RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

RSPO PRINCIPLES & CRITERIA PUBLIC SUMMARY REPORT ANNUAL ASSESSMENT 1

Malaysia SABAHMAS PPB Oil Palms Berhad 2014

Report prepared by: Muhd. Rizal Kassim (Lead Assessor) Certification decision by: Simon Selvaraj (Certifier) Certifying Office Control Union (Malaysia) Sdn. Bhd. 150-A, 1st Floor, Persiaran Raja Muda Musa, Off Jalan Sg Bertih, Teluk Gadong, 41100 Klang, Selangor, 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

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

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 MAIN 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 1.7.4 Percentage of Planted Oil Palm by different Age Ranges ...... 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 (S EE APPENDIX 1) ...... 5 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 ...... 7 2.5 SUMMARY OF THE FINDINGS FOR PARTIAL CERTIFICATION ...... 8 2.6 PARTIAL CERTIFICATION AUDIT AGENDA ...... 8 PART 3: AUDIT PROCESS...... 8

3.1 ABOUT THE CERTIFICATION BODY ...... 8 3.2 AUDIT TEAM ...... 8 3.2.1 Qualifications of the Lead Auditor ...... 9 3.2.2 Qualifications of the Assessment Team ...... 9 3.3 AUDIT METHODOLOGY ...... 11 3.3.1 General Overview ...... 11 3.3.2 Assessment agenda for this Audit ...... 12 PART 4 ASSESSMENT FINDINGS ...... 13

4.1 LEAD ASSESSOR ’S SUMMARY AND RECOMMENDATION FOR CERTIFICATION ...... 13 4.2 SUMMARY OF THE FINDINGS BY PRINCIPLES AND CRITERIA ...... 13 Principle 1: Commitment to Transparency ...... 14 Principle 2: Compliance with Applicable Laws and Regulations ...... 15 Principle 3: Commitment to Long-Term Economic and Financial Viability ...... 17 Principle 4: Use of Appropriate Best Practices by Growers and Millers ...... 18 Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity ...... 21 Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers ...... 24 4.3 NON -CONFORMITY RAISED DURING THIS AUDIT AND ANY FROM THE PREVIOUS YEAR , IF APPLICABLE ...... 29 4.3.1 Non-Conformities Identified during this Audit ...... 29 4.3.2 Non-Conformity Identified during the last ASA, not applicable for MA ...... 31 4 minor non conformities raised during the last Main Assessment...... 31 4.3.3 Observations Raised During this Audit ...... 34 4.4 ISSUES THAT WERE RAISED DURING THE STAKEHOLDER CONSULTATION , IF ANY ...... 35 PART 5: RSPO SUPPLY CHAIN CERTIFICATION ...... 35

5.1 POM INCLUDED IN THE SCOPE OF THE AUDIT ...... 35 5.2 CONFIRMATION OF THE COMPANY ’S SUMMARY OF ANNUAL CERTIFIED VOLUME OF RSPO CERTIFIED PALM OIL AND PALM KERNEL OVER A SPECIFIED PERIOD ...... 35 5.3 SUMMARY REPORT INCLUDING A BRIEF DESCRIPTION OF THE SCOPE OF CERTIFICATION ...... 36 5.4 MONTHLY RECORDS OF CERTIFIED FFB, CPO AND PK SINCE THE LAST AUDIT ...... 36 5.5 RECORDS OF CERTIFIED CPO & PK SOLD UNDER GREEN PALM TO BUYERS SINCE THE LAST AUDIT , IF ANY ...... 36 5.6 RECORDS OF CERTIFIED CPO & PK SOLD UNDER UTZ ETRACE TO BUYERS SINCE THE LAST AUDIT , IF ANY ...... 36 5.7 NON -CONFORMITIES IDENTIFIED DURING THIS AUDIT ...... 36 5.8 DESCRIPTION OF THE ORGANIZATIONAL MANAGEMENT SYSTEMS ...... 37 5.9 FINAL CERTIFICATION DECISION BY CONTROL UNION FOR THE RSPO SCCS AUDIT OF THE POM ...... 37 RSPOPC-SUM-REPORT.F01 OCT2013 Page 2 of 41 Control Union (Malaysia) Sdn. Bhd. 150-A, 1st Floor, Persiaran Raja Muda Musa, Off Jalan Sg Bertih, Teluk Gadong, 41100, Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ...... 37

6.1 DATE OF NEXT ASA ...... 37 6.2 DATE FOR CLOSURE OF NON -CONFORMITIES ...... 37 6.3 SIGNING BY THE CLIENT ...... 38 6.4 SIGNING BY THE LEAD AUDITOR ...... 38 6.5 SIGNING BY THE CERTIFIER ...... 38 PART 7: APPENDICIES ...... 39

APPENDIX 1: LOCATION MAP FOR THIS CERTIFICATION UNIT ...... 39 APPENDIX 2: LIST OF ABBREVIATIONS ...... 41

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT

1.1 Company and C ontact Details Company Name: PPB Oil Palms Berhad (376090-W) Business Address: 8th Floor UBN Tower, No. 10 Jalan P. Ramlee, Kuala Lumpur, Malaysia Contact Person: Mr. Simon Siburat Office Telephone: +6089-671546 E-Mail: [email protected] Web Site: - Other Certifications Held: ISCC

1.2 RSPO Membership & Certification Details RSPO Membership Number: 042-04(O) (1-0011-04-000-00) Registered Client Name: PPB Oil Palms Berhad Certificate Number: Old Certificate No. C809360CU-RSPO-02.2014 New Certificate No. CU-RSPO-809360 Start Date Of Certificate: 24-12-2013 End Date Of Certificate: 23-12-2018 Date Of Original Certification: 24-12-2008 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 Main Surveillance Assessment Details Dates Of This Audit: 11 th - 12th Dec 2014 Audit Number: Annual Assessment 1

1.4 Assessment Type This is an annual assessment and Principles and Criteria [2013] for the Production of Sustainable Palm Oil - Endorsed by the RSPO Executive Board and accepted at the Extraordinary General Assembly by RSPO Members on April 25th 2013. (Including Major Indicators endorsed by RSPO Board of Governors on 15 November 2013).

1.5 Location of the Palm Oil Mill Name Mill Location GPS Reference Palm Oil Mill Capacity (POM) MT/Hour Address Longitude Latitude KM22, Jalan Sri Putatan, Off Jalan Sabahmas Palm 40 Dam, 91113 Lahad Datu Sabah, 118 024’ 19.409” E 05 010’ 37.961” N Oil Mill Malaysia

1.6 Palm Oil Mill Output and Approximate Tonnages Certified Figures below are from: • Only from certified supply bases (Y/N). YES • Combining certified with uncertified supply bases (Y/N). NO • 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 Projected 12 Months (MT) last 12 Months (MT) Audit Year (MT) Forecast Certified in this Report Dec’13 to Nov’14 Dec’13 to Nov’14 Dec’14 to Nov’15 FFB CPO PK FFB CPO PK FFB CPO PK

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

195,900 43,295 9,790 189,019.45 41,337.728 9,341.99 186,136 41,125 9,305 1.7 General Description of Supply Base Sabahmas Palm Oil Mill consists of 1 supply base, namely Sabahmas estate, the details of the supply base are listed in table 1.7.1 below.

1.7.1 Location of the Supply Base Oil Palm Location GPS reference Area Summary (Ha) OPP Plantation Name Address Longitude Latitude Total Mature OPP 1 Jalan Dam, Lahad Sabahmas Datu, Sabah, 118 024’23.127” E 05 010’33.675” N 10,447.00 8,198.92 Estate Malaysia TOTAL 10,447.00 8,198.92

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 Sabahmas Estate 186,493 1994 - 2013 25 TOTAL 186,493 - -

1.7.3 Conservation and HCV Area (Ha) * HCV part of OPP Oil Palm Plantation Conservation Area (Ha) HCV Area (Ha) Conservation OPP 1 Sabahmas Estate - 444.05 Yes TOTAL - 444.05 Yes * 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 1994- 1999 - 2011 – Total 1998 2004 2015 OPP 1 7,427.66 560.72 210.54 - - 8,198.92 - (91%) (6.5%) (2.5%) (100%)

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 - - Explanation as to the selection of estates sampled Only 1 supply base

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 No associated smallholder supplying FFB to this mill.

