sustainability highlights - hyundai engineering...sustainability highlights amendment of code of...

Sustainability Highlights

Amendment of Code of Conduct for Ethics

In May 2014, the Code of Conduct was enacted

to practice ethics with real commitment.

Introduction of performance sharing scheme*

In 2013, Hyundai Engineering was certified as a company that has introduced performance sharing schemes, and was also awarded the highest grade in the Mutual Cooperation

Assessment conducted among construction companies.* Certified by Ministry of Trade, Industry and Energy

Stepping-stone House Project

As a representative social contribution program of Hyundai Engineering, this project focuses on providing

aid to groups living in vulnerable housing conditions by enabling self-support, supporting home and facilities

improvement, and revitalizing the habitants

Cover Story

Hyundai Engineering pursues prosocial company

by steering its business and management activities based

on stakeholders' values.

2 0 1 2 ~ 2 0 1 3 Hyundai Engineering Sustainability Report

2012~2013 H

yundai E

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Repo

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About This Report

This is the third sustainability report pub-

lished by Hyundai Engineering. It includes

details of the company’s performance of

its economic, social, and environmen-

tal responsibilities. Hyundai Engineering

prepared this report by linking the key is-

sues in which its stakeholders are highly

interested to its strategies for promoting a

sustainability management system.

Report period, scope and boundary

This biennial report (the last one was pub-

lished in June 2012) covers the company’s

performance for the two years from 1 Janu-

ary 2012 to 31 December 2013, although

some of the information includes data from

the first half of 2014. This report draws on

information belonging to the Head office in

Seoul and project sites at home and abroad.

Information concerning overseas subsid-

iaries has been excluded due to difficulties

in obtaining their data, while the use of

environment-related data has been limited

to data pertaining to certain project sites

at home and abroad. There may be some

differences from the figures contained in

previous reports as a result of corrections

or revisions made after year-end closure.

Report preparation and verification criteria

Hyundai Engineering prepared this report

in accordance with core options provided

under the GRI G4 Guidelines reflecting the

GRI G4 supplementary indicators given in

the construction and real estate section,

ISO 26000, and the UNGC 10 Principles. In

addition, a third-party assurance agency,

the Korea Standards Association, has pre-

sented its opinion based on its own inde-

pendent review of this report.

ContentsAbout Hyundai Motor Group

Group of Companies

Corporate PhilosophyUnder the corporate philosophy, core values and vision of the Hyundai Motor Group, we are committed

to taking economic and social responsibility as a global corporation and citizen, as well as to achieve

sustainable growth.

Automobile Steel Construction Parts Finance Others

· Hyundai

Motor Company

· Kia Motor

Corporation

· Hyundai Steel

· Hyundai Hysco

· Hyundai

BNGSTEEL

· �Hyundai

Engineering &

Construction

· �Hyundai

Engineering

· Hyundai

Engineering &

Steel Industries

· �Hyundai

Architects &

Engineers

Associates

· �Hyundai City

Corporation

· Hyundai MOBIS

· Hyundai WIA

· Hyundai

POWERTECH

· Hyundai DYMOS

· Hyundai KEFICO

· Hyundai AUTRON

· Hyundai MNSOFT

· Hyundai WISCO

· Hyundai MSEAT

· Hyundai METIA

· Hyundai IHL

· Hyundai PARTECS

· Hyundai Capital

· Hyundai Card

· Hyundai &

Commercial

· �HMC Investment

Securities

· Hyundai Life

· Hyundai GLOVIS

· Hyundai Rotem

· �INNOCEAN

WORLDWIDE

· �Haevichi Hotel &

Resort

· �Hyundai

AutoEver

· �Hyundai NGV

· �Hyundai C&I

· �Hyundai Farm Land

& Development

Company

Management philosophyHyundai Motor Group realizes the dreams of mankind by creating a new future through its creative think-

ing and tireless innovation.

Unlimited Responsibility

Our vision of unlimited responsibility for the safety and happiness of the customer is realized in our quality management, which leads to the creation of unlimited value for our society.

Realization of Potential

We always move forward to the next goal after each success, and create a better future with a challenging spirit.

Love for Humanity

We offer value, better products and better services for people, and make the lives of our customers more affluent.

VisionUnder Hyundai Motor Group’s vision of “Together for a better future,” an embodiment of our belief and

commitment, we provide satisfaction to our customers, and think beyond the external growth of the cor-

poration to share our success with a variety of stakeholders.

Lifetime partner in automobiles and beyond

With our people-oriented and eco-friendly innovative technology and comprehensive service, we realize high quality mobility to create more convenient and enjoyable new spaces.

Leading the new era of steel

As an eco-friendly, resource circulation-centered corporation, we emphasize organic, cooperative relationships domestically and internationally, and provide advanced products and services to realize global competitiveness and become a leader in the new steel era.

We Build Tomorrow

As a comprehensive global engineering corporation, we are the leader in future technology and convergence of industries, collaborating organically with government-initiated industries to create the foundation for a better life.

Sustainability Highlights

About Hyundai Motor Group

Contents / About This Report

Sustainability Overview

Interview with the CEO & President

Company Profile

Business Areas

Sustainability Management System

Governance

Risk Management

Ethical Management

Materiality Assessment

# Special Issue: A new corporation founded through the merger

between Hyundai Engineering and Hyundai Amco

I. Value Boosted : Value Management

Creation and distribution of economic values

Creation of future values

Customer satisfaction management

Quality management

II. Preservation Applies to All : Safety and Environment Management

HSE management system

Eco-friendly workplaces

Eco-friendly projects

Safe and healthy workplaces

# Special Issue: Sustainable Projects

III. Talent Escalated : Talent Management

Talent development

Respect of rights of employees

IV. Winning Out as One : Win-win Management

Win-win growth

Fair competition

V. A Favor Returned : Sharing Management

Social contribution toward local communities

Appendix

Economic Performance

GRI G4/ ISO 26000/ UNGC Index

The 3rd Party Assurance Statement

2012-2013 Key Awards

Membership in Associations

Sustainability Management Task Force

02

21

22

30

40

42

48

52

56

MISSION

At Hyundai Engineering, with an unmatched combination of knowledge, skill, experience and technology we provide

engineering, procurement, construction and maintenance services, and we simultaneously practice the core elements of our

management by making ethics a cornerstone, creating value, cultivating talents, growing together and simply sharing to

improve the quality of life for the people in the communities where we operate, in Korea and around the world.

VISION

GLOBAL PREMIER ENGINEERING PARTNER•Global A global performing leader to the highest standards

•Premier We believe in providing best quality and cutting edge technology

•Engineering From business planning to operation & maintenance, we provide complete services for a projects cycle

•Partner We improve the communities where we work and live to ensure a sustainable future for generations to come

CORE COMPETENCE

MARKETING MANAGEMENT PARTNERSHIP TECHNOLOGY

•�Form a new business line

focused on development

projects such as Real-estate

development and private

investment, etc.

•�Entrepreneurial mind by

proposing business models

(energy development and

production investments) which

includes financing

•�Reassess risk management to

prevent accidents

•�Establish Integrated project

management system

•�Adding new technologies to

maximize resource efficiency

•Value-oriented customer

commitment and satisfaction

•�Build strategic alliances with

leading companies to expand and

enter new markets and regions

and optimize project delivery

•��Localize by establishing

partnerships with local

companies for new

opportunities and long-term

relationships

•�Add new proprietary

technologies to promote new

business

•�Challenge and accomplish

Innovative technology and

solutions

•�Integrate IT system as the basic

groundwork for engineering

and construction

Provider of sustainable values

GLOBAL PREMIER ENGINEERING PARTNER

Vision & Mission of Hyundai Engineering

CustomerChallenge

Collaboration

People

Globality

Core Values The heart of Hyundai Motor Group beats more powerfully when the company practices its intrinsic core values

with a pioneering mindset and passion.

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Interview with the CEO & PresidentAround the time of publication of the Sustainability Report 2012-2013, the CEO & President

(CEO) of Hyundai Engineering sat down in the Hyundai Card Design Library for a talk with

the Head of Planning Office (HPO). Their wide-ranging discussion assessed Hyundai En-

gineering’s accomplishments to date in the area of corporate sustainability and explored

future directions in its sustainability initiatives. Below are some of the highlights.

Part1. Past Sustainability Accomplishments

CEO: This is our company’s third sustainability report, right?

HPO: Yes. We issued our first sustainability report back in 2010,

and followed it up with a biennial report in 2012. The third

and current issue covers our achievements in 2012 and

2013.

CEO: So it’s already been five years since we published our first

sustainability report. What would you say are the key re-

sults that have been achieved in this initiative?

HPO: We have implemented an integrated risk management

system as well as launching a compliance program. We’ve

also joined the UN Global Compact, an international cor-

porate sustainability initiative.

CEO : I see. I do hope for continuous interest in the ten prin-

ciples of the UN Global Compact among our staff and

unflagging efforts to comply with them.

Part2. Highlights of the Sustainability Report 2012-2013

HPO: What should be, in your mind, the focus in this issue of the

sustainability report?

CEO : I believe that enhanced communication with the vari-

ous stakeholders is the key to successful sustainability

practices. Therefore, to my mind, the report should be

centered on the kind of content that is relevant and of

interest to all of them.

HPO: I echo that sentiment, Mr. President. Precisely with this

concern in mind, the previous report was organized by type

of stakeholders. The 2012-2013 report, meanwhile, is orga-

nized by core factor for each stakeholder group. Also, to re-

flect the growing importance of safety & environment man-

agement, safety and environment management has been

added to the priorities making up our company’s vision

2020; namely, ethical management, value management,

talent management, win-win management, and sharing

management. Lastly, the report will contain a section on

the sustainability system and strategies, guiding all of the

above core sustainability factors and initiatives.

Part3. Future Directions in Sustainability

CEO: For sustainability to be actually practiced, building a solid

framework to guide related efforts and developing con-

crete strategies is indeed paramount. Now, what exactly

is the plan for implementing sustainability-related activi-

ties?

HPO: To take into consideration of the different values of vari-

ous stakeholders, we have developed core sustainability

factors for each stakeholder group, and selected strategic

tasks for those factors. These will be accompanied by in-

dicators and practical tasks to assist sustainability man-

agers in actually carrying out the core factors.

CEO: The way I see it, sustainability is not just the responsibil-

ity of a few managers, specifically placed in charge, but

the responsibility of all of us in the company. Every one

of us, even if unaware, is practicing sustainability as a

matter of routine through all the daily tasks we perform.

Volunteer activities, quality certification, technology de-

velopment and efforts to reduce or eliminate industrial

accidents for instance, are all linked to sustainability. The

public perception of Hyundai Engineering has improved

greatly since the merger, accordingly, steady efforts are

still required to develop the company into a prosocial

business in line with the new perception. I myself will

provide unwavering support so that Hyundai Engineering

can fully implement sustainable management according

to its management strategies.

Hyundai Engineering

CEO & President

Kim, Wee Chul

Hyundai Engineering Head of Planning Office

Park, Chan Woo

02 Steering on Values Hyundai Engineering Sustainability Report 03

Sustainability Overview | Value Boosted | Preservation Applies to All | Talent Escalated | Winning Out as One | A Favor Returned

Company Profile

Company overviewHyundai Engineering, which celebrates its 40th anniversary in 2014, is a global engineering company that

develops and provides comprehensive engineering solutions based on the wealth of experience and world-

class technological competence it has accumulated in such sectors as process plant, power & energy plant,

infrastructure and environment. Hyundai Engineering will maximize its service capabilities and synergy through

its merger with Hyundai Amco, a company that has demonstrated superior construction capabilities in the

sectors of civil, building and housing works. in April 2014. Hyundai Engineering will create superior business

values by mutually complementing and developing the brand values the two companies have created.

Global NetworkHyundai Engineering has 158 project sites in 28 countries in the Middle East, Asia, Africa and Latin America

as of June 2014. It also has 5 subsidiaries and 34 branches. Hyundai Engineering has impressed its custom-

ers around the world by providing them with the very best solutions while steadily expanding its markets

based on the exploration of new markets and active localization.

Corporate HistorySince its foundation in 1974, Hyundai Engineering has thoroughly explored the engineering industry for forty

years. It has become a truly global premier engineering partner by acquiring the best engineering technolo-

gies based on its experiences in performing diverse projects in over 50 countries around the world.

OrganizationHyundai Engineering consists of eight divisions, five offices(as of August 2014) specialized in different ser-

vice areas. Each business division carries out its business operations independently.

Overseas subsidiaries and branches of Hyundai Engineering

Overseas subsidiaries and branches of the former Hyundai Amco

(excluding overlapping portions of Hyundai Engineering)

Pursuit of technological independence to escape dependence

1974 Foundation of Hyundai Engineering 1970s

Accumulation of technological competence, advance into

overseas markets

1985 Executed an overseas consulting project for the first time among Korean private companies1980s

Evolution into integrated engineering business through

management innovation

1994 Acquired ISO 9001 certification 1996 Acquired ISO 14001 certification

1990s

Pursuit of world top-class position 2000 Acquired 2nd and 3rd stage orders for Iran South Pars Project (design and engineering of world’s largest gas plant)2002 Founded Hyundai Amco 2006 Hyundai Steel Dangjin Integrated Steel Mill (total of three units, construction completed in 2013) Awarded Industry and Resources Minister Prize of 1st National Eco-friendly Management Grand

Prizes2009 Acquired OHSAS 18001 certification

2000s

2010 Become a member of UN Global Compact2011 Transferred to Hyundai Motor Group2012 Awarded Termotasajero II thermal power plant project in Columbia (first venture in Latin America)2013 Awarded Kiyanly crude oil processing plant in Turkmenistan (total: USD 3 billion, of which USD 3 billion

belongs to Hyundai Engineering)2014 40th anniversary, awarded Biskra/Jijel combined thermal power plant project in Algeria (USD 1.35 billion) Head office relocated to Jongno-gu, Seoul and merged with Hyundai Amco Ranked 33rd in ENR International Top 200 Engineering Firms Ranked 10th in construction competency assessment conducted by the Korean Ministry of Land and

Transportation

A new challenge again based

on 40 years success stories2010s

CEO & President

Process Plant Project Management Office

Power & Energy Plant Project Management

Office

Process Plant Basic Engineering &

Technology Office

Process Plant Construction

Management Offic

Power & Energy Plant Basic Engineering & Technology Office

Building Works Engineering Office Housing Works Office

Infrastructure & Environmental Engineering &

Technology Office

Process Plant Engineering &

Technology Office

Power & Energy Plant Engineering & Technology Office

Technology Supply Offic

Infrastructure & Environmental Project Management Office

Human Resources Office

Process Plant Business & Marketing Office

Process Plant Business & Marketing Office

Power & Energy Plant Business & Marketing

Office

Building Works Business & Marketing

Office

Housing Works Business Group

Domestic Infrastructure & Environmental

Business & Marketing Office

Finance & Accounting

Management Office

Process Plant Cost Planning &

Management Office

Process Plant MEGA Project Engineering

Office

Power & Energy Plant Cost Planning &

Management Office

Industrial Building Works Office

Marketing Business Office

Overseas Infrastructure & Environmental


Business Management Office

Planning Office


HSE Innovation Office

Asset Management

Office

General Administration & Management

Division

Process Plant Division 1

Process Plant Division 2

Power & Energy Plant Division

Building Works Division

Housing Works Division

Infrastructure & Environmental

Division

Finance & Economy Division

Outsourcing & Procurement

Office

Business Reengineering & Audit TeamOverseas subsidiaries and branches

About Hyundai Engineering

Classifications Contents

Date of foundation 11 February 1974

Address 75 Yulgok-ro, Jongno-gu, Seoul, Korea

Total assets* KRW 4,587.4 billion / Current liabilities: KRW 2,282.2 billion, Equity: KRW 2,305.2 billion

Sales* KRW 2,175.9 billion

Number of employees 5,170 (As of April 2014)

Business areasProcess plant, power & energy plant, building works, housing works, infrastructure &

environment, and asset management

* Based on data disclosed as of June 2014; it does not include the 1st quarter performance of former Hyundai Amco. (2014 sales projection: KRW 6,602 billion)



Building Works: Imagination

Factory

R&D Center

Culture / Education / Sports facility

Hotel / Apartment

Office / Sales facility

Public facility / Army installation

Medical facility

Asset management: New creation

Facility Management

Property Management

Consulting for Lease

Consulting for P&S (Purchasing & Selling)

Global Asset Management

Power & Energy Plant: Blood vessel

Combined Cycle Power Plant

Thermal Power Plant

Cogeneration Power Plant

Nuclear Power Plant

Power Transmission / Substation & Distribution

Geothermal Power Plant

Diesel Power Plant

Housing Works: Human-oriented

Apartment

Officetel

Complex building

Infrastructure & environment: Challenges

Harbor & Road

Complex Development

Hydro Power & Water Resource Development

Water Supply & Sewerage System

Renewable Energy

Waste to Energy

Housing Works

Infrastructure & Environment

Asset

Management

Building Works

Process Plant

Plant works: Composite art

Oil & Gas

Chemical & Fertilizer

Petrochemical

Refinery

Offshore Facilities

LNG Facilities

Steel & Nonferrous Metals

Power & Energy Plant

Business Areas



Ethical management

We are committed to becoming a prosocial company by performing systematic economic,

social and environmental activities focusing on our stakeholder values

At Hyundai Engineering, with an unmatched combination of knowledge, skill, experience and technology we provide engineering,

procurement, construction and maintenance services, and we simultaneously practice the core elements

of our management by making ethics a cornerstone, creating value, cultivating talents, growing together and simply sharing

to improve the quality of life for the people in the communities where we operate, in Korea and around the world.

⑨ Implement Steering Committee• Promote and monitor strategic tasks for sustainable management

• Strengthen communication with stakeholders

⑩ Enhance ethical management system• Inspect and improve ethical management status

•Strengthen perception of ethical management

Value management Safety & environment management

Talent management Win-win management Sharing management

① Strengthen site quality management

• Strengthen site quality audit• Expand site quality education② Strengthen eco-friendly

technological competencies• Develop eco-friendly

technologies and strengthen technological competencies

• Explore/promote eco-friendly future-growth engine projects

③ Strengthen HSE management system

• Deploy green-house gas inventory system•�Strengthen education on

health and safety

④ Steadily secure outstanding talents• Diversify channels to secure

global talents•�Enhance recruitment

competitiveness with work-life balance⑤ Strengthen development of core talents• Deploy structure to foster

core duties•Strengthen HRD capabilities

⑥ Strengthen support for outstanding partners

• Advance jointly into overseas markets with outstanding partners•�Develop outstanding partners

and strengthen reward system⑦ Expand achievement sharing

system• Develop strategies to expand

performance sharing schemes• Develop roadmaps to jointly

develop technologies

⑧ Expand global social contribution programs

• Expand global education facilities and foster talents• Develop appropriate technologies by site


Hyundai Engineering established core sustainability factors for the systematic performance of sustain-

ability management and deployed a sustainability management system by stakeholder in May 2014. It

also plans to organizationally perform the specific action plans it adopted for each of 10 strategic tasks

by core factors.

Hyundai Engineering shared this sustainability management system with managers in charge, team leaders

and officers of each division. It also plans to share the future sustainability management system, strategic

tasks and items to perform with its key external stakeholders (customers, partners, peer businesses, local

communities, etc.) as well as its internal stakeholders.

