CANCOM SE — Investor Presentation 2014

Mar 3, 2014

CANCOM SE Germany - IT Services

Buy (old: Buy)				03-March-14
	Price target: EUR 44.00	(old: EUR 42.00)		Tim Wunderlich, CFA Analyst
Price:	EUR 36.75	Next result:	Q1 14: 13.05.14
Bloomberg:	COK GR	Market cap:	EUR 537.1 m	tim.wunderlich@ha-research.de
Reuters:	COKG.DE	Enterprise Value:	EUR 445.6 m	Tel.: +49 40 4143885 81

Value-accretive take-over to boost clout in Cloud; Chg. Est. & PT

CANCOM announced the acquisition of a 100% stake in US company HPM Networks. The target is a value-added reseller in the cloud infrastructure space, meaning it sells hardware (e.g. storage, servers) into cloud projects and offers implementation and consulting services.

In 2013, HPM generated € 40m of sales and € 3.3m EBITDA (adjusted for an undisclosed one-off), implying a strong EBITDA margin of 8.3%. The acquisition looks value-accretive as CANCOM will only pay € 6.6m in cash (i.e. 2x EBITDA) plus an undisclosed earn-out component. In our view, the earn-out should run for several years and depend on the EBITDA result of the target, providing a strong incentive for the former owner and CEO to remain at the company. Why the attractive take-over price was possible, in our view:

• First, a cloud industry insider, the CEO of HPM is seen to be very convinced of the potential of Cancom's proprietary AHP cloud solution for the implementation of Private Cloud solutions, hence accepting a large variable component.
• Second, hardware resellers like HPM with exposure to suppliers like HP should be concerned about the sustainability of their business models given a sluggish global IT hardware market.

Benefits: Marking the entry into the dynamic US West Coast market, CANCOM plans to use HPM's position in the cloud infrastructure market to cross-sell its AHP Private Cloud solution to the existing customer base. Also, HPM's existing partner network (e.g. HP, VMWare) and renowned customer base (e.g. twitter, GAP, Workday, Juniper) should help CANCOM win new customers. Importantly, CANCOM's channel checks have shown that its Private Cloud solution does not face any meaningful competition in this regional market, meaning its unique value proposition remains fully intact.

– continued –

Y/E 31.12 (EUR m)	2009	2010	2011	2012	2013E	2014E	2015E
Sales	348.3	474.6	544.4	558.1	613.0	734.7	782.2
Sales growth	2 %	36 %	15 %	3 %	10 %	20 %	6 %
EBITDA	9.5	19.0	25.0	28.1	33.3	52.9	62.4
EBIT	7.1	15.2	18.5	20.7	24.3	34.0	43.3
Net income	5.1	7.8	11.5	11.5	16.4	23.5	29.9
Net debt	-3.5	-0.9	-18.5	-29.2	-91.6	-68.0	-91.6
Net gearing	-8.0 %	-1.8 %	-30.4 %	-36.3 %	-55.7 %	-39.7 %	-47.1 %
Net Debt/EBITDA	0.0	0.0	0.0	0.0	0.0	0.0	0.0
EPS pro forma	0.48	0.92	1.14	1.06	1.12	1.61	2.05
CPS	0.80	1.28	2.18	0.89	1.04	1.77	2.37
DPS	0.15	0.15	0.30	0.35	0.40	0.45	0.50
Dividend yield	0.4 %	0.4 %	0.8 %	1.0 %	1.1 %	1.2 %	1.4 %
Gross profit margin	31.0 %	29.3 %	29.1 %	29.5 %	30.5 %	35.0 %	35.2 %
EBITDA margin	2.7 %	4.0 %	4.6 %	5.0 %	5.4 %	7.2 %	8.0 %
EBIT margin	2.0 %	3.2 %	3.4 %	3.7 %	4.0 %	4.6 %	5.5 %
ROCE	10.5 %	19.5 %	20.6 %	21.1 %	17.2 %	17.6 %	19.8 %
EV/sales	1.1	0.8	0.7	0.7	0.7	0.6	0.6
EV/EBITDA	39.8	19.8	14.4	13.8	13.4	8.9	7.1
EV/EBIT	53.1	24.8	19.4	18.8	18.4	13.8	10.3
PER	76.4	39.9	32.2	34.6	32.8	22.9	17.9
Adjusted FCF yield	1.6 %	3.0 %	4.4 %	4.0 %	4.4 %	6.8 %	8.7 %

