CANCOM SE — Interim / Quarterly Report 2014

Nov 11, 2014

INTERIM REPORT 30 SEPTEMBER 2014

Group key figures

Q3 AT A GLANCE

in € million	Jul. 1 - Sep. 30, 2014	Jul. 1 - Sep. 30, 2013	Changes
Sales revenues	208.4	142.3	46.5%
Gross profit	69.3	44.7	55.0%
EBITDA adjusted	15.5*	8.0	93.8%
EBITDA margin adjusted	7.4%*	5.,6%	1.8%
EBITA adjusted	12.3*	6.1	101.6%
Earnings per share adjusted (basic)	0.51**	0.36**	41.7%

9 MONTH

in € million	Jan. 1 - Sep. 30, 2014	Jan. 1 - Sep. 30, 2013	Changes
Sales revenues	583.1	417.5	39.7%
Gross profit	193.2	134.2	44.0%
EBITDA adjusted	37.6*	22.8	64.9%
EBITDA margin adjusted	6.4%*	5.5%	0.9%
EBITA adjusted	28.1*	17.0	65.3%
Earnings per share adjusted (basic)	1.19**	0.99**	20.2%
average number of shares (in 1.000) (basic)	14,705	11,430	28.7%
Employees as at June 30	3,009	2,256	33.4%
in € million	Sep. 30, 2014	Dec. 2013	Changes
Balance sheet	393.3	321.5	22.3%
Equity	193.9	162.9	19.0%
Equity ratio	49.3%	50.7%	-1.4%

* Adjusted for one-off effects of € 0.5 million in q3/2014 and € 1.1 million in the first nine months of 2014. The one-off effect in q3 results from costs for the early termination of a rental agreement in connection with the merger of two locations of a prior acquisition. The one-off effects in the first nine months are composed of the one-off effect in q3 as well as external expenses for restructuring in conjunction with acquisitions, not to be capitalized pursuant IFRS.

** Adjusted for one-off effects mentioned above and amortization on intangible assets for purchase price allocation (PPA).

Note:

This overview of key figures is not part of the interim report. Adjusted EBITDA, adjusted EBITA and adjusted earnings per share are not defined in IFRS. CANCOM considers adjusted key figures to be more suitable indicators of operating performance. It is intended to give readers a clearer picture of the results of operations and ensures greater comparability of data over time.

Table of contents

2	Key figures
3	Table of contents
4 - 5	Preface
6 - 11	Consolidated Interim Management Report Q3 1) Fundamental information about the Group 2) Economic report 3) Stocks held by members of the Executive and Supervisory Boards as at September 30, 2014 4) Events of particular significance after the end of the reporting period 5) Risks of future development 6) Opportunities for future develpoment 7) Forecast 8) Management responsibility statement	06 06-07 09 09 09 09 09-10 11
12 - 13	Balance Sheet
14 - 15	Consolidated statement of income
16	Consolidated statement of comprehensive income
17	Statement of cash flows
18	Consolidated statement of changes in equity
19 - 20	Segment information
21 - 29	Notes to the consolidated accounts

Dear Stockholders,

Our results for the first nine months of the year build on the success of the first half year. The sales revenues and profits, both for the third quarter and for the first nine months taken together, exceed the figures for the same periods in 2013. What makes us stand out is our extensive market presence, along with our broad portfolio of high-quality services in major IT growth areas. Also, we have shifted the focus of our business further towards the provision of high-value services, and this is reflected in our consistently good results and the further increase in the profitability of the group.

Mobility and cloud computing continue to drive our business, owing to the demand for state-of-the art workspaces and flexible, efficiency-boosting solutions for company IT departments. We have the advantage of having identified and capitalized on the growth area of cloud computing at an early stage, so we see ourselves as the leading cloud transformation partner for companies. Our close relationships with our customers in the traditional integrated systems and solutions business – some of whom have been working with CANCOM for many years – are a very important component of our strategy. They boost our cloud and shared managed services business, as customers often want a business partner that can satisfy all their IT needs. The CANCOM group offers its customers a comprehensive business cloud portfolio on their path towards the New style of IT. We believe many companies are still just at the threshold of conversion to cloud computing. This means not only that the market volume is very large, but also that the changes in the IT environment should continue over the next years, which offers good growth prospects to us.

Our strong focus on the needs of the market and our customers' confidence in our capabilities is evidenced by the fact that the prestigious trade magazines ChannelPartner and COMPUTER-WOCHE have awarded us the Best integrated IT systems provider in Germany for the fifth time.

Many thanks to you, our stockholders, for your confidence in us. We are well placed to meet the challenges of the future and committed to working for the company's continued success.

Sincerely yours,

Klaus Weinmann CEO

"Thanks to our positioning and our attractive portfolio, our growth prospects in the cloud computing segment are very good."

Consolidated interim management report

relating to the consolidated financial statements, pages 12 et seq.

1. Fundamental information about the Group

The CANCOM Group is one of the leading providers of IT infrastructure and IT services in Germany and in Austria. Its integrated range of products and services covers the entire IT added value chain, from analysis and consulting to implementation and services.

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.

Areas of business

The cloud solutions business segment comprises the CANCOM Group's cloud and shared managed services business, including sales revenues from cloud hardware allocated to these projects. The segment's activities range from analysis and consulting to delivery, implementation and services. This means it offers clients the necessary orientation and support for their changeover from traditional corporate IT systems to cloud computing. As part of its range of services, the CANCOM Group is able to run parts of, or entire, IT departments for its clients, using scalable cloud and managed services – especially shared managed services. Distribution costs allocated to cloud distribution are included in the segment. In addition, the cloud business benefits from synergies with the normal CANCOM distribution system, whose distribution costs are allocated to the reportingsegment IT solution.

The IT solutions business segment of the CANCOM Group offers comprehensive support relating to IT infrastructure and applications. The range of services offered includes IT strategy consulting, project planning and implementation, systems integration, IT procurement via e-procurement services or as part of a project, as well as professional IT services and support.

Focus of activities and sales markets

The CANCOM Group is one of the three largest independent integrated IT systems providers in Germany. It offers IT architecture, systems integration and managed services. As a provider of integrated solutions, 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 client base therefore primarily includes commercial end-users. These range from small and medium-sized companies to large companies, corporate groups and public-sector clients.

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, virtualization, mobile solutions, IT security and managed services. Development activities are very limited in scope and are mainly used for the Group's own purposes.

2. Economic report

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

According to Deutsche Bundesbank estimates, the growth of the German economy was muted in the third quarter. It believes the economy gained a significant boost from consumer spending due to the robust employment market. However, there has been a noticeable decline in company investments. In its autumn forecast, therefore, the federal government expects the rate of growth for the current year as a whole to be lower.

The upward trend in the IT market is continuing, owing to increasing digitization. The majority of companies surveyed for the latest IT sector barometer from BITKOM (the German Federal Association for Information Technology, Telecommunications and New Media) are optimistic about the prospects for the year as a whole.

