CANCOM SE — Interim / Quarterly Report 2002

Mar 18, 2003

QUARTERLY REPORT QUARTERLY REPORT

TABLE OF CONTENTS

SECTION	PAGE
TABLE OF CONTENTS	02
PREFACE – KEY FIGURES	03
BUSINESS DEVELOPMENT	04-09
2) Business development	04
2.1) Sales and income trend	06
2.2) Orders positions	07
2.3) cost and revenue trend	07
2.4) Cash position	07
2.5) Significant changes in risks	07
2.6) Research and development activities	07
2.7) Investment	08
2.8) Employees	08
2.9) Outlook for the current financial year	08
3) Directors holdings	09
4) Notes on shares and stock positions	09
5) Significant events since the end of the quarter	09
BALANCE SHEET	10-11
INCOME STATEMENT	12
CASH FLOW STATEMENT	13
DEVELOPMENT OF EQUITY	14
APPENDIX	15-20

INHALT

PREFACE – KEY FIGURES

Dear Shareholders,

the current trading environment calls for more than just corporate vision. It requires sound and, above all, workable plans to maximise our future earning power.

Despite the continuing difficult general conditions in the IT sector, CANCOM IT Systeme AG has this year consolidated its position as the European market

leader in the desktop publishing and media environment, and has also continued its growth in the Windows environment. As a result, CANCOM has moved from number 10 to number 5 in the ranking of German systems houses, proving that it has put its money on the right idea at the right time.

However, it cannot be denied that we are still not satisfied with CANCOM's current earning power. For this reason we must concentrate all our efforts into actively increasing CANCOM IT Systeme AG's income on a long-term basis. Of course, this will involve both targeted optimisation of our cost structure and the expansion of particularly promising business segments with high profit potential.

focus increasingly on customers in the media environment who work on Windows-based PC systems.

CANCOM IT Systeme AG has therefore broadened its company strategy to

As the European IT market leader in the media and desktop publishing environment, CANCOM will target this profitable and relatively low-compe-

tition market segment more strongly, offering expert support in the areas of hardware and software, IT consultancy, service and training.

Even if there is no change in the market situation in the IT environment, therefore, we still expect a significant improvement in our results in 2003 and a corresponding improvement in the prospects for the CANCOM share.

Key figures

Nine-months` report 2002 in Euro million

| Kennzahlenübersicht | 9-monthsreport | 9-months report | In comparison | Key Figures |
|----------------------------------------------------------------------------------|---------------------------------------------|----------------------------------------------|-----------------------------------------|-----------------------------------------------------------------------------------------|
| Neunmonatszahlen 2002 in Mio. Euro | 01.01. - 30.09.2002 | 01.01. - 30.09.2001 | to last year | First 9 months in Euro million |
| Konzernumsatz | 201,5 | 167,8 | +20,1 % | Consolidated Sales |
| EBITA CANCOM Konzern | 0,3 | 1,1 | -72,7 % | EBITA CANCOM Group |
| EBITDA CANCOM Konzern | 2,3 | 2,3 | +/- 0 % | EBITDA CANCOM Group |
| DVFA/SG-Ergebnis je Aktie in € | -0,27 | 0,04 | - | Earnings per Share (DVFA/SG) in € |
| Bilanzsumme
Eigenkapitalquote
Mitarbeiter zum 30.06.2002
Auslandsanteil | 30.09.2002
89,5
47,1 %
565
31 % | 31.12.2001
101,4
42,0 %
620
31 % | -11,7 %
+12,1 %
-8,9 %
+/- 0 % | Balance Sheet Total
Equity Ratio
Workforce (31.03.2002)
International Business |

Yours, Klaus Weinmann

CEO

1) Business development since the start of the financial year

The CANCOM Group's consolidated sales over the first nine months of 2002 were 20.1 per cent higher than those in the same period last year, at € 201.5m compared with € 167.8m. Sales in the third quarter amounted to € 70.1m, compared with € 67.4m in the same quarter last year. In the currently stagnating IT market, the sales growth achieved is in line with expectations.

At € 2.3m, EBITDA earnings (before interest, tax, depreciation and amortisation) in the first nine months of 2002 were equal to those in the same period last year.

EBITA earnings (before interest, tax and amortisation) for the first nine months of 2002 amounted to € 0.3m, compared with € 1.1m for the same period in 2001.

Note:

in the interest of continuity with regard to accounting methods, this quarterly report was prepared in compliance with International Accounting Standards (IAS), although if we had used US GAAP our earnings figure (EBIT) would have given a more favourable impression, because amortisation of goodwill would not have been included. However, we expect this unfavourable IAS regulation to be changed soon. In order to make CANCOM's results comparable with those of companies adopting US GAAP, we have decided to use EBITA (earnings before interest, tax and amortisation) as a measure of income in future.

Because of the takeover of the VendIT Group, which operates mainly in Germany, the international portion of business fell from 32 per cent over the first nine months of 2001 to 31 per cent over the same period this year. At the end of 2001, the international portion was 31 per cent.

The continuous increase in its market share has placed CANCOM, as the market and cost leader, in a strong strategic position for 2003 and is thus the long-term basis for the company's continued success.

In the fourth quarter, CANCOM expects an improvement on the sales and results achieved in the first three quarters due to seasonal factors.

Here is an overview of the most important developments within the CANCOM Group and its two divisions, CANCOM Systemhaus and Tendi AG, in the third quarter of 2002:

CANCOM's new online shop up and running at http://shop.cancom.de

Since the start of August, CANCOM IT Systeme AG (German securities code (WKN): 541 910) has offered its customers an even more convenient and better way of purchasing online, at http://shop.cancom.de. With its extensive range of Mac and PC products, the shop offers clearly defined product categories and detailed product descriptions with a lot of additional information. It offers many new and useful features, such as quotation requests, shopping lists, newsletters and a personal account with secure access. User-friendly instructions also ensure that customers will find the desired product quickly. Altogether, the range incorporates more than 5,000 items in stock, whose prices are kept updated on a daily basis and which can be ordered around the clock. Delivery is free for orders from as little as € 50 in value. Customers who have more specific questions can phone our expert, friendly sales staff who will be pleased to help. CANCOM expects the introduction of the new webshop gradually to have a positive impact on the Group's sales.

