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GSH Green & Smart Holdings Plc

2.85
0.00 (0.00%)
Last Updated: 00:00:00
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Green & Smart Holdings Plc LSE:GSH London Ordinary Share JE00BYTQ7945 ORD NPV
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 2.85 2.70 3.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Green & Smart Holdings plc Final Results and Publication of Annual Report (4000U)

29/03/2019 7:01am

UK Regulatory


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RNS Number : 4000U

Green & Smart Holdings plc

29 March 2019

29 March 2019

Green & Smart Holdings plc

("Green & Smart" or "the Company" or "the Group")

Final Results and Publication of Annual Report

Green & Smart Holdings plc (AIM: GSH), a renewable energy company generating power from biogas captured through the treatment of palm oil mill effluent ("POME") in Malaysia, announces its final results for the 15 months ended 31 December 2018.

Financial Summary*

   --      Revenue was RM1.92m (2017: RM45.34m) 
   --      Gross loss was RM1.84m (2017: profit of RM11.67m) 
   --      Operating loss was RM11.65m (2017: RM1.9m) 
   --      Loss before tax was RM13.65m (2017: RM2.7m) 
   --      Cash and cash equivalents at 31 December 2018 were RM0.47m (30 September 2017: RM0.09m) 

* Due to the Company changing its financial year end during the period under review, the 2018 results cover 15 months ended 31 December 2018 while the 2017 results cover 12 months ended 30 September 2017.

Operational Summary

-- 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

-- Received certificate of initial operation date ("IOD") for the Group's second fully-owned biogas power plant, the 2.0MW Malpom plant, and, towards the end of the year, received the commercial operation date ("COD") that allows power to be sold to the national electricity grid at the full tariff rate

-- Completed groundwork and commenced construction on the 2.7MW Minyak plant, which will be the Group's largest fully-owned biogas power plant to date

-- Commenced implementing bio-polishing facilities at the Group's first fully-owned biogas power plant, the 2.0MW Kahang plant, to further treat the wastewater by-product or POME and work to upgrade gas production, which resulted in a temporary suspension of operations while the upgrade work is underway

-- As previously stated, the development of the Group's pipeline of other projects was suspended due to financial constraints, however, following the Group raising c.RM17.09m in the second half of 2018 through a subscription for new shares by Serba Dinamik International Ltd. ("Serba Dinamik"), initial work has recommenced

Mr. Saravanan Rasaratnam, Chief Executive Officer of Green & Smart, said:

"This was a milestone period in the history of Green & Smart as our second fully-owned biogas power plant began selling power to the grid - making us the only company in Malaysia to own and operate plants with two different biogas systems under the Feed-in-Tariff mechanism - and we commenced construction of our third fully-owned plant. While financial constraints undoubtedly impeded our progress, our fundraising has resolved many of these challenges and enabled us to move forwards.

"Our focus for 2019 is completing the upgrade works at our Kahang plant to enable us to resume power sales and working towards bringing onstream our third plant at Minyak. We have also begun pursuing new EPCC opportunities. As a result, we expect revenue generation in 2019 to be significantly higher than in the period to 31 December 2018 and, with continued supportive growth drivers, the Board of Green & Smart looks to the future with confidence."

Enquiries

 
 Green & Smart Holdings plc 
 Saravanan Rasaratnam, Chief Executive Officer 
  Navindran Balakrishnan, Chief Operations Officer    +603 2095 0024 
 
 Cantor Fitzgerald Europe (Nominated Adviser 
  and Broker) 
 Philip Davies, Richard Salmond                       +44 20 7894 7000 
 
 Luther Pendragon Ltd (Financial PR Adviser) 
 Claire Norbury, Alexis Gore                          +44 20 7618 9100 
 

Operational Review

Green & Smart is focused on the construction, operation and ownership of biogas power generation plants in Malaysia. These plants, which are located on or near the site of a palm oil mill, capture greenhouse gases (methane) released from palm oil mill effluent ("POME") that is produced by the mill, which is then converted into electricity to be sold to the Malaysian National Grid under a long-term renewable energy power purchase agreement. The Group also provides its services to third parties under engineering, procurement, construction and commissioning ("EPCC") contracts.

During the 15 months ended 31 December 2018, Green & Smart achieved a number of operational milestones: in particular, bringing onstream its second fully-owned biogas power plant - becoming the only company in Malaysia to own and operate power plants with two different biogas systems - and commencing construction of its third fully-owned plant.

Specifically, at the Group's second fully-owned biogas plant, the 2.0MW Malpom plant in Penang, during the period the Group received the IOD from the regulatory authorities, which enabled initial power sales to the grid to commence. Subsequently, towards the end of the period, the formal COD was received, which allows power generated to be sold to the national grid at the full tariff rate. The Malpom plant is the Group's first specialised self-contained covered lagoon-based system, which is developed for mills with space constraints that prevents the setting up of a conventional biogas facility. The Malpom biogas power plant is performing well and converting POME at what management believe is industry-leading efficiency levels.

At the Group's 2.0MW Kahang plant in Johor, which is its first fully-owned plant, construction commenced of a bio-polishing facility that will biologically treat the wastewater by-product of the POME treatment process to remove recalcitrant carbon, reduce the bio-chemical oxygen demand and improve the colour residue. This will allow the water to be reused by the plant, which enhances the overall sustainability of the process. The Group is also undertaking some upgrade works to enhance the efficiency of the gas production process. As a result, power production at the Kahang facility had to be temporarily suspended while these modifications took place, which are expected to be completed, with a return to full operations, in the first half of 2019.

During the period, the Group completed the groundwork and commenced plant construction at its third fully-owned biogas power plant, the 2.7MW Minyak plant in Perak. This plant will be another lagoon-based system and so the Group will be able to leverage its experience with Malpom. With a capacity of 2.7MW, this will be Green & Smart's largest plant to date. The Group intends to complete construction and grid-connection by the 2019 year-end, subject to securing banking facilities and regulatory approval, to enable the award of the COD in the early 2020.

As a result, Green & Smart took some important steps forward during the period in the development of its biogas power plants. However, as previously mentioned, financial constraints meant that the pace of operations needed to be slowed down, which delayed the start, or recommencement, of power sales. In addition, with the Group's limited resources focused on its fully-owned plants, the Group was not in a position to pursue new EPCC contracts. Consequently, revenue generation was substantially curtailed, despite achieving several operational milestones.

Financial Review

The Group's financial performance for the 15-month period ended 31 December 2018 was mixed as growth in the first quarter was counteracted by weakness for the rest of the period. Financial constraints impacted the ability of the Group to progress certain projects to completion that would have enabled the generation of anticipated revenue and, although this was subsequently addressed when c.RM17.09m was successfully raised from Serba Dinamik, the Group was hindered from pursuing any further EPCC contracts during the period. As a result, there was a marked decrease in revenue and financial performance compared with the 12-month period ended 30 September 2017.

