Factbook Q1 2018/19. HORNBACH Group Page 1

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1 Factbook Q1 2018/19 Factbook Q1 2018/19 HORNBACH Group 2018 Page 1

2 DIY retailer with three different business segments Status: May 31, megastores in 9 European countries and online shops focused on retail with DIY, garden and home improvement products for private and professional clients (HORNBACH Baumarkt AG subgroup) 29 builders merchant outlets in south-west Germany and France selling construction materials to professional clients (Hornbach Baustoff Union GmbH subgroup) Retail property development for the operating units (Hornbach Immobilien AG subgroup) Sales split FY 2017/18 44% 6% HORNBACH Baumarkt AG [Germany] 50% HORNBACH Baumarkt AG [International] Hornbach Baustoff Union GmbH Page 2

3 157 DIY megastores and garden centers across Europe Q1 2018/19 2 store openings in Zwolle (Netherlands) and Affoltern (Switzerland): +23,800 sqm 1 store closed (HORNBACH compact) in Alzey (Germany): -1,200 sqm) sales area: 1,8 million sqm store size: Ø 11,750 sqm Germany 97 stores 1,051,200 sqm 27 x 2 x Status: Mai 31, 2018 Zwolle Mar 14, 2018 Alzey, Apr 28,.2018 Austria 14 stores 168,900 sqm Czech Republic 10 stores 140,900 sqm Romania 6 stores 86,400 sqm Slovakia 3 stores 46,100 sqm Affoltern May 26, 2018 Luxembourg 1 store 12,100 sqm Netherlands 14 stores 176,500 sqm Sweden 5 stores 72,900 sqm Switzerland 7 stores 90,000 sqm Page 3

4 Two publicly listed corporations Since March 28, 2017 Free Float Free Float c Hornbach Familien Treuhand GmbH 62.5% 37.5% HORNBACH Holding AG & Co. KGaA Neustadt/Weinstraße Listed Ordinary Shares 1) (ISIN DE ) 100% HORNBACH Management AG Management (General Partner) 23.6% 76.4% 100% 100% HORNBACH Baumarkt AG 3) Bornheim Listed Ordinary Shares² ) (ISIN DE ) HORNBACH Immobilien AG 3) Bornheim Not listed HORNBACH Baustoff Union GmbH 3) Neustadt/Weinstraße Not listed 1) Number of shares: 16,000,000 / Stock market code: HBH 2) Number of shares: 31,807,000 / Stock market code: HBM 3) plus other subsidiary companies in Germany and abroad Page 4

5 Our Key Success Factors Publicly listed family company Focus on B2C and B2B clients with large DIY projects Consistent interconnected retail strategy Own brands with added value Own real estate portfolio and efficient logistics network Organic growth above sector average Highest productivity per sqm in the German DIY sector Leading in DIY online retail High customer satisfaction across Europe Page 5

6 From a small craftsman business to a European DIY Group Roll-out international online shops Austria (2013), Switzerland (2014), Netherlands, Czech Republic, Luxemburg (2015), Slowakia, Sweden (2017), Romania (2018) Change in legal form of HORNBACH Holding AG in KGaA Going public HORNBACH Holding AG 1st DIY store with drive-through Going public HORNBACH Baumarkt AG Start online shop Germany 2003 Emission Eurobond (3,875%) Expansion Austria (1996), Netherlands (1997), Czech Republic (1998), Switzerland (2002), Sweden (2003), Slowakia (2004), Romania (2007) st DIY megastore Karlsruhe 1st DIY store with garden center Bornheim Foundation of handicraft business Page 6

7 Project DIY store for DIY fans and professionals Key focus on project customers tackling major DIY projects Broad and deep product range More than 50,000 articles stocked in sufficient quantities at store Extended product range at online shop Permanent low prices rather than discount campaigns Price leadership online and at stores Price guarantee Competent advice and services for all aspects of DIY projects IHK-certified advisors with planning and project competence Tradesman service, rental service, financing, repairs Support for professionals and Proficard Page 7

8 Consistent multichannel strategy Every day low price Online and in the store Online shop as catalyst for permanent low price strategy and price perceptions Shop with or without contact to store: Reserve & collect at store Direct delivery to home / building site Delivery to store Additional services: Product availability and location within store Central customer service center Planning tools for DIY projects / configurators, online paint mix service etc. International rollout of online shop in all countries where HORNBACH operates Page 8

9 Private labels offer added value Share of sales planned to grow from 23.4% (2017/18) to 30% Private labels differentiate us from competitors and help boost customer retention Lower dependence on manufacturers brands in terms of innovations and quality (specification, certifications, auditing) Full control over brand launch and positioning Ability to actively manage product lifecycle Significantly higher gross margins while offering very good value for money No direct price competition Page 9

