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CANCOM SE — Interim / Quarterly Report 2007
May 29, 2007
71_10-q_2007-05-29_e17e19c9-9658-4b24-9c34-a9c7fcc0e42f.pdf
Interim / Quarterly Report
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Interim Report
Q3/2007
»Leading provider of IT infrastructure and professional services«
Table of contents
| Section | Page |
|---|---|
| Tab le of contents |
02 |
| Prefac e – Key figures |
03 |
| Business Development Q1 | 04-09 |
| 1) CANCOM's business and the general economic situation | 04-05 |
| 2) Earnings, financial and assets situation of the CANCOM Group | 06-07 |
| 3) Shareholdings of the Executive and Supervisory Boards | 08 |
| 4) Events of particular significance after the reporting date | 08 |
| 5) Risk report | 08 |
| 6) Opportunities report | 08 |
| 7) Forecast | 08-09 |
| Balance Sheet | 10-11 |
| Income statement | 12 |
| Cash flow statement | 13 |
| Development of equity | 14-15 |
| Appendix | 16-25 |
CONTENT
Preface – Key figures
Dear Shareholders,
the financial figures for the first quarter of 2007 show that CANCOM's business continues to follow the successful trend of the last financial year. There has been a further increase in sales revenues and especially in profits. This is mainly owing to the positive trend in our service activities. However, even in our IT trading business, which remained sluggish during the first quarter, there are currently signs of a welcome revival.
The general economic conditions are still in our favour. The rate of unemployment in Germany is falling continuously, while domestic demand is steadily rising. The German Federal Government and the leading economic research institutes have therefore made significant upward adjustments to their forecasts for economic growth in Germany in the current year.
In its spring forecast, the German Association of Information Economy, Telecommunications and New Media (BITKOM) is extremely positive about the future of the German IT market. Overall, it expects stronger growth in this sector
than in the German economy as a whole, and it has particular confidence in the IT services and software segments.
As you know, CANCOM concentrated on developing its IT solutions business activities at an early stage. The current figures, and especially the positive
response from our customers, show that this policy is now paying dividends.
CANCOM is in an excellent position to continue making particular gains from the strong upturn in the economy. These are the best conditions for further growth in sales revenues and profits.
Kind regards,
Klaus Weinmann, CEO
Key figures
in Euro million
| Kennzahlenübersicht CANCOM Konzern in Mio. € |
01/01/ - 03/31/2007 | 01/01/ - 03/31/2006 | Veränderungen/ Change |
Overview of key figures CANCOM group in € million |
|---|---|---|---|---|
| Umsatzerlöse | 69.1 | 58.4 | 18.3% | Revenue |
| Rohertrag | 20.8 | 11.7 | 78.1% | Gross profit |
| Rohertragsmarge | 30.1% | 20.0% | 50.5% | Gross margin |
| EBITDA | 2.0 | 1.1 | 77.8% | EBITDA |
| EBIT | 1.6 | 0.9 | 82.1% | EBIT |
| Periodenüberschuss | 1.0 | 0.6 | 77.4% | Net profit |
| Ergebnis pro Aktie (in €) | 0.10 | 0.06 | 66.7% | Earnings per share (in €) |
| Bilanzsumme | 78.2 | 63.0 | 24.1% | Balance sheet total |
| Eigenkapital | 34.5 | 27.4 | 25.9% | Equity |
| Eigenkapitalquote | 44.1 | 43.5 | 1.4% | Equity ratio |
| Durchschnittliche Aktienzahl | Adjusted average number of shares | |||
| (in 1.000) (verwässert) | 10,391 | 9,591 | 8.3% | (in 1,000) (diluted) |
| Mitarbeiter zum 31.03. | 1,290 | 570 | 141.2% | Employees as of 31 March |
Business development
1. CANCOM's business and the general economic situation
Organisational and legal structure of the CANCOM Group
CANCOM IT Systeme Aktiengesellschaft, based in Jettingen-Scheppach, Germany, performs the central financial and management role for the equity investments held by the CANCOM Group.
Focus of activities and sales markets
One of the largest independent systems houses in Germany, the CANCOM Group has been transformed over the last few years from a systems house focusing primarily on hardware and software, into a provider of complete IT solutions. Its central focus is therefore now on providing IT services, in addition to selling hardware and software from reputable manufacturers. Its IT services offering include design and integration of IT systems, as well as system operation.
The CANCOM Group's customer base primarily includes commercial end-users, from independent professionals and small, medium and large-sized companies, to public-sector institutions.
Explanation of the control system used within the Group
To control and monitor the development of the individual subsidiaries, once a month CANCOM analyses, among other things, their sales revenues, gross profit, operating expenditure and operating profit, and compares these key figures with the original plan as well as the quarterly forecast. Additionally, the Company regularly uses external indicators such as inflation rates, interest rates, the general economic trend and the business trend within the IT sector – as well as forecasts for these – for the purpose of management control.
Research and development activities
As the business activities of the CANCOM Group are restricted to hardware and software distribution and service provision, no major research and development costs are incurred.
Overview of the CANCOM Group's business development
The CANCOM Group continued on its path of growth in the first quarter of 2007. Consolidated sales revenues and profits both exceeded the figures for the same quarter in 2006.
Consolidated sales revenues rose by 15.5 percent, from € 58.4 million in the first quarter of 2006, to € 69.1 million in the first quarter of 2007.
The consolidated income for the period rose from € 0.6 million to € 1.0 million. This gave rise to an increase in earnings per share to € 0.10, compared with € 0.06 in the first quarter of 2006.
Significant developments and investments
Below is an overview of the major events affecting the course of business, as well as other important developments during the financial year 2007.
• Announcements by CANCOM IT Systeme AG in accordance with Section 26, paragraph 1 of the German Securities Act (Wertpapier-handelsgesetz, WpHG) On 29 January 2007, Stefan Kober informed us, as required by Section 21, paragraph 1 of the German Securities Act, that his share of the voting rights in CANCOM IT Systeme AG (ISIN: DE0005419105, German securities code: WKN 541910) had exceeded the threshold of 5 percent of the voting rights on 26 January 2007 and now amounts to 5.0361 percent (i.e. 523,289 voting rights).
On 1 March 2007, we received a letter written for and on behalf of AvW Invest Aktiengesellschaft, 9201 Krumpendorf, Austria, as well as the following persons / legal entities:
- AvW Gruppe AG
(formerly AvW Management-Beteiligungs AG), 9201 Krumpendorf, Austria
-
- AvW Beteiligungsverwaltung GmbH, 1010 Vienna, Austria
-
- Auer von Welsbach Privatstiftung, 1010 Vienna, Austria
-
- Dr. Wolfgang Auer von Welsbach, Austria
The letter informs us in accordance with Section 41, paragraph 4a, clause 1 of the German Securities Act that AvW Invest Aktiengesellschaft's share of the voting rights in CANCOM IT Systeme Aktiengesellschaft amounted to 15.04 percent as at 20 January 2007. This is equivalent to a holding of 1,562,422 of a total 10,390,751 shares in CANCOM IT Systeme Aktiengesellschaft.
AvW Gruppe AG holds approximately 74 percent of the shares in AvW Invest Aktiengesellschaft. AvW Beteiligungsverwaltung GmbH, in turn, holds 100 percent of the shares in AvW Gruppe AG, and the sole shareholder in AvW Beteiligungsverwaltung GmbH is Auer von Welsbach Privatstiftung. Dr. Auer von Welsbach is the founder of Auer von Welsbach Privatstiftung, and has the sole right to amend the declaration of establishment of Auer von Welsbach Privatstiftung.
Business development
We have also been informed in line with Section 21 of the German Securities Act that, as at 20 January 2007, the persons / legal entities listed above under numbers 1 to 4 each indirectly held 15.04 percent (i.e. 1,562,442 shares) of the voting capital of CANCOM IT Systeme Aktiengesellschaft as a result of their shareholding in AvW Invest Aktiengesellschaft. The share of 15.04 percent of the voting rights (i.e. 1,562,442 shares) is attributable to each of the legal entities listed above under numbers 1 to 4 in accordance with Section 22, paragraph 1, clause 1, number 1 of the German Securities Act.
On 28 March 2007, we received a letter written for and on behalf of AvW Invest Aktiengesellschaft, 9201 Krumpendorf, Austria.
This letter informs us in accordance with Section 21, paragraph 1 of the German Securities Act that AvW Invest Aktiengesellschaft had sold its voting shares in CANCOM IT Systeme Aktiengesellschaft to AvW Gruppe AG, 9201 Krumpendorf, Austria, on 27 March 2007, and that its shareholding had thus fallen below the thresholds of 15 percent, 10 percent, 5 percent and 3 percent. This means that AvW Invest AG has not held any of the voting capital of CANCOM IT Systeme Aktiengesellschaft since 27 March 2007.
Furthermore, we were informed by way of a voluntary notice that, since 27 March 2007, AvV Gruppe AG directly holds 1,801,899 shares in CANCOM IT Systeme Aktiengesellschaft. This is equivalent to a holding of 17.34 percent of the voting capital. AvW Gruppe AG already had an indirect shareholding of more than 15 percent in CANCOM IT Systeme Aktiengesellschaft.
Comment by CANCOM IT Systeme Aktiengesellschaft:
This means that AvW Gruppe AG now holds 17.34 percent of the voting capital in CANCOM IT Systeme Aktiengesellschaft, instead of AvW Invest AG.
• Executive Board decides to launch share buy-back programme
On 12 March 2007, with the agreement of the Supervisory Board, the Executive Board of CANCOM IT Systeme AG passed a resolution to buy back up to 200,000 of its own shares.
