TIDMBION

RNS Number : 6815A

Bion PLC

30 September 2020

30 September 2020

BiON plc

("BiON" or the "Company" or the "Group")

Final Results and Publication of Annual Report

BiON (AIM: BION), an environmental engineering, wastewater treatment and renewable energy solutions company, announces its final results for the year ended 31 December 2019 and gives notice of the publication of its annual report and accounts.

Financial Highlights

   --    Revenue was RM24.06m (2018*: RM1.92m) 
   --    Gross profit was RM3.05m (2018*: loss of RM1.84m) 
   --    Gross margin was 12.7% (2018*: negative 95.6%) 
   --    Operating profit was RM0.66m (2018*: loss of RM11.65m) 
   --    Profit before tax was RM1.11m (2018*: loss of RM13.65m) 
   --    Cash and cash equivalents at 31 December 2019 were RM0.08m (31 December 2018*: RM0.47m) 

* Due to the Company changing its financial year end, the 2018 results cover 15 months ended 31 December 2018

Operational Highlights

-- Established itself as the only company in Malaysia to operate plants with two different biogas systems - tank and lagoon - under the Feed-in-Tariff ("FiT") mechanism

-- The Group's second fully-owned biogas power plant, the 2.0MW Malpom plant, commenced selling power to the national electricity grid at the full tariff rate in H2 2019

-- Recommenced pursuing engineering, procurement, construction and commissioning ("EPCC") opportunities and successfully secured a number of contracts before year end

-- Post period, conditionally acquired two biogas power plants with a combined installed capacity of 3.0MW

Syed Nazim bin Syed Faisal, Chief Executive Officer, said: " We ended 2019 in a stronger position than when we entered it, despite the challenges faced during the year. We achieved an important milestone when our Malpom biogas power plant began providing power to the national grid at the full tariff rate - also becoming the only company in Malaysia to operate plants with two different biogas systems under the FiT mechanism. We also successfully recommenced our EPCC activities with some notable contracts. Notwithstanding the impact on our operations of the COVID-19 pandemic, we have continued this momentum into 2020 with the acquisition of two biogas power plants, bringing our installed capacity to 7.0MW. By year end, we expect to have resumed full operations at our Kahang and Malpom plants and to have started commercial operations at our two new plants at Nasarudin and Seberang Perak. We look forward to reporting on our progress and delivering sustainable growth."

Publication of Annual Report

The Group's annual report and accounts for the year ended 31 December 2019 has been published today and is available under the Investor Relations section of the BiON website at:

https://www.bionplc.com/investor-relations/

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the EU Market Abuse Regulation (596/2014).

Enquiries:

 
 BiON plc 
 Syed Nazim bin Syed Faisal, Chief 
  Executive Officer                        +603 6413 1085 
 
 Beaumont Cornish (Nominated Adviser) 
 Roland Cornish, Felicity Geidt          +44 20 7628 3396 
 
 Optiva Securities (Broker) 
 Vishal Balasingham                      +44 20 3137 1903 
 
 Luther Pendragon (Financial PR 
  Adviser) 
 Claire Norbury                          +44 20 7618 9100 
 

Operational Review

The Group is one of Malaysia's leading environmental engineering, renewable energy and green technology solutions providers. Currently, its business focus is to construct, operate and own biogas power generation plants in Malaysia, derived namely from the treatment of palm oil mill effluent (POME) and other wastes produced in the processing of palm oil at palm oil mills. The biogas generated (i.e. methane) is converted into electricity to be sold to the Malaysian National Grid under a long-term renewable energy power purchase agreement. Aside from this, the Group provides similar services to third parties through EPCC contracts.

During the first half of 2019, the Group was hampered in its efforts to progress its projects due to financial constraints, which also prevented the completion of the upgrading works at its biogas power plant in Kahang, Johor. However, in the second half of the year, BiON established itself as the only company in Malaysia to operate plants with two different biogas systems - tank (Kahang) and lagoon (Malpom) - under the FiT mechanism with its second fully-owned biogas power plant, the 2.0MW Malpom plant, commencing power sales to the national electricity grid at the full tariff rate. This improved the Group's cash flow, which enabled BiON to resume its other business activities.

This included recommencing pursuing EPCC opportunities, with a number of contracts secured by year end. In particular, towards the end of the year, BiON received a variation order from Megagreen Energy Sdn Bhd ("MGE"), an associate company, for upgrading works at its Nasarudin and Seberang Perak (both in Perak, Malaysia) biogas power plants. This variation order amounted to RM20.5m. The Group also undertook several small infrastructure projects for other customers.

As announced on 22 September 2020, through its subsidiary, BiON Sdn Bhd, post period end, the Group conditionally acquired the Nasarudin and Seberang Perak biogas power plants from MGE. BiON expects these plants to be completed and commence commercial operations by year end, subject to the receipt of approval from the relevant authorities. The plants are under the Malaysian FiT programme with 16-year power purchase agreements with Tenaga Nasional Berhad, the country's largest integrated electricity company. This acquisition, with a combined installed capacity of 3.0MW, increases the Group's total installed capacity to 7.0MW.

COVID-19 Update

Post year-end, following the outbreak of COVID-19, on 18 March 2020 the Government of Malaysia implemented a Movement Control Order ("MCO"), which was the lockdown and restriction of movement for all civilians and non-essential businesses, including a ban on interstate travel. This required the Group to cease its construction activities at the various project sites as supplies, materials and equipment were not transportable or obtainable.

As of 4 May 2020, the Government of Malaysia transitioned the MCO to a Conditional Movement Control Order ("CMCO"), which allowed certain business sectors and companies to resume operations within continued strict parameters regarding social distancing. Consequently, the Group commenced resuming its operations in a phased manner. Interstate border control was still in place and so, while employees were permitted to travel to the project sites with a Letter of Authority from the Company, the movement of resources, materials and equipment to sites or offices progressed slowly. The CMCO was subsequently uplifted on 10 June 2020 and transitioned to a Recovery Movement Control Order ("RMCO"). Under the RMCO, which will be effective until the end of 2020, interstate travel is allowed, and most sectors have been permitted to reopen while ensuring adherence to certain Standard Operating Procedures. This enabled BiON to increase its activity and resume work on upgrading its plants in Kahang, Johor and Malpom, Penang. Management anticipates that the plants will return to optimal operational efficiency before the end of 2020.

The Group implemented a number of mitigating measures to support cash flows during this period of reduced trading. This included participating in the Social Security Organisation's Wage Subsidy Programme, which was introduced under the Government of Malaysia's Prihatin Rakyat Economic Stimulus package to help businesses affected by the COVID-19 outbreak by paying towards employees' wages. The Group is working with its creditors or suppliers to revise and renegotiate payment terms, in a manner acceptable to all parties, either through postponing payments, devising a staggered payment plan or revising the existing payment plan. The Group is also engaging with its customers to address any issues regarding payment procedures. The Group has continued financial support from Serba Dinamik Sdn Bhd, which will be called upon if required to continue to meet its liabilities.

Financial Review

Revenue for the year ended 31 December 2019 significantly increased to RM24.06m (15 months to 31 December 2018: RM1.92m), which was primarily generated by the provision of EPCC services and the sale of electricity from the Malpom plant, which contributed to revenue at the full tariff rate. The Group also completed a number of small infrastructure projects under EPCC contracts.

Gross profit was RM3.05m, with a gross margin of 12.7% (2018: gross loss of RM1.84m; gross loss margin of negative 95.6%). This reflects the higher revenue for 2019 and improvement in cost management.

The Group generated an operating profit for the year of RM0.66m (2018: loss RM11.65m) due to the significant increase in revenue and a one-off waiver of the amount payable to previous Directors and other creditors. The Group recognised a net finance income of RM0.46m (2018: net finance costs of RM2.01m). As a result, the Group achieved a profit before tax of RM1.11m (2018: loss RM13.65m) and net loss was significantly reduced to RM0.07m (2018: RM13.66m).

On a consolidated level, basic loss per share for the year ended 31 December 2019 was RM0.001 (2018: loss RM0.04 per share) based on the weighted number of ordinary shares.

BiON Sdn Bhd, the operating entity of the Group, is a BioNexus Status Company granted by Malaysian Bioeconomy Development Corporation Sdn Bhd. This company was entitled to an income tax exemption on the statutory business income derived from approved activities over five consecutive years of assessment commencing from the first year in which BiON Sdn Bhd generates statutory income from relevant approved activities. The tax exemption has since expired in the financial period ended 31 December 2018. At the end of December 2019, the Company became subject to a concessionary tax rate of 24% for the next 10 years on its taxable profits.

Cash and cash equivalents at 31 December 2019 were RM0.08m (2018: RM0.47m).

On 23 May 2019, the Group procured a 12-month mezzanine loan of approximately RM8.40m with no interest charged, for working capital purposes, from a director of the Company, Syed Nazim Syed Faisal. The drawdown was in tranches and as at the end of the reporting period, the full amount was drawn down. As at year end, the principle remained outstanding. On 24 January 2020, the full amount was converted into ordinary shares of BiON plc.

On 13 August 2019, the Group further procured a 6-month mezzanine loan of approximately RM0.51m with interest of 1.5% per month, for working capital purposes and full drawdown was made during the year.

During the year, the Group continued to maintain its repayment arrangements that were structured with MGE and Concord Green Energy Sdn Bhd ("CGE"). However, the amounts outstanding from both accounts have remained long overdue. Discussions are taking place with CGE to re-negotiate the terms of repayment and in the meantime, Serba Dinamik Sdn Bhd and one of the executive directors, have guaranteed the value of the debt. The amount due from MGE was partly recovered from the Group's purchase of two biogas power plants from the Company as announced on 22 September 2020. The Group's management continue to be in talks with both parties to arrive at an amicable settlement for the remaining amounts, including negotiations to acquire three biogas power plants, which is expected to be finalised upon a satisfactory outcome from the due diligence exercise.

Outlook

As noted, the COVID-19 outbreak is causing significant disruption to BiON's business in 2020 due to the public lockdown. However, as restrictions have been eased, activity is increasingly resuming. In addition, with the cost mitigation measures implemented during the period of reduced trading along with the securing of financing - from the Government and third-party loans - the Board continues to believe that the Group remains viable for the foreseeable future.

BiON is continuing to source EPCC projects while also completing work on its biogas power plants at Kahang and Malpom, which is expected to enable them to return to full operational efficiency by year end. As noted, BiON also expects the two biogas power plants acquired from MGE to be completed and commence commercial operations by year end, subject to the receipt of approval from the relevant authorities.

Looking further ahead, while continuing to develop POME-based biogas power plants, the Board intends to expand its business activities into complementary renewable energy sectors. The Board believes in creating waste-to-value and that there are abundant opportunities in eco-friendly sustainable ventures such as biomass, solar, industrial and wastewater treatment, landfill biogas, livestock waste and more. The Group intends to target these opportunities by leveraging its significant experience and track record in waste-to-energy and environmental engineering as well as by pursuing strategic partnerships, joint ventures and acquisitions, including expanding its EPCC offer to other countries in Southeast Asia.

As a result, the Board continues to look to the future with confidence and to delivering a sustainable future.

