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Driven by Our Promise™
CSL Limited Annual Report 2019/20
Contents
1 Chairman and CEO Message
2 2020 Performance
Business performance and highlights
Financial highlights
3 Our Company
CSL at a glance
Our businesses
Our locations
Our product portfolio
Our research and development pipeline
4 Strategy and Performance
Our 2030 strategy
How we create value
United Nations sustainable development goals
Our fi nancial review
Our operating review
Business strategies, prospects and likely developments
5 Our Material Risks
Patient safety and product quality
Product innovation and competition
Supply, capacity and operations
Market access
People and culture
Privacy and cybersecurity
6 Outlook
7 Powered by Innovation
Expanding our R&D footprint
Investment in our R&D pipeline
Strategic support for innovative medical research
Our drug delivery platforms
Infl uenza vaccine technologies
Addressing the global COVID-19 crisis
New products to market
Clinical trials in process and new
Innovation across the value chain
8 Global Reach and Impact
Global reach and focus
Donor management
Focus on effi ciency, standardised manufacturing
processes and integrated supply chain
Secure and reliable supply
Environment, health and safety
2
6
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10
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12
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14
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18
18
19
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20
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24
25
26
27
28
30
31
32
32
32
33
33
34
CSL Calendar
2020 Key Dates
19 August
10 September
11 September
9 October
14 October
31 December
2021 Key Dates
16 February
Annual profi t and fi nal
dividend announcement
Shares traded ex-dividend
Record date for fi nal dividend
Final dividend paid
Annual General Meeting
Half Year ends
Half year profi t and interim dividend
announcement
4 March
5 March
1 April
30 June
18 August
2 September
3 September
30 September
12 October
31 December
Shares traded ex-dividend
Record date for interim dividend
Interim dividend paid
Full Year ends
Annual profi t and fi nal
dividend announcement
Shares traded ex-dividend
Record date for fi nal dividend
Final dividend paid
Annual General Meeting
Half Year ends
9 A Trusted Health Partner
Product quality and safety
Value and access
Public policy engagement
Infl uenza pandemic and emergency response
Relationships with patient groups
Responsible marketing and promotion
Our expanding footprint
Ethical conduct
10 Promising Futures
Diversity
Attraction and retention
Training and development
Our employee-centric approach to COVID-19
Employee engagement
Safety and wellbeing
11 Our Communities
Our approach
Support for patient communities
Support for biomedical communities
Support for local communities
12 Governance
Governance structure
Board composition
Board of Directors
Board committees
Leadership team
Ethics and transparency
Disclosure
Corporate governance
Risk management
Tax transparency
13 Financial Performance
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
14 Share Information
15 Medical Glossary
16 Key Performance Data Summary
37
37
38
38
40
40
40
41
42
44
44
45
46
46
46
47
48
48
49
50
52
54
54
54
55
58
58
60
60
60
60
60
61
62
67
96
97
98
99
100
138
139
146
148
150
Annual General Meeting
2020 Annual General Meeting (AGM) of CSL Limited
(ABN 99 051 588 348) will be held online on
Wednesday, 14 October 2020 at 10 am (Melbourne time).
Find out more
CSL.com
About this report
This is CSL’s second annual report where we have combined our
financial and non-financial performance in one comprehensive
account, linking our sustainability and strategic priorities to our
business results. Unless otherwise stated, this report covers CSL’s
subsidiaries as listed on Note 17 of the Financial Statements. In 2019/20,
we concluded our fourth materiality assessment. Our prioritised
topics are listed on page 15 and detailed throughout the Report.
In addition to an independent audit of our consolidated financial
accounts, limited assurance on a selection of corporate responsibility
(CR) metrics has been provided by Ernst & Young, and an assurance
statement for non-fi nancial indicators, along with more detailed
Group and CR information, including our materiality assessment,
can be found on CSL.com (Our Company > Corporate Responsibility).
Read Sam’s story on page 42
The people and science of
CSL save lives. We develop
and deliver innovative
medicines that help people
with serious and life-
threatening conditions live
full lives and protect the
health of communities
around the world. Our
Values guide us in creating
sustainable value for our
stakeholders.
Read Stacy’s story on page 28
CSL Limited Annual Report 2020
1
1
Chairman and CEO Message
US$2,103
million in reported net profit after tax.
US$2.02
dividend per share for 2020.
Dear Stakeholders,
In writing this message we have had the opportunity to reflect
on the sobering and far-reaching impact that the COVID-19
pandemic has had on our global community.
This decision was made following a strategic review and will
allow us to access capabilities from an experienced partner
and leverage our own internal investments.
While the pandemic has certainly added complexity to our
business and operating environment, CSL has had a number
of notable achievements throughout the year, including
the Company’s 25th anniversary as a listed company on
the Australian Securities Exchange. We are pleased to share
some of those success stories in this report.
While some clinical trial stage programs in our research
portfolio have been slowed due to COVID-19, our Phase 3
program investigating CSL112 for reduction of recurrent
cardiovascular events is progressing well. Over 9,500 patients
are now recruited and the results of a futility analysis have
provided us the confidence to continue as planned.
Business Highlights
CSL has continued to deliver value to shareholders because
of our unwavering focus on delivering innovative products
to people with rare and serious disease, and to protecting
the health of the public with our influenza vaccines portfolio.
This year we made a series of investments designed to
strengthen the next-generation therapeutic areas within our
portfolio. We exercised an option to fully acquire biotechnology
company Vitaeris, specifically its late-stage monoclonal
antibody therapy to address long-term rejection in kidney
transplants. Additionally, subject to receiving regulatory
approval we acquired the exclusive global license rights to
commercialise a Phase 3 stage program adeno-associated virus
(AAV) gene therapy program for the treatment of haemophilia
B from uniQure, an asset that if successful will prove
transformational for patients suffering this disease. Expanding
our stem cell gene therapy portfolio, we established an alliance
with Seattle Children’s Research Institute to develop stem
cell gene therapies for primary immunodeficiency diseases.
We also entered into a long-term strategic partnership with
Thermo Fisher Scientific for the lease of our state-of-the-art
biotech manufacturing facility currently under construction
in Lengnau, Switzerland. When construction is complete,
Thermo Fisher will lease and operate the Lengnau facility
and provide production support for CSL’s biologics portfolio.
As we’ve seen with the recent registration of Flucelvax in
Europe, Seqirus continues to go from strength to strength
as its differentiated product portfolio gains a strong
reputation in global markets.
Our relationships with the biomedical community have
always been critical to the way we approach our innovation
portfolio. In planning for future growth, we made the decision
to build a bespoke facility to house our Company’s Australian
headquarters and expand our R&D footprint with a new
16-storey building in the heart of Melbourne’s biomedical
precinct. It will accommodate 800 employees from 2024.
The move ensures we are well placed to strengthen our
partnerships and deepen the valuable relationships we have
with the local biomedical community. The move will also
bring key elements of our Australian operations together,
fostering stronger internal collaboration.
With our robust research and development (R&D) pipeline,
Commercial and Operations excellence, passionate people
and global reputation as a leading biotechnology company,
we have delivered a strong result for the year. It reflects the
focused execution of our strategy, robust demand for our
differentiated medicines and our commitment for meeting
the needs of people who rely on our therapies.
We are pleased to deliver a record dividend to shareholders
of US$2.02 per share for 2020.
2
CSL Limited Annual Report 2020 Unified by our Values
Throughout the pandemic period, the majority of our
employees have continued to work on our sites and in our
laboratories carrying out roles that are critical to ensuring
our business continuity.
For many others in our workforce, it has meant working
remotely and adopting new technologies to ensure our
culture of collaboration continues as we prepare for the
safe return to our office sites.
Through this challenging environment, our employees have
stayed focused while demonstrating creativity, flexibility and
resilience in continuing to do their jobs and doing them well.
Our people remain unified by our Values of Patient Focus,
Innovation, Integrity, Collaboration and Superior Performance
and we sincerely thank them for their commitment.
Using our assets to join the COVID-19 battle
We are privileged to be in a unique position of having
capabilities, competencies and assets across the organisation
to respond to COVID-19.
These efforts range from participating in the development
and manufacture of a novel vaccine in partnership with
the University of Queensland, to forming and leading
an unprecedented global industry alliance to develop
a hyperimmune treatment for the most serious cases.
Our scientists involved in these programs are working
with urgency and we thank them for their tireless
commitment over the past few months.
During the COVID-19 pandemic, a few hundred of our
employees have tested positive for the virus. They, along
with their loved ones, have had our full support as they
focus on their recovery.
Seeing so many people affected by COVID-19, over the past
several months, makes us even more determined in our
efforts to fight the virus. Yet, no single vaccine or therapeutic
approach is going to solve this health crisis; multiple
approaches are essential.
We remain optimistic that the extraordinary amount of
scientific collaboration happening across industry, academia
and government, including many initiatives we are proud
to be a part of, will lead to effective treatments and vaccines
in the near future. Until that time, we are greatly encouraged
by the fast adjustments that our business has been able to
make to adapt to changing conditions, and help us endure
any impacts of the pandemic.
We are confident that from the pandemic crisis, society will
eventually discover many benefits arising from it, ranging
across the acceleration and adoption of new technologies,
a deep resilience and ability to recover by the community,
and a significant contribution to science and medicine.
Board Renewal
One of the Board’s priorities is to ensure it has the capabilities
and domain expertise to govern our complex, global business
effectively. We welcomed two new Board members, Carolyn
Hewson and Pascal Soriot, and farewelled Tachi Yamada.
We are excited to have Carolyn and Pascal join our Board as
they will further contribute to the right balance of attributes,
skills, experience and diversity to deliver best practice
governance. Not only do we take a structured and rigorous
approach to Board succession, we apply this level of review
throughout the organisation to make sure that we have an
agile, best in class and principles-based management team
reflecting our Values. We are proud that external stakeholders
recognise this with Forbes including CSL in its Best Employers
for Diversity rankings 2020.
We believe that we are well-positioned to bring our strategy
for the future to life. Our continued momentum would not
be possible without the remarkable efforts of our people,
our donors, our external partners and, of course, our patients.
As always, we thank you for your support.
Please stay healthy and safe.
More on CSL.com (Investors > Financial Results and Information)
Dr Brian McNamee AO
Chairman
Paul Perreault
CEO and Managing Director
3
CSL Limited Annual Report 2020 1
Chairman and CEO Message
Our response to COVID-19
Our Efforts
• Playing a leading role in the launch of the CoVIg-19 Plasma Alliance, an unprecedented industry
partnership to develop a potential plasma-derived hyperimmune therapy for treating COVID-19.
The Alliance also supports national governments in their efforts to fight the pandemic.
• Pursing the development of an anti-SARS-CoV-2 plasma product for the Australian market with
the potential to treat people with serious complications of COVID-19.
• Partnering with the Coalition for Epidemic Preparedness Innovations (CEPI) and the University
of Queensland to accelerate the development, manufacture and distribution of a COVID-19 vaccine
candidate which uses Seqirus’ well-established MF59® adjuvant technology.
• Collaborating with SAB Biotherapeutics, a clinical-stage biopharmaceutical company, to manufacture
a novel immunotherapy targeting COVID-19. The potential therapy would be produced without the
need for blood plasma donations from recovered COVID-19 patients.
• Engaging with investigators regarding the company’s monoclonal antibodies, including CSL312
and CSL324, to identify treatment candidates from the portfolio that have the potential to treat
diffuse alveolar damage – one of the devastating respiratory consequences of COVID-19.
• Provisioning Seqirus MF59 adjuvant technology to multiple preclinical projects.
Our People
• Strongly encouraging employees who are able to work from home to do so in accordance with
guidance from national and local authorities.
• Implementing enhanced measures, including vigorous cleaning efforts and increased social distancing
to protect employees at our manufacturing sites, plasma centres and other essential locations.
• Offering employees at essential sites flexible Caregiver Leave of Absence and Caregiver Allowance plans
to provide support for balancing work with homeschooling and other caregiving responsibilities.
• Providing employees at essential sites with all of the PPE needed to perform their job safely
and effectively.
• Restricting travel to essential trips only to protect employees and prevent the potential spread
of COVID-19.
Our Patients
and Products
• Committing to keep plasma centres and manufacturing sites open during the pandemic to maintain
supply of lifesaving medicines and influenza vaccines.
Our Donors
• Maintaining constant communication with patient advocacy groups to provide updates on the
continued safety and availability of our plasma-derived products for those living with rare and serious
conditions. See page 38 for more on how CSL’s manufacturing processes handle COVID-19.
• Providing essential information for patients in the areas we treat on how COVID-19 may specifically
affect them through the Vita news hub of CSLBehring.com.
• Continuing much of our work on clinical trials for new potential products and therapies despite
a pause in new enrolments at some sites.
• Working with our public health partners to plan for the forthcoming influenza season, meeting
increased demand for influenza vaccines around the world, to help reduce the burden of influenza
on precious health care systems.
• CSL Plasma implemented a COVID-19 Infectious Disease Response Plan in combination with the
CDC’s Exposure Control Plan. The plan includes ensuring the safety of our donors and employees
by instituting social distancing, providing masks for donors and enhanced personal protective
equipment (PPE) for employees at all plasma centres.
• Working closely with local and national authorities to ensure that plasma centres remain open
as an essential service during lockdown measures.
• Launching a comprehensive communications campaign to raise awareness of the opportunity
and need for plasma donation.
• Providing donors with an opportunity to give back to their communities through the
#CSLPlasmaChallenge. The social media campaign raised money for local healthcare workers,
including those on the frontlines of the COVID-19 response.
More on CSL.com (Investors > Financial Results and Information)
More on CSL.com (Investors > Financial Results and Information)
4
CSL Limited Annual Report 2020 Our values
CSL’s strong commitment to living our
Values has guided us for many decades.
Our Values have been fundamental to
our success – helping us to save lives,
protect the health of people, and earn
our reputation as a trusted and reliable
global leader. They’re at the core of how
our employees interact with each other,
make decisions and solve problems.
Superior
performance
We take pride in
our results
Sevilay Gezen
(Broadmeadows,
Australia)
Integrity
We walk the talk
Norikazu Fushimi
(Tokyo, Japan)
Innovation
We turn innovative
thinking into
solutions
Adrian Zuercher
(Bern, Switzerland)
Collaboration
We are stronger
together
Ashlee Polk
(Kankakee, USA)
Patient focus
We deliver on our
promise to patients
Kalpeshkumar Patel
(Bio21 Institute,
Australia)
5
CSL Limited Annual Report 2020 2
2020 Performance
Business performance and highlights
• Another strong year with revenue up 9%^ and reported net profit after tax
of US$2,103 million, up 17% at constant currency (CC)^.
Growth
• Our largest franchise, the immunoglobulin portfolio, performed extremely well,
with PRIVIGEN® sales growing 20%^ and HIZENTRA® sales up 34%^.
Sustainable
Growth
• Seqirus’ earnings before interest and taxes grew more than 70%
this year underpinned by sales of new and differentiated products –
FLUCELVAX® and FLUAD®.
Efficiency
• Major capital projects underway at all manufacturing sites to support future demand.
• 40 new plasma collection centres opened in the United States (US).
• Strategic review of end-to-end supply logistics.
• Strategic partnership with Thermo Fisher Scientific for lease of CSL’s Lengnau,
Efficiency
Switzerland, biotech manufacturing facility.
• Direct distribution transition in China now complete.
• Underwent 401 regulatory inspections of our manufacturing facilities* with
no impact to licences or operations.
• Total revenue up 11% at CC basis driven by our seasonal influenza vaccines,
with a significant increase in demand for FLUAD, Seqirus’ adjuvanted influenza
vaccine for the elderly market and increased sales of FLUCELVAX® Quadrivalent
influenza vaccine.
• Acquired Vitaeris to expedite the development of Clazakizumab – an anti-interleukin-6
monoclonal antibody for the treatment of chronic antibody-mediation rejection
(or AMR) in kidney transplant recipients.
• Agreement to acquire the late stage gene therapy candidate for the treatment
of haemophilia B from uniQure.
• Futility test for CSL112 was completed with the recommendation that the trial should
continue (currently in Phase III for cardiovascular disease).
• Achieved 29 product registrations or new indications in numerous countries.
• CSL named in Best Employers for Diversity (Forbes).
• Employee workforce up 7%, with 57% of our employee base female.
• Achieved 76% employee engagement score, up 2.4 points on prior year.
• US$8.8 billion distributed in supplier payments, employee wages and
benefits, shareholder returns, government taxes and community contributions.
• US$38.7 million in global community investment across our strategic
areas of support.
Influenza
Influenza
Innovation
Innovation
People
& culture
People & culture
Shared value
Shared value
^ Constant currency removes the impact of exchange rate movements,
facilitating comparability of operational performance. For further
detail please refer to page 16.
* Does not include Ruide. Limited assurance by Ernst & Young.
More on CSL.com (Investors and Our Company >
Corporate Responsibility)
6
CSL Limited Annual Report 2020
Financial highlights
Interim unfranked dividend of
US$0.95
per share
+
Final unfranked dividend of
US$1.07
per share*
=
Total ordinary dividends for 2020
US$2.02
per share
US$4.63
per share
4.63
4.63
4.24
4.24
3.82
3.82
CSL Earnings
per share (US$)
5.0
5.0
4.5
4.5
4.0
4.0
3.5
3.5
3.0
3.0
2.94
2.94
2.5
2.5
2.69
2.69
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
15-16
15-16
16-17
16-17
17-18
17-18
18-19
18-19
19-20
19-20
CSL R&D Investment
(US$ millions)
950
950
855
855
760
760
665
665
570
570
475
475
380
380
285
285
190
190
95
95
0
0
922
922
832
832
US$922
million
702
702
667
667
614
614
15-16
15-16
16-17
16-17
17-18
17-18
18-19
18-19
19-20
19-20
Market development 12%
Lifecycle management 26%
New product development 62%
CSL Total operating
revenue (US$ millions)
CSL Net profit
(US$ millions)
9,151
8,539
US$9,151
million
7,915
6,947
6,115
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2,103
2,103
1,919
1,919
US$2,103
million
1,729
1,729
1,337
1,337
1,242
1,242
2,200
2,200
1,980
1,980
1,760
1,760
1,540
1,540
1,320
1,320
1,100
1,100
880
880
660
660
440
440
220
220
0
0
15-16
16-17
17-18
18-19
19-20
15-16
15-16
16-17
16-17
17-18
17-18
18-19
18-19
19-20
19-20
* For shareholders with an Australian registered address, the final dividend of US$1.07 per share (approximately A$1.48) will be unfranked for
Australian tax purposes and paid on 9 October 2020. For shareholders with a New Zealand registered address, the final dividend of US$1.07
per share (approximately NZ$1.63) will be paid on 9 October 2020. The exchange rates will be fixed at the record date of 11 September 2020.
All other shareholders will be paid in US$. CSL also offers shareholders the opportunity to receive dividend payments in US$ by direct credit
to a US bank account.
7
CSL Limited Annual Report 2020 3 Our Company
CSL is a global biotechnology leader which develops
and delivers innovative medicines that save lives,
protects public health and helps people with
life-threatening medical conditions live full lives.
Our businesses
CSL Behring
CSL Behring is a global leader in developing and delivering
high-quality medicines that treat people with rare and serious
diseases. Our treatments offer promise for people who are
living with conditions in the immunology, haematology,
cardiovascular and metabolic, respiratory, and transplant
therapeutic areas. CSL Behring drives more than 85% of
overall company revenue with substantial markets in more
than 100 countries across Asia Pacific, Europe, Latin America
and North America.
Seqirus
As one of the largest influenza vaccine providers in the
world, Seqirus is a major contributor to the prevention
of influenza globally and a transcontinental partner in
pandemic preparedness.
Seqirus operates state-of-the-art production facilities in the
United States (US), the United Kingdom (UK) and Australia
and utilises both egg-based and cell-based manufacturing
technologies as well as a proprietary adjuvant. It has leading
research and development (R&D) capabilities, a broad and
differentiated product portfolio and commercial operations
in more than 20 countries.
CSL at a glance
35+
Countries of operations
around the world
US$9.1
Billion in annual
revenue
US$3.7
Billion in R&D investments
in the last 5 years advances
product pipeline
27,000+
Employees around
the world
1,700+
R&D employees
270+
Plasma collection
centres across
China, Europe
and North America
8
CSL Limited Annual Report 2020 Our locations
Basel Switzerland
Bern
Switzerland
Amsterdam Netherlands
Maidenhead UK
Seqirus Head Office
Liverpool UK
Marburg Germany
Goettingen
Hattwesheim
Schwalmstadt
Germany
Hong Kong China
Tokyo Japan
Wuhan China
Melbourne Australia
Group Head Office
Sydney Australia
Pasadena
US
Indianapolis US
King of Prussia US
CSL Behring Head Office
Kankakee US
Cambridge US
Mesquite US
Boca Raton US
Holly Springs US
Knoxville US
Research and Development
Manufacturing
Commercial Operations
Testing Laboratory
Logistics Centre
Distribution
Warehousing
Administration
Regional Sales and/or Distribution
Plasma collection centres
9
CSL Limited Annual Report 2020 Our research and
development pipeline
Working every day and knowing people’s lives depend on
it, CSL’s world-class R&D organisation continues to evolve
as a biotechnology leader by advancing high-quality science
and technology through our own high-calibre scientists and
innovative collaborations. R&D utilises its expertise in four
strategic platforms – plasma fractionation; recombinant
protein technology; cell and gene therapy; and vaccine
development – to develop and deliver innovative medicines
that address unmet medical needs or enhance current
treatments that help patients lead full lives.
CSL’s strong R&D pipeline includes new treatments that
utilise the above platforms and align with its leading-edge
scientific technology and commercial capabilities across our
six therapeutic areas: immunology; haematology; cardiovascular
and metabolic; respiratory; transplant; and influenza.
Looking towards 2030, R&D is striving to deliver on the current
portfolio of medicines and continue to build a full and innovative
pipeline that will make a meaningful difference to the lives of
patients with rare and serious diseases. This pipeline will also
make a substantial contribution to our future revenue well
into the following decades.
3
Our Company
Our product portfolio
CSL Behring
We meet patients’ needs using the latest recombinant
and plasma-derived technologies. CSL Behring discovers,
develops and delivers the broadest range of products
in the industry for treating rare and serious diseases
such as haemophilia, von Willebrand disease (vWD),
primary immune deficiencies (PI), chronic inflammatory
demyelinating polyneuropathy (CIDP), hereditary
angioedema (HAE) and inherited respiratory disease.
CSL Behring’s products are also used in cardiac surgery,
for burn treatment and for urgent warfarin reversal.
Our therapeutic areas comprise:
– immunology;
– haematology;
– cardiovascular and metabolic;
– respiratory; and
– transplant.
Seqirus
Our broad range of influenza vaccines meets the needs
of different populations around the world. In Australia and
the Asia Pacific region, Seqirus is a leading provider of
in-licensed vaccines and specialty pharmaceuticals. It is
also the world’s only supplier of a unique range of products
made in the national interest for the Australian Government,
including antivenoms and Q fever vaccine.
Influenza Vaccines
Egg-based and cell-based products, seasonal,
pre-pandemic and pandemic influenza vaccines
Products of National Significance
Q fever vaccine and antivenoms for venomous
creatures in Australia and other Pacific countries
In-licensed Vaccines and Pharmaceuticals
For Australia and New Zealand
More on CSL.com (Expertise)
10
CSL Limited Annual Report 2020
Immunology
Research
Pre-Clinical
Clinical
Registration
Post-Launch
Haegarda® (C1 Esterase Inhibitor) Subcutaneous in Japan
Hizentra® (20% subcutaneous Ig) Dermatomyositis
Hizentra® (20% subcutaneous Ig) Systemic Sclerosis
Privigen® (10% intravenous Ig) Systemic Sclerosis
Garadacimab (Anti-FXIIa mAb) Hereditary Angioedema
CSL324 (Anti-G-CSFR mAb) Hidradenitis Suppurativa
CSL730 (Recombinant Trivalent Human IgG1 Fc Multimer)*
Gene Therapy Treatments Primary Immune Deficiency*
Haematology
Research
Pre-Clinical
Clinical
Registration
Post-Launch
Idelvion® (Recombinant rFIX-FP) Haemophilia B
Afstyla® (Recombinant FVIII) Haemophilia A
CSL630 (pdFVIII Ruide)
CSL200 (CAL-H) Sickle Cell Disease
CSL510 Modified Fibrinogen
CSL889 (Hemopexin) Sickle Cell Disease
CSL888 (Haptoglobin) Subarachnoid Haemorrhage
Respiratory
Research
Pre-Clinical
Clinical
Registration
Post-Launch
ZEMAIRA®/RESPREEZA® (Alpha1-Proteinase Inhibitor)
CSL311 (Anti-Beta Common mAb)
CSL787 (Nebulised Ig)
Cardiovascular and Metabolic
Research
Pre-Clinical
Clinical
Registration
Post-Launch
CSL112 (ApoA-1) Acute Coronary Syndrome
CSL346 (Anti-VEGFB mAb) Diabetic Kidney Disease
Transplant
Research
Pre-Clinical
Clinical
Registration
Post-Launch
CSL842 (C1 Esterase Inhibitor) Refractory Antibody Mediated Rejection
CSL964 (Alpha Antitrypsin) Prevention of Graft versus Host Disease
CSL964 (Alpha Antitrypsin) Treatment of Graft versus Host Disease*
Clazakizumab (Anti-IL-6 mAb) Antibody Mediated Rejection
CSL040 (Novel Complement Inhibitor)
Influenza Vaccines
Research
Pre-Clinical
Clinical
Registration
Post-Launch
AFLURIA® Quad (Quadrivalent Egg-based Influenza Vaccine)
FLUCELVAX® Quadrivalent (Quadrivalent Cell-based Influenza Vaccine)
FLUAD® Trivalent (Adjuvanted Influenza Vaccine)
FLUAD® Quadrivalent (Adjuvanted Influenza Vaccine)
Adjuvanted Cell Culture Influenza Vaccine (aQIVc)
Self-amplifying mRNA Influenza Vaccine
Outlicensed Programs
Research
Pre-Clinical
Clinical
Registration
Post-Launch
Mavrilimumab (Anti-GM-CSFR mAb)
CSL334/ASLAN004 (Anti-IL-13R mAb) Atopic Dermatitis
LASN01 (Anti-IL-11R mAb)
P. Gingivalis Periodontal Disease
COVID-19
Research
Pre-Clinical
Clinical
Registration
Post-Launch
CSL312 (Anti-FXIIa mAb) Acute Lung Injury
CSL324 (Anti-G-CSFR mAb) Acute Lung Injury
CSL451 (aCoV2)*
COVID-19 Hyperimmune Therapy*
* Partnered projects.
