Hornbach Holding AG Group

HornbacH Holding AG group annual report 2012/2013 CONTENTS Company Profile 4 To Our Shareholders 8 Report of the Supervisory Board 10 Directors & Officers 14 Corporate Governance 16 The HORNBACH HOLDING Share 26 Retail and Real Estate 32 Group Management Report of HORNBACH HOLDING AG 38 Macroeconomic Framework 38 Sales Performance 42 Earnings Performance 47 Financial Situation 51 Asset Situation 56 Non-Financial Performance Indicators 60 Corporate Responsibility 65 Risk Report 69 Other Disclosures 75 Outlook 76 Consolidated Financial Statements 90 Income Statement 90 Balance Sheet 91 Statement of Changes in Equitiy 92 Cash Flow Statement 93 Notes to the Consolidated Financial Statements 94 Segment Report 111 Responsibility Statement 162 Auditor’s Report 163 Imprint 164 Key Group, Financial and Operating Data CONTENTS Change IFRS financial year Amounts shown in € million 2012/2013 2012/2013 2011/2012 2010/2011 2009/2010 2008/2009 2007/2008 2006/2007 2005/2006 2004/2005 2003/2004 on previous unless otherwise stated year Company Profile 4 Sales and earnings figures 1) To Our Shareholders 8 Net sales 0.8% 3,229 3,204 3,017 2,853 2,752 2,617 2,544 2,367 2,220 2,057 of which in other European countries 0.6% 1,280 1,272 1,195 1,109 1,065 962 862 788 688 611 Report of the Supervisory Board 10 Sales growth as % of net sales 0.8 6.2 5.7 3.7 5.1 2.9 7.5 6.6 8.0 20.3 EBITDA 2) (10.3)% 221 247 229 222 251 181 197 180 181 156 Directors & Officers 14 as % of net sales 6.9 7.7 7.6 7.8 9.1 6.9 7.7 7.6 8.2 7.6 Corporate Governance 16 EBIT 3) (13.7)% 146 169 159 152 179 105 119 92 99 79 as % of net sales 4.5 5.3 5.3 5.3 6.5 4.0 4.7 3.9 4.5 3.8 Earnings before taxes and extraordinary result and non- The HORNBACH HOLDING Share 26 controlling interest (18.4)% 108 132 127 116 144 68 83 53 62 45 as % of net sales 3.3 4.1 4.2 4.1 5.2 2.6 3.3 2.2 2.8 2.2 Retail and Real Estate 32 Net income for the year before non-controlling interest (18.2)% 77 95 99 82 113 58 76 32 37 27 as % of net sales 2.4 3.0 3.3 2.9 4.1 2.2 3.0 1.4 1.7 1.3 Gross margin as % of net sales 36.5 36.6 36.6 36.1 36.0 35.7 35.3 35.2 35.9 35.1 Group Management Report of HORNBACH HOLDING AG 38 Store expenses as % of net sales 4) 27.7 27.1 27.4 27.7 27.3 27.7 27.4 28.1 27.5 27.2 Costs of central administration as % of net sales 4) 4.5 4.2 4.1 4.0 4.2 4.2 4.0 4.3 4.1 4.0 Pre-opening expenses as % of net sales 4) 0.3 0.2 0.2 0.2 0.3 0.3 0.2 0.5 0.5 0.6 Macroeconomic Framework 38 Sales Performance 42 Cash flow figures Cash flow from operating activities 1.7% 144 142 182 184 144 90 215 38 142 28 Earnings Performance 47 Investments (8.2)% 149 163 113 97 130 201 123 208 135 134 Financial Situation 51 Proceeds from divestments 6 13 48 9 83 46 55 193 28 99 Earnings potential 5) 3.6% 154 148 187 188 153 97 220 49 153 41 Asset Situation 56 as % of net sales 4.8 4.6 6.2 6.6 5.6 3.7 8.7 2.1 6.9 2.0 Non-Financial Performance Indicators 60 Dividend distribution 10.5 10.5 10.5 8.9 8.9 8.9 8.9 8.9 8.9 8.9 Corporate Responsibility 65 Balance sheet and financial figures Risk Report 69 Total assets 0.1% 2,270 2,267 2,233 2,033 1,996 1,902 1,842 1,794 1,762 1,664 Non-current assets 5.5% 1,268 1,202 1,125 1,070 1,010 1,000 983 959 1,045 1,030 Other Disclosures 75 Inventories 1.7% 515 507 489 451 516 498 463 512 444 441 Outlook 76 Cash and cash equivalents (15.5)% 357 422 474 335 275 196 265 161 162 69 Shareholders' equity 6) 5.2% 1,095 1,041 962 861 780 688 630 559 536 433 as % of total assets 48.3 45.9 43.1 42.4 39.1 36.1 34.2 31.1 30.4 26.0 Consolidated Financial Statements 90 Return on shareholders' equity based on net income - in % 7.2 9.4 10.9 10.0 15.4 8.8 12.8 5.9 7.6 6.3 Net working capital (2.4)% 406 416 375 368 398 387 346 457 354 366 Income Statement 90 Additions to non-current assets (7.2)% 151 163 113 103 131 202 120 202 131 133 Inventory turnover rate per year 4.0 4.1 4.1 3.8 3.5 3.5 3.4 3.2 3.2 3.2 Balance Sheet 91 Statement of Changes in Equitiy 92 Other information Employees - annual average - Cash Flow Statement 93 converted into full-time