INTERIM REPORT Q2 2023

Key figures

CANCOM GROUP

in € million	H1 2023	H1 2022
Revenue	647.0	595.5	+ 8.6 %
Business volume	870.9	804.5	+ 8.3 %
Gross profit	245.2	212.0	+ 15.7 %
EBITDA	41.5	51.1	- 18.6 %
EBITDA margin	6.4 %	8.6 %	- 2.2 pp
EBITA	18.9	30.9	- 38.8 %
EBIT	16.4	28.8	- 43.1 %
Employees (average)	4.822	3,694	+ 30.5 %

in € million	30.06.2023	31.12.2022

Balance sheet total	1,533.7	1,305.1	+ 17.5 %
Equity	767.8	694.8	+ 10.5 %
Equity ratio	50.1 %	53.2 %	- 3.1 pp
Cash and cash equivalents	170.4	393.2	- 56.7 %

SEGMENT GERMANY

in € million	H1 2023	H1 2022
Revenue	564.5	543.7	+ 3.8 %
EBITDA	32.4	44.5	- 27.2 %
EBITDA margin	5.7 %	8.2 %	- 2.5 pp

SEGMENT INTERNATIONAL

in € million	H1 2023	H1 2022
Revenue	82.5	51.8	+ 59.3 %
EBITDA	9.2	6.6	+ 39.4 %
EBITDA margin	11.2 %	12.7 %	- 1.5 pp

4		Foreword by the Executive Board
---	--	---------------------------------

Interim Group Management Report of CANCOM SE
Fundamentals of the Group
Economic report
Risk and opportunity report
Forecast report

17 Consolidated half-yearly financial statements of CANCOM SE

Consolidated balance sheet
Consolidated statement of comprehensive income
Consolidated cash flow statement
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Responsibility Statement
List of shareholdings

Foreword by the Executive Board

Dear Shareholders,

A first half-year with a decisive step lies behind us: the CANCOM Group has acquired K-Businesscom. This acquisition, our largest to date, will strengthen the CANCOM Group and significantly increase our presence in the DACH market. With the takeover of K-Businesscom we have gained 1,650 new colleagues and also gained further market access in Switzerland and Romania. In addition to our expertise, 500 highly specialised professionals in the fast-growing IT security and network environment area IT security are joining the CANCOM Group with their own Cyber Defense Center (CDC).

With our new colleagues in Austria, the CANCOM Group is now the second largest player in the Austrian market. Together with our already strong positioning in the German market, we have managed to create a new strong player in the DACH region.

It is a strong sign that the KBC management has also largely exchanged its shares in K-Businesscom for shares in the CANCOM Group. We also reflect the connection between the two companies in the Executive Board: with Jochen Borenich we welcome a new Executive Board member.

Dear shareholders, the joy of this great step should not obscure the fact that many more steps will now follow to make our common history a success. We have already started with the integration of K-Businesscom. With the expertise of our new colleagues and their skills in the areas of security, intelligent networks, data analytics and IoT in particular, we will continue to develop the offerings for all customers of the CANCOM Group. Since one of the factors for success will be the customer approach, we have gained an experienced manager in Jochen Borenich, who will devote his full attention to this area.

We are not losing sight of the fact that CANCOM's recent development has no longer fully met our expectations. While we are taking the first steps in the integration of K-Businesscom, we have also made further progress with our own efficiency and profitability programme, especially in the second quarter. Significant personnel measures have been implemented and the winding down of projects for which a suitable perspective is lacking has been completed.

With the implementation of our programme, we will be able to take advantage of market opportunities in our market on a significantly reduced cost basis and with a focused service portfolio, and will benefit disproportionately when demand picks up.

The acquisition of K-Businesscom will accelerate the development of the CANCOM Group as a Leading Hybrid IT Provider through new market access, new capabilities and an even broader portfolio for the customers of both companies. We as the Executive Board, together with our colleagues at KBC, are convinced of this acquisition. CANCOM Group is now stronger and better positioned in the DACH region than ever before. Our clear goal for the coming months is to convince you and other investors of the value of this acquisition and the excellent prospects for the CANCOM Group. In the coming months we will work hard to build on the positive development of the CANCOM Group, even in a difficult economic environment.

Thank you for your trust.

Your Executive Board of CANCOM SE

Rüdiger Rath Jochen Borenich Thomas Stark CEO CSO CFO

Interim Group Management Report of CANCOM SE

for the period 1 January to 30 June 2023

FUNDAMENTALS OF THE GROUP

The CANCOM Group (hereinafter referred to as "CANCOM" or "CANCOM Group") is one of the leading providers of IT services and IT infrastructure in Germany and Austria. In addition to its activities in the core markets of Germany and Austria, the Group has subsidiaries or branches in Switzerland, Slovakia, the Czech Republic, Romania, Belgium and the USA.

