CANCOM SE — Investor Presentation 2014

May 15, 2014

(TecDAX, Software/IT)

		Value Indicators:	EUR	Share data:		Description:
Buy		DCF:	43.10	Bloomberg:	COK GR
		FCF-Value Potential 16e:	40.00	Reuters:	COKG	One of the three largest independent system houses in Germany
EUR 43.00				ISIN:	DE0005419105
		Market Snapshot:	EUR m	Shareholders:		Risk Profile (WRe):	2014e
		Market cap:	513.0	Freefloat	96.0 %	Beta:	1.2
Price	EUR 35.13	No. of shares (m):	14.6	Klaus Weinmann (CEO)	2.0 %	Price / Book:	2.9 x
Upside	22.4 %	EV:	473.1	S. Kober (Superv. Board)	2.0 %	Equity Ratio:	47 %
		Freefloat MC:	492.5			Net Fin. Debt / EBITDA:	-0.8 x
		Ø Trad. Vol. (30d; EUR):	4.75 m			Net Debt / EBITDA:	-0.8 x

Final Q1: Cloud reported separately

Stated Figures Q1/2014:								Comment on Figures:
Figures in EUR m		Q1/14 Q1/14e	Q1/13	yoy	2014e	2013	yoy	The new Cloud Solutions segment comprises the cloud business (also
Sales	185.4	185.4	135.1	37.3%	780.0	613.8	27.1%	the related consulting and implementation) as well as the managed services business.
EBITDA	10.1	10.1	7.0	45.1%	51.5	33.4	54.2%	The IT Solutions segment includes CANCOM's traditional business
margin	5.5%	5.4%	5.2%		6.6%	5.4%		which encompasses IT consulting, system integration, procurement and
EBIT	4.8	4.1	4.8	-0.9%	30.5	22.6	34.6%	e-commerce.
margin	2.6%	2.2%	3.6%		3.9%	3.7%		The recent acquisitions including Pironet (part of the Cloud Solutions
EBIT adjusted	7.2	7.0	5.1	40.8%	42.4	22.6	87.0%	segment), on line Datensysteme and HPM contributed to top-line growth.
margin	3.9%	3.8%	3.8%		5.4%	3.7%		M&A-related costs of EUR 0.5m negatively impacted the bottom line.
EPS	0.21	0.17	0.28	-25.0%	1.38	1.23	12.2%	Thus, adj. EBITDA was EUR 10.6m. Further adjustments at EBIT level
margin	0.1%	0.1%	0.2%		0.2%	0.2%		are related to PPA-amortisation.
EPS adjusted	0.33	0.31	0.30	10.0%	1.94	1.32	47.0%	The number of shares increased from 11.4m to more than 14m due to
Cloud Solutions	20.7	n.a.	10.8	92.7%	0.0	0.0	-	the capital increase in conjunction with the Pironet acquisition as well as
EBITDA Cloud Solutions	4.3	n.a.	2.2	99.3%	0.0	0.0	-	the acquisition of on line Datensysteme. Thus, adj. EPS grew only
margin	21.0%	-	20.3%		-	-		slightly.
IT Solutions	164.7	n.a.	124.3	32.5%	0.0	0.0	-	Organic growth is expected to have reached a double-digit rate.
EBITDA IT Solutions	8.6	n.a.	6.4	34.6%	0.0	0.0	-
margin	5.2%	-	5.2%		-	-

CANCOM has released final Q1 figures, confirming preliminaries.

Along with the figures, the company also introduced a new segment structure. CANCOM now reports the cloud computing business separately, which soared by more than 90% yoy. This increase was supported by Pironet's Cloud Computing segment which recorded revenues of EUR 9.6m (+13% yoy) in Q1. We assume that HPM Networks figures are also included in the Q1 2014 figures as the company has been consolidated since March. Adjusting the figures for Pironet raises the question of CANCOM's organic growth in the cloud which needs further clarification.

CANCOM is among the early movers in the cloud computing market for mid-sized enterprises. Via the Pironet acquisition, CANCOM has strengthened its position in order to monetise its cloud portfolio, which is composed of its proprietary cloud architecture software AHP Private Cloud as well as its data centres which have become part of the CANCOM group since the acquisition of Pironet. The acquisition of HPM Networks in the U.S., a value-added reseller in the area of cloud infrastructure, will serve as a hub in order to expand in the U.S. market. HP will also play a role in CANCOM's German operations in the context of a cooperation agreement: The IT giant will market CANCOM's proprietary AHP Private Cloud solution to mid-sized companies with 500-7,000 PC seats. The Buy rating as well as the PT of EUR 43 are reiterated.

