CANCOM SE — Interim / Quarterly Report 2012

Nov 8, 2012

9-months-report 2012

»Leading provider of IT infrastructure and professional services«

CANCOM Group

CANCOM – integrated solutions for IT infrastructure, system integration, consulting & services

Since its foundation in 1992, CANCOM AG seated in Munich, Germany, has grown to become one of the largest full IT service providers in Germany. The integrated product and service portfolio ranges from consulting and IT architecture design to IT procurement, integration and system operation. Several partnerships and certifications with leading manufacturers are expression of CANCOMs expertise in the trend-setting IT topics of the future such as cloud and mobile computing, collaboration or security.

Group key figures
in € million	01/01 - 30/09/2012	01/01 - 30/09/2011	Changes
Revenue	406.8	387.0	5.1 %
Gross profit	123.1	116.9	5.3 %
EBITDA	20.2	17.3	16.8 %
EBITDA margin in %	5.0	4.5	0.5
EBIT	15.2	12.4	22.6 %
Net profit for the period	8.1	8.5	-4.7 %
Earnings per share (in €)
from continuing operations (diluted)	0.85	0.75	13.3 %
Average number of shares
(in 1,000) (diluted)	10,391	10,391	0.0%
Employees as of 30 September	1,997	2,045	-2,3 %
in € million	30 Sep 2012	31 Dec 2011	Changes
Balance sheet total	172.9	194.9	-11.3 %
Equity	66.1	60.9	8.5 %
Equity ratio in %	38.2	31.2	7.0 %

CANCOM Group's sales revenues

9 months (01/01 - 30/09) (in € million)

CANCOM Group's EBITDA

9 months (01/01 - 30/09) (in € million)

CANCOM Group's EBIT

9 months (01/01 - 30/09) (in € million)

Table of contents

CONTENT

Section	Pag e
CANCOM Group	02
Tab 03 le of con tents
Trends 2012	04
Prefac e	05
Con ement report Q3 solidated interim	06-11
1) Business and the generel economic situation 2) Earnings, financial and assets situation of the CANCOM Group 3) Shareholdings of the Executive and Supervisory Board 4) Events of particular significance after the reoprting date 5) Risk report 6) Opportunities report 7) Forecast 8) Responsibility statement Balanc e sheet	06-07 08-09 10 10 10 10 10-11 11 12-13
Statement of com prehensive incom e	14
Con solidated ca sh flow statement	15
Con solidated statement of chang es in equity	16
Statement of com 17 prehensive incom e
Segm ent informa tion	18-19
Appendix	20-23

Trends 2012

CANCOM at the forefront of IT megatrends

Cloud computing is shaping the most important developments in the IT sector in recent years. Information and data are available everywhere and all the time, communication and the way of working are changing, and the boundary between the professional and private spheres is rapidly becoming more blurred. This development calls for flexible, high-performance, efficient and secure IT structures and environments. An IT architect, systems integrator and managed services provider, CANCOM has for years been successfully helping its customers manage the growing opportunities of latest developments in IT and to assist them in the transformation of IT.

Preface

Dear Shareholders,

We are already on the last lap of what promises to be a good financial year. The past nine months underline CANCOM's continued growth. At the end of the third quarter of 2012, the Group's sales revenues amounted to € 406.8 million, and earnings before interest, tax, depreciation and amortisation (EBITDA) were € 20.2 million, both figures again exceeding the levels achieved in the previous year.

The impetus for the operating business continues to come from IT trends such as mobile IT and cloud computing. Our customers have great confidence in CANCOM's efficiency, and recently voted us Best Integrated Systems Provider in Germany for the fourth time in a row.

Additionally, the recent acquisition of Unicorner GmbH, a specialist in solutions for customers in the field of research and education, has boosted our established team of experts. We plan to continue expanding our leading position in this environment.

We are currently optimistic about the financial year as a whole. The CANCOM Group has a stable earnings position, which reinforces further the strength of our balance sheet. We would like to thank all our shareholders for their confidence in the company. We are very well placed to meet any challenges the future may hold and are committed to the Company's continued success.

Yours sincerely

Klaus Weinmann, CEO

1. Business and operating environment

Organisational and legal structure of the CANCOM Group

CANCOM AG, based in Munich, 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 integrated systems providers in Germany, the CANCOM Group is an IT architect, systems integrator and managed services provider. As a provider of integrated services, its central focus is on providing IT services and IT consulting, in addition to distributing hardware and software from prestigious manufacturers. Its range of IT services includes designing of IT architectures and landscapes, and designing and integration of IT systems, as well as systems operation.

The CANCOM Group's customer base therefore primarily includes commercial end-users, from independent professionals and medium-sized companies to large companies and public-sector institutions.

Explanation of the control system used within the Group

To control and monitor the performance of the individual subsidiaries, once a month CANCOM analyses, key figures such as their sales revenues, gross profit, operating expenditure and operating profit, and compares these 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 performance of the IT sector – as well as forecasts for these – for the purpose of management control. The cash management procedures include a daily status investigation.

Research and development activities

Innovation is of the utmost importance in stimulating economic momentum and growth. However, as CANCOM is purely a services and trading company, it does not undertake any research activities. Development work is very limited and is principally for the Group's own purposes. Its focus includes software solutions and applications in IT growth areas such as cloud computing, virtualisation, mobile solutions, IT security and managed services.