During the year, the Company changed its accounting reference date from 30 September to 31 December in order to align its reporting schedule with that of Serba Dinamik, which, as a public company, updates the market on all its investments. As a result, the period under review is the 15 months from 1 October 2017 to 31 December 2018 while the comparative period is the 12 months from 1 October 2016 to 30 September 2017.

Revenue

Revenue for the 15 months ended 31 December 2018 was RM1.92m (12 months of 2017: RM45.34m), which was generated by the provision of EPCC services under previously-awarded contracts and from the sale of power from the Group's biogas power plants. The financial constraints that the Group faced impeded Green & Smart from pursuing further EPCC contracts during the period. In addition, during the period, the Group commenced work to upgrade its biogas power plant at Kahang, which required a cessation in power generation and, consequently, in power sales. However, this was partly mitigated by the Group's Malpom biogas plant achieving its COD towards the end of the year, enabling power to be sold to the grid at the full tariff rate.

Gross Profit/(Loss) & Margin

The gross loss for the financial period to 31 December 2018 was RM1.84m, with a negative gross margin of 95.6% (2017: profit of RM11.67m; gross profit margin of 25.3%). This was primarily due to the operations and maintenance cost of the existing biogas facilities exceeding the revenue generated by the facilities.

Profit/(Loss)

Operating loss was RM11.65m (2017: RM1.9m loss). While the Group managed to reduce its operating costs to RM9.93m (2017: RM13.83m), the significant reduction in revenue resulted in a significant increase in operating loss.

Earnings/(Loss) Per Share

On a consolidated level, the Group's basic loss per share for the 15-month period ended 31 December 2018 was RM0.04 (2017: RM0.01) based on the weighted number of ordinary shares.

Taxation

Green & Smart Sdn Bhd, the operating entity of the Group, is a BioNexus Status Company granted by Malaysian Bioeconomy Development Corporation Sdn Bhd. This company is 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 Green & Smart Sdn Bhd generates statutory income from relevant approved activities. The tax exemption expired in the financial period ended 31 December 2018. Thereafter, Green & Smart Sdn Bhd became subject to a concessionary tax rate of 20% for the following 10 years on its taxable profits.

Cash Flow

Cash and cash equivalents at 31 December 2018 were RM0.47m (30 September 2017: RM0.09m).

In July 2018, the Company raised approximately c.RM17.09m (GBP3.2m) via a subscription for new common shares by Serba Dinamik. The net proceeds were used to advance the development of the Group's third fully-owned biogas power plant at Minyak and for working capital purposes.

At 31 December 2018, the Group had receivables of RM56.24m (2017: RM76.79m), principally due from Megagreen Energy Sdn Bhd and Concord Green Energy Sdn Bhd before allowance for impairment. Payments of approximately RM20.5m were received from these parties during the financial period and because of this progressive recovery of debt, the Directors are confident that the debt will be fully recovered in due course.

Outlook

The Group entered 2019 in a stronger position than in the previous year. The fundraise in the latter part of 2018 enabled progress to be made on the fully-owned projects, including bringing Malpom onstream - which is now selling power to the grid at the full tariff rate. The Group is on track to complete the upgrade works at Kahang in the first half of this year, which will enable a resumption of revenue generation at that plant. Following the strengthening of the Group's financial position, it has been able to recommence pursuing new EPCC opportunities, which would further support cashflow. As a result, the Board is confident that revenue generation in 2019 will be materially higher than for the 15 months ended 31 December 2018.

Looking further ahead, the Group is progressing development at the Minyak plant and is confident of receiving the banking facilities to enable completion in preparation for receiving the COD in early 2020, which will provide an additional revenue stream. With the strengthened financial footing and improved cash flow, the Group expects to be able to advance the remaining pipeline of fully-owned biogas power plants and, at the appropriate juncture, intends to bid for new FiT quotas for further sites.

The treatment of POME with biogas facilities is supported by sustained economic, environmental and regulatory drivers. The new government in Malaysia remains committed to providing incentives to renewable power generation whilst legislating against discharge of untreated POME in the environment. At the same time, consumer goods companies increasingly demand palm oil from sustainable sources. As one of the few fully-integrated providers and operators of biogas plants in Malaysia, Green & Smart is well-positioned to benefit from these trends.

As a result, with an anticipated significant increase in revenue this year, the strengthening of the Group's foundations and sustained supportive growth drivers, the Board of Green & Smart looks to the future with confidence.

Publication of Annual Report

The Company's annual report and accounts for the 15-month period ended 31 December 2018 has been published today and is available under the Investor Relations section of the Green & Smart website at: www.greennsmart.com.my

GREEN & SMART HOLDINGS plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at

 
 
                                               31.12.2018          30.9.2017 
 ASSETS                                Note      RM'000             RM'000 
 NON-CURRENT ASSETS 
 Intangible assets                       5            831                       899 
 Property, plant and equipment           6         41,636                    36,544 
 Total non-current assets                          42,467                    37,443 
                                              -----------  ------------------------ 
 
 CURRENT ASSETS 
 Trade and other receivables             7         21,775                     1,875 
 Amount owing by contract customers      9            401                       401 
 Amount owing by related parties         8         34,635                    71,662 
 Cash and cash equivalents              10            471                        95 
 Total current assets                              57,282                    74,033 
                                              -----------  ------------------------ 
 
 Total assets                                      99,749                   111,476 
                                              ===========  ======================== 
 
 EQUITY 
 Stated capital                         11         61,052                    43,954 
 Foreign translation reserve              25      (2,499)                   (2,987) 
 Retained profit                                  (3,350)                    10,311 
 Merger reserve                           25      (4,028)                   (4,028) 
 Total shareholders' equity                        51,175                    47,250 
 Non-controlling interests                             41                        44 
 Total equity                                      51,216                    47,294 
                                              -----------  ------------------------ 
 
 CURRENT LIABILITIES 
 Trade and other payables               12         30,888                    48,140 
 Short-term borrowings                  13          9,287                    11,161 
 Total current liabilities                         40,175                    59,301 
                                              -----------  ------------------------ 
 
 NON-CURRENT LIABILITY 
 Government grant income                15            108                       124 
 Amount owing to related parties         8          3,972                     2,555 
 Long-term borrowings                   17            387                       476 
 Amount owing to directors              18          3,891                     1,726 
 Total non-current liabilities                      8,358                     4,881 
                                              -----------  ------------------------ 
 
 Total liabilities                                 48,533                    64,182 
                                              -----------  ------------------------ 
 
 Total liabilities and equity                      99,749                   111,476 
                                              ===========  ======================== 
 

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 29 March 2019.

