Interim Report Q1. 3-months-report 2012.»Leading provider of IT infrastructure and professional services«

Transcription

1 Interim Report Q1 3-months-report 2012»Leading provider of IT infrastructure and professional services«

2 02 Q1/2012 Table of Contents Table of contents SectionP page Table of contents 02 Key figures 03 Preface 04 Consolidated interim management report Q ) Business and the generel economic situation ) Earnings, financial and assets situation of the CANCOM Group ) Shareholdings of the Executive and Supervisory Board 10 4) Events of particular significance after the reoprting date 10 5) Risk report 10 6) Opportunities report 10 7) Forecast Balance sheet Statement of comprehensive income 14 Consolidated cash flow statement 15 Consolidated statement of changes in equity 16 Statement of comprehensive income 17 Segment information Appendix CONTENT

3 Q1/2012 Key figures 03 Key figures Overview of key figures CANCOM group in million 01/01/ - 31/03/ /01/ - 31/03/2011 Changes Revenue % Gross profit % EBITDA % EBITDA-Marge in % 5.0 % 3.8 % % EBIT % Net profit for the period % Earnings per share (in ) from continuing operations (diluted) % Average number of shares (in 1,000) (diluted) 10,391 10,391 0 % Employees as of 31 March 1,981 2, % in million Changes Balance sheet total % Equity % Equity ratio in % 35.1 % 31.2 % % CANCOM Group's sales revenues 3 months (01/01-31/03) (in million) CANCOM Group's EBITDA 3 months (01/01-31/03) (in million) CANCOM Group's EBIT 3 months (01/01-31/03) (in million)

4 4 Q1/2012 Preface Preface Dear Shareholders, nfollowing the record results achieved in 2011, the CANCOM Group made a very good start to the current financial year. The first quarter results are convincing evidence of the Group s impressive performance. Consolidated sales revenues are up 13.2 percent, underlining CANCOM s steady growth, and the Group s continuing profitability is demonstrated by the 48.9 percent increase in earnings before interest, tax, depreciation and amortisation (EBITDA). The price of the CANCOM share jumped at the end of the quarter. The CANCOM strategy clearly concentrates on high-earnings and high-growth market segments, with a corporate portfolio focused on the IT trends of the future. Our objective of achieving an EBITDA margin of 5 percent within the Group in the medium term is therefore already within reach. The establishment of the new company CANCOM cloud solutions GmbH, at the beginning of the year, brings the Group another step closer to becoming the leading private cloud solutions architect and managed services provider. All the Group s managed services and cloud solutions are to be concentrated in the new company immediately. According to the latest economic survey by the German Federal Association for Information Technology, Telecommunications and New Media, BITKOM, the positive mood in the IT sector is set to continue. The majority of companies surveyed expect an increase in revenues over the year 2012 as a whole in comparison with BITKOM anticipates that this growth will be driven by technologies such as cloud computing, and by the increase in mobile Internet use via tablet computers or smartphones. With its portfolio of products and services, CANCOM is well placed for future growth. Our operating strength and our comfortable cash position offer great opportunities to drive the Group s growth, both organically and through acquisitions. We would like to thank our shareholders for their confidence in us, and we look forward to shaping CANCOM s success into the future. Yours sincerely Klaus Weinmann, CEO

5 Consolidated Interim Management Report

6 06 Q1/2012 Consolidated Interim Management Report Consolidated Interim Management Report 1. Business and operating environment Organisational and legal structure of the CANCOM Group Research and development activities CANCOM AG, based in Munich, Germany, performs the central financial and management Innovation is of the utmost importance in stimulating economic momentum and growth. role for the equity investments held by the CANCOM Group. However, as CANCOM is purely a services and trading company, it does not undertake any research activities. Development work is very limited and is principally for the Group s Focus of activities and sales markets own purposes. Its focus includes software solutions and applications in IT growth areas One of the three largest independent integrated systems providers in Germany, the CAN- such as cloud computing, virtualisation, mobile solutions, IT security and managed services. COM Group is an IT architect, systems integrator and managed services provider. As a provider of integrated services, its central focus is on providing IT services in addition to Developments in the first quarter of 2012 focused on the online segment and on a new distributing hardware and software from prestigious manufacturers. Its range of IT services ERP system for a subsidiary. includes designing of IT architectures and landscapes, and designing and integration of IT systems, as well as systems operation. The performance of the IT sector and the economy as a whole Following a decline in GDP in Germany in the fourth quarter of 2011, in the first quarter The CANCOM Group s customer base therefore primarily includes commercial end-users, of the current year the early indications are for slight year-on-year growth of 0.1 percent. from independent professionals and medium-sized companies to large companies and public-sector institutions. According to the latest economic survey by the German IT sector organisation BITKOM, just under three-quarters of German providers of IT, telecommunications and electronic Explanation of the control system used within the Group entertainment equipment recorded a year-on-year increase in sales revenues in the first To control and monitor the performance of the individual subsidiaries, once a month quarter of In the first quarter of 2012 the BITKOM sector index was up on the fourth CANCOM analyses, inter alia, key figures such as their sales revenues, gross profit, quarter of 2011, and it is currently significantly higher than the Ifo Business Climate Index operating expenditure and operating profit, and compares these with the original plan as for the German economy as a whole. well as the quarterly forecast. Additionally, the Company regularly uses external indicators such as inflation rates, interest rates, the general economic trend and the performance of the IT sector as well as forecasts for these for the purpose of management control. The cash management procedures include a daily status investigation.

