NON-FINANCIAL REPORT 2019 PERUTNINA PTUJ GROUP · 2020. 10. 13. · Breza Seiersberg Skopje 1 5 6 4 1 3 1 3 1 PARENT COMPANY MEAT INDUSTRY LIVE PRODUCTION FEED PRODUCTION SALES NETWORK

NON-FINANCIAL REPORT 2019 PERUTNINA PTUJ GROUP

1 WHO WE ARE

2 OUR APPROACH

3 GOVERNANCE

4 ENVIRONMENT

5 ANIMAL WELFARE

6 PRODUCT QUALITY AND SAFETY

7 PEOPLE

8 STAKEHOLDER ENGAGEMENT

9 SUPPLY CHAIN

10 BUSINESS CONDUCT

11 ABOUT THIS REPORT

We operate within the MHP Group, who is our sole owner, and is one of the leading international groups in the food processing industry as well one of the most successful poultry meat producers in Europe.

1 WHO WE ARE

who breed broilers in their natural environment.

19

20

2 million

3,700763500

COMPANIES

COUNTRIES

Perutnina Ptuj is an international

group of

with more than

EMPLOYEES

in

COUNTRIES

with

PRODUCTION PLANTS

TRADING COMPANIESWe work with over

CO-OPERATORS

We sell our products in more

thanworldwide where every day

CONSUMERSenjoy them.

Our

is to prepare natural, healthy, and delicious food. As responsible individu-als and as a company, we set the highest standards for quality, traceability, safety, and ecology. We are united by our commitment to perfection and our vision of be-ing the No. 1 branded poultry producer with an FMCG business model in Southeast Europe.

MISSION

BACK3PERUTNINA PTUJ GROUP • NON-FINANCIAL REPORT 2019

Programme and geographical structure by countriesIn 2019, the Perutnina Ptuj Group did not have any changes in geographical and area structure. The integrated business area of the Perutnina Ptuj Group is divided into six areas, which are interconnected not only in ownership but also and above all in content.

The headquarters and parent company Pe-rutnina Ptuj LLC is located at 10 Potrčeva Street in Ptuj, Slovenia.

PtujMaribor

Zalog

Srbac

Breza

Seiersberg

Skopje

1

65

4

1

3

1

3

1

PARENT COMPANY

MEATINDUSTRY

LIVEPRODUCTION

FEEDPRODUCTION

SALESNETWORK SERVICES

WINEMAKING

AGRICULTURE

ENERGYPRODUCTION

Slovenia

2 in Slovenia (chicken and turkey meat, sausages, frankfurters, ready-made products)

1 in Croatia (chicken meat, sausages)

2 in Bosnia and Herzegovina (chicken meat, sausages)

1 in Serbia (chicken meat, sausages)

1 in Slovenia

2 in Croatia

1 in Bosnia and Herzegovina

2 in Serbia

2 in Slovenia

1 in Croatia

1 in Serbia

Slovenia

Austria

North Macedonia

Romania

Slovenia

2 in Slovenia (veterinary, construction)

1 in Serbia (veterinary)

Slovenia

4PERUTNINA PTUJ GROUP • NON-FINANCIAL REPORT 2019

Ownership as of 31. 12. 2019 Parent company Perutnina Ptuj LLC with headquarters at 10 Potrčeva Street, Ptuj, Slovenia is the sole owner of affiliated companies except in:

• Perutnina Ptuj Pipo, Croatia – 99.6% ownership

• PP Veterinarska ambulanta, Slovenia – 45% ownership

• PP Bro Živa, Serbia – 15.32%

RECOGNIZABLE BRANDS OUR

VALUES

INTEGRATED PRODUCTION PROCESSES FROM FIELD

TO FORK

Legal form as of 31. 12. 2019The parent company Perutnina Ptuj changed its ownership structure several times in 2019, and the company changed its legal and organisational form from a joint stock com-pany to a limited liability company, which was entered in the court register on December 16, 2019.

Until then, the company had a two-tier management sys-tem. The Management Board managed the company and the Supervisory Board oversaw its work.

The bodies of the company following the change are:

• Sole shareholder

• Management.


The values we uphold:Responsibility - We are responsible to our customers, shareholders, the environment, natural resources and relationships.

Quality - We guarantee quality by traceability and control of all processes and components from field to fork and raw material quality.

Creativity - We constantly create new products of quality, healthy, safe and naturally prepared food. We create new dietary habits for everyday and special occasions.

Cooperation - we are constantly connected with our customers, suppliers, and the latest findings.

Quality, safety, and traceability in an integrated production processWe have set our own QST System (quality, safety, traceability) which is a comprehensive system for monitoring and implementing different policies and international standards of quality, safety, and attitude towards the environment that we daily adhere to.

The Perutnina Ptuj Group is one of the few poultry companies in the EU with vertically integrated production. From the field to the table the cy-cle is complete. All phases, including the cultivation of the land, feeding, fattening, transport, processing, and product flow, are closely monitored.

QU

A LI T Y • S A

FE

TY

• TRACE

BIL-QST


We grow with recognisable brands

The Perutnina Ptuj brand draws its inspiration from tradition and reflects its values (nature, health, and family) and its character (vital, flexible, and imagina-tive). The variety of product lines within the PP brand can meet all the needs of our consumers that spring up in daily life and according to the season. PP brand prod-ucts range from meat, sausages, and snacks to quickly prepared warm and healthy meals.

Since its birth in 1974 until today, the Poli brand main-tains the primacy of the first chicken sausage on the market, known for its innovation, products, and quality. Today it is the No. 1 chicken sausage in Europe. Among the products of chicken meat are sausages, cold meats, pate, and snacks. By means of advertising Poli commu-nicates its values (freedom, humour, individuality) and its character (young, fun, ambitious).

Regional brands:

Jata is our brand for sausages and frankfurters in Slovenia.

Topiko is a brand of our subsidiary in Serbia and is a locally recognised brand for sausages, frankfurters, and pates for true gourmets.

Tradition and modernity shook hands in the Ptujska klet wine cellar (Slovenia) and conceived the Pullus brand for wine with taste.

Agronatur is a brand for compound feeding products that are produced in our subsidiary PP Agro in Slovenia.

Local brands:


€285 million NET SALE REVENUE

+€14.4 from 2018

€193 million SALES OUTSIDE

SLOVENIAor 68% of sales

same as in 2018

€ 41 million EBITDA

+€12.5 million from 2018

95,527 TCORE

PROGRAMME SALES

+7% from 2018

60,018 T POULTRY MEAT

+9% from 2018

€ 9.1 millionINVESTMENTS

€7.7 million in 2018

35,509 T POULTRY

PRODUCTS +3% from 2018

Key operating highlights of the Perutnina Ptuj Group in 2019


Memberships and associationsSlovenia Chamber of Commerce and Industry of Slovenia

- General membership

- Biogas Section

- Section of Feed Manufacturers

Chamber of Agriculture and Forestry of Slovenia

Chamber of Craft and Small Business

The Slovenian Chamber of Engineers

Economic Interest Association of the Meat Industry of Slovenia

AVEC

Austria-Slovenian Chamber of Commerce

The Association of Employers of Slovenia

Chamber of Safety and Health at Work

Slovenian Association for Quality and Excellence

Economic Law Institute

Slovenian Chamber of Advertising

CFA Institute

Wine Society of Slovenia

Croatia Croatian Employers’ Association

Croatian Chamber of Commerce

The Association of Livestock and Associated Industry

Bosnia and Herzegovina Chamber of Economy of Zenica – Doboj Canton, part of the Chamber of Economy of the Federation of Bos-nia and Herzegovina

Chamber of Commerce and Industry of Republic of Srpska

Community of Poultry Producers of Republic of Srpska

Serbia Association of Poultry Producers of Serbia

Chamber of Commerce of Serbia

Slovenian Business

Club NALED - National Alliance for Local Economic Development


The Perutnina Ptuj Group has an integrated management system in which the quality management systems, the food safety man-agement system, and the environmental management system are complemented and implemented. We have described and defined this management system, which is based on the recommendations of international ISO standards 9001:2015 and 14001:2015, in the docu-ment THE RULES OF QUALITY AND ENVIRONMENTAL MANAGE-MENT (RQEM). The document is available for an internal audience on the company’s intranet site.

The RQEM applies to all products and activities of the Perutnina Ptuj Group in order to achieve the required quality and control of environ-mental aspects, by strictly adhering to the law, thus protecting the en-vironment and preventing pollution and hazards to humans. With the quality and environmental management system, which is defined by RQEM as a basic document, system procedures and instructions enable all employees to use and fulfil the requirements from the stated docu-mentation and participate in complementing and developing them.

