MKH Annual Report 2020

223 MKH BERHAD 40. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONT’D) The outbreak of COVID-19 has caused significant disruptions to the retail and hotel industry, and as a result, the Group reported lower revenues from property investment segments, mainly due to rental relief granted to its eligible tenants to assist tenants during this crucial period, especially those providing non-essential products and services. In addition, the adverse economy impact resulted from the COVID-19 led to fair value losses of the investment properties of the Group. For hotel segment, the occupancy and revenue levels are being hit hard as widespread travel restrictions and government-imposed lockdowns to contain the spread of the virus have triggered a collapse in both leisure and corporate travel demand. The progress of the on-going property development projects were halted during MCO imposed by the Malaysian Government and thus the revenue recognition of these projects were impeded. As Malaysia’s Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020 came into force, the Group had obtained approval from Ministry of Housing & Local Government to exclude the calculation of liquidated damages for the failure to deliver vacant possession of housing accommodation for the period from 18 March 2020 to 31 August 2020. With the recovery MCO, the Group’s operations returned to normalcy. The latest imposition of the conditional MCO inOctober 2020 has not had any adverse impact on the Group’s operations as the Group is permitted to continue with its normal operations without any form of restrictions or interruptions in the daily activities save for the implementation and observation of the required SOPs and conditions which remain in place. (b) In Indonesia, on 31 March 2020, the Indonesian government declared the COVID-19 pandemic as a national public health emergency, where the government imposed large-scale social restrictions (“PSBB” - Pembatasan Sosial Berskala Besar) to curb the spread of the COVID-19 outbreak in Indonesia. The disruption in the Group’s operations in Indonesia was minimal as the Group’s mills and estates operation in East Kalimantan were not affected by the PSBB. The mills and estates were allowed to continue its normal business operation during the PSBB. At the reporting date, the Group is in a net asset position of RM1,632,609,327 with an amount of RM374,653,655 cash, bank balances, terms deposits and fixed income funds. The Group performed an assessments on the overall impact of the situation on the Group’s operations and financial implications, including the recoverability of the carrying amount of assets and subsequent measurement of assets and liabilities, and concluded that there is no material adverse effect on the financial statements for the financial year ended 30 September 2020, after considering key source of estimation uncertainties as disclosed in Note 2(c). As the COVID-19 situation is evolving, the Group will monitor the situation closely and take the necessary actions to minimise the impact of the COVID-19 on the Group’s operations and financial performances. The Group is of the view that the impact of COVID-19 is short term and expects that the business operations will return to normal when the CMCO and lockdowns are fully relaxed. Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2020