Environmental Report Summary

2013 ENVIRONMENTAL REPORT SUMMARY

1. GENERAL MANAGER STATEMENT 3 2. COMPANY PROFILE 4 2. 1 Details of the organization 4 2. 2 Primary products and main application areas 5 2. 3 Our manufacturing process 7 3. SCOPE OF THE DOCUMENT 10 4. 2020 ENVIRONMENTAL STRATEGY 11 5. ENVIRONMENTAL PERFORMANCES 12 5. 1 Air emissions 13 5.2 Water 15 5.3 Waste 17 5.4 Energy 21 5.5 Product related aspects 23 6. ENVIRONMENTAL IMPROVEMENT 25 6. 1 Targets already achieved 25 6.2 Future targets 27 7. CERTIFICATIONS 28 8. GLOSSARY 29

ENVIRONMENTAL REPORT / 2 1. GENERAL MANAGER STATEMENT

Taghleef Industries Kft. occupies a prominent position in the flexible packaging market, as the only biaxially oriented polypropylene manufacturer in Hungary. Our company is located in Tiszaújváros, about 170 km East of Budapest, and is part of the international Taghleef Industries Group, one of the world’s largest film manufacturers. The Company’s mission is to develop, produce and market BOPP films in compliance with our clients’ highest expectations. Our film can be used in decorative packaging and label markets.

Continuous innovation is part of our Group’s basic philosophy. The portfolio of products include low-heat sealable, anti-fog and easy opening ﬁlms that help to avoid uncontrolled tearing of the packaging.

The most important application of our products is in the food industry. Our products and equipment are constantly improved to meet our customers’ products and service needs.

Sustainability is also part of these efforts, which includes social, economic and environmental aspects. The road towards sustainability requires continuous commitment from the entire company and begins by focusing on environmental considerations.

Our company has always carried out specific environmental measurements, in order to identify and control the environmental impact of our production process. The related figures are below legally prescribed limits and we strive to reduce such results even more with additional improvements. However, we are fully aware that reducing some environmental impcts, such as energy consumption, is directly related to the certain physical and technological limitations due to the kind of products we manufacture. This can be achieved by investing in new technologies and developing new types of products. As an example, by manufacturing thinner films, we reduce the amount of material used for packaging and also the consequent waste.

Publication of this Environmental Report conﬁrms the Company’s commitment and contains past achievements and future targets.

Data and results achieved, conﬁrm that our recent efforts have not been in vain. However, we are aware that further steps need to be made in order to continuously improve our performance. Antal Bazsó MANAGING DIRECTOR

3 / ENVIRONMENTAL REPORT 2. COMPANY PROFILE

2.1 Details of the organization

Headquartered in Dubai (UAE), Taghleef Industries (Ti) is one of the largest manufacturers of biaxially oriented polypropylene (BoPP), cast polypropylene (CPP) and biaxially oriented polylactic acid (BoPLA) ﬁlms in the world, with an annual ﬁlm capacity of 360.000 tons.

The Group was established in 2006, merging the experience and power of three companies: Technopack based in Egypt, Al Khaleej Polypropylene Co. (AKPP) based in Oman and Dubai Poly Film based in the United Arab Emirates (UAE). Taghleef Industries belongs to the privately owned Al Ghurair Group, which operates in strategic businesses, such as real estate and shopping malls, manufacturing (packaging solutions and metals) and investments. As the largest producer in the Middle East, it has been supplying ﬁlms for two decades. During the following years, Taghleef Industries commissioned new production lines and expanded its presence in the global market through new mergers and acquisitions in order to meet the ever increasing domestic and international market demands.

Currently, Taghleef Industries is present in 5 continents with a total of 8 production sites located in the UAE, Oman, Egypt, Italy, Hungary, Australia, USA, and Canada, and operates 3 distribution centers located in Germany, USA and China. After the latest acquisition in the USA, Taghleef Industries increased its manufacturing assets to 24 production lines. Canada and 3 distribution centres located in Germany, USA and China. After the last acquisition in the USA, the total number of lines forming Taghleef Industries’ technology park increased to 24. Thanks to its international presence and its continuous investments in people and equipment, Taghleef Industries is now able to supply high-quality products to serve world markets.

Having a global presence, Taghleef Industries is also involved in global issues and takes fully responsibility on sustainable development. Taghleef Industries is now focussing on the environment, one of the three pillars of sustainable development and it is, therefore, committed to creating and offering alternative packaging solutions while reducing the environmental impact of its manufacturing process.

ENVIRONMENTAL REPORT / 4 2.2 Primary products and main application areas

PACKAGING OF FOODSTUFFS

For the protection, preservation, and last but not least, maximum visual impact of the packaged product, Taghleef Industries Kft. offers a complete portfolio of materials, ranging from transparent film, white film, white voided film, metallised film, and up to specialty matte products used in the packaging of many foodstuff goods.