CSL’s pipeline also includes Life Cycle Managment projects that address regulatory post-marketing commitments, pathogen safety, capacity
expansions, yield improvements, and new packages and sizes.
11
CSL Limited Annual Report 2020 4
Strategy and Performance
In 2020, we are at the start of a decade full of promise. We are continually
investigating new ways to bring lifesaving therapies to patients across
the globe. We are also expanding production as we drive toward future
sustainable growth. The new decade will bring advancements in medicine
and technology as part of a continued evolution of biotechnology. It’s an
evolution we are excited to be a part of and our 2030 strategy is developed
with this evolution at its heart.
Our 2030 strategy
The 2020 strategy demonstrated that, in addition to growing
our global plasma business, we could develop and launch
class-leading recombinant products like IDELVION® and
build Seqirus into the second-largest influenza vaccine
innovator in the world. Along the way, we also expanded our
platform technologies for future growth with the acquisition
of Calimmune, offering a new strategic cell and gene therapy
platform. The 2020 strategy has positioned CSL for continued
and sustainable growth across the enterprise.
Our new 2030 strategy was developed to build on our success
and further serve our patients and enhance public health,
which are both at the core of what we do every day. With our
global workforce and strong culture, we look to execute our
2030 strategy through the following areas: focus; innovation;
efficiency and reliable supply; digital transformation; and
further advance our sustainable growth.
E fficiency &
R e l iable Supply
• Technology
• Process
Improvement
• Operational
Excellence
• Capital Project
Execution
v
o
n
In
n
a ti o
• Products
• Delivery
• Services
• Technology
Sustain
a
ble
G
r
o
w
t
h
Growth Platforms
• Plasma
• Recombinants
• Cell & Gene Therapy
• Influenza Vaccines
s
u
c
o
F
• Immunology
• Haematology
• Transplant
• Respiratory
• Cardiovascular
and Metabolic
• Influenza
S
C
L P e ople & Cultu
r
e
Patients and
Public Health
• Business
Model
• Connected
Healthcare
• New
Capabilities
D
i
g
i
t
a
l
T
r
a
n
s
f
o
r
m
a
t
i
o
n
We focus in areas where we have the capabilities required
to deliver value. We have chosen therapeutic areas (TAs)
where we have strong assets and established expertise, such
as immunology and haematology, and emerging TAs where
we see opportunities to grow our business, such as transplant,
respiratory, and cardiovascular and metabolic (CVM). In the
influenza vaccine business, our focus is on continued growth
of our cell-based products which we believe will lead to
improved outcomes compared to egg-based products.
TA leadership teams, co-led by senior leaders in R&D and
Commercial, have been established to maximise the benefits
of our products in their areas and to identify unmet patient
needs that can be addressed by our core technology
platforms: plasma fractionation, recombinant technology,
cell and gene therapy and vaccines.
12
CSL Limited Annual Report 2020
Therapeutic
Areas
Immunology
Haematology
Respiratory
Cardiovascular
and Metabolic
Transplant
Influenza Vaccines
(Seasonal, Pandemic)
Platform
Plasma
Fractionation
Recombinant
Technology
Cell and
Gene Therapy
Adjuvanted
Cell-based
Egg-based
We see potential in the years ahead to create enhanced
value and to better serve our patients through the use
of data, connectivity and technologies that can improve our
operations and increase our understanding of the patient
experience. Today, we are taking the necessary steps to
enable digital transformation throughout the business.
We are a trusted partner in protecting public health, and
through our unique capabilities and expertise, take such
responsibility seriously. We have partnered with governments
for influenza pandemic vaccine manufacturing and our
response to COVID-19 has demonstrated how CSL can
respond with flexibility and purpose to events that impact
global health. The 2030 strategy will bring new opportunities
and new ways of doing business. Today, we are more than
27,000 employees and growing. Guiding us, both internally
and in the evolving world around us, are the core CSL Values
we established years ago: Patient Focus, Innovation, Integrity,
Collaboration and Superior Performance.
Delivering on our 2030 strategy is not without risk, and we
provide more detail on the material risks that could affect
the execution of our strategy in the next section.
Innovation is in our DNA and we are committed to delivering
novel therapies to patients in our core TAs. In our industry,
bringing new products to market is lengthy and complex,
given the need for extensive testing in the clinic to ensure
the safety and efficacy of our product candidates. Today,
we contribute around 10% of our sales to R&D to develop
clinical candidates and discover new molecules. Over the
2030 timeframe, we will see the results from major clinical
programs in emerging TA’s like CVM and transplant that have
the potential to fill unmet patient need. We are also growing
our early stage portfolio, through our in-house capabilities
and through collaborations with external partners, to find
the next generation of therapies that will treat patients
in the coming years.
Efficiency and reliable supply is critical for meeting the
increasing demand for our core plasma products, such as
HIZENTRA® and PRIVIGEN®, and our emerging cell-based
influenza vaccine products. As one of the global leaders
in plasma fractionation, we look for opportunities to invest
in capital projects that will increase our ability to meet the
needs of patients. We approach the next decade of growth
being the most efficient derived-plasma operator in the
market and aim to serve more patients through a network
strategy that requires investments in technology, operational
excellence and process improvement. Outside plasma,
we have plans to increase capacity and optimise processes
for our cell-based influenza vaccine products.
Sustainable growth of our business requires that patients
who will benefit most from our therapies have access and
that we also capture the value that our products brings to
patients. Global demand for our core products is increasing
and we are committed to grow our business by maximising
the value of our franchises. For our therapeutic areas, we
will continually expand our portfolio of products to deliver
unmet need to patients and value to stakeholders.
13
CSL Limited Annual Report 2020 4
Strategy and Performance
How we create value
CSL’s ultimate goal is to deliver value through fulfilling unmet patient needs and protecting public health. With patients
at the core of our focus, we also strive to deliver sustainable financial growth for our shareholders and other stakeholders
who rely on our operations for economic and social prosperity. We achieve this through high-quality, focused innovation
capabilities, operational excellence and global commercial strength. At the origins of our value chain, plasma donors fuel our
pipeline, while partners and collaborators support innovation. Employees enable value creation by driving our performance
to deliver against our strategy and our promise.
What we draw on
Unmet need
Opportunities to improve and protect the quality
of life of patients in therapy areas we treat.
Financial resources
Cash, equity and debt for future growth.
Our people
27,000+ people with diverse skills that are driven
by our purpose and values.
Physical assets
Plasma centres to collect raw material,
manufacturing facilities for our products,
warehouses, offices for our people and
laboratories for our scientists.
Natural resources
Includes: plasma donations for rare and serious
diseases; influenza virus strains for product
manufacture; and environmental inputs such
as water and energy.
Collaborators and business partners
Accessing and sharing intellectual
know how to develop and innovate
our products.
Value we create
Our value chain
A healthier more productive society
Protecting global health and the wellbeing of
individuals, families, businesses and communities
from life-threatening and/or complications
resulting from influenza.
Saving and/or improving the quality of life of
hundreds and thousands of people with rare
and serious diseases.
14
Sustainable financial growth
Delivering consistent, profitable and
responsible growth for our investors,
which fuels innovation and development
of our product pipeline.
Social and economic opportunity
Enabling hundreds of thousands of
people to benefit from opportunity
created by growing along with us,
including employees, suppliers,
plasma donors and research partners.
We are creating an
environment that
enables innovation
to thrive.
DC
F H I
n
a ti o
v
o
n
In
We target areas
where we have
strong assets,
expertise and
opportunities to
create sustainable
franchises.
A C G J5
s
u
c
o
F
Our strategy
We are investing in capacity
ahead of projected demand and
in technology and process
improvements to ensure that we can
supply the needs of our patients.
D F H I
E fficiency &
R e l iable Supply
Our growth platforms
include plasma,
recombinants, cell and
gene therapy, and
influenza vaccines.
CBA
D E G
IH
J2
J3 J4 J5
Sustain
a
ble
G
r
o
w
t
h
We are transforming
our business model
over the next decade to
drive efficiency and
support innovation
throughout our
business.
B H J2
T
r
a
n
D
s
f
i
g
i
o
r
t
m
a
l
a
t
i
o
n
L P e o ple & Cultu
r
e
S
C
Patients and
Public Health
GCA
H J1 J4 J5
EDB
H J2 J3 J4
Priority sustainability topics *
Employee health and safety
Social investment
Product safety and quality
Innovation/R&D
Diversity and inclusion
Talent recruitment, development and retention
Communities we operate in
Human rights/labour practices
Access to healthcare
Corporate governance
Integrity
Environment – resource consumption and
Climate change risk
Plasma donors
environmental protection
J1
J2
J3
J4
J5
E
F
G
H
I
A
B
C
D
Promise to patients
Pharmacovigilance
Unmet need
Sourcing
including
plasma
collection
Sales, marketing,
policy advocacy
& patient support
Manufacturing
& distribution
Product
development
& clinical trials
Early stage
research
& collaboration
CSL’s Values and Code of Responsible Business Practice
Indicates where across our value chain our resources and assets have supported efforts to address COVID-19 pandemic.
* For more detail on our material topics visit CSL.com (Our Company > Corporate Responsibility > Approach > Material topics).
Topics J1 to J5 are equally ranked. CSL's 2019/20 sustainability materiality assessment has received limited assurance by Ernst & Young.
CSL Limited Annual Report 2020
What we draw on
Unmet need
Financial resources
Opportunities to improve and protect the quality
Cash, equity and debt for future growth.
of life of patients in therapy areas we treat.
Our people
27,000+ people with diverse skills that are driven
by our purpose and values.
Physical assets
Plasma centres to collect raw material,
manufacturing facilities for our products,
warehouses, offices for our people and
laboratories for our scientists.
Natural resources
Includes: plasma donations for rare and serious
diseases; influenza virus strains for product
manufacture; and environmental inputs such
as water and energy.
Collaborators and business partners
Accessing and sharing intellectual
know how to develop and innovate
our products.
Our strategy
We are investing in capacity
ahead of projected demand and
in technology and process
improvements to ensure that we can
supply the needs of our patients.
We are creating an
environment that
enables innovation
to thrive.
DC
F H I
n
a ti o
v
o
n
In
D F H I
E fficiency &
R e l iable Supply
Sustain
a
ble
G
We target areas
where we have
strong assets,
expertise and
opportunities to
create sustainable
franchises.
A C G J5
s
u
c
o
F
S
C
L P e o ple & Cultu
r
e
Patients and
Public Health
a
t
i
o
n
Our growth platforms
include plasma,
recombinants, cell and
gene therapy, and
influenza vaccines.
CBA
D E G
IH
J2
J3 J4 J5
r
o
w
t
h
T
r
a
n
D
s
i
f
g
o
i
r
t
m
a
l
We are transforming
our business model
over the next decade to
drive efficiency and
support innovation
throughout our
business.
B H J2
GCA
H J1 J4 J5
EDB
H J2 J3 J4
Priority sustainability topics *
A
B
C
D
Product safety and quality
Talent recruitment, development and retention
Access to healthcare
Environment – resource consumption and
environmental protection
E
F
G
H
I
Employee health and safety
Innovation/R&D
Communities we operate in
Corporate governance
Climate change risk
J1
J2
J3
J4
J5
Social investment
Diversity and inclusion
Human rights/labour practices
Integrity
Plasma donors
Value we create
Our value chain
A healthier more productive society
Sustainable financial growth
Protecting global health and the wellbeing of
individuals, families, businesses and communities
Delivering consistent, profitable and
responsible growth for our investors,
from life-threatening and/or complications
which fuels innovation and development
resulting from influenza.
of our product pipeline.
Saving and/or improving the quality of life of
hundreds and thousands of people with rare
and serious diseases.
Social and economic opportunity
Enabling hundreds of thousands of
people to benefit from opportunity
created by growing along with us,
including employees, suppliers,
plasma donors and research partners.
Promise to patients
Pharmacovigilance
Unmet need
Sourcing
including
plasma
collection
Sales, marketing,
policy advocacy
& patient support
Manufacturing
& distribution
Product
development
& clinical trials
Early stage
research
& collaboration
CSL’s Values and Code of Responsible Business Practice
Indicates where across our value chain our resources and assets have supported efforts to address COVID-19 pandemic.
* For more detail on our material topics visit CSL.com (Our Company > Corporate Responsibility > Approach > Material topics).
Topics J1 to J5 are equally ranked. CSL's 2019/20 sustainability materiality assessment has received limited assurance by Ernst & Young.
15
CSL Limited Annual Report 2020
4
Strategy and Performance
United Nations sustainable development goals
In September 2015, the General Assembly of the United Nations (UN) adopted the
2030 Agenda for Sustainable Development that includes 17 Sustainable Development
Goals (SDGs). The goals seek to address global challenges, including those related
to health and wellbeing, education, poverty, inequality, climate change, peace and
justice. CSL has identified seven goals where performance against our strategic
objectives, and continuous improvement across our priority sustainability topics,
can impact achievement of these goals.
CSL’s identified UN Sustainable Development Goals
For more information on how CSL supports the UN Sustainable Development Goals
More on CSL.com
visit CSL.com (Our Company > Corporate Responsibility > Approach).
More on CSL.com
More on CSL.com
Our financial review
Our operating review
Reported results
CSL Behring
CSL announced a net profit after tax of US$2,103 million for
the 12 months ending 30 June 2020, up 10% when compared
to the prior comparable period. Net profit after tax at constant
currency1 grew 17%.
Sales revenue was US$8,797 million, up 9% on a constant
currency basis when compared to the prior comparable period.
Expense performance
• Research and development expenses were US$922 million,
up 12%1 when compared to the prior comparable period.
• Selling and marketing expenses were US$896 million,
an increase of 5%1.
• Depreciation and amortisation expense was US$420 million,
up 13%1.
• Net finance costs were US$144 million, down 17%1.
Financial position
• Capital expenditure was US$1,368 million, up 7% when
compared to the prior comparable period.
• Cashflow from operations was US$2,488 million, up 51%.
• CSL’s balance sheet remains in a strong position with
net assets of US$6,527 million.
• Current assets increased by 16% to US$6,446 million.
• Non-current assets increased by 33% to US$9,019 million.
• Current liabilities decreased by 2% to US$2,142 million.
• Non-current liabilities increased by 39% to $6,796 million.
Total revenue was US$7,854 million, up 9% at constant currency
basis when compared to the prior comparable period.
Immunoglobulin (Ig) product sales of US$4,014 million grew
22% on a constant currency basis underpinned by strong
demand for PRIVIGEN® (Immune Globulin Intravenous
(Human), 10% Liquid) and HIZENTRA® (Immune Globulin
Subcutaneous (Human), 20% Liquid).
Global demand for immunoglobulin is being driven by
increased disease awareness and diagnosis as well as increase
usage of Ig for the treatment of chronic conditions such as
primary immune deficiency and the expanding utilisation
of Ig for the treatment of secondary immune deficiencies.
Another contributing factor to the strong growth in Ig was
the label claim granted to PRIVIGEN® and HIZENTRA® in the
US for the treatment of chronic inflammatory demyelinating
polyneuropathy (CIDP) in 2018.
The fastest growing area of the Ig market is the subcutaneous
segment in which HIZENTRA® continues to build its market
leadership position. HIZENTRA® is the only subcutaneous
product approved for CIDP and has been granted orphan
exclusivity for this indication in the US.
1 Constant Currency removes the impact of exchange rate movements to facilitate comparability of operational performance for the Group. This
is done in three parts: a) by converting the current year net profit of entities in the group that have reporting currencies other than US Dollars,
at the rates that were applicable to the prior comparable period (Translation Currency Effect); b) by restating material transactions booked by
the group that are impacted by exchange rate movements at the rate that would have applied to the transaction if it had occurred in the prior
comparable period (Transaction Currency Effect); and c) by adjusting for current year foreign currency gains and losses (Foreign Currency Effect).
The sum of translation currency effect, transaction currency effect and foreign currency effect is the amount by which reported net profit is
adjusted to calculate the result at constant currency.
16
CSL Limited Annual Report 2020 Specialty product sales of US$1,697 million grew 10% on
a constant currency basis. The main drivers of this growth
was KCENTRA® and HAEGARDA®.
Sales of KCENTRA (4-factor prothrombin complex
concentrate) in the US were strong, driven by an expansion
of new accounts and expanding usage in existing accounts.
HAEGARDA®, our therapy for patients with hereditary
angioedema, also grew strongly as usage increased and
additional supply came on stream.
Growth in specialty products was tempered by lower
wound healing sales in Japan following the return to market
of a competitor.
Haemophilia product sales of US$1,122 million increased
8% on a constant currency basis.
CSL Behring’s haemophilia portfolio continues to evolve
with strong growth in the recombinant haemophilia products
of 18% on a constant currency basis over the prior comparable
period. This was partly offset by the continued decline in
plasma-derived coagulation products which fell 3% on a constant
currency basis.
IDELVION®, CSL’s Behring’s novel long-acting recombinant
factor IX product for the treatment of haemophilia B,
continued to grow strongly in the prophylaxis segment
of the markets where we have launched the product.
AFSTYLA®, a novel recombinant factor VIII product for the
treatment of haemophilia A patients, also delivered strong
growth despite intense competition in this market.
Plasma-derived haemophilia sales decreased due to the
competitive pressures in this segment of the market.
Albumin sales grew strongly in key markets with the planned
exception of China, where we transitioned to our new direct
distribution model. The transition has seen overall albumin
sales decrease 36% to US$640 million, which is in line
with guidance.
Seqirus
Total revenue was US$1,297 million, up 11% at constant
currency basis driven by our seasonal influenza vaccines,
with a significant increase in demand for FLUAD®, Seqirus’
adjuvanted influenza vaccine for the elderly market and
increased sales of FLUCELVAX® Quadrivalent influenza vaccine.
Business strategies, prospects
and likely developments
This operating and financial review (OFR) sets out information
on CSL’s business strategies and prospects for future financial
years, and refers to likely developments in CSL’s operations
and the expected results
of those operations in future financial years.
Information in the OFR is provided to enable shareholders to
make an informed assessment of the business strategies and
prospects for future financial years of the CSL Group. Certain
information is excluded from the OFR (which forms part
of the Directors’ Report) on the basis that such information
relates to impending developments or matters in the course
of negotiation and disclosure would be unreasonably
prejudicial to the interests of CSL. Reasons that could
be considered unreasonably prejudicial to the interests
of CSL include: providing information that is misleading
due to the fact it is premature or preliminary in nature, relates
to commercially sensitive contracts, would undermine the
confidentiality between CSL and contract counterparties,
or would otherwise unreasonably damage CSL. The categories
of information omitted include forward looking estimates
and projections prepared for internal management purposes,
information which is developing and susceptible to change
and information relating to commercial contracts and pricing.
17
CSL Limited Annual Report 2020 5 Our Material Risks
CSL operates in a fast paced and constantly evolving environment of science, technology
and healthcare. We are exposed to risks inherent in the global pharmaceutical industry, and
in particular the plasma therapies industry. Therefore, we regularly review our group risk
profile to proactively identify material business risks and opportunities that could impact
our operations. Managing risks includes both the mitigation of disruptive risks and the
preparation for seizing opportunities. Our global Risk Management Framework is designed
to ensure robust risk oversight that is fit-for-purpose for both the operation of our business
and to support our strategy and deliver on our commitments to patients and public health.
As part of our risk management process, the Board and
management have identified the key risks that are material
to CSL. We describe these material group risks below and
explain our approach to managing them in the context
of delivering on our 2030 strategy. These risks are not listed
in any order of significance, nor are they all encompassing.
Patient safety and product quality
Patient safety is paramount for CSL’s ongoing sustainability
as a global biotechnology leader and our long-term strategy
of efficiency and reliable supply. When we talk about patient
safety, we mean both in the use and administration of
registered products as well as in the conduct of our clinical
trials. While it is inherent in our industry that patients
and trial participants may experience adverse reactions to
therapies, CSL’s manufacturing, product quality assurance
and pharmacovigilance practices serve to ensure the
highest standards of safety and the preservation of our
reputational integrity.
We ensure that our processes and procedures meet good
pharmacovigilance practice (GPV) and good clinical practice
(GCP) standards and that product information is up-to-date
and contains all relevant information to assist healthcare
practitioners to appropriately prescribe CSL products. For
clinical trials, participants are informed and acknowledge
awareness of the benefits and risks of participation in the
trial through use of Informed Consent Forms approved
by regulators.
In terms of ensuring product quality is met through our
manufacturing and supply, we adopt and comply with a broad
suite of internationally recognised standards (GxP), including
good manufacturing practice (GMP), good laboratory practice
(GLP) and good distribution practice (GDP). We are frequently
inspected by independent regulatory authorities ensuring
compliance with these standards, and we also undertake
our own GMP quality audits of our third-party suppliers.
Product innovation and competition
We recognise that an impediment to delivering on our
innovation and sustainable growth strategies is the changing
competitive landscape for new technologies and disruptive
therapies, such as gene and cell therapies. This material risk
may alter the economics and characteristics of, and the
demand for, CSL’s plasma and adjacent therapies, and may also
impact our platforms and capabilities in plasma fractionation,
recombinant technology, and cell and gene therapy.
We strategically review our existing and future product
pipeline against market demand and continually evaluate
our competitive landscape. A key part of our strategy includes
diversity in our product pipeline, and focus on six therapeutic
areas (immunology, haematology, respiratory, cardiovascular
& metabolic, transplant, and influenza). We incorporate
product lifecycle development and management, as well
as development of new therapies, in each therapeutic area
strategy. In addition to proprietary research, CSL’s competitive
18
approach includes licensing, acquiring or partnering with
third parties to remain competitive and advance growth
within our chosen therapeutic areas.
With respect to continued growth and innovation in the
competitive global influenza vaccine market, we recognise
the need to continue leading in development and
manufacture of cell culture influenza vaccines. Failure
to capitalise on this innovative technology will diminish
growth in this product sector, whereas success will deliver
competitive advantages.
Supply, capacity and operations
Having a sustainable and reliable supply chain is critical
to the success of our 2030 Strategy, particularly to achieving
consistent and efficient supply. When considering this
material risk, we include the sustainability of collecting
and acquiring human plasma, as well as the scalability
of specialised companies who supply raw materials and
bespoke manufacturing equipment to match our business
demand and growth objectives.
In 2020, we opened 40 new plasma collection centres. We
utilise modern techniques and technologies to facilitate the
most efficient donation process in our new plasma collection
centres, and we consistently update our existing plasma
collection centres to seek to provide a comfortable and
safe donor experience. External sources of plasma may
be utilised as needed and available to supplement collections
to meet demand.
We endeavour to invest in manufacturing capacity ahead
of projected demand to ensure that we can supply the needs
of patients. Our operations also accommodate investments in
technology and process improvements to enhance efficiency
and reduce costs, including improving immunoglobulin
protein yield from each litre of plasma and pursuing the
development of new plasma-derived proteins for therapeutic
use to further improve the economic value of each litre of
plasma. CSL also seeks to develop non-plasma alternative
therapies to supplement patient needs.
Our End-to-End Operations Network Strategy practice
continually evaluates short-, mid-, and long-term needs
to inform decisions on capital and operational expenditures
to ensure a resilient, reliable, and sustainable supply chain.
We continually examine and prioritise our operational
effectiveness efforts, capital plans, inventory targets, supply
chain visibility and regulatory strategies to enhance the
positions of our products from a business continuity and
supply chain resilience standpoint.
Market access
Policymaking around market access is a multi-stakeholder
engagement process, which includes governments, payers/
insurers, patient advocacy groups, medical societies, and
non-governmental organisations. We recognise that if we
are not successful in maintaining an economic and reliable
supply of our therapies for our stakeholders, it may adversely
CSL Limited Annual Report 2020 affect our ability to execute our strategy and to deliver
sustainable growth. In particular we recognise that
macroeconomic pressures on pricing and payers (including
barrier taxes) may impair access, growth and new market
entries. CSL works closely with stakeholders in all markets and
continually seeks to ensure pricing of our therapies remains
competitive in all markets. By continually seeking to innovate
in our product portfolio, we can also expand our access
to competitive markets.
People and culture
Our people and culture are essential to our delivery of our
2030 strategy. Our people and our ability to maintain our
desired culture are integral to operating at the standards
expected by our stakeholders and community. We have
a number of programs and policies in place to ensure that
our Values underlie how we do things and guide our work,
including our CSL Speak Up Policy and our Code of
Responsible Business Practice.