Structure of the CANCOM Group

The parent company of the CANCOM Group is CANCOM SE, based in Munich, Germany. It performs central financing and management functions for the Group companies, i.e. the investments it holds. In addition to the parent company's central management and financing activities, the operating units are supported in their day-to-day business operations by likewise centralised departments for purchasing, internal IT, warehousing/ logistics, finance, vehicle and travel management, repair/service and human resources ("Central Services") as well as marketing/ communications and product management. In addition, an internal specialised sales department ("Competence Centre") is available to the operational units across the organisation.

In addition to these centralised functions, CANCOM's operating units are primarily decentralised and operate in units structured primarily by region. The organisation comprises the regional units South, Southwest, Central, East, North and West as well as locations in Slovakia, Austria and Belgium. In addition, there are the supraregional business units Managed Services, Public and eCommerce.

K-Businesscom AG, with its registered office in Vienna, has been a wholly owned subsidiary of CANCOM SE since 7 June 2023. K-Businesscom AG continues to perform the central financing and management functions for the subsidiaries of K-Businesscom AG. K-Businesscom AG has branches in Austria and subsidiaries in the Czech Republic, Romania, Switzerland, the USA and Germany.

In its financial reporting, the CANCOM Group reports on the development of its operations by means of two segments in addition to the Group as a whole: 'Germany' and 'International'.

Reportable segments

All companies in the CANCOM Group with their registered office in Germany form the 'Germany' operating segment. The CANCOM Group companies based outside Germany are combined in the 'International' segment. The companies allocated to this segment are shown in the list of shareholdings, which forms part of these consolidated half-year financial statements.

Changes in the reporting period

On 24 April 2023 CANCOM SE announced the takeover of the KBC Group by ad hoc announcement. The takeover of the KBC Group was completed at the end of May with the acquisition of all shares in KBC Beteiligungs GmbH, which in turn holds 100 percent of the shares in the main operating subsidiary K-Businesscom AG. The date of first consolidation was 1 June 2023. Details on the acquisition of K-Businesscom can be found in section 2.2.1 of these consolidated half-year financial statements.

In connection with the acquisition of KBC Group, the CANCOM Group has again formed operating segments. The description of the segments can be found in this section of the Group management report and in section D.1. of the consolidated half-year financial statements.

CANCOM SE acquired 100 percent of the shares in CANCOM Financial Services GmbH in May 2023 and immediately sold 60 percent of these shares to Mercator-Leasing-Beteiligungsgesellschaft mbH. Further information on CANCOM Financial Services GmbH can be found in section A.2.3 of the consolidated half-year financial statements.

Business model and sales markets

CANCOM's range of products and services is geared towards advising and supporting corporate customers and public sector clients in adapting IT infrastructures and processes to the requirements of digitalisation. CANCOM acts as a provider of complete solutions and sees itself as a hybrid IT service provider for the customer.

The range of services extends from strategic consulting for digital (business) processes to the partial or complete operation of IT systems (primarily by means of managed services and standardised as-a-service offers), to system design and integration, IT support, delivery and turnkey implementation of hardware and software, e-procurement and logistics services.

This broad-based product and service offering enables the CANCOM Group to generate revenue both on the basis of the company's own skills and services (service business) and from remuneration and commissions for the sale of third-party IT products (sale of goods). Within this business model, management is pursuing a course of strategic transformation of the CANCOM Group into a hybrid IT service provider in which an increasing proportion of business activity is to be the provision of IT services, specifically managed services.

Geographically, the CANCOM Group is primarily active in Germany and Austria. Other markets are Switzerland, Romania, the USA and Belgium. Subsidiaries of the CANCOM Group are active in Slovakia and the Czech Republic, providing services in the areas of service and support centres and software customisation and development.

A key external factor influencing CANCOM's business development is therefore the development of the IT market in the largest sales markets of Germany and Austria. For these markets as a whole - and therefore also for CANCOM - the general trend towards digitalisation is a key driver. The importance of IT processes in business, the education and healthcare sectors, and in administration is increasing. New application possibilities for IT-supported solutions and investments to improve existing infrastructures are contributing to market development.

