Nelly Group — Annual Report 2013

Apr 8, 2014

Annual Report 2013

CDON Group AB NASDAQ OMX Stockholm: CDON

Content

Comments by the CEO
Comments by the CEO Responsibility within CDON Group
Responsibility within CDON Group Financial review
Financial review Board of Directors' Report
Board of Directors' Report Corporate Governance Report
Corporate Governance Report Board of Directors
Board of Directors Executive Management
Executive Management Financial statements – The Group
Financial statements – The Group Financial statements – Parent Company
Financial statements – Parent Company Notes
Notes The Board's attestation
The Board's attestation Audit Report – translation
Audit Report – translation Definitions

Our customers are our most important asset Comments by the CEO

Our customers are our most important asset

CDON Group operates in the rapidly-growing online retail sector, with nine e-stores covering four business segments. Each of our stores faces its own challenges and opportunities, but they all have one thing in common – customer satisfaction is the key to success. CDON Group operates in the rapidly-growing online retail sector, with nine e-stores covering four business segments. Each of our stores faces its own challenges and opportunities, but they all have one thing in

In , our stores had more than 248 million visits, and almost 3 million customers made over seven million purchases. These are impressive figures for the Nordic market, which show that our customers appreciate the work carried out every day on their behalf by our dedicated staff. Our customers' confidence in us strengthens our belief that online shopping will continue to take market share from the traditional retail sector. common – customer satisfaction is the key to success. In , our stores had more than 248 million visits, and almost 3 million customers made over seven million purchases. These are impressive figures for the Nordic market, which show that our customers appreciate the work carried out every day on their behalf by our dedicated staff. Our

Our customers are our most important asset, and it is for their sake that we are changing and improving our offer and stores by bringing them up-to-date and making them more stable and attractive. This enables us to provide a better and more inspiring customer experience. An increasing number of our stores are aimed at customers in a hurry, who want to shop via mobile devices. We are adding new and improved payment solutions and delivery options, and we are broadening our range to provide our customers with a better choice of competitive offers. All these measures are essential if we are to continue to grow and attract increasing numbers of satisfied and loyal customers. market share from the traditional retail sector. Our customers are our most important asset, and it is for their sake that we are changing and improving our offer and stores by bringing them up-to-date and making them more stable and attractive. This enables us to provide a better and more inspiring customer experience. An increasing number of our stores are aimed at customers in a hurry, who want to shop via mobile devices. We are adding new and improved payment solutions and delivery options, and we are broadening our range to provide our customers with a better choice of competitive offers. All

Our subsidiaries' challenges and strategies satisfied and loyal customers.

In the Entertainment segment, sales of physical media-related products are continuing to fall but, at the same time, CDON.com has accelerated its transformation into a full-range online department store. The range has been expanded, with new product categories, and, at the end of 2013, we opened CDON.com as a market place where external stores can market and sell their products to CDON.com's customers. This gives our customers access to an exciting and competitive product range. Our subsidiaries' challenges and strategies In the Entertainment segment, sales of physical media-related products are continuing to fall but, at the same time, CDON.com has accelerated its transformation into a full-range online department store. The range has been expanded, with new product categories, and, at the end of 2013, we opened CDON.com as a market place where external stores can market and sell their

In the Fashion segment, Nelly.com continued to grow in 2013. After a period of reorganisation and focusing on internal processes, the company has achieved a level of operational stability which has enabled us to concentrate on growth once again. An excellent example of this is our decision to expand into new geographical markets. At the end of the year, the French-language version of Nelly.com was launched, while a global English-language version gave Nelly.com access to around 60 new markets, including the USA and Australia. competitive product range. In the Fashion segment, Nelly.com continued to grow in 2013. After a period of reorganisation and focusing on internal processes, the company has achieved a level of operational stability which has enabled us to concentrate on growth once again. An excellent example of this is our decision to expand into new geographical markets. At the end of the year, the French-language

The Sports and Health segment continued to experience impressive growth in 2013. Sales increased rapidly, and we achieved a high level of profitability. New private labels were launched during the year, and the sale of private labels increased to 45% of the sales volume for the segment. We have also launched the completely new Internet store, Milebreaker.com, which is aimed at the large number of endurance sports enthusiasts in Sweden. to around 60 new markets, including the USA and Australia. The Sports and Health segment continued to experience impressive growth in 2013. Sales increased rapidly, and we achieved a high level of profitability. New private labels were launched during the year, and the sale of private labels increased to 45% of the sales volume for the

The Home and Garden segment, incorporating the Tretti and Rum21 stores, continued to expand its range to include white goods and home furnishings, and this led to a steady improvement in sales volumes and profitability during the year.

All the subsidiaries within the Group have worked intensively to improve their internal processes. This effort was necessary after several years of strong growth, and the result was an improvement in the level of competence in the organisation, as well as in the efficiency of our logistics and value chain during 2013. By the end of the year, we saw the positive effects of the improvements in indicators such as improved cash flow and reduced stock levels, and in the fact that all our segments generated a profit in the fourth quarter.

Our task is to deliver shareholder value through continued growth and increased market share. We will achieve this by continuing to focus strongly on our customers and, in parallel with this, working to ensure a fundamental improvement in performance.

Finally, I would like to thank our customers and shareholders for the confidence you have shown in the CDON Group during the year, and we look forward to welcoming you all to our stores in .

Paul Fischbein President and CEO CDON Group AB

A sustainable business model Responsibility within CDON Group

A sustainable business model

CDON Group is a part of society. Our ability to take responsibility for how we conduct our business is fundamental to our ability to build a credible business that creates long-term value. At CDON Group, we see it as our opportunity and obligation to act in our everyday decisions from an economic, social and environmentally sustainable perspective. CDON Group is a part of society. Our ability to take responsibility for how we conduct our business is fundamental to our ability to build a credible business that creates long-term value. At CDON Group, we see it as our opportunity and obligation to act in our everyday decisions from an

We conduct our business responsibly economic, social and environmentally sustainable perspective.

CDON Group promotes a culture of openness and accountability and we always act with honesty and integrity. We conduct our business responsibly

We act responsibly towards society and integrity.

CDON Group supports selected social initiatives to bring about positive change in the society in which we operate. We consider the climate issue and encourage environmental responsibility in our employees, in the general public and in society as a whole. We act responsibly towards society CDON Group supports selected social initiatives to bring about positive change in the society in

We act responsibly towards our colleagues our employees, in the general public and in society as a whole.

CDON Group guarantees an equal workplace, invests in the development of employees and ensures that our companies are good and safe places to work. We act responsibly towards our colleagues

CDON Group is a part of society and we show commitment to our community, together with our employees. We do this by working together with voluntary organisations to raise awareness on issues that are close to our business and that we support. ensures that our companies are good and safe places to work. CDON Group is a part of society and we show commitment to our community, together with our

All the companies in the Group support and help Reach For Change, which works to create a better world for children. During the year the Group provided support in the form of money, but also advertising space in our magazines, e.g. Nelly Magazine, on invoices and via our online stores. In addition to this, the Group's stores have also carried out their own separate initiatives. issues that are close to our business and that we support. All the companies in the Group support and help Reach For Change, which works to create a better world for children. During the year the Group provided support in the form of money, but

Lekmer.com joined forces with Superhjältar mot cancer in 2013, a voluntary organisation that focuses on spreading happiness and laughter among sick children across Sweden. Lekmer has also donated toys to play therapy wards at Swedish hospitals, to vulnerable children via charities and to refugee centres for children and pregnant women. Lekmer's contributions also stretch beyond Sweden's borders through cooperation with local charities across Scandinavia, including Sykehusbarn, A help 2 U and Hope. The fashion store Nelly.com has replaced all its delivery bags with eco-friendly alternatives and also helped UNICEF by providing free marketing during and following the disaster in the Philippines. CDON.com continued its partnership with Desmo, which offers customers the opportunity to donate money to various charities when making a purchase from CDON.com. The Group's Sports & Health segment has also worked in partnership with young people's centre Fryshuset's gym, through Gymgrossisten. The idea is to provide a relaxed environment for enabling good role models to inspire and share their knowledge and experiences within training and diet, and the importance of both through the various stages in life. In addition to this, the Group's stores have also carried out their own separate initiatives. Lekmer.com joined forces with Superhjältar mot cancer in 2013, a voluntary organisation that focuses on spreading happiness and laughter among sick children across Sweden. Lekmer has also donated toys to play therapy wards at Swedish hospitals, to vulnerable children via charities and to refugee centres for children and pregnant women. Lekmer's contributions also stretch beyond Sweden's borders through cooperation with local charities across Scandinavia, including Sykehusbarn, A help 2 U and Hope. The fashion store Nelly.com has replaced all its delivery bags with eco-friendly alternatives and also helped UNICEF by providing free marketing during and following the disaster in the Philippines. CDON.com continued its partnership with Desmo, which offers customers the opportunity to donate money to various charities when making a purchase from CDON.com. The Group's Sports & Health segment has also worked in partnership with young people's centre Fryshuset's gym, through Gymgrossisten. The idea is to provide a relaxed

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Corporate responsibility

.

Corporate responsibility can be defined in many ways; at CDON Group we regard it as both our opportunity and obligation to take responsibility in relation to direct and indirect stakeholders but also future generations. CDON Group has a particular focus on sustainability from an economic, social and environmental perspective. We strive to ensure that relations with our partners are conducted in an appropriate manner and our aim is to only enter into partnerships with companies that manage their businesses in line with current legislation and ethical principles. Human rights, gender equality and environmental requirements are always satisfied and CDON Group also endeavours to ensure that our suppliers and partners meet these requirements as far as possible.

Our code of conduct, or "the code", explains the basic standards that we expect our employees to observe in all situations. The code contains regulations to protect CDON Group's interests and its shareholders, to ensure compliance with the law and clarify CDON Group's position on moral and ethical issues. The code exists to make sure that we as individuals take responsibility for conducting operations in accordance with CDON Group's values. We always gather information on, and follow relevant laws, ordinances and international conventions in the countries in which we operate.

Our goal at CDON Group is to always be honest and professional in our relationships with suppliers and subcontractors. We always aim to develop business relationships with companies that manage their operations in accordance with ethical principles. CDON Group's supplier policy is an integral part of our code of conduct and applies to all companies, suppliers and manufacturers with whom CDON Group works.

CDON Group's corporate responsibility guidelines and current code of conduct, supplier policy and environmental policy are available on the Group's website http://www.cdongroup.com/en/Modern-Responsibility/

Sustainable environmental work

The environment is everyone's responsibility – both companies and individuals. Our ability to take responsibility for sustainable development is the key to strengthening public confidence in us. CDON Group is constantly searching for new ways to further reduce its environmental impact.

Our operations require warehousing, packaging and transportation. Our customers, owners and society in general expect us to offer environmentally conscious choices and to operate our business in a manner that is sustainable in the long term.

We have spent a considerable amount of time developing our packaging selection to optimise product protection for every delivery, while using the smallest amount of material possible. The result is smaller and lighter packaging material. Most of our packages are sent in boxes manufactured from recycled fibre or plastic bags made from eco-friendly material. Some of the Group's stores offer their customers the opportunity to offset the carbon used for their deliveries.

Most of our shipments are sent with PostNord and Bring. These two suppliers pursue active and leading environmental and climate work within their sector. Products packaged in envelopes are mainly sent as eco-friendly product letters, the most environmentally compatible distribution method, which avoids air shipping. PostNord offsets the carbon use for the distribution. Bring is the first climate-neutral postal company in the world. Carbon used by transport through Bring and its subsidiaries is fully offset. Itella, which is our Finnish agent, built a sorting centre in 2013 with solar cells, and electric vehicles are used to a certain extent for transporting to agents.

Responsibility towards colleagues

Within CDON Group, we rely on our skilled and motivated employees to run our business, and we value our employees highly. It is essential for us that everyone is treated fairly and that their efforts are appreciated. CDON Group is an employer that provides equal opportunities and we offer all our employees the same opportunities, regardless of anything that does not affect an individual's ability to do his or her job.

At CDON Group we value diversity and we provide equal treatment; for us it is performance that determines opportunities to develop within our Group. We are constantly striving to improve as an employer and we encourage participation, interest and dedication from our employees. Every year we carry out an employee survey and performance reviews are held with all employees to make sure we identify problems, but also to make use of talent within the Group.

Financial review 2009– Financial review 2009–

Group (SEK million)
Operating revenue and income
Group (SEK million) Net sales
Operating revenue and income Gross profit
Net sales Operating profit/loss (EBIT)	-	-
Gross profit Earnings after net financial items	-	-
Operating profit/loss (EBIT) Income for the period	- -	- -
Earnings after net financial items	-	-
Income for the period Profitability and related ratios	-	-
Gross margin
Profitability and related ratios Operating margin	-	-
Gross margin Return on capital employed	-	-
Operating margin Return on equity	- -	- -
Return on capital employed	-	-
Return on equity Capital structure and related ratios	-	-
Net debt (+)/Net cash (–)	-		-	-	-
Capital structure and related ratios Equity/assets ratio
Net debt (+)/Net cash (–)	-		-	-	-
Equity/assets ratio Operational key ratios
No. of visits (millions)
Operational key ratios No. of orders (millions)
No. of visits (millions) Average shopping basket (SEK)

For definitions of key ratios, see Definitions.

Board of Directors' Report

CDON Group AB (publ) (CDON) is a group of online retailers. CDON Group's share is traded at the MidCap list of the NASDAQ OMX Stockholm Exchange with the symbol CDON. The company's registered office is at Bergsgatan 20, Box 385, SE-20 23 Malmö, Sweden. The company's registration number is 556035-6 0. CDON Group AB (publ) (CDON) is a group of online retailers. CDON Group's share is traded at the MidCap list of the NASDAQ OMX Stockholm Exchange with the symbol CDON. The company's registered office is at Bergsgatan 20, Box 385,

Operations SE-20 23 Malmö, Sweden. The company's registration number is 556035-6 0.

The launch of CDON.com in 1999 became the foundation for CDON Group today. Since its founding, CDON Group has grown significantly by broadening its product range and launching new online stores, as well as by making acquisitions. Today the Group has nine online stores and is a leading player in the Nordic online retailing market. Its assortment includes a wide selection of products such as media, games, children's and baby products, home electronics, clothes, beauty products, shoes, furniture, interior design, white goods and nutritional supplements. The product selection mainly includes physical products, but also digital media for download and streaming. The customer database contains more than 2.5 million active customers. CDON Group divides its operations into the following four segments: Entertainment, Fashion, Sports & Health and Home & Garden. Operations The launch of CDON.com in 1999 became the foundation for CDON Group today. Since its founding, CDON Group has grown significantly by broadening its product range and launching new online stores, as well as by making acquisitions. Today the Group has nine online stores and is a leading player in the Nordic online retailing market. Its assortment includes a wide selection of products such as media, games, children's and baby products, home electronics, clothes, beauty products, shoes, furniture, interior design, white goods and nutritional supplements. The product selection mainly includes physical products, but also digital media for download and streaming. The customer database contains more than 2.5 million active customers. CDON Group divides its

Entertainment & Garden.

Operations in the Entertainment segment are conducted through the CDON.com and Lekmer.com online stores. Together, the stores registered 107 million site visits in 2013 and received 4.6 million orders. Entertainment Operations in the Entertainment segment are conducted through the CDON.com and Lekmer.com

CDON.com was launched in 1999 and today holds a strong position on the entertainment market in the Nordics, both in terms of traditional retailing and e-commerce. CDON.com offers more products than any other Nordic online retailer and has a local presence in Sweden, Norway, Denmark and Finland. CDON.com has a scalable business model, and growth in recent years has partly originated from expansion into new product segments. Today, CDON.com has a wide product selection that offers everything from consumer electronics and mobile phones, to books, games, films, sports and leisure products, clothing and shoes and toys. As a result of the segment focus on strengthening sales volumes in future growth areas, the strategic objective is to shift CDON.com from a pure entertainment store into a leading site for e-commerce. In 2011 and 2012, product ranges from sister companies Lekmer.com, fashion store Nelly.com and white goods and household products store Tretti.com were integrated. The shopping centre concept was further developed in 2013 and CDON.com opened a marketplace for external stores that want to sell their products via CDON.com. CDON.com has also continued to expand its own product range within new categories. Lekmer.com was launched in Sweden in 2006 and is now the leading Nordic online store for toys and other products for children. Lekmer.com was acquired by CDON Group at the end of March 2010 and the company has online stores in Sweden, Norway, Denmark, Finland and the Netherlands. Lekmer's ambition is to present a comprehensive product range for families with children. The company offers more than 10,000 items direct from the warehouse within toys, baby products, children's clothes and furnishings for children's rooms. million orders. CDON.com was launched in 1999 and today holds a strong position on the entertainment market in the Nordics, both in terms of traditional retailing and e-commerce. CDON.com offers more products than any other Nordic online retailer and has a local presence in Sweden, Norway, Denmark and Finland. CDON.com has a scalable business model, and growth in recent years has partly originated from expansion into new product segments. Today, CDON.com has a wide product selection that offers everything from consumer electronics and mobile phones, to books, games, films, sports and leisure products, clothing and shoes and toys. As a result of the segment focus on strengthening sales volumes in future growth areas, the strategic objective is to shift CDON.com from a pure entertainment store into a leading site for e-commerce. In 2011 and 2012, product ranges from sister companies Lekmer.com, fashion store Nelly.com and white goods and household products store Tretti.com were integrated. The shopping centre concept was further developed in 2013 and CDON.com opened a marketplace for external stores that want to sell their products via CDON.com. CDON.com has also continued to expand its own product range within new categories. Lekmer.com was launched in Sweden in 2006 and is now the leading Nordic online store for toys and other products for children. Lekmer.com was acquired by CDON Group at the end of March 2010 and the company has online stores in Sweden, Norway, Denmark, Finland and the Netherlands. Lekmer's ambition is to present a comprehensive product range for families

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Fashion

Operations in the Fashion segment are conducted through the online stores Nelly.com and Members.com. Together, the stores registered 111.2 million site visits in 2013 and received 1.4 million orders. In February 2014, the segment was enlarged with the addition of NLYman.com.

Nelly.com was founded in 2004. After CDON Group acquired the online retailer in 2007, Nelly.com experienced rapid expansion and is now active in Sweden, Norway, Denmark, Finland, Germany, the Netherlands, the UK, France and as a global store enabling customers on a further 60 markets to shop at Nelly.com. The French website was launched at the end of 2013 and the company aims to continue its international expansion. The product selection has broadened from its initial offering of lingerie, swimwear and women's clothing to include men's clothing, as well as accessories, beauty products and sportswear. Nelly.com offers a total of more than 800 brands in all price segments and has launched several private labels since 2008. The website has also implemented successful design partnerships with well-known fashion bloggers. These partnerships have resulted in the expansion of Nelly.com's 30 private labels, which now include an extensive range of shoes and accessories and a selection of clothing and underwear.

Members.com is a shopping club launched throughout the Nordic region in September 2011 by CDON Group, in which registered members are presented with new and unique offerings every day on carefully selected branded items and services. From its initial focus on fashion clothing, the site now also offers sports items under Members Sport, furnishings, design and electronic products under Members Home, and experiences, holidays and hotel offerings from all over the world under Members Travel. Members.com was also launched in the Netherlands in 2013.

Sports & Health

Operations in the Sports & Health segment are conducted through the online stores Gymgrossisten.com (Fitnesstukku.fi in Finland, Gymsector.com in Germany (name changed from Bodystore.de in 2014) and Bodystore.dk in Denmark), Bodystore.com and Milebreaker.com. Together, the stores in 2013 registered 17 million site visits and received 0.9 million orders.

Gymgrossisten.com was founded in 1996 and is today, even taking the entire market into consideration, the leading online retailer of nutritional supplements in the Nordics. CDON Group acquired Gymgrossisten.com and its Finnish equivalent, Fitnesstukku.fi, in 2008. The company established the brand in Norway in October 2008, in Denmark in February 2011, and in Germany in December 2011. In addition to online sales, Gymgrossisten.com also retails its products through franchise stores in Sweden, Norway and Finland. Gymgrossisten.com offers a wide variety of nutritional supplements in various forms, such as bars, powders, and beverages. They are mainly used for muscle-building, meal replacement, performance enhancement, weight loss and to achieve general good health. The products contain vitamins, minerals, carbohydrates, and protein. The online store offers attractive external brands such as Better Bodies, Abilica, Multipower and SAN Nutrition, together with its private labels including Star Nutrition, Chained Nutrition and Smart Supps. Gymgrossisten.com also offers a growing selection of books, training equipment and training clothing.

Bodystore.com is an online store for beauty products, health foods and general well-being. The online store was included in the acquisition of Gymgrossisten in 2008. Bodystore has established itself as Sweden's leading online store for health foods and general well-being. Its constantly growing assortment stretches from health and body care products, food, naturopathic medicines, OTC drugs and beauty products, to nutritional supplements, sportswear and training equipment. The product range includes name as well as in-house brands.

Milebreaker.com launched in April 2013 on the Swedish market as an online store specifically aimed at fitness enthusiasts. Milebreaker offers everything from nutritional supplements to training equipment and sportswear for most types of fitness sports. The store is also designed to function as a source of information and inspiration, offering dietary and training tips. The product range includes name as well as in-house brands.

Home & Garden

Operations in the Home & Garden segment are conducted through the online stores Tretti.com and Rum21.com. Together, the stores in 2013 registered 14.2 million site visits and received 0.3 million orders.

Tretti.se is one of the largest online retailers in the Nordics of white goods and household appliances. The online store offers more than 9,000 articles from well-known brands such as AEG, Bosch, Electrolux, Gorenje, Samsung, OBH Nordica, Siemens and Whirlpool. In addition to its online store, Tretti.com has a showroom in Stockholm. Tretti.se was established in 2004, listed on the exchange in 2005 and launched in Norway and Finland in 2010. In June 2011, the company was purchased through NASDAQ OMX First North by CDON Group; the company was established the same month in Finland.

RUM21.com was launched in 2006 in Borås, Sweden. Today it is the Nordics' largest online retailer of furniture and interior design products from leading Scandinavian and European manufacturers and brands. In 2012, Rum21.com began launching private labels and now also has its own furniture lines under the brands Select21, Department and Formaterial, all featuring high quality furniture at attractive prices. Rum21.com also has a shop in Borås, Sweden. Rum21.com was acquired by CDON Group in February 2011. Since then it has been established in Norway, Denmark and Finland.

Significant events in 2013

Launch of Milebreaker.com

In April 2013, CDON Group AB launched a new online store, Milebreaker.com. The store is included in the Sports & Health segment. Milebreaker is aimed at fitness enthusiasts and offers everything from nutritional supplements to training equipment and sportswear.

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Sale of shoe store Heppo.com

In April, CDON Group completed the divestment of operations in Heppo AB to Footway Group AB at a purchase price of approximately SEK 43 million.

Rights issue carried out and oversubscribed

In April it was announced that the Board had decided to carry out a rights issue of shares, aimed at strengthening the Group's capital structure. The rights issue was approved at an Extraordinary General Meeting on 14 May. The final calculation was announced on 13 June, resulting in an increase in the number of ordinary shares by 33,171,062, from 66,817,124 to 99,988,186. The rights issue raised approximately SEK 514 million for CDON Group before issue expenses.

New logistics centre for Sports & Health

In April, the Sports & Health segment successfully completed a warehouse move and opened its new logistics centre in Trollhättan, which supplies the segment's three online stores Gymgrossisten.com, Bodystore.com and Milebreaker.com with warehousing, logistics and customer service. The move was completed in 49 hours and non-recurring costs attributable to the move amounted to SEK 5.6 million.

Acquisition of all outstanding minority shares in Nelly.com

In July, CDON Group AB acquired all the outstanding 2.23% of shares in the subsidiary NLY Scandinavia AB ("Nelly.com") from the company's minority shareholders. The purchase price amounted to approximately SEK 14 million and CDON Group therefore owns 100.0% of the shares and votes in NLY Scandinavia AB.

Launch of Nelly.com on new markets

In November, Nelly.com launched a local version of its site in France, which gives French customers access to a French-speaking store and customer service, as well as locally adapted payment methods. In December, a global online store was also launched, which made Nelly.com available to around 60 new markets, including the US and Australia.

New CEO for CDON.com and Tretti.com

Ola Strömberg was appointed and took up his position as the new CEO of CDON.com and Tretti.com in November 2013.

Launch of CDON.com's Marketplace

In December, CDON.com launched a marketplace for external online retailers. CDON.com's marketplace allows external online retailers to market and sell their products via CDON.com. Small and medium-sized online retailers are thereby able to reach more than 2 million active customers through the Nordic region's largest online department store.

Launch of Members.com in the Netherlands

The shopping club Members.com, which is included in the Fashion segment, launched its first local online store outside the Nordics in the Netherlands in December.

Consolidated financial position and results

Consolidated financial results

(SEK million)	20 3	20 2	Change %
Net sales	, 0.5	, 6 .	-
Gross profit	5 3.8	.2
Gross margin (%)
Operating profit/loss	- 8.0	- 3.	-
Operating margin (%)	-	-
Net financial items	-3 .	-2 .3
Profit/loss before tax	-82.	-20 .2	-
Profit after tax	-6 .3	- 5 .	-
Basic earnings per share (SEK)	-0.	- .	-
Diluted earnings per share (SEK)	-0.	- .	-
Total assets	, 2.	,682.8

Summary of sale of operations and non-recurring items

(SEK million)	20 3	20 2
Net sales
Sale of operations (Heppo)	23.6	02.6
Gross profit	- .	-
Nelly	0.0	- 60.5
Gymgrossisten	- .6	0.0
CDON	-32.0	0.0
Sale of operations (Heppo)	3.	.6
Operating profit/loss	- .	-
Nelly	0.0	- 0.5
Gymgrossisten	-5.6	0.0
CDON	-32.0	0.0
Sale of operations (Heppo)	-8.6	-20.