BiON plc ( Formerly known as Green & Smart Holdings plc)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at

 
 
                                                31.12.2019   31.12.2018 
 ASSETS                                 Note      RM'000       RM'000 
 NON-CURRENT ASSETS 
 Intangible assets                       5             776          831 
 Property, plant and equipment           6          44,781       41,636 
 Right of use assets                   12 (a)        4,760            - 
 Total non-current assets                           50,317       42,467 
                                               -----------  ----------- 
 
 CURRENT ASSETS 
 Trade and other receivables             7          17,060       21,775 
 Amount due from customer contracts      9             401          401 
 Amounts due from related parties        8          59,654       34,635 
 Cash and cash equivalents               10             83          471 
 Total current assets                               77,198       57,282 
                                               -----------  ----------- 
 
 Total assets                                      127,515       99,749 
                                               ===========  =========== 
 
 EQUITY 
 Stated capital                          11         61,052       61,052 
 Foreign translation reserve              28       (2,683)      (2,499) 
 Retained profit                                   (4,448)      (3,350) 
 Merger reserve                           28       (4,028)      (4,028) 
 Total shareholders' equity                         49,893       51,175 
 Non-controlling interests                             163           41 
 Total equity                                       50,056       51,216 
                                               -----------  ----------- 
 
 CURRENT LIABILITIES 
 Trade and other payables                13         53,922       30,888 
 Lease liabilities                     12 (b)          317            - 
 Short-term borrowings                   14         15,125        9,287 
 Income tax liabilities                                544            - 
 Total current liabilities                          69,908       40,175 
                                               -----------  ----------- 
 
 NON-CURRENT LIABILITY 
 Government grant deferred income        16             96          108 
 Amounts owing to related parties        8               -        3,972 
 Hire purchase payables                  15            295          387 
 Lease liabilities                     12 (b)        5,523            - 
 Amounts owing to directors              26          1,006        3,891 
 Deferred taxation                       18            631            - 
 Total non-current liabilities                       7,551        8,358 
                                               -----------  ----------- 
 
 Total liabilities                                  77,459       48,533 
                                               -----------  ----------- 
 
 Total liabilities and equity                      127,515       99,749 
                                               ===========  =========== 
 

The notes to the financial statements form an integral part of these financial statements.

The financial statements were approved by the Board of Directors and authorised for issue on 30 September 2020 and were signed on its behalf by:

Syed Nazim Syed Faisal

BiON plc ( Formerly known as Green & Smart Holdings plc)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the

 
                                                                          15-MONTH 
                                                                         PERIODED 
                                                      YEARED 
                                                     31.12.2019          31.12.2018 
                                             Note      RM'000              RM'000 
 
 Revenue                                      19          24,061                     1,924 
 Cost of sales                                          (21,009)                   (3,763) 
 Gross profit/(loss)                                       3,052                   (1,839) 
 
 Other income                                 20           6,442                       122 
 
 Less: operating expenses 
 Administrative expenses                                 (8,839)                   (9,930) 
 Operating profit/(loss)                                     655                  (11,647) 
 
 Finance income                               21           2,265                         - 
 Finance costs                                22         (1,810)                   (2,006) 
 
 Profit/(loss) before taxation                23           1,110                  (13,653) 
 
 Income tax expense                           24         (1,175)                      (11) 
 Loss for the year/period                                   (65)                  (13,664) 
                                                   -------------  ------------------------ 
 
 Other comprehensive loss 
 
 Exchange difference on translation of foreign 
  operations                                               (184)                       488 
 Total comprehensive loss                                  (249)                  (13,176) 
                                                   =============  ======================== 
 
 Loss for the year/period attributable 
  to: - 
 - Owners of the company                                   (187)                  (13,661) 
 - Non-controlling interest                                  122                       (3) 
                                                            (65)                  (13,664) 
                                                   =============  ======================== 
 
 Total comprehensive loss attributable 
  to: - 
 - Owners of the company                                   (371)                  (13,173) 
 - Non-controlling interest                                  122                       (3) 
                                                           (249)                  (13,176) 
                                                   =============  ======================== 
 Loss per share: 
 Basic (RM)                                   27         (0.001)                    (0.04) 
 Diluted (RM)                                 27         (0.001)                    (0.04) 
                                                   =============  ======================== 
 

The notes to the financial statements form an integral part of these financial statements.

All amounts are derived from continuing operations.

BiON plc ( Formerly known as Green & Smart Holdings plc)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
                           Share       Foreign       Merger    Retained    Attributable          Non-          Total 
                           capital    translation    reserve    profit       to owners        controlling      equity 
                                        reserve                            of the Company      interest 
                   Note    RM'000       RM'000       RM'000     RM'000        RM'000            RM'000         RM'000 
 
 Balance as at 
  30 September 
  2017                      43,954        (2,987)    (4,028)     10,311            47,250                44     47,294 
 Loss for the 
  period                         -              -          -   (13,661)          (13,661)               (3)   (13,664) 
 
 Translation of 
  foreign 
  operations                     -            488          -          -               488                 -        488 
                         ---------  -------------  ---------  ---------  ----------------  ----------------  --------- 
 Total 
  comprehensive 
  income /(loss)                 -            488          -   (13,661)          (13,173)               (3)   (13,176) 
                         ---------  -------------  ---------  ---------  ----------------  ----------------  --------- 
 Transaction 
 with owners 
 Issuance of 
  shares*           11      17,098              -          -          -            17,098                 -     17,098 
 Balance at 31 
  December 2018             61,052        (2,499)    (4,028)    (3,350)            51,175                41     51,216 
 Effects on 
  adoption of 
  IFRS 
  16**                           -              -          -      (911)             (911)                 -      (911) 
 Loss for the 
  year                           -              -          -      (187)             (187)               122       (65) 
 Translation of 
  foreign 
  operations                     -          (184)          -          -             (184)                 -      (184) 
                         ---------  -------------  ---------  ---------  ----------------  ----------------  --------- 
 Total 
  comprehensive 
  loss                           -          (184)          -    (1,098)           (1,282)               122    (1,160) 
                         ---------  -------------  ---------  ---------  ----------------  ----------------  --------- 
 Balance at 31 
  December 2019             61,052        (2,683)    (4,028)    (4,448)            49,893               163     50,056 
                         ---------  -------------  ---------  ---------  ----------------  ----------------  --------- 
 

The notes to the financial statements form an integral part of these financial statements.

   *              The issue of shares is recognised net of fundraising cost totaling to RM Nil. 
   **             Details explained in note 3 (iv), changes in accounting policies. 

BiON plc ( Formerly known as Green & Smart Holdings plc)

CONSOLIDATED STATEMENT OF CASH FLOW

For the

 
                                                                                  15-MONTH 
                                                                YEARED       PERIODED 
                                                               31.12.2019        31.12.2018 
                                                       Note      RM'000            RM'000 
 CASH FLOW FROM OPERATING ACTIVITIES 
 Profit/(loss) before taxation                                       1,110             (13,653) 
 Adjustments for: 
 Amortisation of intangible assets                                      55                   68 
 Depreciation of right of use assets                                   453                    - 
 Allowance written back                                              (140)                    - 
 Depreciation of equipment                              6            2,288                1,654 
 Impairment on other receivables                                       868                    - 
 Government grant income                                              (13)                 (16) 
 Interest expenses                                      22           1,151                1,966 
 Interest expenses - lease liabilities                  22             651                    - 
 Interest income                                        21         (2,265)                    - 
                                                             -------------      --------------- 
 Cash flow from/ (used in) operating activities 
  before working capital changes                                     4,158              (9,981) 
 Decrease/(increase) in trade and other receivables                  3,987              (3,423) 
 Increase/(decrease) in trade and other payables                    23,034             (17,251) 
 (Increase)/decrease in amount owing from 
  related parties                                                 (31,876)               20,550 
                                                             -------------      --------------- 
 Cash flow used in operating activities                              (697)             (10,105) 
 Tax paid                                                                -                 (11) 
 Interest paid                                                     (1,151)              (1,966) 
 Interest received                                                   2,229                    - 
                                                             -------------      --------------- 
 NET CASH FLOW FROM/ (USED IN) OPERATING ACTIVITIES                    381             (12,082) 
                                                             -------------      --------------- 
 
 CASH FLOW FOR INVESTING ACTIVITIES 
 Purchase of plant and equipment                        6          (5,434)              (6,746) 
                                                             -------------      --------------- 
 NET CASH FLOW USED IN INVESTING ACTIVITIES                        (5,434)              (6,746) 
                                                             -------------      --------------- 
 
 CASH FLOW FOR FINANCING ACTIVITIES 
 Issuance of new ordinary shares                        11               -               17,098 
 Advances from related parties                                           -                1,417 
 Advances from directors                                                 -                2,165 
 Repayment of hire purchase obligations                               (87)                 (83) 
 Drawdown of short-term loans                                        9,142                    - 
 Principal elements of lease payments                                (935)                    - 
 Repayment of term loans                                           (3,271)              (1,785) 
                                                             -------------      --------------- 
 NET CASH FLOW FROM FINANCING ACTIVITIES                             4,849               18,812 
                                                             -------------      --------------- 
 
 Net decrease in cash and cash equivalents                           (204)                 (16) 
 Effects of foreign exchange translation                             (184)                  392 
 Cash and cash equivalents at the beginning 
  of the year/period                                                   471                   95 
                                                             -------------      --------------- 
 Cash and cash equivalents at the end of the 
  year/period                                           10              83                  471 
                                                             -------------      --------------- 
 
 

The notes to the financial statements form an integral part of these financial statements.

BiON plc ( Formerly known as Green & Smart Holdings plc)

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIODED 31 DECEMBER 2019

   1.   GENERAL INFORMATION 

BiON plc (formerly known as Green & Smart Holdings plc) ("the Company") was incorporated as a public limited company in Jersey with registration number 119200 on 7 August 2015. The registered office of the Company is 12 Castle Street, St. Helier, Jersey JE2 3RT, Channel Islands.

Pursuant to a special resolution ratified at the Extraordinary General Meeting of the Company held on 30 April 2020, the Company has changed its name to BiON plc. Accordingly the change of name was taken effective from 1 May 2020, upon receiving the certificate from the Registrar of Companies in Jersey.

The Company is listed on the AIM market of the London Stock Exchange. The Company's nature of operations is to act as the holding company for a group of subsidiaries that are involved in research and development, provision of professional engineering consultancy and process design services in the areas of industrial biotechnology, pollution control and renewable energy; and engineering, procurement and construction of various waste treatment plants/systems; development, commercialisation, operation and maintenance of renewable energy plants .

The consolidated financial statements include the financial statements of the Company and its controlled subsidiaries (the "Group") as follows:

 
                        Place of       Registered 
 Name                 incorporation      address     Principal activity         Effective interest 
                                                                              31.12.2019   31.12.2018 
                    ----------------  ------------  -----------------------  -----------  ----------- 
 BiON Ventures 
  Sdn Bhd (fka 
  Green & Smart 
  Ventures Sdn 
  Bhd)               Malaysia          Note 1        Holding company             100%         100% 
                    ----------------  ------------  -----------------------  -----------  ----------- 
 BiON Sdn Bhd 
  (fka Green & 
  Smart Sdn Bhd)     Malaysia          Note 1        IPP & EPCC contractor       100%         100% 
                    ----------------  ------------  -----------------------  -----------  ----------- 
 Our Energy Group 
  (M) Sdn Bhd        Malaysia          Note 2        IPP                         51%          51% 
                    ----------------  ------------  -----------------------  -----------  ----------- 
 

Note 1 - registered address: B-1-15, Block B, 8 Avenue, Jalan Sungai Jernih 8/1, Section 8, 46050 Petaling Jaya, Selangor.

Note 2 - registered address: 3-2, 3rd. Mile Square, No. 151, Jalan Klang Lama, Batu 3 1/2 , 58100 Kuala Lumpur.

   2.   BASIS OF PREPARATION 

The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") issued by the International Accounting Standards Board ("IASB"), including related interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

As permitted by Companies (Jersey) Law 1991 only the consolidated financial statements are presented.

The financial statements are presented in Ringgit Malaysia ("RM") unless otherwise stated and is the currency of the primary economic environment in which the Group operates. All values are rounded to the nearest thousand ringgits ("RM'000") except where otherwise indicated.

The results for 31 December 2019 are prepared for a 12-month period and therefore the comparative amounts, 15-month period to 31 December 2018, are not entirely comparable.

Going Concern

The financial statements are required to be prepared on the going concern basis unless it is inappropriate to do so.