Development work in the first half of 2012 focused on the online segment, a new ERP system for a subsidiary and the realisation of a data centre.

The performance of the IT sector and the economy as a whole

The German economy continues to grow, even though it has lost some momentum. In a difficult global economic environment, it has so far proved comparatively robust. After the strong growth of the first quarter of this year, gross domestic product (GDP) rose by a further 0.3 percent in the second quarter.

According to the industry barometer by the German Federal Association for Information Technology, Telecommunications and the New Media (BITKOM) for the third quarter of 2012, the majority of ITC companies are still positive about the outlook for their business, although confidence is slightly diminished. However, companies remain optimistic about the year 2012 overall.

Overview of the CANCOM Group's business performance

In the first nine months of 2012, the CANCOM Group recorded significant growth in comparison with the same period of 2011. The high level of both sales revenues and profits continued in the third quarter.

The CANCOM Group's consolidated sales revenues for the first nine months of 2012 were up 5.1 percent to € 406.8 million, in comparison with € 387.0 million in the first nine months of 2011. Consolidated gross profits were up 5.3 percent in the same period, from € 116.9 million to € 123.1 million. At € 20.2 million, consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) were up 16.8 percent year on year, from last year's € 17.3 million. The EBITDA margin was 5.0 percent, compared with 4.5 percent in the first nine months of 2011. Consolidated EBIT was up 22.6 percent, from € 12.4 million in the first nine months of 2011 to € 15.2 million. The consolidated profit for the period was € 8.1 million, compared with € 8.5 million in 2011. This resulted in earnings per share from continuing operations of € 0.85, compared with € 0.75 in the same period of 2011.

Significant events and investments during the reporting period

CANCOM AG has bought all the shares of software distribution company Unicorner GmbH, based in Stuttgart, Germany. The acquisition is documented in a contract of sale dated 18 September 2012. Unicorner specialises in the distribution of hardware and software, as well as IT integration, and offers customised solutions and comprehensive support services for customers in the field of research and education. The acquisition of Unicorner will complement CANCOM's existing business and expertise in this environment. The company's sales revenues in 2011 were roughly € 6 million.

Employees

As at 30 September 2012, the CANCOM Group employed 1,997 people.

The employees worked in the following areas (as at 30 September):

1,377
354
266

The personnel expenses for the first nine months were as follows (in € '000):

	First 9 months 2012	First 9 months 2011
Wages and salaries	71,502	68,153
Social security contributions	12,411	11,982
Pension provisions	205	222
Total	84,118	80,357

2. The earnings, financial and assets position of the CANCOM Group

a) Earnings position

Both the sales revenues and the profits of the CANCOM Group were up in the first nine months of 2012 from the same period of 2011. Consolidated sales revenues were up 5.1 percent in comparison with the first nine months of 2011, from € 387.0 million to € 406.8 million.

Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) were up 16.8 percent in the first nine months of 2012, from € 17.3 million to € 20.2 million.

CANCOM Group EBITDA:

Year-on-year comparison of figures for the first nine months (in € million)

CANCOM Group sales revenues:

Year-on-year comparison of figures for the first nine months (in € million)

In Germany, sales revenues were up 7.3 percent, from € 358.0 million to € 384.0 million.

In international business, the Group's sales revenues fell 21.6 percent, from € 29.1 million to € 22.8 million.

In the e-commerce segment, sales revenues were down 12.6 percent to € 114.5 million, in comparison with € 131.0 million in 2011. In the IT solutions segment they were up 14.2 percent, from € 256.0 million to € 292.3 million.

The consolidated gross profit for the first nine months of 2012 was up 5.3 percent in comparison with 2011, from € 116.9 million to € 123.1 million. The gross profit margin stayed nearly unchanged at 30.3 percent.

CANCOM Group gross profit:

Year-on-year comparison of figures for the first nine months (in € million)

Consolidated earnings before interest and tax (EBIT) were up 22.6 percent in the same period, from € 12.4 million to € 15.2 million.

CANCOM Group EBIT:

Year-on-year comparison of figures for the first nine months (in € million)

The net income fell to € 8.1 million in the first nine months of 2012, compared with € 8.5 million in the same period of 2011. As a result, earnings per share from continuing operations for the first nine months were € 0.85, compared with € 0.75 in 2011.

CANCOM Group earnings per share

Year-on-year comparison of figures for the first nine months (in € million)

The order position

In the e-commerce segment and parts of the IT solutions segment, 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.

In the IT solutions segment, orders are often given over long periods. At present, the volume of orders continues to be healthy.

Due to the stable services business – which now accounts for around two-thirds of the consolidated gross profits (total output less materials costs and services rendered) – as well as the healthy condition of the balance sheet, the management feels the Group is in a good position within the IT sector.

Explanations of individual items on the statement of income

Details on items in the statement of income are given in the notes to the consolidated statement of income.

b) Financial and assets 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 maximise its profitability and credit standing to ensure favourable refinancing rates.

Notes on the capital structure

On the assets side of the consolidated balance sheet, there was a decrease in current assets between 31 December 2011 and 30 September 2012, from € 140.4 million to € 114.0 million. Cash and cash equivalents were down from € 44.4 million to € 19.8 million, owing to seasonal variations. Trade accounts receivable rose from € 72.2 million to € 78.5 million, while inventories were reduced from € 15.0 million to € 9.5 million.

