umw holdings berhad corporate social responsibility summary report

Transcription

UMW HOLDINGS BERHAD
CORPORATE SOCIAL RESPONSIBILITY SUMMARY REPORT 2007
1
CONCEPT RATIONALE
The dawn of each new day brings many
challenges to our ever-changing world. We
all have to play our part to provide a brighter
future for our tomorrows. UMW’s pledge
towards this cause is represented by images
of our children, pictured here in varying
roles, symbolising their present and their
future. And as their potential lies in our
hands, we constantly work towards creating
the perfect world for them... and the promise
of a better tomorrow.
UMW Holdings Berhad was awarded the prestigious Global Reporting Initiative (GRI) Application Level A (+) Certification
for its Corporate Social Responsibility (CSR) reporting. The report was independently audited by Bureau Veritas, an
international certification body. With this award, UMW is the first Malaysian corporation to have received an A (+) rating for
complying with the stringent GRI-G3 sustainability reporting guidelines.
Global Reporting Initiative (GRI), a collaborating centre of the United Nations Environment Programme, is a multi-stakeholder
independent institution based in Amsterdam, The Netherlands, that develops and disseminates globally-applicable
sustainability reporting standards. Its mission is to make sustainability reporting by all organisations as routine and
comparable to financial reporting.
2
ABOUT THIS REPORT
This is the first Corporate Social Responsibility
(CSR) Report produced by UMW Holdings Berhad,
although for a number of years we have reported our
environmental and social performance along with our
economic performance in our Annual Report.
The report brings together our CSR initiatives to provide
a record of what we have achieved and to give focus for
our CSR Programme in the future. It is intended to be
useful to all of our direct stakeholders – our customers,
our employees, our shareholders and the communities in
which are operations are located – as well as to anyone
who wants to find out more about how we approach our
social, economic and environmental responsibilities.
Our CSR report supplements our other publications
including the Group Annual Report, our internal
newsletters including “U”, our regular media releases,
our Group website and our divisional websites.
The report covers the entire UMW Group and those
subsidiaries that are included in the Group consolidated
financial statements. Subsidiaries refer to all companies
in which UMW Holdings Berhad holds a majority stake
and/or has direct managerial control.
We have aimed to provide detailed performance
indicators on those areas of our business over
which we have significant control and where the
impact of our activities is considered material. We
consider information to be material if its omission or
misstatement would influence the judgement of our
CSR performance by readers of the report.
In addition to our main businesses, we have a range
of joint ventures with our business partners and also
a number of associated companies. In these cases the
day-to-day management of the companies is often the
responsibility of our partners and so we have provided
a disclosure on management approach (DMA) to
explain our involvement or a description of the business
activities as appropriate. The data provided in the report
is for UMW Holdings Bhd and is segmented wherever
possible into business units or geographical regions.
When structuring the report, we have taken into account
a number of guidelines which are relevant to our
business in our main market in Malaysia and also in the
global market, which is becoming increasingly important
to us. We have adhered to the guidelines of the Global
Reporting Initiative (GRI) and the Automotive Sector
Supplement published in 2004. The GRI has confirmed
that our reporting approach meets Application Level
A+, the highest category for companies following the
GRI-G3 reporting guidelines.
In addition reference has been made to the “Silver
Book” published by the Putrajaya Committee on GLC
Transformation and the reporting framework outlined
by Bursa Malaysia which suggests sections devoted to
Workplace, Marketplace, Environment and Community,
along the lines of Business in the Community (BiTC) in
the United Kingdom.
We submitted our CSR Report to an independent nonfinancial auditing specialist who has verified certain
sections of the report, as specified in the audit schedule
agreed with them. The information provided has been
checked for reliability, clarity, accuracy, comparability,
balance and relevance. The results are described in their
independent assurance statement published at the end
of the report.
The report covers the period from 2001 through to 2006
although some of the earlier years have less data than
later periods due to changes in our processes. All data
is current and adjusted for any previous restatement
from the annual report. We have also included some
information for 2007 which was available before the
collection deadline of 15th September 2007. This data will
be updated in future supplements and in the next UMW
CSR Report which is due in the fourth quarter of 2008.
3
“Corporate Responsibility is not
something we have to undertake – it is something we want
to do and have always done.”
Dato’ Abdul Halim bin Harun,
UMW Group Managing Director & Chief Executive Officer
4
5
OUR JOURNEY…
90 years ago, a young man set
the wheels of UMW’s history in
motion. UMW’s founder, Chia
Yee Soh, was an apprentice in
a bicycle shop when one day
a customer came in to repair
tyres on a new contraption
- a motorcycle.
Intensely interested in all
things mechanical, Chia fixed
the tyres and also took the
motorcycle apart. This led to
Chia’s complete fascination
with the internal combustion
engine and the setting up of his
own automotive repair shop at
the tender age of 19.
6
He named his shop United Motor Works. The year was
1917. Chia grew his company on the principle that good
business is rooted deep in the solid ground of customer
satisfaction. Through the good and the bad, the company
persevered with passion, integrity and vision.
Chia’s focus on customer satisfaction transformed UMW
from a humble automotive repair shop to a 10 billion
ringgit company of thriving businesses. At each stage of
the country’s growth and recession, UMW has geared
itself to meet the challenges of change and innovation.
The UMW Group currently has four core businesses:
Automotive, Equipment, Manufacturing & Engineering
and Oil & Gas. Strategic alliances with global players
have positioned the Group as a leader in the industries
it serves. UMW has operations overseas in Singapore,
Thailand, Vietnam, Myanmar, Papua New Guinea, China,
Australia, India, Turkmenistan, Indonesia, Taiwan and
the Middle East.
the pole position in the overall market segment. On a
combined basis, UMW today controls more than 50%
market share of Malaysia’s automotive industry.
In line with the Group’s growing presence in the global
arena, its inspired workforce has embraced a new
rallying call – Beyond Boundaries. Beyond Boundaries
is not just about transcending geographical barriers.
It is also about removing the boundaries of our minds
and overcoming all obstacles that stand in our way,
always standing by our core values of being honourable,
vibrant, unshakeable and pioneering.
Today, the UMW Group stands tall among the largest
corporations listed on Bursa Malaysia, with a dedicated
workforce of more than 10,000 worldwide. UMW has
indeed come a long way – from a humble automotive
repair shop to an international conglomerate. And in
its journey towards recognition as a truly world-class
organisation, UMW will continue to give due focus and
prominence to its Corporate Responsibility.
In 2007, UMW was amongst the Top 10 of the Most
Admired Companies in Malaysia in a survey by The Wall
Street Journal Asia that was conducted across South East
Asia. UMW also emerged among the Top 10 Companies
in a number of categories in Malaysia Business’ List of
Malaysia’s Top 100 Companies. UMW currently leads
in the local automotive industry. UMW Toyota Motor,
a subsidiary of UMW has been No 1 in the non-national
market segment consecutively for the last eighteen
years, while Perodua, an associated company, holds
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BEYOND BOUNDARIES
WE ARE PLEASED TO PRESENT THE
FIRST UMW CORPORATE SOCIAL
RESPONSIBILITY (CSR) REPORT
WHICH EXPLAINS OUR APPROACH
AND OBJECTIVES IN CSR AND
DESCRIBES OUR PROGRESS AND
ACHIEVEMENTS DURING THE
REPORTING PERIOD.
UMW HOLDINGS BERHAD IS AN
INTERNATIONAL CONGLOMERATE
THAT DEVELOPS INDUSTRIES,
MANAGES PARTNERSHIPS AND
FACILITATES GROWTH.
OUR COMPANIES OPERATE IN THE
AUTOMOTIVE, EQUIPMENT,
MANUFACTURING & ENGINEERING
AND OIL & GAS INDUSTRIES
AROUND THE WORLD.
At the end of the year, we launched The New UMW
internally to our staff members, marking the onset of
our rebranding exercise. We felt that it was the right
time to amplify our pole position and pioneering spirit
at home while organising ourselves for even greater
global expansion. We wanted to raise the bar to be
truly world class in the likes of GE and Toyota by going
Beyond Boundaries – which is our new rallying call.
Going Beyond Boundaries is not only about crossing
geographical or physical borders. It is about redefining
the boundaries of our minds and doing new things in a
better way. In short, it is about eliminating all barriers
and achieving new heights.
OUR PROMISE
We will go Beyond Boundaries by working together
to play a leading role in shaping the future of our
industries globally. We will do this by inspiring vibrant
ideas, nurturing potential, pioneering partnerships and
delivering excellence in everything we do; the rewards
of which contribute to the progress and well-being
of all our stakeholders.
Our approach is founded on respect for others, through
which we honour our enduring commitment to integrity
and trust, and our unshakeable resolve and steady
perseverance in everything we do.
Our commitment to continuous improvement is forged
in our pioneering and visionary approach to developing
and shaping our industries as well as our vibrant and
contagious energy and appreciation of fresh thinking.
SUSTAINABLE AND RESPONSIBLE
BUSINESS AT UMW
As we go Beyond Boundaries to become a truly
world-class organisation, we know that a world-class
brand never forgets its responsibility to society.
Therefore, our CSR strategy is truly brand-aligned with a
focus that is not just to fund charitable projects. We are
looking at international best practices in CSR, focusing
on the marketplace, the workplace, the environment
and the community.
This is our first CSR Report and it has identified
the significant impact we have on sustainable and
responsible business. We are confident that, after
reviewing our performance, we are fulfilling our
8
responsibilities as best as possible to our stakeholders
according to local law and the expectations of
international standards and norms. Indeed, in many
respects, our commitment to excellence and the sound
management structure we have in place have both
helped us to exceed routine legal compliance.
Strategic priorities for the short-term include an
emphasis on creating a more confident, vocal and public
role for the UMW Group, with a strong parent identity,
which will benefit all industries in our family. Our focus
on the four segments – the marketplace, the workplace,
the environment and the community – will factor as key
issues in the long-term strategy and success of UMW,
adding value to all of our stakeholders.
In the rest of this report you will see key events and
achievements during the review period. We have
consolidated our success in our core businesses and
have expanded into new areas, especially in the Oil
& Gas industry.
In all cases, we have delivered positive benefits to our
stakeholders. Our employees, in particular, continue to
benefit from a good working environment, with higher
salaries and benefits than the industry average. We have
introduced new training opportunities during the review
period and will continue with this programme into the
future. We are pleased that the continuing dialogue
sessions with our staff are appreciated by them and
their union representatives.
Our shareholders have received strong returns on
their investment and have enjoyed a bigger share of
retained earnings in the form of higher dividends. The
economic outlook for our industries remains vibrant
both in Malaysia and in our international markets but
we are of course always mindful of uncertainties in the
global economy, the effects of high oil prices and the
increasing challenges of global warming.
We continuously monitor these risks through our
strategic management process and our Enterprise
Risk Management (ERM) infrastructure and we aim to
respond appropriately and proactively. This will be a key
part of our strategy to continue to deliver good financial
returns whilst at the same time fulfilling our social and
environmental obligations.
OUR STAKEHOLDERS AND OUR COMMITMENTS
Our Core Values and Promise statement are our
commitment to our stakeholders – everyone affected by
or who affects the businesses we operate.
Our main stakeholders are those with whom we spend
most of our time – our customers and our employees –
and those on whom our presence/involvement/activities
has/have a direct impact – our shareholders and our
partners in joint ventures and the associated companies
in which we operate.
In addition, we are proud of our unshakeable
commitment to benefit all industries in which we
operate. We also prize our contribution to the growth
and development of Malaysia and of the Rakyat, its
people – who are also stakeholders in our company.
Our first Corporate Social Responsibility (CSR) Report
is evidence that we are fully committed to fulfilling our
rebranding objectives. It is our way of bringing together
our economic, social and environmental performance so
that we can see the foundations on which we will build
the future growth and development of the UMW Group.
We have aimed to report reliable information, as
clearly and accurately as possible and we have used the
guidelines of the Global Reporting Initiative (GRI-G3)
to provide comprehensive and comparable information
for our readers. We hope that our assessment is
balanced, showing our strengths and areas for
improvement and finally, that our readers find the report
relevant so that they can judge us by our performance.
We encourage you, the reader, to tell us your views on
our approach to CSR and to make suggestions for the
development of our CSR programme.
We hope you will find this report useful.
Tan Sri Datuk Asmat bin Kamaludin,
Chairman of the Board of Directors
Dato’ Abdul Halim bin Harun,
Group Managing Director and CEO
9
OUR CORE VALUES
HONOUR
VIBRANT
UNSHAKEABLE
PIONEERING
OUR WAY
We build trusted
relationships and
behave with high
integrity, resulting in
quality products and
services that stand
the test of time
We start each day
with fresh thinking and
use boundless energy
to fuel growth and
deliver new solutions
for our partners and
businesses
We go forward with
determination and
perseverance in the
face of any obstacle,
building a strong
foundation for
success
We challenge
assumptions and lead
the way with bold
ideas that shape our
industries and make
things better
OUR
ROADMAP
Earn Trust
Ignite Enthusiasm
Exhibit Strength
Forge Ahead
Finish what you start
Consider ideas that
may, at first, seem
unconventional
Take a long term
view and understand
that your actions
influence the future
Deliver solutions that
break new ground
and go above and
beyond the expected
Work hard to
overcome obstacles
and ask for help
from your colleagues
when you need it
Recognise that not
everyone approaches
problem-solving in
the same way
OUR VALUES
our enduring
commitment
to integrity
and trust
Have the courage to
speak up, be honest
and open with your
colleagues, your
customers, and
yourself
our contagious
energy and
appreciation of
fresh thinking
our unwavering
resolve and steady
perseverance
Meet each day with
vitality, optimism,
and excitement
Encourage each other
to explore fresh
ideas
Pursue excellence
and quality in all you
do, so that your work
will stand the test of
time
our visionary
approach to
developing and
shaping our industries
Seek, explore, and
embrace new ways of
thinking
Stand by your word
Be the person that
others count on for
support
Act in a
straightforward way
Be transparent
about your
intentions
Celebrate the
achievements of your
colleagues
Project positive
energy
Focus on successes,
not failures
Respect others
Keep going even
when times are
tough
Examine the way
things have always
been done to see
if you can add
something new
Take action and
move in unexplored
directions
In short, The New UMW’s values mean the continuous
building of trusted relationships while behaving with
high integrity as we exemplify honour in our every task.
By being vibrant, we will build on new ideas and fresh
thinking, leading to new solutions and better products
and services. We will be unshakeable in our commitment
to our customers, partners, employees and the
communities in which we serve. Finally, our pioneering
endeavours will lead the way with bold ideas that will
develop and shape our industries.
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Our rebranding objectives are simple and they are:
• to find the common values shared by the entire
UMW family;
• to refine and amplify these values to revitalise our team, partners and stakeholders;
• to differentiate our company from our competitors; and
• to use the revitalised brand to push further our global
expansion plans as we work towards becoming truly
world class
UMW CORPORATE PROFILE
•
The Automotive Division has been the backbone of the UMW group for most of its history. Indeed,
the company is much better known as an automotive
business than for any of its other business operations.
The leadership position of this unit is built upon a
close relationship with Toyota Motor Corporation of
Japan. Long-term growth has been built upon
continued cost-reduction, higher product performance
and specifications, productivity improvements on the
production line and ever-increasing quality standards.
The Automotive Division distributes Toyota models
including Altis, Avanza, Camry, Fortuner, Hiace, Hilux,
Innova, Rav4, Vios, Wish, Rush and Yaris. Some
modelsincluding the Toyota Hiace, are assembled
for export to neighbouring countries such as Thailand.
In addition the range was extended into the luxury
car market with the introduction of the Lexus LS460L
and GS300 in 2007.
• Strategic alliances: We build successful, long-term business partnerships with leading global companies.
The Perodua model range includes the highly
successful Myvi which was awarded Autocar Asean:
“Car of the Year 2005/6” in the super-mini category
and is exported to United Kingdom, Brunei,
Singapore, Sri Lanka, Fiji, Mauritius, Nepal, Egypt,
Lebanon and Syria.
•
Regional focus: To achieve the necessary size to
compete effectively, we aim for growth within
the Asia-Pacific region which is both organic and/
or developed in partnership with our highly r
egarded partners.
In March 2007, Perodua began its manufacturing/
export programme for Daihatsu cars in Indonesia in
partnership with Daihatsu Motor Corporation of
Japan. The Automotive Division also assembles Hino
and Daihatsu commercial vehicles in Malaysia.
•
Customers: The customer is at the core of our
business vision. We intend to strengthen our core
business in Malaysia and regionally by delivering
value par excellence to our customers.
UMW AUTOMOTIVE DIVISION MARKET
SHARE IN MALAYSIA
•
Business merit: Older businesses are continuously
reviewed and new business proposals are evaluated
against strict financial and strategic criteria to ensure
optimal resource utilisation.
UMW Holdings Berhad is the eighth largest Malaysian
conglomerate and was listed amongst Malaysia’s Top 10
Most Admired companies by the Wall Street Journal Asia
in 2006. UMW has been the uncontested leader in the
non-national car sector in Malaysia for the last 17 years.
In September 2007, the success of the company was
recognised by the award of “Business Times CEO of the
Year” to our Group Managing Director and CEO, Dato’
Dr Abdul Halim bin Harun.
In 2006, turnover reached RM9,950,500 (Ringgit
Malaysia). The foundations for this success were laid
down in 2001 when a major reorganisation of the Group
made us leaner and more responsive to an increasingly
competitive environment.
CORPORATE STRATEGY
UMW Group has a clear Mission Statement that
translates into effective management strategies. In
addressing a highly competitive environment both
in Malaysia and in the Asia-Pacific region the group
approach to strategy is simple but flexible:
UMW BUSINESS DEVELOPMENT
Before 2001, UMW Group operations were divided
into nine strategic business units (SBUs). In 2001, a
major reorganisation of the Group’s core businesses
was conducted which led to a new strategic focus.
Operations were rationalised to achieve greater
efficiency. Our nine SBUs were consolidated into three
new SBUs to help the group focus on areas of strength
and a new SBU, in the fast-growing Oil & Gas sector was
conceived to achieve optimal resource utilisation and
maximise revenue to benefit all of our stakeholders.