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

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

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 N/A 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 w ith any operating groups? 2.1.4 b. A statement of commitment to complying with the Yes 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 2.3.1 Does the plan include all subsidiaries, Yes, all PPB subsidiaries. estates and mills? 2.3.2 Is the time bound plan challenging? Not Applicable as all the Palm Oil Mill & Estate under PPB
Age of plantations. Oil Palm subsidiaries had been RSPO certified.
Location.
Mill development.
Infrastructure.
Compliance with applicable law. 2.3.3 Have there been any changes since the No Changes. last audit? Are they justified?

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Section Requirement Findings and any action required 2.3.4 If there have been changes, what N/A-refer 2.3.3 circumstances have occurred? 2.3.5 Have there been any stakeholder No stakeholder comments received for the inspected comments? units. 2.3.6 Have there been any newly acquired No as per the time of audit. subsidiaries? 2.3.7 Have there been any isolated lapses in N/A –refer 2.3.3 the implementation of the plan? 2.3.8 Has there been any systematic failure N/A –refer 2.3.3. to proceed with the implementation of the plan? 2.3.9 General statement as to progress made N/A –refer 2.3.3 since the last audit?

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 2.4.1 Did the company conduct an internal N/A –no uncertified units under PPB. audit? If so, has a positive assurance statement been produced? 2.4.2 No replacement after dates defined in N/A –no uncertified units under PPB. NIs Criterion 7.3 of: • Primary forest. • Any area identified as containing High Conservation Values (HCVs). • Any area required to maintain or enhance HCVs in accordance with RSPO criterion 7.3. 2.4.3 Any new plantings since January 1 st N/A –no uncertified units under PPB. 2010 must comply with the RSPO New Plantings Procedure. 2.4.4 Any Land conflicts are being resolved N/A –no uncertified units under PPB. through a mutually 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 are being resolved N/A –no uncertified units under PPB. through a mutually agreed process, in accordance with RSPO criterion 6.3. 2.4.6 Any Legal non-compliance is being N/A –no uncertified units under PPB. resolved in accordance with the legal requirements, with reference to RSPO criteria 2.1 and 2.2.

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

- - - - -

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

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 Name of Mill or Plantation *Area of concern (See examples below) - - 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. All the subsidiaries under PPB has been certified and no new acquisition.

2.6 Partial Certification Audit Agenda Date Location Agenda - - -

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.

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.

3.2 Audit Team Lead auditor: Mr. Muhd. Rizal Kassim Team member 1: Mr. Muhd Jamalul Arif bin Hamid Team member 2: Mr. Muhammad Shafiq bin Abd Razak Team member 3: Ms. Nor Atiqah Bt Saipul Bahri Team member 4: Mr. Baskaran Sankaran

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

3.2.1 Qualifications of the Lead Auditor Requirement Qualifications A minimum of post high school (post-secondary Post graduate qualification in Forestry with 5 years school) training in either agriculture/forestry, working experience in manufacturing and forestry. environmental science or social sciences; At least 5 years professional experience in area of More than 5years working experience in plantation and work relevant to the assessment (e.g., palm oil forestry. Involved in RSPO auditing since July 2012. Fully management; agriculture/forestry; ecology; social trained in similar agriculture certification programmes science); such as RSPO SCCS, ISCC Training in the practical application of the RSPO Involved in RSPO assessment since July 2012. Member of criteria, and RSPO certification systems; CUC RSPO audit team. Involved in audits conducted in Malaysia and Indonesia. Successfully completion of an ISO 9000:19011 lead Completed ISO 9001:2008 lead auditor course in January auditors course; 2013 Training in the practical application of RSPO Member of CUC RSPO audit team since July 2012.Involved certification systems. in audits in Malaysia and Indonesia since July 2012 in more than10 different companies. A supervised period of training in practical auditing Involved in audits conducted in Malaysia and Indonesia against the RSPO criteria or similar sustainability since July 2012 in more 10 different companies in standards, with a minimum of 15 days audit Malaysia and Indonesia. experience and at least 3 audits at different organizations. RSPO endorsed lead auditors course. Completed RSPO Lead Auditor training in 2013 Signed code of conduct. Yes signed General knowledge of: • 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 object ives of RSPO. YES • CV available. Upon Request Completion of CUC RSPO lead auditor training. Completed & Passed RSPO Lead Auditor training in 201 3

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

Fluent in main local Shafiq Fluent in Malay and English languages and English. Atiqah Fluent in Malay and English Muhd. Jamalul Arif Fluent in Malay and English Baskaran Fluent in English

Field working Shafiq Diploma in Plantation with more than 5 years experience in the palm working in various palm oil plantations. oil sector, or a Atiqah Graduated on geo-science. demonstrable Muhd. Jamalul Arif Involved in RSPO auditing since November 2010. equivalent. Auditing experience in GMP and Globalgap.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Baskaran Degree in Business Administration. Over 15 years conducting 2 nd and 3 rd party auditing for various industries.

Good agricultural Shafiq Diploma in Plantation with more than 5 years practices (GAP), working in various palm oil plantations. integrated pest Muhd. Jamalul Arif Involved in RSPO auditing since November 2010. management (IPM), Auditing experience in GMP and Globalgap. pesticide and fertilizer Baskaran Degree in Business Administration. Over 15 use. years conducting 2 nd and 3 rd party auditing for various industries. Atiqah Attended In-house GAP trainings.

Health and Safety Shafiq Diploma in Plantation with more than 5 years auditing on the farm working in various palm oil plantations. and in processing Muhd. Jamalul Arif Involved in RSPO auditing since November 2010. facilities. (For example Auditing experience in GMP and Globalgap. OHSAS 18001 or Baskaran Degree in Business Administration. Over 15 occupational. Health years conducting 2 nd and 3 rd party auditing for and safety assurance various industries. system). Atiqah Attended ISO 9001 awareness trainings.

Workers welfare issues Muhd. Jamalul Arif Involved in RSPO auditing since November 2010. and social auditing Auditing experience in GMP and Globalgap. experience. (For Baskaran Degree in Business Administration. Over 15 example with SA8000 or years conducting 2 nd and 3 rd party auditing for related social or ethical various industries. accountability codes). Atiqah RSPO P&C 6 observer and auditing experience [more than 6 audits] assisted by Social Auditor.

Environmental and Muhd. Jamalul Arif Involved in RSPO auditing since November 2010. ecological auditing. (For Auditing experience in GMP and Globalgap. example experience Baskaran Degree in Business Administration. Over 15 with organic agriculture, years conducting 2 nd and 3 rd party auditing for ISO 14001 or various industries. environmental Atiqah RSPO P&C 5 observer and auditing experience management systems). [more than 8 audits] assisted by Environmental Auditor.

Economic issues. Rizal Kassim More than 5years working experience in plantation and forestry. Involved in RSPO auditing since July 2012. Fully trained in similar agriculture certification programmes such as RSPO SCCS, ISCC.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

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.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

3.3.2 Assessment agenda for this Audit Date Auditor Location Main activities All Sabahmas Opening meeting - Chaired by the audit team leader Meeting room • Introduction by team leader • Presentation by respective managers • Presentation of Palm Oil Mill source of FFB by respective Managers • Review the status of previous non-conformities

Mill inspection • Workshops • Stores • POM application 11/12/2014 • Document review [Thursday] Jamal Baskaran Sabahmas Field operations Shafiq POM • Worker interviews Atiqah • Housing • Medical • Schools • Local communities • Environmental

Sabahmas Supply Chain Certification Assessment of the POM (RSPO Rizal POM SCCS)

Document & Field operations. • Worker interviews Rizal • Chemical stores, Workshops Jamal Sabahmas • Housing Baskaran Estate • Medical, Schools Shafiq • Atiqah Local communities • Environment

12/12/2014 Preparation for closing meeting [Friday] Additional field visits and meetings with managers as necessary

Closing meeting Sabahmas Chaired by the audit team leader All auditors Meeting room • Welcome and introduction by the team leader

• Presentation of findings by the audit team • Questions and answers • Final summary by team leader

End of assessment

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

PART 4 ASSESSMENT FINDINGS

4.1 Lead Assessor’s Summary and Recommendation for Certification The mill and supply base are as per the above table 1.5 and 1.7.1 visited was assessed at field, office, facilities, stores and document review carried out in accordance to the RSPO principles and criteria. Partial verification not applicable and please refer to Part 2 for more details. Common systems were identified and specific evidence was recorded for individual estate and mill. Interviews with Estate Managers, Mill Manager, and members of workers representatives took place in both formal and informal environments and worker interviews were conducted in all estates and in the mill. Subsequent to the stakeholders’ interview, the surrounding communities were visited so as to capture more feedback from the stakeholders. There were no complaints received during the field assessment and during interview with the external stakeholders. Up to the time of writing this report, there were neither feedbacks nor comments received from the other external stakeholders and community leaders. Since the RSPO certification, the management adequately practicing the respect of human rights and as evidence, there isn’t discrimination of workers at work place and no land disputes and issues with local communities. The mill is fully verified for RSPO SCCS system verification and it is found to be in full compliance. Refer the whole of Part 5. It is therefore the recommendation of the lead assessor that: • A certificate of compliance is maintained. Signed:

