CANCOM SE — Interim / Quarterly Report 2013

Aug 13, 2013

INTERIM REPORT 30 JUNE 2013

Key figures Group

Q2 AT A GLANCE

		Changes
		10.2%
45.8	40.2	13.9%
7.8	6.4	21.9%
5.6	5.0	0.6%
5.4	4.9	10.2%
5.2	4.4	18.2%
0.32	0.28	14.3%
	01/04-30/06/2013 140.0	01/04-30/06/2012 127.0

FIRST SIX MONTHS

01/01-30/06/2013	01/01-30/06/2012	Changes
275.1	268.1	2.6%
89.6	82.4	8.7%
14.8	13.4	10.4%
5.4	5.0	0.4%
10.3	10.2	1.0%
9.8	9.2	6.5%
6.8	5.6	21.4%
0.59	0.54	9.3%
11,430	10,391	10.0%
2,156	1,976	9.1%
30/06/2013	31/12/2012	Changes
178.9	208.6	-14.2%
83.7	80.8	3.6%
46.8	38.7	8.1%

Revenue CANCOM Group 01/01-30/06/2012 and 01/01-30/06/2013 (in Mio. Euro)		EBITDA CANCOM Group 01/01-30/06/2012 and 01/01-30/06/2013 (in Mio. Euro)
268.1	2012	13.4
275.1	2013	14.8

EBT CANCOM Group

01/01-30/06/2012 and 01/01-30/06/2013 (in Mio. Euro)

2012	9.2
2013	9.8

Earnings per share from continuing operations CANCOM Group

01/01-30/06/2012 and 01/01-30/06/2013 (in Euro)

2012	0.54
2013	0.59

Table of contents

2	Key figures
3	Table of contents
4 - 5	Perface
6 - 11	Consolidated interim management report Q2 1) Business and operating environment 06-07 2) The earnings, financial and assets position of the CANCOM Group 07-09 3) Shareholdings of the Executive and Supervisory Board 09 4) Events of particular significance after the reoprting date 10 5) Risk report 10 6) Opportunities report 10 7) Forecast 10-11 8. Management responsibility statement 11
12 - 13	Consolidated balance sheet
14	Consolidated income statement
15	Statement of compehensive income
16	Consolidated cash flow statement

• 17 Consolidated statement of changes in equity
• 18 19 Segment information
• 20 25 Notes to the Consolidated accounts

Dear Shareholders,

During the second quarter of the current financial year we have actively shifted the focus of our business further towards the provision of high-value services. This is reflected in the good results achieved again this quarter.

Our strong positioning in cloud computing – the latest IT trend – has been recognised by the Experton Group, which awarded CANCOM the prestigious title of Cloud Leader 2013 on the basis of its annual Cloud Vendor Benchmark study. Analysts believe that by continuing to follow its current path CANCOM will expand its cloud portfolio and enjoy further success. The private cloud model is very popular in the German market, and experts believe we will be able to capitalise on this in the coming months. Another award – as Cloud Builder Partner of the Year for Germany, Central Europe and the EMEAR region (Europe, the Middle East, Africa and Russia) – came from our partner Cisco. This recognises CANCOM's extensive know-how and experience in building cloud infrastructure. Both awards provide great stimulus to our operating business.

During the second quarter of 2013, we merged some of our larger subsidiaries into one company, with the aim of boosting our market strength. With more than 1,000 employees, CANCOM GmbH is one of the largest international German integrated systems providers, with a wide network of distribution and service locations providing optimum customer proximity.

We are therefore optimistic about the second half of the year and the financial year 2013 overall. The great majority of IT companies concur with this sentiment; according to the latest BITKOM industry barometer, they expect a year-on-year increase in sales revenues for 2013 as a whole.

We would like to thank you all very much for your confidence in us. We are all working hard at CANCOM to ensure the group's continued success.

Yours sincerely,

Klaus Weinmann, CEO

"We continue to focus on the growth market of cloud computing, and are experiencing high demand for our CANCOM AHP Private Cloud as part of our integrated portfolio of cloud solutions."

Consolidated interim management report

1. Business and operating environment

The CANCOM group is one of the leading providers of IT infrastructure in Germany and Austria.

Legal structure of the CANCOM group

CANCOM SE, 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

The CANCOM group is one of the three largest independent integrated systems providers in Germany. It offers IT architecture, systems integration and managed services. As a provider of integrated services, CANCOM mainly focuses on IT services, in addition to distributing hardware and software in its transaction-based and product-related business. Its comprehensive range of IT services includes design of IT architectures and IT landscapes, IT strategy advice and consulting, design and integration of IT systems, and system operation.

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

Explanation of the control system used within the group

To control and monitor the performance of the individual subsidiaries, CANCOM analyses their monthly figures for, among other things, sales revenues, gross profit, operating expenditure and operating profit, and compares these key figures with the original plan as well as the quarterly forecast. For the purpose of management control, the company also regularly uses external indicators such as inflation rates, interest rates, the general economic trend and the performance of the IT sector, including forecasts. Cash management procedures include daily status assessments.