UMW
Perodua
Toyota
Models
Models
Total UMW
Automotive
Market Share
2001
5.7%
27.5%
33.2%
2002
6.2%
28.8%
34.9%
2003
9.9%
30.6%
40.5%
2004
10.6%
25.0%
35.6%
2005
16.5%
25.3%
41.9%
2006
16.7%
31.7%
48.3%
Source: Annual Reports and the Malaysia Automotive Association
11
•
The Equipment Division is a trading unit specialised
in selling imported equipment of world famous
marques. The key drivers within this highly
competitive sector are our experience, range of
products, distribution network and excellent
customer service. Its heavy equipment range
includes Komatsu and Case construction vehicles. Its
lightequipment range includes the Toyota 8 Series
forklift truck range, Honda EU Series of silent
generators, CompAir Industrial Compressors,
Cameron Turbocompressors, Mitsubishi, GE
Industrial and Marine Engines and the Tennant Industrial Cleaner Range.
UMW Industries (1985) Sdn Bhd is the market leader
in industrial equipment in Malaysia and won the
“Toyota Overall Excellence” award for the 5th
successive year in 2007, outstripping other Toyota
partners around the world. The Equipment Division
has also improved its penetration into Singapore
where its market share in Toyota products has risen
from an estimated 30% in 2002 to 40% in 2006.
•
The Manufacturing and Engineering Division
produces high quality products and services, which
together with innovation,2 are the cornerstones of
success within this unit. UMW Advantech Sdn Bhd
(formerly known as UMW Engineering Sdn Bhd)
designs, manufactures and markets the successful
AEREX, Aircraft Ground Support Equipment (AGSE)
range, which is used in airports in Dubai, Muscat,
Singapore, Jakarta, Bangkok, Saudi Arabia and Malaysia.
Continuous improvement in all operational aspects to reduce costs is also an essential factor in achieving 12
a good competitive position. In January 2007, UMW
Advantech Sdn Bhd consolidated its operations with
UMW Auto Parts Sdn Bhd to further strengthen the
Group’s position in the auto-parts market. The
Division also produces and distributes other auto
related products such as oils and lubricants through
UMW Pennzoil Sdn Bhd.
•
The Oil & Gas Division was identified as UMW’s longterm vehicle for growth back in 2001. The strategy for
this Division is to expand regionally whilst developing
niche expertise in providing valuable support services
to large global oil and gas companies. The success of
the Division is also due to our joint-venture
partnership with the Japan Drilling Company (JDC)
and the benefits and expertise this provides to our
off-shore operations. The early stage of this business
and the degree of managerial and technical control
exercised by our partners JDC put it outside of the
scope of the current report. In future our CSR reports
will include more detailed information about the
performance of this Division.
The Automotive Division has provided on average
76.8% of Group revenues and 57.9% of Group assets
during the review period. Equipment provided 12.8%
of revenues and 17.3% of assets on average during the
same period. The change in the Group structure
and in particular, the development of our Oil &
Gas operations has seen this Division take over from
Equipment as our second largest source of revenues
since 2005. Going forward the Oil & Gas Division
will become an increasingly important area of our
operations and the associated risks and opportunities
will feature in our assessment of our social and
environmental performance.
DIVISIONAL SEGMENTATION RESULTS (PERCENTAGE DISTRIBUTION)
2006
%
2005
2004
2003
2002
2001
Revenue Assets Revenue Assets Revenue Assets Revenue Assets Revenue Assets Revenue Assets
Automotive
71.1
59.3
76.0
53.2
81.5
63.9
82.5
66.9
77.5
51.8
72.4
52.2
10.4
17.5
9.1
12.5
12.3
17.1
11.7
16.6
15.0
17.5
18.2
22.5
Manufacturing
& Engineering
4.2
6.9
4.3
5.6
5.8
7.8
5.0
8.1
6.9
8.5
8.1
9.2
Oil & Gas
14.6
12.6
10.8
26.0
0.7
7.1
0.8
3.4
0.4
1.5
0.0
0.0
Others
0.2
3.7
0.2
2.7
0.2
4.2
0.7
5.0
1.1
20.8
2.3
16.1
Equipment
UMW operates mainly in Malaysia which accounted for
91.7% of revenues and 87.9% of assets on average during
the review period. Our overseas operations are in China,
Singapore, Papua New Guinea, Myanmar, Vietnam and
Thailand and accounted for 12.1% of assets on average.
Revenue from all our overseas markets accounted for
8.3% of average total revenues in the same period. We
also have associate companies in Australia and new
operations in India during 2007.
The development of our export markets in the
Automotive Division and in particular the development
of the Oil & Gas Division has increased revenues from
overseas markets. Further investment in new operations
outside of Malaysia will be central to our growth
strategy in the future and the associated opportunities
and risks will feature in our social and environmental
performance assessments.
DIVISIONAL SEGMENTATION RESULTS (PERCENTAGE DISTRIBUTION)
%
2006
2005
2004
2003
2002
2001
Malaysia Overseas Malaysia Overseas Malaysia Overseas Malaysia Overseas Malaysia Overseas Malaysia Overseas
Total revenues
from external
customers
85.4
14.6
89.1
10.9
97.2
2.8
97.3
2.7
95.9
4.1
94.7
5.3
Segment
assets
91.1
8.9
75.9
24.1
92.9
7.1
92.6
7.4
92.1
7.9
91.3
8.7
Capital expenditure
51.6
48.4
48.7
51.3
90.4
9.6
84.4
15.6
75.4
24.6
79.3
20.7
13
ORGANISATIONAL STRUCTURE
UMW HOLDINGS BERHAD
UMW CORPORATION SDN BHD
Automotive
Oil & Gas
UMW Toyota Motor Sdn. Bhd. (51%)
•Assembly Services Sdn. Bhd. (51%)
•Automotive Industries Sendirian Berhad (51%)
•Toyota Boshoku UMW Sdn. Bhd.(Formerly known as
Takanichi SIM Sdn. Bhd.) (33.14%)
Otomobil Sejahtera Sdn. Bhd. (100%)
UMW Toyotsu Motors Sdn. Bhd. (30%)
Perusahaan Otomobil Kedua Sdn. Bhd. (38%)
•Perodua Sales Sdn. Bhd. (38%)
•Perodua Auto Corporation Sdn. Bhd. (38%)
•Perodua Manufacturing Sdn. Bhd. (28%)
•Perodua Engine Manufacturing Sdn. Bhd. (28%)
UMW Petrodril (Malaysia) Sdn. Bhd. (99%)
UMW Coating Technologies Sdn. Bhd. (100%)
(Formerly known as UMW SAEKAPHEN Coating Sdn. Bhd.)
UMW Oilfield International Trading Sdn. Bhd. (100%)
UMW Oilpipe Services Sdn. Bhd. (81%)
(Formerly known as UMW Citra Maju Sdn. Bhd.)
•UCM Oil-Tex Thailand Limited (49.2%)
•Oil-Tex (Thailand) Company Limited (16.3%)
UMW Oilfield Services (Tianjin) Co., Limited (100%)
UMW Drilling Co. Ltd. (100%)
UMW JDC Drilling Sdn. Bhd. (85%)
Equipment
UMW Petropipe (L) Ltd. (100%)
UMW Equipment Sdn. Bhd. (100%)
UMW (East Malaysia) Sdn. Bhd. (100%)
UMW Niugini Limited (94.4%)
UMW Machinery Limited (100% Myanmar)
UMW Engineering Services Limited (100% Myanmar)
UMW Industries (1985) Sdn. Bhd. (100%)
UMW Industrial Power Sdn. Bhd. (100%)
UMW Equipment & Engineering Pte. Ltd. (100%)
UMW Equipment Systems Pte. Ltd. (100% H/C)
•UMW Equipment Systems (Vietnam) Company Limited (100%)
UMW Industrial Trading (Shanghai) Co., Ltd. (100%)
UMW Industrial Equipment (Shanghai) Co., Ltd. (100%)
•UMW China Ventures (L) Ltd. (100% H/C)
•First Space Holdings Limited (30.6% H/C)
UMW Oilpipe Services (Turkmenistan) Ltd.
(51% not yet operational)
UMW Linepipe (L) Ltd. (51% H/C)
UMW ACE (L) Ltd. (60% H/C)
•Wuxi Seamless Oil Pipe Co., Ltd. (30.6%)
•WSP Heat Insulation Tubing Co., Ltd. (30.0%)
•WSP Jiangsu Pipe Co., Ltd. (H/C)
•Shanghai BSW Petro-pipe Co., Ltd. (25.0%)
Shanghai Tube-Cote Petroleum Pipe Coating Co., Ltd. (40.0%)
•Jiangsu Tube-Cote Shuguang Coating Co., Ltd. (20.0%)
PFP Holdings Proprietary Limited (60.0%)
•PFP (Int) Holdings Pty. Ltd. (60%)
•PFP (Tech) Holdings Pty. Ltd. (60%)
•Cladtek International Pty. Ltd. (42%)
•PFP Technologies Pty. Ltd. (60%)
•PFP (Aust) Holdings Pty. Ltd. (60%)
•PFP (Aust) Pty. Ltd. (60%)
•PT Cladtek (Batam) (?)
•PFP Piping (Thailand) Co. Ltd. (?)
•PFP Taiwan Co. Ltd. (?)
•PFP Singapore Pte. Ltd. (45%)
•PFP (Malaysia) Sdn Bhd (Formerly known as Project Material Services (M) Sdn. Bhd) (24%)
•Cladtek (Malaysia) Sdn. Bhd. (Formerly known as Galperti Engineering (Far East) Sdn. Bhd.) (54% - Dormant)
Progenic Investments Limited (100%)
Vina Offshore Holdings Pte. Ltd. (70%)
•Vietnam Offshore Fabrication & Engineering Co., Ltd. (70%)
UMW Oilfield International Trading (Labuan) Ltd. (100%)
Manufacturing & Engineering
UMW Auto Parts Sdn. Bhd. (100%)
•Lubetech Sdn. Bhd. (70%)
•UMW Pennzoil Distributors Sdn. Bhd. (50%)
UMW Advantech Sdn. Bhd. (100%)
(Formerly known as UMW Engineering Sdn. Bhd.)
KYB-UMW Malaysia Sdn. Bhd. (52.1%)
(Formerly known as Kayaba (Malaysia) Sdn. Bhd.)
•KYB-UMW Steering Malaysia Sdn. Bhd. (52.1%)
(Formerly known as Kayaba Hydraulics (Malaysia) Sdn. Bhd.)
Others
UMW Toyota Capital Sdn. Bhd. (30%)
•Seabanc Kredit Sdn. Bhd. (30%)
•Seabanc Acceptance Sdn. Bhd. (30%)
•Toyota Lease Malaysia Sdn. Bhd. (30%)
UMW Insurance Services Sdn. Bhd. (100%)
UMW Travel Sdn. Bhd. (100%)
UMW E-Technologies Sdn. Bhd. (100%)
UMW-PNSB Development Sdn. Bhd. (51% H/C and property
development)
14
OUR ECONOMIC FOOTPRINT
OUR ECONOMIC VALUE TO OUR PRINCIPAL STAKEHOLDERS
Economic Data - Group Level
2006
2005 2004 2003 2002 2001
RMm
RMm
RMm
RMm
RMm
RMm
9950.5
9868.8
6243.7
5222.7
3933.5
3197.0
129.8
121.0
96.8
100.4
80.7
41.7
6340.5
5323.1
4014.2
3238.7
Direct Economic Value Generated 
Revenue
Other income
Gross value generated
10080.3 9989.8
Economic Value Distributed to:
Our Suppliers: Operating costs
8915.8
8961.3
5710.6
4612.4
3368.5
2752.4
Our Employees: Salaries and benefits
493.3
437.3
328.1
317.7
291.4
245.9
Our Lenders: Payments to lenders
33.7
23.6
3.1
4.6
6.5
9.8
124.4
132.7
85.1
99.0
91.5
73.3
41.1
23.3
1.5
1.4
0.2
-0.4
165.5
156.0
86.6
100.4
91.7
72.9
0.4
0.6
1.1
1.1
1.3
0
Net Value Added
471.6
411.0
211.0
286.9
254.8
157.3
Our Shareholders: Payments to shareholders
306.4
157.0
104.2
105.3
70.4
50.7
Our Future: Economic value retained
165.2
254.0
106.8
181.6
184.4
106.6
The Government: Payments to governments:
Malaysia
Outside Malaysia
The Rakyat: Community Investments
At UMW, we believe that our ever larger economic
footprint increases our responsibilities and obligations
to the stakeholders with whom we achieve this success.
This commitment is central to our long-term growth
and our position as a responsible corporation
In this regard and in the context of our role as a
respected corporate citizen we have a duty to follow
and apply accounting, financial and listing regulations
rigorously. We also take seriously our responsibility
for financial transparency and aim to present our
financial position regularly, correctly and impartially
to our shareholders, the investment community, the
government and the public at large.
The commitment to promote fair business practices and
to act ethically is central to our core values.
We undertake to:
• Act responsibly and fairly in our business dealings with all parties
• Respect applicable laws and regulations
• Manage the assets and resources of the group with care and in the interests of our shareholders
• Promote responsible development within our group and with our joint venture partners, associates and
collaborators
• Continuously reduce our environmental impact
• Respect human rights
• Protect the privacy and confidentiality of information on our clients, partners and of the group as a whole
15
A SUCCESSFUL FOUNDATION
Through its pioneering spirit, UMW achieved an
all-time record profit of RM754.3 million in 2006. This
is a 14.7% increase in profitability over 2005. This
growth is testimony to our unshakeable commitment
to manage the Group’s resources and assets with care
in the best interests of our shareholders. Better cost
management and better utilisation of our resources
is also one way in which we aim to improve our
environmental engagement as we achieve more from
what we already have.
in building the base for such results. As such, we believe
that in fairness, our employees should share in our
success and so, average rewards and benefits to the
workforce were raised by 13.4% in 2006 from 2005.
Dealing fairly and within the law of the countries in
which we operate whilst also achieving growth in our
business play a crucial role in our financial results in
the long-term. This is already seen by our rapid and
sustained growth performance since the start of
the millennium.
Apart from higher rewards and benefits to our
workforce, our patient shareholders also saw a more
than nine-fold increase in dividends over the same
period. Dividends nearly doubled in 2006 alone. Their
share of the Group’s annual Net Value Added has risen
continuously over the past six years compared to the
Economic Value Retained (EVR) within the Group.
VALUE INCREASE AND DISTRIBUTION
In line with the growth in revenue and profits over the
past few years, the Group’s overall financial and cash
position has improved substantially. The ability to
generate more added-value has allowed the Group to
raise the pay and rewards of all its major stakeholders.
The excellent improvement in profit margins achieved
ANNUAL GROUP REVENUES
RM millions
11, 000
10, 000
9, 869
9, 951
2005
2006
9, 000
8, 000
7, 000
6, 244
6, 000
5, 223
5, 000
4, 000
3, 934
3, 197
3, 000
2, 000
2001
2002
2003
in 2006 is also testimony to the hard work and honest
dedication of our workforce. Our commitment to being
honourable – that is, to respect our employees’ rights,
the provision of a good and safe work environment and
the right to be treated with dignity were instrumental
16
2004
NET VALUE ADDED
2006
471.6
2005
411.0
2004
211.0
286.9
2003
254.8
2002
157.3
2001
0.0
100.0
200.0
300.0
400.0
500.0
RM millions
DISTRIBUTION OF NET VALUE ADDED
% of Net Value Added
100%
90%
35.0%
80%
70%
60%
67.8%
50.6%
72.4%
63.3%
61.8%
50%
40%
30%
20%
65.0%
49.4%
38.2%
36.7%
32.2%
10%
2001
27.6%
2002
2003
Dividends to Shareholders
2004
2005
2006
Economic Value Retained
17
REWARDS BEYOND SALARIES: UMW’S DEFINED
BENEFIT PLAN
In Malaysia, where nearly 95% of the Group’s workforce
is employed, it is mandatory for employers to contribute
to the national pension scheme, the Employees
Provident Fund (EPF), for each employee. The defined
benefit plan at UMW is an additional contribution to
our direct mandatory pension payments. Pension costs
amounted to RM43,213,000 in 2006 and RM39,565,000
in 2005. Out of this, payments to the defined
contributionplan (EPF) amounted to RM39,467,000
in 2006 and RM35,552,000 in 2005. The balances
of each of the two yearly figures represent payments
to the defined benefit plans.
The Group is considered to be a Government Linked
Company (GLC) since a substantial portion of Group
shares is held by Government-led investment agencies,
in particular, Permodalan Nasional Berhad (PNB) and
the EPF. Nonetheless UMW is not a nationalised
company but a Private Listed Company (PLC) with
substantial private investors, both inside and outside
of Malaysia.
UMW is one of the few organisations in Malaysia that
still has a defined benefit plan. This covers employees
who joined on or before 31st December 1973. In addition,
a number of current employees are also eligible for a
defined benefit plan to make up for any previous lower
contribution to EPF.
The Group is managed as a private sector entity and
does not receive financial assistance as a result of its
status as a GLC.
Contributions to the plans are made to separatelyadministered funds. At the end of 2006, the present
value of funded defined contribution obligations
amounted to RM19,331,000 as compared to RM16,409,000
at the end of 2005. A total of RM3,746,000 and RM4,013,000
were charged in respect of these plans under staff costs
against group profits in 2006 and 2005, respectively.
The cost of retirement benefits is based on triennial
actuarial valuation by independent actuaries using the
Projected Unit Credit Valuation Method.
CONTRIBUTING TO THE WEALTH OF THE NATION
As a consequence of our higher profits, our payments to
governments in the countries in which we operate have
more than doubled over the past six years. The Group
did not receive any significant financial assistance from
any national, regional or local governments of any of the
countries where it operates.
18
Additionally, the pioneering efforts of UMW staff
members have contributed to the development of the
nation. The employment of vibrant and fresh ideas has
resulted in new products and practices that enrich
society.
