8. CASH AND CASH EQUIVALENTS 2023 $’000 2022 $’000 Cash 17,094 2,304 Demand and short-term deposits – 37,876 17,094 40,180 9. SHORT-TERM INVESTMENTS 2023 $’000 2022 $’000 Short-term investments 211,445 – Following the receipt of the first commercial sale milestone payment and the upfront payment for the expansion of the partnership with Acadia Pharmaceuticals for trofinetide to a worldwide exclusive licence, Neuren is holding more funds than are required to meet currently forecast short-term cash commitments. As a result, the Company has classified short-term deposits as short-term investments. 10. TRADE AND OTHER RECEIVABLES 2023 $’000 2022 $’000 Royalty receivable 12,800 – Other receivables 80 17 Interest receivables 1,532 207 Prepayments 4,205 1,977 Australian R&D tax incentive – 865 18,617 3,066 The Group has not recognised any amounts receivable in relation to the R&D tax incentive for the year ended 31 December 2023, as a result of revenue exceeding the threshold of $20,000,000 in the financial year. As a result of exceeding this threshold, eligible R&D expenditure qualifies for a non-refundable tax offset and is recognised as a reduction in current tax liability. In 2022 the R&D tax incentive receivable was determined based on a combination of eligible domestic and international expenditure of $1,988,057 at a rate of 43.5 cents tax incentive rebate per eligible R&D dollar spent. This amount was received in cash during the financial year. The Group applies the simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component. In measuring the expected credit losses, the trade receivables have been assessed on an individual basis due to the limited number of receivables. The expected loss rates are based on the payment profile of the individual receivable including historical experience, external indicators and forward-looking information to calculate the expected credit losses. Trade receivables are written off (i.e. de-recognised) when there is no reasonable expectation of recovery. Failure to make payments within 180 days from the invoice date and failure to engage with the Group on alternative payment arrangements amongst others are considered indicators of no reasonable expectation of recovery. No credit losses have been determined for the current year (2022: nil). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Neuren Pharmaceuticals Limited Annual Report 2023 43
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