Non-current assets as at 30 September 2012 were up, at € 58.8 million, compared with € 54.5 million as at 31 December 2011.

The liabilities side of the balance sheet shows a significant reduction in current liabilities, which are down from € 109.8 million to € 85.6 million. This is mainly the result of a reduction in trade accounts payable from € 72.9 million to € 58.0 million.

Non-current liabilities, consisting of liabilities with a residual term of at least one year, are down from € 24.2 million to € 21.2 million.

The total assets are down from € 194.9 million as at 31 December 2011 to € 172.9 million as at 30 September 2012.

The nominal equity capital has been increased from € 60.9 million to € 66.1 million since the start of the year, mainly through transfers to net profits. Overall, this resulted in an equity ratio of 38.2 percent at 30 September 2012, compared with 31.2 percent at 31 December 2011.

Further details of the individual balance sheet items can be found in the notes to the consolidated balance sheet.

Notes to the statement of cash flows

The cash flow from ordinary activities is typically negative during the year, and there was a negative cash flow of € 6.5 million as at 30 September 2012, compared with € 16.8 million in the same period of 2011.

There was a negative cash flow from investing activities of € 6.4 million, compared with a negative cash flow of € 5.2 million in the first nine months of 2011.

There was a negative cash flow from financing activities of € 11.6 million, compared with a negative cash flow of € 3.8 million in the first nine months of 2011.

Overall, this resulted in cash and cash equivalents of € 19.8 million, compared with € 5.7 million in 2011.

3. Shares held by members of the Executive and Supervisory Boards as at 30 September 2012

Total number of shares:	10,390,751	100%
Executive Board:
Klaus Weinmann	177,270	1.7%
Supervisory Board:
Stefan Kober	261,289	2.5%
Petra Neureither*	13,711	0.1%
* Shares for PEN GmbH

4. Events of particular significance after the reporting date

The Executive Board of CANCOM AG has decided on 25 October 2012 to increase the company's capital. The Supervisory Board has approved the decision. The share capital of CANCOM AG is to be increased by EUR 1,039,075 using authorised capital while rescinding shareholders' statutory subscription rights. The increase will be in exchange for cash contributions, with 1,039,075 notional no-par-value bearer shares being issued. The move will increase the company's share capital from EUR 10,390,751 to EUR 11,429,826. The company has already received a binding commitment from an investor from Regensburg, Germany, the entrepreneur Dr. Johann Vielberth, to purchase all the new shares issued. The issue price was set very close to the stock market price, at EUR 11.00. The new shares will carry dividend rights from January 2012.

5. Risks of future development

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 2011, starting on page 20. The annual report can be downloaded from www.cancom. de under the Investor Relations tab and/or obtained free of charge from the Company (Investor Relations Department, CANCOM AG).

6. Opportunities for future development

There have been no major changes in the opportunities for future development at CANCOM since the start of the current financial year. Details of the opportunities can be found in the annual report for 2011, starting on page 25.

7. Forecast

According to the latest economic indicators, the German economy should continue to be fairly stable in the second half of the year. Economic mood indicators recovered somewhat in August after some major setbacks in the previous months. However, we are not out of the woods yet. The risks of a downturn in the economy owing to the eurozone sovereign debt crisis continue to dominate and remain considerable.

Gross domestic product, Germany, 2012

(real change compared with 2011, as a percentage)

Forecast: Deutsche Bank Economic Research, 10 October 2012

According to the latest market figures from the German IT sector organisation BITKOM, experts anticipate growth in the German IT market at 2.3 percent.

They forecast growth of 1.1 percent for the IT hardware segment and 4.4 percent for the software segment, compared with 1.3 percent and 4.9 percent respectively in 2011. The IT services segment is expected to grow by 2.1 percent, compared with 3.4 percent in 2011.

Performance of the German IT sector in 2012

(real change in comparison with 2011, as a percentage)

Developments in the fields of cloud computing and mobile computing remain driving growth in the IT sector. The trend towards the flexible use of IT as a service through the internet brings enhanced business prospects for cloud providers such as CANCOM. According to the latest study by market research company Experton Group, by 2016 the business cloud market in Germany will be worth more than € 10 billion, more than three times as much as in 2012.

CANCOM was early in gearing its business policy to future IT trends, and designed its sales and services structure around them. The expansion of the e-commerce business and the new CANCOM webshop have brought further reductions in process and transaction costs both for customers and for the CANCOM Group, which should result in greater profitability for the Group's trading business.

CANCOM has also significantly expanded its market presence and improved its customer proximity in the German-speaking areas, and is represented all over Germany and Austria by its many service and consulting locations. CANCOM plans to continue consolidating its market position in the IT environment in the German-language areas through targeted acquisitions. The market environment offers good conditions for this strategy.

Owing to the investments in the e-commerce segment and the Group's good positioning in the growth market of cloud computing, the Executive Board expects the sales revenues and profits of the e-commerce division and the IT solutions segment to rise further and the demand for IT products and services to remain steady or indeed rise.

In view of the Group's positive performance in 2011, the Executive Board currently expects that, provided economic conditions continue to be positive in 2012, the sales revenues and profits of the Group as a whole will rise, and that its financial situation will continue to be positive.

