GROUP MANAGEMENT REPORT

Sales Performance of the HORNBACH Group
(net, € million)

Sales Performance

The HORNBACH HOLDING AG Group comprised the HORNBACH-Baumarkt-AG, HORNBACH Baustoff Union GmbH (HBU) and HORNBACH Immobilien AG subgroups at the reporting date on February 28, 2009. The HORNBACH Group increased its consolidated sales (excluding sales tax) by 5.1 % from € 2,617 million to € 2,752 million in the 2008/2009 financial year (March 1, 2008 to February 28, 2009).

Sales at DIY megastores with garden centers grow by 5.2 %
The HORNBACH-Baumarkt-AG subgroup successfully defied the difficult economic climate in the past financial year (March 1, 2008 to February 28, 2009) and stepped up its rate of sales growth compared with the previous year. All in all, consolidated net sales grew by 5.2 % from € 2,469 million to € 2,599 million.

Net sales in Germany countered the sector trend, rising by 1.8 % to € 1,534 million (2007/2008: € 1,507 million). As in previous years, HORNBACH thus grew more rapidly than the DIY sector once again in 2008. Our international stores latched seamlessly onto their successful business performance in the previous year, boosting sales by 10.6 % from € 962 million to € 1,065 million. The share of the subgroup’s sales generated by the international stores exceeded the 40 % mark for the first time in the year under report, amounting to 41.0 % at the end of the year (2007/2008: 39.0 %).

Like-for-like sales growth of 1.4 %
Like-for-like sales at the HORNBACH-Baumarkt-AG subgroup, i.e. excluding sales at newly opened stores, grew by 1.4 % in the 2008/2009 financial year (2007/2008: minus 0.2 %).

Unlike in the previous year, which was characterized by sharply contrasting performances in Germany and abroad, the German locations also contributed to this like-for-like growth in 2008/2009. In Germany, we maintained a clear head start over the overall DIY market. In other European countries, we managed yet again to increase the already high level of sales.

Like-for-like Sales Performance (DIY) by Quarter
(in percent)

Note: due to a retrospective correction in the calculation of like-for-like sales abroad, the percentage figures for other European countries and for the Group have increased in some cases compared with the figures stated in the interim reports in 2008/2009. The figures originally reported for other European countries were 2.9 % (Q1), 1.7 % (Q2) and 0.8 % (Q3). The figures originally reported for the Group were 2.4 % (Q2) and 1.5 % (Q3).

	Germany Unlike the start to the season in the previous year, which benefited from favorable weather conditions, the comparatively cooler and damper weather in 2008 meant that the spring business failed to get going in March and April 2008. The sudden rise in demand for garden articles and plants in May 2008 then boosted sales sufficiently to more than compensate for the shortfall in the two previous months. As a result, like-for-like sales in Germany in the first quarter of 2008/2009 were 0.6 % up on the high level seen in the previous year.   Sales continued to show pleasing developments in the second and third quarters of the financial year as well, with growth rates of 2.8 % and 1.9 % respectively within a generally weak competitive climate. This was all the pleasing given that inflation reached long-term highs of more than 3 % in the summer months of 2008, thus severely encroaching on purchasing power. Having said this, the sharp rise in energy prices also had positive aspects for HORNBACH, as increasing numbers of consumers became open to the topic of energy saving in their houses and flats. In this area in particular, we are better positioned than any other DIY store in the sector in terms of a broad product range and professional advice for renovation projects such as building insulation, or replacing windows, doors and heating boilers. The above-average growth rates in energysaving product ranges thus contributed to the Group’s likefor- like sales growth.   Our retail format, with its focus on project customers, also proved its worth as the financial and economic crisis intensified. Sales in Germany maintained their growth course in the months of December 2008 and January 2009. The fact that like-for-like sales fell 0.9 % short of the previous year’s figures in the fourth quarter was chiefly due to there being one shopping day fewer in February 2009, and to the significantly more severe winter weather in that month. We did not witness any crisis-driven reluctance on the part of consumers to make purchases by the end of the 2008/2009 financial year.   Notwithstanding the weaker final quarter, the Group’s performance for the financial year as a whole was certainly respectable. By the end of the twelve months, we had improved our like-for-like sales in Germany by 1.2 %, compared with a decline of 3.6 % in the previous year. We thus further extended our head start over the competition compared with the 2007/2008 financial year. Based on the 2008 calendar year (January to December), gross like-forlike sales in the German DIY sector dropped by 2.0 %, while HORNBACH bucked the negative trend by posting like-for-like growth of 2.2 %. We thus outperformed the German sector average by a monthly average of more than four percentage points in the reporting period from March 2008 to February 2009. This underlines the strength of our DIY megastore and garden center retail format. Thanks to this above-average sales performance, HORNBACH further expanded its market share in Germany in 2008. As a percentage of the total sales of all German DIY stores and garden centers (€ 21.6 billion), our market share rose from 8.3 % to 8.5 %. If the calculation is based only on those DIY stores and garden centers in Germany with sales areas of more than 1,000 m² (market volume: € 17.55 billion), then our share of the market in this segment rose from 10.2 % to 10.4 %.
	Other European countries At our stores outside Germany, we succeeded in the overall 2008/2009 financial year in surpassing the high volume of sales achieved in the past for the tenth year in succession. Like-for-like sales at these stores rose by 1.7 % (2007/2008: 6.0 %). The performance in the first three quarters remained relatively unimpressed by the deterioration in the consumer climate throughout Europe triggered by the sharp rise in the cost of living and fears of recession. Comparable store sales thus improved at an average rate of around 3 %. Given the unfavorable seasonal influences in February 2009, like-for-like sales outside Germany also declined in the fourth quarter (minus 3.2 %). For 2008/2009 as a whole, however, our international activities were able to more than compensate for this weakness thanks to the pleasing growth rates in the first nine months.

