NOTE — Interim / Quarterly Report 2016

Feb 7, 2017

Year-end Report 2016

Year-end report 2016

Financial performance in January–December

• Sales were SEK 1,098.1 (1,121.5) million, excluding divestments sales increased by 1%.
• Operating profit rose to SEK 60.2 (45.2) million.
• Operating margin expanded by 1.5 percentage points to 5.5% (4.0%).
• Profit after financial items increased to SEK 54.5 (39.8) million.
• Profit after tax was up to SEK 45.2 (34.6) million, corresponding to SEK 1.57 (1.20) per share.
• Cash flow after investments increased to SEK 40.9 (5.2) million, or SEK 1.42 (0.18) per share.

Dividend

The Board of Directors is proposing a dividend to shareholders of SEK 0.70 (0.70) per share, or SEK 20.2 (20.2) million. The Annual General Meeting will be held on 20 April 2017.

Events in the year

New CEO & President

Stefan Hedelius became NOTE's CEO & President at the end of the first quarter.

Sale of Norwegian operation

As part of NOTE's streamlining process and continued focus on markets with good growth potential, the Norwegian subsidiary was sold in May. The Norwegian operations had sales of SEK 54 million in 2015, but made a negative contribution to NOTE's operating profit. The transaction had a marginal impact on operating profit in the second quarter.

Financial performance in October–December

• Sales were SEK 288.2 (305.2) million, excluding divestments sales decreased by 1%.
• Operating profit rose to SEK 16.5 (10.5) million.
• Operating margin expanded by 2.3 percentage points to 5.7% (3.4%).
• Profit after financial items increased to SEK 15.1 (9.2) million.
• Profit after tax was up to SEK 12.9 (7.0) million, corresponding to SEK 0.45 (0.24) per share.
• Cash flow after investments was SEK 3.2 (25.4) million, or SEK 0.11 (0.88) per share.

Events after the end of the year

New composition of the Board

The Extraordinary General Meeting on 20 January 2017, convened as a result of changes to the ownership structure, elected Johan Hagberg, John Hedberg and Per Ovrén to the Board and re-elected Kjell-Åke Andersson and Bahare Hederstierna. John Hedberg was elected Chairman.

CEO's comments

Progress in the year

NOTE is one of the leading electronics manufacturers in the Nordics, and a stable business partner for Swedish and multinational customers seeking advanced production and logistics solutions in industrial electronics.

In 2016, market conditions were relatively stable on many of our markets in Europe. Demand for NOTE's services and solutions made positive progress in Estonia and Sweden. Our Chinese operations experienced very strong sales growth in the first six months. After the summer, however, we noted decreased activity amongst some major customers in China. We also saw similar progress in Finland. Sales were weaker than expected on the Norwegian and UK markets, which we've approached via relatively small local units. In order to sharpen our focus on markets with positive sales growth, we divested the Norwegian subsidiary in the second quarter.

Sales were SEK 1,098.1 million in the year, slightly down on the previous year. Adjusted for the sale of the Norwegian operation, sales growth was 1%. To improve the level of service to one of our international customers, we introduced a new logistics setup during the autumn with finished goods stored in close proximity to the customer's final assembly, which temporarily decreased deliveries.

We've won the confidence of many new customers in the year. We perceive continued positive potential for increasing sales and market shares over time, from existing and new customers alike. A key factor is that we've significantly strengthened our position in medtech. In the summer, we commenced batch deliveries under a substantial, advanced manufacturing assignment for an established global customer. As the next step, we decided to obtain certification for manufacture of medtech products for our plant in China. More than half of our facilities are now certified for medtech production, which is positive looking ahead. In Sweden, we intensified our extensive prototyping partnership with a leading customer in the defence industry. The collaboration holds significant potential for batch manufacture looking ahead. The IOT (Internet of Things) is also an area with strong potential. We're currently pursuing several industrialization projects in IOT with promising prospects.

It's also pleasing that we've gradually improved profitability during the year. An increased service content in combination with a number of successful costs measures contributed to the profit improvement. Operating profit for the full year increased by SEK 15.0 million to SEK 60.2 million, corresponding to a 1.5% increase in the operating margin to 5.5%. In the fourth quarter, operating margin improved to 5.7% (3.4%).