equivalents 4.0% 13,289 12,778 12,066 11,881 11,542 11,078 10,622 10,595 9,979 9,139 6) Notes to the Consolidated Financial Statements 94 Number of shares 16,000,000 16,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 Average earnings per share in € 7) 4.06 4.77 10.14 8.32 11.41 6.00 7.89 3.37 3.47 2.69 Segment Report 111 1) Starting in the 2003/2004 financial year: other taxes (e.g. property tax) have been included under operating expenses 2) Earnings before interest, taxes, depreciation and amortization; starting in the 2007/2008 financial year: excluding net currency result 3) Earnings before interest and taxes; starting in the 2007/2008 financial year: excluding net currency result Responsibility Statement 162 4) Starting in the 2003/2004 financial year: excluding interest 5) Cash flow from operating activities, plus pre-opening expenses Auditor’s Report 163 6) Pursuant to IFRS; starting in the 2004/2005 financial year: including minority interests 7) Starting in the 2011/2012 financial year: change in number of shares following issue of bonus shares as of July 29, 2011 (c.f. Note (9) in notes to consolidated financial statements) Imprint 164 4 COMPANY PROFILE COMPANY PROFILE HORNBACH HOLDING AG is the parent company of the HORN- The consistent implementation of the company’s concept, BACH Group. It is not itself an operating company, but has a coupled with the high expectations it places in the quality of number of major subsidiaries. By far the largest and most its locations, its stores, its product range and employees, important subsidiary is HORNBACH-Baumarkt-AG, which have facilitated the dynamic growth witnessed by the com- operates DIY megastores in Germany and abroad. The retail pany in recent years. Together, these factors form the basis for activities of the Group are supplemented by HORNBACH further expansion in the DIY megastore and garden center Baustoff Union GmbH, which is active in the construction segment in Germany and Europe. materials and builders’ merchants business and mainly has commercial customers. The development and utilization of Following the company’s successful entry into the Austrian first-class retail real estate constitutes a further business market in August 1996, it has consistently pressed ahead activity of HORNBACH HOLDING AG. This is undertaken in part with its expansion into neighboring European countries. Stores by HORNBACH Immobilien AG, which owns much of the exten- were subsequently opened in the Netherlands, Luxembourg sive real estate portfolio of the HORNBACH Group. and the Czech Republic. The company’s international growth was maintained with its expansion to Switzerland, Sweden The HORNBACH Group is characterized by its ability to re- and Slovakia. The entry into the Romanian market followed in spond to the challenges of trading in DIY, home improvement the summer of 2007. As of February 28, 2013, the company and garden products, and to set new standards in the process. was operating a total of 46 DIY megastores with garden Since the company was founded in 1877, five generations of centers in eight countries outside Germany. Since Decem- the Hornbach family have been active in almost all areas of ber 1, 2010, the stationary retail business has been supple- the construction sector – in the building trade, as manufac- mented by HORNBACH’s online shop, with which the Group turers of prefabricated components and, for the first time in aims to make targeted use of the opportunities presented by 1900, as builders’ merchants. As one of the pioneers in Ger- multichannel retailing. many and Europe, HORNBACH opened its first DIY store in 1968 and combined it with a garden center – at its time Both HORNBACH HOLDING AG and HORNBACH-Baumarkt-AG are unique in Europe. This combination has since developed into a publicly listed stock corporations. The share capital of HORN- European standard in the DIY sector today. BACH HOLDING AG is divided equally between ordinary and non- voting preference shares.

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