NOTE — Annual Report 2015

Feb 19, 2016

Annual Report 2015

Contents

INTRODUCTION

This is NOTE	2
CEO's statement	4

OPERATIONS

Vision, business concept, strategy and targets	6
Business model	9
Market and competitors	11
Risk management	14
Quality, environment and ethics	15
UN Global Compact	16
Human resources	18

THE NOTE SHARE

	Share data and shareholders	20

FORMAL ANNUAL ACCOUNTS

23
28
30
34
46
50
54
63

Addresses 64

Shareholders' information

Annual General Meeting

The AGM (Annual General Meeting) will be held at 2:00 p.m. on Tuesday, 19 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, jointly 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 13 April, and notify NOTE of their intention to participate by no later than 13 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 that dividend of SEK 0.70 (0.50) per share is paid to shareholders for the financial year 2015.

Nomination Committee

The Nomination Committee has the following members:

Bruce Grant Garden Growth Capital LLC

Johan Hagberg Personal holdings

Jonas Hagströmer Creades AB

Peter Svanlund Banque Carnegie Luxembourg S.A. (on behalf of Museion Förvaltning AB)

Financial information

Calendar

Interim Report, Jan–Mar 19 Apr 2016 Interim Report, Jan–Jun 18 Jul 2016 Interim Report, Jan–Sep 18 Oct 2016

Investor relations contacts

Henrik Nygren Chief Financial Officer Tel: +46 (0)8-568 990 03 +46 (0)70-977 06 86 Email: henrik.nygren@note.eu

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 Email: info@note.eu Tel: +46 (0)8 568 99000 Address: NOTE AB (publ), Box 711, 182 17 Danderyd, Sweden

This is NOTE

NOTE is one of the leading manufacturing and logistics partners for electronics-based products in northern Europe. NOTE produces advanced industrial electronics, on assignment for customers that set high standards.

NOTE produces PCBAs, subassemblies and box build products, often embedded in complex control, monitoring and security systems. Its customer base includes global corporations active on the world market, and local enterprises whose primary sales are in northern Europe. NOTE's customers are mainly active in the engineering, communication and security industries.

Its business model is tailored for the high mix/low to medium volume market segment, i.e. products in small to midsize batches that require a high level of technological competence and flexibility. The business model is based on offering customers advanced consulting services, as well as effective and groundbreaking manufacturing and logistics solutions for the optimal total cost. NOTE's customer offering covers the complete product lifecycle, from design to after-sales.

NOTE operates Nearsourcing Centres located in geographical regions with high industrial activity and innovation standards. These units provide advanced production technology services in close collaboration with customers, such as component selection, developing test equipment, prototyping and serial production.

NOTE's Industrial Plants are located close to large final markets and in regions with strong production traditions and high competence levels. In addition to development-oriented services, these Plants also offer cost-efficient volume production of PCBAs and box build products.

• History: Founded in 1999.
• Production units: Nearsourcing Centres in Sweden, Norway, Finland and the UK. Industrial Plants in Estonia and China.
• Share: NOTE's initial public offering was in 2004. The share is quoted on Nasdaq Stockholm (Small Cap/Industrial Goods & Services). At year-end 2015, the share price was SEK 11.90. Market capitalisation was SEK 344 m, divided between 28,872,600 shares.

		Delta
1,121.5	964.0	157.5
45.2	31.8	13.4
4.0	3.3	0.7
39.8	28.8	11.0
34.6	24.6	10.0
5.2	2.5	2.7
	2015	2014

Number of employees 31 December 2015

962

CEO's statement

We've put a strong year behind us, and I'm pleased that the Board of Directors has proposed to increase our dividend to shareholders to SEK 0.70 per share.

Dear NOTE friends,

NOTE's progress in 2015 was positive. We grew sales, improved profitability and kept rationalising our utilisation of working capital.

Customer-focused efforts

We worked hard to develop our methods and approach in order to strengthen existing customer relationships and win new business that expands our already-strong customer base. This makes it really pleasing that we successfully secured deeper collaborations and several new product generations from existing customers in the year. We were also entrusted by a number of new business customers and started promising new projects—in Europe and on other markets.

Focus on quality

In our day-to-day work, we never compromise our commitment to actions that improve delivery precision and quality. Jointly with customers and suppliers, our constant aim is to cut complexity and total cost. Our customers appreciate our efforts—we know this from our customer satisfaction surveys.

Key growth segments

Looking ahead, we're prioritising the following segments:

• Increasing customer loyalty to generate extra business volumes from current customers. Naturally, much of the responsibility for this rests with our sales and customer service staff. However, our success is based on teamwork. For example, our production and purchasing staff play a key role in continuously improving efficiency and customer logistics so we can achieve world-leading quality for our customers. This also means that we can engage more broadly with potential and existing customers so we can increase sales growth.
• Continuing to establish new customer relationships. Preferably with customers that apply high standards and have good growth potential. For some time now, we've been actively approaching customers on markets where we currently don't have Nearsourcing Centres, in Central Europe for example, where there is substantial potential for market growth. Although this represents a challenge, our efforts have already generated several tangible business opportunities.
• Actively strengthening and profiling our Nearsourcing Centres. We're developing a model that optimises

the development and delivery of prototypes. Our efforts to expand our medtech service offering in Sweden have already resulted in us securing new business accounts with promising deals. We will be working hard to ensure that these assignments progress well.

Being open to structural sector opportunities. Value creating acquisition targets are really interesting. But one prerequisite is that new acquisitions can be incorporated with our values: Committed, Professional, Quality focused, Flexible and Value creating.

To conclude, we've put a strong year behind us. I'm pleased that the Board of Directors has proposed to increase our dividend to shareholders to SEK 0.70 per share.

I would like to take this opportunity to thank our customers for a fruitful collaboration during the year. I would also like to extend a warm thank you to our staff around the world. It's your hard work that drives NOTE forward. Let's keep working with the same focus and dedication in 2016.

Henrik Nygren

Vision, business concept, strategy and targets

The usage of electronics in products, which traditionally used to be mechanical, is increasing, and NOTE is playing an active role in this process. Its goal is to be the best collaboration partner in the sector, with leading-edge delivery precision and quality for a competitive total cost.

Vision

NOTE—the customer's obvious manufacturing and logistics partner.

Business concept

NOTE is a leading northern European manufacturing and logistics partner with an international platform for manufacturing electronics-based products that require high technology competence and flexibility through product lifecycles.

Business targets and strategy

NOTE will be the best collaboration partner in the industry with leading-edge delivery precision and quality for a competitive total cost.

To make the market's most competitive offering, NOTE should actively contribute to safeguarding customers' value chains and sharpening their competitiveness through flexibility, competence, professionalism and good profitability.

Profitable growth will be achieved by:

• Expanding NOTE's customer base with new accounts with complex products and/or high standards.
• Strengthening NOTE's services offering to existing customers.
• Sharpening competitiveness through industry-leading quality and delivery precision, further improvements to NOTE's sourcing and logistics operation, optimising capacity utilisation and enhancing internal processes.
• Executing carefully selected production take-overs and acquisitions.

Financial targets

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

Profitability target

NOTE will grow with profitability. Its target 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 target The minimum equity ratio should be 30 percent.

Dividend target

NOTE's dividend should be adapted to average profit levels over a business cycle, and for the long term, be 30–50 percent of profit after tax. Dividends should also be available for modifying its capital structure.

Business model

NOTE is one of Northern Europe's strongest electronics manufacturers. NOTE produces industrial electronics—everything from fire alarms to medical devices—on assignment from customers. Focusing on quality, NOTE manufactures products that have to cope in demanding environmental conditions such as extreme cold, heat, humidity, desert and tropical rainstorms.

A partner with a strong overall offering

NOTE manufactures PCBAs, subassemblies and box build products. Its customer offering especially addresses the high mix/low to medium volume segment, i.e. products in small to mid-sized batches. This implies demanding standards of technological competence and flexibility of manufacture, because products in this segment often have to be adapted to satisfy specific customer needs over time.

NOTE focuses on providing customers with the right product at the right time, for the best possible total cost. It achieves this through channels including wellconsidered manufacturing processes and sophisticated logistics solutions. To keep sharpening its competitiveness, NOTE continuously monitors and re-engineers its business processes and customer interfaces to further increase efficiency, delivery precision and quality.

Cost of materials is the largest component of the cost of a finished product. Accordingly, another of NOTE's central missions is to offer competitive pricing of electronic components and other production materials.

In box build products, NOTE develops electronics and mechanical solutions in close partnership with its customers, suppliers and the relevant units within the group. NOTE has established, and is continuing to develop, partnerships with selected providers in the mechanics segment.

Most of NOTE's customers are in the engineering, communication and security industries. Other segments where NOTE is active are medtech, defence and marine, with a sharper focus on medtech.

NOTE delivers flexible solutions that last right through product lifecycles—from design to after-sales. Its business model builds on this holistic view, and consists

of two central components: Nearsourcing Centres located close to customers, and Industrial plants in Eastern Europe and Asia.

Nearsourcing™ creates the potential, right from the start

NOTE's Nearsourcing Centres in Sweden, Norway, Finland and the UK are located in geographical regions with high industrial activity and innovation standards. Sophisticated production technology services are provided in these units. Their initial starting point is to support the customer with valuable competence, back in the design and development phase. This creates the right potential for design for manufacturing for customers' products, so that they can be produced sustainably for the long term. This results in lower total cost for customers.

NOTE contributes competence in design for manufacturing, improved producability, as well as the production

PRODUCT LIFECYCLE

VALUE CHAIN

* New Product Introduction, NOTE adopts a highly developed business process for customers about to launch a new product on the market. NOTE increases customer profitability by actively contributing experience and know-how in selecting materials, sourcing, testing, production, quality and logistics.

of test equipment and effective testing methods in close collaboration with customers. Its intention is to create the best feasible products, and optimise serial production right back at the design phase. Prototyping and pilot series are part of this, to determine final product design. Nearsourcing Centres deliver services right through product lifecycles. In addition to industrialisation services, they also provide serial production, sophisticated logistics solutions and after-sales services, based on customer needs.

Products manufactured include remote control systems for rock drilling machinery, and portable satellite equipment integrating a transmitter, receiver and satellite dish. These products are used by the police, rescue and defence services, as well as radio and TV stations, to enable transmission from any location worldwide.

The geographical proximity Nearsourcing Centres offer customers is crucial when projects require ongoing contact and extensive knowledge sharing between the parties. Nearsourcing also shortens time to market, which reduces capital tied-up and offers competitive edges for the customer.

Nearsourcing enables high flexibility for customers in the introduction phase, before the product and 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 potential for controlling production and the supply of materials so total 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 nature of the product, the customer's market conditions, cost structure, where the product lies in its lifecycle, volume and geographical final market.

High-quality, cost-efficient volume production at Industrial Plants

NOTE's Industrial Plants, located in Estonia and China, are close to large final markets and in regions with strong traditions of production and high competence levels. These are contemporary units with advanced production equipment, high manufacturing capacity and broad-based technology competence. In addition to development-oriented services, these units also offer cost-efficient volume production of PCBAs and box build products. The plants manufacture products including NOTE manufactures this portable satellite equipment which is used by the police, rescue and defence services, as well as radio and TV stations, to enable transmission from any location worldwide.

complex equipment for amplifying mobile networks, flowmeters, industrial computers, equipment for GPS applications and control systems for industrial cranes.

Customer relationships are managed either by the Industrial Plant itself directly, as is increasingly the case, or by a Nearsourcing Centre. In the latter case, production is usually started up at the Nearsourcing Centre, to transfer once the product and its volume have stabilised. The products and production processes are then industrialised at Industrial Plants in collaboration with the Nearsourcing Centre.

NOTE has a highly developed methodology for transferring production between Nearsourcing Centres and Industrial Plants. These units collaborate in dedicated account teams to monitor materials and information flows, and to provide the customer with continuous feedback.

Market and competitors

NOTE is active on the market for outsourced electronics manufacturing, which is under fundamental transformation due to the increasing usage of electronics in society.

Background

Europe is unique in the global market for manufacturing services. Compared to the rest of the world, there is no other continent that has as many high-cost countries close to those with significantly lower cost levels. This has influenced the structure and evolution of the European market.

Most market participants in Europe are domestic, smaller enterprises with long histories, often associated with one or a few customers. The global players that have started up in Europe primarily locate their operations in Eastern European countries.

Generally, the value players located in Western Europe add for their customers could be regarded as more specialised services, while the value from those located in Eastern Europe are primarily driven by cost considerations.

The market for outsourced electronics production has emerged and evolved as a consequence of customers' increasing focus on core business, more electronic content in various types of product, as well as increased demand for manufactured products.

The market in 2015

The demand for NOTE's services remained stable on most European markets in the year. The positive trend from the previous year sustained, and sales were up by 16 percent in 2015, of which 7 percent were positive currency effects. The increased sales consisted of new and existing products to current business customers, and products on relatively new NOTE accounts.

A number of structural deals were also made on the European market in the year. In summary, these are established local

and regional players making moves to grow larger.

Market trends, customer needs and future prospects

The market has undergone major transformation in recent years, the primary drivers being price pressure on components, more outsourcing, the relocation of production to low-cost countries, demands for shorter lead-times from idea to finished product, and robust economic progress in growth regions with the resulting emergence of new end-user markets. Going forward, it's likely that important factors will remain the search for costefficient production, rationalisation, as well as continued production migration from West to East. But market demand for manufacturing services are also expected to increase. More sophisticated technology will enable the lead-time from idea to finished product to reduce, and sophisticated logistics solutions will be a central component of service portfolios, to provide the flexibility that customers need.

The decisions to outsource to low-cost countries to secure significant reductions in per unit prices, are also anticipated to keep getting more nuanced and increasingly adopt the total cost perspective. Key parameters to consider are transport costs and product owner needs for flexibility and short lead-times.

NOTE is also witnessing a trend of customers cutting complexity by downscaling supplier bases, and instead developing more effective relationships with a smaller number of partners. In "A Strategic Study of the European EMS Industry 2013–2018", Reed Electronics Research reviews a number of factors

that it thinks any successful electronics manufacturer should possess:

• Physical closeness to customers at an early stage of product lifecycles and/ or relationships.
• Good relationships within several product owner functions.
• The capacity to reduce product time to market.
• The flexibility to manage demand fluctuations.
• The ability to comply with applicable laws, ordinances and standards.
• Good relationships with supplier bases.

The market for manufacturing services for electronics-based products can be segmented from a range of perspectives, but generally, the sector often refers to:

• Low mix/high volume These items (such as mobile phones and TV sets) are often consumer products. In this segment, products are usually manufactured and sold in high volumes with minimal changes to product performance. Usually, product lifecycles are fairly short.
• High mix/low volume These items (such as control systems, measurement instruments and sophisticated communication equipment) are usually industrial products, i.e. items that customers often embed in original equipment. Demand and the level of adaptation varies, setting greater demands on manufacturing partner flexibility. The product lifecycle of these items is generally longer than for consumer products.

Sector commentator Reed Electronics Research forecasts a relatively limited growth during the coming years on

Sales of outsourced electronics production in Europe, EUR million

Source: Reed Electronics Research 2015

the European market for outsourced electronics production. Considering the segment that NOTE is primarily exposed to, the engineering, communications and security industry, a growth of two percent is anticipated in annualised terms in Western Europe. The corresponding figure for the segment medtec, where NOTE has sharpened its focus, is 3 percent.

Customer structure and regional allocation

Globalisation and intensifying competition are sharpening the focus on core business. The demand for shorter lead-times and greater flexibility is a trend that looks like sustaining. This sets challenging standards on supply chains, to manage the costs and capital tied-up implicit in a higher level of service.

Demands for effective administration and greater globalisation mean that at present, purchasing organisations are dealing with expanding product ranges, without resources necessarily increasing correspondingly. This implies greater complexity, and accordingly, businesses require a strong and competent partner in product development, supply chain, industrialisation, box build products and

after-sales services, for example. By coming to NOTE, customers can access all this valuable competence, simultaneous with achieving economies of scale at the production and sourcing level.

NOTE's customer base includes global corporations active on the world market, and local enterprises whose primary sales are in northern Europe.

