CANCOM SE — Interim / Quarterly Report 2015

May 13, 2015

INTERIM REPORT 31 MARCH 2015

Group key figures

GROUP KEY FIGURES

in € million	Jan. 01 - Mar. 31, 2015	Jan. 01 - Mar. 31, 2014	Changes
Sales revenues	198.2	181.9	9.0%
Gross profit	64.5	58.0	11.2%
EBITDA	10.7	9.6	11.5%
EBITDA margin in %	5.4%	5.3%	0.1%
EBITA	7.7	7.0	10.0%
EBIT	5.4	4.6	17.4%
Earnings per share from continuing in € (dilluted)	0.22 €	0.21 €	4.8%
average number of shares (in 1.000) (basic)	14,880	14.616	1.8%
Employees as at March 31	2,902	2,750	5.5%
in € million	Mar. 01, 2015	Dec. 31, 2014	Changes
Balance sheet	393.5	439.8	-10.4%
Equity	197.5	193.8	1.9%
Equity ratio in %	50.2%	44.1%	6.1%

Revenue CANCOM Group
Jan. 1 - Mar. 31, 2014 and Jan. 1 - Mar. 31, 2015 (in € million)

Gross profit CANCOM Group

Jan. 1 - Mar. 31, 2014 and Jan. 1 - Mar. 31, 2015 (in € million)

2014	181.9	2014	58.0
2015	198.2	2015	64.5

	EBITDA CANCOM Group Jan. 1 - Mar. 31, 2014 and Jan. 1 - Mar. 31, 2015 (in € million)		Earnings per share CANCOM Group Jan. 1 - Mar. 31, 2014 and Jan. 1 - Mar. 31, 2015 (in Euro)
2014	9.6	2014	0.21
2015	10.7	2015	0.22

COMMENT

The earnings per stock disclosed in the consolidated statement of income includes effects from amortizations pursuant to IFRS for purchase price allocation (ppa). These effects amount to 0.10 Euro in the reporting period q1/2015 (q1/2014: 0.10 Euro).

Amortizations effects of purchase price allocation (ppa) are one-time in case of acquistions and non-cash, that means they decline over time.

Table of contents

2	Key figures
3	Table of contents
4 - 5	Preface
6 - 11	Consolidated Interim Management Report Q1 1) Fundamental information about the Group 2) Economic report 3) Earnings, financial and assets position of the CANCOM Group 4) Stocks held by members of the Executive and Supervisory Boards as at March 31, 2015 5) Events of particular significance after the end of the reporting period 6) Risks of future development 7) Opportunities for future develpoment 8) Forecast	06 07 08-09 09 09 10 10 10-11
12 - 13	Balance Sheet
14	Consolidated statement of income
15	Consolidated statement of comprehensive income
16	Statement of cash flows
17	Consolidated statement of changes in equity
18 - 19	Segment information

20 - 27 Notes to the consolidated accounts

Dear Stockholders:

After a strong performance by the CANCOM group in the fiscal year 2014, we have started the current year with the same motivation and commitment as ever. The positive trend in sales revenues and profits in the first quarter give us reason to remain optimistic about our prospects in 2015. The group's consolidated sales revenues are up by 9.0 percent, and EBITDA is up by 11.5 percent.

Market researchers and IT analysts continue to see great potential for growth in the cloud computing environment, and we are in a position to take advantage of this because of our market position and strategic portfolio focus. We are experiencing a demand for our cloud solutions from companies not only in Germany, our home market, but also in California, where our U.S. subsidiary CANCOM HPM Networks has acquired its first cloud customers. This will boost our marketing efforts and our sales, helping us to develop our business in the U.S.A. further.

In their recently published spring reports, the leading economic institutes are forecasting continued growth in Germany, which they attribute mainly to the favorable oil price and the weak euro. The German economy, along with most of our clients, is benefiting from the increase in purchasing power and consumer spending, in addition to the export-stimulating low euro exchange rate. As a result corporate investments have stabilized or even increased, with a positive impact on IT budgets and consequently the volume of the IT market. This is benefiting the business of both our cloud solutions segment and our IT solutions segment - although the strong US dollar increase in q1 partly lead to postponements of investments. Aided by the positive market dynamics, we plan to further deepen the integration of the companies we have acquired, taking advantage of synergies. Our comfortable cash position also provides us with the option of making suitable acquisitions should opportunities arise.

We are grateful to you, our stockholders, for your confidence in us, and we look forward to guiding CANCOM to continued success.

Sincerely,

Klaus Weinmann Chief Executive Officer

Consolidated interim management report

1. Fundamental information about the group

The CANCOM group is one of the leading providers of IT infrastructure and services in Germany and Austria. In addition to its locations in Germany and Austria, the group has an international network of partners, with locations in the U.S.A. and representative offices, among other places, in Brussels, Belgium and London, U.K. The group's integrated product and service offering covers the entire IT value chain, ranging from analysis and consulting to implementation and services.

