zooplus SE — Annual Report 2011

Mar 30, 2012

Key figures

Total sales and EBIT 2007-2011

Total sales and EBIT Q1-Q4/2011

Sales origin in%

New customer acquisition performance in thousand

5 year performance overview

		2007	2008	2009	2010	2011
Total sales	in EUR mm	55.4	85.1	129.1	193.6	257.1
Sales	in EUR mm	52.5	80.3	122.6	177.8	244.8
Gross profit	in EUR mm	22.5	35.1	51.9	84.1	100.0
Gross margin	in%	40.6	41.2	40.2	43.4	38.9
EBIT	in EUR mm	0.91	0.7	-1.9	3.3	-7.6
Overall result	in EUR mm	0.63	5.76	-1.5	2.0	-6.0
Consolidated profit/loss per share 1	in EUR  /share	0.38	2.41	-0.61	0.38	-1.07
Balance sheet total	in EUR mm	11.6	22.7	30.5	58.4	75.1
Inventory	in EUR mm	3.3	9	12.5	20.6	25.5
Total equity	in EUR mm	4	9.9	9.5	21.2	35.5
Equity ratio	in%	34.5	43.6	31.1	36.3	47.3
Employees	number	51	79	108	143	191
New customers accounts	in thousand	302	472	706	989	1.213

undiluted and starting in 2010 taking into account the capital increase from company funds carried out in 2011

Statement of comprehensive income Q1-Q4/2011

		Q1/2011	Q2/2011	Q3/2011	Q4/2011
Total sales	in EUR mm	60.6	58.0	66.5	72.0
Sales	in EUR mm	56.3	56.0	64.1	68.4
EBIT	in EUR mm	-1.2	-5.1	-1.5	0.2
Overall result	in EUR mm	-1.0	-3.8	-1.2	0.0

Highlights

Total sales up 33% to EUR 257 million

New logistics center in Eisenach-Hörselgau launched– Backbone for furtherEuropean expansion in place Total sales capacity rises to EUR 400 millionp.a. + x

EUR 19.7 millioncapital increase completed successfully

SDAX index member since June 2011

zooplus at a glance

Company profile zooplus AG

zooplus – set up in 1999 - is Europe's leading internet retailer for pet supplies. The company retails over 8,000 products for all major types of pets. Its product range most notably includes pet food (wet and dry food, food supplements) as well as accessories (such as scratching posts, dog baskets and toys) across all value ranges. In addition to a huge product selection, zooplus customers also benefit from a variety of interactive content and online community features.

zooplus currently operates successfully in 20 European countries. During 2011 the company generated total sales of around EUR 257 million, thereby increasing this figure more than seven-fold during the past five years. Pet supplies are a key market segment within the European general retail landscape. In 2011, sales of around EUR 19 billion were recorded within the pet supplies industry in Europe. The ongoing "humanization" of pets in key industrialized countries indicates that pet owners' purchasing behavior is undergoing profound changes and moving towards healthcare, wellness and other premium offerings. In addition, continued strong growth is expected for internet retailing in Europe overall. zooplus is therefore anticipating a continuously dynamic development on the back of this development. The company is aiming to achieve a total sales run rate of over EUR 500 million by the end of 2014.

Table of contents

zooplus at a glance	1
Company profile zooplus AG	1
To the shareholders	5
Letter of the management board	6
Report of the supervisory board	8
Corporate governance report	11
Business model	18
The share	28
Group management report	31
Business report	32
Net assets, financial position and results of operations	37
Opportunities and risks	42
Key features of the internal control system and the risk management system	44
Outlook	45
Remuneration report	46
Information under takeover law	47
Statement regarding Section 312 AktG	50
Other	50
Overall outlook	50
Consolidated financial statement	51
Consolidated balance sheet	52
Consolidated statement of comprehensive income	54
Group cash flow statement	55
Group statement of changes in equity	57
Notes	58
Declaration of the legal representatives	95
Auditors' opinion	97
Imprint	98

To the shareholders

Letter of the management board	6
Report of the supervisory board	8
Corporate governance report	11
Business model	18
The share	28

Letter of the Management Board

Dear Shareholders,

2011 was a challenging year for zooplus which over time turned increasingly positive after a particularly difficult first half. Despite some temporary adverse circumstances, we took great strides forward towards achieving our long-term corporate goals during the year under review. We are therefore looking confidently towards 2012 and beyond. zooplus continues to rank as the undisputed and rapidly growing eCommerce market leader within European pet supplies. The company is continuing its geographical expansion as well as the penetration of existing markets at high pace.

This report provides a detailed summary of the financial year 2011. Overall, the past year will be remembered for establishing the necessary operating structures to achieve our medium-term corporate goal of generating total sales in excess of EUR 500 million p.a.

Here is an overview of the key steps made during the past year:

• a total sales growth from EUR 194 million to over EUR 257 million on the back of sustained high growth rates across all key markets.
• the acquisition of over 1.2 million new customers in tune with a substantially increased degree of acquisition efficiency. A continuously strong degree of customer loyalty represents predictable future sales within this new customer group as well as with all customers acquired over the last 12 years.
• The opening of a new central logistics hub desiged for German and neighboring markets initially had a negative impact on our earnings in the year under review, but ultimately represents an important platform for our continued strong expansion in the years ahead.
• the positive development of our share price during the year under review as well as the admittance of zooplus AG to the SDAX index of the Frankfurt Stock Exchange.

The challenges for the future remain clear on the back of our unaltered long term strategy. The primary focus of our activities remains to manage our growth and to Europeanize the company on the back of an ongoing and steady development of our logistics and IT infrastructure. This will contribute to serve our overriding aim of tangibly setting ourselves apart from bricks-and-mortar as well as online competitors within our segment from a customer perspective. At the same time, we also want to ensure that the earnings and efficiency potentials held by zooplus are realized to the greatest extent possible in the future.

We firmly believe that a clear and unequivocal growth-driven strategy will sustainably increase zooplus' company value during the financial year 2012. That is why we will continue to deliberately seek further growth opportunities as opposed to any premature earnings maximization. For 2012, we therefore expect a further increase in our absolute growth in conjunction with a neutral operating overall result.

In addition, we have set ourselves the following medium-term goals which we, as the Management Board, would like to be measured by:

we are aiming to:

• achieve a total sales run rate of at least EUR 500 million no later than by the end of 2014
• always be at least five times larger than any other competitor within our online segment
• firmly establish zooplus as a top three European pet retail player on par with our two largest offline rivals

Numerous discussions with our shareholders, the Supervisory Board, business partners and of course our employees have shown that this strategy is widely agreed with. We are pleased with this vote of confidence which will spur us on further during 2012.

We would like to thank you for your continued support over the past financial year.

Dr. Cornelius Patt Florian Seubert Andrea Skersies Guido Bienhaus (Chairman)

Report of the Supervisory Board

Dear Shareholders,

The financial year 2011 was a challenging but successful year for zooplus AG – in sum: twelve months in which the company achieved many of its goals. zooplus AG once again succeeded in substantially increasing sales and continuously improving its competitive position. zooplus AG has now cemented its status as online market leader across all key European markets, thereby even extending its already strong market position - although the overall result for 2011 was substantially impacted negatively, particularly in the first half of the year, in the course of doing so. The future focus is firmly set on European expansion. In order to ensure that current growth rates are sustained during the coming years, the company has invested in expanding both its structures and capacity. Financing for the continuous expansion was secured by successfully carrying out the January 2012 capital increase, amongst other measures.

The company has also firmly established itself on the capital markets on the back of its listing on the Prime Standard of the Frankfurt Stock Exchange. Trading volumes have constantly been on the rise, and the development of the share price has been particularly pleasing compared to the benchmark indices SDAX and DAXsubsector All Retail Internet. Due to the continuously positive development in trading volumes and market capitalization, zooplus AG's shares have been admitted to the SDAX index on June 29, 2011.

The company's efforts in the areas of corporate governance and financial control were also expanded so that both the increased external requirements resulting from the highly regulated Prime Standard market segment as well as from additional internal requirements were met. All in all, the Supervisory Board believes that the financial year 2011 was a positive one for zooplus.

Cooperation with the Management Board

During the financial year 2011, the Supervisory Board performed its tasks according to the law, the articles of incorporation and the bylaws, and constantly monitored and advised the Management Board in its work. The Supervisory Board can once again look back on close and constructive cooperation with the Management Board. Regular, up-to-date and comprehensive reporting by the Management Board allowed the Supervisory Board to deal in detail with the company's standing and development. When reporting on the course of business and company policy, the Management Board covered all relevant issues concerning forecasting, business development, corporate risks and risk management. The Supervisory Board was included directly in any decisions of fundamental importance for the company.

Supervisory Board meetings

The Supervisory Board held a total of four face-to-face meetings, in which it dealt in depth with the company's financial and business development as well as the operating environment during the past financial year based on written and verbal reports by the Management Board. There was also constant contact between the Supervisory Board and Management Board outside these meetings, discussing issues relating to the company's strategic alignment, business development, risk management as well as key individual measures. All of the transactions and activities that require the Supervisory Board's approval by law or according to the articles of incorporation were discussed in detail with the Management Board, and all necessary resolutions were passed by the Supervisory Board accordingly. At times this also took place through telephone conferences.

In addition to discussions about the business and strategic development of the company, the Supervisory Board also advised on matters such as the approval of the 2010 annual financial statements and the ongoing international expansion of zooplus AG.

Conflicts of interest on the part of Management Board and Supervisory Board members, which must be disclosed to the Supervisory Board immediately and reported to the General Meeting, did not occur during the past financial year.

Corporate governance

The Supervisory and Management Boards are aware that good corporate governance is in the best interest of our shareholders and forms a key foundation of the company's capital markets success.

Together with the Management Board, we issued a declaration of conformity pursuant to section 161 of the German Stock Corporation Act (AktG) in March 2012 which was made permanently accessible on zooplus AG's website (www.zooplus.de). A separate report is provided on implementation of the Corporate Governance Code as part of this annual report.

Personnel changes within the Supervisory Board

Effective from the end of the Ordinary General Meeting on May 26, 2011, Mr. Felix von Schubert stepped down from the Supervisory Board. Mr. Michael Rohowski was newly appointed to the Supervisory Board, while Mr. Frank Seehaus and Dr. Norbert Stoeck were reappointed. Mr. Rohowski was elected as Chairman of the Supervisory Board during the first meeting of the Supervisory Board after the General Meeting.

Annual and consolidated financial statements as of December 31, 2011

During the Supervisory Board's meeting to discuss the annual financial statements on March 15, 2012, the Supervisory Board dealt in depth with the documents for the annual financial statements and auditor's report, in particular the annual financial statements prepared according to German accounting standards (HGB) and the consolidated financial statements prepared according to IFRS, each as of December 31, 2011, and the company's management report and Group management report for the financial year 2011. The auditor's report, the financial statements prepared by the Management Board and the report on the situation of zooplus AG and the Group were presented to us in good time, which gave us sufficient opportunity to review these.

The auditor Schaffer WP Partner GmbH Wirtschaftsprüfungsgesellschaft, Äußere Sulzbacher Straße 118, 90941 Nuremberg, Germany, had previously audited the financial statements. There are no concerns regarding the auditor's independence. According to the auditor's opinion, the single and consolidated financial statements in compliance with the respective accounting standards give a true and fair view of the net assets, financial position and results of operations as well as the cash flows of the company and Group. The auditor issued unqualified opinions in each case. In addition, as part of the audit of the risk management system, the auditor ascertained that the Management Board had put the relevant measures in place which are required under section 91 (2) AktG in order to facilitate an early recognition of risks which could endanger the company's continued existence.

Representatives from the auditors were present during the discussions on the single and consolidated financial statements and reported on key findings of the audit and were also available to provide the Supervisory Board with additional information. Upon thorough examination of the annual financial statements and the management report, the Supervisory Board concurred with the auditor's report. No objections were to be raised. The Supervisory Board therefore approved the annual financial statements and consolidated financial statements in its meeting on March 15, 2012. The annual financial statements of zooplus AG are therefore fully adopted. The Supervisory Board also approved the management report, the Group management report and the judgments made regarding the further development of the company.

Dependency report

At its meeting on March 15, 2012, the Supervisory Board reviewed the report from the zooplus AG Management Board pursuant to section 312 AktG regarding relationships with associated companies for the financial year 2011 ("Dependency report"). No objections were raised by the Supervisory Board after reviewing the dependency report.

The auditor reviewed the dependency report and provided the following opinion: "After our mandatory review and opinion, we confirm that the actual information provided by the report is correct."

The Supervisory Board received the dependency report and the auditor's report in good time and reviewed the dependency report from the Management Board and the auditor's report from the auditor. The Supervisory Board discussed its findings with the Management Board and the auditor as part of its meeting on March 15, 2012. The Supervisory Board concurs with the results of the review of the dependency report by the auditor and, after the final results of the discussions and its own review of the dependency report, it believes that the statements made by the Management Board are accurate and no objections therefore have to be raised against the Management Board's final declaration.

On behalf of the Supervisory Board, I would like to thank the Management Board and all of the employees at the Group companies for their hard work and dedication in 2011.

Munich, March 2012

On behalf of the Supervisory Board

Michael Rohowski Chairman of the Supervisory Board

Corporate governance report

The German Corporate Governance Code aims to create transparent general conditions for company management and control. zooplus considers good corporate governance as an important measure to increase trust on the part of shareholders, employees and the general public. zooplus applies the recommendations of the Code with some minor exceptions. These deviations, including the corresponding clauses of the Code, are explicitly outlined within this report.

Cooperation between the Management and Supervisory Boards

As a German public limited company (Aktiengesellschaft, AG), zooplus is subject to the German Stock Corporation Act and employs a dual-pronged management and control structure. The tasks contained within this structure are performed by members of the Management and Supervisory Boards.

The Supervisory Board and the Management Board work together intensively. As part of its monitoring and advisory role, the Supervisory Board works closely together with the Management Board both through meetings and outside this context. Both boards share the goal of achieving a sustained increase in company value.

The Management Board informs the Supervisory Board in a regular, prompt and comprehensive manner about all relevant company issues relating to planning, business development, risk positions, risk management and compliance. The information provided by the Management Board investigates any business developments which deviate from the proposed plans and objectives, providing explanations for these deviations. In a monthly jour fixe between the chairman of the Management Board and the chairman of the Supervisory Board, important questions concerning the business development and other current topics are discussed. Critically assessing the course of business is one of the Supervisory Board's core tasks.

The Management Board's concrete tasks and duties in relation to the Supervisory Board are set out in the rules of procedure for the Management Board. The rules of procedure specify the Management Board's obligations in regards to informing and reporting to the Supervisory Board, and outline the requirement that the Supervisory Board provides its approval to any transactions of fundamental importance to the business.

The company has taken out directors and officers liability insurance for board members of the zooplus Group (D&O insurance). This covers the personal liability risk for the eventuality that Management Board members are held responsible for damage to assets as part of the execution of their job. Item 3.8 of the German Corporate Governance Code recommends that companies carry liability insurance (so-called directors and officers liability insurance – D&O) with a deductible of at least 10% of the damage up to at least one-and-a-half times the fixed annual remuneration for its Management and Supervisory Board members. The current D&O insurance includes a deductible for members of the Management Board in line with statutory requirements. In addition, no deductible is in place for members of the Supervisory Board and none is planned in future; this represents a deviation from the recommendation which is stated in the declaration of conformity. The Management and Supervisory Boards believe that a deductible does not change the sense of responsibility and loyalty with which the members of the boards perform their tasks and functions.

Deviation from Item 5.1.2, 5.4.1 of the Code - Members of the Management Board and Supervisory Board are not subject to any age restrictions. Membership of the Management and Supervisory Board should be based on the professional qualifications and experience of the candidate and their individual ability to perform, irrespective of a fixed age limit.

In the past financial year, the company did not issue any loans to members of the Supervisory Board or Management Board. However, zooplus AG granted the members of its Management Board a permanent advance payment (EUR 41 thousand) to cover their travel expenses.

Management board

zooplus AG's Management Board is responsible for managing the company in line with provisions of the German Stock Corporation Act, the company's rules of procedure, as well as its organizational chart outlining areas of responsibilities. The Management Board devises the strategic plans for the company, agrees upon these plans with the Supervisory Board and, having done so, ensures their implementation.

The Management Board consists of the following four members:

Name	Function	Contract begin	Contract end
Dr. Cornelius Patt	CEO	01.01.2009	31.12.2013
Florian Seubert	CFO	01.01.2009	31.12.2013
Andrea Skersies	CMO	01.07.2009	30.06.2013
Guido Bienhaus	CIO	01.07.2009	30.06.2013

A Chairman of the Management Board was elected. The members of the Management Board have clearly defined and separate tasks. As set out in the respective applicable schedule of responsibilities for the Management Board and Management Board resolutions, each Management Board member is solely responsible for his or her own specific area. Members of the Management Board are also jointly responsible for the overall management of the company.

The Supervisory Board is responsible for setting the remuneration system as well as the individual remuneration of members of the Management Board. It regularly reviews the remuneration structure to ensure its appropriateness. The Management Board's remuneration comprises three components:

• Non-performance related salary paid monthly
• Performance-related salary components
• Variable components with a long-term incentive

The company does not provide individualized information on the remuneration of specific members of the Management Board as a result of the resolution by the General Meeting on April 27, 2007. At the General Meeting 2012, the company will propose the resolution to continue not publishing the remuneration of individual Management Board members in the future and therefore continue to deviate from the recommendation within the meaning of Item 4.2.5 in connection with Item 4.2.4. In all other respects, a remuneration report is prepared according to the recommendations of Item 4.2.5.

Supervisory Board

The Supervisory Board monitors and advises the Management Board on conducting its business. It reviews the annual financial statements, the management report and the proposed appropriation of net retained profit, as well as the consolidated financial statements and group management report. Taking the auditors' reports into account, it adopts zooplus AG's annual financial statements and approves the consolidated financial statements. The Supervisory Board's tasks also include appointing members of the Management Board.

A new Supervisory Board was elected at the General Meeting on May 26, 2011. Mr. Felix von Schubert stepped down from the Supervisory Board following the General Meeting 2011. The period of office for the current members of the Supervisory Board terminates at the end of the Ordinary General Meeting in 2016. The Supervisory Board now consists of the following members:

• Michael Rohowski, Chairman
• Frank Seehaus, Deputy Chairman
• Dr. Norbert Stoeck

The Supervisory Board discusses the business development, forecasts as well as the company's strategy and its implementation with the Management Board at regular intervals. As part of the strategic evaluation of the company, its risk management and reporting, the Management Board communicates with the entire Supervisory Board. In an effort to make work as efficient as possible, communications are not limited to the Chairman of the Supervisory Board.

The members of the Supervisory Board do not have any board functions or advisory tasks at key competitors of the company, or have any professional or personal connection with zooplus AG or its Management Board.

The Supervisory Board has set itself rules of procedure. These define the Supervisory Board's tasks, obligations and internal organization as well as outline details on non-disclosure requirements, the handling of conflicts of interests and the Management Board's reporting duties.

Items 5.2 and 5.3 of the Code recommend forming Supervisory Board committees and distributing functions in the Supervisory Board committees. The Supervisory Board did not form any committees. The entire board is responsible for ensuring that tasks are performed responsibly.

With regards to Item 5.4.1 of the Code, the Supervisory Board has set itself the following targets for its composition:

• Professional qualifications: Professional qualifications and skills are an important prerequisite for operating as a member of the Supervisory Board. When examining the candidates proposed for election to the Supervisory Board, the focus is placed on their knowledge, abilities and professional experience, as well as their ability to perform the duties of a member of the Supervisory Board in an international company and to uphold the zooplus Group's image in public.
• Internationality: Moreover, in view of the company's international orientation, it should also be ensured that the Supervisory Board includes a sufficient number of members with long-standing experience in international business.
• Diversity: Overall, the aim of the composition of the Supervisory Board is to allow its members to optimally execute their monitoring and advisory functions through diversity. In preparation of its election proposals, the Supervisory Board should also include qualified women in the selection process. These female candidates are to be taken reasonably into account in election proposals.
• Avoiding potential conflicts of interest: The Supervisory Board should include a sufficient number of independent members. Material and non-temporary conflicts of interest, for example from positions in executive bodies or consulting roles with key competitors to zooplus AG should be avoided. In addition, the members of the Supervisory Board should have sufficient time available to carry out their duties, ensuring that they can perform these with the due care and regularity required.
• Age limit: Membership of the Supervisory Board should be based on the professional qualifications and experience of the candidate and their individual ability to perform, irrespective of a fixed age limit.

The aims listed above with regards to the composition of the Supervisory Board have been implemented to the following extent up to now: The aims relating to "Professional qualifications", "Internationality" and "Avoiding potential conflicts of interest" have already been implemented. The "Diversity" aim was also taken into account when searching for a suitable candidate for the Supervisory Board. Although no suitable female candidates with the required international experience were available for the pool of candidates put forward for electing the Supervisory Board at the Ordinary Meeting on May 26, 2011, the Supervisory Board has made it an objective to continue to search for suitable female candidates for a position on the Supervisory Board.