Mission

Sustainability management charter


Core factors

Strategic

tasks

(action

plans)

Enabler

Roadmap

Committee Operation

Steering CommitteeSustainability Management Organ

Organ name Date founded Frequency of meeting Agenda

Steering Committee Organ proposed in Q4 2014

Founded in January 2015

QuarterlyQuarterly inspection of strategic tasks

progress and feedback

Working level group MonthlyInformation sharing concerning items promoted and

required for collaboration among organs

CEO & President

Head of Process Plant Division 1 Head of Process Plant Division 2

Head of Power & Energy Plant Division

Head of Housing Works Division

Head of General Administration & Management Division

Head of Planning Office

Head of Business & Marketing Office

Head of Finance & Economy Division

Head of Outsourcing & Procurement Office

Head of HSE Innovation Office

Labor-management council Head of Asset Management Office

Head of Building Works Division

Head of Infrastructure & Environmental Division

Phase Incubator Phase Initiative Phase Integration Phase

Plan

• Expand sustainability management system•Expand with division-based business plans

• Establish and strengthen sustainability management system• Continue division-based business activities• Strengthen sustainability management programs

for partners

•Integrate into core business plans•Manage as corporate business activities•�Strengthen overseas sustainability management

activities

Do

•Link with corporate vision•Operate division-based strategic tasks•Expand target stakeholders

• Integrate with corporate vision• Operate division-based strategic tasks•�Strengthen processes in which stakeholders

participate

• Promote convergence with unit R&Rs• Promote processes to let stakeholders

participate periodically

Check

•Operate Steering Committee•�Measure achievements of sustainability

management•Deploy sustainability management KPI

• Operate Steering Committee (including external directors)•�Measure achievements of sustainability

management•Link with corporate KPI

•�Operate Steering Committee (including external directors)• Measure achievements of sustainability

management• Integrated with corporate KPI

Act

• Collect feedback and recommendations by Steering Committee

• Collect feedback and recommendations by Steering Committee•Publish sustainability report annually

• Collect feedback and recommendations by Steering Committee• Introduce Web-based reporting system

Expected Effect• Deploy foundation for practicing sustainable

management• Strengthen risk management function

•�Implement corporate sustainability management•Diffuse sustainability management outwards

•Secure sustainable competitive advantage

To 2016: Expand sustainability management system

To 2018: Strengthen sustainability management system

To 2020: Integrate sustainability management system

Briefing to Team Leaders in Charge of Sustainability Management



Governance

Context

Progress

Deploying a sound and transparent governance system is essential to securing the trust of stakeholders

and enhancing their rights and benefits. Hyundai Engineering strives to make transparent and sound deci-

sions while enhancing its competitiveness through efficient governance operation.

Board composition and operation

Board composition

Hyundai Engineering’s board of directors consists of three internal executive directors, including one rep-

resentative director, and two non-executive directors. The representative director serves as the chair of the

board. The directors may make decisions on overall management issues. They are elected by a majority of

affirmative votes of the shareholders present at a general shareholders meeting held with one quarter or

more of the total of issued shares represented.

Board operation

Hyundai Engineering enacted its Board Regulations to ensure efficient operation of the board. It does not

have any sub-committees authority that is delegated by the board. The regular board meetings are held

once each quarter, as a rule, whereas its extraordinary meetings may be held as and when required. The

board adopts its resolutions with majority affirmative votes of the directors present at a meeting repre-

sented by a majority of the directors. Directors who are absent may participate in board resolutions via a

video conference system.

Operation of audit system

Hyundai Engineering appoints one auditor who routinely audits the company’s accounting, financial infor-

mation, business status, and the status of the company’s business and property conditions. The auditor

may attend a board meeting to express his opinions. he may report to the board or the general share-

holders meeting when he believes that a director has committed or is feared to commit a violation of any

statutes or the company’s articles of incorporation. Further, the auditor may exercise the right to supervise

the directors’ performance and may also demand overall management-related information as required to

perform his/her duties.

Election of directors and auditors

Hyundai Engineering’s directors and auditors are elected by majority affirmative votes of the shareholders

who are present at a general shareholders meeting held with one quarter or more of the total number of

issued shares represented. The cumulative voting scheme provided under Article 382 of the Commercial

Act is not applied to elect two or more directors.

Evaluation and compensation of directors’ performance

The limit of the directors’ remuneration is determined by majority affirmative votes of the voting rights rep-

resented by the shareholders present at the general shareholders meeting held with one quarter or more of

the total number of issued shares represented. Their remuneration and retirement allowance are paid within

the set limit. The limit of the directors’ remuneration as determined at the 2013 general shareholders meeting

was KRW 4 billion. The actual paid amount is disclosed on the stock exchange digital disclosure system each

quarter.

Ownership structure

The total number of shares issued by Hyundai Engineering stood at 7,595,341 as of the end of June 2014.

The largest shareholder is Hyundai Engineering and Construction, which holds 38.6% of the total number

of issued and outstanding shares.

2012~2013 Key items of board agenda

Date held Agenda items

Feb.2012 Approval of the convocation of the 11th regular general shareholders meeting and seven other items

Jan.2013 Approval of the 12th term financial statements, business report, and another item

Feb.2013 Approval of the convocation of the 12th regular general shareholders meeting and six other items

Mar.2013 Approval of the appointment of the representative director (second term)

2012~2013 12 items, including the founding, relocation or closure of branches

Equity shareholding status

Shareholder’s Name Number of shares held Percentage

Hyundai Engineering & Construction 2,933,000 38.6%

Jung, Eui Sun 890,327 11.7%

Hyundai Glovis 886,740 11.7%

Kia Motors Corporation 710,020 9.3%

Hyundai MOBIS 710,020 9.3%

Jung, Mong Koo 355,234 4.7%

Employee Shareholding Coop. 323,715 4.3%

Others 786,285 10.4%

Total 7,595,341 100%

※ As of June 2014

Amount of remuneration paid to directors

ClassificationNumber

of personsTotal

remunerationAverage remuneration

per personRemarks

Registered directors

5 1,379 2763 executive or internal directors

2 non-executive or external directors

Auditor 1 - -

Total 6 1,379 230

※ As of 2013

Unit: person, million won

Board composition status

Classification Name Duties

Executive or internal directors

Kim, Wee Chul CEO & President

Sung, Sang Rok Executive Vice President, Process Plant Division 1

Choo, Yun Jung Senior Vice President, Finance & Economy Division

Non-executive or

external directors

Jung, Soo Hyun CEO & President, Hyundai E&C

Kim, Jong Ho Executive Vice President, Plant Business Division, Hyundai E&C

Auditor Kang, Sun Moon Director, Budget/Accounting Office, Hyundai E&C

※ As of June, 2014



Risk Management

Context

Progress

Businesses are exposed to diverse types of risk that are hard to anticipate while uncertainty increases day

after day in the realm of economic activities. HEC minimizes damages by systematically controlling poten-

tial risk factors that can occur through advance exploration, and endeavors to convert such risk factors

into opportunities for creating new values.

Risk management system

Hyundai Engineering effectively manages diverse risks, including macro environmental risks, intra-in-

dustry competition, technology diversification risks and internal risks, by preventive or preparatory risk

management through proactive risk sensing*, as a rule.

* Risk sensing: Ability to detect or understand risk factors

Risk management organization

Hyundai Engineering formed its CRO (Chief Risk Officer) organ, which is aligned with that of Hyundai Motor

Group, so that risk-related information can be systematically communicated and inclusively compiled to en-

able an immediate and effective response. Hyundai Engineering’s CRO organ consists of its CEO, the head of

Planning Office, and Business Planning Team leader. By appointing a core risk team to take responsibility for

actual sensing and managing essential risk factors, the company has set up a systematic management sys-

tem linking its working-level teams to the Hyundai Motor Group's top management. Management risks are

monitored and reported to the Group on a quarterly basis. The report was made on six occasions throughout

2013 and the first half of 2014.

Definition and management of key risks

Hyundai Engineering selected 10 key risks based on the impact and probability of, and vulnerability to, the diverse

risks surrounding its business installations, including macro environmental risks, industrial environment risks, and

strategic and operational risks. Key risks are controlled using Key Risk Indicators (KRI) for effective risk detection.

Their trend is steadily monitored against the permitted KRI level. Key risks are reviewed and renewed on a quarterly

basis or as and when required. Hyundai Engineering has secured organizational responsive competency to mini-

mize the damages arising from any potential risk by preparing measures to respond to or address risks.

Strengthening of risk management competency

Hyundai Engineering conducts diverse activities aimed at enhancing the

competency of its risk management teams to ‘sense’ or respond to risk

factors. To enhance the perception of risk management, the company con-

ducted 'risk management team seminars' for each KRI indicator in Septem-

ber 2013. In November 2013, Hyundai Engineering further consolidated the

foundation for active practice by holding a 'risk management workshop'

based on the details derived from the team seminar.

Financial risk management

Hyundai Engineering is exposed to diverse financial risks arising from its business activities, in-

cluding market risk, credit risk, and liquidity risk. Its risk management program focuses on the

unpredictability or uncertainty of the financial market, and concentrates on minimizing effects

that are potentially unfavorable to the company’s financial performance.

Organization of the Risk Management System

Hyundai Motor Group

Hyundai Engineering

Group Risk Management Committee

Group CRO Organ

Quarterly reporting of risk status

Periodic measurement of risk status

CRO (Chief Risk Management Officer) - CEO & President

Risk management unit manager - Head of Planning Office

Person in charge of working level risk management - Management and Planning Team Leader

Teams in charge of risk monitoring

Key risks of Hyundai Engineering (10 risks)

Strengthening of risk management competency

Date Key Details

Feb. 2013 Registration of risk management schemes on Hyundai Engineering intranet

Apr. 2013 Introduction of quarterly risk monitoring

Sep. 2013 Risk management team seminar

Nov. 2013 Risk management workshop

Jan. 2014 Preparation of 2014 risk management manual

2014~ Introduction of measures to internalize risk management

10 Key risks

Type of Risk KRI

Failure to optimize business plans •Order, sales, profit, net liquidity, collection

Expansion of currency volatility •Currency exchange rate fluctuation (won-dollar, won-euro)

Rise of raw material prices •Fluctuation of raw material prices (copper, nickel, lead, aluminum)

Intensified competition •Oil price fluctuation •Bidding win rate

Setback of housing market •Trading volume of condominium •Sale ratio (residential/commercial)

Construction work defects•Project Quality Index (PQI) C or D grade ratio •RFI Reject ratio•NCR Open ratio

Sanction against violation of regulation

•Cumulative penalty points against failures •Disaster ratio•Number of cases of violation of laws

Damage to ethical image•Completion ratio of ethics education •Number of cases of violation of fair trading law

Risk related to overseas advance-ment

•Country credit rating •Travel warning grade

Failure to maintain or secure core workforce

•Turnover ratio •Employment preference degree

※ As of June, 2014

Risk management workshop



• Currency exchange risk management

It usually takes two or more years to receive or pay foreign currency because the company’s business

involves the execution of order-based projects. In this connection, cases occur where the receipt or pay-

ment timing of an ordinary transaction is unclear as the timing is subject to the project progress after the

award of the contract. Hyundai Engineering does its utmost to minimize its currency risk by matching the

receipt and payment currencies of a given project.

• Liquidity management

A business may go bankrupt if it fails to secure or maintain an optimum level of liquidity even though it

posts a net profit. Hyundai Engineering takes proactive measures to block any liquidity crisis in advance

by thoroughly controlling its liquidity ratio.

Project risk management

Hyundai Engineering has selected a number of risk items related to project site processes, such as construc-

tion, test & commissioning, project management, procurement, transport, and HSE. It reports each week by

item according to the action or alternative action manual when any risk arises.

Examples of project-based risk management

Risk items Actions or alternative actions

Site 1

Construction• Delay of advance or follow-up work due to

interoperation with an existing system• Enhanced advance preparation (materials purchase, supervisor assignment, etc.)

and thorough preparation of countermeasures

Test & commissioning

• Unexpected problems may arise in test operation of rotating machines, including penetration by dust or foreign matter

•�Thorough preparation, including development of plans for advance checking or measures, and test operation methods

Project management

• Cash Balance• Early completion of documentation for approval of monthly progress rate•Management of project progress rate

Site 2

HSE

• Risks related to emergency situations due to riot, terrorism and abduction in Algeria•�Risks of incidents involving transport of personnel

or materials to a remote site in a desert

• Performs corresponding emergency action guidelines after notifying the owner immediately if a force majeure event occurs• Requires to survey the risk sites to prepare countermeasures

Site 3

Procurement• Delivery of urgent materials to the site•Prevention of delayed transport or custom clearance

•�Management or support for procurement to ensure timely delivery to the site•Suppress container detention charges by issuing bond

Site 4

Transport

• Additional cost incurred by delayed custom clearance• Customs clearance, transport and storage after

arrival of key materials at site

• Daily checkup of customs clearance status, and thorough advance checkup of shipping documents to prevent any omission of documents required for customs clearance• Advance examination of shipping, stevedoring, advance notification of vendors'

stevedoring plans, and witness by safety manager when heavy items are handled

Hyundai Engineering has been developing its risk management systems with the aim of securing effective

risk management through automation. Hyundai Engineering also expects that it will become easier to

compile or interpret risk-related information by operating risk management system in combination with

its financial information system.

Ethical Management

Context

Ethical management may positively affect a company’s reputation and its ability to attract customers or

acquire talents either directly or indirectly, whereas unethical acts that flout the basic rules or principles may

have a seriously adverse impact on society as well as the business. Led by ethical management based on

integrity, Hyundai Engineering is winning more trust from other companies.

Action guidelines and code of conduct for Ethics Charter

Hyundai Engineering developed detailed ten-point action guidelines in May 2014 to enable its employees

to properly respond to the types of ethical dilemmas they might encounter in the course of their work,

and to help them utilize information or counseling services in consultation with the ethical management

organization in cases where it may be difficult to make sound judgments by themselves.

Ethics charter

(7 articles)

Hyundai Engineering declaratory basic

ethics policies

Criteria for practical value judgment

Specific guidelines for ethical behavior

Code of conduct

(6 chapters, 20 articles)

Guidelines (10 articles)

We implement tasks with responsibilities in an honest and sincere way, and establish organizational culture of mutual respect and trust.

We improve corporate value through transparent and efficient management, and pursue management focused on shareholder benefit maximization.

We put priority on customer satisfaction, and provide the highest goods and supreme service.

We establish fair and clean transaction orders with cooperators and reinforce partnership to pursue mutual growth.

We respect competitors, comply with commercial laws, and endeavor to engage in fair and liberal competition.

We care for environment, pursue sustainable growth and contribute to global preservation and human prosperity.

We sincerely execute social responsibilities by complying within laws and contributing to social welfare.

Structure of Hyundai Engineering’s Code of Ethics Ethics Standards

Ethical management systemIn 2009, Hyundai Engineering enacted its code of ethics in order to establish criteria that will enable its

employees to make correct value judgments and take the necessary actions with regard to business ethics,

while providing an institutional framework for implementation of the ethical management rules.

ProgressLiquidity management status

Classification 2012 2013

Cash or cash equivalents KRW 544.4 billion KRW 683.8 billion

Liquidity ratio 143.3% 152.9%

(1) Reporting procedure, and citation/punishment provisions(2) Prohibition of acts involving demands for, receipt or offering of

monetary benefits to stakeholders - Items of monetary value: receipt is prohibited regardless of the

cause. - Congratulatory or condolence money: maximum of KRW 50 thousand - Entertainment: within the usual level (a limit of KRW 30 thousand

per person is recommended)

(3) Prohibition of illegitimate equity investment in partners(4) Prohibition of duty negligence(5) Manipulation of documents or figures, or false reporting(6) Illegal or illegitimate use of company assets(7) Prohibition of sexual harassment(8) Prohibition of company information and document management(9) Transparent selection of partners(10) Fair management of partners

[Key contents of the action guidelines or the code of conduct for the Ethics Charter]

Next Step



Ethics education

Hyundai Engineering provides ethics education to all its employees to cultivate their ethical mindset and

to induce them to practice ethical behavior at work. Online access to ethics education is offered to induce

more employees to participate in the education even during duty hours. All the employees are enabled to

take mandatory ethics education by distributing education CDs produced by the company to employees

serving overseas. The company delivers the education contents to its employees more effectively by

conducting customized education courses concerning the company’s circumstances and characteristics

to overcome the existing online education, including special lectures by external professional instructors

and dissemination education hosted by team leaders to all team members.

Ethical management programs

Ethical management leadership

To firmly establish and perform ethical management, it is critical for the chief executive officer to con-

stantly express his or her determination to achieve that end. Hyundai Engineering’s CEO & President

urges all employees to practice ethical management by sending ethics promotion letters to them and

partners periodically. In April 2014, he shared his thoughts and experiences concerning ethical manage-

ment in his ‘CEO & President’s message on ethical management'. His interview video footage* is shared

with all of the company’s employees by broadcasting it on the internal television and displaying it on the

corporate bulletin board.

Cyber audit office

Hyundai Engineering conducts cyber audits of all its business units, in addition to site audits, as part of its drive to

establish transparent management company wide. To that end, the Cyber Audit Office has established standards

of ethical value judgment and transparent behavior, and displays its Ethics Charter, Code of Conduct and Action

Guidelines, so as to enable the company’s executives and employees to practice ethical management during the

performance of their duties. It also promotes these standards among its customers and business partners.

In particular, the Internet-based reporting center collects information concerning illegitimate or corrupt prac-

tices and unfair trading, as well as ideas that might prove helpful to corporate management from stakeholders

both in and outside the company, including its customers, partners, executives and employees, without filter-

ing, to improve the institutions and reflect the improvements in corporate management. It has also established

a transparent process for handling whistle blowers’ reports on illegitimate, corrupt or unfair practices and

discloses the results thereof.

Ethical management communication

Hyundai Engineering strives to generate a consensus among its employees on ethical management by

periodically providing them with ethics promotional materials and related information. As part of the

“Hyundai Engineering ethical management system and action plans”, the Ethical Management Series,

which has been published on a bi-monthly basis since June 2012, covers diverse information concerning

local and overseas cases and media articles related to ethical management, including those concerning

bribery, fair trading, and information security. Hyundai Engineering steadily reminds its employees of the

importance of ethical management by publishing Korean and English-language posters.

Hyundai Engineering plans to operate an ‘Ethical management diagnosis system’ with the aim of promoting

Hyundai Engineering-customized ethical management by surveying its management status. The diagnosis

system is being designed to diagnosis the performance status of different sections. The system will be com-

posed of a dual diagnosis system (self-diagnosis and stakeholder questionnaire) to enhance the objective-

ness and reliability of the outcome.

CEO & President's ethical management footage Ethics letter towards partners

Next Step

Ethical management series

Status of education on ethical management

Years Course name Type Targets Hours per person Number of learned students

2013Now practicing, ethical

managementOnline All employees 8 2,222

2014

Ethical management means competitiveness

Offline

Section managers or higher

1 600

Practicing ethicsOfficers and team

leaders1 (each) 157

HEC ethics norm structure All employees 1Dissemination education

completed for 100% of teams at home office and key project sites



Materiality Assessment

Hyundai Engineering conducted a materiality assessment in order to survey diverse expectations or mat-

ters of interest raised by the internal and external stakeholders and to report the achievements by effec-

tively responding to sustainability issues.

In the course of the materiality assessment, the degree of interest in sustainability issues was assessed as

the key stakeholders of the company participated in a balanced manner. Hyundai Engineering determined

the priority of sustainability based on the materiality assessment criteria presented under the GRI G4

Guidelines, referring to the methods presented by ISO 26000 and the IIRC*. The priority was used as basis

for developing mid- and long-term sustainability strategies and objectives.

* IIRC : International Integrated Reporting Committee

STEP 1 Issue identification

Hyundai Engineering analyzed the internal and external environments in order to under-

stand its sustainability-related issues. To that end, it conducted an advance questionnaire

survey of random employees, an analysis of issues concerned in the same industry, an

analysis of media articles in the past three years, an in-depth interview of stakeholders,

and an ISO 26000 diagnosis.

As such trend issues as the securing talent, enhanced demand for safe products and services, business

transparency and fair trading emerged as priority issues, it has been affirmed that the sustainability issues

have been reflected in the priority issues that emerged recently.

The analysis of 20 impact issues based on GRI G4 aspects revealed that such issues as customer satisfaction,

compliance with laws, economic performance, labor practices and sustainable building construction and

development have emerged as key issues stressed to the stakeholders, meaning they are evenly distributed

across the entire categories of economy, society and environment.

Human resources, intellectual properties and social or relational capital were presented as core resource and

capabilities related to internal capability issues among the six capital items presented by the IIRC.

STEP 2 Priority determination

Hyundai Engineering conducted an online questionnaire survey of all its stakeholders in

order to determine the priority of 41 issues derived through the issue identification. It

organized the materiality assessment matrix placing the degree of stakeholder interest

and the impact on business based on the derived priority issues.