Research and development activities

Innovation is very important for economic momentum and growth. However, as it is purely a service and trading enterprise, CANCOM does not conduct any research. Its development work focuses, for example, on software solutions and applications in IT growth segments such as cloud computing, virtualisation, mobile solutions, IT security and managed services. Development activities are very limited in scope and are mainly used for the group's own purposes.

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

The German economy has been on the road to recovery since the beginning of this year. The economy as a whole, which grew only slightly in the first quarter owing to the weather conditions, is expected to have grown considerably in the second quarter, according to the German Federal Ministry of Economics and Technology. The economic barometer of the German Institute of Economic Research (DIW Berlin), indicates that there has been strong growth of more than 0.5 percent quarter-on-quarter.

The latest economic survey by the German Association for Information Technology, Telecommunications and New Media (BITKOM) found that the first half year was positive for the majority of IT companies. More than half experienced an increase in sales revenue. Business was particularly good for providers of IT services, of which 70 percent experienced an increase in sales revenues.

The CANCOM group's business performance in the second quarter

CANCOM SE continued its steady growth in sales revenues and profits in the first half of 2013. There was an increase in momentum, particular in the second quarter, so that the figures for the second quarter far exceeded those achieved in the first three months.

Consolidated sales revenues were up from € 127.0 million in the second quarter of 2012 to € 140.0 million in 2013, representing growth of 10.2 percent. Consolidated EBITDA for the second quarter of the current financial year was € 7.8 million, up around 21.9 percent from € 6.4 million in 2012. As a result the EBITDA margin was 5.6 percent, compared with 5.0 percent in the same period of 2012, demonstrating the increase in the group's profitability. Consolidated EBT in the second quarter was € 5.2 million, compared with € 4.4 million in 2012, an increase of 18.2 percent.

The net income for the period was € 3.6 million, compared with € 2.9 million in the second quarter of 2012, resulting in earnings per share from continuing operations of € 0.32, compared with € 0.28 in the same period of 2012.

Significant events and investments during the reporting period

CANCOM IT Solutions GmbH and CANCOM cloud solutions GmbH were merged into CANCOM Deutschland GmbH (trading as CANCOM GmbH since the merger was registered in the commercial register on 23 April 2013). The mergers are documented in notarised agreements dated 10 April 2013.

On 21 May 2013, CANCOM SE established a subsidiary by the name of CANCOM, Inc. in Palo Alto, California. The objective of the new company is to identify IT trends at an early stage and so develop new products and solutions. In addition, CANCOM wants to analyse market opportunities in the cloud computing environment in the USA.

Employees

As at 30 June 2013 the CANCOM group employed 2,156 people.

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

	01 January - 30 June 2013 €'000	01 January - 30 June 2012 €'000
Wages and salaries	52,265	48,034
Social security contributions	9,054	8,321
Pension provisions	119	141
Total	61,438	56,496

2. Earnings, financial and assets position of the CANCOM group

a) Earnings position

There was a year-on-year increase in the CANCOM group's sales revenues and profits in the first six months of 2013.

Consolidated sales revenues were up 2.6 percent to € 275.1 million, compared with € 268.1 million in the first half of 2012. Momentum increased, particularly in the second quarter, more than compensating for the slight decline in sales revenues in the first quarter. The main reason for this was our high use of resources in the consulting business in the second quarter, as well as the further expansion of the trading business.

In Germany, sales revenues were up 3.9 percent, from € 253.2 million to € 263.1 million.

In international business, the group's sales revenues were down 18.2 percent, from € 14.8 million to € 12.1 million.

In the e-commerce segment, sales revenues were down 18.3 percent year on year, from € 74.9 million to € 63.3 million. In the IT solutions segment, sales revenues were up by 9.6 percent from € 193.2 million to € 211.8 million. Parts of the e-commerce segment have been transferred to the IT solutions segment since the same period of 2012.

The consolidated gross profit for the first six months of 2013 was up 8.7 percent, from € 82.4 million to € 89.6 million. This was a result of the successful expansion of the high-margin services business. The gross profit margin was up from 30.7 percent to 32.6 percent.

Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) for the first six months of 2013 were up 10.4 percent year on year, from € 13.4 million to € 14.8 million. As a result, the EBITDA margin rose to 5.4 percent, in comparison with 5.0 percent in the first half of 2012.

	CANCOM group EBITDA Year-on-year comparison of figures for the first six months (in € million)
2012	13.4
2013	14.8

Consolidated earnings before interest and tax (EBIT) were up 1.0 percent to € 10.3 million, compared with € 10.2 percent in 2012.

Consolidated earnings before tax (EBT) rose 6.5 percent to € 9.8 million, compared with € 9.2 million in 2012.

	CANCOM group EBT Year-on-year comparison of figures for the first six months (in € million)
2012	9.2
2013	9.8

The net income for the period was up 38.0 percent, from € 5.0 million to € 6.9 million. Earnings per share from continuing operations were € 0.59 in the first six months of 2013, compared with € 0.54 in the same period of 2012.

	CANCOM group earnings per share Year-on-year comparison of figures for the first three months (in € million)
2012	0.54
2013	0.59

The order position

In the e-commerce business segment and parts of the IT solutions business 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, and for this reason they are not published.

