We are continuing with our dedication to Corporate social responsibility (CSR) which is a concept incorporated in the foundations of the work of Farmahem from its beginning and throughout its growth. The main activities of Farmahem are closely related to all aspects of social responsibility. Environmental protection, social responsibility, care for the people’s health, building close relations with suppliers/buyers, investing in the satisfaction and motivation of the employees are all part of the long-term goals which have been included in the quality policy and the overall strategy of our company.

Farmahem is continuously conducting activities and projects for social responsibility and has won numerous national and international awards and acknowledgements in the category of small and middle size enterprises. Last year we submitted our first Communicate on Progress report to UN Global Compact which was a retrospective of all our CSR activities from the previous years. Since this is our second report, it will be mainly focused on the activities and projects accomplished during the year 2013.

We will continue to follow the concept of CSR as well as share our experience and knowledge with our business partners and associates. We plan in the upcoming period to implement even greater CSR projects in the Republic of Macedonia.

Marjonka Veljanovska
Executive Manager
FARMAHEM
19th December 2013

Permanent commitment and the key to the success of FARMAHEM are based on several principles and guidelines among which is the principle of respect for human rights and freedoms and non-discrimination on any grounds (sex, age, race, religion, nationality, etc.).

There are many examples showing that Farmahem cares about the welfare of its employees and continually invests in them. Besides meeting all rights provided by law, Farmahem goes a step further and does more to motivate its stuff. Evidence of this is increased motivation of employees, improved operating results, increased profit for the company, and the most important - satisfied employees.

1. STRUCTURE OF EMPLOYEES

Our commitment for gender equality and non-discrimination on any basis, is the principle that is respected in the hiring process as well. On the leading positions currently we have appointed more women than men. The top management has 3 women (General, Executive and Financial Manager) and when it comes to Heads of Departments Farmahem has equal gender representation: two women and two men. In this way, Farmahem represents an example to encourage women entrepreneurs in R. Macedonia. At the same time, we have a handicapped person in our stuff and colleagues from different religions (Catholic, Orthodox) and atheists. In the structure of the employees there are persons from different nationalities (Macedonians, Serbs, Croats and Vlachs). During the employment process, people from the local Municipality have slight advantage, but only when there are two or more candidates with the same qualifications for the opened job position. Currently, we have 6 employees from the municipality Gjorce Petrov where are located the headquarters of Farmahem.

2. INCREASING MOTIVATION AND TEAM BUILDING ACTIVITIES

We are continuously investing in the health and welfare of our employees and team building activities:

- Once a week we rent a gym for practicing sports for a period of one hour. This gym provides opportunities for active sports: basketball, volleyball, table tennis, mini football and running;
- Twice a year we organize excursions to various locations in the Rep. of Macedonia but always with conditions for sports, hiking and developing team spirit;
- Periodic informal gatherings outside the working hours.
- Awards (bonuses) for sales representatives according to achieved profit as well as for all the other employees for successfully completed tasks;
- Also, Farmahem awards prizes to employees for ten, fifteen and twenty years of working in Farmahem. The gift amount is the same for all employees regardless their status in the company;
- We provide compensation for a newborn, wedding and death in the family of our employees;
- We have a tradition of giving a present to each employee for his / her birthday and organize a small celebration with all colleagues at the end of the working hours. All employees are buying gift of choice, but in the same value;
- In addition, Farmahem invests in modern infrastructure and cares that every employee feels comfortable on the workplace and provides equal and pleasant working conditions. The offices are spacious and pleasant to work with modern designs, paintings and pastel colors;
- Each year we organize a Christmas celebration for employees and another celebration for children of employees (0-12 years old) when we give them Christmas presents and books;
- We grant additional time off in the case of employees working during the weekend or after working hours;
- Regular reports are sent to all employees on cultural events in the city and in the region and we periodically organize collective visits to cultural events.
We are building a system in which all our employees are involved in the decision-making process:
- During the regular meetings on Mondays, every employee has the opportunity to be heard and to give suggestions for resolving possible issues and ideas for the development of its programs and improving of the overall performance of the company. Thus, we all together as a team take part in this decision-making process and promote transparent governance. After each meeting we prepare minutes from the meeting a distribute it to every employee.

CSR Project 2013: "FARMAHEM ON TOP OF THE WORLD - with Ilina Arsova and our juniors”

Objective: Farmahem includes children of their employees in the social responsibility projects/activities.
Тhis year, on the occasion of the International Women's Day - 8th March, Farmahem supported Ilina Arsova in her accomplishment to conquer Mount Everest as the first Macedonian lady. We also decided to invite her later to visit Farmahem in order to introduce her to the children of the employees and to share her experiences and adventures of conquering mountain peaks around the world and her passion for hiking and sports in general.

Activities: Within the project “Farmahem juniors visiting Farmahem”, children of the employees for the second time visited Farmahem and had the opportunity to meet Ilina Arsova - the first Macedonian lady who conquered Mount Everest and reached the top of the world. Through Ilina’s presentation, Farmahem juniors could feel the spirit of endurance, persistence and victory, which also characterize Farmahem’s teamwork. Also, they could see part of the mountaineering equipment and closely socialize and take a photo with Ilina.
At the same time, Ilina as a visual artist helped the children creating the drawings for this calendar.