Munich, November 2012

CANCOM AG

The Executive Board

This document has not been audited. It contains statements and information about the future that are based on the assumptions and estimates of the Executive Board of CANCOM AG. These statements are identifiable by words and phrases such as "plan", "intend", "will", "expect", "feel" etc. and are based on current expectations, assumptions and assessments. Although we feel that these expectations are realistic, we cannot guarantee their correctness, especially in our forecast. 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 beyond the legal requirements, nor does it make any commitment to do so.

Consolidated balance sheet (ifrs) – assets

Figures in €'000 Assets	Notes	30/09/2012	31/12/2011	30/09/2011
Current assets
Cash and cash equivalents		19,816	44,365	5,542
Assets held for sale		0	2,080	2,503
Trade accounts receivable		8,470	72,212	77,218
Other current financial assets	B.1.	2,655	5,297	4,449
Inventories		9,516	14,992	9,589
Orders in process		2,353	572	1,312
Prepaid expenses and other current assets	B.2.	1,237	861	1,332
Total current assets		114,047	140,379	101,945
Long-term assets
Property, plant and equipment		15,829	12,901	11,880
Intangible assets		16,705	15,928	15,829
Goodwill		23,901	23,667	23,667
Investments		70	70	68
Notes receivable/loans		52	52	49
Other financial assets		1,376	1,229	1,248
Deferred taxes arising from temporary differences	B.3.	768	628	318
Deferred taxes arising from tax loss carryover	B.3.	103	8	34
Other assets		28	29	29
Total long-term assets		58,832	54,512	53,122
Total assets		172,879	194,891	155,067

Consolidated balance sheet (ifrs) – Equity and liabilities

Figures in €'000
Equity and liabilities	Notes	30/09/2012	31/12/2011	30/09/2011
Current liabilities
Short term debt and current portion of long-term debt		1,023	2,324	1,397
Profit participation capital and subordinated loans short-term portion		3,413	6,824	3,825
Trade accounts payable		57,962	72,906	39,189
Advanced payments redeived		1,303	1,872	640
Other current financial liabilities	B.4.	1,418	1,487	1,941
Accrued expenses	B.5.	1,559	1,555	1,749
Deferred revenues		1,152	1,042	817
Income tax payable		4,106	6,008	3,982
Other current liabilities	B.6.	13,649	13,666	11,648
Liabilities for assets held for sale		0	2,080	1,631
Total current liabilities		85,585	109,764	66,819
Long-term liabilities
Long-term debt, less current portion		5,301	7,358	8,996
Profit participation capital and subordinated loans		6,526	6,797	10,723
Deferred revenues		3,963	4,538	4,665
Deferred taxes from temporary differences	B.7.	2,586	2,653	3,421
Pension provisions		87	87	80
Other long-term financial liabilities	B.8.	1,152	1,081	925
Other long-term liabilities	B.5.	1,540	1,701	1,742
Total Long-term liabilities		21,155	24,215	30,552
Equity
Shared capital		10,391	10,391	10,391
Additional paid-in capital		15,904	15,904	15,904
Net profit (incl. retained earnings)		39,750	34,735	31,551
Currency translation difference and exchange rate difference		-11	-291	-290
Minority interests		105	173	140
Total equity		66,139	60,912	57,696
Total equity and liabilities		172,879	194,891	155,067

Statement of comprehensive income (IFRS)

			Q3	9 months Q
Figures in €'000		01/07/2012	01/07/2011	01/01/2012	01/01/2011
	Notes	-30/09/2012	-30/09/2011	-30/09/2012	-30/09/2011
Revenues		138,745	135,499	406,797	387,022
Other operating income	D.1.	102	91	432	528
Other capitalised services rendered for own account		499	199	1,585	270
Total operating revenue		139,346	135,789	408,814	387,820
Cost of purchased/
materials and services		-98,619	-96,259	-285,726	-270,960
Gross profit		40,727	39,530	123,088	116,860
Personnel expenses	D.2.	-27,622	-26,373	-84,118	-80,357
Depreciation of property, plant and equipment
and amortisation of intangible assets		-1,761	-1,697	-4,985	-4,861
Other operating expenses	D.3.	-6,271	-6,708	-18,745	-19,249
Operating income		5,073	4,752	15,240	12,393
Interest and similar income		82	55	291	120
Interest and other expenses		-473	-476	-1,640	-1,569
Income from investments		0	380	0	380
Foreign currency exchange income / losses		-2	6	-1	5
Profit before taxes		4,680	4,717	13,890	11,329
Income tax expense	D.4.	-1,496	-1,444	-5,065	-3,448
After tax profit
from continuing operations		3,184	3,273	8,825	7,881
Loss from discontinued operations	D.5.	0	722	-676	592
Net income for the year		3,184	3,995	8,149	8,473
thereof attributable to the
shareholders of the parent		3,203	3,946	8,132	8,342
thereof attributable to minority interests	D.6.	-19	49	17	131
Average number of
shares outstanding (basic)		10,390,751	10,390,751	10,390,751	10,390,751
Average number of
shares outstanding (diluted)		10,390,751	10,390,751	10,390,751	10,390,751
Earnings per share
from continuing operations (non-diluted)		0.31	0.31	0.85	0.75
Earnings per share
from continuing operations (diluted)		0.31	0.31	0.85	0.75
Earnings per share
from discontinued operations (non-diluted)		-0.00	0.07	-0.07	0.06
Earnings per share
from discontinued operations (diluted)		-0.00	0.07	-0.07	0.06

Consolidated cash flow statement (IFRS)

