19	–	–780
Pension provisions	73	–73	–	–	–
Derivatives measured at fair value	–	89	57	–	146
Loss carry-forward	17,667	3,896	–316	–	21,247
Provisions	10,350	–4,342	–49	–	5,959
	24,820	2,041	–289	–	26,572

	Balance as of 1 Jan 2011	Reported in Income Statement	Reported against com prehensive income	Reported directly in equity	Balance as of 31 Dec 2011
Property, plant and equipment	–780	–1,279	139	–	–1,920
Derivatives measured at fair value	146	–126	–	–28	–8
Loss carry-forward	21,247	–8,902	–32	–	12,313
Provisions	5,959	–2,811	–110	–	3,038
Untaxed reserves	–	–1,029	–	–	–1,029
Other	–	645	–645	–	–
	26,572	–13,502	–648	–28	12,394

Note 11 Intangible assets

The useful life of goodwill is indefinite while the useful lives of other intangible assets is definite and conforms to what is stated in note 1, Accounting principles. Intangible assets with definite useful lives are amortised on a straight-line basis over their useful lives.

	Goodwill, purchased	Capitalised expenditure for software, purchased	Trademarks and brands etc., purchased	Total
Cumulative cost
Opening balance, 1 Jan 2010	73,139	16,173	1,380	90,692
Investments	–	153	38	191
Reclassification and exchange rate effects	–458	–808	–28	–1,294
Sales and retirements	–	–6,761	–	–6,761
Closing balance, 31 Dec 2010	72,681	8,757	1,390	82,828
Opening balance, 1 Jan 2011	72,681	8,757	1,390	82,828
Investments	–	–	–	–
Reclassification and exchange rate effects	26	–223	–1	–198
Sales and retirements	–144	–6,714	–	–6,858
Closing balance, 31 Dec 2011	72,563	1,820	1,389	75,772
Accumulated amortisation and impairment
Opening balance, 1 Jan 2010	–1,924	–6,123	–1,180	–9,227
Reclassification and exchange rate effects	–	470	3	473
Impairment for the year	–255	–5,005	–	–5,260
Amortisation for the year	–	–3,600	–76	–3,676
Sales and retirements	–	5,576	–	5,576
Closing balance, 31 Dec 2010	–2,179	–8,682	–1,253	–12,114
Opening balance, 1 Jan 2011	–2,179	–8,682	–1,253	–12,114
Reclassification and exchange rate effects	–	225	–4	221
Amortisation for the year	–	–71	–72	–143
Sales and retirements	144	6,714	–	6,858
Closing balance, 31 Dec 2011	–2,035	–1,814	–1,329	–5,178
Carrying amounts
As of 1 Jan 2010	71,215	10,050	200	81,465
As of 31 Dec 2010	70,502	75	137	70,714
As of 1 Jan 2011	70,502	75	137	70,714
As of 31 Dec 2011	70,528	6	60	70,594

Amortisation and impairment

Amortisation and impairment is included in the following Income Statement lines ^{2011 2010}

Cost of goods sold and services	–143	–3,235
Administrative expenses	–	–5,701
Selling expenses	–	–
	–143	–8,936

Impairment testing of goodwill

NOTE allocates and tests goodwill in the Nearsourcing Centres (NSC) and Industrial Plants (IP) operating segments.

	31 Dec 2011	31 Dec 2011
Nearsourcing Centres	54,703	54,677
Industrial Plants	15,825	15,825
	70,528	70,502

Impairment tests are based on measurement of value in use, a value based on cash flow forecasts totalling 3 (3) years. Cash flow for the first year is based on budget set by the Board of Directors. The following two years are based on the company's best judgement. Cash flow beyond the forecast period is extrapolated using the assessed growth rate as follows.

Impairment tests are based on the calculated present values of cash flows from each legal entity that is included in each operating segment. The present value of these aggregated cash flows are then compared with the goodwill and capital employed allocated to the operating segment.

The present value of forecast cash flows has been calculated with a discount rate after tax based on risk-free interest and the risk judged to be associated with operations. NOTE mainly has a joint funding facility. Accordingly, the same discount rate after tax of 11.2 (11.3) percent, has been used for both business segments. The discount rate after tax is 14.2 (14.8) percent. The recoverable values for both NSC and IP exceeds carrying amount.

Important variables	Method for defining values
Growth in the forecast period	Market growth has been estimated at 5 (5) percent during the forecast period for most of the units. However, for the opera tion in China, higher growth has been estimated because this operation is in build-up. Market growth is based on historical experience, estimates in sector research and other externally available information.
Growth after the forecast period	Growth after the forecast period is estimated at 1.5 (1.5) percent.
Cost of materials	The cost of electronic components is expected to reduce during the forecast period, partly because of continued rationalisation of the production process and partly through increased purchasing volumes and improved co-ordination or purchasing processes.
Personnel costs	Payroll expenses have been estimated using collective agre ements and considering historical pay increases. In addition, a growing share of production being conducted in the group's plants in low-cost countries has also been considered.

Sensitivity analysis, goodwill impairment testing

With the above calculation assumptions and considering the growth and profitability potential estimated by NOTE in its business model, there is no impairment of goodwill values at the reporting date. If there is no market growth during or after the forecast period, this would not cause any impairment. An increase of the discount rate after tax by one percentage point, from 11.2 to 12.2 percentage points, would not imply any impairment. Value in use reduces but still significantly exceeds the carrying amount of both NSC and IP.

Note 12 Property, plant and equipment

	Buildings and land (real estate used in business operations)	Costs incurred on other party's property	Machinery and other plant	Equipment, tools, fixtures and fittings	Total
Cost
Opening balance, 1 Jan 2010	69,642	8,030	183,311	55,676	316,659
Investments	–	186	3,505	500	4,191
Sales	–11,454	–737	–53,620	–9,471	–75,282
Reclassification and exchange rate effects	–4,296	–454	–5,680	211	–10,219
Closing balance, 31 Dec 2010	53,892	7,025	127,516	46,916	235,349
Opening balance, 1 Jan 2011	53,892	7,025	127,516	46,916	235,349
Investments	–	495	6,066	386	6,947
Sales	–8,503	–243	–6,427	–735	–15,908
Reclassification and exchange rate effects	–191	167	732	207	915
Closing balance, 31 Dec 2011	45,198	7,445	127,886	46,774	227,303
Depreciation and impairment
Opening balance, 1 Jan 2010	–24,190	–2,647	–121,748	–46,029	–194,614
Depreciation for the year	–3,385	–1,370	–20,571	–2,914	–28,240
Impairment loss for the year	–4,555	–	–900	–	–5,455
Sales	5,754	576	46,421	8,080	60,831
Reclassification and exchange rate effects	1,585	210	3,432	–341	4,886
Closing balance, 31 Dec 2010	–24,791	–3,231	–93,367	–41,204	–162,593
Opening balance, 1 Jan 2011	–24,791	–3,231	–93,367	–41,204	–162,593
Depreciation for the year	–1,615	–1,209	–14,499	–2,362	–19,684
Sales	8,723	46	3,220	589	12,578
Reclassification and exchange rate effects	84	–91	–526	–137	–670
Closing balance, 31 Dec 2011	–17,599	–4,485	–105,172	–43,114	–170,369
Carrying amounts
As of 1 Jan 2010	45,452	5,383	61,563	9,647	122,045
As of 31 Dec 2010	29,101	3,794	34,150	5,712	72,757
As of 1 Jan 2011	29,101	3,794	34,150	5,712	72,757
As of 31 Dec 2011	27,599	2,960	22,715	3,660	56,934

Information on central government support in the group

The aggregate cost of the assets the support is intended to cover amounts to 1,262 in the period. The cost reduced by 194 for enacted government support. Total utilised, but not received, investment subsidies amount to – (630) on the reporting date. Pledged assets for subsidies received in 2011 and the previous year amounted to 8,050, with repayment obligation for investment support in the event of the specified terms not being satisfied.