In the IT solutions business segment, orders are often placed over long periods. For this reason, the reporting date figures do not give a good indication of the order situation in this segment either. At the time this management report was written, the high level of demand for the CANCOM AHP Private Cloud looked set to continue through the third quarter of 2013. Orders in the cloud environment often involve longer-term projects and entail higher initial costs and opportunity costs, but they lead to sustained, stable sales revenues and profits.

Thanks to the steady services business – which now accounts for around two thirds of the consolidated gross profit (total output less materials costs and services rendered) – as well as the healthy balance sheet, the management feels the group is in a strong position within the IT sector.

Explanations of individual items on the statement of income

Further 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 in such a way 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

On the assets side of the consolidated balance sheet, there was a decrease in current assets from € 146.8 million to € 115.0 million between 31 December 2012 and 30 June 2013. Cash and cash equivalents were down from € 44.6 million to € 6.1 million, partly owing to seasonal variations, but also on account of prepayments to suppliers and upfront investments for cloud projects in which, depending on the delivery model, some customers order their entire IT requirements as a cloud service. Trade accounts receivable were up from € 88.3 million to € 91.5 million, as were inventories, which totalled € 9.7 million compared with € 8.7 million in 2012.

Non-current assets as at 30 June 2013 were up to € 64.0 million compared with € 61.9 million as at 31 December 2012.

On the liabilities side of the balance sheet, there was a significant reduction in current liabilities from € 106.6 million to € 74.1 million. This is mainly the result of a decrease in trade accounts payable from € 76.9 million to € 50.0 million.

At € 21.1 million, non-current liabilities – consisting of liabilities with a residual term of at least one year – are almost the same as at the end of 31 December 2012.

The total assets are down from € 208.6 million as at 31 December 2012 to € 178.9 million as at 30 June 2013.

The nominal equity capital has been increased from € 80.7 million to € 83.7 million since the start of the year, mainly through transfers to net profits. Overall, this resulted in an equity ratio of 46.8 percent at 30 June 2013, compared with 38.7 percent as at 31 December 2012.

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 € 27.8 million as at 30 June 2013, compared with a negative cash flow of € 19.8 million in the same period of 2012. The change in comparison with the previous year can mostly be explained by prepayments to suppliers as well as the increasing shift of the business towards cloud solutions.

There was a negative cash flow from investing activities of € 5.6 million, compared with a negative cash flow of € 4.0 million in the first six months of 2012.

The negative cash flow from financing activities was € 5.1 million, compared with a negative cash flow of € 6.2 million in the first six months of 2012.

Overall, this resulted in cash and cash equivalents of € 6.1 million, compared with € 14.4 million in 2012.

3. Shares held by members of the Executive and Supervisory Boards as at 30 June 2013

Total number of shares	11,429,826	100%
Executive Board
Klaus Weinmann	177,270	1.6 %
Supervisory Board
Stefan Kober	261,289	2.3 %
Petra Neureither*	35,000*	0.3 %*

* Shares are attributed indirectly via PEN GmbH

4. Events of particular significance after the end of the reporting period

There were no events of particular importance after the reporting date of 30 June 2013 up to the time this report was prepared.

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 2012, starting on page 23. The annual report can be downloaded from www.cancom.de/berichte under the Investors Relations tab or obtained free of charge from the company.

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 2012, starting on page 23. The annual report can be downloaded from www.cancom.de/berichte under the Investors Relations tab or obtained free of charge from the company.

7. Forecast

The German economy enters the second half of 2013 with some momentum. In July the German Purchasing Managers' Index rose to its highest level in months, indicating a positive trend in the economy in the future.

Economic forecasts for the year 2013 as a whole are restrained. The reason for this is the uncertainty in the eurozone, which is increasingly impeding the growth of the German economy. Forecasts for Germany's economic growth vary between 0.3 and 0.8 percent.

Forecast: Deutsche Bank Economic Research, 29 July 2013

The market figures from the German Association for Information Technology, Telecommunications and New Media (BITKOM) for March show that experts are expecting the German IT market to grow by 2.2 percent in 2013.

A decline of 0.3 percent is forecast for IT hardware, compared with growth of 1.7 percent in 2012. However, the software segment is expected to grow by 4.6 percent, compared with 5.1 percent in 2012, and the IT services segment by 2.5 percent, compared with 2.1 percent in 2012.

CANCOM was early in gearing its business policy to future IT growth areas, and designed its sales and services structure around them. The expansion of the e-commerce business and the e-supply chain enables further reductions to be made 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 further expanded its market presence and improved its customer proximity in the German-speaking countries. It is now 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 continues to offer good conditions for this strategy.

CANCOM aims to continue growing at a faster rate than the IT market, on the basis of its proven expertise and outstanding market position in the IT growth areas described. Further acquisitions are also planned to contribute to the steady expansion of the group's market share.

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 medium-term increases in the sales revenues and profits if the demand for IT products and services remains steady or rises.

Against the background of the group's positive performance in 2012, the Executive Board currently expects that, provided economic conditions continue to be favourable, the sales revenues and profits of the group as a whole will be good in 2013 and its financial situation will continue to be positive.

