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Financial Risk Management

12 Months Ended

Jun. 30, 2025

Financial Risk Management [Abstract]

22.

Financial risk management

The Company’s activities expose it to a variety of financial risks from its operation. The key financial risks include credit risk, liquidity risk and market risk (including foreign currency risk and interest rate risk).

The directors reviews and agrees policies and procedures for the management of these risks, which are executed by the management team. It is, and has been throughout the current and previous financial years, the Company’s policy that no trading in derivatives for speculative purposes shall be undertaken.

The following sections provide details regarding the Company’s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks.

There has been no change to the Company’s exposure to these financial risks or the manner in which it manages and measures the risks.

Credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in a loss to the Company. The Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash), the Company minimizes credit risk by dealing exclusively with high credit rating counterparties.

The Company has adopted a policy of only dealing with creditworthy counterparties. The Company performs ongoing credit evaluation of its counterparties’ financial condition and generally do not require a collateral.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.

The Company has determined the default event on a financial asset to be when internal and/or external information indicates that the financial asset is unlikely to be received, which could include default of contractual payments due for more than 60 days or there is significant difficulty of the counterparty.

To minimize credit risk, the Company has developed and maintained the Company’s credit risk gradings to categorize exposures according to their degree of risk of default. The credit rating information is supplied by publicly available financial information and the Company’s own trading records to rate its major customers and other debtors. The Company considers available reasonable and supportive forward-looking information which includes the following indicators:

●

Internal credit rating

●

External credit rating

●

Actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the debtor’s ability to meet its obligations

●

Actual or expected significant changes in the operating results of the debtor

●

Significant increases in credit risk on other financial instruments of the same debtor

●

Significant changes in the expected performance and behavior of the debtor, including changes in the payment status of debtors in the company and changes in the operating results of the debtor

Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making contractual payment.

The Company determined that its financial assets are credit-impaired when:

●

There is significant difficulty of the debtor

●

A breach of contract, such as a default or past due event

●

It is becoming probable that the debtor will enter bankruptcy or other financial reorganization

●

There is a disappearance of an active market for that financial asset because of financial difficulty

The Company categorizes a receivable for potential write-off when a debtor fails to make contractual payments more than 180 days past due. Financial assets are written off when there is evidence indicating that the debtor is in severe financial difficulty and the debtor has no realistic prospect of recovery.

The Company’s current credit risk grading framework comprises the following categories:

Category	Definition of category	Basis for recognising expected credit loss (ECL)
I	Counterparty has a low risk of default and does not have any past-due amounts.	12-month ECL

II	Amount is >30 days past due or there has been a significant increase in credit risk since initial recognition.	Lifetime ECL – not credit impaired

III	Amount is >60 days past due or there is evidence indicating the asset is credit-impaired (in default).	Lifetime ECL – credit- impaired

IV	There is evidence indicating that the debtor is in severe financial difficulty and the debtor has no realistic prospect of recovery.	Amount is written off

The table below details the credit quality of the Company’s financial assets, as well as maximum exposure to credit risk by credit risk rating categories:

Category

12-month or
lifetime ECL

Gross
carrying
amount

Loss
allowance

Net
carrying
amount

USD

June 30, 2024

Trade receivables

II
Note 1

Lifetime ECL (Simplified)

7,119,565

(243,021

)

6,876,544

1,634,004

Other receivables

I
Note 2

12-month ECL

189,823

45,106

Cash and bank balances

I
Note 3

12-month ECL

3,823,689

908,585

Trade receivables (Note 1)

For trade receivables, the Company has applied the simplified approach in IFRS 9 and use provision matrix to measure the loss allowance at lifetime ECL. In determining ECL on a collective basis, trade receivables are grouped based on similar credit risk and aging. The Company considers the historical credit loss experience based on the past due status of the debtors, historical customers’ payment profile and adjusted as appropriate to reflect current conditions and estimates of future economic conditions affecting the ability of the customers to settle the debts. Accordingly, the credit risk profile of trade receivables is presented based on their past due status in terms of the provision matrix.

	Trade receivables		ECL			Trade receivables, net		Trade receivables, net
	RM		RM			RM		USD
June 30, 2025
Not past due		4,944,289		(119,697	)		4,824,592		1,146,420
< 30 days		987,992		(17,482	)		970,510		230,612
31 days to 60 days		336,636		(4,393	)		332,243		78,948
61 days to 90 days		5,628		(277	)		5,351		1,271
		6,274,545		(141,849	)		6,132,696		1,457,251

	Trade receivables		ECL			Trade receivables, net		Trade receivables, net
	RM		RM			RM		USD
June 30, 2024
Not past due		5,806,342		(206,183	)		5,600,159		1,330,710
< 30 days		1,039,791		(26,259	)		1,013,532		240,835
31 days to 60 days		271,389		(10,497	)		260,892		61,993
61 days to 90 days		1,344		(54	)		1,290		307
91 days to 120 days		699		(28	)		671		159
		7,119,565		(243,021	)		6,876,544		1,634,004

Other receivables (Note 2)

Other receivables are considered to be low credit risk and subject to immaterial credit loss. Credit loss for these assets have not been increased significantly since their initial recognition. Consequently, they are measured at the 12-month ECL.