Impact on the CANCOM Group's business performance

The CANCOM Group recorded a significant increase in sales revenues and profits in the third quarter, and also ended the nine months of the current year with figures significantly higher than in the same period in 2013. The positive trend is a result of the good customer demand across the Group, which benefited both business segments.

Significant events and investments during the period under review

CANCOM GES Gesellschaft für elektronische Systeme mbH was merged into CANCOM GmbH. The merger is recorded in a merger contract dated July 29, 2014 and was entered in CANCOM GmbH's commercial register on September 2, 2014.

Employees

As at September 30, 2014, the CANCOM Group employed 3,009 people. The employees worked in the following areas (as at September 30):

Die Mitarbeiter waren in folgenden Bereichen tätig (jeweils zum 30.09.) Professional services: 2,126 Sales and distribution 481

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

	Jan. 1.-Sep. 30, 2014 €'000	an. 1.-Sep. 30, 2013 €'000
Wages and salaries	108,632	77,520
Social security contributions	17,822	13,432
Pension provisions	167	174
Total	126,621	91,126

3. Earnings, financial and assets position of the CANCOM Group

a) Earnings position

Central services 402

The CANCOM Group recorded a significant growth in its sales revenues and profits in the first nine months of 2014 in comparison with the same period of 2013.

Consolidated sales revenues were up 39.7 percent, from € 417.5 million to € 583.1 million.

	CANCOM Group sales revenues: year-on-year comparison of figures for the first nine months (in € million)
2013	417.5
2014		583.1

In Germany, sales revenues were up 33.4 percent, from € 399.1 million to € 532.4 million. In international business, the CANCOM Group's sales revenues were up from € 18.4 million to € 50.8 million. In the IT solutions segment, sales revenues were up by 32.3 percent, from € 385.7 million in 2013 to € 510.3 million in 2014. In the cloud solutions segment, sales revenues were also up, by 129.0 percent, from € 31.7 million to € 72.6 million.

The CANCOM Group's consolidated gross profit for the first nine months of the year was up 44.0 percent year on year, from € 134.2 million in 2013 to € 193.2 million in 2014. This was as a result of the successful expansion of the high-margin services business. The gross profit margin was up from 32.1 percent to 33.1 percent.

In the IT solutions segment, gross profits were up 28.4 percent to € 153.0 million compared to € 119.2 million in 2013. In the cloud solutions segment, gross profits were up 167.1 percent from € 14.0 million to € 37.4 million.

Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) for the first nine months of the fiscal year 2014 were up 60.1 percent year on year, from € 22.8 million in 2013 to € 36.5 million in 2014. As a result, the EBITDA margin rose to 6.3 percent, compared with 5.5 percent in 2013.

	CANCOM Group EBITDA: year-on-year comparison of figures for the first nine months (in € million)
2013	22.8
2014		36.5

In the IT solutions segment, there was an increase in EBITDA of 47.4 percent from € 19.2 million in 2013 to € 28.3 million. In the cloud solutions segment, EBITDA was up 100.0 percent from € 8.6 million to € 17.2 million.

Consolidated earnings before interest, tax and amortization (EBI-TA) amounted to € 27.1 million, an increase of 59.4 percent on the figure of € 17.0 million for the same period of 2013.

	CANCOM Group EBITA: year-on-year comparison of figures for the first nine months (in € million)
2013	17.0
2014	27.1

Consolidated earnings before interest and tax (EBIT) amounted to € 18.7 million. Despite an increase in amortization of intangible assets as a result of acquisitions, the figure was up 16.1 percent, compared with the first nine months of 2013.

The net income for the period after minority interests was also higher than in 2013, at € 11.6 million compared with € 10.6 million – an increase of 9.4 percent. Earnings per stock from continuing operations (basic) for the first nine months of 2014 were € 0.79, in comparison with € 0.93 in 2013. This was a result of an increase in the number of stocks.

The order position

In 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 cloud solutions business segment, orders are often placed over long periods. For this reason, the reporting figures do not give a good indication of the order situation of this segment either.

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 favorable refinancing rates.

Notes on the capital structure

On the assets side of the consolidated balance sheet, there was an increase in current assets from € 212.1 million to € 233.5 million between December 31, 2013 and September 30, 2014. Cash and cash equivalents were down slightly from € 77.7 million to € 77.0 million. Trade accounts receivable were up to € 117.8 million, compared with € 113.3 million in the same period of 2013. Inventories rose also from € 15.5 million to € 27.9 million.

Non-current assets rose from € 109.3 million as at December 31, 2013 to € 159.8 million as at September 30, 2014. This was mainly owing to acquisitions.

On the liabilities side of the balance sheet, there was a reduction in current liabilities from € 134.7 million to € 119.2 million. This was essentially the result of a reduction in trade accounts payable from € 99.0 million to € 76.2 million.

Non-current liabilities, consisting of debt with a residual term of at least one year, were up from € 23.9 million as at December 31, 2013 to € 80.2 million as at September 30, 2014. The increase was primarily due to the issue of a convertible bond.

The total assets grew from € 321.5 million as at December 31, 2013 to € 393.3 million as at September 30, 2014.

Essentially owing to the retention of profits as well as the inclusion of new companies in the consolidated financial statements, there was an increase in nominal equity capital from € 162.9 million to € 193.9 million. Overall, this resulted in an equity ratio of 49.3 percent as at September 30, 2014 compared with 50.7 percent as at December 31, 2013.

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 € 7.3 million as at September 30, 2014 compared with € 21.2 million in the same period of 2013.

There was a negative cash flow from investing activities of € 31.9 million, compared with a negative cash flow of € 8.8 million in 2013. This was owing to the company acquisitions and the purchase of the business premises in Jettingen-Scheppach, Germany.

The cash flow from financing activities was € 37.9 million resulting mainly from the issue of a convertible bond; this compared with a negative cash flow of € 3.7 million in 2013.

Overall, this resulted in cash and cash equivalents of € 77.0 million, compared with € 11.0 million in 2013.

3. Stocks held by members of the Executive and Supervisory Boards as at September 30, 2014

Total number of stocks	14,879,574	100%
Executive Board
Klaus Weinmann	100,000	0.7 %
Supervisory Board
Regina Weinmann	20,000	0.1 %
Dominik Eberle	10,000	0.1 %

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

CANCOM SE sold its 49 percent interest in Glanzkinder GmbH. The transaction is recorded in a notarized contract dated October 28, 2014. At the time this management report was drawn up by the Executive Board, the sale had made no major impact on the future earnings, financial and assets position of the CANCOM Group.

5. Risks of future development

Ongoing legal disputes could have a negative impact on the CANCOM Group's business. Any impact that can be expected on the consolidated profits will be adequately covered on the basis of cautious legal assessment. For further information please see the notes to the consolidated accounts in section E. Other disclosures, 2. legal disputes (page29). Details of the risks of future development can be found in the annual report for 2013, starting on page 31. The annual report can be downloaded from www.cancom.com/berichte 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 fiscal year. Details of the opportunities can be found in the annual report for 2013, starting on page 31. The annual report can be downloaded from www.cancom.com/berichte or obtained free of charge from the company.

