CANCOM SE — Investor Presentation 2014

Mar 20, 2014

CANCOM SE Germany - IT Services

Buy (old: Buy)				20-March-14
	Price target: EUR 43.50	(old: EUR 43.50)		Tim Wunderlich, CFA Analyst
Price:	EUR 36.17	Next result:	Q1 14: 13.05.14
Bloomberg:	COK GR	Market cap:	EUR 528.6 m	tim.wunderlich@ha-research.de
Reuters:	COKG.DE	Enterprise Value:	EUR 466.2 m	Tel.: +49 40 4143885 81

Final Q4 figures and take-over of DIDAS; Introducing 2016E

As CANCOM had already reported preliminary figures for sales and EBITDA, final Q4/FY figures offered only limited additional insights.

• Q4 EBIT of € 6.9m was below our expectations of € 8.2m given higher-thanexpected purchase price amortisation (i.e. a non-cash item) relating to the takeovers of on-line and Pironet. However, no need to change estimates for 2014E: During the conference call, CANCOM indicated that PPA for FY '14 should be around € 8.4m, which is in-line with our expectations.
• Q4 net income arrived at € 4.1m versus € 5.6m expected, which is also due to the higher PPA.
• CANCOM proposes a € 0.40 dividend per share (vs. € 0.35 for 2012), in line with expectations and yielding 1.1% on the current share price. Evidently, CANCOM will rather use its cash reserve (eH&A: € 77m gross cash at the end of 2014E) to execute further value-accretive acquisitions.

During the conference call, CANCOM confirmed our expectation of more than € 50m EBITDA for 2014E (vs. € 33m for 2013). Notably, it expects to grow EBITDA by € 3m (i.e. an incremental improvement) thanks to the strong demand for its AHP cloud solution. The traditional IT Service business is seen to contribute an incremental € 1m to EBITDA. Additional EBITDA growth of >€ 13m should come from the acquisitions of Pironet and on-line Datensysteme.

On top of this, CANCOM announced the 100% take-over of DIDAS (pending supervisory board and antitrust approval), a traditional IT Services business with eight offices in Germany. The company re-sells hardware and software (c. 45% of sales), offers IT services (30%), and provides managed services/outsourcing (25%). The target generated € 56m of sales and € 1.8m EBITDA in 2013.

CANCOM expects to be able to raise DIDAS' profitability from c. 3% currently to 5%+ within 2-3 years thanks to economies of scale in procurement and logistics as well as synergies in admin (i.e. cutting out central functions, merging offices) – it has a strong track record in doing so. Also, CANCOM plans to use DIDAS' customer base and IT architects to cross-sell its AHP software, hence transforming the business more into the direction of high-margin cloud services. – continued –

Y/E 31.12 (EUR m)	2010	2011	2012	2013	2014E	2015E	2016E
Sales	474.6	544.4	558.1	613.8	734.7	782.2	829.1
Sales growth	36 %	15 %	3 %	10 %	20 %	6 %	6 %
EBITDA	19.0	25.0	28.1	33.4	52.9	62.4	74.3
EBIT	15.2	18.5	20.7	22.6	34.0	43.3	56.1
Net income	7.8	11.5	11.5	14.5	23.1	29.8	39.5
Net debt	-0.9	-18.5	-29.2	-62.5	-65.7	-87.8	-120.0
Net gearing	-1.8 %	-30.4 %	-36.3 %	-38.4 %	-41.1 %	-48.0 %	-55.8 %
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	1.58	2.04	2.70
CPS	1.28	2.18	0.89	0.87	2.11	2.36	3.15
DPS	0.15	0.30	0.35	0.40	0.45	0.50	0.66
Dividend yield	0.4 %	0.8 %	1.0 %	1.1 %	1.2 %	1.4 %	1.8 %
Gross profit margin	29.3 %	29.1 %	29.5 %	30.2 %	35.0 %	35.2 %	35.8 %
EBITDA margin	4.0 %	4.6 %	5.0 %	5.4 %	7.2 %	8.0 %	9.0 %
EBIT margin	3.2 %	3.4 %	3.7 %	3.7 %	4.6 %	5.5 %	6.8 %
ROCE	19.5 %	20.6 %	21.1 %	16.0 %	17.8 %	20.7 %	24.1 %
EV/sales	0.8	0.6	0.7	0.8	0.6	0.6	0.5
EV/EBITDA	19.5	14.1	13.6	14.0	8.7	7.1	5.5
EV/EBIT	24.4	19.1	18.5	20.6	13.6	10.2	7.3
PER	39.2	31.7	34.0	36.4	22.9	17.8	13.4
Adjusted FCF yield	3.1 %	4.4 %	4.1 %	4.6 %	7.3 %	9.4 %	12.5 %

