RAISING THE BAR

Occupational Safety and Health Policy.

As encaps ulated in the Group’s Occupational Safety and Health (“OSH”) Policy, the Group is fully commited to ensure the safety, health and well-being of its employes and to protect them against risks. Having taken the road to sustainability, OSH is an integral part of the Group’s CSR programme and a key element in attaining RSPO certification . As an indication of its growing importance, the anual alocation for promoting OSH in the workplace has been steadily provided over the years.

Our objective is not only to comply with the statutory requirements but to inculcate a culture within the Group whereby OSH becomes ingrained as a way of life in the work-place. The seeds for a nascent OSH culture have already been sown, but they need to be continually nurtured before coming to full bloom. This calls for the full commitment of staff across all levels, with the top management leading by example.

OSH Performance.

As borne out by the numbers, financial year 2010 was a commendable year on the OSH front. The OSH Compliance Project was launched in July 2009 to gauge the level of OSH compliance among operating units. From a level of 57.85% achieved during the first audit conducted in October 2009, the level of compliance rose to 90.90% at the end of December 2010. It is expected that all the selected operating units will be fully compliant by early 2011.

The Group continued to register a yearon- year improvement in its safety record measured in terms of the number of accident cases, number of work days lost, cases for every 1,000 workers and fatal cases reported. The number of accident cases in 2010 has fallen to 31, compared to 39 reported in 2009. More importantly, we have reduced the number of fatalities to zero, from 2 reported in the previous year.

Programmes and Activities.

Safety audits were conducted throughout the year by TPB’s Safety and Health Officer as well as the Department of Occupational Safety and Health (“DOSH”). No major issues were reported by the DOSH audits, whose findings also indicate that all the operating units had met the minimum OSH requirements stipulated under the OSH Compliance Project. Other programmes rolled out during the year included a Health and Safety Campaign in the Northern Peninsular Region. The campaign was held on 23 March and invited guests included representatives from the relevant government departments. Among the activities were a safety talk by the Director of DOSH, Kelantan; a blood donation drive; health and dental checkups and demonstrations on fire-fighting and how to administer cardiopulmonary resuscitation.

Going Forward.

While our OSH per formance in 2010 has been generally satisfactory, we cannot afford to rest on our laurels, not when the stakes are so high. The Group will continue to pursue a zero tolerance stance as far as safety is concerned. Phase 2 of the OSH Compliance Project will be launched in 2011, with an emphasis on health, welfare and environmental matters. The Group will continue to invest in OSH not only because it makes good business sense, but by doing so, we are protecting the well-being of our greatest asset – our human capital.

THE QUEST FOR QUALITY

Quality is one of the key ingredients to the Group’s success and will continue to play a pivotal role as we strive to bring the Group to even greater heights. Spear-headed by the Total Quality Environmental Management Strategic Business Unit (“TQEM-SBU”), our quest for quality excellence is never-ending. Each year we set new targets and strive for continual improvements in all aspects of our operations, laying the foundations for a quality mind-set and culture among our people.

Quality Audits.

To reinforce the quality culture, TQEM-SBU began implementing quality audits during the year under review. These audits have a two-fold objective; the first is to facilitate an independent inspection on harvesting activities and milling operations to determine if they meet quality standards. The other objective is to ensure adherence to the Basic Policy Guidelines by the respective operating units (“OPUs”). Performance that fails to meet quality requirements can be identified and recommendations can be relayed to the OPUs concerned so that remedial action can be taken. During the year, TQEM-SBU focused its attention on the Kuching and Mukah districts, conducting audits in eight OPUs.

Improved Extraction Rates.

In our quality initiatives, one of our most important goals is the improvement of the oil extraction rate (“OER”) and kernel extraction rate (“KER”) achieved by the Group’s eight palm oil mills. During the year under review, the OER and KER had improved to 21.54% and 5.35% respectively as compared to 21.20% and 5.31% recorded in 2009. Five mills achieved an average OER that was above 21.00% in 2010, from only four in 2009. These achievements also underscore the important role played by the Joint Consultative Committees (“JCC”). The JCC is composed of estate and mill personnel and was set up in 2007 as a quality improvement initiative. The 12 JCCs that have been established provide a useful function in identifying problems, recommending solutions, resolving conf l ict s and sharing information with other JCC teams.

Quality Day.

A regular feature on TPB’s corporate calendar, Quality Day serves as a useful platform for JCC teams to challenge the status quo and to map out n ew strategies for continual improvements, the objective being to reduce costs, while increasing productivity and revenue for the Group. During the year, the Sibu, Southern Peninsular, Miri and Northern Peninsular Regions have held their Quality Day. For the Sabah/Lawas and Kuching regions, the events are scheduled in 2011.

ISO and RSPO Certification.

Established by the International Organisation for Standardisation, the ISO 9000 family of standards is an internationally recognised standard for a quality management system. Accreditation to ISO is a stringent process involving many steps. During the year, the Sg. Kachur Palm Oil Mill and the Ulu Sebol Palm Oil Mill earned their certifications to ISO 9001:2008 on 16 July and 6 September 2010 respectively. Our journey towards quality excellence does not end here. With most of the good practices in place, the Group has set its sights on implementing a Total Quality Management System. In the present world of increasing environmental and social consciousness, there is growing concern that products are produced without undue harm to the environment or society. RSPO certification is a seal of approval allaying such fears, taking into account not only good agricultural practices but also responsible social and environmental management. Having completed the earlier preparation, a meeting with stakeholders was convened on 11 November 2010 as required by the RSPO Principles and Criteria.