2 OUR APPROACHThe RQEM also defines:

• understanding the needs and expectations of stakeholders;

• governance, engagement and responsibilities;

• risk and opportunities management measures;

• planning and managing operations;

• provision of all the necessary resources;

• monitoring, measurement, analysis and evaluation;

• constant improvement.

The Policy of Quality, Safe Food Provision and Environmental Pro-tection is a summary of RQEM in which we have defined our goals and commitments to the continuous improvement of food quality, environ-mental management, and customer satisfaction. The Policy is imple-mented in all the affiliate companies in the Perutnina Ptuj Group and communicated to all employees in order to achieve their involve-ment. We also raise awareness of the importance of environmental man-agement through various forms of internal communication and employ-ee training.


Our commitmentsCommitment: The management is committed to im-plementing the Policy of Quality, Safe Food Provision and Environmental Protection in the company and in all our markets.

Implementation: The management commits annually to the company to achieve and measure its goals in accordance with the Policy of Quality, Safe Food Pro-vision and Environmental Protection.

The involvement of all: Each employee has a defined security impact in the context of their work and tasks and product quality and environmental management.

Security: We manage the security of products and pro-cesses and successfully make changes.

Innovation in line with sustainabilityAll innovations and new technologies we implement in our work processes we define also from a sustainability point of view with the goal of decreas-ing our impact on the environment.

Product safety and packaging For our new premium prod-ucts in 2019, we introduced a new packaging technolo-gy that provides even great-er product protection and longer shelf life.

Animal welfare In 2019, we increased the number of our breeders in Slovenia with specifically animal friendly farming.

Sustainable agriculture In 2019, we introduced a new way of s toring dried corn in plastic tubes with which we reduced emissions into the environment. Slo-venia

Digitalisation In 2019, we started imple-menting an electronic form of payrolls for employees in Slovenia, which are code protected for personal data protection.

Our goalsWe operate in accordance with applicable laws, reg-ulations, and standards in the field of food safety and quality and environmental management.

We guarantee food safety and quality: we guarantee the safety and quality of raw materials, accessories, and packaging.

• We reduce environmental impacts and strive for rational energy use: we design and introduce new technologies and products in accordance with the principles of environmental protection; we respon-sibly manage all important environmental aspects and strive for the rational use of all energy sources.

• We confirm consumer choice: we deliver the best quality of products as expected by the consumers of our brands.

• We meet the demands and expectations of consum-ers and other stakeholders: we provide the best ser-vices according to the expectations of consumers and other stakeholders.

• We choose reliable suppliers: we guarantee the re-liability of suppliers, subcontractors, and deliveries.

• We guarantee quality for the best price: we improve quality and profitability and manage variations.


We daily adhere to international and national standards:Companies of Perutnina Ptuj Group The area to which the standard applies:

Standard DescriptionPP LLC

PP MI Zalog PP Agro PP Pipo PP Topiko PP BH PP SLife

production

Meat processing,

production of products

Feed production

Storage of cereals

Veterinary SalesCountry Slovenia Croatia Serbia

Bosnia and Herzegovina

ISO 9001:2015 Quality Management System

ISO 14001:2015Environmental Management System

ISO 22000 Food Safety Management

HACCP Food Safety Management

IFS FoodFood safety and the quality of processes and products

BRC Global Standard for Food Safety

HALAL

Premium Poultry Breeding

Specifically animal friendly farming

McDonald's StandardChicken slaughter & deboning and animal welfare

McDonalds's SQMS Quality Management System

McDonald's SWA Workplace accountability

GLOBAL G.A.P.Good Agricultural Practices on farm

Chosen Quality SloveniaSlovenian national quality scheme

GMO-free Production


Precautionary principleIn the Perutnina Ptuj Group we have established a system of risk man-agement and measures for the systematic management of opportu-nities and risks carried out at the level of the Group.

Our risk management covers all risks that could affect the operations of the Perutnina Ptuj Group and its individual companies, customers and suppliers, and the wider and narrower local communities, as well as the achievement of planned results and the development of individual companies in the Perutnina Ptuj Group and the Group as a whole. In particular, we carefully monitor risks that could jeopardise our mission and the underlying values that we have committed to: Quality – Security – Traceability.

The main objectives are to ensure sustainable development, strengthen our market position, develop production capacities, and successfully im-plement new capabilities in the existing system of successful operation of the Group and its companies.

Identification,assessment, response

and monitoring ofcritical risks

Establishing a system

of regular reporting at

the level of allbusiness functions

Mechanisms formonitoring process

deviations fromeffective and

safe use of assets

Business planningaccording to individualbusiness functions asa basis for monitoring

actual operations

Regular reporting of

the results ofmechanisms


CEO’s statement

Dear Stakeholders, The Perutnina Ptuj Group is the largest producer of poultry meat and products and with a 115-year tradition of operation is a synonym of the highest quality and a driving force in the region of Southeast Europe. We are aware that our actions affect the society and the environment in which we operate. We have an integrated management system in place that complements and implements quality management systems, a food safety management system, and an environmental management system. In all the companies of the Perutnina Ptuj Group, our daily work is carried out in accordance with the principles and objectives of the Policy of Quality, Safe Food Provision and Environmental Protection.

Partnership with the company’s stakeholdersWe keep abreast of the expectations of all stakeholders of our company. In doing so, our goal is to have mutually profitable partnerships with all stakeholders, to act in accordance with applicable national legislation and international and national standards implemented, to protect the environment, and to contribute to a better life for the individual, the local environment and society as a whole.

With the entry of a new strategic owner in early 2019, the MHP Group, Perutnina Ptuj continues to strengthen its existing business model, which has proven to be correct and successful in recent years. The positive ef-fects of a merger with a strategic owner are already reflected in both the

optimisation and synchronisation of operations and the pooling of knowl-edge of the two partners. Technologically updated, more efficient, devel-opment-oriented and with its strong brands, the Perutnina Ptuj Group in 2019 further strengthened its market position in the region of Southeast Europe and beyond.

Greater emphasis on sustainable operationWe continue to build on our commitment to sustainable action with this report. So far, we have reported on the social responsibility and sustain-able development of the Perutnina Ptuj Group as part of our annual re-port. Under the auspices of the new owner, we will raise the standards of sustainable operation in all countries where Perutnina Ptuj operates. Partnership cooperation and support to social communities are two of the guiding principles of our operations. We follow and respond to the needs of different organisations and societies in the local and wider environment where we operate.

We are investing in the modernisation of productionIn 2019, we launched the first investment cycle in all four domicile coun-tries, which will continue in 2020. The total value of investments at the group level is approximately EUR 26 million. Strategic investment projects


are aimed at increasing production capacity, modernising technologi-cal equipment, and reducing the environmental impact of operations. In addition, we will continue to invest in technological modernisation and production automation in 2020, which will improve our efficiency and working conditions.

Strengthening good and long-term relationships with local suppliers is in line with the set strategy. We strengthen good relations with our breeders, which are an important link in vertically integrated production. According to the plan, we are increasing and updating our breeding capacities.

Looking forwardThe Perutnina Ptuj Group is also recognised in the region as a trendsetter. We will strengthen our vertically integrated business model and product range in the future even more. We will continue to build our distinctive and competitive advantage on strong and recognisable brands and ex-pand our advanced breeding practices (premium poultry breeding), which will open up new opportunities for us, especially in the more demanding Western European markets. At the same time, this method of farming is a step forward towards sustainable operations. We will continue to justify consumer confidence by ensuring the highest quality, safety, and tracea-bility of all steps from field to fork that take place on domestic soil in all four countries where we have vertically organised production.

Enver Šišić, CEO


Key indicators

EnvironmentIn 2019 we decreased the usage of non-renewable materials by 1 per-centage point compared to 2018, in spite of the increased total usage of materials by 2 percentage points.

We also increased the fuel con-sumption from renewable sources by 2 percentage points compared to the previous year. Total fuel consump-tion was 1 percentage point higher in 2019 than in 2018.

Our greenhouse emissions of CO2 were 107 tonnes lower in 2019 com-pared to emissions in 2018.

Animal welfareIn 2014 Perutnina Ptuj was the first in Slovenia to introduce a new s tandard of premium poultry breeding that follows the latest findings on the well-being of ani-mals and exceeds the EU legislative requirements.

In 2019 we had 18% of our breeding facilities in Slovenia working upon this standard.

PeopleIn 2018, we had 1.38% staff turn-over and in 2019 1.47%. The slight increase of fluctuation was due to the execution of retirement plans and the start of generational ex-change.

In 2019 we had 75 % less high-se-verity accidents, but we detected an increase by 15 % in low-severity accidents.