One must highlight the both sides heat sealable TSS destined to all the general packaging applications; the transparent TNS with cold seal release properties; the white both sides heat sealable WSS, which contributes to savings in printing with white backgrounds; the metallised (one side) heat sealable ZHB, which offers an excellent barrier to gases and light; the white voided ﬁlms, such as the ELD, the ERD, used not only for the particular optical effect, but also for the elevated quantitative yields up to the matt ﬁlm, like the MUS for the packaging with a natural paper resemblance.

FILM FOR INDUSTRIAL APPLICATIONS (low sealable, metallisable/metallised ﬁlm)

As an alternative to the standard films for the packaging of foodstuffs, and particularly where higher packaging velocity is required, Taghleef Industries Kft. offers a series of films characterized by a low temperature seal capacity. These materials can also be used in applications where an excessive seal temperature could damage the foodstuff product and in applications which substitute packaging with cold seal, such as the packaging of ice-cream, pastries and chocolate.

This series of materials, distinguishable by the acronyms ES (“early sealable”), LS (“low sealable”) or XS (“extra low sealable”), are available in the transparent versions TLS, metallised ZES, white WLS and white voided EXS.

5 / ENVIRONMENTAL REPORT PACKAGING OF FLOWERS

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ADHESIVE FILM

In the field of adhesive tapes, the TPT film is appreciated for its performance and transparency characteristics. The film is designed for the production of adhesive tapes utilizing the latest coating technologies: acrylic, solvent, and hot melt. )RU WKHSURGXFWLRQRIRI¿FHDGKHVLYHWDSHDQGSULQWHGLQGXVWULDOWDSHV a special versionLVDYDLODEOHHQULFKHGZLWKERWKVLGHVPDWWeVXUIDFH ¿QLVKWKH730

PACKAGING OF TEXTILES

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THE LABELS

Taghleef Industries has recently developed a series of ¿OPV VXLWDEOH IRU ZUDS DURXQG DSSOLFDWLRQV the LGL 38 !m ZKLWH YRLGHG¿OPZLWKHOHYDWHGEULOOLDQFH WKH/=/P ZKLWHYRLGHG¿OP ZLWK RQH PHWDOOLVHG VLGH WKH /71 P WUDQVSDUHQW ¿OP ZLWK HOHYDWHGVXUIDFHEULOOLDQFH

It is important to mention the ³LQ-PRXOG´ use of ZKLWHYRLGHG/,0 /,* /,+ and the transparent LITSURGXFWV DQGWKH transparent /6$ZKLWHYRLGHG/6(DQGZKLWH/6: products for self adhesive applications.

7KH PRVW LPSRUWDQW FKDUDFWHULVWLF RI ODEHO ¿OPV LV WKH H[FHOOHQW PHFKDQLFDO SURSHUWLHV UHQGHULQJ WKHP VXLWDEOH IRU DSSOLFDWLRQV LQ WKHYDULRXVW\SHVRIODEHOOLQJPDFKLQHVXVLQJWKHmost common roll- fHGWHFKQLTXH.URQHV6LJ$OID% +3(/DEHOOHUV

ENVIRONMENTAL REPORT / 6 2.3 Our manufacturing process

Production Process Flowchart

entry of raw materials »

storage »

dosage & mixture » »

Extrusion »

casting »

mdo stretching » » tdo stretching » grinding pull roll & treatments » »

winding »

ageing » »

» metalliSation slitting

» department

packaging & finished products store »

delivery to client

7 / ENVIRONMENTAL REPORT RAW MATERIALS

7KHSURGXFWVPDQXIDFWXUHGE\7DJKOHHI,QGXVWULHV.IWGHULYHIURPpolypropylene (PP)ZKLFKLVDWKHUPR plastic polymer that consists of QRQWR[LFPROHFXOHVPDGHXSRIRQO\FDUERQDQGK\GURJHQDWRPV'XULQJWKH PDQXIDFWXULQJSURFHVVWKHXVHRIVSHFL¿HGTXDQWLWLHVRIDGGLWLYHVPDVWHUEDWFKHVJLYHVWRWKH¿OPLWVVSHFL¿F FKDUDFWHULVWLFV$OOUDZPDWHULDOVXVHGE\7DJKOHHI,QGXVWULHV.IWFRPSO\ZLWKWKHNational and European Union regulations and the Food Contact regulations of the USA.

EXTRUSION

([WUXVLRQLVWKH¿UVWVWDge of the transformation process. 3RO\SURS\OHQHJUDQXOHVWRJHWKHUZLWKWKHDGGLWLYHV DUHDSSURSULDWHO\GRVHGVHQWWRDSUHPL[HUDQGVXSSOLHGWRWKHH[WUXGHUVE\SQHXPDWLFV\VWHPV+HUHWKH\ are PHOWHGDQGH[WUXGHG forming a ÀDWVKHHWWKDWLVVWDELOL]HGWKDQNVWRDQLPPHGLDWHFRROLQJE\LPPHUVLRQ LQDZDWHUWDQN and then driedRIWKHUHPDLQLQJVXUIDFHZDWHUE\EORZLQJDLURQWKH¿OPVXUIDFH