We also recognise the need to have the right people
in the right roles in order to execute our 2030 strategy.
In order to attract, develop and retain skilled and talented
people in a globally competitive environment, we frequently
benchmark ourselves against the markets in which we
operate to ensure we offer total rewards that are comparable
to our peers and competitors.
In addition to this, we recognise the evolution of our
workforce environment. We continually challenge ourselves
to create a work dynamic that ensures our people can focus
on meaningful, valuable work. We have recently implemented
the Promising Futures initiative, which emphasises digitalisation
and automation, development and re-skilling, collaboration
and connectivity and customised rewards for attracting
next-generation talent.
Privacy and cybersecurity
Maintaining privacy and security of our patient, plasma donor,
employee and company data is critical and at the forefront of
all that we do. It is an essential risk to manage to ensure that
we can deliver on our 2030 strategy. Over the past 12 months,
we have seen an increase in cyberthreats against individuals
and companies. The nature of these cyberattacks are constantly
evolving and can include sophisticated phishing scams and
attacks on critical infrastructure. The privacy and security
of our patient, donor, employee and corporate information
may be compromised by breaches of our IT security and
unauthorised or inadvertent release of information through
human error or espionage.
CSL continuously monitors and assesses its cybersecurity
threats. We have implemented robust and externally tested
security controls for our IT systems, data centre infrastructure,
and data sets based on our understanding of known threats
and best practice industry knowledge. We also provide
educational updates and training so that our people can
recognise and properly respond to a cyberattack or report
a privacy breach.
Further detail about our risk management framework and
how we manage our business risks is provided in our 2020
Corporate Governance Statement available on CSL.com
(Our Company > Corporate Governance).
19
CSL Limited Annual Report 2020 6 Outlook
Strong progress in market demand has been seen over the past twelve months which lays
a good foundation to supporting our 2030 strategy. In saying this, predicting the underlying
outlook in the market and providing a trend is challenging given the circumstances
presented by COVID-19.
In the medium term CSL expects to continue to grow
through developing differentiated plasma-derived and
recombinant products, expanding markets and indications
for those products as well as seasonal and pandemic
influenza vaccines. We believe that demand for our plasma,
recombinant and vaccine products continues to be robust,
particularly for immunoglobulins and influenza vaccines.
Governments around the world recognise the essential
products and capabilities that we provide to their
communities. It is unlikely that this demand will change
in a material way in the medium term.
The COVID-19 pandemic does, however, present a challenge
for the global plasma industry. The collection of plasma has
been adversely impacted in the past few months as
communities respond to shelter-in-place orders, extended
lockdowns and other government actions. To mitigate this,
we have a number of initiatives in place to sustain plasma
collections. It is our view that, at some point, the pandemic
will recede and, with that in mind, we continue to invest in
plasma collection and manufacturing facilities as well
as our hallmark research and development programs.
Seqirus is expected to continue to perform well and deliver
another strong profitable year. Governments around the
world want to protect their populations from the potential
co-infection of influenza and COVID-19. This, together with
Seqirus’ differentiated products, underpins this expectation.
We have faced an exceptionally challenging environment
with the COVID-19 pandemic, and although the situation
remains highly fluid, we remain positive about CSL’s
prospects for the future. Driven by our promise, and guided
by our Values in making our decisions, we remain committed
to delivering innovative medicines that saves lives, protect
public health and help people with life-threatening medical
conditions live full lives.
More information in relation to our outlook is provided
in our full year investor briefing pack, and further information
on the factors that could affect our outlook is provided
in Our Material Risks.
20
CSL Limited Annual Report 2020 7 Powered by Innovation
Innovation and collaboration are the engine that
drives CSL. We invest in research and development
(R&D), enabling our continued growth.
Expanding our R&D footprint
CSL continues to build an integrated, global R&D organisation
that assembles coordinated international project teams,
drawing together talented staff from different countries
to collaborate with each other and with medical research
institutions everywhere to advance our programs. With more
than 1,700 scientists in nine countries, a global leadership
team situated around the world and important R&D centres
in Melbourne, Australia; Bern, Switzerland; Marburg, Germany;
Pasadena, California, US; and King of Prussia, Pennsylvania,
US, we have access to worldwide, leading innovation from
within and outside CSL. In the past year, CSL has strategically
grown its footprint and alliances in close proximity to its R&D
centres to help foster and access external innovation while
also continuing to evolve internally. In this way, we can
continually deliver meaningful benefit to patients while
growing in a fiscally responsible way.
The following are some notable examples of our
strategic growth.
– Breaking ground on CSL’s new global headquarters in
the Parkville Biomedical Precinct in Melbourne, Australia.
Scheduled for completion in 2024, the facility will house
around 800 employees including early stage research and
product development teams and include leading-edge
laboratories along with space for external collaborators
and start-ups.
– Construction of CSL Behring’s R&D campus in Marburg,
Germany. Scheduled for completion in 2022, the R&D
campus will accommodate around 600 staff, house
state-of-the-art laboratories and create opportunity
for external partners and collaborators to work with us.
– Expanding CSL Behring’s R&D facility in Pasadena,
California, US. This will enable us to focus on cell and gene
therapy that promises to advance our new capabilities in
this scientific platform. The Pasadena location allows for
strategic collaboration both in the cell and gene therapy
arena but also gives CSL a strategic presence along the
west coast of the US.
this CSL R&D laboratory will bring together bright scientific
minds from CSL sites around the world to maximise our
ability to uncover disruptive scientific methods that could
help ensure patients with rare or serious diseases have
the medicines they need in the future. CSL also continues
to partner with the University City Science Center to fund
promising research through the CSL’s Research Acceleration
Initiative, which offers grants to researchers around the
globe working in CSL’s scientific areas of interest.
– Officially opening the Swiss Institute for Translational
and Entrepreneurial Medicine – known as sitem-insel –
in 2019, on the campus of the University of Bern hospital.
This unique facility provides the infrastructure to cultivate
research findings or prototypes to marketable products
and uniquely houses an established biotechnology
company along with academic researchers and start-up
biotechnology companies. CSL’s Biologics Research Centre
will be situated at sitem-insel. CSL will be the sole large
biotechnology company on-site and we will conduct our
own research and enter into meaningful collaborations
with scientists from both the academic and start-up arenas.
Investment in our R&D pipeline
In 2019/20, CSL invested US$922 million* in R&D across our
businesses with a focus on our six therapeutic areas –
immunology, haematology, cardiovascular and metabolic,
respiratory, transplant, and influenza – and four scientific
platforms – plasma fractionation, recombinant protein
technology, cell and gene therapy, and cell-based and
egg-based vaccines. In addition, CSL continues to build
on its capabilities across the R&D value chain, from discovery
research to pharmacovigilance to its currently marketed
therapies. Such proficiency is critical as R&D builds the
novel and diverse pipeline of the future. For a detailed
view of our diverse and balanced product pipeline see
page 11 of this report.
CSL continues to look for strategic collaborations and
acquisitions that align with our therapeutic areas of focus.
– Opening CSL Behring’s first laboratory in Philadelphia,
* Limited assurance by Ernst & Young.
a short drive from its US headquarters in King of Prussia,
Pennsylvania. Located at the University City Science Center,
steps from world-class research institutions and universities,
Therapeutic
Areas
Immunology
Haematology
Respiratory
Cardiovascular
and Metabolic
Transplant
Influenza Vaccines
(Seasonal, Pandemic)
Platform
Plasma
Fractionation
Recombinant
Technology
Cell and
Gene Therapy
Adjuvanted
Cell-based
Egg-based
21
CSL Limited Annual Report 2020 Expanding our
R&D footprint
CSL’s new global headquarters in the
Parkville Biomedical Precinct in Melbourne,
Australia. Scheduled for completion in 2024,
the facility will house around 800 employees.
Marburg, Germany
Pasadena, California, US
Construction of CSL Behring’s R&D campus
in Marburg, Germany. Scheduled for
completion in 2022.
Expanding CSL Behring’s R&D facility in Pasadena,
California, US. This will enable us to focus on cell
and gene therapy that promises to advance our
new capabilities in this scientific platform.
22
CSL Limited Annual Report 2020 Philadelphia, US
Bern, Switzerland
Opening CSL Behring’s first laboratory in
Philadelphia, a short drive from its US
headquarters in King of Prussia, Pennsylvania.
Officially opening CSL laboratories within
the Swiss Institute for Translational and
Entrepreneurial Medicine – known as
sitem-insel – in 2019.
23
CSL Limited Annual Report 2020 7
Powered by Innovation
US$922 million
in research and development*
CSL continues to innovate, expand and diversify our R&D
pipeline. We now have development products in all of our
therapeutic areas – immunology, haematology, cardiovascular
and metabolic, respiratory, transplant, and influenza – across
all of our technology platforms – plasma fractionation,
recombinant protein technology, cell and gene therapy,
and vaccine development.
Global collaborations for innovation access
In order to further increase global collaboration and introduce
external early stage projects to support growth of our
research pipeline, the CSL Research External Innovation (REI)
team in Europe entered into a partnership with Biopôle in
Switzerland in June 2020. Biopôle is a life-sciences campus
boasting a renowned community of industry and academic
specialists, as well as state-of-the-art laboratories. The Biopôle
community consists of leading companies, prestigious
research institutes, clinical research departments and dozens
of other research entities. The partnership will enhance
networking with the scientific community and provide CSL
with access to R&D opportunities on specific research areas
organised by Biopôle and its academic partners.
In June 2020, a strategic alliance was announced with the
Seattle Children’s Research Institute (SCRI) – one of the top
paediatric research institutions in the world – to develop
stem cell gene therapies for primary immunodeficiency (PI)
diseases. Initially, the alliance will focus on the development
of treatment options for patients with two rare, life-threatening
PI diseases: Wiskott-Aldrich syndrome and X-linked
agammaglobulinemia. Expanding our gene therapy portfolio
into an area of immunology well known to CSL exemplifies
how we are strategically growing our capabilities in this
scientific platform and collaborating with world-class
institutions to access innovation with the potential to vastly
improve patients’ lives.
In support of the yearly seasonal influenza vaccine epidemic,
Seqirus collaborates with the World Health Organization
Coordinating Centre in Melbourne, Australia to prepare
vaccine seeds and potency reagents that are made widely
available. This is an important contribution to assist with the
global effort to prepare for the forthcoming vaccination season.
Strategic acquisitions to expand our therapeutic areas
In June 2020, CSL entered an agreement with uniQure, a
leading gene therapy company, to acquire exclusive global
licence rights to commercialise an adeno-associated virus
(AAV) gene therapy program, AMT-061 (etranacogene
dezaparvovec; EtranaDez), for the treatment of haemophilia
B. AMT-061 is currently in Phase III clinical trials and could be
one of the first gene therapies to provide long-term benefits
to patients with haemophilia B. A single dose of AMT-061
has been shown to increase factor IX (FIX) plasma levels (the
blood clotting protein lacking in people with haemophilia B)
to a degree that reduces, or eliminates, the tendency for
bleeding for many years. If AMT-061 is successful, appropriate
* Limited assurance by Ernst & Young.
24
candidate haemophilia B patients would be able to receive
a single dose to restore FIX activity to functional levels capable
of eliminating the need for frequent and ongoing replacement
therapies. Expanding our gene therapy portfolio to treat
haemophilia B, a disease state well known to CSL, exemplifies
how we are strategically aligning our rare and serious disease
focus and our targeted therapeutic area focus with our core
scientific platforms to transform the lives of patients.
The acquisition of Vitaeris Inc. in June 2020 expanded
our transplant therapeutic area portfolio with the addition
of clazakizumab, an anti-interleukin-6 (IL-6) monoclonal
antibody (mAb) currently in Phase III clinical trials for the
potential treatment of chronic active antibody-mediated
rejection (AMR), the leading cause of long-term rejection
in kidney transplant recipients. With this acquisition,
clazakizumab joins our portfolio of products in late-stage
development to address significant unmet needs in the
transplant community. There are currently no approved
treatments for transplant recipients who develop AMR.
CSL’s core therapeutic area focus also means we will choose
not to develop certain internal assets that are outside these
areas; instead, we will identify suitable partners and out-
license assets that have promising therapeutic attributes.
A recent example is our monoclonal antibody program
targeting interleukin-11 receptor (IL-11R). Lassen Therapeutics
acquired the IL-11R antibodies from CSL in June 2020 and
will develop LASN01 in the areas of fibrosis and oncology.
Accessing IL-11 research and antibodies from CSL will greatly
accelerate Lassen’s efforts to bring a novel therapeutic
candidate to patients.
Strategic support for innovative medical research
In order to accelerate the commercialisation of promising
biomedical research, CSL has committed A$45 million over 10
years to the Brandon Capital–led A$230 million Biomedical
Translation Fund (BTF) and the two A$200 million Medical
Research Commercialisation Funds (MRCF3 and MRCF5).
These funds – the largest life-science funds in Australia’s
history – have continued to invest in a range of promising
biomedical discoveries.
Through the ongoing partnership between CSL Behring
and the University City Science Center in Philadelphia, US,
researchers at the University of Pittsburgh and the University
of Delaware were awarded funding and support in February
2020 to accelerate their search for innovative new medicines.
The first recipients of this support from the CSL Research
External Innovation initiative will investigate a potential
targeted therapeutic for the treatment of pulmonary
fibrosis and the use of cell-derived microparticles and
vesicles for both the treatment of thrombocytopenia
and as a vehicle for the delivery of gene-based therapies
into blood stem cells. Following the success of the initial
pilot, the CSL Science Center Research Acceleration Initiative
has expanded and is accepting applications from researchers
at 28 institutions across six states with awardees to receive
up to US$400,000 each.
Influenza remains one of our greatest global health threats.
CSL is committed to collaborating with like-minded partners
to advance understanding of the human response to
influenza and to discover new and innovative vaccine
solutions. We have continued our support of an international,
non-profit venture, the Human Vaccines Project, dedicated
to decoding the immune system to develop a universal
influenza vaccine that affords long-lasting protection against
seasonal and pandemic influenza across demographics and
geography. The project unites leading academic research
CSL Limited Annual Report 2020
centres, industry partners, non-profits and governments
to address the primary scientific barriers to developing
new vaccines and immunotherapies. The project will utilise
biomedical and artificial-intelligence-based, machine-learning
technologies to develop models of the immune system
to rapidly accelerate vaccine research.
Our drug delivery platforms
CSL’s business, including our R&D and in-market product
portfolios, has advanced considerably over the past few years
and looks very different to how it did 10 years ago. New and
exciting opportunities allow us to address previously unmet
patient needs and these continue to drive us each day.
It is important that we have the organisational design
and capabilities we need to allow us to achieve sustainable
growth towards 2030 and beyond.
To ensure a robust and diverse innovation pipeline based on
a foundation of scientific excellence, CSL Behring has evolved
and strengthened its therapeutic area focus and will continue
to use its three primary platforms of plasma fractionation,
recombinant protein technology and cell and gene therapies
to support continued innovation and continually refine ways
in which products can meet patient needs.
Plasma product development
Plasma is a valuable, natural but limited source of many
current and potentially new biological therapies and we rely
upon our donors to provide this lifesaving resource. As such,
CSL Behring has an obligation to maximise the development
and delivery of important products from this vital resource
for the benefit of patients.
Maximising patient benefit from as much of the donated
plasma as possible that is collected across CSL Behring’s
industry-leading network, is a critical area of focus as we strive
to be the industry pacesetter.
Some notable examples of how CSL Behring is continuously
enhancing its plasma product development are listed.
– Development of processes for new plasma therapies across
all of our therapeutic areas.
– Innovation of existing products to provide a continuous
series of life-cycle process improvements for optimal plasma
utilisation with increasing product quality. Such innovations
include the introduction of isoagglutinin removal
technologies within the production stream to improve the
safety and quality of PRIVIGEN®.
– Conducting research to refine our understanding and gain
additional insight at the molecular level for CSL Behring
plasma products and purification processes, by applying
modern analytical testing and characterisation methods
and utilising state-of-the-art analytic instrumentation to
further ensure safety, quality, and reliable supply of product
for patients.
– Development of patient convenience enhancements
that meet patients’ needs, assessing the technological
landscape for the best-fit medical device, then bringing
those candidate devices to process development to
unite the protein therapy with the convenience device,
ultimately leading to a combination product. These
patient convenience enhancements represent an array of
accessories, including prefilled syringes, vial reconstitution
aids, aerosolising nebulisers, and autoinjector platforms.
– Maintaining vigilance against emerging pathogen threats
through surveillance programs and by proactively publishing
data that demonstrate that CSL’s processes have the capability
to remove agents, such as hepatitis E virus and coronaviruses,
providing reassurance to patients and healthcare providers
that our products are safe from these specific threats.
Recombinant protein and monoclonal antibody technology
Following strategic investments over the last decade, the
capability to develop and manufacture both recombinant
proteins and monoclonal antibodies is now firmly established
as a core platform. This enables both efficiencies in manufacture
and the ability to manipulate the sequence of naturally
occurring proteins to achieve desired therapeutic goals
such as the ability to selectively target specific biological
mechanisms, enhanced potency and pharmacokinetics,
resulting in more effective, highly differentiated medicines
with the potential to optimise the route and frequency of
delivery. These capabilities have already translated into
marketed products and several assets in clinical development,
such as IDELVION® and AFSTYLA®, from our recombinant
protein platform; and several recombinant novel monoclonal
antibodies (mAbs), in various phases of clinical development.
Finally, CSL Behring has commenced clinical evaluation
of two mAbs from our existing R&D portfolio, garadacimab
(a novel factor XIIa-inhibitory mAb) and a novel, mAb which
binds to the granulocyte colony-stimulating factor (G-CSF)
receptor, both of which represent a unique and novel
approach to treating the severe consequences of COVID-19.
As demonstrated by the breadth and novelty of the pipeline,
these capabilities have allowed CSL to leverage its expertise
in protein biology and innate cell immunity to build a highly
differentiated preclinical and clinical stage pipeline, with
many of the proposed targets in areas of biology novel
to the pharmaceutical industry.
The value of the culture, capabilities and capacity of our
recombinant protein technology platform has been brought
into perspective by COVID-19, where CSL is uniquely
positioned in Australia to respond to the crisis. CSL has
partnered with the University of Queensland (UQ) and
the Collaboration for Epidemic Preparedness Innovations
(CEPI) to develop and manufacture a vaccine candidate
for the COVID-19 pandemic (additional information on this
partnership can be found in the R&D COVID-19 section on
page 27). Transitioning from preclinical and early clinical
studies to commercial manufacture requires a significant
investment in process optimisation, assay development,
formulation definition and product characterisation to be
able to scale from thousands, to hundreds of millions of
doses. Assuming success, CSL intends to use our significant
capability in recombinant protein technology to honour our
longstanding biosecurity commitment to Australia and its
neighbours, as well as support the global effort to produce
a vaccine for COVID-19.
Nobel Laureate David Baltimore (centre) joins, Bill Mezzanotte
(right), EVP, Head of R&D and Chief Medical Officer for CSL
and Andreas Gille (left), CSL Behring Senior Director and
Pasadena R&D Head, in taking part in a ceremonial ribbon
cutting at the biotech leader’s expanded R&D facility in
southern California.
25
CSL Limited Annual Report 2020 7
Powered by Innovation
Cell and gene therapy
Cell and gene therapies are highly innovative, next-
generation products that, after decades of research and
development, are now starting to positively impact the lives
of patients with serious diseases. For diseases with few
effective therapeutic options, such as certain blood cell
cancers, or where successful therapy has required a lifetime
of regular symptomatic treatment, for example rare inherited
genetic deficiencies, they offer the promise of a long-term
cure. In light of this recent progress, CSL has made a
significant global investment to both acquire and further
develop capability in cell and gene-based therapies. This
investment provides CSL scientists with a third therapeutic
development platform that complements the longstanding
and successful deployment of our plasma and recombinant
protein platforms.
CSL entered the cell and gene therapy field through the
strategic acquisition of Calimmune in 2017. The acquisition
gave CSL access to the preclinical development program
for an ex vivo haematopoietic stem cell gene therapy for the
treatment of sickle cell disease (SCD). CSL also acquired two
platform technologies: SELECT+™ and CYTEGRITY™. These
technologies are designed to address some of the main
challenges currently associated with the commercialisation
of stem cell therapy, including the ability to manufacture
consistent, high-quality products, and to improve stem cell
engraftment, efficacy and tolerability. Both technologies
have broad applications in ex vivo stem cell gene therapy.
The ex-Calimmune facilities in Pasadena, US, and Sydney,
Australia, are now fully integrated into the CSL R&D network
and our cell and gene therapy project-related activities are
now progressed through global project teams that access
skill sets and technical capability from the most appropriate
R&D facility.
The Pasadena site is in close proximity to some of the world’s
premier gene therapy academic institutions and biotech
companies. This proximity has allowed CSL to engage
in strategic partnerships to strengthen its commitment
to developing gene and cell therapies. These include
partnerships with City of Hope Hospital in Duarte, California,
and University of California, Los Angeles (UCLA). In June 2020,
a strategic alliance was announced with the Seattle Children’s
Research Institute (SCRI) in Seattle, Washington, to develop
stem cell gene therapies for primary immunodeficiency (PI)
diseases such as Wiskott-Aldrich syndrome and X-linked
agammaglobulinemia. Expanding our gene therapy portfolio
into an area of immunology well known to CSL exemplifies
how we are strategically growing our capabilities in this
scientific platform and are collaborating with world-class
institutions to access innovation with the potential to vastly
improve patients’ lives.
A newly established viral vector laboratory in Marburg,
Germany, has the capability to produce lentivirus in traditional
flatware, adherent and suspension bioreactors. CSL is focused
on the establishment of a robust and scalable viral vector
manufacturing platform that can be utilised across many
different gene therapy products. Aiding the process
development activities is a state-of-the-art analytical
laboratory that enables the scientist to test and fully
characterise the viral vector. CSL is also continuing to build
a strong network of collaborators across Europe and the
US to further enhance CSL’s process and analytical
capabilities for large-scale viral vector clinical production.
Infl uenza vaccine technologies
The core focus for Seqirus R&D is the development of better
influenza vaccines based on proprietary cell-culture and adjuvant
technologies. For more than 50 years, influenza vaccine has been
produced using chicken eggs to grow virus, which is then
extracted, killed and purified into the vaccine components.
Seqirus has pioneered the modernisation of influenza vaccine
with the development of FLUCELVAX® QUADRIVALENT, a
four-strain product where the vaccine components are grown
in state-of-the-art cell-culture bioreactors in our plant in Holly
Springs, North Carolina, US. This approach has a variety of
potential advantages, including greater efficiency of production
and improved matching of the virus strains included in the
vaccine, with the circulating virus infecting people.
Since its inception, Seqirus has registered FLUCELVAX
QUADRIVALENT in multiple markets, introduced significant
process improvements and increased production scale to
meet global demand. Current activities include further
geographical expansion of licensure and a number of clinical
trials to support expanding the indicated age for FLUCELVAX
to include infants down to six months of age. We also
continue to focus on ways to improve the productivity
and efficiency of the manufacturing process with the aim
of boosting the number of doses we can make in a season
and speeding up the time to market. An ongoing, important
commitment is to gather in-market, real world evidence that
provides insights into the potential benefits of FLUCELVAX.
Standard risk
Seasonal
TIV / QIV
At-risk
populations
Adjuvanted
seasonal
TIV / QIV
Pandemic
Enabling gene therapy research
The Pasadena site represents CSL’s fi rst US-based, wet-
laboratory R&D facility with a good manufacturing practice
(GMP) cell manufacturing facility established to support
CSL’s ex vivo gene therapy clinical development programs
in Phase I and II. In addition, the laboratory space has been
tripled in area and upgraded, representing an overall capital
investment in excess of US$12 million. The expansion also
included the addition of 845 square metres of laboratory and
offi ce space allowing for the required growth in Research,
Bioanalytics, Cell Manufacturing, Clinical Operations and
support functions. Since the acquisition, on-site staff has
more than doubled to 50.
Egg-based
Cell-based
Influenza Science
An important challenge in protecting the community from
influenza is the waning immunity and response to vaccination
of people with increasing age. FLUAD® QUADRIVALENT
combines egg-based vaccine with Seqirus’ proprietary
adjuvant, MF59, an additive that acts to strengthen the
immune response to vaccination. It is licensed in a number
of countries and is indicated for people 65 years and older.
The collection and analysis of real world evidence is also
an important component of our ongoing FLUAD activities.
26
CSL Limited Annual Report 2020
One of our most important new product development
projects is aQIVc, which combines cell-culture vaccine with
MF59 adjuvant and will be targeted for use in older adults and
children. We are in the final phases of preclinical formulation
development and experimental work and plan to commence
clinical trials with this product in late 2020.
A critical part of protection from seasonal influenza is
readiness for a future influenza pandemic. We were pleased
to obtain approval from the US Food & Drug Association
(FDA) earlier in 2020 for AUDENZ™, a pre-pandemic vaccine
based on H5N1, the ‘bird flu’ strain, made by the cell-culture
process and combined with MF59. This product now forms
the basis of our pandemic support of the US.
In the longer term, we are working on developing a self-
amplifying mRNA vaccine, a disruptive technology with
the potential to significantly improve vaccine efficacy
and revolutionise manufacturing. This project is currently
in preclinical research.
Addressing the global COVID-19 crisis
Strategic partnerships and collaborations with academia,
industry and governments have been the foundation of CSL’s
strategic R&D efforts to combat the novel coronavirus, COVID-19.