The structure of the CANCOM group

CANCOM SE (also referred to as CANCOM), 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 operating segment comprises the CANCOM group's cloud and shared managed services business, including sales revenues from project-related cloud hardware, software and services. This ranges from analysis and advice to delivery, implementation and services. Clients are thus offered the necessary orientation and support for their conversion from traditional corporate IT systems to cloud computing. As part of its range of services, the CANCOM group can provide scalable cloud and managed services – in particular shared managed services – to run entire IT departments, or parts of them, for its clients. Distribution costs allocated to cloud distribution are included in the segment. The cloud business also benefits from synergies with CANCOM's central sales and marketing department, the costs of which are allocated to the IT solutions reportable segment.

The IT solutions operating segment of the CANCOM group offers comprehensive support for IT infrastructure and 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 project, in addition to professional IT services and support.

Focus of activities and sales markets

The CANCOM group is one of the largest independent integrated IT 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 from well-known manufacturers. The IT services offered by the group include IT consulting, the design of IT architectures and landscapes, IT strategy advice and consulting, and the design, integration and operation of IT systems – ranging from the performance of individual partial assignments (out-tasking) to taking over the complete operation of a company's IT systems.

The CANCOM group's client base therefore mainly includes commercial end-users, from small and medium enterprises to large companies and groups, as well as public-sector clients. Geographically, the CANCOM group operates primarily in Germany, Austria and Switzerland as well as in the U.S.A.

Explanation of the control system used within the group

To control and monitor the performance of the individual subsidiaries and the operating segments, CANCOM analyzes 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. It also takes into account any early warning data or indicators. Cash management procedures include daily status assessments.

Research and development activities

Innovation is very important for economic momentum and growth. As it is purely a service and trading enterprise, CANCOM does not conduct any research. Its development work focuses mainly on software solutions and applications in IT growth segments such as cloud computing, virtualization, mobile solutions, IT security and shared managed services. Development work is limited in scope and is mainly used for the group's own purposes. During the first quarter of 2015, further development work was carried out on the group's own IT architecture platform, AHP Private Cloud, in addition to customization of in-house software used by the company.

2. Economic report

The general economic situation and the performance of the IT sector

Since the start of the year the German economy has been experiencing an upturn. In the final quarter of 2014 the gross domestic product (GDP) increased by a surprisingly strong 0.7 percent. On the whole, total economic output held its own over the year 2014, with an increase of 1.6 percent. The German economy is in good shape generally. Overall, companies are internationally competitive and have a solid financial base. The market sentiment indicators are therefore looking more positive again.

The mood in the IT sector also remains good. According to the IT sector barometer from the German Association for Information Technology, Telecommunications and New Media (BITKOM), the majority of ICT enterprises surveyed at the start of the year are very confident, and expect a year-on-year increase in sales revenues in the first half of the year.

Impact on the CANCOM group's business performance

The first three months of 2015 saw a continuation of CANCOM SE's consistent growth, along with an improvement in the profitability of the Group. The sales revenues and profits exceeded the values for the same period of 2014. The increase in the Group's sales revenues and profits is driven by the cloud and managed services business, as well as related solutions such as IT mobility and security, which contributed to the good performance of the integrated IT systems business.

Significant events and investments during the first quarter

CANCOM SE has sold its 51 percent stake in consulting firm acentrix GmbH. The sale is documented in a notarized agreement dated March 25, 2015. At the time this management report was drawn up by the Executive Board, the sale had made no significant impact on the earnings, financial and assets position of the CAN-COM group.

Employees

As at March 31, 2015, the CANCOM group employed 2,902 people

The employees worked in the following areas (as at March 31): Professional services 2,039 Sales and distribution 481

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

Central services 382

	Jan. 01 - Mar. 31, 2015 €'000	Jan. 01 - Mar. 31, 2014 €'000
Wages and salaries	38,120	33,894
Social security contributions	6,222	5,569
Pension provisions	67	60
Total	44,479	39,523

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

a) Earnings position

The CANCOM Group recorded a growth in its sales revenues and profits in the first three months of 2015 in comparison with the same period of 2014. To comply with the provisions of International Financial Reporting Standard (IFRS) 5, some adjustments had to be made to the consolidated figures for the previous year regarding areas that were classified as discontinued operations in 2014.

Consolidated sales revenues were up 9.0 percent, from € 181.7 million to € 198.2 million.

	CANCOM Group sales revenues: year-on-year comparison of figures for the first three months (in € million)
2014	181.7
2015	198.2

In Germany, sales revenues were up 6.4 percent, from € 169.1 million to € 179.9 million. In international business, the CANCOM Group's sales revenues were up from € 12.6 million to € 18.3 million (+45.2 percent). The increase in sales revenues is mainly attributable to the U.S. subsidiary HPM Networks.

In the IT solutions segment, sales revenues were up by 3.9 percent, from € 161.0 million in 2014 to € 167.3 million in 2015. In the cloud solutions segment, sales revenues were also up, by 50.0 percent, from € 20.6 million to € 30.9 million.

The CANCOM Group's consolidated gross profit for the first three months of the year was up 11.2 percent year on year, from € 58.0 million in 2014 to € 64.5 million in 2015. This was as a result of the further expansion of the high-margin services business. The gross profit margin was 32.5 percent in comparison to 31.9 percent in 2014.

Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) for the first three months of the fiscal year 2015 were up 11.5 percent year on year, from € 9.6 million in 2014 to € 10.7 million in 2015. As a result, the EBITDA margin stood at 5.4 percent, slightly higher than the previous year's level.

