2. Summary Of The Findings by Criteria

SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 22 of 82

C. 2. Summary Of The Findings by Criteria

1 COMMITMENT TO TRANSPARENCY

1.1 Palm oil growers and millers provide adequate information to other

stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages forms to allow for effective participation in decision making. The company has the procedure in handling all information requests from stakeholders TBL- SOP-PIT and also procedure for retention time of certain document TBL-SOP-MSD. All the information record and response are maintained in Information Request Form. The company has separated form for all funds for social activity. All records are maintained for 3 years. There is a list of stakeholders which are divided base on the location Mill, Estate and Head Office. The stakeholders list consist of department from government, religious and traditional leaders, and national and local NGO. The company has set up the communication mechanism from estateunit – Way Lunik Lampung Office and Jakarta Head office. The inconsistency of input data for information request in the forms still found at Way Lunik lampung Office. Compliance status: Full Compliance 1.2 Management documents are publicly available except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes The company has categorized the document base on the type of stakeholders. All the documents are publicly available such as Land Titlesuser rights, issue relating to environmental and social impacts, Pollution prevention plans, SOP of complaints or grievances, and CSR plans. Besides, all information for company profile can be access from website www.tunasbaru lampung.com. The list of confidential documents has been identified and recorded such as financial issues, MOU between company and supplier. Compliance status: Full Compliance SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 23 of 82 2 COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS

2.1 There is compliance with all applicable local, national and ratified international

laws and regulations. The company has shown a list of rules associated with the last preparation on October 21st, 2012 which is list the number of rules, subject, responsible person and its implementation according to the document no: TBL-REGUU-SAF-2012 revision 01 and the document number: TBL-REGUU- SOS-2012 revision 01 dated October 21st, 2012. In any legislation and regulations related to company operations is made responsible person of each in accordance with their fields. Compliance status : Full Compliance 2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights Documents showing ownership or lease of the land in accordance with relevant laws. The company has been able to demonstrate of the document concession land in accordance with the existing laws and regulations. Total concession vast proven by HGU Certificate and estates license is 5.415,766 ha. Document control concession are held as follows: For PT. TBL estates: No Type of Document Document Number Date of Issued Hectare Statement 1 Estates License 5220639D.52011 May 2011 5415,766 2 SK HGU SK.39HGUDA84 October, 30 th 1984 3693 3 SK HGU SK.11HGUDA86 January, 30 th 1986 1371 4 SK HGU 05-540-08-2000 December, 29 th 2000 102,826 5 Extension of SK HGU No SK.39HGUDA84 60HGUBPN99 June, 28 th 1999 3693 6 Extension of SK HGU No SK.11HGUDA86 59HGUBPN99 June, 28 th 1999 1371 7 HGU certificate HGU No. U.2LT June, 28 th 1985 1060 8 HGU certificate HGU No. U.3LT June, 28 th 1985 2633 9 HGU certificate HGU No. U.10LT April, 25 th 1986 1371 10 HGU certificate HGU No. U.48LT June, 26 th 2001 102,826 11 HGU certificate HGU No. U.56LT November, 7 th 2002 248,94 12 Certificate grant 412Agr1987 July, 31 st 1987 10 13 Certificate grant 413Agr1987 July, 31 st 1987 10 SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 24 of 82 14 Certificate grant 414Agr1987 July, 31 st 1987 10 15 Certificate grant 415Agr1987 July, 31 st 1987 11 16 Certificate grant 416Agr1987 July, 31 st 1987 10 17 Certificate grant 417Agr1987 July, 31 st 1987 10 Documented system and personnel are available, there has been the responsible person to ensure that the boundary signs are well maintained and clearly. Example: a In PT. TBL estates are found the boundaries concession area boundary markers are not clearly identified broken, for example at the border with PT. GGPC in coordinates 05164309464817. b In boundaries of PT BSA estates concession area boundary markers have no identity. Example: In pal which is bordering with buffer village in coordinates 05059439441770. Compliance Status : Full Compliance 2.3 Use of land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent. Company has not had full copies of negotiated agreements and process of consent. During follow up audit, the company has made SOP to ensure that records and formal signature exist for all negotiations and related parties’ consent. Data available such as copies of agreement records of negotiation results land transaction agreement letter dated 10 and 14 February 2012 between PT BSA and related parties . Compliance Status : Full Compliance 3 COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability The estate has a plan and realization in year 2011 that including operations in the estate and mil. Annual plan is divided into a monthly plan and as well as the realization report . The replanting program within 5 years has been compiled which is covers all operational activities in the estates and mill. SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 25 of 82 In the 5 years estate program plan, contains Moisture conservation, Water management, Infrastructure, housing, manpower, machinery, P D Control and Monitoring, Fire Prevention Control, Security, Block Rehabilitations, Social aspect, Environment as well as additional investments in planting trees of various species identified HCV in all areas, CSR and environmental monitoring programs, HCV management plans and other activity to meet the RSPO requirements. Long term planning for capital expenditure is recorded in a less detailed documented 5-year budget plan for year 2009-2014 The company has maintained a record of operational result and conducted an internal audit twice in a year to monitor the operation. Monitoring of operations recorded in Internal Audit file contains checklists, SOP and operational result. Replanting program started in 2011 for TBL and BSA estates according the management of five year estate plan and covering an area of 500 Ha in 2011 and covering an area of 500 ha in 2012. Compliance status: Full Compliance 4 USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS 4.1 Operating procedures are appropriately documented and consistently implemented and monitored The Company has the SOP covered from Pre-Planting to harvesting and issued by the