GREEN & SMART HOLDINGS plc

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the

 
                                                      15-MONTH             12-MONTH 
                                                     PERIODED         PERIODED 
                                                     31.12.2018           30.09.2017 
                                             Note      RM'000               RM'000 
 
 Revenue                                      19            1,924                    45,344 
 Cost of sales                                            (3,763)                  (33,673) 
 Gross (loss)/profit                                      (1,839)                    11,671 
 
 Other income                                                 122                       280 
 
 Less: operating expenses 
 Administrative expenses                                  (9,930)                  (13,849) 
 Operating loss                                          (11,647)                   (1,898) 
 
 Finance costs                                20          (2,006)                     (800) 
 
 Loss before taxation                         21         (13,653)                   (2,698) 
 
 Income tax expense                           22             (11)                       (1) 
 Loss for the period/year                                (13,664)                   (2,699) 
                                                   --------------  ------------------------ 
 
 Other comprehensive income/(loss) 
 Items that may be reclassified subsequently to profit 
  or loss: 
 Exchange difference on translation of foreign 
  operations                                                  488                     (330) 
 Total comprehensive loss                                (13,176)                   (3,029) 
                                                   ==============  ======================== 
 
 Loss for the period/year attributable 
  to: - 
 - Owners of the company                                 (13,661)                   (2,696) 
 - Non-controlling interest                                   (3)                       (3) 
                                                         (13,164)                   (2,699) 
                                                   ==============  ======================== 
 
 Total comprehensive loss attributable 
  to: - 
 - Owners of the company                                 (13,173)                   (3,026) 
 - Non-controlling interest                                   (3)                       (3) 
                                                         (13,176)                   (3,029) 
                                                   ==============  ======================== 
 Loss per share: 
 Basic (RM)                                   24           (0.04)                    (0.01) 
 Diluted (RM)                                 24           (0.04)                    (0.01) 
                                                   ==============  ======================== 
 

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

All amounts are derived from continuing operations.

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 1 
  October 2016              35,142        (2,657)    (4,028)     13,007            41,464                47     41,511 
 Loss for the 
  year                           -              -          -    (2,696)           (2,696)               (3)    (2,699) 
 Other 
 comprehensive 
 income 
 Translation of 
  foreign 
  operations                     -          (330)          -          -             (330)                 -      (330) 
                         ---------  -------------  ---------  ---------  ----------------  ----------------  --------- 
 Total 
  comprehensive 
  income                         -          (330)          -    (2,696)           (3,026)               (3)    (3,029) 
                         ---------  -------------  ---------  ---------  ----------------  ----------------  --------- 
 Transaction 
 with owners 
 Issuance of 
  shares*           11       8,812              -          -          -             8,812                 -      8,812 
                         ---------  -------------  ---------  ---------  ----------------  ----------------  --------- 
 Balance at 30 
  September 2017            43,954        (2,987)    (4,028)     10,311            47,250                44     47,294 
 
 Loss for the 
  year                           -              -          -   (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) 
                         ---------  -------------  ---------  ---------  ----------------  ----------------  --------- 
 Transactions 
 with owners 
 Issuance 
  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 
                         ---------  -------------  ---------  ---------  ----------------  ----------------  --------- 
 

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 (2017: RM0.3m).

GREEN & SMART HOLDINGS plc

CONSOLIDATED STATEMENT OF CASH FLOW

For the

 
                                                               15-MONTH            12-MONTH 
                                                              PERIODED        PERIODED 
                                                              31.12.2018          30.09.2017 
                                                     Note       RM'000              RM'000 
 CASH FLOW FROM OPERATING ACTIVITIES 
 Loss before taxation                                             (13,653)                (2,698) 
 Adjustments for: 
 Amortisation of intangible assets                                      68                     55 
 Depreciation of equipment                                           1,654                  1,029 
 Impairment on investment in associates                                  -                     26 
 Impairment on amount owing by associates                                -                  5,197 
 Impairment on other receivables                                         -                    114 
 Government grant income                                              (16)                   (13) 
 Gain on disposal of investment                                          -                  (250) 
 
 Interest expenses                                     20            1,966                    795 
                                                           ---------------      ----------------- 
 Cash flow from operating activities before 
  working capital changes                                          (9,981)                  4,255 
 Increase in trade and other receivables                           (3,423)                  (918) 
 (Decrease) /increase in trade and other payables                 (17,251)                 13,198 
 Decrease / (increase) in amount owing from 
  related parties                                                   20,550               (17,632) 
                                                           ---------------      ----------------- 
 Cash flow used in/(from) operating activities                    (10,105)                (1,097) 
 Tax paid                                                             (11)                    (1) 
 
 Interest paid                                         20          (1,966)                  (795) 
                                                           ---------------      ----------------- 
 NET CASH FLOW USED FROM OPERATING ACTIVITIES                     (12,082)                (1,893) 
                                                           ---------------      ----------------- 
 
 CASH FLOW FOR INVESTING ACTIVITIES 
 Investment in associates                                                -                (1,000) 
 Purchase of plant and equipment                      6            (6,746)                (9,933) 
                                                           ---------------      ----------------- 
 NET CASH FLOW USED IN INVESTING ACTIVITIES                        (6,746)               (10,933) 
                                                           ---------------      ----------------- 
 
 CASH FLOW FOR FINANCING ACTIVITIES 
 
 Issuance of new ordinary shares                       11           17,098                  2,809 
 Issuance of redeemable convertible preference 
  shares                                               11                -                  6,000 
 Advances from related parties                                       1,417                      - 
 Advances from directors                                             2,165                    830 
 Repayment of hire purchase obligations                               (83)                   (82) 
 Drawdown of short-term loans                                            -                  1,493 
 Repayment of term loans                                           (1,785)                  (282) 
                                                           ---------------      ----------------- 
 NET CASH FLOW FROM FINANCING ACTIVITIES                            18,812                 10,768 
                                                           ---------------      ----------------- 
 
 Net decrease in cash and cash equivalents                            (16)                (2,058) 
 Effects of foreign exchange translation                               392                      - 
 Cash and cash equivalents at the beginning 
  of the period                                                         95                  2,153 
                                                           ---------------      ----------------- 
 Cash and cash equivalents at the end of the 
  period                                               10              471                     95 
                                                           ---------------      ----------------- 
 
 

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

GREEN & SMART HOLDINGS plc

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIODED 31 DECEMBER 2018

   1.   GENERAL INFORMATION 

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 resolution ratified at the Annual General Meeting of the Company on 25 October 2018,

the Group's financial year was changed from 30 September to 31 December 2018.

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 of 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 
                                                                              31.12.2018   30.09.2017 
                    ----------------  ------------  -----------------------  -----------  ----------- 
 Green & Smart 
  Ventures Sdn 
  Bhd                Malaysia          Note 1        Holding company          100%         100% 
                    ----------------  ------------  -----------------------  -----------  ----------- 
 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: 3-2, 3rd Mile Square, No.151, Jalan Kelang Lama, Batu 3 1/2 , 58100 Kuala Lumpur.

Note 2 - registered address: 54B Damai Complex, Jalan Lumut, 50400 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 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.

The results for 31 December 2018 are prepared for a 15 month period and therefore the comparative amounts 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 RM13.65m (2017: RM2.70m) and recorded a net cash outflow from operating activities of RM12.08m (2017: RM1.89m). At the reporting date the Group held cash and cash equivalents of RM0.47m (2017: RM0.09m) and had current liabilities of RM40.18m (2017: RM59.30m).