NOTE has a sharp focus on ensuring first-class quality and delivery precision for customers. The efficient management of working capital is another critical success factor. This is why we're taking a focused approach to rationalising the utilisation of working capital. Flexible and thought-through logistics setups are critical to NOTE's and its customers' financing and cash flow. Including continued aggressive investment in advanced produc-

2016 was another strong year for NOTE with increased profitability and strong cash flow

tion equipment, cash flow (after investments) improved to SEK 40.9 (5.2) million, corresponding to SEK 1.42 (0.18) per share.

NOTE is financially well equipped for the future. Our Balance Sheet remains one of the sector's strongest, with low net debt and an equity to assets ratio of 45.8%

Future

Our strategy for the future remains unchanged. We perceive continued positive potential for increasing our market share, focusing on profitable growth. We're continuing to develop our offering in the service area in order to further consolidate that part of our business.

Our firm ambition is to play an aggressive role in the future development of our sector, on the basis of our market stance and strong financial position.

Stefan Hedelius

Sales and results of operations

Sales, January–December

NOTE sells to a large customer base, essentially active in the engineering, communication and security industries in northern Europe, and to customers in the defence industry and medtech. An increasing sales share is also occurring directly from China to customers in Asia and the US.

Demand for NOTE's services continued to progress positively in the year. Progress remained positive in Estonia and Sweden. Sales growth in China was very strong in the first half of the year, after which a partial slowdown ensued for some of our major customers. Similar progress was also noted in Finland. After a period of declining demand from a few major Norwegian customers, the subsidiary in Norway was divested during the second quarter of the year. In 2015, the Norwegian operation had sales of approximately SEK 54 million, but made a negative contribution to NOTE's operating profit. This transaction had only a marginal impact on operating profit in the second quarter.

NOTE endeavours to secure long-term customer relations and partnerships. In the period, several closer collaborations on new product generations were established with several customers within the strong customer base.

NOTE has also been working extensively for some time with the aim of expanding its customer base further, to lift sales and capacity utilisation in the group's units. As a result of these marketing initiatives, NOTE secured many new customer relationships. Most of these new customers are European and Asian SMEs. Several of these partnerships, which usually start with industrialisation services (service sales, prototyping and pilot series), have now resulted in batch production and higher volumes.

Sales were SEK 1,098.1 (1,121.5) million in the year. The impact of exchange rate fluctuations was marginal, and adjusted for the sale of the Norwegian operation in the second quarter, sales growth for comparable units was 1%. Batch shipments to a leading multinational player in the medtech sector commenced in the summer. NOTE perceives significant potential in this partnership.

Direct sales from Industrial Plants in Estonia and China continued to grow. These sales maintained positive progress,

Sales and operating margin

Operating profit for the fourth quarter 2015 includes expenses related to the change of CEO of SEK 3.8 million—the underlying operating margin was 4.7%. representing 42% (37%) of total sales. The increase was partly an effect of the transfer of account management responsibility from Nearsourcing Centres to Industrial Plants, a natural component of NOTE's business model.

NOTE's 15 largest customers in sales terms represented 58% (57%) of the group's sales. As in the previous year, no single customer (group) represented more than about 9% of total sales.

Results of operations, January–December

In order to sharpen competitiveness and create the potential for further profitable sales growth, NOTE has been conducting methodical improvement work at all units for several years. 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. In tandem with this process, NOTE is progressively implementing a group-wide, business-specific ERP system. The new system is now operational across all Swedish units, enabling further streamlining by harmonising internal processes and systems support.

Gross margin grew by 1.1 percentage points to 12.0% (10.9%), mainly as a result of an expanded service content and focused cost-cutting initiatives.

Sales and administration overheads for the period reduced by 9%, mainly as a result of the divestment of the Norwegian operations in the second quarter. Furthermore, compared to the previous year, NOTE has conducted initiatives to reinforce its sales organisation further. Overheads were 6.5% (7.0%) of sales.

Other operating expenses/income, which normally consist of revaluations of foreign currency assets and liabilities, were SEK 0.3 (1.5) million. NOTE conducts fairly extensive management of foreign currencies, primarily USD and EUR. We're continuously seek to limit currency risk, and the wide fluctuations on the currency markets, mainly in the summer, had only a marginal impact on NOTE's operating profit.