Product quality and safetyIn 2018 and 2019, we received no significant complaints about prod-uct quality and information from consumers.

At the 40th International Meat Prod-ucts Assessment under the auspices of the AGRA fair in 2019 Perutnina Ptuj was awarded the prestigious Jubilee Quality Carrier Award. Fif-teen of our products were awarded the title Quality Champion and an-other 24 products received medals for their quality.

Supply Chain71% of our suppliers are local, which means that they have legal entity in the same country as the company of Perutnina Ptuj Group that uses them.

By working mainly with local suppli-ers our shorter supply routes posi-tively impact our greenhouse emis-sions and environment and on the other hand contributes to the eco-nomic development of local society.


The parent company Perutnina Ptuj changed its ownership structure several times in 2019, and the company changed its legal and organisa-tional form from a joint stock company to a limited liability company, which was entered in the court register on December 16, 2019.

Until then, the company had a two-tier management system. The Man-agement Board managed the company and the Supervisory Board over-saw its work.

The bodies of the company following the change are:

• Sole shareholder

• Management.

The Perutnina Ptuj Group comprises 19 companies in 7 countries and is managed by the parent company Perutnina Ptuj LLC, as of 31.12.2019.

3 GOVERNANCEBIH SERBIA MACEDONIA ROMANIASLOVENIA

PERUTNINA AVSTRIJA

PERUTNINA PTUJ DOEL

SKOPJE

S.C. PERUTNINA ROMANIA

CROATIA AUSTRIA

PP MI ZALOG

PP - AGRO

PP ENERGIJA

PTUJSKA KLET

PP VETERINARSKA AMBULANTA

GRADBENI REMONT

PP GOSTINSTVO

EKO - Energija

PERUTNINA PTUJ - PIPO

PP S

PERUTNINA PTUJ - BH

PERUTNINA PTUJ - TOPIKO

TOP Veterina

PP BRO ŽIVA

NAŠA

PERUTNINA PTUJ Parent company


Each associated company is managed by a Company Director who reports to the management of the parent company.

The management of the parent company Perutnina Ptuj LLC is composed of three directors as of 31.12.2019:

• Chief Executive Officer (CEO) and President of the Com-mittee of Directors,

• Chief Financial Officer (CFO),

• Chief Commercial Officer (CCO).

Management as a collegial body (Committee of Directors) supervises the conduct of the company’s operations and manages the company and the Group. It is the decision making body of the Perutnina Ptuj Group.

Governance structure as of 31. 12. 2019

Shareholder

Executive Management

SeniorManagement

Middle Management

SHAREHOLDER

COMMITTEE OF DIRECTORS

COMPANY DIRECTORS AND PROFIT CENTRES DIRECTORS

DEPARTMENT HEADS


Committee of Directors:Enver Šišić Chief Executive Officer (CEO) and President of the Committee of Directors

Mr Šišić is an experienced senior business executive with production man-agement, investment projects and company management background at the international level.

Nationality Slovenian

Education Bachelor of Science degree in Food Technology and an MBA from the IEDC Business School in Slovenia.

Joined the board 2019

Career and Prior experience Highlights

2002: Project Manager for building a production plant (Perutnina Ptuj Slovenia) and managing the plant after opening

2007–2010: managing the affiliated company in Bosnia and Herzegovina as Company Director

2011–2012: Director of Development at the Perutnina Ptuj Group

2012–2014: Director of the Meat Industry (Perutnina Ptuj Slovenia)

2014–2016: Director of the Dukat plant of the Lactalis Group in Zagreb, Croatia

2016–2019: Executive Director of Production at the Perutnina Ptuj Group

2019: He was named President of the management Board of Perutnina Ptuj, with change of legal form into an LLC as CEO.


Yevheniy Dranov Chief Financial Officer (CFO)

Mr Dranov is highly experienced in financial reporting and financial control, mergers and acquisitions.

Nationality

Ukrainian

Joined the board

2019

Education and memberships:

He graduated in International Finance from Taras Shevchenko State University in Kiev (Faculty of International Relations).

He is a CFA licensee and a member of the ACCA.


2010–2014: Senior Auditor at Deloitte

2014–2019: Head of Reporting at Hemiak Investments Limited

2019: Member of the Management Board of Perutnina Ptuj, with change of legal form into an LLC as Director/CFO.

David Visenjak Chief Commercial Officer (CCO)

Mr Visenjak is a senior business manager with rich experience in sales, marketing, and logistics.

Nationality

Slovenian

Joined the board

2019

Education

Bachelor’s Degree in economics from School of Economics and Busi-ness, University of Ljubljana, Slovenia

Master of Science in Finance and Banking, Faculty of Economics and Business, University of Maribor, Slovenia

MBA from the IEDC Business School, Slovenia


2006–2008: Sales Manager for Austria and a major foreign customer in Perutnina Ptuj

2008–2017: Director of Exports and later Sales Director of the Perut-nina Ptuj Group

2017–2019: Chief Commercial Officer in the Perutnina Ptuj Group

2019: Member of the Management Board of Perutnina Ptuj, with change of legal form into an LLC as Director/CCO.


Corporate responsibility governancePresentation of management of corporate responsibility matters in the Perutnina Ptuj Group:

Committee of Directors Management system Evaluation of management approach

• Sets strategy and authorises the plans for all key areas of corpo-rate responsibility.

• Has the responsibility for the efficiency of the entire quality man-agement, environmental management, and food safety systems. Sets management systems and the Policy of Quality, Safe Food Provision and Environmental Protection at the Group level.

• Appoints management representatives.

All companies in the Perutnina Ptuj Group have specialists or em-ployees responsible for the maintenance of the company’s stand-ards and compliance with the relevant laws and regulations. If not employed or appointed, the responsibility for this lies with company director.

Some companies in the Perutnina Ptuj Group have also appointed management representatives, committees and teams dedicated to special CR areas.

• Interaction with stakeholders, research.

• Internal and external audits.

• Internal mechanism for evaluation of key performance indicators.

• Setting and monitoring the execution of annual plans at all levels: Perutnina Ptuj Group → companies → PCs → departments.

• Annual reports and internal reporting mechanism.


4 ENVIRONMENTENVIRONMENTAL MANAGEMENT

In the Perutnina Ptuj Group, we manage and reduce our environmental impacts with an integrated man-agement system in which the quality manage-ment systems, the food safety management sys-tem and the environmental management system are complemented and implemented (please see Chapter 2 for a detailed description). Our environ-mental management system complies with the re-quirements of ISO 14001 (affiliated companies in Slovenia, Croatia and Bosnia and Herzegovina) and in all our companies we follow the Policy of Quality, Safe Food Provision and Environmental Protection at the Group level.

We have identified environmental aspects and risks that we regularly monitor and act upon when necessary.

We yearly set goals to reduce our environmental im-pact which are confirmed by top management. We report on the achievement of the goals set both in-ternally to management and externally to the relevant national authorities.

Slovenia Croatia Bosnia and HerzegovinaSerbia, Austria, North Macedonia, Romania

Committee on Quality and Environmental Management

Environmental Team

Environmental Management Representative

Quality and environmental management service

Ecologist

Committee on Quality and Environmental Management

Environmental Team


Quality and environmental management service


Ecologist

Management of the company is responsible for implementing and working daily in accordance with the Perutnina Ptuj Group’s Policy of Quality, Safe Food Provision and Environmental Protection

Environmental management responsible bodies and persons:

Fines and penaltiesDuring 2019, no Perutnina Ptuj Group companies incurred material fines or penalties for breaches of environmental laws and regulations.


In the Perutnina Ptuj Group, we have agricultural activities only in Slovenia and in small amounts in Serbia, where we cultivate the land with the goal of reducing our impact on the environment.

Our guiding principle: maintenance of permanent fertility of agricul-tural land, sustainable soil cultivation, protection of drinking water resources.

We use modern tillage technologies with the best quality seed selection and varieties of agricultural crops. When using plant protection products, we use those that minimise the pollution of soil and drinking water, prevent harm to beneficial microorganisms and insects, and do not have harmful consequences for the environment.

Use of fertilisers and plant protection products Agricultural activities in Slovenia represent 85% of all agricultural activi-ties in the Perutnina Ptuj Group therefore the figures presented below are only for Slovenia:

In 2018, we used 16,723 tonnes and in 2019 16,084 tonnes of organic fertilisers on cultivated soil.

We also used 5,282 tonnes of mineral fertilisers and plant protection prod-ucts in 2018 and 4,727 tonnes in 2019.

Green manure crops were sown on 250 hectares in 2018 and on 255 hec-tares in 2019.

Management of Soil ResourcesMinimising mechanical impactTo minimise the mechanical impact on the environment we use:

• conservation tillage

• multiple tillage operations in one pass

• cover crop plants with the effect of loosening soil and improving soil structure.