As described in note 7, amounts of RM17.91m (2017: RM24.3m) is due to the Group from Concord Green Energy Sdn Bhd ("CGE"). Further debts arose during the financial period of approximately RM Nil (2017: RM19.47m) from CGE. During the period, a repayment schedule was undertaken with CGE who committed to a monthly repayment of RM2.0m until full and final settlement of outstanding debts. A total of RM6.48m was collected during the financial period and a further RM6.0m was collected post period end.

As described in note 8, amounts of RM38.33m (2017: RM51.15m) is due to the Group from Megagreen Energy Sdn Bhd ("MGE"). Further debts arose during the financial period of approximately RM1.27m (2017: RM28.43m) from MGE. During the period, a repayment schedule was undertaken with MGE who committed to a monthly repayment of RM3.0m until full and final settlement of outstanding debts. A total of RM14.09m was collected during the financial period. Post period end, RM3.0m was collected but the repayment plan was paused whilst re-negotiations are taking place.

The Directors consider the amounts owing to be recoverable in full.

On 19 July 2018 the Company announced that it had raised approximately RM17.09m (GBP3.2m) via the subscription for 51,806,000 new common shares by Serba Dinamik International Ltd, at a price of approximately 6.19 pence (RM0.33) per share (the "Subscription"). The net proceeds of the Subscription will be used to advance the development of the Company's third fully-owned biogas power plant at Minyak and for working capital purposes.

The Directors have prepared financial projections and plans for a period of at least 12 months from the date of approval of these financial statements, taking into account the proceeds of the Subscription, and have considered the mitigating actions that could be taken in the event that the anticipated receipts from Megagreen Energy and Concord Green Energy are not forthcoming in accordance with the assurances provided to the Directors by management of those undertakings.

Based on their review of those financial projections and plans, the Directors consider the going concern basis of preparation to be appropriate.

New standards, amendments to and interpretations OF published standards not yet IN effect

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective.

IFRS 9 is not expected to impact the measurement of financial instruments, whilst IFRS 15 may have an impact on revenue recognition relating to construction contracts. IFRS 16 will impact the treatment of operating leases and their presentation.

The Group plans to adopt these new standards on the required effective date. In the case of IFRS 15 this will be in the financial year ending 31 December 2019. The majority of the Group's revenue is expected to be driven by contract revenue. The Group currently recognises revenue from contracts on a percentage completion basis. The Directors are reviewing current and pipeline contracts in order to assess the potential impact of IFRS 15 and developing appropriate systems, internal controls, policies and procedures necessary to collect information for the purpose of disclosure as required by IFRS 15. Revenue from the sale of power is currently recognised on delivery and IFRS 15 is not expected to result in a material change to this.

The adoption of IFRS 16 is expected to have a material impact on the Group's reported results in the following financial year. The total future minimum lease payments under the non-cancellable operating leases is approximately RM13.06m (2017: RM14.90m) (see note 28).

   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 Green & Smart Ventures Sdn Bhd ("G&S Venture") for a share for share exchange regarding the ordinary shares in Green & Smart Holdings plc and ordinary shares in G&S Venture. As a result of this transaction, the ultimate shareholders in the Company received shares in Green & Smart Holdings plc in direct proportion to their original shareholdings in G&S Venture.

The acquisition of G&S Venture 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.

   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.

As described in note 7, amounts of RM17.91m (2017: RM24.3m) is due to the Group from Concord Green Energy Sdn Bhd ("CGE"). Further debts arose during the financial period of approximately RM Nil (2017: RM19.47m) from CGE. During the period, a repayment schedule was undertaken with CGE who committed to a monthly repayment of RM2.0m until full and final settlement of outstanding debts. A total of RM6.48m was collected during the financial period. A further RM6.0m was collected post period end.

As described in note 8, amounts of RM38.33m (2017: RM51.15m) is due to the Group from Megagreen Energy Sdn Bhd ("MGE"). Further debts arose during the financial period of approximately RM1.27m (2017: RM28.43m) from MGE. During the period, a repayment schedule was undertaken with MGE who committed to a monthly repayment of RM3.0m until full and final settlement of outstanding debts. A total of RM14.09m was collected during the financial period. Post period end, RM3.0m was collected but the repayment plan was paused whilst re-negotiations are taking place.

   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

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

               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 financial assets 

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets, using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.

   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 other than those categorised as fair value through profit or loss.

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 

Instrument 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)    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 is depreciated from the date it is ready to 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.

   c)     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 finite lives are amortised on straight-line basis over the estimated economic useful lives 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.

   b)    Research and development expenditure 

Research expenditure is recognised as an expense when it is incurred.

Development expenditure is recognised as an expense except that costs incurred on development projects are capitalised as non-current assets to the extent that such expenditure is expected to generate future economic benefits. Such development expenditure is capitalised if, and only if an entity can demonstrate all of the following:

   (i)    its ability to measure reliably the expenditure attributable to the asset under development; 
   (ii)   the product or process is technically and commercially feasible; 

(iii) its future economic benefits are probable;

(iv) its intention to complete and the ability to use or sell the developed assets; and

(v) the availability of adequate technical, financial and other resources to complete the asset under development.

Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense is not recognised as assets in the subsequent period.

The development expenditure is amortised on a straight-line-method over its expected useful life when the products are ready for sale or use. In the event that the expected future economic benefits are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.

4.6 IMPAIRMENT

   a)   Impairment of Financial Assets 

All financial assets (other than those categorised at fair value through profit or loss), are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. For an equity instrument, a significant or prolonged decline in the fair value below its cost is considered to be objective evidence of impairment.

An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets is recognised in profit or loss and is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

   b)    Impairment of Non-Financial Assets 

The carrying values of assets, other than those to which IAS 36: Impairment of Assets does not apply, 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 period/year 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 period/year.

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

    (i)           Revenue from construction contracts 

Revenue from construction contracts is recognised based on the methods as described in note 4.14(i).

   (ii)           Sale of goods 

Revenue from the sale of goods is recognised upon delivery of products and customers' acceptance, if any.

   (iii)         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.

   (iv)          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 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 

Contract revenue is recognised 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)           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 1 October 2016                             1,319                         8                    1,327 
 Addition                                          -                         -                        - 
 At 30 September 2017                          1,319                         8                    1,327 
 Addition                                          -                         -                        - 
 At 31 December 2018                           1,319                         8                    1,327 
                             -----------------------  ------------------------  ----------------------- 
 
 
                                    Trademarks                 Patents                   Total 
                                      RM'000                    RM'000                   RM'000 
 
 Accumulated depreciation 
 At 1 October 2016                               369                         4                      373 
 Charge for the year                              54                         1                       55 
 At 30 September 2017                            423                         5                      428 
 Charge for the period                            67                         1                       68 
 At 31 December 2018                             490                         6                      496 
                             -----------------------  ------------------------  ----------------------- 
 
 
 Net book value 
 At 31 December 2018                             829                         2                      831 
                             -----------------------  ------------------------  ----------------------- 
 
 At 30 September 2017                            896                         3                      899 
                             -----------------------  ------------------------  ----------------------- 
 

(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 four (4) years, the remaining amortisation period of patents is between seven (7) to thirteen (13) years.

