RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

RSPO PRINCIPLES & CRITERIA PUBLIC SUMMARY REPORT ANNUAL SURVEILLANCE ASSESSMENT 2

Malaysia TUAN MEE OIL MILL Kuala Lumpur- Berhad 2015

Report prepared by: Baskaran Sankaran (Lead Assessor) Certification decision by: Simon Selvaraj (Certifier) Certifying Office Control Union () Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima , Jalan Kota/KS 1, 41000 Klang, , Malaysia [email protected] Tel: +603-3377 1600 / 1700

Control Union Certifications Control Union Certifications is a member of the Control Union World Group - an international inspection and certification body. CUC performs assessments and certification in many agricultural based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic Exchange, GLOBALGAP, HACCP, BRC, GMP and GTP.

CUC is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CUC Organic program (according to the EU regulation 2092/91) and GLOBALGAP program. When requested a copy of the accreditation certificate can be obtained from CUC.

Control Union (Malaysia) Sdn Bhd is a registered affiliate member of RSPO and is a private limited company owned by the Control Union World Group based in Malaysia. Control Union (Malaysia) Sdn Bhd is authorized to conduct and issue certification on behalf of RSPO and Control Union Certifications. RSPO Membership Number 8-0025-06-000-00 RSPO Approval Date 12/01/2006 Affiliate Membership http://www.rspo.org/en/member/339

RSPOPC-SUM-REPORT.F01 MAY 2014 Page 1 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Table of Contents PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT ...... 4

1.1 COMPANY AND CONTACT DETAILS ...... 4 1.2 RSPO MEMBERSHIP & CERTIFICATION DETAILS ...... 4 1.3 ANNUAL SURVEILLANCE ASSESSMENT DETAILS ...... 4 1.4 ASSESSMENT TYPE ...... 4 1.5 LOCATION OF THE PALM OIL MILL ...... 4 1.6 PALM OIL MILL OUTPUT AND APPROXIMATE TONNAGES CERTIFIED ...... 4 1.7 GENERAL DESCRIPTION OF SUPPLY BASE ...... 5 1.7.1 Location of the Supply Base ...... 5 1.7.2 Statistics of the Supply Base and Estimated Tonnes of FFB produced per year ...... 5 1.7.3 Conservation and HCV Area (Ha) ...... 5 1.7.5 Calculation of the Number of Production Units (N) to Sample for the Mill ...... 5 1.8 PROGRESS OF ASSOCIATED SMALLHOLDERS OR OUT-GROWERS, IF APPLICABLE TO THIS ASSESSMENT ...... 5 1.9 LOCATION MAP FOR THIS CERTIFICATION UNIT (SEE APPENDIX 1) ...... 6 PART 2: PARTIAL CERTIFICATION ...... 6

2.1 MANAGEMENT STRUCTURE ...... 6 2.2 NON-COMPLIANCE IDENTIFIED WITH 2.1 ABOVE ...... 6 2.3 SUMMARY OF THE TIME BOUND PLAN ...... 6 2.4 UN-CERTIFIED UNITS OR HOLDINGS ...... 8 2.5 SUMMARY OF THE FINDINGS FOR PARTIAL CERTIFICATION ...... 11 2.6 PARTIAL CERTIFICATION AUDIT AGENDA ...... 11 PART 3: AUDIT PROCESS...... 11

3.1 ABOUT THE CERTIFICATION BODY ...... 11 3.2 AUDIT TEAM ...... 11 3.2.1 Qualifications of the Lead Auditor ...... 11 3.2.2 Qualifications of the Assessment Team ...... 12 3.3 AUDIT METHODOLOGY...... 14 3.3.1 General Overview ...... 14 3.3.2 Assessment agenda for this Audit ...... 14 PART 4 ASSESSMENT FINDINGS ...... 15

4.1 LEAD ASSESSOR’S SUMMARY AND RECOMMENDATION FOR CERTIFICATION ...... 15 4.2 SUMMARY OF THE FINDINGS BY PRINCIPLES AND CRITERIA ...... 16 Principle 1: Commitment to Transparency ...... 16 Principle 2: Compliance with Applicable Laws and Regulations ...... 17 Principle 3: Commitment to Long-Term Economic and Financial Viability ...... 19 Principle 4: Use of Appropriate Best Practices by Growers and Millers ...... 19 Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity ...... 25 Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers ...... 29 Principle 7: Responsible Development of New Plantings ...... 32 Principle 8: Commitment to Continuous Improvement in Key Areas of Activity ...... 33 4.3 NON-CONFORMITY RAISED DURING THIS AUDIT AND ANY FROM THE PREVIOUS YEAR, IF APPLICABLE ...... 34 4.3.1 Non-Conformities Identified during this Audit ...... 34 4.3.2 Non-Conformity Identified during the last ASA, not applicable for MA ...... 36 2 MAJOR AND 5 MINOR NON-CONFORMITIES WERE RAISED. ALL MAJOR NON-CONFORMITIES WERE CLOSED IN LAST YEAR...... 36 4.3.3 Observations Identified during this audit ...... 41 TWO OBSERVATIONS FOUND IN THIS AUDIT...... 41 4.4 ISSUES THAT WERE RAISED DURING THE STAKEHOLDER CONSULTATION, IF ANY ...... 42 RSPOPC-SUM-REPORT.F01 MAY 2014 Page 2 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

PART 5: RSPO SUPPLY CHAIN CERTIFICATION ...... 43

5.1 POM INCLUDED IN THE SCOPE OF THE AUDIT ...... 43 5.2 CONFIRMATION OF THE COMPANY’S SUMMARY OF ANNUAL CERTIFIED VOLUME OF RSPO CERTIFIED PALM OIL AND PALM KERNEL OVER A SPECIFIED PERIFFD ...... 43 5.3 SUMMARY REPORT INCLUDING A BRIEF DESCRIPTION OF THE SCOPE OF CERTIFICATION ...... 43 5.4 MONTHLY RECORDS OF CERTIFIED AND UNCERTIFIED FFB RECEIVED SINCE THE LAST AUDIT ...... 43 5.5 MONTHLY RECORDS OF CERTIFIED CPO AND PK PRODUCED SINCE THE LAST AUDIT ...... 44 5.6 RECORDS OF CERTIFIED CPO & PK SOLD UNDER GREEN PALM TO BUYERS SINCE THE LAST AUDIT, IF ANY ...... 44 5.7 RECORDS OF CERTIFIED CPO & PK SOLD UNDER UTZ ETRACE TO BUYERS SINCE THE LAST AUDIT, IF ANY .... 44 5.8 NON-CONFORMITIES IDENTIFIED DURING THIS AUDIT ...... 45 5.9 DESCRIPTION OF THE ORGANIZATIONAL MANAGEMENT SYSTEMS ...... 45 5.10 FINAL CERTIFICATION DECISION BY CONTROL UNION FOR THE RSPO SCCS AUDIT OF THE POM ...... 46 PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ...... 46

6.1 DATE OF NEXT ASA ...... 46 6.2 DATE FOR CLOSURE OF NON-CONFORMITIES ...... 46 6.3 SIGNING BY THE CLIENT ...... 46 6.4 SIGNING BY THE LEAD AUDITOR ...... 46 6.5 SIGNING BY THE CERTIFIER ...... 46

RSPOPC-SUM-REPORT.F01 MAY 2014 Page 3 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT

1.1 Company and Contact Details Company Name: Kuala Lumpur Kepong Berhad Business Address: 1, Jalan S.P. Seenivasagam, 30000 Ipoh, Perak. Contact Person: Mr. Sin Chuan Eng Office Telephone: +605 2417844 E-Mail: [email protected] Web Site: www.klk.com.my Other Certifications Held: RSPO SCCS, ISCC

1.2 RSPO Membership & Certification Details RSPO Membership Number: 1-0014-04-000-00 Registered Client Name: Kuala Lumpur Kepong Berhad Certificate Number: CU-RSPO-822632 Start Date Of Certificate: 10th September, 2013 End Date Of Certificate: 09th September, 2018 Date Of Original Certification: 10 September 2013 Scope: Certification of the Palm Oil Mill and Supply Bases Type Of Certification: Single site Duration Of Certificate: 5 Years from date of certification

1.3 Annual Surveillance Assessment Details Dates Of This Audit: 01st – 3rd June 2015 Audit Number: Annual Assessment 2

1.4 Assessment Type This assessment was conducted against the National Interpretation of RSPO Principles and Criteria [MYNI 2014] for the Sustainable Palm Oil Production - Endorsed by the RSPO Board of Governors on 06 March 2015.

1.5 Location of the Palm Oil Mill Name Mill Location GPS Reference Palm Oil Mill Capacity (POM) MT/Hour Address Longitude Latitude Batu 24, Jalan - KLK Tuan Mee POM 22 Kepong, 47000 Sg. Buloh, Selangor, E 101.463279 N 3.265156 Malaysia

1.6 Palm Oil Mill Output and Approximate Tonnages Certified Figures below are from:  Only from certified supply bases (Y/N). NO  Combining certified with uncertified supply bases (Y/N). YES  If the Mill is receiving FFB from uncertified supply bases outside the audit scope, such uncertified sources is highlighted under the following sections as seen applicable: a. PART 1, Section 1.7 – General Description of Supply Base, b. PART 2: Partial Certification, Section 2.4 – Uncertified Units or Holdings, c. PART 5: RSPO Supply Chain Certification of this report Projected Production from the Actual Production for this Audit Year Projected 12 Months (MT) Forecast last 12 Months (MT) 2014 (MT) Certified in this Report May 2015 to May 2014 to April 2015 May 2014 to April 2015 April 2016 FFB CPO PK FFB CPO PK FFB CPO PK 93,107 21,511 5,084 74,206 15,844 3,727 74,037 16,288 3,850

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

* Projected 12 Months Forecast- May 2015 – Jun 2016

1.7 General Description of Supply Base Located in Tuan Mee Estate, Lot 815, Ijok, District of Kuala Selangor, Selangor. Malaysia. The mill started its operation in July 1973 and has a capacity of 22 MT FFB / HR. This mill processed 70% of its own estate crop and another 30% [9 supply bases] of outside crop. Kombok estate and Ulu Pedas Estate which were previously supply bases for Tuan Mee POM are now certified under Padang Mill. Hence, these two estates are excluded from this year audit. This mill occasionally receives crops from other KLK's certified mills, when there is mill maintenance works.

1.7.1 Location of the Supply Base Oil Palm Area Summary (Ha) Location GPS reference OPP Plantation Updated March 2015 Name Address Longitude Latitude Total Mature Batu 24, Jalan Kuala Tuan Mee Selangor- Kepong, OPP 01 E 101.463279 N 3.265156 2,763 2,581 Estate 47000 Sg. Buloh, Selangor. TOTAL 2,763 2,581

1.7.2 Statistics of the Supply Base and Estimated Tonnes of FFB produced per year OPP Oil Palm Plantation Estimated FFB/Year (MT) Planting Years Cycle (Years) OPP 1 Tuan Mee Estate 74,037 1989 - 2015 25 - 30 TOTAL 74,037 - -

1.7.3 Conservation and HCV Area (Ha) * HCV part of OPP Oil Palm Plantation Conservation Area (Ha) HCV Area (Ha) Conservation OPP 1 Tuan Mee Estate - - - TOTAL - - - * Indicate if HCV area is part of the Conservation Area. If the HCV area is part of the Conservation Area, then “YES” otherwise, “No”

1.7.4 Percentage of Planted Oil Palm by different Age Ranges Planting Years by 5 year Ranges OPP 1989-1993 1994-1998 1999-2003 2004-2008 2009-2015 OPP 1 26.58 12.09 24.25 32.16 4.92 * Data update per May 2015.

1.7.5 Calculation of the Number of Production Units (N) to Sample for the Mill N = 0.8√Y, where “Y” is the number of units, with the result always to be rounded “up” to the next whole integer. Where only a sample of the supply base is assessed, units not previously assessed, or assessed earlier in the certification program, are to be preferred over those more recently assessed For the Mill, how many units make up the production base? Owned estates (Y) N = 0.8√Y Smallholders (Z) N = 0.8√Z 1 1 0 NA Explanation as to the selection of estates sampled 1 estate assessed.

1.8 Progress of associated Smallholders or Out-growers, if applicable to this assessment Progress of associated Smallholders or Out-growers towards Compliance with relevant Standards - should be in accordance to the 3 year implementation plan, if applicable to this assessment RSPOPC-SUM-REPORT.F01 MAY 2014 Page 5 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

There is no an associated smallholder or out grower (Not applicable for this audit).

1.9 Location Map for this Certification Unit (See Appendix 1)

PART 2: PARTIAL CERTIFICATION The rules for partial certification allow organizations that have a majority holding in and / or management control of more than one autonomous company growing oil palm to certify individual management units and / or subsidiary companies subject to certain rules.

2.1 Management Structure Section Criteria Yes/No If “Yes” If “No” 2.1.1 Is the certified operation (POM and supply base as No Section 2 is Go to 2.1.2 detailed above) a stand-alone operation and there are N/A no other plantations or mills owned by the same company? 2.1.2 Is the certified operation part of a simple structure of Yes Go to 2.1.5 Go to 2.1.3 operations owned by one company? 2.1.3 Are there statements of the ultimate controlling - Go to 2.1.4 Go to 2.2.1 shareholders and directors in the managing agency company/companies: a. Explaining the legal relationship and the management arrangements with the subsidiary companies and / or with any operating groups? 2.1.4 b. A statement of commitment to complying with the - Go to 2.4 Go to 2.2.2 spirit of the RSPO for all companies and subsidiaries involved with the growing of oil palm and for the production of palm oil? 2.1.5 Is there a time bound plan in place for all subsidiaries, Yes Go to 2.3 2.2.3 estates and palm oil mills? 2.1.6 Is the parent company or one of its majority owned and / Yes or managed subsidiaries a member of RSPO.