The share buy-back was authorised by resolution of the Company's Annual General Meeting on 28 June 2006. The buy-back process is limited until 31 December 2007, and the shares will be bought on the stock exchange. The price per share paid by the Company is not allowed to exceed or undercut by more than 5 percent the opening price fixed through the Xetra trading system on the trading day.
The Executive Board plans to use the repurchased shares primarily for possible future acquisition of companies, parts of companies or equity investments.
Up to the time of going to press, no shares had been purchased.
Employees
As at 31 March 2007, the CANCOM Group had XXXX employees, in comparison with 570 on the same date in 2006. As at 31 December 2006, the Group employed 1,254 people. The significant increase in the number of employees since the first quarter of 2006 is mainly owing to the takeover of NSG GmbH with effect from 1 July 2006.
The employees worked in the following areas (as at 31 March):
| Professional services: | 854 |
|---|---|
| Sales and distribution: | 201 |
| Marketing and product services: | 47 |
| Purchasing, logistics and order processing: | 95 |
| Central services: | 93 |
The personnel expenses were as follows (in € '000):
| First quarter 2007 | First quarter 2006 | |
|---|---|---|
| Wages and salaries | 12,112 | 5,908 |
| Social security contributions | 2,144 | 904 |
| Pension provisions | 34 | 63 |
| Total | 14,290 | 6,875 |
Business development
2. Earnings, financial and assets situation of the CANCOM Group
a) Earnings situation
The sales revenues of the CANCOM Group rose by 15.5 percent between 31 March 2006 and 31 March 2007, from € 58.4 million to € 69.1 million.
Sales revenues of the CANCOM Group, first quarter 2005 – first quarter 2007 (in € million)
Sales revenues in Germany rose by 23.6 percent to € 61.4 million. The growth is mainly owing to the gratifying trend in the IT services business. The CANCOM Group has consolidated this side of its business since the end of 2004 by targeted takeovers.
In international business, Group sales revenues fell by 11.6 percent to € 7.7 million.
In the systems house business, sales revenues fell slightly by 3.2 percent to € 49.3 million. In the professional services business, sales revenues rose by 135.2 percent to € 21.4 million, partly as a result of acquisitions.
The improved sales situation in Germany and the fall in sales revenues in the international business both impacted on the relevant earnings situations. However, for the CANCOM Group as a whole the positive effects prevailed.
The Group's gross profit rose by 78.1 percent, from € 11.7 million in the first quarter of 2006 to € 20.8 million in the first quarter of 2007. This gave rise to a higher gross profit margin of 30.1 percent, compared with 20.0 percent in the first quarter of 2006. The reason for the considerable improvement in profitability is the successful expansion of the Group's IT services business.
Gross profit of the CANCOM Group, first quarter 2005 – first quarter 2007 (in € million)
Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 77.8 percent in comparison with the first quarter of 2006, from € 1.1 million to € 2.0 million. In Germany, EBITDA earnings rose by 175.6 percent to € 1.8 million, while in the international business they fell to € 0.1 million.
EBITDA earnings of the CANCOM Group, first quarter 2005 – first quarter 2007 (in € million)
Consolidated earnings before interest and tax (EBIT) were 82.1 percent higher, at € 1.6 million compared with € 0.9 million in the first quarter of 2006.
EBIT earnings in Germany rose from € 0.4 million to € 1.5 million, while EBIT earnings from international business fell from € 0.4 million to € 0.1 million.
(in € million) 2 1 0 0.7 First quarter 2005 0.9 First quarter 2006 1.6 First quarter 2007
EBIT earnings of the CANCOM Group, first quarter 2005 – first quarter 2007
The consolidated profit for the period rose from € 0.6 million to € 1.0 million. This gave rise to earnings per share of € 0.10, compared with € 0.06 in the first quarter of 2006.
Business development
The main reason for the significant improvement in gross profit, EBITDA, EBIT and profit for the period on a Group level and in Germany is the successful expansion of the IT services business, which easily compensated for the negative effects of the international business.
Explanations of other items on the income statement
Because of the significant expansion of our service activities, there was an extraordinarily high increase in personnel expenditure in the first quarter of 2007, to € 14.3 million. CANCOM plans to recruit more staff in 2007, in both the service and the trading business, including in the Munich, Frankfurt am Main, Stuttgart, Düsseldorf, Hamburg and Berlin areas, as well as at the Company's headquarters in Jettingen-Scheppach, Germany. This is expected to result in further increases in personnel expenditure.
The order position
In our merchandise business, the majority of incoming orders are converted to sales within two weeks because of our large delivery capacity. Consequently, the reporting date figures on their own do not give a true picture of our order situation in this area of business, which is why they are not published.
b) Asset and financial position
Objectives of financial management
The core objective of the financial management of the CANCOM Group is to safeguard its liquidity at all times, to ensure that day-to-day business activities can be continued. In addition, the Group aims to achieve optimum profitability as well as a high credit status to ensure favourable refinancing rates.
Notes on the capital structure
The current liabilities, amounting to € 30.2 million, include the part of long-term debts which is due within a year, trade accounts payable, provisions and other current liabilities. The long-term liabilities, which amount to € 13.5 million, are liabilities with a residual term of at least one year.
The ratio of short-term to long-term loan capital shifted slightly in favour of long-term financing over the course of the first quarter.
The reduction in trade accounts payable, along with a decrease in provisions, resulted in a welcome reduction in the nominal loan capital.
The nominal equity capital was increased to € 34.5 million during the quarter, as a result of transfers to net profits. This resulted in an increase in the equity ratio to 44.1 percent.
On the asset side, current assets have been reduced since 31 December 2006, to € 46.8 million. The main reason for this is the seasonal decline of 18.2 percent in trade accounts receivable, which fell to € 29.3 million.
Compared with 31 December 2006, there has been a slight increase in long-term assets, to € 31.4 million.
The balance sheet total has fallen from € 85.9 million at 31 December 2006 to € 78.2 million.
Notes on the changes in the cash flow
The typically negative cash flow during the year improved to € 1.4 million as at 31 March 2007, in comparison with a negative cash flow of € 5.4 million in the first quarter of 2006.
At € 0.5 million, the negative cash flow from investing activities was almost the same as in the first quarter of 2006, when it was € 0.4 million.
There was a negative cash flow of € 0.1 million from financing activities, compared with a negative cash flow of € 0.4 million in the first quarter of 2006.
As at 31 March 2007, cash and cash equivalents had fallen slightly to € 5.3 million, in comparison with € 5.7 million at 31 March 2006.
Business development
3. Shareholdings of the Executive and Supervisory Boards
| Total number of shares: | 10,390,751 | 100% | |
|---|---|---|---|
| Shares held by Executive Board members: | |||
| Klaus Weinmann | 476,145 | 4.582% | |
| Paul Holdschik | 13,056 | 0.126% |
Shares held by Supervisory Board members:
| Walter von Szczytnicki | 6,252 | 0.060% |
|---|---|---|
| Stefan Kober | 523,289 | 5.036% |
| Raymond Kober* | 620,891 | 5.975% |
*Replacement for Walter von Szczytnicki
5. Risk report
There have been no major changes in the risks of future development at CANCOM since the start of the current financial year. Details of the risks can be found in the annual report for 2006, starting on page 33. The annual report can be downloaded from www.cancom. de, or obtained free of charge from the Company.
6. Opportunities report
There have been no major changes in the opportunities of future development at CANCOM since the beginning of the current financial year. Details of the opportunities can be found in our annual report for 2006, starting on page 37.
4. Events of particular significance after the reporting date
The Executive Board announced on 7 May 2007 that CANCOM IT Systeme AG was to sell its Company headquarters in Jettingen-Scheppach, Germany for a total of € 9.525 million to a company owned by Levy Investment & Construction Ltd, Israel. This includes the wing currently under construction, which will extend the space from 4,858 square metres to 8,846 square metres.
The Group's plan to retain its connection with the location is evidenced by the fact that a rental agreement for the entire property was concluded at the same time, to run until 2021.
Of the funds generated by the sale, € 4 million will be used to repay the existing mortgage loan. A further € 3.5 million will be used to complete the wing currently under construction, which was included in the sale. The approximately € 2 million remaining will increase CANCOM IT Systeme AG's liquidity.
7. Forecast
A recent forecast by the Kiel Institute for the World Economy (Institut für Weltwirtschaft, IfW) predicts that the strong upturn in the German economy will continue, with gross domestic product growing by 2.8 percent growth in comparison with 2006.
According to the German Association of Information Economy, Telecommunications and New Media (Bitkom), the positive trend in the German IT sector should continue for the rest of the year 2007.
Whereas the growing demand for hardware will probably be exceeded slightly by a fall in prices, resulting in a decline of 0.4 percent, sector experts expect sales growth in the IT services segment and especially the software segment of 4.9 percent and 5.7 percent respectively.
In addition, the Company feels that the trend towards full-service solutions in a "one-stopshop" will continue.
Business development
Development of the German IT sector in 2007*
(real change compared with 2006 as a percentage)
* Forecast: Bitkom, March 2007
CANCOM geared its business policy to these trends at an early stage and, because of the promising prospects, it intends to continue pursuing the same policy.
The business plan, therefore, provides for organic growth, among other things by appointing new IT consultants and technicians, so as to strengthen as a matter of priority the IT services provided by existing locations.
Experience has shown that the consolidation of service activities by recruiting new employees involves initial costs, which is why the recruitment drive planned for the current financial year is expected to lead to a slightly negative or at best neutral effect on the Company's profits. No positive contribution to the profits is expected until at least 2008.
In its media customer business, CANCOM will place increased emphasis on IT infrastructure solutions and services. The introduction of Apple's new operating system, Apple Leopard, which is expected in the autumn, should help this move, as should Adobe's new version of its graphics software collection, Creative Suite, which was introduced in April. Over the year as a whole, this should give rise to further increases in sales revenues and profits in the media customer business.