As mentioned in the last quarterly report, Apple Europe has cancelled its basic contracts with all professional business dealers, including CANCOM, with effect from 1 October 2002. We have since agreed a new dealer contract with Apple Europe that applies to the whole of the CANCOM Group.

The share capital of CANCOM IT Systeme AG was increased by € 354,610 from € 7,481,733 to € 7,836,343 by a resolution passed by the Executive Board on 25 June 2002. The increase was carried out by the issue of 354,160 new no-par-value bearer shares with a share of € 1 each in the company's capital. The shares carry dividend rights from 1 January 2002. The capital increase was carried out by means of a contribution in kind consisting of 218,750 shares in Tendi AG, Munich.

The basis for the capital increase was a resolution taken by CANCOM IT Systeme AG's Annual General Meeting on 17 July 2001 to authorise the Executive Board to increase the share capital with the approval of the Supervisory Board. Up to 15 July 2006, the Executive Board may carry out one or several increases in the capital up to a total of € 3,122,599 by issuing up to 3,122,599 new no-par-value bearer shares against contributions either in cash or in kind.

The Supervisory Board agreed to the capital increase by circular letter on 17, 18 and 19 July 2002.

CANCOM buys back its own shares

At the end of June, the Executive Board of CANCOM IT Systeme AG resolved to buy back some of its own shares. The purpose of the share buy-back was to pay for the takeover of the operating business of Tasha Computer Ltd, London, at the beginning of June.

The share buy-back was carried out on the basis of a resolution taken by the Annual General Meeting of CANCOM IT Systeme AG on 17 July 2001, and with the approval of the Supervisory Board. The consideration per share paid by the company was not allowed to exceed or underrun by more than 10 per cent the opening price fixed at Frankfurt Stock Exchange Xetra trading on the date of the transaction.

The buy-back of a total of 19,022 shares was concluded on 30 July 2002. Further details can be found in section 4 of this quarterly report.

CANCOM

one of "Europe's 500" – distinction from Bavarian Ministry for Economic Affairs (Bayerisches Wirtschaftsministerium)

On 12 September 2002, CANCOM IT Systeme AG was proclaimed one of the GrowthPlus "Europe's 500" growth companies of the year 2002 by Bavaria's Secretary of State for Economics, Hans Spitzner, and Martin Schoeller, Chairman of GrowthPlus Germany. Every year, independent European body GrowthPlus draws up a list of the most dynamic and fastestgrowing companies in Europe – the "Europe's 500". The key factors taken into account were sales growth and the creation of jobs. CANCOM came 71st in Europe and 33rd among the German companies awarded the distinction. And in its own region of Bavarian Swabia, the company even came first.

"This distinction proves that, even in a difficult economic environment, we are on the right track with our company strategy, which is geared to longterm success", said Klaus Weinmann, Chief Executive Officer of CANCOM IT Systeme AG. "Of course, in future, we will do everything to ensure that we continue to grow steadily, with any actions we take naturally being focused on the needs of our customers".

2.1) Sales and income trend 2.2) Orders positions

There was no obvious improvement in market conditions in the IT environment in the first six months of the year. There is still a noticeably cautious approach to investment.

The consolidated sales of the CANCOM Group – including the companies acquired – went up by 20.1 per cent between the first nine months of 2001 and the same period in 2002, from € 167.4m to € 201.5m.

Over the same period, the international portion of business fell from 32 per cent to 31 per cent because of the takeover of the VendIT group, which operates mainly in Germany.

In view of the extremely tense situation in the IT sector, but also in the main sales segments, the sales growth achieved is in line with expectations.

At € 2.3m, EBITDA earnings for the first nine months of this year are at the same level as in the same period last year.

EBITA earnings (before interest, tax and amortisation) amount to € 0.3m. In the first nine months of last year, EBITA earnings were € 1.1m.

This resulted in a DVFA/SG loss per share of € 0.27 for the first nine months, compared with an income per share of € 0.29 in the same period last year.

Since CANCOM generally takes a maximum of one week to process incoming orders, the current orders position is of limited use as an indicator of the business trend.

In the fourth quarter, CANCOM expects an improvement on the sales and results achieved in the first three quarters due to seasonal factors.

2.3) Cost and revenue trend

Due to the general change in economic conditions, in October 2001 CANCOM decided to implement some instant cost-saving measures.

In addition, all unprofitable sub-sections of the business were closed without delay during 2001, and this enabled us to keep to the agreed cost reduction plan in the first nine months of 2002.

2.4) Continued strong cash position

The CANCOM Group's cash position continues to be good. In the third quarter of 2002, a slightly negative cash flow was generated. This is mainly attributable to our growth and the expenditure on current assets this necessitates. This growth makes it necessary for us to keep large inventories, although these ensure that we continue to be able to deliver quickly, often giving us a decisive competitive advantage. And our accounts receivable constitute a valuable asset which is eligible as security.

We have unchanged credit lines which are far from being fully used up, so we are in a position to raise large sums of cash at short notice if need be. These will also enable CANCOM to finance the company's continued growth.

2.5) Significant changes in the risks from any future development (since the start of the financial year)

There has been no significant change since the start of the financial year in the risks arising from any future development at CANCOM. These risks are detailed in our 2001 annual report, starting on page 18.

2.6) Continuous development and improvement of our products

Since the trade sector forms the CANCOM Group's core business, our research and development activities are concentrated on the development of our software ff-eCommerce, which is integrated into the CANCOM Systemhaus division, and on the development of the online shop.

2.7) Investment

Apart from the usual investments in the continuous improvement of our internal infrastructure, our investment activities in the first nine months of 2002 focused on minor investments in our company headquarters and logistics centre in Jettingen-Scheppach, Germany, into which we moved in the autumn of 2001.

We also increased our stake in Tendi AG.

2.8) Employees

The number of employees has fallen by about 12 per cent in the past year, from 644 on 30 September 2001 to 565 on 30 September 2002. On 31 December 2001 the company had 620 employees.

2.9) Outlook for the current financial year

The CANCOM Group hopes to continue its high rate of growth throughout this financial year and into the coming years. The process of consolidation in the market environment leaves CANCOM, as the market and cost leader, in a strong strategic position for 2003, and is thus the long-term basis for the company's continued success.

