ANNUAL REPORT 2022

ABOUT THE COVER

The cover depicts well-located quality
properties that stand for synergy, progress
and resilience. UOA REIT's business
approach is defined by our corporate
philosophy of building excellence, as well as
our commitment to ensuring the long-term
sustainability of our business.
 ANNUAL REPORT 2022 1

CONTENTS

UOA Corporate Tower Wisma UOA Damansara II UOA II Menara UOA Bangsar

02 26 48 102
Glossary Sustainability Additional Analysis of
Statement Compliance Unitholdings
Information
03
Corporate
37 104
Information Statement of
48 Thirty (30) Largest
Corporate Directors of Unitholders
Governance The Manager's
04 Responsibility
Statement 106
Profile of Directors 42
of the Manager Notice of Annual
Audit & Risk
Management 49 General Meeting
07 Committee Report Financial
Management Statements Enclosed
Discussion and
Analysis
45 Proxy Form

Statement on Risk
Management and
Internal Control
2 UOA REIT

GLOSSARY

Manager Trustee
UOA Asset Management Sdn Bhd RHB Trustees Berhad
200501015592 (692639-U) 200201005356 (573019-U)

Parcel B – Menara UOA Bangsar Unitholders

Consisting of a tower block, namely Tower B Unitholders of UOA REIT
comprising 15 levels of office space, 3 levels of
retail podium, 6 levels of elevated car park and 4 UOA Ltd Group
levels of basement car park (which form part of a United Overseas Australia Ltd
development known as Menara UOA Bangsar) (ACN009245890) and its subsidiaries

Properties UOA Holdings Group

Wisma UOA Damansara II, UOA Corporate Tower, UOA Holdings Sdn Bhd
Parcel B – Menara UOA Bangsar and the parcels 198901012937 (190246-V) and its subsidiaries
within UOA Centre, UOA II and UOA Damansara
UOA REIT/The Trust
Property Manager UOA Real Estate Investment Trust
Jordan Lee & Jaafar Sdn Bhd
198001006117 (59901-U)

UOA Damansara & Wisma UOA Damansara II

 ANNUAL REPORT 2022 3

CORPORATE
INFORMATION
MANAGER PROPERTY MANAGER
UOA Asset Management Sdn Bhd Jordan Lee & Jaafar Sdn Bhd
200501015592 (692639-U) 198001006117 (59901-U)
Suite 1.1, Level 1, Block C
PRINCIPAL PLACE OF Plaza Damansara
BUSINESS OF THE MANAGER 45, Jalan Medan Setia 1
UOA Corporate Tower Bukit Damansara
Lobby A, Avenue 10, The Vertical 50490 Kuala Lumpur, Malaysia
Bangsar South City Telephone : +603 2095 5811
No. 8, Jalan Kerinchi Facsimile : +603 2095 5843
59200 Kuala Lumpur, Malaysia
Telephone : +603 2245 9188 REGISTRAR OF THE TRUST IN
Facsimile : +603 2241 4862 CHARGE OF THE REGISTER OF
UNITHOLDERS
REGISTERED ADDRESS OF Tricor Investor & Issuing House Services Sdn Bhd
THE MANAGER 198401005881 (118401-V)
No. 9, Jalan Indah 16 Unit 32-01, Level 32, Tower A
Taman Cheras Indah Vertical Business Suite, Avenue 3
56100 Kuala Lumpur, Malaysia Bangsar South City
Telephone : +603 9287 1000 No. 8, Jalan Kerinchi
Facsimile : +603 9287 2000 59200 Kuala Lumpur, Malaysia
Telephone : +603 2783 9299
BOARD OF DIRECTORS OF Facsimile : +603 2783 9222
THE MANAGER
AUDITORS
Dato’ Gan Boon Khuay (Chairman)
Kong Sze Choon (Chief Executive Officer) Grant Thornton Malaysia PLT
Kung Beng Hong (201906003682 & LLP0022494-LCA)
Yap Kang Beng Chartered Accountants (AF 0737)
Karn Sau Meng Level 11, Sheraton Imperial Court
Jalan Sultan Ismail
AUDIT AND RISK 50250 Kuala Lumpur, Malaysia
MANAGEMENT COMMITTEE Telephone : +603 2692 4022
Facsimile : +603 2732 5119
Kung Beng Hong (Chairman)
Yap Kang Beng
BANKERS
Karn Sau Meng
CIMB Bank Berhad
COMPANY SECRETARIES OF THE AmBank Islamic Berhad
MANAGER United Overseas Bank (Malaysia) Berhad
HSBC Bank Malaysia Berhad
Yap Kai Weng (MAICSA No.: 74580)
HSBC Amanah Malaysia Berhad
Wong Yoke Leng (MAICSA No.: 7032314)
Hong Leong Bank Berhad
MANAGEMENT TEAM OF THE
STOCK EXCHANGE LISTING
MANAGER
Bursa Malaysia Securities Berhad
Kong Sze Choon (Chief Executive
Stock Code: UOA REIT 5110
Officer/Executive Director)
Liao Wan Xin (Accountant)
WEBSITE
Fam Chai Hing (Compliance Officer)
www.uoareit.com.my
TRUSTEE
INVESTOR RELATIONS
RHB Trustees Berhad
200201005356 (573019-U) Email : [email protected]
Level 11, Tower Three Telephone : 1 300 88 6668 (Malaysia)
RHB Centre +603 2245 9192 (International)
Jalan Tun Razak
50400 Kuala Lumpur, Malaysia
Telephone : +603 9280 8799
Facsimile : +603 9280 8796
4 UOA REIT

PROFILE OF DIRECTORS OF
THE MANAGER

Dato' Gan Boon Khuay

Independent Non-Executive Chairman
Dato’ Gan Boon Khuay, Malaysian, male, aged 69, is our Independent Non-Executive Chairman. He was appointed
an Independent Non-Executive Director on 16 November 2005 and was a member of the Audit and Risk
Management Committee. He resigned as a member of the Audit and Risk Management Committee and was
appointed the Chairman of the Board of Directors on 20 January 2022.

He holds a Bachelor of Science (First Class Honours) Degree in Civil, Structural and Environmental Engineering
from University College London, University of London, United Kingdom. He was awarded the Chadwick Medal &
Prize in 1977. He has also successfully completed the East Asian Executive Leadership Course from Harvard
University, Boston, United States of America. On 19 March 2012, he was conferred the IEM Honorary Member
Award by the Institution of Engineers, Malaysia.

Dato’ Gan Boon Khuay has over 46 years of experience in property and project management as well as property
development and investment. After a 3-year stint as Property and Project Manager of Rahim & Co, Chartered
Surveyors, he co-founded the Senawang Land group of companies and served on the Board initially as Project
Director and for the last 34 years as Managing Director. He also holds directorships in various private limited
companies.

Dato’ Gan Boon Khuay was appointed Chairman of Plaza Mont’ Kiara Management Corporation on 10 December
2021 until 5 December 2022. He was the Chairman of Plaza Mont’ Kiara Management Corporation in October 2017
Dato'
until Gan2019.
December Boon He wasKhuay
also the Chairman of Plaza Mont’ Kiara Joint Management Body from January 2014
to June 2015 (until the formation of Plaza Mont’ Kiara Management Corporation).

He does not have any family relationship with any Director and/or major unitholder of UOA REIT, nor any conflict of
interest with the Manager, UOA Asset Management Sdn Bhd. He has no convictions for any offences, and there is
no sanction or penalty imposed on him by any regulatory bodies over the past 5 years.

Kong Sze Choon

Chief Executive Officer and Non-Independent Executive Director
Kong Sze Choon, Singaporean, male, aged 46, is Chief Executive Officer and Non-Independent Executive Director.
He was appointed on 14 January 2011. He is a graduate of Curtin University of Technology, Australia with a
Bachelor of Commerce Degree in Finance. Mr. Kong worked in financial institutions in Singapore where he was
involved in managing and growing the investment portfolio of high net worth individuals. He was part of the
management team and held the position of Asset Management Manager prior to his appointment as Chief
Executive Officer.

He joined UOA Holdings Group in 2002 and his initial roles in UOA Holdings Group were predominantly in leasing
as well as sales and marketing of commercial and residential developments of the UOA Holdings Group. Apart from
his key role in the Leasing department, he was also involved in business development of UOA Holdings Group.

He is currently Director of UOA (Singapore) Pte Ltd, a subsidiary company of the ultimate holding company of the
Manager, United Overseas Australia Ltd (“UOA Ltd”). He is also the Alternate Director to Mr. Kong Chong Soon,
Managing Director of UOA Development Bhd.

He is the son of Mr. Kong Chong Soon, an indirect major shareholder of UOA Asset Management Sdn Bhd
(“Manager”) and a major unitholder of UOA REIT via his interest in UOA Ltd Group. He does not have any conflict of
interest with the Manager and has no convictions for any offences, and there is no sanction or penalty imposed on
him by any regulatory bodies over the past 5 years.
 ANNUAL REPORT 2022 5

Kung Beng Hong

Independent Non-Executive Director
Kung Beng Hong, Malaysian, male, aged 77, is one of our Independent Non-Executive Directors and Chairman of
the Audit and Risk Management Committee. He was appointed on 28 November 2005. He is a graduate of
University of Malaya majoring in Economics and a Fellow of Institute of Bankers, Malaysia. He has had an illustrious
career in the banking industry over the last 53 years where he held numerous senior management posts including
stints in United States of America and Singapore with Citibank where he served for 19 years. Other notable
positions held include Senior General Manager of MBF Bhd (1984 – 1986), General Manager/Executive Director of
United Asian Bank (1986 – 1992), Chief Executive Officer/Director of Overseas Union Bank (1992 – 2002), Managing
Director/Chief Executive Officer of AmBank (M) Berhad (2002 – 2003), Group Chief Executive Officer/Director of
EON Bank Group (2003 – 2004) and Non-Independent Non-Executive Director of Alliance Bank Malaysia Bhd and
Chairman/Non-Executive Director of Alliance Investment Bank Bhd. He served as Adviser to Fullerton Financial
Holdings Pte Ltd until his contract ended on 29 February 2020.

He also holds directorships in Asian Institute of Finance Bhd (a non-listed public company limited by guarantee),
Alliance Financial Group Bhd, both of which are under Members’ Voluntary Liquidation, Quill Motocars Sdn Bhd
and Kytos Management Sdn Bhd.

He does not have any family relationship with any Director and/or major unitholder of UOA REIT, nor any conflict of
interest with the Manager, UOA Asset Management Sdn Bhd. He has no conviction for any offences, and there is no
sanction or penalty imposed on him by any regulatory bodies over the past 5 years.
Dato' Gan Boon Khuay

Yap Kang Beng

Non-Independent Non-Executive Director
Yap Kang Beng, Malaysian, male, aged 47, was appointed Non-Independent Non-Executive Director on 18 March
2016. He was appointed as a member of the Audit & Risk Management Committee on 20 January 2022. He
graduated with a Degree in Bachelor of Economics (Honours) in Accounting and Finance from University of
Manchester, United Kingdom.

He joined UOA Holdings Sdn Bhd in 2010. His duties included corporate affairs and investor relations matters. He is
also involved in leasing as well as sales and marketing of commercial developments of UOA Holdings Group.

He worked in the financial industry for over 13 years prior to joining UOA Holdings Group. Before he assumed the
present position, he was a global investment specialist in J.P. Morgan Private Bank (Singapore). Prior to that, he
also took up different roles in Treasury and Risk Management in Hong Leong Bank Berhad and Standard Chartered
Bank Berhad.

He does not have any family relationship with any Director and/or major unitholder of UOA REIT, nor any conflict of
interest with the Manager, UOA Asset Management Sdn Bhd. He has no convictions for any offences, and there is
no sanction or penalty imposed on him by any regulatory bodies over the past 5 years.
6 UOA REIT

PROFILE OF DIRECTORS OF
THE MANAGER (CONTINUED)

Karn Sau Meng

Independent Non-Executive Director
Karn Sau Meng, Malaysian, female, aged 55, is one of our Independent Non-Executive Directors and a member of
the Audit and Risk Management Committee. She was appointed on 23 December 2021. She completed her
professional accountancy degree from the Association of Chartered Certified Accountants in 1992 and was
admitted to membership in 1996. She has been and is a current member of the Malaysian Institute of Accountants
since 2001. She completed her Master’s in Business Administration degree with Keele University (UK) in 2001.

Her career experience included work related to auditing, accounting, inventory management, logistics, and system
implementation working in various positions from Auditor, Accountant, Finance Manager and Finance and
Administration Director before she set up her own consulting company, Addworth Solutions Sdn Bhd focusing on
business process management, human resource management, corporate training and coaching. She is currently
the principal consultant in Addworth Solutions. She was appointed Secretary and subsequently Treasurer in the
Perdana Emerald Condominium Joint Management Body for 6 years from 2008 to 2014. She was re-appointed as
Treasurer in August 2022 to date.

She does not have any family relationship with any Director and/or major unitholder of UOA REIT, nor any conflict of
interest with the Manager, UOA Asset Management Sdn Bhd. She has no conviction for any offences, and there is
no sanction or penalty imposed on her by any regulatory bodies over the past 5 years.

Dato' Gan Boon Khuay

 ANNUAL REPORT 2022 7

MANAGEMENT DISCUSSION
AND ANALYSIS
OVERVIEW OF BUSINESS AND OPERATIONS, OBJECTIVES AND
STRATEGIES
UOA Real Estate Investment Trust (“UOA REIT” or “Trust”) is a real estate trust fund which commenced its
operations on 1 December 2005 and was listed on the Main Market of Bursa Malaysia Securities Berhad on 30
December 2005.

The principal activity of UOA REIT is to invest in a diversified portfolio of real estate and real estate-related assets
used, or predominantly used, for commercial purposes. Geographically, it is presently focused in Kuala Lumpur
where all existing assets in the portfolio are located in.

The objective of UOA REIT and its subsidiary (the “Group”) is to achieve a stable return from rental income and long
term capital growth in its assets. In order to enhance the performance of the Properties in the portfolio, the Group
employs active operating strategies which include optimising of rental income via management of tenancies and
renewals, improving tenant retentions through relationship management, working closely with Property manager
to pursue new tenancy opportunities. The Group also, where practicable, carry out asset enhancement initiatives
to maintain or improve the quality and appearance of the Properties.

The Manager also seeks to enhance the unit value through selective acquisitions. Apart from seeking yield-
accretive acquisitions, the acquisition strategy also takes into consideration the location, existing occupancy rate,
specifications, facilities, as well as the tenant mix of the building.

Capitalising on the relationship with UOA Holdings Group of companies, one of Malaysia’s leading property
development, property investment, property management services and construction group of companies, the
Manager expects to be at a competitive advantage and benefit towards achieving its long term acquisition
objectives.

The Properties in the portfolio are intended to be held on a long term basis. Where a property has reached a phase
with limited prospect for growth, selling the property can be considered.

The Manager will continue to actively manage the portfolio of properties to maximise the yield for unitholders.
Meanwhile, the Manager will continue to source for opportune acquisitions that meet the objectives of UOA REIT.

Guided by the gearing limits stipulated in the Securities Commission’s Guidelines on Listed Real Estate Investment
Trusts (“REIT Guidelines”), the Manager aims to optimise the Group’s capital structure and cost of capital.

INVESTMENT STRATEGIES
During the financial year, the Manager continued to adopt the following strategies in achieving the Group’s
investment objective:

Operating strategy
The Group’s operating strategy is to continue to enhance the performance of the properties by increasing yields
and returns from the properties through a combination of retaining existing tenants, reducing vacancy levels,
adding and/or optimising retail/office space at the properties and minimising interruptions in rental income and
operational costs.

The Manager expects to apply the following key operating and management principles:

(a) to optimise rental rates via active management of tenancies, renewals and new tenancies;
(b) maintaining a close relationship with tenants to optimise tenant retentions;
(c) actively working with the property manager to pursue new tenancy opportunities;
(d) to optimise tenant mix and space configuration;
(e) continuous review of tenant mix and if practicable, reconfigure lettable space; and
(f) continually maintain the quality of the properties.
8 UOA REIT

MANAGEMENT DISCUSSION
AND ANALYSIS (CONTINUED)
INVESTMENT STRATEGIES (continued)
Acquisition strategy
The Manager seeks to increase cash flow and enhance unit value through selective acquisitions. The acquisition
strategy takes into consideration:

(a) location;
(b) occupancy and tenant mix;
(c) building and facilities specifications;
(d) opportunities; and
(e) yield thresholds.

The Manager has access to a network of and good relationships with leading participants in the real estate industry
which may assist the Group in identifying (a) acquisition opportunities that have favourable returns on invested
capital and growth in cash flow; and (b) under-performing assets. The Manager believes that these deal-sourcing
capabilities are an important competitive advantage of the Group.

The Manager intends to capitalise on the relationship with UOA Holdings Group of companies, which is one of
Malaysia’s leading property development, property investment, property management services and construction
group of companies. This relationship is expected to accord the Group competitive advantages and benefits
towards achieving its long-term objectives.

The Manager intends to hold the properties on a long-term basis. In the future where the Manager considers that
any property has reached a stage that offers only limited scope for growth, they may consider selling the property
and using the proceeds from the sale for alternative investments in properties that meet its investment criteria.

Capital management strategy

The Manager aims to optimise the Group’s capital structure and cost of capital within the borrowing limits
prescribed by the REIT Guidelines and intends to use a combination of debt and equity funding for future
acquisitions and improvement works at the properties. Our capital management strategies involve:

(a) adopting and maintaining an optimal gearing level; and

(b) adopting an active interest rate management strategy to manage risks associated with changes in interest
rates.

while maintaining flexibility in the Group’s capital structure to meet future investment and/or capital requirements.

INVESTMENT POLICIES
Portfolio composition
The Group’s investments may be allocated in the following manner, as prescribed by the REIT Guidelines:

(a) to invest in real estate, single-purpose companies whose principal assets comprise real estate, real estate-
related assets, non-real estate-related assets or liquid assets;
(b) at least 75% of the Group’s total assets must be invested in real estate or single purpose companies whose
principal assets comprise real estate, at all times; and
(c) not more than 25% of the Group’s total assets may be invested in non-real estate-related assets and/or
liquid assets.

Diversification
The Group will seek to diversify its real estate portfolio by property and location type. The Group will focus on
investing in properties that are primarily used for office, retail and/or residential purposes and will continue to look
for opportunities in these types of properties. In addition, it may also look into other properties that will provide
attractive risk-adjusted returns.
 ANNUAL REPORT 2022 9

INVESTMENT POLICIES (continued)

Leverage
The Group will be able to leverage on its borrowings to make the permitted investments. Leveraging on its
borrowings will increase the returns to unitholders. The Group is permitted to procure borrowings of up to 50% of
its total asset value.

DISTRIBUTION POLICY
At least 90% of the distributable income of the Trust will be distributed semi-annually or at such other intervals as
determined by the Manager, in arrears.

COMPOSITION OF INVESTMENT PORTFOLIO

The Group’s investment properties value is RM1,716 million as at 31 December 2022 compared to RM1,716 million
as at 31 December 2021. There were no new acquisitions or disposals during the financial year and the total
number of properties in the portfolio remains at six (6).

Whilst a full valuation has not been conducted, the Group had undertaken an update valuations exercise for all
existing investment properties. The updated market value of the investment properties as at 31 December 2022
were valued at RM1,716,200,000 by independent registered valuers (“Valuer”). In arriving at the updated market
value, the Valuer has applied the comparison and income method to assess the market value of the investment
properties as at the reporting date. The existing carrying amount of the investment properties as at 31 December
2022 was not materially different from the updated valuations performed.

In view of the above and taking into account current market conditions, the Directors of the Manager assessed that
the carrying amount is fair. Hence, the carrying amount was not adjusted and was taken to represent the fair value
of the investment properties.

As at 31 December 2022, the Group’s composition of investment portfolio was as follows:

RM %

Real estate properties

UOA Centre Parcels 78,000,000 4.53

UOA II Parcels 281,000,000 16.34

UOA Damansara Parcels 114,900,000 6.68

Wisma UOA Damansara II 224,356,000 13.04

Parcel B – Menara UOA Bangsar 300,000,000 17.44

UOA Corporate Tower 718,000,000 41.74

Liquid assets

Deposits with licensed financial institutions 1,200,000 0.07

Bank balances 2,712,804 0.16

1,720,168,804 100.00
10 UOA REIT

MANAGEMENT DISCUSSION
AND ANALYSIS (CONTINUED)
COMPOSITION OF INVESTMENT PORTFOLIO
The details of the real estate properties as at 31 December 2022 are as follows:

UOA Centre Parcels

Address/ Within UOA Centre at No. 19, Jalan
Location Pinang, 50450 Kuala Lumpur

Description Parcels within the thirty-three (33)

storey office building known as UOA
Centre inclusive of six (6) levels of car
park space

Title details Twenty-eight (28) strata titles within

UOA Centre identified as Bangunan
M1, held under Master Title Geran
46212, Lot No. 1312, Section 57,
Town and District of Kuala Lumpur,
State of Wilayah Persekutuan KL

Property type Office parcels

Net lettable 124,009 sq.ft.

area

Age Approximately 28 years

Existing use Commercial

Status of Freehold
holding

Major tenants (a) Halim Hong & Quek

(based on (b) Bank Kerjasama Rakyat Encumbrances None
monthly rental Malaysia Bhd
receivable) (c) AWP Services Sdn Bhd Date of 29 November 2005
acquisition
Occupancy 75.2%
rate (based Cost of RM55,981,272
secured acquisition
tenancies)
Last valuation RM78,000,000
Rental RM5,580,629
received/ Date of last 31 December 2022
receivable valuation

Maintenance Maintenance costs amount to Basis of Comparison and Income Approach

costs and RM1,782,697. No capital expenditure valuation
capital incurred during the financial year
Independent PA International Property
expenditure
valuer Consultants (KL) Sdn Bhd

Net carrying RM78,000,000

amount
 ANNUAL REPORT 2022 11

COMPOSITION OF INVESTMENT PORTFOLIO (continued)

The details of the real estate properties as at 31 December 2022 are as follows (continued) :

UOA II Parcels
Address/ Within UOA II at No. 21, Jalan Pinang,
Location 50450 Kuala Lumpur

Description Parcels within the thirty-nine (39)

storey office building known as UOA
II inclusive of five (5) levels of car park
space

Title details Sixty-eight (68) strata titles within

UOA II identified as Bangunan M2,
held under Master Title Geran 46212,
Lot No. 1312, Section 57, Town and
District of Kuala Lumpur, State of
Wilayah Persekutuan KL

Property type Office parcels

Net lettable 427,015 sq.ft.

area

Age Approximately 24 years

Existing use Commercial

Status of Freehold Encumbrances Charged to a financial institution as

holding security for revolving credit facilities

Major tenants (a) Envico Enterprises Sdn Bhd

(based on (b) United Carparks Sdn Bhd Date of 29 November 2005 (Excluding
monthly rental (c) UOA Komune Sdn Bhd acquisition Level 17, UOA II) 22 March 2010
receivable) (Level 17, UOA II)

Occupancy 70.4% Cost of RM194,502,300

rate (based acquisition
secured
tenancies) Last valuation RM281,000,000

Rental RM16,873,062 Date of last 31 December 2022

received/ valuation
receivable
Basis of Comparison and Income Approach
valuation
Maintenance Maintenance costs amount to
costs and RM4,506,993. No capital expenditure Independent PA International Property
capital incurred during the financial year valuer Consultants (KL) Sdn Bhd
expenditure
Net carrying RM281,000,000
amount
12 UOA REIT

MANAGEMENT DISCUSSION
AND ANALYSIS (CONTINUED)
COMPOSITION OF INVESTMENT PORTFOLIO (continued)
The details of the real estate properties as at 31 December 2022 are as follows (continued) :

UOA Damansara Parcels

Address/ Within UOA Damansara at No. 50,
Location Jalan Dungun, Damansara Heights,
50490 Kuala Lumpur

Description Parcels within the thirteen (13) storey

office building known as UOA
Damansara inclusive of four (4) levels
of basement car park space

Title details Thirty (30) strata titles within UOA

Damansara identified as Bangunan
M1, held under Master Title Geran
67371, Lot No. 55917, Mukim and
District of Kuala Lumpur, State of
Wilayah Persekutuan KL

Property type Office parcels

Net lettable 186,395 sq.ft

area

Age Approximately 25 years

Existing use Commercial

Status of Freehold Encumbrances Charged to a financial institution as

holding security for revolving credit facilities

Major tenants (a) Skrine

Date of 29 November 2005
(based on (b) United Carparks Sdn Bhd
acquisition
monthly rental (c) International Committee of the
receivable) Red Cross Cost of RM72,000,000
acquisition
Occupancy 73.2%
rate (based Last valuation RM114,900,000
secured
tenancies) Date of last 31 December 2022
valuation
Rental RM8,068,685
received/ Basis of Comparison and Income Approach
receivable valuation

Independent PA International Property

Maintenance Maintenance costs amount to
valuer Consultants (KL) Sdn Bhd
costs and RM2,854,501. No capital expenditure
capital incurred during the financial year Net carrying RM114,900,000
expenditure amount
 ANNUAL REPORT 2022 13