LOCAL SUPPLIES
The UMW Group is principally an industrial trading
group that derives a large portion of its revenues from
the sale of finished goods imported from overseas. Purchases
Year
Finished Goods
Raw Materials
2006
96.1%
3.9%
2005
87.7%
12.3%
2004
95.2%
4.8%
2003
96.2%
3.8%
2002
76.7%
23.3%
2001
77.1%
22.9%
Most of its operations are in Malaysia. For imported
semi-finished vehicles, a reasonable proportion of the
parts are sourced locally but mainly from other Group
member companies. Thus, raw materials input from
suppliers external to the group accounted for less than
4% of total cost of sales in 2006. On average over the
whole review period, finished goods accounted for 87.2%
of total purchases and raw materials accounted
for just 12.8%.
INVESTMENT IN PUBLIC INFRASTRUCTURE
AND SERVICES
UMW regularly provides small infrastructure
investments to local communities. In accordance
with The New UMW’s rebranding objectives, such
projects are for public benefit within the various local
communities where UMW operates. Examples of
such projects are contributions mainly in cash for the
building/upgrading of orphanages, schools, facilities
for retired people, prayer rooms (suraus) and other
similar schemes.
In other cases, such investments are not made in cash
but in kind through the provision of equipment that can
aid local communities. Such investments are often more
substantial than cash investments. Examples of such
cases include provision of trucks, electric generators
and so on, to needy communities to improve living
conditions and to assist in lessening the destructive
impacts of floods, tsunami or other natural disasters.
An example is the donation of five Honda generators
to the Flood Relief Centre in Johor state in November
2006 which will remain an important facility for helping
communities in flood-prone areas.
INDIRECT ECONOMIC IMPACT
Management is well aware of the Group’s large indirect
economic impact especially in Malaysia from its position
as the largest automotive group and one of the largest
distributors of equipment. However, no specific study
or work has yet been undertaken to understand the
impact of such indirect economic effects in Malaysia.
OUR ECONOMIC IMPACT ON THE ENVIRONMENT
Senior managers take the issue of climate change
seriously and propose to hold an important Group level
awareness programme for top management before the
end of 2008. The intention is to build awareness of the
risks and opportunities from climate change and to
assess their impact on Group operations systematically.
Top management will review fact-finding assessments
and proposals from all Divisions to map a Group
Action Plan to incorporate climate change issues
within its long-term strategies. We envisage our
corporate divisions to be key players in setting such
a vision into reality.
This is yet another example of the Group carrying out
its rebranding objectives that include benefiting and
caring for the environment in which it operates as it
has already set in place a number of environmental
policies and programmes, particularly in the Automotive
Division and the UMW motor subsidiaries, to reduce
environmental impact and to understand importance of
climate change issues. The Group intends to learn from
its global partner Toyota Motor Corporation of Japan in
designing its own strategies towards climate change.
Regular community investments for medical research
and education are also made. Examples are the
long-term ongoing commitment of the Group towards
cancer research and various support schemes for
schoolchildren to encourage excellence in education.
19
AWARDS RECEIVED
Year
Company
Award Received
Awarded By
2007 UMW Holdings Berhad
Dato’ Abdul Halim bin Harun
2007 UMW Industries (1985) Sdn Bhd
Malaysia’s CEO of the Year 2007 UMW Toyota Motor Sdn Bhd
The BrandLaureate Award
The Asia Pacific Brands
2006 - 2007 for BrandFoundation
Excellence in Automotive
2007
JD-Power - Best Compact
Car Award (Kelisa)
PERODUA (Perusahaan
Otomobil Kedua Sdn Bhd)
Business Times
BrandLaureate Award
The Asia Pacific Brands
2006 - 2007 for BrandFoundation
Excellence in The Industries
Equipment Division – Forklift
JD POWER
2007 UMW Industries (1985) Sdn Bhd Overall Excellence Award
Toyota Material Handling Group
2007 PERODUA (Perusahaan
Best Model of The Year
The Frost & Sullivan 2007
(Malaysia) - Perodua Myvi
Asean Automotive Awards
2007 UMW Toyota Motor Sdn Bhd
Best Safety Features in Mid-Car
The Frost & Sullivan 2007
Segment (Malaysia) - Toyota
Asean Automotive Awards
Corolla Altis 1.8G(A)
20
Asia’s 200 Most Admired Companies
Asia Wall Street Journal
Top 10 Most Admired
Companies in Malaysia
Asia Wall Street Journal
Listed at No. 8 in Malaysian Business
100 List of Malaysia’s Largest
Companies by Turnover
Malaysian Business Magazine
Listed No. 5 in Highest
Increase in Turnover
Listed at No. 17 in Biggest
Change in Profit
2006 UMW Industries (1985) Sdn Bhd Toyota Overall Excellence
Award 2005
2006 UMW Equipment & The Worklife Achiever Award
Engineering Pte Ltd
2006 PERODUA (Perusahaan Autocar Asean’s Car of the Year
2005/2006 Award In The
Supermini Category
Toyota Industries Corporation, Japan
2006 KYB-UMW Malaysia Sdn Bhd & ISO14001:2004
KYB-UMW Steering Malaysia Sdn Bhd
ISO/TS 16949:2002
Moody International
Certification, UK
NQA, UK
BS EN ISO 9001 – 2000
The Tripartite Committee on
Work Life Strategy, Singapore
MTM Publications Sdn Bhd
NQA, UK
AWARDS RECEIVED
Year
Company
2006 PERODUA (Perusahaan
Award Received
Awarded By
Technology Business Review
Technology Business Review
Award for Excellence in
- Car manufacturing
Automotive Manufacturing
2006
Automotive Industries Sendirian 2006 Supplier Award of Best
Berhad
Engineering Support
Toyota Boshoku UMW Sdn Bhd
2005
UMW Corporation Sdn. Bhd. – MS ISO 9001 : 2000
Group Human Resource Division
SIRIM QAS International
Sdn. Bhd.
2005 UMW Industrial Power Sdn Bhd Most Professional Distributor for
The Asia Pacific Region
2005 UMW Industrial Power Sdn Bhd 2005 GE Representative Award for
New Genset Engine Sales
2005 UMW Industries (1985) Sdn Bhd President Award
Cooper Compression, USA
GE, Transportation Systems
Division USA
Toyota Material Handling
Company, Japan
2005 UMW Pennzoil Distributors
Superbrands Award
Independent Superbrands Council Sdn Bhd
2005 UMW Equipment Sdn Bhd
Best Maintained Fleet Owner of
Puspakom
Commercial Vehicles
2005 UMW Auto Parts Sdn Bhd
Toyota 100% Delivery Performance UMW Toyota Motor Sdn Bhd
Award
Excellent Performance Vendor 2004
Corporation (Non SMI Group)
Perodua Auto Corporation
Sdn Bhd
Best Cost Vendor
Perodua Auto Corporation Sdn Bhd
Best Delivery Vendor
Outstanding Delivery Performance
Perodua Auto Corporation Sdn Bhd
2003 UMW Engineering Sdn Bhd
ISO 9001 : 2000
2002 Automotive Industries Sendirian The Best Non-SMi Vendor 2002
Berhad
2002 Automotive Industries Sendirian Anugerah Kecemerlangan Pengurusan
Berhad
Kualiti Negeri Selangor
2002 Automotive Industries Sendirian Anugerah Kecemerlangan
Berhad
Industri 2002 - Pengurusan Kualiti
Bureau Veritas Quality
International
Best non-SMI Vendor
Best Quality Performance
UMW Toyota Motor Sdn Bhd
Sdn Bhd
SSIC
Kementerian Perdagangan
Antarabangsa dan Industri M’sia
Sdn Bhd
21
RESPONSIBLE CORPORATE
GOVERNANCE
Good corporate governance is at the heart of the Core
Values of the UMW Group and provides the foundations
of our commitment to excellence and integrity in
everything we do for our stakeholders especially our
shareholders.
Over the years, the Board has formulated internal
guidelines on Corporate Disclosure Policies and
Procedures based on best practices recommended by
Bursa Malaysia Securities Berhad and the Malaysian
Code on Corporate Governance (Revised 2007). These
provide the Group with appropriate guidance in
discharging its obligations and to help the Group to go
beyond minimum, mandatory disclosure requirements.
The structure of the Committees of the Board also goes
beyond legal requirements. Throughout and prior to the
review period, UMW has had no Executive Director on
its Audit Committee. This good governance practice was
made mandatory for all listed companies in the 2008
Malaysia Budget Statement.
Each year, a full and transparent description of the
system of corporate governance, internal controls and
of the major governance issues faced by the Group
are disclosed in the Annual Report. During the review
period, there were no instances of anti-competitive,
anti-trust or monopoly practices, no reported instances
of corruption, and no incidents of non-compliance
with laws and regulations. There were also no major
weaknesses in internal controls which resulted in
material losses.
GOVERNANCE STRUCTURE
The Board of Directors is the ultimate corporate body at
UMW. The Board has nine Directors including the Group
Chairman who is a non-independent, non-executive
member.
Eight Directors, including the Chairman, are nonexecutive. Five members are non-independent nonexecutive directors. Three members are independent
22
non-executive directors. The last member is the Group
Managing Director, who is also the Group CEO. He is
the sole non-independent, executive member of the
Board.
An Independent Director does not have any substantial
direct or indirect stake in the Group, is not related
to any Director and/or major shareholder of UMW
Holdings Berhad and is also not a Nominee Director
appointed to the Board by a substantial shareholder.
Non-executive Directors are not involved in any sort of
day-to-day management of any of the Group’s business.
The Board oversees the overall direction of the Group
and advises the CEO on the general strategic steering
of the business by drawing on the Directors’ vast and
varied experience. The full background of each Board
member is disclosed each year in the Annual Report.
The Board meets on a quarterly basis with additional
meetings convened when necessary and the attendance
of each member is disclosed annually. Each year, Board
members undertake regular training to update them on
developments in areas of strategic importance, including
environmental, social and governance issues.
Board members also contribute to three important
committees: the Audit Committee, the Nomination
Committee and the Remuneration Committee.
The Audit Committee has four members, all of whom
are non-executives. Three of them, including the
chairman of the committee, are also independent. The
committee is now in its 16th year (established in 1992).
Its mandate covers:
•
•
•
External auditor’s appointment, audit fee, resignation
and dismissal,
Liaising closely with the external auditors regarding
the nature and scope of the audit work and review
audit findings arising from the interim and final audits,
Reviewing quarterly, half-yearly and annual financial statements. This includes a review of changes in
•
•
•
•
•
•
accounting policies and practices, significant adjustments arising from the audit, the going concern
assumption and compliance with accounting standards
and other legal requirements,
Providing guidance to the Internal Audit Division (IAD) while ensuring that it is adequately resourced
and has appropriate standing within the Group,
Formulating the terms of reference of IAD, review its
audit plans and all reports in addition to issuing
instructions for further action to be taken by IAD,
Considering major findings of internal investigations (by internal and external auditors) and management’s response,
Reviewing the adequacy and effectiveness of the
Group’s accounting procedures and policies, the
adequacy and effectiveness of its risk management
and internal control systems as well as the financial
reporting standards of the Group,
Considering any related party transactions that may arise within the Group,
Verifying and confirming the allocation of share
options pursuant to the UMW Employee Share Option
Scheme (“UMW ESOS”) as being in compliance with
the criteria set out in the By-Laws of the UMW ESOS.
The Audit Committee has adopted and applies the Code
of Ethics of the Malaysian Institute of Internal Auditors.
The Nomination Committee has three non-executive
directors as members, two of whom are independent
and one non-independent. Its main function is to
oversee the recommendations of appointments of
new executive and non-executive Board members
and recruitment and promotion of the most senior
management staff. Periodically, it also reviews the size,
structure and effectiveness of the Board as a whole, the
effectiveness of other Board level committees and the
contribution of individual Directors.
The Remuneration Committee has three nonindependent, non-executive directors as members. The
Remuneration Committee reviews and recommends to
the Board the remuneration of executive directors and
senior managers (grades 22 and above).
Where possible, the Remuneration Committee aims to
exceed the Malaysian Code on Corporate Governance
which requires that the level of remuneration for
Directors should be sufficient to attract and retain
the Directors needed to guide the Group successfully.
Remuneration for executive directors is structured so as
to link rewards to corporate and individual performance.
In addition, executive directors are eligible to participate
in the company’s Employee Share Option Scheme
(ESOS).
Non-Executive directors do not participate in the
company’s ESOS. Their remuneration structure
reflects the level of responsibilities undertaken and
contributions made.
The Management Committee is separate to the
Board and is composed of leading managers in each
operational Division. It is chaired by the Group
Managing Director and CEO, Dato’ Dr. Abdul Halim bin
Harun. The Management Committee is responsible for
the implementation of Group strategies and policy and
for the operational performance of their Divisions. The
Management Committee is also the Risk Management
Committee responsible for the Group Enterprise Risk
Management (ERM) Framework and its implementation
at Division level.
RESPONSIBLE MANAGEMENT OF RISK
AND OPPORTUNITIES
UMW adopts a structured and disciplined approach to
risk management within its Enterprise Risk Management
(ERM) Framework. Under this framework, a holistic,
integrated, future-focused, and process-oriented
approach helps the Group to manage all key risks and
opportunities with the intent of maximising shareholder
value for the Group as a whole. The ERM framework is
based on the following core elements:
23
•
•
•
•
•
Establishing a risk management framework within which risk management activities take place;
The identification of each business risk which may prevent achievement of business objectives;
The measurement of identified business risks;
The control or methods by which risks are managed in
line with the needs of the Group’s policies or
strategies; and
Constant monitoring and communicating of risks
associated with any activity, function or process in a
way that will enable the Group to minimise losses and
maximise opportunities
The Risk Management Committee is also responsible for
overseeing the Group’s identification and management
of economic, environmental, and social performance,
including relevant risks and opportunities in line with
international best practice, codes of conduct, and
principles. This process also covers the risks associated
with potential corruption. Training is provided for such
issues. It also provides a mechanism for the Group to
manage risk according to the precautionary principle as
in Article 15 of the Rio Principles.
The Audit Committee has also approved the UMW Risk
Management Policies and Procedures adopted by all
SBUs in February 2003. By the end of 2006, all major
operating companies within the Group, including the
Corporate Divisions, have completed their own ERM
framework in line with Group policy.
Risk management responsibilities are divided between
the Board and senior management. The Board, assisted
actively by the CEO, oversees the strategic risks that
impact the Group’s diverse business structure. The focus
is on external events that may have a significant impact
on the Group’s strategic decisions and activities. The
Internal Audit Committee of the Board also receives
24
regular reports from the Internal Audit Division on
critical operational risks and proposed action plans to be
implemented to mitigate such exposure.
Operational risks are the responsibility of the
Management Committee. The Heads of the Strategic
Business Units (SBUs) are specifically accountable for
managing operational risks as these are inherent to
the ongoing activities within the different SBUs of the
Group. The Management Committee in its role as the
Risk Management Committee reviews all major risks at
least twice a year. They are advised by the heads of the
SBUs. The SBU heads act as Risk Officers.
UMW Risk Management Policies and Procedures are
not necessarily adopted by companies outside the
direct managerial influence of the Group. For example,
Perusahaan Otomobil Kedua Sdn Bhd (“Perodua”),
an associate company, has its own risk management
approach.
AVOIDING CONFLICTS OF INTEREST
There is a clear and distinct division of responsibility
between the Chairman and the Group Managing
Director to ensure a proper balance of authority and
control. The Group Managing Director acts under the
instructions and control of the Board and is responsible
for communicating matters relating to the Group’s
business and affairs to the Board. The Group Managing
Director is primarily responsible for the day-to-day
operations of the Group, which includes implementation
of policies and strategies adopted by the Board.
The Audit Committee oversees the work of the Internal
Audit Division (IAD). Within many of its responsibilities,
the IAD reports its findings to the committee, including
issues relating to conflicts of interest.
COMMUNICATING AND ENGAGING WITH
OUR SHAREHOLDERS
Transparency of management decisions and
communication of our business activities to our
shareholders is central to ensuring that we are
accountable to the highest standards of corporate
governance.
In addition, the Group website at www.umw.com.my
provides shareholders with access to information and
they are encouraged to email our investor relations
personnel for further information at any time. The Group
has also run periodic investor relations events and road
shows to further enhance our direct engagement with
our shareholders.
The principle forum for direct discussions between
directors, managers and our shareholders is at the
Group AGM. At each AGM, the Board presents the
progress and performance of the business as contained
in the Annual Report. Shareholders are encouraged
to participate in the question and answer session.
During these events, the Board as well as management
are at hand to provide responses to questions from
shareholders.
UMW also takes part in the PNB Post Event Training
(PNB-PET) Programme as part of its investor
engagement programme. Permodalan Nasional Berhad
(PNB) is government investment agency which manages
large national investment trusts. PNB is a significant
shareholder in UMW and hosts the PNB-PET events as
a way of sharing best practice amongst the companies
in which it invests. UMW played host to the PNB-PET
event in March 2007.
MAJOR SHAREHOLDERS (% DEEMED INTEREST)
2007
2006
2005
2004
2003
2002
2001
Skim Amanah Saham Bumiputera
39.76
32.53
43.39
44.48
41.24
-
30.25
Employees Provident Fund Board
10.75
7.09
6.69
6.88
11.28
3.25
10.28
Permodalan Nasional Berhad
8.15
21.28
12.64
7.67
7.48
52.74
28.17
Other significant shareholdings: 2005: The Capital Group of Companies Inc.5.53%; 2004: The Capital Group of Companies Inc.
8.13%; 2003: The Capital Group of Companies Inc. 7.67%; 2002: Emerging Markets Growth Fund 5.13%
25
WORKPLACE
27
WORKPLACE
WE ARE THE ONE TEAM
UMW HAS ALWAYS BELIEVED THAT ITS WORKFORCE IS ITS MOST
IMPORTANT ASSET AND THAT THE SUCCESSES OF THE GROUP ARE DUE
TO ALL THOSE PEOPLE WHO HAVE PROVIDED THE POOL OF TALENT THAT
HAS HELPED UMW TO BECOME A RESPECTED AND POPULAR EMPLOYER.
