Climate Change Data

Environmental Metrics

ESG Focus Areas

• Sustainability
• Employee Satisfaction
• Environmental Protection
• Climate Change

Environmental Achievements

• Further improved the emissions footprint of our products
• Extensively optimized production structures and methods with a view to further reducing the use of energy, supplies and raw materials
• Developed ecoPlus technology to systematically cut operating costs while reducing the impact on the environment
• Optimized the use of compressed air with intelligent management systems
• Reduced energy consumption by feeding surplus heat from combined heat and power plants into the heating system

Social Achievements

• Maintained a high ratio of trainees to total workforce
• Offered numerous taster traineeships
• Participated in university careers fairs
• Offered placements to students
• Introduced an employee profit participation scheme

Governance Achievements

• Complied with the recommendations of the German Corporate Governance Code without exceptions
• Issued a code of conduct for foreign subsidiaries
• Restructured the R&D function to reduce time to market of innovations

Climate Goals & Targets

Environmental Challenges

• Global economic development
• Customer debt defaults
• Misjudging future market developments and misguided technological developments
• Raw materials price increases
• Data loss, damage or misuse
• Product liability and warranty claims
• Currency risks
• Interest rate changes
• Assertion of warranty claims or related bad debts
• Tax loss carry forwards

Mitigation Strategies

• Maintaining flexible personnel capacities and adjusting production plans
• Obtaining advance payments and taking out insurance on projects
• Close market observation and intensive customer relationships
• Systematic procedural cycles for product development
• Broad product range
• Careful supplier selection and close cooperation
• Master agreements with fixed prices and bundling demand
• Upgraded IT security
• Comprehensive total quality management system
• Hedging instruments for foreign currency sales revenue
• Price indexing clauses
• Syndicated loan agreement
• Interest rate hedges
• Mutual agreements with customers
• Regular monitoring of financial reporting

Supply Chain Management

Responsible Procurement

• Careful supplier selection
• Close cooperation with suppliers

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRSs, German Corporate Governance Code

Certifications: DIN EN ISO 9000

Third-party Assurance: Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft

Sustainable Products & Innovation

• ecoPlus technology

Awards & Recognition

• Third place in the CAPITAL Investor Relations Award

Environmental Metrics

ESG Focus Areas

• Sustainability

Environmental Achievements

• Developed eco Plus technology, significantly reducing energy consumption in machines and production lines.
• Reduced energy consumption by about 20 percent in processing centers equipped with laser Tec technique.

Social Achievements

• Launched "HOMAG cares" initiative, providing support to people in need globally. Donated furniture to Spanish foundation and organized emergency measures for customers affected by natural disasters in Australia and Japan.
• Maintained a high ratio of trainees to total workforce (around 10%).
• Employee profit participation scheme distributed approximately EUR 3.5 million group-wide.

Governance Achievements

• Implemented all recommendations and many suggestions of the German Corporate Governance Code.
• Issued a code of conduct for foreign companies in 2010 (with a plan to issue one for German companies by the end of 2012).
• Conducted an efficiency audit by the supervisory board.

Climate Goals & Targets

Environmental Challenges

• Uncertainty in the eurozone in the second half of 2011, leading to a tendency to shelve investment decisions.
• Losses at subsidiaries FriZ Kaschiertechnik GmbH, Torwegge Holzbearbeitungsmaschinen GmbH, and Bütfering Schleiftechnik GmbH.
• Exchange rate volatility due to the euro crisis.
• Significant increase in valuation allowances on trade receivables.

Mitigation Strategies

• Took quick and comprehensive action to improve profitability (restrictive recruiting policy, targets to reduce operating expenses).
• Implemented restructuring measures at FriZ, Torwegge, and Bütfering, aiming for a sustained improvement in operative EBITDA.
• Adjusted production plan early to developments in order intake.
• Strict receivables management system and case-by-case insurance to minimize customer debt defaults.
• Close market observation and customer relationships to mitigate risks of misjudging market developments.

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Eco Plus technology
• Laser Tec technique
• Reac Tec surfacing technique

Environmental Metrics

ESG Focus Areas

• Sustainability
• Employee Development
• Responsible Procurement
• Environmental Efficiency

Environmental Achievements

• Reduced energy consumption at global production facilities through environmentally compatible investments in modern technology.
• Compressed air savings of up to 25 percent through new developments in through-feed machines.
• ecoPlus technology implemented in machines, including more than 100 aspects to conserve resources.

Social Achievements

• Maintained a high ratio of trainees to total workforce.
• Introduced HOMAG Cares initiative to help people in need.
• Donated furniture produced at trade fairs to local social facilities.
• Employee profit participation scheme distributing EUR 3.6 million group-wide.