On its small and medium-sized accounts, NOTE places a big emphasis on creating flexible concepts that fit businesses with growth ambitions. The SME category has a pressing need for competence relating to new product introductions, effective sourcing and the potential to identify a cost-efficient manufacturing partner that can support their growth over time.

On major global accounts, NOTE is usually one of several suppliers. In these cases, NOTE usually plays the role of a specialist or niche provider, focusing on products in small batches that require high flexibility and technology competence.

NOTE is witnessing continued high interest in production in China. However, as stated above, in the context of decisions relating to outsourcing to China, the market is continuing to mature. An increasing share of value migrated to China is also

intended for sale on this market. NOTE's operations in China are well prepared to cope with the transfer of production from Europe, as well as new product introductions.

The upscaled direct sales initiatives from NOTE's Industrial Plants in recent years has attracted new accounts in Asia, the US and Oceania. Securing business on these markets in competition with local players is good corroboration of NOTE's competitiveness, and the value Industrial Plants deliver.

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

Competitors

A few of NOTE's major competitors active on the Nordic market are Enics, Kitron, Orbit One and Scanfil. There is also a range of regional and local players, often niche oriented, who address one or several of NOTE's markets.

Risk management

OPERATIVA RISKER OPERATIONAL RISKS OPERATIVA RISKER
RISK	EXPOSURE AND MANAGEMENT		RISK	EXPOSURE AND MANAGEMENT
Customers The risk that a customer leaves NOTE or does not fulfil its commitments.	NOTE has a large number of active accounts, the 15 largest in sales terms represented 57 percent of its sales in 2015. In most cases, NOTE manufactures a range of products for each customer. Usually, customers choose to place all their produc tion of one product with the same supplier, so they can achieve economies of scale and limit material commitments and risks. Accordingly, NOTE's production		IT IT-related disruptions can cause production down time, loss of invoicing and/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. Following a far-reaching, group-wide project, a common business specific ERP system has been introduced at some of NOTE's Swedish units. This is a key step in realizing the ambition of further harmonizing internal processes and systems support throughout the group.
	volumes are closely linked to which products, and where in product lifecycles, the customer's products lie. Accord ingly, sales variations can be significant for individual customers. Usually, materials risk is regulated through agreements with customers. NOTE follows up on material risks continuously.		Capacity risk The risk of not having suf ficient capacity in plants.	Overall, NOTE has good production capacity. Production is of a similar nature in several of the group's units and NOTE can transfer production from one unit to another. However, sudden fluctuations in demand can lead to challenging situations relating to capacity utilisation in the group's units.
Environmental risks The risk that operations cause damage to the environment and costs for complying with new more	Unlike the heavy engineering industry, NOTE's business has a fairly limited environmental impact. To comply with applicable environmental legislation, NOTE has essential ly transferred to lead-free production, like the rest of the electronics industry.		Materials Price and access to materials.	The price and access to electronic components and other production materials vary significantly depending on market conditions. NOTE has a central organisation to deal with group-wide sourcing.
stringent environmental directives. Liability NOTE's role includes it being a collaboration partner to its Risks in addition to the customers, but not a product owner. Accordingly, NOTE's above environmental risks responsibility includes conducting the selection of mate where NOTE may be liable rial and production in accordance with the customer's for payment due to com specification. Usually, the standards applying to NOTE's		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 variation in demand, NOTE collaborates closely with customers to limit the risk of obsolescence in inventories. Obsolescence risk is monitored continuously.
mitments in its business.	documentation of services rendered are extensive and can be considered complex. Quality monitoring of NOTE's pro duction and strategic suppliers is a continuous process. NOTE's insurance cover is assessed to be reasonable and is adapted to operational risks. Where possible and financially viable, there is insurance cover for issues
				FINANCIAL RISKS
	including specific costs that may arise as a result of		RISK	EXPOSURE AND MANAGEMENT
production faults. The market for outsourced electronics production is Economic and seasonal variations 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		Currency The risk that a fluctuation in exchange rates affects the group's profit, cash flow or balance sheet negatively.	Against the background of an increasing share of value added being generated in foreign units and the purchas ing of electronic components and other production materials being largely in foreign currencies (EUR/USD), NOTE has fairly extensive currency management. With the aim of limiting currency risks, NOTE trades in currency forwards and similar instruments.
	essentially are active in the engineering, communication and security industries. The 15 largest customers in sales terms represented 57 percent of consolidated sales in 2015. The ambition is to focus on sectors with more stable demand and relatively long product lifecycles and customer assignments.		Financing The risk that refinancing loans is more difficult or costly, and that accord ingly, NOTE's solvency is negatively affected.	NOTE has a substantial need for external finance, primar ily linked to the working capital of operations. Different sources of finance are continuously evaluated in close collaboration with NOTE's lenders. Considering the cyclicality of its operations, funding costs and NOTE's prospects of re-financing are closely
Production downtime Downtime in production	Because NOTE conducts advanced manufacture of electronics, it is subject to high demands on efficient			linked to market conditions and NOTE's profitability and cash flow.
affecting deliveries to processes and state-of-the-art production equipment. The customers and causing risk of production downtime is limited by production being extra costs. 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. NOTE has extensive insurance cover, including cover to minimise the loss of contributions caused by produc tion downtime where possible and financially viable.	Customer credit The risk that a customer is unable to pay its debt to NOTE.	Overall, NOTE has a diversified customer base where its biggest customer (group) comprises some 10 percent of sales. In terms of NOTE's business agreements, there are some individual customers that do create fairly high exposure in accounts receivable—trade and inventories, including outstanding purchase orders. 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
Competence The risk of not possessing sufficient competence in all parts of business.	NOTE provides sophisticated production services which require high technical competence across several seg ments. NOTE endeavours for staff to achieve continuous competence development.			customers. Ongoing financial reporting includes close monitoring of accounts receivable—trade and inventories, including outstanding purchase orders.

Quality, environment and ethics

Sustainability issues are integrated into NOTE's business activities. NOTE has been affiliated to the Global Compact since 2011, which was created from a UN initiative.

Overview raises standards

Taking an integrated approach to various sustainability issues is highly significant to the effectiveness of overall outcomes. These issues cover everything from helping customers select components with positive environmental and quality performance, to locating production close to final markets, and as far as possible, utilising shared transport to limit NOTE's environmental impact. In tandem with improving its customers' impact on the environment and wider society, NOTE endeavour to conduct itself responsibly on those markets where NOTE is active.

Quality policy and working methods

NOTE creates competitiveness for its customers by delivering the right quality at the right time, and at a favourable total cost. To achieve this, NOTE continuously develops and improves its services, and simultaneously endeavours to satisfy customers' relevant standards and expectations. Its production units all work towards consistent and measurable targets. For example, product quality and delivery precision are measured continuously for customers and suppliers.

NOTE utilises a range of quality assurance tools and methodologies, originating in automotive and pharmaceutical industry quality systems.

ISO 9000 is a family of international standards that are the foundation of NOTE's quality work. All the group's production units hold ISO 9001 certification. With its quality management system, NOTE can track faults and continuously develop the company's methods and processes. NOTE verifies that its efforts are working through regular audits, where it follows up on standards and routines, which apply to internal and external resources. Its management system is approved and certified by an external party.

NOTE conducts regular quality audits of strategic suppliers.

Environmental policy and working methods

NOTE endeavours to secure long-term, sustainable development by producing with the minimum possible environmental impact. NOTE endeavours to comply with, or exceed, applicable legislation, and pursues continuous improvement in the environmental segment.

NOTE's environmental work complies with international ISO guidelines, under the ISO 14000 family of standards. All the group's manufacturing units hold ISO 14001 environmental certification, and are audited by internal and external resources.

Despite variations in the environmental legislation of individual countries, NOTE has the consistent ambition of all its units following a consistent line of environmental work. NOTE units exchange best practice, best-in-class actions and proposals for improvement.

Manufacturing units sort the waste from consumables at source, and monitor energy consumption continuously. NOTE also applies environmental consideration to other parts of its business, such as in discussions with its customers regarding sourcing materials and production setups.

Electronic scrap, glass and paper are recycled. NOTE conducts improvement projects to reduce waste, energy consumption and CO2 emissions. Corrugated board and combustible waste is compacted to minimise the amount of waste transport, which affects the environment. In its transport segment, NOTE also coordinates its freight agreements group wide to optimise transportation, and thus limit energy consumption and CO2 emissions.

NOTE conducts regular environmental audits of strategic suppliers.

Ethics

NOTE has been affiliated to the Global Compact, started on a UN initiative, since autumn 2011. The global compact has formulated 10 principles, which affiliated companies undertake to comply with. These principles apply to human rights, labour law, the environment and anti-corruption. Each year, NOTE submits its COP (Communication on Progress) to the UN, which reviews the work it has conducted within the group, and with customers, suppliers and other stakeholders.

In 2015, NOTE updated and consolidated its policy initiatives and conducted a new employee satisfaction survey. In 2016, the aim is to continue to strengthen the policy work and encourage positive social progress in the locations where NOTE has a presence.

NOTE's Code of Conduct is based on the Global Compact, and a full version is available at www.note.eu.

A summary of the actions completed and prepared by NOTE units related to Global Compact principles follows on the next page.

16 NOTE ANNUAL REPORT 2015

PRINCIPLE 4

PRINCIPLE 5

PRINCIPLE 6

UN Global Compact

	HUMAN RIGHTS
	UN GLOBAL COMPACT	NOTE'S APPROACH	RESULTS 2015	GOALS 2016
PRINCIPLE 1	Companies are requested to sup port and respect the protection of international human rights in their spheres of influence; and	NOTE has been using its Code of Conduct since 2006. NOTE endeavours to develop business with companies that have the corresponding ethical rules on accountability.	NOTE works actively and continuously to ensure compliance with its Code of Conduct. In the year, NOTE encouraged existing customers and suppliers to affiliate to, or support, the UN Global Compact by communicating the significance of these issues. New business customers were informed of NOTE's affiliation to the UN Global Compact, its principles and benefits. NOTE signed agreements with another 13 suppliers, who accept NOTE's Code of Conduct or have their own, equivalent Code. NOTE conducted follow-up audits on 16 suppliers in the context of the Code of Conduct and the ten principles of the Global Compact. NOTE also supported UNICEF in its work with refugee children.	Influence customers to accept NOTE's Code of Conduct, or support the ten principles of the UN Global Compact. Increase the share of sourcing from strategic suppli ers and contracted suppliers by 6 percentage points. Work to help children and uphold their rights.
PRINCIPLE 2	ensure that their own company is not party to breaches of human rights.	NOTE has been using its Code of Conduct since 2006.	NOTE works actively and continuously to ensure compliance with its Code of Conduct internally. In the year, NOTE worked actively to reduce the usage of conflict minerals. The implementation of NOTE's human rights policy was enhanced.	Further enhance implemen tation of the human rights policy.
			LABOUR LAW
	UN GLOBAL COMPACT	NOTE'S APPROACH	RESULTS 2015	GOALS 2016
PRINCIPLE 3	Companies are re quested to maintain freedom of assoc iation and make actual recognition of the right of collective bargaining;	NOTE respects that its employees form and join labour organisations, and negotiation is collective. Collective agreements are in place at a majority of NOTE's units. Some of NOTE's subsidiaries use OHSAS 18001 as a guideline. OHSAS 18001 is a far-reaching, global and verifiable occupa tional health and safety standard, which includes auditing and certification by an external party.	NOTE works actively and continuously to ensure compliance with its Code of Conduct. In the year, NOTE encouraged existing customers and suppliers to affiliate to, or support, the UN Global Compact by communicating the significance of these issues. New business customers were informed of NOTE's affiliation to the UN Global Compact, its principles and benefits. NOTE signed agreements with another 13 suppliers, who accepted NOTE's Code of Conduct or have their own, equivalent Code. NOTE conducted follow-up audits on 16 suppliers on the Code of Conduct and the ten principles of the Global Compact.	Influence customers to accept NOTE's Code of Conduct, or support the ten principles of the UN Global Compact. Increase the share of sourcing from strategic suppli ers and contracted suppliers by 6 percentage points. Implement OHSAS 18001 as a guideline in more NOTE

In the year, NOTE continued its work on reducing the usage of conflict minerals. The share of sourcing from strategic suppliers has increased by some 1 percent. The implementation of NOTE's human rights policy, which deals with issues including labour law, was consolidated in the year. OHSAS 18001 was also implemented at the unit in Finland. units. abolition of all forms of forced labour; As part of its business principles, NOTE and its customers' and suppliers' employees should enter employment and contracts of their own free will. Some of NOTE's subsidiaries use OHSAS 18001 as a guideline. OHSAS 18001 is a far-reaching, global and verifiable occupational health and safety standard, which includes auditing and certification by an external party. abolition of child labour; and NOTE does not employ children and does not collaborate with companies that use children as part of their workforce. Some of NOTE's subsidiaries use OHSAS 18001 as a guideline. OHSAS 18001 is a far-reaching, global and verifiable occupational health and safety standard, which includes auditing and certification by an external party. abolition of discrimination in employment and at work. NOTE believes in a workplace where everyone has equal opportunities to work and progress. NOTE sees and benefits from all employees' specific competence and developmental opportunities, regardless of sex, ethnicity, sexual orientation, disability, age and social background. NOTE's units are encouraged to work on integrating equal opportunities and diversity in all parts of their operations. Some of NOTE's subsidiaries use OHSAS 18001 as a guideline. OHSAS 18001 is a far-reaching, global and verifiable occupational health and safety standard, which includes auditing and certification by an external party. NOTE conducted a group-wide employee satisfaction survey in the year. Staff satisfaction regarding the atmosphere and sentiment at NOTE as a workplace remained at a high level, especially in terms of collaborative spirit and respect between colleagues. NOTE works actively and continuously to ensure compliance with its Code of Conduct. In the year, NOTE encouraged existing customers and suppliers to affiliate to, or support, the UN Global Compact by communicating the significance of these issues. New business customers were informed of NOTE's affiliation to the UN Global Compact, its principles and benefits. NOTE signed agreements with another 13 suppliers, who accepted NOTE's Code of Conduct or have their own, equivalent Code. NOTE conducted follow-up audits on 16 suppliers on the Code of Conduct and the ten principles of the Global Compact. The share of sourcing from strategic suppliers has increased by some 1 percent. The implementation of NOTE's human rights policy, which deals with issues including labour law, was consolidated in the year. OHSAS 18001 was implemented at the unit in Finland. Conduct a group-wide employee satisfaction survey and use its results in business processes to evolve as an attractive employer. Influence customers to accept NOTE's Code of Conduct, or support the ten principles of the UN Global Compact. Increase the share of sourcing from strategic suppliers and contracted suppliers by 6 percentage points. Implement OHSAS 18001 as a guideline in more NOTE units.

	ENVIRONMENT
	UN GLOBAL COMPACT	NOTE'S APPROACH	RESULTS 2015	GOALS 2016
PRINCIPLE 7	Companies are re quested to support the principle of prudence in terms of environ mental risks;	NOTE's units run improvement projects in the environmental segment, and measure a series of environmental factors such as electronic scrap, energy consumption, CO2 emissions and transport. All units have environmental targets, which are monitored regularly.	NOTE's units work on the basis of individual targets and circumstances in the environmental segment. The consumption of energy, gas, paper and water reduced, as did lead-content products. The number of faults and reworked products in manufacture reduced, implying that the waste from components, braze flux and PCBAs in production decreased. More energy-efficient heating and lighting equipment was installed in Torsby, Sweden and the UK. Equipment optimising the consumption of braze flux has also been installed at the UK unit. Additionally, equipment to improve the indoor climate for casting, painting and surface mounting was installed in the UK, Estonia and China. These activities were audited by a third party.		Continued progress towards still more environmentally friendly production and envi ronmental transportation. Increase the share of sourc ing from strategic suppliers and contracted suppliers by
PRINCIPLE 8	take the initiative to promote acceptance of far-reaching environ mental responsibility; and	NOTE works actively on developing policies and methodologies designed to minimise the company's negative environmental impact. Employees are encouraged to participate in this process.		6 percentage points. NOTE has good insight into these suppliers' environmental work, and can help them develop and make improvements in this segment.
PRINCIPLE 9	encourage the development and dissemination of en vironmentally friendly technology.	NOTE takes a positive view of developing environmental technology and actively supports new manufacturing methods and components that are more environmentally friendly. NOTE conducts environmental audits when introducing new equipment, technology and logistics solutions. Experience is shared between group units. An environmental perspective is consid ered jointly with customers when tailoring product manufacture. NOTE has implemented a database for identifying RoHS, Reach and conflict minerals in components.	The share of sourcing from strategic suppliers increased by some 1 percent. Follow-up audits of 16 suppliers on NOTE's Code of Conduct and the ten principles of the UN Global Compact were conducted.