Figures in € '000	01/01/2012 -30/09/2012	01/01/2011 -30/09/2011
Cash flow from ordinary activities:
Net profit for the period before taxes and minority interests	13,890	11,329
Adjustments:
+/- Depreciation of property, plant and equipment, and amortisation of intangible assets	4,985	4,861
+/- Changes in long-term accruals	-1,380	88
+/- Changes in current accruals	4	224
+/- Gains/losses on the sale of intangible assets,
property, plant and equipment and financial assets	-482	-387
+ Interest expense	1,349	1,449
+/- Changes in inventories	5,476	-852
+/- Changes in trade accounts receivable and other accounts receivables	-7,594	-10,634
+/- Changes in trade accounts payables and other accounts payable	-15,217	-21,215
+/- Interest payments and rebates	-288	-131
+/- Income tax payments and rebates	-7,497	-1,242
+/- Non-cash expenses and income	0	-108
+/- Inflow/outflow from discontinued operations	277	-216
Net cash from operating activities	-6,477	-16,834
Cash flow from investing activities
+/- Acquisition of subsidiaries and equity instruments of other companies	-288	-3.606
+/- Cash from acquisitions	0	0
- Payments for additions to intangible assets as well as property, plant and equipmen	-8,639	-6,496
+ Income from disposal of intangible assets, property, plant and equipment and financial assets	613	4,463
- Cash used in disposal of equity holdings	-420	-643
+ Interest received	291	120
+/- Inflow/outflow from discontinued operations	2,000	1,000
Net cash used in investing activities	-6,443	-5,162
Cash flow from financing activities
+ Take-up of long-term financial liabilities	0	0
- Repayment of long-term financial liabilities (incl. short-term portions)	-7,751	-1,496
+/- Changes in short-term liabilities	307	580
- Interest paid	-976	-1,161
- Dividends payed	-3,258	-1,634
+ Inflows from sale of own shares	0	0
- Outflows from purchases of own shares	0	0
+/- Cash inflow / outflow finance lease	48	-80
+/- Cash inflow / outflow from discontinued operations	0	0
Net cash used in financing activities	-11,630	-3,791
Net change in cash and cash equivalents	-24,550	-25,787
+/- Changes in value resulting from foreign currency exchange	1	2
+/- Cash and cash equivalents as at beginning of period	44,365	31,472
Cash and cash equivalent sat end of period	19,816	5,687
Breakdown:
Cash	19,816	5,542
Cash from discontinued operations	0	145
	19,816	5,687

Consolidated statement of changes in equity (IFRS)

	Shares	Share capital	Additional paid-in capital	Retained earnings	Foreign currency translation reserve	Exchange rate difference reserve	Revaluation reserve	Net profit loss	Own shares at acquisition costs	Minority interest	Total equity cash
	units'000 in €'000		in €'000	in €'000		in €'000 in €'000 in €'000		in €'000 in €'000		in €'000 in €'000
31. December 2010		10,391 10,391	15,904	10,623	-289	155	-153	14,298	50,929		84 51,013
Changes in reserves
Transfer netprofit/retained earnings				6,465				-6,465	0		0
Distribution								-1,559	-1,559	-75	-1,634
Comprehensive income for the period					-2	-155		11,526	11,369		164 11,533
31. December 2011		10,391 10,391	15,904	17,088	-291	0	-153	17,800	60,739		173 60,912
Changes in reserves:
Transfer netprofit/retained earnings				8,118				-8,118	0		0
Distribution								-3,117	-3,117	-141	-3,258
Comprehensive income for the period					280	0		8,132	8,412	17	8,429
Acquisition of minority interests				0					0	56	56
30 September 2012		10,391 10,391	15,904	25,206	-11	0	-153	14,697	66,034		105 66,139

Statement of comprehensive income (IFRS)

		Q3		9 months
in €'000	01/07/2012 -30/09/2012	01/07/2011 -30/09/2011	01/01/2012 -30/09/2012	01/01/2011 -30/09/2011
Net income for the period	3,184	3,995	8,149	8,473
Other income
Currency translation difference	0	1	-3	0
Exchange rate difference	0	-80	0	-224
Income taxes	0	24	0	68
Other after-tax income for the period	0	-55	-3	-156
Comprehensive income for the period	3,184	3,940	8,146	8,317
thereof attributable to the shareholder of the parent	3,203	3,891	8,129	8,186
thereof attributable to the minority interests	-19	49	17	131

Segment information (IFRS)

		e-commerce		IT Solutions
	30/09/12	30/09/11	30/09/12	30/09/11
	€'000	€'000	€'000	€'000
Sales revenues
– External sales	114,539	131,035	292,258	255,987
– Intersegment sales	4,970	2,378	52,390	46,489
– Total sales revenues	119,509	133,413	344,648	302,476
– Cost of purchased materials and services	-98,398	-110,761	-228,652	-194,732
– Personnel expenses	-12,263	-12,293	-68,657	-64,943
– Other operative income and expenses	-2,091	-3,552	-29,177	-28,008
EBITDA	6,757	6,807	18,162	14,793
– scheduled depreciation and amortisation	-857	-963	-3,997	-3,770
Operating Income (EBIT)	5,900	5,844	14,165	11,023
– Interest income	168	58	24	50
– Interest expenditure	-448	-483	-537	-479
– Income from equity investments
Profit/loss from ordinary activities	5,620	5,419	13,652	10,594
– Foreign currency exchange gains / losses
Pre-tax profit/loss	5,620	5,419	13,652	10,594
– Income taxes
– Discontinued operations	-676	-440	0	0
Consolidated profit/loss for the period
hereof attributable to the shareholders
of the parent
thereof attributable to minority interest
Other information
– Assets 1)
– Investments 1)	62,050	56,967	101,824	92,343
	2,913	2,749	6,074	3,553

