Nelly Group — Interim / Quarterly Report 2011

Feb 1, 2012

Fourth Quarter and Full Year Report 2011

71% YEAR ON YEAR SALES GROWTH IN THE FOURTH QUARTER

CDON Group AB (publ.) ("CDON Group" or "the Group") (NASDAQ OMX Stockholm's Mid Cap market: CDON) today announced its financial results for the fourth quarter and full year, ended 31 December 2011.

Fourth Quarter 2011

• Net sales up 71% year on year to SEK 1,316.4 (768.9) million with an organic growth of 49% (25%)*
• Gross profit of SEK 229.5 (139.0) million with a gross margin of 17.4%
• Operating profit of SEK 71.3 (38.1) million and operating margin of 5.4%
• Net income of SEK 48.4 (26.0) million
• Basic earnings per share of SEK 0.73 (0.41) 1

Full Year 2011

• Net sales up 54% to SEK 3,403.7 (2,210.0) million with an organic growth of 37% (27%)*
• Gross profit of SEK 602.3 (420.2) million with a gross margin of 17.7% when excluding non-recurring items
• Operating profit of SEK 149.0 (134.6) million and operating margin of 4.4% when excluding non-recurring costs
• Investments in start-ups and geographical expansion totalled SEK 34 million in 2011**
• Net income of SEK 83.0 (90.2) million
• Basic earnings per share of SEK 1.26 (5.00) 2
• Acquisition of white goods and household appliances e-retailer Tretti AB for SEK 346 million in June

* Excluding Tretti and Rum21

** Relates to geographic expansion of Nelly in Europe, Rum21 in the Nordics, Gymgrossisten in Germany and Denmark, and the Nordic launch of Members.com. Investments in Heppo's and Lekmer's expansion during the year are not included.

Paul Fischbein, CEO and President of CDON Group, commented: "I am pleased to announce strong growth and significantly improved earnings for CDON Group, for both the fourth quarter and the full year. On what has been an overall weak retail market, we again increased our sales to record levels; in the fourth quarter up 71% when compared to the same period last year and by 54% for the full year. All segments reported profitable growth and contributed to the Group's overall profit. We have invested heavily in growth, throughout the year, and our improved earnings in the fourth quarter clearly illustrates that this strategy is paying off and gives proof of the Group's scalability."

"Continued strong sales growth is key for CDON Group and we can see that we have strong momentum in our business. CDON Group operates in a market with strong underlying growth, despite the fact that the retail sector in general suffers from uncertain macroeconomic conditions. E-commerce constitutes a lower proportion of total retail sales in the Nordic region, compared to more developed e-commerce markets such as the United Kingdom and the United States where the penetration is nearly twice as high. CDON Group is the Nordic market leader in all its segments: Entertainment, Fashion, Sports & Health and Home & Garden. We are therefore well positioned to benefit from, and capitalise on, the continued strong growth in e-commerce. Further, there are several other factors which will potentially benefit us; as technology, infrastructure and

¹ Based on the average number of outstanding shares of 66,342,124 for Oct-Dec 2011 and 66,264,645 for Oct-Dec 2010.

² Based on the average number of outstanding shares of 66,342,124 for Jan-Dec 2011 and 18,153,748 for Jan-Dec 2010.

logistics develop there will be opportunities to expand e-commerce operations into larger geographical areas, especially within the Fashion segment."

"Going forward, we aim to take advantage of these opportunities and we will increase our investments in order to continue the geographical expansion of the fashion segment. Nelly.com was first launched outside of the Nordic region in 2011 and since then the sales outside of the Nordics have increased steadily to become Nelly's third largest market in the fourth quarter. We have therefore decided to take the next step in the expansion and continue the European rollout, as well as to launch new initiatives outside of Europe."

"In addition to the aforementioned initiatives in the Fashion segment, in 2012 we will continue to work on aggressively expanding the product ranges in our e-commerce stores, especially in CDON.com. Previously, media products dominated CDON.com sales. In 2011, and in particular towards the end of the year, consumer electronics grew to become the largest product category at CDON.com. During the year, we have also successfully added toys to CDON.com's offering by integrating Lekmer's assortment. This is a development that we intend to continue in 2012."

"During 2011 we also expanded the Group's Sports & Health segment to Denmark and Germany, acquired both Rum21 and Tretti, as well as expanded them across the Nordics, and we launched Members.com. Although our focus remains on developing our current stores, the strategy going forward also includes adding new stores to our existing portfolio, either through acquisitions or through start-ups, as we have done with Members.com and Heppo.com."

"In summary, we conclude that the future for internet retailing remains bright and that e-commerce will continue to take a larger share of the total retail market. CDON Group has a strong position in the Nordic markets and we are confident that 2012 will be another year of strong growth. In line with previous years, our aim is to consistently outperform the Nordic e-commerce market also onwards."

"CDON Group is currently in an intense growth phase, with investments being made to exploit this opportunity. These investments, combined with the ongoing shift from media products towards fast growth product categories within CDON.com, such as consumer electronics, are expected to affect margins in 2012. During 2012, we will however also focus on realizing Group synergies. During the full year 2011 the underlying operating margin improved compared to 2010. For 2012 we expect our underlying operating margin, adjusted for expansion, to continue improving".

Significant events during the fourth quarter and full year 2011

Geographical expansion of Gymgrossisten

CDON Group expanded Gymgrossisten to Denmark on 22 February and to Germany through the launch of Bodystore.de on 21 December 2011. Gymgrossisten is now present on the Swedish, Finnish, Norwegian, Danish and German markets.

Changes to management

Paul Fischbein was appointed President and CEO for CDON Group on 9 November 2011. Paul has served as CEO of white goods and household appliances e-retailer Tretti AB, which was acquired by CDON Group in the first half of 2011 and is part of the Group's Home & Garden business segment, since 2004.