Consolidated financial results after sale of operations and non-recurring items

(SEK million)	20 3	20 2	Change, %
Net sales	, 6.	,35 .
Gross profit	62 .0	6 2.
Gross margin (%)
Operating profit/loss	- .8	6.	-
Operating margin (%)	-

Sales

Group net sales fell by 0.5% in 2013; excluding divested operations, net sales increased by 1.3%. The Group's online retailers attracted a total of 2 . million visits (244.3) and generated 7.2 million orders (7.1). The decline in sales during the year was primarily a result of the Entertainment segment being heavily affected by the downturn in the market for media products, which accounted for less than 50% of the segment's sales during the year. The divestment of the shoe store business Heppo.com, which was completed in the spring, also contributed to the decline.

Operating expenses

Consolidated expenses for goods sold totalled SEK 3,846.6 million (3,990.5), including nonrecurring items totalling SEK 33.2 million (160.5). The corresponding gross margin amounted to 13.4% (10.6%); excluding non-recurring items and divested operations the gross margin was 14.2% (14.0%). The gross margin increased mainly as a result of a significant boost in efficiency within logistics operations attributable to the Fashion segment. The improvement was mainly offset by a lower proportion of sales from media-related products within the Entertainment segment.

Consolidated sales and administrative expenses amounted to SEK 637.0 million (638.0).

The Group's operating loss excluding non-recurring items and the sale of operations for the full year amounted to SEK -1.8 million (16.7) with an operating margin of 0.0% (0.4.%). Including nonrecurring items and sale of operations, the operating loss amounted to SEK -48.0 million (-173.9) and operating margin totalled - . (-3. ).

Net financial items

The Group's net interest and other financial items amounted to SEK -34.1 million (-27.3), which primarily related to the interest costs related to the convertible bond issued by CDON Group on 2 December 20 0, as well as the Group's revolving credit facility and overdraft facility. Group loss before tax totalled SEK -82.1 million (-20 .2).

Tax

The Group reported tax revenue of SEK 14.8 million (49.4). Group net income therefore totalled SEK -67.3 (-151.7). See Note 9 for further details regarding tax.

Net profit and earnings per share

Group net income improved from SEK -151.7 million to SEK -67.3 million.

The total number of shares amounted to 100,688,186. The Group reported basic earnings per share of SEK -0.74 (-1.91) for the full year, based on weighted average number of shares during the period. The Group reported diluted earnings per share of SEK -0.74 (-1.91) based on weighted average number of shares during the period.

Consolidated financial position

Group total assets on the reporting date grew by 5.3% compared to the previous year, to SEK 1,772.1 million (1,682.8), mainly as a result of an increase of SEK 161.8 million in cash position and cash equivalents, which was partly influenced by a reduced inventory volume. Inventory levels declined year-on-year to SEK 525.2 million (609.7). The reduction in inventory volume is mainly due to the Group's focus throughout the year on reducing inventory levels.

Cash flow from operating activities before change in working capital improved to SEK -54.5 million (-97.5). The Group reported a SEK -84.0 million (- 35. ) change in working capital. The Group's rolling twelve month return on capital employed was negative, but improved year on year to - 5.7% (-23.3 ), which is mainly due to the Group's improved result.

Group cash flow to investing activities amounted to SEK -36.4 million (-50.3), which primarily reflected ongoing investments in the Group's store platforms and logistics operations, as well as the SEK 32.1 million cash flow impact from divestment of the operations in Heppo AB, the SEK -12.0 million cash flow impact from the business combination from Business Linc BL AB, the SEK -2.0 million cash flow impact from the additional purchase price relating to the acquisition of shares in Rum21 AB, and the SEK -4.6 million cash flow impact from the additional purchase price relating to the acquisition of shares in Lekmer AB.

Consolidated cash flow from financing activities amounted to SEK 336.7 million (0.0), which is chiefly an effect of the issue of new shares carried out in 2013, with a cash flow impact of SEK 502.1 million, including issue expenses, as well as repayment of credit facilities with a cash flow impact of SEK -150.0 million.

Total interest-bearing liabilities for the Group amounted to SEK 231.7 million (373.0), which is comprised of the convertible bond.

Group cash and cash equivalents increased by SEK 162.8 million to SEK 288.9 million (126.1). The Group therefore had a net cash position (defined as interest-bearing liabilities less cash and cash equivalents) of SEK 57.2 (-246.8) million.

Acquisitions and divestments

In April 2013, CDON Group sold operations in the subsidiary Heppo AB to Footway Group AB. The sale was completed via an asset deal and comprised the majority of Heppo AB's assets and

associated liabilities. Heppo AB was part of the Group's Fashion segment and reported sales totalling approximately SEK 103 million with an operating loss of roughly SEK -20 million in 2012. The purchase price was approximately SEK 43 million, half of which was paid in cash at the point of takeover and the outstanding portion is being paid on four occasions between September 2013 and June 2014. The transaction is estimated to have a negative impact on profit/loss of approximately SEK -3 million, which affected profit for the second quarter.

Segments

Entertainment*

(SEK million)	20 3	20 2	Change %
Net sales	2, 5 .5	2,386.0	-
Operating profit/loss	-0.	02.3	-
Operating margin (%)	-
Opening inventory balance	28 .	2 8.
Closing inventory balance	23 .5	28 .	-
No. of visits (millions)	0 .0	.2
No. of orders (millions)	.6		-
Average shopping basket (SEK)	2	80	-

*Excluding costs relating to non-recurring items totalling SEK 32 million, which are detailed on page 11

The Entertainment segment comprises the online stores CDON.com and Lekmer.com. In 2013, the Finnish online book store Bookplus.fi was integrated into CDON.com. Sales in this segment decreased by 10% in 2013 and represented 49% (53%) of total Group sales.

CDON.com is a leading Nordic online retailer with a strong market position. From initially only selling media products, the product offering has gradually been broadened and today includes a wide range, featuring everything from consumer electronics to sports & leisure, clothing & shoes and toys. The shift from media products to other categories continued in 2013, with new supplier partnerships, an expanded product range and the strategically important launch of CDON.com Marketplace, where external stores can sell products through CDON.com, all contributing to increased sales volumes from newer product categories. During the year, CDON.com Marketplace generated almost SEK 100 million in sales for sister companies and external stores. However, the negative market trend for media products accelerated during the year, which had an adverse effect on the segment's total sales.

Lekmer.com continued to show solid growth and capitalised on the ongoing transition from bricks-and-mortar retail to e-commerce within the children's goods and toy sector. Sales of children's clothing, prams and car seats displayed considerable growth towards the end of the year, as did toys, which is the largest product category in the store.

The segment's operating result declined to SEK -0.4 million (102.3) for the full year, which was an effect of the ongoing shift from media products to new product categories. The operating result was negatively affected during the second quarter by non-recurring items totalling SEK -32 million related to manual adjustments to purchase prices and an announced clearance sale aimed at reducing working capital tied up in computers in inventory of SEK -20 million.

Fashion*

(SEK million)	20 3	20 2	Change %
Net sales	32.6	8 0.3
Operating profit/loss	- 6.0	- .0	-
Operating margin (%)	-	-
Opening inventory balance	5 .6
Closing inventory balance	2 .	5 .6	-
No. of visits (millions)	.2	20.3	-
No. of orders (millions)		.5	-
Average shopping basket (SEK)	66	626

*Excluding sale of operations and costs relating to non-recurring items detailed on page 11

The Fashion segment includes the online stores Nelly.com, Members.com and during the first part of the year, the sold business Heppo.com. Segment sales were up 1% in 2013 including sale of operations, and by 11% excluding sale of operations. The segment accounted for 22% (21%) of total Group sales.

In the fourth quarter, Nelly.com launched a French language version of Nelly.com and a global English language version, which exposed Nelly to an additional 60 markets, including the US and Australia. The fourth quarter also saw the launch of the shopping club Members.com in the Netherlands, which is the store's first market outside the Nordics.

The Swedish market accounted for 3 ( 0 ) of the segment's total sales volume. Segment sales outside the Nordic region accounted for 11% (14%) in 2013; the Netherlands was the largest market. The segment's product margin was 8 (32%). Sales of private labels accounted for 31% (28%) of total sales. The percentage of returns during the year was 33% (37%).

During the year Nelly has focused on strengthening its organisation as well as enhancing its processes and routines, mainly within logistics and product flow, which has resulted in a considerable improvement in operating profit.

Sports & Health*

(SEK million)	20 3	20 2	Change %
Net sales	6 .	6.
Operating profit/loss	60.5	.3
Operating margin (%)
Opening inventory balance Closing inventory balance	63.6 85.	.6 63.6
No. of visits (millions) No. of orders (millions)	.0 0.	3.0 0.
Average shopping basket (SEK)	0	2

*Excluding cost of warehouse relocation, which is stated as a non-recurring item on page 11

The Sports & Health segment includes the online stores Gymgrossisten.com (Fitnesstukku.fi in Finland, Bodystore.dk in Denmark and Gymsector.com (name changed from Bodystore.de in 2014) in Germany), which mainly sell nutritional supplements, and the Swedish stores Bodystore.com, which is an online health food store, and Milebreaker.com, aimed at fitness enthusiasts. Sales in this segment grew 37% in 2013 and accounted for 15% (11%) of total Group sales.

The strong growth is a result of an expanded product range and persistent positive sales trends on all markets. The stores on the new markets Denmark and Germany continue to develop according to plan.

The ongoing expansion of private labels has resulted in a growing range and a larger percentage of sales of private labels on all markets, which is having a positive impact on the gross margin. Sales of private labels such as Star Nutrition, Chained Nutrition and SmartSupps accounted for 45% (41%) of total sales in 2013.

The segment's operating profit increased by 28 in 20 3 compared with the previous year. The operating margin dropped slightly as a result of continued investments in the new markets and investments in boosting the level of service to customers, as well as in the regulatory operations that ensure the stores satisfy regulatory requirements on the sale of food and nutritional supplements in each market.

Home & Garden

(SEK million)	20 3	20 2	Change %
Net sales	658.8	63 .6
Operating profit/loss	0.	- 3.	-
Operating margin (%)		-
Opening inventory balance Closing inventory balance	65. 83.0	60. 65.
No. of visits (millions)	.2
No. of orders (millions)	0.3	0.3
Average shopping basket (SEK)	2, 25	2,383

The Home & Garden segment comprises the online retailers Tretti.com and Rum21.com. The segment accounted for 15% (14%) of total Group sales.

Tretti.com has a market leading position in e-commerce for white goods in the Nordics and saw a positive sales development during the year, primarily as a result of expanding its product range and a healthy sales trend through CDON.com Marketplace. A broader product range and high growth on all Nordic markets also contributed to increased sales for Rum21.com.

The segment's positive operating profit is largely a result of an improved gross margin.

Central operations

CDON Group Logistics was founded in autumn 20 2 when the net assets of Business Linc BL AB's business in Falkenberg were acquired. Immediately following the acquisition, efforts were focused on guaranteeing higher levels of service and a positive customer experience, and the objective was to break even. CDON Group Logistics achieved this objective in the third quarter of 2013.

The operating loss for CDON Group Logistics AB amounted to SEK -21.2 million (-19.4) and is included in reporting of Group central operations. Operating loss for other central Group operations amounted to SEK -25.6 (-22.8) million.

Outlook

The Nordic e-commerce market is still in an early phase of development and is worth approximately EUR 12.6 billion¹ . Online penetration is high and 85 percent, almost 18 million inhabitants of the Nordic region aged 15-79, have at some point purchased products online. Consumers on the Nordic e-commerce market have considerable access to smartphones and mobile broadband, which when combined with the fact that an increasing number are discovering

¹ Postnord

the many advantages of e-commerce in terms of simplicity and saving time, has meant that the Nordics together with the UK and Germany are now counted among the most mature ecommerce markets in Europe.

In 2013, the Swedish e-commerce market accounted for roughly 6 percent of the total Swedish retail sector2 . E-commerce continued its strong development and in 2013 grew by 17 percent compared with the previous year to a total of around SEK 37 billion. E-commerce therefore gained market shares from the traditional retail sector, which saw total growth of an estimated 2 percent.

The UK, which is regarded as the most developed e-commerce market in Europe, saw strong growth in e-commerce during the year. Growth on an annual basis was 16 percent, with ecommerce accounting for almost 13 percent of total retail³ in 2013. This is proof of the ecommerce sector's general strength and the potential of the continued market trend for the Swedish and Nordic market in particular.

Against this backdrop, CDON Group is operating in a sector with high market growth and the Group's companies are in an excellent position to be able to capitalise on this growth. The Group's strategy in 2014 is to continue to deliver sales growth and increase market share in a balanced way, particularly within Nelly.com and Gymgrossisten.com. Alongside delivering persistent sales growth, the Group will also continue to focus on securing underlying improvements in earnings.

In 2014, CDON.com will continue to invest in the transition towards becoming the leading comprehensive range e-commerce department store, which will gradually offset the decline in sales of media-related products.

The objective in the Fashion segment is to continue to grow for the full year 2014, which will be achieved in a balanced way through investments in geographic expansion.

Overview of risk factors

A number of factors affect, or may in the future affect the operations of CDON Group, both those directly related to CDON Group and those that relate indirectly. Some of the risk factors considered significant to CDON Group's future development are summarised below, in no relative order.

Industry and market risks

• Market trend for e-commerce
• Seasonal variations
• Risks related to fashion trends
• Economic situation and consumer purchasing power

² Postnord/Svensk Digital Handel/HUI Research

³ Centre for Retail Research

Operational risks

• Disturbances or inadequacies in CDON Group's IT and control systems
• Supplier relationships
• Inventory
• Expansion into new markets and new segments
• Ability to recruit and retain personnel

Financial risks

• Currency risks
• Credit risks
• Interest rate risk
• Liquidity risks
• Intangible non-current assets

Legal risks

• Legislation, regulations and compliance
• Intellectual property rights

Industry and market risks

Market trend for e-commerce

The market for e-commerce is undergoing change. In Sweden, the average annual growth of the e-commerce market was 24% between 200 and 20 2. In 20 3 the e-commerce market in Sweden constituted 6.0 of total retail sales, compared with .2 in 2003, according to the Swedish Retail Institute (HUI). There are no assurances that the e-commerce market will continue to show the same positive trend, or that the products CDON Group sells benefit from positive market developments.

Seasonal variations

In the Entertainment segment, CDON Group is exposed to major seasonal variations since a large portion of sales occur during Q4. The Fashion segment also exhibits seasonal variations, where the second and fourth quarters are the strongest. Lower demand during a single quarter can affect sales in a segment, and therefore the entire Group.

Risks related to fashion trends

In the Fashion segment, CDON Group is also exposed to fluctuations in trends and fashion, as well as consumer preferences regarding design, quality and price. If CDON Group misjudges consumer preferences and does not succeed in selling its products, this may lead to excess inventory of certain products, and consequently price cuts.

Economic situation and consumer purchasing power

Demand for the products that CDON Group sells is affected by the general economic situation and developments in the e-commerce market and the product markets in which the Group operates. The economy and consumers' purchasing power are in turn affected by factors that are beyond CDON Group's control, such as interest rates, exchange rates, inflation levels, taxes, unemployment levels and other economic factors. Although the Group believes the business model that is applied to be robust, negative changes in the economic situation may affect the Group's financial position and result.

Operational risks

Disturbances or inadequacies in CDON Group's IT and control systems CDON Group's operations are highly dependent on reliable IT and control systems that are well suited to CDON Group's operations. CDON Group has made significant investments in sophisticated IT and control systems, including an integrated logistics system that automatically manages and forwards orders to its distribution centres. These systems are continually maintained, upgraded and supported. However, despite this it cannot be ruled out that systems could suffer from operational disturbances or interruptions.

Supplier relationships

CDON Group is dependent on the availability of hundreds of external suppliers to be able to pursue its operations. However, CDON Group is of the opinion that alternatives exist for most of the company's current suppliers, which means that if the company loses one or more suppliers it will only have a limited impact on the business.

Inventory

CDON Group has a number of warehouses that are associated with the company's online stores. If a warehouse for some reason were to be destroyed or closed or if its equipment were seriously damaged, the company might not be able to deliver the products to its customers. Under such circumstances, and to the extent that CDON Group cannot quickly and cost-effectively find an alternate warehouse or repair the warehouse in question or its equipment, this may have a considerable negative effect on the company's operations. CDON Group works continually with loss prevention measures and has insurance policies for property damage and production stoppages, but there is no guarantee that such amounts can be recovered in full or that the amounts recovered are sufficient to cover potential losses.

Expansion into new markets and new segments

CDON Group has a growth strategy. Even if the Group conducts a thorough business analysis prior to each investment, potential expansion into new geographic or industrial markets may entail unforeseen costs as well as lower-than-expected sales for CDON Group.

Ability to recruit and retain personnel

CDON Group's future success is highly dependent on the company's ability to recruit, retain and develop qualified senior executives and other key individuals. The company works with central

programmes and initiatives to ensure that staff development, talent identification and succession planning procedures are in place.

Financial risks

Currency risks

CDON Group's reporting currency is the Swedish krona. Since a significant portion of CDON Group's sales, some 2 for the full year 20 3, are completed outside Sweden, the company is exposed to certain risks related to transactions in various currencies (transaction exposure). CDON Group is also exposed to currency risk arising from the translation of foreign operations into Swedish krona (translation exposure). The most important currencies that CDON Group is exposed to are NOK, DKK and EUR for sales, and NOK, DKK, EUR, USD and GBP for purchases. CDON Group does not hedge this exposure.

Credit risks

Credit risk is defined as the company's exposure to loss in the event that one party fails to fulfil its obligations. The exposure is based on the carrying amount of the financial assets, of which the majority comprises accounts receivable and cash and cash equivalents. Credit risk attributable to the Group's accounts receivable is distributed among a large number of customers, mainly private individuals. The accounts receivable have been sold since early 2009 to a factoring company, but if this measure is insufficient it may cause losses and affect the Group's financial position and result.

Interest rate risk

CDON Group finances its operations partly by borrowing, which mainly consists of a nominal SEK 250 million convertible loan (for more information on the convertible loan, see Note 28). Part of CDON Group's cash flow is used for interest payments, but the fixed interest rate of 2.85 on the convertible partly limits the company's interest rate risk.

Liquidity risks

The Group works continually with risks associated with liquidity. Access to cash and cash equivalents is extremely important, since many of the Group's companies experience seasonal variations. Access to cash and cash equivalents for subsidiaries is ensured partly through the use of Group-wide cash pools and bank credit facilities. At the end of 2013, CDON Group had a net cash position amounting to SEK 57.2 million.

Intangible non-current assets

CDON Group's intangible assets at 3 December 20 3 were valued at SEK 638 million; these comprised goodwill of SEK 463 million, brands of SEK 109 million, development expenses of SEK 45 million and other intangible assets of SEK 22 million. Indications of changes in the value of the assets are tested continuously, and CDON Group has made the assessment that there was no impairment requirement as of 31 December 2013.

See Note 21 for further details regarding financial risks.

Legal risks

Legislation, regulation and compliance

CDON Group pursues operations in several countries with different legislation, fiscal regulations and regulations governing some of the goods that CDON Group sells. For example, products within the Sports & Health segment must follow national food regulations. These products must therefore be approved by regulatory authorities in some of the countries where CDON Group operates. To increase control, Gymgrossisten has established a department that monitors rules and regulations on the markets where Gymgrossisten operates. Legal violations or breaching regulations, such as food and drink legislation, could lead to injunctions against CDON Group. Moreover, the cost of regulatory compliance can be substantial. CDON Group endeavours to comply with the laws and regulations that exist and enlists the help of external expertise when required.

Intellectual property rights

CDON Group is proactive about protecting its brands, name and domain name in the jurisdictions where CDON Group operates. It may nevertheless transpire that the measures the Group takes are insufficient and may consequently have a negative effect.

Environment

The environment is everyone's responsibility – both companies and individuals. CDON Group's ability to take responsibility for sustainable development is the key to strengthening public confidence in us. CDON Group is constantly searching for new ways to further reduce its environmental impact.

Our operations require warehousing, packaging and transportation. Our customers, owners and society in general expect us to offer environmentally conscious choices and to operate our business in a manner that is sustainable in the long term.

We have spent a considerable amount of time developing our packaging selection to optimise product protection for every delivery, while using the smallest amount of material possible and generating minimal environmental impact. The result is smaller, lighter packaging material. Most of our packages are sent in boxes manufactured from recycled fibre.

Our shipments are mainly sent with PostNord and Bring. PostNord is the leading supplier of logistics services to, from and within the Nordics. PostNord is actively involved in environmental and climate initiatives. Products packaged in envelopes are mainly sent as eco-friendly product letters, the most environmentally compatible distribution method, which avoids air shipping. PostNord offsets the carbon use for the distribution. Bring is the first climate-neutral postal company in the world. Carbon used by transport through Bring and its subsidiaries is fully offset.

Itella, which is used by CDON Group in Finland, built a sorting centre in 2013 with solar cells, and electric vehicles are used to a certain extent for transporting to agents.

The Group does not have any operations that require permits or applications under the Swedish Environmental Code.

Employees

CDON Group recognises that its employees are crucial to its operations. Attracting and retaining staff and developing employee skills are necessary for the success of CDON Group, as well as to meet established targets for growth and business development.

The Group had 810 full-time employees at the end of 2013, compared with 872 at the beginning of 2013. See notes 23 and 24 for information regarding the average number of employees and salary expenses.

Proposal for the guidelines for remuneration to senior executives

The Board of Directors proposes that the 2014 Annual General Meeting decide on the following guidelines for determining remuneration to senior executives in the Group ("Executives") and Board members (of the parent company), to the extent to which they are remunerated outside their directorship. The wording of the guidelines is unchanged compared with the guidelines adopted at the 2013 AGM.

Remuneration guidelines

The objective of the guidelines is to ensure that CDON Group can attract, motivate and retain senior executives within the context of CDON Group's peer group, which consists of Nordic online and offline retailing companies. The remuneration shall be based on conditions that are market competitive and at the same time aligned with shareholders' interests. Remuneration to Executives shall consist of a fixed and variable salary paid in cash, as well as the possibility of participation in long-term, share-based incentive programmes, customary benefits and pension schemes. These components shall create a well-balanced remuneration reflecting individual performance and responsibility, both short-term and long-term, as well as CDON Group's overall performance.

Fixed salary

The Executives' fixed salary shall be competitive and based on the individual Executive's responsibilities and performance.

Variable remuneration

The Executives may receive variable salaries in addition to fixed salaries. The variable salary will generally not exceed a maximum of 75% of the fixed annual salary. Variable remuneration will be based on the performance of Executives in relation to established goals and targets.

24 CDON Group AB Annual Report 2013 CDON Group ABAnnual Report 2013

Other benefits

CDON Group provides other benefits to Executives in accordance with local practice. Other benefits can include, for example, a company car and company health care. Occasionally, housing allowances may be granted for a limited period.

Pension

Executives are entitled to pension commitments based on those that are customary in the country in which they are employed. Pension commitments will be secured through premiums paid to insurance companies. Under normal circumstances, the retirement age is 65 years.

Notice of termination and severance pay

The maximum notice period in any Executive's contract is generally 2 months, and in exceptional cases 18 months, during which time salary payment will continue.

Compensation to Board members

Board members elected by the AGM may in certain cases be paid for services within their respective areas of expertise, outside of their board duties. Compensation for these services shall be paid at market terms and be approved by the Board of Directors.

Deviations from the guidelines

In special circumstances, the Board may deviate from the above guidelines, for example additional variable remuneration for exceptional performance. In such a case, the Board of Directors shall explain the reason for the deviation at the following AGM.

The current guidelines for remuneration to senior executives in CDON Group are described in the Corporate Governance Report. For further information on remuneration of the CEO and senior executives, see Note 24.

Share-based long-term incentive programmes

CDON Group has three outstanding share-based long-term incentive programmes decided on at the AGMs in 2011, 2012 and 2013. See Note 24 for further information about these programmes.

The total cost of the incentive programme proposed to the 2014 AGM is estimated to amount to SEK 5.4 million excluding social charges in accordance with IFRS 2. The cost will be distributed over the years 2014 - 2017. The estimated expenses for social charges will also be expensed as personnel costs through regular provisions. Costs for social charges are expected to amount to about SEK 2.2 million.

The maximum cost of the incentive programme is expected to total about SEK . million, and the maximum cost for social charges about SEK 2 . million.

Parent company

CDON Group AB is the Group's parent company and is responsible for Group-wide management, administration, and finance functions. CDON Group's financial policy includes providing a central cash pool or financing through internal loans to support the Group's companies. The parent company holds shares in the subsidiaries, as specified in Note 12.

The parent company faces the same risks and uncertainties as the Group, since the parent company's operations are dependent on the Group.

The parent company reported sales of SEK 52.1 million (54.0) for the full year. Administrative expenses totalled SEK - . million (-76.9) for the full year and reflected costs of a recurring nature, primarily regarding Group-wide functions but also related to operating CDON Group AB as a publicly listed company, consisting of expenses for central functions, board fees, auditing services, etc.

Other net financial items amounted to SEK -10.9 million (-13.6) for the full year. The parent company received Group contributions from subsidiaries amounting to SEK 56.6 million and paid Group contributions to subsidiaries amounting to SEK -263.2 million during the year. Group loss before tax totalled SEK -243.3 million (-8.7) for the full year.

Cash and cash equivalents in the parent company amounted to SEK 267.7 million (87.7) at yearend.

