00

table of contents

01 Letter from CEO 4

02 TDR 2009 – A CREATIVE BLEND

OF INNOVATION AND TRADITION 10

03 ECONOMIC IMPACT INDICATORS 16

04 SOCIAL IMPACT INDICATORS 18

05 ENVIRONMENTAL IMPACT INDICATORS 34

06 Plan for 2011 61

4 Letter from CEO

01
Letter
from
CEO
Philosophy and vision for the management and development
of new values by the principles of sustainable development

Dear customers and business partners,

 
Since the inauguration of our new factory in Kanfanar three years ago,
when our large investment clearly confirmed our status of the biggest
regional cigarette producer and exporter, Tdr has faced many challenges.
And these were by no means small. In the times of the economic crisis,
business challenges in all industries are multiplying and becoming
more complex.

Tobacco industry, however, is specific in many ways, rendering the unfa-

vourable market trends even more pronounced due to the increasing tax
burden, liberalization of the market and legislative novelties restricting
advertising and consumption of tobacco products.
 
Faced with this situation, Tdr has been responding to the challenges
by continuous innovation, improvement of organization and strength-
ening of networking with all interested stakeholders through social
responsibility in business. Sustainable development is the dominant
philosophy to be recognized by every economic player in the global
economy wishing to maintain the balance between usage, saving and
renewal of all resources and understanding that the generations of
the future will greatly depend on what we do today. Also, sustainable
Letter from CEO 5

development is not a passive state, it is a changing process and only

those who understand this essential evolution can follow the path
of development.
 
For many years Tdr has been one of the leading Croatian exporters
and this position was additionally strengthened by the launch of the
construction of a 30 million euro factory in Iran. More than 50% of our
sales are already realized in foreign markets, whereas in our immediate
neighbourhood of southeast Europe Tdr is the leading cigarette pro-
ducer with a market share of over 25%. It is with pleasure that I point
out that our exporting success has been recognized in the Croatian
business environment, which is confirmed by the Zlatni ključ (Golden
Key) award for the best Croatian exporter to Bosnia and Herzegovina.
Another extremely important element is to maintain strong connec-
tions with the local community, and we are thus particularly proud of
the fact that we have won three consecutive Kristalna plaketa (Crystal
Plaque) awarded by the Croatian Chamber of Economy – The Pula
County Chamber as the most successful Istrian company in the large
companies category.

 This year, Tdr made a big technological step into virtual reality with
Ronhill Unlimited, the first tobacco brand to introduce QR technology
and interactive packaging as a revolutionary combination of design and
technology. We thereby confirmed our eagerness not only to confront
market changes but also to be the pioneers of new trends.

In the domain of environmental protection and protection of natural

resources, we made a significant step by switching to polypropylene
wrapping in cigarette carton packaging. We now use 1,000 tons of
cardboard less and have reduced the pollution of almost 9 million litres
of water. At the Tdr plants we always aim at responsible management
of all conditions of production and at increasing the degree of usability
of energy and raw material, thus reducing to the minimum the impact
our activities have on the environment.
Letter from CEO 7

In the times when cigarettes and the consumer’s right to freedom of

choice are the subjects of numerous discussions, Tdr as a socially re-
sponsible company abides by the laws. I would like to point out our
Business Principles and the texts on our web site instructing on how
to recognize illegal sale and counterfeiting.

The essence of Tdr management philosophy is reflected in everything

we do. We always strive to be one step ahead, to create new values in
line with the customers’ expectations and with the development of
production technology. Tdr boldly creates its own vision, determined,
with constant innovation, to remain a company in which all intercon-
nected interested parties – stakeholders, customers, employees, the local
community – are truly proud of the brand of the company to which
they belong and which belongs to them.
 
In our work we endeavour to contribute to the overall economic devel-
opment of Croatia and to the creation of new values for the Croatian
economy and the Croatian citizens. Tdr disposes of immense capital in
knowledge, skill and work habits of over 800 of its employees. Armed
with this capital, I have no doubt that we will know how to respond to
the challenges lying ahead.
 
Davor Tomašković,
Tdr ceo
10 Tdr 2009 – A creative blend of innovation and tradition

02
TDR 2009 –
A CREATIVE BLEND
OF INNOVATION
AND TRADITION
From a great past to a brighter future,
“from seed to smoke”

Tdr is one of the leading Croatian companies with over 600 employees
and 138 years of tradition. Founded as a small cigar plant for Austrian-
Hungarian Empire officers, to this day Tdr has grown into the leading
national and regional manufacturer and exporter of tobacco products.
The company seat is in Kanfanar near Rovinj, where a brand new fac-
tory was built in 2007, as a big step forward in the strengthening of the
Tdr market position.