COMPOSITION OF INVESTMENT PORTFOLIO (continued)

The details of the real estate properties as at 31 December 2022 are as follows (continued) :

Wisma UOA Damansara II

Address/ No. 6, Changkat Semantan,
Location Damansara Heights, 50490 Kuala
Lumpur

Description A sixteen (16) storey office building

with 3 levels of elevated car park
space and 5 levels of basement car
park space

Title details Geran 6837, Lot No. 38415, Mukim

and District of Kuala Lumpur, State of
Wilayah Persekutuan KL

Property type Commercial building

Net lettable 291,133 sq.ft.

area

Age Approximately 15 years

Existing use Commercial

Status of Freehold
holding

Major tenants (a) Radimax Group Sdn Bhd

(based on (b) United Carparks Sdn Bhd
monthly rental (c) Synthomer Sdn Bhd
receivable)

Occupancy 76.6% Date of 17 January 2011

rate (based acquisition
secured
tenancies) Cost of RM211,000,000
acquisition
Rental RM14,339,983
received/ Last valuation RM224,300,000
receivable
Date of last 31 December 2022
valuation
Maintenance Maintenance costs amount to
costs and RM3,176,566. No capital expenditure Basis of Comparison and Income Approach
capital incurred during the financial year valuation
expenditure
Independent PA International Property
Encumbrances Charged to a financial institution as valuer Consultants (KL) Sdn Bhd
security for revolving credit facilities
Net carrying RM224,356,000
amount
14 UOA REIT

MANAGEMENT DISCUSSION
AND ANALYSIS (CONTINUED)
COMPOSITION OF INVESTMENT PORTFOLIO (continued)
The details of the real estate properties as at 31 December 2022 are as follows (continued) :

Parcel B – Menara UOA Bangsar

Address/ Within Menara UOA Bangsar No. 5,
Location Jalan Bangsar Utama 1, 59000 Kuala
Lumpur

Description A tower block, namely Tower B

comprising fifteen (15) levels of office
space, three (3) levels of retail
podium, six (6) levels of elevated car
park space and four (4) levels of
basement car park space (which form
part of a development known as
Menara UOA Bangsar)

Title details Thirteen (13) strata titles within

Menara UOA Bangsar, identified as
Bangunan M1 and M1-A, held under
Master Title Pajakan Negeri (WP)
43411, Lot No. 421, Section 96, Town
and District of Kuala Lumpur, State of
Wilayah Persekutuan KL

Property type Commercial building Maintenance Maintenance costs amount to

costs and RM5,493,510. No capital
Net lettable 314,920 sq.ft. capital expenditure incurred during the
area expenditure financial year
Age Approximately 14 years Encumbrances Charged to a financial institution as
security for revolving credit facilities
Existing use Commercial
(There are no encumbrances on
Status of 99 years leasehold expiring in 2106 Petak 9 and 14)
holding (unexpired term of approximately 84
Date of 17 January 2011
years)
acquisition
Major tenants (a) Perbadanan Harta Intelek
Cost of RM287,760,483
(based on Malaysia
acquisition
monthly rental (b) Prasarana Malaysia Berhad
receivable) (c) United Carparks Sdn Bhd Last valuation RM300,000,000

Occupancy 93.2% Date of last 31 December 2022

rate (based valuation
secured
tenancies) Basis of Comparison and Income Approach
valuation
Rental RM23,073,515
received/ Independent PA International Property
receivable valuer Consultants (KL) Sdn Bhd

Net carrying RM300,000,000

amount
 ANNUAL REPORT 2022 15

COMPOSITION OF INVESTMENT PORTFOLIO (continued)

The details of the real estate properties as at 31 December 2022 are as follows (continued) :

UOA Corporate Tower

Address/ UOA Corporate Tower, Avenue 10,
Location The Vertical, Bangsar South City, No.
8, Jalan Kerinchi, 59200 Kuala
Lumpur

Description A stratified 38-storey office building

with a penthouse level known as
UOA Corporate Tower

Title details Provisional parcel property identified

as Vertical 38 Block A, erected on a
portion of land held under Master
Title No. Pajakan Negeri 46338, Lot
58190, Mukim and District of Kuala
Lumpur, State of Wilayah
Persekutuan Kuala Lumpur

Property type Commercial building

Net lettable 732,217 sq.ft.

area

Age Approximately 6 years

Existing use Commercial

Status of 99 years leasehold expiring in 2106 Encumbrances Charged to a financial institution as

holding (unexpired term of approximately 84 security for revolving credit facilities
years)
Date of 30 December 2020
Major tenants (a) Honeywell International Sdn Bhd acquisition
(based on (b) UOA Group of Companies
monthly rental (c) Swift Support Services Malaysia Cost of RM701,653,564
receivable) Sdn Bhd acquisition

Last valuation RM718,000,000

Occupancy 93.0%
rate (based Date of last 31 December 2022
secured valuation
tenancies)
Basis of Comparison and Income Approach
Rental RM46,441,291 valuation
received/
receivable Independent PA International Property
valuer Consultants (KL) Sdn Bhd
Maintenance Maintenance costs amount to
costs and RM5,797,213. No capital expenditure Net carrying RM718,000,000
capital incurred during the financial year amount
expenditure
16 UOA REIT

MANAGEMENT DISCUSSION
AND ANALYSIS (CONTINUED)
FINANCIAL HIGHLIGHTS
Year ended Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December 31 December
2022 2021 2020 2019 2018

Total gross income (RM) 114,802,288 116,883,577 72,692,689 79,032,011 78,585,653

Income before tax (RM) 60,980,844 40,042,561 38,435,875 40,986,917 57,649,915
Income/(Loss) after tax (RM)
- Realised 61,075,415 61,796,178 36,719,912 39,540,726 35,004,263
Unrealised (202,745) (19,693,063) (1,969,037) (19,704,539) 22,532,509
Total 60,872,670 42,103,115 34,750,875 19,836,187 57,536,772

Earnings/(Loss) per unit (sen)

- Realised 9.04 9.15 8.63 9.35 8.28
Unrealised (0.03) (2.91) (0.47) (4.66) 5.33
Total 9.01 6.23 8.16 4.69 13.61

Distribution per unit (sen) 8.62 8.64 8.44 9.11 9.13

Total asset value (RM) 1,729,099,819 1,732,705,917 1,763,839,508 1,046,825,669 1,049,495,779
Net asset value (RM) 966,475,620 963,839,588 980,298,696 706,554,728 725,242,159
Net asset value per unit (RM) 1.431 1.427 1.451 1.671 1.715
Highest net asset value per
unit (RM) 1.480 1.506 1.721 1.719 1.727
Lowest net asset value per
unit (RM) 1.443 1.460 1.451 1.671 1.671
Market price per unit (RM) 1.15 1.15 1.13 1.23 1.31
Highest traded price for the
financial year (RM) 1.19 1.16 1.29 1.46 1.64
Lowest traded price for the
financial year (RM) 1.10 1.08 1.07 1.20 1.29
Distribution yield 7.50% 7.51% 7.47% 7.41% 6.97%
(1)
Annual total returns (RM) 61,075,415 61,796,178 36,719,912 39,540,726 35,004,263
(2)
Average total returns
- for one year 8.14% 8.23% 4.89% 8.31% 7.35%
- for three years 7.09% 7.14% 6.85% 7.88% 8.28%
- for five years 7.38% 7.35% 7.61% 8.62% 8.96%

(1)
Annual total returns are defined as realised income after tax
(2)
Average total returns are calculated based on annual total returns for the respective financial years divided by
unitholders’ capital for the respective financial years

Note: Past performance is not necessarily indicative of future performance. Unit prices and investment returns may
fluctuate in line with economic conditions and subsequent trust performance.
 ANNUAL REPORT 2022 17

FINANCIAL HIGHLIGHTS (continued)

Income Before Earnings Distribution Net Asset Value

Tax (RM) Per Unit (Sen) Per Unit (Sen) Per Unit (Sen)

9.13

9.11
13.61

8.64

8.62
8.44
60,980,844
57,649,915

1.715

1.671
9.01

1.451

1.431
1.427
8.16
40,042,561
40,986,915

38,435,875

6.23
4.69

2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022

Total Asset Value and Net Asset Value (RM'000)

1,763,840

1,729,100
1,732,706
1,049,496

1,046,826

980,299

966,476
963,840
725,242

706,555

2018 2019 2020 2021 2022

Net Asset Value Total Asset Value

Trading Performance and Market Price Per Unit

2,000,000 1.8
Market Price Per Unit (RM)

1.7
1,500,000 1.6
Volume (Units )

1.5
1,000,000 1.4
1.3
500,000 1.2
1.1
0 1.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022

Volume Market Price

18 UOA REIT

MANAGEMENT DISCUSSION
AND ANALYSIS (CONTINUED)
REVIEW OF FINANCIAL RESULTS
1) Overall Financial Results

As at As at As at As at As at
31 December 31 December 31 December 31 December 31 December
2022 2021 2020 2019 2018
RM’000 RM’000 RM’000 RM’000 RM’000

Total gross income 114,802 116,884 72,693 79,032 78,586

Property operating expenses 26,127 26,715 20,456 20,756 20,944
Non-property expenses 7,851 9,470 6,650 5,671 6,690
Finance costs 19,748 18,872 8,867 11,770 15,837
Income before tax, fair value
gain on investment
properties and net changes
on financial liabilities
measured at amortised cost 61,076 61,827 36,720 40,835 35,115
Fair value (loss)/gain on
investment properties - (21,900) 1,756 - 22,570
Net changes on financial
liabilities measured at
amortised cost (95) 115 (40) 152 (35)
Income before tax 60,981 40,042 38,436 40,987 57,650
Tax (expense)/income (108) 2,061 (3,685) (21,151) (113)
Income after tax 60,873 42,103 34,751 19,836 57,537

The summary of our gross rental, property operating expenses and net rental income for each property in the
property portfolio for the financial year ended 31 December 2022 is detailed below:

Property
Operating Net Rental
Gross Rental Expenses Income
Property RM’000 RM’000 RM’000
UOA Centre Parcels 5,581 1,783 3,798
UOA II Parcels 16,873 4,507 12,366
UOA Damansara Parcels 8,069 2,855 5,214
Wisma UOA Damansara II 14,340 3,177 11,163
Parcel B – Menara UOA Bangsar 23,074 5,494 17,580
UOA Corporate Tower 46,441 5,797 40,644
Total 114,378 23,613 90,765

Gross rental

The Group's total gross income for the financial year ended 31 December 2022 comprises rental income of
RM114.4 million (2021: RM116.4 million), interest income of RM78.4 thousand (2021: RM112.7 thousand)
and other income of RM346.8 thousand (2021: RM417.0 thousand). The decrease was mainly due to the
decline in rental contribution from Wisma UOA II and Wisma UOA Damansara II as a result of lower
occupancies.
 ANNUAL REPORT 2022 19

REVIEW OF FINANCIAL RESULTS (continued)

1) Overall Financial Results (continued)

Property operating expenses

The property operating expenses incurred during the financial year decreased by 2.2% to RM26.1 million
compared to RM26.7 million in the previous financial year. The decrease is mainly due to the lesser
maintenance work done compared to the previous year, as well as lower electricity costs.

Non-property operating expenses

As at As at
31 December 31 December Changes
2022 2021
Property RM’000 RM’000 RM’000 %
Manager's fees 6,624 6,709 (85) (1.27)
Trustee's fee 297 300 (3) (1.00)
Auditors' remuneration 65 49 16 32.65
Tax agent's fees 25 26 (1) (3.85)
Valuation fees 45 45 - -
Administration expenses 288 181 107 59.12
Impairment losses of financial assets 507 2,160 (1,653) (76.53)
Total 7,851 9,470 (1,619) (17.10)

Total non-property operating expenses decreased to RM7.9 million from RM9.5 million in previous financial
year. This was mainly due to the lower of impairment losses of financial asset.

Finance costs
Finance costs increased by RM876 thousand or 4.64% compared to previous financial year 2021. The
increase was mainly due to higher costs of funding arising from the hikes in the policy interest rate.

Income before tax

For the financial year ended 31 December 2022, the Group reported an income before tax of RM61.0 million
(2021: RM40.0 million), an increase of 52.3% from the previous financial year. This was due to the fair value
loss on investment properties of RM21.9 million recorded in previous financial year.

Realised net income

The Group realised net income decreased 1.17% from RM61.8 million to RM61.1 million compared to the
previous financial year. Realised net income per unit decreased from 9.15 sen per unit to 9.04 sen per unit.
20 UOA REIT

MANAGEMENT DISCUSSION
AND ANALYSIS (CONTINUED)
REVIEW OF FINANCIAL RESULTS (continued)
2) Income Distribution

The Trust had on 30 August 2022 paid an interim distribution of 4.30 sen per unit totaling RM29.1 million for
the six months ended 30 June 2022.

The Manager had on 19 January 2023, recommended to the Trustee, and the Trustee had on the same day,
approved the final income distribution of 4.32 sen per unit totaling RM29.2 million for the financial year
ended 31 December 2022 to be paid by 28 February 2023 (“Final Distribution”). The Final Distribution
comprises taxable income of 4.32 sen per unit.

The distribution per unit for the financial year ended 31 December 2022 is 8.62 sen per unit, a decrease of
0.23% or 0.02 sen per unit as compared to the previous financial year of 8.64 sen per unit. Based on the
closing price of RM1.15 on 31 December 2022 (2021: RM1.15), the distribution per unit translated to a
distribution yield of 7.50% (2021: 7.51%).

An analysis of the Trust’s income distribution is as follows:

As at As at As at As at As at
31 December 31 December 31 December 31 December 31 December
2022 2021 2020 2019 2018

Distribution per unit (sen)

- interim 4.30 4.32 3.98 4.24 4.04
- final 4.32 4.32 4.46 4.87 5.09
- total 8.62 8.64 8.44 9.11 9.13

Distribution payment date

- interim 30/08/2022 30/08/2021 28/8/2020 30/8/2019 30/8/2018
- final 28/02/2023 28/02/2022 22/1/2021 28/2/2020 28/2/2019

Distribution yield based on

issued price of RM1.15 per
unit (%) 7.50 7.51 7.34 7.92 7.94

Distribution yield based on

market price at
31 December (%) 7.50 7.51 7.47 7.41 6.97

Market price as at
31 December (RM) 1.15 1.15 1.13 1.23 1.31

3) Total Financing

As at 31 December 2022, the Group has total borrowings of RM675.4 million (2021: RM683.2 million).
Approximately 62.48% (2021: 61.77%) of the Group’s financing was maintained at a fixed interest rate. The
floating rate bank borrowings are in the form of revolving credits and are short term in nature renewable on
a one (1) to six (6) months term at interest/profit rates as disclosed in Note 14 to the Financial Statements.
 ANNUAL REPORT 2022 21

REVIEW OF FINANCIAL RESULTS (continued)

3) Total Financing (continued)

The ratio of total bank borrowings to total asset value decreased from 39.4% to 39.1%. Pursuant to the REIT
Guidelines, the permitted limit on gearing ratio of real estate investment trusts is 50%. Total credit facilities
available to the Group amounted to RM856.8 million and there are unutilised facilities of RM181.4 million as
at the end of the financial year. As at 31 December 2022, taking into consideration of the unutilised facilities,
the Group has the capacity to secure a further RM7.75 million of credit facility before reaching the 50% limit
permitted under the REIT Guidelines.

4) Units In Issue

As at As at As at As at As at
31 December 31 December 31 December 31 December 31 December
2022 2021 2020 2019 2018

Number of units in issue 675,599,076 675,599,076 675,599,076 422,871,776 422,871,776

5) Net Asset Value (“NAV”) Of The Group

As at As at As at As at As at
31 December 31 December 31 December 31 December 31 December
2022 2021 2020 2019 2018

NAV* (RM’000) 966,476 963,840 980,299 706,555 725,242

NAV per unit
- before distribution (RM) 1.474 1.470 1.479 1.720 1.766
- after distribution (RM) * 1.431 1.427 1.451 1.671 1.715

NAV per unit is posted on Bursa Malaysia’s website on a quarterly basis.

* NAV and NAV per unit after reflecting final distribution of 4.32 sen per unit totaling RM29.2 million declared
on 19 January 2023 and payable on 28 February 2023.

As at 31 December 2022, the Group’s NAV after distribution has increased from 1.427 to 1.431. The increase
is mainly due to lower loan balance as at financial year 31 December 2022.

Based on the group’s closing unit price of RM1.15, the REIT is trading at approximately 20% below its NAV.

6) Cash Flow

As at 31 December 2022, the Group has cash and bank balances of RM2.7 million (2021: RM5.7 million) and
deposits with licensed financial institution of RM1.2 million (2021: RM1.5 million).

Based on the Statement of Cash Flows for the financial year ended 31 December 2022, the Group
generated net cash from operating activities of RM83.1 million (before the payment of interest expenses of
RM19.7 million), utilised cash for investing activities amounting to RM609 thousand, and utilised cash for
financing activities amounting to RM85.7 million mainly for distribution to unitholders and payment of
interest expenses.

On a net basis, the Group has a net decrease of cash and cash equivalent of RM3.2 million for the financial
year ended 31 December 2022, which the cash and cash equivalent decrease to RM3.9 million as at 31
December 2022.
22 UOA REIT

MANAGEMENT DISCUSSION
AND ANALYSIS (CONTINUED)
REVIEW OF OPERATING ACTIVITIES
1) Rental Income

GROSS RENTAL (RM'MILLION)

50.00

46.68
46.44
40.00

30.00

23.23
20.00

23.07
17.41
16.87

8.07
7.83

15.43
5.75
5.58

14.34
10.00

0.00
UOA UOA II UOA Wisma Parcel B - UOA
Centre Parcels Damansara UOA Menara Corporate
Parcels Parcels Damansara UOA Tower
II Bangsar

2021 2022

5%

15 % UOA Centre Parcels

41 % UOA II Parcels

7% UOA Damansara Parcels

Wisma UOA Damansara II

12% Parcel B - Menara UOA Bnagsar

UOA Corporate Tower

20%

In the financial year ended 2022, UOA Corporate Tower was the highest income generating Property,
amongst the portfolio of assets, followed by Parcel B – Menara UOA Bangsar and UOA II Parcels. These three
assets collectively made up approximately 76% of the total gross income rental for the financial year.

Compared to the preceding financial year, the gross rental income for UOA Damansara Parcels saw a slight
improvement whereas the rest of the assets declined marginally. The overall decline in gross rental income,
was mainly due to the lower occupancy rate as a result of the departure of multiple tenants upon expiry of
tenancy.
 ANNUAL REPORT 2022 23

REVIEW OF OPERATING ACTIVITIES (continued)

2) Occupancy Rates

OCCUPANCY RATES OF PROPERTIES IN THE PORTFOLIO

93.5 %
93.2 %

93.2 %
93.0 %
88.0 %
76.6 %
75.8 %
75.2 %

73.2 %
72.1 %

70.7 %
70.4 %

UOA UOA II UOA Wisma Parcel B - UOA

Centre Parcels Damansara UOA Menara Corporate
Parcels Parcels Damansara UOA Tower
II Bangsar

2021 2022

Including all secured tenancies, there was a decline in the occupancy rates of the Properties in the portfolio
with the exception of UOA Damansara Parcels, giving an average occupancy rate of close to 80% as at 31
December 2022.

In the financial year 2022, the departure of multiple tenants upon the expiry of tenancy saw an overall
decline in the occupancy rates of the Properties in the portfolio. The most notable drop in the occupancy
rate was in Wisma UOA Damansara II (-11.4%), mainly due to several sizeable tenants who terminated their
tenancy upon expiry.

The weighted average lease expiry (“WALE”) of the portfolio, including all secured tenancies, as at 31
December 2022 stood at approximately 1.08 years (31 December 2021: 1.33 years). The WALE is within
expectation as all rental of Properties in the portfolio are typically executed via tenancy agreement with
tenure ranging from 1 year to 3 years. Hence, the Manager actively monitors all tenancy expiries to optimise
renewal.

3) Asset Enhancement Initiatives

Asset enhancement initiatives (“AEI”) continue to play an integral part of UOA REIT’s operating strategies. It
is essential to consistently assess the need for an upgrade in order to ensure that the Properties in our
portfolio remain competitive.

During the financial year 2022, the Group has commenced the refurbishment and upgrading of the food
court located in UOA II Parcels and this initiative is targeted to be completed in the financial year 2023.

As part of the efforts to enhance the Properties in our portfolio in order to improve the rental income, the
Group has also completed the renovation and refurbishment works for some of the vacant and partly fitted
units within UOA Centre Parcels and UOA Damansara Parcels.
24 UOA REIT

MANAGEMENT DISCUSSION
AND ANALYSIS (CONTINUED)
RISK MANAGEMENT
The Manager recognises that it has the responsibility to manage risk effectively to safeguard the Trust from
potential losses, damages or failures arising from actions or events that may have a potential adverse impact on
achieving its goals and objectives. The Board of the Manager has established a sound risk management framework
which is currently being adopted by the Manager that aims to continuously identify, evaluate, monitor and migrate
risks that will potentially affect the Trust.

1) Interest Rate Risk

As at 31 December 2022, the Trust’s gearing was at 39.1%. The borrowings are exposed to the risk of interest
rate fluctuation. Any hike in interest rate will result in higher interest cost and will reduce the net income of
the Trust. In contrast, low interest rates will benefit the Trust.

The Manager closely monitors the interest rate environment and hedge the interest rate risk exposure
accordingly. More than 60% of the Trust’s current debts are in fixed rate loans which the Manager viewed as
adequately hedged against any potential interest rate hike in the near future.

2) Capital and Liquidity Risk

Capital and liquidity risk is associated with the ability of the Group to access cash or capital at any given time
to prevent insufficient liquidity to meet its business needs and financial obligations, including paying of
income distributions, interests and loan repayments.

The Group adopts an active capital management strategy that is within the threshold as stipulated in the
REIT Guidelines. The Group keeps an adequate credit facility available for all planned as well as unexpected
cash requirements. In this financial year, the gearing ratio dropped marginally to approximately 39.1% (31
December 2021: 39.4%) with an available credit facility of RM181.4 million ready to be utilised.

3) Credit Risk

Credit risk is the risk of a tenant or counterparty unable to meet their contractual obligations. Poor collections
also give rise to cash flows issue.

To mitigate the Group’s credit risk exposure, the Manager maintains a policy of collecting security deposits
from all tenants which will secure default by the tenants. The Manager also performs thorough on-boarding
due diligence to assess the tenants’ ability to meet the rental obligations prior to offering tenancies.

The Manager has implemented effective credit control measures such as close follow-up on rental arrears
with tenants and the charging of late payment interest to deter late payment of rental. The Manager also
maintains good tenant relations to increase timely rental collections.

4) Regulatory/Compliance Risk

The Group is required to comply with applicable legislation, regulations and guidelines including the Capital
Markets and Services Act 2007, the Main Market Listing Requirements of Bursa Securities, the Listed REIT
Guidelines, and tax legislation and regulations, where failure to do so may result in fines, penalties or other
remedies available to the regulatory authorities.

Any such compliance failures may impact the Group’s financial performance or reputation, whilst
amendments to existing requirements or introduction of new requirements may also increase compliance
costs. The Manager addresses these risks via its governance and internal control frameworks to monitor and
ensure compliance, further details of which can be found in the Statement of Corporate Governance in this
Annual Report.
 ANNUAL REPORT 2022 25

RISK MANAGEMENT (continued)

5) Acquisition and Investment Risk

Acquisition and investment risks refer to imperil of assets / investments not being yield accretive, affecting
the overall performance of the Group.

The Manager will remain selective and manages such risks by evaluating potential acquisitions against
approved investment criteria. The Due Diligence Committee was established to evaluates all proposed
acquisition from financial, legal and technical aspects. There were no acquisitions and divestment of real
estate during the financial year.

OFFICE SECTOR REVIEW

The financial year 2022 continued to be a challenging year for most of the sectors recovering from the COVID-19
pandemic, facing inflationary pressure and labour shortage. The Malaysian office property is no exception amidst
the challenging market conditions. Although the market has not returned to pre-pandemic levels, the office sector
rental is beginning to experience some stability.

According to Knight Frank Malaysia, the overall occupancy rate of purpose-built office space in KL City improved
slightly to record at 67.5% during 2H2022 (1H2022: 67.2%). However, the occupational demand in KL Fringe was
lower but remained resilient at 86.1% (1H2022: 86.8%).The Klang Valley office sector remains tenant-driven with
landlords focusing on retaining tenants through cost-optimization, asset upgrading and leasing incentives.

The average rental rate of office space in KL City experienced downward pressure. The lack of catalyst to boost
office demand coupled with the fundamental shift in the way people work post COVID-19 sees supply outpacing
demand. In KL Fringe, however, the average office rent remained relatively stable, driven by a wider pool of tenants
/ occupiers and high-quality decentralised offices, particularly in areas with ease of accessibility and adequate
transportation links. (Source: Knight Frank Malaysia, Real Estate Highlights 2nd Half of 2022)

Nevertheless, the landlords are still facing challenges in maintaining rental rates given the rising vacancy rates,
more supply of new offices and the costs of doing business despite the improvement in economic activities in the
financial year 2022. The overall uncertain market conditions, increase in interest rate and inflationary pressure
continue to be risks on economic recovery and may further dampen the market confidence.