Important external factors that CANCOM cannot influence and that may have a positive or negative impact on business development are, in particular, data protection regulations, the general threat situation in the area of cyber security, and also the quality certifications and environmental and social standards required by customers. As a provider of IT services and products, the CANCOM Group's business model is not subject to any special industry-specific legal provisions, licensing requirements or official supervision, i.e. external regulatory or politically influenced factors that go beyond the legal framework generally applicable to all companies. In addition, the availability of IT hardware and software on the world market is an external factor that cannot be influenced.

The CANCOM Group's customer base primarily comprises commercial end users, ranging from small and medium-sized enterprises to large companies and corporations, as well as public institutions.

Competitive position

The CANCOM Group is primarily active in Germany and Austria. In both markets, the CANCOM Group has a prominent market position due to its size.

According to the latest available evaluation by the Federal Statistical Office and the IT industry association Bitkom, there are more than 90,000 companies in the IT hardware and software and IT services sectors in Germany, although they differ significantly in terms of size and/or range of services. Large companies with annual sales of more than € 250 million include 55 companies in the combined business field of IT hardware/software and IT services. Based on data from the most recent system house ranking by the industry medium ChannelPartner, there are only five companies in Germany that achieve domestic revenues of over one billion euros. According to this ranking, CANCOM is the fifth-largest system house in Germany, based on revenues for the 2022 financial year (2021: 4th place).With revenue of more than € 1 billion, the CANCOM Group belongs to the very small group of large companies in the German IT industry compared to the total number of companies active in the market. With annual revenues in Germany in 2022 of around € 1.3 billion, the CANCOM Group's share of the German IT market is around one percent.

Through the acquisition of KBC Group, the CANCOM Group is now also represented in Austria with a prominent market position. The latest evaluation by IT Welt magazine ranks K-Businesscom 11th among all IT companies in Austria based on revenue in the 2021 financial year. Among companies pursuing a business model comparable to K-Businesscom's, K-Businesscom ranks second in Austria in terms of revenue. Like the German market, the Austrian IT market is also highly fragmented. In its current survey, the Austrian Federal Economic Chamber assumes that there are more than 27,000 companies in the IT services sector alone. Only 54 companies belong to the class of companies with more than 250 employees. With an annual revenue of around € 520 million, K-Businesscom's market share, measured against the market volume of € 34.7 billion for information technology in Austria, corresponds to around 1.5 percent.

The two core markets of the CANCOM Group show a long-term trend of growth and at the same time are highly fragmented. There is still great market potential for the CANCOM Group in both markets.

Research and development activities

As CANCOM primarily operates service and trading businesses in the IT market, no research activities are carried out.

CANCOM's development services focus primarily on software solutions, applications and architectures in IT areas such as cloud computing, mobile solutions, Internet of Things, data analytics, IT security and shared managed services. In addition, there are customisations for company software used in-house and in-house developments. Compared with the total output of the CANCOM Group, however, expenditure on development work is not of a significant magnitude, nor is the resulting own work capitalised. Development activities in the CANCOM Group are decentralised and organised on a project basis. Where necessary, they are supported by the use of third-party services.

CANCOM Group: Research and development (in € million)

	H1 2023	H1 2022
Total research and development expenditure	1.6	4.0
thereof own work capitalised	1.1	2.7
of which for third-party services	0	0

ECONOMIC REPORT

With a revenue share of over 75 percent, Germany is the most important sales market for the CANCOM Group. The most important foreign market is Austria. In addition to the general economic development in these country markets, the overall market for information and communication technology (ICT) - especially in Germany - also forms an essential framework and basis of comparison for assessing CANCOM's economic development.

Germany

The Federal Statistical Office assumes that the gross domestic product (GDP) in Germany fell by 0.3 percent in the first quarter of 2023 compared to the previous quarter. In the second quarter of 2023, on the other hand, GDP stagnated at +/- 0.0 percent compared to the previous quarter. Continued high inflation and a lower propensity to consume among private households weighed on economic development. Shortly after the end of the reporting period, the International Monetary Fund (IMF) also reduced its forecast for economic development in Germany in July 2023 on the basis of developments in the first half of the year. This is the second reduction in a row, after the annual forecast of 0.1 percent GDP growth from January had already been lowered in April 2023. For Germany, the IMF now expects a decline in GDP of 0.3 percent in 2023.

Austria

For Austria, CANCOM's most important foreign market, GDP growth in the first quarter of 2023 was 0.1 percent compared to the previous quarter, according to the European statistics authority Eurostat. In the second quarter, a decline of 0.4 percent was recorded.

Gross domestic product (GDP) 2023

(Change compared to previous quarter in %)

Germany
Q1 2023	- 0.1
Q2 2023	+/- 0.0

Austria
Q1 2023	+ 0.1
Q2 2023	- 0.4

*) Source: Eurostat, July 2023.

