RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

RSPO PRINCIPLES & CRITERIA PUBLIC SUMMARY REPORT ANNUAL SURVEILLANCE ASSESSMENT 4

Malaysia KLK Jeram Padang POM KLK Berhad 2016

Report prepared by: Muhd Jamalul Arif (Lead Assessor) Certification decision by: Muhammad Haris (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 CU817844

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 ...... ERROR! BOOKMARK NOT DEFINED. 2.4 UN-CERTIFIED UNITS OR HOLDINGS ...... ERROR! BOOKMARK NOT DEFINED. 2.5 SUMMARY OF THE FINDINGS FOR PARTIAL CERTIFICATION ...... ERROR! BOOKMARK NOT DEFINED. 2.6 PARTIAL CERTIFICATION AUDIT AGENDA ...... 14 PART 3: AUDIT PROCESS...... 15

3.1 ABOUT THE CERTIFICATION BODY ...... 15 3.2 AUDIT TEAM ...... 15 3.2.1 Qualifications of the Lead Auditor ...... 15 3.2.2 Qualifications of the Assessment Team ...... 16 3.3 AUDIT METHODOLOGY...... 18 3.3.1 General Overview ...... 18 3.3.2 Assessment agenda for this Audit ...... 18 PART 4 ASSESSMENT FINDINGS ...... 20

4.1 LEAD ASSESSOR’S SUMMARY AND RECOMMENDATION FOR CERTIFICATION ...... 20 4.2 SUMMARY OF THE FINDINGS BY PRINCIPLES AND CRITERIA ...... 20 Principle 1: Commitment to Transparency ...... 21 Principle 2: Compliance with Applicable Laws and Regulations ...... 22 Principle 3: Commitment to Long-Term Economic and Financial Viability ...... 25 Principle 4: Use of Appropriate Best Practices by Growers and Millers ...... 27 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 ...... 44 Principle 8: Commitment to Continuous Improvement in Key Areas of Activity ...... 45 4.3 SAMPLE CRITERIA APPLIED DURING ANNUAL SURVEILLANCES ONLY & NOT APPLICABLE FOR THE MAIN ASSESSMENT ...... ERROR! BOOKMARK NOT DEFINED. 4.4 NON-CONFORMITY RAISED DURING THIS AUDIT AND ANY FROM THE PREVIOUS YEAR, IF APPLICABLE ...... 45 4.4.1 Non-Conformities Identified during this Audit ...... 45

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

4.4.2 Non-Conformity Identified during the last ASA, not applicable for MA ...... 45 THE FOLLOWING NC’S WERE RAISED DURING THE LAST AUDIT AND THE STATUS WAS REVIEWED AS INDICATED BELOW...... ERROR! BOOKMARK NOT DEFINED. 4.4.2 Observations Raised During this Audit ...... 49 4.5 ISSUES THAT WERE RAISED DURING THE STAKEHOLDER CONSULTATION, IF ANY ...... 49 PART 5: RSPO SUPPLY CHAIN CERTIFICATION ...... 50

5.1 POM INCLUDED IN THE SCOPE OF THE AUDIT ...... 50 5.2 CONFIRMATION OF THE COMPANY’S SUMMARY OF ANNUAL CERTIFIED VOLUME OF RSPO CERTIFIED PALM OIL AND PALM KERNEL OVER A SPECIFIED PERIOD ...... 50 5.3 SUMMARY REPORT INCLUDING A BRIEF DESCRIPTION OF THE SCOPE OF CERTIFICATION ...... 51 5.4 MONTHLY RECORDS OF CERTIFIED AND UNCERTIFIED FFB RECEIVED SINCE THE LAST AUDIT ...... 51 5.5 MONTHLY RECORDS OF CERTIFIED CPO AND PK PRODUCED SINCE THE LAST AUDIT .... ERROR! BOOKMARK NOT DEFINED. 5.6 RECORDS OF CERTIFIED CPO & PK SOLD UNDER GREENPLAM TO BUYERS SINCE THE LAST AUDIT, IF ANY...... 52 5.7 RECORDS OF CERTIFIED CPO & PK SOLD UNDER UTZ ETRACE TO BUYERS SINCE THE LAST AUDIT, IF ANY ...... 52 5.8 NON-CONFORMITIES IDENTIFIED DURING THIS AUDIT ...... 54 5.9 DESCRIPTION OF THE ORGANIZATIONAL MANAGEMENT SYSTEMS ...... 54 5.10 FINAL CERTIFICATION DECISION BY CONTROL UNION FOR THE RSPO SCCS AUDIT OF THE POM ...... 54 PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ...... 55

6.1 DATE OF NEXT ASA ...... 55 6.2 DATE FOR CLOSURE OF NON-CONFORMITIES ...... 55 6.3 SIGNING BY THE CLIENT ...... 55 6.4 SIGNING BY THE LEAD AUDITOR ...... 55 6.5 SIGNING BY THE CERTIFIER ...... 55 PART 7: APPENDICIES ...... 56

APPENDIX 1: LOCATION MAP FOR THIS CERTIFICATION UNIT ...... 56 FOR MALAYSIA ONLY. DELETE IF THIS AUDIT WAS DONE IN ANOTHER COUNTRY ..... ERROR! BOOKMARK NOT DEFINED. APPENDIX 2: LIST OF ABBREVIATIONS ...... 63

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT

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

1.2 RSPO Membership & Certification Details RSPO Membership Number: 1-0014-04-000-00 Registered Client Name: Kuala Lumpur Kepong Berhad Certificate Number: CU-RSPO-817884 Start Date of Certificate: 25th September 2012 End Date of Certificate: 24th September 2017 Date of Original Certification: 25th September 2012 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: 8th – 12th August 2016 Audit Number: ASA 4

1.4 Assessment Type This is Annual Surveillance Audit 3 based on Roundtable on Sustainable Palm Oil (RSPO) Malaysian National Interpretation Task Force (MYNI-TF), National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production Endorsed by RSPO Board of Governors on 6 March 2015 as audit standard.

1.5 Location of the Palm Oil Mill Name Mill Location GPS Reference Palm Oil Mill Capacity (POM) MT/Hour Address Longitude Latitude Jeram Padang POM 55 KM 12, Jalan Jelai - Rompin, 72100 102° 24' 30.6" E 2° 44' 6.4" N Bahau, Negeri Sembilan, Malaysia.

1.6 Palm Oil Mill Output and Approximate Tonnages Certified Figures below are from:  Only from certified supply bases (Y/N). YES  Combining certified with uncertified supply bases (Y/N). NO  If the Mill is receiving FFB from uncertified supply bases outside the audit scope, such uncertified sources is highlighted under the following sections as seen applicable: a. PART 1, Section 1.7 – General Description of Supply Base, b. PART 2: Partial Certification, Section 2.4 – Uncertified Units or Holdings, c. PART 5: RSPO Supply Chain Certification of this report Projected Production from the Actual Production for this Audit Projected 12 Months (MT) last 12 Months (MT) Year (MT) Forecast Certified in this Report August’ 15 – July’ 16 August’ 15 – July’ 16 August’ 16 – July’ 17

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

FFB CPO PK FFB CPO PK FFB CPO PK 249,920 44,826.9 10,569.2 189,000.7 38,792.487 9,620.963 250,762 56,421 13,290

1.7 General Description of Supply Base The mill receives 100% of FFB from its own estates. No changes sighted in the approved supplier list from previous assessment and this audit was carried out to ensure full compliance with RSPO requirement. The incoming and outgoing material [FFB, CPO & PK] are controlled by inventory computerised system.

1.7.1 Location of the Supply Base Oil Palm Plantation Location GPS reference Area Summary (Ha) OPP Name Address Longitude Latitude Total Mature KM 7, Jalan Rompin- Jelai, 73500 Rompin, OPP 1 Batang Jelai Estate E 102°28’20’’ N 2° 42’15’’ 1437 1437 Negeri Sembilan, Malaysia. KM 4, Jalan Simpang Durian-Bahau, 72400 Gunong Pertanian OPP 2 Simpang Durian, E 102°26’95’’ N 3°7’73’’ 677 393 Estate Negeri Sembilan, Malaysia. KM 12, Jalan Jelai- Jeram Padang Rompin, 72109 Bahau, OPP 3 E 102°24’14’’ N 2°43’5’’ 1575 1378 Estate Negeri Sembilan, Malaysia. KM 4, Jalan Sg Gadut- Rantau, 71209 OPP 4 Kombok Estate E 102°00'6’’ N 2°37’34’’ 1693 1624 Rantau, Negeri Sembilan, Malaysia. KM 17, Jalan Karak- OPP 5 Renjok Estate Mancis, 28600 Karak, N 102°8’12’’ N 3°30’53’’ 258 258 Pahang, Malaysia. OPP 6 KM 18, Jalan Karak- Sungei Kawang Temerloh, 28500 E 102°8’41’’ N 3°28’257’’ 1342 1300 Estate Lanchang, Pahang, Malaysia. OPP 7 KM 22, Jalan Karak- Tuan Estate Mancis, 28600 Karak, E 102°9'84’’ N 3°27’82’’ 920 897 Pahang, Malaysia. OPP 8 KM24, Jalan Seremban-Tampin, Ulu Pedas Estate E 102°3’60’’ N 2°37’35’’ 894 772 71409 Pedas, Negeri Sembilan, Malaysia. OPP 9 KM 18, Jalan Bahau- Temerloh, Bandar Sri Ayer Hitam Estate E 102°24’55’’ N 2°56’15.8’’ 2465 2112 Jempol, 72109 Negeri Sembilan. TOTAL 11261 10171

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

1.7.2 Statistics of the Supply Base and Estimated Tonnes of FFB produced per year OPP Oil Palm Plantation Estimated FFB/Year (MT) Planting Years Cycle (Years) 1994, 1995, 1996, 1998, 1999, OPP 1 Batang Jelai Estate 36,018 2000, 2001, 2002, 2003, 2007, 25 2012 Gunong Pertanian 1995, 1998, 2010, 2011, 2012, OPP 2 7,915 25 Estate 2014, 2015 1993, 1994, 1995, 1996, 1997, Jeram Padang 1999, 2002, 2003,2004, 2005, OPP 3 36,482 25 Estate 2006, 2007, 2008, 2013, 2014, 2015, 2016 1992, 1993, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, OPP 4 Kombok Estate 40,580 25 2003, 2005, 2007, 2008, 2010, 2016 OPP 5 Renjok Estate 7,289 2000, 2001, 2002 25 OPP 6 1998, 1999, 2000, 2001, 2002, Sungei Kawang 34,902 2003, 2004, 2005, 2007, 2009, 25 Estate 2011, 2015 OPP 7 1998, 1999, 2000, 2001, 2010, Tuan Estate 23,821 25 2015 OPP 8 1994, 1997, 1998, 1999, 2001, Ulu Pedas Estate 20,052 2004, 2005, 2007, 2008, 2009, 25 2012, 2014, 2015 OPP 9 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2001, 2002, 2003, Ayer Hitam Estate 41,954 25 2004, 2005, 2006, 2007, 2008, 2011, 2012, 2014, 2015, 2016 TOTAL 250,762

1.7.3 Conservation and HCV Area (Ha) * HCV part of OPP Oil Palm Plantation Conservation Area (Ha) HCV Area (Ha) Conservation OPP 1 Batang Jelai Estate 0 - - OPP 2 Gunong Pertanian Estate 1.14 - - OPP 3 Jeram Padang Estate 5 - - OPP 4 Kombok Estate 3 - - OPP 5 Renjok Estate 0 - - OPP 6 Sungei Kawang Estate 4 - - OPP 7 Tuan Estate 6 - - OPP 8 Ulu Pedas Estate 10 - - OPP 9 Ayer Hitam Estate 1.1 - - TOTAL 30.24 * 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 CU817844

1.7.4 Percentage of Planted Oil Palm by different Age Ranges Planting Years by 5 year Ranges (ha) OPP 1991-1995 1996-2000 2001-2005 2006-2010 2011-2015 2016 Total (Ha) OPP 1 227 (15.8%) 600 (41.8%) 465 (32.4%) 85 (5.9%) 60 (4.1%) 0 1437 OPP 2 46 (6.8 %) 19 (2.8%) 0 49 (7.2%) 563 (83.2%) 0 677 OPP 3 362 (22.9%) 454 (28.8%) 389 (24.7%) 173 (10.9%) 117 (7.4%) 80 (5.1%) 1575 OPP 4 294 (17.4%) 611 (36.1%) 409 (24.1%) 310 (18.3%) 0 69 (4.1%) 1693 OPP 5 0 165 (63.9%) 93 (36.1%) 0 0 0 258 OPP 6 0 481 (35.8%) 646 (48.1%) 126 (9.4%) 89 (6.6%) 0 1342 OPP 7 0 549 (59.6%) 335 (36.4%) 13 (1.4%) 23 (2.5%) 0 920 OPP 8 31 (3.5%) 218 (24.4%) 226 (25.3%) 245 (27.4%) 174 (19.4%) 0 894 OPP 9 320 (12.9%) 298 (12.1%) 853 (34.6%) 294 (11.9%) 635 (25.8%) 65 (2.6%) 2465 Total 1280 3395 3416 1295 1661 214 11261

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 9 3 - - Explanation as to the selection of estates sampled On this ASA4, 3 estate selected Renjok Estate, Gunong Pertanian Estate and Jeram Padang Estate which been selected randomly based on last year supply bases sampling.

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 years implementation plan, if applicable to this assessment Not applicable. No associated smallholders or out growers involved in this assessment.

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

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

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 Yes, the time bound plan does include of the subsidiaries, all subsidiaries, mills and estates owns by KLK. The Paloh Palm Oil Mill in estates and mills? Johor and Mill 1 in Sabah are not part of the time bound plan as it meant for out growers and smallholder group. This has Yes been communicated with RSPO in 2015. For the Sumatra Utara, Gohor Lama and Padang Bharang mills been merged and named as Stabat mill. 2.3.2 Is the time bound The plan is achievable unless otherwise with unforeseen plan challenging? circumstances. The risk involves varies from:  Age of plantations.  To engage certification bodies and their availability.

 Location.  Laws and regulations in Indonesia – a lot uncertainty.

 POM development  In Indonesia ISPO precede other certification standards. Yes

 Infrastructure.  In Indonesia, it finds mobilizing the internal resources to different geographical locations.  Compliance with applicable law.

2.3.3 Have there been any The latest time bound plan dated on 22/04/2016 was changes since the last reviewed and changes were discussed during verification. In audit? Are they Kaltim, Jabontara POM had been newly included. Both justified? Jabontara and Berau mill target to be certified by 2017 which Yes a year delay [2016] than planned. This was due to RSPO Compensation Scheme [Compensations Concept Note was submitted to RSPO].