Consolidated earnings before interest, tax and amortization (EBITA) amounted to € 77 million, an increase of 10.0 percent on the figure of € 7.0 million for the same period of 2014.

Consolidated earnings before interest and tax (EBIT) amounted to € 5.4 million, up 17.4 percent from € 4.6 million in 2014.

The net income for the period was slightly above the 2014 figure (€ 3.0 million), at € 3.2 million. Earnings per share from continuing operations for the first three months of 2015 were € 0.22, compared to € 0.21 in the previous year.

The order position

In the cloud solutions segment, and large parts of the IT solutions 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, and they are therefore not published. At the time this management report was written, capacity utilization among our consultants was good in both segments.

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 a decrease in current assets from € 285.7 million to € 237.9 million between December 31, 2014 and March 31, 2015. Cash and cash equivalents were also down from € 114.3 million to € 75.3 million in the same period. Trade accounts receivable decreased to € 125.2 million as at March 31, 2015, compared with € 134.8 million as at the end of 2014. Inventories also experienced losses, dropping from € 22.7 million to € 21.1 million.

Non-current assets slightly rose from € 153.6 million as at December 31, 2014 to € 155.7 million as at March 31, 2015.

On the liabilities side of the balance sheet, there was a substantial reduction in current liabilities from € 169.5 million to € 118.2 million in the first three months of the year. This was essentially the result of a decrease in trade accounts payable from € 108.4 million to € 69.0 million.

Non-current liabilities, consisting of debt with a residual term of at least one year, were up slightly from € 76.0 million as at December 31, 2014 to € 77.8 million as at March 31, 2015.

There was an increase in nominal equity from € 193.8 million as at December 31, 2014 to € 197.5 million as at March 31, 2015. Overall, this resulted in an improved equity ratio of 50.2 percent at the end of the first quarter, up from 44.1 percent as at December 31, 2014, with total assets down to € 393.5 million, compared with € 439.3 million as at December 31, 2014.

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 € 36.4 million as at March 31, 2015 compared with € 20.0 million in the same period of 2014.

There was a negative cash flow from investing activities of € 2.2 million, compared with a negative cash flow of € 22.1 million in 2014.

The cash flow from financing activities was minus € 0.8 million, compared with € 44.1 million in 2014.

Overall, this resulted in cash and cash equivalents of € 75.3 million, compared with € 79.7 million in 2014.

4. Stocks held by members of the Executive and Supervisory Boards as at March 31, 2015

14,879,574	100%
100,000	0,7 %
10,000	0.1 %

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

Up until the time of preparation of this management report by the Executive Board, there were no significant events with any impact on the assets, financial and earnings position of the CANCOM group.

6. Risks of future development

There have been no major changes in the risks of future development at CANCOM since the start of the current fiscal year. Details of the risks can be found in the annual report for 2014, starting on page 30. The annual report can be downloaded from www. cancom.com/corporate/company/investor-relations or obtained in printed form, free of charge, from the company.

7. 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 2014, starting on page 40. The annual report can be downloaded from www.cancom.com/corporate/company/investor-relations or obtained free of charge from the company.

8. Forecast

Further growth is expected for the German economy in 2015. Forecasts for GDP growth range from 1.1 percent to 2.0 percent.

	Gross domestic product 2015 (real change compared with 2014, as a percentage)
Germany	+ 2.0
Euro area	+ 1.4
U. K.	+ 2.4
U.S.A.	+ 2.4
World	+ 3.2

Forecast: Deutsche Bank Economic Research, May 12, 2015

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 3.2 percent to € 80.3 billion in 2015 – considerably more strongly than the rest of the economy.

Trading in software is likely to grow by 5.7 percent to € 20.2 billion. Turnover in IT services is expected to rise by 3.0 percent to € 37.3 billion. Experts expect a weaker performance from the IT hardware market, which they expect to grow by 1.3 percent to € 22.8 billion this year.

Forecast: BITKOM, March 2015

Anticipated performance of the CANCOM group

Thanks to its proven expertise and outstanding market position in the IT growth areas of cloud computing, mobility, IT security and managed services, CANCOM aims to continue growing both of its business segments – organically and through acquisitions – at a faster rate than the IT market, thus steadily expanding its market share. For this purpose, CANCOM geared its business policy to the IT growth areas at an early stage, and its sales and services structure have been designed around them. With its integrated portfolio of services across all areas of IT, and its flexibility in providing individually tailored packages for its clients, CANCOM has major client advantages to enable it to penetrate the market even further. In addition, the increasing complexity of IT is stretching smaller integrated systems providers to the limits of their capabilities. This, combined with the withdrawal of larger providers from individual business segments, could result in the CANCOM group gaining new clients and orders – with positive impacts on the IT solutions and cloud solutions business.

In the past year, the Executive Board set the course for further growth and good performance in the future. CANCOM focuses on profitable business in the traditional IT environment and withdraws without hesitation from low-growth or declining areas. It is planned to pursue further the integration of the acquired companies and the exploitation of synergies.