In the Windows-based hardware and software business, the existing business units are to be consolidated further, for instance by expanding key account management. Microsoft's operating system, Windows Vista, which was successfully introduced in January, should also have a positive impact on sales revenues from hardware and software through the remainder of the year.
Additionally, the CANCOM Group's market position in the German IT environment is to be consolidated by means of targeted acquisitions. The market environment continues to offer favourable conditions for this policy.
CANCOM aims to make improvements to its quality management, for instance by steadily improving customer satisfaction and the efficiency of certain business and work processes. The introduction of Microsoft's Dynamics AX ERP system, which is planned for the middle of the year, will play a crucial role in this process.
By cross-selling and by taking advantage of synergy effects and best practices, costs are to be reduced and resources gathered, so that CANCOM can operate even more competitively in the market in the future. The resulting benefits will bring added value to CANCOM and to its customers and business partners.
However, our planned strategic orientation also carries risks with it. For instance, acquisitions planned or already carried out may not develop as positively as expected, and have a negative impact on CANCOM's business development. An unexpected worsening of general economic conditions could also have a significant negative impact on future business prospects.
Overall, the Executive Board expects consolidated sales revenues of at least € 300 million in the current financial year, and earnings before interest and tax (EBIT) of at least € 6.5 million. Along with this, the Executive Board expects a further improvement in the financial situation.
For the financial year 2008, in consideration of the present conditions, the Executive Board expects further growth in sales revenues and especially in profits, as well as further improvement in the financial situation.
Jettingen-Scheppach, Germany, May 2007 CANCOM IT Systeme AG
The Executive Board
This quarterly report contains statements and information about the future that are based on the assumptions and estimates of the Executive Board of CANCOM IT Systeme Aktiengesellschaft. These statements are identifiable by words and phrases such as "plan", "intend", "will", "expect", "we feel" etc. and are based on current expectations, assumptions and assessments. Although we feel that these expectations are realistic, we cannot guarantee their correctness. The assumptions may be subject to several internal and external risks and uncertainties, which may lead to the actual results deviating considerably, either positively or negatively, from the situations and figures forecast. The following influencing factors are relevant in this respect: changes in the general economic and business situation; changes in interest rates and foreign currency exchange rates; changes in the competitive situation, for instance by the emergence of new competitors, new products and services or new technologies; changes in the consumer habits of target customer groups etc.; and changes to the business strategy.
CANCOM does not plan to update its forecasts, nor does it make any commitment to do so.
Consolidated balance sheet (ifrs) – Assets
| Zahlenangaben in T€ Aktiva |
03/31/2007 | 12/31/2006 | Figures in € '000 Assets |
|---|---|---|---|
| Kurzfristige Vermögenswerte | Current assets | ||
| Zahlungsmittel und Zahlungsmitteläquivalente | 5,288 | 7,302 | Cash and cash equivalents |
| Forderungen aus Lieferungen und Leistungen | 29,266 | 35,796 | Trade accounts receivable |
| Vorräte | 7,745 | 8,130 | Inventories |
| Aufträge in Bearbeitung | 1,134 | 247 | Orders in process |
| Rechnungsabgrenzungsposten und | Prepaid expenses and | ||
| sonstige kurzfristige Vermögenswerte | 3,360 | 3,192 | other current assets |
| Kurzfristige Vermögenswerte, gesamt | 46,793 54 | ,667 | Total current assets |
| Langfristige Vermögenswerte | Long-term assets | ||
| Sachanlagevermögen | 8,689 | 8,564 | Property, plant and equipment |
| Immaterielle Vermögenswerte | 1,112 | 1,178 | Intangible assets |
| Geschäfts- oder Firmenwert | 18,986 | 18,988 | Goodwill |
| Finanzanlagen | 5 | 5 | Investments |
| Nach der Equity-Methode bilanzierte Finanzanlagen | 24 | 30 | Investments accounted for by the equity method |
| Ausleihungen | 146 | 83 | Notes receivable/loans |
| Latente Steuern aus temporären Differenzen | 177 | 183 | Deferred taxes arising from temporary differences |
| Latente Steuern aus steuerlichem Verlustvortrag | 2,104 | 2,057 | Deferred taxes arising from tax loss carryover |
| Sonstige Vermögenswerte | 121 | 145 | Other assets |
| Langfristige Vermögenswerte, gesamt | 31,364 3 | 1,233 | Total long-term assets |
| Aktiva, gesamt | 78,157 | 85,900 | Total assets |
Consolidated balance sheet (ifrs) – Assets
| Zahlenangaben in T€ | Figures in € '000 | ||
|---|---|---|---|
| Passiva | 03/31/2007 | 12/31/2006 | Equity and liabilities |
| Kurzfristige Schulden | Current liabilities | ||
| Kurzfristige Darlehen und kurzfristiger Anteil an | Short term debt and | ||
| langfristigen Darlehen | 940 | 513 | current portion of long-term debt |
| Verbindlichkeiten aus Lieferungen | |||
| und Leistungen | 18,439 | 26,189 | Trade accounts payable |
| Erhaltene Anzahlungen | 22 | 66 | Advanced payments redeived |
| Rückstellungen | 5,019 | 6,551 | Accrued expenses |
| Umsatzabgrenzungsposten | 566 | 286 | Deferred revenues |
| Verbindlichkeiten aus Ertragssteuern | 983 | 732 | Income tax payable |
| Sonstige kurzfristige Schulden | 4,228 | 4,745 | Other current liabilities |
| Kurzfristige Schulden, gesamt | 30,197 | 39,082 | Total current liabilities |
| Langfristige Schulden | Long-term liabilities | ||
| Langfristige Darlehen | 6,390 | 6,695 | Long-term debt, less current portion |
| Genussrechtskapital und nachrangige Darlehen | 6,000 | 6,000 | Profit-participation capital and subordinated loans |
| Umsatzabgrenzungsposten | 63 | 69 | Deferred revenues |
| Latente Steuern aus temporären Differenzen | 407 | 431 | Deferred taxes from temporary differences |
| Pensionsrückstellungen | 201 | 201 | Pension provisons |
| Sonstige langfristige Schulden | 403 | 18 | Other long-term liabilities |
| Langfristige Schulden, gesamt | 13,464 | 13,414 | Total Long-term liabilities |
| Eigenkapital | Equity | ||
| Gezeichnetes Kapital | 10,391 | 10,391 | Shared capital |
| Kapitalrücklage | 15,441 | 15,441 | Additional paid-in capital |
| Bilanzgewinn/Bilanzverlust | Net profit | ||
| (inklusive Gewinnrücklagen) | 7,029 | 6,039 | (incl. retained earnings) |
| Eigenkapitaldifferenz aus Währungsumrechnung | -163 | -138 | Currency translation difference |
| Minderheitenanteile | 1,798 | 1,671 | Minority interests |
| Eigenkapital, gesamt | 34,496 | 33,404 | Total equity |
| Passiva, gesamt | 78,157 | 85,900 | Total equity and liabilities |
Income statement (ifrs)
| Zahlenangaben in T€ | 01/01/07 | 01/01/06 | Figures in € '000 |
|---|---|---|---|
| Gewinn- und Verlustrechnung | -03/31/07 | -03/31/06 | Income Statement |
| Umsatzerlöse | 69,087 | 58,381 | Revenues |
| Sonstige betriebliche Erträge | 162 | 89 | Other operating income |
| Andere aktivierte Eigenleistungen | 0 | 0 | Other capitalised services rendered for own account |
| Gesamtleistung | 69,249 | 58,470 | Total operating revenue |
| Materialaufwand / | Cost of purchased | ||
| Aufwand für bezogene Leistungen | -48,479 | -46,806 | materials and services |
| Rohertrag | 20,770 | 11,664 | Gross profit |
| Personalaufwand | -14,290 | -6,875 | Personnel expenses |
| Abschreibungen auf Sachanlagen | Depreciation of property, plant and equipment | ||
| und immaterielle Vermögensgegenstände | -398 | -245 | and amortisation of intangible assets |
| Sonstige betriebliche Aufwendungen | -4,521 | -3,687 | Other operating expenses |
| Betriebsergebnis | 1,561 | 857 | Operating income |
| Zinsen und ähnliche Erträge | 40 | 23 | Interest and similar income |
| Zinsen und ähnliche Aufwendungen | -238 | -249 | Interest and other expenses |
| Gewinn-Verlustanteile aus Joint Ventures, | Share in profit or loss from joint ventures | ||
| die nach der Equity-Methode bilanziert werden | -6 | 0 | accounted for by the equity method |
| Währungsgewinne / -verluste | -12 | 28 | Foreign currency exchange income / losses |
| Ergebnis vor Steuern | Profit before taxes | ||
| (und Minderheitenanteile) | 1,345 | 659 | (and minority interests) |
| Steuern vom Einkommen und Ertrag | -228 | -101 | Income tax expense |
| Ergebnis vor Minderheitsanteilen | 1,117 | 558 | Profit before minority interests |
| Minderheitenanteile | -127 | 0 | Minority interests |
| Discontinued operations | 0 | 0 | Discontinued operations |
| Periodenüberschuss / Periodenfehlbetrag | 990 | 558 | Net profit for the period |
| Durchschnittlich im Umlauf befindliche | Average number of | ||
| Aktien (Stück) unverwässert | 10,390,751 | 9,590,751 | shares outstanding (basic) |
| Durchschnittlich im Umlauf befindliche | Average number of | ||