Name: Muhd. Rizal Kassim Date: 12 /12/2014

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.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Principle 1: Commitment to Transparency Criterion by The company has all the copies of requests & responses. Such records are Audit kept and available for viewing. As a whole, the business units have common Summary system with parent company on publicly available documents which have been listed in their SOP. ASA 1 1.1 Company has established procedure and system for respond and request from the stakeholder. Information has been recorded effectively and required action that has been taken is registered and commented in the form. Based on the evidence, sighted a request from JKKP Malaysia for Steam Engineer to engage Grade 1 Steam Engineer, the respond has been addressed accordingly. ASA 1 1.2 In the mill, sighted the Safety and Health Policy dated on September 2010. Training programme for 2014 is available. • PPE Training seen on 10/02/2014 conducted by Rudiman bin Malan. Attended 49 workers. • First Aid Training was done on 26/11/2014 conducted by Miss Philisia & Mr. Jusli Thomas was attended by 13 workers. • ERP Training done on 14/04/2014 conducted by Mr. Jumain Mohd Nali and was attended by 58 workers. The document for waste products and sources of pollution is sighted. Mill has list of waste generated in SOP SMPOM-SSOP-REV V 2013. Last update on 11/11/2013. The pollution prevention plan 2014 is available (SMPOM/PPP/REV 5 2014. Prepared by Mill Engineer (Mr. Chong Yih Sien) and Verified by Mill Manager (Mr. Hamuddin Bustamin). Sighted Consultation and Communication Procedure last revised on 2/12/14. There are 2 types of procedures which are for external and internal communication. Internal communications models include management to staff/workers (through daily assemblies and notice board/posters), and staff/workers to management (through suggestion boxes, or staff/worker representatives). External communication models include Public Information Request form, Complaint and grievance form and Requisition form. Consultation and Communication Procedure, Document No RSPO 6.2, date of revision 2/12/14. There is an EIA in place which includes recommendations for improvement and monitoring is carried out to ensure implementation. Evidence is to review the EIA & mitigation plan document annually and regular monitoring of water quality. As for Sabahmas Estate, the company has identified the source of pollution in report of Sabahmas Survey December, 11th – 23rd 2008. The company has the schedule of waste to be disposed in every month. The schedules are mentioning the wastes that shall be disposed and its respective amount. The company has landfill as waste areas and they did record it. SOP for communication in respect of RSPO principle last revision on 1 July 2009 covered 6 procedure included introduction, objective, standard guidelines, procedures for incoming public information request, management document guidance and closing of request. Company also provided communication form to been filled up by interested parties who comes to make a communication. Continuous improvement plan has elements of reduce environmental impacts which are also derived from their EIA output. The action plan includes minimize use of certain pesticides, maximizing recycling programme, cost reduction plan and improve water quality to residents by the usage filters .

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

ASA 1 1.3 A written policy on ethical conduct seen established and effectively communicated among all workers and interested parties. Principle 2: Compliance with Applicable Laws and Regulations Criterion by Records of the business units have maintained legal compliance with Audit statutory requirements. The mill is within the estates boundary and an Summary estate holds valid land titles. The boundaries are well demarcated and visible. An interview with local community confirms that there are no land disputes. ASA 1 2.1 In the mill, there are list of applicable license, permit and certification with information on description, government department, license/certificate number, validity and date of next renewal. Example: • Lessen berniaga, no G002170, expire 31/12/14 • DOE license, no JPKKS/12/001196, expire 30/6/15 • Lessen bagi pepasangan sendiri from suruhanjaya tenaga, No 00121187, expire 30/9/15 There are also list of certificate of fitness and inspection of factory and machinery. Person responsible is being identified for each working station. Example: • Engineer – senior mill manager and mill manager • Gas tester and entry supervisor – mill manager and production supervisor There are register of legal and other applicable requirements that include: • EQA 1974 (Act 127) • Workers Minimum Standards of Housing and Amenities Act 1990 • Drainage and Irrigation Ordinance 1956, etc. The system to monitor compliance is shown in a table where information include part, section/subsection/para/title/abstracts, relevant environmental aspects or other activities, responsible officer, and compliance. This was reviewed by mill manager once/year. Seen evidence: • Register of legal and other applicable requirements • Legal compliance is being reviewed by mill manager once/year. • The person in charge is Mr Hamuddin, senior mill manager and Ms Asriani, document controller. • Legal officer from head office is responsible for identifying and updating legal and other requirements which are applicable to the company activities. • Sighted list of amendments, latest on 27/10/12 - national wages. • SOP for registration of legal and other applicable requirements, document no RSPO 2.1(2), revision date 18/12/07 Estate also was maintained Register of legal and other applicable requirement of PPB Oil Palms Berhad was have 25 sections of Law and Regulations. Sighted additional in laws and regulation such as: 1. Windfall Profit Levy Act 1998 2. EQ (Sewage) regulations 2005 3. Sabah Animal Ordinance 1962 4. National Wages Consultative Council Act 2011- Minimum Wages 5. UN Declarations on the rights of Indigenous Peoples 2007. 6. ILO Conventions No. 87 & 98 7. Conventional on Biological Biodiversity (12 Appendixes) Estate has 15 list of applicable licenses/permits/certificate Approval 2013 in matrix also contains validity period and license No. and remarks.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

ASA 1 2.2 Mill is located under estate land title with title no Country Lease 115378955. It is under lease hold from 1/1/1988 to 31/12/2086 for 98 years. Sighted evidence: • Land title no CL115378955 • There is procedure for identify legal and customary rights. • Procedures include establishment of legal and native customary rights, and establishment of people entitlement for compensation. Process for Identification of Legal and Customary Rights and Identifying People entitled for compensation, version 1.0, revision date 30/07/09. Sabahmas Estate land title is under 7 titles under several name of parent company WILMAR subsidiary. Divided by 3 divisions details as: Division 1 • Land Title no. CL 115378973 (1,735 Ha) under name of Red Logging Sdn Bhd. • Land Title no. CL 115378964 (888.2ha) under name of Page Development Sdn Bhd • Land Title no. CL 115378955 (1,212 Ha) under name of GEPA Lumber Sdn Bhd. Division 2 • Title no. CL 115378946 (1,140 Ha) under name of Logmerc Sdn Bhd. • Title no. CL 115378937 (1,292 Ha) under name Sabahmas Plantations Sdn Bhd. Division 3 • Title no. CL 115418874 (2,189 Ha) under Sabahmas Plantations Sdn Bhd. • Title no. CL 115378919 (2,021.Ha) under name Sabahmas Plantations Sdn Bhd. Land title is legally rights under Sabahmas Plantations Sdn Bhd. No dispute of land recorded so far and the risk is very low. However, negotiation procedure is in place in case if happen PPB/RSPO 6.3 (2.2)/ (1) for Dispute and Grievances Procedure. Total 200 units’ boundaries stone were physically maintained in Sabahmas Estate. In east side of Sabahmas plantation is Tabin Wildlife Reservation, Permai Estate, and MPOB Plantation. In North side, there are stakeholders Hup Seng Plantation. On west plantation side the boundary is adjustment with Segama River approximately 45 Km. Estate has established 50m buffer zone along the common boundary of the estate and Tabin Wild life Reservation Forest. All boundaries are marked with numbers and GPS coordinate for easy tracking and records. No land disputes recorded so far. Company has maintained SOP PPB/RSPO 6.3 (2.2)/ (1) for Dispute and Grievances Procedure. ASA 1 2.3 No customary right land in Sabahmas Plantation compound or adjusted. All neighborhoods are recognized as per detail in P2.2.3.1.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Principle 3: Commitment to Long-Term Economic and Financial Viability Criterion by The annual budget of the business units has detail breakdown as per below Summary Audit findings. ASA 1 3.1 For mill, sighted 10 years cash flow projections from 2006-2024. The operating expenditures include expenses on processing, CPO & PK transport, MPOB cess, mill administration, and access road maintenance. Budget can be summarize as below: 2013 (RM) 2014 (RM) 2015 (RM) processing 4,017,338 3,979,883 4,749,525 CPO transport 963,612 983,097 1,141,146 PK transport 218,940 222,528 259,265 MPOB cess 696,339 689,846 823,251 Mill administration 1,582,588 1,567,833 1,871,025 Road maintenance 168,844 168,844 201,495 Total 7,649,248 7,612,030 9,045,707 Oil extraction rate projection is available from year 2006 to year 2024. It summarized as below: Year / KPI 2014 2015 FFB 241205 287850 OER% 21.5 21.5 KER% 4.1 4.1 Estates have annual business management plan complete with crop projection, agricultural costs, infrastructures, field planting and up keeping. For 2015, budget is captured in Sabahmas Plantations S/B Budget 2014. Budget included comparative budget details, expenditure cost, area of planted & unplanted area, CAPEX, crop budget by year planting & monthly phasing, revenue budget by estate, revenue budget by year planting, detail crop budget by field basis and summary of VRA. Crop projection is captured for upcoming years based on planting trends in Sabahmas Estate including yield/ha. • 2015- 191,200.0 MT • 2016- 178,400.0 MT • 2017- 161,240.0 MT • 2018- 156,200.0 MT Trends in seems to down on 2014-2018 due to mature plant (over than 15 years). Projection also includes maintenance, harvesting, & collection expenditure for 5 years [Land & infrastructures, Housing, Agricultural machinery & motor, Plant & Machinery and office & clinic]. Replanting programme is developed for 5 years projection until 2018. Thus, after approval from HQ, complete replanting programme will develop for 5 years. Replanting programme also include related cost to spend such as land preparation, land clearing, lining/planting, infrastructures, cover crop, planting material and up keeping work such as weeding, boundaries, pest and disease, manuring etc. Estate Hectare (Ha) 2015 2016 2017 2018 1 610.9 306.9 409.8 322.9 2 0 346.2 217.4 287.8 Total 610.9 653.1 627.3 610.7

