You will find the full report on our website at

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1 NEXT-LEVEL SOLUTIONS SUSTAINABILITY REPORT 2017 FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

2 You will find the full report on our website at FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

3 3 NEXT LEVEL SOLUTIONS Dr Daniel Keesman and Dr Michael Faller, managing partners of August Faller GmbH & Co. KG The motto of this year s Next Level Solutions sustainability report encompasses a range of issues from our tried-and-tested soluti ons portfolio for folding cartons, adhesive labels, leaflets and packaging services through to new solutions for work processes, for innovative products and for new services in the pharmaceutical and healthcare industry. The August Faller Group has been able to continue successfully implementing its corporate strategy of operational excellence, innovation and internationalisation within the demanding pharmaceutical and healthcare packaging market in the 2017 financial year, thus confirming its leading market position. After a challenging previous year, we have further improved our competitive ability by focusing relentlessly on quality, reliability and efficiency. With an economic equity ratio now of 44.1%, the company is in a financially solid and sustainable position. With million EUR, the August Faller Group recorded a sales increase of 2.9% for 2017 compared to the previous year. Within the European Faller network, we have developed new efficiency potentials and synergies along the entire supply chain, cooperating closely with our customers. Using digitalisation technology, we are seeing further opportunities to automate processes from customers to Faller to suppliers. By creating a GmbH from our Packaging Services division in Grossbeeren and establishing a joint venture with our Canadian partner Bellwyck Inc., we focus on attracting more projects for packaging services in the commercial and clinical products market. From 2019, the newly founded Digital Packaging Service GmbH in Worms will supply very small batch orders of packaging materials with cost-effective prices and very short lead times. We will be relying on completely new digital technologies and a strategy of automation which is deemed radical for the packaging market. Transforming the needs of our customers into solutions by using our innovative strength and entrepreneurial spirit invigorates us. Thus the August Faller Group used the experience of its 135-year history to invest in customer-focused and sustainable initiatives and projects in In 2018, we are expecting further exciting tasks which will be set forth in the next report. Dr Michael Faller Dr Daniel Keesman FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

4 4 DIGITAL PACKAGING SOLUTIONS: DELIVERING HEALTH B W orking for and with customers, Faller develops individual solutions for products and services which are tailored exactly to the specific context of their use. The product portfolio of the August Faller Group includes folding cartons, leaflets, adhesive labels and combination products as well as the provision of packaging and artwork services for the pharmaceutical and healthcare industry. Since 2017, Faller has also offered innovative folding cartons with integrated electronics. The smart Medical Prescription folding carton has a digital counting mechanism, which helps to ensure medication is taken as per the prescription. A small e-paper display with electronic control elements (buttons) counts down the tablets, reminds the patient when to take the medication and provides notification when it is time to order a new prescription. At the push of a button, the doctor or pharmacist can provide a personalised prescription, with the time of ingestion, the number of tablets to be taken and the duration of the medication in days. The data is sent to the digitalised folding carton using a smartphone, tablet or PC. The Counting Device folding carton prototype is able to count tablets, while the Level Indicator folding carton solution records the filling level of an opaque bottle filled with laboratory materials or liquid medication. Both packaging solutions have an e-paper display and operating buttons and inform the user or patient in good time as to when they should get a new pack. By developing the prototypes for intelligent folding cartons, Faller is well-equipped to satisfy the increasing demand of interactive packaging solutions and the increased digitalisation on the e-health market. The innovative Medical Prescription medication packaging with e-paper display and operating buttons counts tablets and reminds patients to take their medication on time. The app which was developed on purpose sends the prescription to the digitalised folding carton using Bluetooth. FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

5 PRODUCTS AND SERVICES H BETTER How sustainable can such a digital package be? Up to now, use of this technology has been limited to prototypes. If these smart packaging solutions are to establish themselves on the market in the future, it would be practical to implement a type of deposit system for the integrated electronic components at pharmacies. thrown away because it has either not been taken or too much was purchased. This is where digital packaging comes in by helping users and patients to take their medication properly and ensuring they receive the right amount of supplies. The August Faller Group has developed three prototypes for smart packaging solutions. These are from left the Level Indicator, which records the filling level in an opaque bottle of liquid medicine, the Counting Device and the Medical Prescription packaging. Digital packaging solutions can contribute to reducing pharmaceutical waste. Each year, medication worth billions of euros is Awards 2018 Faller Pharma Compliance Pack German Design Award 2017 Elisa-Kit-Box Finalist European Carton Excellence Award 2017 Faller Pharma Compliance Pack Pharmapack Awards 2017 Faller Pharma Compliance Pack World Star Award 2016 Faller Pharma Compliance Pack German Packaging Award 2016 Hanger Info Label World Star Award 2015 Ergo Label Silver Pack Award 2014 Hanger Info Label German Packaging Award 2013 Booklet Category Finat Award 2012 Digital Imaging Category Finat Award 2009 Age-appropriate packaging Silver Pack Award FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

