SUSTAINABILITY REPORT OF OBOLON CORPORATION 2014 © Obolon Corporation page 2 SUSTAINABILITY REPORT OF OBOLON CORPORATION CONTENTS annual REPORT 2014 CORPORATION ECONOMICS 3 KEY FACTORS IN 2014 34 FINANCIAL AND ECONOMICS RESULTS 6 STATEMENT FROM THE PRESIDENT 35 PRODUCTION INDICATORS 7 SOCIAL MISSION 36 EFFICIENT ACTIVITY 8 REPUTATION 39 RISKS 9 BUSINESS OPERATIONS STANDARDS 11 CORPORATE STRUCTURE 12 CORPORATE MANAGEMENT ENVIRONMENT 13 STAKEHOLDERS 43 EFFICIENT USE OF RESOURCES 46 WASTELES PRODUCTION PRODUCTION 18 BRAND PORTFOLIO SOCIETY 19 MANAGEMENT SYSTEM 49 DEVELOPMENT OF REGIONS 20 INNOVATIONS 57 PROMOTION OF SPORTS 21 TECHNOLOGIES 58 EDUCATIONAL PROJECTS 58 SPONSORSHIP AND VOLUNTEERING PEOPLE 59 SUSTAINABLE DEVELOPMENT PLANS FOR 2015-2016 23 WORKING ENVIRONMENT 60 ABOUT REPORT 25 LIFE AND HEALTH 61 TABLE OF GRI INDICATORS 28 ETHICS AND EQUAL RIGHTS 62 CONTACTS 30 PERSONNEL DEVELOPMENT 31 INCENTIVES AND MOTIVATION © Obolon Corporation page 3 SUSTAINABILITY REPORT OF OBOLON CORPORATION KEY FACTORS IN 2014 annual REPORT 2014 28% women in the structure of corporation’s in ТОP-20 employees largest employers 32% women of agribusiness in the management structure 5680 of the corporation employees 229 employees with special needs 70 employees regular blood donors +5% growth of net income UAH UAH 1,2 billion UAH paid taxes 13,9 millions 4 698 financial assistance average salary UAH 732 millions for employees at the corporation’s paid excises enterprises 93,05 million dal 24,6 beverage produced thousand hours the average duration 16 214 million units of employee training hours of preforms released company the average duration of professional training © Obolon Corporation page 4 SUSTAINABILITY REPORT OF OBOLON CORPORATION KEY FACTORS IN 2014 annual REPORT 2014 ECOLOGY FINANCE PROJECTS –27% UAH 10 millions 445 thousand — natural gas consumption — investments in own production liters of beverages for sponsorship and charity 197 LED-lamps UAH 3,63 millions installed — investments in health and safety 314 students passed educational and industrial solid fuels UAH 2,5 millions practice 2 — investments in sponsorship and charity boilers at the regional enterprises 124 812 UAH 3,3 millions — investments in local communities persons visited Obolon brewery –3 tons development — reduced emissions to the atmosphere 39,7 thousand UAH millions 3,2 calls received on the Hotline — less СО emissions — support the military forces –19% 2 42% employees 95,2% passed training and testing on labor — proper recycling and reuse of waste protection © Obolon Corporation CORPORATION page 6 SUSTAINABILITY REPORT OF OBOLON CORPORATION STATEMENT FROM THE PRESIDENT annual REPORT 2014 Dear partners, colleagues and consumers! I hereby present you the seventh non-financial report on sustainable development of Obolon Сorporation. This document is prepared based on the records of corporate structures (except for Sevastopil plant located at the occupied territory of the AR Crimea) during 2014. During this period the company continued the communication of the previous GRI Report version 4. The reporting year became a year of changes and challenges for each of us. Unstable macroenvironment, the fervor of the military conflict and loss of certain territories impacted both on the activities of the corporation and approaches to our responsibilities. As the largest Ukrainian manufacturer, Obolon did not stand aside the crucial events in the country. We continue to invest in the national economy, people, environment, culture and sports. From the beginning its work on the Ukrainian market, Obolon clearly set its social priorities. They remain unchanged to this day. The corporation cares about its staff, is thoughtful regarding the environment, supports local communities and develops culture and sports in Ukraine. However, events which occurred in the country over the last year have shifted the social accents in the work of the company. We have reconsidered communications with key stakeholders, having enhanced the dialogue with the state, law enforcement structures and volunteer organisations. In spite of the difficult situation in Ukraine and the unstable macroeconomic environment, sustained development is key to a common future. We continue building relations of trust and mutual understanding with all stakeholder groups. And these steps are reciprocated. For 35 years of operation, Obolon remains a responsible employer, reliable partner and transparent market player. Time has not broken us but only prepared us for further events and challenges. And I know that we will make it. Today Obolon presents the seventh Social Progress Report of the Corporation. The number seven is seen as a starting point for success and extraordinary luck. I hope that with joint efforts