CSL Ltd Annual Report 2020

Notes to the Financial Statements For the Year Ended 30 June 2020 CSL Limited Annual Report 2020 100 Contents About this Report 100 Notes to the financial statements: 100 Our Current Performance 104 Note 1: Segment Information and Business Combinations 104 Note 1b: Business Combination 105 Vitaeris acquisition 105 Note 2: Revenue and Expenses 106 Note 3: Tax 107 Note 4: Inventories 109 Note 5: People Costs 110 Our Future 114 Note 6: Research & Development 114 Note 7: Intangible Assets 114 Note 8: Property, Plant and Equipment 116 Note 9: Deferred Government Grants 117 Returns, Risk & Capital Management 118 Note 10: Shareholder Returns 118 Note 11: Financial Risk Management 119 Note 12: Equity and Reserves 124 Note 13: Commitments and Contingencies 125 Efficiency of Operation 126 Note 14: Cash and Cash Equivalents 126 Note 15: Trade Receivables and Payables 126 Note 16: Provisions 128 Other Notes 129 Note 17: Related Party Transactions 129 Note 18: Detailed Information – People Costs 130 Note 19: Detailed Information – Shareholder Returns 134 Note 20: Auditor Remuneration 134 Note 21: Deed of Cross Guarantee 135 Note 22: Parent Entity Information 137 Note 23: Subsequent Events 137 Note 24: New and Revised Accounting Standards 137 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 18 August 2020. 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 2020. 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. If an entity in the Group has undertaken transactions in foreign currency, these transactions are translated into that entity’s functional currency using the exchange rates prevailing at the dates of the transactions. Where the functional currency of a subsidiary is not US dollars, the subsidiary’s assets and liabilities are translated on consolidation to US dollars using the exchange rates prevailing at the reporting date, and its profit and loss is translated at average exchange rates. All resulting exchange differences are recognised in other comprehensive income and in the foreign currency translation reserve in equity.