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Significant Accounting Policies
 12 Months Ended
Jun. 30, 2024
Significant Accounting Policies [Abstract]  
SIGNIFICANT ACCOUNTING POLICIES

2. SIGNIFICANT ACCOUNTING POLICIES

 

This summary provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements to the extent they have not been disclosed in the other notes below. The policies have been consistently applied to all the years presented, unless otherwise stated. The consolidated financial statements are for the Group consisting of ARB IOT Group Limited and its subsidiaries.

 

Basis for preparation

 

The consolidated statements of operations and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the years ended June 30, 2024, 2023 and 2022 include the results, changes in equity and cash flows of the companies comprising the Group as if the Company had always been the holding company of the Group and the current group structure had been in existence throughout years ended June 30, 2024, 2023 and 2022, or since their respective dates of incorporation, where this is a shorter period.

 

The consolidated financial statements of ARB IOT Group Limited and its subsidiaries have been prepared on a going concern basis and in accordance with International Financial Reporting Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS. The consolidated financial statements comply with IFRS as issued by the International Accounting Standards Board (“IASB”).

 

Historical cost convention

 

The consolidated financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss and other comprehensive income.

 

New or amended Accounting Standards and Interpretations adopted

 

There was no new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board (“IASB”) that are relevant to the company’s current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The Company has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.

 

Business combinations

 

Business combinations are accounted for using the acquisition method with assets and liabilities acquired recorded at the acquisition date fair value. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value and the amount of any non-controlling interest share (“NCI”) in the acquiree. For each business combination, the Group elects whether to measure NCI in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition related costs are expensed as incurred and included in General and administrative expenses.

 

Principles of consolidation

 

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

 

Upon loss of control of a subsidiary, the Group’s profit or loss is calculated as the difference between the fair value of the consideration received and of any investment retained in the former subsidiary and the previous carrying amount of the assets (including any goodwill) and liabilities of the subsidiary and any non-controlling interests.

 

The principal place of business of the subsidiaries are in Malaysia and/or incorporated in Malaysia unless indicated otherwise. The details of the subsidiaries are as follows:

 

    Ownership Interest in equity  
Name of company   June 30,
2024
%		    

June 30,
2023

%

    

 

Principal activities

  
                   
ARB IOT (M) Sdn. Bhd.   100     100     Investment holding  
                   
ARB IOT Group Sdn. Bhd.   100     100     Investment holding  

 

    Ownership Interest in equity  
Name of company   June 30,
2024
%		     June 30,
2023
%		     Principal activities  
                   
Subsidiaries of ARB IOT Group Sdn. Bhd.                  
ARB AI Agro Sdn. Bhd.   100     100     Investment holding  
                   
Subsidiary of ARB AI Agro Sdn. Bhd.                  
ARB Agro Technology Sdn. Bhd.   100     100     Business in digital agricultural technology  
                   
ARB AI Sdn. Bhd.   100     100     Investment holding  
                   
Subsidiary of ARB AI Sdn. Bhd.                  
ARBIOT Sdn. Bhd.   100     100     IoT, internet and multimedia development and consultancy services, and project management  
                   
ARB Lab Sdn. Bhd.   100     100     Investment holding  
                   
Subsidiaries of ARB Lab Sdn. Bhd.                  
ARB R&D Sdn. Bhd.   100     100     Development of IT and IoT for software and hardware  
                   
Subsidiary of ARB R&D Sdn. Bhd.                  
ARB Innovation Sdn. Bhd.   100     100     Provision of IT software and hardware solution  
                   
ARB R1 Technology Sdn. Bhd   100     100     Dormant  
                   
ARB Midware Sdn. Bhd.   -     100     Investment holding  
                   
Subsidiary of ARB Midware Sdn. Bhd.                  
ARB Distribution Sdn. Bhd.   -     51     Distribution of IoT related products  
                   
ARB Robotic Sdn. Bhd.   100     100     Investment holding  
                   
Subsidiary of ARB Robotic Sdn. Bhd.                  
ARB Intelligence Sdn. Bhd.   100     100     IoT cloud business platform  

 

    Ownership Interest in equity  
Name of company   June 30,
2024
%		    

June 30,
2023

%

    

 

Principal activities

  
                   