   6.   PLANT AND EQUIPMENT 
 
 
                            Furniture                Renovation            Office Equipment         Assets under          Industrial           Motor Vehicle         Total 
                            & Fittings                                                              Construction           Building 
                              RM'000                   RM'000                   RM'000                 RM'000               RM'000                RM'000             RM'000 
 At Cost 
 At 1 October 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 1 October 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        2,847 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 Carrying Amount 
 At 31 December 
  2018                                   106                      242                       77               21,418               19,428                     365       41,636 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 
 
 
                            Furniture                Renovation            Office Equipment         Assets under          Industrial           Motor Vehicle         Total 
                            & Fittings                                                              Construction           Building 
                              RM'000                   RM'000                   RM'000                 RM'000               RM'000                RM'000             RM'000 
 At Cost 
 At 1 October 2016                       163                      456                      141               26,371                    -                     732       27,863 
 Additions                                 -                       18                       31                9,888                    -                      75       10,012 
 Adjustments                             (4)                    (130)                      (5)                    -                    -                       -        (139) 
 Reclassification                          -                        -                        -             (21,587)               21,587                       -            - 
 At 30 September 
  2017                                   159                      344                      167               14,672               21,587                     807       37,736 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 Less: Accumulated 
 Depreciation 
 At 1 October 2016                        15                       35                       26                    -                    -                      87          163 
 Charge for the 
  year                                    17                       23                       26                    -                  810                     153        1,029 
 At 30 September 
  2017                                    32                       58                       52                    -                  810                     240        1,192 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 Carrying Amount 
 At 30 September 
  2017                                   127                      286                      115               14,672               20,777                     567       36,544 
                     -----------------------  -----------------------  -----------------------  -------------------  -------------------  ----------------------  ----------- 
 
   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 RM0.37m (2017: RM0.57m), 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 (2017: RM0.54m).

c) Industrial building with carrying amount of approximately RM19.43m (2017: RM20.78m) and Assets under construction with carrying amount of approximately RM21.42m (2017: RM14.67m) are pledged against the banking facility (note 16).

   d)    Acquisition of plant and equipment: - 
 
                                           31.12.2018      30.09.2017 
                                             RM'000          RM'000 
 
 Cash paid to acquire property, plant 
 and equipment                                  6,746               9,933 
                                          -----------  ------------------ 
 
 
   7.   TRADE AND OTHER RECEIVABLES 
 
                                         31.12.2018          30.09.2017 
                                           RM'000              RM'000 
 
 Trade receivables                           20,152                        104 
 Less: allowance for impairment loss        (1,575)                          - 
                                        -----------  ------------------------- 
                                             18,577                        104 
                                        -----------  ------------------------- 
 
 Other receivables & deposits                 3,701                      2,185 
 Less: allowance for impairment loss          (503)                      (414) 
                                        -----------  ------------------------- 
                                              3,198                      1,771 
                                        -----------  ------------------------- 
 
                                             21,775                      1,875 
                                        ----------- 
 
 Allowance for impairment losses 
 Opening balance                              (414)                      (300) 
 Reclassification (Note c)                  (1,435)                          - 
 Additions during the year                    (229)                      (114) 
 Closing balance                            (2,078)                      (414) 
                                        -----------  ------------------------- 
 

a) The Group's normal credit terms range from 90 to 120 days (2017: 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) Include in the Trade Receivables is an amount of RM17.91m (2017: RM24.3m) due from CGE. CGE was previously classified as a Related Party (Note 8). During the financial period, a repayment arrangement was structured with CGE for a monthly payment of RM2.0m and total monies received during the financial period was RM6.49m. Due to reclassification, the comparative amounts are not entirely comparable.

   8.   AMOUNTS OWING BY / (TO) RELATED PARTIES 
 
 Party         Relationship      Trade Receivables        Other Receivables          Other Payables               Total 
                                       RM'000                   RM'000                   RM'000                   RM'000 
 31.12.2018 
 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 
                              -----------------------  -----------------------  -----------------------  ----------------------- 
 
 
 Party         Relationship      Trade Receivables        Other Receivables          Other Payables               Total 
                                       RM'000                   RM'000                   RM'000                   RM'000 
 30.9.2017 
 Megagreen 
  Energy Sdn   Related 
  Bhd           party                          48,660                    2,485                        -                   51,145 
 Concord 
  Green 
  Energy Sdn   Related 
  Bhd           party                          24,398                    1,250                        -                   25,648 
                                               73,058                    3,735                        -                   76,793 
                              -----------------------  -----------------------  -----------------------  ----------------------- 
 Less: Allowance 
  for impairment 
  loss                                        (5,197)                        -                        -                  (5,197) 
                              -----------------------  -----------------------  -----------------------  ----------------------- 
                                               67,861                    3,735                        -                   71,596 
                              -----------------------  -----------------------  -----------------------  ----------------------- 
 
 Makmur 
  Hidro        Related 
  Sdn Bhd.      party                               -                       66                        -                       66 
                              -----------------------  -----------------------  -----------------------  ----------------------- 
                                               67,861                    3,801                        -                   71,662 
 K2M 
  Ventures 
  Sdn Bhd      Ultimate                             -                        -                  (2,555)                  (2,555) 
  holding 
   co. 
                                               67,861                    3,801                  (2,555)                   69,107 
                              -----------------------  -----------------------  -----------------------  ----------------------- 
 
 
                                        31.12.2018            30.09.2017 
                                          RM'000                RM'000 
 Allowance for impairment losses 
 Opening balance                                 5,197                      - 
 Reclassification (*)                          (1,435)                      - 
 Movement for the year                               -                  5,197 
 Closing balance                                 3,762                  5,197 
                                    ------------------  --------------------- 
 

* 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:

 
                                    31.12.2018        30.09.2017 
                                      RM'000            RM'000 
 
 Not past due                                -                  47,041 
 Past due by less than 3 months              -                       - 
 Past due by less than 3 -                   -                       - 
  6 months 
 Past due by 6 months and above         34,088                  26,017 
                                        34,088                  73,058 
                                   -----------  ---------------------- 
 

During the financial period, a repayment arrangement was structured with MGE for a monthly payment of RM3.0m and they have continued to meet their payment obligation. Total monies received during the financial period was RM14.09m. Post period end, RM3.0m was collected but the repayment plan was paused whilst re-negotiations are taking place.