| Aktien (Stück) verwässert | 10,390,751 | 9,590,751 | shares outstanding (diluted) |
| Ergebnis je Aktie (unverwässert) | 0.10 | 0.06 | Earnings per share (basic) |
| Ergebnis je Aktie (verwässert) | 0.10 | 0.06 | Earnings per share (diluted) |
Consolidated cash flow statement (ifrs)
| Zahlenangaben in T€ | 01/01/07 | 01/01/06 | Figures in € '000 |
|---|---|---|---|
| Kapitalfluss | -03/31/07 | -03/31/06 | Cashflow |
| Cashflow aus gewöhnlicher Geschäftstätigkeit: | Cash flow from ordinary activities: | ||
| Periodengewinn vor Steuern- und Minderheitenanteilen | 1,345 | 659 | Net profit for the period before taxes and minority interests |
| Berichtigungen: | Adjustments: | ||
| +/- Abschreibungen auf Sachanlagen und immaterielle | +/- Depreciation of property, plant and | ||
| Vermögensgegenstände | 398 | 245 | equipment, and amortisation of intangible assets |
| +/- Veränderungen der langfristigen Rückstellungen | 0 | 0 | +/- Changes in long-term accruals |
| +/- Veränderungen der kurzfristigen Rückstellungen | -1,532 | -446 | +/- Changes in current accruals |
| +/- Ergebnis aus dem Abgang von Anlagevermögen | 4 | 1 | +/- Profit/ losses on the disposal of fixed assets |
| +/- Zinsaufwand | 198 | 226 | +/- Interest expense |
| +/- Veränderungen der Vorräte | 385 | -777 | +/- Changes in inventories |
| +/- Veränderungen der Forderungen aus Lieferungen | +/- Changes in trade accounts receivable | ||
| und Leistungen sowie anderer Forderungen | 5,580 | 1,812 | and other accounts receivables |
| +/- Veränderungen der Verbindlichkeiten aus Lieferungen | +/- Changes in trade accounts payables | ||
| und Leistungen sowie anderer Schulden | -7,652 | -7,294 | and other accounts payable |
| +/- Gezahlte Zinsen | -45 | 251 | +/- Interest paid |
| +/- Gezahlte und erstattete Ertragsteuern | -123 | -38 | +/- Income tax payments and rebates |
| +/- Zahlungsunwirksame Aufwendungen und Erträge | 0 | 0 | Cash-based revenues and expenses |
| Nettozahlungsmittel aus betrieblicher Tätigkeit | -1,442 | -5,361 | Net cash from operating activities |
| Cashflow aus Investitionstätigkeit | Cash flow from investing activities | ||
| +/- Erwerb von Tochterunternehmen | +/- Acquisition of subsidiaries | ||
| (abzgl. erworbene Nettozahlungsmittel) | 8 | -206 | (net of cash) |
| +/- Zahlungen für Zugänge zu immateriellen | +/- Payments for additions to intangible assets as | ||
| Vermögenswerten sowie Sachanlagen | -464 | -257 | well as property, plant and equipment |
| +/- Zahlungen für Zugänge zu anderen Finanzanlagen | -63 | 0 | +/- Payments for additions to financial assets |
| +/- Erlöse aus dem Abgang von und Sachanlagen | +/- Proceeds from disposal of property, plant and | ||
| und Finanzanlagen | 3 | 24 | equipment as well as financial assets |
| +/- Erhaltene Zinsen | 40 | 23 | +/- Interest received |
| Für Investitionstätigkeit eingesetzte Nettozahlungsmittel | -476 | -416 | Net cash used in investing activities |
| Cashflow aus Finanzierungstätigkeit | Cash flow from financing activities | ||
| +/- Erlöse aus der Ausgabe von gezeichnetem Kapital | 0 | 0 | +/- Income from issuance of share capital |
| +/- Kapitalerhöhungskosten | 0 | 0 | +/- Costs of capital increase |
| +/- Ein/Auszahlungen für aufgenommene Kredite | 122 | 114 | +/- Inflows/ outflows from borrowings |
| +/- Gezahlte Zinsen | -193 | -500 | +/- Interest paid |
| Für Finanzierungstätigkeit eingesetzte Nettozahlungsmittel | -71 | -386 | Net cash used in financing activities |
| Nettozu-/abnahme von Zahlungsmitt. u. Zahlungmittelaqivalente | -1,989 | -6,163 | Net change in cash and cash equivalents |
| +/- Wechelkursbedingte Wertänderungen | -25 | -38 | +/- Changes in value resulting from foreign currency exchange |
| +/- Finanzmittelbestand am Anfang der Periode | 7,302 | 11,855 | +/- Cash and cash equivalents as at beginning of period |
| Finanzmittelbestand am Ende der Periode | 5,288 | 5,654 | Cash and cash equivalent sat end of period |
| Zusammensetzung: | Breakdown: | ||
| Liquide Mittel | 5,288 | 5,654 | Cash |
| 5,288 | 5,654 |
Consolidated statement of changes in equity (ifrs)
| Shares | Issued capital | Capital reserves | Revenue reserves | Treasury shares | |
|---|---|---|---|---|---|
| TStück/Quantity '000 | T€ /'000 | T€ /'000 | T€ /'000 | T€ /'000 | |
| 31. Dezember 2005 | 9,591 | 9,591 | 13,821 | 122 | 0 |
| Kapitalerhöhungen | 800 | 800 | 1,672 | ||
| Veränderung der kumulierten | |||||
| Währungsdifferenzen | |||||
| Veränderung der Rücklagen: | |||||
| - Veränderung stock options | -18 | ||||
| - IPO Kosten | -34 | ||||
| Ergebnis des Berichtszeitraums | |||||
| Minderheitenanteile | |||||
| 31. Dezember 2006 | 10,391 | 10,391 | 15,441 | 122 | 0 |
| Kapitalerhöhungen | 0 | 0 | 0 | ||
| Veränderung der kumulierten | |||||
| Währungsdifferenzen | |||||
| Veränderung der Rücklagen: | |||||
| - Veränderung stock options | |||||
| - IPO Kosten | 0 | ||||
| Ergebnis des Berichtszeitraums | |||||
| Minderheitenanteile | |||||
| 31. März 2007 | 10,391 | 10,391 | 15,441 | 122 | 0 |
Consolidated statement of changes in equity (ifrs)
| Effects on equity | |||||
|---|---|---|---|---|---|
| Total | from first-time | ||||
| equity | Minority interests | Earned surplus | apllication of IFRS | Translation reserve | |
| T€ /'000 | T€ /'000 | T€ /'000 | T€ /'000 | ||
| 31 December 2005 | 26,887 | 0 | ,660 | -153 3 | -154 |
| Capital increase | 2,472 | ||||
| Change in accumulated foreign | |||||
| currency exchange difference | 16 | 16 | |||
| Change in reserves: | |||||
| - change in stock options | -18 | ||||
| - IPO costs | -34 | ||||
| Net profit for the period | 2,410 | 2,410 | |||
| Minority interests | 1,671 | 1,671 | |||
| 31 December 2006 | 33,404 | 1,671 | 6,070 | -153 | -138 |
| Capital increase | 0 | ||||
| Change in accumulated foreign | |||||
| currency exchange difference | -25 | -25 | |||
| Change in reserves | |||||
| - change in stock options | 0 | ||||
| 0 | |||||
| Net profit for the period | 990 | 990 | |||
| Minority interests | 127 | 127 | |||
| 31 March 2007 | 34,496 | 1,798 | 7,060 | -153 | -163 |
Notes
to the consolidated accounts for the quarter ended 31 March 2007
A. The principles adopted for the financial statements
1. General information
The consolidated financial statements of CANCOM IT Systeme Aktiengesellschaft and its subsidiaries ("the CANCOM Group" or "the Group") were drawn up according to International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS). All compulsory IFRS and IAS as well as interpretations by the International Financial Reporting Interpretation Committee (IFRIC) and the Standing Interpretations Committee (SIC) were taken into account. The consolidated income statement was prepared on the basis of the total cost method.
The consolidated financial statements were drawn up in euro. Unless otherwise stated, all amounts are shown in thousand euro (€ '000 or € k).
The financial year covers the period from 1 January to 31 December 2007. The address of the Company's registered office is Messerschmittstrasse 20, 89343 Jettingen-Scheppach, Germany.
The shares are traded on the Regulated Market of the FWB Frankfurt Stock Exchange under ISIN DE0005419105 and are admitted to the Prime Standard of Deutsche Börse AG.
The main object of CANCOM IT Systeme Aktiengesellschaft and its consolidated subsidiaries is the sale and distribution of integrated IT system solutions (hardware, software and network products), and the provision of a comprehensive range of IT services (e.g. IT advice, system integration, service and support, and training).
2. Scope of consolidation
The consolidated financial statements include CANCOM IT Systeme Aktiengesellschaft and all subsidiaries in which CANCOM IT Systeme Aktiengesellschaft has either a direct or an indirect majority shareholding, or in which it holds the majority of the voting rights. These subsidiaries are fully consolidated.
The following German and non-German subsidiaries are included in CANCOM IT Systeme Aktiengesellschaft's consolidated financial statements for the quarter ended 31 March 2007:
| companys registered office |
Percentage holding |
|
|---|---|---|
| 1. CANCOM Deutschland GmbH | Jettingen-Scheppach, Germany | 100.0 |
| and its subsidiaries | ||
| • CANCOM Computersysteme GmbH | Grambach, Austria | 100.0 |
| • CANCOM (Switzerland) AG | Caslano, Switzerland | 100.0 |
| 2. CANCOM NSG GmbH | Jettingen-Scheppach, Germany | 75.1 |
| 3. CANCOM IT Solutions GmbH | Jettingen-Scheppach, Germany | 100.0 |
| 4. CANCOM physical infrastructure GmbH Jettingen-Scheppach, Germany | 100.0 | |
| and its subsidiary | ||
| • Novodrom People Value Service GmbH Jettingen-Scheppach, Germany | 100.0 | |
| 5. Maily Distribution GmbH | Sindelfingen, Germany | 100.0 |
| 6. CANCOM Ltd. | Guildford, UK | 100.0 |
| 7. SoftMail IT AG | Caslano, Switzerland | 100.0 |
3. Accounting and valuation methods
The basic accounting and valuation methods used in the preparation of these consolidated financial statements are set out below. The methods described were used consistently for the reporting periods shown, unless declared otherwise.