Maintaining biodiversityTo maintain the biodiversity of the soil we cultivate we use:

• wide crop rotation

• greening of arable land

• intermediate cover crops for honey bee pasture

• leguminous plants

• areas of ecological significance.

Crop yieldsIn 2019, we increased the crop yields for wheat, barley, and soybean com-pared to yields in 2018. *The natural conditions in springtime during corn planting included much rain, flooding of fields and hail, which in July re-sulted in our yields of corn grain and oilseed rape being decreased in com-parison with the previous year. The results show our positive and sustain-able approach to soil management, feed systems, plant protection, seeds selection, and use of equipment.

AMOUNT OF MATERIALS USED IN 2018 AND 2019:

2018 2019

Type of materials used tonnes % tonnes %

Non-renewable 19,115 8 17,392 7

Renewable 222,273 92 227,933 93

Total 241,388 100 245,325 100

Materials presented in the table above include all the materials used in soil management, life production and product production in the Perutnina Ptuj Group.

The use of energy products is revealed below.

2018 2019

wheat 5.31 t/ha 6.75 t/ha

corn grain: 12.46 t/ha 9.36* t/ha

barley 6.64 t/ha 7.95 t/ha

soybean 2.94 t/ha 3.10 t/ha

oilseed rape: 3.88 t/ha 2.79* t/h


Energy Management

Biogas plantPerutnina Ptuj Energy (PP Energy) is a green energy company and affiliated company in the Perutnina Ptuj Group located in Slovenia. The biodegrad-able waste of the food processing industry is processed into useful energy and organic fertiliser in a biogas plant that started operating in 2012. The installed biogas capacity is 999 kW and the thermal power is 1.1 MW.

We follow the principle of zero waste and we produce products from waste without creating waste streams.

Biogas production performance:

in kWh 2019 2018

Biogas produced 17,611,440 15,699,489

Electricity produced 7,532,000 7,136,131

Heat produced 7,085,365 6,728,963

Sales of energy (TJ)

2019 2018

Total energy sold in TJ 27 26

Energy audit

In fall of 2019, we completed an energy audit of all the Perutnina Ptuj Group companies in Slovenia. The project had been in place since 2017. Based on the findings of the review, we have come up with solutions that will bring energy savings. We implemented the first solution in 2019: we replaced the energy product light fuel oil with natural gas at the feed fac-tory in Ptuj. For two identified solutions, we are preparing a proposal for approval together with an external partner. Over the next three to four years we will implement all identified solutions from the energy audit.

Projects in 2020:

We want to achieve a change in the environmental permit in the environ-mental field, in which additional waste could be used as an input substrate, thereby reducing the input of maize silage. At the same time, we are taking active measures to reduce the amount of liquid digestate and with this the associated recirculation of process water, which ultimately results in a lower use of fresh drinking water.

The ongoing project which is expected to be completed in spring 2020 is the introduction of energy management in the parent company Perutnina Ptuj, PP MI Zalog and PP Agro. We are working on the introduction of an information-supported system for monitoring, analysing, and targeting en-ergy use. This will enable us to optimise our energy use and to take action in cases where energy use deviates from the set targets.


Fuel consumptionUnder the environmental management system with the aim of increasing energy efficiency and reducing non-renewable energy consumption, we define annual energy consumption targets that also include goals for fuel consumption. Spending is measured and recorded weekly, reported on a monthly basis, and evaluated annually with reference to the achieve-ment of the set goals. Any deviation from the defined goals is analysed and acted upon with corrective measures.

2019 in TJ 2018 in TJ

Fuel consumption from non-renewable sources

432 436

Natural gas 243 253

Diesel 82 82

Gasoline 3 3

Liquefied natural gas 32 34

Coal 25 25

Fuel oil 47 39

Fuel consumption from renewable sources

106 94

Biogas 89 86

Wood 16 8

Total fuel consumption 537 530

% of renewable sources 20 18

Energy consumption (TJ)

2019 2018

Electricity 212 212

Thermal energy (generated by biogas plant) 23 22

Total energy consumption 235 234

% of renewable sources (thermal energy) 10 9

For calculation, we used the conversion rates determined by the Slovenian Environment Agency for 2019.

In 2019, we increased the percentage of renewable sources used for fuel and energy.

We manage our energy materials also in the Procurement department. The main goal of managing electricity and natural gas is to optimise prices and to make better predictions. We use hedging as a tool. We actively manage electricity and natural gas in Slovenia and Croatia and work is underway to overtake the management of energy materials for the entire Perutnina Ptuj Group. Our goal is to have a centralised management system where we can follow and actively participate in managing energy materials con-sumption.

Water useUnder the environmental management system with the aim of reducing the use of drinking water, we define annual water consumption targets.

In our companies we use water consumption meters (inlet and inland) that are regularly maintained and controlled. Consumption is recorded on a weekly basis, a monthly report is made, and the performance of the set goals is evaluated annually. Any deviation from the defined goals is analysed and acted upon with corrective measures.

2019 2018

m3 % m3 %

Subterranean water 1,233,708 69 1,187,575 68

Municipal and other wastewater systems 550,927 31 569,325 32

Total 1,784,635 100 1,756,900 100


https://www.gov.si/assets/organi-v-sestavi/ARSO/Podnebne-spremembe/Znacilne-neto-kaloricne-vrednosti-in-emisijski-faktorji-za-leto-2019.pdf

Discharges to water2019 2018

m3 % m3 %

Discharged from pipes to own wastewater plants* 1,027,624 69 1,086,268 73

Discharged to public sew-age systems 140,052 9 123,113 8

Discharged to a non-flow-through septic tank 645 0 662 0

Discharged into lagoons 117,101 8 120,396 8

Discharged to subterrane-an waters 212,268 14 157,352 11

Total 1,497,690 100 1,487,791 100

*After treatment in our own wastewater plants, the water is discharged to public sewage

systems in Slovenia and Croatia and to subterranean waters in Bosnia and Herzegovina.

In Slovenia, we use our biogas plant to convert organic waste materials (mainly chicken manure and waste fat) into a useful resource. We use or-ganic waste as a raw material for anaerobic digestion to produce energy and then recycle it into fertiliser. This helps to reduce the amount of waste and the cost of its disposal.

In Slovenia, we also have a protein concentrate plant in which we process animal by-products not intended for human consumption. This way we are closing the material circle and reducing our influence on the environment.

Plans for 2020Achieve all annual set goals in environmental management;

Conclude investments in new wastewater plants in Slovenia, Bosnia and Herzegovina, and Serbia;

Carry out planned investment of modernisation of the protein concentrate plant in Slovenia;

Increase employee awareness of the importance of waste prevention, re-use, and separation.

Greenhouse emissionsSCOPE 1 CO2 in tonnes

2019 2018

Natural gas combustion 13,429 14,008

Diesel fuel 6,040 6,062

Gasoline fuel 192 186

Liquefied natural gas combustion 2,032 2,159

Coal combustion 2,387 2,412

Fuel oil combustion 3,669 3,029

Total (tonnes of CO2) 27,748 27,855

For calculation, we used the conversion rates determined by the Slovenian Environment Agency for 2019.

Scope 1 greenhouse emissions from combustion amounted to 27,748 tonnes of CO2 in 2019.

Waste managementThe Perutnina Ptuj Group has a waste management plan in place which complies with the applicable legislation and determines the manner of waste management. The principle of waste prevention is respected, and the generated waste is separately collected and sorted, recycled or ener-gy recovered. We monitor the amount of separately collected and mixed waste and the costs associated with waste disposal. At the Committee on Quality and Environmental Management, we discuss monthly, half-year and annual reports and take action as needed regarding separation, waste disposal, costs, etc. We also set annual targets at each business unit and company in the group.


https://www.gov.si/assets/organi-v-sestavi/ARSO/Podnebne-spremembe/Znacilne-neto-kaloricne-vrednosti-in-emisijski-faktorji-za-leto-2019.pdf

5 ANIMAL WELFAREAnimal welfare managementOur integrated management system (see Chapter 2 for a detailed descrip-tion) also applies to the field of animal welfare. In all breeding facilities of the Perutnina Ptuj Group and at the facilities of our breeders, we follow the Policy of Quality, Safe Food Provision and Environmental Protection when managing animal welfare.

The basic principles of animal welfare management are in compliance with applicable legislation and all international and national standards that we have implemented. Based on this, while respecting the demands of cus-tomers and consumers, the main activities are the continuous education of employees to raise awareness about animal welfare and adopting such a view on all production processes. Another significant activity is techno-logical advancement in all processes and areas where feasible in order to facilitate, simplify, and complete animal life expectancy and welfare.