Trend issues (12)

·Enhanced importance of securing talent·Enhanced demand for safe products and services·Enhanced demand for business transparency·Enhanced demand for fair trading·Enhanced demand for the welfare and rights of officers

and employees·Intensified competition (dumping, etc.)·Enhanced world mutual dependence due to globalization·Diversification of customer demand·Accelerated technological development·Enhanced demand for win-win growth·Depletion of natural resources·Environmental damage

1 Customer satisfaction with performed

projects

2 Compliance with statutes in

performing projects

3 Market presence (wages, purchase,

and employment)

4 Economic performance (profit,

pension, and government subsidy)

5 Compliance with statutes concerning

social issues

6 Sustainable building

construction and development

7 Occupational health and safety

8 Employment (gender, new, temporary

and subcontracting)

9 Local communities

(social contribution)

10 Anti-corruption (fair bidding)

11 Training and education

12 Anti-competitive behavior

(prohibition of collusion)

13 Compliance with environmental

statutes

14 Assessment (human rights)

15 Indirect economic impacts

(infrastructure investment)

16 Recovery of degraded or polluted land

in connection with construction work

17 Supplier human rights assessment

18 Labor/management relations

19 Use of raw materials

20 Emissions (greenhouse gases, dust)

Low

External stakeh

older m

ateriality

High

High

Hyundai Engineering(Internal stakeholder) materiality

Resource and capabilities (9)

·Funds acquired by performing projects·Capabilities related to ethics management,

crisis management, and governance·Boost employee loyalty and motivate employees·Capabilities to understand, develop

and implement the strategies of the organization·Brand or reputation developed by the organization·Relations with or trust of key stakeholders·Intellectual properties·Securing of community support

for projects performed by the organization·Tacit knowledge, system or custom

Frequency of stakeholder engagement

Classification Frequency

Internal stakeholders

(employees)

General manager or higher 266

Deputy general manager, manager 424

Assistant manager 289

Staff 336

Sub-total 1,315

External stakeholders

Shareholders, affiliated companies 13

Customers 14

Partners 35

Government 4

Non-profit organizations 5

Others 2

Sub-total 73

Total 1,388

Impact issues (20)

Processes to derive material issues

Analyzing environment

STEP 1

Issue identification

Detecting major issue

STEP 2

Priority determination

Linking with corporate

strategies,

preparing report

STEP 3

Validation



Special Issue

A new corporation founded through the merger between Hyundai Engineering and Hyundai Amco

STEP 3 Validation

The derived key sustainability issues have been reflected in this report in connection with the vision and

sustainability strategies of Hyundai Engineering. Furthermore, the reporting boundaries of the key issues

were established based on G4 aspects and the contents were organized based on the scope of reporting.

Hyundai Engineering and Hyundai Amco were merged into a new family on 1 April 2014. With the two companies

having different business structures and human resources, synergy was expected even before the merger. Hyundai

Engineering is strong in engineering and overseas markets, whereas Hyundai Amco has merits in construction and

domestic market.

The merger of the two companies fulfilled expectations, with the merged corporation ranked 10, jumping a remarkable 44

notches in the 2014 contractors’ ranking. It continues to live up to its potential by winning new contracts continuously in

overseas markets, including Algeria, Iraq, Turkmenistan, and Uzbekistan. In particular, Hyundai Engineering is assessed to

have diversified its markets successfully by exploring the Central Asian Region, which had remained unexplored by Korean

plant engineering companies, veering away from previous markets that had been concentrated in Middle and Southeast Asia.

The orders won by the company in the first half of 2014 tripled to USD 3.7 billion compared to the previous year.

The merger between Hyundai Engineering and Hyundai Amco was promoted as part of a growth strategy for their construc-

tion business. Through strategic unity between Hyundai Engineering with its engineering competence and Hyundai Amco

equipped with construction competence, the merged company is now able to concentrate on global plant EPC (engineering,

procurement, and construction) services. In particular, it has deployed a systematic organizational model wherein it can re-

spond to changes in the market environment through the merger, including EPC services, development of planned or propos-

al-type projects, and development of investment projects. Hyundai Engineering can utilize this model for specific business

models for joint venture into domestic and overseas markets together with the construction unit or other member companies

of the Hyundai Motor Group. Hyundai Engineering plans to grow into one of the world’s top 15 engineering companies, with

the objective of winning KRW 1.6 trillion worth of orders and posting KRW 1.1 trillion in sales in 2020. Furthermore, it intends

to maintain growth in global EPC services while promoting them along with the plans of Hyundai Motor Group construction

unit member companies for their job specialization and upgraded business structure.

Introduction to Hyundai Engineering and Hyundai Amco

Hyundai Engineering Hyundai Amco

1974 Founded 2002

Process plant, power & energy plant Main business lines Building and housing works

KRW 2,623.6 billion Sales KRW 3,407.1 billion

KRW 10,318.1 billion* Order balance KRW 4,812.6 billion

KRW 265.5 billion Operating income KRW 254.3 billion

36 ENR overseas design service -

54 ranking 13

3,153 Number of employees 1,673

Hyundai E&C (72.55%) Largest shareholders Jung, Eui Sun (25.06%)

Engineering, overseas markets Features Construction, domestic market

※ As of December 2013

* Outstanding construction order balance (3,656.2 billion won) included

Linkage between report contents and GRI G4 aspects

Report Contents G4 AspectsReporting boundary*

Within Outside

Sustainability

OverviewEthical management Anti-corruption (fair bidding) ○ ○

I. Value

management

Creation and distribution of

economic values

Economic performance (profits, pensions,

government subsidies)○

Indirect economic impacts ○

Market presence (wages, purchase, hiring) ○ ○


Customer satisfaction

management

Quality management

Customer satisfaction (related to project

performance)○

II. Safety·

environment

management


Emissions (greenhouse gases, dust) ○

Use of raw materials ○

Compliance with environmental statutes ○


Recovery of land degraded or polluted by

construction work○

Compliance with laws in performing projects ○

Safe and healthy workplace Occupational health and safety ○ ○

III. Talent

management

Talent developmentEmployment ○

Training and education ○

Respect of rights of employeesLabor/management relations ○

Assessment (human rights) ○

IV. Win-win

management

Win-win growth Supplier human rights assessment ○

Fair competition

Compliance with society-related statutes ○

Anti-competitive behavior (prohibition of

collusion)○ ○

V. Sharing

management

Social contribution toward local

communities

Local communities (corporate social

responsibility) ○

* ‘Reporting boundary’ refers to the place where the material issues occur. They are divided into those that arise in- and

those that arise outside Hyundai Engineering organization, and both.

20 Steering on Values

Creation and distribution of economic values

Since merging with Hyundai Amco in 2014, Hyundai Engineering

has secured a synergy effect by harmonizing its engineering ca-

pabilities with the construction competency of Hyundai Amco,

while adding core capabilities for building and housing works

to its specialty in plant engineering.

Steady growth and earningsHyundai Engineering ranked among the top 10 in the 2014 as-

sessment of contractors construction competency for the first

time in its history, thanks to its merger with Hyundai Amco in

April 2014. This was an achievement in the 40 years since its

foundation, an example of synergy with Hyundai Amco. Hyun-

dai Engineering has accomplished rapid growth over the five

consecutive years since it achieved KRW 1 trillion in sales in

2009.

In 2013, it posted KRW 2,616.2 billion in sales, showing a 15%

increase over the preceding year. In the first half of 2014, right

after its merger with Hyundai Amco, Hyundai recorded KRW

2.18 trillion in sales. This was achieved based on the pioneer-

ing spirit and concerted efforts of its employees to diversify

into new business areas and advance incessantly into over-

seas markets.

Its ordinary and net profits are growing steadily along with

its sales. In particular, its net profit in 2013 increased to KRW

219.5 billion, accounting for 8.4% of its sales and exceeding

the 200 billion mark for the first time. It targets KRW 6.202 tril-

lion by year-end. Net profit for the first half of 2014 was KRW

128.6 billion or approximately 59% of the net profit for the

previous year. Hyundai Engineering has become a company

that maintains steady growth while striking a sound balance

between quantitative and qualitative growth.

Financial structureHyundai Engineering has succeeded in maintaining a stable

financial structure with steadily growing sales and profit. The

liquidity and debt ratio of 2013 both improved by 10% or so

compared to the previous year. In the first half of 2014, it re-

corded steadily increasing figures as its stability indicator fur-

ther improved as an effect of the merger with Hyundai Amco,

posting liquidity ratio of 172% and debt ratio of 99%. Further-

more, it has been recognized externally as having achieved

financial stability due to its A+ credit rating.

Context

Progress

Value Boosted : Value Management

“Compliance is a critical issue in advancing to newly emerging or developing markets.”

“I hope that Hyundai Engineering will develop into a powerful company by advancing into overseas markets through joint venture with large private and public enterprises.”

The engineering industry should swiftly respond to the trends, dynamic structure, and geographic

changes of the current global energy market, including the emergence of shale gas. I have nothing

but high praise for the pioneering example set by Hyundai Engineering by advancing to regions

outside the Middle East, which other Korean construction companies have not entered so far.

It is highly likely that foreign companies become embroiled in irregularities or corruption in emerging

or developing countries. Compliance is critical in those countries as foreign companies have been

hard pressed by local governments if they were involved in even one single case of corruption or

illegality. Furthermore, win-win growth with customers is important as the long-term business

value of Hyundai Engineering derives from its customers. It is essential to develop a long-term partnership by contributing

to the mid- and long-term development of the host country by transferring technologies in addition to making temporary

gains.

Chae, Sang Uk /Manager, Research Center, Hana Daetoo Securities

Korean engineering companies should advance into diverse overseas markets to become global

players as the local domestic market has reached a limit. To that end, it is important for them to

actively explore overseas markets by forming joint venture companies in order to take up projects

involving plant operation services as well as construction. Hyundai Engineering will become a

powerful company when it performs joint marketing programs with other large private or public

enterprises by maintaining its expertise and know-how in the relevant areas.

I also hope that Hyundai Engineering will grow into a global company that is highly respected

in overseas markets through joint global marketing by assigning skilled engineers overseas while

securing global talents by training superior human resources.

Lee, Hun Sang / Deputy Manager, Quality Control Team, Korea Gas Corporation

Stability

2013 2014 first half

Liquidity ratio 152.9 172.1

Debt ratio 155.9 99.0

Profitability

Operating income ratio 8.0

Net profit ratio 5.9

Gross margin ratio 12.4

Sales growth rate 84.6

Net profit growth rate 30.0

Financial indicators

Unit: % Unit: %

※ As of June 2014 ※ As of June 2014




Hyundai Engineering is striving to enhance its global competi-

tiveness by securing technological capabilities through the per-

formance of diverse projects, while steadily selecting and im-

plementing projects with potential as future growth engines in

order to secure a steady growth momentum in phase with fast

developing technologies in the rapidly changing world market.

Context

Progress

Future growth enginesHyundai Engineering prepared a framework to strengthen its

position in existing markets and to expand into new markets

by selecting twelve new growth engines in 2011. Since then,

as a newly merged corporation Hyundai Engineering has de-

veloped a foundation for its mid- and long-term development

while actively responding to the changing world market by re-

selecting ten future growth engines spanning the sectors of

process plant, power & energy plant, building works, housing

works and infrastructure.

Hyundai Engineering will concentrate its core business capa-

bilities in order to create and distribute certain indirect eco-

nomic values, including the promotion of employment and

the local economy, as well as the creation of direct economic

values through the steady generation of revenue.

Next Step

Distribution of economic values

Dividend (Shareholders) KRW 2 billion

R&D Investment (Customers) KRW 1.92 billion

Operating Expense (Partners) KRW 2,312.5 billion

Payroll (Employees) KRW 328.9 billion (31% growth)

Corporation Income Tax (Government)

KRW 74.7 billion (45% growth)

Donation (Community) KRW 0.45 billion

※ As of December 2014

Management of retirement pension fundsHyundai Engineering manages a defined benefit retirement

pension fund through Hyundai Life, a member company of

Hyundai Motor Group. As of the end of 2013, the company’s to-

tal assets of KRW 102.7 billion were under management. Mean-

while, the Hyundai Engineering Technology Research Institute

spent KRW 0.61 billion in government subsidies for research

purposes in 2013.

Process plant

Hyundai Engineering is exploring new

markets by selecting future growth

engines in the process plant sector, such

as Gas To Liquid (GTL), LNG Liquefaction,

and Coal Gasification, in consideration of

the prospects of the world petroleum and

gas industries.

Power & energy plant

Hyundai Engineering aims to take part in

Independent Power Plant (IPP) projects

based on the trend and growth direction

of the world power plant market, and

concentrates on developing engineers

and securing technologies by selecting

solar power and high-temperature gas-

coaled reactor projects as its future gro-

wth engines

Infrastructure and environment

Hyundai Engineering has enhanced its

business capabilities to advance into

overseas water-related markets, including

Africa and the Middle East, based on

the technologies and experience it has

accumulated in the field of water

treatment. It also promotes "waste

to energy" projects involving

biomass re-cycling

and scrapped cars

as one of its

future growth

engines.

Building and housing works

Hyundai Engineering concentrates on

the development of its technological

capabilities and business models by

selecting new growth engines in the

building and housing sectors - such as

innovative ‘modular projects,’ which can

dramatically shorten construction period

based on the assembly of pre-fabricated

modules on site, and ‘finance-linked

housing projects’ which develop

residential buildings based on

financial services.

Sales by business division

Total

Others

Process plant

KRW 818,349 million


KRW 517,325 million

Building works

KRW 250,451 million

KRW2,175,926 million

Housing works

KRW 303,875 million

Infrastructure/Environment

KRW149,908 million KRW136,018 million

※ Based on data disclosed as of June 2014

1. Independent Power Plant (IPP)2. Gas To Liquid (GTL)

3. LNG Liquefaction Plant4. Coal Gasification5. Advancement into overseas water plant markets

6. Solar ower generation

7. Finance-linked housing

development projects

8. Pilot project of

high-temperature gas reactor

9. Projects of recycling wastes

into energy

10. Modular building projects

10 Future growth engines

Priority intensivebusiness

Capabilities secure business



New technologiesTechnology development systems ● Hyundai Engineering endeav-

ors to enhance customer satisfaction and service quality by steadily

developing applicable technologies that will expand its EP&CM busi-

ness and strengthen its field business technological competencies.

To that end, it has developed specific action plans for implementing

strategies aimed at strengthening its technological competitiveness

by ensuring a virtuous cycle among its key R&D vision of ‘devel-

oping new high value-added growth projects’, ‘operating a global

real-time management information system’, and ‘deploying intel-

lectual integrated engineering service solutions’. In addition, it aims

to successfully complete technology development projects based

on periodic inspections of research achievements and systematic

management by selecting technology development tasks through

the assessment of future practical usage, while developing tech-

nologies under the three categories of in-house exploration proj-

ects, government research projects, and joint development projects

based on collaboration with universities or research institutes.

Technology development achievements ● Hyundai Engineering en-

hances its technology development achievements in many different areas

by steadily developing technologies according to diverse approaches. It

materializes diverse technologies that can be applied to eco-friendly proj-

ects in whole business areas, and which can also contribute to the devel-

opment of local communities.

Hyundai Engineering carried out a total of 17 R&D projects from 2009

to 2014. In particular, one project for the development of technologies

for optimizing intellectual water purification plants and four modular con-

struction projects are being carried out in connection with advancement

into overseas water plant markets and modular building projects under

the ten future growth engines.

Status of intellectual property rights ● Hyundai Engineering does its ut-

most to secure intellectual property rights of patented or other new tech-

nologies resulting from its technology development projects as it operates

engineering services to which ‘knowledge is an essential value’. It filed 46

patent applications during the period covered by the current report, and

held 579 intellectual property rights as of the end of 2013. Hyundai Engi-

neering supports its employees so that their innovative job-related ideas

based on experience and know-how accumulated in the performance of

projects in diverse industrial sectors can be transformed into patents for

such diverse sectors as plant, building, civil construction, and environment.

Thanks to employee-initiated R&D efforts, Hyundai Engineering's techno-

logical competencies have been widely recognized with the certification of

new environmental and construction technologies, including wastewater

treatment technology that enables high-temperature anaerobic digestion

using tubular ultra-filter membranes and a high-temperature CO2 de-aer-

ator (New technology No. 353 certified by the Korean Ministry of Environ-

ment), and a hybrid seismic control system applicable to the connecting

beams of steel-reinforced squat-thrust walls (new construction technology

No. 653). They provide a foundation for the execution of projects in an eco-

friendly manner while enhancing quality and safety in the performance of

projects by applying such new technologies to project sites.

2012 2013

R&D expenses Unit: KRW million

2,539 2,858

Technology R&D projects

Category Key research projects Period

InfrastructureDevelopment of technologies for optimizing intellectual water purification plants

2011~2014

Building works

Modular building government project [1st year] 2013~2014

Construction and performance evaluation of trial modular houses 2013~2014

Peer review of modular structural design 2012~2012

Alternative designs based on modular techniques; analysis of their economic feasibility

2012~2012

Customer satisfaction management

Hyundai Engineering enhances customer satisfaction by sys-

tematically approaching while assigning the highest values to

the common fundamental requirements of ‘quality’ and ‘safe-

ty’. It also attempts to deploy sustainability by creating highly

loyal customers while enhancing opportunities for re-orders

and additional orders based on the trust of the project owners.

Context

Progress

Understanding changes and requirements of customers and

reflecting them in management is the basis of sustainability

management and the securing of potential customers. Hyun-

dai Engineering manages diverse customer opinions by oper-

ating a customer satisfaction center that is designed to inte-

grate several customer satisfaction centers to one channel. It

also enhances customer satisfaction by steadily monitoring the

progress until the reason for the complaints have been fully

removed, by assigning a person in charge while surveying the

causes of customer complaints.

Customer satisfaction surveyHyundai Engineering measures the objective satisfaction of

its customers by commissioning an external survey agency

to conduct a customer satisfaction survey each year. Further-

more, it is committed to developing areas that require im-

provement based on the results of the survey.

Sangdo-dong Amco Town ● Hyundai Engineering’s Housing

Works Division surveyed customer satisfaction with Sangdo-dong

Amco Town in November 2013. A 1:1 face-to-face questionnaire

survey was conducted on 490 tenant households to collect their

complaints and suggestions. The town won 75 points in the evalu-

ation. Furthermore, it accommodates customers’ requests by

actively reflecting on its future design processes the complaints

raised by tenants due to design or construction defects among

requests for improvement, except simple discontent.

Project owner satisfaction survey ● Hyundai Engineering’s

Bulding Works Division conducts a biannual (once in the first

half, once in the second half) survey of Hyundai Motor Group's

project satisfaction, to enhance the company’s project man-

agement competencies by reflecting the suggestions or rec-

ommendations of the customers. In the latter half of 2013, a

questionnaire survey on sales, cost, process, quality, safety

and environment management was conducted on the custom-

ers of 40 project sites, and the key findings were analyzed and

reflected in the projects concerned.

Hyundai Engineering tries to think and act from the viewpoint of

its customers as a provider of sustainable values, sharing future

values with all stakeholders. In 2014, it plans to conduct a cus-

tomer satisfaction survey at one of the five Amco Town projects

currently under construction. In the latter half of 2014, Hyundai

Engineering plans to operate an integrated call center covering

the central, Yeongnam and Honam regions, and to conduct fur-

ther surveys of the Hyundai Motor Group project.

Next Step

Customer satisfaction survey process

Develops fundamental solutions by product/service based on improvement tasks derived

Action plans (draft) reported and

proposed

Agency appointed

Planning and preparation Survey Outcome

assessedFeedback to

related teams

Technology development activities ● Hyundai Engineering steadily

performs research and market survey activities for technology develop-

ment with a view to occupying future markets ahead of the competition

and to maximizing customer satisfaction. It also promotes the develop-

ment of useful technologies that are essential to the development of

engineering industry in Korea by developing technologies in house and

participating in government research projects.

Status of intellectual property rights

Category Total

Industrial property rights New technolo-

giesSub-total Patents Utility Design Trademarks

Pro-grams

Registered 579 571 150 6 3 192 220 8

Filed 46 44 29 0 1 14 0 2

Unit: cases

※ As of 2013

New technology development systems

A global real-time management information system and knowledge management structure are deployed and under operation.

Hyundai Engineering exerts to satisfy customer by deploying intelligent. integrated engineering service solutions

Hyundai Engineering exerts to develop new high-value added growth projects by developing new core technologies.

Vision

Global real-time management information

system operated

Intelligent integrated

engineering service solutions

deployed

High-value added growth

projects developed



Quality management

The first and most important thing that customers expect from

engineering companies is quality. Hyundai Engineering enhanc-

es its quality competitiveness through the quality inspection

and improvement activities conducted by its engineering, pro-

curement and construction sectors, and by its individual busi-

ness units by layer and stage, according to its quality policies of

creating future values for its customers, maximizing technology

and quality competitiveness through steady quality improve-

ment, and maximizing process efficiency through sound knowl-

edge management and process innovation.

