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Contents
Financial Highlights
Corporate Information Profile of Directors of the Manager Chairman's Statement Statement of Corporate Governance Statement on Risk Management and Internal Control Additional Compliance Information Financial Statements Supplementary Information Analysis of Unitholdings Thirty (30) Largest Unitholders Notice of Annual General Meeting Total gross income (RM) Income before tax (RM) Income after tax (RM) Earnings per unit (sen) Distribution per unit (sen) Total asset value (RM) 1,135,251,395 1,071,048,612 1,067,030,329 1,065,191,249 1,035,716,373 Net asset value (RM) Net asset value per unit (RM) Market price per unit (RM) Distribution yield Annual total returns (RM)(1) Average total returns (2) - for three years - for five years (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.
Income Before Tax (RM)
Earnings Per Unit (Sen)
Distribution Per Unit (Sen)
Net Asset Value Per Unit (RM)
Financial Highlights (Cont'd)
Total Asset Value and Net Asset Value (RM'000)
Total Asset Value Trading Performance and Market Price Per Unit
Market Price Per Unit (RM) : UOA Asset Management Sdn Bhd (692639-U) Parcel B – Menara UOA Bangsar : Consisting of a tower block, namely Tower B comprising 15 levels of office space,
3 levels of retail podium, 6 levels of elevated car park and 4 levels of basement car park (which form part of a development known as Menara UOA Bangsar) Properties
: Wisma UOA Pantai, Wisma UOA Damansara I , Parcel B – Menara UOA Bangsar and the parcels within UOA Centre, UOA I and UOA Damansara Property Manager
: Jordan Lee & Jaafar Sdn Bhd (59901-U) : RHB Trustees Berhad (573019-U) Unitholders
: Unitholders of UOA REIT UOA Ltd Group
: United Overseas Australia Ltd (ACN009245890) and its subsidiaries UOA Holdings Group
: UOA Holdings Sdn Bhd (190246-V) and its subsidiaries UOA REIT / The Trust
: UOA Real Estate Investment Trust UOA Asset Management Sdn Bhd (692639-U) Jordan Lee & Jaafar Sdn Bhd (59901-U)No. 3-3, Level 3, Block B PRINCIPAL PLACE OF BUSINESS OF THE
Jalan Medan Setia 1 Wisma UOA Bangsar South Tower 1, Avenue 3, The Horizon 50490 Kuala Lumpur, Malaysia Bangsar South City Telephone: +603 2095 5811 No. 8, Jalan Kerinchi Facsimile: +603 2095 5843 59200 Kuala Lumpur, MalaysiaTelephone: +603 2245 9188 REGISTRAR OF THE TRUST IN CHARGE OF THE
Facsimile: +603 2241 4862 REGISTER OF UNITHOLDERS
Tricor Investor Services Sdn Bhd (118401-V)
REGISTERED ADDRESS OF THE MANAGER
Unit 32-01, Level 32, Tower A No. 9, Jalan Indah 16 Vertical Business Suite, Avenue 3 Taman Cheras Indah Bangsar South City 56100 Kuala Lumpur, Malaysia No. 8, Jalan Kerinchi Telephone: +603 9287 1000 59200 Kuala Lumpur, Malaysia Facsimile: +603 9287 2000 Telephone: +603 2783 9299Facsimile: +603 2783 9222 BOARD OF DIRECTORS OF THE MANAGER
Tan Sri Dato' Seri Alwi Jantan (Chairman)
Mazars (No. AF: 001954) 7th Floor, South Block Dato' Gan Boon Khuay Wisma Selangor Dredging Alan Charles Winduss 142-A, Jalan Ampang50450 Kuala Lumpur, Malaysia AUDIT AND RISK MANAGEMENT COMMITTEE
Telephone: +603 2161 5222 Kung Beng Hong (Chairman) Facsimile: +603 2161 3909 Dato' Gan Boon KhuayAlan Charles Winduss BANKERS
CIMB Bank Berhad
COMPANY SECRETARIES OF THE MANAGER
AmBank (M) Berhad Yap Kai Weng (MAICSA No: 74580) AmBank Islamic Berhad Wong Yoke Leng (MAICSA No: 7032314) United Overseas Bank (Malaysia) Berhad MANAGEMENT TEAM OF THE MANAGER
STOCK EXCHANGE LISTING
Bursa Malaysia Securities Berhad (Chief Executive Officer / Executive Director) Stock Code: UOA REIT 5110 Glenda Liew (Accountant)Fam Chai Hing (Compliance Officer) TRUSTEE
RHB Trustees Berhad (573019-U)
3rd Floor, Plaza OSK Telephone: 1 300 88 6668 (Malaysia) 50450 Kuala Lumpur, Malaysia +603 2245 9192 (International) Telephone: +603 9207 7777Facsimile: +603 2175 3288 Profile of Directors of The Manager
Tan Sri Dato' Seri Alwi Jantan Independent Non-Executive Chairman Chief Executive Officer and Non-Independent Executive Director Independent Non-Executive Director Dato' Gan Boon Khuay Independent Non-Executive Director Alan Charles Winduss Non-Independent Non-Executive Director Further information on the Directors of the Manager is set out in the following paragraphs.
Tan Sri Dato' Seri Alwi Jantan
(Independent Non-Executive Chairman)
Tan Sri Dato' Seri Alwi Jantan, Malaysian, aged 80, is Independent Non-Executive Chairman. He was appointed on 8 June 2005. He has had a distinguished career in public service in Malaysia culminating in his position as Director General of Public Service, which he held for over three years until his retirement in April 1990. His other notable appointments were as Secretary General, Ministry of Agriculture (1984 – 1987), Deputy Secretary General, Prime Minister's Department (1981 – 1984), Secretary General, Ministry of Health (1977 – 1981), Secretary General, Ministry of Local Government and Federal Territory (1976 – 1977), State Secretary, Selangor (1972 – 1976), Director General of National Archives and Library (1966 – 1971). He concurrently served as Private Secretary to His Royal Highness the Timbalan Yang di Pertuan Agong in 1961, 1962 and in 1965. Upon his retirement after 32 years in the public service, he joined Genting Malaysia Bhd (formerly known as Resorts World Bhd) as Executive Vice-President – Public Affairs and Human Resources in 1990 and was re-designated as Executive Director in 2007. On 1 July 2011, he was re-designated as Independent Non-Executive Director, a position he currently holds. At present, he is also Chairman/Independent Non-Executive Director of UOA Development Bhd. Tan Sri Dato' Seri Alwi Jantan graduated from University of Malaya with a Bachelor of Arts (Honours in History) Degree in 1958. While in the public service, he also obtained a Diploma from Stage Technique International d'Archives, Paris, France and an Honorary Degree from University of Rome, Italy in 1966 and 1979 respectively. In 1980, he attended the Advanced Management Programme at Harvard Graduate School of Business in Boston, United States of America. He was a United Nations Educational, Scientific and Cultural Organisation (UNESCO) Fel ow as wel as a former President of the Harvard Business School Alumni Club of Malaysia.
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 over the past 10 years.
Profile of Directors of The Manager (Cont'd)
Kong Sze Choon
(Chief Executive Officer and Non-Independent Executive Director)
Kong Sze Choon, Singaporean, aged 39, 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 Assets 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 wel as sales and marketing of commercial and residential developments of 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. 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 over the past 10 years.
Kung Beng Hong
(Independent Non-Executive Director)
Kung Beng Hong, Malaysian, aged 70, 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 Fel ow of Institute of Bankers, Malaysia. He has had an il ustrious career in the banking industry over the last 48 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) and Group Chief Executive Officer/Director of EON Bank Group (2003 – 2004). He currently serves as Adviser to Ful erton Financial Holdings Pte Ltd and sits on the Board of Alliance Financial Group Bhd, Alliance Bank Malaysia Bhd and Alliance Investment Bank Bhd as Non-Independent and Non-Executive Chairman.
Mr. Kung also holds directorships in Asian Institute of Finance Bhd and FIDE Forum (both are non-listed public companies limited by guarantee) as wel as Quil Motorcars 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 over the past 10 years.
Profile of Directors of The Manager (Cont'd)
Dato' Gan Boon Khuay
(Independent Non-Executive Director)
Dato' Gan Boon Khuay, Malaysian, aged 62, is one of our Independent Non-Executive Directors and a member of the Audit and Risk Management Committee. He was appointed on 16 November 2005. He holds a Bachelor of Science (First Class Honours) Degree in Civil, Structural and Environmental Engineering from University Col ege London, University of London, United Kingdom. He was awarded the Chadwick Medal & Prize in 1977. He has also successful y gone through 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 39 years of experience in property and project management as wel 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 initial y as Project Director and for the last 27 years as Managing Director. He also holds directorships in various private limited companies. Dato' Gan Boon Khuay was 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 over the past 10 years.
Alan Charles Winduss
(Non-Independent Non-Executive Director)
Alan Charles Winduss, Australian, aged 75, is a Non-Independent Non-Executive Director and a member of the Audit and Risk Management Committee. He was appointed on 28 November 2005. He is also a Director of Winduss & Associates Pty Ltd. He has been involved in the professional accounting in public practice for over 29 years, specialising in matters relating to corporate management, restructuring, corporate finance and company secretarial matters including the Australian Securities Exchange ("ASX") and the Australian Securities Exchange and Investments Commission compliance. The accounting practice of Winduss & Associates Pty Ltd lists among its field of expertise matters relating to property development, management and ownership. He sits on the board of two companies listed on the ASX, and serves on the board of Australian incorporated private limited companies. Mr. Winduss is also Non-Independent Non-Executive Director of UOA Development Bhd and United Overseas Australia Ltd, the ultimate holding company of the Manager.
Mr. Winduss graduated from the then Perth Technical Col ege (now known as Curtin University) with a Diploma in Accounting in 1963. He is a member of various professional bodies including the Institute of Chartered Accountants in Australia and the Certified Public Accountants Australia. In addition, he is an Associate Fel ow of the Australian Institute of Management, a Fel ow of the Taxation Institute of Australia, a Fel ow of the Australian Institute of Company Directors and a registered Australian Company Auditor. 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 over the past 10 years.


