CANCOM SE — Investor Presentation 2014

Jul 1, 2014

CANCOM SE Germany - IT Services

Buy (old: Buy)				01-July-14
Price target: EUR 46.00 (old: EUR 43.50)			Tim Wunderlich, CFA Analyst
Price:	EUR 37.44	Next result:	Q2 14: 07.08.14
Bloomberg:	COK GR	Market cap:	EUR 557.1 m	tim.wunderlich@ha-research.de
Reuters:	COKG.DE	Enterprise Value:	EUR 516.7 m	Tel.: +49 40 4143885 81

Business stays strong; Incorporating DIDAS; Adj. Est. & PT

CANCOM remains in high growth mode. The company is seen to have achieved low double-digit organic sales growth (eH&A: 10% yoy) in April and May. Especially in the cloud environment growth remains highly dynamic at c. 30% according to management. Apart from that, demand should also be driven by "common" IT software, hardware and services. Amongst other, given the end of the Windows XP support, a lot of SMEs should have switched to Windows 7 triggering knock-on demand for new IT hardware (compare healthy figures from Intel).

Integration of latest take-over targets on track. Regarding Pironet, CANCOM should be in the process of cutting out € 1m of fixed costs relating to admin functions (e.g. marketing, finance). It expects to finalise these measures by August. Regarding US target HPM, CANCOM has successfully implemented its AHP cloud solution at the new subsidiary. This implementation was the "on the job training" of the US consultants, who are now ready to win US customers.

More info on DIDAS take-over. CANCOM will consolidate the IT service provider DIDAS on July 1. For the full year 2014E, DIDAS should generate € 50m of sales and € 1.9m of EBITDA: € 30m sales and € 1.1m EBITDA (pre integration costs) are seen to accrue in H2. CANCOM will issue c. 264,000 shares to the old owner at a price of c. € 38 (i.e. new information). The implied purchase price of c. € 10m signals a transaction multiple of c. 5x EV/EBITDA 2014E – value-accretive to CANCOM. The company expects to improve the target's EBITDA margin (currently: c. 4%) to 5% by 2015E and to 6% by 2016E driven by synergies in logistics, procurement and admin. Management has a strong track record of doing so thanks to its acquisitive past.

Action: Higher sales estimates ('14E: +9.0% / '15E: +9.3%) incorporate the DIDAS take-over as well as higher organic hardware & services growth. Also, EBIT expectations (+2% for '15E) are raised because of DIDAS (eH&A: 5% EBITDA margin in '15E) offset partly by higher PPA amortisation. For '14E, EBIT estimates are cut by 14% but only because we factor in € 5m higher PPA amortisation (not exclusively relating to DIDAS but also to previous take-overs; see next page) as well as integration costs of € 1m.

CANCOM remains a BUY with a new PT of € 46.00 (DCF) thanks to its strong position in the German IT service and Private Cloud space. – cont. –

Y/E 31.12 (EUR m)	2010	2011	2012	2013	2014E	2015E	2016E
Sales	474.6	544.4	558.1	613.8	800.7	855.0	897.0
Sales growth	36 %	15 %	3 %	10 %	30 %	7 %	5 %
EBITDA	19.0	25.0	28.1	33.4	53.2	64.8	77.2
EBIT	15.2	18.5	20.7	22.6	29.2	44.2	58.5
Net income	7.8	11.5	11.5	14.5	19.7	30.7	41.3
Net debt	-0.9	-18.5	-29.2	-62.5	-40.5	-68.7	-102.9
Net gearing	-1.8 %	-30.4 %	-36.3 %	-38.4 %	-25.3 %	-37.4 %	-47.2 %
Net Debt/EBITDA	0.0	0.0	0.0	0.0	0.0	0.0	0.0
EPS pro forma	0.92	1.14	1.06	0.99	1.33	2.06	2.77
CPS	1.28	2.18	0.89	0.87	2.05	2.74	3.28
DPS	0.15	0.30	0.35	0.40	0.45	0.50	0.67
Dividend yield	0.4 %	0.8 %	0.9 %	1.1 %	1.2 %	1.3 %	1.8 %
Gross profit margin	29.3 %	29.1 %	29.5 %	30.2 %	35.1 %	35.5 %	35.8 %
EBITDA margin	4.0 %	4.6 %	5.0 %	5.4 %	6.6 %	7.6 %	8.6 %
EBIT margin	3.2 %	3.4 %	3.7 %	3.7 %	3.6 %	5.2 %	6.5 %
ROCE	19.5 %	20.6 %	21.1 %	16.0 %	13.6 %	17.4 %	21.0 %
EV/sales	0.8	0.7	0.7	0.8	0.6	0.6	0.5
EV/EBITDA	20.2	14.6	14.1	14.5	9.7	7.5	5.9
EV/EBIT	25.3	19.8	19.2	21.4	17.7	11.1	7.8
PER	40.6	32.8	35.2	37.7	28.3	18.2	13.5
Adjusted FCF yield	3.0 %	4.3 %	3.9 %	4.4 %	6.5 %	8.4 %	10.9 %