			ANTI-CORRUPTION
	UN GLOBAL COMPACT	NOTE'S APPROACH	RESULTS 2015	GOALS 2016
PRINCIPLE 10	Companies should counteract all forms of corruption, including blackmail and extortion.	NOTE encourages employees to resolutely counteract all forms of corruption, blackmail and extortion. Simultaneously, NOTE expects the corresponding attitudes from its custom ers and suppliers. NOTEs purchasing policy ensures that purchasing is handled ethically and prohibits bribery and corruption. NOTE has group-wide and local authorisa tion procedures expedient for its business.	NOTE conducted follow-ups and audits of its anti-corruption policy in the year, and verified that its authorisation procedures are functional. NOTE signed agreements with another 13 suppliers, who accepted NOTE's Code of Conduct. NOTE conducted follow-up audits on 16 suppliers on the Code of Conduct and the ten principles of the Global Compact.	Consolidated implementation of NOTE's anti-corruption policy. Enhance internal control processes. Continuously follow up on NOTE's Code of Conduct and its ten principles during supplier audits.

The interest in the Global Compact's principles and what they represent is increasing in the business world. We think that's positive.

Henrik Nygren, Acting CEO and President

Human resources

The responsiveness, commitment, competence and loyalty of our employees are what develop our business. It is they that create the potential for NOTE to be a specialist advisor and the customer's obvious manufacturing and logistics partner.

NOTE possesses a global organisation with businesses in Sweden, Norway, Finland, the UK, Estonia and China. One of its key missions is to develop the interaction between units. This work is done through channels including a number of functional forums, in segments including quality, sourcing, accounting and sales. NOTE is working on harmonising its working methods and monitoring tools as well as clarifying guidelines. Its improvement and development process involves many employees group wide. NOTE continuously monitors business-related key performance indicators such as ongoing central and local improvement projects.

The workforce was altered in the year at different levels of the organisation to cope with demand fluctuations and to implement rationalisation. Overall, the workforce increased by 68 employees. A new Chief Sales Officer was also appointed.

Staff turnover was 12 percent in the group overall, of which 5 percent was in the European units.

Training

To assure quality and competence in the electronics assembly process, several NOTE units have long-term collaborations with external partners in soldering and electronics assembly training.

Usually, these training packages involve practical work and the certification of qualified electronic assemblers.

Several NOTE units offer opportunities for students to write their masters' dissertations.

Employee of the month

NOTE recognises when its people make special efforts, or when they serve as good ambassadors for its values. The ambition with this award is to encourage positive efforts, and make an additional contribution to a greater feeling of solidarity within the group. Simultaneously, NOTE shares actual examples of how its people conduct themselves when they perform at their best, towards customers or colleagues, for example. Each year, a winner is selected from the people recognised each month. The employee of the year for 2015 was Malle Maidla, of NOTE Pärnu.

Employee satisfaction survey

NOTE conducted another group-wide employee satisfaction survey in 2015, which attracted a high response rate. The survey consisted of 34 questions in the segments of job content, organisation, management, competence development, setting standards and working atmosphere. The outcome is being analysed and utilised in NOTE's future planning and development work.

Values

Committed

"We make it work." We are solution oriented and create a stimulating working environment, internally and for our customers.

Professional

We strive to do business in a way that is proactive, transparent and fair.

Quality focused

"Get it right from the start." There's a quality focus in everything we do.

Flexible

We are always looking for the most cost-efficient way to satisfy customer demand, adjusting setups as required.

Value creating

We take a long-term view of what we do, and financial stability is important to us. We're proud of being able to create value by safeguarding our customers' value chains.

Average number of employees by country

Christian Greinsmark Prototyping Technician, Lund, Sweden

It's my duty to realise our customers' ideas by manufacturing their prototypes. This work involves everything from contact with customers, machine programming and machine and through-hole assembly of components to finished products. The best part of my work is that it's varied, flexible, challenging, and I have great colleagues.

I really appreciate the developmental opportunities that we're offered here. I've learnt a lot during my 15 years here, which is stimulating. I started in production, then moved to machine assembly, and now working prototyping. Over time, I've also gained more responsibility and a better overview of NOTE Lund.

I think NOTE is a good employer, who keeps its people in mind, and does its best for everyone's well-being.

Average number of employees

Gender division

56%women 44%men

Sirje Paide Operator, Estonia

In the 12 years I've been working for NOTE, my duties have been assembling computers and components, conducting visual inspections and tests, painting where necessary, and assembling all parts before packaging. The most interesting part of my work is finding faults in visual inspections, and if possible, repairing them.

My knowledge of producing electronic components has increased significantly. I've also learnt a lot about working in groups, and how to be a good team player. Several colleagues have joined and left us over the years. But in both cases, it's the people that work here that make it easy and enjoyable to join us, and hard to leave.

A good employer cares about its people, and that's something I think NOTE does. Examples include the fact that NOTE has been willing to find ways to be able to keep staff on, even in hard times. We're also encouraged to maintain active lifestyles outside work. It's important that we spend time together, not only within our own departments, but also have some fun together in our leisure time. Thanks to our flexitime solution, it's also possible for me to study outside work, which I think is great!

Martin Gutberg President and VP Sales, Norrtälje, Sweden

My mission is to build and develop long-term sustainable and value-creating relationships with our customers, suppliers and employees. This also creates value for our shareholders. Our plant should be a stimulating workplace featuring happiness, drive, opportunity and openness to new ideas. Everyone should feel part of creating value for customers every day, and realising our vision of being the customer's obvious manufacturing and logistics partner.

I've developed a lot during my seven years with NOTE, having worked in sales, sourcing and logistics before gaining my current role. This has given me a good overview of our business. It's easier for me to see what's important now, and I have more self-confidence to make tough decisions.

What I like most is seeing opportunities and synergies, and making things happen. Integrating with competent people within NOTE, or our customers and suppliers, and finding new solutions, is really stimulating. We use creativity to build something bigger and better every day from small components, and this applies to production and ideas. I also enjoy the dynamic of our working environment, and often manage projects in global teams involving several NOTE units.

It's exciting to work on the products and technologies of the future today. At NOTE, we're proud of being able to make cool things for our customers—products that are important to manufacturing, wider society and people's everyday lives worldwide.

Share data and shareholders

NOTE's share price climbed by 64 percent in the year.

Share price performance

NOTE's share price increased by 64 percent in the year to a closing price of SEK 11.90 (7.25). The high in the year was SEK 12.50, on 28 December. The low of the year of SEK 7.00 was on 15 January. The stock exchange OMXSSCPI index increased by 48 percent in the year.

At the end of the year, NOTE's market capitalisation was SEK 344 (209) million and the number of shareholders were 2,660 (2,093).

Turnover

17,826,818 NOTE shares were traded over the Stockholm Stock Exchange in 2015, corresponding to a rate of turnover of 62 percent. An average of 71,023 shares were traded per day.

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 of SEK 0.70 (0.50) per share, corresponding to SEK 20.2 million, is paid to shareholders for the financial year 2015.

Trading

Listing:	Nasdaq Stockholm
Segment:	Small Cap
Sector:	Industrial Goods & Services
Ticker symbol:	NOTE
ISIN code:	SE0001161654
No. of shares as of
31 December 2015:	28,872,600

10 largest shareholders as of 31 December 2015, by holding

Name	No. of shares	Proportion of capital/votes, %
Creades AB	4,613,827	16.0
Banque Carnegie Luxembourg S.A	3,305,096	11.5
Garden Growth Capital LLC	2,315,000	8.0
Hagberg, Johan	1,987,073	6.9
Kjell-Åke Andersson with family	1,271,494	4.4
Avanza Pension	1,158,112	4.0
Nordnet Pensionsförsäkring AB	860,616	3.0
Stefan Marcus Bozzao	780,000	2.7
Thomas Krishan	644,188	2.2
Robur Försäkring	515,383	1.8
Total	17,450,789	60.5

Division by size, holdings by shareholder as of 31 December 2015

Size of holding	No. of shareholders	No. of shares	Proportion of capital/votes, %
1–500	1,069	211,845	0.7
501–2,000	838	994,461	3.4
2,001–5,000	390	1,397,462	4.8
5,001–20,000	259	2,571,787	8.9
20,001–50,000	57	1,819,492	6.3
50,001–500,000	37	4,898,258	17.0
500,001–5,000,000	10	16,979,295	58.9
Total	2,660	28,872,600	100.0

Share price 2011–2015

Share capital history

		Increase in	Increase in share	Total no.	Total share	Quotient value
Year	Transaction	no. of shares	capital (SEK)	of shares	capital (SEK)	(SEK)
1999	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

Formal Annual Accounts

FORMAL ANNUAL ACCOUNTS

Report of the Directors 23 Five-year summary 28 Consolidated Financial Statements 30 Notes on the Consolidated Financial Statements 34 Parent Company's Financial Statements 46 Notes on the Parent Company's Financial Statements 50 Corporate Governance Report 54 Auditor's report 63

Addresses 64

Report of the Directors

OPERATIONS—GENERAL

NOTE is one of the leading Northern European manufacturing and logistics partners for production of electronicsbased products. NOTE has especially strong market positioning in the high mix/low to medium volume market segment, i.e. for products in short to medium-sized batches that require high technical competence and flexibility. NOTE produces PCBAs, sub-assemblies and box build products. NOTE's offering covers the complete product lifecycle, from design to after-sales.

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

OPERATIONS IN 2015

NOTE made further advances against the competition in 2015 on a fairly stable European market. NOTE lifted sales, increased profitability and continued to rationalise the utilisation of working capital.

Key reasons for NOTE's advanced positioning are the positive progress several customers are making. NOTE secured deeper partnerships, won new business and product generations in an already-strong customer base, in Sweden and internationally. Additionally, in recent years, NOTE secured several new business accounts and created new partnerships, progressively resulting in batch production and increased volumes. NOTE intensified its strategy work in close dialogue with customers, with the expressed ambition of increasing market shares further and accelerating its profitable growth.

NOTE is working hard to keep evolving as a fast-moving and responsive business partner for customers. This work is founded on its values—being committed, professional, quality focused, flexible and value creating.

Given fairly stable conditions on most markets in Europe, NOTE reported sales

growth of 16 percent in 2015, of which currency effects, primarily in the USD and EUR, comprised some 7 percent.

The demand for NOTE's services in China has been progressing positively for several years. Accordingly, as it did just over a year ago, NOTE expanded manufacturing capacity in China by adding another advanced surface mounting facility in the autumn. Early in the year, NOTE sold its mechanics production unit in Järfälla near Stockholm. Instead, to satisfy demand in the growing box build segment, NOTE is continuing to develop partnerships with carefully selected suppliers in segments such as mechanics, plastics and cabling. NOTE's initiative to expand its services portfolio in the medical devices segment in Sweden has already resulted in several new business accounts and deals. NOTE is working hard to ensure that these assignments progress well. Additionally, NOTE is taking a more active and structured approach to addressing some major European markets where it does not already have a proprietary presence.

The combination of higher sales with continued stable costs contributed to improved profitability, as planned. Adjusted for non-recurring expenses relating to the change of CEO, operating profit for 2015 increased by SEK 17.2 million to SEK 49.0 million. Calculated in the same way, NOTE's operating margin expanded by 1.1 percentage points to 4.4 percent.

Effective management of working capital is a critical success factor in NOTE's business. Accordingly, NOTE conducts active improvement work to increase the efficiency of capital tied up in stock. This is achieved through continued focused efforts, and on a more long-term and industrially appropriate basis, by developing more intelligent logistics solutions, cutting lead-times and securing deeper partnerships with strategic suppliers. Accordingly, it is positive that despite higher sales in the

year, NOTE succeeded in reducing stock value by 8 percent. There is more to do in the working capital segment to reduce complexity and overall cost in partnership with customers and suppliers.

The greater need for working capital that results from sales growth obviously puts pressure on cash flow and liquidity. What is positive is that in the fourth quarter, NOTE achieved cash flow after investments of SEK 25.4 (10.9) million. Over the full year, cash flow was SEK 5.2 (2.5) million. NOTE's liquidity position is good, and its Balance Sheet remains one of the sector's strongest, with an equity to assets ratio of 43.3 percent.

SALES AND RESULTS OF OPERATIONS 2015 Group

Sales

The demand for NOTE's services in the year can be viewed as remaining stable on most of NOTE's markets in Europe. Sales growth was achieved in both operating segments, Nearsourcing Centres and Industrial Plants. In year-on-year terms, NOTE achieved sales gains in Sweden, Finland and the UK. Sales decreased in Norway, mainly as a result of stock redimensioning and the fairly slow progress of a few individual customers.

NOTE endeavours to secure long-term customer relations and partnerships. NOTE achieved sustained positive sales performance and closer collaborations on new product generations with several customers in its already-strong customer base.

NOTE has also been working extensively for some time with the aim of expanding its customer base further, so it can lift sales and capacity utilisation in the group's units. As a result of these marketing initiatives, NOTE secured a fairly high number of new customer relationships. Most of these new customers are European SMEs. Several of these partnerships, which usually start with industrialisation services (service

sales, prototyping and pilot batches), have now resulted in batch production and higher volumes.

Sales were SEK 1,121.5 (964.0) million, corresponding to sales growth of 16 percent. Adjusted for currency effects, growth was some 9 percent. The increased sales were sourced from new product sales to current customers and increased volumes on new business accounts gradually feeding through.

Direct sales from Industrial Plants in Estonia and China continued to grow. These sales, mainly to customers in Europe, and other markets mainly in Asia, maintained positive progress, representing 37 (29) percent of total sales. To some extent, the increase was an effect of the transfer of account management responsibility from Nearsourcing Centres to Industrial Plants, a natural component of NOTE's business model.

NOTE sells to a large customer base, essentially active in the engineering, communication and security industries in northern Europe.

NOTE's 15 largest customers in sales terms represented 57 (57) percent of the group's sales. As in the previous year, no single customer (group) represented more than some 10 (8) percent of total sales.

The group's order book, which consists of a combination of fixed orders and customer forecasts, supported sustained positive sales growth at the end of the period.

Results of operations

As part of NOTE's ambition to create the potential for further profitable sales growth, it is conducting methodical improvement work at all its units. This work is conducted locally at each unit and through a number of group-wide projects. Over and above initiatives to expand and develop its customer offering, its focus is on measures that improve delivery precision and quality, as well as cost and working capital rationalisation.

Primarily as a result of continued rationalisation, and a higher share of value-added being created in Industrial Plants in Estonia and China, the cost increase was limited to some 10 percent for comparable units. Some 4 percentage points were the effect of a weaker Swedish currency. As a result of the stable cost trend, combined with higher sales, gross margin expanded by 0.3 percentage points to 10.9 (10.6) percent.

Adjusted for expenses related to the change of CEO, continued sales and marketing initiatives contributed to sales and administration overheads increasing by 9 percent. Overheads were 6.7 (7.1) percent of sales.

Other operating expenses/income, which normally consist of revaluations of foreign currency assets and liabilities, were SEK 1.5 (–1.7) million. NOTE oper ates in a multinational environment and conducts fairly extensive management of foreign currencies, primarily EUR and USD. It makes continuous efforts to limit the risks inherent in currency fluctua tions. In 2014, other operating expenses included a provision of SEK 4.0 million for the sale of the mechanics unit at Järfälla, near Stockholm, in early 2015.

Operating profit in the year was SEK 45.2 (31.8) million. The underlying operating profit, adjusted for expenses related to the change of CEO, improved by SEK 17.2 million to SEK 49.0 (31.8) million, a 1.1 percentage point operating margin increase to 4.4 (3.3) percent.

The greater need for working capital resulting from NOTE's growth contributed to net financial income/expense decreas ing to SEK –5.4 (–3.0) million.

Profit after financial items was SEK 39.8 (28.8) million, corresponding to a profit margin of 3.5 (3.0) percent. Profit after tax was SEK 34.6 (24.6) million, or SEK 1.20 (0.85) per share. The tax expense for the year corresponded to 13 (15) percent of profit before tax.