On behalf of the Board of Directors of UOA Asset Management Sdn Bhd, the Manager of UOA Real Estate Investment Trust ("UOA REIT"), it is my pleasure to present the Annual Report and Financial Statements of UOA REIT for the financial year ended 31 December 2015.
Results & Operations
The gross rental income improved by 1.8% when compared to the financial year 2014. Total expenditure increased predominantly as a result of higher property operating expenses and borrowing costs. The fair value adjustment on investment properties carried out in the financial year 2015 led to a 135.1% increase in income before tax on a year-on-year basis.
The occupancy and average rental rates of the properties in the portfolio have continued to be stable with occupancy rates ranging from 85% to 99% as at the end of the financial year 2015.
The distribution per unit has increased slightly to 11.02 sen from 11.00 sen while maintaining a distribution rate of 98%.
A portfolio-wide revaluation of the UOA REIT's properties was carried out for the financial year ended 31 December 2015 pursuant to the Securities Commission's Guidelines on Real Estate Investment Trusts. The revaluation gave rise to a fair value gain of approximately RM64.1 mil ion, bringing the total value of investment properties in the portfolio to RM1.13 billion compared to RM1.06 billion previously.


Chairman's Statement (Cont'd)
The Future
Sustaining stable occupancy and rental rates remains as the key focus of the team. We are confident that through the team's experience and the strategic locations of our portfolio properties, UOA REIT wil continue to deliver good performance under the current economic conditions.
UOA REIT wil continue to explore and where possible pursue yield-accretive opportunities while maintaining a prudent capital management strategy.
On behalf of the Board, I would like to take this opportunity to express our gratitude to our Unitholders, tenants and business partners for their continued support and also to al staff for their dedication in achieving another year of satisfactory results. Tan Sri Dato' Seri Alwi Jantan
Chairman

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") 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 of UOA REIT and is critical to the performance and success of the Manager and subsequently UOA REIT. The Board fol ows the practices and policies of the Securities Commission's Guidelines on 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 2012, where applicable to the operations of UOA REIT 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 UOA REIT. Its primary role is to set the strategic direction of UOA REIT and manage the assets and liabilities of UOA REIT for the benefit of its unitholders, to ensure that the operations of UOA REIT are conducted in a proper, diligent and efficient manner within an appropriate risk management framework; and to enhance value and returns to its unitholders. The Manager's primary functions and responsibilities include: enhancement of assets in accordance with the Manager's investment strategy; UÊ œÀ“Տ>̈˜}Ê «>˜ÃÊ vœÀÊ iµÕˆÌÞÊ >˜ Ê iLÌÊ vˆ˜>˜Vˆ˜}Ê vœÀÊ 1"Ê ,/½ÃÊ V>«ˆÌ>Ê ÀiµÕˆÀi“i˜ÌÃÊ ÜˆÌ…Ê Ì…iÊ œLiV̈ÛiÊ œvÊ optimising the capital structure and cost of capital; UÊ -Õ«iÀۈȘ}Ê Ì…iÊ *Àœ«iÀÌÞÊ >˜>}iÀÊ Ü…œÊ «iÀvœÀ“ÃÊ Ì…iÊ >އ̜‡ >ÞÊ «Àœ«iÀÌÞÊ “>˜>}i“i˜ÌÊ v՘V̈œ˜ÃÊ vœÀÊ 1"Ê REIT's properties; and UÊ ˜ÃÕÀˆ˜}Ê Vœ“«ˆ>˜ViÊ ÜˆÌ…Ê Ì…iÊ ÀiiÛ>˜ÌÊ >ÜÃÊ >˜ Ê >««ˆV>LiÊ «ÀœÛˆÃˆœ˜ÃÊ œvÊ Ì…iÊ ,/Ê Ո iˆ˜iÃ]Ê ˆÃ̈˜}Ê Requirements and the trust deed constituting UOA REIT dated 28 November 2005 ("Deed").
UOA REIT is external y managed by the Manager and it has no personnel of its own. The Manager appoints experienced and wel -qualified management personnel to handle the day-to-day operations. Al 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. Statement of Corporate Governance (Cont'd)
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, and 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 UOA REIT. 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.
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 civil service, accountancy, banking and finance, real estate development and property management. This combination of different professions and skil s working together enables the Board to effectively lead and govern the Manager and UOA REIT.
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 ful support of the Board and the Manager. The CEO is responsible for implementing the policies and decisions of the Board. The CEO also has ful 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.
Statement of Corporate Governance (Cont'd)
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. Al the Directors are able to devote sufficient time and attention to the operations of UOA REIT and to update themselves with knowledge and skil s by attending seminars and training. The Directors are also accessible by email and telecommunication should the need arises. Corporate Code of Conduct and Whistle Blowing 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 UOA REIT and/or the Manager, and for the independent investigation of any reports by employees and appropriate follow up action.
The aim of the whistle blowing 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.
United Overseas Australia Ltd ("UOA Ltd"), the ultimate holding company of the Manager had established a Code of Conduct which set out the standards which directors, officers, managers, employees and consultants of UOA Ltd and its subsidiaries are expected to comply in relation to the affairs of their businesses.
Corporate Social Responsibility
The UOA Ltd Group continuously carries out corporate social responsibility initiatives in the areas of education, environmental and community activities. The Board meets to discuss and review the Manager's operations and the financial performance of UOA REIT 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 2015. The attendance record of the Board is as follows: Total Board Meetings attended Percentage of attendance Tan Sri Dato' Seri Alwi Jantan Dato' Gan Boon Khuay Alan Charles Winduss Dr. Tee Kim Siong (resigned on 1 October 2015) Al the Directors have complied with the Listing Requirements by having attended more than fifty percent of the number of Board Meetings held. Al the Directors have access to the Audit and Risk Management Committee, the internal auditors, the Company Secretary/Compliance Officer, as well as to independent professional consultants for advice if and when necessary.
Statement of Corporate Governance (Cont'd)
The remuneration paid by the Manager to its Directors for the year ended 31 December 2015 is as follows: Executive Directors Non-Executive Directors Range of Remuneration Per Annum (RM) 50,000 and below 50,001 to 100,000 100,001 to 150,000 150,001 and above During the year ended 31 December 2015, the Directors have attended training and seminars as follows: Training and seminars attended Tan Sri Dato' Seri Alwi Jantan 1) Board Chairman Series: Tone from the Chair and Establishing Boundaries 2) Nomination Committee Programme Part 2: Effective Board Evaluations 1) Dynamics of the Local Bond Market: From Issuance to Distribution 2) Global Fund Management: Strategies and Megatrends 1) Singapore Forum: Asia and the World – New Growth, New Strategies 2) FIDE Forum: Invitation to Industry Consultation 3) FIDE Forum: Board's Strategic Leadership: Innovation and Growth in 4) FIDE Forum: Board Leading Change: Organisational Transformation Strategy as Key to Sustainable Growth in Challenging Times 5) Securities Commission – Capital Market Directors Programme Dato' Gan Boon Khuay 1) Bursa Malaysia – Directors Corporate Governance Series: Building Effective Finance Function – From Reporting to Analytics to Strategic Input 2) Audit Committee Conference 2015 – Rising to New Challenges Alan Charles Winduss 1) Australian Institute of Company Directors – Finance for Directors 2) Chartered Accountants Australia – Cash & Working Capital Management 3) Australian Taxation Office Tax Seminar updates Dr. Tee Kim Siong 1) 11 Malaysia Plan (2016-2020): Opportunities and Chal enges (resigned on 1 October 2015)


Statement of Corporate Governance (Cont'd)
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 voluntarily adopted the best practices in corporate governance by establishing an Audit Committee 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 UOA REIT. On 15 January 2013, the name of the Audit Committee was changed to Audit and Risk Management Committee ("ARMC"), to better reflect the risk management function undertaken by the Audit Committee.
Statement of Corporate Governance (Cont'd)
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: œ“«ÀˆÃiÃÊ>Ìʏi>ÃÌÊ̅Àiiʭήʓi“LiÀÃÆUÊ Ê“i“LiÀÃʓÕÃÌÊLiÊ œ˜‡ÝiVṎÛiÊ ˆÀiV̜ÀÃÊ܈̅Ê>ʓ>œÀˆÌÞʜvÊ̅i“ÊLiˆ˜}ʈ˜ i«i˜ i˜ÌÊ ˆÀiV̜ÀÃÆUÊ ÌÊ i>ÃÌÊ œ˜iÊ ­£®Ê “i“LiÀÊ “ÕÃÌÊ LiÊ >Ê “i“LiÀÊ œvÊ Ì…iÊ >>ÞÈ>˜Ê ˜Ã̈ÌÕÌiÊ œvÊ VVœÕ˜Ì>˜ÌÃÊ œÀÊ >Ê “i“LiÀÊ œvÊ >˜Ê accounting association as specified in Part II of the First Schedule of the Accountants Act, 1967; and The ARMC consists of two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director as follows: UÊ À°Ê՘}Ê i˜}Êœ˜}Ê­ …>ˆÀ“>˜É˜ i«i˜ i˜ÌÊ>˜ Ê œ˜‡ÝiVṎÛiÊ ˆÀiV̜À®ÆUÊ >̜½Ê>˜Ê œœ˜Ê…Õ>ÞÊ­˜ i«i˜ i˜ÌÊ>˜ Ê œ˜‡ÝiVṎÛiÊ ˆÀiV̜À®ÆÊ>˜ UÊ À°Ê>˜Ê …>ÀiÃÊ7ˆ˜ ÕÃÃÊ­ œ˜‡˜ i«i˜ i˜ÌÊ>˜ Ê œ˜‡ÝiVṎÛiÊ ˆÀiV̜À®° Key Functions and Responsibilities
The key functions and responsibilities of the ARMC are: findings of these reports and management's responses to these findings; to ensure that it has the necessary authority to carry out its work; impact on UOA REIT's business and the measures taken to mitigate such risks; the audit assessment, to present the audit findings and recommendation of the external auditors to the Board; UÊ /œÊ ˆÃVÕÃÃÊ «ÀœLi“ÃÊ >˜ Ê ÀiÃiÀÛ>̈œ˜ÃÊ >ÀˆÃˆ˜}Ê vÀœ“Ê ̅iÊ ˆ˜ÌiÀ˜>Ê >Õ ˆÌ]Ê ÃÌ>ÌÕ̜ÀÞÊ >Õ ˆÌ]Ê >˜ Ê “>ÌÌiÀÃÊ Ì…>ÌÊ Ì…iÊ internal and/or external auditors may wish to discuss (in the absence of the management where appropriate); auditors' evaluation of these systems; REIT Guidelines, Listing Requirements and the Deed; and/or UOA REIT; and UÊ /œÊ«iÀvœÀ“Ê>˜Þʜ̅iÀÊv՘V̈œ˜ÃÊ>ÃÊ ˆÀiVÌi ÊLÞÊ̅iÊ œ>À ° Statement of Corporate Governance (Cont'd)
Frequency and Attendance of Meetings
The ARMC met five (5) times during the financial year ended 31 December 2015. The attendance record of the ARMC is as follows: Total meetings attended Percentage of attendance Dato' Gan Boon Khuay Alan Charles Winduss Summary of Activities of the ARMC during the Year

Functions and responsibilities performed by the ARMC during the financial year ended 31 December 2015 include
the following:
weaknesses highlighted by the internal auditors were rectified by the Manager; to the commencement of audit; and on any internal control weaknesses highlighted; and UÊ ,iۈiÜi Ê Ì…iÊ ŽiÞÊ ÀˆÃŽÊ >Ài>ÃÊ …ˆ}…ˆ}…Ìi Ê ˆ˜Ê ̅iÊ ,ˆÃŽÊ ,i}ˆÃÌiÀÊ LÞÊ Ì…iÊ ,ˆÃŽÊ >˜>}i“i˜ÌÊ 7œÀŽˆ˜}Ê ("RMWC"). Further details on the RMWC are set out in the Statement on Risk Management and Internal Control.
Access to and Supply of Information
The ARMC is entitled to ful 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 function properly.
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 in the absence of management at its quarterly meetings. A Risk Management Policy has been adopted by the Board to mitigate risks of UOA REIT. 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 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 in the absence of management and 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.


