TAG Immobilien

At the Management Board level, responsibilities in the past financial year were as follows:

• COO (also Co-CEO): Real Estate Management, Acquisitions and Sales, Strategic Real Estate Management & Marketing, Shared Service Centre, Customer and Quality Management, FM Services, Craftsmen Service, Central Purchasing and Technology, Change Management, Business Apartments, Energy Residential Service, Multimedia Real Estate, Business Development, Environmental Social Governance (ESG), Digitalisation and Human Resources

• CFO (also Co-CEO): Group Accounting, Financing and Treasury, Corporate Finance, Tax, Controlling, Investor & Public Relations, ERP/Data Management, Legal, Judicial Rental Collection, IT, Compliance, Internal Audit and Property Management

The Supervisory Board was able to expand with the election of Ms Gabriela Gryger as a shareholder representative at the Annual General Meeting on 28 May 2024. She has extensive expertise in the Polish residential real estate market. This also further strengthens the diversity of the Supervisory Board, with women making up 50% of the Supervisory Board, as they do of the Management Board, and our Supervisory Board is now internationally positioned, as Ms Gryger has Polish citizenship.

The existing members of the Supervisory Board and new member Ms Gryger have the knowledge, skills and experience required to properly perform their duties. The respective professional expertise of the individual Supervisory Board members complements each other, enabling the Supervisory Board as a whole to comprehensively fulfil its duties. The Supervisory Board's control and advisory function is ensured in accordance with the law, the Articles of Association, the German Corporate Governance Code and the rules of procedure.

The Supervisory Board has formed an Audit Committee and a Personnel Committee. The Audit Committee is responsible for the preliminary audit of the documents relating to the annual financial statements and the consolidated financial statements, as well as the preparation of the adoption or approval of these and the Management Board's proposal for the appropriation of profits. The committee discusses with the Management Board, among other things, the principles of compliance, the risk management system and the appropriateness and functionality of the internal control systems. The tasks of the Audit Committee also include preparing the election of the auditor by the Annual General Meeting and verifying the auditor's independence required for this purpose. The members of the Audit Committee have sufficient expertise in the field of accounting and auditing. Expertise in both areas includes reporting, including its audit on sustainability topics.

The Personnel Committee, which also performs the tasks of a nominating committee, is responsible for all personnel matters related to the Supervisory Board and Management Board, the conclusion and content of Management Board contracts and related advisory matters, including fixed and variable remuneration. Furthermore, the Personnel Committee selects suitable candidates for nomination to the Supervisory Board at the Annual General Meeting.

In the 2024 financial year, the Supervisory Board performed the duties incumbent upon it by law, the Articles of Association, the German Corporate Governance Code (GCGC) and its rules of procedure with due care. It regularly advised the Management Board on the management of the Company and monitored its activities. It was also directly involved in all decisions of fundamental importance to the Company at an early stage. The Management Board reported regularly, promptly and comprehensively on all relevant issues of corporate planning and strategic development. The Management Board's reporting covered the economic and earnings position of TAG and its Group companies, the course of business, the internal control system, the risk situation, risk management, compliance and sustainability issues. Reporting was done in writing and orally. The Management Board was also in regular contact with the Chairman of the Supervisory Board to discuss important business transactions and to exchange information on the general course of business.

Against the background of the existing discussion about simplifying the requirements of the CSRD and the associated legal uncertainty, particularly with regard to the content and scope of the sustainability reporting standards applicable in the future, the Management Board of TAG has decided in favour of partially applying the first set of ESRS as a framework within the meaning of Section 289d HGB for the non-financial Group statement for the 2024 financial year.

The Audit Committee is responsible for the preliminary audit of the documents relating to the annual financial statements and the consolidated financial statements, as well as the preparation of the adoption or approval of these and the Management Board's proposal for the appropriation of profits. The committee discusses with the Management Board, among other things, the principles of compliance, the risk management system and the appropriateness and functionality of the internal control systems.