1) Segment assets and investments including goodwill from consolidation of capital 2) Tax assets

Segment information (IFRS)

		consolidated		Reconcilation	Other companies			Total operating segments
	30/09/11	30/09/12	30/09/11	30/09/12	30/09/11	30/09/12	30/09/11	30/09/12
€'000		€'000	€'000	€'000	€'000	€'000	€'000	€'000
					0	0	387,022	406,797
			-48,867	-57,360	0	0	48,867	57,360
	387,022	406,797	-48,867	-57,360	0	0	435,889	464,157
	-270,960	-285,726	34,533	41,324	0	0	-305,493	-327,050
	-80,357	-84,118	0	0	-3,121	-3,198	-77,236	-80,920
	-18,451	-16,728	14,334	16,036	-1,225	-1,496	-31,560	-31,268
17,254		20,225	0	0	-4,346	-4,694	21,600	24,919
-4,861		-4,985	0	0	-128	-131	-4,733	-4,854
12,393		15,240	0	0	-4,474	-4,825	16,867	20,065
120		291	-180	-415	430	514	108	192
-1,569		-1,640	180	415	-1,025	-1,070	-962	-985
380		0	0	0
11,324		13,891	0	0	-5,069	-5,381	16,013	19,272
5		-1	-1	-1	0		0	0
11,329		13,890	-1	-1	-5,069	-5,381	16,013	19,272
-3,448		-5,065	-2,004	-5,065
592		-676	0	0	1,032	0	-440	-676
8,473		8,149
8,342		8,132
		17		Reconcilation 2)
131
7,558	155,067	172,879 9,099	700	1,104	5,057 1,256	7,901 112	149,310 6,302	163,874 8,987

A. The principles adopted for the consolidated financial statements

1. General information

The consolidated interim financial statements of CANCOM AG and its subsidiaries ('the CANCOM Group' or 'the Group') for the financial year 2012 were drawn up according to International Financial Reporting Standards or International Accounting Standards (IFRSs/ IAS).

The consolidated interim financial statements were drawn up in euro. Unless otherwise stated, all amounts are shown in thousands of euro (€ '000). Rounding of figures may result in apparent inconsistencies between totals and sums of constituent parts. For the same reason, percentages may not total 100 percent.

This consolidated interim financial report is condensed and was drawn up in compliance with IAS 34 Interim Financial Reporting. It should be read in conjunction with the IFRScompliant consolidated financial statements for the financial year 2011, which can be downloaded from www.cancom.com

2. Reporting entity – basis of consolidation

The consolidated financial statements include CANCOM AG and all subsidiaries in which CANCOM AG 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.

CANCOM AG has sold its shares in CANCOM Ltd. The sale is documented by a purchase and transfer agreement signed on 16 March 2012, which is also the effective date of transfer.

The sale price was GBP 1.

The impact on various items in the balance sheet of the elimination of CANCOM Ltd. from the list of companies included in the consolidated financial statements is shown below:

	Balance as at
(€ '000)	16 March 2012
Assets held for sale	-2,276
Total current assets	-2,276
Total assets	-2,276
Liabilities associated with held-for-sale assets	-1,698
Total current liabilities	-1,698
Total liabilities	-1,698
Net assets disposed of	-578

CANCOM AG has bought 49 percent of the shares of Glanzkinder GmbH (formerly Glanzkinder Verwaltungs GmbH) for the nominal sum of € 12,740. The acquisition is documented in a share purchase and transfer agreement drawn up on 22 May 2012 by notary Dr Thomas Braun.

The purchase price is € 288,235. Incidental acquisition costs of € 9 thousand were incurred and are shown in the statement of income under other operating expenses.

The company is included in consolidated financial statements with effect from 1 July 2012.

The company develops and distributes software, especially apps for mobile devices, and also specialises in software for process optimisation, B2B and B2C.

Changes in the basis of consolidation 2012:

Name and registered office of company	Date from which inclu ded in the consolidated financial statements	Equity investment %	Voting rights %
Glanzkinder GmbH, Köln	01. July 2012	49	49

GmbH for the nominal sum of € 25,564.59. The acquisition is documented in a share purchase and transfer agreement drawn up on 18 September 2012 by notary Dr Thomas Braun.

The purchase price consists of a fixed portion of € 100,000, a variable portion equal to the total equity of the company as at 30 September 2012, and a further variable portion (earnout), dependent on the net income for the periods October 2012 to September 2013, October 2013 to September 2014 and October 2014 to September 2015, which will amount to a maximum of € 233,333 per annum. Incidental acquisition costs of € 10,000 are shown under other operating expenditure in the income statement.

The company was included in the consolidated financial statements with effect from 1 October 2012.

3. Accounting and valuation policies

The consolidated interim financial report is compiled using basically the same accounting and valuation methods as those used for the consolidated financial statements for the financial year 2011.

