Year-end report for January-December 2005

• Fourth quarter sales totalled SEK 32 million (29), while sales for the Anoto business unit increased to SEK 27 million (22). January-December sales were SEK 113 million (147), of which the Anoto business unit accounted for SEK 92 million (95). Within the Anoto Business Unit sales from royalties has increased by 74% as compared to last year. • The Group’s fourth quarter gross profit rose to 73% (65), or SEK 24 million (19). The Group’s gross profit for January-December increased to 70% (61), or SEK 79 million (90). • Cash flow amounted to SEK 140 million (–17) for the fourth quarter and SEK 170 million (–74) for January-December. The issue of new shares carried out in the fourth quarter and the exercising of options in spring boosted cash flow by a total of SEK 182 million (0). • The loss before depreciation and amortisation was SEK –16 million (1) for the fourth quarter and SEK –53 million (–45) for January-December, of which the new initiative in Anoto Content and Applications accounted for SEK – 6 million (0). • Earnings after taxes amounted to SEK 48 million (–5) for the fourth quarter and SEK –14 million (–75) for January-December. Financial income of SEK 70 million (0) that arose in connection with restructuring and streamlining of subsidiaries boosted earnings after taxes. • Earnings per share amounted to SEK 0.38 (–0.04) for the fourth quarter and SEK –0.12 (–0.64) for January-December. Operations • Sales of the FLY pentop computer, an interactive pen manufactured by Anoto partner LeapFrog (ticker symbol LF on the New York Stock Exchange) for children and teens, began on 16 October in the United States. The launch was highly successful and the sales figures were excellent. • Jim Marggraff, LeapFrog’s Executive Vice President Worldwide Content, was appointed as new CEO of Anoto, Inc., a wholly owned subsidiary of Anoto Group AB. He began setting up the company's Silicon Valley office and assumed responsibility for promoting the new digital pen and paper segment of pentop computing. To finance this initiative a new issue of shares was carried out in December yielding a net of SEK 163 million.. • An announcement was made in the fourth quarter that Dai Nippon Printing (DNP), Japan's largest publications and printing company with annual sales of SEK 13 billion, was behind the previously disclosed EUR 7 million investment in the next generation Anoto pen. • Forms sales continued to grow in the fourth quarter, including a number of new commercial installations. Interest in forms solutions has increased as the number of commercial applications has become known. In cooperation with its partners, Anoto launched talks with many new end-customers. • Anoto Group restructured and streamlined its subsidiaries. Deconsolidation of a previous subsidiary generated 2005 Group financial income of approximately SEK 70 million. Key Developments after 31 December • Anoto Group AB's divestment in January of all minority interests in an inactive former subsidiary generated Group financial income of approximately SEK 70 million. The proceeds strengthened cash flow but will have no impact on 2006 earnings. Anoto Group AB (publ), company registration no. 556532-3929 Emdalavägen 18 SE-223 69 Lund, Sweden Phone: +46 46 540 12 00 www.anoto.com