7 Q1/2012 Consolidated Interim Management Report 07 Consolidated Interim Management Report Overview of the CANCOM Group s business performance In the first quarter of 2012, the CANCOM Group again recorded a significant year-on-year jump in sales revenues and profits. In fact, this is the best quarter in the Company s history. The figures for the first quarter of 2012 and the comparative figures for 2011 had to be adjusted in compliance with International Financial Reporting Standards (IFRS) to take into account the sale of HOH Home of Hardware GmbH and CANCOM Ltd. UK, so that these business units are now accounted for as discontinued operations. Details can be found in the notes to the consolidated accounts. Employees As at 31 March 2012, the CANCOM Group employed 1,981 people. The employees worked in the following areas (as at 31 March): Professional services: 1,359 Sales and distribution: 339 Central services: 283 The CANCOM Group s consolidated sales revenues for the first quarter of 2012 were up 13.2 percent year on year to million, compared with million in the first quarter of The consolidated gross profit was up 11.1 percent from 37.9 million to 42.1 million. Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) were up 48.9 percent year on year, from last year's 4.7 million, with an EBITDA margin of 5.0 percent, compared with 3.8 percent in the first quarter of Consolidated EBIT rose by 71.0 percent, from 3.1 million in the first quarter of 2011 to 5.3 million in The consolidated profit for the period was 2.1 million, compared with 1.7 million in the first quarter of This resulted in earnings per share from continuing operations of 0.26, compared with 0.17 in the same period of The personnel expenses for the first three months were as follows (in 000): First quarter 2012 First quarter 2011 Wages and salaries 24,579 22,668 Social security contributions 4,159 4,195 Pension provisions Total 28,841 26,950 Significant events and investments in the reporting period Since 5 March 2012, the former CANCOM subsidiary CANCOM Plaut Managed Services GmbH has been operating under the name of CANCOM cloud solutions GmbH. In a meeting on 20 March 2012, the Supervisory Board of CANCOM AG approved the sale of the Group s wholly-owned subsidiary CANCOM Ltd., UK. The reason for selling the company was to allow the Group to focus on the higher-margin business-to-business segment. Since the company had already been allocated to discontinued operations since the second quarter of 2011, and the main impact of this was taken into account in the financial statements for 2011, the sale will not have any great impact on the Group s cash and profit situation for the current year.

8 08 Q1/2012 Consolidated Interim Management Report Consolidated Interim Management Report 2. The earnings, financial and assets position of the CANCOM Group a) Earnings position The CANCOM Group achieved a significant increase in sales revenues and profits in the first three months of Consolidated sales revenues were up 13.2 percent year on year, from million to million. CANCOM Group EBITDA: year-on-year comparison of first-quarter figures, 2011 and 2012 (in million) 8 6 CANCOM Group sales revenues: year-on-year comparison of first-quarter figures, 2011 and 2012 (in million) Consolidated earnings before interest and tax (EBIT) were up 71.0 percent, from 3.1 million to 5.3 million. In Germany, sales revenues were up 21.1 percent, from million to million. In international business, the Group s sales revenues rose 47.6 percent, from 14.3million to 7.5 million. CANCOM Group EBIT: year-on-year comparison of first-quarter figures, 2011 and 2012 (in million) 6 4 In the e-commerce segment, sales revenues were up 11.5 percent to 37.8 million, in 2 comparison with 42.7 million in In the IT solutions segment they were up 26.0 percent, from 82.0 million to million The consolidated gross profit for the first three months of 2012 was up 11.1 percent in comparison with 2011, from 42.1 million to 37.9 million. The gross profit margin fell from 30.4 percent to 29.8 percent. CANCOM Group gross profit: year-on-year comparison of first-quarter figures, 2011 and 2012 (in million) The net income for the first three months of 2012 rose to 1.7 million, compared with 2.1 million in As a result, earnings per share from continuing operations in the first three months of 2012 were 0.26, compared with 0.17 in the same period of CANCOM Group earnings per share year-on-year comparison of first-quarter figures, 2011 and 2012 (in million) Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) were up 48.9 percent in the first three months of 2012 to 7.0 million, in comparison with 4.7 million in the first quarter of