Depreciation and impairment

Depreciation is included in the following Income Statement lines	2011	2010
Cost of goods sold and services	–18,517	–32,269
Administrative expenses	–1,080	–1,059
Selling expenses	–87	–367
	–19,684 –33,695

Finance leases (leased production equipment)

NOTE leases production equipment through several different finance lease arrangements. As of 31 December 2011, the value of leased assets was 4,936 (12,993).

Collateral

As of 31 December 2011, property with a carrying amount of 27,599 (29,101) was pledged as collateral for bank borrowings.

Note 13 Participations in joint ventures

The group's holding in the joint venture NOTEFideltronik SA was sold in December 2010.

	2011	2010
Revenue	–	34,488
Expenses	–	–41,637
Profit	–	–7,149

Note 14 Long-term receivables and other receivables

	31 Dec 2011 31 Dec 2010
Long-term receivables
Interest-bearing loans	4,000	6,000
Other long-term receivables	488	2,444
	4,488	8,444
Other receivables that are current assets
Interest-bearing loans	2,081	24,488
VAT	5,626	3,917
Other	4,003	6,719
	11,710	35,124

Note 15 Inventories

		31 Dec 2011 31 Dec 2010
Raw materials and consumables	170,431	159,740
Products in process	27,807	35,108
Finished goods and goods for re-sale	19,248	10,078
Obsolescence provision	–15,161	–12,347
	202,325	192,579

The expensed inventories for the year are stated in note 6 'Operating expenses by type.'

Note 16 Prepaid expenses and accrued income

	31 Dec 2011	31 Dec 2010
Accrued income	2,461	2,581
Prepaid services	2,671	2,326
Prepaid rent	3,267	1,543
Prepaid licenses	811	557
Prepaid insurance	871	610
Prepaid lease payments	232	550
Other prepaid expenses	423	2,874
	10,736	11,041

Note 17 Equity

Group	Share class A
Share capital (thousands of shares)	31 Dec 2011 31 Dec 2010
Issued as of 1 January	28,873	9,624
New share issue	–	19,248
Issued as of 31 December—paid up	28,873	28,873

As of 31 December 2011, registered share capital comprised 28,872,600 shares with a quotient value of SEK 0.50. There were no outstanding warrants or other instruments that could result in dilution effects as of 31 December 2011. Shareholders are entitled to dividends, and shareholdings confer the voting rights of one vote per share at the AGM.

Other paid-up capital

Equity that is contributed by the owners. This includes a portion of share premium reserves transferred to the statutory reserve as a 31 December 2005 and a premium of SEK 4 per share in the rights issue of 2010, less issue expenses.

Reserves

Translation reserve	31 Dec 2011 31 Dec 2010
Opening translation reserve	–4,398	5,786
Translation differences for the year	2,954	–10,184
Closing translation reserve	–1,444	–4,398

The translation reserve includes all exchange rate differences arising from translating financial statements from foreign operations that prepared their financial statements in currencies other than the currency the consolidated financial statements are presented in. The parent company and group present their financial statements in Swedish kronor. The translation reserve also includes the effect of exchange rate differences on long-term internal loans that are equivalent to equity in subsidiaries.

Hedging reserve	31 Dec 2011 31 Dec 2010
Opening hedging reserve	–159	–
Forecast cash flow hedges for the year	77	–159
Closing hedging reserve	–82	–159

The hedging reserve includes the cash flow hedges whose effectiveness is partly tested in accordance with IAS 39 and partly relates to the forecast flows that have not yet affected the Consolidated Income Statement and Consolidated Balance Sheet.

Retained profit including profit for the period

Retained profits including profit for the period include accrued profits of the parent company and its subsidiaries and joint venture companies. Previous provisions to statutory reserves, excluding transfers to share premium reserve are included in retained profit including profit for the year.

Capital management

The Board of Directors and management of NOTE have set the following financial goals:

Growth goal NOTE will increase its market share organically and through acquisitions.

Profitability goal

NOTE will grow with profitability. Its goal is for a minimum return on operating capital of 20%. For the long term and over a business cycle, profitability will also exceed the average of other mid-sized international and comparable competitors. For the financial year 2011 the return on operating capital was 17.7 (–12.1) percent.

Capital structure goal

The minimum equity ratio should be 30 percent. At year-end, the equity to assets ratio was 41.0 (31.3) percent.

Note 18 Earnings per share

Earnings per share		Before dilution	After dilution
	2011	2010	2011	2010
Earnings per share, SEK	1.36	–2.55	1.36	–2.55

The calculation of earnings per share for 2011 has been based on profit for the period of SEK 39,392 (–61,958) and on a weighted average number of outstanding shares in 2011 of 28,872,600 (24,342,155).

Earnings per share after dilution

There is no dilution effect because NOTE has not issued any instruments that could cause dilution.

Note 19 Interest-bearing liabilities

		31 Dec 2011 31 Dec 2010
Non-current liabilities
Bank loans	–	1,475
Finance lease liabilities, machinery	2,148	3,191
	2,148	4,666
Current liabilities
Overdraft facility	22,068	24,863
Factoring	116,004	146,532
Short-term portion of bank loans	1,681	2,518
Short-term portion of finance lease liabilities	3,364	9,801
Other loans	–	18,526
	143,117	202,240

Pledged assets

24,595 (24,679) of collateral for bank loans, finance lease liabilities and overdraft facilities is pledged in the company's land and buildings (see also note 12) and 220,207 (212,192) in operations. Collateral for factoring is issued at an amount of 181,027 (188,064) in pledged accounts receivable—trade.

Fair value of non-current liabilities	Carrying amount		Fair value
	2011	2010	2011	2010
Finance lease liabilities, machinery	2,148	3,191	2,070	3,073

The fair value of current liabilities corresponds to their carrying amount, because the discounting effect is not significant. Fair value is based on discounted cash flow with interest based on average loan interest of 8.2 (8.4) percent.

Finance lease liabilities

Finance lease liabilities are due for payment as follows:

	Minimum lease pay ments 2011	Interest 2011	Prin cipal 2011	Minimum lease pay ments 2010	Interest 2010	Prin cipal 2010
Within one year	3,364	303	3,061	9,801	1,078	8,723
Between one and five years	2,148	193	1,955	3,191	351	2,840
	5,512	496	5,016	12,992		1,429 11,563

For more information, see note 24 Financial risks and finance policy on page 51.