2.2 Non-compliance Identified with 2.1 Above Section Non-compliance findings NC raised Category 2.2.1 There is no explanation as to the company’s structure and therefore it - Major Is not possible to conduct an effective audit against the rules for partial certification. 2.2.2 There is no statement of commitment to complying with the spirit of - Major the RSPO for all companies within the company structure. 2.2.3 There is no time bound plan in place for the certification for all - Major subsidiaries, estates and mills. 2.2.4 No applicable membership of the RSPO. - Major

2.3 Summary of the Time Bound Plan Section Requirement Findings and any action required Compliance 2.3.1 Does the plan include New inclusion of supply base and mill has been updated in Yes all subsidiaries, below time bound plan. estates and mills? 2.3.2 Is the time bound Existing time bound plan has been included with new supply Yes plan challenging? base and mill.  Age of plantations.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

 Location.  Mill development.  Infrastructure.  Compliance with applicable law. 2.3.3 Have there been any The time bound plan reviewed by CUC and changes such as Yes changes since the last new inclusion is updated and accepted. audit? Are they justified? Due to compensation plan conclusion. 2.3.4 If there have been New inclusion of mill and supply base. No changes on the Yes changes, what targeted time line. circumstances have occurred? 2.3.5 Have there been any  Recent stakeholder comment on acquired land in Papua Yes stakeholder New Guinea on the credibility on land obtained has been comments? raised by OCEAN-Program Officer Collingwood Bay Community Representative, Mr. Adelbert Gangai has sent comments to KLK on a letter dated 5th December 2013 and kept RSPO & other parties in copy. Currently, KLK has leased a piece of a land to park all the machineries temporarily. As of 09 December 2013, this matter is being handled with RSPO and currently KLK is in progress to reply to RSPO. Wild Asia had been appointed since April 2013 to undertake SEIA assessment and subsequently 1st meeting at Wanigela district on 25th Nov 2013 and community and representative attended was recorded. Pending official assessment report. Note: Case was closed. See the RSPO website.  On PT Menteng Jaya Sawit Perdana IUP for 7,400Ha approval no: 525.26/153/II/EKBANG/2007 dated on 13 February 2007 and Izin Lokasi (IL) is renewed and documented no: 188.45/359/HUK-BPN/2013 dated: 1st August 2013 which includes an approval clause 1a that this IL will remain in force until land swap process is finalised. Note: Still in progress 2.3.6 Have there been any No. Yes newly acquired subsidiaries? 2.3.7 Have there been any No lapses. Yes isolated lapses in implementation of the plan? 2.3.8 Has there been any No. Yes systematic failure to proceed with the implementation of the plan? 2.3.9 General statement as The target to certify all the units within year 2017 remain Yes to progress made same. since the last audit?

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

2.4 Un-Certified Units or Holdings NOTE: Companies may demonstrate compliance by clear evidence of a self-audit (i.e. an internal audit for all subsidiaries, estates and Palm Oil Mills) Section Requirement Findings and any action required Compliance 2.4.1 Did the company The internal control points have included all the requirements Yes conduct an internal to validate the compliance against uncertified units or audit? If so, has a holdings as per partial requirements and assurance statement positive assurance has been generated by KLK has a list of subsidiaries inspected. statement been produced? Liberia is not required internal audit as it is part under EPO. 2.4.2 No replacement after Land Use Change Analysis did by ASENTA. Submitted to RSPO Yes dates defined in NIs 30th September 2014. Data that identified as HCV as per Criterion 7.3: below:  Primary forest.  Any area identified No Location Total HA HCV as containing High 1. PT MP 7,971 1,824 Conservation 2. PT HHM 7,317 748.30 Values (HCVs). 3. PT AKS 2,336 368.45  Any area required to 4. PT KMA 13, 148 58.36 maintain or enhance 5. PT MAP 9,056 787.11 HCVs in accordance 6. PT MJSB 5,893 234.85 with RSPO criterion 7.3. 2.4.3 Any new plantings PT Anugerah Surya Mandiri has undergone NPP and published Yes since January 1st 2010 in RSPO website on 1st April 2013. must comply with the RSPO New Plantings 2,786 Ha did NPP. Waiting the HCS study in November 2015 Procedure. 2.4.4 Any Land conflicts are PT Adei Plantation land conflicts around 2,544 Ha are still in Yes being resolved progress of negotiation. 730.51 Ha exclude for HGU PT Adei through a mutually 14,859.84 Ha. agreed process, e.g. RSPO Grievance procedure or Dispute Settlement Facility, in accordance with RSPO criteria 6.4, 7.5 and 7.6. 2.4.5 Any Labor disputes None noted. No stakeholder comments or complaints Yes are being resolved received through a mutually agreed process, in accordance with RSPO criterion 6.3. 2.4.6 Any Legal non- None noted. No stakeholder comments or complaints Yes compliance is being received. resolved in accordance with the legal requirements, with reference to RSPO criteria 2.1 and 2.2.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

TIME BOUNDP PLAN FORECAST FOR RSPO CERTIFICATION OF ALL PALM OIL MILLS & SUPPLY BASES

Supply Bases (estates, Targeted RSPO Current Certification Palm Oil Mill Country plantations, associations) Certification Year Status as per this Audit Pelam Estate Serdang, Batu Lintang Estate Batu Lintang Kedah, 2013 Certified Subur Estate Malaysia Buntar Estate Landak Estate Kekayaan Estate Voules Estate Sg Penggeli Estate Paloh, Johor, New Pogoh Estate Kekayaan Oct 2011 Certified Malaysia Fraser Estate Paloh Estate Sg Bekok Estate Ban Heng Estate See Sun Estate Ayer Hitam Estate Batang Jelai Estate Jeram Padang Estate Bahau, Negeri Kombok Estate Jeram Padang Sembilan, Ulu Pedas Estate Sept 2012 Certified Malaysia Sg Pertanian Estate Sg Kawang Estate Renjok Estate Tuan Estate Tanjung Changkat Asa Estate Tanjung Malim Malim, Perak, Kerling Estate 2013 Certified Malaysia Sg Gapi Estate , Tuan Mee Selangor, Tuan Mee Estate 2013 Certified Malaysia Kerilla Estate Kuala Krai, Pasir Gajah Estate Kuala Pertang Kelantan, By 2014 Certified Sg Sokor Estate Malaysia

Pang Burong Estate Tawau, Sri Kunak Estate Mill 2 Sabah, March 2009 Certified Tundong Estate Malaysia Ringlet Estate Jatika Estate Tawau, Sigalong Estate Pinang Sabah, March 2009 Certified Pangeran Estate Malaysia Pinang Estate Lahad Datu, Tungku Estate Lungmanis Sabah, Bukit Tabin Estate July 2010 Certified Malaysia Lungmanis Estate Lahad Datu, Rimmer Estate Rimmer Sabah, July 2010 Certified Sg. Sibalukan Malaysia RSPOPC-SUM-REPORT.F01 MAY 2014 Page 9 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Kinabatangan, Bornion Estate Bornion Sabah, July 2010 Certified Segar Usaha Estate Malaysia Lekir Estate Changkat Chermin Estate Manjung. Raja Hitam Estate Changkat Perak, Glenealy Estate 2013 Certified Chermin Malaysia Serapoh Estate Kuala Kangsar Estate Allagar Estate Kebun Malindomas Perkebunan, Berau, Kaltim, Kebun Hutan Hijau Mas, Berau 1 By 2016 Pending Indonesia Kebun Jabontara Ekakarsa, Kebun Anugrah Surya Mandiri Steelindo Belitung, Kebun Steelindo Wahana Wahana By 2013 Certified (2015) Indonesia Perkasa Perkasa Kebun Parit Sembada Belitung, Parit Sembada Kebun Alam Karya By 2015 Pending Indonesia Sejahtera Riau, Mandau Sumatera, Kebun Mandau Oct 2012 Certified Indonesia Riau, Nilo 1 Sumatera, Kebun Nilo Timur By 2013 Certified (2014) Indonesia Riau, Nilo 2 Sumatera, Kebun Nilo Barat By 2013 Certified (2014) Indonesia Riau, Kebun Sekarbumi Tapung Kanan Sumatera, By 2013 Certified. Alamlestari Indonesia Langkat, Kebun Basilam Sumatera Kebun Gohor Lama Gohor Lama By 2017 Pending Utara, Kebun Tanjung Beringin Indonesia (New inclusion)

Kebun Padang Brahrang Kebun Bukit Lawang Sumatera Padang Kebun Tanjung Keliling Utara, By 2017 Pending Brahrang Kebun Bekiun Indonesia Kebun Maryke (New Inclusion) Kebun Karya Makmur Kalimantan Abadi MAP March Tengah, Kebun MAP By 2017 Pending 2013 Indonesia Kebun Menteng Jaya Sawit Perdana With reference to time bound plan, the following issues were reviewed openly with the Control Union audit team during the assessment and which may be in conflict with the rules for partial certification, if applicable

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Name of Mill or Plantation *Area of concern (See examples below) N/A N/A Include any known concerns, media reports and major issues both present and from the past covering, for example:  Replacement of primary forest or any area containing HCV’s since November 2005.  Evidence of non-compliance with the law  Legal issues  Compensation payments  Social relations  Burning  Labor disputes

2.5 Summary of the findings for Partial Certification The audit team assessed compliance with the above requirements during this audit. Failure to address any non- compliance identified may lead to certification suspension. Under partial certification the main company and all its subsidiaries has been certified according to the initial time bound plan.

2.6 Partial Certification Audit Agenda Date Location Agenda 29/04/2015 Wisma Taiko Documentation review

PART 3: AUDIT PROCESS

3.1 About the Certification Body Control Union Certifications is a member of the Control Union World Group – an international inspection and certification body. CUC performs Audits and certification in many agricultural based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic Exchange, GLOBALGAP, HACCP, BRC, GMP and GTP. CUC is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CUC Organic program (according to the EU regulation 2092/91) and EUREPGAP program. When requested a copy of the accreditation certificate can be obtained from CUC.

3.2 Audit Team Lead auditor: Baskaran Sankaran Team member 1: Muhammad Syafiq bin Abd Razak Team member 2: Flora Anthonysamy Team member 3: Victor Soosai 3.2.1 Qualifications of the Lead Auditor Requirement Qualifications A minimum of post high school (post-secondary Certified ISO 9001:2000 and EMS 14001:2004 Lead school) training in either agriculture/forestry, Auditor. environmental science or social sciences; At least 5 years professional experience in area of More than 20 years of working experience in various work relevant to the assessment (e.g., palm oil industries. Trained in agriculture certification programs management; agriculture/forestry; ecology; social such as RSPO. science); Training in the practical application of the RSPO Involved in RSPO assessment since 2014. Member of CUC criteria, and RSPO certification systems; RSPO audit team. Involved in audits conducted in Malaysia and Indonesia. Successfully completion of an ISO 9000:19011 lead Completed ISO 9001:2008 and ISO 14001:2004 lead RSPOPC-SUM-REPORT.F01 MAY 2014 Page 11 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

auditors course; auditor course in 2006 & 2010. Training in the practical application of RSPO Involved in RSPO audits since 2014. Member of CUC RSPO certification systems. audit team, participated audits in Malaysia and Indonesia. A supervised period of training in practical auditing Involved in audits conducted in for many different against the RSPO criteria or similar sustainability companies in Malaysia and Indonesia. standards, with a minimum of 15 days audit experience and at least 3 audits at different organizations. RSPO endorsed lead auditors course. Completed RSPO Lead Auditor training in December 2014 Signed code of conduct. Yes General knowledge of: Yes  RSPO P&C standards. Yes  CUC organizational structure. Yes  CUC quality systems. Yes  Lead auditor role. Yes  Report writing. Yes  Stakeholder consultation. Yes  Certification decision process. Yes  RSPO SCCS program manual. Yes  CUC filing systems. Yes  Correct use of RSPO trademarks. Yes  History and objectives of RSPO. Yes  CV available. Yes Completion of CUC RSPO lead auditor training. Yes

3.2.2 Qualifications of the Assessment Team RSPO Requirement Team Member Name Qualifications

Fluent in main local Muhammad Syafiq Abd Razak Fluent in both English and Bahasa Malaysia languages and English. Flora Anthonysamy Fluent in both English and Bahasa Malaysia Victor Soosai Fluent in both English and Bahasa Malaysia

Field working Muhammad Syafiq Abd Razak Diploma in Plantation with more than 5 years experience in the palm working in various palm oil plantations. oil sector, or a Flora Anthonysamy Involved in RSPO audits since 2014. Member of demonstrable CUC RSPO audit team, participated audits in equivalent. Malaysia and Indonesia. Certified Lead Assessor for ISO 9001 and ISO 14001.Holds degree in Chemistry from UKM. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course.

Good agricultural Muhammad Syafiq Abd Razak Diploma in Plantation with more than 5 years practices (GAP), working in various palm oil plantations. integrated pest Flora Anthonysamy Involved in RSPO audits since 2014. Member of management (IPM), CUC RSPO audit team, participated audits in pesticide and fertilizer Malaysia and Indonesia. Certified Lead Assessor use. for ISO 9001 and ISO 14001.Holds degree in Chemistry from UKM. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor RSPOPC-SUM-REPORT.F01 MAY 2014 Page 12 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course.

Health and Safety Muhammad Syafiq Abd Razak Diploma in Plantation with more than 5 years auditing on the farm working in various palm oil plantations. and in processing Flora Anthonysamy Involved in RSPO audits since 2014. Member of facilities. (For example CUC RSPO audit team, participated audits in OHSAS 18001 or Malaysia and Indonesia. Certified Lead Assessor occupational. Health for ISO 9001 and ISO 14001.Holds degree in and safety assurance Chemistry from UKM. system). Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course.

