The second COVID-19 lockdown in 2021 has impacted the Group’s and Company’s operations, customers and suppliers, and consequently the Group’s and Company’s revenue, expenses, cash collection and dividend distribution. Following the lockdown from March to May 2021, a number of the Group's tenants could not operate and found themselves in difficulty to meet their rental obligations. In order to reduce the financial stress of the tenants, the Group provided a relief plan to the tenants most affected by the pandemic. The cost of these measures to the Group is disclosed in Note 8. The Group has carried on with the safe shopping measures during this financial year to mitigate health risks for mall customers, which has also increased the cost of operations. Following the lifting of lockdown restrictions, the Group successfully reopened its shopping malls and operations resumed to normal levels.
The Group continues to monitor the impact of the COVID-19 pandemic on its operations, customers and suppliers, and consequently on the Group’s revenue, cash position and the fair value of its investment properties. The main impacts are discussed below:
The Group expects COVID-19 to continue to have adverse effects on certain sectors of the economy especially tourism. Given that the Group owns and leases a hotel building, the operations of the tenant could be significantly affected if borders are not successfully re-opened and the business travel sector does not go back to pre-COVID levels. Moreover, should the Mauritian economy not recover to pre-COVID levels while the government ceases to provide support, there could be a decrease in general consumption levels which would affect the business of many tenants of the Group. This could, in turn increase the vacancy levels and adversely impact the fair value of the Group's investment properties.
Nonetheless, based on the analysis of the Group’s cash flows, the Board of Directors believe that the Group has sufficient liquid assets and has access to unutilised borrowing facilities with sufficient headroom to meet the Group's obligations for at least the next 12 months from the date of the approval of these consolidated financial statements. Accordingly, the consolidated financial statements are prepared on a going concern basis.
During the year, the Group reassessed the classification of short-term deposit with its intermediate holding company (included within financial assets at amortised cost in the statement of financial position) as cash and cash equivalents for the purpose of the statement of cash flows. While this balance is repayable at call and its main purpose is for maintaining liquid assets, the Group now believes that it does not meet the definition of cash and cash equivalents as per IAS 7 - Statement of Cash Flows given that the intermediate holding company does not operate and is not regulated as a financial institution, which would have been one of the key conditions for the balances to meet the criteria of being readily convertible into known amounts of cash.
Accordingly, the balance of cash and cash equivalents in the statement of cash flows for the Group and Company have been restated as shown in the table below. Furthermore, the movement in the balance due from the intermediate holding company which was previously included within net cash flow for the year, has been restated as investment in financial assets at amortised cost and redemption of financial assets at amortised cost within investing activities in the statement of cash flows.