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

2.3.4 If there have been New inclusion of mill and supply base. No changes on the changes, what targeted time line. Yes circumstances have occurred? 2.3.5 Have there been any On PT Menteng Jaya Sawit Perdana IUP for 7,400 Ha approval stakeholder no: 525.26/153/II/EKBANG/2007 dated on 13 February 2007 comments? and Izin Lokasi (IL) is renewed and documented no: 188.45/359/HUK-BPN/2013 dated: 1st August 2013 which Yes includes an approval clause 1a that this IL will remain in force until land swap process is finalised and as at now, the land / boundary survey on-going. 2.3.6 Have there been any No. newly acquired Yes subsidiaries? 2.3.7 Have there been any No lapses isolated lapses in Yes implementation of the plan? 2.3.8 Has there been any No systematic failure to proceed with the Yes implementation of the plan? 2.3.9 General statement as The target to certify all the units within year 2017 remain to progress made same. Yes 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 Since all the facilities in Malaysia were certified, therefore the conduct an internal facilities in Indonesia monitor by the Pak Steven and once in a audit? If so, has a 3 months a review with Sustainability Head will be done in positive assurance KLK HQ in Ipoh. The internal control points have included all Yes statement been the requirements to validate the compliance against produced? uncertified units or holdings as per partial. Joint venture in Liberia does not required internal audit as it is part of EPO as their stand-alone entity. 2.4.2 No replacement after There will either be a moratorium on development or for new dates defined in NIs areas to be developed the HCS Approach method will be Criterion 7.3: employed until the exercise of convergence is completed.  Primary forest.  Any area identified as containing High Conservation Yes Values (HCVs).  Any area required to maintain or enhance HCVs in accordance with RSPO criterion

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

7.3. 2.4.3 Any new plantings There is no NPP applicable. There will either be a moratorium since January 1st on development or for new areas to be developed the HCS 2010 must comply Approach method will be employed until the exercise of Yes with the RSPO New convergence is completed. Plantings Procedure. 2.4.4 Any Land conflicts are PT Adei Plantation land conflicts around 2,544 Ha are still in being resolved progress of negotiation and the land area been enclave. through a mutually agreed process, e.g. RSPO Grievance Yes 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. are being resolved No stakeholder comments or complaints received through a mutually Yes agreed process, in accordance with RSPO criterion 6.3. 2.4.6 Any Legal non- None noted. compliance is being No stakeholder comments or complaints received. resolved in accordance with the Yes legal requirements, reference to RSPO criteria 2.1 & 2.2.

TIME BOUNDP PLAN FORECAST FOR RSPO CERTIFICATION OF ALL PALM OIL MILLS & SUPPLY BASES Current Targeted Certification Palm Oil Supply Bases (estates, plantations, RSPO s/n Country Area [Ha] Status as Mill associations) Certification per this Year Audit

Kulim, Kedah, Pelam Estate* 2,960 Malaysia Batu Lintang Estate* 1,808 Batu Serdang, Kedah, 1 2013 Certified Lintang Malaysia Buntar Estate 899 Batu Kurau, Perak Subur Estate 1,290 Malaysia Landak Estate 4,451 Paloh, Johor, Kekayaan Estate 4,436 Malaysia Paloh Estate 2,029 2 Kekayaan Oct 2011 Certified Tenang, Johor, Voules Estate* 2,969 Malaysia New Pogoh Estate* 1,545

Kulai, Johor, Fraser Estate 2,928

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

Malaysia Bekok, Johor, Sg Bekok Estate 625 Malaysia Pagoh, Johor, Ban Heng Estate 631 Malaysia Renggam, Johor, See Sun Estate 589 Malaysia Bandar Tenggara, Sg Penggeli Estate 942 Johor, Malaysia Bahau, Negeri Ayer Hitam Estate 2,640 Sembilan, Malaysia Jeram Padang Estate* 2,114

Telemong, Renjok Estate* 1,578 Pahang, Malaysia Tuan Estate* 1,353 Lanchang, Sg Kawang Estate* 1,889 Pahang, Malaysia Rompin, Negeri Jeram Sembilan, Batang Jelai Estate* 2,148 3 Sept 2012 Certified Padang Malaysia Simpang Durian, Negeri Sembilan, Gunung Pertanian Estate* 686 Malaysia Pedas, Negeri Sembilan, Ulu Pedas Estate* 922 Malaysia Rantau, Negeri Sembilan, Kombok Estate* 1,915 Malaysia Tanjung Malim, Changkat Asa Estate* 1,716 Perak, Malaysia Kerling, Selangor, Tanjong Kerling Estate* 619 4 Malaysia 2013 Certified Malim Serendah, Selangor, Sg Gapi Estate 603 Malaysia Sungai Buloh, 5 Tuan Mee Selangor, Tuan Mee Estate 2013 Certified 1,556 Malaysia

Kuala Krai, Certified by Kelantan, Pasir Gajah Estate 2,107 SGS in 2014, Kuala 6 Malaysia By 2014 currently Pertang engaging Tanah Merah, new CAB. Kerilla Estate* 2,176 Kelantan,

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

Malaysia Sg Sokor Estate* 1,603 Pang Burong Estate 2,548

Tawau, Sabah, Sri Kunak Estate 2,770 7 Mill 2 March 2009 Certified Malaysia Tundong Estate 2,155 Ringlet Estate 1,834 Jatika Estate 3,508

Tawau, Sabah, Sigalong Estate 2,864 8 Pinang March 2009 Certified Malaysia Pangeran Estate 2,855 Pinang Estate 2,420 Tungku Estate 3,418 Lahad Datu, 9 Lungmanis Bukit Tabin Estate 2,916 July 2010 Certified Sabah, Malaysia Lungmanis Estate 1,656

Lahad Datu, Rimmer Estate 2,730 10 Rimmer July 2010 Certified Sabah, Malaysia Sg. Sibalukan 2,654

Kinabatangan, Bornion Estate 3,233 11 Bornion July 2010 Certified Sabah, Malaysia Segar Usaha Estate 2,792 Lekir Estate 3,313 Manjung, Perak, Changkat Chermin Estate 2,530 Malaysia Raja Hitam Estate 1,497 Glenealy Estate* 1,059 Changkat Parit, Perak, 12 2013 Certified Chermin Malaysia Serapoh Estate* 936 Padang Rengas, Kuala Kangsar Estate* 843 Perak, Malaysia Trong, Perak, Allagar Estate 805 Malaysia Kebun Malindomas Perkebunan, 7,971[2006] Berau, Kaltim, 13 Berau Kebun Hutan Hijau Mas, 7,317[2006] By 2017 Pending Indonesia Kebun Anugrah Surya Mandiri 2,682

Jabontara Berau, Kaltim, 14 Kebun Jabontara Eka Karsa 14,086[2007] By 2017 Pending (New Indonesia Inclusion) Steelindo Belitung, Certified 15 Wahana Kebun Steelindo Wahana Perkasa 14,065 By 2013 Indonesia (2015) Perkasa

Parit Belitung, Kebun Parit Sembada 3,990 By 2015 Certified 16 Sembada Indonesia Kebun Alam Karya Sejahtera 2,336[2009] By 2016 Pending

17 Mandau Riau, Sumatera, Kebun Mandau* 14,799 Oct 2012 Certified

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Indonesia Riau, Sumatera, Certified 18 Nilo 1 Kebun Nilo Timur By 2013 Indonesia 12,860 (2014) Riau, Sumatera, Kebun Nilo Barat Certified Nilo 2 By 2013 19 Indonesia Kebun Mutiara (New Inclusion) 1,400[2005] (2014) Tapung Riau, Sumatera, 20 Kebun Sekarbumi Alamlestari 6,200 By 2013 Certified Kanan Indonesia Kebun Basilam* 2,697[2001] Langkat, Sumatera Utara, Kebun Gohor Lama* 3,323[1992] By 2017 Pending Indonesia Kebun Tanjung Beringin 3,936[2000] Kebun Padang Brahrang 1,949[1979] 21 Stabat Kebun Bukit Lawang 1,377[1995] Langkat, Sumatera Utara, Kebun Tanjung Keliling 2,407[2407] By 2017 Pending Indonesia Kebun Bekiun 2,979[1984] Kebun Maryke 2,704[2007]

Mentaya Hulu, Kebun Karya Makmur Abadi 13,148[2008] Kalteng Indonesia Baamang, Kalteng Kebun MAP 9,056[2006] 22 MAP By 2017 Pending Indonesia

Mentaya Hilir, 5,893[2009] Kebun Menteng Jaya Sawit Perdana Kalteng Indonesia Note: Above marked * is combination of total rubber and palm oil area within stated plantation where the exact certified or under certification of each plantation will be according to the respective public summary report

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

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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. This verification was attended by Mr. Sin Chuan Eng and Ms. Lee Kuan Yee from the Sustainability Department. On behalf of CUC, Mr. Simon [Certifier], Ms. Mozhi [Program Manager], Mr. Jamal [Auditor] and Mr. Mahas [Auditor] were involved. The verification was found satisfactory with documented evidences of latest time bound plan, detail discussions on NPP and the challenges in meeting the time bound plan. There were no non-conformities found and as at 01/04/2016, below is the status of land bank owned by KLK [certified and none]. Country Region Name of POM Area [Ha] Batu Lintang Tanjung Malim Kekayaan Tuan Mee Peninsular Malaysia 61,508 Paloh Changkat Chermin Jeram Padang Malaysia Kuala Pertang Mill 1 Mill 2 Rimmer Sabah 40,353 Bornion Lungmanis Pinang Berau Kaltim 32,056 Jabontara Mandau Nilo 1 Riau 35,259 Nilo 2 Indonesia Tapung Kanan Parit Sembada Belitung 20,391 Steelindo Wahana Perkasa Gohor Lama Sumatera Utara 21,372 Padang Brahrang Kalteng MAP 28,097 Total 239,036

2.6 Partial Certification Audit Agenda

Date Location Agenda 22/04/2016 KLK Wisma Taiko, Ipoh Documentation review

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

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: Muhd Jamalul Arif Team member 1: Baskaran Sankaran Team member 2: Mohd Fadzli Bistamam Team member 3: Nor Asyikin Abd Whayab

3.2.1 Qualifications of the Lead Auditor Requirement Qualifications A minimum of post high school (post-secondary Post graduated in Plantation Management and Cargo school) training in either agriculture/forestry, Surveying from local university. environmental science or social sciences; At least 5 years professional experience in area of Experience in auditing since 2011 in RSPO P&C, SCCS, work relevant to the assessment (e.g., palm oil GMP B2 & B3, ESCAS Animal Welfare management; agriculture/forestry; ecology; social RSPO P&C and Global Gap standards. Working experience science); in handling Q&Q survey for agricultural products such palm oil. Training in the practical application of the RSPO Involved in RSPO assessment since 2011. Member of CUC criteria, and RSPO certification systems; RSPO audit team. Involved in audits for P&C and SCCS conducted in Malaysia, Indonesia and middle east country. Successfully completion of an ISO 9000:19011 lead Completed ISO 9001:2008 Lead auditor in 2011, ISO auditors course; 19011 & 17021 in 2014. Training in the practical application of RSPO Involved in RSPO assessment since 2011. Member of CUC certification systems. RSPO audit team. Involved in audits conducted in Malaysia and Indonesia. A supervised period of training in practical auditing Involved in RSPO assessment since 2011. Involved in against the RSPO criteria or similar sustainability audits conducted in Malaysia and Indonesia for more than standards, with a minimum of 15 days audit 5 companies audits. experience and at least 3 audits at different organizations. RSPO endorsed lead auditors course. Yes, successful passed on 2013. Signed code of conduct. Yes RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 15 of 63

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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 Baskaran Sankaran Fluent in English and Bahasa languages and English. Mohd Fadzli Bistamam Fluent in English and Bahasa Nor Ashikin Shafinaz Fluent in English and Bahasa

Field working Baskaran Sankaran Degree in Business Administration. Over 15 experience in the palm years conducting 2nd and 3rd party auditing for oil sector, or a various industries. demonstrable Mohd Fadzli Bistamam Bachelor Degree in Plantation Engineering. equivalent. Working experience more than 5 years in various plantation companies. Qualified auditor in ISO 9001, RSPO P&C and others sustainable standard such ISCC. Nor Ashikin Shafinaz Graduated from Universiti Kebangsaan Malaysia in Chemical Engineering. Been part of RSPO P&C and SCC team member during audits in Malaysia. Trained on ISO 9001 and GAP.

Good agricultural Baskaran Sankaran Degree in Business Administration. Over 15 practices (GAP), years conducting 2nd and 3rd party auditing for integrated pest various industries. Master in Occupational Safety management (IPM), and Health and experience in ISO 18001 auditing pesticide and fertilizer for past 5 years. use. Mohd Fadzli Bistamam Bachelor Degree in Plantation Engineering. Working experience more than 5 years in various plantation companies. Qualified auditor in ISO 9001, RSPO P&C and others sustainable standard such ISCC. Nor Ashikin Shafinaz Graduated from Universiti Kebangsaan Malaysia in Chemical Engineering. Been part of RSPO P&C and SCC team member during audits in Malaysia. Trained on ISO 9001 and GAP.

Health and Safety Baskaran Sankaran Degree in Business Administration. Over 15 auditing on the farm years conducting 2nd and 3rd party auditing for

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and in processing various industries. Master in Occupational Safety facilities. (For example, and Health and experience in ISO 18001 auditing OHSAS 18001 or for past 5 years. occupational. Health Mohd Fadzli Bistamam Bachelor Degree in Plantation Engineering. and safety assurance Working experience more than 5 years in various system). plantation companies. Qualified auditor in ISO 9001, RSPO P&C and others sustainable standard such ISCC. Nor Ashikin Shafinaz Graduated from Universiti Kebangsaan Malaysia in Chemical Engineering. Been part of RSPO P&C and SCC team member during audits in Malaysia. Trained on ISO 9001 and GAP.

Workers welfare issues Mohd Fadzli Bistamam Bachelor Degree in Plantation Engineering. and social auditing Working experience more than 5 years in various experience. (For plantation companies. Qualified auditor in ISO example, with SA8000 9001, RSPO P&C and others sustainable standard or related social or such ISCC. ethical accountability Nor Ashikin Shafinaz Graduated from Universiti Kebangsaan Malaysia codes). in Chemical Engineering. Been part of RSPO P&C and SCC team member during audits in Malaysia. Trained on ISO 9001 and GAP.