Context

Progress

Quality management policiesHyundai Engineering operates a tiered quality management

system for project performance in order to create future values

for its customers. In addition, quality management activities

and programs are conducted by its engineering, procurement

and construction sectors, and by its individual business units,

in accordance with its key quality policies. In the case of nuclear

energy projects, it ensures that all its teams, employees adhere

to any additional quality assurance policies.

Quality management systemHyundai Engineering pursues systematically defined objectives

based on its quality policies, with the focus on quality planning,

management, assurance and improvement. Furthermore, it op-

erates the Project Quality Rating System for all the projects it car-

ries out, and provides the best quality services through periodic

quality audits and analyses, including its partners.

Quality management programsQuality management review ● Hyundai Engineering conducts an

annual review and assessment of its quality management system

to derive improvement solutions while ensuring the adequacy, suf-

ficiency and effectiveness of its quality management system. The

review and assessment of six divisions and seven support units and

offices are finally reviewed by the CEO & President in the form of an

inclusive report covering the outcome of the review of their perfor-

mance by individual project and unit.

Knowledge Management (KM) ● The Lessons Learned System op-

erated on the intranet is a type of feedback system that extensively col-

lects and systematically compiles errors and examples of improvement

identified in EPC projects. The Lessons Learned System was developed

to enable the easy identification of solution leads in the event of a prob-

lematic situation during the performance of a similar project. This is

essentially a knowledge management system that enables Hyundai En-

gineering’s employees to share information on errors that arise during

a project, their experiences, examples of improvement, and knowledge

held by individuals in order to promote efficient project management.Operation process of quality management system

Quality management system (QMS)

Management responsibility

Product realization

Resource management Measurement, analysis and improvement

Identification / Control of processes

Management commitment Quality

policy

CustomersCustomers

Require-ments

Satis-faction

Objectives establishment QMS planning Work responsibility

communications Management review

Customer-related processes Planning Engineering and/or

development Construction (as required)

Purchasing (as required)

Supervision (as required)

Outcome of project performance

QMS documentationControl of records

Control of documents

Provision of resources

Human resources

Infrastructure

Work environment

Internal audit

Monitoring and measurement

Control of nonconforming product

Analysis of data

Customer management

Improvement

Corrective actionPreventive action

Promotion

Order

Communi-cation

Quality management in engineering ● Hyundai Engineer-

ing operates a project collaboration system (Project-

Space), which it developed to facilitate the standardization

and transparency of its engineering services. It efficiently

manages the interface among areas, teams, and partners

through the real-time monitoring of engineering outputs.

Quality management in procurement ● Hyundai Engi-

neering has introduced an advanced inspection techniques

for equipment and materials and a special management

system for sub-standard or low quality equipment and

materials to enhance project performance. Its divisions

and teams share information with other related teams

via a quality information database using a Methodology

for Assessing the Procurement of Materials (MAPS). In so

doing, they enhance the efficiency of inspection and the

soundness of equipment and materials.

Quality management in construction ● Hyundai Engi-

neering pursues ‘Zero Defect Quality’ by training opera-

tors and conducting thorough quality inspections, while

reinforcing its quality risk management by setting up a

quality management system on site immediately upon

the opening of a project site to secure quality in advance.

It also controls the quality of its construction work ef-

ficiently and manages data transparently using advanced

IT systems such as HCQM*, AQMS**, and WIT***.

* HCQM: Hyundai Construction & Quality Management

** AQMS: Amco Quality Management System

*** WIT: Welding Inspection and Testing system

Quality CertificationISO 9001 / KS Q ISO 9001, KEPIC* ● Hyundai Engineering

implements its quality management system in accordance

with ISO 9001 and KS Q ISO 9001*. Since obtaining the ISO

9001 certification for the first time in 1994, the certifica-

tion has been reviewed each year in all engineering fields,

including construction sites. It also obtained certification

of its nuclear quality assurance system, as required under

With the launch of the newly merged corporation, Hyundai

Engineering plans to steadily augment follow-up actions for

quality assessment while expanding the targets thereof to

include projects, sites or partners. It also strives to improve

its quality by developing specific action plans to achieve its

enterprise-wide quality objectives for 2014, which include

grade B or higher in the quality assessment, corrective Provi-

sion of resources week of the detection of defects, and 5% or

fewer rejects out of the total number of inspections request-

ed. Hyundai Engineering also plans to continue its quality

management activities in order to introduce an integrated

quality portal system while improving the performance of its

IT systems for quality management and expanding the scope

of its application.

Next Step

EPC quality management performance

ENGINEERING• Operation of Lessons Learned Management System (EPC common)• Project History Book maintained (EPC common)

PROCUREMENT

•�Standardization/advancement of equipment and materials inspection process•Revision of equipment and materials inspection guidelines•�Enhancement of control functions by improving functions of

inspection management system (MAPS)

CONSTRUCTION

• Employment of experts for construction quality: 30 persons (excluding 10 persons whose organization has changed)•Monitoring site quality assurance activities•Site quality inspection: 7 sites (8 times)•I nternal assessment of construction work performed by ‘third

country nationality’ (TCN)

ISO 9001 2011-2014 KEPIC 2014-2017

※ As of 2013

Lessons Learned System Operational Status

2011

414

2010

113

2012

1,914

2013

2,224

※ As of newly registered

Unit: cases

KEPIC for power plant equipment.* ISO 9001: International standards for quality management systems / KS

Q ISO 9001: Korean Industrial Standards for quality management systems

developed based on ISO 9001 / KEPIC: Korea Electric Power Industry Code.



HSE Management System

HSE implementation organsHyundai Engineering founded an independent HSE inno-

vation office in April 2014 to strengthen its HSE manage-

ment. Previously operating as a team subordinate to the

Plant Project Support Office, the HSE Innovation Office

now functions as a control tower that develops corporate

HSE strategies and objectives, while each business divi-

sions control HSE activities by site.

Key achievements of the HSE management

Sectors Key functions Performed Remarks

Environ-ment

Survey of chemicals used at project sites at home and abroad

On 2 occasions

to date2013 (first and latter half)

Distribution of the revised booklet of guidelines for the safety management of hazardous chemical substances

Com-pleted

Planning for deployment of the greenhouse gas inventory and control systems

Com-pleted Reflected in the 2014 business plan

Safety

HSE inspection/review

On 9 occasions

to date

Awarded the Grand Prize at the Contest on Outstanding Cases of Safety and Health in the Construction Industry- Construction industry risk assessment

category (Project site for facilities to support the Pyeongtaek thermal power plant)

- Periodic inspection: twice per site (first and latter half)

- Guidance and support: 26 occasions

Health & Safety education

On 11 occasions

to date

- HSE education for new recruits: once- Education of experienced employees

for early mobilization: twice- HSE education for engineering and

technical staff: 4 occasions- HSE education for personnel assigned

overseas: twice- Partner employee education: twice

KOSHA 18001 SYSTEM education: 100 occasions

HealthOfficial letters on health management distributed to employees

On 3 occasions

to date

Corona virus, summer season health, and malaria

CommonCollection of HSE-related statutes through all overseas sites

17 sites

Preservation Applies to All : Safety and Environment Management

“Hyundai Engineering will stringently comply with the relevant statutes as the

environment becomes increasingly important with every day.”

Sustainability management is a method of future-oriented management that

can be used to upgrade the overall operational efficiency of a company as

well as an essential requirement for its continual development. I am sure that

Hyundai Engineering will grow into a top-tier global engineering company by

contributing to the fulfillment of its 'Vision 2020’ while becoming a prosocial

company that is respected by society for its sustainability management. To

that end, Hyundai Engineering makes corporate efforts in all sectors of society,

economy, and environment. Hyundai Engineering will stringently comply with the relevant statutes,

including minimizing the discharge of dioxin generated during plant construction, while augmenting

water treatment and other eco-friendly projects as the environment becomes increasingly important

with every day. Hyundai Engineering will also contribute to the development of local communities by

proactively advancing into overseas markets as an exporter of plant equipment, and by signing MOUs

with CIS countries. As a member of Hyundai Motor Group, we will do our utmost to become a good

workplace while actively contributing to job creation.

Ji, Dae Young / Vice President, Head of HSE Innovation Office, Hyundai Engineering

HSE management system

1. Requirements on HSE Aspects

▶ 2. Environment Policies

▶ 3. Goals & Plans

• Establishing HSE Policy

•�Understanding Environmental Issues & Risk Assessment

•�Understanding Legal Requirement

•�Comprehend requirements of the interested parties

•�Establishing Goals & Plans

Plan

4. Performance and Management

• Resource (Human, infrastructure)

• Developing Environmental Technology

• Organization, Granting Authority and Obligation

• Organization, Granting Authority and Obligation

• Communication

• Documentation, Archives Operation Management by Policy,

Process, and Plant

• Emergency Measures

Do

6. Reviewing / Taking Action

• Measures for Correction and Prevention

• Report on HSE Management Performance, Executive Review

Act

Sustainable improvement

5. Inspection

• Monitoring and Measuring

• Incident investigation

• Evaluation Observance

• Internal Evaluation Performance Evaluation

Check

Health, Safety and Environment Policies

Our vision is to enhance our global reputation, ensuring that we respect

all stakeholders, all life, conserve the environment, and prevent injury to

all. HEC has adopted the following to be recognized and, put into practice

as the top priority.

1. We will comply with local legislation and meet the clients HSE

requirements.

2. We are committed to meeting global HSE standards through our

risk based HSE IT system. We are further committed to continuous

improvement via our audit & inspection systems.

3. We consistently make an effort to prevent risk and environmental

pollution by timeously recognizing these impacts that may result from our

activities or services on our project.

4. We share HSE Policy and HSE Performance with our employees and all

concerned parties.

All Employees, and Sub-contractors are accountable for complying with

our HSE Policy and establishing a management system for improvement of

their HSE Performance. The HSE policy will be regularly reviewed to ensure

continual improvement and corporate sustainability management.

April, 2014

Hyundai Engineering CEO & President Kim, Wee Chul

HSE Management System* and policiesHyundai Engineering places top priority on the implementa-

tion of health and safety and environmental policies to en-

hance its corporate image as a future-oriented business that

respects human life, while preserving the precious global en-

vironment. It manages its project sites efficiently using the

HSE management system, and ensures that it deploys a solid

system by applying PDCA processes to all projects.

* HSE Management System: Health, Safety, Environmental Management System




Context

Progress

The discharge of pollutants has increased steadily along with

the growing use of raw materials due to the expansion of busi-

ness domains and the scale of our projects. Hyundai Engineer-

ing is committed to establishing eco-friendly project sites or

business premises equipped with stable management systems

that can minimize adverse impacts on its financial perfor-

mance and the eco-system.

eco-friendly workplacesAdherence to international standards ● In 2008, Hyundai En-

gineering obtained the ISO 14001 standards certification en-

acted by the International Standards Organization (ISO) for

eco-friendly management systems. It maintains eco-friendly

systems that satisfy the international standards through peri-

odic follow-up reviews and re-certification reviews.

eco-friendly operationEfficient use or saving of raw materials ● Hyundai Engineering’s

project sites involve the use of diverse materials including steel

bars, ready-mixed concrete, cement, sand and aggregates for the

construction of buildings and other structures. The company is

steadily adopting the use of alternative raw materials to ensure the

efficient use of resources, including alternative formworks and re-

cycled aggregates. In so doing, it aims to minimize environmental

damage and reduce the cost of raw materials.

Waste management or recycling ● Diverse waste materials are

inevitably generated by the process of disassembling outdated

equipment undertaken by a business that improves or repairs

used equipment. Hyundai Engineering thoroughly complies with

the environmental statutes of the relevant countries or regions

while safely discharging waste materials through special process-

ing or treatment, including those that may have adverse effects

on the environment, such as heavy metals and waste oil. At the

MONE site in Malaysia, all hazardous waste materials generated

at the site are securely stored in a sealed container by outsourc-

ing their handling to service providers that have been authorized

by the government or owner. Contamination of the surrounding

environment is minimized by their periodic removal from the site.

Hyundai Engineering strives to reduce waste materials at source

by recycling them. In 2013, it minimized the cost of handling

waste materials by sharing 63 tons of waste wood generated at

the HDO LBO site with the local residents. At the same time, it

spared the time to share its eco-friendly management programs

with the residents.

Preservation of the eco-system and assessment of environmental

impact ● Hyundai Engineering explores diverse approaches to

minimizing adverse effects on eco-systems and the environ-

ment by proactively assessing the impact that its projects may

have on the environment before starting them, including their

nature, characteristics, location and conditions. Hyundai Engi-

neering carries out comprehensive actions aimed at protecting

the eco-system and any plant and animal species (especially,

endangered species) that may be affected by issues related to

water and air quality, noise and vibration that may arise during

the execution of its projects, including the relocation of trees

and the provision of alternative habitats for animals. The envi-

ronmental impact is assessed, and the ex-post facto impact is

predicted, prior to the commencement of a given project.

Compliance with environmental statutes at home and abroad ●

Hyundai Engineering pays particularly close attention to protect-

ing the environments and ecosystems surrounding its project sites

and to maintaining their biological diversity. It thoroughly controls

and supervises the use of hazardous substances and the discharge

of pollutants at its project sites. Hyundai Engineering minimizes

complaints from local residents by installing appropriate preven-

tive facilities and using low-noise equipment or techniques, while

surveying locals’ demands at community meetings prior to proj-

ect commencement. During the period covered by the report, the

company violated the environmental regulation standards on a to-

tal of 11 occasions, including noise and waste disposal violations.

It plans to gradually decrease the number of violations which tend

to occur due to the nature of its construction projects.

Targets and elements of environmental impact assessment

Category Details

Targets of environmental

impact assessment

Urban development, development/construction of industrial parks, energy facilities, harbors, roads, water resources, airports, river-based installations and amenities, landfills and land reclamation, tourist complexes, specific areas, waste treatment facilities, defense or military installations; and mining of aggregates and minerals, etc.

Elements of items for focused

assessment

• Ecological environment: Habitats of animals and plants, natural environmental assets•Atmospheric environment: climate, air quality, odor•Water environment: irrigation, hydrologic installations•Soil environment: soil, topographic or geological conditions•�Living environment: living conditions, eco-friendly resource cycle,

noise, vibration, landscape, hygiene, and public health• Socio-economic environment: population and housing,

industries

Volume of raw materials used

Classification Unit 2012 2013

Reinforcing steel bars ton 46,477 115,736

Ready-mixed concrete m3 401,398 607,656

Cement ton 19,956 86,271

Sand m3 65,592 390,702

Aggregates m3 167,702 823,768

Asphalt concrete ton 4,780 70,273

Timber ton 226 7,906

Concrete ton 77,843 82,005

Formworks ton 10,878 149,279

Smaller lump coals kg - 42,750

Others (concrete pile) m - 5,500

※ Sum of materials used by 33 sites (Process Plant: UGCC and 6 other sites; Power & Energy: ARNA; Building: 3 sites, including Enbai Province, Vietnam; Housing: Bundang Jeongja-dong and 12 other sites; Infrastructure: Songsan and 8 other sites)

Waste materials by type and amounts handled


Waste materials by type

Waste concrete debris(internally recycled or outsourced)

ton 328,582 296,179

Sludge (sludge generated at project sites) ton 637 791

Waste asphalt ton 114,556 90,783

Mixed wastes ton 48,400 38,772

Waste wood ton 5,143 4,127

Others ton 41,318 63,851

Treatment or

handling of waste

materials

Outsourced handling

Recycled ton 496,889 452,786

Incineration ton 4,914 5,608

Buried ton 11,753 2,508

Internal treatment Recycled ton 25,080 33,600

※ Limited to domestic project sites

Management of air pollutants ● Ozone Depleting Substances

(ODS) have a negligible impact on the environment although

small amounts are nonetheless discharged from test & commis-

sioning processes, refrigerants, or fire extinguishers. Because

of the nature of the business, dust is generated and dispersed

at some sites. Hyundai Engineering sprays water in areas where

there is a risk of dust being generated, using water tank lorries

twice a day, especially at project sites located in deserts like JPP

site of Process Plant Division. Roads are paved with priority in

areas where dust is expected. At most domestic sites, Hyundai

Engineering is trying to minimize pollutants by removing dirt

from vehicle tires using a wheel cleansing system at the entrance.

Scene showing a wheel-cleansing device utilized

Sealed storage of hazardous waste materials

Treatment process of hazardous waste materials



Water and wastewater management ● Hyundai Engineering uses

water in both its construction and test & commissioning process-

es. As such, waste water is legitimately treated according to the

standards applicable to the treatment of wastewater. To prevent

acidic wastewater contained in rainwater when chemical fuel used

by poly silicon production equipment is leaked at the JPP site of

Process Plant Division, the company charges limestone to neutral-

ize acid wastewater in the storage tanks used to collect rainwater.

It controls the pH of rainwater by installing a monitoring system.

Eco-friendly communication ● Hyundai Engineering implements

diverse eco-friendly communication programs in order to alert

personnel at project sites to environment-related issues and

to refresh their awareness of the importance of environmental

preservation. All the personnel of Hyundai Engineering and its

partners at the Jinju Pyeonggeo Amco Town site clean the sur-

rounding areas by picking up cigarette butts and other trash. The

Officetel construction project site in the Magok District was des-

ignated as a model construction site in 2013 by Gangseo District

Office in recognition of its distinguished efforts to preserve the

environment, including its outstanding attention to environmen-

tal preservation and the installation of facilities designed to pre-

vent the proliferation of dust.

Volume of water used

Classification Unit 2012 2013*

Surface water (wetland, river, lakes, sea)

ton 50,959 244,942

Potable water ton 28,150 40,887

Underground water ton 3,434 23,929

※ Sum of volumes used by 18 sites belonging to 4 divisions (Process plant: ATOM and 3 other sites; Power & energy plant: ARNA; Housing works: Bundang Jeongja-dong and 9 other sites; Infrastructure: Seong-dong and 2 other sites)

* The 2013 data for some sites differ from the preceding year as projects began in earnest (MGP in Oman, JPP in Saudi Arabia).

Climate change response plan

Management of energy and greenhouse gas ● Hyundai Engineer-

ing uses key energy sources such as mogas, diesel and power in

the performance of its projects. The main sources of its green-

house gas emissions originate from the use of fossil fuels and

power for operating site equipment and power generators.

Hyundai Engineering’s project sites are gradually reducing their

emission of greenhouse gases during the operation or construc-

tion stages by applying technologies for reducing greenhouse

gas emissions, such as heat recovery systems, while saving en-

ergy. Hyundai Engineering’s office buildings conduct continuous

campaigns aimed at reducing electricity consumption, as they

rely most heavily on electricity among all the types of energy

consumed.

Green office activities

Classification Key activities in 2013

Commuter bus service- 12 routes in service- Used by a daily average of 530 persons

Video conference - 3,500 units of video conference equipment supplied (70% of all)

‘Cool biz’- Cool biz period extended (by two months) (1 July to 31 August → 1 June to mid-September)

Control of indoor temperature

- 27℃ in summer, 20℃ in winter

Energy consumption and greenhouse gas emissions


Energy used

Mogas Liter 92,057 2,279,310

Diesel Liter 5,881,380 11,740,554

Kerosene liter 1,220 17,062

LPG Nm3

- 11

Greenhouse gas emitted SCOPE 1 tCO2eq 15,392 35,112

Energy used Electric power mwh 2,617 58,465

Greenhouse gas emitted SCOPE 2 tCO2eq 1,230 27,510

※ Includes data of 33 sites of 5 divisions, based on greenhouse gas emission volumes measured by Korea Energy Management Corporation

Hyundai Engineering plans to steadily control the sources

and volumes of its greenhouse gas emissions by deploying a

greenhouse gas inventory system in 2015. The company also

intends to deploy an corporate greenhouse gas inventory sys-

tem, including all of its home offices, research institutes, and

domestic and overseas project sites. It plans to systematically

control energy consumption and greenhouse gas emissions

by introducing an energy management system that satisfies

international standards including ISO 50001.

Next Step

At JPP site of Process Plant Division, Hyundai Engineering minimizes

its greenhouse gas emissions while enhancing energy efficiency by

producing steam without operating any additional equipment, as such

sites employ heat recovery systems that generate steam using the waste

heat left over from the reactive processes of poly silicon production.

Poly silicon production processes employ Chemical Vapor Deposition

(CVD) reactors whose internal temperature rises up to 1,100 degrees

Celsius. To recover the waste heat while preventing the reactors from

overheating, cold water is circulated through their external jackets. The

high-temperature and high-pressure water thus recovered is turned

into steam and supplied to steam-powered equipment within the poly

silicon factory. The condensed water after using the steam is stored in

condensate drums for re-supply to the reactors to recover their waste

heat.