Geographical expansion of Nelly.com

CDON Group launched the fashion retailer Nelly.com across the entire EU on 29 September 2011, thus increasing its geographic reach into 20 new markets. In conjunction with the European launch, CDON Group

also announced an upcoming global launch. The e-commerce store is now available in English, German, Swedish, Danish, Norwegian, Finnish and Dutch language versions.

Launch of Members.com

CDON Group launched the shopping-club Members.com throughout the Nordic region in September 5 2011. Members.com is a new and exclusive e-shopping club that daily presents new and unique offerings in fashion, beauty and lifestyle for selected members. Members.com's core offerings are fashion apparel and accessories as well as goods and services related to lifestyle and design.

Acquisition and geographical expansion of Tretti AB

CDON Group announced a recommended cash offer to the shareholders of Tretti AB on 28 April 2011. The offer valued Tretti AB at SEK 346 million, or SEK 67.25 per share. The Group subsequently initiated a mandatory tender offer for the remaining shares in Tretti AB, in accordance with the Swedish Companies Act (2005:551). Tretti AB has also been delisted from NASDAQ OMX First North, and the last trading day in the company's shares was 15 July 2011. On 13 June 2011 CDON Group expanded Tretti to Finland through the launch of ecommerce store Tretti.fi. Tretti is now present in all Nordic markets.

Acquisition and geographic expansion of Rum21

On 31 January 2011, CDON Group acquired 90.1% of Rum21 AB, an online retailer of designer brand furniture and interior decoration products. The company was acquired for a consideration of SEK 14.0 million. SEK 7.3 million of the purchase price will be deferred over the three consecutive years following the closing of the transaction, starting from 2012. Rum21.se's results have been fully consolidated into the Group's accounts with effect from 1 February 2011. Rum21 was expanded across the Nordic region during the second half of 2011, as an effect of the launch of Room21.dk in Denmark and Room21.fi in Finland in September, and Room21.no in Norway during October.

Recognition of one-off costs

CDON Group announced on 10 October 2011 that it recognised SEK 15 million of one-off costs in the results for the third quarter and nine months ended 30 September 2011. These costs reflect a restatement of Norwegian customs duties and VAT over the past three years. The recognition will not affect the Group's underlying business, profitability or revenue growth. The costs have been accounted for in a separate line in the Group's income statement and are included in "Group central operations" in the segment reporting.

Significant events after the reporting period

Completion of the arbitration procedure relating to compulsory redemption of outstanding shares in Tretti AB CDON Group announced on 25 January 2012 that the arbitration procedure relating to compulsory redemption of outstanding shares in Tretti AB had been completed. The arbitral tribunal issued a separate award on 15 December 2011, in which the tribunal ruled that CDON Group had the right and obligation to redeem the outstanding shares. CDON Group owned 100 per cent of the shares in Tretti at the end of 2011. 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.

Financial summary

(SEK Thousand)	2011 Oct-Dec	2010 Oct-Dec	Change(%)	2011 Jan-Dec	2010 Jan-Dec	Change (%)
Net sales	1,316,415	768,933	71.2%	3,403,746	2,210,034	54.0%
Gross profit excl non-recurring items	229,500	139,034	65.1%	602.320	420,220	47.6%
Gross margin (%)	17.4%	18.1%		17.7%	19.0%
Gross profit incl non-recurring items*	229,500	139,034	65.1%	587,320	420,220	39.8%
Gross margin (%)	17.4%	18,1%		17.3%	19.0%
Operating profit excl	71,305	38,083	87.2%	148,966	134,628	10.7%
non-recurring items Operating margin (%)	5.4%	5,0%		4.4%	6.1%
Operating profit incl
non-recurring items*	71,305	38,083	87.2%	129,226	134,628	-4.0%
Operating margin (%)	5.4%	5,0%		3.8%	6.1%
Net interest & other	-5,401	-4,647		-18,178	-18,799
financial items Income before tax	65,904	33,436		111,048	115,829
Net income	48,402	26,002		83,009	90,234
Basic earnings per share (SEK)**	0.73	0.41		1.26	5.00
Diluted earnings per share (SEK)**	0.66	0.41		1.14	4.90
Total assets	1,625,333	1,014,197	71.5%	1,625,333	1,014,197	71.5%

* Including one-off costs of SEK 15.0 million, related to a restatement of Norwegian customs duties and VAT three years back. The operating profit for 2011 also includes one-off costs of SEK 4.7 million related to the acquisition of Tretti AB.

** Earnings per share for Oct-Dec 2010 and Jan-Dec 2010 are based on the average number of outstanding shares for these periods which are 66,264,645 and 18,153,748 respectively. The weighted average number of shares outstanding before dilution for the fourth quarter and full year of 2011 amounted to 66,342,124. The weighted average number of shares outstanding after dilution for the fourth quarter and full year of 2011 amounted to 72,921,071.

Group summary

Group net sales were up 71% year on year in the quarter and 54% for the year to date and organically sales were up 49% year on year in the quarter and 37% for the year to date, following sales growth and continued market share gains for each business segment. The Group's sites attracted 60.8 (37.4) million visits during the quarter and generated 2.2 (1.6) million orders during the period. A total of 171.8 (114.1) million visits and 6.0 (4.7) million orders were registered for the full year.

The Group's consolidated cost of goods sold increased by 73% year on year to SEK 1086.9 (629.9) million in the quarter and by 57% to SEK 2,801.4 (1,789.8) million for the full year, adjusted for the one-off costs of SEK 15 million recognised in the third quarter. The gross margin hence was 17.4% (18.1%) in the quarter and 17.3% (19.0%) for the year to date. The decrease in margin is a result of the ongoing shift in the Entertainment segment away from the sale of media products towards growth categories such as consumer electronic products, and affected by the consolidation of Tretti.com from June 3 2011, as the company's gross margins

are somewhat lower than the Group's average. The full year decrease is primarily reflecting the one-off costs related to the restatement of Norwegian customs duties and VAT.