of business, the state and society Ukraine will become a strong and independent European country. Oleksandr Slobodian President of Obolon Corporation page 7 SUSTAINABILITY REPORT OF OBOLON CORPORATION SOCIAL MISSION annual REPORT 2014 Sustainable development for Obolon Corporation is not only a factor SUSTAINABLE DEVELOPMENT of effectively work, but the component of responsible behavior to employees, community and environment. OF THE CORPORATION PEOPLE SOCIAL MISSION Employees are the key asset of the corporation, forming a special produce useful and safe drinks with caring for people and labour culture and distinguishing Obolon from its competitors. responsibility for environment ECOLOGY SOCIAL GOAL Minimal environmental impact of the company is secured by recycling balance of economic, social and environmental benefits by and reuse of resources and energy efficient technologies. integrating sustainable development and corporate interests LOCAL COMMUNITIES PHILOSOPHY OF SUSTAINABLE Community support in the regions where corporate companies operate DEVELOPMENT is the basis for mutually beneficial cooperation. «Good deeds for many years» CULTURE AND SPORT Investing into the development of the cultural environment, Obolon contributes to supporting authentic Ukrainian traditions. © Obolon Corporation page 8 SUSTAINABILITY REPORT OF OBOLON CORPORATION REPUTATION annual REPORT 2014 5680 Ukrainian beer market billion 25,3% Obolon Corporation’s share UAH 3,19 people employed sales revenue 1590 women Every fourth bottle is produced by Obolon corporation 1818 engineers UAH 1,27 billion Beers exports from Ukraine total tax and duty payments 64,5% Obolon Corporation’s share 229 employers with special needs UAH 10 million social investments 3 of 4 bottles of export beer is produced by Obolon corporation See © Obolon Corporation page 9 додаток 1 SUSTAINABILITY REPORT OF OBOLON CORPORATION СТАНДАРТИBUSINESS OPERATIONS ВЕДЕННЯ БІЗНЕСУ STANDARDS annual REPORT 2014 VALUES OF OBOLON CORPORATION Quality Professionalism Safety Effectiveness Team spirit Focusing on producing Well-coordinated and skilled Responsibility for Considerable output of Single «family» drinks compliant with work of the employees. life and health of environmental and industrial of like-minded people high standards of quality employees and safety activities. with common values and safety. consumers. © Obolon Corporation page 10 SUSTAINABILITY REPORT OF OBOLON CORPORATION BUSINESS OPERATIONS STANDARDS annual REPORT 2014 COMPONENTS OF RESPONSIBLE WORK – respecting one’s competitor – respecting the rules of business and decisions of the authorities Code of ethics See – avoiding unfair competition Gender Plan See – equal chances for success National legislation International law 10 UN Global Compact fundamentals See – provisions on labour rights, responsibilities Market «fair play» of the employees and labour relations – provisions on the choice of suppliers Anti-bribery policy of goods, works and services Responsible procurement See – provisions on contractual work in the corporation Responsible marketing – ‘Consume Responsibly’ programme See – No beer sampling in trade networks and sales outlets – Warnings on drinks labels – Product portfolio includes non-alcoholic beer © Obolon Corporation page 11 SUSTAINABILITY REPORT OF OBOLON CORPORATION CORPORATE STRUCTURE annual REPORT 2014 2 3 8 9 1 OBOLON ARENA Sport and health complex Kyiv 7 MAIN PLANT Public Joint-Stock Company Kyiv 1 3 manufacturing10 KRASYLIVSKE Okhtyrka Brewery plants throughout Subsidiary 4 ZIBERT’S BREWERY Public Joint-Stock Company Krasyliv, Kmelnytsky region 2 Okhtyrka, Sumy region Subsidiary Ukraine Fastiv, Kyiv region DIATKIVTSI Private Joint-Stock Company 8 Kolomiya, Ivano-Frankivsk region OBOLON AGRO Limited Liability Company 5 6 4 7 MALTING PLANT 9 Remote enterprise Chemerivtsi, PRODUCTION COMPLEX Khmelnytsky region BERSHAD Remote enterprise COMPLEX Olexandria, Kirovograd region Private Joint-Stock 6,000 Company employees of all Bershad, Vinnytsia region structures 5 +3,000 Sales Representatives Beer Brewer’s grains Malt Sevastopol Soft Drink Low-Alcohol Drinks Plant Soft Drinks Snacks Public Joint-Stock Company Raising cattle and pigs Sevastopol, Crimea Mineral water Agriculture PET-processing Recycling Packaging band 6 © Obolon Corporation page 12 SUSTAINABILITY REPORT OF OBOLON CORPORATION CORPORATE MANAGEMENT annual REPORT 2014 SENIOR MANAGEMENT Oleksandr Slobodian Ihor Bulakh Serhii Bloshchanevych President of the Corporation CEO Chairman of the Supervisory Board, «We live in rather interesting but difficult times. «There are many of manufacturers in Ukraine Director for Personnel and Welfare Today Ukraine faces serious challenges of loss today that produce high-quality goods and «People