AGS Transact Technologies Limited

Annexure V - Basis of preparation and Significant Accounting Policies

Notes to the Revised Restated Consolidated Financial Information

(iv) Compensated absences

Compensated absences which are not expected to occur within twelve months after the end of the year in which the
employee renders the related services are recognised as a liability at the present value of the estimated liability for
leave as a result of services rendered by employees, which is determined at each reporting date based on an actuarial
valuation by an independent actuary using the projected unit credit method. The discount rates used for determining
the present value of the obligation under other long term employee benefits, are based on the market yields on
Government of India securities as at the reporting date. Re-measurement gains and losses are recognised
immediately in the Revised Restated Consolidated Statement of Profit and Loss.

The Group presents the above liability as current in the Revised Restated Consolidated Statement of Assets and
Liabilities.

(v) Employee stock compensation cost

The grant date fair value of equity settled share-based payment awards granted to employees is recognised as an
employee expense, with a corresponding increase in equity, over the period that the employees unconditionally
become entitled to the awards. The amount recognised as expense is based on the estimate of the number of awards
for which the related service and non-market vesting conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number of awards that do meet the related service and non-
market vesting conditions at the vesting date.

Provisions (other than for employee benefits)

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate
of the expenditure required to settle the present obligation at the reporting date) at a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount
is recognised as finance cost.

Provision for warranties

Provision for current warranty-related costs is recognised when the related product is sold. Provision is based on
technical estimates which are based on historical experience. The estimates of such warranty-related costs are
reviewed and revised annually.

Contingent liabilities and contingent assets

Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly
within the control of the Group, or present obligations where it is not probable that an outflow of resources will be
required or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not
recognised in the revised restated consolidated financial information but are disclosed unless the possibility of an
outflow of economic resources is considered remote.

A contingent asset is not recognised but disclosed in the revised restated consolidated financial information where
an inflow of economic benefit is probable.

Contingent liabilities and contingent assets are reviewed at each reporting date.

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