B. Notes to the consolidated balance sheet

1. Other current financial assets

This item includes bonuses due from suppliers (€ 1,172 thousand), a purchase price receivable (€ 893 thousand), creditors with a debit balance (€ 241 thousand), marketing revenue (€ 238 thousand), and receivables from employees (€ 111 thousand).

2. Prepaid expenses and other current assets

This item mainly consists of other current assets such as tax refunds (€ 326 thousand), rent receivables (€ 50 thousand), compensation for damages (€ 32 thousand), interest income (€ 21 thousand) and receivables from social security carriers (€ 12 thousand).

Prepaid expenses (€ 771 thousand) also include deferred insurance premiums.

3. Deferred tax assets

The deferred tax assets are as follows:

Deferred tax resulting from	Temporary differences	Tax loss carryforward
	€ '000	€ '000
As at 1 January 2012	628	8
Tax expenditure from profit and loss calculation	140	95
As at 30 September 2012	768	103

As at 30 September 2012, the CANCOM Group had corporation tax loss carryforwards of € 6.2 million and trade tax loss carryforwards of € 5.5 million. The unused corporate tax losses for which no deferred tax claim was recognised in the balance sheet amounted to € 5.8 million, and the trade tax losses for which no deferred tax claim was recognised amounted to € 5.3 million. These amounts relate to loss carryforwards that have been called into question because of the EU Commission's legal interpretation of the restructuring clause in Section 8 c of the German Corporate Tax Act (Körperschaftsteuergesetz, KStG) and therefore cannot be claimed as tax exempt at present.

The deferred taxes from temporary differences are mainly the result of differences in property, plant and equipment (€ 275 thousand), other provisions (€ 180 thousand), intangible assets (€ 140 thousand), goodwill (€ 104 thousand), and elimination of sales within the Group (€ 67 thousand).

4. Other current financial liabilities

This item includes outstanding bills of costs (€ 702 thousand), debtors with a credit balance (€ 423 thousand), Supervisory Board remuneration (€ 155 thousand) and purchase price liabilities (€ 138 thousand).

5. Other provisions

The provisions mainly include guarantees and warranties (€ 1,400 thousand), severance payments (€ 833 thousand), salaries (€ 474 thousand), additional leasing costs (€ 219 thousand) and financial statement costs (€ 127 thousand).

The total provisions include long-term provisions of € 1,540 thousand disclosed under other non-current liabilities. They comprise guarantees and warranties (€ 693 thousand), a provision for severance payments which is legally mandatory in Austria (€ 454 thousand), anniversaries (€ 194 thousand), provisions for partial retirement (€ 109 thousand) and additional leasing costs (€ 90 thousand).

6. Other current liabilities

Other current liabilities mainly include bonus payments to Board members and employees (€ 4,251 thousand), sales tax (€ 3,478 thousand), holiday and overtime (€ 2,919 thousand), tax on wages and salaries and church tax (€ 1,533 thousand), trade association payments (€ 384 thousand), social security contributions (€ 210 thousand), wages and salaries (€ 198 thousand), and the compensation levy for non-employment of the severely handicapped (€ 124 thousand).

7. Deferred tax liabilities

The deferred tax liabilities are as follows:

As at 30 September 2012	2,587
Tax ependiture from profit and loss calculation	-115
in consolidated financial statements	49
Addition from recognition directly owing to first inclusion
As at 1 January 2012	2,653
	€ '000

The deferred tax liabilities arise from deviations from the tax balance sheets. They result from the recognition and revaluation of intangible assets (€ 2,242 thousand), other financial assets (€ 308 thousand), orders in process (€ 16 thousand), capital from profit-participation rights and subordinated loans (€ 11 thousand) and other provisions (€ 10 thousand).

The provisions are valued at the relevant tax rate, which ranges between 25 percent (for the Austrian subsidiary) and 32.98 percent (German subsidiary).

8. Other non-current financial liabilities

Other non-current financial liabilities comprise debtors with a credit balance (€ 771 thousand) and purchase price liabilities (€ 381 thousand).

C. Segment information (see page 18+19)

A description of the segments subject to mandatory reporting can be found on page 70 of CANCOM's annual report for 2011.

Reconciliation

Reconciliation shows items not directly connected with the operating segments and the other companies They include sales within the segments, and the income tax expense. The income tax expense is not a component of the profits of the operating segments. Since the tax expense is allocated to the parent company where the parent company is the taxable entity, the allocation of the income tax does not exactly correspond to the structure of the segments.

Information on geographical regions

		Sales revenue according to customer location 1 Jan. - 30 Sept. 2012 1 Jan. - 30 Sept. 2011	Sales revenue according to 1 Jan. - 30 Sept. 2012 1 Jan. - 30 Sept. 2011	company location
	€ '000	€ '000	€ '000	€ '000
Germany	372,754	348,439	384,003	357,957
Outside Germany	34,043	38,583	22,794	29,065
Group	406,797	387,022	406,797	387,022
				Non-current assets
			30 Sept. 2012	30 Sept. 2011
			€ '000	€ '000
Germany			55,911	50,584
Outside Germany			1,928	2,069

Non-current assets include property, plant and equipment, intangible assets, goodwill and other non-current assets. Financial instruments and deferred tax claims are not included.