We recognise our ethical commitment to the health and humane treatment of our poultry during breeding, catching, transporting, and processing. Our policy has zero tolerance for the deliberate abuse or mistreatment of broilers.

Our business model of poultry rearing combines rearing with contracted farmers and at our own breeding facilities. Rearing with contracted farmers represents 83% of total Perutnina Ptuj Group rearing.

In last two years, we have not had non-compliance with the laws, regula-tions, and implemented standards that we abide by.

Premium poultry breeding

In 2014, Perutnina Ptuj was the first in Slovenia to introduce a new stand-ard of premium poultry breeding that follows the latest findings on the well-being of animals and exceeds the EU legislative requirements. The most noticeable addition introduced by the premium poultry breeding is a special protective canopy along the entire length of the barn. Its surface accounts for at least a fifth of the breeding surface and enables the animals to roam in the fresh air and rummage through quality litter. More movement outdoors and more daylight for animals are key benefits also recognised by our breeders. The animals are comfortable in the barns with plenty of sunlight, room, and special climbing elements, allowing them to move and feed naturally. We have made sure these chickens have everything home-bred courtyard chickens do. A special feature of the new way of breeding is the approach of the breeders and their families, who welcome the animals into their homestead and look after their health and well-being.

By the end of 2019 we had 29 breeders (27 in 2018) in Slovenia working with this standard. This represents 18% of our breeding facilities in Slove-nia. All the meat and products produced within premium poultry breeding are marked with the special logo PPR (Slovenian expression for premium poultry breeding) and are sold under the brand PP Natur Premium.


Poultry rearing data 2019 2018

unit chicken chicken

total of housed number 49,416,758 45,674,498

loss (% from housed) % 4.1% 4.3%

total processed number 49,643,998 47,520,050

live weight - classical breeding tonnes 103,191 97,581

live weight - premium poultry breeding tonnes 9,732 9,520

Poultry breedsIn the Perutnina Ptuj Group, there are two breeds of broiler chickens as well as broiler turkeys. The majority – more than three quarters – of broiler chickens are Ross breed, which is the world’s most popular broiler. They feature a high growth rate and food efficiency. We increased the share of Ross chickens in 2019 by 7 percentage points.

Chicken

Year COBB ROSS

2019 22% 78%

2018 29% 71%

Flock density is specified by state legislation and international and na-tional standards we adhere to.

Training and education: Employees attend periodic training in legislation, technology, change, and breeding innovations. We also transfer knowledge

and share good practice within the Perutnina Ptuj Group companies. We educate our breeders about the procedures and conditions of breeding and animal welfare and inform them about innovations through working instructions and notices.

Biosecurity, hygiene, antibiotic use, and vaccinationWe have a prescribed vaccination programme for chickens and turkeys. Other preventive vaccinations are performed according to the requirements of the epizootiological situation. We have veterinary sanitary regulations in place to ensure biosecurity. We do not use antimicrobial agents for pre-emptive purposes, only for curative purposes after careful prior consid-eration. The use of antimicrobial agents is concomitant with improvements in technological measures.

Biosafety and hygiene maintenance in the farm facility, ancillary rooms, and environment during the rearing periods and in between them is carried out according to internal procedures that prescribe farm biosecurity measures.

Key projects 2019: Slovenia:

• Increasing capacities for premium poultry breeding;

• Search for optimal types of litter for improving breeding conditions (use of pelleted straw);

• Optimisation of compound feeds (recipes and granulation).

Bosnia and Herzegovina, Serbia:

• Adapt habitat and breeding conditions to natural conditions of poul-try;

• Renewal and training of means of transport for day-old and fattened chickens, project continues in 2020;

• Implement improved technological requirements for farmers in terms of improving technical equipment and improving bio-security meas-ures, project continues in 2020.

Plan 2020• Premium poultry breeding has the priority in Slovenia;

• Introducing probiotics and organic acids to reduce the use of antimi-crobials;

• Educating breeders to raise their professional knowledge and achieve plans;

• Carry out planned investments into a slaughterhouse that will im-prove animal welfare (offloading, slaughtering) in Slovenia and Croa-tia;

• Improve flock density and fully comply with EU animal welfare stand-ards (Bosnia and Herzegovina, Serbia);

• Adapt habitat and breeding conditions to natural conditions of poul-try (Bosnia and Herzegovina, Serbia).


6 PRODUCT QUALITY AND SAFETY

In the Perutnina Ptuj Group, we manage product quality and safety with an integrated management system in which the quality management systems, the food safety management system and the environmental management system are complemented and implemented (please see Chapter 2 for a detailed description). In all our companies, we follow the Policy of Quality, Safe Food Provision and Environmental Protection when managing the quality and safety of products.

Our main goal and commitment is to continually improve the qual-ity of food and the satisfaction of our stakeholders. We have several professional services organised in the company which independently of one another and in a coordinated way take care of satisfying all the legal obligations that we have as a food concern, and have enriched them with high quality requirements. By obtaining numerous certificates, we have certified compliance with the requirements of the highest international and national standards and the requirements of the applicable legislation (see Chapter 2 for international and national standards obtained and im-plemented). Standards are a basic testament to an organisation’s ability to meet stakeholder expectations. We regularly monitor the requirements of the standards throughout the food chain with internal controls and validate them by external independent organisations.

Our system for ensuring the safety, quality and traceability of meat and meat products is strictly controlled and can be trusted. The certificates for international and national quality standards that we have obtained are a formalised endorsement of our own quality philosophy. Given the number of certificates obtained, unannounced and announced external audits by independent audit firms and customers are a constant in our management system.

We develop and increase employee awareness of the importance of product quality and safety by internal and external training.

Product labellingFoods are labelled in accordance with the applicable legislation on the provision of food information to consumers. Information is indicated by the name of the food and displayed directly on the packaging/declaration. Traceability is also clearly communicated to consumers by information on the product declaration.


Access controlWith system documentation and operating instructions that comply with the requirements of all implemented standards, we have prescribed and implemented requirements for ensuring safety and quality in all our oper-ations. Controls are performed in accordance with applicable legislation and implemented international and national standards.

In all our production plants in the Perutnina Ptuj Group, access is restricted to those staff members that are authorised to conduct production activ-ities. These include:

• Video surveillance and alarm systems;

• Regular checking and maintenance of site perimeters and fencing;

• Staffing of entry and access points with a verification process to pre-vent unauthorised entry;

• Restrictions on visitors’ access;

• Prohibition of unauthorised photography and filming.

Communication with the consumersConsumer can find contact details on our company and brand websites. Direct communication with our consumers is ongoing through our profiles on different social media.

On all our products produced in Slovenia, we communicate a toll-free phone number for consumers to get in contact with us if needed. On products we produce in Bosnia and Herzegovina, the contact phone number of the company is displayed on product packaging. In Serbia, the contact e-mail address is displayed on products produced there.

In 2018 and 2019, we received no significant complaints (in 2019: 0.08% – qty of complained goods/total produced qty) about product quality and information from consumers.

We take all feedback from our consumers seriously, record it and provide a response to each communication we receive. Consumer information serves us as useful feedback from the market and as a guide for future work.

Awards:

At the 40th International Meat Products Assessment Jubilee under the auspices of the AGRA fair in 2019, in which 38 companies with 277 prod-ucts participated, the professional public also recognised and confirmed the exceptional quality of our products. Perutnina Ptuj was awarded the prestigious Jubilee Quality Carrier Award. Fifteen of our products were awarded the title Quality Champion and another 24 products received medals for their quality.

Plans for 2020 • 100% performance in all announced and unannounced external and

internal audits, retain all existing certificates, and ensure continuous improvement of the introduced safety and quality systems;

• Achieve all set annual goals in product quality and safety;

• Implement annually planned new technologies and carry out invest-ments to increase product quality and product safety;

• Implement the requirements of applicable law in our processes.


7 PEOPLEHUMAN RESOURCES MANAGEMENT The HR Director for the Perutnina Ptuj Group centrally leads all our HR departments in the companies of the Perutnina Ptuj Group. The HR strategy is set centrally and follows the business strategy of the Perutnina Ptuj Group, then adjusted accord-ingly to each country. Our HR process is also defined by the international standard ISO 9001:2015 which we follow.

Our human resources management rests on 4 basic streams:

• Strategic workforce planning;

• Efficient human resources management (including designing optimal organ-isation of the operation, raising the level of leadership at all levels in the or-ganisation, building performance management culture, predicting and mit-igating human resources risks, and building a productive corporate culture based on basic company values);

• Modern talent acquisition management;

• Dedication to personal development and growth.

