RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

RSPO PRINCIPLES & CRITERIA PUBLIC SUMMARY REPORT ANNUAL SURVEILLANCE ASSESSMENT 1

Malaysia TANJONG MALIM PALM OIL MILL -Kepong Berhad 2014

Report prepared by: Mahaswaran Maliyapan (Lead Assessor) Certification decision by: Gerben Stegeman (Certifier) Certifying Office Control Union () Sdn. Bhd. 150-A, 1st Floor, Persiaran Raja Muda Musa, Off Jalan Sg Bertih, Teluk Gadong, 41100 , , Malaysia [email protected] Tel: +603-3377 1600 / 1700

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

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

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

RSPOPC-SUM-REPORT.F01 MAY 2014 Page 1 of 70 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 CU827183

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

1.1 COMPANY AND CONTACT DETAILS ...... 4 1.2 RSPO MEMBERSHIP & CERTIFICATION DETAILS ...... 4 1.3 ANNUAL SURVEILLANCE ASSESSMENT DETAILS ...... 4 1.4 ASSESSMENT TYPE ...... 4 1.5 LOCATION OF THE PALM OIL MILL ...... 4 1.6 PALM OIL MILL OUTPUT AND APPROXIMATE TONNAGES CERTIFIED ...... 4 1.7 GENERAL DESCRIPTION OF SUPPLY BASE ...... 5 1.7.1 Location of the Supply Base ...... 5 1.7.2 Statistics of the Supply Base and Estimated Tonnes of FFB produced per year ...... 5 1.7.3 Conservation and HCV Area (Ha) ...... 5 1.7.4 Percentage of Planted Oil Palm by different Age Ranges ...... 6 1.7.5 Calculation of the Number of Production Units (N) to Sample for the Mill ...... 6 1.8 PROGRESS OF ASSOCIATED SMALLHOLDERS OR OUT-GROWERS, IF APPLICABLE TO THIS ASSESSMENT ...... 6 1.9 LOCATION MAP FOR THIS CERTIFICATION UNIT (SEE APPENDIX 1) ...... 6 PART 2: PARTIAL CERTIFICATION ...... 6

2.1 MANAGEMENT STRUCTURE ...... 6 2.2 NON-COMPLIANCE IDENTIFIED WITH 2.1 ABOVE ...... 7 2.3 SUMMARY OF THE TIME BOUND PLAN ...... 7 2.4 UN-CERTIFIED UNITS OR HOLDINGS ...... 8 2.5 SUMMARY OF THE FINDINGS FOR PARTIAL CERTIFICATION ...... 11 2.6 PARTIAL CERTIFICATION AUDIT AGENDA ...... 11 PART 3: AUDIT PROCESS...... 12

3.1 ABOUT THE CERTIFICATION BODY ...... 12 3.2 AUDIT TEAM ...... 12 3.2.1 Qualifications of the Lead Auditor ...... 12 3.2.2 Qualifications of the Assessment Team ...... 13 3.3 AUDIT METHODOLOGY...... 14 3.3.1 General Overview ...... 14 3.3.2 Assessment agenda for this Audit ...... 15 PART 4 ASSESSMENT FINDINGS ...... 16

4.1 LEAD ASSESSOR’S SUMMARY AND RECOMMENDATION FOR CERTIFICATION ...... 16 4.2 SUMMARY OF THE FINDINGS BY PRINCIPLES AND CRITERIA ...... 16 Principle 1: Commitment to Transparency ...... 17 Principle 2: Compliance with Applicable Laws and Regulations ...... 18 Principle 3: Commitment to Long-Term Economic and Financial Viability ...... 19 Principle 4: Use of Appropriate Best Practices by Growers and Millers ...... 20 Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity ...... 30 Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers ...... 37 Principle 7: Responsible Development of New Plantings ...... 43 Principle 8: Commitment to Continuous Improvement in Key Areas of Activity ...... 45 4.3 NON-CONFORMITY RAISED DURING THIS AUDIT AND ANY FROM THE PREVIOUS YEAR, IF APPLICABLE ...... 46 4.3.1 Non-Conformities Identified during this Audit ...... 46 4.3.2 Non-Conformity Identified during the last ASA, not applicable for MA ...... 58 NON-CONFORMITIES IDENTIFIED FOR PREVIOUS AUDIT. [7 MINOR NCS] ...... 58 4.3.3 Observations Identified during this audit ...... 65 NO OBSERVATION FOUND IN THIS AUDIT...... 65 4.4 ISSUES THAT WERE RAISED DURING THE STAKEHOLDER CONSULTATION, IF ANY ...... 65 RSPOPC-SUM-REPORT.F01 MAY 2014 Page 2 of 70 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 CU827183

PART 5: RSPO SUPPLY CHAIN CERTIFICATION ...... 65

5.1 POM INCLUDED IN THE SCOPE OF THE AUDIT ...... 65 5.2 CONFIRMATION OF THE COMPANY’S SUMMARY OF ANNUAL CERTIFIED VOLUME OF RSPO CERTIFIED PALM OIL AND PALM KERNEL OVER A SPECIFIED PERIOD ...... 66 5.3 SUMMARY REPORT INCLUDING A BRIEF DESCRIPTION OF THE SCOPE OF CERTIFICATION ...... 66 5.4 MONTHLY RECORDS OF CERTIFIED AND UNCERTIFIED FFB RECEIVED SINCE THE LAST AUDIT ...... 66 5.5 MONTHLY RECORDS OF CERTIFIED CPO AND PK PRODUCED SINCE THE LAST AUDIT ...... 66 5.6 RECORDS OF CERTIFIED CPO & PK SOLD UNDER GREEN PALM TO BUYERS SINCE THE LAST AUDIT, IF ANY ...... 66 5.7 RECORDS OF CERTIFIED CPO & PK SOLD UNDER UTZ ETRACE TO BUYERS SINCE THE LAST AUDIT, IF ANY ...... 67 5.8 NON-CONFORMITIES IDENTIFIED DURING THIS AUDIT ...... 67 5.9 DESCRIPTION OF THE ORGANIZATIONAL MANAGEMENT SYSTEMS ...... 67 5.10 FINAL CERTIFICATION DECISION BY CONTROL UNION FOR THE RSPO SCCS AUDIT OF THE POM ...... 68 PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ...... 68

6.1 DATE OF NEXT ASA ...... 68 6.2 DATE FOR CLOSURE OF NON-CONFORMITIES ...... 68 6.3 SIGNING BY THE CLIENT ...... 68 6.4 SIGNING BY THE LEAD AUDITOR ...... 68 6.5 SIGNING BY THE CERTIFIER ...... 68

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT

1.1 Company and Contact Details Company Name: Kuala Lumpur Kepong Berhad. Business Address: 1, Jalan S. P. Seenivasagam, 30000 , . Contact Person: Mr. Sin Chuan Eng Office Telephone: +6089-887240 E-Mail: [email protected] Web Site: www.klk.com.my Other Certifications Held: ISCC

1.2 RSPO Membership & Certification Details RSPO Membership Number: 1-0014-04-000-00 Registered Client Name: Kuala Lumpur Kepong Berhad Certificate Number: CU-RSPO-827183 Start Date Of Certificate: 19/11/2013 End Date Of Certificate: 18/11/2018 Date Of Original Certification: 19/11/2013 Scope: Certification of the Palm Oil Mill and Supply Bases Type Of Certification: Single site Duration Of Certificate: 5 Years from date of certification

1.3 Annual Surveillance Assessment Details Dates Of This Audit: 18th August – 21st August 2014 Audit Number: ASA 1

1.4 Assessment Type This is a RSPO Principles &Criteria Compliance assessment of the palm oil mill and its respective supply bases as listed in this report below.

1.5 Location of the Palm Oil Mill Name Mill Location GPS Reference Palm Oil Mill Capacity (POM) MT/Hour Address Longitude Latitude Tanjong Malim Beg Berkunci No 3, 35909 Tanjong 20 E 101°29.145" N 3° 41.700" POM Malim, Perak. 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 Audit Year Projected 12 Months (MT) last 12 Months (MT) 2013 (MT) Forecast Certified in this Report Jun’13 to July’14 Jun’13 to July’14 Jun’14 to July’15 FFB CPO PK FFB CPO PK FFB CPO PK 77,000 25,200 6,000 60,905.51 13,483.62 3,232.79 82,926 18,243 4,146

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

1.7 General Description of Supply Base There is no change in the supply base. The sampled supply bases were assessed on the RSPO implementation and records maintenance. Random interviews were conducted by auditors at respective sites as to ensure the intended scope of RSPO reached the stakeholders. RSPO P&C 2013, Generic guideline was used during this assessment.

1.7.1 Location of the Supply Base Oil Palm Area Summary Location GPS reference OPP Plantation (Ha) Name Address Longitude Latitude Total Mature Ladang Changkat ASA, Changkat ASA E 100° 29’ OPP1 35900 Hulu Bernam, N 3° 41’ 3.0” 1,288 1201 Estate 34.7” Selangor. Ladang Kerling, Peti Surat E 101° 20' N 3° 20' 619 221 OPP2 Kerling Estate 202, 44109 Kerling, 24" 23.99" Selangor. Sungai Gapi KM 62, Jalan KL-Ipoh, 44100 E 101° 36' N 3° 34' OPP3 603 561 Estate , Selangor. 35.99" 11.99" Bukit Kartho Ladang Bukit Kartho, 35500 E 101° 20' N 4° 4' OPP4 482 264 Estate , Perak. 11.58" 51.491" 90, Jalan Tronoh Mines, Kampar Estate E 101 °6' 0" N 4° 16' 0" 708 624 OPP 5 31910 Kampar, Perak. TOTAL 3700 2871

1.7.2 Statistics of the Supply Base and Estimated Tonnes of FFB produced per year Estimated Cycle OPP Oil Palm Plantation Planting Years FFB/Year (MT) (Years) OPP 1 Changkat ASA Estate 33,684 1987-2010 25 OPP 2 Kerling Estate 5,925 2003-2005 25 OPP 3 Sungai Gapi Estate 16,482 1999-2005 25 OPP 4 Bukit Kartho Estate 5,824 1989-2004 25 OPP 5 Kampar Estate 21,011 1986-2000 25 82,926 - -

1.7.3 Conservation and HCV Area (Ha) * HCV part of OPP Oil Palm Plantation Conservation Area (Ha) HCV Area (Ha) Conservation OPP 1 Changkat ASA Estate 2 - No OPP 2 Kerling Estate 25 - No OPP 3 Sungai Gapi Estate 17 - No OPP 4 Bukit Kartho Estate 1 - No OPP 5 Kampar Estate - - No TOTAL 45 - - * Indicate if HCV area is part of the Conservation Area. If the HCV area is part of the Conservation Area, then “YES” otherwise, “No”

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

1.7.4 Percentage of Planted Oil Palm by different Age Ranges Planting years by 5 year ranges (Ha) CU Code Pre 1990 1991~1995 1996~2000 2001~2005 2006~2010 2011~2015 Total 100% OPP 1 8% 21% 35% 14% 15% 7%

100% OPP 2 - - - 100% - -

100% OPP 3 - - 61.21% 35.52% - 3.28%

100% OPP 4 7.62% 18.57% 26.19% 10.48% - 37.14%

100% OPP 5 58% 21% 21% - - -

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 5 3 0 NA Explanation as to the selection of estates sampled 3 estates were sampled.

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 Not Applicable

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

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

2.1 Management Structure Section Criteria Yes/No If “Yes” If “No” 2.1.1 Is the certified operation (POM and supply base as No Section 2 is Go to 2.1.2 detailed above) a stand-alone operation and there are N/A no other plantations or mills owned by the same company? 2.1.2 Is the certified operation part of a simple structure of Yes Go to 2.1.5 Go to 2.1.3 operations owned by one company? 2.1.3 Are there statements of the ultimate controlling - Go to 2.1.4 Go to 2.2.1 shareholders and directors in the managing agency company/companies: a. Explaining the legal relationship and the management arrangements with the subsidiary companies and / or with any operating groups?

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

2.1.4 b. A statement of commitment to complying with the - Go to 2.4 Go to 2.2.2 spirit of the RSPO for all companies and subsidiaries involved with the growing of oil palm and for the production of palm oil? 2.1.5 Is there a time bound plan in place for all subsidiaries, Yes Go to 2.3 2.2.3 estates and palm oil mills? 2.1.6 Is the parent company or one of its majority owned and / Yes or managed subsidiaries a member of RSPO.

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

2.3 Summary of the Time Bound Plan Section Requirement Findings and any action required Compliance 2.3.1 Does the plan New inclusion of supply base and mill has been updated in Yes include all below time bound plan. subsidiaries, estates and mills?