During the Machine Direction Orientation (MDO) the sheet is ZDUPHGXSDJDLQDQGstretched longitudinally using rolls that URWDWH DW GLIIHUHQW VSHHGV $IWHUZDUGV WKH ¿OP LV ORFNHG RQ WKHHGJHVE\DFOLSV\VWHPDQGstretched transversely in the Transversal Direction Orientation process (TDO). The output ¿OPLVthen subjectedtRDQDSSURSULDWHVXUIDFHWUHDWPHQW ÀDPH or corona treatment)WRPDNHWKHSURGXFWSULQWDEOH and then ZRXQGLQWRMXPERUROOVZLWKDZLGWKRI.RU.PHWHUV

ENVIRONMENTAL REPORT / 8 MAIN SLITTING, SECONDARY SLITTING AND PACKAGING

$IWHUDQDGHTXDWHagingSHULRG,WKHMXPERUROOVDUHVHQWWRWKHslitting areaZKHUH they are slit into multiple ¿QLVKHGUHHOVWKDWFRPSO\ZLWKWKHVSHFL¿FDWLRQVRIWKHFOLHQW¶VRUGHU When in need of additional processing, WKHVHUHOOVDUHVHQWWRWKHVHFRQGDU\VOLWWHUVEHIRUHEHLQJPRYHGWRWKHSDFNDJLQJarea and taken to the ¿QLVKHGSURGXFWVZDUHKRXVH

METALLISATION

Metallisation of the film is an additional processWKDWPD\EHUHTXLUHG E\ WKH customer.,WWDNHVSODFHRQD KLJKYDFXXP V\VWHP that deposits a thin layer of aluminiumRQRQHRIWKHWZRVXUIDFHV RIWKH¿OPLPSURYLQJLWVEDUULHUSURSHUWLHV$UHVOLWWHUSURYLGHV RQHRUPRUH¿QLVKHGSURGXFWUHHOVWKDWDUHWKHQVWRUHGLQWKH ¿QLVKHGSURGXFWVZDUHKRXVH7KHlateral scrapsSURGXFHGE\ the slitters during the metallised reel slitting are stored in unit loads and GHVWLQHGWRH[WHUQDOVDOH

REGRANULATION Regranulation is a scraps reprocessing procedureIURPZKLFKLWLVSRVVLEOHWRREWDLQWKHgranulesZKLFKLVWKHQ VWRFNHGLQVSHFLDOVLORVDQGZLOOEHUHXVHGGXULQJWKHH[WUXVLRQSURFHVVLQYDULDEOHSHUFHQWDJHVGHSHQGLQJRn the type of product. 7KHVFUDSVGHULYLQJIURP¿OPEUHDNRIIV GXULQJWKHVWUHWFKLQJ SURFHVV RU GXULQJ WKH VWDUW XS RI WKH H[WUXVLRQ OLQHV VOLWWHU off-cutsJULQGLQJRIMXPERUROOVRU¿QLVKHGSURGXFWUolOVWKDW GR not meet specification are all appropriately grinded through PLOOV DQGRU JULQGLQJ PDFKLQHV 7KH PDWHULDO GHULYHG IURP this process is then VHQWWRDQH[WUXVLRQV\VWHPWKURXJKZKLFKE\PDWHULDOPHOWLQJLW LVSRVVLEOHWRREWDLQWKHJUDQXOHWKDQNVWRDVSHFL¿Fregranulatio n machine. The granule is then cooled LQ D ZDWHU WDQN GULHG ZHLJKHG DQG VHQW IRU VWRFNLQJ E\ D SQHXPDWLFV\VWHPWRWKHH[WUXVLRQOLQHVsilos.

9/ ENVIRONMENTAL REPORT 3. SCOPE OF THE DOCUMENT

TODAY, A COMPANY THAT IS POSITIONING ITSELF AS A MARKET LEADER PROMPOTING ENVIRONMENTAL RESPONSIBILTITY MUST CONSIDER BOTH THE ECONOMIC AND SOCIAL IMPACTS OF OUR PRODUCTS ON THE ECOSYSTEM. THEREFORE, TAGHLEEF INDUSTRIES KFT. FOCUSES ON THE WIDER CONCEPT OF SUSTAINABILITY FOR PRESENT AND FUTURE GENERATIONS.

Taghleef Industries Kft. supplies their products to converters where the materials are subject to further application processes before they get to the packaging companies and ﬁnally end up in the hands of consumers.

Taghleef CONVERTER END USER CONSUMER Industries

It is essential to provide our products with specific certifications that show the suitability of use, especially for food applications. In 1997, the company started toward a path for quality management through ISO 14001:1996 which focused on the environment, followed in 2002 with ISO 9001:2000 which related to product quality. Then, in 2004, the company received the BRC/loP hygiene certificate for food safety. Finally, in 2006, the integrated management system with Occupational Health and Safety aspects, OHSAS 18001:1999 was completed. The addition of these certifications laid the foundation of a global approach toward sustainability. (For more details, see "Certifications" section).

The environmental performance of the company regarding air emissions, water and energy consumption, and scrap or waste production during all stages of the manufacturing process is supported by the improvement objectives already achieved and by those that Taghleef Industries Kft. commits to achieve in the future, following the medium term environmental strategy.