Environmental and Baskaran Sankaran Degree in Business Administration. Over 15 ecological auditing. (For years conducting 2nd and 3rd party auditing for example, experience various industries. Master in Occupational Safety with organic agriculture, and Health and experience in ISO 18001 auditing ISO 14001 or for past 5 years. environmental Mohd Fadzli Bistamam Bachelor Degree in Plantation Engineering. management systems). Working experience more than 5 years in various plantation companies. Qualified auditor in ISO 9001, RSPO P&C and others sustainable standard such ISCC. Nor Ashikin Shafinaz Graduated from Universiti Kebangsaan Malaysia in Chemical Engineering. Been part of RSPO P&C and SCC team member during audits in Malaysia. Trained on ISO 9001 and GAP.

Economic issues. Baskaran Sankaran Degree in Business Administration. Over 15 years conducting 2nd and 3rd party auditing for various industries. Master in Occupational Safety and Health and experience in ISO 18001 auditing for past 5 years. Muhd Jamalul Arif Involved in RSPO assessment since 2012. Member of CUC RSPO audit team. Involved in audits conducted in Malaysia and Indonesia.

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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.

3.3.2 Assessment agenda for this Audit Date Location Main activities 08/08/2016 09.30 Opening meeting Renjok Estate Chaired by the audit team leader (Monday)  Introduction by team leader  Presentation by respective managers  Presentation of Palm Oil Mill source of FFB by respective managers 0900 – 1700: Document review  Document review [EIA, SIA, CIP, Business Plan]  Complaint mechanism / Request & respond RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 18 of 63

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

 Best agricultural practices  Safety and Health

Site verification  Best agricultural practices  Manuring, Spraying, Harvesting,  HCV / Conservation Area  Legal compliance / boundary  Chemical / Pesticide / Fertilizer Stores  Workers interview  Worker’s facilities (housing, pay, etc.)  Stakeholder consultation if required.

09/08/2016 Jeram Padang 0900 – 1700: Document review / Site verification POM  Document review [EIA, SIA, CIP, Business Plan] (Tuesday)  Complaint mechanism / Request & respond

0900 – 1700: Document review/ Site verification Supply Chain Certification Assessment of the POM (RSPO SCCS)  Demonstration of legal entity  Roles and responsibility  Procedures/manual/SOP  Record of purchase – RSPO certified product  Record of sales– RSPO certified product  RSPO logo & claims

10/08/2016 Gunong 0900 – 1700: Document review Pertanian  Document review [EIA, SIA, CIP, Business Plan] (Wednesday) Estate  Complaint mechanism / Request & respond  Best agricultural practices  Safety and Health

Site verification  Best agricultural practices  Manuring, Spraying, Harvesting,  HCV / Conservation Area  Legal compliance / boundary  Chemical / Pesticide / Fertilizer Stores  Workers interview  Worker’s facilities (housing, pay, etc)  Stakeholder consultation if required.

11/08/2016 Jeram Padang 0900 – 1700: Document review Estate  Document review [EIA, SIA, CIP, Business Plan] (Thursday)  Complaint mechanism / Request & respond  Best agricultural practices  Safety and Health

Site verification  Best agricultural practices  Manuring, Spraying, Harvesting,  HCV / Conservation Area

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 Legal compliance / boundary  Chemical / Pesticide / Fertilizer Stores  Workers interview  Worker’s facilities (housing, pay, etc)  Stakeholder consultation if required.

12/08/2016 Jeram Padang 0800 – 0900: Preparation for closing meeting Estate Additional field visits and meetings with managers as necessary (Friday) meeting room 0900: Closing meeting  Presentation of findings by the audit team  Questions and answers  Final summary by team leader End of assessment

PART 4 ASSESSMENT FINDINGS

4.1 Lead Assessor’s Summary and Recommendation for Certification The mill and supply bases visited (as per the above Tables 1.5 and 1.7.1) and were assessed at field, office, facilities, stores and a document review was carried out in accordance to the RSPO principles and criteria. The RSPO management system’s documentations seen with minor changes in relation to scope of certification. Specific evidences were recorded for estates and mill. Interviews with Estate Managers, Mill Manager, members of worker’s 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. The company has established continuous improvement and effectively documented. There was no complaint or negative feedback received during the audit or during the field assessment when interviewing with the external stakeholders. The management continuously monitor the established KPI / objectives that significantly rule the achievement of company’s corporate policy on RSPO. There is no non-compliance was raised during this ASA 4. Also, the mill is verified for RSPO SCCS system verification and it is found to be in full compliance. See PART 5 below.

It is therefore the recommendation of the lead assessor that:

 A certificate of compliance is maintained.

Signed:

Name: Muhd Jamalul Arif Date: 2 September 2016

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

Principle 1: Commitment to Transparency Criterion by The company has all the copies of requests & responses which are more to Audit internal request and local authority bodies. Such records are kept and available for viewing. A common system adopted as parent company on publicly available Summary documents which have been listed in their SOP. Requests made by stakeholder were responded and well documented. Adequate information available for confidential information that publicly available. ASA 4 1.1 The company has established procedure titled Stakeholders Engagement/Negotiation, SOP 1.0, Issue/Rev 1/0, and dated 01/06/2015. The above said SOP has identified mechanism for Request and Respond, Consultation & Meeting and Complaint & Grievances. Stakeholders List (Appd #1 SOP 1.0) Issues 1 Rev 0 dated 01/06/2015 – Estates and Stakeholders List (Appd #1 SOP 1.0 Issues 1 Rev 0 dated 30/03/16 – Mill.

Sighted the Standard Operating Procedures (SOP) for Stakeholders Engagement "SOP No.1 date on 01/06/2015 (Rev 01). This SOP stated how to deal with request and respond. Since July 2014 to June 2015, sighted the “Records of Information Request and Respond” log book for all operating units effectively responded by the manager for each operating units. A summary of request and respond made available for monthly review. There were some requests made for mill and estate. All the request has been identified and responded immediately by management with taken action.

The list of stakeholders in mill is updated latest on 06/10/2015 prepared by Mr. Kamal Fawwaz (Asst. Manager). Stakeholders identified are as follow:  21 government/subsidiaries bodies  7 Association  26 supplier/contractor  9 supplying estates  2 others: Negeri Sembilan Cement Industries Sdn Bhd. ASA 4 1.2 The following documents were made publicly available in the mill and estate offices:  Land titles / user rights  Safety and health plan  Plans and impact assessments relating to environmental and social impacts  Pollution prevention plans  Details of complaints and grievances  Negotiation procedures  Continuous improvement plan

All these documents were sighted in the mill and estate offices. All requests for documents through the mill or estate offices will have to go through the mill or estate managers. They will make the decision as to whether the information can be shared to or viewed by the person requesting the information or document.

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The RSPO Master List of Documents stipulates the documents that can be made publicly available and documents that should be kept confidential. ASA4 1.3 Sighted "Policy Document" for code of ethical dated on 1.12.2014, effectively documented and evidences made available that the policy communicated to all interested parties. Awareness on ethical policy being enforced by mill and estate’s managers during morning roll call, OHS meeting and gender meeting. Policy signed by HR Director (William Yap) dated on 20/09/2014 contains:  Confidential information  Inside Information and Securities Trading  Compliance with the Law (anti money laundering, anti-corruption)  Personal gifting  Outside Interest  Misconduct (engaging in illegal activity)

The policy has been socialized to the workers and external stakeholders. Evidence as follow:

 An attendance record of KLK Sustainability Policy training dated 05/05/2016 and was attended by 31 participants  Sighted external stakeholder meeting dated 06/05/2016

Aside from annual training programme, estate has taken initiative to give socialization during muster briefing. Manager, Mr. Mohd. Khairul is the person in charged to brief estate worker. Sighted attendance record for last briefing dated 25/07/2016. 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. ASA4 2.1 The company has established SOP No. 2.0 titled “Legal Compliance” Issue 1/0, dated 01/06/2015. The SOP which established and issued by company’s Sustainability Department has identified processes such as Identification, implementation & Compliance and review of legal requirements that are applicable to mill operations.

The company has “Legal Compliance Checklist” under SOP No. 2.0 titled “Legal Compliance Checklist” Appendix 2 issue 2/0. Following are list of licenses and permits that sighted company has maintained and complied:  Boiler (Dandang Stim Tiup Air NS PMD 696) Expiry: 13/08/2016.  Pressure Filter PMT 48536. Expiry: 13/08/2016.  Vertical Sterilizer NS PMT 5361, NS PMT 5362 and NS PMT 5363. Expiry: 07/07/2016*  MPOB Licence No. 500110504000. Expiry: 30/09/2016.  Air Receiver NS PMT 1816. Expiry: 13/08/2016.  Diesel Permit No.: N010560 (for storage 27,300 Litre) Expiry date: 18/08/2016

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 MPOB (No: 50140370200) Exp: 31/03/2017  Permit Barang Kawalan Berjadual Peraturan-Pertautan Kawalan Bekalan 1974 Peraturan 9 (2) (Petrol and Diesel): Exp: 25/08/2016.  As for the air-compressor permit which has expired on 07/07/2016, sighted letter of estate manager Mr Samy Nathan’s application for renewal dated 21 /04/2016 and payment receipt of payment received by DOSH Pahang. Pending to receive official certificate renewal.  Licence for surface water Abstraction No. BKSA-JPL/752/5/2015/0237 expired on 31/05/2016. Application for renewal of the license was made by the company on 11/03/2016 (sighted official letter) is still in the process according to the email correspondence from Government Officer Mr Kasfullah Bin Idris from Negeri Sembilan State Water Control and Supervisory Body dated 07/06/2016. Sighted email correspondence between the estate management and the government body which maintained in the estate office.  Temporary Occupied License (TOL) / Lesen Pendudukan Semetara, License No. No.147686/PJT 234/077/2009/01 and License No.012003 were expired on 31/12/2015. However, sighted estate’s application for renewal on 06/10/2015 which has been acknowledged by and stamped by Pentadbir Tanah Negeri Sembilan. Also sighted follow-up email sent by the estate manager Mr Nathan on 08/06/2016 requesting to process the application which was replied on the same day by Negeri Sembilan Land Department Officer Ms Nursuhana Farhana Binti Norazmi stating that the application is already forwarded to State Director for Land and Minerals.

Sighted Mill Inspection record book maintained by the mill which claimed by the Mill Assistant Mr Kamal written by of DOSH Inspectors during their visit to their mill for inspection. Sighted inspection notes on status of machine, name and signature of DOSH Inspector Ir. Nor Halim Bin Hasan and Mr Noor Adzahir Bin Mohd Ali dated 09/05/2016. The above DOSH regular inspection records has stated list of mill’s machineries inspected including vertical sterilizers, Boiler are in good condition. Also sighted email correspondence dated 02/08/2016 from Mr Noor Adzahir Bin Mohd Ali to Mill Assistant Mr Chang Chee Khee verifying that all machineries inspected on 09/05/2016 are in good condition. The company has established SOP No. 2.0 titled “Legal Compliance” Issue 1/0, dated 01/06/2015. The SOP which established and issued by company’s Sustainability Department has identified processes such as Identification, implementation & Compliance and review of legal requirements that are applicable to companies operations. Based on the above SOP the company has established “List and Summary of Applicable Laws and Regulations” identifying legal requirements that applicable to estate and mill. The document has columns identifying name of law / regulation, summary of the law, requirements, current status and remarks. Sighted Mill’s ““List and Summary of Applicable Laws and Regulations” which was last updated on June 2015 by sustainability department has identified total of 81 laws and regulations. Following are some of the laws and regulations identified in the legal register that applicable to the mill and estates:  OSHA and regulations 1994 (Act 514)  Factory and Machinery Act with Regulations (Act 139)

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 Pesticides Act and Regulations (Act 149)  Kementerian Perdagangan.  Malaysian Palm Oil Board Act  Road Transport Act 1987 (Act 333) Employees Social Security Act and Regulations (Act 4)  Food Act and Regulations (Act 281)  Industrial Relations Act and Regulations (Act 177)  Trade Union Act and Regulations  Employees Provident Fund Act 1991  Human Rights Commission of Malaysian Act.  Stockholm convention on Persistent Organic Pollutants (2001)  International Labour Organisation (ILO) Convention 98 (1949) right to Organise and Collective Bargaining

Person responsible for the legal compliance been identified in the Sustainability Manual No. 1/0, titled “Management Responsibility” Issue 1/0 dated 01/06/2015 as respective operating unit manager. PIC for legal compliance for Jeram Padang mill is manager on each operating units. The Mill has copy of legal documents maintained in the office. Sighted latest law books on “Industrial Relations Act 1967” Rules and regulations, Occupational Safety and Health Act and Regulations’, Poison Act 1952, etc. The legal document is accessible to all key mill staff.

The company SOP No.2.0 issue has specified any changes to legal requirements are tracked by means of periodic review and evaluation on the Laws & regulations list to ensure that any new/addition as well as changes and amendment are captured and update, through the following manner:

 Enquiring the laws books publisher  Communication with law/enforcement officers  Website ASA4 2.2 The mill has legal land title from Negeri Sembilan State Land Department. Sighted Mill’s land title. No: 169204 for land size of 57,790 square meters. The mill land which has been categorized as Industrial Land in the above land title is legally owned by KL-Kepong Bhd. Renjok Estate land has proper land tile for the estate land which is for agriculture use. The estate consists of eleven land titles which are freehold status. Total land size is 1,578.4317 Ha. However, according to Estate Manager only 258 Ha is planted with Oil Palm and the rest are with rubber due to hilly nature of the land. Sighted details of latest land tax payment done by the company to the government from the land tax payment receipt for year 2015. Following is the details of land titles and land sizes.

No. Land title # Land Size (Ha) 1 6789 80.8344 2 6279 396.4353 3 8795 232.5887 4 1398 7.5321 5 1399 8.0809

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6 1400 7.5194 7 1401 7.7850 8 1402 7.9975 9 879 85.1342 10 8539 445.9401 11 8540 298.5841 Total 1,578.4317

Gunong Pertanian estate has legal land title No.: 1111 which consist of 688 ha land. The estate land is leased form Negeri Sembilan state government 99 years starting from 21/03/1978 and expires on 20/03/2077. The estate land is owned by KL Kepong Bhd which is for agriculture use. Annual tax payment for the lease land is stated as RM47,472.00 in “Borang 5CK” State Lease Document. Sighted details of latest land tax payment done by the company to the government from the land tax payment receipt for year 2015. Jeram Padang Estate land is consisting of 22 land titles which are owned by Kuala Lumpur Kepong Bhd which is for agriculture use. According to the estate’s year 2016 hectarage statement, out of the total 2113.9417 Ha, 65.5 % Mature Oil Palm, 5.5% is Immature Oil Palm and the rest is planted with rubber. Sighted details of latest land tax payment done by the company to the government from the land tax payment receipt for year 2016.

