Kimlun Corporation Berhad Annual Report 2020

200901023978 (867077-X) Kimlun Corporation Berhad (Incorporated in Malaysia) 38. Impact of Covid-19 outbreak On 11 March 2020, the World Health Organisation declared the Coronavirus (“COVID-19”) outbreak as a pandemic in view of the speed and scale of its transmission globally. 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 to contain it by the governments of Malaysia and Singapore. The governments of Malaysia and Singapore imposed lockdowns and social restriction measures to combat the spread of COVID-19. These are unprecedented and challenging times for the Group as the property and construction sectors were significantly curtailed due to the various government orders. Following the Malaysia Government’s implementation of a Movement Control Order (“MCO”) on 18 March 2020 in response to the COVID-19 outbreak, all of the Group’s business operations were substantially halted until late May 2020. All of the Group’s business operations resumed works in June 2020, however at a lower scale and momentum compared to the pre-MCO period due to the compliance with the applicable standard operating procedures imposed by the Malaysian government, and shortage of foreign workers consequential to the freeze on recruitment of new foreign workers in Malaysia since June 2020. The export of the Group’s precast concrete products to Singapore was severely reduced during the Circuit Breaker Order (period which began on 7 April 2020 and ended on 1 June 2020), and for a few months after the Circuit Breaker Order period. During the Circuit Breaker Order period, all non-essential workplaces were closed. Though the Singapore construction industry was allowed to resume operations effective from 2 June 2020, the resumption of construction activities of the Group’s clients was slow as it was compulsory to have all their foreign workers tested and confirmed negative for COVID-19 before resumption of construction activities, and the challenges in meeting the safe management measures required at workplaces. In addition, order book replenishment opportunities were substantially reduced due to the postponements in the award of some Singapore public sector projects from 2020 to 2021, and developers delayed or cancelled their planned roll out of new projects amidst weak market sentiment. The Group has performed an assessment of the overall impact of the situation on the Group’s operations, including the recoverability of the carrying amount of assets and measurements of assets and liabilities for the financial year ended 31 December 2020 (“FYE 2020”). As a result of the assessment, an impairment loss of RM7.32 million was recognised in relation to a parcel of development land. Consequentially, the Group’s revenue and earnings were affected negatively. - 105 - Annual Report 2020 162 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020