RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

RSPO PRINCIPLES & CRITERIA PUBLIC SUMMARY REPORT ANNUAL SURVEILLANCE ASSESSMENT 2015

Malaysia CHANGKAT CHERMIN PALM OIL MILL Kuala Lumpur-Kepong Berhad 2015

Report prepared by: Baskaran Sankaran (Lead Assessor) Certification decision by: Simon Selvaraj (Certifier) Certifying Office Control Union (Malaysia) Sdn. Bhd. B-3-1, Prima Klang Avenue, Jalan Kota KS/1, 41100 Klang, Selangor, Malaysia [email protected] Tel: +603-3377 1600 / 1700

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

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

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

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

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 ...... 6 1.7.3 Conservation and HCV Area (Ha) ...... 6 1.7.4 Percentage of Planted Oil Palm by different Age Ranges ...... 7 1.7.5 Calculation of the Number of Production Units (N) to Sample for the Mill ...... 7 1.8 PROGRESS OF ASSOCIATED SMALLHOLDERS OR OUT-GROWERS, IF APPLICABLE TO THIS ASSESSMENT ...... 7 1.9 LOCATION MAP FOR THIS CERTIFICATION UNIT (SEE APPENDIX 1) ...... 7 PART 2: PARTIAL CERTIFICATION ...... 7

2.1 MANAGEMENT STRUCTURE ...... 7 2.2 NON-COMPLIANCE IDENTIFIED WITH 2.1 ABOVE ...... 8 2.3 SUMMARY OF THE TIME BOUND PLAN ...... 8 2.4 UN-CERTIFIED UNITS OR HOLDINGS ...... 9 2.5 SUMMARY OF THE FINDINGS FOR PARTIAL CERTIFICATION ...... 12 2.6 PARTIAL CERTIFICATION AUDIT AGENDA ...... 13 PART 3: AUDIT PROCESS...... 13

3.1 ABOUT THE CERTIFICATION BODY ...... 13 3.2 AUDIT TEAM ...... 13 3.2.1 Qualifications of the Lead Auditor ...... 13 3.2.2 Qualifications of the Assessment Team ...... 14 3.3 AUDIT METHODOLOGY...... 17 3.3.1 General Overview ...... 17 3.3.2 Assessment agenda for this Audit ...... 18 PART 4 ASSESSMENT FINDINGS ...... 19

4.1 LEAD ASSESSOR’S SUMMARY AND RECOMMENDATION FOR CERTIFICATION ...... 19 4.2 SUMMARY OF THE FINDINGS BY PRINCIPLES AND CRITERIA ...... 20 Principle 1: Commitment to Transparency ...... 20 Principle 2: Compliance with Applicable Laws and Regulations ...... 21 Principle 3: Commitment to Long-Term Economic and Financial Viability ...... 23 Principle 4: Use of Appropriate Best Practices by Growers and Millers ...... 24 Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity ...... 33 Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers ...... 38 Principle 7: Responsible Development of New Plantings ...... 42 Principle 8: Commitment to Continuous Improvement in Key Areas of Activity ...... 43 4.3 NON-CONFORMITY RAISED DURING THIS AUDIT AND ANY FROM THE PREVIOUS YEAR, IF APPLICABLE ...... 44 4.3.1 Non-Conformities Identified during this Audit ...... 44 4.3.2 Non-Conformity Identified during the last ASA ...... 45 FOLLOWING 3 MAJOR AND 4 MINOR NON-CONFORMITIES IDENTIFIED DURING THE LAST AUDIT AND THE STATUS WAS REVIEWED AS INDICATED BELOW...... 45 RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 2 of 60

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

4.3.3 Observations Raised During this Audit ...... 51 4.4 ISSUES THAT WERE RAISED DURING THE STAKEHOLDER CONSULTATION, IF ANY ...... 52 PART 5: RSPO SUPPLY CHAIN CERTIFICATION ...... 52

5.1 POM INCLUDED IN THE SCOPE OF THE AUDIT ...... 52 5.2 CONFIRMATION OF THE COMPANY’S SUMMARY OF ANNUAL CERTIFIED VOLUME OF RSPO CERTIFIED PALM OIL AND PALM KERNEL OVER A SPECIFIED PERIOD ...... 52 5.3 SUMMARY REPORT INCLUDING A BRIEF DESCRIPTION OF THE SCOPE OF CERTIFICATION ...... 53 5.4 MONTHLY RECORDS OF CERTIFIED AND UNCERTIFIED FFB RECEIVED SINCE THE LAST AUDIT ...... 53 5.5 MONTHLY RECORDS OF CERTIFIED CPO AND PK PRODUCED SINCE THE LAST AUDIT ...... 53 5.6 RECORDS OF CERTIFIED CPO & PK SOLD UNDER GREENPLAM TO BUYERS SINCE THE LAST AUDIT, IF ANY...... 53 5.7 RECORDS OF CERTIFIED CPO & PK SOLD UNDER UTZ ETRACE TO BUYERS SINCE THE LAST AUDIT, IF ANY .... 54 5.8 NON-CONFORMITIES IDENTIFIED DURING THIS AUDIT ...... 55 5.9 DESCRIPTION OF THE ORGANIZATIONAL MANAGEMENT SYSTEMS ...... 56 5.10 FINAL CERTIFICATION DECISION BY CONTROL UNION FOR THE RSPO SCCS AUDIT OF THE POM ...... 56 PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ...... 57

6.1 DATE OF NEXT ASA ...... 57 6.2 DATE FOR CLOSURE OF NON-CONFORMITIES ...... 57 6.3 SIGNING BY THE CLIENT ...... 57 6.4 SIGNING BY THE LEAD AUDITOR ...... 57 6.5 SIGNING BY THE CERTIFIER ...... 57 PART 7: APPENDICIES ...... 58

APPENDIX 1: LOCATION MAP FOR THIS CERTIFICATION UNIT ...... 58 APPENDIX 2: LIST OF ABBREVIATIONS ...... 60

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT

1.1 Company and Contact Details Company Name: Kuala Lumpur Kepong Berhad Business Address: 1, Jalan S. P. Seenivasagam, 30000 Ipoh, Perak. Contact Person: Mr. Sin Chuan Eng Office Telephone: +6052417844 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-822639 Start Date Of Certificate: 10th September, 2013 End Date Of Certificate: 9th September, 2018 Date Of Original Certification: 10th September, 2013 Scope: Certification of the Palm Oil Mill and Supply Bases Type Of Certification: Single site Duration Of Certificate: 5 Years from date of certification

1.3 Annual Surveillance Assessment Details Dates Of This Audit: 15th – 19th June 2015 Audit Number: ASA2

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 KLK Changkat Batu 13 ½, 32400 Ayer Tawar, 60 N 4.288974 E 100.765152 Chermin POM 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 Actual Production for this Audit Year Projected Production from the Projected 12 Months (MT) 2015 (MT) last 12 Months (MT) Forecast Certified in this Report May’14 to Apr’15 FFB CPO PK FFB CPO PK FFB CPO PK 232,793 76,280 11,980 239,108.7 49,859.29 10,559.86 250,697 56,406.8 13,537.6

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

1.7 General Description of Supply Base There has been decrease in the supply bases from 13 supply bases to 10. Three supply bases that been removed from Changkat Chermin POM are Kampar Estate, Bukit Kartho Estate and Subur Estate. These three estates are now the main supply base of Tanjong Malim POM and Batu Lintang POM and only send the crop to Changkat Chermin POM only during crop diversion. As all the supply bases are from certified units, therefore no impact seen on SCCS model [IP] as well required receiving and processing FFB.

1.7.1 Location of the Supply Base Oil Palm Location GPS reference Area Summary (Ha) OPP Plantation Name Address Longitude Latitude Total Mature OPP 1 Changkat Batu 13 ½, 32400, Ayer Chermin Tawar, Perak N4⁰ 18’ 16” E100 ⁰ 47’ 48” 2,540 2,026 Estate OPP 2 Batu 12, 32020 Sitiawan, Lekir Estate N4⁰ 07’ 12” E100 46’47” 3,285 2,498 Perak OPP 3 Raja Hitam Bt 18, Kg Jering, 32400 N 21’3.72’ E100 ’21.92” 1,445 1,445 Estate Ayer, Tawar, Perak OPP 4 Jalan Si Putih – Batu Glenealy Hampar, 32800 Parit N4⁰ 27’ 31” E100⁰ 55’50” 1,027 557 Estate Perak OPP 5 Ladang Allagar, 34800 Allagar Estate N04 36’ E100 44” 776 713 Trong, Perak. OPP 6 Serapoh Ladang Serapoh, 32800 N4⁰ 31’ 13” E100⁰ 53’ 29” 667 651 Estate Parit, Perak OPP 7 Ladang Kuala Kangsar, Kuala Kangsar 33700 Padang Rengas, N4.79709970” E100.86773400 214 177 Estate Perak OPP 8 Ladang Pinji, P.O.Box Pinji Estate N4⁰ 551944 E101⁰ 06667 953 428 1027, 30820 Ipoh, Perak OPP 9 Ladang Batu Dua, Batu Dua P.O.Box 1027, 30820 N4.501944 E101.07243 158 101 Estate Ipoh, Perak OPP 10 Ladang Menglembu d/k No. 1, Hala Kledang 4, Menglembu Taman Kledang, 31450 N4.62953 E101.03548 266 42 Estate Menglembu, Perak TOTAL 11,331 8,638

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

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 Chermin Estate 53,344 2001,2005,2006,2007,2009,2010 25 OPP 2 1991,1992,1999,2001,2002,2003,2004, Lekir Estate 61,272 25 2008 & 2009 OPP 3 Raja Hitam Estate 49,053 2002, 2003, 2004,2006 & 2007 25 OPP 4 1984A,1986A,1987A,1990A,1992A, 1994A,1995A,1996A,1999A,2001A, Glenealy Estate 16,825 36 2001C,2002A,2002B,2005A,2006A, 2011A,2012A OPP 5 1989,1997,1998,1999,2000,2001,2002, Allagar Estate 16,248 25 2003,2004,2005,2007,2008 OPP 6 Serapoh Estate 18793 1996-2009 25 OPP 7 Kuala Kangsar Estate 5,185 2002,2003,2005,2006,2010,2013 25 OPP 8 1985,1991,1993,1996,1998,1999,2000, Pinji Estate 13,198 25 2001,2003,2006,2010,2011,2012,2013 OPP 9 Batu Dua Estate 2,843 2000,2003,2010,2014 25 OPP 10 Menglembu Estate 1,386 1999 25 TOTAL 238,147 - -

Only use data from 1.7.3 in the eTrace Summary 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 Chermin Estate NIL NIL NIL OPP 2 Lekir Estate NIL NIL NIL OPP 3 Raja Hitam Estate NIL NIL NIL OPP 4 Glenealy Estate NIL NIL NIL OPP 5 Allagar Estate NIL 20 NIL OPP 6 Serapoh Estate NIL NIL NIL OPP 7 Kuala Kangsar Estate NIL 150 YES OPP 8 Pinji Estate NIL NIL NIL OPP 9 Batu Dua Estate NIL NIL NIL OPP 10 Menglembu Estate NIL NIL NIL TOTAL - 170 - * 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 CU822639

1.7.4 Percentage of Planted Oil Palm by different Age Ranges Planting Years by 5 year Ranges OPP 1996-2000 2001 -2005 2006 – 2010 2011 – 2015 Total OPP 1 NIL 20% 62% 18% 100% OPP 2 2.28% 66.01% 11.93% NIL 100% OPP 3 NIL 58.20% 41.80% NIL 100% OPP 4 8.0% 37.3% 7.5% 9.6% 100% OPP 5 38.8% 35.3% 20.5% NIL 100% OPP 6 30.57% 51.77% 17.67% NIL 100% OPP 7 NIL 55.6% 27.1% 17.3% 100% OPP 8 40.19% 27.18% 7.77% 16.89% 100% OPP 9 36.44% 38.98% 10.17% 14.41% 100% OPP 10 100% NIL NIL NIL 100%

1.7.5 Calculation of the Number of Production Units (N) to Sample for the Mill N = 0.8√Y, where “Y” is the number of units, with the result always to be rounded “up” to the next whole integer. Where only a sample of the supply base is assessed, units not previously assessed, or assessed earlier in the certification program, are to be preferred over those more recently assessed For the Mill, how many units make up the production base? Owned estates (Y) N = 0.8√Y Smallholders (Z) N = 0.8√Z 10 3 - NA Explanation as to the selection of estates sampled In term of hectarage one large estate, one medium size estate one small size estate were assessed for this audit.

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 RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 7 of 60

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

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

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

2.3 Summary of the Time Bound Plan Section Requirement Findings and any action required Compliance 2.3.1 Does the plan include New inclusion of supply base and mill has been updated in Yes all subsidiaries, below time bound plan. estates and mills? 2.3.2 Is the time bound Existing time bound plan has been included with new supply Yes plan challenging? base and mill.  Age of plantations.  Location.  Mill development.  Infrastructure.  Compliance with applicable law. 2.3.3 Have there been any The time bound plan reviewed by CUC and changes such as Yes changes since the last new inclusion is updated and accepted. Due to compensation audit? Are they plan conclusion. 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 any Recent stakeholder comment on acquired land in Papua New Yes stakeholder Guinea on the credibility on land obtained has been raised by comments? OCEAN-Program Officer Collingwood Bay Community Representative, Mr. Adelbert Gangai has sent comments to KLK on a letter dated 5th December 2013 and kept RSPO & other parties in copy. Currently, KLK has leased a piece of a land to park all the machineries temporarily. As of 09 December 2013, this matter is being handled with RSPO and

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

currently KLK is in progress to reply to RSPO. Wild Asia had been appointed since April 2013 to undertake SEIA assessment and subsequently 1st meeting at Wanigela district on 25th Nov 2013 and community and representative attended was recorded. Pending official assessment report.

Note: Case was closed. See the RSPO website.