9 Q1/2012 Consolidated Interim Management Report 09 Consolidated Interim Management Report The order position In the e-commerce segment and parts of the IT solutions segment, the majority of incoming orders are converted to sales within two weeks because of our large delivery capacity. Consequently, the reporting date figures on their own do not give a true picture of our order situation in this area of business, which is why they are not published. In the IT solutions segment, orders are often given over long periods. At present, the volume of orders continues to be healthy. Due to the stable services business which now accounts for around two-thirds of the consolidated gross profits (total output less materials costs and services rendered) as well as the healthy condition of the balance sheet, the management feels the Group is in a good position within the IT sector. Explanations of individual items on the statement of income Details on items in the statement of income are given in the notes to the consolidated statement of income. b) Financial and assets position Objectives of financial management The core objective of the financial management of the CANCOM Group is to safeguard its liquidity at all times, to ensure that day-to-day business activities can be continued. In addition, the Group aims to achieve optimum profitability as well as the highest possible credit standing to ensure favourable refinancing rates. Notes on the capital structure On the assets side of the consolidated balance sheet, there was a decrease in current assets between 31 December 2011 and 31 March 2012, from million to million. Cash and cash equivalents were down from 44.4 million to 28.3 million, owing to seasonal variations. Trade accounts receivable rose from 72.2 million to 81.8 million, but inventories were reduced from 15.0 million to 9.2 million. Non-current assets as at 31 March 2012 were almost unchanged, at 55.0 million, compared with 54.5 million as at 31 December The liabilities side of the balance sheet shows a significant reduction in current liabilities, which are down from million to 95.5 million. This is mainly the result of a reduction in trade accounts payable from 72.9 million to 55.9 million. Non-current liabilities, consisting of liabilities with a residual term of at least one year, are down from 24.2 million to 21.7 million. The total assets are down to million as at 31 March 2012, compared with million as at 31 December The nominal equity capital has been increased from 60.9 million to 63.3 million since the start of the year, mainly through transfers to net profits. Overall, this resulted in an equity ratio of 35.1 percent at 31 March 2012, compared with 31.2 percent at 31 December Further details of the individual balance sheet items can be found in the notes to the consolidated balance sheet. Notes to the statement of cash flows The cash flow from ordinary activities is typically negative during the year, and there was a negative cash flow of 14.2 million as at 31 March 2012, compared with 15.9 million in the same period of The change in comparison was influenced by the increase of balance between trade accounts receivable and trade accounts payable. There was a negative cash flow from investing activities of 1.0 million, compared with a negative cash flow of 2.4 million in the first three months of There was a negative cash flow from financing activities of 1.0 million, compared with a negative cash flow of 1.2 million in the first three months of Overall, this resulted in cash and cash equivalents of 28.3 million, compared with 11.8 million in 2011.

10 010 Q1/2012 Consolidated Interim Management Report Consolidated Interim Management Report 3. Shares held by members of the Executive and Supervisory Boards as at 31 March Opportunities for future development Total number of shares: 10,390, % Executive Board: Klaus Weinmann 209, % Rudolf Hotter % Supervisory Board: Walter von Szczytnicki 6, % Stefan Kober 261, % Raymond Kober 260, % Walter Krejci % Regina Weinmann % Petra Neureither* 11, % * Shares for PEN GmbH 4. Events of particular significance after the reporting date There were no events of particular importance after the reporting date of 31 March 2012 up to the time this management report was prepared by the Executive Board. 5. Risks of future development There have been no major changes in the opportunities for future development at CANCOM since the start of the current financial year. Details of the opportunities report can be found in the annual report for 2011, starting on page Forecast The German Economics Ministry is of the view that the German economy is gradually emerging from the dip, and stands a good chance of starting to grow again in the spring. According to the Ministry, there are various economic indicators that point to this. For the year 2012 as a whole, most experts are forecasting growth of between 0.5 percent and 1.0 percent. Gross domestic product, Germany, 2012 (real change compared with 2011, as a percentage) -0.2 Euroland There have been no major changes in the risks of future development at CANCOM since Germany USA Japan UK World the start of the current financial year. Details of the risks can be found in the annual report for 2011, starting on page 20. The annual report can be downloaded from de or obtained free of charge from the Company. * Forecast: Deutsche Bank Economic Research, 11 April 2012 According to the latest market figures from the Federal Association for Information Technology, Telecommunications and New Media (BITKOM) experts anticipate that growth in the German IT market will remain steady at 3.1 percent. They forecast growth of 3.0 percent for the IT hardware segment and 4.4 percent for the software segment, compared with 1.3 percent and 5.1 percent respectively in The IT services segment is expected to grow by 2.5 percent, compared with 3.2 percent in 2011.