Cash and cash equivalents (Note 3)

Cash and cash equivalents are mainly deposits with reputable banks with high international credit rating. Credit loss for the assets have not been increased significantly since their initial recognition. Consequently, they are measured at the 12-month ECL.

Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry.

Exposure to credit risk

The Company has no significant concentration of credit risk except for those significant customers disclosed below. The Company has credit policies and procedures in place to minimize and mitigate its credit risk exposure.

The following table sets forth a summary of single customers who represent 5% or more of the Company’s revenue:

	June 30, 2023		June 30, 2024		June 30, 2025		June 30, 2025
	RM		RM		RM		USD
Customer A		13,716,413		10,763,769		10,883,671		2,586,178
Customer B		7,823,338		3,274,015		5,180,589		1,231,012
Customer C		5,804,590		3,236,703		2,044,171		485,736
Customer D		3,413,844		N/A		N/A		N/A
		30,758,185		17,274,487		18,108,431		4,302,926

Liquidity risk

Liquidity risk refers to the risk that the Company will encounter difficulties in meeting its short-term obligations due to shortage of funds. The Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. It is managed by matching the payment and receipt cycles. The Company finances its working capital requirements through a combination of funds generated from operations, bank borrowings, and advances and loans from related parties, if necessary.

In assessing our liquidity, we monitor and analyze our cash and bank balances and our operating expenditure commitments. As of June 30, 2025, our cash and bank balances amounted to approximately RM 23.7 million, our current assets were approximately RM 44.6 million, and our current liabilities were approximately RM 9.5 million.

Based on the above considerations, management is of the opinion that the Company has sufficient funds to meet its working capital requirements and debt obligations, for at least the next 12 months. There are several factors that could potentially arise that could undermine the Company’s plans, such as changes in the demand for its products, economic conditions, its operating results continuing to deteriorate and its shareholders and related parties being unable to provide continued financial support.

The Company maintains sufficient cash and bank balances, and internally generated cash flows to finance their activities and management is satisfied that funds are available to finance the operations of the Company.

Analysis of financial instruments by remaining contractual maturities

The following table details the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.

	On demand or within 1 year		Within 2 to 5 years		Total
	RM		RM		RM
June 30, 2025
Trade and other payables		8,086,186		-		8,086,186
Lease liabilities		953,807		809,200		1,763,007
Total		9,039,993		809,200		9,849,193

June 30, 2024
Trade and other payables		12,164,409		1,737,100		13,901,509
Lease liabilities		1,334,650		1,153,787		2,488,437
Total		13,499,059		2,890,887		16,389,946

Market risk

Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates will affect the Company’s profit or loss. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates. The Company’s exposure to interest rate risk arises primarily from loans from related parties.

The Company periodically reviews its liabilities and monitors interest rate fluctuations to ensure that the exposure to interest rate risk is within acceptable level.

The Company does not expect any significant effect on the Company’s profit or loss arising from the effects of reasonably possible changes to interest rates on interest bearing financial instruments at the end of the reporting period.

Foreign currency risk

The Company’s foreign exchange risk results mainly from cash flows from transactions denominated in foreign currencies. At present, the Company does not have any formal policy for hedging against currency risk. The Company ensures that the net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates, where necessary, to address short-term imbalances.

The Company has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the functional currency of the entity, primarily United States Dollar (“USD”) and Euro (“EUR”).

At the end of each reporting period, the Company’s exposure to foreign currency risk is as follows:

	June 30, 2024						June 30, 2025
	USD			EUR			USD			EUR
	RM			RM			RM			RM
Financial assets
Trade and other receivables		12,931,625			1,645,651			8,797,060			1,289,412
Cash and bank balances		2,307,804			518,391			22,387,986			505,794

Financial liabilities
Trade and other payables		(12,295,728	)		(255,478	)		(5,805,035	)		(523,228	)

Net exposure		2,943,701			1,908,564			25,380,011			1,271,978

Strengthening of Malaysian Ringgit against the foreign currencies denominated balances as at the reporting date would increase/(decrease) profit or loss by the amounts shown below. The analysis assumes that all other variables remain constant.

	Profit or loss (after tax)
	June 30, 2024		June 30, 2025
	RM		RM
USD strengthening 4% (Jun 2024: 1%)		29,437		1,015,200
EUR strengthening 4% (Jun 2024: 1%)		19,086		50,879

Weakening of Malaysian Ringgit against the above currencies would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.