On PT Menteng Jaya Sawit Perdana IUP for 7,400Ha approval no: 525.26/153/II/EKBANG/2007 dated on 13 February 2007 and Izin Lokasi (IL) is renewed and documented no: 188.45/359/HUK-BPN/2013 dated: 1st August 2013 which includes an approval clause 1a that this IL will remain in force until land swap process is finalised. 2.3.6 Have there been any No. Yes newly acquired subsidiaries? 2.3.7 Have there been any No lapses. Yes isolated lapses in implementation of the plan? 2.3.8 Has there been any No. Yes systematic failure to proceed with the implementation of the plan? 2.3.9 General statement as The target to certify all the units within year 2017 remain Yes to progress made same. since the last audit?

2.4 Un-Certified Units or Holdings NOTE: Companies may demonstrate compliance by clear evidence of a self-audit (i.e. an internal audit for all subsidiaries, estates and Palm Oil Mills) Section Requirement Findings and any action required Compliance 2.4.1 Did the company The internal control points have included all the requirements Yes conduct an internal to validate the compliance against uncertified units or audit? If so, has a holdings as per partial requirements and assurance statement positive assurance has been generated by KLK has a list of subsidiaries inspected. statement been produced? Liberia is not required internal audit as it is part under EPO. 2.4.2 No replacement after Land Use Change Analysis did by ASENTA. Submitted to RSPO Yes dates defined in NIs 30th September 2014. Data that identified as HCV as per Criterion 7.3: below:  Primary forest.  Any area identified No Location Total HA HCV as containing High 1. PT MP 7,971 1,824 Conservation 2. PT HHM 7,317 748.30 Values (HCVs). 3. PT AKS 2,336 368.45  Any area required to 4. PT KMA 13, 148 58.36 maintain or enhance 5. PT MAP 9,056 787.11 HCVs in accordance 6. PT MJSB 5,893 234.85 with RSPO criterion 7.3. RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 9 of 60

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

2.4.3 Any new plantings PT Anugerah Surya Mandiri has undergone NPP and published Yes since January 1st 2010 in RSPO website on 1st April 2013. must comply with the RSPO New Plantings Procedure. 2.4.4 Any Land conflicts are PT Adei Plantation land conflicts around 2,544 Ha are still in Yes being resolved progress of negotiation. About 730.51 Ha has been exclude through a mutually from HGU PT Adei. agreed process, e.g. RSPO Grievance procedure or Dispute Settlement Facility, in accordance with RSPO criteria 6.4, 7.5 and 7.6. 2.4.5 Any Labor disputes None noted. No stakeholder comments or complaints Yes are being resolved received through a mutually agreed process, in accordance with RSPO criterion 6.3. 2.4.6 Any Legal non- None noted. No stakeholder comments or complaints Yes compliance is being received. resolved in accordance with the legal requirements, with reference to RSPO criteria 2.1 and 2.2.

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

Supply Bases (estates, Targeted RSPO Current Certification Palm Oil Mill Country plantations, associations) Certification Year Status as per this Audit Pelam Estate Serdang, Batu Lintang Estate Batu Lintang Kedah, 2013 Certified Subur Estate Malaysia Buntar Estate Landak Estate Kekayaan Estate Voules Estate Sg Penggeli Estate Paloh, Johor, New Pogoh Estate Kekayaan Oct 2011 Certified Malaysia Fraser Estate Paloh Estate Sg Bekok Estate Ban Heng Estate See Sun Estate Bahau, Negeri Ayer Hitam Estate Jeram Padang Sembilan, Batang Jelai Estate Sept 2012 Certified Malaysia Jeram Padang Estate

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

Kombok Estate Ulu Pedas Estate Sg Pertanian Estate Sg Kawang Estate Renjok Estate Tuan Estate Tanjung Changkat Asa Estate Tanjung Malim Malim, Perak, Kerling Estate 2013 Certified Malaysia Sg Gapi Estate Sungai Buloh, Tuan Mee Selangor, Tuan Mee Estate 2013 Certified Malaysia Kerilla Estate Kuala Krai, Pasir Gajah Estate Kuala Pertang Kelantan, By 2014 Certified Sg Sokor Estate Malaysia

Pang Burong Estate Tawau, Sri Kunak Estate Mill 2 Sabah, March 2009 Certified Tundong Estate Malaysia Ringlet Estate Jatika Estate Tawau, Sigalong Estate Pinang Sabah, March 2009 Certified Pangeran Estate Malaysia Pinang Estate Lahad Datu, Tungku Estate Lungmanis Sabah, Bukit Tabin Estate July 2010 Certified Malaysia Lungmanis Estate Lahad Datu, Rimmer Estate Rimmer Sabah, July 2010 Certified Sg. Sibalukan Malaysia Kinabatangan, Bornion Estate Bornion Sabah, July 2010 Certified Segar Usaha Estate Malaysia Lekir Estate Changkat Chermin Estate Manjung. Raja Hitam Estate Changkat Perak, Glenealy Estate 2013 Certified Chermin Malaysia Serapoh Estate Kuala Kangsar Estate Allagar Estate Kebun Malindomas Perkebunan, Berau, Kaltim, Kebun Hutan Hijau Mas, Berau 1 By 2016 Pending Indonesia Kebun Jabontara Ekakarsa, Kebun Anugrah Surya Mandiri Steelindo Belitung, Kebun Steelindo Wahana Wahana By 2013 Certified (2015) Indonesia Perkasa Perkasa Belitung, Kebun Parit Sembada Parit Sembada By 2015 Pending Indonesia Kebun Alam Karya

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

Sejahtera Riau, Mandau Sumatera, Kebun Mandau Oct 2012 Certified Indonesia Riau, Nilo 1 Sumatera, Kebun Nilo Timur By 2013 Certified (2014) Indonesia Riau, Nilo 2 Sumatera, Kebun Nilo Barat By 2013 Certified (2014) Indonesia Riau, Kebun Sekarbumi Tapung Kanan Sumatera, By 2013 Certified. Alamlestari Indonesia Langkat, Kebun Basilam Sumatera Kebun Gohor Lama Gohor Lama By 2017 Pending Utara, Kebun Tanjung Beringin Indonesia (New inclusion)

Kebun Padang Brahrang Kebun Bukit Lawang Sumatera Padang Kebun Tanjung Keliling Utara, By 2017 Pending Brahrang Kebun Bekiun Indonesia Kebun Maryke (New Inclusion) Kebun Karya Makmur Kalimantan Abadi MAP March Tengah, Kebun MAP By 2017 Pending 2013 Indonesia Kebun Menteng Jaya Sawit Perdana With reference to time bound plan, the following issues were reviewed openly with the Control Union audit team during the assessment and which may be in conflict with the rules for partial certification, if applicable Name of Mill or Plantation *Area of concern (See examples below) N/A N/A Include any known concerns, media reports and major issues both present and from the past covering, for example:  Replacement of primary forest or any area containing HCV’s since November 2005.  Evidence of non-compliance with the law  Legal issues  Compensation payments  Social relations  Burning  Labor disputes

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

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

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

PART 3: AUDIT PROCESS

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

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

Control Union (Malaysia) Sdn Bhd is a registered affiliate member of RSPO and is a private limited company owned by the Control Union World Group based in Malaysia. Control Union (Malaysia) Sdn Bhd is authorized to conduct and issue certification on behalf of RSPO and Control Union Certifications.

3.2 Audit Team Lead auditor: Team member 1: Baskaran Sankaran Team member 2: Mohd Faisal Jaafar Team member 3: Victor Soosai Team member 4: Rico Pratama Putra

3.2.1 Qualifications of the Lead Auditor Requirement Qualifications A minimum of post high school (post-secondary Certified ISO 9001:2000 and EMS 14001:2004 Lead school) training in either agriculture/forestry, Auditor. environmental science or social sciences; At least 5 years professional experience in area of More than 20 years of working experience in various work relevant to the assessment (e.g., palm oil industries. Trained in agriculture certification programs management; agriculture/forestry; ecology; social such as RSPO. science); Training in the practical application of the RSPO Involved in RSPO assessment since 2014. Member of CUC criteria, and RSPO certification systems; RSPO audit team. Involved in audits conducted in Malaysia and Indonesia. Successfully completion of an ISO 9000:19011 lead Completed ISO 9001:2008 and ISO 14001:2004 lead auditors course; auditor course in 2006 & 2010. Training in the practical application of RSPO Involved in RSPO audits since 2014. Member of CUC RSPO certification systems. audit team, participated audits in Malaysia and Indonesia. A supervised period of training in practical auditing Involved in audits conducted in for many different against the RSPO criteria or similar sustainability companies in Malaysia and Indonesia. standards, with a minimum of 15 days audit experience and at least 3 audits at different organizations. RSPO endorsed lead auditors course. Completed RSPO Lead Auditor training in December 2014 Signed code of conduct. Yes RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 13 of 60

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General knowledge of: Yes  RSPO P&C standards. Yes  CUC organizational structure. Yes  CUC quality systems. Yes  Lead auditor role. Yes  Report writing. Yes  Stakeholder consultation. Yes  Certification decision process. Yes  RSPO SCCS program manual. Yes  CUC filing systems. Yes  Correct use of RSPO trademarks. Yes  History and objectives of RSPO. Yes  CV available. Yes Completion of CUC RSPO lead auditor training. Yes

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

Fluent in main local Mohd Faisal Jaafar Fluent in both English and Bahasa Malaysia languages and English. Victor Soosai Fluent in both English and Bahasa Malaysia Rico Pratama Putra Fluent in both English and Bahasa Malaysia

Field working Mohd Faisal Jaafar Degree holder in forestry from Universiti Putra experience in the palm Malaysia. He has a 7 years experience in oil sector, or a operating Malaysian Timber Certification demonstrable Scheme with specialization in forest equivalent. management certification and forest plantation management certification. Has undergone the necessary an RSPO Endorsed Lead Auditor Course, ISO 9000 and ISO 14001 Lead Auditor course and has gathered substantial auditing experience pertaining to RSPO certification covering Legal, GAP, Safety & Health, Social as well as Environmental aspects since 2011. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course Rico Pratama Putra Degree in Agriculture oil palm plantations with more than 3 years working in palm oil industry. A qualified auditor for ISPO, QMS, and EMS, including HCV assessment. Auditing RSPO since 2011 as auditor external.

Good agricultural Mohd Faisal Jaafar Degree holder in forestry from Universiti Putra practices (GAP), Malaysia. Faisal has a 7 years experience in integrated pest operating Malaysian Timber Certification management (IPM), Scheme with specialization in forest pesticide and fertilizer management certification and forest plantation use. management certification. Has undergone the necessary an RSPO Endorsed Lead Auditor RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 14 of 60

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Course, ISO 9000 and ISO 14001 Lead Auditor course and has gathered substantial auditing experience pertaining to RSPO certification covering Legal, GAP, Safety & Health, Social as well as Environmental aspects since 2011. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course Rico Pratama Putra Working experience in palm oil plantation. A qualified auditor for ISPO, QMS, and EMS. Involve auditing RSPO auditing since 2011.

Health and Safety Mohd Faisal Jaafar Degree holder in forestry from Universiti Putra auditing on the farm Malaysia. Faisal has a 7 years experience in and in processing operating Malaysian Timber Certification facilities. (For example Scheme with specialization in forest OHSAS 18001 or management certification and forest plantation occupational. Health management certification. Has undergone the and safety assurance necessary an RSPO Endorsed Lead Auditor system). Course, ISO 9000 and ISO 14001 Lead Auditor course and has gathered substantial auditing experience pertaining to RSPO certification covering Legal, GAP, Safety & Health, Social as well as Environmental aspects since 2011. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course Rico Pratama Putra Working experience in palm oil plantation. A qualified auditor for ISPO, QMS, and EMS. Involve auditing RSPO auditing since 2011.

Workers welfare issues Mohd Faisal Jaafar Degree holder in forestry from Universiti Putra and social auditing Malaysia. Faisal has a 7 years experience in experience. (For operating Malaysian Timber Certification example with SA8000 or Scheme with specialization in forest related social or ethical management certification and forest plantation accountability codes). management certification. Has undergone the necessary an RSPO Endorsed Lead Auditor Course, ISO 9000 and ISO 14001 Lead Auditor course and has gathered substantial auditing experience pertaining to RSPO certification covering Legal, GAP, Safety & Health, Social as well as Environmental aspects since 2011. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course

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Rico Pratama Putra Working experience in palm oil plantation. A qualified auditor for ISPO, QMS, and EMS. Involve auditing RSPO auditing since 2011.

Environmental and Mohd Faisal Jaafar Degree holder in forestry from Universiti Putra ecological auditing. (For Malaysia. Faisal has a 7 years experience in example experience operating Malaysian Timber Certification with organic agriculture, Scheme with specialization in forest ISO 14001 or management certification and forest plantation environmental management certification. Has undergone the management systems). necessary an RSPO Endorsed Lead Auditor Course, ISO 9000 and ISO 14001 Lead Auditor course and has gathered substantial auditing experience pertaining to RSPO certification covering Legal, GAP, Safety & Health, Social as well as Environmental aspects since 2011. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course Rico Pratama Putra Working experience in palm oil plantation. A qualified auditor for ISPO, QMS, and EMS. Involve auditing RSPO auditing since 2011.

Economic issues. Mohd Faisal Jaafar Degree holder in forestry from Universiti Putra Malaysia. Faisal has a 7 years experience in operating Malaysian Timber Certification Scheme with specialization in forest management certification and forest plantation management certification. Has undergone the necessary an RSPO Endorsed Lead Auditor Course, ISO 9000 and ISO 14001 Lead Auditor course and has gathered substantial auditing experience pertaining to RSPO certification covering Legal, GAP, Safety & Health, Social as well as Environmental aspects since 2011. Victor Soosai Involved in RSPO audits since 2014. Lead Auditor for ISO 9001:2008. Has attended ISO 19011: 2011 Standards Training, ISCC System Certification Training, ISO 17021: 2011 Standards Training and SA8000 & Basic Auditor Course Rico Pratama Putra Working experience in palm oil plantation. A qualified auditor for ISPO, QMS, and EMS. Involve auditing RSPO auditing since 2011.