Workers welfare issues Muhammad Syafiq Abd Razak Diploma in Plantation with more than 5 years and social auditing working in various palm oil plantations. experience. (For Flora Anthonysamy Involved in RSPO audits since 2014. Member of example with SA8000 or CUC RSPO audit team, participated audits in related social or ethical Malaysia and Indonesia. Certified Lead Assessor accountability codes). for ISO 9001 and ISO 14001.Holds degree in Chemistry from UKM. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course.

Environmental and Muhammad Syafiq Abd Razak Diploma in Plantation with more than 5 years ecological auditing. (For working in various palm oil plantations. example experience Flora Anthonysamy Involved in RSPO audits since 2014. Member of with organic agriculture, CUC RSPO audit team, participated audits in ISO 14001 or Malaysia and Indonesia. Certified Lead Assessor environmental for ISO 9001 and ISO 14001. Holds degree in management systems). Chemistry from UKM. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course.

Economic issues. Baskaran Sankaran Involved in RSPO auditing since September 2014. Qualified ISO 9001QMS and ISO 14001EMS Lead Auditor. 7 years of auditing experience in quality, environment and occupational health and safety. Muhammad Syafiq Abd Razak More than 5 years working experience oil palm plantations. Qualified in QMS and RSPO Auditor. Flora Anthonysamy Involved in RSPO audits since 2014. Member of CUC RSPO audit team, participated audits in Malaysia and Indonesia. Certified Lead Assessor RSPOPC-SUM-REPORT.F01 MAY 2014 Page 13 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

for ISO 9001 and ISO 14001.Holds degree in Chemistry from UKM. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course.

3.3 Audit Methodology 3.3.1 General Overview The Audit was carried out in conformity with the procedures as laid down in the CUC Procedure Manual and the RSPO Program Manual for the auditors and Certifier. During the Audit the qualified CUC auditors used the RSPO standard as endorsed for the country in which the audit took place and recorded their findings. Workers and local communities were interviewed and evidence sought to confirm ongoing compliance to include:  Chemical stores. Storage, MSDS leaflets, Herbicide mixing areas, PPE, Ventilation, Security.  Field inspections. Herbicide application programs. Harvesting sites and efficiency. Fertilizing operations. SOP’s. Soil maps. Land preparation. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations.  Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts. Child labor. First aid. Awareness.

 Re-planting sites. Zero burn.  HCV’s. Identification. Management plans. Environmental Impact Assessments. Implementation.  Riparian zones. Width. Current and future management. Non maintenance regimes.  Water management. Water courses. Water monitoring.  Road maintenance. Run off.  Social amenities. Social Impact Audits.  Local communities. Contributions made. Employment opportunities. Social impacts. Complaints procedures.  Workshops. Oil traps. Safe working environment. PPE. Diesel tanks. Environmental waste management.  Line sites. Interviews with householders. Inspection of water discharge points. Water improvement plans. Waste disposal.  Documentation review.

The Palm Oil Mill audit verification included the following activities:  Mill and workshop inspections. Documentation review & worker interviews.  Mill. SOP’s. Safe working environment. Gen sets. Walk ways. Signs. EFB. POME treatment. Emissions. Mass balance. Diesel tanks. PPE. Fire extinguishers. First aiders and boxes. Fuel and water usage.  OSH. Training. Management structure. First aiders.  Full document review. Completion of the checklist. Review and documentation of evidence. All aspects of RSPO P&C’s applicable.  Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts.  Compliance against the RSPO SCCS certification scheme. Verification: Verification of implementation was done through field observations, workshop and chemical store inspections, worker and community interviews and mill inspections as summarized above.

3.3.2 Assessment agenda for this Audit Date Location Auditors Main activities 01/06/2015 Tuan Mee Baskaran 08.30 Opening meeting [Mon] POM Office Shafiq Chaired by the audit team leader RSPOPC-SUM-REPORT.F01 MAY 2014 Page 14 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Flora  Introduction by team leader Victor  Presentation by respective managers  Presentation of Palm Oil Mill source of FFB by respective managers 0900 – 1700: RSPO P&C  Document review [EIA, SIA, CIP, Business Plan] Baskaran  POM application Shafiq  Flora Safety and Health Victor  Waste Management / Environment  Legal compliance / boundary Tuan Mee  Chemical Stores POM  Complaint mechanism / Request & respond

 Worker interviews / Human Rights / Transparency

Worker’s facilities (housing, pay, etc)

Syafiq Supply Chain Certification Assessment of the POM (RSPO SCCS) 0900 – 1600: RSPO P&C Baskaran  Document review [EIA, SIA, CIP, Business Plan] Shafiq  Best agricultural practices Flora Victor  Manuring, Spraying, Harvesting,  HCV / Conservation Area 02/06/2015 Tuan Mee  Safety and Health [Tues] Estate  Waste Management / Environment  Legal compliance / boundary  Chemical / Pesticide / Fertilizer Stores  Complaint mechanism / Request & respond  Worker interviews / Human Rights / Transparency Worker’s facilities (housing, pay, etc) Preparation for closing meeting Additional field visits and meetings with managers as necessary Closing meeting Chaired by the audit team leader 03/06/2015 Tuan Mee All  Welcome and introduction by the team leader [Wed] Estate auditors  Presentation of findings by the audit team  Questions and answers  Final summary by team leader End of assessment

PART 4 ASSESSMENT FINDINGS

4.1 Lead Assessor’s Summary and Recommendation for Certification The mill and supply base visited (as per the above Tables 1.5 and 1.7.1) were assessed at field, office, facilities, stores and a document review was carried out in accordance to the RSPO principles and criteria. The audited RSPO management system’s documentations seen with minor changes that due to internal and external influenced factors that in relation to scope of certification. Specific evidence was recorded for estate and mill. Interviews with Estate Manager, Mill Manager, members of workers union and committee took place in both formal and informal environments and worker interviews were conducted at the supply base and the mill. The management is highly committed in maintaining the RSPO system by adopting to continuous improvement programs. There was no complaint or feedback received during the audit or during the field assessment when interviewing with the external stakeholders.

Under partial certification rules, there is a time-bound plan established. For further clarification on Partial RSPOPC-SUM-REPORT.F01 MAY 2014 Page 15 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Certification, see PART 2 above. The management continually monitoring the established KPI / objectives that significantly rules the achievement of company’s corporate policy on RSPO. The mill is fully verified for RSPO SCCS system verification and it is found to be in full compliance. See PART 5 below It is therefore the recommendation of the lead assessor that:  A certificate of compliance is maintained.

Signed: Name: Baskaran Sankaran Date: 03/06/2015

4.2 Summary of the findings by Principles and Criteria  Over the 5 year period of the life of the certificate, there will be 4 annual surveillance audits  Identified Non-Conformities and noteworthy Positive and Negative Observations.  The RSPO require that this report contain findings by each principle and some example criteria. Please see table below.

Principle 1: Commitment to Transparency Criterion by The company has maintained adequate records of request made by its Audit stakeholders and as well as well documented evidence of response which is Summary publicly available. It has adhered to centralized SOP which has outlined documents that need to publicly available as defined in the RSPO P&C. ASA 2 1.1 SOP for stakeholder request for information is available in SOP #1 titled “Stakeholders Engagement / Negotiation”, for consultation & meeting, and complaint & grievance with rev 2 dated 1/3/13. Requests are recorded and being provided in appropriate languages and forms, once completed stakeholders shall then acknowledge the completed action and response.

The mill’s last stakeholder meeting was held on 21/05/2015 for FFB suppliers and on 22/05/2015 for hardware suppliers and others interested parties. While the estate stakeholders meeting which was conducted by Estate’s Senior Assistant manager on 26/05/2015, attended by contractors, suppliers, union representative and local authorities.

The stake holder meeting minutes were maintained by both mill the estate. Also sighted records of stakeholders request and respond compilation which were effectively responded by the mill and estate were maintained in the logbook.

ASA 2 1.2 The SOP # 9 titled “Master list of Documents” stating on what are the documents and records that being approved by the management for public view. The publicly available documents are land title, safety and health plan, environmental plan, social plan, SIA, EIA, pollution prevention plan, complain and grievances, FFB Price , CIP, etc.

The mill and estate has adopted “KLK Sustainability Policy” that signed by company’s CEO Tan Sri Dato’ Seri Lee Oi Hian which has outlined commitment statement includes no deforestation, protection of peat areas, drive positive socio-economic impact for people and communities, respect and support the universal declaration of human rights, respect and recognize the rights of all employees, etc. RSPOPC-SUM-REPORT.F01 MAY 2014 Page 16 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

The estates land titles showing legal ownership are available The estate consists of following eight land titles under the ownership of Kula Lumpur Kepong Bhd. Sighted Land Title # 5955, 36411, 8867, 37850, 4465, 21698, 4466 & 37851.

Occupational health and safety plans have been established by the company for both mill and estate to assess, control, monitor and reduce occupational safety and health risks at workplace. Hazard identification, Risk assessment and Determine Control (HIRADC) exercise have carried out periodically by management and sighted last review and updated record for the mill dated on 04/08/2014 and estate dated 01/01/14. Occupational safety & health policy dated 07/01/20114 which was approved by group plantation director is in place. Health and Safety Committee has been established both mill and estate and headed by respective managers. Occupational health and safety training programmes to educate workforce are established on annual basis and records of training conducted are maintained.

Stakeholders meetings were held on 21/05/2015 for the mill and on 26/05/15 for the estate. Stakeholders consist of contactors and suppliers. Records of stakeholder meeting minutes, attendance and log book are maintained.

The company has conducted environmental aspect and impact assessment for all its’ activities in year 2010. It assessment are being reviewed on annual basis and updated records are maintained. The last review and update were done on 10/10/2014 for the mill and on 02/02/2015 for the estate.

HCV assessment was conducted on 22/12/2012 by the estate management staff based on document titled “HCV/Conservation Area Assessment” SOP#10, which was established by company’s Sustainability Department using guidance from HCV Forest Toolkit for Malaysia, edition Oct 2009. The assessment finding shows there is no HCV or RTE species identified for the estate.

ASA 2 1.3 The company has established and documented “KLK Sustainability Policy” which committing to a code of ethical conduct and integrity in all operations and transactions such as no deforestation, protection not peat areas, respect and recognize rights of all employees, etc. This policy has been communicated to its employees through training. Sighted training record on company’s sustainability policy conducted by Mr Kamrul Annuar dated 24/04/2015 for the mill on 24 & 26/04/2015 for the estate which were attended by 280 employees which are been maintained by the management.

Principle 2: Compliance with Applicable Laws and Regulations Criterion by The mill and estate have demonstrated compliance to all applicable laws and Audit regulations. Legal ownership of land and its land use is clearly demonstrated Summary through the respective land titles. Boundaries have been clearly demarcated. There have been no land disputes or claims involving the mill and estate. ASA 2 2.1 The company has established SOP # 2, titled “Legal Compliance” dated 01- 03-2013 for identification, implementation & compliance and review of legal requirements applicable to the company. Identification and compliance to legal requirements are recorded the company’s legal register. The legal

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

register has identified relevant applicable legal laws and regulations, Licences, Permits, Certificates and compliances status in document titled “List & Summary of Applicable Laws & Regulations” under SOP#2.0, appendix 1, Issue 2, Rev.0, dated 01/03/2013. Following are some of the legislations and legal requirements identified in the register as follows: - OSHA and Regulations Act 1994 - Factories and Machinery Act with Regulations Act 139 - National Land Code 1965 - Environmental Quality Act 1974 - Pesticides Act and Regulations Act 149 - Poison Act Regulations 1952 (Act 356) - Industrial Relations Act and Regulation Act 177 - Workmen’s Compensation Act 1952 - Trade Union Act 1959 - Land Acquisition Act 1960 - Sales Tax Act 1972 - MPOB Licence - Diesel and petrol permits - Road Transport Act 1987 (Act 333)

Company’s compliance status has been stated for each of the law identified in status column of the legal register Master List. A total of 80 legal laws been identified in the legal register. To ensure legal compliance at all time, the management has established “Legal Compliance Checklist” to check applicable permits were maintained & monitored as per SOP # 2. It was last updated on 01/03/2015. Sighted records of following permits / licenses that need to annually renew such as: - Fire extinguisher – Exp on 16/05/2016 - Foreign Worker Permit – Exp. 16/05/2016 - MPOB Tuan Mee POM – Exp. 16/04/2016 - Takuma Boiler – Exp. 08/05/2016 - Back Pressure Receiver – Exp. 08/05/2016 - Diesel License – Exp. 21/02/2016 Management reviews the legal register whenever there is change made to laws and regulations by keeping track of legal updates by the means of enquiring the laws books publisher and maintaining communication with law/enforcement officers.

ASA 2 2.2 There is no land conflict or dispute recorded for the land titles which is starting from the 1975. The estate’s land titles are legally identified and documented and boundaries are clearly demarcated. The mill is located within the estate boundaries. The estate land titles showing legal ownership are available. The estate consists of following eight land titles under the ownership of Kula Lumpur Kepong Bhd. Sighted Land Title # 5955, 36411, 8867, 37850, 4465, 21698, 4466 & 37851. There is no evidence of land conflict and dispute detected during the audit.

