TRANSACTION PAYMENT SOLUTIONS (Pvt) Ltd

Property, Plant and Equipment Impairment Tests (18 February 2011)

The terminals for TPS have been treated as tangible assets since the date of recognition
(purchase date). Terminals that have been reported faulty have been diagnosed and parts to
repair them are already in stock and those not in stock plans to order them are underway. Report
on faulty terminals refers to Annexure 1 attached. The requirements of IAS 36 (Impairment of
Assets) in relation to this treatment have been considered below:
Definitions
Impairment; An asset is impaired when its carrying amount exceeds its recoverable amount.
Carrying amount; the amount at which an asset is recognized in the balance sheet after
deducting accumulated depreciation and accumulated impairment losses.
Recoverable Amount; the higher of an asset’s fair value less costs to sell (sometimes called net
selling price) and its value in use.
Fair value; the amount obtainable from the sale of an asset in an arm’s length transaction
between knowledgeable, willing parties.
Fixed Assets
Motor Vehicles
At 28 February the vehicles were assessed and found to be fairly valued with carrying amounts
(NBV’s) lower than recoverable amounts
- No need to impair vehicles
Furniture and Equipment
Furniture in the books is in good state and therefore considered to have carrying amounts that
equate to recoverable amounts.
Identifying Terminals for Impairment
At balance sheet date (28-February-2011) TPS has reviewed all the categories of terminals
looking for indications of impairment (if the carrying amount may be in excess of the greater of
the net selling price and the value in use); factors that have been taken into consideration are;

 Possibility of changes in technology, and it has been noted that over the past the models
do change and the software is constantly upgraded. The terminals held are also still in use
and not yet obsolete
  Obsolescence or physical damage; Physical damage has been assessed based on the
terminals that have been returned as faulty by clients. Terminals identified as damaged
beyond repair were selected and scrapped. Spares were used to repair other working
terminals. This is an ongoing operation throughout the year.

 Terminals deployed not transacting, it has been noted that because of the contracts signed
between TPS and the merchants, if the terminals that if for any reason the merchants
cannot return the terminals to TPS then full liability will be charged to them, i.e. all
lost/stolen terminals in the current year TPS has recovered the full cost over and above
the carrying amounts.

 Ready market for terminals on disposal

The market for terminals is confirmed by sales ofterminals during the year
Non Transacting Terminals- Reasons
Activity of terminals is monitored weekly on an ongoing basis and those deemed idle are re-
called back for redeployment to other busy merchant outlets. The following are some of the
reasons why terminals were not transacting;
o GPRS Connectivity

o Faulty Software

o Hardware faults

o Merchants stop use, for shop renovations

o Terminals used as backup for scratch cards

o Too many terminals in one shop e.g. TM

o TPS Account’s in payment arrears and therefore further credit suspended

Terminals we have on our asset register are as follows;

Model Technology
VeriFone - VX510 -TCP-IP
VX610 -GPRS
VX670 -GPRS
Ingenico - I5100 -TCP-IP
I7910 -GPRS
We have assessed the status of these terminals and concluded that the business will be able to use
these terminals for the next 3-5years. All of them are based on current technologies which are
fairly new to Zimbabwe.
Conclusion
There is no material misstatement in the carrying amount of the terminals. Hence impairment
will be restricted to terminals which are beyond repair.
Warranties provisions have been made for terminals awaiting spares or repairs.