7. Forecast

Research institutes expect growth overall in the German economy in 2014. In its autumn forecast, the Federal government estimates that the rate of growth this year will be slower. It has corrected its forecast for gross domestic product (GDP) growth to 1.2 percent. Economic research institutes are currently forecasting GDP growth in 2014 at between 1.2 and 2.0 percent.

Forecast: Deutsche Bank Economic Research, October 27, 2014

According to the latest market figures from the German Association for Information Technology, Telecommunications and New Media (BITKOM), the turnover in IT products and services should grow by 4.3 percent to € 77.8 billion in 2014 – considerably more strongly than the rest of the economy.

Trading in hardware is likely to grow by 5.8 percent to € 22.4 billion in the current fiscal year. Sales in software are expected to rise by 5.6 percent to € 19.1 billion. Experts anticipate a weaker performance from the IT services market, which they expect to grow by 2.7 percent to € 36.3 billion this year.

Forecast: BITKOM, October 2014

Anticipated performance of the CANCOM Group

CANCOM aims to continue growing at a faster rate than the IT market and to expand its market share steadily, both through acquisitions and organically, on the basis of its proven expertise and outstanding market position in the IT growth areas of cloud computing, mobility, IT security and managed services.

To achieve this aim, CANCOM geared its business policy to the IT growth areas from an early stage, and designed its sales and services structure around them.

CANCOM has a market presence and is close to its clients in the German-speaking countries. The Group is represented all over Germany and Austria by its many service and consulting locations. In the USA it is represented by its subsidiary HPM Networks, which offers good market access both to customers and to major manufacturing partners there.

CANCOM plans to continue consolidating its market position, inter alia, through selective acquisitions in the IT environment in German-speaking countries. The market continues to offer favorable conditions for this policy.

Owing to the Group's good positioning in the IT market as a whole - and in particular in the growth market of cloud computing - the Executive Board expects further growth in the company and an improvement in profits in the medium term if the demand for IT products and services remains steady or even rises.

For the Group as a whole, the Executive Board currently expects a significant increase in the gross profit and EBITDA in the fiscal year 2014.

Munich, Germany, November 2014

CANCOM SE

The Executive Board

8. Disclaimer for forward-looking statements

This document has not been audited. It contains forward-looking state ments and information based on the assumptions and estimates of the Executive Board of CANCOM SE, and other information currently availa ble to the management. The words 'expect', 'assume', 'believe', 'estimate', 'presume', 'intend', 'could', 'plan', 'project'', 'should', or similar, are used to indicate forward-looking statements. All statements with the exception of facts regarding the past are forecasts. These forward-looking statements include inter alia: forecasts on the availability of products and services, the financial and earnings position, the business strategy and the Executive Board's plans for future operating activities, current and future economic performance and all statements regarding expectations and assumptions. Although we feel that these statements and comments are based on realistic expectations, we cannot guarantee their correctness, especially in our forecast. Various known and unknown risks, uncertainties and other factors may lead to the actual events deviating significantly from those contained in the forward-looking statements.

The following influencing factors are, among others, relevant in this respect: changes in the general economic and business situation; 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 investment behavior of target client groups etc. and changes to the business strategy. CANCOM cannot guarantee the pertinence, accuracy, completeness or correctness of the information or opinions in this docu ment. 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	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Current assets
Cash and cash equivalents		77,039	77,733	11,023
Trade accounts receivable		117,766	112,949	85,834
Other current financial assets	B.1.	4,681	3,508	3,801
Inventories		27,884	15,481	10,134
Orders in process		1,088	791	946
Prepaid expenses and other current assets	B.2.	5,043	1,687	2,342
Total current assets		233,501	212,149	114,080
Non-current assets
Property, plant and equipment		38,114	20,493	19,358
Intangible assets		42,011	22,611	15,048
Goodwill		68,292	32,703	24,599
Long-term financial assets		63	62	2,213
Long-term equity investments		416	28,940	0
Loans		97	60	56
Other financial assets		2,883	2,502	1,876
Deferred tax resulting from temporary differences	B.3.	2,825	1,571	1,173
Deferred tax resulting from tax loss carryforwards	B.3.	4.415	196	393
Other assets		720	169	380
Total non-current assets		159,836	109,307	65,096
Total assets		393,337	321,456	179,176

EQUITY AND LIABILITIES

(in € 000)	Notes	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Current liabilities
Short-term loans and current portion of long-term loans		1,737	770	2,858
Trade accounts payable		76,167	98,987	48,758
Prepayments received		5,006	6,560	517
Other current financial liabilities	B.4.	1,915	1,947	1,626
Provisions	B.5.	5,638	2,491	1,658
Deferred income		3,772	1,397	1,049
Income tax liabilities		5,189	1,889	1,767
Other current liabilities	B.6.	19,817	20,624	12,666
Total current liabilities		119,241	134,665	70,899
Non-current liabilities
Long-term loans		3,821	4,813	4,569
Convertible bond	B.7.	38,849	0	0
Profit participation capital and subordinated loans		6,213	5,926	5,838
Deferred income		3,334	3,249	3,842
Deferred taxes from temporary differences	B.8.	12,892	5,210	2,692
Pension provisions		1,431	110	123
Other non-current financial liabilities	B.9.	2,697	1,744	1,691
Other non-current liabilities	B.5.	11,005	2,866	2,000
Total non-current liabilities		80,242	23,918	20,755
Equity capital
Capital stock		14,880	14,616	11,430
Capital reserves		110,199	94,578	26,086
Net retained profits (including revenue reserves)		59,348	53,616	49,730
Equity difference resulting from currency translation and price changes		537	-32	71
Minority interests		8,890	95	205
Total equity capital		193,854	162,873	87,522
Total liabilities		393.337	321,456	179,176

CONSOLIDATED STATEMENT OF INCOME 1

			Q3		9 Month
(in € 000)	Notes	Jul. 1 - Sep. 30, 2014	Jul. 1 - Sep. 30, 2013	Jan. 1 - Sep. 30, 2014	Jan. 1 - Sep. 30, 2013
Sales revenues		208,389	142,328	583,133	417,457
Other operating income	D.1.	208	249	659	651
Other own work capitalized		1,140	51	2,230	404
Gross revenue for the period		209,737	142,628	586,022	418,512
Cost of materials and purchased services		-140,418	-97,976	-392,821	-284,310
Gross profit		69,319	44,652	193,201	134,202
Personnel expenses	D.2.	-43,641	-29,688	-126,621	-91,126
Depreciation on property, plant and equipment and amortization of intangible assets		-6,341	-2,249	-17,709	-6,755
Other operating expenses	D.3.	-10,657	-6,919	-30,124	-20,269
Operating result		8,680*	5,796*	18,747*	16,052*
Interest and similar income		105	39	327	205
Interest and similar expenses		-1,120	-278	-2,015	-860
Share in profit or loss of joint ventures accounted for by the equity method		70	0	141	0
Currency translation gains/ losses		-29	-5	-36	-1
Earnings before taxes		7,706	5,552	17,164	15,396

COMMENT

The following comments of the Executive Board are not part of the consolidated financial statement (IFRS):

* The operating result according to the consolidated statement of income is negatively affected by amortizations pursuant to IFRS for purchase price allocation (ppa) and "as if" adjusted.