2.3.2 Is the time bound Existing time bound plan has been included with new supply Yes plan challenging? base and mill.  Age of plantations.  Location.  Mill development.  Infrastructure.  Compliance with applicable law. 2.3.3 Have there been The time bound plan reviewed by CUC and changes such as new Yes any changes since inclusion is updated and accepted. the last audit? Are they justified? 2.3.4 If there have been New inclusion of mill and supply base. No changes on the Yes changes, what targeted time line. circumstances have occurred? 2.3.5 Have there been  Recent stakeholder comment on acquired land in Papua Yes any stakeholder New Guinea on the credibility on land obtained has been comments? raised by OCEAN-Program Officer Collingwood Bay Community Representative, Mr Adelbert Gangai has sent comments to KLK on a letter dated 5th December 2013 and kept RSPO & other parties in copy. Currently, KLK has leased a piece of a land to park all the machineries RSPOPC-SUM-REPORT.F01 MAY 2014 Page 7 of 70 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 CU827183

temporarily.  As of 09 December 2013, this matter is being handled with RSPO and currently KLK is in progress to reply to RSPO. Wild Asia had been appointed since April 2013 to undertake SEIA assessment and subsequently 1st meeting at Wanigela district on 25th Nov 2013 and community and representative attended was recorded. Pending official assessment report.  On PT Menteng Jaya Sawit Perdana IUP for 7,400Ha approval no: 525.26/153/II/EKBANG/2007 dated on 13 February 2007 and Izin Lokasi (IL) is renewed and documented no: 188.45/359/HUK-BPN/2013 dated: 1st August 2013 which includes an approval clause 1a that this IL will remain in force until land swap process is finalised. 2.3.6 Have there been No new acquisition other than Papua New Guinea. Yes any newly acquired subsidiaries? 2.3.7 Have there been No lapses. Yes any isolated lapses in implementation of the plan? 2.3.8 Has there been any No. Yes systematic failure to proceed with the implementation of the plan? 2.3.9 General statement The target to certify all the units within year 2015 remain same. Yes as to progress made 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 Compliance 2.4.1 Did the company The internal audit have included all the requirements to validate Yes conduct an internal the compliance against uncertified units or holdings as per audit? If so, has a partial requirements and assurance statement has been positive assurance generated by KLK has a list of subsidiaries inspected and dated statement been 30th Nov 2013. produced? 2.4.2 No replacement The company has conducted HCV assessment by Jump Yes after dates defined Consulting in January – February 2012 for all subsidiaries where in NIs Criterion 7.3: the assessment report confirms that there was no replacement  Primary forest. of primary forest or containing HCV. The new mills and newly  Any area acquired land are still under consultant preliminary report. identified as containing High Conservation Values (HCVs).  Any area required to maintain or enhance HCVs in accordance with

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

RSPO criterion 7.3. 2.4.3 Any new plantings PT Anugerah Surya Mandiri has undergone NPP and published in Yes since January 1st RSPO website on 1st April 2013. 2010 must comply with the RSPO New Plantings Procedure. 2.4.4 Any Land conflicts For PT Karya Makmur Abadi, a total land of 4,745.13Ha has been Yes are being resolved compensated. PT Adei Plantation land conflicts around 2,544Ha through a mutually are still in progress of negotiation. The disputes are being agreed process, handled by the company through Grievance procedures, Dispute e.g. RSPO settlement procedures where the settlement is evident phase Grievance by phase. procedure or Dispute Settlement Facility, in accordance with RSPO criteria 6.4, 7.5 and 7.6. 2.4.5 Any Labor disputes None noted.no stakeholder comments or complaints received Yes are being resolved through a mutually agreed process, in accordance with RSPO criterion 6.3. 2.4.6 Any Legal non- None noted. No stakeholder comments or complaints received. Yes compliance is being 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 Current Supply Bases (estates, Targeted RSPO Palm Oil Mill Country Certification Status plantations, associations) Certification Year as per this Audit  Pelam Estate Serdang, Kedah.  Batu Lintang Estate Batu Lintang 2013 Certified Malaysia  Subur Estate  Buntar Estate  Landak Estate  Kekayaan Estate  Voules Estate  Sg Penggeli Estate  New Pogoh Estate Paloh, Johor. Kekayaan  Fraser Estate Oct 2011 Certified Malaysia  Paloh Estate  Sg Bekok Estate  Ban Heng Estate  See Sun Estate

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

Paloh, Johor. Supply base consisting of Paloh 2015 Pending Malaysia smallholders  Ayer Hitam Estate  Batang Jelai Estate  Jeram Padang Estate Bahau, Negeri  Kombok Estate Jeram Padang Sembilan.  Ulu Pedas Estate Sept 2012 Certified Malaysia  Sg Pertanian Estate  Sg Kawang Estate  Renjok Estate  Tuan Estate  Changkat Asa Estate Tanjung ,  Kerling Estate 2013 Certified Malim Perak. Malaysia  Sg Gapi Estate Sungai Buloh, Tuan Mee Selangor.  Tuan Mee Estate 2013 Certified Malaysia  Kerilla Estate Kuala Krai,  Pasir Gajah Estate Kuala Pertang Kelantan. By 2013 Pending  Sg Sokor Estate Malaysia

100% independent Tawau, Sabah. smallholders, not to be Mill 1 N/A N/A Malaysia included in the scope of the certification  Pang Burong Estate Tawau, Sabah.  Sri Kunak Estate Mill 2 March 2009 Certified Malaysia  Tundong Estate  Ringlet Estate  Jatika Estate Tawau, Sabah.  Sigalong Estate Pinang March 2009 Certified Malaysia  Pangeran Estate  Pinang Estate  Tungku Estate Lahad Datu, Lungmanis  Bukit Tabin Estate July 2010 Certified Sabah. Malaysia  Lungmanis Estate Lahad Datu,  Rimmer Estate Rimmer July 2010 Certified Sabah. Malaysia  Sg. Sibalukan Kinabatangan,  Bornion Estate Bornion July 2010 Certified Sabah. Malaysia  Segar Usaha Estate  Estate  Changkat Chermin Estate  Raja Hitam Estate Changkat Manjung, Perak.  Glenealy Estate 2013 Certified Chermin Malaysia  Serapoh Estate  Estate  Allagar Estate  Kebun Malindomas Berau, Kaltim. Perkebunan, Berau 1 By 2014 Pending Indonesia  Kebun Hutan Hijau Mas,  Kebun Jabontara

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

Ekakarsa Steelindo Audited on 30/9- Belitung,  Kebun Steelindo Wahana Wahana By 2013 04/10/2013. Indonesia Perkasa Perkasa Pending.  Kebun Sembada Parit Belitung,  Kebun Alam Karya By 2014 Pending Sembada Indonesia Sejahtera Riau, Sumatera, Mandau  Kebun Mandau Oct 2012 Certified Indonesia Approved by RSPO, Riau, Sumatera, Nilo 1  Kebun Nilo Timur By 2013 pending certificate Indonesia issuance. Approved by RSPO, Riau, Sumatera, NIlo 2  Kebun Nilo Barat By 2013 pending certificate Indonesia issuance. Tapung Riau, Sumatera,  Kebun Sekarbumi By 2013 Certified. Kanan Indonesia Alamlestari  Kebun Basilam Langkat,  Kebun Gohor Lama Gohor Lama Sumatera Utara. By 2014 Pending  Kebun Tanjung Beringin Indonesia (New inclusion) Kebun Padang Brahrang Kebun Bukit Lawang Padang Sumatera Utara. Kebun Tanjung Keliling By 2014 Pending Brahrang Indonesia Kebun Bekiun Kebun Maryke (New Inclusion) Kebun Karya Makmur Abadi Kalimantan MAP March Kebun MAP Tengah. By 2015 Pending 2013 Kebun Menteng Jaya Sawit Indonesia Perdana

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. Overall findings are satisfactory and a minor non-compliance raised has been closed with an assurance statement. The 6 estates which have been excluded from time bound plan previously is included now with a target date. Out of the two mills in Kalimantan Timur, a new palm oil mill named Berau 2 POM is yet to commission. Stabat POM in Medan & KMA POM in Sampit has not commissioned and will be included in the time bound plan once ready. The company has also made decision to include Paloh Mill into certification by year 2015. Mill 1 which consists of 100% of independent smallholders will be shut down within 3 years from 2012. For final conclusion, please refer to table 3.1.

2.6 Partial Certification Audit Agenda Date Location Agenda 18/08/2014 Tanjong Malim POM Documentation review

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

PART 3: AUDIT PROCESS

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

3.2 Audit Team Lead auditor: Mahaswaran Maliyapan Team member 1: Flora Anthonysamy Team member 2: Muhd. Jamalul Arif Team member 3: Atiqah [Trainee Auditor]

3.2.1 Qualifications of the Lead Auditor Requirement Qualifications A minimum of post high school (post-secondary Certified ISO 14001:2004 and OHSAS 18001:2007 Lead school) training in either agriculture/forestry, Auditor. environmental science or social sciences; At least 5 years professional experience in area of More than 15 years of working experience in various work relevant to the assessment (e.g., palm oil industries. Fully trained in similar agriculture certification management; agriculture/forestry; ecology; social programs such as RSPO, SCCS and RFS2. science); Training in the practical application of the RSPO Involved in RSPO assessment since 2012. Member of CUC criteria, and RSPO certification systems; RSPO audit team. Involved in audits conducted in Malaysia and Indonesia. Successfully completion of an ISO 9000:19011 lead Completed ISO 9001:2008, ISO 14001:2004 and OHSAS auditors course; 18001:2007 lead auditor course in June 2007. Training in the practical application of RSPO Involved in RSPO assessment since 2012. Member of CUC certification systems. RSPO audit team. Involved in audits conducted in Malaysia and Indonesia. A supervised period of training in practical auditing Involved in audits conducted in for many different against the RSPO criteria or similar sustainability companies in Malaysia and Indonesia. standards, with a minimum of 15 days audit experience and at least 3 audits at different organizations. RSPO endorsed lead auditors course. Completed RSPO Lead Auditor training in Oct 2013 Signed code of conduct. Yes General knowledge of: Yes  RSPO P&C standards. Yes  CUC organizational structure. Yes  CUC quality systems. Yes  Lead auditor role. Yes  Report writing. Yes  Stakeholder consultation. Yes  Certification decision process. Yes  RSPO SCCS program manual. Yes

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

 CUC filing systems. Yes  Correct use of RSPO trademarks. Yes  History and objectives of RSPO. Yes  CV available. Yes Completion of CUC RSPO lead auditor training. Yes

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

Fluent in main local Flora Anthonysamy Fluent in both English and Bahasa Malaysia languages and English. Muhd. Jamalul Arif Fluent in both English and Bahasa Malaysia Atiqah Fluent in Bahasa and English

Field working Atiqah [Trainee Auditor] Graduated on geo-science. experience in the palm Muhd. Jamalul Arif Involved in RSPO auditing since November 2010. oil sector, or a Auditing experience in GMP and Globalgap. demonstrable equivalent.

Good agricultural Atiqah [Trainee Auditor] Attended In-house GAP trainings. practices (GAP), Muhd. Jamalul Arif Involved in RSPO auditing since November 2010. integrated pest Auditing experience in GMP and Globalgap. management (IPM), pesticide and fertilizer use.

Health and Safety Flora Anthonysamy 10 over years of auditing experience with auditing on the farm Certification Bodies for ISO 9001, ISO 14001, ISO and in processing 13485 and SA 8000. facilities. (For example Muhd. Jamalul Arif Involved in RSPO auditing since November 2010. OHSAS 18001 or Auditing experience in GMP and Globalgap. occupational. Health Atiqah [Trainee Auditor] Attended ISO 9001 awareness trainings. and safety assurance system).

Workers welfare issues Flora Anthonysamy 10 over years of auditing experience with and social auditing Certification Bodies for ISO 9001, ISO 14001, ISO experience. (For 13485 and SA 8000. example with SA8000 or Muhd. Jamalul Arif Involved in RSPO auditing since November 2010. related social or ethical Auditing experience in GMP and Global gap. accountability codes).

Environmental and Flora Anthonysamy 10 over years of auditing experience with ecological auditing. (For Certification Bodies for ISO 9001, ISO 14001, ISO example experience 13485 and SA 8000. with organic agriculture, Muhd. Jamalul Arif Involved in RSPO auditing since November 2010. ISO 14001 or Auditing experience in GMP and Global gap. environmental management systems).

Economic issues. Mahaswaran Quality, environment and OHSAS Lead auditor. Working experience in various industries. Auditing since 2007. Involve in RSPO Audit since

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

2012. 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 CU827183

3.3.2 Assessment agenda for this Audit Date Location Auditors Main activities 08.30 Opening meeting Chaired by the audit team leader Changkat  Introduction by team leader ASA Estate Mahas  Presentation by respective managers Meeting  Presentation of Palm Oil Mill source of FFB by respective Room Managers  Review the status of previous non-conformities Mahas Supply Chain Certification Assessment of the POM (RSPO SCCS)

Mill inspection 18/08/2014 Flora  Workshops [Mon] Atiqah  Stores  POM application  Document review Tanjong

Malim POM Mill operations Mahas  Worker interviews Jamal  Housing  Medical  Schools  Local communities  Environmental Field operations.  Worker interviews

 Chemical stores Mahas Sungai Gapi  Workshops Estate Flora  Housing  Medical  Schools  Local communities 19/08/2014  Environmental [Tue] Field operations.  Worker interviews

 Jamal Chemical stores Kampar Atiqah  Workshops Estate  Housing  Medical  Schools  Local communities  Environmental

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

Flora Field operations.  Worker interviews Atiqah  Chemical stores Mahas 20/08/2014 Changkat  Workshops Jamal [Wed] ASA Estate  Housing  Medical  Schools  Local communities  Environmental Auditor’s preparation for closing meeting. Additional field visits and meetings with managers if necessary. Closing meeting to be chaired by the audit team leader Changkat  Welcome and introduction by the team leader 21/08/2014 ASA Estate All  Presentation of findings by the audit team [Thr] Meeting auditors  Questions and answers Room  Final summary by team leader

End of assessment

PART 4 ASSESSMENT FINDINGS

4.1 Lead Assessor’s Summary and Recommendation for Certification The mill and supply bases visited (as per the above Tables 1.5 and 1.7.1) were assessed at field, office, facilities, stores and a document review was carried out in accordance to the RSPO principles and criteria. The audited RSPO management system’s documentations seen with minor changes that due to internal and external influenced factors that in relation to scope of certification. Specific evidence was recorded for estates and mill. Interviews with Estate Managers, Mill Manager, members of workers union and committee took place in both formal and informal environments and worker interviews were conducted at the supply base and the mill. The management is highly committed in maintaining the RSPO system by adopting to continuous improvement programs. There was no complaint or feedback received during the audit or during the field assessment when interviewing with the external stakeholders. Under partial certification rules, there is a time-bound plan established. For further clarification on Partial Certification, see PART 2 above. The management continually monitoring the established KPI / objectives that significantly rules the achievement of company’s corporate policy on RSPO. The mill is fully verified for RSPO SCCS system verification and it is found to be in full compliance. See PART 5 below. It is therefore the recommendation of the lead assessor that:  A certificate of compliance is maintained. Signed:

