CSL Ltd Annual Report 2021

The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. Contract assets and deferred revenue (contract liabilities): The completion of performance obligations often differs from contract payment schedules. A contract asset is initially recognised for revenue earned from satisfying a performance obligation; however, the receipt of consideration is conditional upon the full satisfaction of the performance obligation within the contract. Upon completing the full performance 16 The comparative balances have been restated to reflect the finalisation of the Vitaeris’ acquisition accounting (refer to Note 1b). obligation, the amount recognised as contract assets is reclassified to trade receivables. Amounts billed in accordance with customer contracts, but where the Group had not yet provided a good or service, are recorded and presented as part of deferred revenue. Deferred revenue is recognised as revenue when the Group performs under the contract. Other current receivables are recognised and carried at the nominal amount due upon an unconditional right to payment. Non-current receivables are recognised and carried at amortised cost. They are non-interest bearing and have various repayment terms. As at 30 June 2021, the Group had made provision for expected credit loss of $23.5m (2020: $25.3m). 2021 US$m 2020 US$m Opening balance as at 1 July 25.3 17.5 (Allowance utilised/written back)/Additional allowance (2.3) 9.4 Currency translation differences 0.5 (1.6) Closing balance at 30 June 23.5 25.3 Non-trade receivables do not include any impaired or overdue amounts and it is expected they will be received when due. The Group does not hold any collateral in respect to other receivable balances. Key Judgements and Estimates In applying the Group’s accounting policy to trade and other receivables with governments and related entities in South Eastern Europe as set out in Note 11, significant judgement is involved in assessing the expected credit loss of trade or other receivable amounts. Matters considered include recent trading experience, current economic and political conditions and the likelihood of continuing support from agencies such as the European Central Bank. (b) Trade and other payables 2021 US$m 2020 (restated) 16 US$m Current Trade payables 523.0 458.3 Accruals and other payables 1,516.7 1,067.1 Carrying amount of current trade and other payables 2,039.7 1,525.4 Non-current Accruals and other payables 102.3 – Contingent consideration associated with business combinations 16 345.8 341.6 Carrying amount of non-current trade and other payables 448.1 341.6 Trade and other payables represent amounts reflected at notional amounts owed to suppliers for goods and services provided to the Group prior to the end of the financial year that are unpaid. Trade and other payables are non-interest bearing and have various repayment terms but are usually paid within 30 to 60 days of recognition. Receivables and payables include the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, taxation authorities is included in other receivables or payables in the balance sheet. The Group has recognised contingent consideration associated with the past business combinations for Vitaeris and Calimmune as non-current financial liabilities at fair value, which is then remeasured at each subsequent reporting date at fair value through profit and loss. The fair value estimations typically depend on factors such as technical milestones or market performance, and are adjusted for the probability of their likelihood of potential future payments, and are appropriately discounted to reflect the impact of time. Refer to Note 11 for further details on the fair value measurement. As at 30 June 2021, the maximum amount of undiscounted potential future milestone payments for Vitaeris and Calimmune are $470.0m and $325.0m (2020: $470.0m and $325.0m) respectively, of which $345.8m (2020: $341.6m) is reflected as a contingent consideration liability at fair value. Changes in the fair value of contingent consideration liabilities in subsequent periods are recognised in research and development expenses for early stage products and as cost of sales for currently marketed products. The effect of unwinding the discount over time for contingent consideration carried at fair value is recognised as finance costs. CSL Limited Annual Report 2020/21 136 Notes to the Financial Statements