02.01 COMPANY PROFILE

Tdr is part of the vertically integrated “from seed to smoke” system, also
including Hrvatski duhani d.d., iNovine d.d., Istragrafika d.d., Adista
d.o.o. and Rovite. Each company plays its own role in the process of
tobacco growing and processing, as well as in the distribution of to-
bacco products.The Hrvatski duhani core business is tobacco production,
processing and sale, whereas Tdr deals in the production and distribution
of final tobacco products. Istragrafika manufactures tobacco products
packaging and iNovine is a specialised retail chain. Rovite ensures the
presence of Tdr products in the major markets and takes care of product
distribution and communication with customers and business partners.
Tdr 2009 – A creative blend of innovation and tradition 11

All of the above companies are part of Adris grupa joint stock com-
pany for management and investment. Adris grupa is one of the most
successful Croatian companies comprising, along with tobacco manu-
facturing plants, a very successful tourism corporation Maistra and a
health food manufacturer Cromaris. It has grown on the foundations
of the Tdr business experience with the aim of creating a company that
would enable maintenance and growth of the existing stock capital and
of keeping the leading market position.

02.02 Company business particularities

State-of-the-art technology and efficient production, highly qualified

management and dynamic new product development policy – these are
but few of the advantages used by Tdr to achieve its business goals and
to maintain its leading position. Tdr has been successfully satisfying the
needs of the modern consumer by continuing to offer superior innova-
tive products. Production is aligned with Croatian and European Union
legislation, with particular attention given to the highest environmental
protection standards.

02.03 Product portfolio

Tdr has developed a wide range of its product portfolio in line with
business trends set by the world’s largest tobacco products manufactur-
ers. Consumers in fifteen countries are offered 10 brands and 33 products.
Tdr 2009 – A creative blend of innovation and tradition 13

02.04 Markets

Tdr is the leading cigarette producer in the regional market, holding a

market share of 80% in Croatia, 38% in Bosnia and Herzegovina, and
more than 25% in the entire area of Eastern Europe. Tdr has its own
companies in all countries of the region. Strongly export-oriented, Tdr is
present in the other European markets as well and has also been develop-
ing a sales network in the countries of the Middle East. Tdr products
can be found in the Czech Republic, Spain, Italy, Germany and Austria.

02.05 Tdr’s Management Board

Tdr’s Management Board members

Davor Tomašković - ceo

Josip Lozančić - CFO
Ivan Leko – Board Member for Operations
Maja Đemidžić – Board Member for R&D
16 Economic impact indicators

03
ECONOMIC
IMPACT
INDICATORS
A brief overview of company affairs
in big numbers

Tdr has annual revenue of over 230 million euros and annual profit of
over 70 million euros.

Tdr is the leading cigarette manufacturer in the regional market, with

a market share of 80% in Croatia, 37% in Bosnia and Herzegovina and
more than 25% of the regional market with the total consumption of
cigarettes at more than 45 billion.

Tdr is a strongly export-oriented company, present in prominent

European markets such as Germany, Spain, Italy, Austria, the Czech
Republic and Slovakia and has been developing its sales network in
the countries of the Middle and Far East as well. A significant step
forward was made by the launch of sale and distribution of cigarettes
in the Iranian market, as well as by initiating activities in a cigarette
manufacturing project in Iran, in cooperation with a local partner (Ira-
nian Tobacco Company – Itc).

Business results have been significantly affected by the abrupt changes

of tax legislation in the most important markets for Tdr, causing the
excise tax in Croatia to rise by an average of 25%, resulting in a signifi-
cant increase of retail prices, a drop in the consumers’ buying power
and the shift of the demand towards the lower price segment, namely
a drop in cigarette production and sales. After the changes in Croatia,
Economic impact indicators 17

the biggest impact was felt from the new excise tax regulations in Bosnia
and Herzegovina and in Serbia with similar trends detected in the
other regional markets.

Tdr sales in 2009, directly or through affiliated companies, amounted

to 12.5 billion cigarettes, resulting in net profit for 2009 in the amount
of 471,642,095.69 kunas, which is by 16.1% less than in the previous year.

One of the most significant business events in 2009 was the signing
of the agreement between Tdr and Iranian Tobacco Company (Itc),
formalizing the expansion of cooperation and the launch of production
as an important step for Tdr on the Iranian market.

Due to further increase in already heavy tax load and to the ban of
smoking in public areas coming into force pursuant to the Act on the
Restriction of the Use of Tobacco Products, the shrinking market trend
is expected to continue.

Along with the adjustments of the Croatian legislation and its harmo-
nization with the European Union legislation, there have been con-
stant legislative changes in other Tdr’s markets as well. The company
continues to invest in quality products and in cutting edge cigarette
manufacturing technology with the aim of meeting the needs and
demands of our customers and of acquiring greater flexibility in the
context of constant and swift changes in legislation.
18 Social impact indicators

04
SOCIAL IMPACT
INDICATORS
Satisfied employees are every company’s
most valuable product

04.01 Human resources

04.01.01 Employment

When employing new staff at Tdr particular attention is paid to profes-

sional and other qualities of each individual. Education and experience
is assessed, as well as proactive personality and the desire for learning
and personal development.