ICT market

The expectations of the industry association Bitkom for the development of the ICT market in Germany, the most important sales market for the CANCOM Group, have weakened in the course of the first half of 2023. For the information technology market segment, which is particularly important for the CANCOM Group, the growth forecast for 2023 has been lowered from 6.3 percent to 3.0 percent. The software and IT services sub-markets are expected to continue to develop positively in the current financial year. Here, Bitkom expects growth of 9.6 percent and 5.3 percent respectively. The outlook has improved since the Bitkom forecast in January. Originally, growth rates of 9.3 percent were expected in the software market segment and 4.7 percent in the IT services market segment. Bitkom, on the other hand, estimates the development in the IT hardware market to be significantly lower. The expected development was reduced from growth of 5.3 percent in the January forecast to a decline of -3.6 percent in the current forecast from July.

Outlook: Information technology (IT) market 2023, Germany* (Change compared to prior year in %)

Software	+ 9,6
IT services	+ 5,3
IT hardware (incl. semiconductors)	- 3,6

*) Source: Bitkom/IDC, July 2023.

In Austria, companies in the IT sector expected the market for information technology to develop positively at the beginning of 2023, according to the UBIT Radar published by KMU Forschung Austria. 65.0 percent of companies expected business to be rather good or better in the 2023 business year. The average expectation for the increase in revenue in the current business year was 10.8 percent. The significance of the figures for the business expectations of the Austrian market has decreased in view of the time lag before the publication of this half-year report. Nevertheless, in view of the economic framework data, a positive market development can still be assumed for Austria in the reporting period.

Business performance in the first half of 2023

In the reporting period from 1 January to 30 June 2023, the CANCOM Group generated revenue of € 647.0 million (prior year: € 595.5 million). The Germany segment accounted for € 564.5 million (prior year: € 543.7 million) and the International segment for € 82.5 million (prior year: € 51.8 million). The positive revenue development was primarily explained by the contribution of the acquisitions. Revenue growth at Group level was 8.6 percent, and the organic share1 of revenue growth was 0.2 percent. In the CANCOM Group's core market in Germany, demand weakened in the second quarter, particularly for IT hardware. By contrast, business in the service areas of Consulting, Services and Managed Services / XaaS continued to develop very positively in the reporting period. The gross profit trend was correspondingly positive.

The EBITDA of the CANCOM Group was burdened by special effects and amounted to € 41.5 million in the first half of 2023 (prior year: € 51.1 million). In the first quarter, higher costs due to inflation led to a decline in profitability. Special effects in connection with the efficiency and profitability programme as well as expenses in connection with acquisitions had an impact of around € 10.2 million on EBITDA in the second quarter.

Order situation

At the beginning of the first quarter of 2023, the order backlog was significantly above the historical level. The main reason for this development was the continued limited availability of IT hardware, which caused the order backlog to rise sharply. At the end of the first quarter and in the course of the second quarter, the order backlog fell because, on the one hand, the availability of IT hardware improved significantly and, on the other hand, increasing restraint on the part of customers became noticeable, especially in the area of IT hardware.

Explanation of the Alternative Performance Measures (APM) used in accordance with the APM guidelines of the European Securities and Markets Authority (ESMA):

¹ Organic share of financial ratios = respective financial ratio (GAAP or non-GAAP) - contributions from companies that have been part of the scope of consolidation for less than 12 months

Employees

As at 30 June 2023, the CANCOM Group had 5,668 employees (30 June 2022: 3,702). This represents an increase of 53.1 percent compared to the previous year's reporting date.

The staff members were active in the following areas:

CANCOM Group: Employees

	30.06.2023	30.06.2022
Professional Services	3,708	2,207
Sales	1,026	829
Central Services	934	666
Total	5,668	3,702

The average number of employees in the first half of 2023 was 4,822 (same period last year: 3,694).

The very significant growth can be explained by the acquisition of the KBC Group. The acquisition added 1,653 employees to the CANCOM Group. As at 30 June 2023, 1,206 of them work in Professional Services, 185 in Sales and 262 in Central Services.

Results of operations, financial and net assets position of the CANCOM Group

Result of operations

CANCOM Group: Revenue (in € million)
H1 2023	647.0
H1 2022	595.5

In the first half of 2023, the CANCOM Group achieved consolidated revenue of € 647.0 million (prior year:

€ 595.5 million). Organic revenue growth amounted to 0.2 percent. In the reporting period, CANCOM generated revenue of € 424.1 million (prior year: € 412.0 million) from the sale of goods, i.e. in particular hardware and software, and € 222.9 million (prior year: € 183.6 million) from the provision of services.

