19. Financial risk management

 

Financial risk factors

The Board of Directors currently reviews the Group’s cash forecast and liquidity requirements. The Group’s activities expose it to a variety of financial risks including foreign exchange risk, credit risk, interest rate risk and liquidity risk.

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. dollar, euro and pounds sterling. Transaction exposure arises because the amount of local currency paid or received in transactions denominated in foreign currencies may vary due to changes in exchange rates. Foreign exchange risk arises from:

The Group’s cash, cash equivalents and other financial assets are denominated in the following currencies:

The Group is exposed to foreign exchange risk in respect of cash and cash equivalents which are held in a currency other than the entity’s functional currency. The Group is also exposed to foreign exchange risk in respect of its subsidiary as its functional currency is euro. Accordingly, future changes in exchange rates will expose the Group to currency gains or losses that will impact the reported amounts of assets, liabilities, income and expenses and the impact could be material.

For the year ended December 31, 2025, the Group recognized a foreign exchange gain of $1.8 million (2024: gain of $2.1 million, 2023: loss of $2.6 million). The foreign exchange gain primarily relates to the Group’s foreign currency holdings of cash, cash equivalents and other financial assets and the associated strengthening and weakening of those foreign currencies throughout the year. In the year ended December 31, 2024, the foreign exchange gain primarily related to the U.S. dollar cash and other financial assets holding of its subsidiary and the associated strengthening of the U.S. dollar. At December 31, 2025, if foreign currency exchange rates had strengthened/weakened by 10% against the U.S. dollar, with all other variables held constant, the loss before tax for the year would have been $8.0 million higher/lower (2024: $2.3 million higher/lower).

The Group does not believe there is currently a need to enter into specific contracts to reduce the exposure to changes in foreign exchange rates, such as by entering into options or forward contracts. The Group may in the future consider using options or forward contracts to manage currency transaction exposures. All marketable securities are denominated in U.S. dollar and are not subject to foreign exchange risk as they are held in an entity whose functional currency is the U.S. dollar. Other financial assets are denominated in U.S. dollar but are held in an entity whose functional currency is not the U.S. dollar and as such are subject to foreign exchange risk.

Credit risk

The Group is exposed to credit risk on our cash, cash equivalents and marketable securities. The Group’s cash balance is maintained with well-established, highly rated financial institutions. As of December 31, 2025, the cash balance is held at three banks that have a minimum S&P’s credit rating of A-. At December 31, 2025, the amount reflected in the statement of financial position for cash and cash equivalents represents the Group’s maximum exposure to credit risk for these instruments.

At December 31, 2025, the Group holds investments in investment grade bonds and in money market funds (“the Portfolio”). These investments are exposed to credit risk in the event of default of the counterparty. The Group does not invest in equity instruments or derivatives and none of the bonds are individually above 3% of the value of the Portfolio.

The Group’s marketable securities, measured at FVOCI, are subject to the expected credit loss model. The Group provides for expected credit losses as prescribed by IFRS 9 for its assets held at FVOCI. The expected credit loss model under IFRS 9 requires the calculation of “12 month expected credit losses” for financial assets. Those are the losses based on defaults which are possible within 12 months of the reporting date. This is required unless the asset is not considered to be of low credit risk at the reporting date and is deemed to have had a significant increase in credit risk since initial recognition. If that is the case, lifetime expected credit losses should be recorded. Management considers low credit risk for existing marketable securities to be an investment grade credit rating with at least one major rating agency. Assets held at FVOCI are considered to have low credit risk when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the short term. The Group’s current policy is to invest primarily in investment grade securities. After a downgrade, compliance with this restriction is restored in a timely manner. The credit risk for the Group’s marketable securities is considered to be low as of December 31, 2025. The impairment allowance recognized during the period was calculated based on 12 month expected credit losses and reconciles to the opening impairment allowance as follows:

		Year ended December 31,
		2025				2024
		$’000				$’000
Opening impairment allowance			54				120
Movement in impairment allowance during the year			(42	)			(66	)
Closing impairment allowance			12				54

The impairment allowance is based on assumptions around probability of default, loss given default, exposure at default and the discount rate. Judgment is used in making these assumptions and selecting the inputs to the expected credit losses calculation, based on any historical experience and current market conditions, as well as forward looking estimates at the end of the reporting period.

Interest rate risk

Interest rate risk is the risk of a change in the price of a financial instrument due to fluctuations in interest rates, leading to a financial loss. The Group is exposed to interest rate risk on its marketable securities. Although the bonds pay interest at a fixed rate, the value of the Group’s marketable securities would decrease in the short term in the event of an interest rate increase in alternative investments.

As of December 31, 2025, if interest rates had increased / decreased by 50 basis points, with all other variables held constant, the Group’s total comprehensive loss would have been $0.1 million higher / lower (2024: $0.3 million higher / lower), due to the movement in the fair value of the Group’s marketable securities.

Liquidity risk is the risk that the Group may not be able to generate sufficient cash resources to settle its obligations in full as they fall due or can do so only on terms that are materially disadvantageous. Prudent liquidity risk management implies maintaining sufficient cash to cover working capital requirements. Cash is monitored by the Group’s management.

Funding and liquidity risks are reviewed regularly by the Board of Directors and management. The Group funds its capital requirements through capital raising. All financial liabilities, aside from lease liabilities as included in Note 15 “Leases”, are due within one year from the balance sheet date.

Capital management

The Group considers capital as equivalent to the IFRS equity on the balance sheet (including share capital, additional paid-in capital and all other equity reserves attributable to the owners of the Company). The Group has no interest-bearing debt.

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to provide returns to its shareholders through advancing our investigational pharmaceutical product candidates towards regulatory approval.

 

Fair value estimation

 

The carrying amount is considered to be a reasonable approximation of fair value for the following financial assets and liabilities:

The following table shows the carrying amounts and fair values of financial assets. The table does not include fair value information for financial assets or financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

 

		Carrying amount
		2025				2025				2024				2024
		FVOCI $’000				FVTPL $’000				FVOCI $’000				FVTPL $’000
Financial assets measured at fair value
Marketable securities			34,457				—				62,446				—
Cash equivalents			—				215,279				—				72,214
Other financial assets			—				—				—				19,387
			34,457				215,279				62,446				91,601

Fair value methodology

Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities.

Level 2: Inputs other than quoted market prices within Level 1 that are observable for the asset, either directly or indirectly.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.

The fair value of marketable securities, other financial assets and cash equivalents are based on quoted market prices representing Level 1 inputs.

Fair value – share-based compensation

Fair values must be estimated on an ongoing basis with regard to awards under the Share Option Plan. The approach to valuation follows the grant date fair value principle and the key input factors are described for the share-based compensation awards in Note 18, “Share-based compensation”.