Interim Report January – March 2005

• Group sales decreased by 34 per cent to SEK 29 million (44). Sales in Business Unit Anoto dropped by 23 per cent to SEK 23 million (30). Large license income generated by the LeapFrog project in the first quarter accounts for the decrease, SEK 7 (15) million. • The Group’s profit for the period was 65 per cent (70), SEK 19 million (31). The reduced gross profit is also due to the large license income that impacted the margin positively in the first quarter of 2004. • For the first time in its history Anoto achieved positive cash flow from operations of SEK 1 million (-17). Total cash flow for the period was SEK –1 million (-18). The Group is well on the road to achieving the goal of positive cash flow for the full year of 2005. • Income before depreciation and amortisation was SEK –8 million (-7). • Income after taxes totalled SEK –15 million (-15). • Earnings per share amounted to SEK - 0,13 (-0,13). Operations: • Anoto partner US-based LeapFrog presented an entirely new product, the FLY Pentop computer, based on Anoto technology. The FLY Pentop computer targets children and teenagers, helping to make it fun to learn to read, write, do mathematics and acquire knowledge in general. Sales in the US will start in the autumn 2005. • British Magicomm has implemented a forms solution at one of the world’s largest insurance loss adjusters, GAB Robbins. The forms solution is utilised by the company’s loss adjusters making home visits in order to process the insurance claims of private persons. • Logitech introduced a bluetooth version of its io2 digital pen. CEO, Anders Tormod’s statement: LeapFrog’s launching of the Fly Pentop Computer, an new product that targets children and teenagers, helping to make it fun to learn to read, write etcetera, is by far the most important event of the first quarter for Anoto. The launching attracted a great deal of media attention and interest in the product is high. This is an important milestone and an entirely new market opening up for Anoto. The quarter has been marked by intense activity throughout. Our partners are steadily assuming a greater role in the further development and marketing of Anoto functionality, and the results are gradually coming. Anoto’s focus on systems and forms solutions for enterprises and organisations has developed successfully. The user base is constantly growing and a large number of pilot projects are ongoing. The quarter also saw the launch of new product packages for personalised use offering interesting and innovative solutions for notetaking. In addition Maxell and Logitech launched two new digital pens. In comparison with Q1 of 2004, the Group’s income and margin decreased. The reduced sales are mainly due to lower sales of certain C Technologies products that have been phased out. The Company’s focus and growth is primarily on Anoto’s products and technology where income is based on licenses and royalties that generate a very strong gross margin. In Q1 of 2004 significant lump sums for licenses were received. These lump sums resulted in Anoto posting a favourable gross profit. Compared with Q1of 2004, Anoto’s gross profit in Q1 of 2005 remained unchanged at 6 per cent. Level of costs is stable and cash flow improved considerably. The first quarter was a step in the right direction towards achieving our goals for the year, one of which is positive cash flow for the full year. Anoto Group AB (publ) Corporate Identity Number 556532-3929 Scheelevägen 19 C SE-223 70 Lund Telephone: +46 46 540 12 00 www.anotogroup.com