MOVING FORWARD
Market sentiment remains soft given the challenging market conditions such as rising inflationary pressure, interest
rate and electricity tariff hike as well as potential global recession. The overall economic uncertainty continues to
weigh on the office rental market. The Manager expects a slow, gradual improvement in rental activities and
business sentiments amid economic recovery as it takes time for the consumer confidence to be restored to pre-
pandemic levels.

The Manager will continue to actively market the vacant space in the Properties and identify potential
enhancement initiatives. Meanwhile, the Manager will also maintain its active capital management strategy and
continue to explore potential yield-accretive acquisitions that meets the objectives of UOA REIT.
26 UOA REIT

SUSTAINABILITY STATEMENT
INTRODUCTION
UOA Real Estate Investment Trust (“UOA REIT”) is a Malaysia-based unit trust established with the objective to own
and invest in real estate and real estate-related assets used, or predominantly used, for commercial purposes,
whether directly or indirectly through the ownership of single-purpose companies who wholly own real estate.

UOA REIT, together with the UOA Group of companies (“UOA”), is committed to creating a positive and enduring
social impact through our sustainability initiatives that support our business, the environment and the communities
in which we operate. Our approach to sustainability is defined by UOA’s corporate philosophy of building
excellence with a definitive focus on the areas of education, environment and community activities.

The scope of the report covers the economic, environment and social performance of UOA REIT’s properties in
Malaysia from 1 January 2022 to 31 December 2022 (“FYE2022”), with 1 January 2021 to 31 December 2021
(“FYE2021”) being the year of comparison, where applicable. In view that the Trust does not have any employees,
information reported in relation to employees are referred to the employees of the Manager. The Manager will
continue reporting its sustainability performance on an annual basis.

SUSTAINABILITY GOVERNANCE STRUCTURE

UOA REIT’s sustainability strategy is overseen by the Board based on the following governance structure:

BOARD

CEO

RISK MANAGEMENT &

SUSTAINABILITY COMMITTEE

ACCOUNTANT PROPERTY MANAGER

The Risk Management & Sustainability Committee (“RMC”), chaired by the CEO, is responsible for the formulation
of sustainability policies and implementation of sustainability initiatives while the financial and day-to-day business
operations will be undertaken by the accountant and property manager respectively.
 ANNUAL REPORT 2022 27

STAKEHOLDER ENGAGEMENT
The table below illustrates UOA REIT’s outreach efforts to its various stakeholder groups.

STAKEHOLDER ENGAGEMENT CHANNEL FREQUENCY

Trustees - Annual General Meeting Yearly

- Investor relation events On-going

Tenants - UOA newsletter Yearly

- Tenants and office building management committee On-going
meetings

Unitholders - Annual General Meeting Yearly

- Interim financial reports Quarterly
- Unitholders’ meeting On-going
- Corporate announcements On-going
- UOA newsletter Yearly

Employees - Recruitment, training and development programmes On-going

- Staff appraisal Yearly
- Long service award Yearly
- Internship programme On-going

Investors/Fund - Analyst briefings On-going

Providers - Regular meetings with analysts, fund managers and On-going
other investors

Regulatory - Regular meetings with relevant authorities On-going

Authorities - Attending talks and conferences organised by regulators On-going

Industry Peers - Conferences On-going

- Annual reports Annually
- Membership associations Quarterly

Local - Community engagement programmes On-going

Communities - Collaborations with NGOs On-going
- Donations and financial aid On-going

Media - Press releases On-going

- Regular updates and engagement sessions On-going

MATERIAL ANALYSIS
In determining sustainability priorities, UOA REIT continues to reach out to its stakeholders with the purpose to
identify and address key sustainability issues which reflect significant economic, environmental and social impact
on our business. It is essential for gaining a better understanding of the sustainability aspects that are important to
UOA REIT as we strive to align them in our efforts to improve business practices, reduce environmental impact and
enhance livelihoods.
28 UOA REIT

SUSTAINABILITY STATEMENT (CONTINUED)

MATERIAL ISSUES

ECONOMIC
Financial Sustainability

Our commitment to business excellence is underpinned by an unwavering focus on strong corporate governance
and prudent financial management in the face of a challenging market environment. As such, we will continue our
focus on the following areas:

- provision of regular and stable income distributions to Unitholders

- ensure long-term growth in terms of Net Asset Value (“NAV”)
- improve the occupancy rates
- continue to explore opportunities for potential yield accretive acquisitions

UOA REIT owns a portfolio of 6 properties strategically located in Malaysia and receives rental income from the
operation of these properties. These properties generated revenue of RM114.4 million and net realised income of
RM61.1 million in the financial year ended 31 December 2022. Our value creation ensures that the properties
operate optimally to remain competitive in the marketplace. Effective property management through AEIs are also
essential to prolong the life of the assets and ensuring the condition of the property is tenantable to remain
competitive. For a more detailed review of our financial performance, please refer to the Management Discussion
and Analysis section and Financial Statements section of this Annual Report.

Supply Chain Management

Responsible and effective management of our supply chain ensures the continuous delivery of high-quality
properties that meet the needs and expectations of our investors and tenants. Our suppliers, including service
providers and contractors, lie at the heart of our supply chain. Hence, selecting the right suppliers and building a
network of strong relationships help us to create value throughout our investment portfolio.

To aid in the selection of qualified suppliers, we have established an Approved Vendor Listing, and yearly contracts
with several suppliers deemed suitable for specific job scopes. Any potential new suppliers will undergo screening
as part of our stringent tender process. The initial stage of this process includes company background checks and
project references. Those selected are required to provide the relevant licenses to operate for record keeping.

We encourage an open line of communication to ensure that our requirements are understood. If there are any
queries, our in-house team is able to assist or provide the relevant support.

All suppliers are required to undergo a yearly performance evaluation to determine whether the services they have
provided meet our standards. A wide range of criteria are scored on a scale from one (1) to five (5), where one (1)
refers to poor performance and five (5) refers to excellent performance. Upon determining the overall performance,
we identify if any improvements have been made since the last review, followed by a recommendation to retain,
keep in view, or replace the suppliers.

Apart from the annual performance evaluation, we monitor the performance of the suppliers on a regular basis to
assess the quality of work done.

Another crucial facet of our supply chain is practising sustainable procurement. We are cognisant of our role in
nation development and believe that local procurement contributes to local economic growth as it supports local
businesses. Sourcing locally also mitigates the negative environmental impact associated with carbon emissions
from long-distance transportation. Taking all of this into consideration, we procure products and services locally
where possible. For financial year 2022, 100% of our procurement budget was expended locally.
 ANNUAL REPORT 2022 29

MATERIAL ISSUES (continued)

ECONOMIC (continued)
Product Investments

Maintaining and upgrading the quality of UOA REIT’s properties are essential to the success of the Trust as well as
meeting the expectations of all stakeholders and unitholders. The quality of the properties largely determines the
value and income generated.

During the financial year 2022, we have carried out some upgrading works on the escalator as well as
refurbishment of food court at UOA II Parcels. As part of the efforts to enhance the UOA REIT’s properties in order to
improve the rental income, the Group has also completed the renovation and refurbishment works for some of the
vacant and partly fitted units.

The cashless and ticketless system was introduced at the car parks of UOA REIT's properties for visitors to make
payment using their MyDebit card, Mastercard and Visa card instead of cash. This provides added convenience
and time saving for visitors to drive in and exit without having to look for the auto-pay stations to make cash
payments. The system was implemented in financial year 2022.

Regulatory Compliance

We integrate the compliance culture within our business by observing legal, regulatory and internal regulations as
well as the observance of common standards and rules of professional conduct. Our business activities are
conducted based on ethical and legal standards with high levels of integrity in fostering a sense of responsibility
and trust with our stakeholders.

We also ensure that all sub-contractors/service providers deliver their services in accordance to requirements and
adherence to appropriate evaluation process.

We have put in place various measures to ensure we continue to comply with all applicable laws and regulations in
order to maintain our license to operate. The key national laws and regulations applicable to UOA REIT are:

Guidelines on Listed Real Estate Investment Trusts

Capital Markets and Services Act 2007
Main Market Listing Requirements of Bursa Malaysia Securities Berhad
Companies Act 2016
Employment Act 1955
Environmental Quality Act 1974
Personal Data Protection Act 2010
Malaysian Anti-Corruption Commission Act 2009

At UOA REIT, we also ensure our employees are kept up-to-date on corporate policies such as the ‘Whistleblowing
policy’.

The Whistleblowing policy aims to encourage employees and other stakeholder groups to disclose any improper
conduct that they have become aware of. Concerns can be raised directly to the Independent Directors. The
Manager is committed to ensuring that all cases will be treated in the strictest of confidence and promptly
investigated. There were zero cases reported in 2021 and 2022.

Non-compliance with this policy is classed as major misconduct and the employee involved will be subjected to
disciplinary action, which may lead to dismissal.
30 UOA REIT

SUSTAINABILITY STATEMENT (CONTINUED)

MATERIAL ISSUES (continued)

ECONOMIC (continued)
Regulatory Compliance (continued)

UOA REIT has established an Anti-Bribery & Corruption Policy which is published on its website in accordance with
the Guidelines on Adequate Procedures issued pursuant to subsection (5) of Section 17A of the Malaysia Anti-
Corruption Commission Act 2009 which came into effect in June 2020. The said Policy has been and will be
disseminated to all the employees and other stakeholders from time to time when necessary.

Please refer to the Statement of Corporate Governance, Audit & Risk Management Committee Report, and
Statement on Risk Management and Internal Control of this Annual Report for more details on compliance.

Online Lead Generation Campaign for UOA REIT Signature Offices

As part of our digitalisation plan to progressively use more technology to improve our business processes,
operational and cost efficiencies, we have implemented an online lead generation campaign for UOA REIT
signature offices to diversify and complement our traditional marketing platform (prints/classified advertisements).
Our intention is to reach and engage new leads via online channels such as Google, Facebook and LinkedIn, while
enhancing brand awareness and interests in our office units.

The advantages of the online campaign include:

reduces cost and runs 24/7, whereby customers can access our product information at their most
convenient time
target audiences based on demography
measure and track results in real-time, and adjust our business plans to continuously improve results
data collection of prospects and web traffic allows for better analysis

ENVIRONMENTAL
Continuous efforts have been put into managing UOA REIT’s commercial buildings by Jordan Lee Jaafar, the
property manager of UOA REIT. Listed below are the key areas which have contributed to the effective operation
and cost saving management of the buildings.

Energy, Water & Resource Efficiency

The building sector is one of the largest sources of carbon emissions in the country. In view of global climate
change and Malaysia’s commitment to reduce carbon emissions, we have taken initial steps to implement new
environmentally friendly systems across our properties.

Double Glazing Unit

Some of our building façades are equipped with curtain glass wall using double glaze glass to reduce heat
penetration into the buildings.
 ANNUAL REPORT 2022 31

MATERIAL ISSUES (continued)

ENVIRONMENTAL (continued)
Energy, Water & Resource Efficiency (continued)

Lighting Zoning & Energy Saving Light Fitting

The lighting zones allow for more flexible control by owners and tenants to reduce energy consumption
and cost by lighting only areas or zones that are occupied. This is complemented by the replacement of
conventional lighting with LED lighting to reduce energy consumption throughout the car park area and
corridors. Motion sensor lights are also installed in toilet/staircase and tested with a digital power meter in
designated buildings to reduce energy consumption.

Sub-Metering
Separate metering facilities are installed for lighting, power, domestic water and rainwater in designated
offices for effective overall consumption monitoring.

Highly Efficient Equipment

Upgrading of existing lifts with high efficiency motor and equipment with energy regeneration system.

Heat Recovery Wheel

This system serves to shift lower temperature air from outside into indoor office areas by heat transfer
through the heat wheel. The method reduces the air-conditioning usage by bringing in lower temperature
air (fresh air) into the buildings.

Smoke Free Zone

Smoking is prohibited in the buildings.

Indoor Air Pollutants

The use of materials with minimal volatile organic compounds (VOC) and formaldehyde content such as
paint and coating are used throughout the building to minimise detrimental impact on occupants’ health.

Centralised Air-Conditioning System

The use of centralised air-conditioning system to reduce the overall energy consumption in the buildings.
Other initiatives include the installation of chilled water and condenser water treatment, usage of high
efficiency water cooled chiller and the default setting of room temperature to 24 degree celsius (main
lobby, lift lobby and office areas).

Refrigerant & Clean Agents

Use of environmentally friendly refrigerants and clean agents as well as demonstrated leadership in
accelerating the phase out of all ozone depleting substances and promoting the use of low global warming
substances.

Rainwater Harvesting
Reduction in potable water consumption through rainwater collection from roof top to designated water
tank by gravity fled system to applications such as landscape irrigation, toilets and cleaning of common
areas.
32 UOA REIT

SUSTAINABILITY STATEMENT (CONTINUED)

MATERIAL ISSUES (continued)

ENVIRONMENTAL (continued)
Energy, Water & Resource Efficiency (continued)

Water Efficient Landscaping

Use of native or adaptive plants to reduce potable water consumption.

Water Efficient Fittings

Water consumption monitoring and installation of water saving fittings such as self-closing basin tap, toilet
cistern with half/full flush and spray bidet to reduce water flow rate. A flood sensor is also installed at
designated buildings to monitor potential flooding and early detection as well as to safeguard against
water damage and prevent water waste.

Non-Chemical Water Treatment for Cooling Tower

Use of non-chemical water treatment system for cooling tower to reduce airborne disease.

Waste
We ensure that the wastes generated from our properties are collected and disposed of responsibly in accordance
with legal requirements, to minimise the wastes sent to landfills. We collaborate closely with our Property Managers
to identify responsible waste management practices that would benefit both our stakeholders and the
environmental value of our properties.

Our green initiatives to reduce environmental waste have and will continue to be implemented by creative
recycling of annual festive ornaments; reduction in paper usage by e-mailing information instead of sending by
mail; and continuous evaluation of potential automation system in order to identify areas of improvement to reduce
energy cost.

Responsible Consumption
We have also taken the initiative to promote responsible consumption of resources within the management and
finance offices. Employees are encouraged to practice in good consumption habits such as minimising electricity
use, minimising printing and limiting the wastage of resources. For example, employees are encouraged to
transform hardcopy records into softcopy, to print double sided or on recycled paper, when necessary.
 ANNUAL REPORT 2022 33

MATERIAL ISSUES (continued)

SOCIAL
As a real estate investment trust, social sustainability encompasses our tenants, the Manager’s employees, the
property manager’s employees and those who frequently visit our buildings.

New Normal Precautionary Measures (COVID-19)

The global COVID-19 pandemic has presented new norms indiscriminately and all participants of the economy had
to adopt precautionary measures accordingly to mitigate the risk of infection.

We have heightened safety protocols in all our properties in compliance with the Ministry of Health’s guidelines:

1) Effective communication with tenants/visitors to ensure implementation of the Standard Operating

Procedure (“SOP”);
2) Ongoing weekly disinfection at common properties;
3) Encourage the usage of face mask by all tenants/visitors before entering the buildings; and
4) Provision of hand sanitiser at the main lobbies/lift lobbies of the buildings.

Customer Focus
We are committed to achieve the highest customer satisfaction level by placing customers as a top priority. We
maintain a responsible and responsive Facilities Management Programme with the objective of ensuring efficiency
and peace of mind for owners/tenants. Yearly survey is conducted for our tenants on the services provided and
quality of the properties. Continuous improvements on the quality of our buildings and services are carried out.

We also undertake various measures to ensure the quality of our buildings is maintained at all times. Whilst all our
buildings are equipped with firefighting services and security systems, we also arrange for daily patrolling by our
appointed security personnel in order to ensure the safety of occupants in our buildings. Our building
management division has adopted crisis management policies and procedures to ensure annual testing,
simulations and training for crisis situations are conducted.

We also ensure that local tenants are given priority, whenever it is practical to do so, as we consider it important to
support local businesses, their products and services, and to indirectly have a positive impact on the local
economy.

Managing Occupational Health & Safety and Security

As landlord of properties, we always place the safety of tenants and occupiers of our properties a priority. We are
committed to minimising risks; ensuring safety; and protecting the health of tenants, contractors, employees and
visitors who work in or visit UOA REIT’s properties. As such, we have incorporated occupational safety and health
policies and guidelines into our daily business operations with the aim to establish a positive safety culture with
zero tolerance of workplace injury.

In addition, we organise fire drills regularly to ensure that our tenants and other co-owners of our projects are
familiar with the evacuation process. We also ensure annual certification of our elevators and escalators. Certified
chargemen are engaged to continuously assess the safety and maintenance of our electrical wiring and
installations. Asset Enhancement Initiatives (“AEI”) including escalator upgrading are carried out to ensure our
buildings are kept in a good, tenantable and competitive condition.
34 UOA REIT

SUSTAINABILITY STATEMENT (CONTINUED)

MATERIAL ISSUES (continued)

SOCIAL (continued)
Promising Workplace
The Manager acknowledges that the employees are our greatest assets. As an employer of choice, we are
committed to growing and nurturing our talent pool through various channels, not only to help our employees
reach their full potential, but also to ensure our business growth and sustainability.

Recruitment
We strive to formulate a people-centric human resource approach to retain and recruit talents. This is
reflected in our conduct of employment, including recruitment, hiring, compensation, training and
promotion for all employees, regardless of race, gender or age. We practise non-discriminatory
employment policy with conscious effort in promoting inclusivity and diversity.

Diversity is essential to our business as an investment fund as we require views and opinions from varying
groups to ensure that the Group remains relevant in the current economic environment. Hence, we strive
to ensure that all parties receive equal opportunities and enjoy a conducive working environment.

Employee Breakdown
Currently, we have a gender distribution of 39% female and 61% male, 73% of which being Bumiputera
while 27% are non-bumiputera. This reflects that we offer career advancement opportunities to deserving
employees based on their performance, regardless of their gender or race.

A majority of our employees lies in the age group of 31-50 years. All employees are employed based on
talents and capabilities to ensure that our workforce is culturally diverse and knowledgeable. Nevertheless,
23% of our employees lie within the age group of 30 and below. This shows that we also remain mindful of
hiring young talents to groom Malaysia’s younger generation with skills that will not only benefit our
business and the economy but their employability value as well.

Training & Development

To facilitate the continuous development and motivation of our employees, relevant internal and external
training programmes that tailor to different divisions and individual employees were organised. External
courses comprising technical and non-technical training workshops, seminars as well as conferences
amounted to a total of 330 hours by the employees.

Minimising Turnover Rate

Our employee turnover rate was recorded at 0.91% for the financial year ended 2022. We adhere to the
requirements of Malaysia’s Minimum Wages Order 2020 and assure our stakeholders that our business
practices will continue to comply with the Order throughout our operations. Ensuring that our employees
are fairly compensated with remuneration packages that are competitive within the domestic REIT industry
is an important factor that contributes to employee satisfaction and talent retention.
 ANNUAL REPORT 2022 35

MATERIAL ISSUES (continued)

SOCIAL (continued)
Promising Workplace (continued)

Minimising Turnover Rate (continued)

To achieve a good working culture and encourage employee dedication, various employee benefits were
provided during the financial year 2022 (continued) :
1) Medical Benefits
a. Outpatient Care covering employee, their non-working spouse and children below 21 years old
b. Group Hospitalisation & Surgical Insurance Plan
c. Group Personal Accident Insurance Plan
2) Statutory Contributions
a. Employees Provident Fund (EPF)
b. Employment Insurance System (EIS)
c. Social Security Organisation (SOCSO)
3) Dental Benefits
4) Marriage Gift & Baby Gift
5) Complementary Staff Parking
6) Awards (Long Service Award and Healthy Award)
7) Staff Dine-In Discount in selected restaurants
8) Medical Check-Up
9) Face Mask Distribution
10) Chinese New Year Angpow
11) Festive Discretionary Leave; and
12) Early Release for Muslim Employees during Ramadan

COMMUNITY OUTREACH

As a responsible corporate citizen, we give back to communities wherever we operate through our multi-faceted
approach towards Corporate Social Responsibility (“CSR”). UOA recognises the importance of such engaging
initiatives as they form the basis of a caring community, thereby helping to shape a better and more sustainable
society.

Raya Food Hampers Distribution To 250 Single Parents & OKUs

In April 2022, UOA held the annual Sambutan Aidilfitri in Kerinchi to bring cheer to the underserved community.
Some 250 food hampers together with duit raya were distributed to single parents and Orang Kurang Upaya
(OKUs) in the presence of YB Fahmi Fadzil, Member of Parliament for Lembah Pantai.

The Raya hamper distribution was conducted with strict adherence to the established COVID-19 Standard
Operating Procedures (SOPs) and guidelines to protect the safety and well-being of the community. Each hamper
comprised food items such as rice, cooking oil, sugar, flour, coffee, biscuits and canned food.
36 UOA REIT

SUSTAINABILITY STATEMENT (CONTINUED)

MATERIAL ISSUES (continued)

COMMUNITY OUTREACH (continued)

RM60,000 E-Paper Sponsorship To Benefit Tertiary Students
In September 2022, UOA sponsored subscriptions of The Star ePaper worth RM60,000 for selected higher learning
institutions, under SMG’s University Sponsorship Programme 2022. The e-Paper will serve as a convenient and
beneficial educational resource for university students in need to keep abreast with current affairs, and support
their academic pursuits. UOA hopes that the sponsorship will provide students with greater access to knowledge
and information as they work on pursuing excellence, particularly in English.

In the spirit of lifelong learning and good reading habits, UOA believes it is important to help these students, who
are our future leaders, to be equipped with a strong foundation in information literacy and analytical thinking, so
that they can develop sound judgement and make informed decisions. A total of 800 students from the B40 group
and self-supporting part-time student groups will benefit from the university sponsorship programme.

RM50,000 Donation In Support Of Breast Cancer Awareness Campaign

UOA donated RM50,000 to MH-Bifrost Run 2022: Run Against Breast Cancer that was held in October 2022. The
campaign was promoted by Breast Cancer Resource Centre of University Malaya Medical Centre (BCRC, UMMC) in
conjunction with Pink October Breast Cancer Awareness Campaign.

Former Deputy Minister of Women, Family and Community Development, Datin Paduka Chew Mei Fun; Chief
Brand Officer for eShoplive, Ms Chiong Pei Pei; and Honorary Advisor of UMMC Pink Warrior, Puan Sri Chelsia
Chan; came together as the Pink Warrior ambassadors to unite and inspire Malaysians to participate in the charity
run. The ultimate objective of the campaign was to raise diagnostics funds for B40 breast cancer patients while
promoting social awareness of breast cancer prevention.

CONCLUSION
Financial year 2022 was a challenging year brought forth by the effects of the COVID-19 global pandemic. As we
continue to navigate our way towards a sustainable and resilient recovery amidst market uncertainty and economic
downturn, we remain committed to further strengthening our prudent and agile approach in ensuring the long-
term sustainability of our business.

UOA Centre
 ANNUAL REPORT 2022 37

STATEMENT OF CORPORATE
GOVERNANCE
The Board of Directors of UOA Asset Management Sdn Bhd (“Board”), being the Manager of UOA Real Estate
Investment Trust (“UOA REIT”) and its subsidiary (“Group”) recognises the importance of good corporate
governance as they firmly believe that an effective corporate governance culture is essential in the best interests of
the unitholders and is critical to the performance and success of the Manager and subsequently the Group.

The Board follows the practices and policies of the Securities Commission’s Guidelines on Listed Real Estate
Investment Trusts (“REIT Guidelines”) and the Main Market Listing Requirements of Bursa Malaysia Securities
Berhad (“Listing Requirements”). The Board has also adopted relevant principles and recommendations of the
Malaysian Code of Corporate Governance 2021, where applicable to the operations of the Group and is pleased to
provide a narrative statement on the Manager’s main corporate governance practices and policies.

A. THE MANAGER OF UOA REIT

The Manager has general powers of management over the assets of the Group. Its primary role is to set the
strategic direction of the Group and manage the assets and liabilities of the Group for the benefit of its
unitholders, to ensure that the operations of the Group are conducted in a proper, diligent and efficient
manner within an appropriate risk management framework; and to enhance value returns to its unitholders.

The Manager’s primary functions and responsibilities include:

Setting the strategic direction of the Group and recommend to the Trustee on the acquisition, divestment
or enhancement of assets in accordance with the Manager’s investment strategy;
Formulating plans for equity and debt financing for the Group’s capital requirements with the objective of
optimising the capital structure and the cost of capital;
Ensuring proper recording of transactions including the preparation of accounts, and annual financial
statements and reports;
Supervising the Property Manager who performs the day-to-day property management functions for the
Group’s properties; and
Ensuring compliance with the relevant laws and applicable provisions of the REIT Guidelines, Listing
Requirements and the trust deed constituting UOA REIT dated 28 November 2005 (“Deed”).

UOA REIT is externally managed by the Manager and it has no personnel of its own. The Manager appoints
experienced and well-qualified management personnel to handle the day-to-day operations. All Directors and
employees of the Manager are remunerated by the Manager and not by UOA REIT. UOA Asset Management
Sdn Bhd is the appointed Manager of UOA REIT in accordance with the terms of the Deed which outlines the
circumstances under which the Manager can be retired.