Boundary marking map is available. Renjok Estate has maintained legal boundary map obtained from the state land department. During field visit sighted boundary stone No. PM1 and PM2 which are painted and well maintained. Measured GPS co-ordinate for both stones using CUC GPS device and recorded following reading:

PM 1 N 3o 18’ 0.53” E 102o 04’ 50.2” PM 2 N 3o 18’ 1.21” E 102o 04’ 52.2”

At Gunong Pertanian Estate has maintained boundary map from land department and from JUPEM. Identified 29 boundary stone and 22 pegging in the map titled “Boundary Stone Map Ladang Gunung Pertanian” No.: PA05/025027. GPS Coordinates has been stated for both boundary stone and as well for pegging. During field visit sighted boundary stone which are painted and well maintained. Measured GPS co-ordinate for both stones using CUC GPS device and recorded following reading:

N 03o 04’ 47.7” E 102o 15’ 55.6” N 03o 04’ 39.6” E 102o 15’ 57.1”

ASA4 2.3 There is no evidence to suggest that the use of land in the production unit diminished the legal, customary or user rights. There is no customary land surrounding the production unit. Principle 3: Commitment to Long-Term Economic and Financial Viability Criterion by A documented business plan (10 years) available both at mill and estate. The Summary Audit annual budget includes of FFB yield/ha, OER, CPO yield/ha and cost of

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production. Seen the top management able to demonstrate attention to economic and financial viability through long-term management planning. Replanting programme for the estate is also available for estate with replanting activities. ASA4 3.1 Business management plan (provided from year 2015 - 2025) is available during audit time. Sighted document “2015/2016 Estimates” by each harvester group, field name and hectares, clone, immature hectares, yield per hectares and estimated FFB production. This document also includes summary of expenditure, capital expenditure, indirect cost, mature and immature area statement, estimate vehicle & allocation and relevant appendices. All revenue goes directly to HQ. Indirect cost – Staff salary, CSR & expenses. Direct cost – 3 main costs – Upkeep, Harvesting and Transportation.

FFB Received and Production of CPO for 3-year Projection 2017 2018 2019 (RM) (RM) (RM) FFB 244,838 245,260 244,188 CPO 55,654 55,177 54,942 (22.5%)

Production Cost/MT CPO (For Mill)

RM/MT 2017 2018 2019 FFB 2069 2038 2043 CPO 268 273 277

Forecasted Price per MT FFB 2017 2018 2019 2481 2481 2481

Production Cost / Hectare (financial year Oct 2016 – Sept 2017 (Renjok Estate – 258 Ha). Cost RM/Hectare RM/MT Mature area 2,232.79 83.69 upkeep Collecting/ 1,563.25 58.60 Harvesting External 719.55 26.97 transport

Estimates FFB production (Gunong Pertanian Estate) 2017 2018 2019 (RM) (RM) (RM) FFB 9,088 12,918 15,880

Estate have just completed last replanting at Block 84D/99 and 84C/63 for 142 Ha of plantation. Replanting commence on Sept 2014 and completed on May 2015. This area is flat area located at west side of estate. Replanting programme sighted included in document ‘’’Financial Year 2013/14’’ Senior General Manager’s Report. In same report, future replanting programme also been included for next 5 years programme (2015 – 2020) overview. Next replanting is planned on financial year 2018/19 involved block 1995A/28/AA for 28 Ha. Soil type is RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 26 of 63

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Renggam (clay to sandy) and local alluvium (marginal) soil. Soil map sighted AAR/14/10/2010 last update on October 2010. Principle 4: Use of Appropriate Best Practices by Growers and Millers Criterion by The mill and estate have a complete set of GAP, POD and SOP which is being Audit strictly adhered to and continuously monitored. Soil fertility is being maintained in the fields and IPM is being implemented in all the estate. They use chemicals Summary that are in accordance with the regulations. There is a comprehensive OSH policy and is being implemented throughout the all operating units. Improvement sighted in the identification and assessment with HIRARC. Trainings are being carried out as per the Annual Training Plan. ASA4 4.1 The Company has established SOPs for estates and mills. Documented evidence was sighted during the audit. All documents are well maintained and well implemented through trainings conducted by the Management through out the year. All documents are well maintained by company's sustainability team by conducting internal audit annually to check on the implementation of these procedures. Records of internal audits are made available during the audit. Several records of monitoring done by the estate management are available during the audit. All records are found updated as of the audit date. Examples for mill such as DOSH logbook, CHRA monitoring, Annual & Baseline Audiometric Testing Result, Additional Noise Exposure Monitoring Report, Annual Medical Surveillance Records, Boundary Noise Monitoring Report and Stack Emission Monitoring Report while example for estate monitoring documents are Rainfall records monitoring, Vehicle/machine monitoring log book, Water analysis monitoring, Bin Card for chemical and fertiliser stores and Internal Audit reports. The mill only received FFBs from their own estates. ASA4 4.2 SOP for soil management has been well established by the Company as evident in the SOP GP/AGRIC/OP5 and SOP 4.0: Soil Erosion & Fertility and Road Maintenance. The GAP starts from the survey by Agronomist with recommendation for fertilizer application. Soil improvement plan includes in fertilizer based on soil and foliar sampling annually. The management is keeping Nephrelepis along the frond stacking area to help with nitrogen fixation and improve soil moisture. No chemical spraying using Metsulfuron Methyl to avoid killing this species. Application of Empty Fruit Bunches (EFB) and decanter soilid was observed in Jeram Padang Estate showing good practices done by the management to maintain its soil fertility and ensuring good yielding field.

Annual Fertiliser program is available as per report from Applied Agricultural Services Sdn. Bhd (Ref LYA/Advisory/2015/Renjok) entitled “Oil Palm Manuring Recommendations 2015/2016”. Records of actual fertiser application is available and updated. Observed the actual application is tally with the recommendations from Agronomist Report. Evidence of periodic tissue and soil sampling are available as per Agronomist report from Applied Agricultural Services Sdn. Bhd (Ref KYK/adv/GUNONG PERTANIAN ESTATErtanian/OP2015_2016/4) entitled “Oil Palm Manuring Recommendations 2015/2016”. Fertiliser recommendations are based from the results obtained.

The operating unit is utilizing nutrient recycling for all waste generated in the mill operation. The estates are also applying EFB as per recommendation from agronomist in their report. EFB and Decanter application record is evident in Estate Application Record for Jeram Padang Estate. ASA4 4.3 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: 01 RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 27 of 63

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June 2015).

There is no evidence of steep slopes area (> 25°) exist in the estate. The management only spot spray large woodies and conserved as much ground vegetation as possible to protect the topsoil. Sighted in Gunong Pertanian Estate, no planting on steep slope as evident in estate replanting map for field 2011 and 2012. Total area abandoned for field planting 2011 – 18.80 ha and 2012 – 6.10 ha.

Road maintenance programme has been established at each operating units and budget has been allocated. The yearly programme includes types of maintenance, target of completion with planned and realized date. During field inspection, it was observed that the roads are well maintained. No peat areas and problematic soil sighted from site visit and verified through estate Soil series map for every estate. ASA4 4.4 The estate water management plan is evident in Estate Water Management Plan (SOP No.: 5.0; Date: 01 June 2015). Drinking water for Renjok Estate workers is extracted from nearby river and treated by own Water Treatment Plant. Water sampling for drinking water is conducted 3 times a year. Latest water sampling was sent to Organo Asia Sdn. Bhd showing no abnormalities to its source.

Map for identifying water source and river is available during the audit. Sg. Tamarong is flowing inside the estate. The Management has taken good initiative to conserve area along the river and demarcate the area as buffer zone. Sighted from site visit clear signage of buffer zone has been erected by the Management. No chemical applications are allowed along the river buffer zone. Treatment of mill effluent is well taken care by the Mill Management. Monitoring of the effluent produced is conducted by sending samples from 7 ponds. Approval letter from DOE date 1/7/2016 – 30/6/2017 with license No. 004097 Ref.No - (ASSS (B) 31/152/000/004 . Latest sample was analysed by TQCC-KLK (HQ-KL) and by DOE on 12/07/2016.Analysis parameters were BOD, COD, Suspended solid, Oil and grease, dissolved oxygen, ammonia cal Nitrogen, E. Coli, PH and etc.

Sighted the daily record of the rainfall. Water consumption record per ton FFB ratio has been maintained for every year to measure the performance of the mill. The mill’s record shows the water consumption by monthly basis and accumulated per intended period. ASA4 4.5 Implementation of IPM is based on Integrated Pest Management (SOP No.: 7.0; Date: 01 June 2016). The procedure indicates information regarding the implementation of IPM including Spraying, Trunk injection and Rat baiting.

No outbreak of rat attack recorded in the estate. Latest rat damage census was done on (Renjok Estate): i. 05/07/2016 – Field PM00A (4.8% damaged) ii. 10/05/2016 – Field 2000B (5% damaged) iii. 11/05/2016 – Field 2000A (4.3% damaged)

Biological control of rat by Barn Owl (Tyto Alba) is used to reduce potential rat attack in the estate. Currently total of 25 barn own boxes are available in the estate area. Latest occupancy census of barn owl boxes was done on 15/6/2016 and 24/06/2016. RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 28 of 63

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Training record of IPM sighted conducted in few sessions at Jeram Padang Estate:  10/06/2016 – IPM Training attended by 6 workers  15/03/2016 – SOP training for sprayers attended by 21 workers  24/02/2016 – SOP training on Handling Inter Pump by MYCROP attended by 8 workers ASA4 4.6 The mill and estates maintain a chemical register detailing the chemicals used, its purpose and classification as per the Classification, packaging and labeling requirements as per the Register of Chemicals Hazardous to Health stipulated in the USECHH 2000 regulations (regulation 5). All pesticides used are in accordance with the Pesticides Act 1974 (Act 149) and the relevant provision (Section 53A) and in accordance with USECHH Regulations (2000).

All estates did ensure that all pesticides are handled by personnel who have completed necessary training and aware with the information on the product label. The training contents has cover chemical handling method, PPE usage, Safety Datasheet and environmental aspects. Site inspection to the storage facilities evidence the chemical stores were found to be in good condition and stored in an appropriate manner. First aid kits as well as shower and washing facilities are available.

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. All chemical applications activities is accordance to the company procedure and good agriculture practices.

At mill, a Chemical Health Risk Assessment (CHRA) was prepared on April 2016 by Procoma Environment (M) Sdn. Bhd. This report covers all operations in the mill where chemicals are used and is valid for 5 years. JKKP Reg. No: JKKP IH 127/171-2(228). Sighted full report ref # PRO/FEB/FEB/16(JPPOM/125) of the audiometric test by Conducted by PROCOMA Environmental (M) Sdn Bhd Taman Sri Andalas Klang on 18/02/2016. The test was done for:

i. Mill workers (Kernel Plant, Oil Room, Boiler, Pump House) – 69 persons ii. Staff – 1 person iii. Executive – 2 persons

Annual medical surveillance records are available during the audit. Annual medical surveillance was done in accordance to the latest CHRA report. Latest check-up was done on 14/07/2016 by Kelinik Raja & Surgeri. The mill management sent 11 workers for this round of medical surveillance. The management is planning to send another 18 workers for check-up in August and Sept 2016. In estate level, annual medical surveillance records are available during the audit. Medical surveillance is conducted based on estate CHRA conducted by PROCOMA Environment (M) Sdn. Bhd on 14/05/2013 (Jeram Padang Estate). Registered Assessor – Lean Hock Leng (JKKP HIE 127/171-2(129). Latest check-up was done on 18/01/2016 by Kelinik Raja & Surgeri. The estate management sent 18 workers for this round of medical surveillance. All workers are fit to work

In Renjok Estate, Safe Use of Agrochemicals (SOP: 2.0) has clearly explain the RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 29 of 63

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justification of agrochemicals used and Register of chemical hazardous to health. List of chemical used in the estate is available as evident in “Register of Chemicals Hazardous to Health”. Examples:  Metsulfuron methyl 20%;  Glyphosate isopropyl amine 41%;  2,4-D dimethyl-amine;  Triclopyr butoxy ethyl 32.1%;  Copper Sulphate  Sodium Chloride  Matikus

Justification of chemical used is available as evident in “Justification on Agrochemicals Used”. Examples:

 Chemical: Glyphosate Target: Circle spray (Eluesine indica, Imperata cylindrical, Pennisetum indica)  Chemical: Amine Target: Spot spray (Asystasia sp.)  Chemical: Comet Target: Spot spray (Clidemia hirta, Lantana camara, Melastoma malabatricum)

Implementation of IPM is based on Integrated Pest Management (SOP No.: 7.0; Date: 01 June 2015). The procedure indicates information regarding the implementation of IPM including Spraying, Trunk injection and Rat baiting. The estate management is planting beneficial plants to avoid outbreak of leaf eating caterpillar and bagworms. Maps of beneficial plant is available and verified during site visit to the field. No prophylactic used of pesticide observed as the management is conducting census before using any chemicals for P&D application.

Pesticide application equipment used in the estate operation are evidence minimize the risk of contamination and impacts on the environment. The equipment use is Knapsack Sprayer (INTER 16). All equipment is calibrated and services at specified interval and when necessary by the pump supplier, MYCROP.