While the IT market as a whole is expected to shrink by 1.3 per cent by the end of the year, according to the German Federal Association of the Information Economy, Telecommunications and the New Media (BITKOM), market research companies are fairly optimistic with regard to the economic outlook for the IT sector.

Whereas the latest study by the European Information Technology Observatory (EITO) forecasts only very slight growth for Germany in the next year, EITO expects the western European ITC market to grow by 3.2 per cent.

In the media industry, one of the most important sales markets for CANCOM IT Systeme AG, there are also signs of a recovery, and, in their current report, analysts at Basle market research company Prognos anticipate an increase in advertising sales from the second half of 2003, to be followed by further sales increases in the years 2004 to 2006.

Consultants at PricewaterhouseCoopers expect an upturn in the advertising market by 2004 at the latest, according to their annual study, "Global Entertainment and Media Outlook: 2002-2006". PWC expects the global media and entertainment industry to grow by as much as 5.2 per cent per year over the next five years.

For 2003, CANCOM expects continued strong growth in comparison with the rest of the market, and a return on sales of up to 3 per cent.

In the view of the Executive Board, organic growth of 15 per cent should be possible in 2003 because of the continuing process of consolidation in the market.

3) Shares of members of the Executive and Supervisory Boards (as at 30. Sept. 2002)

Executive Board:		Supervisory Board:
Raymond Kober	705.091 (8,998 %)	Willy Kober	11.880 (0,152 %)
Stefan Kober	523.599 (6,682 %)	Walter von Szczytnicki	6.252 (0,080 %)
Klaus Weinmann	523.599 (6,682 %)

4) Notes of the company´s holdings of its own shares and stock options held by Board members and employees

No share options were issued to Board members or employees during the period under review (for further details on share options see the Notes).

Own shares of CANCOM IT Systeme AG:

Date of purchase	Number of shares	Shareprice	Nominal value/share	Percentage of share capital (total 7.836.343)
Purchase of own shares 02.07.02	5.000	2,81€	1€	0,0638%
Purchase of own shares 05.07.02	5.000	3,015€	1€	0,0638%
Purchase of own shares 15.07.02	4.000	2,73€	1€	0,0510%
Purchase of own shares 17.07.02	2.000	2,90€	1€	0,0255%
Purchase of own shares 30.07.02	3.022	2,5631€	1€	0,0385%
Sum	19.022		1€	0,2427%

5) Events of particular significance since the end of the quarter

CANCOM broadens its strategy – greater focus on media customers in the PC environment

With effect from October 2002, CANCOM IT Systeme AG has broadened its business strategy to focus increasingly on media customers working on Windows-based PC systems.

CANCOM, the European IT market leader in the media and desktop publishing environment, will in future give more targeted support to this highmargin and relatively low-competition segment of the market, providing expert support in the areas of hardware, software, IT consultancy, service and training. Consequently, the latest MacSolutions catalogue was published under the name "MediaSolutions", with the subheading "X and XP". All customers in the media sector will in future be targeted as one group, regardless of which platform they work on. Of course, the product range offered in the MediaSolutions catalogue will include peripheral and software products from both system landscapes. This is the first catalogue geared towards the needs of media customers in the Windows environment to be published in Germany. In view of the existing and growing market volume of media customers working on Windows-based systems, CANCOM media solutions GmbH expects its own sales in the German media environment to grow by about 20 to 30 per cent next year. In 2002, its sales in this area will reach approximately € 90m.

This projection is based on the assumption that, because CANCOM has such a large share – 25 per cent – of the German market for Apple products, the business in Apple-based systems will only grow in line with the market. For this reason the German Apple business will be turned into a cash cow. Growth will in future be achieved predominantly through Windows-based systems. This growth strategy is supported by well-known partners, particularly Hewlett Packard, Microsoft and Adobe.

As mentioned in the last quarterly report, Apple Europe has cancelled its basic contracts with all professional business dealers, including CANCOM, with effect from 1 October 2002. We have since agreed to a new dealer contract with Apple Europe that applies to the whole of the CANCOM Group.

BALANCE SHEET (IAS) – ASSETS

Aktiva	9-months` report 30.09.02 (TEuro)	Annual acounts 31.12.2001 (TEuro)	Assets
Kurzfristige Vermögensgegenstände			Current assets
Liquide Mittel	5.941	10.915	Cash and cash equivalents
Wertpapiere des Umlaufvermögen	408	1.141	Short-term investments/ Marketable securities
Forderungen aus
Lieferungen und Leistungen	23.367	28.254	Trade account recieveable
Forderungen			Accounts recievable
im Verbundbereich	0	0	due from related parties
Vorräte	10.236	8.847	Inventories
Latente Steuern	0	0	Deferred tax asset
Rechnungsabgrenzungsposten und			Prepaid expenses and
sonstige kurzfristige Vermögensgegenstände	5.113	7.660	other current assets
Kurzfristige Vermögens
gegenstände, gesamt	45.065	56.817	Total current assets
Langfristige Vermögensgegenstände			Long-term assets
Sachanlagevermögen	9.689	10.529	Property, plant and equipment
Immaterielle Vermögensgegenstände	3.290	3.162	Intangible assets
Geschäfts- oder Firmenwert	26.602	26.662	Goodwill
Finanzanlagen	4	132	Investments
Nach der Equity-Methode bilanzierte Finanzanlagen	0	0	Investment accounted for by the equity method
Ausleihungen	0	484	Notes receivable/loans
Latente Steuern	3.950	3.523	Deferred taxes
Sonstige Vermögensgegenstände	893	79	Other assets
Langfristige Vermögens
gegenstände, gesamt	44.428	44.571	Total long-term assets
Aktiva, gesamt	89.493	101.388	Total assets