In the segment Germany, which covers the business activities of all the companies in the CANCOM Group based in Germany, revenue rose by 3.8 percent to € 564.5 million in the period under review. In the International segment, which comprises the companies of the CANCOM Group that are not based in Germany, revenue rose by 59.2 percent to € 82.5 million.

In the second quarter of 2023, revenue for the CANCOM Group was € 329.4 million (prior year: € 298.8 million). In the Germany segment, revenue was 0.7 percent higher at € 266.6 million (prior year: € 264.8 million). Revenue in the segment International rose in the second quarter by 84.5 percent to € 62.7 million (prior year: € 34.0 million).

The business volume2 of the CANCOM Group, i.e. before the application of IFRS 15 with transactions classified as principal (gross disclosure) or agent (net disclosure), amounted to € 870.9 million in the first half of the year (prior year: € 804.5 million). In the second quarter, the business volume amounted to € 437.8 million (prior year: € 412.3 million).

The CANCOM Group's other operating income fell to € 3.4 million in the first half of 2023 (prior year: € 6.6 million). In the second quarter, other operating income was € 2.1 million (prior year: € 3.1 million).

The CANCOM Group's total operating revenue in the first half of the year was € 651.6 million (prior year: € 605.7 million). In the second quarter, total operating revenue was € 331.9 million (prior year: € 303.7 million).

CANCOM Group: Cost of materials

(in € million)
	H1 2023	H1 2022
Cost of materials/cost of purchased
services	-406.4	-393.8

The cost of materials totalled € 406.4 million in the first half of 2023 (prior year: € 393.8 million). In the second quarter, the value was € 203.8 million (prior year: € 198.8 million).

CANCOM Group: Gross profit (in € million)

H1 2023	245.2
H1 2022	212.0

2 Business volume = revenue before adjustment according to IFRS 15 (principal/agent classification); corresponds to accounting before 2020

Explanation of the Alternative Performance Measures (APM) used in accordance with the APM guidelines of the European Securities and Markets Authority (ESMA):

The CANCOM Group's gross profit3 rose by 15.7 percent year-on-year in the first half of 2023 to €245.2 million (prior year: €212.0 million). 3.3 percent of the gross profit growth was organic. The gross profit margin rose to 37.9 percent in the reporting period (prior year: 35.6 percent). In the Group segment Germany, gross profit rose to € 214.0 million in the reporting period (prior year: € 195.3 million). Organic gross profit growth was 5.8 percent. In the International Group segment CANCOM posted a gross profit of € 37.5 million (prior year: € 17.6 million).

The second quarter of 2023 produced consolidated gross profit of € 128.2 million (prior year: € 104.9 million). The organic share of growth was 0.5 percent. In the segment Germany, gross profit rose to € 102.4 million in the second quarter (prior year: € 94.2 million). In the International segment, gross profit in the second quarter was € 29.1 million (prior year: € 11.2 million).

CANCOM Group: Personnel expenses (in € million)
	H1 2023	H1 2022
Wages and salaries	-138.6	-115.0
Social security contributions	-27.0	-20.5
Equity-settled share-based payment transactions	0.0	0.1
Expenses for retirement benefits	-0.5	-0.1
Share-based payments with cash settle ment	-0.2	-0.1
Total	-166.3	-135.6

Personnel expenses amounted to € 166.3 million in the first half of 2023 and were thus higher than in the same period of the prior year (prior year: € 135.6 million). The personnel expense ratio was 25.7 percent (prior year: 22.8 percent).

In the second quarter of 2023, personnel expenses amounted to € 90.1 million (prior year: € 67.0 million) and the personnel expense ratio was 27.3 percent (prior year: 22.4 percent). The significant increase in the second quarter is explained by the addition of KBC Group's personnel costs.

Other operating expenses amounted to € 37.5 million in the first six months of 2023 (prior year: € 25.1 million).

For the second quarter, other operating expenses amounted to € 20.7 million (prior year: € 13.1 million).

In the first half of 2023, EBITDA4 for the CANCOM Group was € 41.5 million (prior year: € 51.5 million).

In the Germany segment, EBITDA in the first half of the year was € 32.3 million (prior year: € 44.5 million), while in the International segment it was € 9.2 million (prior year: € 6.6 million).

In the second quarter of 2023, EBITDA for the CANCOM Group was € 17.4 million (prior year: € 24.7 million).

In the Germany segment, EBITDA in the second quarter reached € 10.1 million (prior year: € 19.2 million). In the International segment, EBITDA in the second quarter was € 7.3 million (prior year: € 5.5 million).

