UEM Sunrise : Corportate Governance Report 2023

CORPORATE GOVERNANCE REPORT

STOCK CODE	:	5148
COMPANY NAME	:	UEM SUNRISE BERHAD
FINANCIAL YEAR	:	December 31, 2023

OUTLINE:

SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

SECTION B - DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable for financial institutions or any other institutions that are listed on the Exchange that are required to comply with the above Guidelines.

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SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.1

The board should set the company's strategic aims, ensure that the necessary resources are in place for the company to meet its objectives and review management performance. The board should set the company's values and standards, and ensure that its obligations to its shareholders and other stakeholders are understood and met.

Application	:	Applied
Explanation on	:	The Board of Directors (Board) of UEM Sunrise Berhad (UEM Sunrise or
application of the		the Company) assumes a primary role in shaping the strategic and
practice		annual plans for the Company and its subsidiaries (the Group). This
		encompasses overseeing business performance, ensuring proper
		conduct of business, managing talent and succession planning, risk
		management, shareholders' communication, internal controls,
		management information systems and relevant statutory matters. The
		Board recognises that maintaining good corporate governance
		practices is key to business integrity and delivering long term
		sustainable value for the Group's stakeholders.
		The Board bears ultimate responsibility for the management and
		oversight of business affairs, corporate governance, strategic direction,
		financial and organisational matters of the Group. The governance
		model for the Group delegates specific powers to Board Committees
		and the Chief Executive Officer (CEO), which enables the Board
		Committees, CEO and Management to execute their duties effectively.
		In order to remain relevant with developments in the market practice
		and regulations, the Board evaluates and continues to strengthen the
		existing corporate governance practices by embracing the latest
		corporate governance practices and regulatory framework.
		(1) The Board, together with the Management, remains fully
		committed to upholding the highest standards of corporate
		governance, which it considers critical to business integrity and to
		maintaining investors' and stakeholders' trust in the Company, in
		the pursuit of the Company's vision of building communities of the
		future with you and for you.
		In discharging its fiduciary duties and responsibilities, the Board is
		guided by its Charter and the Company's Discretionary Authority
		Limits (DAL) which outline high level duties and responsibilities of
		the Board, matters that are specifically reserved for the Board, as
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well as those which the Board may delegate to the Board Committees, the CEO and Management. The establishment and execution of well-defined organisational roles, responsibilities and authorities, as outlined in the Board-approved DAL, are integral components of effective corporate governance. At UEM Sunrise, the DAL is crafted to ensure robust governance, providing necessary checks and balances in the initiation and approval processes for authorised transactions.

Adopting a risk-based approach, the DAL facilitates a balanced distribution of accountability and control among the authorised parties, involving the Board, Board Committees and Management of the Group as necessary. The Board also extends the application of the DAL to its wholly owned subsidiaries, delegating authority limits to Senior Management for daily operations.

The Board as well as Management conducts continuous review of the DAL, which is one of the critical elements of corporate governance in establishing clear roles, responsibilities and accountabilities throughout the organisation and in a transparent manner. The DAL undergoes periodic reviews, ensuring an optimum structure for efficient and effective decision-making within the Group.

During the financial year, Management has reviewed the DAL and together with the Board, recognised the need of a comprehensive overhaul to align with industry best practices, the process of which is currently on-going. Management will continually review and assess the effectiveness of the DAL with the analysis of data points collected to improve efficiency and allow empowerment as envisaged by the Board, balanced with vigorous internal control.

Key matters reserved for the Board's review and approval are:

• the annual operating plan for the Group, which includes the overall corporate strategy, business development and plans
• dividend policy
• major capital commitments
• disposal and acquisition of significant assets and investments

In 2023, the Triage phase of the Group's three-phase strategic turnaround plan "Triage, Stabilise and Sustain", unveiled in November 2021, was successfully completed.

Following an extensive exercise to validate the turnaround plan in 2023, a more refined, comprehensive and structured transformation plan was established, named as U2030. U2030 serves as the focal point of the Company's corporate strategy in realising the Company's aspiration to become a balanced real estate player by 2030.