Statement of Corporate Governance (Cont'd)
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 UOA REIT 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, 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, nominated by the Manager, is approved by the Trustee ("Auditors"). The Auditors are independent of the Manager and the Trustee. The remuneration of the Auditors is approved by the Trustee.
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 wel informed of the activities and performance of UOA REIT. 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.
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") is committed to maintaining an effective and sound system of internal control to safeguard the interests of the unitholders of UOA REIT as wel as the investments and assets of UOA REIT and the Manager. In this commitment, the Board has voluntarily 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 although it is not mandatory for UOA REIT, being a real estate investment trust, 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 2015.
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 al activities carried out by the internal auditors in respect of UOA REIT.
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 UOA REIT 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 and efforts for continuous improvement in operations and systems. The internal audit activities are guided by an annual audit plan, which is approved by the ARMC. 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 2015 is as follows: UÊ ,iۈiÜi Ê Ì…iÊ Õ«}À> ˆ˜}]Ê Ài«>ˆÀÊ >˜ Ê “>ˆ˜Ìi˜>˜ViÊ ÜœÀŽÃ]Ê >˜ Ê LՈ ˆ˜}Ê “>ˆ˜Ìi˜>˜ViÊ ÃiÀۈViÃÊ vœÀÊ Ì…iÊ ˆ˜ÛiÃ̓i˜ÌÊ requirements are met; Statement on Risk Management and Internal Control (Cont'd)
Key Elements in 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 the business objectives of the Manager. 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 UOA REIT'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: of UOA REIT. This operations manual is a guide to daily activities and operations of UOA REIT and it is subject to periodic review and updates; are determined upon consultation with relevant professionals; manage the aforesaid risks which are then outlined in the Risk Register and subsequently appraised by the ARMC; and with the Securities Commission's Guidelines on Real Estate Investment Trust and the Trust Deed, and are carried out on an arm's length basis and on normal commercial terms. Non-compliance and internal control weaknesses noted by the internal and external auditors and their recommendations wil be reported to the ARMC. To date, there has been no identified non-compliance or internal control weaknesses of a material nature.
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 UOA REIT. Responsibility for managing risk lies initial y with the business unit concerned, working within the overal 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 on 16 July 2013. The Risk Register is updated periodical y by the RMWC and presented to the ARMC on a quarterly basis. During the financial year under review, new risks were identified particularly in relation to the compliance of the Personal Data Protection Act 2010, SC Guidelines and Listing Requirement, as wel as liquidity and cash flow risks, accounts receivables management and tenancy management. The risk profiles were reviewed and assessed to ensure that the risk exposures are updated and properly mitigated to reflect the current economic environment and new regulatory requirements which may impact UOA REIT.
The management has given assurance to the Board that UOA REIT's risk management and internal control system is operating adequately and effectively, in al material respects, based on UOA REIT's risk management and internal control


Statement on Risk Management and Internal Control (Cont'd)
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 2015. Their review was conducted in accordance with the Recommended Practice Guide 5 (Revised 2015) ("RPG 5 (Revised 2015)"), 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). RPG 5 (Revised 2015) does not require the external auditors to, and they did not, consider whether this Statement covers al risks and controls, or to form an opinion on the adequacy and effectiveness of UOA REIT's risk and control procedures. RPG 5 (Revised 2015) 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 wil , 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 UOA REIT. There was no material control failure or weakness that would have any material adverse effects on the results of UOA REIT for the period under review. In addition, the Board is of the view that UOA REIT wil 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.


Additional Compliance Information
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 25 to the financial statements.
During the financial year ended 31 December 2015, there was no non-audit fee paid/payable to UOA REIT's external auditors, or a firm or company affiliated to the external auditors' firm. Financial Statements
Manager's Report
Statement by Manager Statutory Declaration Trustee's Report to the Unitholders Independent Auditors' Report to the Unitholders Statement of Financial Position Statement of Profit or Loss and Other Comprehensive Income 45 Statement of Changes in Net Asset Value Statement of Cash Flows Notes to the Financial Statements Manager's Report
for the Year Ended 31 December 2015
UOA Asset Management Sdn Bhd, the Manager of UOA Real Estate Investment Trust ("UOA REIT"), has pleasure in presenting the Manager's Report on UOA REIT together with the audited financial statements of UOA REIT for the year ended 31 December 2015. PRINCIPAL ACTIVITY OF THE MANAGER
The Manager, a company incorporated in Malaysia, is a subsidiary company of UOA Corporation Bhd (an effectively 60% owned subsidiary company of UOA Holdings Sdn Bhd which in turn, is a whol y owned subsidiary company 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 AND INVESTMENT OBJECTIVE OF THE TRUST
UOA REIT is a Malaysia-domiciled real property trust fund constituted under a Deed dated 28 November 2005 ("Deed") by UOA Asset Management Sdn Bhd ("Manager") and RHB Trustees Berhad ("Trustee").
UOA REIT commenced 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 whol y 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 wil continue its operations until such time as determined by the Trustee and the Manager as provided under Clause 26 of the Deed.
During the financial year, the Manager continued to adopt the fol owing strategies in achieving UOA REIT's investment objective: (I) Operating Strategy
UOA REIT'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: 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 continually maintain the quality of the Properties.
Manager's Report (Cont'd)
(II) Acquisition Strategy
The Manager seeks to increase cash flow and enhance unit value through selective acquisitions. The acquisition strategy takes into consideration: (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 UOA REIT 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 UOA REIT.
The Manager intends to capitalise on the relationship with UOA Holdings Group, 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 UOA REIT 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 sel ing the property and using the proceeds from the sale for alternative investments in properties that meet their investment criteria.
(III) Capital Management Strategy
The Manager aims to optimise UOA REIT's capital structure and cost of capital within the borrowing limits prescribed by the Securities Commission's Guidelines on Real Estate Investment Trusts ("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: adopting and maintaining an optimal gearing level; and adopting an active interest rate management strategy to manage risks associated with changes in interest while maintaining flexibility in UOA REIT's capital structure to meet future investment and/or capital requirements.
UOA REIT's investments may be allocated in the following manner, as prescribed by the REIT Guidelines: at least 75% of UOA REIT's total assets shal be invested in real estate, single-purpose companies, real estate-related assets or liquid assets; (b) at least 50% of UOA REIT's total assets must be invested in real estate or single-purpose companies; and(c) the remaining 25% of UOA REIT's total assets may be invested in other assets (i.e. real estate-related assets, non-real estate-related assets or asset-backed securities).
Manager's Report (Cont'd)
UOA REIT wil seek to diversify its real estate portfolio by property and location type. UOA REIT wil focus on investing in properties that are primarily used for office, retail and/or residential purposes and wil continue to look for opportunities in these type of properties. In addition, it may also look into other properties that wil provide attractive risk-adjusted returns.
UOA REIT wil be able to leverage on its borrowings to make the permitted investments. Leveraging on its borrowings wil increase the returns to unitholders. UOA REIT is permitted to procure borrowings of up to 50% of its total asset value.
At least 90% of the distributable income of UOA REIT wil be distributed semi-annual y or at such other intervals as determined by the Manager, in arrears.
PERFORMANCE OF THE TRUST
December
December
December
December
Total net asset value (RM'000) Units in circulation ('000) Net asset value per unit (RM) Highest net asset value per unit (RM) Lowest net asset value per unit (RM) Market price per unit (RM) Highest traded price for the financial year (RM) Lowest traded price for the financial year (RM) Year ended
Year ended
Year ended
Year ended
Year ended
31 December 31 December 31 December 31 December 31 December
Total gross income Property operating expenses Non-property expenses Income before taxation, fair value gain on investment properties and net changes onfinancial liabilities measured at amortised cost Fair value gain on investment properties Net changes on financial liabilities measured at amortised cost Income before tax Tax (expense)/income Income after tax Manager's Report (Cont'd)
OPERATING RESULTS (CONT'D)
The Manager is pleased to report that total gross income for the financial year ended 31 December 2015 was RM91,935,277 (2014 : RM90,386,624) comprising rental income of RM91,631,673 (2014 : RM89,978,010), interest income of RM40,565 (2014 : RM29,872) and other income of RM263,039 (2014 : RM378,742). Total gross income for the financial year was 1.7% higher than the previous financial year. Realised income before tax was RM47,519,544 (2014 : RM47,444,250), a slight increase of 0.2% as compared to the previous financial year due to improvement in rental income which was offset by increases in property operating expenses and borrowing costs.
For the financial year ended 31 December 2015, a valuation was conducted by PA International Property Consultants (KL) Sdn Bhd, an independent professional valuer on the investment properties to determine their fair value in compliance with the REIT Guidelines. The valuation resulted in a fair value gain of RM64,129,226. The fair value gain was incorporated into the financial statements of the Trust for the financial year ended 31 December 2015 as an unrealised gain.
INCOME DISTRIBUTION
The Trust had on 28 August 2015 paid an interim distribution of 5.32 sen per unit for the six months ended 30 June 2015.
The Manager had on 13 January 2016, recommended to the Trustee, and the Trustee had on 14 January 2016, approved the final income distribution of 5.70 sen per unit totaling RM24,103,691 for the financial year ended 31 December 2015 to be paid by 29 February 2016 ("Final Distribution"). The Final Distribution comprises a taxable income of approximately 5.20 sen per unit and a tax-exempt income of approximately 0.50 sen per unit. The total distribution for the financial year ended 31 December 2015 is 11.02 sen per unit, an increase of approximately 0.2% or 0.02 sen per unit as compared to the previous financial year.
An analysis of UOA REIT's income distribution is as follows: Year ended
Year ended
Year ended
Year ended
Year ended
31 December 31 December 31 December 31 December 31 December
Distribution per unit (sen) Distribution payment date 28/08/2015 29/08/2014 30/08/2013 30/08/2012 29/08/2011 29/02/2016 27/02/2015 28/02/2014 28/02/2013 29/02/2012 Distribution yield based on issued price of RM1.15 per unit (%) Distribution yield based on market price at 31 December (%) Market price as at 31 December (RM) Manager's Report (Cont'd)
BENCHMARKS RELEVANT TO THE REIT
Year ended
Year ended
Year ended
Year ended
Year ended
31 December 31 December 31 December 31 December 31 December
Management Expense Ratio ("MER") (%)* Portfolio Turnover Ratio ("PTR") (times)** * MER is calculated based on the total administrative expenses incurred by the Trust divided by the average value of the Trust fund for the financial year calculated on a weekly basis. ** PTR is the ratio of the average sum of acquisition and disposal of the Trust for the financial year to the average value of the Trust fund for the financial year calculated on weekly basis. Note: As the basis of calculation may vary among real estate investment trusts, no accurate comparison can be made between UOA REIT's MER and PTR, and other real estate investment trusts.
COMPOSITION OF INVESTMENT PORTFOLIO
As at 31 December 2015, UOA REIT's composition of investment portfolio was as follows: REAL ESTATE PROPERTIES
Commercial