In the reporting period from January to June 2023, the EBITDA margin of the CANCOM Group was 6.4 percent (prior year: 8.6 percent).

The EBITDA margin in the segment Germany was 5.7 percent (prior year: 8.2 percent). In the International segment the EBITDA margin was 11.1 percent (prior year: 12.7 percent).

In the second quarter of 2023, the EBITDA margin for the CANCOM Group was 5.3 percent (prior year: 8.2 percent). In the Germany segment, the EBITDA margin for the second quarter was 3.8 percent (prior year: 7.2 percent) and in the International segment it was 11.7 percent (prior year: 16.1 percent).

Explanation of the Alternative Performance Measures (APM) used in accordance with the APM guidelines of the European Securities and Markets Authority (ESMA):

3 Gross profit = total output (sales revenue + other operating income + other own work capitalised + capitalised contract costs) less cost of materials/expenses for purchased services 4 EBITDA = profit for the period + income taxes + foreign exchange gains/losses + depreciation and amortisation of financial assets + income from investments + other financial result

interest result + depreciation and amortisation of property, plant and equipment, intangible assets and rights of use

CANCOM Group: Depreciation and amortisation

(in € million)

	H1 2023	H1 2022
Scheduled depreciation of property, plant and equipment	6.3	6.9
Scheduled amortisation of software	7.9	6.5
Scheduled amortisation of rights of use	8.4	6.7
Scheduled amortisation on customer bases etc.	2.4	2.1
Impairment of goodwill	0.0	0.0
Total	25.1	22.3

Depreciation and amortisation increased to € 25.1 million in the first half of 2023 (prior year: € 22.3 million). In the second quarter, depreciation amounted to € 13.7 million (prior year: € 11.3 million).

CANCOM Group: EBITA

	(in € million)

H1 2023	18.9
H1 2022	30.9

The CANCOM Group's EBITA5 in the first six months of the current financial year was € 18.9 million (prior year: € 30.9 million).

In the Group segment Germany, EBITA amounted to € 11.4 million in the reporting period (prior year: € 24.9 million). In contrast, EBITA in the International segment was € 7.5 million (prior year: € 6.0 million).

In the second quarter, the CANCOM Group achieved EBITA of € 5.4 million (prior year: € 14.4 million). In the Group's Germany segment, EBITA was negative at € -0.6 million. (prior year: € 9.2 million). In the segment International, EBITA was € 5.9 million (prior year: € 5.2 million).

CANCOM Group: EBIT (in € million) H1 2023 16.4 H1 2022 28.8

The CANCOM Group's EBIT6 in the first half of the current financial year was € 16.4 million (prior year: € 28.8 million).

In the reporting period, EBIT in the Germany segment was € 9.7 million (prior year: € 22.8 million) and in the International segment EBIT was € 6.7 million (prior year: € 6.0 million).

For the second quarter of 2023, the CANCOM Group's EBIT amounted to € 3.7 million (prior year: € 13.4 million). In the Germany segment, EBIT was € -1.4 million (prior year: € 8.2 million). By contrast, EBIT in the International segment was € 5.1 million (prior year: € 5.2 million).

CANCOM Group: Result for the period

(in € million)

As a result of the first half of 2023, the CANCOM Group's profit for the period amounted to € 13.5 million (prior year: € 19.6 million).

In the second quarter of 2023, the CANCOM Group's profit for the period was € 3.5 million (prior year: € 9.3 million).

Financial and asset position

Principles and objectives of financial management

The core objective of CANCOM's financial management is to ensure liquidity at all times in order to guarantee daily business operations. In addition, the aim is to optimise profitability and, associated with this, to achieve the highest possible credit rating in order to secure favourable refinancing. The financing structure is primarily geared towards long-term stability and maintaining financial room for manoeuvre to take advantage of business and investment opportunities.

Explanation of the Alternative Performance Measures (APM) used in accordance with the APM guidelines of the European Securities and Markets Authority (ESMA):

5 EBITA = profit for the period + income taxes + currency gains/losses + write-downs on financial assets + income from investments + other financial result + interest result + amortisation of intangible assets resulting from company acquisitions (in particular customer bases, order backlogs)

6 EBIT = profit for the period + income taxes + currency gains/losses + write-downs on financial assets + income from investments + other financial result + interest result