From the time the coronavirus was first identified, CSL has
been assisting in the fight against COVID-19 in a number of
ways including offering expertise, technologies, equipment
and materials on a humanitarian basis. Our acumen in
vaccines, monoclonal antibodies, recombinant technologies,
plasma technologies, manufacturing capabilities and
partnerships, along with a therapeutic focus in Immunology
and Respiratory, all align with the scope of this disease and,
most importantly, potential vaccines and treatments.
CSL has committed to the fight against COVID-19, leading
several external collaborations to combat this devastating
global pandemic. In April 2020, CSL recruited companies
from throughout the plasma industry and, with Takeda, led
the creation of the unprecedented CoVIg-19 Plasma Alliance
to accelerate the development of one, unbranded plasma-
derived hyperimmune therapy for treating people with
COVID-19. By partnering as an industry, the Alliance aims to
provide a reliable, scalable and sustainable treatment solution
for patients suffering the impact of COVID-19 and to support
national governments in their efforts to fight the current
pandemic. Hyperimmunes are already on the market for
several conditions including rabies and tetanus. If successful,
the anti-COVID-19 hyperimmune globulin (CoVIg-19) may
be one of the first treatments with the potential to treat
individuals with serious complications of COVID-19.
In addition, and building upon, the global CoVIg-19 Plasma
Alliance, in May 2020, CSL Behring began development of an
anti-SARS-CoV-2 plasma product with the potential to treat
serious complications of COVID-19 in Australia. Working with
the Australian Government, CSL will develop the product
using donations of plasma made in Australia by people who
have recovered from COVID-19. Plasma will be collected by
the Australian Red Cross Lifeblood.
CSL Behring has also partnered with SAb Biotherapeutics
(SAB) who have developed a small-scale process for purification
and formulation of SAB-185, a bovine-derived, but fully human
polyclonal anti-SARS-CoV-2 antibody therapeutic candidate.
The partnership joins the forces of CSL Behring’s leading
protein science capabilities with SAB’s novel immunotherapy
platform, to bring a therapy to the market as soon as possible.
Together, SAB and CSL are capable of rapidly developing,
registering and manufacturing natural, highly targeted,
high-potency, fully human polyclonal antibodies (made
using several different immune cells).
CSL is also collaborating with the Coalition for Epidemic
Preparedness Innovations (CEPI) and the University of
Queensland (UQ) in Australia to accelerate the development,
manufacture and distribution of a COVID-19 vaccine candidate
pioneered by researchers at UQ. The partnership builds on a
relationship that dates back to the early 1990s when CSL with
UQ, and later Merck & Co., Inc., collaborated to develop the
recombinant human papilloma vaccine, GARDASIL®. CEPI and
CSL are funding the development and manufacture of UQ’s
‘molecular clamp’ enabled vaccine that is combined with
CSL’s recombinant manufacturing capabilities and Seqirus’
proprietary adjuvant technology MF59 for COVID-19. Funding
will provide support for the Phase I safety study being led
by UQ, followed by subsequent late-stage clinical trials, and
industrial-scale manufacturing to allow the production of
potentially millions of doses a year, should the product be
approved. CSL’s R&D team in Melbourne will transfer the UQ
process to CSL and make adjustments to ensure that it will
scale to commercial quantities. A development and scale-up
process that typically takes years is being accelerated to be
completed in months. The initial phase of large-scale
production of the vaccine will take place at CSL’s biotech
manufacturing facilities in Melbourne, Australia. CSL
anticipates that the production technology can be scaled
to produce up to 100 million doses towards the end of 2021.
CSL would also subcontract other global manufacturers to
increase the number of doses that can be produced and
broaden the geographical distribution of vaccine production.
Should clinical trials be successful, a vaccine could be available
for distribution in 2021. This proprietary adjuvant boosts
immune response and enables less antigen to be used in each
dose of vaccine, so more doses can be produced more rapidly.
These include garadacimab (a novel factor XIIa-inhibitory
mAb) which successfully passed through Phase II clinical
development as a new type of prophylactic treatment for
hereditary angioedema (HAE); a novel, humanised mAb
targeting vascular endothelial growth factor-B (VEGF-B) for
the treatment of diabetic kidney disease (DKD) in patients
with type 2 diabetes mellitus which is progressing into Phase
II and; a novel, mAb which binds to the granulocyte colony-
stimulating factor (G-CSF) receptor, currently in a Phase Ib
study in patients with hidradenitis suppurativa and
palmoplantar pustulosis.
We’re in this together – Perreault calls for COVID-19
plasma donations at White House roundtable
CEO and Managing Director Paul Perreault represented
the CoVIg-19 Plasma Alliance at a White House Roundtable
discussion on 30 July in Washington where he urged those who
have recovered from COVID-19 to consider donating plasma
toward the development of a potential hyperimmune COVID-19
treatment. Perreault told U.S. President Donald Trump at the
event that the call to action for plasma donations was an
“important step” in making the potential treatment a reality.
Photo credit: Shutterstock
CSL Limited Annual Report 2020
27
7
Powered by Innovation
New products to market
CSL Behring continues to broaden the geography and use of
our medicines for rare and speciality diseases across the globe
within our Immunology and Haematology therapeutic areas.
Within the immunology portfolio, regulatory indication
expansion and new registrations are primarily focused
on our subcutaneous immunoglobulin, HIZENTRA, and
our intravenous immunoglobulin, PRIVIGEN. In 2019/20,
indication expansion was sought for HIZENTRA for chronic
inflammatory demyelinating polyneuropathy (CIDP) and
multifocal motor neuropathy (MMN) in select markets. CIDP
is a chronically progressive, rare autoimmune disorder that
affects the peripheral nerves and may cause permanent
nerve damage. The myelin sheath, or the protective covering
of the nerves, is damaged, which may result in numbness
or tingling, muscle weakness, fatigue and other symptoms,
which worsen over time. MMN is a rare, progressive neuropathy
that presents as muscle weakness asymmetrically in the
extremities. Notably, in February 2020, PRIVIGEN was
approved for primary immunodeficiency (PI) and secondary
immunodeficiency (SI) by Japan’s Ministry of Health, Labour
and Welfare (MHLW). Additionally, four new product
registrations were achieved for each of HIZENTRA and
PRIVIGEN and five for ALBUREX®/ALBUMINAR®.
In our haematology therapeutic area, the focus in 2019/20
was expansion of the current portfolio. Six new product
registrations were achieved for our recombinant FVIII
product, AFSTYLA, three new product registrations for
IDELVION, our recombinant FIX product, seven for BERIATE®,
our factor FVIII product, three for our prothrombin complex,
BERIPLEX®, plus additional approvals for HAEMOCOMPLETTAN®
and CORIFACT®/FIBROGAMMIN® (refer to Product Registrations
and Indications 2019/20). Additionally in May 2020, IDELVION
received a favourable opinion from the European Committee
for Medicinal Products for Human Use (CHMP) on updated
product labelling that included a description of 21-day
expanded dosing schedule.
For Seqirus, 2019/20 brought significant progress in broadening
our influenza vaccine portfolio.
In 2019, Seqirus achieved marketing approval in Australia for
FLUAD® QUAD, indicated for protection of adults 65 years and
older against seasonal influenza. This was the first of a number
of approvals during the period for the adjuvanted quadrivalent
influenza vaccine, which included licensure in Europe
(as FLUAD® TETRA) and the US (as FLUAD® QUADRIVALENT).
We continue to expand the availability of our four-strain
influenza vaccine, AFLURIA® QUAD, the egg-based vaccine
manufactured at our Parkville, Australia plant. AFLURIA® QUAD
was granted approval in Argentina and New Zealand in 2019
and South Korea, Germany and Austria (as AFLURIA® TETRA)
in 2020, while AFLURIA® QUAD JUNIOR was registered in New
Zealand for ages six months to three years in 2019.
The global rollout of FLUCELVAX® QUAD continued, with
approval in Canada for people aged nine years and above in
2019, in Taiwan for people aged three years and above in 2020,
and in Brazil for two years and older (as FLUCELVAX® TETRA).
In 2020, FDA approval was granted for AUDENZ, an adjuvanted,
cell-based influenza vaccine designed to protect against
influenza A (H5N1) in the event of a pandemic. This vaccine
enables the potential for rapid deployment in the event
of an H5N1 pandemic emergency. AUDENZ™ is indicated
for people six months and above.
In Australia and New Zealand, Seqirus’ in-licensing business
helps provide greater access to a broad portfolio of vaccines
and medicines. The Australian allergy portfolio was reinforced
with the approval in 2019 of RYALTRIS® nasal spray for treatment
of symptoms of allergic rhinitis and rhino-conjunctivitis.
CATIONORM®, an ophthalmic treatment for dry eyes, was
the first product for an eye-care portfolio when Australian
registration was granted in 2019.
29
product registrations or new
indications for serious diseases.
Stacy Ahearn
,
Until she turned 40, Stacy Ahearn
spent a life powering through illnesses
to pursue her passion for fitness. Stacy
ran marathons and even met the
challenge of the legendary Ironman
Triathlon. When repeated illnesses
forced Stacy to put her athletic
career on hold, she began to seek
a diagnosis. After years of tests, she
was finally diagnosed with common
variable immune deficiency, one
of more than 200 primary immune
deficiency conditions. After getting
the treatment she needs, Stacy
is again chasing her dreams. She
recently hit the trail to conquer the
famed Camelback Mountain near
her Arizona, US, home.
28
CSL Limited Annual Report 2020 Product Registrations and Indications 2019/20*
Immunology
Focus on improved patient convenience, plasma yield improvements, expanded labels, new formulation science,
and recombinant technology.
Product
Type
Country/Region
HIZENTRA® Immune Globulin Subcutaneous (Human) 20% Liquid
HIZENTRA® Immune Globulin Subcutaneous (Human) 20% Liquid
PRIVIGEN® Immune Globulin Intravenous (Human) 10% Liquid
PRIVIGEN® Immune Globulin Intravenous (Human) 10% Liquid
BERINERT®, C1-Esterase Inhibitor Intravenous (Human) 2000 IU and 3000 IU
ALBUREX® 5/20, ALBURX® 20/25, Human Albumin, Albuminar 20/5/25,
Albuminate 5/20/25
NR
NI
NR
NI
NR
NR
Vietnam, Kazakhstan, Russia, Azerbaijan
Taiwan, Brazil, Macedonia, Mexico, Ecuador (all CIDP)
Sri Lanka, Vietnam, Brunei, Paraguay, Nicaragua
Switzerland (MMN), Japan (PID/SID), Panama (CIPD),
Macedonia (MMN), Jordan (CIDP)
Switzerland
France, UK, Malta, Singapore, Indonesia, China, New
Zealand, Ecuador
Haematology
Maximize the value and performance of our existing coagulation therapies and develop new protein
and gene-based therapies.
IDELVION® Coagulation Factor IX (Recombinant) Albumin Fusion Protein
AFSTYLA® Coagulation Factor VIII (Recombinant)
BERIATE® Coagulation Factor VIII (Human)
BERIPLEX® C P/N, Prothrombin Complex (Human)
CORIFACT®, FIBROGAMMIN®, Coagulation Factor XIII Concentrate (Human)
HAEMOCOMPLETTAN® 1g, Fibrinogen Concentrate (Human)
NR
NR
NR
NR
NR
NR
Singapore, Argentina, South Korea
Thailand, Singapore, Brazil, Argentina, South Korea,
Malaysia
Latvia, Estonia, Lithuania, Malta, Vietnam, Singapore,
Sri Lanka, Jordan
New Zealand, Chile, Paraguay
Iraq
Singapore
Respiratory
Develop new treatments for respiratory diseases using our existing plasma derived immunoglobulins and proteins
and recombinant monoclonal antibody technology.
ZEMAIRA® Alpha1 Proteinase Inhibitor (Human)
NI
Brazil (severe alpha1-antitrypsin deficiency)
Influenza Vaccines (Seasonal, Pandemic)
Develop products for the prevention of infectious diseases.
FLUAD® QUAD Inactivated Quadrivalent Influenza Vaccine
(surface antigen), Adjuvanted
FLUAD® QUADRIVALENT (Influenza Vaccine, Adjuvanted)
FLUAD® TETRA (Influenza Vaccine, Adjuvanted)
FLUCELVAX® QUAD Influenza Vaccine (surface antigen, inactivated,
prepared in cell cultures)
FLUCELVAX® QUAD (Influenza Vaccine)
FLUCELVAX® TETRA (Influenza Vaccine)
FLUCELVAX® TETRA (Influenza Vaccine)
AFLURIA® QUAD seasonal egg-based split inactivated quadrivalent
influenza vaccine
AFLURIA® QUAD seasonal egg-based split inactivated quadrivalent
influenza vaccine
AFLURIA® QUAD JUNIOR seasonal egg-based split inactivated quadrivalent
influenza vaccine
AFLURIA® TETRA Inactivated Influenza Vaccine
AFLURIA® seasonal egg-based split trivalent inactivated influenza vaccine
FLUAD® Inactivated Trivalent Influenza Vaccine Adjuvanted
AUDENZ™ adjuvanted, cell-based pandemic Influenza A (H5N1) vaccine
In-Licensed Products 1,2
NR
Australia
NR
NR
NR
NR
NR
NI
NR
NI
NR
US
Europe
Canada
Taiwan
Brazil
Brazil (for the prevention of influenza in persons
aged two years and older)
South Korea, Argentina
New Zealand (for the prevention of influenza in persons
aged three years and over)
New Zealand (for the prevention of influenza in persons
aged six months–three years)
NR
Germany, Austria
PQ WHO
NR
NR
New Zealand
US
CATIONORM® OTC ophthalmic treatment for dry eyes
RYALTRIS® Nasal spray for treatment of symptoms of allergic rhinitis
and rhino-conjunctivitis
NR
NR
Australia
Australia
* First-time registrations or indications for CSL products in the listed countries/regions over the reporting period.
NR=New Registration; NI=New Indication; PQ=Prequalification (via WHO).
1 CATIONORM® is a registered trademark of Santen SAS.
2 RYALTRIS® is a registered trademark of Glenmark Specialty SA.
29
CSL Limited Annual Report 2020 7
Powered by Innovation
Clinical trials in process and new
In 2019/20, CSL had 34 clinical trials in operation across all
therapeutic areas. Of those, nine had a first patient enrolled
in the trial during the year.
CSL conducts ethical clinical trials and adheres to exemplary
standards of integrity in the formulation, conduct and
reporting of scientific research. This is based upon three
primary elements: scientific integrity, patient safety and
investigator objectivity.
34
clinical trials in
operation across all
therapeutic areas.
17
regulatory
inspections with
no impact to
clinical licences.
The CSL Clinical Quality Management System allows us to
monitor and effectively oversee the quality of our clinical trials
and includes all good clinical practice (GCP), pharmacovigilance
(PV), good laboratory practice (GLP), and good research
laboratory practice (GRLP) audits.
Over the reporting period, 15 clinical trial registrations and
seven clinical trial results were published and made readily
available to stakeholders and the general public. These were
all disclosed in a timely manner and in compliance with our
transparency policy. Our policy reflects international
requirements and standards including requirements from
the International Committee of Medical Journal Editors,
WHO guidance and legislative requirements.
In addition, 17 (11 CSL Behring and six for Seqirus) inspections
were undertaken by regulatory agencies such as the US FDA,
the Pharmaceuticals and Medical Devices Agency of Japan
(PMDA) and the Paul Ehrlich Institute (PEI). All inspections
confirmed adherence with GCP requirements, validated the
data integrity of our clinical trials and had no impact on
clinical trial licences or operations.
Power of real-world evidence
The use of Real-World Evidence (RWE) is gaining importance
amongst policy makers, decision makers and purchasers.
Seqirus established an innovative and cutting-edge dataset
to conduct Real-World Research (Observational/Phase IV
studies). This dataset links one of the largest electronic
medical health record datasets in the US with a large
pharmacy and medical claims dataset incorporating more
than 45 million unique individuals. This unique real-world
anonymised data provides a comprehensive perspective
on the health status, service utilisation and financial profile
of both individuals and population. Seqirus Medical Affairs
uses this dataset to generate real-world evidence critical
in evaluating influenza vaccine effectiveness for continued
advances in influenza prevention.
30
CSL Limited Annual Report 2020 Innovation across the value chain
At CSL, innovation isn’t limited to the laboratory. We have
fostered a culture of innovation that touches every part of
our organisation and allows us to think and act progressively.
Examples of our innovation abound, from the development
of leading therapeutics to new ways to utilising the power
of data science at our manufacturing sites around the world.
Through our efforts we are able to better serve our patients,
our employees and our communities.
As part of the ongoing digital transformation that is a pillar
of our 2030 strategy, we have implemented an organisation-
Bringing virtual reality to life in Bern
wide effort to integrate data science, artificial intelligence (AI)
and machine learning throughout every aspect of the enterprise.
In addition to using AI to solve many burdens that patients
face, CSL is using AI to improve supply chain efficiency and
comply with regulatory and legal requirements.
The approach ensures each data science project is the right
one to address individual team needs while benefitting
CSL as a whole. It’s an effort that is only going to get bigger
as we keep an eye firmly focused on the future.
CSL’s ongoing Digital Transformation is on display every day at our Bern manufacturing site
in Switzerland.
Packaging employees are improving efficiency with the help of augmented reality. Workers wear
specialised glasses and use barcode scanners to record and check incoming materials, ensuring
that the valuable ingredients for lifesaving therapies are verified and logged.
The Bern site also is improving training by making use of virtual reality technology. Aseptic filling
trainees are taking courses in a virtual training space outside the production area. The setup
ensures that normal operations continue while workers are being trained and at the same time
reduces the risk of contamination in the sterile production area.
Collaborating with patients to create digital tools
By working closely with people living with sickle cell disease, our clinical team designed an augmented reality app, which
walks patients through the details of our CSL200 gene therapy clinical trial. Patients guided the design, including choosing
the app’s avatar and selecting the voice patients hear in the immersive, augmented reality experience. This app is an
innovative tool that will complement, not replace, existing tools for explaining clinical trials and gaining consent from
patients. This use of technology has resulted in the exploration of similar applications for wider use across other clinical trials.
Improving customer experience through technology
Seqirus Medical Affairs launched three customised online tools that significantly improved efficiencies and effectiveness
for our internal and external customers.
– A medical education grants tool enables healthcare professionals to submit applications easily and efficiently.
– An investigator initiated research tool enabling academic researchers to submit applications for funding improves our
review process and management of ongoing projects.
– An online publication tool improves the tracking of our scientific manuscript development and streamlines the review
process of all our abstracts and manuscripts. The tool manages the publication process from start to finish and provides
an audit trail to maintain ethical, transparent publication practices.
Inspecting with eagle eyes
With our Bern site aiming to significantly boost production over the next several years, an
innovative solution was needed to ensure all of the product could be inspected. Project Eagle
answered the call. The project, which consisted of the implementation of fully automated
inspection technology has boosted inspection rates from 35 vials per minute to 180 vials per
minute, ensuring manufacturing operations can keep up with future demand.
31
CSL Limited Annual Report 2020 8 Global Reach and Impact
The COVID-19 pandemic has underscored the importance of CSL’s ability
to think globally and act locally to help ensure that we can continue to
meet growing demand, fulfil the critical need for our lifesaving medicines
and improve public health. Throughout the global health crisis, CSL has
leveraged its reach and strategic manufacturing and distribution capability
with a high degree of coordination, agility and flexibility to continue
meeting the needs of patients and healthcare providers worldwide.
Seqirus has been able to simplify and streamline the testing
process to release FLUCELVAX® influenza vaccine into the US
each season. Since 2012, the Food & Drug Administration’s
(FDA) Center for Biologics Evaluation and Research (CBER)
requirement to demonstrate that the influenza virus had
been successfully inactivated in our cell-based vaccine was
undertaken using egg-based testing. This required complex
network logistics to ship a number of bulk lots of FLUCELVAX
from the US to the Seqirus Liverpool site in the UK, for testing
each year. Seqirus quality control teams collaborated over
multiple years to prove that the cell-based testing was
equivalent, or superior, to egg-based testing. With CBER
agreement, the egg-based testing is no longer required. With
testing now based at our Holly Springs plant in the US, the
need for complex shipping is also removed, thereby reducing
risk to the product.
Seqirus introduced a new process for inspection of harvested
allantoic fluid, at the influenza vaccine manufacturing site
in Parkville, Australia. This process was designed in-house
and has enabled the removal of the cumbersome process of
‘candling’ over 440,000 eggs per day. Seqirus Liverpool, UK, has
optimised the process for incubation of eggs pre-inoculation
that has resulted in yield improvement in certain strains of 15%.
This year, Seqirus Liverpool saw the commissioning and
start-up of a new line for production of MF59®, Seqirus’ novel
adjuvant. The line is now operating and capable of producing
over 1000L per week of bulk sterile MF59.
Production of the Seqirus antivenom portfolio has been
improved in the past year. The Therapeutic Goods Administration
(TGA) approved the chemistry, manufacturing, control (CMC)
regulatory variation for the use of an adjuvant in venom
dosing. Use of this adjuvant has significantly increased
antibody potency for most antivenoms.
Donor management
CSL Plasma, a division of CSL Behring, has grown to become
one of the largest plasma collection networks in the world,
providing human plasma to CSL Behring for the manufacture
and distribution of plasma protein biotherapeutics. Expanded
laboratory and logistics operations have increased CSL
Plasma’s testing and storage capacity to meet the growing
need for plasma-derived therapies.
99%
of plasma donors
are willing to
donate again.*
97%
of plasma donors
are willing to refer
a friend to a centre.*
Within our end-to-end operations organisation, we are
focused on delivering top-tier results in safety, quality,
reliability and innovation, and driving efficiency and scale
of our operations to supply the expanding global market.
Global reach and focus
CSL applies its world-class research and development (R&D),
commercial strength and patient-focused management,
along with its high-quality manufacturing, to develop and
deliver innovative biotherapies, influenza vaccines and
support programs.
In the past five years, CSL has grown rapidly, due to strategic
acquisitions, a rise in global demand for our products and
investment in increased capacity and modernisation.
Our management team has significant experience in the
industry and the confidence to drive our promise to patients
into the next century.
Our commitment to strategic sourcing has allowed the
business to have a reliable supply of lifesaving therapies
in multiple facilities across the globe.
A number of CSL’s sites are supporting major capacity
expansion projects from Project Phoenix in Marburg, Germany,
for base fractionation, Project Protinus in Bern, Switzerland,
for PRIVIGEN®, and Project Aurora in Broadmeadows,
Australia, also for base fractionation. The timing of these
projects coming online will help ensure a seamless supply
of products to patients.
Although the COVID-19 pandemic briefly slowed construction
work on CSL’s state-of-the-art manufacturing facility in
Lengnau, Switzerland, the site continues to move toward
completion. In May 2020, CSL announced that we have
entered into a strategic partnership with Thermo Fisher
Scientific Inc. for the lease of the Lengnau facility. As part
of this long-term lease agreement, Thermo Fisher will
manufacture and supply CSL Behring with IDELVION®,
which will be produced in Lengnau. Thermo Fisher is
scheduled to assume oversight and operation of the facility
once construction is completed in mid-2021.
When the Seqirus business was formed, there were 400
applications inherited from the legacy businesses. A major
milestone was achieved in October 2019 with the three-year
Edge program successfully completed, enabling Seqirus
to be fully integrated globally on a single information systems
platform. This is greatly enhancing collaboration and
efficiency across the business.
In a multiyear investment, the first serialisation of Seqirus
products was supplied for the 2019/20 influenza season in the
US and Europe. Serialisation is where a unique serial number
is printed on each pack of vaccines. It helps to combat
counterfeit products and provides the basis for full track
and trace of our vaccines in the future. Seqirus’ Southern
Hemisphere products are also now serialisation-capable.
* Limited assurance by Ernst & Young.
32
CSL Limited Annual Report 2020 We continue to invest in our CSL Plasma footprint to secure
supply to meet growing patient demand. CSL Plasma has
over 270 collection centres globally (US, Germany, Hungary
and China) with plasma testing laboratories and logistics
centres in the US, Germany and China along with a saline
and sodium citrate manufacturing facility in the US.
Efficient and safe donor management contributes to our
success by ensuring a supply of raw material which we use in
our biotherapy manufacture. Over the reporting period 1.164
million surveys completed by our plasma donors indicated
99% would be willing to donate again and 97% would be
willing to refer a friend to donate.*
CSL Plasma donor profile
The socio-demographic background of CSL Plasma donors
in the US is very diverse.
Based on self-reported survey data (1 July 2019 to 30 June
2020), CSL Plasma donors related their occupational status*:
– 50% described themselves as working full-time;
– 26% described themselves as unemployed, inclusive
of full-time parents, donors who are not looking for work
or the unemployed;
– 14% described themselves as part-time;
– 3% described themselves as students; and
– 7% described themselves as other (e.g. military, retired).
Focus on efficiency, standardised manufacturing
processes and integrated supply chain
CSL’s end-to-end operations organisation has a critical role
to play in helping to deliver on our 2030 strategy, so we can
continue saving people’s lives and improving public health
across the globe. Over the last year, we have been evolving
our end-to-end operations to build on its strengths and
create an engaged and inclusive culture that consistently
delivers top-tier results in the key areas of safety, quality,
reliability and innovation.
To meet the global demand for CSL’s lifesaving medicines,
we are focused on driving a global mindset and creating
an end-to-end operation organisation that is modern and
scalable, from plasma collection through to our patients.