Note 20 Pension commitments

Changes to the commitment for defined-benefit plans reported in the Balance Sheet			2011		2010
Commitment for defined-benefit plans as of 1 January			–		12,748
Cost of employment in the current period and interest expense (see below)			–		328
Pension payments			–		–
Pension plan taken over by Alecta			–		–13,076
Commitment for defined-benefit plans as of 31 December			–		–
Expense reported in Income Statement			2011		2010
Cost related to employment in the current period			–		328
Interest expense on commitment			–		–
Actuarial losses(+)/gains(–)			–		–
Total net expense in Income Statement			–		328
The measured expense for 2012 amounts to – (–)
Expense reported in the following Income Statement lines			2011		2010
Cost of sold goods and services			–		–
Selling expenses			–		–
Administrative expenses			–		328
Total net expense in Income Statement			–		328
Historical information	2011	2010	2009	2008	2007
Present value of traditional assurance commitments	–	–		15,658 14,768 14,636
Experience-based adjustment loss –/gain +	–	–		–2,910 –2,398 –1,291

Alecta

The commitments for retirement and survivors' pensions for salaried employees in Sweden are largely insured through a policy with Alecta. Statement URA 42 from RR's Emerging Issues Taskforce defines this as a defined-benefit multi-employer plan. For the financial year 2011, the company did not have access to sufficient information enabling the plan to be reported as a defined-benefit plan. Thus, ITP (Supplementary Pensions for Salaried Employees) plans insured through Alecta are reported as defined-contribution plans. The expenditure for pension policies with Alecta in the year were SEK 3.3 (3.8) million. Alecta's surplus can be divided between policy-holders and/or beneficiaries. At year-end 2011, Alecta's surplus, expressed as a collective consolidation ratio was 113 (146) percent. The collective consolidation ratio comprises the market value of Alecta's assets as a percentage of insurance commitments calculated in accordance with Alecta's actuarial calculation assumptions, which are not consistent with IAS 19.

Defined-contribution pension plans

The group has defined-contribution pension plans in Sweden for white-collar and blue-collar staff, which the companies fund fully. There are defined-contribution plans in foreign countries, which are partly paid by subsidiaries and partly covered through employees' contributions. Payments to these plans is on an ongoing basis subject to the regulations of each plan.

	2011	2010
Expenses for defined-contribution plans 1	9,077	16,249

1 Includes 3,269 (3,790) for an ITP plan insured with Alecta, see above.

Note 21 Provisions

Short-term portion of provisions		31 Dec 2011 31 Dec 2010
Expenses for restructuring measures	1,131	12,628
Expenses for resigning CEO	188	4,256
Other	37	31
	1,356	16,915

Expenses for restructuring measures:

At the beginning of 2010, NOTE decided to intensify its structural transformation. The objective was to execute savings and rationalization measures to have a minimum annualized profit effect of SEK 50 million. As part of this program, the group's electronics manufacturing units were concentrated, in Sweden and internationally. Operations that did not fit were closed down or sold off. Central resources were adapted to prevailing market conditions. The rationalization package resulted in non-recurring costs totalling some SEK –47 million in 2010, which essentially, was completed as planned in the financial year 2011.

The provision for restructuring measures as of 31 December 2011 consists of costs decided for terminated staff, which will be paid until October 2012 inclusive.

			Expenses for resig
2010	Restructuring	Pensions	ning CEO/other	Total
Carrying amount at beginning of period	32,134	12,748	6,317	51,199
Provisions in the period	41,229	328	5,230	46,787
Amounts utilised in the period*	–53,879	–13,076	–7,260	–74,215
Un-utilised amounts reversed in the period	–6,856	–	–	–6,856
Carrying amount at end of period	12,628	–	4,287	16,915
* Includes reclassifications to other lines of the Balance Sheet of –27,000.
			Expenses for resig
2011	Restructuring	Pensions	ning CEO/other	Total
Carrying amount at beginning of period	12,628	–	4,287	16,915
Provisions in the period	–	–	7	7
Amounts utilised in the period*	–9,146	–	–4,069	–13,215

Un-utilised amounts reversed in the period –2,351 – – –2,351 Carrying amount at end of period 1,131 – 225 1,356

Note 22 Other current liabilities

	31 Dec 2011 31 Dec 2010
Staff withholding tax	4,190	7,812
Social security contributions	3,544	5,557
VAT	11,973	15,460
Other	2,920	4,746
	22,627	33,575

Note 23 Accrued expenses and deferred income

	31 Dec 2011 31 Dec 2010
Accrued salaries and benefits	9,444	6,945
Accrued social security contributions	5,452	5,125
Payment for vacation taken in cash	18,377	19,003
Other	14,302	12,885
	47,575	43,958

Note 24 Financial risks and finance policy

Through its operations, the group is exposed to various types of financial risk such as currency risks, funding and interest risks and liquidity and credit risks. The group's finance policy stipulates that financial risks are to be kept at the lowest possible level.

The group's finance policy for managing financial risk has been formulated by the Board and constitutes a framework for risk management. The policy's overall goal is to ensure the company's long and short-term access to capital, to adapt the financial strategy to the company's operations to enable the attainment and retention of a stable long-term capital structure, and to achieve the best possible financial income/expenses within stated risk limits.

The group's guidelines for loan financing state that there should be one main lender. The policy stipulates the consistent allocation of maturities over the years. The parent company is primarily focused on the management, coordination and develop-

ment of the group, as well as group reporting and communication with shareholders. The group's operations are conducted in legal subsidiaries, and accordingly, the actual risks occur there.

Agreement terms

Financial assets mainly consist of cash and cash equivalents and accounts receivable trade. The risk associated with accounts receivable—trade increases with the number of outstanding days of credit. There is a market tendency to require longer credit terms.

NOTE's funding consists of a combination of factoring and traditional overdraft facilities. Pledged accounts receivable—trade were SEK 181 (188) million at year-end. The interest terms on the factoring and overdraft facilities are based on a variable base

rate plus fixed percentage interest rates, average interest of 4.0 (3.3)% was charged to consolidated profit.

NOTE has agreed on a number of covenants to its lender as security for the liabilities. These are based on profit, interest coverage ratio, equity to assess ratio and working capital. All covenants were satisfied at year-end.

Liquidity risks

Liquidity risk means the risk of being unable to fulfil payment commitments resulting from insufficient liquidity or difficulties in raising external borrowings. Operations are funded through means such as SEK 259.4 (217.0) million of equity and interest-bearing liabilities of SEK 145.3 (206.9) million, utilised overdrafts of SEK 22.1 (24.9) million are included. The un-utilised overdraft facility was SEK 35.6 (33.3) million at year-end. Financial liabilities comprise loans and the utilised portion of the overdraft and factoring facilities.