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Principle 4: Use of Appropriate Best Practices by Growers and Millers Criterion by The company best agricultural practice ensures the management systems Audit are always being monitored by having regular internal audits by the Summary sustainable team. The mill has kept the OER within the trend from the past years. The estates have continually implementing best agricultural practices together integrated pest management system. ASA 1 4.1 In Sabahmas POM, seen the Safe and Standard Operating Procedure (SSOP) (Rev. VI, 2013). Document that covering all mill practices. Sections are also clearly displayed in the mills. Safe and Standard Operation Procedure (26 Stations) includes Reception & Weighbridge (Sales & Dispatch) / Sterilizer / Tipper and threshing / Press and Kernel Plant. Inspections by Mill Manager and Mill Engineer to ensure all the work area follow the SSOP. SSOP checklist for all the monitoring and action taken is available. Monitoring records for water quality. Water usage, effluent water BOD, river water quality, safety aspects implementation and monitoring records are updated regularly. The mechanism to ensure that of implementation sighted thru the group internal audit (RSPO Audit Team) report from 10 th -11 th November 2014 checked, the recommendation and action taken is available. Sighted the visit from DOSH. Latest visit on 16 th July 2014 to check pressure vessel. Also visit by DOE on 20 th March 2014 by Mr. Azman bin Salamon. The purpose of the internal/external audit is to verify records and procedure against specific requirement and relevant standards requirements. In Sabahmas Estate, the facility has established Standard Operating procedures (SOP) under title “Procedure Kerja Selamat Operasi” on 02/01/2008 identifying all key activities. Agriculture manual & SOP for Oil Palm available. The SOP been regularly updated and the last update was on 06/06/2013 to add Replanting SOP. Monitoring records are kept more than 12 months at estate main office. Seen the chemical usage report for estate from Jan –November 2014 identifying monitoring of all chemicals used in the plantation by volume. Example Estate 1 –BM Glyphosate, amount used = 52.8 litter for 756.64 Ha. ASA 1 4.2 Fertilizers are used as per annual recommendation. Sighted Fertilizer Recommendation Report 2014 by prepared by Eco-Management Unit. Also sighted the fertilizer consumption monthly record. Example: Rock Phosphate (Gafsa) = Feb=17.15, Mar=28.1, Apr=0.5, May=11.55, Aug=229.61, Sep=21.05 and total till date = 307.96mt. Foliar Analysis data is carried out for 2013 with consideration to elements such as N, P, K, Ca, & Mg. Monthly EFB Application record for Sabahmas year 2014 with attached map of areas applied is available. Example, sighted area field No.: 029 [Jan = 7.9Ha/ 295.5MT / May = 7.14Ha/285.5MT / June = 3.58 Ha/ 143 MT]. ASA 1 4.3 In estate, seen the environmental impact assessment done in 2012 has recommended to plant cover crop to minimize soil erosion. Sighted cover crops planted in replanting areas during site visit. There is no evidence documented plan but however records of usage of herbicides for year 2014 by months are available. Example: For the month January 2014 total BM Glyphosate, amount used = 52.8 litter. Feb=169.0. EIA assessment done PPB Oil on August 2014 has identified soil type in figure 3.7 Soil Map. Agriculture manual & SOP for Oil Palm has identified in chapter 3, land clearing and preparation on “all steep areas > 25 0 and larger 20 ha should not be cleared for developments.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Sabahmas Estate Soil Organic Carbon Report published on 28 th June 2012 by EMU, senior manager Mr Philip Ho, has recommended to chip and spread out old palm trunks and to plant “Mucuna bracteata “cover crop. During the site visit to the planation new planted areas are planted with “Mucuna bracteata “cover crop and also chipped palm trunk. Monitoring report by independent consultant Ekohandal Sdn Bhd dated September 2104 has identified progress on the environmental management practices. ASA 1 4.4 Riparian Management Project for Segama River which runs on the edge of the plantation boarder is signed by both the PPB Oil Palms Berhad and The Sabah state Government (Sabah Forestry Dept.) dated 26 th October 2009 has identified the riparian zone map in the memorandum. The company and the State government have reviewed the memorandum of understanding in October 2014 but yet to publish a new memorandum for 2104. Monitoring of riparian for Sg. Segama has carried out on monthly basis. Some of the survey done, such as Boat and land survey 03/11/2014, distance = 4.09 km. The Rapid Assessment Report on Proboscis Monkeys For Wilmar at Sabahmas Estate report done by Red Ape Encounters to gather with HUTAN dated 17 th June 2014. The monitoring report has outlined recommendations for further improvements such as monitoring strategy and Training programme for monitoring. There is significant abstraction noticed for the Segama river during the site visit. Sighted the effluent and water sampling records (MJ 4.4.3). The test maintains and checked by Mill Manager every month. POME is discharged to effluent pond during the last audit at the Sabahmas POM. Month pH BOD COD Jun’14 8.1 20.10 445 Jul’14 8.0 18.00 310 Aug’14 7.9 15.40 445 Sep’14 8.0 21.20 419 Oct’14 8.1 25.70 510 Nov’14 8.2 20.70 372