11 Q1/ Consolidated Interim Management Report Consolidated Interim Management Report Performance of the German IT sector in 2012 In view of the Group s positive performance in 2011, the Executive Board currently expects (real change in comparison with 2011, as a percentage) that, provided economic conditions continue to be positive in 2012, the sales revenues and profits of the Group as a whole will rise, and that its financial situation will continue to be positive. Munich, Germany, May 2012 CANCOM AG IT market IT hardware Software as a whole IT services Forecast: BITKOM, February 2012 The Executive Board CANCOM was early in gearing its business policy to future IT trends, and designed its sales and services structure around them. The expansion of the e-commerce business and the new CANCOM webshop have brought further reductions in process and transaction costs both for customers and for the CANCOM Group, which should result in greater profitability of the Group s trading business. CANCOM has also significantly expanded its market presence as well as improving its customer proximity in the German-speaking areas, and is represented all over Germany and Austria by its many service and consulting locations. CANCOM plans to consolidate its market position in the IT environment in the German-language areas through targeted acquisitions. The market environment continues to offer good conditions for this strategy. This document has not been audited. It contains statements and information about the future that are based on the assumptions and estimates of the Executive Board of CANCOM AG. These statements are identifiable by words and phrases such as plan, intend, will, expect, feel etc. and are based on current expectations, assumptions and assessments. Although we feel that these expectations are realistic, we cannot guarantee their correctness, especially in our forecast. The assumptions may be subject to several internal and external risks and uncertainties, which may lead to the actual results deviating considerably, either positively or negatively, from the situations and figures forecast. The following influencing factors are relevant in this respect: changes in the general economic and business situation; changes in interest rates and foreign currency exchange rates; changes in the competitive situation, for instance by the emergence of new competitors, new products and services or new technologies; changes in the consumer habits of target customer groups etc.; and changes to the business strategy. CANCOM does not plan to update its forecasts beyond the legal requirements, nor does it make any commitment to do so. CANCOM aims to continue growing faster than the IT market, using its proven expertise and outstanding market position in the IT trend segments referred to above. Owing to the investments in the e-commerce segment and the Group s good positioning in the growth market of cloud computing, the Executive Board expects the sales revenues and profits of the e-commerce division and the IT solutions segment to rise further and the demand for IT products and services to remain steady or indeed rise.

12 12 Q1/2012 Balance sheet Consolidated balance sheet (ifrs) assets Figures in '000 Assets Notes 31/03/12 31/12/11 31/03/11 Current assets Cash and cash equivalents 28,313 44,365 11,832 Assets held for sale 0 2,080 0 Trade accounts receivable 81,815 72,212 63,653 Other current financial assets B.1. 3,552 5,297 3,809 Inventories 9,216 14,992 13,801 Orders in process 1, ,212 Prepaid expenses and other current assets B.2. 1, ,621 Total current assets 125, ,379 98,928 Long-term assets Property, plant and equipment 13,219 12,901 10,165 Intangible assets 15,872 15,928 17,918 Goodwill 23,667 23,667 23,667 Investments ,780 Notes receivable/loans Other financial assets 1,277 1, Deferred taxes arising from temporary differences B Deferred taxes arising from tax loss carryover B Other assets Total long-term assets 54,923 54,512 56,129 Total assets 180, , ,057

13 Q1/2012 Balance sheet 13 Consolidated balance sheet (ifrs) Equity and liabilities Figures in '000 Equity and liabilities Notes 31/03/12 31/12/11 31/03/11 Current liabilities Short term debt and current portion of long-term debt 3,814 2, Profit-participation capital and subordinated loans short-term portion 6,920 6, Trade accounts payable 55,909 72,906 45,605 Advanced payments redeived 1,515 1,872 1,505 Other current financial liabilities B.4. 1,546 1,487 2,391 Accrued expenses B.5. 1,833 1,555 1,557 Deferred revenues 1,285 1,042 1,417 Income tax payable 8,112 6,008 1,865 Other current liabilities B.6. 14,612 13,666 11,149 Liabilities in connection with assets held for sale 0 2,080 0 Total current liabilities 95, ,764 67,046 Long-term liabilities Long-term debt, less current portion 5,663 7,358 9,370 Profit-participation capital and subordinated loans 6,415 6,797 14,011 Deferred revenues 4,250 4,538 4,854 Deferred taxes from temporary differences B.7. 2,593 2,653 4,065 Pension provisons Other long-term financial liabilities B.8. 1,055 1,081 1,457 Other long-term liabilities B.5. 1,646 1,701 1,635 Total Long-term liabilities 21,709 24,215 35,472 Equity Shared capital 10,391 10,391 10,391 Additional paid-in capital 15,904 15,904 15,904 Net profit (incl. retained earnings) 36,780 34,735 26,452 Currency translation difference Minority interests Total equity 63,269 60,912 52,539 Total equity and liabilities 180, , ,057