Sales, general and administrative expenses increased by 50% year on year to SEK 155.3 (103.7) million in the quarter and by 60% to SEK 458.8 (287.4) million for the full year, which reflected the higher sales volumes from existing and new business lines, investments in the launch of Members.com in the Nordics and Nelly.com in the EU, as well as marketing initiatives, such as Nelly.com in the German and Dutch markets and for Gymgrossisten's internet stores Bodystore.dk in Denmark and Bodystore.de in Germany. The Group also incurred higher year on year TV advertising costs as a stand-alone company following the signing of a new agreement with the former parent company Modern Times Group, which took effect from the beginning of 2011. Group central costs of SEK 4.1 (15.6) million in the fourth quarter and SEK 37.8 (16.5) million for the year to date reflected the Group's status as a stand-alone and publicly listed company with its own central functions and governing bodies, as well as non-recurring cost of SEK 15 million associated with the restatement of Norwegian customs duties and VAT and SEK 4.7 million associated with the acquisition of Tretti AB during the second quarter.

The Group therefore reported an operating profit of SEK 71.3 (38.0) million in the quarter, and SEK 149.0 (134.6) million for the full year, with operating margins of 5.4% (5.0%) and 4.4% (6.1%) when excluding the non-recurring costs mentioned above. The Group reported an operating profit of SEK 71.3 million in the quarter and SEK 129.2 million for the full year, including non-recurring costs.

The Group´s net interest and other financial items amounted to SEK -5.4 (-4.6) million in the fourth quarter and SEK -18.2 (-18.8) million for the full year, which primarily reflected the interest costs related to the convertible bond issued by CDON Group in December 2010, as well as the Group´s revolving credit facility.

Group pre-tax profits amounted to SEK 65.9 (33.4) million in the fourth quarter and SEK 111.0 (115.8) million for the full year.

The Group reported income tax expenses of SEK 17.5 (7.4) million in the fourth quarter and SEK 28.0 (25.6) million for the full year. Group consolidated net income therefore totalled SEK 48.4 (26.0) million in the quarter and SEK 83.0 (90.2) million for the full year.

The total number of shares amounted to 66,532,124 at the end of the fourth quarter and the total number of outstanding shares amounted to 66,342,124. The Group reported basic earnings per share of SEK 0.73 (0.41) for the quarter and SEK 1.26 (5.00) for the year to date, based on weighted average number of shares during the period. The Group reported diluted earnings per share of SEK 0.66 (0.41) for the quarter and SEK 1.14 (4.90) for the full year, based on weighted average number of shares during the period.

Segmental Operating Review

Entertainment

(Tkr)	2011 Oct-Dec	2010 Oct-Dec	Change (%)	2011 Jan-Dec	2010 Jan-Dec	Change (%)
Net sales	772,080	561,971	37.4%	1,928,927	1,492,154	29.3%
Operating profit	50,474	43,422	16.2%	102,269	99,734	2.5%
Operating margin (%)	6.5%	7.7%		5.3%	6.7%
No. of visits ('000)	27,519	23,189	18.7%	81,436	68,564	18.8%
No. of orders ('000)	1,494	1,260	18.6%	4,201	3,685	14.0%
Avr. shopping basket (SEK)	484	400	20.9%	433	375	15.4%

The Entertainment segment comprises the online stores CDON.com, BookPlus.fi and Lekmer.com. The segment sales were up 37% year on year in the fourth quarter and up 29% for the year to date. The segment accounted for 59% (73%) of total Group sales in the fourth quarter and 57% (68%) for the full year.

The ongoing shift from media products towards new growth areas such as consumer electronics accelerated further in the fourth quarter as new vendor collaborations and an expanded product range contributed to continued strong sales development. In the fourth quarter, consumer electronics confirmed its position as the largest product category even on a full year basis. Media products show growth in both the quarter and full year despite a weak market development. In the media category, computer games reported the strongest development in the fourth quarter, which offered unusually many anticipated releases, film and books also presented a positive development with increased sales volumes for both periods. Toys continued with threedigit growth also in the fourth quarter, which was an effect from convincing demand on the new markets, as well as Lekmer.com's assortment being integrated in CDON.com during the third quarter. The segment increased its sales volumes in all markets and all product categories strengthened their positions and market shares in both periods.

In the fourth quarter CDON.com also integrated the digital platforms for video on demand and digital games into CDON.com's retail platform, resulting in increased exposure to and enhanced sales volumes of digital products. The company also launched a mobile version of the shop.

The segment's operating income and the average shopping basket value increased during the quarter compared with the previous year as a result of the increased sales volume and the rapid development of consumer electronics-sales within CDON.com. Consumer electronics are now the largest product group in the Entertainment segment even for the full year, and growth of the category is expected to continue. In the fourth quarter, the operating margin was also affected by market investments in the development of Lekmer.com, however, to a lesser extent than the previous quarter.

(Tkr)	2011 Oct-Dec	2010 Oct-Dec	Change (%)	2011 Jan-Dec	2010 Jan-Dec	Change (%)
Net sales	275,136	134,673	104.3%	730,642	433,167	68.7%
Operating profit	13,489	1,857	626.4%	19,871	16,078	23.6%
Operating margin (%)	4.9%	1.4%		2.7%	3.7%
No. of visits ('000) No. of orders ('000)	27,426 445	12,543 196	118.7% 126.9%	74,980 1,113	39,312 635	90.7% 75.3%
Avr. shopping basket (SEK)	608	661	-8.0%	641	655	-2.2%

Fashion

The Fashion segment comprises the online stores Nelly.com, Heppo.com and Members.com. The segment sales were up 104% year on year in the quarter and up 69% for the year to date. The segment accounted for 21% (18%) of total Group sales in the fourth quarter and 21% (20%) for the full year.