Parent company

The parent company, NOTE AB (publ), is primarily focused on the management, coordination and development of the group. Revenue for the year was SEK 29.9 (37.1) million, and mainly relates to intragroup services. The revenue decrease

mainly stems from simplified treatment of group-wide expenses, by which the rev enues and expenses of goods sold reduce by the same amount. The operating profit for the fourth quarter includes expenses related to the change of CEO of SEK 3.8 million. Net financial income/expense for the period includes SEK 7.0 (3.6) million of dividends received from subsidiaries, as well as a net of group contributions received and paid of SEK 15.9 (–4.4) million. Profit/loss after tax was SEK 13.1 (–0.2) million.

In the first quarter of 2015, the parent company decided to transfer to adopting the exemption for intangible assets stated in RFR 2, which permits development expenditure that pursuant to IAS 38 p. 57 should be recognised as an asset in the Balance Sheet, to be expensed in the period it arises instead. Instead, capitalisation is in the group. The net effect of previous year's capitalisation reduced parent company retained profit by SEK 5.5 million.

FINANCIAL POSITION, CASH FLOW AND INVESTMENTS Cash flow

Competing successfully in the high mix/low to medium volume market segment sets high standards on flexible production, effective supply of materials and the ability to deliver custom logistics solutions. Accordingly, NOTE faces a major challenge in continuously improving its business methods and internal processes in these segments. This challenge is especially apparent during new project start-ups and in rapid demand upturns and downturns, and relates mainly to the complexity of materials supply and changing lead-times of electronic components.

The global market for electronic components can be considered fairly cyclical. Progress in the year, as in the previous year, was fairly stable, and with good supply of components. This benefitted NOTE's materials planning and logistics.

Increased manufacturing and sales volumes continued to set challenging demands on flexibility at the sourcing and production stages. The combination of focused initiatives and implementation of new logistics solutions had a positive effect on stock, especially in the final quarter of the year. Capital tied up in stock, including prepayments for materials, decreased by 8 percent in the year. Considering the higher manufacturing and sales volumes, NOTE achieved a significantly higher rate of stock turnover, as planned.

Accounts receivable—trade were 25 percent higher at year-end than at the previous year-end. Essentially, the increase is linked to higher sales. Sustained focused initiatives meant that the number of days of credit remained at approximately the same level as the previous year.

Accounts payable—trade, which mainly relate to sourced electronic components and other production materials, were up 7 percent on the previous year-end. Essentially, this increase relates to the continued evolution of NOTE's partnership model for its suppliers, which concentrates sourcing on fewer, quality-assured suppliers, and has contributed to more efficient utilisation of working capital.

Despite a greater need for working capital, which is a consequence of sales growth, cash flow after investments for the year was SEK 5.2 (2.5) million, corresponding to SEK 0.18 (0.09) per share.

Equity to assets ratio

According to NOTE's externally communicated financial targets, its equity to assets ratio should not fall below 30 percent. The equity to assets ratio at the end of the period was 43.3 (44.1) percent. The dividend payment in the second quarter of SEK 14.4 million reduced the equity to assets ratio by some 2 percentage points.

Liquidity

NOTE is maintaining a sharp focus on measures to further improve the group's liquidity and cash flow. The group's available cash, including unutilised overdraft facilities, were SEK 104.7 (92.0) million at year-end. Factored accounts receivable—trade were some SEK 121 (116) million.

Investments

Capital expenditure on fixed assets amounted to SEK 22.8 (24.3) million, corresponding to 2.0 (2.5) percent of sales. SEK 9.3 (11.1) million of investments in the year were financed through finance leases. To satisfy the increased demand for electronics manufacturing in China, NOTE brought another advanced surface mounting line on stream in the fourth quarter. Otherwise, investments consisted mainly of projects to increase efficiency and quality.

Depreciation and amortisation according to plan was SEK 12.8 (8.4) million. The increase relates mainly to the previous year's capacity expansion at NOTE's Industrial Plant in China. NOTE also commenced depreciation of its new business-specific ERP system during the first quarter, which will be progressively brought into production at the group's units. The ambition is to create the potential for further rationalisation, mainly in the cost and working capital segments, by harmonising internal processes and systems support at the group's units.

RESEARCH AND DEVELOPMENT ACTIVITIES

As a manufacturing partner, NOTE is closely involved in its customers' development processes through its operations, including contributing to the industrialisation phase and guiding and developing manufacturing processes for its customers. This work is continuous and not reported separately in the accounts.

NOTE continued to work on developing the group-wide ERP system in the year. The costs, which satisfy the criteria for capitalised expenditure, have been capitalised in the Balance Sheet.

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 percent, Creades AB with 16.0 (16.0) percent of the votes and Banque Carnegie Luxembourg S.A. with 11.5 (11.5) 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 20-21.

HUMAN RESOURCES

The average number of full-time employees was 940 (893) in the year, 523 (491) of them being women and 417 (402) men. At year-end, NOTE had 964 (896) employees.

Work attendance in the group was 96.4 (96.2) percent of regular working hours and staff turnover was 12.0 (12.2) percent.

For more information on employees, see Operations on pages 18–19.

GUIDELINES FOR REMUNERATING SENIOR MANAGERS

Senior managers means the members of NOTE's Group management.

Remuneration to NOTE's management for 2015 was decided in accordance with The Board of Director's guidelines which were adopted by the AGM 2015.

For 2016, 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 targets, 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 remueration over 24 months. The Board is entitled to depart from these guidelines if there are special circumstances in individual cases.

For more information on remuneration, see Note 8, Employees, personnel expenses and remuneration to senior managers, on page 38.

ENVIRONMENT Reporting obligation and certification

The group conducts business in one Swedish subsidiary, which holds permits compliant with the Swedish Ordinance on Environmentally Hazardous Activities & Health (reference SFS 1998:899). Two facilities are subject to permits and one Swedish facility is partially subject to a permit.

All NOTE's production units 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 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 SVHC materials.

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

SIGNIFICANT RISKS OF OPERATIONS Operational risks

NOTE is one of the leading northern European manufacturing and logistics partners for production of electronicsbased products. It has especially strong market positioning in the high mix/low

to medium volume market segment, i.e. for products in small to medium-sized batches that require high technology competence and flexibility. NOTE produces PCBAs, sub-assemblies and box build products. The customer offering covers complete product lifecycles, from design to after-sales. 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 risks, such as borrowing and interest risk, currency risk, as well as liquidity and credit risks. Essentially, the group is financed 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.

Invoicing is in Swedish krona and foreign currency, mainly USD and EUR. Otherwise, Exchange rate risks lie mainly in the sourcing of production materials. Net exposure in foreign currency is essentially hedged 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 financial risks, see Operations on page 14 and Note 24 Financial risks and finance policy, on page 44.

POST-BALANCE SHEET EVENTS

Stefan Hedelius takes up his position as NOTE's new CEO & President effective 7 March 2016. He succeeds Peter Laveson. Henrik Nygren will continue as Interim CEO & President until Stefan Hedelius takes up his position.

EXPECTATIONS OF FUTURE PROGRESS

NOTE's order book continues to corroborate positive sales performance. NOTE is working hard to retain and develop the working methods and attitudes it has introduced to strengthen customer relationships, secure new business, continue its rationalisation work, and succeed in utilising working capital.

PROPOSED APPROPRIATION OF PROFITS

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

Total	90,860,488
Carried forward	70,649,668
Distributed to shareholders	20,210,820
Total	90,860,488
Profit for the year	13,121,107
Brought forward	77,739,381

BOARD OF DIRECTORS' COMMENTS ON THE PROPOSED DIVIDEND

Against the background of NOTE's profit performance, the Board of Directors proposes a dividend payment to the shareholders of SEK 0.70 (0.50) per share, corresponding to SEK 20.2 (14.4) million. The proposed dividend to shareholders amounts to 22 percent of the company's profit as of the balance sheet date and reduces the group equity ratio from 43.3 percent to 40.2 percent calculated on year-end figures. The Board of Directors considers that the proposed dividend conforms to The Swedish Companies Act's caution rule and is justified on the basis of stipulations relating to the company's equity, investment requirement, liquidity and financial position and the risks associated with the nature and scale of its operations.

With regard to NOTE's results of operations and financial position otherwise, please refer to the Income Statement and Balance Sheet and the Notes to the Financial Statements below. NOTE's financial year covers the period 1 January to 31 December inclusive. All amounts are in SEK 000 unless otherwise indicated.

Five-year summary

SEK m
Consolidated Income Statement	2015	2014	2013	2012	2011
Net revenue	1,121.5	964.0	907.0	1,029.2	1,208.9
Gross profit	122.5	102.4	72.5	92.6	133.0
Operating profit	45.2	31.8	9.0	25.9	64.4
Profit before tax	39.8	28.8	1.2	19.1	56.3
Profit for the year	34.6	24.6	0.7	12.6	39.4
Consolidated Balance sheet
ASSETS
Non-current assets	156.7	154.1	134.5	134.8	147.8
Current assets	506.5	458.8	406.3	441.2	485.5
TOTAL ASSETS	663.2	612.9	540.8	576.0	633.3
EQUITY AND LIABILITIES
Equity	287.1	270.2	238.1	260.5	259.4
Non-current liabilities	12.1	12.0	6.7	7.0	5.5
Current liabilities	364.0	330.7	296.0	308.5	368.4
TOTAL EQUITY AND LIABILITIES	663.2	612.9	540.8	576.0	633.3
Consolidated Cash Flow Statement
Cash flow from operating activities	18.7	15.7	4.2	98.1	37.5
Cash flow from investing activities	–13.5	–13.2	–6.2	–1.1	19.0
CASH FLOW AFTER INVESTING ACTIVITIES	5.2	2.5	–2.0	97.0	56.5
Cash and cash equivalents at beginning of period	35.2	40.8	70.7	29.3	33.7
Cash flow before financing activities	5.2	2.5	–2.0	97.0	56.5
Cash flow from financing activities	7.3	–10.6	–28.2	–54.9	–61.2
Exchange rate difference in cash and cash equivalents	–0.4	2.5	0.3	–0.7	0.3
CASH AND CASH EQUIVALENTS AT END OF YEAR	47.3	35.2	40.8	70.7	29.3
Consolidated key figures
Earnings per share, SEK	1.20	0.85	0.02	0.44	1.36
Cash flow per share after investing activities, SEK	0.18	0.09	–0.07	3.36	1.96
Market capitalisation at end of period	344	209	188	218	191
Operating margin, %	4.0	3.3	1.0	2.5	5.3
Profit margin, %	3.5	3.0	0.1	1.9	4.7
Return on operating capital, %	12.9	10.1	3.1	7.9	17.7
Return on equity, %	12.4	9.7	0.3	4.9	16.5
Operating capital (average)	351.7	314.7	291.4	328.6	364.5
Interest-bearing net debt	81.9	64.3	56.8	27.4	109.9
Equity to assets ratio, %	43.3	44.1	44.0	45.2	41.0
Net debt/equity ratio, multiple	0.3	0.2	0.2	0.1	0.4
Interest coverage ratio, multiple	5.3	4.8	1.1	2.9	5.3
Capital turnover rate (operating capital), multiple	3.2	3.1	3.1	3.1	3.3

Sales per employee, SEK 000 1,193 1,080 1,071 1,164 1,287

Profit margin 2015

Equity to assets ratio 2015

43.3%

Cash flow per share 2015

0.18SEK

For Financial definitions, see Note 30 on page 45.

Financial accounts

NOTE ANNUAL REPORT 2015 29

Consolidated Income Statement

SEK 000	NOTE	2015	2014
Net revenue	2, 3	1,121,500	964,022
Cost of goods sold and services		–998,993	–861,599
Gross profit		122,507	102,423
Selling expenses		–46,765	–39,081
Administrative expenses		–31,992	–29,819
Other operating revenue	4	23,707	14,795
Other operating expenses	5	–22,203	–16,537
Operating profit	3, 6, 7, 8, 9, 27	45,254	31,781
Financial income		3,826	4,588
Financial expenses		–9,260	–7,545
Net financial income/expense	10	–5,434	–2,957
Profit before tax		39,820	28,824
Tax	11	–5,184	–4,242
Profit for the year		34,636	24,582
Basic and diluted earnings per share, SEK	17	1.20	0.85

Consolidated Statement of Other Comprehensive Income

SEK 000	2015	2014
Profit for the year	34,636	24,582
Other comprehensive income
Items that can be subsequently reversed in the Income Statement:
Exchange rate differences	–3,007	7,686
Cash flow hedges	–421	405
Tax on cash flow hedges and exchange rate difference	209	–649
Total other comprehensive income, net after tax	–3,219	7,442
Total comprehensive income for the year	31,417	32,024

Consolidated Balance Sheet

SEK 000	NOTE	31 Dec 2015	31 Dec 2014
Assets
Intangible assets	12	80,371	80,107
Property, plant and equipment	3, 13	65,930	59,086
Long-term receivables	14	1,462	1,110
Deferred tax assets	11	8,898	13,794
Total non-current assets		156,661	154,097
Inventories	3, 15	189,863	205,609
Accounts receivable—trade	23, 24	252,110	201,781
Tax receivables		5,508	5,732
Other receivables	14, 23	3,485	3,114
Prepaid expenses and accrued income	16	8,331	7,461
Cash and cash equivalents	23, 26	47,298	35,160
Total current assets		506,595	458,857
TOTAL ASSETS		663,256	612,954
Equity	18
Share capital		14,436	14,436
Other paid-up capital		217,862	217,862
Reserves		–1,556	1,663
Retained profit		56,399	36,199
Total equity		287,141	270,160
Liabilities
Long-term interest-bearing liabilities	19, 23, 24	9,744	9,537
Deferred tax liabilities	11	2,359	2,570
Total non-current liabilities		12,103	12,107
Current interest-bearing liabilities	19, 23, 24	119,466	89,965
Accounts payable—trade	23, 24	175,044	163,859
Tax liabilities		310	3,509
Other liabilities	21	21,361	22,181
Accrued expenses and deferred income	22	47,819	47,161
Other provisions	20	12	4,012
Total current liabilities		364,012	330,687
TOTAL EQUITY AND LIABILITIES		663,256	612,954

For information on the group's pledged assets and contingent liabilities see Note 25 on page 45.

Consolidated Statement of Changes in Equity

SEK 000	Share capital	Other paid-up capital	Reserves	Retained profit	Total equity
Opening equity, 1 Jan 2014	14,436	217,862	–5,779	11,617	238,136
Comprehensive income
Profit for the year				24,582	24,582
Other comprehensive income
Exchange rate differences			7,686		7,686
Cash flow hedges			405		405
Tax on cash flow hedges and exchange rate difference			–649		–649
Total comprehensive income			7,442	24,582	32,024
Dividend				–	–
Closing equity, 31 Dec 2014	14,436	217,862	1,663	36,199	270,160

SEK 000	Share capital	Other paid-up capital	Reserves	Retained profit	Total equity
Opening equity, 1 Jan 2015	14,436	217,862	1,663	36,199	270,160
Comprehensive income
Profit for the year				34,636	34,636
Other comprehensive income
Exchange rate differences			–3,007		–3,007
Cash flow hedges			–421		–421
Tax on cash flow hedges and exchange rate difference			209		209
Total comprehensive income			–3,219	34,636	31,417
Dividend				–14,436	–14,436
Closing equity, 31 Dec 2015	14,436	217,862	–1,556	56,399	287,141

Consolidated Cash Flow Statement

SEK 000	NOTE	2015	2014
	26
Operating activities
Profit before tax		39,820	28,824
Reversed depreciation and amortisation		12,835	8,361
Other non-cash items		–1,066	–1,400
Tax paid		–4,137	–3,950
		47,452	31,835
Change in working capital
Increase (–)/decrease (+) in inventories		13,233	–41,909
Increase (–)/decrease (+) in trade receivables		–53,904	6,050
Increase (+)/decrease (–) in trade liabilities		11,979	19,739
		–28,692	–16,120
Cash flow from operating activities		18,760	15,715
Investing activities
Purchase of property, plant and equipment		–11,040	–9,340
Sale of property, plant and equipment		–	161
Purchase of intangible assets		–2,495	–4,046
Sale of financial assets		–	–
Cash flow from investing activities		–13,535	–13,225
Financing activities
Borrowings		21,755	–
Amortisation of loans		–	–10,590
Dividends paid		–14,436	–
Cash flow from financing activities		7,319	–10,590
Cash flow for the year		12,544	–8,100
Cash and cash equivalents
At beginning of period		35,160	40,731
Cash flow before financing activities		5,225	2,490
Cash flow from financing activities		7,319	–10,590
Exchange rate difference in cash and cash equivalents		–406	2,529
Cash and cash equivalents at end of period		47,298	35,160

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 restatements of following years' financial statements are reviewed in more detail in Note 28.