	FY End: 31.12.	CAGR
	in EUR m	(13-16e)	2010	2011	2012	2013	2014e	2015e	2016e
	Sales	12.8 %	474.6	544.4	558.1	613.8	780.0	830.0	880.0
	Change Sales yoy		12.3 %	14.7 %	2.5 %	10.0 %	27.1 %	6.4 %	6.0 %
	Gross profit margin		29.4 %	29.1 %	29.7 %	30.2 %	31.2 %	30.8 %	30.8 %
	EBITDA	27.9 %	19.0	25.0	28.1	33.4	51.5	63.7	69.8
	Margin		4.0 %	4.6 %	5.0 %	5.4 %	6.6 %	7.7 %	7.9 %
	EBIT adj.	37.8 %	15.2	18.5	20.7	22.6	42.4	53.4	59.3
	EBIT	32.6 %	15.2	18.5	20.7	22.6	30.5	44.9	52.8
	Margin		3.2 %	3.4 %	3.7 %	3.7 %	3.9 %	5.4 %	6.0 %
	Net income	35.0 %	7.8	11.5	11.5	14.5	20.2	30.3	35.8
	EPS	24.8 %	0.76	1.11	1.09	1.23	1.38	2.03	2.39
	DPS	14.5 %	0.15	0.30	0.35	0.40	0.45	0.50	0.60
Rel. Performance vs TecDAX:	Dividend Yield		2.2 %	3.4 %	2.9 %	2.0 %	1.3 %	1.4 %	1.7 %
	FCFPS		0.86	1.67	0.34	0.94	2.64	2.69	2.65
1 month:	12.3 % EV / Sales		0.1 x	0.1 x	0.2 x	0.3 x	0.6 x	0.6 x	0.5 x
6 months:	21.1 % EV / EBITDA		3.7 x	2.9 x	3.5 x	5.2 x	9.2 x	7.2 x	6.2 x
Year to date:	7.8 % EV / EBIT		4.6 x	3.9 x	4.7 x	7.7 x	15.5 x	10.3 x	8.2 x
Trailing 12 months:	EV / EBIT adj. 75.8 %		4.6 x	3.9 x	4.7 x	7.7 x	11.2 x	8.6 x	7.3 x
	P / E		9.0 x	8.0 x	11.0 x	16.4 x	25.4 x	17.3 x	14.7 x
Company events:	FCF Yield Potential		9.1 %	15.7 %	9.8 %	10.9 %	5.2 %	8.9 %	10.3 %
25.06.14	AGM Net Debt		-0.8	-20.5	-29.1	-62.4	-39.9	-71.0	-97.6
07.08.14	Q2 ROE		16.5 %	20.6 %	16.2 %	11.9 %	12.5 %	17.7 %	18.4 %
11.11.14	ROCE (NOPAT) Q3		24.1 %	29.0 %	29.1 %	20.1 %	17.8 %	23.6 %	29.1 %
	Guidance:	2014: EBITDA EUR 50m
A n a l y s t

Andreas Wolf awolf@warburg-research.com +49 40 309537-140

Company Background

• Cancom is the third-largest independent system house in Germany.
• The range of products and services the company offers includes the sale of hardware and software of all the main producers as well as IT-services (conception, integration and operation of IT systems).
• The company employs more than 2,000 people in more than 30 locations in Germany and Austria. More than half of the employees work in the service business areas.

Competitive Quality

• The German system house market is intensely competitive and strongly fragmented. As one of the largest system houses in Germany, Cancom achieves competitive advantages over most of its smaller competitors with…
• …favourable purchasing conditions
• …the wide range of products and services offered as a one-stop-shop supplier
• …its presence in more than 30 locations in Germany, which contributes to a high quality of service on location.
• Acquisitions are a part of the company strategy. These serve to improve purchasing conditions, to build up regional presence and extend the range of products and services on offer.

DCF model Detailed forecast period Transitional period Term. Value Figures in EUR m 2014e 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e Sales 780.0 830.0 880.0 909.0 937.5 965.5 992.8 1,019.5 1,045.5 1,070.9 1,095.5 1,119.5 1,141.9 Sales change 27.1 % 6.4 % 6.0 % 3.3 % 3.1 % 3.0 % 2.8 % 2.7 % 2.6 % 2.4 % 2.3 % 2.2 % 2.0 % 2.0 % EBIT 30.5 44.9 52.8 57.3 59.1 60.8 62.5 64.2 65.9 67.5 69.0 70.5 71.9 EBIT-margin 3.9 % 5.4 % 6.0 % 6.3 % 6.3 % 6.3 % 6.3 % 6.3 % 6.3 % 6.3 % 6.3 % 6.3 % 6.3 % Tax rate (EBT) 30.5 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % NOPAT 21.2 31.4 37.0 40.1 41.3 42.6 43.8 45.0 46.1 47.2 48.3 49.4 50.4 Depreciation 21.0 18.8 17.0 13.6 14.1 14.5 14.9 15.3 15.7 16.1 16.4 16.8 17.1 in % of Sales 2.7 % 2.3 % 1.9 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % Changes in provisions -0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Change in Liquidity from - Working Capital -10.6 -0.9 3.5 4.4 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 - Capex 19.7 10.5 10.5 15.0 15.5 15.9 16.4 16.8 17.3 17.7 18.1 18.5 18.8 Capex in % of Sales 2.5 % 1.3 % 1.2 % 1.7 % 1.7 % 1.7 % 1.7 % 1.7 % 1.7 % 1.7 % 1.7 % 1.7 % 1.7 % Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Free Cash Flow (WACC Model) 33.0 40.6 40.0 34.3 39.3 40.5 41.7 42.8 44.0 45.1 46.1 47.2 48.2 49 PV of FCF 33.0 37.3 33.7 26.6 27.9 26.4 25.0 23.6 22.2 20.9 19.6 18.4 17.3 254 share of PVs 17.75 % 38.87 % 43.39 % Model parameter Valuation (m) Derivation of WACC: Derivation of Beta: Present values 2026e 332 Terminal Value 254 Debt ratio 5.00 % Financial Strength 1.20 Financial liabilities 15 Cost of debt (after tax) 2.5 % Liquidity (share) 1.20 Pension liabilities 0 Market return 8.00 % Cyclicality 1.20 Hybrid capital 0