Operating profit in the period improved by SEK 15.0 million to SEK 60.2 (45.2) million, implying a 1.5 percentage point operating margin increase to 5.5% (4.0%).

Stable progress of working capital and continued low market interest rates contributed to unchanged net financial income/ expense of SEK –5.7 (–5.4) million.

Profit after financial items was SEK 54.5 (39.8) million, corresponding to a profit margin increase of 1.5% to 5.0% (3.5%).

Profit after tax was SEK 45.2 (34.6) million, or SEK 1.57 (1.20) per share. The tax expense for the period corresponded to 17% (13%) of profit before tax.

Sales and results of operations, October–December

The demand for NOTE's services remained positive in the fourth quarter, especially in Sweden and Estonia. Sales in Finland and the UK slowed slightly. Progress in China remained affected by slower activity from some major customers.

Fourth-quarter sales decreased by 6% to SEK 288.2 (305.2) million. Adjusted for the sale of the Norwegian operations, the reduction was 1%. The introduction of a new customized logistics setup for a major international customer in the autumn, with finished goods stored in close proximity to customers' manufacture, affected NOTE's sales negatively in the short term. Sales from Industrial Plants were 43% (40%) of group sales.

Despite lower sales, and mainly as a result of cost rationalisations and stronger margins in ongoing customer projects, gross profit increased slightly year-on-year. The number of employees decreased significantly in the fourth quarter, particularly in the Chinese operations. Gross margin improved by 0.8 percentage points to 12.3% (11.5%).

Sales and administration overheads for the period decreased, mainly as a result of the sale of the Norwegian operations and non-recurring cost reductions, amounting to SEK 20.3 (23.6) million, or 7.0% (7.7%) of sales.

Other operating income/expenses, which mainly consist of revaluations of foreign currency assets and liabilities, were SEK 1.3 (–1.0) million.

Operating profit in the fourth quarter improved to SEK 16.5 (10.5) million, corresponding to an operating margin of 5.7% (3.4%). Profit after financial items improved to SEK 15.1 (9.2) million, corresponding to a profit margin of 5.2% (3.0%).

Cash flow and financial position

Cash flow

Competing successfully in the high mix/low to medium volume market segment sets high standards on flexible production, short lead times in manufacture, the effective supply of materials and the ability to deliver custom logistics solutions. Accordingly, NOTE focuses sharply on 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 2015, was fairly stable with good access to electronics components. This benefitted NOTE's materials planning and logistics.

Expanded prototype manufacture and start-ups of new batch production continued to set challenging demands on flexibility at the sourcing and production stages. Stock levels were relatively stable in the year. The implementation of new logistics solutions, including finished goods being stored in close proximity to customers' manufacture, led to some increase in stock after the summer. This contributed to increasing capital tied up in stock, including prepayments for materials, by 9% year-on-year. At the same time, the customer's payment terms were adjusted, meaning that total working capital tied up was marginal.

For natural reasons, accounts receivable—trade have reduced since year-end, and were 1% down year-on-year at the end of 2016. NOTE is conducting continuous initiatives to monitor its credit risk and the progress of customer credit terms. Despite increased international sales, and growing customer demand for extended credit terms, customer credit terms were comparable to the previous year.

Accounts payable—trade mainly relate to sourced electronic components and other production materials. NOTE is working actively to keep evolving its partnership model for suppliers, which involves changes including concentrating sourcing on fewer,

Equity to assets ratio

45.8%

Cash flow after investments

quality-assured suppliers. This has contributed to more efficient utilisation of working capital. At the end of the period, Accounts payable—trade were some 2% down on last year.

The combination of continued positive profit performance with rationalisation of working capital, contributed to cash flow after investments for the year improving to SEK 40.9 (5.2) million, corresponding to SEK 1.42 (0.18) per share.

Equity to assets ratio

According to NOTE's externally communicated financial targets, its equity to assets ratio should not fall below 30%. The equity to assets ratio at the end of the year was 45.8% (43.3%). The proposed dividend of SEK 0.70 per share, or SEK 20.2 million would reduce the equity to assets ratio by some 3 percentage points.