Records for rainfall are available and maintained which being monitored on daily basis. All the data get from Sabahmas Estate. This information is used to plan water treatment programme and daily field work. Records are kept at each operating units. Rainfall for to date 2014 as below : Month Sabahmas 5 Sabahmas 6 Sabahmas 7 Jan 492 448 736 Feb 103 164 228 Mar 133 296 130 Apr 74 34 74 Mei 179 156 181 Jun 135 216 161 July 121 218 142 Aug 336 193 291 Sept 138 118 135 Oct 234 201 286 Water quality analysis was done on 22 August 2014 by Ekohandal Sdn Bhd indicates that some of the parameters slightly higher than Class II Limit. Example: Total suspended Solid = 127-271 but the limit is 50. However the report prepared the consultant has identified the cause for exceeding limits is due to heavy rain.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Monitoring of the water usage per FFB is recorded and available. Month Water use (litre) FFB processed (MT) Litre / MT Sep 2014 39,347 20,738.17 1.90 Oct 2014 39,809 19,366.34 2.06 Nov 2014 38,081 19,543.28 1.95 Water management plan is available (SMPOM/WMP/Rev III. 2012). Also sighted the Water Management Programme & Action Plan 2014. Prepared by Mill Engineer and review by Mill Manager. Example to reduce water consumption for mill process in the year 2014. • Minimize water consumption for mill cleaning purposes. • Minimize the water consumption at hydrocylone and clay bath machine. • Maintain the daily record of water usage (Process & Boiler. ASA 1 4.5 Agriculture Manual in Chapter 8 Plant Protection – Pest and disease management has identified various control measures for the plantation, such as Chemical control, Biological control, Physical control and Cultural control (Planting beneficial plants are already in place, Tunera, Cassia and Anti Gonon). Monitoring of pest and disease are done monthly basis. November 2014- One Rate spotted at Field No. : 34.43. ASA 1 4.6 In Sabahmas POM, Chemical Health Risk Assessment is available. A chemical health risk assessment was prepared on the 22th September 2014 by CHRA OSHE Global Solutions Sdn Bhd. This report covers all operations in the mill where chemicals are used and is valid for 5 years. Assessor by Christina Tiong Ching Ling [JKKP Reg. No: JKKP HIE 127/171-2(253)]. In Sabahmas Estate, there are a few SOPs established for chemical handling such as Chemical Spraying, Manuring, Palm Thinning, Transportation and handling of FFEB, Chemicals, Fertilizer, waste and workers SOP, Transportation and handling diesel and lubricant, Premix of herbicides and Leaf eating pest control SOP. A chemical health risk assessment was prepared on the 22th September 2014 by CHRA OSHE Global Solutions Sdn Bhd. This report covers all operations in the mill where chemicals are used . ASA 1 4.7 The Mill Manager (Mr. Hamuddin bin Bustamin) is responsible person. Manual SOP is available for accident and safety procedures. Supervisor gives safety briefing during every morning to ensure the workers understand the procedures and records in his daily record book. Sighted the Safety and Health Policy on September 2010. Training programme for 2014 is available. Records of meeting minutes are available during audit conducted. Meeting Date: 30/09/2014 – 12 people attended the meeting. This safety and health meeting conducted quarterly to discuss safety issues, represented by staff and workers. PPE Training, 10/02/2014 conducted by Rudiman bin Malan. Attended 49 workers. First Aid Training, 26/11/2014 conducted by Miss Philisia & Mr. Jusli Thomas. Attended 13 workers. ERP Training, 14/04/2014 conducted by Mr. Jumain Mohd Nali. Attended 58 workers. First Aid Training 26/11/2014 conducted by Miss Philisia & Mr. Jusli Thomas. Attended 13 workers. Safety and health policy, plan available in English and local language including Indonesian language. The latest OSH policy by September 2010. During site visit, sighted the policy. Every station has safety signage. All the workers understand the requirement of the policy. They also implemented it in their works. CHRA was prepared on the 22th September 2014 by CHRA OSHE Global Solutions Sdn Bhd.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

This report covers all operations in the mill where chemicals are used and is valid for 5 years. In the mill, accident is 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,II, IV) on annually basis to the DOSH. LTA calculation based on local interpretation from DOSH. Sighted the JKKP 8 for 2013 in File MI 4.7.2. Management review on the end of year will determine the total LTA and report to DOSH by JKKP 8 Form above. Safety committee meeting minutes dated 11 July 2014. The foreign workers are covered by workman compensation insurance [Certificate No KK- W0363877-WFC - 46 workers insured Sabahmas Estate]. Action plans has identified such as to provide training, PPE, apron, goggles, face mask have been identified. ASA 1 4.8 There is a training syllabus with records of training and photographic evidence. Each worker and staff members has their own individual record that is updated. There are identified some training programs. • PPE Training • Safety and Health Policy • First Aid training. In Sabahmas Estate, Safety & Health Training Plan for year 2014 is available. Among the training planned and conducted are: • SSOP training for handling & spraying technique • SSOP for Manuring • PPE Training Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity Criterion by The operating units review the environmental improvement plans every Audit January. The mill improvement plan was given importance to reduce water Summary usage and for the estates is to control through biological such as barn owls and beneficial plants as stated in IPM above. ASA 1 5.1 In Sabahmas POM, sighted Environment Impact Assessment (EIA) is available in SOP EAIP 01/ (00) /1114. The SOP includes: i. Identification - To identify all activities or aspects of the palm oil mill those have impact to the environment. ii. Implementation & maintenance - - To obtain a site plan indicating that area where activities pertaining to POM and sensitive area in estate. - Evaluate the risk level of the identified based on risk analysis matrix. - To provide plan to mitigate negative impact and implement and monitored. - To ensure that the details of the EIA are publicly available. EIA assessment has been carried out at 21 areas starting with Boiler, Generator Set, Sterilizer Station, Press Station, Oil Room and etc. covering all activities of the mill. The EIA assessment findings are recoded in “Identification of Environmental Aspect and Evaluation of Environmental Impacts and Evaluation of Significance” [SMPOM/EAI-IDE/EVA/REV V 2014]. Review is done minimum once a year on all Mill activities. Last review was done by Mill Engineer (Mr Chong Yih Sin) 02/11/2014 and Review by Mill Manager (Mr. Hamuddin Bustamin). Mitigation measures are planned for those significant impacts that have been identified in the “Significant Environmental Aspects and Impacts Mitigation Methods” document SMPOM/EIA-MIT/REV IV, 2013. RSPOPC-SUM-REPORT.F01 OCT2013 Page 21 of 41 Control Union (Malaysia) Sdn. Bhd. 150-A, 1st Floor, Persiaran Raja Muda Musa, Off Jalan Sg Bertih, Teluk Gadong, 41100, Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Example, Boiler – Noise emission has been identified as significant environmental impact in then “Significant Environmental Aspects and Impacts Mitigation Methods” document. The mitigation measures identified are SSOP for boiler operation and use of PPE. In Sabahmas Estate, reviewed the procedure titled Identification of Environment Aspects and Evaluation of Environmental Impacts. Document No: RSPO 5/5.1 (1) dated of revision 16-10-2007. In the procedure, the environmental impacts are identified: Depletion of natural/renewable resources, ozone layer depletion, global warming, acid rain, air pollution, water pollution, land contamination, nuisance/healthy&safety, community impacts, business impacts, endangered/fatality to sildlife, and soil erosion. In Sabahmas Estate, HVC scoping for oil plam plantations of PPB Oil Palm Berhad done on February, 21 st 2008 and May, 24 th 2008 by independent consultant. The follow up assessment has been carried out by Ms Marcie Elene M.J Assistant Manager Biodiversity. The company is using the HCV toolkit for Malaysia developed by the WWF-Malaysia. The company has wildlife identification guide and protected birds of Sabah iedntification guide. ASA 1 5.2 For Sabahmas Estate, HVC for oil plam plantations of PPB Oil Palm Berhad done on February, 21 st 2008 and May, 24 th 2008 by independent consultant. The follow up assessment has been carried out by Ms Marcie Elene M.J Assistant Manager Biodiversity. The company is using the HCV toolkit for Malaysia developed by the WWF-Malaysia. The company has wildlife identification guide and protected birds of Sabah iedntification guide. The company has a management plan for HCV habitats and their conservation. They are using EIA as their management plan which is monitored in every 4 months. The company is implementing the monthly monitoring of activities. The company has Riparian Project. In the riparian areas they are planting the indigenous species of trees as the reforestation and rehabilitaion activities. Warning signs boards are noticed along the estate roadside of the riparian zone from hunting during site visit. Refers to the information from Estate Group manager that their riparian areas width has been increased from 20m to 50m by their top management will be reserved as a reforestation and rehabilitaion areas. So that, no activities related to the palm oil are allowed to be conducted in the areas. Then the socialization has been done during the meeting named HCV and Riparian Awareness Talk. In this meeting the company represent by Mrs. Marcie Elene has delivered information related to the HCV such as warning signs, the wildlife that couldn’t be hunted, do and don’t activites. ASA 1 5.3 In mill, the document for waste products and sources of pollution is sighted. Mill has list of waste generated in SOP SMPOM-SSOP-REV V 2013. Last update on 11/11/2013. o Wastewater:  Effluent  Sterilizer condensate  Domestic waste o Solid waste  Scrap iron  EFB  Boiler ash