   9.   DUE FROM/ (TO) CUSTOMERS FOR CONSTRUCTION CONTRACTS 
 
                                 31.12.2018        30.09.2017 
                                   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 owing from contract 
  customers                             401                     401 
 Amounts owing to contract                -                       - 
  customers 
 

10. CASH AND CASH EQUIVALENTS

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

 
                                   31.12.2018   30.09.2017 
                                     RM'000       RM'000 
        Cash and bank balances            471           95 
                                  -----------  ----------- 
 

11. STATED CAPITAL

 
                                                  No. of shares           RM'000 
 Issued and Fully Paid-Up at no 
  par value 
 1 October 2015                                               2                        - 
 Issuance of shares: 
 On 20 January 2016                                         100                        - 
 On 6 May 2016 - share exchange 
  agreement                                         232,222,120                   13,069 
 On 6 May 2016 - on AIM admission                    44,444,445                   24,531 
 Less: transaction costs                                      -                  (2,458) 
 30 September 2016                                  276,666,667                   35,142 
                                     --------------------------  ----------------------- 
 
 Issuance of shares: 
 On 19 December 2016                                 10,761,367                    6,000 
 On 19 June 2017                                      6,141,778                    3,083 
 Less: transaction costs                                      -                    (271) 
 30 September 2017                                  293,569,812                   43,954 
                                     --------------------------  ----------------------- 
 Issuance of shares: 
                                     --------------------------  ----------------------- 
 On 19 July 2018                                     51,806,000                   17,098 
                                     --------------------------  ----------------------- 
 Less: transaction costs                                      - 
                                     --------------------------  ----------------------- 
 31 December 2018                                   345,375,812                   61,052 
                                     --------------------------  ----------------------- 
 

On 19 December 2016, the Company issued 10,761,367 Ordinary Shares at a subscription price of 10.62 pence per Subscription Share pursuant to a Share Swap Agreement dated the same to MTDC. This followed the conversion by MTDC of 6,000,000 Preference Shares in Green & Smart Sdn Bhd, acquired pursuant to an Investment Agreement dated 16 December 2016. At that date of the share issuance, MTDC held 19,476,367 shares in the Company, amounting to 6.78% of the enlarged issued share capital of the Company, which stood at 287,428,034.

During the financial year on 19 June 2017, the Company issued 6,141,778 Ordinary Shares (representing approximately 2.1% of the Company's issued share capital as enlarged by the Shares) at 9p per Ordinary Share to raise approximately RM3.12 million (GBP552,759, at an exchange rate of RM5.6461 to GBP1) and 5,848,664 five-year warrants (exercisable at 9.25 pence per share) to subscribe in aggregate up to 5,848,664 Shares.

During the financial period on 19 July 2018, the Company issued a further 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 RM17.09m (GBP3.12, at an exchange rate of RM5.4487 to GBP1).

At 31 December 2018, the Company's issued share capital was 345,375,812 ordinary shares.

12. TRADE AND OTHER PAYABLES

 
                                 31.12.2018     30.09.2017 
                                   RM'000         RM'000 
 
 Trade payable                       13,797           15,016 
 Other payables and accruals         17,091           33,124 
                                     30,888           48,140 
                                -----------  --------------- 
 

The normal credit terms granted to the Group by the suppliers are 90 days (2017: 90 days) from invoice date.

13. SHORT-TERM BORROWINGS

 
                                  31.12.2018   30.09.2017 
                                    RM'000       RM'000 
 
 Mezzanine loan                        1,509        1,412 
 Hire purchase payables (note 
  14)                                     87           81 
 Term loans (note 16)                  7,691        9,668 
                                       9,287       11,161 
                                 -----------  ----------- 
 

14. HIRE PURCHASE PAYABLES

 
                                         31.12.2018         30.09.2017 
                                           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                               406                      440 
 - later than five years                         26                      133 
                                                542                      683 
 Less: Future finance charges                  (68)                    (126) 
                                                474                      557 
                                        -----------  ----------------------- 
 
 Current 
 Not later than one year (note 
  13)                                            87                       81 
 Non-current (note 17) 
 Later than one year and not later 
  than five years                               362                      421 
 Later than five years                           25                       55 
                                                387                      476 
                                                474                      557 
                                        -----------  ----------------------- 
 

The hire purchase payables of the Group at the end of the reporting period bore effective interest rates ranging from 5.20% to 5.36% (2017: 5.20% - 5.36%).

15. 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 2018, an amortised amount of RM15,625 was recognised (12 months of 2017: RM12,500) as other income in profit or loss.

16. TERM LOAN

 
                             31.12.2018        30.09.2017 
                               RM'000            RM'000 
 Current (note 13) 
 Not later than one year          7,691                  9,668 
                            -----------  --------------------- 
 
 

The term loans are secured against: -

   (i)            Capital work-in-progress as disclosed in note 7(c) to the financial statement; 
   (ii)           Fixed and floating charge over present and future assets; 
   (iii)         A guarantee by Credit Guarantee Corporation Berhad ("CGC"); 
   (iv)         Corporate guarantee from holding company; and 
   (v)           Joint and several guarantees by the directors. 

During the previous 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. On 17 October 2017, the Group received a supplemental letter of offer from the lender to vary the terms & conditions of the facility & reschedule the repayment period.

17. LONG TERM BORROWINGS

 
                                  31.12.2018        30.09.2017 
                                    RM'000            RM'000 
 
 Hire purchase payables (note 
  14)                                    387                     476 
                                 -----------  ---------------------- 
 

18. AMOUNT OWING TO DIRECTORS

The amounts owing to directors are unsecured, interest free and have no fixed terms of repayment.

19. REVENUE

Revenue represents contract revenue recognised based on percentage of completion method and the net invoiced value of powers sold, after allowances for returns and trade discounts. All revenues are derived from Malaysia.

 
                                         31.12.2018       30.09.2017 
                                           RM'000           RM'000 
 
 Contract revenue recognised based 
  on percentage of completion method          1,058               44,378 
 Net invoiced value of power sold               866                  966 
                                              1,924               45,344 
                                        -----------  ------------------- 
 

20. FINANCE COSTS

 
                              31.12.2018         30.09.2017 
                                RM'000             RM'000 
 
 Bank charges                         10                         5 
 Bank guarantee charges               30                         - 
                             -----------  ------------------------ 
 
 Hire purchase interest               59                        18 
 Short-term loan interest          1,124                       155 
 Term loan interest                  783                       622 
                             -----------  ------------------------ 
                                   1,966                       795 
                             -----------  ------------------------ 
 
                                   2,006                       800 
                             -----------  ------------------------ 
 

21. PROFIT / (LOSS) BEFORE TAXATION

 
                                                           31.12.2018               30.09.2017 
                                                             RM'000                   RM'000 
 
 Profit/(loss) 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                                                      136                       337 
     Non-audit fees payable to Company's auditor relating 
     to the transaction services                                          -                       15 
 Allowance for impairment losses: 
  - 
    Investment in associates                                              -                       26 
    Amount owing by associates                                            -                    5,197 
    Other receivables                                                     -                      114 
 Amortisation of intangible assets                                       68                       55 
 Depreciation of plant and equipment                                  1,654                    1,029 
 Rental of premises                                                     173                      152 
 Rental of equipment                                                     12                        8 
 Rental of motor vehicles                                               268                      243 
 Unrealised (gain) /loss on foreign 
  exchange                                                             (19)                       86 
 Realised gain on foreign exchange                                     (88)                     (13) 
 Waiver of debt                                                           -                    (506) 
 Government grant income                                               (16)                     (13) 
 Employees Provident Fund                                               433                      321 
 

22. 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.