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. All chemical applications activities are accordance to the company procedure and good agriculture practices. Interviews and Records clearly shows of no pregnant or breast- feeding women assigned for chemical handlings works. ASA4 4.7 The Company has established safety policy as evident in “KLK Occupational Safety & Health Policy” signed by the Group Plantations Director on 07/11/2014. All policies are publicly available and displayed on estate notice boards outside the office. The policy is available in Bahasa Malaysia and English. OSH plans will be reviewed each year which includes safety targets, meetings and training. HIRARC on all activity of the mill and estates was reviewed on January each year. Both mill and estates training records includes task instruction with trainer’s name and attendee’s signature. Policies are available in English and Local Language and displayed at the mill notice boards as evident during mill site visit. RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 30 of 63

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Training for safety policies was included during Management Review Meeting conducted on 28/12/2015. Training material is available during the audit. Safety and Health plan is available for the mill as evident in “Programme on OSH for Jeram Padang POM – 2016”. Some of the training plan included:

Plan Realized Month Training Month Training Jan 16  Eco matt SOP Feb 16  Press/Thresher/ 15/02/2016  Vehicle driver Auto feeder SOP training  Safety Meeting  Mill OSH Visit Mar 16  Vehicle Driver Training  Lab SOP Apr 16  General 11/04/2016  Boiler & Engine Workers SOP Room SOP  Boiler & Engine  Vehicle Driver Room SOP Training  Lab SOP May 16  Safety Meeting 26/05/2016  Press/Thresher  Medical /Auto feeder Surveillance SOP  Safety Meeting  Mill OSH Visit Jun 16  Workshop SOP 03/06/2016  Workshop SOP  Electrical  Electrical Training Training July 16  Fire Drill 29/06/2016  Effluent  Effluent SOP Treatment Plant SOP

Risk assessment had been conducted by the Mill Asst Manager on 05/02/2016 as evident in HIRARC form. Risk assessment done included mill operations such as weighbridge, loading ramp, vertical sterilizer, auto feeder & thresher, lubricant store, press station & oil room station.

OSH training program is available as evident in “Annual OSH Training Programme for Renjok Estate – 2016”. Example of OSH training program:  SOP Training On Chemical Handlers & Chemical Sprayers  SOP Training for Harvesters  SOP Training Work in High Places  Fire Drill Training  SOP Training on Fire Extinguisher

In Renjok Estate, risk assessment for estate was reviewed on 01/03/2016 covering all operations within the estates. The risk assessment is verified by the Estate Manager. One case of accident occurred on 11/01/2016 as evident in form JKKP6 submitted by the estate management. Investigation was conducted by the Company OSH Department. Several actions were planned to avoid this accident to occur again. Sighted training record on Wildlife Attack conducted on 11/01/2016. In Jeram Padang Estate, risk assessment for estate was reviewed on 01/06/2016 covering all operations within the estate. The risk assessment

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was prepared by the estate Asst. Manager and verified by the estate manager. The HIRARC included such:  Harvesting FFB  Loader collecting FFB  Loading FFB at ramp  Chemical spraying  Fertilizer application in field  Water treatment plant

In Jeram Padang Mill, the management has appointed the Sr. Mill Manager, Mr. S. Teyagarajan as the person in-charge for OSH implementation as evident in appointment letter dated 26/05/2016. OSH organisation chart is available during the audit. The organisation included management and worker’s representatives. Regular meetings have 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’’. Last meeting conducted on 03/05/2016.

Emergency procedure for POM is available during the audit and well displayed on the notice boards around the mill compound. Emergency response plan included the emergency contact number, and also have Guidelines on Accident and Emergency Procedures such as:  Animal Attack  Chemical/Lubricant spillage  Explosion  Fire  Accidents & Dangerous Occurrence  Flood

Accident records are available during the audit. Sighted an accident happened on 12/01/2016. JKKP6 form was submitted to DOSH on 15/01/2016. Accident investigation has been done as evident in “Borang Soal Selidik Penyiasatan Kemalangan” and improvement has been done to avoid same accident to occurred in future. The mill management is monitoring the working hours and accident records using Borang JKKP 8(1)/(IV). Latest JKKP8 form submitted to DOSH Putrajaya was on 01/01/2016. Total man-hours recorded for 2015 was 58,176 hours

Accidents and emergency procedures for the estate are available in ‘’Program Tindakan Kecemasan’’. The procedures are displayed on the notice board and displayed at permanent stores (fertilizers and chemical) and workplaces. Fire drill and Emergency procedures training was conducted on 04/04/2016 First aid kits are available in various locations as observed during site visit such as chemical stores and chemical mixing area. At Renjok Estate, monitoring of LTA is done using LTA monitoring board displayed outside the office. Total working days without accident since the last recorded accident on 11/01/2016 until August 2016 is 231 days. The management also is submitting JKKP 8(1)/(IV) form to DOSH Putrajaya on yearly basis. For 2015, the estate recorded total manhours work for 656,948 hours.Sighted ‘’Accident and Emergency Procedures’’ such as:  Animal Attack  Chemical/Lubricant spillage  Fire RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 32 of 63

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 Accidents & Dangerous Occurrence  Flood All the procedures are clearly displayed on notice boards located in office, chemical store and water treatment plant. Emergency contact numbers are also clearly displayed with the emergency procedures. Fire drill and ERT training was conducted on 30/03/2016.

All workers in Jeram Padang Mill (both local and foreign) are found to be covered by the valid accident insurance. Local Workers are bound to subscribe to EPF and SOCSO. Observed sample of insurance policy for foreign workers (by AXA Affin General Insurance Bhd) as follows:  Policy No LWX/93161910/13/12/IPO –Covering 1 mill worker  LWX/93159975/13/12/IPO – Covering 1 mill worker  LWX/93159910/13/12/IPO – Covering 1 mill worker  LWX/93161895/13/12/IPO – Covering 2 mill worker

At Gunong Pertanian Estate, all workers (both local and foreign) are found to be covered by the valid accident insurance. Local Workers are bound to subscribe to EPF and SOCSO. Observed sample of insurance policy for foreign workers (by AXA Affin General Insurance Bhd) as follows:  Policy No LWX/93185270/13/06/IPO (Exp 13/08/2017 – Covering 1 estate worker)  LWX/93185693/13/06/IPO (Exp 13/07/2017 covering 1 estate worker)  LWX/93185702/13/06/IPO (Exp 19/07/2017 – Covering 1 estate worker) ASA4 4.8 The mill & estates have developed a training programme for year 2015-2016 which includes work stations in the mill and each task in the estate. Trainings are conducted to improve or develop skills. The training records of each individual was sighted which records training information and trainer’s name and followed by competency assessment of the trainee. Records of training for each employee are maintained at all operating units as evident in Attendance & Evaluation Forms (SOP No.: 8.0; Appendix 1; Dated: 01 June 2015). Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity Criterion by Environmental Impact Assessment has been carried out by the mill and estate. A Audit comprehensive identification of all waste has been recorded and disposal of Summary scheduled waste has been carried out by an approved and registered collector. Monitoring and analysis of waste is carried out regularly. The company is in full compliance to Principal 5. ASA4 5.1 The first for Environmental Impact Assessment SOP was established procedure in 01/01/2010. The company has re-established Environmental Impact Assessment Procedure titled “Environmental Aspect & Impact Assessment” SOP # 10.0 dated 01/06/2015. Based on the Environmental Impact Assessment SOP # 10, the mill has conducted, reviewed and updated environmental impact assessment (EIA) for its activities in document titled “Jeram Padang POM Environmental Aspect and Impact Identification and Risk Assessment”. The last review and update of EIA for the mill was done by Mr Kamal Fawwaz Mohd on 01/06/2016.

The in house EIA done for the mill operation has covered key activities such as FFB Intake, FFB Reception, FFB Sterilizer, Threshing & Stripping, Press, Clarification, Decanter, Separator, Kernel recovery, Steam generation, etc. The EIA assessment includes identification of mill activities, aspect and impacts for each the identified activities and risk assessment. For activities that been RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 33 of 63

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identified having high risks, the management has identified mitigation measures in “Jeram Padang POM Environmental Management Plan” dated 05/02/2016 prepared by Kamal Fawwaz Mohd. Consultation on EIA is done with stakeholders is done during annual stakeholder meeting. Sighted last stakeholder meeting that was conducted on 09/12/2015 which has included discussion on EIA & SEIA.

The environmental impact assessment in mill has covered key areas such as weighbridge, loading ramp, sterilizer and other areas that has a high risk. Besides that, another area such as chemical store, diesel tank, and office also covered. Meanwhile for estates, the assessment has covered key areas such as nursery, replanting, immature maintenance (included riparian zone checklist, emission of GHG from chemical usage, etc), mature maintenance, harvesting, FFB collection, and other areas that has a high risk. Further than that, another area such as chemical store, fertilizer store, premix station, diesel tank, landfill, clinic, nursery, replanting, immature maintenance, mature maintenance, harvesting, FFB collection, and other areas that has environmental risk. The assessment done based on estate processes.

The EIA assessment includes Environmental severity levels are classified in 5 categories: Insignificant, minor, moderate, major, Catastrophic. Finally, the environmental ratings are classified as low, medium and high. Based on the Environmental Impact Assessment SOP # 10, the estate has conducted, reviewed and updated environmental impact assessment (EIA) for its activities in document titled “Renjok Estate Environmental Aspect and Impact Identification and Risk Assessment”

For activities that been identified having high risks, the management has identified mitigation measures in “Jeram Padang POM Environmental Management Plan” dated 05/02/2016 prepared by Kamal Fawwaz Mohd in order reduce negative impact to environment. There is no specific time table been established as most of the mitigation measures are permanent features or continues implementation. Example of mitigation measure identified as follow:  Activity - Discharge of Sludge  Water Pollution  Mitigation Measure – Daily pipe observation, to cover oil at separator before discharge, treatment of sludge at effluent treatment plant.  Activity – Boiler generation of black smoke  Air pollution  Mitigation measures – monitoring smoke emission using CEMS, to conduct regular stake monitoring, to do regular maintenance of dust collector cyclone.

The estate monitors implementation and effectiveness of its environmental mitigation measures by using checklist provided under SOP No. 6.0 titled “Checklist – Fertilizer Store/Chemical Store/Diesel Tank/Premix Area”. The checklist is used on monthly basis to monitor the effectiveness of implementation. Sighted checklist of latest inspection done by Estate Assistant Mr Hafiz on 12/07/2016. The estate reviews mitigation measures stated in the Aspect and Impact register one every 2 years. Last review and update was done on 23/05/2016 by Estate Assistant Mr Ng Wei Siang. Internal Audit is also used for monitoring effectiveness of mitigation measures. Latest Internal Audit was done on 06/06/2016 by Mr Bennard Mr Lee Kian Wei. No issues were recorded. ASA4 5.2 There is no HCV identified in both estates. Seen the assessment done in estates based on SOP 11.0 – High Conservation Value (HCV) & Conservation Area

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Management was conducted on 25/10/2015. From the assessment carried out and the assessment done by using HCV Tool Kit by WWF Malaysia version October 2009.

The estate has conducted in house HCV assessment on 06/06/2013 by the estate management staff based on document titled “HCV/Conservation Area Management” SOP#11, which was established by company’s Sustainability Department using guidance from HCV Forest Toolkit for Malaysia. There is no HCV area identified in the assessment. There is no river run across the estate. However, Sungai Telemong runs on smallholders’ land along the estate boundary. The estate is surrounded by smallholders and there is no forest. The latest In-house HCV Assessment was conducted on 24/05/2016 by Estate Assistant Mr Ng Wei Siang. The HCV assessment for the presence HCV1 to HCV 6 within the estate. There is no presence of HCV identified in the assessment report. The HCV assessment includes interview with stakeholder and survey questionnaires aided with pictures for participants to identify sighting HCV elements that detected within the estate.

At Jeram Padang Estate, the latest In-house HCV Assessment was conducted on 26/05/2016 by Estate Assistant. The HCV assessment was done for the presence HCV1 to HCV 6 within the estate. There is no presence of HCV identified in the assessment report. The estate is surrounded by smallholders, native land and other estates. The assessment report has identified river riparian zone as conservation area for Sungai Muar river and Sungai Tamarong river which runs across the estate. During field visit noted riparian zone are well maintained. The HCV assessment includes interview with stakeholder and survey questionnaires aided with pictures for participants to identify sighting HCV elements that detected within the estate. Six estate workers participated in the HVC assessment which was conducted on 26/05/2016.

There is no HCV area or RTE species identified in the in-house assessment for the estate. ASA4 5.3 The mill has identified waste generated by the mill and sources of pollution in document titled “Identification of All Waste Products and Operational Plan to Reduce Pollution” dated 23/05/2016 prepared by Mill Assistant Mr Kamal Fawwaz Mohd. The mill has identified 16 types waste products generated from the mill and sources of pollution. The above waste management plan has identified waste products, sources of pollution, mitigating measures, target, PIC and status. Example of waste, pollution, mitigation measures identified in the waste management plan includes:  Spent Lubricant oil (waste)  Vehicle & Machinery (source)  Dispose by DOE approved contractor (Mitigation measure) once every 6 months (target) Mill executive (PIC)  POM effluent (waste)  Mill waste water (source)  Treating using open pond tranches (mitigation)  BOD level around 50 ppm by 2017 (target) Mill Executive (PIC)

Example disposal record sighted: Tex Cycle (P2) Sdn. Bhd.; License No: 001487; Expired dated of 01/05/2016-30/04/2017. Sighted the consignment note for SW409 (Disposed containers, bags or equipment contaminated with chemicals, pesticides, mineral oil or scheduled wastes) is 4 drums on 03/06/2016.

In estates, identified and documented 14 types of waste that generated from its plantation activities in waste management plan for year 2015/2016 titled is RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 35 of 63

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“Scheduled Waste Generated and Pollution Prevention Plan “. The waste management plan has identified waste product, sources waste, sources of pollution, plan to reduce pollution, target, and person responsible. Estate’s scheduled wastes are disposed through a DOE registered schedule waste disposal contractor as per DOE requirements.

Example disposal record sighted: Tex Cycle (P2) Sdn. Bhd.; Licence No: 001487; Expired dated of 01/05/2016-30/04/2017. Sighted the consignment note for SW409 (Disposed containers, bags or equipment contaminated with chemicals, pesticides, mineral oil or scheduled wastes) is 4 drums on 03/06/2016. Aliran Segar Sdn. Bhd.; Licence No: 004192; Expired dated of 01/05/2016-30/04/2017. Sighted the consignment note for SW305, SW306 and SW307 is 660m3 on 09/03/2016. ASA4 5.4 Plan for improving efficiency of the use of fossil fuels and to optimise renewable energy sighted in “Operational Plan to Reduce Fossil Fuel Usage”. This plan updated on February 2016. Fossil fuel usage was monitored by SOP 12.0 dated on 01/06/2015, the titled is “Waste Management & Energy Use” and record in sub section titled is “Energy Usage”.