CANCOM has expanded its market presence and improved its client proximity in the German-speaking area (i.e. Germany, Austria and Switzerland). The group is represented all over Germany and Austria by its many service and consulting locations. Through its subsidiaries in the U.S.A., the U.K. and Belgium, as well as its global partner networks, the CANCOM group has an international presence in selected markets. CANCOM plans to continue strengthening its market position, primarily in the IT environment in the German-speaking area. It intends to achieve this partly by selective acquisitions, thus taking advantage of economies of scale and synergies in the market. The market continues to offer favorable conditions for this policy.

Against the background of the group's successful performance in 2014 and in view of its favorable positioning in the emerging market of cloud computing and in the IT market as a whole, the Executive Board expects further growth and an improvement in the profits of the group if the demand for IT products and services remains steady. The group will increasingly focus on profitable turnover rather than simply higher sales volumes.

The Executive Board currently expects a further increase in the sales revenues and gross profit of the group as a whole in the fiscal year 2015. The growth of the CANCOM group should continue to exceed the growth of the German IT market, the market of relevance to the group. In the fiscal year 2015, the Executive Board expects acquisition-based growth in both operating segments to ease off in comparison with 2014. There are takeover targets, but many of them are not sufficiently interesting in terms of their price. Although it is difficult to forecast, it is assumed that the organic growth of the group will continue at a rate comparable to that in 2014, with acquisition-based growth at a similar rate. The Executive Board anticipates a further increase in the CANCOM group's EBITDA, which should grow faster than the organic growth in sales revenues, owing to an improved product mix.

The Executive Board anticipates for the full year that growth in the sales revenues, gross profit and EBITDA generated by the IT solutions operating segment will outstrip market growth in 2015. For the cloud solutions segment, it expects significant increases in all three figures.

Munich, Germany, May 2015

CANCOM SE

The Executive Board

Disclaimer regarding forward-looking statements

This document has not been audited. It contains forward-looking statements and information based on the current expectations, assumptions and estimates of the Executive Board of CANCOM SE, and other information currently available to the management. The words 'expect', 'assume', 'believe', 'estimate', 'presume', 'calculate', 'intend', 'could', 'plan', 'should', or similar, are used to indicate forward-looking statements. All statements with the exception of facts regarding the past are forwardlooking statements. These statements include expectations regarding the availability of products and services, the financial and earnings position, the business strategy and the Executive Board's plans for future operating activities, economic performance and all statements regarding assumptions. Although we take the greatest of care when making these statements, 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: external political influences, 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 document. 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	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Current assets
Cash and cash equivalents		75,312	114,295	79,727
Assets held for sale		3,731	2,291	0
Trade accounts receivable		125,154	134,846	120,586
Other current financial assets	B.1.	7,658	7,522	4,969
Inventories		21,113	22,658	14,098
Orders in process		577	560	1,148
Prepaid expenses and other current assets	B.2.	4,468	3,535	4,683
TOTAL current assets		238,013	285,707	225,211
Non-current assets
Property, plant and equipment		37,662	37,654	33,983
Intangible assets		33,187	34,295	44,661
Goodwill		68,476	66,923	63,254
Long-term financial assets		67	67	62
Long-term equity investments		485	393	363
Loans		1,502	1,501	60
Other financial assets		6,092	4,662	3,074
Deferred tax resulting from temporary differences	B.3.	2,989	3,071	2,172
Deferred tax resulting from tax loss carryforwards	B.3.	4,019	4,238	4,940
Other assets		1,191	771	258
TOTAL non-current assets		155,670	153,575	152,827
Total assets		393,683	439,282	378,038

EQUITY AND LIABILITIES

(in € 000)	Notes	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Current liabilities
Short-term loans and current portion of long-term loans		1,776	1,711	1,662
Participation rights and subordinated loans, current portion		1,988	1,985	0
Trade accounts payable		68,983	108,440	79,857
Prepayments received		7,228	9,040	3,735
Other current financial liabilities	B.4.	3,573	3,629	2,734
Provisions	B.5.	4,667	4,753	4,173
Deferred income		2,717	2,413	3,123
Income tax liabilities	B.6.	3,790	7,186	2,907
Other current liabilities		21,548	28,295	19,511
Liabilities in connection with assets held for sale		2,045	2,022	0
Total current liabilities		118,315	169,474	117,702
Non-current liabilities
Long-term loans		3,442	3,632	4,197
Convertible bond	B.7.	39,456	39,144	38,218
Profit participation capital and subordinated loans		4,436	4,332	6,018
Deferred income		3,677	3,130	3,067
Deferred taxes from temporary differences	B.8.	10,474	10,552	13,705
Pension provisions		1,801	1,796	169
Other non-current financial liabilities	B.9.	2,802	2,843	3,486
Other non-current liabilities		11,789	10,588	9,508
TOTAL non-current liabilities		77,877	76,017	78,368
Equity capital
Capital stock		14,880	14,880	14,616
Capital reserves		110,197	110,197	100,530
Net retained profits (including revenue reserves)		63,052	59,967	56,433
Equity difference resulting from currency translation and price changes		1,096	519	-28
Minority interests		8,266	8,228	10,417
Total equity capital		197,491	193,791	181,968
Total liabilities		393,683	439,282	378,038

