21. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) At 31 December 2025, 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 2025 resulted in a loss of $3.3 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 2025 is as follows: Buy USD $’000 Sell AUD $’000 Term Weighted average exchange rate Buy US dollar / sell AU dollar 65,103 99,232 3 months or less 0.6561 During the year, the US dollar fluctuated against the Australian dollar. A net foreign exchange gain of $8.0 million is included in results for the year ended 31 December 2025 (2024: $7.2 million loss). The carrying amounts of Australian dollar denominated financial assets and liabilities are as follows: Year ended Dec 2025 $’000 Year ended Dec 2024 $’000 Assets Australian dollars 116,917 104,030 Liabilities Australian dollars 182 230 An increase of 10% in the rate of the Australian dollar against the US dollar as at the reporting date would have increased the consolidated profit after income tax by $1,584,483 (2024: $5,428,109). A decrease of 10% in the rate of the Australian dollar against the US dollar as at the reporting date would have decreased the consolidated profit after income tax by $1,944,721 (2024: $6,639,911). An increase of 10% in the rate of the Australian dollar against the US dollar as at the reporting date would have decreased equity by $28,978,429 (2024: $36,280,789). A decrease of 10% in the rate of the Australian dollar against the US dollar as at the reporting date would have increased equity by $34,208,896 (2024 $44,142,672). 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: Financial Assets 2025 $’000 2024 $’000 Cash and cash equivalents Australian dollar cash deposits 116,917 102,014 Australian dollar interest rate 4.06% 4.67% US dollar cash deposits 179,204 120,174 US dollar interest rate 3.70% 4.27% 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 $569,296 (2024: $494,963). A 5% increase/decrease in the average market interest rates would have no impact on other components of equity. Credit risk The Group incurs credit risk from transactions with financial institutions. The total credit risk on cash and cash equivalents and short-term investments, which have been recognised in the statement of financial position, is the carrying amount. The Company and its subsidiaries do not retain any collateral or security to support transactions with financial institutions. Cash and cash equivalents and short-term deposits are held and transacted with National Australia Bank, Commonwealth Bank, Westpac, ANZ, Convera and Primis bank. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Neuren Pharmaceuticals Limited Annual Report 2025 54
RkJQdWJsaXNoZXIy MjE2NDg3