The Supervisory Board has reviewed the efficiency of its activities.

Deviating from Item 5.4.3 Sentence 2 of the Code, proposed candidates for Supervisory Board chairmanship are not announced to shareholders in accordance with Section 107 of the German Stock Corporation Act (AktG). The Supervisory Board selects a Chairman and Deputy Chairman from within its ranks at the first meeting after its election by the General Meeting.

The members of the Supervisory Board currently receive a fixed remuneration of EUR 5,000.00 each for every full financial year that they belong to the Supervisory Board, the Chairman of the Supervisory Board receives twice this amount. Deviating from Item 5.4.6 of the Code, the Deputy Chairman of the Supervisory Board is not taken into account in the remuneration structure of Supervisory Board members as the workload of the Deputy Chairman is not largely different from that of the remaining Supervisory Board members. In addition, the remuneration of the Supervisory Board does not contain any performance-related component, contrary to Item 5.4.6. The company believes that this would not provide any additional incentive for proper fulfillment of the Supervisory Board's monitoring and consulting tasks.

Shareholders and General Meeting

The shareholders are able to exercise their rights and vote at the General Meeting. Each share grants one vote. No shares with multiple voting rights, preferential voting rights or maximum voting rights exist.

The Management Board presents the General Meeting with the annual financial statements and consolidated financial statements. The General Meeting decides upon the appropriate use of any net retained profits and exonerates the members of both the Management Board and the Supervisory Board from their responsibilities. Moreover, the General Meeting is empowered to make changes to the company's articles of incorporation, elect members of the Supervisory Board and select the auditors. In the year under review, the General Meeting also decided on the capital increase from company resources.

The General Meeting takes place annually. The Management and Supervisory Board give account of the preceding financial year. At the General Meeting, shareholders can either exercise their voting rights in person, be represented by an authorized proxy of their choice or by a proxy appointed by the company and obliged to vote

15

as per instruction. Deviating from Item 2.3.3 Sentence 2, the company is not providing the option allowed by the articles of incorporation of postal voting for the General Meeting 2012. Postal voting does not offer shareholders any additional value in their personal realization of their rights compared to the voting rights representation offered by zooplus AG in writing up to the day of the General Meeting.

The Chairman of the Meeting ensures that the General Meeting proceeds in a timely manner. The Management Board is responsible for preparing and publishing the legally required reports and documents presented at the General Meeting, including the annual report. These documents, along with the Meeting's agenda, are readily accessible on the company's website.

Transparency

The Management Board and public relations personnel ensure that shareholders, financial analysts, the media and interested general public receive open and prompt information on the company's situation and any major changes to the business.

Insider information directly affecting the company is published immediately by zooplus, even outside the regular reporting schedule. In an effort to ensure that shareholders receive comprehensive and prompt information, zooplus also uses the internet. The company's website is easy to navigate. It also features a financial calendar which includes the key dates in advance (e.g. the publication of the annual and interim reports, the General Meeting).

In accordance with the provisions of Section 15a of the German Securities Trading Act (WphG), zooplus discloses securities transactions promptly upon receiving the corresponding information (Directors' Dealings). In addition, zooplus AG publishes the interests of Management Board and Supervisory Board members in zooplus AG in line with legal requirements, if the legal reporting levels pursuant to Section 21 of the German Securities Trading Act are exceeded or undercut. Information on securities transactions made by members of the Management Board and Supervisory Board which were reported for the 2011 financial year is included in the so-called "Annual Document" prepared in line with Section 10 of the German Securities Trading Act. This document also contains all the publications made in accordance with capital market regulations which zooplus released during the financial year. Deviating from the recommendations contained in Item 6.6 para. 2 of the Code, the personal sphere of the people involved is protected by not publishing any further information about shares owned by the Management Board and Supervisory Board members.

In contrast to Item 7.1.2 Sentence 4, the interim reports are each published at the latest two months after the end of the reporting period, and therefore during the two-month period required by the Frankfurt Stock Exchange's regulations for listing in the Prime Standard. zooplus AG believes that this deadline is sufficient to ensure proper accounting. As it believes that sales are a key indicator of the company's success, the company will publish its preliminary sales as soon as possible after the end of the respective reporting period in the future.

Item 7.1.3 in connection with Item 4.2.5 of the Code recommends including concrete information on share option programs and similar securities-oriented incentive systems employed at the company in the corporate governance report or in the remuneration report. The company does not have any securities-oriented incentive systems. The annual report includes more detailed information on zooplus AG's share option program. The Management and Supervisory Boards believe that this information is sufficient for investors and the general public.

Accounting and Auditing

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Since the 2005 financial year, accounting at group level has been carried out in accordance with the International Financial Reporting Standards (IFRS) while the single-entity statements are completed in adherence to German standards (Code of Commercial Law - HGB). Reporting with the annual financial statements and quarterly interim reports is made in line with statutory requirements and stock market regulations. According to international standards, the annual report and company website are also published in English, and the annual and interim reports are published online.

The Management Board prepares the consolidated financial statements and these are examined by the auditor and the Supervisory Board.

The appointed auditors issued written confirmation of their neutrality. The auditors of zooplus AG agreed that the Chairman of the Supervisory Board is to be promptly informed of any possible disqualifying reasons and conflict of interests discovered in the course of the audit, if these are not resolved immediately. The auditor receives its mandate from the Chairman of the Supervisory Board who is directed in this choice by the vote of the General Meeting.

The auditor is required to inform the Supervisory Board or, if more appropriate, include mention in its audit report, of any factual contradiction between the Declaration of Conformity to the German Corporate Governance Code submitted by the Management Board and Supervisory Board and the facts as the auditor finds them.

Relationships with shareholders who are to be classified as related parties according to the applicable accounting standards are described in the notes to the consolidated financial statements.

On March 15, 2012, the auditor attended the Supervisory Board's discussion of the 2011 annual financial statements and consolidated financial statements. At this meeting, the auditor reported to the Supervisory Board on the results of the audit of the annual financial statements, the zooplus management report as of December 31, 2011 (German Commercial Code - HGB) as well as the consolidated financial statements and zooplus Group management report as of December 31, 2011 (IFRS)

zooplus AG's business model

Business model

zooplus is Europe's largest online retailer for pet products and the clear market leader in its segment by a considerable margin over its competitors. In a EUR 19 billion European market, the company operates as an exclusively Internet-based B2C retailer across 20 countries. Its product range includes pet food and accessories across all major pet supplies segments.

History

zooplus AG was set up in June 1999 and since then has successfully utilized the Internet as a sales platform for pet-related products. Its business activities have been continuously expanded in recent years. An enlarged product range, the penetration of new European markets through a focused international expansion, as well as the company's 2008 IPO are just some of the key milestones on zooplus' continuing growth path.

International presence

Since 2005, zooplus has been pursuing a systematic growth-oriented internationalization strategy, which has not only allowed the group to achieve critical mass in its German home market but also to do so in France, Italy, Spain, the Netherlands and the United Kingdom. These markets are the six largest European markets in terms of volume and are therefore of key importance to zooplus. The company has succeeded in positioning itself as online market leader in all of these markets. In addition, zooplus is active in 14 other European markets, where it also enjoys a market leadership position within the segment.

Shipments to customers are made out of two central logistics hubs: Eisenach-Hörselgau / Thuringia (Germany) and Tilburg (The Netherlands). The Hörselgau logistics center was launched in summer 2011 as a replacement for the previous site in Staufenberg / Hessen (Germany) and increases the company's overall logistics capacity to around EUR 400 million per annum. In addition, the new hub allows for an even faster, more efficient servicing of international markets based on a state-of-the-art Europe-wide logistics and fulfillment set-up.

Past experience has taught us the importance of countryspecific local product ranges and websites. That is why zooplus already operates local language websites across 14 markets, through which it also seeks to offer a large number of specific regional pet products. This offering is currently in place in Germany, the United Kingdom, the Netherlands, France, Italy, Spain, Poland, Belgium, Ireland, Finland, Denmark, Portugal, the Czech Republic and Slovakia. In Slovenia, Hungary, Sweden and Luxembourg , zooplus is currently available via its English website zooplus.com. Customers in Austria are served via zooplus.de. While the German core business continues to enjoy stable growth within a corridor of 15 to 20% annually, potential growth in our international markets is significantly larger due to factors relating to the stepby-step market expansion between 2006 and 2011. In future, our focus will remain on growing and developing existing markets as well as expanding into still untapped territories.

zooplus offers its customers an unbeatable mix of attractive prices, huge product selection and convenient home-delivery. In combination with its high-performance infrastructure, zooplus has become the clear number 1 in its segment.

zooplus' European market presence

zooplus' value chain

The company's multi-lingual customer service, fully tailored to our customers' needs, are a key factor in zooplus' internationalization strategy. The company operates several multi-lingual customer care centers in Western and Eastern Europe, as well as in South America. In the past, this structure has proven to be extremely efficient, providing effective services while offering excellent scalability. All locations are staffed by highly motivated, excellently trained employees with outstanding foreign language skills. Consequently, our planned and continuous dynamic growth will not be limited significantly by capacity restrictions in this respect.

Creating flexible, high-performance operating structures was and remains a key objective in developing the zooplus business model. These considerations are continuously taken into account across all core business areas.

Purchasing and product range

Pet supplies are an important market segment within the European retail landscape. In 2011, annual total sales of around EUR 19 billion were generated within the European Union alone. zooplus pursues an international purchasing strategy which results in a wide product selection. Overall, the company offers a wide-ranging yet distinct product range spanning all pet types and product categories to its customers. Whether specialist foods or large-dimension aquariums, zooplus

offers around 8,000 food and accessory products for dogs, cats, small animals, birds, reptiles, fish and horses – resulting in a unique selection for customers to choose from. This broad range of brands and products includes everyday staples such as recognizable brand-name food ranges generally available in specialist stores as well as zooplus' own private label and specialty products such as care products, litter, toys and other accessories.

It is essential to continuously maintain a close relationship with key suppliers and manufacturers to provide this type of product range. zooplus procures all of its products directly, i.e. without involving wholesalers or other intermediaries. zooplus purchases its products from a range of more than 100 international suppliers. This strategy is supplemented by a steadily developing private label development within key product areas. In this context, zooplus uses a diversified proprietary brand range, which has been developed in house and has already established itself as an outstanding offering for our customers. This includes dry and wet foods for dogs and cats under the Rocco, Cosma and Smilla brands, as well as additional proprietary brands (Lukullus, Catessy, Tigerino, amongst others). In strategic terms, the company attaches particular importance to consistently differentiating its products within an existing proprietary label universe around a strong brand core. The products and brands that have been launched so far generally enjoy a high level of acceptance among our customers.

zooplus product portfolio

	Dogs	Cats	Small animals	Fish	Birds	Reptiles	Horses
Canned food	 	 				
Dry food	 	 	 		 		
Food supplements							
Snacks and treats	 	 					
Accessoires		 					

zooplus private label

Other branded products

Over the medium term, private label brands will play a prominent role within zooplus' overall strategy. A constantly increasing customer base and a correspondingly higher total sales volume mean that over time the company will be able to realize substantially better purchasing terms, which in turn should help to underpin more attractive product margins. In addition, the zooplus-exclusive nature of its own private label range should contribute further towards intensifying existing customer loyalty levels. Over the coming years, zooplus is planning to increase the proportion of private label brands as a percentage of sales to at least 20 to 25%.

Logistics and information technology

National and international logistics

As of March 2012, zooplus operated two central logistics centers in Eisenach-Hörselgau (Germany) and Tilburg (the Netherlands), each with annual sales capacities of around EUR 220 and 180 million, respectively. The Staufenberg logistics center was replaced as planned by a new operation in Eisenach-Hörselgau during the second quarter of 2011.

The new main logistics center at the Eisenach-Hörselgau site is a tailor-made, state-of- the-art internet logistics center with a total annual sales capacity of around EUR 220 million. In addition, international markets can

be served more efficiently and rapidly from Hörselgau due to the specific logistics technology employed. The new site comprises a total area of around 25,000 m² and will be operated together with an international logistics partner, as is already the case in Tilburg, who will be responsible for the overall operational handling of all fulfillment processes. In order to continue to drive the company's dynamic growth in the future, both logistics centers are closely synchronized in terms of their output. Ultimately, zooplus is now capable of processing total sales of EUR 400 million per year.

Despite having outsourced its logistics operations, zooplus controls all core fulfillment processes centrally, which represents a de facto proprietary company expertise. The company exclusively employs a designated in-house team to coordinate and further develop its logistics and distribution structure. Smooth material flows, packaging efficiency and quality as well as delivery speed are critical levers for maximizing customer satisfaction, which in turn is a crucial factor for business success. Both inventory planning and supply chain management are processed through the company's proprietary systems. Deliveries to customers across Europe are dispatched via national and international parcel service providers.

21

A clear "plus" in terms of growth: The new Hörselgau hub within our pan-European logistics network

Maximum output

• 10 mm parcels per annum
• 650 output tons handled per day
• 225,000 orders per day

• 8,000 products available

• < 6 hour processing time (order to dispatch)

Providing national and international expansion capacity

Faster and more efficient production thanks to state-of-the-art logistics technology

Rapid distribution due to advantageous geographic location and transport connections

Existing and new markets can be served more efficiently within our internationalization strategy

Increased capacity for total annual sales of more than EUR 400 mm

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2015

85 129 194 257 320 500 + x

^{2 8 12 16 20 28 36 55}

Technology infrastructure

zooplus AG' performance is based on the company's proprietary back-end structures. These include the European central logistics and international supply chain management systems, as well as an integrated pan-European technology platform, which in turn allows the individual calibration of all respective national markets. All of the company's core areas, such as logistics and distribution, marketing, payment transactions, pricing and product management, purchasing and finance are controlled centrally from the company's headquarters in Munich. International offices allow for separate regional fine-tuning. These structures make it possible to generate significant economies of scale based on a continued dynamic rate of growth.

zooplus is a technology-driven online retail company. New and follow-on developments of core processes and other important systems within the business model are almost exclusively initiated and implemented in house. The aim hereby is to find perfect-fit solutions offering high flexibility within a scalable business model. External partners are called in if the company deems it sensible to supplement this internal expertise or support its ressource capacity for implementation. In the past few years, systems developed in-house as well as highly-specific software solutions within all key areas have made a decisive contribution to zooplus AG's success, and will also remain mission-critical in delivering on the company's future targets. Business areas in which these internally developed systems play a key role include:

• Pricing and margin management

• Logistics management and controlling

• National and international payment operations

• Online marketing and customer acquisition
• Working capital management and procurement
• International controlling

A smooth and reliable provision of national and international payment options is particularly important for zooplus as an online retailer. zooplus currently offers almost all leading European modes of payment. Highly advanced credit checks have allowed the company to limit default rates to a low level.

Marketing and customer acquisition

Marketing, and in particular the acquisition of new customers, plays a key role in the company's dynamic growth. One key factor in terms of marketing efficiency is to avoid any media breaks within our customers' search pattern: consequently, zooplus tends to avoid conventional advertising channels such as print, radio or TV, and focuses on online marketing in its various forms. This ranges from conventional online advertising, search engine advertising and search engine optimization to affiliate networking, the use of price comparison engines and other industry-specific online activities. In addition, zooplus employs a wide range of social media channels. As a result, we meet our customers right where they have direct and simple access to zooplus: online. As an international company, zooplus adapts all of its activities to the different countries and regions in order to achieve a most efficient overall acquisition process.

In total, the company was able to acquire around 1.2 million new customer accounts during 2011. For the future, the company will continue to focus on further expansion with correspondingly high levels of new customer acquisition. Our customer service offering to

zooplus' private label brand Rocco

existing customers is of equal importance. Ultimately, zooplus' business success is based on converting new customers into repeat customers and establishing itself as their primary pet supplies provider. Stable and attractive repeat purchasing rates among zooplus' loyal customer base – based on the regular demand for food – are the main source of the company's long-term business success. The activities outlined above contribute to realize this, as do regular special offers, customer loyalty programs, reactivation programs for dormant customer accounts and a constantly attractive pricing structure in tune with an outstanding product and service range. zooplus aims to be the clear quality and service leader amongst its industry competitors. According to the customer survey "Kundenmonitor Deutschland 2011", zooplus meets this aim as being one of the top companies with regard to total customer satisfaction. With a grade of 1.81, zooplus was the only pet supplies company amongst 29 other businesses which received a ranking better than 2.0. The "Kundenmonitor" is a cross-industry benchmarking study for customer service. Around 24,000 telephone interviews were carried out and around 12,000 people questioned via online interviews for the latest 2011 survey. Total satisfaction describes the satisfaction of customers with the services provided overall.

Market and competition

Market

Two major factors influence the development of online pet supplies retailing: the underlying growth of the European pet supplies market overall as well as the general and industry-specific development of online shopping and purchasing behavior.

In 2011, European pet supplies encompassed a total market volume of approx. EUR 19 billion. The six highvolume markets in Germany, France, United Kingdom, Spain, the Netherlands and Italy account for around EUR 16 billion of this total volume.

In addition, eCommerce has become an increasingly important retail channel in its own right. For example, online consumer retail spending in Germany alone totaled more than EUR 21 billion during 2011. Independent market experts such as Forrester Research assume that double-digit growth rates will continue to be recorded within online retailing in the coming years.

In total, zooplus is forecasting a stable to slightly increasing overall market volume for pet supplies (< 3% p. a.) on the back of stronger specific growth within the online segment (> 20% p. a.) of the pet supplies market. zooplus therefore anticipates above-average medium to long-term demand structures.

Competition

Advantages over online competitors

zooplus is confronted with a host of mostly regional small-scale online providers within all of its European markets. This includes, for example, independent pet shops with individual online shops. In addition, within the German, French and British markets, around three to four smaller competitors have been noticed, some of which are subsidiaries of larger bricks-and-mortar operators. zooplus estimates that each of these competitors generates annual sales within a single-digit million range. In addition, providers such as Amazon and eBay offer a somewhat more restricted pet supplies product range via their respective platforms. However, from an overall market perspective, all these are of limited significance.

In contrast to smaller competitors, only zooplus is structurally equipped, in terms of its size and European market leadership, to generate structural advantages from internet-specific economies of scale as well as other efficiency effects that remain unavailable to alternative providers. These advantages in areas such as national and international logistics, technology infrastructure, customer service and customer acquisition are key factors behind zooplus' outstanding competitive position. At present, zooplus does not believe that it will have to relinquish this advantage in the short to medium term. This is complemented with additional advantages with regards to brand awareness and the company's underlying financial strength.

Moreover, an existing customer base of around 4,3 million customer accounts at the end of 2011 means that zooplus is benefiting substantially from highly dynamic word-ofmouth recommendations in new customer acquisition. In addition, the company currently operates 14 countryspecific websites as well as an international Englishlanguage website – which together allow for major economies of scale.

Advantages over bricks-and-mortar competitors zooplus's business model is based on a lean, technologically efficient and scalable value creation chain in connection with an outstanding shopping experience in terms of selection, price and convenience. zooplus does not operate any offline outlets. It serves its customers across Europe from two central warehouses and offers a significantly larger product range than traditional bricks-and-mortar retailers. At the same time, the company's centralized structures and associated efficiency advantages compensate for certain disadvantages due to size differences compared with larger bricks-and-mortar pet store chains, such as in product purchasing.

Conclusion and objectives

Over the past 13 years, zooplus has succeeded in establishing itself as our market's clear online leader. Its business model creates substantial added value for its customers, which is reflected in high customer loyalty and repurchase rates. The company also believes that it will be able to sustain its past growth track and continue the success story it has delivered to date. zooplus' medium-term goal is to defend and expand its leading position within online pet supplies retail and to sustainably benefit from an anticipated further substantial growth in online retail overall. As a first mover and market leader within the online field, zooplus benefits from its unique positioning versus its bricksand-mortar competition:

• Leading full service provider of online pet supplies
• Pan-European positioning in all key consumer retail markets
• Being the highest-growth company within the segment
• Scalable technology and logistics platform
• Excellent track record in tapping and developing new markets

This successful positioning also results from the fact that shopping with zooplus could hardly be simpler from a customer viewpoint: After making a selection from up to 8,000 products online and having put these into their virtual shopping baskets, customers can pay by invoice, direct debit, credit card or other payment methods depending on their respective country of residence. The customer's order is then transferred directly to the zooplus distribution center, where it is usually packed and dispatched within a few hours. As a result, customers generally receive the goods they ordered after just one working day via their respective parcel couriers – a truly unique service. An increasing number of pet owners all across Europe are discovering the advantages of online shopping for themselves and their pets – a trend that zooplus will continue to benefit from considerably over the coming years. From the customers' perspective, zooplus above all stands for:

• Convenience due to simple ordering and rapid doorstep delivery
• Huge product selection with more than 8,000 products
• Highly attractive pricing across all food and accessories ranges
• Excellent customer service and after-sales support

There are virtually no reasons not to shop for pet supplies online.