CONSOLIDATED STATEMENT OF INCOME

(in € 000)	Notes	Jan. 1 - Mar. 31, 2015	Jan. 1 - Mar. 31, 2014
Sales revenues		198,180	181,689
Other operating income	D.1.	216	297
Other own work capitalized		460	180
Gross revenue for the period		198,856	182,166
Cost of materials and purchased services		-134,313	-124,158
Gross profit		64,543	58,008
Personnel expenses	D.2.	-44,479	-39,523
Depreciation on property, plant and equipment and amortization of intangible assets		-5,322	-4,936
Other operating expenses	D.3.	-9,373	-8,908
Operating result		5,369	4,641
Interest and similar income		150	99
Interest and similar expenses		-829	-360
Share in profit or loss of joint ventures accounted for by the equity method		91	89
Currency translation gains/ losses		194	-61
Earnings before taxes		4,975	4,408
Income tax	D.4.	-1,624	-1,422
Earnings after taxes from continuing operations		3,351	2,986
Earnings from discontinued operations	D.5.	-123	-10
Net income/ loss for the period		3,228	2,976
thereof attributable to the stockholders of the parent company		3,085	3,011
thereof attributable to minority interests		143	-35
Average number of stocks outstanding (basic)		14,879,574	14,615,791
Average number of stocks outstanding (diluted)		15,935,094	14,615,791
Earnings per stock from continuing operations (basic) in EUR		0.22	0.21
Earnings per stock from continuing operations (diluted) in EUR		0.20	0.21
Earnings per stock from discontinued operations (basic) in EUR		-0.01	-0.00
Earnings per stock from discontinued operations (diluted) in EUR		-0.01	-0.00

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in € 000)	Jan. 1, - Mar. 31, 2015	Jan. 1, - Mar. 31, 2014
Net income/ loss for the period	3,228	2,976
Other comprehensive income
Items possibly reclassified in profit or loss
Currency translation differences	833	6
Income tax	-256	-2
Other comprehensive income for the period (after taxes)	577	4
Comprehensive income for the period	3,805	2,980
thereof attributable to the stockholders of the parent company	3,662	3,015
thereof attributable to minority interests	143	-35

STATEMENT OF CASH FLOWS

(in € 000)	Jan. 1 - Mar. 31, 2015	Jan. 1 - Mar. 31, 2014
Cash flow from ordinary activities
Profit for the period before taxes and minority interests	4,975	4,408
Adjustments
+/- Depreciation on property, plant and equipment and amortization of intangible assets	5,322	4,936
+/- Changes in non-current provisions	-50	-170
+/- Changes in current provisions	-354	-110
+/- Income/ loss on the sale of intangible assets, property, plant and equipment and long-term financial assets	-992	6
+ Interest expenses	679	261
+/- Changes in inventories	1,545	2,319
+/- Changes in trade accounts receivable and other accounts receivable	5,071	-26
+/- Changes in trade accounts payable and other accounts payable	-47,129	-31,130
+ Interest paid	-107	-92
+/- Income taxes paid and refunded	-5,325	-420
+/- Non-cash expenses/ income	-92	-89
+/- Cash inflow/outflow from discontinued operations	35	77
Net cash from operating activities	-36,422	-20,030
Cash flow from investing activities
+/- Acquisition of subsidiaries and equity instruments of other companies	0	-30,506
+/- Cash acquired on the purchase of stocks	0	18,884
+ Income from sale of former consolidated subsidiaries	1,049	0
- Payments for additions to intangible assets and property, plant and equipment	-3,530	-10,671
+ Income from disposal of intangible assets, property, plant and equipment, and long-term financial assets	159	140
- Cash transferred on the sale of shares	-43	0
+ Interest received	150	99
Net cash used in investing activities Cash flow from financing activities	-2,215	-22,054
+/- Capital stock increase expenses	0	12
+ Cash inflow from convertible bond	0	45,000
- Repayment of long-term borrowings (including current portion)	-217	-218
+/- Changes in short-term borrowings	68	5
- Interest paid	-530	-1,023
+/- Cash inflow/ outflow from finance lease	-122	298
Net cash used in financing activities	-801	44,074
Net increase/ decrease in cash and cash equivalents	-39,438	1,990
+/- Exchange rate-related changes in cash	455	4
+/- Cash and cash equivalents at beginning of period	114,295	77,733
Cash and cash equivalents at end of period	75,312	79,727
Breakdown:
Cash and cash equivalents	75,312	79,727
	75,312	79,727

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Shares	Share capital	Additional paid-in capital	Additional paid-in capital	Foreign currency translation reserve	Exchange rate difference reserve	Reserve change of actuarial gains/ losses from pensions	Revaluation reserve	Net profit / loss	Total investors parent company	Minority interest	Total equity cash
	units'000	in €'000	in €'000	in €'000	in €'000	in €'000	in €'000	in €'000	in €'000	in €'000	in €'000	in €'000
Dezember 31, 2013	14,616	14,616	94,578	28,597	-32	0	0	-153	24,978	162,584	95	162,679
Capital increase	264	264	9,681							9,945		9,945
Changes in reserves:
Costs of capital increase			-4							-4		-4
Convertible bonds			5,942							5,942		5,942
Transfer net profit / retained earnings				6,023					-6,023	0		0
Payout in financial year									-5,847	-5,847	0	-5,847
Comprehensive income for the period					548	3	-268		12,660	12,943	-1,363	11,580
Acquisition of minority interests										0	10,586	10,586
Effect from disposal of minority interests										0	-1,090	-1,090
Dezember 31, 2014	14,880	14,880	110,197	34,620	516	3	-268	-153	25,768	185,563	8,228	193,791
Comprehensive income for the period					577	0	0		3,085	3,662	143	3,805
Effect from disposal of minority interests										0	-105	-105
March 31, 2015	14,880	14,880	110,197	34,620	1,093	3	-268	-153	28,853	189,225	8,266	197,491