Governance Achievements

• Implemented the HOMAG Group Action Program to enhance efficiency.
• Concluded a new syndicated loan agreement with improved conditions.
• Restructuring measures at subsidiaries progressing on schedule.
• Management holding structure introduced to reorganize management.

Climate Goals & Targets

Environmental Challenges

• Difficult economic environment and downward trend in customers’ propensity to invest.
• Euro crisis effects and decline in companies’ willingness to invest.
• Fierce competition.
• Weak development of order intake in Russia due to difficult financing situation.
• Weak economic performance in industrialized countries.
• Highly challenging situation impacting the Italian market.

Mitigation Strategies

• Measures to cut costs and enhance efficiency (HOMAG Group Action Program).
• Strengthened earning power through efficiency measures.
• Concluded a new syndicated loan agreement for sound financing.
• Restructuring measures at subsidiaries to improve competitiveness and profitability.
• Flexible personnel capacities and adjustment of production plan to order intake developments.
• Financing plans to support regions in 2013.
• Implementation of planned structural measures concerning sales and expansion of global sales and service organization.

Supply Chain Management

Responsible Procurement

• Careful selection of suppliers and long-standing relationships based on trust.
• Supplier audits and visits to main suppliers.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Certifications: DIN EN ISO 9000

Third-party Assurance: Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Stuttgart

Sustainable Products & Innovation

• Machines with ecoPlus technology for resource conservation.

Environmental Metrics

ESG Focus Areas

• Sustainability

Environmental Achievements

• Reduced CO2 emissions by 1,750 metric tons per annum through energy efficiency measures at Schopfloch location.
• Ecoplus concept integrated into product development for energy and resource efficiency.

Social Achievements

• Launched "HOMAG Cares" initiative, donating revenue from demonstration parts sales to charities.
• Maintained a high ratio of trainees to total workforce (just over 9.6%).
• Employee participation scheme in place since 1974, distributing EUR 3.9 million group-wide in 2013.

Governance Achievements

• Implemented almost all recommendations of the German Corporate Governance Code.
• Improved compliance system with the appointment of a compliance officer and development of guidelines.

Climate Goals & Targets

Environmental Challenges

• Challenging economic environment with stagnation in the German mechanical engineering sector and decline in industry sales revenue.
• Macroeconomic risks related to global economic development.
• Customer and competitive risks.
• Product and development risks.
• Procurement and purchasing risks.
• IT risks related to data security and system failures.
• Quality risks associated with complex machinery.
• Risks from project business due to complexity and coordination challenges.
• Currency risks from international activities.
• Liquidity and financing risks.
• Tax risks.
• Personnel risks related to attracting and retaining qualified staff.
• General compliance risks.
• Legal risks related to warranty claims and litigation.

Mitigation Strategies

• Flexible personnel capacities and early adjustment of production plans to order intake fluctuations.
• Strict receivables management, prepayments, and insurance to minimize customer defaults.
• Close market observation, customer feedback, and standardized development processes to manage product and development risks.
• Careful supplier selection, supplier audits, and master agreements with fixed prices to mitigate procurement risks.
• Continuous review, improvement, and expansion of IT security, including regular audits and centralized malware protection.
• Comprehensive total quality management system and high degree of standardization to minimize quality risks.
• Detailed project management, control, and reporting systems to manage project risks.
• Invoicing in euro where possible, hedging instruments, and price indexing clauses to mitigate currency risks.
• Syndicated loan agreement and interest rate hedges to manage liquidity and financing risks.
• Cautious accounting policy for tax assets and increased tax capacity within the Group to manage tax risks.
• Young talent program and focus on employee training to mitigate personnel risks.
• Code of conduct for foreign subsidiaries, appointment of a compliance officer, and development of compliance guidelines to address compliance risks.
• Comprehensive total quality management system and high degree of standardization to minimize product liability and warranty claims.

Supply Chain Management

Supplier Audits: Yes

Responsible Procurement

• Careful selection of suppliers and long-term relationships.
• Master agreements with fixed prices and bundled demand.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: IFRS

Certifications: DIN EN ISO 9001

Third-party Assurance: Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• powerTouch user interface
• powerControl operating system
• laserTec and airTec zero-joint technologies
• ecoplus technology package

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Sustainability

Environmental Achievements

• Reduced CO2 emissions by 1,750 metric tons per annum at Schopfloch location through energy efficiency measures (new combined heat and power plants, improved insulation).