Manager's Report (Cont'd)
The details of the real estate properties as at 31 December 2015 are as follows: UOA Centre Parcels
Address/Location
Within UOA Centre at No. 19, Jalan Pinang, 50450 Kuala
Lumpur.
Description
Parcels within the 33 storey office building known as UOA
Centre inclusive of 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 area
123,950 sq ft
Approximately 21 years Existing use
Commercial
Date of acquisition
Status of holding
Cost of acquisition
Major tenants (based on monthly rental receivable)
a) Dats Management Sdn Bhd b) Bank Kerjasama Rakyat Malaysia Bhd Last valuation
c) Mondial Assistance Services (Malaysia) Sdn Bhd Occupancy rate (based on secured tenancies)
Date of last valuation
Rental received
Basis of valuation
Investment and Comparison Method Maintenance costs and capital expenditure
Independent valuer
Maintenance costs amount to RM1,709,971. No major PA International Property Consultants (KL) Sdn Bhd capital expenditure incurred during the financial year.
Net book value
Charged to a financial institution as security for revolving credit facilities.


Manager's Report (Cont'd)
UOA II Parcels
Address/Location
Within UOA I at No. 21, Jalan Pinang, 50450 Kuala Lumpur.
Description
Parcels within the 39 storey office building known as UOA
I inclusive of 5 levels of car park space.
Title details
Sixty-eight (68) strata titles within UOA I 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 area
426,777 sq ft
Approximately 17 years Existing use
Commercial
Date of acquisition
Status of holding
29 November 2005 (Excluding Level 17, UOA II) 22 March 2010 (Level 17, UOA II) Major tenants (based on monthly rental receivable)
Cost of acquisition
a) Dats Management Sdn Bhd b) Infinity Supercorridor Sdn Bhdc) M3nergy JDA Sdn Bhd Last valuation
RM294,000,000
Occupancy rate (based on secured tenancies)
96.3%
Date of last valuation
31 December 2015
Rental received
RM23,528,113
Basis of valuation
Investment and Comparison Method
Maintenance costs and capital expenditure
Maintenance costs amount to RM4,215,191. No major
Independent valuer
capital expenditure incurred during the financial year. PA International Property Consultants (KL) Sdn Bhd Net book value
Charged to a financial institution as security for revolving credit facilities (There are no encumbrances on Level 17, UOA I ). Manager's Report (Cont'd)
UOA Damansara Parcels
Address/Location
Within UOA Damansara at No. 50, Jalan Dungun,
Damansara Heights, 50490 Kuala Lumpur.
Description
Parcels within the 13 storey office building known as UOA
Damansara inclusive of 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, District of Kuala Lumpur, Mukim and District of
Kuala Lumpur, State of Wilayah Persekutuan KL.
Property type
Office parcels

Net lettable area
186,395 sq ft
Approximately 18 years Existing use
Date of acquisition
29 November 2005 Status of holding
Cost of acquisition
Major tenants (based on monthly rental receivable)
Last valuation
b) Dats Management Sdn Bhdc) Kerajaan Malaysia (Kementerian Perumahan dan Date of last valuation
Kerajaan Tempatan) Occupancy rate (based on secured tenancies)
Basis of valuation
Investment and Comparison Method Rental received
Independent valuer
PA International Property Consultants (KL) Sdn Bhd Maintenance costs and capital expenditure
Net book value
Maintenance costs amount to RM2,593,976. Capital expenditure of RM85,773 was incurred during the financial year to enhance the property.
Encumbrances
Charged to a financial institution as security for revolving
credit facilities.
Manager's Report (Cont'd)
Wisma UOA Pantai
Address/Location
No. 11, Jalan Pantai Jaya, 59200 Kuala Lumpur.
Description
A 5 storey office building with 2 mezzanine floors
and 3 levels of basement car park space.
Title details
Geran 68832, Lot No. 57687, Mukim and District
of Kuala Lumpur, State of Wilayah Persekutuan
KL.
Property type
Commercial building
Net lettable area
157,083 sq ft
Age
Approximately 8 years
Existing use
Commercial
Date of acquisition
Status of holding
Cost of acquisition
Major tenants (based on monthly rental
receivable)
Last valuation
a) Solid Waste and Public Cleansing Management Corporationb) Tenaga Nasional Berhad Date of last valuation
c) Dats Management Sdn Bhd Occupancy rate (based on secured
tenancies)

Basis of valuation
Investment and Comparison Method
Rental received
Independent valuer
PA International Property Consultants (KL) Sdn Bhd
Maintenance costs and capital expenditure
Net book value
RM95,000,000
Maintenance costs amount to RM2,336,567. No major capital expenditure incurred during the financial year.
Manager's Report (Cont'd)
Wisma UOA Damansara II
Address/Location
No. 6, Changkat Semantan, Damansara Heights, 50490
Kuala Lumpur.
Description
A 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 area
295,036 sq ft
Approximately 8 years Existing use
Commercial
Status of holding
Freehold
Date of acquisition
Major tenants (based on monthly rental receivable)
a) S5 Systems Sdn Bhdb) Dats Management Sdn Bhd Cost of acquisition
c) Radimax Group Sdn Bhd Occupancy rate (based on secured tenancies)
Last valuation
Rental received
Date of last valuation
Maintenance costs and capital expenditure
Basis of valuation
Maintenance costs amount to RM3,746,443. Capital Investment and Comparison Method expenditure of RM217,768 was incurred during the financial year to enhance the property.
Independent valuer
PA International Property Consultants (KL) Sdn Bhd
Encumbrances
Charged to a financial institution as security for revolving
Net book value
credit facilities. Manager's Report (Cont'd)
Parcel B – Menara UOA Bangsar
Address/Location
Within Menara UOA Bangsar at No. 5, Jalan Bangsar
Utama 1, 59000 Kuala Lumpur.
Description
A tower block, namely Tower B comprising 15 levels of
office space, 3 levels of retail podium, 6 levels of elevated
car park and 4 levels of basement car park (which form part
of a development known as Menara UOA Bangsar).
Title details
Fourteen (14) 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