We are currently in the process of reviewing the organisation structure to fit the challenges of the future and our business plans. In this respect, we have a focus on hiring the best talent we can find in the market. Alongside this, we are reviewing and harmonising all the procedures that are currently in place – most of them be-ing developed separately for different countries thus having different scopes and approaches. First, we are focusing on defining a new transparent salary system as part of the basic rulebook for all countries, adopting all the stipulations of existing collective labour agreements.

Key projects in 2019:• Organisation review in all countries;

• Design of the organisation;

• Recruitment for key positions.

We offer equal opportunities and equal remuneration, irrespective of gender, na-tionality, faith, sexual orientation, or type of employment to all our employees. Standard benefits that we offer to our employees are predominantly those that are covered by collective labour agreements (summer bonus) and end-of-the-year bonus, which is based on company performance during the year. Beside basic ben-efits we also pay attention to health and wellbeing and in this respect, we provide healthcare treatment.

The second pillar of benefits we provide to our employees is training and devel-opment.

Collective labour agreementsWe have collective labour agreements in Slovenia and Austria, while in Serbia, Bosnia & Herzegovina, and North Macedonia we arrange our business with internal rulebooks. In Slovenia we have enterprise and branch collective labour agreement.

There were no changes in 2019 to the collective agreements.

In all our companies we work upon and respect the local legislation on worker par-ticipation in management of the company in which the minimum number of days’ notice provided to employees and their representatives prior to the implementation of significant operational changes that could substantially affect them is defined.


The information below records employment data by type of employment, gender, job category, and age.

TYPE OF EMPLOYMENT, GENDER

Total number of employeesPermanent

employmentFull

employmentPart-time

employment

Year total male % female % male female male female male female

2019 3,692 1,618 44 2,074 56 1,469 1,672 1,624 1,996 36 36

2018 3,677 1,597 43 2,080 57 1,432 1,663 1,651 1,956 36 34

JOB CATEGORY

Managers Professionals Workers

Year number % number % number %

2019 80 2 500 14 3112 84

2018 74 2 437 13 3130 85

AGE DISTRIBUTION

Employees aged under 30 aged between 30 and 50 aged over 50

Year number % number % number %

2019 458 12 1939 53 1295 35

2018 457 12 1970 54 1250 34

Recruitment of new staff by country:

Slovenia Croatia BIH SerbiaN. Mace-

donia Romania Austria Total

2019 367 117 102 126 0 1 1 714

2018 406 130 123 142 1 2 4 808

In 2018, we had 1.38% of staff turnover and in 2019 1.47%. The slight increase of fluctuation was due to the execution of retirement plans and the start of generational exchange.

Training and educationAverage hours of training per employee:

average hours by job category

managers professionals workers

2019 4.48 8% 55% 37%

2018 3.87 7% 54% 39%

Plans for 2020:• Introduction of performance management through a KPI system;

• Prepare year-long health awareness plan and start implementing it;

• Continue with ASI training plan (5 modules of leadership), financed by state training funds (Slovenia);

• Start working on talent attraction and employer branding;

• Work on leadership development;

• Introduce new dynamic ways of working.


PEOPLE HELATH AT WORK AND SAFETY

Health at work and safety managementIn the Perutnina Ptuj Group we are aware of the importance of occupa-tional safety and health and fire prevention and have a health and safety policy in place. The adopted occupational safety and health policies will be revised and aligned with the owner’s policy. At the Perutnina Ptuj Group level, we have informal committees on occupational safety and fire safety.

We want to protect our employees and property as much as possible. We have professional staff and organised internal or external services for this matter at all our companies in the Perutnina Ptuj Group. We act in accord-ance with the applicable state law of each individual country. The man-agement system depends on the level of risk, the number of employees, and the activity. We do not have a standard for managing occupational safety and health, but we follow implemented consumer standards (Ikea, McDonald’s).

Key projects in 2019The operations of the Perutnina Ptuj Group are exposed to an increased risk of injuries at work and health problems. The company achieved the set goals in the field of occupational safety and fire prevention. In 2019, safety and health at work and fire safety tasks were continuously carried out in accordance with applicable national laws at all locations. Experts worked in the fields of professional consulting, production and revision of risk assessments, training, reviews of work resources and measurements of microclimate working conditions, monitoring of construction sites, ac-tive cooperation with practitioners of occupational medicine, authorised physicians, representation of the employer and employees in disability procedures, representation of the employer in audits and supervision of inspection services.

Incidents data by country Slovenia Croatia BIH Serbia

2019 2018 2019 2018 2019 2018 2019 2018

Lost time due to health and safety incidents (hours1)

22,773 16,254 1,528 2,672 3,152 1,684 2,728 2,920

Lost time due to health and safety incidents (days1)

2,846 2,031 191 334 394 206 341 365

Fatalities 0 0 0 0 0 0 0 0

High-severity incidents 2 3 0 1 0 2 0 2

Low-severity2 incidents 75 64 19 13 12 10 15 12

LTIFR3 (person/hour) 21.97 18.90 13.90 9.71 14.61 13.81 11.84 11.25

1 Scheduled working hours, converted into working days

2 Low severity incidents include first aid level incidents

3 LOST TIME INJURY FREQUENCY (“LTIF”) RATE – the ratio of the number of lost time injury

(“LTI”) incidents to total work hours in the unit or entity (Work Hours – WH)

In our sales companies in Austria, North Macedonia, and Romania, we have no recorded incidents in 2018 and 2019.

We are happy with the decreasing trend of high-severity incidents which decreased by 75% in 2019 compared to 2018. On the other hand, we see an increase in low-severity incidents by 15%.


Health at work and safety expenditure, training and inspection data (Perutnina Ptuj Group) 2019 2018

Total expenditure for health and safety improvements in € 637,765 683,124

Expenditure on personal protection equipment in € 760,316 702,837

Safety training (hours) 1,728 1,791

Number of employees participating in training 1,168 1,776

Number of safety inspections by the State officials 10 14

Number of employee citations following the safety inspections 26 74

Number of occupational safety internal audits 148 152

Occupational health at work data (Perutnina Ptuj Group) 2019 2018

Workplaces with noise in excess of local law/level established by IFC (85 dBA) 35 30

Number of people at workplaces with noise in excess of local law/level established by IFC (85 dBA) 355 351

Workplaces with dust concentration in excess of local law/level established by IFC 16 14

Number of people at workplaces with dust concentration in excess of local law/level established by IFC 84 82

Ongoing activities for promoting health

% of employees using health promotion activities

2019 2018

Slovenia We have medically programmed active break for 20 employees/year in place, also health promotion sport activities for all employees (swimming, bowling, volleyball, healthy lifestyle, healthy eating, hiking, cycling, etc.), socialising and a yearly Poli cycling marathon.

24 22

Croatia Possibility for employees to have a warm meal and refreshing and warm drinks. Participation in the selection of personal protective equipment. Ad-ditional training according to the requirements and suggestions of workers. Distribution of promotional material and health related leaflets.

43 35

BIH Revision of the Occupational Health Regulations for the duration of personal protective equipment. Respecting the realistic requirements of individual jobs for protective equipment.

30 20

Serbia Additional training, possibility for employees to choose personal protective equipment, consultation with employees and H&S committee.

40 30

Plans for 2020• Develop a health at work and safety policy for the Perutnina Ptuj Group;

• Unify the external systems of professional tasks of occupational safety, health at work, and fire safety;

• Update and create committees for safety and health at work or persons in charge of occupational safety, health at work, and fire safety.


8 STAKEHOLDER ENGAGEMENTRespecting stakeholders’ interestsThe Perutnina Ptuj Group respects the interests of all stakeholders and conducts a constructive dialogue with them with the aim of addressing social, economic, and environmental issues that are relevant to both the Perutnina Ptuj Group and the local environment, the region, and the indi-vidual countries in which the Group is located.

We want to contribute to a better life for the individual, the local envi-ronment, and society as a whole through mutually profitable partnerships with stakeholders, implementation of selected projects of wider reach and successful business.

We conduct our activities transparently and are open to dialogue with all our stakeholders. In our operations, we respect the international norms of behaviour and the rule of law. We are committed to fair, equitable, and comprehensive action, which means that we care for people, animals, and the environment. We are also committed to addressing the consequences of our decisions and activities. We conduct all our operations with aware-ness that stakeholders have a significant impact on and shape the Group’s reputation.

Plan for 2020: Implement CSR Policy and Communication Policy at the Perutnina Ptuj Group level

Seven stakeholder groups

EmployeesCooperation objectives: operational activity of Perutnina Ptuj Group Companies by ensuring a decent and safe working envi-ronment and respecting international and national labour and human rights standards.

Key expectation: stability of employment and adequate wages; employee development: education and promotion opportunities; respect for human rights; job stability, wage growth.