The parent company made investments of SEK 16.7 million (134.6) in non-current assets during the year, The majority of the investments, SEK 14.2 million, related to the acquisition of additional 2.23% of the shares in NLY Scandinavia AB.

Proposed allocation of profits

These amounts are at the disposal of the shareholders as of 31 December 2013 (SEK):

Total
Loss for the year	- 8 , 06,082. 3
Retained earnings	25,62 ,220.32
Share premium reserve	5 8,326,3 2.2

The Board proposes that retained earnings, share premium reserve and profit for the year, in total SEK 514,047,450.18, be carried forward. The share premium reserve totals SEK 578,326,312.29.

Regarding the company's financial position and operational results, see the financial statements and accompanying notes and comments that follow.

The share

CDON Group's share is traded on the NASDAQ OMX Stockholm MidCap list under the CDON ticker symbol. CDON's market capitalisation at the close of trading on the NASDAQ OMX Stockholm exchange on the last business day of 2013 was SEK 3.2 billion.

Shareholders at 30 December 2013

	Capital	Votes
	(%)	(%)	No. of shares
Investment AB Kinnevik	2 .8	25.	2 , 5 , 0
Swedbank Robur Funds	.6		,6 6,2
Oppenheimer Funds	5.6	5.	5,625,0
Henderson Funds	3.	.0	3, 30,8
Nordea Funds	2.6	2.6	2,635, 80
SHB Funds	2.6	2.6	2,60 , 06
AMF Insurance & Funds	2.0	2.0	, 85,05
Avanza Pension Försäkring AB			, 3,005
Invesco Funds		.8	, 50,000
Enter Funds	.6	.6	,5 6,850
DBN Funds	.5	.6	,55 ,055
SEB Funds	.5	.6	, 3, 86
Fidelity Funds	.3	.3	,3 ,6
Skandia Funds	.3	.3	,2 , 36
Norges Bank Investment Management			, 3 ,
Total for the 15 largest owners – by holdings
Other shareholders	36.	36.2	3 , 83,62
Total shares issued*

* Includes 1,175,000 C shares held by the CDON Group.

Source: SIS Ägarservice

Share capital

At 31 December 2013, outstanding shares amounted to 100,688,186, of which 99,513,186 were ordinary shares and 1,175,000 were C shares. Each ordinary share and each Class C share is entitled to one vote. The Class C shares are not entitled to dividend payments. Class C shares were issued and repurchased by the company as part of the performance-based incentive programs authorised by the 20 -2013 AGMs. The C shares have a par value of SEK 2 and are fully owned by CDON Group AB. CDON Group AB acquired C shares for a total of SEK 2,350,000. The Group's share capital amounted to SEK 201.4 million at year-end. For changes in the share capital between 2012 and 2013, please see the Consolidated Statement of Changes in Equity.

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. In connection with the issue of new shares carried out in 2013, the conversion price has been recalculated at SEK 31.00. The bond may therefore be converted into a

maximum of 8,064,516 shares in CDON Group AB up until 1 December 2015, which would represent a 7.5% dilution effect based on the number of shares outstanding as at 31 December 2013. The conversion price for the convertible will be recalculated if a shareholder other than Investment AB Kinnevik should hold 50% or more of the company's shares.

At 31 December 2013 there were 807,575 outstanding rights and employee stock options attributable to the company's share-based incentive programmes. See Note 24 for further details regarding the incentive programmes.

The company is not aware of any agreements between shareholders that would limit rights to transfer shares.

Dividend

The parent company paid no dividend in 2013 and the Board proposes no dividend for 2014.

Share price development

Recalculated to take into account the rights issue carried out in 2013, the share price at the beginning of the year was SEK 40.00. On the last trading day of the year, the share price was SEK 3 .60.

Corporate governance report

This report describes CDON Group AB's policies for corporate governance. CDON Group is a Swedish public limited liability company. The company's governance is based on the Articles of Association, the Swedish Companies Act, the Annual Accounts Act, the listing rules of NASDAQ OMX Stockholm, the Swedish Code of Corporate Governance and other relevant Swedish and international laws and regulations. This report describes CDON Group AB's policies for corporate governance. CDON Group is a Swedish public limited liability company. The company's governance is based on the Articles of Association, the Swedish Companies Act, the Annual Accounts Act, the listing rules of NASDAQ

The company follows the Code in most aspects, and only deviates from its recommendations in respect to the composition of the remuneration committee, which is detailed in the Remuneration Committee section. international laws and regulations. The company follows the Code in most aspects, and only deviates from its recommendations in

CDON Group is governed by several bodies. At the Annual General Meeting, the shareholders exercise their voting rights by electing the Board of Directors and external auditors. Some of the Board's duties are assigned to the Chief Executive Officer (CEO) of CDON Group. The CEO is in charge of the day-to-day management of the Group in accordance with guidelines and instructions from the Board. Remuneration Committee section. CDON Group is governed by several bodies. At the Annual General Meeting, the shareholders exercise their voting rights by electing the Board of Directors and external auditors. Some of the Board's duties are assigned to the Chief Executive Officer (CEO) of CDON Group. The CEO is in

Shares and shareholders

According to the share register held by Euroclear Sweden AB, there were approximately 19,334 shareholders at year-end 2013. Shareholdings by its ten largest shareholders correspond to some 56% of share capital and votes. Swedish institutions and mutual funds own approximately 55 per cent of the share capital; international investors hold about 30 per cent; Swedish private investors own around 15 per cent.

Share capital consists of two share types; ordinary shares and Class C shares. There are no restrictions on the number of votes each shareholder can cast at the AGM. For further information regarding company shares, please see the "Shareholder information" section.

Shareholders are regularly provided information, including interim and full-year financial reports, financial statements and press releases on significant events during the year. All reports, press releases and other information can be found on CDON Group's website www.cdongroup.se.

Annual General Meeting

The Annual General Meeting (AGM) is a limited company's highest decision-making body and a forum for shareholders to exercise their voting rights to influence issues affecting the company and its operations. The Swedish Companies Act and the Articles of Association detail procedures on how notice is given of the AGM and Extraordinary General Meetings, along with who is entitled to participate and vote at the meetings.

The authority and rules of procedure for the AGM are primarily based on the Swedish Companies Act and the Swedish Corporate Governance Code, as well as on the Articles of Association adopted by the AGM. The AGM shall be held within six months of the end of the financial year. The AGM makes decisions on adoption of the income statement and balance sheet, consolidated income statement and statement of financial position, allocation of the company's earnings according to the adopted balance sheet, discharge of liability for the Board and CEO, appointment of Board members and the Chairman of the Board, the company's auditors and certain other matters provided for by law and the Articles of Association.

The AGM for financial year 2013 will be held on 13 May 2014, in Stockholm, Sweden.

Nomination Committee

Tasks of the Nomination Committee include:

• Evaluation of the Board's work and composition
• Submission of proposals to the AGM regarding the election of Board members and the Chairman of the Board

• Preparation of proposals for the election of auditors in cooperation with the Audit Committee, as appropriate

• Preparation of proposals for the fees to be paid to Board Directors and to the company's auditors

• Preparation of proposals for the Chairman of the Annual General Meeting
• Preparation of proposals to the AGM regarding the Nomination Committee's composition and work during the following year.

In accordance with the resolution of the 2013 Annual General Meeting, Cristina Stenbeck, as the representative of the largest shareholder Investment AB Kinnevik, has convened a Nomination Committee consisting of members appointed by the largest shareholders in CDON Group. The Nomination Committee comprises Cristina Stenbeck appointed by Investment AB Kinnevik, Annika Andersson appointed by Swedbank Robur fonder and Frank Larsson appointed by Handelsbanken Fonder AB. At their first meeting the Nomination Committee appointed Cristina Stenbeck as Chair of the Committee. The Nomination Committee represents together over 37% of the votes in CDON Group AB. The members of the Nomination Committee do not receive any separate remuneration for their work.

The Nomination Committee will submit a proposal for the composition of the Board and Chairman of the Board to be presented to the 2014 AGM for approval.

Board

The members of the Board of Directors are elected at the AGM for the period up until the end of the following AGM. The CDON Group's Articles of Association do not include any restrictions regarding the eligibility of Board members. According to the Articles of Association, the Board shall consist of a minimum of three and a maximum of ten members.

Responsibilities and duties of the Board

The Board has overall responsibility for the organisation and management of CDON Group. The Board has adopted working procedures for its internal activities that include rules pertaining to the number of regular board meetings, which issues will be handled at regular board meetings and the duties of the chairperson. The work of the Board is also governed by laws and regulations, including the Companies Act, Articles of Association and the Swedish Code of Corporate Governance.

In order to carry out its work more effectively, the Board has appointed a Remuneration Committee and an Audit Committee with special tasks. These committees handle business within their respective areas and present recommendations and reports on which the Board may base its decisions and actions. However, all members of the Board have the same responsibility for decisions made and actions taken, irrespective of whether or not issues have been reviewed by such committees.

The Board has also adopted procedures for instructions and mandates to the CEO. These procedures require that investments in non-current assets of more than SEK 2,000,000 must be approved by the Board. The Board must also approve major transactions, including acquisitions

and closures or divestments of businesses. In addition, the Board has also issued written instructions specifying when and how information, which is required in order to enable the Board to evaluate the Group's and its subsidiaries' financial positions, should be reported.

The rules of procedure that are adopted annually by the Board include instructions on which financial reports and which financial information should be submitted to the Board. In addition to the year-end report, interim reports and the annual report, the Board also examines and evaluates extensive financial information relating to both the Group as a whole and various units included in the Group. The Board also examines, primarily through the Audit Committee, the most significant accounting policies applied in the Group with regard to financial reporting, as well as any key changes to these policies. The Audit Committee is also tasked with examining reports on internal controls and the processes for financial reporting, along with internal audit reports compiled by the Group's internal auditing function. The Group's external auditor reports to the Board as required, and at least once a year. At least one of these reporting occasions occurs without the CEO or any other member of executive management being present. The Group's external auditor also participates in the meetings of the Audit Committee. All Audit Committee meetings are minuted and the minutes are made available to all Board members and the auditors.

Composition of the Board as of 31 December 2013

The Board of CDON Group AB comprises seven Board members. The Board members are Lars-Johan Jarnheimer, Mia Brunell Livfors, Patrick Andersen, David Kelly, Mengmeng Du, Jonas Kjellberg and Lars Nilsson. Biographical information on each of the Board members is contained in the "Board" section of this annual report.

		Date of		Independent of major	Independent of the company and its	Remuneration	Audit
Name	Position		birth Nationality Appointed	shareholders	management	Committee	Committee
Lars-Johan Jarnheimer	Chairman of the Board		Swedish	Yes	Yes	Member
Mia Brunell Livfors	Member		Swedish	No	No	Chairman
Patrick Andersen	Member		Danish	Yes	Yes		Member
David Kelly	Member		British	Yes	Yes		Member
Mengmeng Du	Member		Swedish	Yes	Yes	Member
Jonas Kjellberg	Member		Swedish	Yes*	Yes
Lars Nilsson	Member		Swedish	No	Yes		Chairman

* - since 1 November 2013. (Jonas Kjellberg was not independent in relation to major shareholders for the period 14 May – 31 October 2013, when he held a leading position at Investment AB Kinnevik (a shareholder who owns more than 10 percent of the shares in CDON Group)).

CDON Group's Board composition during the year has fulfilled the requirements of NASDAQ OMX Stockholm AB and the Code on the independence of board members. This means that the majority of Board members appointed by the AGM are independent in relation to the company

and its management. At least two of these members are also independent in relation to the company's major shareholders.

Remuneration Committee

The Remuneration Committee comprises Mia Brunell Livfors as Chair, Lars-Johan Jarnheimer and Mengmeng Du.

The main tasks of the Remuneration Committee are to: (i) prepare decisions for the Board on matters regarding remuneration principles, remuneration and other employment terms for the CEO and senior executives; (ii) monitor and evaluate ongoing programmes and programmes concluded during the year for variable remuneration (e.g. long-term share-based incentive programmes) for the CEO, senior executives and other key individuals within CDON Group; and (iii) monitor and evaluate the application of the guidelines for remuneration to senior executives that the AGM, in accordance with the law, will decide upon, along with applicable remuneration structures and remuneration levels in the company.

The Swedish Corporate Governance Code states that the members of the committee are to be independent of the company and its executive management, with the exception of the Chairman of the Board who may chair the committee regardless of whether or not this criterion is met. Mia Brunell Livfors is not independent in relation to the company and its management due to her role as member of the Board of Modern Times Group MTG AB (former owner of CDON), which holds a CDON convertible bond, and a company in which Investment AB Kinnevik owns more than 10% of shares. As CEO of Investment AB Kinnevik, Mia Brunell Livfors represents shareholders who together hold more than 10% of the shares in CDON. The company therefore deviates from this rule in the Code. The reason for the deviation is that Mia Brunell Livfors has significant experience in establishing and defining remuneration principles in listed companies, thereby providing the committee with the appropriate expertise.

Audit Committee

The Audit Committee comprises Lars Nilsson as Chairman, Patrick Andersen and David Kelly.

The Audit Committee's responsibilities are to (i) monitor the company's financial reporting; (ii) in respect of the financial reporting, monitor the efficiency of the company's internal controls, internal audits and risk management; (iii) stay informed on the audit of the annual report and consolidated accounts; (iv) review and monitor the impartiality and independence of the auditor, and therewith, paying special attention to whether the auditor provides the company with services other than auditing services; and (v) assist with preparation of proposals to the AGM's resolution on election of an auditor. The Audit Committee focuses on evaluating quality and accuracy in financial reporting, changes in accounting policies when applicable, internal controls, risk assessment, qualifications and independence of the auditors, adherence to prevailing rules and regulations, and, where applicable, transactions with related parties.

Remuneration to Board members

The fixed remuneration for the Board for the period until the close of the 2014 AGM is in total SEK 3,071,000, of which SEK 670,000 is allocated to the Chairman of the Board, SEK 325,000 to each Board member, and a total of SEK 451,000 as remuneration for work in board committees. The remuneration of the Board members will be proposed by the Nomination Committee, which represents the company's largest shareholders, and approved by the AGM. The Nomination Committee proposal is based on benchmarking of peer group company compensation and company size.

Board work in 2013

During 2013, the Board regularly reviewed the financial position of CDON Group AB and the Group's financial position. The Board also regularly dealt with matters involving acquisitions, the establishment of new operations, divestments and investment matters. The Board also evaluated the Group's strategies and future development plans. The Board held five regular meetings in 2013 and ten extraordinary meetings (four of which were held per capsulam).

			Remuneration
Name	Board meetings	Audit Committee	Committee
Number of meetings up to and
including 13- -
Number of meetings from 13- -
Total number of meetings in 2013
Lars-Johan Jarnheimer
Mia Brunell Livfors
Patrick Andersen (from 14- - )
David Kelly (from 14- - )
Mengmeng Du
Jonas Kjellberg (from 14- - )
Lars Nilsson
Henrik Persson (up to and
including - - )
Florian Seubert (up to and
including 13- - )

Presence at Board and committee meetings

External auditors

CDON Group AB's auditor was elected by the AGM for a period of four years. KPMG was elected as CDON Group AB's main auditor and has been the external auditor since . Cronie Wallquist, certified public accountant, is responsible for the audit of the company on behalf of KPMG as of September 2013.

The auditor's report their findings to the shareholders by means of the auditors' report, which is presented to the AGM. In addition, the auditor's report detailed findings to the Audit Committee twice a year and to the full Board once a year, and annually provide written assurance of their impartiality and independence to the Audit Committee.

KPMG provided certain additional services in 2012 and 2013. These services comprised consultation on accounting and tax issues and other audit-related assignments.

Audit assignments have involved examination of the annual report and financial accounting, administration by the Board and CEO, other tasks related to the duties of a company auditor, and consultation or other services which may result from observations noted during such examination or implementation of such other tasks.

For more detailed information on auditing fees for 2013, see Note 25 in this annual report.

CEO and executive management

Executive management of CDON Group includes the Chief Executive Officer, the Chief Financial Officer, managers/managing directors of CDON Group's operating subsidiaries and other key executives. Biographical information on the Group's executive managers is contained in the "Executive Management" section of this annual report.

CEO and executive management

The Chief Executive Officer (CEO) is responsible for the ongoing management of the company in accordance with the guidelines and instructions established by the Board.

The CEO and executive management team, supported by various employee functions, are responsible for adhering to the Group's overall strategy, financial and business controls, financing, capital structure, risk management and acquisitions. Among other tasks, this includes preparation of financial reports, communication with the stock market and other issues. Guidelines and policies issued include financial control, communication, brands, business ethics and personnel policies.

As of the second half of 2013, regular board meetings are held in CDON Group's operating subsidiaries (previously there was an operating board for each business area). The subsidiaries' boards consist of CDON Group's CEO and CFO, the respective subsidiary's managing director and in some cases, a representative of minority shareholders. The CDON Group's CEO is Chairman of the subsidiaries' boards and leads the meetings. Subsidiaries' executive management teams may also participate in the meetings of the subsidiaries' boards. The boards of the operating subsidiaries have adopted working procedures for their activities that include rules pertaining to the number of regular board meetings, which issues will be handled at regular board meetings etc. Furthermore, guidelines have been adopted that shall be followed by the subsidiaries' managing directors.

Applicable guidelines for remuneration to senior executives

Current guidelines for determining remuneration to senior executives in the Group ("Executives") as well as Board members to the extent to which they are remunerated outside their directorship, were adopted at the AGM on 14 May 2013 as follows.

Remuneration guidelines

The objective of the guidelines is to ensure that CDON Group can attract, motivate and retain Executives within the context of CDON Group's peer group, which consists of Nordic online and offline retailing companies. Remuneration shall be based on conditions that are market competitive and at the same time aligned with shareholders' interests. Remuneration to Executives shall consist of a fixed and variable salary paid in cash, as well as the possibility of participation in long-term, share-based incentive programmes, customary benefits and pension schemes. These components shall create a well-balanced remuneration reflecting individual performance and responsibility, both short-term and long-term, as well as CDON Group's overall performance.

Fixed salary

The Executives' fixed salary shall be competitive and based on the individual Executive's responsibilities and performance.

Variable remuneration

The Executives may receive variable remuneration in addition to fixed remuneration. The variable salary will generally not exceed a maximum of 75% of the fixed annual salary. Variable remuneration will be based on the performance of Executives in relation to established goals and targets.

Other benefits

CDON Group provides other benefits to Executives in accordance with local practice. Other benefits can include, for example, a company car and company health care. Occasionally, housing allowances may be granted for a limited period.

Pension

Executives are entitled to pension commitments based on those that are customary in the country in which they are employed. Pension commitments will be secured through premiums paid to insurance companies. Under normal circumstances, the retirement age is 65 years.

Notice of termination and severance pay

The maximum notice period in any Executive's contract is generally months, and in exceptional cases 18 months, during which time salary payment will continue.

Remuneration to Board members

Board members elected by the AGM may in certain cases be paid for services within their respective areas of expertise, outside of their board duties. Compensation for these services shall be paid at market terms and be approved by the Board of Directors.

Deviations from the guidelines

In special circumstances, the Board may deviate from the above guidelines, for example additional variable remuneration for exceptional performance. In such a case, the Board of Directors will explain the reason for the deviation at the following AGM.

The guidelines were followed in 2013. Information on remuneration to senior executives is described in Note 24 of this annual report.

Share-based long-term incentive programmes

CDON Group has three outstanding share-based long-term incentive programmes decided on at the AGMs in 2011, 2012 and 2013. See Note 24 for further information about these programmes.

Internal control of financial reporting

The processes for internal control, risk assessment, control activities and monitoring regarding financial reporting are designed to ensure reliable overall and external financial reporting in accordance with International Financial Reporting Standards (IFRS), applicable laws, regulations and other requirements for listed companies on the NASDAQ OMX Stockholm exchange. This process involves the Board, executive management and other personnel.

Control environment

In addition to the Board's rules of procedure and instructions to the CEO and board committees, there is a clear division of roles and responsibilities for effective management of operational risks. The Board also has a number of established basic guidelines, which are important for its work with internal control activities. This includes control and follow-up of results as compared to plans and prior years. The Audit Committee assists the Board in overseeing various issues such as internal audit and accounting policies applied by the Group.

Responsibility for maintaining an effective control environment and internal control over financial reporting is delegated to the CEO. Other managers at various levels in the company have respective responsibilities. The executive management regularly reports to the Board according to established routines and in addition to the Audit Committee's reports. Defined responsibilities, instructions, guidelines, manuals and policies, together with laws and regulations, form the control environment. All employees are accountable for compliance with these guidelines.

Risk assessment and control activities

The company has prepared a model for assessing risks in all areas, in which a number of parameters are identified and measured. These risks are reviewed regularly by the Board and the Audit Committee, and include both the risk of losing assets as well as irregularities and fraud.

Designing control activities is of particular importance to enable the company to prevent and identify shortcomings. The important areas are purchasing, logistics, and inventory processes, technical development and performance of the web platform, as well as general IT security. Assessing and controlling risks involves the boards in each operating subsidiary, where meetings are held at least four times a year. CDON Group's CEO, CFO and the managers of each subsidiary participate in these minuted meetings. Further information about the subsidiary boards can be found under the heading "CEO and executive management".

Information and communication

Important guidelines, manuals and the like that are significant to financial reporting are regularly updated and distributed to the employees concerned. There are formal as well as informal information channels to the executive management and Board for information from employees that is considered significant. Guidelines for external communication ensure that the Company applies the highest standards for providing accurate information to the financial market.

Follow-up

The Board continuously evaluates the information submitted by company management and the Audit Committee. The Board receives regular updates of the Group's development between the meetings. The Group's financial position, strategies and investments are discussed at every Board meeting. The Audit Committee reviews the quarterly reports prior to publication. The Audit Committee is also responsible for following up internal control activities. This work includes ensuring that measures are taken to deal with any discrepancies and proposed measures emerging from the internal and external audits.

The company has an independent internal audit function responsible for the evaluation of risk management and internal control activities. Internal auditing is performed by a third party, whose work includes scrutinising the application of established routines and guidelines. The internal audit function plans its work in cooperation with the Audit Committee and reports the results of its reviews to the Audit Committee. The external auditors participate in the regular meetings of the Audit Committee.

Board of Directors

Lars-Johan Jarnheimer Chairman of the Board Swedish, born 1960

Lars-Johan has been a member of the Board of CDON Group since August 2010. He is currently Chairman of the Board of Directors of Eniro AB and Arvid Nordquist Handels AB and a member of the Boards of SAS AB, INGKA Holding B.V. (the parent company of the IKEA Group of Companies), Egmont International Holding A/S and Chairman of the charity BRIS (Children's Rights in Society). Lars-Johan served as Chief Executive Officer of Tele2 AB from 1999 to 2008, and previously held various positions at IKEA, Hennes & Mauritz and Comviq AB. Lars-Johan was a Non-Executive Director of Modern Times Group MTG AB 1997-2008 and of Millicom International Cellular S.A. 2001-2007. Lars-Johan graduated with a Master's Degree in Economics from Växjö and Lund universities in Sweden. Lars-Johan Jarnheimer Chairman of the Board Swedish, born 1960 has been a member of the Board of CDON Group since August 2010. He is currently Chairman of the Board of Directors of Eniro AB and Arvid Nordquist Handels AB and a member of the Boards of SAS AB, INGKA Holding B.V. (the parent company of the IKEA Group of Companies), Egmont International Holding A/S and Chairman of the charity BRIS (Children's Rights in Society). Lars-Johan served as Chief Executive Officer of Tele2 AB from 1999 to 2008, and previously held

Member of the Remuneration Committee. Director of Modern Times Group MTG AB 1997-2008 and of Millicom International Cellular S.A.

Independent of the company and management and independent of major shareholders. Direct or related person ownership in CDON Group: 35,000 shares 2001-2007. Lars-Johan graduated with a Master's Degree in Economics from Växjö and Lund universities in Sweden.

Mia Brunell Livfors Board member Swedish, born 1965

Mia has been a member of the Board of CDON Group since August 2010. She has served as President and Chief Executive Officer of Investment AB Kinnevik since 2006, prior to which Mia served as Chief Financial Officer of MTG between 2001 and 2006 and in various financial management positions between 1992 and 2001. Mia has been Chair of the Board of Directors of Metro International S.A. since 2008, Non-Executive Director since 2006, and has also been a Non-Executive Director of Tele2 AB since 2006, Millicom International Cellular S.A. and Modern Times Group MTG AB since 2007 and BillerudKorsnäs AB since 2012 (Non-Executive Director of Korsnäs AB 2006-2012). Mia studied Business Administration at Stockholm University. Mia Brunell Livfors Board member Swedish, born 1965 Mia has been a member of the Board of CDON Group since August 2010. She has served as President and Chief Executive Officer of Investment AB Kinnevik since 2006, prior to which Mia served as Chief Financial Officer of MTG between 2001 and 2006 and in various financial management positions between 1992 and 2001. Mia has been Chair of the Board of Directors of

Chair of the Remuneration Committee. Executive Director of Tele2 AB since 2006, Millicom International Cellular S.A. and Modern Times

Not independent of the company and management and not independent of major shareholders. Direct or related person ownership in CDON Group: 8,257 shares Group MTG AB since 2007 and BillerudKorsnäs AB since 2012 (Non-Executive Director of Korsnäs AB 2006-2012). Mia studied Business Administration at Stockholm University.

Patrick Andersen Board member Danish, born 1962

Patrick has been a member of the Board of CDON Group since May 2013. He currently serves as President of the Americas (North America and Latin America) at Carlsson Wagonlit Travel, where he has been since 2008, having held numerous executive positions in Europe leading up to his current role. Prior to this, Patrick was a consultant and the owner of PNA Consulting, and before that held several executive positions at DHL, where he worked for over 2 years. Patrick studied management at London Business School.