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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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3.3.2 Assessment agenda for this Audit Date Location Auditors Main activities 08.30 Opening meeting Chaired by the audit team leader  Introduction by team leader Pinji Estate Baskaran  Presentation by respective managers  Presentation of Palm Oil Mill source of FFB by respective managers  Review the status of previous non-conformities 0900 – 1700: RSPO P&C 15/06/2015 Field operations. [Mon]  Worker interviews Baskaran  Chemical stores Faisal  Workshops Pinji Estate Victor Rico  Housing  Medical  Schools  Local communities  Environmental 0900 – 1700: RSPO P&C Field operations.  Worker interviews Baskaran  Chemical stores Faisal 16/06/2015 Serapoh Victor  Workshops [Tues] Estate Rico  Housing  Medical  Schools  Local communities  Environmental 0900 – 1700: RSPO P&C Field operations.  Worker interviews  Chemical stores Baskaran Chngkat  17/06/2015 Faisal Workshops Chermin [Wed] Victor  Housing Estate Rico  Medical  Schools  Local communities  Environmental

0900 – 1700: RSPO P&C Mill inspection Baskaran  Workshops Faisal  Stores Changkat Victor  POM application 18/06/2015 Chermin Rico  Document review [Thurs] POM Field operations  Worker interviews  Housing  Medical  Schools RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 18 of 60

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 Local communities  Environmental

Supply Chain Certification Assessment of the POM (RSPO Baskaran SCCS)

Preparation for closing meeting Additional field visits and meetings with managers as necessary Closing meeting Changkat Baskaran Chaired by the audit team leader 19/06/2015 Chermin Faisal  Welcome and introduction by the team leader [Fri] POM Victor  Presentation of findings by the audit team Rico  Questions and answers  Final summary by team leader End of assessment

PART 4 ASSESSMENT FINDINGS

4.1 Lead Assessor’s Summary and Recommendation for Certification The mill and supply bases which 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.

It is therefore the recommendation of the lead assessor that:

 A certificate of compliance is maintained.

Signed:

Name: Baskaran Sankaran Date: 19/06/2015

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

Principle 1: Commitment to Transparency Criterion by Requests made by stakeholder were responded to and all these are well Audit documented. Adequate information are made available to public. Company’s Summary policies are well communicated to all level employees. There is 1 Minor NC issued. ASA2 1.1 Sighted the adequate information from mill to stakeholders regarding land titles, safety & health plan, EIA, SIA and pollution prevention plan, details of complaints and grievances, negotiation procedure and prices paid for FFB.

SOP for stakeholder request for information is available in SOP #1 titled “Stakeholders Engagement / Negotiation”, for consultation & meeting, and complaint & grievance with rev 2 dated 1/3/13 at mill office. The above said SOP has identified mechanism for Request and Respond, Consultation & Meeting and Complaint & Grievances. Requests are recorded and being provided in appropriate languages and forms, once completed, stakeholders shall then acknowledge the completed action and response. The mill has established stake holder list consist of 29 stakeholders. The list covers statutory bodies, government agencies, non-governmental organization, workers union, small holders, suppliers, etc. Mill’s stakeholder meeting was organized combine with Changkat Chermin estate and Ladang Raja Hitam estate was chaired by the estate manager Mr Xavier on 25/03/2015 which was attended by 17 stakeholders and 11 company’s senior management staffs. Sighted minutes attendance record of the meeting with stakeholders. Meeting minutes has detailed issues raised by stakeholders and response provided by the management.

All three estates have established stakeholder lists consist of statutory bodies, government agencies, non-governmental organization, workers union, small holders, suppliers, etc. Estate’s stakeholder lists being updated in annually. Stakeholder meetings were held for year 2014/2015 and sighted minutes of the meeting with stakeholders. Proof of action been taken by the estate management on issues raised by stakeholders during the stakeholders meeting is evident in the request and respond compilation list for stake holders which are recorded in the Stakeholder logbook. ASA2 1.2 Sighted SOP # 9 titled “Control of Documents & Records” dated 01/03/2013 stating on what are the documents and records that being approved by the management for public view. The publicly available documents are land title, safety and health plan, environmental plan, social plan, SIA, EIA, pollution prevention plan, complain and grievances, FFB Price , CIP, etc. The mill also has established “Master Of Document” under SOP # 9, Appendix 1A. The master document list which has identified documents that are publicly available in the column ST1 which found to be corresponding to the publicly available list identified in the RSPO P&C criterion 1.2.1

The company has integrated all its policies covering as well those required under the RSPO P&C such as Health and Safety policy, human rights policy, etc., as an integrated policy document under the title “KLK Sustainability RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 20 of 60

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Policy”. Noticed that the “KLK Sustainability Policy” have been adequately displayed in the notice boards located in office as well as in notice board placed outside the office compound. The “KLK Sustainability Policy” is also publicly assessable form KLK company website. ASA 2 1.3 Sighted “KLK Sustainability Policy” which has outlined management’s commitment to a code of ethical conduct and integrity in all operations and transactions that are publicly available. In addition the company has also has established document titled “Code of conduct for employees” and displayed in the estate management office. Sighted memo issued by Group plantation director Mr William Yap dated 20/09/2014 instructing all estate management to notify permanently display and notify all employees.

The mill has conducted training on “KLK Sustainability Policy” which also covers code of conduct for its employees on 13/04/2015. Sighted the records of training conducted for 41 workers by Mr Soong, Mill’s Assistant Manager. Sighted attendance record which is maintained at mill’s management office. The management has also briefed by Mill Manager Mr Mohd. Hadzri Bin Arsad to their office staffs on “KLK Sustainability Policy” during OSH Meeting on 28/05/2015 which were attended by 17 employees. Record of attendance available at mill office.

All the three estates have also conducted training for its employees to ensure company’s “KLK Sustainability Policy” is been communicated to them. The trainings were conducted by Estate Assistants. Sighted training record for Pinji estate dated 18/03/2015, Serapoh estate dated 20/09/2014 and Changkat Chermin estate on 11/04/2015 and 21/04/2015.

Minor NC There is no evidence Ms Puspha, Pinji Estate’s weighbridge attendant who joined the company in year 2009 has been trained the “KLK Sustainability Policy” or on “Code of conduct for employees”. 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. Legal ownership of land and its land use is Summary 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. There is 1 Observation recorded. ASA2 2.1 The company has established SOP # 2, titled “Legal Compliance” dated 01-03- 2013 for identification, implementation & compliance and review of legal requirements applicable to mill and estate. It has developed a legal register identifying relevant applicable legal requirements, Licenses, Permits, Certificates and compliances status in document titled “List of Summary of Applicable Guidelines in Agriculture”. Example of the legislations and legal requirements identified in the register as follows: - OSHA and Regulations Act 1994 - Factories and Machinery Act with Regulations Act 139 - National Land Code 1965 - Environmental Quality Act 1974 - Pesticides Act and Regulations Act 149 - Poison Act Regulations 1952 (Act 356) - Industrial Relations Act and Regulation Act 177 - Workmen’s Compensation Act 1952 - Trade Union Act 1959 RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 21 of 60

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- Land Acquisition Act 1960 - Sales Tax Act 1972 - MPOB License - Diesel and petrol permits - Road Transport Act 1987 (Act 333)

Company’s legal compliance status has been stated for each of the law identified in the current status column of the legal register titled “List and Summary of Applicable Laws and Regulations”. A total of 81 legal laws been identified in the legal register.

Mill and estates have established “Legal Compliance Checklist” to check applicable permits were maintained & monitored as per SOP # 2 for the year 2015.The legal compliance checklist for year 2014/2015 of permits and licenses that need to annually renew such as: - Softener – Exp on 01/09/2015 - Boiler – Exp. 01/08/2015 - Ventilation MS Steam PK PMT 6508 – Exp. 18/02/2016 - Deaerator – Exp. 01/12/2015 - Air Compressor – Exp. 07/07/2015 - Back Pressure vessel – Exp.01/09/2015 - Vacuum Air dryer – Exp. 01/09/2015 - Send Filter – Exp. 07/07/2015

A periodical review is carried out by the company on the laws and regulations list to ensure that any new/addition as well as changes and amendment are captured and updated. Written information on legal requirements are maintained in legal text books and CD.

Observation Legal text books and CD kept for reference are not being updated to reflect latest changes to legal requirements. ASA2 2.2 Mill and estates land ownership are clearly documented with no disputes. Estate boundaries clearly identified with boundary stones. Land taxes have been paid duly for all the grant tiles by HQ. Changkat Chermin mill is built on the company owned land within Changkat chermin estate. The land title # 40646 which the mill is located is owned by Kuala Lumpur Kepong Bhd.

Pinji estate consists of 79 land titles (Grand of Land) under Malay Rubber Plantation Sdn Bhd., Taiko Garden (3titles), Hillrise Division (2 titles), Meranti Lapan Division (46 titles), Sengat Division (4 titles), Kekal & Deras Sdn Bhd, Division (4 titles), Dato’ Lee Soon Hian (6 titles), Hup Heng Loong Corpn. (12 titles, only 10 titles available), Batu Dua Division (30 titles). Total land size is 754 Ha.

Serapoh estate consists of 9 land titles. Following are the details of the ownership. All land titles are under Kuala Lumpur Kepong Bhd. Land title sighted as follow: Grant Title No. Land Area (Ha) 16656 (GRN 51001) 81.1402 1899 (GRN 66504) 122.6175 12187 (GRN 60026) 100.5625 3891 (GRN 6695) 1.2393

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14344 (GRN 62837) 2.1549 4772 1.3152 16595 (GRN 53417) 202.64 5875 (GM 7629) 1.3481 9331 419.5902 Total 935,6079

Changkat Chermin estate consists of 15 land titles which are lease hold ownership. The land was acquired in year 1981 by KLK and lease hold of the land is valid until March 2088 as per the land title document. All land titles are under Kuala Lumpur Kepong Bhd. Following are the details of the ownership.

Land Title No. Land Area (Ha) 40640 230.000 40641 7.825 40642 90.120 40643 215.200 40644 2.3220 40645 122.300 40646 232.400 40647 334.600 40648 71.290 40649 43.540 51580 671.200 51581 394.600 51582 0.662 HS(D) Dgs 32/81 57.326 HS(D) Dgs 33/81 66.994 Total 2,540.380

ASA2 2.3 There is no new planting nor extension of existing one documented and seen during this audit. Replanting program in place for period of 2015 - 2021. As there is no new planting applicable, therefore formal HCV, EIA and SIA assessment not evidence. No negotiations concerning compensation for loss of legal or customary rights are as per this assessment period. Principle 3: Commitment to Long-Term Economic and Financial Viability Criterion by Three year management plan is available for the mill and estates that Audit Summary details revenue and costs of operation. Replanting programme for the estates for the next five years is also available. ASA2 3.1 Annual financial plan for 2014/2015 and 2015/2016 is available for crude palm oil that includes cost for all operations such as supervision, labor wages and overtime, power generation, water supply, repairs to building, etc. Estimated crop from contributing estates which are certified sources are available for year 2015/2016, 2016/2017 and 2017/2018 as shown below:

YEAR FFB (MT) CPO (T) KERNEL (T) OER 2015/2016 250,697 56,406.825 13,537.64 22.5 2016/2017 259,458 58,378.05 14,010.73 22.5 2017/2018 267,434 60,172.65 14,441.44 22.5

Three year management plan is available for all the estates. For Pinji estate for the year 2014/2015, estimates FFB production is 13,133 Mt where RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 23 of 60

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average hectare is 562 hector and with estimation of 30 kg yield per hectare. Summary of expenditure estimates for financial year 2014/20145 are RM 13,280,631 for total revenue and RM 67,500 for total capital expenditure. Estimated total revenue expenditure for year 2015/2016 is RM 4,803,907 and total capital expenditure is RM 286,000. Oil palm forecast for the estate is available for year 2015/2016 up to year 2024/2025. Serapoh Estate has established management plan for three years. For year 2014/2015, estimates FFB production is 17,597 Mt where average hectare is 667 hector and with estimation of 27 kg yield per hectare. Summary of expenditure estimates for financial year 2014/20145 are RM 5,077,627 for total revenue and RM 62,000 for total capital expenditure. Estimated total revenue expenditure for year 2015/2016 is RM 4,808,358 and total capital expenditure is RM 204,000. Oil palm forecast for the estate is available for year 2015/2016 up to year 2024/2025.

Management plan for Changkat Chermin Estate is available for three years. For year 2014/2015, estimates FFB production is 62,594 Mt where average hectare is 2,498 hector and with estimation of 27 kg yield per hectare. Summary of expenditure estimates for financial year 2014/20145 are RM 5,077,627 for total revenue and RM 62,000 for total capital expenditure. Estimated total revenue expenditure for year 2015/2016 is RM 13,846,437 and total capital expenditure is RM 184,180. Oil palm forecast is available for year 2015/2016 up to year 2024/2025. Below are the samples of the forecast.

Pinji Estate and Serapoh Estate have established 5 years replanting program scheduled form year 2014 until 2018. Pinji estate’s replanting program which started in year 2014 involves 289 hactors of land. Serapoh estate replanting program is planned in year 2017/2018 which involves 24 hactors of land. However Changkat Chermin estate has no replanting program for next 5 years.

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. Trainings are being carried out as per the Annual Training Plan. ASA2 4.1 The mill is operating in accordance to SOPs as specified in Guidelines on Safe Operating Procedure for Palm Oil Mill (dated 01 July 2010). The SOP covers all operations in the mill such as: Reception Station, Loading Ramp, Kernal Plant, Oil Room Station, Sterilizing Station, Hoisting/Threshing Station, Pressing and Digester Station, Depericarper Station, Kernel Recovery Station, Clarification Station, CPO Despatch, Maintenance and Cleaning, FFB/SFB/EFB Conveyors, Boiler/Power House, Water/Effluent Treatment Plan, etc.

The mill has maintained its generic Standard Operation Procedure that have a total of 20 specific procedures regarding the sustainability requirements which includes among others SOPs for Stakeholders Engagement, Legal Compliance, Land Acquisition (OP Planting), Soil Erosion & Fertility and Road Maintenance, Surface Water & Groundwater Management, etc. Besides the above, the mill also maintains its Safety Operation Procedure encompassing 50 procedures. The mill regularly conducted training for all workers in the RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 24 of 60

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mill operations to ensure that all workers are fully aware and understand the SOP. Every station are supervised by a supervisor, record of supervisor monitoring is evident and be made available to the audit team during the audit.