14 14 Q1/2012 Statement of comprehensive income (IFRS) Statement of comprehensive income (IFRS) Figures in '000 01/01/ /01/2011 Income Statement Notes -31/03/ /03/2011 Q1 Revenues 141, ,620 Other operating income D Other capitalised services rendered for own account Total operating revenue 141, ,851 Cost of purchased materials and services -99,643-86,972 Gross profit 42,117 37,879 Personnel expenses D ,841-26,950 Depreciation of property, plant and equipment and amortisation of intangible assets -1,702-1,564 Other operating expenses D.3. -6,261-6,249 Operating income 5,313 3,116 Interest and similar income Interest and other expenses Foreign currency exchange income / losses -1 8 Profit before taxes 4,847 2,580 Income tax expense D.4. -2, After tax profit from continuing operations 2,752 1,786 Loss from discontinued operations D Net income for the year 2,078 1,723 thereof attributable to the shareholders of the parent 2,045 1,684 thereof attributable to minority interests D Average number of shares outstanding (basic) 10,390,751 10,390,751 Average number of shares outstanding (diluted) 10,390,751 10,390,751 Earnings per share from continuing operations (non-diluted) Earnings per share from continuing operations (diluted) Earnings per share from discontinued operations (non-diluted) Earnings per share from discontinued operations (diluted)

15 Q1/2012 Consolidated cash flow statement (IFRS) 15 Consolidated cash flow statement (IFRS) Figures in '000 01/01/ /01/2011 Cashflow -31/03/ /03/2011 Cash flow from ordinary activities: Net profit for the period before taxes and minority interests 4,847 2,580 Adjustments: +/- Depreciation of property, plant and equipment, and amortisation of intangible assets 1,702 1,564 +/- Changes in long-term accruals -1, /- Changes in current accruals /- Gains/losses on the sale of intangible assets, property, plant and equipment and financial assets Interest expense /- Changes in inventories 5, /- Changes in trade accounts receivable and other accounts receivables -10,134 1,235 +/- Changes in trade accounts payables and other accounts payable -15,515-20,532 +/- Interest payments and rebates /- Income tax payments and rebates /- Non-cash expenses and income 0-7 +/- Inflow/outflow from discontinued operations Net cash from operating activities -14,177-15,879 Cash flow from investing activities +/- Acquisition of subsidiaries and equity instruments of other companies 0-1,359 +/- Cash from acquisitions Payments for additions to intangible assets as well as property, plant and equipmen -2,024-1,277 + Income from disposal of intangible assets, property, plant and equipment and financial assets Cash used in disposal of equity holdings Interest received /- Inflow/outflow from discontinued operations Net cash used in investing activities ,352 Cash flow from financing activities + Take-up of long-term financial liabilities Repayment of long-term financial liabilities (incl. short-term portions) /- Changes in short-term liabilities Interest paid Dividends payed 0 0 +/- Cash inflow / outflow finance lease Net cash used in financing activities ,213 Net change in cash and cash equivalents -16,053-19,444 +/- Changes in value resulting from foreign currency exchange /- Cash and cash equivalents as at beginning of period 44,365 31,472 Cash and cash equivalent sat end of period 28,313 11,832 Breakdown: Cash 28,313 10,979 Cash from discontinued operations ,313 11,832

16 16 Q1/2012 Consolidated statement of changes in equity (IFRS) Consolidated statement of changes in equity (IFRS) Shares Share capital Additional paid-in capital Retained earnings Foreign currency translation reserve Exchange rate difference reserve Revaluation reserve Net profit loss Own shares at acquisition costs Minority interest Total equity cash units'000 in '000 in '000 in '000 in '000 in '000 in '000 in '000 in '000 in '000 in ' December ,391 10,391 15,904 10, ,298 50, ,013 Changes in reserves Transfer netprofit/retained earnings 6,465-6, Distribution -1,559-1, ,634 Comprehensive income for the period ,526 1, , December ,391 10,391 15,904 17, ,800 60, ,912 Changes in reserves: Transfer netprofit/retained earnings Distribution Comprehensive income for the period ,149 2, , March ,391 10,391 15,904 17, ,845 63, ,269