WITH THE LAUNCH OF THE NEW UMW, WE ARE FULLY COMMITTED TO THE
DEVELOPMENT AND TRAINING OF ALL STAFF MEMBERS TO MAKE THEM THE
BEST EMPLOYEES AND MEMBERS OF SOCIETY AS POSSIBLE. IN LINE WITH
OUR REBRANDING EXERCISE, THIS TRAINING WILL BE AN ONGOING PROCESS
THAT WE WILL ALWAYS CONTINUE TO HONE.
Our responsibilities toward our staff are given the highest priority throughout
the UMW Group. We have continuously improved our role as a caring
employer to provide a fair and supportive workplace for all of the people who
have chosen to share part of their lives and careers with us.
CREATING SUSTAINABLE EMPLOYMENT
The economic growth of the UMW Group has been closely associated with
the growth of its workforce. Since 2001, the number of Group employees has
grown by 55% to reach a global level of 9,694 employees by April 2007. The
composition of global employees has been maintained at a more or less stable
ratio of 23% executives to 77% non-executives. Within the overall workforce,
the number outside of Malaysia was 5.4% in 2006 compared to 4.1% in 2001 in
line with the Group’s development overseas.
As the business of the Group expands across Asia, the quality of our human
resource services has to keep up with Group needs as well as with the
aspirations of current and future employees. We are fortunate to have HR
practices that are certified to the best internationally-recognised standards.
Our HR divisions at Group non-Automotive and Group Automotive Divisions
have both achieved and maintained ISO 9001:2000 status.
All staff, excluding those in the lowest grades, undergo formal recruitment
processes including tests for skills, aptitude and personality indicators. All
UMW GROUP STRENGTH AT APRIL 2007
28
Papua New
Singapore
Guinea
Malaysia
Myanmar
Vietnam
Executive
1,777
13
18
50
Non-Executive
7,322
42
25
107
China
Thailand
22
12
3
174
120
9
permanent employees are formally evaluated at least
once a year by their line manager. In 2006, 94.1% of
all employees and 100% of all permanent employees
received a formal performance appraisal. Information
from this very important process is regularly fed back
to each employee and also forms the basis for the
annual increment that employees receive every January.
Under-performing employees are offered counselling
and help in structured improvement programmes. This
has proved successful in supporting employees through
their appraisals and less than one percent of staff are
re-assigned or out-placed due to underperformance
each year.
The long-term performance of the workforce as a whole
is measured using formal processes, which include
qualitative operating measures, non-financial, costbased financial and investment-based indicators. The
Group implements a medium term workforce and skills
programme across all of its business units to ensure
proper management of human resources and stability
in workforce numbers and skills.
WORKPLACE DIVERSITY AT UMW
Our workforce reflects the rich diversity of the people
of Malaysia. Within our workplace, we aim to champion
a culture that allows any employee, irrespective of sex,
ethnic origin, colour, religion or background, to have the
opportunity to work in an environment where talent
and professionalism are respected and justly rewarded.
We aim to create a workplace in which employees can
develop their ability fully and achieve a rewarding and
fulfilling career. We are pleased to be able to report
that there were no instances of discrimination in the
workplace during the review period.
A MULTICULTURAL WORKPLACE
We are aware of our responsibility to provide
employment opportunities to the local communities in
which we operate. In line with employing international
best practices that are part of our rebranding efforts to
become an employer-of-choice, we aim to ensure that
the diversity of our workforce reflects that of these
communities.
We believe that this practice allows us to achieve a
fair distribution of the benefits of growth especially
in Malaysia where our primary operations are located.
Our relatively large workforce and our reputation as a
good employer have helped UMW to become a good
corporate citizen sympathetic to global standards whilst
reflecting the diversity of the local community. This
practice extends to our overseas operations where it
is our practice within UMW to allow citizens of the
countries where we operate to head and manage these
operations.
TOTAL EMPLOYEES
10, 000
9, 000
8, 000
9,424
9,450
2005
2006
8,279
7, 000
6, 000
6,250
6,648
6,875
5, 000
4, 000
3, 000
2, 000
1, 000
0
2001
2002
2003
2004
29
CULTURAL DIVERSITY 2006
Indian 8%
no restrictions or specific requirements in recruitment
of women at any level.
Others 1%
Over the past six years, on average around 20% of all
employees (managerial and non-managerial) were
women and 28.6% of all managerial employees were
women. We have also had a much lower level of
employee turnover among women compared to men.
Taken together with our equal pay policy, we are
confident that we have adopted a successful practice
of non-discrimination against our female staff in terms
of employment and advancement within UMW. There
were no reported instances of gender discrimination
in the workplace during the review period.
Chinese 21%
Bumiputera 70%
GENDER EQUALITY
Exemplifying our value of being honourable, the Group
does not discriminate in recruitment, pay or promotion
practices between men and women. All employees are
entitled to the same pay and benefits appropriate to the
position they are engaged in within the Group. Both
men and women are placed on a single pay scale and we
aim to provide female members of staff with the same
openings and opportunities as men. Being an industrial
trading group has traditionally made us more attractive
to men as a place of work though the Group itself places
MANAGING THE CHALLENGES OF A YOUNGER
WORKFORCE
The Group workforce broadly reflects the relatively
young age profile of the Malaysian population. In 2006,
about 56% of employees were below 30 years, 25.5%
were above 30 but below 40, 13.6% were above 40 but
below 50 while 4.9% were above 50.
Such a young composition carries with it certain specific
risks. One such risk is that employee turnover within
the youngest age group (< 30 years) is the highest at an
average of nearly 28% compared to an overall average
employee turnover of only around 16.5% during the
review period.
GENDER RATIOS
100%
90%
82.7%
81.9%
79.4%
78.9%
78%
80%
80.8%
70%
60%
50%
40%
30%
20%
22%
21.1%
20.6%
18.1%
17.3%
19.2%
10%
0%
2001
2002
2003
Female
30
2004
Male
2005
2006
AGE DISTRIBUTION OF OUR WORKFORCE
47
.0
%
45
.6%
50%
56
.0
%
56
.4%
50
.8%
60%
59
.2%
70%
4.9
%
4.7
%
13
.0
%
4.8
%
13
.6%
25
.5%
23
.1%
24
.6%
14
.2%
5.8
%
5.9
%
5.6
%
10%
17.
3%
.5%
18
20
.0
%
20%
28
28
28
30%
.4%
.6%
.8%
40%
0%
2001
2002
< 30
2003
30 to 40
2004
40 to 50
2005
2006
> 50
We believe that this risk is primarily due to the age
profile. The labour market in Malaysia provides nearly
full employment and plenty of varied opportunities for
younger workers. Our younger employees are more
likely to experiment with other forms of work than their
older counterparts.
To address this risk, a total of 41 senior management
employees were selected in 2006 to undergo a series
of specialised programmes which equip them with
important leadership skills. This program is continuous
and part of our commitment to providing opportunities
and stability to our managers throughout their careers.
We also find that the excellent and extensive training
and technical exposure provided by our Automotive
Division makes our young employees attractive to
other employers within the automotive sector. As
a responsible citizen and out of respect for our
employees, we do not place artificial barriers to
stop them from moving away after acquiring good
experience within our Group.
Furthermore, we began training all UMW staff members
– with the exception of production workers - in line
with the internal launch of our rebranding exercise in
November 2007. Phase 1 of our Beyond Boundaries
training was an introduction to The New UMW during
which a total of 10,388 staff members, as of November
2007, were trained. Subsequent phases will show our
employees how to really live and breathe The New UMW
in their daily tasks, as we continue to hone these training
sessions for many years to come. This will be done
due to the fact that we place the development of our
employees at the top of our list of priorities.
We recognise that valuing our people also requires us
to understand our largest group of employees. Thus,
more discussions were held with the employees’ unions
to allow us to improve collective agreements to create
a more conducive environment for all workers as well
as to put in place better opportunities in shaping the
careers of our younger employees. The turnover rate
for the under 30s has fallen from a high of 38% in 2005
to 24.4% in 2006.
Another risk arising from high turnover rates is the
reduction in the talent pool for management succession.
COLLECTIVE AGREEMENTS:
A HARMONIOUS RELATIONSHIP
Our business is built on our commitment to
excellence in customer service. We are aware that such
a commitment rests on our ability to meet customer
needs to consistently excellent standards. Consequently,
we understand that our employees play a crucial role in
upholding our customer commitment. Good industrial
31
relations are therefore the foundation of our business
and reduce the risk of operational disruption which
reflects failure in employee engagement.
To this end, we constantly demonstrate our
unshakeable commitment to a constructive and
harmonious relationship with all employee
representatives. We also aim to respect employees’
rights to freedom of association and to collective
promotion systems, relocation, outsourcing and other
benefits. They also cover grievances, conciliation
procedures and compulsory lay-offs, although there
have been no significant instances of retrenchment
during the review period. Agreed hours of work in the
Automotive Division have been 8.8 hours per day during
the review period. Overtime rates vary from time-totime according to operational conditions.
Grievance and conciliation processes allow for
UNION MEMBERSHIP
100%
90%
29.7%
28.5%
29.0%
26.1%
25.2%
29.1%
70.3%
71.5%
71.0%
73.9%
74.8%
70.9%
2001
2002
2003
2004
2005
2006
80%
70%
60%
50%
40%
30%
20%
10%
0%
Union members
bargaining as provided by the law within the countries
in which we operate and by emerging best practices
set out in international guidelines such as those of
the International Labour Organisation (ILO). This
commitment also extends to our overseas operations
where we regularly check for risks to freedom of
association and effective collective bargaining.
This level of commitment is achieved by listening and
responding to the issues which our employees value
in terms of their daily lives. The process of listening to
our workforce creates trust through engagement at
all levels, whether on an informal basis or on a more
formal basis. This in turn results in relationships and
partnerships built on honour and integrity.
Consultations and Collective Agreements cover pay
and remuneration, hours of work, working conditions,
32
Non-union members
anonymity of complainants. Issues are dealt with
according to established procedures within the
Collective Agreements. These include counselling,
support and a formal, transparent process by which
employees can gain recourse from the management
without compromise to their statutory rights under
the Malaysian Industrial Relations Act 1967. Policies
on grievances and conciliation procedures are
distributed widely in appropriate languages.
Although not specifically provided for within such
agreements, the Group has always practised an open
consultation policy in informing union representatives of
significant operational changes that could substantially
affect their members. It has always been the practice
that such changes be announced well in advance.
Typically, depending on the nature of the change, a
minimum of 4 weeks notice is given.
Since 2001, at least 70% of all eligible employees have
been members of unions. In 2006, our partnerships
with all unions were reinforced and our collective
agreements were renewed to the satisfaction of all
parties in a total of eight collective agreements. These
included five agreements with our in-house union (UMW
Group Workers Union) and one agreement
each with the National Union of Commercial Workers,
Sabah Commercial Employees’ Union and Sarawak
Commercial Employees’ Union. These new collective
agreements cover the period from 2006 to 2008. The
benefits provided to union members include higher
salary levels, wider salary bands and several improved
non-monetary benefits.
are also covered within collective agreements which
include commitments which go beyond routine legal
requirements.
In the Automotive Division, trade union membership
has covered 79.1% of the workforce on average during
the review period. Since the main first tier suppliers to
this Division are either other UMW companies or our
partners in Toyota Motor Corporation or its affiliates,
we can be confident that the proportion of union
membership is also high and at least 70% on average
during the review period.
We have a strong commitment and a clear policy
to provide a safe and healthy environment to our
employees, our customers and our visitors. We are
continuously improving safety standards and we hope
to be able to achieve OHSAS 18000 by first quarter of
2009 at the non-Automotive Division. This will then
be gradually extended to other Divisions. The Group is
already in a position to report zero fatalities for all of its
global operations since the turn of the millennium.
OCCUPATIONAL SAFETY AND HEALTH (OSH)
Our Occupational Safety and Health (OSH) policies
adhere scrupulously to the legal requirements in the
countries in which we operate. Health and Safety topics
OSH is managed through a combination of collective
agreements, adherence to local laws and adoption of
international best practice. For example, our collective
agreements require personal protective equipment
for all of our staff working in potentially hazardous
environments. As required by law, our OSH Committees
have a 50-50 composition of joint managerial-employee
representatives and there is also an equal composition
of representatives on OSH audit and accident
investigation teams.
In the non-Automotive Division, four out of eight
major sites reported zero lost time injury (LTI) in 2005
and 2006 with three of the remaining four showing a
ACCIDENT RATE: GROUP ACCIDENT FREQUENCY RATE
Accidents per
million work hours
6.50
6.00
5.93
5.50
5.00
4.50
3.96
4.00
3.80
3.50
3.00
2.58
2.50
2.26
2.20
2005
2006
2.00
2001
2002
2003
2004
33
SALARIES AND BENEFITS PER EMPLOYEE
RM per employee
55,000
52,201
50,000
46,211
45,000
40,000
46,403
43,833
39,344
39,630
35,000
2001
2002
2003
declining trend. Many of the injuries recorded are minor
level (one to four days Medical Certificate leave) injuries
which are also included in the accident rate calculations
as a matter of best practice. Since 2004, a formal
statement of OSH has reinforced our commitment to
achieving a declining accident rate and this commitment
has been successful overall.
UMW JDC Drilling Sdn Bhd achieved zero lost time
incidents during the review period. UMW JDC Drilling
Sdn Bhd is part of the Oil & Gas Division and records
the highest amount of man-hours of a single company
within our Oil & Gas operations.
UMW Equipment & Engineering Pte Ltd Singapore
division has received the Singapore H.E.A.L.T.H. Gold
Award in recognition of its effective initiatives in
workplace health programmes for employees.
The Group’s OSH Committees meet at least four times
a year to ensure that proper OSH systems are in place.
Pro-active programmes cover job safety analysis, plant
safety audits, chemical exposure monitoring, chemical
health risk assessments and monthly inspections to
prevent gas leaks. OSH activities including training
are also regularly conducted.
Awareness programmes are also run which include
safety week campaigns, road safety campaigns, HSE
video viewing, housekeeping 5S programmes and an
34
2004
2005
2006
annual fire-fighting competition. All employees have
to attend a one-day safety awareness training course
at least once after joining UMW. Other forms of safety
training for our staff include crisis response, building
evacuation, basic fire safety and CCCF (completely check
and completely find out) for machine operators.
In addition our most important contractors within the
Automotive Division have to go through the “green
card” contractor safety passport programme before
being allowed to work at key UMW sites.
As part of our commitment to product health and safety,
all customers who purchase heavy equipment are offered
OSH training. Between January and April 2007, 575
employees from our customer companies have
received training, more than for the whole of 2006.
Beyond basic OSH training, employees are provided
with informal training and counselling to assist in
preventing and treating serious diseases or exposure
to high risk manufacturing activities. Such programmes
are currently not extended to the family members of
employees or local community members.
Strict regular medical check-up guidelines exist for staff
involved in specific hazardous condition. Such guidelines
follow legal requirements and the guidelines provided in
the UMW safety, health and environment manual.
Additionally, executive level staff receive medical
check-ups every two years for those below 40 years
of age while annual check-ups are provided for those
above 40 years of age. These are general health
checks for all staff, even those in non-hazardous
work environments.
CONTINUOUS TRAINING AND SKILLS
ENHANCEMENT
As we continue to grow, we remain mindful of the
impact that changes to our business have on our
employees. One way to help them to adapt is through
continuous learning. This is provided to all employees
from the moment they join us. All new employees are
taken through orientation and induction programmes,
and plant and other facility visits are also conducted to
provide on-site familiarisation. All staff members above
the level of production workers also go through Beyond
Boundaries training. In Phase 1, they were introduced
to The New UMW to understand what it meant to them
as employees. Soon, they will be shown how to live and
breathe the new values in their daily tasks and to really
go Beyond Boundaries in Phase 2 of their training.
Both the Automotive and non-Automotive Divisions
have dedicated training centres. These centres are
staffed by full-time UMW employed trainers. External
training is also provided to complement internal
expertise. Training courses on offer extend from
management development to technical and safety
training, sales & after sales training and computer
skills enhancement.
In 2006, 23% of all employees participated in some
form of training or learning. Each training event involves
around nine participants on average. The average
training budget for 2006 was RM243 per employee and
within the non-Automotive Division nearly 14 hours
of training were provided per employee.
While internal training courses are common, external
training is also provided within each year’s budget.
Additionally, scholarships are available for longer-term
education programmes.
In 2007 the UMW Group established the UMW
Executive Diploma in General Management at SEGi
College Bhd in collaboration with the University of
Sunderland, UK. In its first year, 24 employees who
hold supervisor positions or executive positions have
been enrolled.
Studies are presently being carried out with a view to
building a state-of-the-art UMW International Training
Centre which is intended to benefit not only UMW
employees but also the industries in which we operate.
The Group recognises, however, that it does not
at present provide programmes to support retiring
employees even though the retirement age in Malaysia
is only 56 years.
REWARDS AND BENEFITS
We aim to support our employees by rewarding them
both financially and non-financially at a level that is at
least at par and mostly above, the general level of pay
across the overall Malaysian industrial sector. Over
the years, we have increased the level of non-salary
related rewards and by 2006, we provided a total of 22
additional benefits, out of which 18 apply to the
majority of our employees.
Over the last three years employees’ total rewards and
benefits have been significantly enhanced in line with
their contribution to the Group’s increased turnover
and profits. Both financial and non-financial benefits
have been increased and coverage across employees
has also been extended.
In line with its efforts to be an employer-of-choice, we
employ an independent consultant to conduct a
five-yearly industry benchmarking exercise. We are
proud that monetary rewards to our employees, in the
form of salaries and wages, are now above the industry
average and that we are a leader in providing other
benefits that are also above industry and national levels.
While on its journey to going Beyond Boundaries to
become a truly world-class brand, UMW aims as far as
possible to go beyond mandatory benefits schemes.
For example, we contribute 4% above the minimum
mandatory employer share of pension contribution to
the national pension scheme, the Employees Provident
Fund (EPF). For those employee groups that do not
qualify for the additional 4% employer contribution
to the EPF, we provide an equivalent 4% into another
defined benefit scheme. Within this policy all eligible
employees are entitled to retirement benefits after
serving the Group for a period of not less than
five years.