Source: Company data, Hauck & Aufhäuser Close price as of: 28.02.2014

Source: Company data, Hauck & Aufhäuser

High/low 52 weeks:	36.75 / 14.15
Price/Book Ratio:	3.3
Relative performance (TecDAX):
3 months	25.9 %
6 months	48.2 %
12 months	99.1 %

Changes in estimates

		Sales	EBIT	EPS
2013	old:	613.0	24.3	1.32
	∆	-	-	-
	old:	701.4	31.6	1.48
2014	∆	4.7%	7.9%	8.3%
	old:	742.2	40.4	1.91
2015	∆	5.4%	7.2%	7.2%

Key share data:

Number of shares: (in m pcs)	12.4
Authorised capital: (in € m)	4.0
Book value per share: (in €)	11.3
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.

Conclusion: The low acquisition price and healthy profitability of HPM should limit risks while the target's footprint in the cloud market (on the US West Coast) is seen to provide attractive cross-selling opportunities for Cancom's AHP software which offers recurring revenues and high margins of above 30%. It shows that Cancom continues to put its cash pile to sensible use and convert its first-mover advantage regarding its AHP solution into sustainable market share.

Changes: Our model is adjusted to incorporate the take-over of HPM. We are not including any success from cross-selling CANCOM's AHP Private Cloud solution until there is first evidence of customer acceptance. As such, sales and EBIT expectations are raised to include c. € 40m of sales and € 3.3m of EBITDA, which we model to be flat going forward. Also, we include c. € 0.4m of annual PPA and a € 0.3m earn-out p.a. for the next three years.

CANCOM remains a Buy with a new PT of € 44.00 (old: € 42.00) based on DCF: The higher PT reflects the value-accretive nature of the deal.

Financials

Profit and loss (EUR m)	2009	2010	2011	2012	2013E	2014E	2015E
Net sales	348.3	474.6	544.4	558.1	613.0	734.7	782.2
Sales growth	1.6 %	36.2 %	14.7 %	2.5 %	9.8 %	19.9 %	6.5 %
Increase/decrease in finished goods and work-in-process	1.0	1.3	0.9	2.5	1.0	1.0	1.0
Total sales	349.3	475.8	545.3	560.6	614.0	735.7	783.2
Other operating income	2.3	3.3	0.7	0.6	0.7	0.7	0.7
Material expenses	241.1	336.3	386.6	395.1	426.6	478.3	507.8
Personnel expenses	79.2	97.0	108.0	112.4	125.4	163.9	170.2
Other operating expenses	21.8	26.8	26.4	25.8	29.4	41.2	43.5
Total operating expenses	339.8	456.8	520.3	532.5	580.7	682.8	720.9
EBITDA	9.5	19.0	25.0	28.1	33.3	52.9	62.4
Depreciation	2.4	3.8	2.8	4.0	4.8	8.3	8.7
EBITA	7.1	15.2	22.2	24.0	28.5	44.6	53.7
Amortisation of goodwill	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Amortisation of intangible assets	0.0	0.0	3.7	3.4	4.2	10.6	10.4
Impairment charges	0.0	0.0	0.0	0.0	0.0	0.0	0.0
EBIT	7.1	15.2	18.5	20.7	24.3	34.0	43.3
Interest income	0.2	0.1	0.3	0.4	0.6	0.7	0.7
Interest expenses	1.3	1.9	2.2	2.1	1.2	1.0	1.0
Other financial result	0.0	0.0	0.4	0.0	0.0	0.0	0.0
Financial result	-1.1	-1.8	-1.6	-1.8	-0.6	-0.3	-0.3
Recurring pretax income from continuing operations	5.9	13.3	16.9	18.9	23.7	33.8	43.0
Extraordinary income/loss	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Earnings before taxes	5.9	13.3	16.9	18.9	23.7	33.8	43.0
Taxes	0.9	3.7	4.9	6.6	7.1	9.2	11.7
Net income from continuing operations	5.0	9.6	12.0	12.3	16.6	24.6	31.3
Result from discontinued operations (net of tax)	-0.1	1.7	0.3	0.7	0.0	0.0	0.0
Net income	5.1	7.9	11.7	11.6	16.6	24.6	31.3
Minority interest	0.0	0.1	0.2	0.1	0.2	1.1	1.4
Net income (net of minority interest)	5.1	7.8	11.5	11.5	16.4	23.5	29.9
Average number of shares	10.4	10.3	10.4	10.6	12.4	14.6	14.6
EPS reported	0.49	0.76	1.11	1.09	1.32	1.61	2.05

