Annual Report 2010 - CDON Group

CDON Group Group AB AB
Annual Report report 2010
Financing and interest rates
The CDON Group currently has a strong financial position with net cash, but finances its
operations in part by borrowing, which mainly consists of a nominal SEK 250 million convertible
loan. For more information on the convertible loan, see Note 27. This means that part of CDON
Group’s cash flow is used for interest payments, but the fixed interest rate of 2.85% on the
convertible limits the company’s interest rate risk. If the CDON Group’s development deviates
from the forecasted development, it cannot be ruled out that a situation could arise in the future
in which CDON Group has difficulties paying interest or must obtain new capital, for example
through a new share issue. Potential future acquisitions may also increase the need for new
capital. It cannot be guaranteed that additional capital can be obtained on favourable terms for
the CDON Group.
For further information on the financial risks, see Note 20.
Legal risks
Legislation, regulation, and compliance
CDON Group is affected by legislation and regulations relating to some of the goods that it sells.
For example, products within the Sports & Health segment are covered by national food
regulations. These products must therefore be approved by regulatory authorities in some of the
countries where the CDON Group operates, which may entail approval or registration. Violation of
legislation or regulations, such as food and drink legislation, could lead to injunctions against the
CDON Group. Moreover, the cost of regulatory compliance can be substantial.
Intellectual property rights
The CDON Group works actively to protect its brands, name, and domain names in the
jurisdictions where the CDON Group operates. However, there is no assurance that the measures
the CDON Group has taken are sufficient. In CDON Group’s opinion, the CDON Group does not
infringe on any third-party intellectual property rights. However, there are no guarantees that in
future situations, such as product launches or in conjunction with expansion into new geographic
markets, the CDON Group will not infringe or be accused of infringing on third-party intellectual
property rights.
Taxes
The CDON Group conducts business in several different countries. There are no assurances that
the CDON Group’s interpretation and application of applicable laws, regulations, case law, and the
tax authorities’ administrative practices have been or will continue to be correct, or that such
laws, regulations, case law, or practices will not be amended, possibly retroactively. CDON Group
may be affected by changes in different countries’ tax laws and may have to pay additional taxes,
interest, or penalties in connection with future tax audits or may be required to write down
deferred tax assets.
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