ENVIRONMENTAL REPORT / 10 4. 2020 ENVIRONMENTAL STRATEGY

Taghleef Industries Kft. has adopted the following medium term strategy that identifies out the objectives that t he company is committed to achieve within the end of 2020.

WASTE Increase PP recyclable efﬁciency: The quantity of regranulated PP used internally with reference to the total amount of recyclable PP produced .

Decrease hazardous waste: The quantity of hazardous waste shall be reduced by 5% compared to the total amount recorded in 2008.

GREENHOUSE GAS EMISSIONS (GHG) Greenhouse Gas Emissions shall be reduced by 20 % in comparison with the quantity recorded in 2005 and in line with European policies and commitments.

WATER

Water consumption per tons of ﬁlm produced shall be reduced by 10% compared to the ﬁgures of 2008.

ENERGY Energy consumption (expressed in TOE) per tons of ﬁlm produced shall be reduced by 15% compared to the ﬁgures of 2008.

PRODUCTS More with less We shall pursue collaboration with our customers for the reduction of raw materials used in our products, without compromising quality.

Products with a lower environmental impact We shall continue to cooperate with our customers in the research and development of new ﬂexible ﬁlms to reduce environmental impacts.

Our Company shall assess the life cycle and carbon footprint of its products.

11/ ENVIRONMENTAL REPORT 5. ENVIRONMENTAL PERFORMANCES

Air emissions produced by our manufacturing plant derive mainly from the extrusion, stretching, film surface treatment, regranulation and energy production.

The polltuing substances emitted by the 14 emission points and regularly authorized by the competent regional bodies are:

» AIR EMISSIONS

» WATER RESOURCES

» WASTE

» ENERGY

» PRODUCT RELATED ASPECTS

Emissions are not subject to the abament process because their rates are far below the legal limits.

The only air emission treatment is for dust abatement and utilizies cyclone and bag filters.

The following table reports the average value recorded for each pollutant measured in 2008 and 2013 compared to authorized emissions limits.

ANNUAL FILM PRODUCTION

39 475,7 39 581,4 40 000

35 401,9 35 450,0 35 596,3 35 000

t 30 000

25 000

20 000 2008 2009 2010 2011 2012

PICTURES 1: ANNUAL FILM PRODUCTION RATES.

ENVIRONMENTAL REPORT / 12 5.1 Air emissions

Air emissions produced by our manufacturing plant derive mainly from the extrusion, stretching, ﬁlm surface treatment, regranulation and energy production.

The polluting substances emitted by the 14 emission points and regularly authorized by the competent regional bodies are:

» total dust, » CO, NOx, » ozone, » formaldehiyde, » acetaldehyde, » acetone, » propane.

Emissions are not subject to the abatement process because their rates are far below the legal limits.

The only air emission treatment is for dust abatement and utilizes cyclone and bag filters.

The following table reports the average value recorded for each pollutant measured in 2008 and 2013 compared to authorized emissions limits.

13 / ENVIRONMENTAL REPORT Name of the Air Measured value (mg/m3) Emission limit source pollutant 2008 2013 value (average of more values) (mg/m3) Carbon-monoxide 3.3 1.4 100 Gasboiler chimney P1 Nitrogen-oxide 149.7 152.2 350 P2 Regranulation cyclone P3 PP dust 0.43 0.351 150 dust ﬁlter P4 P5 3A organic 0.007 0.000075 20 P6 P5 3B organic 0.0003 0.000075 100 P6 P5 3C organic 104.95 // 150 P6 TDO oven chimney P5 3A+3B+3C organic 104.96 69 150 P6 P5 propane (3C) <1.6 67.2 150 P6 P5 pentane (3C) // 1.42 150 P5 acetone (3C) // 0.39 150 3A organic <0.0002 0.000102 20 3B organic <0.0002 0.000102 100 P7 TDO neutral zone 3C organic 2.7 0.509 150 3A+3B+3C organic 2.7 5.31 150 propane (3C) <1.6 4.8 150 Flame treater Carbon-monoxide 25.3 24.33 500 P8 chimney Nitrogen-oxide 0.6 0.262 500 P9 3A organic <0.0002 0.000057 20 P10 P9 3B organic <0.0002 0.000057 100 P10 P9 Ozone extractor 3C organic 0.16 0.285 150 P10 P9 3A+3B+3C organic 0.16 1.88 150 P10 P9 propane (3C) <1.6 1.6 150 P10 3A organic 0.008 0.000096 20 3B organic 0.001 0.000096 100 P17 Extractor above the 3C organic 2.7 0.481 150 equipment 3A+3B+3C organic 2.7 2.08 150 propane (3C) <1.6 1.6 150 Boiler Smokegas Carbon-monoxide 4.2 1.48 100 P18 Chimney Nitrogen-oxide 41.8 152.3 350 Raw material delivery 0.12 0.203 150 P132 chimney PP dust Film heat treater Carbon-monoxide 28.8 17.15 500 P133 chimney Nitrogen-oxide 3.1 2.266 500

Note: 3A, 3B and 3C are categorization of different types of organic pollutants. TABLE 1: AIR EMISSION VALUE.