10 Property ownership and hidden reserves Status: February 28, 2018 No. of stores Sales area in % 8% 2% 28% Hidden reserves in real estate assets* FY 2017/18 ( million) Book value Yield value (x13) Hidden reserves (x13) 53 33% 45 29% Baumarkt Subgroup Property HI Operating Leases Property HBM Finance Lease Immobilien Subgroup Others HORNBACH Group 1,029 1, *based on our own assumptions and calculations Page 10

11 Investment in prime locations Focus on big catchment areas Large store format: 85% of stores > sqm Homogeneous store network: Economies of scale in store operation and store development Meets customers needs and provides superior shopping experience HORNBACH 4 8,500 10,999 sqm incl. drive through Selling Space (BHB weighted) CapEx 1) million HORNBACH 5 11,000 14,999 sqm million HORNBACH sqm incl. drive through million 1) average CapEx for property and building Page 11

12 Logistics network for store deliveries Soltau (56,000 sqm) 2012 Central WH 2017 Extension Lehrte (55,000 sqm) 1994 Regional WH 1999 Extension cross-docking 2011 Extension regional WH Berlin (5,200 sqm) 2015 Cross-docking Castrop-Rauxel (11,400 sqm) 2015 Cross-docking Lorsch (24,700 sqm) 2015 Regional WH & Cross Docking Essingen (26,900 sqm) 1999 Regional WH & Cross Docking Vilshofen (30,300 sqm) 2005 Regional WH & Cross Docking 2018 Extension Cross Docking 8 logistics sites 150,000 storage spaces 215,000 sqm warehouse space Enzersdorf a/d Fischa (5,200 sqm) 2018 Cross-docking bulk Page 12

13 Logistics to customers HORNBACH Baumarkt Subgroup The store as a partner for e-commerce Online sales: 3 delivery options Direct delivery Click and Collect in store DV Supplier Fulfillment Partner DVZ HORNBACH Fulfillment Centre Pick-up store Delivery Pick-up of online orders in store HORNBACH Delivery Center Page 13

14 Sustainable success Factbook Q1 2018/19 HORNBACH Group 2018 Page 14

15 Organic Growth HORNBACH Group FY 1987/88: 613 employees 132 million net sales FY 2017/18: 19,614 employees* 4.14 bn net sales (CAGR ~12% / 30 years) 6% 44% 50% HORNBACH Baumarkt [Germany] HORNBACH Baumarkt [International] Hornbach Baustoff Union * incl. passive employees Page 15

16 Volume of the German Core DIY Market in 2017 (total sales including online sales) online total: ~ 1.2 billion 7.1 Gross sales in billion 16.2 thereof online: ~ 360 million thereof online: ~ 230 million thereof online: ~ 600 million DIY stores Specialist retailers Small scale formats Total DIY core market [Source: BHB, GfK, IFH, Teipel Retail & Consulting, HORNBACH] Page 16

17 Performance and market share in Germany HORNBACH Baumarkt Subgroup 1998: 5% Market share in Germany 2017: 11% Market share in Germany +36% 1998 = 100% DIY sector (GER) HORNBACH (GER) Like-for-like sales growth in Germany -11% [Source: BHB/GfK DIY-Panel (until 2013), GfK DIY-TSR (since 2014), HORNBACH] Page 17

18 HORNBACH ranks #3 among German DIY Retailers (2017) HORNBACH Baumarkt AG 6,211 5,452 but growth faster than its competitors 3,891 Net sales (Europe) in million; growth in % ,610 2,270 1, % +1.4% +4.9% +2.9% +1.5% +0.1% OBI Bauhaus HORNBACH ZEUS/Hagebau Toom/B1 Globus/Hela and is #1 in sales per store ( million) and sales per sqm ( ) 1,274 1,698 2,135 1,108 1,053 1,857 OBI Bauhaus HORNBACH Zeus/Hagebau Toom/B1 Globus/Hela OBI Bauhaus HORNBACH Zeus/Hagebau Toom/B1 Globus/Hela [Source: Dähne, HORNBACH] Page 18

19 Average store size, net sales and sales densities (2017): HORNBACH Baumarkt Subgroup Bubble size = Net sales (Europe) average store size (in sqm) Megastore OBI Bauhaus HORNBACH Toom Globus/Hela 4000 Zeus/Hagebau Eurobaustoff 2000 EMV-Profi Net sales / sqm Hellweg [Source: Dähne, HORNBACH] Page 19

20 DIY multichannel retail in all regions HORNBACH Baumarkt Subgroup Status: April 28, 2018 DIY multichannel retail is based on three pillars: Direct delivery (no store contact) Order/ delivery via store Click & Collect (C&C) Netherlands since March ,000 items Czech Republic since December ,000 items Slovakia since August ,000 items Germany since December ,000 items Austria since January ,000 items Switzerland since November ,000 items Luxemburg (only C&C) since December ,000 items Sweden since October ,000 items Romania since January ,000 items Page 20