The zooplus share

Stock Chart zooplus AG: January 1, 2011 to December 31, 2011

Overview

zooplus AG's shares were introduced to the Frankfurt Stock Exchange's Entry Standard segment on May 9, 2008. Around one and a half years later, on October 22, 2009, the company successfully moved into the Prime Standard segment (which requires the highest transparency and publicity standards). After a continuously positive development in terms of market capitalization and trading volumes, zooplus became an SDAX index member on June 29, 2011.

The zooplus share started the year with a share price of EUR 28.001 . This also marked the annual low. From the beginning of the year, the share recorded a strong if volatile performance and developed substantially better than the relevant benchmark indexes SDAX and DAXsubsector All Retail Internet overall. The share's annual high was recorded on November 9 at EUR 69.00. As of the year end date on December 31, 2011, the share price closed at EUR 43.10. This represented a

1) This takes into account the capital increase from company resources in July 2011

substantial increase of almost 54% from the beginning of the year. zooplus AG's market capitalization therefore amounted to EUR 243 million as of the year end closing.

Capital increase from company resources

As of May 26, 2011, the General Meeting resolved to increase the company's share capital out of company reserves. As part of this, the number of shares doubled. One share effectively split in two. The aim was to increase the attractiveness of the zooplus share for retail shareholders and broaden the investor base. The overall ownership structure in zooplus AG at the time of the share split remained unchanged. The capital increase from company reserves was entered into the commercial register on July 15, 2011 and became effective on July 18, 2011.

Capital increase in November/December 2011

On November 17, 2011, the Management Board of zooplus AG resolved, with the approval of the Supervisory Board, to increase the company's share capital by partially exercising the Authorized Capital 2008 from EUR 5,631,138.00 by a nominal amount of up to EUR 469,261.00 to up to EUR 6,100,399.00. 469,261 ordinary bearer shares, each with a notional interest of EUR 1.00 in the share capital, were issued. The new shares were offered to the shareholders of zooplus AG through pro-rata subscription rights at a ratio of 10:1 and a purchase price of EUR 42.00. As of December 9, 2011, zooplus announced that the capital increase was successfully completed and that a total

of 469,261 shares had been placed with shareholders. The proceeds from the capital increase are intended to further drive the company's growth and extend its European online market leadership. In addition, the capital increase also served to increase the company's equity base overall. The capital increase was entered into the commercial register on January 9, 2012. The company's share capital therefore increased to EUR 6,100,399.00.

Key data

WKN	511170
ISIN	DE0005111702
Stock exchange symbol	Z01
Trading segment	Regulated market (Prime Standard)
Type of shares	No-par value bearer shares
Share capital as of 31.12.2010	2,593,190.00
Share capital as of 31.12.2011	5,631,138.00
Share capital as of 09.01.2012	6,100,399.00
Initial listing	May 9, 2008
Initial issuing price*	EUR 13.00
Share price at the start of the financial year*	EUR 28.00
Share price at the end of the financial year	EUR 43.10
Percentage change	53.93%
Annual high*	EUR 69.00
Annual low*	EUR 26.00

Closing prices in the Xetra trading system from Deutsche Börse AG *This takes into account the capital increase from company resources in July 2011

zooplus has positioned itself as a clear-cut capital markets growth story right from the beginning. The future will be all about realizing zooplus' full potential.

Investor relations

The aim of zooplus' investor relations work is to inform the public regularly and promptly about important company-relevant information and therefore provide the best possible information about the development of the company. Maintaining and expanding the scope of trust with shareholders, analysts and other capital market participants is a top priority for zooplus AG.

Both the Investor Relations department and the Management Board are continually available as a point of contact for interested parties. In addition, investors are also offered telephone conferences and webcasts as sources of information parallel to the publication of key financial results.

In 2011, the management of zooplus AG took part in twelve roadshows as well as four capital market conferences both in Germany and internationally. This gave the company an opportunity to present the zooplus AG business model to a broad public. In addition, the company management was available for personal discussions with investors and analysts. zooplus AG is currently being followed regularly by six analysts, three of which currently recommend buying the share.

Institution	Analyst	Date	Recom mendation	Target price (EUR)
Close Brothers Seydler	Martin Decot	30.01.2012	Sell	42.50
Berenberg	Lars Dannenberg	27.01.2012	Buy	46.00
Viscardi	Robert Willis	05.01.2012	Sell	25.00
Commerzbank Dennis	Schmitt, Florian Treisch	29.11.2011	Buy	65.00
Hauck & Aufhäuser	Sascha Berresch	25.11.2011	Hold	46.00
Numis Securities	Andrew Wade	18.11.2011	Buy	60.00

Listing based on the analyst reports available as of February 29, 2012

General Meeting 2011

The Ordinary General Meeting took place on May 26, 2011 in Munich, Germany. A total of 70.92% of the capital and voting rights were represented. The attendees concurred with the Management Board's report regarding business development in 2010 as well as the outlook for the current financial year. All draft resolutions, including the proposal to increase the share capital using company resources, were approved unanimously.

Financial calendar 2012

March 30, 2012	Annual Report 2011 published
April 20, 2012	Preliminary sales figures Q1 2012
May 21, 2012	Publication of Quarterly Report Q1 2012
May 22, 2012	Ordinary General Meeting 2012
July 20, 2012	Preliminary sales figures for H1 2012
August 20, 2012	Publication of Semi-annual Report H1 2012
October 22, 2012	Preliminary sales figures for Q3 2012
November 12, 2012	Publication of 9M Report 2012
November 12-14, 2012	German Equity Forum

Shareholder structure

*According to the definition of the Deutsche Börse the free float amounts to 49.96% (as of March 30, 2012); according to published voting rights notifications and information by investors

Group management report

Business report	32
Net assets, financial position and results of operations	37
Opportunities and risks	42
Key features of the internal control system and the risk management system	44
Outlook	45
Remuneration report	46
Information under takeover law	47
Statement regarding Section 312 AktG	50
Other	50
Overall outlook	50

Group management report

Fiscal year 2011

1. Business and underlying trading conditions

a. Group structure and business activities

i. Divisions

zooplus AG was founded in Munich in 1999, which makes 2011 the company's thirteenth year in business. As an online retail company, zooplus sells pet supplies directly to private customers via the Internet. zooplus AG is positioned as the clear online market leader in Europe in terms of sales and active customer base.

The overriding goal and prime focus of the business is the sustained generation of growth and the expansion of the company's online market leadership across Europe. In this context, zooplus is continuously working to expand its technological infrastructure in an effort to remain the "state-of-the-art" technology leader.

Overall, zooplus offers its customers around 8,000 food and accessories products for dogs, cats, small animals, birds, reptiles, fish and horses. These include everyday staples such as brand name foods generally available at specialist dealers, zooplus' own private labels, as well as specialty articles such as toys, care and hygiene products and other accessories. In addition, zooplus offers its customers a wide range of free content and information on its websites, veterinary and other animal-related advice, plus interactive features such as discussion forums and blogs.

zooplus generates the majority of its sales by selling its goods out of its central warehouse operations located in Germany and the Netherlands. This central warehousing approach enables the company to ensure rapid standardized quality deliveries with a high level of general product availability to its customers across Europe. As part of this, the new German logistics center in Hörselgau/Eisenach which was opened in the first half of 2011 plays a crucial role. In addition, zooplus realizes a small portion of its sales with its so-called "direct line business", in which zooplus directly sells and ships products from selected suppliers from their respective warehouses to zooplus customers. Sales nevertheless are always generated through a zooplus online shop. Shipments and final mile deliveries are generally made by national and international parcel service providers.

Overall, zooplus's business model is based on a broad product range coupled with efficient supply and delivery processes, as well as simple and convenient functionalities from a customer perspective.

ii. Markets

zooplus maintains a pan-European presence in 20 countries, which together represent a total annual pet supplies market volume of around EUR 19 billion. The company operates a range of country-specific and international online shops. According to company estimates, zooplus AG is the online market leader in terms of sales and customer base in all of the highvolume European markets (Germany, France, United Kingdom, the Netherlands, Spain and Italy).

As of March 2012, zooplus operated a total of fourteen country-specific online shops. In addition to the six high-volume markets stated above, the company also runs online shops in Austria, Belgium, Denmark, Ireland, Finland, the Czech Republic, Slovakia, Switzerland and Poland. zooplus also serves Sweden, Luxembourg, Portugal, Hungary and Slovenia via its multinational English language site zooplus.com.

The company is therefore effectively the dominant online provider in its segment across Europe by a substantial margin over smaller local and national competitors.

iii. Key influencing factors

Two major factors influence the development of online pet supplies retailing: the underlying growth of the European pet supplies market in total as well as the general and industry-specific development of online shopping and purchasing behavior per se.

Development of the European pet supplies market The European pet supplies market within the countries of the European Union has an annual market volume of approx. EUR 19 billion (2011). The six high-volume markets in Germany, France, the United Kingdom, Spain, the Netherlands and Italy alone make up around EUR 16 billion.

The primary retail channels for pet supplies in all of the EU countries are predominantly bricks-andmortar pet stores, garden centers and DIY stores, as well as supermarkets and discounters. The main differences between the individual bricks-and-mortar retail concepts within the pet supplies segment are the product range and product positioning: Conventional supermarkets and discounters generally limit themselves to a basic, high-turnover product range of around 150 to 200 products within low and medium priced food ranges, while larger pet store chain operators usually offer a comprehensive product range from foods (entry-level prices to premium) to accessories (including toys, hygiene products, pet furniture and equipment). zooplus has identified specialty retail as its core market segment along with further related specialist product areas within typical supermarket ranges. The company estimates that this represents an approximately EUR 10 - 11 billion portion of the overall market, as well as the more attractive area in terms of customer quality, margins and long-term growth potential.

Overall, zooplus is forecasting a stable to slightly increasing total pet supplies market volume for the coming years. The company is anticipating market growth of around 2% - 3% for 2012 within the European Union. In Germany for instance, around one third of all households have one or more pets. zooplus assumes that the other key high-volume European markets are showing similar levels. Adjustments in the market are due to changes in the animal population, as well as a shift in sales towards higher value products and categories within the food and accessories sector ("premiumization").

Overall, the pet supplies market enjoys a very low degree of seasonality as a result of repeat demand patterns, particularly within its food segments. Around 70% of total demand in Germany is generated by pet food itself, which means that, from the company's perspective, the medium to long-term demand structures enjoy above-average stability.

Development of online retailing

The growth of the Internet as a new sales and distribution channel for pet products is of key importance to zooplus. This development is determined by three major factors, of which only one can be influenced by the company directly.

A fundamental requirement for successful European online retailing is fast and reliable Internet access for large sections of the population. This development is being primarily driven by the availability of high speed fixed and increasingly mobile Internet access. As a result, the total number of Internet users has risen sharply in recent years. This, in turn, is leading to a substantial increase in general online activities and online shopping, in particular in conjunction with an increased day-to-day use of search engines and other

Internet platforms such as price information services and product comparison sites, which again support online shopping activities per se.

eCommerce is an increasingly important sales channel within most retail sectors. For example, online consumer retail spending in Germany alone totaled more than EUR 20 billion during 2010. Further growth in European online retailing seems probable, particularly given the inherent advantages which online retailing offers over existing bricks-and-mortar retail concepts – most notably in the form of more extensive product ranges and greater convenience. Independent market observers, such as Forrester Research, therefore anticipate that online retailing will continue to enjoy double-digit percentage annual growth rates over the coming years.

With regard to pet supplies, the proportion of products sold via the Internet is still relatively low compared to other consumer product categories, and is significantly driven by the sales zooplus itself generates across Europe. According to internal calculations, the company believes that only around 1.5% to 2% of the total European pet market has migrated online to date.

zooplus, as the dominant market leader, is therefore well positioned to benefit strongly from present and future changes to existing distribution and retailing structures.

iv. Competitive position

Advantages over online competitors

In general, there are significantly lower barriers to market entry in online retailing compared to traditional bricks-and-mortar retailing. As a result, zooplus is confronted with a host of small and mostly regional providers in all of its European markets, such as independent and owner-managed pet stores with small individual webshops and local delivery options.

In contrast to these small-scale competitors, zooplus is structurally capable, simply in terms of its size and its European market leadership status, of generating critical comparative advantages from specific economies of scale and efficiency effects, many of which remain out of reach for existing smaller providers. This structural advantage in areas such as purchasing, private label development, logistics, technology, customer service and marketing is a key factor that leaves zooplus excellently positioned. This is coupled with additional relative advantages with regards to brand awareness and financial strength.

At the same time, zooplus' base of active European customer accounts helps ensure that the company benefits from substantial momentum in terms of acquiring new customers through word-of-mouth recommendations.

Advantages over bricks-and-mortar competitors zooplus' business model is based on a lean, technologically efficient and scalable value creation chain in connection with an outstanding shopping experience in terms of selection, price and convenience.

zooplus does not operate any physical stores or outlets. Instead, it is able to supply customers throughout Europe with a significantly larger product range than existing offline retailers thanks to its approach of distributing from two central warehouses. At the same time, the company's centralized management and corresponding efficiency advantages (stemming from its largely automated business processes) help to compensate for certain size-based advantages still enjoyed by the larger bricks-and-mortar pet store chains, particularly in terms of product purchasing.

zooplus' present and future medium-term objective is to consolidate and extend its online leadership and to sustainably benefit from the anticipated further substantial growth in online retailing overall.

v. Group structure

As of December 31, 2011, zooplus Group encompassed six wholly owned subsidiaries, of which four are completely consolidated in the consolidated financial statements.

zooplus AG, Munich, Germany

• Bitiba GmbH, Munich, Germany (second-brand business)
• Matina GmbH, Munich, Germany (private label business)
• zooplus services Ltd., Oxford, UK (international business development and UK)
• logistik service center s.r.o., Mimon, Czech Republic (trading in prescription-free OTC and care products for pets)

On April 27, 2011, zooplus AG purchased a further 51% stake in logistik service center s.r.o. Mimon, Czech Republic, for a purchase price of EUR 40 thousand and consequently now owns 100% of the share capital.

Furthermore, zooplus AG set up the wholly-owned subsidiary zooplus EE TOV, Kiev, Ukraine, during the second quarter of 2011. The company is currently not conducting any business activities and is therefore not included in the zooplus AG consolidated financial statements due to its lack of importance (total assets less than EUR 10 thousand). The same applies to the wholly-owned subsidiary zooplus Italia s.r.l., Genoa, Italy, which was set up in December 2011.

zooplus AG is managed by a four-member Management Board:

• Dr. Cornelius Patt, CEO (Group management & operations)
• Guido Bienhaus (IT)
• Florian Seubert (Finance & legal)
• Andrea Skersies (Sales & marketing)

The Management Board is advised and controlled by the Supervisory Board. In the financial year under review, this body was made up of the following members:

• Felix von Schubert (Chairman) until May 2011
• Michael Rohowski (Chairman) since May 2011
• Frank Seehaus (Deputy Chairman)
• Dr. Norbert Stoeck

In the financial year 2011, zooplus employed an average of 191 people (2010: 143 employees).

Human capital is a key success factor at zooplus. We regularly conduct internal employee training sessions and many employees participate in external training programs, which has helped to further increase the quality of our work and our workforce's potential for value creation.

b. Corporate strategy – Sustainable and profitable pan-European growth

The company aims to maintain and expand its existing market leadership within the European online pet supplies segment and thereby increase the company's medium and long-term earnings potential. In the company's view, the Internet and Internet retailing in Europe are still at an early stage of development. Therefore the company is now aiming to position itself accordingly and create the necessary structures so that it can achieve significantly positive returns in the medium to long-term by virtue of its size and market leadership.

Given this aim, our activities focus on the following objectives:

• Expanding and increasing our customer base in all major European markets

• Tapping further European markets (incl. Eastern Europe and Scandinavia)

• Boosting sales and contribution margin per customer/year

• Defending and expanding our market leadership

The Management Board considers the following key figures as good yardsticks for measuring our success:

• The Group's total sales and sales as an indicator of market success
• EBITDA before one-off items and market development costs as a yardstick for operating performance
• After-tax profit as the key financial figure

In an effort to achieve its targets, the company utilizes a wide range of financial and non-financial indicators and steering tools, focusing on the following areas:

• Pricing and product range
• New customer acquisition and existing customer management
• Logistics and distribution management
• HR management
• Cost management in all fixed and variable areas
• Working capital management and payment optimization

Achieving maximum possible growth has top priority. Against the backdrop of what are still excellent expansion opportunities across Europe, the management believes this to be the most sensible strategy for long-term growth in the company's value over the coming quarters. It is therefore prepared to accept some additional volatility and possible earnings impacts in the context of the implementation of necessary structural changes.

In all areas, relevant performance criteria are managed and controlled using target-oriented as well as processspecific indicators. These are reviewed regularly and can be adjusted and modified over the short to mediumterm if required. The company attaches particular importance to clearly communicating its key targets to its employees.

c. Technology and development

zooplus primarily regards itself as being a technologydriven Internet retailing company. New and further developments of core operational processes and systems are usually initiated and executed internally. External partners are called in if it is deemed sensible to supplement this internal expertise or support our physical capacity for implementation.

Over the past few years, hardware systems and highlyspecific software solutions developed in house across all key areas of the company have made a decisive contribution to zooplus AG's success. From a current perspective, they will also act as vital components in achieving the company's future targets.

Business areas in which these proprietary systems play a key role include:

• Price and margin management
• Logistics management and controlling
• National and international payment processes
• Online marketing and customer acquisition
• Working capital management and stock procurement

d. Business development 2011

i. The economy and overall retailing market The calendar year 2011 was characterized by discussions regarding the right way to overcome the international debt crisis. There is still a risk that the negative effects on the financial markets could have a significant impact on the real economy. While a number of economic research institutes fear that the Federal Republic of Germany will experience a slowdown in economic development, they expect the economy

Information under takeover law

to pick up again from mid-2012. A key influence on zooplus AG compared to the general economic overview provided above still remains the development of the specific industry and online retailing environment.

ii. Development of zooplus AG

From the point of view of the Management Board, zooplus AG recorded an overall positive development during the financial year 2011. This is primarily reflected in the growth of total sales, which were up around 33% compared to the previous year. Important milestones during the financial year 2011 included the successful conclusion of the large project to open the new logistics center in Eisenach/Hörselgau and the corresponding increase in the overall capacity up to EUR 400 million total sales p.a. in future. The temporary slowdown in growth which corresponded with the logistics migration during the second quarter was successfully remedied by the Group from the third quarter 2011 onwards. In addition, the earnings situation in the second half of the year also substantially improved compared to the migration quarter Q2 2011.

The successful expansion of operating capacities was a decisive move towards further dynamic expansion for the years 2012 through 2014. zooplus AG is also well positioned for the future due to to the successful capital increase at the end of the financial year 2011, which led to a cash inflow of over EUR 19 million, as well as its sound assets and financial position. Despite the somewhat unsatisfactory second quarter, the financial year 2011 was a good year for the company's continued growth and long-term success. zooplus AG was able to generate total sales of EUR 71.9 million in the fourth quarter, up EUR 5.4 million from EUR 66.5 million in the third quarter. The Group also improved its earnings, with EBITDA up by EUR 1.8 million from EUR -1.3 million in the third quarter to EUR 0.5 million during the fourth quarter.

Given today's situation, zooplus believes that the European pet supplies market will remain relatively stable in 2012, with estimates suggesting overall market growth of 2% to 3%. In view of this strong positive trend in the online segment, as well as the high proportion of zooplus-specific sales derived from repeat and recurring demand for pet food, the company believes that it is well positioned to successfully master the current financial year 2012.

With regard to online pet supplies in general, zooplus anticipates that substantial growth will continue across all of Europe's high-volume markets.

2. Net assets, financial position and results of operations

a. Earnings position

i. Sales development

zooplus, which considers itself the European online market leader, was able to significantly increase both its sales and total sales last year. Total sales (consisting of sales and other operating income) rose by 32.8% yearon-year from EUR 193.6 million to EUR 257.1 million.

This growth was largely due to the significant expansion in the customer base in all of the company's geographic markets as well as the high level of customer loyalty and repeat purchase rates among existing customers. Both of these trends underscore and prove the sustainable market success of our business model.

Sales increased from EUR 177.8 million in 2010 to EUR 244.8 million in 2011, while other operating income declined from EUR 15.8 million to EUR 12.3 million in the period under review. Other operating income in the previous year was substantially boosted by one-off payments as part of a change of

service provider. Sales solely reflect the sale of goods. Other operating income primarily contains standard industry advertising income and other payments.

Pet supplies retailing is mostly unaffected by seasonal fluctuations.

Overall, the positive development of sales and total sales clearly shows that zooplus, as the market leader, is benefiting from a demand migration from traditional bricks-and –mortar sales channels towards online retailing.

Total sales (Sales and other operating income)

ii. Expense items

The following section provides a brief overview of the amount of and changes in the key expense items. Please refer to the consolidated financial statements and the notes to the consolidated financial statements for detailed figures. All of the percentages provided in the following section are approximate figures and can be subject to slight rounding differences compared with the figures of the consolidated financial statements.