ASA 2 2.3 Estate’s legal boundaries have been clearly marked in the boundary stone map. The estate land ownership is liaise with Kula Lumpur Kepong Bhd. through the legal land titles and there is no evidence of any conflict or dispute since purchase of the land in 1975. There is no new planting or acquire of new land noticed during the audit. RSPOPC-SUM-REPORT.F01 MAY 2014 Page 18 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Principle 3: Commitment to Long-Term Economic and Financial Viability Criterion by A documented business plan available both at mill and estate. The annual Audit budget includes of FFB yield/ha, OER, CPO yield/ha and cost of production. Summary Seen the top management able to demonstrate attention to economic and financial viability through long-term management planning. Replanting programme for the estate is also available for estate with replanting activities. ASA 2 3.1 Annual financial plan for 2015/2016 is available for the mill crude palm oil that includes cost for all operations such as supervision, labour wages and overtime, power generation, water supply, repairs to building, etc. Estimated crop from contributing estates which certified (Tuan Mee estate) and uncertified sources are available for year 2014/2015 and 2015/2016 as below:

YEAR Cert./Uncert. FFB (MT) CPO (T) KERNEL (T) Certified 80,633 17,738 4,193 2014/2015 Uncertified 17,860 3,929 929 Certified 74,037 16,288 3,850 2015/2016 Uncertified 19,100 4,202 992

For 2015, estimated production of FFB in m tonnes is 80,633 and Crude Palm Oil 17,738. Kernel production in m tonnes for 2014 estimated amounts is 4,193. There are details expenditure estimates for financial year 2014/2015 It includes capital expenditure and indirect cost. No scheme smallholder.

Tuan Mee estate has established Business management plan for year 2014/2015 and 2015/2016. For year 2014/2015, estimates FFB production is 65,443 MT where average hectare is 2581 hector and 25.35 kg of yield is being estimated for each hectare. Summary of expenditure estimates for financial year 2014/20145 are RM 15,018,967 for total revenue and RM 676,560 for total capital expenditure.

Tuan Mee Estate has replanting program for 2014/2015 up to 2022/2023. The replanting program can be summarize as below:

YEAR FIELD TOTAL HA 2015/2016 CA 89A/111AA 111 2016/2017 TM 90A/94AA 94 TM 91A/70AA 70 2017/2018 CH90C/76AA 76 CH90D/44AA 44 CH89D/35AA 35 2018/2019 CH92D/64AA 64 CH90F/30AA 30 2019/2020 CH02A/103AA 103

Principle 4: Use of Appropriate Best Practices by Growers and Millers Criterion by The mill and estate have a complete set of GAP, SOP and SaOP which is being Audit strictly adhered to and continuously monitored. Soil fertility is being maintained in the fields and IPM is being implemented in all the estate. They use chemicals that are in accordance with the regulations. There is a Summary comprehensive OSH policy and is being implemented throughout the all operating units. Improvement sighted in the identification and assessment with HIRARC. Trainings are being carried out as per the Annual Training Plan. (1 Minor NC issued) ASA 2 4.1 The company has established Sustainable Palm Oil Manual Issue 2, Dated 01/03/2013 governing both mill and the estate. The mill has two category of RSPOPC-SUM-REPORT.F01 MAY 2014 Page 19 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

operating procedures; Standard Operating Procedure (SOP) and Safety Operating Procedure (SaOP).

The Standard Operation Procedures which applicable for both mill and estate have outlined important processes to be maintained to ensure appropriate best practices are deployed for betterment of all stakeholders. The SOPs include: o Stakeholders Engagement o Legal Compliance o Acquisition of Land( Oil Palm Planting) o Surface and Ground Water Management o Training o Control of Document & Records o Environment Impact Assessment o Waste Management and Energy Use o Supply Chain o Internal Audit Procedure o Trade and Shipping

SOP for mill include supply chain requirements. During the audit sighted SOP # 18 for supply chain which consist information such as receiving material, processing material, dispatching material, etc. in company’s Sustainable Palm Oil Manual dated on 01.03.2013. Sighted records of FFB received. FFB received is recorded with the origin place, delivery note number, date, time in & out, vehicle reg. number, driver details and weight (kg) , viewed documents and report for April 2015. The weighbridge clerk well trained and able to segregated record between internal and external supplier. Sighted Staff Training record for weighbridge clerk B. Santhy, training was conducted by supervisor BH Chai . Mill also prepared “FFB Daily Contributors Summary Report” document that contains summary of all FFB received daily includes name of origin and total tonnage.

Trainings are being provided by the mill management for employees who are performing task following the company SOPs. Sighted training records for following processes.

o Weighbridge o Loading Ramp o Sterilizer Station o Hoisting & Threshing Station o Empty bunch Hopper o Press & digester Station o Clarification Station o Depericarper Station o Nut & Kernel Station o Boiler Station

The estate has implemented Good Agricultural Practices (GAP). During the audit sighted company’s GAP policy no GP/AGRIC/OP, dated 15 May-2014. GAP manual is covering operations from land clearing, replanting, harvesting, up keeping, Roads & Drains. Estate has furnished SOP for all stage of operations and in accordance with RSPO requirements issue no. 9 dated 01- 01-2014. The SOP is covering operations from land clearing, safety of spray equipment for spray operation, workshop workers, water treatment plant, chemical handlers, replanting, harvesting, buffalo handling, fertilizer RSPOPC-SUM-REPORT.F01 MAY 2014 Page 20 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

applications, up keeping, Roads & Drains ,etc. For replanting, the Group policy shown in No: GP/AGRIC/OP7, issue 15 June 2005

The company uses Internal audit as a one of the mechanisms to check consistent implementation of company procedures. Sighted report of internal audit report for year 2015. The internal audit was conducted from 14 to 16/04/2014. There are 22 NC was raised by during the internal audit and all NC were closed before the external audit date. The company’s OSH committee also performs internal inspections on adherence of SOPs and holds safety meetings. Daily monitoring of procedures and quality is carry out by mill assistant to ensure all workers and machinery in good order and according to the SOP. Sample of daily monitoring sighted such as number of manpower, machinery inspection such sterilization station check sheet, crane station check sheet, auto feeder check sheet, press station check sheet and etc. Quality monitoring includes of sampling of product and tested by internal laboratory. This analysis includes FFA, VM & DOBI testing for CPO and VM, Dirt & stone for Kernel.

ASA 2 4.2 Sighted the SOP 4.0 dated on 01/03/2013 for "Soil Erosion & Fertility and Road Maintenance". The GAP starts from the survey by Agronomist (Applied Agricultural Resources Sdn. Bhd) by Chen Zi Yan. The report includes recommendation for fertilizer application. The site visit was done on 23 &25 June 2014. The Agronomist and Estate Manager to review the applied practices periodically [at minimum half yearly]. Soil improvement plan includes in Fertilizer recommendations from TQCC based on soil and foliar sampling annually.

In the estate sighted the AAR "Oil Palm Manuring Recommendations for 2014/2015" – ZY/Advisory/ 2014/Tuan Mee/mrrpt1 date on 24 July 2014. Analysis and recommendation was carry out by Apply Agriculture Resources (AAR). Mean Yield to date 2013 was at 23.1 m ton per ha, showed 5% below the year yield. Details of yield analysis conclude that estate yield (Oct 2013 – Feb 2014) was still below optimum hence the necessary corrective action recommended needs to be taken. Sighted the fertilizer application records for Nov'14 – April 2015. Sampled following record for April 2015.

Field HA Fertilizer Rate[KG] Bags Date type 92A/103 103 Ammonia 1.25 360 23-28/04 Chloride 08A/66 66 Kieserite 2.00 359 28-29/05

ASA 2 4.3 In the estate sighted the SOP 4.0 dated on 01/03/2013 for "Soil Erosion & Fertility and Road Maintenance". There are 5 types of soil identified in the estate soil map (AAR/18/11/2010). The soil types that identified by AAR Laboratory are : - Batu Lapan, - Bungor, - Local alluvium, - Munchong and - Serdang. There is no peat soil identified for the estate.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Slopes area which is exceed the 25 degrees are maintain in accordance with the company SOP. Road Maintenance SOP and plan is specified in SOP # 4, Issue 2, dated 1/3/2013. Road maintenance program dated 01/09/2013 is available in Appendix 2 of SOP 4. Road maintenance work has been completed on field for Feb & March 2015. Sighted road maintenance work that been recorded in picture forms. ASA 2 4.4 Mill’s water management plan has been sighted in the SOP 5 dated 01/03/2013. Mill water is sourced from the Water Lagoon that is near to the mill area. Water is treated and used for processing operation. Sighted latest water analysis date on 03/05/14 using parameters such as pH, COD, BOD, TN, AN, TS & SS. The water was tested by TQCC Laboratory.

Waste water is treated in six (6) POME aerobic & anaerobic pond system reserved and is applied as land application to estate to maintain the soil fertility. Sighted latest water analysis conducted on 03 April 2015 and 11 May 2015 for final discharge. Parameter measured such as BOD, pH, TN, AN, SS and O&G maximum BOD as per DOE limit 5000 ppm. Test result as follow:

BOD (mg/l) COD (mg/l) Final Discharge Sample 79 674 (11 May15) Final Discharge Sample 50 369 (3 April 15)

Monitoring of the water usage per FFB is recorded and available. Sampled water treatment record: Month Water usage m3/mt FFB February 2015 1.34 m3/mt FFB March 2015 1.24 m3/mt FFB

There is water management plan established for the plantation under the SOP dated on 01/04/2012. The plan dated April 2014 was prepared Lee Wei Shin. The estate only uses water supply from 2 tube wells which were installed on 21 Dec 2011. There is no river or watercourse in estate area. ASA 2 4.5 In Tuan Mee Estate, the implementation of IPM is based on the SOP # 7.0 integrated pest management dated 01/04/2012. The SOP contains information regarding on the implementation of IPM. Including Spraying, Trunk injection and Rat baiting. Pest and Disease is in use Policy No.GP/ AGRIC/ OP4 available at estate. The Pest (Bagworms) treatment programme was sighted. The programme also provides the necessary guideline to eliminate the pest. Estates barn owl census record is well maintained. Rat attacks are monitored by Rat census conducted when attack was sighted at the FFB. ASA 2 4.6 Annual agrochemicals recommendation from AA (Applied agricultural resources S/B) for 2014/2015. SOP 6 on Safe use of agrochemicals, 01-02- 2012, mentioning on justification of agrochemicals used and its hazards to health. List of Hazardous Chemical Record is available. Sighted license for Methamidophos and there are total of 29 chemical items recorded for spraying.

The estate has established plan to reduce pesticides such as Ebor bait includes maintenance a barn owl in the field. Major pest is rat and barn owl to

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

attract the natural predator for rat, Owl. For herbicides, estate was currently practising only circle and spot sprays. This is to minimize the usage quantity and reduce the risk. Class 1a pesticide, Enforce (Methamidophos) used in specific situation where bagworm attacks exceed than a level. Usage of this pesticide was under control from local Agricultural Department as letter no. SG/METHA(GL)/15/004. No class I herbicides use in the estate including Paraquat. There is plan to reduce class 1a chemical by planting a beneficial plant such Tunera subulata and Mucuna. Using the new generation of rat bait (Ebor) was reduce toxicity of bait from class II to currently class IV. Part from the plan, all equipment ben daily calibrated to ensure efficiency of chemical usage. Calibration records are well maintained.

Application chemical products in the field are under controlled and only can be carried out by qualified workers who have attended specific training. Estate management has conducted training for sprayers who are specialized in handling the chemical. The training was conducted on 26 Feb 2015 under the title of “Training – Spraying Pump Maintaining and Spraying Technique) ” which was attended by 30 personals. Sighted attendance list which is maintained at office. Training was conducted by Mr. Heng ( Mycrop)

Tuan Mee estate has planned to reduce pesticides such as Ebor bait includes in maintenance a barn owl in the field. Major pest is rat and barn owl to attract the natural predator for rat, Owl.

All sprayers are provided with proper PPE such as mask, apron, gloves and rubber boot. Mixing of the chemicals carried out at mixing area provided by estate which is under control and secure environment. During the site visit noticed spraying is done using the proper equipment (knapsack) and well maintained. All chemical activities are accordance to the company procedure and good agriculture practices.

Mill and estate waste management is included in the EIA and Pollution Prevention Plan documents. Wastes identified includes scheduled waste (SW) as: i. SW410 – Used gloves & rags ii. SW409 – Chemical containers iii. SW322 – Hexane iv. SW306 – Hydraulic oil v. SW305 – Lubricant oil. Scheduled wastes are collected by licensed waste collector. Last collection of Schedule waste was done on 25/3/2014 by ECODRUM SDN. BHD. A valid license from the waste collector was sighted.

Annual medical surveillance programme available for both mill and estate. Medical surveillance was conducted by Kilinik Medisafe for the mill workers and Kilinik Saujana the estate workers. Last medical annual medical surveillance tests was done in April 2015, for 21 sprayers records and sighted the medical records that maintained by the estate. Records clearly shows there is no pregnant or breast-feeding woman assigned for chemical handlings works both at estate and the mill.

Minor NC All sprayers are provided with proper PPE such as mask, apron, gloves and

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

rubber boot. However, eye protective equipment such as goggles was not identified as PPE to minimize health risk to sprayers. (Minor NC) ASA 2 4.7 The company has established Safety and Health Policy covering both the mill and estate. Sighted that occupational Safety & Health policy dated 07/11/2014 which was approved by group plantation director. In compliance with DOSH requirement, both the mill estate has established safety and health committee.

Mill’s health and safety committee is headed by the mill Manager. Last safety and health committee meeting was held on 9th April 2015. The mill developed OSH plan for year 2015. OSH Objective for 2015 is to create safe working environment by reducing accident to Zero Level compare to last year. Target for 2015, safety knowledgeable for workers by end of year 2015, with Zero Accident. Estate’s health and safety committee is headed by the estate Manager En. Mohmad Azman. Last safety and health committee meeting was held on 7th May 2015. The meeting was attended by 17 of its committee members.