35
UMW GROUP-WIDE BENEFIT PLAN
36
Benefits
1
Higher EPF contribution
2
Group Term Life & Group Personal Accident
3
Maternity Leave
4
Retirement Benefit (applicable to those who joined UMW on or before 31/12/73)
5
Retirement Gift
6
Stock Option
7
Staff Car Purchase Discount (for Toyota & Perodua cars only)
8
Car Interest Subsidy
9
Housing Loan Interest Subsidy
10
Personal Computer Loan
11
Pilgrimage Leave
12
Dental – Self
13
Dental - Spouse & children up to 19 years old
14
Wedding Gift - 1st legal marriage
15
Gift to new born
16
Bereavement Donation (for next of kin)
17
Children’s Education Subsidy
18
Children’s Academic Excellence Awards
19
Long Service Awards - 10th, 20th & 30th
20
Medical Check-Up
21
Medical Check -Up - Above 55 years old
22
Education Assistance
MARKETPLACE
37
MARKETPLACE
OUR PRODUCT RESPONSIBILITIES
THE GROUP’S EQUIPMENT DIVISION OPERATES MAINLY AS AN
INDUSTRIAL TRADING COMPANY. IT IMPORTS AND SELLS PRODUCT RANGES
FROM KOMATSU HEAVY EQUIPMENT, TOYOTA FORKLIFTS, TENNANT
(SCRUBBERS, SWEEPERS), COMPAIR & COOPER BRANDS OF AIR
COMPRESSORS, AMONGST OTHERS.
AS A DISTRIBUTOR AND RESELLER, THE GROUPS’ INVOLVEMENT IN THE
LIFECYCLE OF THESE PRODUCTS IS LIMITED TO THEIR FINAL STAGES TO
WHICH THE GROUP CONTRIBUTES IN VARIOUS WAYS:
• Marketing and promotion
To highlight the safe use of our products, we have built forklift training
circuits to provide regular training to our customers. This helps to protect
untrained users from the obvious hazards associated with the misuse of
industrial equipment. Training is also provided for other heavy equipment
to encourage a “Safety First,” attitude and to provide handling skills to the
operators in maneuvering such equipment.
• Storage distribution and supply
The Group also prioritises safety in its storage facilities. It maintains
large yards and warehouse hangars especially set aside or built for the
safekeeping and storage of the imported industrial equipment, from the
largest Komatsu heavy movers to small Honda brush cutters. These facilities
allow parking and storage of all equipment in a safe manner; they protect
the equipment from damage that could impair safe operation after sale and
also prevent it from damaging other equipment or personnel.
• Use and service
For most heavy equipment, the Group encourages clients to take operating
leases rather than to purchase the equipment. This allows UMW to
guarantee the quality, maintenance and safety of the equipment as an
ongoing service. The leasing scheme allows us to ensure that our heavy
equipment is optimally maintained to prevent injuries not only to operators
but also to others who work within the same areas. Service schedules can
also be strictly monitored and teams of service experts are always at hand
throughout the countries in which we provide this equipment.
• Disposal, reuse, or recycling
Operating leases also allow us to take back the equipment at the end
of their useful lives so that we maintain control on the disposal, reuse
and recycling of the equipment in accordance with best practice and the
protocols of our major suppliers.
We are therefore heavily involved throughout all four final stages of the
product life cycle during which we maintain logs of failures or particular
technical problems encountered. These are then regularly fed back to our local
38
and foreign suppliers, including within our own Group,
for advice and improvement. Our staff members are also
regularly trained by experts from our suppliers on how
to handle, store, operate and dispose or recycle their
equipment.
Automotive Division Product Safety
Features
Product safety in the Automotive Division is central to
our commitment to our customers. UMW Toyota Motor
Sdn Bhd and our partners in Perodua use world-class
technologies developed in partnership with Toyota
Motor Corporation and Daihatsu Motor Corporation.
This helps us to build-in safety features as standard
across the whole of our vehicle range.
Specifications vary from model to model and are regularly
updated. Product information is provided in full for each
model on our websites. Common technologies available:
Active Safety Features – help prevent crashes by
providing greater control of the vehicle
•
•
•
•
•
•
•
Anti-Lock Brake System (ABS) prevents wheel-lock in
an emergency
Active Controlled Suspension for improved tyre
performance
Toyota Electronic Modulated Suspension (TEMS) adjusts shock absorber stiffness
Vehicle Stability Control (VSC) is an active safety feature that helps control skidding
Active 4-Wheel Steering automatically adjusts the angle of the rear wheels
Limited Slip Differential is an advanced system to prevent the car from freewheeling
Traction Control (TRC) is for added grip on slippery
surfaces
Passive Safety Features – build features into the design
of the vehicle that improve safety performance
• Secondary Impact Absorption
• Energy Absorbing Steering Wheels
• Padding
• SRS Airbags Rescue
• Driver-side and Passenger-side Airbags
PRODUCT WARRANTY PROVISIONS
RM million
90
77.0
80
70
64.4
60
50
42.3
40
32.8
30
20
10
0
16.5
7.9
2.2
2001
27.3
18.4
6.9
1.1
2002
Provided during the year
3.3
2003
33.2
25.3
16.9
10.1
12.0
7.2
2004
Used during the year
2005
2006
Provisions unused at year end
39
•
•
•
•
Energy Absorbing Vehicle Structures
Seatbelt Protrusions
Jam Resistant Doors
High Integrity Structures
We are pleased that our commitment to quality has
resulted in no complaints to regulatory or similar bodies
in respect of the health and safety features of our
models at any time.
Therefore, we have in place a professional team of
customer service personnel in all Divisions, especially
Company
Standard Certified
2005
TS 16949 Certification
2005
Automotive Industries Sdn Bhd
ISO/TS 16949 Certification
2006
KYB-UMW Malaysia Sdn. Bhd. ISO/TS 16949 : 2002
2006
KYB-UMW Steering Malaysia Sdn. Bhd.
ISO/TS 16949 : 2002
2006
UMW Auto Parts Sdn Bhd
ISO/TS 16949 : 2002
2006
UMW Oilpipe Service Sdn Bhd
Certificate of Authority to use Official API Monogram
40
Committing to quality even after sales
The Group remains very conscious of its responsibilities
to its customers and aims to go further than standard
sales and after-sales services. We realise that in order to
achieve truly world-class status as a brand, every single
stage of sales activities has to be top-notch and
at international standards.
Company
Standard Certified
2000
ISO 9001/QS9000 Certification
2003
UMW Engineering Sdn Bhd
ISO 9001 : 2000
2003
Perusahaan Otomobil Kedua Sdn Bhd
ISO 9001 : 1994 certification (PSSB)
2005 UMW Corporation Sdn. Bhd. – MS ISO 9001 : 2000
Group Human Resource Division
2005
Toyota Boshoku UMW Sdn. Bhd.
ISO9001 : 2000
2006
KYB-UMW Malaysia Sdn. Bhd.
BS EN ISO 9001 - 2000
2006
KYB-UMW Steering Malaysia Sdn. Bhd.
BS EN ISO 9001 - 2000
2007
Perusahaan Otomobil Kedua Sdn Bhd.
ISO 9001 : 2000
in the Automotive and Equipment businesses. These
teams provide contact points in person, by telephone
and through the internet to deal with customer service
issues and to monitor customer satisfaction. This aspect
of our customer care process is under continual review
to ensure the highest standards of service. Customer
privacy is a key issue and we have had no incidents
of breaches during the review period. To protect our
customers from product failure and as a guarantee
of our long-term commitment to them we regularly
provide substantial provisions in our financial accounts
to cover warranties. As a matter of good practice, we
always make larger provisions so as to be comfortable in
providing the best maintenance service at all times.
The Group provides warranties of between 1 to 10 years
on most products and undertakes to repair or replace
items that fail to perform satisfactorily. This commitment
starts as soon as a sale or lease is signed and customer
starts using our product.
A provision of RM 25.3 million was made in 2006 and
RM 42.3 million in 2005 for product warranty costs. At
the end of 2006, this provision stood at just above
RM 77 million. We rarely use more than 50% of each
year’s provision but we continue to provide a high
amount for such warranties yearly. This large annual
carryover provision amount is testimony to our honesty
and commitment to our products’ quality and to their
health and safety features.
Management and Quality Standards
Over time, we have increased the number of business
units which are managed to international quality
and management standards, as part of our efforts to
achieving world-class status. We have also successfully
extended the coverage of formal certification across
most of our main operations including in our sales and
distribution outlets. Each business within the Group
holds a regular QCC Convention, to catch-up on recent
developments and to reward good quality management
performance by staff members and teams.
PRODUCT INFORMATION
Product labelling is mainly conducted by our partners.
The various international suppliers of the products
provide product information through sales brochures
and technical manuals. In many cases, UMW provides
translations into Bahasa Malaysia for the local market
and promotes product information through regular
trade and public information events.
The Group also provides training to customers to assist
in familiarising customers’ staff with the different
modes of operation of the various equipment sold. This
is very helpful in assisting users and allows hands-on
application, minimising difficulties in using product
information that is in a foreign language. From 2001 to
2006, 3,524 customers followed a training programme
at UMW. This represents an average of 587 customers
trained annually.
Marketing Communications
The Group has a voluntary code of conduct that applies
to all staff including those in marketing. There is,
however, no specific code related specifically to
marketing communications.
One of UMW’s rebranding initiatives includes being
more vocal and prominent in the media in terms of
publicising their myriad of achievements. This course of
action will also introduce UMW to the public as a Group,
making known its many products and services as well
as core businesses.
The Group does not sell any product that is under any
sort of ban in any of the markets in which it is engaged.
None of its products are subject to any public
controversy or stakeholder concerns.
41
Compliance
The Group is pleased to state that it has not had to pay
any significant fines for non-compliance with laws and
regulations concerning the provision and use of its
products and services over the last six years that this
report covers and up till the issue date of this CSR report.
Conforming to External CSR Standards
and Protecting Human Rights
We make every effort to ensure that our business
practices conform to appropriate standards such as
those on Corporate Disclosure Policies and Procedures
which are based on best practices recommended by
Bursa Malaysia Securities Berhad and the Malaysian
Code on Corporate Governance.
In addition, for the purposes of this review we have
assessed our policies in the context of a number of
external CSR standards. We believe that in practice, our
approach to the management of our operations is fully
consistent with the guidelines provided by the relevant
national and international frameworks including the
Malaysia National Integrity Plan, the Putrajaya
Committee on GLC Transformation Guidelines, the
International Labour Organisation’s Declaration
of Fundamental Principles and Rights at Work, ILO
Tripartite Declaration of Principles concerning
Multinational Enterprises and Social Policy (MNE
Declaration) and the United Nations Global Compact.
We also believe that our practices are aligned with the
UN Millennium Development Goals (MDG), especially
Goal 2 on primary education, Goal 7 on environmental
sustainability and Goal 8 on developing a global
partnership for development.
We are confident that all of our significant investment
are protective of human rights. In addition, although
it has not been the policy of the Group to provide
screening on human rights issues, in practice, all
42
significant suppliers and contractors are expected to
conform to the Core Values of the Group which cover
policies and procedures concerning aspects of human
rights that are relevant to operations. All Group
employees receive training on our Core Values.
In common with all responsible companies, UMW
opposes the use of child labour or forced labour of any
form. Since our business operations are mainly in the
manufacturing industry in Malaysia, we believe that
our exposure to the risk of such human rights breaches
is small. Nonetheless we aim to remain vigilant and
as a matter of policy, we will not tolerate such abuses.
Our operations also do not infringe on the rights of
indigenous people and there have been no violations of
this kind during the review period.
UMW Group has operations in Myanmar which is
recognised as a country of concern. These operations
are small and do not provide a material contribution to
the overall economic value of the Group. Nonetheless,
in order to support our small workforce of around sixty
people, the Group has decided to continue operations
in Myanmar for the time being. We believe our business
practices provide protection for our employees as far
as possible and guarantee them and their families a
livelihood which they otherwise might not have. We will
continue to monitor developments and risks in Myanmar
as a matter of priority in the future.
ENVIRONMENT
43
ENVIRONMENT
The environmental impact of our operations and
products is a high priority at UMW and reflects the
concerns of our leading stakeholders.
Over the years, we have taken important steps to build
a sustainable environmental policy which reflects the
main areas of our business and the products we supply
into the marketplace.
This is in line with UMW going Beyond Boundaries. In
its efforts to become truly world class, the Group never
forgets it responsibility to the societies as well as the
environment in which it operates.
Environmental Standards in UMW
Automotive Businesses
Our main focus has been on our core business in the
automotive sector which accounts for around 70% of
our sales, 60% of our physical assets and employs more
than 70% of our workforce.
In January 2000, UMW Toyota Motor Sdn Bhd, in
collaboration with officers from the Department
of Environment, set the foundation of our current
environmental policies with a set of written guidelines
and procedures for waste management in its service
centres in line with Environmental Quality (Scheduled
Waste) Regulations. Environmental inspections and
briefings for staff members were also introduced.
In 2002 UMW Toyota Motor Sdn Bhd introduced an
Environmental Policy and a 5-Year Environmental Action
Plan (2002-2006) to extend this policy beyond minimum
legal compliance. The policy was extended in line with
the 4th Toyota Environmental Action Plan (2006-2010)
which has a clear set of targets and action points.
In 2003, UMW Toyota Motor Sdn Bhd introduced regular
staff training and monitoring of air and water, to extend
the environmental policy into after-sales outlets.
In July 2003, Assembly Services Sdn Bhd (ASSB)
introduced its first “Toyota Suppliers Environmental
Guidelines” to ensure high environmental standards in
the supply chain. These were extended in 2006 in line
with the “Toyota Green Purchasing Guidelines” which
meet the world-class standards set by our partner,
Toyota Motor Corporation of Japan (TMC). These provide
a comprehensive set of environmental requirements
for suppliers to ASSB as part of its commitment to
implementing the global environmental standards of TMC.
44
UMW Toyota Motor Sdn Bhd launched a new integrated
Environment, Safety and Health Policy (ESH) in May
2004 following on from a waste recycling programme
started in February of the same year. Information
manuals including the Environment, Health and Safety
Committee Member’s Guide and Tips on How to Work
Safely Everyday were distributed to all branches.
The process of formal certification of environmental
management systems (EMS) outside of the main office
began when UMW Toyota Motor Sdn Bhd, Kuching
branch became the first ISO 14000 certified sales,
service and parts distributor in Malaysia in June 2004
(SIRIM QAS International certified).
In 2005, UMW Toyota Motor Sdn Bhd set a target of
ISO14001 certification for 16 sites which it surpassed
with ease. In all, 18 sites including head office, parts
distribution centre and 16 after-sales branches, achieved
certification by the end of the year.
To ensure that distribution outlets also adopt good
environmental management systems, A Dealers’
Environmental Risk Audit Programme was introduced at
all service outlets including dealers’ outlets.
To raise awareness of environmental issues amongst its
staff members, ASSB organised a number of initiatives
including a free screening of the film-documentary “An
Inconvenient Truth” for employees, their families and
friends; a “Fill and Win” environmental survey to help in
policy development in which 348 staff responded; a Top
10 Best Green Suggestion programme and a “Cash for
Trash Recycling Programme.”
UMW Toyota Motor Sdn Bhd Environment
Action Plan 2006-2010
Following the success of the 2002-2006 Environmental
Action Plan, UMW Toyota Motor Sdn Bhd adopted a
second five-year strategy for 2006-2010 in line with
directions set by Toyota Motor Corporation of Japan.
The main aims of this policy are:
• To be the leader in environment conservation
performance amongst the automotive companies
in Malaysia
•
•
•
•
To minimise pollution through proactive prevention
measures, conserve natural resources and promote
recycling
To promote environment and conservation efforts
to business partners
To actively disclose environmental information to
the public
To strive to comply and achieve a better performance
level that is applicable to environmental legal
requirements
Specific Implementation Plans
Specific implementation plans are drawn from the
Global Environmental Action Plan from Toyota Motor
Corporation of Japan. UMW Toyota Motor Sdn Bhd in
Malaysia has chosen nine out of twenty policies that are
applicable and most effectively implemented at a local,
rather than global, level. They are:
• To reduce CO2 emissions in production and
non-production activities
• To promote the effective use of resources to
contribute further to the realisation of a
recycling-based society
• To reduce water consumption
• To promote the management and reduction of
Substances of Concern (SoC) – to eliminate the use
of four SoCs (lead, mercury, cadmium and hexavalent
chromium) globally
• To implement initiatives that reduce volatile organic
compound (VOC) emissions
• To strengthen consolidated environmental management
• To further the promotion of environmental
management at business partners’ level
• To enhance environmental education
• To improve disclosures of environmental information
and two-way communication
In each case, a specific set of challenging targets
and an action plan is put in place with the aim of
achieving the global standards during the 2006-2010
period. Operational issues are reported and monitored
on a monthly basis and any areas of non-compliance
with targets, are subject to immediate corrective
counter measures.
The aim is to achieve and maintain world-class standards
in environmental management and to prevent and
reduce the adverse impact of automotive sales and
services on the environment.
Perusahaan Otomobil Kedua Sdn Bhd
Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is
Malaysia’s second national car company and is an
associate company of the UMW Group. In April 2004,
its sales division, Perodua Sales Sdn Bhd (PSSB), became
the first automotive sales company in Malaysia to
achieve ISO 14001:1996 certification from VCA UK.
In October 2004, its manufacturing arm, Perodua
Manufacturing Sdn Bhd (PMSB), successfully
implemented the Toyota Avanza production project at
its plant. This was a joint collaboration among PMSB,
UMW Toyota Motor Sdn Bhd, Toyota Motor Corporation
of Japan (TMC), Daihatsu Motor Corporation (DMC)
and PT Astra Daihatsu Motor, and PT Toyota Motor
Manufacturing in Indonesia. This project saw the
adoption of TMC global standards with regard to
the manufacturing processes of Malaysia’s second
national car company.
International environmental standards
across the UMW Group
The UMW Group has adopted a Group-wide policy of
ensuring that its environmental management systems
conform to international standards, particularly those of
the ISO14000 series.