The following accounting principles for the group have been applied consistently for all periods presented in the consolidated financial statements, 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 18 February 2016. The Consolidated Income Statement and Balance Sheet will be subject to adoption at the AGM (Annual General Meeting) on 19 April 2016. 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.

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 2015 or later are expected to have any material impact on the group.

New standards and interpretation statements that have not yet been applied by the group

A number of new standards and interpretation statements come into effect for financial years beginning after 1 January 2015 and have not been applied to the preparation of these financial statements. None are expected to have any material impact on the consolidated financial statements apart from the following:

IFRS 9 "Financial Instruments" deals with the classification, measurement and recognition of financial assets and liabilities and replaces those parts of IAS 39 that deal with the classification and measurement of financial instruments. The standard retains a mixed measurement model that has been simplified in some respects. There will be three measurement categories; amortised cost, fair value through other comprehensive income and fair value through profit or loss. How an instrument is classified depends on the company's business model and the characteristics of the instrument. IFRS 9 also implements a new model for measuring credit loss reserves that is based on expected credit losses. For financial liabilities, the classification and measurement does not change apart from in the case when a liability is recognised at fair value through profit or loss based on the fair value option. IFRS 9 reduces the requirement for applying hedge accounting by replacing the 80-125 criterion with a requirement for an economic relationship between the hedging instrument and the hedged item, and that the hedging ratio should be the same as used in risk management. The standard should be applied for financial years beginning 1 January 2018. Prospective application is permitted. The EU has not yet endorsed this standard. The group has not yet evaluated the impact of the implementation of this standard.

IFRS 15 "Revenue from Contracts with Customers" regulates the recognition of revenue. The basic principle of IFRS 15 is that a company recognises revenue in the manner that best reflects the transfer of the goods or service offered to the customer. This recognition is conducted with the aid of a five-step model. The principles that IFRS 15 is based on should give the user of financial statements more useful information regarding the company's revenues. This increased liability of disclosure requires the presentation of information regarding revenue type, the timing of settlement, uncertainty associated with revenue recognition and cash flow relating to the company's customer contracts. According to IFRS 15, revenue should be recognised when the customer gains control over the sold good or service, and is able to use or receive benefit from that good or service. IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction Contracts, as well as the associated SIC and IFRIC interpretation statements. IFRS 15 comes into effect on 1 January 2018. Prospective application is permitted. The EU has not yet endorsed this standard. The group has not yet evaluated the impact of the implementation of this standard.

In January 2016, the IASB published a new lease standard, IFRS 16 "Leases," which will replace IAS 17 Leases and the associated SIC and IFRIC interpretation statements. This standard requires that the assets and liabilities relating to all lease arrangements, with certain exceptions, are recognised in the Balance Sheet. This recognition is based on the approach that the lessee is entitled to use the asset for a specific period of time and bears the simultaneous liability to pay for this entitlement. The standard is applicable to financial years beginning 1 January 2019. Prospective application is permitted. The EU has not yet endorsed this standard. The group has not yet evaluated the effects of IFRS 16.

None of the other IFRS or IFRIC interpretation statements that have yet to come into effect are expected to have any material impact on the group.

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 13 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 recognised in the Income Statement.

Transactions to be eliminated on consolidation

Receivables from and liabilities to group companies, revenues or expenses and unrealised gains or losses arising from group transactions, are fully eliminated when preparing the consolidated financial statements.

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 in 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 obligation 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 asset 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 non-derivative financial assets 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 receivable 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.

Regarding NOTE's factoring financing in Estonia, 90 percent of the risk in accounts receivable—trade has been transferred to the creditor. This financing is also reported as factoring, in accordance with applicable regulations.

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 are 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 sale, or when no future economic rewards are expected from using or disposing of/selling the asset. Profits or losses arising upon disposal or sale 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 retired 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 combination 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.

In 2014, the group commenced implementation of a new ERP system whose cost was covered by purchased consulting hours and time allocated to the project internally, which satisfies the criteria for capitalised expenditure.

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	10 years

Capitalised expenditure for process development	3–5 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 charged 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 Obligations 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 an obligation, and it is likely that an outflow of economic resources will be necessary to fulfil the obligation and the amount can be reliably measured. Provisions are measured at the present value of the amounts expected to be required to fulfil the obligation.

Restructuring program and other non-recurring expenses

A restructuring program provision is recognised when the group has determined an executable and formal restructuring program plan, and the restructuring program 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 the reporting date, 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 recognition 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 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 com- mitment can be reliably measured.

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 largely manufacturing units in Estonia and China. Other units consist of business-support, group-wide operations.

	Other units and
		Nearsourcing Centre		Industrial Plants	eliminations			Total
	2015	2014	2015	2014	2015	2014	2015	2014
NET REVENUE
External net revenue	704,666	683,464	416,834	280,558	–	–	1,121,500	964,022
Internal net revenue	4,484	9,395	147,103	169,513	–151,587	–178,908	–	–
Net revenue	709,150	692,859	563,937	450,071	–151,587	–178,908	1,121,500	964,022
OPERATING PROFIT
Operating profit	25,160	10,879	30,084	25,662	–9,990	–4,760	45,254	31,781
Operating profit	25,160	10,879	30,084	25,662	–9,990	–4,760	45,254	31,781
Financial income and expenses—net							–5,434	–2,957
Profit before tax							39,820	28,824
SIGNIFICANT ASSETS BY SEGMENT
Property, plant and equipment	25,494	24,906	40,369	34,180	67	0	65,930	59,086
Inventories	94,650	96,297	95,213	109,312	–	0	189,863	205,609
External accounts receivable–trade	124,875	127,697	126,877	73,870	358	214	252,110	201,781
Total assets	388,122	388,085	284,733	247,194	–9,599	–22,325	663,256	612,954
OTHER INFORMATION
Investments in property, plant and equipment	6,131	5,077	14,044	15,212	80	0	20,255	20,289
Depreciation and amortisation	–6,650	–4,969	–6,172	–3,392	–13	0	–12,835	–8,361
Other non-cash items (excl. depreciation and amortisation)	–4,116	3,130	2,679	–256	371	–4,274	–1,066	–1,400
Average number of employees	350	373	573	505	17	15	940	893

NOTE's registered office is in Sweden. Revenues from external customers in Sweden were SEK 452.2 (387.8) million, and from other countries SEK 669.3 (576.2) million. Generally speaking, NOTE has a diversified customer base where no single customer represents more than 10 percent of total group sales. Non-current assets in Sweden (excluding financial) were SEK 58.1 (57.5) million, in Estonia SEK 17.6 (18.1) million, the UK SEK 5.1 (4.9) million, Norway SEK 5.9 (6.3) million and in other countries SEK 56.4 (48.5) million as of the reporting date. Deferred tax assets in Sweden were SEK –0.2 (4.1) million, in Norway SEK 3.8 (4.4) million, the UK SEK 4.2 (4.2) million and other countries SEK 1.1 (1.1) million as of the reporting date.

NOTE 4 Other operating revenue
	2015	2014
Exchange gains on trade receivables/liabilities	21,509	12,860
Other	2,198	1,935
Total	23,707	14,795

NOTE 5 Other operating expenses

	2015	2014
Exchange losses on trade receivables/liabilities	–21,167	–12,429
Other	–1,036	–4,108
Total	–22,203 –16,537

NOTE 6 Operating expenses by type

	2015	2014
Cost of goods and materials	–695,750	–574,118
Personnel expenses	–259,865	–247,396
Depreciation and amortisation	–12,835	–8,361
Other	–131,503	–117,161
Total	–1,099,953	–947,036

NOTE 7 Operating leases

Premises rent	31 Dec 2015	31 Dec 2014
Lease arrangements payable within one year	15,591	15,904
Lease arrangements payable between one and five years	26,125	41,967
Total	41,716	57,871

Group costs for premises rent in 2015 were 15,828 (15,346).

Other operating leases	31 Dec 2015	31 Dec 2014
Lease arrangements payable within one year	2,733	1,973
Lease arrangements payable between one and five years	3,589	4,323
Total	6,322	6,296

Group costs for other operating leases were 2,921 (2,778) in 2015.

NOTE 8 Employees, personnel expenses and remuneration to senior management

Expenses for employee benefits	2015	2014
Salaries and benefits	–196,640	–188,294
Pension expenses, defined-benefit plans	–	–
Pension expenses, defined-contribution plans	–14,811	–10,937
Social security contributions	–48,414	–48,165
Total	–259,865	–247,396

Alecta

The commitments for retirement and survivors' pensions for salaried employees in Sweden are largely insured through a policy with Alecta. Statement UFR3 from The Swedish Financial Reporting Board, Classification of ITP plans financed by insurance in Alecta, defines this as a defined-benefit multi-employer plan. For the financial year 2015, 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 2.8 (2.5) million. The charges for next year are estimated at some SEK 2.8 million. The group's share of total expenditure to the plan is negligible and is less than 0.010 percent. Alecta's surplus can be divided between policyholders and/or beneficiaries. At year-end 2015, Alecta's surplus, expressed as a collective consolidation ratio was 148 (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.

	2015	2014
Expenses for defined-contribution plans*	–14,811	–10,937

*Includes 2,839 (2,550) for an ITP plan insured with Alecta.

Senior management's remuneration

		Basic salary,	Performance
Remuneration and other benefits, 2015		Directors' fees	related pay	Other benefits	Pension expenses	Total
Chairman of the Board:	Kristian Teär	–300	–	–	–	–300
Board members:	Kjell-Åke Andersson	–100	–	–	–	–100
	Bruce Grant	–100	–	–	–	–100
	Bahare Hedenstierna, elected 22 April 2015	–67	–	–	–	–67
	Stefan Johansson	–160	–	–	–	–160
	Henry Klotz	–100	–	–	–	–100
	Daniel Nyhrén	–100	–	–	–	–100
CEO:	Peter Laveson, left after year-end	–4,207	–281	–65	–942	–5,495
Other senior management (3 people)*		–3,273	–485	–177	–1,048	–4,983
Total		–8,407	–766	–242	–1,990	–11,405

Comments on the table:

Salary, benefits and Directors' fees are remuneration charged to consolidated profit for 2015. Unpaid remuneration to the departing CEO amounts to SEK 2.7 (–) million at the end of the year, of which SEK 0.5 (–) million was benefits and pensions. There was a profitability-based, performance-related remuneration program for the CEO, senior managers, subsidiary Presidents and other key staff, during the financial year 2015. This program had 19 participants. In 2015, an estimated outcome of SEK 1.6 million excluding social security contributions, was charged to the group's profit, of which SEK 0.8 million related to senior managers. The Report of the Directors states the details of the remuneration guidelines for senior managers.

*The total number of senior managers at the end of the year. A total of two people for the first half-year. A total of three people for the second half-year.

Senior management's remuneration

Remuneration and other benefits, 2014		Basic salary, Directors' fees	Performance related pay	Other benefits	Pension expenses	Total
Chairman of the Board:	Kristian Teär, elected 25 April 2014	–200	–	–	–	–200
Board members:	Kjell-Åke Andersson	–100	–	–	–	–100
	Bruce Grant	–100	–	–	–	–100
	Stefan Johansson	–160	–	–	–	–160
	Henry Klotz	–100	–	–	–	–100
	Daniel Nyhrén, elected 25 April 2014	–67	–	–	–	–67
	Stefan Charette, left 25 April 2014	–100	–	–	–	–100
CEO:	Peter Laveson	–1,914	–417	–65	–447	–2,843
Other senior management (2 people)		–2,809	–646	–170	–906	–4,531
Total		–5,550	–1,063	–235	–1,353	–8,201

Comments on the table:

Salary, benefits and Directors' fees are remuneration charged to consolidated profit for 2014. There was a profitability-based, performance-related remuneration program for the CEO, senior managers, subsidiary Presidents and other key staff, during the financial year 2014. This program had 16 participants. In 2014, an estimated outcome of SEK 2.2 million excluding social security contributions, was charged to the group's profit, of which SEK 1.1 million related to senior managers. The Report of the Directors states the details of the remuneration guidelines for senior managers.

Group total	940	44%	893	45%
China	335	41%	266	41%
Estonia	237	28%	240	25%
Finland	43	62%	41	62%
UK	32	50%	31	48%
Norway	40	48%	39	46%

Average number of employees 2015 Of which men 2014 Of which men Sweden 253 60% 276 64%

	2015	2014
Division between sexes in group management	Share of women	Share of women
Board members, Presidents	28%	27%
Other senior management, 3 (2) people*	0%	0%

*The total number of senior managers at the end of the year. A total of two people for the first half-year. A total of three people for the second half-year.

NOTE 9 Auditors' fees and reimbursement

	2015	2014
PwC
Auditing assignment	–910	–930
Auditing in addition to audit assignment	–	–
Tax consultancy	–	–28
Other services	–227	–58
Other Auditors
Auditing assignment	–438	–273
Auditing in addition to audit assignment	–31	–
Tax consultancy	–	–115
Other services	–673	–609

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

NOTE 11 Tax

Reported in Income Statement	2015	2014	Reconciliation of effective tax	%	2015	%	2014
Current tax expense (–)/tax revenue (+)			Profit before tax		39,820		28,824
Tax expense for the period	–2,867	–3,937	Tax at applicable rate for parent company	–22.0 –8,760			–22.0 –6,341
Adjustment of tax attributable to previous year	1,644	–868	Effect of other tax rates for foreign subsidiaries	2.9	1,135	1.5	428
			Non-deductible expenses	–1.3	–522	–0.5	–147
Deferred tax expense (–)/tax revenue (+)			Non-taxable revenue	9.4	3,732	9.0	2,597
Deferred tax relating to temporary differences/ appropriations	–1,342	670	Un-reported tax revenue on loss for the year		–5.4 –2,139	–	–
Deferred tax revenue/expense in capitalised/utilised			Tax attributable to utilised portion of loss carry-forwards	0.1	32	0.4	123
tax value in loss carry-forward	–2,541	–28	Tax attributable to previous year	3.9	1,566	–3.3	–947
Adjustment of tax attributable to previous year	–78	–79	Other	–0.6	–228	0.2	45
Total reported tax in group	–5,184	–4,242	Total reported tax in group	–13.0 –5,184			–14.7 –4,242

Reconciliation of effective tax	%	2015	%	2014
Profit before tax		39,820		28,824
Tax at applicable rate for parent company		–22.0 –8,760		–22.0 –6,341
Effect of other tax rates for foreign subsidiaries	2.9	1,135	1.5	428
Non-deductible expenses	–1.3	–522	–0.5	–147
Non-taxable revenue	9.4	3,732	9.0	2,597
Un-reported tax revenue on loss for the year		–5.4 –2,139	–	–
Tax attributable to utilised portion of loss carry-forwards	0.1	32	0.4	123
Tax attributable to previous year	3.9	1,566	–3.3	–947
Other	–0.6	–228	0.2	45

		Deferred tax asset	Deferred tax liability		Net
Recognised in Balance Sheet	31 Dec 2015	31 Dec 2014	31 Dec 2015	31 Dec 2014	31 Dec 2015	31 Dec 2014
Property, plant and equipment	–39	196	1,944	1,959	–1,983	–1,763
Derivatives measured at fair value	12	–301	–	–	12	–301
Loss carry-forwards	7,654	11,110	–	–	7,654	11,110
Provisions	1,271	2,735	–	–	1,271	2,736
Untaxed reserves	–	54	415	611	–415	–558
Tax receivables/liabilities	8,898	13,794	2,359	2,570	6,539	11,224

Deferred tax assets on loss carry-forwards

More than 80 percent of deferred tax assets are attributable to loss carry-forwards. The remainder relates to temporary differences relating to valuation of fixed assets and provisions, which will be divided over a number of years.