Cost of materials

The company's cost of materials increased at a slightly lower rate than in the previous year. The cost of materials to total sales ratio of 61.1% achieved in 2011 was 4.5 percentage points up on the previous year's mark (56.6%). In turn, this also caused the company's net product margin to fall from 43.4% in 2010 to 38.9% in 2011. The main reason for the fall in the net product margin was one-off payments as part of a change of service providers within other operating income during the financial year 2010 as well as changes in pricing.

Personnel costs

Personnel costs were up from EUR 9.3 million in 2010 to EUR 12.3 million in 2011, representing an almost unchanged personnel expenses ratio of 4.8% (in relation to total sales).

In the financial year 2011, zooplus employed an average of 191 people (versus 143 employees during the financial year 2010).

Depreciation

Scheduled depreciation and amortization costs increased from EUR 0.6 million in 2010 to EUR 0.8 million in the year under review.

Logistics and fulfillment expenses

zooplus AG's business model requires warehousing, stock picking and the shipping of products sold to our customers. Additional expenses arise in areas such as the processing of returns, storage and other costs of logistics and distribution. These activities are, in essence, the zooplus equivalent to outlet and other high street costs within offline retailing.

Expenses for logistics and fulfillment rose from EUR 42.0 million in 2010 to EUR 63.5 million in 2011, which represents a 3% rise (in relation to total sales)

from 21.7% to 24.7%. Total expenses for logistics and fulfillment are mostly attributable to distribution (e.g. package service providers), packaging as well as variable and fixed costs for the distribution centers, and are therefore mostly variable to the company's sales. The change in the previous year was attributable to factors including the increased costs of fulfillment connected with the effects of the logistics migration carried out by the company in the second quarter.

The successful conclusion of the logistics migration, combined with the first time full capacity operation of the new, also outsourced, distribution center in Hörselgau/Eisenach from the second quarter 2011 onwards underlines the planned dynamic expansion course in the years to come. The total logistics capacity of the company has now risen to over EUR 400 million in total sales per year as we continue upon our growth path.

Marketing expenses

Marketing expenses are largely driven by the acquisition of new customers across all European markets. This usually takes place within online marketing, where the efficiency of individual acquisition activities is constantly measured and individual activities are adjusted accordingly. These activities relate to the entire spectrum of search engine optimization and affiliate marketing, other online partnerships as well as online direct marketing. Moreover, additional activities are undertaken using conventional and offline-based marketing tools. zooplus attaches great importance to all of its marketing core competencies being kept in house, although the company occasionally cooperates with third parties in implementing some of these projects.

Marketing expenses fell from EUR 15.8 million in 2010 to EUR 14.8 million in 2011, which represents a percentage reduction (in relation to total sales) from 8.2% to 5.8%. This reduction was enabled by increased efficiency and optimization gains realized as part of an improved European marketing strategy. The target for 2012 is to tap other key European markets, as well as to cement and expand our market leadership in existing markets in terms of sales and customer base. The company believes that this contributes fundamentally towards sustainably increasing our long term company value.

Payment transaction costs

Payment transaction costs were up from EUR 1.9 million in 2010 to EUR 2.8 million in 2011, primarily reflecting an increase in international payment transaction costs.

Other expenses

Other expenses, in addition to logistics and fulfillment, marketing and payment transactions as described above included customer care and services, office rental, general administrative expenses, technology as well as other minor expenses incurred as part of our ordinary operating activities during the year under review.

Financial expenses

In order to finance its working capital, zooplus AG has access to credit lines from the company's major bank. This financing facility totals EUR 17.0 million, of which EUR 16 million were utilized at year-end. This also largely explains the company's financial expenses (interest expenses).

iii. Earnings development

Earnings before interest, taxes, depreciation and amortization

In the financial year 2011, earnings before interest, taxes, depreciation and amortization (EBITDA) totaled EUR -6.8 million largely due to specific cost effects resulting from the logistics migration primarily carried out in the second quarter. The effects resulted from the parallel phasing in and -out of the respective old and new company logistics centers. These changes had a significant impact on the fixed and variable costs of fulfillment and were also reflected in the substantially reduced overall margin in the second quarter. In addition, one-off transport and temporary storage costs were also incurred, which impacted earnings. Cost increases in the areas of HR, marketing and other operating expenses also hit our earnings.

Operating income

In the period under review, operating income totalled EUR -7.6 million compared to EUR 3.3 million in 2010.

Consolidated net profit/Overall result

In the financial year 2011, consolidated net profit and the overall result amounted to EUR -6.0 million compared to EUR 2.0 million in the previous year. The overall result only differs slightly from the consolidated net profit as a result of differences in currency conversion.

b. Net assets

Long term assets totaled EUR 8.9 million at the end of 2011, up from EUR 6.3 million at the end of 2010. Of this total, around EUR 7.6 million is due to deferred tax assets.

Within short term assets, inventories rose from EUR 20.6 million at the end of 2010 to EUR 25.5 million as of December 31, 2011. In particular with regards to general product availability, direct import products and private label development, with the latter being subject to longer procurement cycles, higher inventory levels are a key driver of sales per individual customer account.

In addition, the company recorded a significant increase in liquid funds due to the inflow of funds from the capital increase carried out at the end of the year.

Accounts receivable totaled EUR 6.4 million at the end of 2011. In the financial year 2011, accounts receivable with a net value of EUR 1.3 million were written off.

Equity totaled EUR 35.5 million at the end of 2011 compared to EUR 21.2 million at the end of the previous year. The equity ratio on December 31, 2011 therefore came in at around 47%. Please note that the increase in equity during the financial year is the result of the capital increase from authorized capital totaling EUR 19.7 million in December 2011. The capital increase was registered on January 9, 2012.

Financial debt were up from EUR 10.0 million at the end of 2010 to EUR 16.0 million as of December 31, 2011.

Trade payables totaled EUR 11.4 million on December 31, 2011 compared to EUR 12.0 million at the end of 2010. zooplus does not generally make use of the maximum payment periods available. This makes economic sense in view of the company's readily available financing options. zooplus will continue to utilize possible discounts and early payment options as far as possible in the future in an effort to maximize margins and potential income.

More than 90% of the company's liabilities are denominated in Euros. At times, there are also other liabilities – mostly six-digit – denominated in British Pound GBP and US Dollar USD. The former is due to the company's VAT obligations and procurement in the United Kingdom and the latter to the purchase of merchandise from Asia.

Other short term liabilities fell during the year under review, totaling EUR 9.4 million as of December 31, 2011, down from EUR 12.8 million at the end of 2010.

All of the current liabilities are due within one year. This is primarily attributable to the type of key liabilities items: trade payables and VAT liabilities.

The company does not make use of any derivative financial instruments or other hedging instruments. In addition, no off-balance sheet financial instruments are used.

The company's total assets were therefore reported at EUR 75.1 million at the end of the financial year 2011, compared to EUR 58.4 million on December 31, 2010.

c. Cash flow, cash and cash equivalents and financing

Cash flow from operating activities totaled EUR -11.7 million in 2011 compared to EUR -3.1 million in 2010. This change was largely attributable to the operating result for the year as a whole as well as the development of working capital.

Cash flow from investing activities was negative (coming in at EUR -0.6 million in 2011 after EUR -0.6 million in 2010), while cash flow from financing activities recorded highly positive development (EUR 24.8 million in 2011, compared to EUR 15.2 million in 2010).

To summarize, as a retail company zooplus is subject to substantial volatility in items that are of relevance to both the balance sheet and cash flow, such as inventories, liabilities and VAT payment schedules. This has led to significantly higher fluctuations within these accounts during the year as compared to the development of earnings.

The overall changes in cash and cash equivalents during the course of the year were largely due to the company's strong growth and the capital increase carried out at the end of the year. The negative operating cash flow was largely impacted by the overall result as well as the overall growth of the company.

However, the liquidity available to the company from its lines of credit was significantly higher than required to secure business operations. During the past financial year, zooplus was able to fulfill all of its payment commitments at all times.

The company has flexible lines of credit totaling EUR 17.0 million. The use of these lines of credit ranged between EUR 1.5 million and EUR 16.0 million during the past financial year. Some of these lines of credit are secured with inventories and receivables, and are subject to standard industry equity covenants. On the whole, it must be noted that zooplus is not subject to any particular restrictions that could impact the availability of financing, with the exception of the mandatory financing covenants. The company believes that it will also be possible to obey these covenants in the coming years.

The company's lines of credit are all indexed to Euribor, and their overall interest levels including the interest premium are low to medium single-digit percentages. An increase in the current level of interest would, by its very nature, lead to a rise in the company's financing costs, while, from the current perspective, this appears to be manageable. The company's management does not anticipate a significant change in credit conditions.

Overall, given its strong equity base, its dynamic growth, the significant improvement in results in Q4 2011 and the existing stable financing facilities, the company believes that it is well equipped to support strong future growth in the coming year, as well as the related effects on working capital (mostly inventories and receivables from customers).

d. Summary statement on zooplus' financial position

With a growth in total sales of around 33% to EUR 257 million, a successfully completed logistics migration as well as a new total logistics capacity of over EUR 400 million p.a. created by the move, the financial year 2011 can be seen as positive within an overall context. The negative effects, particularly within the second quarter, were significantly reduced by year end. The company returned to dynamic growth momentum and was able to substantially improve earnings.

e. Report on events after the balance sheet date

After the end of the financial year 2011, the capital increase carried out in December 2011 was entered into the commercial register on January 9, 2012.

3. Opportunities and risks

As an internationally operating group, zooplus is exposed to a wide-ranging variety of business opportunities and risk factors. The dynamic tapping of new markets and the establishment of market-leading positions within all key European markets are the core priorities in our corporate activities. As a result, the Management Board already set up a comprehensive risk management system at a very early stage in previous years. Within this system, the company's individual departments are responsible for identifying and evaluating risks as well as developing effective counterstrategies.

Risk management can also mean consciously deciding to take measured risks. This is generally the case if the opportunities far outweigh the risks and zooplus is in a position to deal with any possible damages in the worst case scenario.

a. Key individual risks and opportunities

The following section discusses a selection of key opportunities and risks for zooplus AG's business activities.

Strategic risks and opportunities

zooplus' success depends to a critical extent on the continued acceptance of the Internet as a channel for purchasing pet supplies.

If the growth in online retailing slows or even falls overall, this would directly affect the zooplus AG business model. However, from the current perspective, all of the indicators suggest that acceptance of the Internet as a sales channel will continue to rise. This is also underlined by current growth rates.

Average order sizes and repeat purchase behavior could be subject to negative changes in more difficult economic periods:

During a recession, existing and newly acquired customers' purchasing behavior could change to the company's detriment. If our customers stop buying non-food products that are not seen as a necessity, or if they switch to lower-priced alternative products or alternative suppliers, this could have a negative impact on zooplus overall. However, the fact that zooplus was still able to increase its total sales by 50% during the worst annual recession (2009) and acquire significant customers in all of the key European markets is a proof for the attractiveness of the business model, also in more difficult economic periods. zooplus is offered further opportunities by the trend towards humanizing pets. This trend is boosted by developments such as the ongoing increase in single households and the decline in birth rates.

New competitors could establish a successful online presence and negatively impact zooplus' market opportunities:

zooplus is currently the clear market leader in Germany and Europe. Should this positioning change after new competitors enter the market, this would have a significantly negative impact on zooplus' sales and operating margins. From the current perspective, zooplus believes that the level of competition will increase over the medium term. However, this will take place within an eCommerce market that is continuing to see strong growth. In addition, zooplus believes that, as a result of its existing competitive advantage, it will be able to permanently retain its market leadership thanks to its superior operating systems and processes.

The existing market shares, growing experience in tapping new markets and the steadily growing, effective infrastructure offer the opportunity to establish specific barriers to market entry in the face of increasing competition. In addition, the existing infrastructure allows the rapid entry into other new markets and therefore the opportunity for further growth.

Operating risks

Unforeseen events could endanger the stability of key business systems for IT and logistics:

The company's operations are based on the constant availability of all of its technical systems. If this is jeopardized, for example by force majeure or other system problems, this would have a substantial negative impact on zooplus as a whole. However, zooplus believes that this risk is manageable in view of the fact that the business systems have proved stable for the past 10 years of operations. In addition, zooplus cooperates with reliable partners of good business standing in these areas, which in turn should reduce risks significantly.

The loss of key employees could jeopardize the company's long term success:

In managing its employees and departments, zooplus places its trust in several key employees, who would not be easy to replace. If these employees were to leave the company, this could have a negative impact, at least in the short term, on the company's success. However, zooplus believes that the company's key employees are general loyal to zooplus, and it also believes, in the event that certain key employees are lost, that it would be possible to find adequate replacements for these employees over the medium term. Employee loyalty is also promoted by creating a positive working environment, offering opportunities for training and advanced education, and providing an incentive-based remuneration system.

Forecasting demand incorrectly could result in overstocks along the supply chain and in the logistics system:

As a rule, material planning errors could result in overstocks in the company's warehouses. If it is difficult to sell these, or if they cannot be sold, this could result in significant damages for the company. As a result of the low seasonality, and the relatively strong ability to predict customer-based sales structures, the company believes that these risks can be controlled. This is coupled with the fact that the average shelf-life of typical zooplus products is around 1 to 2 years, which would also make it significantly easier to sell slowmoving products if this was necessary.

Financial risks

The main financial instruments the group uses consist of lines of credit, operating leases, cash and cash equivalents and short term deposits. The main purpose of these financial instruments is to constantly cover the need for financing and to ensure financial flexibility. The Group has various other financial assets at its disposal (such as trade accounts payable) arising directly in connection with its operations. There are no derivative financial instruments.

As an internationally operating company zooplus is exposed to substantial currency translation risks:

zooplus operates on foreign currency markets outside of the Eurozone. The company's most important foreign currencies are British Pound (GBP) and US Dollar (USD). As the company has not previously used hedging instruments, there are exchange rate risks related to purchasing and product sales. The company is increasingly aiming to limit these risks by buying products locally in foreign currency zones. At the same

time, the company regularly reviews whether it makes sense to use possible hedging instruments that could be implemented if necessary.

Defaults on the company's receivables could increase in economically difficult periods:

In more difficult economic periods, zooplus could possibly also be impacted by higher credit defaults by its customers. This could result in sustained risks for zooplus AG's business model. In the past, total receivables defaults were around 1% of the company's overall sales. From the current perspective, we do not anticipate any deterioration in this regard, thanks to the company's strict credit check system.

The company's access to the credit market could become more difficult or impossible:

Although zooplus is not currently subject to any borrowing restrictions, it could become restricted as a result of further banking and/or financial crises. However, from the current perspective, zooplus does not believe that this will be the case in the short or medium term.

The existing level of interest rates could increase and make existing borrowing more expensive:

The company's most important line of credit is indexed to Euribor. A general increase in interest rates, including in inter-bank business, could lead to a significant rise in the company's financing costs.

Overall statement on the risk and opportunity situation In view of the company's positive overall growth, as things stand today it appears that both the risks and also the potential dangers are limited and can be controlled. The company uses tried and tested risk management systems and processes. From the company's perspective, there are no individual risks that could endanger the company's continued existence at

present and in the foreseeable future. The individual risks, taken together, do not endanger our company's continued existence either.

4. Key features of the internal control system and the risk management system

The key features of the internal control system and risk management system at zooplus AG relating to the accounting process are set out below:

zooplus AG is characterized by its clear organizational, corporate control and monitoring structures. There are forecasting, reporting, controlling and early warning systems and processes in place throughout the Group. These have been coordinated and allow the end-to-end analysis and the control of risk factors that could impact earnings and endanger the company's continued existence. The functions for all areas of the accounting process (e.g. financial accounting and controlling) are clearly assigned. Due to its size, zooplus AG does not have a separate internal audit department.

The IT systems used for accounting are protected against unauthorized access. The financial systems in place employ standard software (Diamant) and proprietary software.

The IFRS consolidated financial statements are prepared on the basis of a uniform reporting format, which is coordinated centrally from the Group head office in Munich. The validation processes and additional plausibility checks performed at the Group head office underpin the correctness and completeness of the annual financial statements of the subsidiaries and zooplus AG.

An appropriate internal risk management system has been implemented. The accounting data is reviewed regularly to ensure that it is correct and complete

using random samples and plausibility checks carried out through manual checks and also with the software employed at the company. The key processes that are relevant for the company's accounting are subject to regular analyses. The existing company-wide risk management system is constantly being adjusted in response to current developments and its functionality is reviewed.

The Supervisory Board deals with aspects including major accounting issues, risk management, the audit mandate and its areas of focus.

The internal control and risk management system used in relation to the accounting process ensures that business events are recorded, prepared and assessed correctly in the accounts, and that they are included in the external accounting.

The clear organizational, corporate control and monitoring structures as well as the fact that the accounting department is sufficiently staffed and has sufficient materials available, form the foundations for the departments and employees involved in the accounting process to work efficiently. Clear guidelines and instructions, stemming from both legal requirements and from within the company, ensure that the accounting process is uniform and correct. The clearly defined review mechanisms within departments which participate in the accounting system, as well as the review by internal controlling and early recognition of risks by risk management, ensure error-free accounting.

The internal control and risk management system within the zooplus Group safeguards that the zooplus Group's accounting is in line with the legal and statutory requirements as well as with internal guidelines. In particular, the uniform risk management system within the company, which adheres to the

statutory requirements, is designed to recognize risks in good time, measuring and communicating these appropriately. As a result, the reports' recipients are provided with accurate, relevant and reliable up-to-date information.

5. Outlook

The underlying economic conditions are expected to remain stable overall in 2012 and 2013. We are therefore expecting a slight increase in overall sales in our sector over this period of time.

Irrespective of this, however, we anticipate that online shopping will continue to grow in importance as a sales channel in the coming years. zooplus will benefit substantially from this.

Overall, we are expecting the following results for zooplus on the back of these two trends for 2012:

• Total sales will increase from EUR 257 million to at least EUR 320 million
• A positive operating result (EBITDA) overall

With a look to the following year 2013 we are expecting:

• Further growth in total sales to at least EUR 400 million
• A continued positive operating result (EBITDA) overall

The following key sales and expense factors will drive this anticipated development:

• We are expecting a further rise in overall sales across all European markets based on a substantial increase in the number of active customers (new and existing) for the coming years.

• We are anticipating a stable gross product margin for both 2012 and 2013 in relation to sales.

• We also anticipate that logistics costs will fall in relation to sales in 2012 due to increased efficiency and economies of scale.

• As a result of the planned increase in new customer accounts, we are forecasting slightly increasing marketing costs compared to total sales in 2012.
• We expect a slower rise in costs from HR, technology and other operating expenses.

As in previous years, the prime focus for 2012 and 2013 will be on the company's growth. From our perspective, it is critical for zooplus to maintain and further expand its European market leadership in online pet supplies. As a result, zooplus will continue to be managed with a clear focus on growth, with the management giving priority to further growth as opposed to premature earnings maximization efforts. Our activities aimed at tapping markets in other regions (Nordic, Eastern Europe and Turkey) play an important part of this strategy.

If over the course of the year the company observes that an increase in total sales to substantially over EUR 320 million is possible, zooplus would make additional investments in particular in customer acquisition, cost of goods sold and logistics in an effort to achieve this goal, and would accept the resulting yet limited impact on the overall result which this would have.

From the Management Board's point of view, zooplus has the necessary operating and financial resources to maintain its high growth rate – we are aiming to increase penetration in our active markets while establishing new markets and expanding our leading position in Europe overall. This is our utmost priority in both the current and next financial year.

Given this objective, we have outlined the medium-term goals of the company as follows:

We are aiming to:

• Achieve a total sales run rate of EUR 500 million no later than the end 2014
• Always remain at least five times larger than any other online competitor within our segment
• Firmly establish zooplus as a top three European pet retail player on par with our two largest offline rivals

6. Remuneration report

The Supervisory Board is responsible for setting the remuneration system, as well as the individual remuneration of members of the Management Board. It regularly reviews the remuneration structure to ensure its appropriateness. The Management Board's remuneration comprises three components:

• Non-performance related salary paid monthly: Fixed remuneration consists of a contractually agreed non-performance related annual salary which is paid in twelve installments of equal amount.
• Performance-related salary component: The variable salary component remunerates the performance of the Management Board in line with company development for the past financial year and is linked to the sales and earnings achieved in the financial year.
• Variable component with a long-term incentive: In line with company planning, the long-term performance of the Management Board is remunerated with the issuing of share options in zooplus AG.

The Management Board's total remuneration (all three components) totaled EUR 1,424 thousand in the financial year 2011. Of this total, the non-performance related basic remuneration accounted for around 62%. The performance-related components of all Management Board members are dependent upon the respective annual increases in the company's operating income and total sales. This accounted for

around 10% of total remuneration in 2011 and related to further remuneration due from the financial year 2010. Components with a long term incentive are stock option programs. This remuneration component made up around 28% of total expenses in 2011.