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In discharging its fiduciary duties, the Board has delegated specific tasks to the following Board Committees, all of which comply with the provisions of the Malaysian Code on Corporate Governance (MCCG), and they play a vital governance role by undertaking detailed work to fulfil the delegated responsibilities:

• Audit Committee
• Nominations & Remuneration Committee
• Board Development Committee
• Board Tender Committee
• Board Governance & Risk Committee

These Committees have the authority to examine particular issues and report to the Board on their proceedings and deliberations together with their recommendations as well as approval authority for matters specifically delegated by the Board to the Board Committees as provided in the DAL. The Board has the ultimate responsibility for final decisions on all matters.

The Company Secretary prepares reports which summarise the key discussion points and decisions from Committee meetings for presentation at the subsequent Board Meeting, facilitating the respective Board Committee Chairperson's reporting.

1. The Board reviewed the quarterly performance management report on financial results; tracking of key performance indicators (KPIs); cash flows; project launches and progress; investment and divestment updates; borrowings and funding updates; turnaround/transformation plan updates; sustainability updates and inventory status at its meetings held throughout 2023 and provided feedback and guidance to the Management, where required.
2. The Board participates actively in the development of the
   Company's strategy which encompasses the formulation and implementation of a strategic plan with full appreciation of the competitive operating environment and prospects for economic growth and development.
3. The Board also reviews and approves the Annual Operating Plan for the ensuing year and sets the KPIs and targets for the Company, leveraging on internal capabilities. In line with the MCCG, the Board sets the Company's strategic aims, ensuring that the necessary resources are in place for the Company to meet its objectives and reviews management performance. A periodic monitoring and reporting system is in place which highlights significant variances of KPIs against plans and budget to monitor performance.
   The Company also has in place a robust performance management system based on a 'Balanced Scorecard' approach with identified KPIs and targets being set at the beginning of each year in line with

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the Company's business strategy and objectives as agreed in the Annual Operating Plan. The KPIs in the overall Corporate Scorecard (which measures overall Company performance) are aligned and cascaded down to the CEO, Senior Management team and all employees. Employees who meet their KPIs and achieve a high- performance rating are appropriately rewarded whilst non- performers are given the opportunity to improve their performance through specific Performance Improvement Plans.

1. The annual Board Retreat with Senior Management was conducted via a physical session on 28 and 29 October 2023. At the Board Retreat, the Board engaged with the Senior Management to ensure alignment on the strategy and future direction of the Company. The session was also aimed at stimulating discussion of strategic issues and to explore potential solutions with an emphasis on effective and efficient implementation of the strategies, which include game plans, growth pursuits as well as strategic initiatives.
   The Board's feedback received at the Board Retreat framed the Management's presentation to the Board on the Company's Annual
   Operating Plan, transformation plan and the game plan covering development approach, marketing strategy and sustainability agenda. With the insight and advice provided by the Board at the Retreat session as well as continuous engagement post-Retreat, the U2030 Transformation Plan and Annual Operating Plan 2024 were presented to the Board and approved on 15 November 2023.
2. The Board also recognises the importance of building a sustainable business and has established a Sustainability Policy which outlines key focus areas based on environmental, social and governance attributes. UEM Sunrise will continue its efforts to ensure that sustainability considerations are integrated as part of its corporate decision-making process in particular into the products it builds, the methods it employs, who it hires and how it works with the communities where it operates. The Company's Corporate Responsibility Policy and Sustainability Policy updated for adoption since January 2017 reflect its commitment towards operating in a responsible and sustainable manner. These policies outlined common goals focusing on:
3. • Education and Human Capital
   • Community Development
   • Green Environment and Technology
   • Value Creation

The Corporate Responsibility Policy and Sustainability Policy were last reviewed in 2018 and Management was of the view that these policies and its goals remain valid. The Corporate Responsibility Policy and Sustainability Policy are published on the Company's

website atwww.uemsunrise.com/corporate/investor-relations/corporate-governanceand the Group's Corporate

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Responsibility activities for the year under review are disclosed in the Company's Integrated Annual Report 2023, which are available

on the Company's website at www.uemsunrise.com/corporate/about-us/information-and-downloads.