Member of the Audit Committee.

Independent of the company and management and independent of major shareholders. Direct or related person ownership in CDON Group: 45,000 shares

Mengmeng Du Board member

Swedish, born 1980

Mengmeng has been a member of the Board of CDON Group since September 2010. Since August 2011, she has been working as Director Global Marketing Operations at Spotify. In addition, Mengmeng has been a board member of Skånska Byggvaror AB since June 2012. From August 2010 to July 2011 Mengmeng worked as Project Manager at Alumni, an executive search and leadership services consultancy. She was Vice President Product Development of Stardoll, the world's largest online fashion and games community for girls, from 2009, prior to which she was Project Manager and Director of product development at the company. Before joining Stardoll in 2008, Mengmeng was a management consultant with Bain & Company in Sweden from 2005. She holds a Master of Science in Economics and Business from Stockholm School of Economics and a Master of Science in Computer Science and Engineering from the Royal Institute of Technology in Stockholm.

Member of the Remuneration Committee.

Independent of the company and management and independent of major shareholders. Direct or related person ownership in CDON Group: 450 shares

40 CDON Group AB Annual Report 2013 CDON Group AB Annual Report 2013

David Kelly Board member British, born 1963

David has been a member of the Board of CDON Group since May 2013. Previously, David served as advisor to the CDON Group Board between June 2012 – April 2013. David is currently Chairman of the Board of Directors of Carloan4u and a board member of Holiday Extras, MBA & Company, LoveHomeSwap.com ,Pure360 and Simply Business. David was previously a member of the executive management as well as CEO for Rackspace Cloud Hosting. He has also held several positions at eBay, Amazon.com and Lastminute.com. David is also one of the founders of Mydeco. David holds a Ph.D. in Business Strategy and an MBA in marketing from City University Business School, as well as a BA in computer science from Leicester University.

Member of the Audit Committee.

Independent of the company and management and independent of major shareholders. Direct or related person ownership in CDON Group: 0 shares

Jonas Kjellberg Board member Swedish, born 1971

Jonas has been a member of the Board of CDON Group since May 2013. Jonas served formerly as advisor to the CDON Group Board between June 2012 – April 2013. In 2012-2013, Jonas was responsible for Investment AB Kinnevik's investments within Online. Previously he was CEO of Wyatt and has also been CEO and Global Sales Director for Skype Norden and Deputy CEO of Lycos Europe's Communities business area. Jonas holds a degree in Economics and Business from Uppsala University and a degree in Engineering from the Royal Institute of Technology in Stockholm. Jonas is also the author of the book "Gear up: your best business idea ever", "Gear Up: Bring business opportunities to life" and "Business creation: based on the gear up framework" which are used by the Stockholm School of Economics' MBA programme and by Stanford University, where Jonas lectures on entrepreneurship.

Independent of the company and management and independent of major shareholders since 1 November 2013. (Jonas Kjellberg was not independent in relation to major shareholders for the period 14 May – 31 October 2013, when he held a leading position at Investment AB Kinnevik (shareholders who own more than 10 percent of the shares in CDON Group)). Direct or related person ownership in CDON Group: 0 shares

CDON Group AB 41 Annual Report 2013 CDON Group AB Annual Report 2013

Lars Nilsson Board member Swedish, born 1956

Lars has been a member of the Board of CDON Group since September 2010. He has been Chief Financial Officer at Tele2 since 2007, and Deputy CEO since 2010. Lars was previously Executive Vice President and Chief Financial Officer of Axfood AB, one of the largest food retailers in Scandinavia; CFO of Fritidsresegruppen; President and CEO of Aros Fondkommission and CFO of ABB Financial Services. Lars holds a Master's Degree in Economics from Linköping University in Sweden.

Chairman of the Audit Committee.

Independent of the company and management but not independent of major shareholders. Direct or related person ownership in CDON Group: 38,000 shares

Executive Management

Paul Fischbein President & CEO Born 1973

Paul Fischbein took over as CEO of CDON Group in November 2011. Paul's most recent position was as CEO of e-commerce company Tretti AB, which he founded in 2004 and which was acquired by CDON Group during the first half of 2011. Paul has been a board member of the trade association Svensk Distanshandel and before establishing Tretti Paul worked as an entrepreneur within internet services and recruitment. Paul holds a Master's Degree in Economics from Lund University and has also studied at the London School of Economics and Political Science. Paul Fischbein President & CEO Born 1973 Paul Fischbein took over as CEO of CDON Group in November 2011. Paul's most recent position was as CEO of e-commerce company Tretti AB, which he founded in 2004 and which was acquired

Shareholding in CDON Group: 82,500 shares association Svensk Distanshandel and before establishing Tretti Paul worked as an entrepreneur

Nicolas Adlercreutz CFO Born 1970 Shareholding in CDON Group: 82,500 shares

Nicolas Adlercreutz joined as CFO of the CDON Group in February 2013. Nicolas' most recent position was CFO at PA Resources AB (publ), and prior to that he worked for Svenska Cellulosa Aktiebolaget SCA (publ), where he held several positions including Vice President Group Control. Nicolas has a Master's degree in Economics. Nicolas Adlercreutz CFO Born 1970

Shareholding in CDON Group: 15,000 shares position was CFO at PA Resources AB (publ), and prior to that he worked for Svenska Cellulosa

Elisabeth Andersson Head of Human Resources Born 1971 Shareholding in CDON Group: 15,000 shares

Elisabeth Andersson joined as COO of newly acquired LinusLotta.com in 2008. In 2009, she became Head of Logistics and Customer Services at CDON.com. She has been Head of Human Resources for CDON Group since 2010. Elisabeth brings more than 10 years of experience in logistics, both from the Electrolux Group and Tradimus (now Aditro). Between 2005 and 2008, Elisabeth headed Tradimus Logistics' Malmö office. She has a Master of Science Degree in Engineering from Lund University. Elisabeth Andersson Head of Human Resources Born 1971 Elisabeth Andersson joined as COO of newly acquired LinusLotta.com in 2008. In 2009, she became Head of Logistics and Customer Services at CDON.com. She has been Head of Human

Shareholding in CDON Group: 5,800 shares logistics, both from the Electrolux Group and Tradimus (now Aditro). Between 2005 and 2008,

Annual Report 2013Fredrik Bengtsson Head of Communications and IR Born 1974

Fredrik Bengtsson joined CDON.COM as Marketing Director in 2004. He was appointed Head of Business Development at MTG Internet Retailing, now CDON Group, in 2007 and has been Head of Communications and IR for the Group since 2010. Prior to joining CDON, Fredrik worked for Ikano Bank, and prior to that he was an entrepreneur in the advertising sector. Fredrik has studied Business Administration and Media at Lund University and holds a Bachelor's Degree in Informatics from the University of Gothenburg School of Business, Economics and Law.

Shareholding in CDON Group: 5,000 shares

Therese Hillman

CEO of Gymgrossisten Sweden AB (Gymgrossisten.com, Bodystore.com and Milebreaker.com), Segment Manager Sports & Health Born 1980

Therese Hillman was employed as Business Developer for Gymgrossisten in 2007, and in the same year she became the company's CFO. She was appointed COO of the company in 2009, and in 2011 she was appointed CEO. Prior to joining CDON, Therese worked at Handelsbanken Capital Markets. She holds a Master's Degree in Economics from the Stockholm School of Economics, and has also studied at college in the US and MBA courses at Darden School of Business at the University of Virginia.

Shareholding in CDON Group: 5,700 shares

Patrik Illerstig

Head of Business Development Born 1982

Patrik Illerstig was appointed Head of Business Development in 2012. Patrik's most recent position was CEO and co-founder of Rocket Internet Scandinavia and prior to that he worked for McKinsey & Company. He holds a Master's Degree in Economics from the Stockholm School of Economics, and has also studied MBA courses at Instituto Tecnológico Autónomo de México.

Shareholding in CDON Group: 3,000 shares

Magnus Månsson

CEO of NLY Scandinavia AB (Nelly.com and Members.com), Segment Manager Fashion Born 196

Magnus Månsson was appointed CEO of Nelly.com and Members.com in 2012. Magnus was most recently employed by the New Wave Group where he worked as MD for the New Wave Sport business area, as well as for Craft, a clothing company. Magnus has many years of experience from the sport and fashion industry, including at Nike and Puma.

Shareholding in CDON Group: 2,900 shares

Fredrik Palm

CEO of Lekmer AB (Lekmer.com) and Rum21 AB (Rum21.com), Segment Manager Home & Garden Born 1974

Fredrik Palm was appointed in 2011 as CEO of Lekmer.com and in 2012 he was also made CEO of Rum21.com. During 2012 Fredrik was CEO of Tretti.com. Fredrik has previously held a number of senior positions within Hexagon and MTG, and also founded companies within the online and logistics sector. He has a Master's degree in Economics from the University of Gothenburg School of Business, Economics and Law, with a specialisation in management of growth companies.

Shareholding in CDON Group: 36,428 shares

Ola Strömberg

CEO of CDON AB (Cdon.com) and Tretti AB (Tretti.com), Segment Manager Entertainment Born 1971

Ola Strömberg took up the post as the new CEO of CDON.com and Tretti.com in November 2013. Ola has previously held a number of senior positions within companies such as MTG, Spray Ventures and Oriflame. Before CDON, Ola was President & CEO of Mercuri International. He studied business economics and law at Lund University and has a Bachelor's degree from the University of Wisconsin. He also studied MBA courses at Darden School of Business at the University of Virginia.

Shareholding in CDON Group: 0 shares

Consolidated income statement

(SEK million)	Note	2013	2012
Net sales	4	4,440.5	4,461.7
Cost of sales	30	-3,846.6	-3,990.5
Gross profit		593.8	471.2
Sales & administrative expenses		-637.0	-638.0
Other operating income	7	0.4	1.6
Other operating expenses	7	-5.3	-8.8
Operating profit/loss	4, 5, 6, 10, 11, 12, 13, 22, 24, 25, 27, 30	-48.0	-173.9
Finance income	8	0.8	0.9
Finance expense	8, 28	-34.9	-28.2
Profit before tax		-82.1	-201.2
Tax	9	14.8	49.4
Profit/loss for the year		-67.3	-151.7
Attributable to:
Parent company shareholders		-66.9	-149.6
Non-controlling interest		-0.4	-2.2
Profit/loss for the year		-67.3	-151.7
Basic earnings per share, SEK	16	-0.74	-1.91
Diluted earnings per share, SEK	16	-0.74	-1.91

Consolidated statement of comprehensive income

(SEK million)	Note 2013	2012
Profit/loss for the year	-67.3	-151.7
Other comprehensive income
Items that have been, or can be reclassified to profit/loss for the year
Translation differences for foreign operations for the year	0.9	-1.2
Other comprehensive income for the year 9, 17	0.9	-1.2
Comprehensive income for the year	-66.4	-152.9
Comprehensive income for the year attributable to:
Parent company shareholders	-66.0	-150.7
Non-controlling interest	-0.4	-2.2
Comprehensive income for the year	-66.4	-152.9

Consolidated statement of financial position

	31 December	31 December
(SEK million) Note ASSETS	2013	2012
Non-current assets
Intangible non-current assets	10
Ongoing projects	14.2	4.4
Development expenses	44.5	33.3
Domains	4.9	5.6
Trademarks	108.7	108.7
Customer relationships	3.2	4.6
Goodwill	462.6	461.8
Total intangible non-current assets	638.1	618.3
Property, plant and equipment	11
Equipment	21.0	14.3
Total property, plant and equipment	21.0	14.3
Financial non-current assets
Other financial non-current assets	1.6	1.6
Total financial non-current assets	1.6	1.6
Deferred tax asset	9 64.0	44.4
Total non-current assets	724.6	678.5
Current assets
Inventory	30
Finished goods and merchandise	520.7	597.2
Advances to suppliers	4.5	12.4
Total inventory	525.2	609.7
Current receivables
Accounts receivable	14 138.6	183.7
Other current receivables, non interest-bearing	46.6	52.4
Prepaid expenses and accrued income	48.2	32.4
Total current receivables	233.4	268.5
Cash and cash equivalents	21
Cash and bank	288.9	126.1
Total cash and cash equivalents	288.9	126.1
Total current assets	1,047.4	1,004.3
Total assets	1,772.1	1,682.8

	31 December	31 December
(SEK million) Note EQUITY AND LIABILITIES	2013	2012
Equity attributable to parent company shareholders	17
Share capital	201.4	133.6
Other capital contributions	579.1	141.8
Reserves	-1.4	-2.3
Retained earnings including net income for the year	-90.5	-6.1
Total equity attributable to parent company shareholders	688.7	267.1
Non-controlling interest
Non-controlling interest	2.2	-0.7
Total equity	690.9	266.4
Non-current liabilities	21
Interest-bearing
Convertible bonds	28 231.7	223.0
Total non-current interest-bearing liabilities	231.7	223.0
Non-interest-bearing
Deferred tax liability	9 28.6	30.9
Other provisions	18 3.3	6.0
Total non-current non-interest-bearing liabilities	31.9	36.9
Total non-current liabilities	263.6	259.8
Current liabilities	21
Interest-bearing
Credit facility	31 -	150.0
Current liabilities	-	15.0
Total current interest-bearing liabilities	0.0	165.0
Non-interest-bearing
Accounts payable	472.6	564.2
Current tax liabilities	-	25.6
Other liabilities	81.6	109.3
Accrued expenses and prepaid income	263.4	292.5
Total current non-interest-bearing liabilities	817.6	991.6
Total current liabilities	817.6	1,156.6
Total liabilities	1,081.2	1,416.4
Total equity and liabilities	1,772.1	1,682.8

For information on pledged assets and contingent liabilities, see Note 20.

Consolidated statement of changes in equity

		Equity attributable to parent company shareholders
(SEK million) Notes 9, 17	Share capital	Other capital contributions	Translation reserve	Retained earnings including net income for the year	Total	Non-controlling interest	Total equity
Opening balance, 1 January 2012	133.1	140.7	-1.1	143.2	415.9	1.4	417.3
Comprehensive income for the year
Profit/loss for the year				-149.6	-149.6	-2.2	-151.7
Other comprehensive income for the year			-1.2		-1.2		-1.2
Comprehensive income for the year	-	-	-1.2	-149.6	-150.7	-2.2	-152.9
New share issue	0.6				0.6		0.6
Acquisition of own shares				-0.6	-0.6		-0.6
Share savings plan				0.9	0.9		0.9
Effect of change in tax rate		1.2			1.2		1.2
Closing balance, 31 December 2012	133.6	141.8	-2.3	-6.1	267.1	-0.7	266.4
Opening balance, 1 January 2013	133.6	141.8	-2.3	-6.1	267.1	-0.7	266.4
Comprehensive income for the year
Profit/loss for the year				-66.9	-66.9	-0.4	-67.3
Other comprehensive income for the year			0.9		0.9		0.9
Comprehensive income for the year	-	-	0.9	-66.9	-66.0	-0.4	-66.4
New share issue	67.7	437.3			505.0		505.0
Acquisition of own shares				-1.4	-1.4		-1.4
Acquisition of shares from non-controlling interest, where
there is already a controlling interest				-17.3	-17.3	3.3	-13.9
Share savings plan				1.2	1.2		1.2
Effects from changes in tax rate					0.0		0.0
Closing balance, 31 December 2013	201.4	579.1	-1.4	-90.5	688.7	2.2	690.9

Transaction costs of SEK 13.5 million (SEK 10.5 million after tax), directly attributable to the issue of new ordinary shares, are reported, net after tax, in equity as a deduction from issue proceeds.

Consolidated statement of cash flow

(SEK million)	Note	2013	2012
Operating activities
Profit/loss before tax		-82.1	-201.2
Adjustments for items not included in cash flow	26	67.7	125.4
Income tax paid		-40.1	-21.7
Cash flow from operating activities		-54.5	-97.5
Cash flow from changes in working capital
Increase (–)/decrease (+) in inventories		41.6	-238.3
Increase (–)/decrease (+) in other current receivables		56.5	-128.1
Increase (+)/decrease (-) of accounts payable		-91.7	101.4
Increase (+)/decrease (-) of other current liabilities		-90.4	129.9
Total change in working capital		-84.0	-135.1
Net cash flow from operations		-138.6	-232.6
Investing activities
Investments in activities	6	-18.6	-14.9
Sale of operations	5	32.1	0.0
Investments in property, plant and equipment		-12.8	-3.9
Divestment of property, plant and equipment		0.0	-
Investments in intangible non-current assets		-37.1	-38.5
Cash flow to investing activities		-36.4	-57.3
Financing activities
New share issue		515.6	0.6
Share issue expenses		-13.5	-
Repurchase of own shares		-1.4	-0.6
Acquisition of shares from non-controlling interest	6	-13.9	-
Utilised credit facilities	31	150.0	-
Amortisation of credit facilities	31	-300.0	-
Cash flow from/to financing activities		336.7	0.0
Change in cash and cash equivalents		161.8	-289.9
Cash and cash equivalents, beginning of the year		126.1	417.4
Exchange rate difference for cash and cash equivalents		0.9	-1.4
Cash and cash equivalents, year's end		288.9	126.1

New share issue relates to the issue of new ordinary shares of SEK 514,2 million and the issue of Class C shares of SEK 1.4 million.

Income statement – parent company

(SEK million)	Note	2013	2012
Net sales		52.1	54.0
Gross profit		52.1	54.0
Administrative expenses		-77.7	-76.9
Other operating income		0.0	-
Other operating expenses		-	0.0
Operating profit/loss	22, 24, 25, 27	-25.6	-22.8
Profit/loss from shares in subsidiaries		-0.1	-0.1
Interest income and similar items		18.4	12.8
Interest expenses and similar items		-29.3	-26.4
Profit/loss after financial items	8, 28	-36.6	-36.5
Changes in accelerated depreciation		-	0.0
Group contributions received		56.6	148.2
Group contributions paid		-263.2	-120.4
Profit/loss before tax		-243.3	-8.7
Tax	9	53.4	2.3
Profit/loss for the year		-189.9	-6.4

Statement of comprehensive income – parent company

(SEK million)	2013	2012
Profit/loss for the year	-189.9	-6.4
Other comprehensive income
Items that have been, or can be reclassified to profit/loss for the year	-	-
Other comprehensive income for the year	-	-
Comprehensive income for the year	-189.9	-6.4

Balance sheet - parent company

	31 December	31 December
(SEK million) Note	2013	2012
ASSETS
Non-current assets
Intangible non-current assets
Ongoing projects 10	2.1	-
Total intangible non-current assets	2.1	-
Property, plant and equipment
Equipment 11	0.3	0.0
Total property, plant and equipment	0.3	0.0
Financial non-current assets
Participations in Group companies 12	832.6	818.2
Deferred tax asset	54.4	-
Total financial non-current assets	887.0	818.2
Total non-current assets	889.4	818.3
Current assets
Current receivables
Current interest-bearing liabilities, Group	208.2	370.0
Receivables in Group companies	61.7	153.8
Other receivables	1.7	0.3
Prepaid expenses and accrued income 15	2.9	2.0
Total current receivables	274.5	526.1
Cash and bank 21	267.7	87.7
Total cash and cash equivalents	267.7	87.7
Total current assets	542.3	613.8
Total assets	1,431.7	1,432.0

		31 December	31 December
(SEK million)	Note	2013	2012
EQUITY AND LIABILITIES
Equity	17
Restricted equity
Share capital		201.4	133.6
Statutory reserve		0.8	0.8
Total restricted equity		202.2	134.4
Non-restricted equity
Share premium reserve		578.3	141.0
Profit brought forward		125.6	132.3
Profit/loss for the year		-189.9	-6.4
Total non-restricted equity		514.1	266.9
Total equity		716.2	401.3
Provisions
Deferred tax liability	9	4.0	6.0
Other provisions	18	0.9	1.0
Total provisions		5.0	6.9
Non-current liabilities
Convertible bonds	28	231.7	223.0
Total non-current liabilities		231.7	223.0
Current liabilities
Credit facility
Accounts payable	31	-	150.0
Other interest-bearing liabilities, Group companies		2.3 206.7	4.3 360.3
Liabilities to Group companies		257.1	248.3
Current tax liabilities		-	20.9
Other liabilities		2.2	6.3
Accrued expenses and prepaid income	19	10.5	10.8
Total current liabilities		478.8	800.8
Total liabilities		715.4	1,030.7
Total equity and liabilities		1,431.7	1,432.0
Pledged assets and contingent liabilities – parent company
Pledged assets		None	None
Contingent liabilities	20	171.8	144.9

Statement of changes in equity – parent company

			Restricted equity Non-restricted equity
				Share premium	Profit	Profit/loss for the	Total
(SEK million)	Note 17	Share capital	Statutory reserve	reserve	brought forward	year	equity
Opening balance, 1 January 2012		133.1	0.8	139.9	76.3	55.7	405.7
Comprehensive income for the year
Profit/loss for the year						-6.4	-6.4
Other comprehensive income for the year
Comprehensive income for the year		-	-	-	-	-6.4	-6.4
Appropriation of profits					55.7	-55.7	-
New share issue		0.6					0.6
Acquisition of own shares					-0.6		-0.6
Share savings plan					0.9		0.9
Effects from changes in tax rate				1.2			1.2
Closing balance, 31 December 2012		133.6	0.8	141.0	132.3	-6.4	401.3
Opening balance, 1 January 2013		133.6	0.8	141.0	132.3	-6.4	401.3
Comprehensive income for the year
Profit/loss for the year						-189.9	-189.9
Other comprehensive income for the year							-
Comprehensive income for the year		-	-	-	-	-189.9	-189.9
Appropriation of profits					-6.4	6.4	-
New share issue		67.7		437.3			505.0
Acquisition of own shares					-1.4		-1.4
Share savings plan					1.2		1.2
Closing balance, 31 December 2013		201.4	0.8	578.3	125.6	-189.9	716.2

Transaction costs of SEK 13.5 million (SEK 10.5 million after tax), directly attributable to the issue of new ordinary shares, are reported, net after tax, in equity as a deduction from issue proceeds.

Cash flow statement – parent company

(SEK million)		2013	2012
Cash flow from operations
Profit/loss before tax		-243.3	-8.7
Adjustments for items not included in cash flow	26	218.3	-18.4
Income tax paid		-21.8	-5.0
Cash flow from operating activities before change in working capital		-46.7	-32.1
Cash flow from changes in working capital
Increase (-)/decrease (+) of accounts receivable		-	0.0
Increase (–)/decrease (+) in other current receivables		160.8	10.9
Increase (+)/decrease (-) of accounts payable		-2.0	2.1
Increase (+)/decrease (-) of other current liabilities		-154.3	-355.2
Total cash flow from changes in working capital		4.5	-342.3
Cash flow from operating activities		-42.2	-374.4
Investing activities
Investment in shares in subsidiaries	6	-20.8	-12.2
Investments in intangible non-current assets		-2.1	-
Investments in property, plant and equipment		-0.3	0.0
Cash flow from investing activities		-23.2	-12.2
Financing activities
New share issue		515.6	-
Share issue expenses		-13.5	-
Repurchase of own shares		-1.4	-
Utilised credit facilities	31	150.0	-
Amortisation of credit facilities	31	-300.0	-
Shareholder contribution paid out		-133.0	-
Group contributions, paid out		-120.4	-6.0
Group contributions received		148.2	124.0
Cash flow from financing activities		245.5	118.0
Cash flow for the year		180.1	-268.6
Cash and cash equivalents, year's start		87.7	356.3
Cash and cash equivalents, year's end		267.7	87.7

New share issue relates to the issue of new ordinary shares of SEK 514,2 million and the issue of Class C shares of SEK 1.4 million.

Notes

Note 1 General information

CDON Group AB has its registered office in Malmö, Sweden. The company's address is Bergsgatan 20, Box 385, SE-201 23 Malmö, Sweden. The consolidated income statements and balance sheets as at 31 December 2013 include the parent company and its subsidiaries. CDON Group is listed on the NASDAQ OMX Stockholm exchange with the symbol ticker "CDON". Note 1 General information CDON Group AB has its registered office in Malmö, Sweden. The company's address is Bergsgatan 20, Box 385, SE-201 23 Malmö,

This annual report was approved by the Board and CEO for publication on 2 April 2014. subsidiaries. CDON Group is listed on the NASDAQ OMX Stockholm exchange with the symbol ticker "CDON".

Note 2 Accounting policies and valuation principles This annual report was approved by the Board and CEO for publication on 2 April 2014.

2.1 Compliance with standards and laws Note 2 Accounting policies and valuation principles

The consolidated accounts were prepared per International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB), as well as interpretive statements from the International Financial Reporting Interpretations Committee (IFRIC) as approved for application within the EU. The Swedish Financial Reporting Board's recommendation RFR 1 Supplementary Accounting Regulations for Groups has also been applied when preparing the consolidated accounts. 2.1 Compliance with standards and laws The consolidated accounts were prepared per International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB), as well as interpretive statements from the International Financial Reporting Interpretations

The parent company applies the same accounting policies as the Group, except where otherwise stated below in the parent company accounting policies section. Supplementary Accounting Regulations for Groups has also been applied when preparing the consolidated accounts.

The parent company's functional currency is the Swedish krona, which is also the reporting currency for the parent company and the Group. The financial statements are therefore presented in the Swedish krona. All amounts are rounded off to the nearest thousand, unless otherwise specified. company accounting policies section. The parent company's functional currency is the Swedish krona, which is also the reporting currency for the parent company and

The accounting policies specified below, with their detailed exceptions, were applied consistently to all periods presented in the consolidated financial statements. thousand, unless otherwise specified.

Changes to accounting policies due to new or amended IFRS standards consolidated financial statements.

