Notes to the Financial Statements Note 3: Revenue and Expenses continued Key Judgements and Estimates Significant estimates on CSL Seqirus sales returns is performed in respect of the influenza season expected to be subject to return. The estimate is performed with inputs including historical returns and customer sales data amongst other factors. For contracts where the customer controls the plasma (tolling contracts) and the Group provides fractionation services – the Group recognises revenue over time as the performance obligations are satisfied based upon a percentage of completion of our fractionation services. Royalties: Revenue from licensees of CSL intellectual property reflect a right to use the intellectual property as it exists at the point in time in which the licence is granted. Where consideration is based on sales of product by the licensee, it is recognised when the customer’s subsequent sales of product occurs. License revenue: Revenue from licensees of CSL intellectual property reflects the transfer of a right to use the intellectual property as it exists at the point in time in which the licence is transferred to the customer. Consideration is highly variable and estimated using the most likely amount method. Subsequently, the estimate is constrained until it is highly probable that a significant revenue reversal will not occur when the uncertainty is resolved. Revenue is recognised as or when the performance obligations are satisfied. Influenza pandemic facility reservation fees: Revenue from governments in return for access to influenza manufacturing facilities in the event of a pandemic. Contracts are time-based and revenue is recognised progressively over the life of the relevant contract, which aligns to the performance obligations being satisfied. Other Income: Other income is derived from net income realised from activities that are outside of the ordinary business, such as the disposal of property, plant and equipment and rental income. Revenue from contracts with customers includes amounts in total operating revenue except other income. Expenses 2022 US$m 2021 US$m Finance costs 142.8 128.6 Lease related interest expense 35.2 30.1 Unrealised foreign currency (gains)/losses on debt (12.8) 12.1 Total finance costs 165.2 170.8 Depreciation of PPE and right-of-use assets (Note 9) 445.7 399.4 Amortisation of intangibles (Note 8) 96.8 95.9 Impairment expenses (Notes 8 and 9)2 125.8 94.3 Total depreciation, amortisation and impairment expense 668.3 589.6 Write-down of inventory 223.8 208.3 Employee benefits expense 2,802.9 2,781.6 Recognition and measurement of expenses 2 D uring the year ended 30 June 2022, the Group impaired certain intellectual property assets associated with the Calimmune acquisition ($112.6m). The net impact to the profit or loss from all Calimmune related adjustments was a loss of $24.8m (refer to Note 1 for further details). Total finance costs: Includes interest expense and borrowing costs, including lease related interest expense. Lease related interest expense and borrowing costs are recognised as an expense when incurred, except where finance costs are directly attributable to the acquisition or construction of a qualifying asset where they are capitalised as part of the cost of the asset. Capitalised interest for qualifying assets during the year ended 30 June 2022 was $26.7m (2021: $7.3m). The weighted average interest rate applicable to capitalised borrowing costs during the year was 2.4% (2021: 1.0%). Interestbearing liabilities and borrowings are stated at amortised cost. Any difference between borrowing proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the borrowing period using the effective interest method. Unrealised foreign currency (gains)/losses on debt is primarily related to EUR350m and CHF400m of senior unsecured notes in the US Private Placement market. The foreign currency risk related to this debt was partially hedged as a cash flow hedge. In connection with the 144A senior unsecured notes (Note 2), the Group entered into a treasury lock (“T-lock”) prior to the completion of the issuance of the notes to hedge against increases in the Base US Treasury Yield until the settlement date for a portion of the notes. The T-lock arrangement was determined to be an effective cash flow hedge and resulted in a gain of $134.7m being recognised in the statement of comprehensive income. This amount will be reclassified into finance costs in the same period as the associated interest expense from the notes impacts earnings. For the year ended 30 June 2022, $1.0mwas reclassified into finance costs. Goods and Services Tax (GST) and other foreign equivalents: Revenues, expenses and assets are recognised net of GST, except where GST is not recoverable from a taxation authority, in which case it is recognised as part of an asset’s cost of acquisition or as part of the expense. CSL Limited Annual Report 2021/22 106
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