The waste heat recovery system used for CVD reactors reduces the cost

of generating additional steam. It is an eco-friendly technology that

minimizes greenhouse gas emissions by replacing steam boilers.

CVD Reactor Process

Examples of technologies for reducing greenhouse gas emissions -

Process Plant JPP project site

Amco Town site cleaning activity, Pyeonggeo, Jinju

Environmental protect expenses and investment in 2013

Classification Unit 2013 Remarks

Process plant KRW million 80 MGP and one other site

Building works

KRW million 270 HMA and one other site

Housing works

KRW million 1,120 Bundang Jeongja-dong and 6 other sites




Context

Progress

Diverse environmental issues have emerged due to industrializa-

tion, including an imbalance in the eco-system, contamination of

land, air and water, and climate change. Hyundai Engineering im-

plements programs aimed at enhancing the efficiency of resources

while mitigating environmental hazards with through the develop-

ment of eco-friendly engineering technologies

Eco-friendly technologiesHSC (Hybrid Smart Cement) techniques ● HSC is smart cement com-

posed of three materials that is produced by mixing Portland cement

with fine furnace slag power, a by-product of steel mills and fly ash,

a by-product of coal-burning power plants. HSC is environmentally

friendly as it discharges 50% less carbon dioxide and 35% less hexava-

lent chrome than existing mass concrete. It also offers high stability as

quality disparity is minimized among concrete mixers as it is premixed.

Further, it is extremely durable as it is highly resistant against sulfuric

acid and salt. Hyundai Engineering applied the HSC technique to the

Gumi Officetel project site and eight other sites in the period covered

by the current report. The HSC technique has also been applied to

the project sites of other construction companies (e.g. the Gunsan

Saemangeum express rail project between Suseo-Pyeongtaek, the

Gimpo Pungmu Apartment House, and nine other sites.)

Intelligent integrated management system of water supply fa-

cilities ● Hyundai Engineering has acquired a patent for the

technology of deploying the H-ECO Integrated Water Sup-

ply System, an intelligent integrated management system of

water supply facilities, in order to enhance its future growth

engine projects while securing a safe potable water supply in

developing countries. This technology has been optimized for

the operation of water purification plants in developing coun-

tries where such issues as unstable potable water supply and a

shortage of hygiene equipment sanitation facilities are preva-

lent. The system is commercialized based on on-site verifica-

tion - Polonaruwa water treatment plant project in Sri Lanka

- and secured conformation of its performance.

Modular Construction ● Hyundai Engineering has secured the in-

tellectual property rights for its modular construction technology

by performing diverse internal projects in addition to government-

sponsored projects for modular building construction. It aims to

explore overseas markets by developing independent technolo-

gies and products. Hyundai Engineering has accumulated the

related skills and technologies for engineering, procurement and

construction by building and assessing the performance of pilot

modular homes. It has also completed assessments of their liv-

ing performance, including insulation, heating and sound perfor-

mances.

HyVic (Hyundai Vibration control) damper ● Registered by Hyun-

dai Engineering as a Construction New Technology (No. 653),

the HyVic damper is a hybrid anti-seismic damper technology

that can control a building’s swing motion caused by earth-

quake or strong winds. The HyVic damper is a purely domestic

technology developed in consideration of seismic and con-

struction project conditions in Korea. As it does not need to

be applied to walls or pillars, it offers an outstanding degree of

design freedom and spatial utilization. It also delivers easy per-

formance control by allowing a simple adjustment of the layer

of high damping rubber, and ease of application to connecting

beams where large displacement may occur.

for refinement and purity control. Hyundai Engineering is currently

test operating a 3,000 tons/year capacity poly silicon factory, the

contract for which was awarded by PTC (Polysilicon Technology

Company), Saudi Arabia in 2011. It is Saudi Arabia’s first poly silicon

factory construction project.

Projects for the remediation of contaminated soil and groundwater

● The objective of soil remediation is to preserve a soil ecosystem,

enhance the value of soil resources and mitigate the environmental

hazards. Hyundai Engineering performed a project for the remedia-

tion of contaminated soil and groundwater at the Yongdang-dong

container yard of Hyundai Merchant Marine from 2011 to 2013,

including the investigation, design, construction and operation for

remediation of soil and groundwater contaminated with heavy oil or

heavy metal(Zn). It is currently undertaking additional work for out-

side remediation and scheduled to monitor contaminants behavior

for two years after completion of the project.

Eco-friendly building construction ● Hyundai Engineering designs

eco-friendly buildings that deliver enhanced energy efficiency and

employ recycled energy. Hyundai Engineering designed the site

support office of the Pyeongtaek Thermal Power Plant to use eco

- friendly energy sources by installing solar panels on its roof. It

also controls its environmental impact to comply with the Silver

grade LEED (Leadership in Energy and Environmental Design) cer-

tification. In 2014, it also designed buildings for Maesil 3 Elemen-

tary School and Hanyang University that can utilize solar energy

or geothermal heat to meet up to 8% to 15% of their total energy

requirements.

2014 80,000 tons

2013 77,316 tons

2012 8,191 tons

Volume of HSC applied yearly (tons)

HANT processes

Project for the construction of a water purification center, Dongtan, Hwaseong

Key details of the H-ECO Integrated Water Supply System

• MOU signed with the Sri Lanka Water Resource Corporation to select a test bed water treatment plant in Polonaruwa, Sri Lanka- Technology verification and commercialization through test bed operation

• Facility for automated operation of water treatment facilities- Systems installed to monitor in take, gauging well, clear well and water taps- Systems installed to continuously determine and control input coagulant and

chlorine- Systems installed to determine operational schedule of water supply pumps

• Systems installed to remotely control purification plants- Installation of expert decision-making systems that enable sensor-based

remote monitoring of the treatment plant’s operational status by the local control office and the head office in Korea simultaneously

• Development of manual for expert decision making via remote monitoring- Acquisition of technologies for system operation and deployment for advance

into overseas O&M marketsIncluded in 2013 UNESCO Research Projects

Water treatment plant, Polonaruwa, Sri Lanka

Eco-friendly projectsConstruction of poly silicon production facilities ● Poly silicon is a

raw material that is essential to solar energy systems, a leading

eco-friendly industry, which requires highly advanced capability

Hyundai Engineering considers the entire range of processes

from the efficient use of resources to enhanced energy efficiency

and reduced environmental contamination at the construction

stage of all its eco-friendly engineering projects. Hyundai En-

gineering plans to expand its sustainable development projects

based on research for technology development, and to actively

commercialize eco-friendly technologies and services as its fu-

ture growth engine.

Next Step

HANT technique ● HANT is an advanced sewage and wastewa-

ter treatment technology that was internally developed by Hyun-

dai Engineering in a drive to improve the utilization of resources

while proactively addressing the issue of global water shortage.

The technological competence of the HANT process, which utilizes

an advanced membrane bioreactor, has already been recognized

as it was applied to the 3rd phase sewage treatment plant (30,000

㎥/day) in Cheonan in 2009. The technology has also been ap-

plied to the 4th Cheonan sewage treatment plant (40,000㎥/day)

and Hwaseong Dongtan sewage treatment plant (122,000㎥/day).

In particular, the quality of the water treated by the Hwaseong

Dongtan sewage treatment plant is so good that it may be re-used

for maintaining river stream. The company is also preparing to ad-

vance into overseas markets with this technology.

Hyundai Engineering Sustainability Report 37 36 Steering on Values


Safe and healthy workplacesContext

Progress

All workers are vested with the right to work in a safe and

pleasant environment. Therefore, businesses have the so-

cial obligation to provide an environment where the workers

may lead a healthy life. Hyundai Engineering does its utmost

to provide healthy, disaster-free workplaces by enhancing its

safety and health management system.

Hyundai Engineering exerts to let its employees and those of its

partners by setting up stringent corporate health and safety ob-

jectives. It establishes safe and healthy workplaces by practicing

systematic disaster management and conducting health and safety

related programs. Safety management of project sitesRisk assessment (R/A) ● Hyundai Engineering conducts con-

sistent efforts to strengthen activities aimed at preventing ac-

cidents by deriving key hazards or risk factors and reporting

actions taken to prevent them at daily risk assessment meet-

ings at all its project sites at home and abroad.

cident are awarded citations and prizes to be motivated to main-

tain an advanced level of safety and be inspired to complete

their projects with ‘zero accident’.

Enhancement of health of employeesGrand Prize for outstanding safety and health management ●

Hyundai Engineering’s project site for constructing facilities to

support the Pyeongtaek thermal power plant was awarded the

Grand Prize in the category of Risk Assessment in the Construc-

tion Industry in the 2013 Outstanding Safety and Health Manage-

ment Contest hosted by the Ministry of Employment and Labor

Affairs and Occupational Safety and Health Corporation. Py-

eongtaek project site, one of the KOSHA 18001 exemplary sites,

operates a safety and health management system for promoting

voluntary or autonomous risk assessment. It won the Grand Prize

(Minister of Employment and Labor Affairs Award) for actively

diffusing the system to other sites and others.

Emergency medical aid service at overseas project sites ●

Hyundai Engineering ensures that adequate medical services

are promptly provided to its employees at overseas sites when

they are diagnosed with a serious medical condition due to

disease or injury. It provides an emergency medical support

service comprising 24-hour phone-based medical consulta-

tion, location and advance reservation of local medical service

institutions, and a transfer service in key dangerous project

areas such as Iraq, Pakistan and Algeria where medical treat-

ment is unavailable due to an absence of quality medical insti-

tutions or Korean medical specialists.

Adherence to international standards ● Since obtaining OH-

SAS 18001 in 2009, Hyundai Engineering project sites rigorously

maintain their international standard certifications by conducting

follow-up reviews. Hyundai Engineering not only enhances the

work safety of employees based on international standards, but

also designates essential provisions for all contracts signed with

its partners, including those concerning environment, health and

safety standards. Hyundai Engineering plans to obtain KOSHA

18001, the standard certification of the Korea Industrial Safety and

Health Corporation. in 2015, and to systematically operate corpo-

rate integrated processes together with OHSAS 18001.

Pursuit of zero-accident workplaces ● Hyundai Engineering

pursues ‘zero-accident’ workplaces at all its project sites, in-

cluding its home office. Its HSE Innovation Team strictly controls

and supervises the disaster rate at all its project sites at home

and abroad. The personnel at worksites that achieve zero ac-

that corrective actions are taken to resolve any inadequacies.

Activities aimed at strengthening employees’ safety mindset ●

Hyundai Engineering attracts the attention of its employees

to its health and safety management by posting safety rules

and related examples of incidents via a pop-up window on its

intranet twice a week. It also delivers practical HSE information

that can be applied to its project sites in a beneficial manner.

Management-hosted safety inspection ● Hyundai Engineering

conducts safety facility inspections and employee education

programs in preparation for safety incidents by designating

the 4th day of each month as ‘Safety Inspection Day’. The

event day is attended by Hyundai Engineering’s division heads

and other employees, as well as by the managers and supervi-

sors of partners to encourage them to stage activities to pre-

vent incidents by instilling safety mind.

Enhancement of fire prevention activities ● Hyundai Engineering

conducts special education on internal inspection and fire pre-

vention at each site by designating the 15th day of the month as

a fire prevention and inspection day in order to strengthen fire

prevention activities at project sites. The site personnel, includ-

ing the managers of Hyundai Engineering and its partners, peri-

odically inspect their offices, work sections, appliances and fire

extinguishers. Special fire prevention education is also provided

for the workers. Furthermore, measures are taken to ensure that

all items are checked in such inspections using checklists, and

2013 awards and citations for zero accident project sites

Divisions Site nameZero-accident

hoursDetails of award / citation

Process plant

Oman MGP 10,087,896Surpassed the target for zero-accident hours

by ten times (Dec. 2013)

UAE UONE 10,933,593Surpassed the target zero-accident hours by

ten times (Oct. 2013)


Iraq RGP 3,376,425Surpassed the target for zero-accident hours

by five times (Dec. 2013)

Housing Works

Jinju Pyeonggeo Amco Town

1,820,000Surpassed the target for zero-accident hours

by two times (Feb. 2013)

Infra-structure

Bancheon general industrial complex

910,000Surpassed the target for zero-accident

(Nov. 2013)

LIFE SAVING RULES

The following series of Life Saving Rules are designed to strengthen

employees’ attitude toward safety while delivering practical

information by illustrating Hyundai Engineering’s policies for diverse

site situations with graphics. It is one of the company’s flagship

activities for enhancing its employees’ safety mindset.

1. Fasten the seat belt whenever you ride in a vehicle.

2. Check the power-off state before conducting electrical work,

and always wear insulated protective gear.

3. Wear safety or protection gear when working at high elevation.

4. Perform work in a sealed area under supervision after approval

of the written proposal.

5. Maintain 5 foot-candles or brighter illumination at work spots.

6. Perform lifting work by adhering to the designated safety

procedures.

7. Start digging work only after approval of the written proposal.

8. Always wear personal protection gear.

9. Prevent and forbid the use of unsafe scaffolding.

10. Take actions to prevent objects from falling.

Life saving rules series

Details of urgent transfer or evacuation procedures

3. aviation support for evacuation

4.Aviation support for backup

Real-time notice about progress

In common

Medical care

Evacuation

Real-time report on progress

4. Post compensation service

1. Request on emergency aid

3. Booking on local hospital service / house call, payment on medical fees

Customer(onsite)

Head office

Domestic medical support business in

emergency

2. Report and supporting request

Overseas medical support

business in emergency

Hyundai Engineering intends to operate a more systematic

health and safety management system by establishing enter-

prise-wide processes that integrate its existing OHSAS 18001

certification with KOSHA 18001. In addition, it will have its em-

ployees take the mandatory education course beginning 2015

by developing e-learning education courses to enhance their

safety mindset in 2015.

Next Step

• Achievement of ‘ZERO’ Fatality Accident at all our sites• Stringent Management of Accident Rate - Domestic site: KPI accident rate below 0.11 - Overseas site: TRIR below 1.05• Enforcement of HSE Management System - Expansion of HSE IT System

- Compliance with approved HSE budgets for overseas sites

• Reinforcement of Technical HSE Management (Construction equipment, Erection and dis-

mantling of temporary facility)All employees must completely understand and make an effort to achieve the above objectives.

2014 Corporate HSE Management Objectives

Incident rate at domestic and overseas sites


Domestic Converted incident rate 0.14 0.13

Overseas

TRIR (Total Recordable Incident Rate) 0.24 0.27

LTIR (Lost Time Injury Rate) 0.02 0.06

SR (Severity Rate) 0.05 0.16

※ TRIR: (Fatality cases + Lost Time Accident cases + MTC) X 200,000 / Total Man-hours worked

※ LTIR: Total Number of Lost Time Accidents X 200,000 / Total Man-hours worked※ SR: (Lost Workdays / Man-Hours worked) X 200,000

Number of persons injured by type

Classification Collapse Crash Falling Coarction Collision Others

2012 5 11 2 5 1 6

2013 5 5 9 4 2 16

※ Victims of major disasters: Domestic 2 persons (2012), Domestic 2 persons, overseas 2 persons (2013)

Procedure for assessing risk

Daily R/A preparation and delivery

Daily report received

Risk analysis by site staff

R/A assessment (general meeting)

Delivery of derived risks

"O" (zero) Accident

Project sites

Head office

Project sites

Head office

Unit: Persons



Special Issue

Sustainable Projects

residential-commercial building project site, Sangbong, South Korea

■ Geothermal energy system

The planet Earth’s geothermal energy offers limitless potential

depending on the depth of drilling. Hyundai Engineering designed

a geothermal energy system of approximately 250RT for its Sang-

bong residential-commercial complex to supply sufficient heat for

the heating and cooling for its common residential facilities, sales

facilities, and office spaces. It enhanced the convenience in ex-

tending the capacity, construction and maintenance by adopting

a vertical sealed geothermal heat exchange system.

■ Solar energy system

Solar energy, as the most noted energy source among all new

or recycled energy sources, is attracting heavy investment for

research and development of the related technologies. Hyundai

Engineering installed a 113KW solar power generation facility at

the Sangbong commercial-residential complex site, as well as

solar energy panels of 140㎡ for use as an ancillary heat source to

supply warm water to a swimming pool. Hyundai Engineering’s

Housing Works Division strives to enhance tenants’ satisfaction

by supplying eco-friendly energy to reduce their utility costs,

while actively responding to the government’s policy of supply-

ing more new and recycled energy and preventing power short-

ages, by actively applying solar energy systems.

■ First new and recycled energy project

Hyundai Engineering, having entered the East European mar-

ket for the first time by winning a project to construct a 9MW

solar power plant in Bulgaria in 2011, successfully completed its

first new and recycled energy project in June 2012. The project,

which was carried out at two different sites in Palauzovo and

Cherveniakovo, Bulgaria, has an annual power generation ca-

pacity of 1,170kWh, which is sufficient to meet the daily power

requirement of 3,780 households, and will have the effect of

reducing CO2 gas emissions by 7,560 tons per year. More than

anything else, it is highly significant as it has provided a bridge-

head for Hyundai Engineering to advance into the European

market for new and recycled energy systems.

■ Only Korean company with geothermal project experience

Hyundai Engineering, as the only Korean company with experience

in the construction of geothermal power plants, became Korea’s

first company to construct a geothermal power plant in Africa af-

ter winning a contract from Kenya Electricity Generating Company

(KENGEN) for the construction of the geothermal power generation

units 1 and 4. This USD 370 million project consisted in constructing

geothermal power plants with a total capacity of 280MW which will

make it the world’s largest geothermal power plant project under

one process. Scheduled for completion in the latter half of 2014, the

new plants will increase Kenya’s power supply by about 20%. Above

all, it is a highly significant achievement in that the technological

prowess of a Korean company has been recognized in the geother-

mal power plant market, which has so far been dominated by Japan,

the USA and various European countries.

Solar power plant, Cherveniakovo, Bulgaria

Geothermal power plant, Olkaria, Kenya

Geothermal & solar energy system

Classification Key details

Geothermal

energy system

• Total system and geothermal heat load at the site: 1,900RT / 250TR (13%)•�Geothermal heat exchange scheme: Vertical sealed type (200m underground,

85 holes)•�Heat recovery method: Heat exchange with geothermal heat pump via a heat

exchanger installed underground•�Applications: Supply of cooling, heating and hot water to annex facilities

(golf range, health club, etc.) and standby heat source for air harmonizing units

Photovoltaic

facilities

• Capacity of photovoltaic power generation system: 113KW (roof-top: 73KW,

wall-hung type: 40KW)•�Nominal module capacity of solar battery: 250W (15.46% efficiency, lifespan of

20 years or more)• Yearly average power generation volume: 124,545KW / year •�Applications: Lamps and electric heating for common use areas of condominium

(residential)

Solar power plant, Bulgaria

Gas desulfurization facility, Turkmenistan

■ Largest government project in Turkmenistan

A gas desulfurization facility removes sulfur oxides - the main

cause of air pollution - from fuel gas. The gas desulfurization

project in Turkmenistan is worth KRW 10 trillion, making it the

country’s largest government project ordered by a government-

owned gas corporation. As Hyundai Engineering completed this

project, awarded in 2009, successfully in September 2013, there-

by demonstrating the company’s advanced engineering capabili-

ties and winning two further projects.

■ Exploration of a new silk road in Central Asia

This project is highly significant as it is the first time a Korean com-

pany has been awarded a government project by a CIS member

state. Hyundai Engineering finally held the completion ceremony

in September 2013 after successfully completing the construction

work in approximately 800 days, having transported 560 tons of

heavy equipment to the project site some 20,000km from Korea

by sea and land. Hyundai Engineering’s successful completion of

the project may be said to be a historic landmark in the exploration

of a new silk road in the Central Asian plant market, recalling the

frontier spirit of the ancient caravans.

Gas desulfurization facility, Turkmenistan

Geothermal power plant, Kenya

Photovoltaic energy

Solar heat energy

Geothermal energy

Electric power

Equipment

Equipment

Talent development

Context

Progress

Hyundai Engineering’s educational roadmap starts with sup-

port for the development of a corporate culture of innovation

and challenge by fostering talents who can create new values

with technologies. Hyundai Engineering implements a sys-

tematic HR management system based on the ‘H-type ideal of

talent’ and diverse development strategies in accordance with

the principle of respect for human resources.

