Notes to the Financial Statements Note 3: Revenue and Expenses Recognition and measurement of revenue and other income Revenue is recognised when the Group satisfies a performance obligation by transferring control of the promised good or service to a customer at an amount that reflects the consideration to which an entity expects to be entitled in exchange for the goods or services. Revenue from contracts with customers includes amounts in total operating revenue. Further information about each source of revenue from contracts with customers and the revenue recognition criteria follows. Sales: Revenue is earned (constrained by variable considerations, which include returns, discounts, rebates and allowances) from the sale of products and services. Sales are recognised when performance obligations are either satisfied over time or at a point in time. Generally the supply of product under a contract with a customer will represent the satisfaction of a performance obligation at a point in time, which is when control of the product passes to the customer. 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. With respect to CSL Behring, 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 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. CSL Limited Annual Report 2022/23 124
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