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

o Scheduled waste  Used lubricant oil / Contaminated rags  Contaminated leather hand gloves  Used hydraulic oil filter / Empty container The pollution prevention plan 2014 is available (SMPOM/PPP/REV 5 2014. Prepared by Mill Engineer (Mr. Chong Yih Sien) and Verified by Mill Manager (Mr. Hamuddin Bustamin). In Sabahmas Estate, seen the company established procedures to manage schedule wastes. Their schedule waste includes waste oil, spent hydraulic, empty drums 209 litre, and cotton rugs; used filter. Domestic wastes are segregated and disposed accordingly by DOE approved contractor. In the mill sighted ccontaminated rags, leather hand glove, used lubricant oil and filter are being collected by DOE approved collector which is Petrojadi Sdn. Bhd. [No. 000734Expiry 30/04/2015]. Sighted the latest records on 27/08/2014. • SW 102 : KA No :140013-023 1 pallet • SW 109 : KA No :140013-020 1 drum • SW 409 : KA No :140013-017 1 pallet • SW 410 : KA No :140013-002 3 drums • SW 429 : KA No :140013-009 4 drums • SW 110 : KA No :140013-R04 1 drum • SW 305 : SMPOMSW-002 6 drums • SW 306 : SMPOMSW-003 3 drums Waste management plan established by estate management has identified activities that cause pollution and type of waste. Some of the waste identified are waste oil, spent hydraulic, empty drums 209 litre, and cotton rugs; used filter. Sighted the effluent and water sampling records (MJ 4.4.3). The test maintains and checked by Mill Manager every month. POME is discharged to effluent pond: Month pH BOD COD Jun’14 8.1 20.10 445 Jul’14 8.0 18.00 310 Aug’14 7.9 15.40 445 Sep’14 8.0 21.20 419 Oct’14 8.1 25.70 510 Nov’14 8.2 20.70 372

ASA 1 5.4 The mill has planned to reduce the usage of gensets by upgrading the turbine biogas engine to supply electricity for mill, office, Linesite and etc. Data for 3 gensets is as below: Month kWhr for Diesel usage FFB processed kWhr / gensets (litre) (MT) litre Sep 2014 73,885 21,873 20,738.17 3.38 Oct 2014 78,760 22,826 19,366.34 3.45 Nov 2014 76,775 22,033 19,543.28 3.48 There are also data on shovel usage of fossil fuels for FFB transported. Month Diesel use FFB processed Litre / MT (litre) (MT) Sep 2014 21,873 25,996.90 0.84 Oct 2014 22,826 28,943.93 0.79 Nov 2014 22,033 21,805.06 1.01

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

In Sabahmas Estate, there is a plan to reduce/improving efficiency of fossil fuel usage includes, regular checking on estate use vehicles and application of diesel and petrol. ASA 1 5.5 In Sabahmas Estate, seen there is implementation of chipping as the fallen method. No fire is allowed in this area. It can be evidenced by the zero burning policy stated in the environmental policy point (3). The company has a warning signs for the prohibition of waste burning and no open burning noticed during the site visit. ASA 1 5.6 In Sabahmas POM, sighted the document for waste products and sources of pollution is sighted. Mill has list of waste generated in SOP SMPOM-SSOP- REV V 2013. Last update on 11/11/2013. The pollution prevention plan for 2014 is available (SMPOM/PPP/REV 5 2014. Prepared by Mill Engineer (Mr. Chong Yih Sien) and Verified by Mill Manager (Mr. Hamuddin Bustamin). In Sabahmas Estate, sighted the facility has identified the source of pollution in report of Sabahmas Survey December, 11th – 23rd 2008. The facility has the schedule of waste to be disposed in every month. The schedule is mentioning the wastes that shall be disposed and its respective amount. The facility also has landfill as waste areas and they did record it. The pollution prevention plan 2014 is available (SMPOM/PPP/REV 5 2014. There is no peat areas identified within the estate. Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Miller s 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 was issued. ASA 1 6.1 For mill, the SIA management action plan is being reviewed on 15/11/14. The impact parameter added is from the stakeholder meeting held on 15/10/14. Most of the parameters are from the previous assessment as they are in on-going process. SIA Management Action Plan, document no RSPO C6.1/ISCC. Stakeholder meeting minutes dated 15/10/14. The impact parameter added is from the stakeholder meeting held on 15/10/14. During the meeting, mitigation plan is being discussed along. Example: o Safety issue – speedy rider o Groceries cost o Disposal of used tyres Stakeholder meeting minutes dated 15/10/14. Latest update is on 15/11/14. The plan include information on impact parameters, recommendations / comments, proposed action / mitigation, location, person in charge, timeline, progress/remarks. SIA Management Action Plan, document no RSPO C6.1/ISCC. In estate, Initial Scoping of SIA was carried out by independent party, Envirologic Consulting dated on 31 May 2008. The SIA covered issued such estates background, communities, and condition of workers, environment issue and lead to identification of aspect and impact. Social Impact Management Plan was developed to proposed mitigation action need to be taken from management. The plan also indicate person in charge, timeline to the action taken.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Impact and aspect assessment is divided into 4 aspects: • Communities • Workers Condition. • Welfare • Environmental Latest review of SIA action plan was done on 15/11/2014 includes the issues: 1. Over sped motorcyclist and vehicles within Sabahmas Estate. 2. Untagged price and expired goods in grocery shop in estate. 3. Safety aspect on Tanduo Incident. All new aspect has an impact assessment including action plan taken and PIC. Record of periodically meeting is available on annually basis. Latest meeting on 02/12/2014 representing by local communities and management. Records of meeting on annual basis available. Meeting was attended by representative from local communities and management. Timetable for all management action plans was monitored by person in charge. ASA 1 6.2 Sighted Consultation and Communication Procedure last revised on 2/12/14. There are 2 types of procedures which are for external and internal communication. Internal communications models include management to staff/workers (through daily assemblies and notice board/posters), and staff/workers to management (through suggestion boxes, or staff/worker representatives). External communication models include Public Information Request form, Complaint and grievance form and Requisition form. Consultation and Communication Procedure, Document No RSPO 6.2, date of revision 2/12/14. Person in charge is Mr Hamuddin, senior mill manager. Sighted his appointment letter date 1/4/14. Appointment letter, ref no SBPOM/RSO/MI6.2.2, dated 1/4/14. There are total of 194 stakeholders that include government agencies, local communities, FFB supplier, contractor, refinery, grocery shop and spare part supplier. Ex: o Government agencies – Balai Polis Lahad Datu o FFB supplier – Atlantic Plantations Sdn Bhd o Refinery – Lahad Datu Edible Oils Sdn Bhd In estate, sighted SOP for communication in respect of RSPO principle last revision on 1 July 2009 covered 6 procedure included introduction, objective, standard guidelines, procedures for incoming public information request, management document guidance and closing of request. Company also provided communication form to been filled up by interested parties who comes to make a communication. Nomination letter (SBPOM/RSPO/MI6.2.2) date on 01/04/2014 for Mr. Hamuddin Bustamin as nominated Head of Communicator & Negotiator for whole complex. List of stakeholder evident. Ex: Supplier [15] – Mr Lau Fui Ling Atlantic Plantation ; Government [23]– Labour – Ms Asuria, Village Smallholder [2]– Kg Sri Putatan Mr Sylvester, NGO [4] –BORA Dr Junaidi and others like, Balai Polis , Hospital etc. Last updated on 29/11/2014 additional stakeholders included for Hutan KOCP Team as NGO and Lagenda Bumimas Sdn Bhd as schedule waste collector.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

