AGS Transact Technologies Limited

Annexure V - Basis of preparation and Significant Accounting Policies
Notes to the Revised Restated Consolidated Financial Information

(ii) Classification and subsequent measurement

The Group classifies its financial assets into a) financial assets measured at amortised cost, b) financial assets
measured at fair value through other comprehensive income (FVOCI), and c) financial assets measured at fair value
through profit and loss (FVTPL). Management determines the classification of its financial assets at the time of
initial recognition or, where applicable, at the time of reclassification.

a) Financial assets measured at amortised cost

A financial asset is classified as measured at amortised cost if it is held within a business model whose objective is
to;
— hold financial asset in order to collect contractual cash flows and

— the contractual terms of the financial asset give rise on specific dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using effective interest
rate method (EIR). Amortised cost is arrived at after taking into consideration any discount on fees or costs that are
an integral part of the EIR. The amortisation of such interest forms part of finance income in the Revised Restated
Consolidated Statement of Profit and Loss. Any impairment loss arising from these assets is recognised in the
Revised Restated Consolidated Statement of Profit and Loss.

b) Financial assets measured at fair value through other comprehensive income (FVOCI)

- Debt investments at FVOCI: These assets are subsequently measured at fair value. Interest income under the
effective interest method, foreign exchange gains and losses and impairment are recognised in Revised Restated
Consolidated Statement of Profit and Loss. Other net gains and losses are recognised in OCI. On derecognition,
gains and losses accumulated in OCI are reclassified to Revised Restated Consolidated Statement of Profit and Loss.

Financial assets are not reclassified subsequent to their recognition, except if and in the period the Group changes its
business model for managing financial assets.

c) Financial assets measured at fair value through profit and loss (FVIPL)

This is a residual category for classification. Any asset which does not meet the criteria for classification as at
amortised cost and FVOCI, is classified as FVTPL. Financial assets at fair value through profit and loss are
measured at fair value, and changes therein are recognised in the Revised Restated Consolidated Statement of Profit
and Loss.

(iii) Trade receivables

Trade receivables are initially recognised at fair value. Subsequently, these assets are held at amortised cost, using
the effective interest rate (EIR) method. The EIR is the rate that discounts estimated future cash income through the

expected life of financial instrument. Trade receivables are tested for impairment on a specific basis after
considering the sanctioned credit limits, prior experience, customer profile and expectations about future cash flows.

(iv) Derecognition

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the contractual rights to receive the cash flows from the asset.

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