Jeram Padang POM Fossil Fuel Usage Month Diesel consumption FFB Produced Litre/ for vehicle/genset (MT) MTFFB (litres) Jan 2016 1,866 10,411 0.179 Feb 2016 1,744 11,883 0.147 Mar 2016 2,401 13,461 0.178 Apr 2016 1,483 13,933 0.106 May 2016 1,495 12,328 0.121 Jun 2016 1,750 15,894 0.110 July 2016 1,495 15,197 0.098

Renjok Estate Fossil Fuel Usage Month FFB Produced Diesel consumption Litre/ (MT) (Litre) MTFFB Jan 2016 370.32 379 1.02 Feb 2016 350.45 334 0.95 Mar 2016 364.12 290 0.80 Apr 2016 404.01 203 0.50 May 2016 415.67 330 0.79

Gunong Pertanian Estate Fossil Fuel Usage Month FFB Produced Diesel consumption Litre/ (MT) (Litre) MTFFB Jan 2016 135.26 1,575 11.64 Feb 2016 179.70 1,291 7.18 Mar 2016 270.61 1,284 4.47 Apr 2016 272.49 1,549 5.68 May 2016 368.93 1,476 4.00

The estate monitors diesel usage for its activities. Diesel is mainly used for estate tractor operation. ASA4 5.5 The company has established “zero open burning” policy dated 1st December 2014 by Mr. Tan Sri Dato’ Seri Lee Oi Hian, company’s CEO. There is no open RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 36 of 63

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burning noticed during the plant visit. The company’s Sustainability Policy in Clause 1 has stated that “A strict Zero Burning policy is practised in relation to all new planting, re-planting or other development.”

Jeram Padang Estate is undergoing replanting program during this audit period. However, during field visit sighted no evidence of fire been used for land clearing. The company is using felling and chipping method to clear old oil palm trees. Sighted replanting contract dated 16/11/2015 No. RWA(WCM) I- 2015/2016 offered to WCM Replanting and trading has identified under Schedule Appendix –A that to use mechanical felling, chipping, and pulverizing for clearing old palm trees. ASA4 5.6 Assessment of all polluting activities for the mill are identified and recorded in document titled “Environmental Impact Assessment (EIA) & Pollution Prevention Plan’’ last updated on 27th October 2015. EIA is being reviewed on annual basis and previous review was done in 05th January 2016 prepared by Sr. Mill Assistant Manager and approved by Mill Manager. This EIA assist by KLK Sustainability Team (HQ).

Mill’s pollutants including greenhouse gas emission are identified in “Jeram Padang POM Environmental aspect and Impact Identification and Risk Assessment” register dated 05/02/2016 prepared by Kamal Fawwaz Mohd in order reduce negative impact to environment. Assessment polluting activities conducted periodically by the mill management. Following is example of assessment of mill’s polluting activities sighted.

 Sighted Stake emission monitoring report for Boiler dated 15/12/2015 carried by Procoma Environmental (M) Sdn Bhd. Result reported: 3 3 3 Sulphur = 4.824 mg/m , NOx = 6.70 mg/m , SO2 = < 2.86 mg/m , CO2 = 670.00, O2 = 20.80 %. The test result is in compliance with clean air regulation.  Sighted boundary monitoring report dated 20th October 2015 carried by Procoma Environmental (M) Sdn Bhd. The monitoring result in indicates that day time noise level does not exceed 70 dBA and night time noise level does not exceed 60 dBA as set by DOE.

The mill monitors its POME effluent quality on monthly basis. (Refer to 4.4.3). The mill management is monitoring its greenhouse emission by means of measuring factors that contribute to the greenhouse gas emission. These factors are monitored by monthly basis by respective operating units. Following are example of factors and measurements that monitored by the mill for the financial period October 2014 – September 2015:

 Diesel = 93,629 litre  Electricity = 1,750,981 kWh  Water usage = 408,283.5 M3

Plan to reduce pollutants and GHG for the plantation is available. Sighted the decreasing for fuel consumption and fertilizer dosage/palm. Furthermore, there is management control of reduce emission of GHG from chemical usage is the chemical dosage are calibrated and keep in the calibration list refer to spraying costing book.

The estate management is monitoring its greenhouse emission by means of measuring factors that contribute to the greenhouse gas emission. These factors RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 37 of 63

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are monitored by monthly basis by respective operating units. Following are example of factors and measurements that monitored by the estate for the financial period October 2014 – September 2015:  Ammonium Chloride (Fertilizer) = 140.5 MT  Muriate of Potash (Fertilizer) = 133.3 MT  Diesel = 3,742 litre  Electricity = 264,523 kWh

GHG for the mill is been calculated by sustainability department and summary sighted. Auditors verify the data that compile by mill management. 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 relevant Audit policies are in place and are fully implemented across the board. Summary Communication and consultation as well complaints and grievances 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. ASA4 6.1 The mill has conducted SIA for both internal and external stakeholders that involved all affected parties related to POM.

External stakeholder The last external stakeholder was conducted on 27/05/2016 participated by 10 respondents whom are relevant stakeholders to the mill operation. Sighted SIA prepared by Mr. Kamal Fawwaz, Asst. manager checked by Mr S. Teyagarajan, Mill Manager.

Survey covered the general satisfaction for general facility & service provided by mill to external stakeholder in term of local community benefits, communication, sustainability practices, health, accessibility, and social development & contribution. All stakeholder’s respondent gave positive feedback in all surveyed aspects. However, management will take initiative to resolve any negative impact pertaining aspect studied with given priorities toward health and safety aspects.

Internal stakeholder Last internal SIA was conducted on 25/05/2016 prepared by Mr. Kamal Fawwaz- Asst. Manager. 25 subjects are picked in this assessment which represent a wide demographic range or workers in Jeram Padang POM. 4 categories assessed in questionnaire are:

 Access and user rights  Economic livelihood and working conditions  Cultural and religious value  Health and education facilities

Assessment carried out included participation from all affected parties. For internal stakeholders, SIA of New Paving Road (1st & 2nd Phase) nearby Jeram Padang mill quarters have been conducted dated 25/05/2016. 20 respondents have been assessed which resulted in positive feedback. Respondents agreed that the project will not disturb their routine activities and will not affecting their safety. The new road paving project is done with cooperation between government and KLK company. It is consisting of 2 phases with 1st phase has been completed at end of Jan 2016 and 2nd phase to be completed on 2017.

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Among external stakeholder, SIA has been carried out prior construction and commissioning of new biogas plant. Sighted the SIA report and surveyed done based on this project dated 25/05/2016 prepared by mill assistant. Comment from external stakeholders, (Cement Industry Representative) questioning the effect or hazard of methane gas which might involve of poisoning or explosion. Mill explained that methane gas running under low concentration thus make it impossible to explode and affect surrounding area.

In external SIA assessment, 1 respondent gave a negative response in health issues where she claimed that workers littering rubbish even with the dustbin provided. Therefore, estate have come out with management plan to mitigate negative impacts and promote positive impact. A tangible action plan is provided with target dated, PIC and current status. Estate management has conduct briefing for cleanliness of linesite which was conducted in Jun 2016.

In Jeram Padang Estate, 20 respondents have given positive feedback in all topic assessed in internal SIA. In addition, prior commencement of road resurfacing and change of tube well, estate management has conducted SIA among internal stakeholders. Sighted SIA of internal stakeholder’s road resurfacing (Tar road) dated 26/05/2016 responded by 20 subjects and SIA of internal stakeholders change of water supply (tube well) dated 26/05/2016 responded by 20 subjects. Both SIA are prepared by Mr. Syazwan (Asst. Manager). Respondents have responded positively that both operation will not cause safety issue that might affect them.

In external SIA assessment, SIA analysis has shown that all respondents participated have given positive feedback in assessed aspects. Even though there is no negative feedback issued, estate management have carried out management plan outlined a tangible action plan provided with target dates, PIC and current status for those essential topics being covered. ASA4 6.2 The company has established procedure for engagement and negotiation between company and local community and other affected parties. Sighted SOP Stakeholders Engagement/Negotiation SOP 1.0 Issue/Rev 1/0 dated 01/06/2015. SOP has outlined the request & response, consultation & communication and complaint & grievance in order to liaise with stakeholders.

The list of stakeholders is updated latest on 06/10/2015 prepared by Asst. Manager. The last stakeholders’ consultation has been done last on 09/12/2015 attended by 20 participants. Sighted the minute meeting with accompanied pictorial evidence and presentation material prepared by Mr. Kamal Fawwaz (Asst. Manager) and checked by Mr. Teyagarajan (Mill Manager). SIA and management plan have been discussed during meeting where estate management will act accordingly to the social issues being discussed.

In Renjok Estate, the last stakeholders’ consultation has been done last on 24/05/2016 attended by 30 participants. Sighted the minute meeting with accompanied pictorial evidence was prepared by Mr. Ng Wei Siang (Asst. Manager) and checked by Mr. A. Samy Nathan (Estate Manager). Among the issues that have been highlighted during consultation are:  Safety briefing  Briefing on KLK Sustainability Policy RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 39 of 63

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 Communication of EIA, SIA and CV area to stakeholders  Communication between stakeholders and estate management  Request and response

SIA and management plan have been discussed during meeting where estate management will act accordingly to the social issues being discussed. ASA4 6.3 The company has established SOP 1.0 Stakeholders Engagement/Negotiation Issue/Rev 1/0 dated 01/06/2015. The SOP has been developed in order to deal with complaints and grievances for affected parties. The SOP has outlined the method of handling requests, complaints and grievances, identified and registered all stakeholders, record of request and response, resolving consultation, resolving communication and complaint and grievance.

The company comprised complaint and grievance in logbook. The complainant will fill up stakeholders’ logbook form where the complaint will then will be identified and responded by management. The protection of whistle blower is stated in KLK Sustainability Policy Issue/Rev. 1/0 dated 01/06/2015 approved by Tan Sri Dato’ Sri Lee Oi Hian (KLK Group CEO) Clause 3.2 (xii)

The KLK Sustainability training is done on 25/05/2016 where the mechanism of the stated SOP is briefed among all level of workforce. Sighted attendance list attended by 115 participants with pictorial evidence. ASA4 6.4 The company has established SOP 3.0 Att. 2.0 Issue/Rev 1/0 – Land Acquisition (for OP planting) dated 01/05/2016 that outline the procedure for identifying legal and customary rights and a procedure for identifying people entitled to compensation is available. ASA4 6.5 Employment’s term and condition at mill and estates are documented in the employment letter for local employee and in contract for employment for foreign employee. Employment contract already indicated pay, overtime, annual leave, sick leave etc. Mill implied the Minimum wages 2015 as recommended by MAPA/NUPW agreement which salary amount is RM 38.46 daily and minimum RM1000 per month as specified in contract and been agreed and signed by employee.

Contracts of employment are available in Bahasa for Indonesian and English for Indian workers in order to ensure it is easily understood. Contract is signed by both employee and management indicating hours of work, amendments to annual leave, medical leave, pay, overtime etc.

Mill and estates management has provided housing for both local and foreign workers. Linesite for workers and staffs are kept monitoring once a week by appointed staff. Sighted the monitoring record latest done on 08/08/2016. Water supply for linesite is free while for electrical bill, when exceeded RM20.00, bill payment will be deducted from their salary payment and mentioned in their salary slip. The nearby hospital is Hospital Jempol (serious case) and employee will be referred to Klinik Ladang Jeram Padang for minor treatment.

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The nearby accessible town is Pekan Jelai that is just a walking distance from workers linesite. Besides, workers also go to Pekan Bahau by public transportation. In estates, few groceries shop available nearby to ensure workers able to accomplish their daily needs. ASA4 6.6 The company has established policy entitled ‘KLK Sustainability Policy’ dated 01/06/15 approved by Tan Sri Dato’ Sri Lee Oi Hian (KLK Group CEO) which under clause 3.2 (v) indicates Freedom of Association and Right to Collective Bargaining where workers are allowed to join collective association.

There is NUPW representative for each operating units. Meeting between with management and NUPW will be done once a year for a free talk, conversation & consultation session regarding any issues that might be raised. Sighted last minute meeting dated 17/06/2016 between mill management and mill NUPW representative. ASA4 6.7 The company has outlined in ‘KLK Sustainability Policy (01/06/15) (3.2) (ii) No Child Labour’ where company states the commitment to comply with national law in regards to minimum age requirement. This is verified by employment list in Jeram Padang POM which 110 employees/workers are all above 18 years old. A random sampling in the mill and estates employees list indicated that there is no worker employed below 18 years. ASA4 6.8 The company has applied the SOP 14.0 (Issue/Rev: 1/0 dated 01/06/15) - Employment of Workers/Staff where contract of employment is maintained along with record of training, salary and medical is also maintained.Also indicates that there is no discrimination during employment (also stated in KLK Sustainability Policy). As evidenced, interview done with workers confirmed that employees are recruited and promoted based on skill.

The company established policy that emphasized the right to equal opportunity in ‘KLK Sustainability Policy Clause 3.2(ix)-Equal Employment Opportunities’ dated 01/06/2015 stated that employment of either local or foreign workers will not practice any discrimination regardless race, religion and gender. Interviewed effluent worker he explained that he has been given equal opportunity with no discrimination.

The mill maintains the record of all workers’ data and information such as their contract, passport, permit, payment slip, medical insurance payment and medical record for every particular jobs area.

Employee recruitment is giving equal opportunities where people whom are Malaysian are given 1st priority (positive) and also foreign workers whom having legal permit and passport with age above 18 years old. Contract of employment for foreign worker is maintained. Sighted contract of worker A is employed starting 05/10/2014 until 05/10/2016 on 2 years basis contract. Record of training, salary and medical also maintained.

The estate explicitly states the in discriminatory policy during the recruitment of RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 41 of 63

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new employee. Estate will conduct orientation programme for new workers upon arrival. Sighted records of Ladang Gunong Pertanian Orientation Programme for New Workers last done on 01/06/2016 conducted by Mr. Ahmad Azani attended by 3 new workers. Among issues that have been discussed are:  Employment agreement, all terms and conditions  Safety policy and safety procedure,  Company policy,  RSPO certification  SOP 18: complaints and grievance procedure  SOP 21 on management and workers  SOP 26 on Sexual harassment complaint procedure  Working cultures in Malaysia (foreign workers) and estate ASA4 6.9 The company has established policy on protection against sexual harassment entitled KLK Sustainability Policy in clause 3.2 (xi) Harassment and Violence described the group and its supplier/contractors shall not tolerate any type of harassment or violence dated 01/06/2015 approved by Tan Sri Dato Lee Oi Hian (KLK Group CEO) attached with Polisi No. GP/OSH12-Women’s Committee. In Jeram Padang mill, last gender committee meeting was done on 02/08/2016 attended by 9 members. The meeting agenda included the briefing such the awareness of sexual harassment, productive right, safety at working place & RSPO Policy.

Sustainability training is done last on 25/05/2016 given by Mr. Lee Kian Wei (KLK Sustainability team). Sighted training record sign by 115 including of staff and workers. Sighted the training material. Aside from that, RSPO training have been carried out on 11/07/2016. Sighted the training record attended by 16 participants. Sighted the training program, Jeram Padang POM Annual Training Programme 2016 on RSPO.