Liquidity and investments

Liquidity and net debt

NOTE is maintaining a sharp focus on measures to further improve the group's liquidity and cash flow.

The group's available cash and cash equivalents, including unutilised overdraft facilities, were SEK 127.1 (104.7) million at the end of the year. Factored accounts receivable—trade were some SEK 123 (121) million. Net debt at the end of the year was SEK 60.4 (81.8) million.

Investments

Capital expenditure on fixed assets amounted to SEK 15.8 (22.8) million in the year, corresponding to 1.4% (2.0%) of sales. The capital expenditure mainly consisted of projects to improve efficiency and quality.

To satisfy the increased demand for electronics manufacturing in China, NOTE brought another advanced surface mounting line on stream in the fourth quarter of 2015. Largely as a result of this, depreciation and amortisation according to plan increased to SEK 14.8 (12.8) million.

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 31.8 (29.9) million, and mainly related to intra-group services.

Net financial income/expense includes SEK 4.6 (7.0) million of dividends received from subsidiaries, as well as a net of group contributions received and paid of SEK 24.3 (15.9) million. The impairment of shares in subsidiaries had a negative impact on net financial income/expense. Profit/loss after tax was SEK –18.2 (13.1) million.

Extraordinary General Meeting 2017

The Extraordinary General Meeting on 20 January 2017, convened as a result of changes to the ownership structure, elected Johan Hagberg, John Hedberg and Per Ovrén to the Board and re-elected Kjell-Åke Andersson and Bahare Hederstierna. John Hedberg was elected Chairman.

Transactions with related parties

A subsidiary within the group sourced consulting services relating to operational improvements from a company owned by a related party.

Significant operational risks

NOTE is one of the leading manufacturing and logistics partners for production of electronics-based products in northern Europe. NOTE has especially strong market positioning in the high mix/ low to medium volume market segment, i.e. products in small to mid-size batches that require a high level of technological 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.

NOTE's Nearsourcing initiative, which is intended to increase sales growth while limiting overheads and capital expenditure in high-cost countries, is one way to mitigate the risks in operations. For a more detailed review of the group's operational and financial risks, refer to the Risks section on page 14, the Report of the Directors on page 26, as well as note 24, Financial risks and finance policy, on page 44 of NOTE's Annual Report for 2015.

NOTE's operations set relatively high standards on working capital financing. Accordingly, it puts a sharp focus on managing its liquidity risk.

Accounting and valuation principles

NOTE observes International Financial Reporting Standards (IFRS) as endorsed by the European Union. Significant accounting and valuation principles are stated on pages 34–36 of the Annual Report for 2015. The group's Interim Report has been prepared in accordance with the Swedish Annual Accounts Act and IAS 34, Interim Financial Reporting. The parent company observes RFR2.

All amounts are in millions of Swedish kronor (SEK million) unless otherwise stated.

Discrepancies between reports

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.

Chief Executive Officer NOTE AB (publ)

Danderyd, Sweden, 6 February 2017

Consolidated six-year summary

SEK million	2016	2015	2014	2013	2012	2011
Net sales	1,098.1	1,121.5	964.0	907.0	1,029.2	1,208.8
Gross margin	12.0%	10.9%	10.6%	8.0%	9.0%	11.0%
Operating margin	5.5%	4.0%	3.3%	1.0%	2.5%	5.3%
Profit margin	5.0%	3.5%	3.0%	0.1%	1.9%	4.7%
Cash flow after investing activities	40.9	5.2	2.5	–2.0	97.0	56.5
Cash flow per share, SEK	1.42	0.18	0.09	–0.07	3.36	1.96
Equity per share, SEK	11.01	9.94	9.36	8.25	9.02	8.98
Return on operating capital	16.1%	12.9%	10.1%	3.1%	7.9%	17.7%
Return on equity	14.9%	12.4%	9.7%	0.3%	4.9%	16.5%
Equity to assets ratio	45.8%	43.3%	44.1%	44.0%	45.2%	41.0%
Average number of employees	987	940	893	847	884	939
Net sales per employee, SEK 000	1,113	1,193	1,080	1,071	1,164	1,287