Age analysis, financial liabilities

2011, SEK m	Total	Within 1 mth.	1–3 mth.	3 mth. –1 yr.	1–5 yr.	5 yr. and longer
Bank credit facilities inclu ding overdraft & factoring	139.7	0.1	0.3	139.3	–	–
Finance lease liabilities	5.5	0.5	1.0	1.8	2.2	–
Derivatives	–	–	–	–	–	–
Accounts payable—trade	153.0	97.7	47.2	8.1	–	–
Total	298.2	98.3	48.5	149.2	2.2	–
2010, SEK m	Total	Within 1 mth.	1–3 mth.	3 mth. –1 yr.	1–5 yr.	5 yr. and longer
Bank credit facilities inclu
ding overdraft & factoring	175.4	0.1	1.3	172.5	1.5	–
Finance lease liabilities	13.0	2.1	2.3	5.4	3.2	–
Derivatives	0.6	0.2	0.4	–	–	–
Accounts payable—trade	172.0	129.0	37.8	5.2	–	–
Other financial liabilities	18.5	18.5	–	–	–	–

Interest risks

Interest risk is the risk that the value of a financial instrument varies due to changes in market interest rates. Interest risks can partly comprise changes in fair value, price risk, and partly changes in cash flow, cash flow risk. Interest fixing periods are a significant factor influencing interest risk. Long interest fixing periods mainly affect cash flow risk, while shorter interest fixing periods affect price risk.

The management of the group's interest exposure is centralised, implying that the central finance function is responsible for identifying and managing this exposure.

The group's exposure to market risk for changes in interest levels is mainly attributable to the group's financial net debt which amounted to SEK 109.9 (142.7) million at year end. There were no interest derivatives as of the reporting date, and accordingly, all interest was variable.

Translation exposure

The group's foreign net assets are divided between the following currencies, amounts in SEK 000 and percentage share of NOTE's total equity:

	31 Dec 2011		31 Dec 2010
Currency	Amount	%	Amount	%
CNY	15,465	6.0	5,024	2.3
EEK	–	–	1,329	0.6
EUR	14,658	5.7	10,204	4.7
GBP	2,207	0.9	2,058	0.9
LTL	–	–	1,211	0.6
NOK	7,986	3.1	6,364	2.9
PLN	5,215	2.0	801	0.4
USD	–	–	0	0.0
	45,531	17.6	26,991	12.4

Credit risks

Credit risks in financing activities Credit risk consists of a party of a transaction being unable to fulfil its financial commitments.

Credit risks in accounts receivable—trade

The risk that the group's customers do not fulfil their commitments, i.e. that payments for accounts receivable—trade are not received, is a credit risk. The group's customers are subject to credit checks, implying the collection of information on customers' financial positions from various credit agencies. The group has prepared rules stating the level of decisions for credit limits, and how valuations of credits and doubtful debts should be managed. Bank guarantees or other collateral are required for customers with low creditworthiness or insufficient credit histories.

The ten biggest customers provide approximately 49 (51) percent of sales. The group has a relatively good diversification of customers across a range of industrial sectors.

Age analysis, accounts receivable—trade	2011	2010
Not overdue accounts receivable—trade	184,384	207,977
Overdue accounts receivable—trade 0–30 days	35,098	23,213
Overdue accounts receivable—trade > 30 days–60 days	6,546	1,935
Overdue accounts receivable—trade > 60 days	3,795	5,488
Impaired accounts receivable—trade > 60 days	–2,970	–4,263
Total	226,853	234,350

Currency risks

The group is exposed to various types of currency risk. The primary exposure is for purchases and sales in foreign currency, where risks can partly comprise fluctuations in the currency of the financial instrument, customer or supplier's invoice, partly the currency risk in expected or contracted payment flows, termed transaction exposure.

Currency risk fluctuations also exist in the conversion of foreign subsidiaries' assets and liabilities to the functional currency of the parent company, termed translation exposure.

Foreign currency expenses and purchases are largely hedged through binding contracts, where the customer assumes the full currency risk. Invoicing is largely in local currency and the majority is denominated in Swedish kronor. If invoicing in local currency is not possible, hedging is arranged on contracts larger than a value of SEK 5 m. NOTE adopts a centralised view of managing currency hedges. NOTE's central accounting function hedges net flows in foreign currency on rolling six-month forecasts, based on the limits stipulated in NOTE's finance policy.

	Net exposure from sales and purchasing in fo reign currencies	Total hedging	Percentage	Average ex change rate
EUR	4,775	3,075	64%	9.09
USD	9,438	4,000	42%	6.88
Total	14,213	7,075	50%	N/A

The group classifies its forward contracts used for hedging forecast transactions as cash flow hedging. At year-end, the fair value of NOTE's cash flow hedges was SEK 0.0 (–0.6) million.

IFRS 7, i.e. fair value is based on observable data from an independent source.

Assets and liabilities measured at fair value

Materials risks

Because a high proportion of the group's sales values comprise materials, both the price and access to materials are decisive to profitability. NOTE's strategic sourcing company NOTE Components manages a substantial portion of materials sourcing agreements.

NOTE's derivative instruments held for hedge accounting are based on valuation tier 2 of

Sensitivity analysis

To manage market risks, the group's intention is to minimise the impact of short-term fluctuations in consolidated profit.

Effect on comprehensive income

Market risk, SEK m	+/– 2%	+/– 5%
Change in sales price to customers	17.8	44.5
Change in sales volume	4.5	11.4
Change in materials price*	11.2	27.9
Change in payroll overheads	3.8	9.4
Change in interest rates	1.6	4.0
Change in EUR/USD exchange rate on customer and supplier liabilities as of 31 Dec 2011	0.2	0.6
Currency change on net assets in foreign subsidiaries	0.9	2.3

* Disregarding price adjustment clauses to customers.

Note 25 Financial instruments by category

31 Dec 2011	Loans and accounts receivable	Derivatives used for hedging purposes	Other financial liabilities	Total
Assets in the Balance Sheet
Derivative instruments	–	31		31
Accounts receivable—trade and other financial receivables	232,934	–		232,934
Cash and cash equivalents	29,297	–		29,297
Total assets	262,231	31		262,262
Liabilities in the Balance Sheet
Interest-bearing liabilities		–	145,265	145,265
Derivative instruments		–	–	–
Accounts payable—trade and other financial liabilities		–	152,978	152,978
Total liabilities		–	298,243	298,243

31 Dec 2010	Loans and accounts receivable	Derivatives used for hedging purposes	Other financial liabilities	Total
Assets in the Balance Sheet
Derivative instruments	–	–		–
Accounts receivable—trade and other financial receivables	264,838	–		264,838
Cash and cash equivalents	33,682	–		33,682
Total assets	298,520	–		298,520
Liabilities in the Balance Sheet
Interest-bearing liabilities		–	206,906	206,906
Derivative instruments		556	–	556
Accounts payable—trade and other financial liabilities		–	171,945	171,945
Total liabilities		556	378,851	379,407

Note 26 Operating leases

		31 Dec 2011 31 Dec 2010
Lease arrangements payable within one year	3,065	4,083
Lease arrangements payable between one and five years	5,903	7,219
	8,968	11,302

Group expenses for operating leases were 3,566 (6,227).