central office in 2007 as controlled documents. There is no SOP of land clearing, it is clarified by the staff estate that no new opening and the youngest planting year was in 2011 , In TBL estate founded SOP of integrated pest management that does not comply with the implementation in the field. For example, for handling caterpillars fire in SOP estate by using Azodrin is injected with 10 ml palm and it was using marshal with dose of 12 ml palm. During the follow up audit, this findings has been improved by issuing new SOP and the dosage using refers to the pesticide standard. Mill 1 PT. TBL already has the SOP TBL-QC-SOP-KI dated March, 7 th 2011 with 55 procedures. This SOP’s are socialized in every year especially if there is new revision from head office. Last socialization has been done in April, 13 th 2012. The estates and mill maintains records of operational results, such as daily FFB production reports, percentage of fruit types received mature, immature, etc, production results CPO SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 26 of 82 content, FFA, kernel content, CPO losses and kernel losses, CPO quality analysis results, despatch of CPO, FFB, kernel, and fibre, other necessary records related to estate or mill operations. In maintaining the system, the company conducted an internal audit which covers operational activity in the estates and mills. Internal audit activity is carried out by the internal audit team that is appointed by the company through a letter TBL-PANRSPO-IA. Audit activities is carried out on the HRD division, Social, Safety, Legal, Production, Environment, Management Representative and Document control. The results of the internal audit are summarized in the form of a summary of the findings of internal audit and submitted to the relevant head section by letter 005TBL-OPSSR-DPPII2011. Sampled checked out on internal audit year 2011 and it was found that the checklist was not covering the whole of RSPO principles and criteria. The improvement has been taken by conducting Internal audit on January 11, 2012 to ensure all areas has been audit with the checklist refer to all RSPO principles and criteria Record of operational activities in the estate is recorded, such as daily activity, regular maintenance reports, form of FFB receiving, washing equipment checklist, plant maintenance checklist, production machine maintenance checklist, realization of the action plan harvesting FFB fertilizer conservation P D Maintenance. Result of recording operations are reported monthly and then compiled to be annually report. Compliance status : Full Compliance 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield The company keeps records of the soil status of the land to ensure the conformity with the fertility recommendations . Sampled of recommendation No. 251TBL = Perl2011 stated that recommendation is issued based on leaf analysis which is done in each year Leaf analysis result no. MRC VP ITBL0600VI2011. Soil analysis is conducted once in 5 years. Sample taken from fertilizer recommendation that is issued by the company ,No. 251TBL = Perl2011. This recommendation is issued based on the leaf analysis which is done every year. Copy of the results of soil and leaf analysis is kept in estate and also includes records of fertilizing, planting of beans and POME distributing areal in the field. Data of Company plan and realization is available. For example in year 2012, there is program to plant beneficial plants in the estates area of 200 ha. Planting program is equipped with planting beneficial location map. SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 27 of 82 The fertilizer schedule in 2012 contain fertilizing plan for each block and the type of fertilizers used such as urea, MOP, RP, Kieserite, Borat. Compliance status : Full Compliance 4.3 Practices minimize and control erosion and degradation of soils Marginal soil map is available for each estate but it was found only the title as there is no mark in map to show as marginal areal. The company policy stated on area with slopes of more than 45 is not allowed to be planted. There are water gates in the estates to control the floods within the estate. The company has the SOP for estate strategy in areas with a slope of more than 45 and SOP for planting on peat land. The estates have maintenance program for road improvement that is documented and reported on the progress report in the estates, In progress report is found program road for 150 km and the progress in April is reached 34 km. For year 2013, management plans for road improvements grading and culverts are about Rp 170 million in the estate area. The company stated and result of identification throughout the estate area confirmed that there is no peat soil at PT. Estate. The company has SOP on Planning and Pre planting activities that include surveying, land preparation and planting strategies in peat lands. Actually, there is no peat land or marginal land in the estates area. Compliance status: Full Compliance 4.4 Practices maintain the quality and availability of surface and groundwater. The company does not have the protection of water flow and wetlands, including keeping and maintaining river border areas. Organizations has improved by making such as SOP of Management Monitoring of High Conservation Value Areas HCVA. As checked in the field, the marking boundary for river is found not completed. Some boundary have markers for 15 meters and some boundary with 50 meters. The company has the program for enrichment planting in HCV Area. Implementation program of planting is unclear for plant height, plant density and number of plant species in accordance with the SOP. The enrichment planting was not performed on all blocks at the HCV areas. To improve this, the company has the management program by planting flora on all blocks at the SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 28 of 82 HCV area. Records of implementation of water management programs are recorded in the report of Environmental Management and Monitoring activity of the palm oil industry. The report is submitted to the Environment agency level II and level I Central Lampung Bandar Lampung province every 6 months. The wastewater treatment mechanism is done by making Waste Water Treatment Plant WWTP. Wastewater as result of production process contains dissolved organic solids with a high concentration. Waste treatment is conducted biologically, through anaerobic, aerobic and biological control ponds. Furthermore, the liquid waste that has been processed is utilized for land application in estate. The company has the license no. 66016. 