Changes to IAS 1 have meant the introduction of the requirement to divide other comprehensive income into two categories: items that have or can be reclassified to profit/loss for the year, and items that cannot be reclassified to profit/loss for the year. The only item that is stated in other comprehensive income for CDON Group comprises translation differences for foreign operations. The format of the statement of comprehensive income has been amended to show that this item comes under the category "items that have been, or can be reclassified to profit/loss for the year". Furthermore, the introduction of IFRS 13 has led to extended disclosure requirements regarding the fair value of financial instruments, see Note 21. Other amendments to IFRS effective as of 1 January 2013 had no material impact on the consolidated accounts. Changes to accounting policies due to new or amended IFRS standards Changes to IAS 1 have meant the introduction of the requirement to divide other comprehensive income into two categories: items that have or can be reclassified to profit/loss for the year, and items that cannot be reclassified to profit/loss for the year. The only item that is stated in other comprehensive income for CDON Group comprises translation differences for foreign operations. The format of the statement of comprehensive income has been amended to show that this item comes under the category "items that have been, or can be reclassified to profit/loss for the year". Furthermore, the introduction of IFRS 13 has led to extended disclosure

2.1.2 New IFRS standards not yet implemented 2013 had no material impact on the consolidated accounts.

Several new or amended standards and interpretations to IFRS will not come into effect until coming financial years and were not adopted early in preparing these financial statements. New standards or amendments effective for future financial years will not be adopted early. None of the amendments to IFRS effective for future financial years are expected to have any material impact on consolidated accounts. 2.1.2 New IFRS standards not yet implemented Several new or amended standards and interpretations to IFRS will not come into effect until coming financial years and were not adopted early in preparing these financial statements. New standards or amendments effective for future financial years will not be

2.1.3 Valuation methods used in preparing the financial statements

Assets and liabilities are recognised at historical cost, except for financial assets and financial liabilities, which are recognised at amortised cost.

2.2 Classification

Non-current assets and non-current liabilities are essentially expected to be recovered or paid 12 months or more after the reporting date. Current assets and current liabilities essentially comprise amounts expected to be recovered or paid within 12 months of the reporting date.

2.3 Operating segment reporting

An operating segment is a Group entity that engages in activities that may earn revenue and incur expenses, and for which separate financial information is available. Operating segment earnings are reviewed by the company's executive management to assess performance and allocate resources to the segment. See Note 4 for further information on the division and presentation of operating segments.

2.4 Consolidation principles and business combinations

Subsidiaries

Subsidiaries are companies over which CDON Group AB has a controlling interest. Controlling interest means, directly or indirectly, the right to formulate a company's financial and operational strategies with the aim of receiving economic benefits. When judging whether there is a controlling interest, potential voting shares that can be used or converted immediately are taken into account.

Acquisitions

Subsidiaries are recognised using acquisition accounting. With this method, acquisition of a subsidiary is regarded as a transaction whereby the Group indirectly acquires the subsidiary's assets and assumes its liabilities. The acquisition analysis establishes the fair value of acquired identifiable assets and assumed liabilities on the acquisition date, as well as any non-controlling interest. Transaction expenses, except for transaction fees attributable to issued equity or debt instruments, are recognised directly in profit/loss for the year.

In business combinations in which the transferred payment, any non-controlling interest, and fair value of previously held interest (for incremental acquisitions) exceeds the fair value of acquired assets and assumed liabilities that are recognised separately, the difference is recognised as goodwill. When the difference is negative, it is recognised directly in profit/loss for the year.

Compensation transferred in connection with the acquisition does not include payments for the settlement of past business relationships. This type of settlement is recognised in profit/loss.

Contingent considerations are recognised at fair value on the date of acquisition. In cases where contingent considerations are presented as equity instruments, no revaluation is done and adjustments are made in equity. Other contingent considerations are revalued at each reporting date and the change is recognised in profit/loss for the year.

Non-controlling interests arise in cases where the acquisition does not include 100% of the subsidiary. There are two options for recognising non-controlling interests: (1) recognise the non-controlling interest's share of proportional net assets, or (2) recognise the non-controlling interest at fair value, which means that the interest is part of goodwill. Choosing between the two options for recognising non-controlling interests can be done individually for each acquisition.

For incremental acquisitions, goodwill is determined on the date control is taken. Previous holdings are assessed at fair value and changes in value are recognised in profit/loss for the year.

Disposals leading to loss of controlling interest but where holdings are retained are assessed at fair value, and the change in value is recognised in profit/loss for the year.

Acquisition of non-controlling interest

Acquisition from non-controlling interest is recognised as a transaction in equity, that is, between the parent company's owners (in retained profits) and the non-controlling interest. Therefore, no goodwill arises in these transactions. The change in non-controlling interest is based on its proportional share of net assets.

Transactions eliminated in consolidation

Intra-group receivables and liabilities, income or expenses and unrealised gains or losses that arise from intra-group transactions between Group companies are entirely eliminated in preparation of the consolidated accounts.

2.5 Foreign currency

2.5.1 Foreign currency transactions

Foreign currency transactions are translated into the functional currency at the exchange rate that applied on the transaction date. The functional currency is the currency used in the primary economic environments in which the companies operate. Monetary assets and liabilities in foreign currencies are translated into the functional currency at the exchange rate on the reporting date. Exchange differences arising from the translations are recognised in profit/loss for the year.

2.5.2 Financial statements of foreign operations

Assets and liabilities in foreign operations, including goodwill and other Group surpluses and deficits, are translated from the functional currency of the foreign operation to the Group's reporting currency, the Swedish krona, at the exchange rate applicable on the reporting date. Income and expenses in foreign operations are translated to the Swedish krona at an average rate that is an approximation of the exchange rates on the respective transaction date. Translation differences that arise from currency translation of foreign operations are otherwise recognised in comprehensive income and are accumulated in a separate component of equity called the translation reserve. In the event that the foreign operation is wholly owned, the translation difference is allocated to noncontrolling interest based on its proportional participating interest. When divesting foreign operations, they are realised in the operation for accumulated translation differences, where they are reclassified from translation reserve in equity to profit/loss for the year. In cases where disposal occurs but controlling interest is retained, the proportional share of cumulative translation differences is transferred from other comprehensive income to non-controlling interest.

2.6 Revenue

2.6.1 Sale of goods and rendering of services

Revenue from the sale of goods is recognised in accordance with the terms of sale, that is, when the goods are submitted to the transport agent, net of returns. Since the majority of sales are made to consumers who, depending on the country, most often have a legal right to cancellation for distance trading, the deduction for returns is a relatively significant item. Group revenue reflects seasonal variations. Fourth-quarter revenue significantly exceeds the other quarters due to Christmas shopping.

Revenue from the sale of services is recognised when services are delivered.

2.6.2 Bartering

Bartering refers to the exchange of gift certificates for other goods or services. Bartering is recognised at the fair value of the goods or services. The fair value is determined from existing contracts for the same type of services with other customers. Revenue from bartering is recognised when the gift certificate is redeemed; the expense is booked when the goods or services are used.

2.7 Leasing

2.7.1 Operating leases

Expenses pertaining to operating leases are recognised in profit/loss for the year on a straight-line basis over the lease term. Incentives received in conjunction with signing a lease agreement are recognised in profit/loss for the year as a reduction of the leasing payments on a straight-line basis over the lease term. Variable charges are expensed in the periods in which they arise. For further information, see Note 22.

2.8 Financial income and expenses

Financial income comprises interest income on invested funds.

Financial expenses comprise interest expenses on loans. Borrowing costs are recognised in earnings using the effective interest method.

Exchange gains and exchange losses are recognised at net; operating-related gains/losses are recognised in operating profit/loss and financial gains/losses in financial items.

Effective interest is the interest that discounts estimated future payments and disbursements during a financial instrument's expected term at the financial asset's or liability's recognised net value. The calculation includes all fees paid or received by the parties to the contract, transaction costs and all other surplus and deficit values.

2.9 Taxes

Income taxes comprise current and deferred tax. Income taxes are recognised in profit/loss for the year, except when the underlying transaction is recognised in other comprehensive income or equity, in which case the related tax effect is recognised in other comprehensive income or equity.

Current tax is tax that is payable or receivable for the current year, according to the tax rates enacted or for all practical purposes enacted on the reporting date. Current tax also includes adjustment of current tax attributable to previous periods.

Deferred tax is calculated using the balance sheet method, based on temporary differences between the carrying amounts and tax bases of assets and liabilities. Temporary differences are not considered in consolidated goodwill or for differences that arose on

initial recognition of assets and liabilities that are not business combinations, which at the time of the transaction affect neither recognised nor taxable earnings.

Temporary differences attributable to interests in subsidiaries that are not expected to be reversed within the foreseeable future are also not considered. Measurement of deferred tax is based on how underlying assets or liabilities are expected to be realised or settled. Deferred tax is calculated using the tax rates and rules enacted or for all practical purposes enacted on the reporting date.

Deferred tax assets regarding deductible temporary differences and loss carry-forwards are only recognised where it is deemed probable that they can be used. The value of deferred tax assets is reduced when their use is no longer deemed probable.

Any additional income tax that arises in conjunction with dividends is recognised when the dividend is recognised as a liability.

2.10 Financial instruments

Financial instruments recognised in the statement of financial position include cash and cash equivalents, loan receivables and accounts receivable among the assets and accounts payable and loans payable among the liabilities.

2.10.1 Recognition in and derecognition from the statement of financial position

A financial asset or financial liability is recognised in the statement of financial position when the company becomes a party to the contractual provisions of the instrument. A receivable is entered when the company has rendered a service or supplied a product and there is a contractual obligation on the counterparty to pay, even if an invoice has not yet been sent. Accounts receivable are entered in the statement of financial position when an invoice is sent. Liabilities are entered when the counterparty has rendered a service or supplied a product and there is a contractual obligation to pay, even if an invoice has not yet been received. Accounts payable are recognised when an invoice is received.

Financial assets are removed from the statement of financial position when the entitlements of agreements are realised, fall due or the company loses control of them. The same applies to part of a financial asset. Financial liabilities are removed from the statement of financial position when contractual obligations are fulfilled or are otherwise extinguished. The same applies to part of a financial liability.

Financial assets and financial liabilities are offset and recognised at the net amount in the statement of financial position only when there is a legal offset right for the amounts and the intention is to (1) settle the items at a net amount, or (2) realise the asset and settle the liability simultaneously.

Acquisitions and disposals of financial assets are recognised on the settlement date, which is the date the asset is delivered to or from the company.

2.10.2 Classification and measurement

Financial instruments that are not derivatives are initially recognised at cost corresponding to the fair value of the instrument, plus transaction costs for all financial instruments apart from those in the category of financial assets at fair value through profit or loss; these are recognised at fair value excluding transaction costs. A financial instrument is presented at initial recognition based in part on the purpose for which it is acquired. The classification determines how the financial instrument is valued after initial recognition, as described below.

Cash and cash equivalents consist of cash.

2.10.3 Loans receivable and accounts receivable

Loans receivable and accounts receivable are non-derivative financial assets that have fixed or determinable payments and are not quoted on an active market. These assets are valued at amortised cost, which is determined on the basis of the effective rate as calculated at the time of acquisition. Accounts receivable are recognised at the amounts expected to be received, that is, less bad debts.

2.10.4 Other financial liabilities

This category contains loans and other financial liabilities, such as accounts payable. Liabilities are valued at amortised cost.

Consolidated financial assets and liabilities are allocated to the categories described in Note 20 Financial Instruments and Risk Management. Recognition of financial income and expenses is also described in item 2.8 above.

2.11 Convertible bonds

Convertible bonds that can be converted to shares if the counterpart exercises the option to convert the receivable into shares, are recognised as a compound financial instrument divided into a debt portion and an equity portion. The fair value of liabilities on the date of issue is calculated on the basis of future cash flows, which are discounted using the current market rate for similar liabilities, with no rights of conversion. The value of equity instruments is calculated as the difference between the issue proceeds when the convertible promissory note was issued and the fair value of the financial liability on the date of issue. Any deferred tax liability on the date of issue is deducted from the carrying value of the equity instrument. Transaction costs associated with the issue of a compound financial instrument are distributed between the debt portion and the equity portion in proportion to the distribution of the issue proceeds. Interest expense is recognised in profit/loss for the year and is calculated using the effective interest method.

2.12 Property, plant and equipment

Property, plant and equipment are recognised in the consolidated accounts at cost, less accumulated depreciation and any impairment losses. Cost includes the purchase price and expenses directly attributable to ensuring the asset is in place and in the right condition to be used as intended. Borrowing costs that are directly attributable to the purchase, construction or production of assets that require a substantial amount of time to prepare for their intended use or sale are included in the cost.

The carrying amount of an item of property, plant or equipment is derecognised from the statement of financial position upon disposal or sale or when no future financial benefits are expected from the asset's use, disposal or sale. Gains or losses that arise from an asset's sale or disposal comprise the difference between the selling price and the carrying amount, less direct selling expenses. Gains and losses are recognised as other operating income/expense.

2.12.1 Depreciation principles for property, plant and equipment

Depreciation occurs on a straight-line basis over the estimated useful life of the asset. The depreciation methods used, residual values, and useful lives are reassessed at each year-end.

Estimated useful lives:

Equipment 3-10 years

2.13 Intangible assets

2.13.1 Intangible assets with indefinite useful lives

2.13.1.1 Goodwill

Goodwill is valued at cost, less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is tested at least once a year for impairment (see accounting policy 2.15).

2.13.1.2 Trademarks

Trademarks are carried at cost, less any accumulated impairment losses. Trademarks are allocated to cash-generating units and are tested at least once a year for impairment (see accounting policy 2.15).

2.13.2 Intangible assets with defined useful lives

2.13.2.1 Development expenses

Development expenditures for creating new or improved products or processes are recognised as assets in the statement of financial position if the product or process is technically and commercially viable and the Group has sufficient resources to complete the development. The carrying amount includes direct costs and, where applicable, expenditure for salaries and share of indirect expenses. Other expenses are recognised in the income statement as expenses when they arise. In the statement of financial position, capitalised development expenses are carried at cost, less accumulated amortisation and any impairment losses. Capitalised expenditures refer mainly to software and software platforms.

2.13.2.2 Domains

Domains are recognised at cost less accumulated amortisation (see below) and impairment loss (see accounting policy 2.15).

2.13.2.3 Customer relationships

Customer relationships are recognised at cost less accumulated amortisation (see below) and impairment loss (see accounting policy 2.15).

2.13.3 Amortisation method for intangible assets

Amortisations are recognised in profit/loss for the year on a straight-line basis over the estimated useful life of the intangible asset, provided such useful life is indefinite. Useful lives are reassessed at least once a year. Goodwill and trademarks with indefinite useful lives are tested for impairment annually and when there are indications that the asset has lost value. Intangible assets with determinable useful lives are amortised from the date on which they become available for use.

Estimated useful lives:

Development expenses	5 years
Domains	5 years
Customer relationships	4-5 years

2.14 Inventories

Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and sale. The cost of inventory is based on weighted averages and includes expenditures incurred in the acquisition of goods and bringing the goods to their form and location. Provisions for obsolescence are included in cost of goods sold.

2.15 Impairment losses

The Group's recognised assets are assessed on every reporting date to determine whether indications of impairment exist. IAS 36 is applied to impairment of assets other than financial assets, which are recognised as per IAS 39.

2.15.1 Impairment of intangible assets and property, plant and equipment

The recoverable amount of the asset is calculated if there is indication of impairment (see below). The recoverable amount is also calculated annually for goodwill, trademarks and intangible assets that are not yet ready for use. If substantially independent cash flows to an individual asset cannot be established, and if the asset's fair value less selling expenses cannot be used, then assets are grouped in impairment testing at the lowest level at which substantially independent cash flows can be identified – this grouping is called a cash-generating unit (CGU).

An impairment charge is recognised when the carrying amount of an asset or CGU (group of units) exceeds the recoverable amount. Impairment loss is recognised in profit/loss for the year as an expense. When impairment has been identified for a CGU (group of units), the impairment loss is first allocated to goodwill. Thereafter, impairment losses are distributed proportionately among other assets included in the unit (group of units).

The recoverable amount is the higher of the fair value less selling expenses and value in use. When calculating the value in use, future cash flows are discounted using a discount rate that accounts for risk-free interest and the risk associated with the specific asset.

2.15.2 Impairment of financial assets

On each reporting date, the company determines if there is any objective evidence that a need exists to recognise an impairment loss on any financial asset or group of assets. Objective evidence comprises observable past events that adversely affect the possibility of recovering the cost.

Accounts receivable impairment is determined based on historical experience of bad debts on similar receivables. Accounts receivable with impairment is recognised at the value of expected future cash flows. Under normal circumstances, accounts receivable are impaired by 100% after 90 days.

2.15.3 Reversal of impairment losses

Impairment losses on assets included in the scope of IAS 36 are reversed if there is (1) an indication that impairment has ceased and (2) a change in the assumptions that formed the basis of calculating the recoverable amount. Impairment losses on goodwill are never reversed. A reversal only occurs to the extent that the asset's carrying amount (after reversal) does not exceed the carrying amount that would have been recognised (less depreciation or amortisation, where applicable), had no impairment loss been recognised.

Impairment losses on loans and accounts receivable carried at amortised cost are reversed if the previous reasons for impairment no longer exist and full payment from the customer is expected to be obtained.

2.16 Capital payments to shareholders

2.16.1 Dividends

Dividends are recognised as a liability after approval at the Annual General Meeting.

2.16.2 Acquisition of own shares

Acquisition of own shares is recognised as a deductible item from equity. Payment from divestment of this type of equity instrument is recognised as an increase in equity. Any transaction expenses are recognised directly in equity.

2.17 Earnings per share

The calculation of earnings per share is based on the consolidated profit/loss for the year attributable to the parent company's shareholders and the weighted average number of shares outstanding during the year. In calculating diluted earnings per share, earnings and the average number of shares are adjusted to account for effects of diluted potential ordinary shares. For the reported periods, the parent company has had two classes of instruments that may generate potential dilution in the future, a convertible bond and custodial C shares attributable to the Group incentive programme. These have not been included in the calculation of earnings per share since they contribute no dilution effect to either 2013 or 2012.

2.18 Employee benefits

2.18.1 Short-term employee benefits

Short-term employee benefits are calculated without discounting and are recognised as a cost when the related services are rendered.

A provision is reported for the expected cost of bonus payments when the Group has an applicable legal or informal obligation to make such payments due to services being rendered by employees, and the commitment can be reliably calculated.

2.18.2 Defined contribution pension plans

Defined contribution pension plans are presented as plans for which the company's obligation is limited to the charges the company undertook to pay. In such cases the size of the employee's pension depends on (1) the contributions that the company pays to the plan or to an insurance company and (2) the contributions' return on capital. The employee thus bears the actuarial risk (that the remuneration will be lower than expected) and the investment risk (that the invested assets will not suffice to pay out the expected remuneration). The company's obligations for contributions to defined contribution plans are recognised as an expense in profit/loss for the year at the rate earned by the employee performing services for the company over a period.

2.18.3 Termination benefits

An expense for remuneration paid on termination of employment is only recognised if the company is demonstrably committed – without realistic option of withdrawal – to a detailed formal plan to terminate an employment contract before the normal end date. If benefits are offered to encourage voluntary redundancy, an expense is recognised if it is probable that the offer will be accepted and that the number of employees who will accept the offer can be reliably estimated.

2.18.4 Share-based payments

The Group has incentive programmes directed to certain employees that consist of shareholder rights and employee options. The fair value of the programmes is measured as of the grant date. The fair value includes social security contributions and is distributed over the vesting period, based on the Group's estimate of the number of shares and employee options that will eventually be redeemed. The fair value expense is reported in the income statement as employee costs, with the corresponding equity increase. The fair value is revalued each interim period to calculate social security contributions. This cost is adjusted for future periods to eventually reflect the number of shares and employee options that will eventually be redeemed. For further information, see Note 2 .

2.19 Provisions

A provision differs from other liabilities because of prevailing uncertainty about payment date or the amount required to settle the provision. A provision is recognised in the statement of financial position when there is an existing legal or informal obligation due to a past event, and it is probable that an outflow of economic resources will be required to settle the obligation, and the amount can be reliably estimated.

The amount allocated to a provision is the best estimate of what is required to settle the existing obligation on the reporting date. When the payment date has a material impact, provisions are calculated by discounting the expected future cash flow at an interest rate before tax that reflects (1) current market estimates of the time value of money and (2) where applicable, the risks associated with the liability.

2.20 Contingent liabilities

A contingent liability is recognised when there is a possible obligation from past events, and the occurrence of the obligation is only confirmed by one or more uncertain future events, or when there is an obligation that is not recognised as a liability or provision since it is not probable that an outflow of resources will be required.

2.21 Parent company accounting policies

The parent company prepared its annual accounts as per the Swedish Annual Accounts Act (1995:1554) and Recommendation RFR 2 Accounting for Legal Entities of the Swedish Financial Reporting Board. The Swedish Financial Reporting Board's statement on listed companies is also applied. RFR 2 means that, in the annual report for the legal entity, the parent company must apply all EUapproved IFRS and interpretations as far as possible within the framework of the Annual Accounts Act and the Act on Safeguarding of Pension Commitments, and with regard to the connection between accounting and taxation. The recommendation states which exceptions from and additions to IFRS must be applied.

2.21.1 Differences between accounting policies of the Group and parent company

The differences between Group and parent company accounting policies are stated below. The parent company's accounting policies described below were applied consistently to all periods reported in the parent company's financial statements.

2.21.1.1 Changes to accounting policies

Unless otherwise indicated below, changes to the parent company's accounting policies in 2013 were the same as stated above for the Group.

2.21.1.2 Classification and presentation

The parent company uses the names Balance Sheet and Cash Flow Statement for the reports that in the Group are called Consolidated Statement of Financial Position and Consolidated Statement of Cash Flows. The parent company's income statement and balance sheet are prepared in accordance with the Swedish Annual Accounts Act's schedule, while the statement of comprehensive income, statement of changes in equity, and cash flow statement are based on IAS 1 Presentation of Financial Statements and IAS 7 Statement of Cash Flows. The differences in parent company reporting versus Group reporting as seen in the parent company income statement and balance sheet mainly comprise reporting of financial income and expenses, equity and the occurrence of provisions as a separate heading in the balance sheet.

2.21.1.3 Subsidiaries

Participations in subsidiaries are recognised in the parent company using the cost method. This means that transaction costs are included in the carrying amount for holdings in subsidiaries. In the consolidated accounts, transaction costs related to subsidiaries are recognised directly in earnings when they arise.

Contingent considerations are valued based on the probability that the purchase price will be payable. Any changes to the provision increase/decrease the cost. In the consolidated accounts, contingent considerations are recognised at fair value with changes in value via earnings.

2.21.1.4 Group contributions and shareholder contributions for legal entities

The parent company reports Group contributions received and paid as balance sheet appropriations in accordance with RFR 2. Shareholder contributions are recognised directly in the equity of the recipient and are capitalised in shares and participating interests of the issuer, to the extent impairment is not required.

Note 3 Estimates and assessments

Preparation of the financial statements using IFRS requires that the Board and company management make assessments, estimates and assumptions that affect application of the accounting policies and the recognised amounts of assets, liabilities, income and expenses. These estimates and assumptions are based on historic experience and several other factors that are judged to be reasonable, taking current conditions into consideration. Resulting estimates and assumptions are used to determine the estimated value of assets and liabilities that are not otherwise clear from other sources. The actual outcome may differ from these estimates and assessments.

The estimates and assumptions are reviewed regularly. Changes to estimates are recognised in the period when the change is made – if the change only affected that period. If the change affects current and future periods, it is recognised in the period when the change is made and in future periods. The development, selection of, and disclosures regarding the Group's significant accounting policies and estimates, and the application of these policies and estimates, are reviewed by CDON Group's Audit Committee.

Key sources of uncertainties in estimates

Note 10 contains information about the assumptions and risk factors regarding impairment testing of goodwill and other intangible assets with indefinite useful lives. Note 18 includes a description of provisions made.

Goodwill and other intangible non-current assets

Goodwill and other intangible assets with indefinite useful lives are tested annually for impairment or when evidence demonstrates a need for impairment. The impairment test requires that management determines the fair value of cash-generating units on the basis of projected cash flows and internal business plans and forecasts. See Note 10 Intangible assets for further information.

Obsolescence assessment of inventories

Inventories are reviewed monthly to determine possible impairment requirements. An impairment loss is reported in cost of goods sold at the amount which, after careful evaluation, the inventory is considered obsolete. If true obsolescence differs from estimates or if management makes future adjustments to the assumptions, changes in valuation can affect the period's earnings and financial position.

Assessment of returns rate

Each month, the provision requirement associated with future returns is assessed. The assessment is carried out based on historic outcome and actual sales. The provision requirements is recognised as a reduction in net sales, with the equivalent adjustment being made to cost of goods sold.

Provisions and contingent liabilities

Liabilities are recognised when there is a present obligation as a result of a past event, when it is probable that an outflow of economic benefits will occur and a reliable assessment of the amount can be made. In these cases, a calculation of the provision is made and recognised in the statement of financial position. A contingent liability is recognised in the notes when a possible obligation is incurred, but whose existence can only be confirmed by one or more uncertain future events beyond the Group's control, or when it is not possible to calculate the amount. Realisation of contingent liabilities that are not recognised or not included in the annual report can have a material effect on the Group's financial position.

The Group regularly reviews significant outstanding disputes to determine the need for provisions. Among the factors considered in such an assessment are the type of litigation or summons, the amount of any damages, the development of the case, perceptions of legal and other advisers, experience from similar cases, and decisions of Group management regarding the Group's actions concerning these disputes. Estimates do not necessarily reflect the outcome of pending litigation, and differences between outcome and estimate may significantly affect the company's financial position and have an unfavourable impact on operating income and liquidity. See Note 18 Provisions for further information.