8. Management responsibility statement

We confirm that, to the best of our knowledge, the consolidated interim financial statements, prepared in accordance with the applicable principles of financial reporting for interim statements, give a true and fair view of the assets, liabilities, financial position and income of the group, and that the interim management report gives a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks of the anticipated development of the group for the remaining six months of the financial year.

Munich, Germany, August 2013

CANCOM SE

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 SE. These statements are identifiable by words and phrases such as 'plan', 'intend', 'wish' 'will', 'expect', 'anticipate' etc. and are based on current expectations, assumptions and assessments. Although we feel that these statements and comments are based on realistic expectations, 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, among others, 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 position and 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

(in € 000)	Notes	30/06/2013	31/12/2012	30/06/2012
Current assets
Cash		6,121	44,638	14,362
Trade accounts receivable		91,547	88,285	76,951
Other current financial assets	B.1.	3,732	3,277	4,405
Inventories		9,663	8,744	9,978
Orders in process		1,448	666	1,688
Prepaid expenses and other current assets	B.2.	2,476	1,140	1,321
Total current assets		114,987	146,750	108,705
Long-term assets
Property, plant and equipment		19,603	17,552	14,657
Intangible assets		15,806	16,889	16,537
Goodwill		24,600	24,336	23,667
Investments		70	71	70
Notes receivable/loans		56	56	52
Other financial assets		2,016	1,683	1,148
Deferred taxes arising from temporary differences	B.3.	1,274	971	753
Deferred taxes arising from tax loss carryover	B.3.	378	158	29
Other assets		149	182	43
Total long-term assets		63,952	61,898	56,956
Total assets		178,939	208,648	165,661

EQUITY AND LIABILITIES

(in € 000)	Notes	30/06/2013	31/12/2012	30/06/2012
Current liabilities
Short-term debt and current portion of long-term debt		940	900	2,287
Profit-participation capital and subordinated loans short-term portion		0	412	6,825
Trade accounts payable		49,962	76,933	43,468
Advance payments received		1,810	3,649	1,297
Other current financial liabilities	B.4.	1,250	2,063	1,391
Accrued expenses	B.5.	1,616	1,726	1,553
Prepaid expenses and deferred charges		1,125	866	1,163
Income tax payable		2,004	3,352	9,446
Other current liabilities	B.6.	15,431	16,746	13,883
Total current liabilities		74,138	106,647	81,313
Long-term liabilities
Long-term debt, less current portion		4,753	5,120	5,557
Profit-participation capital and subordinated loans		5,752	5,592	6,454
Prepaid expenses and deferred charges		3,849	4,188	4,101
Deferred taxes arising from temporary differences	B.7.	2,847	2,831	2,491
Pension provisions		123	123	87
Other long-term financial liabilities	B.8.	1,827	1,333	1,082
Other long-term liabilites	B.5.	1,998	2,040	1,536
Total long-term liabilities		21,149	21,227	21,308
Equity
Share capital		11,430	11,430	10,391
Additional paid-in capital		26,086	26,086	15,904
Net profit (incl. retained earnings)		45,880	43,087	36,547
Currency translation difference and exchange rate difference		-11	-10	-11
Minority interest		267	181	209
Total equity		83,652	80,774	63,040
Total equity and liabilities		178,939	208,648	165,661

CONSOLIDATED INCOME STATEMENT

	Q2			6 month
(in € 000)	01/04/2013 - 30/06/2013	01/04/2012 - 30/06/2012	01/01/2013 - 30/06/2013	01/01/2012 - 30/06/2012
Revenues	140,038	126,952	275,129	268,052
Other operating income	237	141	402	330
Other capitalised services rendererd for own account	225	615	353	1,086
Total operating income	140,500	127,708	275,884	269,468
Cost of purchased materials and services	-94,745	-87,464	-186,334	-187,107
Gross profit	45,755	40,244	89,550	82,361
Personnel expenses	-30,886	-27,655	-61,438	-56,496
Depreciation on property, plant and equipment and amortisation of intangible assets	-2,352	-1,522	-4,506	-3,224
Other operating expenses	-7,083	-6,213	-13,350	-12,474
Operating income	5,434	4,854	10,256	10,167
Interest and similar income	95	101	166	209
Interest and other expenses	-288	-594	-582	-1,167
Foreign currency exchange gains	-2	2	4	1
Profit before taxes (and minority interest)	5,239	4,363	9,844	9,210
Income tax expense	-1,550	-1,474	-2,965	-3,569
After-tax profit/loss from continuing operations	3,689	2,889	6,879	5,641
Profit/loss from discontinued operations	0	-2	0	-676
Net income for the period	3,689	2,887	6,879	4,965
thereof attributable to the shareholders of the parent	3,626	2,884	6,793	4,929
thereof attributable to minority interests	63	3	86	36
Average number of shares outstanding (basic)	11,429,826	10,390,751	11,429,826	10,390,751
Average number of shares outstanding (diluted)	11,429,826	10,390,751	11,429,826	10,390,751
Earnings per share from continuing operations (non-diluted)	0.32	0.28	0.59	0.54
Earnings per share from continuing operations (diluted)	0.32	0.28	0.59	0.54
Earnings per share from discontinued operations (non-diluted)	0.00	0.00	0.00	-0.07
Earnings per share from discontinued operations (diluted)	0.00	0.00	0.00	-0.07