Net lettable area
309,627 sq ft
Approximately 7 years Existing use
Commercial
Date of acquisition
17 January 2011
Status of holding
99 years leasehold expiring in 2106 (unexpired term of
Cost of acquisition
approximately 91 years) Major tenants (based on monthly rental receivable)
Last valuation
a) Perbadanan Harta Intelek Malaysia b) Dats Management Sdn Bhdc) Prasarana Malaysia Bhd Date of last valuation
31 December 2015
Occupancy rate (based on secured tenancies)
98.8%
Basis of valuation
Investment and Comparison Method
Rental received
RM25,609,303
Independent valuer
PA International Property Consultants (KL) Sdn Bhd
Maintenance costs and capital expenditure
Maintenance costs amount to RM5,365,753. Capital
Net book value
expenditure of RM58,767 was incurred during the financial year to enhance the property.
Encumbrances
Charged to a financial institution as security for revolving
credit facilities.
Manager's Report (Cont'd)
Pursuant to the REIT Guidelines, the permitted limit on gearing ratio of real estate investment trusts is 50%.
As at 31 December 2015, the Trust has total borrowings of RM378,300,000 representing a gearing ratio of 33.3% (2014 : 35.4%). The debts 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 9 to the financial statements. Total credit facilities available to the Trust amount to RM408,400,000 and there are unutilised facilities of RM30,100,000 as at the end of the financial year.
As at 31 December 2015, the Trust has the capacity to raise its borrowings by an additional RM159,225,697 before reaching the 50% limit permitted under the REIT Guidelines.
UNITS IN ISSUE
December
December
December
December
No. of units in issue 422,871,776 422,871,776 NET ASSET VALUE ("NAV")
December
December
December
December
NAV per unit - before distribution (RM) - after distribution* (RM) * NAV per unit is posted on Bursa Malaysia's website on a quarterly basis.
Al the properties of UOA REIT are expected to continue to enjoy high occupancy rates and improving average rental rates due to their strategic locations and excellent facilities.
The Manager wil continue to adopt an active operating and capital management strategy to enhance the yields and returns of the existing properties while continuing to seek opportunities to further acquire real estate that meets the objectives of the Trust. During the financial year, the Manager did not receive any soft commission from its broker, by virtue of transactions conducted by the Trust.
Manager's Report (Cont'd)
BOARD OF DIRECTORS OF THE MANAGER
Directors
Date of Appointment
Tan Sri Dato' Seri Alwi Jantan Dato' Gan Boon Khuay Alan Charles Winduss Dr. Tee Kim Siong (resigned on 1 October 2015) 28 September 2012 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 might acquire benefits by means of the acquisition of units in or debentures of UOA REIT or any other body corporate.
During the financial year under review, no director 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 in which he has a substantial financial interest, except as disclosed in Note 25 to the financial statements.
No. of Units
1 January
Acquired
Disposed
31 December
Alan Charles Winduss Dato' Gan Boon Khuay Kong Sze Choon * * By virtue of his interest in the shares of Global Transact Sdn Bhd.
During and at the end of financial year, there was no material contract entered into involving any directors and major unitholders, except for any contracts arising from transactions disclosed in Note 25 to the financial statements.
Manager's Report (Cont'd)
OTHER STATUTORY INFORMATION
Before the statement of profit or loss and other comprehensive income and statement of financial position of UOA REIT were made out, the directors of UOA Asset Management Sdn Bhd took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of al owance for doubtful debts and satisfied themselves that al known bad debts have been written off and that adequate allowance had been made for doubtful debts; and (ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors of UOA Asset Management Sdn Bhd are not aware of any circumstances: (i) which would render the amount written off for bad debts or the amount of the al owance for doubtful debts in the financial statements of UOA REIT inadequate to any substantial extent; or (ii) which would render the values attributed to the current assets in the financial statements of UOA REIT (iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of UOA REIT misleading or inappropriate.
(c) As at the date of this report, there does not exist: (i) any charge on the assets of UOA REIT which has arisen since the end of the financial year which secures the liabilities of any other person; or (ii) any contingent liability of UOA REIT which has arisen since the end of the financial year.
(d) No contingent or other liability of UOA REIT has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors of UOA Asset Management Sdn Bhd, will or may affect the ability of UOA REIT to meet its obligations as and when they fall due.
At the date of this report, the directors of UOA Asset Management Sdn Bhd are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of UOA REIT which would render any amount stated in the financial statements misleading.
In the opinion of the directors of UOA Asset Management Sdn Bhd: (i) the results of the operations of UOA REIT for the financial year were not substantial y affected by any item, transaction or event of a material and unusual nature; and (ii) 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 substantial y the results of the operations of UOA REIT for the financial year in which this report is made.
Manager's Report (Cont'd)
The auditors, Mazars, Chartered Accountants, have expressed their willingness to continue in office.
Signed by the Board of Directors of UOA Asset Management Sdn Bhd in accordance with a directors' resolution dated 16 February 2016.
For and on behalf of the Manager,
UOA Asset Management Sdn Bhd
KONG SZE CHOON
ALAN CHARLES WINDUSS
Kuala Lumpur, Malaysia Statement by Manager
In the opinion of the Directors of UOA Asset Management Sdn Bhd, the financial statements set out on pages 44 to 74 have been drawn up: so as to give a true and fair view of the state of affairs of UOA Real Estate Investment Trust as at 31 December 2015 and of its results and cash flows for the year ended on that date; and (b) in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, Securities Commission's Guidelines on Real Estate Investment Trusts and the provisions of the Deed dated 28 November 2005; and The supplementary information on the breakdown of realised and unrealised profits on Page 75 have been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants.
Board of Directors of UOA Asset Management Sdn Bhd in accordance with a directors' resolution dated For and on behalf of the Manager,
UOA Asset Management Sdn Bhd
KONG SZE CHOON
ALAN CHARLES WINDUSS
I, Kong Sze Choon (Passport No.: E2973099E), 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 for the year ended 31 December 2015 as set out on pages 44 to 74 are correct.
And I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the above named ) Kong Sze Choon at Kuala Lumpur in the State of Federal Territory KONG SZE CHOON
this 16th day of Feb, 2016 (Commissioner of Oaths) to the Unitholders of UOA Real Estate Investment Trust We have acted as Trustee of UOA Real Estate Investment Trust for the financial year ended 31 December 2015. In our opinion and to the best of our knowledge, UOA Asset Management Sdn Bhd, the Manager, has managed UOA Real Estate Investment Trust ("Fund") 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 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 Fund 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 2015 are in line with and are reflective of the objectives of the Fund. Two distributions have been declared for the financial year ended 31 December 2015 as follows: Interim income distribution of 5.32 sen per unit paid on 28 August 2015; and Final income distribution of 5.70 sen per unit to be paid on 29 February 2016.
For and on behalf of the Trustee,
RHB Trustees Berhad
(Company No. : 573019-U)

TONY CHIENG SIONG UNG
Director
Date: 16 February 2016 Independent Auditors' Report
to the Unitholders of UOA Real Estate Investment Trust
Report on the Financial Statements
We have audited the financial statements of UOA Real Estate Investment Trust ("UOA REIT"), which comprise the statement of financial position as at 31 December 2015, and the statement of profit or loss and other comprehensive income, statement of changes in net asset value and statement of cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 44 to 74.
Manager's Responsibility for the Financial Statements The Directors of UOA Asset Management Sdn Bhd ("Manager") of UOA REIT are responsible for the preparation of financial statements so as to give a true and fair view in accordance with the provisions of the Deed dated 28 November 2005, the Securities Commission's Guidelines on Real Estate Investment Trusts, the Malaysian Financial Reporting Standards and the International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the Manager's preparation of financial statements that give a true and fair view 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 Manager's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors of the Manager, as wel as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independent Auditors' Report (Cont'd)
In our opinion, the financial statements give a true and fair view of the financial position of UOA REIT as at 31 December 2015 and of its financial performance, changes in net asset value and cash flows for the year ended 31 December 2015 in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, Securities Commission's Guidelines on Real Estate Investment Trusts and the provisions of the Deed dated 28 November 2005.
Other Reporting Responsibilities The supplementary information set out on Page 75 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors of the Manager are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in al material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
This report is made solely to the Unitholders of UOA REIT, as a body, in accordance with the Securities Commission's Guidelines on Real Estate Investment Trusts in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
FRANCIS XAVIER JOSEPH
No. 2997/06/16 (J) Chartered Accountants Chartered Accountant Date: 16 February 2016 Statement of Financial Position
as at 31 December 2015
Note
Plant and equipment Investment properties 1,127,000,000 1,062,508,466 Trade and other receivables Deposits with licensed financial institutions Cash and bank balances TOTAL ASSETS
LIABILITIES
Provision for income distribution Deferred tax liability TOTAL LIABILITIES
NET ASSET VALUE
Represented by:
UNITHOLDERS' FUND
Unitholders' capital Undistributed income TOTAL UNITHOLDERS' FUND
NUMBER OF UNITS IN CIRCULATION
NET ASSET VALUE PER UNIT
- before income distribution
- after income distribution
The accompanying notes form an integral part of the financial statements.
Statement of Profit or Loss and
Other Comprehensive Income
for the Year Ended 31 December 2015 Note
Property operating expenses Net rental income
TOTAL INCOME
EXPENSES
Auditors' remuneration Tax agent's fees Administrative expenses TOTAL EXPENSES
Fair value gain on investment properties Net changes on financial liabilities measured at amortised cost INCOME BEFORE TAX
TAX (EXPENSE)/INCOME
PROFIT FOR THE YEAR
Other comprehensive income TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME IS MADE UP AS FOLLOWS:
Statement of Profit or Loss and Other Comprehensive Income (Cont'd)
Note
EARNINGS PER UNIT
- After Manager's fees (sen) - Before Manager's fees (sen) NET INCOME DISTRIBUTION
- Interim distribution of 5.32 sen (2014 : 5.27 sen) paid on 28 August 2015 (2014 : 29 August 2014) - Proposed final distribution of 5.70 sen (2014 : 5.73 sen) payable on 29 February 2016 (2014 : 27 February 2015) Interim income distribution per unit*
Final income distribution per unit*
Based on 422,871,776 (2014 : 422,871,776) units entitled to distribution. Approximately 0.50 sen (2014 : 0.99 sen) out of the 5.70 sen (2014 : 5.73 sen) final income distribution per unit is exempted from income tax due to the utilisation of capital al owances from the investment properties of the Trust and the interest income received from financial institutions pursuant to paragraph 35A, Schedule 6 of the Income Tax Act, 1967. *** Pursuant to the amended Section 6(1)(i) of the Income Tax Act, 1967, the fol owing withholding tax rates as stipulated in Part X, Schedule 1 of the Income Tax Act, 1967 wil be deducted for distribution of income by the Trust to the fol owing categories of unitholders: Withholding tax rate
2016
2015
Resident corporate Resident non-corporate Non-resident individual Non-resident corporate Non-resident institutional No withholding tax; to tax at prevailing tax rate. The accompanying notes form an integral part of the financial statements.
Statement of Changes in Net Asset Value
for the Year Ended 31 December 2015 Unitholders' Undistributed income

Realised
Unrealised
Sub-total
Balance as at 1 January 2014 19,398,202 137,499,354 156,897,556 632,959,717 Total comprehensive income for Distribution to unitholders Balance as at 31 December 2014/ 20,326,557 139,171,492 159,498,049 635,560,210 Total comprehensive income for 62,797,718 110,317,262 110,317,262 Distribution to unitholders Balance as at 31 December 2015 21,245,632 201,969,210 223,214,842 699,277,003 The accompanying notes form an integral part of the financial statements. Statement of Cash Flows
for the Year Ended 31 December 2015
CASH FLOWS FROM OPERATING ACTIVITIES