21 Highly satisfied customers across Europe HORNBACH Baumarkt Subgroup #1/#2 Product range, selection, offering in Germany, Switzerland, Austria, Netherlands, Czech Republic, Sweden #1 Product quality in Germany, Switzerland, Netherlands, Sweden #1/#2 Pricing in Germany, Austria, Switzerland, Netherlands, Czech Republic #1/#2 Specialist advice in Germany, Switzerland, Netherlands, Czech Republic, Sweden Sources: Kundenmonitor Germany/Austria/Switzerland, GfK (Czech Republic), ING Retail Jaarprijs (Netherlands), Svenskt Kvalitetsindex/evimetrix (Sweden) (Statements based on studies in Germany, Switzerland, Austria, Netherlands, Czech Republic, Sweden. No information collected for Romania, Slovakia, Luxembourg) Page 21

22 Opportunities and Growth Drivers in the DIY Market HORNBACH Group Sustainability International expansion Consumer trends Increasing need for renovation and modernization (80% of houses/flats > 30 years) Homing (Consumers living trends) Energy efficiency (Lower lifecycle cost, CO 2 reduction) Online retailing (Growing share of DIY e-commerce, Omni-Channel and the death of pure play)) Barrier-free living (ageing of the population) New target groups (women, do-it-for-me, seniors) Page 22

23 Financial Year 2017/18 Page 23

24 Highlights of 2017/18 financial year HORNBACH Group Pleasing like-for-like sales growth %; international %, Germany % New store openings in The Hague and Halle Online shop launched in Slovakia, Sweden and Romania Further expansion in multichannel retail approach Consolidated operating earnings (EBIT) and consolidated net income both up on previous year Stable dividends Strong balance sheet with high equity ratio (54.8 %) Page 24

25 Sustainable Sales Growth HORNBACH Group 3, , , , % 4, % million % 1820 Rounding differences +8.3% / / / / /18 Hornbach Baustoff Union HORNBACH Baumarkt AG [International] HORNBACH Baumarkt AG [Germany] Page 25

26 Like-for-like Sales* HORNBACH Baumarkt Subgroup GJ 2016/17 Q /18 Q /18 H /18 Q /18 9 M 2017/18 GJ 2017/18 Total Previous year Germany Previous year International Previous year * In constant currencies Page 26

27 EBIT* and adjusted EBIT HORNBACH Group HORNBACH Baumarkt Subgroup EBIT margin EBIT margin 4.0% 3.9% 2.6% 2.6% Adjusted EBIT margin 4.1% 4.0% Adjusted EBIT margin 2.8% 2.8% 156,8 159,8 161,2 165,6 97,5 102,8 102,5 110,0 +3,7% +7,0% +2,8% +5,1% 2016/ /18 EBIT Adjusted EBIT 2016/ /18 EBIT Adjusted EBIT *based on International Financial Reporting Standards (IFRS) Page 27

28 Earnings before taxes and Group net income HORNBACH Holding Group HORNBACH Baumarkt Subgroup Group net income in % of net sales Group net income in % of net sales 2.3% 2.3% 1.4% 1.5% tax ratio 30.9% 27.2% tax ratio 33.3% 27.5% / / / /18 Earnings before taxes Group net income Earnings before taxes Group net income Page 28

29 CAPEX 2017/18 HORNBACH Group HORNBACH Immobilien HORNBACH Baustoff Union HORNBACH Baumarkt Intangible assets Administration Existing stores New stores million 87 % 34 % 55 % 2016/ / / /18 Page 29 Olomouc

30 Group Balance Sheet Structure (IFRS) HORNBACH Group Total Assets 2,648 2,668 Total Equity and liabilities 2,668 2, Liquid funds 164 Inventories, accounts receivable and other assets Current liabilities Non-current liabilities 1,667 1,704 Non-current assets 1,463 Shareholders equity 1, % 52.8% February 28, 2017 February 28, 2018 February 28, 2018 February 28, 2017 rounding differences Page 30

31 Group Balance Sheet Structure (IFRS) HORNBACH Baumarkt Subgroup Total Assets 1,960 1,998 Total Equity and liabilities 1,998 1, Liquid funds Current liabilities Inventories, accounts receivable and other assets Non-current liabilities 503 1,132 Non-current assets 1,173 Shareholders equity 1,049 1, % 51.6% February 28, 2017 February 28, 2018 February 28, 2018 February 28, 2017 rounding differences Page 31

32 Employees* HORNBACH Group HORNBACH Group HORNBACH Baumarkt Subgroup 18,835 19,614 18,002 18,721 7,726 8,234 7,693 8,201 11,109 11,380 10,309 10,520 February 28, 2017 February 28, 2018 February 28, 2017 February 28, 2018 Germany International Germany International * incl. passive employees Page 32