Source: Company data, Hauck & Aufhäuser Close price as of: 30.06.2014

Source: Company data, Hauck & Aufhäuser

High/low 52 weeks:	39.48 / 17.68
Price/Book Ratio:	3.5
Relative performance (TecDAX):
3 months	3.6 %
6 months	-
12 months	70.2 %

Changes in estimates

		Sales	EBIT	EPS
	old:	734.7	34.0	1.59
2014	∆	9%	-14%	-17%
	old:	782.2	43.3	2.06
2015	∆	9%	2%	0%
	old:	829.1	56.1	2.71
2016	∆	8%	4%	2%

Key share data:

Number of shares: (in m pcs)	14.7
Authorised capital: (in € m)	4.0
Book value per share: (in €)	10.7
Ø trading volume: (12 months)	60,000

Major shareholders:

Free Float	82.9 %
AGI	13.3 %
Stefan Kober	2.3 %
Klaus Weinmann	1.6 %

Company description:

CANCOM is Germany's 3rd largest independent system house operating a scalable eCommerce business.

CANCOM SE: Trend in operating performance 2009-16E
	2009	2010	2011	2012	2013	2014E	2015E	2016E
Sales	348	475	544	558	614	801	855	897
y-o-y	17.2%	36.2%	14.7%	2.5%	10.0%	30.5%	6.8%	4.9%
Cloud Computing	n/a	n/a	n/a	10.0	15.0	72.0	83.0	95.0
y-o-y	n/a	n/a	n/a	n/a	50%	380%	15%	14%
in % of sales	n/a	n/a	n/a	2%	2%	9%	10%	11%
Traditional IT business & Other	348	475	544	548	599	729	772	802
y-o-y	17%	36%	15%	1%	9%	22%	6%	4%
in % of sales	100%	100%	100%	98%	98%	91%	90%	89%
EBITDA	9.5	19.0	25.0	28.1	33.4	53.2	64.8	77.2
EBITDA-margin	2.7%	4.0%	4.6%	5.0%	5.4%	6.6%	7.6%	8.6%
Cloud Computing	n/a	n/a	n/a	3.0	5.0	16.1	23.4	31.0
EBITDA-margin	n/a	n/a	n/a	30%	33%	22%	28%	33%
in % of EBITDA	n/a	n/a	n/a	11%	15%	30%	36%	40%
Traditional IT business & Other	9.5	19.0	25.0	25.1	28.4	37.1	41.4	46.2
EBITDA-margin	2.7%	4.0%	4.6%	4.6%	4.7%	5.1%	5.4%	5.8%
in % of EBITDA	100%	100%	100%	89%	85%	70%	64%	60%
Net income	5.1	7.8	11.5	11.5	14.5	21.2	31.4	41.3
in % of sales	1.5%	1.6%	2.1%	2.1%	2.4%	2.6%	3.7%	4.6%

Source: Company data, Hauck & Aufhäuser

CANCOM: Organic versus external growth 2013-15E

Source: Company data, Hauck & Aufhäuser

CANCOM: PPA amortisation per year 2014-16E (in € m)