Segment information – IFRS

Segment information	Cloud solutions		IT solutions
	Mar. 31, 2015 €'000	Mar. 31, 2014 €'000	Mar. 31, 2015 €'000	Mar. 31, 2014 €'000
Sales revenues
- External sales	30,906	20,568	167,264	161,048
- Intersegment sales	280	419	1,682	84
- Total sales revenues	31,186	20,987	168,946	161,132
- Cost of materials and purchased services	-15,409	-10,492	-120,693	-114,114
- Personnel expenses	-8,082	-5,141	-34,415	-32,395
- Other income and expenses	-1,457	-1,134	-6,701	-6,337
EBITDA	6,238	4,220	7,137	8,286
- Depreciation and amortization	-1,585	-1,365	-3,651	-3,519
Operating income (EBIT)	4,653	2,855	3,486	4,767
- Interest income	44	13	102	69
- Interest expenses	-1	-6	-417	-374
- Share in profit or loss of joint ventures accounted for by the equity method	91	89	0	0
Result from ordinary activities	4,787	2,951	3,171	4,462
- Currency translation gains/ losses
Earnings before taxes	4,787	2,951	3,171	4,462
- Income tax
- Discontinued operations	142	0	-265	-88
Consolidated net income
thereof attributable to the stockholders of the parent company
thereof attributable to minority interests
Other information
- Anteile an assoziierten Unternehmen	0	0	0	0
- Assets1	82,557	63,205	259,148	238,802
- investments1	741	34,691	4,390	70,840

1) Assets and investments including goodwill from capital consolidation

2) Tax assets

Totals			Other companies	Reconciliation			Consolidated
Mar. 31, 2015 €'000	Mar. 31, 2014 €'000	Mar. 31, 2015 €'000	Mar. 31, 2014 €'000	Mar. 31, 2015 €'000	Mar. 31, 2014 €'000	Mar. 31, 2015 €'000	Mar. 31, 2014 €'000
198,170	181,616	10	73
1,962	503	0	0	-1,962	-503
200,132	182,119	10	73	-1,962	-503	198,180	181,689
-136,102	-124,606	0	0	1,789	460	-134,313	-124,146
-42,497	-37,536	-1,982	-1,987	0	0	-44,479	-39,523
-8,158	-7,471	-712	-1,015	173	43	-8,697	-8,431
13,375	12,506	-2,684	-2,929	0	0	10,691	9,577
-5,236	-4,884	-86	-52	0	0	-5,322	-4,936
8,139	7,622	-2,770	-2,981	0	0	5,369
146	82	233	170	-229	-153	150
-418	-380	-640	-133	229	153	-829
91	89	0	0	0	0	91
7,958	7,413	-3.177	-2,944	0	0	4,781
0	0		0	194	-15	194
7,958	7,413	-3,177	-2,944	194	-15	4,975
-123	-88	0	-78	-1,624 0	-1,422 0	-1,624 -123
						3,228
						3,085 143
					Reconciliation 2
0	0	485	363			485
341,705	302,007	43,309	66,491	8,184	9,177	393,198
5,131	105,531	104	5,100			5,235

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 2015 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 2014, 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 SE has sold its stocks in acentrix GmbH. The transaction is documented in a stock purchase and assignment agreement dated March 25, 2015. The stocks were transferred on March 31, 2015.

The table below shows the impact on the reporting entity of the sale of acentrix GmbH:

	March 31, 2015 €'000
Cash and cash equivalents	-43
Trade accounts receivable	-578
Other current financial assets	0
Intragroup accounts receivable	-223
Orders in process	-159
Prepaid expenses and other current assets	-131
Total current assets	-1,134
Property, plant and equipment (tangible assets)	-115
Intangible assets	-15
Goodwill	-59
Other financial assets	-35
Total non-current assets	-224
Total assets	-1,358
Trade accounts payable	-66
Intragroup accounts payable	-667
Provisions	-5
Other current liabilities	-329
Total current liabilities	-1,067
Deferred taxes from temporary differences	-30
Total non-current liabilities	-30
Total liabilities	-1,097
Net assets sold (excess of liabilities)	-261

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 2014.

B. Notes to the consolidated balance sheet

1. Other current financial assets

This item includes bonuses due from suppliers (€ 3,020 thousand), claims to the payment of a purchase price (€ 2,569 thousand), creditors with a debit balance (€ 912 thousand), marketing revenue (€ 738 thousand), receivables from staff (€ 215 thousand), receivables from the disposal of affiliated companies (€ 194 thousand) and receivables from former stockholders (€ 10 thousand).

2. Prepaid expenses and other current assets

This item mainly consists of other current assets such as tax refunds (€ 2,025 thousand), compensation for damages (€ 240 thousand), commission income (€ 88 thousand) and receivables from social insurance institutions (€ 16 thousand).