In 2022, to ensure UEM Sunrise's sustainability agenda is more holistic, the Board approved and adopted the UEM Sunrise Sustainability Blueprint with the established Guiding Principle as the extended narrative, as well as the proposed Environment, Social and Governance (ESG) metrics and subsequent target setting to be adopted and implemented company-wide. The Guiding Principle serves as the key reference document for the Development Division in establishing the Sustainable Development Design Guidelines (SDDG) as the next design standard prioritising on ESG factors.

The Board in 2023 approved the SDDG which provides a framework with a set of principles and best practices for the Company to develop its projects and communities that by design will minimise the impact on the environment, enhance social equity and promote economic development that are aligned with the Sustainability Blueprint of UEMS.

UEM Sunrise has successfully been certified with the Quality Management System, ISO 9001:2015; Environmental Management System, ISO 14001:2015; and Occupational Health and Safety Management System, ISO 45001:2018. UEM Sunrise's certification demonstrates our commitment towards meeting compliance to legal and other requirements. The certifications help set the foundations for the sustainability pillars of UEM Sunrise.

1. The Board is ultimately responsible for the adequacy and integrity of the Company's internal control system. Details of the Company's internal control system and the review of its effectiveness are set out in the Statement on Risk Management and Internal Control and
   Risk Management Report of the Company's Integrated Annual Report 2023 respectively.
   The Audit Committee was established on 15 September 2008 and its primary responsibility is to assist the Board in assessing the effectiveness of the Group's system of internal control and overseeing the financial and non-financial reporting process, policies and practices of the Group. It also reviews the adequacy and integrity of the Group's system of internal control, financial and non-financial reporting processes, management information systems, related party transactions and conflict of interest situations that arose, persist or may arise within the Group and the measures taken to resolve, eliminate or mitigate such conflicts, including compliance with applicable laws, rules, directives and guidelines. The Audit Committee assesses the effectiveness and adequacy of internal controls through internal audits carried out by

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the Internal Audit Department and internal control recommendations made by the External Auditor.

The Board Governance & Risk Committee was established on 1 August 2017 as the 'Board Risk Committee' to take over the risk oversight role previously undertaken by the Audit Committee. Following the delegation of governance and compliance purview by the Board on 1 June 2018, the Committee was renamed as the 'Board Risk & Governance Committee'. Subsequently on 28 November 2018, the Committee was renamed as the 'Board Governance & Risk Committee' in view of its expanded role on governance review matters. The Committee assists the Board in overseeing the Group's adherence to governance, anti-corruption compliance matters and sustainability matters in alignment with the Group's long-term strategy and makes the necessary recommendations. In respect of risk management, the Committee assists the Board in ensuring a sound and robust Risk Management Framework, and in overseeing the implementation of appropriate systems and processes to enhance the Group's corporate governance practices with a focus on key risk areas and mitigations. The Committee also oversees the formulation of a strong governance, ethical and integrity culture within the Group and provides oversight and guidance on the Group's integrity, governance and anti-corruption initiatives, including whistleblowing management, in line with Section 17A of the Malaysian Anti-Corruption Commission (MACC) Act 2009 (Amendment 2018). The Committee is also responsible for the whistleblowing management and oversight role, in which the Committee provides an avenue for individuals to raise concerns in confidence and without risk of reprisal, and enables legitimate concerns to be objectively addressed. The Committee also provides oversight and guidance on the Group's sustainability governance, strategies and initiatives to ensure the Group remains resilient in its business operations.

1. For an effective and orderly succession planning in UEM Sunrise Group, the Nominations & Remuneration Committee is entrusted by the Board with the responsibility to review candidates for Executive Directors and key management positions and to recommend their compensation packages. It also reviews the compensation framework for Senior Management staff, the human resources roadmap and receives reports and deliberate on manpower analysis and staffing requirements. The Board upon recommendation of the Nominations & Remuneration Committee had on 23 February 2023 endorsed the Board Succession Plan and took cognisance that the then composition of Board and Board Committees remained effective.
   In addition, to ensure that the Group has a robust leadership pool to meet current and future challenges as well as for succession planning, it has established a talent brand and attraction strategy

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aligned with the Company's desired organisational culture. External talent acquisition must support the Group's talent framework in order to complement and supplement UEM Sunrise's organisational culture and operating eco-system. The Group aims to build a leadership brand that is both purpose-driven and people- driven. The People Steering Committee established in March 2022 (previously Talent Council set up in 2018) was set up with the aim to contribute towards shaping UEM Sunrise's talent management policies and procedures to support its organisational goals, and building sustainable talent pipeline through a series of interventions that enable our people to fully develop their potential. The People Steering Committee is now known as Management People Committee. High performers are enrolled in Leadership Development programmes and the Company also assists senior managers to advance in their careers through business management programme.

