Audit Team Findings in Correlation to the Rules Partial Certifications

SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 8of 106

A. 5. 1. Audit Again the Rules for Partial Certification 1. Introduction

The audit team has visited Head office at Sinarmas Land Plaza, Tower 2, 30 th Floor, Jalan M. H. Thamrin No. 51, Jakarta, Indonesia to find out the compliance with the rules for partial certification standard in the whole group of PT Sinar Mas Agro Resources and Technology, Tbk SMART. There are 14 mills, 40 own estates and 14 plasma associated smallholders within this group. The team found a major and a minor non conformity refer to the RSPO requirements for partial certification as stated in the final RSPO certification Systems documents, June 2007, section 4.2.4 as describe below : 2. Assessment agenda partial Certification Audit

3. Audit Team Findings in Correlation to the Rules Partial Certifications

a. The Organization is a member of RSPO PT Kresna Duta Agroindo has confirmed membership of the RSPO under PT SMART Tbk. with no.1-0019-05-000-00 b. A Time Bound Plan for achieving certification within relevant entities No Name of Mill Supply Base Company Location Estimate time of Certifica tion 1 Padang Halaban Mill Padang Halaban Estate Pernantian Estate Adipati Estate Kanopan Ulu Estate PT. SMART TBK North Sumatera 2011 2 Batu Ampar Mill Batu Ampar Estate Batu Mulia Estate Sungai Panci Estate Sungai Panci KKPA PT. SMART TBK South Kalimantan 2012 3 Tanah Laut Mill Tanah Laut Estate Kintapura Estate PT. SMART TBK South Kalimantan 2012 4 Langga Payung Mill Langga Payung Estate Paya Baung Estate Normak Estate PT. Tapian Nadenggan North Sumatera 2012 Date Location Agenda 19November 2013 BangkoEstate Verifying legal documents, meeting with Human resources department for Labor Union and workers information SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 9of 106 5 Hanau Mill Hanau Estate Tasik Mas Estate Tanjung Paring Estate Langadang Estate Medang Sari Estate PT. Tapian Nadenggan PT. Satya Kisma Usaha Central Kalimantan 2012 2015 6 Leidong West Mill Leidong West Utara Estate Leidong West Selatan Estate Bukit Intan Estate Bukit Mas Estate PT. Leidong West Indonesia Bangka 2013 7 Semilar Mill Semilar Estate Sei Rindu Estate Mandang Estate Puri Estate PT. Tapian Nadenggan Central Kalimantan 2013 8 Jak Luay Mill Pantun Mas Estate Pantun Mas KKPA Jak Luay Estate Jak Luay KKP Long Buluh Estate Bukit Subur Estate Bukit Subur KKPA PT. Tapian Nadenggan East Kalimantan 2014 9 Gunung Kombeng MillMuara Wahau Mill Gunung Kombeng Estate Gunung Kombeng KKPA Muara Wahau Estate Rantau Panjang Estate Rantau Panjang KKPA PT. Kresna Duta Agroindo East Kalimantan 2014 10 Jelatang Mill Bangko Inti Estate Tiga Serumpun KKPA Pamenang Plasma Bukit Bungkul KKPA PT. Kresna Duta Agroindo Jambi 2014 2014 2015 2015 11 Pelakar Mill Pelakar Estate Tiga Serumpun KKPA Batang Merangin Estate Batang Tembesi Estate Kubang Ujo Plasma PT. Kresna Duta Agroindo Jambi 2014 2014 2014 2014 2015 12 Langling Mill Bangko Inti Estate Bangko Plasma Bukit Bungkul KKPA Pamenang Plasma Batang Gading Estate Batang Gading KKPA PT. Kresna Duta Agroindo PT. Satya Kisma Usaha Jambi 2014 2015 2015 2015 2015 2015 13 Sungai Bengkal Mill Sungai Bengkal Estate Sungai Bengkal KKPA Kilis Estate Kilis KKPA PT. Satya Kisma Usaha Jambi 2014 SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 10of 106 14 Bukit Kapur Mill Sungai Cantung Estate Bukit Kapur Estae PT. SMART TBK South Kalimantan 2015 The raw material for POM PT. Kresna Duta Agroindo KDA – Jelatang Mill is supplied from the FFB which are; one 1 Own estate – Bangko Estate division 4; and 3 three Plasma Associated Smallholders; 1. Tiga Serumpun KKPA 2. Pamenang Plasma; 3. Bukit Bungkul KKPA; and from associated smallholders. The application of Certification audit was Jelatang Mill and Bangko Estate Division 4 as a supply base. Team has been verified documents during partial certification audit. The company has conducted Gap analysis to the whole group compare to P C RSPO requirement. The Gap Analysis conducted by other Certification Body. Randomly, the team checked the content of reports to ensure the fulfillment of partial certification. From the sampling report, the team found that not all report has the conclusion for the fulfillment regards to partial certification requirement. The company has made the self declaration for partial certification rule and signed by management. The self declaration stated as belows a-d : a. Significant Conflicts The company has the SOP for Conlict Land Resolution refers to RSPO criteria 6.4, 7.5 and 7.6. All the conflicts so far has been resolved with mutual agreement. GAR also registerd as member of RSPO Dispute Settlement Facility Advisory Group as a representative of grower. Supporting document is DSF RSPO member as a grower dated 22 April 2013. b. No replacement of primary forest and or area with HCV’s since November 2005 or year 2007 National Interpretation PT SMART Tbk has conducted Historical HCV Assesment HHA in collaboration with Faculty of Forestry, Institut Pertanian Bogor IPB April 2011. Historical HCV Assesment HHA Report has been submitted to RSPO on May 2011. As a follow up from the Historical HCV Assesment HHA Report, GAR has been proposed HCV Remediation Plan to RSPO. Revisions of HCV Remediation Plan are on going process discussion with RSPO Biosdiversity and HCV Working Group BHCV WG. Supporting documents is Historical HCV Assesment HHA report. c. No labor disputes that are not being resolved through an agreed The company has the SOP and menchanism to resolve dispute with union labour with mutually agreement. The last data shows that there was a labor dispute in Jambi in 2012. The dispute has been resolved by related parties and has been final through Jambi Industrial Relation Court. There is the Decision of the Supreme Court of the Republic of Indonesia No. 1007 KPdt.Sus2010 related to the case of the industrial relation dispute. d. No evidence of non-compliance with law in any of the non-certified holdings There are no land dispute or court cases. The last case was in 2012 relating to the PT SMART Tbk land located in North Sumatera. The people occupied land under the company’s HGU and the case was won by the company. SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 11of 106 A.6. Date Certificate Issued and Scope of Certificate Name of Client PT KRESNA DUTA AGROINDO Client Number RSPO 00005 Certificate Number RSPO 00005 Certification Decision Date Issued by PT SUCOFINDO, SBU SICS Address Graha Sucofindo, SBU SICS. Jl Raya Pasar Minggu Kav 34 Jakarta 13640 Telephone Fax Tel.: +62-21-7983666 Fax.: +62-21-7987015 Email tutisucofindo.co.id Website www.sucofindo.co.id Scope : Mill Jelatang Mill Estate Bangko Estate Projected mass balance CPO PK CPO : 28,646.90 MT and PK : 6,151.19 MT Certification Registration Code SICS-00003 Type of Certification Single site Certifier TriyanAidilfitri Signed SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 12of 106

B. Assessment Process