The prepaid expenses (€ 2,037 thousand) include deferred insurance premiums and expenses paid in advance.

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, 2015	3,071	4,238
Derecognition due to deconsolidation, recognised in equity	-35	0
Income tax expense/revenue from profit and loss calculation	-214	-221
Income tax expense from profit and loss calculation included in discontinued operations	145	0
Currency difference	22	2
As at March 31, 2015	2,989	4,019

As at March 31, 2015, the CANCOM group had corporate tax loss carryovers of € 13.5 million and trade tax loss carryovers of € 15.0 million. The unused corporate tax losses for which no deferred tax claim was recognized in the balance sheet amounted to € 1.8 million. The trade tax loss carryovers for which no deferred tax claim was recognized also amounted to € 1.8 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 (€ 946 thousand), property, plant and equipment (tangible assets) (€ 784 thousand), provisions (€ 472 thousand), other liabilities (€ 383 thousand), pension provisions (€ 228 thousand), intragroup accounts payable (€ 171 thousand), and goodwill (€ 5 thousand).

4. Other current financial liabilities

This item refers to debtors with a credit balance (€ 2,176 thousand), outstanding bills of charges (€ 569 thousand), purchase price liabilities (€ 396 thousand), Supervisory Board remuneration (€ 338 thousand) rent (€ 87 thousand) and liabilities to stockholders (€ 7 thousand).

5. Other provisions

The provisions mainly include the variable component of the purchase price for stocks in affiliated companies (€ 13,087 thousand), guarantees and warranties (€ 1,318 thousand), termination and severance payments (€ 839 thousand), contingent risks (€ 510 thousand), salaries (€ 227 thousand), financial statement costs (€ 149 thousand), archiving costs (€ 135 thousand) and provisions for additional leasing costs (€ 96 thousand).

The total provisions include long-term provisions of € 11,789 thousand, which are disclosed under other non-current liabilities. These provisions are for the variable components of the purchase prices for company acquisitions (€ 10,494 thousand), guarantees and warranties (€ 598 thousand), termination payments, for which a provision is legally mandatory in Austria (€ 242 thousand), anniversaries (€ 195 thousand), archiving costs (€ 111 thousand), decommissioning and restoration liabilities (€ 99 thousand), additional leasing costs (€ 30 thousand) and provisions for tax audits (€ 20 thousand).

6. Other current liabilities

Other current liabilities essentially include bonus payments to Executive Board members and staff (€ 7,903 thousand), vacation and overtime entitlements (€ 4,641 thousand), sales tax (€ 3,681 thousand), tax on salaries and church tax (€ 2,865 thousand), payments to employers' liability insurance association (€ 863 thousand), fees (€ 678 thousand), wages and salaries (€ 442 thousand), social security contributions (€ 133 thousand) and compensation levy for non-employment of the severely handicapped (€ 63 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-par value 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 € 410 thousand was recognized for the bond in the period from January 1 to March 31, 2015.

8. Deferred tax liabilities

The deferred tax liabilities are as follows:

	€'000
As at January 1, 2015	10,552
Derecognition due to deconsolidation, recognized in equity	-30
Tax revenue from profit and loss calculation	-565
Tax saving from profit and loss calculation included in discontinued operations	-118
Currency difference	635
As at March 31, 2015	10,474

The deferred tax liabilities arise from deviations from the tax balance sheets. They are the result of the recognition and revaluation of intangible assets (€ 8,302 thousand), other financial assets (€ 835 thousand), intragroup accounts receivable (€ 563 thousand), software development costs (€ 234 thousand), convertible bonds (€ 198 thousand), property, plant and equipment (tangible assets) (€ 159 thousand), provisions (€ 157 thousand), contracts in process (€ 11 thousand), prepaid expenses (€ 6 thousand), equity-accounted investments (€ 5 thousand), capital from profit participation capital and subordinated loans (€ 3 thousand) and financial assets (€ 1 thousand).

The deferred tax liabilities are recognized at an individual tax rate of between 25 percent (for the Austrian subsidiary) and 39.83 percent (for the U.S. subsidiary).

9. Other non-current financial liabilities

Other non-current financial liabilities mainly include purchase price liabilities of € 1,531 thousand, debtors with a credit balance totaling € 697 thousand, and rent obligations of € 566 thousand.

C. Segment information

Description of segments subject to mandatory reporting

The cloud solutions operating segment comprises PIRONET NDH Datacenter AG & Co. KG, PIRONET NDH EDI-Services GmbH, PIRONET NDH Enterprise Solutions GmbH and Pironet NDH Aktiengesellschaft, in addition to the divisions of CANCOM GmbH and CANCOM DIDAS GmbH allocated to the cloud solutions segment. This operating 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, the distribution costs of which are allocated to the IT solutions reportable segment.

Due to the company's intention to sell the content management division of Pironet NDH Aktiengesellschaft, the continuing operations of the Pironet subgroup now only include its divisions in the cloud solutions segment. As a result, the central units of Pironet NDH Aktiengesellschaft are now all allocated to the cloud solutions segment.

The IT solutions operating 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, 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 operating 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 project, as well as professional IT services and support.

