CSL Ltd Annual Report 2021

Note 8: Property, Plant and Equipment 10 T he capital work in progress additions are the result of major capacity projects. One of these projects is our recombinant protein facility in Lengnau which is subject to an agreement with Thermo Fisher to lease the facility to them upon the achievement of defined milestones. 11 D uring the year ended 30 June 2021, the Group recorded an impairment expense of $74.4m for assets associated with major capital projects which have been identified as surplus to requirements as a result of the change in project scope for these projects. Land US$m Buildings US$m Leasehold improvements US$m 2021 2020 2021 2020 2021 2020 Cost 39.5 38.7 964.3 782.0 546.0 461.0 Accumulated depreciation – – (253.4) (220.3) (157.0) (136.2) Net carrying amount 39.5 38.7 710.9 561.7 389.0 324.8 Movement Net carrying amount at the start of the year 38.7 38.8 561.7 490.0 324.8 265.9 Transferred from capital work in progress/intangible assets – – 157.2 92.9 79.8 84.5 Additions 10 0.4 – 0.5 – 2.8 – Disposals – – – – (0.1) (2.8) Other Adjustments – – – (4.6) – – Depreciation/amortisation for the year – – (29.2) (23.4) (20.7) (22.9) Impairment for the year 11 – – – – – – Currency translation differences 0.4 (0.1) 20.7 6.8 2.4 0.1 Net carrying amount at the end of the year 39.5 38.7 710.9 561.7 389.0 324.8 Property, plant and equipment Land, buildings, capital work in progress and plant and equipment assets are recorded at historical cost less, where applicable, depreciation and amortisation. Right-of-use assets are measured at cost, less accumulated depreciation, impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities and restoration obligations recognised less any lease incentives received and initial direct costs. Depreciation or amortisation is recognised on a systematic basis over the estimated useful life of the asset, generally on a straight-line basis. Buildings 5 – 40 years Plant and equipment 3 – 15 years Leasehold improvements 5 – 25 years Right-of-use assets – Plasma centres 5 – 40 years – Office and warehouses 1 – 39 years – Land 43 – 101 years The units-of-production depreciation (“UoP”) method, based on the expected use or output as the asset is being used, may be applied during the early stages of operation of manufacturing facilities, as a substantial period of time may be required to ramp up the production and operate at intended capacity. This method is to be applied consistently from period to period unless there is a change in the expected pattern of consumption of those future economic benefits. Assets’ residual values and useful lives are reviewed and adjusted if appropriate at each reporting date. Items of property, plant and equipment are derecognised upon disposal or when no further economic benefits are expected from their use or disposal. Impairment testing for property, plant and equipment will be performed if an impairment trigger is identified. Gains and losses on disposals of items of property, plant and equipment are determined by comparing proceeds with carrying amounts and are included in the statement of comprehensive income when realised. 40% of the Holly Springs facility, acquired with the Novartis Influenza business, is legally owned by the US Government. Full legal title will transfer to CSL on the completion of the Final Closeout Technical Report, expected in the next one to three years. CSL has full control of the asset and 100% of the value of the facility is included in the consolidated financial statements. Leasehold improvements The cost of improvements to leasehold properties is amortised over the unexpired period of the lease or the estimated useful life of the improvement, whichever is the shorter. Right-of-use (“ROU”) assets The Group primarily has leases for plasma centres, office buildings, warehouses, land and vehicles. Except for short-term leases and leases of low value assets, the Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). The Group accounting policy for lease liabilities has been discussed in Note 11(d). Unless the Group is reasonably certain to obtain ownership of the underlying asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight- line basis over the shorter of its estimated useful life and the lease term. CSL Limited Annual Report 2020/21 124 Notes to the Financial Statements