Operation of the estates are governed by the documented Group Policy – Agriculture – Oil Palm. The audit team observed that the company has maintained its Group Policy with a reference no, GP/AGRIC/OP dated 29 March 2010. The said policy documents specifies all activities within the estates covering: i. GP/AGRIC/OP1 Harvesting ii. GP/AGRIC/OP2 Field Upkeep iii. GP/AGRIC/OP3 Nutrition iv. GP/AGRIC/OP4 Pest & Diseases v. GP/AGRIC/OP5 Conservation vi. GP/AGRIC/OP6 By Products vii. GP/AGRIC/OP7 Replanting viii. GP/AGRIC/OP8 Nursery ix. GP/AGRIC/OP9 Field Identification x. GP/AGRIC/OP10 Roads & Drains

The mechanism to ensure that all procedures has been implemented is internal audit, daily supervising and internal audit. Internal Audit has been conducted to ensure compliance in term of OSH and sustainability requirements. Latest Internal audit has been conducted on 27 April 2015 by the appointed Internal Auditor from the Sustainability Department. Observed that the Internal Audit covers all requirement of the standard including the Supply Chain Requirements. Following to the audit, an action plan has been established to ratify all issues raised following to the Internal Audit conducted. Observed that the issues has been fully addressed on 31 May 2015 and evidence of action that has been taken is made available to the audit team during the audit. ASA2 4.2 Agronomist visit report is evident during the audit as available in Applied Agricultural Resources Sdn. Bhd. - Oil Palm Manuring Recommendations 2015/2016 for both estates. The report has included operational activities and field conditions dated. Latest assessment has been conducted for Pinji estate on 03 March 2015 by Dr Liew Yew Ann, Serapoh Estate on 06 April 2015 by Mr. Cheah Li Wenand Changkat Chermin Estate on 27 July 2014 by Cassandra Ching Yi Wen.

The report outlined the following sections: Introduction, Appearance of Palms, Inter-row Cover Management, Leaf Analysis Result, Soil Analysis Result, Yield, Manuring Recommendations and General. Annual Oil Palm Fertilizer Programme 2015 for the estate is evident during the audit. All three estates do monitor the application of fertilizer in the field as evident in Fertilizer Application in 2014. Example of fertilizer application for Pinji estate are as follow: Field 2001C Fertilizer type: Kiserite Date applied: 11-14 November 2014 Dosage: 1.25kg/palm

The operating unit is utilizing nutrient recycling for all waste generated in the mill operation. For example, effluent land application. Record of such application is maintained and made available during the audit (Ref Doc: Decanter Cake Disposal Summary). Empty Fruit Bunch: EFB Mulching (Ref

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

Doc: EFB Disposal Summary) ASA2 4.3 Sighted the SOP 4.0 dated on 01/03/2013 for "Soil Erosion & Fertility and Road Maintenance" that applicable to estates. Each estate maintains its own soil map. Soil maps for Pinji estate is evident in Map 2: It is evident that there is no fragile soils exist in Pinji estate. The estate consist of soil series of Bungor – Shale-Fine Sandy Clay, Gajah Mati – Clay, Malacca – Sandy Clay, Rasau/Holyrod – Sandy Clay, Langkawi – Heavy Clay, Tandak – Clay, Munchong – Sandy-Clay Loam and Terap – Clay.

Serapoh Estate soil map indicates that there is no fragile soils exist in the estate. The estate consist of soil series of Serdang – clay, Local Alluvium, Durian/Gajah Mati – Clay, Munchong – Sandy-clay Loam; and Alluvial complex. Changkat Chermin Estate Soil maps for the estate is evident in Map 2: Soils Map. It is evident that there is no fragile soils exist in the estate. The estate consist of soil series of Bertam – sandy clay, Bakri – organic clay, Tepus – Fine Clay, Banar – Corse Loamy and Sepayang – Fine Silt.

A management strategy for purpose of planting on slopes above a certain limit is evident in Soil Erosion & Fertility and Road Maintenance (SOP: 4.0; Date: 1st March 2013) Slightly slopes area which is exceed the 15 degrees slopes as according to the company SOP. There is no evidence of steep slopes area exist in the estate. The management only spot spray large woodies and conserved as much ground vegetation as possible to protect the topsoil. Estate has identified and management plant to use planted in the slope area.

The production unit is operating in accordance to Soil Erosion & Fertility and Road Maintenance (SOP: 4.0; Date: 1st March 2013). Road maintenance program for the estate is available in Road Repair/Filling Depression/Potholes FY2015/2016 for all field areas and line sites. Road maintenance realization are recorded in Road Repairs form. With regards to programme for 2014/2015, the programme has been completed whereby several fields has undergone the maintenance programme.

A management strategy for other fragile and problematic soils has been clearly explained in in Soil Erosion & Fertility and Road Maintenance (SOP: 4.0; Date: 1st March 2013) procedure. Soil analysis has been carried out by Agronomist to determine soil type. There is no fragile soils exist in the both estates.

Agronomist report has established a program for application of EFB in Changkat Chermin and Pinji Estates as their management strategy to reduced chemical fertilizer usage.Empty fruit bunch (EFB) application in the field is to replace potassium, moisture retention and as supplement from inorganic fertilizer. ASA2 4.4 Water management plan have established, implemented and monitored for mill and estates to efficient usage and prevent pollution. Water management plan for the mill is evident in Water Management Plan (SOP: 5.0; Date: 1st March 2013). The SOP contains: gazetted river banks, water catchment ponds, water for consumptions, domestic wastewater and palm oil mill effluent. Water for the mill is extracted from two sources i.e. for operation from Tube Well and for domestic local government authority (Jabatan Bekalan Air Perak).

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

There is no treatment of water for domestic use in view that the supply is from the government which has been treated before being supplied to the mill.

All three estates have conducted water sampling analysis on the treated water covering several parameters such as total coliforms, faecal coliforms and E.coli. The latest sampling was conducted on 07 April 2015 for Pinji estate and observed that two readings has exceed the allowable threshold level set by the Ministry of Health. The test result shows >1,600/100ml while the allowable threshold is ND/100ml. Following to the negative result, the estate has taken immediate action to repeat the analysis on the same sampling point. The company also has appointed Department of Health Malaysia to conduct the test. Evidence of letter dated 12 May 2015 stating the application to the department to conduct the water analysis is made available to the audit team during the audit.

The mill is monitoring the quality of final discharge as evident in Kuala Lumpur Kepong Technology & Quality Control Centre (TQCC). Latest analysis report is dated 19 May 2015, reprt reference # EFF00424/2015, has recoded BOD Result: 1900mg/l below the threshold limit set by DOE i.e. 5000mg/L.

Mill water usage per ton of FFB processed is monitored in Water Usage Changkat Chermin Palm Oil Mill (month June 2014 to May 2015). All information are recorded on a monthly basis with example of verified information are as follows:

Water Usage FFB Production Water Usage/FFB Month (m3) (mt) Production Jan 2015 22,908.00 14,684.63 1.560 Feb 2015 25,416.00 15,786.63 1.610 Mar 2015 33,055.00 20,789.60 1.590 Apr 2015 36,306.00 23,273.23 1.560 May 2015 34,163.00 22,183.88 1.540

ASA2 4.5 Implementation of IPM is based on Integrated Pest Management (SOP No.: 7.0; Date: 1st March 2013). The procedure indicates information regarding the implementation of IPM. Including Spraying, Trunk injection Rat baiting.

For Changkat chemin estate, Census for several pest has been conducted at the estate such as rat damage census, rhinoceros census and special census to determine the barn owl occupancy to control the rat population. Example verified are as follows: Bagworm Census Field No. Occurrence level PM09B 8 larvae found PM07D 12 larvae found Rat Census Field No % Occurrence Level PM06E 0.39 % PM06D 0.35% PM06C 0.58 %

There is no IPM plan available for Pinji estate as the estate is not infected RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 27 of 60

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

with major pest except very little/rare attacks. For instance, the estate has conducted Ganoderma Census to monitor the outbreak of ganoderma attack in the estate. Latest census conducted for ganoderma attack is on 12-16 March in the fields # PM85C (occurrence level 0.43% ), PM91A (occurrence level 0.70% ), and PM93A (occurrence level 0.42%).

All staffs and workers involved in the IPM implementation have been trained by the estate management. Sighted IPM Training/Rat Baiting Training conducted for workers on 3rd Feb 2015 for Pinji estate, on 26 March 2015 for Serapoh estate and on 02 April 2015 Changkat In any case of major pest outbreak, the case will be referred to General Manager for consultation. ASA2 4.6 Justification of all pesticides usage is evident in Annual agrochemicals recommendation from AAR for 2015/2016. Safe Use of Agrochemicals (SOP: 2.0) has clearly explain the justification of agrochemicals used and Register of chemical hazardous to health.

List of chemicals register in the estates are available in Register of Chemicals Hazardous to Health ref no. PL/04/04/848 dated 21 July 2014 (Changkat Chermin Estate) 09 April 2015 (Pinji Estate) and 02 January 2015 (Serapoh Estate). The list of chemicals includes: Triclopyr butoxy ethyl 32.1%; Metsulfuron methyl 20%; Glyphosate isopropyl amine 41%; 2,4-D dimethyl- amine; Chloroethyl phosphoric acid; 2,4-D Dichlorophe oxtacetate 69.5%; 4- Amino-3,5-dichloro-6-fluoro-2-pyridyloxyac etic acid 29.6%; Glufosinate ammonium 13.5%; Fenitronthion 93%; Mancozed 64%; Cypermethrin 16.0%; D-Phenothrin Piperonyl Butoxide; 1-Methoxy-2-propanol; Phytohemaglutinin- L; Chlorpyrifos; and Fluazifop-p-butyl.

Although there are numerous chemicals that are registered as per mentioned above, only several chemicals that has been used by the company. Such usage has been adequately justified that is stated in Chemical Data. Example of pesticides used within the company’s operations and has been justified are as follows: a. Glyphosate isopropyl amine 41% - Circle spraying for weeds such as Eluesine indict, imperata cylindrical, pennisetum indical; b. Metsulfuron methyl 20% - Circle spraying for Eluesine indict, ottachilaa nadasa, imperata cylindrical, ageratum adaratum; c. 2,4-D dimethyl-amine - Circle spraying for Eluesine indict, ottachilaa nadasa, imperata cylindrical, ageratum adaratum; d. Glufosinate ammonium 13.5% - Circle spraying for immature palm - Eluesine indict, ottachilaa nadasa, imperata cylindrical, ageratum adaratum e. Triclopyr butoxy ethyl 32.1% - Spot Spraying – Clidemia hirta, Lantana camara, Melastama malabathricum; f. Fluazifop-p-butyl – Spot Spraying (Eluesine indict, iomperata cylindrical, pennisetum indical)

All pesticides used in the estates operation has been minimized as a part of the plan for continuous improvement. Procedure for Integrated Pest Management (SOP: 7.0; Date: 1st Jan 2014) has justified that any used of pesticides shall be reduced. Justification of all pesticide usage is evident during the audit. All estates do monitor the usage of pesticides (a.i/hectare) in the daily operation as evident in Summary of Herbicide Use (a.i. applied per area treated). RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 28 of 60

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Record of pesticides used including the information of active ingredients used, area treated, and amount of active ingredients per hectare is evident in n Summary of Herbicide Use (a.i. applied per area treated). In Serapoh, the pesticides applications can be referred in Costing Book. Example of pesticides application records in the estate dated 10 Oct 2014, Field: PM2001B applied with chemical Glyphosate (1.58 l /ha) and Ally (10.71gm/ha)

There is no class 1A or 1B chemicals used in both estate as evident in Register of Chemicals Hazardous to Health ref no. PL/04/04/848 dated 21 July 2014 (Changkat Chermin Estate) 09 April 2015 (Pinji Estate) and 02 January 2015 (Serapoh Estate). With regards to Paraquat, the company has no longer use paraquat since February 2011. Such usage has been replaced with other less hazardous pesticides and such usage has been justified accordingly.

Site inspection to the storage facilities evidence that all pesticides are stored in an appropriate manners. All pesticides are labelled with original labels and powders are stored above liquids. The storage facilities are made of concrete and have a sound roof to prevent exposure from rain and heat. All empty pesticides containers are triple rinsed and punched prior to delivery to the mill for disposal by approved collector.

All pesticide application equipment used in the estate operation are evidence minimize the risk of contamination and impacts on the environment. The application equipment are Conventional Knapsack Sprayer and Controlled Droplet Applicator. All equipment are calibrated and services at specified interval and when necessary. All sprayers are provided with proper PPE such as mask, apron, gloves and rubber boot. Mixing of the chemicals was done by mandore at mixing area provided under control and secure environment. Records clearly shows of no pregnant or breast-feeding women assigned for chemical handlings works in all estates. ASA2 4.7 The mill is in compliance to health and safety plan set by the company. The plan covers, Polisi Keselamatan dan Kesihatan Pekerjaan dated 01 January 2012 signed by the Mill Manager and Plan Keselamatan dan Kesihatan Pekerjaan 2015 Changkat Chermin Palm Oil Mill dated 17 April 2014. The plan contains information such as Objective; Target; Action Plan, Review Number of Accident – 2014; Number of Serious Accident; Annual Programme on Occupational Safety & Health for Changkat Chermin Palm Oil Mill – 2015; Usage of PPE; Occupational Safety & Health Meeting; SOP Review; ccupational Safety & Health Audit; Monitoring Number of Serious Accident – 2015 an Outcomes / Recommendations

All operations of the mill where health and safety is an issue in the mill has been risk assessed as evident in HIRARC Form dated 25 October 2014. The form has been assessed and prepared by the Engineering Assistant of the POM. The mill has also updated HIRARC Form for all activities in the mill operations. The HIRARC has been updated in accordance to the latest accident recorded. Latest update of the HIRARC is on 25 October 2014.

