CSL Ltd Annual Report 2020

CSL Limited Annual Report 2020 114 Notes to the Financial Statements Our Future Note 6: Research & Development The Group conducts research and development activities to support future development of products to serve our patient communities, to enhance our existing products and to develop new therapies. All costs associated with our research and development activities are expensed as incurred as uncertainty exists up until the point of regulatory approval as to whether a research and development project will be successful. At the point of approval, the total cost of development has largely been incurred. Development costs incurred after regulatory approval are expensed. The Group also gains control of Intellectual Property (IP) through acquisitions or licence arrangements. In certain circumstances the acquired IP will be capitalised, dependant on the phase of development. For the year ended 30 June 2020, the research costs, net of recoveries, were $921.8m (2019: $831.8m). Further information about the Group’s research and development activities can be found on the CSL website. Note 7: Intangible Assets Goodwill US$m Intellectual Property US$m Software US$m Intangible capital work in progress US$m Total US$m Year 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Cost 1,154.2 1,101.8 575.7 565.6 696.1 618.5 133.4 148.4 2,559.5 2,434.3 Accumulated amortisation – – (184.1) (332.1) (235.2) (223.9) – – (419.3) (556.0) Net carrying amount 1,154.2 1,101.8 391.7 233.5 460.9 394.6 133.4 148.4 2,140.2 1,878.3 Movement Net carrying amount at the beginning of the year 1,101.8 1,102.0 233.5 262.9 394.6 257.8 148.4 179.8 1,878.3 1,802.5 Additions 2 – – – 10.2 44.2 3.2 76.8 172.9 121.0 186.3 Business acquisition 52.6 – 188.0 – – – – – 240.6 – Transfers from intangible capital work in progress – – – – 93.1 204.0 (93.1) (204.0) – – Transfers to/from property, plant and equipment – – – – (1.0) – – 1.0 (1.0) 1.0 Disposals – – (25.2) (1.5) – (0.1) (0.1) 0.1 (25.3) (1.5) Amortisation for the year 3 – – (3.7) (37.2) (68.7) (65.1) – – (72.5) (102.3) Currency translation differences (0.2) (0.2) (0.9) (0.9) (1.3) (5.2) 1.5 (1.4) (0.9) (7.7) Net carrying amount at the end of the year 1,154.2 1,101.8 391.7 233.5 460.9 394.6 133.5 148.4 2,140.2 1,878.3 Goodwill Any excess of the fair value of the purchase consideration of an acquired business over the fair value of the identifiable net assets (minus incidental expenses) is recorded as goodwill. Goodwill is allocated to each of the cash-generating units but is monitored at the segment (business unit) level. The aggregate carrying amounts of goodwill allocated to each business unit are as follows: 2020 $m 2019 $m CSL Behring 1,154.2 1,101.8 Closing balance of goodwill as at 30 June 1,154.2 1,101.8 Goodwill is not amortised but is measured at cost less any accumulated impairment losses. Impairment occurs when a business unit’s recoverable amount falls below the carrying value of its net assets. The results of the impairment test show that each business unit’s recoverable amount exceeds the carrying value of its net assets, inclusive of goodwill. Consequently, there is no goodwill impairment as at 30 June 2020. A change in assumptions significant enough to lead to impairment is not considered a reasonable possibility. 2 The intangible capital work in progress additions relate to two significant information technology projects. 3 The amortisation charge is recognised in general and administration expenses in the statement of comprehensive income.