50 COMBINED MANAGEMENT REPORT BUSINESS REPORT

Development in HORNBACH's store network

HORNBACH opened a total of eight new DIY stores with garden centers (of which one replacement location) and substantially extended one existing store in the 2014/2015 year under report. Furthermore, one store was closed for temporary con- version work.

In the first quarter of 2014/2015 (March 1 to May 31, 2014) we celebrated two new store openings. In March 2014, we opened our 93rdlocation in Germany, in this case in Lübeck. In

Prague-Čestlice, our third HORNBACH DIY store with a garden

center in the Czech capital launched operations in the same month. Our store network in the Czech Republic now compris- es nine locations with sales areas of some 125,000 m². The further expansion program in the 2014/2015 financial year took place exclusively in Germany. In the second quarter of 2014/2015, we launched operations at the first two of the total of six Praktiker/Max Bahr locations we have taken over. Following several months of conversion work at a former Max Bahr location, we opened a HORNBACH DIY megastore with a garden center in Trier at the beginning of June 2014. This has replaced our smaller existing location dating from 1990. In early July 2014, we boosted our presence in the Nuremberg

region by opening the reflagged location in Schwabach (for- merly Max Bahr). At the end of July 2014, we launched opera- tions at a small-scale DIY store (HORNBACH Compact) in Bad

Bergzabern (Rheinland-Pfalz). Here, we have closed a region-

al supply gap in this rural catchment area.

Furthermore, in August 2014 we closed our garden center in Geleen in the Netherlands. Following its conversion into a DIY megastore with a garden center, we expect to reopen this location in summer 2015.

In the third quarter of 2014/2015, we opened the doors at three more of the Praktiker/Max Bahr locations taken over in Germany. Following the conversion of a former Praktiker loca- tion, we opened a HORNBACH DIY megastore with a garden center in Ulm in early September 2014. At the end of Septem- ber, we subsequently extended our store network in Germany by reopening a former Max Bahr location in Lüneburg. After several months of conversion work at a former Max Bahr store in Kamen, the DIY store and garden center began operating under its new HORNBACH flag at the end of October 2014.

Sales by region

58.0 % 58.6 %

Other European Countries Germany 2014 / 2015 2013/2014 € 1,827 million € 1,966 million € 1,390 million € 1,325 million 42.0 % 41.4 % Financial year 11 | 12 12 | 13 13 | 14 14 | 15 10 | 11 20 0 40 60 80 100 120 140 160

Stores and sales areas at the HORNBACH-Baumarkt-AG Group

(No. of HORNBACH DIY megastores with garden centers)

Financial year 11 | 12 12 | 13 13 | 14 14 | 15 10 | 11 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,000

(Total sales areas in thousand square meters)

Germany Other European 92 41 97 49 91 43 92 46 92 49

DIY stores Real estate Headquarters and consolidation 71 51 -17 82 49 -21 2014 / 2015 2013/2014 2014 / 20152013/2014 EBIT by segment (€ million) EBIT by region (share in %)

Other European Countries Germany € 36.7 million € 29.6 million € 68.3 million € 80.6 million 35 % 27 % 65 % 73 %

COMBINED MANAGEMENT REPORT BUSINESS REPORT

51

In December 2014, the standalone garden center in Lohfelden

near Kassel was closed and work began on converting the

neighboring old HORNBACH DIY store into a combined DIY store and garden center.

Including the stores newly opened and closed in the year under report, we were operating 146 retail outlets across the Group as of February 28, 2015 (February 28, 2014: 141). Sales areas at the 97 stores in Germany amounted to around 1,039,000 m². The 49 DIY stores with garden centers in other European countries had sales areas of around 665,000 m². The international stores are located in Austria (11), Nether- lands (9), Czech Republic (9), Switzerland (6), Romania (5), Sweden (5), Slovakia, (3) and Luxembourg (1). Total sales areas at the HORNBACH-Baumarkt-AG Group amounted to around 1,704,000 m² as of February 28, 2015. The average size of a HORNBACH DIY store with a garden center thus amounts to almost 11,700 m².

Comparison of actual and forecast business performance

Expansion

In the Outlook section of our 2013/2014 Annual Report, we forecast that, unlike in the previous year, the focus of our expansion activities in the 2014/2015 financial year would shift to Germany due to the takeover of former locations from the broken-up Praktiker Group. A total of eight new store openings were planned, of which seven in Germany (including two replacement locations). Accounting for the replacement locations, the number of HORNBACH stores with garden centers was planned to increase from 141 to 147, of which up to 97 in Germany and 50 in other European countries. We basically complied with these objectives.

Stores were opened on schedule in Prague – our only interna- tional store opening – and in Lübeck in March 2014. In the forecast period, it was planned to link up all six of the former Praktiker/Max Bahr locations taken over to HORNBACH's network in the further course of the financial year. In actual fact, the five rented locations in Trier, Schwabach, Ulm, Lüne- burg, and Kamen were reopened. The opening of the Praktiker

location in Saarbrücken acquired by HORNBACH Immobilien AG, originally scheduled by the end of February 2015, was post- poned to the first half of March 2015 and thus to the new 2015/2016 financial year (first construction stage). The con- version of the directly adjacent HORNBACH area into a modern drive-in facility with a direct link to the new DIY store and garden center (second construction stage) will take place as planned in the 2015/2016 financial year.

The opening of a HORNBACH store in Bad Bergzabern (July 2014) and conversion-related closure of our garden center in Geleen in the Netherlands (August 2014) were additionally included in our 2014/2015 expansion program. Furthermore, the merger of the standalone HORNBACH garden center in Lohfelden near Kassel with our nearby DIY store reduced the number of stores by one location. The number of HORNBACH stores totaled 146 at the balance sheet on February 28, 2015 (2013/2014: 141).

Investments

Total investments in a range of € 100 million to € 120 million were budgeted for the 2014/2015 financial year. With an actual investment total of € 99.9 million, we reached the lower end of the planned range.

Sales and earnings performance

The sales forecast for the HORNBACH-Baumarkt-AG Group formulated in the Outlook section of the 2013/2014 Annual Report and not revised in the course of the year predicted that net sales would show growth in a medium single-digit per- centage range and at a higher rate than in the 2013/2014 financial year (4.4%). With consolidated sales growth of 6.5%, we clearly met this target.

For like-for-like sales net of currency items, we forecast group-wide growth in a low to medium single-digit percent- age range. In actual fact, we improved our adjusted sales by 4.4% in the financial year. We thus reached the upper end of the target corridor.