Name: Mahaswaran Maliyapan Date: 21/08/2014

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 CU827183

Principle 1: Commitment to Transparency Criterion by Requests made by stakeholder were responded to and all these are well Audit Summary documented. Adequate information available for confidential information that being listed as publicly available. 1 Minor NCs issued. ASA1 1.1  In the mill the SOP for stakeholder request for information is available in SOP 1, for consultation & meeting, and complaint & grievance with rev 2 dated 1/3/13. Here, requests are recorded and being provided in appropriate languages and forms, once completed, stakeholders shall then acknowledge the completed action and response.  Stakeholder invitation letter was released on 28/12/2013 and the meeting was conducted on 03/01/2014. Sighted the attendance record signed by 15 stakeholders whom have been provided with basic refreshment awareness on RSPO, SCCS model and ISCC.  Based on the minutes of meeting, there was no issue brought up by any of the stakeholder [whom attended and via email//fax/letter]. Sighted the request and respond compilation list, and 5 out of 6 requests made were on housing facility repairing issues.  The management has taken sufficient measures to rectify the request and effectively documented. Copy of original land title is available at the mill’s office.  Tanjong Malim POM is registered in the land title No. CT 4635 Lot 1054 [the new lot Nos., 4260, 4261 & 4275] Mukim Ulu Bernam. Management has been publicise (pasted on the wall) the documents regarding policies on child labor, gender, PPE, etc.  In estates, sighted information publicise such as emergency contact numbers, map, emergency planning route, etc. Stakeholder logbook and meeting minutes.  Stakeholder logbook available and for any stakeholders are in place. Please refer to 6.1.1 – 6.2. ASA1 1.2  In the mill, sighted the the SOP-9 [Master list of Documents] stating on what are the documents and records that being approved by the management for public view. Copy of original land title is available at the office. [as per in 1.1.2].  Group Policy on OSH [manual and safety guideline] made available and it being used as reference for individual safety and health operating procedures.  Aside that, HIRADC and safety audit checklist being update when / where necessary. EIA is available and last update is on 01/12/2013. There was a minor NC issued during main audit for ineffective EIA assessment. In the estates, sighted the land titles well maintained.  Observed in Kampar Estate the land titles: No. 25261 – 5.8375 ha / No.25262 – 5.8957 ha / No. 25263 – 5.4758 ha

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

No. 25264 – 6.0120 ha / No.25265 – 5.1875ha / No.25266- 6.3307 ha No. 25267 – 5.2861ha / No.25268 – 6.3054ha / No.25269 – 6.2776 ha No.25270 – 6.7961ha / No.25271 – 427.9471ha / No.32169 – 266.4805 ha  The total area is 753.8320 ha and quit rent paid was RM47,535 (for 2014).  In estates the occupational health and safety plans and impact assessments relating to environmental and social impacts well kept.  Sighted the EIA was last prepared on 1/12/2013. SIA prepared and Stakeholder Logbook maintained & managed.  Continuous improvement plan is not available for 2014 and not discussed in Management Review meeting. ASA1 1.3 A Minor Non-Conformity issued against criterion 1.3.1: There is no written policy on committing to a code of ethical conduct and integrity in all operations and transactions, which shall be documented and communicated to all levels of the workforce and operations. Principle 2: Compliance with Applicable Laws and Regulations Criterion by The mill and estates have demonstrated compliance to all applicable local, Audit national and international laws with the exception of the implementation of the USECHH 2000 Regulations and the Scheduled Wastes Regulations 2005. Summary Legal ownership of land and its land use is clearly demonstrated through the respective land titles. Boundaries have been clearly demarcated. There have been no land disputes or claims involving the mill and estate. ASA1 2.1  In mill, sighted all applicable permits were maintained & monitored. Total of 81 list of laws and regulations applicable for Tanjung Malim POM. Permit checklist available consist of 20 permits need to annually renew such as: Air Receiver Tank – Expire on 15/04/2015 Vertical Pressure Filter – Exp. 20/6/2015 DOE Permit – 30/06/2015 Fire Extinguisher – 22/08/2014 MPOB Licence – 31/03/2015 Scheduled Goods (Diesel) – 24/07/2015  Method to update the applicable is through website.  OSH and regulations 1994 (Act 514) has been updated through website of Department of Occupation Safety and Health Malaysia.  The implementation of relevant laws were made through Management and communicated to concerned parties.  To carry out periodic review and evaluation on the Laws & regulations list to ensure that any new/addition as well as changes and amendment are captured and update, through enquiring the laws books publisher and communications with law/enforcement officers.  Estates maintains a list of laws applicable, among sighted were: -OSHA and regulations 1994 (Act 514) -Factories and Machinery Act with regulations (Act 139) -Pesticides Act and Regulations (Act 149) -Poison Act and Regulations 1952 (Act 366) -Kementerian Perdagangan. -Road Transport Act 1987 (Act 333) -Employees Social Security Act and Regulations (Act 4) -Food Act and Regulations (Act 281) -Industrial Relations Act and Regulations (Act 177) -Employees Provident Fund Act 1991

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

-Human Rights Commission of Malaysian Act. -Wetlands and climate Change 1999 -Stockholm Convention On Persistent Organic Pollutants (2001) ASA1 2.2 Lands in Kampar Estate consist of 7 land title under the name of Kampar Rubber & Tin Company Limited, signed and affixed on 8 Dec 1961 in Ipoh, Perak. No. 42115 / No. 42116 / No. 42118 – each with 14 acres No. 42119 – 12 acres / No. 42120 – 15 acres and No. 42121 – 13 acres / No. 42122 – 15 acres In total there are 118 stones visibly maintained surrounding the estate. Boundary stones were maintained by checking periodically by staff in charge. Verified in the field stones no. 82, 83, 84 were visibly maintained and clearly demarcated. There no land dispute or conflict. SIA issue 01-04-2012 includes Flow, Hazards, Level of negative social impact and Mitigation measures. ASA1 2.3 There is no customary right in entire Tanjong Malim Complex. Principle 3: Commitment to Long-Term Economic and Financial Viability Criterion by The annual budget and 10 years projections for the mill and estate that Audit Summary details revenue and costs are available. Replanting programme for the estates for the next five years is also available. ASA1 3.1  In the mill sighted the annual financial plan for 2013/2015 is available for crude palm oil that includes cost for all operations such as supervision, labour wages and overtime, power generation, water supply, repairs to building, etc.  Estimated crop from contributing estate is available for year 2014/2015 and 2015/2016 as below: YEAR FFB (MT) CPO (T) KERNEL (T) 2014/2015 136841 30105 7526 2015/2016 119062 26194 6548  In Changkat ASA Estate, there isn’t scheme smallholder. Total matured area is 1201HA and immature is 87HA. This estate produces rubber and oil palm crops. Total area Total Matured Immature cultivated OP + R [HA] [HA] area [HA] OP [HA] Katoyong div 622 478 430 48 Main div 803 527 527 0 Escort 109 119 109 10 KTM 143 164 135 29 Total 1677 1288 1201 87  Sighted the “Estimate for financial year ending – 9/2015 – Crop forecast”. Sighted the yield per hectare [and yield per [KG] for year 2013 in the attachment.  Sighted the evidence of quit rent payment for 2013. Sampled Katoyong div - RM 28,318.00 and Changkat ASA – RM 14,323.00.  In Changkat ASA, sighted “5 years Proposed Programme 2010 – 2015”. Sighted the “Replant Programme – Field PM 88A/29” report book.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

 It consisted map of replanting area, tender for replanting, work schedule of replanting, agreement with contractor, photos during felling and drainage clearing stages.  The replanting activities summary: CA PM 88A/29 CH [Changkat ASA] 29 HA [OP to OP] KK PM 87B/48 CH [Katoyong] 48 HA [OP to OP] ES RM 89A/10 PB [Escort] 10 HA [rubber to OP]  In Kampar Estate, a Business management plan is available for year 2013/2014 and 2014/2015.  For year 2013/2014, estimates FFB production is 21,011T where average hectare is 667 and 31.50kg of yield is being estimated for each hectare.  Summary of expenditure estimates for financial year 2013/2014 are RM 4,011,113 for total revenue and RM 163,500 for total capital expenditure.  Oil palm forecast is available for year 2013/2014 up to year 2022/2023. Below is the sample of the forecast. YEAR CROP (MT) 2013/2014 21,011 2014/2015 19,462 2015/2016 19,331 2016/2017 16,883 2017/2018 16,294  For year 2014/2015, estimated total revenue expenditure is RM 4,009,312 and total capital expenditure is RM 128,500.  In Kampar Estate has replanting program for 2013/2014 up to 2017/2018. The program can be summarize as below: YEAR FIELD TOTAL HA 2013/2014 1984A 28 1985A 36 1988A 18 2015/2016 1987A 75 2017/2018 1986A 78 1988A 32 1989A 49

Principle 4: Use of Appropriate Best Practices by Growers and Millers Criterion by The mill and estate have a complete set of SOPs which is being strictly Audit adhered to and continuously monitored. Soil fertility is maintained along with soil erosion prevention that continuously carried out. IPM implemented in all Summary the estate and the use of chemicals are in accordance with the regulations. There is a comprehensive OSH policy implemented throughout the estate and mill. A Minor NC issued. ASA1 4.1  FFB received is recorded with the origin place, delivery note number, date, time in & out, vehicle reg. number, driver details and weight (kg).  Weighbridge clerk well trained and able to segregated record between internal and external supplier.  Mill also prepared “FFB Daily Contributors Summary Report” document that contains summary of all FFB received daily includes name of origin and total tonnage.  This record is divided into two section which is: INTERNAL SUPPLIERS - Changkat Asa Estate, Escot Division, Complex Tg. Malim, Ladang Kerling, Sg. Gapi Estate & Tuan Mee Estate RSPOPC-SUM-REPORT.F01 MAY 2014 Page 20 of 70 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 CU827183

EXTERNAL SUPPLIERS - Bukit Kartho Estate & Kampar Estate, Ladang Sg. Chinoh, Landta Rasmi Sdn Bhd, Narborough Plantations & Ong Kim Sing  In the mill, sighted SOP on the storage and Issue of security seal, lubricant store, diesel used, laboratory, Boiler, engine room, reception station of FFB  Based on the SOP mill also has developed multiple safe operation procedures.  One of the mechanisms to ensure of implementation sighted thru internal audit. The purpose of the internal audit is to verify records and procedure against specific requirement and relevant standards requirements.  Each new worker is mandatory to have SOP & SaOP Training before starts to work. Internal inspection in field is carried out by OSH Committee together with the Safety Meeting.  Record of the internal audit has been sighted. Internal audit has divided into 2 type of internal audit.  OSH audit – Last OSH internal audit on 25/11/2013. Some issue was addressed in the report and corrective action was done immediately.  Mill Procedure & Quality inspection - 11/08/2014  Palm Oil Mill has 2 types Manual Standard of Procedure (SOP) & Safety Operation Procedure (SaOP) document was maintained and well implemented.  Standard Operation Procedure includes:  Weighbridge  Loading Ramp  Sterilizer Station  Hoisting & Threshing Station  Empty bunch Hopper  Press & digester Station  Clarification Station  Depericarper Station  Nut & Kernel Station  Boiler Station  Engine Room  Raw Water Treatment Plant  Effluent Treatment Plan  For Supply chain requirement, it been sighted in the SOP of Sustainability date on the 01.03.2013 which consist information of receiving material, processing material, dispatching material, etc.  In estates, sighted the GAP policy no GP/AGRIC/OP, 01-01-2007.  GAP manual is covering operations from land clearing, replanting, harvesting, up keeping, Roads & Drains, etc.  Estate has furnished SOP for all stage of operations and in accordance with RSPO requirements issue no. 5 dated 01-01-2014.  The Sop covers from land clearing, safety of spray equipment, workshop, water treatment plant, chemical handlers, replanting, harvesting, buffalo handling, fertilizer applications, up keeping, Roads & Drains, etc.  For the replanting show on the Group policy No: GP/AGRIC/OP7, issue 21 June 2005.  SOP is kept and will be updated periodically.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

 Document issuance sighted for Master list of document dated on 01-01- 2014.  Daily monitoring of procedure is carry out by mill assistant to ensure all workers and machinery in good order and according to the SOP.  Sample of daily monitoring sighted such as number of manpower, machinery inspection such sterilization station check sheet, crane station check sheet, auto feeder check sheet, press station check sheet and etc.  Quality monitoring includes of sampling of product and tested by internal laboratory. This analysis includes FFA, VM & DOBI testing for CPO and VM, Dirt & stone for Kernel.  Internal audit has been conducted on the 22/07/2014.There are at least 15 NC was raised by internal auditor. All NC were closed before this audit date.  Issue noted: - Water sampling record was not available for 2 divisions. – NC closed. Analysis report no. 0000008540 - Waste management - SW 305 & 306 stored exceed than 180 days. - SIA – Data analysis for questionnaire for 2014 ASA1 4.2  In estates sighted the SOP 4.0 dated on 01/03/2013 for "Soil Erosion & Fertility and Road Maintenance".  The GAP starts from the survey by Agronomist with recommendation for fertilizer application.  The Agronomist and Estate Manager to review the applied practices periodically [at minimum half yearly].  Soil improvement plan includes in Fertilizer recommendations from TQCC based on soil and foliar sampling annually.  Sighted the fertilizer application records for Jan'14 - June'14. For June '14 sampled: Field HA Fertilizer Rate[KG] Bags Date type 99A/118 153 Ammonia 1.75 360 26-28/06 Chloride 96F 80 Ammonia 2.00 130 30/06 Chloride 97B 47 Ammonia 1.75 132 24 -25/06 Chloride  Sighted the AAR "Oil Palm Manuring Recommendations for 2014/2015" – KYK/adv/Kampar/OP2014_2015/1 date on 09 July 2014.  Analysis and recommendation was carrying out by Apply Agriculture Resources (AAR), a subsidiary laboratory under KLK’s Group.  Leaf analysis will carry out on annual basis whereby soil analysis is depending on the agronomist decision.  Normally soil sampling conducted every 2 -3 years. Leaf analysis results and nutrients levels documented in the AAR report. Latest analysis was 15 blocks were sampled for 2014 leaf analysis.  Element were monitored includes N, P, K, Mg & Boron. Details of leaf and soil analysis conclude that estate nutritional status based on the 3 Years means was still below optimum hence moderately high to high rate of