Over the last year, we have made enhancements to our
supply chain and manufacturing capabilities, introducing
concepts such as reliability rooms, to give us greater visibility
and control across our network. End-to-end operations is
also working more closely than ever before with key internal
partners like commercial operations and R&D, and using
more predictive thinking and modelling to anticipate
potential challenges, minimise risk and identify solutions.
For CSL Plasma, the collection of vital human-derived plasma
for the development of lifesaving products is industry leading
and a critical part of CSL’s supply chain. With careful localised
management of operations, including donor remuneration,
CSL Plasma facilities minimise donor time via integrated
donor management systems including electronic biometric
identification and check-in, streamlined floor layouts and an
operational excellence approach driving a cohesive culture
of efficiency and teamwork. During the COVID-19 pandemic,
CSL Plasma utilised a wide variety of measures to ensure the
safety of donors and employees and address challenges such
as the need for social distancing, stay-at-home orders and
mandated capacity reductions.
* Limited assurance by Ernst & Young.
Secure and reliable supply
During the financial year, a new function, External Supply
Integration, was created to focus on partnering with world
class contract manufacturers, analytical services and logistics
providers. This function supports our 2030 strategy by
delivering growth, reliability and innovation through
investments made by the chosen partners. This ensures
efficient growth, risk reduction and new capabilities are
delivered more quickly and cost effectively.
Sourcing in collaboration with the supplier quality team
ensures the required level of quality and performance is
demonstrated consistently across the CSL business. The
focus on consistency removes variation for suppliers, thus
simplifying their efforts to support CSL and further reduces
risks and inefficiencies in our operations.
CSL logistics was able to maintain the continuity of CSL
product deliveries throughout the year and especially during
COVID-19 amidst unprecedented disruptions of shipping
capacity affecting both sea and airfreight.
With the introduction in 2019 of a newly formed supply chain
integrity role, a roadmap was developed to deepen our due
diligence towards continuously improving the monitoring
of potential risks in our supply chain. In collaboration
with EcoVadis, a trusted global provider of sustainability
performance evaluations, high-priority suppliers were
independently assessed across health and safety, labour
rights, ethical and environmental risk domains. Further to
this pilot, CSL will establish an enterprise-wide due diligence
platform that will create a consistent and holistic risk profile
for our existing critical supplier base as well as enhance risk
assessment processes when evaluating new suppliers.
The COVID-19 pandemic served as a significant test
of the security of Seqirus’ supply chain in the second half
of the year. Supplies were successfully maintained to our
manufacturing operations across all sites, internal and
external, throughout the lockdown period. Materials where
long-lead times are necessary will be assessed to mitigate
future risks in similar circumstances.
Seqirus UK secured Authorised Economic Operator (AEO)
status in 2019/20, confirming the quality of our organisation and
processes with World Customs Organization (WCO) standards.
Procurement activities implemented across the Seqirus
organisation, including commercial operations and R&D,
have generated service improvements and cost reduction.
Increased demand for influenza vaccine from Southern
Hemisphere markets in early 2020 was able to be
accommodated as a result of the network capacity and
flexibility implemented in recent years.
CSL remains compliant with all product serialisation
requirements having achieved implementation in Russia
in 2019/20 and is preparing to meet requirements for various
other countries, such as Brazil and the USA Drug Supply
Chain Security Act 2023 Track and Trace.
Logistics goes green in the US
Through a multi-functional initiative, CSL Global Logistics
implemented a new small parcel shipper for the US market.
Single-use components are made of cardboard, while all
other components are collected and returned to the vendor
for refurbishment and re-use. The result is a 90% reduction
in landfill contributions (150 US tons annually). In addition,
improved performance, increased branding and easier
packaging ensures a unique and simpler customer experience.
33
CSL Limited Annual Report 2020 8
Global Reach and Impact
Supplier assessments
Environmental performance
In 2019/20, CSL conducted 476 quality audit of suppliers.*
This level of effort reflects our continued focus on
understanding our suppliers across our value chain
and the expansion of the numbers of suppliers to
accommodate growth.
Our Code of Responsible Business Practice (CRBP) includes
a commitment to forbid the solicitation, facilitation or any
other use of slavery or human trafficking, and under no
circumstance should any engagement with CSL deprive
individuals of their freedom. From 1 July 2019 to 30 June 2020,
no instances related to human trafficking or slavery and
forced labour were reported.
CSL’s Statement on the Prevention of Human Trafficking,
Slavery and Forced Labour can be found on CSL.com (Our
Company > Corporate Responsibility > Workplace > Employee
relations and diversity).
Environment, health and safety
CSL is committed to continuously improving our
Environmental, Health, Safety and Sustainability (EHS2)
performance with culture-driven, risk-centred methodologies
that are focused on preventing workplace injuries and
illnesses and reducing environmental impacts of our
operations and products throughout their lifecycle.
Our EHS2 Management System provides the platform for
policies, procedures and guidelines, which manage our
business processes.
The following principles are applied and practised
by CSL employees. We:
– adhere to applicable EHS2 laws and regulations and
in the absence of governmental standards, apply sound
EHS2 practices;
– instil ownership at all levels in the organisation;
– establish opportunities for EHS2 involvement and expect
all employees to be responsible for EHS2;
– set performance objectives and regularly measure and
communicate results, progress and opportunity with our
employees and stakeholders;
– provide the resources to implement an EHS2 culture that
proactively identifies and controls EHS2 risk;
– share best practices with the intent to improve our
operations and our communities;
– conduct internal audits to ensure the integrity of our
operations against our EHS2 Management System; and
– provide training to all employees to ensure that they have
the right level of skills, ability and knowledge to perform
their work.
For further information on our employee health and safety
performance, please see page 47.
CSL continues to be challenged by its expanding
manufacturing footprint, which is growing to help meet
product demand and deliver new and improved therapies
to patients. Increasing production output in 2019/20 is reflected
in our extensive expansion across all areas of operation.
However, environmental initiatives, together with increasing
use of the production capacity of recently built plants, has led
to decreasing energy, greenhouse gas (GHG) and waste
intensities. Nonetheless, CSL’s facilities require significant
amounts of energy and water for operational procedures
such as test runs, validation of equipment and operation
when not at full capacity. Furthermore, heating, ventilating
and air conditioning (HVAC) energy consumption for clean
room areas is nearly independent of production output.
For more on our environmental performance please see
Section 10 of our Directors’ Report.
Environmental targets
Over the course of the financial year, we have undertaken
detailed engagement with key stakeholders including
employees, investors and customers. As reflected in our 2020
sustainability materiality assessment results (see page 15),
we recognise and acknowledge the impact that climate
change poses for our operations, patients and the communities
in which we live and work. While some of our manufacturing
facilities, particularly those in Europe, drive improvements
and reductions against specific environmental targets, the
setting of Group targets and focus areas will drive global
consistency, enable innovation across the network and
contribute to containing increases in global temperatures.
We anticipate the setting and communication of global
environmental targets by June 2021.
Climate change
CSL has a practice of conducting climate risk assessments
following CSL’s Risk Framework. Risk assessments are based
on identification, quantification and mitigation of risks which
would prevent or impair CSL from meeting its business
objectives. Enterprise-wide assessments were undertaken
in 2008/09 and 2014/15, and will be repeated when a new
international consensus on climate change physical and
transitional risks emerges, notably through the
Intergovernmental Panel on Climate Change (IPCC) process.
In the interim, we are finalising the results and outcomes
of a narrow-based risk assessment undertaken on our plasma
operations and key suppliers and seek to communicate the
outcomes in our next annual report.
Reporting transparency and performance
CSL is a longstanding participant in CDP (formerly the
Carbon Disclosure Project) – an investor-led initiative to
drive transparency and improvement in environmental
performance. In 2019, we achieved a C in our climate change
submission, an improvement on the prior year, and consistent
with the global average but a grade lower than the biotech
and pharmaceutical average of B. For our water submission,
we achieved a B−, consistent with the global average and
slightly lower than the biotech and pharmaceutical average
of B. Both initiatives deploy an eight-point scale with A the
highest possible score and D− the lowest. Our participation
in both initiatives demonstrates a continued commitment
to measuring and assessing our environmental impacts.
* Does not include Ruide. Limited assurance by Ernst & Young.
34
CSL Limited Annual Report 2020
Our environmental impact trends
In 2019, we restated our environmental data against a new reporting timeframe (April to March) to support publication
of our environmental performance at the same time as our financial performance.
Our environmental performance includes our manufacturing facilities held by:
• Seqirus, three facilities in Australia, the UK and the US;
• CSL Behring, six facilities in Australia, Germany, Switzerland, the US and China;
• CSL Plasma operations, including testing laboratories and plasma centres, across Germany, Hungary and the US;
• administrative and R&D operations co-located with our manufacturing facilities; and
• the respective head offices for CSL Behring (King of Prussia, US), CSL Plasma (Boca Raton, US) and CSL Limited (Parkville, Australia).
Indicator
Unit
(April to March)
(April to March)
(April to March)
17-18 1,9
18-19 1,9
19-20 1, 9
Energy consumption 2
Petajoules (PJ)
Greenhouse gas emissions 3
Water consumption
Metric kilotonnes CO2-e (KT )
Gigalitres (GL)
Total waste
Metric kilotonnes (KT)
Waste recycling rate4
%
3.27
308 5
3.61 5
49.15 6
43 7
3.39
319
3.87
61.40 8
42
3.79
344
4.25
66.75
46
1
Data reported, with offsets, are inclusive of manufacturing sites located in Bern (Switzerland), Marburg (Germany), Kankakee (US), Parkville (Australia) and Broadmeadows (Australia),
CSL Plasma, CSL Behring headquarters (King of Prussia, US) and Seqirus’ two manufacturing sites at Holly Springs (US) and Liverpool (UK). Only 2019/20 data includes the production
site in Wuhan (China) but excludes Lengnau (Switzerland) which is still under construction.
Offsets are supply of energy to third parties on or near a CSL production site. Included offsets are scope 1 and 2 energy supplies only.
2 Includes scope 1 and 2 energy sources. Scope 1 energy sources are fossil energy sources supplied or used on-site. Scope 2 energy sources are electricity, steam, compressed air and
nitrogen used on site.
3 The major greenhouse gas (GHG) emitted from CSL’s operation is carbon dioxide (CO2). In USA, Germany, UK and Switzerland, GHG emission factors are used to calculate CO2
emissions only. In Australia, GHG emission factors used by CSL calculate carbon dioxide, nitrous oxide and methane emissions. Total emissions for Australian facilities are expressed
as carbon dioxide equivalents (CO2-e).
4 The recycling rate represents the proportion of total waste generated that is either reused or recycled.
5 Due to some inconsistency and gaps in energy and water consumption data, recording for CSL Plasma may impact overall values reported by an estimated 1–3%.
6 Includes additional previously not reported waste streams from CSL Plasma and increase in liquid waste streams from Liverpool.
7 Data has been restated downwards following the adjustment of an internal formula.
8 Includes additional previously not reported waste streams from CSL Plasma.
9 CSL Plasma uses validated factors to calculate electrical power, gas and water consumption. Utility invoices were used to establish these factors and calculate natural gas, electricity
and water consumption for all Plasma centres. Utility invoices were also used for the two Plasma Logistic centres in Knoxville (US) and Union (US). CSL Plasma uses the contracted
waste hauler monthly data to calculate the total yearly waste impact. In the absence of hauler information, a factorial is applied to calculate the estimated waste impact per volume
of plasma collected.
Energy and greenhouse gas
(GHG) trends
Across our manufacturing facilities,
overall increases in energy
consumption and resulting GHG
emissions are driven by an increasing
production output, expansion and
upgrade projects and the inclusion
of the Wuhan (China) production site
for the 2019/20 year. The intensity
reductions are largely due to overall
company performance (group
revenue), slightly lower emission
factors for electric power at some sites
and the implementation of energy
efficiency projects. Scope 3 emission
trends and energy efficiency case
studies can be found on CSL.com
(Our Company > Corporate
Responsibility > Environment).
Energy consumption trends 1, 2
Greenhouse gas (GHG)
emissions trends 1, 2
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Trends for CSL manufacturing sites located in Bern
(Switzerland), Marburg (Germany), Kankakee (USA),
Parkville (Australia), Broadmeadows (Australia) and for
Seqirus’ two manufacturing sites at Holly Springs (US)
and Liverpool (UK).
1
Trends for CSL manufacturing sites located in Bern
(Switzerland), Marburg (Germany), Kankakee (USA),
Parkville (Australia), Broadmeadows (Australia) and for
Seqirus’ two manufacturing sites at Holly Springs (US)
and Liverpool (UK).
2 Without offsets.
2 Without offsets.
3 Data includes the manufacturing site at Wuhan
(China) but excludes the site under construction
in Lengnau (Switzerland).
3 Data includes the manufacturing site at Wuhan
(China) but excludes the site under construction
in Lengnau (Switzerland).
35
CSL Limited Annual Report 2020
8
Global Reach and Impact
Water and waste trends
Water consumption trends 1
Waste generation trends 1
Overall increase in water
consumption is largely driven by an
increase in production output and
from capital expansion works where
commissioning activities are required
to gain regulatory approval prior
to product manufacture.
The increase in waste is driven mainly
by an increase in production and the
intensity reductions is largely due to
overall company performance (group
revenue). We are identifying a range
of waste streams for reduction over
the medium to long-term.
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Intensity
Water (GL)
Intensity
Waste (KT)
1 Trends for CSL manufacturing sites located in Bern
(Switzerland), Marburg (Germany), Kankakee (US),
Parkville (Australia) Broadmeadows (Australia) and the
two Seqirus manufacturing sites at Holly Springs (US)
and Liverpool (UK).
2 Data includes the manufacturing site at Wuhan
(China) but excludes the site under construction
in Lengnau (Switzerland).
1 Trends for CSL manufacturing sites located in Bern
(Switzerland), Marburg (Germany), Kankakee (US),
Parkville (Australia), Broadmeadows (Australia) and the
two Seqirus manufacturing sites at Holly Springs (US)
and Liverpool (UK).
2 Includes additional increases in liquid waste streams
from Liverpool (UK).
3 Data includes hazardous but not non-hazardous
waste from the production site in Wuhan (China).
36
CSL Limited Annual Report 2020
9 A Trusted Health Partner
We respect the trust that is placed in us by our stakeholders globally.
To continue to earn that trust is a driving force throughout our business
and is critical to our ongoing success. Trust drives value.
We earn stakeholders’ trust by demonstrating responsible
behaviour in our activities and decisions. Responsible conduct
in the marketplace protects our reputation and sustains
organisational growth.
Around the world, patients and healthcare professionals
know that they can rely on the quality, safety and efficacy of
our therapies. International organisations such as the World
Health Organization rely on us to help prevent and prepare
for influenza pandemics. Governments and regulators
understand the ethical approach we bring to development
and registration of our products and our commitment to fair
pricing. Investors see that this trust and positive reputation
is reflected in our strong financial performance.
US$8.8 billion
distributed in supplier payments,
employee wages and benefits,
shareholder returns, government
taxes and community contributions*
Product quality and safety
The development, manufacture and supply of high-quality
and safe products is critical to our ability to continue to
protect public health, save lives and improve the health
and wellbeing of patients with rare and serious diseases.
CSL employs an independent quality function that strives
to maintain the highest standards through the use of global
quality standards.
These are reflected in global policies and local procedures,
as well as global electronic systems to support management
of the quality processes. In 2019/20, CSL’s quality systems,
plasma collection and manufacturing operations were
subject to 401 good manufacturing practice (GMP) regulatory
agency inspections around the world. These independent
and rigorous inspections resulted in no suspensions or
terminations of a licence to market a product in any market
in which CSL is active and confirm that the quality systems
established globally by CSL are effective and in line with
regulatory agency expectations.
401
regulatory inspections
of our manufacturing
facilities† with no
impact to licences
476
quality audits
of our suppliers†
* Limited assurance by Ernst & Young.
† Does not include Ruide. Limited assurance by Ernst & Young.
In November 2019, CSL paid a civil penalty of US$4.7 million
(RMB 33,488,050) for legacy (pre-acquisition) GMP non-
compliances at CSL’s Ruide facility in Wuhan, China. We
have remediated impacted processes, against CSL’s quality
standard, to the satisfaction of local regulators.
During the reporting period, CSL initiated two voluntary
safety-related product recalls†. There were no recalls
initiated by regulators. In January 2020, CSL Behring, Bern,
Switzerland, initiated a recall on the Canada market for one
batch of HIZENTRA pre-filled syringes due to the product
appearing gelatinous. In March 2020, Seqirus, Parkville,
Australia, initiated a product defect correction on the
Australian market for one batch of PALEXIA due to faded
and absent print on the blister foil.
To assure continued consistent high-quality materials
from our partners, CSL Behring and Seqirus conducted
a combined 476 quality (GMP) audits of suppliers worldwide.
Over the reporting period, there were 11 reported cases of
counterfeit product; two of these were confirmed as counterfeit,
five were CSL products, with the remaining four cases having
limited data available or remaining under investigation.
Oversight and management of pharmacovigilance and
clinical safety affords our patients the opportunity to fully
realise the benefits of our products. CSL’s Global Clinical
Safety and Pharmacovigilance function continues to assure
the safety of patients and clinical study participants while
further deepening its capabilities and improved quality
outputs. Compliance metrics have remained at high levels.
50
pharmacovigilance audits of CSL and
third-party operations with no outcomes
diminishing reliable supply of quality product.
Over the reporting period, CSL Behring and Seqirus
pharmacovigilance quality assurance (PVQA) performed
a total of 50 pharmacovigilance (PV) audits:
– 17 on internal systems and processes across our sites,
including affiliates; and
– 33 on third parties that undertake PV responsibilities
on CSL’s behalf in various countries all over the world.
37
CSL Limited Annual Report 2020 9
A Trusted Health Partner
None of these audits resulted in an outcome which affected
our ability to supply product. Seqirus also underwent two
successful regulatory pharmacovigilance inspections by the
Therapeutic Goods Administration (TGA) and Paul-Ehrlich-
Institut (PEI) in Australia and Germany, respectively.
The safety of our donors, employees and the plasma we
collect is of paramount importance. To ensure the continuous
safety of the donors and the plasma supply, donors are
carefully screened and tested for infectious diseases. Plasma
and plasma products undergo rigorous quality controls and
inspections throughout every step of the manufacturing
process, from the collection of plasma to the final packaging
of the finished product, to ensure that our plasma products
are of the highest quality and safety.
Plasma safety with COVID-19
The SARS-CoV-2 virus causing COVID-19
is large in size (approximately 120 nm in
diameter). The relatively large size and lipid
envelope makes it highly susceptible to steps
with virus inactivation and removal capacity
used during the manufacturing processes,
such as pasteurisation, solvent-detergent
(S/D) treatment, low pH incubation, dry-heat
treatment, and virus filtration. The effectiveness
of these processes has been demonstrated on
other coronavirus lipid-enveloped model
viruses that are quite similar to SARS-CoV-2,
such as SARS-CoV, human coronavirus 229E
and OC43, and porcine coronavirus TGEV.
Based on these data, we can be assured that
existing manufacturing processes will provide
significant safety margins for our plasma
products against SARS-CoV-2.
New published data shows significantly reduced
risk of haemolytic anaemia for patients receiving
intravenous immunoglobulin
Over the last several years, CSL Behring has identified
and implemented changes to how we source plasma
and manufacture intravenous immunoglobulin to help
reduce the rate of haemolytic anaemia (HA). HA is a rare
but potentially serious adverse event associated with all
intravenous immunoglobulin therapies, occurring most
often in people receiving high doses of the therapy.
New data from two separate observational studies
examining the effects of our adverse event mitigation
efforts was published in the May and June issues of the
journal Transfusion, the peer-reviewed journal of the
AABB (formerly the American Association of Blood Banks),
the professional membership organisation dedicated to
advancing transfusion medicine and biotherapies. One
study showed a 90% reduction in HA after changes made
to the manufacturing process of PRIVIGEN, Immune
Globulin Intravenous (Human), 10% Liquid, while another
study confirmed these findings.
These efforts, as demonstrated by this new data, will have
long-lasting benefits for patients. The instances of HA have
now become very rare with PRIVIGEN.
* Limited assurance by Ernst & Young.
38
Value and access
CSL invests in programs to develop and supply innovative
vaccines and therapies that protect public health, and extend
the lives of people living with serious and rare diseases.
The value our products provide to patients and society is
meaningful and substantial. Our therapies save lives and
improve clinical outcomes and quality of life, and our vaccines
prevent life-threatening illnesses, each contributing to the
reduction of overall healthcare costs around the world.
We are proud of these contributions and work diligently
to ensure that patients and communities have access to
biopharmaceuticals. We work with governments, health
insurance payers and other stakeholders to support timely
market entry and access, as both play a critical role in the
development of reimbursement frameworks and patient
access regimes. We articulate and communicate
comprehensive evidence on the value of our innovations
to inform access and reimbursement decisions, and we
provide patient assistance programs and support advocacy
efforts that improve access to care.
In 2019/20, CSL’s investment for humanitarian access
programs and product support initiatives totalled US$6.56
million.* In the US, access programs are critical to patients
who are uninsured, underinsured or who cannot afford therapy.
US$6.56 million
supporting product access across the world*
We are also committed to pricing practices that reflect the
value our products bring to patients and society. To that end,
we evaluate real-world and clinical trial data that demonstrate
the clinical benefits our therapies deliver, as well as the cost
savings they provide to overall healthcare. We also consider
patient needs and preferences and the improvements
our therapies offer to improve patients’ quality of life
and productivity.
As a leader in our space, we are committed to dialogue with
all interested stakeholders on how best to ensure continued
patient access and affordability of medicines, and to preserve
an ecosystem that sustains medical innovation for patients
today and in the future.
In 2019/20, there were no findings against CSL relating
to a breach of any fair trading or competition laws.
Public policy engagement
CSL recognises the importance of participating in the
formulation of public policies that can affect business
operations, patient access to medicines, and the public
health. To this end, we engage with governments directly and
through participation in industry groups and other forums,
and collaborate with a range of other interested stakeholders,
including patient organisations, medical societies, and public
health agencies at the global, national and local levels.
Over the reporting period, CSL contributed a total of US$600
in corporate political contributions in the US and A$25,363
to political organisations in Australia solely for attendance
at events including breakfast briefings, lunches or boardroom
dinners. In all other regions, CSL made no political contributions.
CSL Limited Annual Report 2020 CSL employees in the United States of America have formed
a Political Action Committee (PAC). CSL provides a small
budget to cover PAC operational costs as is allowed by US law,
but the PAC is managed by an employee member board. CSL
otherwise does not control or manage the PAC nor contribute
any funds for distribution by the PAC to political candidates.
Management of the PAC is at the discretion of the PAC
employee member board.
Examples of public policy initiatives across our regions
Asia
Australia
Europe
North America
CSL Behring is working with stakeholders in China to explore ways for rare disease patients
to gain broader access to treatments as part of the Greater Bay Area healthcare initiative.
CSL has continued to engage with the biotech sector and the Australian Government
particularly in relation to the importance of a competitive business environment for R&D
and advanced manufacturing.
CSL Behring is participating in policy discussions at the European level, including in relation to the
European Blood Directive and the European Pharmaceutical Strategy, to ensure patient access
to plasma and other biopharmaceutical therapies and to foster an environment for innovation.
To help supply information for policy analysis, discussion, and to better target educational materials and
campaigns, Seqirus sponsored a study on key factors driving influenza immunisation for older adults
(50+) in four different European countries. Geography, more than age or other factors, was the main
factor in differences of risk and benefit of vaccination, and results were presented at events in both
the UK and European Parliament.
To elevate the need for prevention and vaccination in older adults, Seqirus worked with the
International Longevity Center to conduct events at the G20 Minister of Health Conference in Okayama,
Japan, and at the Wellcome Trust in London with key stakeholders outside public health including the
World Bank, the International Monetary Fund (IMF) and the World Economic Forum (Davos).
Given the rapidly ageing population of Europe and the UK, and growing pressures on the national
health service, tackling influenza is an important challenge, especially during the winter months when
flu and other related health conditions are most prevalent. Campaigns were sponsored by Seqirus
across Europe to educate, and develop and provide information to non-governmental organisations,
providers, medical practice managers, older adults, adults with high-risk conditions, carers and others
in the UK, Germany, the Netherlands and Spain to increase vaccination rates and reduce the burden of
influenza. Additionally, with the burden of COVID-19 and concerns of co-circulation, Seqirus sponsored a
European-wide webinar series on preparing for and managing influenza during the COVID-19 pandemic.
CSL Behring is working with policy stakeholders on a variety of initiatives to ensure appropriate patient
access to immunoglobulin in the home setting for the treatment of CIDP, and to ensure safe and
adequate plasma collection capacity in the context of the COVID-19 situation.
In December 2019, Seqirus submitted a concept paper in response to the US President’s Executive
Order: ‘Modernizing Influenza Vaccines in the United States to Promote National Security and Public
Health’. The paper outlines the areas of Seqirus research, development and operations that would
deliver better matched vaccines faster and with more capacity, enhancing the US ability to respond
to both seasonal and pandemic influenza strains.
Seqirus has supported the efforts of the Coalition to Stop Flu, a multisector US advocacy coalition
dedicated to ending deaths from seasonal and pandemic influenza. The Coalition’s policy agenda is
aimed at saving lives and protecting public health by enhancing the US influenza ecosystem, including
ensuring adequate resources for priority influenza programs.