ENVIRONMENTAL REPORT / 14 5.2 Water

Water use, whether as a natural resource that is consumed, or as wastewater derived from the manufacturing processes, is closely measured and monitored. In the Tiszaújváros plant, water is used only in the cooling and stabilizing phases of cast ﬁlm production. Therefore, there are no discharges from water processes that would result in the presence of pollutants.

The water used in the plant has three different ﬂows:

» ion free » recycled » drinkable

Deionized water is produced buy TVK Nyrt. (a company operating in the same industrial area). Recycled water is initially drawn from the Tisza river. Then it is chemically treated, filtered and cooled in evaporating towers by TVK Nyrt. Drinking water comes from groundwater layers (wheel-driven) after water treatment and disinfection.

The water process cycle is a closed type; therefore, consumption rates result mainly from water evaporation, water overflow, and periodic water discharge which is necessary to maintain the appropriate characteristics of the fluid in the cooling circuit and also for the clean up of the tub.

Details of wastewater produced are: » overﬂow of production plants (extrusion lines and regeneration plants) » toilet facilities » canteen » additional operations (i.e. washings using water cleaners)

Taghleef Industries Kft. does not carry out any type of analytical control on the wastewater produced because this is not requested by the supplier collecting the wastewater and type of use (cooling system) excludes any possibilitiy of pollutant contamination.

15 / ENVIRONMENTAL REPORT Ion free water is used to cool the extruded ﬁlm and the regranulation. The variation in the consumption of the ion free water depends mainly on the quantity of the water outﬂow which is kept under control during every shift.

IONFREE WATER CONSUMPTION

0,60 0,51 0,50

0,40 0,27 0,30 0,22 0,19 0,20 0,15

/t Of film produced 0,11 3

m 0,10

0,00 2007 2008 2009 2010 2011 2012

TABLE 2: ION FREE WATER CONSUMPTION INDICATOR IN RELATION TO THE PRODUCTION.

The recycled water is supplied by TVK Nyrt. and is used in a secondary circuit to cool the ion free water. The amount of recycled water consumed depends on the total amount of ﬁlms produced and the air temperature. The increase of the water consumption index in 2008 and 2011 were related to the reduction of the productions in these two years.

RECYCLED WATER CONSUMPTION

160 137,19 123,72 140 120,44 106,36 109,20 120

100

/t Of film produced 40 3 m 20

0 2008 2009 2010 2011 2012

TABLE 3: RECYCLED WATER CONSUMPTION INDICATOR IN RELATION TO THE PRODUCTION

ENVIRONMENTAL REPORT / 16 5.3 Waste

Waste produced is mainly composed by PP scraps derived from manufacturing, a signiﬁcant lower amount of packaging and other types of waste. The following pie chart shows the subdivision of the total amount of 5,616,314 kg of waste produced in 2012.

98,67% Plastic Waste (PP) 1,33% Other

1,33% Other 0,41% Paper and cardboard 0,37% Wood 0,31% Not-iron metal 0,12% * Waste oil 0,05% * Absorbents, ﬁltering materials, rags and protective, clothing contaminated by dangerous substances Electrical waste TABLE 4: PERCENTAGE SHARING OF THE MAIN TYPES OF 0,04% WASTE PRODUCED IN 2012 0,03% Ceramics

The amount of hazardous waste produced is around 0,2% of the total amount of waste.

17 / ENVIRONMENTAL REPORT WASTE DERIVED FROM THE MANUFACTURING PROCESS

Taghleef Industries Kft. has always been involved in speciﬁc activities to optimize its production processes with the aim to reduce and rationalize the use of raw materials. These activities have positively impacted the reduction of scraps and the possibility to reuse them. A high attention to the product quality does not allow the recovery of all the production scraps and their subsequent regeneration. The amount left is recycled by specialized companies in order to use it as a less valuable secondary raw material and, therefore, is not suitable for food contact. The following raw materials are currently recovered using internal regeneration plants:

» Polypropylene films (transparent) » Polypropylene from white films » Polypropylene from white voided films » Polypropylene from matte films

Those polypropylene scraps that are not reused by Taghleef Industries Kft. also have a speciﬁc market value and are in high demand. In any case, they are managed as waste with the aim to guarantee that legal requirements are fully respected.

WASTE DISPOSED

8 6,6

6 4,7 4,4 4 %

2 1,1 1,2

0 2008 2009 2010 2011 2012

Table 5: PERCENTAGE OF WASTE DISPOSED COMPARED TO THE TOTAL PRODUCTION OF WASTE Increase in waste production in 2010 was due to an increase in the quantities of semi-ﬁnished products coming from the plants located in MENA (Middle East and North Africa) countries. Before these products were used, they were unpacked, causing a major quantity of different types of wastes produced (e.g. paper, wood and plastic materials). Since 2011, we reuse a part of these plastic plugs, pallets and cardboard cores in the production and storage processes. The quantities of these types of wastes depend on the number of the deliveries and the size of the semi-ﬁnished products received.