Amortizations are one-time in case of any acquistion and noncash, that means they decline over time. That will lead to a relative improvement of operating result in the future.

IFRS amortizations from purchase price allocation (PPA)

	Q3/2014		Q3/2013
	PPA	as-if	PPA	as-if
*operating result in € million	3.1	11.8	0.3	6.1
	9M/2014 PPA	as-if	9M/2013 PPA	as-if

CONSOLIDATED STATEMENT OF INCOME 2

		Q3			9 Month
(in € 000)	Notes	Jul. 1 - Sep. 30, 2014	Jul. 1 - Sep. 30, 2013	Jan. 1 - Sep. 30, 2014	Jan. 1 - Sep. 30, 2013
Income tax	D.4.	-2,660	-1,724	-5,711	-4,689
Earnings after taxes from continuing operations		5,046	3,828	11,453	10,707
Earnings from discontinued operations		0	0	-100	0
Net income/ loss for the period		5,046	3,828	11,353	10,707
thereof attributable to the stockholders of the parent company		5,162	3,850	11,579	10,643
thereof attributable to minority interests	D.5.	-116	-22	-226	64
Average number of stocks outstanding (basic)		14,879,574	11,429,826	14,704,685	11,429,826
Average number of stocks outstanding (diluted)		15,935,084	11,429,826	15,431,563	11,429,826
Earnings per stock from continuing operations (basic) in EUR		0.35**	0.34**	0.79**	0.93**
Earnings per stock from continuing operations (diluted) in EUR		0.32	0.34	0.76	0.93
Earnings per stock from discontinued operations (basic) in EUR		0.00	0.00	-0.01	0.00
Earnings per stock from discontinued operations (diluted) in EUR		0.00	0.00	-0.01	0.00

COMMENT

The following comments of the Executive Board are not part of the consolidated financial statement (IFRS):

** The earnings per stock (EPS) according to the consolidated statement of income is negatively affected by amortizations pursuant to IFRS for purchase price allocation (ppa) and "as if" adjusted.

Amortizations are one-time in case of any acquistion and noncash, that means they decline over time. That will lead to a relative improvement of earnings per stock in the future.

IFRS amortizations from purchase price allocation (PPA)

	Q3/2014		Q3/2013
	PPA	as-if	PPA	as-if
** Earnings per stock
in €	0.12	0.47	0.02	0.36
	9M/2014		9M/2013
	PPA	as-if	PPA	as-if
** Earnings per stock

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Q3		9 Month
(in € 000)	Jul. 1 - Sep. 30, 2014	Jul. 1 - Sep. 30, 2013	Jan. 1 - Sep. 30, 2014	Jan. 1 - Sep. 30, 2013
Net income/ loss for the period	5,046	3,828	11,353	10,707
Other comprehensive income
Currency translation differences	886	-18	820	-19
Security price differences	0	135	0	135
Income tax	-271	-35	-251	-35
Other comprehensive income for the period (after taxes)	615	82	569	81
Comprehensive income for the period	5,661	3,910	11,922	10,788
thereof attributable to the stockholders of the parent company	5,777	3,932	12,148	10,724
thereof attributable to minority interests	-116	-22	-226	64

STATEMENT OF CASH FLOWS

(in € 000)	Jan. 1 - Sep. 30, 2014	Jan. 1 - Sep. 30, 2013
Cash flow from ordinary activities
Profit for the period before taxes and minority interests	17,164	15,396
Adjustments
+/- Depreciation on property, plant and equipment and amortization of intangible assets	17,709	6,755
+/- Changes in non-current provisions	-165	-40
+/- Changes in current provisions	-105	-99
+/- Income/ loss on the sale of intangible assets, property, plant and equipment and long-term financial assets	-695	46
+ Interest expenses	1,688	655
+/- Changes in inventories	-8,173	-1,375
+/- Changes in trade accounts receivable and other accounts receivable	13,991	280
+/- Changes in trade accounts payable and other accounts payable	-40,664	-35,954
+/- Interest paid and refunded	-371	-77
+/- Income taxes paid and refunded	-7,412	-6,745
+/- Non-cash expenses/ income	-142	0
+/- Cash inflow/outflow discontinued operations	-100	0
Net cash from operating activities	-7,275	-21,158
Cash flow from investing activities
+/- Acquisition of subsidiaries and equity instruments of other companies	-31,162	-2,964
+/- Cash acquired on the purchase of stocks	19,180	466
+ Cash inflow from sale of former consolidated subsidiaries	300	0
- Payments for additions to intangible assets and property, plant and equipment	-20,883	-6,563
+ Income from disposal of intangible assets, property, plant and equipment, and long-term financial assets	342	64
+ Interest received	327	205
Net cash used in investing activities	-31,896	-8,792
Cash flow from financing activities
+/- Capital stock increase expenses	-6	0
+ Cash inflow from convertible bond	44,124	0
- Repayment of long-term borrowings (including current portion)	-656	-1,220
+/- Changes in short-term borrowings	89	2,125
- Interest paid	-427	-447
- Dividends paid	-5,847	-4,040
+/- Cash inflow/ outflow from finance lease	660	-70
Net cash used in financing activities	37,937	-3,652
Net increase/ decrease in cash and cash equivalents	-1,234	-33,602
+/- Exchange rate-related changes in cash	540	-13
+/- Cash and cash equivalents at beginning of period	77,733	44,638
Cash and cash equivalents at end of period	77,039	11,023
Breakdown:
Cash and cash equivalents	77,039	11,023
	77,039	11,023

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS)

	Stock units'000	Capital stock in €'000	Capital reserves in €'000	Retained earnings in €'000	Reserves for currency translation in €'000	Reserves for securities price changes in €'000	Revaluation reserve in €'000	Net retained profits in €'000	Total investors parent company in €'000	Minority interests in €'000	Total equity capital in €'000
December 31, 2012	11,430	11,430	26,086	25,206	-11	1	-153	18,034	80,593	181	80,774
Capital stock increase	3,186	3,186	69,529						72,715		72,715
Change in reserves: Capital stock increase costs			-1,037						-1,037		-1,037
Transfer net retained profits / revenue reserves				3,391				-3,391	0		0
Distribution in fiscal year								-4,000	-4,000	-40	-4,040
Comprehensive income for the period					-21	-1		14,529	14,507	-46	14,461
December 31, 2013	14,616	14,616	94,578	28,597	-32	0	-153	25,172	162,778	95	162,873
Capital stock increase	264	264	9,681						9,945		9,945
Change in reserves: Capital stock increase costs			-4						-4		-4
Convertible bonds			5,944						5,944		5,944
Transfer net retained profits / revenue reserves				6,023				-6,023	0		0
Distribution in fiscal year								-5,847	-5,847	0	-5,847
Comprehensive income for the period					569	0		11,579	12,148	-226	11,922
Acquisition of minority interests				0					0	10,358	10,358
Effect from disposal of minority interests									0	-1,337	-1,337
September 30, 2014	14,880	14,880	100,199	34,620	537	0	-153	24,881	184,964	8,890	193,854