Four new HORNBACH DIY megastores with garden centers
We pressed ahead with our expansion by opening four new HORNBACH DIY megastores with garden centers during the 2008/2009 reporting period. In July 2008, we opened our first location in the Swedish capital, Stockholm (Botkyrka). The same month also witnessed the launch of operations at the second HORNBACH store in Bucharest, Romania. In Switzerland, sales activities commenced at our new location in Biel in November 2008. These three international store openings were accompanied by a premiere in Germany, with the opening of our first DIY megastore with a garden center in Hamburg, in the Eidelstedt district, at the end of January 2009. Including the four stores newly opened, we were operating a total of 129 retail outlets across the Group as of February 28, 2009 (February 29, 2008: 125). The sales areas of our 92 stores in Germany (2007/2008: 91) amounted to around 971,000 m². The average store size in Germany is in excess of 10,500 m². Outside Germany, we operate a total of 37 DIY megastores with garden centers (2007/2008: 34) with total sales areas of around 476,000 m² and average sales areas of just under 12,850 m². The stores are located in Austria (11), the Netherlands (8), Luxembourg (1), the Czech Republic (6), Switzerland (4), Sweden (3), Slovakia (2), and Romania (2). With total sales areas of around 1,447,000 m² at the Group (2007/2008: 1,385,000 m²), the average sales area per store now amounts to around 11,200 m² (2007/2008: around 11,100 m²). We have thus further extended our unique position among European DIY store operators in the megastore segment involving sales areas of more than 10,000 m².

HORNBACH Baustoff Union GmbH subgroup
All in all, the business performance of the HORNBACH Baustoff Union GmbH (HBU) subgroup was satisfactory in the 2008/2009 financial year. Following a positive course of business in the first nine months, the long and severe winter significantly inhibited the sales performance in the final quarter. The (net) sales of the subgroup grew by 2.8 % from € 148.6 million to € 152.8 million in the 2008/2009 financial year. HBU thus outperformed the builders’ merchant segment in Germany, which reported growth of 1.5 % in 2008. HBU operated 20 outlets at the reporting date on February 28, 2009 (2007/2008: 18).

HORNBACH Immobilien AG subgroup
The HORNBACH Immobilien AG subgroup develops first-class retail real estate for the operating companies in the HORNBACH HOLDING AG Group. The overwhelming share of property is let at customary market conditions to companies within the Group. Rental income rose by 13.3 % to € 58.8 million in the 2008/2009 financial year (2007/2008: € 51.9 million).