On 31 December, 2009, Tdr had 647 employees, 537 in Croatia and 110 in
other countries. On the same date, Istragrafika was employing 162 per-
sons, Adista 132, and Hrvatski duhani 261 persons. This amounts to the
total number of 1,202 persons employed at Tdr on 31 December, 2009.

04.01.02 Training, education, scholarships

Tdr education programmes consist of four modules. Education pro-

grammes are presented by in-house experts, as well as by experts from
Croatian and foreign professional training and vocational education
institutions.

Basic Module is aimed at all employees, stressing the specific require-

ments of each position. It includes foreign language courses, basic
Social impact indicators 19

computer skills and elementary skills such as communication, pres-

entation skills, efficient time management and conflict management.

Professional Knowledge Development Module is aimed at specific

groups of employees and it includes programmes in domestic and
foreign educational and professional training institutions. It covers the
areas of brand management, development of sales skills, technological
and engineering professional knowledge, finance, law and other work-
specific programmes.

Managerial Skills and Knowledge Development Module is aimed

at managers in order to improve their skills, as well as at employees
not holding leading positions but identified as potential future man-
agers. The module programmes include leadership, human resource
management, change management, project management and mba/
postgraduate studies.

Interns Development Module is activated in several year intervals,

with the target group of recently employed highly educated experts.
The module includes a working experience programme by circulating
through various organizational units, professional education with in-
house renowned experts and the selection of the desired area of work
(and eventually specialization).
22 Social impact indicators

04.01.03 Management-employee relationship

All matters regarding the status of the employees are discussed with
union and workers’ council representatives and this communication has
been continuous and successful. In addition, the Management Board
gives to the employees a quarterly presentation of the results and all
important information in order for the employees to be familiarized
with business dealings. This is two-way communication in which em-
ployees are able to put questions directly to management representatives.

04.01.04 R espect for human rights

and employee rights

Tdr aims for the highest level of the respect for human rights and
employee rights. We strictly abide by the legal standards relating to
employees and the treatment of employees, as well as by all the provi-
sions of the signed Collective Agreement.
Social impact indicators 23

04.02 Science and education

04.02.01 Scholarships

As part of Adris grupa, Tdr contributes to Zaklada Adris - the Adris

Foundation, the largest corporate foundation in this part of Europe.
Along with having provided the initial capital, Adris grupa earmarks
an annual one percent of profit for the Foundation programmes. Since
its beginnings, the Foundation has allocated a total of 17 million kunas
in four donation cycles. Approximately 3.2 million of this amount was
given to exceptional pupils and students. In 2010, the Foundation ear-
marked 555,000 kunas for 23 scholarships in its fourth donation cycle.

04.02.02 Donations

Wishing to support and promote excellence in education, encourage

competitiveness and acknowledge the best, the Adris Foundation gave
a 100,000 kuna award to the gymnasium whose pupils had been found
by the National Centre for External Evaluation of Education as hav-
ing had the best results in the 2010 state high school graduation exam.
Also, the pupil with the best result in the 2009/2010 state high school
graduation exam was awarded.
24 Social impact indicators

04.03 Investing into community

04.03.01 Donations in the community

Along with providing 23 scholarships, the Adris Foundation supported

29 projects and 30 donations this year. 740,000 kunas was donated to five
projects from the Knowledge and Discoveries programme, and 464,000
kunas to 11 projects from the Creativity programme. 721,000 kunas was
donated to 13 projects from the Ecology and Heritage area, and 425,850
kunas to 30 donations from the Kindness programme.

In the previous four donation cycles, the Foundation has donated

17 million kunas. This included 4 million kunas for 34 projects from
Knowledge and Discovery and 2.3 million kunas for 33 projects from
the Creativity segment. The Adris Foundation donated 3.7 million
kunas to 32 projects focusing on the promotion and protection of en-
vironment and heritage, whereas 3.8 million kunas was donated to the
Kindness projects.

04.04 Care for employees

04.04.01 Activities involving employees

Since 2007, six blood donation events have been organized at Tdr. One
such event took place in 2007, two were held in 2008, and three in the
course of last year. In late 2007, a humanitarian event was organized by
Zaklada “Ana Rukavina”, the Ana Rukavina Foundation, with partici-
pation of Tdr’s employees.
Social impact indicators 25

04.05 Health and safety

04.05.01 Safety at work management

and implementation

Safety at work is an integral part of work and work process organization

and it is established by the independent safety at work department. It is
being implemented pursuant to legislation and adopted safety at work
regulations with the aim of improving safety and health of employees,
preventing injury at work and vocational and other diseases as well as
protecting the work environment.