The Manager holds a Capital Markets Services Licence as required under the Capital Markets and Services Act
2007 to carry on the regulated activity of fund management in relation to asset management restricted to real
estate investment trust activities. The Manager is a member of the Securities Industry Dispute Resolution
Centre (SIDREC) pursuant to the requirements in the Capital Markets and Services (Dispute Resolution)
Regulations 2010.
38 UOA REIT

STATEMENT OF CORPORATE
GOVERNANCE (CONTINUED)
B. BOARD OF DIRECTORS OF THE MANAGER OF UOA REIT
Role of the Board

The Board is responsible for the oversight and corporate governance of the Manager. The Board sets the
strategic direction, oversees the proper conduct of the Manager’s activities, identifies principal risks and
ensures the implementation of systems to manage these risks. In addition, the Board reviews key matters such
as financial results, investments, divestments and major capital expenditure of the Group. In making decisions,
the Board considers the business outlook and other factors affecting real estate investment trusts and property
sectors.

Appointment to the Board

All new nominations are assessed by the Directors and the final decision of appointment lies with the entire
Board to ensure a balanced mix of experience and expertise of members of the Board.

Board Composition

The Board presently consists of five (5) members, comprising one (1) Executive Director and four (4) Non-
Executive Directors. Three (3) of the Non-Executive Directors are independent. The Board composition
complies with provisions of the Listing Requirements and the REIT Guidelines for at least one third (1/3) of the
Board to be independent.

The Board composition reflects a mix of suitably qualified and experienced professionals in the fields of
accountancy, banking and finance, real estate development and property management. This combination of
different professions and skills working together enables the Board to effectively lead and govern the Manager
and the Group.

The Board is led by competent Independent Directors, namely an Independent Non-Executive Chairman and
two Independent Non-Executive Directors, who are highly respected persons with extensive experience in
various fields and are able to provide sufficient guidance and advice to the Audit and Risk Management
Committee and the Board. There are four male and one female Directors on the Board. The Board is of the
opinion that the composition of the Board is adequate.

Clear Roles and Responsibilities

The positions of Chairman of the Board and Chief Executive Officer (“CEO”) are held by separate persons.

The Chairman leads the Board to ensure that members of the Board work together with the Manager in a
constructive manner to address strategies, business operations, financial performance and risk management
issues. The Chairman also takes a lead role in promoting high standards of corporate governance with the full
support of the Board and the Manager.

The CEO is responsible for implementing the policies and decisions of the Board. The CEO also has full
executive responsibilities over the business directions and operational decisions in managing UOA REIT.

The clear separation of roles of the Chairman and the CEO provides a healthy, independent and professional
relationship between the Board and the management.

The Board is assisted by a qualified and competent Company Secretary and a Compliance Officer to provide
sound governance advice and ensure adherence to rules and procedures.

The Board has formalized its Board Charter setting out the roles and responsibilities of the Board together with
its objectives. The Board Charter serves as a guide to the Board in carrying out its duties. The Board Charter is
published on UOA REIT’s website.

Independence and Time Commitment

The Board receives annual written confirmation from the Independent Directors confirming their
independence and in which the Directors acknowledge their respective positions. All the Directors are able to
devote sufficient time and attention to the operations of UOA REIT and to update themselves with knowledge
and skills by attending seminars and training. The Directors are also accessible by email and
telecommunication should the need arises.
 ANNUAL REPORT 2022 39

B. BOARD OF DIRECTORS OF THE MANAGER OF UOA REIT (CONTINUED)

Corporate Code of Conduct and Whistleblowing Policy

The Manager has in place procedures to provide its employees with defined and accessible channels to report
on suspected fraud, corruption, dishonest practices or other similar matters relating to the Group and/or the
Manager, and for the independent investigation of any reports by employees and appropriate follow up action.

The aim of the whistleblowing policy is to encourage the reporting of such matters in good faith, with the
confidence that employees making such reports will be treated fairly, and to the extent possible, be protected
from reprisal.

The Manager has developed a Whistle Blowing Policy for the public to have access to the Independent
Directors and Chairman of the Board.

United Overseas Australia Ltd (“UOA Ltd”), the ultimate holding company of the Manager has established a
Code of Conduct which sets out the standards which directors, officers, managers, employees and consultants
of UOA Ltd and its subsidiaries are expected to comply with in relation to the affairs of their businesses.

Pursuant to the Guidelines on Adequate Procedures issued pursuant to subsection (5) of Section 17A of the
Malaysian Anti-Corruption Commission Act 2009 (Act 694) (“MACC Act 2009”) which came into effect in June
2020, the Manager has established its Anti-Bribery and Corruption Policy which is published on its website.

Corporate Social Responsibility

The UOA Ltd Group continuously carries out corporate social responsibility initiatives in the areas of
education, environment and community activities.

Board Meetings

The Board meets to discuss and review the Manager’s operations and the financial performance of the Group
and meetings are held at least once every quarter (or more often if necessary). The Board is provided in
advance with the agenda together with reports and supporting documents relevant to the Board Meeting. The
proceedings of the Board Meetings are duly minuted and signed by the Chairman of the meeting. The Board
met six (6) times during the financial year ended 31 December 2022. The attendance record of the Board is as
follows:

Total Board Meetings Percentage of

Directors Attendance
Attended

Kong Sze Choon 6/6 100%

Kung Beng Hong 6/6 100%

Dato’ Gan Boon Khuay 6/6 100%

Yap Kang Beng 6/6 100%

Karn Sau Meng 6/6 100%

All the Directors have complied with the Listing Requirements by having attended more than fifty percent of
the number of Board Meetings held.

All the Directors have access to the Audit and Risk Management Committee, the internal auditors, the
Company Secretary and Compliance Officer, as well as to independent professional consultants for advice if
and when necessary.
40 UOA REIT

STATEMENT OF CORPORATE
GOVERNANCE (CONTINUED)
B. BOARD OF DIRECTORS OF THE MANAGER OF UOA REIT (CONTINUED)

Directors’ Fees

The remuneration paid by the Manager to its Directors for the year ended 31 December 2022 is as follows:

Fees Salaries Others Total

RM RM RM RM

Kong Sze Choon - 558,000 67,603 625,603

Kung Beng Hong 48,000 - - 48,000

Dato’ Gan Boon Khuay 48,000 - - 48,000

Karn Sau Meng 48,000 - - 48,000

Directors’ Training

During the year ended 31 December 2022, the Directors have attended training and seminars as follows:

Directors Training And Seminars Attended

Kong Sze Choon 1) Preparing Leaders & Executives for Artificial Intelligence
2) Decoding Transaction & Related Party Transactions Rules

Kung Beng Hong 1) Thannes Tax Conference 2022

2) The Audit Committee: Unpacking the roles of the Committee &
honing its effectiveness in discharging its responsibilities
holistically

Dato’ Gan Boon Khuay 1) Thannes Tax Conference 2022

2) 3rd Annual Malaysian REIT Forum 2022: M-REITs & The Road
Ahead

Yap Kang Beng 1) Thannes Tax Conference 2022

Karn Sau Meng 1) The Audit Committee: Unpacking the roles of the Committee &
honing its effectiveness in discharging its responsibilities
holistically
2) Mandatory Accreditation Programme
3) Cessation of employment: What You Should Know and What will
be the Employee and Employer Responsibilities
 ANNUAL REPORT 2022 41

C. DUE DILIGENCE COMMITTEE

The Due Diligence Committee (“DDC”) was established by and operates under the delegated authority of the
Board. The DDC comprises one (1) Independent Director, one (1) Non-Independent Director and one (1)
management representative. The DDC’s role is to perform appropriate due diligence work on any proposed
investment or divestment and make recommendations to the Board.

D. AUDIT AND RISK MANAGEMENT COMMITTEE

The Board has adopted the best practices in corporate governance by establishing an Audit and Risk
Management Committee (“ARMC”) and implemented an Internal Audit Function. The Board is committed to
maintaining a sound and effective system of internal control in order to safeguard the interests of the
unitholders of UOA REIT and the investments and assets of the Group.

Key Functions and Responsibilities, and Summary of Activities of the ARMC during the Year

The detailed ARMC Report including the key functions and responsibilities, and the summary activities of the
ARMC are more specifically set out in the ARMC Report in this Annual Report.

E. INTERNAL AUDIT FUNCTION AND RISK MANAGEMENT

The Internal Audit Function is undertaken by the internal auditors of UOA Ltd and is independent of
Management. The ARMC meets with the internal auditors at its quarterly meetings. A Risk Management Policy
has been adopted by the Board to mitigate risks of the Group. Further details are set out in the Statement on
Risk Management and Internal Control.

The ARMC reviews related party transactions at its quarterly meetings and whenever deemed necessary. A
Related Party Transaction Policy has been adopted to enable the ARMC to review and deliberate on such
transactions appropriately. Suitable recommendations are presented to the Board for approval.

The ARMC ensures that financial statements comply with the applicable financial reporting standards and
meet with the external auditors at least two (2) times a year to ensure that such standards are in place. The
external auditors confirm their independence to the ARMC at the meeting where they table the audit findings
to the ARMC.

F. ACCOUNTABILITY AND AUDIT

Directors’ Responsibility Statement for Preparing the Annual Audited Financial Statements

The Board is responsible for ensuring that the financial statements of the Group are drawn up in accordance
with the Malaysian Financial Reporting Standards, International Financial Reporting Standards, REIT
Guidelines and the Deed. In preparing the financial statements, the Directors have selected and applied
consistently suitable accounting policies and made judgements and estimates that are reasonable and
prudent.

Timely Disclosures

The Board ensures timely disclosure of transactions and other necessary disclosures by having in place various
checklists prepared in accordance with regulatory requirements and disseminated to the relevant departments
to enable disclosures to be made on a timely basis.

Relationship with Auditors

The appointment of the external auditors (“Auditors”), nominated by the Manager, is approved by the Trustee.
The Auditors are independent of the Manager and the Trustee. The remuneration of the Auditors is approved
by the Trustee. While there is no specific policy on the assessment of the Auditors, the Board reviews and
approves the re-appointment of the Auditors on a yearly basis.

Communication with Unitholders and Dissemination of Information

The Board acknowledges the importance of regular communication with unitholders and the investing
community to ensure that they are well informed of the activities and performance of the Group. The
communication channels include UOA REIT’s website, quarterly reports, annual reports, circulars, various
disclosures and announcements on Bursa Malaysia’s website, and at general meeting of unitholders.
42 UOA REIT

AUDIT & RISK MANAGEMENT

COMMITTEE REPORT
INTRODUCTION
The Board of Directors (“Board”) has established an Audit and Risk Management Committee (“ARMC”) and
implemented an Internal Audit and Risk Management Function. The Board is committed to maintaining a sound
and effective system of internal control in order to safeguard the interests of the unitholders of UOA REIT and the
investments and assets of the Group. The ARMC provides assistance to the Board in fulfilling its corporate
governance responsibilities in relation to financial reporting, internal control structure, related party transactions
and external and internal audit functions. The ARMC may invite any of the key management or employees to
participate in its meetings and to appoint any relevant consultants or professionals to assist it to discharge its
functions.

COMPOSITION
The ARMC consists of the following two (2) Independent Non-Executive Directors and a Non-Independent Non-
Executive Director:

Mr. Kung Beng Hong - Independent Non-Executive Director/Chairman of the ARMC

Ms. Karn Sau Meng - Independent Non-Executive Director

Mr. Yap Kang Beng - Non-Independent Non-Executive Director

SUMMARY OF TERMS OF REFERENCE

1. Composition

The ARMC is appointed by the Board from among its members. The appointment and composition of the ARMC
is determined based on the following principles:

Comprises at least three (3) members;

All members must be Non-Executive Directors with a majority of them being independent directors;
At least one (1) member must be a member of the Malaysian Institute of Accountants or a member of an
accounting association as specified in Part II of the First Schedule of the Accountants Act, 1967; and
The Chairman must be an Independent Director.

The ARMC consists of two (2) Independent Non-Executive Directors and a Non-Independent Non-Executive
Director.

Mr. Kung Beng Hong (Chairman/Independent and Non-Executive Director);

Ms. Karn Sau Meng (Independent and Non-Executive Director); and
Mr. Yap Kang Beng (Non-Independent and Non-Executive Director).

The Terms of Reference of the ARMC is published on our website.

 ANNUAL REPORT 2022 43

2. Key Functions and Responsibilities, and Summary of Activities of the ARMC during the Year

The key functions and responsibilities of the ARMC are:

To review together with the internal auditors, their internal audit plans and internal audit reports, and to
evaluate major findings of these reports and management’s responses to these findings;

To review the adequacy of the scopes, functions, competencies and resources of the internal audit function
and to ensure that it has the necessary authority to carry out its work;

To direct the internal auditors to any specific area or procedure for audit if necessary;

To review the internal auditor’s report on risk management so as to evaluate key risks that would have
significant impact on the Group’s business and the measures taken to mitigate such risks;

To recommend to the Board any matters relating to the appointment of external auditors, the fees and any
matters in relation to resignation or dismissal of the external auditors;

To review together with the external auditors, the audit plan and scope of their audit and upon completion
of the audit assessment, to present the audit findings and recommendation of the external auditors to the
Board;

To assess the suitability and independence of the external auditors. The ARMC reviews the independence of
the external auditors at the meeting where the external auditors confirm their independence when they
table their audit findings to the ARMC;

To discuss problems and reservations arising from the internal audit, statutory audit, and matters that the
internal and/or external auditors may wish to discuss (in the absence of the management where
appropriate);

To review the quarterly results and year-end financial statements prior to the approval by the Board;

To review financial statements with focus on significant matters highlighted including financial reporting
issues, significant judgement made by management, and significant and unusual events or transactions,
and how these matters are addressed;

To monitor and evaluate the effectiveness of the Manager’s internal control systems and the
internal/external auditors’ evaluation of these systems;

To monitor the procedures established to ensure compliance with relevant laws and applicable provisions
of the REIT Guidelines, Listing Requirements and the Deed;

To review related party transactions and any conflict of interest situations that may arise within the Manager
and/or the Group; and

To perform any other functions as directed by the Board.

3. Frequency and Attendance of Meetings

A minimum of four (4) meetings a year shall be planned and any additional meetings will be on a need basis.
The ARMC meets with the External Auditors without Executive Board members present at least twice a year. The
ARMC meets regularly, with due notice of issues to be discussed, and records its conclusions and then report to
the full Board as and when necessary. The Chairman of the ARMC engages on a continuous basis with Senior
Management, the Accountant, the Internal Auditors and the External Auditors in order to keep abreast of matters
affecting the Group. Other Board members and employees may attend any particular ARMC meeting only upon
the invitation of the ARMC specific to a relevant meeting.
44 UOA REIT

AUDIT & RISK MANAGEMENT

COMMITTEE REPORT (CONTINUED)
3. Frequency and Attendance of Meetings (continued)

The ARMC met five (5) times during the financial year ended 31 December 2022. The attendance record of the
ARMC are as follows:

Total meetings Percentage of

Directors
attended Attendance

Kung Beng Hong 5/5 100%

Karn Sau Meng 5/5 100%

Yap Kang Beng 5/5 100%

Summary of Activities of the ARMC during the Year

Functions and responsibilities performed by the ARMC during the financial year ended 31 December 2022
include the following:

Reviewed the external auditors’ Audit Planning Memorandum, audit approach and reporting requirement
prior to the commence of audit for the financial year ended 31 December 2022;

Reviewed the external auditors’ Audit Progression Memorandum and Audit Completion Memorandum for
the audit for the year ended 31 December 2022 and discussed on key audit areas and any significant audit
findings;

Reviewed the results of risk management activities;

Reviewed the compliance with Guidelines on Listed REITs, Malaysian Code on Corporate Governance and
related party transaction with the internal auditors;

Reviewed the function of purchasing, contracts and payment to contractors and suppliers with the internal
auditors;

Reviewed the quarterly results for all the financial quarters and year-end;

Reviewed and approved the reports and statements for the Annual Report 2022;

Reviewed the Business Continuity Plan with the internal auditors;

Reviewed the compliance in relation to related party transaction; and

Reviewed with the internal auditors, and approved the annual audit plan for the year ending 31 December
2023.

Access to and Supply of Information

The ARMC is entitled to full access to and co-operation of the management and internal auditors. Other Board
members and employees may attend any particular ARMC meeting upon invitation by the ARMC. The ARMC
has full access to reasonable resources to enable it to discharge its functions properly.
 ANNUAL REPORT 2022 45

STATEMENT ON RISK
MANAGEMENT AND INTERNAL
CONTROL
The Board of Directors of UOA Asset Management Sdn Bhd (“Board”), being the Manager of UOA Real Estate
Investment Trust (“UOA REIT”) and its subsidiary (“Group”) is committed to nurture and preserve an effective and
sound system of risk management and internal control to safeguard the interests of the unitholders of UOA REIT as
well as the investments and assets of the Group. In taking on this commitment, the Board has adopted the best
practices in corporate governance by establishing an Audit and Risk Management Committee (“ARMC”) and
setting up an Internal Audit Function, undertaken by the Internal Auditors of United Overseas Australia Ltd to
comply with Paragraph 15.26 (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

The Board is pleased to provide a statement on the state of the Manager’s internal controls for inclusion in this
Annual Report for the financial year ended 31 December 2022.

Internal Audit Function

The internal audit function is undertaken by the Internal Audit Department of the ultimate holding company of the
Manager, United Overseas Australia Ltd. The ARMC has an oversight function of all activities carried out by the
internal auditors in respect of the Group.

The principal role of the internal auditors is to independently review the risk exposures and control processes
implemented by the Manager and conduct assignments which encompass auditing and review of critical areas,
report on the adequacy, effectiveness and efficiency of the operations and internal control and highlight the
significant findings in respect of non-compliance within the Group to the ARMC.

The Internal Audit Department function is guided by the Institute of Internal Auditors’ International Professional
Practices Framework (“IPPF”). The internal audit framework is designed to be in line with the Committee of
Sponsoring Organisations of the Treadway Commission (“COSO”) Internal Control – Integrated Framework. The
Internal Audit Department reports directly to the ARMC.

The internal auditors engage in regular communication with the senior management team and various
departments within the organisation in relation to its internal audit activities. Efforts for continuous improvement in
operations and systems are also discussed.

Internal audit reports which include details of activities planned, audit findings and recommendations are tabled at
quarterly ARMC meetings.

A summary of internal audit activities that were undertaken during the financial year ended 31 December 2022 are
as follows:

Reviewed on the compliance with Guidelines on Listed Real Estate Investment Trusts;

Reviewed on the process of purchasing, contract and payment to contractors and suppliers;

Reviewed on financial management; and

Reviewed on the Business Continuity Plan for UOA Real Estate Investment Trust.

The professionalism and competency of internal auditors are being emphasized through continuous training,
regular performance evaluation by the ARMC and attaining professional certifications. As at year ended 31
December 2022, the Internal Audit Department comprises 3 internal auditors. The head of the Internal Audit
Department is a Certified Internal Auditor and member of The Institute of Internal Auditors Malaysia. All internal
audit personnel are free from any relationship or conflicts of interest, which could impair their objectivity and
independence.
46 UOA REIT

STATEMENT ON RISK
MANAGEMENT AND INTERNAL
CONTROL (CONTINUED)
Key Elements of Internal Control

The Board assumes its responsibility to maintain a sound and effective system of internal control and risk
management practices within the Manager in order to meet business objectives. The Board acknowledges that the
system provides reasonable but not absolute assurance against material misstatement of management and
financial information or against financial losses or fraud. Therefore, the Board ensures the effectiveness of the
system through regular reviews.

The Board has appointed the ARMC to review the effectiveness of the Group’s system of internal control. The
ARMC, assisted by the Internal Audit Function provides the Board with the assurance it requires on the adequacy
and integrity of the system of internal control.

The current system of internal control has within it the following key elements:

There is an operations manual which provides an overview of the Manager’s responsibilities in relation to
management of the Group. This operations manual is a guide to daily activities and operations of the Group
and is subject to periodic review and updates;

Quarterly management reporting on the performance of the Group is presented to the Board;

The operational structure is well defined with adequate segregation of duties to ensure check and balance
on jobs, as well as delegation of authorities and responsibilities;

Human resource policy, procedure and related human resource matters are communicated to staff via
regular memo, emails and the employee handbook. These are also available on the internal information
portal.

Establishment of an Internal Audit Function which carries out internal audit review according to a risk-based
audit plan approved by the ARMC. The internal auditors tabled the results of their review with
recommendations and follow up actions to the ARMC on quarterly basis;

Adequate insurance coverage in respect of insurable risk (including investment properties) to appropriate
levels, which are determined upon consultation with relevant professionals;

On-going training and educational programmes for Directors and relevant staff in their respective areas of
duty in order for them to perform their functions effectively;

Adoption of a Risk Management Policy to identify key risks together with the appropriate measures and
controls to manage the aforesaid risks. These are then outlined in the Risk Register and subsequently
appraised by the ARMC;

Adoption of a Related Party Transaction Policy to ensure that related party transactions are undertaken in
compliance with the REIT Guidelines and the Trust Deed, and are carried out on an arm’s length basis and
on normal commercial terms; and

The Business Continuity Plan is in place to ensure timely continuation of operations in the event of
disruption.

Non-compliance and internal control weaknesses noted by the internal and external auditors and their
recommendations will be reported to the ARMC. To date, there have been no identified non-compliance or internal
control weaknesses of a material nature.
 ANNUAL REPORT 2022 47

Risk Management

The Board has established a sound risk management framework which is currently being adopted by the Manager
that enables it to continuously identify, evaluate, mitigate and monitor risks that affect the Group. The Board
provides an oversight function on risk management. However, responsibility for managing risk lies initially with the
business unit concerned, working within the overall strategy outlined by the Board. Therefore, the Manager has
formed the Risk Management Working Committee (“RMWC”) which encompasses key personnel from various
departments to identify potential risks, to assess the effectiveness of existing controls and to develop mitigating
measures to manage significant risks.

With the assistance rendered by the internal auditors, the RMWC has formulated and developed a Risk
Management Policy which was reviewed by the ARMC and approved by the Board. The Risk Management Policy
was revised in 2021 and aims to:

Provide objectives and principles in risk management activities;

Establish responsibilities and accountability in risk management;

Establish risk management structures and processes; and

Establish risk parameters in risk assessment.

During the financial year under review, the RMWC performed a risk assessment. Identified risks were categorised
and assessed in terms of likelihood and consequences. Subsequent to the risk assessment, a residual risk rating
was recorded taking into account the effectiveness of internal controls in mitigating the risk. The outcome of the
risk assessment was recorded in the Risk Register and Risk Heat Map for ARMC deliberation. The RMWC ensures
that internal controls are in place and effective in mitigating the risk, while the ARMC provides an oversight role in
risk management.

The management has given its assurance to the Board that the Group’s risk management and internal control
system is operating adequately and effectively in all material respects. This is based on the Group’s effective
processes of control and oversight.

Review of This Statement by External Auditors

The external auditors have reviewed this Statement on Risk Management and Internal Control for inclusion in the
annual report for the financial year ended 31 December 2022. Their review was conducted in accordance with
Assurance Engagements Other than Audits or Reviews of Historical Financial Information (“AAPG 3”), Guidance for
Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the
Annual Report, issued by the Malaysian Institute of Accountants (MIA). AAPG 3 does not require the external
auditors to, and they did not, consider whether this Statement covers all risks and controls, or to form an opinion on
the adequacy and effectiveness of the Group’s risk and control procedures. AAPG 3 also does not require the
external auditors to consider whether the processes described to deal with material internal control aspects of any
significant problems disclosed in the annual report will, in fact, remedy the problems. Based on their review, the
external auditors have reported to the Board that nothing has come to their attention that causes them to believe
that this Statement is inconsistent with their understanding of the process the Board has adopted in the review of
the adequacy and effectiveness of the risk management and internal control system.

The Board’s Conclusion

The Board is of the view that the current system of internal control is responsive and adequate to the business
environment of the Group. There was no material control failure or weakness that would have any material adverse
effects on the results of the Group for the period under review.

In addition, the Board is of the view that the Group will maintain its business objective and operational efficiency by
continuous commitment towards a sound system of internal control. The Board continues to take measures to
enhance the system of internal control.
48 UOA REIT

ADDITIONAL COMPLIANCE
INFORMATION
Material Contracts

There was no material contract entered into involving directors’ and major unitholders’ interest which were still
subsisting as at the end of the financial year under review or which were entered into since the end of the previous
financial year, except as disclosed in Note 28 to the financial statements.

Non-Audit Fees

Non-audit fees paid/payable to the external auditors of the Trust and its subsidiary for the financial year ended 31
December 2022 amounted to RM3,000 in respect of services for the review of the Statement on Risk Management
and Internal Control of the Trust.

The provision of non-audit services by the external auditors to the Group is both cost effective and efficient due to
their knowledge and understanding of the operations of the Group, and did not compromise their independence
and objectivity.