1 P - DOK - REV D5 IV 2008 for Land application. The program to maintain of the water environment is conducted by controlling the water pollution. It is intended to prevent, anticipate and monitor the potential of water contamination that could reduce the quality of surface water rivers and groundwater the wells Monitoring records BOD effluent plant is in the document management and utilization report of the activities of the palm oil industry is reported to the Environment agency level II and level I Bandar Lampung province once in 6 month. The report content is BOD measurements record in every month, stated in the certificate analysis of waste water by Health Polytechnic Laboratory of Health Ministry Tanjung Karang. The institution does not has accreditation from National Accreditation Committee KAN , but it is a referral laboratory from Governor Bandar Lampung Provincial Level. Land application of BOD monitoring records, is in the document management and report of environmental monitoring activities for oil and BOD parameter monitoring wells is not in the record. Where are reported to the agency every 3 months. BOD measurements record each month for the land application and for monitoring wells once in 6 months The company has appointed Sungai Budi Group in cooperation with the Institute of research and Bandar Lampung industry standardization, the employment contract letter No. 052 SBG I 2012 about cooperation sampling, laboratory analysis of wastewater tests. Where the Industrial Research and Standards Bandar Lampung has been accredited by the No. KAN. 2230 3.a2 LP 0512 Analysis of BOD measurements in monitoring wells was performed by the Laboratory in semester I not accredited yet, and plan of semester II October 29, 2012 will be measured by the Center for Industrial Research and of Bandar Lampung Industry standardization. No. 458BRS - W X 2012 SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 29 of 82 Records of water use monitoring for mill per tone of FFB can be seen on the monitoring of water debit is recorded daily and recording of monthly report recap is attached to the report of management activity and monitoring of environmental activity of the palm oil industry. Compliance Status : Full Compliance 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Documented IPM plan is available in the SOP of Pest management TBL-SPO-KKL-PHT , The IPM includes monitoring of bagworm, rat census, barn owl population census and planting of beneficial plants, Use of barn owl boxes, Tunera and Cassia and limited use of pesticides. Field inspections show extensive planting of Tuners and Cassia alongside most of the roads. Pest control is arranged refers to documented IPM program includes work program, schedule of IPM activity and IPM realization record. In TBL estate, controlling of pests such as fire caterpillars is conducted in April 2012. The report showed in 03 sample points are founded 600 caterpillars fire and the controlling with using chemicals called marshal. In SOP, there is no procedures of using marshall for fire caterpillars. Data showed in the monitoring map, There were fire caterpillar attacked in April 2012 which affected 323 Ha area for 43.928 trees by using 68.11 liters marshal. Pests Census are conducted in accordance with the annual budget and annual work program that has been compiled annually for pest control. Meanwhile, pest control in the SOP does not cover the control mechanics, biology and chemistry. There is no data found for records of training for personnel who handle IPM in TBL and BSA estate. There is no data found for records of monitoring pesticide toxicity unit LD50 material per tone of FFB or per hectare in the TBL and BSA estates. Compliance status: Minor NCR no. 2 4.6 Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorized as World Health Organization Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 30 of 82 The list of chemicals used such as Andal, Graso, DMA, and Meta prime is registered and in accordance with that permitted by the agency of Agriculture number 07 Permentan SR. 140 2 2007 terms and procedures for pesticide registration and regulation of agriculture minister number 42 Permentan SR. 14052007 the control of pesticides The records of using pesticide used is available. The records contains type and quantity of using pesticide, the extent of the application area and the number of applications per year. An example for controlling weeds is by using graso 0.6 liter mixed with 20 liters of water and then use for spraying for 2 ha within 6 months. Agrochemical usage instructions is found in the label and MSDS and is found appropriate with the species target and dose. There is no data found that organization has given the relevant training in handling chemicals for personnel on duty in the storage. As response to this, the company has conducted the training on October 3 rd , 2012, attending by participants from PT. TBL . The pesticide packaging waste is stored in temporary shelters warehouse of Hazardous material and company has a permit from the Department of Environmental, Government Central with no. 66035 KPTS - IPS - LB3 2010. For pesticide packaging waste is returned to the manufacturer of agrochemicals. The organization has reported the balance sheet waste of Hazard Toxic Material to the environment agencies and Lampung Province Level I in accordance with regulation PP 18 of 1999 section 11. Organization does not use the materials chemicals, which is categorized in type 1 A and 1 B WHO, but by using a chemical substance listed in the licensing ordinance of Agriculture Minister No.07 Permentan SR 14022007 Employees medical check up are carried out every 3 months by a physician of PT. Tunas Baru Lampung clinic for operators who affected directly from the work environment. The scope of the medical check up are includes pulmonary tuberculosis, cardiac, ENT, Eye, TB BB GO and blood pressure. Medical check up for thorax Rontgen and Chlorinnesterase analysis have been conducted by Prodia Laboratory on August, 2 nd 2012 . The data of medical check-up is available, contain of summary results of medical check-up applicators of pesticides, laboratory test results and manual inspection of medical check up. The company has the policy with Letter No. . 