ENVIRONMENTAL REPORT /18 OTHER TYPES OF WASTE

The table below show the trends of the most signiﬁcant types of waste in terms of annual production.

PAPER AND CARDBOARD PACKAGING PAPER WASTE

1,00 Reduction in paper waste in 2011 0,87 was due to the reuse of paper 0,79 0,80 cores from MENA. That same 0,70 0,76 0,59 year, an automatic trim winder was 0,60 installed. This device does not require the use of paper cores for 0,40 winding, consequently reducing

paper core consumption. kg/t of film produced 0,20

0,00 2008 2009 2010 2011 2012

TABLE 6: PAPER AND CARDBOARD PACKAGING WASTE IN RELATION TO THE PRODUCTION

WOOD PACKAGING WOOD WASTE

The production of wood waste dropped 1,40 in 2011 because we reused palletts 1,22 1,20 arriving from MENA for transporting 1,12 waste and regranulated product. 1,00 0,79 0,72 0,80 0,52 0,60

0,40 kg/t of film produced 0,20

0,00 2008 2009 2010 2011 2012

TABLE 7: WOOD PACKAGING WASTE PRODUCTION IN RELATION TO THE PRODUCTION

19 / ENVIRONMENTAL REPORT PACKAGING COMPOSED OF VARIOUS MATERIALS

Increase in waste production in 2010 was due to a rise of the quantities of semi-ﬁnished products coming from plants located in MENA countries.

The increase of the 2012 ﬁgure is PACKAGING COMPOSED OF VARIOUS mainly due to nonstandard production MATERIALS conditions. In July and August 2012, 1,39 1,60 we received raw materials in bags from 1,40 a different supplier, which explains 1,25 1,15 1,07 the increase in the amount of waste 1,20 0,90 packaging produced. 1,00

0,80

0,60

0,40 kg/t of film produced 0,20

0,00 2008 2009 2010 2011 2012

TABLE 8:PACKAGING COMPOSED OF VARIOUS MATERIAL WASTE IN RELATION TO THE PRODUCTION

OIL WASTE OIL WASTE

The yearly fluctuation of waste oil 0,35 0,30 produced is mainly influenced by the 0,30 annual maintenance plans. 0,24 0,25 0,21 0,19 0,20 0,16 Since 2009, we started to clean our 0,15 hydraulic oil with a filter system in order to increase the oil life cycle, thus 0,10 l/t of film produced reducing the production of oil waste. 0,05

0,00 2008 2009 2010 2011 2012

TABLE 9: OIL WASTE PRODUCTION IN RELATION TO THE PRODUCTION

ENVIRONMENTAL REPORT / 20 5.4 Energy

Taghleef Industries Kft. manufacturing processes consume electric energy and thermal energy produced from methane combustion.

ELECTRIC ENERGY

Electric energy is used in all processes, from the melting of raw materials (at nearly 250°C where it is necessary to assure the workability of the material) to the motorized devices used to manufacture and transport the product. It is also used to produce refrigerated water and compressed air.

ELECTRICITY CONSUMPTION

1 250 1 200,00 1 182,28 1 200

1 139,89 1 150 1 101,31 1 100

1 036,85

of film produced 1 050

kWh/t 1 000

950 2008 2009 2010 2011 2012

TABLE 10: ELECTRICITY CONSUMPION IN RELATION TO THE PRODUCTION.

At the end of 2009, we replaced the Line III tandem main melt extruder screw with a larger diameter extruder screw. This increased the output of the production line by 10%. At the same time this caused an increase by 2% of the annual efﬁciency in the use of raw material. This means that we produced less waste while the amount of production was increased. Consequently, the energy consumption per ton produced decreased in 2010. In 2011, production was reduced and, therefore, power consumption increased. In the same year, an upgrade to Line III was made, substituting the main extruder with a twin-screw system. Due to this investment, further improvements regarding efficiency and production output were obtained. This resulted in a further reduction in energy consumption per unit value in 2012.

21/ ENVIRONMENTAL REPORT METHANE

Methane is used for direct and indirect heating of the plastic ﬁlm during preheating stages before lon- gitudinal and transversal stretching. It is equally necessary for the ﬁlm surface treatment to be prepared for the future printing phases.

Differences in methane consumption rates are mainly due to the variations METHANE CONSUMPTION

of the product mix requested by the 59 customers, characterized by different 55,39 56 requirements in terms of unit gas con- 53,14 sumption for their production. 53 50,51 48,29 50 46,15 47

/t of film produced 41 3 m 38

35 2008 2009 2010 2011 2012

TABLE 11: METHANE CONSUMPTION IN RELATION TO THE PRODUCTION.

The following table summarizes TOTAL ENERGY CONSUMPTION the total energy consumption rates RATES EXPRESSED IN TOE expressed in Tonne of Oil Equivalent (TOE). For electricity, 1 MWh cor- 0,40 responds to 0.23 TOE and for meth- 0,35 0,31 0,32 0,29 0,31 0,28 ane, 1000 Nm3 corresponds to 0.825 0,30 TOE. 0,25

0,20

0,15 /t of film produced 3 0,10

0,05 TOE/t m 0,00 2008 2009 2010 2011 2012

TABLE 12: ENERGY CONSUMPTION RATES IN RELATION TO THE PRODUCTION EXPRESSED IN TOE.

