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Annual Report 2020
213
Notes to the Financial Statements
As at 31 March 2020
kumpulan Fima Berhad
(197201000167)(11817-V)
42. Financial risk management objectives and policies (cont'd.)
(d) Credit Risk
Credit risk, or the risk of counterparties defaulting, is controlled by the application of credit approvals, limits and
monitoring procedures. Credit risk is minimised and monitored via strictly limiting the Group’s associations to
business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via Group
management reporting procedures.
The Group does not have any significant exposure to any individual customer or counterparty except with the
government agencies as disclosed in Note 22. The Group does not have any major concentration of credit risk
related to any financial instruments.
During the financial year, the Group changed its risk management practices in response to the COVID-19
outbreak. Accordingly, the Group changed its ECL methodology in order to better estimate the impact of the
outbreak in accordance with the requirements of MFRS 9. The Group has accordingly, calculated any overlays and
adjustments to these simplified models. In order to accelerate the reflection of changes in credit quality not yet
detected at an individual customer level, the Group adjusts the probabilities of default (PD) on a collective basis.
Whilst it is not possible to estimate the full impact of the outbreak’s short-term and longer-term effects or the
Government’s varying efforts to combat the outbreak and support businesses, it is likely that the ECL would increase
by a further 2% within the next financial year.
43. Capital management
The primary objective of the Group's capital management is to ensure that it maintains an optimal capital structure in
order to support its businesses and maximise shareholders' value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To
maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders. The Group's
approach in managing capital is based on defined guidelines that are approved by the Board.
There were no changes in the Group's approach to capital management during the year.