Efficiency of Operation Note 14: Receivables, Contract Assets and Payables a. Receivables and contract assets 2026 2025 US$m US$m Trade receivables 2,754 2,283 Contract assets 212 289 Less: Provision for expected credit losses (40) (21) Carrying amount of trade receivables and contract assets – current 2,926 2,551 Other receivables 282 331 Prepayments 339 259 Carrying amount of receivables and contract assets – current 3,547 3,141 Other receivables 164 95 Prepayments 84 94 Carrying amount of receivables and contract assets - non-current 248 189 Receivables are initially recorded at their transaction price and are generally due for settlement within 30 to 60 days from date of invoice. Collectability is regularly reviewed at an operating unit level. For trade receivables and contract assets, the Group recognises a provision for expected credit losses (ECL) based on a simplified approach. The Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on historical credit loss experience, adjusted for forward-looking factors specific to the debtors and economic environment. When a trade receivable for which a provision for ECL has been recognised becomes uncollectible in a subsequent period, it is written off against the provision. The following table illustrates the movement in the Group’s provision for expected credit losses. The carrying amount of receivables and contract assets is a reasonable approximation of fair value. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivable disclosed above. Refer to Note 11 for more information on the risk management policy of the Group and the credit quality of trade receivables. 2026 2025 Provision for expected credit losses US$m US$m Opening balance as at 1 July 21 16 Additional allowance, net 21 4 Currency translation differences (2) 1 Closing balance at 30 June 40 21 As at 30 June 2026, receivables totalling $86m (2025: $108m) had been sold as part of the Group's non-recourse receivable factoring arrangements. The receivables were derecognised upon sale as substantially all risks and rewards associated with the receivables passed to the purchaser. These arrangements were transacted with non-US high quality counterparties as part of the Group's foreign exchange risk mitigation strategy (Note 11). 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 obligation, the amount recognised as contract assets is reclassified to trade receivables. Contract liabilities (deferred revenue) represents amounts billed in accordance with customer contracts, but where the Group had not yet provided a good or service. These amounts are presented within trade and other payables (within accruals and other payables) and 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. 121 Notes to the Financial Statements 121 CSL Limited Annual Report 2025/26
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