6 ECONOMY ENERGETIC. INNO V The August Faller Group aims to use its Next Level Solutions to open up new levels of collaboration to customers, employees and business partners. Faller is the only supplier in the healthcare packaging industry to cover the entire value-added chain: from the processing and management of print data and packaging production and logistics to the packaging of primary packaged products. Our product range comprises printed folding cartons, leaflets, adhesive labels and combination products as well as pharmaceutical services in print data management, serialisation and packaging. With services designed to improve efficiency in the packaging process and in resource consumption, we enable our customers to make a considerable reduction to the total cost of ownership in the packaging process. Our joint venture with our Canadian partner Bellwyck Inc. has opened up new dimensions for our services. Bellwyck Faller Pharmaceutical Services GmbH specialises in logistical services for clinical trials, serving a very sensitive and extremely secure division of pharmaceutical research. Our subsidiary company Digital Packaging Service GmbH (DPS), which was founded in 2017, will offer small lot sizes at cost-effective prices from the first quarter of 2019 a business model that will be a game changer in the packaging market. Market The global health market is a dynamic growth market, with the pharmaceutical and healthcare industry being affected by cost pressures in healthcare systems. In terms of quantity, the generic product segment is the fastest growing; however, profits are falling. As packaging processes and the materials used in them are a relevant pool of costs for pharmaceutical production, they are subject to a disproportionately high price pressure. In terms of the continuous price erosion of standard products, this creates the challenge of pressing forward with continual measures to reduce costs and of concentrating on sustainable value-added products and services. In 2017, Faller generated a turnover of million EUR, a gain at group level of almost 3%. Our European market share remained stable. The Packaging Services division and the Adhesive Label division achieved the largest relative revenue growths, with 9.6% and 5.0% respectively. With 1.3% growth, August Faller A/S (Hvidovre) once again recorded more than 10 million EUR in turnover. August Faller Sp. z o.o. in Łódź increased its turnover by 18.0% to 11.8 million EUR. August Faller Artwork Solutions GmbH in Waldkirch had a challenging year, with a drop in turnover of 10.0%. It is now aiming to build on its customer portfolio with consistently high quality and reliability. Economic activity Quality In 2017, the customer complaint rate quality score was 0.42% at group level, an improvement on the 0.5% target. On-time deliveries With 96.8% of our deliveries being on time, we have almost achieved our ambitious target of 98% at group level despite the high demand volatility. In 2018, we aim at achieving the target of 98% again, thus confirming our leading position on the market in terms of reliability. Costs Due to the huge price pressure on the market, making use of further cost-saving potentials remains on our agenda. With modern lean management methods, we are working on increasing productivity in all divisions. Resource efficiency Material efficiency stabilised at a high level in The evaluation of production and logistics data means it is possible to plan better production sequences with higher material savings. Our company-wide consultation services for better organisation of the supply chain has attracted keen interest on the market. FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

7 7 O VATION Investments In 2017, the focus of investment for German production plants was mainly in the cutting and gluing departments. An advance payment for a new printing press was made in Denmark and SAP was introduced in Poland. New CRM software was procured and a digitisation project is enabling the automated processing of print and image data. Investments totalling 5.2 million EUR are in line with the long-term average. For 2018, an investment budget of 17.8 million EUR is planned the highest investment budget to date. Earnings and equity The financial result in 2017 again reached a satisfactory level. The cost-cutting measures at the end of 2016 contributed to increasing revenue and improving our profit situation in The economic equity ratio of August Faller GmbH & Co. KG increased further in 2017 to 44.1%, with the ratio of liable equity capital being 37.4%. We are implementing our corporate strategy on this solid basis thereby contributing to delivering health better. Investments in million EUR Investment rate in % 14% 13.8% % 11.8% 16 10% 8.1% % 7.1% % 6% 4.6% 4.8% 4.2% 8 4% 3.0% 6 4 2% % * % 3% 3% 3% 3% 4% 10% 9% 6% * Investments of August Faller Group incl. DPS Turnover of August Faller Group in million EUR *planned FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

