18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) At 31 December 2023, there were three forward contracts to convert Australian dollars to US dollars outstanding. Adjustment of these financial instruments to fair value as measured at 31 December 2023 resulted in a loss of $2.2 million. This fair value measurement is categorised within Level 2 of the fair value hierarchy. A summary of the forward contracts outstanding at 31 December 2023 is as follows: Buy USD $'000 Sell AUD $'000 Term Weighted average exchange rate Buy US dollar / sell AU dollar 23,611 36,672 3 months or less 0.6439 During the year, the US dollar fluctuated against the Australian dollar. A net foreign exchange gain of $2.4 million is included in results for the year ended 31 December 2023 (2022: $1.2 million), this includes a $1.9 million gain on the milestone revenue from Acadia (2022: $1.4 million gain). The carrying amounts of US dollar denominated financial assets and liabilities are as follows: 2023 $’000 2022 $’000 Assets US dollars 168,688 2,104 Liabilities US dollars 2,760 803 An increase of 10% in the rate of the US dollar against the Australian dollar as at the reporting date would have decreased the consolidated profit after income tax by $18,418,196 (2022: $1,238,107). A decrease of 10% in the rate of the US dollar against the Australian dollar as at the reporting date would have increased the consolidated profit after income tax by $22,511,129 (2022: $1,514,242). An increase of 10% in the rate of the US dollar against the Australian dollar as at the reporting date would have decreased equity by $51,743 (2022: decrease of $12,419). A decrease of 10% in the rate of the US dollar against the Australian dollar as at the reporting date would have increased equity by $63,242 (2022: increase of $15,179). Interest rate risk The Group is exposed to changes in market interest rates as entities in the Group hold cash and cash equivalents and short-term investments. The effective interest rates on financial assets are as follows: 2023 $’000 2022 $’000 Financial Assets Cash and cash equivalents Australian dollar cash deposits 59,858 38,076 Australian dollar interest rate 4.79% 3.58% US dollar cash deposits 168,688 2,104 US dollar interest rate 4.67% –% The Company and Group do not have any interest-bearing financial liabilities. Trade and other receivables and payables do not bear interest and are not interest rate sensitive. A 5% change in average market interest rates would have changed reported profit after tax by approximately $537,400 (2022: $68,200). A 5% increase/decrease in the average market interest rates would have no impact on other components of equity. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Neuren Pharmaceuticals Limited Annual Report 2023 49
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