Hyundai Engineering talent Hyundai Engineering pursues H-type talents equipped with

speciality, diverse knowledge, sensibility, empathy, pride,

challenge spirit and global mind. All its employees personally

strive to become passionate H-type talents who can achieve

great things by acquiring expertise and pride based on their

global capabilities.

Current status of employeesThe number of Hyundai Engineering employees increased

by 60% to 5,170 persons over the preceding year due to the

merger with Hyundai Amco in April 2014. There are 508 female

employees, representing 9.8% of the workforce. Permanent

employees account for 65.8% of the workforce, while those

assigned overseas account for 20%. Furthermore, the pay

of newly hired employees is 247% of the statutory minimum

wage for 2014.

“Securing superior talents and creating a happy workplace should be our

top priority.”

The engineering industry differs from other industries mainly because people

rather than machines create the products. As engineering, procurement, and

construction are all performed by people, securing superior people and creating

a happy workplace should be the top priorities. A system that can resolve the

complaints of employees has not yet been completed, although some programs

go to considerable lengths to create ‘happy workplaces’. Hyundai Engineering

should show the determination to improve such issues from now on.

In addition, Hyundai Engineering should make concerted efforts to enhance the efficiency of human

resource management by training and assigning the right core personnel to the right jobs through

diverse education and training programs. When such efforts are made on a steady basis, Hyundai

Engineering will become a leading global EPC company by catching up with leading foreign companies

as well as leading other Korean ones in the area of hiring, payroll, and welfare.

Yang, Ki Young / Chair, Labor-Management Council,Hyundai Engineering

Talent Escalated: Talent Management

Employees status

2011 2012 2013

Total number of employees* 2,312 (193) 2,649 (190) 3,214 (176)

Newly hired 576 (100) 586 (91) 848 (91)

Turnover (separation/retirement)** 124 127 145

Contracttype

Permanent 1,656 1,893 2,134

Temporary 656 (193) 756 (190) 1,080 (190)

Job grade

Ordinary 1,155 1,388 1,763

Managers 1,098 1,205 1,398

Officers 59 56 53

Age range

20s 584 690 820

30s 725 827 1,060

40s 569 627 693

50s or older 434 505 641

GenderFemale 244 269 343

Male 2,068 2,380 2,871

OtherDisabled 16 20 23

International 62 76 80

Childcare leave

Number of users 2 3 20

Persons who returned to work 0 9 12

Persons who work for 12 months after their return

0 2 9

* Those in parentheses indicate local recruits.

** Excludes those whose contract has expired or who have left the company due to retirement.

Future CreatorGenuine talent model of Hyundai Engineering

that requires speciality with diverse knowledge, sensibility,

empathy, pride, challenge spirit and global mind.

H-type ideal of talent

(H symbolizes 'Hyundai' and 'Humanity')

Performance(Output created)

Generalist(Ability to integrate diverse instructions)

Global(Linguistics, communication)

Professional(Specialist)

Passion(Passion, driving force, sense of responsibility)

Pride(Pride in and loyalty to the company)



Strategies for and processes of talent developmentHyundai Engineering’s talents constitute a professional body

that creates new values and develops a corporate culture of in-

novation and challenge. Based on a talent development policy

that views people as the company itself, Hyundai Engineering

concentrates its resources on talent development by training

job specialists, strengthening international capabilities, and

providing individually-customized education.

Development of experts and specialistsSpecialized job education ● Hyundai Engineering runs EPM edu-

cation courses designed to train and transform its employees into

specialists qualified to perform overseas EPC projects, as the num-

ber of projects is increasing each year. The training courses, which

consist of such key subjects as project cost, hours, risk and quality

management, are provided by internal and external instructors who

are experts in those fields, with the aim of turning out the employ-

ees as engineering and project managers.

Education of international employees ● As of 2013, Hyundai En-

gineering had recruited 80 international employees from diverse

countries including Vietnam, India, the Philippines and Russia.

Hyundai Engineering runs a wide range of programs to enable its

foreign national employees to demonstrate their skills by adapting

to Korean culture and company life and to be reborn as core talents.

The education programs are designed to instill them with a sense of

belonging, enhance their understanding of company affiliates and

equip them with experience of Korean culture, as well as offering

career development and counseling.

Strengthening global capabilitiesOverseas training ● Hyundai Engineering’s employees are given

overseas training opportunities to allow them to personally ex-

perience the world-top class operations of advanced engineering

companies and to apply their newly acquired knowledge to their

functions or duties. Such overseas training courses have been or-

ganized in Japan, the Netherlands, Germany and the USA, and have

covered business management and the business areas of process

plant and power & energy plant.

Internal language courses ● The Hyundai Engineering Language

Institute (HLI) runs Hyundai Engineering’s internal language pro-

gram to help employees strengthen international communication

skills. The program consists of a ‘self-initiated learning’ course and

a ‘company-initiated learning’ course: the former may be taken by

any employee while the latter is offered to employees who are be-

ing reassigned overseas or who perform duties related to foreign

projects.

Graded educationEducation of new recruits ● The development of talents is more

important than their initial selection. Hyundai Engineering’s new

recruits take such courses as introduction to Hyundai Motor Group,

job skills and collective camp education upon employment, followed

by practical education and on-the-job training provided by each di-

vision upon assignment to their respective teams. In addition, they

receive mentoring from their superiors to help them adapt to the

organization and increase their basic job knowledge and skills.

Education of experienced employees ● Even outstandingly

talented people experience difficulties in demonstrating their

skills in an entirely strange environment. Hyundai Engineer-

ing provides customized education to newly hired but experi-

enced employees to enable them to swiftly adapt to the new

corporate culture. New experienced recruits follow courses

on personnel management, welfare and benefits, vision and

business status, and core values, and attend special lectures

delivered by company executives. In particular, the ‘workshop

for experienced employees’ is said to enhance peer communi-

cation, teamwork, and their sense of belonging.

Education performances


Number of education courses opened

Internal 28 31

External 374 376

Number of hours of education completed per person 27 44

Educational expenses per person (KRW) 498,325 1,401,447

Education for new recruits

Education for experienced employees

Hyundai Engineering supports the efforts of its executives and

employees to grow into experts by providing job-grade based

education to newly-hired employees, experienced employees, and

executives alike. It also runs its education system in such a way that

employees may exchange diverse opinions in a spirit of open think-

ing within the organization. In the future, Hyundai Engineering will

provide unwavering support and opportunities to foster talents

who will function as the backbone in its development of a sustain-

able organization and realization of social values.

Next Step

Diagram of Hyundai Engineering’s educational structure

Common culture education programs Specialized job skills programsGlobal

competency programs

Self-development

programs

Core values/fundamental management

ideals

Organizational capabilities/leadership

Education layers

Common job skills

Domestic trainingOverseas training

Internal specialist job

skills

Global job capabilities

Capability development through self

study

Entire officers and employees

Individual applicants

Selected by division

Common to entire employees

Candidates for performing overseas projects

Targets by course

Entire employees

Volunteers/targets

VolunteersTechnical or engineering positions

GPP

Education of newly appointed officers

Seoul National University EPM/CM courses

Global EPC project management

1:1 nativeEnglishlesson

Online- English- 2nd foriegn language

Internal language institute(General, Biz)- English- Spanish- Russian

IntensiveCourse

Toeic/SPA

Online- Management general- Job skills- Self development

Early development of job skills of experienced em

ployees (by Hyundai Engineering)

Education of foreign national employees

Orientation for group em

ployees with experience

Ethical managem

ent, prevention of sexual harassment, com

pliance program

Division seminars, team

seminars

Value Build-up Program

Statutory education

Maintenance of engineer qualification certificates

HR Development Day

Workshop for PM/project superin-tendents

Training of construction managers

Training of construction managers

General overseas job training

Training at advanced overseas companies

Internal education by division/office

Processl plant EM/PM

education

Internal education of engineering segments

Early orientation of newly hired employees

Enhanced quality education

Enhanced process managem

ent

Enhancement of HSE

Enhanced cost managem

ent

Quality education general

Process managem

ent general

HSE general

Cost managem

ent general

Understanding of international contract FIDIC

Education of those who are new

ly assigned to overseas post

Creative Journey

LPG (Leadership Program for M

anagerial Position Holders)

InnoBiz School

LPG (Leadership Program for Global Position Holders)

Officer book review education

HMG HMGHMG

HMGHMG HMGHMG HMG

Programs

Education contentsEducation targets

Officers

General manager

Deputy manager

Assistant manager

StaffM

anager



Respect of rights of employees

Context

Progress

Employees are family members as well as key stakeholders of

the company. Hyundai Engineering’s support and care for its

personnel is a minimum benefit as well as the best effort the

company may provide. Hyundai Engineering is committed to

generating a corporate culture that respects the rights of all its

employees. To that end, it offers a benefits package consisting

of various practical benefits, runs work-life balance programs

designed to help employees lead a happy family and personal

life, maintains dialog and consultation between labor and

management, and operates a grievances settlement system.

Benefits package Hyundai Engineering implements diverse welfare policies in order

to ensure a better quality of life while minimizing the burdens and

difficulties its employees and their family members may experi-

ence as a result of regular overseas assignments. Hyundai En-

gineering subscribes to workers liability insurance to cover any

incidents during overseas business travel that are not covered

by Korean workers’ compensation insurance. The satisfaction of

employees is enhanced by providing diverse welfare benefits, in-

cluding welfare fund points system, congratulatory and condola-

tory payments, medical fee support, and scholarship.

Key welfare and benefit programs

Classification Permanent institutions

Support to leisure lifeSupport to operation of intra-company communities, bi-weekly Family Day (punctual return to home), and recuperation center, and payment of summer holiday allowance

Support to childbirth/maternity protection

Childcare leave, payment of nursing allowance (0 year to junior high)

Support to housing/household

Low-interest rate housing loans by raising a social welfare fund

Support to Medical/healthcare

Support to inclusive health checkup, medical bills for in- and outpatient treatment

Support to educationPayment of scholarship to children and allowance based on qualification certificate

Statutory welfare/benefits

Maternity leave

Welfare and benefits - selective

Welfare card, payment of annuity

Others (categorized)Operation of company cafeteria, commuting bus, and gifts to selected employees on the corporate anniversary and national holidays

Use of childcare leave

2011 2012 2013

Number of persons on leave 2 3 20

Number of persons returned 0 9 12

Persons who work for 12 months after their return

0 2 9

Work-life balanceThe family is the smallest yet most important community of all.

Hyundai Engineering does its utmost to ensure co-existence

between the values of its employees and the organization by

helping them to achieve a good work-life balance.

Children’s camp ● The ‘children’s camp’ for the offspring of our

employees is a leading example of the family-friendly manage-

ment programs hosted by Hyundai Engineering during the an-

nual summer and winter vacations. It consists of a ‘fun camp’,

which includes various seasonal activities such as angling and

swimming in summer, and a ‘ski camp’ in winter, as well as ex-

perience learning programs like the ‘English camp’, ‘astronomi-

cal observatory camp’, and ‘aerospace science camp’. The com-

pany also stages leadership and filial piety camps.

Family Day ● Hyundai Engineering encourages all of its em-

ployees to leave their work at a given time to spend some

quality time with their family by designating the second and

fourth Wednesdays of the month as ‘Family Days’.

Nursing and childcare support by executives and employees ●

Working parents are always destined to experience the burden

of childcare. To alleviate this burden, Hyundai Engineering,

Hyundai Engineering and Construction, and Hyundai Heavy

Industries jointly founded the Hyundai Dasom Children’s

Labor-management councilHyundai Engineering operates a labor-management coun-

cil where all employees belong-except the division head or

higher officers-to protect the rights and benefits of employ-

ees while pursuing the sound development of the company.

The council, which consists of an equal number of representa-

tives from labor and management, discusses matters related

to enhancement of productivity, distribution of earnings, hu-

man resources, and labor and welfare issues at both quarterly

regular meetings and ad hoc meetings. The council gathers

information concerning grievances, recommendations and is-

sues that may affect the employees, in addition to wage nego-

tiation, distribution of achievements, and welfare or benefits.

Compiled opinions are fine-tuned at ad hoc informal meetings

and finalized at regular or ad hoc meetings where both labor

and management are equally represented, before delivered to

the employees. In particular, business disruptions are mini-

mized by informing the employees of important matters con-

cerning management changes or reshuffles at least 30 days

in advance.

Grievances CommitteeThe grievances committee helps the employees to devote

themselves to their work by providing solutions or appropriate

alternatives to employee grievances by analyzing their causes.

Employees could raise objections to irrational systems or

practices by regular/irregular, online/offline communication

system which the management fails to notice in advance, while

the management may induce enhanced unity and productivity

by adequately responding to their discontent.

Home to alleviate employees' childcare burden and allow them

to concentrate on their work. The Hyundai Dasom Children’s

Home is equipped with safe and pleasant facilities, and is run

by the Hansol Education Hope Foundation, a specialist nurs-

ing agency.

Meanwhile, Hyundai Engineering has introduced spousal ma-

ternity leave, encouraging its employees to use the childcare

and childbirth leave. As of April 2014, total 21 women employ-

ees were on childcare leave without experiencing any disad-

vantages in terms of employment, pay or promotion.

Astronomical observatory camp for employees' children

Fun camp for employees’ children

Labor-Management signing event

Hyundai Engineering’s labor and management have developed

a new future-oriented labor-management culture by forward-

looking mind, practices, and institutions with autonomy and a

sense of responsibility while respecting each other and main-

taining progressive relations based on a cooperative spirit of

win-win survival. The two parties will make further efforts

to establish a workplace where all employees are satisfied, a

workplace where work and life are harmoniously balanced, and

a workplace where communication and dialog is a top priority,

by steadily improving labor-management relations with the

introduction of improved systems for personnel management,

benefits packages, and grievances settlement.

Next Step

Unit: persons



Win-win Growth

Context

Progress

Hyundai Engineering has experienced remarkable growth

due to steady collaboration with its partners over the past 40

years. One of the win-win growth index companies in 2012,

Hyundai Engineering seeks to be reborn into a leading com-

pany in the course of national economic growth through win-

win growth with its partners.

Introduction and operation of four major guide-lines for fair tradingThe four major guidelines for fair training published by the Fair

Trade Commission are designed to prevent large enterprises

from impeding the principle of free contracting by abusing their

superior negotiating power in deals with small businesses,

while enabling small businesses with insufficient negotiating

power to legitimately reflect their profits in contracts with large

enterprises. Hyundai Engineering implements these guidelines

and displays them on its partner portal site.

Fair selection and assessment of partnersHyundai Engineering selects its partners transparently in accor-

dance with the fair systems and policies Hyundai Engineering

has established for that purpose. It expands open bidding while

ensuring an adequate profit margin for its partners. Further-

more, it lowered the entry barrier to new superior partners. It

also supplemented its previous assessment criteria of partners

based on personnel and sales to include average number of

years of experience and continuous service of their employees.

It has complemented its assessment system by introducing a

system for grouping* partners by work category based on their

technological competency and fairness. In so doing, smaller

partners are now able to compete on a fair basis.

* Partners are grouped into the categories of A (Excellent), B (General) and C (Re-

serve) based on their functional performance, personnel and financial status.

Win-win growth programPerformance sharing system ● Hyundai Engineering induces real

growth in its partners by introducing programs for sharing per-

formance bonuses with them, which in turn enhances the quality

of Hyundai Engineering’s projects.Hyundai Engineering has oper-

ated a performance sharing scheme wherein it shares research

and development expenses and industrial property rights after

completion of the tasks with its partners, including two joint R&D

projects it implemented with two partners for modular building

and rust-proof concrete. It also plans to conclude contracts con-

tinuously for performance sharing with existing or new R&D tasks.

Win-win Council ● Hyundai Engineering strives to shift to a hor-

izontal relationship by holding win-win consultative meetings

with partners each week. As a mutually participated conference

body that includes the owner, general contractor, and subcon-

tractors, the win-win consultative body is designed to resolve

site problems speedily through horizontal communication.

Hyundai Engineering started the system for domestic gov-

ernment project sites on a trial basis in 2013, and then has

expanded the system to other project sites. Thanks to such

efforts, Hyundai Engineering garnered the best grade (98 out

of 100 points) in the 'Assessment of Win-Win Cooperation

among Construction Companies'.

Winning Out as One : Win-win Management

“Hyundai Engineering should develop a strategic partnership by helping

enhance the competitiveness of its partners by bidding adequate prices.”

Today’s global competition has brought about a switch to the format of competition

between business networks or industrial ecosystems. The adoption of a win-win

growth strategy has become a critical factor in business competitiveness.

You should conduct much preparatory research before bidding for global projects

as the conditions are very different from those in Korea. The lowest price bid

cannot properly evaluate businesses as it merely compares bid prices even

though you compute the cost inclusive of taxation and environmental factors

based on a site survey. You may face greater risks as the bidder may go bankrupt or the project may

be delayed by a low price bid. Hyundai Engineering will become a company that enjoys higher trust

if we develop a strategic partnership with our partners in order to enhance their competitiveness by

competition based on an adequate price bid.

Kang, Jong Wook / CEO, Younghwa Engineering

Partner portal site

Education of partners for overseas advancement



Enhanced communication with partners ● Hyundai Engineer-

ing organized the Hyundai Engineering Partner Council, a con-

sultative body comprising its win-win cooperation task force

and representatives of its partners, firm in the belief that its

partners’ competitiveness is the backbone of its own com-

petitiveness. The win-win cooperation task force, which is

composed of three sub-divisions for sustainable growth, win-

win growth, and global competitiveness, concentrates on en-

hancing the management stability, growth, and international

competitiveness of its partners. The Council operates with the

focus on systematic cooperation among its three subcommit-

tees - engineering, procurement, and construction.

Improvement of subcontracting payment terms ● Hyundai En-

gineering pays 100% of KRW 100 million or less in cash to help

stabilize partners’ cash flow. It also has improved its payment

terms in various ways, including reducing the payment term

from the previous 15 days to 13.5 days on the average.

Fund raising and support ● Hyundai Engineering raised a total

of KRW 21 million in win-win cooperation funds and loaned

KRW 16 million in 2013. Moreover, it pursued substantial win-

win growth by providing KRW 400 million worth of interest-

free loans to partners that experienced temporary financial

difficulties.

Support for education ● Hyundai Engineering provides oppor-

tunities for partners to receive the job-related education they

request. In 2013, a total of 447 employees of its partners com-

pleted job-related curricula at government-accredited educa-

tion institutes free of charge (tuition paid by HEC).

In order to employ the standard subcontract forms that re-

flect the 2014 recommendations of the Fair Trade Commission,

Hyundai Engineering plans to modify its existing contracts

and riders following an extensive review, so that riders that

are disadvantageous to its partners are no longer applied to

new contracts. Hyundai Engineering also plans to monitor its

partners in order to prevent any unacceptable issues related

to human rights or work conditions. Furthermore, it plans to

shorten the payment term to partners from 13.5 to 13 days. It

will also raise up to KRW 38 billion worth of win-win coopera-

tion funds by adding KRW 17 billion. In addition, it intends to

exert efforts steadily to promote win-win growth with its part-

ners by providing an additional KRW 1.5 billion in low-interest

rate loans.

Next Step Hyundai Engineering plans to expand its CP efforts in order

to establish a fair and clean trade order. To that end, it has

continuously disclosed its operational status in its business

reports and PR booklets. It also plans to conduct CP educa-

tion aimed at enhancing its executives and employees’ un-

derstanding of fair trade, and to reflect improvements and le-

gal amendments of 2013 by steadily improving the checklists

through continued monitoring.

Next Step

Fair competitionContext

Progress

Because of the recent switch in the public perception of fair

competition, the burden of tangible and intangible costs has

increased, including financial burdens, such as the penalties

and liquidated damages imposed on violations, legal fees, and

damages to a company’s social image. The issue of minimizing

legal sanctions for violations of the Fair Trade Act has emerged

as the most important issue of the engineering industry. Thus,

Hyundai Engineering has steadily implemented its Compliance

Program (CP), a program of voluntary compliance with the fair

trade rules it introduced in June 2011.

Compliance Program (CP - program for voluntary compliance with fair trade rules)Hyundai Engineering strives to enhance its executives

and employees’ perception of fair competition in order

to minimize damages caused by violations of the law

while enhancing its corporate image with transparent

and ethical management under its recently introduced

Compliance Program.