Profit and loss (common size)	2009	2010	2011	2012	2013E	2014E	2015E
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 %	0.3 %	0.2 %	0.5 %	0.2 %	0.1 %	0.1 %
Total sales	100.3 %	100.3 %	100.2 %	100.5 %	100.2 %	100.1 %	100.1 %
Other operating income	0.6 %	0.7 %	0.1 %	0.1 %	0.1 %	0.1 %	0.1 %
Material expenses	69.2 %	70.9 %	71.0 %	70.8 %	69.6 %	65.1 %	64.9 %
Personnel expenses	22.7 %	20.4 %	19.8 %	20.1 %	20.5 %	22.3 %	21.8 %
Other operating expenses	6.3 %	5.7 %	4.8 %	4.6 %	4.8 %	5.6 %	5.6 %
Total operating expenses	97.6 %	96.3 %	95.6 %	95.4 %	94.7 %	92.9 %	92.2 %
EBITDA	2.7 %	4.0 %	4.6 %	5.0 %	5.4 %	7.2 %	8.0 %
Depreciation	0.7 %	0.8 %	0.5 %	0.7 %	0.8 %	1.1 %	1.1 %
EBITA	2.0 %	3.2 %	4.1 %	4.3 %	4.6 %	6.1 %	6.9 %
Amortisation of goodwill	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Amortisation of intangible assets	0.0 %	0.0 %	0.7 %	0.6 %	0.7 %	1.4 %	1.3 %
Impairment charges	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
EBIT	2.0 %	3.2 %	3.4 %	3.7 %	4.0 %	4.6 %	5.5 %
Interest income	0.0 %	0.0 %	0.1 %	0.1 %	0.1 %	0.1 %	0.1 %
Interest expenses	0.4 %	0.4 %	0.4 %	0.4 %	0.2 %	0.1 %	0.1 %
Other financial result	0.0 %	0.0 %	0.1 %	0.0 %	0.0 %	0.0 %	0.0 %
Financial result	-0.3 %	-0.4 %	-0.3 %	-0.3 %	-0.1 %	0.0 %	0.0 %
Recurring pretax income from continuing operations	1.7 %	2.8 %	3.1 %	3.4 %	3.9 %	4.6 %	5.5 %
Extraordinary income/loss	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Earnings before taxes	1.7 %	2.8 %	3.1 %	3.4 %	3.9 %	4.6 %	5.5 %
Tax rate	15.6 %	28.1 %	28.8 %	35.0 %	30.0 %	27.2 %	27.2 %
Net income from continuing operations	1.4 %	2.0 %	2.2 %	2.2 %	2.7 %	3.3 %	4.0 %
Income from discontinued operations (net of tax)	0.0 %	0.4 %	0.1 %	0.1 %	0.0 %	0.0 %	0.0 %
Net income	1.5 %	1.7 %	2.1 %	2.1 %	2.7 %	3.3 %	4.0 %
Minority interest	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.1 %	0.2 %
Net income (net of minority interest)	1.5 %	1.6 %	2.1 %	2.1 %	2.7 %	3.2 %	3.8 %