ARB Techsymbol Sdn. Bhd.   100     100     Investment holding  
                   
Subsidiaries of ARB Techsymbol Sdn. Bhd.                  
ARB Logistic Technologies Sdn. Bhd.   100     100     Dormant  
                   
ARB WMS Technologies Sdn. Bhd.   100     51     Business in provision of warehouse management system solution and equipment  
                   
ARB Information Sdn. Bhd.   100     100     Investment holding  
                   
Subsidiary of ARB Information Sdn. Bhd.                  
ARB AI Technology Sdn. Bhd.   100     100     Provision of IT software and hardware solution  
                   
ARB 5G Sdn. Bhd.   100     100     Investment holding  
                   
Subsidiary of ARB 5G Sdn. Bhd.                  
ARB Big Data Sdn. Bhd.   100     100     Software development and data analysis  

 

During the financial year, the Group completed the following subscriptions, acquisitions and disposals of companies:

 

(1)On October 6, 2023, ARB IOT Group Sdn. Bhd., an indirect subsidiary of the Company, disposed 100% equity interest in ARB Midware Sdn. Bhd. for a total cash consideration of RM1. Consequently, ARB Midware Sdn. Bhd. and its 51% owned subsidiary, namely ARB Distribution Sdn. Bhd. were disposed off from the Group.

 

(2)On May 31, 2024, ARB Techsymbol Sdn. Bhd. had acquired additional 49,000 ordinary shares of ARB WMS Technologies Sdn. Bhd. representing 49% of controlling equity interest for a total cash consideration of RM49,000. Consequently, ARB Techsymbol Sdn. Bhd. and its wholly-owned subsidiary, namely ARB WMS Technologies Sdn. Bhd. became wholly-owned subsidiaries of the ARB IOT Group Sdn. Bhd.

 

In the previous financial year, the Group completed the following subscriptions, acquisitions, disposals and incorporations of companies:

 

(1)On April 17, 2023, ARB IOT Group Sdn. Bhd., an indirect subsidiary of the Company, acquired 1 ordinary share representing 100% equity interest of ARB Synergy Sdn. Bhd. for a total cash consideration of RM 1. Consequently, ARB Synergy Sdn. Bhd. and its wholly-owned subsidiary, namely ARB Databook Pte. Ltd. became wholly-owned subsidiaries of the ARB IOT Group Sdn. Bhd.

 

On June 27, 2023, ARB IOT Group Sdn. Bhd. disposed 100% equity interest in ARB Synergy Sdn. Bhd. for consideration of RM 1. Consequently, ARB Synergy Sdn. Bhd. and its subsidiary, ARB Databook Pte. Ltd. were disposed off from the Group.

 

  (2) On May 26, 2023, ARB IOT Group Sdn. Bhd. acquired 10 ordinary shares representing 10% of equity interest of ARB Robotic Sdn. Bhd. from ARB Distribution Sdn. Bhd., an 51% owned subsidiary of the Company, for a total consideration of RM 1. Consequently, ARB Robotic Sdn. Bhd. and its wholly-owned subsidiary, namely ARB Intelligent Sdn. Bhd. became wholly-owned subsidiaries of the Company.

 

In financial year ended June 30, 2022, the Group completed the following subscriptions, acquisitions, disposals and incorporations of companies:

 

  (1) On July 12, 2021, ARB Techsymbol Sdn. Bhd. acquired 49,000 ordinary shares representing 49% of the equity interest of ARB Logistic Technologies Sdn. Bhd. for a total cash consideration of RM 49,000. Consequently, ARB Logistic Technologies Sdn. Bhd. became a wholly-owned subsidiary of ARB Techsymbol Sdn. Bhd.
     
  (2) On August 12, 2021, ARB Techsymbol Sdn. Bhd. had acquired 51,000 ordinary shares representing 51% of equity interest of ARB WMS Technologies Sdn. Bhd. Bhd., for a total cash consideration of RM 51,000.
     
  (3) On September 23, 2021, ARB R&D Sdn. Bhd., had acquired one (1) ordinary share representing 100% of equity interest of ARB Innovation Sdn. Bhd., for a total cash consideration of RM 8,000,001.
     
  (4) On October 12, 2021, ARB AI Agro Sdn. Bhd. acquired 100 ordinary shares representing 10% of the equity interest of ARB Agro Technology Sdn. Bhd. for a total cash consideration of RM 100. Consequently, ARB Agro Technology Sdn. Bhd. became a wholly-owned subsidiary of ARB AI Agro Sdn. Bhd.
     