The Directors, having considered "Going Concern and Liquidity Risk: Guidance for Directors of UK Companies" issued by The Financial Reporting Council in 2016, consider the going concern basis of preparation to be appropriate in preparing the financial statements. The key conclusions are summarised below.

The Group made a loss for the period of RM0.07m (2018: RM13.66m) and recorded a net cash inflow from operating activities of RM0.38m (2018: outflow of RM12.08m). At the reporting date the Group held cash and cash equivalents of RM0.08m (2018: RM0.47m) and had current liabilities of RM69.91m (2018: RM40.18m).

As described in note 7, amounts of RM10.51m (2018: RM17.91m) are due to the Group from Concord Green Energy Sdn Bhd ("CGE"). A repayment plan was put in place during the year and RM7.40m was repaid. Due to the repayment plan not being upheld subsequent discussions are taking place to re-negotiate the terms of repayment and in the meantime, Serba Dinamik Sdn. Bhd. and one of the executive directors, have guaranteed the value of the debt.

As described in note 8, amounts of RM63.35m (2018: RM38.33m) are due to the Group from Megagreen Energy Sdn Bhd ("MGE"). Further debts arose during the financial period of approximately RM25.02m (2018: RM1.27m) from MGE. The repayment arrangement put in place during the year recovered RM3.13m. As a result of re-negotiations taking place to acquire two (2) biogas power plants located in Perak, in part exchange for some of the receivables this repayment arrangement was put on hold. These acquisitions completed in Q3 2020 and further negotiations are taking place to acquire an additional three (3) biogas power plants and is expected to be finalised upon satisfactory outcome from the due diligence exercise.

The Directors consider the amounts owing to be recoverable in full as a result of negotiations being undertaken.

The Group has also received a letter of support from one of its largest shareholders, Serba Dinamik Sdn. Bhd. giving its willingness to continue to fund the Group.

COVID-19 has been identified as having a significant impact on the Group in the 2020 financial year due to public lockdown. However, as restrictions have been eased and activity is increasingly resuming, the Directors continue to believe that the Group remains viable for the foreseeable future.

The Directors prepared financial projections and plans for a period of at least 12 months from the date of approval of these financial statements. On assessment of the Group's future cash flows, the new financing arrangements that have been made available from the SME Bank loan (detail in note 36), as well as the agreed letter of support from Serba Dinamik Sdn. Bhd. and an assessment of their willingness to perform under this the Directors believe the Group has the ability to continue as a going concern for at least 12 months.

   3.   basis of COnSOLIDATION 

The consolidated financial statements comprise the financial information of the Company and its subsidiaries made up to the end of the reporting period. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The consolidated financial statements present the results of the Company and its subsidiaries and joint arrangements as if they formed a single entity. Inter-company transactions and balances between Group companies are therefore eliminated in full. The financial information of subsidiaries is included in the Group's financial statements from the date that control commences until the date that control ceases.

On 6 May 2016, the Company entered into agreements with all of the shareholders of BiON Ventures Sdn Bhd ("Green & Smart Ventures Sdn Bhd") for a share for share exchange regarding the ordinary shares in BiON plc and ordinary shares in BiON Ventures. As a result of this transaction, the ultimate shareholders in the Company received shares in BiON plc in direct proportion to their original shareholdings in BiON Ventures.

The acquisition of BiON Ventures by the Company was that of a re-organisation of entities which were under common control. As such, that combination also falls outside the scope of IFRS 3 'Business Combinations' (Revised 2008). The Directors have, therefore, decided that it is appropriate to reflect the combination using the merger basis of accounting in order to give a true and fair view. No fair value adjustments were made as a result of that combination.

CHANGES IN ACCOUNTING POLICIES

Standards issued and applied for the first time in 2019

The following new and revised Standards and Interpretations have been adopted in the current year.

   --      Amendments to IFRS 9 Financial Instruments 
   --      IFRS 16 Leases 
   --      IFRS 15 Revenue Contracts with Customers 
   --      Amendments to IAS 28 Investments in Associates and Joint Ventures 

With the exception of IFRS 16 the adoption of these standards has not had a material impact on the financial statements.

Standards issued and not yet effective

There are no new standards, amendments and interpretations to existing standards that have been published which have not been adopted.

IFRS 9 Financial Instruments

The Group applied IFRS 9 retrospectively, with an initial application date of 1 January 2019. The Group has not restated comparative information which continues to be reported under IAS 39 and the disclosure requirements of IFRS 7 Financial Instruments: Disclosures relating to items within the scope of IAS 39. The impact arising from IFRS 9 adoption was included in the opening retained earnings and other components of equity at the date of initial application.

   (i)      Classification and measurement 

Under IFRS 9, debt instruments are subsequently measured either at fair value through profit or loss (FVPL), amortised cost or fair value through other comprehensive income (FVOCI). The classification is based on two criteria: The Group's business model for managing the assets; and whether the instruments' contractual cash flows represent 'solely payments of principal and interest' on the principal amount outstanding.

The assessment of the Group's business model was made as of the date of initial application, 1 January 2019. The assessment of whether contractual cash flows on debt instruments solely comprised of principal and interest was made based on the facts and circumstances as at the initial recognition of the assets.

The classification and measurement requirements of IFRS 9 did not have a significant impact to the Group. The Group continued measuring at fair value all financial assets previously held at fair value under IAS 39. The following are the changes in the classification and measurement of the Group's financial assets:

- Trade and other receivables classified as receivables as at 31 December 2018 are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. These were classified and measured as debt instruments at amortised cost beginning 1 January 2019.

- Unquoted equity securities classified as available-for-sale (AFS) financial assets as at 31 December 2018 were classified and measured as equity instruments designated at FVOCI beginning 1 January 2019. The Group elected to classify irrevocably its unquoted equity securities under this category at the date of initial application as it intends to hold these investments for long-term appreciation. There was an impairment loss of RM150,000 recognised in profit or loss for these investments in prior periods. In addition, all of the investments in unquoted equity securities was measured at cost under IAS 39. Upon adoption of IFRS 9, the Group measured the unquoted equity security at FVOCI.

The Group has not designated any financial liabilities at FVPL. There are no changes in classification and measurement for the Group's financial liabilities.

   (ii)    Impairment 

The adoption of IFRS 9 has fundamentally changed the Group's accounting for impairment losses for financial assets by replacing IAS 39's incurred loss approach with a forward-looking expected credit loss (ECL) approach. IFRS 9 requires the Group to recognise an allowance for ECLs for all debt instruments not held at FVPL.

There is no impact on the impairment amount of the Group upon adoption of IFRS 9 as at 1 January 2019.

IFRS 16 Leases

IFRS 16 is effective from 1 January 2019 and supersedes IAS 17 Leases. The standard eliminates the classification of leases as either operating or finance leases and introduces a single accounting model. Lessees are required to recognise a right-of-use asset and related lease liability for their operating leases and show depreciation of leased assets and interest on lease liabilities separately in the statement of comprehensive income. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognise substantially all leases on the statement of financial position.

The Group adopted IFRS 16 effective 1 January 2019 using the modified retrospective method of adoption. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application as an adjustment to the opening balance of retained earnings. Accordingly, prior year financial information has not been restated and will continue to be reported under IAS 17 Leases. The right-of-use asset and lease liability have initially been measured at the present value of remaining lease payments, with the right-of-use asset being subject to certain adjustments.

   i)             Practical expedients applied 

In applying IFRS 16, the Group elected to apply the following practical expedients permitted by the standard:

-- The Group has elected not to reassess contracts that were not identified as leases under IAS 17 and IFRIC 4 to determine whether there is a lease under IFRS 16. Therefore, a definition of a lease under IFRS 16 was applied only to contracts entered into or modified on or after 1 January 2019;

   --      Applying a single discount rate to a portfolio of leases with similar characteristics; 

-- Relying on previous assessments as to whether leases are onerous as an alternative to performing an impairment review - there were no onerous contracts as at 1 January 2019;

-- Accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases;

-- Excluding initial direct costs for the measurement of the right-of-use asset at the date of the initial application; and

-- Using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

   ii)            Measurement of lease liabilities 

The following table reconciles the opening balance for the lease liabilities as at 1 January 2019 based upon the operating lease obligations as at 31 December 2018:

 
                                                    RM'000 
 
 Operating lease commitments as at 31 December 
  2018                                              11,282 
 Less: 
 Commitments relating to short-term leases           (500) 
                                                 --------- 
 Gross lease liabilities at 1 January 2019          10,782 
 Effect of discounting (10.85%)                    (4,658) 
                                                 --------- 
 Lease liabilities at 1 January 2019                 6,124 
                                                 --------- 
 
 Of which: 
 Current lease liabilities                             351 
 Non-current lease liabilities                       5,773 
                                                 --------- 
                                                     6,124 
                                                 --------- 
 
   iii)           Measurement of right-of-use assets 

The associated right-of-use assets for land leases were measured on a modified retrospective basis. The right-of-use assets for the leases were recognised based on the carrying amount as if the standard had always been applied, using the incremental borrowing rate at the date of initial application.

   iv)           Adjustments recognised in the statement of financial position on 1 January 2019 

The change in accounting policy affected the following items on 1 January 2019:

 
                                                           Restated opening 
                          Opening balance                        balance as 
                          as at 1 January                      at 1 January 
                               2019 under                        2019 under 
                                   IAS 17     Adjustment            IFRS 16 
                             RM'000            RM'000           RM'000 
 
 Right-of-use assets                    0          5,213              5,213 
 Lease liabilities                      0        (6,124)            (6,124) 
 Retained Earning                 (3,350)          (911)            (4,261) 
 

The Group solely has lease contracts in relation to land.

IFRS 15 Revenue Contracts with Customers

IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue and related interpretations and it applies, with limited exceptions, to all revenue arising from contracts with customers. IFRS 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

IFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

The Group adopted IFRS 15 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under this method, the standard can be applied either to all contracts at the date of initial application or only to contracts that are not completed at this date. The Group elected to apply the standard to those contracts that are not completed as at 1 January 2019. The adoption of IFRS 15 didn't affect the opening retained earnings and other components of equity at the date of initial application.

   4.   SIGNIFICANT ACCOUNTING POLICIES 

4.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below: -

   a)   Impairment of assets 

When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.

   b)   Impairment of trade and other receivables 

An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loans and receivable financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables.

   c)   Construction contracts 

As described in note 4.13, the Group's accounting approach reflects a sound judgement as potential losses on contract are being considered and reflected with its probability immediately upon occurrence while contract revenue which cannot be estimated reliably is realised only after confirmed by written agreement. The carrying amounts of the Group's construction contracts due from/(to) customers at the end of the reporting period/year are disclosed in note 9 including any allowance for impairment if there is a material uncertainty to fully recover costs of each contract.

4.2 FUNCTIONAL AND FOREIGN CURRENCIES

   a)    Transactions and balances 

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are recognised in profit or loss.

   b)    Foreign operations 

Assets and liabilities of foreign operations are translated to RM at the rates of exchange ruling at the end of the reporting period. Revenues and expenses of foreign operations are translated at exchange rates approximating those ruling at the dates of the transactions. All exchange differences arising from translation are taken directly to other comprehensive income and accumulated in equity under the foreign exchange translation reserve. On the disposal of a foreign operation, the cumulative amount recognised in other comprehensive income relating to that particular foreign operation is reclassified from equity to profit or loss.

4.3 FINANCIAL INSTRUMENTS

               4.3.1       Financial Assets 

On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables financial assets, or available-for-sale financial assets, as appropriate. The Group currently holds financial assets as:

   a)   Loans and receivables 

These assets are non-derivative financial assets that have fixed or determinable payments that are not quoted in an active market. They arise through the provision of services to customers (trade receivables). They are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition or issue and subsequently carried at amortised cost using the effective interest method less provision for impairment. The effect of discounting on these financial instruments is not considered to be material.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all the amounts due under the term's receivable. The amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

   4.3.2       Financial Liabilities 

All financial liabilities are initially measured at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

   4.3.3       Equity Instruments 

Instruments classified as equity are measured at cost and are not remeasured subsequently.

   a)    Ordinary shares 

Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from proceeds.