Note 4 Segment reporting

Group operations are divided into four segments. Each segment manager regularly reports to Group management, the Group's highest operative decision-maker. The Group's internal reporting is designed so executive management can follow each segment's revenue growth and operating performance.

• The Entertainment segment comprises CDON.com and Lekmer.com, which are online retailers of films, games, music, books, home electronics and toys.

• The Sports & Health segment retails health products and comprises Gymgrossisten.com, Bodystore.com, Fitnesstukku.fi and Milebreaker.com.

• The Fashion segment is a retailer of clothes and shoes for men, women and children and comprises Nelly.com and Members.com, and divested operation Heppo.com during the year.

• The Home & Garden segment retails white goods, household appliances, furniture and interior design, and consists of Tretti.com and Rum21.com.

Subsidiaries are attributable entirely to their respective segment.

Group-wide

In 2013 the parent company provided the Group segments with specific services. These sales were conducted at cost price. In addition, CDON Group Logistics AB provided some Group segments with logistics services. Pricing of these services was based on market terms.

				2013
					Group
Group (SEK million)	Entertainment	Fashion	Sports & Health	Home & Garden	wide	Eliminations	Group
External sales	2,143.9	956.2	677.4	658.8	4.1		4,440.5
Internal sales	10.6				178.1	-188.7	-
Operating profit/loss	-32.4	-24.6	54.9	0.9	-46.8		-48.0
Finance income							0.8
Finance expense							-34.9
Profit/loss before tax							-82.1

				2012
					Group
Group (SEK million)	Entertainment	Fashion	Sports & Health	Home & Garden	wide	Eliminations	Group
External sales	2,385.6	942.9	496.4	629.4	7.5		4,461.7
Internal sales	0.5		0.0	2.1	93.6	-96.2	-
Operating profit/loss	102.3	-267.6	47.3	-13.7	-42.2		-173.9
Finance income							0.9
Finance expense							-28.2
Profit/loss before tax							-201.2

No individual customer account is responsible for more than 10% of Group revenue.

The Group's segments operate mainly in the Nordics. Revenues and non-current assets are shown below by geographical area. Sales are shown by country of sale.

	Net sales		Non-current assets
(SEK million)	2013	2012	2013	2012
Sweden	2,564.8	2,518.9	703.5	658.1
Norway	878.5	919.1	-	-
Finland	592.3	604.5	21.1	20.4
Denmark	288.5	297.9	-	-
Other World	116.3	121.3	-	-
Total	4,440.5	4,461.7	724.6	678.5

Sales per type of income (SEK million)	2013	2012
Products	4,283.6	4,358.7
Services	156.8	103.0
Total revenue	4,440.5	4,461.7

Note 5 Sale of operations

Sale of operations 2013

On 17 April 2013, CDON Group AB announced that the company had entered into an agreement on the sale of operations in the subsidiary Heppo AB to Footway Group AB. The sale is not to be considered as a liquidated operation as per IFRS 5.

The sale was completed via an assets deal and comprised the majority of Heppo AB's assets and associated obligations. Heppo AB was part of the Group's Fashion segment and reported sales totalling approximately SEK 103 million with an operating loss of roughly SEK -20 million in 2012. The purchase price amounted to SEK 42.9 million, of which SEK 32.1 million was received by the reporting date. The outstanding amount is due on two dates between March and June 2014. The transaction had a negative impact on earnings of SEK -2.5 million. The takeover took place on 18 April.

Profit/loss from sale of operations

Group (SEK million)	2013	2012
Revenue	23.6	102.6
Expenses	-31.4	-123.7
Profit/loss before tax	-7.8	-21.0
Tax	-0.5	0.0
Profit/loss after tax but before capital gains from sale of operations	-8.4	-21.0
Capital gains from sale of the discontinued operation	-2.5	-
Tax attributable to above stated capital gains	0.5	-
Profit/loss from sale after tax	-1.9	-
Total profit/loss for the period	-10.3	-21.0

Net cash flow from discontinued operations

Group (SEK million)	2013	2012
Cash flow from operations	-10.6	3.7
Cash flow to/from investing activities	32.1	-2.7
Cash flow to/from financing activities	-	-
Net cash flow from the discontinued operation	21.5	0.9

Effect of the sale on individual assets and liabilities in the Group

Group (SEK million)	2013
Property, plant and equipment	-0.3
Inventory	-42.2
Net divested assets and liabilities	-42.6
Purchase price	42.9
Deferred purchase price	-10.7
Net cash flow	32.1

Deferred purchase price

The purchase price amounts to SEK 42.9 million. Half was paid in cash at the point of takeover and the outstanding portion is being paid in four equal payments on four occasions between September 2013 and June 2014.

Note 6 Business combinations

Acquisitions 2013

In 2013 the Group acquired an additional 2.23% of the shares in NLY Scandinavia AB. Consequently CDON Group AB's ownership in NLY Scandinavia AB amounts to 100% of the share capital. Details of this acquisition are reported under the Fashion segment.

The deferred purchase price was paid out during the year for the business combination from Business Linc BL AB in accordance with the acquisition agreement. This acquisition is reported in the Group-wide segment.

An additional purchase price was paid out for Rum21 AB during the year in accordance with the acquisition agreement. This acquisition is reported in the Home & Garden segment.

An additional purchase price was paid out for Lekmer AB during the year in accordance with the acquisition agreement. This acquisition is reported in the Entertainment segment.

Summary of acquisitions

		Net identifiable
Group (SEK million)	Net cash flow assets and liabilities	Goodwill
Business combination from Business Linc BL AB	-12.0	-	-
Additional purchase price from previous years, Rum21 AB	-0.8	-	-
Deferred purchase price Rum21 AB	-1.1
Additional purchase price from previous years, Lekmer AB	-4.6	-	-
Acquisition of shares from non-controlling interest, NLY Scandinavia AB	-13.9	-	-
Total	-32.5	0.0	0.0

Acquisition of shares from non-controlling interest, NLY Scandinavia AB

On 8 July 2013, CDON Group AB announced that it had acquired all the outstanding 2.23% of shares in the subsidiary NLY Scandinavia AB from the company's minority shareholders. CDON Group now owns 100% of the shares and votes in NLY Scandinavia AB.

Transaction expenses

Transaction expenses for the acquisition of shares from non-controlling interests in NLY Scandinavia AB amount to SEK 0.3 million and are recognised in the item 'Sales & administrative expenses' in the income statement for the Group.

Acquisitions 2012

In 2012, the Group acquired operations in Business Linc BL AB. CDON Group took over operations on 1 October 2012 and integrated the business into the newly formed company CDON Group Logistics AB. CDON Group Logistics AB is reported in the Group-wide segment.

An additional purchase price was paid out for Lekmer AB in 2012 in accordance with the acquisition agreement. This acquisition is reported in the Entertainment segment.

An additional purchase price and deferred purchase price were paid out for Rum21 AB in 2012 in accordance with the acquisition agreement. This acquisition is reported in the Home & Garden segment.

In 2012, the arbitration procedure relating to compulsory redemption of outstanding shares in Tretti AB was completed. In a final arbitration award which was issued on 19 January 2012, the arbitral tribunal set out the redemption price at SEK 67.25 per share.

Summary of acquisitions

		2012
Group (SEK million)	Net cash flow	Net identifiable assets and liabilities	Goodwill
CDON Group Logistics AB	-0.1	0.1	-
Business combination from Business Linc BL AB	-3.0	-0.7	15.7
Additional purchase price from previous years, Rum21 AB	-1.0	-	-
Deferred purchase price Rum21 AB	-3.9	-	-
Additional purchase price from previous years, Lekmer AB	-1.8	-	-
Compulsory redemption of outstanding shares in Tretti AB	-5.2	-	-
Total	-14.9	-0.6	15.7

Acquisition of operations from Business Linc BL AB

On 28 September 2012, CDON Group announced that it had signed a deal to acquire Business Linc BL AB's operations. Business Linc is a third-party logistics company with expertise in e-commerce. The company operates 50,000 square metres of warehousing space in Falkenberg. The operations were transferred to CDON Group through an assets deal, through which the new operations were integrated into a new company, CDON Group Logistics AB. All personnel, around 340, were offered employment in CDON Group. Customers external to CDON Group will be discontinued. Acquisition of the logistics operations is a step towards strengthening the Group's value chain and delivering a high level of customer satisfaction. The profit/loss for CDON Group Logistics AB has been fully consolidated within the Groupwide segment from 1 October 2012. During the three months until 31 December 2012, the subsidiary contributed SEK 7.5 million to consolidated revenue and SEK -19.4 million to Group loss after tax.

Accrued goodwill in 2012 consists of strategic advantages and synergies. The goodwill item is expected to be fully deductible.

Acquired net assets (SEK million):	Carrying amount
Property, plant and equipment	5.7
Accounts payable and other operating liabilities	-6.4
Net identifiable assets and liabilities	-0.7
Goodwill on acquisition	15.7
Purchase price	15.0
Deferred purchase price	-7.0
Provision for contingent consideration	-5.0
Net cash flow	3.0

Transaction expenses

Transaction expenses for the acquisition of operations in Business Linc BL AB amount to SEK 1.3 million and are recognised in the item 'Sales & administrative expenses' in the income statement for the Group.

Contingent consideration

The acquisition agreement specifies payment of an additional purchase price, contingent on certain conditions, including the transfer to CDON Group of existing facility rental contracts and staff for the operations with unchanged terms.

Note 7 Other income and expenses

	Group		Parent company
(SEK million):	2013	2012	2013	2012
Other operating income
Gain from sale of non-current assets	-	0.8	-	-
Exchange gains on operating receivables/liabilities	0.3	0.6	0.0	-
Revaluation regarding contingent consideration for Rum21 AB	-	0.1	-	-
Other operating income	0.1	0.1	-	-
Total	0.4	1.6	0.0	-
Other operating expenses
Loss from sale of shares in subsidiaries	-0.4	0.0	-	-
Loss from sale of non-current assets	-2.4	-5.1	-	-
Exchange losses on operating receivables/liabilities	-2.4	-2.5	-	-
Revaluation regarding contingent consideration for Rum21 AB	0.0	-	-	-
Revaluation regarding contingent consideration for Lekmer AB	-0.1	-1.2	-	-
Total CDON Group AB Annual Report 2013	-5.3	-8.8	0.0	-

Note 8 Financial items

	Group		Parent company
(SEK million)	2013	2012	2013	2012
Loss from sale of shares in subsidiaries	-		-0.1	-0.1
Profit/loss from shares in subsidiaries	0.0		-0.1	-0.1
Interest income:
- Subsidiaries, CDON Group	-	-	17.8	8.0
- Interest income, other	0.8	0.9	0.6	0.6
Net translation differences	-	-	-	4.1
Other	0.0	0.0	-	0.0
Finance income	0.8	0.9	18.4	12.8
Interest expenses:
- Subsidiaries, CDON Group	-	-	-1.1	-2.2
- Convertible bonds (Note 27)	-15.9	-15.3	-15.9	-15.3
- Interest expenses, other	-14.1	-10.7	-9.4	-7.3
Net translation differences	-3.2	-0.4	-1.4	-
Other	-1.7	-1.8	-1.6	-1.6
Finance expense	-34.9	-28.2	-29.3	-26.4
Net financial items	-34.1	-27.3	-11.0	-13.7

Note 9 Tax

	Group			Parent company
Distribution of tax expenses (SEK million)	2013	2012	2013	2012
Current tax expense
Tax expense for the year	-3.0	-1.1	-	-
Adjustment of tax attributable to prior years	-1.1	3.4	0.0	0.2
Total	-4.1	2.4	0.0	0.2
Deferred tax
Deferred tax on temporary differences	2.2	3.9	1.9	2.1
Deferred tax revenue in the year's capitalised taxable value in loss carry-forwards	19.4	44.3	51.5	-
Deferred tax expense in loss carry-forwards used during the year	-	-5.6	-	-
Revalued loss carry-forwards	-2.7	-0.5	-	-
Effects from changes in tax rate	-	4.9	-	-
Total	18.9	47.1	53.4	2.1
Total recognised tax expense in the Group	14.8	49.4	53.4	2.3

	Group				Parent company
Reconciliation of tax expense (SEK million)	2013	%	2012	%	2013	%	2012	%
Profit/loss before tax	-82.1		-201.2		-243.3		-8.7
Tax as per applicable tax rate for parent company		18.1 -22.0		52.9 -26.3		53.5 -22.0		2.3 -26.3
Effect of other tax rates for foreign subsidiaries	-0.4	0.5	0.0	0.0	-	0.0	-	0.0
Non-taxable income	0.3	-0.4	1.2	-0.6	-	0.0	-	0.0
Non-deductible expenses	-2.0	2.4	-6.1	3.0	-2.1	0.8	-2.3	26.3
Utilisation of previously uncapitalised deficit deduction	0.0	0.0	0.0	0.0	-	0.0	-	0.0
Losses on which deferred tax was not recognised	0.0	0.0	-0.3	0.1	-	0.0	-	0.0
Revalued loss carry-forwards	-2.7	3.3	-0.5	0.2	-	0.0	-	0.0
Other permanent effects	0.6	-0.8	0.3	-0.1	-	0.0	-	0.0
Tax effect of convertible loan	1.9	-2.3	2.1	-1.1	1.9	-0.8		2.1 -24.6
Effects from changes in tax rate	-	0.0	-3.8	1.9	-	0.0	-	0.0
CDON Group AB Annual Report 2013 Tax attributable to prior years	-1.1	1.3	3.4	-1.7	0.0	0.0	0.2	-1.8
Effective tax/tax rate		14.8 -18.0		49.4 -24.6		53.4 -21.9		2.3 -26.4

	Group		Parent company
Tax items recognised directly in equity (SEK million)	2013	2012	2013	2012
Current tax attributable to share issue expenses	3.0	-	3.0	-
Total	3.0	-	3.0	-

	Group		Parent company
Recognised deferred tax assets and liabilities (SEK million)			31 December 2013 31 December 2012 31 December 2013 31 December 2012
Deferred tax asset
Loss carry-forwards	64.0	44.4	54.4	-
Total	64.0	44.4	54.4	0.0
Deferred tax liability
Intellectual property rights Convertible bonds	24.6 4.0	24.9 6.0	- 4.0	- 6.0
Total	28.6	30.9	4.0	6.0
Net deferred tax	35.3	13.5	50.4	-6.0

The change in net temporary differences is recognised below:

				2013
	Opening balance	Deferred tax	Deferred tax	Acquisition of	Recognised in	Closing balance, 31
Group (SEK million)	1 January	revenue	expense	subsidiaries	equity	Other December
Temporary differences:
Loss carry-forwards	44.4	16.7			3.0	64.0
Equipment, tools and installations	-					0.0
Intellectual property rights	-24.9	0.3				-24.6
Non-current liabilities	-6.0	1.9				-4.0
Total	13.5	18.9	-	-	3.0	- 35.3

				2012
Group (SEK million)	Opening balance 1 January	Deferred tax revenue	Deferred tax expense	Acquisition of subsidiaries	Recognised in equity	Closing balance, 31 Other December
Temporary differences:
Loss carry-forwards	6.0	44.4	-6.0			44.4
Equipment, tools and installations	-1.1	1.1				-
Intellectual property rights	-30.4	5.4				-24.9
Non-current liabilities	-9.3	2.1			1.2	-6.0
Total	-34.7	53.1	-6.0	-	1.2	- 13.5

		2013
	Opening balance	Deferred tax	Recognised in	Closing balance, 31
Parent company (SEK million)	1 January	revenue	equity	December
Temporary differences:
Loss carry-forwards	-	51.5	3.0	54.4
Non-current liabilities	-6.0	1.9		-4.0
Total	-6.0	53.4	3.0	50.4
		2012
	Opening balance	Deferred tax	Recognised in	Closing balance, 31
Parent company (SEK million)	1 January	revenue	equity	December
Temporary differences:
Non-current liabilities	-9.3	2.1	1.2	-6.0
Total	-9.3	2.1	1.2	-6.0

Non-current liabilities refer to the tax effect at the present value of the convertible loan.

At 31 December 2013, recognised loss carry-forwards without expiration date in the Group were SEK 290.8 million (201.6). The 2013 annual accounts include the tax value of a deferred income tax asset in all countries where it is considered probable that the loss carryforward will be able to be used against taxable surplus.

	Group		Parent company
Loss carry-forwards for which no deferred tax asset is recognised, per expiration date (SEK million)		31 December 2013 31 December 2012 31 December 2013 31 December 2012
No expiry date	3.1	0.7	-	-
Total	3.1	0.7	-	-

Note 10 Intangible non-current assets

Internally developed intangible assets

		Group		Parent company
Ongoing projects (SEK million)	2013	2012	2013	2012
Opening accumulated cost	4.4	9.6	-	-
Investments	22.5	8.2	2.1	-
Reclassifications	-12.3	-9.7	-	-
Divestments	-0.3	-3.8	-	-
Closing accumulated acquisition values	14.2	4.4	2.1	-
Carrying amounts	14.2	4.4	2.1	-

This item relates to expenditures on projects that have not been put into use, principally related to Group web platforms.

Both internal and external expenses were capitalised. No loan expenses were capitalised.

	Group		Parent company
Development expenses (SEK million)	2013	2012	2013	2012
Opening accumulated cost	55.2	25.9	-	-
Investments through acquisition		-	-	-
Investments	14.5	20.3	-	-
Reclassifications	12.3	9.6	-	-
Divestments	-3.0	-0.7	-	-
Closing accumulated acquisition values	79.1	55.2	-	-
Opening accumulated depreciation	-21.9	-13.6	-	-
Year's depreciation	-13.5	-8.7	-	-
Divestments	0.9	0.4	-	-
Closing accumulated depreciation	-34.5	-21.9	-	-
Carrying amounts	44.5	33.3	-	-

This item relates to expenses for the Group's web platform.

Depreciation costs of SEK 13.5 million (8.7) are included in 'Sales & administrative expenses'.

Both internal and external expenses were capitalised. No loan expenses were capitalised.

	Group		Parent company
Domains (SEK million)	2013	2012	2013	2012
Opening accumulated cost	7.0	1.7	-	-
Investments	0.1	5.5	-	-
Reclassifications	-	0.1	-	-
Divestments	-	-0.4	-	-
Closing accumulated acquisition values	7.1	7.0	-	-
Opening accumulated depreciation	-1.4	-0.7	-	-
Year's depreciation	-0.8	-0.7	-	-
Divestments	-	0.0	-	-
Closing accumulated depreciation	-2.2	-1.4	-	-
Carrying amounts	4.9	5.6	-	-

This item relates to expenses for registering and maintaining the company's internet domains.

Depreciation costs of SEK 0.8 million (0.7) are included in 'Sales & administrative expenses'.

Only external expenses have been capitalised. No loan expenses were capitalised.

Acquisition of intangible assets

		Group		Parent company
Trademarks (SEK million)		2013	2012	2013	2012
Opening accumulated cost		108.7	108.7	-	-
Investments		-	-	-	-
Closing accumulated acquisition values		108.7	108.7	-	-
Carrying amounts		108.7	108.7	-	-

This item relates to the Gymgrossisten, Lekmer, Rum21 and Tretti trademarks.

	Group		Parent company
Customer relationships (SEK million)	2013	2012	2013	2012
Opening accumulated cost	18.7	18.7	-	-
Investments	-	-	-	-
Closing accumulated acquisition values	18.7	18.7	-	-
Opening accumulated depreciation	-14.1	-12.5	-	-
Year's depreciation	-1.4	-1.7	-	-
Closing accumulated depreciation	-15.6	-14.1	-	-
Carrying amounts	3.2	4.6	-	-

This item relates to the identified customer relationships from the acquisitions of Gymgrossisten Sweden AB, Lekmer AB, Rum21 AB and Tretti AB.

Depreciation costs of SEK 1.4 million (1.7) are included in 'Sales & administrative expenses'.

		Group	Parent company
Goodwill (SEK million)	2013	2012	2013	2012
Opening accumulated cost	461.8	447.0	-	-
Investments	-	15.7	-	-
Translation differences	0.8	-0.8	-	-
Closing accumulated acquisition values	462.6	461.8	-	-
Carrying amounts	462.6	461.8	-	-

This item relates to goodwill arising from the acquisition of Gymgrossisten Sweden AB, Lekmer AB, NLY Scandinavia AB, Linus & Lotta Postorder AB, Rum21 AB, Tretti AB and the operations in Business Linc BL AB.

Impairment testing for cash-generating units containing goodwill

The following cash-generating units, which coincide with the Group's subsidiaries and subgroups, recognise significant goodwill values in relation to the Group's total recognised goodwill values:

(SEK million)	2013	2012
CDON Group	21.1	20.4
Gymgrossisten Sweden AB	139.9	139.9
NLY Scandinavia AB	24.1	24.1
Lekmer AB	3.7	3.7
Rum21 AB	8.5	8.5
Tretti Group	249.6	249.6
CDON Group Logistics AB	15.7	15.7
Total	462.6	461.8

Impairment testing

Impairment testing for goodwill for cash-generating units is based on recoverable value (value in use), calculated using a discounted cash flow model. The cash flow is projected over a five-year period and based on the most recently adopted budgets and forecasts, which are based on actual historic outcomes of the operation. The single most important variables associated with the preparation of the impairment tests are net sales and operating margin. The net sales projection is the total of the estimated development within each product segment and the operating margin projection is an average of the product mix. The cash flows calculated for each unit after the first five years have been based on annual growth of 2.5% (2.5).

The cash flow is discounted for each unit using an appropriate discount rate, taking into consideration the cost of capital and risk. The estimated cash flows have been calculated at present value at a discount rate of 9.5% (9.5) before tax. The nature and market for the operation, and therefore the risk, for each unit has been determined to be so similar that the same discount rate is used for all units.

Sensitivity

The impairment tests do not indicate an impairment requirement. The impairment tests generally have such a margin that any adverse changes in individual parameters would likely not cause the value in use to fall below the carrying amount. However, the cash flow projections are uncertain and may also be influenced by factors beyond the company's control. Even if the estimated growth rate applied after the forecasted 5-year period had been 1.5% instead of the management estimate of 2.5%, there would be no need to recognise an impairment loss for goodwill. Even if the estimated discount rate before tax applied to the discounted cash flows had been 10.5% instead of the management estimate of 9.5%, there would be no need to recognise an impairment loss on goodwill. Nor does the company deem that likely changes in other important assumptions would cause the recoverable amount to fall below the carrying amount.

Impairment testing for cash-generating units containing trademarks

The following cash-generating units, which coincide with the Group's subsidiaries and subgroups, recognise significant values for trademarks in relation to the Group's total recognised value for trademarks:

(SEK million)	2013	2012
Gymgrossisten Sweden AB	48.9	48.9
Lekmer AB	5.1	5.1
Rum21 AB	6.2	6.2
Tretti Group	48.4	48.4
Total	108.7	108.7

For disclosures on impairment testing of these cash-generating units, see the section above on goodwill testing. In addition to being included in the cash-generating units tested as stated above, the brands have been individually tested, based on a royalty factor and the forecast for future net sales. The forecast for the coming five years, the long-term growth rate, and the discount rate have been generated in the same way and reach the same amount as stated above.

Indefinite useful life

Recognised trademarks are deemed to have an indefinite useful life since they relate to trademarks that are well-known on the market that the Group intends to keep and further develop, and thus may be expected to generate cash flows for an indefinite period of time in the future. CDON Group ABAnnual Report 2013

Note 11 Property, plant, and equipment

		Group		Parent company
Equipment (SEK million)	2013	2012	2013	2012
Opening accumulated cost	22.4	15.9	0.0	0.0
Investments	12.8	3.9	0.3	-
Investments through business combinations	-	5.7	-	-
Divestments	-0.5	-3.2	-	-
Closing accumulated acquisition values	34.7	22.4	0.4	0.0
Opening accumulated depreciation	-8.1	-5.1	0.0	0.0
Year's depreciation	-5.7	-4.6	0.0	0.0
Depreciation through acquisition	-	-	-	-
Divestments	0.1	1.6	-	-
Closing accumulated depreciation	-13.7	-8.1	-0.1	0.0
Carrying amounts	21.0	14.3	0.3	0.0

Depreciation costs of SEK 5.7 million (4.6) are included in 'Sales & administrative expenses' for the Group.

Depreciation costs of SEK 48.7 thousand (7.0) are included in 'Sales & administrative expenses' for the parent company.