  (5) On December 31, 2021, ARB AI Sdn. Bhd. acquired 1,000,000 ordinary shares representing 1% equity interest of ARBIOT Sdn. Bhd. for a total cash consideration of RM 1. Consequently, ARB Agro Technology Sdn. Bhd. became a wholly-owned subsidiary of ARB AI Sdn. Bhd.
     
  (6) On March 14, 2022, ARB IOT Group Sdn. Bhd. incorporated a wholly-owned subsidiary, ARB Information Sdn. Bhd., with an issued and paid up capital of RM 1 comprising one (1) ordinary share.
     
  (7) On March 16, 2022, ARB Information Sdn. Bhd. incorporated a wholly-owned subsidiary, ARB AI Technology Sdn. Bhd., with an issued and paid up capital of RM 1 comprising one (1) ordinary share.
     
  (8) On May 10, 2022, ARB R&D Sdn. Bhd. had acquired one (1) ordinary share representing 100% of equity interest of ARB R1 Technology Sdn. Bhd., for a total cash consideration of RM 1.

 

Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

 

Segmental Information

 

An operating segment is defined as a component of an entity for which discrete financial information is available and whose operating results are regularly reviewed by the Chief Operating Decision Maker (CODM). The CODM is comprised of the Management Board of the Group. The Group operates as two segments dedicated to the provision of hardware and software of Internet of Things solutions and investment holding and others. The CODM makes decisions about allocating resources and assessing performance based on the Group as a whole. Accordingly, the Group has determined it operates in two operating and reportable segments. 

 

Foreign currency translation

 

The consolidated financial statements are presented in Ringgit Malaysia, which is the Company’s presentation currency. The use of USD is solely for the convenience of the reader. The functional currency of the Company is USD. All the functional currency of subsidiaries of ARB IOT Group Limited are Ringgit Malaysia.

 

Foreign currency transactions

 

Foreign currency transactions are translated into Ringgit Malaysia using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Non-monetary items are converted at the rate of exchange used to convert the related consolidated statements of financial position items, i.e., at the time of the transaction.

 

Revenue recognition

 

Revenues are generally recognized upon the transfer of control of promised products or services provided to our customers, reflecting the amount of consideration we expect to receive for those products or services. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

 

Revenues are recognized upon the application of the following steps:

 

  1 Identification of the contract or contracts with a customer;

 

  2 Identification of the performance obligations in the contract;

 

  3 Determination of the transaction price;

 

  4 Allocation of the transaction price to the performance obligations in the contract; and

 

  5 Recognition of revenue when, or as, the performance obligation is satisfied.

 

Employee benefits

 

Short-term employee benefits

 

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group and the Company. Short term accumulating compensated absence such as paid annual leave is recognised when services are rendered by employees and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

 

Defined contribution plan

 

As required by law, companies in Malaysia make contributions to the Employees’ Provident Fund (“EPF”). The contributions are recognised as a liability after deducting any contribution already paid and as an expense in profit or loss in the period in which the employee render their services. Once the contributions have been paid, the Group and the Company has no further payment obligations.

 

Income tax

 

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

 

Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial year.

 

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

 

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.

 

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

 

Impairment of assets

 

Goodwill is not subject to amortization and is tested annually for impairment or more frequently if events or changes in circumstances indicate it might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use and is calculated with reference to future discounted cash flows that the asset is expected to generate when considered as part of a cash-generating unit. Assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. If an impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment charge been recognized for the asset in prior years.

 

Cash and bank balances

 

For the purposes of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with financial institutions, and, if applicable, other short-term highly liquid investments with original maturities of three months or less.

 

Trade receivables

 

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Trade receivables are recognized initially at fair value. The Group holds trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortized cost, less provision for impairment. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

 

Trade payables

 

Trade payables are liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. They are recognized initially at their fair value and subsequently measured at amortized cost. They are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. All trade payables were current for the years ended June 30, 2024, 2023 and 2022.

 

Share capital and reserves

 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds of the issue.

 

Fair value hierarchy

 

Financial instruments are carried at fair value. The different levels used in measuring fair value have been defined in accounting standards as follows:

 

Level 1 — the fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period.

 

Level 2 — the fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

 

Level 3 — if one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

 

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.