Sales within the fashion segment grew strongly despite the moderate development on the general clothing and shoes market. The strong growth is mainly an effect of the significant investments the Group has made in development of new brands, such as shoe retailer Heppo.com which was launched in the third quarter of 2010, the shopping club Members.com that was launched during the third quarter of 2011 and the geographical expansion of fashion retailer Nelly.com. The investments have developed according to plan, and a global launch of Nelly.com is scheduled for 2012.

Nelly.com launched a series of new private label brands in the fourth quarter, as well as a mobile shop and new marketing campaigns in the Netherlands and Germany. Heppo.com focused on broadening the product range and brand assortment, and Members.com expanded into Norway, Denmark and Finland.

The segment improved its profitability in the fourth quarter compared to last year despite these investments. Higher sales volumes, improved operating margin for Heppo.com and stronger gross margins for Nelly.com are the main drivers behind this positive development.

(Tkr)	2011 Oct-Dec	2010 Oct-Dec	Change (%)	2011 Jan-Dec	2010 Jan-Dec	Change (%)
Net sales	97,065	72,234	34.4%	377,138	284,658	32.5%
Operating profit	10,257	8,405	22.0%	39,746	35,358	12.4%
Operating margin (%)	10.6%	11.6%		10.5%	12.4%
No. of visits ('000)	2,863	1,687	69.7%	9,486	6,226	52.4%
No. of orders ('000)	142	101	40.8%	545	391	39.5%
Avr. shopping basket (SEK)	688	709	-2.9%	692	727	-4.9%

Sports & Health

The Sports & Health segment comprises the online stores Gymgrossisten.com, Fitnesstukku.fi and Bodystore.com. The segment's sales were up 34% year on year in the fourth quarter and up 33% for the full year. The segment accounted for 7% (9%) and 11% (13%) of total Group sales for the two respective periods.

The strong growth in the fourth quarter is a result of marketing campaigns and market share gains in all of Gymgrossisten.com's markets. The product categories Nutrition supplements and Protein continued to show healthy growth, while the categories Sportswear and Health foods, where the assortment has been broadened, also contribute to growth in both periods.

Gymgrossisten launched Bodystore.de on the German market during the fourth quarter. Bodystore.de offers a wide range of international brands, an additional range of German products and Gymgrossisten's private label brand Star Nutrition, a market leader brand in the Nordic countries.

The segment's operating profit increased by 22% in the fourth quarter compared to last year, and by 12% for the full year. The segment's operating margin decreased from the previous year as a result of the previously mentioned market investments.

Home & Garden

(Tkr)	2011 Oct-Dec	2010 Oct-Dec	Change (%)	2011 Jan-Dec	2010 Jan-Dec	Change (%)
Net sales	172,134	-	-	367,050	-	-
Operating profit	1,231	-	-	5.171	-	-
Operating margin (%)	0.7%	-	-	1.4%	-	-
No. of visits ('000)	2,958	-	-	5,856	-	-
No. of orders ('000)	71	-	-	136	-	-
Avr. shopping basket (SEK)	2,450	-	-	2,696	-	-

The Home & Garden segment comprises the online-shops Tretti.com and Rum21.se. The segment's sales accounted for 13% (-) and 11% (-) of total Group sales for the fourth quarter and year to date respectively.

Tretti developed according to plan and strengthened its position as the leading online white goods and home appliance shop in the Nordic region. The Nordic launch, range expansion and an increased focus on online advertising contributed to increased market shares in a total market characterised by strong price pressure. Rum21 reported three digit growth in both the quarter and the full year. Rum21 expanded to Norway during the fourth quarter, launched its private label Formaterial and continued to aggressively expand its assortment.

The segment's operating margin is slightly lower in the fourth quarter than for the full year, mainly due to the previously mentioned initiatives, but also as a result of strong pressure on prices in the white goods category. Further, a slowdown in the housing market has put some pressure on the premium segment in Tretti.com.

Financial position

Group total assets grew by 60% year on year to SEK 1,625.3 (1,014.2) million. At the end of the third quarter, the Groups total assets amounted to SEK 1,346.8 million. The increase mainly reflected the strong Christmas season sales and following change in working capital. During the quarter the Group's cash and cash equivalents increased by SEK 281.9 million and working capital decreased to SEK -178.0 (83.9) million. At the end of the fourth quarter 2011 working capital amounted to SEK -107.0 million.

Inventory levels increased year on year to SEK 459.1 (251.3) million. The increase reflected the higher proportion of Group sales generated from the more inventory intensive Fashion and Sports & Health segments, the acquisition of Tretti as well as the expansion of the Group's product categories and assortments, e.g. consumer electronics within the Entertainment segment.

Cash flow from operating activities before changes in working capital increased to SEK 73.1 (44.3) million in the quarter but decreased to SEK 124.3 (126.2) million year to date, and included SEK 18.9 million of corporate tax payments incurred during 2010. The Group reported a SEK 246.6 (64.7) million change in working capital in the quarter and SEK 85.5 (-32.9) million for the year to date. Capital employed increased by SEK 30.2 million, to SEK 797.1 million in the fourth quarter. Therefore the Group's rolling twelve month return on capital employed declined year on year to 18.7% (36.1%) in the fourth quarter, which mainly reflected the acquisition of Tretti AB.

Group cash flow to investing activity amounted to SEK -22.3 (-1.3) million in the quarter and SEK -358.5 (-9.8) million year to date, which primarily reflected the SEK -5.3 million net cash flow impact from the acquisition of Rum21 AB in February and the SEK -317.5 million net cash flow impact from the acquisition of Tretti AB in June.

Group cash flow from financing activities amounted to SEK 0.0 (311.3) million in the quarter and SEK 150.0 (353.8) million for the year to date, which reflected the Group's revolving credit facility.

The Group's total interest-bearing borrowings amounted to SEK 379.8 (207.2) million at the end of the period, compared to SEK 377.8 million at the end of the third quarter 2011. This increase mainly reflected the revolving credit facility and the convertible issued by Modern Times Group.

