18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (a) Categories of financial instruments At amortised cost At fair value through profit or loss Floating Interest Rate $’000 Non-Interest Bearing $’000 Non-Interest Bearing $’000 Total $’000 2023 Financial assets Cash and cash equivalents 8 17,094 – – 17,094 Short-term investments 9 211,445 – – 211,445 Trade and other receivables 10 – 14,332 – 14,332 Total financial assets 228,539 14,332 – 242,871 Financial liabilities Trade and other payables 11 – 2,849 – 2,849 Derivative financial instruments - forward exchange contracts 12 – – 2,226 2,226 – 2,849 2,226 5,075 2022 Financial assets Cash and cash equivalents 8 40,180 – – 40,180 Trade and other receivables 10 – 207 – 207 Total financial assets 40,180 207 – 40,387 Financial liabilities Trade and other payables 11 – 525 – 525 Derivative - financial liability 12 – – 700 700 Total financial liabilities – 525 700 1,225 At 31 December 2023, the carrying value of all financial instruments approximated their fair value. (b) Risk management The Group is subject to a number of financial risks which arise as a result of its activities. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. Currency risk During the normal course of business the Group enters into contracts with overseas customers or suppliers or consultants that are denominated in foreign currency. As a result of these transactions there is exposure to fluctuations in foreign exchange rates. The Company also has a net investment in a foreign operation, whose net assets are exposed to foreign currency translation risk. The principle currency risk faced by the business is the exchange rate between the Australian dollar and the US dollar. The Group holds cash denominated in US dollars and Australian dollars and has material revenue and expenditure in each of these currencies. Where possible, the Group matches foreign currency income and foreign currency expenditure as a natural hedge, holding foreign currency cash to facilitate this natural hedge. When foreign currency expenditure exceeds foreign currency revenue and foreign currency cash, the group purchases foreign currency to meet anticipated requirements under spot and forward contracts. The Group does not designate formal hedges. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Neuren Pharmaceuticals Limited Annual Report 2023 48
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