Note 27 Pledged assets and contingent liabilities

		31 Dec 2011 31 Dec 2010
Pledged assets
In the form of pledged assets for own liabilities and provisions
Property mortgage	24,595	24,679
Floating charge (approx.)	220,207	220,242
Factored accounts receivable—trade	181,027	188,064
	425,829	432,985
Contingent liabilities
County administrative board, conditional loan	1,434	1,014
	1,434	1,014

Note 28 Close relations

Close relation	Yr.	Sale of goods and services to related parties	Purchases from related parties of an operating character	Liability to related party as of 31 December	Receivable from related party as of 31 December
Company owned by Board member of parent company/subsidiary	2011	–	1,081	–	–
Company owned by Board member of parent company/subsidiary	2010	–	3,325	–	–
Company owned by senior manager	2011	–	–	–	–
Company owned by senior manager	2010	–	3,134	–	–
Joint venture	2011	–	–	–	–
Joint venture	2010	21,761	50,185	–	–

Transactions with key staff in executive positions

For the Board of Directors', the CEOs' and other senior managers' salaries and other benefits, expenses and commitments relating to pensions and similar benefits, as well as agreements on severance pay, see note 7, Employees, personnel expenses and remuneration to senior management on page 44.

* Purchasing is remuneration invoiced from the senior manager's own foreign company, because employment in Sweden was not appropriate.

Note 29 Cash Flow Statement

Interest paid	2011	2010
Interest received	93	442
Interest paid	–5,941	–6,469
Other non-cash items	2011	2010
Impairment losses	–3,697	11,928
Unpaid loan receivables	–	–33,084
Unrealised exchange rate differences	–1,398	1,469
Capital gain/loss on sale of property, plant and equipment	2,401	3,923
Capital gain/loss on sale of operation/subsidiary	3,844	–1,192
Provisions	–2,354	10,099
Other items not affecting liquidity	913	235
	–291	–6,622
Cash and cash equivalents	31 Dec 2011 31 Dec 2010
Cash and bank balances	29,297	33,682
Un-utilised overdraft facilities	35,595	33,311
Available cash and cash equivalents	64,892	66,993

Sale of operation, subsidiary and joint ventures	2011	2010
Sold assets and liabilities
Intangible assets	–	388
Property, plant and equipment	4,551	5,327
Inventories	5	12,577
Trade receivables	8	15,688
Cash and cash equivalents	434	533
	4,998	34,513
Current trade liabilities	105	27,251
	105	27,251
Sales price	1,049	8,454
Less vendor notes	–	–2,000
Cash and cash equivalents in sold operation	–434	–533
Effect on cash and cash equivalents	615	5,921

Note 30 Significant estimates and judgements

Critical judgements when applying the group's accounting principles

Some critical accounting estimates made when applying the group's accounting principles are reviewed below.

Accounts receivable—trade and inventories

Accounts receivable—trade and inventories are the largest asset items in value terms on the reporting date. Both these items are reported as net values after deducting for impairment losses, based on individual judgment. The obsolescence reserve on the reporting date 31 December 2011 was SEK –15.2 (–12.3) million and the reserve for doubtful debt was SEK –3.0 (–4.3) million. Note 24 provides more information on the judgments made and information on the risks associated with these asset items.

Goodwill

The group's goodwill relates to the Swedish and foreign subsidiaries. Goodwill is subject to impairment tests in accordance with IAS 36 Impairment of Assets. On the reporting date 31 December 2011, goodwill on consolidation was SEK 70.5 (70.5) million. Note 11 states more information on the measurement of goodwill items.

Deferred tax assets

The group's deferred tax assets mainly consist of provisions and capitalised loss carryforwards in foreign subsidiaries. On the reporting date 31 December 2011, the consolidated deferred tax asset was SEK 15.8 (29.0) million. Note 10 states more information on the group's deferred tax assets.

Note 31 Post-balance sheet events

One of NOTE's customers reported profitability problems and impending restructuring measures in the first quarter of 2012. In light of the situation, NOTE is continuing deliveries in close dialogue with this customer.

Parent Company Income Statement

SEK 000	NOTE	2011	2010
Net revenue		33,756	40,500
Cost of sold services		–27,331	–29,866
Gross profit		6,425	10,634
Selling expenses		–5,022	–7,998
Administrative expenses		–10,656	–14,008
Other operating revenue	2	34	2,103
Other operating expenses	3	–13	–2,048
Operating profit	4, 5, 17, 19	–9,232	–11,317
Profit from financial items	6
Profit from participations in group companies		43,289	–81,776
Interest income, etc.		7,946	4,115
Interest costs, etc.		–8,098	–15,651
Profit after financial items		33,905	–104,629
Appropriations	7	–1,051	–
Profit before tax		32,854	–104,629
Tax	8	–8,698	5,407
Profit after tax		24,156	–99,222

Parent Company Statement of Comprehensive Income

SEK 000	2011	2010
Profit after tax	24,156	–99,222
Other comprehensive income	–	–
Total comprehensive income for the year	24,156	–99,222

Parent Company Balance Sheet

SEK 000	NOTE	31 Dec 2011	31 Dec 2010
ASSETS
Non-current assets
Intangible assets	9	–	–
Property, plant and equipment	10	32	51
Financial assets
Participations in group companies	20	250,233	229,817
Participations in joint ventures	21	–	–
Deferred tax asset		–	7,868
Other receivables	11	4,000	8,000
Receivables from group companies	11	88,523	85,166
Total financial assets		342,756	330,851
Total non-current assets		342,788	330,902
Current assets
Short-term receivables
Accounts receivable—trade		70	16
Receivables from group companies	12	61,580	100,220
Other receivables	13	2,896	25,017
Prepaid expenses and accrued income		2,736	3,011
Total short-term receivables		67,282	128,264
Cash and bank balances	22	13,278	11,778
Total current assets		80,560	140,042
TOTAL ASSETS		423,348	470,944
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital (28,872,600/9,624,200 class A shares)		14,436	14,436
Statutory reserve		217,923	217,923
Non-restricted equity
Profit brought forward		4,919	104,141
Profit after tax		24,156	–99,222
Total equity		261,434	237,278
Un-taxed reserves		1,051	–
Provisions	15	188	4,256
Current liabilities
Liabilities to credit institutions	14	16,636	20,902
Accounts payable—trade		2,176	1,458
Liabilities to group companies		131,639	199,950
Other liabilities		1,070	1,601
Accrued expenses and deferred income	16	9,154	5,499
Total current liabilities		160,675	229,410
TOTAL EQUITY AND LIABILITIES		423,348	470,944
Pledged assets and contingent liabilities for parent company
Pledged assets	18	–	–
Contingent liabilities	18	25,382	23,099

Summary Statement of Changes in Parent Company's Equity

	Restricted equity		Non-restricted equity
SEK 000	Share capital	Statutory reserve	Profit brought forward	Profit for the year	Total equity
Opening equity, 1 Jan 2010	4,812	148,161	86,189	17,952	257,114
Appropriation of profits	–	–	17,952	–17,952	–
Comprehensive income
Profit after tax	–	–	–	–99,222	–99,222
Other comprehensive income	–	–	–	–	–
Total comprehensive income	–	–	–	–99,222	–99,222
Transactions with shareholders
New share issue	9,624	76,994	–	–	86,618
Costs relating to new share issue	–	–7,232	–	–	–7,232
Closing equity, 31 Dec 2010	14,436	217,923	104,141	–99,222	237,278