Source: Company data, Hauck & Aufhäuser

Financials

Profit and loss (EUR m)	2010	2011	2012	2013	2014E	2015E	2016E
Net sales	474.6	544.4	558.1	613.8	800.7	855.0	897.0
Sales growth	36.2 %	14.7 %	2.5 %	10.0 %	30.5 %	6.8 %	4.9 %
Increase/decrease in finished goods and work-in-process	1.3	0.9	2.5	0.4	1.0	1.0	1.1
Total sales	475.8	545.3	560.6	614.2	801.7	856.0	898.1
Other operating income	3.3	0.7	0.6	1.1	0.7	0.7	0.7
Material expenses	336.3	386.6	395.1	428.7	520.0	552.5	576.7
Personnel expenses	97.0	108.0	112.4	123.2	184.0	191.4	195.1
Other operating expenses	26.8	26.4	25.8	29.9	45.2	48.0	49.8
Total operating expenses	456.8	520.3	532.5	580.8	748.6	791.3	820.9
EBITDA	19.0	25.0	28.1	33.4	53.2	64.8	77.2
Depreciation	3.8	2.8	4.0	5.5	8.3	8.7	9.5
EBITA	15.2	22.2	24.0	27.9	44.9	56.1	67.7
Amortisation of goodwill	0.0	0.0	0.0	0.3	0.0	0.0	0.0
Amortisation of intangible assets	0.0	3.7	3.4	5.0	15.7	11.9	9.2
Impairment charges	0.0	0.0	0.0	0.0	0.0	0.0	0.0
EBIT	15.2	18.5	20.7	22.6	29.2	44.2	58.5
Interest income	0.1	0.3	0.4	0.3	0.7	0.9	1.1
Interest expenses	1.9	2.2	2.1	1.4	1.4	1.0	0.9
Other financial result	0.0	0.4	0.0	-0.2	0.0	0.0	0.0
Financial result	-1.8	-1.6	-1.8	-1.2	-0.7	-0.1	0.2
Recurring pretax income from continuing operations	13.3	16.9	18.9	21.4	28.5	44.1	58.7
Extraordinary income/loss	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Earnings before taxes	13.3	16.9	18.9	21.4	28.5	44.1	58.7
Taxes	3.7	4.9	6.6	6.9	7.7	12.0	16.0
Net income from continuing operations	9.6	12.0	12.3	14.5	20.7	32.1	42.7
Result from discontinued operations (net of tax)	1.7	0.3	0.7	0.0	0.0	0.0	0.0
Net income	7.9	11.7	11.6	14.5	20.7	32.1	42.7
Minority interest	0.1	0.2	0.1	0.0	1.0	1.4	1.5
Net income (net of minority interest)	7.8	11.5	11.5	14.5	19.7	30.7	41.3
Average number of shares	10.3	10.4	10.6	11.8	14.7	14.9	14.9
EPS reported	0.76	1.11	1.09	1.23	1.34	2.06	2.77

Profit and loss (common size)	2010	2011	2012	2013	2014E	2015E	2016E
Net sales	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %
Increase/decrease in finished goods and work-in-process	0.3 %	0.2 %	0.5 %	0.1 %	0.1 %	0.1 %	0.1 %
Total sales	100.3 %	100.2 %	100.5 %	100.1 %	100.1 %	100.1 %	100.1 %
Other operating income	0.7 %	0.1 %	0.1 %	0.2 %	0.1 %	0.1 %	0.1 %
Material expenses	70.9 %	71.0 %	70.8 %	69.8 %	64.9 %	64.6 %	64.3 %
Personnel expenses	20.4 %	19.8 %	20.1 %	20.1 %	23.0 %	22.4 %	21.8 %
Other operating expenses	5.7 %	4.8 %	4.6 %	4.9 %	5.6 %	5.6 %	5.6 %
Total operating expenses	96.3 %	95.6 %	95.4 %	94.6 %	93.5 %	92.5 %	91.5 %
EBITDA	4.0 %	4.6 %	5.0 %	5.4 %	6.6 %	7.6 %	8.6 %
Depreciation	0.8 %	0.5 %	0.7 %	0.9 %	1.0 %	1.0 %	1.1 %
EBITA	3.2 %	4.1 %	4.3 %	4.5 %	5.6 %	6.6 %	7.5 %
Amortisation of goodwill	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Amortisation of intangible assets	0.0 %	0.7 %	0.6 %	0.8 %	2.0 %	1.4 %	1.0 %
Impairment charges	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
EBIT	3.2 %	3.4 %	3.7 %	3.7 %	3.6 %	5.2 %	6.5 %
Interest income	0.0 %	0.1 %	0.1 %	0.1 %	0.1 %	0.1 %	0.1 %
Interest expenses	0.4 %	0.4 %	0.4 %	0.2 %	0.2 %	0.1 %	0.1 %
Other financial result	0.0 %	0.1 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Financial result	-0.4 %	-0.3 %	-0.3 %	-0.2 %	-0.1 %	0.0 %	0.0 %
Recurring pretax income from continuing operations	2.8 %	3.1 %	3.4 %	3.5 %	3.6 %	5.2 %	6.5 %
Extraordinary income/loss	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Earnings before taxes	2.8 %	3.1 %	3.4 %	3.5 %	3.6 %	5.2 %	6.5 %
Tax rate	28.1 %	28.8 %	35.0 %	32.4 %	27.2 %	27.2 %	27.2 %
Net income from continuing operations	2.0 %	2.2 %	2.2 %	2.4 %	2.6 %	3.8 %	4.8 %
Income from discontinued operations (net of tax)	0.4 %	0.1 %	0.1 %	0.0 %	0.0 %	0.0 %	0.0 %
Net income	1.7 %	2.1 %	2.1 %	2.4 %	2.6 %	3.8 %	4.8 %
Minority interest	0.0 %	0.0 %	0.0 %	0.0 %	0.1 %	0.2 %	0.2 %
Net income (net of minority interest)	1.6 %	2.1 %	2.1 %	2.4 %	2.5 %	3.6 %	4.6 %