Balance sheet (EUR m)	2009	2010	2011	2012	2013E	2014E	2015E
Intangible assets	31.5	42.5	39.6	41.2	57.0	96.4	90.6
Property, plant and equipment	6.5	9.7	12.9	17.6	19.6	23.0	25.3
Financial assets	0.2	3.2	2.2	5.0	5.0	5.0	5.0
FIXED ASSETS	38.2	55.4	54.6	63.8	81.7	124.5	120.9
Inventories	12.6	13.4	15.0	8.7	12.3	14.1	15.6
Accounts receivable	47.2	68.0	72.2	88.3	95.7	110.7	120.0
Other current assets	5.1	6.4	7.2	0.9	0.9	0.9	0.9
Liquid assets	25.8	31.5	44.4	44.6	102.5	78.9	102.5
Deferred taxes	2.6	0.7	0.6	1.1	1.1	1.1	1.1
Deferred charges and prepaid expenses	3.4	2.0	0.9	1.1	1.1	1.1	1.1
CURRENT ASSETS	96.7	122.0	140.2	144.8	213.7	206.9	241.3
TOTAL ASSETS	134.9	177.4	194.9	208.6	295.4	331.4	362.2
SHAREHOLDERS EQUITY	43.9	50.9	60.7	80.6	164.6	171.2	194.6
MINORITY INTEREST	0.0	0.1	0.2	0.2	0.4	19.1	20.5
Long-term debt	21.6	29.0	16.7	14.1	6.4	6.4	6.4
Provisions for pensions and similar obligations	0.0	0.1	0.1	0.1	0.1	0.1	0.1
Other provisions	4.3	3.2	7.6	5.1	5.1	5.1	5.1
Non-current liabilities	26.0	32.2	24.4	19.3	11.6	11.6	11.6
short-term liabilities to banks	0.7	1.6	9.1	1.3	4.5	4.5	4.5
Accounts payable	47.9	64.4	72.9	76.9	84.0	94.6	100.7
Advance payments received on orders	1.1	1.5	1.9	3.6	3.6	3.6	3.6
Other liabilities (incl. from lease and rental contracts)	10.7	16.3	17.4	18.8	18.8	18.8	18.8
Deferred taxes	2.0	4.3	2.7	2.8	2.8	2.8	2.8
Deferred income	2.7	6.0	5.6	5.1	5.1	5.1	5.1
Current liabilities	65.0	94.2	109.6	108.6	118.8	129.4	135.5
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	134.9	177.4	194.9	208.6	295.4	331.4	362.2

Balance sheet (common size)	2009	2010	2011	2012	2013E	2014E	2015E
Intangible assets	23.4 %	24.0 %	20.3 %	19.8 %	19.3 %	29.1 %	25.0 %
Property, plant and equipment	4.8 %	5.5 %	6.6 %	8.4 %	6.6 %	6.9 %	7.0 %
Financial assets	0.1 %	1.8 %	1.1 %	2.4 %	1.7 %	1.5 %	1.4 %
FIXED ASSETS	28.3 %	31.2 %	28.0 %	30.6 %	27.7 %	37.6 %	33.4 %
Inventories	9.3 %	7.5 %	7.7 %	4.2 %	4.2 %	4.3 %	4.3 %
Accounts receivable	35.0 %	38.3 %	37.1 %	42.3 %	32.4 %	33.4 %	33.1 %
Other current assets	3.8 %	3.6 %	3.7 %	0.4 %	0.3 %	0.3 %	0.2 %
Liquid assets	19.2 %	17.7 %	22.8 %	21.4 %	34.7 %	23.8 %	28.3 %
Deferred taxes	1.9 %	0.4 %	0.3 %	0.5 %	0.4 %	0.3 %	0.3 %
Deferred charges and prepaid expenses	2.5 %	1.1 %	0.4 %	0.5 %	0.4 %	0.3 %	0.3 %
CURRENT ASSETS	71.7 %	68.8 %	72.0 %	69.4 %	72.3 %	62.4 %	66.6 %
TOTAL ASSETS	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %
SHAREHOLDERS EQUITY	32.5 %	28.7 %	31.2 %	38.6 %	55.7 %	51.7 %	53.7 %
MINORITY INTEREST	0.0 %	0.0 %	0.1 %	0.1 %	0.1 %	5.8 %	5.7 %
Long-term debt	16.0 %	16.3 %	8.6 %	6.8 %	2.2 %	1.9 %	1.8 %
Provisions for pensions and similar obligations	0.0 %	0.0 %	0.0 %	0.1 %	0.0 %	0.0 %	0.0 %
Other provisions	3.2 %	1.8 %	3.9 %	2.4 %	1.7 %	1.5 %	1.4 %
Non-current liabilities	19.3 %	18.2 %	12.5 %	9.3 %	3.9 %	3.5 %	3.2 %
short-term liabilities to banks	0.5 %	0.9 %	4.7 %	0.6 %	1.5 %	1.4 %	1.2 %
Accounts payable	35.5 %	36.3 %	37.4 %	36.9 %	28.4 %	28.5 %	27.8 %
Advance payments received on orders	0.8 %	0.9 %	1.0 %	1.7 %	1.2 %	1.1 %	1.0 %
Other liabilities (incl. from lease and rental contracts)	7.9 %	9.2 %	9.0 %	9.0 %	6.4 %	5.7 %	5.2 %
Deferred taxes	1.5 %	2.4 %	1.4 %	1.4 %	1.0 %	0.9 %	0.8 %
Deferred income	2.0 %	3.4 %	2.9 %	2.4 %	1.7 %	1.5 %	1.4 %
Current liabilities	48.2 %	53.1 %	56.2 %	52.0 %	40.2 %	39.1 %	37.4 %
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %

Cash flow statement (EUR m)	2009	2010	2011	2012	2013E	2014E	2015E
Net profit/loss	5.1	7.9	11.7	11.6	16.6	24.6	31.3
Depreciation of fixed assets (incl. leases)	2.4	3.8	2.8	4.0	4.8	8.3	8.7
Amortisation of goodwill	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Amortisation of intangible assets	0.0	0.0	3.7	3.4	4.2	10.6	10.4
Others	-0.6	3.0	4.7	2.9	0.0	0.0	0.0
Cash flow from operations before changes in w/c	6.9	14.7	22.9	21.9	25.6	43.5	50.4
Increase/decrease in inventory	-0.9	0.3	-6.3	6.2	-3.5	-1.9	-1.5
Increase/decrease in accounts receivable	0.8	-15.2	-5.2	-16.1	-7.4	-15.0	-9.3
Increase/decrease in accounts payable	2.7	17.1	15.3	4.0	7.0	10.6	6.1
Increase/decrease in other working capital positions	1.1	0.0	0.0	0.0	0.0	0.0	0.0
Increase/decrease in working capital	3.8	2.2	3.8	-5.8	-3.9	-6.2	-4.7
Cash flow from operating activities	10.7	16.9	26.7	16.1	21.7	37.3	45.7
CAPEX	4.7	8.1	9.4	12.5	9.9	16.1	15.2
Payments for acquisitions	0.4	10.5	3.6	0.1	0.0	39.0	0.3
Financial investments	-0.2	-0.1	-0.3	0.0	0.0	0.0	0.0
Income from asset disposals	2.3	1.1	4.8	2.0	0.0	0.0	0.0
Cash flow from investing activities	-2.6	-17.3	-7.9	-10.6	-9.9	-55.1	-15.5
Cash flow before financing	8.0	-0.4	18.8	5.5	11.8	-17.8	30.2
Increase/decrease in debt position	0.1	8.1	-2.6	-11.9	-4.5	0.0	0.0
Purchase of own shares	0.2	-0.6	0.0	0.0	0.0	0.0	0.0
Capital measures	0.0	0.0	0.0	11.2	54.6	0.0	0.0
Dividends paid	0.0	1.5	1.6	3.3	4.0	5.8	6.6
Others	-1.0	-1.3	-1.6	-1.4	0.0	0.0	0.0
Effects of exchange rate changes on cash	0.0	0.1	0.0	0.0	0.0	0.0	0.0
Cash flow from financing activities	-1.1	5.9	-5.8	-5.3	46.1	-5.8	-6.6
Increase/decrease in liquid assets	7.0	5.6	13.0	0.2	57.9	-23.6	23.6
Liquid assets at end of period	25.8	31.5	44.5	44.6	102.5	78.9	102.5

Source: Company data, Hauck & Aufhäuser

2009	2010	2011	2012	2013E	2014E	2015E
386.1	441.7	502.0	529.1	582.4	698.7	744.7
19.8 %	14.4 %	13.7 %	5.4 %	10.1 %	20.0 %	6.6 %
36.4	32.9	42.4	29.0	30.7	36.0	37.5
n/a	-9.6 %	28.9 %	-31.7 %	5.9 %	17.5 %	4.3 %
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	n/a	n/a	n/a	n/a	n/a	n/a
422.5	474.6	544.4	558.1	613.0	734.7	782.2
31.1 %	12.3 %	14.7 %	2.5 %	9.8 %	19.9 %	6.5 %

