The Board of Directors of the Company (“the Board”) wishes to announce that by way of Board Circular Resolution dated 25 March 2021, the Board has accepted and approved for the Company to enter into an Agreement with the Director General of LHDNM pursuant to Section 96A (1) of the Income Tax Act 1967 in relation to the settlement of income tax by the Company to LHDNM.

1. BACKGROUND

LHDNM has carried out a tax investigation on the Company’s tax affairs for years of assessment 2013 to 2015. Arising from the tax investigation, the LHDNM has disputed on the Real Property Gains Tax (“RPGT”) assessments on the two (2) Joint Venture Agreements executed by the Company in 2013 and 2015 in respect of the land held under TL 017561689, in Kota Kinabalu as follows:

(a) Joint Venture Agreement (16.25 acres) with SBC Corporation Berhad dated 21 May 2013 (“First Transaction”); and

(b) Joint Venture Agreement (7 acres) with Gabungan AQRS Berhad dated 16 March 2015 (“Second Transaction”).

As a result of the tax investigation, it was resolved that the Company shall accept to make the full settlement of income tax in the sum of RM53,727,597.75 (Ringgit Malaysia Fifty Three Million Seven Hundred Twenty Seven Thousand Five Hundred Ninety-Seven and sen Seventy Five only) in respect of the First Transaction without any penalty to be imposed by the Director General of LHDNM. It was also resolved that the Second Transaction in respect of the 7 acres of land held for long term investment has been correctly assessed under RPGT.

By making the full settlement of the income tax, the Company is not being subjected to double taxation as the Company is not being charged for both real property gains tax under the RPGT Act 1976 and income tax under the Income Tax Act 1967. The Board acknowledges that the LHDNM may revise and discharge the assessment under the RPGT and then raise the assessment under the Income Tax Act 1967, if the facts and circumstances warrant it.

2. FINANCIAL IMPACT AND OTHER IMPLICATIONS TO THE COMPANY ARISING FROM THE INCOME TAX SETTLEMENT

It was further resolved that the LHDNM be and is hereby authorised to utilise the RPGT of RM25,838,520.65 which the Company had paid to the LHDNM in 2015 for year assessment 2013 in respect of the First Transaction, to be discharged by LHDNM and to be set-off against the Initial Payment of RM18,638,520.65 on or before 31 March 2021 as well as the twelve (12) instalments of RM600,000.00 each month for the months of April 2021 to March 2022.

The Company will only commence the monthly cash instalment of RM1,162,000.00 from April 2022 until February 2024 with final cash instalment of RM1,163,077.10 in March 2024.

The Board has unanimously agreed that the settlement of the said income tax signifies the Company’s seriousness in ensuring that legal risk exposures arising from any act of default in fulfilling tax obligations are adequately managed and mitigated.

This announcement is dated 26 March 2021.