Source: Company data, Hauck & Aufhäuser Close price as of: 19.03.2014

Source: Company data, Hauck & Aufhäuser

High/low 52 weeks:	39.07 / 14.15
Price/Book Ratio:	3.2
Relative performance (TecDAX):
3 months	17.1 %
6 months	47.4 %
12 months	100.8 %

Changes in estimates

		Sales	EBIT	EPS
2014	old:	734.7	34.0	1.60
	∆	-	-	-
	old:	782.2	43.3	2.04
2015	∆	-	-	-
	old:	-	-	-
2016	∆	-	-	-

Key share data:

Number of shares: (in m pcs)	11.8
Authorised capital: (in € m)	4.0
Book value per share: (in €)	11.1
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.

The transaction will be paid for in shares. While the purchase price has not been disclosed, CANCOM indicated that even with the dilution the transaction should be earnings-accretive.

Our estimates will be adjusted for the take-over of DIDAS only after the final approval and the emergence of further details regarding purchase price and PPA. CANCOM remains a BUY with a € 43.50 PT based on DCF.

Financials

Profit and loss (EUR m)	2010	2011	2012	2013	2014E	2015E	2016E
Net sales	474.6	544.4	558.1	613.8	734.7	782.2	829.1
Sales growth	36.2 %	14.7 %	2.5 %	10.0 %	19.7 %	6.5 %	6.0 %
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	735.7	783.2	830.2
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	478.3	507.8	533.0
Personnel expenses	97.0	108.0	112.4	123.2	163.9	170.2	177.4
Other operating expenses	26.8	26.4	25.8	29.9	41.2	43.5	46.2
Total operating expenses	456.8	520.3	532.5	580.8	682.8	720.9	755.9
EBITDA	19.0	25.0	28.1	33.4	52.9	62.4	74.3
Depreciation	3.8	2.8	4.0	5.5	8.3	8.7	9.5
EBITA	15.2	22.2	24.0	27.9	44.6	53.7	64.8
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	10.6	10.4	8.7
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	34.0	43.3	56.1
Interest income	0.1	0.3	0.4	0.3	0.6	0.7	0.9
Interest expenses	1.9	2.2	2.1	1.4	1.5	1.2	0.8
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	-0.8	-0.5	0.1
Recurring pretax income from continuing operations	13.3	16.9	18.9	21.4	33.2	42.8	56.2
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	33.2	42.8	56.2
Taxes	3.7	4.9	6.6	6.9	9.0	11.6	15.3
Net income from continuing operations	9.6	12.0	12.3	14.5	24.2	31.1	40.9
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	24.2	31.1	40.9
Minority interest	0.1	0.2	0.1	0.0	1.1	1.4	1.5
Net income (net of minority interest)	7.8	11.5	11.5	14.5	23.1	29.8	39.5
Average number of shares	10.3	10.4	10.6	11.8	14.6	14.6	14.6
EPS reported	0.76	1.11	1.09	1.23	1.58	2.04	2.70