STATEMENT OF COMPEHENSIVE INCOME

		Q2	6 month
(in € 000)	01/04/2013 - 30/06/2013	01/04/2012 - 30/06/2012	01/01/2013 - 30/06/2013	01/01/2012 - 30/06/2012
Net income for the period	3,689	2,887	6,879	4,965
Other income
Currency translation difference	-2	0	-1	-3
Exchange rate difference	0	0	0	0
Income taxes	0	0	0	0
Other after-tax income for the period	-2	0	-1	-3
Comprehensive income for the period	3,687	2,887	6,878	4,962
thereof attributable to the shareholder of the parent	3,624	2,884	6,792	4,926
thereof attributable to the minority interests	63	3	86	36

CONSOLIDATED CASH FLOW STATEMENT

(in € 000)	01/01/2013 - 30/06/2013	01/01/2012 - 30/06/2012
Cash flow from ordinary activities
Profit for the year before tax and minority interest	9,844	9,210
Adjustments
+/- Depreciation on property, pland and equipment and amortisation of intangible assets	4,506	3,224
+/- Changes in long-term provisions	-42	-1,384
+/- Changes in short-term provisions	-142	-2
+/- Gains/losses on the sale of intangible assets, property, plant and equipment and financial assets	41	-482
+ Interest expenditure	416	958
+/- Changes in inventories	-904	5,014
+/- Changes in trade accounts receivable and other accounts receivable	-5,773	-6,674
+/- Changes in trade accounts payable and other accounts payable	-30,874	-29,278
+/- Interest payments and rebates	-58	-231
+/- Income tax payments and rebates	-4,810	-471
+/- Cash inflow/outflow from discontinued operations	0	271
Net cash from operating activities	-27,796	-19,845
Cash flow from investing activities
+/- Acquisition of subsidiaries and equity instruments of other entities	-949	0
+/- Cash acquired	466	0
- Payments for additions to intangible assets and property, pland and equipment	-5,287	-5,686
+ Income from disposal of intangible assets, property, plant and equipment and financial assets	32	579
- Cash transferred on the sale of financial assets	0	-415
+ Interest received	166	209
+/- Cash inflow / outflow from discontinued operations	0	1,350
Net cash used in investing activities	-5,572	-3,963
Cash flow from financing activities
- Repayment of long-term financial liabilities (incl. short-term portions)	-801	-2,661
+/- Changes in short-term liabilitiesn	0	208
- Interest paid	-302	-663
- Dividends paid	-4,000	-3,117
+/- Cash inflow / outflow finance lease	-45	36
Net cash used in financing activities	-5,148	-6,197
Net change in cash and cash equivalentse	-38,516	-30,005
+/- Changes in value resulting from foreign currency exchange	-1	2
+/- Cash as at beginning of period	44,638	44,365
Cash and cash equivalents as at end of period	6,121	14,362
Breakdown:

Cash	6,121	14,362
	6,121	14,362

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS)

	Shares units'000	Share capital in €'000	Additional paid-in capital in €'000	Additional paid-in capital in €'000	Foreign currency translation reserve in €'000	Exchange rate difference reserve in €'000	Revaluation reserve in €'000	Net profit / loss in €'000	Total investors parent company in €'000	Minority interest in €'000	Total equity cash in €'000
31. December 2011	10,391	10,391	15,904	17,088	-291	0	-153	17,800	60,739	173	60,912
Capital increase *	1,039	1,039	10,391						11,430		11,430
Changes in reserves: Costs of capital increase			-209						-209		-209
Transfer net profit / retained earnings				8,118				-8,118	0		0
Payout in financial year								-3,117	-3,117	-141	-3,258
Comprehensive income for the period					280	1		11.469	11,750	115	11,865
Changes in the scope of consolidation				0						34	34
31. December 2012	11,430	11,430	26,086	25,206	-11	1	-153	18,034	80,593	181	80,774
Transfer net profit / retained earnings				3,409				-3,409
Payout in financial year								-4,000	-4,000		-4,000
Comprehensive income for the period					-1	0		6,793	6,792	86	6,878
30. June 2013	11,430	11,430	26,086	28,615	-12	1	-153	17,418	83,385	267	83,652

* Issuing amount per share € 11

Segment information – IFRS

Segment information		e-commerce		IT Solutions
	30/06/13 €'000	30/06/12 €'000	30/06/13 €'000	30/06/12 €'000
Sales revenues
- External sales	63,310	74,857	211,819	193,195
- Intersegment sales	2,052	3,259	2,265	1,760
- Total sales revenues	65,362	78,116	214,084	194,955
- Cost of purchased materials and services	-51,291	-63,394	-138,791	-127,793
- Personnel expenses	-7,661	-8,358	-51,472	-45,960
- Other operative income and expenses	-848	-1,269	-11,323	-9,820
EBITDA	5,562	5,095	12,498	11,382
- calculated depreciation and amortisation	-966	-523	-3,444	-2,611
Operating income (EBIT)	4,596	4,572	9,054	8,771
- Interest income	31	113	109	18
- Interest expenditure	-267	-323	-416	-338
- Income from investments
Result from ordinary activities	4,360	4,362	8,747	8,451
- Foreign currency exchange gains / losses
Pre-tax profit	4,360	4,362	8,747	8,451
- Income taxes
- discontinued operations	0	-676	0	0
Consolidated income for the year
thereof attributable to the shareholders of the parent
thereof attributable to minority interests
Other information
- Assets 1	55,079	53,786	120,268	100,153
- Investments 1	1,258	1,287	4,538	4,290