Communication channels: meetings, calls, e-mails, internal magazine, intranet for employees, bulletin boards.


Business partners (Including suppliers, customers, and consumers)

Cooperation objectives: fair and transparent business relation-ships in good faith and mutually profitable partnership.

Key expectation: partnership; close cooperation, timely ex-change of information; compliance with the requirements of standards, laws, and customer requirements; safe, quality, tasty, and affordable product.

Communication channels: meetings, calls, e-mails, website, so-cial media, hotline and e-mail address for consumers.

OwnerCooperation objectives: mutually profitable partnership; deliv-ering accurate and complete business information; working in line with the owner’s vision.

Key expectation: coherent and transparent operation; process without emergencies, accidents, injuries.

Communication channels: meetings, calls, e-mails, visits.

Society and local communitiesCooperation objectives: engaging on the principles of transparency and honesty, building partnerships to achieve mutually beneficial goals and providing reliable and timely information to the public.

Key expectation: compliance of business with applicable legis-lation; local community development and social responsibility: investments in the development of local society and the environ-ment, joint projects.

Communication channels: website, social media, meetings, calls, e-mails, visits.

MediaCooperation objectives: distribution of reliable and truthful in-formation on the activities of the Perutnina Ptuj Group; answer to media questions, comment on site.

Key expectation: accuracy, transparency, and timeliness of infor-mation provided.

Communication channels: company PR service and websites, cor-respondence (meetings, calls, e-mails).

Government and state authoritiesCooperation objectives: mutually profitable partnership, both so-cially and economically, implementation of joint programmes and projects to improve the quality of life of the population and address current local issues.

Key expectation: compliance of business operations with applicable legislation (on quality, safety, environment, human resources, law, finance, accounting, informatics, fire protection, safety at work)

Communication channels: reporting, certification, documentation according to the requirements of legislation and state institutions, official correspondence (one-on-one meetings, calls, e-mails, visits).

Non-governmental organisations (NGOs) and civic associationsCooperation objectives: effective cooperation to improve the quality of life of citizens; preparation and implementation of environmental, social, and cultural programmes.

Key expectation: animal welfare, environmentally friendly busi-ness operations, sustainable farming.

Communication channels: website, social media, correspond-ence (one-on-one meetings, calls, e-mails).


Cooperation with the local environmentIn all the markets in which the Perutnina Ptuj Group conducts production processes we are involved in local communities with sponsorships and donations or working on projects which benefit the development of local communities.

In 2019, we helped local communities to execute international and local cultural or sport events, contributed to the greening of the city of Ptuj, and supported local cultural, sport, and NGO organisations. For these activities, we contributed EUR 216,625 on the Group level and numerous donations in material (our products).

Plan for 2020:• Proceed with involvement and support of local communities;

• Implement CSR policy including Sponsorship and donation policy.


In Perutnina Ptuj Group strategic purchasing, we follow the Perutnina Ptuj Group’s Policy of Quality, Safe Food Provision and Environmental Protec-tion and we apply its main requirements about quality, safety, traceability and select suppliers objectively and transparently by taking into account quality, reliability, best and efficient commercial terms, and environmen-tal matters. We require that our suppliers comply with our corporate re-sponsibility approach in relation to matters such as environment, climate change, people, local communities, health and safety, business conduct, and human rights. We evaluate our suppliers on a yearly basis with surveys and questionnaires.

Perutnina Ptuj Group strategic purchasing is committed to act in accord-ance with legislation, rules, and principles of implemented international and national standards.

Key projects 2019• Implementation of a new organisational structure of the Purchasing

department introducing category management; followed by education and training of category managers and purchasing managers for the Perutnina Ptuj Group;

• Realisation of savings by negotiating with suppliers and revising the cooperation conditions for different material groups;

• Introducing and implementing a new type of storage in plastic sleeves, which increased the efficiency of procurement by reducing the impact of seasonal increases in raw material prices;

• Due to implementation of raw material price transparent procedure and recipe optimisation in Bosnia and Herzegovina, the average price of feeds was reduced by 7% (Sept 2019 vs Sept 2018).

Plan for 2020• Implementation of an online electronic auction supplier management

system across the Perutnina Ptuj Group;

• Implementing general contracts containing conditions and pricing with large suppliers across all the areas of activity of the Procurement Department;

• In order to reduce the supply chain and develop partnerships with grain producers, we have intention to realise two projects:

• Carry out investment in a new grain elevator building in Croa-tia with a planned storage capacity of 20,000 tonnes.

• Introduce storage in plastic sleeves in Serbia.

• The implementation of both of these projects will allow us to increase the share of corn that we purchase during the harvest season to 80% of the annual demand and thereby reduce purchasing costs.

9 SUPPLY CHAIN


SUPPLY CHAIN DATASupplier type in % Large supplier Medium supplier Small supplier

Goods type Domestic Non-domestic Domestic Non-domestic Domestic Non-domestic

Fertilisers 96 2 2

Seeds 77 13 10

Fuels & lubricants 74 4 22

Gas 72 28

Laboratory materials 21 78 2

Veterinary products (medicine and vaccines) 94 2 4

Disinfections & detergents 9 76 16

Spices and additives 20 38 8 3 18 13

Packaging materials 51 24 13 8 3 2

Day old poultry 19 45 36

Work protection 20 31 49

Corn 10 5 12 1 70 3

Wheat 11 11 23 55

Soya (meal, bean, cake) 14 62 9 12 3

DDGS 17 67 17

Soya oil 25 0 50 8 17

Corn oil 4 67 30

Premixes 11 33 36 20

Amino acids 62 5 33

Suppliers - definitionLarge: More than EUR 100,000 of value from annual turnover

Medium: EUR 20,000–100,000 of value from annual turnover

Small: Up to EUR 20,000 of value from annual turnover

Location – definition: Domestic: Suppliers of services and materials have local legal entity in the same country as the company from the Perutnina Ptuj Group that uses them. Supplier is local.

Non-domestic: Suppliers of services and materials have a different legal entity country than the company from the Perutnina Ptuj Group that uses them. Supplier is not local.


10 BUSINESS CONDUCTFight against corruption and briberyAll companies in the Perutnina Ptuj Group are subject to national legislation on detecting and preventing corruption, while respecting the anti-corrup-tion guidelines of international organisations. Regardless of the fact that companies do not have internal rules for the fight against corruption, they follow high standards of business ethics in their work and build an organ-isational culture that promotes legal, transparent, and ethical behaviour and decision-making of all employees.

Our anti-corruption practices include:• system of rules, standards of conduct and expected conduct within

the framework of the adopted Code of Ethics;

• the validity of the Code not only for employees of the Perutnina Ptuj Group, but also for business partners who must also do business with-out any form of corruption or fraud.

Planned activities:• Preparation of the Rules on Prevention of Corruption and Conflict of

Interest;

• Raising awareness of our employees (additional training) and reducing legal risks (setting up a reporting and investigation system).

Transparency and opennessIn the Perutnina Ptuj Group, we conduct our activities transparently and are open to dialogue with all our stakeholders. In our operations, we respect the international norms of behaviour and the rule of law.

Business ethicsWe are committed to fair, equitable, and comprehensive action, which means that we care for people, animals, and the environment. We are also committed to addressing the consequences of our decisions and activities.

Code of conductIn the beginning of 2019 as the Perutnina Ptuj Group became the part of MHP we introduced and implemented the MHP’s Code of conduct in our Group.

In 2020, we plan to prepare a new user-friendly Code of conduct for the Perutnina Ptuj Group, which we will base on MHP’s Code of conduct and adjust to local environments.

BACKBACK40PERUTNINA PTUJ GROUP • NON-FINANCIAL REPORT 2019

11 ABOUT THIS REPORTScope and content In preparing this report, the Perutnina Ptuj Group aims to provide a trans-parent and informative account of the Company’s management systems and performance in the key focus areas highlighted within it, as follows:

• Corporate responsibility governance

• Environment

• Product safety and quality

• Animal welfare

• People

• Stakeholder engagement

• Supply chain

• Business conduct

We have based the content of this report on the stakeholders of the Pe-rutnina Ptuj Group and their expectations. We have defined and follow the stakeholders’ expectations based on our Rules of quality and environ-mental management.