Over time, we have increased the number of business
units which are managed to ISO14001 guidelines, and
have successfully extended the coverage of formal
certification across most of our main operations
including in our sales and distribution outlets.
We are committed to continuing these efforts and
to ensuring recertification as a routine and ongoing
process. UMW also supports its associated companies
in their efforts to achieve certification of their EMS
procedures to reach international environmental
standards.
The process of integrating environmental management
with other areas is also ongoing. In September 2006,
UMW Pennzoil Distributors Sdn Bhd and Lubetech
Sdn Bhd launched their Health, Safety, Security and
Environment Policy. UMW Advantech Sdn Bhd has
also moved to enhance its own ESH Policy and
procedures further, following consolidation with
UMW Auto Parts Sdn Bhd which has had ISO14001
certification for some years.
Impact of our operations on the local
environment
As a matter of practice, UMW operations are mainly
located on industrial sites and special industrial zones.
None of our significant operations are located, owned or
managed in, or adjacent to, protected areas and areas
45
Year 1999
ISO14001 Certification
Assembly Services Sdn. Bhd. (ASSB)
2001
Automotive Industries Sdn Bhd (AISB)
2003
2004
Perodua (Perusahaan Otomobil Kedua Sdn Bhd) (POSB & PSSB)
2004
UMW Toyota Motor Kuching 3S Branch & Melaka 3SBranch
2004
Perodua (Perusahaan Otomobil Kedua Sdn Bhd) (PMSB)
2005
UMW Toyota Motor Sdn Bhd – Head Office
2005
UMW Toyota Motor Sdn Bhd – Parts Distribution Centre
2005
UMW Toyota Motor Sdn Bhd – 16 sales and after-sales branches
2006
KYB-UMW Malaysia Sdn. Bhd. (Formerly known Kayaba (M) Sdn Bhd)
2006
KYB-UMW Steering Malaysia Sdn. Bhd. (Formerly known Kayaba Hydraulic Sdn Bhd)
2006
2006
Toyota Boshoku UMW Sdn Bhd (recertification)
2006
All Toyota Motor Service Centres (Multi-Site Certification) (37 sites)
2006
UMW Oilpipe Services Sdn Bhd (Formerly known as UMW Citra Maju Sdn Bhd)
2007
Perodua (Perusahaan Otomobil Kedua Sdn Bhd)
2007
Automotive Industries Sdn Bhd (AISB)
Note: UMW Oilpipe Services Sdn Bhd (Formerly known as UMW Citra Maju Sdn Bhd) achieved its Registration Certificate
for its Environmental Systems in 2003
of high biodiversity value outside protected areas. Our
operations do not, therefore, have significant impact on
biodiversity in such areas or on species with habitats
in those areas. Protection and restoration of such areas
are therefore not a significant part of our ongoing
environmental policy. Nonetheless, we remain conscious
of the potential impact of our operations and products
on biodiversity and aim to take into account such issues
in our risk management strategies, current actions, and
future plans for managing impact on biodiversity.
Similarly, as an industrial user of water, we are conscious
of the impact our operations have on scarce water
resources. Our Automotive Division has targets in place
for the reduction and reuse of water in its operations,
46
and has successfully reduced water usage per unit
during the review period. We believe that our efforts are
helping to mitigate significant impact on water resources
due to our operations. There have been no significant
spills during the review period and no significant water
bodies have been affected by discharge or run-off.
Environmental Product Features in the
Automotive Division
UMW Toyota Motor Sdn Bhd uses technologies
developed by our partner Toyota Motor Corporation
of Japan which are widely regarded as amongst the
most innovative and environmentally-friendly in the
automotive industry.
Material issues relating to the environmental
performance of the vehicles in our range are therefore
regulated and controlled by the world-class systems and
technology of our partner. UMW Toyota Motor Sdn Bhd
implements these systems to the letter and adopts this
technology in all of the vehicles in our range.
The petrol engine models we sell use the Toyota Variable
Valve Timing with Intelligence (VVT-i) engine system.
This provides better fuel efficiency and more efficient
combustion which lowers exhaust emissions. All of our
models comply with the national emissions standards in
Malaysia and elsewhere.
Looking to the future, the Toyota Hybrid Synergy Drive
is developing features for hybrid petrol-electric vehicles
such as the Prius, which significantly reduces CO2
emissions and improves the environmental performance
of the vehicles. These new models will be progressively
rolled out into the global market in the future.
Independent analysis shows that these improvements
are delivering real environmental benefits. In September
2007 a report by the US Environmental Protection
Agency ranked Toyota vehicles second most fuelefficient in the market. Toyota vehicles recorded
average fuel efficiency of 22.8mpg (9.7km/litre) for 2007
compared with 22.4mpg (9.5km/litre) for 2006.
In a separate report in the same month, the independent
lobby group Environmental Defense showed that in the
US, over the period 1990-2005, Toyota vehicles’ CO2
emissions rate fell by 3% despite increasing market
share. Average new vehicles emissions of CO2 were
reported as 4.6 TCO2/year, which is the second lowest
amongst all leading automotive companies.
In addition to fuel economy and emissions, our range
also includes models with an increasing percentage of
recycled and renewable materials input in line with the
Toyota Motor Environmental Plan. All of our models also
conform to the defined noise standards in the countries
in which they are sold.
Continuous improvement is a key feature of this process
and full details, regular updates and key performance
indicators can be found on the websites of UMW
Toyota Motor Sdn Bhd in Malaysia and Toyota Motor
Corporation in Japan.
The link between Perodua and Daihatsu has also ensured
the adoption of similarly high environmental standards
into the Perodua range. Daihatsu is part of the Toyota
Motor Corporation group and the synergies between
all of our companies offer significant technological
advantages which improve the overall environmental
performance of the Group’s product range.
Incorporating Environmental Issues into
the UMW product range
UMW is progressively improving its product range to
incorporate more environmentally-friendly features and
options for its customers.
Reducing noise with “Silent Generators”
In August 2007, UMW Industrial Power Sdn Bhd, a
wholly-owned subsidiary of UMW Corporation Sdn Bhd,
launched its range of inverter EU silent generators,
featuring the new EU65is 6.5kVA generator. UMW
Industrial Power Sdn Bhd has been the sole distributor
of Honda Power Products and Outboards since 1969.
The Honda EU series is the new generation of generators
that are environmentally friendly, compact, lightweight,
portable and quiet. They use the unique “Eco-Throttle”
design which ensures longer continuous operation with
superior fuel economy.
Promoting “Green Cleaning”
In order to bring cleaner technologies to industrial
business customers, UMW Industries (1985) Sdn Bhd
introduced the Tennant M20 Scrubber-Sweeper during
a “Green Cleaning” Seminar in March 2007. The Tennant
M20 is the cleaning industry’s first-ever integrated,
single-system scrubber-sweeper and is safer for the
environment. The Tennant FAST technology system
uses 70% less water and 90% less detergent, and runs
up to three times longer than conventional scrubbing
machines, thus reducing energy consumption. In
collaboration with the supplier, the Tennant Company
USA, the new cleaner helps to promote “Green
Cleaning” as an industry response to the rising
concerns about global warming, rising energy prices
and environmental degradation.
Statement on compliance
We are pleased to report that neither the Group nor
any of its associated companies has been the subject of
significant penalties for non-compliance to environmental
regulations and laws during the review period.
We are also pleased to report that no significant spills of
waste occurred at UMW sites during the review period.
Due to the diversity of our operations, for the current
review we are unable to provide an estimate of the
environmental impact of our transportation use,
materials used by volume or the percentage of recycled
materials and products and packaging reclaimed. We will
endeavour to provide this information in future reviews.
47
OUR ENVIRONMENTAL
PERFORMANCE
(For Assembly Services Sdn Bhd (ASSB)
FOR THE CURRENT REVIEW, WE ARE ABLE TO PROVIDE
PERFORMANCE DATA FOR ASSEMBLY SERVICES SDN BHD (ASSB)
WHICH IS MOST MATERIAL TO OUR OVERALL ENVIRONMENTAL
PERFORMANCE. IN FUTURE REPORTS, WE WILL ENDEAVOUR TO
PROVIDE GROUP-WIDE ENVIRONMENTAL PERFORMANCE DATA IN
THE FORMAT REQUIRED BY THE GRI GUIDELINES.
The environmental management system at ASSB
provides Action Policies in the following areas:
Promoting counter-measures that help prevent global
warming:
• Goal: Reduce energy use per unit
• Review and remove excess lighting
• Optimise operational timing of equipment
• Improve technologies to reduce energy use
• Reinforce awareness of energy reduction in the
workplace
Manage and reduce environmentally-damaging
substances:
• Goal: Reduce Volatile Organic Compounds
(VOC) emission
• Goal: Eliminate usage of Banned Substances
of Concern (SoC) in the plant operations and vehicles
• Improve technologies to minimize paints and thinners
usage during painting process
• Reduce thinner usage by recovery/recycling system
• Conduct chemical prior assessment system and
supplier/parts audit for SOC screening
Reduce general and scheduled waste to landfills and
conserve resources:
• Goal: Reduce Waste using 3Rs strategy for waste
Reduce, Reuse, Recycle
• Implement recycling activities to reduce landfill waste
• Reinforce waste reduction schemes
• Reinforce awareness of waste reduction in the
workplace
48
Water conservation:
• Goal: Conserve water and minimise wastage
• Reuse waste water for work use
• Enhance water conservation awareness at the
workplace
Monitoring of key environmental data is carried out on
a regular basis in order to achieve each goal. Monthly
performance statistics are reviewed and countermeasures taken in cases of non-compliance with targets.
Internal voluntary limits on each form of pollution are
challenging and exceed local legal requirements.
For the purposes of this review, we have also provided
estimates of our indirect Green House Gas emissions
based on energy use per unit. Calculations are made on
the basis of the indirect Green House Gas estimation
protocol of the World Council for Sustainable Business
Development and the World Resources Initiative: “The
Greenhouse Gas Protocol - A corporate reporting and
accounting standard (revised edition)”, March 2004.
Overall, our management policy has been extremely
successful in reducing or controlling our environmental
impact.
ENERGY TREND FY2001 -2006
4.00
3.79
3.71
3.50
3.00
2.82
2.59
2.50
2.51
2.55
3.79
2.00
1.50
2.69
2.60
2002
2003
2.80
2.86
2.53
1.00
0.50
0.00
2001
Energy Usage Gj/unit
g/m 2
120.00
2004
2006
Target Gj/unit
VOLATILE ORGANIC COMPOUNDS (VOC) TREND FY2001 - 2006
110.00
100.00
95.00
100.00
90.00
77.00
80.00
60.00
2005
73.10
108.60
101.30
90.80
40.00
82.10
79.66
76.68
20.00
0.00
2001
2002
2003
VOC Trend g/m 2
2004
2005
2006
Target g/m 2
49
SCHEDULED WASTE TREND FY2001 - 2006
kg/unit
14.00
12.00
10.00
10.30
9.82
9.61
9.72
8.20
8.00
6.00
7.25
10.30
12.73
10.20
8.93
4.00
7.30
7.70
2.00
0.00
2001
2002
2003
Scheduled Waste kg/unit
40.00
2005
2006
Target kg/unit
TOTAL WASTE TREND FY2001 - 2006
kg/unit
45.00
2004
40.06
38.09
34.99
35.00
30.00
23.77
25.00
20.00
22.20
40.06
37.66
15.00
16.95
24.07
27.13
17.10
10.00
16.30
5.00
0.00
2001
2002
2003
Total Waste kg/unit
50
2004
Target kg/unit
2005
2006
WATER USE TREND FY2001 - 2006
m3 /unit
7.00
6.37
6.00
5.05
5.00
5.00
4.77
4.35
4.33
4.00
3.00
5.15
4.92
2.00
5.19
5.08
4.05
4.39
1.00
0.00
2001
2002
2003
WaterUsage m3 /unit
GHG CO2
metric tonnes/unit
2004
2005
2006
Target m3 /unit
ESTIMATED INDIRECT GREEN HOUSE GAS (GHG) EMISSIONS
CO2 METRIC TONNES/UNIT
0.60
0.50
0.53
0.40
0.41
0.41
0.37
0.36
0.30
0.41
0.20
0.10
0.00
2001
2002
2003
2004
2005
2006
*Estimates are based on the indirect Green House Gas estimation protocol of the World Council for Sustainable Business
Development and the World Resources Initiative: “The Greenhouse Gas Protocol - A corporate reporting and accounting
standard (revised edition)”March 2004
51
COMMUNITY
52
53
COMMUNITY
As UMW moves towards achieving world-class status as an
organisAtion, one of the Group’s main concerns is to be a caring
corporate citizen. We consider our social responsibilities to be
as important as our corporate role at both Group and Division
levelS. Therefore, we have adopted a fully brand-aligned CSR
strategy that, apart from promoting good employment and
business practices, also attracts investors from the Socially
Responsible Investment (SRI) Community.
Each year, UMW supports a number of non-profit and non-political
organisations through its community programme. However, our focus is not
just on funding charitable projects. The Group is looking at international best
practices in CSR with a concentration on the marketplace, workplace, the
environment and community.
Our involvement with community groups aims to respond to their needs on a
case-by-case basis. With this in mind, we have developed a number of different
ways to assist and support the communities in which we live and work.
Building long-term relationships
Many of our community programmes have a long history. For example, we
have encouraged children to develop and pursue musical interests by
sponsoring the school band at Sekolah Menengah Sultan Salahuddin Abdul
Aziz Shah near our main site in Shah Alam. In 2006, we donated musical
instruments worth RM86,956 along with a RM5,000 annual grant which we
have provided since 1982.
UMW - PENILAIAN MENENGAH RENDAH (PMR) EXAMINAIONS AWARDS
54
Since 1995
Amount
Awards
Schools
Amount
Awards
2006
RM15,000
30
15
RM141,000
189
2005
RM11,000
22
11
RM126,000
159
2004
RM11,000
22
11
RM115,000
137
2003
RM11,000
22
11
RM104,000
115
2002
RM16,500
33
11
RM82,000
93
2001
RM11,000
11
11
RM65,500
60
Since 1995, the UMW Penilaian Menengah Rendah (PMR)
Awards Scheme has provided annual prizes to secondary
school students for academic excellence. Each year
prize-winners receive RM500 worth of unit-trusts to
encourage them to begin responsible saving for their
future. The criteria are based on academic achievement
but also take into account family income, extra curricula
participation and good discipline records. The aim is to
provide assistance to excellent students who do not
have access to other forms of support.
variety of musical talents from around the world.
The performances are usually held at Auditorium MBSA
in Shah Alam, Selangor and provide a rare opportunity
for western classical musicians to perform outside of the
capital Kuala Lumpur.
Since 1999, we have provided an annual contribution to
Majlis Kanser National (MAKNA) through our payroll
giving scheme. UMW donations have been the largest
single source of funds for MAKNA for a number of years
during the review period.
Promoting Environmental Values in the
Community:
The Toyota Classics Concert Series
– Shah Alam
The Toyota Classics Concerts have raised and donated
RM4.1mil to 26 charity organisations around Malaysia
since 1990. The aim of the concert series is to provide a
forum for major international orchestras to perform in
Malaysia and to allow Malaysian audiences to enjoy a
Over the years, the main beneficiaries of donations
made from ticket sales have been organisations that
provide help and support to disabled children across
each of the different States of Malaysia.
The Toyota Eco-Youth Programme
The Toyota Eco-Youth Programme was introduced in
2001 in collaboration between UMW Toyota Motor Sdn
Bhd and the Ministry of Education. It was extended to a
national programme in 2002 and since then, each year,
15 schools in 14 states and the Federal Territory have
been invited to participate. The Eco-Youth programme
has received RM300,000 per year since 2003 for the
organisation of events and the award of prizes for the
best participants.
THE TOYOTA CLASSICS – FUNDS RAISED AND BENEFICIARIES
Amount Raised
2006 – RM451,556
Nagoya Philharmonic Orchestra
2005 – RM320,340
Budapest Operetta Theatre
Orchestra Hungary
2003 – RM254,740
Northeast Germany
Philharmonic Orchestra
Beneficiaries
St. Nicholas’ Home of Bagan Jermal, Penang
Persatuan Kanak-Kanak Spastik, Johor
Pusat Latihan Pertanian Bagi Orang Buta, Taman Harapan Temerloh, Pahang
Women’s Aid Organisation, Selangor
Persatuan Kebajikan Orang Cacat Pendengaran Terengganu
Yayasan Nur, Kuala Lumpur
Persatuan Kanak-Kanak Istimewa Kajang Selangor
Pusat Penjagaan Kanak-Kanak Cacat Taman Megah
Kuala Lumpur Society of the Deaf
Persatuan Kebajikan Kanak-Kanak Terencat Akal
Pulau Pinang and Pertubuhan Rumah Anak Yatim/Miskin Daerah Kuala Langat,
Selangor Darul Ehsan
2002 – RM240,000
Cadaques Orchestra Spain
Spastic Children’s Association of Selangor Darul Ehsan and Federal Territory
Persatuan Kanak-Kanak Khas Sungai Petani, Kedah Darul Aman
2001 – RM296,870
London Festival Orchestra
Spastic Children’s Association of Selangor Darul Ehsan and Federal Territory
School for Mentally Retarded Children (PERKATA), Sarawak
55
The objectives of the scheme are to encourage
secondary school students to propose and develop ideas
for creative solutions to environmental problems and
to promote:
• Awareness – to help students and their teachers
acquire an awareness of the environment and its
problems
• Sensitivity – to help students gain a variety of
experiences and to acquire a set of values and feelings
of concern for the environment
• Attitudes – to influence student attitudes to
encourage and motivate active concern for
environmental improvement and protection
• Skills – to help students acquire skills to identify
and solve environmental issues and problems
• Participation – to provide students with an
opportunity to be actively involved in working towards
resolving environmental issues and problems
By 2007, 784 students and 196 teachers in 98 separate
schools across Malaysia had participated and were
trained in the Toyota Eco-Youth Programme in areas
such as:
• Management of water and waste usage
• Elimination of open burning and rubbish dumping
• Prevention of oil erosion
• Reduction of electricity consumption in school
• Treatment of the recycling of effluents
In addition to the Eco-Youth Programme, UMW
also supports other environmental groups such as
Environmental Management and Research Organisation
of Malaysia which received RM180,000 in 2004 from
a grant provided by UMW’s partner, Toyota Motor
Company of Japan.