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, approximately SEK 2 million are expected to be utilised in 2016. 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 2.3 (–) million.

Provisions for deferred tax	31 Dec 2015	31 Dec 2014
Carrying amount at beginning of period	2,570	2,432
Amount provisioned in period	28	256
Amounts utilised in period	–239	–118
Carrying amount at the end of period	2,359	2,570

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

			2014			2015
			Reported					Reported
	Balance	Reported	against	Reported	Balance	Balance	Reported	against	Reported	Balance
	as of 1 Jan	in Income Statement	Comprehen– sive Income	directly in equity	as of 31 Dec	as of 1 Jan	in Income Statement	Comprehen– sive Income	directly in equity	as of 31 Dec
Property, plant and equipment	–1,488	–313	–	38	–1,763	-1,763	–220	–	–	–1,983
Derivatives measured at fair value	7	–193	–115	–	–301	–301	194	119	–	12
Loss carry-forward	11,509	30	–34	–395	11,110	11,110	–2,617	–399	–440	7,654
Provisions	1,623	1,107	–	6	2,736	2,736	–1,459	–	–6	1,271
Untaxed reserves	–500	–65	–	7	–558	–558	143	–	–	–415
Other	–	–	–	–	–	–	–	–	–	–
Total	11,151	566	–149	–344	11,224	11,224	–3,959	–280	–446	6,539

NOTE 10 Net financial income/expense

	2015	2014
Interest income on bank balances	80	134
Exchange rate gains	3,746	4,454
Other	–	–
Financial income	3,826	4,588
Interest costs on financial liabilities measured
at amortised cost	–2,543	–3,573
Bank charges	–2,362	–2,812
Exchange rate losses	–3,398	–863
Other	–957	–297
Financial expenses	–9,260	–7,545
Net financial income/expense	–5,434	–2,957

NOTE 12 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, Critical accounting principles. Intangible assets with definite useful lives are amortised on a straight-line basis over their useful lives.

		Capitalised expenditure	Trademarks and
	Goodwill, purchased	for software	brands etc	Total
Cumulative cost
Opening balance, 1 Jan 2014	72,328	8,209	1,466	82,003
Investments	–	3,802	245	4,047
Reclassification and exchange rate effects	–	–	–	–
Sales and retirements	309	–	21	330
Closing balance, 31 Dec 2014	72,637	12,011	1,732	86,380
Opening balance, 1 Jan 2015	72,637	12,011	1,732	86,380
Investments	–	2,308	188	2,496
Reclassification and exchange rate effects	–200	–623	–21	–844
Sales and retirements	–	–302	–	–302
Closing balance, 31 Dec 2015	72,437	13,394	1,899	87,730
Accumulated amortisation and impairment
Opening balance, 1 Jan 2014	–2,031	–2,306	–1,419	–5,756
Reclassification and exchange rate effects	–	–	–	–
Amortisation for the year	–	–445	–64	–509
Sales and retirements	1	–	–9	–8
Closing balance, 31 Dec 2014	–2,030	–2,751	–1,492	–6,273
Opening balance, 1 Jan 2015	–2,030	–2,751	–1,492	–6,273
Reclassification and exchange rate effects	–	–	9	9
Amortisation for the year	–	–1,300	–97	–1,397
Sales and retirements	–	302	–	302
Closing balance, 31 Dec 2015	–2,030	–3,749	–1,580	–7,359
Carrying amounts
As of 1 Jan 2014	70,297	5,903	47	76,247
As of 31 Dec 2014	70,607	9,260	240	80,107
As of 1 Jan 2015	70,607	9,260	240	80,107
As of 31 Dec 2015	70,407	9,645	319	80,371

Amortisation and impairment are included in

following Income Statement lines	2015	2014	Important variables	Method for defining values
Cost of goods sold and services	–1,397	–509	Growth in the forecast	Market growth has been estimated at 5 (5) percent during
Administrative expenses	–	–	period	the forecast period for all units. Market growth is based on
Total	–1,397 –509			historical experience, estimates in sector research and other externally available information.
Impairment testing of goodwil			Growth after the forecast period	Growth after the forecast period is estimated at 2.0 (2.0) percent.
NOTE allocates and tests goodwill in the Nearsourcing Centres and Industrial Plants operating segments. The following table states goodwill values by operating segment.		Cost of materials		The cost of electronic components is expected to reduce during the forecast period, partly because of continued ra
	31 Dec 2015	31 Dec 2014		tionalisation of the production process and partly through
Nearsourcing Centres	58,233	58,433		increased purchasing volumes and improved co-ordination
				or purchasing processes.

Total	70,407	70,607
Industrial Plants	12,174	12,174

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.

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 testing is conducted in the two operating segments—Nearsourcing Centres and Industrial Plants. As operations are monitored otherwise, goodwill is monitored and

impairment is tested at operating segment level. Testing is based on estimated present values of future cash flows for each constituent legal entity of the operating segment. The present value of these aggregated cash flows are

then compared with the goodwill and capital employed that is allocated to the operating segment.

The present value of forecast cash flow is calculated by applying a discount rate after tax based on risk-free interest and the risk judged to be associated with the operation. Against the background of NOTE mainly having shared borrowings, and that the group's entities operate on the same markets, the same discount rate after tax of 9.0 (9.1) percent has been applied for both operating segments. The discount rate before tax amounts to 11.1 (11.1) percent.

The recoverable values for both Nearsourcing Centres and Industrial Plants exceed carrying amounts.

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 9.0 to 10.0 percentage points, would not imply any impairment.

Value in use reduces but still significantly exceeds the carrying amount of both Nearsourcing Centres and Industrial Plants.

NOTE 13 Property, plant and equipment

	Buildings and land (real estate used in business operations)	Cost incurred on other party's property	Machinery and other plan	Equipment, tools, fixtures and fittings	Total
Cumulative cost
Opening balance, 1 Jan 2014	45,194	7,568	129,251	45,723	227,736
Investments	–	187	19,203	899	20,289
Sales	–	–	–3,744	–942	–4,686
Reclassification and exchange rate effects	1,247	828	4,708	430	7,213
Closing balance, 31 Dec 2014	46,441	8,583	149,418	46,110	250,552
Opening balance, 1 Jan 2015	46,441	8,583	149,418	46,110	250,552
Investments	254	607	18,750	644	20,255
Sales	–	–	–8,968	–5,257	–14,225
Reclassification and exchange rate effects	–838	50	–1,132	–303	–2,223
Closing balance, 31 Dec 2015	45,857	9,240	158,068	41,194	254,359
Depreciation and impairment
Opening balance, 1 Jan 2014	–20,132	–5,710	–113,257	–44,299	–183,398
Depreciation for the year	–730	–167	–6,140	–815	–7,852
Sales	–	–	3,744	933	4,677
Reclassification and exchange rate effects	–671	–653	–3,221	–348	–4,893
Closing balance, 31 Dec 2014	–21,533	–6,530	–118,874	–44,529	–191,466
Opening balance, 1 Jan 2015	–21,533	–6,530	–118,874	–44,529	–191,466
Depreciation for the year	–1,142	–462	–8,478	–1,356	–11,438
Sales	–	–	7,629	5,257	12,886
Reclassification and exchange rate effects	468	–30	882	269	1,589
Closing balance, 31 Dec 2015	–22,207	–7,022	–118,841	–40,359	–188,429
Carrying amounts
As of 1 Jan 2014	25,062	1,858	15,994	1,424	44,338
As of 31 Dec 2014	24,908	2,053	30,544	1,581	59,086
As of 1 Jan 2015	24,908	2,053	30,544	1,581	59,086
As of 31 Dec 2015	23,650	2,218	39,227	835	65,930

Depreciation and impairment is included in the following Income Statement lines

	2015	2014
Cost of goods sold and services	–11,045	–7,476
Administrative expenses	–158	–307
Selling expenses	–235	–69
Total	–11,438	–7,852

Leased production equipment via several different lease contracts*

	2015	2014
Opening balance	26,358	13,281
Investments	9,283	13,077
Sales / obsolescence	–2,000	–
Accumulated depreciation	–12,224	–10,690
Total	21,417	15,668

*Included under Plant and machinery in the table showing Property, plant and equipment.

Information on central government support in the group

The aggregate cost of the assets the support is intended to cover amounts to 2,652 (500) in the period. The cost reduced by 468 (75) for enacted government support. Total utilised, but not received, investment subsidies amount to 543 (–) on the reporting date. Pledged assets for subsidies received in 2015 and the previous year amounted to 8,050, with repayment obligation for investment support in the event of the specified terms not being satisfied.

Collateral

As of 31 December 2015, property with a carrying amount of 23,650 (24,908) was pledged as collateral for bank borrowings. As of 31 December 2015, there is ownership reservation on machinery, with a carrying amount of 1,082 (1,563).

NOTE 14 Long-term receivables and other receivables

Long-term receivables	31 Dec 2015	31 Dec 2014
Interest-bearing loans	–	–
Other long-term receivables	1,462	1,110
Total	1,462	1,110
Other receivables that are current asset
Interest-bearing loans	–	–
VAT	1,076	2,127
Other	2,409	987
Total	3,485	3,114

NOTE 15 Inventories

	31 Dec 2015	31 Dec 2014
Raw materials and consumables	160,110	163,116
Products in process	14,679	20,153
Finished goods and goods for re-sale	27,077	32,612
Obsolescence provision	–12,003	–10,272
Total	189,863	205,609

The expensed inventories for the year are stated in Note 6, Operating expenses by type, on page 37.

NOTE 16 Prepaid expenses and accrued income

	31 Dec 2015	31 Dec 2014
Accrued income	2,352	1,804
Prepaid services	951	278
Prepaid rent	2,088	2,594
Prepaid licenses	1,241	800
Prepaid insurance	413	503
Prepaid lease payments	271	256
Other prepaid expenses	1,015	1,226
Total	8,331	7,461

NOTE 17 Earnings per share

	Before dilution		After dilution
Earnings per share	2015	2014	2015	2014
Earnings per share, SEK	1.20	0.85	1.20	0.85

The calculation of earnings per share for 2015 has been based on profit for the period of 34,636 (24,582) and on a weighted average number of outstanding shares in 2015 of 28,872,600 (28,872,600).

Earnings per share after dilution

NOTE has not issued any instruments that could cause dilution.

NOTE 18 Equity

	Share class A
No. of shares (thousands)	31 Dec 2015	31 Dec 2014
Issued as of 1 January	28,873	28,873
lssued as of 31 December—paid up	28,873	28,873

As of 31 December 2015 registered share capital comprised 28,872,600 shares with a quotient value of SEK 0.50 each. There were no outstanding warrants or other instruments that could result in dilution effects as of 31 December 2015. 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 2015	31 Dec 2014
Opening translation reserve	1,258	–5,779
Translation differences for the year	–2,799	7,037
Closing translation reserve	–1,541	1,258

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 2015	31 Dec 2014
Opening hedging reserve	405	–
Forecast cash flow hedges for the year	–421	405
Closing hedging reserv	–16	405

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. 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 targets:

Growth target

NOTE will increase its market share organically and through acquisitions.

Profitability target

NOTE will grow with profitability. Its target 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. For the financial year 2015 the return on operating capital was 12.9 (10.1) percent.

Capital structure target

The minimum equity ratio should be 30 percent. At year-end, the equity to assets ratio was 43.3 (44.1) percent.

Dividend target

The dividend should be adapted to the average profit level over a business cycle and should constitute 30–50 percent of profit after tax for the long term. The dividend should also be available to adapt the capital structure.

NOTE 19 Interest-bearing liabilities
Non-current liabilities	31 Dec 2015	31 Dec 2014
Bank loans	555	–
Finance lease liabilities, fixed assets	9,189	9,537
Total	9,744	9,537
Current liabilities
Overdraft facility	–	1,336
Factoring	112,455	82,802
Short-term portion of bank loans	230	265

Pledged assets

24,874 (25,431) of collateral for bank loans, finance lease liabilities and overdraft facilities is pledged in the company's land and buildings (see also Note 13) and 220,310 (220,517) in operations. Collateral for factoring is issued at an amount of 120,506 (115,710) in pledged accounts receivable—trade.

Short-term portion of finance lease liabilities 6,781 5,562 Total 119,466 89,965

90 percent of the risk associated with customer receivables–trade for NOTE's factoring engagements in Estonia have been transferred to the lender. To comply with applicable regulations, this financing is also reported as factoring, totaling 11,902 (10,828).

Fair value on non-current liabilities	Carrying amount		Fair value
	2015	2014	2015	2014
Finance lease liabilities, fixed assets	9,189	9,537	8,482	8,699

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 8.4 (8.1) percent.

Finance lease liabilities

Finance lease liabilities are due for payment as follows:

	2015			2014
	Minimi lease			Minimi lease
	payments Interest Prinipal			payments Interest Prinipal
Within one year	7,349	568	6,781	6,013	451	5,562
Between one and five years	9,958	770	9,189	10,311	774	9,537
Total	17,307		1,338 15,970	16,324		1,225 15,099

For more information, see Note 24 Financial risks and finance policy on page 44.

NOTE 20 Provisions

Short-term portion of provisions	31 Dec 2015	31 Dec 2014
Cost of divesting operations	–	4,000
Other	12	12
Total	12	4,012

Cost of divesting operations:

In 2014, NOTE chose to focus its offering to electronics manufacture, logistics and final assembly of complete products. A decision to divest the mechanical processing unit in Järfälla, Sweden, was made. The cost of the divestment was estimated at SEK 4.0 million.

	Restructur
2014	ing program	Other	Total
Carrying amount at beginning of period	–	–	–
Provisions in the period	4,000	12	4,012
Amounts utilised in the period	–	–	–
Un-utilised amounts reversed in the period	–	–	–
Carrying amount at end of period	4,000	12	4,012
2015	Restructur ing program	Other	Total
Carrying amount at beginning of period	4,000	12	4,012
Provisions in the period	–	–	–
Amounts utilised in the period	–4,000	–	–4,000
Un-utilised amounts reversed in the period	–	–	–

NOTE 21 Other current liabilities

	31 Dec 2015	31 Dec 2014
Staff withholding tax	3,840	4,058
Social security contributions	3,680	4,285
VAT	10,924	10,206
Other	2,917	3,632
Total	21,361	22,181

NOTE 22 Accrued expenses and deferred income

	31 Dec 2015	31 Dec 2014
Accrued salaries and benefits	11,183	9,257
Accrued social security contributions	5,653	5,062
Accrued vacation payment	18,665	19,402
Other	12,318	13,440
Total	47,819	47,161

NOTE 23 Financial instruments by category

31 Dec 2015	Loans and accounts receivable	Derivatives used for hedging purposes	Other financial liabilities	Total
Assets in the Balance Sheet
Accounts receivable—trade and other financial receivables	252,110	–	–	252,110
Cash and cash equivalents	47,298	–	–	47,298
Total assets Liabilities in the Balance Sheet Interest-bearing liabilities	299,408 –	– –	– 129,210	299,408 129,210
Other liabilities Accounts payable—trade and other financial liabilities	– –	56 –	– 175,044	56 175,044
Total liabilities	–	56	304,254	304,310

31 Dec 2014	Loans and accounts receivable	Derivatives used for hedging purposes	Other financial liabilities	Total
Assets in the Balance Sheet
Accounts receivable—trade and other financial receivables	201,781	–		201,781
Cash and cash equivalents	35,160	–		35,160
Total assets Liabilities in the Balance Sheet Interest-bearing liabilities	236,941	– –	99,502	236,941 99,502
Other liabilities Accounts payable—trade and other financial liabilities		–1,367 –	– 163,859	–1,367 163,859
Total liabilities		–1,367	263,361	261,994

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 parent company is primarily focused on the management, co-ordination and development 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 121 (116) 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 2.3 (3.0) percent was charged to consolidated profit.

NOTE has agreed on a number of covenants to its lender as security for the liabilities.

Liquidity risks

Liquidity risk means the risk of being unable to fulfil payment obligations resulting from insufficient liquidity or difficulties in raising external borrowings. Operations are funded through means such as SEK 287.1 (270.2) million of equity and interest-bearing liabilities of SEK 129.2 (99.5) million, utilised overdrafts of SEK – (1.3) million are included. The un-utilised overdraft facility was SEK 57.4 (56.8) million at year-end. Financial liabilities

comprise loans and the utilised portion of the overdraft and factoring facilities.

