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
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