The mill has conducted hazard identification, risk analysis and risk control measure taken for high risk activities. Latest HIRARC revised on 04/08/2014 conducted by Jayvinesh Ramachandran – Assistant manager. HIRARC is consist of hazard identification (type of work activity, hazard & effect) Risk analysis (Existing risk control, likelihood, severity & risk) & Risk Control (Recommended control measures & PIC). HIRARC sighted sample such Reception Station, Sterilization and Bunch Fruit, Capstan, Threshing FFB, Boiler station and products dispatch.

In estates, the HIRARC assessment was updated date on 01/01/14. All activities in estate operation have been assessed to determine the risk and hazard. Next revision on 2015. CHRA conducted by the third party consultant, Procoma Environmental (M) Sdn Bhd. Date of assessment is 17/12/2012. (DOSH no. PK/05/04/1166) CHRA will be revised every 5 years or if any changes in operation. Also available, “Chemical Exposure Monitoring Report” date on 19 Sept 2013 also is prepared by same consultant.

Annual plan for OSH programme 2015- 2019 available which has outlined training on SOP and health talk for sprayers, training on Safety in Harvester, training on PPE, SOP training for tractor and OSH meeting. Objective for OSH for 2015 is includes, to 100% comply with OSHA 1996 regulation, Zero accident at work places, explain to workers on hazard of chemicals use and create awareness among the workers with cleanliness and safety aspect.

In the mill and estate, accidents are handled according to the national OSH department (JKKP) includes reporting any accident case, investigation and calculate of LTA. Mill has sent JKKP 8 (I & II)/(IV) on annually basis to the DOSH. LTA calculation based on local interpretation from DOSH. Management review on the end of year will determine the total LTA and report to DOSH by JKKP 8 Form above. Estate workers are covered by two type of insurance. SOCSO For local workers. Each local worker is entitled to contribute to SOCSO based on checked pays lip. Foreign workers – Group insurance consist of all workers from India, Nepal, Indonesia & Bangladesh by AXA insurance the policy.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

ASA 2 4.8 The mill and estate have established a formal training programme as that cover all aspects of RSPO Principles and Criteria as evident in ‘Annual Prgoramme on OSH for Tuan Mee POM – 2015”. All workers training needs has been evaluated as evident in HIRARC form recommendation. The training programme has included the productivity and best management practices in the mill operations. All staffs training records are available in Annual Prgoramme on OSH for Tuan Mee POM - 2015. All workers and staffs met during the audit are found competent in doing all tasks. Records of training for each employee are maintained at both mill and estate. Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity Criterion by Environmental Impact Assessment has been carried out by the mill and Audit estate. A comprehensive identification of all waste has been recorded and Summary disposal of scheduled waste has been carried out by an approved and registered collector. Monitoring and analysis of waste is carried out regularly. The company is in full compliance to Principal 5. ASA 2 5.1 The company has re-established Environmental Impact Assessment Procedure titled “Environmental Impact Assessment” SOP # 10.0 dated 01/03/2013 which used by both mill and the estate. It has conducted environmental aspect and impact assessment for all its’ activities in year 2010. It has been reviewed on annual basis. The last reviewed and update was done on 10/10/2014 in company’s “Environmental Impact Assessment (EIA) & Pollution Prevention Plan (Maintenance and Inspection)” and last updated on 01/03/2015.

Mill’s environmental impact assessment has covered key processes such as FFB Intake, Ramp station, Sterilization, Threshing, Digestion, Pressing Station, Oil Room, Boiler House, power station, etc. Environmental Impact / Risk Matrix and Risk / Impact Value Table have been established in its environmental aspect – impact Register. Environmental severity levels are classified in 5 categories: Insignificant, minor, moderate, major, Catastrophic. Finally the environmental ratings are classified as low, medium and high. Activities such as power station, effluent treatment, nut cracking stations are identified as high for the mill which has mitigation measures accompanied to minimize the environmental impacts. The environmental register has identified columns for Process, activities, pollution, frequency, Impact, risk level, mitigation measure, responsible person and status. All the columns are appropriately filled in with required assessment information.

Due to no changes identified in the mill operation, therefore no timetable for any change is required. During mill visit, the EIA was used as guide and no discrepancy found. The EIA is planned and being review on annual basis. The recent review was on 01/03/2015. Prepared by Sr. Mill Assistant (Mr. Jayvinesh) and approved by Mill Manager (Mr. George Jaya Kumar). For significant environmental impact the company has identified as high and accompanied with mitigation measures to reduce its impacts. Monitoring plans are incorporated in the “Environmental Impact Assessment (EIA) & Pollution Prevention Plan (Maintenance and Inspection)” register.

Estate’s environmental impact assessment is being reviewed on annual basis and previous review was done in 02/02/2015. The EIA assessment findings are recorded in document titled “Environmental Impact Assessment (EIA) & Pollution Prevention Plan “. The environmental impact assessment has covered all activities of the plantation such as nursery, immature area, matured area, harvesting, chemical spraying, transportation and etc. The environmental register has identified columns for Process, activities, RSPOPC-SUM-REPORT.F01 MAY 2014 Page 25 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

pollution, frequency, Impact, risk level, mitigation measure, responsible person and status. All the columns are appropriately filled in with required assessment information.

There is no change identified for the operation activities. Negative impact were identified during the above assessment, sufficient mitigation measures action plan have been taken. During the site visit noticed water tank and fire extinguisher were sighted in standby mode. The ERP team also will react for others emergency case as well such a flood and chemical spillage.

The EIA is planned and being review on annual basis. The recent review was on 02/02/2015. Prepared by Estate Assistant (Mr. Shaifuddin ) and approved by Assistant General Manager (Mr. Mohmad Azman Abdul Majid) Mitigation measures are reviewed on annual basis, and its effectiveness are monitored during internal audit. The effectiveness of control measures last reviewed during recent internal audit which was conducted on 16rd March 2015. ASA 2 5.2 HCV assessment was conducted on 22/12/2012 by the estate management staff based on document titled “HCV/Conservation Area Assessment” SOP#10, which was established by company’s Sustainability Department using guidance from HCV Forest Toolkit for Malaysia, edition Oct 2009. The assessment finding shows there is no HCV was found for the estate.

From the assessment finding, there is no RTE species identified for the estate. Also there is no traditional community and no river run across or near to the estate’s boarders. ASA 2 5.3 The mill has identified waste generated from its activities under the SOP 12 which was established in 01/03/2013. Waste generated by the mill has been documented under document titled “Identification of All Waste Products and Operational Plan to Reduce Pollution”. It also has established waste management plan with the objective to maximize recycling and minimize the pollution. Operational Plan contains details such as waste products / sources of pollutions / mitigation measures / Target & Person Responsible. List of waste is updated on annually basis.

Waste list is separated by scheduled waste & and common waste as below:

Scheduled Waste i. Spent lubricating oil ii. Spent oil filter iii. Spent batteries iv. Empty chemical containers v. Used Rags

By Product Waste i. EFB, decanter cake and POME effluent - recycle to estate as added product ii. Blake smoke / dust - frequent furnace cleaning iii. Fibre and shell - use as boiler fuel iv. Scrap irons v. Household rubbish

The waste management plan has also identified source of pollution, mitigation measures, target, person responsible, and status. Example: Spent lubricant oilVehicle and MachineryDisposed by DOE approved ContractorDispose at least once a year Mohamad Zaki Jamaludin RSPOPC-SUM-REPORT.F01 MAY 2014 Page 26 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Disposed on 26/01/2015.

Mill’s chemical wastes and other scheduled wastes are disposed through a DOE registered schedule waste disposal contractor as per DOE requirements. Waste disposal documents sighted for disposal of SW 305 / SW 306 / SW 307/ SW 312 by A&C Technology Waste Oil Sdn. Bhd. Contractor License No : 001350 (Expired on 30th April 2016). On 25/03/2014 mill’s empty drums (SW 409) were disposed by SW Contractor ECODRUM Sdn. Bhd. The Contractor has valid licence from DOE to collect scheduled wastes (Licence No : 000557 which Expires on 30th April 2016).

Tuan Mee Estate’s sources of wastes are well identified in the "Environmental Impacts Assessment & Pollution Prevention Plan" dated on 02/02/15. Among the identified sources are office, workshop, water treatment, chemical store, etc. The estate has identified and documented 6 types of waste that generated from its plantation activities in waste management plan for year 2014/2015 titled “Scheduled Waste Generated and Pollution Prevention Plan“.

The waste management plan has identified waste product, sources waste, sources of pollution, plan to reduce pollution, target, and person responsible. Scheduled wastes generated from estate activities are disposed according to DOE established requirements. Estate’s chemical wastes and other schedule wastes are disposed through a DOE registered schedule waste disposal contractor as per DOE requirements. Sighted disposal record for A&C Technology Waste Oil Sdn. Bhd. License No : 001350 (Expired on 30th April 2016) who has collected estates scheduled waste (SW 305/SW 306/SW 307/SW 312) on 22/05/2015. Recycle container (591 units) was collect by G- Planter on 29/05/2015.

ASA 2 5.4 Mill’s fossil fuel usage was monitored by SOP 12.0 dated on 01/03/2013 titled “Energy Usage”. Mill has sufficient plans to reduce the usage of the fossil fuel that included in the 2014/2015 budget. Plan is to replace the Genset to TNB power supply. Record from Oct 2013-Sept 2014 and Oct 2014 - May 2015 was checked as evident that mill monitored the Diesel Usage and the record clearly show that the trend is decreased. Following is last 7 months of monitoring record of mill’s diesel usage.

Month Diesel usage[L] FFB processed [MT] Litre/MT Oct'14 3,390 7,407.58 0.46 Nov'14 2,410 7,205.75 0.33 Dec'14 2,400 5,403.99 0.44 Jan'15 2,095 5,284.39 0.40 Feb'15 1,760 3,813.90 0.46 Mar'15 2,651 8,404.52 0.32 Apr'15 3,108 9,437.27 0.33

Estate’s fossil fuel usage is monitored by SOP 12.0 dated on 01/03/2013 titled “Energy Usage”. Following is the record from Oct 2014- May 2015 sighted during the audit.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Month Diesel Petrol FFB (MT) Litre/MT Litre/MT usage usage (Diesel) (Petrol) Oct'14 6,814 261.50 5,216.99 1.30 0.050 Nov'14 7,624 384.00 4,298.60 1.77 0.089 Dec'14 6,886 535.50 3,639.11 1.89 0.147 Jan'15 6,379 467.00 3,401.46 1.87 0.137 Feb'15 7,781 338.00 3,699.95 2.10 0.091 Mar'15 8,035 240.00 4,999.86 1.60 0.048 Apr'15 6,615 498.00 5,370.77 1.23 0.092 May’15 6,494 510.00 5,130.98 1.27 0.099

ASA 2 5.5 The company has established “zero open burning” policy dated 1st January 2014 by Regional Director Mr. Teh Sar Moh Ne. There is no open burning noticed during the plant visit. Last replanting was done in year 2012 for Jeram Division. Since then, there is no replanting taken place in Tual Mee estate. There is no open burning noticed during the estate site visit. ASA 2 5.6 The company has established plans to reduce pollution and emissions including greenhouse gases. The mill has initiated, POME Green House Gas emission monitoring using RSPO calculator which was downloaded from RSPO website by Mr Lee Kian Wei of HQ’s Sustainability department. The value calculated based on inputs from supply base(estate) for mill (POME), electricity, diesel consumption and EFB mulching. Sighted GHG summary which has reported: CPO =1.0 tCO2.e/t product, PK = 1.0 tCO2.e/t product, PKO=0, PKE=0. KLK Sustainability team has submitted their GHG emission report to the RSPO Secretariat for review.

Mill’s polluting activities are identified and assessed in company’s “Environmental Impact Assessment (EIA) & Pollution Prevention Plan (Maintenance and Inspection)” last updated on 01/03/2015. The mill monitors boiler chimney smoke emission once every 6 months. Last monitoring was done on 09th February 2015. The initial test done by Mr. Mohd Yunus Izham for boiler, steriliser and factory. Sighted his comment on Inspection Log Book.

Mill has sufficient plans to reduce the usage of the fossil fuel that included in the 2014/2015 budget. Plan is to replace the Genset to TNB power supply. Sighted the decreasing for fuel consumption. Also sighted the maintenance records for Genset for every 250 liter.

Plan to reduce pollutants and GHG for the plantation is available. The source of waste well identified in the "Environmental Impacts Assessment & Pollution Prevention Plan" dated on 02/02/15. Among the identified sources are office, workshop, water treatment, chemical store, etc. The estate has identified and documented 6 types of waste that generated from its plantation activities in waste management plan for year 2014/2015 titled “Scheduled Waste Generated and Pollution Prevention Plan“.

The waste management plan has also identified source of pollution, mitigation measures, target, person responsible, and status. Example: Spent lubricant oilVehicle and MachineryDisposed by DOE approved ContractorDispose at least once a year Mohamad Zaki Jamaludin Disposed on 26/01/2015.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers Criterion by The mill and estate have conducted the social impact assessment. The Audit relevant policies are in place and are fully implemented across the board. Communication and consultation as well complaints and grievances Summary procedure are well communicated and adhered to. There are evidences of workers not been discriminated against in any way and all are being paid their fair wages. (1 Minor NC issued) ASA 2 6.1 The company has established SOP 13.0 Issue/Rev 2/0 dated 01/03/2013 for conducting Social Impact Assessment. The mill has conducted SIA 2015 conducted on current management practises. Areas surveyed : i) Recruitment ii) Local/foreign employment iii) Disease iv) Cultural differences v) Security vi) Racial tension vii) Communication problem viii) Repatriation ix) Disciplinary action/abscondment Results identified and summarised.

An SIA dated 02/06/2015 on removal of used oil containers from linesite was conducted with survey forms. SIA Management Plan 2015 is prepared based on survey with mitigation plan.

