Human Resources
As at 31 December 1998, the Group employed 16,310 employ, consisting of 475 executive staff, 1,438 non-executive staff and 14,397 workers. This had increased by 1.3% compared with 1997 where a total of 16,096 people were employed by the Group.
The Group has always upheld the importance of human resource development to ensure the continuing success of the Group. Under the prevailing circumstances, one of the most challenging concerns of Management is to ensure stability and productivity of the Group's workforce. Towards this end, a review of manpower requirements of the affected sectors, particularly the Property Division, was carried out during the year, whereby staff were redeployed to other areas to ensure a lean but effective organisation. Despite the difficult economic situation, there was no retrenchment of staff throughout the Group. The Group continues to provide training programmes to improve the skills and knowledge of the staff, especially in key sectors.
The Group is embarking on a comprehensive training programme, which is called the 'Competency Based General Management Development Programme' to sharpen staff skills and enhance individual potential. Training for plantation non-executives and also supervisory staff are being carried out at the Group's own Plantation Training Centre, and also at the Harvard Suasana Hotel in Gurun, Kedah.
The Group continues to provide quality life for estate workers, who are the integral part of the Group's plantation operation. New workers' quarters now have three rooms instead of the normal two rooms, and the health and safety of the workers are always high on the agenda.
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A total of 24 Management Trainees were recruited under the Management Trainee Scheme in the third quarter of 1998, and they successfully graduated in March 1999. They underwent initial training at the Plantation Training Centre, and were later posted to various departments and estates within the Group during the six-month training period. Once graduated, most of them have found permanent employment within the Group.
The Group has also introduced the human resource information system (HRIS), which enables the easy recording and retrieval of data for all staff within the Group. It is a comprehensive system which will ensure completeness and accuracy of human resource data of the Group at a touch of a button.
Information Technology
1998 was a busy year for Information Technology (IT) Services Unit, The year was dominated by the issue of the millennium bug, or better known as Y2K. A Committee was set up which met regularly to oversee the implementation of the Y2K remedial measures within the Group. Specific IT personnel were designated to tackle specific Y2K issues. Although the impact of Y2K issue on the Group's operations will be minimal, nonetheless the Group views the Y2K issue with a high degree of seriousness and determination, No effort is spared to ensure that the Group will be Y2K ready by June 1999.
1998 also saw the implementation of the new financial system, CODA. The pilot CODA system was implemented in the Group's medium-density fibreboard and wood products operations in Kulim, Kedah, in April 1998. The system for the Head Office went live in October 1998, and the usage of the previous financial system was decommissioned. The long-term strategy for CODA is to make it the common financial application Group-wide with full integration with other applications in the Group. This approach will improve efficiency through the elimination of duplication and overlapping activities.
The standardisation of IT software within the Group also materialised in 1998. With standardisation, the sharing of information and a reduction in costs were achieved. 'Trouble shooting' of any problem was also made easier by this move. Communication using IT within the Group has increased as more and more users are communicating electronically
The Group recognises the importance of IT in its operations and efforts to enable more IT applications are being intensified.
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Research And Development
Research and development continues to take priority within the Group. All efforts are directed towards achieving the Group's Vision 25:25. Guthrie Research Chemara played its important role in supporting the Group's plantation operation. Research to improve the yield of oil palm were carried out continuously. Guthrie Biotech Laboratory Sdn. Bhd. (GBLSB) increased its production of clonal planting materials, which were exclusively used by the Group for replanting, Plant breeding programmes, also carried out by GBLSB, ensure that high yielding mother (Dura) palm and father (Pisifera) palm are used to produce oil palm seeds and seedlings. The commercialisation of testing and laboratory services scored a new miles-tone when the income from outside the Group overtook the income from within the Group. In addition to boosting Group's revenue, this had at the same time reduced the unnecessary wastage of Group's expenditure.
Awards
The awards and accreditations for the Group continued to flow in, making 1998 a golden year for the Kumpulan Guthrie Group. The undoubted highlight of the year was Malaysia's CEO Of The Year Award, awarded to the Group Chief Executive Officer (CEO), YBhg.Tan Sri Dato' Abdul Khalid Ibrahim, in December 1998. He jointly received it with the CEO of Hap Seng Consolidated Berhad.
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The award, jointly organised by Business Times and American Express, is aimed at recognising and acknowledging entrepreneurial and management expertise and excellence among leaders of Malaysian corporations. Judged on the Group's performance for 1997 and the first half of 1998, the criteria used to decide on the recipients, among others, were the CEO's performance in terms of operations, marketing, development, financial management, as well as contributions to community development and nation building. The honour bestowed by this award has proven that the Group has withstood the test of severe economic downturn and adverse business conditions.