Workers involved in the mill operations have been adequately trained in safe working practice. Records of the training attendees and materials have been evaluated. SPO & OSH Briefing: 13 April 2015; Supply Chain Training: 18 March 2015; Safety & Security Training on FFB Receiving and Dispatching

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

CPO: 27 February 2015; KLK OSH and Sustainability Policy Training: 13 February 2015 Confined Space Training: 11th Mar 2015; and Fire Drill & Fire Extinguisher Training: 01 November 2014.

Audiometric Testing Programme conducted to all workers stationed at high pitch area such oil extraction station, kernel plant, press station, boiler plant, engine room and water treatment. Latest programme conducted in 23 & 24 March 2015 ({PRO-AUD15-0029) resulted in out of 101 workers inspected, 13 workers have a mild-hearing impairment while one having Moderate-hearing impairment and two workers having moderately-severe-hearing impairment. Based on report, the audit team observed that these workers identified for having hearing impairment and standard threshold shift are required to undergo annual audiometric test.

The mill has identified Mill Manager as the responsible person for health and safety. Appointment letter for him has been issued and be made available to the audit team during the audit. An organization chart is available to show his position as the chairman of Jawatankuasa Keselamatan & Kesihatan Pekerjaan (JKKKP) for 2015. The Safety and health committee has been conducted every 3 month to discuss about health and safety. Latest meeting conducted on 28 May 2015 as evident in Mesyuarat Keselamatan & Kesihatan Pekerja Kilang Kelapa Sawit Changkat Chermin.

Accident and emergency procedures for the mill is available in Program Tindakan Kecemasan. The emergency response plan include the emergency contact number and available in local language (Malay and English). The ERP has been explained to all workers and staffs during training which has been conducted Fire Drill exercise on 01 November 2014. Training for first aid is available on has been conducted on 01 December 2014 which has been conducted by the Health Assistant.

The mill has monitored accident cases using record in Laporan Penyiasatan Kemalangan compiled within Kemalangan (Buku). The mill has discussed all accidents during OSH meeting. Latest OSH meeting has been conducted on 28 May 2015 as evident in Mesyuarat Keselamatan & Kesihatan Pekerja Kilang Kelapa Sawit Changkat Chermin. As to the date of audit, there is one accident has been reported in FY2014/2015 involving General Worker. The accident cases has been discussed during Mesyuarat Kemalangan (OSH Committee) dated 12 December 2014. The accident has been reported to DOSH using JKKP 8 form.

All estates have established safety and health plan as evident in Occupational Safety and Health (OSH) Plan 2015. Polisi Keselamatan dan Kesihatan Pekerjaan signed by the estate managers are evident. HIRARC Form showing that all activities in estates have been risk assessed and implemented. Risk Assessment for Estate dated 05 Jan 2015 (Pinji Estate), 03 January 2015 (Serapoh Estate) and 10 January 2015 (Changkat Chermin Estate) available covering all operations within the mill and estates. The risk assessment is found to be approved by the manager. Site inspection evidence that all safety measures are implemented and monitoring is conducted by OSH Department

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

Safety Audit & Report.

All workers involved in the operations have been adequately trained in safe working practice. Record of the training attendees and materials have been evaluated during the audit as below: a. NADOPOD Awareness Training – 22 Dec 2014 (Pinji Estate); b. Nursery Operation – 09 Sept 2014 (Pinji Estate); c. Safety & Health Awareness Training – 13 Aug 2014 (Pinji Estate); d. SOP for Harvesting – 07 Jul 2014 (Pinji Estate); e. First Aid Handling – 26 Jul 2014 (Pinji Estate); f. Fire Drill and Fire Extinguisher Training – 20 June 2014 (Pinji Estate); g. SOP – Chemical Handling – 10 March 2015 (Pinji Estate); h. SOP – Nursery Operation – 22 Jan 2015 (Pinji Estate); i. Safe Operating Training for Spraying – 13 Mar 2015 (Serapoh Estate); j. Safety Operating Training for Tractor Driver – 05 June 2015 (Serapoh Estate); k. First Aid Training – 02 February 2015 (Serapoh Estate); l. Safe Operating Training for Harvester – 23 April 2015 (Serapoh Estate); m. Fire Drill and Fire Extinguisher Training – 13 May 2015 (Serapoh Estate); n. SOP – Harvesting – 04 April 2015 (Changkat Chermin); o. Safety Inspection at workplace – 25 February 2015 (Changkat Chermin); p. PPE Application Training – 12 May 2015 (Changkat Chermin); q. Safe Operating Training for Spraying – 05 Mar 2015 (Changkat Chermin); r. RSPO Awareness Training – 11 April 2015 (Changkat Chermin); s. Fire Drill and Fire Extinguisher Training – 08 May 2015 (Changkat Chermin).

Estates have nominated estate managers as the responsible person in safety and health implementation. Regular meetings has been conducted between the estate managements and workers to discuss about health, safety and welfare. Records of the meetings conducted are available in Minit Mesyuarat Jawatankuasa Keselamatan dan Kesihatan Pekerjaan. Latest meeting on OSH for Pinji Estate was conducted 12 June 2015. Prior to the above meeting, another meeting was held on 16 March 2015 where there is an accident that has been discussed during the meeting i.e. one accident occur on 13 February 2015. As for Serapoh Estate, the latest Meeting was conducted on 26 March 2015. Observed that the Meeting do discussed on the accident occurrence during the last three months before the meeting. Changkat Chermin estate latest meeting was conducted on 22 May 2015.

Accidents and emergency procedures for estates are available in Program Tindakan Kecemasan. The procedures are pasted on the notice board and displayed at permanent stores (fertilizers and chemical) and workplaces. Training on emergency procedures has been conducted during daily muster call prior to commence any work. Latest training conducted are as below: a. Fire Drill and Fire Extinguisher Training – 20 June 2014; b. Fire Drill and Fire Extinguisher Training – 13 May 2015;

All workers have been trained on basic first aid procedure. However, at all workplace, mandore will be the person in charge to keep the First Aid box. Site inspection evidence that first aid kit are available with complete contents.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

Records of all accidents are available in the JKKP 6 form and discussed quarterly during OSH Meeting. Latest meeting on OSH was conducted 12 June 2015. Prior to the above meeting, another meeting was held on 16 March 2015 where there is an accident that has been discussed during the meeting i.e. one accident occur on 13 February 2015.

Accident records are found to be updated on a monthly basis (using JKKP 6 form) for both Mill and Estates. Observed also JKKP 8 is used for reporting the accident records at a yearly basis. Observed that latest submission were done on 29 January 2015 for Pinji Estate, on 30 January 2015 for Serapoh Estate and on 07 January 2015 for Changkat Chermin Estate. Letter were signed by respective Estate Manager.

All mill workers has been provided with medical and accident insurance as evident in Workmen Compensation Policy as follows: • LWX/93091994/13/12/IPO valid from 09 Feb 2015 to 08 Feb 2016; • LWX/93091998/13/12/IPO valid from 13 Feb 2015 to 12 Feb 2016; • LWX/93093543/13/12/IPO valid from 11 Apr 2015 to 10 Apr 2016; • LWX/93093346/13/12/IPO valid from 21 Mar 2015 to 20 Mar 2016; and • LWX/93091956/13/12/IPO valid from 21 Jan 2015 to 20 Jan 2016. All of the above policies are issued by AXA Affin General General Insurance Bhd and covered all 41 foreign workers. There are 48 local workers in the mill who are covered under EPF & SOCSO as required by the Malaysian Laws and Regulations.

Estate local workers are bound to subscribe to EPF and SOCSO in addition to their accident insurance. However, all estate workers (both local and foreign) are found to be covered by the valid accident insurance. Observed sample of insurance policy as follows: • Pinji Estate – SPPA– Policy No. LWX/93091992/13/12/IPO with a validity from 05 Feb 2015 to 06 Feb 2016; • Serapoh Estate – SPPA– Policy No. LWX/93091990/13/12/IPO with a validity from 05 Feb 2015 to 04 Feb 2016; and • Serapoh Estate – SPPA– Policy No. LWX/93042863/13/05/IPO with a validity from 01 June 2015 to 31 May 2016.

ASA2 4.8 The mill has developed a formal training programme covering all aspects of RSPO Principles and Criteria. It has established an Annual Training Prgoramme on OSH for Changkat Cherrmin POM – 2015. All workers training needs has been evaluated as evident in HIRARC form recommendation. The training programme has included the productivity and best management practices in the mill operations.

All the estates audited have established formal training program that covers all aspects of the RSPO Principles and Criteria as evident in: a. Annual Training Programme on OSH for Pinji Estate 2015 b. Annual Safety & Health Programmes Serapoh 2015 c. Annual Training Programme on OSH for Changkat Chermin Estate 2015

The plan has included relevant training such as: i. First Aid Training ii. Safety & Health

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iii. Environmental Aspects iv. Management of Waste v. Triple Rinse & Management of Empty Pesticide Containers 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 Summary disposal of scheduled waste has been carried out by an approved and registered collector. Monitoring and analysis of waste is carried out regularly. ASA2 5.1 The company has established environmental Impact Assessment (EIA) procedure covering mill and estates operations in 01/01/2010. The procedure which titled as “Environmental Impact Assessment for Changkat Chermin POM & Supplying Estates” SOP#10.0 was reviewed updated on 01/03/2013. The Environmental Impact Assessment has covered key areas such as FFB intake, FFB reception, FFB sterilizer, Clarification, and other areas that has a high risk.

The Mill has conducted environmental aspect and impact assessment for all its’ activities in year 2010 and was reviewed and updated in 01/03/2013. The assessment findings are recorded in environmental register which being is been reviewed on annual basis. The last reviewed and update was done by Assistant Process Manager Mr. Logamaje on 16/04/2015 in company’s document titled “Environmental Impact Assessment (EIA) & Pollution Prevention Plan (Maintenance and Inspection)”. The environmental register has identified columns for Process, activities, pollution, frequency, Impact, risk level, mitigation measure, responsible person and status. All the columns are appropriately filled in with required assessment information. In the assessment activities such as power station, effluent treatment, nut cracking stations are identified as high for the mill which has mitigation measures accompanied to minimize the environmental impacts.

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 differences were found. For significant environmental impact the mill has identified as high and accompanied with mitigation measures to reduce its impacts. Monitoring plans are incorporated in the “Environmental Impact Assessment (EIA) & Pollution Prevention Plan (Maintenance and Inspection)” register.

All the estates have conducted environmental impact assessment based on the SOP 10.0 titled “Environmental Impact Assessment for Changkat Chermin POM & Supplying Estates”. The SOP has covered key areas such as nursery, replanting, immature maintenance, mature maintenance, harvesting, FFB collection, and other areas that has a high risk. Besides that other areas such as chemical store, fertilizer store, premix station, diesel tank, landfill, clinic, and office are also covered under the SOP.

Estates environmental assessment findings are recorded environmental register titled “Environmental Impact Assessment (EIA) & Pollution Prevention Plan”. The environmental register has identified columns for Process, activities, pollution, frequency, Impact, risk level, mitigation measure, responsible person and status. All the columns are appropriately filled in with required assessment information. Environmental severity levels are classified in 5 categories: Insignificant, minor, moderate, major, RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 33 of 60

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

Catastrophic. Finally the environmental ratings are classified as low, medium and high.

Estates environmental registers are reviewed on annual basis or whenever there is a change in the operation. Changkat Chermin estate has reviewed its “Environmental Impact Assessment (EIA) & Pollution Prevention Plan” on 01/01/2015, Serapoh estate on 02/05/2015 and Pinji estate on on 28/04/2015. ASA2 5.2 HCV assessment was conducted on 01/03/2013 by the estate management staff based on SOP#11 document titled “HCV/Conservation Area Management” which was established by company’s Sustainability Department using guidance from HCV Forest Toolkit for Malaysia, 1st edition Oct 2009. The HCV assessment finding shows there is no HCV or RTE species was found for the Changkat Chermin Estate, Serapoh estate and Pinji estate.

Also noted there is no river run across or near to the state’s borders, just the drainage that separated between the estates with smallholders. Surrounding neighbours [government, NGO's and local communities] always invited for the stakeholder meetings, which the venue used to discuss and review of the HCV issues. ASA2 5.3 The mill has identified waste generated from its activities under the SOP 12 which was established in 01/03/2013. Waste generated by the mill has been documented under document titled “Identification of All Waste Products and Operational Plan to Reduce Pollution”. It also has established waste management plan with the objective to maximize recycling and minimize the pollution. Waste list is separated by scheduled waste & and common waste as below: Scheduled Waste i. Spent lubricating oil ii. Spent oil filter iii. Spent batteries iv. Empty chemical containers v. Used Rags By Product Waste i. EFB, decanter cake and POME effluent - recycle to estate as added product ii. Blake smoke / dust - frequent furnace cleaning iii. Fibre and shell - use as boiler fuel iv. Scrap irons v. Household rubbish

The waste management plan has also identified source of pollution, mitigation measures, target, person responsible, and status. Example: Spent lubricant oil Vehicle and Machinery Disposed by DOE approved Contractor Dispose at least once a year Mr. Shafiz  Disposed on 16/03/2015.

Mill maintains records of scheduled waste that being disposed periodically. Scheduled wastes are disposed DOE registered waste collector Hiap Huat Chemicals Sdn. Bhd. The contractor has valid license which expired on 30th April 2016. Sighted summary report of scheduled waste inventory dated of RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 34 of 60

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

17/06/2015 prepared by Sr. Manager (Mr. Mohd. Hadzri Bin Arsad). The record of SW inventory for the month of June 2015 has listed below - Waste code : SW305; used engine oil; balance C/F is 0.0112 mt - Waste code : SW306; hydraulic oil; balance C/F is 0.000 mt - Waste code : SW409; empty container; balance C/F is 0.07780 mt - Waste code : SW410; used cotton rags and gloves; balance C/F is 0.0100 mt - Waste code : SW410; used oil filter; balance C/F is 0.0020 mt - Waste code : SW429; Lab. Chemical waste mixture; balance C/F is 0.1117 mt

Empty chemical containers generated from mills activities ae disposed in accordance with schedule waste requirements. Sighted record of 1.19475 Metric Tonne of empty chemical containers (Waste code : SW409 was disposed on 08/05/2015 by scheduled waste contractor Tex Cycle Sdn. Bhd. The contractor appointed by the mill Tex Cycle Sdn. Bhd to collect and dispose SW has a valid licence from DOE which expires on 30/04/ 2016.