Age analysis, financial liabilities

		Within	1–3	3 mth.		5 yr. or
2015, SEK million	Total	1 mth.	mth.	–1 yr.	1–5 yr.	longer
Bank credit facilities inclu ding overdraft & factoring*	113.8	51.8	27.4	34.0	0.6	–
Finance lease liabilities*	17.6	0.5	1.6	5.1	10.4	–
Accounts payable—trade	175.1	120.0	50.2	4.9	–	–
Total	306.5	172.3	79.2	44.0	11.0	–

Age analysis, financial liabilities

		Within	1–3	3 mth.		5 yr. or
2014, SEK million	Total	1 mth.	mth.	–1 yr.	1–5 yr.	longer
Bank credit facilities inclu ding overdraft & factoring*	84.8	46.2	15.7	22.9	–	–
Finance lease liabilities*	16.6	0.5	0.9	4.5	10.7	–
Accounts payable—trade	163.9	119.5	35.8	8.6	–	–
Total	265.3	166.2	52.4	36.0	10.7	–

*Factoring and overdraft facilities are subject to estimated average interest of 2.3 (3.0) percentage points. A majority of these credits mature within three months. Finance lease liabilities are subject to estimated average interest of 8.3 (8.1) percentage points and a majority of these credits mature within 1–5 year.

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 81.9 (64.3) 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 2015		31 Dec 2014
Currency	Amount	%	Amount	%
CNY	50,108	17.5	29,120	10.8
EUR	33,974	11.8	30,020	11.1
GBP	306	0.1	717	0.3
NOK	7,042	2.5	12,112	4.5
Total	91,430	31.9	71,969	26.7

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 47 (48) percent of sales. The group has a relatively good diversification of customers across a range of industrial sectors.

Age analysis, accounts receivable—trade	31 Dec 2015	31 Dec 2014
Not overdue accounts receivable—trade	192,007	153,860
Overdue accounts receivable—trade 0–30 days	38,194	33,819
Overdue accounts receivable—trade > 30 days–60 days	13,796	6,644
Overdue accounts receivable—trade > 60 days	8,113	7,458
Total	252,110	201,781

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. Against the background of underlying pricing of electronic components being basically in USD, despite actual purchasing often being conducted in EUR, NOTE considers it relevant to disclose the effects of the aggregate exposure to EUR and USD.

Currency risk fluctuations also exist in the translation 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, Euro or USD and with a fairly even division between these currencies. NOTE adopts a centralised view of managing currency hedges. NOTE's corporate finance function hedges net flows in foreign currency on rolling six-month forecasts, based on the limits stipulated in NOTE's finance policy.

Allocation 6 months from the closing date

		Net exposure from sales and purchasing in foreign currencies		Total hedging		Percantage		Average exchange rate
	2015	2014	2015	2014	2015	2014	2015	2014
EUR	2,925	2,820	493	2,050	17%	73%	9.20	9.35
USD	6,372	4,690	1,955	2,700	31%	58%	8.43	7.34

The group classifies its forward contracts used for hedging forecast transactions as cash flow hedging.

Assets and liabilities measured at fair value

NOTE's derivative instruments held for hedge accounting are based on valuation tier 2 of IFRS 7, i.e. fair value is based on observable data from an independent source.

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 AB manages a substantial portion of materials sourcing agreements.

Sensitivity analysis

The following table illustrates the effect on the group from changes in a number of parameters.

Effect on comprehensive income
		2015		2014
Market risk, SEK million	+/– 2% +/– 5%		+/– 2% +/– 5%
Change in sales price to customers	17.5	43.7	15.0	37.6
Change in sales volume	4.6	11.5	4.1	10.3
Change in materials price*	10.9	27.1	9.0	22.4
Change in payroll overheads	4.2	10.5	3.9	9.8
Change in interest rates	1.3	3.2	1.0	2.5
Change in EUR/USD exchange rate on customer and supplier liabilities as of 31 Dec 2015	0.9	2.2	0.4	1.1
Currency change on net assets in foreign subsidiaries	1.7	4.3	1.3	3.3

*Disregarding price adjustment clauses to customers.

NOTE 25 Pledged assets and contingent liabilities

In the form of pledged assets for own liabilities and provisions	31 Dec 2015	31 Dec 2014
Property mortgage	24,874	25,431
Floating charge	220,310	220,517
Ownership reservation on machinery	1,082	1,563
Factored accounts receivable—trade	120,506	115,710
Total	366,772	363,221
Contingent liabilities
Guarantees issued	56,063	53,592
County administrative board, conditional loan	290	633
Total	56,353	54,225

NOTE 26 Cash Flow Statement

Interest paid	2015	2014
Interest received	200	191
Interest paid	–3,178	–2,936
Övriga poster som inte är kassaflödespåverkande
Impairment losses	1,226	–972
Unrealised exchange rate differences	–176	–5,709
Capital gain/loss on sale of property, plant and equipment	1,338	–153
Other items not affecting liquidity	–3,454	5,434
Total	–1,066	–1,400
Cash and cash equivalents	31 Dec 2015	31 Dec 2014
Cash and bank balances	47,298	35,160
Un-utilised overdraft facilities	57,438	56,760
Total	104,736	91,920

NOTE 27 Close relations

	2015	2014
Sale of goods and services to related parties	–	–
Purchases from related parties	–1,000	–1,000
Liability to related party as of 31 December	–	–
Receivable from related party as of 31 December	–	–

Related parties refers to company owned by a parent company/subsidiary Board member. Purchasing from related parties was conducted on an arm's length basis. Transactions with key staff in executive positions, see Note 8, Employees, personnel expenses and remuneration to senior management, on page 38.

NOTE 28 Critical 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 judgement. The obsolescence reserve on the reporting date 31 December 2015 was SEK –12.0 (–10.3) million and the reserve for doubtful debt was SEK –3.7 (–4.3) million. Note 24 provides more information on the judgements 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 31 December 2015, goodwill on consolidation was SEK 70.4 (70.6) million. Note 12 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 carry- forwards in foreign subsidiaries. On the reporting date 31 December 2015, the consolidated deferred tax asset was SEK 8.9 (13.8) million. Note 11 states more information on the group's deferred tax assets.

NOTE 29 Post-balance sheet events

Stefan Hedelius takes up his position as NOTE's new CEO & President effective 7 March 2016. He succeeds Peter Laveson. Henrik Nygren will continue as Interim CEO & President until Stefan Hedelius takes up his position.

NOTE 30 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 and provisions.

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 twelvemonth period.

Interest-bearing net debt

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

Interest coverage ratio, multiple

Operating profit plus financial income 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

Parent Company Income Statement

SEK 000	NOTE	2015	2014
Net revenue		29,877	37,132
Cost of sold services		–17,954	–24,484
Gross profit		11,923	12,648
Selling expenses		–10,806	–7,126
Administrative expenses		–10,950	–9,592
Other operating revenue	2	91	195
Other operating expenses	3	–1,742	–98
Operating profit	4, 5, 6, 15	–11,484	–3,973
Profit from financial items	7
Profit from participations in group companies		22,817	–2,274
Interest income, etc.		8,000	6,790
Interest costs, etc.		–3,901	–1,314
Profit after financial items		15,432	–771
Appropriations	8	–	–
Profit before tax		15,432	–771
Tax	9	–2,311	590
Profit for the year		13,121	–181

Parent Company Statement of Other Comprehensive Income

SEK 000	2015	2014
Profit for the year	13,121	–181
Other comprehensive income
Items that can be subsequently reversed in the Income Statement:
Fair value reserve	–953	2,792
Tax on fair value reserve	210	–614
Total comprehensive income for the year	12,378	1,997

Parent Company Balance Sheet

SEK 000	NOTE	31 Dec 2015	31 Dec 2014
ASSETS
Non-current assets
Intangible assets	10
Capitalised expenditure on development work		790	7,964
Property, plant and equipment	10	67	–
Financial assets
Participations in group companies	16	248,564	243,733
Receivables from group companies	11	36,565	42,348
Deffered tax assets	9	1,303	2,495
Total financial assets		286,432	288,576
Total non-current assets		287,289	296,540
Current assets
Short-term receivables
Receivables from group companies		35,656	53,293
Other receivables	12	818	850
Prepaid expenses and accrued income		1,488	1,028
Total short-term receivables		37,962	55,171
Cash and bank balances	17	28,393	1,028
Total current assets		66,355	56,199
TOTAL ASSETS		353,644	352,739
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital (28,872,600/28,872,600 class A shares)		14,436	14,436
Statutory reserve		148,161	148,161
Non-restricted equity
Profit brought forward		77,740	98,627
Profit for the year		13,121	–181
Total equity		253,458	261,043
Current liabilities
Liabilities to credit institutions		–	1,591
Accounts payable—trade		1,752	1,147
Liabilities to group companies		86,784	81,300
Other liabilities		716	842
Accrued expensed and deferred income	13	10,934	6,816
Total current liabilities		100,186	91,696
TOTAL EQUITY AND LIABILITIES		353,644	352,739
Pledged assets and contingent liabilities for parent company
Pledged assets	14	–	–
Contingent liabilities	14	64,113	61,643

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 2014	14,436	148,161	87,155	9,294	259,046
Appropriation of profit			9,294	–9,294	–
Comprehensive income
Profit for the year				–181	–181
Other comprehensive income
Fair value reserve			2,792		2,792
Tax on fair value reserve			–614		–614
Total comprehensive income			2,178	–181	1,997
Transactions with shareholders
Dividend			–		–
Closing equity, 31 Dec 2014	14,436	148,161	98,627	–181	261,043

	Restricted equity			Non-restricted equity
SEK 000	Share capital	Statutory reserve	Profit brought forward	Profit for the year	Total equity
Opening equity, 1 Jan 2015	14,436	148,161	98,627	-181	261,043
Appropriation of profit			–181	181	–
Comprehensive income
Profit for the year				13,121	13,121
Other comprehensive income
Fair value reserve			–953		–953
Tax on fair value reserve			210		210
Effect of change in accounting principle			–5,527		–5,527
Total comprehensive income			–6,270	13,121	6,851
Transactions with shareholders
Dividend			–14,436		–14,436
Closing equity, 31 Dec 2015	14,436	148,161	77,740	13,121	253,458

Parent Company Cash Flow Statement

SEK 000	NOTE	2015	2014
Operating activities	17
Profit before tax		15,432	–771
Reversed depreciation		101	–
Other non-cash items		10,066	–3,234
Tax paid		–19	–1,746
		25,580	–5,751
Cash flow from change in working capital
Increase (–)/decrease (+) in trade receivables		–4,768	–41,407
Increase (+)/decrease (–) in trade liabilities		27,013	30,394
		22,245	–11,013
Cash flow from operating activities		47,825	–16,764
Investing activities
Purchase of intangible assets		–80	–3,802
Sale of financial assets		–	22,129
Cash flow from investing activities		–80	18,327
Financing activities
Borrowings		–	1,591
Amortisation of loans		–1,591
Dividends paid		–14,436	–
Group contributions received		18,504	17,904
Group contributions paid		–22,857	–35,677
Cash flow from financing activities		–20,380	–16,182
Cash flow for the year		27,365	–14,619
Cash and cash equivalents
At beginning of period		1,028	15,647
Cash flow before financing activities		47,745	1,563
Cash flow from financing activities		–20,380	–16,182
Cash and cash equivalents at end of period		28,393	1,028

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 on page 34, of the consolidated accounts, subject to the exemptions stated below. These principles have been applied consistently for all years presented, unless otherwise stated.

Subsidiaries

Participations in subsidiaries 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.

Loans to subsidiaries

The parent company lends funds to subsidiaries in foreign currency. A portion of these loans is considered as a portion of net investments in subsidiaries, and accordingly, revaluation at closing day rates from these loans is recognised in equity in the fair value reserve. Other loans receivable in foreign currency are revalued at closing day rates and the revaluation is recognised in the Income Statement.

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.

Intangible assets

The parent company has begun the process of implementing a new group-wide ERP system. Effective 1 January 2015, the parent company is applying the exemption of RFR 2 that permits expenditure for development, which pursuant to IAS 38 p. 57 should be recognised as an asset in the Balance Sheet, to be expensed in the period that it arises instead. Instead, capitalisation is in the group. Remaining intangible assets and the parent company have estimated useful lives of 10 years.

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.

NOTE 2 Other operating revenue

	2015	2014
Exchange gains on trade receivables/liabilities	91	189
Other operating revenue	–	6
Total	91	195

NOTE 3 Other operating expenses

	2015	2014
Impairment of current asset	–1,597	–
Exchange losses on trade receivables/liabilities	–145	–98
Total	–1,742	–98

NOTE 4 Auditors' fees and reimbursement

	2015	2014
PwC
Auditing assignment	–434	–380
Auditing in addition to audit assignment	0	–
Tax consultancy	0	–28
Other services	–227	–58
Total	–661	–466

Expenses for employee benefits			2015	2014
Salaries and benefits			–15,513	–12,034
Pension expenses, defined-contribution plans		–3,729	–3,024
Social security contributions			–6,564	–4,887
Total			–25,806	–19,945
Average number of employees		2015 of which men		2014 of which men
Sweden	12	67%	11	64%

Division between sexes in management	2015 Share of women	2014 Share of women
Board of Directors	13%	0%
Other senior management 4 (3) people *	0%	0%

*For the first half-year, the company's management had a total of three members, and for the second half-year, a total of four members.

Salaries, other benefits and social security contributions

	2015		2014
	Salaries and benefits (of which bonus)	Social security (of which pension expense)	Salaries and benefits (of which bonus)	Social security (of which pension expense)
Management *	–9,173	–5,353	–6,616	–3,760
	(–766)	(–1,988)	(–1,063)	(–1,354)
Other employees	–7,266	–4,941	–6,245	–4,151
	(–262)	(–1,741)	(–)	(–1,671)

Management means the Board of Directors and the group management.

*Unpaid remuneration to the departing CEO amounts to SEK 2.7 (–) million at the end of the year, of which SEK 0.5 (–) million was benefits and pensions. For the first half-year, the company's management had a total of three members, and for the second half-year, a total of four members.

NOTE 6 Operating leases

	31 Dec 2015	31 Dec 2014
Lease arrangements payable within one year	1,121	1,769
Lease arrangements payable between one and five years	557	1,347
Total	1,678	3,116

Parent company expenses for operating leases were 2,024 (2,118). A significant proportion of operating leases relates to rents for premises. In addition. NOTE is party to lease agreements relating to cars and office equipment.

NOTE 7 Net financial income/expense
Profit from participations in group companies	2015	2014
Impairment, shares in subsidiaries	–	–1,500
Write-down, receivables from subsidiaries	–	–
Dividend from group companies	6,965	3,579
Group contributions, received	23,865	18,504
Group contributions, paid		–8,013 –22,857
Total	22,817	–2,274
Interest income etc.
Interest income, group companies	2,346	2,458
Interest income, other	1	10
Exchange rate differences	5,653	4,322
Total	8,000	6,790
Interest costs, etc.
Interest costs, group companies	–	–
Interest costs, other	–338	–145
Exchange rate differences	–3,174	–457
Other	–389	–712
Total	–3,901	–1,314

NOTE 8 Appropriations

	2015	2014
Tax allocation reserve, provision/dissolved for the year	–	–
Total	–	–

NOTE 9 Tax

Reported in Income Statement			2015	2014
Current tax expense (–)/tax revenue (+)
Tax expense/tax revenue for the period			–	–31
Deferred tax expense (–)/tax revenue (+)
Deferred tax revenue/expense in capitalised/utilised tax values of loss carry-forwards			–2,311	621
Total reported tax			–2,311	590
Reconciliation of effective tax	%	2015	%	2014
Profit before tax		15,432		–771

Total	–15.0	–2,311	–76.6	590
Tax attributable to dissolution of fair value reserve	–	–	4.5	–35
Tax attributable to previous years	–0.5	–77	–0.5	4
Non-taxable revenue	9.9	1,533	–106.7	822
Non-deductible expenses	–2.4	–372	48.1	–371
Tax at applicable rate for parent company	–22.0	–3,395	–22.0	170
Profit before tax		15,432		–771

NOTE 10 Intangible assets and Property, plant and equipment

	Capitalised expenditure on development work	Equipment, tools, fixtures and fittings
Cumulative cost
Opening balances 1 Jan 2014	4,162	183
Purchases	3,802	–
Sales and retirements	–	–
Closing balance, 31 Dec 2014	7,964	183
Opening balances 1 Jan 2015	7,964	183
Purchases	–	80
Sales and retirements	–7,086	–49
Closing balance, 31 Dec 2015	878	214
Depreciation
Opening balance, 1 Jan 2014	–	–183
Depreciation for the year	–	–
Sales and retirements	–	–
Closing balance, 31 Dec 2014	–	–183
Opening balance, 1 Jan 2015	–	–183
Depreciation for the year	–88	–13
Sales and retirements	–	49
Closing balance, 31 Dec 2015	–88	–147
Carrying amounts
1 Jan 2014	4,162	–
31 Dec 2014	7,964	–
1 Jan 2015	7,964	–
31 Dec 2015	790	67

Depreciation is included in the following

Income Statement lines	2015	2014
Cost of goods sold and services	–101	–
Total	–101	–

In the year, the parent company decided to transfer to utilising the exemption in RFR 2 for intangible assets, which allows expenditure for development to be expensed in the period it arises. The net effect of capitalisation in the previous year reduced the parent company's retained earnings. For more information, see Note 1 Critical accounting principles on page 50.