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

fertilizer will be recommendation.  Sighted in Changkat ASA Estate, 31 blocks has been sampled for leaf nutrient analysis in 2013. The results are shown status of foliar N & K was increased.  However, foliar Mg was found decrease expected due area is hilly terrains and hill top. Hence, report was recommended to use Kieserite to improve the Mg to ensure optimum growth and yield production.  In Kampar Estate, a program for application of POM by products such as EFB. Empty fruit bunch in the field to replace potassium, moisture retention and as supplement from inorganic fertilizer.  For 2014 programme, sighted field no. 98/39 – 235.32 MT EFB were being applied. Total EFB applied per hectare – 30 MT/Ha. ASA1 4.3  SOP 4.0 (01-03-2014): Soil erosion & fertility and road maintenance documented. Soil type has been carried out by Agronomist to determine soil type.  Soil map (AAR/02/05/2006), for 2 divisions [Palong Division with 594Ha and Home Division with 793Ha] has been established for : Division Last GPS mapping Home 02/2001 Palong 02/2001

 The management only spot spray large woodies and conserved as much ground vegetation as possible to protect the topsoil.  The practice of frond stacking in L-shape configuration against the slope is to reduce the surface run-off and soil erosion.  As for low-lying areas especially blocks in the Div. 2, management have decided de-silted the drains to reduce the water stagnation during flash flood incidences.  Road maintenance program for 2013/14 available for all field areas and line sites. In both divisions, the roads patching, road grading, tipping fronds have been carried out and points of activities have been marked on the estate map.  Sighted the “Payment of Work Order” that being evidence for road maintenance was carried out as per plan.  In Div. 1, rainfall of 3592mm with several wet months were recorded in 2013, an increase of 339mm from previous year.  In Div. 2 the rainfall was 1761mm in the same period of Div. 1 but this was an increase of 766mm from 2012. Both divisions are higher percentage of clay and sandy loam.  There are 6 type of Soil in the estate area as follow: Holyrood – Alluvial / Tawar – Alluvial / Lintang – Alluvial and Local alluvium  Soil map (AAR/09/05/2012) identified what the soil types in the estate develop by AAR Laboratory. No fragile soil available in the estate.  In Changkat ASA Estate, there are 5 type of Soil in the estate area as follow: Holyrood – Shale/sandstone / Bungor – Fine sandy clay / Rasau – Alluvial and Renggam – Granite.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

ASA1 4.4  In the mill, water management plan has been sighted in the SOP 5. Mill is getting water from Ulu .  Water is treated and used for mill operation. POME is treated in the mill 5 pond for effluent treatment.2 is anaerobic and 3 for aerobic.  POME being discharge to the land application based on the guidelines from Department of Environmental (DOE) of Malaysia (JPKKS/14/003126) date from 01 July 2014 – 30 June 2015.  Waste water is treated in six (5) POME aerobic & anaerobic pond system reserved and is applied as land application to estate to maintain the soil fertility.  Latest water analysis on July parameter used as BOD, pH, TN, AN, SS and O&G maximum BOD as per DOE limit 5000 ppm) BOD (mg/l) COD (mg/l) Final Discharge 1 73 731 Final Discharge 2 105 906  Monitoring of the water usage per FFB is recorded in the water treatment plant record in June – 1.11m3/MT FFB.  Domestic water is treated from river water. Latest analysis result date on 02/05/14 includes parameters as Iron, Fluoride, Magnesium, pH, Turbidity, Aluminum, Free chlorine.  Micro bacterial test such as E – Coli & Coliform done by third party laboratory, ORGANO (ASIA) Sdn Bhd & Department of Chemical Malaysia.  Latest analysis date on 05/03/2014 for second quarter of 2014.  Monitoring of the water usage per FFB is recorded in the water treatment record for June – 1.01 and July – 1.04.  In estates, there is a SOP established [SOP -5.0] dated on 01/03/2013.  Water management plan is includes water for consumption that consist of: 1. To ensure water pump house facility is maintained. 2. To ensure correct dosage of water treatment chemicals. 3. To perform periodic monitoring of the treated and untreated water quality. (water sampling program) 4. To ensure adequate capacity of water reservoir including that for emergency use.  Water analysis result sighted, for treated water for consumption dated on 14/04/2014 for two sampling points as: Parameters Water Catchment Sg. Muar (Point no. 6) (Point no. 8) Coliform 12 Not detected E - coli 14 Not detected *exceed the law requirement <100  In Changkat ASA Estate, there is 3 types of water analysis programme conducted includes: - Waste water analysis -14/08/2014 - River water analysis – 14/08/2014 - Water consumption analysis – 08/08/2014  Gazette river bank is managed accordance to SOP 11.0 which is 1. to set aside and surround a 20m riparian zone, 2. to erect proper signboard at strategic point along the boundary to riparian zone to prevent illegal activities, 3. to paint in red & white band on frond bordering the riparian zone.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

4. Spraying of agrochemicals and Manuring activities is not allowed 5. To ensure no bund/weirs/dams that spans the entire main river. 6. To perform monitoring of river water quality.

River water result

Parameters Inlet Outlet Inlet 2 Outlet 1 1 2 DO 98 77 97 95 90 97 BOD 2 3 2 3 6 5 COD 7 11 8 8 14 11 SS 27 33 30 27 39 28 pH 5.4 5.3 5.5 5.7 5.7 5.8 Remarks Clean Slightly Clean Clean Slightly Clean pollute pollute d d

Water consumption

Parameters Water Catchment (Point no. 6) Coliform ND E - coli ND Total 0.431 Faecal (max 0.3 ppm)

 Total faecal found exceed the limit and management take an action by develop new source of underground water. Project is under progress and expected to be complete on Sept 2014. ASA1 4.5  In Kampar Estate, the implementation of IPM is based on the SOP no 7.0 integrated pest management, that contain information regarding on the implementation of IPM. This SOP includes spraying, trunk injection and rat baiting.  There is no IPM plan available as the estate not infected with any pest but with very little / rare rat attacks.  However the barn owl census record well maintained. Herbicide application records seen for circle spraying.  Seen records for Jan - Mar2014 in field PM95A/76, PM98/135 and PM03A/114, Glyphosate, Ally, with details of man-day, labour cost, hectare treated, labour cost per ha, a.i.. (Lit), material cost and total cost, with status.  Rat attacks are monitored by Rat census conducted when attack was sighted at the FFB.  Latest census for March 2014 – Not exceed the 5 % outbreak. In any case of outbreak, Ebor (warfarin) baits will use as last application method. A Minor Non-Conformity: against - 4.5.2 No evidence of IPM Training has been conducted to the workers who involved in IPM implementation in estates. This training also was not part from the estates yearly training programme. ASA1 4.6  In Kampar and Changkat ASA Estate, sighted the annual agrochemicals recommendation from AA (Applied agricultural resources SND. BHD) for 2013/2014. RSPOPC-SUM-REPORT.F01 MAY 2014 Page 25 of 70 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 CU827183

 SOP 2: Safe use of agrochemicals, 01-02-2012, mentioning on justification of agrochemicals used and Register of chemical hazardous to health.  In Kampar Estate, the herbicide application records seen for circle spraying. Seen records for Jan – June 2014 in field Glyphosate, Ally, Cypermethrine with details of man-day, labour cost, hectare treated, labour cost per ha, a.i.. (Lit), material cost and total cost, with status.  Record verified for Miracles, on 3/7/14 at field no. 86A 250 liter uses, 1.82 a.i/hectare.

 In Changkat ASA sample pesticides record verified: - Enforce – (a.i Methamidophos) on application 31/3/14 at field 91 (3 Ha), total amount – 4 liter (400 trees) & a.i/hectare – 0.67 (Trunk injection). 30/07/14 – Chemical name –Basta/Morax (Glyphosate) field 14A (10 Ha) amount used - , a.i/Ha – 0.68  In Kampar estate, plan to reduce pesticides such as Ebor bait includes in maintenance a barn owl in the field. Major pest is rat and barn owl to attract the natural predator for rat, Owl.  For herbicides, estate was currently practicing only circle and spot sprays. It’s to minimize the usage quantity and reduce the risk.  In Changkat ASA, plan to reduce class 1a chemical by planting a beneficial plant such Tunera subulata and Mucuna. Using the new generation of rat bait (Ebor) was reducing toxicity of bait from class II to currently class IV.  Part from the plan, all equipment ben daily calibrated to ensure efficiency of chemical usage. Last record of calibration on 19/08/14.  In Kampar estate, no class 1A chemical was used in this estate. The only pesticide use in the estate is Ebor Baits (a.i warfarin) class IV. No class I herbicides use in the estate including Paraquat.  In Changkat ASA estate, Class 1a pesticides, Enforce (Methamidophos) used in specific situation where bagworm attacks exceed than a level.  Usage of this pesticide was under control from local Agricultural Department as letter no. PK/METHA (GL)/11/077.  Group Agriculture Group (GAP) under section Pest & Disease also recognized the usage of trunk injection if the attacks exceed than 5% level.  In Kampar estate, the application of any chemical products in the field is under controlled and only can be carried out by qualified workers which have attended certain training.  Estate has 7 sprayers who are specialized in handling the chemical.  Training attend by sprayers include:  Date on 16/04/2014 title “SOP Training for Sprayer” attended by 7 (sprayer).  Date on 06/01/2014 title “SOP Training for New Sprayers” attended by 11 personals. All attendance lists are verified.  In Changkat ASA found training for Trunk Injection on 19/06/14 attended by Arusamy Ramu & Loord Pramedes by B. Navin.  Chemical Handling Training on 07/04/14 to all sprayers by supplier, My Crop (Mr. Lim Soon Seng).  Storage of chemical is in appreciating manners, well ventilated. Powder is above the liquid. RSPOPC-SUM-REPORT.F01 MAY 2014 Page 26 of 70 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 CU827183

 All sprayers are provided with proper PPE such as mask, apron, gloves and rubber boot. Mixing of the chemicals was done by one Mandor at mixing area provided by under control and secure environment.  Spraying was using the proper equipment (knapsack) and well maintained.  All chemical activities are accordance to the company procedure and good agriculture practices.  No aerial application.  No small holder is involved.

 In the mill the waste management was included in EIA and Pollution Prevention Plan documents. Waste includes scheduled waste (SW) as: 1. SW410 – Used gloves & rags 2. SW409 – Chemical containers 3. SW322 – Hexane 4. SW306 – Hydraulic oil 5. SW305 – Lubricant oil. 6. Effluent waste water 7. Workers housing waste.  License collector is Tex Cycle Sdn Bhd.  Latest training regarding Waste Management on 12/08/13 covered topic “Schedule Waste Handling”  Medical surveillance were send annually for those workers who handling chemicals and workshop.  Latest medical surveillance sighted at Changkat ASA on 09/04/2014 for 16 workers was sent to OSH endorsed clinic, Policlinic Sumi.  Mill still sent 2 lab attendants who recognized as LOW risk of Hexane exposure on 25/03/13. No contamination noted.  Records clearly shows of no pregnant or breast-feeding women assigned for chemical handlings works. ASA1 4.7  In the mill, sighted that occupational Safety & Health policy date on 10.01.05 which was approved by group plantation director.  OSH plan has been develop for 2014. That consist as follow: Month Program July Training on confine space and welding Nov Mill internal safety inspection. Dec Safety committee and management review.  Every plan should have person in charge to make sure the implementation.  Objective for 2014 is to improve PPE usage among workers and create safe working environment by reducing accident case by 50% compare to last year.  Target to achieve by 31/12/2014. Target for 2014, safety knowledgeable workers by end of year 2014.  Action plans includes: 1. Having a safety assembly at every first day of the month to increase workers safety awareness. 2. Provide necessary training such as PPE training, SOP and confine space training. 3. To place additional safety signboard in mill.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

 Both in Kampar and Changkat ASA Estate, seen an annual plan for OSH programme 2014 consists of training & OSH activities programme from January – Dec 2014.  OSH programme was done until June 2014 includes: 1. Training on SOP and health talk for sprayers – 22/02/14 2. Training on Safety in Harvester – 25/02/14 3. OSH meeting – 26/03/2014 4. Training on PPE – 24/05/14 5. SOP Training for tractor – 11/06/14

 Objective for OSH for 2014 is includes: 1. To 100% comply with OSHA 1996 regulation 2. Zero accident at work places. 3. To explained the workers on hazard of chemicals use. 4. Awareness among the workers with cleanliness and safety aspect.  The mill has conducted hazard identification, risk analysis and risk control measure taken for high risk activities.  Latest HIRARC revised on 04/08/2014 conducted by Mohd Zahir – Engineering assistant manager.  HIRARC is consist of hazard identification (type of work activity, hazard & effect) Risk analysis (Existing risk control, likelihood, severity & risk) & Risk Control (Recommended control measures & PIC).  HIRARC sighted sample such Reception Station, Digester & Pressing Station, Laboratory, Boiler station and products dispatch.  Assessment reviewed by assistant manager once in the year or if any changes in operation, any comes first.  In estates, the HIRARC assessment updated date on 01/01/14. All activities in estate operation have been assessed to determine the risk and hazard. Next revision on 2015.  CHRA conducted by the third party consultant, Procoma Environmental (M) Sdn Bhd. Date of assessment is 17/12/2012. (DOSH no. PK/05/04/1166) CHRA will be revised every 5 years or if any changes in operation.  Also available, “Chemical Exposure Monitoring Report” date on 19 Sept 2013 also is prepared by same consultant.  Annual medical surveillance 2013, 3 sprayers 2 staff, date on 17/12/13 by Cheah & Lim Medical Associates Sdn Bhd.  Estate workers are covered by two type of insurance. SOCSO –For local workers. Each local worker is entitled to contribute to SOCSO based on checked pays lip.  Foreign workers – Group insurance consist of all workers from India, Nepal, Indonesia & Bangladesh by AXA insurance the policy.  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)/(IV) on annually basis to the DOSH. LTA RSPOPC-SUM-REPORT.F01 MAY 2014 Page 28 of 70 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 CU827183

calculation based on local interpretation from DOSH.  Management review on the end of year will determine the total LTA and report to DOSH by JKKP 8 Form above.  Sighted in estates, all accidents is handled according to the national OSH department (JKKP) includes reporting any accident case, investigation and calculate of LTA.  LTA lost – 21 days. Insurance claims paid amount RM 247.50 on 23/07/2014.