Balance sheet (EUR m)	2010	2011	2012	2013	2014E	2015E	2016E
Intangible assets	42.5	39.6	41.2	55.3	107.0	101.0	97.5
Property, plant and equipment	9.7	12.9	17.6	20.5	31.9	34.2	37.3
Financial assets	3.2	2.2	5.0	35.0	6.0	6.0	6.0
FIXED ASSETS	55.4	54.6	63.8	110.8	144.9	141.2	140.7
Inventories	13.4	15.0	8.7	15.5	15.4	16.8	17.6
Accounts receivable	68.0	72.2	88.3	112.9	120.0	126.5	132.7
Other current assets	6.4	7.2	0.9	1.1	1.1	1.1	1.1
Liquid assets	31.5	44.4	44.6	77.7	103.3	122.7	155.8
Deferred taxes	0.7	0.6	1.1	1.8	1.8	1.8	1.8
Deferred charges and prepaid expenses	2.0	0.9	1.1	1.7	1.7	1.7	1.7
CURRENT ASSETS	122.0	140.2	144.8	210.7	243.2	270.5	310.6
TOTAL ASSETS	177.4	194.9	208.6	321.5	388.1	411.6	451.3
SHAREHOLDERS EQUITY	50.9	60.7	80.6	162.8	159.9	183.9	217.7
MINORITY INTEREST	0.1	0.2	0.2	0.1	17.9	19.3	20.8
Long-term debt	29.0	16.7	14.1	14.4	62.0	53.2	52.2
Provisions for pensions and similar obligations	0.1	0.1	0.1	0.1	0.1	0.1	0.1
Other provisions	3.2	7.6	5.1	4.4	4.4	4.4	4.4
Non-current liabilities	32.2	24.4	19.3	18.9	66.5	57.7	56.7
short-term liabilities to banks	1.6	9.1	1.3	0.8	0.8	0.8	0.8
Accounts payable	64.4	72.9	76.9	99.0	103.1	110.1	115.5
Advance payments received on orders	1.5	1.9	3.6	6.6	6.6	6.6	6.6
Other liabilities (incl. from lease and rental contracts)	16.3	17.4	18.8	23.5	23.5	23.5	23.5
Deferred taxes	4.3	2.7	2.8	5.2	5.2	5.2	5.2
Deferred income	6.0	5.6	5.1	4.6	4.6	4.6	4.6
Current liabilities	94.2	109.6	108.6	139.7	143.8	150.8	156.2
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	177.4	194.9	208.6	321.5	388.1	411.6	451.3

