Kimlun Corporation Berhad Annual Report 2019

Annual Report 2019 Kimlun Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2019 (cont’d) 158 38. Subsequent event (i) The COVID-19 pandemic has significantly disrupted many business operations around the world. For the Group, the impact on business operations has not been a direct consequence of the COVID-19 outbreak, but a result of the measures taken by the Malaysia Government and Singapore Government to contain it. These are unprecedented and challenging times for the Group. As the outbreak continues to evolve, it is challenging to predict the full extent and duration of its impact on business and the economy. Since the COVID-19 outbreak occurred subsequent to the end of the reporting period, it is not an adjusting post balance sheet event. Judgements and assumptions used in the preparation of the financial statements of the Group for the financial year ended 31 December 2019 do not reflect the effects arising from this non-adjusting event. The Group anticipates that the effects of COVID-19 would be recognised in the financial statements for the financial year ending 31 December 2020. The effects of COVID-19 would potentially impact the judgements and assumptions used in the preparation of the financial statements for the financial year ending 31 December 2020, such as expected credit losses on trade and other receivables and contract assets, net realisable value of inventories, land held for development and development properties and impairment assessments on property, plant and equipment, investment properties, properties held for sale, investments in subsidiaries and joint ventures. Following the Malaysia Government’s implementation of a Movement Control Order (MCO) on 18 March 2020 in response to the COVID-19 outbreak, all the Group’s operations have been shut down during the MCO period except for the minimum permitted critical works such as slope protection and delivery of products for permitted critical works. Consequentially, the Group’s revenue, earnings, cash flow and financial condition are affected negatively by the MCO. The Group’s revenue streams have been severely reduced during the MCO period due to the shutting down of the Group’s operations whilst the Group continues to incur substantially the same amount of fixed and recurring expenses such as depreciation, payroll expenses, rental and interest expenses. Though the Malaysia Goverment has allowed most business sectors to resume operations under the conditional MCO period beginning 4 May 2020, there are significant uncertainties in assessing how long the pandemic would last and the severity of its impact on the economy. Hence, at this juncture it is not possible to estimate the full impact of the outbreak’s short-term and longer-term effects nor can we predict the Government’s varying responses and directives to combat the outbreak as the COVID-19 pandemic remains a fluid and evolving situation. As such the full extent of the impact on the Group’s financial performance and operations cannot be determined at this stage. The Group will continue to monitor the development of these events and have implemented the following measures to mitigate the impact of COVID-19 to the Group’s business: take the necessary precautionary measures at our business premises and work sites in accordance with guidelines from health authorities and government bodies;