The Group's cash and cash equivalents increased by SEK 281.9 (410.0) million to SEK 417.4 (431.3) million at the end of the quarter, compared to SEK 135.5 million at the end of the third quarter 2011. The Group therefore had a net cash position (defined as interest-bearing liabilities less cash and cash equivalents) of SEK 37.6 (224.1) million at the end of the reporting period, compared to a net debt position of SEK 242.3 million at the end of the third quarter of 2011.

Parent company

The CDON Group parent company reported sales of SEK 14.1 (0.1) million in the fourth quarter and SEK 42.4 (0.1) million for the full year, 100.0% and 99.9% of it to companies within the Group for the respective period. Administrative expenses amounted to SEK -20.5 (-16.5) million in the fourth quarter and SEK -61.9 (-17.8) million for the full year.

Other net financial items amounted to SEK -1.5 (-0.8) million in the quarter and SEK -12.6 (-8.3) million for the full year. The parent company received group contributions from subsidiaries amounting to SEK 124.0 million and gave group contributions to subsidiaries amounting to SEK -16.0 million in the fourth quarter. Income before tax amounted to SEK 100.1 (-17.2) million in the quarter and SEK 75.8 (-26.1) million for the full year.

The parent company's cash and cash equivalents amounted to SEK 356.3 (407.4) million at the end of the period, which reflected the Group's cash pool including the funds of SEK 250.0 million pertaining to the convertible bond.

The parent company invested SEK 43.4 (21.0) million in non-current assets during the quarter, of which SEK 13.8 million related to acquisition of additional 2.23% of the shares in NLY Scandinavia AB, SEK 5.2 million to buy-out of the minority's shareholdings in Tretti AB, SEK 19.5 million to shareholders' contributions and revaluation of the earn-out regarding Lekmer AB and SEK 5.0 million to shareholders' contributions and revaluation of the earn-out regarding Rum21 AB. Consequently CDON Group AB's ownership in NLY Scandinavia AB amounts to 97.77% of the share capital. In addition to the above, the parent company also carried out investments of SEK 359.6 million in non-current assets during the full year, relating to the acquisition of Tretti AB and 90.1% of the shares of Rum21 AB.

Accounting policies

This report has been prepared in accordance with 'IAS 34 Interim Financial Reporting' and the 'Annual Accounts Act'. The interim report for the parent company has been prepared in accordance with the 'Annual Accounts Act'. The accounting policies in the Group's consolidated financial statements and the parent company's financial statements have been prepared according to the same accounting policies and calculation methods as the 2010 annual accounts.

Risks and uncertainties

Several factors could affect CDON Group's earnings and operations, most of which can be managed through internal procedures but some of which are controlled by external factors. Risks and uncertainties include IT and control systems, suppliers, seasonal variations and currencies, new market entries, changes in market conditions, and changes in e-commerce spending behaviour. The parent company is also subject to interest rate risks. The 2010 Annual Report contains a more comprehensive description of the risks and uncertainty factors affecting the Group in the Management Report and in Note 20.

Related party transaction

Related party transactions for the period are of the same character and amounts as the transactions described in the 2010 Annual Report.

Other information

Annual General Meeting of shareholders 2012

CDON Group's 2012 Annual General Meeting of shareholders will be held on 8 May 2011 in Stockholm. Shareholders wishing to have matters considered at the Annual General Meeting should submit their proposals in writing to ir@cdongroup.com or to CDON Group AB, Box 385, SE- 201 23 Malmö, Sweden, at least seven weeks before the Annual General Meeting, in order that proposals may be included in the notices to the meeting. Further details on how and when to register will be published in advance of the meeting.

Dividend

The Board of Directors will propose to the 2012 Annual General Meeting of shareholders that no dividend is paid out to shareholders for the financial year ended 31 December 2011, and that the retained earnings for the year be carried forward into the accounts for 2012.

Nomination Committee for the 2012 Annual General Meeting of shareholders

A Nomination Committee of major shareholders in CDON Group has been formed in accordance with the resolution of the 2011 Annual General Meeting, The Nomination Committee is comprised of Cristina Stenbeck on behalf of Investment AB Kinnevik; Ryan Schaper on behalf of Point Lobos Capital, LLC; Jeffrey Pierce on behalf of Luxor Capital Group LP; and Björn Lind on behalf of AMF and AMF Funds.

Annual Report

The 2011 Annual Report & Accounts will be made available at www.cdongroup.com and at the Company's head office at Bergsgatan 20, Malmö, Sweden, at least three weeks before the Annual General Meeting.

First Quarter 2012 Financial Results

CDON Group's results for the first quarter ended 31 March 2012 will be published on 18 April 2012.

This report has not been reviewed by the Group's auditor.

1 February 2012

Paul Fischbein, President & CEO

CDON Group AB Bergsgatan 20 Box 385 SE-201 23 Malmö Corporate ID number: 556035-6940

The company will host a conference call today at 15.00 Stockholm time, 14.00 London time and 09.00 New York time.

To participate in the conference call, please dial:
Sweden:	+46 (0)8 5051 3793
International:	+44 (0)20 7136 2051
US:	+1 212 444 0896

The access pin code for the conference call is 3496746. To listen to the conference call online, please go to www.cdongroup.com.

***

For additional information, please visit www.cdongroup.com or contact:

Paul Fischbein, President & Chief Executive Officer Phone: +46 (0) 10 703 20 00

Investor and analysts enquiries: Martin Edblad, Chief Financial Officer Phone: +46 (0) 700 80 75 03 E-mail: ir@cdongroup.com

Media enquiries: Fredrik Bengtsson, Head of Communications Phone: +46 (0) 700 80 75 04 E-mail: press@cdongroup.com

About CDON Group

CDON Group is the leading e-commerce group in the Nordic region. Established in 1999, the Group has continuously expanded its product portfolio and is now a leading e-commerce player in the Entertainment (CDON.COM, BookPlus.fi, Lekmer.com), Fashion (Nelly.com, Heppo.com Members.com), Sport & Health (Gymgrossisten.com, Bodystore.com) and Home & Garden (Tretti.com and Rum21.se) segments. CDON Group's nine online stores attracted approximately 172 million site visits and two million unique customers in 2011.