	Restricted equity		Non-restricted equity
SEK 000	Share capital	Statutory reserve	Profit brought forward	Profit for the year	Total equity
Opening equity, 1 Jan 2011	14,436	217,923	104,141	–99,222	237,278
Appropriation of profits	–	–	–99,222	99,222	–
Comprehensive income
Profit after tax	–	–	–	24,156	24,156
Other comprehensive income	–	–	–	–	–
Total comprehensive income	–	–	–	24,156	24,156
Transactions with shareholders	–	–	–	–	–
Closing equity, 31 Dec 2011	14,436	217,923	4,919	24,156	261,434

Parent Company Cash Flow Statement

SEK 000	NOTE	2011	2010
Operating activities	22
Profit after financial items		33,905	–104,629
Reversed depreciation		20	902
Other non-cash items		7,711	62,264
Tax paid		–308	833
		41,328	–40,630
Cash flow from change in working capital
Increase (–)/decrease (+) in trade receivables		38,438	–40,202
Increase (+)/decrease (–) in trade liabilities		–68,921	60,976
		–30,483	20,774
Cash flow from operating activities		10,845	–19,856
Investing activities
Investments in subsidiaries		–27,178	–
Sale of subsidiary/joint venture		1,049	5,454
Sale of business line		–	1,000
Purchase of other financial assets		–3,357	–19,675
Sale of financial assets		24,407	4,596
Cash flow from investing activities		–5,079	–8,625
Financing activities
Borrowings		–	35,000
New share issue		–	79,386
Amortisation of loans		–4,266	–78,943
Cash flow from financing activities		–4,266	35,443
Cash flow for the year		1,500	6,962
Cash and cash equivalents
At beginning of period		11,778	4,816
Cash flow before financing activities		5,766	–28,481
Cash flow from financing activities		–4,266	35,443
Cash and cash equivalents at end of period		13,278	11,778

Notes on the Parent Company's Financial Statements

Note 1 Critical accounting principles

Parent company accounting principles

The parent company has prepared its annual accounts in accordance with the Swedish Annual Accounts Act and RFR's (Rådet för finansiell rapportering, the Swedish Financial Reporting Board) recommendation RFR 2, Accounting for Legal Entities. RFR's statements for listed companies have also been adopted. RFR 2 stipulates that in its annual accounts as a legal entity, the parent company should adopt all IFRS and statements endorsed by the EU, providing this is possible within the framework of the Swedish Annual Accounts Act, The Swedish Pension Obligations Vesting Act (Tryggandelagen) and with consideration to the relationship between accounting and taxation. This recommendation states the exemptions and supplements to be made from and to IFRS.

Accordingly, the parent company adopts those principles presented in note 1 of the consolidated accounts, subject to the exceptions stated below. These principles have been applied consistently for all years presented, unless otherwise stated.

Subsidiaries and joint ventures

Participations in subsidiaries and joint ventures are reported in the parent company in accordance with the cost method. Dividends received are only recognised as revenues if they are sourced from earnings accrued after the acquisition. Dividends exceeding these accrued earnings are considered as a re-payment of the investment and reduce the value of the participations.

Financial guarantees

The parent company has granted sureties in favour of subsidiaries. In accordance with IFRS, these obligations are classified as financial guarantee agreements. For such agreements, the parent company applies the relaxation of RFR 2 point 72, and accordingly reports the surety as a contingent liability. When the company judges that it is likely that payment will be required to settle the obligation, a provision is made.

Borrowing costs

The company expenses all borrowing costs immediately.

Revenues

Sales of goods and conducting services assignments The revenue of services assignments in the parent company is recognised in accordance with Chap. 2 §4 of the Swedish Annual Accounts Act when the services are complete. All parent company sales are to other group companies.

Property, plant and equipment

Property, plant and equipment in the parent company are recognised at cost less deductions for accumulated depreciation and potential impairment losses in the same manner as for the group, but with a supplement for potential revaluations.

Leases

All lease arrangements in the parent company are reported in accordance with the rules for operating leases.

Tax

In the parent company, untaxed reserves are reported including deferred tax liabilities.

Group contributions and shareholders' contributions for legal entities

The company reports group contributions and shareholders' contributions in accordance with statements from the RR Emerging Issues Task Force. Shareholders' contributions are recognised directly to the recipient's equity and capitalised in shares and participations of the issuer, to the extent no impairment losses are necessary.

Because of the termination of UFR 2, from 2011 onwards, the parent company is reporting group contributions in net financial income/expense instead of as previously, directly against equity. This amendment is being made retroactively, which means that the comparative year 2010 has also been restated.

Note 2 Other operating revenue

	2011	2010
Gains on sale of non-current assets	–	1,987
Exchange gains on trade receivables/liabilities	34	116
	34	2,103

Note 3 Other operating expenses

	2011	2010
Loss on sale/retirement of non-current assets	–	–2,018
Exchange losses on trade receivables/liabilities	–13	–30
	–13	–2,048

Note 4 Employees, personnel expenses and remuneration to senior management

Expenses for employee benefits

		2011	2010
		–13,262	–4,869
Pension expenses, defined-contribution plans		–3,151	–1,007
		–4,955	–1,802
		–21,368	–7,678
			2010 Of which men
11	73%	7	45%
11	73%	7	45%
		2011 Of which men

Division between sexes in management	2011 Share of	2010 Share of
	women	women
Board of Directors	0%	0%
Other senior management 3 (5) people	0%	0%

Salaries, other benefits and social security contributions

		2011 2010
	Salaries & benefits (of which bonus)	Social security con tributions (of which pension expense)	Salaries & benefits (of which bonus))	Social security con tributions (of which pension expense)
Management	–5,657	–3,255	–3,043	–1,712
	(–580)	(–1,189)	(–)	(–608)
Other employees	–7,605	–4,851	–1,826	–1,097
	(–)	(–1,962)	(–)	(–399)

Comments on the table:

Management is the Board of Directors and CEO, and the parent company's management.

Note 5 Auditors' fees and reimbursement

	2011	2010
PwC
Auditing assignment	–400	–380
Auditing in addition to audit assignment	–100	–70
Tax consultancy	–279	–4
Other services	–140	–665
	–919	–1,119

Note 6 Net financial income/expense

	2011	2010
Profit from participations in group companies
Impairment of shares in subsidiaries	–5,323	–70,953
Capital gains from the sale of shares in group companies	–390	–19,233
Dividend from group companies	5,589	6,370
Group contributions, received	50,970	37,000
Group contributions, paid		–7,557 –34,960
		43,289 –81,776
Interest income, etc.
Interest income, group companies	1,834	1,432
Exchange rate differences	6,060	1,394
Interest income, other	52	1,289
	7,946	4,115
Interest costs, etc.
Interest costs, group companies	–734	–
Interest costs, other	–1,202	–1,953
Exchange rate differences	–2,575	–10,963
Other	–3,587	–2,735
		–8,098 –15,651

Note 7 Appropriations

	2011	2010
Tax allocation reserve, provision/dissolution for the year	–1,051	–
	–1,051	–

Note 8 Tax

Reported in Income Statement	2011	2010
Current tax expense (–)/tax revenue (+)
Tax expense/tax revenue for the period	–830	–
Adjustment of tax attributable to previous year	–	–
Deferred tax expense (–)/tax revenue (+)
Deferred tax revenue/expense in capitalised/utilised tax values of loss carry-forwards	–7,868	5,399
Restatement of tax attributable to previous year	–	8
Total reported tax	–8,698	5,407

Reconciliation of effective tax	%	2011	%	2010
Profit before tax		32,854		–104,629
Tax at applicable rate for parent company	26,3	–8,641	26,3	27,517
Non-deductible expenses	0,2	–57		–22,3 –23,794
Non-taxable revenue	–	–	1,6	1,676
Tax attributable to previous year	–	–	0,0	8
		26,5 –8,698	5,6	5,407

Note 9 Intangible assets

The useful life of goodwill is indefinite while the useful lives of other intangible assets are definite and conform to what is stated in note 1, Accounting principles. Intangible assets with definite useful lives are amortised on a straight-line basis over their useful lives.