Capital structure of the Group

The total assets of the CANCOM Group at the reporting date of 30 June 2023 amounted to € 1,533.7 million (31 December 2022: € 1,305.1 million). On the liabilities side, € 767.8 million of this was attributable to equity and € 765.9 million to debt. The CANCOM Group's equity ratio was therefore 50.1 percent at the end of June, which was lower than at the end of the 2022 financial year (31 December 2022: 53.2 percent). The debt ratio rose accordingly to 49.9 percent (31 December 2022: 46.8 percent). The shift in the balance sheet structure in the first half of 2023 resulted primarily from the consolidation of K-Businesscom. As on 31 December 2022, there were no non-current liabilities to banks at the end of the reporting period. Current financial liabilities to banks increased to € 28.4 million as of 30 June 2023 (31 December 2022: € 0 million) due to the acquisition of liabilities of K-Businesscom. The balance of cash and cash equivalents as at the reporting date of 30 June 2023 covers this balance of interest-bearing financial liabilities. Thus, there is no net financial debt of the Group or this key figure is negative ("net cash" situation).

Debt and equity

Current liabilities, i.e. liabilities with a remaining term of less than one year, totalled € 543.1 million as at the balance sheet date of the first half of 2023 (31 December 2022: € 479.8 million). The change compared to December 2022 is due to the increase in current liabilities to banks, other financial liabilities and current contract liabilities. In contrast, trade payables decreased and reached € 298.7 million as at 30 June 2023 (31 December 2022: € 326.0 million).

Non-current liabilities, at € 222.8 million as at the reporting date, were significantly above the level at the end of 2022. (31 December 2022: € 130.5 million). The main factor was an increase in other non-current financial liabilities, which amounted to € 154.4 million (31 December 2022: € 103.0 million). Long-term pension provisions and similar pension provisions also increased in connection with the acquisition of K-Businesscom to € 22.2 million (31 December 2022: € 1.1 million) and deferred tax liabilities reached € 21.6 million (31 December 2022: € 11.7 million).

At € 767.8 million, equity was higher on the balance sheet date than the comparable figure (31 December 2022: € 694.8 million). The increase can be explained by the higher capital reserve, which amounted to € 471.9 million on 30 June 2023 (31 December 2022: € 380.0 million).

Essential financing measures

The financing of current business and necessary replacement investments was carried out from cash and cash equivalents and the operating cash flow in the reporting period. The same applies to all other investments.

Assets

The assets side of the balance sheet showed current assets of € 913.2 million as at 30 June 2023 (31 December 2022: € 958.7 million). Cash and cash equivalents decreased in the first half of 2023 to € 170.4 million as at 30 June 2023 (31 December 2022: € 393.2 million). The change in cash and cash equivalents was mainly influenced by the payout in connection with the acquisition of K-Businesscom. Trade receivables increased to € 478.3 million in the first half of the year (31 December 2022: € 409.2 million). Furthermore, inventories grew to € 96.7 million as at 30 June 2023 (31 December 2022: € 83.0 million).

Non-current assets amounted to € 620.5 million as at 30 June 2023 (31 December 2022: € 346.4 million). Changes occurred primarily in intangible assets, which amounted to € 94.4 million at the end of the first half of the year (31 December 2022: € 57.4 million). Goodwill increased very significantly to € 256.5 million as at 30 June 2023 (31 December 2022: € 125.2 million) due to the acquisition of K-Businesscom.

Cash flow and liquidity

Based on a result for the period of € 14.6 million (prior year: € 20.1 million), the cash flow from operating activities for the reporting period from January to June 2023 shows a value of € -79.8 million (prior year: € -126.1 million). At € -7.4 million, the build-up of inventories in the first half of the year was lower than in the previous period (prior year: € -48.0 million). Trade receivables, contract assets, capitalised contract costs and other assets were reduced by € 17.5 million (prior year: € -88.1 million). In contrast, the lower trade payables and other liabilities in the reporting period of € -121.0 million (prior year: € -27.0 million) had a significant negative impact.

Cash flow from investing activities in the first half of 2023 amounted to €-94.8 million (prior year: € -17.0 million). The main influencing factor was the payments for the acquisition of subsidiaries, primarily in connection with the takeover of KBC Beteiligungs GmbH and its subsidiaries. The corporate transaction led to payments for the acquisition of € -95.7 million with cash acquired of € 12.2 million. The share of the purchase price paid through the capital increase through contributions in kind of € 95.5 million was non-cash.

At € -47.8 million, cash flow from financing activities in the reporting period was higher than in the same period last year (prior year: € -120.9 million). In the comparative period, the figure was largely influenced by the payment of € 117.4 million for the repurchase of treasury shares as part of CANCOM SE's 2021/22 share buy-back programme. In the reporting period, the payment of the CANCOM SE dividend of €35.4 million was the determining factor.