BALANCE SHEET (IAS) – LIABILITIES AND THE SHAREHOLDERS EQUITY

	9-months` report	Annual acounts
Passiva	30.09.02 (TEuro)	31.12.2001 (TEuro)	Liabilities and shareholders' equity
Kurzfristige Verbindlicheiten			Current liabilities
Kurzfristige Darlehen und kurzfristiger Anteil an			Short term debt and
langfristigen Darlehen	10.961	10.444	current portion of long-term debt
Verbindlichkeiten aus Lieferungen
und Leistungen	17.838	19.717	Trade accounts payable
Verbindlichkeiten im Verbundbereich	0	0	Accounts payable due to related parties
Erhaltene Anzahlungen	45	161	Advance payments received
Rückstellungen	4.648	7.138	Accrued expenses
Umsatzabgrenzungsposten	4	85	Deferred revenues
Verbindlichkeiten aus Ertragssteuern	472	1.136	Income tax payable
Latente Steuern	0	0	Deferred tax liability
Sonstige kurzfristige Verbindlichkeiten	2.820	9.362	Other current liabilities
Kurzfristige Verbindlichkeiten, gesamt	36.788	48.043	Current liabilities, total
Langfristige Verbindlicheiten			Long-term liabilities
Langfristige Darlehen	7.140	7.345	Long-term debt, less current portion
Langfristige			Capital lease obligations,
Finanzleasingverpflichtungen	0	0	less current portion
Umsatzabgrenzung	0	0	Deferred revenues
Latente Steuern	504	403	Deferred tax liability
Pensionsrückstellungen	575	596	Pension accrual
Übrige	91	70	Others
Langfristige Verbindlichkeiten, gesamt	8.310	8.414	Long-term liabilities, total
Eigenkapital			Shareholders' equity
Minderheitenanteile	2.225	2.337	Minority interest
Gezeichnetes Kapital	7.836	7.482	Share capital
Kapitalrücklage	35.178	33.955	Additional paid-in capital
Bilanzgewinn/Bilanzverlust (inklusive			Retained earnings /
Gewinnrücklagen)	-856	1.145	accumulated deficit
Übrige	12	12	Others
Eigenkapital, gesamt	42.170	42.594	Total shareholders' equity
			Total liabilities and
Passiva, gesamt	89.493	101.388	shareholders' equity

INCOME STATEMENT (IAS)

Zahlenangaben in T€ Gewinn- u. Verlustrechnung	01.07.02 - 30.09.02	01.07.01 - 30.09.01	01.01.02 - 30.09.02	01.01.01 - 30.09.01	Income Statement
					01.01.01.-30.06.01
Umsatzerlöse	70.108	67.375	201.489	167.813	Revenues
Sonstige betriebliche Erträge	516	579	1.346	1.513	Other operating income
Andere aktivierte Eigenleistungen	187	169	561	476	Prod. for own fixed assets capitalized
Materialaufwand/Aufwand					Cost of purchased materials
für bezogene Leistungen	-58.904	-56.229	-167.046	-137.575	and services
Personalaufwand	-5.961	-5.640	-18.730	-15.875	Personnel expenses
Abschreibungen auf Sachanlagen
u. immater. Vermögensgegenstände*	-1.287	-498	-3.700	-1.463	Depreciation and amortization
Sonstige betriebliche Aufwendungen	-5.112	-3.608	-15.349	-11.790	Other operating expenses
Betriebsergebnis**	-453	2.148	-1.429	3.099	Operating income/loss
Zinsaufwendungen	-202	-66	-701	-42	Interest expense
Währungsgewinne/-verluste	-41	0	-41	0	Foreign currency exch. gains/losses
Ergebnis vor Steuern					Result before income taxes
(und Minderheitenanteilen)	-696	2.082	-2.171	3.057	(and minority interest)
Steuern vom Einkommen und Ertrag	40	82	189	-122	Income tax
Außerord. Erträge/Aufwendungen	-36	-413	-36	-526	Extraordinary expenses
Ergebn. v. Minderheitenanteilen	-692	1.751	-2.018	2.409	Result before minority interest
Minderheitenanteile	101	61	17	91	Minority interest
Einzustellende Bereiche	0	-1.978	0	-2.253	discontinued operations
Periodenüberschuss/-fehlbetrag	-591	-166	-2.001	247	Net income/loss
Ergebnis je Aktie (unverwässert)	-0,08	0,02	-0,27	0,04	Net income per share (basic)
Ergebnis je Aktie (verwässert)	-0,08	0,02	-0,27	0,04	Net income per share (diluted)
Ergebnis je Aktie nach DVFA	-0,08	0,02	-0,27	0,04	Net income per share after DVFA
Durchschnittliche im Umlauf					Weigthed average shares
befindliche Aktien (unverwässert)	7.481.733	6.904.450	7.481.733	6.9041.450	outstanding (basic)
Durchschnittliche im Umlauf					Weigthed average shares
befindliche Aktien (verwässert)	7.487.670	6.909.164	7.487.670	6.909.164	outstanding (diluted)

* of which are scheduled amortization of goodwill: 1,722 Euro Mio.

** before scheduled amortization of goodwill, EBITA amounts: +0,293 Euro Mio. EBITA is being used as a measure of earning instead of EBIT from now on in order to make CANCOM´s figures more comparable with those of companies using US-GAAP, whose earnings figures do not take into account scheduled goodwill amortization.