Social Achievements

• Increased employee count to 5,606 (prior year: 5,064), including 329 employees from Stiles Machinery acquisition; maintained a high ratio of trainees to total workforce (just over 8.6%); implemented a code of conduct, anti-corruption guidelines, and antitrust law instructions for all employees; distributed EUR 4.2 million (prior year: EUR 3.9 million) to employees participating in profit-sharing schemes.
• Improved compliance system with code of conduct, anti-corruption measures, and antitrust law training for all employees.

Governance Achievements

• Implemented almost all recommendations of the German Corporate Governance Code; published a declaration of compliance; improved internal monitoring and risk management systems; premature extension of syndicated loan agreement to 2019 with improved terms.

Climate Goals & Targets

Environmental Challenges

• Macroeconomic risks (economic downturns impacting investment decisions); geopolitical risks negatively impacting economies in several countries; customer and competitive risks; product and development risks; procurement and purchasing risks; IT risks (data loss, hacking, virus attacks); risks from project business (complexity, coordination challenges); currency risks; liquidity and financing risks; tax risks; personnel risks (employee turnover, filling vacancies).

Mitigation Strategies

• Flexible personnel capacities, adjusting production capacity to order intake; strict receivables management, credit insurance; close market observation, standardized development processes; careful supplier selection, supplier audits, global procurement; reliable IT systems, IT security audits, centralized malware protection, two-factor authentication; comprehensive total quality management system; detailed project management system, project control, project reporting; hedging transactions, low foreign currency positions; syndicated loan agreement, interest rate hedges; active assets management, successful working capital management; program to promote young talent, targeted personnel development.

Supply Chain Management

Responsible Procurement

• Careful supplier selection, long-term relationships, supplier audits, global procurement activities to obtain regional price advantages.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: German Commercial Code (HGB), International Financial Reporting Standards (IFRSs)

Certifications: DIN EN ISO 9001 (at majority of production sites)

Sustainable Products & Innovation

• Energy-efficient machines and production lines (ecoPlus concept, IE2 motors); innovative material (CFK) for energy-efficient chip removal; sealTec technology for higher moisture resistance.

Awards & Recognition

• Excellence in Training quality seal (largest subsidiary)

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Employee Responsibility
• Social Engagement

Environmental Achievements

• Increased energy efficiency of machines through ecoPlus label and IE2 drives, reducing CO2 emissions.
• Investments in modern and environmentally friendly technology to reduce energy consumption in production facilities.

Social Achievements

• Regular employee satisfaction surveys and implementation of improvement measures.
• Social budget for employee well-being initiatives.
• First "Social Day" supporting SOS Children's Village.
• Continued employer branding activities and support for employees in change processes.
• Extensive part-time offers, flexible working hours, and mobile work options to support work-life balance.
• Leading Employer Award and inclusion in "Best Trainers in Germany" ranking.

Governance Achievements

• Reached 25% women representation target in the Supervisory Board.
• Reached 8% women representation target in the second management level.

Climate Goals & Targets

Environmental Challenges

• Global economic downturn due to the Corona pandemic, impacting order intake.
• Increased competition and price pressure due to weaker global economy.
• Potential for supply chain disruptions and increased insolvency risk among suppliers due to the pandemic.
• Technical risks in large projects with high prototype shares and increased costs due to the pandemic.
• Increased risk of personnel shortages due to illness and fluctuation.
• Slightly increased compliance risk due to onboarding of new employees from acquisitions.

Mitigation Strategies

• Flexible personnel and production capacities adjusted to order intake.
• Global presence to compensate for economic downturns in individual regions.
• Stringent debt management and credit insurance to minimize customer-side risks.
• Systematic process cycles and standardized product development process to minimize risks of technological misdevelopments and high start-up costs.
• Global procurement to utilize regional price advantages and framework agreements with fixed prices.
• Detailed project management, project controlling, and regular project reporting to mitigate project risks.
• Comprehensive Total Quality Management System and DIN EN ISO 9001:2015 certification.
• Continuous improvement of IT systems and infrastructure to mitigate IT risks.
• Increased efforts in talent attraction and a global junior management program to address personnel risks.
• Task force for communication and implementation of protective measures against the pandemic.
• Supplier audits and long-term cooperation with suppliers to avoid supply bottlenecks.
• Initiated a supplier consolidation project to reduce the number of suppliers and better manage risks.

Supply Chain Management

Responsible Procurement

• Careful selection of suppliers and striving for long-term cooperation.
• Global coordination of procurement of important goods by specialized commodity managers.

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Energy-efficient machines and systems

Awards & Recognition

• Leading Employer Award (2020)
• Beste Ausbilder Deutschlands (2019, 2020)