Estates sources of wastes well identified in the "Environmental Impacts Assessment & Pollution Prevention Plan" dated on 01/04/15 prepared by Estate Assistants. Among the identified sources are mature maintenance, harvesting, FFB evacuation, workshop, line site, parking bay, etc. The waste management plan has identified Waste product, sources waste, sources of pollution, plan to reduce pollution, target, and person responsible. Scheduled wastes generated from estates are disposed by DOE approved contractor. Example disposal record sighted: Spent lubricant oil (SW305) disposed by contractor SP Metro (M) Sdn. Bhd; Consignment Note serial No: 12670 dated of 03/03/2015. ASA2 5.4 Mill’s fossil fuel usage is monitored by SOP 12.0 dated on 01/03/2013 titled “Energy Usage”. Mill has sufficient plans to reduce the usage of the fossil fuel that included in the 2014/2015 budget. Plan is to replace the Genset to TNB power supply. Record sighted below from Oct 2014- May 2015 is check as evident that mill monitored the Diesel Consumption.

Month Diesel FFB processed Litre/MT consumption [L] [MT] Oct'14 3,200 18,777.34 0.17 Nov'14 3,162 17,938.46 0.18 Dec'14 4,286 15,995.32 0.27 Jan'15 4,022 14,684.63 0.27 Feb'15 2,928 15,786.63 0.19 Mar'15 3,240 20,789.60 0.16 Apr'15 3,820 23,273.23 0.16 May’15 3,375 22,183.80 0.15

Also sighted following record from Oct 2014- May 2015 is check as evident that mill monitored the titled “Monitoring of Fossil Fuel In Terms of kWhr/ litre diesel used for Gen-set).

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

Month kWhr for Gen- Diesel consumption kWhr/ set for Gen-set (litre) litre Oct'14 2,080 913 2.28 Nov'14 2,387 950 2.51 Dec'14 7,280 2,123 3.43 Jan'15 3,620 1,683 2.15 Feb'15 3,740 1,079 3.47 Mar'15 3,011 937 3.21 Apr'15 4,950 1,347 3.67 May’15 1,781 1,026 1.74

Besides that, Changkat Chermin POM has made record from TNB Power Supply from Oct’14 – Apr’15, as below:

Month kWhr rm Todate (RM) Oct'14 80878.00 35655.00 35655.00 Nov'14 118630.00 52303.63 87958.63 Dec'14 77771.00 34284.81 122243.44 Jan'15 111961.00 49362.60 171606.04 Feb'15 75887.00 33452.62 205058.66 Mar'15 85348.00 37626.27 242684.93 Apr'15 187840.00 82825.24 325510.17

All the estates monitor usage of fossil fuel usage for their operation. Estates fossil fuel usage is monitored by SOP 12.0 titled “Waste Management & Energy Use” dated on 01/03/2013. Sighted Chankat chermin estate’s record of diesel usage from Oct’14 – May’15, as shown below which was prepared by Assistant Manager.

Month Diesel usage FFB Litre/MT (litre) Transported(MT) (Diesoline) Oct’14 4,705 4,436.06 1.06 Nov’14 4,510 4,561.41 0.99 Des’14 4,026 3,886.39 1.03 Jan'15 3,622 4,254.18 0.85 Feb'15 3,498 5,289.71 0.66 Mar’15 3,736 7,310.05 0.51 Apr'15 4,365 6,918.89 0.63 May'15 3,773 6,002.30 0.62

Sighted Serapoh estate’s record of diesel usage from June’14 – May’15, as shown below which was prepared by Assistant Manager.

Month Diesel usage FFB Litre/MT

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Transported(MT) (Diesoline) June’14 3,876 1,088.13 3.56 July'14 3,543 993.32 3.57 Aug'14 3,775 1,831.63 2.06 Sept'14 2,842 1,381.50 2.06 Okt'14 3,120 945.42 3.30 Nov’14 2,858 885.49 3.23 Des’14 3,257 760.42 4.28 Jan’15 2,779 1,265 2.19 Feb’15 2,560 1,456.77 1.75 Mar’15 2,890 1,506.78 1.91 Apr'15 2,670 1,510.55 1.76 May'15 2,289 1,172.90 1.95

Sighted Pinji estate’s record of diesel usage from June’14 – May’15, as shown below which was prepared by Assistant Manager.

Month Diesoline usage FFB Litre/MT Transported(MT) (Diesoline) Jul’14 2,280 1,186 1.92 Aug’14 2,370 1,162 1.47 Sept’14 2,255 1,322 1.71 Oct'14 1,940 904 2.15 Nov'14 2,110 753 2.80 Dec'14 2,045 661 3,09 Jan'15 2,174 678 3.20 Feb'15 1,990 700 2.84 Mar'15 2,120 1,158 1.83 Apr'15 2,130 1,127 1.89 May’15 1,750 1,171 1.49

ASA2 5.5 The company has established “zero burning” policy dated 1st December 2014 by Mr. Tan Sri Dato’ Seri Lee Oi Hian, company’s CEO. There is replanting program Serapoh estate in Nov’13 at Field Number PM85D as 5 hectares; in March’14 at Field Number RM90A as 31 hectares. Besides that, the Pinji Estate has made also replanting program for 2015 as indicated by the document is Replanting Work Program for Field Number RM89A as 40 hectares and the target of May 2015. Replanting programme for Pinji Estate from 2012 – 2018 totally is 306 hectares.

KLK Group has maintained “Group Agriculture Oil Palm” and covered for land preparing Policy no. GP/AGRIC/OP7: Replanting section title: Palm Chipping and Pulverizing. In the Policy No. GP/AGRIC/OP 4: Pest & Disease – 2, titled “Ganoderma Treatment in Oil Palm” as well implemented same method to disposed effected palm tree. The tree will be felled, chipping and landfill. For replanting process, sighted field no. 89/325 replanting progress no fire related work is practised. There is no evidence of fire is used noticed during site visits.

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ASA2 5.6 Assessment of all polluting activities for the mill are identified and recorded in document titled “Environmental Impact Assessment (EIA) & Pollution Prevention Plan “ and was last updated on 05/01/2015. The company has established plans to reduce pollution and emissions including greenhouse gases. The mill has initiated, POME Green House Gas emission monitoring using RSPO calculator which was downloaded from RSPO website by Mr Lee Kian Wei of HQ’s Sustainability department. The value calculated based on inputs from supply bases(estates) for mill (POME), electricity, diesel consumption and EFB mulching.

Mill’s GHG reduction program includes reduction in diesel usage by the use installation of biogas plant and installation of belt press at Effluent Treatment Plant which already included in CAPEX 2015/2016.

Assessment of all polluting activities for the estate are identified and recorded in document titled “Environmental Impact Assessment (EIA) & Pollution Prevention Plan “ and was last updated on 05/01/2015. EIA is being reviewed on annual basis and previous review was done in 05/01/2015.Plan to reduce pollutants and GHG for the estates is available. The source of waste well identified in the "Environmental Impacts Assessment & Pollution Prevention Plan" dated on 02/02/15. GHG for the plantation is been calculated by sustainability department and summary sighted. Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers Criterion by The mill and estate have conducted the social impact assessment. The Audit relevant policies are in place and are fully implemented across the board. Communication and consultation as well complaints and grievances Summary procedure are well communicated and adhered to. There are evidences of workers not been discriminated against in any way and all are being paid their fair wages. 1 Minor NC and 3 Observation issued. ASA2 6.1 Mill’s stakeholder meeting was last held on 15/04/2015 attended by surrounding stakeholders those who have been invited by the mill management. There a total of 29 stakeholders identified in the mill’s stakeholders list. Among the issues raised by stakeholders includes, road from mill to Ayer Tawar town is dark at night and there is risk to get robbed. The management has responded that part of the street lighting done within the estate area (app. 1.2km). There is still outstanding – 0.5 km to the main road. TNB has provided the necessary quotations for management to finalize.

Negative impact identified in the meeting includes – insufficient EFB for contractors to collect (reported by Stanplam Enterprise) which is effecting their business and workers are also complaining due to reduction of income. For this the management is now providing sufficient EFP to be transported. There is sufficient supply due to improvement in processed FFB quantity.

In Changkat Cermin Estate, latest Social Consultation carried out on 15/04/2014. Meeting is attended by worker representatives (MAPA), government body, contractors, suppliers and surrounding communities. Minutes of meeting available and no social issue raise during the meeting. Assessment is carried out based on stakeholders meeting result as mentioned above. There are 54 stakeholders listed in the stake holders list. For Pinji estate last stakeholder meeting was held 20 January 2015. It was noted that 7 stakeholder were present, only 4 external representatives were present at RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 38 of 60

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the meeting. The last assessment form Serapoh estate has been conducted with the participation of affected parties on 16 Jan 2015. ASA2 6.2 SOP 1.0 Stakeholders engagement / negotiation dated 1.3.2013 rev 2 shown as a documented consultation and communication procedure. Stakeholders meeting is being conducted annually with participant from surrounding stakeholders and been documented in minute of meeting. Last meeting of was held on 25 March 2015 and the previous meeting was conducted on 30 December 2014.

Since 1st December 2011 mill manager, Mohd Hadzri Arsad who is the nominated person responsible on social issue. Respective managers of the estate are automatically becomes the responsible person by the organization to handle social issues. List of stakeholders updated on 2015 involve 29 stakeholders including government bodies, workers representative, contractors, suppliers, surrounding community and smallholders. All communication is kept including stakeholders meeting and complaints records.

Observations 1. The SOP masterlist with the necessary approved signatures has been prepared by KLK HQ. The training on the document has been scheduled on 26 June 2015. All SOP’s that are to be become obsolete / superseded needs to be clearly documented.

2. There are 54 stakeholders listed in the stakeholders list. The last stakeholder meeting was held 20 January 2015. It was noted that 7 stakeholder were present, only 4 external representatives were present at the meeting. Need to improve stakeholder’s consultation and communications. ASA2 6.3 SOP 1.0 dated 1.3.2013 Complaints & Grievance is shown at Para 3 the process of complaints & grievance. The procedure includes to record down the details accordingly, to ensure all C&G are verified and investigated, to resolve C&G in fair manner through open and consensual agreement with effected parties, any issue that cannot be resolve by assistant/manager should be brought to GM, timeframe must be set to resolve any C&G and for protracted case, stakeholders must be kept informed on the status. Last engagement was on 20/04/15 with stakeholder Sekolah Kebangsan Simpang Empat on request to sludge cake. The request was fulfilled on 22/4/2015 with the supply of 2.48 MT of sludge cake.

Manager and esate assistants handles grievances and dispute issues. Max 1 month; depending of the severity of problem. No complaint registered and all request has been attended promptly. Request is being requested through stakeholder logbook form. Many complain were verbally received and fulfilled. Sighted example of JKKK Kampung Serapoh meeting dated 09/05/2012 and responded by the management on 8/6/2015. ASA2 6.4 No negotiations concerning compensation for loss of legal or customary rights are as per this assessment period. ASA2 6.5 In Changkat Chermin mill sampled and interviewed workers on pay and conditions for employees and for contract workers. - Workshop (Assistant) - Mr. Madasamy Ganapathy (Foreigner) - Age: 28 (Reports to En. Abdul Hassan ( Forman) - Mr. Mohd Hannifi (Local ) Age 42 – Process area RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 39 of 60

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- Mr. Mageswaran (Local) Age 33 – Fireman boiler

Pay wages & slip evident; employee understood the salary itinerary. Contract verified; local staffs, foreigner has their own agreement. Workers understood contract. Terms & condition evident. Minimum pay of RM 34.62 as per the government regulation sighted and verified.

In Serapoh estate sampled and interviewed workers on pay and conditions for employees and for contract workers. - Haikal – Harvester – Indonesian- 28 yrs – working for 8 months - Saiful Islam – 35 years – 1 year in employment

Pay wages & slip evident; employee understood the salary itinerary. Minimum pay of RM 34.62 per day as per the government regulation sighted and verified. May 2015 ; deduction for Union, EPF, Socso are made accordingly - Overtime. It is paid RM 6.4857 per hour. - Rest day complies - Public holiday complies Contract verified; local staffs, foreigner has their own agreement. Workers understood contract Terms & condition evident. No workers had taken maternity leave in past 3 years. Workers union NUPW are well established in the estate. No record of meeting with the management unless there have any raise issue by the workers.

Minor NC Workers quarter’s condition not satisfactory and needs to be improved and sanitation in and around, especially the foreign workers quarters, need to be improved. ASA2 6.6 The company’s commitment to respect to freedom of association can be seen from the establishing and publicly displaying “The Right of Freedom Association of Employees” policy. This policy has been incorporated into KLK Sustainability policy in clause 3.2(v) Freedom of Association and Right to Collective Bargaining since 1st December 2014. This policy has been publicly displayed in office and line-site. The workers are free to become members of workers union that already exist in the mill and estates, NUPW. Foreign workers have no restriction from the company to become members of trade union. Last meeting workers union held with estate management was on 18 May 2015. Workers understood contract Terms & condition evident. Workers union NUPW are well established in the estate.

No record of disputes or complaint with management recorded for past year. OSH Manual GP/OSH, Rev 1 dated 1July 2010 is available. Further, workers have several platforms to raise any issue at OSH meeting and Gender Committee meeting. Minutes of meeting available. Latest OSH meeting on 12/06/14 and Gender Committee meeting on 14/01/2015. Changkat Chermin estate’s last Gender Committee meeting was held on 11/06/2015 where 8 members including leader and secretary were present. Welfare of female workers such as sexual harassment, pap smear, breastfeeding were discussed. The gender committee Chairmanis Ms Nor Paridah bin Ariffin and Secretary is Rohidayu Binti Hussin.