In Gunong Pertanian Estate, last gender committee meeting was done on 26/07/2016 attended by 8 members. The meeting agenda are as below:

 Formation of gender committee  Responsibility of gender committee  Sexual harassment and violence issue  Gender committee member

Socialization training was held during KLK Sustainability Policy training that brief policy, 3Ps, minimum wage etc. dated 05/05/2016 conduct by Team Sustainability. Sighted the training program, Gunung Pertanian Estate Annual Training Programme 2016 on RSPO dated 04/01/2016 prepared by Mr. Chan Yik Loon

The company has outlined that reproductive rights of female workers are protected. This is stated in KLK Sustainability Policy in 3-Drive Positive Socio- Economic Impact for People and Communities dated 01/06/2015. The reproductive rights policy is briefed during women gender meeting which done on quarterly basis. Besides, the policy is also communicated via briefings last on 25/05/16 for mill workers during KLK Sustainability Policy training. RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 42 of 63

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ASA4 6.10 No smallholders scheme involved. The mill does not receive FFB from outside plantation as the mill operates on IP module. Only receive FFB from supply own certified supply bases. Prices are not relevant in this unit as the unit belongs to KLK and supplied by estate belongs to KLK also Pricing is followed by actual MPOB pricing system. A bimonthly review and update does guarantee a clear and transparent procedure, complete records are available The estate has maintained the contractual agreement with their suppliers and local business. Sighted the contractual agreement as per below

 Tractor service maintenance and repair agreement between Palm Mach Sdn Bhd and Taiko Plantation Sdn Bhd dated 01/11/2015  Contract no. UMW/SC/037/2011 dated 01/12/2011 between Taiko Plantation Sdn Bhd and UMW Equipment Sdn Bhd ASA4 6.11 Mill had made contribution to the local community as one of their corporate social responsibility. Sighted the CSR records as below:

 The mill has done budgeted in adding additional facilities for toilet for public used, RM10,000  Donation to cost assist for temple renovation, RM1000.00  Sekolah tadika shirt and ETC, RM1000.57  Donation to DOE, RM1084.00

Sighted record of CSR made in Jeram Padang Estate Estate had made contribution to the local community as one of their corporate social responsibility. Sighted the CSR record as in Stakeholder logbook as below:

 The request and response from temple to provide water tank during the ceremony. Sighted letter sent dated 27/07/2016, identified and responded by estate management on 01/08/2016  Donation to SJKT Ladang Jeram Padang, RM500.00 for school activity. Sighted letter from school dated 20/05/2016  Donation to Education Fund- Koperasi AMESU, RM300.00 dated 05/04/2016 ASA4 6.12 There is no temporary worker hired by the mill and estate. Foreign workers are employed via passport and work visa/permit for 3 year contract period. The foreign workers’ contract covers housing, leave, medical, wages and working hours others terms and condition of employment similar to local employees. The company has a policy for not using forced or bonded workers that is covered under KLK Sustainability Policy that strictly prohibits forces or trafficked labour (01/06/15).

According to observation and samples sighted, migrant workers must have legal passport and legal permit before working in this company. Sighted also the letter of consent that allow employer to keep their worker’s passport. ASA4 6.13 The company has established policy that protects and outline the important of human right entitled KLK Sustainability Policy 3-Drive Positive Socio Economic Impact for People and Communities dated 01/06/2015 approved by Tan Sri Dato Lee Oi Hian (KLK Group CEO). RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 43 of 63

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Socialization and briefing of the policy is done during internal stakeholders consultation on 25/05/2016. Sighted training material ‘KLK Sustainability Policy Training’ by Sustainability Team. The KLK Sustainability Policy is also displayed in notice boards inside office building as well as outside of the office. On top of that, implementation of human right awareness has been done among external stakeholders during last consultation held on 27/05/2016. Mr. Teyagarajan (mill manager) is responsible to communicate with external stakeholders regarding this policy. Principle 7: Responsible Development of New Plantings Criterion by New planting activities by the company found responsibly conducted and found Summary Audit fully compliance with the principle 7. ASA4 7.1 Estate have a programme to convert 73 Ha of own rubber plantation into oil palm in Nov 2015 for block # PR16B (RM86). The programme currently on the land preparation as felling the old rubber trees already completed on 30/11/2015. Seen the programme estimates to completed on Dec 2016. Assessment for SIA & EIA conducted internally accordance with RSPO 7.3 guidance – Area less than 500Ha.

Seen the internal EIA conducted internally on 26/05/2016 included replanting activity. Assessment is included elements such waste generated, major activities, aspect & impact and risk assessment (likehood & consequence). This is based on the SOP 10.0 dated on 01/06/2016. Assessment also were identified no HCV area surrounding including forest.

Some major activities identified such felling/construction of roads, silt pit and drainage possible aspect is smoke emission of heavy machineries (bulldozer, excavator), emission of GHG from diesel engine and noise generated by heavy machineries.

Social Impact Assessment (SIA) conducted separately, which is based on SOP 13 – Social Impact Assessment dated on 01/06/2015. SOP was mentioned procedure to conduct assessment must include: Identification:  Access and use rights  Economic livelihood and working condition  Subsistence activities  Cultural and religious values  Health and education facilities  Other communities value, resulting from changes Implementation & Maintenance  To conduct SIA on activities in estates.  To conduct consultation with stakeholders  To develop, monitor and evaluate mitigation measures  To ensure SIA is publicly available.

Sighted assessment conducted for new planting activities for respective block PR16B (73 Ha). Sample of stakeholder questionnaire distributed to 20 respondents on 08/10/2015 to obtain comment from surround stakeholders. Identification of impact resulted: - All stakeholders are aware of the replanting are aware of the replanting works

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

- 19 from 20 respondents that replant work will not cause noise and air contamination ASA4 7.2 Area of new planting is totally flat area <4 degrees according to topography maps. ASA4 7.3 This is conversion crop from rubber to oil palm. No any HCV area identified in estate area as per assessment conducted on 26/05/2016. Assessment conducted based on HCV Proforest toolkit. From assessment conducted, sighted questionnaire been distributed to few internal & external stakeholders to obtained information. ASA4 7.4 Maps are available to show that land clearing avoided identified HCVs. There was no forest areas converted since November 2005. ASA4 7.5 N/A. This is conversion crop from rubber to oil palm in internal estate land. Not affected any local peoples land. ASA4 7.6 N/A. This is conversion crop from rubber to oil palm in internal estate land. Not affected any local peoples land. ASA4 7.7 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 no open burning noticed during the plant visit. There is replanting program in year 2015/2016. During site visit, sighted no burning in replanting area. Estate did the felling and chipping. ASA4 7.8 Company has concluded land is not with high carbon stock value based on land status history. Major GHG emission identified from replanting is smoke emission from engine diesel during operation. Principle 8: Commitment to Continuous Improvement in Key Areas of Activity Criterion by There are many improvement programs as mentioned in respective principles Audit Summary published in their annual company presentation. Both mill and estates has sufficient records and documents to justify the achievements. ASA4 8.1 Continuous improvement plan seen documented in SOP 16.0 dated 01/06/2015. Seen the CIP format includes of activity, process area, PIC and status of action taken. Among these identified process / areas in the CIP are the spraying and OHS. Verified the list for biological control of rats as to minimize the use of chemicals and pesticides. As for minimizing waste [schedule and non-schedule], authorized collectors being appointed.

As whole complex, few of the continues plan keep developed as from several aspects such environmental, OSH, social including workers welfares.

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 No NC was raise during this audit.

4.3.2 Non-Conformity Identified during the last ASA, not applicable for MA The following NC’s were raised for last audit.

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

NON-CONFORMITY REPORT NC number: 01 Client name: KLK Jeram Padang Complex Date raised: 09/07/2015 Major or Minor: Major Raised by: Muhammad Syafiq Aspect of standard: 1.2.1 Publicly available documents shall include, but are not necessarily limited to: • Land titles/user rights (Criterion 2.2); • Occupational health and safety plans (Criterion 4.7); • Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8)

• HCV documentation (Criteria 5.2 and 7.3); • Pollution prevention and reduction plans (Criterion 5.6); • Details of complaints and grievances (Criterion 6.3); • Negotiation procedures (Criterion 6.4); • Continual improvement plans (Criterion 8.1); • Public summary of certification assessment report; • Human Rights Policy (Criterion 6.13)

Evidence of non-conformity: Ulu Pedas Estate Seen the complaint and grievance book but no remark for status and date complete available for all complaint and grievance that reported in log book (Date Request/No/Name/Repair/Sign). Estate also not followed the SOP 1.0 Stakeholder Logbook Format as sighted in the SOP (Previous or latest version- New Rev 01/-01/06/2015).

Lead Assessor signature:

Date: 10/07/2015 Proposed corrective action / improvement action by company.

Estate already use the SOP 1.0 Stakeholder Logbook Format as sighted in the SOP latest version 01/06/2015. Manager also conducted training to person that involved for this issues. Training was done on 11/07/2015 and attended by 5 persons.

Timeline for conformance: 60 Days

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

Review of corrective /improvement action:

The verification audit assessment carried out is evident and therefore this major non-compliance is closed.

Lead Assessor signature:

Date: 19/08/2015

NON-CONFORMITY REPORT NC number: 02 Client name: KLK Jeram Padang Complex Date raised: 09/07/2015 Major or Minor: Major Raised by: Muhammad Syafiq Aspect of standard: 4.7.4 The responsible person/persons shall be identified. There shall be records of regular meetings between the responsible person/s and workers. Concerns of all parties about health, safety and welfare shall be discussed at these meetings, and any issues raised shall be recorded. Evidence of non-conformity:

Records of regular safety committee meeting for year 2014 is not complete at Ulu Pedas Estate. Sighted only 3 meeting have been conducted at this estate. According Safety & Health Committee Regulations, 1996 (Part IV- Meetings on S&H Committee) Reg. 21 (1) - Meeting shall be held not less than once in 3 months.

Lead Assessor signature:

Date: 10/07/2015 Proposed corrective action / improvement action by company.

Estate already done make regular safety committee meeting in year 2015. Sighted the latest OSH meeting that conducted on 22/05/2015 and attended by 11 persons. Next meeting will be on August 2015. This meeting also included in their OSH Programme for year 2015.

Timeline for conformance: 60 Days

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

Review of corrective /improvement action:

The verification audit assessment carried out is evident and therefore this major non-compliance is closed.

Lead Assessor signature:

Date: 19/08/2015

Non-conformity number: 03 Project No: 817884 Site: KLK Berhad – Jeram Padang Complex (Ulu Pedas Estate) Date: 10/07/2015

Part of scope: Principle 2 Requirement reference: 2.2.2 Legal boundaries shall be clearly demarcated and visibly maintained. Type of Non-conformity: Verification by Lead Auditor: Major On-site Minor Time Line to Close the Non-conformity Pre-Conditioned: Main/Re-Assessment: Yes No ASA 4 Annual Surveillance: Major (60 days): Minor (365 days): Non-conformance (objective observation and statement of non-conformance): During audit time, legal boundaries stone is not maintained due to some of boundaries stone is missing especially near to smallholder’s area. Estate also has insufficient evidence records that estate have maintain the legal boundaries. Root Cause Analysis and extent: (To be filled by Auditee) Lack of on-site monitoring to ensure the old boundary stones are visibly maintained. Mechanism to trace the missing legal boundary stones needs to be established to ensure all legal boundary markers are clearly demarcated. Corrections: Kindly provide the extent (To be filled by Auditee) Management had obtained map from relevant statutory body (JUPEM) to re-locate the missing boundary markers. In order to ensure old boundary stones are visibly maintained, 17 units of iron poles with red and white marking were erected close to the old boundary stones. (Refer to Attachment 1) Furthermore, 18 units of iron poles with red and white marking was erected to replace the missing old boundary stones to ensure all boundary markers are clearly demarcated in accordance to legal map from JUPEM. (Refer to Attachment 1) Management had gathered information on GPS coordinate for every boundary marker. (Refer to Attachment 2) Corrective/Preventive Actions: (To be filled by Auditee)

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

Management will ensure regular monitoring on every boundary markers and immediate action will be taken to re-locate the missing boundary markers (if any). Review of evidences submitted to CUC: Estate has taken appropriated corrective action by retrieve legal map from relevant statutory body (JUPEM) to re-allocated boundary marking surrounding estate. From the latest stone identification process by proper GPS coordination, found out 17 stones still available and 18 points is missing. Estate also has conduct stakeholder’s consultation before allocated new marking, example consultation with smallholders (Air Putih Private Camp) owner, Hj. Zainal & Mr. Zali (smallholder plantation) for point # 1 & # 2. Latest boundary mark monitoring record provided completed with GPS coordination consist of total 35 units iron poles with red and white color painted. Conclusion by CUC: Evidence accepted. NC Status: Yes (CLOSED) No (OPEN) ON SITE VERIFICATION REQUIRED Yes No Lead Auditors’ Name: Muhd Jamalul Arif Date: 8th August 2016

Signature: Company’s Representative Acceptance: Date: 8th August 2016 Name: Sin Chuan Eng

Signature:

4.3.3 Observations Raised During this Audit No observation was raise during this audit.

4.4 Issues that were raised during the Stakeholder Consultation, if any Stakeholders were either informed by the client or by Control Union via the RSPO website.  For Main Assessments, a 30 days 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 RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 49 of 63

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

Sprayer- Jeram Padang Estate The Company will continue Positive comments 1. Positive Comments implement good practices to maintain zero serious  He responded that there is no occupational accidents rate, and issue regarding wage, and also maintain good corporate discrimination occurred. The social relationship with the company has been given workers. equal opportunities to their

workers. Sprayer- Jeram Padang Estate The Company will continue to Positive comments maintain the good relationship 1. Positive comment with the workers.  The complex has given lots of facilities support to their worker with good housing accommodations.  If there is any complaints or issues arise, they will complaints to top management and action will be taken immediately Chief Clerk- Jeram Padang POM The Company will continue to Positive comments inculcate the awareness 1. Positive comments: regarding gender issues among  There is no complaints of workers harassment or abuse to date.  There is no issue regarding wage, and discrimination. The complex has been given equal opportunities to their workers. Lab Supervisor - Jeram Padang The Company will continue to Positive comments POM maintain good corporate social relationship with the workers. 1. Positive comments:  The complex has given lots of facilities support to their worker with good housing accommodations.  If there is any complaints or issues arise, they will complaints to top management and action will be taken immediately. Complaints will be directed to supervisor, Asst. Manager/ Manager Cleaner - Jeram Padang POM The Company will continue to Positive comments inculcate the awareness 1. Positive comments: regarding gender issues among  No complaints of harassment workers or abuse to date. She states no complaints have been RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 50 of 63

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

done so far and she’s clear who the gender committee members are. She also knows the method of complaint.