Note 12 Participations in Group companies

					Share of
	Corporate			Share capital	voting rights	Carrying amount	Carrying amount
Shares in subsidiaries (parent company) (SEK million)	ID number	Registered offices	No. of shares	(%)	(%)	31 Dec 2013	31 Dec 2012
CDON AB	556406-1702	Malmö	1,000	100.0	100.0	27.8	27.8
CDON Group E-commerce AB	556533-8372	Stockholm	1,666	100.0	100.0	-	-
Linus & Lotta Postorder AB	556078-3135	Borås	9,000	100.0	100.0	-	-
Gymgrossisten Sweden AB	556564-4258	Stockholm	1,000	100.0	100.0	202.1	202.1
NLY Scandinavia AB	556653-8822	Borås	172,100	100.0	100.0	196.9	182.7
Lekmer AB	556698-8035	Stockholm	901	90.1	90.1	35.3	35.2
Rum21 AB	556774-1300	Malmö	901	90.1	90.1	19.1	19.1
Tretti AB	556665-7606	Stockholm	5,141,758	100.0	100.0	351.2	351.2
NLY Norge AS	896 508 202	Norway	100	100.0	100.0	0.1	0.1
CDON Group Logistics AB	556904-0834	Malmö	50,000	100.0	100.0	0.1	0.1
Total						832.6	818.2

Corporate				Share of
ID number	Registered offices			voting rights (%)
556406-1702	Malmö	1,000	100.0	100.0
2143083-5	Finland	100	100.0	100.0
556078-3135	Borås	9,000	100.0	100.0
556564-4258	Stockholm	1,000	100.0	100.0
556653-8822	Borås	172,100	100.0	100.0
556533-8372	Stockholm	1,666	100.0	100.0
556698-8035	Stockholm	901	90.1	90.1
556774-1300	Malmö	901	90.1	90.1
556665-7606	Stockholm	5,141,758	100.0	100.0
32788300	Denmark	80,000	100.0	100.0
896 508 202	Norway	100	100.0	100.0
556904-0834	Malmö	50,000	100.0	100.0
				No. of shares Share capital (%)

		Parent company
Shares and participating interests in subsidiaries, (SEK million)	2013	2012
Opening accumulated cost	834.1	699.7
Acquisitions	14.2	0.5
Revaluation of contingent consideration	0.1	1.1
Shareholder contribution	0.1	133.0
Sales	-	-0.3
Closing balance, 31 December	848.5	834.1
Opening accumulated impairment Impairment losses during the year	-15.8 -0.1	-15.8 -
Closing balance, 31 December	-15.9	-15.8
Carrying amount, 31 December	832.6	818.2

Note 13 Operating costs distributed per type of cost

	Group
(SEK million)	2013	2012
Cost of goods sold	-3,101.8	-3,225.3
Distribution and warehousing costs	-692.4	-694.9
Personnel expenses	-315.3	-326.6
Depreciation/amortisation	-21.4	-15.7
Other expenses	-358.0	-374.7
Total expenses	-4,488.9	-4,637.2

Note 14 Accounts receivable

Credit exposure

Accounts receivable are recognised taking into consideration credit losses incurred during the year of SEK 7.1 million (3.1) in the Group. The credit losses refer to losses on a number of smaller customers. For more information, see Note 21.

	Group
(SEK million)	31 December 2013	31 December 2012
Accounts receivable not overdue or impaired	80.7	163.8
Accounts receivable overdue but not impaired	57.9	19.9
Accounts receivable written down	6.2	9.9
Provision for bad debts	-6.2	-9.9
Total accounts receivable	138.6	183.7

Credit risks in accounts receivable that are not overdue or impaired are not deemed to be large. No individual customer represents more than 10% of Group accounts receivable. See Note 21 for further details regarding credit risk.

The company's accounts receivable are mainly in SEK. There is not deemed to be any significant currency exposure in accounts receivable.

Receivables past due without provision for bad debts (SEK million)	31 December 2013	31 December 2012
<30 days	45.7	9.8
30-90 days	6.0	9.9
>90 days	6.2	0.2
Total	57.9	19.9

Receivables past due with provision for bad debts (SEK million)	31 December 2013	31 December 2012
30-90 days	1.0	4.7
>90 days	5.3	5.2
Total	6.2	9.9

Closing balance, 31 December	6.2	9.9
Actual losses	-5.2	-1.0
Unutilised amount reversed during the period	-5.0	-
Provision for potential losses	6.5	7.2
Opening balance, 1 January	9.9	3.8
Provision for bad debts (SEK million)	31 December 2013	31 December 2012

Note 15 Prepaid expenses and accrued income

	Parent company
(SEK million)	31 December 2013	31 December 2012
Prepaid insurance expenses	0.4	-
Prepaid rent	0.2	0.3
Prepaid licensing costs	1.2	1.0
Other	1.0	0.6
Total	2.9	2.0

Note 16 Earnings per share

	Group
	Before dilution			After dilution
(SEK)	2013	2012	2013	2012
Earnings per share	-0.74	-1.91	-0.74	-1.91

The numerator and denominator used in the above calculation are shown below.

Basic earnings per share	2013	2012
Profit/loss for the year attributable to parent company shareholders (SEK million)	-66.9	-149.6
Average number of shares	90,519,451	78,470,152
Basic earnings per share, SEK	-0.74	-1.91

Earnings per share for 2013 have been calculated taking into account the new share issue, following which the number of outstanding shares has increased from 66,342,124 to 99,513,186.

Earnings per share for 2012 have been calculated taking into account the new share issue. The adjustment factor is 1.18 and the adjusted number of outstanding shares totals 78,470,152.

The parent company has two classes of instruments that may generate potential dilution in the future; a convertible bond (see Note 28 for further details) and custodial C shares attributable to the Group incentive programme (see Note 24). These have not been included in the calculation of earnings per share since they contribute no dilution effect to either 2013 or 2012.

Diluted earnings per share	2013	2012
Profit/loss for the year attributable to parent company ordinary shareholders (SEK million)	-66.9	-149.6
Interest effect on convertible bonds after tax (SEK million)	-	-
Diluted earnings attributable to parent company ordinary shareholders	-66.9	-149.6
Average number of shares	90,519,451	78,470,152
Diluted earnings per share, SEK	-0.74	-1.91
Weighted average number of ordinary shares, after dilution	2013	2012
Weighted average number of ordinary shares during the year, before dilution	90,519,451	78,470,152
Effect of convertible bonds	-	-
Weighted average number of ordinary shares during the year, after dilution	90,519,451	78,470,152

Note 17 Equity

At 31 December 2013, share capital comprised 100,688,186 shares (66,817,124). Each share has a par value of SEK 2.

Issued shares (SEK million)	No. of shares	Par value
Ordinary shares	99,513,186	199.0
CDON Group ABAnnual Report 2013 C shares	1,175,000	2.4
Total number of shares issued/total par value as of 31 December 2013	100,688,186	201.4

Change in number of shares/share capital

		Change	Change	Share capital after	No. of shares
Date	Event	share capital (SEK)	no. of shares	change (SEK)	after change
1936-12-11	Establishment	1,000,000	2,000	1,000,000	2,000
2010-09-24	Split	-	498,000	1,000,000	500,000
2010-09-24	Offset issue	131,090,244	65,545,122	132,090,244	66,045,122
2010-10-26	Cash issue	594,004	297,002	132,684,248	66,342,124
2011-05-31	Cash issue	380,000	190,000	133,064,248	66,532,124
	C shares
2012-05-30	Cash issue	570,000	285,000	133,634,248	66,817,124
	C shares
2013-06-14	Cash issue	66,342,124	33,171,062	199,976,372	99,988,186
2013-09-03	Cash issue	1,400,000	700,000	201,376,372	100,688,186
	C shares
No. of issued shares/share capital at
31 December 2013		201,376,372	100,688,186	201,376,372	100,688,186

On 14 May 2013, the Extraordinary General Meeting of CDON Group AB resolved to approve the Board's decision from 16 April 2013 to increase the company's share capital via an issue of new ordinary shares. CDON Group AB's share capital increased by SEK 66,342,124 in connection with the cash issue.

The cash issue of C shares in 2013, 2012 and 2011 was implemented for use in the Group's incentive programme. See Note 24 for further details regarding the incentive programme. All C shares are owned by CDON Group AB.

C shares may be issued in an amount corresponding to the maximum total share capital and do not entitle the holder to dividends. C shares may be converted into ordinary shares at the request of the Board. Customary provisions on primary and subsidiary preferential rights for cash issues apply to C shares. C shares have limited rights to assets at liquidation of the company.

The 2010 offset issue was implemented by offsetting previously issued loans from the Modern Times Group MTG AB at a value corresponding to SEK 239,000,000. CDON Group AB's share capital thus increased to SEK 132,090,244.

Other capital contributions/Share premium reserve

A share premium reserve arises when shares are issued at a premium; that is, shares were paid at a higher price than the par value.

Foreign currency translation reserve

The translation reserve includes all exchange-rate differences that arise from the translation of income statements and balance sheets into the Swedish krona in the consolidated accounts.

	Group
(SEK million)	2013	2012
Opening balance, 1 January	-2.3	-1.1
Translation differences for the year, net after tax	0.9	-1.2
Total accumulated translation differences	-1.4	-2.3

Retained earnings

Retained earnings include previously earned profit.

Proposed dividend

The Board of Directors will propose to the 2014 Annual General Meeting of shareholders that no dividend be paid to shareholders for the fiscal year ending 31 December 2013, and that retained earnings be carried forward into the 2014 accounts.

Note 18 Other provisions

	Group		Parent company
Other provisions (SEK million)	2013	2012	2013	2012
Provisions for social security contributions on share-based remuneration	0.9	0.5	0.9	0.5
Provisions for contingent considerations	-	5.5	-	0.5
Other provisions	2.3	-	-	-
Unutilised amount reversed during the period	-	0.0	0.0	0.0
Total	3.3	6.0	0.9	1.0
	Group		Parent company
Provisions for share-based remuneration (SEK million)	2013	2012	2013	2012
Carrying amount at year's start	0.5	0.1	0.5	0.1
Provisions allocated during the period	0.4	0.4	0.4	0.4
Carrying amount at year end	0.9	0.5	0.9	0.5

See Note 24 for further details regarding share-based remuneration.

	Group		Parent company
Provisions for contingent considerations (SEK million)	2013	2012	2013	2012
Carrying amount at year's start	5.5	4.8	0.5	4.8
Transferred to current liabilities	-5.5	-5.4	-0.5	-5.4
Provisions allocated during the period	-	6.2	-	1.2
Unutilised amount reversed during the period	-	0.0	-	0.0
Carrying amount at year end	-	5.5	-	0.5

Provisions consist of contingent considerations from the acquisitions of Lekmer AB, Rum21 AB and Business Linc BL AB's operations. The valuation of the contingent considerations for Lekmer AB and Rum21 AB is based on defined profit objectives for coming years and the probability of their fulfilment. The valuation of the contingent considerations regarding the acquisition of operations from Business Linc BL AB is based on certain conditions, including the transfer to CDON Group of existing facility rental contracts for the operations with unchanged terms.

Provisions in the parent company consist of contingent considerations from the acquisition of Lekmer AB and Rum21 AB. The valuation of the contingent considerations is based on defined profit objectives for coming years and the probability of their fulfilment.

	Group		Parent company
Total provisions (SEK million)	2013	2012	2013	2012
Total carrying amount at year's start	6.0	4.9	1.0	4.9
Transferred to current liabilities	-5.5	-5.4	-0.5	-5.4
Provisions allocated during the period	2.8	6.5	0.4	1.5
Total carrying amount at year end	3.3	6.0	0.9	1.0
Of which non-current portion of provisions	3.1	6.0	0.7	1.0
Of which current portion of provisions	0.2	-	0.2	-
		Group Parent company
Payments (SEK million)	2013	2012	2013	2012
Amount for which payment is expected to be made after 12 months	3.1	6.0	0.7	1.0

Note 19 Accrued expenses and prepaid income

	Parent company
(SEK million)	31 December 2013	31 December 2012
Accrued personnel expense	9.3	8.2
Accrued audit expense	0.4	0.5
Accrued interest expense	-	0.2
Other	0.9	1.9
Total	10.5	10.8

Note 20 Pledged assets and contingent liabilities

	Group		Parent company
Contingent liabilities (SEK million)	31 December 2013	31 December 2012	31 December 2013	31 December 2012
Guarantees for external parties	76.6	74.5	76.6	74.5
Guarantees for subsidiaries	20.0	-	95.2	70.4
Capital cover guarantees	-	-	-	-
Total	96.6	74.5	171.8	144.9

Guarantees for external parties relates to bank guarantees and security pledged to suppliers and other external parties for subsidiaries in the Group.

Guarantees for subsidiaries relates to parent company/bank guarantees and security pledged to suppliers and other external parties for subsidiaries in the Group.

The parent company has pledged capital cover guarantees to the subsidiaries CDON Group E-commerce AB, Lekmer AB, Rum21 AB and CDON Group Logistics AB.

Note 21 Financial instruments and financial risk management

Capital management

The Group's aim is to have a solid financial position that contributes to maintaining the confidence of investors, creditors and the market, as well as being a solid foundation for the continued development of business operations, while generating satisfactory long-term investor returns. However, there are no explicit quantitative objectives, such as for the debt/equity ratio.

Capital is defined as total equity.

	Group
Capital (SEK million)	31 December 2013	31 December 2012
Total equity	690.9	266.4

Neither the parent company nor any of the subsidiaries have any external capital requirements to be met.

Finance policy

CDON Group is exposed to various types of financial risks through its operations, such as market risk, liquidity risk and credit risk. CDON Group's financial risk management is centralised within the parent company to capitalise on economies of scale and synergies, as well as minimise operational risks. The parent company also functions as the Group's internal bank and is responsible for financing and the financial policy. This includes pooling of cash requirements. The Board has established financial principles for overall management of risks and for specific areas, such as liquidity risk, interest rate risk, currency risk, credit risk, insurance risk, the use of financial instruments and placement of extra liquidity.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to fulfil its obligations associated with financial liabilities. This risk is centrally managed by the parent company, which ensures that there is always sufficient cash and cash equivalents and the ability to extend the available financing. Access to cash and cash equivalents for subsidiaries is ensured partly through the use of cash pools. In 2013, the Group has renegotiated its terms and conditions of loan, as well as amortised SEK 150 million. Total available credit facilities amounted to SEK 295 million at the reporting date. At the reporting date, this margin was utilised with bank guarantees totalling SEK 65 million. The Group had approximately SEK 230 million in available unutilised overdraft facilities at the reporting date. At 31 December 2013, the Group's liquidity stood at SEK 289 million (126).

The Group's financial policy stipulates that there must always be at least SEK 50 million in available cash and cash equivalents.

Market risk – interest rate risk

Interest rate risk is the risk that the value of a financial instrument varies due to changes in market interest rates. The Group's interest rate risk consists almost exclusively of long-term borrowing in the form of a nominal SEK 250 million convertible bond. Since the promissory note bears a fixed interest rate of 2.85%, the interest rate risk is limited. See Note 28 for the terms of the convertible loan.

If the variable interest rate on the Group's loan were to increase or decrease by 1%, it would affect the Group's net financial items by SEK 2.3 million (1.5).

Credit risk

Credit risk is defined as the company's exposure to loss in the event that one party to a financial instrument fails to fulfil its obligations. The exposure is based on the carrying amount of the financial assets, of which the majority comprises accounts receivable and cash and cash equivalents. The Group has a credit policy detailing how customer credit will be managed.

Credit risk attributable to the Group's accounts receivable is distributed among a large number of customers, mainly private individuals. Accounts receivable have been sold since early 2009 to a factoring company. The vast majority of accounts receivable are sold with full transfer of the credit risk to the counterparty. The total of the accounts receivable for which the credit risk is not transferred to the factoring company amounts to an insignificant sum. See Note 14 for further details regarding accounts receivable.

Market risks – currency risks

Currency risk is the risk that fluctuations in exchange rates will adversely affect the income statement, financial position and/or cash flow. The risk can be divided into transaction exposure and translation exposure.

Transaction exposure

Transaction exposure is the risk that arises from net inflow or outflow of a foreign currency required by operations and financing. The transactions are not hedged.

Net foreign cash flow was as follows:

	Group
Flow of foreign funds (SEK million)	2013	2012
DKK	198.3	192.1
NOK	538.9	573.2
EUR	46.5	89.6
USD	-176.7	-181.2
GBP	-129.3	-173.9

Translation exposure

Translation exposure is the risk that arises from recalculating equity in a foreign subsidiary. Translation exposure is not hedged.

Net foreign assets including goodwill and other intangible assets arising from acquisitions are distributed as follows:

	Group
Currency (SEK million)	2013	%	2012	%
DKK	-3.0	47.0	-2.9	-210.6
NOK	0.0	0.7	0.0	-2.3
EUR	-3.3	52.3	4.3	312.9
Total	-6.4	100.0	1.4	100.0

A five percent exchange rate fluctuation for each currency would affect equity by the following amounts:

	Group
Sensitivity analysis (SEK million)	2013	2012
DKK	+/- 0.2	+/- 0.1
NOK	+/- 0.0	+/- 0.0
EUR	+/- 0.2	+/- 0.2

Classification of financial instruments

2013		Carrying amount Loans receivable
	Holdings held	and accounts
Group (SEK million) Note	for trading	receivable	Other liabilities	Total	Total
Financial assets not measured at fair value
Deposits		1.6		1.6	1.6
Accounts receivable		138.6		138.6	138.6
Other receivables		46.6		46.6	46.6
Accrued income		0.0		0.0	0.0
Cash and cash equivalents		288.9		288.9	288.9
Total financial assets	-	475.7	-	475.7	475.7
Financial liabilities measured at fair value
Additional purchase price considerations	0.6			0.6	0.6
Financial liabilities not measured at fair value
Accounts payable			472.6	472.6	472.6
Convertible bonds			231.7	231.7	247.2
Other liabilities			81.0	81.0	81.0
Accrued expenses and prepaid income			263.4	263.4	263.4
Total financial liabilities	0.6	-	1,048.7	1,049.3	1,064.8

Deposits are reported in the statement of financial position as other financial non-current assets, and additional purchase price considerations are reported in the statement of financial position as other liabilities.

2013		Carrying amount Loans receivable
	Holdings held	and accounts
Parent company (SEK million) Note	for trading	receivable	Other liabilities	Total	Total
Financial assets not measured at fair value
Receivables from Group companies		269.9		269.9	269.9
Other receivables		1.7		1.7	1.7
Cash and cash equivalents		267.7		267.7	267.7
Total financial assets	-	539.4	-	539.4	539.4
Financial liabilities measured at fair value
Additional purchase price considerations	0.6			0.6	0.6
Financial liabilities not measured at fair value
Accounts payable			2.3	2.3	2.3
Convertible bonds			231.7	231.7	247.2
Liabilities to Group companies			463.8	463.8	463.8
Other liabilities			1.6	1.6	1.6
Accrued expenses and prepaid income			10.5	10.5	10.5
Total financial liabilities	0.6	-	709.9	710.5	726.0

Additional purchase price considerations are reported in the balance sheet as other liabilities.

Calculation of fair value

Additional purchase price considerations

Valuation of additional purchase price considerations comes under level 3 in the fair value hierarchy. No other financial instruments besides additional purchase price considerations are continually measured at fair value in the balance sheet.

Convertible bonds

Fair value of the debt component of the convertible bonds is calculated by discounting future flows of principal amounts and interest using a market interest rate for similar debts without conversion right. As of 31 December 2013, fair value is estimated to amount to SEK 247.2 million (245.5). Disclosure on fair value for the convertible bonds comes under level 2 in the fair value hierarchy.

Accounts receivable and accounts payable

For accounts receivable and accounts payable with a remaining life of less than six months, the carrying amount reflects the fair value. The Group has no accounts receivable or accounts payable with a life in excess of six months.

Interest rates used to determine fair value

The company uses the Stockholm interbank offered rate of 31 December 2013 plus a relevant interest spread when discounting financial instruments.

2012		Carrying amount Loans receivable				Fair value
		Holdings held	and accounts
Group (SEK million)	Note	for trading	receivable	Other liabilities	Total	Total
Financial assets not measured at fair value
Deposits			1.6		1.6	1.6
Accounts receivable			183.7		183.7	183.7
Other receivables			52.4		52.4	52.4
Accrued income			2.2		2.2	2.2
Cash and cash equivalents			126.1		126.1	126.1
Total financial assets		0.0	366.0	0.0	366.0	366.0
Financial liabilities measured at fair value
Additional purchase price considerations		5.9			5.9	5.9
Financial liabilities not measured at fair value
Accounts payable				564.2	564.2	564.2
Convertible bonds				223.0	223.0	245.5
Credit facilities				150.0	150.0	150.0
Other liabilities				103.4	103.4	103.4
Accrued expenses and prepaid income				292.5	292.5	292.5
Total financial liabilities		5.9	0.0	1,333.0	1,338.9	1,361.4

2012		Carrying amount Loans receivable				Fair value
		Holdings held	and accounts
Parent company (SEK million)	Note	for trading	receivable	Other liabilities	Total	Total
Financial assets not measured at fair value
Receivables from Group companies			523.8		523.8	523.8
Other receivables			0.3		0.3	0.3
Cash and cash equivalents			87.7		87.7	87.7
Total financial assets		-	611.8	-	611.8	611.8
Financial liabilities measured at fair value Additional purchase price considerations		5.9			5.9	5.9
Financial liabilities not measured at fair value
Accounts payable				4.3	4.3	4.3
Convertible bonds				223.0	223.0	245.5
Credit facilities				150.0	150.0	150.0
Liabilities to Group companies				608.6	608.6	608.6
Other liabilities				0.4	0.4	0.4
Accrued expenses and prepaid income				10.8	10.8	10.8
Total financial liabilities		5.9	-	997.0	1,002.9	1,025.4

Calculation of fair value

Additional purchase price considerations

Valuation of additional purchase price considerations comes under level 3 in the fair value hierarchy. No other financial instruments besides additional purchase price considerations are continually measured at fair value in the balance sheet.

Convertible bonds

Fair value of the debt component of the convertible bonds is calculated by discounting future flows of principal amounts and interest using a market interest rate for similar debts without conversion right. As of 31 December 2012, fair value is estimated to amount to SEK 245.5 million (239.0).

Accounts receivable and accounts payable

For accounts receivable and accounts payable with a remaining life of less than six months, the carrying amount reflects the fair value. The Group has no accounts receivable or accounts payable with a life in excess of six months.

Interest rates used to determine fair value

The company uses the Stockholm interbank offered rate of 31 December 2012 plus a relevant interest spread when discounting financial instruments.

		Group	Parent company
Additional purchase price considerations (SEK million)	2013	2012	2013	2012
Carrying amount at year's start	5.9	7.6	5.9	7.6
Payments	-5.5	-2.8	-5.5	-2.8
Revaluations done during the period	0.1	1.2	0.1	1.2
Unutilised amount reversed during the period	-	-0.1	-	-0.1
Carrying amount at year end	0.6	5.9	5.9	5.9

Maturity structure of financial liabilities – undiscounted cash flows

	2013
Group (SEK million)	Total	0-3 months	3 mon - 1 year	1-5 years	> 5 years
Additional purchase price considerations	0.6		0.6
Convertible bonds	263.7	1.8	5.3	256.5
Accounts payable	472.6	472.6
Other liabilities	81.0	81.0
Accrued expenses and prepaid income	263.4	239.2	24.2
Total	1,081.3	794.6	30.1	256.5	0.0

	2013
Parent company (SEK million)	Total	0-3 months	3 mon - 1 year	1-5 years	> 5 years
Additional purchase price considerations	0.6		0.6
Convertible bonds	263.7	1.8	5.3	256.5
Accounts payable	2.3	2.3
Liabilities to Group companies	463.8	463.8
Other liabilities	1.6	1.6
Accrued expenses and prepaid income	10.5	6.4	4.2
Total	742.5	475.9	10.1	256.5	0.0

			2012
Group (SEK million)	Total	0-3 months	3 mon - 1 year	1-5 years	> 5 years
Additional purchase price considerations	5.9		5.4	0.5
Convertible bonds	270.8	1.8	5.3	263.7
Credit facilities	152.2	1.6	150.5
Accounts payable	564.2	564.2
Other liabilities	103.4	103.4
Accrued expenses and prepaid income	292.5	262.2	30.3
Total	1,388.9	933.2	191.6	264.2	0.0

			2012
Parent company (SEK million)	Total	0-3 months	3 mon - 1 year	1-5 years	> 5 years
Additional purchase price considerations	5.9		5.4	0.5
Convertible bonds	270.8	1.8	5.3	263.7
Credit facilities	152.2	1.6	150.5
Accounts payable	4.3	4.3
Liabilities to Group companies	608.6	608.6
Other liabilities	0.4	0.4
Accrued expenses and prepaid income	10.8	5.4	5.4
Total	1,052.9	622.1	166.7	264.2	0.0

Note 22 Operating leases

Group

The Group rents mainly office premises and warehousing facilities through operating leases. The parent company mainly rents office premises through operating leases.

		2013
Leases and other commitments for future payments at 31 December 2013 (SEK million)		Group Parent company
2014	45.0	1.0
2015	43.1	1.0
2016	30.7	0.2
2017	21.2	-
2018	7.2	-
2019 and beyond	0.1	-
Total leases and other commitments	147.2	2.2
Leasing expense for the year	49.0	1.3

		2012
Leases and other commitments for future payments at 31 December 2012 (SEK million)		Group Parent company
2013	27.6	1.0
2014	21.8	0.4
2015	16.2	0.4
2016	4.6	-
2017	1.5	-
2018 and beyond	-	-
Total leases and other commitments	71.6	1.7
Leasing expense for the year	40.3	1.5

Note 23 Average number of employees

			2012
Group	Men	Women	Men	Women
Sweden	381	403	284	296
Finland	-	1	-	1
Total	381	404	284	297
Total average no. of employees		785		581

		2013
Parent company	Men	Women	Men	Women
Sweden	29	29	26	32
Total	29	29	26	32
Total average no. of employees		58		58

Distribution of men and women in executive management

		2013	2012
Group	Men %	Women %	Men %	Women %
Board	93	8	91	9
CEO and other executives	80	20	80	20
Total	90	10	89	11

		2013	2012
Parent company	Men %	Women %	Men %	Women %
Board	71	29	67	33
CEO and other executives	80	20	80	20
Total	76	24	75	25

Note 24 Salaries, other remuneration and social security contributions

Remuneration to senior executives

Guidelines for remuneration of senior executives, "Executives" below, were adopted at the AGM on 14 May 2013 as follows:

Remuneration guidelines

The objective of the guidelines is to ensure that CDON Group can attract, motivate and retain senior executives within the context of CDON Group's peer group, which consists of Nordic online and offline retailing companies. The remuneration shall be based on conditions that are market competitive and at the same time aligned with shareholders' interests. Remuneration to Executives shall consist of a fixed and variable cash-based salary, as well as the possibility of participation in long-term share-based incentive programmes and pension plans. These components shall create a well balanced remuneration reflecting individual performance and responsibility, both short-term and long-term, as well as CDON Group's overall performance.