Consolidated quarterly summary

SEK million	2016 Q4	2016 Q3	2016 Q2	2016 Q1	2015 Q4	2015 Q3	2015 Q2	2015 Q1
Net sales	288.2	248.4	282.4	279.1	305.2	261.5	279.5	275.3
Gross margin	12.3%	11.2%	12.6%	11.7%	11.5%	10.7%	10.9%	10.4%
Operating margin	5.7%	5.7%	5.5%	5.1%	3.4%	4.4%	4.0%	4.3%
Profit margin	5.2%	5.2%	4.8%	4.6%	3.0%	4.0%	3.3%	4.0%
Cash flow after investing activities	3.2	6.5	4.1	27.1	25.4	–24.0	–18.0	21.8
Cash flow per share, SEK	0.11	0.23	0.14	0.94	0.88	–0.83	–0.62	0.76
Equity per share, SEK	11.01	10.55	10.09	10.26	9.94	9.81	9.47	9.77
Equity to assets ratio	45.8%	44.7%	44.4%	44.5%	43.3%	43.5%	43.4%	42.6%
Average number of employees	916	988	1,047	1,016	963	962	931	901
Net sales per employee, SEK 000	315	251	270	275	317	272	300	306

Financial definitions

Key figures, besides IFRS, published in this Interim Report

Average number of employees	Average number of employees calculated on the basis of hours worked.
Cash flow per share	Cash flow after investments divided by the number of shares at end of the period.
Equity per share	Equity divided by the number of shares at end of the period.
Equity to assets ratio	Equity as a percentage of total assets.
Gross profit margin	Gross profit as a percentage of net sales.
Net debt	Interest-bearing liabilities and provisions less cash and cash equivalents.
Net sales per employee	Net 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.
Operating margin	Operating profit as a percentage of net sales.
Profit margin	Profit after financial items as a percentage of net sales.
Return on equity	Net profit as a percentage of the average equity for the most recent twelve-month period.
Return on operating capital	Operating profit as a percentage of the average operating capital for the most recent twelve-month period.

Consolidated Income Statement

SEK million	2016 Q4	2015 Q4	2016 full year	2015 full year
Net sales	288.2	305.2	1,098.1	1,121.5
Cost of goods and services sold	–252.7	–270.1	–966.4	–999.0
Gross profit	35.5	35.1	131.7	122.5
Selling expenses	–12.7	–15.3	–42.3	–46.8
Administrative expenses	–7.6	–8.3	–29.5	–32.0
Other operating income/expenses	1.3	–1.0	0.3	1.5
Operating profit	16.5	10.5	60.2	45.2
Net financial income/expenses	–1.4	–1.3	–5.7	–5.4
Profit after financial items	15.1	9.2	54.5	39.8
Income tax	–2.2	–2.2	–9.3	–5.2
Profit after tax	12.9	7.0	45.2	34.6

Consolidated Statement of Other Comprehensive Income

SEK million	2016 Q4	2015 Q4	2016 full year	2015 full year
Profit after tax	12.9	7.0	45.2	34.6
Other comprehensive income
Items that can be subsequently reversed in the income statement:
Exchange rate differences	0.6	–3.4	6.1	–3.0
Cash flow hedges	0.0	0.0	0.0	–0.4
Tax on hedges and exchange rate difference	0.0	0.2	–0.2	0.1
Total other comprehensive income after tax	0.6	–3.2	5.9	–3.3
Comprehensive income after tax	13.5	3.8	51.1	31.3

Earnings per share

	2016 Q4	2015 Q4	2016 full year	2015 full year
Number of shares at end of period (000)	28,873	28,873	28,873	28,873
Weighted average number of shares (000)	28,873	28,873	28,873	28,873
Earnings per share, SEK	0.45	0.24	1.57	1.20

