Hornbach Holding AG Group
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HORNBACH HOLDING AG GROUP ANNUAL REPORT 2013/2014 CONTENTS Company Profile 4 To Our Shareholders 8 Report of the Supervisory Board 10 Directors & Officers 14 Corporate Governance 16 Declaration on Corporate Governance with Declaration of Conformity 16 Compensation Report 23 The HORNBACH HOLDING Share 32 Retail and Real Estate 34 Combined Management Report 40 Group Fundamentals 40 Business Report 45 Macroeconomic and Sector-Specific Framework 45 Business Performance 48 Comparison of Actual and Forecast Business Performance 49 Earnings Situation 51 Financial Situation 59 Asset Situation 64 Overall Assessment of Group Earnings, Financial and Asset Situation 67 Notes on the Annual Financial Statements of HORNBACH HOLDING AG (HGB) 68 Events after the Balance Sheet Date 71 Corporate Responsibility 74 Risk Report 79 Opportunity Report 86 Outlook 91 Other Disclosures 98 Consolidated Financial Statements 102 Income Statement 102 Balance Sheet 103 Statement of Changes in Equity 104 Cash Flow Statement 105 Notes on the HORNBACH HOLDING AG Group 106 Explanatory Notes on the Principles and Methods Applied 106 Segment Report 124 Notes on the Consolidated Income Statement 127 Notes on the Consolidated Balance Sheet 135 Other Disclosures 160 Responsibility Statement 177 Auditor’s Report 178 Imprint 180 Key Group, Financial and Operating Data Change IFRS financial year Amounts shown in € million 2013/2014 2013/2014 2012/2013 2011/2012 2010/2011 2009/2010 2008/2009 2007/2008 2006/2007 2005/2006 2004/2005 on previous unless otherwise stated year Sales and earnings figures Net sales 4.3% 3,369 3,229 3,204 3,017 2,853 2,752 2,617 2,544 2,367 2,220 of which in other European countries 4.3% 1,334 1,280 1,272 1,195 1,109 1,065 962 862 788 688 Sales growth as % of net sales 4.3 0.8 6.2 5.7 3.7 5.1 2.9 7.5 6.6 8.0 EBITDA 1) 6.5% 236 221 247 229 222 251 181 197 180 181 as % of net sales 7.0 6.9 7.7 7.6 7.8 9.1 6.9 7.7 7.6 8.2 EBIT 2) 10.0% 160 146 169 159 152 179 105 119 92 99 as % of net sales 4.8 4.5 5.3 5.3 5.3 6.5 4.0 4.7 3.9 4.5 Earnings before taxes and non-controlling interest 18.7% 128 108 132 127 116 144 68 83 53 62 as % of net sales 3.8 3.3 4.1 4.2 4.1 5.2 2.6 3.3 2.2 2.8 Net income for the year before non-controlling interest 11.3% 86 77 95 99 82 113 58 76 32 37 as % of net sales 2.6 2.4 3.0 3.3 2.9 4.1 2.2 3.0 1.4 1.7 Gross margin as % of net sales 36.6 36.5 36.6 36.6 36.1 36.0 35.7 35.3 35.2 35.9 Store expenses as % of net sales 27.3 27.7 27.1 27.4 27.7 27.3 27.7 27.4 28.1 27.5 Costs of central administration as % of net sales 4.4 4.5 4.2 4.1 4.0 4.2 4.2 4.0 4.3 4.1 Pre-opening expenses as % of net sales 0.3 0.3 0.2 0.2 0.2 0.3 0.3 0.2 0.5 0.5 Cash flow figures Cash flow from operating activities 37.1% 198 144 142 182 184 144 90 215 38 142 Investments (22.7)% 116 149 163 113 97 130 201 123 208 135 Proceeds from divestments 12 6 13 48 9 83 46 55 193 28 Earnings potential 3) 34.9% 207 154 148 187 188 153 97 220 49 153 as % of net sales 6.1 4.8 4.6 6.2 6.6 5.6 3.7 8.7 2.1 6.9 Dividend distribution 10.5 10.5 10.5 10.5 8.9 8.9 8.9 8.9 8.9 8.9 Balance sheet and financial figures Total assets 4.1% 2,362 2,270 2,267 2,233 2,033 1,996 1,902 1,842 1,794 1,762 Non-current assets 1.4% 1,286 1,268 1,202 1,125 1,070 1,010 1,000 983 959 1,045 Inventories 4.6% 539 515 507 489 451 516 498 463 512 444 Cash and cash equivalents 20.1% 429 357 422 474 335 275 196 265 161 162 Shareholders' equity 4) 6.1% 1,164 1,097 1,041 962 861 780 688 630 559 536 as % of total assets 49.3 48.3 45.9 43.1 42.4 39.1 36.1 34.2 31.1 30.4 Return on shareholders' equity based on net income - in % 7.6 7.2 9.4 10.9 10.0 15.4 8.8 12.8 5.9 7.6 Net working capital (2.2)% 397 406 416 375 368 398 387 346 457 354 Additions to non-current assets (22.6)% 117 151 163 113 103 131 202 120 202 131 Inventory turnover rate per year 4.1 4.0 4.1 4.1 3.8 3.5 3.5 3.4 3.2 3.2 Other information Employees - annual average - converted into full-time equivalents 4.0% 13,825 13,289 12,778 12,066 11,881 11,542 11,078 10,622 10,595 9,979 