NOTE 11 Long-term receivables

Receivables from group companies	31 Dec 2015	31 Dec 2014
Cumulative cost
At beginning of year	42,348	61,356
Purchase	0	3,121
Re-payment	–5,783	–22,129
Total	36,565	42,348

NOTE 12 Other receivables

	31 Dec 2015	31 Dec 2014
VAT receivable	–	826
Tax receivable	818
Other short-term receivables	–	24
Total	818	850

NOTE 14 Pledged assets and contingent liabilities

NOTE 13 Accrued expenses and deferred income

	31 Dec 2015	31 Dec 2014
Accrued consulting fees	487	565
Accrued salaries and benefits	4,670	2,527
Accrued social security contributions	3,059	1,553
Accrued vacation payment	2,068	1,595
Other	650	576
Total	10,934	6,816

Contingent liabilities	31 Dec 2015	31 Dec 2014
Rent guarantee	216	216
Sureties in favour of subsidiaries	63,897	61,427
Total	64,113	61,643

NOTE 15 Close relations

Close relation	Year	Sales 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	2015	–	–	–	–
Company owned by Board member	2014	–	–1,000	–	–

Transactions with staff in executive positions

For the Board of Directors', the CEO's 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 8 on page 38.

NOTE 16 Group companies

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

		31 Dec 2015	31 Dec 2014
Subsidiary Sweden/Corporate identity no./Registered office	No. of shares	Carrying amount	Carrying amount
NOTE Components AB, 556602-2116, Danderyd, Sweden	1,000	100	100
NOTE International AB, 556655-6782, Danderyd, Sweden	1,000	100	100
NOTE Järfälla AB, 556749-2409, Järfälla, Sweden	1,000	0	0
NOTE Lund AB, 556317-0355, Lund, Sweden	10,661	43,091	43,091
NOTE Norrtelje AB, 556235-3853, Norrtälje, Sweden	1,000	60,719	60,719
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 Torsby AB, 556597-6114, Torsby, Sweden	30,000	3,000	3,000
Subsidiary other/Corporate identity no./Registered office
IONOTE Electronics (Dongguan) Ltd, 441900400100981, Dongguan, China	1	47,630	47,630
NOTE Hyvinkää OY, 1931805-1, Hyvinkää, Finland	80	1,347	1,347
NOTE Norge AS, 982 609 380, Oslo, Norway	1,000	27,185	22,354
NOTE Pärnu OÜ, 10358547, Pärnu, Estonia	1	26,887	26,887
NOTE UK Ltd, 5257074, Telford, UK	1,850,000	14,237	14,237
Total		248,564	243,733

The participating interest is 100 (100) percent in all companies.

Cumulative cost	31 Dec 2015	31 Dec 2014
At beginning of year	276,770	276,770
Sales	–	–
Shareholder contributions	4,831	–
	281,601	276,770
Cumulative impairment
At beginning of year	–33,037	–31,537
Sales	–	–
Impairment for the year	–	–1,500
	–33,037	–33,037
Net carrying amount	248,564	243,733

NOTE 17 Cash Flow Statement

Interest paid and dividend received	2015	2014
Interest received	1,784	2,519
Interest paid	–338	–145
Dividend received	6,965	44,573
Other non-cash items
Anticipated dividends from subsidiaries	–	–
Impairment of financial assets	–	1,500
Impairment of current asset	1,527	–
Group contributions received/paid in the year	7,977	–4,353
Other items not affecting liquidity	562	–381
Total	10,066	–3,234
Cash and cash equivalents	31 Dec 2015	31 Dec 2014
Cash and bank balances	28,393	1,028
Un-utilised credit facilities
Un-utilised credit facilities	45,000	44,437

NOTE 18 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 Stockholm Stock Exchange.

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 2015 comprise the parent company and its subsidiaries, collectively termed the group.

Corporate Governance Report

Introduction

The regulatory structure applied for governing and controlling NOTE is primarily the Swedish Companies Act, applicable regulations for listed companies, the Swedish Code of Corporate Governance (the Code) as well as 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 instance of noncompliance 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 include a number of mandatory duties of a more fundamental nature in accordance with applicable legislation. The Articles of

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.

Association stipulate items including the company's registered office, operations, the amount of share capital, the number of shares and how the AGM is convened. The Articles of Association also 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.

Shareholders

At the end of 2015, NOTE had two shareholders representing more than 10 percent of the shares of the company each.

• NASDAQ Stockholm,www.nasdaqomx. com, which states the rules for issuers
• The Swedish Financial Supervisory Authority, www.fi.se, which states Authority's statutes and information on insiders.

Creades AB represented 16.0 percent and Banque Carnegie Luxembourg S.A. represented 11.5 percent. For more information on the share and shareholders, see The NOTE share on pages 20–21.

Shareholders' meetings

The Shareholders' Meeting is the company's chief decision-making body, where 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 correctly, 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 the minutes of 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 2015

NOTE's AGM was held on 22 April 2015 at Spårvagnshallarna in Stockholm, Sweden. Shareholders representing a total of 39.3 percent of the capital and votes attended the Meeting.

The Meeting resolved on matters including re-electing Kjell-Åke Andersson, Bruce Grant, Stefan Johansson, Henry

Klotz, Daniel Nyhrén and Kristian Teär, and electing Bahare Hedenstierna as Board members for the period until the next Annual General Meeting is held. Kristian Teär was elected Chairman.

The AGM approved fees in accordance with the Nomination Committee's proposal. In accordance with the Board of Directors' proposal, the Meeting approved a dividend to shareholders of SEK 0.50 per share and authorised the Board of Directors to decide on purchases and transfers of treasury shares.

Nomination Committee

The AGM resolves on how the Nomination Committee is appointed. The AGM 2015 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 prior to 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 remuneration for Committee work.

• Election and remuneration of the 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 2016. 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 2015 elected Öhrlings PricewaterhouseCoopers AB as audit firm, with Niklas Renström as Auditor in Charge until the AGM 2016.

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, determines 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 remuneration of the CEO and senior management and ongoing monitoring of operations in the year.

Nomination Committee members for the AGM 2016

	Share of capital/votes, %
Committee member	30 Sep. '15	31 Dec. '15
Bruce Grant, Garden Growth Capital LLC	8.0	8.0
Johan Hagberg, personal holdings	5.9	6.9
Jonas Hagströmer, Creades AB	16.0	16.0
Peter Svanlund, Banque Carnegie Luxembourg S.A. (on behalf of Museion Förvaltning AB)	8.5	8.5

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, applicable regulations for listed companies, including the Code and other laws and ordinances. 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 seven members elected by the Annual General Meeting and one employee representative. The Board of Directors has a general composition of sector knowledge and competence from Board work and management of listed companies as well as financing, accounting, structural change and sales, and strategic sourcing.

Board work in 2015

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, sales and marketing, financing, budget and long-term operational planning.

The Board held nine 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. The Audit Committee is not authorised to reach decisions independently. 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 Johansson and Kristian Teär. 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 corporate finance function regarding internal and external reporting of financial information. There is also a collaboration developed on matters of internal control, selection and appraisal of auditing principles and models.

In the financial year 2015, the Audit Committee monitored compliance with the adopted guidelines and held three meetings, with the company's Auditors, to discuss audit issues and internal controls. The Auditors' written reports were distributed to the Board of Directors 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 measures during the year.
• Following up on the internal audit function's review in the year. The focus has been on valuations of inventories, accounts receivable— trade and goodwill, and auditing foreign subsidiaries.

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 consisted of the Board of Directors in 2015. The duties of the Remuneration Committee are to:

• Consult on matters regarding remuneration principles, remuneration and other employment terms for group management.
• Monitor and evaluate programs for performance-related pay for group management, subsidiary Presidents and other key staff.
• 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 and monitored compliance with adopted guidelines. The following main issues were considered:

• Evaluation and approval of remuneration structures for group management.
• Specifying the profitability-based, variable remuneration program for group management, subsidiary presidents and other key individuals, which ran during 2015.

After an evaluation, the Remuneration Committee concluded that:

• NOTE is following the guidelines for remunerating senior management that the AGM 2015 resolved on.
• Applicable remuneration structures and levels are reasonable against the background of the company's operations.
• Compensation from the profitabilitybased, variable remuneration program that ran during 2015 for group management, subsidiary presidents and other key individuals amounted to SEK 1.6 million.

Guidelines for remuneration and other benefits for senior management

For information on these guidelines, refer to the Report of the Directors on page 25. For information on remuneration and other benefits, see Note 8, Employees, personnel expenses and remuneration to senior management, on page 38.

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. The CEO reports to the Board of Directors, informing them on how operations are progressing based on the decisions they have taken. Written instructions define the division of responsibility between the Board of Directors and the CEO.

Group management

NOTE's group management is responsible for various 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.

Governance of subsidiaries

Subsidiaries' operations are monitored monthly on the basis of 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 has been delegated to, and is managed primarily by, the CEO and the group's corporate finance 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 corporate finance 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, NOTE 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 44.

Monitoring control activities

The monitoring of NOTE's units is undergoing continuous progress. The units' financial and operational progress is followed closely in various forums. Matters that are addressed include financial 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 corporate finance function.

Group management

Position	Chief Financial Officer and acting Chief Executive Officer & President	Chief Operating Officer	Chief Sales Officer
Employed	2006	2010	2015
Born	1956	1967	1972
Education	M.Sc. (Eng.) industrial engineering and management.	Accountant, studied international economics.	Graduate of the Swedish Air Force Officer Training School, political economics qualifications.
Other significant assignments	None	None	None
Professional experience	Many years' experience as CFO and business controller of major listed Swedish and international indu strial groups such as SSAB Svenskt Stål AB, Danaher Corporation and Snap-on Incorporated. Previous experience of business develop ment and trade sales for companies including Retriva AB.	Business Developer with Nobia AB, COO of Johnson Pump AB and other senior positions in Alfa Laval.	Many years' experience of the EMS sector from senior positions in supply chain, sourcing and sales in multinational groups such as Flextronics and Enics.
NOTE holdings*	30,000 shares	65,692 shares	10,000 shares

*Including potential holdings by related persons or affiliated companies.

Board of Directors

KJELL-ÅKE ANDERSSON BAHARE HEDERSTIERNA

Position	Chairman	Board member	Board member	Board member
Elected	2014	2010	2007	2015
Born	1963	1946	1959	1981
Education	M.Sc. (Eng.)	M.Sc. (Eng.)	Ph. D. and B.Sc. (Finance)	M.A. Econ.
Main occupation	Regional Manager for Europe, the Middle East and Africa with Logitech Europe S.A. Advisor at Ri verMeadow Software Inc.	Board work and consult ing in corporate mana gement.	Executive Chairman and principal owner of Garden Growth Capital LLC and Applied Value LLC.	Category Manager of Knorr Bremse GmbH.
Other directorships	Chariman of the Board of mobilityView Inc. Board member of International Tennis Hall of Fame and Tampnet AS.	Chairman of the Board of Cervitrol AB, Domitech AB and MedicPen AB. Board member of Mekatronik Konsult i Lund AB.	Chairman of the Board of Hand in Hand International and Human Care HC AB (publ). Board member of Robust AB and the Swe dish- American Chamber of Commerce in New York.	None.
Professional experience	Former COO of Black berry. Executive Vice President and Head of Sales & Marketing of Sony Mobile. Previous positions include executive positions at SonyEricsson and Erics son globally.	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.	Former Board member and adviser on profita bility improvements and more efficient capital structures for Investment AB Kinnevik, Korsnäs AB, Metro International S.A., Stille AB, Transcom WorldWide S.A. and Tele2 AB (Chairman).	Ten years within purcha sing and supply chain in the vehicle industry. Broad experience of various positions at Volvo Cars and Volvo Trucks, most recently as responsible for strategic purchasing of electronics at Volvo Lastvagnar.
NOTE holdings*	0 shares	1,271,494 shares	2,315,000 shares	0 shares
Non-affiliated to company and management Non-affiliated to major	Yes	Yes	Yes	Yes
shareholders	Yes	Yes	Yes	Yes
Attendance Board meetings	9/9	8/9	8/9	6/6
Attendance Renumeration Committee	2/2	2/2	2/2	2/2
Attendance Audit Committee	3/3	–	–	–
Directors' fees, SEK	SEK 300,000	SEK 100,000	SEK 100,000	SEK 100,000
Committee fees	–	–	–	–

*Including potential holdings by related persons or affiliated companies.

60 NOTE ANNUAL REPORT 2015

**Employed by Creades AB, NOTE's largest shareholder.

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

Kristian Teär Kjell-Åke Andersson

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.

Chairman Board member

Bruce Grant Bahare Hederstierna Stefan Johansson Board member Board member Board member

Henrik Nygren CEO

Danderyd, Sweden, 18 February 2016

As stated above, the annual accounts and consolidated accounts were approved for issuance by the Board of Directors on 18 February 2016. 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 19 April 2016.

Our Audit Report was presented on 18 February 2016

Niklas Renström Auditor in Charge Authorised Public Accountant Öhrlings PricewaterhouseCoopers AB

Henry Klotz Daniel Nyhrén Edeen Stefan Henriksson Board member Board member Board member, Employee representative

Auditor's report

To the annual 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 2015. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 23-62.

Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts

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

Auditor's responsibility

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

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

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

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 2015 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. 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 2015 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. A corporate governance statement has been prepared. The statutory administration report and the corporate governance statement 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 also audited the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the Managing Director of NOTE AB for the year 2015.

Responsibilities of the Board of Directors and the Managing Director

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

Auditor's responsibility

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

As 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 determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

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

Opinions

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

Niklas Renström Auditor in Charge Authorized Public Accountant Öhrlings PricewaterhouseCoopers AB

Stockholm 18 February 2016

Addresses

NOTE AB (publ)

NOTE Pärnu OÜ

Box 711 Vendevägen 85 A 182 17 Danderyd Sweden

Laki 2

NOTE Components AB

Box 711 Vendevägen 85 A 182 17 Danderyd Sweden

NOTE Hyvinkää Oy

Avainkierto 3 05840 Hyvinkää Finland

NOTE Lund AB

Maskinvägen 3 227 30 Lund Sweden

NOTE Norge AS

Jogstadveien 21 2007 Kjeller Norway

NOTE Norrtelje AB

Box 185 Vilhelm Mobergs gata 18 761 22 Norrtälje Sweden

Website: www.note.eu Email: info@note.eu

80010 Pärnu Estonia

NOTE Torsby AB

Inova Park 685 29 Torsby Sweden

NOTE UK Ltd

Stroudwater Business Park Brunel Way Stonehouse GL10 3SX Gloucestershire UK

IONOTE Electronics

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

64 NOTE ANNUAL REPORT 2015

NOTE AB (publ) Annual Report 2015 Corporate identity number 556408-8770 Text and graphic design: NOTE AB (publ). Production: NOTE AB (publ) and Redesign. Images: Jann Lipka. Printing: Billes Tryckeri AB.

Translation: Turner & Turner.