This visit took place on October 5, 2013 and was attended by 13 children.

Results: Children on this occasion through creative workshop drew collages and Ilina as a visual artist helped the children creating the drawings. The children drew on the following topics: "Mountaineering and Nature" and "Farmahem on top of the world!" by using self-adhesive sheets for collages and markers.
Collages are used to illustrate the calendar, notebook and New Year’s greeting card for Farmahem 2014.

1. Stuff attending trainings, seminars, Congresses, workshops, etc.

Training of our employees in the country as well as abroad is being performed according to the annual plans which are prepared at the level of Departments and approved by the Farmahems’ CEO at the beginning of each year. When planning trainings we always take into consideration that all Departments and all employees receive opportunities for professional and vocational advancement, each according to their individual needs and job requirements.

Overview of training, seminars, workshops etc. by Departments in 2013:

I. Diagnostics and Pharmaceuticals - 5 trainings abroad, 2 seminars in the country
II. Instruments and equipment, division Laboratory equipment - 4 trainings abroad, 2 seminars in the country
IIa. Instruments and equipment, division Measuring instruments - 3 trainings abroad, 2 seminars in the country
III. Reagents and additives - 1 training abroad, 2 seminars in the country
IV. Environmental consultancy and Environmental Laboratory – 1 seminar abroad, 7 workshops in the country

2. Investing in new personnel

More than 15 years during the summer we accept interns from different countries through the student exchange organization IAESTE (International Organization for the Exchange of Students from Technical Sciences). Their internship lasts month and a half and at the end the intern is required to prepare a report from his / her experience and obtained knowledge and skills from visiting our company. Past 5 years, from 2008 to 2012, we had internships in our Environmental Laboratory and before that in our biochemical laboratory "Farmahem Diagnostics".

Since 2012, we have had two internships in the finance department from the Faculty of Economics in Skopje and in the Dept. for Environmental Consultancy form the Faculty of Mechanical Engineering - Skopje, Division Environment and Energy.
At the same time, we support and assist the future masters and PhDs in R. Macedonia through providing them with free importing of chemicals needed for their researches and scholarships.

In 2013 we had a student from Germany, Eva Wiesmann. Our activities in the following period will include more support of the educational process and educating young people in the country because we believe that in that way we invest in future highly professional and skilled personnel.

3. CSR awards and acknowledgments in 2013 regarding respect of human rights

In 2013, Farmahem won an acknowledgment from the National Coordination Body for CSR in R. Macedonia in the category "relationship with the employees". The awarded project was entitled: "FARMAHEM ON TOP OF THE WORLD - with Ilina Arsova and our juniors”.

Farmahems respects the ILO Declaration on Fundamental Principles and Rights at Work is an expression of commitment by governments, employers' and workers' organizations to uphold basic human values - values that are vital to our social and economic lives.

Farmahem respects the four fundamental principles and rights at work:

1. Freedom of association and the effective recognition of the right to collective bargaining - we are a small size company, so we don't have a syndicate. However, all employees are involved in the decision making process and have the right to freely state their opinion. That is way we have regular Monday stuff meeting where everyone briefs about their ongoing activities;

2. Elimination of all forms of forced or compulsory labour,

3. Effective abolition of child labour;

4. Elimination of discrimination in respect of employment and occupation - Farmahem has equal gender representation in the company, on all levels and regarding all professions (service engineers, application specialists, administration workers, sales representatives and Managers. Also, we are employing people from different ethnic groups and nationalities. This principle is implemented in the the Quality Policy and the overall strategy of the company.

Our services protect the environment

Immediately after the establishment of a company whose core business is trading, we established a separate department for consultancy in the field of environment. Services offered by this Department are fully geared towards environmental protection in accordance with the requirements of current legislation in the R. Macedonia and the requirements of international conventions and directives. When it comes to environmental protection, Farmahem despite its commercial services which directly influence the environment, often gives free advice to its clients. Thus, Farmahem uses the opportunity to further influence and enhance the environmental practices of clients. Using Farmahems’ services, clients/companies change their business processes in order to have a negative impact on the environment and thus have a long term impact.

1. Farmahems' participation in the adjustment of legislation

Farmahem team constantly participates in adjusting of the legislation related to the environment and nature. At the time when the Republic of Macedonia began to adapt its legislation with the EU, initiated by Farmahem a group of companies was established in order to work on environmental consulting within the Economic Chamber of R. Macedonia. The need for such group, at the time of adoption of new laws and regulations, has proved to be very significant. Experts were actively involved in making the laws in this area and helped by giving suggestions and comments directly in the making of the legislation by delegating a member of the Supervisory Board CARDS Programme (Programme for the harmonization of national legislation with the EU directives). Farmahem team was constantly invited to give their comments in amendments to the legal documents that are continuously being brought in the country.