Since the universal influenza vaccine recommendation was declared in the US in 2010, many
stakeholders have worked together to support the implementation. Seqirus has worked with these
key stakeholders over the last several years, with a particular focus on influenza vaccination amongst
adults and older adults. This year, we have partnered with the Immunization Action Coalition, National
Foundation for Infectious Disease, and the Adult Vaccine Access Coalition, amongst others, to support
a number of educational, communications and advocacy activities to raise awareness of enhanced
vaccines for older adults. These activities have supported the Advisory Committee on Immunization
Practices review of the enhanced vaccine category.
In Canada, Seqirus worked with the Lung Association to bring educational forums about the
importance of influenza vaccine and new technologies to the provinces.
39
CSL Limited Annual Report 2020 9
A Trusted Health Partner
At a global level, Seqirus continues to play an active role
within the International Federation of Pharmaceutical
Manufacturers and Associations (IFPMA). This year, the focus
is on supporting greater understanding amongst the public
health community of the impact of the Nagoya Protocol,
and other national legislation related to the Convention
on Biodiversity, on the access and benefits of the sharing
of influenza viruses.
Seqirus also continues to work with the World Health
Organization (WHO) to enhance policies to support capacity-
building for seasonal influenza vaccination and pandemic
preparedness. Additionally, we have supported projects to
advance a life-course approach to vaccination and to raise
awareness of the role of vaccines in preventing antimicrobial
resistance and to explore innovative partnership solutions
to vaccine hesitancy.
Influenza pandemic and emergency response
A measure of the trust we have built is our position as a global
leader in influenza pandemic preparedness and response.
Seqirus has three state-of-the-art manufacturing facilities
on three different continents, together with a global fill and
finish network located close to our end markets.
Our facility in the US, built in a partnership with the US
Government, is unique as it utilises cell-based technology
for influenza vaccine production, which has the potential
for the rapid ramp-up of pandemic vaccine production.
Each Seqirus facility provides pandemic response solutions
to its host country and WHO. There are agreements in place
with a number of other nations willing to reserve pandemic
vaccine doses to protect their populations in the event
of an influenza pandemic. In addition, Seqirus supplies
pre-pandemic vaccine stockpiles that could be deployed to
first-responders upon a declaration of an influenza pandemic.
During the reporting period, Seqirus renewed two influenza
pandemic vaccine agreements with governments in Europe.
In January 2020, the Food & Drug Association (FDA) approved
a biological license application for an MF59®-adjuvanted
cell-based pandemic (H5N1) vaccine AUDENZ™ produced
at our Holly Springs facility.
As part of our contribution to protect public health worldwide,
Seqirus continued its support for the Pandemic Influenza
Preparedness Framework operated by WHO, which aims to
build pandemic preparedness capacity in low and middle-
income countries.
Seqirus is active in the Private Sector Roundtable (PSRT), a
coalition of companies that acts as a central touchpoint for
industry engagement to support countries in achieving the
goals of the Global Health Security Agenda (GHSA). As a core
member on the PSRT Steering Committee, Seqirus aims to
contribute to addressing global health security challenges
and, in particular, explore ways to help countries become
more resilient to pandemic influenza threats.
Relationships with patient groups
We have strong and deep relationships with key stakeholders
across the sector including healthcare professionals, regulators,
patients and clinical groups. These ties are an important part
of the social capital that adds value to our business.
CSL’s commitment to patient focus continues to be
emphasised at a global and local level. We continue to find
mutually beneficial ways to partner with patient stakeholders
to address community needs and advance collective
expertise and thinking across our therapeutic areas.
40
In 2019, cross-functional teams across CSL businesses and
regions came together to initiate pilot patient engagements
in new areas. Two notable examples are the Sjogren’s
Syndrome Early Research Patient Experience Mapping in
Australia and the Alpha 1 Antitrypsin Lifecycle Management
Patient and Caregiver Workshop in Germany.
The Sjogren’s Advisory Board aimed to understand what
patients would define as a meaningful treatment outcome
and how they would prioritise several of the condition’s
quality of life altering impacts (physical, emotional, and
financial). These insights were gathered into actionable
learnings to inform potential research programs and to
guide future engagements with patients in early research.
The Alpha 1 Antitrypsin Workshop aimed to enhance CSL’s
understanding of factors that impacted self-administration.
Learnings translated into ways to increase awareness and
education and to enhance user experience, including
revisions to CSL packaging design guidelines incorporating
the patient perspective.
CSL continues to work on developing methods and processes
for periodically and consistently engaging with patient
stakeholders at key points in the development continuum,
thereby ensuring CSL will continue to deliver on its promise
to patients.
Responsible marketing and promotion
Responsible marketing of prescription medicines is vital to
maintaining consumer trust and ensuring patients receive
the maximum benefits from our products and services.
Government regulation and industry codes oversee the
marketing of our medicines across key regions where
we operate.
During 2019/20, promotional materials for Seqirus Australia’s
inactivated influenza vaccine adjuvanted, FLUAD, distributed
between March and April 2019 were found to be in moderate
contravention of some terms of the Medicines Australia (MA)
Code of Conduct. The MA Code panel found that the
promotional materials included claims about clinical efficacy
that were not consistent with the FLUAD-approved product
information, and Seqirus was fined A$80,000. The promotional
material included the term ‘immune response’ as a proxy for
clinical efficacy. While immune response is the standard used
in the regulatory approval of vaccines, the panel found that
immune response is insufficient evidence to support claims
for the degree, breadth or duration of clinical effect. Being
committed to the highest ethical standards, Seqirus agreed
to publish a corrective letter to healthcare professionals. CSL
Behring Australia, CSL’s other major commercial entity in
Australia, was not found to be in breach by the MA.
In Canada, an unbranded email campaign to healthcare
professionals in October 2019 was found by the Pharmaceutical
Advisory Advertising Board (PAAB), an independent agency
providing a pre-clearance review service of medical promotional
material, to be in contravention of some terms of the
PAAB Code of Advertising Acceptance and some federal
regulations. The PAAB ruled the unbranded material included
implied promotional claims attributable to Seqirus and that
the claims lacked sufficient substantiation. Seqirus agreed
to not use the material in any future campaigns unless it was
amended in accordance with the PAABs suggestions and
pre-clearance. No fine was issued and no further regulatory
action took place. Though not required by law, Seqirus agreed
to submit all promotional material to the PAAB for pre-
clearance in the future.
CSL Limited Annual Report 2020 For other international operations, CSL (including CSL
Behring and Seqirus) was not found to be in breach of any
regulation of the US FDA or the European Medicines Agency
(EMA) with respect to the promotion or marketing of
medicines, vaccines and therapies.
2
breaches of product marketing and
promotional activities by Medicines Australia
and PAAB; 0 breaches from the FDA or EMA.*
Our expanding footprint
CSL reaches patients in more than 100 countries and
we continue to deliver on our promise to make our novel
therapies available to patients around the world.
The Commercial Operations Leadership Team oversees
the delivery of our marketplace strategy and the CSL Board
has strategic oversight and monitors performance through
key subcommittees.
The decision to enter new markets is a long-term
commitment driven by a desire to understand and respond
to patients’ needs. We continue to see the benefits of our
expanding footprint, including double-digit growth from our
local investments in the developing countries of Russia and
Turkey and within Latin America.
While we invest locally to improve disease awareness and
access to medicines, we also bring global benefits to the
markets we serve. Our people are passionate about
connecting local healthcare providers and other stakeholders
to the global rare disease community, which in turn
accelerates their ability to learn and exchange best practice.
Highlights for the reporting period include the following:
China
Colombia
Italy
Netherlands
Saudi Arabia
CSL Behring has been importing albumin into China for more than 30 years and is the largest supplier
of imported human albumin. This year, we transitioned our distribution model from management
by third party distributors, to a direct trading model via our own Good Supply Practice (GSP) license.
This provides a number of benefits, including improved participation in the value chain, removing
reliance on third parties and importantly allowing CSL Behring to work directly with clinicians. It is
also an important step towards CSL’s ability to be able to broaden its product offering and aligns the
distribution model with other major markets.
November marked the opening of our first office in Colombia. The Bogota location allows CSL Behring
to be closer to patients and more attuned to their medical needs. Colombia is a well-developed Latin
American market that provides a solid foundation for CSL Behring’s continued regional growth.
In August 2019, Seqirus opened new Italian headquarters in San Martino, Monteriggioni, just outside
Siena. The expansion was prompted by a growing demand for Seqirus influenza vaccines and the
launch of a new cell-based quadrivalent influenza vaccine.
Seqirus officially opened its new European Centre of Excellence for Research & Development (R&D) and
Quality in Amsterdam in September 2019. The €10 million investment was prompted by the expansion
of research and development of Seqirus’ differentiated influenza vaccines to match growing demand.
The addition of a testing and release laboratory in the European Union (EU) is part of Seqirus’ business
continuity plan to ensure regulatory compliance for the release of influenza vaccines to European
countries when Brexit transition arrangements conclude.
CSL Behring established a second office in the Middle East by cutting the ribbon on its first Saudi Arabia
location in October. The move follows the opening of the regional headquarters office for the Middle
East and Africa region in Dubai in April. The strategic location allows CSL Behring to accelerate business
growth and fully build on the opportunities presented by the historical transformation of the country.
* Limited assurance by Ernst & Young.
41
CSL Limited Annual Report 2020 9
A Trusted Health Partner
Ethical conduct
CSL operates in a diverse and complex marketplace where
bribery and corruption are risks that could expose the
organisation and employees to possible prosecution, fines
and imprisonment. CSL has a number of commercial
arrangements with governments and related agencies
across various geographies, presenting both challenges
and opportunities.
Market practices are governed by company-specific policies
and procedures. Internal compliance mechanisms and control
systems are directly supported by the Global Business Integrity
team and subject to additional oversight by CSL’s Global
Compliance Committee (GCC), regional committees, and
CSL’s Audit and Risk Management Committee of the Board.
Based on these controls, we consider our overall risk relating
to corruption to be low and are committed to ensuring full
compliance in how we conduct our operations across all
regions in which we operate and those we are seeking to enter.
CSL’s Code of Responsible Business Practice (CRBP)
underpins our commitment to operating with the highest
integrity in the marketplace. From 1 July 2019 to 30 June 2020,
136 reports were identified for the attention of management
through our global hotline. For substantiated allegations,
corrective actions were taken to the extent warranted. For
matters closed during the reporting period, no allegations
resulted in any regulatory action or action by law enforcement
authorities indicating an increase in CSL’s overall risk profile.
Sam Duffield
136
hotline reports received with no allegations
resulting in any regulatory action or action
by law enforcement authorities.
In addition, over the reporting period, our operations
conducted an annual assessment of bribery and corruption
risk within their businesses. This is achieved by means
of a standardised questionnaire that is completed and the
responses reviewed with the GCC. During the reporting
period, these assessments did not identify any material
corruption risks.
CSL’s environmental, social and
governance (ESG) performance has
been recognised by the FTSE4Good
Index Series, a leading sustainability
index, for the last 9 years.
Living with haemophilia A hasn’t
stopped Sydneysider Sam Duffield
from living life to the fullest. The
bleeding disorder typically has a
family history; however, Sam is the
first in his family with haemophilia A
and was diagnosed when he was one
year old. Sam has not let his condition
hold him back. He loves to travel and
has explored Japan, Europe, the
United States, Panama and Myanmar.
Haemophilia hasn’t deterred Sam
from trying new experiences, such
as night scuba diving, rockclimbing,
surfing and, once, jumping out of
a helicopter. Sam says he won’t let
haemophilia get in the way of “living
a regular life”. His advice to others
living with the condition is, “Never let
your bleeding disorder hold you back.”
42
CSL Limited Annual Report 2020 43
CSL Limited Annual Report 2020 10
Promising Futures
Every day, CSL is relying on our team of more than 27,000 talented
employees around the globe to deliver on our promise to our patients,
our donors and our communities. In return, we are continually investing
in our workplace and in our employees. We are building a diverse, flexible
and engaging workplace where individuals can have promising futures.
It is a workplace where people collaborate and innovate around global
challenges and where everyone can make a difference.
CSL’s global workforce has grown to a total of 27,009
employees (as at 30 June 2020) – up 7% from last year. Our
people are in 39 countries across a number of geographic
regions. As with past years, our workforce continues to grow
to accommodate an expanding network of CSL Plasma
centres, an expansive market presence in more than
100 countries and a growing manufacturing footprint
that includes facilities in Australia, China, Germany,
Switzerland, the UK and the US.
27,009
employees in
39 countries
Diversity
7%
up on prior year
57%
Female
43%
Male
Our commitment is to build a global workplace where people
may fulfil their career aspirations, realise their potential, and
be inspired to be part of a purpose-driven company with
a values-based culture. This goal requires us to have a culture
of inclusion where all employees are respected, valued and
able to freely share their perspectives.
We define diversity in the broadest of terms, including
but not limited to gender, nationality, ethnicity, disability,
sexual orientation, gender identity, generation/age,
socioeconomic status, marital/family status, religious beliefs,
language, professional and educational background, and
cultural experiences.
CSL has a global diversity policy, which is integral to our talent
and culture strategies. We also set annual diversity objectives.
Our current 2020/21 fiscal year objectives are to:
– increase our focus on diversity beyond gender, including
our aspiration to increase CSL’s overall ethnic and disability
workforce demographics;
– strengthen CSL’s culture by recognising performance
aligned to CSL Values while developing and measuring
inclusive leadership. This includes maintaining an
Employee Engagement Index above the global external
benchmark; and
– enhance CSL’s external reputation for diversity and inclusion
to attract and retain talent. This includes a 10% increase in
partnerships across all major operating areas when it comes
to female leaders, ethnicity, disability, and women in STEM.
CSL’s Gender Diversity Profile
The following graphs highlight the proportion of women
and men on the Board, in senior executive positions (senior
director and above), people managers with three or more
direct reports as well as all employees across the whole
organisation as at 30 June 2020.
Board Members
Senior Executives
People Managers
All Employees
9
450
3,385
27,009
Female 44%
Male 56%
Female 30%
Male 70%
Female 44%
Male 56%
Female 57%
Male 43%
44
CSL Limited Annual Report 2020 Attraction and retention
How we identify, recruit and develop our employees
is paramount to the long-term sustainability of our
business, which is why our talent acquisition and talent
development efforts are a key element of our overall
human resource strategy.
CSL has a global network of internal recruiting experts
and external partners focused on positively positioning the
CSL brand among both active and passive job candidates.
Global advertisement campaigns and recruiting events,
as well as specialised diversity recruiting training, allow the
team to target high-demand talent populations, including
engineers and scientists.
New this year, CSL launched a global Employee Referral
Program based on the belief that our employees are a
strong resource for identifying talented people who share
our passion for patients and our commitment to living
our values. Under the program, employees receive a bonus
for referring qualified candidates who are ultimately hired.
Since the program started in March, we have received over
2,600 referrals.
Promoting a diverse talent pipeline while positively
contributing to the global community
A new CSL Refugee Internship Program in Marburg,
Germany, aims to build our talent pipeline, promote diversity,
and compassionately contribute to the global community.
The program provides international refugees from countries
such as Syria, Iran and Pakistan the opportunity to intern
with CSL and then potentially move into an apprenticeship
or employment. There are two paths available depending
on the individual’s qualifications.
– Those with professional experience or education participate
in a four-month internship designed to develop the
knowledge and skills necessary to perform key CSL roles in
areas such as production, engineering, quality and research
and development (R&D).
– Participants who lack professional credentials or formal
training participate in an 11-month program focused on
building skills to serve as a technical assistant in biomedical
production followed by a CSL apprenticeship for another
two years.
Both programs include a mix of technical skills as well
as capabilities required to be successful at CSL, including
teamwork, giving/receiving feedback, our CSL Values, etc.
The first ‘class’ of 11 refugees has resulted in positive outcomes
– two participants have accepted full-time positions while
seven others are planning to transfer into apprenticeships
in September 2020. The next program is scheduled to start
in October 2020.
CSL’s Generational Diversity Profile
Our multigenerational workforce includes employees ranging
from ages 16 to 81.
Baby Boomers (1946–1961) 8%
Generation X ( 1962–1979) 37%
Generation Y (Millennials) (1980–2000) 54%
Generation Z (2001+) 1%
CSL is assessing the global legal landscape in order to be able
to capture demographic information related to race, disability,
ethnicity and other diversity classifications. This information
will be used to measure and further focus our efforts as we
strive to ensure we have the broadest array of diversity within
our employee population at CSL.
Data as of 30 June 2020 and includes
all employees globally where birthday
is recorded (98% of population).
45
CSL Limited Annual Report 2020
10
Promising Futures
Training and development
A key underpinning of CSL’s brand is the investment we
make in the growth, learning and development of our people.
We want to ensure that once on board, CSL employees have
access to opportunities that help them achieve superior
performance in their current position and/or prepare for their
next position. There were a number of highlights over the
past year.
– We launched the ‘Advancing Women’ Track of the Executive
Edge Program. Designed to accelerate female candidates
for future executive leadership positions, this program
provides a differentiated development experience to
a cross-functional cohort of high-potential female leaders
(Senior Directors & Executive Directors). The program
includes external leadership coaching, mentoring and
a webinar series covering topics such as enhancing
confidence, advancing how one contributes, influencing
and inspiring others, and publicising success as a leader
and a multiplier of talent.
– We introduced unconscious bias training as part of
the overall diversity and inclusion strategy. The course
is designed to build an understanding of diversity and
inclusion concepts while also challenging individuals to
examine their own unconscious biases and the ways in
which those biases may affect their judgement and daily
interactions with others.
– We hosted development days for employees at seven
of our major CSL locations. These events promoted career
development through knowledge and skill building sessions
related to innovation, collaboration, diversity and inclusion,
and patient focus.
Employee engagement
We conduct an employee feedback survey to ensure we
are listening to employees when it comes to their work
experiences and expectations. The survey captures feedback
on everything from the company’s future vision to collaboration,
decision-making, processes and living the CSL Values. In the
most recent survey conducted in March/April 2020, over
15,000 employees shared their thoughts and opinions. CSL’s
overall engagement index score remained steady with the
comparable prior period and is now 4.4 points above the
external benchmark.
New this year, we launched a series of ‘Insights to Actions’
training webinars to help managers better understand their
engagement data, hold meaningful team conversations and
develop action plans to build on existing strengths or address
improvement areas.
In addition, in an effort to address prior employee survey
feedback related to recognition, we piloted a new program
with over 5,000 employees: Celebrate the Promise. The new
program provides an easy-to-use platform for employees and
managers to recognise and celebrate the contributions of
colleagues. Since the program launched in February 2020,
we have seen over 15,000 recognition moments, each one
tied to a specific CSL Value. We plan to roll out the program
fully in the new fiscal year.
Our employee-centric approach to COVID-19
The COVID-19 pandemic affected our employees lives, their
families, and their communities in numerous and unexpected
ways. CSL has various types of working environments from
our manufacturing sites and R&D facilities to our Plasma
Centres and corporate offices. As such, we could not take
a one-size-fits-all approach to the pandemic. Instead, we
developed employee-centric programs and policies that
prioritized the safety and well-being of our people while
ensuring we continued to deliver on our promise to patients
and public health.
Here are a few examples.
– Essential employee programs and policies have been
introduced. Emergency caregiver policies were created
to provide essential employees additional support through
time off and/or financial assistance. Plasma employees
received a pre-loaded, non-taxable debit card to assist
with unexpected expenses.
– Employees able to perform their roles remotely have
continued to do so in an effort to minimise the potential
spread of the virus while also allowing for greater flexibility
as employees navigate new challenges such as childcare
issues due to school closings.
– The expansion of the US Employee Assistance Program
(EAP) has been accelerated to give all employees access
to resources on topics such as dealing with uncertainty,
maintaining healthy habits and staying productive.
– Employees at essential sites are provided personal
protective equipment (PPE), cleaning efforts at all locations
have increased significantly and social distancing is required.
– Travel restrictions have been introduced to protect
employees and prevent the potential spread of the virus.
76.4%
employee
engagement score*
2.4up
points on prior year
4.4
points higher than the
world norms database
* Limited assurance by Ernst & Young.
46
CSL Limited Annual Report 2020 Safety and wellbeing
Our Health and Safety Performance
In order to achieve Environmental, Health, Safety and
Sustainability (EHS2) excellence and stay true to our
commitment to promising futures, CSL has in place a robust,
flexible and global approach to EHS2 management that ensures
our operations are safe and environmentally responsible. Our
EHS2 Management System seeks to uphold our EHS2 principles
that aim to keep people safe, protect the environment and
build trust internally and externally. Each year, CSL establishes
robust key performance indicators to measure our adherence
to our values and drive improved results.
The EHS2 team works collaboratively with site operations
management and employees to proactively identify and
correct workplace hazards, strengthen communication,
define roles and responsibilities and promote a company-
wide culture of safety at all of our manufacturing, laboratory
and office locations. This safety culture improvement journey
fosters employee involvement in our workplace EHS2
programs, promotes awareness and strives to maintain
a safe workplace for all. With our unwavering commitment
to employees we have established targeted improvement
plans to address our performance.
We have restated our safety performance for the last four
years whereby data previously reported separately as
MTIFR and LTIFR has been combined into TRIFR to enable
comparison with published industry data. Over the reporting
period, there were no fatalities across our employee and
contractor workforce.
Total Recordable Injury Frequency Rate (TRIFR)†
(per million hours worked)
Year
16-17
17-18
18-19
19-20*
19-20‡
Non-CSL
Plasma sites
CSL Plasma
Targets‡
Results
≤6.6
≤6.2
≤5.5
see below
≤3.5
≤10
5.7
4.6
7.2
6.1
1.9
10.9
* Limited assurance by Ernst & Young. Underlying data for 16-17, 17-18 and 18-19 has
received limited assurance by Ernst & Young.
† Total Recordable Injury Frequency Rate (TRIFR) is the rate of injuries resulting in
a fatality, lost time from work ≥ one day/shift, and medical treatment beyond first aid
calculated as TRIFR = (# Injuries)x(1,000,000)/(Hours Worked). Includes employees
and workers directly supervised by an employee. Data was calculated over a 12-month
period of time. Prior to 19-20, targets and data were reported separately as MTIFR and
LTIFR which is combined into TRIFR to enable comparison with published industry
data (TRIFR = MTIFR + LTIFR).
‡ Data for 19-20 and beyond is calculated over a 36-month period of time. Targets
were modified in 2019 to allow comparison with published industry performance
data. Targets are set at 50% of the industry average for the period published. Data
is separated into CSL Plasma and non-CSL Plasma sites to account for the difference
in the inherent hazards in plasma collection centres as compared to manufacturing
facilities and the resulting differences in how industry data is published.
47
CSL Limited Annual Report 2020 11
Our Communities
Strong relationships with communities – especially healthcare
providers, patient support communities and areas in which we
operate – are critical to delivering on our promise. More than that,
these relationships keep us connected to the evolving needs of
patients and other stakeholders, so we can better support them,
including with improved medicines and advocacy programs.
Our approach
CSL’s approach to community support is guided by our Code of Responsible Business Practice and supplemented by our Global
Community Contributions Policy. The policy applies to all CSL businesses and employees and is intended to be implemented
to guide decision-making and management of any form of community contribution, financial or by other means. The core
of the policy is our community contributions framework, which sets out our key focus areas of support.
Support for patient communities
– Enhancing quality of life for patients in the
Aligns with CSL’s Values of Patient Focus and Integrity.
conditions our therapies treat
– Improving access to our biological medicines
Supports CSL’s Patient and Public Health and Focus strategic
objectives by improving patient outcomes.
Support for biomedical communities
– Advancing knowledge in medical and
Aligns with CSL’s Values of Innovation and Collaboration.
scientific communities
– Fostering the next generation of medical researchers
Supports CSL’s Innovation strategic objective by fuelling new
breakthroughs, enhancing scientific knowledge and building
capability and capacity.
Support for local communities
– Supporting community efforts where we live
Aligns with CSL’s Value of Superior Performance.
and work
– Supporting communities in times of emergency
Supports CSL’s People and Culture strategic objective by creating
an environment that employees feel proud to perform within.
Collaborative relationships with communities is an important part of our commitment to advance scientific knowledge
and foster the next generation of medical researchers, as well as enhance the quality of life for patients and improve access
to our medicines. In 2019/20, CSL contributed US$38.7 million to patient, biomedical and local communities, reflecting our
commitment to nurturing communities in which we work and live.
US$38.7
million in
community
contributions
60%
to patient
communities
37%
to biomedical
communities
3%
to local
communities
48
CSL Limited Annual Report 2020 Support for patient communities
Our support for patient communities continues as a priority, with the majority of total funding directed towards programs
that enhance patient quality of life, protect public health and improve access to our medicines.
Some of these strategic programs are detailed following.
CSL Behring
Bleeding disorders
CSL Behring has a deep commitment to global patient communities and has
provided product donations to patients in dozens of countries.
Empowering patient
communities through
education and advocacy
Influenza
Commitment to donate
10% of influenza vaccine
output in the event
of a global pandemic.
Snakebite
1,275 vials of snake and
marine antivenom donated
to Papua New Guinea across
two years
With more than 30 years of experience treating patients with bleeding disorders, CSL
Behring holds its relationship with the World Federation of Hemophilia (WFH) among
its strongest partnerships.
WFH works to improve the lives of people with haemophilia and other inherited
bleeding disorders. As a not-for-profit global network of patient organisations, WFH
organises programs that help improve diagnosis and access to care for patients in
developing countries, provides medical training, increases awareness, establishes
education initiatives and achieves government support through advocacy. Support
from longstanding industry partners, such as CSL Behring, helps to deliver these
important programs to patients, caregivers and healthcare professionals.