   4.3.4       Derecognition 

A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

4.4 PROPERTY, PLANT AND EQUIPMENT

   a)    Owned Assets 

Items of property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses, if any. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to the location and condition for its intended use.

   b)    Assets under construction 

Assets under construction are items of property, plant and equipment that are yet to be completed or ready for use. These are held at historical cost less any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is not provided until such a time that the asset is capable of operating in the manner intended by management. Upon completion of the asset, the assets will be carried at fair value determined annually by the directors.

   c)     Depreciation 

Depreciation is charged to profit or loss (unless it is included in the carrying amount of another asset) on the straight-line basis to write off the depreciable amount of the assets net of the estimated residual values over their estimated useful lives. Assets under construction are depreciated from the date they are ready for use. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are: -

 
                          Estimated Useful Lives 
 Office equipment              5 -10 years 
                         ----------------------- 
 Furniture and fittings        5 -10 years 
                         ----------------------- 
 Plant & machinery               20 years 
                         ----------------------- 
 Renovation                    5 -10 years 
                         ----------------------- 
 Industrial building             50 years 
                         ----------------------- 
 Motor vehicle                   5 years 
                         ----------------------- 
 

The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period to ensure that the amounts, method and periods of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment.

   d)    Subsequent expenditure 

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from de-recognition of the asset is recognised in profit or loss.

4.5 INTANGIBLE ASSETS

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses (note 5). The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with a finite life are amortised on straight-line basis over the estimated economic useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial period / year end.

The amortisation expense on intangible assets with finite useful lives is recognised in the profit or loss in the expense category consistent with the function of the intangible asset.

   a)    Trademark 

Trademarks are stated at cost less accumulated amortisation and any impairment losses (note 5). Trademarks are tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at cash generating unit level. Trademarks are amortised over a period of ten (10) years.

4.6 IMPAIRMENT

   a)    Impairment of Non-Financial Assets 

The carrying values of assets, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets' fair value less costs to sell and their value--in--use, which is measured by reference to discounted future cash flow.

An impairment loss is recognised in profit or loss immediately.

When there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately.

4.7 INCOME TAXES

Income tax for the period comprises current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of the taxable profit for the reporting period and is measured using the tax rates that have been enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period/year and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year/period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting year/period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive income or directly in equity. Deferred tax arising from a business combination is included in the resulting goodwill or excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities over the business combination costs.

4.8 CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value with original maturity periods of three months or less.

4.9 EMPLOYEE BENEFITS

   a)      Short-term benefits 

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are measured on an undiscounted basis and are recognised in profit or loss and included in the development costs, where appropriate, in the period/year in which the associated services are rendered by employees of the Group.

   b)    Defined contribution plans 

The Group's contribution to defined contribution plans are recognised in profit or loss in the period/year to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans.

4.10 REVENUE AND OTHER INCOME

Revenue is recognised at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer net of sales taxes and discounts. A performance obligation may be satisfied at a point in time or over time. The amount of revenue recognised is the amount allocated to the satisfied performance obligation.

   (i)            Revenue from construction contracts 

Revenue from construction contracts is recognised in line with IFRS 15 based on the percentage of completion method based on works performed. The stage of completion is measured by reference to the actual cost incurred to date to estimated total cost for each contract.

Where the outcome of a contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

    (ii)          Government grants 

Grants that compensate the Group for expenses incurred are recognised in profit or loss on a systematic basis over the period necessary to match them with the related costs which they are intended to compensate for.

Grants that compensate the Group for the costs of assets are recognised in profit or loss on a systematic basis over the expected life of the related asset.

   (iii)         Revenue from Sale of Electricity 

Revenue from the sale of electricity generated from the renewable energy plant is recognised as and when the electricity is delivered to the off-taker, based on the invoiced value of sale of electricity, computed at a predetermined rate. Accrued unbilled revenues are reversed in the following month when actual billing occurs.

4.11 BORROWING COSTS

Borrowing costs, directly attributable to the acquisition, construction or production of a qualifying asset, are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted.

All other borrowing costs are recognised in the profit or loss as expenses in the period in which they are incurred. No interest costs were capitalised during the period.

Investment income earned on the temporary investment of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

4.12 CONTINGENT LIABILITIES

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required, or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

4.13 CONSTRUCTION CONTRACTS

   (i)            Contract revenue 

Revenue from construction contracts is recognised as described in note 4.10(i).

   (ii)           Amount due from / (to) customer for contract work 

Amount due from / (to) customer for contract work is the net amount of cost incurred for construction and contract-in-progress plus profit attributable to contract-in-progress less foreseeable losses, if any, and progress billings. Contract cost incurred to date include costs directly related to the contract or attributable to contract activities in general and costs specifically chargeable to the customer under the terms of the contract.

   5.   INTANGIBLE ASSETS 
 
                                   Trademarks                Patents                  Total 
                                     RM'000                   RM'000                  RM'000 
 
 Cost 
 At 31 December 2018                         1,319                         8                  1,327 
 Additions                                       -                         -                      - 
 At 31 December 2019                         1,319                         8                  1,327 
                             ---------------------  ------------------------  --------------------- 
 
 
                                   Trademarks                Patents                  Total 
                                     RM'000                   RM'000                  RM'000 
 
 Accumulated amortisation 
 At 31 December 2018                           490                         6                    496 
 Charge for the year                            54                         1                     55 
 At 31 December 2019                           544                         7                    551 
                             ---------------------  ------------------------  --------------------- 
 
 
 Net book value 
 At 31 December 2019                           775                         1                    776 
                             ---------------------  ------------------------  --------------------- 
 
 At 31 December 2018                           829                         2                    831 
                             ---------------------  ------------------------  --------------------- 
 

(a) Trademark

The trademarks "GRASS", "POME-MAS" and "GREENPAK" are registered in Malaysia in respect of patented wastewater and bio-waste treatment technologies. These trademarks have been granted for an indefinite period, however, they are being amortised over ten (10) years in line with Management's best estimate of their expected useful life.

The remaining amortisation period of trademarks is between one (1) to three (3) years, the remaining amortisation period of patents is between six (6) to twelve (12) years.

(b) Impairment Test

The Group has assessed the recoverable amounts of intangible assets and determined that no impairment is required. The recoverable amounts of the cash-generating units ("CGU") are determined using the value in use approach, and this is derived from the present value of the future cash flows from each CGU computed based on the following key assumptions:

(i) Cash flows are extrapolated to 18 years based on management's two-year business plan.

(ii) Discount rates used, 7%, for the cash flows discounting purpose reflects specific risks relating to the relevant CGU.

(iii) Growth rate for a CGU, 2%, is determined based on the management's estimate of the industry trends and past performances of the CGU.

(iv) Profit margins are projected based on the industry trends and historical profit margin achieved.

Management believes that there is no reasonable possible change likely to materially cause the CGU carrying amount to exceed its recoverable amount if applied to the above key assumptions.

   6.   PLANT AND EQUIPMENT 
 
 
                            Furniture               Renovations            Office Equipment         Assets under          Industrial          Motor Vehicles         Total 
                            & Fittings                                                              Construction           Building 
                              RM'000                   RM'000                   RM'000                 RM'000               RM'000                RM'000             RM'000 
 At Cost 
 At 31 December 
  2018                                   159                      344                      167               21,418               21,587                     807       44,482 
 Addition                                  -                        -                        -                    -                5,434                       -        5,434 
 Reclassification                          -                        -                        -             (13,876)               13,875                       -          (1) 
 At 31 December 
  2019                                   159                      344                      167                7,542               40,896                     807       49,915 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 Less: Accumulated 
 Depreciation 
 At 31 December 
  2018                                    53                      102                       90                    -                2,159                     442        2,846 
 Charge for the 
  year                                    15                       34                       32                    -                2,045                     162        2,288 
 At 31 December 
  2019                                    68                      136                      122                    -                4,204                     604        5,134 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 Carrying Amount 
 At 31 December 
  2019                                    91                      208                       45                7,542               36,692                     203       44,781 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 
 
 
                            Furniture               Renovations            Office Equipment         Assets under          Industrial          Motor Vehicles         Total 
                            & Fittings                                                              Construction           Building 
                              RM'000                   RM'000                   RM'000                 RM'000               RM'000                RM'000             RM'000 
 At Cost 
 At 30 September 
  2017                                   159                      344                      167               14,672               21,587                     807       37,736 
 Addition                                  -                        -                        -                6,746                    -                       -        6,746 
 At 31 December 
  2018                                   159                      344                      167               21,418               21,587                     807       44,482 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 Less: Accumulated 
 Depreciation 
 At 30 September 
  2017                                    32                       58                       52                    -                  810                     240        1,192 
 Charge for the 
  period                                  21                       44                       38                    -                1,349                     202        1,654 
 At 31 December 
  2018                                    53                      102                       90                    -                2,159                     442        2,846 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 Carrying Amount 
 At 31 December 
  2018                                   106                      242                       77               21,418               19,428                     365       41,636 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 

6. PLANT AND EQUIPMENT (CONT'D)

a) Included in the assets of the Group at the end of the reporting period were motor vehicles with a total net book value of RM0.20m (2018: RM0.37m), which were acquired under hire purchase terms.

b) Assets under construction represents biogas power plant under construction. It is subject to depreciation only when completed and ready for use. No interest was capitalised during the financial year, but total interest capitalised to date included in the Asset under construction amounts to RM0.54m (2018: RM0.54m).

c) Industrial building with carrying amount of approximately RM36.69m (2018: RM19.43m) and Assets under construction with carrying amount of approximately RM7.54m (2018: RM21.42m) are pledged against the banking facility (note 17).

d) Acquisition of plant and equipment: -

 
                                           31.12.2019   31.12.2018 
                                             RM'000       RM'000 
 
   Net cash paid to acquire property, 
   plant and equipment                          5,434        6,746 
                                          -----------  ----------- 
 
 
   7.   TRADE AND OTHER RECEIVABLES 
 
                                         31.12.2019         31.12.2018 
                                           RM'000             RM'000 
 
 Trade receivables                           16,130                    20,152 
 Less: allowance for impairment 
  loss                                      (1,435)                   (1,575) 
                                        -----------  ------------------------ 
                                             14,695                    18,577 
                                        -----------  ------------------------ 
 
 Other receivables & deposits                 3,736                     3,701 
 Less: allowance for impairment 
  loss                                      (1,371)                     (503) 
                                        -----------  ------------------------ 
                                              2,365                     3,198 
                                        -----------  ------------------------ 
 
                                             17,060                    21,775 
                                        ----------- 
 
 Allowance for impairment losses 
 Opening balance - Trade receivables        (1,575)                         - 
 Reclassification (Note c)                        -                   (1,435) 
 Allowance written back                         140                         - 
 Allowance for the year                           -                     (140) 
                                            (1,435)                   (1,575) 
                                        -----------  ------------------------ 
 
 Opening balance - Other receivables          (503)                     (414) 
 Allowance for the year                       (868)                      (89) 
                                        -----------  ------------------------ 
                                            (1,371)                     (503) 
                                        -----------  ------------------------ 
 Closing balance                            (2,806)                   (2,078) 
                                        -----------  ------------------------ 
 

a) The Group's normal credit terms range from 90 to 120 days (2018: 90 to 120 days). Other credit terms are assessed and varied on a case-by-case basis.

b) Trade and other receivables that are individually determined to be impaired relate to customers that have defaulted on payments or the amount due from third parties considered irrecoverable.