In 2011, the members of the Management Board also received advance payments for travel expenses. The company does not provide individualized details of the Management Board's remuneration. The Management Board was exempted from the disclosures pursuant to § 314 Paragraph 1, 6a, Clauses 5 - 8 of the German Commercial Code (HGB) by vote of the General Meeting on April 27, 2007. Further details on the remuneration structures can be found in the notes to the financial statements.

Members of the Supervisory Board receive a non-performance related annual remuneration.

7. Information under takeover law (Section 315 (4) of the HGB)

As of December 31, 2011, the subscribed capital comprised 5,631,138 no-par value registered shares, each with a proportionate interest of EUR 1.00 in the company's share capital.

Restrictions affecting voting rights or the transfer of shares

zooplus AG's shareholders are neither restricted by German legislation nor by the company's articles of incorporation on their decision to buy or sell shares. Only the statutory prohibitions on voting rights apply.

Equity participations exceeding 10% of voting rights As of December 31, 2011, the following shareholders held more than 10% of voting rights:

• Burda Digital Ventures GmbH, Offenburg
• BDV Beteiligungen GmbH & Co. KG, München

• The Nomad Investment Partnership L.P., George Town, Cayman Islands

The participations of Burda Digital Ventures GmbH and BDV Beteiligungen GmbH & Co. KG are attributable to Prof. Dr. Hubert Burda, Hubert Burda Media Holding Kommanditgesellschaft, Offenburg, as well as Burda Gesellschaft mit beschränkter Haftung, Offenburg, respectively pursuant to Section 22 (1), clause 1, no. 1 of the German Securities Trading Act (WpHG).

The participation in voting rights held by Nomad Investment Partnership L.P. is attributable to Sleep, Zakaria & Company (Cayman) Ltd., George Town, Cayman Islands, pursuant to Section 22 (1), clause 1 no. 1 and no. 6 of WpHG.

Shares with special rights/control of voting rights There are no shares with special rights, and employees do not participate in equity such that they cannot directly exercise their controlling rights.

Appointment and dismissal of members of the Management Board, changes to the articles of incorporation

The appointment and dismissal of Management Board members is made in compliance with sections 84 and 85 of the German Stock Corporation Act (AktG). The Supervisory Board appoints the Management Board members for a maximum of five years. Members may be reappointed or their term of office extended for a maximum of five years in each case. In addition, the articles of incorporation section 7 stipulate that the number of Management Board members is fixed by the Supervisory Board and that the Management Board can comprise just one member.

Requirements for amendments to the articles of incorporation are primarily stipulated in sections 179 to 181 of the AktG. Amendments to the articles of incorporation require a resolution from the General Meeting pursuant to section 179 of the AktG. Pursuant to section 24 of the articles of incorporation, the Supervisory Board of zooplus AG is permitted to make changes to the articles of incorporation, to the extent that these changes only affect their wording.

Authorization for the Management Board to issue shares

As a result of the resolution by the General Meeting on April 25, 2008, the Management Board is authorized, with the approval of the Supervisory Board, to increase the company's share capital on one or several occasions during the period until April 24, 2013 against cash or non-cash contributions by up to a total of EUR 1,193,075.00 by issuing new, no-par value bearer shares with a notional interest in the share capital of EUR 1.00 per share. As a rule, shareholders are to be granted subscription rights. However, the Management Board is authorized, with the approval of the Supervisory Board, to remove shareholders' statutory subscription rights in the following cases:

• (1) For fractional amounts;
• (2) In order to place the new shares on an organized market in connection with the admission of all of the company's shares;
• (3) When the capital is increased against cash contributions and the total pro rata amount of share capital represented by the new shares in respect of which the shareholders' subscription rights are excluded does not exceed 10% of the company's share capital existing either at the time the authorization is entered in the commercial register or at the time the new shares are issued and the issue price of the new shares is not

substantially (within the meaning of section 203 [1] and [2] and section 186 [3] sentence 4 AktG) below the trading price of listed shares of the same class carrying the same rights at the time when the Management Board finally determines the issue price; for the purpose of calculating the 10% threshold, the pro rata amount of share capital represented by any new or repurchased shares that were issued or sold after April 25, 2008 subject to the simplified exclusion of shareholders' subscription rights pursuant to or in accordance with section 186 (3) sentence 4 AktG and the pro rata amount of share capital to which any conversion or option rights or obligations relate under bonds that were issued on or after April 25, 2008 by applying section 186 (3) sentence 4 AktG mutatis mutandis must be deducted;

• (4) Insofar as it is necessary to exclude subscription rights in order to grant bearers of convertible bonds/loans or warrants issued by zooplus AG or its subsidiaries subscription rights to new shares to the extent that they would be entitled after exercising their warrants or conversion rights or after fulfilling conversion obligations;
• (5) For capital increases against non-cash contributions to grant shares as part of business mergers and for the purpose of acquiring companies, parts of companies or equity interests in companies.

The Management Board is entitled to finalize further details regarding the execution of capital increases from Approved Capital 2008 in conjunction with the Supervisory Board.

The approved capital from April 25, 2008, which originally totaled EUR 1,193,075.00, was already used to the tune of EUR 216,099.00 as part of a capital

increase. The corresponding change to section 5 (6) of the company's articles of incorporation was entered into the commercial register on January 3, 2011.

Authorization for the Management Board to buy back shares

zooplus AG's General Meeting on May 27, 2010 authorized the Management Board, subject to the approval of the Supervisory Board and through to May 26, 2015, to acquire shares of the company up to a total of 10% of the share capital, measured on the share capital at the time of the General Meeting resolution, subject to the condition that the shares acquired as a result of this authorization together with other shares of the company, which the company either holds or which are to be allocated to it pursuant to sections 71d and 71e of the AktG, do not total more than 10% of the company's share capital at any point in time. Dependent Group companies within the meaning of section 17 AktG or third parties acting for the account of the company or dependent Group companies acting for the account of the company are also entitled to purchase the shares.

This authorization may be exercised for all purposes permissible by law. The company is not permitted to trade in its own shares. The authorization may be exercised on one or more occasions, or in parts. The shares can be acquired in partial tranches spread over various purchase dates within the authorization period until the maximum purchase volume is reached.

The shares are acquired while upholding the principle of equal treatment (section 53a of the AktG) via the stock market or using a public purchase offer made to all shareholders.

If the shares are acquired via the stock exchange, the compensation paid by the company per no-par value share (without incidental acquisition costs) may not

be more than 5% higher or lower than the volumeweighted average of the closing prices for shares of the company in Xetra trading (or a functionally comparable successor system) on the Frankfurt Stock Exchange on the last five stock market days prior to the date on which the undertaking to acquire the shares was entered into.

If the acquisition is performed via a public purchase offer addressed to all shareholders, the purchase price offered or the thresholds for the purchase price range offered per share (without incidental acquisition costs) may not be more than 10% higher or lower than the volume-weighted average price of shares of the company in Xetra trading (or a functionally comparable successor system) on the Frankfurt Stock Exchange in the last five stock market trading days prior to the date the offer is published. The volume of the offer may be restricted. If the total number of tendered shares is greater than this volume, the acquisition may be made proportionately according to the ratio of vested shares; in addition, there may be preferred acceptance for lower numbers of up to 100 vested shares per shareholder and figures may be rounded according to commercial principles to avoid fractions of shares. Any further rights of tender are not permitted to shareholders.

At the end of the year under review, the conditional capital to serve subscription rights under the stock option program amounted to EUR 432,860.00.

Material agreements of the company that are subject to a change of control upon a takeover bid The Management Board contracts of employment contain the special right to termination for Management Board members in the case that a qualified majority of at least 75% of the company's existing voting rights are purchased by a shareholder

50 Business report Opportunities and risks Outlook Remuneration report Information under takeover law

and that their role as Management Board members is significantly impacted by this or they are subsequently dismissed.

Compensation agreements of the parent company for the case that members of the Management Board or employees are impacted by a takeover In the case that an employment relationship is terminated following the exercising of the special right to termination or an amicable agreement following the purchase of a qualified majority, the Management Board is entitled to a compensation payment, except in the case that its members received a severance payment from a third party as part of the termination of an employment relationship.

8. Statement regarding Section 312 AktG

"In the financial year under review, no affairs for which mandatory reporting is applicable occurred in connection with the controlling company or its affiliates."

9. Other

The corporate governance declaration pursuant to section 289a of the HGB is published in the investor relations section of the company's website at: http://investors.zooplus.com/de/ir.

10. Overall outlook

The European online pet market will continue to enjoy sustainable growth and become more attractive overall. zooplus AG is excellently positioned to enjoy significant benefits from these developments. As a result, the Management Board is expecting a favorable business development for the company in 2012.

Dr. Cornelius Patt For zooplus AG's Management Board

Munich, March 13, 2012

Consolidated financial statement and Notes

Consolidated financial statement

Consolidated balance sheet	52
Consolidated statement of comprehensive income	54
Group cash flow statement	55
Group statement of changes in equity	57
Notes	58
Declaration of the legal representatives	95
Auditors' opinion	97

Consolidated Balance Sheet as of December 31, 2011 according to IFRS

Assets

	in EUR Note No.		31.12.2010
A.	LONG-TERM ASSETS
I.	Property, plant and equipment 7	812,784.57	702,383.86
II.	Intangible assets 8	513,602.44	617,439.26
III.	Financial assets 9	20,000.00	3,699.12
IV.	Deferred tax assets 10	7,550,264.69	4,930,810.29
	Total long-term assets	8,896,651.70	6,254,332.53
B.	SHORT-TERM ASSETS
I.	Inventory 11	25,534,581.18	20,567,513.50
II.	Advance payments 12	816,740.70	2,865,853.81
III.	Accounts receivable 13	6,357,964.30	6,250,870.94
IV.	Other short-term assets 14	10,021,265.91	11,494,172.84
V.	Cash in hand and cash equivalents 15	23,466,124.34	10,957,784.13
	Total short-term assets	66,196,676.43	52,136,195.22
		75,093,328.13	58,390,527.75

in EUR		Note No.	31.12.2011	31.12.2010
A.	EQUITY
I.	Capital subscribed	16	5,631,138.00	2,593,190.00
II.	Capital reserves	16	29,565,812.12	22,960,449.80
III.	Contributions made to implement the resolved capital increase	16	19,670,996.19	9,041,281.48
IV.	Other reserves	16	11,245.94	-55.55
V.	Profit and Loss carried forward	16	-19,356,695.11	-13,372,158.05
	Total equity		35,522,497.14	21,222,707.68
B.	LONG-TERM LIABILITIES
	Deferred tax liabillties	10	59,909.67	118,683.49
C.	SHORT-TERM LIABILITIES
I.	Trade liabilities	18	11,386,286.16	12,029,637.50
II.	Financial debt	19	16,000,000.00	10,000,000.00
III.	Other short-term liabilities	20	9,433,650.62	12,820,005.91
IV.	Tax liabilities		212,611.02	92,746.60
V.	Provisions	21	2,478,373.52	2,106,746.57
	Total short-term Liabilities		39,510,921.32	37,049,136.58
			75,093,328.13	58,390,527.75

Equity and Liabilities

Consolidated statement of comprehensive income January 1 to December 31, 2011 according to IFRS

in EUR	Note No.	2011	2010
Sales	22	244,795,664.40	177,828,136.09
Other income	24	12,264,554.68	15,771,135.25
Total sales		257,060,219.08	193,599,271.34
Cost of materials		-157,045,847.24	-109,538,484.58
Personnel costs	23	-12,255,050.75	-9,256,199.50
cash		(-11,665,581.91)	(-8,932,056.56)
non-cash		(-589,468.84)	(-324,142.94)
Depreciation	7, 8	-773,463.15	-586,562.40
Other expenses	24	-94,549,497.40	-70,917,771.31
of which logistics/fulfillment		(-63,454,207.31)	(-41,984,062.15)
of which marketing		(-14,835,819.75)	(-15,804,415.83)
of which payment		(-2,793,588.15)	(-1,890,525.28)
Operating income		-7,563,639.46	3,300,253.55
Financial income	24	2,761.05	3,249.89
Financial expenses	24	-912,953.42	-227,339.49
Pre-tax profit		-8,473,831.83	3,076,163.95
Taxes on income	10	2,489,294.77	-1,106,545.41
Consolidated net profit		-5,984,537.06	1,969,618.54
Differences from currency translation		11,301.49	281.21
Overall result		-5,973,235.57	1,969,899.75
Consolidated profit/loss per share
undiluted	25	-1.07	0.381
diluted	25	-1.07	0.381

This takes into account the capital increase from company resources.

Group cash flow statement January 1 to December 31, 2011 according to IFRS

in EUR	Note No.	2011	2010
Cash Flow from operating activities
Pre-tax operating profit		-8,473,831.83	3,076,163.95
Allowances for:
Depreciation of fixed assets	7, 8	773,463.15	586,562.40
Non-cash personnel expenses		589,468.84	324,142.94
Other non-cash expenses/Income		-55,588.65	125,538.23
Financial expenses	24	912,953.42	227,339.49
Financial income	24	-2,761.05	-3,249.89
Changes in:
Inventory	11	-4,657,158.31	-8,034,192.85
Advance Payments	12	2,049,113.11	-2,494,344.57
Accounts receivable	13	-62,559.16	-627,033.96
Other short-term assets	14	1,472,906.93	-8,503,325.76
Accounts payable	18	-1,197,181.60	4,768,614.49
Other liabilities	20	-3,386,355.29	7,228,858.45
Provisions	21	371,626.95	237,272.11
Tax		0.00	-14,053.99
Interest income		2,761.05	3,249.89
Cash Flow from operating activities		-11,663,142.44	-3,098,459.07
Cash Flow from investing activities
Proceeds from the disposal of property, plant and equipment/intagible assets	7	394.87	158,297.68
Cash from acquisitions	26	106,323.40	0.00
Payments for financial investments	9	-20,000.00	0.00
Payments for property, plant and equipment/intangible assets	7, 8	-723,804.20	-760,983.48
Cash-Flow from investing activities		-637,085.93	-602,685.80
Cash Flow from financing activities
Capital increase	16	19,721,522.00	9,459,141.50
Uptake of loans	19	6,000,000.00	6,000,000.00
Interest paid	24	-912,953.42	-227,339.49
Cash Flow from financing activities		24,808,568.58	15,231,802.01

(Continued on the next page)

Consolidated Balance Sheet Consolidated statement of comprehensive income Group cash flow statement Group statement of changes in equity

in EUR	Note No.	2011	2010
Net change of cash and cash equivalents		12,508,340.21	11,530,657.14
Cash and cash equivalents at the beginning of the period	15	10,957,784.13	-572,873.01
Cash and cash equivalents at the end of the period	15	23,466,124.34	10,957,784.13
Composition of funds balance at the end of the period
Cash on hand, bank deposits, cheques	15	23,466,124.34	10,957,784.13
Overdraft balances		0.00	0.00
		23,466,124.34	10,957,784.13

Group statement of changes in equity as of December 31, 2011

	Capital subscribed	Capital reserves	Contributions made to imple ment the resolved	Other reserves	Profit or loss carried forward	Total
in EUR			capital increase
As of January 1, 2011	2,593,190.00	22,960,449.80	9,041,281.48	-55.55	-13,372,158.05	21,222,707.68
Additions from stock options	12,560.00	589,468.84	0.00	0.00	0.00	602,028.84
Currency translation differences	0.00	0.00	0.00	11,301.49	0.00	11,301.49
Net profit/loss 2011	0.00	0.00	0.00	0.00	-5,984,537.06	-5,984,537.06
Capital increase from authorized capital 2010	216,099.00	8,825,182.48	-9,041,281.48	0.00	0.00	0.00
Capital increase from authorized capital 2011	0.00	0.00	19,670,996.19	0.00	0.00	19,679,996.19
Capital increase from company funds	2,809,289.00	-2,809,289.00	0.00	0.00	0.00	0.00
As of December 31, 2011	5,631,138.00	29,565,812.12	19,670,996.19	11,245.94	-19,356,695.11	35,522,497.14
As of January 1, 2010	2,561,755.00	22,284,758.36	0.00	-336.76	-15,341,776.59	9,504,400.01
Additions from stock options	31,435.00	675,691.44	0.00	0.00	0.00	707,126.44
Currency translation differences	0.00	0.00	0.00	281.21	0.00	281.21
Net profit/loss 2010	0.00	0.00	0.00	0.00	1,969,618.54	1,969,618.54
Capital increase from authorized capital	0.00	0.00	9,041,281.48	0.00	0.00	9,041,281.48
As of December 31, 2010	2,593,190.00	22,960,449.80	9,041,281.48	-55.55	-13,372,158.05	21,222,707.68

Notes

to the consolidated financial statements as of December 31, 2011 according to the International Financial Reporting Standards (IFRS)

1. Information regarding the company

zooplus AG (henceforth referred to as the "company") is a stock corporation with limited liability as defined under German law, the shares of which have been publicly traded since 2008. The company's registered office is at Sonnenstrasse 15, 80331 Munich, Germany.

zooplus AG and its subsidiaries are active in the online retailing of pet supplies in Germany and other European countries. Pet supplies are generally understood to be foods and accessories. The company's retail operations are carried out via the company's websites.

The consolidated annual financial statements were approved for publication by the Management Board on March 13, 2012.

2. Principles of preparing the annual financial statements

The consolidated annual financial statements of zooplus AG and its subsidiaries (in the following referred to as the "Group") as of December 31, 2011 were prepared in accordance with section 315a of the German Commercial Code (HGB) and with the International Financial Reporting Standards (IFRS) promulgated by the International Accounting Standards Board (IASB) as applied within the European Union.

The cost method is generally applied in the preparation of the consolidated financial statements. Excluded from this are derivative financial instruments and financial assets available for sale, both of which are measured at fair value. The income statement was prepared according to the total cost method.

The consolidated annual statements are prepared in euros (EUR), the functional currency and Group presentation currency. Unless indicated otherwise, all values are expressed in whole amounts in thousands of euros figures after rounding off as per standard commercial practice.

3. Consolidation principles

The consolidated financial statements comprise the financial statements of zooplus AG and its subsidiaries as of December 31 of each financial year. The financial statements of the subsidiaries are prepared according to the same accounting and measurement methods as used for the parent company and on the same balance sheet date.

Subsidiaries are fully consolidated from the date on which they are acquired, i.e. the date on which the Group obtained full control over them, unless they are not of material importance. Inclusion in the consolidated financial statements is discontinued on the date when the parent company no longer exercises this control.

Capital is consolidated according to the purchase method. This means that, as part of a business combination, the identifiable assets, liabilities and contingent liabilities are measured at fair value on initial consolidation. If the acquisition costs exceed the Group's acquired interest in the fair value of the net assets, this excess amount is recognized as goodwill. If the acquisition costs are lower than the fair value of the net assets of the purchased subsidiary, the difference is recorded directly in the income statement.

Expenses, income, receivables and liabilities between the companies included in the consolidation as well as intercompany profits from trading within the Group (in inventory and intangible assets) are eliminated. For consolidation transactions which affect the company's annual profit, deferred tax entries are created..

The following subsidiaries have been included in the consolidated annual financial statements:

	Equity share	Share of equity interest (IFRS) in EUR thousand
Matina GmbH, Munich	100%	105
Bitiba GmbH, Munich	100%	156
zooplus service Ltd., Oxford, England	100%	246
logistik service center, Mimon, Czech Republic	100%	44

The subsidiaries' financial statements are prepared using uniform accounting methods for the same period as the parent company.

On April 27, 2011, zooplus AG purchased a further 51% stake in logistik service center s.r.o. Mimon, Czech Republic, for a purchase price of EUR 40 thousand and therefore now owns 100% of the shares. logistik service center has since been fully consolidated in the consolidated financial statements of zooplus AG. For more on this, see Note 26.

Furthermore, zooplus AG founded the wholly-owned subsidiary zooplus EE TOV, Kiev, Ukraine, in the second quarter 2011. The cost of establishing this subsidiary totaled EUR 10 thousand. The company is currently not conducting any business activities and is therefore not included in the zooplus AG consolidated financial statements due to its lack of importance (total assets less than EUR 10 thousand). In addition, zooplus AG holds 100% of shares in zooplus italia s.r.l., Genoa, Italy, which was founded in December 2011 and entered into the commercial register on December 21, 2011. The Group invested EUR 10 thousand in the new company. The company is also currently not conducting any business activities and is therefore not included in the consolidated financial statements due to its lack of importance (total assets less than EUR 10 thousand).

4. Accounting and valuation principles

Amendments to the accounting and measurement methods

The accounting and measurement methods applied generally correspond to those used in the previous year.

