Note 19. Financial instruments (continued) Market risk Foreign currency risk Generally, the Consolidated Entity’s main exposure to exchange rate risk relates primarily to trade payables and cash denominated in EUR, arising in relation to its activities in Cuba. Where a payable is significant, EUR may be purchased on incurring the liability or commitment. The Consolidated Entity’s exposure to unhedged financial assets and liabilities at balance date is as follows: 30-June-25 $ 30-June-24 $ USD Financial assets Cash on hand at bank 3,469,669 5,521,964 USD Financial liabilities Payables 97,027 88,548 EUR Financial assets Cash on hand at bank 1,338,450 1,704,258 EUR Financial liabilities Payables 516,693 7,774,468 CAD Financial liabilities Payables 491,555 3,606,108 The Consolidated Entity had net liabilities denominated in foreign currencies as at 30 June 2025 of $6,091,952 (2024: net assets of $5,556,384). Based on this exposure, had the Australian dollar strengthened by 10% / weakened by 10% (2024: strengthened by 10% and weakened by 10%) against these foreign currencies with all other variables held constant, the Consolidated Entity’s loss before tax for the year would have been $553,813 higher and $676,883 lower (2024: $505,126 higher / $617,376 lower) and equity would have been $553,813 higher/ 676,883 lower (2024: $505,126 lower / $617,376 higher). The percentage change is the expected overall volatility of the significant currencies, which is based on management’s assessment of reasonable possible fluctuations taking into consideration movements over the last 12 months and the spot rate at each reporting date. An analysis of the exchange rate sensitivity by foreign currency is as follows: AUD strengthened AUD weakened Change Effect on profit before tax Effect on equity Change Effect on profit before tax Effect on equity 30-Jun-25 USD net financial assets/liabilities 10% (469,603) 469,603 10% 573,959 (573,959) EUR net financial assets/liabilities 10% (134,180) 134,180 10% 163,998 (163,998) CAD net financial assets/liabilities 10% 49,970 (49,970) 10% (61,074) 61,074 Cash on hand at bank (553,813) 553,813 676,883 (676,883) AUD strengthened AUD weakened Change Effect on profit before tax Effect on equity Change Effect on profit before tax Effect on equity 30-Jun-24 USD net financial assets/liabilities 10% (740,522) 740,522 10% 905,083 (905,083) EUR net financial assets/liabilities 10% 886,315 (886,315) 10% (1,083,274) 1,083,274 CAD net financial assets/liabilities 10% 359,333 (359,333) 10% (439,185) 439,185 Cash on hand at bank 505,126 (505,126) (617,376) 617,376 65 Melbana Energy Limited Annual Report 2025
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