215 TBL EM I 2007 dated January 25 th , 2009 Records of sprayers women, stated that woman with pregnant or breastfeed condition is prohibited to do spraying with pesticides. SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 31 of 82 Compliance Status : Full Compliance 4.7 An occupational health and safety plan is documented, effectively communicated and implemented All companies being audited have established OHS Policy, which is part of other company’s policies. The company policy is set by the Head Office and signed by the President Director on 4 January 2008, and applicable to all the group’s companies. The OHS Policy has defined the key objectives of preventing accident and work-related disease. Unfortunately, when audited all the company’s sites do not have evidences that socialization has been conducted to employees, suppliers, and visitors. This is established as a nonconformity. With reference to criteria 4.7.1 above, the implications are that the Company has established P2K3 Team to comply with the provisions of the Regulation of the Minister of Manpower Permenaker No. 04MEN1987. With the establishment of P2K3 Team, Company has automatically appointed persons responsible in the safety program, where one of them is the P2K3 Secretary who must be certified Safety Expert. However, in all existing P2K3 Team the secretary has not received training and assignment as Safety Expert. In addition, the three Company’s sites, i.e. PT. TBL Estate Unit, PKS1 Unit and PT. BSA Unit, the P2K3 Team established has not conducted monthly routine meetings in accordance with the Minister of Manpower No. 1551984. The PT. BSA P2K3 Team has even not been approved by the Manpower Department. These three are established as a nonconformity. As specified in in the Collective Labour Agreement CLA Chapter VII, Article 20 on social security, Company includes any employee with the status of Permanent worker KT and Permanent day worker HT, to participate in the Worker’s Social Security. Program they are included in is Accident Compensation JK, Death Compensation JKM, and Old Age Pension JHT. For Casual worker BHL, only those persons working as a sprayer chemist, harvester, and fertilizer applicator, are included in Jamsostek JK and JKM programs. During the audit, there is evidence in the form of the Name List of Jamsostek Participant KT and HT. Their monthly pay check includes JK and JKM items paid by Company. For BHL workers the evidence of their participation is found on the List of Open Policy Participant whose premium is paid monthly. As for health insurance JPK, the tree Companies do not use the Jamsostek, but instead they provide themselves, among others by providing a clinic located in PT. TBL Terbanggi Besar. The costs of medication, either outpatient or hospitalization, can be claimed to and borne by SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 32 of 82 Company. Regular health examination either in TBL estate, PKS1 and BSA is carried out by dr. Hakikiyah, the doctor of the Clinic which is located in TBL Terbanggi. Routine examination is scheduled once a year for the PKS employees, except for boiler operator which is scheduled once every 6 months. For the estate ’s workers, all are scheduled every 6 months, for both Permanent worker KT, and Permanent day worker HT. Specific to Casual worker BHL, there is no routine health examination, despite the potential health hazards, such as sprayer personnel. But if the BHL is sick, they will be served by the clinic for examination and medication, at no charge. According to the provisions in the regulation, the sprayer personnel should get their cholinesterase concentration checked. In addition, even for KT and HT workers who get the examination, the laboratory aspect is not inclusive. Moreover, it is unclear whether the examiner doctor has been certified hiperkes as specified in regulations. All of these findings are issued as a nonconforming finding. Company has a facility of clinic led by a hiperkes certified doctor. In addition to health examination service according to the patient visit, the clinic conducts periodic health examination that can be handled. The clinic has obtained a permit from Health Department, issued in the name of Polyclinic Tunas Baru Lampung Terbanggi. All records of doctor examination are kept. For TBL and PKS1 Estate, Company has developed risk analysis of occupational health and safety for existing work processes in each company. For TBL Estate, the records of analysis results are contained in Hazard Identification, Risk Assessment and Control Form, which is prepared on 26 April 2012 by Safety Unit, and approved by the Estate Manager as Chairman of P2K3. For PKS1, risk analysis has also been recorded in the same forms. Risk analysis is carried out by Safety Coordinator and created as of 1 May 2012. As for the PT. BSA, the risk analysis has not been prepared. Another thing that is a drawback is that the risk analysis that has been prepared, both TBL Estate and PKS1, does not cover any of company’s existing processes and is not based on a structured preparation. These three things have been established as a nonconformity. Company maintains records of training conducted for the workers. All records are filed or kept by HRD Unit. Safety related training done includes: fire handling, fire simulation, boiler operations, pesticide handling, and safety norm socialization. Unfortunately, all companies do not have employee records by safety training they attended. In addition, employees assigned to handle safety are also not provided with safety-related training, the training is limited to fire handling training. This is issued as a nonconformity. SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 33 of 82 Emergency preparedness has been established as key P2K3 program in both PKS1 and TBL Estate. This commitment is demonstrated by forming an emergency response team, i.e.: 1. PKS1 has established the PBK Team Fire Hazard Response Team, the Emergency Response Team Structure was established on 1 July 2012 and approved by the Plant Manager. 2. TBL Estate has established the Fire Control Organization Structure and signed by the Estate Manager. 3. PT. BSA has established the Fire Organization Structure in 2012, signed by Ass. Project and acknowledged by Estate Manager. In addition to establishing an emergency response team, the Company has also issued procedures as a guide in handling emergencies occurred, i.e.: 1 SOP of Security and Fire Hazard Mitigation K3-PMKS-014, rev.0 which applies only in PKS1 and 2 SOP of Emergency Handling TBL-SOP-PSD-2012, which applies to all Estate under TBL Group. Both SOPs have identified any potential emergency that must be addressed, which include: fires and explosions, earthquakes, bomb threats, occupational accidents, riot civil commotion, robbery hold-up, a suspicious letter or package, and hazardous spills, post-emergency situations Company has provided provides training to emergency response team members which was provided by the Companys internal. Several types of training that have been attended, among others: training with the estate fire control team, emergency response, fire controlextinguishing, and security training. Equipment to face emergency conditions has also been prepared and placed in strategic places. In PKS1 there are 32 portable fire extinguishers and 7 points of hydrant. It is also equipped with bakortiba. As for the TBL and BSA Estate, emergency response equipment comprises the water tank and engine unit, communication radio, binoculars, and portable fire extinguisher; the office is also