Kazia Therapeutics Annual Report 2021

2021 AT A GLANCE CHAIRMAN’S LETTER CEO’S REPORT KEY MILESTONES PIPELINE REVIEW PARTNER FOR SUCCESS WORK WITH THE BEST #2 IN THE KAZIA STORY FINANCIAL REPORTS Kazia Therapeutics Limited Annual Report 2021 57 If the AUD had strengthened against the USD by 10% (2020: 10%) then this would have had the following impact: AUD strengthened AUD weakened Consolidated - 2021 % change Effect on profit before tax Effect on equity % change Effect on profit before tax Effect on equity US dollars 10% (1,762,479) (1,762,479) (10%) 1,762,479 1,762,479 Euros 10% 1,594 1,594 (10%) (1,594) (1,594) (1,760,885) (1,760,885) 1,760,885 1,760,885 AUD strengthened AUD weakened Consolidated - 2020 % change Effect on profit before tax Effect on equity % change Effect on profit before tax Effect on equity US dollars 10% 192,383 192,383 (10%) (192,383) (192,383) Price risk The consolidated entity is not exposed to any significant price risk. Interest rate risk The consolidated entity’s exposure to market interest rates relate primarily to the investments of cash balances. The consolidated entity has cash reserves held primarily in Australian dollars and United States dollars and places funds on deposit with financial institutions for periods generally not exceeding three months. As at the reporting date, the consolidated entity had the following variable interest rate balances: 2021 2020 Weighted average interest rate Balance Weighted average interest rate Balance Consolidated % $ % $ Cash at bank and in hand - 21,086,760 0.04% 1,264,044 Short term deposits 0.04% 6,500,000 0.95% 7,500,000 Net exposure to cash flow interest rate risk 27,586,760 8,764,044 The consolidated entity has cash and cash equivalents totalling $27,586,760 (2020: $8,764,044). An official increase/decrease in interest rates of 100 basis points (2020: 100 basis points) would have a favourable/adverse effect on profit before tax and equity of $275,867 (2020: $87,640) per annum. The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The entity is not exposed to significant credit risk on receivables. The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the consolidated entity based on recent sales experience, historical collection rates and forward-looking information that is available. The consolidated entity places its cash deposits with high credit quality financial institutions and by policy, limits the amount of credit exposure to any single counter-party. The consolidated entity is averse to principal loss and ensures the safety and preservation of its invested funds by limiting default risk, market risk, and reinvestment risk. The consolidated entity mitigates default risk by constantly positioning its portfolio to respond appropriately to a significant reduction in a credit rating of any financial institution. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. There are no significant concentrations of credit risk within the consolidated entity. The credit risk on liquid funds is limited as the counter parties are banks with high credit ratings. Credit risk is managed by limiting the amount of credit exposure to any single counter-party for cash deposits. NOTE 21. FINANCIAL INSTRUMENTS (CONTINUED)