The 'other companies' are CANCOM SE, CANCOM, Inc., CANCOM VVM GmbH, CANCOM Financial Services GmbH and the division of CANCOM DIDAS GmbH allocated to the Other companies segment. CANCOM SE 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.

Überleitungsrechnungen

Reconciliation shows items not directly connected with the operating segments and the other companies. They include sales within the segments and the income tax expense.

The income tax expense is not a component of the profits of the operating segments. Since the tax expense is allocated to the parent company where the parent company is the taxable entity, the allocation of the income tax does not exactly correspond to the structure of the segments.

Information on geographical regions

		Sales revenue according to client location		Sales revenue according to company location
	Jan. 1 - Mar. 31, 2015 €'000	Jan. 1 - Mar. 31, 2014 €'000	Jan. 1 - Mar. 31, 2015 €'000	Jan. 1 - Mar. 31, 2014 €'000
Germany	168,189	161,397	179,854	169,124
Outside Germany	29,991	20,292	18,326	12,565
Group	198,180	181,689	198,180	181,689

		Non-current assets
	Mar 31, 2015 €'000	Mar 31, 2014 €'000
Germany	126,897	125,568
Outside Germany	21,598	21,366
Group	148,495	146,934

Non-current assets include property, plant and equipment (tangible assets), 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 - Mar. 31, 2015	Jan. 1 - Mar. 31, 2014
	€'000	€'000
Rent	0	2
Income not relating to period	84	175
Government grants	128	116
Other operating income	4	4
Total	216	297

2. Personnel expenses

The personnel expenses consist of the following:

Jan. 1 -	Jan. 1 -
€'000	Mar. 31, 2014 €'000
38,190	33,894
6,222	5,569
67	60
44,479	39,523
	Mar. 31, 2015

3. Other operating expenses

The other operating expenses consist of the following items:

	Jan. 1 - Mar. 31, 2015 €'000	Jan. 1 - Mar. 31, 2014 €'000
Office space costs	2,201	2,160
Insurance and other charges	155	261
Motor vehicle costs	1,193	1,198
Advertising costs	639	550
Stock exchange and entertainment costs	7	91
Hospitality and traveling expenses	1,350	1,221
Delivery costs	653	602
Third-party services	578	233
Repairs, maintenance, leasing	469	376
Communications and office costs	578	543
Professional development and training costs	421	321
Legal and consultancy expenses	356	741
Fees and charges, costs of money transactions	211	266
Value adjustments on receivables	98	0
Other operating expenses	464	345
Total	9,373	8,908

4. Income tax

The rate of income tax for the German companies was 30.70 percent (2014: 30.49 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 - Mar. 31, 2015 €'000	Jan. 1 - Mar. 31, 2014 €'000
Earnings before tax	4,975	4,407
Expected tax expense at rate for German companies (30.70 percent; 2014: 30.49 percent)	1,527	1,344
- Difference from tax paid outside Germany	-98	-57
- Change in value adjustment of deferred tax assets on loss carryforwards	76	0
- Tax-exempt income / non tax-relevant losses on disposals	-134	35
- Actual income tax not relating to the period	5	-33
- Permanent differences: non-deductible operating expenses as well as additions and
reductions in relation to trade tax	219	131
- Effects of tax rate changes	26	0
- Other	3	2
Total group income tax	1,624	1,422

The actual tax rate is calculated as follows:

	Jan. 1 - Mar. 31, 2015 €'000	Jan. 1 - Mar. 31, 2014 €'000
Income before tax	4,975	4,407
Income tax	1,624	1,422
Actual tax expense rate	32.64%	32.27%

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

	Jan. 1 - Mar. 31, 2015 €'000	Jan. 1 - Mar. 31, 2014 €'000
Actual income tax paid	1,753	1,953
Deferred taxes:
Assets	436	-271
Liabilities	-565	-260
	-129	-531
Group income tax	1,624	1,422

5. Discontinued operations

The impact of discontinued operations on the consolidated statement of income was a loss of € 123 thousand (2014: loss of € 10 thousand).

This amount consists of income (including other own work capitalized, other operating income and income from long-term equity investments) of € 2,394 thousand (2014: € 3,915 thousand), expenditure of € 2,744 thousand (€ 3,926 thousand), resulting in a pre-tax loss of € 350 thousand (2014: € 11 thousand). There was a related income tax gain of € 227 thousand (2014: € 1 thousand).

The discontinued operations relate exclusively to the intended sale of Imperia AG.

As a group, CANCOM focuses on the high-growth and high-margin cloud computing business. At the end of 2014, Pironet NDH Aktiengesellschaft decided to focus on the highly profitable cloud data center services business, and started the process of selling its wholly-owned subsidiary Imperia AG.

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;
• ABCON Holding GmbH and its subsidiaries;
• WFO Vermögensverwaltung GmbH and its subsidiaries;
• 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 first quarter of 2015 was as follows: € 681 thousand (gross) in relation to goods/services purchased by AL-KO Kober SE and its subsidiaries, of which € 290 thousand was outstanding as at the balance sheet date.

No goods or services were purchased from related parties under IAS 24.

2. 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.

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 stockholder disclosing a majority stockholding as defined in Section 20 of the above Act in the first quarter of 2015.

CANCOM SE

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