Standards which came into effect after the accounting date are not applied in advance. There are therefore no effects from the prior application of standards on the assets, financial position and earnings of the Group.
Preparation of the individual financial statements included in the consolidated statements
The financial statements of German and non-German companies included in the consolidated statements were prepared as at the balance sheet date for the annual financial statements of CANCOM IT Systeme Aktiengesellschaft.
Principles of consolidation
The consolidated financial statements are based on the individual financial statements of the companies consolidated in CANCOM IT Systeme Aktiengesellschaft.
IFRS 3 is used from 31 March 2004, which means that a retrospective application does not take place. In accordance with IFRS 3.79, the amortisation of previously recognised goodwill is discontinued. The carrying amount of the amortisation thus accumulated is charged against a corresponding reduction of the goodwill. The goodwill is analysed annually for impairment of assets in accordance with IAS 36.
The financial statements of the individual subsidiaries were included in the consolidated statements according to the acquisition method. When a subsidiary is first included in the consolidated financial statements, assets, liabilities and contingent liabilities identifiable within the scope of a merger are valued at their fair value at the time of acquisition. The surplus acquisition costs beyond the Group's share in the net assets valued at fair value are recognised as goodwill. In line with IFRS 3 "Business combinations", IAS 36 "Impairment of assets" and IAS 38 "Intangible assets", goodwill is not subject to scheduled amortisation. Instead, an impairment test must be carried out at least once a year to establish whether extraordinary impairment is necessary. The reviews of goodwill based on market values are to be carried out at business unit (cash generating unit) level. For the purpose of this rule, a business unit is an operating segment or one level below.
When reporting using the equity method, the shares in the company are initially estimated using the acquisition costs. The carrying amount of the shares is then increased or reduced according to the shareholder's portion of the associated company's net income for the period. The shareholder's portion of the associated company's profit or loss is shown in its net income for the period. Dividends received by the associated companies reduce the carrying amount of the shares.
Profits, losses, revenues, expenses and income within the Group, as well as existing accounts payable and receivable between the Group companies, are eliminated. Interests held by other shareholders are shown as a separate adjusting item under the equity capital.
Calculations and assumptions
In drawing up the consolidated financial statements, we have to make estimates and assumptions. These have an impact on the amounts shown for assets, liabilities and contingent liabilities, as well as the reporting of expenditure and income. The actual amounts may deviate from these assumptions and estimates.
Currency conversion principles
In the individual financial statements of the companies, business transactions in foreign currencies are valued using the rate of exchange that applied on the date of the initial posting. Gains and losses from exchange rate fluctuations are recognised in the income statement. Conversion of the financial statements of international subsidiaries is carried out according to the concept of functional currency. In the CANCOM Group, all international subsidiaries are economically independent, and therefore the relevant national currency of the subsidiary is the functional currency. The assets and liabilities are accordingly converted at the rate of exchange applicable on the reporting date, while income and expenditure are converted at the average rate for the year. Differences from the conversion rate on the reporting date in the previous year, and between the net income for the year shown in the balance sheet and in the income statement, are charged against the equity capital, without affecting the net profit, and are indicated separately under equity capital.
| Currency | First quarter 2007 |
First quarter 2006 |
First quarter 2005 |
|---|---|---|---|
| Swiss francs | |||
| Rate on reporting date | € 1 = SFR 1.624 | € 1 = SFR 1.579 | € 1 = SFR 1.549 |
| Average rate | € 1 = SFR 1.617 | € 1 = SFR 1.559 | € 1 = SFR 1.549 |
| Pounds sterling | |||
| Rate on reporting date | € 1 = GBP 0.680 | € 1 = GBP 0.697 | € 1 = GBP 0.688 |
| Average rate | € 1 = GBP 0.680 | € 1 = GBP 0.686 | € 1 = GBP 0.694 |
Conversion rate differences are recorded in the results and amount to € 12k.
Realisation of revenues
Revenues for sales of hardware and software are realised when ownership and risk passes to the customer, if payment is pre-arranged or determinable by contract and it is probable that the accounts receivable relating to the sale will be met. Sales relating to the professional services segment are realised only after acceptance by the customer, or installation, if this is an essential condition for the commissioning of the product. The revenues figures constitute the amounts after deduction of cash discounts, price reductions, customer bonuses and rebates.
Service contracts in progress are valued by the percentage of completion method, in line with IAS 11. Work progress is calculated from the ratio of the contract costs accumulated up to the reporting date to the estimated total contract costs, unless this would distort the representation of the work progress. If the result of a contract can be reliably estimated, then the revenues and costs are recorded on the reporting date according to this degree of completion. If the result of a contract cannot be reliably estimated, the contract revenues are only recorded at the level of the probable refundable accumulated contract costs.
Interest income is accrued under the relevant period, taking into account the outstanding loan amount and the interest rate to be applied. The applicable interest rate is the interest rate which discounts the anticipated future cash inflows over the life of the financial asset with regard to the carrying amount of the asset. Dividend income from financial investments is recorded at the time when the shareholder acquires the right to receive the dividend payment.
Earnings per share
Earnings per share are determined in accordance with IAS 33 "Earnings per share". The basic earnings per share are calculated by dividing the consolidated net income by the weighted average number of ordinary shares outstanding in the financial year.
The diluted earnings per share are calculated on the basis that all potentially diluted stock options will be exercised. It can be assumed, economically speaking, that the options are exercised when the strike price per option is favourable with regard to the traded share price.
Short-term assets
Inventories are valued at the lower of acquisition or manufacturing cost and market value (lower of cost or market) in accordance with IAS 2.9. Acquisition or manufacturing costs include direct materials costs and, where applicable, direct production costs as well as any overheads that have been incurred in bringing the inventories to their present location and condition. Acquisition and manufacturing costs are calculated according to the weighted average method. The net realisable value is the estimated sales price less all estimated costs up to completion, plus the costs for marketing, sales and distribution. Items with reduced marketability are valued at the lower net realisable value.
Where necessary, devaluations are carried out for overextending items, obsolescence and reduced marketability.
No interest on loans was capitalised under the manufacturing costs. Interest on loans was immediately recorded as expenditure.
Contracts in progress were valued using the percentage of completion method, in line with IAS 11, with revenue and costs being recognised in proportion to the stage of completion of contract activity.
Accounts receivable are shown at their net sales proceeds value, allowing for a write-down for doubtful debts. Where the agreed interest rate for long-term accounts receivable is less than the market rate, the nominal amount of the account receivable is discounted. Trade accounts receivable are not discounted. If it is unlikely that an account receivable can be collected, the amount is written down.
Other assets are shown at their nominal values.
Cash and cash equivalents include cash in banks and cash in hand, and cash deposits which are not subject to any considerable value fluctuation and can be turned into cash within a period of three months at most.
Prepaid expenses are accrued to charge expenses to their relevant accounting period, and are valued at their nominal value.
Intangible assets
In line with IAS 38 "Intangible assets", goodwill and other intangible assets purchased are recognised at acquisition cost and the estimated residual carrying amount is written down by the straight-line method over the expected useful life of the assets. Assets are written down uniformly throughout the Group by the straight-line method (generally over a period of three to five years) over the period during which the relevant company can expect to use the asset. Goodwill from acquisitions is not subject to scheduled amortisation. Instead of scheduled amortisation, goodwill is subject to an impairment test at least once a year
in line with IFRS 3 and IAS 36. IAS 38 distinguishes between intangible assets with limited useful lives and those with indeterminable useful lives. Only intangible assets with limited useful lives are subject to scheduled amortisation, unlike intangible assets with indeterminable useful lives, which are instead reviewed at least once a year to check if a write-down is necessary in accordance with IAS 36. With the exception of goodwill, all intangible assets have a limited useful life.
Once a year, goodwill is checked for impairment losses – as well as for signs of a possible impairment loss. The impairment value of goodwill is reviewed at reporting unit (cash generating unit) level based on the geographical segment reporting in accordance with IAS 36. In this process the carrying amounts of cash generating units are compared with the realisable amount.
The realisable amount is the higher of the realisable value less realisation costs and the value in use. CANCOM IT Systeme Aktiengesellschaft calculates the value in use as the present value of the future cash flows of the reporting unit over a period of five years, discounted by the prevailing market rate. Cash flows beyond the five-year period are projected with a constant rate of growth and discounted.
Property, plant and equipment
Property, plant and equipment are valued at acquisition or manufacturing cost less depreciation, in accordance with IAS 16. They are subject to scheduled straight-line depreciation over their useful lives. Their recognition is based on the following useful lives:
| Administrative and warehouse buildings | 33 1/3 years |
|---|---|
| Fixtures, fittings and equipment | 4-10 years |
Acquisition/manufacturing costs include expenditure directly attributable to the purchase of assets. Subsequent acquisition/manufacturing costs are only recorded as a part of the acquisition/manufacturing costs of an asset or – where relevant – as separate assets if it is probable that economic use will in future accrue to the company out of them and the costs of the assets can be reliably determined. All other repair and maintenance costs are recorded as expense in the financial year in which they occur. The residual carrying amounts and useful lives are checked as at every balance sheet date and adjusted where necessary. If the carrying amount of an asset exceeds its estimated realisable amount, the value is immediately written down to this amount. Gains and losses from disposals of assets are recorded as the difference between the realised proceeds and the carrying amount, and recognised in the income statement. Low-value assets are written off in full in the year of acquisition and shown in the statement of fixed assets as additions or disposals, and as depreciation for the relevant financial year.