CASH FLOW STATEMENT

	01.01. -	01.01. -
Kapitalfluss	30.09.02 (TEuro) 30.09.01 (TEuro)		Cashflow
Cashflow aus betrieblicher Tätigkeit:			Cash flows from operating acivities:
Jahresergebnis	-2.001	247	Net profit/loss (period)
Anpassungen für:			adjustments for:
Minderheitenanteile	-17	-91	Minortiy interest
Außerord. Erträge/Aufwend. (IPO-Kosten Tendi)	0	526	Extraordinary income/expenses (IPO-costs Tendi)
Abschreibungen	3.700	1.463	Depreciation and amortization
Zunahme/Abnahme der Rückstellungen	-3.154	6.578	increase/decrease in provisions
Zunahme/Abnahme der Wertberichtigungen	0	0	increase/decreaseand in accruals
Gewinn/Verlust aus dem Abgang von Anlagevermögen	62	0	Lasses on the disposal of fixed assets
Fremdwährungsgewinne/-verluste	41	0	Foreign exchange gains/losses
Zunahme/Abnahme der latenten Steuern	-326	-1.562	Increase/decrease in deferred tax asset
Veränderung des Nettoumlaufvermögens	-1.841	-9.028	Change in net working capital
Sonstige	-814	-479	Other
Aus betrieblicher Tätigkeit erwirtschaftete/			Net cash provided by
eingesetzte Zahlungsmittel	-4.350	-2.346	operating activities
Cashflow aus der Investitionstätigkeit:			Cash flows from investing activities
Erwerb von Tochterunternehmen,
abzüglich erworbener liquider Mittel	-2.198	-11.493	Acquisition of subsidiaries, net of cash aquired
Erlöse aus dem Verkauf von Tochterunternehmen,			Proceeds from disposal of a subsidiary,
abzüglich übertragener liquider Mittel	0	0	net of cash transferred
Erwerb von Anlagevermögen	-309	-10.519	Purchase of property, plant and equipment
Erlöse aus dem Verkauf von Anlagevermögen	35	0	Proceeds of property, plant and equiment
Sonstige	0	0	Other
Für Investitionen eingesetzte Zahlungsmittel	-2.472	-22.012	Net cash used in investing activities
Cashflow aus der Finanzierungtätigkeit:			Cash flows from financing activities
Erlöse aus Eigenkapitalzuführungen	1.577	10.639	Proceeds from issuance of share capital
Einzahlungen aus der Aufnahme von kurz- oder
langfristigen Darlehen	0	6.783	Proceeds from short or long-term borrowings
Auszahlungen aus der Tilgung von Darlehen	-246	0	Cash repayments of mounts borrowed
Auszahlungen für Finanzierungsleasing	0	0	Payment of capital lease liabilities
Auszahlung an Unternehmenseigner	0	0	Payment of enterprice owner
Sonstige	0	-526	Other
Aus der Finanzierungstätigkeit erzielte/			Net cash used in
eingesetzte Zahlungsmittel	1.331	16.896	financing activities
Erhöhung/Verminderung der liquiden Mittel	-5.491	-7.462	Net increase/decr. in cash and cash equivalents
Liquide Mittel zu Beginn der Periode	471	7.370	Cash and cash equivalents at beginning of period
Liquide Mittel am Ende der Periode	-5.020	-92	Cash and cash equivalents at and of period

DEVELOPMENT OF EQUITY

Figures in €th					Annual net income
		Capital	Capital	other	from
	01.01.2002	increase	reserves	changes	01.01.-30.09.02	30.09.2002
Subscribed capital	7.482	354				7.836
Capital reserves	33.955
Capital increase Tendi Deutschland
GmbH & Co. KG		1.330
Excluding costs for capital increase			-173
plus tax saving because of capital increase			66
			-107			35.178
Revenue reserves
statutory reserves	6					6
other reserves	116					116
Differece from
Capital consolidation	12					12
Consolidated profit
Net income in the beginning
of the period	1.023
Net income					-2.001	-978
	42.594	1.648	-107	+/- 0	-2001	42.170

Figures in €th	01.01.2001	Capital increase	Capital reserves	other changes	Annual net income from 01.01.-30.09.01	30.09.2001
Subscribed capital	6.552
Capital increase 1:
VendIT		930
		7.482				7.428
Capital reserves	24.293
Capital increase 1:
VendIT			9.709
			9.709			34.002
Revenue reserves
statutory reserves	7					7
other reserves	116					116
Differece from	12			-12		0
Capital consolidation
Consolidated profit
Net income	2.149				248	2.397
	33.129	7.482	9.709	-12	248	44.004

Notes to the consolidated accounts for the quarterly report to 30.09.2002

A. ACCOUNTING PRINCIPLES

These consolidated financial statements are drawn up in accordance with International Accounting Standards (IAS), cf. IAS 1.11.

1. Accounting and valuation methods

Intangible assets acquired for a consideration are carried at acquisition cost and written off according to the straight-line method over their expected useful life.

Permanent losses in economic usefulness are accounted for by non-scheduled depreciation.

In connection with intangible assets developed by the company, software development costs especially for internal software projects are accounted at production costs and are subject to scheduled straight-line depreciation over their expected useful life. The production costs include direct personnel expenses for the employees involved and the overheads attributable to the product development, insofar as these are clearly identifiable, are necessary and are not selling overheads.

Depreciation of intangible assets begins on principle as from the time of their use. In general, this is the point in time of acquisition, or completion in the case of internally created assets. Depreciation is undertaken uniformly in the Group on a straight-line basis (as a rule over 3 to 5 years) through the time during which the company can expect to use or sell the asset (IAS 38.88).

The positive goodwill arising from capital consolidation is amortised on a straight-line basis over a useful period of 15 to 20 years. This period of amortisation depends in particular on the long-term profitability of the acquired customer portfolio and the market penetration it represents.

IAS 22.25 stipulates that, in addition to the consideration in return for the interests and participations, direct costs (external consultancy costs for auditors, legal advisers, etc., for tasks including purchase price examinations and auditing) incurred in company acquisitions are also attributable to the company acquisition costs.

Property, plant and equipment is capitalised at acquisition cost. These fixed asset items are written off according to the straight line method over the period of their expected useful life. The period allowed for wear and tear is the same across the Group. It is based on the internationally accepted standards for useful life periods which the consolidated financial statements assume to be between 4 and 10 years.

Low-value items are fully depreciated in the year of their acquisition and are shown as additions and disposals in the schedule of fixed assets, and as depreciation in the current financial year.

Shares in subsidiary companies in which control is only exercised temporarily because the subsidiary company is held as defined by IAS 27.13a exclusively for the purpose of resale in the near future are carried at their net book value in accordance with IAS 39.73.

Possible lost usefulness is examined at regular intervals. The same valuation principle applies to other insignificant holdings. Goods are recorded at acquisition cost. Items with diminished marketability are valued at their lower net realisation value.

Trade accounts receivable, other receivables and other assets, short-term investments, marketable securities, cash and cash equivalents, trade accounts payable, as well as other liabilities are shown when recorded for the first time at their original cost or the lower of cost or market value; i.e. the current market value of assets or the counter-performance received in the case of receivables. Following their initial recording, these assets and debts are shown at net book value. It is examined at regular intervals whether these assets require mark-downs on their value. As a rule, the acquisition cost of short-term receivables is their original invoice amount, and the original cost of current liabilities corresponds to their satisfaction or repayment amount.

Direct value mark-downs are made on accounts receivable that are doubtful or encumbered with identifiable risks. Uncollectable receivables are written off.