   c)   Included in the Trade Receivables is an amount of RM10.51m (2018: RM17.91m) from CGE. 
   d)    The amounts in Trade Receivables are analysed as follows: 
 
                                    31.12.2019      31.12.2018 
                                      RM'000          RM'000 
 
 Not past due                                2                  - 
 Past due by less than 3 months              -                  - 
 Past due by less than 3 -                 162                  - 
  6 months 
 Past due by 6 months and above         15,966             34,088 
                                        16,130             34,088 
                                   -----------  ----------------- 
 
   8.   AMOUNTS OWING BY / (TO) RELATED PARTIES 
 
 Party         Relationship*      Trade Receivables        Other Receivables          Other Payables               Total 
                                        RM'000                   RM'000                   RM'000                   RM'000 
 31.12.2019 
 Megagreen 
  Energy Sdn   Related 
  Bhd           party                           51,497                   11,853                        -                   63,350 
 Less: Allowance for 
  impairment loss                              (3,762)                        -                        -                  (3,762) 
                               -----------------------  -----------------------  -----------------------  ----------------------- 
                                                47,735                   11,853                        -                   59,588 
                               -----------------------  -----------------------  -----------------------  ----------------------- 
 Makmur 
  Hidro        Related 
  Sdn Bhd.      party                                -                       66                        -                       66 
                               -----------------------  -----------------------  -----------------------  ----------------------- 
                                                47,735                   11,919                        -                   59,654 
                               -----------------------  -----------------------  -----------------------  ----------------------- 
 
 
 Party         Relationship*      Trade Receivables        Other Receivables          Other Payables               Total 
                                        RM'000                   RM'000                   RM'000                   RM'000 
 31.12.2018 
 Megagreen 
  Energy Sdn   Related 
  Bhd           party                           34,088                    4,243                        -                   38,331 
 Less: Allowance 
  for impairment 
  loss                                         (3,762)                        -                        -                  (3,762) 
                               -----------------------  -----------------------  -----------------------  ----------------------- 
                                                30,326                    4,243                        -                   34,569 
                               -----------------------  -----------------------  -----------------------  ----------------------- 
 
 Makmur 
  Hidro        Related 
  Sdn Bhd.      party                                -                       66                        -                       66 
                               -----------------------  -----------------------  -----------------------  ----------------------- 
                                                30,326                    4,309                        -                   34,635 
                               -----------------------  -----------------------  -----------------------  ----------------------- 
 K2M 
  Ventures 
  Sdn Bhd      Ultimate                              -                        -                  (3,972)                  (3,972) 
  holding 
   co. 
                                                30,326                    4,309                  (3,972)                   30,663 
                               -----------------------  -----------------------  -----------------------  ----------------------- 
 
   *              Relationship 

a) The Group via its subsidiary, BiON Sdn Bhd holds 15% shares in Megagreen Energy Sdn Bhd and Syed Nazim Syed Faisal, being the Executive Director of BiON plc, was appointed as Director effective 3 July 2020.

b) Mr. Saravanan, who was a director in BiON Plc for the year to 31 December 2019 and is a significant shareholder in BiON Plc, is also one of the appointed Directors in Makmur Hydro Sdn Bhd.

   c)    K2M Ventures Sdn Bhd, holds 32.52% of the share capital in BiON plc 
 
                                        31.12.2019           31.12.2018 
                                          RM'000               RM'000 
 Allowance for impairment losses 
 Opening balance                                 3,762                 5,197 
 Reclassification (*)                                -               (1,435) 
 Movement for the year                               -                     - 
 Closing balance                                 3,762                 3,762 
                                    ------------------  -------------------- 
 

* For the financial period to 31 December 2018, Concord Green Energy Sdn Bhd ("CGE") is no longer classified as a related party following the Group's disposal of its interest in the Company. The outstanding amount is now reflected as a Trade Receivable (Note 7).

Amounts owing by related parties principally comprise trade debts due from Megagreen Energy Sdn Bhd ("MGE"). The amounts due are collectible in cash, have arisen in the ordinary course of the business of the Group and are subject to credit terms of 30 days. The amounts owing are analysed as follows:

 
                                    31.12.2019      31.12.2018 
                                      RM'000          RM'000 
 
 Not past due                           20,539                  - 
 Past due by less than 3 months              -                  - 
 Past due by less than 3 -                   -                  - 
  6 months 
 Past due by 6 months and above         30,958             34,088 
                                        51,497             34,088 
                                   -----------  ----------------- 
 

During the year, a repayment arrangement was structured with MGE for a monthly payment of RM3.0m. During the year RM3.13m was received, but as a result of re-negotiations taking place to acquire two (2) biogas power plants located in Perak, in part exchange for some of the receivables this repayment arrangement was put on hold. . Post year end these have been acquired from MGE with the deposits for these plants being used to offset the receivable due to the Group of RM13.80m. Further negotiations are taking place to acquire three (3) further biogas power plants and is expected to be finalised upon satisfactory outcome from the due diligence exercise.

   9.   DUE FROM CUSTOMERS FOR CONSTRUCTION CONTRACTS 
 
                                31.12.2019   31.12.2018 
                                  RM'000       RM'000 
 
 Aggregate cost incurred to 
  date                              52,669       52,669 
 Add: attributable profits          18,386       18,386 
                                    71,055       71,055 
 Less: progress billings          (70,654)     (70,654) 
                                       401          401 
                               -----------  ----------- 
 Represented by: 
 Amounts due from customer 
  contracts                            401          401 
 

10. CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the cash flow statement comprise the following amounts:

 
                                    31.12.2019   31.12.2018 
                                      RM'000       RM'000 
         Cash and bank balances             83          471 
                                   -----------  ----------- 
 

11. STATED CAPITAL

 
                                        No. of shares         RM'000 
      Issued and Fully Paid-Up at 
       no par value 
      1 October 2017                      293,569,812               43,954 
      Issuance of shares: 
      On 19 July 2018                      51,806,000               17,098 
      31 December 2018                    345,375,812               61,052 
                                     ----------------  ------------------- 
 
      31 December 2019                    345,375,812               61,052 
                                     ----------------  ------------------- 
 

During the financial period on 19 July 2018, the Company issued 51,806,000 Ordinary Shares (representing approximately 15% of the Company's issued share capital as enlarged by the Shares) at 6.19p per Ordinary Share to raise approximately RM17.10m (GBP3.21m, at an exchange rate of RM5.3295 to GBP1).

At 31 December 2019, the Company's issued share capital was 345,375,812 ordinary shares.

There were no further movements in the Company's issued share capital during the financial year.

12. LEASES

Group as a lessee

The Group has lease contracts for lands. The Group's obligations under these leases are secured by the lessor's title to the leased assets. The Group is restricted from assigning and subleasing the leased assets.

The Group also has certain leases of office equipment with low value. The Group applies the 'lease of low-value assets' recognition exemptions for these leases.

a) Right of use assets

 
                             Land    Total 
                            RM'000   RM'000 
 
 Cost at 1 January 2019      6,979    6,979 
 Additions                       -        - 
 At 31 December 2019         6,979    6,979 
                           -------  ------- 
 
 
 Accumulated Depreciation at 1 
  January 2019                     1,766   1,766 
 Charge for the year                 453     453 
 At 31 December 2019               2,219   2,219 
                                  ------  ------ 
 
 
 Net carrying amount at 31 December 
  2019                                  4,760   4,760 
                                       ------  ------ 
 

b) Lease liabilities

The carrying amount of lease liabilities is as follows: -

 
                                     2019        2018 
                                    RM'000      RM'000 
 Current liabilities 
  - not later than 1 year               317          - 
 
 Non-current liabilities: 
  - later than one year and not       1,671          - 
  later than five years 
 - Later than 5 years                 3,852          - 
 At 31 December 2019                  5,840          - 
                                   --------    ------- 
 

c) Amounts recognised in profit or loss

 
                                             2019       2018 
                                            RM'000     RM'000 
 
 Depreciation of right of use                  453          - 
  assets 
 Interest expenses on lease liabilities        651          - 
 Lease expenses not capitalised 
  in lease liabilities:                         11          - 
  - Expenses related to low value 
  assets 
 - Expenses related to short term              486          - 
  lease 
 At 31 December 2019                         1,601          - 
                                           -------    ------- 
 

d) Total cash outflow

The Group had a total cash outflows for leases of RM935,000 in current financial year.

13. TRADE AND OTHER PAYABLES

 
                                 31.12.2019   31.12.2018 
                                   RM'000       RM'000 
 
 Trade payables                      35,780       13,797 
 Other payables and accruals         18,142       17,091 
                                     53,922       30,888 
                                -----------  ----------- 
 

The normal credit terms granted to the Group by the suppliers are 90 days (2018: 90 days) from invoice date.

14. SHORT-TERM BORROWINGS

 
                                  31.12.2019   31.12.2018 
                                    RM'000       RM'000 
 
 Mezzanine loan *                      9,269        1,509 
 Hire purchase payables (note 
  15)                                     92           87 
 Term loans (note 17)                  5,764        7,691 
                                      15,125        9,287 
                                 -----------  ----------- 
 

*Mezzanine loan

a) On 23 May 2019, the Group procured a 12-month interest free loan of RM8.40m with Tuan Syed Nazim Syed Faisal for working capital purposes. This has subsequently been converted to shares post year-end, see note 36.

b) On 13 August 2019, the group further procured a 6-month loan of approximately RM0.51m with a UK-based lender at an interest rate of 1.5% per month for working capital purposes. As at year end, the principle remains outstanding.

15. HIRE PURCHASE PAYABLES

 
                                         31.12.2019        31.12.2018 
                                           RM'000            RM'000 
 Minimum hire purchase payments: 
 - not later than one year                      110                     110 
 - later than one year and not later 
  than five years                               318                     406 
 - later than five years                          4                      26 
                                                432                     542 
 Less: Future finance charges                  (45)                    (68) 
                                                387                     474 
                                        -----------  ---------------------- 
 
 Current 
 Not later than one year                         92                      87 
 
 Non-current 
 Later than one year and not later 
  than five years                               291                     362 
 Later than five years                            4                      25 
                                        -----------  ---------------------- 
                                                295                     387 
                                        ----------- 
                                                387                     474 
                                        ===========  ====================== 
 

The hire purchase payables of the Group at the end of the reporting period bare effective interest rates ranging from 5.20% to 5.36% (2018: 5.20% - 5.36%).

16. DEFERRED GRANT INCOME

The Group received a government grant in financial years 2007 and 2008 which was provided for the project "Greenpak", to develop a new individual septic tank using Upflow Anaerobic Sludge Blanket principle. The grant income is amortised on a systematic basis over the useful life of the related patent.

During the financial period ended 31 December 2019, an amortised amount of RM13,000 was recognised (15 months of 2018: RM16,000) as other income in profit or loss.

17. TERM LOANS

 
                                  31.12.2019   31.12.2018 
                                    RM'000       RM'000 
 
      Current (note 14) 
      Term loan 1                      4,742        6,669 
      Term loan 2                      1,022        1,022 
                                 -----------  ----------- 
      Not later than one year          5,764        7,691 
                                 ===========  =========== 
 
 

The term loans are secured against: -

   (i)            Fixed and floating charges over the present and future assets; 

(ii) Assignment of all rights, interest and benefits and the proceeds from the sales of the electricity;

   (iii)         Assignment of all rights, benefits interest and title under industrial building; 
   (iv)          A guarantee by Credit Guarantee Corporation Berhad (Term loan 1 only); 
   (v)           Joint and severally guaranteed by the Directors of the Company. 

Term loan 1 bears effective interest rate at 8% (2018: 8%) per annum and term loan 2 bears effective interest rate at 5% (2018: 5%) per annum.

During the financial year, due to delayed repayment and the lender being in a position to declare the term loan outstanding as immediately due and payable, the entire term loan was reclassified as a current liability. Thereafter, the term loan was fully repaid on 3 July 2020.