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 %	65.1 %	64.9 %	64.3 %
Personnel expenses	20.4 %	19.8 %	20.1 %	20.1 %	22.3 %	21.8 %	21.4 %
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 %	92.9 %	92.2 %	91.2 %
EBITDA	4.0 %	4.6 %	5.0 %	5.4 %	7.2 %	8.0 %	9.0 %
Depreciation	0.8 %	0.5 %	0.7 %	0.9 %	1.1 %	1.1 %	1.1 %
EBITA	3.2 %	4.1 %	4.3 %	4.5 %	6.1 %	6.9 %	7.8 %
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 %	1.4 %	1.3 %	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 %	4.6 %	5.5 %	6.8 %
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 %	0.2 %	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 %	-0.1 %	0.0 %
Recurring pretax income from continuing operations	2.8 %	3.1 %	3.4 %	3.5 %	4.5 %	5.5 %	6.8 %
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 %	4.5 %	5.5 %	6.8 %
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 %	3.3 %	4.0 %	4.9 %
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 %	3.3 %	4.0 %	4.9 %
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 %	3.1 %	3.8 %	4.8 %

CANCOM SE

Balance sheet (EUR m)	2010	2011	2012	2013	2014E	2015E	2016E
Intangible assets	42.5	39.6	41.2	55.3	63.7	59.1	56.4
Property, plant and equipment	9.7	12.9	17.6	20.5	23.9	26.2	28.3
Financial assets	3.2	2.2	5.0	35.0	35.0	35.0	35.0
FIXED ASSETS	55.4	54.6	63.8	110.8	122.5	120.3	119.7
Inventories	13.4	15.0	8.7	15.5	14.1	15.6	16.6
Accounts receivable	68.0	72.2	88.3	112.9	110.7	120.0	127.2
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	83.5	96.8	127.9
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	212.9	236.9	276.2
TOTAL ASSETS	177.4	194.9	208.6	321.5	335.4	357.2	395.9
SHAREHOLDERS EQUITY	50.9	60.7	80.6	162.8	159.8	182.9	215.1
MINORITY INTEREST	0.1	0.2	0.2	0.1	18.8	20.2	21.7
Long-term debt	29.0	16.7	14.1	14.4	17.0	8.2	7.2
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	21.5	12.7	11.7
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	94.6	100.7	106.8
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	135.3	141.4	147.4
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	177.4	194.9	208.6	321.5	335.4	357.2	395.9

Balance sheet (common size)	2010	2011	2012	2013	2014E	2015E	2016E
Intangible assets	24.0 %	20.3 %	19.8 %	17.2 %	19.0 %	16.6 %	14.2 %
Property, plant and equipment	5.5 %	6.6 %	8.4 %	6.4 %	7.1 %	7.3 %	7.1 %
Financial assets	1.8 %	1.1 %	2.4 %	10.9 %	10.4 %	9.8 %	8.8 %
FIXED ASSETS	31.2 %	28.0 %	30.6 %	34.5 %	36.5 %	33.7 %	30.2 %
Inventories	7.5 %	7.7 %	4.2 %	4.8 %	4.2 %	4.4 %	4.2 %
Accounts receivable	38.3 %	37.1 %	42.3 %	35.1 %	33.0 %	33.6 %	32.1 %
Other current assets	3.6 %	3.7 %	0.4 %	0.3 %	0.3 %	0.3 %	0.3 %
Liquid assets	17.7 %	22.8 %	21.4 %	24.2 %	24.9 %	27.1 %	32.3 %
Deferred taxes	0.4 %	0.3 %	0.5 %	0.5 %	0.5 %	0.5 %	0.4 %
Deferred charges and prepaid expenses	1.1 %	0.4 %	0.5 %	0.5 %	0.5 %	0.5 %	0.4 %
CURRENT ASSETS	68.8 %	72.0 %	69.4 %	65.5 %	63.5 %	66.3 %	69.8 %
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 %	47.6 %	51.2 %	54.3 %
MINORITY INTEREST	0.0 %	0.1 %	0.1 %	0.0 %	5.6 %	5.7 %	5.5 %
Long-term debt	16.3 %	8.6 %	6.8 %	4.5 %	5.1 %	2.3 %	1.8 %
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 %	1.3 %	1.2 %	1.1 %
Non-current liabilities	18.2 %	12.5 %	9.3 %	5.9 %	6.4 %	3.5 %	3.0 %
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 %	28.2 %	28.2 %	27.0 %
Advance payments received on orders	0.9 %	1.0 %	1.7 %	2.0 %	2.0 %	1.8 %	1.7 %
Other liabilities (incl. from lease and rental contracts)	9.2 %	9.0 %	9.0 %	7.3 %	7.0 %	6.6 %	5.9 %
Deferred taxes	2.4 %	1.4 %	1.4 %	1.6 %	1.6 %	1.5 %	1.3 %
Deferred income	3.4 %	2.9 %	2.4 %	1.4 %	1.4 %	1.3 %	1.2 %
Current liabilities	53.1 %	56.2 %	52.0 %	43.4 %	40.3 %	39.6 %	37.2 %
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %

CANCOM SE

Cash flow statement (EUR m)	2010	2011	2012	2013	2014E	2015E	2016E
Net profit/loss	7.9	11.7	11.6	14.5	24.2	31.1	40.9
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	10.6	10.4	8.7
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	43.1	50.2	59.1
Increase/decrease in inventory	0.3	-6.3	6.2	-6.7	1.4	-1.5	-0.9
Increase/decrease in accounts receivable	-15.2	-5.2	-16.1	-24.7	2.2	-9.3	-7.2
Increase/decrease in accounts payable	17.1	15.3	4.0	22.1	-4.4	6.1	6.0
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	-0.8	-4.7	-2.1
Cash flow from operating activities	16.9	26.7	16.1	19.2	42.3	45.5	57.0
CAPEX	8.1	9.4	12.5	8.1	16.1	15.2	15.9
Payments for acquisitions	10.5	3.6	0.1	1.4	14.6	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	-30.7	-16.9	-17.6
Cash flow before financing	-0.4	18.8	5.5	-16.0	11.6	28.7	39.5
Increase/decrease in debt position	8.1	-2.6	-11.9	-1.1	0.0	-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	6.6	7.3
Others	-1.3	-1.6	-1.4	-0.3	0.0	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	-5.8	-15.4	-8.3
Increase/decrease in liquid assets	5.6	13.0	0.2	33.1	5.8	13.3	31.2
Liquid assets at end of period	31.5	44.5	44.6	77.7	83.5	96.8	127.9

Source: Company data, Hauck & Aufhäuser

2010	2011	2012	2013	2014E	2015E	2016E
						0.0
						n/a
32.9	42.4	29.0	30.7	36.0	37.5	0.0
-9.6 %	28.9 %	-31.7 %	6.0 %	17.3 %	4.3 %	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	734.7	782.2	0.0
12.3 %	14.7 %	2.5 %	10.0 %	19.7 %	6.5 %	n/a
	441.7 14.4 %	502.0 13.7 %	529.1 5.4 %	583.1 10.2 %	698.7 19.8 %	744.7 6.6 %

