Interim Results

26 October 2020

BiON plc

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

Interim Results

BiON (AIM: BION), an environmental engineering, wastewater treatment and renewable energy solutions company, announces its interim results for the six months ended 30 June 2020.

Financial Summary

· Revenue increased to RM27.2m (H1 2019: RM1.9m)

· Gross profit of RM0.7m (H1 2019: RM0.1m loss)

· Operating loss reduced to RM2.8m (H1 2019: RM3.7m loss)

· Loss before tax reduced to RM2.7m (H1 2019: RM4.4m)

· Cash and cash equivalents at 30 June 2020 were RM0.3m (31 December 2019: RM0.08m)

Operational Summary

· Completed engineering, procurement, construction and commissioning ("EPCC") contracts for wastewater treatment and infrastructure projects despite disruption to operations caused by COVID-19 pandemic

· Progressed upgrading and engineering works at fully-owned Kahang and Malpom biogas power plants

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

Syed Nazim bin Syed Faisal, Chief Executive Officer, said: "I am pleased that we were able to complete our EPCC projects to ensure a significant increase in revenue over the first half of last year, despite COVID-19 and the public lockdown. We also continued to progress our Kahang and Malpom biogas power plants and, post period, acquired two further plants, bringing our installed capacity to 7.0MW. Our focus is now on commencing commercial operations at our two new plants, which, subject to receiving regulatory approval, we expect to achieve by year end. We look forward to reporting on our progress and delivering sustainable growth."

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:

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 2020, the Group continued to source and procure EPCC projects. This included providing hydraulic and water supply-related engineering and technology services at a wastewater treatment plant in Terengganu, Malaysia. The Group also continued with the upgrading works at its fully-owned biogas power plants at Kahang and Malpom to enable full operations to recommence. However, progress was hindered during the period by the onset of the COVID-19 pandemic and associated government restrictions on the movement of goods and people as described below.

Post period end, through its subsidiary, BiON Sdn Bhd, the Group conditionally acquired two biogas power plants, at Nasarudin and Seberang Perak, from Megagreen Energy Sdn Bhd ("MGE"), an associate company of the Group. The plants, with a combined installed capacity of 3.0MW, are under the Malaysian FiT programme with 16-year power purchase agreements with Tenaga Nasional Berhad, the country's largest integrated electricity company. The construction of these plants is complete. They are now pending testing by the authorities to enable interconnection with the electricity grid and, following verification, the receipt of regulatory approval to commence commercial operations. The Group expects this to occur by year end, subject to government restrictions related to the COVID-19 pandemic.

COVID-19 Update

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. However, 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 Group, the movement of resources, materials and equipment to sites or offices progressed slowly. The CMCO subsequently transitioned to a Recovery Movement Control Order ("RMCO") on 10 June 2020, under which interstate travel was allowed and most sectors were permitted to reopen while adhering to the government's pandemic-related Standard Operating Procedures. Post period end, on 14 October, the Malaysian government introduced a new CMCO for much of the country, which is expected to last a minimum of two weeks. While permitting most business sectors to remain open, the CMCO has instated the requirement for employees to have a letter of authority to be able to travel between districts or states.

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 ("Serba"), which will be called upon if required to continue to meet its liabilities.

Financial Review

Revenue for the six months ended 30 June 2020 significantly increased to RM27.2m (H1 2019: RM1.9m), which was generated by the provision of EPCC services. Gross profit was RM0.7m compared with a gross loss of RM0.1m for the same period of the prior year, which reflects the higher revenue for the first half of 2020.

Operating loss for the period was reduced to RM2.8m (H1 2019: RM3.7m loss) due to the greater revenue. The Group recognised a net finance income of RM0.08m (H1 2019: net finance costs of RM0.8m). As a result, loss before tax was reduced to RM2.7m (H1 2019: RM4.4m loss). The Group was not subject to tax due to it being lossmaking and, therefore, loss after tax was also RM2.7m (H1 2019: RM4.4m loss).

On a consolidated level, basic loss per share for the six months ended 30 June 2020 was RM0.006 (H1 2019: RM0.012 loss per share) based on the weighted number of ordinary shares.

Cash and cash equivalents at 30 June 2020 were RM0.3m (31 December 2019: RM0.08m; 30 June 2019: RM0.06m).

On 24 January 2020, the Group converted a loan of approximately RM8.40m into ordinary shares of BiON plc. The loan had been procured during 2019, for working capital purposes, from a director of the Company, Syed Nazim Syed Faisal.  

During the period, 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 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.