A minor NC issued under criterion 6.1.4 The plans shall be reviewed as a minimum once every two years and updated as necessary, in those cases where the review has concluded that changes should be made to current practices. There shall be evidence that the review includes the participation of affected parties. NC Description: SIA Management Plan is to be reviewed annually in Management Review as per procedure SOP 13.0 Issue/Rev 2/0. But no evidence of specific review in 2014 (carried out on 3/4/2015).

Tuan Mee estate has conducted SIA 2015 via survey forms for workers and internal contractor (staying in estate). The survey carried out for 20 respondents. Sighted all completed survey forms. Records of analysis and mitigation plan available dated 28/03/15. During site visit, noted mechanical frond/bunch cutting sighted in storage and EIA done dated 02/02/2015. The estate has conducted SIA for the mechanical frond which a group of 5 harvesters have participated in the survey. The survey result shows mechanical frond not dangerous and not being used for last 1 year. Report prepared. Also sighted SIA done for repainting of houses at line site which was started in January 2015. A total 10 respondents were happy with newly painted houses. Positive & negative record monitored on safety and work time.

Also sighted SIA conducted for 2014 using survey forms. The record shows government agency and external contractor has been surveyed. ASA 2 6.2 Procedure SOP 1 Stakeholder Engagement & Negotiation dated 1.3.2013 on consultation, participation & communication evident for the purpose of open and transparent methods for communication and consultation between growers and/or mills, local communities and other affected or interested parties. Person in charge for communication is available for both mill and RSPOPC-SUM-REPORT.F01 MAY 2014 Page 29 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

estate. For the mill, Mill Manager Mr. George is responsible for RSPO issues, while Mr. Mohmad Azman Abd Majid is responsible for the estate.

Sighted list of stakeholders dated 01/10/13 consists of 7 FFB supplier, 6 small holders (Non Certified ), 2 Workers Association, 15 Supplier, 12 Statutory and government agencies.

Stakeholder Logbook Form is used to record information as prescribed in SOP 1. Sighted logbook forms, Eg. Internal stakeholders: repair to houses and utilities, repair of septic tank (03/03/2015) request by estate worker Mr Darmaraj. 17 Invitation letter was sent to external stakeholders dated 13/04/2015. 12 stakeholders has responded. A consultation was held on 21/05/2015 with suppliers eg. Syarikat Landtha Rasmi, Poh Lim, Shalimar Estate, Sg Gapi & Mantin and Ladang Kombok (Mantin) for high % of overnight crops. As result of the consultation it was decided to conduct join grading from Tuan Mee.

In estate, Stakeholder consultation was conducted on 26/05/15 which was attended by 9 employee and 7 external stakeholder (contractors & police). A total of 14 external stakeholders were invited. Survey forms and report sighted and responded with action plan for mill road resurfacing and guards uniform. Also sighted Stakeholder Logbook Form used eg Request for tree cutting machine by employee on 30/05/15 for gotong royong which was granted by the estate management. ASA 2 6.3 Documentation sighted for dispute and resolve stated in procedure SOP 1.0 – Stakeholders Engagement/Negotiation (Complaints & Grievances) dated 1/10/2013 covering for both the mill and estate. Stakeholder log form is used to register complaints and grievances. Sighted stakeholder logbook for the mill. There is no complaint recorded. Generally, the records on workers request for repair of their houses which the management has fulfilled. Evidence of minutes of stakeholder meeting and logbook forms filled sighted.

Also sighted Stakeholder logbook forms for the estate. The forms are well filled. Most of the information recorded in the logbook are related to estate employees request for borrowing items from the estate management and repair works which are generally granted by the management. There is no complaint registered for the estate. ASA 2 6.4 No negotiations concerning compensation for loss of legal or customary rights are as per this assessment period. The land which the mill stands is in Tuan Mee Estate which legally belongs to Kuala Lumpur – Kepong Bhd]. History and documents of the development of Tuan Mee Estate under KLK do not show any evidence that there was a loss of legal or customary rights which would have lead to a necessary, consequent compensation or that any compensational claims would be open and/or evident. Acquisition of Land dated 01/01/2014 for a procedure for identifying legal and customary rights and a procedure for identifying people entitled to compensation. No record kept as per today. ASA 2 6.5 In the mill sighted workers contract and salary slip. i) Gwana Piragasam a/l Murugasu (Engine Driver) - Letter of contract work employment letter dated 1/1/2015 stating starting salary (RM2,700) and allowance RM25. - Salary slip Apr 2015 stating salary, compulsory deductions of EPF and Socso. ii) Murugananatham Kaliyamoorthy - Old contract dated 20/11/2010 RSPOPC-SUM-REPORT.F01 MAY 2014 Page 30 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

- April 2015 : RM 34.62 per day x 26 days ( RM900.12) iii) Thenmoli a/p Vedasalam - Letter of employment 1/6/2006 - Basic salary RM 900.00 iv) Sundre Raju a/l Muniandy - Letter of employment 6/10/2007 - Basic salary RM34.62 x26 = RM 900.12

The mill follows the Minimum wage policy Federal Government Gazette P.U.(A) 214 dated 16/7/2012 states RM 900 for Peninsular Malaysia. Salary information as per act is updated via memo on notice board and given to union representative dated 20/01/2013 [RM34.62 per day and minimum RM 900 and allowance of RM 1.60 per day for category II workers].

As for the estate, following workers contract and salary slips were sighted. During the interview, they are aware of minimum wage of RM 900. i) Yanasundry a/p Abarau (650723-10-7042) Date of employment : 3/2/1998 Salary slip Mar : RM 827.00 ( Worked 22 days)

ii) Ahashan (Bangladeshi – E1344285) Date of employment : 12/01/2007 Salary slip Mar : 934.26

The mill and estate complies with MAPA/NUPW general employees and fringe benefits agreement states housing, free water, electricity (20kW free) and transport for schooling. There are sufficient and affordable food is available for sundry shop in estate (Bhojarajan Sundry Shop & Ah Moi Sundry Shop) and very accessible. Most workers own vehicles/motorbikes. Accessibility to main road is very near and walking distance and easy to go to nearby town and shops. ASA 2 6.6 The company has established freedom of association policy which is available in both languages dated 01/01/2011. The policy is publicly available and also been posted at office entrance. List of mill union members (NUPW- national union) indicates there are 68 employees who are union members. The mill’s union committee chairman is Mr. Thanabalan a/l Tamil Salvam, Secretary Mr. Sundre Raju a/l Muniandy and Committee Members Mdm Thenmoli a/p Vedasalam, Mr. Nadarajan a/l Chandrasegaran, Mr. Balamurugan & Mr. Saiun (Indonesian). Estate union is representative is Mr Subramaniam. Interview with Mr Sunder Raju reveals that the committee meets 3 monthly and any concern is brought to Manager. But for the past 2 years there is issue and very satisfied with management. ASA 2 6.7 Children are not employed or exploited. Policy of minimum age limit is 18 years available in bi-lingual dated 01/01/2014. Mill’s youngest worker is 20 years old and he was born 1995. Estates youngest worker is 20 years old Mr Hasbullah (Indonesian) and he was born in 1995. ASA 2 6.8 A policy of “Equal Opportunities” is established in bilingual approved by Mr. Yap Mun Yew Regional Director dated 01/01/2011. Policy of equal opportunities publicly displayed in office and at line-site. The Policy content with race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation and age is determined as an aspect of discrimination. Wage records show that wages are the same and interviews confirmed that there is no discrimination. There is no discrimination applied in the mill. Between migrant worker and

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

female worker in POM process. Local communities are employed. Recruitment selection, hiring and promotion are based on skills, capabilities, qualities, and medical fitness necessary for the jobs evident. No new promotion or demotion registered as per this audit period. ASA 2 6.9 The company has established policy regarding sexual harassment and violence & reproductive rights in bilanguage dated 01/01/2011. The mill has formed Gender committee organization. The committee’s coordinator is Pn Sabariah Shaari, Asst Coordinator Mrs. Margrett, committee members employee Ms Shanthy, Mrs Thenmoli and Mrs Puspavally. The appointment of gender committee was done 01/10/2014. Last meeting was held on 04/04/2015. Sighted meeting minutes which shows that RSPO principles, sexual harassment & breastfeeding policy is highlighted in the meeting.

Estate has established Gender committee for year 2014/2016. The committee Chairperson is Pn. Norashiken Mohd Yusoff and Secretary is Pn. Farhana. The committee’s last meeting was held on 27/05/2015 which was attended by seven members. Sighted meeting minutes dated 27/05/2015 which shows that RSPO principles and sexual harassment are discussed in the meeting. There is no incident of sexual harassment reported for both mill and the estate. ASA 2 6.10 Prices are not relevant in this unit as the unit belongs to KLK and supplied by estate belongs to KLK also Pricing is followed by actual MPOB pricing system. A bimonthly review and update does guarantee a clear and transparent procedure, complete records are available. The contract between Estate and contractor/ supplier evident. Evidence of payment slips available eg 3 payment monthly sighted for 01 to 15 May to Ladang Mantin. ASA 2 6.11 Sighted mill’s CSR budget for Oct 2014 – Sept 2015 is RM 9,000.00. It includes sports & recreation, workers amenities, donation for employee family deaths, donation to temples & statutory bodies. Also sighted cheque presented to Tenaga (RM500.00)

Sighted Estate’s CSR budget for Oct 2014 – Sept 2015 is RM 12,300.00. It includes sports & recreation, workers amenities, donation for employee family deaths, donation to temple & surau, upkeep of playground and donation for school & kindergarten. The estate has spent RM 11,087.75 for CSR from Oct 2013 to Sept 201. ASA 2 6.12 Interviewing the workers and stakeholders revealed that there is no forced or labour trafficking involved. Workers enter into employment voluntarily and freely. Labour are mainly foreigners with valid passport and work visa. Locals have individual letter of employment. Employee’s contract reviewed and found there is no contract substitution has occurred. Passports are voluntarily surrendered. ASA 2 6.13 The company has established “KLK Sustainability Policy” dated December 2014 which encompasses respect human rights. The policy has been communicated to company’s all level of employees.

Principle 7: Responsible Development of New Plantings Criterion by Summary There were no new plantings carried out. Audit ASA 2 7.1 No new planting nor extension of existing one documented and seen during this audit. Replanting program in place for period of 2015 - 2021. Based on the Group Policy - Oil Palm dated 17 July 2010, there is no SOP established for RSPOPC-SUM-REPORT.F01 MAY 2014 Page 32 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

new planting. The management claimed there is no oil palm extension in Malaysia. There is no out grower scheme associated with this estate. ASA 2 7.2 New planting not applicable however AAR prepared the annual soil & leaf sampling and topographic information for current estates. Topographic information for the existing estate sighted [AAR/19-03-2010], GPS Survey 06/2004/Sd, last updated 04/2008/3 topo_wor/Vic. ASA 2 7.3 No primary forest sighted within this estate perimeter. The estate neighbor to industrial park and residential estate . No HCV area identified and the matured youngest palm is 2008. As there is no new planting applicable, therefore formal HCV assessment not evidence. No new planting programme applicable. As there is no new planting applicable, therefore formal HCV, EIA and SIA assessment not evidence. ASA 2 7.4 AAR report on "Oil Palm Manuring Recommendations 2014/15 for Ladang Sungai Penggeli" sighted with estate's geographical condition. No peat land and due to no hilly and sloping areas, therefore terraincing not applicable. The annual AAR report will be used as guideline for existing estate mature palm management and for replanting. ASA 2 7.5 As there is no new planting applicable, therefore formal HCV, EIA and SIA assessment not evidence. ASA 2 7.6 No new planting nor extension of existing one documented and seen during this audit. Replanting program in place for period of 2015 - 2021. As there is no new planting applicable, therefore formal HCV, EIA and SIA assessment not evidence. No negotiations concerning compensation for loss of legal or customary rights are as per this assessment period. Based on the land title, it lease for 99 years, therefore no compensation issues involved. Since the RSPO certification date, there isn't any issues raised by stakeholders during stakeholder meetings. Based on the land title, it lease for 99 years, therefore no compensation issues involved. No new planting nor extension of existing one documented and seen during this audit, therefore no evidence available for communication to communities. ASA 2 7.7 KLK has stated on zero burning in the SOP-09 dated on 01/01/2011. The upcoming replanting schedule to be in 2015. During field visit not observed any open burning in the operating units. Apart from the policy, Guidelines for the implementation of the ASEAN policy on zero burning used for reference. KLK has stated on zero burning in the SOP-09 dated on 01/01/2011. ASA 2 7.8 No new planting nor extension of existing one documented and seen during this audit. Principle 8: Commitment to Continuous Improvement in Key Areas of Activity Criterion by The mill and estate has demonstrated their commitment to continuous Audit improvement by monitoring, review of activities and develop action plans Summary that allow continual improvement in key operations such as in minimizing use of certain pesticides, environmental impacts, maximizing recycling and minimizing waste or by-products generation, pollution prevention plans. ASA 2 8.1 In mill, there are sufficient documents made available for continuous improvement. Its continuous plans includes implementation of Continues Emission Monitoring System [CEMS] which to monitor stack gases for regulatory compliance linked to DOE. In addition, stack emission sampling done twice annually in accordance to DOE requirement. It has also has identified source of pollution through environmental Impact Assessment (EIA) and reviewing mitigation measures annually to evaluate effectiveness of control measures that currently in place.

Mill has sufficient plans to reduce pollutants and GHG emissions. This includes reduce the usage of the fossil fuel that included in the 2014/2015 budget.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Plan is to replace the Genset to TNB power supply. Sighted the decreasing for fuel consumption. Also have sighted the maintenance records for Genset for every 250 liter.