DIRECTORS OF THE MANAGER’S RESPONSIBILITY

STATEMENT
for the Audited Financial Statements
The Directors of the Manager (“The Directors”) are required by the Companies Act 2016 to prepare the financial
statements for each financial year which have been made out in accordance with applicable Malaysian Financial
Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”), the Securities Commission’s
Guidelines on Listed Real Estate Investment Trusts (“REIT Guidelines”), the provisions of the Deed dated 28
November 2005 (“Deed”), the requirements of the Companies Act 2016 and the Main Market Listing Requirements
of Bursa Malaysia Securities Berhad.

The Directors are responsible to ensure that the financial statements give a true and fair view of the state of affairs of
the Group and the Trust at the end of the financial year, and of the results and cash flows of the Group and the Trust
for the financial year.

In preparing the financial statements, the Directors have:

Adopted appropriate accounting policies and applied them consistently;

Made judgements and estimates that are reasonable and prudent; and

Prepared the financial statements on a going concern basis.

The Directors are responsible to ensure that the Group and the Trust keep accounting records which disclose with
reasonable accuracy the financial position of the Group and the Trust which enable them to ensure that the
financial statements comply with the Companies Act 2016. The Directors have taken reasonable steps to detect
and prevent fraud and other irregularities, and to safeguard the assets of the Group and of the Trust.
FINANCIAL
STATEMENTS

50 Manager's Report

54 Statement by Manager

55 Statutory Declaration

56 Trustee’s Report to the Unitholders

57 Independent Auditors’ Report to the

Unitholders

61 Statements of Financial Position

62 Statements of Profit or Loss and

Other Comprehensive Income

64 Statements of Changes in Net Asset

Value

66 Statements of Cash Flows

68 Notes to the Financial Statements

50 UOA REIT

MANAGER’S REPORT
UOA Asset Management Sdn Bhd, the Manager of UOA Real Estate Investment Trust (“UOA REIT” or “Trust”), has
pleasure in presenting the Manager’s Report on UOA REIT together with the audited financial statements of the
Group and of the Trust for the financial year ended 31 December 2022.

PRINCIPAL ACTIVITY OF MANAGER

The Manager, a company incorporated in Malaysia, is a subsidiary of UOA Corporation Berhad (a subsidiary of UOA
Holdings Sdn Bhd which in turn, is a wholly owned subsidiary of United Overseas Australia Ltd, a company
incorporated in Australia and listed on the Australian Stock Exchange and the Stock Exchange of Singapore). The
principal activity of the Manager is the management of real estate investment trusts. There has been no significant
change in the nature of this activity during the financial year.

PRINCIPAL ACTIVITIES OF THE TRUST

UOA REIT is a Malaysia-domiciled real estate investment trust constituted under a Deed dated 28 November 2005
(“Deed”) by UOA Asset Management Sdn Bhd (“Manager”) and RHB Trustees Berhad (“Trustee”).

UOA REIT commenced its operations on 1 December 2005 and was listed on the Main Market of Bursa Malaysia
Securities Berhad on 30 December 2005. The principal activity of UOA REIT is to invest in a diversified portfolio of
real estate and real estate-related assets used, or predominantly used, for commercial purposes, whether directly or
indirectly through the ownership of single-purpose companies, who wholly own real estate with the objective of
achieving a stable return from rental income and long-term capital growth. There has been no significant change in
the nature of this activity during the financial year.

UOA REIT will continue its operations until such time as determined by the Trustee and the Manager as provided
under Clause 26 of the Deed.

The principal activity of the subsidiary company is disclosed in Note 7 to the Financial Statements.

CHANGES IN THE STATE OF AFFAIRS

There was no change in the state of affairs of the Group during the financial year under review.

BOARD OF DIRECTORS OF THE MANAGER (“DIRECTORS”)

Directors Date of appointment

Dato’ Gan Boon Khuay 16 November 2005

Kung Beng Hong 28 November 2005

Kong Sze Choon 14 January 2011

Yap Kang Beng 18 March 2016

Karn Sau Meng 23 December 2021

 ANNUAL REPORT 2022 51

DIRECTORS’ BENEFIT

Neither at the end of the financial year, nor at any time during that financial year, did there exist any arrangement to
which UOA Asset Management Sdn Bhd was a party, whereby Directors of the Manager might acquire benefits by
means of the acquisition of units in or debentures of the Trust or any other body corporate.

During the financial year under review, no Director of the Manager has received or become entitled to receive any
benefit by reason of a contract made by UOA Asset Management Sdn Bhd or a related corporation, with any
director or with a firm of which he is a member, or with a company or a related corporation, in which he has a
substantial financial interest, except as disclosed in Note 28 to the Financial Statements.

DIRECTORS’ INTEREST

The interests and deemed interests in the units of the Trust of those who were Directors as at the financial year end
(including the interests of the spouses or children of the Directors who themselves are not Directors of the
Company) are as follows:

Number of units

As at As at
1 January 31 December
2022 Acquired Disposed 2022

Direct interest
Dato’ Gan Boon Khuay 400,000 100,000 - 500,000
Kung Beng Hong 400,000 - - 400,000
Kong Sze Choon 69,000 - - 69,000

Indirect interest
Kong Sze Choon * 24,000 - - 24,000
Kung Beng Hong# 63,400 100,000 - 163,400

* By virtue of his interest in the shares of Global Transact Sdn Bhd

# By virtue of shares held by his spouse

None of the other Directors in office at the end of the financial year had any interest in units in the Trust during the
financial year.

SOFT COMMISSION

During the financial year, the Manager did not receive any soft commission from its broker, by virtue of transactions
conducted by the Group.

CONFLICT OF INTEREST

None of the Directors and employees of the Manager have any conflict of interest with the Group and the Trust.

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Trust were made out, the Directors took reasonable steps:

a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the allowance for
doubtful debts, and satisfied themselves that all known bad debts had been written off and adequate
allowance had been made for doubtful debts; and
52 UOA REIT

MANAGER’S REPORT (CONTINUED)

OTHER STATUTORY INFORMATION (continued)

Before the financial statements of the Group and of the Trust were made out, the Directors took reasonable steps
(continued):

b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including
their values as shown in the accounting records of the Group and of the Trust have been written down to an
amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:
a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in
the financial statements of the Group and of the Trust inadequate to any substantial extent; or

b) which would render the values attributed to current assets in the financial statements of the Group and of the
Trust misleading; or

c) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of
the Group and of the Trust misleading or inappropriate; or

d) not otherwise dealt with in this report or the financial statements which would render any amount stated in the
financial statements misleading.

At the date of this report, there does not exist:

a) any charge on the assets of the Group and of the Trust which has arisen since the end of the financial year
which secures the liability of any other person; or

b) any contingent liability of the Group and of the Trust which has arisen since the end of the financial year.

In the opinion of the Directors:

a) no contingent liability or other liability of the Group and of the Trust has become enforceable or is likely to
become enforceable within the period of twelve months after the end of the financial year which will or may
affect the ability of the Group and of the Trust to meet their obligations as and when they fall due;

b) the results of the operations of the Group and of the Trust during the financial year were not substantially
affected by any item, transaction or event of a material and unusual nature; and

c) there has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely to affect substantially the results of the operations of
the Group and of the Trust for the financial year in which this report is made.

MATERIAL LITIGATION

The Manager is not aware of any pending material litigation as at the date of statement of financial position and up
to the date of this report.

HOLDING COMPANY

The Directors regard United Overseas Australia Ltd, a company incorporated in Australia and listed on the
Australian Stock Exchange and the Stock Exchange of Singapore as the ultimate holding company.

INDEMNITY AND INSURANCE FOR DIRECTORS

There are no indemnity coverage and insurance premium paid for Directors of the Company during the financial
year.
 ANNUAL REPORT 2022 53

AUDITORS

The total amount of fees paid to or receivable by the Auditors, Grant Thornton Malaysia PLT, as remuneration for
their services as auditors of the Group and of the Trust for the financial year ended 31 December 2022 are
amounted to RM54,000 and RM50,000 respectively.

There was no indemnity given or insurance effected for the auditors of the Company.

The Auditors, Grant Thornton Malaysia PLT have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors of UOA Asset Management Sdn Bhd in accordance with a resolution of
the Board of Directors.

For and on behalf of the Manager,

UOA Asset Management Sdn Bhd

KONG SZE CHOON YAP KANG BENG

Director Director

Kuala Lumpur
21 February 2023
54 UOA REIT

STATEMENT BY MANAGER

We, Kong Sze Choon and Yap Kang Beng, being two of the Directors of UOA Asset Management Sdn Bhd (“the
Manager”), do hereby state that, in the opinion of the Directors, the financial statements set out on pages 61 to 101
are drawn up so as to give a true and fair view of the financial position of the Group and of the Trust as at 31
December 2022 and financial performance and cash flows of the Group and of the Trust for the financial year then
ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards,
Securities Commission’s Guidelines on Listed Real Estate Investment Trusts and the provisions of the Deed dated
28 November 2005.

Signed on behalf of the Board of Directors of UOA Asset Management Sdn Bhd in accordance with a resolution of
the Board of Directors.

For and on behalf of the Manager,

UOA Asset Management Sdn Bhd

KONG SZE CHOON YAP KANG BENG

Director Director

Kuala Lumpur
21 February 2023
 ANNUAL REPORT 2022 55

STATUTORY DECLARATION

I, Kong Sze Choon, being the Director of UOA Asset Management Sdn Bhd primarily responsible for the financial
management of UOA Real Estate Investment Trust, do solemnly and sincerely declare that to the best of my
knowledge and belief, the financial statements set out on pages 61 to 101 are correct, and I make this solemn
declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by )

the abovenamed at Kuala Lumpur in the )
Federal Territory this day of )
21 February 2023 ).................................................................................................
KONG SZE CHOON

Before me:

Commissioner for Oaths

56 UOA REIT

TRUSTEE’S REPORT TO THE UNITHOLDERS

OF UOA REAL ESTATE INVESTMENT TRUST
(Established in Malaysia)

We have acted as Trustee of UOA Real Estate Investment Trust for the financial year ended 31 December 2022. In
our opinion and to the best of our knowledge, UOA Asset Management Sdn Bhd, the Manager, has managed UOA
Real Estate Investment Trust (“Trust”) in accordance with the limitations imposed on the investment powers of the
Manager and the Trustee under the Deed dated 28 November 2005, other provisions of the Deed, the Capital
Markets and Services Act, 2007, the Securities Commission’s Guidelines on Listed Real Estate Investment Trusts
and other applicable laws during the financial year then ended.

We have ensured that the procedures and processes employed by UOA Asset Management Sdn Bhd to value and
price the units of the Trust are adequate and that such valuation/pricing is carried out in accordance with the Deed
and other regulatory requirements.

We also confirm that the income distributions declared and paid during the financial year ended 31 December
2022 are in line with and are reflective of the objectives of the Trust. Two distributions have been declared for the
financial year ended 31 December 2022 as follows:

(a) Interim income distribution of 4.30 sen per unit paid on 30 August 2022; and

(b) Final income distribution of 4.32 sen per unit has been declared in subsequent year end to be paid on 28
February 2023.

For and on behalf of the Trustee,

RHB Trustees Berhad
(Registration No: 200201005356 (573019-U))

TONY CHIENG SIONG UNG

DIRECTOR

Kuala Lumpur
21 February 2023
 ANNUAL REPORT 2022 57

INDEPENDENT AUDITORS’ REPORT

TO THE UNITHOLDERS OF UOA REAL
ESTATE INVESTMENT TRUST
(Established in Malaysia)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of UOA Real Estate Investment Trust (“UOA REIT” or “Trust”), which
comprise the statements of financial position as at 31 December 2022 of the Group and of the Trust, and the
statements of profit or loss and other comprehensive income, statements of changes in net asset value and
statements of cash flows of the Group and of the Trust for the financial year then ended, and notes to the financial
statements, including a summary of significant accounting policies, as set out on pages 61 to 101.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the
Group and of the Trust as at 31 December 2022, and of their financial performance and cash flows for the financial
year then ended in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial
Reporting Standards (“IFRS”), the Securities Commission’s Guidelines on Listed Real Estate Investment Trusts
(“REIT Guidelines”) and the provisions of the Deed dated 28 November 2005 (“Deed”).

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International
Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and Other Ethical Responsibilities

We are independent of the Group and of the Trust in accordance with the By-Laws (on Professional Ethics,
Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance
with the By-Laws and the IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial statements of the Group and of the Trust for the current financial year. These matters were addressed
in the context of our audit of the financial statements of the Group and of the Trust as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
58 UOA REIT

INDEPENDENT AUDITORS’ REPORT

TO THE UNITHOLDERS OF UOA REAL
ESTATE INVESTMENT TRUST (CONTINUED)
(Established in Malaysia)

Report on the Audit of the Financial Statements (continued)

Key Audit Matters (continued)

Valuation of Investment Properties

As disclosed in Note 6 to the Financial Statements, the Group’s and the Trust’s investment properties that were
carried at fair value amounted to RM1,716,256,000 and RM1,709,256,000 respectively as at 31 December 2022.

The investment properties are stated at fair value based on independent professional valuation using the
comparison and income method. We focused on this due to the magnitude of the balance and the complexities in
determining the fair value of the investment properties, which involves significant judgement and estimation that
could result in material misstatement.

Audit responses

Our audit procedures performed include:

1. Evaluated the competency, capabilities and objectivity of the independent valuer.

2. Performed site visits to major properties to inspect the condition of the properties and vacant units.
3. Checked the accuracy and relevance of the input data used in the valuations.
4. Evaluated and challenged the key assumptions used in the valuations.

Information Other than the Financial Statements and Auditors’ Report Thereon

The Manager is responsible for the other information. The other information comprise the information included in
the annual report, but does not include the financial statements of the Group and of the Trust and our auditors’
report thereon.

Our opinion on the financial statements of the Group and of the Trust does not cover the other information and we
do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Trust, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements of the Group and of the Trust or our knowledge obtained in the audit or otherwise appears to
be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Manager for the Financial Statements

The Manager is responsible for the preparation of financial statements of the Group and of the Trust that give a true
and fair view in accordance with MFRS, IFRS, REIT Guidelines and the provisions of the Deed. The Manager is also
responsible for such internal control as the Manager determine is necessary to enable the preparation of financial
statements of the Group and of the Trust that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Trust, the Manager is responsible for assessing the
Group’s and the Trust’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Manager either intends to liquidate the Group
or the Trust or to cease operations, or have no realistic alternative but to do so.
 ANNUAL REPORT 2022 59

Report on the Audit of the Financial Statements (continued)

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the
Trust as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with approved standards on auditing in Malaysia and International Standards on
Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the approved standards on auditing in Malaysia and International Standards
on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We
also:

Identify and assess the risks of material misstatement of the financial statements of the Group and of the Trust,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s and of the Trust’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Manager.

Conclude on the appropriateness of the Manager’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s or the Trust’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in
the financial statements of the Group and of the Trust or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report.
However, future events or conditions may cause the Group or the Trust to cease to continue as a going
concern.

Evaluate the overall presentation, structure and content of the financial statements of the Group and of the
Trust, including the disclosures, and whether the financial statements of the Group and of the Trust represent
the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial statements of the Group. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
60 UOA REIT

INDEPENDENT AUDITORS’ REPORT

TO THE UNITHOLDERS OF UOA REAL
ESTATE INVESTMENT TRUST (CONTINUED)
(Established in Malaysia)

Report on the Audit of the Financial Statements (continued)

Auditors’ Responsibilities for the Audit of the Financial Statements (continued)

We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.

We also provide with the Manager with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Manager, we determine those matters that were of most significance in
the audit of the financial statements of the Group and of the Trust for the current year and are therefore the key
audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.

Other Matter

This report is made solely to the unitholders of the Trust, as a body, in accordance with the REIT Guidelines in
Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this
report.

GRANT THORNTON MALAYSIA PLT LIM SOO SIM

(201906003682 & LLP0022494-LCA) (NO: 03335/11/2023 J)
CHARTERED ACCOUNTANTS (AF 0737) CHARTERED ACCOUNTANT

Kuala Lumpur
21 February 2023
 ANNUAL REPORT 2022 61

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2022

Group Trust
Note 2022 2021 2022 2021
RM RM RM RM

ASSETS
Non-current assets
Plant and equipment 5 909,940 377,006 909,940 377,006
Investment properties 6 1,716,256,000 1,716,200,000 1,709,256,000 1,709,200,000
Investment in a subsidiary company 7 - - 2 2
Total non-current assets 1,717,165,940 1,716,577,006 1,710,165,942 1,709,577,008
Current assets
Trade receivables 8 2,026,191 3,408,745 1,994,772 3,351,115
Other receivables 9 5,994,884 5,569,032 5,994,884 5,569,032
Amount owing by a subsidiary company 10 - - 11,500,479 12,100,476
Deposits with licensed
financial institutions 11 1,200,000 1,500,000 1,200,000 1,250,000
Bank balances 2,712,804 5,651,134 2,434,607 5,401,428
Total current assets 11,933,879 16,128,911 23,124,742 27,672,051
Total assets 1,729,099,819 1,732,705,917 1,733,290,684 1,737,249,059

LIABILITIES
Non-current liabilities
Other payables 12 10,428,307 13,921,926 10,241,135 13,921,926
Deferred tax liabilities 13 21,188,000 21,188,000 21,188,000 21,188,000
Total non-current liabilities 31,616,307 35,109,926 31,429,135 35,109,926
Current liabilities
Other payables 12 26,401,598 21,369,906 26,304,956 21,120,613
Bank borrowings 14 675,400,000 683,199,807 675,400,000 683,199,807
Tax payable 20,416 812 - -
Total current liabilities 701,822,014 704,570,525 701,704,956 704,320,420
Total liabilities 733,438,321 739,680,451 733,134,091 739,430,346
Net asset value 995,661,498 993,025,466 1,000,156,593 997,818,713

UNITHOLDERS' FUND
Unitholders' capital 15 750,555,165 750,555,165 750,555,165 750,555,165
Undistributed income 245,106,333 242,470,301 249,601,428 247,263,548
Distribution to unitholders 995,661,498 993,025,466 1,000,156,593 997,818,713
Number of units in circulation 675,599,076 675,599,076 675,599,076 675,599,076
Net asset value
- Before income distribution 995,661,498 993,025,466 1,000,156,593 997,818,713
- After income distribution * 966,475,620 963,839,588 970,970,715 968,632,835

Net asset value per unit

- Before income distribution 1.474 1.470 1.480 1.477
- After income distribution * 1.431 1.427 1.437 1.434

* After proposed final income distribution of 4.32 sen (2021: 4.32 sen) per unit.
The accompanying notes form an integral part of the financial statements.
62 UOA REIT

STATEMENTS OF PROFIT OR LOSS AND

OTHER COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022

Group Trust
Note 2022 2021 2022 2021
RM RM RM RM

INCOME
Gross rental 16 114,377,165 116,353,861 113,731,892 115,736,605
Property operating expenses 17 (26,127,478) (26,715,077) (25,924,701) (26,505,633)
Net rental income 88,249,687 89,638,784 87,807,191 89,230,972

Interest income 78,365 112,694 73,010 106,610

Other income 346,758 417,022 345,399 416,722
Total income 88,674,810 90,168,500 88,225,600 89,754,304

EXPENSES
Manager's fees 18 (6,624,134) (6,708,735) (6,624,134) (6,708,735)
Trustee's fees 19 (296,603) (300,391) (296,603) (300,391)
Auditors' remuneration (65,420) (48,940) (61,180) (44,700)
Tax agent's fees (25,204) (26,336) (19,904) (18,930)
Valuation fees (45,000) (45,000) (44,200) (44,200)
Administration expenses (288,408) (180,331) (283,309) (174,753)
Impairment losses of financial assets (506,683) (2,159,713) (479,238) (2,159,713)
Finance costs 20 (19,747,943) (18,871,828) (19,747,943) (18,871,828)
Total expenses (27,599,395) (28,341,274) (27,556,511) (28,323,250)
Fair value loss on investment
properties - (21,900,000) - (21,900,000)
Net changes on financial liabilities
measured at amortised cost (94,571) 115,335 (94,571) 115,335
Income before tax 60,980,844 40,042,561 60,574,518 39,646,389
Tax (expense)/income 21 (108,174) 2,060,554 - 2,158,952
Net income/Total comprehensive
income during the financial year 60,872,670 42,103,115 60,574,518 41,805,341
Net income/(loss)/Total comprehensive
income/(loss) is made up as follows:
- Realised 61,075,415 61,796,178 60,669,089 61,400,006
- Unrealised (202,745) (19,693,063) (94,571) (19,594,665)
60,872,670 42,103,115 60,574,518 41,805,341
 ANNUAL REPORT 2022 63

Group Trust
Note 2022 2021 2022 2021
RM RM RM RM

Earnings per unit (Basic and diluted) 22

- After Manager's fees (sen) 9.01 6.23 8.97 6.19
- Before Manager's fees (sen) 9.99 7.22 9.95 7.18
Net income distribution 23
- Interim distribution of 4.30 sen
(2021: 4.32 sen) paid on 30 August
2022 (2021: 30 August 2021) 29,050,760 29,185,879 29,050,760 29,185,879
- Proposed final distribution of 4.32 sen
(2021: 4.32 sen) payable on 28 February
2023 (2021: 28 February 2022) 29,185,878 29,185,878 29,185,878 29,185,878
58,236,638 58,371,757 58,236,638 58,371,757
Interim income distribution per unit *
- Gross (sen) 4.30 4.32 4.30 4.32
- Net (sen) ** 4.30 4.32 4.30 4.32
Final income distribution per unit *
- Gross (sen) 4.32 4.32 4.32 4.32
- Net (sen) ** 4.32 4.32 4.32 4.32

* Based on 675,599,076 (2021: 675,599,076) units entitled to distribution.

** Withholding tax will be deducted for the distributions made to the following categories of unitholders :

Withholding tax rate

2022 2021

Resident corporate # - -
Resident non-corporate 10% 10%
Non-resident individual 10% 10%
Non-resident corporate 24% 24%
Non-resident institutional 10% 10%

# No withholding tax; to tax at prevailing tax rate

The accompanying notes form an integral part of the financial statements.

64 UOA REIT

STATEMENTS OF CHANGES
IN NET ASSET VALUE
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022

Unitholders' Undistributed Income

Note capital Realised Unrealised Sub-total Total
RM RM RM RM RM

Group
Balance as at
1 January 2021 750,745,631 54,333,416 175,219,649 229,553,065 980,298,696
Net income/(loss)/
Total comprehensive
income/(loss) for the
financial year - 61,796,178 (19,693,063) 42,103,115 42,103,115
Unitholders'
transactions:
- New units issuance
expenses (190,466) - - - (190,466)
- Distribution to
unitholders 23 - (29,185,879) - (29,185,879) (29,185,879)
Total unitholders'
transactions (190,466) (29,185,879) - (29,185,879) (29,376,345)

Balance as at
31 December 2021 750,555,165 86,943,715 155,526,586 242,470,301 993,025,466
Net income/
(loss)/Total
comprehensive
income/(loss) for the
financial year - 61,075,415 (202,745) 60,872,670 60,872,670
Unitholders'
transactions:
- Distribution to
unitholders 23 - (58,236,638) - (58,236,638) (58,236,638)
Balance as at
31 December 2022 750,555,165 89,782,492 155,323,841 245,106,333 995,661,498
 ANNUAL REPORT 2022 65

Unitholders' Undistributed Income

Note capital Realised Unrealised Sub-total Total
RM RM RM RM RM

Trust
Balance as at
1 January 2021 750,745,631 59,244,865 175,399,221 234,644,086 985,389,717
Net income/(loss)/
Total comprehensive
income/(loss) for the
financial year - 61,400,006 (19,594,665) 41,805,341 41,805,341
Unitholders'
transactions:
- New units issuance
expenses (190,466) - - - (190,466)
- Distribution to
unitholders 23 - (29,185,879) - (29,185,879) (29,185,879)
Total unitholders'
transactions (190,466) (29,185,879) - (29,185,879) (29,376,345)
Balance as at
31 December 2021 750,555,165 91,458,992 155,804,556 247,263,548 997,818,713
Net income/
(loss)/Total
comprehensive
income/(loss) for the
financial year - 60,669,089 (94,571) 60,574,518 60,574,518
Unitholders'
transactions:
- Distribution to
unitholders 23 - (58,236,638) - (58,236,638) (58,236,638)
Balance as at
31 December 2022 750,555,165 93,891,443 155,709,985 249,601,428 1,000,156,593

The accompanying notes form an integral part of the financial statements.