WACC 8.92 % Beta 1.23 Equity Value 631 Value per share (EUR) 43.14

Sensitivity Value per Share (EUR)

	Terminal Growth								Delta EBIT-margin
Beta WACC	1.25 %	1.50 %	1.75 %	2.00 %	2.25 %	2.50 %	2.75 %	Beta WACC	-1.5 pp	-1.0 pp		-0.5 pp +0.0 pp	+0.5 pp	+1.0 pp	+1.5 pp
1.42 9.9 %	37.16	37.52	37.92	38.33	38.78	39.25	39.76	1.42 9.9 %	29.62	32.52	35.43	38.33	41.24	44.14	47.05
1.33 9.4 %	39.17	39.61	40.08	40.58	41.11	41.68	42.30	1.33 9.4 %	31.30	34.39	37.48	40.58	43.67	46.76	49.85
1.28 9.2 %	40.27	40.75	41.26	41.81	42.40	43.04	43.72	1.28 9.2 %	32.23	35.43	38.62	41.81	45.01	48.20	51.40
1.23 8.9 %	41.44	41.97	42.54	43.14	43.79	44.50	45.26	1.23 8.9 %	33.23	36.53	39.84	43.14	46.45	49.75	53.06
1.18 8.7 %	42.70	43.28	43.90	44.57	45.29	46.07	46.92	1.18 8.7 %	34.30	37.73	41.15	44.57	47.99	51.42	54.84
1.13 8.4 %	44.04	44.68	45.37	46.11	46.91	47.78	48.73	1.13 8.4 %	35.46	39.01	42.56	46.11	49.66	53.21	56.76
1.04 7.9 %	47.03	47.81	48.66	49.58	50.58	51.68	52.87	1.04 7.9 %	38.06	41.90	45.74	49.58	53.42	57.26	61.10

Others 1.25 Market val. of investments 0

Liquidity 78 No. of shares (m) 14.6

In the long term, company growth is expected to match the growth of the German IT market.

Risk free rate 2.50 % Transparency 1.30 Minority interest 18

Working capital requirements are low despite reseller activities.

Minorities are related to the 25% free float share in Pironet.

Free Cash Flow Value Potential

Warburg Research's valuation tool "FCF Value Potential" reflects the ability of the company to generate sustainable free cash flows. It is based on the "FCF potential" - a FCF "ex growth" figure - which assumes unchanged working capital and pure maintenance capex. A value indication is derived by discounting the "FCF potential" of a given year with the weighted costs of capital. The fluctuating value indications over time add a timing element to the DCF model (our preferred valuation tool).

in EUR m	2010	2011	2012	2013	2014e	2015e	2016e
Net Income before minorities	7.9	11.7	11.6	14.5	20.8	31.0	36.6
+ Depreciation + Amortisation	3.8	6.6	7.4	10.7	21.0	18.8	17.0
- Net Interest Income	-1.8	-1.6	-1.8	-1.2	-0.6	-0.6	-0.6
- Maintenance Capex	7.2	8.5	11.3	7.3	17.7	9.5	9.5
+ Other	0.0	0.0	0.0	0.0	0.0	0.0	0.0
= Free Cash Flow Potential	6.4	11.3	9.5	19.1	24.6	40.9	44.7
Free Cash Flow Yield Potential	9.1 %	15.7 %	9.8 %	10.9 %	5.2 %	8.9 %	10.3 %
WACC	8.92 %	8.92 %	8.92 %	8.92 %	8.92 %	8.92 %	8.92 %
= Enterprise Value (EV)	69.8	72.2	97.3	174.9	473.1	460.0	433.4
= Fair Enterprise Value	71.2	126.9	106.5	214.2	276.1	458.7	501.0
- Net Debt (Cash)	-62.5	-62.5	-62.5	-62.5	-39.9	-71.0	-97.6
- Pension Liabilities	0.1	0.1	0.1	0.1	0.0	0.0	0.0
- Other	0.0	0.0	0.0	0.0	0.0	0.0	0.0
- Market value of minorities	0.0	0.0	0.0	0.0	0.0	18.0	18.0
+ Market value of investments	0.0	0.0	0.0	0.0	0.0	0.0	0.0
= Fair Market Capitalisation	133.7	189.4	168.9	276.6	315.9	511.7	580.6
No. of shares (total) (m)	14.6	14.6	14.6	14.6	14.6	14.6	14.6
= Fair value per share (EUR)	9.14	12.96	11.56	18.92	21.62	35.01	39.72
premium (-) / discount (+) in %					-38.4 %	-0.3 %	13.2 %
Sensitivity Fair value per Share (EUR)
11.92 %	7.92	10.77	9.72	15.24	16.86	27.12	31.10
10.92 %	8.25	11.37	10.22	16.24	18.16	29.27	33.45
9.92 %	8.65	12.08	10.82	17.45	19.71	31.85	36.27
WACC 8.92 %	9.14	12.96	11.56	18.92	21.62	35.01	39.72
7.92 %	9.76	14.05	12.48	20.77	24.00	38.97	44.05
6.92 %	10.55	15.46	13.66	23.16	27.07	44.08	49.62
5.92 %	11.61	17.35	15.25	26.35	31.18	50.90	57.08

Business model with low capex requirements and high FCF...

…provides scope for acquisitions and pay-outs to shareholders.