33 Q1 2018/19 Page 33

34 Highlights Q1 2018/19 HORNBACH Group Group sales +2.7 % Like-for-like sales growth (DIY) of % despite unfavourable seasonal effects in spring International +5.2 % Germany -0.2 % Store openings in Zwolle (NL) und Affoltern (CH) support international growth EBIT and group net income below previous year s level as expected Strong balance sheet with high equity ratio (53.7 %) Full year revenue and earnings outlook confirmed Page 34

35 Sales Growth Q1 HORNBACH Group 1,035 1, , , % -0.1% 1, million % / / / / /19 Hornbach Baustoff Union HORNBACH Baumarkt AG [International] HORNBACH Baumarkt AG [Germany] Rounding differences 0.0% Page 35

36 Like-for-Like Sales* HORNBACH Baumarkt Subgroup +5.4% +2.6% +2.7% +3.3% +2.3% Q1 2017/18 Q2 2017/18 Q3 2017/18 Q4 2017/18 Q1 2018/19 * In constant currencies Germany International -0.2 Page 36

37 EBIT Q1 HORNBACH Group Q1 2018/19 HBM: HBU: HI: HORNBACH Baumarkt Subgroup HORNBACH Baustoff Union GmbH HORNBACH Immobilien AG % /18 million / / / / / /19 HBM HBU HI Rounding differences Page 37

38 EBIT Q1 HORNBACH Baumarkt Subgroup Q1 2018/ / /19 million % / / / / /19 Retail Real estate Rounding differences Page 38

39 Cash Flow Statement HORNBACH Group HORNBACH Baumarkt Subgroup Q1 2017/18 Q1 2018/19 Q1 2017/18 Q1 2018/19 Cash flow from operating activities of which: funds from operations , of which: change in working capital , million Cash flow from investing activities Short-term investments Cash flow from financing activities Cash-effective change in cash and cash equivalents Change in cash and cash equivalents due to changes in exchange rates Cash and cash equivalents at March Cash and cash equivalents at May Rounding differences Page 39

40 Group Balance Sheet Structure (IFRS) HORNBACH Group Total Assets 2,668 2,824 Total Equity and liabilities 2,824 2, Liquid funds Current liabilities Inventories, accounts receivable and other assets Non-current liabilities 1,704 1,744 Non-current assets Shareholders equity 1,516 1, % 54.8% February 28, 2018 May 31, 2018 May 31, 2018 February 28, 2018 Rounding differences Page 40

41 Group Balance Sheet Structure (IFRS) HORNBACH Baumarkt Subgroup Total Assets 1,998 2,151 Total Equity and liabilities 2,151 1, Liquid funds Inventories, accounts receivable and other assets Current liabilities Non-current liabilities 496 1,173 Non-current assets 1,215 Shareholders equity 1,094 1, % 52.5% February 28, 2018 May 31, 2018 May 31, 2018 February 28, 2018 Rounding differences Page 41

42 Outlook FY 2018/19 Page 42

43 New Store Openings and Outlook 2018/19 Sales and earnings forecast HORNBACH Group for FY 2018/19 Zwolle (Q1 - opened) Boras (Q3) Sales 2018/19 HORNBACH Group HORNBACH Baumarkt Subgroup Sales to increase in a medium single-digit percentage range Sales 2017/18 4,141 million 3,891 million Affoltern (Q1 - opened) Adjusted EBIT 2018/19 Adjusted EBIT 2017/18 On previous year s level 166 million 110 milion Capex 2018/ million million Capex 2017/ million 129 million Page 43

44 Financial Calendar 2018 HORNBACH Group June 22, 2018 Financial Update: 1st Quarter of 2018/19 as of May 31, 2018 July 5, 2018 Annual General Meeting HORNBACH Baumarkt July 6, 2018 Annual General Meeting HORNBACH Holding September 27, 2018 Half-Year Financial Report 2018/19 as of August 31, 2018 DVFA Analysts Conference HORNBACH Holding December 20, 2018 Financial Update: 3rd Quarter of 2018/19 as of November 30, 2018 DISCLAIMER This presentation is to be read in the context of the audited financial data of the HORNBACH Holding Group and the disclosures made in the notes to the consolidated financial statements contained in the annual report. It contains statements relating to the future based on assumptions and estimates made by HORNBACH s Board of Management. Forward-looking statements are only valid at the time at which they are made. Although we assume that the expectations reflected in these forecast statements are realistic, the company can provide no guarantee that these expectations will turn out to be accurate. The assumptions may involve risks and uncertainties which could result in actual events differing significantly from the forecast statements. Such factors include those discussed in the Risk Report and Outlook of the annual report. We do not assume any obligation to update the forward-looking statements contained in this presentation. Page 44