AGS Transact Technologies Limited

Annexure V - Basis of preparation and Significant Accounting Policies

Notes to the Revised Restated Consolidated Financial Information

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs
to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU
(or the asset).

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in the Revised Restated Consolidated Statement of Profit and Loss.
Impairment loss recognised in respect of a CGU is allocated to the carrying amounts of the other assets of the CGU
ona pro rata basis.

In respect of assets for which impairment loss has been recognised in prior periods, the Group reviews at each
reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is
made only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Goodwill on business combinations is included in intangible assets. Goodwill is not amortised but it is tested for
impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired.

Inventories

Raw materials, finished goods, stores, spares (other than those capitalised in property, plant and equipment), traded
items and consumables are carried at the lower of cost and net realisable value. However, materials and other items
held for use in the production of inventories are not written down below cost if the finished products in which they
will be incorporated are sold at or above cost. The comparison of cost and net realisable value is made on an item-
by-item basis.

In determining cost of raw materials, finished goods, traded items, stores, spares and consumables, weighted average
cost method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently
recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and
condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.

Cost of finished goods includes the cost of raw materials and other costs incurred in bringing the inventories to their
present location and condition.

Revenue

(i) Sale of goods

Revenue from contracts with customers is measured at fair value of the consideration received or receivable, is net
of returns, service level adjustment/credits, non-current warranties, trade discounts, goods and service tax and
volume rebates, where applicable.

Revenue is recognised when the Group satisfies performance obligation by transferring the goods to the customers.
The Group ‘transfers’ goods to the customers when the customers obtain control of the goods. Control may be
transferred either at a point in time or over time. The amount of revenue recognised is adjusted for expected returns,
which are estimated based on historical data.

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