	Capitalised expenditure for software, purchased
Cumulative cost
Opening balance, 1 Jan 2010	1 426
Sales and retirements	–1 426
Closing balance, 31 Dec 2010	–
Opening balance, 1 Jan 2011	–
Sales and retirements	–
Closing balance, 31 Dec 2011	–
Accumulated amortisation
Opening balance, 1 Jan 2010	–528
Amortisation for the year	–357
Sales and retirements	885
Closing balance, 31 Dec 2010	–
Opening balance, 1 Jan 2011	–

Amortisation for the year – Sales and retirements – Closing balance, 31 Dec 2011 –

Carrying amounts

As of 1 Jan 2010	898
As of 31 Dec 2010	–
As of 1 Jan 2011	–
As of 31 Dec 2011	–

Amortisation and impairment

Amortisation and impairment is included in the following Income Statement lines	2011	2010
Cost of goods sold and services	–	–357
Administrative expenses	–	–
Selling expenses	–	–
	–	–357

Note 10 Property, plant and equipment

		Equipment, tools, fixtures and fittings
Cost
Opening balance, 1 Jan 2010		2,954
Sales and retirements		–2,558
Closing balance, 31 Dec 2010		396
Opening balance, 1 Jan 2011		396
Sales and retirements		–180
Closing balance, 31 Dec 2011		216
Depreciation
Opening balance, 1 Jan 2010		–982
Depreciation for the year		–545
Sales and retirements		1,182
Closing balance, 31 Dec 2010		–345
Opening balance, 1 Jan 2011		–345
Depreciation for the year		–20
Sales and retirements		180
Closing balance, 31 Dec 2011		–184
Carrying amounts
1 Jan 2010		1,972
31 Dec 2010		51
1 Jan 2011		51
31 Dec 2011		32
Amortisation and impairment
Amortisation is included in the following Income Statement lines	2011	2010
Cost of goods sold and services	–13	–180
Administrative expenses	–7	–181

Note 11 Long-term receivables

		31 Dec 2011 31 Dec 2010
Long-term receivables
Receivables from group companies	88,523	85,166
Interest-bearing receivables	4,000	6,000
Other long-term receivables	–	2,000
	92,523	93,166
Cumulative cost
Long-term receivables
At beginning of year	93,166	52,320
Purchase	30,056	65,493
Re-payment	–30,699	–24,647
	92,523	93,166

Selling expenses – –184

–20 –545

Note 13 Other receivables

Note 14 Interest-bearing liabilities

31 Dec 2011 31 Dec 2010

31 Dec 2011 31 Dec 2010

16 636 20 902

2,896 25,017

Note 12 Short-term receivables from group companies and joint ventures

	Receivables from group companies
		31 Dec 2011 31 Dec 2010
Cumulative cost
At beginning of year	100,220	111,597
Loans	3,740	49,195
Overdraft facility	4,774	25,271
Accounts receivable—trade, short-term receivables	53,066	25,754
Re-paid liabilities	–100,220	–111,597
	61,580	100,220

Interest-bearing receivable 2,081 24,488 VAT receivable 815 392 Other short-term receivables – 137

Overdraft facility 16 636 17 829 Other interest-bearing liabilities – 3 073

Note 15 Provisions

	31 Dec 2011 31 Dec 2010
Carrying amount at beginning of period	4,256	6,130
Provisions made in the period	–	5,230
Amounts utilised in the period	–4,068	–7,104
Carrying amount at end of period	188	4,256
Of which total long-term portion of provisions	–	–
Of which total short-term portion of provisions	188	4,256

The parent company's provisions are for salary and severance pay for the previous CEO.

Note 16 Accrued expenses and deferred income

		31 Dec 2011 31 Dec 2010
Accrued consulting fees	2,200	2,155
Accrued salaries and benefits	3,108	848
Accrued social security contributions	1,355	772
Payment for vacation taken in cash	1,430	882
Other	1,061	842
	9,154	5,499

Note 17 Operating leases

	31 Dec 2011 31 Dec 2010
Lease arrangements payable within one year	178	72
Lease arrangements payable between one and five years	134	108
	312	180

Parent company expenses for operating leases were 297 (186).

Note 18 Pledged assets and contingent liabilities

	31 Dec 2011 31 Dec 2010
Contingent liabilities
Guarantee commitments, FPG/PRI	–	–
Sureties in favour of subsidiaries	25,382	23,099
	25,382	23,099

Note 19 Close relations

Current liabilities

Close relation	Yr.	Sale of goods and services to related parties	Purchases from related parties	Liability to related party as of 31 December	Receivable from related party as of 31 December
Company owned by Board member	2011	–	420	–	–
Company owned by Board member	2010	–	3,325	–	–
Company owned by senior manager	2011	–	–	–	–
Company owned by senior manager	2010	–	3,134	–	–

Transactions with key staff in executive positions

For the Board of Directors', the CEO's and other senior executives' salaries and other benefits, expenses and commitments relating to pensions and similar benefits, as well as agreements on severance pay, see note 7 for the group.

Note 20 Group companies

Specification of the parent company's direct holdings of shares in subsidiaries

Subsidiary/Corporate identity no./Registered office	No. of shares	31 Dec 2011 Carrying amount	31 Dec 2010 Carrying amount
NOTE Norrtelje AB, 556235-3853, Norrtälje, Sweden	1,000	60,719	60,719
NOTE Lund AB, 556317-0355, Lund, Sweden	10,661	43,091	43,091
NOTE Components Gdansk Sp. z o.o, 583-26-15-588, Gdansk, Poland	333	5,000	0
IONOTE EMS Ltd, CR-134187, Tangxia	–	–	0
NOTE Pärnu OÜ, 10358547, Pärnu, Estonia	1	26,887	26,887
NOTE Norge AS, 982 609 380, Oslo, Norway	1,000	22,354	22,354
NOTE Nyköping-Skänninge AB, 556161-4339, Skänninge, Sweden	9,000	8,190	8,190
NOTE Skellefteå AB, 556430-0183, Skellefteå, Sweden	5,000	16,078	16,078
NOTE UK Ltd, 5257074, Telford, England	1,850,000	14,237	14,237
NOTE Tauragé UAB, 1076886, Tauragé, Lithuania	–	–	0
NOTE Torsby AB, 556597-6114, Torsby, Sweden	30,000	3,000	3,000
NOTE Hyvinkää Oy, 1931805-1, Hyvinkää, Finland	80	1,347	1,347
NOTE Components Järfälla AB, 556749-2409, Järfälla, Sweden	1,000	1,500	1,500
IONOTE Electronics (Dongguan) Ltd, 441900400100981, Dongguan, China	1	47,630	32,214
NOTE International AB, 556655-6782, Danderyd, Sweden	1,000	100	100
NOTE Components AB, 556602-2116, Danderyd, Sweden	1,000	100	100
		250,233	229,817

The participating interest is 100 (100)% in all companies. In addition to the above directly owned subsidiaries, the group includes a second-tier subsidiary NOTE Björbo AB, NOTE Björbo AB was merged with parent company NOTE Torsby AB in 2011.