Consolidated Balance Sheet

SEK million	2016 31 dec	2015 31 dec
Assets
Goodwill	70.4	70.4
Other intangible assets	10.0	10.0
Property, plant and equipment	65.3	65.9
Deferred tax assets	5.0	8.9
Other financial assets	1.6	1.5
Total non-current assets	152.3	156.7
Inventories	206.3	189.8
Accounts receivable—trade	249.8	252.1
Other current receivables	14.5	17.3
Cash and bank balances	71.6	47.3
Total current assets	542.2	506.5
TOTAL ASSETS	694.5	663.2
Equity and liabilities
Equity	318.0	287.1
Liabilities
Long-term interest-bearing liabilities	6.8	9.7
Deferred tax liabilities	2.5	2.4
Total non-current liabilities	9.3	12.1
Current interest-bearing liabilities	125.2	119.4
Accounts payable—trade	171.3	175.1
Other current liabilities	70.7	69.5
Total current liabilities	367.2	364.0
TOTAL EQUITY AND LIABILITIES	694.5	663.2

Consolidated Change in Equity

SEK million	2016 Q4	2015 Q4	2016 full year	2015 full year
Opening equity	304.5	283.3	287.1	270.2
Comprehensive income after tax	13.5	3.8	51.1	31.3
Dividend	–	–	–20.2	–14.4
Closing equity	318.0	287.1	318.0	287.1

Consolidated Cash Flow Statement

SEK million	2016 Q4	2015 Q4	2016 full year	2015 full year
Operating activities
Profit after financial items	15.1	9.2	54.5	39.8
Reversed depreciation and amortisation	4.2	3.8	14.8	12.8
Other non-cash items	–7.8	2.5	–1.8	–1.1
Tax paid	7.7	0.2	–0.4	–4.1
Change in working capital	–14.7	14.5	–18.5	–28.7
Cash flow from operating activities	4.5	30.2	48.6	18.7
Cash flow from investing activities	–1.3	–4.8	–7.7	–13.5
Cash flow from financing activities	14.8	–1.0	–17.0	7.3
Change in cash and cash equivalents	18.0	24.4	23.9	12.5
Cash and cash equivalents
At beginning of period	53.6	23.0	47.3	35.2
Cash flow after investing activities	3.2	25.4	40.9	5.2
Cash flow from financing activities	14.8	–1.0	–17.0	7.3
Exchange rate difference in cash and cash equivalents	0.0	–0.1	0.4	–0.4
Cash and cash equivalents at end of period	71.6	47.3	71.6	47.3
Un-utilised credits	55.5	57.4	55.5	57.4
Available cash and cash equivalents	127.1	104.7	127.1	104.7

Operating segments

Nearsourcing Centres consist of units located in geographical regions with high industrial activity and innovation standards in Sweden, Norway (until April 2016), Finland and the UK. 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, located in Estonia and China, are

close to large final markets and in regions with strong traditions of production and high competence levels. In addition to developmentoriented services, these units also offer cost-efficient volume production of PCBAs and box build products.

Other units are group-wide business support functions in the parent company and for the sourcing operations in NOTE Components.

SEK million	2016 Q4	2015 Q4	2016 full year	2015 full year
NEARSOURCING CENTRES
External net sales	163.0	182.0	638.1	704.7
Internal net sales	2.1	1.2	6.2	4.5
Operating profit	10.6	8.5	25.6	25.2
Operating margin	6.4%	4.6%	4.0%	3.5%
Inventories	106.6	94.6	106.6	94.6
External accounts receivable—trade	126.2	124.8	126.2	124.8
Average number of employees	278	330	298	350
INDUSTRIAL PLANTS
External net sales	125.2	123.2	460.0	416.8
Internal net sales	25.4	32.5	127.2	147.1
Operating profit	6.5	10.1	39.0	30.1
Operating margin	4.3%	6.5%	6.6%	5.3%
Inventories	99.7	95.2	99.7	95.2
External accounts receivable—trade	123.2	126.9	123.2	126.9
Average number of employees	619	615	670	573
OTHER UNITS AND ELIMINATIONS
Internal net sales	–27.5	–33.7	–133.4	–151.6
Operating profit	–0.6	–8.0	–4.4	–10.0
External accounts receivable—trade	0.4	0.4	0.4	0.4
Average number of employees	19	18	19	17