Balance sheet (common size)	2010	2011	2012	2013	2014E	2015E	2016E
Intangible assets	24.0 %	20.3 %	19.8 %	17.2 %	27.6 %	24.5 %	21.6 %
Property, plant and equipment	5.5 %	6.6 %	8.4 %	6.4 %	8.2 %	8.3 %	8.3 %
Financial assets	1.8 %	1.1 %	2.4 %	10.9 %	1.5 %	1.5 %	1.3 %
FIXED ASSETS	31.2 %	28.0 %	30.6 %	34.5 %	37.3 %	34.3 %	31.2 %
Inventories	7.5 %	7.7 %	4.2 %	4.8 %	4.0 %	4.1 %	3.9 %
Accounts receivable	38.3 %	37.1 %	42.3 %	35.1 %	30.9 %	30.7 %	29.4 %
Other current assets	3.6 %	3.7 %	0.4 %	0.3 %	0.3 %	0.3 %	0.2 %
Liquid assets	17.7 %	22.8 %	21.4 %	24.2 %	26.6 %	29.8 %	34.5 %
Deferred taxes	0.4 %	0.3 %	0.5 %	0.5 %	0.5 %	0.4 %	0.4 %
Deferred charges and prepaid expenses	1.1 %	0.4 %	0.5 %	0.5 %	0.4 %	0.4 %	0.4 %
CURRENT ASSETS	68.8 %	72.0 %	69.4 %	65.5 %	62.7 %	65.7 %	68.8 %
TOTAL ASSETS	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %
SHAREHOLDERS EQUITY	28.7 %	31.2 %	38.6 %	50.6 %	41.2 %	44.7 %	48.2 %
MINORITY INTEREST	0.0 %	0.1 %	0.1 %	0.0 %	4.6 %	4.7 %	4.6 %
Long-term debt	16.3 %	8.6 %	6.8 %	4.5 %	16.0 %	12.9 %	11.6 %
Provisions for pensions and similar obligations	0.0 %	0.0 %	0.1 %	0.0 %	0.0 %	0.0 %	0.0 %
Other provisions	1.8 %	3.9 %	2.4 %	1.4 %	1.1 %	1.1 %	1.0 %
Non-current liabilities	18.2 %	12.5 %	9.3 %	5.9 %	17.1 %	14.0 %	12.6 %
short-term liabilities to banks	0.9 %	4.7 %	0.6 %	0.2 %	0.2 %	0.2 %	0.2 %
Accounts payable	36.3 %	37.4 %	36.9 %	30.8 %	26.6 %	26.7 %	25.6 %
Advance payments received on orders	0.9 %	1.0 %	1.7 %	2.0 %	1.7 %	1.6 %	1.5 %
Other liabilities (incl. from lease and rental contracts)	9.2 %	9.0 %	9.0 %	7.3 %	6.1 %	5.7 %	5.2 %
Deferred taxes	2.4 %	1.4 %	1.4 %	1.6 %	1.3 %	1.3 %	1.2 %
Deferred income	3.4 %	2.9 %	2.4 %	1.4 %	1.2 %	1.1 %	1.0 %
Current liabilities	53.1 %	56.2 %	52.0 %	43.4 %	37.0 %	36.6 %	34.6 %
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %

Cash flow statement (EUR m)	2010	2011	2012	2013	2014E	2015E	2016E
Net profit/loss	7.9	11.7	11.6	14.5	20.7	32.1	42.7
Depreciation of fixed assets (incl. leases)	3.8	2.8	4.0	5.5	8.3	8.7	9.5
Amortisation of goodwill	0.0	0.0	0.0	0.3	0.0	0.0	0.0
Amortisation of intangible assets	0.0	3.7	3.4	5.0	15.7	11.9	9.2
Others	3.0	4.7	2.9	3.3	0.0	0.0	0.0
Cash flow from operations before changes in w/c	14.7	22.9	21.9	28.5	44.7	52.7	61.4
Increase/decrease in inventory	0.3	-6.3	6.2	-6.7	0.1	-1.4	-0.8
Increase/decrease in accounts receivable	-15.2	-5.2	-16.1	-24.7	-7.0	-6.5	-6.2
Increase/decrease in accounts payable	17.1	15.3	4.0	22.1	4.1	7.0	5.4
Increase/decrease in other working capital positions	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Increase/decrease in working capital	2.2	3.8	-5.8	-9.3	-2.8	-0.9	-1.6
Cash flow from operating activities	16.9	26.7	16.1	19.2	41.9	51.8	59.8
CAPEX	8.1	9.4	12.5	8.1	24.1	15.2	16.6
Payments for acquisitions	10.5	3.6	0.1	1.4	30.0	1.7	1.7
Financial investments	-0.1	-0.3	0.0	26.0	0.0	0.0	0.0
Income from asset disposals	1.1	4.8	2.0	0.5	0.0	0.0	0.0
Cash flow from investing activities	-17.3	-7.9	-10.6	-35.2	-54.1	-16.9	-18.2
Cash flow before financing	-0.4	18.8	5.5	-16.0	-12.2	34.9	41.6
Increase/decrease in debt position	8.1	-2.6	-11.9	-1.1	45.0	-8.8	-1.0
Purchase of own shares	-0.6	0.0	0.0	0.0	0.0	0.0	0.0
Capital measures	0.0	0.0	11.2	54.6	0.0	0.0	0.0
Dividends paid	1.5	1.6	3.3	4.0	5.8	6.7	7.4
Others	-1.3	-1.6	-1.4	-0.3	-1.4	0.0	0.0
Effects of exchange rate changes on cash	0.1	0.0	0.0	0.0	0.0	0.0	0.0
Cash flow from financing activities	5.9	-5.8	-5.3	49.1	37.8	-15.5	-8.4
Increase/decrease in liquid assets	5.6	13.0	0.2	33.1	25.5	19.4	33.1
Liquid assets at end of period	31.5	44.5	44.6	77.7	103.3	122.7	155.8