CANCOM SE

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 % 19.7 %	6.5 % 6.0 %
EBITDA growth 100.7 % 31.6 % 12.2 % 18.9 % 58.6 %	17.8 % 19.2 %
EBIT growth 114.0 % 21.7 % 12.0 % 9.6 % 50.3 %	27.0 % 29.7 %
EPS growth 55.5 % 46.4 % -2.1 % 13.7 % 27.9 %	29.0 % 32.7 %
Efficiency
Total operating costs / sales 96.3 % 95.6 % 95.4 % 94.6 % 92.9 %	92.2 % 91.2 %
Sales per employee 257.7 273.1 270.9 289.1	330.9 337.9 702.6
EBITDA per employee 10.3 12.5 13.6 15.7	23.9 26.9 63.0
Balance sheet analysis
Avg. working capital / sales 2.8 % 2.6 % 2.6 % 3.2 %	3.2 % 3.3 % 3.5 %
Inventory turnover (sales/inventory) 35.5 36.3 63.8 39.6	52.0 50.0 50.0
Trade debtors in days of sales 52.3 48.4 57.7 67.2	55.0 56.0 56.0
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	-6.4 -5.2 -5.8
Cash flow analysis
Free cash flow 8.8 17.3 3.6 11.1	26.2 30.3 41.1
Free cash flow/sales 1.9 % 3.2 % 0.6 % 1.8 %	3.6 % 3.9 % 5.0 %
FCF / net profit 113.1 % 150.3 % 31.4 % 76.2 % 113.5 %	101.9 % 104.1 %
Capex / depn 206.6 % 139.0 % 169.0 % 318.6 % 85.2 %	79.6 % 87.5 %
Capex / maintenance capex 133.1 % 151.6 % n/a 112.8 % 102.6 %	100.0 % 105.5 %
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	-65.7 -87.8 -120.0
Net Debt/EBITDA 0.0 0.0 0.0 0.0	0.0 0.0 0.0
Net debt / equity 0.0 -0.3 -0.4 -0.4	-0.4 -0.5 -0.6
Interest cover 8.0 8.3 9.7 16.5	22.9 35.9 73.7
Dividend payout ratio 19.7 % 26.7 % 34.7 % 40.2 % 28.5 %	24.6 % 24.6 %
Asset utilisation
Capital employed turnover 5.6 5.8 5.5 3.4	3.7 3.6 3.3
Operating assets turnover 18.9 21.5 16.4 14.2	15.4 14.3 14.1
Plant turnover 49.0 42.2 31.8 30.0	30.7 29.9 29.3
Inventory turnover (sales/inventory) 35.5 36.3 63.8 39.6	52.0 50.0 50.0
Returns
ROCE 19.5 % 20.6 % 21.1 % 16.0 % 17.8 %	20.7 % 24.1 %
ROE 15.4 % 19.0 % 14.2 % 8.9 % 14.4 %	16.3 % 18.4 %
Other
Interest paid / avg. debt 7.2 % 7.9 % 10.3 % 9.0 %	9.0 % 9.0 % 9.0 %
No. employees (average) 1842 1994 2060 2123	2220 2315 1180
Number of shares 10.3 10.4 10.6 11.8 DPS 0.2 0.3 0.4 0.4	14.6 14.6 14.6 0.5 0.5 0.7
EPS reported 0.76 1.11 1.09 1.23	1.58 2.04 2.70
Valuation ratios
P/BV 7.3 6.2 5.1 3.2	3.3 2.9 2.5
EV/sales 0.8 0.6 0.7 0.8	0.6 0.6 0.5
EV/EBITDA 19.5 14.1 13.6 14.0	8.7 7.1 5.5
EV/EBITA 24.4 15.9 15.9 16.7	10.4 8.2 6.3
EV/EBIT 24.4 19.1 18.5 20.6	13.6 10.2 7.3
EV/FCF 41.9 20.4 106.0 42.1	17.7 14.5 9.9
Adjusted FCF yield 3.1 % 4.4 % 4.1 % 4.6 %	7.3 % 9.4 % 12.5 %
Dividend yield 0.4 % 0.8 % 1.0 % 1.1 %	1.2 % 1.4 % 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	60.91 %	100.00 %
Sell	13.64 %	0.00 %
Hold	25.45 %	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.

Under no circumstances shall the Company, any of its employees involved in the preparation, and Hauck & Aufhäuser Privatbankiers KGaA have any liability for possible errors or incompleteness of the information included in this research report – neither in relation to indirect or direct nor consequential damages. Liability for damages arising either directly or as a consequence of the use of information, opinions and estimates is also excluded.

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

2. Responsibilities

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.

3. Organisational Requirements

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.