Importance of individual stakeholders to the Perutnina Ptuj Group according to the assessment:

Stakeholder Groups Stakeholders Importance to the Group

Owner Owner

most important

State authorities Government bodies (ministries, agencies, funds, courts, inspections)

Employees Employees

Business partners Consumers and customers

Business partners Suppliers, business partners

Business partners Certification bodies

very important

Employees Trade unions and the works council

Society Local community and society

Media Media

Business partners Employment agencies

Business partners Employment institutions

State authorities Institute for Pension and Disability Insurance

Business partners Banks

Business partners Educational, research institutions

importantSociety Non-governmental organisations

Business partners Chamber of Commerce


Assessment of stakeholders’ expectations according to the importance of stakeholder groups for the Perutnina Ptuj Group:

Importance Chapter in this Report

Corporate governance issues

Anti-corruption policy very important 10

Transparency and compliance very important 2,10

Human rights very important 7

Ethics very important 2,10

Reputation very important 8

Equal opportunities very important 7, 9

Fines very important 4

Labour and relations with employees

Bonus, healthcare very important 7

Employee development very important 7

Appropriate work environment very important 7

Employment stability very important 7

Knowledge transfer within the group very important 7

Environmental issues

Sustainable operation and biodiversity very important 2, 4

Importance Chapter in this Report

Consumers / Partners

Partnership very important 2

Feedback very important 6, 8

Innovations very important 2

Quality and safety of product very important 1, 2, 6

Confidentiality and data protection very important 10

Long term cooperation important 2

Proactive cooperation less important 2

Community

Local community development important 8

Community impact assessment important 8

Smooth operation important 2

Animal welfare

Animal welfare important 2,5

Antibiotics use important 5

Compliance with EU Directives (growing, transportation, slaughter)

important 5


Reporting period and scopeThis is the Company’s first annual Non-Financial Report, and also the first report that has been aligned with the reporting requirements of the Glob-al Reporting Initiative G4. It is designed to disclose information that the Company’s stakeholders view as being a material aspect of the Company’s activities.

The Perutnina Ptuj Group reports regularly on its sustainability develop-ment in its consolidated Annual Reports but to a narrower extent.

We plan to continue to publish information contained within this report annually. In the future, we will apply GRI Standards as the reporting frame-work for this report.

The data within this report is performance information for the 2019 cal-endar year. Comparative data for 2018 is also supplied with a supporting narrative to assist readers of the report in understanding performance.

The information provided relates to the Company’s operations in Slove-nia, Croatia, Bosnia and Herzegovina, and Serbia (see Chapter 1 and 3). It does not contain information about the Perutnina Ptuj Group’s sales enterprises in Austria, North Macedonia, and Romania, except for number of employees (Chapter 7: People). It is designed to disclose information that the Company’s stakeholders view as being a material aspect of the Company’s activities.

Report audienceThis Report is provided for a broad range of audiences. These include:

• Customers, suppliers and consumers;

• Government and regulators;

• The media, opinion formers, and food industry commentators;

• Current and potential employees and their representatives;

• Local communities and their representatives;

• Non-governmental organisations (NGOs).

AvailabilityThis report is available for download in English from the Perutnina Ptuj Group’s corporate website (www.perutnina.com) and will be sent to stake-holders on request (see contact details later in this section).

Independent assurance and advisory supportThe Perutnina Ptuj Group has chosen not to have the information within this Report independently assured although it has been reviewed for con-sistency with the Company’s other published information and, for com-pleteness, by the owner’s professional advisors.

Feedback and contactWe welcome feedback from interested stakeholders in relation to the in-formation contained within this report and the approach to key focus areas highlighted within it.

Contact:PUBLIC RELATIONS

Renata Lovrak

+386 (0)2 7490 119

[email protected]


This report is aligned with GRI G4 standards at the core level.

GRI Standard GRI Disclosure Chapter Page

General disclosures

Organisational Profile 102-1 Name of the Organisation 1 3-4, 43102-2 Activities, brands, products, and services 1 3-11102-3 Location of headquarters 1 4102-4 Location of operations 1 4102-5 Ownership and legal form 1 5102-6 Markets served 1 3-4102-7 Scale of the Organisations 1 8102-8 Information on employees, and other workers 7 31-34102-9 Supply chain 9 38-39102-10 Significant changes to the Organisation and its supply chain 9 38-39102-11 Precautionary Principle or approach 2 13102-12 External initiatives 8 35

102-13 Membership of associations 1 9Strategy 102-14 Statement from senior decision-maker 2 14-15Governance 102-18 Governance structure 3 17-21Stakeholder Engagement 102-40 List of stakeholder groups 8 35-36 102-41 Collective bargaining agreements 7 31-32Reporting Practices 102-42 Identifying and selecting stakeholders 8, 11 41-42

102-43 Approach to stakeholder engagement 2, 8, 11 35-37, 14-

15,42102-44 Key topics and concerns raised 2, 11 16, 41102-45 Entities included in the consolidated financial statement 3, 11 4, 43102-46 Defining report content and topic boundaries 11 41-43102-47 List of material topics 11 41102-48 Restatements of information - 102-49 Changes in reporting - 102-50 Reporting period 11 43102-51 Date of most recent report 11 43102-52 Reporting cycle 11 43102-53 Contact point for questions regarding the report 11 43102-54 Claims of reporting in accordance with the GRI Standards 11 44102-55 GRI content index 11 44

102-56 External assurance 11 43


GRI TOPIC SPECIFIC STANDARDS

Economic performance Management approach 103-1 Explanation of the material topic and its boundaries 2 10, 14-16

103-2 The management approach and its components 2, 3 14-15, 21 103-3 Evaluation of the management approach 3 21Indirect economic impacts

Indirect economic impacts 203-1 Infrastructure investments and services supported Global Goal 2 13-16

203-2 Significant indirect economic impacts, including the extent of impacts 2 13-16

Procurement practicesProcurement practices 204-1 Proportion of spending on local suppliers 9 39Anti-corruptionAnti-corruption 205-1 Operations assessed for risks related to corruption 2, 10 40

205-2 Communication and training about anti-corruption policies and procedures 10 40

ENVIRONMENTAL

Materials Materials 301-1 Materials used by weight or volume 4 23Energy Energy 302-1 Energy consumption within the organisation 4 24Water use Water 303-1: Water withdrawal by source Global Goal #13 4 26

303-2 Water sources significantly affected by withdrawal of water 4 26 303-3 Water recycled and reused 4 26Emissions GNG Emissions 305-1 Direct (Scope 1) GHG emissions 4 26 305-1 Energy indirect (Scope 2) GHG emissions - Effluents and wasteEffluents and waste 306-1 Effluents and waste (by quality and direction) 4 26 306-2 Waste by type and disposal method 4 26Environmental complianceEnvironmental compliance 307-1 Non-compliance with environmental laws and regulations 4 22



SOCIAL

EmploymentEmployment 401-1 New employee hires and employee turnover 7 32

401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees 7 31

Labour management relations Labour management relations 402-1 Minimum notice periods regarding operational changes 7 31

Occupational health and safety Occupational health and safety

403-2 Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities 7 33

403-3 Workers with high incidence or high risk of diseases related to their occupation 7 34

Training and education Training and education 404-1 Average hours of training per year per employee 7 32, 34

404-2 Programmes for upgrading employee skills training of employees and transition assistance programmes 7 32

404-3 Percentage of employees receiving regular performance and career development reviews 7 31

Diversity and equal opportunity Diversity and equal opportunity 405-1 Diversity of governance bodies and employees 3 19-20

Non-discrimination Non-discrimination 406-1 Incidents of discrimination and corrective actions taken 10 40Freedom of Association and Collective BargainingFreedom of Association and Collective Bargaining

407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk -

Local communities

Local communities, 2016 413-1 Activities on involvement of communities, impact assessment, development programmes 8 37

Customer Health and Safety Health and safety of consumers, 2016

416 -1 Assessment of the health and safety impacts of product and service category 6 29-30

416-2 Incidents of non-compliance concerning the health and safety impacts of products and services 6 29-30

Food processing sector disclosures. Animal welfare

N/a FP9 Percentage and total of animals raised and/or processed, by species and breed type 5 28


FP10 Policies and practices by species and breed type, related to physical alterations and the use of anaesthetic 5 27-28

FP11 Percentage and total of animals raised and/or processed, by species and breed type, per housing type 5 28

FP12 Policies and practices on antibiotic, anti-inflammatory, hormone, and/or growth promotion treatments, by species and breed type

5 28

FP13 Total number of incidents of significant non-compliance with laws and regulations, and adherence with voluntary standards related to transportation, handling, and slaughter practices for live terrestrial and aquatic animals

5 27

Innovations N/a Innovations in the organisation 2 11


Documents

NON-FINANCIAL REPORT 2019 PERUTNINA PTUJ GROUP · 2020. 10. 13. · Breza Seiersberg Skopje 1 5 6 4 1 3 1 3 1 PARENT COMPANY MEAT INDUSTRY LIVE PRODUCTION FEED PRODUCTION SALES NETWORK