Group 57,839 52,653

D. Notes to the consolidated statement of income

1. Other operating income

The other operating income is made up of the following items:

€ '000	1 Jan. - 30 Sept. 2012	1 Jan. - 30 Sept. 2011
Rent	20	5
Income from repayment of non-current debts	0	136
Income not relating to the period	20	47
Government grants	369	300
Other operating income	23	40
Total	432	528

2. Personnel expenses

The personnel expenses consist of the following items:

Total	84,118	80,357
Pension expenses	205	222
Social security contributions	12,411	11,982
Wages and salaries	71,502	68,153
€ '000	1 Jan. - 30 Sept. 2012	1 Jan. - 30 Sept. 2011

3. Other operating expenses

The other operating expenses consist of the following items:

€ '000	1 Jan. - 30 Sept 2012	1 Jan. - 30 Sept 2011
Office space	3,928	3,665
Insurance and other charges	560	555
Motor vehicles	3,379	4,509
Advertising	863	870
Stock exchange and entertainment	214	301
Hospitality and travelling expenses	2,238	2,067
Delivery costs	1,352	1,655
Third-party services	1,439	1,431
Repairs, maintenance, leasing	656	726
Communication and office expenses	1,297	1,411
Professional development and training costs	969	768
Legal and consultancy expenses	697	379
Fees and charges; costs of money transactions	218	287
Adjustments on receivables	285	0
Other operating expenses	650	625
Total	18,745	19,249

4. Income tax

The rate of income tax for German companies was 30.72 percent (2011: 30.29 percent). This is made up of corporation tax, trade tax and the solidarity surcharge.

The divergence between the tax expenses reported and those at the tax rate of CANCOM AG is shown below:

€ '000	1 Jan. - 30 Sept. 2012	1 Jan. - 30 Sept 2011
Earnings before tax	13,889	11,329
Expected tax expense at
rate for German companies
(30.69 percent; 2011: 30.27 percent)	4,267	3,432
- Difference from tax paid outside Germany	13	-11
- Change in value adjustment of deferred tax assets
on loss carryforwards	72	-18
- Tax-exempt income/ non tax-relevant capital losses	-108	-93
- Actual income not relating to the period	649	-28
- Permanent differences:
non-deductible operating expenses; additions and
reductions due to trade tax	171	149
- Deferred taxes due to contingent
purchase price components	-1	-33
- Miscellaneous	2	50
Total Group income tax	5,065	3,448

E. Other disclosures

The actual tax rate is calculated as follows:

Actual tax expense rate	36.47%
Income tax	5,065
Income before tax	13,889
	€ '000

Income tax comprises the income tax paid or owed in the individual countries and also the deferred taxes:

€ '000	1 Jan. - 30 Sept. 2012	1 Jan. - 30 Sept. 2011
Actual income tax paid	5,415	3,513
Deferred taxes
Assets	-235	118
Liabilities	-115	-183
	-350	-65
Group income tax	5,065	3,448

5. Discontinued operations

The impact of discontinued operations on the consolidated statement of income is a loss of € 676 thousand and comprises the loss made by CANCOM Ltd. up to the time of its sale, and the loss on the sale.

6. Minority interests

Minority interests account for 49 percent of acentrix GmbH's net income for the year (€ 68 thousand) and 51 percent of Glanzkinder GmbH's net loss for the year (€ 51 thousand).

1. Related party disclosures

For the purposes of IAS 24, Klaus Weinmann can be considered a related party who can exercise a significant influence on the CANCOM Group, both as an Executive Board member and as a shareholder in CANCOM AG. Rudolf Hotter, the other Executive Board member, is also a related party for the purposes of IAS 24, as are the members of the Supervisory Board. The following can also be considered to be related parties as defined by IAS 24.9 b:

• AL-KO Kober AG and its subsidiaries
• PEN GmbH
• WFO Vermögensverwaltung GmbH
• AURIGA Corporate Finance GmbH
• SNP Schneider-Neureither & Partner AG.

Related party transactions were made on terms equivalent to those that prevail in arm's length transactions, with payment due in full between 10 and 30 days after the invoice date.

The transaction volume of goods sold, and services provided, to related parties under IAS 24 in the period from 1 January to 30 September 2012 was € 1,531 thousand (gross), of which € 128 thousand was still outstanding at the balance sheet date. This amount relates to goods/services purchased by AL-KO Kober AG and its subsidiaries.

There were no goods and services purchased from related parties under IAS 24.

A consultancy agreement was in place between CANCOM AG and the Chairperson of its Supervisory Board, Walter von Szczytnicki, from 1 July 2007 until 30 June 2012. The contract was approved on 9 March 2007 in accordance with Section 114 of the German Stock Companies Act (Aktiengesetz, AktG), and provided for an annual remuneration of € 60 thousand. The consultancy agreement expired on 30 June 2012. The remuneration for the financial year 2012 amounts to € 30 thousand.

2. Shares held by members of the Executive and Supervisory Boards (at the balance sheet date)

A list of shareholdings can be found on page 8 of this interim report.

3. Equity interests in the company as defined in Section 20 IV of the German Stock Companies Act (Aktiengesetz, AktG)

CANCOM AG did not receive written notice from any shareholder disclosing a majority shareholding as defined in Section 20 of the above Act in the first nine months of 2012.

3-Monatszahlen 2007 9-months-report 2012

Publication details

CANCOM AG

Investor Relations

Erika-Mann-Str. 69 80636 München

GERMANY

Tel.: +49 89 / 5 40 54-5193 Fax: +49 82 25 / 9 96-4-5193 E-Mail: IR@CANCOM.DE