6. Competent Supervisory Authority

The Company and Hauck & Aufhäuser Privatbankiers KGaA are under supervision of the BaFin – German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht), Graurheindorfer Straße 108, 53117 Bonn and Marie-Curie-Straße 24 – 28, 60439 Frankfurt a.M.

7. Specific Comments for Recipients Outside of Germany

This research report is subject to the law of the Federal Republic of Germany. The distribution of this information to other states in particular to the USA, Canada, Australia and Japan may be restricted or prohibited by the laws applicable within this state.

This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order. This document shall not be made available - whether directly or indirectly - to another group of people in or from the United Kingdom.

Contacts: Hauck&Aufhäuser Investment Banking

Hauck & Aufhäuser Research

Hauck & Aufhäuser Institutional Research AG Mittelweg 16/17

20148 Hamburg Germany

Leonhard Bayer Analyst

Tel.: +49 (0)40 414 3885 - 79 E-Mail: leonhard.bayer@ha-research.de

Lars Dannenberg Analyst

Tel.: +49 (0)40 414 3885 - 92 E-Mail: lars.dannenbergl@ha-research.de

Christian Schwenkenbecher Analyst

Tel.: +49 (0)40 414 3885 - 76 E-Mail: christian.schwenkenbecher@ha-research.de Tel.: +49 (0) 40 414 3885 - 70 Fax: +49 (0) 40 414 3885 - 71 Email: info@ha-research.de www.ha-research.de

Sascha Berresch, CFA Head of Research

Tel.: +49 (0)40 414 3885 - 85 E-Mail: sascha.berresch@ha-research.de

Nils-Peter Fitzl Analyst

Tel.: +49 (0)40 414 3885 - 86 E-Mail: nils-peter.fitzl@ha-research.de

Torben Teichler Analyst

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

Tel.: +49 (0)40 414 3885 - 73 E-Mail: henning.breiter@ha-research.de

Philippe Lorrain Analyst

Tel.: +49 (0)40 414 3885 - 83 E-Mail: philippe.lorrain@ha-research.de

Tim Wunderlich, CFA Analyst

Tel.: +49 (0)40 414 3885 - 81 E-Mail: tim.wunderlich@ha-research.de

Hauck & Aufhäuser Sales

Vincent Bischoff Sales

Tel.: +49 (0)40 414 3885 - 88 E-Mail: vincent.bischoff@ha-research.de

Hugues Madelin Sales

Tel.: +33 1 78 41 40 62 E-Mail: hugues.madelin@ha-research.de

Supervisory Board

Graeme Davies Chairman

Tel.: +49 (0)40 414 3885 - 70 E-Mail: graeme.davies@ha-research.de

Hauck & Aufhäuser Sales Trading

Hauck & Aufhäuser Privatbankiers KGaA Kaiserstraße 24

60311 Frankfurt am Main Germany

Mirko Brueggemann Trading

Tel.: +49 (0)40 414 3885 75 E.Mail: mirko.brueggemann@hauck-aufhaeuser.de James Bonsor, CFA Sales

Tel.: +44 207 125 0987 E-Mail: james.bonsor@ha-research.de

Markus Weiss Sales

Michael Bentlage

Tel.: +49 (0)69 2161 - 1863

Tel.: +49 (0)40 414 3885 - 89 E-Mail: markus.weiss@ha-research.de Hamish Edsell Sales

Tel.: +44 207 125 0988 E-Mail: hamish.edsell@ha-research.de

Toby Woods Sales

Tel.: +44 207 125 0989 E-Mail: toby.woods@ha-research.de

Jeronimo Bremer

Tel.: +49 (0)40 414 3885 - 70 E-Mail: jeronimo.bremer@ha-research.de

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

E-Mail: michael.bentlage@hauck-aufhaeuser.de

Carolin Weber Middle-Office

Tel.: +49 (0)40 414 3885 87 E.Mail: carolin.weber@hauck-aufhaeuser.de