CSL Behring continued a partnership with WFH to support critical WFH programs
that was renewed for a fourth time in 2019. As a Visionary Corporate Partner, CSL
Behring holds a Leadership Partner role in the WFH’s Global Alliance for Progress
(GAP) Program that aims to increase the diagnosis and treatment of patients with
haemophilia and other bleeding disorders in developing countries.
CSL Behring is also a Collaborating Partner of the World Bleeding Disorders Registry
(WBDR), the only global registry collecting standardised clinical data on haemophilia
patients. CSL Behring continues to be a significant contributor to the WFH
Humanitarian Aid Program’s efforts to provide consistent and predictable treatment
access through product donations and financial support.
As part of its most recent commitment, CSL Behring promised to donate 50 million
international units (IUs) of product over a three-year period. In 2019 alone, it we
donated almost twice that amount, including both plasma-derived and recombinant
therapies, and helped patients in 48 countries.
Our partnerships with the WFH and other global patient groups reinforce CSL
Behring’s promise to patients by empowering them through education and advocacy,
raising awareness, advancing scientific knowledge and improving access to care.
In 2019, Seqirus continued our support for the World Health Organization’s (WHO)
Pandemic Influenza Preparedness (PIP) Framework with a corporate contribution.
The program aims to improve the sharing of influenza viruses with pandemic
potential and the equitable access to products necessary to respond to pandemic
influenza (e.g., vaccines, antiviral medicines and diagnostic products). Seqirus has also
agreed to donate 10% of influenza vaccine output in real time to WHO for deployment
to developing countries in the event of a global pandemic emergency.
In Papua New Guinea (PNG), the PNG Snakebite Partnership continues to distribute
life-saving antivenom across the country. PNG has some of the highest rates
of snakebite mortality in the world, caused mainly by taipan and death adder
envenomation. The same snake species are found in Australia, where Seqirus
antivenom has been in use for decades. The partnership, involving the PNG National
Department of Health, the Australian High Commission, Seqirus, the Australian
Venom Research Unit, at the University of Melbourne, and the Charles Campbell
Toxinology Centre, at the University of Papua New Guinea, significantly improves
access to antivenoms by combining a large product donation with healthcare worker
training and a purpose-built cold-chain distribution and product management
system. Now in the second year of the project, more than 950 vials of antivenom to
date have been distributed from the central point in Port Moresby to more than 50
health centres across 12 provinces in PNG. Each vial holding the potential to save a life.
49
CSL Limited Annual Report 2020 11
Our Communities
Support for biomedical communities
To help advance scientific knowledge in areas of unmet
patient need, CSL engages in direct collaborations with
medical research institutes and universities.
At CSL, we are committed to supporting established
researchers and the researchers of tomorrow – the scientists
whose discoveries will help patients lead longer, fuller lives.
We also offer research grants to institutes, hospitals and
patient organisations. Additionally, CSL funds investigator-
initiated studies (IIS), projects undertaken by researchers
outside CSL’s research and development (R&D) activities
to better understand the potential use of its products
to treat new indications or therapy areas.
For an IIS, CSL does not have any role in the conduct of the
study and does not claim exclusivity over research outcomes,
but does provide support through the provision of product
and/or financial grants. In 2019/20, there were 27 studies
supported that spanned a multitude of areas including
acquired bleeding, haemophilia A and B, von Willebrand
disease, immunodeficiency, autoimmune disorders,
chronic inflammatory, demyelinating polyneuropathy
and hereditary angioedema.
The CSL Centenary Fellowships are competitively selected,
high-value grants available to mid-career Australians who
wish to continue medical research in Australia. Two individual,
five-year, A$1.25 million fellowships are awarded each year.
The 2020 CSL Centenary Fellowships were awarded to Dr
Kamala Thriemer from Menzies School of Health Research
and Associate Professor Daniel Thomas from the South
Australian Health and Medical Research Institute. Dr Thriemer
is using her Fellowship to develop and optimise treatment
programs against vivax malaria in SE Asia and the Horn of
Africa. Associate Professor Thomas is using his Fellowship
to continue developing new ways to identify a cancer’s
weakness and target it with personalised treatment. He’s
already treating acute myeloid leukaemia patients in Adelaide.
Seqirus supported the Global Initiative for Sharing of Influenza
Data (GISAID) with a donation of €200,000 to support open
and rapid sharing of genetic data for influenza viruses.
Supporting
innovation
through
strategic
partnership
50
In February 2020, CSL Behring and
the University City Science Center in
Philadelphia awarded the first grants
from the CSL Behring – Science
Research Acceleration Initiative.
As part of an ongoing strategic
collaboration between CSL Behring and
Philadelphia’s University City Science
Center, researchers at academic and
research institutions throughout the
region were invited to submit proposals
for projects with a focus on therapeutics
that fit within CSL Behring’s areas
of expertise.
CSL Behring awarded Cecelia Yates,
Ph.D., from the University of Pittsburgh,
and Eleftherios (Terry) Papoutsakis,
Ph.D., from the University of Delaware,
US$250,000 each and an opportunity
to work alongside the plasma-based
biotech’s own experts in an effort to help
transform their ideas into groundbreaking
therapies to improve patients’ health.
With CSL Behring’s support, Dr Yates’
group will test the ability of FibroKine™,
a chemokine-based class of biomimetic
peptides that are potential therapeutic
agents for the targeted treatment of
tissue fibrosis, to effectively treat and halt
the progression of pulmonary fibrosis.
Dr Papoutsakis is exploring the use
of cell derived micro-particles and
vesicles (MkMPs) for the treatment
of thrombocytopenias and in stem-cell
targeted gene therapies.
CSL Behring’s operational headquarters
is located near Philadelphia in King
of Prussia, Pennsylvania, US.
CSL Limited Annual Report 2020 Support
for local
communities
51
CSL Limited Annual Report 2020 11
Our Communities
Support for local communities
Local community initiatives are centred on engaging employees in local giving, both financially and through volunteered time.
These programs invite the broader participation of our employees in the community. While seeking to address a community
need or gap, support for the local community encourages teamwork and collaboration and builds a sense of pride in the
workplace and organisation. A number of activities are undertaken across our sites to support local organisations.
The devastation to people, property,
wildlife and their habitat in Australia
spurred our employees to take action.
CSL’s workforce answered the call
to action in support of the cause
by making individual contributions
and joining forces at different
locations to host fundraising events.
The employee effort of the campaign
yielded A$157,523. Coupled with an
initial A$500,000 company donation
and a dollar-for-dollar match of all
employee donations, CSL and its
employees gave A$815,046 to the
relief effort.
Nearly 1,000 employees contributed
to the effort, supporting 58 different
bush fire charities, with the largest
amount of support directed toward
the Australian Red Cross. In addition
to this, CSL supported employees to
take leave to volunteer with fighting
the fires.
CSL Behring partnered with
Philadelphia-based non-profit
Uplifting Athletes to present the
third annual Young Investigator
Draft in March 2020, which
awarded more than US$100,000
in grant funding to emerging
rare disease researchers.
Uplifting Athletes is an organisation
comprised of athletes at colleges and
universities across the US that seeks
to inspire the rare disease community
through the power of sport.
The event took place at Lincoln
Financial Field, home of the National
Football League’s Philadelphia
Eagles. CSL Behring has served
as the title sponsor for the event
since its inception in 2018.
Bush fire
relief in
Australia
Teaming up
to support
rare disease
research
52
CSL Limited Annual Report 2020 Providing
“hope” for
teens in
Jamaica
Supporting
the COVID-19
response
in China
Teens living with sickle cell disease
in Kingston, Jamaica, had a unique
chance to spend time with peers
with the same condition at Hope
Lives Here, a CSL Behring-sponsored
teen camp at the Sickle Cell Unit
at the University of the West Indies.
According to the Sickle Cell Support
Foundation of Jamaica, approximately
10% of people living in the island
nation carry sickle cell trait and one
in every 150 babies is born with sickle
cell disease.
Teens living with sickle cell in Jamaica
have big dreams, but often face
adversity because of the frequent
hospitalisations required by their
rare blood disorder.
In addition to learning more about
their condition, campers took part in
a career expo and visited the nearby
Bob Marley Museum.
As the COVID-19 pandemic unfolded
in China in January, CSL stepped up
to provide a donation of ¥1,000,000
to the Chinese Red Cross Foundation.
The funding helped provide needed
medical supplies to frontline responders
treating patients in Wuhan.
CSL employees also pitched in
to help treat COVID-19 patients.
Employees gathered at the plasma
centre in Hubei province, where they
coordinated efforts to help distribute
medical supplies and other necessary
goods, including disinfectant,
personal protective equipment
and more than 500 tonnes of food.
Staff members at the plasma centre
volunteered to work as couriers,
delivering food and medicines to
residents of their community. They also
served as cleaners to help maintain
cleanliness and hygiene in their area.
All of the volunteers received
high appreciation and recognition
from community residents for
their contributions.
More on CSL.com (Our Company > In the Community & Corporate Responsibility)
53
CSL Limited Annual Report 2020 12
Governance
CSL Limited’s Board and management team maintain high
standards of corporate governance as part of CSL’s commitment
to maximise shareholder value. This is achieved through promoting
effective strategic planning, risk management, transparency
and corporate responsibility.
Governance structure
Our approach to corporate governance and the role it plays
goes well beyond meeting our compliance obligations. We
believe that our governance framework fosters our high
performing and respectful culture while underpinning CSL’s
Values of Integrity, Patient Focus, Collaboration, Innovation
and Superior Performance. The Board has a formal charter
documenting its membership, operating procedures and
the allocation of responsibilities between the Board and
management. CSL’s Board charter is central to the governance
framework at CSL as it embodies our corporate purpose,
strategy and values and defines when we are successful.
CSL’s Board of Directors is responsible for overseeing the
management of CSL and providing strategic direction. It
monitors operational and financial performance, strategic
human resource matters and approves CSL’s budgets and
business plans. It is also responsible for overseeing CSL’s risk
management, financial reporting and compliance framework.
The Board has delegated the day-to-day management of
CSL, and the implementation of approved business plans
and strategies, to the CEO and Managing Director, who
in turn may further delegate to senior management.
The diagram below shows the governance framework of
CSL. Robust processes are in place to ensure the delegation
flows through the Board and its committees to the CEO and
Managing Director, the Global Leadership Group (GLG) and
into the organisation. The CEO and Managing Director and
GLG have responsibility for the day- to-day management
of the Group. Our governance framework also aligns the
flow of information and accountability from our people,
through the management levels, to the Board and ultimately
our shareholders and key stakeholders.
Board composition
Throughout the year there were 10 or 11 directors on the
Board. At the date of this report, there were 10 directors on
the Board, comprising eight independent, non-executive
directors and two executive directors.
Since 1 July 2019 to the date of this report, the following
director movements occurred:
– Dr Tadataka “Tachi” Yamada retired from the Board, effective
at the end of the 2019 Annual General Meeting (AGM);
– Marie McDonald and Dr Megan Clark AC were re-elected
as directors, at the 2019 AGM;
– Ms Carolyn Hewson AO was appointed to the Board on
9 December 2019 and will seek election at the 2020 AGM; and
– Mr Pascal Soriot was appointed to the Board on 19 August
2020 and will seek election at the 2020 AGM.
The Board is focused on maintaining an appropriate mix of
skills and diversity in its membership. This includes a range
of skills, experience and background in the pharmaceutical
industry, international business, finance and accounting,
and management, as well as gender diversity. A detailed
matrix of Board skills is available in CSL’s 2019/20 Corporate
Governance Statement available at CSL.com (Our Company >
Corporate Governance).
Key Stakeholders, including Shareholders
Board
Committees
Audit & Risk
Management
Corporate Governance
& Nomination
Human Resources
& Remuneration
Innovation &
Development
Securities &
Market Disclosures
CEO & Managing Director
Global Leadership Group
Our People
Values
Company Secretary
Integrity
Patient Focus
Collaboration
Innovation
Superior Performance
Code of Responsible Business Practice
54
CSL Limited Annual Report 2020 Board of Directors
Dr McNamee has deep executive experience in the biopharmaceutical industry, with a focus
on strategy and creating long-term shareholder value. Dr McNamee has a broad global
perspective and understanding of long-term capital projects in the pharmaceutical industry,
with proven health, safety, environment and corporate responsibility.
Dr McNamee was the Chief Executive Officer and Managing Director of CSL from 1990 until
2013. Since leaving his executive role at CSL, Dr McNamee has served as a Senior Advisor
to private equity group Kohlberg Kravis Roberts. He has also pursued a number of private
equity and interests in small cap healthcare companies, and in 2014 served on the panel
of the Australian Government’s Financial System Inquiry. In 2009, he was made an Officer
of the Order of Australia for service to business and commerce.
Brian McNamee AO
MBBS, FTSE Age 63
Chairman and independent Non-
executive Director
Director of CSL Limited since February
2018 and Chairman from October 2018
Other directorships and offices (current and recent):
– Chairman of GenesisCare Limited (from July 2019).
Board Committee memberships:
– Chairman of the Innovation and Development Committee.
– Member of the Corporate Governance and Nomination Committee.
– Member of the Securities & Market Disclosure Committee.
Paul Perreault
BA (Psychology) Age 63
Non-independent Executive Director
Director of CSL Limited since February
2013, and appointed Chief Executive Officer
and Managing Director in July 2013
Andrew Cuthbertson AO
BMedSci, MBBS, PhD, FAA, FTSE,
FAHMS Age 65
Non-independent Executive Director
Director of CSL Limited since October 2018,
and appointed Chief Scientific Officer and
R&D Director in 2000 and Senior Adviser
to the CEO in July 2020.
Mr Perreault has more than 35 years of experience across both the global biotech and
pharmaceutical industries.
He was appointed Chief Executive Officer and Managing Director of CSL Limited in July 2013,
and was appointed to the CSL Board of Directors the same year. Since then, CSL has grown
to become the fifth largest biotech company in the world with more than 25,000 employees
bringing lifesaving medicines to people in more than 100 countries.
Mr Perreault, who previously served as CSL Behring’s president, joined CSL in 2004 with
the acquisition of Aventis Behring. Prior to CSL, he spent more than 15 years in key senior
roles at Wyeth-Ayerst Laboratories, now part of Pfizer. Mr Perreault holds a bachelor’s degree
in psychology from the University of Central Florida and completed advanced business
management training at the Kellogg and Wharton schools of business.
Board Committee memberships:
– Member of the Innovation and Development Committee.
– Member of the Securities & Market Disclosure Committee.
Professor Cuthbertson has over 35 years’ experience in medical research and biotech
development with large biopharmaceutical companies and medical organisations. He also
has non-executive director experience.
Professor Cuthbertson joined CSL in April 1997 as the director of research. Prior to CSL, he
was a senior scientist at Genentech Inc, a biotechnology company dedicated to pursuing
groundbreaking science to discover and develop medicine for people with life-threatening
diseases. After completing medical training at the University of Melbourne and a PhD in
immunology at the Walter and Eliza Hall Institute in Australia, Professor Cuthbertson spent
five years doing molecular biology research as a staff member at the Howard Florey Institute
in Melbourne, Australia, and the National Institutes of Health in Maryland, US. In 2016, he was
made an Officer of the Order of Australia and appointed Enterprise Professor at the
University of Melbourne.
Other directorships and offices (current and recent):
– Director of the Centre of Eye Research Australia (since March 2017);
– Director of the Grattan Institute (since January 2019); and
– Member of the Council of the University of Melbourne (since January 2020).
Board Committee memberships:
– Member of the Innovation and Development Committee.
Mr Brook has an extensive breadth of executive experience in diverse industries, including
mining, finance, manufacturing and chemicals. In particular, Mr Brook has valuable insight
and experience in relation to risk, capital discipline, change management, corporate culture
and creating shareholder value.
Mr Brook was Chief Financial Officer of WMC Resources Limited from 2002 to 2005. He also
held key executive roles including Deputy Chief Finance Officer of ANZ Banking Group
Limited, Group Chief Accountant of Pacific Dunlop Limited and General Manager, Group
Accounting positions at CRA Limited and Pasminco Limited.
Other directorships and offices (current and recent):
Bruce Brook
BCom, BAcc, FCA, MAICD Age 65
Independent Non-executive Director
– Director of Guide Dogs Victoria (since November 2018);
– Director of Incitec Pivot Limited (since December 2018);
– Director of Newmont Corporation (since October 2011);
– Former Director of the Deep Exploration Technologies Co-operative Research Center
Director of CSL Limited since August 2011
Limited (from August 2011 to September 2018); and
– Former Director and Chairman of Programmed Group (from June 2010 to October 2017).
Board Committee Memberships:
– Chairman of the Audit and Risk Management Committee.
– Member of the Corporate Governance and Nomination Committee.
55
CSL Limited Annual Report 2020 12 Governance
Governance
Megan Clark AC
BSc (Hons) PhD Age 62
Dr Clark has significant executive and non-executive experience across a broad range of sectors
including scientific research, health, investment banking and financial services, education and
mining. Through her roles, Dr Clark brings a broad strategic perspective and global experience,
with a focus on risk and proven health, safety and environment and technology performance.
Dr Clark was Chief Executive of the Commonwealth Scientific and Industrial Research
Organisation (CSIRO) from 2009 until November 2014. Prior to joining CSIRO, she was a Director
at NM Rothschild and Sons (Australia) and held senior positions at BHP, including Vice
President, Technology and Vice President, Health, Safety and Environment.
Other directorships and offices (current and recent):
– Director of Rio Tinto Limited and Rio Tinto Plc (since November 2014);
– Head of the Australian Space Agency (since June 2018);
– Member of the Australian Advisory Board and Global Advisory Board of the Bank
Independent Non-executive Director
of America Merrill Lynch (since July 2010);
Director of CSL Limited since
February 2016
– Member of Council of Monash University Council (since April 2015); and
– Former Director of Care Australia Limited (from May 2015 to June 2020).
Board Committee memberships:
– Chairman of the Human Resources and Remuneration Committee.
– Member of the Corporate Governance and Nomination Committee.
– Member of the Innovation and Development Committee.
Ms Hewson is a former investment banker with over 35 years’ experience in the finance
sector. She was previously an Executive Director of Schroders Australia Limited and has
extensive financial markets, risk management and investment management expertise.
She has long-term non-executive experience in a number of sectors bringing a breadth
of experience and insight on strategy, capital management, and portfolio optimisation
through cycles, financial and non-financial risk, social value, organisational culture and
the changing external environment.
In 2009, Ms Hewson was made an Officer in the Order of Australia for her services to the
broader community and to business.
Other directorships and offices (current and recent):
– Director of Infrastructure SA (since January 2019);
– Member of Federal Government Growth Centres Advisory Committee (since January 2015);
– Former Director of BHP Group Limited and BHP Group Plc (from March 2010
to November 2019);
– Former Director of Stockland Group (from March 2009 to September 2018); and
– Former Trustee Westpac Foundation (from May 2015 to May 2019).
Board Committee membership:
– Member of the Audit and Risk Management Committee.
– Member of the Human Resources and Remuneration Committee.
– Member of the Corporate Governance and Nomination Committee.
Mr Hussain has executive experience in the biopharmaceutical industry and deep
biotechnology industry insight. Through his executive and non-executive roles, Mr Hussain
has a broad global perspective and understanding of pharmaceutical manufacturing,
product development, risk, health and safety, environment and corporate responsibility.
Mr Hussain was the Global President, Pharmaceutical at GlaxoSmithKline (GSK) serving from
2008 to late 2017, where he managed a global pharmaceutical and vaccine business across
150 markets including the US, Europe, Japan and emerging markets. Before GSK he held
senior roles with global responsibilities at Eli Lilly.
Other directorships and offices (current and recent):
– Director of Cochlear Limited (since December 2018);
– Director of TargTex SA (since July 2020);
– Director of Teva Pharmaceuticals Inc. (since September 2020);
– Senior advisor at C-Bridge Capital (since October 2017);
– Senior advisor at CellResearch Corporation (since August 2017);
– Senior advisor to Indegene Inc. (since July 2020); and
– Former Director of ViiV Healthcare Limited (from October 2009 to July 2017); and
– Former Director of Immunocore Limited (from May 2017 to June 2020).
Board Committee memberships:
– Member of the Innovation and Development Committee.
– Member of the Human Resources and Remuneration Committee.
Carolyn Hewson
BEc (Hons), MA Age 65
Independent Non-executive Director
Director of CSL Limited since
December 2019
Abbas Hussain
BSc (Hons) Age 55
Independent Non-executive Director
Director of CSL Limited since
February 2018
56
CSL Limited Annual Report 2020 Marie McDonald
BSc (Hons), LLB (Hons) Age 63
Independent Non-executive Director
Director of CSL Limited since August 2013
Christine O’Reilly
BBUS Age 59
Independent Non-executive Director
Director of CSL Limited since
February 2011
Pascal Soriot
DVM, MBA Age 61
Independent Non-executive Director
Director of CSL Limited since
August 2020
Fiona Mead
LLB (Hons), BComm Age 51
Company Secretary and Head
of Corporate Governance
Ms McDonald has significant executive and non-executive experience in a number
of sectors including law, medical research, manufacturing and chemicals. Through these
roles, Ms McDonald brings experience and insight on financial markets, risk and compliance
and change management.
Ms McDonald is a former lawyer with over 30 years’ experience in the legal sector. She was
previously a partner of Ashurst, specialising in mergers and acquisitions and corporate
governance. She held the role of National Head of Mergers and Acquisitions and was Chair
of the Corporations Committee of the Business Law Section of the Law Council of Australia
and a member of the Australian Takeovers Panel for nine years.
Other directorships and offices (current and recent):
– Director of Nanosonics Limited (since October 2016);
– Director of Nufarm Limited (since March 2017); and
– Director of the Walter & Eliza Hall Institute of Medical Research (since October 2016).
Board Committee memberships:
– Member of the Audit and Risk Management Committee.
– Member of the Human Resources and Remuneration Committee.
Ms O’Reilly has non-executive experience in a number of sectors including infrastructure,
property, private health insurance, energy and medical research. She also has deep strategic
and operational leadership experience, with a focus on corporate transformational change,
debt and equity capital markets and merger and acquisitions.
Ms O’Reilly was the co-head of Unlisted Infrastructure Investments at Colonial First State
Global Asset Management from July 2007 until September 2012.
Prior to this, she was the Chief Executive Officer of the GasNet Australia Group. Ms O’Reilly’s
early work history includes participating in the reform and establishment of the regulatory
framework for the Australian gas industry, eight years with the investment bank, Centaurus
Corporate Advisory Services, and audit experience with Price Waterhouse where she
qualified as a chartered accountant.
Other directorships and offices (current and recent):
– Director of Transurban Group (since April 2012);
– Director of Medibank Private Limited (since March 2014);
– Director of Stockland Limited (since August 2018);
– Director of Baker Heart and Diabetes Institute (since July 2013); and
– Former Director at Energy Australia Holdings Limited (from September 2012 to August 2018).
Board Committee memberships:
– Chairman of the Corporate Governance and Nomination Committee.
– Member of the Audit and Risk Management Committee.
– Member of the Human Resources and Remuneration Committee.
Mr Soriot has non-executive experience in the clincial-stage biotechnology sector. Mr Soriot
brings a passion for science and medicine as well as significant experience in established
and emerging markets, strength of strategic thinking, a successful track record of managing
change and executing strategy, and the ability to lead a diverse organisation.
Mr Soriot is the Chief Executive Officer of AstraZeneca, and has held this position since 2012.
Before this he served as Chief Operating Officer of Roche’s pharmaceuticals division from
2010 to September 2012 and, prior to that, Chief Executive Officer of Genentech, a biologics
business, where he led its successful merger with Roche.
Mr Soriot joined the pharmaceutical industry in 1986 and has worked in senior management
roles in numerous major companies around the world.
Other directorships and offices (current and recent):
– Chief Executive Officer of AstraZeneca (since October 2012); and
– Former Director of Viela Bio, Inc (from October 2019 to August 2020).
Ms Mead was appointed Company Secretary and Head of Corporate Governance effective
June 2018. Previously, she was the Company Secretary and a member of the Executive
Leadership Team at Tabcorp Holdings Limited. Prior to that, Ms Mead was the Company
Secretary at Asciano Limited, and earlier, Assistant Company Secretary at Telstra. Fiona
began her career as a lawyer with law firm Ashurst.
Ms Mead is a fellow of the Governance Institute of Australia and a graduate member of the
Australian Institute of Company Directors.
57
CSL Limited Annual Report 2020 12 Governance
Governance
Board committees
The Board has established a number of standing committees as a mechanism for considering detailed issues and, where
appropriate, making recommendations for consideration by the Board. These committees have charters setting out matters
relevant to the composition, responsibilities and membership of each committee.
Leadership team
Our Global Leadership Group is responsible for driving company performance so that we can keep our promises to our patients,
our employees and our shareholders. They have earned their roles because of their experience, achievements, unwavering
ethics and commitment to our core values.
Paul Perreault
BA (Psychology)
Age 63
Chief Executive Officer
and Managing Director
Paul was appointed to the CSL Board in February 2013 and was appointed as
the Chief Executive Officer and Managing Director in July 2013. He joined a CSL
predecessor company in 1997 and has held senior roles in sales, marketing and
operations with his most recent prior position being President, CSL Behring.
