Reference is made to the Company’s announcement dated 26 April 2022 announced that its indirect subsidiary company, Ace Gases Marketing Sdn. Bhd. (“AGMSB”) on 26 April 2022 accepted a Letter of Intent from a World leading optoelectronics semiconductor company (“the Customer”) for onsite industrial gases supply scheme over a period of 10 years (“the Supply Scheme”).

The Board of Directors of KGB wishes to announce that AGMSB had on 29 November 2022 entered into a Supply Agreement for Industrial Gas (“Agreement”) with the Customer.

AGMSB shall commence work in December 2022 and will set up onsite generators (“on-site gas supply equipment”) to produce nitrogen, hydrogen, and oxygen gases at the Customer’s semiconductor manufacturing plant located at Kulim, Kedah. The construction and commissioning of the on-site gas supply equipment is expected to be completed by second or third quarter of 2023.

The Supply Scheme shall remain effective for an initial term of 10 (ten) years from the date of first supply of gas. Before the end of the initial term, both parties shall discuss in good faith on the renewal of the Agreement. The Supply Scheme is expected to generate a cumulative revenue of approximately RM180 million for the Group over a period of 10 years via monthly fixed facility fees and sales of gases.

The Supply Scheme will not have any effect on the share capital and shareholding structure of KGB and will not have any immediate material effect on the earnings per share of KGB for the financial year (“FY”) ending 31 December 2022, however, expected to contribute positively to earnings and net assets of the Group over the 10-year duration of the Supply Scheme, starting from FY 2023.

Risk factors affecting the Agreement include supply chain disruptions, construction and operation risks, skilled manpower shortages, fluctuation in exchange rates, and/or changes in political, economic, and regulatory conditions. Nonetheless, KGB has the relevant experience and expertise to undertake this Agreement and would take the appropriate measures to mitigate the risks when executing the Agreement. 

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

This announcement is dated 29 November 2022.