Unless otherwise defined in this announcement, all terms used herein shall have the same meaning as those defined in the announcement dated 29 October 2024.

1. INTRODUCTION 

Further to announcement dated 29 October 2024, the Board of Directors of KTI wishes to announce that the Company’s wholly-owned subsidiary, K.T.I. Sdn Bhd (“KTISB”) had on 20 August 2025 entered into a Development Agreement (“Agreement”) with the Government of The State of Sabah acting through the Ministry of Tourism, Cultural and Environment Sabah (Kementerian Pelancongan, Kebudayaan Dan Alam Sekitar Sabah) (“Government”) for the appointment of KTISB to develop a cultural complex with facilities, amenities and the related infrastructure (“Proposed Project”) on a public-private partnership basis by way of land swap initiative.

2. SALIENT TERMS 

The salient terms of the Agreement are as follows:-

(a) The Government has identified a parcel of state land measuring a total area of 153 acres in Kinarut reserved for Cultural Complex Site under Section 28(1) of the Land Ordinance which is more particularly described in Gazette Notification No. 58, of 1982 (“Reserve Land”). It is the intention of the Government to revoke the Reserve Land in whole under Section 28(3) of the Land Ordinance and subsequently to utilise the Reserve Land upon its revocation in the following manner:-

(i) an area measuring approximately 58 acres for the development of the Proposed Project (“Project Land”); 

(ii) an area measuring approximately 30 acres being the Government’s land designated for its existing use (“Government’s Land”); and 

(iii) an area measuring approximately 65 acres for residential development (“Entitlement Land”).

(Project Land, Government Land and Entitlement Land shall collectively be referred to as “the said Land”)

(b) Following the revocation of the Reserve Land, the Government shall cause the Director of Lands and Surveys Sabah to alienate the said Land into five (5) distinct parcels for the purpose mentioned above as follows:-

(i) Lot 1 comprising the Project Land to be alienated to the Ministry of Tourism, Cultural and Environment Sabah; 

(ii) Lot 2 comprising the Government Land; and

(iii) Lot 3, 4 & 5 comprising the Entitlement Land to be alienated to KTISB or such other company(ies) as may be determined by KTISB.

(c) KTISB is required to carry out and complete, at its own cost, the Proposed Project on the Project Land together with all infrastructure, including roads, driveways, culverts, water mains, sewerage mains/pipes/ plants and landscaping serving and/or relating to the Proposed Project within the boundaries of the Project Land in accordance with the requirements of the appropriate authorities and the facilities and amenities therefor in accordance with the Approved Plans on a public-private partnership basis by way of land swap. 

(d) The total estimated development cost of the Proposed Project shall not be less than the sum of RM107,000,000.00 (“Project Cost”).

(e) The value of the Entitlement Land shall be equivalent to the value of the Project Cost, to which the value of the Project Cost shall be valued by an independent quantity surveyor to be appointed and agreed by both parties.

(f) KTISB shall commence construction works of the Proposed Project within nine (9) months from the date of approval of the Building Plans or the amended Building Plans or the environmental impact assessment by the appropriate authorities, whichever is the later (“Construction Commencement Date”) and to complete the construction thereto within a period of 36 months from Construction Commencement Date.

3. RISK FACTORS

The Board is not aware of any material risk factors arising from the Proposed Project other than the risks and uncertainties that are generally associated with the property development and construction industries, such as changes in political, economic and regulatory conditions, shortage of labour and building materials, increase in labour and material costs, changes in credit and interest rate conditions, inflation and natural disaster that may affect the financial and operational conditions and the profitability of the Group subsequently.

The risks shall be managed and mitigated by KTI Group accordingly by taking more effective internal controls over the business operations of the Group.

4. FINANCIAL EFFECT

The Agreement will have no effect on the issued share capital and the shareholding of the substantial shareholders of the Company but it is expected to contribute positively to the earnings and net assets per share of the Group for the financial years ending 2026 to 2029.

5. APPROVALS REQUIRED

Save for the revocation of the Reserve Land and the alienation of the Land, the Agreement is not subject to the approvals of any other relevant regulatory authorities, other than those required in the ordinary course of obtaining the necessary approvals from the appropriate authorities, including but not limited to approvals in relation to the Development Plan, Building Plans, and all other necessary permits, licences, and consents for the planning, development, construction, and completion of the Proposed Project, which shall be deemed to form part of the ordinary regulatory approval process and shall not affect the enforceability of the Agreement.

The Agreement and the Proposed Project are not subject to the approvals of the shareholders of KTI.

6. INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM

None of the Directors and/or major shareholders of KTI and/or person connected with them have any interest, whether direct or indirect, in the Agreement.

7. DIRECTORS’ STATEMENT 

The Board of Directors of the Company, having considered all aspects of the Agreement, is of the opinion that it is in the best interest of the Company and its shareholders.

This announcement is dated 20 August 2025.