Observation

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Workers union NUPW are well established in the estate. Last meeting with the management was on 18 May 2015. But there was no minutes of meeting with NUPW is available. ASA2 6.7 The company has implemented minimum age requirement, which stated in the 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 mill units. Youngers worker in the mill is Mr Vinothkumar age 19 years. The company has incorporated its no child labour policy into KLK sustainability Policy in clause 3.2 (ii). In Pinji estate the youngest worker is Mr. Manikandan Poochandran [Indian] is 20 years old. ASA2 6.8 Policy of equal opportunities publicly displayed in office and as well as in outside notice boards. Since 01st December 2014, this policy already incorporated in KLK Sustainable policy in clause 3(ix) as “Equal Employment Opportunities” which is available for public through company website. Understanding of the policy is found moderate by the interviewed with the local or foreigner workers.

According interview with workers, the company has implemented equal opportunities to all workers, including migrant workers. No advertisement sighted. Recruitment selection, hiring and promotion are based on skills, capabilities, qualities, and medical fitness necessary for the jobs available. ASA2 6.9 A policy on reproductive right incorporated in the “Sexual harassment and Violence Policy” that communicated through gender committee meeting. There is no restriction regarding reproductive rights as in KLK sexual harassment and violence policy and female employee can get pregnant if they want. Female employee who intend to have pap smear check-up or another medical consultation regarding women health can go to government clinic. Gender committee meeting is being conducted twice a year. The last meeting for the mill female workers was held on 10/16/2015, attended by 8 members. There are evidences on matters regarding sexual harassment being discussed during the meeting. Gender committee meeting is being conducted twice/year. The last meeting for Pinji estate was held on 17.01. 2015, attended by 9 members. ASA2 6.10 The mill does not received FFB from outside plantation. Only from supply bases from own group. Not handling any FFB payment. The company has transparent agreement with its contractors. The contract between company and a contractor is available. Agreement sighted no. 01-2014/15 with KS Changkat Chermin and Yee Ah Chai Enterprise g for supplying labour date on 1/10/14. Contract expires on 30/9/2015 Contract is agreed by both parties. Contract: SS Naveen Engineering, Contract no: 03/2014-2015. Effective from 1st Oct 2014 – 30 Sept 2015. Estate maintains contract document at estate office. Sighted Pinji estate contract documents. Ex: KLK/ LCC/1-2014/15 , Murugan A/l Munusamy , for Transporting FFB to Changkat Chermin Mill using ‘Bin System’. This contract will expire on 30/9/2015. Documents are kept in the mill office.

The document review of Serapoh estate on payment to contractor is confirmed that all payments have been made in a timely manner. Ex: Backhoe hiring contract sighted (Dated 1st Oct 2014). Payment for Mr. Chong Fook Leong on monthly basis, payment on 13/04/15 total was RM6,601.14. ASA2 6.11 The mill and estates have been contributing to local sustainable development. Street lights are being planned from the estate entrance to the main road. The quotation received from TNB is being negotiated and the local politicians RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 41 of 60

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assistance to get government assistance on the matter. The management had also informed during the Stakeholders consultation that the use of Diesel is being eventually reduced to provide positive impact to the surrounding environment. Mill has started using turbine to generate the necessary energy required. The record of CSR for Pinji estate stated that RM500 provided as donation to temple and provided 2 workers for cleaning of temple area in respond to request made by the temple on 20 April 2015 and responded on 30 April 2015. The record of CSR for Changkat Chermin stated that upgrading Muslim Prayer house (Surau) is completed in July 2014. ASA2 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. No contract substitution is practiced. New contracts are being planned in line with the new workers rate and incentives under the collective agreement. ASA2 6.13 The company has incorporated its human rights policy into KLK Sustainability policy in clause 3 dated 1st December 2014 signed by the Chief Executive Officer, Tan Sri Dato’ Seri Lee Oi Hian. The policy document in Clause 3 state that ”KLK respects, supports and upholds fundamental human rights, and does not engage in discrimination based on race, religion or gender.” Principle 7: Responsible Development of New Plantings Criterion by Summary There is no new planting carried out by the company. Audit ASA2 7.1 There were no new plantings involving forest land. ASA2 7.2 Neither new planting nor extension of existing one documented and seen during this audit. Replanting program in place for period of 2015 - 2021. Based on the Group Policy - Oil Palm dated 17 July 2010, there is no SOP established for new planting. The management claimed there is no oil palm extension in Malaysia. There is no out grower scheme associated with this estate. ASA2 7.3 No primary forest sighted within this estate perimeter. The estate neighbor to industrial park and residential estate. No HCV area identified and the matured youngest palm is 2008. As there is no new planting applicable, therefore formal HCV assessment not evidence. No new planting programme applicable. As there is no new planting applicable, therefore formal HCV, EIA and SIA assessment not evidence. ASA2 7.4 AAR report on "Oil Palm Manuring Recommendations 2014/15 sighted with estate's geographical condition. No peat land and due to no hilly and sloping areas, therefore terraincing not applicable. The annual AAR report will be used as guideline for existing estate mature palm management and for replanting. ASA2 7.5 As there is no new planting applicable, therefore formal HCV, EIA and SIA assessment not evidence. ASA2 7.6 Neither new planting nor extension of existing one documented and seen during this audit. Replanting program in place for period of 2015 - 2021. As there is no new planting applicable, therefore formal HCV, EIA and SIA assessment not evidence. No negotiations concerning compensation for loss of legal or customary rights are as per this assessment period. Based on the land title, it lease for 99 years, therefore no compensation issues involved. Since the RSPO certification date, there isn't any issues raised by stakeholders during stakeholder meetings. Based on the land title, it lease for 99 years, therefore no compensation issues involved. Neither new planting nor extension of existing one documented and seen during this audit, therefore no evidence available for communication to communities. RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 42 of 60

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ASA2 7.7 KLK has stated on zero burning in the SOP-09 dated on 01/01/2011. 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. The company has incorporated its zero burning policy into KLK Sustainability policy in paragraph 1.0 where it has stated “A strict Zero Burning policy is practiced in relation to all new planting, re-planting or other development.” This policy has come inti effect since 1st December 2014 as signed by the Chief Executive Officer, Tan Sri Dato’ Seri Lee Oi Hian. ASA2 7.8 Neither new planting nor extension of existing one documented and seen during this audit. Principle 8: Commitment to Continuous Improvement in Key Areas of Activity Criterion by Sighted continuous monitoring, review of activities and development are Audit implemented along with action plans that allow demonstrable continual Summary improvement in key operations such as in minimizing use of certain pesticides, environmental impacts, pollution prevention plans and working conditions. ASA2 8.1 The road from mill to Ayer Tawar town is dark at night and there is the risk to get robbed. Part of the street lighting is done within estate area (app. 1.2km) and balance outstanding – 0.5 km to the main road to be complete soon. Negative impact identified in the meeting includes – insufficient EFB for contractors to collect (reported by Stanplam Enterprise) which is affecting their business and workers are also complaining due to reduction of income. The management is now providing sufficient EFP to be transported. There is sufficient supply due to improvement in processed FFB quantity. The mill has planned following continues improvement plan.  Construction of a new room in the Engine room for the comfort and safety of engine drivers – September 2015  Construction of new room to prevent water going into Vickers Boiler switch – September 2015  To provide personal locker for each worker – September 2015  To provide water jet pressure gun to ease the cleaning work – September 2015  To provide new air conditioner for the comfort of employees in the office – September 2015

The estates have implemented best practices for management of pesticides and the improved controls associated with this program has reduced overall chemicals usage over the past 3 years. The Units have not used the herbicide Paraquat since February 2011 in line with the management memo to replace paraquat with alternatives. The monitoring of barn owl occupancy rate is on- going to reduce the usage of rodenticide. Planting of beneficial plants to encourage the proliferation of predators of leaf eating larvae is also on-going. Monitoring of pesticide use per ha is on-going with records of usage is kept and maintained by the company. Such records has been verified by the audit team during this audit.

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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 Following 2 minor non conformities were raised for this audit.

NON CONFORMITY REPORT NC number: 01/2015 Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 19/06/2015 Major or Minor: Minor Raised by: Baskaran Aspect of standard: 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: There is no evidence Ms Puspha, estate’s weighbridge attendant who joined the company in year 2009 has been trained the “KLK Sustainability Policy” or on “Code of conduct for employees”.

Lead Assessor signature:

Date: 19/06/2015 Proposed corrective action / improvement action by company.

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

Lead Assessor signature:

Date:

NON CONFORMITY REPORT NC number: 02/2015 Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 19/06/2015 Major or Minor: Minor Raised by: Baskaran Aspect of standard: 6.5.3 Growers and millers shall provide adequate housing, water supplies, medical, educational and welfare amenities to national standards or above, where no such public facilities are available or accessible. RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 44 of 60

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Evidence of non-conformity: Workers quarter’s condition not satisfactory and needs to be improved and sanitation in and around, especially the foreign workers quarters, need to be improved.

Lead Assessor signature:

Date: 19/06/2015 Proposed corrective action / improvement action by company.

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

Lead Assessor signature:

Date:

4.3.2 Non-Conformity Identified during the last ASA Following 3 major and 4 minor Non-Conformities Identified during the last audit and the status was reviewed as indicated below.

NON CONFORMITY REPORT NC number: 01/2014 Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 26/06/2014 Major or Minor: Major Raised by: Mahaswaran Maliyapan Aspect of standard: 5.6.2 - Significant pollutants and greenhouse gas (GHG) emissions shall be identified, and plans to reduce or minimise them implemented. Evidence of non-conformity: Significant of pollutant and GHG emission not been identified. Plans to reduce or minimize the GHG emissions that include objectives, targets and timelines not available.

Auditors signature:

Date: 26/06/2014 Proposed corrective action / improvement action by company: An immediate meeting was organized after the audit’s closing meeting among all staff that involved in the GHG assessment, a review was conducted and assignment delivered on.

Timeline for conformance: 60 days Review of corrective /improvement action: Sighted the “REDUCING/MINIMISING GREENHOUSE GAS (GHG)

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EMISSIONS PLAN” which dated on 15/07/2014. The effectiveness of the monitoring activities will be verified in next assessment.

Assessors signature:

Date: 30/07/2014

NON CONFORMITY REPORT NC number: 02/2014 Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 26/06/2014 Major or Minor: Major Raised by: Mahaswaran Maliyapan Aspect of standard: 6.1.3 - Plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts identified, shall be developed in consultation with the affected parties, documented and timetabled, including responsibilities for implementation. Evidence of non-conformity: In Lekir Estate, a documented social impact assessment given was not conducted as per the procedure SOP 13. Assessment done with affected parties not evident. A timetable with responsibilities for mitigation and monitoring reviewed and updated as necessary not evident as well.

Auditors signature:

Date: 26/06/2014 Proposed corrective action / improvement action by company: A meeting was organized as to address the corrective action. A review on current SIA was carried out and checked the compatibility against the procedure.

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

Assessors signature:

Date: 30/07/2014

NON CONFORMITY REPORT NC number: 03/2014 Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 26/06/2014 Major or Minor: Major Raised by: Mahaswaran Maliyapan

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Control Union (Malaysia) Sdn. Bhd. B-3-1, Prima Klang Avenue, Jalan Kota KS/1, 41100, Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

Aspect of standard: 4.3.4 - Subsidence of peat soils shall be minimized and monitored. A documented water and ground cover management programme shall be in place. Evidence of non-conformity: In Glenealy Estate, there was no water management plan available even though the topographic map sighted of 81HA of peat land. However the peat area not mentioned in the AAR report and the estate manager claims it’s only a shallow peat and therefore a documented water management plan not needed.

Auditors signature:

Date: 26/06/2014 Proposed corrective action / improvement action by company: The clarification of peat land was discussed with AAR team – Agronomist and as per our review, a water management plan is not required.

Timeline for conformance: 60 days Review of corrective /improvement action: Sighted the letter from AAR dated on 26/06/2014 claiming the standing of peat land 2 blocks. This NC is closed.

Assessors signature:

Date: 30/07/2014

NON CONFORMITY REPORT NC number: 04/2014 Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 26/06/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: 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 management is in progress of implementing / developing all the necessary Human rights policy. However at the period of audit, it is noted that code of ethical conduct and integrity in all operations and transactions policy is not publically available yet.

Auditors signature:

Date: 26/06/2014 Proposed corrective action / improvement action by company: The ethical conduct for employees has been included in the ”KLK Sustainability Policy” which has been effective since 01 December 2014.

Timeline for conformance:

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

Review of corrective /improvement action: Sighted the ”KLK Sustainability Policy” which has included under clause 3. (xiii) Business Integrity has stated “The Group shall conduct business in an honest and ethical manner, and comply with applicable laws and regulations.” which signed by company’s CEO Tan Sri Dato’ Seri Lee Oi Hian on 01/12/2014. The policy document is displayed in office and publicly available from company’s website.

The assessment carry out is evident and therefore this minor non-compliance is closed.

Assessors signature:

Date: 19/06/2015

NON CONFORMITY REPORT NC number: 05/2014 Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 26/06/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: 5.6.3 - A monitoring system shall be in place, with regular reporting on progress for these significant pollutants and emissions from estate and mill operations, using appropriate tools. Evidence of non-conformity: Since there is no plans to reduce or minimize the GHG emissions therefore the monitoring system not auditable.

Auditors signature:

Date: 26/06/2014 Proposed corrective action / improvement action by company: SOP 10 Reducing/Minimising Greenhouse Gas (GHG) Emissions Plan has been established to identify significant pollutants and plans to reduce or minimize GHG emissions.

Timeline for conformance: Review of corrective /improvement action: Sighted SOP 10 Reducing/Minimising Greenhouse Gas (GHG) Emissions Plan dated 15/07/2014 . The plan has identified significant GHG pollutants for mill and estate, mitigation measures to reduce them, target date and person responsible.

The assessment carry out is evident and therefore this minor non-compliance is closed.