Green & Smart Sdn Bhd ("G&S") is granted BioNexus status by a government agency, namely Malaysian Bioeconomy Development Corporation Sdn Bhd (previously known as Malaysian Biotechnology Corporation Sdn. Bhd). Therefore, G&S 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 G&S generates statutory income from the relevant approved activities. The tax exemption expired in the financial period ended 31 December 2018.

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: -

 
 
                                                     31.12.2018        30.09.2017 
                                                       RM'000            RM'000 
 
 Loss before taxation                                  (13,653)                (2,698) 
                                                    -----------  --------------------- 
 
 Tax at the statutory tax rate of 24% (2017:24%)        (3,276)                  (647) 
 Tax effect 
  of: 
 Non-deductible expenses                                  3,438                  2,420 
 Tax exempt 
  income                                                  (207)                (4,470) 
 Under provision of income tax in the previous               11                      - 
  financial year 
 Income tax expenses for the period/year                     11                      1 
                                                    -----------  --------------------- 
 

Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2017: 24%) of the estimated assessable profit for the financial period.

Subject to the agreement of the Inland Revenue Board, at 31 December 2018, the Group has deferred tax assets not recognised in the financial statements for the following item under the liability method:-

 
                           31.12.2018        30.09.2017 
                             RM'000            RM'000 
 
 Unabsorbed tax losses          1,264                  1,260 
                          -----------  --------------------- 
 

No deferred tax assets are recognised in the financial statements for the above item as it is not probable that taxable profits will be available against which the deductible temporary differences can be utilised. The unused tax losses do not expire under current tax legislation. The availability of unused tax losses for offsetting against future taxable profits in Malaysia are subject to there being no substantial changes in shareholdings of the subsidiary undertakings under the Income Tax Act 1967 and the application of guidelines issued by the tax authorities.

23. RELATED PARTY TRANSACTIONS

   a)    Identities of Related Parties 

Parties are considered to be related to the Company if the Company 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 Company and the party are subject to common control.

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

b) 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: -

 
 
                                                   31.12.2018             30.09.2017 
                                                     RM'000                 RM'000 
 
 Megagreen Energy Sdn. Bhd. 
 - Contract revenue                                              -                  25,060 
 - Amounts owing by related parties                         34,569                  47,383 
 
 Amount owing to K2M Ventures Sdn. 
  Bhd                                                      (3,972)                 (2,555) 
 
 Amount owing from Makmur Hidro 
  Sdn, Bhd.                                                     66                      66 
 
 Net amount owing to Saravanan Rasaratnam                  (1,204)                   (396) 
 
 Amount owing to Navindran Balakrishnan                    (1,428)                   (593) 
 
 Amount due to Serba Dinamik Sdn.                            (460)                       - 
  Bhd. 
 
 
   c)     Compensation of key management personnel 

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

 
                                            31.12.2018        30.09.2017 
                                              RM'000            RM'000 
 
 Short-term employee benefits                    2,355                   1,673 
 Defined contribution plan (EPF)                   183                     167 
                                                 2,538                   1,840 
                                           -----------  ---------------------- 
 
   Included in the total key management 
   personnel 
 compensation are:- 
 
 Directors' remuneration                         1,336                   1,077 
 Executive Directors' Fees                         426                     455 
 Non-Executive Directors' Fees                     445                     455 
                                                 2,207                   1,987 
                                           -----------  ---------------------- 
 

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.

24. EARNINGS PER SHARE

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

 
                                     31.12.2018    30.09.2017 
 
 Loss attributable to the owners 
  of the company (RM'000)               (13,163)       (2,696) 
 
 Weighted average shares in 
  issue for                          315,155,645   286,273,137 
 basic earnings per share 
 
 Adjustment for: 
 Warrants instruments                  7,232,013     2,845,503 
 
 Weighted average shares in 
  issue for 
 diluted earnings per share          322,387,658   289,118,640 
                                    ------------  ------------ 
 
 Basic earnings per share (RM 
  - cent)                                 (4.33)        (0.94) 
 Diluted earnings per share 
  (RM - cent)                             (4.33)        (0.94) 
                                    ------------  ------------ 
 

Diluted EPS amounts are 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 outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares and issued warrants into ordinary shares. The potential ordinary shares are anti-dilutive and therefore the diluted loss per share has not been calculated.

25. RESERVES

   a)    Foreign currency translation reserves 

The foreign exchange 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 reorganisation 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 new holding company has been accounted for as a capital reorganisation using the merger accounting principles prescribed under current UK GAAP. Therefore, the consolidated financial statements of Green & Smart Holdings 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.

   26.       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:-

 
                                           31.12.2018   30.09.2017 
                                             RM'000       RM'000 
 
 Corporate guarantee given to licensed 
  banks for credit facilities granted 
  to a related party                           32,729       33,446 
                                          -----------  ----------- 
 

The Group has provided Megagreen Energy with a corporate guarantee in support of a loan facility. As the Group has only a 15% interest in Megagreen, it has no effective control over whether any claim may be made under this guarantee. 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. On that basis, the Directors expect the exposure of G&S under the guarantee to be limited to approximately RM14.1m (2017: RM14.1m).

   27.       CAPITAL COMMITMENTS 

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

 
                                              31.12.2018   30.09.2017 
                                                RM'000       RM'000 
 
 Approved and contracted for construction 
  of plant and equipment                          17,064       11,880 
                                             -----------  ----------- 
 
   28.       OPERATING LEASE COMMITMENT 

The Company leases a number of office premises, motor vehicles, equipment and land under non-cancellable operating leases. The future minimum lease payments under the non-cancellable operating leases are as follows: -

 
                                          31.12.2018          30.09.2017 
                                            RM'000              RM'000 
 
 Not later than one year                           1,293               1,302 
 Later than one year and not later 
  than five years                                  4,124               4,747 
 Later than five years                             7,638               8,841 
                                                  13,055              14,890 
                                      ------------------  ------------------ 
 
   29.       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 period/year are as follows:

 
                                     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 
 
                                     Consulting 
 Business Segments                    & contract           Power          Head office         Total 
                                       RM'000              RM'000           RM'000            RM'000 
 30.09.2017 
 Contract revenues                           44,378                  -               -             44,378 
 Power sold                                       -                966                                966 
                                 ------------------  -----------------  --------------  ----------------- 
 Group revenues                              44,378                966               -             45,344 
 
 Gross Profit/(Loss)                         12,491            (1,326)               -             11,165 
 Net Loss                                   (1,186)            (1,510)               -            (2,696) 
 
 Segment Assets                              72,097             36,704           2,675            111,476 
 Segment Liabilities                         36,809             15,347          12,026             64,182 
 Capital Expenditure                              -              9,872               -              9,872 
 Depreciation and amortisation                    -                810             219              1,029 
 
   (b)   Information about major customers 

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

 
                                     31.12.2018   30.09.2017 
                                       RM'000       RM'000 
 
 Megagreen Green Sdn Bhd                      -       25,060 
 Felcra Processing & Engineering          1,058            - 
  Sdn Bhd 
 Tenaga Nasional Berhad                     866            - 
 Concord Green Energy Sdn Bhd                 -       19,318 
                                          1,924       44,378 
                                    -----------  ----------- 
 
   30.       WARRANT INSTRUMENTS 
 
                                   31.12.2018                              30.09.2017 
                        Average exercise        Number       Average exercise           Number 
                        price per warrants    of warrants    price per warrants       of warrants 
 
 At 1 October                       0.092p      7,232,013                 0.09p            1,383,333 
 Granted during 
  the period/year                        -              -               0.0925p            5,848,680 
 Exercised during 
  the period/year                        -              -                     -                    - 
 Forfeited during 
  the period/year                        -              -                     -                    - 
 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 nominated adviser, at the exercise price of 9 pence each with an expiring date of 5 years.