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 of Palm Oil Mill Mill Capacity Location Supply Chain Model (POM) MT/Hour Address (IP or SG or MB) Jeram Padang Palm Oil Mill 55 KM 12-Jln Jelai-Rompin 72100 Bahau CPO Mills-IP

5.2 Confirmation Of The Company’s Summary Of Annual Certified Volume Of RSPO Certified Palm Oil And Palm Kernel Over A Specified Period Product CPO (MT) PK (MT) Specified 12 month period CU Code POM 1 56,421 13,290 Volumes between 01/09/2016 to 30/09/2017. See also 1.6 above.

5.3 Summary Report Including A Brief Description Of The Scope Of Certification The palm oil mill sources FFB [all certified] being processes to produce RSPO CPO and RSPO PK through the IP module. Actual quantities of FFB delivered to the mill are entered into weighbridge system and the actual quantities of CPO and PK produced are also entered and the OER is known. The quantities of certified CPO and PK are shown in real time and summarized each day on a spreadsheet. 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 This is an Annual Surveillance Assessment, the figures used are since the last audit. No MONTH-YEAR Certified Supply Bases Uncertified Supply Bases Total (MT) (MT) (MT), if any 1 August 2015 22,969.70 - 22,969.70 2 September 2015 22,511.11 - 22,511.11 3 October 2015 19,827.60 - 19,827.60 4 November 2015 17,321.27 - 17,321.27 5 December 2015 13,260.91 - 13,260.91 6 January 2016 10,411.13 - 10,411.13 7 February 2016 11,883.37 - 11,883.37 8 March 2016 13,461.50 - 13,461.50 9 April 2016 13,933.97 - 13,933.97 10 May 2016 12,328.32 - 12,328.32 11 June 2016 15,894.65 - 15,894.65 12 July 2016 15,197.22 - 15,197.22 TOTAL 189,000.75 - 189,000.75

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RSPO Principles & Criteria Annual Surveillance Assessment Report Report Number CU817844

5.5 Monthly Records of Certified FFB, CPO and PK Since the Last Audit If this is the 1st Main Assessment, the figures used are from the last 12 months. If this is an Annual Surveillance Assessment, the figures used are since the last audit. No MONTH-YEAR Certified CPO (MT) Certified PK (MT) 1 August 2015 2,068.365 1,246.807 2 September 2015 5,078.757 1,221.302 3 October 2015 4,528.916 1,075.303 4 November 2015 3,859.524 839.67 5 December 2015 2,978.239 673.466 6 January 2016 2,334.378 540.436 7 February 2016 2,556.302 603.967 8 March 2016 3,020.46 688.003 9 April 2016 3,045.229 728.163 10 May 2016 2,541.268 580.272 11 June 2016 3,431.67 775.934 12 July 2016 3,349.379 647.64 TOTAL 38,792.487 9,620.963

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 Not available Nil Nil Nil

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-fa9573c1-d3b1 250 2 Sang Kee Edible Oils Sdn Bhd TR-7f9c4ad4-0e1a 150 3 Sang Kee Edible Oils Sdn Bhd TR-abc4b375-6043 250 4 Sang Kee Edible Oils Sdn Bhd TR-3611e023-efa3 250 5 Sang Kee Edible Oils Sdn Bhd TR-9300dcde-8f04 150 6 Sang Kee Edible Oils Sdn Bhd TR-f46f6e04-c772 200 7 Intercontinental Specialty Fats Sdn Bhd TR-22f28fb7-3bea 1,000 8 Intercontinental Specialty Fats Sdn Bhd TR-cfdb2d92-bb62 500 9 Intercontinental Specialty Fats Sdn Bhd TR-1077b3eb-72fc 500 10 Intercontinental Specialty Fats Sdn Bhd TR-64a58b64-843f 500 11 Intercontinental Specialty Fats Sdn Bhd TR-1a50d244-b999 500 12 Intercontinental Specialty Fats Sdn Bhd TR-3c877412-106c 1,000 13 Intercontinental Specialty Fats Sdn Bhd TR-4af6c2de-d278 200 14 Intercontinental Specialty Fats Sdn Bhd TR-48a1ff5d-d001 500 15 Intercontinental Specialty Fats Sdn Bhd TR-e2b7e98a-1986 500 16 Sang Kee Edible Oils Sdn Bhd TR-0952f309-b5fe 500 17 Sang Kee Edible Oils Sdn Bhd TR-dc3d6700-9d6f 150 18 Sang Kee Edible Oils Sdn Bhd TR-b9db9166-9f9c 200

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19 Sang Kee Edible Oils Sdn Bhd TR-e4efab30-c96c 500 20 Sang Kee Edible Oils Sdn Bhd TR-04abc025-04c5 500 21 Sang Kee Edible Oils Sdn Bhd TR-26a145d2-8ddb 300 22 Sang Kee Edible Oils Sdn Bhd TR-6d9f6d19-5377 700 23 Intercontinental Specialty Fats Sdn Bhd TR-6c6fc10b-34f6 500 24 Intercontinental Specialty Fats Sdn Bhd TR-dfb36bc7-4f12 400 25 Intercontinental Specialty Fats Sdn Bhd TR-8db63a23-8fd4 500 26 Cargill Palm Products Sdn Bhd TR-0a66de64-54dd 500 27 Cargill Palm Products Sdn Bhd TR-db0c4553-b149 504.94 28 Intercontinental Specialty Fats Sdn Bhd TR-a4cd91b3-21de 500 29 Intercontinental Specialty Fats Sdn Bhd TR-1fe2e1df-8023 500 30 Intercontinental Specialty Fats Sdn Bhd TR-799914b7-3e22 500 31 Intercontinental Specialty Fats Sdn Bhd TR-356a3036-98f4 1,000 32 Intercontinental Specialty Fats Sdn Bhd TR-34e17ca9-3e98 200 33 Intercontinental Specialty Fats Sdn Bhd TR-bd4fe010-5689 1,000 34 Cargill Palm Products Sdn Bhd TR-a152dff7-94b3 500 35 Sang Kee Edible Oils Sdn Bhd TR-81d20e76-cc10 100 36 Sang Kee Edible Oils Sdn Bhd TR-49e4c678-1a78 100 37 Sang Kee Edible Oils Sdn Bhd TR-33c36976-1f3c 950 38 Sang Kee Edible Oils Sdn Bhd TR-20bcb537-b02a 1,000 39 Intercontinental Specialty Fats Sdn Bhd TR-0fba5cfd-40bc 400 40 Cargill Palm Products Sdn Bhd TR-4279ff81-b4c3 1,006.21 41 Cargill Palm Products Sdn Bhd TR-398032a4-3dc9 500 42 Cargill Palm Products Sdn Bhd TR-ddf549a7-34cf 201.32 43 Cargill Palm Products Sdn Bhd TR-357f9f13-d88f 300 44 Cargill Palm Products Sdn Bhd TR-f6c7eff5-3081 302.79 45 Intercontinental Specialty Fats Sdn Bhd TR-4f84cdd1-5174 1,000 46 Intercontinental Specialty Fats Sdn Bhd TR-04fe71e6-eb98 1,000 47 Intercontinen tal Specialty Fats Sdn Bhd TR-9a8508ec-848d 1,000 48 Intercontinental Specialty Fats Sdn Bhd TR-cd41004e-2ae2 1,000 49 Intercontinental Specialty Fats Sdn Bhd TR-b2fd029c-df9d 1,000 50 Intercontinental Specialty Fats Sdn Bhd TR-6e6b393a-d39c 1,000 51 Inter continental Specialty Fats Sdn Bhd TR-99d75780-3207 1,000 52 Intercontinental Specialty Fats Sdn Bhd TR-0aa62977-df12 1,000 53 Intercontinental Specialty Fats Sdn Bhd TR-cc4e259d-41cc 1,000 54 Intercontinental Specialty Fats Sdn Bhd TR-dce37869-8d93 1,000 55 Intercontinental Specialty Fats Sdn Bhd TR-7a89f7b9-bfd7 1,000 56 Sang Kee Edible Oils Sdn Bhd TR-7ed337fb-947b 500 57 Sang Kee Edible Oils Sdn Bhd TR-91e204cc-2046 800 58 Sang Kee Edible Oils Sdn Bhd TR-21124490-947f 300 59 Sang Kee Edible Oils Sdn Bhd TR-ad771e2a-57f2 750 60 Intercontinental Specialty Fats Sdn Bhd TR-572bdebd-6aa6 500 61 Intercontinental Specialty Fats Sdn Bhd TR-7beae412-bcac 1,000 62 Intercontinental Specialty Fats Sdn Bhd TR-a135e17e-91f0 1,000 63 Intercontinental Specialty Fats Sdn Bhd TR-b7a650db-4a53 1,000 64 Intercontinental Specialty Fats Sdn Bhd TR-faedcfd3-3b32 1,000 65 Intercontinental Specialty Fats Sdn Bhd TR-0dc4f1e3-c5fa 1,000 66 Intercontinental Specialty Fats Sdn Bhd TR-4d577102-4b99 1,000 67 Intercontinental Specialty Fats Sdn Bhd TR-14d1775e-0c6f 1,000 68 Cargill Palm Products Sdn Bhd TR-04c9d3cc-3afe 510.38 69 Cargill Palm Products Sdn Bhd TR-d0b9a746-bafe 500 70 Sang Kee Edible Oils Sdn Bhd TR-632ff68d-78cc 900 RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 53 of 63

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71 Sang Kee Edible Oils Sdn Bhd TR-bb353bec-d4f0 300 72 Intercontinental Specialty Fats Sdn Bhd TR-53b658e4-f252 500 73 Intercontinental Specialty Fats Sdn Bhd TR-0d4480cf-f02f 1,000 74 Intercontinental Specialty Fats Sdn Bhd TR-1e7409b4-2bb0 1,000 75 Intercontinental Specialty Fats Sdn Bhd TR-7c101b10-027f 1,000 76 Intercontinental Specialty Fats Sdn Bhd TR-daed09ca-cdd9 1,000 77 Sang Kee Edible Oils Sdn Bhd TR-9240d59a-1545 200 78 Sang Kee Edible Oils Sdn Bhd TR-d5cdd978-0162 300 79 Sang Kee Edible Oils Sdn Bhd TR-25063fa8-f8e3 250 80 Sang Kee Edible Oils Sdn Bhd TR-281c6ae5-a2b6 200

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

5.9 Description of the Organizational Management Systems Including organizations, management and operational systems to ensure compliance with the RSPO Supply Chain Certification Systems and Standards as detailed above The management continually improving the established RSPO Supply Chain standards since the main assessment. As part of continuous improvement, many trainings being planned in the mill. ETrace data management is managed by HQ. Organizational structure of the sustainability management system has been established. 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- N/A compliances: Certification status of client: The POM included in the scope of this audit demonstrated full compliance with RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 54 of 63

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the RSPO SCCS.

With effect from the certification date given in the RSPOPC certificate, this POM mentioned in the scope of this report is considered to be certified in accordance with the RSPO SCCS.

PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

6.1 Date of next ASA The provisional date for the next ASA is: June 2017 (re-certification audit)

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: Not applicable  All minor NCs to be closed by: Before next surveillance audit

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

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

Acknowledged by: Name: Sin Chuan Eng Position: Head of Sustainability (Plantations)

Date: 5/12/2016 Signature

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

Acknowledged by: Name: Muhd Jamalul Arif RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 55 of 63

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Position: Lead Auditor Date: 01/11/2016 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: Muhammad Haris Position: Certifier Date: 5/12/2016 Signature

PART 7: APPENDICIES

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

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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 CU817844

Kok Foh Estate

Chong Weng Chan Kok Foh

Estat Estate e

Kg. Batu Peti (Asli)

Small Holders

Ladang Bukit Tinggi

Small Holders

Ladang Yayasan Negeri

Small Holders

RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 57 of 63

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 CU817844

Small Holder ( Orang Kaya )

Felcra Lakal

Felcra Lakal Small Holder ( Rantau Genting )

Pasoh Permanent Forest Reserve

Small Holder ( En. Zainal )

Small Holder ( En. Arip)

Kampong Temeri Ladang s Sialang Sain s Felda

Kepis Negeri Sembilan Cement Industries Hutan Rezab NSCI Jeram Padang

Selatan

Felda Ldg Ikatan Kepis Akti f

NSC Felda Bukit

I Rokan Felda Bukit Rokan

RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 58 of 63

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 CU817844

Sabai Estate

Cheng Kong

Hon(Small ) Holder

S.Letchumana n Tuan (Small ) Holder Estate

Ng Kin

(Small Onn ) Holder Lai Kam

(SionSm all ) Yang Mook Sui Holder (Small ) Holder

RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 59 of 63

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 CU817844

Chong Sow San Kg. Sri Telemong

( Small Holder )

Onn Swee Art Work

Ming Kee Bird Nest

Telemong Forest Reserve

Kg. Sungai Perdak Telemong Forest Reserve

Telemong Forest Reserve

Hutan SimpanKemasul

Kg. Jerakan Taman Murni Kg. Kuala Kaung

Kg. Sempadan Lanchang Estate

Hutan Simpanan Kemasul

Sg. Pertang Estate

Hutan Simpan Kemasul

To Hutan Simpan Kemasul

RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 60 of 63

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 CU817844

Rubber Small Holder

Kampung Nyatoh

Taman Ladang Seremban Bunga Sejati

Kampung Ulu Rantau Oil Palm Kampung Batu Sebelas

Small Holders

Kampung Ribu Kampung Baru India Kombok

Oil Palm Small Holders Oil Palm Small Holders

Ladang Ulu Kanchong

Ladang LadangSaba Renjuk

Ladang

Renjuk Kemasul Forest

Reserve Kemasul Forest Weng Hup Reserve

Green Line Sang Lee Estate

Sang Lee Estate

Sang Lee Estate

RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 61 of 63

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 CU817844

Kg. Air Panas

Kg. Sepri

Kg. Baru

Kg. Bt Dua

Kg. Bt Dua

Sek Keb Pedas

Kg. Pinggiran Pedas Taman Pinggiran Pedas

Institutes Latihan Perindustrian Pedas

RSPOPC-SUM-REPORT.F01 (3.0) January 2016 Page 62 of 63

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 CU817844

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