Small grants and special donations
In addition to its long-term commitments, UMW has
an annual scheme to award small grants and special
donations to the community on a case-by-case
basis. These smaller donations assist many types of
community groups including children, the elderly and
the disabled.
They also support other forms of community activity
such as sports clubs. In 2006, UMW made special
donations of RM10,000 each to support badminton at
Piala DYMM Sultan-Sultan Ke-50; the Malaysian Lawn
Bowls Federation; and the Persatuan Kriket Melayu
Malaysia Training Centre Programme.
A one-off special donation of RM100,000 was made in
2005 to the Perdana Leadership Foundation to support
the development of leadership skills in Malaysia.
56
In total, RM275,140 was provided for 62 small grants in
2005; RM127,915 for 47 grants in 2006, and RM186,362
for 46 grants up to August 2007.
Responding with help in times of need
UMW also offers humanitarian support and help in
times of desperate need, during natural disasters and
emergencies. In Malaysia, a donation of five generators
Umw Holdings Berhad:
Consolidated Donations (Small Grants And
Long Term Commitments)
Year
Amount (RM)
2001
387,196
2002
1,328,034
2003
1,139,208
2004
1,082,331
2005
558,736
2006
439,020
was made through Kontena Nasional Berhad for the
Johor Flood Relief Centre in 2006, and RM100,000 was
donated to the Malaysian Tsunami Appeal in January
2005. Immediately after the Asian Tsunami in December
2004, UMW and its employees contributed almost
RM270,000 to the Malaysian Tsunami Disaster Fund and
the Tabung Kemanusiaan Aceh.
Overseas, we donated RM10,000 through Majlis Belia
Malaysia to earthquake victims in Yogyakarta, Indonesia,
in 2006. Donations were also made to Palestinian
children through the National Institute of Social Care and
Vocational Training, and to provide Ramadhan Breaking
Fast sessions for underprivileged Muslims in Cambodia.
Living with the Communities in which
we work
As a matter of practice, most of UMW’s major
operations are carried out in industrial zones on the
outskirts of local communities. Occasionally, our
activities infringe on those living in the areas in which
we operate, and when this happens, UMW tries to
ensure that the needs of the local community are
accommodated as sensitively as possible.
One example arose in 1992 when UMW acquired
the New Serendah Estate from the Selangor State
Government on which 136 ex-estate workers were living
in workers’ quarters. On compassionate grounds, UMW
allowed them to continue to live there with free water
supply and subsidised electricity.
In August 2006, the Board of Directors of UMW
Holdings Berhad approved a proposal to transfer 8 acres
of land worth RM2 million to RV Global Sdn Bhd, which
will act in the interest of the 136 ex-estate workers. RV
Global will sub-divide the land for the construction of
houses and build a community hall and a playground for
the ex-estate workers and their families.
The final transfer was signed in July 2007 in the presence
of Dato’ G. Palanivel, Deputy Minister, Ministry of
Women, Family & Community Development.
Supporting the national CSR agenda
As a matter of policy, UMW refrains from supporting
organisations which are political or religious in nature
but as a good corporate citizen, we try to support areas
of public policy interest where a broad consensus has
been identified.
57
In the 2007 Budget, Prime Minister Dato’ Seri Abdullah
Ahmad Badawi encouraged companies to adopt a range
of CSR initiatives to inculcate a culture of responsibility
into Malaysian businesses and to support the Rakyat or
people of Malaysia.
Our CSR programme at UMW is fully supportive of this
agenda and we are proud to be able to make a
contribution to the national CSR agenda through our
efforts.
Adopt-a-Charity – UMW has a long history of building
sustainable relationships with community groups
such as our payroll-giving scheme in collaboration
with MAKNA since 1999. In addition, in 2001, we
pledged RM100,000 over five-years (2001-2005) to the
Malaysian Crime Prevention Foundation. In 2003, we
committed RM50,000 over five-years to the Malaysian
Cancer Research Initiatives Foundation (CARIF) and
made a separate donation of RM100,000 to the
Malaysian Medical Relief Society. We will continue to
build similar lasting relationships wherever we can help.
Adopt-a-School – In addition to our long-term support
for musical activities at Sekolah Menengah Sultan
Salahuddin Abdul Aziz Shah in Shah Alam, we also assist
many other schools around the whole country. The
UMW–PMR scheme has benefited more than 37 schools,
for example. The Toyota Eco-Youth Programme chooses
15 schools each year – one from each state in Malaysia
and one from the Federal Territory. The schools chosen
vary from year to year to allow as many as possible
to take part in the programme. By 2007, 98 separate
schools had benefited from this scheme.
UMW Pennzoil Distributors Sdn Bhd recently sponsored
the “Straight A’s” Programme 2007/08 for students of
Sekolah Menengah Kebangsaan TTDI Jaya in Shah Alam.
The programme is run in conjunction with the school’s
Parent-Teacher Association and aims to encourage
students to excel in their examinations. The scheme
provides a simple and effective tool to allow parents to
track the academic progress of their children, and to
help them prepare their children for examinations.
Key subjects sponsorships – In 2005-2007, UMW
contributed RM34,400 across 14 secondary schools
through the New Straits Times (NST) Schools
Sponsorship Programme to improve English proficiency.
In addition, the UMW Group supports the PINTAR
programme introduced by the government through
Khazanah Nasional Berhad and other GLCs to improve
the academic performance of school children in the
rural areas.
58
Graduate Sponsorship/Scholarship Programmes –
Each year, UMW Scholarships are awarded for students
at local universities in engineering, accountancy and
business administration. By 2006, 65 scholarships had
been granted, 37 from the Group’s non-automotive
division and 28 from Group automotive divisions.
UMW Scholarship Awards
Amount
NonEngineering
Engineering
Total
2003 RM10,000
13
7
20
2004 RM74,000
13
5
18
2005 RM50,000
14
5
19
2006 RM60,000
17
5
22
2007 RM67,500
11
4
15
Graduate Training and Employment – Each year, UMW
Toyota Motor Sdn Bhd runs an active programme in
collaboration with local colleges, to provide vocational
training to students during their studies. Successful
candidates are offered employment within the company.
During 2007, 98 students from colleges across the
whole of Malaysia participated in this scheme.
Contributions in kind – In many cases, community
groups value UMW’s contributions of equipment and
services, in addition to financial assistance. In 2006
for example, UMW Toyota Motor Sdn Bhd contributed
RM75,000, used Toyota components and a simulator
to INPENS College and Kolej WIT. We donated five
generators through Kontena Nasional Berhad for the
Johor Flood Relief Centre.
Toyota Road Safety Campaign – In January 2007, UMW
Toyota Motor Sdn Bhd launched the School Traffic
Warden Programme with the support of the Ministry of
Education. The programme will train and equip traffic
wardens. When qualified, the new wardens will be
certified by the Road Safety Department. This scheme is
part of the Toyota Road Safety Programme.
RECENT COMMUNITY PROGRAMME HIGHLIGHTS
Education
Social Contributions
NST School Sponsorship Programme
UMW Scholarship Awards
Pintar Programme 2007
UMW Penzoil “Straight A’s” Programme
UMW-PMR Achievement Awards
Vocational Learning Aids
Sponsoring the school band at
Sekolah Menengah
Sultan Salahuddin Abdul Aziz Shah
Sports Education Schemes
Toyota Road Safety Programme
Malaysia Crime Prevention Foundation
Toyota Classics Concerts
Charitable Contributions to children, elderly and the disabled
Donations of vans to Rumah Kanak-Kanak Taman Bakti in Kepala Batas
Environmental Programme
Humanitarian Assistance
Toyota Eco-Youth Programme
Tsunami Victims in Acheh
Earthquake Relief in Yogyakarta
Flood Relief in Johor
Palestinian Children’s’ Welfare Fund
Medical Aid
Cancer Research Initiative Foundation (CARIF)
Majlis Kanser Nasional (MAKNA)
MERCY Malaysia
Medical Equipment and Financial Aid
59
Assurance Statement
Introduction
Bureau Veritas has been engaged to provide assurance
services to UMW Holdings Berhad. This Assurance
Statement applies to UMW Holdings Berhad Corporate
Social Responsibility Report 2007 (the ‘Report’).
The preparation of the Report and its content is
the responsibility of UMW Holdings Berhad. Our
responsibility is to provide assurance over the Report
and underlying processes within the scope set
out below:
• Workplace: Governance: Verification through low to
mid-level assurance via information provided
• Workplace: Employment: Verification through mid level assurance on employment, working and living
conditions via compliance against internationally recognised standards. Low to mid-level assurance on
health & safety via The Organisation’s management/
inspection records
• Workplace: Awards & Accreditation: Verification
through low to mid-level assurance via information
provided
• Marketplace: Verification through low to mid-level
assurance via information provided.
• Environment: Verification through low to mid-level
assurance via The Organisation’s records, purchase
& importation data, independent assessment records,
environmental controls, stock data, select site visit,
The Organisation’s policies & practice
implementation, KPI/GRI data transposition (internal),
select factual & numerical data analysis (KPI/GRI
verification will not be traced to source unless local
and accessible)
• Community: Verification through low to mid-level
assurance via The Organisation’s practices/
procedures, training records, limited financial data,
lands deeds/disputes procedures, third party studies,
impact analysis, The Organisation’s management/
inspection records, etc.
It is agreed that UMW Holdings Berhad expects to
be able to provide a response to each of the GRI-G3
Guideline Protocols and the Automotive Sector
Supplement.
UMW Holdings Berhad aims to provide an A+ or
Advanced Application Level which requires reporting
on each of the GRI-G3 indicators, (even if the report
is an omission statement). There will be at least 20-50
individual performance data indicators, overall.
60
Exclusions from the scope of our work
Excluded from the scope of our work is information
relating to:
• Statements of commitment to, or intention to,
undertake action in the future
• Statements of opinion, belief and/or aspiration;
• Our assurance does not extend to the information
hyper-linked from the Report
Basis of our opinion
In conducting this engagement, we have considered the
following guiding principles:
• The principles of materiality, completeness and
responsiveness, and we have reflected the
requirements of the AA1000 Assurance Standard in
our assurance work
• The principles of balance, comparability, accuracy,
timeliness, clarity, relevance and reliability as per
Sustainable Reporting Guideline version 3.0 (GRI-G3)
Our work was planned and carried out to provide
reasonable, rather than absolute, assurance and we
believe that the work conducted as described in the
scope of work above provides a reasonable basis for our
conclusions.
We relied on the representations made to us during the
course of our assurance work by UMW Holdings Berhad
personnel. Where information in the Report is directly
sourced from 2001 to 2006 Annual reports, we consider
this to be reliable, as an independent Chartered
Accountant and Registered Auditor have audited it.
Where we have provided assurance over numeric
information, this has been achieved through review of
consolidation processes and databases held at UMW
Holdings Berhad’s headquarters in Shah Alam, Selangor.
This work is not considered sufficient for us to identify
all misstatements.
Our review included the following activities: Interviews
with relevant staff members at corporate and operation
level who are responsible for the information in the
Report, a review of internal and external documentation
such as minutes of meetings, UMW internal newsletters
including “Berita UMW”, 2001-2006 Annual Reports,
e-mails, receipts, invoices, checklists, maintenance logs,
memos, Employee Handbook 2006-2008, magazines,
newspaper clips, photos, pictures, guidelines, survey
reports, Collective Agreement 2006-2008 handbook
(COG 91/2006), brochures, reports, website and
intranet sources; Observed-related facilities and areas
including notice boards, awards display areas, cafeterias
and production floors. A review of the underlying
systems and procedures used to collect and process
the reported information, including the aggregation of
data into the information in the Report; a review of the
reliability of the quantitative and qualitative information
in the Report based on sampling; visited Assembly
Services Sendirian Berhad factory to review the data
collection process and implementation evidence on
reported statements in the Report; challenged the
CSR-related statements and claims made in the Report;
witnessed actual regular implementation onsite - such
as product training conducted for customers.
• Certain information is excluded from the scope of our
assurance work, as stated above;
• Environmental and social data are subject to inherent
limitations due to its nature and the methods used for
determining, calculating or estimating such data.
Therefore this independent assurance statement
should not be relied upon to detect all errors,
omissions or misstatements in the Report, nor can it
guarantee the quality of social accounting and
reporting processes. We have provided reasonable
assurance as to the quality and accuracy of the
report within the scope of our investigations
During our investigation, we discussed the necessary
changes in the Report with UMW Holdings Berhad, and
determined that these changes have been adequately
incorporated into the final version.
CONCLUSIONS
• In our opinion, the Report meets the content and
quality requirements of the Global Reporting Initiative 2006 Sustainability Reporting Guidelines (Version 3.0)
• During the course of our review nothing came to our
attention to indicate that there was any material error,
omission or misstatement
• The Report provides a fair representation of UMW
Holdings Berhad’s social accounting and reporting
activity for the period from 2001 up to the data
collection deadline on 15th September 2007
• UMW Holdings Berhad has processes in place for
identifying, understanding and managing its social
issues and for capturing, understanding and
responding to stakeholder views
Areas for ongoing improvement
• The increased use of performance indicators should
feature in subsequent reporting
• Effective ongoing monitoring, measurement and
reporting of UMW Holdings Berhad against selected
indicators and targets to demonstrate ongoing
commitment to the reporting process and
stakeholder interest
Considerations and limitations
In relation to our assurance work and conclusions, the
following considerations and limitations should be noted:
15th February 2008
Statement by Bureau Veritas of
independence, impartiality and
competence
Bureau Veritas is an independent professional services
company that specialises in Quality, Health, Safety,
Social and Environmental management with over 180
years history in providing independent assurance
services.
Bureau Veritas has implemented a code of ethics across
the business that is intended to ensure that all our staff
members maintain high ethical standards in their day-today business activities; we are particularly vigilant in the
prevention of conflicts of interest.
Competence: Our assurance team completing the
work for the Social Report, have extensive experience
in conducting assurance over environmental, social,
ethical and health and safety information, systems
and processes and an excellent understanding of good
practice in Corporate Responsibility reporting and
assurance.
61
PERFORMANCE
62
63
PERFORMANCE
MARKETPLACE
Group Financial Indicators (RM million)
2006
2005 2004 2003 2002 2001
Profit before tax
754.3
657.5
350.2
464.8
464.2
371.2
Net profit
584.9
499.3
267.9
348.1
347.2
263.7
Shareholders’ Funds
2560.1
2342.0
2130.9
1922.0
1731.9
1511.2
Capital expenditure
490.0
570.3
261.2
177.6
133.3
100.4
Total assets
5102.5
5721.0
3931.2
3401.9
3167.9
2656.3
Depreciation, amortisation & 164.6
151.7
100.8
93.4
91.7
87.3
76.7
650.6
254.4
205.9
205.3
338.0
impairment loss
Operating cash flow
Comparative Global Financial Data (RM million)
Malaysia
Overseas
Total
2006
2005 2004 2003 2002 2001
External Total Revenue
8494.9
8792.3
1455.6
1076.5
9950.5
9868.8
Profit from operations
404.0
425.3
226.6
127.5
630.5
552.7
Segment assets
3360.0
3597.9
326.6
1142.6
3686.5
4740.5
252.8
277.5
237.1
292.9
490.0
570.3
2006
2005 2004 2003 2002 2001
Provided during the year
25.3
42.3
16.9
6.9
18.4
7.9
Used during the year
12.0
10.1
7.2
3.3
1.1
3.2
Provisions unused at year end
77.0
64.4
33.2
27.3
32.8
16.5
Capital expenditure
Product Warranty Provisions (RM million)
64
WORKPLACE
Human Resources
2006
2005 2004 2003 2002 2001
Total number
9450
9424
8279
6875
6648
6250
Executive (%)
23.5
19.8
20.6
22.8
22.3
22.8
Non Executive (%)
76.5
80.2
79.4
77.2
77.7
77.2 
In Malaysia (%)
94.6
95.4
95.4
94.4
96.1
95.9
Outside Malaysia (%)
5.4
4.6
4.6
5.6
3.9
4.1
Permanent staff (%)
93.7
87.9
89.6
98.4
98.8
99.0
Non-permanent staff (%)
6.3
12.1
10.4
1.6
1.2
1.0
Female (%)
19.2
17.3
18.1
20.6
21.1
22.0
Male (%)
80.8
82.7
81.9
79.4
78.9
78.0
Union members (%)
70.9
74.8
73.9
71.0
71.5
70.3
Non-union members (%)
29.1
25.2
26.1
29.0
28.5
29.7
Age group (%) : < 30
56.0
59.2
56.4
50.8
47.0
45.6
30 to 40
25.5
23.1
24.6
26.1
28.6
28.8
40 to 50
13.6
13.0
14.2
17.3
18.5
20.0
> 50
4.9
4.7
4.8
5.8
5.9
5.6
Employees: Global
Employees: In Malaysia
 
65
WORKPLACE (Cont.)
Employees: In Malaysia (cont.)
2006
2005 2004 2003 2002 2001
Diversity (%) :
Bumiputera 69.7
72.9
70.8
65.7
64.8
62.6
Chinese
21.2
18.8
20.0
23.3
23.2
24.8
Indian
8.0
7.4
8.3
9.8
10.8
11.4
Others
1.1
0.9
0.9
1.2
1.2
1.2
Global (%)
17.3
26.3
17.9
16.6
18.7
20.0
In Malaysia (%)
16.8
26.5
17.7
17.0
19.1
20.1
Outside Malaysia (%)
26.4
22.3
23.3
8.8
9.3
18.9
Employee: Turnover Rates
Employee: Turnover Rates in Malaysia
Female (%)
11.1
11.2
9.3
13.2
13.9
12.6
Male (%)
18.2
29.7
19.5
18.0
20.5
22.2
24.4
38.0
24.1
22.9
26.5
32.0
 
Age group (%) : < 30
30 to 40
7.2
10.5
8.6
9.4
13.1
12.9
40 to 50
2.6
3.1
3.6
6.6
8.5
3.2
> 50
19.9
26.0
29.5
30.7
21.8
19.2
28.6
28.8
28.7
29.2
29.5
29.5
Women in Management
Women executives (%)
66
WORKPLACE (Cont.)
