CSL Ltd Annual Report 2019

Notes to the Financial Statements For the Year Ended 30 June 2019 CSL Limited Annual Report 2019 92 Contents About this Report 92 Notes to the financial statements: 92 Our Current Performance 94 Note 1: Segment Information and Business Combinations 94 Note 1b: Business Combination 95 Note 2: Revenue and Expenses 96 Note 3: Tax 97 Note 4: Inventories 99 Note 5: People Costs 100 Our Future 104 Note 6: Research & Development 104 Note 7: Intangible Assets 104 Note 8: Property, Plant and Equipment 106 Note 9: Deferred Government Grants 107 Returns, Risk & Capital Management 108 Note 10: Shareholder Returns 108 Note 11: Financial Risk Management 109 Note 12: Equity and Reserves 114 Note 13: Commitments and Contingencies 115 Efficiency of Operation 116 Note 14: Cash and Cash Equivalents, Cash Flows 116 Note 15: Trade Receivables and Payables 117 Note 16: Provisions 118 Other Notes 119 Note 17: Related Party Transactions 119 Note 18: Detailed Information – People Costs 120 Note 19: Detailed Information – Shareholder Returns 125 Note 20: Auditor Remuneration 125 Note 21: Deed of Cross Guarantee 126 Note 22: Parent Entity Information 128 Note 23: Subsequent Events 129 Note 24: New and Revised Accounting Standards 129 Applicable to the Group for the year ended 30 June 2020 129 About this Report Notes to the financial statements: Corporate information CSL Limited (“CSL”) is a for-profit company incorporated and domiciled in Australia and limited by shares publicly traded on the Australian Securities Exchange. This financial report covers the financial statements for the consolidated entity consisting of CSL and its subsidiaries (together referred to as the Group). The financial report was authorised for issue in accordance with a resolution of directors on 13 August 2019. A description of the nature of the Group’s operations and its principal activities is included in the directors’ report. a. Basis of preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, International Financial Reporting Standards (IFRS) and the Corporations Act 2001. It presents information on a historical cost basis, except for certain financial instruments, which have been measured at fair value. Amounts have been rounded off to the nearest hundred thousand dollars. The report is presented in US Dollars, because this currency is the pharmaceutical industry standard currency for reporting purposes. It is the predominant currency of the Group’s worldwide sales and operating expenses. b. Principles of consolidation The consolidated financial statements comprise the financial statements of CSL and its subsidiaries as at 30 June 2019. CSL has control of its subsidiaries when it is exposed to, and has the rights to, variable returns from its involvement with those entities and when it has the ability to affect those returns. A list of significant controlled entities (subsidiaries) at year-end is contained in Note 17. The financial results of the subsidiaries are prepared using consistent accounting policies and for the same reporting period as the parent company. In preparing the consolidated financial statements, all intercompany balances and transactions have been eliminated in full. The Group has formed a trust to administer the Group’s employee share scheme. This trust is consolidated as it is controlled by the Group. c. Foreign currency While the presentation currency of the Group is US dollars, entities in the Group may have other functional currencies, reflecting the currency of the primary economic environment in which the relevant entity operates. The parent entity, CSL Limited, has a functional currency of US dollars. The functional currency of the parent entity and certain operational entities was changed to US dollars during the year due to the change in the currency that mainly influences sales process and costs and the regulatory environment under which the entities operate. The effect of the change in functional currency was accounted for prospectively. Any exchange differences arising from the translation of a foreign operation previously recognised in other comprehensive income are not reclassified from equity to profit or loss until the disposal of the operation.