18. DEFERRED TAXATION

 
                                     31.12.2019     31.12.2018 
                                       RM'000         RM'000 
    At beginning of the year                  -              - 
    Charge to profit or loss for            631              - 
     the year 
                                    -----------    ----------- 
    At end of the year                      631              - 
                                    -----------    ----------- 
 

19. REVENUE

All revenues are derived from Malaysia.

 
                            31.12.2019   31.12.2018 
                              RM'000       RM'000 
 
    Contract revenue            21,602        1,058 
    Sale of electricity          2,459          866 
                                24,061        1,924 
                           -----------  ----------- 
 

20. OTHER INCOME

 
                                            31.12.2019   31.12.2018 
                                              RM'000       RM'000 
 
    Deferred grant income                           13           15 
    Insurance claim                                 41            - 
    Realised gain on foreign exchange                -           88 
    Unrealised gain on foreign exchange             59           19 
    Waiver of debts                              6,329            - 
                                                 6,442          122 
                                           -----------  ----------- 
 

21. FINANCE INCOME

The finance income recognised is in relation to the interest charged for advances given to the related party, at a rate of 18% per annum (1.5% per month) (see note 26 for detail).

22. FINANCE COSTS

 
                                      31.12.2019   31.12.2018 
                                        RM'000       RM'000 
 
    Bank charges                               8           10 
    Bank guarantee charges                     -           30 
 
    Bank interest                              1            - 
    Hire purchase interest                    20           59 
    Short-term loan interest                 443        1,124 
    Term loan interest                       687          783 
                                     -----------  ----------- 
                                           1,151        1,966 
                                     -----------  ----------- 
 
    Interest on lease liabilities            651            - 
                                     -----------  ----------- 
                                           1,810        2,006 
                                     -----------  ----------- 
 

23. PROFIT BEFORE TAXATION

 
                                                             31.12.2019             31.12.2018 
                                                               RM'000                 RM'000 
 
    Profit before taxation is arrived 
     at after charging/(crediting): 
     - 
    Auditors' remuneration 
        Fees payable to Company's auditor and 
         its associates 
        for the audit of the consolidated financial 
         statements                                                      177                     136 
    Amortisation of intangible assets                                     55                      68 
    Depreciation of right of use assets                                  453                       - 
    Government grant income                                             (13)                    (16) 
    Depreciation of plant and equipment                                2,288                   1,654 
    Impairment loss on trade receivables                               (140)                       - 
     written back 
    Impairment loss on non-trade receivables                             868                       - 
    Rental of premises                                                   107                     173 
    Rental of equipment                                                   12                      12 
    Rental of motor vehicles                                             222                     268 
    Unrealised gain on foreign exchange                                 (59)                    (19) 
    Realised gain on foreign exchange                                    (4)                    (88) 
    Employees provident fund expense                                     331                     433 
 

24. INCOME TAX EXPENSE

The Company is regarded as resident for tax purposes in Jersey and on the basis that the Company is neither a financial service company nor a utility company for the purpose of the Income Tax (Jersey) Law 1961, as amended, the Company is subject to income tax in Jersey at a rate of zero per cent.

BiON Sdn Bhd is granted BioNexus status by a government agency, namely Malaysian Bioeconomy Development Corporation Sdn Bhd (previously known as Malaysian Biotechnology Corporation Sdn. Bhd). Therefore, BiON Sdn Bhd is entitled to tax exemption on the statutory business income derived from approved activities over five consecutive years of assessment commencing from the first year in which BiON Sdn Bhd generates statutory income from the relevant approved activities. The tax exemption expired in the financial period ended 31 December 2018. No further exemption has been granted thereafter.

 
                                                      31.12.2019        31.12.2018 
                                                        RM'000            RM'000 
          Income Tax 
          - Current year                                     544                      - 
          - Under provision in prior years                     -                     11 
          Deferred taxation 
          - Current year                                     936                      - 
          - Not provided for in prior years                (305)                      - 
          Income tax expenses for the year/period          1,175                     11 
                                                     -----------  --------------------- 
 

Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2018: 24%) of the estimated assessable profit for the financial period.

A reconciliation of income tax expense applicable to the profit before taxation at the statutory tax rate to income tax expense at the effective tax rate of the Group is as follows: -

 
 
                                                            31.12.2019        31.12.2018 
                                                              RM'000            RM'000 
 
          Profit/(loss) before taxation                          1,110               (13,653) 
                                                           -----------  --------------------- 
 
          Tax at the statutory tax rate of 24% (2018: 
           24%)                                                    266                (3,276) 
          Tax effect of: 
          Non-deductible expenses                                4,242                  3,483 
          Tax effect on non-taxable income                        (54)                      - 
          Tax exempt income                                    (2,974)                  (207) 
          Under provision of income tax in the previous 
           financial year                                            -                     11 
          Over provision of deferred taxation in the 
           previous financial year                               (305)                      - 
          Income tax expenses for the year/period                1,175                     11 
                                                           -----------  --------------------- 
 

25. DIRECTORS' EMOLUMENTS

The amount of remuneration received by each director in the year was as follows:

 
                                                            Approved 
                                  Remuneration    Fees     contribution   Total 
                                    RM'000       RM'000      RM'000       RM'000 
  31.12.2019 
  Syed Nazim bin Syed Faisal               360       64              45      469 
  Saravanan Rasaratnam                     300       63              37      400 
  Navindran Balakrishnan                   300       63              37      400 
  Datuk Dr. Haji Radzali 
   Hassan                                    -       64               -       64 
  Aditya Chathli                             -       63               -       63 
                                           960      317             119    1,396 
                               ---------------  -------  --------------  ------- 
 
                                                            Approved 
                                  Remuneration    Fees     contribution   Total 
                                    RM'000       RM'000      RM'000       RM'000 
  31.12.2018 
  Syed Nazim bin Syed Faisal                30       16               4       50 
  Saravanan Rasaratnam                     450      143              55      648 
  Navindran Balakrishnan                   450      143              55      648 
  Sivadas Kumar                            260      124              32      416 
  Datuk Dr. Haji Radzali 
   Hassan                                    -      143               -      143 
  Dato' Dr. Sivamohan 
   S. Namasivayam                            -      124               -      124 
  Aditya Chathli                             -      178               -      178 
                                         1,190      871             146    2,207 
                               ---------------  -------  --------------  ------- 
 

26. RELATED PARTY TRANSACTIONS

   a)    Identities of Related Parties 

Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control.

In addition to the information detailed elsewhere in the financial statements, the Group has related party relationships with its directors, key management personnel and entities within the same group of companies.

Other than those disclosed elsewhere in the financial statements, the Group also carried out the following significant transactions with the related parties during the financial period: -

 
 
                                                        31.12.2019             31.12.2018 
                                                          RM'000                 RM'000 
 
         i) Megagreen Energy Sdn. Bhd. 
            - Contract revenue                                   20,539                      - 
            - Interest income                                     2,265                      - 
            - Amount owing from                                  59,588                 34,569 
 
         ii) K2M Ventures Sdn Bhd 
            - Amount owing to                                         -                (3,972) 
            - Other income (waive of debts)                       1,633                      - 
 
         iii) Makmur Hidro Sdn Bhd 
            - Amount owing from                                      66                     66 
 
         iv) Saravanan Rasaratnam 
            - Director fees due                                       -                  (363) 
            - Director advance                                        -                  (841) 
            - Director fees                                          63                    143 
            - Other income (waive of debts)                       3,595                      - 
 
         v) Navindran Balakrishnan 
            - Director fees due                                       -                  (363) 
            - Director advance                                        -                (1,065) 
            - Director fees                                          63                    143 
            - Other income (waive of debts)                       1,101                      - 
 
         vi) Serba Dinamik group of companies 
            - Amount owing to                                  (10,078)                      - 
            - Services rendered from                            (8,397)                  (460) 
 
         vii) Syed Nazim Syed Faisal 
            - Mezzanine loan                                    (8,406)                      - 
            - Director advance                                  (1,305)                      - 
            - Director fees due                                    (81)                   (16) 
            - Director fees                                          64                     16 
 
         viii) Datuk Dr. Hj. Radzali Hassan 
            - Director fees due                                   (395)                  (323) 
            - Director fees                                          64                    143 
 
         ix) Aditya Chathli 
            - Director fees due                                   (242)                  (174) 
            - Director fees                                          63                    178 
 
         x) Dato' Dr. Sivamohan S. Namasivayam 
            - Director fees due                                       -                  (266) 
            - Director fees                                           -                    124 
 
         xi) Sivadas Kumar 
            - Director fees due                                   (288)                  (335) 
            - Director fees                                           -                    124 
 
 

Related parties: -

   i)     The group via its subsidiary, BiON Sdn Bhd, hold 15% shares in Megagreen Energy Sdn Bhd. 

ii) K2M Ventures Sdn Bhd ("K2M"), holds 32.52% shares in BiON plc. During the year, K2M waived debts due from the Group amounting to RM1.63m.

iii) Mr. Saravanan, who was a director and shareholder in BiON plc for the year ended 31 December 2019, is also one of the appointed Directors in Makmur Hydro Sdn Bhd.

iv) Mr. Saravanan, who was a director and shareholder in BiON plc for the year ended 31 December 2019. During the year, all amounts owed to the director were waived and amounts were realised in other income.

v) Mr. Navindran, who was a director and shareholder in BiON plc for the year ended 31 December 2019. During the year, all amounts owed to the director were waived and amounts were realised in other income.

vi) Serba Dinamik group of companies , one of the significant shareholders in BiON plc for the year ended 31 December 2019.

vii) Syed Nazim Syed Faisal , being an Executive Director in BiON plc for the year ended 31 December 2019.

viii) Aditya Chathlli, being a Non-Executive Director in BiON plc for the year ended 31 December 2019.

ix) Datuk Dr. Hj. Radzali Hassan, being a Non-Executive Director in BiON plc for the year ended 31 December 2019.

x) Dato' Dr. Sivamohan S. Namasivayam, who was a Non-Executive Director in BiON plc, resigned on 25 October 2018.

   xi)   Sivadas Kumar , who was an Executive Director in BiON plc, resigned on 25 October 2018. 
   b)    Compensation of key management personnel 

The remuneration of directors and other members of key management personnel during the period are as follows: -

 
                                                            31.12.2019   31.12.2018 
                                                              RM'000       RM'000 
 
            Short-term employee benefits                         1,632        2,355 
            Defined contribution plan (EPF)                        273          183 
                                                                 1,905        2,538 
                                                           -----------  ----------- 
 
              Included in the total key management 
              personnel 
            compensation are: - 
 
            Directors' remuneration                                960        1,336 
            Executive Directors' Fees                              190          426 
            Non-Executive Directors' Fees                          127          445 
                                                                 1,277        2,207 
                                                           -----------  ----------- 
 
 

The key management personnel are those personnel having authority and responsibility for planning, directing and controlling the activities within the Group, either directly or indirectly.

The payment of emoluments to the director is disclosed in the remuneration report.

27. EARNINGS PER SHARE

The calculation of earnings per share is based on the following earnings and number of shares:

 
                                        31.12.2019    31.12.2018 
 
    Loss attributable to the owners 
     of the 
     Company (RM'000)                         (187)      (13,661) 
 
    Weighted average number of 
     shares                             345,375,812   345,375,812 
 
    Warrant instruments                   7,232,013     7,232,013 
 
    Diluted number of shares            352,607,825   352,607,825 
                                       ------------  ------------ 
 
    Basic earnings per share (RM)           (0.001)        (0.04) 
    Diluted earnings per share 
     (RM)                                   (0.001)        (0.04) 
                                       ------------  ------------ 
 

Earnings per share has been calculated by dividing the profit or loss for the year attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the year.

The diluted number of shares includes those reserved under warrants (note 32).