Key ratios (EUR m)	2009	2010	2011	2012	2013E	2014E	2015E
P&L growth analysis
Sales growth	1.6 %	36.2 %	14.7 %	2.5 %	9.8 %	19.9 %	6.5 %
EBITDA growth	21.3 %	100.7 %	31.6 %	12.2 %	18.7 %	59.0 %	17.8 %
EBIT growth	26.0 %	114.0 %	21.7 %	12.0 %	17.5 %	40.3 %	27.0 %
EPS growth	87.8 %	55.5 %	46.4 %	-2.1 %	21.9 %	21.5 %	27.4 %
Efficiency
Total operating costs / sales	97.6 %	96.3 %	95.6 %	95.4 %	94.7 %	92.9 %	92.2 %
Sales per employee	196.0	257.7	273.1	270.9	288.7	330.9	337.9
EBITDA per employee	5.3	10.3	12.5	13.6	15.7	23.9	26.9
Balance sheet analysis
Avg. working capital / sales	3.4 %	2.8 %	2.6 %	2.6 %	3.0 %	3.2 %	3.7 %
Inventory turnover (sales/inventory)	27.7	35.5	36.3	63.8	50.0	52.0	50.0
Trade debtors in days of sales	49.5	52.3	48.4	57.7	57.0	55.0	56.0
A/P turnover [(A/P*365)/sales]	50.1	49.6	48.9	50.3	50.0	47.0	47.0
Cash conversion cycle (days)	-3.9	-3.1	-6.3	-5.3	-4.4	-6.4	-5.2
Cash flow analysis
Free cash flow	6.0	8.8	17.3	3.6	11.8	21.2	30.5
Free cash flow/sales	1.7 %	1.9 %	3.2 %	0.6 %	1.9 %	2.9 %	3.9 %
FCF / net profit	118.4 %	113.1 %	150.3 %	31.4 %	71.9 %	90.1 %	101.9 %
Capex / depn	188.4 %	206.6 %	139.0 %	169.0 %	109.7 %	85.2 %	79.6 %
Capex / maintenance capex	137.6 %	133.1 %	151.6 %	n/a	106.2 %	102.6 %	100.0 %
Capex / sales	1.3 %	1.7 %	1.7 %	n/a	n/a	n/a	n/a
Security
Net debt	-3.5	-0.9	-18.5	-29.2	-91.6	-68.0	-91.6
Net Debt/EBITDA	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Net debt / equity	-0.1	0.0	-0.3	-0.4	-0.6	-0.4	-0.5
Interest cover	5.4	8.0	8.3	9.7	20.5	34.7	44.1
Dividend payout ratio	30.7 %	19.7 %	26.7 %	34.7 %	35.7 %	28.0 %	24.4 %
Asset utilisation
Capital employed turnover	4.9	5.6	5.8	5.5	3.4	3.6	3.4
Operating assets turnover	20.1	18.9	21.5	16.4	15.3	14.8	13.8
Plant turnover	53.4	49.0	42.2	31.8	31.2	31.9	30.9
Inventory turnover (sales/inventory)	27.7	35.5	36.3	63.8	50.0	52.0	50.0
Returns
ROCE	10.5 %	19.5 %	20.6 %	21.1 %	17.2 %	17.6 %	19.8 %
ROE	11.5 %	15.4 %	19.0 %	14.2 %	10.0 %	13.7 %	15.4 %
Other
Interest paid / avg. debt	5.9 %	7.2 %	7.9 %	10.3 %	9.0 %	9.0 %	9.0 %
No. employees (average)	1777	1842	1994	2060	2123	2220	2315
Number of shares	10.4	10.3	10.4	10.6	12.4	14.6	14.6
DPS	0.2	0.2	0.3	0.4	0.4	0.5	0.5
EPS reported	0.49	0.76	1.11	1.09	1.32	1.61	2.05
Valuation ratios
P/BV	8.7	7.4	6.3	5.2	3.3	3.1	2.8
EV/sales	1.1	0.8	0.7	0.7	0.7	0.6	0.6
EV/EBITDA	39.8	19.8	14.4	13.8	13.4	8.9	7.1
EV/EBITA	53.1	24.8	16.2	16.2	15.7	10.5	8.3
EV/EBIT	53.1	24.8	19.4	18.8	18.4	13.8	10.3
EV/FCF	62.8	42.6	20.7	107.8	37.8	22.1	14.6
Adjusted FCF yield	1.6 %	3.0 %	4.4 %	4.0 %	4.4 %	6.8 %	8.7 %
Dividend yield	0.4 %	0.4 %	0.8 %	1.0 %	1.1 %	1.2 %	1.4 %

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.

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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.

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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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