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

2) Tax assets

• Investments 1 1,258 1,287 4,538 4,290 5,796 5,577 40 109 5,836 5,686

275,129	30/06/13 €'000	30/06/12 €'000
			30/06/13 €'000	30/06/12 €'000	30/06/13 €'000	30/06/12 €'000	30/06/13 €'000
				0	0	268,052	275,129
		-5,019	-4,317	0	0	5,019	4,317
		-5,019	-4,317	0	0	273,071	279,446
	-186,334	4,080	3,748	0	0	-191,187	-190,082
	-61,438	0	0	-2,178	-2,305	-54,318	-59,133
	-12,595	939	569	-908	-993	-11,089	-12,171
	14,762	0	0	-3,086	-3,298	16,477	18,060
	-4,506	0	0	-90	-96	-3,134	-4,410
	10,256	0	0	-3,176	-3,394	13,343	13,650
166		-245	-360	323	386	131	140
	-582	245	360	-751	-259	-661	-683
0		0	0
	9,840	0	0	-3,604	-3,267	12,813	13,107
4		1	4	0		0	0
	9,844	1	4	-3,604	-3,267	12,813	13,107
	-2,965	-3,569	-2,965
0		0	0	0	0	-676	0
	6,879
	6,793
86

A. The principles adopted for the consolidated financial statements

1. General information

The consolidated interim financial statements of CANCOM SE and its subsidiaries ('the CANCOM group' or 'the group') for the financial year 2013 were drawn up according to the International Financial Reporting Standards or the International Accounting Standards (IFRS/IAS).

The consolidated interim financial statements were drawn up in euro. All amounts are shown in thousand euro (€ thousand) unless otherwise stated. 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 IFRS-compliant consolidated financial statements for the financial year 2012, which can be downloaded from www.cancom.de.

2. Reporting entity

The consolidated financial statements include CANCOM SE and all subsidiaries in which CANCOM SE 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 SE has acquired 100 percent of the shares in GES Gesellschaft für elektronische Systeme mbH (trading as CANCOM GES Gesellschaft für elektronische Systeme mbH since 10 April 2013) for the nominal sum of € 102,258.38. The acquisition is documented in a share purchase and transfer agreement dated 13 March 2013.

The purchase price was € 979,400. The vendor will additionally receive credit to the value of 30 days of consultancy services (roughly equivalent to € 30 thousand) for IT services to be purchased from the buyer and/or companies affiliated with the buyer. Incidental acquisition costs of € 11 thousand were incurred in the first half of 2013; these are shown in the statement of income under other operating expenses.

The company was included in the consolidated financial statements with effect from 1 April 2013.

The commercial object of the company is to engage in trading computers, systems and accessories for digital video technology, to develop and distribute software and to provide services of all kinds, including consultancy connected with all areas of digital video technology.

Change in the reporting entity in 2013:

Name and registered office of company	Date from which included in the consolidated fi nancial statements	Equity investment (in percent)	Voting rights (in percent)
CANCOM GES Gesellschaft für elektro nische Systeme mbH, Künzelsau, Germany	1 April 2013	100	100

CANCOM IT Solutions GmbH and CANCOM cloud solutions GmbH have been merged into CANCOM Deutschland GmbH (trading as CANCOM GmbH since 23 April 2013). The merger is documented in merger contracts dated 10 April 2013, and was recorded in the commercial register of CANCOM GmbH on 23 April 2013.

CANCOM SE has established a new company named CANCOM, Inc., based in Palo Alto, California. This is documented in a contract dated 21 May 2013. The company's share capital is USD 500,000, and the company is wholly owned by CANCOM SE. The capital contribution was paid on 26 June 2013. The purpose of the corporation are cloud and IT services as well as marketing services and trading in hardware and software products.

Change in the reporting entity in 2013:

Name and registered office of company	Date from which included in the consolidated fi nancial statements	Equity investment (in percent)	Voting rights (in percent)
CANCOM, Inc., Palo Alto, USA	21 May 2013	100	100

CANCOM SE has established a new company called Verioplan GmbH, based in Munich, Germany. This is documented in a contract dated 12 June 2013. The company's share capital is € 25,000 and CANCOM SE holds all the company's shares. The capital contribution was paid on 12 July 2013. The commercial object of the company is to provide planning, consulting and engineering services for building and industrial technology, as well as energy efficiency and risk assessments in connection with data centres. The newly established company was registered in the commercial register on 18 July 2013.