Obligatory, newly applied and revised standards and interpretations for this financial year together with their effects:

Standard	Interpretation	Mandatory application	Effects
IAS 32	Classification of Rights Issues	01.02.2010	none
IFRIC 19	Extinguishing Financial Liabilities with Equity Instruments	01.07.2010	none
IFRS 1	Limited Exemption from IFRS 7 Disclosures for First-time Adopters	01.07.2010	none
IAS 24	Related Party Disclosures
	Improvements 2010 - minor amendments to a number of standards (IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 37, IAS 34, IFRIC 13)	01.01.2011	no material effects

Published standards and interpretations only applicable for financial years commencing after 01.01.2011:

Standard	Interpretation	Mandatory application	Foreseeable effects
IFRS 7	Financial Instruments: Disclosures on Transfers	01.07.2011	no material effects
IFRS 1	Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters	01.07.2011	none
IAS 12	Income taxes: Deferred taxes	01.07.2012	no material effects
IAS 1	Presentation of Financial Statements	01.01.2012	no material effects
IAS 19	Employee benefits	01.01.2013	none
IFRS 9	Financial Instruments: Classification and Measurement	01.01.2013	no material effects
IFRS 10	Consolidated Financial Statements	01.01.2013	no material effects
IFRS 11	Joint Arrangements	01.01.2013	none
IFRS 12	Disclosures of Interests in Other Entities	01.01.2013	no material effects
IFRS 13	Fair Value Measurement	01.01.2013	no material effects
IAS 27	Separate Financial Statements	01.01.2013	none
IAS 28	Investments in Associates	01.01.2013	none

Key accounting and measurement methods

Property, plant and equipment

Property, plant and equipment is carried at cost less cumulative scheduled depreciation and cumulative impairment losses.

The costs of fixed assets comprise the purchase price, import duties and other non-refundable tax as well as all directly attributable costs that are incurred when the asset is put into operational condition. Reductions in the purchase price such as rebates, volume and early payment discounts are deducted from the purchase price. Subsequent costs such as repair and maintenance costs are entered in the period during which they are incurred and recognized as expense. If such costs can be shown to verifiably lead to an increase in the future financial benefit resulting from the use of the asset which is higher than the original cost, these additional costs are entered as subsequent costs.

The estimated useful lives of respective assets are the basis of the scheduled straight line depreciation, with useful lives between 3 and 10 years being assumed.

An item from property, plant and equipment is written off either at its disposal or when no financial benefit can be expected from the further use or sale of the asset. If property, plant and equipment is divested or disposed of, its purchase costs and also the accumulated depreciation are derecognized, and any profit or loss arising from the sale is recognized in the income statement.

The length of the amortization period and the amortization method is reviewed annually at the end of each financial year.

Intangible assets

Intangible assets not acquired as part of a business combination are reported at cost on initial recognition. The cost of purchase of intangible assets acquired as part of a business combination reflects the fair value on the acquisition date. In the following periods, they are measured at cost less the accumulated scheduled amortization and accumulated impairment losses. Expenses for internally generated intangible assets are recognized in income in the period in which they are incurred, except in the case of development costs that can be capitalized. Development costs from individual projects are only capitalized as intangible assets if the Group can prove the following:

• The technical feasibility of completing the intangible asset which allows it to be available for internal use or sale;
• The intention to complete the intangible asset and use or sell it;
• How the intangible asset will generate probable future financial benefits;
• The availability of resources for the purpose of completing the asset and
• The ability to reliably measure the expenditure attributable to the intangible asset during its development.

Intangible assets with a finite useful life are amortized over their estimated economic life using the straight-line method and tested for impairment if there is an indication that the intangible asset may be impaired. The length of the amortization period and the amortization method is reviewed annually at the end of each financial year. The amortization of intangible assets with a limited useful life is reported under depreciation and amortization in the income statement.

Development costs are recognized after they are disclosed for the first time, i.e. on the date on which the intangible asset fulfills the above conditions for the first time, using the acquisition cost model, i.e. at acquisition costs less accumulated amortization and accumulated impairment losses. Amortization starts upon completion of the development phase and from the date on which the asset can be used. Assets are written down over the period in which future benefits are expected. Annual impairment tests are performed during the development phase at least once a year or upon signs of impairment.

The estimated useful life of these intangible assets is 3 years.

Expenses for software purchases with a limited useful life are accounted for as intangible assets providing these expenses cannot be considered to be part of the corresponding hardware. The company does not currently hold intangible assets with an indefinite useful life.

Goodwill is created from purchasing subsidiaries, associated companies and jointly controlled entities, and represents the excess from the compensation transferred for the acquisition of the company above and beyond the fair value of the Group's share in the acquired identifiable assets, the debts taken over, the contingent liabilities and all non-controlling interests of the acquired company on the acquisition date.

Goodwill is allocated to the cash-generating units as part of the impairment test. Goodwill is tested for possible impairment on an annual basis, as stipulated in IAS 36. If there is an indication that an impairment may be possible, impairment tests are conducted more regularly. The carrying amount of the goodwill is compared with the recoverable amount, i.e. with the higher of the fair value less costs to sell and the value in use. An impairment is recognized as an expense immediately and not reversed in subsequent reporting periods.

Impairment of non-financial assets

At every balance sheet date, the Group tests non-financial assets for signs of impairment. If there are such signs or an annual impairment check is required, the Group estimates the recoverable amount for the respective asset.

The recoverable amount is judged to be the higher of the following two amounts: the fair value of an asset or cash generating unit less the costs of disposal and the value in use. The value in use is the present value expected from the further use of the asset together with its sales value at the end of its useful life. The value in use is determined for every asset individually or for the corresponding cash generating unit. If the carrying amount of an asset or cash generating unit exceeds this amount, the asset is considered to be impaired and is written down to the recoverable amount.

Impairment for continued operations is recognized as an expense in the cost category that corresponds to the impaired assets, unless the corresponding asset is carried at its remeasured amount. In this case, the impairment is treated as a reduction of the revaluation reserve.

A review is performed on each balance sheet date to look for indicators that an impairment previously recognized no longer exists or has been reduced. If any of such indicators are present, the Group estimates the recoverable amount of the asset or cash generating unit. An impairment loss from prior years is only reversed if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recorded. The write-up is limited in that the carrying amount of an asset may not exceed its recoverable amount nor the carrying amount which would have resulted after consideration of scheduled depreciation if no impairment losses had been recognized for the asset in previous years. Write-ups are recognized in income unless the asset is accounted for using the revaluation method. In this case, the write-up is treated as an increase in value from revaluation.

Leases

Whether an agreement is or includes a lease depends on the financial aspects of the agreement which in turn requires an estimate whether the fulfillment of the contractual agreement is dependent upon the use of a particular asset and whether the agreement includes a right of use for this asset.

Finance leases, for which all general property-based risks and opportunities connected with respect to the transferred asset are assigned to the Group, did not exist during 2011, with the result that no finance leases had to be capitalized.

Lease payments for operating leases for which all significant risks remain with the lessor are included as costs in the income statement subject to straight-line depreciation over the term of the lease.

Financial assets

Financial instruments are all agreements which give rise to a financial asset at one company and a financial liability or equity instrument at another company. The Group's financial assets mostly comprise cash and cash equivalents, accounts receivable, receivables from loans extended and other receivables.

Categorization under IAS 39 depends on the type and designated purpose of the financial assets and is performed upon initial recognition. zooplus does not apply the categories "Financial assets recognized in income at fair value" and "Held-to-maturity financial instruments".

Financial assets are measured at fair value upon initial recognition. Financial investments that are not classified as measured at fair value also include transaction costs that are directly allocable to the acquisition of the assets.

Purchases or sales of financial assets that include delivery of the financial asset within a period which is defined by regulations or conventions on the respective market (standard market purchases) are recorded on the trade date, i.e. the date on which the group enters into the obligation to buy or sell an asset.

The subsequent measurement of financial assets therefore depends on their classification:

Loans and receivables are non-derivative financial assets with fixed or ascertainable payments that are not traded in an active market. After these have been recognized for the first time they are measured at amortized cost applying the effective interest rate method and less any impairment. Profits and losses arising from these are recognized in the income statement for the period if the loans and receivables are deleted or impaired or as part of amortization. As of December 31, 2011, accounts receivable, other current assets and cash and cash equivalents were allocated to this category. The Group's cash comprises bank balances as well as cash on hand.

Available-for-sale financial assets include debt and equity instruments. In the case of available-for-sale equity instruments, these are equity instruments that are not held for trading nor recognized at fair value through profit and loss. The debt instruments in this category are debt instruments that are to be held for an indefinite period and which can be sold in response to liquidity requirements or changes in market conditions. After initial recognition, the available-for-sale financial assets are measured at fair value through profit and loss, with unrealized profit or loss being entered as other earnings in a separate equity item as a reserve. At the time at which such an asset is derecognized, the accumulated profit or loss entered previously as equity is now recognized in other operating income. If such an asset is impaired, the accumulated loss previously entered directly under equity is recognized in income under financial expenses. As of December 31, 2011, other non-current financial assets were allocated to this category. They were measured at cost.

No derivatives were used as hedging instruments during the financial year.

Impairment of financial assets

The Group performs a review each balance sheet date to ascertain if there are objective indicators that a financial asset or a group of financial assets is impaired.

If there is an objective indication that loans and receivables accounted for at amortized cost have been impaired, the amount of the impairment loss is calculated as the difference between the carrying amount of the asset and the present value of the future cash flows discounted at the asset's original effective interest rate. The asset's carrying amount is reduced by the corresponding impairment loss and the impairment loss is recognized as an expense. If the impairment decreases in one of the following reporting periods and if this reduction can be objectively allocated to an event occurring after the impairment has been recognized, the impairment accounted for earlier will be cancelled. The subsequent recovery in value is entered as a profit providing that the carrying amount of the asset does not exceed the amortized costs at the time of the recovery in value.

For accounts receivable, an impairment is recognized if there is an objective indication that the Group will not be in a position to collect the receivables.

If there are indicators for the impairment of an available-for-sale asset, the accumulated loss – which results from the difference between the costs of purchase and the current fair value less any impairment previously recognized as an expense for this instrument – is removed from other earnings under equity and is recognized as an expense. Recovery in the value of an equity instrument is not reversed and recognized as income; a later increase in the fair value is recognized directly under other earnings.

Derecognizing financial assets

A financial asset is derecognized if one of the three following conditions is fulfilled:

• The contractual rights to the cash flow arising from a financial asset have elapsed.
• The Group has transferred its contractual right to claim the cash flow from a financial asset to a third party or entered into a contractual obligation to pay the cash flow immediately to a third party as part of an agreement that fulfills the conditions of IAS 39.19 (so-called pass-through agreement), and in so doing has either (a) transferred in general all risks and opportunities connected with the ownership of the financial asset or (b) must neither transfer nor retain all risks and opportunities connected with the ownership of the financial asset, must however transfer the disposal over the financial asset.

If the Group has transferred its contractual rights to cash flows from an asset or has entered into a pass-through agreement, and in so doing essentially neither transfers nor retains all of the opportunities and risks that are associated with ownership of this asset, but nevertheless retains the power of disposal over the transferred asset, the Group records an asset within the scope of its ongoing involvement. In this case the Group also recognizes an associated liability. The transferred asset and the associated liability are measured such that the rights and obligations which the Group has retained are taken into account.

Inventories

Raw materials, consumables and operational supplies as well as items for resale are measured at the lower of costs of purchase and net realizable value. Costs of purchase are the purchase price plus incidental acquisition costs less reductions to the acquisition price. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Because of the high stock turnover and the corresponding short time items for resale are held in stock, these will effectively be measured according to FIFO (first in first out).

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, demand deposits, other current highly liquid financial assets with an original maximum term of three months and overdrafts. On the balance sheet, overdrafts are shown as "Liabilities to banks".

Equity

An equity instrument is a contract that evidences a residual interest in the assets of a company after deducting all of its liabilities. Equity instruments are recognized at the issuing proceeds received less directly allocable issuing costs. Issuing costs are costs that would not have been incurred without the issue of the equity instrument.

If the Group acquires its own shares, these are recorded at cost of purchase and deducted from equity. The purchase, sale, issue or withdrawal of own shares are not recognized in income. Any differences between the carrying amount and compensation are recorded under other capital reserves.

Convertible preferred shares are broken down into debt and equity components based on the contractual conditions. For issues of convertible preferred shares, the fair value of the debt component is determined using a market interest rate for comparable non-convertible bonds. This amount is recorded as a financial liability measured at amortized cost (less transaction costs) until it is derecognized as a result of conversion or a buy-back. The amount of the proceeds from the issue in excess of this amount is recorded under equity as a conversion option after the deduction of transaction costs. The carrying amount of the conversion option remains unchanged in following years.

Financial liabilities

The Group classifies its financial liabilities within the meaning of IAS 39 upon initial recognition. The Group does not use the opportunity to classify financial liabilities as measured at fair value through profit and loss upon initial recognition (fair value option). The category "Derivatives designated as hedge transactions and effective as such" is also not used.

All financial liabilities are measured at fair value upon initial recognition, in the case of loans plus the directly allocable transaction costs. The Group's financial liabilities include trade payables, other liabilities, overdrafts and loans.

After the first entry, interest-bearing other financial liabilities are measured at amortized cost applying the effective interest rate method. Profits and losses are recognized in the income statement if the debt has been derecognized or has been amortized using the effective interest rate method.

A financial liability is derecognized if the obligation is then fulfilled, or notice has been given of terminating it, or if it has elapsed. If an existing financial liability is exchanged for another financial liability from the same lender with substantially different contractual conditions, or if the conditions for an existing liability are subject to material change, this exchange or this change is treated as derecognition of the original liability and the recognition of a new liability. The difference between the respective carrying amounts is recognized in income.

Provisions

A provision is formed if the Group has a current obligation (legal or factual) resulting from a past event for which the use of resources with financial benefits for fulfilling the obligation is probable and a reliable estimate can be made of the amount of the obligation. To the extent that the Group expects at least a partial refund for a provision carried as a

liability (as is the case, for example, for insurance policies), the refund is only recorded as a separate asset if the refund is as good as secure. Expenses for the formation of provisions are carried in the income statement after deduction of the refund. If the effect of interest is significant, provisions are discounted at a pre-tax interest rate which reflects any risks specific to the debt. In the event of discounting, the increase in the provisions over time is recorded as financial expenses.

Provisions are audited at every reporting date and amended according to the best estimate in each case. The amount of the provision corresponds to the present value of the probable costs required to fulfill the obligation.

Foreign currency conversion

Foreign-currency denominated accounts and transactions are converted according to IAS 21 and the functional currency principle.

Transactions denominated in foreign currency in the single-entity financial statements for zooplus AG and its subsidiaries are translated to the functional currency using the exchange rate on the transaction date. On the balance sheet date, monetary items are converted using the closing rate on the reporting date. Currency conversion differences resulting from this are recognized in income. This does not include all monetary items that constitute effective hedges of a net investment in foreign business operations. These are recorded under other earnings until the net investment is sold, and are only recognized in the income statement upon their disposal.

The assets and liabilities of foreign Group companies for which the functional currency is not the Group's reporting currency (EUR) are converted according to the modified closing-rate method. In the consolidated financial statements, assets and liabilities are converted based on the exchange rate prevailing on the final day of the period. Items in the income statement are converted to EUR based upon average exchange rates during the period. The resulting net profit or loss is then carried in the consolidated balance sheet. Currency conversion differences are not recognized in profit/loss and are posted under other reserves in equity.

Share-based payment

A portion of Group employees and the Management Board receive a share-based remuneration in the form of equity instruments. The expenses that arise as a result of granting equity instruments are measured at the fair value of the instruments on the date they are granted. The fair value is identified using a suitable option price model. During this measurement, the only conditions that apply, if any, are those linked to zooplus AG's share price ("market conditions"), no other performance-related conditions for exercising the option are considered.

Expenses arising from granting equity instruments are recorded with an accompanying corresponding increase of the equity over the period in which the performance and/or service conditions are fulfilled. This period ends at the time from which the employee has an irrevocable right to exercise the option. The accumulated expenses from granting the equity instruments reflect, at every reporting date up to the time when the option may first be exercised, the elapsed part of the period between granting and exercising of the option as well as the Group's best estimate of the quantity of equity instruments that become vested. The amount that is debited or credited to the income statement reflects the development of the accumulated expenses at the beginning and at the end of the reporting period.

No expenses are recognized for remuneration rights that cannot be exercised. This does not include transactions with compensation via equity instruments for which specific market or non-exercise conditions have to be fulfilled in order that these can be exercised. Irrespective of whether the market or non-exercise conditions have been fulfilled, these are regarded as being exercisable if all other performance and service conditions have been met.

Revenue recognition/Recognition of income

Income is recorded when it is probable that the financial benefits will flow to the Group and the amount of the sales can be reliably determined. Income is recognized at the fair value of the compensation less any bonuses and discounts granted as well as value added tax or other levies.

When goods are sold, sales are recognized if the delivery was performed and the risks have been transferred to the purchaser. Sales arising from the sale of goods are recognized at net value, i.e. after the deduction of VAT, returns, early payment and volume discounts and rebates. It is common Group business practice that the purchaser has the right to return the goods. Goods returned by customers after the reporting date are entered so as to reduce sales. Provisions are formed for any outstanding or uncertain returns.

The Group runs its own loyalty program, allowing customers to collect bonus points with every purchase. Once a certain minimum number of points have been collected, the customer can then redeem these points for goods. The compensation received is apportioned to the goods sold and bonus points awarded, with the apportionment of the compensation to the points depending on their fair value. The fair value of the bonus points is determined based on the sales price of the various products offered as rewards. The fair value of the awarded bonus points is deferred and recognized as sales only when the bonus points are redeemed.

The Group offers its customers the opportunity to receive discounts over a contractually agreed period by purchasing a "zooplus saving plan". The income generated from sales of the saving plan is deferred over the validity period of the individual saving plans.

For the provision of services, sales are recognized at the point of time at which the service was provided. Services mainly comprise industry specific bonuses, advertising income and the provision of advertising space.

The Group has carried out an analysis of its business relations to determine whether it takes the role of principal or intermediary and has determined that it acts as the principal in all its sales transactions.

Interest is recognized at the time of accrual and reported in the income statement under financial earnings.

Borrowing costs

Borrowing costs that can be allocated directly to the purchase, construction or production of an asset, said asset requiring a substantial amount of time to render usable or saleable, are capitalized as cost of purchase or cost of conversion of the relevant asset. There are currently no capitalized borrowing costs.

All other borrowing costs are recognized as expenses in the period in which they are incurred. Borrowing costs are interest and other costs incurred by a company when taking on debt.

Taxes on income

Actual tax liabilities and claims for tax refunds

The actual tax liabilities and claims for tax refunds for the current period and for earlier periods are to be measured at the amounts expected for payment to the tax authorities or expected for refund by the tax authorities respectively. When calculating these amounts, the tax rates and tax laws as valid on the balance sheet date are applied.

Deferred tax

Deferred taxes are formed by applying the liability method for temporary differences existing on the balance sheet date between the carrying amount of an asset or liability on the balance sheet and its value in the tax base.

Deferred tax liabilities are formed for all taxable temporary differences with the exception of the following:

• Deferred tax liabilities arising from the initial measurement of goodwill or an asset or a liability for a business transaction that is not a business combination and at the time of the transaction neither influences the trading profit nor the taxable profit/loss for the financial year.
• Deferred tax liabilities arising from taxable temporary differences connected with shareholdings in subsidiaries and associated companies and joint ventures, if the timing for reversing the temporary differences can be controlled and it is likely that the temporary differences will not be reversed in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences and tax losses brought forward which have not yet been deducted, to the extent to which it is likely that taxable income will be available in the future against which the deductible temporary differences and the losses brought forward that have not yet been deducted can be offset, with the exception of the following:

• Deferred tax assets may not be entered that arise from deductible temporary differences connected to the initial valuation of an asset or debt that is not related or connected to a business combination and at the time of the business transaction had no influence on either the trading profit/loss for the financial year concerned nor the taxable profits/loss.
• Deferred tax assets that arise from deductible temporary differences connected to shareholdings in subsidiaries and associated companies may only be entered to the extent to which it is likely that these temporary differences will not be reversed in the foreseeable future and an adequate taxable profit will be available against which the temporary differences can be offset.

The carrying amount of deferred tax assets is reviewed at every reporting date and reduced to the extent in which it is no longer likely that an adequate taxable profit will be available against which the deferred tax asset can at least be partially offset. Deferred tax assets that are not carried on the balance sheet are reviewed at every balance sheet date and carried to the extent to which it has become likely that a future taxable profit will enable the deferred tax asset to be realized.

Deferred tax assets and liabilities are calculated based on the anticipated tax rates and the tax laws that apply on the balance sheet date.

Deferred tax assets and liabilities are netted if there is a legally enforceable right to set off the deferred tax receivables against the deferred tax liabilities and these are for income taxes for the same tax authority and if the Group intends to net its current tax assets and tax liabilities.

Current and deferred taxes are recognized as income or expense unless they are connected to items which are taken directly to equity. In this case, taxes are also to be taken directly to equity.

Business transactions after the balance sheet date

Business transactions that occurred before the balance sheet date but become known after the balance sheet date will be accounted for in the consolidated financial statements. Significant transactions in relation to which financial consequences arise after the balance sheet date are explained.

5. Significant estimates and discretionary decisions

Preparing the consolidated financial statements requires the management to make estimates and assumptions which directly impact income, expenses, assets and liabilities on the balance sheet date as well as the disclosure of contingent liabilities. However, the uncertainties associated with these assumptions and estimates could lead to results which might substantially affect the carrying amounts of the aforementioned items in future periods.