The information in this announcement is that which CDON Group AB is required to disclose under the Securities Markets Act. This information was released for publication at 13:00 CET 1 February 2012.

CONDENSED CONSOLIDATED	2011	2010	2011	2010
INCOME STATEMENT (SEK thousand)	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Net sales	1,316,415	768,933	3,403,746	2,210,034
Cost of goods and services	-1,086,915	-629,899	-2,801,426	-1,789,814
Non-recurring items*	0	0	-15,000	0
Gross profit	229,500	139,034	587,320	420,220
Sales and administration expenses	-155,269	-103,749	-458,798	-287,382
Other operating income and expenses, net	-2,926	2,798	704	1,790
Operating profit	71,305	38,083	129,226	134,628
Net interest & other financial items	-5,401	-4,647	-18,178	-18,799
Profit before tax	65,904	33,436	111,048	115,829
Tax	-17,502	-7,434	-28,039	-25,595
Net income for the period	48,402	26,002	83,009	90,234
Attributable to:
Equity holders of the parent	48,184	27,265	83,299	90,835
Non-controlling interests	218	-1,263	-290	-601
Net income for the period	48,402	26,002	83,009	90,234
Basic earnings per share (SEK)**	0.73	0.41	1.26	5.00
Diluted earnings per share (SEK)**	0.66	0.41	1.14	4.90

* For an explanation of the non-recurring items please see heading "Recognition of one-off costs" under the section "Significant events during and after the end of the fourth quarter".

** Earnings per share for the period Oct-Dec and Jan-Dec 2011 has been calculated on the average number of outstanding shares for the period, amounting to 66,342,124.Earnings per share for Oct-Dec 2010 and Jan-Dec 2010 are based on the average number of outstanding issued shares for these periods which are 66,342,124 and 18,153,748 respectively. The earnings per share for the period Jan-Dec 2010 have been recalculated to reflect a 250:1 share split and two share issues, by which the amount of issued shares increased in September from 500,000 to 66,045,122, and in October to 66,342,124.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONDENSED (SEK thousand)
Profit for period	48,402	26,002	83,009	90,234
Other comprehensive income
Translation difference for the period	-1,234	-938	-230	-3,250
Other comprehensive income for the period	-1,234	-938	-230	-3,250
Total comprehensive income for period	47,168	25,064	82,779	86,984
Total comprehensive income attributable to:
Parent company shareholders	46,950	26,327	83,069	87,585
Non-controlling interests	218	-1,263	-290	-601
Total comprehensive income for the period	47,168	25,064	82,779	86,984
Shares outstanding at period's end*	66,342,124	66,342,124	66,342,124	66,342,124
Shares outstanding at period's end, incl convertible*	72,921,071	72,921,071	72,921,071	72,921,071

Average number of shares, basic* 66,342,124 66,264,645 66,342,124 18,153,748 Average number of shares, diluted* 72,921,071 68,409,954 72,921,071 18,694,484

* Outstanding shares at the end of the reporting period and weighted average number of shares before and after dilution for the period Jan-Dec 2010 have been recalculated with regards to the share split 250:1 and two share issues, where the number of shares increased from 500,000 to 66,045,122 in September, and to 66.342.124 in October.

CONSOLIDATED STATEMENT OF FINANCIAL	2011	2010
POSITION CONDENSED (SEK thousand)	31-Dec	31-Dec
Non-current assets
Goodwill	446,950	188,966
Other intangible assets	137,958	65,878
Total intangible assets	584,908	254,844
Financial non-current assets	7,608	0
Tangible non-current assets	10,754	3,660
Total non-current assets	603,270	258,504
Current assets
Inventories	459,080	251,284
Current interest-bearing receivables	0	0
Current non-interest-bearing receivables	145,555	73,066
Total receivables	145,555	73,066
Cash and cash equivalents	417,428	431,343
Total current assets	1,022,063	755,693
Total assets	1,625,333	1,014,197
Equity
Equity attributable to owners of the parent	415,849	345,665
Non-controlling interest	1,442	879
Total equity	417,291	346,544
Non-current liabilities
Non interest bearing
Deferred tax liability	40,762	26,748
Other provisions	4,877	2,397
Interest bearing
Long term loans	150,000	0
Convertible bond	214,803	207,204
Total non-current liabilities	410,442	236,349
Current liabilities
Current interest-bearing liabilities	15,000	0
Current non-interest-bearing liabilities	782,600	431,304
Total current liabilities	797,600	431,304
Total equity and liabilities	1,625,333	1,014,197

CONSOLIDATED STATEMENT OF CASH FLOWS	2011	2010	2011	2010
CONDENSED (SEK thousand)	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Cash flow from operating activities	73,135	44,259	124,261	126,162
Changes in working capital	231,584	64,660	70,473	-32,876
Cash flow from operations	304,719	108,919	194,734	93,286
Investments in subsidiaries*	-13,845	596	-336,602	-4,459
Investments in other non-current assets	-8,438	-1,907	-21,946	-5,373
Other cash flow from investing activities	0	45	0	0
Cash flow to/from investing activities	-22,283	-1,266	-358,548	-9,832
Other cash flow from/to financing activities	0	311,321	150,000	353,808
Cash flow to/from financing activities	0	311,321	150,000	353,808
Change and cash equivalents for the period	282,436	418,974	-13,814	437,262
Cash and cash equivalents at period's start	135,513	21,333	431,343	3,045
Translation difference, cash and cash equivalents	-521	-8,964	-101	-8,964
Cash and cash equivalents at period's end	417,428	431,343	417,428	431,343

* Investments in subsidiaries Jan-Dec 2011 comprises SEK 5,303 thousand acquisition of Rum21 AB, SEK 317,454 thousand acquisition of Tretti AB, see Note 1 and 2, and SEK 13,845 thousand acquisition of shares in NLY Scandinavia AB.

