Annual Report 2010 - CDON Group

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Condensed consolidated income statement (SEK thousands) Revenue 1,746,162 1,746,162 86 Cost of goods sold CDON Gross profit/loss Group AB Annual report 2010 -1,476,858 269,304 79,167 79,167 -1,397,691 348,471 Sales & administrative expenses -144,971 -79,095 -224,066 Other operating income and expenses, net 806 -72 734 Operating profit/loss 125,139 - 125,139 Reclassifications have been made for marketing costs and some internal warehousing costs. As such, cost of goods sold includes costs for CDON products, Group distribution, AB warehousing, shipping, and payment transactions, as well as realised and anticipated bad debt losses. The changes Annual were implemented report 2010 at 1 January 2010 and data from 2009 has been adjusted to facilitate comparison. Note 29 Events after the end of the financial year Acquisition of Rum21 AB CDON Group acquired 90.1% of RUM21 AB, a family-owned online retailer of designer brand furniture and interior design products on 31 January 2011. The company, less cash and liabilities, was acquired for a purchase price of SEK 14 million, of which SEK 7.3 million is paid as a deferred/contingent part of the acquisition price over a three-year period starting in 2012. Rum21.se expands the Group’s online portfolio and provides the Group with access to an industry segment that is well suited for e-commerce and has considerable growth potential. Company earnings are consolidated within the Group from 1 February 2011. Its sales in 2010 amounted to SEK 11 million and it had four employees at year-end. A preliminary acquisition analysis for the purchase of Rum21 is shown below. Acquired net assets (SEK thousands): Carrying amount Property, plant, and equipment 21 Intangible non-current assets 7,243 Inventory 1,914 Accounts receivable and other receivables 811 Cash and cash equivalents 1,360 Deferred tax liability -1,905 Accounts payable and other operating liabilities -2,249 Net identifiable assets and liabilities 7,195 Non-controlling interest -1,535 Goodwill on acquisition 8,314 Purchase price 13,974 Deferred purchase price -5,000 Provisions for additional purchase consideration -2,311 Cash and cash equivalents in acquired companies -1,360 Net cash flow 5,303 Convertible conversion rate The conversion price for the Group’s SEK 250.0 million five-year convertible bond was set as of 19 January 2011 at SEK 38.00, which corresponds to 125% of the volume-weighted share price for CDON Group shares during the first 20 days of trading, that is to say, the period from 15 December 2010 to 14 January 2011. MTG may therefore convert the bond into a maximum of 6,578,947 CDON Group shares between 15 June 2012 and the end of 1 December 2015, which would represent a 9.0% dilution effect based on the number of shares outstanding as at 31 December 2010. Continued focus on Germany for Nelly.com Nelly.com was launched as a test in Germany in May 2010, which marked the first expansion of CDON Group outside the Nordic region. The internet store’s initial marketing campaign comprised affiliate programmes, online social media, and TV advertising campaigns. The test launch showed a healthy demand for Nelly.com products in the German marketplace; so a decision was made in March 2011 to follow the test launch with the permanent establishment of Nelly.com in Germany. Nelly.com’s German launch is expected to generate loss for 2011 and 2012. Note 30 Inventories Before reclassifications Jan-dec 2009 Reclassifications After reclassifications During the year, inventory has been impaired by SEK 8,361 thousand, which is considered to be within the boundaries for normal obsolescence.
CDON Group AB Annual report 2010 The board's attestation The Board of Directors and Chief Executive Officer certify that the Annual Report has been prepared in accordance with generally accepted accounting principles in Sweden and the consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards which are defined in regulation (EC) 1606/2002 of the European Parliament and of the Council of July 19, 2002 on the application of international accounting standards. The Annual Report and consolidated accounts provide a true and fair view of the financial position and earnings of the Parent Company and the Group. The Directors´ Report for the Group and parent company present a fair summary of the Group and parent company's activities, position, and results, and describes significant risks and uncertainty factors faced by the parent company and Group companies. Hans-Holger Albrecht Chairman of the Board Lars-Johan Jarnheimer Board member Mengmeng Du Board member Stockholm 20 April 2011 Mikael Olander Chief Executive Officer Anders Nilsson Board member Henrik Persson Board member Our audit report was submitted on 20 April 2011 KPMG AB George Pettersson Authorised Public Accountant Mia Brunell Livfors Board member Lars Nilsson Board member Florian Seubert Board member The annual accounts and consolidated accounts have, as stated above, been approved for publication by the board on 20 April 2011. 87
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Annual Report 2010 - CDON Group

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