28. RESERVES

   a)    Foreign currency translation reserves 

The foreign currency translation reserves arose from the translation of the financial information of foreign subsidiaries and are not distributable by way of dividends.

   b)    Merger reserves 

The accounting treatment for Group reorganisations is scoped out of IFRS 3. Accordingly, as required under IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, the Group has referred to current UK GAAP to assist its judgement in identifying a suitable accounting policy. The introduction of the holding company, BiON plc, had been accounted for as a capital reorganisation using the merger accounting principles prescribed under current UK GAAP. Therefore, the consolidated financial statements of BiON plc are presented as if the Company has always been the holding company for the Group.

The use of merger accounting principles has resulted in a balance on Group capital and reserves that have been classified as a merger reserve and included in the Group's shareholders' funds. The consolidated financial statements include the results of the Company and all its subsidiary undertakings made up to the same accounting date.

29 . CONTINGENCIES

No provisions are recognised on the following matters as it is not probable that a future sacrifice of economic benefits will be required, or the amount is not capable of reliable measurement: -

 
                                           31.12.2019   31.12.2018 
                                             RM'000       RM'000 
 
 Corporate guarantee given to licensed 
  banks for credit facilities granted 
  to a related party                           32,489       32,729 
                                          -----------  ----------- 
 

The Group has provided Megagreen Energy with a corporate guarantee in support of a loan facility. Credit Guarantee Corporation Malaysia Berhad has confirmed that repayment of the 60% of the amount borrowed by Megagreen under the facility is guaranteed by Credit Guarantee Corporation Malaysia Berhad up to June 2025 pursuant to the Green Technology Financing Scheme - established by the Malaysian government. In July 2020, the loan was partially repaid, leaving a balance of RM9.5m. On that basis, the Directors expect the exposure of BiON under the guarantee to be limited to approximately RM3.8m (2018: RM14.1m).

30. CAPITAL COMMITMENTS

At 31 December, the Group had the following capital commitments in respect to plant & equipment:

 
                                              31.12.2019     31.12.2018 
                                                RM'000         RM'000 
 
 Approved and contracted for construction 
  of plant and equipment                                  -       17,064 
                                              -------------  ----------- 
 

31. OPERATING SEGMENTS

   (a)   Operating segments 

Operating segments are prepared in a manner consistent with the internal reporting provided to the management as its chief operating decision maker in order to allocate resources to segments and to assess their performance. Currently the Group operates under two operating segments providing consulting and contract services to customers in the renewable energy sector and the supply of power to National Grid.

Information on geographical segments is not presented as the Group operates wholly in Malaysia where all of its assets and liabilities are located.

The information provided to management for the reportable segments during each year/period are as follows:

 
                                   Consulting 
 Business Segments                  & contract    Power     Head office     Total 
                                     RM'000      RM'000       RM'000        RM'000 
 31.12.2019 
 Contract revenues                      21,602         -               -     21,602 
 Power sold                                  -     2,459               -      2,459 
                                  ------------  --------  --------------  --------- 
 Group revenues                         21,602     2,459               -     24,061 
 
                                                 (1,4 59 
 Gross profit/(loss)                     4,511         )               -     3 ,052 
 Net profit/(loss)                       1,720   (1,785)               -       (65) 
 
 Segment Assets                         72,432    52,652           2,431    127,515 
 Segment Liabilities                    27,105    19,374          30,980     77,459 
 Capital Expenditure                         -     5,434               -      5,434 
 Depreciation and amortisation               -     2,553             243      2,796 
 Impairment loss on receivables              -         -             868        868 
 
                                   Consulting 
 Business Segments                  & contract    Power     Head office     Total 
                                     RM'000      RM'000       RM'000        RM'000 
 31.12.2018 
 Contract revenues                       1,058         -               -      1,058 
 Power sold                                  -       866               -        866 
                                  ------------  --------  --------------  --------- 
 Group revenues                          1,058       866               -      1,924 
 
 Gross Profit/(Loss)                       222   (2,061)               -    (1,839) 
 Net Loss                              (6,282)   (7,382)               -   (13,664) 
 
 Segment Assets                         51,547    43,957           4,245     99,749 
 Segment Liabilities                    15,965    16,875          15,695     48,535 
 Capital Expenditure                         -     6,746               -      6,746 
 Depreciation and amortisation               -     1,418             304      1,722 
 
 
   (b)   Information about major customers 

During the year, the following customers contributed more than 10% of the revenue for the Group:

 
                                     31.12.2019   31.12.2018 
                                       RM'000       RM'000 
 
 Megagreen Green Sdn Bhd                 20,539            - 
 Felcra Processing & Engineering 
  Sdn Bhd                                     -        1,058 
 Tenaga Nasional Berhad                   2,459          866 
                                         22,998        1,924 
                                    -----------  ----------- 
 

32. WARRANT INSTRUMENTS

 
                                   31.12.2019                           31.12.2018 
                        Average exercise        Number       Average exercise        Number 
                        price per warrants    of warrants    price per warrants    of warrants 
 
 At 1 January                       0.092p      7,232,013                0.092p      7,232,013 
                      --------------------  -------------  --------------------  ------------- 
 As at 31 December                  0.092p      7,232,013                0.092p      7,232,013 
                      --------------------  -------------  --------------------  ------------- 
 

On 6 May 2016, the Company granted 1,383,333 warrants to S.P. Angel Corporate Finance LLP, the Company's previous nominated adviser, at the exercise price of 9 pence each, which were exercisable immediately upon grant, with an expiring date of 5 May 2021.

On 19 June and 28 June 2017, the Company issued 5,848,680 warrants, at the exercise price of an average closing bid price at three trading days prior to the day of notice to exercise, to subscribers to a private placing arranged by Charles Street Securities Europe LLP ("CSS"), and to CSS as part of the fee arrangements for arranging the placement. Of the total warrants issued, 2,777,778 were issued to CSS as fees payable in connection with that placement. The warrants issued to subscribers are outside the scope of IFRS 2. In accordance with IFRS 2 the fair value of the warrants issued as fees for the placement services provided has been estimated as RM220,000. This has been recognised within the stated capital component of equity as the costs were directly incurred in raising the related equity funds.

33. ULTIMATE CONTROLLING PARTIES

At the reporting date, the Directors consider there is no ultimate controlling party.

34. FINANCIAL INSTRUMENTS

The Group's activities are exposed to a variety of market risks (including foreign currency risk, interest rate risk and equity price risk), credit risks and liquidity risks. The Group's overall financial risk management policy focuses on the unpredictability of finance market and seek to minimise potential adverse effects on the Group's financial performance by having in place adequate financial resources for the development of the Group's business whilst managing its market risk, credit risk and liquidity risk.

The Group holds the following financial instruments:

 
                                        31.12.2019   31.12.2018 
                                          RM'000       RM'000 
 Financial Assets 
 Trade receivables                          14,695       18,577 
 Other receivables and deposits              2,365        3,198 
 Amount owing by contract customers            401          401 
 Amount owing by related parties            59,654       34,635 
 Cash and bank balances                         83          471 
                                            77,198       57,282 
                                       -----------  ----------- 
 
 Financial Liabilities 
 Trade payables                             35,780       13,797 
 Other payables and accruals                18,142       17,091 
 Amount owing to related parties                 -        3,972 
 Amount owing to directors                   1,006        3,891 
 Hire purchase payables                        387          474 
 Lease liabilities                           5,840            - 
 Term loans                                 15,033        9,200 
                                            76,188       48,425 
                                       -----------  ----------- 
 
   34.1     Financial Risk Management Policies 

The following sections provide details on the Group's exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks.

34.1.1 Market Risk

   (a)           Foreign Currency Risk 

The Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than functional currency. The currencies giving rise to this risk are primarily the United States Dollar ("USD") and Great British Pound ("GBP"). Foreign currency risk is monitored closely on an on-going basis to ensure that the net exposure is at an acceptable level. At the end of the reporting period, the Group does not have any derivative financial instruments used to hedge foreign currency risk.

34. FINANCIAL INSTRUMENTS (CONT'D)

34.1.1 Market Risk (cont'd)

The Group exposure to foreign currency risk, based on the carrying amounts at the reporting date is as follows:

 
                                                  USD       GBP       IDR        RM       TOTAL 
 31.12.2019                                      RM'000    RM'000    RM'000    RM'000     RM'000 
 Financial Assets 
 Trade receivables                                    -          -    1,065     13,630     14,695 
 Other receivables and deposit                        -          -        -      2,365      2,365 
 Amount owing by contract customers                   -          -        -        401        401 
 Amount owing by related parties                      -          -        -     59,654     59,654 
 Cash and bank balance                                1         10        -         72         83 
                                                      1         10    1,065     76,122     77,198 
                                                -------  ---------  -------  ---------  --------- 
 Financial Liabilities 
 Trade payables                                     867          -        -     34,913     35,780 
 Other payables and accruals                          -      1,071        -     17,071     18,142 
 Amount owing to directors                            -      1,006        -          -      1,006 
 Hire purchases                                       -          -        -        387        387 
 Lease liabilities                                    -          -        -      5,840      5,840 
 Term loans                                           -      9,269        -      5,764     15,033 
                                                    867     11,346        -     63,975     76,188 
                                                -------  ---------  -------  ---------  --------- 
 
 Net financial assets/(liabilities)               (866)   (11,336)    1,065     12,147      1,010 
 Less: Net financial liabilities denominated          -          -        -   (12,147)   (12,147) 
 in the Group's functional currency 
 Currency exposure                                (866)   (11,336)    1,065          -   (11,137) 
                                                -------  ---------  -------  ---------  --------- 
 

34. FINANCIAL INSTRUMENTS (CONT'D)

34.1.1 Market Risk (cont'd)

 
                                         USD       GBP      IDR        RM       TOTAL 
 31.12.2018                             RM'000   RM'000    RM'000    RM'000     RM'000 
 Financial Assets 
 Trade receivables                           -         -        -     18,577     18,577 
 Other receivables and 
  deposits                                   -         -        -      3,198      3,198 
 Amount owing by contract customers          -         -        -        401        401 
 Amount owing by related parties             -         -        -     34,635     34,635 
 Cash and bank balance                      13         -        -        458        471 
                                            13         -        -     57,269     57,282 
                                       -------  --------  -------  ---------  --------- 
 Financial Liabilities 
 Trade payables                            936         -        -     12,861     13,797 
 Other payables and accruals                 -     1,774        -     15,317     17,091 
 Amount owing to related 
  parties                                    -     1,938        -      2,034      3,972 
 Amount owing to directors                   -     1,986        -      1,905      3,891 
 Hire purchase                               -         -        -        474        474 
 Term loans                                  -     1,509        -      7,691      9,200 
                                           936     7,207        -     40,282     48,425 
                                       -------  --------  -------  ---------  --------- 
 
 Net financial assets/(liabilities)      (923)   (7,207)        -     16,987      8,857 
 Less: Net financial liabilities 
  denominated                                -         -        -   (16,987)   (16,987) 
 in the Group's functional currency 
 Currency exposure                       (923)   (7,207)        -          -    (8,130) 
                                       -------  --------  -------  ---------  --------- 
 

34. FINANCIAL INSTRUMENTS (CONT'D)

34.1.1 Market Risk (cont'd)

   (a)        Foreign Currency Risk (cont'd) 

The following details the sensitivity analysis of the Group's profit after tax to a reasonably possible change in the foreign currencies at the end of the reporting period with all other variables held constant:

 
 
                                Increase/(Decrease) 
 
                              31.12.2019   31.12.2018 
                                  RM           RM 
 
  Effects on Profit After 
   Taxation 
  USD/RM 
  - strengthened by 1%           (8)          (9) 
  - weakened by 1%                8            9 
  GBP/RM 
  - strengthened by 1%           (11)         (72) 
  - weakened by 1%                11           72 
  IDR/RM 
  - strengthened by 1%           (1)           - 
  - weakened by 1%                1            - 
 

A weakening of the above currencies against Ringgit Malaysia at the reporting date would have had the equal but opposite effect on the above currencies to the amounts shown above, with all other variables held constant.