17 Q1/2012 Statement of comprehensive income (IFRS) 17 Statement of comprehensive income (IFRS) Q1 in '000 01/01/ /01/ /03/ /03/2011 Net income for the period 2,182 1,723 Other income Currency translation difference -3-1 Exchange rate difference Income taxes 0 85 Other after-tax income for the period Comprehensive income for the period 2,075 1,526 thereof attributable to the shareholder of the parent 2,042 1,487 thereof attributable to the minority interests 33 39

18 18 Q1/2012 Segment information (IFRS) Segment information (IFRS) e-commerce IT Solutions 31/03/12 31/03/11 31/03/12 31/03/11 '000 '000 '000 '000 Sales revenues External sales 37,819 42, ,281 81,954 Intersegment sales 1, ,924 14,753 Total sales revenues 38,890 43, ,205 96,707 Cost of purchased materials and services -31,954-36,086-80,760-62,205 Personnel expenses -4,244-4,169-23,472-21,851 Other operative income and expenses ,101-10,595-8,509 EBITDA 2,137 1,830 6,378 4,142 scheduled depreciation and amortisation ,382-1,200 Operating Income (EBIT) 1,861 1,506 4,996 2,942 Interest income Interest expenditure Income from equity investments Profit/loss from ordinary activities 1,741 1,348 4,864 3,126 Foreign currency exchange gains / losses Pre-tax profit/loss 1,741 1,348 4,864 3,126 Income taxes Discontinued operations Consolidated profit/loss for the period thereof attributable to the shareholders of the parent thereof attributable to minority interest Other information Assets 1) 104,804 95,897 58,029 53,459 Investments 1) ,138 1,041 1) Segment assets and investments including goodwill from consolidation of capital 2) Tax assets

19 Q1/2012 Segment information (IFRS) 19 Segment information (IFRS) Total operating segments Other companies Reconcilation consolidated 31/03/12 31/03/11 31/03/12 31/03/11 31/03/12 31/03/11 31/03/12 31/03/11 '000 '000 '000 '000 '000 '000 '000 ' , , ,995 15, ,995-15, , , ,995-15, , , ,714-98, ,071 11,319-99,643-86,972-27,716-26,020-1, ,841-26,950-11,150-9, ,924 4,015-5,601-6,018 8,515 5,972-1,500-1, ,015 4,680-1,658-1, ,702-1,564 6,857 4,448-1,544-1, ,313 3, ,605 4,474-1,757-1, ,848 2, ,605 4,474-1,757-1, ,847 2,580-2, , ,078 1,723 2,045 1,684 Reconcilation 2) , ,356 16,876 4, , , ,057 1,933 1, ,024 1,321

20 20 Q1/2012 Notes to the consolidated accounts Notes to the consolidated accounts A. The principles adopted for the consolidated financial statements 1. General information The consolidated interim financial statements of CANCOM AG and its subsidiaries ( the CANCOM Group or the Group ) for the financial year 2012 were drawn up according to International Financial Reporting Standards or International Accounting Standards (IFRS/ IAS). The consolidated interim financial statements were drawn up in euro. Unless otherwise stated, all amounts are shown in thousands of euro ( 000). Rounding of figures may result in apparent inconsistencies between totals and sums of constituent parts. For the same reason, percentages may not total 100 percent. This consolidated interim financial report is condensed and was drawn up in compliance with IAS 34 Interim Financial Reporting. It should be read in conjunction with the IFRScompliant consolidated financial statements for the financial year 2011, which can be downloaded from 2. Reporting entity scope of consolidation The consolidated financial statements include CANCOM AG and all subsidiaries in which CANCOM AG has either a direct or an indirect majority shareholding, or in which it holds the majority of the voting rights. These subsidiaries are fully consolidated. CANCOM AG has sold its shares in CANCOM Ltd. The sale is documented by a purchase and transfer agreement signed on 16 March 2012, which is also the effective date of transfer. The sale price was GBP 1. The impact on various items in the balance sheet of the elimination of CANCOM Ltd. from the list of companies included in the consolidated financial statements is shown below: 3. Accounting and valuation policies The consolidated interim financial report is compiled using basically the same accounting and valuation methods as those used for the consolidated financial statements for the financial year B. Notes to the consolidated balance sheet 1. Other current financial assets This item includes a purchase price receivable ( 2,028 thousand), bonuses due from suppliers ( 976 thousand), marketing revenue ( 241 thousand), creditors with a debit balance ( 207 thousand) and receivables from employees ( 100 thousand). 2. Prepaid expenses and other current assets This item mainly consists of other current assets such as tax refunds ( 160 thousand), compensation for damages ( 37 thousand), interest income ( 37 thousand), rent receivables ( 33 thousand), receivables from social security carriers ( 27 thousand) and receivables from the German Federal Employment Agency ( 18 thousand). Prepaid expenses ( 1,031 thousand) also include deferred insurance premiums. 3. Deferred tax assets The deferred tax assets are as follows: Balance as at ( '000) 16 March 2012 Assets held for sale -2,184 Total current assets -2,184 Total assets -2,184 Liabilities associated with held-for-sale assets -1,597 Total current liabilities -1,597 Total liabilities -1,597 Net assets disposed of -587 (All figures in German data format) Deferred tax resulting from Temporary Tax loss differences carryforward '000 '000 As at 1 January Tax expenditure from profit and loss calculation As at 31 March (All figures in German data format) As at 31 March 2012, the CANCOM Group had corporation tax loss carryforwards of 8.6 million and trade tax loss carryforwards of 8.1 million. The unused corporate tax losses for which no deferred tax claim was recognised in the balance sheet amounted to 8.6 million, and the trade tax losses for which no deferred tax claim was recognised amounted to 8.1 million. These amounts relate to loss carryforwards that have been called into question because of the EU Commission s legal interpretation of the restructuring clause in Section 8 c of the German Corporate Tax Act (Körperschaftsteuergesetz, KStG) and therefore cannot be at present be claimed as tax exempt.