66 UOA REIT

STATEMENTS OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022

Group Trust
2022 2021 2022 2021
RM RM RM RM

CASH FLOWS FROM

OPERATING ACTIVITIES
Income before tax 60,980,844 40,042,561 60,574,518 39,646,389
Adjustments for :
Impairment losses of financial assets 506,683 2,159,713 479,238 2,159,713
Bad debts written off 111,641 - 111,641 -
Depreciation 94,886 56,370 94,886 56,370
Fair value loss on investment
properties - 21,900,000 - 21,900,000
Plant and equipment written off 3,450 1,409 3,450 1,409
Net changes on financial liabilities
measured at amortised cost 94,571 (115,335) 94,571 (115,335)
Interest income (78,365) (112,694) (73,010) (106,610)
Interest expense 19,747,943 18,871,828 19,747,943 18,871,828
Operating profit before working
capital changes 81,461,653 82,803,852 81,033,237 82,413,764
Changes in working capital :
Receivables 338,378 8,733,270 339,612 8,772,342
Payables 1,382,645 (1,857,461) 1,348,124 (1,863,321)
Cash generated from
operating activities 83,182,676 89,679,661 82,720,973 89,322,785
Tax paid (88,570) (113,897) - -
Net cash from operating activities 83,094,106 89,565,764 82,720,973 89,322,785

CASH FLOWS FROM

INVESTING ACTIVITIES
Purchase of plant and equipment (631,270) (10,315) (631,270) (10,315)
Enhancements to investment properties (56,000) - (56,000) -
Interest income 78,365 112,694 73,010 106,610
Repayment from a subsidiary company - - 599,997 500,053
Net cash (used in)/from investing activities (608,905) 102,379 (14,263) 596,348

CASH FLOWS FROM

FINANCING ACTIVITIES
Drawdown of bank borrowings 229,000,000 22,300,000 229,000,000 22,300,000
Repayment of bank borrowings (236,799,807) (43,122,693) (236,799,807) (43,122,693)
Interest paid (19,687,086) (18,871,120) (19,687,086) (18,871,120)
New units issuance expenses - (190,466) - (190,466)
Distribution to unitholders (58,236,638) (48,045,960) (58,236,638) (48,045,960)
Net cash used in financing activities (85,723,531) (87,930,239) (85,723,531) (87,930,239)

CASH AND CASH EQUIVALENTS

Net changes (3,238,330) 1,737,904 (3,016,821) 1,988,894
Brought forward 7,151,134 5,413,230 6,651,428 4,662,534
Carried forward 3,912,804 7,151,134 3,634,607 6,651,428
 ANNUAL REPORT 2022 67

NOTES TO THE STATEMENTS OF CASH FLOWS

Cash and cash equivalents included in the Statements of Cash Flows comprise the following :

Group Trust
2022 2021 2022 2021
RM RM RM RM

Bank balances 2,712,804 5,651,134 2,434,607 5,401,428

Deposits with licensed financial institutions 1,200,000 1,500,000 1,200,000 1,250,000
3,912,804 7,151,134 3,634,607 6,651,428

RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

Group Trust
2022 2021 2022 2021
RM RM RM RM

Bank borrowings
As at 1 January 683,199,807 704,022,500 683,199,807 704,022,500
Drawdown 229,000,000 22,300,000 229,000,000 22,300,000
Repayment (236,799,807) (43,122,693) (236,799,807) (43,122,693)
As at 31 December 675,400,000 683,199,807 675,400,000 683,199,807

The accompanying notes form an integral part of the financial statements.

68 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022

1. GENERAL INFORMATION

UOA Real Estate Investment Trust (“UOA REIT” or “Trust”) was constituted under a Deed dated 28 November
2005 (“Deed”), by the Manager, UOA Asset Management Sdn Bhd (“Manager”) and RHB Trustees Berhad
(“Trustee”). UOA REIT commenced operations on 1 December 2005.

UOA REIT was listed on the Main Market of Bursa Malaysia Securities Berhad on 30 December 2005. The
principal activity of UOA REIT is investment in real estate and real estate-related assets used, or predominantly
used, for commercial purposes, whether directly or indirectly through the ownership of single-purpose
companies which wholly own real estate. There has been no significant change in the nature of this activity
during the financial year.

The Manager, a company incorporated in Malaysia, is a subsidiary of UOA Corporation Berhad, (a subsidiary of
UOA Holdings Sdn Bhd which in turn, is a wholly owned subsidiary of United Overseas Australia Ltd, a
company incorporated in Australia and listed on the Australian Stock Exchange and the Stock Exchange of
Singapore). The principal activity of the Manager is the management of real estate investment trusts. There has
been no significant change in the nature of this activity during the financial year.

The principal activity of the subsidiary company is disclosed in Note 7 to the Financial Statements.

The consolidated financial statements reported for the financial year ended 31 December 2022 relates to the
Trust and its subsidiary company (“the Group”).

The financial statements were approved by the Manager’s Board of Directors in accordance with a resolution
of the Directors passed on 21 February 2023.

2. TERM OF THE TRUST

UOA REIT will continue its operations until such time as determined by the Trustee and the Manager as
provided under the provisions of Clause 26 of the Deed.

3. BASIS OF PREPARATION

3.1 Statement of compliance

The financial statements of the Group and of the Trust have been prepared in accordance with the
Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”),
the Deed and the Securities Commission’s Guidelines on Listed Real Estate Investment Trusts.
 ANNUAL REPORT 2022 69

3. BASIS OF PREPARATION (CONTINUED)

3.2 Basis of measurement

The financial statements of the Group and of the Trust are prepared under the historical cost
convention, except for investment properties that have been measured at fair value.

Historical cost is generally based on the fair value of the consideration given in exchange for goods
and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either in the principal market for the asset or liability, or in the absence of a
principal market, in the most advantageous market for the asset or liability. The principal or the
most advantageous market must be accessible to by the Group and by the Trust.

The fair value of an asset or a liability is measured using the assumptions that market participants
would use when pricing the asset or liability, assuming that market participants act in their
economic best interest.

A fair value measurement of a non-financial market takes into account a market participant’s ability
to generate economic benefits by using the asset in its highest and best use or by selling it to
another market participant that would use the asset in its highest and best use.

The Group and the Trust use valuation techniques that are appropriate in the circumstances and
for which sufficient data are available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input
that is significant to their fair value measurement as a whole:

Level 1 : Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 : Valuation techniques for which the lowest level input that is significant to their fair
value measurement is directly or indirectly observable

Level 3 : Valuation techniques for which the lowest level input that is significant to their fair
value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the
Group and the Trust determine whether transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that is significant to their fair value
measurement as a whole) at the end of each reporting date.

For the purpose of fair value disclosures, the Group and the Trust have determined classes of
assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and
the level of fair value hierarchy as explained above.

3.3 Functional and presentation currency

The financial statements are presented in Ringgit Malaysia (“RM”) which is the Group’s and the
Trust’s functional currency and all values are rounded to the nearest RM except when otherwise
stated.
70 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

3. BASIS OF PREPARATION (CONTINUED)

3.4 Adoption of new standards/amendments/improvements to MFRSs

The Group and the Trust have consistently applied the accounting policies set out in Note 4 to all years
presented in these financial statements.

At the beginning of the current financial year, the Group and the Trust adopted new
standards/amendments/improvements to MFRSs which are mandatory for the financial years beginning
on or after 1 January 2022.

Initial application of the new standards/amendments/improvements to financial standards did not have
material impact to the Financial Statements.

3.5 Standards issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective are disclosed
below. The Group and the Trust intend to adopt these new and amended standards and interpretations,
if applicable, when they become effective :

MFRS and amendments to MFRSs effective 1 January 2023:

MFRS 17 and amendments Insurance Contracts
to MFRS 17*
Amendments to MFRS 17* Initial Application of MFRS 7 and MFRS 9 – Comparative Information
Amendments to MFRS 101 Classification of Liabilities as Current or Non-Current
Amendments to MFRS 101 Disclosure of Accounting Policies
Amendments to MFRS 108 Definition of Accounting Estimates
Amendments to MFRS 112 Deferred Tax related to Assets and Liabilities arising from a Single
Transaction

Amendments to MFRSs effective 1 January 2024:

Amendments to MFRS 16* Lease Liability in a Sale and Leaseback
Amendments to MFRS 101* Non-Current Liabilities with Covenants

Amendments to MFRSs - effective date deferred indefinitely:

Amendments to MFRS 10* Sale or Contribution of Assets between an Investor and its Associate
and 128* or Joint Venture

* Not applicable to the Group’s and the Trust’s operations

The initial application of the above standards, amendments and interpretation are not expected to have
any financial impacts to the financial statements.
 ANNUAL REPORT 2022 71

3. BASIS OF PREPARATION (CONTINUED)

3.6 Significant accounting estimates and judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the
financial statements. They affect the application of the Group’s and the Trust’s accounting policies and
reported amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and
underlying assumptions are assessed on an on-going basis and are based on experience and relevant
factors, including expectations of future events that are believed to be reasonable under the
circumstances. The actual result may differ from the judgements, estimates and assumptions made by
management, and will seldom equal the estimated results.

3.6.1 Estimation uncertainty

Information about significant judgements, estimates and assumptions that have the most
significant effect on recognition and measurement of assets, liabilities, income and expenses are
discussed below.

Useful lives of depreciable assets

Plant and equipment are depreciated on a straight-line basis over their useful lives. Management
estimates the useful lives of the depreciable assets to be within 5 to 10 years and reviews the
useful lives of depreciable assets at each reporting date. As at the reporting date, management
assesses that the useful lives represent the expected utility of the assets to the Group and to the
Trust. Actual results, however, may vary due to change in the expected level of usage and
technological developments, which may result in adjustments to the Group’s and to the Trust’s
assets.

Fair value of investment properties

The Group and the Trust measure their investment properties at fair value with changes in fair
value being recognised in profit or loss. Significant judgement is required in the determination of
fair value which may be derived based on different valuation method. In making the judgement,
the Group and the Trust evaluate based on past experience and reliance on the work of
specialists. The Group and the Trust engage independent valuation specialists to determine fair
values.

The carrying amount of investment properties at the end of the reporting year and the relevant
revaluation bases are disclosed in the Note 6 to the Financial Statements.

Impairment of non-financial assets

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s
carrying amount exceeds its recoverable amount. To determine the recoverable amount,
management estimates expected future cash flows from each asset or cash-generating unit and
determines a suitable interest rate in order to calculate the present value of those cash flows. In
the process of measuring expected future cash flows, management makes assumptions about
future operating results. The actual results may vary, and may cause significant adjustments to
the Group’s and to the Trust’s assets within the next financial year.

In most cases, determining the applicable discount rate involves estimating the appropriate
adjustments to market risk and the appropriate adjustment to asset-specific risk factors.

Provision for expected credit losses (“ECL”) of trade receivables

The Group and the Trust use a provision matrix to calculate ECLs for trade receivables. The
provision rates are based on days past due of outstanding debts.
72 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

3. BASIS OF PREPARATION (CONTINUED)

3.6 Significant accounting estimates and judgements (continued)

3.6.1 Estimation uncertainty (continued)

Provision for expected credit losses (“ECL”) of trade receivables (continued)

The provision matrix is initially based on the Group’s and on the Trust’s historical observed
default rates. The Group and the Trust will calibrate the matrix to adjust the historical credit loss
experience with forward-looking information. For instance, if forecast economic conditions (i.e.,
gross domestic product) are expected to deteriorate over the next year which can lead to an
increased number of defaults in the Group’s and the Trust’s related economic sector, the
historical default rates are adjusted. At every reporting date, the historical observed default rates
are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic
conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in
circumstances and of forecast economic conditions. The Group’s and the Trust’s historical credit
loss experience and forecast of economic conditions may also not be representative of
customer’s actual default in the future. The information about the ECLs on the Group’s and the
Trust’s trade receivables is disclosed in Note 32 to the Financial Statements.

Income taxes

Significant judgement is involved in determining the capital allowances and deductibility of

expenses during the estimation of the provision for income tax. There are certain transactions
and computations for which the ultimate tax determination is uncertain during the ordinary
course of business.

The Group and the Trust recognise liabilities for expected tax issues based on estimates of
whether additional taxes will be due. Where the final tax outcome of these matters is different
from the amounts that were initially recognised, such differences will impact the income tax and
deferred tax provisions in the year in which such determination is made.

3.6.2 Significant management judgements

The following are significant management judgements in applying the accounting policies of the
Group and of the Trust that have the most significant effect on these financial statements.

Classification between investment properties and owner-occupied properties

The Group and the Trust determine whether properties qualify as investment properties and
have developed the criteria in making that judgement. Investment properties are properties held
to earn rentals or for capital appreciation or both.

Certain properties comprise a portion that is held to earn rentals or for capital appreciation and
another portion that is held for use in the production or supply of goods or services or for
administrative purposes. The Group and the Trust account for the portions separately if the
portions could be sold separately (or leased out separately under a finance lease). If the portions
could not be sold separately, the properties are investment properties only if an insignificant
portion is held for use in the production or supply of goods or services or for administrative
purposes.

Judgement is made on an individual property basis to determine whether ancillary services are
so significant that a property does not qualify as an investment property.
 ANNUAL REPORT 2022 73

3. BASIS OF PREPARATION (CONTINUED)

3.6 Significant accounting estimates and judgements (continued)

3.6.2 Significant management judgements (continued)

Deferred tax on investment properties

For the purposes of measuring deferred tax liabilities arising from investment properties that are
measured using the fair value model, the management of the Group and the Trust review the
investment properties and concluded that the Group’s and the Trust’s investment properties are
held under a business model whose objective is to recover the carrying amount of the
investment properties through sale.

Accordingly, the Group and the Trust recognise deferred taxes in respect of the changes in fair
value of investment properties based on Real Property Gains Tax (“RPGT”). The final tax outcome
could be different from the deferred tax liabilities recognised in the financial statements should
the economic benefits embodied in the investment properties be subsequently substantially
consumed over time rather than through sale.

4. SIGNIFICANT ACCOUNTING POLICIES

The Group and the Trust apply the significant accounting policies, as summarised below, consistently
throughout all years presented in the financial statements, unless otherwise stated.

4.1 Consolidation

4.1.1 Subsidiary company

Subsidiary company is entity, including structured entity, controlled by the Trust. Control exists
when the Group is exposed, or has rights, to variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity. Potential voting rights
are considered when assessing control only when such rights are substantive. Besides, the
Group considers it has de facto power over an investee when, despite not having the majority of
voting rights, it has the current ability to direct the activities of the investee that significantly affect
the investee’s return.

Investment in subsidiary company is stated at cost less any impairment losses in the Trust’s
financial position, unless the investment is held for sale or distribution.

Upon the disposal of investment in a subsidiary company, the difference between the net
disposal proceeds and its carrying amount is included in profit or loss.

4.1.2 Basis of consolidation

The Group financial statements consolidate the audited financial statements of the Trust and its
subsidiary, which have been prepared in accordance with the Group’s accounting policies.
Amounts reported in the financial statements of subsidiary have been adjusted where necessary
to ensure consistency with the accounting policies adopted by the Group. The financial
statements of the Trust and its subsidiary are all drawn up to the same reporting date.

All intra-group balances, transactions, income and expenses are eliminated in full on
consolidation and the consolidated financial statements reflect external transactions only.

Subsidiary is consolidated from the date on which control is transferred to the Group and are no
longer consolidated from the date that control ceases.
74 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.1 Consolidation (continued)

4.1.2 Basis of consolidation (continued)

Changes in the Trust owners’ ownership interest in a subsidiary that do not result in a loss of
control are accounted for as equity transactions between the Group and non-controlling interest
holders. In such circumstances, the carrying amounts of the controlling and non-controlling
interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any
difference between the amount by which the non-controlling interest is adjusted and the fair
value of the consideration paid or received is recognised directly in equity.

4.1.3 Loss of control

When the Trust loses control of a subsidiary :

(i) It derecognises the assets and liabilities, non-controlling interests, and other amounts
previously recognised in other comprehensive income relating to the former subsidiary.

(ii) It recognises any gain or loss in profit or loss attributable to the Group, which is calculated as
the difference between (i) the aggregate of the fair value of the consideration received, if
any, from the transaction, event or circumstances that resulted in the loss of control; plus any
investment retained in the former subsidiary at its fair value at the date when control is lost;
and (ii) the net carrying amount of assets, liabilities, goodwill and any non-controlling
interests attributable to the former subsidiary at the date when control is lost.

(iii) It recognises any investment retained in the former subsidiary at its fair value when control is
lost and subsequently accounts for it and for any amounts owed by or to the former
subsidiary in accordance with relevant MFRS. That fair value shall be regarded as the fair
value on initial recognition of a financial asset or, when appropriate, the cost on initial
recognition of an investment in an associate or joint venture.

4.2 Plant and equipment

All plant and equipment are initially stated at cost. The cost of an item of plant and equipment is
recognised as an asset if, and only if, it is probable that future economic benefits associated with the item
will flow to the Group and to the Trust and the cost of the item can be measured reliably.

Cost includes expenditures that are directly attributable to the acquisition of the assets and any other
costs directly attributable to bringing the assets to working condition for its intended use, cost of
replacing component parts of the assets, and the present value of the expected cost for the
decommissioning of the assets after their use. All other repair and maintenance costs are recognised in
profit or loss as incurred.

All plant and equipment are subsequently stated at cost less accumulated depreciation and less any
impairment losses. When significant parts of plant and equipment are required to be replaced in
intervals, the Group and the Trust recognise such costs as individual assets with specific useful lives and
depreciation respectively. All other repair and maintenance costs are recognised in profit or loss as
incurred.

Plant and equipment are written down to recoverable amount if, in the opinion of the Managers, it is less
than their carrying value. Recoverable amount is the net selling price of the plant and equipment, that is
the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable,
willing parties, less the costs of disposal.
 ANNUAL REPORT 2022 75

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.2 Plant and equipment (continued)

Depreciation is recognised on the straight-line method in order to write off the cost of each asset over its
estimated useful life. The principal annual depreciation rates used are as follows :

Office equipment 10%

Computer 20%
Office renovation 10%

Fully depreciated assets are retained in the financial statements until they are no longer in use and no
further charge for depreciation is made in respect of these assets.

Restoration cost relating to an item of plant and equipment is capitalised only if such expenditure is
expected to increase the future benefits from the existing asset beyond its previously assessed standard
of performance.

The residual values, useful lives and depreciation method are reviewed for impairment when events or
changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually
to ensure that the amount, method and rate of depreciation are consistent with previous estimates and
the expected pattern of consumption of the future economic benefits embodied in the items of plant and
equipment.

Plant and equipment are derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Gains or losses arising on the disposal of plant and equipment are
determined as the difference between the disposal proceeds and the carrying amounts of the assets and
are recognised in profit or loss in the financial year in which such asset is derecognised.

4.3 Investment properties

Investment properties are properties which are owned to earn rental income or for capital appreciation or
for both, but not for sale in the ordinary course of business, use in the production or supply of goods or
services or for administrative purposes.

Investment properties are initially measured at cost, including transaction cost. Cost includes
expenditures that are directly attributable to the acquisition of the investment properties.

Subsequent to initial recognition, investment properties are measured at fair value and are revalued
annually and are included in the statements of financial position at their open market values. Any gain or
loss resulting from either a change in the fair value or the sale of investment properties are immediately
recognised in profit or loss in the period in which they arise. The fair values are determined by external
professional valuers with sufficient experience with respect to both the location and the nature of the
investment properties and are supported by market evidence.

Investment properties are derecognised when either they are disposed off or when they are permanently
withdrawn from use and no future economic benefit is expected from the disposal. Any gain or loss on
the retirement or disposal of an investment property is recognised in the profit or loss in the financial year
of retirement or disposal.

Transfers are made to or from investment properties only when there is a change in use. For a transfer
from investment properties to owner-occupied properties, the deemed cost for subsequent accounting
is the fair value at the date of change. If owner-occupied properties becomes an investment properties,
the Group and the Trust account for such properties in accordance with the policy stated under plant
and equipment up to the date of change.
76 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.4 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

4.4.1 Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition as subsequently measured at amortised cost,
fair value through other comprehensive income (“OCI”) and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s and the Trust’s business model for
managing them. With the exception of trade receivables that do not contain a significant
financing component or for which the Group and the Trust have applied the practical expedient,
the Group and the Trust initially measure a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do
not contain a significant financing component or for which the Group and the Trust have applied
the practical expedient are measured at the transaction price.

In order for a financial asset to be classified and measured at amortised cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (“SPPI”)’
on the principal amount outstanding. This assessment is referred to as the SPPI test and is
performed at an instrument level. Financial assets with cash flows that are not SPPI are classified
and measured at fair value through profit or loss, irrespective of the business model.

The Group’s and the Trust’s business model for managing financial assets refers to how it
manages its financial assets in order to generate cash flows. The business model determines
whether cash flows will result from collecting contractual cash flows, selling the financial assets,
or both. Financial assets are classified and measured at amortised cost are held within a business
model with the objective to hold financial assets in order to collect contractual cash flows while
financial assets classified and measured at fair value through OCI are held within a business
model with the objective of both holding to collect contractual cash flows and selling.

Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the market place (regular way trades) are recognised
on the trade date, i.e. the date that the Group and the Trust commit to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories :

Financial assets at amortised cost (debt instruments).

Financial assets at fair value through OCI with recycling of cumulative gains and losses(debt
instruments).
Financial assets designated at fair value through OCI with no recycling of cumulative gains
and losses upon derecognition (equity instruments).
Financial assets at fair value through profit or loss.

At the reporting date, the Group and the Trust carry only financial assets at amortised cost on
their statements of financial position.
 ANNUAL REPORT 2022 77

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.4 Financial instruments (continued)

4.4.1 Financial assets (continued)

Subsequent measurement (continued)

Financial assets at amortised cost

Financial assets at amortised cost are subsequently measured using the effective interest (“EIR”)
method and are subject to impairment. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired. The Group’s and the Trust’s financial assets at
amortised cost include trade and other receivables, amount owing by a subsidiary company and
cash and cash equivalents.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognised when :

The rights to receive cash flows from the asset have expired; or
The Group and the Trust have transferred its rights to receive cash flows from the asset or
have assumed an obligation to pay the received cash flows in full without material delay to a
third party under a ‘pass-through’ arrangement; and either (a) the Group and the Trust have
transferred substantially all the risks and rewards of the asset, or (b) the Group and the Trust
have neither transferred nor retained substantially all the risks and rewards of the asset but
have transferred control of the asset.

When the Group and the Trust have transferred their rights to receive cash flows from an asset or
has entered into a passthrough arrangement, they evaluate if, and to what extent, have retained
the risks and rewards of ownership. When they have neither transferred nor retained
substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
Group and the Trust continue to recognise the transferred asset to the extent of its continuing
involvement. In that case, the Group and the Trust also recognise an associated liability. The
transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Group and the Trust have retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured
at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Group and the Trust could be required to repay.

Impairment

The Group and the Trust recognise an allowance for expected credit losses (ECLs) on financial
assets measured at amortised cost. Expected credit losses are a probability-weighted estimate of
credit losses.

The Group and the Trust measure loss allowances at an amount equal to lifetime expected credit
loss, except for debt securities that are determined to have low credit risk at the reporting date,
cash and bank balance and other debt securities for which credit risk has not increased
significantly since initial recognition, which are measured at 12-month expected credit loss. Loss
allowances for trade receivables and lease receivables are always measured at an amount equal
to lifetime expected credit loss.
78 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.4 Financial instruments (continued)

4.4.1 Financial assets (continued)

Impairment (continued)

When determining whether the credit risk of a financial asset has increased significantly since
initial recognition and when estimating expected credit loss, the Group and the Trust consider
reasonable and supportable information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information and analysis, based on the
Group’s and the Trust’s historical experience and informed credit assessment and including
forward-looking information, where available.

Lifetime expected credit losses are the expected credit losses that result from all possible default
events over the expected life of the asset, while 12-month expected credit losses are the portion
of expected credit losses that result from default events that are possible within the 12 months
after the reporting date. The maximum period considered when estimating expected credit
losses is the maximum contractual period over which the Group and the Trust are exposed to
credit risk.

The Group and the Trust estimate the expected credit losses on trade receivables using a
provision matrix with reference to historical credit loss experience.

An impairment loss in respect of financial assets measured at amortised cost is recognised in

profit or loss and the carrying amount of the asset is reduced through the use of an allowance
account.

At each reporting date, the Group and the Trust assess whether the financial assets carried at
amortised cost are credit-impaired. A financial asset is credit impaired when one or more events
that have a detrimental impact on the estimated future cash flows of the financial asset have
occurred.

The gross carrying amount of a financial asset is written off (either partially or full) to the extent
that there is no realistic prospect of recovery. This is generally the case when the Group and the
Trust determine that the debtor does not have assets or sources of income that could generate
sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that
are written off could still be subject to enforcement activities in order to comply with the Group’s
or the Trust’s procedures for recovery amounts due.

4.4.2 Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs.

Subsequent measurement

For purposes of subsequent measurement, financial liabilities are classified in two categories :

Financial liabilities at fair value through profit or loss

Financial liabilities at amortised cost

At the reporting date, the Group and the Trust carry only financial liabilities at amortised cost on
their statements of financial position.
 ANNUAL REPORT 2022 79

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.4 Financial instruments (continued)

4.4.2 Financial liabilities (continued)

Subsequent measurement (continued)

Financial liabilities at amortised cost

After initial recognition, carrying amounts are subsequently measured at amortised cost using the
EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised
as well as through the EIR amortisation process. Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an integral part of the
EIR. The EIR amortisation is included as finance costs in the statements of profit or loss.

The Group's and the Trust's financial liabilities include other payables and bank borrowings.

Derecognition

A financial liability is derecognised when the obligation under the liability is

discharged,cancelled or expired. When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the statements of profit or loss.