ASA 1 6.3 There are procedures for dispute & grievances. This procedure has been approved by sustainability coordinator, Mr Simon Siburat on 16/11/09. Dispute & Grievances Procedure, document no PPB/RSPO 6.3 (2.2) / (1), date of original issue 22/08/13. Complaint is recorded in complaint form and action taken after that is being written in that form. Besides that, list of complaint is available where there are 23 complaint recorded for year 2014. Example, Marten, date 8/10/14, regarding house condition. His complaint has been attended promptly with timely manner. In estate, the SOP no. PPB/RSPO 6.3 (2.2)/ (1) title “Dispute & Grievance Procedure” sighted and the procedure mentioned flow of complaint to be address by management. Time frame for internal and external communication is divided into 2. The 1 st is on dealing with internal and external communication, the following timeframe to provide feedback should be adopted. The 2 nd is within 2 weeks of the date of receipt for communication requiring direct feedback. Within one week of the completion of the investigation, for requiring investigation. ASA 1 6.4 There is procedure for identify legal and customary rights. Procedures include establishment of legal and native customary rights, and establishment of people entitlement for compensation. Process for Identification of Legal and Customary Rights and Identifying People entitled for compensation, version 1.0, revision date 30/07/09. In the procedure, there is procedure for establishment of people entitlement for compensation. Process for Identification of Legal and Customary Rights and Identifying People entitled for compensation, version 1.0, revision date 30/07/09. No customary land. No compensation for customary right land so far. ASA 1 6.5 In mill, sighted salary recap and contracts of workers. Local and foreign workers are having the same contract. Minimum wages are RM 30.77 as stipulated in law, minimum wages RM800/month. Salary recaps for month August-November 2014. Workers have same contract regardless local or foreign workers. Sighted contract of Mr Rasid Bin Abdul Rahim. Checked his punch card from Aug-Nov 2014. Seen that he’s been working for this 4 whole month with only 1day off. In estate, seen all workers get pay slip every month to mention the income including any deduction, incentive, allowance etc. Sample of workers’ payslip sighted, Norsiah Kaseng (Sprayer) on November 2014 received basic wages RM 800, incentive RM 439.85 and allowance RM 50. Total deduction for SOCSO, EPF and petrol RM193. Take home pay is RM 1095.89. All workers have own work contract according to Ordinan Buruh (Sabah Bab.67) and kept in estate office. Contains of the contract is include payment, working hours, overtime, rest day, house facility, insurance, maternity leave, reason for contract dismissal etc. Workers contract name Norsiah Kaseng (Sprayer) and Ekal Juma (harvester) sighted. No difference between local and foreign workers work contract. Checked contract name, Ekal Juma (Indonesian worker). Workers housing including water supplies, medical, school, mosque, electricity and accordance to Workers Minimum Standard of Housing & Amenities Act 1990. A minor non-conformity issued for work been done with no rest day. ASA 1 6.6 In the mill, sighted minute of meeting for welfare committee that consist of local, foreign and gender committee representative. Latest meeting is on 2/10/14 and meeting is being held at least 3 times/year. All matters being attended promptly. Seen minute of meeting dated on 2/10/14. Freedom of association and collectively bargain is stated and communicated. RSPOPC-SUM-REPORT.F01 OCT2013 Page 26 of 41 Control Union (Malaysia) Sdn. Bhd. 150-A, 1st Floor, Persiaran Raja Muda Musa, Off Jalan Sg Bertih, Teluk Gadong, 41100, Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

In estate, there is a workers union representative and organisation chart was available and communicate to all workers thru meeting that will held every 4 months. Latest meeting on 26hb Sept 2014. ASA 1 6.7 Found the policy in mill didn’t define clearly the minimum working age. But in the policy, it stated that they won’t employ those who fall under the ILO and refer to Sabah employment laws. Sighted the youngest at age of 18. Example: Anita Suman, entry date 20/06/14, date of birth 13/4/96, start working at the age of 18years 2months. In estate, no person under 18 years will be absorbed to work in PPB Oil Palms Berhad Group. According to company Child Labour Policy dated on September 2010. ASA 1 6.8 In the mill, sighted Policy of equal opportunities is available where it were last update on September 2010. Sighted workers/employees right brochure where it stated the rights and being distributed to all workers so that they knew their rights. In estate, Policy Equal Opportunity Policy date on September 2010 was maintained and displayed at office and workers housing. The document review of “Workers summary” consist of name of workers, date of birth, age, staus (marital or single), Sex (Male and Female), nationality, job, wages rate shown that all workers obtain equal opportunities and workers interview also confirmed that no any discrimination found during interview. All workers were treated equally from interviewing with migrant workers. Salary is based on volume and level of work. All workers included migrant or women that working with chemical will been sent to medical surveillance every year without discrimination. ASA 1 6.9 In mill, seen a Policy on sexual harassment is available and last reviewed on June 2014. Sighted discussion on sexual harassment, violence, pregnant lady and breastfeeding mother. Also sighted the policies on sexual harassment, gender committee meeting minute which being held at least 3 times/year. The latest meeting is on 17/10/14. There is no complaint at the time of audit. In estate, seen Sexual Harassment, Violence and Abuse, Reproductive Rights Policy dated on June 2014. Estate has own Women & Child Committee to protect their rights in estate. The committees are chaired by Leinis Tuging and have 3 representatives from management and 6 from workers. Meeting was held every 4 months and latest on 08/12/2014. Activities in Gender & Children Committee include Pap smear Check-up (03/11/14), Pregnant Lady Check-up and Immunization (13/09/2014). Management also conducted Sexual Harassment Training to all workers in estate on 12-13 Sept 2013. Women & Children Violence Training was conducted 12 July 2014. Interviewed person name Josita Lansau (Women committee secretary). Have separated mechanism to handling sexual harassment and violence. Any grievance received will be record into “Sexual Harassment Grievance Form”. Grievance further will be investigated by committee and further action will be taken to the person. ASA 1 6.10 In the mill, seen FFB prices were display at weighing counter. Current and past FFB prices were available. Prices are based on MPOB prices. The pricing mechanisms are available and manage by HQ. Sighted agreement for CPO & PK transport between Sabahmas Plantations Sdn Bhd and Sri Sabmal Transport Sdn Bhd commence at 1/1/14. Payment is done in monthly basis.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Sighted claim made by Sri Sabmal Transport Sdn Bhd for October and November 2014 for PK and CPO transport. CPO transport – RM 74,622.38 and PK transport – RM 22,051.92. In estate, seen a contract between company and EFB Transporter Chuing Kien Enterprise; sighted signed agreement dated 10.03.2014. Certificate of payment raised every end of the month. Group Manager will approve. Final payment will be issued. Verified payment release to contractor through payment voucher. ASA 1 6.11 In the mill, sighted summary of donation for year 2014. Example: o Donation for best student award 2014, RM 137.72 o Donation for annual sports event, RM 275.44 In the estate, the CSR realization records are based on the result of consultation with local communities such playground budget at the crèche. Others continuous contribution to local communities such as HUMANA school fees provided by estate management for RM 60 per children, uniform and learning material. ASA 1 6.12 List of workers verified all is local workers. No migrant or trafficked labours are used. No possible of contract substitution. All the workers are local people not migrant workers. All the workers are local people not migrant workers. No temporary workers in this mill. ASA 1 6.13 Policy of “Hak Asasi Manusia” well maintained and communicated to all workers during meeting and morning. There are sufficient an evidence of above Policy was communicated to all workers. Principle 7: Responsible Development of New Plantings Criterion by Summary There were no new plantings carried out. Audit ASA 1 7.1 Neither new planting nor extension of existing one documented or seen during this audit. Management claimed there is no oil palm extension in Malaysia. There is no out grower scheme associated with this estate. ASA 1 7.2 New planting not applicable, topographic information for the existing estate sighted along with latest GPS Survey. ASA 1 7.3 No primary forest sighted within this estate perimeter. As there is no new planting applicable, therefore formal HCV assessment not evidence. No new planting programme applicable. ASA 1 7.4 No peat land and due to no hilly and sloping areas, therefore terracing not applicable. ASA 1 7.5 As there is no new planting applicable, therefore formal HCV, EIA and SIA assessment not evidence. ASA 1 7.6 Neither new planting nor extension of existing one documented or seen during this audit. No negotiations concerning compensation for loss of legal or customary rights are as per this assessment period. ASA 1 7.7 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 ASA 1 7.8 Neither new planting nor extension of existing one documented.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Principle 8: Commitment to Continuous Improvement in Key Areas of Activity Criterion by Sighted continuous monitoring, review of activities and development are Audit implemented along with action plans that allow demonstrable continual Summary 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 1 8.1 The mill has an environmental policy on waste management and it is evident through observations and consideration of practices and criteria that this is being implemented. Seen contaminated rags, leather hand glove, used lubricant oil and filters are being collected by DOE approved collector which is Petrojadi Sdn. Bhd. There is an EIA in place which includes recommendations for improvement and monitoring is carried out to ensure implementation. Evidence sighted for: i. To review the EIA & mitigation plan document annually. ii. Regular monitoring of water quality. The purpose of the internal/external audit is to verify records and procedure against specific requirement and relevant standards requirements. There is a continuous improvement plan that for PPB Oil Palms covering the Sabahmas plantation. The action plan includes : • Minimize use of certain pesticides • Maximizing recycling programme • Estate cost reduction plan • Improve water quality to residents by the usage filters The mechanism to ensure that of implementation sighted thru the group internal audit (RSPO Audit Team) report from 10 th -11 th November 2014 checked, the recommendation and action taken is available.