The most important forward-looking assumptions and other key sources of estimating insecurities which exist on the balance sheet date and as a result of which a risk exists that will make an adjustment to the carrying amounts of assets and liabilities necessary during the next financial year are discussed below.

Accounts receivable

The company applies age structure time bands to determine impairments on accounts receivable. The overdue time buckets are impaired by a percentage based on past empirical data. As of December 31, 2011 and 2010, the impairment for accounts receivable totaled EUR 3.9 million and EUR 3.7 million respectively.

Loyalty program

The measurement of obligations from the loyalty program is based on various estimates. In accordance with IFRIC 13 "Customer Loyalty Programs", the fair value of the distributed but not yet redeemed bonus points is deferred. The fair value of a bonus point is determined based on the sales price of the various products offered as rewards. The fair value of bonus points that are no longer likely to be used is not deferred. Estimates of how many bonus points are unlikely to be redeemed in the future are based on the previously observed redemption rate, while also taking into account the current participation conditions of the loyalty program. Assumptions and related methods for estimating the measurement of the loyalty program are presented in Note 21.

Share-based payments

The costs that arise as a result of granting equity instruments to employees are measured at the fair value of the granted instruments on the date they are granted. The most suitable measurement method must first be determined by estimating the fair value of share-based payment; this is dependent on the granting conditions. For this estimation, suitable input parameters in this measurement process are required, primarily including aspects such as likely maturity period, volatility and dividend yield as well as corresponding assumptions. Assumptions and related methods for estimating the fair value of share-based payments are presented in Note 17.

Deferred tax

Deferred tax assets are to be created for all unused tax losses carried forward insofar as it is probable that adequate taxable income will be generated in the future so that the tax losses carried forward can be utilized. When identifying the amount of deferred tax assets that can be capitalized, the management must exercise discretion with regard to the anticipated date of occurrence and the amount of the future taxable income and also the future tax planning strategies.

The Group has corporation tax losses carried forward totaling EUR 22.5 million (2010: EUR 14.7 million) as well as trade tax losses carried forward totaling EUR 22.5 million (2010: EUR 14.8 million). These are mostly at zooplus AG, which recorded positive earnings in 2007, 2008 and 2010. zooplus AG's loss in 2011 was largely due to extraordinary one-off factors in connection with the logistics migration. As a result of the consolidated net profit in the past as well as the future corporate forecast and the existing opportunities to carry forward losses, the Management Board believes that it will be possible to use these losses carried forward in full. If actual results differ from the Management Board's expectations, this could have a negative impact on the net assets, financing position and results of operations. Further details on deferred taxes can be found in Note 10.

6. Segment reporting

As defined by IRFS 8, a segment is a clearly outlined part of the Group that: engages in business activities from which it may earn sales and incur expenses, and whose operating results are reviewed regularly by the entity's chief operating decision-maker in making decisions about resources to be allocated to the segment and to measure its performance, and for which separate financial information is available.

zooplus Group's sole business activity is the sale and distribution of pet supplies. The range of products distributed by the company is homogenous and cannot be sub-divided. As an Internet retailer, the company distributes its products from 2 locations, independently of the geographic location of the customers. All key corporate processes are defined on a pan-European basis. Suppliers, brands and price structures apply Europe-wide. For this reason, the Management Board manages the company based on the key figures of the business as a whole. The business is not split into segments. Consequently the company does not provide or produce any segment-oriented reports.

No individual customers account for more than 10% of total sales.

The breakdown of sales by country is discussed in Note 22. The Group's main non-current assets are all held by zooplus AG in Germany.

7. Property, plant and equipment

	in EUR thousand
Cost as of January 1, 2010	1,719
Additions	416
Disposals	-97
Cost as of December 31, 2010	2,038
Accumulated depreciation as of January 1, 2010	1,003
Additions	343
Disposals	-11
Accumulated depreciation as of December 31, 2010	1,335
Carrying amount as of December 31, 2010	703

	in EUR thousand
Cost as of January 1, 2011	2,038
Additions	764
Additions from initial consolidation	28
Foreign currency valuation	-1
Disposals	-253
Cost as of December 31, 2011	2,576
Accumulated depreciation as of January 1, 2011	1,335
Additions	428
Foreign currency valuation	0
Disposals	0
Accumulated depreciation as of December 31, 2011	1,763
Carrying amount as of December 31, 2011	813

Property, plant and equipment consists exclusively of fixtures, fittings and equipment at the company's premises. The company does not have any finance leases. There were no signs of impairment on the reporting date

8. Intangible assets

in EUR thousand	Software developed in-house	Software/ licenses	Goodwill	Total
Cost as of January 1, 2010	368	657	0	1,025
Additions	167	178	0	345
Disposals	0	0	0	0
as of December 31, 2010	535	835	0	1,370
Accumulated depreciation as of January 1, 2010	52	458	0	510
Additions	123	120	0	243
Disposals	0	0	0	0
as of December 31, 2010	175	578	0	753
Carrying amount as of December 31, 2010	360	257	0	617

in EUR thousand	Software developed in-house	Software/ licenses	Goodwill	Total
Cost
as of January 1, 2011	535	835	0	1,370
Additions	0	212	0	212
Additions from initial consolidation	0	9	21	30
Foreign currency valuation	0	0	0	0
Disposals	0	0	0	0
as of December 31, 2011	535	1,056	21	1,612
Accumulated depreciation
as of January 1, 2011	175	578	0	753
Additions	178	168	0	346
Foreign currency valuation	0	0	0	0
Disposals	0	0	0	0
as of December 31, 2011	353	746	0	1,099
Carrying amount as of December 31, 2011	182	310	21	513

Intangible assets solely comprise goodwill, concessions, industrial property rights and similar rights and licenses to such rights of which the remaining useful life is up to three years. Amortization on development costs recorded as expenses in the income statement during the financial year totaled EUR 178 thousand (2010: EUR 123 thousand). There were no further development costs.

There are no restrictions to the rights of disposal for the intangible assets. Furthermore no material intangible assets have been pledged as collateral for debts.

The goodwill totaling EUR 21 thousand resulted from the initial consolidation of logistic service center s.r.o. in the financial year 2011. The goodwill recognized on the balance sheet stemmed from both the expected and realizable synergies as well as from the abilities acquired as part of the acquisition of the integrated workforce. For more details please see Note 26.

There were no signs of impairment on the reporting date.

9. Other financial assets

in EUR thousand	2011	2010
Interests in associated companies	20	0
Participating interests	0	4
Total	20	4

Interests in associated companies relates to the subsidiaries zooplus EE TOV, Kiev, Ukraine, and zooplus italia s.r.l. Genoa, Italy, which were founded in 2011. These companies do not currently conduct any business activities and are therefore excluded from the consolidated financial statements due to their lack of importance. In accordance with IAS 39, the interests are classed as an available-for-sale financial asset and are recorded on the balance sheet at the cost of purchase, as no market prices exist for a publicly accessible market in this case. The participation cost of EUR 4 thousand in logistic service center s.r.o. Mimon, Czech Republic was absorbed as part of the initial consolidation (see Note 26).

10. Taxes on income

The significant components of income tax expense for the financial years 2011 and 2010 are as follows:

in EUR thousand	2011	2010
Actual taxes on income
Current taxes on income	-118	-34
Deferred tax
on temporary differences	66	-25
on losses carried forward	2,541	-1,048
Total	2,489	-1,107

In order to identify current taxes in Germany, a uniform corporation tax rate of 15% (previous year: 15%) is applied with a solidarity surcharge of 5.5% (previous year: 5.5%) to distributed and retained profits. In addition to corporation tax, trade tax was charged for the profits generated in Germany. Taking into account the non-deductability of the trade tax as an operating expense, there is an average trade tax rate of 17.15%. This results in a total tax rate in Germany of approx. 33%. When calculating the deferred tax assets and liabilities, the tax rates are used that apply on the date the asset is realized or the liability is fulfilled. Deferred tax assets and liabilities are measured using the total tax rate of 33%.

The calculation for converting the income tax to the product of the profit/loss for the reporting period and the Group tax rate for the financial years 2011 and 2010 is as follows:

in EUR thousand	2011	2010
Pre-tax profit	-8,474	3,076
Taxes on income at the tax rate in Germany of 33%	2,794	-1,014
Impact of non-deductible expenses from stock options	-194	106
Impact of basis of calculation for trade tax	68	28
Impact of other non-deductible operating expenses	-14	-44
Current taxes on income	-118	-166
Impacts of other deviations	-47	-17
Taxes on income in the consolidated income statement	2,489	-1,107

Deferred tax on the balance sheet date had the following structure:

in EUR thousand	2011	2010
Deferred tax as assets
Intangible assets	2	2
Inventories	81	56
Losses carried forward	7,467	4,873
	7,550	4,931
Deferred tax liabilities
Internally generated intangible assets	60	119

On December 31, 2011, corporation tax losses carried forwards totaled EUR 22.5 million (previous year: EUR 14.7 million) and trade tax losses carried forwards came in at EUR 22.5 million (previous year: EUR 14.8 million). The company believes that, as a result of its future business activities, it will be able to generate sufficient positive taxable income to realize its deferred tax assets.

Tax-relevant losses in Germany can be offset in full up to an amount of EUR 1.0 million, however above that amount only 60% can be offset.

11. Inventories

This balance sheet item is structured as follows:

in EUR thousand	2011	2010
Raw materials, consumables and supplies	800	143
Merchandise	24,735	20,425
Total	25,535	20,568

Raw materials, consumables and supplies consist in general of packaging for the mail order trade. On the balance sheet date there were no reasons for performing impairment that would have had to be considered by creating an allowance. The company's inventories are used as security for securing the loans received.

12. Advance payments

These are payments made in advance for upcoming deliveries of goods to be added to inventory.

13. Accounts receivable

All accounts receivable have a remaining term of up to one year and are not subject to interest. As a rule they are due within 30 days. There are no restrictions on the rights to dispose over them.

The age distribution of accounts receivable as of December 31 is as follows:

in EUR thousand	Purchase	Not due and not		Overdue and not impaired		Overdue and
	cost	impaired	<30 days	30-90 days	>90 days	impaired
2011	10,226	4,226	1,080	303	215	4,402
2010	9,991	3,868	1,153	286	460	4,225

As of December 31, 2011, receivables totaling EUR 3,868 thousand (previous year: EUR 3,741 thousand) were impaired. This impairment is mainly in connection with receivables stemming from customers undergoing private insolvency or related moratoria. The company applies age structure time bands to determine impairments on accounts receivable. The overdue time buckets are impaired by a percentage based on past empirical data.

The impairment account changed as follows:

in EUR thousand	2011	2010
Balance on January 1	3,741	3,641
Additions	1,425	1,278
Utilization	-1,298	-1,178
Balance on December 31	3,868	3,741

14. Other current assets

in EUR thousand	2011	2010
VAT receivables	4,673	2,190
Creditors with net debit balance	3,803	3,525
Receivables from compensation payments	0	2,975
Advance payments	600	1,550
Others	945	1,254
Total	10,021	11,494

Creditors with net debit balance refers to claims against suppliers due to advertising and marketing campaigns carried out in the financial year. All other current assets have a term of up to one year.

15. Cash and cash equivalents

in EUR thousand	2011	2010
Bank balances	23,463	10,955
Cash on hand	3	3
Total	23,466	10,958

Bank balances are subject to variable interest for demand deposits. Bank balances contain a capital inflow of EUR 19,079 thousand from the capital increase carried out in December.

In the previous year, the level of funds used to support the consolidated cash flow comprised the above-mentioned cash and cash equivalents less current overdraft liabilities. Cash flows from operating activities were prepared according to the indirect method.

16. Equity

Subscribed capital

The subscribed capital corresponds to zooplus AG's share capital and totals EUR 5,631,138.00 (previous year: EUR 2,593,190.00) It has been fully paid and comprises no-par bearer shares, each with a theoretical interest of EUR 1.00 in the share capital.

In the financial year 2011, zooplus AG's subscribed capital increased as a result of the subscribing of a total of 216,099 shares as part of a capital increase from subscribed capital, the allocation of 2,809,289 shares as part of a capital increase from company resources as well as the allocation of a total of 12,560 shares from the conditional capital 2004/I and 2007/I from EUR 2,593,190.00 by a total of EUR 3,037,948.00 to EUR 5,631,138.00.

Approved capital

As a result of the resolution by the General Meeting on April 25, 2008, the Management Board is authorized, with the approval of the Supervisory Board, to increase the company's share capital on one or several occasions, whole or in partial amounts, during the period until April 24, 2013 against cash or non-cash contributions by up to a total of EUR 1,193,075.00 by issuing new, no-par value bearer shares with a notional interest in the share capital of EUR 1.00 per share (Approved Capital 2008/I). The Management Board is entitled to finalize further details regarding the execution of capital increases from Approved Capital 2008 in conjunction with the Supervisory Board.

With the approval of the Supervisory Board, the Management Board passed a resolution on November 17, 2011 to increase the company's share capital to a nominal EUR 469,261.00 through a partial utilization of the Approval Capital 2008 by issuing up to 469,261 new, no-par value bearer shares with a notional interest in the share capital of EUR 1.00 per share. The capital increase was registered on January 9, 2012.

Conditional capital

The company's share capital was conditionally increased by up to EUR 2,920.00 (Conditional Capital 2004/I) after being adjusted to the capital increase from company resources on the balance sheet date. Conditional Capital 2004/I currently backs rights for the subscription of up to 2,920 no-par value bearer shares and serves to secure subscription rights from stock options for the company's employees. The conditional capital increase is only to be executed to the extent that the holders of the subscription rights issued as a result of the authorization resolution by the Annual General Meeting on December 27, 2004 in the version dated March 23, 2006, April 27, 2007, July 20, 2007 and November 30, 2008 as part of the 2004 stock option program exercise their subscription rights for shares of the company and the company does not grant its own shares to satisfy the subscription rights.

The company's share capital was conditionally increased by a further EUR 9,940.00 (Conditional Capital 2007/I) after being adjusted to the capital increase from company resources on the balance sheet date. Conditional Capital 2007/I currently backs rights for the subscription of up to 9,940 no-par value bearer shares and serves to secure subscription rights from stock options for the company's employees. The conditional capital increase is only to be executed to the extent that the holders of the subscription rights issued as a result of the authorization resolution by the Annual General Meeting on April 27, 2007 in the version dated July 20, 2007 as part of the 2007/I stock option program exercise their subscription rights for shares of the company and the company does not grant its own shares to satisfy the subscription rights.

Conditional Capital 2007/II was completely exhausted with the issue of shares in the financial year 2010.

The company's share capital was conditionally increased by a further EUR 420,000.00 (Conditional Capital 2010/I) after being adjusted to the capital increase from company resources on the balance sheet date. Conditional Capital 2010/I currently backs rights for the subscription of up to 420,000 no-par value bearer shares. Conditional Capital 2010/I serves to secure subscription rights from stock options for employees and members of the company's Board of Management. The conditional capital increase is only to be executed to the extent that the holders of the subscription rights issued as a result of the authorization resolution by the Annual General Meeting on May 27, 2010 as part of the 2010/I stock option program exercise their subscription rights for shares of the company and the company does not grant its own shares to satisfy the subscription rights.

As of December 31, conditional capital after being adjusted to the capital increase from company resources was structured as follows:

in EUR thousand	2011	2010
Conditional Capital 2004/I or III	2,920.00	3,640.00
Conditional Capital 2007/I	9,940.00	21,780.00
Conditional Capital 2010/I	420,000.00	420,000.00
Total	432,860.00	445,420.00

Capital reserves

As of December 31, 2011, the capital reserves totaled EUR 29,565,812.12. The increase in the capital reserves came about from the recognition of expenses in connection with the employee stock option plan on the balance sheet (see further information under Note 17) and the premium from the conditional capital increase performed in the financial year. It was reduced by the capital increase from company resources. On the balance sheet date these were structured as follows:

in EUR thousand	2011	2010
Capital reserves paid during financing rounds	23,828	15,003
Converted shareholder loans	4,820	4,820
Capital increase from company resources	-2,809	0
Capital reserves from increases out of conditional capital	2,048	2,048
Debentures/employee stock options	1,678	1,089
Total	29,566	22,960

Contributions made to implement the approved capital increase

With the approval of the Supervisory Board, the Management Board passed a resolution on November 17, 2011 to increase the company's share capital to a nominal EUR 469,261.00 through a partial utilization of the Approval Capital 2008 by issuing up to 469,261 new, no-par value bearer shares with a notional interest in the share capital of EUR 1.00 per share. Payments of EUR 19,708,962.00 were made for the above-described capital increase in the period between November 25, 2011 and December 8, 2011, which were reported as a deposit that had been rendered to perform a capital increase, less equity procurement costs, on the balance sheet date. The capital increase was entered into the commercial register on the balance sheet date January 9, 2012. In total, costs from equity sourcing totaled EUR 57 thousand. This resulted in tax effects of EUR 19 thousand.

Other reserves

The reserve for currency differences serves to record differences resulting from the currency translation of financial statements of the foreign subsidiaries zooplus services Ltd. and logistic service center s.r.o.

Profit/loss for the period and losses carried forward

in EUR thousand	2011	2010
Losses carried forward as of January 1	-13,372	-15,342
Profit/loss for the period	-5,985	1,970
Losses carried forward as of December 31	-19,357	-13,372

17. Share-based payments

The expenses recorded for the options granted in the financial year were as follows:

in EUR thousand	2011	2010
Expenses for executives	409	222
Expenses for employees	180	102
Total costs	589	324

Employee stock option program

According to the stock option program 2004/2005, zooplus AG employees can be granted option rights with respect to zooplus AG shares. Each option entitles the bearer to subscribe for 10 zooplus AG bearer shares at a nominal value of EUR 1.00 per share. The subscription price is EUR 1.00 per share. The options can only be converted to shares. The option rights can only be exercised two years after the options have been granted at the earliest. After this period has elapsed, 50% of the rights can be exercised immediately in one tranche and the rest at a rate of 1/24 after each further month has elapsed (waiting period). The options must be exercised seven years after their issue date at the latest.

On the basis of the resolution of the Annual General Meeting of April 27, 2007, the Management Board passed a resolution on June 29, 2007 with the agreement of the Supervisory Board with regard to the employee Stock Option Program 2007/I and the corresponding granting of stock options with a right to subscribe for shares of the company. Each option entitles the bearer to subscribe for 10 zooplus AG bearer shares at a nominal value of EUR 1.00 per share. The subscription price is EUR 1.00 per share. According to the Stock Option Program 2007/I, certain employees of zooplus AG are authorized to purchase a total of up to 3,240 individual shares in the company. The options can only be converted to shares. The option rights can only be exercised two years after the options have been granted at the earliest. After this period has elapsed, 50% of the rights can be exercised immediately in one tranche and the rest at a rate of 1/24 after each further month has elapsed (waiting period). The options must be exercised seven years after their issue date at the latest. The subscription rights on stock options can only be exercised if specific performance goals are achieved.

On the basis of the resolution of the Annual General Meeting on May 27, 2010, the Management Board passed a resolution on June 15, 2010 with the agreement of the Supervisory Board with regard to the employee Stock Option Program 2010/I and the corresponding granting of stock options with a right to subscribe for shares of the company. According to the Stock Option Program 2010/I, the Management Board and Supervisory Board can authorize certain employees of zooplus AG to purchase a total of up to 170,000 individual shares in the company. The stock options are issued in two tranches (42,500/42,500), with each linked to a different performance goal. In the financial year 2011, no stock options were issued to employees of zooplus AG. Each option entitles the bearer to subscribe for

two zooplus AG no-par value bearer shares at a nominal value of EUR 1.00 per share. The exercise price per share corresponds to the volume-weighted 1-month average price of the company share in Xetra trading (or a functionally comparable successor system) on the Frankfurt Stock Exchange before the issuing date of the stock options less a reduction of 5%, however at least the highest exercise price of all stock already issued as part of the Stock Option Program 2010/I. The option rights can only be exercised 4 years after the options have been granted at the earliest. The subscription rights on stock options can only be exercised if specific performance goals are achieved. It is possible to exercise the subscription rights within three years, starting with the expiry of the waiting period.

Option plan for executives

On the basis of the resolution of the General Meeting on May 27, 2010, zooplus AG's Supervisory Board passed the regulations of the Stock Option Program 2010/I on June 15, 2010 for granting stock options to members of the Management Board with the right to subscribe for zooplus AG shares. According to the Stock Option Program 2010/I, members of the Management Board can subscribe for up to 250,000 shares in the company. The stock options were issued in two tranches (62,500/62,500), with each linked to a different performance goal. Each option entitles the bearer to subscribe for two zooplus AG no-par value bearer shares at a nominal value of EUR 1.00 per share. The subscription price is EUR 17.50 per share. The option rights can only be exercised four years after the options have been granted at the earliest. The subscription rights on stock options can only be exercised if specific performance goals are achieved. It is possible to exercise the subscription rights within three years, starting with the expiry of the waiting period.