4.4.3 Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statements
of financial position if there is a currently enforceable legal right to offset the recognised amounts
and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities
simultaneously.

4.5 Impairment of non-financial assets

At each reporting date, the Group and the Trust review the carrying amounts of their non-financial assets
to determine whether there is any indication of impairment by comparing its carrying amount with its
recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and its
value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash generating units).

In assessing value-in-use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is
written down to its recoverable amount. Impairment losses recognised in respect of a cash-generating
unit or groups of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to those units or group of units and then, to reduce the carrying amount of the other assets in
the unit or groups of units on a pro-rata basis.

An impairment loss is recognised as an expense in the profit or loss immediately.

80 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.5 Impairment of non-financial assets (continued)

An assessment is made at each end of the reporting year as to whether there is any indication that
previously recognised impairment losses for an asset other than goodwill may no longer exist or may
have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised
impairment loss is reversed only if there has been a change in the estimates used to determine the asset
recoverable amount since the last impairment loss was recognised. The increased amount cannot
exceed the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss.

4.6 Cash and cash equivalents

Cash and cash equivalents comprise bank balances and deposits with licensed financial institutions
which are readily convertible to known amount of cash and which are subject to an insignificant risk of
changes in value.

4.7 Borrowing costs

Borrowing costs consist of interest and other costs that the Group and the Trust incurred in connection
with the borrowing of funds.

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset
are capitalised during the period of time that is necessary to complete and prepare the asset for its
intended use or sale. Capitalisation of borrowing costs commences when the activities to prepare the
asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred.
Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.
Other borrowing costs are expensed in the year in which they incurred.

4.8 Leases

The Group and the Trust assess at contract inception whether a contract is, or contains a lease, that is, if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.

As lessor

Leases in which the Group and the Trust do not transfer substantially all the risks and rewards incidental
to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a
straight-line basis over the lease terms and is included in revenue in the statements of profit or loss due
to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and recognised over the lease term on the same basis
as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

4.9 Revenue

4.9.1 Rental income

Rental income is recognised on a straight-line basis over the specific tenure of the respective
leases. Lease incentives and rebates granted are recognised as an integral part of the total rental
income, over the term of the lease.
4.9.2 Interest income

Interest income is recognised on a time proportion basis.

 ANNUAL REPORT 2022 81

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.10 Tax expense

4.10.1 Current tax

Current tax is the expected amount of income taxes payable in respect of the taxable profit for the
financial year and are measured using tax rates that have been enacted by the end of reporting
year and any adjustment to tax payable in respect of previous years.

Current tax is recognised in the statements of financial position as a liability (or an asset) to the
extent that it is unpaid (or refundable).

4.10.2 Deferred tax

Deferred tax is recognised using the liabilities method, providing for temporary differences
between the carrying amounts of assets and liabilities in the statements of financial position and
their tax bases. Deferred tax is measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on the laws that have been enacted or
substantially enacted by the end of the reporting date.

Where investment properties are carried at their fair value in accordance with the accounting
policy set out in Note 4.3 to the Financial Statements, the amount of deferred tax recognised is
measured using the tax rates that would apply on sale of those assets at their carrying value at
the reporting date unless the property is depreciable and is held with the objective to consume
substantially all of the economic benefits embodied in the property over time, rather than
through sale. In all other cases, the amount of deferred tax recognised is measured based on the
expected manner of realisation or settlement of the carrying amount of the assets and liabilities,
using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and
liabilities are not discounted.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the
same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be realised simultaneously.

4.11 Earnings per unit

The earnings per unit (“EPU”) are presented on basic and diluted format.

Basic EPU is calculated by dividing the profit or loss attributable to unitholders by the weighted average
number of units outstanding during the year.

Diluted EPU is determined by adjusting the profit or loss attributable to unitholders against the weighted
average number of units outstanding adjusted for the effects of all dilutive potential units.

4.12 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker who is responsible for allocating resources, assessing performance of the
operating segments and making strategic decisions for the Group.
82 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

5. PLANT AND EQUIPMENT

Office Office
Group and Trust equipment Computer renovation Total
RM RM RM RM

Cost
At 1.1.2021 426,732 22,680 142,353 591,765
Additions 10,315 - - 10,315
Written off (2,350) - - (2,350)
At 31.12.2021 434,697 22,680 142,353 599,730
Additions 631,270 - - 631,270
Written off (6,900) - - (6,900)
At 31.12.2022 1,059,067 22,680 142,353 1,224,100

Accumulated depreciation
At 1.1.2021 136,721 12,033 18,541 167,295
Charge for the year 38,182 3,956 14,232 56,370
Written off (941) - - (941)
At 31.12.2021 173,962 15,989 32,773 222,724
Charge for the year 79,076 3,630 12,180 94,886
Written off (3,450) - - (3,450)
At 31.12.2022 249,588 19,619 44,953 314,160

Net carrying amount

31.12.2022 809,479 3,061 97,400 909,940
31.12.2021 260,735 6,691 109,580 377,006
 ANNUAL REPORT 2022 83

6. INVESTMENT PROPERTIES

Group Trust
RM RM

At 1.1.2021 1,738,100,000 1,731,100,000

Fair value adjustment (21,900,000) (21,900,000)

At 31.12.2021 1,716,200,000 1,709,200,000

Additions 56,000 56,000
At 31.12.2022 1,716,256,000 1,709,256,000

Investment properties as at 31 December 2022 are stated at fair value based on update valuations conducted
by an independent firm of professional valuers registered with the Board of Valuers, Appraisers & Estate
Agents Malaysia using the comparison and income method of valuation.

The fair value represents the amount at which the properties could be exchanged on an open market basis
between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction at
the reporting date. The fair value should also reflect market conditions at the reporting date.

In arriving at the updated market value, the Valuer has applied the comparison and income method to assess
the market value of the investment properties as at the reporting date.

The fair value of investment properties is classified under Level 3.

Details of Level 3 fair value measurements are as follows:

Valuation method and key Significant unobservable Relationship of unobservable

inputs inputs inputs and fair value

Income method which capitalises Discount rate of 5.00% to 6.25% The higher the discount rate, the
the actual or estimated rental (2021: 5.00% to 6.25%) lower the fair value
income stream, net of projected
operating costs, using a discount Estimated market yield of 5.00% to The higher the estimated market
rate derived from market yields 6.25% (2021: 5.00% to 6.25%) yield, the lower the fair value

Occupancy rate of 69.75% to The higher the occupancy rate, the

92.27% (2021: 71.48% to 93.16%) higher the fair value

All land/strata titles are registered in the name of the Trustee.

84 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

6. INVESTMENT PROPERTIES (CONTINUED)

Group

Percentage
of fair value
to the
Acquisition Last Fair Group’s Net
Description
of Tenure cost Date of last valuation value Asset Value
properties RM valuation RM RM %

As at
31 December
2022
UOA Centre
Parcels Freehold 55,981,272 31.12.2022 78,000,000 78,000,000 7.83
UOA II
Parcels Freehold 194,502,300 31.12.2022 281,000,000 281,000,000 28.22
UOA
Damansara
Parcels Freehold 72,000,000 31.12.2022 114,900,000 114,900,000 11.54
Wisma UOA
Damansara II Freehold 211,000,000 31.12.2022 224,300,000 224,356,000 22.53
Parcel B –
Menara UOA
Bangsar Leasehold 287,760,483 31.12.2022 300,000,000 300,000,000 30.13
UOA
Corporate
Tower Leasehold 701,653,564 31.12.2022 718,000,000 718,000,000 72.11
1,522,897,619 1,716,200,000 1,716,256,000

As at
31 December
2021
UOA Centre
Parcels Freehold 55,981,272 31.12.2021 78,000,000 78,000,000 7.85
UOA II
Parcels Freehold 194,502,300 31.12.2021 281,000,000 281,000,000 28.30
UOA
Damansara
Parcels Freehold 72,000,000 31.12.2021 114,900,000 114,900,000 11.57
Wisma UOA
Damansara II Freehold 211,000,000 31.12.2021 224,300,000 224,300,000 22.59
Parcel B –
Menara UOA
Bangsar Leasehold 287,760,483 31.12.2021 300,000,000 300,000,000 30.21
UOA
Corporate
Tower Leasehold 701,653,564 31.12.2021 718,000,000 718,000,000 72.30
1,522,897,619 1,716,200,000 1,716,200,000

The valuations were conducted by PA International Property Consultants (KL) Sdn Bhd, an independent firm of
professional valuers registered with the Board of Valuers, Appraisers & Estate Agents Malaysia, using the
comparison and income method of valuation.
 ANNUAL REPORT 2022 85

6. INVESTMENT PROPERTIES (CONTINUED)

Trust

Percentage
of fair value
to the
Acquisition Last Fair Group’s Net
Description
of Tenure cost Date of last valuation value Asset Value
properties RM valuation RM RM %

As at
31 December
2022
UOA Centre
Parcels Freehold 55,981,272 31.12.2022 78,000,000 78,000,000 7.80
UOA II
Parcels Freehold 194,502,300 31.12.2022 281,000,000 281,000,000 28.10
UOA
Damansara
Parcels Freehold 72,000,000 31.12.2022 114,900,000 114,900,000 11.49
Wisma UOA
Damansara II Freehold 211,000,000 31.12.2022 224,300,000 224,356,000 22.43
Parcel B –
Menara UOA
Bangsar Leasehold 278,778,785 31.12.2022 293,000,000 293,000,000 29.30
UOA
Corporate
Tower Leasehold 701,653,564 31.12.2022 718,000,000 718,000,000 71.79
1,513,915,921 1,709,200,000 1,709,256,000

As at
31 December
2021
UOA Centre
Parcels Freehold 55,981,272 31.12.2021 78,000,000 78,000,000 7.82
UOA II
Parcels Freehold 194,502,300 31.12.2021 281,000,000 281,000,000 28.16
UOA
Damansara
Parcels Freehold 72,000,000 31.12.2021 114,900,000 114,900,000 11.52
Wisma UOA
Damansara II Freehold 211,000,000 31.12.2021 224,300,000 224,300,000 22.48
Parcel B –
Menara UOA
Bangsar Leasehold 278,778,785 31.12.2021 293,000,000 293,000,000 29.36
UOA
Corporate
Tower Leasehold 701,653,564 31.12.2021 718,000,000 718,000,000 71.96
1,513,915,921 1,709,200,000 1,709,200,000

The valuations were conducted by PA International Property Consultants (KL) Sdn Bhd, an independent firm of
professional valuers registered with the Board of Valuers, Appraisers & Estate Agents Malaysia, using the
comparison and income method of valuation.
86 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

6. INVESTMENT PROPERTIES (CONTINUED)

As at 31 December 2022, UOA II Parcels, UOA Damansara Parcels, Wisma UOA Damansara II, Parcel B – Menara
UOA Bangsar (excluding Petak 9 and 14) and UOA Corporate Tower with an aggregate carrying amount of
RM1,631,256,000 (2021: RM1,631,200,000) have been pledged as security for borrowings referred to in Note
14 to the Financial Statements.

The direct operating expenses are disclosed in Note 17 to the Financial Statements.

7. INVESTMENT IN A SUBSIDIARY COMPANY

Trust
2022 2021
RM RM

Unquoted shares, at cost 2 2

The details of the subsidiary company is as follows:

Principal place Equity interest Principal activity

of business 2022 2021
% %

Angkara Restu Sdn Bhd Malaysia 100 100 Property investment

8. TRADE RECEIVABLES

Group Trust
2022 2021 2022 2021
RM RM RM RM

Trade receivables 6,318,238 7,305,750 6,259,374 7,248,120

Less: Allowance for expected

credit losses
As at 1 January (3,897,005) (1,737,292) (3,897,005) (1,737,292)
Additions (1,156,404) (2,465,086) (1,128,959) (2,465,086)
Reversal 649,721 305,373 649,721 305,373
Written off 111,641 - 111,641 -
As at 31 December (4,292,047) (3,897,005) (4,264,602) (3,897,005)

2,026,191 3,408,745 1,994,772 3,351,115

The credit term for monthly rental from tenants is 14 (2021: 14) days.

Allowance for expected credit losses was reversed as a result of receipts during the financial year.

Included in trade receivables of the Group and of the Trust was amount owing by companies related to the
Manager amounting to RM114,371 in previous financial year.
 ANNUAL REPORT 2022 87

9. OTHER RECEIVABLES

Group and Trust

2022 2021
RM RM

Non-trade receivables 2,563,578 2,424,082

Deposits 3,288,048 2,992,218
Prepayment 143,258 152,732
5,994,884 5,569,032

Included in non-trade receivables of the Group and of the Trust is amount owing by companies related to the
Manager amounting to RM162,006 (2021: Nil).

10. AMOUNT OWING BY A SUBSIDIARY COMPANY

The amount owing by a subsidiary company represents interest free advances which are unsecured and
expected to be repaid in the next 12 months.

11. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS

The effective interest rates of deposits ranged between 1.25% to 2.65% (2021: 1.25% to 1.65%) per annum. The
deposits had maturity terms of one month or less.

12. OTHER PAYABLES

Group Trust
2022 2021 2022 2021
RM RM RM RM

Non-current
Tenants’ deposits 10,428,307 13,921,926 10,241,135 13,921,926

Current
Amount owing to the Manager 566,982 587,030 566,982 586,986
Amount owing to companies
related to the Manager 83,780 62,877 83,780 62,877
Non-trade payables 980,477 245,975 979,809 245,004
Interest payables 544,123 483,266 544,123 483,266
Accruals 1,864,432 1,461,324 1,851,229 1,450,230
Tenants’ deposits 20,929,536 17,010,229 20,902,402 16,828,682
Rental received in advance 1,432,268 1,519,205 1,376,631 1,463,568
26,401,598 21,369,906 26,304,956 21,120,613
36,829,905 35,291,832 36,546,091 35,042,539

The amount owing to the Manager which represents management fee payable and the amounts owing to
companies related to the Manager are unsecured and expected to be settled within the normal credit period of
30 (2021: 30) days.

Included in tenants’ deposits refundable within 12 months of the Group and of the Trust are deposits received
from companies related to the Manager amounting to RM3,979,749 (2021: RM4,510,378).
88 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

13. DEFERRED TAX LIABILITIES

Group and Trust

2022 2021
RM RM

At 1 January 21,188,000 23,378,000

Charged to profit or loss (Note 21) - (2,190,000)
At 31 December 21,188,000 21,188,000

The deferred tax liabilities represent the tax effects of RPGT on fair value adjustment of investment properties.

14. BANK BORROWINGS

Group and Trust

2022 2021
RM RM

Secured
Revolving credit I 4,400,000 -
Revolving credit II 156,000,000 156,000,000
Revolving credit III 93,000,000 105,199,807
Revolving credit IV 422,000,000 422,000,000
675,400,000 683,199,807

Revolving credit I is secured by a legal charge over Wisma UOA Damansara II.

Revolving credit II is secured by Loan Agreements cum Assignment, Deeds of Extension of Deed of
Assignment, Deeds of Assignment of Rental Proceeds (“DARP”), Deeds of Extension of DARP and four (4)
Powers of Attorney, and legal charges over UOA Damansara Parcels and Parcel B – Menara UOA Bangsar
(excluding Petak 9 and 14).

Revolving credit III is secured by a legal charge over UOA II Parcels.

Revolving credit IV is secured by a legal charge over UOA Corporate Tower.

The revolving credits are subject to periodic review and repayable on demand. The Manager is of the opinion
that the facility will be rolled over and remain available in the long term.

The effective interest/profit rates of the borrowings ranging from 3.65% to 3.76% (2021: 2.62% to 2.67%) per
annum except revolving credit IV with the fixed interest rate of 2.75% (2021:2.75%) per annum.

Changes in borrowings arising from financing activities pertain to drawdown and repayment made in the
statements of cash flows.
 ANNUAL REPORT 2022 89

15. UNITHOLDERS’ CAPITAL

Group and Trust

2022 2021

Issued and fully paid with no par value:

Number of units (Units)
At 1 January/31 December 675,599,076 675,599,076

Unitholders’ capital (RM)

At 1 January 750,555,165 750,745,631
New units issuance expenses - (190,466)
At 31 December 750,555,165 750,555,165

16. GROSS RENTAL

Gross rental represents rental income from the investment properties and is generated from Malaysia.

17. PROPERTY OPERATING EXPENSES

Group Trust
2022 2021 2022 2021
RM RM RM RM

Assessment and quit rent 6,928,919 6,968,730 6,914,471 6,954,039

Insurance 285,969 329,556 285,535 328,706
Maintenance fees 9,793,335 10,078,293 9,628,174 9,905,425
Others 6,603,257 6,926,602 6,580,523 6,905,567

Direct operating expenses 23,611,480 24,303,181 23,408,703 24,093,737

Property management fees 2,515,998 2,411,896 2,515,998 2,411,896
26,127,478 26,715,077 25,924,701 26,505,633

18. MANAGER’S FEES

The Manager is entitled under the Deed to a management fee of up to 1.00% per annum of the Net Asset Value
of the Trust, calculated on a monthly accrual basis and payable monthly in arrears.

For the financial year, the Manager charged a manager’s fees of RM6,624,134 (2021:RM6,708,735) which was
calculated based on 0.67% (2021: 0.67%) of the Net Asset Value of the Trust on monthly basis.

19. TRUSTEE’S FEES

The Trustee is entitled to a fee of up to 0.05% per annum of Net Asset Value of the Trust, calculated on a
monthly accrual basis and payable monthly in arrears.

For the financial year, the Trustee charged a trustee’s fees of RM296,603 (2021: RM300,391) which was
calculated based on 0.03% (2021: 0.03%) of the Net Asset Value of the Trust.
90 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

20. FINANCE COSTS

Group and Trust

2022 2021
RM RM

Interest expense on revolving credits 19,747,943 18,871,828

21. TAX EXPENSE/(INCOME)

Group Trust
2022 2021 2022 2021
RM RM RM RM

Current year provision

- current tax 103,000 97,000 - -
- deferred tax (Note 13) - (2,190,000) - (2,190,000)
Underprovision of current tax in
prior years 5,174 1,398 - -
RPGT on disposed properties - 31,048 - 31,048
Tax expense/(income) 108,174 (2,060,554) - (2,158,952)

The numerical reconciliation of tax expense/(income) on income before tax with the statutory tax rate is as
follows :

Group Trust
2022 2021 2022 2021
RM RM RM RM

Income before tax 60,980,844 40,042,561 60,574,518 39,646,389

Taxation at statutory tax rate
of 24% 14,635,403 9,610,215 14,537,884 9,515,133
Non-deductible expenses 310,066 321,630 304,585 319,712
Non-taxable income (14,842,469) (15,090,845) (14,842,469) (15,090,845)
Difference between income tax
rate and RPGT rate applicable
on fair value adjustment on
investment properties - 3,066,000 - 3,066,000
RPGT on disposed properties - 31,048 - 31,048
Underprovision of current tax in
prior years 5,174 1,398 - -
Tax expense/(income) 108,174 (2,060,554) - (2,158,952)

Pursuant to the amended Section 61A of the Income Tax Act, 1967, where in the basis period for a year of
assessment, 90% or more of the total income of the trust is distributed to its unitholders, the total income of the
trust for that year of assessment shall be exempted from corporate tax.
 ANNUAL REPORT 2022 91

22. EARNINGS PER UNIT

The EPU after manager’s fees of the Group and of the Trust have been calculated by dividing income after tax
for the financial year of RM60,872,670 and RM60,574,518 (2021: RM42,103,115 and RM41,805,341) by the
weighted average number of units in issue of 675,599,076 (2021: 675,599,076).

The EPU before manager’s fees of the Group and of the Trust have been calculated by dividing income after
tax before deduction of manager’s fees for the financial year of RM67,496,804 and RM67,198,652 (2021:
RM48,811,850 and RM48,514,076) by the weighted average number of units in issue of 675,599,076 (2021:
675,599,076).

Diluted EPU equals to Basic EPU as there are no potential dilutive units in issue.

23. NET INCOME DISTRIBUTION TO UNITHOLDERS

Group and Trust

2022 2021
RM RM

Distribution to unitholders declared and paid for:

Financial year ended 31 December 2021
- Interim distribution of 4.32 sen - 29,185,879
- Final distribution of 4.32 sen 29,185,878 -

Financial year ended 31 December 2022

- Interim distribution of 4.30 sen 29,050,760 -
58,236,638 29,185,879

Proposed final distribution of 4.32 sen (2021: 4.32 sen)

for financial year ended 31 December 29,185,878 29,185,878

Total income distribution based on current year's net income 58,236,638 58,371,757

The distribution to unitholders is from the following sources of the Trust:

Group and Trust

2022 2021
RM RM

Sources of income
Gross rental income 113,731,892 115,736,605
Interest income 73,010 106,610
Other income 345,399 416,722
114,150,301 116,259,937

Expenses (excluding Manager’s fees)

Property expenses 25,924,701 26,505,633
Non-property expenses 20,932,377 21,614,515
46,857,078 48,120,148
92 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

23. NET INCOME DISTRIBUTION TO UNITHOLDERS (CONTINUED)

The distribution to unitholders is from the following sources of the Trust (continued):

Group and Trust

2022 2021
RM RM

Net income before Manager’s fees, income distribution, fair

value loss on investment properties, net changes on financial
liabilities measured at amortised cost and taxation 67,293,223 68,139,789
Fair value loss on investment properties - (21,900,000)
Net changes on financial liabilities measured at amortised cost (94,571) 115,335
Manager’s fees (6,624,134) (6,708,735)
Tax income - 2,158,952
60,574,518 41,805,341

Undistributed income during the year

- Unrealised loss 94,571 19,594,665
- Realised income (2,432,451) (3,028,249)
Total income distribution based on current year's net income 58,236,638 58,371,757

Total distribution per unit (sen) 8.62 8.64

24. TRANSACTIONS WITH STOCKBROKING COMPANIES

There were no transactions made with stockbroking companies during current and prior years.

25. MANAGEMENT EXPENSE RATIO

Group and Trust

2022 2021
% %

Management expense ratio (“MER”) 0.74 0.73

MER is calculated based on the total administrative expenses incurred by the Group and the Trust divided by
the average value of the Net Asset Value for the financial year calculated on a quarterly basis.

As the basis of calculation may vary among real estate investment trusts, no accurate comparison can be made
between the Group’s and the Trust’s MER with other real estate investment trusts.

26. UNITHOLDERS BY THE MANAGER

The Manager did not hold any direct units in the Trust in current and prior years.
 ANNUAL REPORT 2022 93

27. UNITHOLDERS RELATED TO THE MANAGER

Percentage of
Number of units units in issue Market value
2022 2021 2022 2021 2022 2021
% % RM RM

Directors of the Manager:

- Dato’ Gan Boon Khuay 500,000 400,000 0.07 0.06 575,000 460,000
- Kung Beng Hong 400,000 400,000 0.06 0.06 460,000 460,000
- Kong Sze Choon 69,000 69,000 0.01 0.01 79,350 79,350

Companies related to the

Manager :
- Desa Bukit Pantai Sdn Bhd 102,261,538 102,261,538 15.14 15.14 117,600,769 117,600,769
- Wisma UOA Sdn Bhd 77,729,000 77,729,000 11.51 11.51 89,388,350 89,388,350
- Rich Accomplishment
Sdn Bhd 74,661,538 74,661,538 11.05 11.05 85,860,769 85,860,769
- Dynasty Portfolio Sdn Bhd 63,326,600 63,326,600 9.37 9.37 72,825,590 72,825,590
- UOA Corporation Bhd 48,000,000 48,000,000 7.10 7.10 55,200,000 55,200,000
- LTG Development Sdn Bhd 5,600,700 5,600,700 0.83 0.83 6,440,805 6,440,805

Persons related to the

Manager via relationship
with a Director of the
Manager
- Kong May Chee 15,900 15,900 0.00 0.00 18,285 18,285
- Kong Ai Chee 13,500 13,500 0.00 0.00 15,525 15,525

Director of the Manager

(indirect interest)
- Kong Sze Choon * 24,000 24,000 0.00 0.00 27,600 27,600
- Kung Beng Hong ** 163,400 63,400 0.02 0.00 187,910 72,910

Persons related to the

Manager via relationship
with a Director of the
Manager (indirect interest)
- Kong Chong Soon
@ Chi Suim *** 371,579,376 371,579,376 55.00 55.00 427,316,282 427,316,282

* Deemed interest through his shareholding in Global Transact Sdn Bhd.

** Deemed interest through shares held by his spouse.

*** Deemed interest through his shareholdings in United Overseas Australia Ltd (the ultimate holding
company of Desa Bukit Pantai Sdn Bhd, Wisma UOA Sdn Bhd, Rich Accomplishment Sdn Bhd, Dynasty
Portfolio Sdn Bhd, UOA Corporation Bhd and LTG Development Sdn Bhd).

The market value of the units is determined by using the closing market value of RM1.15 as at 31 December
2022 (31 December 2021: RM1.15).
94 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

28. RELATED PARTY TRANSACTIONS

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or
the Trust has the ability, directly or indirectly, to control the party or exercise significant influence over the
party in making financial and operating decisions, or vice versa, or where the Group or the Trust and the party
are subject to common control or common significant influence. Related parties may be individuals or other
entities.