Income before tax
Adjustments for: Allowance for doubtful debts Allowance for doubtful debts no longer required Bad debts written off Fair value gain on investment properties Plant and equipment written off Net changes on financial liabilities measured at amortised cost Interest income Interest expense Operating profit before working capital changes Changes in receivables Changes in payables Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment Enhancements to investment properties Interest income Net cash used in investing activities Statement of Cash Flows (Cont'd)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (repayment)/drawdown of borrowings Distribution to unitholders Net cash used in financing activities NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS BROUGHT FORWARD
CASH AND CASH EQUIVALENTS CARRIED FORWARD
Deposits with licensed financial institutions Cash and bank balances The accompanying notes form an integral part of the financial statements. Notes to the Financial Statements
for the Year Ended 31 December 2015
THE TRUST, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES
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 company of UOA Corporation Bhd (an effectively 60% owned subsidiary company of UOA Holdings Sdn Bhd which in turn, is a whol y owned subsidiary company 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.
2. TERM OF THE TRUST
UOA REIT wil continue its operations until such time as determined by the Trustee and the Manager as provided under Clause 26 of the Deed.
3. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The financial statements of UOA REIT have been prepared in accordance with the Malaysian Financial Reporting Standards ("MFRS") issued by the Malaysian Accounting Standards Board ("MASB"), International Financial Reporting Standards ("IFRS"), the Deed and the Securities Commission's Guidelines on Real Estate Investment Trusts. The measurement bases applied in the preparation of the financial statements include historical cost, recoverable value, realisable value, and fair value. Fair value is the price that would be received to sel an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by sel ing it to another market participant that would use the asset in its highest and best use.
Notes to the Financial Statements (Cont'd)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(a) Basis of preparation (cont'd)
Fair value measurements are categorised as follows: Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs are unobservable inputs for the asset or liability.
The financial statements are presented in Ringgit Malaysia ("RM"), which is also UOA REIT's functional currency. (b) Application of new or revised standards
In current year, UOA REIT has applied a number of new or revised MFRSs, Amendments to MFRSs, Issue Committee Interpretation ("IC Interpretation") and Amendments to IC Interpretation that become mandatory for the accounting periods beginning on or after 1 January 2015. The adoption of the new and revised standards, amendments and/or interpretations does not have significant impact on the financial statements of UOA REIT.
(c) Standards issued that are not yet effective
UOA REIT has not applied the following MFRSs and Amendments to MFRSs that have been issued by the MASB but are not yet effective: Regulatory Deferral Accounts Amendments to MFRS 116 Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to MFRS 11 Accounting for Acquisitions of Interests in Joint Operations Amendments to MFRS 116 Incorporating Bearer Plants into the Scope of Amendments to MFRS 141 Amendments Resulting from the Incorporation of Bearer Plants into the scope of MFRS 116 Amendments to MFRS 127 Equity Method in Separate Financial Statements Notes to the Financial Statements (Cont'd)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(c) Standards issued that are not yet effective (cont'd)
Amendments to MFRS 5, Annual Improvements to MFRSs 2012-2014 Cycle MFRS 7, MFRS 119 and MFRS 134 Amendments to MFRS 101 Disclosure Initiative Amendments to MFRS 10, Investment Entities: Applying the Consolidation MFRS 12 and MFRS 128 Revenue from Contracts with Customers Financial Instruments Amendments to MFRS 10 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Except as otherwise indicated below, the adoption of the above new standards and amendments are not expected to have significant impact on the financial statements of UOA REIT.
MFRS 9 Financial Instruments
MFRS 9 addresses the classification, recognition, derecognition, measurement and impairment of financial assets and financial liabilities, as wel as general hedge accounting. It replaces MFRS 139. MFRS 9 requires financial assets to be classified into two measurement categories, i.e. at fair value and at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the MFRS 139 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to changes in an entity's own credit risk is recorded in other comprehensive income, unless this creates an accounting mismatch. MFRS 9 contains a new impairment model based on expected losses (as opposed to ‘incurred loss' model under MFRS 139), i.e. a loss event needs not occur before an impairment loss is recognised, which will result in earlier recognition of losses.
The Manager is currently assessing the impact to the financial statements upon adopting MFRS 9, and intends to adopt MFRS 9 on the mandatory effective date.
(d) Significant accounting judgements and estimates
The preparation of financial statements requires the Manager to exercise judgement in the process of applying the accounting policies. It also requires the use of accounting estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the end of the reporting period, and reported amounts of income and expenses during the financial year.
Although these estimates are based on the Manager's best knowledge of current events and actions, historical experiences and various other factors, including expectations for future events that are believed to be reasonable under the circumstances, actual results may ultimately differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
Notes to the Financial Statements (Cont'd)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(d) Significant accounting judgements and estimates (cont'd)
Critical judgements in applying the accounting policies The fol owing are judgements made by Directors of the Manager in the process of applying the accounting policies that have the most significant effect on amounts recognised in the financial statements: For the purposes of measuring deferred tax liabilities arising from investment properties that are measured using fair value model, the Manager reviews the investment properties and concluded that the investment properties are held under a business model whose objective is to consume substantial y al the economic benefits embodied in the investment properties over time. Therefore, in making judgement, the Manager has determined that the presumption that the carrying amounts of investment properties measured using the fair value model are recovered entirely through sale is not rebutted.
Accordingly, UOA REIT recognises deferred taxes in respect of the changes in fair value of investment properties. The final tax outcome could be different from the deferred tax liabilities recognised in the financial statement should the investment properties subsequently be disposed rather than consumed substantially all of the economic benefits embodied over time.
(ii) Key sources of estimation uncertainty The key assumptions concerning the future and other key sources associated with estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are as follows: The Manager assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Manager considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the receivables at the reporting date is disclosed in Note 6 to the financial statements.
UOA REIT measures its investment properties at fair value with any change in fair value recognised in the 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 Manager determines based on past experience and reliance on the work of specialists. UOA REIT engages an independent professional valuer to determine fair value.
Information regarding the valuation techniques and inputs used in determining the fair value is disclosed in Note 5 to the financial statements.
Notes to the Financial Statements (Cont'd)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(e) Plant and equipment
Measurement basis Plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.
The cost of plant and equipment includes expenditure that is directly attributable to the acquisition of an asset. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the asset wil flow to the Trust and the cost of the asset can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised to profit or loss when incurred.
Plant and equipment are derecognised upon disposal or when no future economic benefits are expected from their use or disposal. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in the profit or loss (ii) Depreciation Depreciation is calculated to write off the depreciable amount of plant and equipment on a straight-line basis over their estimated useful lives. The depreciable amount is determined after deducting residual value from cost.
The principal annual rates used for this purpose are: Office equipment The residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each reporting date.
The carrying values of plant and equipment are reviewed for impairment when events or change in circumstances indicate that the carrying value may not be recoverable.
(f) Investment properties
Investment properties are properties held to earn rental income or for capital appreciation or both, rather than for use in the production or supply of goods and services or for administrative purposes, or sale in the ordinary course of business.
Investment properties are measured initial y at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the profit or loss in the year in which they arise.
Investment properties are derecognised upon disposal or when they are permanently withdrawn from use and no future economic benefits are expected. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in the profit or loss.
Notes to the Financial Statements (Cont'd)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(g) Financial instruments
A financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity. Initial recognition and measurement A financial instrument is recognised in the financial statements when, and only when, the Trust becomes a party to the contractual provisions of the instrument. A financial instrument is recognised initial y, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.
(ii) Financial instrument categories and subsequent measurement Financial assets are classified as either financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets or loans and receivables, as appropriate. Management determines the classification of the financial assets as set out below upon initial recognition. The Trust has only financial assets categorised as loans and receivables.
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established general y by regulation or convention in the marketplace. A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting.
Loans and receivables This category comprises debt instruments that are not quoted in an active market, trade and other receivables and cash and cash equivalents. The subsequent measurement of financial assets in this category is at amortised cost using the effective interest method, less al owance for impairment losses. Al financial assets at amortised cost are subject to review for impairment. Financial liabilities Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities at amortised cost.
Financial liabilities at fair value through profit or loss comprises financial liabilities that are held for trading, derivatives and financial liabilities that are specifical y designated into this category upon initial recognition. These financial liabilities are subsequently measured at their fair values with the gain or loss recognised in the profit or loss.
Al other financial liabilities are subsequently measured at amortised cost using the effective interest method. The Trust only has financial liabilities categorised as financial liabilities at amortised cost.
Notes to the Financial Statements (Cont'd)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(g) Financial instruments (cont'd)
(ii) Financial instrument categories and subsequent measurement (cont'd) Derecognition of financial assets and liabilities A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantial y al risks and rewards of the asset.
On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received together with any cumulative gain or loss that has been recognised in equity is recognised in the profit or loss.
A financial liability or part of it is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expired.
On derecognition of a financial liability, the difference between the carrying amount and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the profit or loss.
(h) Operating lease
A lease is classified as an operating lease if it does not transfer substantial y al the risks and rewards incidental to ownership.
Operating lease income is credited to profit or loss on a straight-line basis over the period of the lease.
(i) Income recognition
