HORNBACH Baumarkt : Non-Financial Group Report 2022/23

Non-Financial Group Report

1. Fundamentals of Non-Financial Group Report

About this report

HORNBACH Holding AG & Co. KGaA is obliged pursuant to § 315b (1) - (3) of the German Commercial Code (HGB) to prepare a non-financial Group declaration. This report has been prepared in accordance with

• 315b-cin conjunction with § 289b-e HGB. The contents of the report are exclusively based on the definition of materiality and the content requirements stipulated in § 315b (1) - (3) HGB. For this reason, no reference has been made to any framework. The explanation of the materiality analysis of the HORNBACH Group has been presented in detail in Chapter 1.2. of this report.

1.1 Group structure and business model

The structure and business model of the HORNBACH Group are presented below.

HORNBACH Holding AG & Co. KGaA is the parent company of the HORNBACH Group. It does not have any operations itself, but has a number of major subsidiaries. In addition to HORNBACH Baumarkt AG, the largest operating Subgroup at which the do-it-yourself (DIY) retail activities across Europe are pooled, the HORN- BACH Group also comprises the HORNBACH Baustoff Union GmbH Subgroup (regional builders' merchants) and the HORNBACH Immobilien AG Subgroup (real estate and location development). At the balance sheet date on February 28, 2023, the Group had a total of 25,118 employees. In the 2022/23 financial year (March 1, 2022 to February 28, 2023), the HORNBACH Group generated net sales of around € 6.3 billion. The HORNBACH Group was founded in 1877 and is family managed, now in the fifth generation. It has the legal form of a partnership limited by shares (KGaA) and is listed in the Regulated Market of the Frankfurt Stock Exchange.

In accordance with the Articles of Association, the General Partner of HORNBACH Holding AG & Co. KGaA is HORNBACH Management AG, represented by its Board of Management, which currently comprises two mem- bers. The Board of Management of the General Partner manages the business of HORNBACH Holding AG & Co. KGaA and represents the company to third parties. Hornbach Familien-Treuhandgesellschaft mbH holds all shares in the General Partner of HORNBACH Holding AG & Co. KGaA.

Our business activities focus on do-it-yourself (DIY) retail with DIY stores and garden centers, as well as on online DIY retail in Germany and eight other European countries. These retail activities, which mainly focus on the needs of private end customers (business-to-consumer: B2C), are managed at HORNBACH Baumarkt AG, which is by far the largest operating Subgroup. With its "ProfiService" and product range, HORNBACH also targets tradespeople and other commercial customers (business-to-business: B2B). The DIY product range, which comprises around 50,000 articles stocked at the stationary stores and up to around 260,000 articles available online, is structured in five product divisions: (1) hardware / electrical, (2) paint / wallpa- per / flooring, (3) construction materials / timber / prefabricated components, (4) sanitary / tiles, and (5) garden.

In addition, HORNBACH is also active in the regional stationary builders' merchant business via the HORN- BACH Baustoff Union GmbH Subgroup (HBU), which chiefly focuses on specialist retail with commercial customers in the main and secondary construction trades (business-to-business: B2B). The range of products and services in HBU's B2B segment comprises around 170,000 articles in ten product divisions: civil engi- neering, building construction, roof / façade, fittings, garden, construction elements, sanitary and tiles, specialist products, fuels, and transport/other.

The findings were agreed with the Board of Management of HORNBACH Management AG in order to ensure consistent and comprehensive reporting for the overall Group.

1.3 Risk assessment

All material non-financial topics were subject to a risk assessment to ascertain whether our business activi- ties, supply chain, or customers gave rise to any material risks for the aspects defined in § 289c (3) Nos. 3 and 4 and § 315c HGB. Our Group-wide risk management did not identify any risks requiring report at the HORNBACH Holding AG & Co. KGaA Group.

Further information can be found in the Group Management Report, Risk Report, and Outlook of HORNBACH Holding AG & Co. KGaA.