Change in the reporting entity in 2013:

Name and registered office of company	Date from which included in the consolidated fi nancial statements	Equity investment (in percent)	Voting rights (in percent)
Verioplan GmbH, Munich,Germany	18 July 2013	100	100

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 2012.

B. Notes to the consolidated balance sheet

1. Other current financial assets

This item includes bonuses due from suppliers (€ 1,774 thousand), a purchase price receivable (€ 1,042 thousand), marketing revenue (€ 595 thousand), creditors with a debit balance (€ 180 thousand), receivables from employees (€ 139 thousand) and receivables from shareholders (€ 2 thousand).

2. Prepaid expenses and other current assets

This item mainly consists of other current assets such as tax refunds (€ 387 thousand), compensation for damages (€ 181 thousand), commission income (€ 96 thousand), rent receivable (€ 45 thousand), interest income (€ 6 thousand) and receivables from social insurance institutions (€ 4 thousand).

The prepaid expenses and deferred charges (€ 1,743 thousand) include deferred insurance premiums and expenses paid in advance.

3. Deferred tax assets

The deferred tax assets are as follows:

Deferred tax resulting from	temporary differences €'000	tax loss carryforwards €'000
As at 1 January 2013	971	158
Tax revenue from profit and loss calculation	303	220
As at 30 June 2013	1,274	378

As at 30 June 2013 the CANCOM group had corporate tax loss carryovers of € 7.2 million and trade tax loss carryovers of € 5.9 million. The unused corporation tax losses for which no deferred tax claim was recognised in the balance sheet amounted to € 5.8 million. The trade tax loss carryovers for which no deferred tax claim was recognised amounted to € 5.3 million. The amounts referred to include a component of € 5.8 million (corporation tax) and € 5.3 million (trade tax), which has 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 at present be claimed as tax exempt.

The deferred taxes from temporary differences are mainly the result of differences in other liabilities (€ 418 thousand), property, plant and equipment (€ 375 thousand), other provisions (€ 191 thousand), intangible assets (€ 133 thousand), goodwill (€ 73 thousand) and elimination of sales within the group (€ 67 thousand).

4. Other current financial liabilities

This item includes debtors with a credit balance (€ 494 thousand), outstanding bills of charges (€ 455 thousand), purchase price liabilities (€ 120 thousand), Supervisory Board remuneration (€ 102 thousand) and rent obligations (€ 79 thousand).

5. Other provisions

The provisions mainly include guarantees and warranties (€ 1,425 thousand), purchase price of shares in affiliated companies (€ 709 thousand), severance payments (€ 609 thousand), salaries (€ 355 thousand), contingent risks (€ 240 thousand), additional leasing costs (€ 131 thousand) and financial statement costs (€ 77 thousand).

The total provisions include long-term provisions of € 1,998 thousand, which are disclosed under other non-current liabilities. These provisions are for guarantees and warranties (€ 621 thousand), the termination payments legally mandatory in Austria (€ 543 thousand), the purchase price for the shares in Glanzkinder GmbH and CANCOM Unicorner GmbH (€ 440 thousand), anniversaries (€ 236 thousand), additional leasing costs (€ 87 thousand) and part-time work for older employees (€ 71 thousand).

6. Other current liabilities

Other current liabilities mainly include sales tax (€ 4,657 thousand), holiday and overtime entitlements (€ 4,336 thousand), bonus payments to Board members and employees (€ 3,064 thousand), tax on salaries and church tax (€ 2,155 thousand), trade association payments (€ 278 thousand), social security contributions (€ 268 thousand), and wages and salaries (€ 130 thousand).

7. Deferred tax liabilities

The deferred tax liabilities are as follows:

	€'000
As at 1 January 2013	2,831
Addition from recognition of assets directly in equity owing to first-time inclusion in consolidated financial statements	70
Tax revenue/ expense from profit and loss calculation	-54
As at 30 June 2013	2,847

The deferred tax liabilities arise from deviations from the tax balance sheets. They are the result of the recognition and revaluation of intangible assets (€ 2,140 thousand), other financial assets (€ 455 thousand), orders in process (€ 234 thousand), capital from profit participation rights and subordinated loans (€ 11 thousand) and other provisions (€ 7 thousand).

The deferred tax liabilities are recognised at an individual tax rate of between 25 percent (for the Austrian subsidiary) and 32.98 percent (for the German subsidiary).

8. Other non-current financial liabilities

Other non-current financial liabilities include debtors with a credit balance, amounting to € 784 thousand, purchase price liabilities of € 718 thousand and rent obligations of € 325 thousand.

C. Segment information (see page 18+19)

Description of segments subject to mandatory reporting

The e-commerce business segment comprises CANCOM GmbH, CANCOM Computersysteme GmbH, CANCOM a + d IT solutions GmbH and CANCOM (Switzerland) AG with the exception of the cost centres of CANCOM GmbH allocated to the IT solutions segment. This business segment primarily includes the group's transaction-based and product-related business via internet, catalogue, telesales and direct sales.