On 19 June and 28 June 2017, the Company issued 5,848,680 warrants 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 IFRS2. In accordance with IFRS2 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.

   31.       ULTIMATE CONTROLLING PARTIES 

Although K2M Ventures Sdn Bhd held 32.52% of the Company's share capital at the reporting date, as that entity is jointly controlled by Saravanan Rasaratnam and Navindran Balakrishnan, the Directors consider there is no ultimate controlling party.

   32.       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:

 
                                        31.12.2018   30.09.2017 
                                          RM'000       RM'000 
 Financial Assets 
 Trade receivables                          18,577          104 
 Other receivables and deposits              3,198        1,771 
 Amount owing by contract customers            401          401 
 Amount owing by related parties            34,635       71,662 
 Cash and bank balances                        471           95 
                                            57,282       74,033 
                                       -----------  ----------- 
 
 Financial Liabilities 
 Trade payables                             13,797       15,016 
 Other payables and accruals                17,091       33,124 
 Amount owing to related parties             3,972        2,555 
 Amount owing to directors                   3,891        1,726 
 Hire purchase payables                        474          557 
 Term loans                                  9,200       11,080 
                                            48,425       64,058 
                                       -----------  ----------- 
 
   32.1     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.

32.1.1 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.

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

 
                                           USD       GBP        RM       TOTAL 
 31.12.2018                               RM'000   RM'000     RM'000     RM'000 
 Financial Assets 
 Trade receivables                             -         -     18,577     18,577 
 Other receivables and 
  deposit                                      -         -      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 purchases                                -         -        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 Company's functional currency 
 Currency exposure                         (923)   (7,207)          -    (8,130) 
                                         -------  --------  ---------  --------- 
 
 
                                       USD              GBP              EURO               RM               TOTAL 
 30.09.2017                          RM'000            RM'000           RM'000            RM'000             RM'000 
 Financial Assets 
 Trade receivables                         -                        -         -                       104        104 
 Other receivables and 
  deposits                                 -                       26         -                     1,745      1,771 
 Amount owing by contract 
  customers                                -                        -         -                       401        401 
 Amount owing by related parties           -                        -         -                    71,662     71,662 
 Cash and bank balance                     1                       13         -                        81         95 
                                           1                       39         -                    73,993     74,033 
                                    --------  -----------------------  --------  ------------------------  --------- 
 Financial Liabilities 
 Trade payables                        3,153                    1,586     3,332                     6,945     15,016 
 Other payables and accruals               -                      334         -                    32,790     33,124 
 Amount owing to related 
  parties                              2,005                        -         -                       550      2,555 
 Amount owing to directors                 -                    1,217         -                       509      1,726 
 Hire purchase                             -                        -         -                       557        557 
 Term loans                                -                    1,412         -                     9,668     11,080 
                                       5,158                    4,549     3,332                    51,019     64,058 
                                    --------  -----------------------  --------  ------------------------  --------- 
 
 Net financial 
  assets/(liabilities)               (5,157)                  (4,510)   (3,332)                    22,974      9,975 
 Less: Net financial liabilities 
  denominated 
 in the Company's functional 
  currency                                 -                        -         -                  (22,974)   (22,974) 
 Currency exposure                   (5,157)                  (4,510)   (3,332)                         -   (12,999) 
                                    --------  -----------------------  --------  ------------------------  --------- 
 

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) 
 
                             31.12.2018   30.09.2017 
                                 RM           RM 
 
 Effects on Profit After 
  Taxation 
 USD/RM 
 - strengthened by 1%               (9)         (51) 
 - weakened by 1%                     9           51 
 GBP/RM 
 - strengthened by 1%              (72)           45 
 - weakened by 1%                    72         (45) 
 EUR/RM 
 - strengthened by 1%                 -           33 
 - weakened by 1%                     -         (33) 
 

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.

32.1.2 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 27 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 (2017: 2) customers which constitutes approximately 90% (2017: 98%) 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 9.

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.

32.1.3 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 
 31.12.2018 
 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 
                                            -------------------  --------------  -----------------------  ---------- 
 
 30.09.2017 
 Trade payables                                          15,016          15,016                   15,016           - 
 Other payables and accruals                             33,124          33,124                   33,124           - 
 Amount owing to related 
  parties                                                 2,555           2,555                    2,555           - 
 Amount owing to directors                                1,726           1,726                        -       1,726 
 Hire purchase payables          6.4 - 6.9                  557             557                       81         476 
 Term loans                      5.0 - 8.0               11,080          11,080                   11,080           - 
                                                         64,058          64,058                   61,856       2,202 
                                            -------------------  --------------  -----------------------  ---------- 
 

32.1.4 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 Instrument     Fair Value of Financial Instrument     Total     Carrying 
                       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 
 31.12.2018 
 Term loans              -            -             -           -       9,200           -       9,200      9,200 
 Hire 
  purchase 
  payables              -            -             -            -         474           -         474        474 
 Amount owing 
  to 
  directors             -            -             -            -           -       3,891       3,891      3,891 
               ----------  -----------  ------------   ----------  ----------  ----------  ----------  --------- 
 
 30.09.2017 
 Term loans              -            -             -           -      11,080           -      11,080     11,080 
 Hire 
  purchase 
  payables              -            -             -            -         557           -         557        557 
 Amount owing 
  to 
  directors             -            -             -            -           -       1,726       1,726      1,726 
               ----------  -----------  ------------   ----------  ----------  ----------  ----------  --------- 
 

32.1.4 Fair Values Measurements

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:-

 
                                     31.12.2018     30.09.2017 
                                         %              % 
 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.

   33.       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 maximise 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 regulatory, 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:

 
 
                                  31.12.2018     30.09.2017 
                                    RM'000         RM'000 
 
 Hire purchase payables                  474               557 
 Term loans                            9,200            11,079 
 Less: Cash and bank balances          (471)              (95) 
 Net debt                              9,203            11,541 
                                 -----------  ---------------- 
 
 Total shareholders' 
  equity                              51,175            47,250 
                                 -----------  ---------------- 
 
 Debt-to-equity ratio                   0.18              0.24 
 
   34.       SIGNIFICANT EVENT OCCURING AFTER THE REPORTING PERIOD 

None.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR KVLFLKXFBBBX

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