It is taken into account when deciding the extent of value adjustments that a substantial portion of the accounts receivable are secured by commercial credit insurance and therefore only a residual risk remains per account receivable.

The determination of tax on income in accordance with IAS 12 (deferred taxes) includes tax deferrals resulting from differing valuations in the commercial balance sheet and the tax balance sheet, realisable carryovers, differences in results between the tax valuations in the individual financial statements of the consolidated subsidiary companies and the CANCOM Group valuation, as well as due to the consolidation processes, to the extent that these balance out over the course of time.

Deferred tax claims relating to the carrying forward of unused tax losses are capitalised in view of the expected future positive results. The deferred taxes are calculated on the basis of the taxation rates that are expected to apply to the period in which an asset is realised or a debt satisfied. The taxation rates valid or announced for the balance sheet date are used.

According to SIC 17, the amount of directly attributable external expenses for the flotation and for capital increases is recorded in the balance sheet as deductions from shareholders' equity, less deferred taxes; Accruals are formed for contingent liabilities according to sound business judgement. They are accounted as the amount required according to the best possible estimate to cover all present legal and objective obligations of the Group as of the balance sheet date. These accruals give consideration to future events that influence the amounts required to discharge obligations insofar as these are objectively predictable with a sufficient degree of certainty.

The realisation of revenues is subject to IAS 11 and 18. It is shown less the tax on income, credits and other items diminishing revenues. Leasing payments in an operating

lease relationship are recorded using the straight line method in the income statement as expenditure over the term of the leasing contract, unless another systematic

fundamental corresponds more closely to the development of usefulness to the company. In an operating lease relationship, all essential risks and chances are

assigned to the lessee. The company examines all leasing contracts at regular intervals to establish whether operating or finance lease terms apply.

2. Currency conversion fundamentals

Accounts receivable and payable in foreign currencies are valued in the individual financial statements at the average exchange rates on the balance sheet date, or at the forward rate if hedged by forward exchange transactions.

The translation of the annual financial statements into other currencies is effected according to the current rate method. Year-end figures in foreign currencies are converted at the rate applying on the reporting date, and yearend figures from countries that do not belong to the European Currency Union, in particular Switzerland and the United Kingdom, are converted at the mean rate applying on the reporting date.

The effect on income due to the conversion of shareholders' equity at reporting date conversion rates at the beginning and end of the financial year or at the dates of first consolidation during the year is unaccounted for insignificance. Conversion gains and losses are taken into consideration as having an effect on net income. Conversion differences from the debt consolidation are also recorded as affecting net income. All in all, currency fluctuations do not affect the result in any essential way.

3. Changes to the Group structure in the third quarter of 2002

Acquisitions in the third quarter

In accordance with the capital contribution agreement of 25 June 2002 between CANCOM IT Systeme AG and Concord Effekten AG, 218,750 Tendi AG shares to the total par value of € 437,500 were transferred from Concord to CANCOM. CANCOM IT Systeme AG's stake in the company has thus risen to 87.8 per cent.

4. Scope of consolidation

IThe following German and other European subsidiaries are included in the consolidated financial statements of CANCOM IT Systeme Aktiengesellschaft as of 30 September 2002 in accordance with the principles of full consolidation:

		quote
1.	CANCOM media solutions GmbH, Scheppach Germany and their subsidiary companies	100,0 %
	• CANCOM Computersysteme Ges.m.b.H., Graz/Austria	100,0 %
	• CANCOM (Switzerland) AG, Switzerland	100,0 %
2.	CANCOM business solutions GmbH, Scheppach, Germany	100,0 %
3.	Tendi AG, Munich, including: • Tendi Deutschland GmbH & Co. KG	87,8 %

• (formaly Software Wings GmbH & Co. KG)
• Software Wings GmbH + Co. KG, Vils / Austria
• SoftMail IT AG, Caslano/Switzerland
• 4. eBizcuss.com S.A:, Genneviliers/France 58,3 % • C.G.M. S.A., Paris • KA-Phenix Assistance S.A.R.L., Paris • EIRE Services S.A.R.L., Paris 5. Novodrom GmbH, Jettingen-Scheppach (formerly iAuction24.de GmbH) 100 % 6. CANCOM Ltd., Guilford/Great Britain *73,3 % 7. TechConsult GmbH (formaly Adservice GmbH), Hamburg 100 %
• 8. Maily Software GmbH & Co. KG, Sindelfingen, Germany 100 %
• 9. Bytehouse International Deutschland GmbH, Sindelfingen, Germany 100 %
• * * The voting rights deviate from the capital share and amount to 60 %

Pfannstiel's Logibyte GmbH & Co. KG was merged with Software Wings GmbH + Co. KG with effect from 30 September 2001 by a merger agreement dated 18 December 2001 (deed no. S1966/2002-se). The transaction was entered into the commercial register on 16 May 2002.

TechConsult GmbH (formerly Adservice GmbH) was merged with CANCOM media solutions GmbH with effect from 31 March 2002. The merger was formalised by a contract dated 25 June 2002 (deed no. S 885/2002-se). The transaction was registered on 26 September 2002.

The following direct and indirect subsidiaries were not included in the consolidated financial group statements as of 30 September 2002:

• IT Consult GmbH (formaly TechConsult GmbH),
Jettingen-Scheppach, Germany	100,0 %

Since it is intended to sell the above subsidiaries, they were not included in the consolidated financial group statements as of 30 September 2002.

• Computer Zones Ltd., England	99,9 %
• Mac Supplies Ltd., England	99,9 %
• Mac Zones Ltd., England	99,9 %

The above subsidiaries are not operational and thus were not included in the consolidated financial statements as at 30 June 2002.

5. Preparation of the financial statements included in the consolidated financial statements

The financial statements of the companies in Germany and in other countries included in the consolidated financial statements relate to the same date as the annual financial statements of CANCOM IT Systeme Aktiengesellschaft.

6. Consolidation methods

Beteiligungs-

Capital consolidation is carried out using the acquisition method (book value). This means that the acquisition costs of the holdings subject to mandatory consolidation are set off against the shareholders' equity of the subsidiary in question which corresponds to the book value of its assets, debts, deferrals and accruals and extraordinary items at the time of the acquisition of shares in the subsidiaries, and which are to be included in the financial statements.