equipped with bakortiba – in the form of drums filled with sand, wet gunny. Periodic equipment inspections are conducted monthly for all equipment. In the TBL Estate there are fire monitoring tower at the site of Division II Block 59. Although the Company has attempted to prepare themselves to face emergency conditions, there are some deficiencies still found. During the audit, the following is still found: in PT. BSA there is no emergency preparedness and response procedure or SOP found, the existing SOP was limited to the fire potential only, not all of emergency response team members have received training, and no Company, neither the Estate nor PKS have done emergency simulations according to the existing potential. All of this has been issued as a nonconformity. Personal protective equipment PPE already available include: mask, helmet, ear muff or ear SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 34 of 82 plug, bootssafety shoes, safety gloves, safety glasses, welding goggles, and apron chest protection from heat. The provision of PPE depends on where workers work. For example, the pesticide sprayers are supplied with boots, masks, goggles, and rubber gloves, and are required to wear a shirt with long sleeves to protect from exposure to pesticides. The harvesters are supplied with boots, helmet, and fabric gloves. PKS workers, such as boiler operator, are provided with helmets, safety shoes, ear protectors and chest protector apron. However, when site visit was carried out, the wheelbarrowers are found not wearing boots. In PKS1 company checks the availability and fitness of PPE per month for each work area, and recorded on the form Personal Protective Equipment Examination, conducted by the foreman and acknowledged by the Chairman of P2K3Mill Manager. The company has provided First aid kit in the workplace. First aid kit for the Estate, TBL and BSA, are provided in each Estate office and each foreman also bring First aid kit to the workplaces in the estate. As for the PKS1, First aid kit is placed in the office, cap stand, screw press, clarification, kernel plant, boiler station, engine room, scoda and turbines, factory post, spare part warehouse and oil warehouse Hazardous waste temporary storage area. In addition, the Company has a clinic attended by a doctor and a paramedic. The clinic is already obtaining approval from the Head of Manpower and Transmigration Department of Lampung Province No. Kep. 5664257III.502PPKKIX2011, on Certification of Company Occupational Health Services Operation PPKK of PT. Tunas Baru, Central Lampung, Lampung Regency dated 6 September 2011. Related to compliance with health and safety equipment, some deficiencies are still found. During the audit, there are findings, among others, the clinic does not have an ambulance, the tension meter is not calibrated, paramedic has not been hiperkes certified, number and contents of first aid kit have not been according to the provisions of the Regulation of the Minister of Manpower, and a worker was found not using boots PPE. All of this is established as a nonconformity finding. All companies, PKS1, TBL Estate and BSA Estate, do not have field first aiders who have received training. There is no a special designation of field first aiders yet. Even the foreman did not bring first aid equipment in their workplace and this is established as a nonconformity. Company maintains records of work accident which is carried out by the HRD function. The Company has established procedures regulating how to handle, investigate, and report accidents and take corrective and preventive measures, i.e. the Work Accident Mitigation and Settlement Procedures POS-first-aid-03-TBL, which is effective on 17 February 2010. Accident SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 35 of 82 insurance claim follows the format of KK2 jamsostek, and other formats. If there are accidents, the following will be produced: the Certificate contains the chronology only, and Work Accidents Minutes contains the chronology only. But, both have not conducted the investigation of the accident to ascertain the cause, establish correctivepreventive action, and the appointment of the person in charge of such repairs according to the schedule. This is established as a nonconformity finding. Compliance Status : Minor, see NCR no. 02, 03, 04 4.8 All staff, workers, smallholders and contractors are appropriately trained. The company, for BSA Estate, has no SOP for organizing training. All trainings attended are only at the invitation from the Head Office. There is no developed training program. Both are established as the findings see No. NCR. 40. The training for harvesters, sprayers is just in the form of a briefing of the foreman and field assistant, but there is no documented evidence, so that the records of training attended also does not exist. This is established as a nonconformity. PKS1 and TBL Estate have established Employee Training SOP 19TBL-SOP-PKS-PK. There is a training program contained in PKS-IPP-001 form, approved by the Manager. The appointment of candidate participant is discussed first in a meeting by the management. When the meeting is over the minutes is made, and a Program is developed. The existing programs are mostly an internal training including from the Head Office. Some form of training ever followed by employees, among others: - fire handlingcontrol training, - safety norms socialization - operation of the boiler machine - security guard training - RSPO and ISO socialization - environmental training on waste - candidate safety expert training - handling of production machines With respect to the use of contractor services, all the companies, PKS1, TBL Estate, and BSA, do not have a List of Selected Supplier which shows that they use trained contractors. This is established as a nonconformity finding. SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 36 of 82 Compliance Status : Minor, see NCR no. 05 5 ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY

5.1 Aspects of estate and mill management, including replanting, that have

environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate The document of impact assessment of palm oil milling operations is the UKL UPL with the approval of No. 66016. 1 P-DOK - REV D.5 IV 2008 where every 3 years its approval should be extended. In this case, to date the organization has not yet extended its approval. Impact assessment documents for the activities of palm oil estate with the approval of the EIA document No. 66021 P.DOK LTD 4 IX 2004 with business activity of industry of palm oil fruit processing into CPO. The document has been extended with the evidence of a letter from BLH of Central Lampung Regency on recommended revision of UKL UPL No. 66020 R - Rev.UKL-UPL LTD.8 2012 and evidence that UKL UPL documents exist. Organizations have to manage the environment on the activities of palm oil mill which consists of the management of air quality, dust and noise, solid waste management, liquid waste management, management of hazardous and toxic waste B3. Management is in accordance with the environmental document UKL UPL where in every 6 months made report of management and environmental monitoring, reported to the office environment level II Central Lampung and level I Bandar Lampung Province. The records of environmental management of the estate activities comprise water environmental management ground water and surface water, air environmental management, hazardous waste management, conservation of vegetation and flora and fauna where the environmental management of palm oil estate activities conform to the EIA document where every 3 months the record report of environmental management and monitoring implementaion is made. The organization has revised the UKL UPL document of palm oil mills in 2005 into UKL UPL 2008 due to changes in CPO production capacity from 54,000 tons per year to 165,600 tons per year. For Amdal document of the activities in palm oil estate nothing is changed. SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 37 of 82 Compliance status: Full Compliance 5.2 The status of rare, threatened or endangered species and high conservation value habitats, if any, that exist in the estate or that could be affected by estate or mill management, shall be identified and their conservation taken into account in management plans and operations The Company has identified protected species in analysis book form and identification the presence of high conservation value HCV both in the estates area PT. Tunas Baru Lampung and PT. Bumi Sentosa Abadi. In TBL estates have created programs and procedures for handling RZ riparian zone. Based on the identification of the HCV assessor from Institute Agriculture Bogor, RZ contained in PT. TBL is categorized of HCV 4.1. The work program has been created in the form of tables which is done on each type of activity. Types of protected flora and fauna are protected in PT. TBL is Pulai, ground orchid CITES Appendix II, kuwuk cat, civet CITES Appendix III and black eagle. Compliance status: Full Compliance 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner List of Identification of aspects and impacts, and control has been created and evidence of field implementation for PT. TBL palm oil mills and palm oil estate has been in compliance. Waste management plan is documented and implemented based on identification to avoid and reduce pollution has existed, one of them is the monitoring report of palm oil mill waste water utilization implementation in PT. Tunas Baru Lampung palm oil estate . Hazardous waste management, the used oil generated is collected in a storage tank drums and then placed in hazardous waste temporary storage TPS. The hazardous waste TPS should have a prior permit from the relevant agency as stipulated in Law no. 322009 and the Regulation of the Minister of Environment no. 182009, Government Regulation No. 181999. And then the hazardous waste in TPS is handed over to the company collecting hazardous waste PT Karya Gemilang Bersama which has obtained a license from the Ministry of Environment. Then the organization received the manifest for hazardous waste that has been delivered to the waste management site. The organization is required to submit the balance sheet of hazardous waste with the manifest. The organization has regulated its operations in SOP of CPO Waste Management. SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 38 of 82 Hazardous waste from palm oil activities i.e. used oil and used pesticide packaging are managed by storing them in hazardous waste temporary storage, and then used pesticide packaging is returned to the pesticide producers in accordance with the Joint Decree between the company and the provider of materials that the packaging can be sent back to the producers. Waste of used oil is combined and sent to the head office and handed to hazardous waste collector company PT Karya Gemilang Bersama. The organization makes a report of the combined hazardous waste and submitted to the environmental agency of level II and level I of Bandar Lampung Province. Record of monitoringanalysis of waste from palm oil mill activities is contained in the certificate of analysis of Laboratorium Politeknik Kesehatan Kemenkes Tanjung Karang for wastewater quality and the Bandar Lampung Center for Industrial Research and Standardization for air quality, where the certificate is attached to the report of environmental management and monitoring of palm oil industrial activity. Compliance status: Full Compliance 5.4 Efficiency of energy use and use of renewable energy is maximized Use of solid waste from palm oil activities of PT. Tunas Baru Lampung like shells, fibers, originating from the treshing, burned as boiler fuel, where its efficiency to produce 1 ton of CPO will require mixed fuel of 90 kg fiber and 20 kg shell with the energy generated of 342.000 calories. The use of solid waste is recorded in the report of environmental management and monitoring of palm oil mill activities. The operation of 450 KVA generor requires diesel fuel consumption where the average use is around 85 liters per hour. For boiler activity with CPO product of 1 ton per hour requires 34 liters of diesel fuel with energy generated of 340.000 calories. The record of diesel fuel use per day is recapitulated in a month. Compliance status: Full Compliance 5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice. Fire is not used for any land preparation or for replanting. Recent planting shows that no burning carried out. The company has procedures in place to assist in the event of fire in the field Fire SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 39 of 82 fighter team and facilities in supporting the operation. Field visit, interview with workers, stakeholders, SOP’s and manager interviews confirm that the previous crop is felled down, chipped, shredded and spread. No evidence of burning anywhere on any operating units. Compliance Status: Full Compliance 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented, and monitored. There is no evidence of identification of pollution and emissions sources in palm oil mill from the stationary source emissions activity of generators and boilers, and for mobile source emissions is derived from transportation cars. There has been a list identifying pollution sources and emissions of PT. TBL palm oil mill and has been implemented in the field Emission air quality measurements are performed on the stack of generator, boiler 1 and boiler 2. The results of measurements taken by the Poleteknik Kesehatan Kemenkes Tanjung Karang, environmental health department, at