ASA1 4.8  In the mill, seen several training programme from different aspect such RSPO P&C & SCCS aspect, OSH, environmental and social.  Among the trainings listed was the SOP training for each station in the mill.  Training program sighted such Annual Training programme on RSPO & ISCC – Training on RSPO, Internal & Stakeholders meeting, raw water and boiler water treatment and Management of RSPO documentation, review & compliance.  OSH Training Programme – First aid kit Training, Fire drill training, Chemical handling Training, Working on high place, confine space & welding Training and PPE Training.  In estates, sighted training programme is available includes:  Open burning – Jan 2014  Triple use empty chemical container  Recycle rubbish at home – March  Proper disposal of tractor schedule waste – April 14  PPE training  Proper harvesting technique  Importance of cleanliness at home.

OSH safety programs:  July Training on confine space and welding  August Annual medical surveillance  Sept Committee meeting  Oct PPE Training  Nov Mill internal safety inspection.  Dec Safety committee and management review.

 Record of training for each worker was kept as attendance list record for all workers. Maintaining personal training record to monitor the effectiveness of the training to the workers.  File workers name; Muhammad Kassim (JH98A) have attended 3 training which is PPE & RSPO Training, RSPO Training on ERT and 7 policies. All workers were trained according to their work station.  Sample training for Welding & Confine Space Training title on 15/08/14 by Mohd Zahir, First aid Training on 02/06/2014 attended by 20 workers & Fire Drill Training on 02/05/2014 by 19 personals.  PPE issuance records / logbook sighted for safety shoes, goggle, safety helmet, respirator mask and nitrile glove.  Safety shoes are provided to all workers every 6 month once. Verified from PPE receiving record, Mr. Kamarulzaman (fireman) received PPE such helmet, ear plug, safety shoes, safety goggle and jacket.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

 In estates, seen the records of training available and maintained. Training plan includes in OSH plan and was updated every year.  Training on SOP and health talk for sprayers – 22/02/14  Training on Safety in Harvester – 25/02/14  OSH meeting – 26/03/2014  Training on PPE – 24/05/14  SOP Training for tractor – 11/06/14  In the mill, the Mill Manager Mr. Koh Choon Hei is person who is responsible for the monitoring and implementation of the safety requirement in the mill.  Safety and health committee meeting has been conducted quarterly. Last conducted meeting is on the 14/07/2014.  There is several issue has been discussed as result of “Safety Compliance” audit by HQ on 24/11/2013.  In estates, sighted the OSH committee in estate level is head by manager, Mr. Micheal Ong and PIC is the secretary, Mr. K. Subramaniam. Committee is participated by 3 representative from employer and 3 personnel from workers.  Meeting will be held in every 3 months. OSH meeting is the medium to workers and employer can discuss about OSH issue to take further action by management, if any.  Latest meeting held on 26/06/2014 attended by 8 personals. In the mill, sighted emergency procedure is sighted in the emergency response plan. Complete with emergency contact number.  Training for first aider is available. Last conducted first aid training is on the 02.06.2014.That attended by 20 personals.  There is a record maintained for First Aid Kit to workers on-site, distribution list. Mapping of first aid location available in the mill area. Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity Criterion by Environmental Impact Assessment has been carried out by the mill and Audit estates. A comprehensive identification of all waste has been recorded and disposal of scheduled waste has been carried out by an approved and Summary registered collector. Monitoring and analysis of waste is carried out regularly. Landfills were filled with non-biodegradable wastes such as plastics and an observation was raised for this matter. 1 Major and 1 Minor NCs issued. ASA1 5.1  In the mill, sighted the Environment Impact Assessment (EIA) is available in SOP 10 – EIA and Pollution Prevention Plan file last update on 8th August 2014.  The SOP includes: - Identification – all activities or aspects of the palm oil mill those have impact to the environment. - 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. - Review - annually review the EIA management Review Meeting and re-evaluate if any new activities in POM, changes of legislation and RSPOPC-SUM-REPORT.F01 MAY 2014 Page 30 of 70 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 CU827183

environmental issue raise by stakeholder.  There is three months reviewe for the achieved activities.  Assessment covered the entire operation of the mill, right from receiving the FFB until despatching of CPO & PK. Some of the detailed processes identified are FFB intake, reception and sterilizer, clarification, separator, EFB heaps, depericarpering, kernel recovery, steam generation, etc.  Impact to environment through all these processes were identified along with the management control, person in charge, status and completed date.  The recent review is done on 8/8/14 for staff house construction. Sighted minute of meeting dated on 13/8/14 attended by 4 stakeholders.  Due to no changes identified in the mill operation, therefore no timetable for any change is required.  During mill visit, the EIA was used as guide and no discrepancy. EIA is being reviewed once/year. Latest review on EIA is done on 8th August 2014 on new construction for staff house.  Review also done on new construction of horizontal retention tank (14/5/14) and construction of new belt press (5/8/14).  In Kampar Estate, the Environmental Impact Assessment (EIA) was available and well documented in SOP 10 file. EIA was last update on 1/12/2013.  Impact from major activities has been identified through every process involved in the estate. The processes include general activity, stores, tractor parking, nursery, and field operation.  The EIA and Pollution Prevention Plan include information on process, major activity, impact, risk level, mitigation measures, target date, person responsible and status.  Negative impacts identified are soil pollution, water pollution, land contamination, air pollution and natural resources depletion. Sufficient mitigation measures action plan has been taken to deal with the negative impacts.  Seen there is environmental management plan that last updated on 31/1/2014. It includes the process of replanting area, tractor garage, premix of chemical, diesel supplying, estate tractors, spraying & manuring activity in field, estate vehicles, scheduled waste oils & rags, line site domestic waste, and rubbish collection.  In Sg Gapi Estate, the recent EIA is dated on 28/12/2014 with the pollution prevention plan attached.  Timeline for this action is set as on-going process and the estate manager is fully responsible in delegating the required jobs.  Some of the mitigation measures observed in the EIA are, water sampling, create public awareness, close monitoring for emission from vehicles, constructing bun in lubricant store, prevent blanket spray and etc.  No changes in operation activities. Negative impact were identified above has been taken sufficient mitigation measures action plan.  The ERP team also will react for others emergency case as well such a flood

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

and chemical spillage. The mitigation measure is reviewed annually or when necessary to monitor the effectiveness. ASA1 5.2  In estates, the HCV assessment was carried out on 1/12/2013 as per stated in SOP 11 – High Conservation Value (HCV) Area Management file.  From the assessment done, no HCV1 – HCV6 identified in the estate, but Indian graveyard was found as the conservation area.  There is HCV/Conservation Area Management Plan available in the SOP11 file. Plan for the cemetery area is to ensure good housekeeping, put proper signboards, and to perform monthly monitoring. Appropriate signs were sighted during site visit.  Monthly monitoring is sighted in the file from Jan’14 to June’14. In Changkat ASA Estate, the HCV assessment was carried out by estate management team by interviewing stakeholders on Jan’13.  Findings were then being summarized where no HCV’s were found in the estate area. Gazette river is identified as conservation area.  Monthly monitoring is sighted in the file from Dec’13 to July’14. Plan for gazette river banks include set riparian zone, place proper signboards, paint bands of alternate palm, no spraying, ensuring no blockages of water course, encourage planting, and doing monthly monitoring.  Riparian zone signboards were sighted during site visit. Monthly checklist record was available.  In Sg. Gapi Estate, the HCV assessment is carried out based on SOP 11.0 – High Conservation Value (HCV) & Conservation Area Management.  No peat swamp, mangrove and endangered ecosystem were spotted within estate land. Other than HCV4 [reserve forest], others not found.  From the assessment carried out in 2013, the border of Sg Gapi [Div. 1 & 2] is smallholder lands and normally no wildlife was found to encroach into the estate land.  Wild boar is one of the common wildlife found in estate area. No migrating birds were found nearby, only some common species like monitor lizard and local birds spotted.  The Div. 2 has no water catchment ponds as the water source from Syabas. In Div. 1, there is a water catchment and the management plan to construct tube well by 2015.  Measures to maintain the ERT done by management with restricted of hunting in the identified area. Appropriate signages were sighted during site visit.  There is on-going biodiversity concerning [mammals, birds, reptiles] education to the workforce sighted. An awareness training for all level of workers planned in Dec 14.  Sighted training records on HCV [Dec 2013] for sprayers and harvesters.  Surrounding neighbors [government, NGO's and local communities] always invited for the stakeholder meetings, which the venue used to discuss and review of the HCV issues.  Sighted the recent updated stakeholder list and the minutes dated on 23/12/2013 well documented. The next stake holder meeting planned in Sept 2014. RSPOPC-SUM-REPORT.F01 MAY 2014 Page 32 of 70 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 CU827183

ASA1 5.3  In the mill, contaminated rags, leather hand glove, used lubricant oil and filter are being collected by DOE approved collector which is Tex Cycle Sdn Bhd.  Sighted evidence of 0.29MT of SW410 waste were last collected by Tex Cycle Sdn Bhd on 24/7/14, consignment no 1008926.  Empty container is being collected by suppliers which are Chemindus Sdn Bhd.  Sighted goods despatch notes no: 0208 dated 16/8/14 to collect 54pcs black containers and 16pcs white and blue containers.  SW305 wastes were re-used for chain lubricant as sighted in DOE e- Consignment note, inventory ref no 122340.  Waste management and disposal plan to avoid or reduce pollution is available where the waste is being identified in environmental aspects and impacts identification and risk assessment, and the plan is available in the environmental management plan.  The plan includes process, major activity, impact, management control, person in charge, and status.  Mill has list of waste generated in SOP 10 file last update on 3/1/14.  Waste is being classified into wastewater, solid waste, and scheduled waste. o Wastewater: . Effluent / Sterilizer condensate / Used calcium carbonate / Mill washing / Boiler water blow down / Domestic waste o Solid waste . General rubbish / Scrap iron / Sludge and sand from desanding process / Kernel shell / EFB / Boiler ash o Scheduled waste . Used lubricant oil / Contaminated rags / Contaminated leather hand gloves / Used hydraulic oil filter / Empty container

 Estate has identified waste and list of it is available in SOP12 – Waste Management and Energy Used file. Waste and status has been classified by estate area. It includes: o Office . Paper / Wastewater / Plastic o Chemical store . Cleaning cloth / Paper / Container / Wastewater o Fertilizer store . Fertilizer bag o Workshop . Used engine oil / Cleaning cloth / Wastewater / Scrap iron / Plastic / Paper o Weighing station . Wastewater / Plastic o Field RSPOPC-SUM-REPORT.F01 MAY 2014 Page 33 of 70 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 CU827183

. Frond o Estate clinic . Clinical waste o Line site . Wastewater / Rubbish  No proper list of scheduled waste is available. Ex: clinical waste is not recognized as scheduled waste where it supposed to be.

 In Kampar Estate, the clinical waste is being disposed by sending the syringe and needles to Kampar Hospital. Up till audit day, 30pcs of syringe and needle is being collected from Jan’13, before it was sending to Kampar Hospital.  Clinical waste is under SW403 is supposed to be disposed within 180 days as stated in Environmental Quality (Scheduled Waste) Regulations 2005. It is sighted at the store that some of the empty container were re-used. Ex: lubricant container used for planting.  Waste management and disposal plan to avoid or reduce pollution is available where the waste is being identified in environmental aspects and impacts identification and risk assessment, and the plan is available in the environmental management plan. Checklist on domestic wastes and sanitary landfill is available and it is done on monthly basis.  In Changkat ASA Estate, sighted consignment note from G-Planter Sdn Bhd collecting SW409 waste on 23/5/14.  SW305 and SW306 waste being collected on 18/4/14 by Malik Family Resources Technology Sdn Bhd.  Proven by consignment note no 44382 sighted in SOP9 file. However, the Paraquat containers were sighted being used at the line site to kept water and when asked, the interviewee said that it is to be used to wash clothes and plates.  The clinic waste (SW403) being kept for too long from 14/12/12 to 8/8/14. It supposed to be disposed by 1Malaysia clinic.  Disposal plan is available in the environmental plan. It includes the disposal of scheduled waste, general waste, wastewater, etc.  The plan contains information on process, major activity, impact, management control, person in charge, and status.  Checklist on domestic wastes and sanitary landfill is available and it is done on monthly basis.However, sighted used tires dumped at the drain along with other type of wastes.

A Major Non-Conformity against criteria 5.3.3 [CLOSED] i). No proper list of scheduled waste is available. Ex: clinical waste is not recognized as scheduled waste where it supposed to be. ii). Clinical waste is under SW403 is supposed to be disposed within 180 days as stated in Environmental Quality (Scheduled Waste) Regulations 2005. It is sighted at the store that some of the empty container were re- used. Ex: Lubricant containers used for planting, Paraquat container were sighted being used at the line site to kept water.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

ii). The implementation and management of schedule and none schedule waste not reflect to mitigation measures identified. ASA1 5.4  Mill has planned to reduce the usage of genset by upgrading the turbine to 550kW turbine to supply electricity for office, effluent treatment plant and raw water treatment plant.  As in SOP12 – Waste and Energy Use, usage of fossil fuels for genset, turbine and shovel are being monitored in monthly basis.