Kumpulan Guthrie Berhad's 1997 Annual Report won the Most Outstanding Annual Report of the Year given by the National Annual Corporate Reports Award (NACRA) in December 1998. The same Annual Report also won the Industry Excellence Award in the Plantation & Mining Category of the Kuala Lumpur Stock Exchange (KLSE)'s Main Board companies. Another listed company in the Group, Highlands & Lowlands Berhad, was awarded the Certificate of Merit in the Plantation & Mining Category.
Jointly organised by the KILSE, the Malaysian Institute of Accountants, the Malaysian Institute of Management and the Malaysian Association of Certificate Public Accountants, the annual award is based on many criteria, such as promptness of publication and submission of the Annual Report to the KILSE, compliance with all applicable approved accounting standards, the availability of shareholders statistics and design. As such, the Company and Highlands & Lowlands Berhad are proud to be among the top three per cent of companies listed on the KILSE which are regarded as having achieved a certain standard of corporate reporting.
A number of the Group's estates also won numerous awards for best landscaping at both the state and national levels, and Laclang Tanah Merah won the "Anugerah Laclang Bahagia" organised by the Ministry of Human Resource. The award was given based on the provision of complete infrastructure and facilities by an attentive and caring management, and was presented by the Honourable Prime Minister,YAB Dato' Seri Dr Mahathir Mohamed, on 18 August 1998. It is a further confirmation of the Group's commitment to providing quality life in the estates.
Research and development (R&D) has also earned its recognition. Guthrie Biotech Laboratory Sdn. Berhad was accorded R&D status by Malaysian Industrial Development Authority (MIDA) in 1998, whilst Guthrie Plantation & Agricultural Services Sdn. Berhad passed the tough Quality System re-assessment audit for the production of germinated oil palm seeds, which was conducted by SIRIM Berhad. On top of that, Chemara Laboratories Sdn, Berhad was officially awarded the ISO/IEC G 25 (SAMM) Accreditation for the Standard Malaysian Rubber (SMR) laboratory in November 1998, bestowing recognition and approval on the laboratory for all SMIR testing. All this will help ensure that Vision 25:25 will become a reality for the Group in the near future.
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Corporate Governance
The Group always promotes the concept of good corporate governance in all business activities. Transparency in all business dealings is the value upheld by the Group. Timely disclosure of all relevant information is made available to the general public as required by the Kuala Lumpur Stock Exchange.
Briefings to analysts are conducted regularly, either on a one-to-one basis, or for the whole group of analysts when the Group's results have been announced. In addition to an independent non-executive Director who sits on the major Tender Board Committee, independent non-executive Directors also act as advisors in the selection of consultants for major projects within the Group. All Directors played an active role in determining the direction of the Group, and this was evident from the attendance at Board meetings which recorded an average attendance of 90% for 1998.
The interests of minority shareholders are protected by having Directors who represent minority shareholders on the Boards of all three listed companies in the Group. All the Directors are also qualified professionals who have the experience and capability required to determine the corporate direction of the Group's business and affairs.
The Audit Committee of the Board meets regularly on a quarterly basis, to oversee the financial reporting process through reports submitted by the Internal Audit Department and the external auditors. The average attendance at meetings by the Members of the Audit Committee was recorded at 95%. The Internal Audit Department, which directly reports to the Audit Committees of the three listed companies in the Group also plays an independent and effective role in ensuring all business activities are conducted in the most effective and transparent manner.
The Group also complies with all the International Accounting Standards (IAS), and also the Malaysian Accounting Standards (MAS) requirements for the preparation of its financial statements.
Corporate Citizenship and Community Services
For the year ended 31 December 1998, the value added contributed by the Group accounted for 0.4% of real gross national product of Malaysia. The Group's share of total employment in the country was recorded at 0. 18%.
Kumpulan Guthrie has always been conscious of its role as a corporate citizen. When the country was initially faced with the current economic recession, the Group had contributed towards the "Project Malaysia" campaign to restore investors and public confidence, throughout the world.
The project involved a massive and intensive six-month advertising campaign, in the various local and international mass media. Contributions were also made towards the 'Dana Khas Negara' launched by the Government, in this connection.
Meanwhile, Yayasan Guthrie, which generates its income from the contributions by the companies within the Group, continued to play its role in the community where it donated funds to various welfare organisations. Yayasan Guthrie awarded university scholarships to deserving employees' children, who undertook degree and diploma courses, and some Guthrie scholars have been offered permanent employment within the Group. Yayasan Guthrie also awarded two outstanding students and sponsored a pilot to complete a specialised two-month course in Agricultural Aircraft Flying in the United States of America. After graduating, he became the first Malaysian pilot qualified in agricultural flying.
At the same time, the 'Rakan Jayadiri' Programme, or partner in self-reliance programme, reached a new milestone when a sixth intake was taken in early 1998 to be trained as electrical technicians, followed by the seventh intake who are now undergoing training as mechanical artisans. The 'Rakan Jayadiri' youth have now formed an important workforce in the Group.
At the State levels, the management of the various estates and other operating units of the Group still continue to play their role by contributing towards the community development activities.
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