the measurement point indicates that the quality of emission air of boiler and generator stacks are still below the threshold limit of quality standards specified in the regulation of the State Minister of Environment No. 072007 regarding quality standards of emission from stationary sources for boiler palm fibershell fired and the regulation of the State Minister of Environment No. 212008 on emission quality standards for thermal power plant business andor activity. The monitoring of the quality of emissions from sources of pollution and emissions were recorded in the certificate of analysis of exhaust gas emissions from generators and boilers. Measurement is conducted every 6 months and reported to the Environmental Agency of level II and level I of Bandar Lampung every 6 months. List of record of effort and plan to reduce pollution and emissions in the future, but instead there is improvement in the management of palm oil mill activities that reduce pollution and emissions from activities of combustion of bunches that are not used again for buming on the stove but bunches are buried at palm oil mill to enrich the soil. The reduction of pollution of exhaust gas emissions also comes from the management of the Boiler stacks where the stack is equipped with schubber so that the quality of the measurement of dust of exhaust gas emission is below the quality standard. SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 40 of 82 There has been a list of efforts and plans to reduce pollution and emissions that have been done by the TBL palm oil mill and the implementation in the field has been seen. Records identifying the liquid waste in the form of waste water of CPO management at the outlet of WWTP is recorded on the implementation report of environmental management and monitoring of palm oil mill activities, while the current monitoring of semester 2 of 2011 water discharges from the WWTP outlet sampling conducted once every month and every 6 months reported. For POME treatment methods sampling done instantaneously or grap sampling method as for laboratory analysis by the parameters contained in the certificate of analysis WWTP effluent let out. Compliance status: Full Compliance 6 RESPONSIBLE CONSIDERATION OF EMPLOYEES AND OF INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS

6.1 Aspects of estate and mill management that have social impacts are identified

in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement The company has set up the CSR program base on the result of Social Impact Assesmen that has been done by Department of Forestry, Institute of Agriculture Bogor. The SIA scope including estate and factory at Tunas Baru Lampung. The program is covered education, healthcare, infrastructure, transportation, culturereligion funds, sport and economic empower for surrounding community. According to public consultation, there are several positive impact due to the company activities such as improving transportation and funds for religion activities. Otherwise, negative impacts included decreasing of water resource at communities’ area as impact of ddevelopment of deep well in the estates. The company responds the community complained by sending the water tank regularly to the certain area There is no yet evaluation mechanism to ensure the CSR program is implemented accordinglyeffectively. The company is required to set up the SOPmechanism to ensure the CSR program has been implemented effectively. Compliance status: Minor, see NCR no. 01 6.2 There are open and transparent methods for communication and consultation SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 41 of 82 between growers andor mills, local communities and other affected or interested parties There is a procedure to ensure the communication system between company and local community TBL-SOP-KMS. Every meeting with local community has been recorded in the Communication form. If there is an agreement made at the meeting, the minutes should be signed among the participant affected and the relevant copy will be kept by each party. All the communication regarding suggestion and complaining has been recorded in the form TBL-RKM and updated every month. The authorized person for communication has been appointed per location. At Head office Lampung, the personel who responsible for all information request will be handled by Secretary for General Manager and Human Resources Officer. Compliance status: Full compliance 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties The stakeholders meeting and interview confirmed that company has tried and has been developed the good communication and transparent methods with local community. Sample taken from the meeting between company and local community from Desa Terbanggi Besar. The meeting was held regarding the complain for mills pollution waste and noise pollution. The minutes has been signed by each party for the next action to be made by the company to solve that complain. The related SOP has been revised and ensure the transparancy, effectif and properly. Compliance status: Full Compliance 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stake holders to express their views through their own representative institutions In the existing procedure Conflict between community and company, there is no phase for the identification and calculation of fair compensation for the loss of legal right, with the involvement of local community representatives and relevant agencies. The process of previous compensation payment does not involve the village chief of the area neighborhood customary SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 42 of 82 leaders only During follow up audit, Company has revised the relevant procedure TBL-SOP-PK by completing the stages for the identification and calculation of compensation for the loss of legal right, with the involvement of local community representatives and relevant agencies. Compliance status: Full Compliance 6.5 Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages The company has a basic remuneration as set out in the document of Collective Labour Agreement CLA Chapter VI on Overtime and Wage Determination, Article 15 to 19. The company has wage payment standard documentation as of 13 June 2011, in a document of Sungai Budi Group Salary Standard for Estate Division 2011. The details are as follows: A. Managerial Level: Group consists of: Foreman, Field Assistant, Chief Assistant, and Manager, with Grade 1-3 for each group. B. Executing level: Group consists of: Administration, Head of Administration, Cashier, Warehouse, Workshop, and Vehicles, with Grade 1-3 for each group. As for the lower levels such as harvesters, sprayers are not regulated. In determining the minimum wage, the Company has made reference to the Decree of the Governor of Lampung No. G67III.05HK2012 