ENVIRONMENTAL REPORT / 22 5.5 Product related aspects

Thin film, low density and multilayer technologies provide opportunities for packaging weight reduction. With a density of 0.91 g/cm³, polypropylene is among the lightest polymers available in the market. This advantage, in combination with the low thickness achieved through biaxial orientation technology, has been the key to success of BOPP films in recent years. However, there is still room for improvement. If we look at packaging films, further benefits can be achieved in three areas where Taghleef Industries has always been involved:

» Thickness reduction » Density reduction » Improved performance (i.e. barrier ﬁlms, improved seal integrity ﬁlms)

THICKNESS REDUCTION

Typical thickness for BOPP films is in the range of 30! m. Thinner films, up to 15µm, are available for most specifications (transparent and metallised in particular) and offer plenty of opportunities for packaging weight reduction without compromising on performance. In cooperation with several top brands, Taghleef Industries Kft. has demonstrated that reducing the thickness of the package without compromising on performance (appearance, runnability, shelf life) is indeed possible.

This graph outlining the average thickness of a white voided film (LIM) typically used for in-mold labeling confirms that the average thickness has been reduced by close to 10% in the last 10 years, moving from 65 µm to 59 µm.

LIM AVERAGE THICKNESS

59 ( µm) thickness 57

55 2006 2007 2008 2009 2010 2011 2012

TABLE 13: AVERAGE THICKNESS TREND OF LIM FILM FROM 2006 TO 2012

23/ ENVIRONMENTAL REPORT A recent example is the thickness reduction implemented in potato chip bags, where several brand owners are moving from structures of 20+20 microns to 15+15 microns clear to metalized laminations, especially for the smaller bags.

DENSITY REDUCTION

BOPP terms, reducing the density means replacing plastic with air. This is possible thanks to the cavitation technology, which creates vacuoles within the film. The final result is a white opaque effect. These low- density cavitated BOPP films are commonly used for confectionery, ice cream, bakery and labels. In the early stages, the typical density was in the range of 0.75 g/cm³. Thanks to recent developments in master batches and extrusion technology, 0.62 g/cm3 density has become the standard, and 0.55 g/cm3 is just around the corner, one step closer in the direction of doing more with less.

IMPROVED PERFORMANCE

A very important function of packaging is preservation of the quality of the product. When it comes to food packaging, this means providing the conditions which allow the longest shelf life. Such conditions depend largely on the kind of food we are packing: they can be moisture barrier, gas barrier, light protection, aroma barrier, seal integrity, or a mix of these. Each food has its own requirements. Improving shelf life means optimizing distribution and minimizing food waste. Once again, it’s all about ﬁnding the right balance between environmental costs of packaging versus the beneﬁts of longer shelf life.

The ﬁrst steps taken in this direction by Taghleef Industries Kft. have been the development of high barrier metallised ﬁlms and improved seal integrity for tight seals.

ENVIRONMENTAL REPORT / 24 6. ENVIRONMENTAL IMPROVEMENT

6.1 Targets already achieved

The list below summarizes some of the most important targets achieved during the past years to reduce environmental impacts, mainly related to energy and water consumption rates.

2003

Installation and start up of the new Line IV. The product energy consumption indicator is lower with the new Line IV than with the Line III. 2005

Installation and start up of the Metalliser II The product energy consumption indicator is lower with the new Metalliser II than with the Metalliser I. 2008

» In Line IV, we replaced the water outﬂow system in order to avoid excessive water loss. As a consequence this investment permitted the reduction of ion-free water consumption.

» We substituted the ﬁrst paper core trim-rewinding system with an automatic rewinding device system

» and consequently the paper core consumption was reduced. 2009

The Line III tandem main melt extruder screw was replaced with a larger diameter extruder screw. This resulted in a 2% increase in the annual efficiency with regard to the use of raw materials.

25/ ENVIRONMENTAL REPORT 2010

A leakage sensor for the McQuay coolers was installed which could identify gas leaks in the case of breakdowns and prevent the escape of CHG and ozone depleting gases into the atmosphere

2011

» We arranged a new investment in Line III regarding the substitution of the main extruder with a twin- screw system. Due to this upgrade, further improvements regarding the efﬁciency and production output were obtained.

» We substituted the second paper core trim-rewinding system with an automatic rewinding device system and consequently the paper core consumption was reduced.

» We began to substitute the existing lighting system with new energy-saving ones in Line III.

2012

» The substitution of the lighting system with new energy-saving ones in Line III was completed. This reduced energy consumption by 15%.

» A modern technology LAEM re-slitter was installed which reduced energy consumption by 10% compared to the previous equipment. This new re-slitter also has an automatic edge trim spooler system which further reduced the consumption of paper cores. A modern technology re-slitter equipment LAEM type was installed, which brought a reduction in the

consumption of energy by 10 % compared to the similar type of re-slitter. This new re-slitter also has a n automatic edge trim spooler system, which enables to reduce the consumption of paper-cores.