There is waste disposal management plan associated with CIP. Recycling activities being tabulate in the "waste Generated & Pollution Reduction Plan for 2014/2015". The recycling includes such as EFB for mulching, Scrap iron, Land application, Fibre, boiler ash etc. POME discharges are monitored on monthly basis to ensure effluent discharges meet regulatory requirements.

Among the continual plan established for the estate includes stop the usage of unproductive tractor in field to reduce the fossil fuels usage. Estates fossil fuel usage is being monitored by SOP 12.0 dated on 01/03/2013 titled “Energy Usage”. The company has established “zero open burning” policy dated 4th December 2013 by Mr Eyu Teong Po, company’s regional director. There is no open burning noticed during the plant visit. The environmental impact assessment has identified source of pollution and effectiveness of mitigation measures are reviewed annually.

Tuan Mee estate has planned to reduce pesticides such as Ebor bait includes in maintenance a barn owl in the field. Major pest is rat and barn owl to attract the natural predator for rat, Owl.

There is waste disposal management plan associated with CIP. The waste management plan has identified Waste product, sources waste, sources of pollution, plan to reduce pollution, target, and person responsible.

4.3 Non-conformity Raised During this Audit and Any from the Previous Year, if applicable This section gives an over view of new or revised non-conformities raised during this audit and of action taken to close out non-conformities raised during the previous audits, if applicable  If a minor-non-conformity raised at the last audit, is not closed out, then this will be raised to Major status and the company given 60 days to close this out.  The NC number is comprised of 2 parts to include the year in which the NC was raised as well as a sequential number.

4.3.1 Non-Conformities Identified during this Audit 2 minor non-conformities were raised during this audit.

NON CONFORMITY REPORT NC number: 01/2015 Client name: KLK – Tuan Mee POM Date raised: 04/06/2015 Major or Minor: Minor Raised by: Baskaran Aspect of standard: 4.6.7 Application of pesticides shall be by proven methods that minimize risk and impacts. Evidence of non-conformity: Tuan Mee Estate All sprayers are provided with proper PPE such as mask, apron, gloves and rubber boot. However, eye protective equipment such as goggles was not identified as PPE to minimize health risk to sprayers.

Lead Assessor signature:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Date: 04/06/2015 Proposed corrective action / improvement action by company.

Timeline for conformance: Before next surveillance audit Review of corrective /improvement action:

Lead Assessor signature:

Date:

NON CONFORMITY REPORT NC number: 02/2015 Client name: KLK – Tuan Mee POM Date raised: 04/06/2015 Major or Minor: Minor Raised by: Baskaran Aspect of standard: 6.4.1 The plans shall be reviewed as a minimum once every two years and updated as necessary. Evidence of non-conformity:

Tuan Mee POM & Estate No evidence that SIA Management Plan 2014 was reviewed in Management Review as per the requirement of SIA Procedure (SOP 13.0 Issue/Rev 2/0.) for both POM and Estate. (Management Review Report POM dated 3/4/15 and Estate dated 16/1/15).

Lead Assessor signature:

Date: 04/06/2015 Proposed corrective action / improvement action by company.

Timeline for conformance: Before next surveillance audit Review of corrective /improvement action:

Lead Assessor signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

4.3.2 Non-Conformity Identified during the last ASA, not applicable for MA 2 major and 5 minor non-conformities were raised. All major non-conformities were closed in last year.

NON CONFORMITY REPORT NC number: 01/2014 Client name: KLK Tuan Mee Complex Date raised: 04/06/2014 Major or Minor: Major Raised by: Mahaswaran Maliyapan Aspect of standard: 5.6.2 - Significant pollutants and greenhouse gas (GHG) emissions shall be identified, and plans to reduce or minimise them implemented. Evidence of non-conformity: Significant of pollutant and GHG emission not been identified. Plans to reduce or minimize the GHG emissions that include objectives, targets and timelines not available.

Lead Assessor signature:

Date: 04/06/2014 Proposed corrective action / improvement action by company: An immediate meeting was organized after the audit’s closing meeting among all staff that involved in the GHG assessment, a review was conducted and assignment delivered on.

Timeline for conformance: 60 days Review of corrective / improvement action: Sighted the “REDUCING/MINIMISING GREENHOUSE GAS (GHG) EMISSIONS PLAN” which dated on 15/07/2014. The effectiveness of the monitoring activities will be verified in next assessment.

Lead Assessor signature:

Date: 30/07/2014

NON CONFORMITY REPORT NC number: 02/2014 Client name: KLK Tuan Mee Complex Date raised: 04/06/2014 Major or Minor: Major Raised by: Mahaswaran Maliyapan Aspect of standard: 6.1.3 - Plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts identified, shall be developed in consultation with the affected RSPOPC-SUM-REPORT.F01 MAY 2014 Page 36 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

parties, documented and timetabled, including responsibilities for implementation. Evidence of non-conformity: A documented social impact assessment given was not conducted as per the procedure SOP 13 as stated above. Assessment done with affected parties not evident. A timetable with responsibilities for mitigation and monitoring reviewed and updated as necessary not evident.

Lead Assessor signature:

Date: 04/06/2014 Proposed corrective action / improvement action by company: a meeting was organized on 07/07/14 as to address the corrective action. SIA for mill was carried out in accordance to the procedure.

Timeline for conformance: 60 days Review of corrective /improvement action: Sufficient documented evidences provided and accepted by LA as for desk verification. However the stakeholder involvement in the assessment to be further check in next assessment by interviews.

Lead Assessor signature:

Date: 30/07/2014

NON CONFORMITY REPORT NC number: 03/2014 Client name: KLK Tuan Mee Complex Date raised: 04/06/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 1.2.1 - Publicly available documents shall include, but are not necessarily limited to: • Land titles/user rights (Criterion 2.2); • Occupational health and safety plans (Criterion 4.7); • Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8);

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

• HCV documentation (Criteria 5.2 and 7.3); • Pollution prevention and reduction plans (Criterion 5.6); • Details of complaints and grievances (Criterion 6.3); • Negotiation procedures (Criterion 6.4); • Continual improvement plans (Criterion 8.1); • Public summary of certification assessment report; • Human Rights Policy (Criterion 6.13). Evidence of non-conformity: The Group Plantation Director has already in progress of implementing / developing all the necessary Human rights policy. However at the period of audit, it is noted that the Human Rights policy is not publically available yet. Auditors signature:

Date: 04/06/2014 Proposed corrective action / improvement action by company. Company top management will establish human right policy as required by the RSPO P&C before end of 2014.

Timeline for conformance: next surveillance Review of corrective /improvement action: The company has policy to respect human rights approved by Tan Sri Dato Lee Oi Hian CEO dated 1.12.2014. This policy is displayed in notice boards inside the office as well as outside the office. The policy also publicly available through the official website. The policy is communicate to all levels of the workforce and operations. Sighted the training records for all operating units. The assessment carry out is evident and therefore this minor non-compliance is closed.

Assessors signature:

Date: 01/06/2015

NON CONFORMITY REPORT NC number: 04/2014 Client name: KLK Tuan Mee Complex Date raised: 04/06/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 1.3.1 - There shall be a written policy committing to a code of ethical conduct and integrity in all operations and transactions, which shall be documented and communicated to all levels of the workforce and operations. Evidence of non-conformity: The Group Plantation Director has already in progress of implementing / developing all the necessary Human rights policy. However at the period of audit, it is noted that the Human Rights policy is not publically RSPOPC-SUM-REPORT.F01 MAY 2014 Page 38 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

available yet. Auditors signature:

Date: 04/06/2014 Proposed corrective action / improvement action by company.

Company top management will establish human right policy as required by the RSPO P&C before end of 2014. Timeline for conformance: next surveillance Review of corrective /improvement action: The company has “KLK Sustainability Policy” that include policy to respect human rights, code of ethic and etc approved by Tan Sri Dato Lee Oi Hian CEO dated 1.12.2014. This policy is displayed in notice boards inside the office as well as outside the office. The policy also publicly available through the official website. The policy is communicate to all levels of the workforce and operations. Sighted the training records for all operating units. The assessment carry out is evident and therefore this minor non-compliance is closed.

Assessors signature:

Date: 01/06/2015

NON CONFORMITY REPORT NC number: 05/2014 Client name: KLK Tuan Mee Complex Date raised: 04/06/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 5.2.3 - There shall be a programme to regularly educate the workforce about the status of these RTE species, and appropriate disciplinary measures shall be instigated in accordance with company rules and national law if any individual working for the company is found to capture, harm, collect or kill these species. Evidence of non-conformity: No evidence that such education programme regarding to status of RTE species was done for all units workforce.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Auditors signature:

Date: 04/06/2014 Proposed corrective action / improvement action by company. Training and information will be provided for unit workers on RTE species.

Timeline for conformance: next surveillance Review of corrective /improvement action: Sighted the training records for RTE species even no HCV/RTE identified for the estate. All operating units is train and give the information to all workforce regarding the RTE species. The assessment carry out is evident and therefore this minor non-compliance is closed.

Assessors signature:

Date: 01/06/2015

NON CONFORMITY REPORT NC number: 06/2014 Client name: KLK Tuan Mee Complex Date raised: 04/06/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 5.6.3 - A monitoring system shall be in place, with regular reporting on progress for these significant pollutants and emissions from estate and mill operations, using appropriate tools. Evidence of non-conformity: Since there is no plans to reduce or minimize the GHG emissions therefore the monitoring system not auditable. Auditors signature:

Date: 04/06/2014 Proposed corrective action / improvement action by company.

The GHG is being calculated and plan to minimalized and monitoring will be established before mid 2015.

Timeline for conformance: next surveillance Review of corrective /improvement action: There is GHG calculation for all operating units that has been calculated by sustainability department and summary is available. Sighted plan to reduce the pollutants, emissions and GHG for mill and plantations site. The assessment carry out is evident and therefore this minor non-compliance is closed.

Assessors signature:

Date: 01/06/2015

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

NON CONFORMITY REPORT NC number: 07/2014 Client name: KLK Tuan Mee Complex Date raised: 04/06/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 6.13.1 - A policy to respect human rights shall be documented and communicated to all levels of the workforce and operations. Evidence of non-conformity: In countries and communities where KLK operates, social issues are part of a broader set of complex socioeconomic and security concerns and being apply to many aspects of their business. The management of human rights issues in KLK is based on the totality of their efforts and not on a single activity. Their corporate policies, management processes, community investment programs and participation in voluntary initiatives are complementary and are intended to work together and reinforce their commitment to respecting human rights. However a policy to respect human rights not documented and communicated to all levels of the workforce and operations. Auditors signature:

Date: 04/06/2014 Proposed corrective action / improvement action by company. Company top management will establish human right policy as required by the RSPO P&C before end of 2014.

Timeline for conformance: next surveillance Review of corrective /improvement action: The company has policy to respect human rights approved by Tan Sri Dato Lee Oi Hian CEO dated 1.12.2014. This policy is displayed in notice boards inside the office as well as outside the office. The policy also publicly available through the official website. The policy is communicate to all levels of the workforce and operations. Sighted the training records for all operating units. The assessment carry out is evident and therefore this minor non-compliance is closed.

Assessors signature:

Date: 01/06/2015

4.3.3 Observations Identified during this audit Two observations found in this audit.

Client name: KLK – Tuan Mee POM Date raised: 04/06/2015 Raised by: Baskaran Aspect of standard: 6.1.3 Plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts identified, shall be developed in consultation with the affected parties, documented and timetabled, including responsibilities for implementation.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Observation SIA Management Plan for Tuan Mee POM can be further improved by putting timeframe and responsibility of action . Some mitigation is not very logical eg communication problem – mitigation stated is to comply with law & regulations which is not the most correct action.

Client name: KLK – Tuan Mee POM Date raised: 04/06/2015 Raised by: Baskaran Aspect of standard: 6.2.3 A list of stakeholders, records of all communication, including confirmation of receipt and that efforts are made to ensure understanding by affected parties, and records of actions taken in response to input from stakeholders, shall be maintained.

Observation Invitation for stakeholder meeting is limited to only 14 stakeholders but the list indicates a total of 71 stakeholders for Tuan Mee Estate. No basis as to method of selection of stakeholders for the consultation held on 2/6/15. eg. tamil school in the estate vicinity, transporters from Jeram , etc not invited.

4.4 Issues that were raised during the Stakeholder Consultation, if any Stakeholders were either informed by the client or by Control Union via the RSPO website.  For Main Assessments, a 30 day Stakeholder consultation announcement is published on the RSPO website prior to the audit. The same announcement is circulated by the client prior to the audit  For subsequent Annual Assessments, it is based on stakeholders reading the approved public summary reports available on the RSPO website, the client’s procedures in receiving on-going feedback or if feedback was sent directly to Control Union prior to an audit or thorough RSPO complaints procedures. During each assessment, the audit team will review the company’s implemented procedures in receiving feedback and will execute field visits and interviews. Not limited to the following questions, any feedback received is reviewed and summarized in this summary report for either Part 2 – Partial Certification or Part 4 – Assessment Findings above or noted below, if applicable: 1. Do you have any remarks on the RSPO standard? 2. What is your relation with the applicant? 3. Are there any plantation or mill management practices that affect you? 4. Do you consider any management is in conflict with the RSPO principles and criteria? 5. Do you have any suggestions for management? 6. Are you aware of any HCV in the plantations or in adjacent land? 7. Are you aware of any endangered or rare species? 8. Are there any adverse (or positive) effects on local communities? 9. Additional comments? 11. Do you have any comments about the assessment team and would you like to meet with them? 12. Do you have any comments for the client’s management of any other plantations?