Property, plant and equipment are subject to land charges of € 6.0 million, which are valued at € 4.1 million as at 31 March 2007.
Extraordinary depreciation of long-term assets
If there are indications that the carrying amount of a long-term asset cannot be recovered, the requirement for an extraordinary write-down is reviewed on the basis of IAS 36.9 "Impairment of assets". In this case CANCOM would carry out an unscheduled write-down. Long-term assets that will continue to be used in the future are subjected to an impairment test by comparing the carrying amount and the discounted future inflow and outflow of funds. If this value (current value of the reporting date) is less than the carrying amount, a reduction in value of the asset takes place in accordance with IAS 36 and IAS 38.108.
Financial investments and loans
Other notes receivable/loans are valued at acquisition cost. Non-interest-bearing and low-interest-bearing notes receivable and loans are valued at their present value. The financial investments do not include any securities traded on organised markets.
Deferred taxes
Deferred taxes are accrued according to the balance sheet liability method. This involves the accrual of deferred taxes for temporary differences between the basis of calculation for the purposes of tax law and for commercial law, which will most probably be cancelled out in the future, and for temporary result differences from consolidation measures affecting the net income or net loss. Deferred taxes are assessed using the tax rates applying in the year the differences are reversed, if these are already approved on the balance sheet date. In accordance with IAS 12 and SIC-21, the deferred tax assets and liabilities are shown separately in the Group figures. For loss carryovers that reduce future tax burdens, deferred tax assets have been accrued if it is probable that they will be realised. The value of the deferred taxes is reviewed and adjusted if necessary. Deferred taxes are shown in the balance sheet at their nominal value; no discounting is carried out.
Provisions and liabilities
Provisions for employee benefits mainly include performance-based pension obligations, which are determined on the basis of actuarial reports using the projected unit credit method and taking into account future increases in salary and pensions. For contribution-based pension schemes, provisions are made only to the amount of the contributions still due at the balance sheet date. In the event of unforeseeable changes in pension obligations or plan assets, actuarial gains and losses can occur which are not reported in the income statement. These gains and losses which have been incurred but not yet reported in the income statement are realised to the extent that they exceed, at the beginning of a financial year, the value of pension obligations and plan assets by a range that is greater than 10 percent.
Other provisions are made where there is an uncertain present obligation arising from a past event with a legal or material cause, which is expected to be claimed and which can be reliably quantified. The obligation is valued on the basis of best estimate, taking into account unit costs and overheads. General administrative, distribution and development costs are not taken into account.
Liabilities are valued at their repayment value, which is equivalent to the current market value.
Utilised overdraft facilities are shown in the balance sheet as liabilities to banks, under shortterm financial liabilities.
Consolidated cash flow statement
The cash flow statement is drawn up according to IAS 7 and shows the inflow and outflow of cash in the Group during the year under review. It distinguishes between cash flows from current operating activities and cash flows from investing and financing activities.
Leasing
Payments on an operating lease are recorded as expenses in the income statement using the straight-line method over the term of the lease contract, unless another systematic basis is more representative of the time pattern of the Company's benefit. An operating lease is one in which not all major risks and opportunities are assigned to the lessee. The Company reviews all leasing contracts at regular intervals to establish whether operating or finance lease terms apply.
Following the introduction of a new ERP software package, which is expected in the second quarter of 2007, a lease agreement of a total value of € 1,317 has been signed with TRS Technology Refresh GmbH. The transaction was treated as an operating lease in accordance with IAS 17. The basic term of the lease, which is not terminable, is 56 months.
5. Major differences in financial reporting between IFRS and German commercial law
The consolidated financial statements of the Company for the first quarter of 2007 were drawn up in compliance with International Financial Reporting Standards (IFRS). The Company fulfils the prerequisites for exemption from the obligation to prepare consolidated financial statements in accordance with German commercial law.
The essential differences in consolidated financial reporting between the IFRS method and German commercial law are as follows:
-
- Breakdown of the balance sheet into long-term and short-term items, in line with IAS 1 (revised 2003)
-
- Valuation of pension provisions according to the projected unit credit method in line with IAS 19
-
- Conversion of accounts payable and receivable in foreign currency monetary amounts based on the reporting date rates in line with IAS 21
-
- Deduction of IPO costs and costs of capital increases after deducting deferred taxes from equity capital in accordance with IFRS 3
-
- Reporting of deferred tax assets and deferred tax liabilities according to the liability method based on IAS 12
-
- Treatment of differences in liabilities arising from first-time consolidation, and recognition and continued measurement of goodwill with regard to consolidation in accordance with IFRS 3
-
- Reporting of manufacturing contracts according to the percentage of completion method in line with IAS 11
B. Notes to the consolidated balance sheet
1. Cash and cash equivalents
Cash and cash equivalents consist exclusively of cash in banks payable on demand and cash in hand.
2. Trade accounts receivable
The trade accounts receivable are due within a year.
3. Inventories
Inventories consists almost exclusively of merchandise, particularly hardware components and software. The majority of these are stored at the logistics centre in Jettingen-Scheppach, Germany.
The inventories consist of the following (company-specific breakdown):
| 31 March 2007 | 31 March 2006 | |
|---|---|---|
| € ´000 | € ´000 | |
| Finished products and merchandise | 7.779 | 8.591 |
| Advance payments made | 98 | 116 |
| Advance payments received | -132 | -577 |
| 7.745 | 8.130 |
4. Orders in process
Orders in process are contracts reported according to the percentage of completion method. They amount to € 1,430k, less down-payments of € 296k received.
5. Prepaid expenses and other short-term assets
This item mainly consists of other short-term assets. These include bonuses due from suppliers (€ 1,218k), marketing revenues (€ 413k), accounts receivable from employees (€ 226k), insurance recovery (€ 181k), creditors with debit balance (€ 168k), tax rebates (€ 166k), accounts receivable from original shareholders (€ 118k) as well as accounts receivable from the social security institution and pension funds (€ 81k). The deferred income, amounting to € 677k, consists of deferred insurance premiums and advance payments.
6. Fixed assets
6.1 Property, plant and equipment
Property, plant and equipment mainly consists of the land and buildings of the administrative and logistics centre in Jettingen-Scheppach, Germany in the value of € 5.7 million, as well as the equipment necessary for the automated small parts warehouse and the manual pallet rack in the value of € 0.6 million. Computer equipment, tenant's fittings and office furnishings are also shown under this item.
6.2 Intangible assets
Intangible assets consist of software that has been purchased (€ 65k) and a customer list (€ 1,047k).
6.3 Goodwill
Goodwill at the balance sheet date mainly includes the relevant figures arising from the consolidation of CANCOM Deutschland GmbH; CANCOM Ltd., UK; CANCOM IT Solutions GmbH and CANCOM NSG GmbH.
6.4 Loans
Loans include the asset value from reinsurance, amounting to € 146k.
7. Deferred tax assets
The deferred tax assets on losses carried forward were capitalised on the basis of the existing German and non-German corporate tax losses carried forward, which amount to approximately € 5.8 million, and the German trade tax losses carried forward, amounting to approximately € 5.0 million. Where the losses carried forward were taken on as a result of company acquisitions, deferred tax assets were accrued with no effect on the profit and loss, by netting against the relevant goodwill.
| Deferred taxes from | temporary | tax losses |
|---|---|---|
| differences | carried forward | |
| €´000 | €´000 | |
| As at 1 January 2007 | 183 | 2,057 |
| Tax expenditure from profit and loss calculation | -6 | 47 |
| As at 31 March 2007 | 177 | 2,104 |
8. Short-term debt and current portion of long-term debt
Short-term debt and current portion of long-term debt comprises liabilities to banks. These are drawings on 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. Other provisions
The provisions mainly comprise provisions for bonuses and commissions (€ 1,157k), holiday entitlements (€ 917k), invoices not yet received (€ 877k), severance payments and salaries (€ 826k), guarantees (€ 385k), contingent risks (€ 351k), trade association (€ 350k), social security contributions and tax on wages and salaries (€ 171k), additional costs of leasing (€ 114k), costs of litigation (€ 114k) and a provision for the cost of financial statements (€ 109k).
The total amount of the provisions is due within one year, apart from the provision of € 17k for severance payments which are legally mandatory in Austria, and the provision of € 385k for guarantees. These are shown under long-term provisions.
11. Income tax payable
Income tax payable mainly consists of obligations for 2004, 2005, 2006 and 2007, as well as for tax audits for the years 2000 to 2003.
12. Other current liabilities
Other current liabilities include sales tax liabilities (€ 2,078k), tax on wages and salaries, and church tax (€ 941k), debtors with a credit balance (€ 533k), wages and salaries (€ 192k), social security contributions (€ 108k) and purchase price liabilities (€ 81k).
13. Long-term debt
Long-term debt consists purely of liabilities to banks with a remaining term of at least one year. The portion of these debts that is due within the next twelve months is shown under "Short-term debt and current portion of long-term debt".
14. Capital from profit-participation rights and subordinated loans
Capital from profit-participation rights and subordinated loans includes only profitparticipation rights, which amount to € 6,000,000 (PREPS 2005-1 und PREPS 2005-2). The profit-participation rights designated as PREPS 2005-2, a portion which amounts to € 3,000,000, were granted by a contract dated 1 November 2005. The capital was paid in on 8 December 2005. The profit-participation rights expire on 8 December 2012. There is no participation in the Company's losses. Claims arising from the profit-participation rights are ranked inferior to the claims of all current and future creditors of the Company. This means that, in the event of the liquidation or insolvency of the Company, they are subordinate to the claims defined by Section 39, paragraph 1, no. 4 of the German Insolvency Statute (Insolvenzordnung, InsO), and are therefore only to be met after these and any claims senior to them have been fully met, but before the claims defined by Section 39, paragraph 1, no. 5 of the above Statute.