An assessment study of life-threatening danger and health risks at a

workplace has been made in order to prevent or mitigate any danger.
Employees are trained in a safe manner, installations are checked, as
well as microclimate conditions, light and noise intensity in work posts
and the functionality of machines and appliances.

04.05.02 Fire protection, evacuation and

rescue, first aid and medical aid

Tdr has been authorized by the Ministry of the Interior to train citizens
in applying preventive measures for fire protection, fire fighting and res-
cuing persons and property under threat from fire.Training is individual
for each employee and the programme is prescribed by special rules of
procedure. In addition, 33 employees have passed a special programme
for professional fire fighters.
30 Social impact indicators

04.05.03 P rotection of non-smokers, ban of

consummation of alcoholic drinks
and other addictive substances

Specific areas at Tdr are designated and adequately marked smoking

areas. Non-smoking employees can take their break in areas designated
as “relax rooms”. Bringing in and consummation of alcoholic drinks and
other addictive substances at Tdr premises is strictly forbidden. As part
of safety at work training, employees are duly informed of the harmful
effects of alcoholic drinks and addictive substances and of their effect
on work capacity. There are regular checks for traces of alcoholic drinks
or other addictive substances.

04.05.04 S upervision of protective

measures application

Internal supervision of the application of the prescribed and introduced

protective measures for safety at work is conducted in line with the
provisions of the Tdr Safety at Work Regulations by the Management,
employer’s authorized representative, immediate authorized representa-
tives and the safety at work department.

04.05.05 Medical checks for employees

Prior to employment, all employees undergo a medical examination at a

vocational medicine centre. Employees working under specific working
conditions (work at heights, forklift drivers, electricians, steam plant
operators, etc.) undergo regular periodic health checks at a vocational
medicine centre.

The first preventive blood pressure and glucose control was organized
in 2008, and was expanded to include preventive cholesterol and trig-
Social impact indicators 31

lyceride controls in 2009. Two such examinations were organized in

2010, as well as preventive bone density testing.

04.05.06 Work post adaptation and

working conditions improvement

Tdr adapts work posts and improves working conditions in the fol-
lowing manners:
»» all work posts are ergonomically adapted to employees, reducing effort at
performing work tasks to the minimum
»» working areas are aerated, with a pleasant temperature maintained
throughout the year
»» employees are equipped with the required personal protective equipment
»» employees working with computers undergo specialist medical exami-
nation and are provided with corrective glasses or contact lenses and
foot stools

04.05.07 Injury at work

In case of injury at work, a meeting is held between the authorized

representative of the employer, the safety at work expert, the immediate
superior of the injured employee and the employees’ representative to
determine the cause and manner in which the injury has been inflicted,
to consider the results obtained and to find a suitable solution in order
for this type of injury to be avoided in the future.
34 Environmental impact indicators

05

ENVIRONMENTAL
IMPACT INDICATORS
Successful companies are always green

05.01 Environmental management system

Iso 14001:200

The state of ecological systems and of the environment at large is a glo-

bal problem. Aware of its scope and wishing to maintain and adequately
manage environment, Tdr relies on the Environmental management
system Iso 14001:2004 which is a new generation environmental pro-
tection instrument.

The Iso 14001 standard family is the framework within which Tdr
establishes, manages and enhances its environmental management
system, protecting its interests and its environment in the best possible
way. The basic principle of the environmental management system
is continuous improvement of management results. Tdr applies the
Pdca (Plan-Do-Check-Act) model, enabling the establishment and
assessment of the efficiency of activities, policy and goals, as well as
their mutual harmonization.

05.01.01 Environmental system

management policy

As the leading regional cigarette producer, aware of its role and respon-
sibility in its environment and aiming at protecting the environment
Environmental impact indicators 35

and natural resources, Tdr introduced Environmental policy, obliging

the company Management Board to be responsible and professional
in managing all aspects of production processes, products and services,
thereby mitigating negative environmental impacts. With the aim of
implementing this Policy, the Board also undertakes to ensure organiza-
tional, professional and financial resources enabling operations accord-
ing to the principles of sustainable development. There is an ongoing
cooperation with the local community and wider community to ensure
the conditions for environmental protection at company locations as
well as to raise awareness of the employees of the need for environ-
mental protection. Through the application of environmentally friendly
materials and technologies, the detrimental effects on the environment
are mitigated, the usability of energy and raw material is increased, and
amounts of waste are reduced through waste management. Particular
attention has been given to investments into sustainable growth of
production by satisfying economical, social and esthetical needs without
posing a threat to natural and cultural heritage.

The Policy is available to the general public and has been implemented
since the date of signing.