Subject raised Company response and Audit team findings proposed action to be taken - - -

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

PART 5: RSPO SUPPLY CHAIN CERTIFICATION The palm mill mentioned in the scope of the audit was audited against the requirements of the following: RSPO Supply Chain Certification Systems. November 2014 RSPO Supply Chain Certification Standard. November 2014

5.1 POM Included In The Scope Of The Audit Name Mill Location Supply Chain Model Palm Oil Mill Capacity (POM) MT/Hour Address (IP or SG or MB) Batu 24, Jalan Kuala Selangor- Tuan Mee POM 22 Kepong, 47000 Sg. Buloh, MB Selangor, Malaysia

5.2 Confirmation Of The Company’s Summary Of Annual Certified Volume Of RSPO Certified Palm Oil And Palm Kernel Over A Specified Periffd Product CPO (MT) PK (MT) Specified 12 month period CU Code POM 1 15,843.80 3,727.490 Forecasted volumes between May 2014 to Apr 2015, asin 5.4 below.

5.3 Summary Report Including A Brief Description Of The Scope Of Certification A full RSPO SCCS certification audit was used during this annual assessment and the findings support the certification based on supply chain model listed above.

5.4 Monthly Records of Certified and Uncertified FFB Received Since the Last Audit If this is the 1st Main Assessment, the figures used are from the last 12 months. If this is an Annual Surveillance Assessment, the figures used are since the last audit. No MONTH-YEAR Certified Supply Bases (MT) Uncertified Supply Bases (MT), if any Total (MT) 1 May 2014 7418.93 1386.750 8805.680 2 June 2014 4733.89 1376.50 6110.39 3 July 2014 6432.99 1598.29 8031.28 4 Aug 2014 9293.22 1974.16 11267.38 5 Sept 2014 6504.24 1749.18 8253.420 6 Oct 2014 6404.54 1003.04 7407.58 7 Nov 2014 6031.30 1174.450 7205.75 8 Dec 2014 4509.20 894.790 5403.99 9 Jan 2015 4455.56 828.83 5284.39 10 Feb 2015 3182.85 631.05 3813.90 11 Mar 2015 7114.81 1289.71 8404.52 12 Apr 2015 8095.43 1341.84 9437.27 TOTAL 74205.51 15260.35 89465.86

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

5.5 Monthly Records of Certified CPO and PK Produced Since the Last Audit If this is the 1st Main Assessment, the figures used are from the last 12 months. If this is an Annual Surveillance Assessment, the figures used are since the last audit. No MONTH-YEAR Certified CPO (MT) Certified PK (MT) Total (MT) 1 May 2014 1590.62 350.17 1940.79 2 June 2014 1012.58 204.03 1216.61 3 July 2014 1378.59 348.02 1726.61 4 Aug 2014 1959.94 549.23 2509.17 5 Sept 2014 1372.39 333.02 1705.41 6 Oct 2014 1385.30 298.45 1683.75 7 Nov 2014 1300.35 275.03 1575.38 8 Dec 2014 966.32 236.28 1202.60 9 Jan 2015 941.46 222.78 1164.24 10 Feb 2015 705.00 170.28 875.28 11 Mar 2015 1530.40 362.14 1892.54 12 Apr 2015 1700.85 378.06 2078.91 TOTAL 15843.80 3727.490 19571.29

5.6 Records of Certified CPO & PK Sold under Green Palm to Buyers since the Last Audit, if Any If this is the 1st Main Assessment, the figures used are from the last 12 months. If this is an Annual Surveillance Assessment, the figures used are since the last audit. The transactions were sighted form the clients registered Green Palm Account. Certified CPO Certified PK No Buyers Name Green Palm Trading No (MT) Sold (MT) Sold 1 - - -

5.7 Records of Certified CPO & PK Sold under UTZ eTrace to Buyers since the Last Audit, if Any

If this is the 1st Main Assessment, the figures used are from the last 12 months. If this is an Annual Surveillance Assessment, the figures used are since the last audit. The transactions were sighted form the client’s registered UTZ eTrace Account. Certified CPO Certified PK No Buyers Name UTZ eTrace Trading No (MT) Sold (MT) Sold 1 Sang Kee Edible Oils Sdn Bhd TR-3cf015cf-643d - 16.43 2 Sang Kee Edible Oils Sdn Bhd TR-d30290e2-7e91 - 120 3 Sang Kee Edible Oils Sdn Bhd TR-3952e81b-1306 - 17.48 4 Sang Kee Edible Oils Sdn Bhd TR-2f3d0a47-7d47 - 20.25 5 Sang Kee Edible Oils Sdn Bhd TR-16a73995-3a4e - 20.5 6 Sang Kee Edible Oils Sdn Bhd TR-73e2f499-5fa0 - 20.46 7 Sang Kee Edible Oils Sdn Bhd TR-dfa23e83-bb18 - 20.41 8 Sang Kee Edible Oils Sdn Bhd TR-bbb14030-9569 - 20.56 9 Sang Kee Edible Oils Sdn Bhd TR-c855f027-7220 - 20.48 10 Sang Kee Edible Oils Sdn Bhd TR-ec959974-ec73 - 20.34 11 Sang Kee Edible Oils Sdn Bhd TR-6ec198b5-9c19 - 29.61 12 Sang Kee Edible Oils Sdn Bhd TR-35835f27-0167 - 29.29 13 Sang Kee Edible Oils Sdn Bhd TR-ae50326e-d25a - 29.48 14 Sang Kee Edible Oils Sdn Bhd TR-a2d49931-0a1d - 20.54 15 Sang Kee Edible Oils Sdn Bhd TR-f6204242-1550 - 20.99 16 Sang Kee Edible Oils Sdn Bhd TR-338dbf46-72c6 - 20.7 17 Sang Kee Edible Oils Sdn Bhd TR-a73eca5e-c955 - 20.06 18 Sang Kee Edible Oils Sdn Bhd TR-54abcace-a9f0 - 20.47 19 Sang Kee Edible Oils Sdn Bhd TR-30eb6408-67e9 - 19.51 RSPOPC-SUM-REPORT.F01 MAY 2014 Page 44 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

20 Sang Kee Edible Oils Sdn Bhd TR-8f338e55-85b8 - 20.51 21 Sang Kee Edible Oils Sdn Bhd TR-70937f64-1cc2 - 20.57 22 Sang Kee Edible Oils Sdn Bhd TR-3142451c-2d04 - 30.47 23 Sang Kee Edible Oils Sdn Bhd TR-52c2cc70-2dab - 20.44 24 Sang Kee Edible Oils Sdn Bhd TR-0aee72c8-7df7 - 20.69 25 Sang Kee Edible Oils Sdn Bhd TR-35cb2157-36ff - 29.31 26 Sang Kee Edible Oils Sdn Bhd TR-fa2b5f2e-6bcf - 20.72 27 Sang Kee Edible Oils Sdn Bhd TR-6c84d73f-584a - 28.88 28 Sang Kee Edible Oils Sdn Bhd TR-7bf21f2e-1781 - 20.85 29 Sang Kee Edible Oils Sdn Bhd TR-d0b94754-9756 - 25.43 30 Sang Kee Edible Oils Sdn Bhd TR-00af08c6-972b - 27.95 31 Sang Kee Edible Oils Sdn Bhd TR-42745e7f-05d6 - 20.09 32 Sang Kee Edible Oils Sdn Bhd TR-cd12f075-9504 - 26.53 33 Southern Acids Industries Sdn Bhd TR-5fd1b190-bf48 48 - 34 Kuala Lumpur Kepong Berhad / KLK Oleo TR-1219bdd8-c241 101.19 - 35 Kuala Lumpur Kepong Berhad / KLK Oleo TR-d763dcdf-db6f 101.41 - 36 Cargill Palm Products Sdn Bhd TR-714ccd83-aa04 501.93 - 37 Kuala Lumpur Kepong Berhad / KLK Oleo TR-325ea20f-ae46 71.27 - 38 Cargill Palm Products Sdn Bhd TR-c9e722a4-8a3f 403.23 - 39 Kuala Lumpur Kepong Berhad / KLK Oleo TR-dbd57c1e-289b 200 -

5.8 Non-Conformities Identified during this Audit Timeline for compliance: 1. All non-conformances observed during an audit shall be classified as ‘major’ since all requirements for Supply Chain certification have to be met before granting certification. 2. For Main Assessments, all non-conformances shall be addressed satisfactorily by the operation before certification may be granted by the certification body. If non-conformances are not addressed within three (3) months of the audit, a full re-audit shall be required. The certification body shall assess the effectiveness of the corrective and/or preventive actions taken before closing out the non-conformances. 3. For Annual Surveillance Assessments, non-conformances raised after the certification are serious (i.e. must be considered as a major) and the integrity of the RSPO Supply Chain Certification is at risk. A maximum of one month is to be given to the certified client to satisfactorily address the non-conformance. The certification body shall assess the effectiveness of the corrective and/or or preventive actions taken. Should the nonconformance not be addressed within the one-month maximum timeframe, a suspension or withdrawal of the certificate and a full re-audit may be necessary. 4. If no non-conformances are observed at an audit or when the corrective action plan has satisfactorily addressed raised non-conformance(s), the client shall be recommended for (re-) certification. Non-were raised during this audit.

5.9 Description of the Organizational Management Systems Including organizations, management and operational systems to ensure compliance with the RSPO Supply Chain Certification Systems and Standards as detailed above The management continually improving the established RSPO Supply Chain standards since the main assessment. As part of continuous improvement, many trainings being planned in the mill. ETrace data management is managed by HQ. The mill manager, who acts in the capacity of top management in the sustainability management system, is responsible for decision making in the management system implementation and shall commit towards the development, improvement and implementation of the management system.

RSPOPC-SUM-REPORT.F01 MAY 2014 Page 45 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

5.10 Final Certification decision by Control Union for the RSPO SCCS Audit of the POM Recommendations made: Yes Summary of non- Nil compliances: Certification status of client: The POM included in the scope of this audit demonstrated full compliance with the RSPO SCCS. With effect from the certification date given in the RSPOPC certificate, this POM mentioned in the scope of this report is considered to be certified in accordance with the RSPO SCCS.

PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

6.1 Date of next ASA The provisional date for the next ASA is: June 2016

6.2 Date for Closure of Non-Conformities See sections above for details of NC’s, if any  All major NCs to be closed by: 60 days from the issuance date  All minor NCs to be closed by: Before next surveillance audit

6.3 Signing by the Client I the undersigned, being the most senior relevant management representative of the operation seeking or holding certification, agree with the contents and audit findings as presented in this document . I also confirm:  Acceptance of liability in execution of the instructions given.  That this company was made aware that the findings of the audit team are tentative; pending review and decision making by the duly designated representatives of Control Union Certifications.  That during the closing meeting all agenda items was covered by the Lead Auditor.

Acknowledged by: Name: Sin Chuan Eng Position: Head Of Sustainbility (Plantation)

Date: 2/9/2015 Signature

6.4 Signing by the Lead Auditor I the undersigned, being the Lead Auditor, confirm that this report is an accurate record of the findings and of the closing meeting. I further confirm that the summary of the findings as presented in this report are a true representation of the actual findings of the audit team. Acknowledged by: Name: Baskaran Sankaran Position: Lead Auditor Date: 31/07/2015 Signature

6.5 Signing by the Certifier I the undersigned, being the Certifier, confirm that the information and conclusions included in this report have been prepared in good faith and that the certification decision has been based upon this information. Acknowledged by: Name: Simon Selvaraj Position: Certifier

Date: 2/09/2015 Signature RSPOPC-SUM-REPORT.F01 MAY 2014 Page 46 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

PART 7: APPENDICIES

Appendix 1: Location Map for this Certification Unit From 1.9, the location map(s)

Map 1: Map showing the location of Tuan Mee Estate in Malaysia

RSPOPC-SUM-REPORT.F01 MAY 2014 Page 47 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Map 2: Map showing the location of the estates, POM and neighbouring entities.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU 822632

Appendix 2: List of Abbreviations BRC British Retail Consortium BOD Biochemical oxygen demand CHRA Chemical Health Risk Assessment CoC Chain of Custody COD Chemical oxygen demand CPO Crude Palm Oil CSR Corporate Social Responsibility CU Control Union CUC Control Union Certifications DOE Department of Environment DOSH Department of Safety and Health EFB Empty Fruit Bunch EIA Environment Impact Assessment ERT Endangered Rare or Threatened species EU European Union FFB Fresh Fruit Bunch FSC Forest Stewardship Council FSC COC Forest Stewardship Council Chain of Custody FSC FM Forest Stewardship Council Forest Management GGL Green Gold Label GMP Good Manufacturing Practice GOTS Global Organic Textile Standard GTP Good Trading Practice GPS Global Positioning System HACCP Hazard Analysis and Critical Control Point HIRARC Hazard Identification, Risk Assessment and Risk Control HCV High Conservation Value HCVF High Conservation Value Forest IPM Integrated Pest Management JAS Japanese Agricultural Standard LTI Lost Time Injury MDC MDC Publishers Sdn Bhd ( Company Name) MSDS Material Safety Data Sheet NC Non Conformity OE Organic Exchange OSH Occupational Safety and Health OSHAS Occupational Safety and Health Assessment Scheme P&C Principle and Criteria PEFC Programme for the Endorsement of Forest Certification PK Palm Kernel POME Palm Oil Mill Effluent PPE Personal Protective Equipment RSPO Roundtable on Sustainable Palm Oil RSPO NI Roundtable on Sustainable Palm Oil National Interpretation SA8000 Social Accountability 8000 Sdn Bhd Sendirian Berhad SIA Social Impact Assessment SOCSO Social Security Organization SOP Standard Operating Procedure USDA/NOP United States Department of Agriculture – National Organic Program MT Metric Tones WHO World Health Organization

RSPOPC-SUM-REPORT.F01 MAY 2014 Page 49 of 49 Control Union (Malaysia) Sdn. Bhd. B-3-1 Block B, Pusat Perniagaan Prima Klang, Jalan Kota/KS 1, 41000 Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700