Valuation
	2010	2011	2012	2013	2014e	2015e	2016e
Price / Book	1.4 x	1.5 x	1.6 x	1.5 x	2.9 x	2.6 x	2.3 x
Book value per share ex intangibles	0.81	2.03	3.72	9.13	4.73	6.55	8.66
EV / Sales	0.1 x	0.1 x	0.2 x	0.3 x	0.6 x	0.6 x	0.5 x
EV / EBITDA	3.7 x	2.9 x	3.5 x	5.2 x	9.2 x	7.2 x	6.2 x
EV / EBIT	4.6 x	3.9 x	4.7 x	7.7 x	15.5 x	10.3 x	8.2 x
EV / EBIT adj.*	4.6 x	3.9 x	4.7 x	7.7 x	11.2 x	8.6 x	7.3 x
P / FCF	8.0 x	5.3 x	35.1 x	21.4 x	14.2 x	14.0 x	14.2 x
P / E	9.0 x	8.0 x	11.0 x	16.4 x	25.4 x	17.3 x	14.7 x
P / E adj.*	8.9 x	8.0 x	11.0 x	16.4 x	18.1 x	14.4 x	13.0 x
Dividend Yield	2.2 %	3.4 %	2.9 %	2.0 %	1.3 %	1.4 %	1.7 %
Free Cash Flow Yield Potential	9.1 %	15.7 %	9.8 %	10.9 %	5.2 %	8.9 %	10.3 %
*Adjustments made for: -

Consolidated profit & loss

In EUR m	2010	2011	2012	2013	2014e	2015e	2016e
Sales	474.6	544.4	558.1	613.8	780.0	830.0	880.0
Change Sales yoy	12.3 %	14.7 %	2.5 %	10.0 %	27.1 %	6.4 %	6.0 %
Increase / decrease in inventory	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Own work capitalised	1.3	0.9	2.5	0.4	1.2	1.2	1.2
Total Sales	475.8	545.3	560.6	614.2	781.2	831.2	881.2
Material Expenses	336.3	386.6	395.1	428.7	538.2	575.4	610.0
Gross profit	139.5	158.7	165.5	185.5	243.0	255.8	271.2
Gross profit margin	29.4 %	29.1 %	29.7 %	30.2 %	31.2 %	30.8 %	30.8 %
Personnel expenses	97.0	108.0	112.4	123.2	153.3	154.0	160.0
Other operating income	3.4	0.7	0.6	1.1	3.9	4.2	4.4
Other operating expenses	26.9	26.4	25.8	29.9	42.1	42.3	45.8
Unfrequent items	0.0	0.0	0.0	0.0	0.0	0.0	0.0
EBITDA	19.0	25.0	28.1	33.4	51.5	63.7	69.8
Margin	4.0 %	4.6 %	5.0 %	5.4 %	6.6 %	7.7 %	7.9 %
Depreciation of fixed assets	2.1	2.8	4.0	5.5	8.0	8.0	8.0
EBITA	16.9	22.2	24.0	27.9	43.5	55.7	61.8
Amortisation of intangible assets	1.7	3.7	3.4	5.0	13.0	10.8	9.0
Goodwill amortization	0.0	0.0	0.0	0.3	0.0	0.0	0.0
EBIT	15.2	18.5	20.7	22.6	30.5	44.9	52.8
Margin	3.2 %	3.4 %	3.7 %	3.7 %	3.9 %	5.4 %	6.0 %
EBIT adj.	15.2	18.5	20.7	22.6	42.4	53.4	59.3
Interest income	0.1	0.3	0.4	0.3	0.3	0.3	0.3
Interest expenses	2.0	2.2	2.1	1.4	0.9	0.9	0.9
Other financial income (loss)	0.0	0.4	0.0	-0.1	0.0	0.0	0.0
EBT	13.3	16.9	18.9	21.4	29.9	44.3	52.2
Margin	2.8 %	3.1 %	3.4 %	3.5 %	3.8 %	5.3 %	5.9 %
Total taxes	3.7	4.9	6.6	6.9	9.1	13.3	15.7
Net income from continuing operations	9.6	12.0	12.3	14.5	20.8	31.0	36.6
Income from discontinued operations (net of tax)	-1.7	-0.3	-0.7	0.0	0.0	0.0	0.0
Net income before minorities	7.9	11.7	11.6	14.5	20.8	31.0	36.6
Minority interest	0.1	0.2	0.1	0.0	0.6	0.7	0.8
Net income	7.8	11.5	11.5	14.5	20.2	30.3	35.8
Margin	1.6 %	2.1 %	2.1 %	2.4 %	2.6 %	3.6 %	4.1 %
Number of shares, average	10.3	10.4	10.6	11.8	14.6	14.9	14.9
EPS	0.76	1.11	1.09	1.23	1.38	2.03	2.39
EPS adj.	0.77	1.11	1.09	1.23	1.94	2.43	2.70
*Adjustments made for:

Guidance: 2014: EBITDA EUR 50m

Financial Ratios

	2010	2011	2012	2013	2014e	2015e	2016e
Total Operating Costs / Sales	96.3 %	95.6 %	95.4 %	94.6 %	93.6 %	92.5 %	92.2 %
Operating Leverage	9.6 x	1.5 x	4.8 x	1.0 x	1.3 x	7.4 x	2.9 x
EBITDA / Interest expenses	9.7 x	11.2 x	13.1 x	24.0 x	57.2 x	70.7 x	77.6 x
Tax rate (EBT)	28.1 %	28.8 %	35.0 %	32.4 %	30.5 %	30.0 %	30.0 %
Dividend Payout Ratio	16.1 %	25.9 %	30.2 %	32.5 %	31.7 %	24.1 %	24.5 %
Sales per Employee	248,075	267,377	273,569	275,738	312,000	325,490	338,462