   (b)           Interest Rate Risk 

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to interest rate risk arises mainly from interest-bearing financial liabilities. The Group's policy is to obtain the most favourable interest rates available. Any surplus funds of the Group will be placed with licensed financial institutions to generate interest income.

The sensitivity analysis is not presented as the sensitivity impact is immaterial because the loan has a fixed interest rate which is subsequently rolled-up into the principal.

   (c)           Equity Price Risk 

The Group does not have any quoted investments and hence is not exposed to equity price risk.

34.1.2 Credit Risk

The Group's exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis.

The Group uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due, which are deemed to have higher credit risk, are monitored individually.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified (where applicable). Impairment is estimated by management based on prior experience and the current economic environment.

The Group provided a financial guarantee to financial institutions for credit facilities granted to an associate undertaking, as disclosed in note 28 to the financial statements. The Group monitors its exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an on-going basis.

Credit risk concentration profile

The Group's major concentration of credit risks relates to the amount owing by 2 (2018: 2) customers which constitutes approximately 90% (2018: 90%) of its trade & other receivables at the end of the reporting period.

The ageing analysis of receivables (including amount owing by associates and amount owing by affiliates) and at the end of the reporting period is disclosed in note 7 and note 8.

At the end of the reporting period, trade receivables that are individually impaired were those with significant long outstanding obligations. These receivables are not secured by any collateral or credit enhancement but have nevertheless demonstrated that they are meeting their obligations though payments have been protracted.

34. FINANCIAL INSTRUMENTS (CONT'D)

34.1.3 Liquidity Risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure as far as possible, that they will have sufficient liquidity to meet its liabilities when they fall due.

The following table sets out the maturity profile of the financial liabilities at the reporting date based on contractual undiscounted cash flows:

 
                                                                      Contractual 
                                    Effective                         undiscounted 
                                  interest rate    Carrying amount      cashflow     Within 1 year   1-5 years 
                                        %              RM'000           RM'000          RM'000        RM'000 
 31.12.2019 
 Trade payables                                             35,780          35,780          35,780           - 
 Other payables and accruals                                18,142          18,142          18,142           - 
 Amount owing to directors                                   1,006           1,006               -       1,006 
 Hire purchase payables              6.4-6.9                   387             387              92         295 
 Lease liabilities                                           5,840           5,840             317       5,523 
 Term loans                          5.0-8.0                15,033          15,033          15,033           - 
                                                            76,188          76,188          69,364       6,824 
                                                  ----------------  --------------  --------------  ---------- 
 
 31.12.2018 
 Trade payables                                             13,797          13,797          13,797           - 
 Other payables and accruals                                17,091          17,091          17,091           - 
 Amount owing to related 
  parties                                                    3,972           3,972           3,972           - 
 Amount owing to directors                                   3,891           3,891               -       3,891 
 Hire purchase payables             6.4 - 6.9                  474             474              87         387 
 Term loans                         5.0 - 8.0                9,200           9,200           9,200           - 
                                                            48,425          48,425          44,147       4,278 
                                                  ----------------  --------------  --------------  ---------- 
 

34. FINANCIAL INSTRUMENTS (CONT'D)

34.1.4 Fair Values Measurements

The fair values of the financial assets and financial liabilities maturing within the next 12 months approximated their carrying amounts due to the relatively short-term maturity of the financial instruments.

 
 
                Fair Value of Financial Instruments         Fair Value of Financial           Total     Carrying 
                                                                  Instruments 
                       Carried at Fair Value               Not Carried at Fair Value          Fair       Amount 
                                                                                              Value 
                 Level 1     Level 2      Level 3       Level 1      Level 2     Level 3 
                 RM'000       RM'000       RM'000        RM'000      RM'000      RM'000      RM'000      RM'000 
 31.12.2019 
 Term loans              -            -             -           -      15,033           -      15,033     15,033 
 Hire 
  purchase 
  payables              -            -             -            -         387           -         387        387 
 Amount owing 
  to 
  directors             -            -             -            -           -       2,183       2,183      2,183 
               ----------  -----------  ------------   ----------  ----------  ----------  ----------  --------- 
 
 31.12.2018 
 Term loans              -            -             -           -       9,200           -       9,200      9,200 
 Hire 
  purchase 
  payables              -            -             -            -         474           -         474        474 
 Amount owing 
  to 
  directors             -            -             -            -           -       3,891       3,891      3,891 
               ----------  -----------  ------------   ----------  ----------  ----------  ----------  --------- 
 

- Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

- Level 2: Valuation techniques for which the lowest level input that is significant to the fair value.

- Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

34. FINANCIAL INSTRUMENTS (CONT'D)

34.1.4 Fair Values Measurements (CONT'D)

Fair Value of Financial Instruments Not Carried at Fair Value

The fair values, which are for disclosure purposes, have been determined using the following basis: -

(i) The fair value of term loan with fixed interest rate is determined by discounting the relevant cash flows using current market interest rate for similar instruments at the end of the reporting period. The interest rate (per annum) used to discount the estimated cash flows is as follows: -

 
                                     31.12.2019     31.12.2018 
                                         %              % 
 Hire purchase payables                 6.4-6.9        6.4-6.9 
 Term loan (fixed interest 
 rate)                                  5.0-8.0        5.0-8.0 
                                    ===========    =========== 
 

(ii) The carrying amount of term loan with variable interest rate approximates its fair value.

(iii) The fair value of amount owing to directors (non-current) is determined by discounting the relevant cash flows using current market interest rates for similar instruments at rates of 4.5% per annum.

35. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that it will be able to maintain an optimal capital structure so as to support their businesses and maximize shareholders' value. To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.

The Group manages its capital based on debt-to-equity ratio that complies with debt covenants and regulations, if any. The debt-to-equity ratio is calculated as total borrowings from financial institutions divided by total equity.

There was no change in the Group's approach to capital management during the financial period.

The debt-to-equity ratio of the Group at the end of the reporting period was as follows:

 
 
                                  31.12.2019   31.12.2018 
                                    RM'000       RM'000 
 
 Hire purchase payables                  387          474 
 Term loans                           15,033        9,200 
 Less: Cash and bank balances           (83)        (471) 
 Net debt                             15,337        9,203 
                                 -----------  ----------- 
 
 Total shareholders' 
  equity                              49,893       51,175 
                                 -----------  ----------- 
 
 Debt-to-equity ratio                   0.31         0.18 
 

36. SIGNIFICANT EVENTS OCCURING AFTER THE REPORTING PERIOD

Investment in associate

The Group via its subsidiary, BiON Sdn Bhd, holds 15% of the share capital in Megagreen Energy Sdn Bhd.

Although the Group holds less than 20% of the voting power in Megagareen Energy Sdn. Bhd., the Group is able to exercise significant influence due to its representation on the board of directors, effective 3 July 2020. Therefore, from 3 July 2020, the investment in Megagreen will be treated as an associate.

As a result of prior impairments this investment has nil value (2018: RM nil).

Short term loan conversion into ordinary shares

On 24 January 2020, the Group announced that, at the Extraordinary General Meeting ("EGM"), the Resolution placed in respect of the approval of the waiver under Rule 9 of the City Code and taken by Independent Shareholders on a poll was approved in regards to loan conversion to ordinary shares.

In view of the above and other the relevant approved application, i.e. London Stock Exchange, on 27 January 2020, the loan of RM8.4 million from Syed Nazim Syed Faisal was converted into 86,343,953 new Ordinary Shares representing 20 per cent (20%) of the enlarged share capital at an effective share price of approximately 1.85 pence. As a result of the shares issued to Syed Nazim Syed Faisal's, the Concert Party's shareholding increased to 172,687,543 Ordinary Shares (40% of the enlarged share capital of the Group). The Concert Party's shareholding is disclosed within the table below.

 
                                                             Total number of ordinary 
                                  Total number of ordinary      shares inserted in 
                                     shares inserted in        following completion 
                                    following completion       Debt for Equity swap 
   Concert Party                    Debt for Equity swap         as percentage of 
                                                              Enlarged Share Capital 
 Serba Dinamik International                    51,806,000                        12% 
 Serba Dinamik Group                            34,537,581                         8% 
 Syed Faisal Syed Nazim                         86,343,953                        20% 
 
 Concert Party aggregate 
  total                                        172,687,534                        40% 
                               ---------------------------  ------------------------- 
 

Loan from related party

On 6 February 2020, the Group via its subsidiary, BiON Sdn Bhd (Borrower), entered in to a facility agreement with Serba Dinamik Sdn Bhd (Lender), to obtain a loan of RM10 million for working capital purposes.

The Group unconditionally agreed to pay profit for this facility at the rate of five per cent (5%) per annum for a term of fifty-four (54) months commencing from 6 August 2020.

Bank borrowing

On 24 February 2020, SME Bank had approved bank borrowing of RM55.3 million for the Group via its subsidiary, BiON Sdn Bhd as follow:

 
 Bank Borrowing     RM '000   Purpose 
 Term loan 1         32,000   To part finance the acquisition of 
                               2 biogas power plant 
                   --------  --------------------------------------- 
 Term loan 2          6,200   To redeem existing facility from MDV 
                   --------  --------------------------------------- 
 Term loan 3         12,100   To part finance remaining project cost 
                               of biogas power plant 
                   --------  --------------------------------------- 
 Revolving credit     5,000   For working capital requirement 
                   --------  --------------------------------------- 
 

The bank borrowing bear interest rate at 4% above base financing rate per annum and repayable within a 15-year period.

Acquisition of biogas power plant

On 8 April 2020, the Group via its subsidiary, BiON Sdn Bhd, entered into sale and purchase agreements to acquire 2 units of biogas power plant that belong to the related company, Megagreen Energy Sdn Bhd for consideration of RM45,990,000. 30% of the sales proceed have been set off with the amount due from the related company. The balance of 70% was paid in cash, financed by bank borrowings as above.

Factoring facility

On 20 April 2020, the Group via its subsidiary, BiON Sdn Bhd, entered into a factoring facility agreement with Maax Factor Sdn Bhd (Factor), at a maximum margin of eighty per cent (80%) of the purchased debt, amounting to RM10 million, with a credit period not exceeding ninety (90) days from the date of the invoice.

The Group has agreed to pay factoring charges at two per cent (2%) of the purchase debt. The Group has also agreed on the recourse charge at two point five per cent (2.5%) per month on the outstanding balance which remain unpaid after the expiry of the credit period.

On 30 April 2020, the Group has successfully received RM9.74 million (net facility) from the Factor.

COVID-19

The financial statements are approved during a period where there is much uncertainty as a result of the emergence and international spread of a coronavirus (COVID-19) and responses to control its spread since February 2020. The Group has been impacted by the economic effects of these responses, resulting in depressed revenue in the 2020 financial year. However, management consider the Group to be in a good position to weather this due to its net asset position, positive cash balance and the available loans and borrowings.

The ultimate impact of COVID-19 on the world and the economy is yet to be seen. However, through appropriate consideration of risks and mitigating actions both already taken and available to be taken, the directors consider it appropriate to prepare these accounts on a going concern basis.

The spread of the global pandemic is considered to be a non-adjusting post-balance sheet event for 31 December 2019 financial statements and the financial statements have accordingly been prepared on this basis.

37. COMPARATIVE FIGURES

The current financial year covers the twelve months year ended 31 December 2019 while the comparative figures cover the fifteen months period from 1 October 2017 to 31 December 2018. For the above reason, the financial statements for the current year are not comparable to the previous financial period.

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END

FR FLFERARIIVII

(END) Dow Jones Newswires

September 30, 2020 13:11 ET (17:11 GMT)

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