05.01.02 Planning

05.01.02.01 Environmental aspects

Tdr has identified 156 environmental aspects which can have an envi-
ronmental impact through our own actions, such as the pollution of
soil, water, air and work environment. A comprehensive evaluation has
revealed 59 significant aspects that have or could have considerable
impact on the environment in which Tdr operates. These are being
followed, monitored, controlled and revised annually.
36 Environmental impact indicators

05.01.02.02 Legal requirements

Tdr has established and is maintaining a procedure with the purpose of

identifying, approaching, applying and communicating legal and other
requirements applicable to all environmental aspects in the company.
Legal and other requirements are followed on the state and local govern-
ment and self-government levels, applicable to the entire organization.
The legal regulations applicable to Tdr are those in the areas of environ-
mental protection, protection of waters, waste management, air protection,
noise protection, handling of dangerous substances and fire protection.

05.01.02.03 Goals and programmes

General and individual goals are determined taking into account the
relevant aspects of the environment, legal and other requirements, tech-
nological possibilities, financial and business plans and opinions of the
interested parties.

General goals:
»» permanent improvement in environmental protection by introducing
new technologies
»» reducing amounts of waste
»» protection of natural resources and efficient energy use
»» harmonization with legal requirements
»» education of employees.

Individual goals reached in 2010:

»» reduction of the FT (flip top) box polypropylene wrapping
»» reduction of the inner frame grammage
»» replacement of display carton cardboard packaging
»» introduction of reusable absorbent materials system
»» obtaining the concession for the management of the Kanfanar
municipality public sewage system.
Environmental impact indicators 37

05.01.03 Application and operation

05.01.03.01 Resources, roles, responsibility

and authority

The roles, responsibilities and authorities in the environmental man-

agement system have been distributed at high positions and levels
within the company. Tdr’s Management Board ensures the following
resources highly relevant for the implementation and surveillance of
the environmental management system:
»» education
»» human resources
»» organizational infrastructure
»» financial means
»» technical and information services.

The Management Board has designated its environment representative

whose primary task is introduction, implementation and maintenance
of the environmental management system and informing the Board
on its achievement, including recommendations for improvement. Op-
erations in the environmental management system in all sectors are
coordinated by the environmental management coordinator who is
directly responsible to the Board environmental representative.

05.01.03.02 Expertise, education

and awareness

Tdr identifies, plans, monitors and notes requirements for education

of the personnel whose work can have a significant impact to the en-
vironment. The employees’ education plan has been made and is being
implemented at all relevant levels and positions, thereby additionally
raising the awareness of the necessity to protect the environment and
38 Environmental impact indicators

natural resources, of importance of properly managed waste and of

abiding by legal regulations. All employees have received training in
emergency procedures and are aware of possible consequences that
may ensue from failing to act as prescribed. In 2009, training was held
for 23 new employees as well as refresher courses for the Main Office
Building staff.

05.01.03.03 Communication

Tdr has established and maintains communication procedures on envi-

ronmental aspects and environmental management system. This com-
munication involves various levels and positions within the company,
as well as the interested parties outside the company. This increases
awareness, understanding and cooperation of employees in crucial en-
vironmental aspects relevant to daily and long-term activities in the
company. All interested parties are given a higher-level insight into
the Tdr’s environment aspects.

For all interested parties who happen to notice that daily Tdr operations
do not follow the adopted environmental protection principles, a free-of-
charge phone line (if calling from Croatia) has been introduced at 0800
8844,and the same can be reported online at www.tdr.hr or more precisely at
http://www.tdr.hr/en/kontakt_centar/kontakt.htm

05.01.03.04 D ocumenting the environmental

management system and
surveillance of documents
and entries

Tdr has established a procedure for managing all documents related to

the environmental management system. It has ensured creating, verify-
ing, approving, issuing, application and maintenance of all controlled
Environmental impact indicators 39

documents, availability of the existing versions and timely removal and

updating of documents.

Also set up was a list of easily available and protected entries on the
environmental management system, such as entries on education, audit
results and measuring results, reports on discrepancies, Management
Board review, inspection findings.

05.01.03.05 Supervision of work

Tdr has identified and is planning processes and activities related to

the established environmental aspects, including maintenance, waste
management, supply of environment friendly goods and services. For
the purpose of keeping asphalt surfaces clean, Tdr has invested in its
own machine, thereby cutting outsourcing maintenance costs, with the
investment paying off within 8 months.

05.01.03.06 Readiness and emergency

response

Tdr has established a procedure ensuring the system and instructions

for the identification of potential ecological accidents or emergencies
hazardous to the environment. Also established was the procedure for
implementation of emergency measures and for drawing up appropriate
operative plans for emergency response, as well as for the prevention
and mitigation of possible environmental impacts that could ensue. In
2009, the Buildings and Facilities Fire Protection Plan and Operative
Protection and Rescue Plan for the Kanfanar plant were made.
42 Environmental impact indicators

05.01.04 Verification

05.01.04.01 H armonization monitoring,

measuring and evaluation

Tdr has established the procedure for environmental management

for monitoring and measuring the crucial elements of its operations
and activities that could have a significant impact to the environment
and for the evaluation of adherence to the applicable legal and other
requirements undertaken to by the company.