The IT solutions segment comprises CANCOM NSG GmbH, CANCOM NSG GIS GmbH, CANCOM NSG SCS GmbH, CANCOM NSG ICP GmbH, CANCOM physical infrastructure GmbH, acentrix GmbH, Glanzkinder GmbH, CANCOM Unicorner GmbH, CANCOM GES Gesellschaft für elektronische Systeme mbH, CANCOM, Inc. and Verioplan GmbH in addition to the cost centres of CANCOM GmbH allocated to the IT solutions segment. This business segment of the CANCOM group offers comprehensive services relating to IT infrastructure and IT applications. The range of services offered includes IT strategy consulting, project planning and implementation, system integration, maintenance and training, as well as several IT services, right through to full and integrated IT operation.

The other companies are CANCOM SE, CANCOM VVM GmbH and CANCOM Financial Services GmbH. CANCOM SE performs the staff and/or management function. As such, it provides a range of services for its subsidiaries. This costs of central management of the group and investments in internal group projects also fall within this company.

Reconciliation

Reconciliation shows items not directly connected with the operating segments and the other companies. These 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 necessarily correspond to the structure of the segments.

Information on geographical regions

		Sales revenues according to customer location	Sales revenues according to company location
	01/01- 30/06/2013 €'000	01/01- 30/06/2012 €'000	01/01- 30/06/2013 €'000	01/01- 30/06/2012 €'000
Germany	254,570	246,050	263,055	253,247
Outside Germany	20,559	22,002	12,074	14,805
Group	275,129	268,052	275,129	268,052
			Non-current assets
			30/06/2013 €'000	30/06/2012 €'000
Germany			60,267	54,091
Outside Germany			1,907	1,961
Group			62,174	56,052

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.

D. Notes to the consolidated statement of income

1. Other operating income

The other operating income is made up of the following:

	01/01- 30/06/2013 €'000	01/01- 30/06/2012 €'000
Rent	20	3
Income not relating to the period	107	43
Government grants	215	269
Other operating income	60	15
Total	402	330

2. Personnel expenses

The personnel expenses consist of the following:

	01/01- 30/06/2013 €'000	01/01- 30/06/2012 €'000
Wages and salaries	52,265	48,034
Social security contributions	9,054	8,321
Pension expenses	119	141
Total	61,438	56,496

3. Other operating expenses

The other operating expenses consist of the following items:

	01/01- 30/06/2013 €'000	01/01- 30/06/2012 €'000
Office space costs	3,311	2,620
Insurance and other charges	335	416
Motor vehicle costs	2,203	2,267
Advertising costs	555	664
Stock exchange and entertainment costs	227	150
Hospitality and travelling expenses	1,645	1,483
Delivery costs	927	864
Third-party services	1,006	931
Repairs, maintenance, leasing	440	455
Communication and office expenses	957	863
Professional development and training costs	669	645
Legal and consultancy expenses	401	428
Fees and charges; costs of money transactions	144	159
Adjustments on receivables	0	89
Other operating expenses	530	440
Total	13,350	12,474

4. Income tax

The rate of income tax for the German companies was 30.57 percent (2012: 30.69 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 SE is shown below:

	01/01- 30/06/13 €'000	01/01- 30/06/12 €'000
Earnings before tax	9,844	9,210
Expected tax expense at rate for German com panies (30.57 percent; 2012: 30.69 percent))	3,009	2,827
- Difference from tax paid outside Germany	23	8
- Change in value adjustment of deferred tax assets on loss carryforwards	0	72
- Tax-exempt income / non tax-relevant capital losses on disposals	0	-67
- Actual income tax not relating to the period	-106	649
- Permanent differences: non-deductible operating expenses, as well as additions and
reductions in relation to trade tax	70	80
- Miscellaneous	-31	0
Total Group income tax	2,965	3,569

The actual tax rate is calculated as follows:

	€'000
Income before tax	9,844
Income tax	2,965
Actual tax expense rate	30.12%

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

30/06/2013 €'000	01/01- 30/06/2012 €'000
3,542	2,254
-523	-146
-54	-162
-577	-308
2,965	3,569

5. Minority interests

Minority interests account for 49 percent of acentrix GmbH's net income (€ 150 thousand) and 51 percent of the net loss of Glanzkinder GmbH (loss of € 64 thousand).

E. Other disclosures

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 SE. 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.

Other related parties under IAS 24.9 b are:

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

Transactions with related parties were settled in the same way as arm's length transactions, and the payment terms are net 10 to 30 days.

The transaction volume of goods sold and services provided to related parties under IAS 24 in the first half of 2013 was € 2,030 thousand (gross), of which € 3 thousand was still outstanding at the balance sheet date. This amount relates to goods/ services purchased by AL-KO Kober AG and its subsidiaries.

The transaction volume of goods sold and services received from related parties under IAS 24 was € 1 thousand (gross), of which € 0 was outstanding at the balance sheet date. This amount relates to goods/services purchased from AL-KO Kober AG and its subsidiaries.

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 SE did not receive written notice from any shareholder disclosing a majority shareholding as defined in Section 20 of the above Act in the second quarter of 2013.

CANCOM SE

Investor Relations Erika-Mann-Straße 69 80636 Munich Germany Phone +49 89 54054–5193 Fax +49 8225 996–45193 ir@cancom.de www.cancom.de