Rental income is recognised on a straight-line basis over the specific tenure of the respective leases. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.
Interest income is recognised on a time proportion basis.
(j) Impairment of financial assets
Al financial assets, except for financial assets categorised as fair value through profit or loss, are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. Financial assets carried at amortised cost If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced through the use of an al owance account. The impairment loss is recognised in the profit or loss.
When the asset becomes uncol ectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against carrying amount of the financial asset.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the profit or loss.
Notes to the Financial Statements (Cont'd)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(k) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantial y al the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.
All other borrowing costs are recognised as an expense in the period in which they are incurred.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
(I) Taxation
The tax expense in profit or loss represents the aggregate amount of current and deferred tax.
Current tax is the expected income tax payable or receivable on the taxable income or loss for the year, estimated using the tax rates enacted or substantively enacted by the end of the reporting period.
On the statement of financial position, a deferred tax liability is recognised for taxable temporary differences while a deferred tax asset is recognised for deductible temporary differences and unutilised tax losses only to the extent that it is probable that taxable profit wil be available in future against which the deductible temporary differences and unutilised tax losses can be utilised. No deferred tax is recognised for temporary differences arising from the initial recognition of: an asset or liability which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax assets and liabilities are measured based on tax consequences that would fol ow from the manner in which the asset or liability is expected to be recovered or settled, and based on tax rates enacted or substantively enacted by the reporting date that are expected to apply to the period when the asset is realised or when the liability is settled. Current tax and deferred tax are charged or credited directly to other comprehensive income if the tax relates to items that are credited or charged, whether in the same or a different period, directly to other comprehensive income.
(m) Cash equivalents
Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Notes to the Financial Statements (Cont'd)
4. PLANT AND EQUIPMENT
Equipment
Computer
At 1 January 2015 At 31 December 2015 Accumulated depreciation At 1 January 2015 Charge for the year At 31 December 2015 Net carrying value at 31 December 2015 At 1 January 2014 At 31 December 2014 Accumulated depreciation At 1 January 2014 Charge for the year At 31 December 2014 Net carrying value at 31 December 2014 5. INVESTMENT PROPERTIES
Additions from enhancements Notes to the Financial Statements (Cont'd)
fair value to
Net Asset V
Fair value as at
of professional valuers registered w hd, an independent firm Date of last
as conducted by PA aluers, Appraisers & Estate Agents Malaysia, using the investment and comparison method of valuation.
cel B – Menara UOA Bangsar Description of pr
UOA Damansara Par At 31 December 2015 Notes to the Financial Statements (Cont'd)
fair value to
Net Asset V
aluers, Appraisers & Fair value as at
ofessional valuers r Date of last
national Sdn Bhd, an independent firm of pr cel B – Menara UOA Bangsar The valuation was conducted by PPC Inter Estate Agents Malaysia, using the investment and comparison method of valuation.
Description of pr
UOA Damansara Par At 31 December 2014 Notes to the Financial Statements (Cont'd)
5. INVESTMENT PROPERTIES (CONT'D)
The fair value represents the amount at which the properties could be exchanged on an open market basis between a knowledgeable wil ing buyer and a knowledgeable wil ing sel er in an arm's length transaction at the reporting date. The investment properties as at 31 December 2015 are stated at fair value based on valuations conducted by an independent firm of professional valuers registered with the Board of Valuers, Appraisers & Estate Agents Malaysia using the investment and comparison method of valuation.
The fol owings assumptions have been applied in the valuation: The investment method entails the determination of the probable gross annual rental the property is capable of producing and deducting therefrom the outgoings to arrive at the annual net income.
The comparison method entails comparing the property with comparable properties which have been sold or are being offered for sale and making adjustments for factors which affect value such as location and accessibility, size, building construction and finishes, building services, management and maintenance, age and state of repair, market conditions and other relevant characteristics. The fair value of investment properties is classified under Level 3 and was determined using investment method.
Details of Level 3 fair value measurements are as follows: Valuation method and key inputs Significant unobservable inputs
Relationship of unobservable
inputs and fair value
Investment method which capitalises Discount rate of 5% to 8.25% The higher the discount rate, the estimated rental income stream, the lower the fair value.
net of projected operating costs, using a discount rate derived from Estimated market yield of The higher the estimated market yield, the higher the fair value.
Occupancy rates of 85% to 98% The higher the occupancy rate, the higher the fair value.
All land/strata titles are registered in the name of the Trustee.
As at 31 December 2015, UOA Centre Parcels, UOA II Parcels (excluding Level 17, UOA II), UOA Damansara Parcels, Wisma UOA Damansara II and Parcel B – Menara UOA Bangsar with an aggregate carrying amount of RM1,018,000,000 (2014 : RM955,218,466) have been pledged as security for borrowings referred to in Note 9 below.
Notes to the Financial Statements (Cont'd)
6. TRADE AND OTHER RECEIVABLES
Trade receivables Allowance for doubtful debts (see Note 29a) Net trade receivables Amount owing by a company related to the Manager Other receivables Total receivables and deposits The Trust's credit term for monthly rental from tenants is fourteen (14) days.
7. DEPOSITS WITH LICENSED FINANCIAL INSTITUTIONS
The effective interest rates of deposits ranged between 1.90% and 3.15% (2014 : 1.80% and 3.15%) per annum. The deposits had maturity terms of one month or less.
8. PAYABLES
Amount owing to the Manager Amounts owing to companies related to the Manager Interest payable Tenants' deposits - refundable within 12 months - refundable after 12 months Notes to the Financial Statements (Cont'd)
8. PAYABLES (CONT'D)
The amount owing to the Manager which represents management fee payable and the amounts owing to companies related to the Manager are expected to be settled within the normal credit period of 30 days.
Included in the tenants' deposits are deposits received from companies related to the Manager amounting to: Refundable within 12 months Refundable after 12 months Revolving credit I Revolving credit II Revolving credit III Revolving credit IV Total borrowings – revolving credits Revolving credits I and II are secured by legal charges over UOA Centre Parcels and UOA II Parcels (excluding Level 17, UOA II). Revolving credit III is secured by a legal charge over Wisma UOA Damansara II. Revolving credit IV 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. 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 revolving credits are subject to interest/profit rates ranging from 0.5% + Cost of Fund to 0.7% + Cost of Fund.
The effective interest/profit rates of the borrowings ranged from 4.19% to 4.49% (2014: 3.98% to 4.49%) per annum.
Notes to the Financial Statements (Cont'd)
10. PROVISION FOR INCOME DISTRIBUTION
Distribution paid The distribution to unitholders is from the following sources: Sources of income Gross rental income Expenses (excluding Manager's fees) Property expenses Non-property expenses Net income before Manager's fees, income distribution, fair value gain on investment properties, net changes on financial liabilities measured at amortised cost and taxation Fair value gain on investment properties Net changes on financial liabilities measured at amortised cost Tax (expense)/income Undistributed income for the current year Total income distribution for the year Distribution per unit (sen) Notes to the Financial Statements (Cont'd)
11. DEFERRED TAX LIABILITY
Origination/(Reversal) during the year The temporary difference recognised as deferred tax liability represents Real Property Gains Tax ("RPGT") in relation to the Trust's investment properties. Pursuant to the amended Part I, Schedule 5 of the Real Property Gains Tax Act, 1976, the fol owing RPGT rates would be applicable in respect of gains on disposal of investment properties by the Trust: RPGT rate
Properties held for 2 years or less Properties held for more than 2 years but up to 3 years Properties held for more than 3 years but up to 4 years Properties held for more than 4 years but up to 5 years Properties held for more than 5 years 12. UNITHOLDERS' CAPITAL
Number of units
Unitholders' capital
At 1 January/31 December Issued and ful y paid: At 1 January/31 December 13. GROSS RENTAL
Gross rental represents rental income from the investment properties.
Notes to the Financial Statements (Cont'd)
14. PROPERTY OPERATING EXPENSES
Assessment and quit rent Maintenance fees Property management fees Property management fees were paid to Jordan Lee & Jaafar Sdn Bhd and is inclusive of permissible discounts in accordance with the Valuers, Appraisers and Estate Agents Act, 1981 and reimbursable site staff cost. 15. 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 RM4,328,859 (2014 : RM4,279,368) which was calculated based on 0.67% (2014 : 0.67%) of the Net Asset Value of the Trust.
16. 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 RM193,830 (2014 : RM191,614) which was calculated based on 0.03% (2014 : 0.03%) of the Net Asset Value of the Trust.
17. FINANCE COSTS
Interest expense on revolving credit Notes to the Financial Statements (Cont'd)
18. TAX EXPENSE/(INCOME)
Malaysian tax based on results for the year - deferred tax relating to Real Property Gains Tax ("RPGT") The provision for taxation differs from the amount of taxation determined by applying the applicable statutory tax rate to the income before tax as a result of the following differences: Accounting profit Taxation at statutory rate of 25% - non-deductible expenses - non-taxable income - income exempted from tax - net changes on financial liabilities measured at amortised cost Utilisation of capital allowances Difference between income tax rate and RPGT rate applicable on fair value gain on investment properties 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 tax.
19. EARNINGS PER UNIT
The earnings per unit after manager's fees has been calculated by dividing income after tax for the financial year of RM110,317,262 (2014 : RM49,116,388) by the weighted average number of units in issue of 422,871,776 (2014 : 422,871,776).
The earnings per unit before manager's fees has been calculated by dividing income after tax before deduction of manager's fees for the financial year of RM114,646,121 (2014 : RM53,395,756) by the weighted average number of units in issue of 422,871,776 (2014: 422,871,776).
20. TRANSACTIONS WITH STOCKBROKING COMPANIES
There were no transactions made with stockbroking companies during the financial year (2014 : Nil).
Notes to the Financial Statements (Cont'd)
21. UNITHOLDINGS BY THE MANAGER
As at 31 December 2015, the Manager did not hold any direct units in the Trust (2014 : Nil).
22. UNITHOLDERS RELATED TO THE MANAGER
Direct holdings unless No. of units Percentage of units in issue Market value as at
otherwise indicated
31.12.2015
31.12.2014
31.12.2015 31.12.2014
31.12.2015
Directors of the Manager : - Alan Charles Winduss - Dato' Gan Boon Khuay - Kung Beng Hong - Kong Sze Choon Companies related to the - Desa Bukit Pantai Sdn Bhd 102,261,538 102,261,538 24.18 163,618,461 146,233,999 - Wisma UOA Sdn Bhd 18.38 124,366,400 111,152,470 - Rich Accomplishment Sdn Bhd 17.66 119,458,461 106,765,999 - Damai Positif Sdn Bhd - Dynasty Portfolio Sdn Bhd - LTG Development Sdn Bhd Persons related to the Manager via relationship with a Director of the Manager: - Kong Chong Soon @ Chi Suim Director of the Manager (indirect interest): - Kong Sze Choon* Persons related to the Manager via relationship with a Director ofthe Manager (indirect interest): - Kong Chong Soon @ Chi Suim** 323,717,276 323,717,276 76.55 517,947,642 462,915,705 Deemed interest through his shareholding in Global Transact Sdn Bhd. 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, Damai Positif Sdn Bhd, Dynasty Portfolio Sdn Bhd and LTG Development Sdn Bhd). The market value of the units is determined by using the closing market value of RM1.60 as at 31 December 2015 (31 December 2014 : RM1.43).
Notes to the Financial Statements (Cont'd)
23. PORTFOLIO TURNOVER RATIO
Portfolio Turnover Ratio ("PTR") (times) PTR is the ratio of the average sum of acquisition and disposal of the Trust for the financial year to the average value of the Trust fund for the financial year calculated on a weekly basis.
