17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) At 31 December 2022, there were two forward contracts to convert Australian dollars to US dollars outstanding. Adjustment of these financial instruments to fair value as measured at 31 December 2022 resulted in a loss of $0.7 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 2022 is as follows: Buy USD $'000 Sell AUD $'000 Term Weighted average exchange rate Buy US dollar / sell AU dollar 7,873 12,323 3 months or less 0.6389 During the year, the US dollar fluctuated against the Australian dollar. A net foreign exchange gain of $1.2 million is included in results for the year ended 31 December 2022 (2021: $0.4 million), this includes a $1.4 million gain on the milestone revenue from Acadia, offset by a loss on the translation for reporting purposes of the Group’s US dollar cash balances into Australian dollars. The carrying amounts of US dollar denominated financial assets and liabilities are as follows: 2022 $’000 2021 $’000 Assets US dollars 2,104 6,905 Liabilities US dollars 803 38 An increase of 10% in the rate of the US dollar against the Australian dollar as at the reporting date would have increased the consolidated loss after income tax by $1,238,107 (2021: $624,255). A decrease of 10% in the rate of the US dollar against the Australian dollar as at the reporting date would have decreased the consolidated loss after income tax by $1,514,242 (2021: $762,978). 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 $12,419 (2021: increase of $2,109). 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 $15,179 (2021: decrease of $2,578). Interest rate risk The Group is exposed to changes in market interest rates as entities in the Group hold cash and cash equivalents. The effective interest rates on financial assets are as follows: 2022 $’000 2021 $’000 Financial Assets Cash and cash equivalents Australian dollar cash deposits 38,076 29,885 Australian dollar interest rate 3.58% 0.17% US dollar cash deposits 2,104 6,898 US dollar interest rate –% –% 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 loss after tax by approximately $68,200 (2021: $2,580). A 5% increase/decrease in the average market interest rates would have no impact on other components of equity. NOTES TO THE CONSOL I DATED F I NANC I A L STATEMENTS CON T I NU E D Neuren Pharmaceuticals Limited Annual Repor t 2022 43
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