In line with the resolution of the Annual General Meeting of 2005 giving the Executive Board authority to grant profit-participation rights, the portion shown in the balance sheet as at 31 December 2005 as a subordinated loan (PREPS 2005-1), amounting to € 3,000,000, has been converted into profit-participation rights. The conversion became effective from the interest period started on 4 May 2006.
The profit-participation rights expire on 4 August 2012. There is no participation in the Company's losses. With regard to the ranking of any claims arising from these profitparticipation rights, the same applies as to the profit-participation rights designated as PREPS 2005-2 above.
15. Deferred tax liabilities
The deferred tax liabilities provide for deviations from the tax balance sheets. Their valuation is based on a uniform tax rate of 38.19 percent.
16. Pension provisions
The pension provisions include € 168k for Executive Board members and € 33k for other employees.
Individual performance-related commitments exist with regard to one Executive Board member. In addition there are further performance related commitments for other employees who were taken on as a result of an acquisition.
The size of the pension commitments for pension schemes in Germany is calculated mainly by the years of service and the remuneration of the employees in question.
17. Equity capital
Subscribed capital (as at 31 March 2007)
The Company's share capital as at 31 March 2007 was € 10,390,751, divided into 10,390,751 notional no-par-value shares.
Authorised and conditional capital (as at 31 March 2007)
The Company's authorised capital as at 31 March 2007 amounted to € 3,988,671.
At the Annual General Meeting of 16 June 2004 a resolution was passed authorising the Executive Board to undertake a one-off increase or several increases in the share capital of up to a total of € 838,671, by issuing up to 838,671 new notional no-par-value bearer shares in exchange for cash or non-cash contributions. The capital increases require the approval of the Supervisory Board and must be carried out by 15 June 2009. The shareholders are granted subscription rights which can be rescinded in the event of a capital increase through non-cash contributions in connection with the acquisition of an equity investment. The Executive Board is also authorised to exclude fractional amounts from the shareholders' subscription rights. The Executive Board, with the agreement of the Supervisory Board, will decide on the content of the relevant rights inherent in the shares and the other conditions of the share issue (Authorised Capital 2004/I).
Based on a resolution of the Annual General Meeting of 22 June 2005, the Executive Board is also authorised to undertake a one-off increase or several increases in the share capital of up to a total of € 150,000, by issuing up to 150,000 new notional no-par-value bearer shares in exchange for cash contributions. The capital increases require the approval of the Supervisory Board and must be carried out by 20 June 2010. The Executive Board may rescind the shareholders' subscription rights with the approval of the Supervisory Board, provided that the new shares are issued at a price that is not significantly lower than the stock market price. Subject to the approval of the Supervisory Board, the Executive Board is also authorised to exclude fractional amounts from the shareholders' subscription right. The Executive Board, with the agreement of the Supervisory Board, will decide on the content of the relevant rights inherent in the shares and the other conditions of the share issue (Authorised Capital 2005/II).
By a resolution of the Annual General Meeting of 22 June 2005, the Executive Board is authorised to undertake a one-off increase or several increases in the Company's share capital of up to a total of € 3,000,000 by issuing up to 3,000,000 new notional nopar-value bearer shares in exchange for cash or non-cash contributions. The capital increases require the approval of the Supervisory Board and must be carried out by 20 June 2010. The shareholders are granted subscription rights which can be rescinded in the event of a capital increase through non-cash contributions in connection with the acquisition of an equity investment or parts of other companies. Subject to the approval of the Supervisory Board, the Executive Board is also authorised to exclude fractional amounts from the shareholders' subscription rights. The Executive Board, with the agreement of the Supervisory Board, will decide on the content of the relevant rights inherent in the shares and the other conditions of the share issue (Authorised Capital 2005/III).
As at 31 March 2007, the conditional capital amounted to € 3,740,866.
The increase in share capital by up to € 3,560,866 through the issue of up to 3,560,866 new notional no-par-value bearer shares will only be implemented to the extent that holders of bonds exercise their conversion rights or obligations and option rights. The Executive Board was authorised by the Annual General Meeting of 27 May 2002 to issue these shares, subject to the approval of the Supervisory Board, until 25 May 2007. The new shares carry dividend rights from the beginning of the financial year for which, at the time of their issue, no resolution of the Annual General Meeting has been passed on the appropriation of the net profit for the year.
The increase in share capital by up to € 180,000 through the issue of up to 180,000 new notional no-par-value bearer shares will only be carried out to the extent that beneficiaries of warrants, which the Executive Board was authorised to issue according to the resolution of the Annual General Meeting held on 18 April 2000, exercise their conversion rights. The shares resulting from the exercised option rights are entitled to profit participation from the beginning of the financial year in which they originate as a result of the option rights being exercised.
18. Minority interest
Minority interest is the portion of the equity capital attributable to CANCOM NSG GmbH's minority shareholders.
C. Notes to the consolidated income statement
1. Segment reporting
The CANCOM Group discloses segmental information in accordance with IAS 14.
The primary segment reporting format of the CANCOM Group is based on geographical segments, since the risks, the return on equity and the earnings potential of the Group are influenced mainly by whether the business is operational in Germany or in the rest of Europe.
The secondary segment reporting format is based on the systems house and professional services business segments.
The accounting methods used for internal segment reporting are in line with the accounting and valuation methods described in section A. 3. The only differences arise from currency conversion and these result in slight deviations between the data for internal reporting and the relevant disclosures for external accounting.
Internal sales are recorded on the basis of either their cost of their current market prices, depending on the type of service or product sold.
The CANCOM Group's segmental reporting for 2007 includes the following companies in Germany: CANCOM Deutschland GmbH, CANCOM IT Solutions GmbH, CANCOM NSG GmbH, CANCOM physical infrastructure GmbH, Novodrom People Value Service GmbH, Maily Distribution GmbH and CANCOM IT Systeme Aktiengesellschaft.
The Europe segment includes CANCOM Ltd., CANCOM (Switzerland) AG, CANCOM Computersysteme GmbH and SoftMail IT AG.
The performance pools method is used for internal transfer pricing for transactions between the segments.
The table below divides up different data from the consolidated financial statements by regions. All the figures shown were calculated in the same way as the relevant consolidated data, which is why the totals of the segmental data correspond to the consolidated values.
| geopraphical segments | Germany | Europe | Elimination | Consolidation | ||||
|---|---|---|---|---|---|---|---|---|
| 03/31/07 | 03/31/06 | 03/31/07 | 03/31/06 | 03/31/07 | 03/31/06 | 03/31/07 | 03/31/06 | |
| ´000 € | ´000 € | ´000 € | ´000 € | ´000 € | ´000 € | ´000 € | ´000 € | |
| Sales revenues | ||||||||
| - External sales | 61,357 | 49,633 | 7,730 | 8,748 | ||||
| - Intersegment sales | 1,683 | 1,858 | 14 | 303 | -1,697 | -2,161 | ||
| - Total sales revenues | 63,040 | 51,491 | 7,744 | 9,051 | -1,697 | -2,161 | 69,087 | 58,381 |
| Result | ||||||||
| EBITDA | 1,816 | 659 | 143 | 443 | 1,959 | 1,102 | ||
| - Depreciation and amortisation | 366 | 210 | 32 | 35 | 398 | 245 | ||
| Operating result (EBIT) | 1,450 | 449 | 111 | 408 | 1,561 | 857 | ||
| - Share in profit or loss from joint ventures | ||||||||
| accounted for by the equity method | -6 | 0 | 0 | 0 | -6 | 0 | ||
| - Interest income | 40 | 23 | ||||||
| - Interest expenditure | -238 | -249 | ||||||
| Result from ordinary activities | 1,357 | 631 | ||||||
| - Extraordinary result | 0 | 0 | 0 | 0 | 0 | 0 | ||
| - Foreign currency exchange gains / losses | -12 | 28 | ||||||
| - Income taxes | -228 | -101 | ||||||
| - Minority interest | -127 | 0 | ||||||
| - Discontinuing operations | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Consolidated income for the year | 990 55 | 8 | ||||||
| Other information | ||||||||
| - Segment assets 1,2 | 70,504 | 54,968 | 5,372 | 6,427 | 75,876 | 61,395 | ||
| - Current liabilities | 27,725 | 21,747 | 2,572 | 3,550 | 30,297 | 25,297 | ||
| - Long-term liabilities | 13,347 | 10,235 | 17 | 25 | 13,364 | 10,260 | ||
| - Investments1 | 411 | 426 | 52 | 24 | 462 | 450 |
In secondary segment reporting, the professional service segment includes the subsidiary CANCOM NSG GmbH, as well as CANCOM IT Solutions GmbH and the CANCOM Deutschland GmbH cost centres allocated to it.
Service GmbH, Maily Distribution GmbH, CANCOM Computersysteme GmbH, CANCOM (Switzerland) AG, CANCOM Ltd., and SoftMail IT AG, excluding the cost centres allocated to CANCOM IT Solutions GmbH.