As there were no acquisitions and disposals of investment properties during the financial year, hence PTR is nil.
Since the average value of the Trust fund is calculated on a weekly basis, comparisons of the PTR of the Trust with other real estate investment trust which uses a different basis of calculation may not be an accurate comparison.
24. MANAGEMENT EXPENSE RATIO
Management Expense Ratio ("MER") MER is calculated based on the total administrative expenses incurred by the Trust divided by the average value of the Trust fund for the financial year calculated on a weekly basis.
Since the average value of the Trust fund is calculated on a weekly basis, comparison of the MER of the Trust with other real estate investment trust which uses a different basis of calculation may not be an accurate comparison.
25. RELATED PARTY DISCLOSURES
For the purposes of these financial statements, parties are considered to be related to UOA REIT if UOA REIT 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 UOA REIT 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 control ing the activities of UOA REIT either directly or indirectly. The key management personnel include all Directors of the Manager, and certain members of senior management of the Manager.
UOA REIT has related party transactions with companies related to the Manager. Notes to the Financial Statements (Cont'd)
25. RELATED PARTY DISCLOSURES (CONT'D)
Significant related party transactions during the financial year were as follows: Transaction value Balance outstanding
Transactions with companies related to the Manager Parking fees paid Security fees paid/payable Landscaping fees paid/payable Repair and maintenance paid/payable Upgrading of investment property paid/payable Annual general meeting expenses paid 26. OPERATING LEASE COMMITMENTS
The Trust as lessor The Trust leases out its investment properties under operating leases. These leases are non-cancel able and typical y run for a period ranging from 1 to 3 years, with the option to renew. None of the leases include contingent rentals.
The future minimum lease payments receivable under non-cancel able operating leases contracted for as at the reporting date but not recognised as receivables, are as fol ows: Not later than one year Later than one year but not later than five years 27. CAPITAL COMMITMENTS
Approved and contracted for the upgrading for investment property – Wisma UOA Damansara II Approved but not contracted for the upgrading work for investment property – Wisma UOA Damansara II Notes to the Financial Statements (Cont'd)
28. FINANCIAL INSTRUMENTS
Classification of financial instruments The table below provides an analysis of financial instruments categorised as follows: Loans and receivables
Financial Assets
Receivables (see Note 6) Deposits with licensed financial institutions Cash and bank balances Total financial assets At amortised cost
Financial Liabilities
Payables (see Note 8) Borrowings – revolving credits (see Note 9) Total financial liabilities (b) Fair value of financial instruments The carrying amounts of cash and cash equivalents, receivables, payables and borrowings approximate fair values due to the relatively short term nature of these 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 3.314% at the end of the reporting period. Notes to the Financial Statements (Cont'd)
29. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES
UOA REIT operates within clear defined guidelines as set out in the Securities Commission's Guidelines on 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 Trust is exposed to a variety of financial risks, including credit risk, interest rate risk and liquidity and cash flow risks arising from its operations and the use of financial instruments. Information regarding the Trust's exposure to the above-mentioned risks and the Trust's risk management policies, which ensure compliance with the spirit of the REIT Guidelines, are set out below: Credit risk arises from the possibility that a tenant or counter party may be unable to meet the terms of a contract in which the Trust has a gain position. At the reporting date, the maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position.
The Trust is 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-col ectibility of monthly rentals is also mitigated with rental deposits col ected from the tenants.
The ageing analysis of receivables as at the reporting date which is trade in nature is as follows: Less than 30 days past due Between 30 to 90 days past due More than 90 days past due Less than 30 days past due Between 30 to 90 days past due More than 90 days past due Movements in the allowance for the doubtful debts of trade receivables are as follows: Addition during the year Allowance no longer required Bad debts written off Notes to the Financial Statements (Cont'd)
29. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES (CONT'D)
(b) Interest rate risk The Trust has no exposure to movements in market interest rates other than revolving credit facility and deposits with licensed financial institutions. Financial assets By placing its deposits on short tenures and at prevailing market interest rates, the Trust is able to reduce its exposures to interest rate fluctuations.
The Trust minimises its 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 9 to the financial statements.
A sensitivity analysis has been performed based on the outstanding floating rate borrowings of the Trust as at the reporting date. If interest rates increase or decrease by 50 basis points with al other variables held constant, the Trust's profit after tax would decrease or increase by RM1,892,000 (2014 : RM1,897,000), as a result of higher or lower interest expense on these borrowings.
Liquidity and cash flow risks The Trust ensures 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, internal y generated funds or borrowings. As timing of these arrangements is critical, 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 facility wil be rol ed over and remain available for the long term and there is no imminent obligation to repay.
The table below summarises the maturity profile of financial liabilities at the reporting date based on contractual undiscounted cash flows.
Carrying
Contractual
Less than
1 to 5 years
cash flows
Borrowings – revolving credits Borrowings – revolving credits Notes to the Financial Statements (Cont'd)
30. CAPITAL MANAGEMENT
The Trust's objectives when managing capital is to maintain a strong capital base and safeguard the Trust'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 Securities Commission's Guidelines on Real Estate Investment Trusts.
Total borrowings compared to total asset value at the reporting date is as fol ows: Total asset value (RM) Total borrowings (RM) Total borrowings to total asset value (%) 31. AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS
These financial statements were authorised for issue on 16 February 2016 by the Board of Directors of UOA Asset Management Sdn Bhd.
Supplementary Information
on Realised and Unrealised Profits or Losses Realised profits Unrealised profits The information above is disclosed pursuant to the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance").
The information on realised and unrealised profits disclosed in the Statement of Changes in Net Asset Value on page 47 differ from the information disclosed above by RM584,509 (2014 : RM534,561) is due to tenants' deposits measured at amortised cost which does not involve consumption of resources, hence, is categorised as "unrealised" in the Statement of Changes in Net Asset Value, instead of "realised" pursuant to the MIA Guidance. Analysis of Unitholdings
Distribution of Unitholders as at 31 December 2015
No. of Unitholders No. of Units held 100 to 1,000 units 1,001 to 10,000 units 10,001 to 100,000 units 100,001 to less than 5% of issued units 5% and above of issued units Classification of Unitholders as at 31 December 2015
No. of Unitholders
No. of Units held -
Category of Unitholders
Malaysian
Malaysian
Malaysian
Bumiputra
Bumiputra Non-Bumiputra
26,482,000 1,237,000 2) Body Corporate a) Banks/Finance Companies b) Investment Trusts/ Foundations/ c) Industrial and Commercial Companies 324,818,576 5,300,000 3) Government Agencies/ Institutions 35,918,000 1,685,500 389,424,476 8,222,500 Grand Total
Thirty (30) Largest Unitholders
as at 31 December 2015 Desa Bukit Pantai Sdn Bhd Wisma UOA Sdn Bhd Rich Accomplishment Sdn Bhd Damai Positif Sdn Bhd Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board Dynasty Portfolio Sdn Bhd CIMB Group Nominees (Tempatan) Sdn Bhd Yayasan Hasanah (AUR-VCAM) LTG Development Sdn Bhd Tokio Marine Life Insurance Malaysia Bhd As Beneficial Owner (PF) 10) Amanah Raya Berhad Kumpulan Wang Bersama 11) CitiGroup Nominees (Tempatan) Sdn Bhd MCIS Insurance Berhad (Life Par Fd) 12) CitiGroup Nominees (Tempatan) Sdn Bhd MCIS Insurance Berhad (Shh Fd) 13) CitiGroup Nominees (Tempatan) Sdn Bhd MCIS Insurance Berhad (Ann Fd) 14) Affin Hwang Investment Bank Berhad 15) Cimsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ramanathan A/L L.Manickavasagan 16) CitiGroup Nominees (Asing) Sdn Bhd Exempt An for CLSA Limited (Cust-Non Res) 17) AMSEC Nominees (Tempatan) Sdn Bhd AmBank (M) Berhad for Sieh Kok Swee (9039-1101) Thirty (30) Largest Unitholders (Cont'd)
18) Lian Mong Yee @ Lian Mung Yee 19) Chong Kok Fah 20) Yeh, Yeong-Jye 21) CitiGroup Nominees (Tempatan) Sdn Bhd MCIS Insurance Berhad (Grp Life Fd) 22) Cimsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lim Chen Yik (Penang-CL) 24) CitiGroup Nominees (Tempatan) Sdn Bhd MCIS Insurance Berhad (Div Fd) 25) Leow Lin Sing 26) Lai Yoke Ping 27) AmBank (M) Berhad Pledged Securities Account for Ali Bin Abdul Kadir (SMART) 28) Ling Thik Ping 29) On Thiam Cai 30) AMSEC Nominees (Tempatan) Sdn Bhd AmBank (M) Berhad for Ong Kean Tong (9647-1101) Notice of Annual General Meeting
NOTICE OF FOURTH ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Fourth Annual General Meeting of UOA Real Estate Investment Trust ("UOA
REIT") wil be held at Prism Room, Level 3A, Connexion@Nexus, Nexus, Bangsar South City, No. 7, Jalan Kerinchi,
59200 Kuala Lumpur, Malaysia on Thursday, 21 April 2016 at 10.00 a.m. or any adjournment, for the following purpose:-
1. To lay the Audited Financial Statements for the financial year ended 31 December 2015 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 Auditors' Report thereon.
By Order of the Board of
UOA ASSET MANAGEMENT SDN BHD (692639-U)
The Manager of UOA Real Estate Investment Trust
YAP KAI WENG (MAICSA 74580) WONG YOKE LENG (MAICSA 7032314) Company Secretaries Kuala Lumpur29 February 2016 Notice of Annual General Meeting (Cont'd)
1. Appointment of Proxy
(i) Only depositors whose names appear in the Record of Depositors as at 14 April 2016 shal be regarded as Unitholders and be entitled to attend and speak at the Fourth Annual General Meeting.
(ii) A Unitholder of UOA REIT ("Unitholder") shal be entitled to attend and speak and shal 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 shal be entitled to attend and speak, and shal 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 shal be invalid unless it specifies the proportions of its holdings to be represented by each proxy. (vi) The instrument appointing a proxy shal 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 10th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof.
2. Audited Financial Statements for the Financial Year Ended 31 December 2015
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 Real Estate Investment Trusts. Hence, this matter will not be put forward for voting. UOA REAL ESTATE INVESTMENT TRUST
(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 under the Companies Act, 1965) PROXY FORM
CDS Account No.: No. of Units held: I / We …………………………………………………… NRIC No. / Company No. ……………………………….… being a Unitholder/Unitholders of UOA REIT, hereby appoint the following person(s) as my proxy: No. Name as per NRIC
% unitholding to be represented
or failing him/her the Chairman of the Meeting as my/our proxy to attend on my/our behalf the Fourth Annual General Meeting of UOA REIT to be held at Prism Room, Level 3A, Connexion@Nexus, Nexus, Bangsar South City, No. 7, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia on Thursday, 21 April 2016 at 10.00 a.m. or any adjournment.
Signature of Unitholder(s) / Common Seal for Corporate Unitholder(s) Note:
(i)
Only depositors whose names appear in the Record of Depositors as at 14 April 2016 shal be regarded as Unitholders and be entitled to attend and speak at the Fourth Annual General Meeting.
A Unitholder of UOA REIT ("Unitholder") shal be entitled to attend and speak and shal 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 shal be entitled to attend and speak, and shal 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.
Where a Unitholder appoints two (2) proxies, the appointment shal be invalid unless it specifies the proportions of its holdings to be represented by each proxy. (vi) The instrument appointing a proxy shal 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 10th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof.
FOLD THIS FLAP FOR SEALING RHB TRUSTEES BERHAD (573019-U)
(as Trustee for UOA Real Estate Investment Trust)
10th Floor, Plaza OSK
Jalan Ampang
50450 Kuala Lumpur, Malaysia

Source: http://uoareit.com.my/UOAREIT-Annual-Report2015.pdf

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