STATEMENT OF CHANGES IN EQUITY	2011	2010
CONDENSED (SEK thousand)	31-Dec	Jan-Dec
Opening balance	346,544	8,211
Profit for the period	83,009	90,234
Other comprehensive income	-230	-3,250
Effects of employee option program	279	-
New share issue	380	239,594
Repurchased own shares	-380	-
Acquisition of non-controlling interests with a change in control	1,535	827
Acquisition of shares from non-controlling interests without a change in control	-13,846	-21,033
Equity-part of convertible bonds	-	31,960
Closing balance	417,291	346,544

SEGMENT REPORTING

NET SALES	2010	2010	2010	2010	2010	2011	2011	2011	2011	2011
(SEK thousand)	Jan-Mar	Apr-Jun	Jul-Sep	Oct-Dec	Full year	Jan-Mar	Apr-Jun	Jul-Sep	Oct-Dec	Jan-Dec
Entertainment	328,941	272,972	328,270	561,971	1,492,154	361,215	365,788	429,844	772,080	1,928,927
Fashion	69,035	116,971	112,488	134,673	433,167	113,959	184,374	157,173	275,136	730,642
Sport & Health	71,757	67,684	72,983	72,234	284,658	96,660	90,001	93,412	97,065	377,138
Home & Garden	-	-	-	-	-	-	48,946	145,970	172,134	367,050
Total operational business areas	469,733	457,627	513,741	768,878	2,209,979	571,834	689,109	826,399	1,316,415	3,403,757
Group central operations	-	-	-	55	55	7,961	11,624	8,638	14,127	42,350
Eliminations	0	0	0	0	0	-7,974	-11,622	-8,638	-14,127	-42,361
CONSOLIDATED TOTAL	469,733	457,627	513,741	768,933	2,210,034	571,821	689,111	826,399	1,316,415	3,403,746
Intersegment sales Entertainment	-	-	-	-	-	27	-	-	-	27
Fashion	-	-	-	-	-	-	-	-	-	-
Sport & Health	-	-	-	-	-	-	-	-	-	-
Home & Garden	-	-	-	-	-	-	-	-	-	-
Group central operations	-	-	-	-	-	7,947	11,622	8,638	14,127	42,334
Total	0	0	0	0	0	7,974	11,622	8,638	14,127	42,361
OPERATING PROFIT	2010	2010	2010	2010	2010	2011	2011	2011	2011	2011
(SEK thousand)	Jan-Mar	Apr-Jun	Jul-Sep	Oct-Dec	Full year	Jan-Mar	Apr-Jun	Jul-Sep	Oct-Dec	Jan-Dec
Entertainment	24,186	11,175	20,951	43,422	99,734	18,191	9,861	23,743	50,474	102,269
Fashion	3,857	8,906	1,458	1,857	16,078	-4,259	8,292	2,349	13,489	19,871
Sport & Health	10,126	7,983	8,844	8,405	35,358	10,823	9,620	9,046	10,257	39,746
Home & Garden	-	-	-	-	-	-	638	3,302	1,231	5,171
Total operational business areas	38,169	28,064	31,253	53,684	151,170	24,755	28,411	38,440	75,451	167,057
Group central operations	-258	-210	-473	-15,601	-16,542	-4,617	-9,306	-19,762	-4,146	-37,831
CONSOLIDATED TOTAL	37,911	27,854	30,780	38,083	134,628	20,138	19,105	18,678	71,305	129,226

PARENT COMPANY INCOME STATEMENT	2011	2010	2011	2010
CONDENSED (SEK thousand)	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Net Sales	14,127	55	42,350	55
Gross profit	14,127	55	42,350	55
Administration expenses	-20,491	-16,479	-61,910	-17,814
Operating profit	-6,364	-16,424	-19,560	-17,759
Net interest & other financial items	-1,541	-759	-12,631	-8,321
Group contribution received	124,000	0	124,000	0
Group contribution paid	-16,013	0	-16,013	0
Change in excess depreciation	-3	0	-3	0
Profit before tax	100,079	-17,183	75,793	-26,080
Tax	-26,359	4,342	-20,133	6,682
Net income for the period	73,720	-12,841	55,660	-19,399

CONDENSED (SEK thousand)
Profit for period	73,720	-12,841	55,660	-19,399
Other comprehensive income	0	0	0	0
Total comprehensive income for period	73,720	-12,841	55,660	-19,399

PARENT COMPANY STATEMENT OF FINANCIAL POSITION	2011	2010
CONDENSED (SEK thousand)	31-Dec	30-Dec
Non-current assets Shares and participating interests		280,282
Equipment	683,918	0
Total non-current assets	28	280,282
	683,946
Current assets
Current interest-bearing receivables	17,713	27,399
Current non-interest-bearing receivables	131,502	139,815
Cash and cash equivalents	356,275	407,444
Total current assets	505,490	574,658
Total assets	1,189,436	854,940
Equity
Restricted equity		133,484
Unrestricted equity	133,864	216,283
Total equity	271,842	349,767
	405,706
Non-current liabilities
Convertible bonds	214,803	207,204
Interest-bearing liabilities	150,000	0
Deferred tax liability	9,257	11,255
Provisions	4,877	2,660
Total non-current liabilities	378,937	221,119
Current liabilities
Other interest-bearing liabilities	344,747	241,311
Non-interest-bearing liabilities	60,046	42,743
Total current liabilities	404,793	284,054
Total equity and liabilities	1,189,436	854,940