Source: Company data, Hauck & Aufhäuser

2010	2011	2012	2013	2014E	2015E	2016E
						0.0
						n/a
32.9	42.4	29.0	30.7	39.2	41.0	0.0
-9.6 %	28.9 %	-31.7 %	6.0 %	27.8 %	4.6 %	n/a
n/a	n/a	n/a	n/a	n/a	n/a	0.0
n/a	n/a	n/a	n/a	n/a	n/a	n/a
n/a	n/a	n/a	n/a	n/a	n/a	0.0
n/a	n/a	n/a	n/a	n/a	n/a	n/a
n/a	n/a	n/a	n/a	n/a	n/a	0.0
n/a	n/a	n/a	n/a	n/a	n/a	n/a
474.6	544.4	558.1	613.8	800.7	855.0	0.0
12.3 %	14.7 %	2.5 %	10.0 %	30.5 %	6.8 %	n/a
	441.7 14.4 %	502.0 13.7 %	529.1 5.4 %	583.1 10.2 %	761.5 30.6 %	814.0 6.9 %

Key ratios (EUR m)	2010	2011	2012	2013	2014E	2015E	2016E
P&L growth analysis
Sales growth	36.2 %	14.7 %	2.5 %	10.0 %	30.5 %	6.8 %	4.9 %
EBITDA growth	100.7 %	31.6 %	12.2 %	18.9 %	59.2 %	21.8 %	19.2 %
EBIT growth	114.0 %	21.7 %	12.0 %	9.6 %	28.7 %	51.5 %	32.5 %
EPS growth	55.5 %	46.4 %	-2.1 %	13.7 %	8.3 %	54.1 %	34.6 %
Efficiency
Total operating costs / sales	96.3 %	95.6 %	95.4 %	94.6 %	93.5 %	92.5 %	91.5 %
Sales per employee	257.7	273.1	270.9	289.1	360.7	369.3	760.2
EBITDA per employee	10.3	12.5	13.6	15.7	23.9	28.0	65.4
Balance sheet analysis
Avg. working capital / sales	2.8 %	2.6 %	2.6 %	3.2 %	3.0 %	3.1 %	3.1 %
Inventory turnover (sales/inventory)	35.5	36.3	63.8	39.6	52.0	51.0	51.0
Trade debtors in days of sales	52.3	48.4	57.7	67.2	54.7	54.0	54.0
A/P turnover [(A/P*365)/sales]	49.6	48.9	50.3	58.9	47.0	47.0	47.0
Cash conversion cycle (days)	-3.1	-6.3	-5.3	-3.9	-6.9	-7.7	-8.0
Cash flow analysis
Free cash flow	8.8	17.3	3.6	11.1	17.8	36.6	43.2
Free cash flow/sales	1.9 %	3.2 %	0.6 %	1.8 %	2.2 %	4.3 %	4.8 %
FCF / net profit	113.1 %	150.3 %	31.4 %	76.2 %	90.2 %	119.4 %	104.7 %
Capex / depn	206.6 %	139.0 %	169.0 %	318.6 %	100.4 %	73.8 %	88.7 %
Capex / maintenance capex	133.1 %	151.6 %	n/a	112.8 %	172.8 %	100.0 %	114.2 %
Capex / sales	1.7 %	1.7 %	n/a	n/a	n/a	n/a	n/a
Security
Net debt	-0.9	-18.5	-29.2	-62.5	-40.5	-68.7	-102.9
Net Debt/EBITDA	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Net debt / equity Interest cover	0.0 8.0	-0.3 8.3	-0.4 9.7	-0.4 16.5	-0.3 20.8	-0.4 44.2	-0.5 65.0
Dividend payout ratio	19.7 %	26.7 %	34.7 %	40.2 %	34.0 %	24.3 %	24.3 %
Asset utilisation
Capital employed turnover	5.6	5.8	5.5	3.4	3.3	3.3	3.0
Operating assets turnover	18.9	21.5	16.4	14.2	13.9	14.1	13.7
Plant turnover	49.0	42.2	31.8	30.0	25.1	25.0	24.1
Inventory turnover (sales/inventory)	35.5	36.3	63.8	39.6	52.0	51.0	51.0
Returns
ROCE	19.5 %	20.6 %	21.1 %	16.0 %	13.6 %	17.4 %	21.0 %
ROE	15.4 %	19.0 %	14.2 %	8.9 %	12.3 %	16.7 %	19.0 %
Other
Interest paid / avg. debt	7.2 %	7.9 %	10.3 %	9.0 %	3.6 %	1.7 %	1.7 %
No. employees (average)	1842	1994	2060	2123	2220	2315	1180
Number of shares	10.3	10.4	10.6	11.8	14.7	14.9	14.9
DPS	0.2	0.3	0.4	0.4	0.5	0.5	0.7
EPS reported	0.76	1.11	1.09	1.23	1.34	2.06	2.77
Valuation ratios
P/BV	7.6	6.4	5.3	3.4	3.5	3.0	2.6
EV/sales	0.8	0.7	0.7	0.8	0.6	0.6	0.5
EV/EBITDA	20.2	14.6	14.1	14.5	9.7	7.5	5.9
EV/EBITA	25.3	16.5	16.5	17.4	11.5	8.7	6.7
EV/EBIT	25.3	19.8	19.2	21.4	17.7	11.1	7.8
EV/FCF	43.4	21.1	110.0	43.8	29.1	13.3	10.5
Adjusted FCF yield	3.0 %	4.3 %	3.9 %	4.4 %	6.5 %	8.4 %	10.9 %
Dividend yield	0.4 %	0.8 %	0.9 %	1.1 %	1.2 %	1.3 %	1.8 %