dated 31 January 2012, on the Stipulation of Regency Minimum Wage UMK of Central Lampung 2012. The decree stipulates that the UMK of Central Lampung Regency is Rp. 982.000, - per month. This provision is only to permanent workers category of both the managerial and executing employees. The Company has met the provisions of UMK value. This is evident from the record of receipts of the salary payment of PT. TBL Division III Permanent Day Employee in March 2012, and the PT. BSA’s Recapitulation of Permanent Casual worker Wage in April 2012. They received Rp. 982 000, - for a permanent worker or at a minimum the permanent day employee. They also get a rice allowance, as specified in the CBA, Article 19, paragraph 3. The company also employs Casual workers BHL. They were recruited by the contractor. Thus, the employment agreement is signed by the Company and the contractor, or Foreman, or Contractor. The foreman is responsible for the recruitment of casual workers. But in wages, it has been in conformity with the UMK provisions. They are paid Rp. 39 300, - per day or Rp. 982 SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 43 of 82 000, - per month. The company already requires the Contractor as set out in the contract. The company has a Collective Labour Agreement CLA between PT. Sungai Budi Group and Trade Unions PUK.SP.RTMM.SPSI of PT. Sungai Budi Group, which has been registered in the Office of Manpower and Transmigration of Lampung Province, by Decree No.. KEP- 188.43054III.05032010 dated 29 October 2010, and is valid until 29 October 2012. PT. TBL Estate, PKS1 and PT. BSA as the subsidiary of Sungai Budi Group are subject to this Agreement. Employee accommodation facilities provided by the company is not as a housing yet. This is stipulated in Article 19 of the CLA on Allowances. Paragraph 1 says: The company has not provided a housing allowance for monthly, daily, and contract workers, and does not provide compensation but only provide an accomodation which location is to be regulated and based on the consideration of the Company. The mess is provided with facilities and infrastructure. The mess is provided for PKS1 and TBL Estate employees. The following is an example of mess and support facilities provided by the Company: List of Facilities in PKS1 and TBL estate, May 2012. No Type of Facility Total 1. Mess 30 Unit 95 pintu 2. Canteen 1 unit 3. Mosque 1 Unit 4. Meeting Hall 1 Unit 5. Polyclinic 1 Unit The total mess provided does not accommodate all employees. However, the location of Company and the Estate is easy to reach, as it is located on the side of national roads and provincial roads, so that the mess facility is only an option to the workers. Most employees chose to reside in the population residential and to socialize. The company has documented contracts with the Contractor. The company has designed a standard format of co ntract documents. For PKS1, they already include the contractor’s obligation to comply with the provisions of manpower regulations. But for the TBL Estate and BSA such requirements have not been listed. In sample contract no. 01PKKTBLPERKI2012 and contract no. 19SBGKPUTBLX2010 this has been established as a nonconformity finding. Compliance status: Full Compliance SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 44 of 82

6.6 The employer respects the right of all personnel to form and join trade unions

of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel The company has a policy to give freedom to join trade unions. This is listed in Article 4, 5, and 7 of the CLA document. Article 4, paragraph 1 and 2 states that Employer recognizes that the organizations of Trade Union of F.SP.RTMM.SPSI PT. Sungai Budi Group is a legalrecognized workers organization and bipartite cooperation institution. In paragraph 3 and 4 it is stated that the Employer and Unions will not interfere or obstruct each other with respect to their respective policies or activities, as long as it is not contrary to the laws and regulations and the course of the Company. In line with this recognition, and to facilitate and make negotiations that may occur easier, then at each unit – Estate and PKS, the leadership of PUK.SP.RTMM.SPSI SPSI PT Tunas Baru Lampung is established, which also serves as a bipartite cooperation institution. There is evidence of an internal meeting of PT. TBL union officials. As stated on the minutes of meetings dated 14 June 2011 and 6 December 2010 the meetings are to discuss the agenda of Socialization of CLA 2010-2012. The record of the meeting is provided with a list of members and officials present. Compliance status: Full Compliance 6.7 Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programs. Children are not exposed to hazardous working conditions The Company has a policy governing the minimum age of workers i.e. not less than 18 years. This is stated in Article 11 paragraph 4 of CLA. But in these paragraph children of 15 years is waived to do light work as long as obtaining written permission from the parentguardian, as provided for in Article 69 of Law No. 132003. As evidence of the implementation of this policy, it can be seen that in the list of the company employees and based on information from employees, there are no workers under the age of 18 years, for both permanent and casual workers. Another evidence was the announcement of Job Vacancy announced in March 2012 set out the requirements that applicants must be over the SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 45 of 82 age of 17 years. At the time of the visit to the work areas, the auditors did not find children in the estate or other areas. Compliance status: Full Compliance 6.8 Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited The Company has and already set the Nondiscriminatory Policy, which is part of the Company’s policies. The policy was signed by the President Director on 4 January 2008. The policy states that Tunas Baru Lampung Group is committed, prohibits discrimination and conduct that can lead to discrimination. The policy is shown in the form of equal opportunity for all employees and workers as stated in Article 10 of CLA concerning Employee Recruitment, where the requirements do not mention gender, ethnicity, or religion. Evidence of implementation is seen in the data of manpower composition which consists of a diversity of ethnic, religion, worker place of origin, and workers gender of male and female. It can be seen from the Company Report in October 2011. The following tables also show the number or percentage of workforce viewed from various aspects that show non-discrimination. Number of Workers based on Gender Business unit Employee Male Female Total PKS1 TBL 295 91.6 27 8,4 322 100 TBL estate 117 84,2 22 15,8 139 100 BSA estate NA NA NA Number of Workers by Religion, Ethnic Group, and Origin