Cumulative cost		31 Dec 2011 31 Dec 2010
At beginning of year	300,770	266,266
Sales	–18,037	–7,900
Investments/purchases	25,739	42,404
	308,472	300,770

Accumulated impairment losses		31 Dec 2011 31 Dec 2010
At beginning of year	–70,953	–2,900
Sales	18,037	2,900
Impairment for the year	–5,323	–70,953
	–58,239	–70,953
Net carrying amount	250,233	229,817

Note 21 Parent company participations in joint ventures

		Joint ventures
Cumulative cost		31 Dec 2011 31 Dec 2010
At beginning of year	–	24,636
Sold participations	–	–24,636
Closing balance, 31 December	–	–

Note 23 Information on the parent company

NOTE AB (publ) is a Swedish-registered limited company with its registered office in Danderyd, Sweden. The parent company's shares are listed on NASDAQ OMX Sweden's Nordic List.

The address of the head office is NOTE AB (publ), Box 711, 182 17 Danderyd, Sweden. The corporate identity number is 556408-8770. The consolidated accounts for 2011 comprise the parent company and its subsidiaries, collectively termed the group.

Note 22 Cash Flow Statements

Interest paid and dividend received	2011	2010
Interest received	1,886	2,721
Interest paid	–1,936	–1,948
Dividend received	5,589	6,370
Other non-cash items
	2011	2010
Other provisions	–	5,230
Capital gain on sold non-current assets	2,000	1,917
Capital gain on sale of operation/subsidiary	390	17,246
Unpaid vendor note receivables	–	–33,084
Impairment of shares and subsidiaries	5,323	70,953
Other items not affecting liquidity	–2	2
	7,711	62,264
Cash and cash equivalents		31 Dec 2011 31 Dec 2010
Cash and bank balances	13 ,278	11,778
	13,278	11,778
Un-utilised credits		31 Dec 2011 31 Dec 2010
Un-utilised credits	28,364	27,171

The Board of Directors and CEO hereby certify that the consolidated accounts have been prepared in accordance with IFRS as endorsed by the EU and give a true and fair view of the group's financial position and results of operations. The annual accounts have been prepared in accordance with generally accepted accounting principles and give a true and fair view of the parent company's financial position and results of operations. The Reports of the Directors of the group and parent company give a true and fair view of the group's and parent company's operations, financial position and results of operations and review the significant risks and uncertainty factors facing the parent company and group companies.

Danderyd, Sweden, 30 March 2012

Stefan Charette Chairman

Kjell-Åke Andersson Bruce Grant Stefan Johansson

Board member Board member Board member

Henry Klotz Christoffer Skogh

Board member Board member/Employee representative

As stated above, the annual accounts and consolidated accounts were approved for issuance by the Board of Directors on 30 March 2012. The Consolidated Income Statement and Consolidated Balance Sheet and the Parent Company Income Statement and Parent Company Balance Sheet will be subject to adoption at the Annual General Meeting on 25 April 2012.

Peter Laveson CEO

Our Audit Report was presented on 3 April 2012

Öhrlings PricewaterhouseCoopers AB

Magnus Brändström Anders Magnussen Senior Auditor Authorised Public Accountant

Authorised Public Accountant

Audit Report

To the Annual General Meeting of the shareholders of NOTE AB (publ) Corporate identity number 556408-8770

Report on the Annual Accounts and Consolidated Accounts

We have audited the annual accounts and consolidated accounts of NOTE AB (publ) for the year 2011). The annual accounts and consolidated accounts of the Company are included in the printed version of this document on pages 25-62.

Responsibilities of the Board of Directors and the Chief Execu-

tive Officer for the Annual Accounts and Consolidated Accounts The Board of Directors and the Chief Executive Officer 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 Chief Executive Officer 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.

Auditors' 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 principles used and the reasonableness of accounting estimates made by the Board of Directors and the Chief Executive Officer, 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 the Annual Accounts Act, and the consolidated accounts have been prepared in accordance with the Annual Accounts 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 Standards, as adopted by the EU, and the Annual Accounts Act. A corporate governance report has been prepared. The statutory administration report and corporate governance report are 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 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 Chief Executive Officer of NOTE AB (publ) for the year 2011.

Responsibilities of the Board of Directors and the Chief Executive Officer

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 Chief Executive Officer are responsible for administration under the Companies Act.

Auditors' 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 a basis for our opinion on the Board of Directors' proposed appropriations of the Company's profit or loss, we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.

As a 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 be able to determine the liability, if any, to the Company of any board member or the Chief Executive Officer. We also examined whether any board member or the Chief Executive Officer 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 Chief Executive Officer be discharged from liability for the financial year.

Stockholm, Sweden, 3 April 2012 Öhrlings PricewaterhouseCoopers AB

Auditor in Charge Authorised Public Accountant

Magnus Brändström Anders Magnussen Authorised Public Accountant

Addresses

NOTE AB (publ)

NOTE Norrtelje AB Box 185

Box 711 Vendevägen 85 A 182 17 Danderyd Sweden

NOTE Components AB Box 711 Vendevägen 85 A 182 17 Danderyd Sweden

NOTE Hyvinkää Oy Avainkierto 3 05840 Hyvinkää Finland

NOTE Järfälla AB Saldovägen 1 175 62 Järfälla Sweden

NOTE Lund AB Maskinvägen 3 227 30 Lund Sweden

NOTE Norge AS

Jogstadveien 21 2007 Kjeller Norway

www.note.eu info@note.eu Vilhelm Mobergs gata 18 761 22 Norrtälje Sweden

NOTE Pärnu OÜ

Laki 2 80010 Pärnu Estonia

NOTE Torsby AB

Inova Park 685 29 Torsby Sweden

NOTE UK Ltd Stroudwater Business Park Brunel Way Stonehouse Gloucestershire GL10 3SX England

IONOTE Electronics

(Dongguan) Ltd No.6 Ling Dong 3 Road Lincun Industrial Center Tangxia 523710 Dongguan Guangdong Province China

Swedish and English-language versions of this Report have been produced. In the event of any discrepancy between the two, the Swedish version shall apply.

NOTE AB (publ) Annual Report 2011 Corporate identity number 556408-8770

Text: NOTE AB (publ). Production and graphic design: Olsson & Per. Images: Olsson & Per. Printing: Fototext AB. Translation: Turner & Turner.