TAG Immobilien AG (hereinafter also referred to as "TAG" or the "Group) is a property company focused on the residential real estate sector, based in Hamburg. The properties of TAG and its subsidiaries are spread across various regions in Northern and Eastern Germany and North Rhine-Westphalia, and since the 2020 financial year, also in Poland, where the business model includes not only building and managing a residential real estate portfolio but also sales activities. As of 31 December 2024, TAG managed a total of around 82,500 (31 December 2023: around 84,700) of its own residential units in Germany and around 3,200 (31 December 2023: around 2,400) in Poland.

TAG's business model in Germany is based on the long-term rental of residential units. All the functions essential for real estate management are performed by our own employees. In addition, caretaker and craftsman services are provided for TAG's own portfolio. The rental business focuses on affordable housing that appeals to broad sections of the population. The Group's own multimedia company supports the multimedia needs of tenants and expands the range of property management services. Energy management is bundled in a subsidiary and includes the commercial supply of heating to the Group's own portfolio with the aim of optimising energy management. In the medium term, these services are to be further expanded and new services for tenants are to be added.

In Germany, TAG's investments are primarily in medium-sized cities and in the surrounding areas of large metropolitan areas, because we see not only growth potential there, but also better opportunities for returns compared to investments in large cities. The vacancy rates of newly acquired portfolios are regularly higher, but these are then reduced after acquisition through targeted investments and proven asset management concepts. Within Germany, investments are made almost exclusively in the regions already managed by TAG, in order to utilise existing administrative structures. In addition, local market knowledge is essential when acquiring new portfolios.

The expansion of business activities into Poland began in 2020 with the acquisition of Vantage Development S.A. ("Vantage"), a real estate developer based in Wrocław. The acquisition of Warsaw-based ROBYG S.A. ("ROBYG") expanded TAG's platform for developing residential units for its own portfolio in the existing regions of Wrocław, Poznań, and especially Tricity, and also enabled a comprehensive market entry in Warsaw. At the same time, TAG expanded its business model to include the development of residential units for sale.

In Poland, TAG had c. 3,200 completed residential units in its rental business as of the reporting date (31 December 2023: c. 2,400). A further c. 1,100 (31 December 2023: c. 1,400) rental units are under construction as of the reporting date. In addition, there are land reserves for the future construction of c. 6,100 (31 December 2023: c. 5,700) further residential units.

In the area of sales business, which also includes joint ventures, c. 3,400 residential units (31 December 2023: 4,300) were under construction as of the reporting date (including c. 100 completed residential units not yet sold (31 December 2023: 502)). The land reserve in this business segment includes a further c. 22,000 (31 December 2023: c. 15,600) future residential units. In the past financial year, a total of 1,936 (previous year: 3,586) residential units were sold in Poland and 2,666 (previous year: 3,780) residential units were handed over to the buyers.

TAG's medium-term growth target is to build up a portfolio of c. 10,000 rental units in Poland by the end of 2028. In addition, the existing sales activities in Poland are to be continued in order to support further growth of the rental portfolio with the surplus liquidity generated there. The investment focus is on new-build apartments in large cities with a favourable population development, close to universities and with a well-developed infrastructure.

Table of contents of the ESRS disclosure requirements

E5-4 – Resource Inflows

Resource inflows are a material sustainability matter for TAG, particularly in connection with refurbishment projects and new construction activities in Poland. Material impacts, opportunities and risks arise primarily from the procurement and use of corresponding construction products and materials in connection with these activities. Construction projects are generally associated with considerable resource requirements. However, this can be minimised by using renewable raw materials, reusable materials and products or resource-efficient technologies. Using regional materials and sourcing from regional suppliers can shorten supply chains and lead to cost advantages.

Based on TAG's own activities, including activities in the upstream value chain (in particular construction and trade companies and construction material suppliers), the purchased quantities and masses of the material products and material groups for 2024 were determined.

The total weight of inflows in the reporting period amounts to approx. 476,341.1 tonnes and includes building materials (e.g. concrete, steel, insulation materials) as material or product groups. Technical equipment and office equipment are not classified as material and are therefore not included.

Certified organic materials and biofuels for non-energy purposes were not used in the reporting period; their percentage share is therefore 0%. No information can be provided on the weight and proportion of reused or recycled components due to a lack of sufficient data from the value chain for the reporting year.