05.01.04.02 N on-compliance, corrective

and protective actions

Tdr has established a procedure for defining responsibilities and

authorizations for analysis and detection of causes of non-compliance,
for assessing the necessity to undertake and implement appropriate
and necessary corrective and protective actions that will mitigate
the effects of a cause of non-compliance, and for the checking and
verifying the actions undertaken. In 2009, an internal audit found
one case of non-compliance, gave 6 proposals for improvement and
15 remarks. The external audit gave 3 requests for correction and 4
proposals for improvement.

05.01.04.03 I ndependent assessment of the

environmental management
system (internal audit)

Tdr has established a periodical evaluation system (internal audit) so

as to ensure continuous monitoring and insight into the efficiency of
the environmental management system. Internal audits of the environ-
Environmental impact indicators 43

mental management system examine a degree of implementation and

maintenance of the environmental management system, confirming
that the activities are in line with the documented procedures, plans
and instructions for work and that efficient corrective and protective
measures have been undertaken. The EMS coordinator forwards the
audit results to the Management Board representative for environ-
ment. In 2009, two internal audits were conducted, in line with Audit
Implementation Plan and Programme.

05.01.05 Management review

Two times a year, Tdr’s Management Board evaluates the environmen-

tal management system in order to ensure its continuous applicability,
appropriateness and efficiency. The Management review it, evaluate
opportunities for improvement and the necessity to change the envi-
ronmental management system, including the Environmental Policy
and general and individual goals. In 2009, two Management reviews
were made, finding that the environmental management system was
appropriate and effective.

05.02 Caring for the environment

Tdr provides professional and active care for environmental protection.

Introduction and enhancement of the environmental management
system according to the international standard Iso 14001:2004, which
is based on sustainable development, is directed toward reduction of all
kinds of pollution in the immediate and wider environment by applying
continuous improvement programmes. All environmental aspects are
documented and monitored and the programmes applied for reducing
negative environmental impacts to a minimum.
46 Environmental impact indicators

05.02.01 Reduction of waste

The Tdr plant in Kanfanar was designed and constructed in line with
the latest environmental protection findings and the following meas-
ures for the reduction of waste and harmful consequences are being
implemented:
»» education and supervision of employees performing processes resulting in
production and storage of waste
»» adhering to the technological process when working with hazardous
substances
»» permanent supervision of managers and employees in work posts where
environment pollution can occur through improper handling of hazard-
ous substances
»» obligatory waste separation and its disposal at designated sites (containers,
tanks, covered areas, etc.)
»» regular record keeping on the amounts of waste produced and taking care
of its proper storage and disposal by authorized companies.

05.02.01.01 Municipal waste management

The total amount of municipal waste produced in 2009 was approxi-

mately 24% less than the previous year. The amount of municipal waste
produced per product unit is approximately 3% higher than the previous
year. In order to cut municipal waste disposal costs in 2009, we invested
in the purchase of a new press-container with stationary press, reducing
transport costs by approximately 42%.

05.02.01.02 Non-hazardous industrial

waste management

Proper non-hazardous industrial waste management at Tdr is con-

ducted by:
Environmental impact indicators 47

»» a voiding and reducing waste production

»» separate collection into containers and temporary storage of the waste
whose valuable potential can be further exploited
»» reuse and recycling of waste whose valuable potential can be further ex-
ploited
»» handing over waste only to persons registered and in possession of a permit
for collection, reuse and/or disposal of waste
»» handing over waste to collector always accompanied by appropriate
documentation
»» keeping records.

When managing non-hazardous waste, particular attention is given to

recycling and disposal of waste through composting. By proper waste
management in 2009 the total amount of non-hazardous industrial
waste produced was by approximately 26% less than in the previous
year. Of the total amount of non-hazardous industrial waste produced
in 2009, 66.9% was recycled, 28.8% composted and 4.4% disposed at
a waste disposal site.

05.02.01.03 Hazardous waste management

Proper hazardous industrial waste management at Tdr is conducted by:

»» avoiding and reducing waste production
»» storage of waste in adequate tight containers and disposal in an adequate
temporary storage area
»» handing over waste only to persons registered and in possession of a permit
for collection, reuse and/or disposal of waste
»» ordering reports on the examination of physical and chemical character-
istics of waste only from test laboratories accredited for conducting such
examination
»» handing over waste to collector always accompanied by appropriate
documentation
»» keeping records.
48 Environmental impact indicators

A part of the hazardous waste is disposed of by thermal waste processing

in power facilities, a part is exported from Croatia by authorised waste
collectors and processors, and a part of the hazardous waste is processed
by physical and chemical procedures. Waste such as batteries is recycled.

The total amount of hazardous waste produced in 2009 is by approxi-

mately 14% less than in the previous year. The amount of hazardous
waste produced by product unit is by approximately 19% higher than
in the previous year.