In the first half of 2023, there was thus a decrease in cash and cash equivalents of € 222.4 million compared to the cash and cash equivalents at the beginning of the financial year. Cash and cash equivalents amounted to € 170.4 million as at 30 June 2023 (31 December 2022: € 393.2 million).

As a result, the CANCOM Group has a positive balance of cash and cash equivalents at the balance sheet date and can draw on unused credit lines with financial institutions at the balance sheet date of this half-year financial report. This puts the CANCOM Group in an exceptionally strong position to meet its payment obligations at all times.

Overall statement on the results of operations, financial position and net assets of the CANCOM Group

In the first half of 2023, the CANCOM Group generated revenue of € 647.0 million and EBITDA of € 41.5 million. This means that an EBITDA margin of 6.4 percent was achieved. The CANCOM Group's performance in the first half of the year fell short of the expectations at the beginning of the year. The very good revenue development in the service business, which amounted to € 216.6 million in the first half of the year, could not compensate for the significantly weaker demand in the hardware sector. In the first quarter, inflation-related cost effects depressed profitability. In the second quarter, special effects in connection with the efficiency and profitability programme burdened EBITDA. However, with the acquisition of K-Businesscom the Executive Board also succeeded in taking an important step in the development of the CANCOM Group during the period under review. The growth in revenue and gross profit of the

CANCOM Group after the first six months of the financial year was significantly supported by the inorganic contribution. However, the Executive Board's goal is profitable growth for the entire CANCOM Group; accordingly, the Executive Board is not completely satisfied with the development in the first half of 2023.

Events after the end of the reporting period

CANCOM SE's share buy-back programme began after the end of the reporting period on 3 July 2023. The programme was announced in an ad hoc announcement on 21 June 2023 during the reporting period.

On 1 August 2023, the Executive Board of CANCOM SE adjusted the forecast for CANCOM SE. Information on the background and the updated forecast can be found in the forecast report of this interim management report.

The Supervisory Board of CANCOM SE has appointed Mr. Jochen Borenich to the Executive Board of CANCOM SE with effect from 1 August 2023. Mr. Borenich will assume the function of Chief Sales Officer (CSO).

There were no other significant events for the CANCOM Group after the reporting period.

RISKS AND OPPORTUNITIES OF FUTURE DEVELOPMENT

In the period under review, there were no significant changes to the assessment of the opportunities and risks relating to the future development of the CANCOM Group published in the Annual Report 2022 and in the interim report for the first quarter of 2023.

With regard to the assessment of individual risks, there have been no changes in the CANCOM Group's financial year to date, apart from the adjustments described in the last interim report.

With regard to the assessment of risks and opportunities, the effects of the acquisitions made, in particular K-Businesscom, are currently being evaluated, reviewed and transferred to a joint risk management system. The consolidation work began on 1 June 2023 and was therefore not yet completed as of the reporting date, so that no final statements can be made regarding adjustments and effects at this time.

FORECAST REPORT

The Executive Board of CANCOM SE adjusted the forecast for the CANCOM Group on 1 August 2023. At this point in time, sufficiently resilient preliminary figures showed for the first time the business development of the CANCOM Group in the second quarter of the current financial year.

Premises of the forecast

The forecasts for the CANCOM Group and CANCOM SE include all information known to the Executive Board at the time of preparing this report that could have an influence on business development. The outlook is based, among other things, on the expectations described below with regard to economic development and the development of the IT market.

With regard to the CANCOM Group as a whole and the individual markets represented in the Group segments, unforeseeable events could influence the development of the Company or individual Group segments expected from today's perspective. Such events include, for example, the consequences of short-term legal or regulatory changes. Such events are not taken into account in the forecast.

The forecast developments in the financial performance indicators relate to the development of the CANCOM Group in its Group structure as at the reporting date of 31 December 2022 (consolidated group), taking into account the incorporation of the business activities of KBC Group as at 1 June 2023.

Development of the overall economy and the IT market

Overall economy

With a revenue share of around 75 percent, Germany is the most important sales market for the CANCOM Group. The most important foreign market is Austria. While GDP in Germany is expected to decline in 2023, Austria is expected to grow slightly over the year.

Gross domestic product outlook 2023* (Change on prior year in %)
Germany	- 0.3
Austria	+ 0.3

*) Source: Deutsche Bank Research, July 2023.

While the economic outlook for Austria improved in the first half of the year, the outlook in Germany deteriorated in the same period. The outlook in Germany is particularly burdened by the uncertain economic development.

In addition to the general economic development in these country markets, the overall market for information and communication technology - especially in Germany and Austria - also forms an important framework and basis for comparison for assessing the economic development of the CANCOM Group.