Methodology and Data Quality

The data provided for building materials are estimates and projections based on TAG's internal documentation, such as contracts with construction companies. For example, reference quantities were determined for the inflow of building materials from the construction project activities of empty apartment construction/small-scale maintenance, string refurbishment, complex refurbishment and energy refurbishment and extrapolated to the area affected by these actions in the reporting period. The data used to determine the resource inflows from construction activities in Poland are based on the construction contracts concluded with TAG's business partners in the 2024 financial year.

Note on critical materials: Critical raw materials and rare earths are not of central importance for TAG's business activities, but are contained in certain building technologies such as smart home systems and photovoltaic systems.

Resource outflows

The operation of buildings, modernisation measures in the portfolio and, in particular, the construction of new properties involve considerable consumption of energy and raw materials. Buildings are designed so that their individual elements can be repaired. Actions and regular maintenance ensure the preservation or restoration of their functionality and safety by eliminating defects and repairing damage.

Average life cycle and service life:

• The average life cycle of buildings is around 50 years; with regular maintenance, their service life or useful life can be extended to 100 years or more
• The useful lives of individual components and technical building installations vary depending on the type of construction and material:
  • Concrete walls: 50 years average service life
  • Composite thermal insulation systems: 20 to 40 years
  • Insulating glazing: 30 to 40 years

Relevant data collections such as the ÖKOBAUDAT data sets or the BBSR tables on service life of building components serve as a basis for the calculation or estimation of life cycle costs and life cycle assessments and support the valuation of the ecological criteria of buildings.

With this in mind, TAG's resource management takes a holistic view of material flows, i.e. across the property life cycle and according to the principle of the circular economy. From planning, procurement and recovery through to waste disposal, attention is paid to the economical and efficient use of resources, longevity and functional stability of products and materials, reuse and recovery and recyclability. This can contribute both to lower resource consumption and to the promotion of innovative waste management solutions and recycling, especially in larger construction projects.

Waste

Waste generation and composition

Resource outflows in the TAG Group relate in particular to products and materials used in portfolio management, modernisation and maintenance measures, new construction and administrative activities, e.g. consumed as fuels or used as construction products, as well as waste generated in this context. The waste generated by TAG in Germany consists materially of waste from construction activities, such as building rubble. TAG's waste volume does not contain any radioactive waste.

Material waste codes from construction activities (European Waste Catalogue - AVV):

Quantitative waste data (01/01 – 12/31/2024)

Methodology and data quality

The data provided on waste volumes are estimates based on TAG's internal records, taking into account current legal regulations and standards as well as relevant waste balances. The assumptions were made against the background that the disposal of construction and demolition waste is carried out by waste disposal companies commissioned by the tied construction companies. Waste disposal companies are required by law to ensure that waste is separated by type. TAG sets out its requirements in this respect to the construction companies via construction or framework agreements.

For the estimates, waste volumes were determined on the basis of a reference project in Germany and then extrapolated to all projects started and completed in the 2024 financial year. The breakdown of the total amount into hazardous and non-hazardous waste and recycling routes is based on the respective waste codes and the relevant waste balances mentioned.

For the business activities in Poland, data is available for resource outflows from the Company's own administration (central divisions as well as sales locations and construction offices), i.e. only waste from the Company's own activities is taken into account and no construction waste is included. TAG plans to expand the data collection processes for waste volumes in the construction process in the future.

Personnel expenses increased to EUR 91.4m in the reporting period (prior-year period: EUR 85.6m), due in particular to ongoing salary increases, but also to the higher number of employees required due to growth in Poland. As of 31 December 2024, TAG employed 1,856 people, including employees in Poland, compared to 1,816 employees at the end of the 2023 financial year.

This also further strengthens the diversity of the Supervisory Board, with women making up 50% of the Supervisory Board, as they do of the Management Board, and our Supervisory Board is now internationally positioned, as Ms Gryger has Polish citizenship. Following these new elections, the proportion of women on TAG's Supervisory Board, as on its Management Board, is 50%.