Segment information – IFRS

Segment information	Cloud solutions		IT solutions
	Sep. 30, 2014 €'000	Sep. 30, 2013 €'000	Sep. 30, 2014 €'000	Sep. 30, 2013 €'000
Sales revenues
- External sales	72,595	31,728	510,322	385,729
- Intersegment sales	662	0	1,530	302
- Total sales revenues	73,257	31,728	511,852	386,031
- Cost of materials and purchased services	-35,836	-17,775	-358,945	-266,836
- Personnel expenses	-16,178	-4,271	-103,857	-83,376
- Other income and expenses	-4,068	-1,051	-20,731	-16,634
EBITDA	17,175	8,631	28,319	19,185
- Depreciation and amortization	-4,310	-718	-13,177	-5,902
Operating income (EBIT)	12,865	7,913	15,142	13,283
- Interest income	37	28	212	146
- Interest expenses	-13	-60	-1,276	-976
- Share in profit or loss of joint ventures accounted for by the equity method	141	0	0	0
Result from ordinary activities	13,030	7,881	14,078	12,453
- Currency translation gains/ losses
Earnings before taxes	13,030	7,881	14,078	12,453
- Income tax - Discontinued operations	0	0	0	0
Consolidated net income
thereof attributable to the stockholders of the parent company
thereof attributable to minority interests
Other information
- Assets1	63,829	15,284	252,921	152,496
- investments1	60,222	172	62,981	6,858

1) Assets and investments including goodwill from capital consolidation

2) Tax assets

	٧ I
۰

Totals			Other companies		Reconciliation		Consolidated
Sep. 30, 2014 €'000	Sep. 30, 2013 €'000	Sep. 30, 2014 €'000	Sep. 30, 2013 €'000	Sep. 30, 2014 €'000	Sep. 30, 2013 €'000	Sep. 30, 2014 €'000	Sep. 30, 2013 €'000
582,917	417,457	216	0
2,192	302	0	0	-2,192	-302
585,109	417,759	216	0	-2,192	-302	583,133	417,457
-394,781	-284,611	-3	0	1,963	301	-392,821	-284,310
-120,035	-87,647	-6,586	-3,479	0	0	-126,621	-91,126
-24,799	-17,685	-2,665	-1,530	229	1	-27,235	-19,214
45,494	27,816	-9,038	-5,009	0	0	36,456	22,807
-17,487	-6,620	-222	-135	0	0	-17,709	-6,755
28,007	21,196	-9,260	-5,144	0	0	18,747	16,052
249	174	624	589	-546	-558	327	205
-1,289	-1,036	-1,272	-382	546	558	-2,015	-860
141	0	0	0	0	0	141
27,108	20,334	-9,908	-4,937	0	0	17,200	15,397
0	0		0	-36	-1	-36	-1
27,108	20,334	-9,908	-4,937	-36	-1	17,164	15,396
0	0	-100	0	-5,711 0	-4,689 0	-5,711 -100	-4,689 0
						11,353	10,707
						11,579	10,643
						-226	64
					Reconciliation 2
316,750	167,780	66,774	9,622	9,813	1,774	393,337	179,176
123,203	7,030	6,666	2,229			129,869	9,259

A. The principles adopted for the consolidated financial statements

1. General information

The consolidated financial statements of CANCOM SE and its subsidiaries ('the CANCOM Group' or 'the Group') for the fiscal year 2014 were drawn up according to the International Financial Reporting Standards (IFRS) or the International Accounting Standards (IAS).

The consolidated interim financial statements were drawn up in euro. All amounts are shown in thousand euro (€ thousand) unless otherwise stated. In individual cases rounding of figures may result in inconsistencies between totals and sums of constituent parts. For the same reason, percentage may not exactly match the aggregate values shown.

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 fiscal year 2013, 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 stockholding, or in which it holds the majority of the voting rights. These subsidiaries are fully consolidated.

CANCOM's acquisition of a further 4,666,492 stocks in Pironet NDH Aktiengesellschaft, Cologne, Germany, on January 7, 2014 increased its share of the voting rights by 32 percent, from 42.9 percent to 74.9 percent. The purchase price was € 4.80 per stock; as there are 4,666,492 stocks, this is equivalent to a total of € 22,399 thousand.

The company is included in the consolidated financial statements from January 1, 2014. The time difference between this date and January 7, 2014 was considered to be immaterial.

The company performs the role of a managerial holding company, i.e. acquiring, holding, managing and selling equity interests in companies focusing on consulting, development, operational and supplementary IT services in Germany and other countries.

Included in this role is the provision of administrative services for these companies, in addition to the management of the companies by taking over strategic control and coordination, including defining business segments and corporate policy, exercising a uniform management policy, coordination of activities, monitoring of results and co-decision on such measures taken by the companies in which Pironet NDH Aktiengesellschaft has a direct or indirect interest.

Change in the reporting entity in 2014:

Name and registered office of the company	Date from which included in the consolidated financial statements	Stockholding (in percent)	Voting rights (in percent)
Pironet NDH Aktien gesellschaft, Cologne, Germany	January 1, 2014	74.9	74.9

The table below shows the impact on the consolidated financial statements of the change in the reporting entity as at January 1, 2014, the date from which Pironet NDH Aktiengesellschaft was included in the consolidated financial statements:

	Fair value €'000	Carrying amount €'000
Cash and cash equivalents	17,538	17,538
Trade accounts receivable	8,521	8,521
Other current financial assets	343	343
Inventories	299	299
Prepaid expenses and other current assets	473	473
Current assets	27,174	27,174
Propery, plant and equipment	4,169	4,169
Intangible assets	16,381	4,976
Investments accounted for by the equity method	274	274
Other financial assets	140	140
Deferred taxes resulting from temporary differences	817	817
Deferred taxes resulting from tax loss carryforwards	4,753	4,753
Other assets	204	204
Non-current assets	26,738	15,333
Total assets	53,912	42,507
Trade accounts payable	2,678	2,678
Prepayments received	399	399
Other current financial liabilities	260	260
Provisions	240	240
Deferred income	310	310
Income tax liabilities	635	635
Other current liabilities	2,321	2,321
Current liabilities	6,843	6,843
Deferred taxes	5,161	1,460
Pension provisions	59	59
Non-current liabilities	5,220	1,519
Total liabilities	12,063	8,362
Net assets acquired	41,849	34,145

The acquisition of the company resulted in goodwill of € 20,779 thousand, which is not tax-deductible. The main reason for the acquisition itself, and for recognizing goodwill, was to expand the Group's business, especially in the cloud computing environment.

