In 2006, the stock markets latched seamlessly onto the superb performance seen in the previous year. The upward trend on global stock exchanges came to a halt in May due to the substantial rise in crude oil prices in the preceding months and to concerns regarding interest rate rises. However, the subsequent period of correction, which led to highly volatile movements in share prices on the large capital markets, did not last for long. The rise in share prices in the second half of 2006 was a reflection of strong company earnings figures, lively merger and acquisitions activities, and favorable economic developments in Germany and Europe. Moreover, the US economy proved to be in more robust state than had widely been expected.

Following its annual low of just under 5,300 points (June 13, 2006), the German Stock Index (DAX) rose consistently, breaking through the 7,000 points barrier on February 26, 2007 – a level last achieved in 2000. During the reporting period from March 1, 2006 to February 28, 2007, the DAX rose by 14.5 %, before turbulence on the Asian stock exchanges and reports of a US mortgage crisis triggered a period of increasing jitters at international financial centers.

HORNBACH HOLDING share rises by 8.4 %

The preference share of HORNBACH HOLDING AG (ISIN DE0006083439) rose by 8.4 % during the year under report, but nevertheless failed to much the dynamic growth shown by the HORNBACH-Baumarkt share or by the most important indices on the German stock market. Until August 2006, the share more or less outperformed the overall market. During the first trading weeks of the reporting period, the share rose by around 10 %, reaching its annual high of € 89.00 on April 4, 2006. The share just about succeeded in maintaining this level into May, before the correction on the stock markets in the months of May and June also left its mark on the HOLDING preference share. From August 2006 onwards, the share moved sideways, remaining relatively unimpressed by the boom on the markets. The annual low was recorded on October 19, 2006 at € 70.75 (Xetra). This was followed by a period of low trading volumes without any substantial change in the share price.

From mid-December 2006, positive expectations as to the course of business and the increasingly dynamic sales performance both at the DIY megastores with garden centers and in the builders’ merchant business provided the share with upward momentum. Investors increased their focus on those consumer stocks with the potential to benefit from the effect of purchases being brought forward in advance of the sales tax increase scheduled to take effect in Germany in January 2007. Not only that, the ongoing economic upturn, which also affected the German construction industry for the first time in many years, also provided investors with a positive impression of our future business prospects. The HORNBACH HOLDING share concluded the year under report on February 28, 2007 at a price of € 85.50 – nonetheless more than 20 % up on the annual low and 8 % higher than at the end of the previous year.

Communications on a wide variety of levels

Our investor relations activities once again provided shareholders, analysts, the financial media, and the general public with prompt information on the performance of HORNBACH HOLDING AG in thepast financial year. All quarterly reports, annual reports, press releases, and additional financial information were published on the internet communications platform of the HORNBACH Group (www.hornbachgroup.com), where we have pooled all of our information and services for shareholders and press representatives.

Here we provide information about the overall Group and its subsidiaries, as well as about the publicly listed shares of the HORNBACH Group. Moreover, this site also offers numerous download possibilities and the online annual reports of HORNBACH HOLDING AG and of the HORNBACH-Baumarkt-AG subgroup together with a range of very user-friendly research tools. This separate site for corporate communications thus complements the product-related and marketing content available at HORNBACH’s internet site at www.hornbach.com.

The annual general meeting, the annual results press conference, analysts’ conferences, and meetings with investors in Germany and abroad gave HORNBACH the opportunity to maintain its dialog with the capital markets. Moreover, we also draw on personal contacts with the media in order to present the objectives and strategy of our company within the framework of interviews. We achieved a further substantial increase in our presence in the most important financial media in the past financial year. In doing so, we outlined the specific details of our concept, our market position and the further growth prospects for the Group, as well as our current performance figures.

In the focus of value investors

With its DIY megastores with garden centers across Europe, HORNBACH has a clear focus on organic growth and its concept has proven to be successful on an international basis. In terms of the overall Group, the substantial real estate holdings of the HORNBACH Immobilien AG subsidiary round off the investment story from the perspective of our shareholders. Our share is particularly interesting for value investors with a long-term perspective. These investors see sustainable growth potential for HORNBACH, particularly in view of the opportunity profile set out in greater detail in the management report.

The share of HORNBACH HOLDING AG represents a solid long-term investment with high intrinsic value. The share capital of HORNBACH HOLDING AG amounting to € 24 million is equally divided into four million ordinary shares and four million non-voting preference shares.

More than 80 % of the preference shares are owned by independent shareholders. The British retail group Kingfisher plc, with which HORNBACH entered a strategic alliance at the end of 2001, holds around 17.4 % of the preference shares. In line with the index system of the German stock exchange, the share of HORNBACH HOLDING AG is admitted for trading in the Prime Standard (a subsection of the official market involving additional admissions requirements). The company’s listing in the Prime Standard obliges it to meet a high level of transparency standards.

The majority of the four million ordinary shares not listed on the stock exchange is owned by the Hornbach families, who have pooled their share of the voting capital, amounting to 75 % minus one share, at HORNBACH Familien-Treuhand GmbH. Kingfisher plc holds a qualified minority shareholding in the voting capital amounting to 25 % plus one share.