21 Q1/2012 Notes to the consolidated accounts 21 Notes to the consolidated accounts The deferred taxes from temporary differences are mainly the result of differences in other provisions ( 229 thousand), property, plant and equipment ( 169 thousand), intangible assets ( 144 thousand), goodwill ( 123 thousand), and elimination of sales within the Group ( 66 thousand). 4. Other current financial liabilities This item includes debtors with a credit balance ( 784 thousand), outstanding bills of costs ( 584 thousand), purchase price liabilities ( 126 thousand) and Supervisory Board remuneration ( 52 thousand). 5. Other provisions The provisions mainly include guarantees and warranties ( 1,497 thousand), severance payments ( 965 thousand), salaries ( 474 thousand), additional leasing costs ( 338 thousand), financial statement costs ( 97 thousand) and contingent risks ( 57 thousand). The total provisions include long-term provisions of 1,646 thousand disclosed under other non-current liabilities. They comprise guarantees and warranties ( 752 thousand), a provision for severance payments which is legally mandatory in Austria ( 456 thousand), anniversaries ( 205 thousand), provisions for partial retirement ( 122 thousand) and additional leasing costs ( 111 thousand). 6. Other current liabilities Other current liabilities mainly include sales tax ( 4,507 thousand), bonus payments to Board members and employees ( 3,736 thousand), holiday and overtime ( 3,138 thousand), tax on wages and salaries and church tax ( 1,602 thousand), trade association payments ( 703 thousand), wages and salaries ( 198 thousand), social security contributions ( 164 thousand) and the compensation levy for non-employment of the severely handicapped ( 39 thousand). The deferred tax liabilities arise from deviations from the tax balance sheets. They result from the recognition and revaluation of intangible assets ( 2,378 thousand), other financial assets ( 184 thousand), orders in process ( 16 thousand), capital from profit-participation rights and subordinated loans ( 12 thousand) and other provisions ( 3 thousand). The provisions are valued at the relevant tax rate, which ranges between 25 percent (for the Austrian subsidiary) and percent (German subsidiary). 8. Other non-current financial liabilities Other non-current financial liabilities comprise debtors with a credit balance ( 607 thousand) and purchase price liabilities ( 448 thousand). C. Segment information (see page 18+19) A description of the segments subject to mandatory reporting can be found on page 70 of CANCOM s annual report for Reconciliation Reconciliation shows items not directly connected with the operating segments and the other companies. They include sales within the segments, and the income tax expense. The income tax expense is not a component of the profits of the operating segments. Since the tax expense is allocated to the parent company where the parent company is the taxable entity, the allocation of the income tax does not exactly correspond to the structure of the segments. 7. Deferred tax liabilities The deferred tax liabilities are as follows: '000 As at 1 January Tax ependiture from profit and loss calculation -60 As at 31 March (All figures in German data format)