 Data for genset is as below: Month kWhr for Diesel usage FFB kWhr / litre genset (litre) processed (MT) May 2014 2352 673.65 7009.6 3.69 June 2014 2278 792.11 6475.51 2.88 July 2014 1980 728.25 6740.03 2.76

 There are also data on shovel usage of fossil fuels for FFB transported. Month Diesel use (litre) FFB processed Litre / MT (MT) May 2014 895 7009.6 0.12768 June 2014 753 6475.51 0.11628 July 2014 537 6740.03 0.07967  In Kampar Estate, the fossil fuel usage was monitored by SOP 12.0 dated on 01/03/2013 titled “Energy Usage”.  Record from May - July 14 was sighted as below: Month Diesel usage FFB Transported Litre/MT May-14 1,606 1,370 1.17 June-14 1,164 1,214 0.95 July-14 1,630 1,433 1.14  Plan to reduce/improving efficiency of fossil fuel usage includes regular checking on estate use vehicles, tractor pooling and application of diesel and lubricant container below the tractor when parking.  In Changkat ASA Estate, the records of fossil fuels were kept in SOP12- Energy Usage file. Sighted record from Dec’13 to July’14 Month Diesel usage FFB Transported Litre/MT May-14 3305 1259.06 2.62 June-14 3242 1147.30 2.83 July-14 3435 1116.56 3.08  Plan to reduce/improving efficiency of fossil fuel usage includes, replacing old tractors as can be seen in the budget.  In Sg. Gapi Estate, the fossil fuel usage is clearly mentioned in the by SOP 12.0 dated on 01/03/2013 titled “Energy Usage”. Record from Jan till April 14 – July 14 sighted as below: Month Diesel usage[Lt] FFB Transported [MT] Litre/MT Apr 488 467 1.04 May 419 501 0.83 Jun 389 422 0.92 July 358 423 1.18

ASA1 5.5  No land burning preparation in KLK Group Company [dated 01/01/2014]. RSPOPC-SUM-REPORT.F01 MAY 2014 Page 35 of 70 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 CU827183

Policy of Zero burning well implemented. In Sg. Gapi sighted records, photos and during field visit interviewed workers at Block 1989B [replanting rubber to OP], that the policy is effective. ASA1 5.6  Mill has documents on environmental aspects and impacts identification and risk assessment and environmental management plan.  List of waste is updated and the operational plan contains details such, waste products, sources of pollution, mitigation measures, target, person responsible and the status. There is mitigation plan for emission of greenhouse gases from diesel engine.  Pollutant has been identified through each mill process and there is plan on the environmental management.  Mill has identified greenhouse gases from diesel engine and there is management control plan to reduce the gases.  Mill has identified the significant GHG emission by CO2 from POME treatment on 2013 record as recorded below: Emission source Total emissions Total emissions Emissions in in kgCO2e (not in kgCO2e kgCO2e per t allocated) (allocated to CPO CPO) Biological CO2 31,904,985 28,234,340 1,221.53 from energy production Fossil CO2 from 339,533 300,470 13.00 grid electricity Fossil CO2 from 47,979 42,459 1.84 diesel consumption CO2e from 5,833,786 5,162,613 223.36 POME treatment Total GHG 18,049,087 15,972,553 691.04 emission of CPO  There is plan to reduce greenhouse gas for fossil fuels, and electricity.  Kampar Estate has identified waste and list of it is available in SOP12 – Waste Management and Energy Used file.  Waste and status has been classified by estate area. The plan includes process, major activity, impact, management control, person in charge, and status.  Estate has identified the GHG emission as below: Emission Total emissions Total emissions Emissions in source in kgCO2e (not in kgCO2e kgCO2e per t allocated) (allocated to CPO CPO) Total emission 1,340,620.24 1,186,382.87 59.00 from FFB production Emission from 348,433.80 308,346.75 15.33 transport of FFB from estate to mill RSPOPC-SUM-REPORT.F01 MAY 2014 Page 36 of 70 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 CU827183

 No plans that includes objectives, targets and timelines available.

A Minor Non-Conformity against criteria 5.6.3 Monitoring system for GHG is in place, however the report of the progress not demonstrable during audit.

Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers Criterion by The mill and estate have conducted the social impact assessment. The Audit relevant policies are in place and are fully implemented across the board. Communication and consultation as well complaints and grievances Summary procedure are well communicated and adhered to. There are evidences of workers not been discriminated against in any way and all are being paid their fair wages. 5 Minor NCs issued. ASA1 6.1  In the mill, sighted SOP 1.0 (Issue/Rev 2/0) dated 1/12/2013 is available to conduct SIA. Summary of the SOP includes: - To identify aspects in the mill that has social impact. - To identify the effected parties or their official representatives. - To conduct SIA document in participation manner. - To conduct and documented social meeting/consultation to evaluate significant of all the identified impacts.  Latest Social Consultation carried out on 17/8/14.  Minutes/photos of meeting with internal stakeholder available for new horizontal retention tank.  SIA dated 17/8/14 on new staff house construction and no social issue raise during the meeting.  Both SIA has mitigation plan and survey. Both projects in progress. Yearly routine meeting was conducted 18/7/14.  Survey results available and sighted. External SIA was conducted on 3/1/2014. Minutes available. Assessment is carried out based on internal & external stakeholders meeting and survey result as mentioned above.  An identified impact has been tabled with mitigation, impact and responsibilities for mitigation. No issue or negative impact was identified from the consultation carried out above.  Minutes meeting are available and verified. The identified impact (low in nature) is completed when the project is completed e.g. Retention wall building. I  n Kampar Estate, seen SOP 13.0(issue/rev 2/0) dated 01/12/2013. SIA identified in SOP with mitigation measures on disease (health) medium (- ve) - medical surveillance and communication problem medium (-ve)- awareness training. However seen no documented evidence of any consultation/communication done.  SIA on minimum wages 5/4/2013 also has no evidence of any consultation; but has mitigation plan with responsibility under the Estate Manager.  External Stakeholder (neighbouring): 3 survey forms available for impacts of river pollution towards chemical, fertilizer and machinery usage dated 4/1/14 has been done and no negative comment given.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

 Evidence for internal stakeholders (workers) External – 3 survey forms as above. An identified impact has been tabled with mitigation, impact and responsibilities for mitigation.  No issue or negative impact was identified from the consultation carried out above. Minutes meeting are available and verified. Smallholder schemes not applicable.

 In Changkat ASA Estate, SIA report sighted.  Analysis on the Effects of Estate Field Operations toward River Water Quality and their Impacts toward Local Social Activities - Survey done with stakeholders (Penghulu Orang Asli, school, Clinic Chan) and worker. - No negative impacts. - Meeting with stakeholders held 24/12/2013 (external stakeholders – 12 attended out of 23). - Stakeholders list 01/12/2012. - Meeting minutes sighted for 24/12/2013. - Donation given to school (12/2/2014) and temple (12/08/14). - SIA planting Jasmine plants ‘Green Book Project’. - SIA repainting Mosque. - Tube well project (started July 14).  Monthly internal stakeholder meeting with staff and staff representative.  Interviewed En.Din of Perniagaan Anak-Anak Nagoor Merah (sundry shop) in estate. Stakeholder survey and logbook sighted.  Tube well building – conducted SIA with mitigation.Smallholder schemes not applicable ASA1 6.2  In the mill, sighted the SOP 1.0 Section 2 (Issue/Rev 2/0) dated 1/12/2013 seen.  External Stakeholder Logbook filled for e.g. transporter Sakthy Transport. Language survey filled up in Malay & Tamil.  Mill Manager has been identified in SOP 1.0. A list of stakeholders is available.  And invitation letter for meeting with external sighted for 3/1/2014. 26 invited and 15 attended. 4 other estates and others are contractors e.g. transporters, police, MAPA etc.  Meeting minutes sighted. Internal stakeholders: all mill and office workers attends meeting.  In Kampar Estate, sighted SOP 1.0 Section 2 (Issue/Rev 2/0) dated 1/12/2013 seen.  List of Stakeholders dated 15/11/2012. Meeting invitation dated 4/1/14 to surrounding stakeholders. 3 neighbouring stakeholders [SRJK (T) Ladang Kampar, SK Ayer Hitam Labu and Kaliamman Temple attended].  Estate Manager identified in SOP 1.0 as the responsible person. List of RSPOPC-SUM-REPORT.F01 MAY 2014 Page 38 of 70 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 CU827183

Stakeholders dated 15/11/2012.  Invitation for meeting dated 14/1/14 was sent out to 10 external stakeholders. 3 attended. Meeting minutes with internal & surrounding stakeholder’s minute on 11/1/14.  A minute 11/1/2014 states a survey was conducted but no survey forms were evident during audit.

 For Internal employee (Stakeholder Logbook) is used and recorded 3 items for 2014 to date. Mainly for repairs of wash basin, water storage tank & septic tank.

A Minor Non-Conformity: against 6.2.2, Assistant Manager Mr Navin is responsible for RSPO issues, however no evidence of nomination nor stated in the job roles and responsibilities of the said personnel.

A Minor Non-Conformity: against 6.2.3, Stakeholders meeting records dated 11/1/2014 states a stakeholders survey was conducted but no survey results were evident and no improvement action taken. ASA1 6.3  The mill has documented the SOP 1.0 Section 3: Complaint and Grievances. Sighted the logbook 2 is used to register any complaints and acted on. Most issues are on transporter/lorry or work area related.  Another way, through Union meeting dated 17/6/14. NUPW minutes dated 17/6/14 has raised some concerns i.e. rubbish collection 3x a week.  Seen rubbish collection checklist for July. No disputes raised in any meetings by internal or external parties.  Meeting with NUPW is carried out e.g. 17/6/14. Internal has raised a few concerns, less overtime Rubbish collection and housing.  Estates seen established the SOP 1.0 Section 3: Complaint and Grievances. Stakeholder Logbook used.  No specific complaint logged. Request for repairs as above.  NUPW letter dated 29/3/13 identifies NUPW Committee for Kampar Estate as Ramadass (Chairman), Mohd Hussin (Secretary), Hasnah, Fatimah & Subramaniam (Committee Member).  However, Mohd Hussin & Hasnah has resigned from the estate. But, no evidence of re-nomination.  In Changkat ASA Estate, seen the stakeholder Logbook used. No specific complaint logged. More request for house repairs, school grass cutting & rubbish collection. NUPW minutes for meeting dated 17/6/14 sighted. ASA1 6.4  No negotiations concerning compensation for loss of legal or customary rights are as per this assessment period.  Changkat ASA stands belong to KLK Kepong Sdn Bhd; land title sighted ref 169204.  In Kampar Estate, SOP for Land Acquisition 3.0 (Issue/rev 2/0) 1/12/2013 available. ASA1 6.5  In Changkat ASA, list of summary and guidelines has identified the ‘Guidelines on the Implementation on the Minimum Wages’. RSPOPC-SUM-REPORT.F01 MAY 2014 Page 39 of 70 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 CU827183

 National Wages Consultative Council Act 2011 (Act 732) Malaysian minimum salary is RM900 as stated in the guidelines. Verified Lingeswaran a/l Vathumalai and Manivanan.  In Kampar Estate, seen briefing for new employees on the Terms & Condition of work i.e. salary, off day, benefits, housing etc. Sampled salary slip July 2014: Mrs Indrani (local female general worker) and Maksak SK (foreigner Bangladeshi).  Salary slip and calculations are in Malay. An internal meeting has identified that employees are working exceeding 14 days’ work w/o off day and overtime exceeding 4 hours daily.  As a result of this finding, an internal memo 1/8/14 stated that the management will limit the overtime hours to maximum 4 hours per day and that no employee shall work more than 14 days without rest.  However, no proper system has been put up to solidly monitor this requirement e.g.: No off day given for Lingeswaran from 1/8 till 15/8 and he work daily overtime about 3 – 4 ½ hours.  The system is not well established to monitor this and no work planning or acknowledgement of employee that he consents to work such hours.  Sighted salary slip calculation of workers and seen that overtime and off day calculation is done accordingly. All workers used thumb print as acknowledgement.  Total employees in mill: 86, foreigner: 54 (29 Indonesian, 18 Indian & 7 Bangladeshi) local: 32 - Female (local): 12.  Sighted in Changkat ASA Estate, Malay – 8, Indian – 136, Foreigner - 103, Female – 51 and total workers are 247 with 11 staff.  Workers minimum Standards of Housing and Amenities Act 1990.  Houses provided for married couple but if single, shared house.  Sanitation & free water provided. Medical treatment also free at the estate clinic. Electricity from TNB. School provided free water (5,000 litres) per month provided.  In Changkat ASA, housing is provided. Interviewed Maheswaran & Vanitha (Vanaja’s mum) and they are satisfied with the housing and amenities provided. Any repairs are handled by estate quickly. Schools nearby (walking) and day care centre (free) provided for non-school going children (6am – 2pm).

A Minor Non-Conformity: against - 6.5.2 Management has identified in July meeting (memo dated 1/8/14 issued) that monitoring of overtime hours (max 4 hours per day) and worker cannot work for 14 days without off day; however there is no solid methodology of ensuring that this is effectively monitored eg Lingeswaran a/l Vathumalai has worked from 1/8 till 15/8 without an off day and some days he works 4 ½ hours. ASA1 6.6  The policy of freedom association statement mentioned clearly in policy of “the right of freeedom of association of employees” dated 1.1.2011 and the Policy publicly displayed in office.  Minutes dated 17/6/14 sighted as above. (Main trade union), interviewed Union Chairman, Mr. Ramadass. In Changkat ASA Estate, NUPW requested RSPOPC-SUM-REPORT.F01 MAY 2014 Page 40 of 70 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 CU827183

for meeting on 17/6/14 via memo dated 22/5/14.  Meeting minutes dated 17/6/14 by NUPW with Estate Manager & representatives available for Katayong Division. Chairman – Mahdevan, Secretary – Murugan, Comm member ladies & men. A Minor Non-Conformity: against 6.6.2 - No evidence of discussion or meeting minutes of main trade union NUPW or workers representative with Management was available. ASA1 6.7  The company has created and implementation of minimum age, it was stated in policy of “Child employees”.  According interview with workers and staff and document review, it confirmed that no workers below 18 year old working in all operation units.  Policy of below 18 years of age cannot be employed (1/1/2014). Sampled employees listing all the operating units –no below 18 years. ASA1 6.8  In mill, the equal employment Opportunities Policy dated on 1 Jan 2011. Employment composition : Local 18 Foreigner – 48 Women local – 3 (office)  Local is advertised via mill workers and walk in employment. Foreign worker provided by HQ. Job Application form e.g. Sonia Sitara Daniel (Office girl) employed 16/4/13. Mathu a/l Sinayah (general worker) employed 25/7/13.  In Kampar Estate the Policy available. Total employees : 86 Foreigner : 54 (29 Indonesian, 18 Indian & 7 Bangladeshi) Local : 32 Female (local) : 12  Composition is clear that local, migrant & women has been employed (as numbers above). Contract letter available and sighted for Muhammad Sopiandi [Passport A6574787] employed from 25/3/14 and acknowledged by employee. Letter of offer employment dated 17/2/14 for Muhammad Yusri bin Hashim sighted. ASA1 6.9  A group policy on sexual harassment and violence in the workplace 1/1/2013. No women employed in the mill.  A Women Gender Committee is formed in 2012 and quarterly meeting is conducted i.e. 12/3 and 27/6/14. During gender committee meeting dated on 27/06/2014, sexual harassment incident is being asked by the chairperson, Pn Noridah. No cases recorded sexual harassment by the Gender Committee.  In Kampar Estate, gender /Women Committee Policy No: GP/OSH12 dated 1/7/2010 only states sexual harassment and is not updated on the violence, reproductive and breast feeding.  Letter of appointment for Women Committee available dated 14/10/13 & 21/12/12. Last meeting minutes 18/10/13. Interviewed Mrs. Jit & Mrs. Indrani. Stated meeting is once a year and planned for Oct 2014.  In Changkat ASA the gender committee chairman is Mrs Thilaga a/p Natarajah appointed by Management on 1/1/2014.  A policy on reproductive right incorporated in the “Sexual harassment and RSPOPC-SUM-REPORT.F01 MAY 2014 Page 41 of 70 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 CU827183

