CSL Ltd Annual Report 2019

CSL Limited Annual Report 2019 94 Notes to the Financial Statements Significant judgements and estimates were applied to account for the transition adjustment for our tolling contracts. Previously revenue was recognised for tolling contracts at a point in time upon delivery. Under AASB 15 revenue is recognised over time as the fractionation services are provided to the customer. Management estimate revenue recognition for providing the fractionation services over time based on achieving specific steps in the process. At 1 July 2018 the transition adjustment to opening retained earnings was to recognise revenue earned under tolling contracts for fractionation services at 30 June 2018. For the Year Ended 30 June 2019 Income Statement As Reported US$m Amount without adoption of AASB 15 US$m Effect of Change US$m Sales and service revenue 8,205 8,184 21 Cost of Sales (3,761) (3,750) (11) Gross Profit 4,777 4,767 10 Profit before income tax expense 2,341 2,331 10 Income tax expense (422) (419) (3) Net profit 1,919 1,912 7 Our Current Performance Note 1: Segment Information and Business Combinations The Group’s segments represent strategic business units that offer different products and operate in different industries and markets. They are consistent with the way the CEO (who is the chief operating decision-maker) monitors and assesses business performance in order to make decisions about resource allocation. Performance assessment is based on EBIT (earnings before interest and tax) and EBITDA (earnings before interest, tax, depreciation and amortisation). These measures are different from the profit or loss reported in the consolidated financial statements which is shown after net interest and tax expense. This is because decisions that affect net interest expense and tax expense are made at the Group level. It is not considered appropriate to measure segment performance at the net profit after tax level. The Group’s operating segments are: • CSL Behring – manufactures, markets, and develops plasma therapies (plasma products and recombinants), conducts early stage research on plasma and non-plasma therapies, excluding influenza, receives licence and royalty income from the commercialisation of intellectual property and undertakes the administrative and corporate function required to support the Group. • Seqirus – manufactures and distributes non-plasma biotherapeutic products and develops influenza related products. CSL Behring US$m Seqirus US$m Consolidated Entity US$m 2019 2018 2019 2018 2019 2018 Sales and services to external customers 7,187.3 6,677.5 1,018.1 910.4 8,205.4 7,587.9 Pandemic Facility Reservation fees – – 133.4 117.7 133.4 117.7 Royalties and License revenue 151.1 124.8 20.0 20.0 171.1 144.8 Other revenue/Other income (excl interest income) 4.5 24.7 24.2 40.2 28.7 64.9 Total segment revenue 7,342.9 6,827.0 1,195.7 1,088.3 8,538.6 7,915.3 Segment Gross Profit 4,195.1 3,893.0 582.3 490.7 4,777.4 4,383.7 Segment Gross Profit % 57.1% 57.0% 48.7% 45.1% 56.0% 55.4% Segment EBIT 2,350.6 2,327.9 153.4 52.4 2,504.0 2,380.3 Consolidated Operating Profit 2,504.0 2,380.3 Finance income 13.8 9.3 Finance costs (176.7) (108.4) Consolidated profit before tax 2,341.1 2,281.2 Income tax expense (422.4) (552.3) Consolidated net profit after tax 1,918.7 1,728.9 Amortisation 76.5 40.8 25.8 17.0 102.3 57.8 Depreciation 244.5 211.6 28.6 27.3 273.1 238.9 Segment EBITDA 2,671.6 2,580.3 207.8 96.7 2,879.4 2,677.0