Hornbach Holding AG: Hornbach increases its earnings as well

Hornbach increases its earnings as well

2014/2015 Annual Reports published:

- Hornbach Group's sales up 6.0 % to Euro 3.57 billion

- EBIT up 3.0 % to Euro 165.1 million / Consolidated net income
with disproportionate growth to Euro 106.7 million

- Change of legal form to KGaA proposed to Annual General Meeting

- Dividend policy adjustment in line with higher level of earnings advised for 2015/2016

Frankfurt/Main, May 28, 2015. Consistent with expectations, the Hornbach Group achieved year-on-year earnings growth in the 2014/2015 financial year (March 1, 2014 to February 28, 2015). Consolidated operating earnings (EBIT) rose by 3.0 % to Euro 165.1 million (2013/2014: Euro 160.4 million). Consolidated earnings before taxes (EBT) and consolidated net income both showed disproportionate growth compared with sales (plus 6.0 %), rising by 9.3 % to Euro 139.7 million and 23.8 % to Euro 106.7 million respectively. Earnings per Holding preference share improved from Euro 4.56 to Euro 5.66. A resolution to change the legal form of Hornbach Holding AG into a German partnership limited by shares (KGaA) with the accession of HORNBACH Management AG as general partner has been proposed for approval by this year's Annual General Meeting of Hornbach Holding AG. As now communicated by HORNBACH Management AG, following implementation of the change in form it, as general partner, intends to adjust the dividend policy in line with the higher level of earnings achieved.

"In the past 2014/2015 financial year, we further expanded our market position as one of Europe's leading DIY groups, pressed ahead with our innovations aimed at generating future growth, and simultaneously increased our earnings", commented Albrecht Hornbach, Chairman of the Board of Management of Hornbach Holding AG, when presenting the company's results in Frankfurt.

All three subgroups post operating earnings growth

The Hornbach Group's increased earnings strength was chiefly driven by the pleasing level of like-for-like sales growth achieved by DIY stores with garden centers in conjunction with an improvement in the gross margin. This more than offset the rise in selling and store, pre-opening, and administration expenses due in particular to the acceleration in the company's expansion and additional expenses incurred for forward-looking strategic projects.

Hornbach-Baumarkt-AG, the most important operating subgroup that currently operates 147 DIY stores with garden centers in nine European countries, increased its sales by 6.5 % to Euro 3.36 billion and its like-for-like sales, i.e. excluding stores newly opened or closed, by 4.4 % in the 2014/2015 financial year. EBIT at this subgroup also grew by 4.4 %, in this case to Euro 109.8 million. Earnings per Baumarkt share increased from Euro 1.77 to Euro 2.19.

At Euro 51.5 million, EBIT at the Hornbach Immobilien AG subgroup was 0.8 % up on the previous year's figure. EBIT at the third subgroup, Hornbach Baustoff Union GmbH (HBU), showed a clearly disproportionate improvement of 19.6 % to Euro 6.5 million. As a regional builders' merchant chain, HBU currently operates 26 outlets in Rheinland-Pfalz, Saarland, Baden, and Southern Hessen, and two outlets in neighboring Lorraine (France).

The Hornbach Group can also point to a further improvement in its equity resources. "The equity ratios of 53.5 % on the level of the Hornbach-Baumarkt-AG subgroup and 51.8 % at the Hornbach Holding AG Group underline our solid financial foundation", remarked Albrecht Hornbach.

Outlook for 2015/2016: Increased investments and expansion focus abroad

Budgeted gross investments at the Hornbach Holding AG Group are expected to total between Euro 180 million and Euro 200 million in the 2015/2016 financial year, as against around Euro 120 million in the past financial year. The focus of investment and expansion will return to other European countries, having moved to Germany in the past financial year due to the takeover of former Praktiker/Max Bahr locations. Up to six DIY megastores with garden centers (including two replacement locations) are planned to be opened in 2015/2016. Of these, five new store openings involve locations in the Netherlands (2), Austria (2), and Romania (1), while one new store will be opened in Germany. The Hornbach Group expects to generate consolidated sales growth in a medium single-digit percentage range in the current 2015/2016 financial year and to achieve EBIT at around the same level as in the previous 2014/2015 financial year (Euro 165.1 million).

2015 Annual General Meetings: unchanged dividend for 2014/2015 -
dividend policy announced for 2015/2016 financial year onwards

Dividends at the same level as in the previous year have been proposed for the past 2014/2015 financial year for approval by the Annual General Meetings of Hornbach-Baumarkt-AG and Hornbach Holding AG. These involve dividends of Euro 0.60 per ordinary share at Hornbach-Baumarkt-AG (ISIN DE0006084403) and of Euro 0.77 per ordinary share (ISIN 0006083405) and of Euro 0.80 per preference share (ISIN DE0006083439) at Hornbach Holding AG.

On Hornbach Holding AG level, the Annual General Meeting (expected on July 9, 2015) and separate 2015 meeting of preference shareholders (expected on July 10, 2015) will decide on the proposed change of legal form to a German partnership limited by shares (KGaA).

The change of the legal form of Hornbach Holding Aktiengesellschaft will be effected in accordance with the provisions of the German Transformation Act (Umwandlungsgesetz - UmwG). In its new legal form, the company will operate under the name HORNBACH Holding AG & Co. KGaA. As the case may be, shareholders in Hornbach Holding Aktiengesellschaft will become limited shareholders in HORNBACH Holding AG & Co. KGaA. However, preference shareholders will not be granted preference shares but, like ordinary shareholders, will solely be granted non-par value ordinary bearer shares with voting rights in the KGaA. The exchange ratio will be 1:1 in each case. To compensate this loss of preference status, preference shareholders will receive an additional cash payment of Euro 0.38 per preference share.

The general partner of HORNBACH Holding AG & Co. KGaA will be HORNBACH Management AG, whose registered seat is in Annweiler am Trifels and which is wholly owned by Hornbach Familien-Treuhandgesellschaft mbH. HORNBACH Management AG has meanwhile communicated its intentions regarding the future development of the dividend policy of Hornbach Holding AG following the change of legal form. Accordingly, "contingent on the change of legal form entering into effect and subject to the performance of the business and principle of dividend continuity, the general partner intends, in principle, to plan for a dividend in the amount of 30% of consolidated net income after non-controlling interests from financial year 2015/2016 onwards".

The notification of the convening of the Annual General Meeting, which also includes the full wording of the proposed resolution concerning the change of legal form, was published today - Thursday, May 28, 2015 - and made available on the internet at www.hornbach-group.de. The detailed Transformation Report of the Board of Management of Hornbach Holding AG can also be found at this site.

Key earnings figures of the Hornbach Group (Hornbach Holding AG Group)

¹⁾ Head count at balance sheet on February 28
Differences due to rounding up or down to nearest Euro million; percentage changes calculated on basis of Euro 000s.

Note
The Annual Reports of the Hornbach Holding AG Group and the Hornbach-Baumarkt-AG subgroup for the 2014/2015 financial year are available online at: www.hornbach-group.de