Current status of CP operationHyundai Engineering has laid a solid foundation for

its executives and employees to recognize the impor-

tance of voluntary compliance with the fair trade rules

by displaying the sworn statement and declaration that

clarify them. In addition, Hyundai Engineering discloses

the operational status of its Compliance Program to its

external stakeholders by including it in its business re-

ports, and has conducted on- and offline education for

executives and employees on the program. Further, it

has distributed revised CP manual and detailed guide-

lines in order to encourage voluntary compliance with

the statutes related to fair trade. It has sent to its part-

ners a letter stating the importance of fair trade and

win-win growth and its determination to achieve them.

It has also enhanced the job-related knowledge and

responsiveness of the organizations by requiring em-

ployees responsible for CP implementation to attend

external education courses.

Hyundai Engineering, albeit, was responsible for two

illegal actions for unfair subcontract transaction and

improper cartel during the period, will continue to do

its best in preventing a recurrence and establishing fair

trade order.

CEO & President

Compliance manager

Head of Finance and Economy Division

Compliance Council

Compliance manager and operative managers in divisions

Working level compliance team

Person responsible: Finance team leaderPerson in charge: Person in charge of IR/

disclosure

CP organ

CP Code of Conduct

As an employee of Hyundai Engineering, I hereby promise to faithfully practice the following principles to establish a sound culture of fair trade:

I shall do my best to assist the establishment of a fair competition

culture in the company.I shall comply with the statutes related to fair competition and not acquire any gains by unfair means.I shall not become involved in illegal or unfair trading acts, either jointly or alone.I shall actively participate in education efforts as well as routine internal inspections to ensure that our Compliance Program is effectively operated.I shall report to the CP Council any executive or employee for whom I have good grounds for suspecting has violated the statutes related to fair competition.I shall accept entire responsibility as provided under the corporate regulations in the event that I breach any of the above pledges.

Partner Council



New Hope SchoolImprovement of flophouse village conditions

Social contribution toward local communities

Hyundai Engineering has continued carrying out diverse so-

cial contribution activities both at home and abroad under the

sustainability management system, as if it were nurturing life

in a deserted land by constructing plants. Hyundai Engineer-

ing is committed to rebirth as a sustainable business that can

create values for its stakeholders and local communities with

sincere social contribution activities linked with its core ca-

pabilities.

Stepping-stone house project ●

The ‘stepping-stone house’ proj-

ect, one of Hyundai Engineering’s

representative social contribution

programs, is designed to help people living in vulnerable housing con-

ditions. It consists of self-help support programs, including the foun-

dation of a joint workplace to assist the self-help ventures of poverty-

stricken residents in the Namdaemun Flophouse Village; programs

for improving housing conditions, the lease of building spaces after

remodeling; a facility improvement program to support the repair and

remodeling of their counseling center and other convenience facilities;

and programs to encourage self-reliance through culture lectures. The

stepping stone house project is implemented jointly with the Seoul

Metropolitan Government. A total of KRW one billion will be invested

from October 2013 to end of 2015.

New Hope School ● Hyundai Engineer-

ing founded the ‘New Hope School’ in

Phnom Penh, Cambodia in 2011 in order

to instill hope in children whose families

could not afford proper schooling for them. The school consists of

three international-class buildings and one common toilet building.

The children are provided with classes and meals every day. Since

2012 Hyundai Engineering employees have supported 80 children

with more stable education under 1:1 mentoring relationships. In ad-

dition, Hyundai Engineering plans to assist the extension and repair

of a school and support the livelihood of local residents in three vil-

lages, Bangladesh in the second half of 2014.

Context

Progress

Representative programs

Domestic

A Favor Returned : Sharing Management

“We should approach our social contribution programs from a long-term

perspective, coupled with plans for a long-term return to the community.”

Since last year, Hyundai Engineering has provided financial support for the

renovation of flophouses near Namdaemun. It recently contributed to the

settlement of problems related to poverty-stricken people living in vulnerable

housing conditions, which are largely attributable to urbanization and

bipolarization, by assisting their efforts under a self-help venture florist service

called ‘Flower Bloom’.

You should approach your social contribution programs with a long-term view.

A short-term or one-off project is unlikely to be of any real significance. I hope that you will provide

social contribution programs based on a long-term plan for return to the community. I am sure that

a long-term, planned performance coupled with a far-reaching vision will lead to great achievements

even when backed with only a small financial contribution.

Park, Jong Sung / Director, Namdaemun Area Counseling Center

‘Happy Energy Contributor’

Habitat for HumanityScholarship aid provided to children and youth defec-

tors from North KoreaDream Sketch

Hope Cultivation Center

Support to multi-culture families

Domestic

Stepping-stone house projectOverseas

New Hope School

Voluntary participation Sustainable sharing Happy win-win survival

Vision

3 major principles

Leading programs

Major programs

Social contribution organ

CEO & President

Head of Planning Office

Business Planning Team Leader

Social contribution FT

Volunteer Service Corps

Hyundai Engineering social contribution system

Overseas



Key programs

Habitat for Humanity ● Habitat, a non-governmental organization

established in the USA, aims to realize ‘a world with decent housing

for everyone’ by building ‘houses of hope’. Hyundai Engineering has

participated in Habitat Love Home Building together with Habitat Korea

in Hwaseong, Yangpyeong, and Chuncheon since 2009. In April 2014,

more than forty persons, including its social contribution TF members

and Stepping-stone volunteer workers, participated in Habitat activities

in Chuncheon, Gangwon-do after the foundation of the newly merged

corporation. Hyundai Engineering employees supported each other

while working in scorching summer weather, and donated a remark-

able KRW 20 million after completing their volunteer service activities.

Scholarship aid provided to children and youth defectors from North

Korea ● Children and youth defectors from North Korea face signifi-

cant difficulties in adapting to South Korean society and its culture

and life style, as well as the suffering and pain they experience dur-

ing the defection process. Hyundai Engineering supports their mental

healing, physical recovery and resettlement in South Korea by provid-

ing scholarships to Yeomyung School, an alternative school for them.

Hyundai Engineering will continue striving to ensure they settle suc-

cessfully in South Korean society while providing them with effective

opportunities for learning.

Hope Cultivation Center ● A society in which everyone enjoys happi-

ness without discrimination is the very ideal that Hyundai Engineering

seeks to realize. Hyundai Engineering founded the Hope Cultivation

Center, a business-linked vocational rehabilitation facility that produces

components for domestic appliances, while providing job skill training

in cooperation with Yangcheon-gu municipal office, back in 2007. The

Hope Cultivation Center functions as an incubator for physically-dis-

abled people in search of employment, by providing vocational training

with production equipment that is easy for them to operate. Hyundai

Engineering plans to implement diverse activities so that over 40 dis-

abled people attending the Hope Cultivation Center can work more

comfortably, including the deployment of automated equipment and

support for development of appropriate product designs. In 2014, the

company plans to relocate the workshop to a larger facility.

Emergency famine aid in Kenya ● In February 2014, Hyundai Engi-

neering’s Power & Energy Plant Division delivered items of emer-

gency aid to an elementary school in Baringo near the site of Olkaria

geothermal power plant units 1 and 4, a project which the division has

been executing. The event was attended by the director of Kenya’s

education administration agency as well as the school’s principal and

students. Hyundai Engineering delivered 16.2 tons of corn, which is

equivalent to one’s month lunch for 4,000 pupils of eight elementary

schools, including Salabani Elementary School.

Community Programs

Hyundai Engineering plans to conduct leading and major social

contribution activities and programs focusing on sincerity, con-

tinuity and public benefit with a view to developing them into

‘Value-Sharing social contribution’ programs, representing the

mid- and long-term objectives of the corporate social contribu-

tion programs since the merger of the corporation.

Hyundai Engineering believes that the mission of a world-class

engineering enterprise is to transform the world into a more

beautiful place by sharing love while enhancing human conve-

nience by developing innovative technologies. Firm in this con-

viction, Hyundai Engineering plans to resolve diverse community

problems by gaining a true understanding of the regions in which

it operates. In particular, as a knowledge-oriented business, it

will actively support activities for young people who will be re-

sponsible for the future of the nation. Hyundai Engineering will

steadily implement projects for providing good education condi-

tions as well as infrastructure of all countries it enters. In addi-

tion, Hyundai Engineering will enhance its reliability as a happy

energy contributor by working together with its neighbors amid

an atmosphere of joyful cooperation.

Next Step

Habitat for Humanity

Scholarship to Yeomyung School

Hope Cultivation Center

Activities Target agencies Key details

Cultural events commemo-rating the anniversary

Sinmok Welfare CenterMovies, meals and gifts presented to children from low-income families and disabled persons

Beautiful Accompany Yangcheon Welfare Center for the Disabled Support and accompanying outings for children from low-income families and disabled people

Fly, Green Dream Sinmok Welfare Center Support for Children’s Day events for children from low-income families

Lunch food rationing service Sinmok Welfare Center Provision of lunch on hot summer or year-end occasions

Weekend food rationing service

Organ Donation Association Meal rationing service for patients with renal insufficiency

Infant support Dongbang Social Welfare Society Service helping packaging (since 2012) and album production

Sharing charcoal briquettes Charcoal Sharing Campaign HQ Donation of charcoal briquettes and volunteer service

Donation of holiday funds Siloam Ophthalmic Clinic and others Support events during holiday periods

Psychiatric treatment for abused children

Save the Children(Mapo Children Welfare Institute)

Support for psychiatric treatment for abused children from low-income families

Food support Yangcheon Welfare Center for the Disabled Supply of side dishes to families with disabled members

Blood donation campaign Korea Red Cross Periodic participation in blood donation campaigns

Donation of Love PCsSeoul Metropolitan Government and Korea Disabled IT Employment Association

100 units in 2009; 800 units in 2012; 500 units in 2014

Domestic

Country Related site Key details

Kenya Olkaria, Salabani, etc.Donation of textbooks and school supplies to Massai schools and emergency aid activities

Equatorial Guinea Mongomo, Ebinayon, etc. Donation of Friendship Park and Friendship School, school supplies, etc.

Malaysia Terengganu, etc. Supply of relief provisions and equipment

Turkmenistan Ashkhabad, Yoloten, etc. Support for disabled children’s facilities and juvenile soccer teams

Uzbekistan Kungrad Support for Children’s Day events and volunteer medical services

Overseas

Social contribution programs and participating personnel

Year 2011 2012 2013

Number of programs 35 25 26

Number of participating personnel 2,164 1,291 1,126

Unit: case, persons



APPENDIXEconomic Performance




Membership in Associations


Condensed statement of financial position

Classifications Amount

Current assets 3,292,899

Noncurrent assets 1,294,568

Total assets 4,587,467

Current liabilities 1,912,902

Noncurrent liabilities 369,332

Total liabilities 2,282,234

Capital stock 37,977

Other paid in capital 1,287,494

Other components of equity 22,493

Retained earnings 955,196

Non-controlling interest 2,073

Total equity 2,305,233

Total liabilities and equity 4,587,467


Condensed statement of income

Classifications Amount

Sales 2,175,926

Cost of sales 1,905,731

Gross profit 270,195

Selling and administrative expenses 95,187

Operating income 175,008

Other income 44,625

Other expenses 64,945

Share of profit of associates 40

Finance income 21,498

Finance expenses 12,376

Profit before income tax 163,850

income tax expense 35,233

Profit for the period attributed to : 128,617


KRW, million

KRW, million

56 Hyundai Engineering Sustainability Report 57


GENERAL STANDARD DISCLOSURES

Indicator General Standard Disclosures Page ISO 26000 External Assurance

Strategy and Analysis

G4-1 Provide a statement from the most senior decision-maker of the organization (such as CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and the organization’s strategy for addressing sustainability. 2-3

4.7/ 6.2/

7.4.262-63

Organizational Profile

G4-3 Report the name of the organization 4-5

6.3.10/

6.4.1-6.4.2/

6.4.3/

6.4.4/

6.4.5/

6.8.5/ 7.8

62-63

G4-4 Report the primary brands, products, and services. 4-5 62-63

G4-5 Report the location of the organization’s headquarters 4-5 62-63

G4-6Report the number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report. 4-5 62-63

G4-7 Report the nature of ownership and legal form. 10-11 62-63

G4-8 Report the markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries) 4-5 62-63

G4-9

Report the scale of the organization, including:- Total number of employees - Total number of operations- Net sales (for private sector organizations) or net revenues (for public sector organizations) - Total capitalization broken down in terms of debt and equity (for private sector organizations)- Quantity of products or services provided

4-5 62-63

G4-10

a. Report the total number of employees by`and gender.b. Report the total number of permanent employees by employment type and gender.c. Report the total workforce by employees and supervised workers and by gender.d. Report the total workforce by region and gender.e. Report whether a substantial portion of the organization’s work is performed by workers who are legally recognized as self-employed, or by individuals other than employees or supervised workers, including employees and supervised employees of contractors.f. Report any significant variations in employment numbers (such as seasonal variations in employment in the tourism or agricultural industries).

43 62-63

G4-11 Report the percentage of total employees covered by collective bargaining agreements. 0% 62-63

G4-12 Describe the organization’s supply chain. - No

G4-13

Report any significant changes during the reporting period regarding the organization’s size, structure, ownership, or its supply chain, including:- Changes in the location of, or changes in, operations, including facility openings, closings, and expansions- Changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private

sector organizations)- Changes in the location of suppliers, the structure of the supply chain, or in relationships with suppliers, including

selection and termination

21 62-63

G4-14 Report whether and how the precautionary approach or principle is addressed by the organization. 12-14 62-63

G4-15List externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses. Appendix 62-63

G4-16

List memberships of associations (such as industry associations) and national or international advocacy organizations in which the organization: - Holds a position on the governance body- Participates in projects or committees - Provides substantive funding beyond routine membership dues- Views membership as strategic

Appendix

G4-17* List all entities included in the organization’s consolidated financial statements or equivalent documents. * Report whether any entity included in the organization’s consolidated financial statements or equivalent documents is

not covered by the report. 1 62-63

Identified Material Aspects and Boundaries

G4-18a. Explain the process for defining the report content and the Aspect Boundaries.b. Explain how the organization has implemented the Reporting Principles for Defining Report Content. 18-20 5.2/ 7.3.2/

7.3.3/ 7.3.4

62-63

G4-19 List all the material Aspects identified in the process for defining report content. 18-20 62-63

Indicator General Standard Disclosures Page ISO 26000 External Assurance

G4-20

For each material Aspect, report the Aspect Boundary within the organization, as follows: * Report whether the Aspect is material within the organization * If the Aspect is not material for all entities within the organization (as described in G4-17), select one of the following

two approaches and report either: - The list of entities or groups of entities included in G4-17 for which the Aspect is not material or - The list of entities or groups of entities included in G4-17 for which the Aspects is material * Report any specific limitation regarding the Aspect Boundary within the organization

18-20

5.2/ 7.3.2/

7.3.3/ 7.3.4

62-63

G4-21

For each material Aspect, report the Aspect Boundary outside the organization, as follows:- Report whether the Aspect is material outside of the organization- If the Aspect is material outside of the organization, identify the entities, groups of entities or elements for which the

Aspect is material. In addition, describe the geographical location where the Aspect is material for the entities identified- Report any specific limitation regarding the Aspect Boundary outside the organization

18-20 62-63

G4-22 Report the effect of any restatements of information provided in previous reports, and the reasons for such restatements. 4-5 62-63

G4-23 Report significant changes from previous reporting periods in the Scope and Aspect Boundaries. 21 62-63

Stakeholder Engagement

G4-24 Provide a list of stakeholder groups engaged by the organization. 18-20

5.3

62-63

G4-25 Report the basis for identification and selection of stakeholders with whom to engage. 18-20 62-63

G4-26Report the organization’s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group, and an indication of whether any of the engagement was undertaken specifically as part of the report preparation process.

18-20 62-63

G4-27Report key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting. Report the stakeholder groups that raised each of the key topics and concerns.

18-20 62-63

Report Profile

G4-28 Reporting period (such as fiscal or calendar year) for information provided. 1

7.5.3/ 7.6.2

62-63

G4-29 Date of most recent previous report (if any). 1 62-63

G4-30 Reporting cycle (such as annual, biennial). 1 62-63

G4-31 Provide the contact point for questions regarding the report or its contents. Appendix 62-63

G4-32

a. Report the ‘in accordance’ option the organization has chosen.b. Report the GRI Content Index for the chosen option (see tables below).c. Report the reference to the External Assurance Report, if the report has been externally assured. GRI recommends the use of external assurance but it is not a requirement to be ‘in accordance’ with the Guidelines.

1 62-63

G4-33

a. Report the organization’s policy and current practice with regard to seeking external assurance for the report.b. If not included in the assurance report accompanying the sustainability report, report the scope and basis of any

external assurance provided. c. Report the relationship between the organization and the assurance providers. d. Report whether the highest governance body or senior executives are involved in seeking assurance for the

organization’s sustainability report.

1 62-63

Governance

G4-34Report the governance structure of the organization, including committees of the highest governance body. Identify any committees responsible for decision-making on economic, environmental and social impacts. 8-9 6.2 62-63

Ethics and Integrity

G4-56 Describe the organization’s values, principles, standards and norms of behavior such as codes of conduct and codes of ethics. 15-17

4.4/ 6.6.3

62-63

G4-57Report the internal and external mechanisms for seeking advice on ethical and lawful behavior, and matters related to organizational integrity, such as helplines or advice lines. 15-17 62-63

G4-58Report the internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and matters related to organizational integrity, such as escalation through line management,whistleblowing mechanisms or hotlines.

15-17 62-63

Hyundai Engineering Sustainability Report 58


Material

Aspects

Specific Standard Disclosures Page ISO 26000 External Assurance

Economic


G4-EC1 DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED 23-24 6.8.1-6.8.2/ 6.8.3/ 6.8.7/ 6.8.9 62-63

G4-EC2FINANCIAL IMPLICATIONS AND OTHER RISKS AND OPPORTUNITIES FOR THE ORGANIZATION’S ACTIVITIES DUE TO CLIMATE CHANGE

-6.5.5 No

G4-EC3 COVERAGE OF THE ORGANIZATION’S DEFINED BENEFIT PLAN OBLIGATIONS 23-24 6.8.7 62-63

G4-EC4 FINANCIAL ASSISTANCE RECEIVED FROM GOVERNMENT 23-24 - 62-63

Market Presence

G4-EC5RATIOS OF STANDARD ENTRY LEVEL WAGE BY GENDER COMPARED TO LOCAL MINIMUM WAGE AT SIGNIFICANT LOCATIONS OF OPERATION

436.3.7/ 6.3.10/ 6.4.3/ 6.4.4/

6.8.1-6.8.262-63

G4-EC6PROPORTION OF SENIOR MANAGEMENT HIRED FROM THE LOCAL COMMUNITY AT SIGNIFICANT LOCATIONS OF OPERATION

100% 6.4.3/ 6.8.1-6.8.2/ 6.8.5/ 6.8.7 62-63

Indirect Economic Impacts

G4-EC7 DEVELOPMENT AND IMPACT OF INFRASTRUCTURE INVESTMENTS AND SERVICES SUPPORTED 40-41 6.3.9/ 6.8.1-6.8.2/ 6.8.7/ 6.8.9 62-63

G4-EC8 SIGNIFICANT INDIRECT ECONOMIC IMPACTS, INCLUDING THE EXTENT OF IMPACTS 40-416.3.9/ 6.6.6/ 6.6.7/ 6.7.8/

6.8.1-6.8.2/ 6.8.5/ 6.8.7/ 6.8.962-63

Environmental

MaterialsG4-EN1 MATERIALS USED BY WEIGHT OR VOLUME 32 6.5.4 62-63

G4-EN2 PERCENTAGE OF MATERIALS USED THAT ARE RECYCLED INPUT MATERIALS - 6.5.4 No

Emissions

G4-EN15 DIRECT GREENHOUSE GAS (GHG) EMISSIONS (SCOPE 1) 35 6.5.5 62-63

G4-EN16 ENERGY INDIRECT GREENHOUSE GAS (GHG) EMISSIONS (SCO 35 6.5.5 62-63

G4-EN17 OTHER INDIRECT GREENHOUSE GAS (GHG) EMISSIONS (SCOPE 3) Not applicable 6.5.5 62-63