Violence Policy” dated 1/1/2013 that communicated thru gender meeting.  There are no restriction regarding reproductive rights as in KLK sexual harassment and violence policy and female employee is not restricted to getting pregnant.  No restrictions when interviewed the Gender Committee on reproductive. No cases of sexual harassment. Interviewed Mrs. Jit. Last meeting minutes dated 17/10/2013.  No meeting conducted for 2014 however during interview, mentioned that next meeting will be in Oct 2014 (frequency once a year) but not documented.  In Changkat ASA Estate, no restrictions when interviewed the Gender Committee on reproductive.  No cases of sexual harassment. Interviewed Mrs Thilaga & Mrs Anjalai Devi (sprayer). Sighted letter of appointment for Mrs. Thilaga. In the mill, the gender committee meeting is being conducted once in 3 months.  Last meeting is on 27/06/2014 where chairwomen and other 5 members were present.  Sexual harassment & violence discussed in meeting but no evidence on matters regarding breastfeeding and pregnant lady being discussed during the meeting (interviewed the Committee Secretary – Mrs. Vasanthi); however the women are more office staff and have no restrictions on breastfeeding or pregnancy based on Labour Law.  Committee chart available with Chairman and Committee Members. Meeting minutes 12/2/14 and 25/6/14 sighted. ASA1 6.10  Collecting FFB from own estate within the KLK Group. However if necessary; the price for FFB supplier is vary and decided by the HQ.  There are matrix on the FFB pricing that include supplier, FFB tonnage delivered/MT, OER%, Ker%, processing charges/MT, transport charges/MT, MPOB cess, and terms effective.  There is SOP regarding FFB pricing mechanism last update 1/3/2013. The pricing for every supplier are being decided by HQ.  In mill, sighted the contract between company and a contractor are available.  The document review of payment to supplier is confirmed that all payments have been made in a timely manner. ASA1 6.11  In the mill, seen CSR being done. Donation to school and temple given in 2014.  In Kampar Estate, sighted contributions budge for RM5, 490.00. Spent to date is RM 6,090.73. Contribution for donation to temple, school sports, upkeep the Indian graveyard (conserved area). Requested via Stakeholder Logbook or direct to Manager.  In Changkat ASA Estate, donation given to school (12/2/2014) and temple (12/08/14). ASA1 6.12  Interviewing the workers and stakeholders revealed that there is no forced or labor trafficking involved.  Temporary worker not employed. Sighted labour policy and labour contract is general with local employees.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

 No contract substitution. Post-arrival orientation programme.  Decent living conditions to be provided. Statement of the non- discriminatory practices. ASA1 6.13  In countries and communities where KLK operates, social issues are part of a broader set of complex socioeconomic and security concerns and being apply to many aspects of their business.

 The management of human rights issues in KLK is based on the totality of their efforts and not on a single activity.

 Their corporate policies, management processes, community investment programs and participation in voluntary initiatives are complementary and are intended to work together and reinforce their commitment to respecting human rights. A Minor Non-Conformity: against - 6.13.1 However a policy to respect human rights not documented and communicated to all levels of the workforce and operations. Principle 7: Responsible Development of New Plantings Criterion by Summary There were no new plantings carried out. Audit ASA1 There was a replanting programme for 29HA sighted in Changkat ASA Estate, Summary whereby land formerly planted with rubber converted to palm. ASA1 7.1  In Sg. Gapi and Kampar Estates, neither new planting nor extension of existing one documented during this audit.  Replanting program in place for period of 2015 – 2021.  However in Changkat ASA Estate, the total matured area is 1201HA and immature is 87HA.  This estate produces rubber and oil palm crops. Total area Total Matured Immature cultivate OP + R [HA] [HA] d area [HA] OP [HA]

Katoyong div 622 478 430 48

Main div 803 527 527 0

Escort 109 119 109 10

KTM 143 164 135 29

Total 1677 1288 1201 87

 Sighted the “Replant Programme – Field PM 88A/29” report book.  It consist of map of replanting area, tender for replanting, work schedule of replanting, agreement with contractor, photos during felling and drainage clearing stages.  The replanting activities summary:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

CA PM 88A/29 CH [Changkat ASA] 29 HA [OP to OP] KK PM 87B/48 CH [Katoyong] 48 HA [OP to OP] ES RM 89A/10 PB [Escort] 10 HA [rubber to OP] [Seed ordered – May 2012  Nursery prepared – Apr 2013  Tender awarded – Dec 2013  Felling & chipping – Apr 2014  Terrace lining – April 2014  Platform construction – Apr – Aug 2014].

 Based on the Group Policy dated 17 July 2010, there is no SOP established for new planting.  The management claimed there is no oil palm extension in Malaysia, therefore the needs for a procedure is not required. However there is a procedure “Soil Erosion & Fertility and Road Maintenance” [SOP 4.0], clause 4 is available for replanting.  Also sighted the GP/AGRIC/OP7-Replanting in the Group Agriculture Policy. There is no out grower scheme associated with this estate.

ASA1 7.2  Sampled in Sg Gapi Estate, the topographic information for the 2 divisions are: Div. 1: GPS Mapping 05/2008-last updated 11/2008/4Topo_12wor Div. 2: GPS Mapping 06/2011-last updated 04/2008/4Bmap_11wor  In Changkat ASA Estate, the management had confirmed the replanting programs in 3 blocks, the ES RM 89A/10 PB [Escort] 10 HA is a conversion from rubber to OP and the other 2 blocks are from OP to OP.  This also been suggested by AAR in their annual soil & leaf sampling and topographic information [2012/2013 – dated 03/07/2012.  Based on the soil map, this block found with Sandy Clay Loam texture. Topographic information for Escort div: AAR/03/10/2008, last GPS mapping 02/2008/3Topo_wor. ASA1 7.3  Based on the Survey map produced in Sg Gapi Estate, the map which is from “Jabatan Ukur dan Pemetaan” Negeri Selangor – Pesanan Bil J.U. Sel. 1971, there is a reserve jungle sighted within division 2 perimeter.  Where else Div. 1 is surrounded by smallholders. In Changkat ASA Estate, based on the “Certificate of Title” – 18162 dated on 11/12/1980, this land can be cultivated for agriculture.  HCV, EIA and SIA assessment evidence. HCV assessment being detailed in the principle 5.2. ASA1 7.4  Sighted in Sg Gapi Estate, AAR report on "Oil Palm Manuring Recommendations 2014” – TTM/Advisory/2014/Sg Gapi.  Most areas are hilly and patches of bare grounds were observed in most blocks.  No peat land and during field visit, minor soil erosions seen especially in areas with very steep terrain.  In Changkat ASA Estate, the AAR report on "Oil Palm Manuring Recommendations 2014” – TTM/Advisory/2014. Most areas are hilly and patches of bare grounds were observed in most blocks.  No peat land and during field visit. The annual AAR report will be used as guideline for existing estate mature palm management and for replanting. ASA1 7.5 As the above mentioned, in Changkat ASA Estate 10HA within the estate RSPOPC-SUM-REPORT.F01 MAY 2014 Page 44 of 70 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 CU827183

perimeter and own by KLK, therefore none of the local people affected. ASA1 7.6  For Changkat ASA Estate legal rights mentioned in the principle 2.  No negotiations concerning compensation for loss of legal or customary rights are as per this assessment period. Based on the land title, it leases for 99 years, therefore no compensation issues involved.  Since the RSPO certification date, there isn't any issues raised by stakeholders during stakeholder meetings. ASA1 7.7  KLK has stated on zero burning in the SOP-09 dated on 01/01/2011. The upcoming replanting schedule to be in 2015-16.  During field visit not observed any open burning in the operating units. Apart from the policy, Guidelines for the implementation of the ASEAN policy on zero burning used for reference.  KLK has stated on zero burning in the SOP-09 dated on 01/01/2011. ASA1 7.8 This been incorporated into EIA that effectively define in principle 5.3. 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 improvement in key operations such as in minimizing use of certain Summary pesticides, environmental impacts, maximizing recycling and minimizing waste or by-products generation, pollution prevention plans. 2 Minor Non Conformities raised. ASA1 8.1  In the mill the EIA sighted with 2 objectives – Environment Management Plan 1. Emission of greenhouse gases from diesel engine & generation of black smoke (power generation). 2. Emission of greenhouse gases due to usage of electricity (line site/office)  As for SIA, seen they have identified mitigation measures for construction for horizontal retention tank & new staff house construction.  Action plan monitoring is available and updated. As part of Continuous Improvement Plan.  The mill established plans to improve the efficiency of the effluent treatment plant by using belt press to remove the solid content of the effluent 2014.  This objective is carried forward from 2013 as it was not completed. Work progress monitoring 2013 updated in 9/1/13 & 6/1/14.  However an objective in 2013 ‘ to improve the land application system by enlarging the application area by addition terraces’ was pending in Dec 2013 minutes but failed to be followed up or brought forward to CIP 2014.  Continuous improvement plan available that include description of improvement, activity, person in charge, target date and status but very basic.  Takes the stakeholder logbook input and converts into continuous improvement plan.  In Kampar Estate, the Continuous Improvement Plan (with description of improvement, activity, person in charge, target date and status) 3 items identified : 1. Stakeholder meeting 11/1/2014 (minutes sighted)

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

2. To repair hopper 30/6/14 (status completed) 3. To acquire surveyor to identify boundary of kampong – pending (30/8/14)

 Management Review Minutes dated 2/1/2014 does not consider items mentioned in SOP 16 for agenda.  The agenda for 2/1/2014 only identifies safety & accident and this does not comply with SOP 16.  In Changkat ASA Estate, the Continuous Improvement Plan as per SOP 16. Sighted plan with description of activity, activity, PIC, target date and status available. Prepared on 1/1/2014. E.g. maintain cleanliness of estate line site – regular checking for prompt rubbish collection (2 days once) and checked monthly.  Monthly domestic waste checking checklist filled up till 25/7/14. To create 100% RSPO awareness – training- monitored monthly.  Identified a list of training for each month and executed e.g. Importance of Riparian Zone done on 23/7/14 to sprayers (attendance record available). 2 Minor Non-Conformities issued against criterion - 8.1  Management Review Minutes dated 2/1/2014 does not follow agenda set in SOP 16. Continuous Improvement Plan was not reviewed in the management review. [The agenda and minutes for 2/1/2014 were only on safety & accident.  An objective in Continuous Improvement Plan 2013 ‘ to improve the land application system by enlarging the application area by addition terraces’ was pending in Dec 2013 minutes but failed to be followed up or brought forward to CIP 2014.

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 1 major and 10 minor Non-Conformities Identified.

RSPOPC-SUM-REPORT.F01 MAY 2014 Page 46 of 70 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 CU827183

NON CONFORMITY REPORT NC number: 01/2014 Client name: KLK TANJONG MALIM COMPLEX [Kampar & Changkat ASA] Date raised: 20/08/2014 Major or Minor: Major Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 5.3 - Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. 5.3.1 (M) All waste products and sources of pollution shall be identified and documented. 5.3.2 (M) All chemicals and their containers shall be disposed of responsibly. 5.3.3 A waste management and disposal plan to avoid or reduce pollution shall be documented and implemented Evidence of non-conformity: i). No proper list of scheduled waste is available. Ex: clinical waste is not recognized as scheduled waste where it supposed to be. ii). Clinical waste is under SW403 is supposed to be disposed within 180 days as stated in Environmental Quality (Scheduled Waste) Regulations 2005. It is sighted at the store that some of the empty container were re-used. Ex: Lubricant containers used for planting, Paraquat container were sighted being used at the line site to kept water. ii). The implementation and management of schedule and none schedule waste not reflect to mitigation measures identified.

Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company. The management of both mill and estates had attended meeting with the sustainability team and an immediate action was taken.

Timeline for conformance: 60 days Review of corrective /improvement action: The company compares the collection list by schedule waste collector and comparing against waste generator list in order to ensure waste are not left off. Types of waste are listed and status of each waste is written to identify its classification for disposal order. Corrective action taken is satisfactory where the waste has been disposed according to the schedule waste list and during ASA 2 a detail verification will be carried out at all operating units that to be audited.

Assessors signature:

Date: 02/09/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 02/2014 Client name: KLK TANJONG MALIM COMPLEX [Group] Date raised: 20/08/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 1.3.1 - There shall be a written policy committing to a code of ethical conduct and integrity in all operations and transactions, which shall be documented and communicated to all levels of the workforce and operations. Evidence of non-conformity: The top management has already in progress of implementing / developing all the necessary Human rights policy. However at the period of audit, it is noted that the Human Rights policy is not publically available yet. Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company.

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

Assessors signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 03/2014 Client name: KLK TANJONG MALIM COMPLEX [All units] Date raised: 20/08/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 5.6.3 - A monitoring system shall be in place, with regular reporting on progress for these significant pollutants and emissions from estate and mill operations, using appropriate tools. Evidence of non-conformity: Monitoring system for GHG is in place, however the report of the progress not demonstrable during audit. Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company.