All options can only be converted into equity instruments.

The fair value of the granted stock options is determined by applying the Black & Scholes model at the time they were granted and by taking the conditions under which the stock options were granted into account. The following model parameters were used for the calculation:

	Stock option program (SOP)
	2004/2005	2007/I	2010/I
Average share price (EUR)	6.13	7.51	37.70
Expected volatility (%)	50	30	36
Risk-free interest rate (%)	4.0	4.5	2.2
Dividend yield (%)	0.0	0.0	0.0
Anticipated maturity of the options (years)	3.0	3.5	5.5

The anticipated maturity of stock options is based on past data and current expectations, and does not necessarily reflect the actual exercising patterns of the stock holders. The future volatility during the anticipated maturity period of the stock option was estimated based on past volatilities and the expected future share price development. Due

to the limited history of the company's share on the market, the volatility of the past year was used as the basis. The anticipated volatility is based on the assumption that past volatility will be reflected in future trends, however the actual future, volatility can deviate from the assumptions made.

The stock options changed as follows:

	Stock option program (SOP)
	2004/2005*	2007/I*	2010/I**
Outstanding at the beginning of the reporting period	72	1,520	187,000
Lapsed in the reporting period	0	-12	-18,000
Exercised in the reporting period	-72	-1,184	0
Granted in the reporting period	0	0	0
Outstanding at the end of the reporting period	0	324	169,000

* One option authorizes the purchase of 10 shares.

** One option authorizes the purchase of 2 shares.

The prices for exercising the options for the shares outstanding on December 31, 2011 were between EUR 1.00 and EUR 17.50 per share. The weighted average share price on the date the options were granted was EUR 28.67 (previous year: EUR 17.60).

At the end of the period under review, 324 options could be exercised (previous year: 955). The weighted average remaining contractual term for the stock options outstanding on December 31, 2011 was 2.71 years (previous year: 3.39 years).

18. Trade liabilities

Trade liabilities have a term of up to one year and are not subject to interest payments. Payment periods usually vary between 14 and 30 days.

19. Financial debt

in EUR thousand	2011	2010
Current account liabilities	0	0
Short-term bank loans	16,000	10,000
Total	16,000	10,000

The company has lines of credit totaling EUR 17.0 million with no definite maturity. As of the balance sheet date December 31, 2011, EUR 16.0 million of this total was drawn on (previous year: EUR 10.0 million). As part of this line of credit, the company was utilizing a one-month money market loan of EUR 16.0 million with an interest rate based on Euribor plus 250 basis points. The loans are collateralized according to standard banking practice using the transfer of inventories, global cessions for customer receivables and assignment of insurance claims for merchandise. In addition, there is a covenant which includes a minimum equity ratio of 25%.

20. Other current liabilities

in EUR thousand	2011	2010
Tax liabilities
VAT	5,317	8,577
Salary and church taxes	144	141
Subtotal	5,461	8,718
Other sundry liabilities
Debtors with net credit balance	2,206	1,892
Bonus payments	489	416
Employee vacation obligations	255	247
Costs of preparing the annual financial statements and audit costs	73	70
Others	950	1,477
Subtotal	3,973	4,102
Total	9,434	12,820

The other short-term liabilities have a term of up to one year and are non-interest bearing. Creditors with net debit balance relate to customers with a positive balance due to excess payment or returns.

21. Provisions

in EUR thousand	2011	2010
Provisions for loyalty program points	987	1,913
Provisions for international duties	777	0
Provisions for zooplus saving plans	511	0
Provisions for returns	201	144
Other provisions	2	50
Total	2,478	2,107

Provisions for as yet unredeemed bonus points from the customer loyalty program totaled EUR 987 thousand as of December 31, 2011. To calculate these provisions, the redeemable bonus points according to the applicable participation conditions on the balance sheet date December 31, 2011 were determined and measured taking into account past redeeming rates as well as the fair value of a bonus point based on the sale prices of the products available in the loyalty program. The fall was based on the revised participation conditions for the bonus program compared to the previous year.

22. Sales

in EUR thousand	2011	2010
Germany	114,648	95,470
France	35,204	24,311
The Netherlands	20,887	13,094
Great Britain	14,471	10,533
Spain	12,732	7,803
Italy	12,594	7,417
Other countries	34,260	19,200
Total	244,796	177,828

The Group's sales relate to the sale of pet products in Germany and other European countries. Sales from other European countries mainly include France, the Netherlands, Great Britain, Spain and Italy. In addition, the Group also operates in a number of smaller European markets, including Austria, Belgium, Poland, Denmark, Ireland, the Czech Republic, Switzerland, Finland, Slovakia, Luxemburg, Portugal, Hungary, Slovenia and Sweden.

23. Personnel costs

in EUR thousand	2011	2010
Wages and salaries	10,536	7,920
Social security deductions and expenses for pension provisions and other benefits	1,719	1,336
Total	12,255	9,256

We refer to Note 17 for the personnel expenses incurred as a result of share-based payments.

On average, 191 people were employed during the financial year (excl. Management Board; previous year: 143).

24. Other income and expenses

Other income

in EUR thousand	2011	2010
Income from marketing services	9,573	8,282
Compensation payments	875	6,125
Income from reminder charges	464	421
Other income	1,353	943
Total	12,265	15,771

In connection with a switch of service providers, the Group received compensation payments totaling EUR 875 thousand in the year under review (previous year: EUR 6,125 thousand).

Other expenses

in EUR thousand	2011	2010
Logistics & fulfillment	63,454	41,984
Advertising	14,836	15,804
Payment transaction costs	2,794	1,891
Other various operating expenses	13,466	11,239
Total	94,550	70,918

In 2011, losses from currency conversion totaling EUR 594 thousand (previous year: EUR 224 thousand) were recognized in income.

Financial income/Financial expenses

in EUR thousand	2011	2010
Interest income and similar income	3	3
Interest expenses and similar expenses	-913	-227
Total	-910	-224

The increase in interest expenses largely resulted from the expansion and corresponding use of the line of credit during the financial year 2011.

25. Consolidated profit/loss per share

When calculating basic earnings per share, the earnings to be allocated to bearers of ordinary shares of the parent company are divided by the weighted average number of ordinary shares in circulation throughout the year.

Diluted earnings per share are calculated by dividing the earnings to be allocated to bearers of ordinary shares of the parent company by the weighted average quantity of ordinary shares in circulation throughout the year plus the share equivalents leading to the dilution.

The values of basic and the diluted earnings per share are calculated as follows:

		2011	2010
Consolidated profit/loss	EUR	-5,984,537.06	1,969,618.54
Weighted ave. no. of ordinary shares in circulation	No. of shares	5,618,432	2,579,137
Dilution effect
Stock options	No. of shares	n/a1	23,466
Weighted ave. no. of ordinary shares in circulation
adjustment for the effects of dilution	No. of shares	n/a1	2,602,603
Basic consolidated earnings per share	EUR/share	-1.07	0.382
Diluted consolidated earnings per share	EUR/share	-1.07	0.382

1 No dilution due to loss situation

2 Takes into account the capital increase from company resources

In the period between the balance sheet date and the preparation of the consolidated financial statements, the capital increase was entered in the commercial registry on January 9, 2012. As part of this registration, 469,261 no-par bearer shares, each with a theoretical interest of EUR 1.00 in the share capital, were issued.

26. Business combinations

On April 27, 2011, zooplus AG purchased a further 51% stake in logistik service center s.r.o. Mimon, Czech Republic, for a purchase price of EUR 40 thousand and therefore now owns 100% of the shares.

The takeover of the stake in logistik service center s.r.o. allows the zooplus Group to extend its product portfolio and gain access to other logistics services. Logistik service center s.r.o., Mimon, Czech Republic trades in prescription-free OTC and care products for pets and people.

During the period from April 27, 2011 to December 31, 2011, the acquired company contributed EUR 825 thousand to consolidated sales and a loss of EUR 197 thousand to consolidated net profit/loss. The consideration paid totaled EUR 40 thousand. No additional consideration was agreed.

The identifiable assets and liabilities from the acquisition as of April 27, 2011 are as follows:

in EUR thousand	Fair value
Intangible assets	9
Property, plant and equipment	28
Inventories	310
Accounts receivable and other receivables	45
Cash	146
Deferred tax as assets	53
Trade liabilities and other liabilities	-554
Fair value of the identified assets	37
Previous share measured at fair value	18
New purchase price	40
Total purchase price at fair value	58
Goodwill	21

The fair value of the previous share on the purchase date totaled EUR 18 thousand. The resultant profit of EUR 14 thousand was recognized in income.

The goodwill of EUR 21 thousand comprises the value of expected synergies from the company acquisition and the site as well as the unlimited term of the acquired pharmacy license. This is not separable and therefore does not fulfill the criteria for intangible assets according to IAS 38 Intangible Assets. It is assumed that the goodwill recorded cannot be deducted from tax.

Transaction costs of EUR 8 thousand were incurred. These were recorded as expense and recognized as administration expenses.

27. Other financial obligations and unquantifiable factors affecting company profit/loss

The total of future financial commitments arising from leases, insurance policies and warehouse logistics agreements and also rental agreements for the facilities in Munich, Oxford, Genoa, Cracow and Strasbourg have the following structure:

Up to one year	EUR 10,291 thousand
Longer than one year and up to five years	EUR 37,918 thousand
Longer than five years	EUR 29,194 thousand

The leases comprise rental agreements as well as car and server leases at standard market conditions. There are no sub-leases.

The annual rental costs for the Group's business premises were around EUR 1,692 thousand in 2011 (previous year: EUR 1,215 thousand).

In addition, there are variable obligations for usage fees for logistics services.

There was no material litigation on the balance sheet date. Contingent liabilities from guarantees totaled EUR 65 thousand. No claims are currently expected.

28. Related party disclosures

There were no notable relationships between the Group and related parties during the year under review. The expenses from stock options for members of the Management Board are detailed in Section 17. Member of the Supervisory Board Dr. Stoeck holds shares in the company.

A participation in zooplus AG is held by Burda GmbH, Burda Digital Ventures GmbH and BDV Beteiligungen GmbH & Co. KG. zooplus AG is therefore included in the subgroup financial statements of Burda GmbH, Offenburg, as well as the consolidated financial statements of Hubert Burda Media Holding Kommanditgesellschaft, Offenburg. The consolidated financial statements are submitted to the operator of the electronic Federal Gazette for publishing. In the financial year, no reportable affairs took place at zooplus AG Group companies in connection with the controlling company or its affiliates.

29. Financial risk management: Aims and methods

The most significant financial liabilities used by the Group are overdrafts, current money-market loans, trade liabilities and other liabilities. The main purpose of these financial instruments is to constantly cover the need for financing and to ensure financial flexibility. The Group has at its disposal accounts receivable and other receivables as well as cash and cash equivalents that result directly from its business activities. There are no derivative financial instruments.

The most significant risks arising from these financial instruments for the Group are credit and liquidity risks as well as risks relating to changes in interest rates and foreign currencies. There are no material concentrations of credit risk.

Interest rate risk

The Group currently only uses overdrafts and current money-market loans. Interest rate risks exist if the current level of interest rates increases. No hedges have been put in place for the interest rate risk, as the impact is regarded as minor. If interest rates were to rise by 100 basis points, this would result in additional expenses of EUR 23 thousand, while a fall in interest rates by 100 basis points would result in additional income of EUR 23 thousand.

Credit risk

Credit risk is defined as the risk that a business customer will not be able to fulfill its obligations which in turn leads to a financial loss for the Group. The extent of the credit risk of zooplus AG is equal to the total of accounts receivable as well as other receivables. There are no credit concentration risks.

Credit limits are set for all customers based on internal risk classification characteristics. Outstanding receivables from customers are monitored regularly. In order to reduce credit risk, lump-sum adjustments to individual values are made based on past experience. Receivables are written down where a debt collection agency has proved unable to collect the debt, or a customer has applied for individual insolvency, or as a result of the statute of limitations.

For the Group's other financial assets such as cash or cash equivalents, the maximum credit risk corresponds to the carrying amount of an asset in the case of a default by the debtor concerned.

Liquidity risk

The risk of a liquidity bottleneck is monitored continually by the Group taking account of the terms of the financial liabilities and receivables as well as the expected cash flow. The Group aims to preserve a balance between constantly covering its liquidity requirements and ensuring flexibility through the use of overdrafts and loans. On the date that these consolidated financial statements were prepared, unused lines of credit worth EUR 17 million were available. As a result, the Group does not have any liquidity risks.

Currency risk

The Group also operates on foreign currency markets outside of the Eurozone, which could result in exchange rate risks in both sales and purchasing. Currency risks result mainly from cash and cash equivalents, accounts receivable and payables as well as payments made in a foreign currency. The most important foreign currencies are British pounds and US dollars. The Group is increasingly trying to limit these risks by buying products locally in foreign currency zones. The Group does not currently use other hedging instruments. IFRS 7 requires sensitivity analyses when presenting market risks, with these analyses presenting the effects of hypothetical changes to the relevant risk variables on profit/loss and equity. The following representation is one-dimensional and does not take into account the feedback effects in international purchasing as well as on the manufacturer's side. In addition, effects of taxation are not taken into account. The table shows the positive and negative effects if the Euro were to gain or lose 10% of its value compared to the other currencies presented.

Currency	1 monetary unit FC = Euro Exchange rate as of December 31, 2011	Result for -10% in EUR thousand	Result for +10% in EUR thousand
USD	0.7722	2,007	-2,007
GBP	1.1933	-300	300
PLZ	0.2254	-790	790
CZK	0.0388	-731	731
CHF	0.8216	-70	70

Equity and capital management

Primary aim of the Group's equity and capital management is to retain its high credit rating on the basis of a sound overall equity ratio in an effort to support its business activities and maximize value for shareholders. The Group actively controls its capital structure and will undertake the relevant adjustments if deemed necessary, taking the change in the underlying economic conditions into account. The Group's capital is monitored by controlling the equity ratio, which should total at least 25%. In 2011, the Group's equity ratio totaled 47% compared to 36% in the previous year.

Securities

As of December 31, 2011 and December 31, 2010, the Group did not hold any securities.

30. Additional information on financial instruments

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.

The following table displays the carrying amount and fair value of all of the financial instruments contained in the consolidated financial statements:

in EUR thousand	Category	Carrying amount		Fair value
		2011	2010	2011	2010
Financial assets
Accounts receivable	LaR	6,358	6,250	6,358	6,250
Participating interests	AfS	0	4	0	4
Interests in associated companies	AfS	20	0	20	0
Other receivables	LaR	4,315	7,398	4,315	7,398
Cash and cash equivalents	LaR	23,466	10,958	23,466	10,958
Total		34,159	24,610	34,159	24,610
Financial liabilities
Current loans	FLaC	16,000	10,000	16,000	10,000
Trade liabilities	FLaC	11,386	12,030	11,386	12,030
Other liabilities	FLaC	2,413	1,892	2,413	1,892
Total		29,799	23,922	29,799	23,922

LaR (Loans and Receivables) AfS (Available for Sale) FLAC (Financial Liability at Cost)

The market values of the cash and cash equivalents, accounts receivable, current assets, trade payables and other current payables as of December 31, 2011 and 2010 correspond to their carrying amounts. This is primarily due to these instruments' short terms.

The Group's financial liabilities are all short-term and a maturity of up to one year. The repayments of the existing financial liabilities are made from operating cash flow .

31. Events after the balance sheet date

One material event after the balance sheet date was the entry of the capital increase into the commercial register on January 9, 2012. For more information, please refer to Note 16.

32. Executive bodies

Members of the Management Board:

• Dr. Cornelius Patt, CEO and Chairman
• Guido Bienhaus, CIO, IT
• Florian Seubert, CFO, Finance and controlling
• Andrea Skersies, CMO, Marketing and sales

The Management Board's emoluments in 2011 including all perquisites are all short-term and amounted to EUR 1,424 thousand (previous year: EUR 1,639 thousand). In addition, zooplus AG granted the members of its Management Board a permanent advance payment (EUR 41 thousand) to cover their expenses.

Members of the Supervisory Board:

• Felix von Schubert, Member of the Management Board of zouk ventures Ltd, London, Great Britain (Chairman of the Supervisory Board up to May 26, 2011)
• Michael Rohowski, Managing Director of Burda Direkt Services GmbH, Offenburg (Chairman of the Supervisory Board since May 26, 2011)
• Frank Seehaus, Managing Director of Acton Capital Partners GmbH, Munich (Deputy Chairman)
• Dr. Norbert Stoeck, self-employed corporate consultant

In 2011, the Supervisory Board received remuneration of EUR 20 thousand (previous year: EUR 15 thousand).

33. Auditors' fees

In the financial year 2010, the auditor's fees amounted to EUR 115 thousand (previous year: EUR 86.5 thousand) and were recognized as expense.

34. Declaration with respect to corporate governance

zooplus AG's corporate governance declaration based upon section 161 of the German Stock Corporation Act (AktG) and in accordance with the German Governance Code has been published and can be accessed online under http://investors.zooplus.com/de/ir/cgk.

Munich, March 13, 2012 Management Board

Dr. Cornelius Patt Andrea Skersies Guido Bienhaus Florian Seubert

Declaration of the legal representatives

To the best of our knowledge, we declare that, according to the principles of proper consolidated reporting applied, the consolidated financial statements provide a true and fair view of the company's net assets, financial position and results of operations, that the consolidated management report presents the company's business including the results and the company's position such as to provide a true and fair view and that the major opportunities and risks of the company's anticipated growth for the remaining financial year are described.

Munich, March 13, 2012

Dr. Cornelius Patt Andrea Skersies Guido Bienhaus Florian Seubert

Auditors Report issued and addressed to zooplus AG

We have audited the consolidated financial statements prepared by zooplus AG, comprising the consolidated balance sheet, the consolidated statement of comprehensive income, the consolidated changes in equity, the cash flow statement, the notes to the financial statements as well as the management report for the financial year January 1 to December 31, 2011. The preparation of the consolidated financial statements and the management report in accordance with IFRS as applied within the EU, as well as the rules and regulations applicable under section 315a paragraph 1 HGB and the articles of incorporation, is the responsibility of the company's management. Our responsibility is to express an opinion based on our audit of the consolidated financial statements and the management report.

We performed our audit of the consolidated financial statements in accordance with section 317 of the German Commercial Code (HGB) and taking account of the generally accepted German standards for the audit of financial statements promulgated by the Institute of Public Auditors in Germany (Institut der Wirtschaftsprüfer [IDW]). These standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements prepared in accordance with IFRS and commented upon in the management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group as well as expectations as to possible misstatements are taken into account in the determination of audit procedures. Within the scope of the audit, the effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the management report are examined primarily on a sampling basis. The audit includes assessing the annual financial statements of the companies included in the consolidated financial statements, the delimitation of the companies included in the consolidation, the balance sheet and consolidation principles applied and the significant estimates made by senior management as well as evaluating the overall presentation of the consolidated financial statements and the Group management report.

We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated financial statements give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with IFRS applied within the EU, as well as the rules and regulations applicable under section 315a paragraph 1 HGB and the articles of incorporation. The Group management report is consistent with the consolidated financial statements and as a whole provides a correct view of the Group's position and correctly presents the opportunities and risks of future developments.

Nuremberg, March 14, 2012

Schaffer WP Partner GmbH Wirtschaftsprüfungsgesellschaft

Sabine Erhardt Auditor

Any publication or reproduction of the consolidated financial statements in a form which differs from the audited report requires a subsequent statement on our part, if the auditor's report is quoted or reference is made to our audit; in particular we refer to section 328 HGB in this context.

Imprint

Publisher

zooplus AG Sonnenstrasse 15 80331 Munich Germany Tel: +49 (0) 89 95 006 – 100 Fax: +49 (0) 89 95 006 – 500

E-Mail: contact@zooplus.com www.zooplus.com

Investor Relations

cometis AG Unter den Eichen 7 65195 Wiesbaden Germany Tel: +49 611 20 58 55 – 0 Fax: +49 611 20 58 55 – 66

E-Mail: info@cometis.de www.cometis.de

Concept, editing, layout and typesetting:

cometis AG

Photos::

Page 20, graphic "zooplus' value chain": from left: 1. and 2.: zooplus AG; 3.: DHL; 4.: iStockphoto (no. 11113859); 5.: Fotolia (no. 11641122) All further pictures: zooplus AG

This annual report is also available in German. In case of discrepancies the German version prevails.

A digital version of this zooplus AG annual report and the interim reports can be downloaded from the Investor Relations section of www.zooplus.com.

Forward looking Statements

This report contains forward-looking statements. These statements are based on current experience, estimates and projections of the management and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict, and are based upon assumptions as to future events that may not be accurate. Many factors could cause the actual results, performance or achievements to be materially different from those that may be expressed or implied by such statements. Such factors include those discussed in the Risk Report from page 42 to 46. We do not assume any obligation to update the forward-looking statements contained in this report.

zooplus AG Sonnenstrasse 15 80331 Munich Germany