G4-EN18 GREENHOUSE GAS (GHG) EMISSIONS INTENSITY Not applicable 6.5.5 62-63

G4-EN19 REDUCTION OF GREENHOUSE GAS (GHG) EMISSIONS Not applicable 6.5.5 62-63

G4-EN20 EMISSIONS OF OZONE-DEPLETING SUBSTANCES (ODS) 33 6.5.3/ 6.5.5 62-63

G4-EN21 NOX, SOX, AND OTHER SIGNIFICANT AIR EMISSIONS 33 6.5.3 62-63

Compliance G4-EN29MONETARY VALUE OF SIGNIFICANT FINES AND TOTAL NUMBER OF NON-MONETARY SANCTIONS FOR NON-COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS

32 4.6 62-63

Social

Labor Practice and Decent Work

Employment

G4-LA1 OTAL NUMBER AND RATES OF NEW EMPLOYEE HIRES AND EMPLOYEE TURNOVER BY AGE GROUP, GENDER AND REGION 43 6.4.3 62-63

G4-LA2BENEFITS PROVIDED TO FULL-TIME EMPLOYEES THAT ARE NOT PROVIDED TO TEMPORARY OR PART-TIME EMPLOYEES, BY SIGNIFICANT LOCATIONS OF OPERATION

46 6.4.4/ 6.8.7 62-63

G4-LA3 RETURN TO WORK AND RETENTION RATES AFTER PARENTAL LEAVE, BY GENDER 46 6.4.4 62-63

Labor/Management Relations

G4-LA4MINIMUM NOTICE PERIODS REGARDING OPERATIONAL CHANGES, INCLUDING WHETHER THESE ARE SPECIFIED IN COLLECTIVE AGREEMENT

47 6.4.3/ 6.4.5 62-63

Occupational Health and

Safety

G4-LA5PERCENTAGE OF TOTAL WORKFORCE REPRESENTED IN FORMAL JOINT MANAGEMENT-WORKER HEALTH AND SAFETY COMMITTEES THAT HELP MONITOR AND ADVISE ON OCCUPATIONAL HEALTH AND SAFETY PROGRAMS

- 6.4.6 No

G4-LA6TYPE OF INJURY AND RATES OF INJURY, OCCUPATIONAL DISEASES, LOST DAYS, AND ABSENTEEISM, AND TOTAL NUMBER OF WORK-RELATED FATALITIES, BY REGION AND BY GENDER

39 6.4.6/ 6.8.8 62-63

G4-LA7 WORKERS WITH HIGH INCIDENCE OR HIGH RISK OF DISEASES RELATED TO THEIR OCCUPATION - 6.4.6/ 6.8.8 No

G4-LA8 HEALTH AND SAFETY TOPICS COVERED IN FORMAL AGREEMENTS WITH TRADE UNIONS None 6.4.6 62-63

Training and Education

G4-LA9 AVERAGE HOURS OF TRAINING PER YEAR PER EMPLOYEE BY GENDER, AND BY EMPLOYEE CATEGORY 44 6.4.7 62-63

G4-LA10PROGRAMS FOR SKILLS MANAGEMENT AND LIFELONG LEARNING THAT SUPPORT THE CONTINUED EMPLOYABILITY OF EMPLOYEES AND ASSIST THEM IN MANAGING CAREER ENDINGS

None 6.4.7/ 6.8.5 62-63

G4-LA11PERCENTAGE OF EMPLOYEES RECEIVING REGULAR PERFORMANCE AND CAREER DEVELOPMENT REVIEWS, BY GENDER AND BY EMPLOYEE CATEGORY

100% 6.4.7 62-63

Material

Aspects

Specific Standard Disclosures Page ISO 26000 External Assurance

Human Rights

Assessment G4-HR9TOTAL NUMBER AND PERCENTAGE OF OPERATIONS THAT HAVE BEEN SUBJECT TO HUMAN RIGHTS REVIEWS OR IMPACT ASSESSMENTS

100% 6.3.3/ 6.3.4/ 6.3.5 62-63

Supplier Human Rights Assessment

G4-HR10 PERCENTAGE OF NEW SUPPLIERS THAT WERE SCREENED USING HUMAN RIGHTS CRITERIA Not applicable 6.3.3/ 6.3.4/ 6.3.5/ 6.6.6 62-63

G4-HR11SIGNIFICANT ACTUAL AND POTENTIAL NEGATIVE HUMAN RIGHTS IMPACTS IN THE SUPPLY CHAIN AND ACTIONS TAKEN

None6.3.3/ 6.3.4/ 6.3.5/

6.6.662-63

Society

Local Communities

G4-SO1 PERCENTAGE OF OPERATIONS WITH IMPLEMENTED LOCAL COMMUNITY ENGAGEMENT, IMPACT ASSESSMENTS, AND DEVELOPMENT PROGRAMS

100%6.3.9/ 6.5.1-6.5.2/

6.5.3/ 6.8 62-63

G4-SO2 OPERATIONS WITH SIGNIFICANT ACTUAL AND POTENTIAL NEGATIVE IMPACTS ON LOCAL COMMUNITIES None 6.3.9/ 6.5.3/ 6.8 62-63

Anti-competitive

BehaviorG4-SO7

TOTAL NUMBER OF LEGAL ACTIONS FOR ANTI-COMPETITIVE BEHAVIOR, ANTI-TRUST, AND MONOPOLY PRACTICES AND THEIR OUTCOMES

51 6.6.1-6.6.2/ 6.6.4 62-63

Product Responsibility

Product and Service

Labeling

G4-PR3TYPE OF PRODUCT AND SERVICE INFORMATION REQUIRED BY THE ORGANIZATION’S PROCEDURES FOR PRODUCT AND SERVICE INFORMATION AND LABELING, AND PERCENTAGE OF SIGNIFICANT PRODUCT AND SERVICE CATEGORIES SUBJECT TO SUCH INFORMATION REQUIREMENTS

Not applicable6.7.1-6.7.2/ 6.7.3/

6.7.4/ 6.7.5/ 6.7.962-63

G4-PR4TOTAL NUMBER OF INCIDENTS OF NON-COMPLIANCE WITH REGULATIONS AND VOLUNTARY CODES CONCERNING PRODUCT AND SERVICE INFORMATION AND LABELING, BY TYPE OF OUTCOMES

None4.6/ 6.7.1-6.7.2/ 6.7.3/

6.7.4/ 6.7.5/ 6.7.962-63

G4-PR5 RESULTS OF SURVEYS MEASURING CUSTOMER SATISFACTION 27 6.7.1-6.7.2/ 6.7.6 62-63

Compliance G4-PR9MONETARY VALUE OF SIGNIFICANT FINES FOR NON-COMPLIANCE WITH LAWS AND REGULATIONS CONCERNING THE PROVISION AND USE OF PRODUCTS AND SERVICES

None4.6/ 6.7.1-6.7.2/

6.7.662-63

Construction and Real Estate

Emissions

CRE3 GREENHOUSE GAS EMISSIONS INTENSITY FROM BUILDINGSNot managed

currentl62-63

CRE4 GREENHOUSE GAS EMISSIONS INTENSITY FROM NEW CONSTRUCTION AND REDEVELOPMENT ACTIVITYNot managed

currentl62-63

Land Degradation,

Contami-nation and

Remediation

CRE5LAND REMEDIATED AND IN NEED OF REMEDIATION FOR THE EXISTING OR INTENDED LAND USE, ACCORDING TO APPLICABLE LEGAL DESIGNATIONS

Not applicable 62-63

Occupational Health

and SafetyCRE6

PERCENTAGE OF THE ORGANIZATION OPERATING IN VERIFIED COMPLIANCE WITH AN INTERNATIONALLY RECOGNIZED HEALTH AND SAFETY MANAGEMENT SYSTEM

38 62-63

Local Communities

CRE7NUMBER OF PERSONS VOLUNTARILY AND INVOLUNTARILY DISPLACED AND/OR RESETTLED BY DEVELOPMENT, BROKEN DOWN BY PROJECT

None 62-63

Product and Service Labeling

CRE8TYPE AND NUMBER OF SUSTAINABILITY CERTIFICATION, RATING AND LABELING SCHEMES FOR NEW CONSTRUCTION, MANAGEMENT, OCCUPATION AND REDEVELOPMENT

29 62-63

SPECIFIC STANDARD DISCLOSURES

UN GLOBAL COMPACT 10 Principles

Principles Page

Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and

46-47

Principle 2: make sure that they are not complicit in human rights abuses. 46-47

Labour

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

47

Principle 4: the elimination of all forms of forced and compulsory labour; 46-47

Principle 5: the effective abolition of child labour; and 46-47

Principle 6: the elimination of discrimination in respect of employment and occupation. 46-47

Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges; 31

Principle 8: undertake initiatives to promote greater environmental responsibility; and 32-35

Principle 9: encourage the development and diffusion of environmentally friendly technologies. 36-37

Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. 13-15



Dear Hyundai Engineering Management and Stakeholders,

■ Introduction The Korean Standards Association (“KSA”) was commissioned by Hyundai Engineering to perform a third-party Assurance Engagement of

the 2012~2013 Hyundai Engineering Sustainability Report (the “Report”). The KSA presents the following independent opinions based on its

assessment of the feasibility of the data contained in this Report. Hyundai Engineering has sole responsibility for the contents and performance

reviewed in this Report.

■ IndependenceAs an independent assurance agency, the KSA does not have any kind of commercial interest in the businesses of Hyundai Engineering other

than its responsibility for undertaking third-party assurance of the Report. We have no other contract with Hyundai Engineering that may

undermine our credibility and integrity as an independent assurance agency.

■ Assurance Standards and LevelThis Assurance Engagement follows the AA1000AS (2008) assurance standards to provide Moderate Level assurance. We have checked the

three principles of ‘Inclusivity’, ‘Materiality’, and ‘Responsiveness’ in combination with the information credibility of the Report. We have also

verified whether the content of the Report was created in accordance with the GRI G4 Guidelines and ISO 26000.

■ Assurance Type and Scope We have performed a Type 2 Assurance Engagement in accordance with AA1000AS. This means that we have verified the accuracy and quality

of the statements made by Hyundai Engineering and the sustainability performance data included in this Report. This Assurance Engagement

covers data from the calendar year 2012 to year 2013. Information from the first half of 2014 has also been included, depending on the content.

The scope of this Assurance Engagement primarily covers the systems and initiatives undertaken by Hyundai Engineering, including its

sustainability management policies, goals, business, standards and performance during the reporting period defined in the Report. While the

company’s environmental and social data, as well as its financial data, have been verified, the scope of the review concerning stakeholder

engagement is limited to the materiality test process.

■ Assurance Methods The KSA, as the assurance agency, collected information, data or evidential materials within the specified scope of assurance, using the

following methods:

•Analysis of articles related to Hyundai Engineering’s sustainability management published by domestic media outlets over the last three years

•Analysis of issues reported in the sustainability reports published by domestic and overseas industry peers

•Visits to Hyundai Engineering headquarters/Interviews with employees in charge of sustainability management and managers of respective issues

•Verification of the management system and process to improve achievement in sustainability management and to prepare the Report

•�Examination as to whether the financial result-related data are in accord with the audit report and public disclosure materials concerning the

2013 financial statements of both Hyundai Engineering and Hyundai AMCO in the pre-merger period

•Examination of internal documents and other basic materials

■ Assurance Results and Opinions [On the assurance principle/process level]The KSA has reviewed the draft version of this Report in order to present our opinions as an assurance provider. Modifications were made to

the content of the Report when deemed necessary. We have not detected any significant errors or inappropriate descriptions in this Report as

a result of our Assurance Engagement. As such, we present our opinion of the report as follows.

Inclusivity : Has Hyundai Engineering engaged its stakeholders in strategically responding to sustainability?We believe that Hyundai Engineering is making an all-out effort to encourage major stakeholders’ participation in promoting sustainability

management, and we have assured the procurement and operation of diverse stakeholder communication channels of Hyundai Engineering.

However, it is judged that in future the Company must strive to collect opinions positively? and reflect them by expanding the pool of external

stakeholders - such as customers, subcontractors, and non-profit organizations - that can have an impact on the Company’s sustainability.

Materiality : Has Hyundai Engineering included material information in the Report to help stakeholders make informed decisions?We are not aware of any significant omissions or exclusions of data that are material to stakeholders. We have verified that Hyundai

Engineering conducted the materiality test with issues identified in analyses of internal and external environments, and reported according

to the result. In particular, we think highly of the efforts made to come up with important sustainability issues relating to internal/external

stakeholders and report them in linkage with the Company’s vision and sustainability strategy. It is recommended that in future the Company

disclose data about the status of responses from different stakeholders and the process of defining the content of reports in greater detail,

and should make more concerted efforts to ensure that the reports on important issues are focused on performance results.

Responsiveness : Has Hyundai Engineering appropriately responded to stakeholder requirements and interest in this Report?We have verified that Hyundai Engineering has responded to stakeholders’ needs and interests by reflecting stakeholders’ opinions in the

Report. We are not aware of any evidence that Hyundai Engineering’s response to significant issues of stakeholders has been reported

inappropriately. We think highly of the steps taken to cope with stakeholders’ demands and interests in a comprehensive and balanced

fashion by operating diverse communication channels suited to the characteristics of different stakeholders. We recommend that the Company

establish a more solid management system, in which the Plan-Do-Check-Act process can be applied continually to each major issue raised by

the stakeholders through diverse channels designed for the collection of opinions.

■ Review of GRI G4 Compliance and Verification by IndicatorWe confirm that this Report has been prepared in accordance with the GRI G4 Core Option. Based on the data provided by Hyundai Engineering,

we can also confirm the validity of the contents related to General Standard Disclosure and Specific Standard Disclosure indicators.

General Standard Disclosures : G4-1, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32,

33, 34, 56, 57, 58

Specific Standard Disclosures : G4-EC1, EC2, EC3, EC4, EC5, EC6, EC7, EC8, EN1, EN2, EN15, EN16, EN17, EN18, EN19, EN20, EN21, EN29,

LA1, LA2, LA3, LA4, LA5, LA6, LA7, LA8, LA9, LA10, LA11, HR9, HR10, HR11, S01, S02, S07, PR3, PR4, PR5, PR9

■ Opinions and Recommendations by Sector [On a performance/issue level]We present the following recommendations which are intended to help Hyundai Engineering establish a company-wide sustainability

management strategy and respond to continuous issues of sustainability.

Economic : The content explains clearly the status of the Company’s merger with Hyundai AMCO and the ensuing synergistic effects expected

from the merger. We recommend that the Company classify the risks associated with its financial status and changes in the industry in more

detail and that it disclose its plan on how to carry out management more systematically based on such classification more proactively.

Environmental : We find it very encouraging that the Company operates the environmental safety management system and that the relevant

organization carried out such activities proactively, when environmental safety is regarded as an important issue. It is expected that the Company will

set examples for others to follow through continued management and improvement efforts. We recommend that the Company improve to exemplary

level its process for the establishment of global standards and the collection of data for integrated management of domestic and international

indicators, and that it expand its management areas to company-wide environmental safety data beyond those relating to specific workplaces.

Social : The Company’s adoption of a system for sharing performance results with its partners and subcontractors, improvement of the conditions

concerning payments made to subcontractors, and operation of its “win-win” fund show how Hyundai Engineering has endeavored to practice

win-win management to strengthen its competitiveness rather than engaging in one-off ‘almsgiving’ types of acts. Its adoption of the system for

per-category registration of subcontractors, which is intended to help them enhance their competitiveness, and its switch of focus from the number

of HEC employees and sales to the number of years of HEC employees’ continued service for them in its evaluation of potential subcontractors

attest to the differentiated efforts made by the Company to enhance the industry’s competitiveness through collaboration and co-prosperity with

its subcontractors. The Company-led Stepping-stone house project, which is a network type of social contribution program carried out jointly by

the private and public sectors, appears to present a future vision of businesses’ social contribution activities. We recommend that the Company

evaluate and draft reports on the ripple effects created by the series of social contribution activities it has carried out.

29 August 2014

Kim, Moo-HongActing KSA Chairman & CEO

The Korean Standards Association (KSA), established as a special corporation in accordance with the Law for Industrial Standardization in 1962, serves as a knowledge service provider by distributing and disseminating such services as industrial standardization, quality management, sustainability management, KS certification and ISO certification. The KSA is committed to the sustainable development of Korean society in its roles as ISO 26000 National Secretary, certified GRI training partner, AA1000 assurance provider, KSI(Korea Sustainability Index) operator, UN CDM DOE(development operational entity), and assurance provider of the Korean government’s greenhouse gas energy target management system



Prize name Date Awarded by

Awarded the Grand Cross Medal for a project in Equatorial Guinea Oct. 2012 Government of Equatorial Guinea

Awarded the Grand Prize (Platinum Award) at the Spotlight Awards,

Sustainability Management Report categoryOct. 2012

League of American Communications

Professionals (LACP), USA

Awarded the One Billion Export Tower Prize on the 49th Foreign Trade Day Dec. 2012 Korea International Trade Association

Awarded the Grand Prize for This Year’s Civil Engineering Structure on the 16th Civil

Engineering Day (Geogeumdaegyo Bridge)March. 2013 Korea Society of Civil Engineers

Awarded the Seoul Mayor’s citation as a distinguished taxpayer April 2013 Seoul Metropolitan Government

Awarded the Industry and Resource Minister’s citation as a distinguished plant exporter May 2013 Korea Plant Industries Association

Awarded Special prize by the Reviewers of the 1st Korea Volunteer Service Film Festival Nov. 2013 Korea Volunteer Service Foundation

Awarded a Presidential citation as a distinguished plant exporter; USD 2 billion Export Tower

on the 50th Foreign Trade DayDec. 2013

Ministry of Trade, Industry and

Energy/Korea International Trade

Association

Awarded a Presidential citation as an outstanding job creation enterprise Dec. 2013 Ministry of Employment and Labor

Grand Prize for Ethical Management in the Construction Industry (large enterprise category) Dec. 2013 Construction Association of Korea

Membership in AssociationsMembership in associations

The Korea Gas Union Korea International Trade Association Korea Productivity Center

Korea Wind Energy Industry AssociationKorea Association of Construction Engineering & Management

Korea Industrial Technology Association

Korea Desalination Plant Association Seoul Chamber of Commerce & Industry Korea Industrial Technology Association

Korea Atomic Industrial Forum Korea electrical Contractors Association Korea Foundation for Quality (KFQ Membership)

Korean Radioactive Waste Society Korea Association of Surveying & Mapping The Korea Institute of Building Construction

Korea Institute of Registered Architects Korea electric Engineers AssociationKorea Institute of Construction Engineering and Management

Korea River Association Korea Construction Engineers Association Korea Remodeling Association

Environmental Influence Assessment Association International Contractors Association of Korea HMC

Korea Water and Wastewater Works Association Korea Fire Safety Association Korea Building Owners & Managers Association

KATIA Korea Institute of Registered Architects Fair Competition Federation

Korea Disaster Prevention Association Korea Information & Comm.Contractors Association The Korea Institute of Landscape Architecture

Korea Water Resources Association Korea Facilities Maintenance Association Korea Housing Association

Korea Fire Facility Association The Federation of Korean Industries Korean Society of Civil Engineers

Korea Engineering & Consulting Association Korea Management Association

Construction Association of Korea Korea Plant Industries Association

Sustainability Management Task Force2012~2013 Hyundai Engineering Task Force

responsible for Sustainability Management

Related organs

(Division/Office)Organization Person in charge

Process Plant 1,2 Division Process Plant Business Support Team Kim, Byung Sik

Power & Energy Plant Division J/V EM Team Cha, Gyu Hee

Building Works Division Building Works Business Planning Team Jang, Jin Bong

Housing Works DivisionHousing Works Business Supporting

Team Gu, Hong Chan

Infrastructure & Environment Division Water & Environment Team Choi, Hyo Sun

Finance & Economy DivisionFinance Team Hong, Joon Pyo

Accounting Team Min, Ji Hong

General Administration

& Management DivisionHuman Resources Planning Team Lee, Jung Min

Outsourcing

& Procurement Office

Cooperation Propulsion Team Kim, Jung Man

Outsourcing Team Choi, Hyoung Min

Planning Office Business Planning Team Kim, Ye Ji

HSE Innovation Office HSE Innovation Team Shin, Yong Ho

Labor-Management Council Labor-Management Council Lee, Jong Sung

Inquiries about this report

This report has been published in Korean and English. You may download it from the Sustainability Management Section of Hyundai Engineering’s website. If you have any questions or suggestions, please contact:

•Team: Sustainability Management Representative, Business Planning Team,

Planning Office

• E-mail: [email protected]

• Tel: +82-2-2134-1809

• Website: https://eng.hec.co.kr/

• Address: 75 Yulgok-ro, Jongno-gu, Seoul, Korea

64

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