Continuous Staff Development and Care
2006
2005
2004
2003
2002
2001
Employee participation in training (%)
23.0
20.0
25.7
26.8
28.7
35.4
Average participants per
8.5
7.2
7.4
5.5
5.8
6.8
RM243
RM308
RM275
RM303
RM310
RM382
13.94
10.92
8.16
-
-
-
Training
training programme
Average training budget per employee
Total hours of training per employee
Performance Review towards Career Enhancement
Employee formally appraised at least
94.1
87.9
89.6
98.4
98.8
99.0
2.62
3.52
6.26
6.11
5.41
5.92
1.91
1.57
0.42
1.74
2.45
5.94
2.20
2.26
2.58
3.80
3.96
5.93
once annually (%)
Health & Safety
Accidents per million work hours at non-automotive division
Accidents per million work hours at
automotive division**
Total accidentsper million work hours*
* excludes AISB, UMW Toyota Motor and Oil & Gas Division; ** excludes AISB and UMW Toyota Motor
67
ENVIRONMENT
Environmental Data: (for Assembly Services Sdn Bhd (ASSB)
2006
2005 2004 2003 2002 2001
Energy Usage
GJ/unit
2.86
2.53
2.80
2.60
2.69
3.79
VOC Trend
g/m2
76.68
79.66
82.10
90.80
101.30
108.60
Scheduled Waste
kg/unit
7.70
7.30
12.73
8.93
10.20
10.30
General Waste
kg/unit
8.60
9.80
14.40
15.14
27.46
29.76
Total Waste
kg/unit
16.30
17.10
27.13
24.07
37.66
40.06
Water Usage
m3/unit
5.19
4.39
5.08
4.05
4.92
5.15
GHG Estimates*
CO2 tonnes/unit
0.41
0.37
0.41
0.36
0.41
0.53
GHG Estimates*
CO2 tonnes
34,552
34,000
21,378
14,288
11,260
12,035
*Estimates are based on the indirect Green House Gas estimation protocol of the World Council for Sustainable Business
Development and the World Resources Initiative: “The Greenhouse Gas Protocol - A corporate reporting and accounting
standard (revised edition)”March 2004
68
AUTOMOTIVE SECTOR SUPPLEMENT
Human Resources
2006
2005 2004 2003 2002 2001
Total number
6412
6438
5466
4146
3963
3409
Executive
23.1%
18.3%
19.3%
22.2%
20.9%
21.6%
Non Executive 76.9%
81.7%
80.7%
77.8%
79.1%
78.4%
Permanent staff
92.3%
84.2%
85.7%
98.1%
98.7%
98.7%
7.7%
15.8%
14.3%
1.9%
1.3%
1.3%
Female
16.3%
13.8%
14.2%
16.5%
15.8%
17.0%
Male
83.7%
86.2%
85.8%
83.5%
84.2%
83.0%
Union members
76.9%
81.7%
80.7%
77.8%
79.1%
78.4%
Non-union members
23.1%
18.3%
19.3%
22.2%
20.9%
21.6%
Age group:
< 30
65.0%
68.3%
65.7%
58.1%
54.3%
51.4%
30 to 40
21.4%
18.7%
19.9%
22.9%
24.8%
25.2%
40 to 50
9.9%
9.5%
10.7%
14.0%
15.5%
18.0%
> 50
3.7%
3.5%
3.7%
5.0%
5.4%
5.4%
Bumiputera
70.1%
74.5%
72.4%
65.5%
64.9%
61.8%
Chinese
21.0%
17.9%
19.2%
23.7%
23.2%
25.3%
Indian
7.7%
6.6%
7.3%
9.1%
10.2%
11.1%
Others
1.2%
1.0%
1.1%
1.7%
1.7%
Employees
Non-permanent staff
Diversity:
1.8% 69
AUTOMOTIVE SECTOR SUPPLEMENT (Cont.)
Human Resources
2006
2005 2004 2003 2002 2001
Automotive total
18.8%
29.4%
19.3%
19.2%
18.2%
22.9%
Female
10.6%
11.0%
9.2%
11.3%
10.0%
13.3%
Male
20.4%
32.3%
21.0%
20.8%
19.8%
24.8%
25.2%
38.1%
23.3%
24.5%
23.1%
31.5%
Age group:
< 30
30 to 40
7.6%
11.7%
11.3%
10.8%
15.3%
19.6%
40 to 50
2.2%
1.8%
3.4%
4.5%
4.1%
3.3%
> 50
16.1%
25.4%
38.0%
36.2%
22.5%
21.6%
26.1%
26.1%
25.3%
24.9%
24.2%
25.0%
All Grades
14.31
11.87
6.74
-
-
-
Management
19.36
19.58
14.61
-
-
-
Non-management
12.79
10.14
4.85
-
-
-
Women in Management
% Women executives
Average Hours of Training per year:
70
GRI CONTENT INDEX
The decision as to which indicator to report and how to
report it has been guided by the GRI-G3 criteria.
Reporting on social and environmental information is different
from reporting financial information. There are a number of
inherent limitations on the accuracy and precision of the data
and also in the availability of quantitative data or indeed in the
availability of any form of reportable information.
These limitations are well known and stem from the nature
of the data and the phenomena on which we are
attempting to provide information.
For our first CSR Report there are a number of weaknesses and
gaps in the information we have available. This is especially the
case in the Environmental Section of the Report, where our
monitoring and information systems do
not collate data in line with the GRI-G3 guidelines.
We have included data for our biggest operations in our
Automotive Division which collates data according to the
Toyota Motor Company of Japan procedures. This is the most
material environmental information for the Group due to
its coverage, consistency and time range.
To estimate GHG emissions we have applied the protocol
recommended by GRI from the World Council for Sustainable
Business Development and the World Resources Initiative:
GHG Protocol 2004.
Nonetheless, we have been able to provide a significant amount
of information. We have provided a Disclosure on Management
Approach (DMA) in each of the categories,
we have reported on each of the Profile Disclosures in full
and we have provided full or partial data on all Core
Performance Indicators and forty out of forty-five
Additional Performance Indicators. The remaining five
were considered non-material.
71
GRI CONTENT INDEX
GRI Reporting Area
Core
Additional
Status
Profile Disclosures
Strategy and Analysis
2
-
Both Reported
Organisational Profile
10
-
All Reported
Report Profile
4
-
All Reported
Report Scope and Boundary
7
-
All Reported
GRI Content Index
1
-
Reported
Assurance
1
-
Reported
Governance
10
-
All Reported
Commitments to External Initiatives
3
-
Two Reported; One Not Material
Stakeholder Engagement
4
-
All Reported
DMA and Performance Indicators
Economic 7
2
All Reported
Social Performance: Labour Practices & Decent Work 9
5
All Reported
Social Performance: Human Rights 6
3
All Reported
Social Performance: Society 6
2
All Reported
Social Performance: Product Responsibility 4
4
All Reported
Environmental
17
13
72
All Core Reported; Eight
Additional Reported; Five
Additional Not Material
Automotive Sector Supplement
-
16
All Reported
Total
91
45
130/136 Reported
PROFILE DISCLOSURES
Profile Disclosures
Section
Status
1.1
CEO or Chairman’s statement
p8 - 9
1.2
Description of key impacts, risks and opportunities
p8 - 9
Organizational Profile
2.1
Name of the organization.Front Cover
2.2 Primary brands, products, and/or services p11
2.3 Operational structure of the organization
p14
2.4 Location of organization’s headquarters
Back Cover
2.5 Number of countries where the organization operates
p7
2.6 Nature of ownership and legal form
p18
2.7 Markets served
p11, p13
2.8 Scale of the reporting organization
p11, p62
2.9 Significant changes during the reporting period
p11
2.10 Awards received in the reporting period
p20 - 21
Report Profile
3.1
Reporting period for information provided
p3
3.2 Date of most recent previous report
p3
3.3 Reporting cycle
p3
3.4 Contact point for questions regarding the report or its contents
Inside Back Cover
Report Scope and Boundary
3.5 Process for defining report content
p3, p71
3.6 Boundary of the report p3
3.7 Specific limitations on the scope or boundary of the report
p71
3.8 Basis for reporting on joint ventures, subsidiaries etc
p3
3.9 Data measurement techniques and the basis of calculations
p71
Application: C – Core; A – Additional; SS – Sector Supplement
Status: Fully Reported;
Partially Reported; ◊ Not Material;
× Not reported
73
PROFILE DISCLOSURES (Cont.)
Profile Disclosures (cont.)
Section
3.10 Explanation of the effect of any re-statement of information
p3
3.11 Significant changes from previous reporting periods p3
GRI Content Index
3.12 Table identifying the location of the Standard Disclosures p71 - 80
Assurance
3.13 Policy and current practice on external assurance
p3
Governance 4.1
Governance structure of the organization
p22
4.2 Status of the Chair of the Board
p22
4.3 Number of independent and/or non-executive Board members
p22
4.4 Mechanisms to provide advice to the Board p22
4.5 Link between compensation of the Board and their performance
p22
4.6 Avoiding conflicts of interest
p24
4.7 Qualifications and expertise of the Board
p22
4.8 Mission or values, codes of conduct and principles
p8, p10
4.9 Management of CSR performance
p22,p25
4.10 Evaluating the performance of the Board p23
Commitments to External Initiatives
4.11 Addressing the precautionary approach or principle
p23
4.12 External CSR principles p41
4.13 Memberships of associations No Memberships
Stakeholder Engagement
4.14 List of stakeholder groups engaged by the organization. p3, p8 - 9
4.15 Basis for identification and selection of stakeholders p3, p8 - 9
4.16 Approaches to stakeholder engagement
p25, p31 - 32, p33, p38
4.17 Key topics and concerns raised by stakeholders
p31 - 32, p35, p39, p44
74
× Not reported
Status
Economic
Section
Disclosure on management approach
p15
Status
Economic Performance
EC1
Economic value generated and distributed
C
p15
EC2 Risks and opportunities due to climate change
C
p19
EC3
Coverage of the defined benefit plan obligations
C
p18
EC4 Significant financial assistance from government
C
p18
Market Presence
EC5
Standard entry level wage vs. local minimum wage
A
p35
EC6 Spending on locally-based suppliers
C
p18
EC7
C
p29
C
p19
A
p19
Local hiring policies
Indirect Economic Impacts
EC8
Investments and services primarily for public benefit
EC9 Indirect economic impacts
Social Performance: Labour Practices & Decent Work Disclosure on management approach
Employment
p28, p30
LA1
Employment type, employment contract, and region C
p28, p65
LA2
Employee turnover by age group, gender, and region
C
p30 - 31, p66
LA3
Benefits provided to full-time employees
A
p34 - 35
Labour/Management Relations
LA4 Collective bargaining agreements
C
p29 - 30
LA5
C
p32
LA6 % of workforce represented in OSH committees
A
p33
LA7
OSH injury and accident statistics C
p33, p67
LA8
Awareness training for serious diseases
C
p34
LA9 OSH topics covered in collective agreements A
p33
Notice period for operational change
Occupational Safety & Health (OSH)
× Not reported
75
Social Performance: Labour Practices & Decent Work (cont.) Section
Status
Training and Education
LA10 Average hours of training per year per employee C
p35, p67
LA11 Skills management and lifelong learning A
p35
LA12 % of employees with regular reviews
A
p28, p67
Diversity and Equal Opportunity
LA13 Indicators of employee and Board diversity
C
p29, p65 - 67
LA14 Basic salary men vs. women
C
p30
Social Performance: Human Rights
p41
Investment and Procurement Practices
HR1 Agreements with human rights clauses or screening
C
p41
HR2 Human rights screening of suppliers and contractors C
p41
HR3 Human rights training A
p41
Non-Discrimination
HR4 Incidents of discrimination and actions taken
C
p30
Freedom of Association and Collective Bargaining
HR5 Risks to freedom of association and collective bargaining
C
p31
Child Labour
HR6 Risk of incidents of child labour
C
p41
Forced and Compulsory Labour
HR7 Risk of incidents of forced or compulsory labour C
p41
Security Practices
HR8 Security personnel trained human rights issues A
–
Indigenous Rights
HR9 Violations involving rights of indigenous people Application: C – Core; A – Additional; SS – Sector Supplement
76
A
× Not reported
p41
◊
Social Performance: Society
Section
p22, p54
Status
Community SO1
Impacts of operations on communities
C
p57
Corruption
SO2 Risks related to corruption. C
p23
SO3 Training in anti-corruption policies and procedures
C
p23
SO4 Actions taken in response to incidents of corruption
C
p22
Public Policy
SO5 Public policy development and lobbying
C
p57
SO6 Contributions to political organisations A
p57
Anti-Competitive Behaviour
SO7 Anti-competitive, anti-trust, and monopoly penalties A
p22
Compliance
SO8 Penalties for non-compliance with laws and regulations
C
p22
Social Performance: Product Responsibility
p38
Customer Health and Safety PR1
Life cycle stages – health and safety impacts
C
p38
PR2
Incidents of non-compliance A
p38
Products and Service Labelling PR3
Type of product and service information C
p41
PR4 Incidents of non-compliance A
p41
PR5
A
p40, p41
Customer satisfaction systems Marketing Communications PR6 Compliance in marketing, communications etc.
C
p41
× Not reported
77
Social Performance: Product Responsibility (cont.)
PR7
Incidents of non-compliance
A
Section
Status
p41
Customer Privacy PR8
Substantiated complaints breaches of customer privacy
A
p40
Compliance PR9 Penalties for non-compliance of products and services. C
p40
Environmental
p44 - 45, p48
Materials EN1
Materials used by weight or volume
EN2 % of input materials that are recycled
C
p46
C
p46
Energy EN3 Direct energy consumption by primary source
C
p49, p68
EN4 Indirect energy consumption by primary source
C
p49, p68
EN5 Energy conservation and efficiency improvements
A
p49, p68
EN6 Energy-efficient or renewable energy A
-
EN7 Reducing indirect energy consumption A
p49, p68
◊
Water EN8 Total water withdrawal by source. C
p45, p49, p68
EN9 Significant impact of withdrawal of water. A
p45
EN10 % and total volume of water recycled and reused. A
-
Biodiversity EN11 Protected areas and areas of high biodiversity value
C
p45
EN12 Impact on biodiversity
C
p45
EN13 Habitats protected or restored. A
p45
EN14 Managing impacts on biodiversity. A
p45
78
× Not reported
◊
Environmental (cont.) EN15 Protected species with habitats in areas of operations A
Section
Status
p45
Emissions, Effluents, and Waste
EN16 Direct and indirect greenhouse gas emissions
C
p51, p68
EN17 Other relevant indirect greenhouse gas emissions
C
p51, p68
EN18 Greenhouse gas emissions and reductions achieved
A
p51, p68
EN19 Emissions of ozone-depleting substances C
p49, p68
EN20 NOx, SOx, and other significant air emissions C
p49, p68
EN21 Total water discharge by quality and destination
C
p51
EN22 Total weight of waste by type and disposal method
C
p50, p68
EN23 Total number and volume of significant spills
C
p51
EN24 Transported hazardous waste
A
-
◊
EN25 Water bodies affected discharge and runoff. A
-
◊
Products and Services
EN26 Environmental impacts of products and services C
p47
EN27 % of products and packaging reclaimed
C
p47
Compliance
EN28 Penalties for environmental non-compliance Transport
EN29 Environmental impacts of transporting products C
p47
A
p47
Overall
EN30 Total environmental expenditures by type
A
-
◊
Automotive Sector Supplement
EC5
Total payroll and benefits
SS
p15
EN10 Emissions, effluents and waste
SS
p48
EN15 Product environmental issues
SS
p46
× Not reported
79
Automotive Sector Supplement (cont.)
PR1
Customer Health & Safety
SS
p39
PR5
Compliance and penalties
SS
p39
LA1
Breakdown of workforce
SS
p69
LA9 Average hours of training by employee type
SS
p70
A1
Stipulated work time and overtime
SS
p32
A2
% of employees not managed on hourly basis
SS
p69
A3
% of first-tier suppliers with trade unions
SS
p32 - 33
A4
Number of vehicles sold
SS
p12
A5
Emissions compliance
SS
p46 - 47
A6
Average fuel economy
SS
p46 - 47
A7
Average CO2 emissions
SS
p46 - 47
A8
Noise compliance
SS
p46 - 47
A9
Environmental impact of transportation
SS
p46 - 47
A10
% of recycled, renewable material inputs
SS
p46 - 47
80
Section
× Not reported
Status
Moving Forward with CSR
Corporate Responsibility is not something we have to
undertake – it is something we want to do and have
always done. This is evident in our multi-dimensional
strategy that focuses on four main segments – the
marketplace, the workplace, the environment and the
community – that has won us an A+ rating for our
internationally-recognised reporting standards (GRI-G3),
as awarded by Global Reporting Initiative.
Our Corporate Responsibility strategy going forward
is in line with and reflective of our rallying call Beyond
Boundaries goal of becoming a truly world-class
organisation. And as we continue to achieve success, we
will bring benefit to the communities and industries in
which we operate.
FEEDBACK AND COMMENTS
We encourage readers to tell us your views on our approach to CSR and to make suggestions for the development of our CSR programme.
Comments and suggestions can be directed to:
Farida Mohd Salleh
UMW Corporation Sdn Bhd
Group Public Affairs Division, Jalan Utas 15/7, 40915 Shah Alam, Selangor Darul Ehsan, Malaysia
Tel: (603) 5163 5045 Fax: (603) 5512 8208 Email: [email protected]
For full PDF download, please go to www.umw.com.my
UMW Holdings Berhad 090278-P
3rd Floor, The Corporate, No. 10, Jalan Utas (15/7)
Batu Tiga Industrial Estate, 40300 Shah Alam
Selangor Darul Ehsan, Malaysia
Tel: (603) 51635000 Fax: (603) 55193890 www.umw.com.my

umw holdings berhad corporate social responsibility summary report

Transcription

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