Sales, EBITDA in EUR m

Source: Warburg Research

Performance per Share

Source: Warburg Research

Consolidated balance sheet

In EUR m	2010	2011	2012	2013	2014e	2015e	2016e
Assets
Goodwill and other intangible assets	42.5	39.6	41.2	55.3	91.2	83.4	77.4
thereof other intangible assets	1.8	3.8	6.1	4.9	34.1	26.3	20.3
thereof Goodwill	23.7	23.7	24.3	32.7	56.4	56.4	56.4
Property, plant and equipment	9.7	12.9	17.6	20.5	29.5	29.0	31.5
Financial assets	3.3	1.4	1.8	31.6	31.6	31.6	31.6
Other long-term assets	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Fixed assets	55.5	53.8	60.6	107.4	152.2	143.9	140.4
Inventories	14.1	15.6	9.4	16.3	11.1	11.9	12.6
Accounts receivable	68.0	72.2	88.3	112.9	106.8	111.4	118.1
Liquid assets	31.5	46.4	44.6	77.7	97.4	120.5	147.1
Other short-term assets	8.4	6.8	5.7	7.1	7.1	7.1	7.1
Current assets	122.0	141.0	148.1	214.1	222.4	250.9	284.9
Total Assets	177.4	194.9	208.6	321.5	374.6	394.8	425.3
Liabilities and shareholders' equity
Subscribed capital	10.4	10.4	11.4	14.6	14.6	14.6	14.6
Capital reserve	15.9	15.9	26.1	94.6	94.6	94.6	94.6
Retained earnings	24.8	34.7	43.1	53.6	69.1	92.8	121.1
Other equity components	-0.1	-0.3	0.0	0.0	-18.0	-20.8	-23.5
Shareholder's equity	50.9	60.7	80.6	162.8	160.2	181.1	206.7
Minority interest	0.1	0.2	0.2	0.1	17.6	17.6	17.6
Total equity	51.0	60.9	80.8	162.9	177.8	198.7	224.3
Provisions	3.3	7.7	5.2	4.5	4.4	4.4	4.4
thereof provisions for pensions and similar obligations	0.1	0.1	0.1	0.1	0.0	0.0	0.0
Financial liabilites (total)	30.6	25.9	15.4	15.2	57.5	49.5	49.5
thereof short-term financial liabilities	1.2	10.6	3.4	2.7	2.7	2.7	2.7
Accounts payable	64.4	72.9	76.9	99.0	98.3	104.6	108.5
Other liabilities	28.1	27.6	30.3	39.9	36.6	37.6	38.6
Liabilities	126.4	134.0	127.9	158.6	196.7	196.0	200.9
Total liabilities and shareholders' equity	177.4	194.9	208.6	321.5	374.6	394.8	425.3

Financial Ratios

	2010	2011	2012	2013	2014e	2015e	2016e
Efficiency of Capital Employment
Operating Assets Turnover	18.4 x	21.0 x	16.1 x	13.9 x	18.3 x	20.2 x	18.7 x
Capital Employed Turnover	9.5 x	13.5 x	10.8 x	6.1 x	5.7 x	6.5 x	6.9 x
ROA	14.1 %	21.4 %	18.9 %	13.5 %	13.2 %	21.0 %	25.5 %
Return on Capital
ROCE (NOPAT)	24.1 %	29.0 %	29.1 %	20.1 %	17.8 %	23.6 %	29.1 %
ROE	16.5 %	20.6 %	16.2 %	11.9 %	12.5 %	17.7 %	18.4 %
Adj. ROE	16.7 %	20.6 %	16.2 %	11.9 %	17.6 %	21.2 %	20.8 %
Balance sheet quality
Net Debt	-0.8	-20.5	-29.1	-62.4	-39.9	-71.0	-97.6
Net Financial Debt	-0.9	-20.5	-29.2	-62.5	-39.9	-71.0	-97.6
Net Gearing	-1.6 %	-33.6 %	-36.0 %	-38.3 %	-22.4 %	-35.7 %	-43.5 %
Net Fin. Debt / EBITDA	-4.8 %	-82.2 %	-104.1 %	-187.3 %	-77.5 %	-111.6 %	-139.8 %
Book Value / Share	4.9	5.8	7.6	13.8	11.0	12.1	13.8
Book value per share ex intangibles	0.8	2.0	3.7	9.1	4.7	6.5	8.7