05.02.01.04 Packaging waste management

Packaging waste is any packaging or packaging material residual after

the product has been unpacked and separated from the packaging, not
including production residues. Tdr product packaging is divided into
point-of-sale or primary packaging (a pack of 20 cigarettes), bulk or
secondary packaging (a carton of 10 cigarette packs) and transport or
tertiary packaging (transport case with 25-50 cigarette cartons). Packag-
ing waste produced by placing Tdr products on the Croatian market
includes paper, cardboard, multilayer packaging and polymeric materials.
The total amount of packaging waste placed on the Croatian market
in 2009 was by approximately 13% less than in the previous year. The
total amount of imported packaging waste (paper/cardboard, Fe-cans,
wood, textile, polymeric materials) in 2009 was by approximately 17%
less than in the previous year.

05.02.02 P rotection of natural resources

and efficient use of energy

On the global level, saving increases energy efficiency, reduces depend-

ence on energy import and contributes to environmental protection.
Noticing great benefits brought upon by small modifications in the
Environmental impact indicators 49

overall process is proof of good management and results in trust and

satisfaction of all parties involved.

05.02.02.01 Energy sources

By carefully managing natural resources and energy, Tdr is making

repeated efforts to reduce the consumption of energy sources. The total
consumption of electrical power in 2009 was reduced by 21%, of fuel by
28% and of water by 27% with reference to the previous year.

In 2009 Tdr conducted the project of condensate return optimiza-

tion by collecting part of industrial steam as condensate in a tank and
pumping it back into the boiler feed tank. However, when the con-
densate temperature drops, part of the energy is lost. For this reason,
programme modifications were launched for operating condensate
pumps and throttles were installed at pump and pipeline connections,
resulting in the monthly saving of approximately 88 m3 of raw water or
approximately 15,000.00 kunas per year. In addition, exterior decorative
lights and service road lights were operating in savings mode which
resulted in an annual electrical energy saving of 230,637.00 kWh or
115,000.00 kunas.

05.02.02.02 Recycled water

Protecting natural resources, Tdr treats its waste waters with an Mbr
(membrane biological reactor) waste water filter system. Once treated and
recycled, the water flows into a 25,000 m3 artificial reservoir lake. The
lake water is of excellent quality and is used to irrigate the green areas
of the factory park and surroundings on the surface of approximately
8 hectares.
54 Environmental impact indicators

05.02.03 H armonization with legal

requirements

Responsibilities and the observance of legal requirements at Tdr are

precisely determined and are conducted in a clearly outlined manner.
This procedure ensures regular monitoring and measurements of the
identified activities that can have a substantial impact on the envi-
ronment. Another purpose of this procedure is to conduct periodical
evaluation of the harmonization of the measured parameters with the
applicable legal requirements and other requirements which the com-
pany is obligated to meet.

05.02.03.01 Emissions

Tdr monitors emissions of polluting substances from stationary sources

for power plant and industrial plant facilities.

05.02.03.01.01 P ower and industrial plant

facilities (gas supply connections,
boiler room, dedusting system)

As early as in project design phase, gas supply connections were part of

the Kanfanar factory. After the gas pipeline installation in this part of
Istria, Tdr will replace the current fuel with gas, thereby additionally
reducing emissions of polluting substances.

The total installed heat power of the boilers in Tdr’s boiler room is 15
MW, and thus, pursuant to legislation, Tdr does not have to participate
in the greenhouse gas emission quota trading.

The dry dedusting system contains three filter lines through which to-
bacco particles are extracted from the production process and the filtered
Environmental impact indicators 55

air is released into the atmosphere. The same process takes place in the
wet dedusting system, only with additional humidification of air. In 2009,
emissions of polluting substances into the air from stationary sources
at wet dedusting were measured. The obtained value of emissions of
powdery substance in waste gas at mass flow rate of up to and includ-
ing 500 g/h was 92% lower than the legally prescribed threshold value.

In addition, in 2009, in comparison with the year before, the amount

of sulphur dioxide (SO2) was reduced by 27%, the amount of nitrogen
dioxide (NO2) by 39%, the amount of carbon monoxide (CO) by 41%
and the amount of carbon dioxide (CO2) by 28%, whereas the amount
of particles was reduced by 60%.

05.02.03.02 Waste water

Water management is one of the bases of successful co-existence of

man and the environment in general.

05.02.03.02.01 Industrial waste waters

»» sanitary water
»» industrial water
»» rainwater potentially polluted with mineral oil residues.

In 2009, 37% less waste water was released into the public sewage sys-
tem than the previous year. The concentrations of all other polluting
substances monitored are in line with the values prescribed in the Water
Permit. Waste water drainage is conducted through the internal sew-
age system, with separate segments for rainwater and for sanitary and
industrial water.
Environmental impact indicators 57

05.02.03.02.02 Urban waste water

Tdr has been managing the Kanfanar municipality public sewage sys-
tem since December 2007. The basic activity of Tdr as a municipal
service company and concession holder is to manage the drainage
system and the waste water filtering system (Mbr) in order to acquire
the required purified waste water parameters at the point of release, in
line with the water regulations in force. The amount of waste water
received for processing in 2009 was by 18% less than in the previous year.