The non-controlling interests in Pironet NDH Aktiengesellschaft were recognized at the pro rata fair value of the assets and liabilities, which amounts to € 10,358 thousand.

CANCOM SE has bought all the stocks (10,000) of HPM Incorporated, based in Pleasanton, California, through its subsidiary CANCOM, Inc. The purchase is documented in a contract of sale dated February 27, 2014. The purchase price consists of a fixed component of € 6,437 thousand (US\$ 8,878 thousand) and a variable purchase price component (an earn-out component) of € 10,056 thousand (US\$ 13,871 thousand). The variable component of the purchase price consists of 50 percent of the planned EBIT-DA for the fiscal years 2014, 2015, 2016 and 2017.

HPM Incorporated trades under the name of HPM Networks. The company operates as a value added reseller (VAR) in the cloud infrastructure environment.

The company was included in the consolidated financial statements with effect from March 1, 2014.

Change in the reporting entity in 2014:

Name and registered office of the company	Date from which included in the consolidated financial statements	Stockholding (in percent)	Voting rights (in percent)
CANCOM, Inc. and subsidiary · HPM Incorporated	March 1, 2014	100	100

The table below shows the presumed impact on the consolidated financial statements of the change in the reporting entity as at March 1, 2014, the date from which HPM Incorporated was included in the consolidated financial statements:

	Fair value €'000	Carrying amount €'000
Cash and cash equivalents	381	381
Trade accounts receivable	2,822	2,822
Other current financial assets	2	2
Inventories	247	247
Prepaid expenses and other current assets	21	21
Current assets	3,473	3,473
Property, plant and equipment	1,027	1,027
Intangible assets	8,501	0
Other assets	22	22
Non-current assets	9,550	1,049
Total assets	13,023	4,522
Short-term loans and current portion of long-term loans	462	462
Trade accounts payable	2,339	2,339
Other current financial liabilities	42	42
Deferred income	2	2
Income tax liabilities	270	270
Other current liabilities	125	125
Current liabilities	3,240	3,240
Deferred taxes	3,642	0
Non-current liabilities	3,642	0
Total liabilities	6,882	3,240
Net assets acquired	6,141	1,282

The acquisition of the company resulted in goodwill of € 11,341 thousand, which is not tax-deductible. The main reason for the acquisition itself, and for recognizing goodwill, was to position CANCOM's business cloud portfolio in the U.S. market, expand the IT solutions portfolio offered to clients of HPM Incorporated and potential new clients, and extend the Group's presence in the U.S.

CANCOM SE has acquired all the stocks of DIDAS Business Services GmbH (trading as CANCOM DIDAS GmbH since August 1, 2014), based in Langenfeld, Germany, for the nominal sum of € 1,000 thousand. The acquisition is documented in a purchase and contribution agreement dated April 10, 2014. The purchase price was € 10,000 thousand and was paid by issuing new no-par-value stocks to the seller as a contribution in kind from the authorized capital of CANCOM SE.

The stocks are admitted to the FWB Frankfurt Stock Exchange and are eligible for trading; 263,783 stocks were issued at € 37.7 per stock plus a compensatory payment of € 56 thousand. Incidental acquisition costs of € 80 thousand arising in the period from January 1 to September 30, 2014 are shown in the statement of income under other operating expenditure.

CANCOM DIDAS GmbH is an integrated IT systems provider with eight locations in Germany. The company employs 238 people and in 2013 it generated EBITDA of € 2.0 million and sales revenues of around € 56 million.

The company was included in the consolidated financial statements with effect from July 1, 2014.

Change in the reporting entity in 2014:

Name and registered office of the company	Date from which included in the consolidated financial statements	Stockholding (in percent)	Voting rights (in percent)
CANCOM DIDAS GmbH, Langenfeld, Germany	July 1, 2014	100	100

The table below shows the impact on the consolidated financial statements of the change in the reporting entity as at July 1, 2014, the date from which CANCOM DIDAS GmbH was included in the consolidated financial statements:

	Fair value €'000	Carrying amount €'000
Cash and cash equivalents	1,262	1,262
Trade accounts receivable	8,874	8,874
Other current financial assets	19	19
Inventories	3,684	3,684
Orders in process	331	331
Prepaid expenses and other current assets	701	701
Current assets	14,871	14,871
Property, plant and equipment	1,146	1,146
Intangible assets	2,270	272
Loans	37	37
Deferred taxes from temporary differences	469	469
Other assets	267	267
Non-current assets	4,189	2,191
Total assets	19,060	17,062
Trade accounts payable	2,575	2,575
Prepayments received	2,072	2,072
Other current financial liabilities	108	108
Provisions	317	317
Deferred income	1,437	1,437
Income tax liabilities	766	766
Other current liabilities	2,076	2,076
Current liabilities	9,351	9,351
Deferred income	421	421
Deferred taxes	687	102
Pension provisions	1,241	1,241
Other non-current financial liabilities	829	829
Non-current liabilities	3,178	2,593
Total liabilities	12,529	11,944
Net assets acquired	6,531	5,118

The acquisition of the company resulted in goodwill of € 3,469 thousand, which is not tax-deductible. The main reason for the acquisition itself, and for recognizing goodwill, was to gain access to the company's clients, to expand the IT solutions portfolio, and to extend the cloud portfolio of CANCOM DIDAS GmbH as well as the Group's presence in the region.

By contract dated July 9, 2014, CANCOM SE has founded Cancom online BVBA, based in Elsene, Belgium. CANCOM SE holds 100 percent of the share capital of € 18,600 thousand. The object of the company is planning, project planning, sales and distribution, installation, individualization, implementing and maintenance of ITC systems, especially for the public sector. The new established company was entered in the commercial register on July 11, 2014.

Change in the reporting entity in 2014:

Name and registered office of the company	Date from which included in the consolidated financial statements	Stockholding (in percent)	Voting rights (in percent)
Cancom on line BVBA, Elsene, Belgien	09.07.2014	100	100

CANCOM GES Gesellschaft für elektronische Systeme mbH was merged into CANCOM GmbH. The merger is recorded in a merger contract dated July 29, 2014 and was entered in CANCOM GmbH's commercial register on September 2, 2014.

CANCOM SE has bought all the stocks of new established CANCOM LTD, based in London, UK, with a par value of 1 pound. The new established company was entered in the commercial register on September 12, 2014.

Change in the reporting entity in 2014:

Name and registered office of the company	Date from which included in the consolidated financial statements	Stockholding (in percent)	Voting rights (in percent)
CANCOM LTD, London, England	12.09.2014	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 fiscal year 2013.

B. Notes to the consolidated balance sheet

1. Other current financial assets

This item includes bonuses due from suppliers (€ 1,825 thousand), a purchase price receivable (€ 1,361 thousand), marketing revenue (€ 670 thousand), creditors with a debit balance (€ 518 thousand), receivables from employees (€ 160 thousand), purchase price for the sale of affiliated companies (€ 140 thousand) and receivables from former stockholders (€ 7 thousand).