CO M M E N T Published 15.05.2014 7

Consolidated cash flow statement

In EUR m	2010	2011	2012	2013	2014e	2015e	2016e
Net income	7.9	11.7	11.6	14.5	20.8	31.0	36.6
Depreciation of fixed assets	2.1	2.8	4.0	5.5	8.0	8.0	8.0
Amortisation of goodwill	0.0	0.0	0.0	0.3	0.0	0.0	0.0
Amortisation of intangible assets	1.7	3.7	3.4	5.0	13.0	10.8	9.0
Increase/decrease in long-term provisions	0.3	0.1	-0.1	-0.1	-0.1	0.0	0.0
Other non-cash income and expenses	2.0	4.6	-1.0	-2.1	6.0	0.0	0.0
Cash Flow	14.0	22.9	17.9	23.1	47.7	49.8	53.6
Increase / decrease in inventory	0.5	-6.3	6.3	-5.1	5.2	-0.8	-0.7
Increase / decrease in accounts receivable	-14.7	-5.2	-16.4	-20.3	6.1	-4.6	-6.7
Increase / decrease in accounts payable	17.2	15.3	8.4	21.5	-0.7	6.3	3.9
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 (total)	2.9	3.8	-1.8	-3.9	10.6	0.9	-3.5
Net cash provided by operating activities	16.9	26.7	16.1	19.2	58.3	50.7	50.1
Investments in intangible assets	-3.0	-2.8	-1.1	-0.7	-2.7	-3.0	-3.0
Investments in property, plant and equipment	-5.0	-6.6	-11.4	-7.5	-17.0	-7.5	-7.5
Payments for acquisitions	-9.7	-3.6	-0.6	-1.4	-79.0	-3.0	-6.0
Financial investments	0.0	0.0	0.0	-28.9	0.0	0.0	0.0
Income from asset disposals	0.5	5.1	2.5	3.4	0.5	0.5	0.5
Net cash provided by investing activities	-17.3	-7.9	-10.6	-35.2	-98.2	-13.0	-16.0
Change in financial liabilities	8.3	-4.3	-13.2	-1.8	42.3	-8.0	0.0
Dividends paid	-1.5	-1.6	-3.3	-4.0	-4.7	-6.6	-7.5
Purchase of own shares	0.6	0.0	0.0	0.0	0.0	0.0	0.0
Capital measures	0.0	0.0	11.4	56.1	0.0	0.0	0.0
Other	-1.5	0.1	-0.3	-1.2	0.0	0.0	0.0
Net cash provided by financing activities	5.9	-5.8	-5.3	49.1	37.6	-14.6	-7.5
Change in liquid funds	5.5	13.0	0.2	33.1	-2.4	23.1	26.6
Effects of exchange-rate changes on cash	0.1	0.0	0.0	0.0	0.0	0.0	0.0
Cash and cash equivalent at end of period	31.5	44.5	44.6	77.7	75.4	120.5	147.1

Financial Ratios

	2010	2011	2012	2013	2014e	2015e	2016e
Cash Flow
FCF	8.9	17.3	3.6	11.1	38.6	40.2	39.6
Free Cash Flow / Sales	1.9 %	3.2 %	0.6 %	1.8 %	5.0 %	4.8 %	4.5 %
Free Cash Flow Potential	6.4	11.3	9.5	19.1	24.6	40.9	44.7
Free Cash Flow / Sales	1.9 %	3.2 %	0.6 %	1.8 %	5.0 %	4.8 %	4.5 %
Free Cash Flow / Net Profit	113.4 %	150.3 %	31.4 %	76.2 %	191.5 %	132.7 %	110.6 %
Interest Received / Avg. Cash	0.5 %	0.8 %	0.8 %	0.5 %	0.3 %	0.3 %	0.2 %
Interest Paid / Avg. Debt	7.4 %	7.9 %	10.4 %	9.1 %	2.5 %	1.7 %	1.8 %
Management of Funds
Investment ratio	1.7 %	1.7 %	2.2 %	1.3 %	2.5 %	1.3 %	1.2 %
Maint. Capex / Sales	1.5 %	1.6 %	2.0 %	1.2 %	2.3 %	1.1 %	1.1 %
Capex / Dep	208.3 %	143.6 %	169.0 %	75.8 %	93.8 %	55.9 %	61.8 %
Avg. Working Capital / Sales	2.9 %	2.7 %	2.7 %	3.3 %	2.4 %	1.5 %	1.6 %
Trade Debtors / Trade Creditors	105.6 %	99.0 %	114.8 %	114.1 %	108.6 %	106.5 %	108.8 %
Inventory Turnover	23.9 x	24.8 x	42.0 x	26.3 x	48.5 x	48.3 x	48.4 x
Receivables collection period (days)	52	48	58	67	50	49	49
Payables payment period (days)	70	69	71	84	67	66	65
Cash conversion cycle (Days)	-54	-54	-64	-73	-63	-62	-60