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

Assessors signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 04/2014 Client name: KLK TANJONG MALIM COMPLEX [Group] Date raised: 20/08/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 6.13.1 - A policy to respect human rights shall be documented and communicated to all levels of the workforce and operations. Evidence of non-conformity: In countries and communities where KLK operates, social issues are part of a broader set of complex socioeconomic and security concerns and being apply to many aspects of their business. The management of human rights issues in KLK is based on the totality of their efforts and not on a single activity. Their corporate policies, management processes, community investment programs and participation in voluntary initiatives are complementary and are intended to work together and reinforce their commitment to respecting human rights. However a policy to respect human rights not documented and communicated to all levels of the workforce and operations. Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company.

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

Assessors signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 05/2014 Client name: KLK TANJONG MALIM COMPLEX [Changkat ASA] Date raised: 20/08/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 6.2 - There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties. 6.2.2 - A management official responsible for these issues shall be nominated. Evidence of non-conformity: Assistant Manager Mr Navin is responsible for RSPO issues, however no evidence of nomination nor stated in the job roles and responsibilities of the said personnel. Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company.

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

Assessors signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 06/2014 Client name: KLK TANJONG MALIM COMPLEX [Changkat ASA & Kampar] Date raised: 20/08/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 4.5 - Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management techniques. 4.5.2 - Training of those involved in IPM implementation shall be demonstrated. Evidence of non-conformity: No evidence of IPM Training has been conducted to the workers who involved in IPM implementation in estates. This training also was not part from the estates yearly training programme. Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company.

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

Assessors signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 07/2014 Client name: KLK TANJONG MALIM COMPLEX [Mill] Date raised: 20/08/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 6.5.2 - Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc.) shall be available in the languages understood by the workers or explained carefully to them by a management official. Evidence of non-conformity: Management has identified in July meeting (memo dated 1/8/14 issued) that monitoring of overtime hours (max 4 hours per day) and worker cannot work for 14 days without off day; however there is no solid methodology of ensuring that this is effectively monitored eg Lingeswaran a/l Vathumalai has worked from 1/8 till 15/8 without an off day and some days he works 4 ½ hours. Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company.

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

Assessors signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 08/2014 Client name: KLK TANJONG MALIM COMPLEX [Mill] Date raised: 20/08/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 8.1 - The action plan for continual improvement shall be implemented, based on a consideration of the main social and environmental impacts and opportunities of the grower/mill, and shall include a range of Indicators covered by these Principles and Criteria. Evidence of non-conformity: An objective in Continuous Improvement Plan 2013 ‘ to improve the land application system by enlarging the application area by addition terraces’ was pending in Dec 2013 minutes but failed to be followed up or brought forward to CIP 2014. Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company.

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

Assessors signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 09/2014 Client name: KLK TANJONG MALIM COMPLEX [Kampar] Date raised: 20/08/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 8.1 - The action plan for continual improvement shall be implemented, based on a consideration of the main social and environmental impacts and opportunities of the grower/mill, and shall include a range of Indicators covered by these Principles and Criteria. Evidence of non-conformity: Management Review Minutes dated 2/1/2014 does not follow agenda set in SOP 16. Continuous Improvement Plan was not reviewed in the management review. [The agenda and minutes for 2/1/2014 were only on safety & accident. Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company.

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

Assessors signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 10/2014 Client name: KLK TANJONG MALIM COMPLEX [Kampar] Date raised: 20/08/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 6.2.3 - A list of stakeholders, records of all communication, including confirmation of receipt and that efforts are made to ensure understanding by affected parties, and records of actions taken in response to input from stakeholders, shall be maintained. Evidence of non-conformity: Stakeholders meeting records dated 11/1/2014 states a stakeholders survey was conducted but no survey results were evident and no improvement action taken. Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company.

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

Assessors signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 11/2014 Client name: KLK TANJONG MALIM COMPLEX [Kampar] Date raised: 20/08/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: Criterion: 6.6.2 - Minutes of meetings with main trade unions or workers representatives shall be documented. Evidence of non-conformity: No evidence of discussion or meeting minutes of main trade union NUPW or workers representative with Management was available. Auditors signature:

Date: 20/08/2014 Proposed corrective action / improvement action by company.

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

Assessors signature:

Date:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

4.3.2 Non-Conformity Identified during the last ASA, not applicable for MA Non-Conformities Identified for previous audit. [7 Minor NCs]

NON CONFORMITY REPORT NC number: 08/2013 Client name: Tanjong Malim Complex Date raised: 21-23 Jan 2013 Major or Minor: Minor Raised by: Simon Selvaraj Aspect of standard: 5.1.1 Documented aspects and impacts risk assessment that is periodically reviewed and updated. Evidence of non-conformity: -

The EIA is limited, for example the hazards description: water pollution is mentioned in relation to the workshop, but it is not clear whether it relates to oil, chemicals, pesticides or other sources of pollution. Or human activities cause the water and air pollution, but how it is not specified (The root-cause is not clearly identified). In most cases the landfill is not included. When interviewing the staff, it is clear that there is far more information available than presented in the EIA. In general the KLK format is not made specific enough for each site and misses the details on where, what, when, how, why and who.

Auditors signature:

Date: 23 -01- 2013 Proposed corrective action / improvement action by company: The details of mill EIA had been completed as per Attachment 1 and 2 enclosed.

Timeline for conformance: Will be verified during ASA 1. Review of corrective / improvement action: The assessment carry out is evident and therefore this minor non-compliance is closed. Assessors signature:

Date: 18/08/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 09/2013 Client name: Tanjong Malim Complex Date raised: 21-23 Jan 2013 Major or Minor: Minor Raised by: Simon Selvaraj Aspect of standard: 5.3.1 Documented identification of all waste products and sources of pollution Evidence of non-conformity: - It was found that, the list of waste generated with source of pollution, does not completely cover all aspects in the estates.

Auditors signature:

Date: 23 -01- 2013 Proposed corrective action / improvement action by company: Attached in a list of waste generated and source of pollution from the estate. Please refer to Attachment 3.

Timeline for conformance: Will be verified during ASA 1. Review of corrective / improvement action: The assessment carry out is evident and therefore this minor non-compliance is closed. Assessors signature:

Date: 18/08/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 10/2013 Client name: Tanjong Malim Complex Date raised: 21-23 Jan 2013 Major or Minor: Minor Raised by: Simon Selvaraj 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: -

Schedule wastes are found to be stored together with other general items.

Auditors signature:

Date: 23 -01- 2013 Proposed corrective action / improvement action by company: Schedule waste had been separated from the Store by Kerling estate.

Timeline for conformance: Will be verified during ASA 1. Review of corrective / improvement action: The assessment carry out is evident and therefore this minor non-compliance is closed. Assessors signature:

Date: 18/08/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 11/2013 Client name: Tanjong Malim Complex Date raised: 21-23 Jan 2013 Major or Minor: Minor Raised by: Simon Selvaraj Aspect of standard: 5..6.1 Documented plans to mitigate all polluting activities (Cross ref to C5.1.) Evidence of non-conformity: -

The assessment of polluting activities has conducted which incorporated in EIA, covering the environmental aspects and impact in actifity/area, how the case is happened (normal, abnormal and emergencies) the measures of consequences, adequaty of existing control, determine level and priority of risk, and legal implication. However, plan to reduce the pollution and emission is not complete in both of mill and estates.

Auditors signature:

Date: 23 -01- 2013 Proposed corrective action / improvement action by company: Plan to reduce pollution and emissions have been completed with the Attachment 2 for mill and 4 for estates.

Timeline for conformance: Will be verified during ASA 1. Review of corrective / improvement action: The assessment carry out is evident and therefore this minor non-compliance is closed. Assessors signature:

Date: 18/08/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 12/2013 Client name: Tanjong Malim Complex Date raised: 21-23 Jan 2013 Major or Minor: Minor Raised by: Simon Selvaraj Aspect of standard: 6.5.3 Growers and millers provide adequate housing, water supplies, medical, educational and welfare amenities in accordance with Workers’ Minimum Standard of Housing and Amenities Act 1990 (Act 446) or above, where no such public facilities are available or accessible. Evidence of non-conformity: - Workers have been using water directly from the river without proper treatment at their houses. No evidence to show that, the estate has carried out tests on the water to identify, if the water is safe to use/consume.

Auditors signature:

Date: 23 -01- 2013 Proposed corrective action / improvement action by company: Tube well had been installed in June 2013. Soda Ash and Chlorine are used to treat the water.

Timeline for conformance: Will be verified during ASA 1. Review of corrective / improvement action: The assessment carry out is evident and therefore this minor non-compliance is closed. Assessors signature:

Date: 18/08/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 13/2013 Client name: Tanjong Malim Complex Date raised: 21-23 Jan 2013 Major or Minor: Minor Raised by: Simon Selvaraj Aspect of standard: 6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied. Evidence of non-conformity: -

The policy to prevent sexual harassment and all other forms of violence against women are evidenced but the policy does not indicate on the reproductive rights.

Auditors signature:

Date: 23 -01- 2013 Proposed corrective action / improvement action by company: Sexual harassment and violence policy had been amended to include the reproductive right of women. Please refer to Attachment 5.

Timeline for conformance: Will be verified during ASA 1. Review of corrective / improvement action: The assessment carry out is evident and therefore this minor non-compliance is closed. Assessors signature:

Date: 18/08/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

NON CONFORMITY REPORT NC number: 14/2013 Client name: Tanjong Malim Complex Date raised: 21-23 Jan 2013 Major or Minor: Minor Raised by: Simon Selvaraj Aspect of standard: 6.11.1 Demonstrable contributions to local development that are based on the results of consultation with local communities. Evidence of non-conformity: -

Management is allocating contribution to neighboring societies; however, there is no evidence of consultation is made against the sum being contributed.

Auditors signature:

Date: 23 -01- 2013 Proposed corrective action / improvement action by company: Consultation is made against the sum being contributed to neighboring societies and attached are the evidence from them. Please refer to Attachment 6 and 7.

Timeline for conformance: Will be verified during ASA 1. Review of corrective / improvement action: The assessment carry out is evident and therefore this minor non-compliance is closed. Assessors signature:

Date: 18/08/2014

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

4.3.3 Observations Identified during this audit No observation found in this audit.

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) Kilang Kelapa Sawit Beg Berkunci No. 3, 35909, 20 MB Tanjung Malim Tanjung Malim, Perak

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

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 18,243 4,146 Forecasted volume between Sept 2014 to August 2015.

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

5.4 Monthly Records of Certified and Uncertified FFB Received Since the Last Audit If this is the 1st Main Assessment, the figures used are from the last 12 months. If this is an Annual Surveillance Assessment, the figures used are since the last audit. No MONTH-YEAR Certified Supply Bases (MT) Uncertified Supply Bases (MT), if any Total (MT) 1 Nov 2013 5955.31 3981.58 9936.89 2 Dec 2013 5719.65 3680.16 9399.81 3 Jan 2014 4869.380 3295.00 8164.38 4 Feb 2014 5455.370 3067.00 8522.37 5 Mar 2014 2251.68 2182.57 4434.25 6 Apr 2014 3479.17 3219.57 6698.74 7 May 2014 3855.32 3154.28 7009.60 8 June 2014 3257.82 3217.69 6475.51 TOTAL 34,843.70 25,797.85 60,641.55

5.5 Monthly Records of Certified CPO and PK Produced Since the Last Audit If this is the 1st Main Assessment, the figures used are from the last 12 months. If this is an Annual Surveillance Assessment, the figures used are since the last audit. No MONTH-YEAR Certified CPO (MT) Certified PK 1 Nov 2013 1310.764 313.845 2 Dec 2013 1248.028 311.721 3 Jan 2014 1086.359 269.280 4 Feb 2014 1280.921 295.680 5 Mar 2014 495.82 118.889 6 Apr 2014 762.634 178.134 7 May 2014 845.086 193.152 8 June 2014 726.168 163.868 TOTAL 7,755.78 1,844.57

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

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

5.7 Records of Certified CPO & PK Sold under UTZ eTrace to Buyers since the Last Audit, if Any If this is the 1st Main Assessment, the figures used are from the last 12 months. If this is an Annual Surveillance Assessment, the figures used are since the last audit. The transactions were sighted form the clients registered UTZ eTrace Account. Certified CPO Certified PK No Buyers Name UTZ eTrace Trading No (MT) Sold (MT) Sold 1 Cargill Palm Products Sdn. Bhd. TR-142f49a9-3271 [Feb 2014] 500 - Contract : KLK/74041-S/CPO/MB] 2 Cargill Palm Products Sdn. Bhd. TR-41a00ce1-fb84 [Jan 2014] 500 - Contract : KLK/74023-S/CPO/MB] 3 KLK Oleo TR-c9e9dbdb-ceae [Jun 2014] 300 - Contract : KLK/74699-S/CPO/MB] 4 Cargill Palm Products Sdn. Bhd. TR- b68b353a-6bfc [July 2014] 500 - Contract : KLK/74114-S/CPO/MB]

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

5.9 Description of the Organizational Management Systems Including organizations, management and operational systems to ensure compliance with the RSPO Supply Chain Certification Systems and Standards as detailed above Tanjong Malim palm oil mill and its supply bases were audited against RSPO SCCS. There are 66 [male 63 and female 3] as a permanent workers and sighted no contract workers in the mill operation. The mill processing capacity is 20 ton FFB per hour with throughput of 19 ton. The mill is capable of handling MB supply chain model. Since May 2014, the management has decided to discontinue the ISO 14001 certification as found some of the ISO 14001’s applications are overlaps the RSPO requirements.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

5.10 Final Certification decision by Control Union for the RSPO SCCS Audit of the POM Recommendations made: Yes Summary of non- None Found 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: Aug 2015

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

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

Acknowledged by: Name: Sin Chuan Eng Position: Head of Sustainability Date: 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: Mahaswaran Maliyapan Position: Lead Auditor

Date: 21/08/2014 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: Gerben Stegeman Position: Certifier

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

Date: Signature

PART 7: APPENDICIES

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

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU827183

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

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