22 22 Q1/2012 Notes to the consolidated accounts Notes to the consolidated accounts Information on geographical regions Sales revenue according to Sales revenue according to customer location company location 1 Jan Mar Jan Mar Jan Mar Jan Mar '000 '000 '000 '000 Germany 130, , , ,326 Outside Germany 10,978 14,365 7,457 14,294 Group 141, , , ,620 Non-current assets 31 Mar Mar '000 '000 Germany 52,079 50,297 Outside Germany 1,987 2,340 Group 54,066 52,637 (All figures in German data format) Non-current assets include property, plant and equipment, intangible assets, goodwill and other non-current assets. Financial instruments and deferred tax claims are not included. D. Notes to the consolidated statement of income For reasons of comparability, the figures shown below for the previous year have been recalculated in compliance with IFRS 5.34 to take into account the income and expenditure included in the loss from discontinued operations. 1. Other operating income The other operating income is made up of the following items: '000 1 Jan Mar Jan Mar Rent 1 2 Income not relating to the period Government grants Other operating income 4 10 Total (All figures in German data format) 2. Personnel expenses The personnel expenses consist of the following items: '000 1 Jan Mar Jan Mar Other operating expenses The other operating expenses consist of the following items: '000 1 Jan Mar Jan Mar Office space 1,269 1,198 Insurance and other charges Motor vehicles 1,224 1,499 Advertising Stock exchange and entertainment Hospitality and travelling expenses Delivery costs Third-party services Repairs, maintenance, leasing Communication and office expenses Legal and consultancy expenses Fees and charges; costs of money transactions Adjustments on receivables Other operating expenses Total 6,261 6,249 (All figures in German data format) 4. Income tax The rate of income tax for German companies was percent (2011: percent). This is made up of corporation tax, trade tax and the solidarity surcharge. The divergence between the tax expenses reported and those at the tax rate of CANCOM AG is shown below: '000 1 Jan Mar Jan Mar Earnings before tax 4,847 2,580 Expected tax expense at rate for German companies (30.79 percent; 2011: percent) 1, Difference from tax paid outside Germany Change in value adjustment of deferred tax assets on loss carryforwards Tax-exempt income/ non tax-relevant capital losses Actual income not relating to the period Permanent differences: non-deductible operating expenses; additions and reductions due to trade tax Deferred taxes due to contingent purchase price components Miscellaneous Total Group income tax 2, (All figures in German data format) Wages and salaries 24,579 22,668 Social security contributions 4,159 4,195 Pension expenses Total 28,841 26,950 (All figures in German data format)

23 Q1/2012 Notes to the consolidated accounts 23 Notes to the consolidated accounts E. Other disclosures The actual tax rate is calculated as follows: '000 Income before tax 4,847 Income tax 2,095 Actual tax expense rate 43.22% (All figures in German data format) Income tax comprises the income tax paid or owed in the individual countries and also the deferred taxes: '000 1 Jan Mar Jan Mar Actual income tax paid 2, Deferred taxes Assets Liabilities Group income tax 2, (All figures in German data format) 5. Discontinued operations The impact of discontinued operations on the consolidated statement of income is a loss of 674 thousand and comprises the loss made by CANCOM Ltd. up to the time of its sale, and the loss on the sale. 6. Minority interests Minority interests account for 49 percent of acentrix GmbH s net income for the year. 1. Related party disclosures For the purposes of IAS 24, Klaus Weinmann can be considered a related party who can exercise a significant influence on the CANCOM Group, both as an Executive Board member and as a shareholder in CANCOM AG. Rudolf Hotter, the other Executive Board member, is also a related party for the purposes of IAS 24, as are the members of the Supervisory Board. The following can also be considered to be related parties as defined by IAS 24.9 b: - AL-KO Kober AG and its subsidiaries - PEN GmbH - WFO Vermögensverwaltung GmbH - AURIGA Corporate Finance GmbH - SNP Schneider-Neureither & Partner AG. Related party transactions were made on terms equivalent to those that prevail in arm's length transactions, with payment due in full between 10 and 30 days after the invoice date. The transaction volume of goods sold, and services provided, to related parties under IAS 24 was in the first quarter ,689 thousand (gross), of which 334 thousand was still outstanding at the balance sheet date. This amount relates to goods/services purchased by AL-KO Kober AG and its subsidiaries. The was no transaction volume of goods and services purchased from related parties under IAS 24. A consultancy agreement has been in place between CANCOM AG and the Chairperson of its Supervisory Board, Walter von Szczytnicki, since 1 July The contract was approved on 9 March 2007 in accordance with Section 114 of the German Stock Companies Act (Aktiengesetz, AktG), and provides for an annual remuneration of 60 thousand. The remuneration paid in the first quarter of 2012 amounted to 15 thousand. 2. Shares held by members of the Executive and Supervisory Boards (at the balance sheet date) A list of shareholdings can be found on page 10 of this interim report. 3. Equity interests in the company as defined in Section 20 IV of the German Stock Companies Act (Aktiengesetz, AktG) CANCOM AG did not receive written notice from any shareholder disclosing a majority shareholding as defined in Section 20 of the above Act in the first three months of 2012.

24 Interim report Q1 3-months-report 3-Monatszahlen Publication details CANCOM AG Investor Relations Ridlerstrasse München GERMANY Tel.: / Fax: / IR@CANCOM.DE