2 MATERIAL ACCOUNTING POLICIES (CONTINUED) (xviii)Current versus non-current classification The Group presents assets and liabilities in the Statement of Financial Position based on current/non-current classification. An asset is current when it is: – Expected to be realised or intended to be sold or consumed in the normal operating cycle – Held primarily for the purpose of trading – Expected to be realised within twelve months after the reporting period; or – Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period All other assets are classified as non-current. A liability is current when: – It is expected to be settled in the normal operating cycle – It is held primarily for the purpose of trading – It is due to be settled within twelve months after the reporting period; or – There is no right to defer the settlement of the liability for at least twelve months after the reporting period The Group classifies all other liabilities as non-current. (xix) Borrowings Borrowings in the form of equipment loans are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is taken to the income statement over the period of the borrowings using the effective interest method. Borrowings which are due to be settled within twelve months after the balance sheet date are included in current borrowings in the balance sheet even though the original term was for a period longer than twelve months and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the balance sheet date and before the financial statements are authorised for issue. Other borrowings due to be settled more than twelve months after the balance sheet date are included in non-current borrowings in the balance sheet. (xx) Issued Capital Issued and paid-up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity, net of tax, as reduction of the proceeds received. (xxi) Earnings Per Share Basic earnings per share (EPS) is calculated by dividing the net (loss)/profit attributable to members of the Company for the reporting period, after excluding any costs of servicing equity (other than dividends on ordinary shares), by the weighted average number of ordinary shares of the Company, adjusted for any bonus issue. Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after-tax effect of financing costs associated with dilutive potential ordinary shares and other non-discretionary changes in revenues and expenses that would result from the dilution of potential ordinary shares, by the weighted average number of ordinary shares and dilutive potential ordinary shares of the Company adjusted for any bonus issue. (xxii) Critical Accounting Estimates and Judgments The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue, and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Management has identified the following key estimates and assumptions that have the most significant impact on the critical accounting policies and therefore the financial statements. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Significant accounting estimates and assumptions The carrying value of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are outlined below. Notes to the Financial Statements continued for the year ended 30 June 2026 42 INOVIQ Limited
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