Company: ARBB
Filing Date: 2025-10-31
Form Type: 20-F
Source: 0001213900-25-104705
Chunk: 76

Company: ARB IOT Group Ltd
Filing Date: 2025-10-31
Form: 20-F
Item: Item 5
Chunk 76
---
 the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations
as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application
and require us to make significant accounting estimates. The following descriptions of significant accounting judgments, and estimates
should be read in conjunction with our consolidated financial statements and other disclosures included in this Annual Report. When reviewing
our financial statements, you should consider (i) our selection of significant accounting policies, (ii) the judgments and other uncertainties
affecting the application of such policies, and (iii) the sensitivity of reported results to changes in conditions and assumptions.

Intangible Asset and Goodwill

Supply/Service Agreements

Supply Agreement, Service Agreement and the Reseller
and Drone Service Agreement (“ Supply/Service Agreements”) recognized in a business combination is a contract-based intangible
asset at the acquisition date and is initially measured at cost. After initial recognition, Supply/Service Agreement is measured at cost
less accumulated amortization and accumulated impairment losses.

For the purpose of initial cost recognition,
the Company had appointed Independent Valuer (“the Valuer”) to value Supply/Service Agreement based on Discounted Cash Flow
Valuation Model (“ DCF valuation model”), where the Valuer has adopted the mid-point cost of equity (“ Ke”) as
the discount rate for future cash flows on June 3, 2021.

The initial cost recognition was taken the following basis into
consideration:

  the expected cash flows received by Digital Agrophonic Sdn Bhd (“ DASB”)                                                                   

  (i)      provision                                                                                                                                 

  (ii)      purchase                                                                                                                            

  the                                                                                                                                   

  rationale                           

The calculation of initial cost of Supply/Service
Agreements is based on the following assumptions:

  (i)      Revenue                                                                                                                               

  (a)      Sale                                          

  (b)      Drone                                                                                                                           

The selling price per unit of the products is
approximately RM5,800 per unit, inflated by 5% per annum for every 3-year intervals. Approximately 272 units are expected to be sold within
these ten (10) years.

Drone Services provided will be charged at a rate
of approximately RM342,800 per month and shall be inflated by 5% per annum for every 3-year intervals. Approximately 608 times of the
monthly service rate are expected to be earned within these ten (10) years.