CAPEX and Cash Flow in EUR m

Working Capital

CO M M E N T Published 15.05.2014 8

LEGAL DISCLAIMER

This research report was prepared by the Warburg Research GmbH, a subsidiary of the M.M.Warburg & CO KGaA and is passed on by the M.M.Warburg & CO KGaA. It contains selected information and does not purport to be complete. The report is based on publicly available information and data ("the information") believed to be accurate and complete. Warburg Research GmbH neither does examine the information to be accurate and complete, nor guarantees its accuracy and completeness. Possible errors or incompleteness of the information do not constitute grounds for liability of M.M.Warburg & CO KGaA or Warburg Research GmbH for damages of any kind whatsoever, and M.M.Warburg & CO KGaA and Warburg Research GmbH are not liable for indirect and/or direct and/or consequential damages. In particular, neither M.M.Warburg & CO KGaA nor Warburg Research GmbH are liable for the statements, plans or other details contained in these analyses concerning the examined companies, their affiliated companies, strategies, economic situations, market and competitive situations, regulatory environment, etc. Although due care has been taken in compiling this research report, it cannot be excluded that it is incomplete or contains errors. M.M.Warburg & CO KGaA and Warburg Research GmbH, their shareholders and employees are not liable for the accuracy and completeness of the statements, estimations and the conclusions derived from the information contained in this document. Provided a research report is being transmitted in connection with an existing contractual relationship, i.e. financial advisory or similar services, the liability of M.M.Warburg & CO KGaA and Warburg Research GmbH shall be restricted to gross negligence and wilful misconduct. In case of failure in essential tasks, M.M.Warburg & CO KGaA and Warburg Research GmbH are liable for normal negligence. In any case, the liability of M.M.Warburg & CO KGaA and Warburg Research GmbH is limited to typical, expectable damages. This research report does not constitute an offer or a solicitation of an offer for the purchase or sale of any security. Partners, directors or employees of M.M.Warburg & CO KGaA, Warburg Research GmbH or affiliated companies may serve in a position of responsibility, i.e. on the board of directors of companies mentioned in the report. Opinions expressed in this report are subject to change without notice. All rights reserved.

COPYRIGHT NOTICE

This work including all its parts is protected by copyright. Any use beyond the limits provided by copyright law without permission is prohibited and punishable. This applies, in particular, to reproductions, translations, microfilming, and storage and processing on electronic media of the entire content or parts thereof.

DISCLOSURE ACCORDING TO §34B (1) OF THE GERMAN SECURITIES TRADING ACT (WHPG) AND THE ORDINANCE ON THE ANALYSIS OF FINANCIAL INSTRUMENTS (FINANV)

The valuation underlying the investment recommendation for the company analysed here is based on generally accepted and widely used methods of fundamental analysis, such as e.g. DCF Model, Free Cash Flow Potential, Peer Group Comparison or Sum of the Parts Model. The result of this fundamental valuation is modified to take into consideration the analyst's assessment as regards the expected development of investor sentiment and its impact on the share price.

Independent of the applied valuation methods, there is the risk that the price target will not be met, for instance because of unforeseen changes in demand for the company's products, changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rate etc. For investments in foreign markets and instruments there are further risks, generally based on exchange rate changes or changes in political and social conditions.

This commentary reflects the opinion of the relevant author at the point in time of its compilation. A change in the fundamental factors underlying the valuation can mean that the valuation is subsequently no longer accurate. Whether, or in what time frame, an update of this commentary follows is not determined in advance.

In accordance with § 5 (4) of the Ordinance on the Analysis of Financial Instruments (FinAnV) Warburg Research GmbH has implemented additional internal and organisational arrangements to prevent or to deal with conflicts of interest. Among these are the spatial separation of Warburg Research GmbH from M.M.Warburg & CO KGaA and the creation of areas of confidentiality. This prevents the exchange of information, which could form the basis of conflicts of interest for Warburg Research in terms of the analysed issuers or their financial instruments.

The analysts of Warburg Research GmbH do not receive a gratuity – directly or indirectly – from the investment banking activities of M.M.Warburg & CO KGaA or of any company within the Warburg Group.

All prices of financial instruments given in this financial analysis are the closing prices on the last stock-market trading day before the publication date stated, unless another point in time is explicitly stated.

M.M.Warburg & CO KGaA and Warburg Research GmbH are subject to the supervision of the Federal Financial Supervisory Authority, BaFin.

SOURCES

All data and consensus estimates have been obtained from FactSet except where stated otherwise.

Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise preparing a securities analysis to point out possible conflicts of interest with respect to the company that is the subject of the analysis. A conflict of interest is assumed, in particular, when the enterprise preparing the analysis …

-1-	… or companies affiliated with this enterprise holds 5% or more of the share capital of the analysed company
-2-	… or companies affiliated with this enterprise were involved in the management of a consortium for a public offering of securities which are or whose issuer is the subject of this report within the last twelve months
-3-	… or companies affiliated with this enterprise manages the securities of the analysed company on the basis of an existing contract
-4-	… or companies affiliated with this enterprise over the previous 12 months has been providing investment banking services for the analysed company for which a compensation has been or will be paid. Warburg Research GmbH receives indirect remuneration from the investment banking activities of M.M.Warburg & CO KGaA.
-5-	… effected an agreement with the analysed company for the preparation of the financial analysis
-6-	… or companies affiliated with this enterprise regularly trade in shares or derivatives of the analysed company
-7-	… or the analyst responsible for this company has other important financial interests in relation to the analysed company such as e.g. the performance of mandates for the analysed company

Company	Disclosure	Link to the historical price targets and rating changes (last 12 months)
CANCOM	5	http://www.mmwarburg.com/disclaimer/disclaimer_en/DE0005419105.htm

INVESTMENT RECOMMENDATION

Investment recommendation: expected direction of the share price development of the financial instrument up to the given price target in the opinion of the analyst who covers this financial instrument.

-B-	Buy:	The price of the analysed financial instrument is expected to rise over the next 12 months.
-H-	Hold:	The price of the analysed financial instrument is expected to remain mostly flat over the next 12 months.
-S-	Sell:	The price of the analysed financial instrument is expected to fall over the next 12 months.
"-"	Rating suspended:	The available information currently does not permit an evaluation of the company.

WARBURG RESEARCH GMBH – RESEARCH UNIVERSE BY RATING

Rating	Number of stocks	% of Universe
Buy	106	54
Hold	78	39
Sell	11	6
Rating suspended	3	2
Total	198	100

WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING …

… Looking only at companies for which a disclosure according to § 34b of the Germany Securities Trading Act and the FinAnV has to be made.