Number of shares 4) 5) 16,000,000 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 Average earnings per share in € 5) 4.55 4.06 4.77 10.14 8.32 11.41 6.00 7.89 3.37 3.47 1) Earnings before interest, taxes, depreciation and amortization; starting in the 2007/2008 financial year: excluding net currency result 2) Earnings before interest and taxes; starting in the 2007/2008 financial year: excluding net currency result 3) Cash flow from operating activities plus pre-opening expenses 4) Pursuant to IFRS; starting in the 2004/2005 financial year: including minority interests 5) Starting in the 2011/2012 financial year: change in number of shares following issue of bonus shares as of July 29, 2011 4 COMPANY PROFILE COMPANY PROFILE HORNBACH HOLDING AG is the parent company of the HORNBACH The consistent implementation of the company’s concept, cou- Group. It is not itself an operating company, but has a number of pled with the high expectations it places in the quality of its major subsidiaries. By far the largest and most important subsidi- locations, its stores, its product range and employees, have ary is HORNBACH-Baumarkt-AG, which operates DIY megastores in facilitated the dynamic growth witnessed by the company in Germany and abroad. The retail activities of the Group are supple- recent years. Together, these factors form the basis for further mented by HORNBACH Baustoff Union GmbH, which is active in the expansion in the DIY megastore and garden center segment in builders’ merchants business and mainly has commercial custom- Germany and Europe. ers. The development and utilization of first-class retail real estate constitutes a further business activity of HORNBACH HOLDING AG. Following the company’s successful entry into the Austrian mar- This is undertaken in part by HORNBACH Immobilien AG, which ket in August 1996, it has consistently pressed ahead with its owns much of the extensive real estate portfolio of the HORNBACH expansion into neighboring European countries. Stores were Group. subsequently opened in the Netherlands, Luxembourg and the Czech Republic. The company’s international growth was main- The HORNBACH Group is characterized by its ability to respond to tained with its expansion to Switzerland, Sweden and Slovakia. the challenges of trading in DIY, home improvement and garden The entry into the Romanian market followed in the summer of products, and to set new standards in the process. Since the 2007. As of February 28, 2014, the company was operating a company was founded in 1877, five generations of the Hornbach total of 49 DIY megastores with garden centers in eight countries family have been active in almost all areas of the construction outside Germany. Since December 1, 2010, the stationary retail sector – in the building trade, as manufacturers of prefabricated business has been supplemented by HORNBACH’s online shop, components and, for the first time in 1900, as builders’ mer- with which the Group is making targeted use of the opportunities chants. As one of the pioneers in Germany and Europe, HORN- presented by the internet. BACH opened its first DIY store in 1968 and combined it with a garden center – at its time unique in Europe. This combination Both HORNBACH HOLDING AG and HORNBACH-Baumarkt-AG are has since developed into a European standard in the DIY sector publicly listed stock corporations. The share capital of HORN- today. BACH HOLDING AG is divided equally between ordinary and non- voting preference shares. Of the eight million preference shares In the second half of the 1980s, HORNBACH added a new dimen- (ISIN DE0006083439), 100 % are owned by independent share- sion to the market with its concept of large DIY and home im- holders (status: March 25, 2014). The preference shares are provement megastores with garden centers. Today, an impres- admitted to the subsection of official trading of the German sively presented range of around 50,000 top quality DIY and Stock Exchange with additional admissions obligations (Prime gardening articles is available to DIY customers in spacious Standard).