If the acquisition costs exceed the relevant proportion of the subsidiary's equity at the time of acquisition, adjusted in accordance with IAS valuation rules, the balance of the acquisition costs is capitalised as goodwill pursuant to its characteristics and generally amortised by the straight-line method over a period of 15 to 20 years, beginning with the year in which the first shares in the company in question were acquired.

Unscheduled amortisation and depreciation is effected if the commercial benefit from the acquired goodwill turns out in the long term to be less than the acquisition costs.

Profits, loss, sales, expenses and income within the Group, and accounts receivable or payable between Group companies are eliminated.

Elimination of interim results is dispensed with because these exist only to an insignificant extent.

B. NOTES ON DIVERGENT ACCOUNTING, VALUATION AND CONSOLIDATION METHODS PURSUANT TO SECTION 292 A (2) NO. 4B GERMAN COMMERCIAL CODE (HANDELSGESETZBUCH, HGB)

The accounting, valuation and consolidation methods applied in these financial statements deviate from German law governing the preparation of group accounts as follows:

• Capital increase expenses

Pursuant to SIC 17, external expenses directly attributable to the IPO and for capital increases are to be shown in the balance sheet as deduction from the shareholders' equity less all associated income tax benefits.

• Ancillary costs of acquisitions

IAS 22.25 stipulates that not only the consideration paid for trade investments, but also direct costs (e.g. external consultancy fees for auditors, legal advisers, etc., including for acquisition price examinations) incurred in connection with the acquisition of companies are included in corporate acquisition costs.

• Software development costs

In accordance with IAS 38, self-developed software products are capitalised. The software costs concern mainly the further development of the integrated EDP system ff-eCommerce for order processing, purchasing, inventory and sales management, including the web shop. All individual and overhead costs in connection with the development are capitalised. The capitalised development costs are written off over a scheduled period of 3to 5years (IAS 38.88) as from the start of use.

• Deferred taxes

According to IAS 12, deferred taxes on tax-losses carried forward are to be charged to subsequent accounting years if and insofar as they appear to be realisable in future. The deferral in question is called upon in the period to which the tax loss is carried forward. In view of the existing losses carried forward, deferred tax assets are capitalised in the period under review.

Due to capitalisation of the self-created intangible assets and the consequent valuation difference in accounting for the tax balance sheet, the resulting deferred taxes are carried as liabilities.

• Recording of capital increases through contributions

in kind as affecting net income. If the IAS accounting principles are interpreted in terms of theoretical interests, these actions affect consolidated net income because the Group's participation in the fair value of the contributed assets causes a corresponding increase of the assets within the Group. These effects on income are shown as other operating income.

• Accrued expenses

Accruals have been made on the basis of "best estimate" valuations.

C. EXPLANATORY NOTES TO THE CONSOLIDATED BALANCE SHEET

1. Cash and cash equivalents

Cash and cash equivalents are exclusively cash in banks payable on demand and cash on hand.

2. Short-term investments/ marketable securities

Short-term investments/marketable securities show essentially the interests in associated companies held exclusively for the purpose of reselling them.

3. Trade accounts receivable

The trade accounts receivable are due within one year.

4. Inventories

The inventories consist almost exclusively of goods, especially hardware components and software. Most of the hardware components are on store at the new logistics centre in Jettingen-Scheppach, Germany.

5. Prepaid expenses and other assets

This includes tax rebates (€ 1.344k), bonuses receivable from suppliers (approx. € 1,181k), accounts receivable from unconsolidated subsidiaries (€ 609k), the asset value of the reinsurance cover (€ 541k) and staff loans (€ 191k).

The prepaid expenses contain deferred insurance premiums and advance payments.

6. Fixed assets

6.1 Property, plant and equipment

The item property, plant and equipment concerns essentially land and buildings of the new logistics centre in Jettingen-Scheppach, Germany. The acquisition costsamount to € 6.4m.

6.2 Intangible assets

Intangible assets encompasses mainly software that is either purchased or selfproduced. The self-created intangible assets are essentially ca. € 1,277k (31 December 2001: € 1.160k) for customising of the integrated EDP system ffeCommerce. The probability that the self-produced internal software creates a commercial usefulness is deducted from the fact that the software in question is already used in the company and a significant optimisation of processes was achieved.

6.3 Goodwill

The goodwill as of the reporting date contains essentially the values for VendIT AG, Teampoint companies, SoftMail IT AG, Tendi AG and CANCOM UK Ltd. The goodwill accounted for by these companies amounts to € 20,358k.

7. Deferred tax assets

corporate income tax.

The deferred tax assets are capitalised on the basis of the existing tax losses carried forward amounting to approximately € 10.8m. Deferred tax assets are set up essentially without affecting the net income since they were set off against the corresponding goodwill to the extent in which these tax loss carryforwards were taken over within the framework of purchasing companies. Valuation is based on a uniform taxation rate of approximately 36.3 per cent. This tax rate is deduced from a trade tax rate of 15 per cent and a corporate income tax rate of 25 per cent plus 5.5 per cent solidarity surcharge on the

8. Short-term debt and current portion of long-term debt

Current liabilities due to banks are included in the item short-term debt and current portion of long-term debt.

These are drawings on the credit facilities provided by banks and those portions of long-term loans due for repayment within one year.

9. Trade accounts payable

The trade accounts payable are due within one year.

10. Accrued expenses

The accrued expenses contain largely accruals for invoices not yet received (€ 3,589k).

Accruals for vacation not yet taken and other employee benefits are also carried under this item.

The total amount of the accrued expenses is due within one year, with the exception of warranty accruals of € 91k shown as long-term accruals.

11. Income tax payable

Obligations from the years 2000 and 2001 are shown under income tax payable.

12. Other current liabilities

Other current liabilities show tax liabilities (€ 1.399k), wages and salaries (€ 51k)and social security contributions (€358k).

13. Long-term debt

Long-term debt comprises exclusively liabilities due to banks with a term remaining to maturity of at least one year. The portion of this debt due within the next 12 months is shown in the item short-term debt and short-term portion of long-term debt.

14. Deferred tax claims

Deferred taxes carried as a liability were set up in connection with capitalised services rendered for own account that were charged to subsequent accounting periods.

