KUALA LUMPUR (June 22): KJTS Group Bhd (KL:KJTS) said it has entered into a savings-sharing agreement with Top Glove Corp Bhd (KL:TOPGLOV) that could generate about RM27.3 million in revenue over the 10-year contract period, based on guaranteed energy savings of RM5.47 million annually.

In a bourse filing on Monday, KJTS said its 70.67%-owned subsidiary iHandal Green Assets Holdings Sdn Bhd (IHGASB) signed the agreement with Flexitech Sdn Bhd, a wholly-owned subsidiary of Top Glove, for the construction, installation and maintenance of its Heatfuse Heat Recovery Solutions system at the glove maker's manufacturing facilities in Banting.

Under the agreement, IHGASB will bear the full cost of the project and, in return, receive 50% of the actual energy cost savings generated by the system over the contract period.

Based on the guaranteed annual savings of RM5.47 million disclosed by KJTS, the group's share of the savings would amount to about RM2.73 million a year, or RM27.3 million over the 10-year tenure.

The Heatfuse Heat Recovery Solutions system is designed to capture and recover waste heat generated during manufacturing processes and convert it into hot water for process heating requirements, helping to reduce energy consumption, operating costs and carbon emissions.

KJTS noted that IHGASB had also entered into similar savings-sharing agreements over the past 12 months with two other Top Glove subsidiaries — TG Medical Sdn Bhd and GMP Medicare Sdn Bhd — involving manufacturing plants in Klang. These projects carry guaranteed annual savings of RM877,633 and RM1.77 million respectively, with the same 50:50 savings-sharing arrangement.

The group said the agreements are expected to contribute positively to its earnings and net assets going forward.

Shares in KJTS closed down 1.5 sen or 1.9% at 78.5 sen, valuing the group at RM542.15 million. Over the past one year, the stock has fallen 25.9%.