2. Aware of our impact on the nature

The main task of a part of the team is the Farmahem is implementation of projects related to the conservation of nature in the R. Macedonia. The team consists of professionals with appropriate education and experience in this area. Their knowledge of the importance of nature and biodiversity, and the importance of its preservation, the team closely transferred to colleagues and associates and customers through presentations, walks in the nature, discussions etc. In this way, we create a corporate culture and awareness of the impact that each of us, but also the company, has on the environment.
As for the direct impact of Farmahem on the environment, it should be noted that we:
- select waste (paper, toners and batteries);
- paper re-use or multiple-use of used paper;
- properly treat medical waste in accordance with the legislation;
- transport of imported hazardous chemicals, biochemical reagents and radioactive materials is conducted according to the requirements of domestic and European legislation;
- chemicals and reagents are stored properly in order to prevent environmental impact.
The Department for Environmental Consultancy entirely implements at the company all its knowledge of environmental protection and nature conservation which it has to offer as a service to customers.

Many years prior to the introduction of the concept of CSR in R. Macedonia, Farmahem actively invested and promoted the CSR concept and sustainable development of enterprises. The founder of Farmahem, Josif Tanevski, PhD (1945-2010) has won several awards and recognitions for his achievements in the field of environmental protection, caring for the local community, a sense of social processes and active contribution in many association, as well as the management of the company based on the concept of social responsibility and corporate governance. In 2000, from the Macedonian Center for International Corporation, Tanevski won the award for sustainable development “Hert Jan Van Apeldorn” for successful introduction of the concept of sustainable development and long-lasting accomplishments in capacity building of sustainable development in the Republic of Macedonia, through strengthening the Ecologists’ Movement of Macedonia and other environmental organizations, promotion of sustainable development through lobbying and information in the political, economic and scientific circles and through issuing publications.

Ethical Management

Farmahem respects the International Declaration of Human Rights by striving for transparency in governance, involvement of employees in the decision-making process and recognizing the importance of the integrity of the enterprise.
The company actively participates in national and international forums concerning ethical management. Furthermore, Farmahems’ management strongly advocates for promotion of ethical standards in the business and believes that each individual is responsible and can positively affect the wider community to achieve the common goal which is to eliminate restrictions that are a result of corruption in the society.

The management has signed a Statement of Business Ethics Code on a national level in November 2012.

Transparency and involvement of all employees in the decision-making process

Farmahem fully encourages employees involvement in the decision -making process in the company and thus increases the confidence and loyalty of employees to the company. This is implemented through:

• Regular staff meetings once a week where ongoing and future projects and activities are being discussed. Also, on these meeting we analyze successes, problems, coordinate the work of all departments are prepare weekly plans for field trips and other activities, and discuss the reports from the work done during the previous week. These meeting are attended by the employees in Farmahem, and the meeting is headed by the Executive Manager;

• Regular and transparent information flow between all levels of employees via e-mail regarding any changes in the weekly plans, sending minutes from the weekly meetings to all employees and sharing information on the latest developments of the company. This activity enables regular communication between company employees and Departments. We have made an electronic group (Ethernet) where all employees have access and information provided there are public to all employees in the company;

• Maintenance of monthly meetings between different Departments and the management of the company. Within this activity, the current activities of the Department are being discussed as well as specific activities of each employee in the Department. They agree upon the following activities and discuss current issues and requirements of the Department;

• The Executive Manager holds an annual presentation in front of all employees Farmahem for the annual results of the company. Traditionally, the end of December, the company's management, represented by the CEO organizes a presentation of the achievements of the company in the current year for all the employees in the company. On this occasion, presented are successes, revenues, investments as well as public praise of employees or departments.

• Presentation of the latest activities in the printed edition of Farmahems’ newsletter “Info” which is prepared once a year and is delivered to all Farmahems’ customers. This printed edition is used as a medium for presenting the latest achievements of the company to the customers, clients aiming for them to get acquainted with the possibilities offered by Farmahem to improve their work.

• In case if staff or stakeholders have objection or complaint, it is taken into account and we apply certain corrective measures for improvement.

As a result of this kind of leadership, the company achieved the following benefits:

• Increased trust among the company employees (increased trust among employees, cross-Department cooperation and consequently increased number of joint multiple Departments business actions with one client);

• Increased transparency of the company to employees and to customers (on annual level, more than 800 e-mails have been sent, 24 Department meetings, 50 weekly meetings and one final presentation);

• Increased motivation of employees (employees are motivated to work harder, improve and to build successful careers which is evident in the increased number of trainings Farmahem has delivered to customers);

• Increased profits for the company (although it was a crisis in the whole economy, just transparent management of the company and its activities in 2010, 2011 finished as one of the most successful years ever).

The major benefit of ethical management is strengthen relationship between employees and management or setting up an open relationship for the flow of information that lead to greater success of the company. Satisfied, motivated and highly skilled employees and citizens are the main benefits for the company by which we can achieve a greater accessibility to the company's employees as well as to citizens and customers.