2. Prepaid expenses and other current assets

This item mainly consists of other current assets such as tax refunds (€ 2,494 thousand), compensation for damages (€ 125 thousand), commission income (€ 60 thousand) and receivables from social insurance institutions (€ 20 thousand).

The prepaid expenses (€ 2,174 thousand) include deferred insurance premiums and prepayments.

3. Deferred tax assets

The deferred tax assets are as follows:

Deferred tax from	Temporary differences €'000	Tax loss carry forwards €'000
As at January 1, 2014	1,571	196
Addition from recognition of tax assets directly in equity owing to first-time inclusion in consolidated financial statements	1,286	4,753
Tax revenue from profit and loss calculation	-32	-542
Currency translation adjustment	0	8
As at September 30, 2014	2,825	4,415

As at September 30, 2014, the CANCOM Group had corporate tax loss carryovers of € 16.3 million and trade tax loss carryovers of € 15.3 million. The unused corporate tax losses for which no deferred tax claim was recognized in the balance sheet amounted to € 2.7 million. The trade tax loss carryovers for which no deferred tax claim was recognized amounted to € 2.3 million. On the basis of the planned tax results, it is expected that the capitalized deferred tax advantages from loss carryovers will be realized.

The deferred taxes from temporary differences are the result of differences in intangible assets (€ 851 thousand), property, plant and equipment (€ 610 thousand), other liabilities (€ 578 thousand), provisions (€ 504 thousand), pension provisions (€ 261 thousand) and goodwill (€ 21 thousand).

4. Other current financial liabilities

This item includes debtors with a credit balance (€ 858 thousand), outstanding bills of charges (€ 553 thousand), purchase price liabilities (€ 219 thousand), Supervisory Board remuneration (€ 184 thousand) rent (€ 87 thousand) and liabilities to stockholders (€ 14 thousand).

5. Other provisions

The provisions mainly include the variable component of the purchase price for stocks in affiliated companies (€ 12,657 thousand), guarantees and warranties (€ 1,507 thousand), severance payments (€ 706 thousand), contingent risks (€ 387 thousand), salaries (€ 219 thousand), financial statement costs (€ 218 thousand) archiving costs (€ 166 thousand) and provisions for additional leasing costs (€ 120 thousand).

The total provisions include non-current provisions of € 11,005 thousand, which are disclosed under other non-current liabilities. These provisions are for the variable components of the purchase prices for the stocks in HPM Incorporated, on line Datensysteme GmbH (trading as CANCOM on line GmbH since June 17, 2014) and CANCOM Unicorner GmbH (€ 9,687 thousand), the severance payment provision legally mandatory in Austria (€ 544 thousand), guarantees and warranties (€ 582 thousand), anniversaries (€ 161 thousand), additional leasing costs (€ 26 thousand) and provisions for part-time work for older employees (€ 5 thousand).

6. Other current liabilities

Other current liabilities essentially include bonus payments to Executive Board members and employees (€ 7,830 thousand), vacation and overtime entitlements (€ 4,035 thousand), sales tax (€ 3,416 thousand), tax on salaries and church tax (€ 2,303 thousand), trade association payments (€ 490 thousand), wages and salaries (€ 324 thousand), compensation levy for non-employment of the severely handicapped (€ 195 thousand) and social security contributions (€ 140 thousand).

7. Convertible bonds

In March 2014, CANCOM SE issued a convertible bond for a total nominal amount of € 45,000 thousand. The bond matures in March 2019. The denomination per unit is € 100,000, and holders are entitled to convert the bond into up to 1,055,510 new no-parvalue bearer stocks in CANCOM SE. The initial conversion price is € 42.6334 per stock. The conversion ratio is therefore 2,345.5788 stocks per bond at the nominal amount of € 100,000. The conversion right for the convertible bond can be exercised throughout its term to maturity. The bond has a coupon of 0.875 percent per annum. Interest payments will be made annually on March 27, starting on March 27, 2015.

On the balance sheet, the convertible bond will be split into an equity component and a debt component. The market value of the debt component to be recognized is € 38,975 thousand, taking into account the issuing costs. This value was calculated using the binomial model. The resulting value of the equity component is € 6,025 thousand. This takes into account deferred taxes in the capital reserves. An interest expense of € 833 thousand was recognized for the bond in the period from January 1 to September 30, 2014.

8. Deferred tax liabilities

The deferred tax liabilities are as follows:

	€'000
As at January 1, 2014	5,210
Addition from recognition of tax liabilities directly in equity owing to first-time inclusion of tax revenue in consolidated financial statements	9,490
Revenue from profit and loss calculation	-2,097
Currency translation adjustment	289
As at September 30, 2014	12,892

The deferred tax liabilities arise from deviations from the tax balance sheets. They are the result of the recognition and revaluation of intangible assets (€ 9,709 thousand), software development costs (€ 1,876 thousand), other financial assets (€ 717 thousand), convertible bonds (€ 213 thousand), property, plant and equipment (€ 191 thousand), orders in process (€ 100 thousand), trade accounts receivable (€ 64 thousand), provisions (€ 10 thousand), profit participation capital and subordinated loans (€ 6 thousand), stocks in associated companies (€ 4 thousand) and other assets (€ 2 thousand).

The deferred tax liabilities are recognized at an individual tax rate of between 25 percent (for the Austrian subsidiary) and 42.84 perce

9. Other non-current financial liabilities

Other non-current financial liabilities mainly include purchase price liabilities of € 1,228 thousand, debtors with a credit balance totaling € 850 thousand, and rent of € 609 thousand.

C. Segment information

Description of segments subject to mandatory reporting

The cloud solutions business segment comprises PIRONET NDH Datacenter AG & Co. KG, PIRONET NDH EDI-Services GmbH and PIRONET NDH Enterprise Solutions GmbH, in addition to the divisions of CANCOM GmbH and CANCOM DIDAS GmbH allocated to the cloud solutions segment. This business segment comprises the CANCOM Group's cloud and shared managed services business, including sales revenues from cloud hardware allocated to the projects. The segment's activities range from analysis and consulting to delivery, implementation and services. This means it offers clients the necessary orientation and support for their transformation from traditional corporate IT systems to cloud computing. As part of its range of services, the CANCOM Group is able to run parts of, or entire, IT departments for its clients, using scalable cloud and managed services – especially shared managed services.

Distribution costs allocated to cloud distribution are included in the segment. In addition, the cloud business benefits from synergies with the normal CANCOM distribution system, whose distribution costs are allocated to the reporting segment IT solutions.

