KUALA LUMPUR (June 30): Cypark Resources Bhd fell into the red for the first time since its listing in October 2010, with a net loss of RM298.48 million for the February-to-April period this year, no thanks to a hefty RM376 million worth of impairments and provisioning.

The sum includes a one-off provision for potential liability due to delays in existing projects, and impairments that include outstanding receivables and intangible assets for its waste-to-energy (WTE) project in Ladang Tanah Merah, Negeri Sembilan.

This came after the group delayed the commercial operation dates of this WTE project and another floating solar plant in Tasik Danau Tok Uban, Pasir Mas, Kelantan, while scepticism mounts over the viability of its renewable energy assets.

In contrast, Cypark posted a net profit of RM14.52 million in the same three months a year ago, when it made a revenue of RM75.81 million, 57.5% more than its latest quarter's RM32.21 million.

"The impairment and provisioning were recognised following rigorous position review and assessment performed by the company over all its assets. The impairment and provision were mainly one-off adjustments and are not expected to recur moving forward," Cypark said in a statement.

"The impairment assessment was done in a timely and prudent manner to best reflect the financial position of the group. It enables the management to focus on completing active projects, said Cypark chairman Datuk Ami Moris.

The group also said it will continue to perform the impairment review from time to time to ensure that the recoverable amounts of its assets are higher than the carrying amount.

Meanwhile, for its WTE business, Cypark recorded a revenue of RM9.2 million in the February-to-April period, consisting mainly of tipping fee, recycling revenue and the sale of green energy.

“However, loss before tax of RM77 million was recorded in this quarter mainly due to the impairment losses of RM39 million recognised for the intangible assets. Also, revenue from the sale of green energy from WTE was lower than expected during its initial stage of operation and we target to get the optimal capacity soon,” the group's Bursa Malaysia filing read.

Cypark changed its financial year end to April 30 from Oct 31 previously, hence the group’s current fiscal year will involve a cumulative period of 18 months.

The latest quarterly loss also dragged the group into posting a net loss of RM243.01 million for the 18-month period ended April 30, 2023 (FY2023), on a revenue of RM311.98 million.

Cypark further said the impairments and provisioning it made are not expected to have any adverse impact on future cash flow or its ability to meet its financial obligations.

“With regards to the liquidated ascertained damages (LAD) provisioning, the management is currently in active negotiations with its client on its application for the project extension. The delay was mainly caused by force majeure events with precedence approval given for similar circumstances. The group is positive on obtaining extension of time and hence reducing the required LAD,” it said.

As at April 30 this year, Cypark’s deposits, cash and bank balances stood at RM155.62 million, down 30.8% from RM224.89 million a year ago and 47.86% from Oct 31, 2021's RM298.46 million. This is despite the group having done two private placements since 2021 to raise funds.

Short-term loans and borrowings stood at RM252.34 million as at April 30, up from RM250.23 million a year ago, while long-term loans and borrowings stood at RM1.19 billion, up from RM1.15 billion over the same period.

“Moving forward, we remain focused on delivering active projects, such as the Selgate RM109 million hospital construction contract, LSS2 Floating Solar Project in Danau Tok Uban, Kelantan and LSS3 Solar Project in Merchang, Terengganu,” Ami said.

Upon completion, Ami said the LSS2 Floating Solar project will be the largest floating solar plant in the world outside China with combined capacity of 60 Megawatt alternating current (MWac)/100 Megawatt direct current (MWdc) while LSS3 Merchang will be the largest solar farm in the country with 100MWac/171MWdc capacity.

Both are targeted to be completed by the end of 2023, she said, giving Cypark about 400MW of renewable energy assets under its operational portfolio.

“While focus is to complete active projects, Cypark continues to identify immediate opportunities such as the Corporate Green Power Purchase programme, the lifting of the export ban on renewable energy, and accelerated energy transition plans by corporates and governments,” she said.

Shares of Cypark, which has fallen 37.5% from its year-to-date high of RM1.20 on Feb 9, closed one sen or 1.35% higher at 75 sen on Friday, giving it a market capitalisation of RM586.63 million.

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