1. The Board had on 20 February 2013 established a Shareholder Communication Policy to keep the market informed of all information which may or could have a material effect on the value of its securities.
   The Shareholder Communication Policy was reviewed, amended and renamed as Investor Relations and Shareholder Communication Policy and approved by the Board on 5 December 2017 to align with the practices recommended in the MCCG and enhancement of the process for effective, transparent and regular communication with the Company's stakeholders.
   A copy of this policy is available for reference on the Company's
   websitewww.uemsunrise.com/corporate/investor-relations/corporate-governance.

(10)The Company's Privacy Policy approved in 2014 prepared in accordance with the seven data protection principles which form the basis of protection under the Personal Data Protection Act 2010 was revised and approved by the Board on 10 September 2021 to ensure its completeness and be kept in-pace with the changes of business and operational needs of UEM Sunrise. A copy of this policy is available for reference on the Company's website www.uemsunrise.com.

(11)Since 12 June 2012, the Board had adopted a dividend policy of paying out between 20% to 40% of the Group's consolidated profit after tax and non-controlling interests (PATANCI), subject to among others, availability of distributable reserves and adequate free cash flow from operations, to allow shareholders to participate in the Company's profits, at the same time retaining adequate reserves for future growth. Subsequent to the financial year ended 31 December 2023, the Board on 27 February 2024 approved a revision to the Company's dividend policy to a payout ratio of

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between 40% to 60% of the Group's consolidated PATANCI, subject to among others, availability of distributable reserves and adequate free cash flow from operations, to ensure sustainable long-term returns to shareholders. Whilst the dividend policy reflects the Board's current views of the Group's financial and cash flow position, the dividend policy will be reviewed from time to time.

A copy of the dividend policy can be obtained from the Company's

website atwww.uemsunrise.com/corporate/investor-relations/corporate-governance.

(12)The Board is also pleased to inform that UEM Sunrise has been selected as one of the companies qualified under the Green Lane Policy (Qualified Companies) of Bursa Malaysia Securities Berhad (Bursa Securities) which accords benefits such as issuance of circulars to shareholders without pre-vetting and clearance by Bursa Securities, except those involving more complex proposals e.g. major disposals, privatisation and related party transactions, as well as fast-track processing of complex proposal circulars/other applications. This is premised on the Company's standard of corporate governance conduct and disclosure practices. The policy is an incentive granted to Qualified Companies which have been assessed to have good corporate governance and disclosure practices thus accorded certain privileges which among others facilitated faster issuance of circulars to shareholders and hence, expedites completion of corporate proposals.

(13)The revised Directors' Remuneration Framework has been in place since 2012. On 29 March 2022, the Board had approved the adoption of the Remuneration Policy for Directors and Senior Management to incentivise the Board and its executives to achieve the objectives of the Group while promoting the long-term sustainable success of the Company. The policy also reflects the Company's commitment to attract and retain Directors and Senior Management of high calibre to contribute in providing stewardship to the Board and to Management towards enhancing the objectives of the Group which should take into account the demands, complexities and performance of the Company. This new policy replaced the Remuneration Policy for Non-Executive Directors, which was formalised on 26 November 2019, and is available on the Company's website at www.uemsunrise.com/corporate/investor-relations/corporate-governance.

(14)The Board aims to provide and present a clear, balanced and comprehensive assessment of the Group's financial performance and prospects at the end of the financial year, primarily through the annual financial statements, quarterly announcement of results to shareholders as well as the Chairman's Statement and Management Discussion & Analysis in the Company's Integrated Annual Report. The Board is assisted by the Audit Committee to

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oversee the Group's financial and non-financial reporting processes and the quality of its financial reporting.

Explanation for	:
departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure:

Timeframe:

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