Disclosures regarding research publications of Hauck & Aufhäuser Institutional Research AG pursuant to section 34b of the German Securities Trading Act (WpHG) and the regulations of the German Financial Analysis Ordinance (FinAnV)

Pursuant to section 34b of the German Securities Trading Act (WpHG) and section 5 of the Financial Analysis Ordinance (FinAnV) a research report has to point out possible conflicts of interest in connection with the analysed company. A conflict of interest is presumed to exist in particular if Hauck & Aufhäuser Institutional Research AG

• (1) or its affiliate(s) was, within the past twelve months, a member in a consortium that acquired the financial instruments of the analysed company,
• (2) has entered into an agreement on the production of the research report with the analysed company,
• (3) or its affiliate(s) has, within the past twelve months, been party to an agreement on the provision of investment banking services with the analysed company or have received services or a promise of services under the term of such an agreement,
• (4) or its affiliate(s) holds 5% or more of the share capital of the analysed company,
• (5) or its affiliate(s) regularly holds a trading position in shares of the analysed company or derivatives thereof,
• (6) or its affiliate(s) manages the financial instruments of the analysed company on the basis of an existing contractual relationship,
• (7) or the analyst has any other significant financial interests relating to the analysed company such as, for example, exercising mandates in the interest of the analysed company.
• (8) The research report has been made available to the company prior to its publication. Thereafter, only factual changes have been made to the report.

Conflicts of interest that existed at the time when this research report was published:

Company	Disclosure
CANCOM SE	2, 3, 5, 7

Buy	63.48 %	100.00 %
Sell	13.04 %	0.00 %
Hold	23.48 %	0.00 %

1. General Information/Liabilities

This research report has been produced for the information purposes of institutional investors only, and is not in any way a recommendation, offer or solicitation to buy or sell the financial instruments mentioned herein. The document is confidential and is made available by Hauck & Aufhäuser Institutional Research AG (the ʺCompanyʺ), a majority-owned subsidiary of Hauck & Aufhäuser Privatbankiers KGaA, exclusively to selected recipients [in DE, GB, FR, CH, US, Scandinavia, and Benelux or, in individual cases, also in other countries]. A distribution to private investors in the sense of the German Securities Trading Act (WpHG) is excluded. It is not allowed to pass the research report on to persons other than the intended recipient without the permission of the Company. Reproduction of this document, in whole or in part, is not permitted without prior permission of the Company. All rights reserved.