Rating	Number of stocks	% of Universe
Buy	82	58
Hold	51	36
Sell	6	4
Rating suspended	2	1
Total	141	100

PRICE AND RATING HISTORY CANCOM AS OF 15.05.2014

The chart has markings if Warburg Research GmbH changed its rating in the last 12 months. Every marking represents the date and closing price on the day of the rating change.

RESEARCH

Dep. Head of Equity Sales, GER kschilling@mmwarburg.com Sales Trading gbolsen@mmwarburg.com

Marie-Therese Grübner +49 40 3282-2630 Jörg Treptow +49 40 3262-2658

Dirk Rosenfelder +49 40 3282-2692

Philipp Stumpfegger +49 40 3282-2635

Software, IT fellmann@warburg-research.com Utilities crodler@warburg-research.com

Health Care, Pharma uhuwald@warburg-research.com Chemicals, Agriculture oschwarz@warburg-research.com

Engineering ekuls@warburg-research.com Software, IT awolf@warburg-research.com

United Kingdom tbeckmann@mmwarburg.com Sales Trading bquast@mmwarburg.com

United Kingdom mfritsch@mmwarburg.com Sales Trading tstruve@mmwarburg.com

France mgruebner@mmwarburg.com Sales Trading jtreptow@mmwarburg.com

Ömer Güven +49 40 3282-2633 Jan Walter +49 40 3262-2662 Germany ogueven@mmwarburg.com Sales Trading jwalter@mmwarburg.com

United Kingdom mkriszun@mmwarburg.com Roadshow/Marketing kmerckel@mmwarburg.com

Marc Niemann +49 40 3282-2660 Germany mniemann@mmwarburg.com

Austria, Switzerland drosenfelder@mmwarburg.com

Australia, United Kingdom pstumpfegger@mmwarburg.com

SALES SALES TRADING

MACRO RESEARCH

Roland Rapelius +49 40 309537-220 Andreas Pläsier +49 40 309537-246 Head of Research rrapelius@warburg-research.com Banks, Financial Services aplaesier@warburg-research.com

Henner Rüschmeier +49 40 309537-270 Malte Räther +49 40 309537-185 Head of Research hrueschmeier @warburg-research.com Technology, Telco, Internet mraether@warburg-research.com

Christian Cohrs +49 40 309537-175 Jochen Reichert +49 40 309537-130 Engineering, Logistics ccohrs@warburg-research.com Telco, Internet, Media jreichert@warburg-research.com

Felix Ellmann +49 40 309537-120 Christopher Rodler +49 40 309537-290

Jörg Philipp Frey +49 40 309537-258 Malte Schaumann +49 40 309537-170 Retail, Consumer Goods jfrey@warburg-research.com Technology mschaumann@warburg-research.com

Harald Hof +49 40 309537-125 Susanne Schwartze +49 40 309537-155 Medtech hhof@warburg-research.com Telco, Internet, Media sschwartze@warburg-research.com

Ulrich Huwald +49 40 309537-255 Oliver Schwarz +49 40 309537-250

Thilo Kleibauer +49 40 309537-257 Marc-René Tonn +49 40 309537-259 Retail, Consumer Goods tkleibauer@warburg-research.com Automobiles, Car Suppliers mtonn@warburg-research.com

Torsten Klingner +49 40 309537-260 Björn Voss +49 40 309537-254 Real Estate tklingner@warburg-research.com Steel, Car Suppliers bvoss@warburg-research.com

Eggert Kuls +49 40 309537-256 Andreas Wolf +49 40 309537-140

Frank Laser +49 40 309537-235 Stephan Wulf +49 40 309537-150 Construction, Industrials flaser@warburg-research.com Utilities swulf@warburg-research.com

Holger Nass +49 40 3282-2669 Oliver Merckel +49 40 3282-2634 Head of Equity Sales, USA hnass@mmwarburg.com Head of Sales Trading omerckel@mmwarburg.com

Klaus Schilling +49 40 3282-2664 Gudrun Bolsen +49 40 3282-2679

Christian Alisch +49 40 3282-2667 Michael Ilgenstein +49 40 3282-2700 Scandinavia, Spain calisch@mmwarburg.com Sales Trading milgenstein@mmwarburg.com

Tim Beckmann +49 40 3282-2665 Bastian Quast +49 40 3282-2701

Matthias Fritsch +49 40 3282-2696 Thekla Struve +49 40 3282-2668

Michael Kriszun +49 40 3282-2695 Katharina Merckel +49 40 3282-2694

Carsten Klude +49 40 3282-2572 Macro Research cklude@mmwarburg.com

Matthias Thiel +49 40 3282-2401 Macro Research mthiel@mmwarburg.com

Dr. Christian Jasperneite +49 40 3282-2439 Investment Strategy cjasperneite@mmwarburg.com

Our research can be found under:

Andrea Schaper Sales Assistance	+49 40 3282-2632 aschaper@mmwarburg.com	Kerstin Muthig Sales Assistance	+49 40 3282-2703 kmuthig@mmwarburg.com
For access please contact:
FactSet	www.factset.com	Capital IQ	www.capitaliq.com
Bloomberg	MMWA GO	Reuters	www.knowledge.reuters.com
Warburg Research	research.mmwarburg.com/en/index.html	Thomson	www.thomson.com