Related parties also include key management personnel defined as those persons having authority and
responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The
key management personnel include all Directors of the Manager, and certain members of senior management
of the Manager.

Other than those disclosed elsewhere in the financial statements, the significant related party transactions are
disclosed as follows :

Transaction value
2022 2021
RM RM

Transactions with companies related to the Managers:

Group and Trust
Purchase of plant and equipment 107,020 -
Rental received/receivable 14,861,267 15,974,494
Parking fees paid/payable 9,147 9,147
Security fees paid/payable 531,688 506,530
Landscaping fees paid/payable 43,800 49,600
Repair and maintenance paid/payable 3,060 1,800
Annual General Meeting expenses paid 8,000 8,000

Transactions with subsidiary company :

Trust
Rental received 202,913 202,913

The above transactions have been entered into in the normal course of business and have been established
based on terms and conditions that are not materially different from those obtainable in transactions with
unrelated parties.

The related party balances arising from related party transactions as at the reporting date were disclosed in
Notes 8, 9, 10 and 12 to the Financial Statements.
 ANNUAL REPORT 2022 95

29. MATURITY ANALYSIS OF LEASE PAYMENTS

The Group and the Trust as lessor

The Group and the Trust lease out their investment properties under operating leases. These leases are non-
cancellable and typically run for a period ranging from 1 to 5 years, with the option to renew. Subsequent
renewals are negotiated with the lease on average rental period of 1 to 5 years. None of the leases include
contingent rentals.

The future undiscounted lease payments receivables after the reporting date are as follows :

Group Trust
2022 2021 2022 2021
RM RM RM RM

As lessor
Within 1 year 79,163,884 102,242,399 78,534,638 101,857,311
In the second year 21,076,694 50,342,923 20,535,311 50,342,923
In the third year 4,245,689 9,637,805 3,878,444 9,637,805
In the fourth year 176,777 51,462 176,777 51,462
104,663,044 162,274,589 103,125,170 161,889,501

30. SEGMENT REPORTING

The segmental financial information by business or geographical segments is not presented as there is only
one business activity within the investment properties of the Group and of the Trust and the business activity is
operated in Malaysia.

The Manager assesses the financial performance of the operating segments based on, including but not
limited to, net rental income. The net rental income enables financial performance benchmarking as such
basis eliminates the effect of financing and investment decisions which may not be made at operating level.
96 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

31. FINANCIAL INSTRUMENTS

Classification of financial instruments

The Group and the Trust have financial instruments categorised at amortised cost only and details as follows :

Group Trust
2022 2021 2022 2021
RM RM RM RM

Financial assets
- at amortised cost
Trade and other receivables 7,877,817 8,825,045 7,846,398 8,767,415
Amount owing by a
subsidiary company - - 11,500,479 12,100,476
Deposits with licensed
financial institutions 1,200,000 1,500,000 1,200,000 1,250,000
Bank balances 2,712,804 5,651,134 2,434,607 5,401,428
11,790,621 15,976,179 22,981,484 27,519,319

Financial liabilities
- at amortised cost
Other payables 35,397,637 33,772,627 35,169,460 33,578,971
Bank borrowings 675,400,000 683,199,807 675,400,000 683,199,807
710,797,637 716,972,434 710,569,460 716,778,778

Fair value of financial instruments

Included in payables are tenants’ deposits received. The tenants’ deposits are determined based on the
present value of future cash flows discounted at the market interest rate of 3.59% (2021: 2.81%) per annum at
the end of the reporting year.

The carrying amounts of all other financial assets and liabilities approximate fair values due to the relatively
short-term nature of these financial instruments.
 ANNUAL REPORT 2022 97

32. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES

The Group and the Trust operate within clearly defined guidelines as set out in the Securities Commission’s
Guidelines on Listed Real Estate Investment Trusts (“REIT Guidelines”). These REIT Guidelines seek to provide
a regulatory framework that would protect the interests of the investing public. The Group and the Trust are
exposed to a variety of financial risks, including credit risk, interest rate risk and liquidity risk arising from their
operations and the use of financial instruments.

Information regarding the Group’s and the Trust’s exposure to the abovementioned risks and the Group’s and
the Trust’s risk management policies, which ensure compliance with the spirit of the REIT Guidelines, are set
out below:

(a) Credit risk

Credit risk is the risk that a tenant or counter party may be unable to meet their contractual obligations. At
the reporting date, the maximum exposure to credit risk is represented by the carrying amount of each
financial asset in the statements of financial position.

The Group and the Trust are not exposed to significant credit risks as it is not permitted to extend loans or
any other forms of credit facilities. The risk of non-collectability of monthly rentals is also mitigated with
rental deposits collected from the tenants.

The maximum exposure to credit risk for other receivables is represented by their carrying amounts in the
statements of financial position.

The ageing analysis of receivables as at the reporting date which is trade in nature is as follows:
Group

Gross
carrying Loss Net
amount allowance balances
RM RM RM

2022
Not past due 160,044 - 160,044
Past due 1 to 30 days 334,147 - 334,147
Past due 31 to 90 days 298,402 - 298,402
Past due more than 91 days 1,233,598 - 1,233,598
Past due more than 91 days
with credit impaired 4,292,047 4,292,047 -
6,318,238 4,292,047 2,026,191

2021
Not past due 321,631 - 321,631
Past due 1 to 30 days 940,560 - 940,560
Past due 31 to 90 days 593,268 - 593,268
Past due more than 91 days 1,553,286 - 1,553,286
Past due more than 91 days
with credit impaired 3,897,005 3,897,005 -
7,305,750 3,897,005 3,408,745
98 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

32. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED)

Information regarding the Group’s and the Trust’s exposure to the abovementioned risks and the Group’s and
the Trust’s risk management policies, which ensure compliance with the spirit of the REIT Guidelines, are set
out below (continued):
(a) Credit risk (continued)
The ageing analysis of receivables as at the reporting date which is trade in nature is as follows
(continued):
Trust

Gross
carrying Loss Net
amount allowance balances
RM RM RM

2022
Not past due 152,840 - 152,840
Past due 1 to 30 days 327,239 - 327,239
Past due 31 to 90 days 290,291 - 290,291
Past due more than 91 days 1,224,402 - 1,224,402
Past due more than 91 days
with credit impaired 4,264,602 4,264,602 -
6,259,374 4,264,602 1,994,772

2021
Not past due 321,631 - 321,631
Past due 1 to 30 days 924,947 - 924,947
Past due 31 to 90 days 591,319 - 591,319
Past due more than 91 days 1,513,218 - 1,513,218
Past due more than 91 days
with credit impaired 3,897,005 3,897,005 -
7,248,120 3,897,005 3,351,115

(b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Trust’s financial
instruments will fluctuate because of changes in market interest rates.

The Group’s and the Trust’s investments in fixed rate debt securities and its fixed rate borrowings are
exposed to a risk of change in their fair value due to changes in interest rates. The Group’s and the Trust’s
variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.

The Group and the Trust have no exposure to movements in market interest rates other than revolving
credit facilities and deposits with licensed financial institutions.

Financial assets

By placing its deposits on short tenures and at prevailing market interest rates, the Group and the Trust are
able to reduce their exposures to interest rate fluctuations.
 ANNUAL REPORT 2022 99

32. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED)

Information regarding the Group’s and the Trust’s exposure to the abovementioned risks and the Group’s and
the Trust’s risk management policies, which ensure compliance with the spirit of the REIT Guidelines, are set
out below (continued):

(b) Interest rate risk (continued)

Financial liabilities

The Group and the Trust minimise their interest rate risk by borrowing as far as possible at a floating
interest rate.

The information on maturity and effective interest/profit rates on the revolving credits are disclosed in
Note 14 to the Financial Statements.

The interest rate profile of the Group’s and Trust’s significant interest-bearing financial instruments, based
on carrying amounts as at the end of the financial year are as follows:

Group Trust
RM RM

2022
Fixed rate instruments
Deposits with licensed financial institutions 1,200,000 1,200,000
Bank borrowings 422,000,000 422,000,000

Floating rate instruments

Bank borrowings 253,400,000 253,400,000

2021
Fixed rate instruments
Deposits with licensed financial institutions 1,500,000 1,250,000
Bank borrowings 422,000,000 422,000,000

Floating rate instruments

Bank borrowings 261,199,807 261,199,807

A sensitivity analysis has been performed based on the outstanding floating rate borrowings of the Group
and the Trust as at the reporting date. If interest rates increase or decrease by 50 basis points with all other
variables held constant, the Group’s and the Trust’s income after tax and equity would decrease or
increase by RM1,267,000 (2021: RM1,306,000) respectively, as a result of higher or lower interest expense
on these borrowings.

(c) Liquidity risk

The Group and the Trust ensure that there are adequate funds to repay the revolving credit in a timely and
cost-effective manner. Sources of funds can be via issuance of units, internally generated funds or
borrowings. As timing of these arrangements is critical, the Group and the Trust may be exposed to the
risk of its investment properties being foreclosed in the interim. However, the Manager is of the opinion
that the facilities will be rolled over and remain available for the long term and there is no imminent
obligation to repay.
100 UOA REIT

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2022 (CONTINUED)

32. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED)

Information regarding the Group’s and the Trust’s exposure to the abovementioned risks and the Group’s and
the Trust’s risk management policies, which ensure compliance with the spirit of the REIT Guidelines, are set
out below (continued):

(c) Liquidity risk (continued)

Carrying Contractual Less than 1

Group amount cash flows year 1 to 5 years
RM RM RM RM

2022
Other payables 35,397,637 35,782,370 24,969,330 10,813,040
Bank borrowings 675,400,000 696,427,900 696,427,900 -
710,797,637 732,210,270 721,397,230 10,813,040

2021
Other payables 33,772,627 34,251,931 19,850,701 14,401,230
Bank borrowings 683,199,807 701,726,242 701,726,242 -
716,972,434 735,978,173 721,576,943 14,401,230

Carrying Contractual Less than 1

Trust amount cash flows year 1 to 5 years
RM RM RM RM

2022
Other payables 35,169,460 35,554,193 24,928,325 10,625,868
Bank borrowings 675,400,000 696,427,900 696,427,900 -
710,569,460 731,982,093 721,356,225 10,625,868

2021
Other payables 33,578,971 34,058,275 19,657,045 14,401,230
Bank borrowings 683,199,807 701,726,242 701,726,242 -
716,778,778 735,784,517 721,383,287 14,401,230
 ANNUAL REPORT 2022 101

33. CAPITAL MANAGEMENT

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s
ability to continue as a going concern, so as to maintain unitholder, creditor and market confidence and to
sustain future development of the business. The Directors of the Manager monitor and determine an optimal
debt-to-equity ratio that complies with debt covenants and regulatory requirements.

UOA REIT is permitted to procure borrowings of up to 50% of its total asset value pursuant to the REIT
Guidelines.

Total borrowings compared to total asset value as at the reporting date is as follows:

Group
2022 2021

Total asset value (RM) 1,729,099,819 1,732,705,917

Total borrowings (RM) 675,400,000 683,199,807

Total borrowings to total asset value (%) 39.1 39.4

102 UOA REIT

ANALYSIS OF UNITHOLDINGS
DISTRIBUTION OF UNITHOLDERS AS AT 31 DECEMBER 2022

No. of No. of
Trust Unitholders % Units held %

Less than 100 119 1.74 1,281 0.00

100 to 1,000 units 1,532 22.41 911,375 0.14
1,001 to 10,000 units 3,354 49.06 16,970,284 2.51
10,001 to 100,000 units 1,508 22.05 49,062,535 7.26
100,001 to less than 5% of issued units 320 4.68 607,684,601 89.95
5% and above of issued units 4 0.06 969,000 0.14
Total 6,837 100.00 675,599,076 100.00

CLASSIFICATION OF UNITHOLDERS AS AT 31 DECEMBER 2022

No. of Unitholders No. of Units held

Category Malaysian Malaysian Foreign Malaysian Malaysian Foreign

of Unitholders Bumiputra Non-Bumiputra Bumiputra Non-Bumiputra

1) Individual 179 4,610 60 829,500 98,431,779 3,733,901

2) Body Corporate
a) Banks/Finance
Companies 1 - - 4,180,000 - -
b) Investment
Trusts/
Foundation/
Charities 1 2 - 10,000 288,000 -
c) Industrial and
Commercial
Companies 3 60 4 328,000 374,857,676 4,836,300
3) Nominees 1,399 464 53 91,063,820 92,288,200 4,751,800
4) Others - 1 - - 100 -

Total 1,583 5,137 117 96,411,320 565,865,755 13,322,001

Grand Total 6,837 675,599,076

 ANNUAL REPORT 2022 103

SUBSTANTIAL UNITHOLDERS AS AT 31 DECEMBER 2022

Direct Indirect Direct+Indirect

Substantial Unitholders
Units % Units % Units %

1 UOA Corporation
Bhd (“UOA Corp”) 48,000,000 7.10 254,652,076* 37.69 302,652,076 44.80
2 Desa Bukit Pantai Sdn Bhd
(“Desa Bukit Pantai”) 102,261,538 15.14 - - 102,261,538 15.14
3 Rich Accomplishment Sdn
Bhd (“Rich Accomplishment”) 74,661,538 11.05 - - 74,661,538 11.05
4 Wisma UOA Sdn Bhd
(“Wisma UOA”) 77,729,000 11.15 - - 77,729,000 11.51
5 Dynasty Portfolio Sdn Bhd
(“Dynasty”) 63,326.600 9.37 - - 63,326,600 9.37
6 UOA Holdings Sdn Bhd
(“UOAH”) - - 371,579,3761 1 55.00 371,579,376 55.00
7 United Overseas Australia Ltd
(“UOAL”) - - 371,579,3761 1 55.00 371,579,376 55.00
8 Transmetro Sdn Bhd
(“Transmetro”) - - 371,579,3761 2 55.00 371,579,376 55.00
9 Griyajaya Sdn Bhd 3
(“Griyajaya”) - - 371,579,3761 55.00 371,579,376 55.00
10 Kong Chong Soon @
Chi Suim - - 371,579,3761 4 55.00 371,579,376 55.00
11 Kong Pak Lim - - 371,579,3761 2 55.00 371,579,376 55.00
12 UOA Development Bhd - - 63,326,6005 5
9.37 63,326,600 9.37
13 UOA Properties Sdn Bhd - - 63,326,6005 5 9.37 63,326,600 9.37
14 Employees Provident Fund 67,507,500 9.99 - - 67,507,500 9.99

Notes:

* Deemed interested by virtue of Section 8 of the Companies Act 2016 (“the Act”) held through Wisma UOA,
Desa Bukit Pantai and Rich Accomplishment.
1. Deemed interested by virtue of the Act through its unit holdings in Damai Positif, Desa Bukit Pantai, Dynasty
Portfolio Sdn Bhd (“Dynasty”), LTG Development Sdn Bhd (“LTG”) (holding 5,600,700 units in 2 CDS
accounts), Rich Accomplishment and Wisma UOA.
2. Deemed interested by virtue of the Act through its/his unit holdings in UOAL and Griyajaya which in turn has
direct interest in UOAL and indirect interest in UOAH.
3. Deemed interested by virtue of the Act through its unit holdings in UOAL and indirect interest in UOAH.
4. Deemed interested by virtue of the Act through his unit holdings in Transmetro which in turn has direct interest
in Griyajaya which in turn has direct interest in UOAL and indirect interest in UOAH.
5. Deemed interested by virtue of the Act through Dynasty Portfolio.
104 UOA REIT

THIRTY (30) LARGEST UNITHOLDERS

AS AT 31 DECEMBER 2022

Unitholders No. of Units %

1) Desa Bukit Pantai Sdn Bhd 102,261,538 15.14

2) Wisma UOA Sdn Bhd 77,729,000 11.51

3) Rich Accomplishment Sdn Bhd 74,661,538 11.05

4) Citigroup Nominees (Tempatan) Sdn Bhd

Employees Provident Fund Board 67,507,500 9.99

5) Dynasty Portfolio Sdn Bhd 63,326,600 9.37

6) UOA Corporation Berhad 48,000,000 7.10

7) Lim Chee Meng 11,000,000 1.63

8) Cimsec Nominees (Tempatan) Sdn Bhd CIMB For

Loh Wee Hian (Pb) 10,600,000 1.57

9) Db (Malaysia) Nominee (Tempatan) Sendirian

Berhad Exempt An For AHAM Asset Management
Berhad (Tstac/Clntt) 6,950,100 1.03

10) LTG Development Sdn Bhd 5,370,700 0.79

11) Amsec Nominees (Tempatan) Sdn Bhd Ambank

(M) Berhad For Tan Boon Seng
(7928-1102) 4,545,500 0.67

12) Maybank Nominees (Tempatan) Sdn Bhd

Maybank Private Wealth Management For
Desamal Capital Sdn Bhd 4,545,500 0.67

13) Cimsec Nominees (Tempatan) Sdn Bhd CIMB For

Ahmad Johari Bin Abdul Razak (Pb) 4,315,100 0.64

14) Amanah Raya Berhad - Kumpulan

Wang Bersama 4,180,000 0.62

15) HLB Nominees (Tempatan) Sdn Bhd

Ta Kin Yan (Csd Sin/Tky) 4,090,900 0.61

16) Yap Tian Tion 3,322,200 0.49

17) Tokio Marine Life Insurance Malaysia Bhd As

Beneficial Owner (Pf) 2,909,000 0.43

18) Citigroup Nominees (Tempatan) Sdn Bhd

MCIS Insurance Berhad (Life Par Fd) 2,411,600 0.36

19) Christina Chan Swee Lee (Christina Zeng Ruili) 2,025,600 0.30

20) RHB Nominees (Tempatan) Sdn Bhd

Pledged Securities Account for Sheldon
Wee Tah Poh 1,900,000 0.28
 ANNUAL REPORT 2022 105

Unitholders No. of Units %

21) Lim Bee Eng 1,829,600 0.27

22) CIMB Group Nominees (Tempatan) Sdn Bhd

CIMB Commerce Trustee Berhad For Affin
Hwang Multi-Asset Fund 2 1,818,100 0.27

23) Wong Lee Yun 1,755,800 0.26

24) Cimsec Nominees (Tempatan) Sdn Bhd

CIMB for Loh Gim Ean Holdings Sdn Bhd (Pb) 1,620,000 0.24

25) Goh Thong Beng 1,545,200 0.23

26) Eagle Prosperity Sdn Bhd 1,513,700 0.22

27) RHB Capital Nominees (Tempatan) Sdn Bhd

Pledged Securities Account For Lye Ek Seang 1,508,500 0.22

28) Maybank Nominees (Tempatan) Sdn Bhd

Maybank Private Wealth Management For
Gnanalingam A/L Gunanath Lingam 1,506,000 0.22

29) Maybank Nominees (Tempatan) Sdn Bhd

Maybank Private Wealth Management For
Ooi Joon Leong 1,350,000 0.20

30) Cimsec Nominees (Tempatan) Sdn Bhd

CIMB For Cheah Chin Heng 1,300,000 0.19

Total 517,399,276 76.57

106 UOA REIT

NOTICE OF ELEVENTH
ANNUAL GENERAL MEETING
UOA REAL ESTATE INVESTMENT FUND
(constituted in Malaysia under the Deed dated
28 November 2005 entered into between UOA
Asset Management Sdn Bhd and RHB Trustees
Berhad, companies incorporated in Malaysia)

NOTICE IS HEREBY GIVEN THAT the Eleventh Annual General Meeting (“AGM”) of UOA Real Estate Investment
Trust (“UOA REIT”) will be held at Spectrum, Level 3A, Connexion Conference & Event Centre, Nexus, Bangsar
South City, No. 7, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia on Thursday, 20 April 2023 at 10.00 a.m. or at any
adjournment, for the following purposes:

AGENDA

1. To lay the Audited Financial Statements for the financial year ended 31 December 2022 (Refer note 2)
together with the Trustee’s Report to the Unitholders issued by RHB Trustees Berhad, as
trustee for UOA REIT and the Statement by the Manager issued by UOA Asset Management
Sdn Bhd, as the manager of UOA REIT and the Independent Auditors’ Report thereon.

By Order of the Board of

UOA ASSET MANAGEMENT SDN BHD 200501015592 (692639-U)
The Manager of UOA Real Estate Investment Trust

YAP KAI WENG (MAICSA 74580)

WONG YOKE LENG (MAICSA 7032314)
Company Secretaries

Kuala Lumpur
28 February 2023
 ANNUAL REPORT 2022 107

NOTES:
1. APPOINTMENT OF PROXY

(i) Only depositors whose names appear in the Record of Depositors as at 13 April 2023 shall be regarded
as Unitholders and be entitled to attend and speak at the AGM.

(ii) A Unitholder of UOA REIT (“Unitholder”) shall be entitled to attend and speak and shall be entitled to
appoint another person (whether a Unitholder or not) as its proxy to attend and speak in his/her stead.

(iii) Where a Unitholder is a corporation, its duly authorised representative shall be entitled to attend and
speak, and shall be entitled to appoint another person (whether a Unitholder or not) as its proxy to attend
and speak in its stead.

(iv) Where a Unitholder is an Authorised Nominee as defined under the Securities Industry (Central
Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each Securities Account it
holds with units of UOA REIT standing to the credit of the said Securities Account.

(v) Where a Unitholder appoints two (2) proxies, the appointment shall be invalid unless it specifies the
proportions of its holdings to be represented by each proxy.

(vi) The instrument appointing a proxy shall be in writing under the hand of the appointer or of its attorney
duly authorised in writing or if the appointer is a corporation either under its common seal or under the
hand of an officer or attorney duly authorised.

(vii) The instrument appointing a proxy must be deposited at the Business Office of the Trustee at Level 11,
Tower Three, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia not less than fourty-eight
(48) hours before the time appointed for holding the Meeting or any adjournment thereof.

(viii) Please ensure ALL the particulars as required in the Proxy Form are completed, signed and dated
accordingly.

(ix) Last day and time for lodging the Proxy Form is Tuesday, 18 April 2023 at 10.00 a.m.

2. AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022

This Agenda is meant for discussion only as the Audited Financial Statements do not require formal approval
of Unitholders under the Securities Commission’s Guidelines on Listed Real Estate Investment Trusts. Hence,
this matter will not be put forward for voting.
PROXY
FORM
UOA REAL ESTATE INVESTMENT FUND
(constituted in Malaysia under the Deed dated
CDS Account No.: 28 November 2005 entered into between UOA
Asset Management Sdn Bhd and RHB Trustees
No. of Units held: Berhad, companies incorporated in Malaysia)

I/We NRIC No. / Company No.

of Tel no.
being a Unitholder/Unitholders of UOA REIT, hereby appoint the following person(s) as my proxy:

No. Name as per NRIC NRIC No. % unitholding to be represented

1.

2.

or failing him/her the Chairman of the Meeting as my/our proxy to participate on my/our behalf at the Eleventh
Annual General Meeting (“AGM”) of UOA REIT to be held at Spectrum, Level 3A, Connexion Conference & Event
Centre, Nexus, Bangsar South City, No. 7, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia on Thursday, 20 April 2023
at 10:00 a.m., or any adjournment thereof.

Signature of Unitholder(s) / Common seal for Corporate Unitholder(s)

Date:

NOTES:

(i) Only depositors whose names appear in the Record of Depositors as at 13 April 2023 shall be regarded as
Unitholders and be entitled to attend and speak at the AGM.
(ii) A Unitholder of UOA REIT (“Unitholder”) shall be entitled to attend and speak and shall be entitled to appoint
another person (whether a Unitholder or not) as its proxy to attend and speak in his/her stead.
(iii) Where a Unitholder is a corporation, its duly authorised representative shall be entitled to attend and speak,
and shall be entitled to appoint another person (whether a Unitholder or not) as its proxy to attend and speak
in its stead.
(iv) Where a Unitholder is an Authorised Nominee as defined under the Securities Industry (Central Depositories)
Act 1991, it may appoint at least one (1) proxy in respect of each Securities Account it holds with units of UOA
REIT standing to the credit of the said Securities Account.
(v) Where a Unitholder appoints two (2) proxies, the appointment shall be invalid unless it specifies the
proportions of its holdings to be represented by each proxy.
(vi) The instrument appointing a proxy shall be in writing under the hand of the appointer or of its attorney duly
authorised in writing or if the appointer is a corporation either under its common seal or under the hand of an
officer or attorney duly authorised.
(vii) The instrument appointing a proxy must be deposited at the Business Office of the Trustee at Level 11, Tower
Three, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia not less than fourty-eight (48) hours
before the time appointed for holding the Meeting or any adjournment thereof.
(viii) Please ensure ALL the particulars as required in the Proxy Form are completed, signed and dated
accordingly.
(ix) Last day and time for lodging the Proxy Form is Tuesday, 18 April 2023 at 10.00 a.m.
Fold This Flap For Sealing

Then Fold Here

AFFIX
STAMP

RHB TRUSTEES BERHAD 200201005356 (573019-U)

(as Trustee for UOA Real Estate Investment Trust)
Level 11, Tower Three
Jalan Tun Razak
50400 Kuala Lumpur, Malaysia

1 st Fold Here