8 8 LONG-TERM. AT ALL LEVELS. E The August Faller Group traditionally focuses on sustainable economic activity and is the founding member of the WIN-Charta sustainability management system of Baden-Württemberg. Faller has published an annual sustainability report since In 2017, we focus on the changes in energy consumption values. Site development In Binzen, Schopfheim and Waldkirch, we have cut down energy consumption by reducing the basic pressure in the compressed air system by 1 bar. In 2017, we recorded a total energy consumption in Waldkirch of 9% less than the previous year. The drop is primarily due to the 21.3% reduction in gas consumption. This is actually equivalent to an improve ment of 12.8% given the increased output quantity in This was primarily achieved through a new energy-saving heating system in Plant 1, through which energy consumption for the heating has been reduced by 43% since July Since January 2017, the new air humidification in Plant 1 (Waldkirch) has no longer been fed through gas-operated steam generation. Since 2012, the energy consumption in the Pharma-Service-Center in Waldkirch has dropped by approx. 27%, while gas consumption has fallen by 39%. Binzen The energy consumption per tonne of printing material in relation to the processed quantity of 3,800 tonnes in 2016 (excluding Grossbeeren) resulted in a gain of 1.8%. We attribute this to a considerably higher utilisation rate of the two web-fed presses and the additional load of the cooling unit in the summer (+10% in comparison to 2016) as a result of more machinery and printing units in the production plant. The overall consumption of gas was reduced by 49% in comparison to Schopfheim The 7% increase in energy consumption is explained by a higher order quantity (+8.7% running meters) and by overtime and extra shifts. Gas consumption has been slightly reduced ( 1.94%). The overall energy consumption in relation to the output quantity improved by 2.3% in In comparison with 2012, the gas consumption has increased by about 30% as a result of considerably expanded administration and production departments and new machinery. Grossbeeren The production of plano leaflets was relocated to Binzen at the end of Power consumption has dropped by 57% as a result of the removal of the machinery involved with this. Łódź Energy consumption in Łódź has risen in comparison with However, a reduction of 10% energy per tonne of printing material could be achieved due to the 25% higher material output. Hvidovre An LED lighting system has been installed in the production plant, which has reduced energy consumption by 10%. Investment in a new roof and improved insulation have produced a 7% saving of heating costs. CO 2 The CO 2 values showed similar progress to the energy values. Hazardous waste The slight increase in hazardous waste per tonne of printing material in Waldkirch is a normal deviation, which is caused by the collection of waste after the new year had started. In Schopfheim, the figures could be maintained FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

9 ECOLOGY. ENERGY-CONSCIOUS. despite the greater output quantities. In Binzen, the figure was improved by 21.4%. In Łódź, the amount of hazardous waste per tonne of printing material was reduced slightly. And in Hvidovre too, the quantity of hazardous waste remained stable, with the key figures of 2016 being corrected following a change in disposal company and the divergence to other sites requiring detailed analysis. Carton waste In Waldkirch, a slight improvement of 0.8% in rejects per tonne of printing material could be seen. This is a normal deviation, which we attribute to a slightly different order mix and the sensitisation of our employees. In Binzen in 2017, sensitisation of employees, the reintroduction of the totalizer and daily monitoring resulted in a reduction in material scrap of 135 tonnes to 47 tonnes and a drop in rejects from 6.2% to 5.1%. In relation to the output quantity, this was an improvement of 4.8%. In Schopfheim in 2017, the materials warehouse was continually reorganised and the residual material from 2015 and 2016 was booked out. For this reason, the rejects quota increased significantly. However, if the average figures from 2016 and 2017 are taken as a basis, the quota remains stable. In Hvidovre, it was possible to make a 16% saving in rejects due to improvements in production. In Łódź, we were able to maintain the previous year s rejects quota per tonne of printing material. Training for energy efficiency A Waldkirch-based apprentice who has completed the training to become an energy scout with the Chamber of Commerce and Industry of Südlicher Oberrhein is encouraging colleagues to actively participate in internal efficiency programmes and support these. ECOLOGY Definition Consumption in % to prev. year Energy consumption per tonne printing material (kwh) PSC* Folding Cartons, Waldkirch % PSC* Leaflets, Binzen ** 787** + 1.8% PSC* Adhesive Labels, Schopfheim 1,902 2,012 1, % August Faller A/S, Hvidovre % August Faller Sp. z o.o., Łódź % CO 2 emissions per tonne printing material (kg) PSC* Folding Cartons, Waldkirch % PSC* Leaflets, Binzen 30 47** % PSC* Adhesive Labels, Schopfheim % August Faller A/S, Hvidovre % August Faller Sp. z o.o., Łódź % Hazardous waste per tonne printing material (kg) PSC* Folding Cartons, Waldkirch % PSC* Leaflets, Binzen ** % PSC* Adhesive Labels, Schopfheim % August Faller A/S, Hvidovre U/K % August Faller Sp. z o.o., Łódź % Carton waste per tonne printing material (kg) PSC* Folding Cartons, Waldkirch Carton board % PSC* Leaflets, Binzen Paper ** % PSC* Adhesive Labels, Schopfheim August Faller A/S, Hvidovre August Faller Sp. z o.o., Łódź Adhesive % Carton board % Carton board % * PSC = PharmaServiceCenter ** Material values adjusted in Binzen, without figures for Grossbeeren. FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