The IT solutions business segment comprises CANCOM GmbH, CANCOM Computersysteme GmbH, CANCOM a + d IT solutions GmbH, CANCOM (Switzerland) AG, CANCOM NSG GmbH, CANCOM NSG GIS GmbH, CANCOM NSG SCS GmbH, CANCOM NSG ICP GmbH, CANCOM on line GmbH, Imperia AG, CANCOM physical infrastructure GmbH, acentrix GmbH, Glanzkinder GmbH, CANCOM, Inc., HPM Incorporated, Verioplan GmbH and the division of CANCOM DIDAS GmbH allocated to the IT solutions segment, less the division of CANCOM GmbH allocated to the cloud solutions segment. This business segment of the CANCOM Group offers comprehensive support for IT infrastructure and IT applications. The range of services offered includes IT strategy consulting, project planning and implementation, system integration, IT procurement via e-procurement services or as part of a projec

The other companies are CANCOM SE, Pironet NDH AG, CANCOM VVM GmbH, CANCOM Financial Services GmbH and the division of CANCOM DIDAS GmbH allocated to the Other companies segment. CANCOM SE, Pironet NDH AG and the division of CANCOM DIDAS GmbH allocated to this segment perform the staff and/or management function. As such, they provide a range of services for their subsidiaries. The costs of central management of the Group and investments in internal Group projects also fall within this segment.

Reconciliation

Reconciliation shows items not directly connected with the business 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 business 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 revenues according to customer location		Sales revenues according to company location
	Jan. 1 - Sep. 30, 2014 €'000	Jan. 1 - Sep. 30, 2013 €'000	Jan. 1 - Sep. 30, 2014 €'000	Jan. 1 - Sep. 30, 2013 €'000
Germany	508,141	385,920	532,378	399,050
Outside Germany	74,992	31,537	50,755	18,407
Group	583,133	417,457	583,133	417,457

	Non-current assets
	Sep. 30, 2014 €'000	Sep. 30, 2013 €'000
Germany	130,822	59,380
Outside Germany	21,614	1,881
Group	152,436	61,261

Non-current assets include property, plant and equipment, intangible assets, goodwill, long-term equity investments in associated companies 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:

	Jan. 1 - Sep. 30, 2014 €'000	Jan. 1 - Sep. 30, 2013 €'000
Rent	5	30
Income not relating to the period	259	206
Government grants	356	326
Other operating income	39	89
Total	659	651

2. Personnel expenses

The personnel expenses consist of the following:

	Jan. 1 - Sep. 30, 2014 €'000	Jan. 1 - Sep. 30, 2013 €'000
Wages and salaries	108,632	77,520
Social security contributions	17,822	13,432
Pension expenses	167	174
Total	126,621	91,126

3. Other operating expenses

The other operating expenses consist of the following items:

	Jan. 1 - Sep. 30, 2014 €'000	Jan. 1 - Sep. 30, 2013 €'000
Office space costs	6,878	5,068
Insurance and other charges	742	508
Motor vehicle costs	4,042	3,604
Marketing costs	2,130	744
Stock exchange and entertainment costs	415	358
Hospitality and traveling expenses	3,804	2,524
Delivery costs	2,007	1,413
Third-party services	1,903	1,418
Repairs, maintenance, leasing	1,317	763
Communication and office expense	1,756	1,379
Professional development and training costs Legal and consultancy expenses	975 1,748	934 606
Fees and charges, costs of money transactions	635	219
Adjustments on receivables	6	9
Paid compensation	417	6
Other operating expenses	1,349	716
Total	30,124	20,269

4. Income tax
---------------

The rate of income tax for the German companies was 30.61 percent (2013: 30.51 percent). This is made up of corporate tax, trade tax and solidarity surcharge.

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

	Jan. 1 - Sep. 30, 2014 €'000	Jan. 1 - Sep. 30, 2013 €'000
Earnings before tax	17,164	15,396
Expected tax expense at rate for German companies (30.61 percent; 2013: 30.51 percent)	5,254	4,697
- Difference from tax paid outside Germany	-58	17
- Change in value adjustment of deferred tax assets on loss carryforwards	259	0
- Tax-exempt income / non tax-relevant losses on disposals	19	-12
- Actual income tax not relating to the period	-22	-107
- Permanent differences: non-deductible operating expenses as well as additions and reductions in relation to trade tax	264	123
- Deferred taxes due to contingent purchase price components	0	-1
- Other	-5	-28
Total group income tax	5,711	4,689

The actual tax rate is calculated as follows:

	€'000
Income before tax	17,164
Income tax	5,711
Actual tax expense rate	33.27%

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

	Jan. 1 - Sep. 30, 2014 €'000	Jan. 1 - Sep. 30, 2013 €'000
Actual income tax paid	7,198	5,375
Deferred taxes:
Assets	573	-436
Liabilities	-2,097	-250
	-1,524	-686
Deferred tax from items directly recognized in equity	37	0
Group income tax	5,711	4,689

5. Minority interests

Minority interests account for 49 percent of acentrix GmbH's net loss (€ 100 thousand), 51 percent of Glanzkinder GmbH's net loss (€ 305 thousand) and 25.14 percent (for the period from January 1 to 31), 24.97 percent (for the period from February 1 to 28), 22.76 percent (for the period from March 1 to 31), 22.59 percent (for the period from April 1 to May 31) and 21.91 percent (for the period from June 1 to September 30) of the net income of the Pironet NDG AG sub-group (€ 187 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 SE and its subsidiaries (until June 25, 2014);
• WFO Vermögensverwaltung GmbH;
• AURIGA Corporate Finance GmbH; and
• Dr. Vielberth Verwaltungsgesellschaft mbH.

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

The transaction volume of goods sold and services provided to related parties under IAS 24 in the period January 31 to September 30, 2014 was as follows: € 1,528 thousand (gross) in relation to goods/services purchased by AL-KO Kober SE and its subsidiaries in the period from January 1 to June 25, 2014, which had been paid for in full as at the balance sheet date; and € 1 thousand in relation to goods/services purchased by Walter von Szczytnicki, which had been paid for in full by the balance sheet date.

The transaction volume of goods and services purchased from related parties under IAS 24 was € 4 thousand (gross), which had been paid in full by the balance sheet date. This amount relates to goods/services purchased from AL-KO Kober SE and its subsidiaries.

2. Legal disputes

An insolvency administrator has made a claim against CANCOM for part of the purchase price (€ 2 million) from the sale of a former subsidiary to a now insolvent purchaser. A legal assessment has concluded that the claims will almost certainly not be tenable. A possible effect would be non-operational and therefore not impact the operating result but earnings from discontinued operations, as the former subsidiary was classified as "discontinued operations" according to IFRS 5 at the time of sale.

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

A list of stockholdings can be found on page 9 of this interim report.

4. 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 stockholder disclosing a majority stockholding as defined in Section 20 of the above Act in the period from January 1 to September 30, 2014.

This is a translation of CANCOM SE's interim report. Only the German version of the report is legally binding. Every effort was made to ensure the accuracy of the translation, however, no warranty is made as to the accuracy of the translation and the company assumes no liability with respect thereto. The company cannot be held responsible for any misunderstandings or misinterpretation arising from this translation.

CANCOM SE

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