AGS Transact Technologies Limited
Annexure V - Basis of preparation and Significant Accounting Policies

Notes to the Revised Restated Consolidated Financial Information
Leases

For the purpose of preparation of Revised Restated Consolidated Financial Information, the Group has applied Ind
AS 116 using the modified retrospective approach from 1 April 2018.

The Group assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group
assesses whether: (i) the contact involves the use of an identified asset (ii) the Group has substantially all of the
economic benefits from use of the asset through the period of the lease and (iii) the Group has the right to direct the
use of the asset.

On transition to Ind AS 116, the Group has elected to apply practical expedient to grandfather the assessment of
which transactions are leases. Contracts that were not identified as leases under Ind AS 17 were not re-assessed for
whether there is a lease under Ind AS 116. Therefore, the definition of leases the Group has tested its right of use
assets for impairment on the date of assessment and has concluded that there is no indication that the right of use
assets is impaired.

Asa lessee

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less
any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful
lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition,
the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the
discount rate.

Lease payments included in the measurement of the lease liability comprise the fixed payments, including in-
substance fixed payments;

The lease liability is measured at amortised cost using the effective interest method.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term.
Right of use assets and lease liabilities includes these options when it is reasonably certain that they will be
exercised.

Under Ind AS 116, the Group recognised a right-of-use asset and a lease liability for the sale and leaseback
transaction on 1 April 2019, measured in the same way as other right-of-use assets and lease liabilities at that date
and adjusted the leaseback right-of-use of asset for proportionate gains and losses recognised in Revised Restated
Consolidated Statement of Profit and Loss.

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