KEY RATIOS

	2010	2010	2010	2010	2010	2011	2011	2011	2011	2011
KEY RA T IOS	Jan-Mar	A pr-Jun	Jul-Sep	Oc t-Dec	Full y ear	Jan-Mar	A pr-Jun	Jul-Sep	Oc t-Dec	Full y ear
GROUP
Sales grow th (% )	21.3	32.3	29.1	25.0	26.6	21.7	50.6	60.9	71.2	54.0
Change in operating ex pens es (% )	17.8	32.7	31.9	29.5	28.0	27.8	65.3	66.8	49.5	59.5
Operating margin (% )	8.1	6.1	6.0	5.0	6.1	3.5	2.8	2.3	5.4	3.8
Gros s prof it margin (% )	19.9	20.7	18.1	18.1	19.0	19.2	18.3	14.7	17.4	17.3
Return on c apital employ ed (% )	41.3	44.9	44.1	36.1	36.1	27.0	20.6	15.8	18.7	18.7
Return on equity (% )	62.7	81.0	62.0	60.6	60.6	35.4	24.1	17.5	22.0	22.0
Equity /as s ets ratio (% )	5.6	8.6	42.5	34.2	34.2	38.4	29.2	28.9	25.7	25.7
Net debt (SEK million)	186.9	189.7	-81.0	-224.1	-224.1	-52.2	187.1	242.3	-37.6	-37.6
Cas h f low s f rom operations (SEK million)	-65.3	9.2	40.5	108.9	93.3	-161.9	80.4	-28.4	304.7	194.7
Earnings per s hare (SEK)*	49.46	39.00	4.05	0.41	5.00	0.19	0.16	0.18	0.73	1.26
Equity per s hare (SEK)*	65.61	103.53	4.70	5.22	5.22	5.43	5.68	5.86	6.29	6.29
Earnings per s hare (SEK)**	0.37	0.29	0.30	0.41	1.37	0.19	0.16	0.18	0.73	1.26
Equity per s hare (SEK)**	0.44	0.77	4.65	5.22	5.22
						5.43	5.68	5.86	6.29	6.29
No. of v is its (thous and)	26,102	23,807	26,774	37,419	114,102	34,092	35,611	41,289	60,765	171,758
No. of orders (thous and)	1,065	963	1,126	1,557	4,711	1,250	1,235	1,358	2,151	5,996
A v erage s hopping bas ket (SEK)	419	465	443	453	442	438	536	588	587	546
En te r tain m e n t
No. of v is its (thous and)	16,490	13,011	15,875	23,189	68,564	18,864	16,061	18,991	27,519	81,436
No. of orders (thous and)	861	697	867	1,260	3,685	935	818	954	1,494	4,201
A v erage s hopping bas ket (SEK)	357	368	364	400	375	363	424	429	484	433
Fas h io n
No. of v is its (thous and)	7,997	9,420	9,352	12,543	39,312	12,848	16,814	17,892	27,426	74,980
No. of orders (thous and)	107	173	159	196	635	173	271	224	445	1,113
A v erage s hopping bas ket (SEK)	639	659	693	661	655	643	657	686	608	641
Sp o r t & He alth
No. of v is its (thous and)	1,616	1,376	1,547	1,687	6,226	2,380	2,036	2,207	2,863	9,486
No. of orders (thous and)	9 7	9 3	100	101	391	142	132	129	142	545
A v erage s hopping bas ket (SEK)	722	727	731	709	727	681	679	723	688	692
Ho m e & Gar d e n
No. of v is its (thous and)	-	-	-	-	-	-	699	2,199	2,958	5,856
No. of orders (thous and)	-	-	-	-	-	-	1 4	5 1	7 1	136
A v erage s hopping bas ket (SEK)	-	-	-	-	-	-	3,377	2,781	2,450	2,696

the f irs t three quarters 2010 hav e been rec alc ulated w ith regards to a s plit of 250:1 in s eptember 2010. The number of s hares f or thes e periods is 500,000. Earnings per s hare f or the f ull y ear 2010 and Oc t-Dec 2010 hav e, in addition to the rec alc ulation f ollow ing the 250:1 s plit, been rec alc ulated w ith regards to s hare is s ues , w here the number of s hares has inc reas ed f rom 500,000 to 66,342,124. The w eighted av erage number of s hares f or the f ull y ear 2010 is 18,153,748 and 66,264,645 f or the period Oc t-Dec 2010. ** Calc ulated on pres ent number outs tanding of s hares , as per Dec ember 2011, amounting to 66,342,124.

De fin itio n s
Equity /as s ets ratio	Equity plus non-c ontrolling interes ts as a perc entage of total as s ets
Net debt (+) / Net c as h (-)	Interes t-bearing liabilities les s interes t-bearing c urrent and non-c urrent as s ets and c as h and c as h equiv alents
No. of v is its	Gros s number of v is its
Return on equity	Net inc ome f or the las t f our quarters as a perc entage of av erage equity f or the las t f our quarters
Return on c apital employ ed	Operating inc ome f or the las t f our quarters as a perc entage of av erage of total non-c urrent as s ets , c as h and c as h equiv alents , and net w orking c apital reduc ed f or prov is ions , f or the las t f our quarters
Earnings per s hare	Earnings f or the y ear attributable to the parent c ompany 's s hareholders div ided by av erage number of s hares
Equity per s hare	Equity attributable to the parent c ompany 's s hareholders div ided by av erage number of s hares

Note 1

Final purchase price allocation for Rum21 AB SEK thousand	Recognised values
Net identifiable assets and liabilities	7,195
Non-controlling interest	-1,535
Goodwill on acquisition	8,453
Consideration transferred	14,113
Deferred payment	-5,000
Contingent consideration	-2,450
Cash in acquired company	-1,360
Net cash flow	5,303

Note 2

Preliminary purchase price allocation for Tretti AB SEK thousand	Recognised values
Net identifiable assets and liabilities
	96,163
Goodwill on acquisition	249,620
Consideration transferred	345,783
Deferred payment	-5,084
Cash in acquired company	-23,245
Net cash flow	317,454