10 NEWS AND SOCIAL AFFAIRS COOPERATION. INTERNATIONAL AND P NEWS Joint venture: Bellwyck Faller Pharmaceutical Services GmbH In November 2017, Jeff Sziklai, CEO of Canada-based Bellwyck Inc., and Dr Daniel Keesman, managing partner of August Faller GmbH & Co. KG, sealed the deal on founding Bellwyck Faller Pharmaceutical Services GmbH, Grossbeeren. Logistics services for clinical trials will be provided here. Hvidovre (Denmark) The Danish team celebrated 100 years of packaging manufacturing in Hvidovre with a family day in November The company was founded by A.C. Schmidt in 1917 and has been part of the August Faller Group since Łódź (Poland) Faller is engaging in career fairs for employees needed to further expand production capacities. The number of employees has more than doubled since 2014 from 63 to 135 (2017) and the team requires further reinforcement. SOCIAL AFFAIRS Acting responsibly Employees and management of the August Faller Group are committed to acting ethically in terms of the corporate policy. Social standards are being complied with throughout the supply chain: the Group purchases all materials and services from manufacturers in industrialised countries, of which 98% are located in Europe. All manufacturers publish a Code of Conduct on their company website with the relevant claims. As one of the shareholders of Waldkirch-based employment initiative WABE ggmbh and WABE e.v., Faller is committed to the training alliance and training guides of WABE. Faller is associated with wvib (Wirtschaftsverband industrieller Unternehmen Baden e. V.), IHK Südlicher Oberrhein, FFI (Fachverband Faltschachtel-Industrie e. V.) and the European Carton Makers Association (ECMA), among others. Employee participation schemes In 2017, 19.4% of employees had investments in August Faller GmbH & Co. KG as silent partners. 4% interest was paid on the capital contributions for Corporate health management In Binzen, Schopfheim and Waldkirch, management committees and the works council have defined the principles of a comprehensive corporate health management (CHM) system. This will go live in the first half of Since November 2017, the employees in Łódź have been able to participate in the Enel-Med scheme: the largely employer-financed scheme provides them with access to private medical care for a small financial contribution. Training and social responsibility Two annual campaign days for the Faller apprentices are characterised by social commitment. In 2017 the Waldkirch apprentices worked with the elderly of St Nikolai Stift retirement home, a project which they organised themselves. They also invited participants on a tour through the Faller production plant. The Binzen and Schopfheim apprentices focused on the environment. Equipped with large sacks, they cleaned the paths around the Anglerfreunde lake in Steinen. Christian Holmskov, managing director of August Faller A / S in Hvidovre FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

11 11 D PERSONAL. Human resource development With coaching programmes, professional training and individual encouragement, Faller offers its employees structured, professional development prospects. Dialogue and discussion In 2015, the Sounding Board started in Waldkirch, with introduction in Binzen and Schopfheim following in In a moderated process, employees from different departments communicate with company-trained Sounding Board members. This allows the team to participate in internal change processes. Sponsoring and donations Faller supports social and cultural life at the company s sites. For the past few years, this has included sponsoring the Nur Mut play put on by Freies Theater Tempus fugit e.v. in the region around Lörrach. This inter- active play encourages students to independently investigate their career aspirations. Supporting self-help The non-governmental organisation MAVUNO Improvement for Community Relief and Services was founded in the province of Kagera in Tanzania in Its aim is to improve the living conditions of people using modern farming methods and environmental protection. The August Faller Group has supported the Tree Plantations as a Contribution to Ensure Food Provisions to Reduce the Effects of Climate Change sub-project since Over the last three years, MAVU- NO has cultivated 31 tree nurseries and planted 31,539 seedlings. MAVUNO actively involves the population in its comprehensive tree planting project. FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10

12 AUGUST FALLER GROUP HEAD OFFICE Freiburger Straße Waldkirch Germany Tel Fax August Faller Artwork Solutions GmbH Fabrik Sonntag 4 b Waldkirch Germany Tel Fax August Faller A/S Hammerholmen Hvidovre Denmark Tel Fax info.dk@august-faller.com August Faller Sp. z o.o. ul. Nowy Józefów 64e Łódź Poland Tel Fax info.pl@august-faller.com IMPRINT All rights reserved. August Faller GmbH & Co. KG, Waldkirch Contacts: Dr Michael Faller Managing Partner Lutz Benz Sustainability Officer Ursula Kühn Head of Corporate Communications Logo Co 2 offsetting FALLER_BRO_Nachhaltigkeit_2018_EN_210x210_RZ.indd :10