1.4 Sustainability strategy and management

We base all our Group-wide entrepreneurial actions on the HORNBACH Values. These provide a firm foundation for the values underpinning our dealings with customers, as well as our conduct towards our fellow em- ployees. We are convinced that responsible activities are a prerequisite for our long-term economic success and for the HORNBACH Group's future prospects. Our sustainability strategy is intended to secure the com- pany's success on a long-term basis to the benefit of our employees and with respect for the environment and society in which we operate.

Within our company organization, we have defined areas of action on which we base sustainability strategy. When further developing our sustainability strategy in the 2022/23 financial year, the existing areas of action were specified as follows:

• Our product range provides our customers with the opportunity to consider ecological, health-related, and social aspects when making their purchases and facilitates more sustainable construction, renova- tion, and design. Relevant factors include the environmentally-friendly and socially responsible manufac- ture of the products, durability, sustainable product features, and environmentally-friendly packaging and transport.
• By offering product-relatedservices, we help our customers to benefit from products for as long as pos- sible and thus save resources. These include repair services and spare parts, as well as the professional disposal of products no longer suitable for use.
• We make people the focus of our activities and invest in long-term relationships. We aim to create a work- ing environment in which all employees have the same opportunities, stay healthy, and are encouraged to take decisions under their own responsibility.
• We protect resources in our own business operations, for example by avoiding waste, promoting the re- newed use of resources, and saving energy or procuring it from more environmentally-friendly sources or

generating it ourselves. When we build new stores and logistics centers or purchase vehicles and operating materials, sustainability criteria are factored into the respective planning and procurement processes.

The topics resulting from the areas of action are presented in detail in the new CSR Policy, which is valid throughout the Group. By setting mandatory CSR standards, the companies in the HORNBACH Group also require their business partners to comply with ecological, social, and ethical standards of conduct. Further- more, the HORNBACH Group has published a policy statement on its human rights strategy. Both documents are available at www.hornbach-holding.de/en/responsibility/our-business-partners.

An internal CSR team comprising a core CSR team and members of the relevant departments from across the Group is responsible for further developing the company's strategic non-financial topics. The core CSR team coordinates and supports the work on sustainability topics at the overall Group and reports to the Boards of Management of HORNBACH Management AG and HORNBACH Baumarkt AG. The strategies, targets, and management of non-financial topics are largely defined by HORNBACH Baumarkt AG as the largest operating Subgroup and are the responsibility of that company's Board of Manage- ment. The Board of Management is regularly involved in topic-specific measures and kept informed of their implementation. The Chief Executive Officer of HORNBACH Baumarkt AG bears overall responsibility for the topic of CSR. He is additionally responsible for the areas of strategic development, operating sales and ser- vices, and expansion. Sustainability-related topics are nevertheless dealt with by all Board of Management departments and are within the responsibility of the respective member of the Board of Management.

At the HORNBACH Baustoff Union GmbH Subgroup, the management is responsible for the strategies, tar- gets, and management approaches for those non-financial topics deemed material. Overall responsibility is incumbent on the Chairman of the Management.

Within the Board of Management of HORNBACH Management AG, the General Partner of HORNBACH Holding AG & Co. KGaA, the CEO is responsible for the operating business at the two subsidiaries HORNBACH Bau- markt AG and HORNBACH Baustoff Union GmbH.

2. Material Non-Financial Aspects

The HORNBACH Baumarkt AG Subgroup holds a dominant position within the HORNBACH Group, and that both in terms of business activities and of their implications for the aspects defined in § 289c (2) HGB as they pertain to the HORNBACH Holding AG & Co. KGaA Group. The B2C retail business at HORNBACH Bau- markt AG contributes by far the largest share of the Group's sales and is therefore also the most important lever in terms of implications for the aspects defined in § 289c (2) HGB.

The material non-financial aspects identified for the Group are also relevant to the HORNBACH Baustoff Union GmbH Subgroup.

In view of this, unless indicated otherwise, the concept described in this Non-Financial Group Report relates to the targets, strategies, management approaches, and measures at the HORNBACH Holding AG & Co. KGaA Group. In what follows, the terms "we", "HORNBACH" and "Group-wide" are synonymous with the entire HORNBACH Group. Diverging from this, we explicitly refer to any concepts pursued solely on the level of the HORNBACH Baumarkt AG or HORNBACH Baustoff Union GmbH Subgroups.