05.02.03.03 Waste and waste sludge

Through the authorized test laboratory accredited for the conducting

of tests, Tdr conducts regular analyses of waste intended for physical,
chemical or thermal processing, analyses of the eluate of waste intended
for disposal and examination of sludge from the waste water purifying
devices, as well as of the sludge-treated soil. The results of the tests
conducted in 2009 were in line with the legally prescribed values.
 
05.02.03.04 Noise

Excessive noise, as a consequence of the development of modern society,

is considered to be a substantial polluter of the living environment.
Consequently, Tdr has been periodically monitoring noise levels and
undertaking various actions. One of such actions was fencing-in noise-
emitting parts of the plant with decorative “brise-soleils” which blend
in well with the surrounding area.

05.02.03.05 Ozone depleting substances

Our system cooling devices use only ozone friendly refrigerants

R134A, R404A, R407C, R22. In order to reduce the risk of system
58 Environmental impact indicators

leakage, Tdr has installed a cooling apparatus leakage detection de-

vice. In keeping with the legislation, Tdr checks the device in order to
prevent uncontrolled leakage of the said substances and keeps service
cards pursuant to the Code of Good Practice. No system leakage was
reported in 2009.

05.02.03.06 Hazardous substances

In its production process, Tdr uses solid, liquid and gas flammable
and highly flammable substances which can potentially cause fire and
explosion. All potentially hazardous substances, depending on their
characteristics, are stored in specially designated storage rooms and, in
line with legislation, are registered into the Registry of Plants in Which
the Presence of Hazardous Substances Has Been Detected, at the Min-
istry of Environmental Protection, Physical Planning and Construction.
All employees handling hazardous substances have been trained for
handling hazardous substances at the Croatian Institute for Toxicology.

05.03 Risk management

There is a systematic monitoring of risk and the impact of our own

activities, products and services, with preventive measures undertaken
for the mitigation of environmental impact.

The preventive measures undertaken by Tdr with the aim of mitigating

the risk of emergency situations are as follows
»» employee emergency situations training
»» monitoring system
»» alert system
»» permanent modernization of technical equipment.
Environmental impact indicators 59

05.04 Environmental economics

Tdr is aware that the environment is not an entity separate from econ-
omy but that all changes in the economy affect the environment and
vice versa. Therefore, monitoring of financial aspects of environmental
protection is another important tool for obtaining maximum profit
while simultaneously conserving all environmental conditions. We
monitor expenses (environmental protection fees, municipal fees, waste
management charges, analyses and measurements costs, environmental
protection costs, waste water purification device cost, investment), rev-
enue (revenue from waste, revenue from Kanafanar municipality public
sewage system management) and savings.
Plan for 2011 61

06

Plan for 2011

Standing on the firm foundations of tradition
one can have a better view of the future

The following individual goals have been set for 2011, to be reached
through existing or new programmes:
»» recertification of the environmental management system in line with
HRN EN ISO 14001:2009 standard
»» reduction of toner packaging waste – finding alternative waste disposal
methods
»» purchase of EURO 5 standard engines for vehicles
»» landscaping of the rooftop garden
»» obtaining a renewed water permit for the release of urban waste
water by 1 March 2013, or until the expiry of the concession
»» purchase of cigarette manufacturing machines with an automatic
cigarette weight measuring device using microwave technology in-
stead of the nuclear head
»» careful managing of natural resources and energy in order to reduce the
usage of energy sources per product unit
»» reduction of COD and BOD levels in industrial waste water prior to releas-
ing it into the wastewater treatment facility
»» drawing up of Operative Protection and Rescue Plan
»» separation and management of hazardous and non-hazardous industrial
waste
»» training for employees on environmental management system and waste
management
»» using the lake water as industrial water in the boiler room in winter.
Publisher: tdr d.o.o.,
Obala Vladimira Nazora 1,
HR-52210 Rovinj
t + 385 52 844 000
f + 385 52 844 470
tdr@tdr.hr, www.tdr.hr
Editor: Predrag D. Grubić
Executive editor: Vanja Mohorović
Design: Bruketa & Žinić o.m.
www.bruketa-zinic.com
Printed by: Cerovski Print Boutique
Knepsen d.o.o. (dust jacket)
TDR Sustainable Development Report was entirely printed on Shiro Tree
Free paper made of fiber from quickly renewable annual plants such as
cotton, bamboo and hemp. No tree biomass is used in the manufacturing of
this paper, leaving our forests intact.

Shiro Tree Free paper manufacturing uses only electrical energy generated
in line with the Renewable Energy Certificate System (RECS).