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Past performance of a financial instrument is not necessarily indicative of future performance.

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This research report was prepared by the research analyst named on the front page (the ʺProducerʺ). The Producer is solely responsible for the views and estimates expressed in this report. The report has been prepared independently, i.e. the content of which was not independently examined by the Company or Hauck & Aufhäuser Privatbankiers KGaA.

The estimates and views in this financial report may deviate from those of Hauck & Aufhäuser Privatbankiers KGaA.

The content of the research report was not influenced by the issuer of the analysed financial instrument at any time. It may be possible that parts of the research report were handed out to the issuer for information purposes prior to the publication without any major amendments being made thereafter.

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The Company and Hauck & Aufhäuser Privatbankiers KGaA took internal organisational and regulative precautions to avoid or accordingly disclose possible conflicts of interest in connection with the preparation and distribution of the research report. All members of the Company involved in the preparation of the research report are subject to internal compliance regulations.

No part of the Producer's compensation is directly or indirectly related to the preparation of this financial analysis.

4. Information Concerning the Methods of Valuation/Update

The determination of the fair value per share, i.e. the price target, and the resultant recommendation is done on the basis of the adjusted free cash flow (adj. FCF) method and on the basis of the discounted cash flow – DCF model. Furthermore, a peer group comparison is made.

The adj. FCF method is based on the assumption that investors purchase assets only at a price (enterprise value) at which the operating cash flow return after taxes on this investment exceeds their opportunity costs in the form of a hurdle rate of 7.5%. The operating cash flow is calculated as EBITDA less maintenance capex and taxes.

Within the framework of the DCF approach, the future free cash flows are calculated initially on the basis of a fictitious capital structure of 100% equity, i.e. interest and repayments on debt capital are not factored in initially. The adjustment towards the actual capital structure is done by discounting the calculated free cash flows with the weighted average cost of capital (WACC), which takes into account both the cost of equity capital and the cost of debt. After discounting, the calculated total enterprise value is reduced by the interest-bearing debt capital in order to arrive at the equity value.

Hauck & Aufhäuser Institutional Research uses the following three-step rating system for the analysed companies:

Buy: Sustainable upside potential of more than 10% within 12 months Sell: Sustainable downside potential of more than 10% within 12 months. Hold: Upside/downside potential is limited. No immediate catalyst visible.

NB: The recommendations of Hauck & Aufhäuser Institutional Research are not based on a performance that is expected to be "relative" to the market.

The decision on the choice of the financial instruments analysed in this document was solely made by the Company. The opinions and estimates in this research report are subject to change without notice. It is within the discretion of the Company whether and when it publishes an update to this research report.

5. Major Sources of Information

Part of the information required for this research report was made available by the issuer of the financial instrument. Furthermore, this report is based on publicly available sources (such as, for example, Bloomberg, Reuters, VWD-Trader and the relevant daily press) believed to be reliable. The Company has checked the information for plausibility but not for accuracy or completeness.

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Hauck & Aufhäuser Research

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Michael Bentlage

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Hauck & Aufhäuser Sales Trading

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Mirko Brueggemann

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Nils-Peter Gehrmann Analyst Tel.: +49 (0)40 414 3885 - 86 E-Mail: nils-peter.gehrmann@ha-research.de

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Torben Teichler Analyst Tel.: +49 (0)40 414 3885 - 74 E-Mail: torben.teichler@ha-research.de

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Hugues Madelin Sales Tel.: +33 1 78 41 40 62 E-Mail: hugues.madelin@ha-research.de Hamish Edsell Sales Tel.: +44 207 125 0988 E-Mail: hamish.edsell@ha-research.de

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Tel.: +49 (0) 69 2161- 0 Fax: +49 (0) 69 2161- 1340 Email: info@hauck-aufhaeuser.de www.hauck-aufhaeuser.de

Christian von Schuler Trading Tel.: +49 (0)40 414 3885 77 E.Mail: christian.schuler@hauck-aufhaeuser.de Carolin Weber Middle-Office Tel.: +49 (0)40 414 3885 87 E.Mail: carolin.weber@hauck-aufhaeuser.de