Assessors signature:

Date: 19/06/2015 RSPOPC-SUM-REPORT.F01 (2.0) MAY 2015 Page 48 of 60

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

NON CONFORMITY REPORT NC number: 06/2014 Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 26/06/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: 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: 26/06/2014 Proposed corrective action / improvement action by company: Human right policy been included in the ”KLK Sustainability Policy” which has been effective since 01 December 2014.

Timeline for conformance: Review of corrective /improvement action: Sighted the ”KLK Sustainability Policy” which has included under clause 3. It has stated that “KLK respects, supports and upholds fundamental human rights, and does not engage in discrimination based on race, religion or gender. Reproductive rights in line with the country’s laws shall also be respected” which has been signed by company’s CEO Tan Sri Dato’ Seri Lee Oi Hian on 01/12/2014. The policy document is displayed in office and publicly available from company’s website.

The assessment carry out is evident and therefore this minor non-compliance is closed.

Assessors signature:

Date: 19/06/2015

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Control Union (Malaysia) Sdn. Bhd. B-3-1, Prima Klang Avenue, Jalan Kota KS/1, 41100, Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

NON CONFORMITY REPORT NC number: 07/2014 Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 26/06/2014 Major or Minor: Minor Raised by: Mahaswaran Maliyapan Aspect of standard: 4.6.3 - Any use of pesticides shall be minimized as part of a plan, and in accordance with Integrated Pest Management (IPM) plans. There shall be no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Evidence of non-conformity: Sufficient evidences found as ongoing activities that being practice routinely as part of reduction in pesticide, however it is not documented into a plan in accordance to the requirement in 4.6.3.

Auditors signature:

Date: 26/06/2014 Proposed corrective action / improvement action by company: The management plan minimize usage of pesticide is already included in the SOP 10 Environmental Impact Assessment (EIA) for estates.

Timeline for conformance: Review of corrective /improvement action: Sighted Serapoh Estate Management Plan established under SOP 10 Environmental Impact Assessment (EIA). For emission of green gases under the management control column of the plan has identified “To ensure dosage of chemical are adhered to calibration. The chemical dosage are calibrated keep in the calibration list”

The assessment carry out is evident and therefore this minor non-compliance is closed.

Assessors signature:

Date: 19/06/2015

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

4.3.3 Observations Raised During this Audit

Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 19/06/2015 Raised by: Baskaran

Legal books and CDs kept for reference are not being updated to reflect latest changes.

Assessors Signature Date 19/06/2015

Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 19/06/2015 Raised by: Baskaran

There are 54 stakeholders listed in the stakeholders list. The last stakeholder meeting was held 20 January 2015. It was noted that 7 stakeholder were present, only 4 external representatives were present at the meeting.

Need to improve stakeholder’s consultation and communications.

Assessors Signature Date 19/06/2015

Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 19/06/2015 Raised by: Baskaran

The SOP masterlist with the necessary approved signatures has been prepared by KLK HQ. The training on the document has been scheduled on 26 June 2015. All SOP’s that are to be become obsolete / superseded needs to be clearly documented.

Assessors Signature Date 19/06/2015

Client name: KLK CHANGKAT CHERMIN COMPLEX Date raised: 19/06/2015 Raised by: Baskaran

Workers union NUPW are well established in the estate. Last meeting with the management was on 18 May 2015. But there was no minutes of meeting with NUPW is available.

Assessors Signature Date 19/06/2015

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

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 2014 RSPO Supply Chain Certification Standard. November 2014

5.1 POM Included In The Scope Of The Audit Name Mill Location Supply Chain Model Palm Oil Mill Capacity (POM) MT/Hour Address (IP or SG or MB) Changkat Chermin 60 Batu 13 ½, Ayer Tawar, Perak IP POM

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 Actual volumes between May 2014 to April 2015 POM 1 49,859.29 10,559.86 See also 1.6 above.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

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) Certified CPO (MT) Certified PK (MT) 1 May 2014 19,404.29 - 19,404.29 2 June 2014 17,009.67 - 17,009.67 3 July 2014 22,585.98 - 22,585.98 4 Aug 2014 30,027.60 - 30,027.6 5 Sept 2014 22,836.23 - 22,836.23 6 Oct 2014 18,777.340 - 18,777.34 7 Nov 2014 17,938.46 - 17,938.46 8 Dec 2014 15,995.32 - 15,995.32 9 Jan 2015 14,684.63 - 14,684.63 10 Feb 2015 15,786.3 - 15,786.3 11 Mar 2015 20,789.60 - 20,789.6 12 Apr 2015 23,273.23 - 23,273.23 TOTAL 23,9108.7 - 23,9108.7

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 Supply Bases (MT) Certified CPO (MT) Certified PK (MT) 1 May 2014 4,207.71 895.310 5,103.02 2 June 2014 3,747.94 243.850 3,991.79 3 July 2014 4,974.30 937.000 5,911.3 4 Aug 2014 6,224.67 1,613.540 7,838.21 5 Sept 2014 4,748.29 1,291.210 6,039.5 6 Oct 2014 3,450.91 894.470 4,345.38 7 Nov 2014 3,791.91 796.810 4,588.72 8 Dec 2014 3,663.26 489.080 4,152.34 9 Jan 2015 2,108.65 733.89 2,842.54 10 Feb 2015 3,492.90 771.43 4,264.33 11 Mar 2015 4,579.81 886.980 5,466.79 12 Apr 2015 4,868.94 1,006.29 5,875.23 TOTAL 49,859.29 10,559.86 60,419.15

5.6 Records of Certified CPO & PK Sold under GreenPlam 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 GreenPlam Account. Certified CPO Certified PK No Buyers Name GreenPalm Trading No (MT) Sold (MT) Sold 1 - - - -

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Control Union (Malaysia) Sdn. Bhd. B-3-1, Prima Klang Avenue, Jalan Kota KS/1, 41100, Klang, Selangor. Malaysia. Tel: +603-3377 1600 / 1700

RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

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 Sang Kee Edible Oils Sdn Bhd TR-2f5856ab-31a1 - 200 2 Sang Kee Edible Oils Sdn Bhd TR-d143f8bd-d4fd - 200 3 Unitata Berhad TR-1ce9dc24-e320 - 900 4 Unitata Berhad TR-0a0af315-1214 - 800 5 Unitata Berhad TR-875c6832-0784 - 700 6 Unitata Berhad TR-fbf01913-1593 - 600 7 Intercontinental Specialty Fats Sdn Bhd TR-7878bd41-bc38 250 - 8 Intercontinental Specialty Fats Sdn Bhd TR-53d46983-344d 750 - 9 Intercontinental Specialty Fats Sdn Bhd TR-71b7901f-3fcd 1,000 - 10 Intercontinental Specialty Fats Sdn Bhd TR-5278144a-59ee 1,000 - 11 Unitata Berhad TR-cb50adb3-6be7 - 800 12 Unitata Berhad TR-b0209bb2-26c4 - 800 13 Intercontinental Specialty Fats Sdn Bhd TR-a389b0fd-19d7 300 - 14 Intercontinental Specialty Fats Sdn Bhd TR-3ccf177e-482e 1,000 - 15 Intercontinental Specialty Fats Sdn Bhd TR-789c7fd6-8316 1,000 - 16 Intercontinental Specialty Fats Sdn Bhd TR-5e72a08b-2001 400 - 17 Intercontinental Specialty Fats Sdn Bhd TR-9475955a-42b6 1,000 - 18 Intercontinental Specialty Fats Sdn Bhd TR-77725719-c563 1,000 - 19 Intercontinental Specialty Fats Sdn Bhd TR-5509ad0f-f810 1,000 - 20 Intercontinental Specialty Fats Sdn Bhd TR-60deb536-f156 1,000 - 21 Intercontinental Specialty Fats Sdn Bhd TR-fc7145aa-82dc 1,000 - 22 Intercontinental Specialty Fats Sdn Bhd TR-837ca1bb-486f 1,000 - 23 Intercontinental Specialty Fats Sdn Bhd TR-1b0000ba-3c21 1,000 - 24 Intercontinental Specialty Fats Sdn Bhd TR-fa4abd86-2297 300 - 26 Intercontinental Specialty Fats Sdn Bhd TR-5ea14e13-5c23 300 - 27 Intercontinental Specialty Fats Sdn Bhd TR-d9966a4c-d2da 1,000 - 28 Intercontinental Specialty Fats Sdn Bhd TR-5219eaaa-5fcc 1,000 - 29 Intercontinental Specialty Fats Sdn Bhd TR-e12a96e5-8907 200 - 30 Intercontinental Specialty Fats Sdn Bhd TR-8f9e53ee-1ff5 500 - 31 Cargill Palm Products Sdn Bhd TR-93ded1b7-2f82 1,003.45 - 32 Intercontinental Specialty Fats Sdn Bhd TR-d99c66da-7319 500 - 33 Intercontinental Specialty Fats Sdn Bhd TR-78077c85-0c3d 1,000 - 34 Intercontinental Specialty Fats Sdn Bhd TR-b72f5a23-93aa 1,000 - 35 Intercontinental Specialty Fats Sdn Bhd TR-eba57496-d038 2,000 - 36 Intercontinental Specialty Fats Sdn Bhd TR-2452bf85-06c8 300 - 37 Intercontinental Specialty Fats Sdn Bhd TR-c76f7fba-c8c7 1,000 - 38 Intercontinental Specialty Fats Sdn Bhd TR-3bb55c23-5713 1,000 - 39 Intercontinental Specialty Fats Sdn Bhd TR-3ad7f4a6-d65a 1,000 - 40 Intercontinental Specialty Fats Sdn Bhd TR-9fc915d5-17f8 1,000 - 41 Intercontinental Specialty Fats Sdn Bhd TR-584062ef-6edc 1,000 - 42 Intercontinental Specialty Fats Sdn Bhd TR-9663ce1b-b60f 1,000 - 43 Cargill Palm Products Sdn Bhd TR-211baa8e-4d8d 403.96 - 44 Cargill Palm Products Sdn Bhd TR-1cf1fa34-cf65 800 - 45 Cargill Palm Products Sdn Bhd TR-4eda2ce3-0b8b 99.67 -

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

Kuala Lumpur Kepong Berhad / KLK 46 TR-fe23147d-81cb 100.05 - Oleo 47 Intercontinental Specialty Fats Sdn Bhd TR-d5c060bb-a604 1,000 - 48 Intercontinental Specialty Fats Sdn Bhd TR-a1fe8d74-1db0 1,000 - 49 Intercontinental Specialty Fats Sdn Bhd TR-4d639d1e-fc3d 500 - 50 Cargill Palm Products Sdn Bhd TR-7fbf1ac0-09df 801.19 - 51 Intercontinental Specialty Fats Sdn Bhd TR-b39af525-606d 1,000 - 52 Intercontinental Specialty Fats Sdn Bhd TR-c5770181-77a3 1,000 - 53 Intercontinental Specialty Fats Sdn Bhd TR-15d8b2ff-9803 1,000 - 54 Intercontinental Specialty Fats Sdn Bhd TR-d6c3fd8f-4380 1,000 - 55 Intercontinental Specialty Fats Sdn Bhd TR-14770591-5c39 500 - 56 Intercontinental Specialty Fats Sdn Bhd TR-4faf6541-3c23 1,600 - 57 Intercontinental Specialty Fats Sdn Bhd TR-ffae515f-afa2 1,000 - 58 Intercontinental Specialty Fats Sdn Bhd TR-0d40c750-64e5 400 - 59 Intercontinental Specialty Fats Sdn Bhd TR-53f67c34-1216 650 - 60 Intercontinental Specialty Fats Sdn Bhd TR-9f9357a6-c8b8 1,350 - 61 Intercontinental Specialty Fats Sdn Bhd TR-9945d6e7-c5bc 1,000 - 62 Intercontinental Specialty Fats Sdn Bhd TR-6618ccde-32ba 1,000 - 63 Intercontinental Specialty Fats Sdn Bhd TR-b4fe15b9-90bd 600 - 64 Intercontinental Specialty Fats Sdn Bhd TR-e9873830-9f9e 1,000 - 65 Intercontinental Specialty Fats Sdn Bhd TR-b20081a6-c4df 900 - 66 Intercontinental Specialty Fats Sdn Bhd TR-07d66058-c07c 1,000 -

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: -

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

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 Including organizations, management and operational systems to ensure compliance with the RSPO Supply Chain Certification Systems and Standards as detailed above Changkat Chermin palm oil mill and its supply base were audited against RSPO SCCS. The mill processing capacity is 60 ton FFB per hour with throughput of 38 to 48 ton. The management continually improving the established RSPO Supply Chain standards since the main assessment. As part of continuous improvement, many trainings being planned in the mill. ETrace data management is managed by HQ. The mill manager, who acts in the capacity of top management in the sustainability management system, is responsible for decision making in the management system implementation and shall commit towards the development, improvement and implementation of the management system.

5.10 Final Certification decision by Control Union for the RSPO SCCS Audit of the POM Recommendations made: Yes Summary of non- Non 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.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

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

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

6.3 Signing by the Client I the undersigned, being the most senior relevant management representative of the operation seeking or holding certification, agree with the contents and audit findings as presented in this document .

I also confirm:  Acceptance of liability in execution of the instructions given.  That this company was made aware that the findings of the audit team are tentative; pending review and decision making by the duly designated representatives of Control Union Certifications.  That during the closing meeting all agenda items was covered by the Lead Auditor.

Acknowledged by: Name: Sin Chuan Eng Position: Head of Sustainbility (Plantation) Date: 1/9/2015 Signature

6.4 Signing by the Lead Auditor I the undersigned, being the Lead Auditor, confirm that this report is an accurate record of the findings and of the closing meeting. I further confirm that the summary of the findings as presented in this report are a true representation of the actual findings of the audit team.

Acknowledged by: Name: Baskaran Sankaran Position: Lead Auditor

Date: 13/08/2015 Signature

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

Acknowledged by: Name: Simon Selvaraj Position: Certifier Date: 2/9/2015 Signature

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU822639

PART 7: APPENDICIES

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

CHANGKAT CHERMIN PALM OIL MILL LOCATION

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LOCATION FFB CONTRIBUTING ESTATES TO CHANGKAT CHERMIN MILL

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

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