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 The following 1 Minor NC’s was raised for this audit.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

NON CONFORMITY REPORT NC number: 01/2015 Client name: Sabahmas POM Date raised: 12/12/2014 Major or Minor: Minor Raised by: Nor Atiqah Aspect of standard: 6.5.2 - Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. Working hours, deductions, overtime (maximum of 90 hrs per month), sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc) are available in the language understood by the workers or explained carefully to them by a plantation management official in the operating unit. Evidence of non-conformity: Workers entitled 1 rest day / week as stated in work contract “ Hari Rehat - Pekerja berhak mendapat sehari cuti rehat pada setiap minggu. Hari rehat akan di atur/di tetapkan oleh majikan”. Sighted that workers are working continuously with only 1 rest day for 4 months (Aug-Nov 2014). Example: Mr Rasid Abdul Rahim, • August 2014 – 31 working day • September 2014 – 30 working days • October 2014 – 30 working days • November 2014 – 30 working days

Lead Assessor signature :

Date: 12/12/2014 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 CU809360

4.3.2 Non-Conformity Identified during the last ASA, not applicable for MA 4 minor non conformities raised during the last Main Assessment.

NON CONFORMITY REPORT NC number: 01/2013 Client name: PPB Oil Palm Berhad (Sabahmas POM) Date raised: 12/12/2013 Major or Minor: Minor Raised by: Simon Aspect of standard : 1.2.5 Documents that must be publicly available. Evidence of non-conformity:

The company has listed 7 types of documents as publicly available documents upon request. However, the company is unable to demonstrate how the details of complaints & grievances procedures are publicly available.

Auditors signature:

Date: 12th Dec 2013 Proposed corrective action / improvement action by company. The complaints & grievances procedure been revised to address the documents as publicly available documents.

Timeline for conformance: before next surveillance date Review of corrective /improvement action: Corrective action is effective, therefore NC is closed. Assessors signature:

Date: 12/12/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

NON CONFORMITY REPORT NC number: 02/2013 Client name: PPB Oil Palm Berhad (Sabahmas POM) & Estate Date raised: 12/12/2013 Major or Minor: Minor Raised by: Simon Aspect of standard : 5.1.2 Documented impact assessment. Evidence of non-conformity:

EIA for contractor’s activities at the contractor quarters not assessed. Sighted the area were not organized, oil leakage and domestic waste were not controlled. The contractor found to be a transporter of FFB for Sabahmas Mill & Sabahmas Estate. Auditors signature:

Date: 12th Dec 2013 Proposed corrective action / improvement action by company. The EIA was reviewed with the participation from contractor and an RSPO P&C awareness was provided to all contractors.

Timeline for conformance: before next surveillance date Review of corrective /improvement action: Corrective action is effective, therefore NC is closed. Assessors signature:

Date: 12/12/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

NON CONFORMITY REPORT NC number: 03 /2013 Client name: PPB Oil Palm Berhad (Sabahmas POM) & Estate Date raised: 12/12/2013 Major or Minor: Minor Raised by: Simon Aspect of standard : 5.3.2 Having identified wastes and pollutants, an operational plan should be developed and implemented, to avoid or reduce pollution. Evidence of non-conformity:

The identified wastes and pollutants, an operational plan was not developed and implemented, as to avoid or reduce pollution. Referring to NC 03/2013 this NC is raised.

Auditors signature:

Date: 12th Dec 2013 Proposed corrective action / improvement action by company. An environmental operational management plan established and respective personal were assigned to report of the progress on quarterly basis.

Timeline for conformance: before next surveillance date Review of corrective /improvement action: Corrective action is effective, therefore NC is closed. Assessors signature:

Date: 12/12/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

NON CONFORMITY REPORT NC number: 04/2013 Client name: PPB Oil Palm Berhad (Sabahmas POM) & Estate Date raised: 12/12/2013 Major or Minor: Minor Raised by: Simon Aspect of standard : 6.2.1 Documented consultation and communication procedures. Evidence of non-conformity:

RSPO 6.2 Consultation and Communication Procedure dated 4.1.2010 sighted. However, it was evaluated that the mechanism to derive or access various information through participation of various parties including disinterest community groups, NGOs, government, village leaders, ethnic groups, day to day workers is insufficient.

Auditors signature:

Date: 12th Dec 2013 Proposed corrective action / improvement action by company. The RSPO 6.2 Consultation and Communication Procedure were reviewed and amended the method of receiving and responding to parties who needs informations.

Timeline for conformance: before next surveillance date Review of corrective /improvement action: Corrective action is effective, therefore NC is closed. Assessors signature:

Date: 12/12/2014

4.3.3 Observations Raised During this Audit None was raised

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

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 refer to PART 2 and PART 4 refer to PART 2 and PART 4 refer to PART 2 and PART 4

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 2011 RSPO Supply Chain Certification Standard. November 2011

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) KM22, Jalan Sri Putatan, Off Jalan Sabahmas Palm Oil 40 Dam, 91113 Lahad Datu Sabah, MB Mill Malaysia

5.2 Confirmation Of The Company’s Summary Of Annual Certified Volume Of RSPO Certified Palm Oil And Palm Kernel Over A Specified Period Product CPO (MT) PK (MT) Specified 12 month period CU Code POM 1 41,125 9,305 Forecasted volumes between Dec 2014 – Nov 2015.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

5.3 Summary Report Including A Brief Description Of The Scope Of Certification Sabahmas palm oil mill receives FFB from own supply base and outside growers and process it into CPO and Palm Kernel as a product using RSPO SCCS MB model. Workers trained on RSPO SCCS requirement. A full RSPO SCCS certification audit was used during this annual assessment and the findings support the certification based on supply chain model used.

5.4 Monthly Records of Certified FFB, CPO and PK Since the Last Audit No MONTH-YEAR Certified Supply Bases (MT) Certified CPO (MT) Certified PK (MT) 1 Dec 2013 20,058.400 4,289.496 1,018.729 2 Jan 2014 16,272.860 3,320.445 786.947 3 Feb 2014 15,573.470 3,346.702 798.518 4 March 2014 16,612.750 3,750.337 866.341 5 April 2014 14,136.030 3,232.356 722.804 6 May 2014 14,603.690 3,277.153 701.262 7 June 2014 12,567.750 2,749.210 558.348 8 July 2014 15,444.370 3,345.977 658.028 9 August 2014 17,595.430 3,928.533 822.815 10 Sept 2014 16,620.080 3,724.541 872.695 11 Oct 2014 15,149.670 3,305.617 798.468 12 Nov 2014 14,384.950 3,067.361 737.030 TOTAL 189,019.45 41,337.728 9,341.99

5.5 Records of Certified CPO & PK Sold under GreenPalm to Buyers since the Last Audit, if Any Certified CPO Certified PK No Buyers Name GreenPalm Trading No (MT) Sold (MT) Sold 1 - - - -

5.6 Records of Certified CPO & PK Sold under UTZ eTrace to Buyers since the Last Audit, if Any Certified CPO Certified PK No Buyers Name UTZ eTrace Trading No (MT) Sold (MT) Sold 1 Lahad Datu Edible Oils Sdn Bhd - RSPO_PO1000000071 14,241.32 - Wilmar International Ltd

5.7 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 .

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

5.8 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 It is the responsibility of the department heads to ensure that they and their subordinates comply with the requirements and procedures stated in SOP manual. It is their responsibility to maintain records that will allow verification of the RSPO status of the material. The MR is having the overall responsibility for and authority over the implementation of the requirements and compliance with all applicable requirements. He is having the full understanding and awareness of supply chain certification system and the facilities procedures for the implementation of the standard.

5.9 Final Certification decision by Control Union for the RSPO SCCS Audit of the POM Recommendations made: Yes Summary of non- None. 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: Approximately Sept 2015

6.2 Date for Closure of Non-Conformities See sections above for details of NC’s, if any • Al l major NCs to be closed by: No Major NC raised. • All minor NCs to be closed by: Before next surveillance audit

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

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 A uditor.

Acknowledged by: Name: Edrin Moss Position: Senior Manager - Sustainability Date: 19 March 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: Muhd. Rizal Kassim Position: Lead Auditor Date: 12/12/2014 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: 21/03/2015 Signature

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

PART 7: APPENDICIES

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

Map 1. Location of PBB in Sabah Region

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Map 2. Location of PBB (Sabah Mas POM and estate) and neighboring entities

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU809360

Appendix 2: List of Abbreviations BRC British Retail Consortium CHRA Chemical Health Risk Assessment CoC Chain of Custody CPO Crude Palm Oil CSR Corporate Social Responsibility CU Control Union CUC Control Union Certifications DOE Department of Environment 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 HCV High Conservation Value HCVF High Conservation Value Forest IPM Integrated Pest Management JAS Japanese Agricultural Standard 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 Tonnes WHO World Health Organization

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