Fixed salary

The Executives' fixed salary shall be competitive and based on the individual Executive's responsibilities and performance.

Variable remuneration

The Executives may receive variable remuneration in addition to fixed remuneration. The variable salary will generally not exceed a maximum of 75% of the fixed annual salary. The variable remuneration shall be based on the performance of Executives in relation to established goals and targets.

Other benefits

CDON Group provides other benefits to Executives in accordance with local practice. Other benefits can include, for example, a company car and company health care. Occasionally, housing allowances may be granted for a limited period.

Pension

Executives are entitled to pension commitments based on those that are customary in the country in which they are employed. Pension commitments will be secured through premiums paid to insurance companies. Under normal circumstances, the retirement age is 65 years.

Notice of termination and severance pay

The maximum notice period in any Executive's contract is generally 12 months, and in exceptional cases 18 months, during which time salary payment will continue.

Remuneration to Board members

Board members elected by the AGM may in certain cases be paid for services within their respective areas of expertise, outside of their Board duties. Compensation for these services shall be paid at market terms and be approved by the Board of Directors.

Deviations from the guidelines

In special circumstances, the Board may deviate from the above guidelines, for example additional variable remuneration for exceptional performance. In such a case, the Board of Directors shall explain the reason for the deviation at the following AGM.

Share-based remuneration

The 2013 long-term incentive programme

The 2013 AGM determined to adopt an incentive programme (the "Plan") that includes approximately 40 senior executives and other key employees within CDON Group. In order to participate in the Plan, the participants are required to own shares in CDON Group. These shares can either be shares already held or shares purchased on the market in connection with the notification to participate in the Plan. The participants will then be granted shares free from consideration based on performance and achieved targets, as well as, in some cases, shares based on performance and stock options according to the terms adopted by the AGM. Subject to fulfilment of certain retention and performance-based conditions during the period 1 April 2013 – 31 March 2016 ("the Measurement Period"), and subject to the participant retaining the invested shares during the vesting period ending at the release of CDON Group's interim report for the period January – March 2016, and that the participant, with some exceptions, is still employed in CDON Group at the release of the interim report for the period January – March 2016, each right entitles the participant to receive, free of charge, one ordinary share in the company and each option entitles the participant to purchase one ordinary share at a price equivalent to 120% of the share price at the allotment date.

The 2012 long-term incentive programme

The 2012 AGM determined to adopt an incentive programme (the "Plan") that includes approximately 20 senior executives and other key employees within CDON Group. In order to participate in the Plan, the participants are required to own shares in CDON Group. These shares can either be shares already held or shares purchased on the market in connection with the notification to participate in the Plan. The participants will then be granted shares free from consideration based on performance and achieved targets, as well as, in some cases, shares based on performance and stock options according to the terms adopted by the AGM. Subject to fulfilment of certain retention and performance-based conditions during the period 1 April 2012 – 31 March 2015 ("the Measurement Period"), and subject to the participant retaining the invested shares during the vesting period ending at the release of CDON Group's interim report for the period January – March 2015, and that the participant, with some exceptions, is still employed in CDON Group at the release of the interim report for the period January – March 2015, each right entitles the participant to receive, free of charge, one ordinary share in the company and each option entitles the participant to purchase one ordinary share at a price equivalent to 120% of the share price at the allotment date.

The 2011 long-term incentive programme

The 2011 AGM determined to adopt an incentive programme (the "Plan") that includes approximately 10 senior executives and other key employees within CDON Group. There was no previous equity-based incentive programme in the Group. In order to participate in the Plan, the participants are required to own shares in CDON Group. These shares can either be shares already held or shares purchased on the market in connection with the notification to participate in the Plan. The participants will then be granted shares free from consideration based on performance and achieved targets according to the terms adopted by the general meeting. Subject to fulfilment of certain retention and performance-based conditions during the period 1 April 2011 – 31 March 2014 (the "Measurement Period"), the participant maintaining the employment within CDON Group at the release of the interim report for the period January – March 2014 and subject to the participant maintaining the invested shares during the vesting period ending at the release of the interim report for the period January – March 2014, each right entitles the participant to receive, free of charge, one ordinary share in the company.

		Group	Parent company
Personnel expenses (SEK million)	2013	2012	2013	2012
Salaries	270.1	212.8	32.4	34.6
Social security contributions	75.4	56.4	10.6	10.2
Pension expenses – defined contribution plans	16.1	13.4	4.2	4.0
Expenses for share-based remuneration	1.2	0.9	1.2	0.9
Social security contributions on share-based remuneration	0.4	0.4	0.4	0.4
Total	363.2	283.9	48.8	50.0

	Group
Basic salary and variable remuneration (SEK million)	2013	2012
Senior executives (12 persons)	22.2	14.3
Of which, variable salary	3.2	2.1

Remuneration and other benefits			2013
		Variable	Other	Pension
Group (SEK million)	Basic salary	salary	benefits		expenses Rights expenses	Total
Paul Fischbein, CEO	3.3	0.3	-	0.6	0.3	4.6
Senior executives (11 persons)	15.7	2.9	-	3.6	0.6	22.8
Total	19.1	3.2	0.0	4.3	0.9	27.4

The amounts recognised for 2013 relate to the full year. Variable salary regarding 2013 paid out in 2014 for the CEO SEK 0.3 million (0.0). Remuneration regarding 2013 paid out in 2014 for other senior executives SEK 3.0 million (0.4).

Remuneration and other benefits			2012
		Variable salary	Other benefits	Pension expenses Rights expenses
Group (SEK million)	Basic salary					Total
Paul Fischbein, CEO	2.6	0.0	-	0.6	0.2	3.4
Senior executives (11 persons)	9.6	2.1	-	2.4	0.6	14.6
Total	12.2	2.1	0.0	3.0	0.7	18.0

The amounts recognised for 2012 relate to the full year. Variable salary regarding 2012 paid out in 2013 for the CEO SEK 0.0 million (0.2).

		Parent company
Payroll expenses and other remuneration (SEK million)	2013	2012
Board and senior executives (19 persons)	16.5	15.5
Of which, variable salary	1.9	0.7
Other employees	17.1	19.9
Total salaries and other remuneration	33.5	35.4

Remuneration and other benefits	2013
Group and parent company (SEK million)	Basic salary, Board remuneration	Variable salary	Other benefits	Pension	expenses Rights expenses	Total
Lars-Johan Jarnheimer, Chairman of the Board	0.7					0.7
Mia Brunell Livfors	0.4					0.4
Lars Nilsson	0.5					0.5
Mengmeng Du	0.4					0.4
Jonas Kjellberg	0.3					0.3
David Kelly	0.4					0.4
Patrick Andersen	0.4					0.4
Paul Fischbein, CEO
Remuneration from parent company	3.3	0.3		0.6	0.3	4.6
Other senior executives (11 persons)
Remuneration from parent company	7.3	1.6		1.6	0.6	11.1
Remuneration from subsidiaries	8.4	1.3		2.0		11.7
Total	22.1	3.2	0.0	4.3	0.9	30.5

The amounts recognised for 2013 relate to the full year. Accrued variable remuneration to be paid after year end totals SEK 0.4 million (0.1) for the CEO and SEK 3.0 million (0.4) for other senior executives. The Board will receive its full remuneration from the parent company.

Notice of termination of the CEO is maximum 18 months when terminated by the company and 12 months when terminated by the employee. The CEO has no right to severance pay.

Remuneration and other benefits			2012
	Basic salary, Board	Variable	Other	Pension
Group and parent company (SEK million)	remuneration	salary	benefits	expenses Rights expenses		Total
Lars-Johan Jarnheimer, Chairman of the Board	0.7					0.7
Mia Brunell Livfors	0.4					0.4
Lars Nilsson	0.5					0.5
Henrik Persson	0.4					0.4
Mengmeng Du	0.3					0.3
Florian Seubert	0.4					0.4
Paul Fischbein, CEO
Remuneration from parent company	2.6	0.0		0.6	0.2	3.4
Other senior executives (11 persons)
Remuneration from parent company	6.4	0.7		1.8	0.6	9.4
Remuneration from subsidiaries	3.1	1.4		0.6		5.2
Total	14.8	2.1	0.0	3.0	0.7	20.7

The amounts recognised for 2012 relate to the full year. Accrued variable remuneration to be paid after year end totals SEK 0.1 million (0.2) for the CEO. The Board will receive its full remuneration from the parent company.

The Group's CFO was a temporary hire from May through December 2012. This expense was invoiced to the CDON Group.

Share-based remuneration

Starting in 2011, CDON Group AB's AGM established incentive programmes for management and key employees.

The 2013 long-term incentive programme

The 2013 programme is addressed to 40 employees in management and other key personnel. A personal investment in CDON Group AB shares is necessary to participate. These shares can either be already held or shares purchased at market price in conjunction with notification to participate in the programme. Participants must retain the shares during the three-year vesting period. After that, participants will be allotted objective- and performance-based rights, as well as, in some cases, employee options, depending on how defined objectives were met. The objectives relate to return on shares, gross profit levels and return on shares compared with a reference group. The objective-based and performance-based rights as well as the employee options were allotted to the participants free of charge in early June 2013. They can be utilised after publication of the interim report for the first quarter of 2016. The programme contains 61,700 objective-based rights, 361,600 performance-based rights and 344,400 performance-based employee options.

The 2012 long-term incentive programme

The 2012 programme is addressed to 20 employees in management and other key personnel. A personal investment in CDON Group AB shares is necessary to participate. These shares can either be already held or shares purchased at market price in conjunction with notification to participate in the programme. Participants must retain the shares during the three-year vesting period. After that, participants will be allotted objective- and performance-based rights, as well as, in some cases, employee options, depending on how defined objectives were met. The objectives relate to return on shares, gross profit levels and return on shares compared with a reference group. The objective-based and performance-based rights as well as the employee options were allotted to the participants free of charge in early June 2012. They can be utilised after publication of the interim report for the first quarter of 2015. The programme contains 26,375 objective-based rights, 173,100 performance-based rights and 202,800 performance-based employee options.

The 2011 long-term incentive programme

The 2011 programme is addressed to 10 employees in management and other key personnel. A personal investment in CDON Group AB shares is necessary to participate. These shares can either be already held or shares purchased at market price in conjunction with notification to participate in the programme. Participants must retain the shares during the three-year vesting period. After that, participants will be allotted objective- and performance-based rights, depending on how defined objectives were met. The objectives relate to return on shares, gross profit levels and return on shares compared with a reference group. The objective-based and performance-based rights were allotted to the participants free of charge in early June 2011. They can be utilised after publication of the interim report for the first quarter of 2014. The programme contains 24,700 objective-based rights and 138,600 performance-based rights.

Cost effects of incentive programmes

The programmes are equity-regulated programmes. The fair value at allotment date is expensed over the vesting period. The cost of the programmes is recognised in equity and as an operating expense. The cost is based on the fair value of CDON Group AB shares at allotment date and the number of shares that are expected to be earned. The cost of the programmes in 2013 totalled SEK 1.2 million (0.9), excluding social security contributions. When allocation of shares occurs, social security contributions will be paid for the value of benefit to the employee. During the vesting period, provisions are made for these estimated social security contributions.

The estimated fair value of services received in return for the employee options granted is based on the Black & Scholes valuation model. The expected volatility is based on historic values. The assumption of a 10% attrition rate during the period was also made. For the objective-based programmes, the probability that the objectives will be achieved were taken into account by using the adjustment factors for the various objectives when the cost was calculated.

Dilution

If all rights and options allocated to senior executives and other key employees are utilised as of 31 December 2013, the number of shares issued by the company will increase by 861,431 ordinary shares, which corresponds to a dilution of 0.9% of capital and votes at year-end 2013.

		Senior
	Group	execu	Key
Granted shareholder rights and options	CEO	tives	persons	Total
The 2011 long-term incentive programme	-	30,000	-	30,000
The 2012 long-term incentive programme	90,300	84,500	24,375	199,175
The 2013 long-term incentive programme	170,100	326,800	81,500	578,400
Total outstanding as of 31 December 2013	260,400	441,300	105,875	807,575

The current CEO is not participating in the 2011 incentive programme. The former CEO was allotted 72,000 rights but they were forfeited by his departure.

	2013 Weighted		2012	Weighted
	No. of options and rights	redemption price	No. of options and rights	redemption price
Outstanding rights and options 1 January	301,675	-	91,300	-
Rights and options issued during the year	710,200	-	267,300	-
Rights and options forfeited during the year	-204,300	-	-56,925	-
Total outstanding as of 31 December	807,575	-	301,675	-

Specification of long-term incentive programme	Number of rights and options	Number of participants	Maximum redemption price	Theoretical fair value at allocation	Redemption period	No. of options and rights 1 January	Lapsed during the year	Redeemed during the year	Outstanding rights and options as of 31 December
Allocation 2011
2011	163,300	9	121.5	27.1	2014	37,500	-7,500	-	30,000
Allocation 2012 2012	267,300	20	226.8	14.7	2015	264,175	-65,000	-	199,175
Allocation 2013 2013	710,200	30	174.0	14.7	2016	-	-131,800	-	578,400
Total allocation
2011	163,300					37,500	-7,500		30,000
2012	267,300					264,175	-65,000	-	199,175
2013	710,200					-	-131,800	-	578,400

	Group			Parent company
Personnel expenses (SEK million)	2013	2012	2013	2012
Granted rights 2011	-0.1	0.2	-0.1	0.2
Granted rights and options 2012	0.6	0.6	0.6	0.6
Granted rights and options 2013	0.7	-	0.7	-
Total expense recognised as personnel expenses	1.2	0.9	1.2	0.9

Note 25 Fees and remuneration to auditors

	Group			Parent company
(SEK million)	2013	2012	2013	2012
KPMG
Auditing assignments	3.5	2.6	0.9	0.8
Auditing-related services	1.0	0.0	1.0	0.0
Tax consulting	0.2	0.9	0.2	0.8
Other services	0.1	0.4	0.0	0.4
Total	4.7	3.9	2.1	2.0

Auditing assignments refer to compulsory audits of the annual accounts and accounting records, the administration of the Board of Directors and CEO, as well as other audits and reviews conducted in accordance with agreements or contracts.

This includes other duties that are incumbent on the company's auditor as well as the provision of advice or other assistance resulting from observations in connection with such auditing or the performance of such other duties.

Note 26 Supplementary disclosures regarding the statement of cash flow

Items in profit/loss for the year that do not generate cash flow from operations.

	Group		Parent company
(SEK million)	2013	2012	2013	2012
Loss from sale of operations	0.4	-	-	-
Gain from sale of non-current assets	-	0.0	-	-
Loss from sale of non-current assets	2.4	4.8	-	-
Depreciation, amortisation, impairment and disposals of non-current assets	21.4	15.7	0.0	0.0
Change in provision for contingent considerations	0.1	1.1	-	-
Change in other provisions	-2.1	-	-	-
Incentive programme	1.6	1.2	1.6	-
Interest expenses and income	8.5	7.7	8.5	8.1
Unrealised exchange differences	3.4	0.4	1.4	-
Impairment of inventories	-	87.7		-
Impairment losses on receivables	-	6.8		-
Group contributions received	-	-	-56.6	-148.2
Group contributions paid	-	-	263.2	120.4
Other items	32.0	-	0.1	1.3
Total	67.7	125.4	218.3	-18.4
Other supplementary disclosures
Interest received during the fiscal year	0.8	0.9	18.4	8.6
Interest paid during the fiscal year	-21.2	-17.8	-15.4	-16.6
Total	-20.4	-17.0	2.9	-8.0

Note 27 Related-party transactions

Group
Related parties
Investment AB Kinnevik (Kinnevik)	Kinnevik holds shares in CDON Group AB.
Related to Kinnevik:

Tele2 AB (Tele2) Kinnevik owns a significant number of shares in Tele2. Metro International S.A. (Metro) Kinnevik owns a significant number of shares in Metro. Modern Times Group MTG AB (MTG) Kinnevik owns a significant number of shares in Metro.

All transactions between related parties are based on market conditions and negotiations have taken place on an arms' length basis.

Transactions with related parties

CDON Group ABAnnual Report 2013 The Group purchases internal auditing and marketing services from Kinnevik. In 2013, purchases totalled SEK 13.6 million (9.0). The 2013 purchases included guarantee commission to Kinnevik in connection with the new share issue.

Transactions with companies related to Kinnevik

The Group purchases telecom and data communication services from Tele2.

The Group purchases advertising from Metro.

The Group purchases advertising from MTG companies.

There have been no transactions with senior executives in addition to those disclosed in Note 24.

Parent company

The parent company has related party relationships with its subsidiaries (see Note 12).

		Sale of	Purchase of		Claims on	Liability to
		goods/service	goods/services	Other (e.g.	related parties	related parties
		s to related	from related	interest,	as of 31	as of 31
Summary of related company transactions (SEK million)	Year	parties	parties	dividend)	December	December
Subsidiaries	2013	52.1	0.0	-189.9	269.9	463.8
Subsidiaries	2012	54.0	0.0	33.6	523.8	608.6

Note 28 Convertible bonds

Following a resolution passed at an Extraordinary General Meeting of CDON Group shareholders in Stockholm on 25 November 2010, the Group issued a five-year SEK 250 million convertible bond on 2 December 2010. MTG subscribed for 100% of the bond, which bears an annual coupon rate of 2.85%.

Group and parent company (SEK million)	2013	2012
Nominal value after convertible bond issue, 2 December 2010	250.0	250.0
Original amount classified as equity	-32.0	-32.0
Reclassification to equity pursuant to change in tax rate	-1.2	-1.2
Deferred tax liability attributable to convertible bond	-10.2	-10.2
Capitalised interest	25.1	16.3
Recognised liability, 31 December	231.7	223.0
Net financial items
Capitalised interest	-8.7	-8.1
Coupon rate	-7.1	-7.1

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. According to the original terms, the bond can be converted to a maximum of 6,578,947 shares in CDON Group. In connection with the issue of new shares carried out in 2013, the conversion price has been recalculated at SEK 31.00. In addition, the maximum number of shares that the bond can be converted to increased to 8,064,516. MTG, which holds the bond, may convert the bond into shares between 15 June 2012 and 1 December 2015. The convertible bond has not had any dilution effect either for 2013 or 2012 and has therefore been excluded from the calculation of diluted earnings per share. However, the convertible bond may have a dilution effect in the future.

Effect of the convertible bond on net financial items in the consolidated and parent company income statements -15.9 -15.3

In the case that a shareholder other than Investment AB Kinnevik should hold 50% or more of the Company's shares, or if the company is delisted, MTG can require repayment of the convertible. The conversion price for the convertible will also be recalculated if a shareholder other than Investment AB Kinnevik should hold 50% or more of the company's shares.

Note 29 Significant events after the end of the fiscal year

Lekmer takes over the Carena brand

The CDON Group AB announced on 10 February 2014 that its subsidiary, Lekmer AB, signed an agreement with Britax to take over the Carena brand. Carena is a well-known brand of prams and accessories in the Nordic region.

Nelly launches NLYman.com

On 24 February 2014, CDON Group AB announced that its subsidiary NLY Scandinavia AB would launch NLYman.com. NLY Man is a new concept with a private label brand and website for male fashion.

CDON Group launches Nelly.com in Belgium

On 5 March 2014, CDON Group AB announced that its subsidiary NLY Scandinavia AB would launch a local provisional version of Nelly.com in Belgium. Nelly.com has previously been accessible on the Belgian market through the shop's EU site in English. Clients are now offered a bilingual version adapted for local use.

Bodystore changes its name to Gymsector in Germany

The CDON Group AB announced on 13 March 2014 that its subsidiary, Gymgrossisten Sweden AB, in order to continue its expansion outside the Nordic region under a single brand, would change the name of Bodystore.de, its German nutritional supplement shop, to

Note 30 Inventories

Cost of sales for the Group includes impairment of inventory for SEK 6.6 million (62.7). Non-recurring items mainly related to the warehouse relocation completed during the year as well as impairments of overstock in Nelly.com were charged against 2012.

Note 31 Liabilities to credit institutions

	Group			Parent company
Liabilities to credit institutions (SEK million)	2013	2012	2013	2012
Bank loans	-	150.0	-	150.0
Liabilities due for payment more than five years after the reporting date:	-	-	-	-

In 2013, the Group has renegotiated its terms and conditions of loan, as well as amortised SEK 150 million.

The bank loan relates to the revolving credit facility obtained from Nordea Bank AB (publ) in conjunction with the acquisition of Tretti AB.

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 19 July, 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 uncertainties faced by the parent company and Group companies.

Stockholm, 2 April 2014

Lars-Johan Jarnheimer Chairman of the Board

Paul Fischbein Chief Executive Officer Mia Brunell Livfors Board member

Lars Nilsson Board member Jonas Kjellberg Board member Mengmeng Du Board member

Patrick Andersen Board member

David Kelly Board member

Our audit report was submitted on 7 April 2014

KPMG AB

Cronie Wallquist Authorised Public Accountant

The annual accounts and consolidated accounts have, as stated above, been approved for publication by the Board on 2 April 20 .

Auditor's report To the Annual General Meeting of the Shareholders of CDON Group AB (publ), corp. ID no. 556035-

To the Annual General Meeting of the Shareholders of CDON Group AB (publ), corp. ID no. 556035-

Report on the annual accounts and consolidated accounts

Report on the annual accounts and consolidated accounts We have audited the annual accounts and consolidated accounts of We have audited the annual accounts and consolidated accounts of CDON AB (publ) for the year 2013. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages - .

consolidated accounts of the company are included in the printed version of this document on pages - . The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts in accordance with the Annual Accounts Act and of the consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts in accordance with the Annual Accounts Act and of the consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

accounts and consolidated accounts that are free from material Auditor's responsibility

misstatement, whether due to fraud or error. Auditor's responsibility Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.

we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.

the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

We believe that the audit evidence we have obtained is sufficient and Opinions

appropriate to provide a basis for our audit opinions. Opinions In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2013 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2013 and of their In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2013 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2013 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. The statutory

administration report is consistent with the other parts of the annual accounts and consolidated accounts.

administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the annual meeting of shareholders We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the statement of comprehensive income and statement of financial position for the group.

and the statement of comprehensive income and statement of financial Report on other legal and regulatory requirements

position for the group. Report on other legal and regulatory requirements In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the Managing Director of CDON AB (publ) for the year .

company's profit or loss and the administration of the Board of Directors and the Managing Director of CDON AB (publ) for the year . Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss, and the Board of Directors and the Managing Director are responsible for administration under the Companies Act.

Directors and the Managing Director are responsible for administration Auditor's responsibility

under the Companies Act. Auditor's responsibility Our responsibility is to express an opinion with reasonable assurance Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.

on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden. As basis for our opinion on the Board of Directors proposed appropriations of the company's profit or loss we examined the Board As basis for our opinion on the Board of Directors proposed appropriations of the company's profit or loss we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.

of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act. As basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also As basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

We believe that the audit evidence we have obtained is sufficient and Opinions

appropriate to provide a basis for our opinions. Opinions We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year. Stockholm, 7 April 2014 KPMG AB

Cronie Wallquist Authorised Public Accountant

Definitions

Earnings per share

Earnings for the year attributable to the parent company's shareholders divided by average number of shares for the period. Earnings per share

Equity/assets ratio Earnings for the year attributable to the parent company's shareholders divided by average number of shares for the period.

The equity/assets ratio equals equity including non-controlling interests, expressed as a percentage of total assets. Equity/assets ratio

Equity per share The equity/assets ratio equals equity including non-controlling interests, expressed as a percentage of total assets.

Equity attributable to parent company shareholders divided by the number of shares at the end of the period. Equity per share

Net cash flow from operations Equity attributable to parent company shareholders divided by the number of shares at the end of the period.

Cash flow from operating activities is calculated as operating income before depreciation, amortisation and other non-cash items, plus/minus changes in working capital. Net cash flow from operations

Net debt/Net cash Cash flow from operating activities is calculated as operating income before depreciation, amortisation and other non-cash items, plus/minus changes in working capital.

Net debt equals total interest-bearing liabilities, less interest bearing current and non-current assets and cash and cash equivalents. Net debt/Net cash

Operating income (EBIT) Net debt equals total interest-bearing liabilities, less interest bearing current and non-current assets and cash and cash equivalents.

Operating income is earnings before interest and tax (EBIT).

Operating margin, % Operating income is earnings before interest and tax (EBIT).

Operating margin is operating income as a percentage of net sales.

Return on equity, % Operating margin is operating income as a percentage of net sales.

Return on equity is calculated as net income for the four last quarters divided by average equity for the same period, as a percentage. Return on equity, %

Return on capital employed, % Return on equity is calculated as net income for the four last quarters divided by average equity for the same period, as a percentage.

Return on capital employed is calculated as operating income for the four last quarters divided by average capital employed for the same period, as a percentage. Capital employed is calculated as the average of total non-current assets, cash and cash equivalents and working capital, less provisions. Return on capital employed, % Return on capital employed is calculated as operating income for the four last quarters divided by average capital employed for the same period, as a percentage. Capital employed is calculated as

Working capital the average of total non-current assets, cash and cash equivalents and working capital, less provisions.

Working capital equals the total of inventory and current receivables, less trade accounts payable and other current liabilities. Working capital

CDON Group AB Bergsgatan 20 Box 385 SE-201 23 Malmö SWEDEN www.cdongroup.com