Valuation is based on a uniform taxation rate of approximately 36.3 per cent. The tax rate calculation is the same as already described in the notes on deferred tax assets.

15. Shareholders' equity

The company's share capital is € 7,836,342 and is divided into 7,836,342 no-par-value shares.

D. Erläuterungen zur Konzerngewinn- und Verlustrechnung

1. NOTES TO THE CONSOLIDATED INCOME STATEMENT

Personnel expenses account for wages and salaries (€ 15,546k) and social security (€ 3,175k). Expenses for pensions amount to € 9k.

2. Other operating expenditure

Other operating expenditure contains advertising costs, freight and packaging, premises costs including rent and incidental costs, car costs, travel and entertainment expenses, insurance, and legal and consulting fees, etc..

3. Income tax

The taxes paid or due in the individual countries and the deferred taxes are shown as income tax in the following breakdown:

In €´000	Jan. - Sept. 2002	Jan. - Sept. 2001
Current tax expenses:
In Germany	-16	279
Outside Germany	87	91
	71	370
Deferred taxes:
Tax assets	-427	-174
Tax liabilities	167	-74
	-260	-248
Group tax expenses	-189	122

The income tax expenses in and outside Germany concern exclusively, corporate income tax, trade tax and solidarity surcharge in the case of all subsidiary companies with the exception of Maily GmbH & Co. KG and Tendi Deutschland GmbH & Co. KG. These partnerships carry their trade expenditure as income tax expenses. The computation of tax on income in accordance with IAS 12 (deferred taxes) includes tax deferrals resulting from differing valuations in the commercial balance sheet and the tax balance sheet, realisable carryovers, differences in results between the tax valuations in the individual financial statements of the consolidated subsidiary companies and the CANCOM Group valuation, as well as due to the consolidation processes, to the extent that these balance over the course of time. Deferred tax claims relating to the carrying forward of unused tax losses are capitalised in view of the expected future positive results. The deferred taxes are calculated on the basis of the taxation rates that are expected to apply to the period in which an asset is realised or a debt satisfied. The taxation rates valid or announced for the balance sheet date are used. In determining deferred taxes, all period-related differences in the tax deferrals are taken into consideration, independent of the point in time of their realisation.

The tax rates valid on the reporting date are used. The deferred tax assets concern exclusively future tax savings due to realisable loss carry-forwards. Deferred tax assets or liabilities are netted with tax expenses for the current year and the relevant balance is shown under income tax.

E. OTHER MANDATORY DISCLOSURES

1. Segmental reporting

Segmental reporting is mainly based on the geographical segments of Germany and Europe.

2. Stock options

In the reporting period no stock options were issued to employees. In 2001, 24,600 stock options were issued to employees on 31 July 2001 (exchange ratio 1:1). These can first be exercised in 2004. A total of 59,750 stock options (exchange ratio 1:1) were issued in 2000 to employees on 1 September 2000. These cannot be exercised before 2003. In the meantime, 9,100 option rights have returned to the company because the beneficiaries have left the Group. This means that 75,250 out of a possible 180,000 option rights have been issued so far.

The Executive Board is entitled to grant the remaining 104,750 stock option rights until 30 April 2003. The exercise price for options issued in 2001 is € 8.99/share (2000: € 19.27/share). The scope of employees entitled to subscribe encompasses the Executive Board and management, as well as managerial employees of the first and second management levels in CANCOM IT Systeme AG as well as in its related party companies. The lockup period is 3 years and the exercise period ends with the fifth year following issue of the option right. The issue of option rights is not linked with the achievement of any particular performance targets.

3. Related companies and persons

CANCOM IT Systeme AG prepares these consolidated financial statements as the common parent company. These consolidated financial statements are not included in any superior consolidated financial statements.

In accordance with IAS 24, Mr Klaus Weinmann, Mr Raymond Kober and Mr Stefan Kober fulfill all prerequisites required for exercising decisive influence on the CANCOM Group in their capacities as Executive Board Members and shareholders of the parent company.

The Members of the Supervisory Board are also considered to be related persons as defined by IAS 24.

As at the balance sheet date, there were no accounts receivable from or payable to Members of the Executive Board and/or the CANCOM Group companies.

Transactions with related parties were settled at market prices.

4. Director's holdings (as of 30 September 2002)

For the structure of shareholders please see page 9 of this report.

ANHANG

geographical segments	Germany		Europe		Elimination		consolidation
		30.09.02 30.09.01	30.09.02	30.09.01	30.09.02	30.09.01	30.09.02	30.09.01
	T€	T€	T€	T€	T€	T€	T€	T€
Sales revenues
- External sales	140.831 114.246		60.658	53.567
- Sales between segments	7.404	7.296	1.346	1.811	-8.750	-9.107
- Total income	148.235 121.542		62.004	55.378	-8.750	-9.107	201.489 167.813
Result
EBITDA	1.902	3.131	369	1.431			2.271	4.562
- Depreciation and amortization	3.132	1.155	568	308			3.700	1.463
(EBIT)1	-1.230	1.976	-199	1.123			-1.429	3.099
- Interest income							80	143
- Interest expense							-781	-185
- Foreign currency losses							-41	0
Result of ordinary activities							-2.171	3.057
- Extraordinary result	-36	-224	0	-302			-36	-526
- Income tax							189	-122
- Minortiy interest							17	91
- Discontinuing operations							0	-2.253
Net income							-2.001	247
Other informations
- Segment assets2	65.926	72.599	23.567	19.844			89.493	92.443
- Current liabilities	22.631	27.620	14.157	10.697			36.788	38.317
- Long-term liabilities	8.056	7.597	254	39			8.310	7.636
- Investments2	2.139	21.296	175	1.971			2.314	23.267

2 Segment assets and investments including goodwill from consolidation fo capital

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CANCOM IT SYSTEME AG INVESTOR RELATIONS

MESSERSCHMITTSTR. 20 89343 JETTINGEN-SCHEPPACH

GERMANY

TEL: +49 82 25/9 96-1051 FAX: +49 82 25/9 96-1033 EMAIL: IR@CANCOM.DE

CANCOM IT Systeme AG

Messerschmittstraße 20 89343 Scheppach

http.//uk-cancom.de

on +49 82 25 / 9 96-1051 fax +49 82 25 / 9 96-1033