ENVIRONMENTAL REPORT / 26 6.2 Future targets

The list below details the short term objectives deﬁned by Taghleef Industries Kft. in accordance with the 2020 environmental strategy.

Reduction of ELECTRICITY consumption rates – informatics hardware improvement Objectives Deadline Economic resources

Replacing 16 of the plant production computers and updating the server system (energy consumption 30.09.2013 165.000 " 9 Wh per computer instead of 140 Wh)

Undertaking an energy reduction analysis regarding feasible technical improvements for Line IV 31.12.2013 5.000 "

Reduction of WOOD consumption – repurchase of sideboards Objectives Deadline Economic resources

Reducing sideboard wood consumption by 5%, by repurchasing them from customers 31.12.2013 2.000 € (~1000pieces/month)

GHG Objectives Deadline Economic resources

Developing LCA and Carbon Footprint of products studies 31.12.2013 9.000 "

27 / ENVIRONMENTAL REPORT 7. CERTIFICATIONS

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Since 2006 Taghleef Industries Kft. RSHUDWHVZLWKDQLQWHJUDWHGDQGFHUWL¿HG4XDOLW\(QYLURQPHQW+\JLHQH 2FFXSDWLRQDO+HDOWKDQG6DIHW\Management System.

CERTIFICATION Since

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ENVIRONMENTAL REPORT / 28 8. GLOSSARY

Biochemical Oxygen Demand 5 (BOD 5) Biochemical oxygen demand refers to the amount of dissolved oxygen consumed in 5 days by aerobic biological organisms in a body of water in order to break down organic material present in a given water sample at a certain temperature.

BRC/IoP Standard BRC/IoP Standard refers to the Hygiene Management System. It has been deﬁned after extensive consultations between the British Retail Consortium (BRC), the Institute of Packaging (IoP), packaging suppliers, food manufacturers and third party certiﬁcation bodies. It includes binding standards for suppliers of food packaging materials for primary food packaging.

BS OHSAS 18001:2007 It is a British Standard for Occupational Health and Safety Management systems. Its aim is to help all kinds of organizations to put in place demonstrably sound occupational health and safety performance.

Carbon Footprint of a Product (CFP) It is the sum of greenhouse gas emissions directly and indirectly related to the entire life cycle of a product. It is based on a LCA methodology and it is normally expressed as quantity of CO2 equivalent.

Chemical Oxygen Demand (COD) Chemical Oxygen Demand is the standard method for indirect measurement of the amount of pollution (that cannot be oxidized biologically) in a sample of water. It follows a procedure based on the chemical decomposition of organic and inorganic contaminants, dissolved or suspended in water. The resulting data indicate the amount of water-dissolved oxygen (expressed as parts per million or milligrams per liter of water) consumed by the contaminants during two hours of decomposition from a solution of boiling potassium dichromate. The higher the chemical oxygen demand, the higher the amount of pollution in the test sample.

29 / ENVIRONMENTAL REPORT Hazard Analysis and Critical Control Points Method (HACCP Method) The Hazard Analysis and Critical Control Points System identiﬁes, evaluates and controls hazards which might result in consumers receiving harmful food products.

ISO 9001:2008 ISO 9001:2008 sets out the criteria for a quality management system and is the only standard that can be veriﬁed through internal audits. Following this procedure, an organization checks how its quality management system is working and may decide to invite an independent third part body to certify that it is in conformity to the standard.

ISO 14001:2004 ISO 14001:2004 specifies the requirements for an environmental management system to enable an organization to develop and implement a policy and objectives which take into account legal requirements and other requirements to which the organization subscribes, and information about significant environmental aspects. It applies to those environmental aspects that the organization identifies as those which it can control and those which it can influence. It does not itself state specific environmental performance criteria.

Life Cycle Assessment (LCA) Life Cycle Assessment is an examination of the environmental performance of products and services throughout all phases of their lifecycle: from the extraction of raw materials, to manufacturing, transportation and distribution phases, carrying on with use, re-use, maintenances stages and ﬁnally focusing on recycling and disposal. The methodology is based on the ISO 14040 series. Even if it analyzes several phases, it usually does not include social impacts.

Tonne (s) of Oil Equivalent (TOE) Tonne(s) of oil equivalent is a normalized unit of energy. By convention it is equivalent to the approximate amount of energy that can be extracted from one tonne of crude oil. It is a standardized unit, assigned a net caloriﬁc value of 41 868 kilojoules/kg and may be used to compare the energy from different sources.

ENVIRONMENTAL REPORT / 30 Taghleef Industries Kft. P.O. Box 259 H-3581Tiszaújváros (Hungary) Tel.: +36 49 888 401 Fax: +36 49 888 434 Email: staff.hu@ti-ﬁlms.com www.ti-ﬁlms.com

With the support of:

Aequilibria di Pernigotti Daniele Via F.lli Rosselli, 25 36050 Quinto Vicentino (VI) – Italy Tel: +39 0444 355156 Fax: +39 0444 355156 Email: [email protected] www.aequilibria.com

31 / ENVIRONMENTAL REPORT