Outlook

For the second half of the year, BiON is focused on progressing the two recently acquired biogas power plants, which it expects to commence commercial operations by year end subject to the receipt of the required regulatory approvals and COVID-19 disruption. The Group has completed a further EPCC project during the second half and anticipates delivering another contract before the end of the year. BiON also intends to continue work on its Kahang and Malpom plants, which, following the reinstatement of certain lockdown restrictions, the Group expects to complete early next year.  

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, and with the ongoing financial support from Serba, the Board continues to look to the future with confidence and to delivering sustainable growth.

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

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended

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

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

For the six months ended

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

NOTES TO THE FINANCIAL STATEMENT

For the six months ended 30 June

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:

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 ½, 58100 Kuala Lumpur.

2. basis of preparation

The consolidated financial information for the six-month period ended 30 June 2020 has 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").

The consolidated financial information is unaudited and does not constitute statutory financial statements. The interim financial information has been prepared on a historical cost basis, and fair value method will be used if it is relevant.

The financial information is presented in Malaysian Ringgit ("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 ringgit ("RM'000") except where otherwise indicated.

A copy of the audited consolidated financial statements for the year ended 31 December 2019 is available on the Company's website.

The interim financial information for the six months ended 30 June 2020 was approved by the Directors on 23 October 2020.

Going Concern

The interim financial information has been 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 interim financial information. The key conclusions are summarised below.

The Group made a loss for the period of RM2.7m (H1 2019: loss of RM4.4m) and recorded a net cash outflow from operating activities of RM7.9m (H1 2019: inflow of RM4.3m). At 30 June 2020, the Group held cash and cash equivalents of RM0.32m (H1 2019: RM0.06m) and had current liabilities of RM75.0m (H1 2019: RM33.0m).

As described in note 11, a trade receivable amount of RM10.51m (H1 2019: RM10.51m) was due from Concord Green Energy Sdn Bhd ("CGE") as at 30 June 2020. 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 13, an amount of RM66.30m (H1 2019: RM35.36m) was due from Megagreen Energy Sdn Bhd ("MGE") as at 30 June 2020. During the financial reporting period, the Group via its subsidiary, BiON Sdn Bhd, entered into sale and purchase agreements on 8 April 2020 to acquire three biogas power plant units located in Perak for consideration of RM45,990,000.00. The completion of the sale took place in Q3 2020, where 30% of the sales proceeds have been offset against the amount due and the balance of 70% was paid in cash, financed by bank borrowings. Further negotiations are taking place to acquire an additional three 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 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 from the date of approval of these financial statements.

3. SEASONAL OR CYCLICAL FACTORS

There are no seasonal factors that materially affect the operations of any company in the Group.

4. ITEMS OF AN UNUSUAL NATURE

There were no other unusual items affecting assets, liabilities, equity, net income or cash flows due to their nature, size or incidence for the financial period ended 30 June 2020.

5. MATERIAL CHANGES IN ACCOUNTING ESTIMATES

The preparation of unaudited interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses for the current and its corresponding financial period under review. Actual results may differ from these estimates.

In preparing the unaudited interim financial information, the significant judgements made by the management in applying the Group's accounting policies and the sources of estimation uncertainty were consistent with those applied to the 2019 Audited Financial Statements.

There were no changes in estimates of amounts of the Group that may have a material effect on the financial period ended 30 June 2020.

6. DIVIDENDS

No interim dividend was recommended by the Directors during the financial period under review.

7. SEGMENTAL REPORTING

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 the 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 six-month period/year are as follows:

8. TAXATION

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.

9. INTANGIBLE ASSETS

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 10 years in line with management's best estimate of their expected useful life.

The remaining amortisation period of trademarks is between one to two years. The remaining amortisation period of patents is between three to 10 years.

10. PROPERTY, PLANT AND EQUIPMENT

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 RM0.59m that 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 period.

c) Industrial building with carrying amounts of approximately RM36.7m are pledged against the banking facility (note 20).

d) Acquisition of plant and equipment: -

11. TRADE AND OTHER RECEIVABLES

a) The Group's normal credit terms range from 90 to 120 days (H1 2019: 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 due from CGE (H1 2019: 10.51m).

d) The amounts in trade receivables are analysed as follows:

12. AMOUNT OWING BY CONTRACT CUSTOMERS

13. AMOUNTS OWING BY/(TO) RELATED PARTIES

* 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 during the period until his resignation on 31 January 2020 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 26.02% of the share capital in BiON plc at the end of reporting period.

14. CASH AND CASH EQUIVALENTS

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

15. STATED CAPITAL

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.

On 27 January 2020, upon relevant approved application, a loan of RM8.4m from Syed Nazim Syed Faisal, Executive Director, was converted into 86,343,953 new Ordinary Shares representing 20% of the enlarged share capital of the Group at an effective share price of approximately 1.85 pence.

16. TRADE AND OTHER PAYABLES