Sales and operating margin Nearsourcing Centres

Sales and operating margin Industrial Plants

Parent Company Income Statement

SEK million	2016 Q4	2015 Q4	2016 full year	2015 full year
Net sales	9.6	7.1	31.8	29.9
Cost of services sold	–3.8	–4.8	–16.1	–18.0
Gross profit	5.8	2.3	15.7	11.9
Selling expenses	–5.6	–6.0	–11.0	–10.8
Administrative expenses	–3.3	–2.8	–11.2	–10.9
Other operating income/expenses	–10.9	–1.7	–15.1	–1.7
Operating profit	–14.0	–8.2	–21.6	–11.5
Net financial income/expenses	24.4	15.8	7.2	26.9
Profit after financial items	10.4	7.6	–14.4	15.4
Appropriations	–	0.0	–	–
Profit before tax	10.4	7.6	–14.4	15.4
Income tax	–4.0	–2.3	–3.8	–2.3
Profit after tax	6.4	5.3	–18.2	13.1

Parent Company Statement of Other Comprehensive Income

SEK million	2016 Q4	2015 Q4	2016 full year	2015 full year
Profit after tax	6.4	5.3	–18.2	13.1
Other comprehensive income
Items that can be subsequently reversed in the income statement:
Fair value reserve	0.1	–1.0	0.6	–1.0
Tax on fair value reserve	0.0	0.2	–0.2	0.2
Total other comprehensive income after tax	0.1	–0.8	0.4	–0.8
Comprehensive income after tax	6.5	4.5	–17.8	12.3

Parent Company Balance Sheet

SEK million	2016 31 dec	2015 31 dec
Assets
Intangible assets	1.2	0.8
Property, plant and equipment	0.2	0.1
Deferred tax assets	–	1.3
Long-term receivables from group companies	9.6	36.5
Financial non-current assets	221.4	248.6
Total non-current assets	232.4	287.3
Receivables from group companies	43.9	35.6
Other current receivables	1.5	2.3
Cash and bank balances	34.9	28.4
Total current assets	80.3	66.3
TOTAL ASSETS	312.7	353.6
Equity and liabilities
Equity	215.4	253.4
Liabilities
Liabilities to group companies	79.5	86.8
Other current liabilities and provisions	17.8	13.4
Total current liabilities	97.3	100.2
TOTAL EQUITY AND LIABILITIES	312.7	353.6

Parent Company Change in Equity

SEK million	2016 Q4	2015 Q4	2016 full year	2015 full year
Opening equity	208.9	248.9	253.4	261.0
Comprehensive income after tax	6.5	4.5	–17.8	12.3
Dividend		–	–20.2	–14.4
Effect of change in accounting principle		–		–5.5
Closing equity	215.4	253.4	215.4	253.4

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 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.

Nearsourcing Centres and Industrial Plants

The business is organised to address the differing needs of its customers optimally.

NOTE's Nearsourcing Centres 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 offer developmentoriented services and cost-efficient volume production of PCBAs and box build products.

NOTE AB (publ)

Corporate ID no. 556408-8770

Calendar

Interim Report Jan—Mar	20 Apr 2017
Interim Report, Jan—Jun	17 July 2017
Interim Report, Jan—Sep	17 Oct 2017

Annual Report

The Annual Report for 2016 will be published on NOTE's website, www.note.eu, in week commencing Monday 27 March.

Annual General Meeting

The AGM vill be held at Spårvagnshallarna in Stockholm, Sweden, at 2 p.m. on 20 April 2017.

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 E-mail: info@note.eu Tel: +46 (0)8 568 99000

Investor Relations contact

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

NOTE AB (publ) Box 711 Vendevägen 85 A 182 17 Danderyd Sweden

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

NOTE Hyvinkää Oy Avainkierto 3 05840 Hyvinkää Finland

NOTE Lund AB Maskinvägen 3 227 30 Lund Sweden

NOTE Norrtelje AB Box 185 Vilhelm Mobergs gata 18 761 22 Norrtälje Sweden

NOTE Pärnu OÜ Laki 2 80010 Pärnu Estonia

NOTE Torsby AB Inova Park 685 29 Torsby Sweden

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

NOTE Electronics (Dongguan) Co Ltd No. 6 Ling Dong 3 Road Lincun Industrial Center Tangxia

523710 Dongguan Guangdong Province China

www.note.eu info@note.eu