NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023 (CONT’D) 44. FINANCIAL INSTRUMENTS (CONT’D) 44.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D) (b) Credit Risk (Cont’d) (iii) Assessment of Impairment Losses (Cont’d) Other Receivables (Cont’d) The Group uses 3 categories to reflect their credit risk and how the loss allowance is determined for each category:- Category Definition of Category Loss Allowance Performing: Receivables have a low risk of default and a strong capacity to meet contractual cash flows 12-months expected credit losses Underperforming: Receivables for which there is a significant increase in credit risk Lifetime expected credit losses Not performing: There is evidence indicating the receivable is credit impaired or more than 90 days past due Lifetime expected credit losses The Group measures the expected credit losses of receivables having significant balances, receivables that are credit impaired and receivables with a high risk of default on individual basis. Other receivables are grouped based on shared credit risk characteristics and assessed on collective basis. Loss allowance is measured on either 12-month expected credit losses or lifetime expected credit losses, by considering the likelihood that the receivable would not be able to repay during the contractual period (probability of default, PD), the percentage of contractual cash flows that will not be collected if default happens (loss given default, LGD) and the outstanding amount that is exposed to default risk (exposure at default, EAD). In deriving the PD and LGD, the Company considers the receivable’s past payment status and its financial condition as at the reporting date. The PD is adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the receivable to settle its debts. There are no significant changes in the estimation techniques and assumptions as compared to the previous financial year. INTEGRATED ANNUAL REPORT 2023 MATRIX CONCEPTS HOLDINGS BERHAD 229
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