The systems house segment includes CANCOM IT Systeme Aktiengesellschaft, CANCOM Deutschland GmbH, CANCOM physical infrastructure GmbH, Novodrom People Value
| Secondary reporting segment | Systems House | Professional services | Elimination | Consolidated | ||||
|---|---|---|---|---|---|---|---|---|
| 03/31/07 | 03/31/06 | 03/31/07 | 03/31/06 | 03/31/07 | 03/31/06 | 03/31/07 | 03/31/06 | |
| € ´000 | € ´000 | € ´000 | € ´000 | € ´000 | € ´000 | € ´000 | € ´000 | |
| Segment revenues | ||||||||
| - External sales | 47,689 | 49,284 | 21,398 | 9,097 | ||||
| - Intersegment sales | 100 | 0 | 43 | 0 | -143 | 0 | ||
| - Total sales revenues | 47,789 4 | 9,284 | 21,441 | 9,097 | -143 | 0 | 69,087 5 | 8,381 |
| Segment assets 1,2 | 53,284 5 | 1,610 | 22,592 | 9,785 | 75,876 | 61,395 | ||
| Investments 1 | 382 43 | 1 | 81 | 19 | 4 | 63 45 | 0 | |
| 1 Segment assets and investments including goodwill from consolidation of capital | 2 Excluding deferred tax assets |
Information on dominant customers:
Customers of the Siemens Group (Siemens IT Solutions and Services, and Fujitsu Siemens Computers) each account for more than 5 percent of the total sales of the CANCOM Group, and considerably more than 5 percent of the contribution margin.
2. Sales revenues
The sales revenues figure of € 69,087k includes order revenues of € 909k calculated using the POC method.
3. Other operating income
Other operating income consists of the following:
| in € ´000 | 1 Jan. - 31 March 2007 | 1 Jan. - 31 March 2006 |
|---|---|---|
| Rental income | 34 | 43 |
| Income not relating to the period | 123 | 23 |
| Other operating income | 5 | 23 |
| Total | 162 | 89 |
Income not relating to the period mainly includes payments received from receivables written off, and income from debtors with a credit balance also written off.
4. Personnel expenses
Personnel expenses consist of the following:
| in T€ | 01.01. - 31.03.2007 | 01.01. - 31.03.2006 |
|---|---|---|
| Wages and salaries | 12,112 | 5,908 |
| Social security contributions | 2,144 | 904 |
| Pension expenses | 34 | 63 |
| Total | 14,290 | 6,875 |
5. Other operating expenses
Other operating expenses consist of the following:
| in € ´000 | 1 Jan. - 31 March 2007 | 1 Jan. - 31 March 2006 |
|---|---|---|
| Cost of premises | 830 | 663 |
| Insurance and other charges | 180 | 159 |
| Vehicle costs | 950 | 413 |
| Advertising costs | 507 | 556 |
| Stock exchange and entertainment expenses | 67 | 73 |
| Hospitality and travel costs | 364 | 154 |
| Goods delivery costs | 493 | 552 |
| Outside services | 219 | 368 |
| Repairs, maintenance, operating leases | 266 | 130 |
| Communication and office costs | 288 | 206 |
| Legal and consultancy costs | 178 | 142 |
| Fees and charges for money transfers | 116 | 125 |
| Adjustment of value of accounts receivable | 8 | 41 |
| Other operating expenses | 55 | 105 |
| Total | 4,521 | 3,687 |
6. Interest income / expenses
Interest income mainly consists of interest on cash in banks and interest from customers.
7. Income tax
The rate of income tax for German companies is 38.19 percent, and relates to corporation tax, trade tax and solidarity surcharge. The divergence between the tax expenses reported and those at the tax rate of CANCOM IT Systeme Aktiengesellschaft arises as follows:
| € ´000 | € ´000 | |
|---|---|---|
| Result before income tax | 1,218 | 659 |
| Expected tax expenses of the companies | ||
| in Germany (38.19 %; 2006: 37.8 %) | 465 | 249 |
| - Tax rate difference outside Germany | -26 | -107 |
| - Change in adjustment item for deferred tax assets | ||
| on loss carryover | -221 | -12 |
| - Tax-free income | 13 | 0 |
| - Actual income tax not relating to the period | -23 | -16 |
| - Permanent differences: non-deductible | ||
| operating expenses and trade tax | ||
| additions and reductions | 17 | -29 |
| - Temporary differences | -4 | 16 |
| - Other | 7 | 0 |
| Total Group income tax payable | 228 | 101 |
Below is a breakdown of the income tax:
| € ´000 | |
|---|---|
| Capitalisation of tax loss carryover of CANCOM IT Systeme Aktiengesellschaft | -12 |
| Capitalisation of tax loss carryover of CANCOM IT Solutions GmbH | -82 |
| Utilisation of tax loss carryover of CANCOM physical infrastructure GmbH | 3 |
| Corporation tax and solidarity surcharge of Novodrom People Value Service GmbH | 10 |
| Trade tax of Novodrom People Value Service GmbH | 6 |
| Tax yield of Maily Distribution GmbH in previous years | -20 |
| Capitalisation of tax loss carryover of Maily Distribution GmbH | -10 |
| Deferred taxes owing to deviations from tax balance sheet of CANCOM NSG GmbH | -18 |
| Corporation tax and solidarity surcharge of CANCOM NSG GmbH | 174 |
| Trade tax of CANCOM NSG GmbH | 128 |
| Utilisation of tax loss carryover of CANCOM Computersysteme GmbH, Austria | 58 |
| Corporation tax of CANCOM Computersysteme GmbH., Austria | 3 |
| Tax yield of CANCOM Computersysteme GmbH., Austria in previous years | -8 |
| Capitalisation of tax loss carryover of CANCOM Ltd., UK | -35 |
| Utilisation of tax loss carryover of SoftMail Group, Switzerland | 31 |
The actual tax rate is calculated as follows:
| € ´000 | |
|---|---|
| Result before tax | 1,218 |
| Income tax | 228 |
| Actual tax expense rate | 18.7 % |
Total 228
The unused tax losses for which no deferred tax claim was recognised in the balance sheet were € 6.1 million (IAS 12.81.e.)
Income tax comprises the tax paid or due and the deferred taxes in the individual countries:
| in € ´000 | 1 Jan. - 31 March 2007 | 1 Jan. - 31 March 2006 |
|---|---|---|
| Actual income tax payable | 293 | 22 |
| Deferred taxes: | ||
| Assets | -41 | 79 |
| Liabilities | -24 | 0 |
| -65 | 79 | |
| Group tax payable | 228 | 101 |
The computation of income tax in accordance with IAS 12 includes tax deferrals resulting from differing valuations in the commercial balance sheet and the tax balance sheet, from realisable loss carryovers, from differences in results between the tax valuations in the individual financial statements of the consolidated subsidiaries and the standard CANCOM valuation, or from the consolidation processes, if these balance out over the course of time. Deferred tax claims relating to the carrying forward of unused tax losses are partially capitalised in view of the expected positive results within the next five years. The deferred taxes are calculated on the basis of the taxation rates expected to apply to the period in which an asset is realised or a debt satisfied. The taxation rates used are those that apply or will apply on the balance sheet date.
8. Minority interests
The minority interests are equivalent to 24.9 percent of CANCOM NSG GmbH's net income for the year attributed to the minority shareholder.
D. Notes to the cash flow statement
The consolidated cash flow statement is drawn up in line with the principles of IAS 7 "Cash flow statements". This states that a distinction must be made between cash flows from operating activities, investing activities and financing activities. The cash and cash equivalents shown in the cash flow statement comprise cash in hand and cash at banks.
The indirect method was used to establish the cash flow from current activities. The cash flow from ordinary activities has increased by € 3.9 million in the first quarter of 2007 in comparison with the same period of 2006.
The addition of fixtures, fittings and equipment is shown in the cash flow statement under additions for property, plant and equipment. The addition of inventories is shown under changes to inventories.
Cash and cash equivalents amounting to € 5,288k include cash in hand and cash at banks.
E. Other disclosures
1. Associated and related companies and parties
CANCOM IT Systeme Aktiengesellschaft has drawn up these consolidated financial statements as the parent company. The consolidated financial statements are not included in any other consolidated financial statements.
Under IAS 24, CANCOM Financial Services GmbH, the joint venture founded in January 2006 with TRS Technology Refresh GmbH, is a related party. By establishing the company, it has been the CANCOM Group's intention to improve customer loyalty by offering added value in the area of financing. CANCOM Financial Services GmbH brokers the leasing contracts concluded by TRS Technology Refresh GmbH.
For the purposes of IAS 24, Klaus Weinmann can be considered a related party, who can exercise decisive control over the CANCOM Group, both in his capacity as an Executive Board member and as a shareholder in CANCOM IT Systeme Aktiengesellschaft. The Executive Board members Rudolf Hotter and Paul Holdschik are also related parties for the purposes of IAS 24, as are all members of the Supervisory Board.
There were no accounts receivable or payable in relation to the Executive Board or the other companies in the CANCOM Group on the balance sheet date.
Since 1 November 2001 there has been a consultancy agreement in place between CANCOM IT Systeme Aktiengesellschaft and the Chairman of its Supervisory Board. The agreement dates from 21 September 2001, and there is also a supplementary agreement dated 10 December 2006. The agreement was originally approved in 2001 by the Supervisory Board, and the supplementary agreement by the Supervisory Board with its new legally appointed member on 9 February in accordance with Section 114 of the German Companies Act (Aktiengesetz, AktG). The term of the contract ends in June 2007. The annual remuneration is € 120,000.
Transactions with related parties were accounted for at market prices.
2. Shareholdings of members of the Executive and Supervisory Boards (as at balance sheet date)
Please see page 8 of this report for a list of shareholdings.
3. Shareholdings in the Company as defined by Section 20 IV of the German Companies Act (Aktiengesetz, AktG)
No shareholder reported in writing to CANCOM IT Systeme Aktiengesellschaft a majority shareholding as defined by Section 20 of the above Act in the period from 1 January to 31 March 2007.
Interim Report
3-Monatszahlen 2007 Q3/2007
Masthead
CANCOM IT Systeme AG Investor Relations
Messerschmittstr. 20 89343 Jettingen-Scheppach
Germany