NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 21. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (a) Categories of financial instruments At amortised cost At fair value through profit or loss Interest Bearing $’000 Non-Interest Bearing $’000 Non-Interest Bearing $’000 Total $’000 2025 Financial assets Cash and cash equivalents 10 4,227 – – 4,227 Short term investments 11 291,895 – – 291,895 Trade and other receivables 12 – 464 – 464 Total financial assets 296,122 464 – 296,586 Financial liabilities Trade and other payables 15 – 1,811 – 1,811 Derivative financial instruments - forward exchange contracts 16 – – 1,935 1,935 Total financial liabilities – 1,811 1,935 3,746 2024 Financial assets Cash and cash equivalents 10 3,153 – – 3,153 Short term investments 11 219,089 – – 219,089 Trade and other receivables 12 – 156,321 – 156,321 Derivative financial instruments - forward exchange contracts 16 – – 1,362 1,362 Total financial assets 222,242 156,321 1,362 379,925 Financial liabilities Trade and other payables 15 – 2,392 – 2,392 At 31 December 2025, 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. Foreign 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. Neuren Pharmaceuticals Limited Annual Report 2025 53
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