Paul has also worked in senior leadership roles with Wyeth, Centeon, Aventis
Bioservices and Aventis Behring. He was previously Chairman of the Global
Board for the Plasma Protein Therapeutics Association. Paul has had more than
36 years’ experience in the global healthcare industry.
The Harvard Business Review named Paul among the Top 100 Performing CEOs
in the world during this fiscal year. See above for further biographical details.
David Lamont
BCom, CA
Age 55
Chief Financial Officer
David was appointed as Chief Financial Officer in January 2016. As Chief
Financial Officer, he is responsible for managing the financial aspects of CSL’s
strategy which includes financial planning and reporting, capital management,
tax, treasury and investor relations. Immediately prior to joining CSL, he was the
Chief Financial Officer and an Executive Director at MMG since 2010. Prior to this,
David served as chief financial officer for several leading multi-national public
companies across a range of industries since 1999 – including MMG Limited, Oz
Minerals Limited, PaperlinX Limited, BHP Billiton’s energy and coal and carbon
steel materials divisions, and Incitec Pivot Limited. He is a qualified chartered
accountant and a member of the Institute of Chartered Accountants (Australia).
Greg Boss
JD, BS (Hon)
Age 59
Executive Vice President,
Legal and CSL Group
General Counsel
Greg was appointed Group General Counsel in 2009 and is responsible for
worldwide legal operations for all CSL Group companies. He joined CSL in 2001,
serving as General Counsel for what became the CSL Behring business.
In addition to his legal role, Greg is also responsible for overseeing global
Risk Management and Compliance for the Group as well as global Corporate
Communications. Prior to joining CSL, Greg was Vice President and Senior
Counsel for CB Richard Ellis International, after working 10 years in private legal
practice. In 2016, Greg received the World Recognition of Distinguished General
Counsel from the Directors Roundtable, and in 2017 Greg received the
Leadership in Law award from the Burton Foundation.
Bill Campbell
BSc (Business
Administration)
Age 61
Executive Vice
President, Chief
Commercial Officer
Bill was appointed in September 2017 as Executive Vice President, Chief
Commercial Officer. He has responsibility for a variety of global functions
including sales, marketing, commercial development, medical affairs and
public policy. Prior to being appointed to his current role, Bill led CSL Behring’s
North American commercial operations since 2014. He has more than 35 years
of diverse pharmaceutical and biotechnology experience across a range of
therapeutic areas, including oncology, women’s health, vaccines and plasma
proteins. Bill has held senior management positions at a number of
pharmaceutical and biotechnology companies.
58
CSL Limited Annual Report 2020 Elizabeth Walker
BA, MS (Organisational
Development and
Leadership)
Age 50
Executive Vice
President, Chief Human
Resources Officer
Elizabeth was appointed as Chief Human Resources Officer in December 2017.
She joined CSL Behring as Chief Talent Officer in 2016 and served as interim
Chief Human Resources Officer from October 2017. Prior to joining CSL,
Elizabeth was Vice President Global Talent Management at Campbell Soup
Company. She has more than 25 years of experience in both management
consulting and human resources. Elizabeth has worked across a variety of
industries, including healthcare, financial services and food manufacturing.
Bill Mezzanotte
MD, MPH
Age 61
Executive Vice President,
Head Research &
Development and
Chief Medical Officer
Bill was appointed Head of Research & Development (R&D) in October 2018 and
Chief Medical Officer was added to his direct responsibilities in 2020. He is
responsible for developing and executing CSL’s R&D strategy and portfolio,
including the identification and development of all R&D platforms, skills and
expertise necessary for success. Bill initially joined CSL as head of clinical
development in April 2017. Prior to CSL, Bill was senior vice president and
therapeutic area head for the respiratory unit for Boehringer Ingelheim and
spent 16 years with AstraZeneca in research and development, assuming roles
of increasing leadership and management responsibility across multiple
therapeutic areas. Bill obtained his MD at the University of Pennsylvania and a
Master of Public Health degree from Johns Hopkins University. He is board
certified in internal medicine, pulmonary medicine, critical care medicine and
sleep medicine and currently serves as a member of the Board of Directors of
the Philadelphia-based University City Science Center.
Alan Wills
BA (Zoology), MBA
Age 56
Executive Vice President,
Strategy and Business
Development
Alan joined the company in February 2015. He is responsible for strategy,
portfolio management and business development activities at CSL. Prior to
joining CSL, Alan was Executive Vice President, Corporate Development at
Auxilium Pharmaceuticals. He was previously head of corporate strategy for
Bristol-Myers Squibb and Pfizer, and has worked in strategy and business
development roles at United Healthcare and Stanford Medical Center. Alan
began his career with the Boston Consulting Group.
Paul McKenzie
PhD (Chemical
Engineering)
Age 54
Chief Operating Officer
(from June 2019)
Paul was appointed Chief Operating Officer in June 2019 and leads CSL’s global
end-to-end operations organisation and its accompanying strategy. He also
has responsibility for the Seqirus business. Prior to joining CSL, he served as
Executive Vice President of Pharmaceutical Operations and Technology at
Biogen. With more than 25 years of experience, Paul held various senior roles
in research and development and manufacturing for Johnson & Johnson,
Bristol-Myers Squibb and Merck & Co.
On 17 June 2020, CSL announced the resignation of David Lamont, Chief Financial Officer, effective 30 October 2020. Other
leadership changes during the financial year include Anjana Narain, Executive Vice President and General Manager, leaving Seqirus.
More on CSL.com (Our Company > Board and Management)
59
CSL Limited Annual Report 2020
12
Governance
Ethics and transparency
Risk management
While our Values serve as the directional compass of our
work, our Code of Responsible Business Practice (Code)
provides a more detailed map to deliver on our promise
in ways that exemplify the highest standards of conduct
throughout the organisation. This applies in all areas, from
our R&D facilities to our plasma centres to our manufacturing
sites to our commercial affiliates
CSL’s Code fosters a culture that rewards high ethical
standards, personal and corporate integrity and respect
for others.
In 2019/20, in line with our standard practice of ensuring CSL
policies remain current, we commenced a review of the Code.
The review included an independent assessment against
Australian Standard – AS8002 Organisational Codes of Conduct
and expert insights into current code of ethics good practice.
CSL will publish the fourth edition of our Code in July 2021.
Each of our employees is responsible for complying with the
applicable local laws of the countries in which we operate.
In certain aspects of our business, such as the marketing
of our products, our relationships with other healthcare
professionals and our research and development, we have
made further commitments to comply with both local
and internationally accepted pharmaceutical industry
codes of conduct.
We expect third parties with which we work to comply with
the applicable local laws and regulations of the countries
in which they operate, and to observe all of the principles
set out in our Code.
We have internal control systems to ensure financial
statements comply with the applicable local laws of the
countries in which we operate and to prevent fraud and
other improper conduct.
Disclosure
As a publicly listed company on the Australian Securities
Exchange (ASX), CSL has obligations under Australian law and
the ASX Listing Rules. Subject to limited exceptions, we must
continuously disclose to the ASX information about CSL that
a reasonable person would expect to have a material effect
on the price or value of CSL securities.
CSL has adopted and follows a detailed and structured
Risk Framework to ensure that risks in the CSL Group are
identified, evaluated, monitored and managed. This Risk
Framework sets out the risk management processes and
internal compliance and control systems, the roles and
responsibilities for different levels of management, the
matrix of risk impact and likelihood for assessing risk,
and risk management reporting requirements.
The risk management processes and internal compliance
and control systems are made up of various CSL policies,
processes, practices and procedures, which have been
established by management and/or the Board to provide
reasonable assurance that:
– established corporate and business strategies are
implemented, and objectives are achieved;
– any material exposure to risk is identified and adequately
monitored and managed;
– significant financial, managerial and operating information
is accurate, relevant, timely and reliable; and
– there is an adequate level of compliance with policies,
standards, procedures and applicable laws and regulations.
Further details of CSL’s risk management framework are
contained in CSL’s Corporate Governance Statement.
A description of CSL’s material risks and key risk management
activities for each risk can be found in Our Material Risks.
Tax transparency
While CSL’s roots are proudly Australian, CSL is a truly global
company, with more than 90% of our revenues and profits
derived outside Australia. We separately report on our global
tax footprint, as part of our tax transparency reporting.
We are subject to the different tax regimes that apply in each
of those countries and comply with applicable taxation laws
in all the jurisdictions in which we operate.
CSL’s approach to tax is underpinned by our Value of Integrity.
This is consistent with our commitment to complying with
all tax laws in the countries in which we operate. CSL has
a low tax risk appetite and does not engage in aggressive
tax planning.
We have a policy that sets clear guidelines and describes
the actions that the directors and all employees should
take when they become aware of information that may
require disclosure.
CSL supports efforts to promote prevention of tax avoidance
and tax transparency in order to support a fairer economy
and ensure there is confidence in the robustness of country
tax regimes.
Operating with transparency forms a core part of CSL’s
tax management philosophy and as such our annual
tax transparency reports can be found on CSL.com
(Our Company > Corporate Responsibility).
Corporate governance
Throughout 2019/20, CSL’s governance arrangements were
consistent with the ASX Corporate Governance Council’s
Corporate Governance Principles and Recommendations
(3rd edition). Our 2019/20 Corporate Governance Statement
has been approved by the Board and is available on CSL.com
(Our Company > Corporate Governance).
The Board continually reviews governance at CSL to ensure
that our arrangements remain appropriate in light of
changing expectations and general developments in good
corporate governance. CSL is pleased to report that its
governance arrangements as outlined in the Corporate
Governance Statement already address a number of the
new issues raised in the fourth edition of the ASX Corporate
Governance Council’s Corporate Governance Principles
and Recommendations which will come into effect for CSL
in 2020/21.
60
CSL Limited Annual Report 2020 13
Financial Performance
Contents
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
62
67
96
97
98
99
100
138
139
61
CSL Limited Annual Report 2020 Directors’ Report
The Board of Directors of CSL Limited (CSL) has pleasure in presenting their report on the consolidated entity for the year
ended 30 June 2020.
1. Principal Activities, Strategy and
3. Directors
Operating Model
The principal activities of the consolidated entity during the
financial year were the research, development, manufacture,
marketing and distribution of biopharmaceutical and
allied products.
CSL is a leader in global biotechnology, and develops
and delivers innovative medicines that saves lives, protects
public health and help people with life threatening medical
conditions to live full lives. CSL’s strategy is delivered through
its five strategic objectives for 2030: focus, innovation,
efficiency and reliable supply, sustainable growth and digital
transformation. More detail on CSL’s performance against
its 2020 strategic objectives can be found in Strategy
and Performance.
CSL’s operating model for its two businesses, CSL Behring
and Seqirus, leverage multifunctional teams that connect
to share best practice. CSL’s operating model is based around
four key value creation activities: early stage research, product
translation, manufacturing and patient access. CSL’s
commercial and functional areas operate at a global level,
with the Global Leadership Group responsible for the
day-to-day management of the group and delivery of CSL’s
strategic objectives. More detail on CSL’s operations can be
found in Our Company and Strategy and Performance.
2. Operating and Financial Review
CSL discloses financial performance primarily by business.
This provides the most meaningful insight into the nature
and financial outcomes of CSL’s activities and facilitates
greater comparability against industry peers. Information
on the operations and financial position for CSL is set out
in the Operating and Financial Review (OFR). The OFR
comprises of the Chairman and CEO message, Strategy
and Performance, Our Company, Our Material Risks and
Outlook accompanying this Directors’ Report.
The directors who served at any time during FY2020
or up until the date of this Directors’ Report were Dr Brian
McNamee AO, Mr Paul Perreault, Professor Andrew
Cuthbertson AO, Mr Bruce Brook, Ms Carolyn Hewson AO,
Dr Megan Clark AC, Mr Abbas Hussain, Ms Marie McDonald,
Ms Christine O’Reilly and Dr Tadataka Yamada KBE.
Further details of the current directors are set out in the
Governance section of CSL’s 2019/20 Annual Report or CSL’s
website, CSL.com. These details include the period for which
each director held office up to the date of this Directors’
Report, their qualifications, independence, experience and
particular responsibilities, the directorships held in other
listed companies since 1 July 2017 and the period for which
each directorship has been held.
Dr Tadataka Yamada KBE served as a Non-executive
Director of CSL from September 2016 until his retirement
on 16 October 2019.
Ms Carolyn Hewson AO was appointed as a Non-executive
Director of CSL with effect from 9 December 2019. Mr Pascal
Soriot was appointed as a Non-executive Director of CSL with
effect from 19 August 2020.
4. Company secretaries
Ms Fiona Mead, B.Com/LLB (Hons) FGIA, GAICD, was
appointed and commenced in the position of Company
Secretary and Head of Corporate Governance on 4 June 2018
and continues in office as at the date of this report. Ms Mead
was previously the Company Secretary and a member of the
Executive Leadership Team at Tabcorp Holdings Limited.
Prior to that, she was the Company Secretary at Asciano
Limited. Ms Mead also served as Assistant Company Secretary
at Telstra Corporation.
Mr John Levy served as an Assistant Company Secretary
from 16 August 2011 until his resignation from this position
on 8 August 2019.
62
CSL Limited Annual Report 2020 5. Directors’ attendances at meetings
The Board meets as often as necessary to fulfil its role. Directors are required to allocate time to CSL to perform their
responsibilities effectively, including adequate time to prepare for Board meetings. During the reporting year, the Board
met nine times, with all of those meetings held in Australia.
Members of the Global Leadership Group and other members of senior management attend Board meetings by invitation.
Attendance at Board and standing Board committee meetings during FY2020 is set out in the table 1 below. The Directors
also visited various locations of the CSL Group’s operations inside and outside Australia and met with local management.
Table 1: FY2020 Director Attendance at Board and Committee meetings
Board of Directors
Audit & Risk
Management
Committee
A
9
9
7
9
9
9
9
9
9
2
B
9
9
7
9
9
8 3
9
9
84
2
A1
6
3
6
6
B
5*
6
3
1*
2*
6
6*
6
B McNamee
B Brook
C Hewson
M Clark
A Cuthbertson
A Hussain
M McDonald
P Perreault
C O’Reilly
T Yamada
Securities
& Market
Disclosure
Committee
A
4
B
4
4
4
Human Resources
& Remuneration
Committee
Innovation &
Development
Committee
Corporate
Governance
& Nomination
Committee
A2
3
6
6
6
6
A
3
3
3
3
3
B
5*
1*
3
6
6
6
6*
6
B
3
3*
1*
3
3
3
3*
3
3*
A
2
2
1
2
2
B
2
2
1
2
2*
2
A Number of meetings held whilst a member.
B
Number of meetings attended. Board Committee meetings are open to all Directors to attend. Where a Director attended a meeting of a Committee of which
they were not a member, it is indicated with an asterisk*.
6. Dividends
On 18 August 2020 the directors resolved to pay a final dividend of US$1.07 per ordinary share, unfranked, bringing dividends
per share for 2020 to US$2.02 per share. In accordance with determinations by the directors, CSL does not operate a dividend
investment plan.
Dividends paid during the year were as follows:
Dividend
Final Dividend for Year Ended 30 June 2019
Interim Dividend for Year Ended 30 June 2020
Date paid
11/10/2019
09/04/2020
Unfranked
dividend per
share US$
100 cents
95 cents
Total
dividend
US$
$453.9m
$429.2m
Dividends are determined after period-end and announced with the results for the period. Interim dividends are determined
in February and paid in April. Final dividends are determined in August and paid in October. Dividends determined are not
recorded as a liability at the end of the period to which they relate.
7. Significant changes in the state of affairs
8. Developments in operations in future
There were no significant changes in the state of affairs of the
consolidated entity during the financial year not otherwise
disclosed in this report ‘ASX Full-year information 30 June
2020’ including the financial statements.
years and expected results
The OFR sets out information on CSL’s business strategies
and prospectus for future financial years, and refers to likely
developments in CSL’s operations and the expected results
of those operations in future financial years. Certain information
regarding developments in operations in future years and
expected results of those operations is excluded because
it is likely to result in material prejudice to the Group.
1
2
3
4
One of the Audit & Risk Management Committee meetings was held jointly with the Human Resources and Remuneration Committee.
One of the Human Resources and Remuneration Committee meetings was held jointly with the Audit & Risk Management Committee.
One Board meeting was arranged at short notice which meant two Non-executive Directors could not attend.
One Board meeting was arranged at short notice which meant two Non-executive Directors could not attend.
63
CSL Limited Annual Report 2020 Directors’ Report
9. Significant events after year end
Other than Mr Soriot joining the CSL Board from
19 August 2020 and information as disclosed in the financial
statements, the directors are not aware of any other matter
of circumstance which has arisen since the end of the
financial year which has significantly affected or may
significantly affect the operations of the consolidated
entity, results of those operations or the state of affairs
of the consolidated entity in subsequent financial years.
10. Environment, Health, Safety and
Sustainability performance
CSL has an Environmental, Health, Safety and Sustainability
(EHS2) Management System that its facilities operate to
industry and regulatory standards. This system includes
compliance with government regulations and commitments
for continuous improvement of health and safety in the
workplace, as well as minimising the impact of operations
on the environment. To drive this system, CSL implemented
an EHS2 Management System (EHSMS) Standard. Internal
audits at one site demonstrated compliance with the EHSMS
in FY2019/20. Completion of the remaining internal audits
are planned over the next one to two years.
Development, implementation, and improvement of employee
health and safety processes and programs continue to focus
on enhancement of a strong safety culture. Our Australian
operations continue classification as an Established Licensee
in respect to CSL’s self-insurance licence as granted by the
Safety, Rehabilitation and Compensation Commission.
Australian and foreign laws regulate environmental and
safety obligations and waste discharge quotas. Government
agency audits and site inspections monitor CSL environmental
and safety performance. The following is a summary of findings
identified or with continued action over the reporting period.
In 2020, CSL, Parkville (Australia) submitted a proposed
remediation plan for the identified groundwater contamination
to the environmental authority. CSL has sought a meeting
with the Environmental Protection Agency (EPA) to discuss
a path forward on this issue. An environmental assessment
of the broader Parkville site has been completed and we are
currently reviewing the results to determine what further
action may be required.
In 2020, CSL, Broadmeadows (Australia) received a non-
compliance notice from the local water authority for a
wastewater discharge of acetic acid in exceedance of the
local limit. Investigations are ongoing in consultation with
the water authority.
In 2019/20, CSL, Kankakee (US) experienced wastewater
pH violations identified through sampling by the local
environmental authority. In 2020, CSL entered into an
agreement with the local environmental authority to allow
periodic non-compliance with the site permit for pH until
completion of a pH neutralisation system by November 2021.
In 2019, CSL, Kankakee received a Notice of Intent to File a
Civil Administrative Complaint from the federal environmental
authority for alleged violations of the Clean Air Act identified
during a 2018 inspection. CSL and the environmental
authority are continuing to discuss the potential violations
with a final complaint or order expected to be filed in 2020.
In 2020, CSL Plasma, Margate (US) received a Citation and
Notification of Penalty fine following a 2019 employee
exposure to dry ice.
As part of compliance and continuous improvement in
regulatory and voluntary environmental performance, CSL
continues to report on key environmental aspects including
energy consumption, emissions, water use and management
of waste as part of CSL’s annual reporting on CSL.com
(see Corporate Responsibility) and submission to the CDP
(previously known as Carbon Disclosure Project). CSL has met
its reporting obligations under the Australian Government’s
National Greenhouse and Energy Reporting Act (2007) and
Victorian Government’s Industrial Waste Management Policy
(National Pollutant Inventory).
Monitoring environment, climate change risks, and control
measures means that CSL is ready for new and emerging
regulatory requirements. CSL’s environmental performance
is particularly important and relevant to select stakeholders
and CSL reaffirms its commitment to continue to participate
in initiatives such as CDP’s (climate change and water
disclosures) to help inform investors of its environmental
management approach and performance.
Additional EHS2 performance details, including workplace
safety, will be provided in Sections 6 and 8 of CSL’s 2019/20
Annual Report and on CSL.com.
11. Directors’ shareholdings and interest
At 30 June 2020, the interests of the Directors who held office
at 30 June 2020 in the shares, options and performance rights
of CSL are set out in the Remuneration Report – Tables 10
and 11 for executive Key Management Personnel (KMP) and
Tables 16 and 17 for Non-Executive Directors. It is contrary to
Board policy for KMP to limit exposure to risk in relation to
these securities. From time to time the Company Secretary
makes inquiries of KMP as to their compliance with this policy.
12. Directors’ interests in contracts
Section 14 of this report sets out particulars of the Director’s
Deed entered into by CSL with each director in relation
to access to Board papers, indemnity and insurance.
13. Performance Rights and Options
As at 30 June 2020, the number of unissued ordinary shares
in CSL under options and under performance rights are set
out in Note 5 on page 110 and Note 18 on page 130 of the
Financial Statements.
Holders of options or performance rights do not have any
right, by virtue of the options or performance rights, to
participate in any share issue by CSL or any other body
corporate or in any interest issued by any registered managed
investment scheme.
The number of options and performance rights exercised
during the financial year and the exercise price paid to acquire
fully paid ordinary shares in CSL is set out in Note 5 of the
Financial Statements. Since the end of the financial year,
no shares were issued under CSL’s Performance Rights Plan.
Since the end of the financial year, there has been no
change to the information contained in Note 5 or Note 18
to the Financial Statements.
64
CSL Limited Annual Report 2020 CSL paid insurance premiums of US$3,791,684 in respect of
a contract insuring each individual director of CSL and each
full time executive officer, director and secretary of CSL and
its controlled entities, against certain liabilities and expenses
(including liability for certain legal costs) arising as a result
of work performed in their respective capacities, to the extent
permitted by law.
15. Indemnification of auditors
To the extent permitted by law, CSL has agreed to indemnify
its auditors, Ernst & Young, as part of the terms of its audit
engagement agreement against claims by third parties
arising from the audit (for an unspecified amount). No
payment has been made to indemnify Ernst & Young during
or since the financial year.
16. Auditor independence and
non-audit services
CSL may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise and experience with CSL and/or the consolidated
entity are important.
Details of the amounts paid or payable to the entity’s auditor,
Ernst & Young, for non-audit services provided during the year
are set out below. The directors, in accordance with the advice
received from the Audit and Risk Management Committee,
are satisfied that the provision of non-audit services is
compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001. The
directors are satisfied that the provision of non-audit
services by the auditor did not compromise the auditor
independence requirements of the Corporations Act 2001
for the following reasons:
• all non-audit services have been reviewed by the Audit and
Risk Management Committee to confirm that they do not
impact the impartiality and objectivity of the auditor; and
• none of the services undermine the general principles
relating to auditor independence as set out in Professional
Statement F1, including reviewing or auditing the auditor’s
own work, acting in a management or a decision making
capacity for CSL, acting as an advocate for CSL or jointly
sharing economic risks and rewards.
A copy of the auditors’ independence declaration as
required under section 307C of the Corporations Act 2001
accompanies this report.
14. Indemnification of Directors and Officers
During the financial year, the insurance and indemnity
arrangements discussed below were in place concerning
directors and officers of the consolidated entity:
CSL has entered into a Director’s Deed with each director
regarding access to Board papers, indemnity and insurance.
Each deed provides:
a. an ongoing and unlimited indemnity to the relevant
director against liability incurred by that director in or
arising out of the conduct of the business of CSL or of a
subsidiary (as defined in the Corporations Act 2001) (Cth)
or in or arising out of the discharge of the duties of that
director. The indemnity is given to the extent permitted by
law and to the extent and for the amount that the relevant
director is not otherwise entitled to be, and is not actually,
indemnified by another person or out of the assets of
a corporation, where the liability is incurred in or arising
out of the conduct of the business of that corporation
or in the discharge of the duties of the director in relation
to that corporation;
b. that CSL will purchase and annually renew a liability
insurance program which covers all past, present and
future directors and officers against liability for acts and
omissions in their respective capacity on behalf of CSL.
Coverage will be maintained for a minimum of seven
years following the cessation of office for each director
appointment for acts or omissions during their time
served; and
c. the relevant director with a right of access to Board papers
relating to the director’s period of appointment as a
director for a period of seven years following that director’s
cessation of office. Access is permitted where the director
is, or may be, defending legal proceedings or appearing
before an inquiry or hearing of a government agency or
an external administrator, where the proceedings, inquiry
or hearing relates to an act or omission of the director in
performing the director’s duties to CSL during the director’s
period of appointment.
In addition to the Director’s Deeds, Rule 95 of CSL’s
constitution requires CSL to indemnify each ‘officer’ of CSL
and of each wholly owned subsidiary of CSL out of the assets
of CSL ‘to the relevant extent’ against any liability incurred
by the officer in the conduct of the business of CSL or in the
conduct of the business of such wholly owned subsidiary
of CSL or in the discharge of the duties of the officer unless
incurred in circumstances which the Board resolves do not
justify indemnification.
For this purpose, ‘officer’ includes a director, executive officer,
secretary, agent, auditor or other officer of CSL. The indemnity
only applies to the extent CSL is not precluded by law from
doing so, and to the extent that the officer is not otherwise
entitled to be or is actually indemnified by another person,
including under any insurance policy, or out of the assets
of a corporation, where the liability is incurred in or arising
out of the conduct of the business of that corporation
or in the discharge of the duties of the officer in relation
to that corporation.
65
CSL Limited Annual Report 2020 Directors’ Report
Ernst & Young and its related practices received or are due to receive the following amounts for the provision of non-audit
services to CSL and its subsidiaries in respect to the year ended 30 June 2020:
AUDIT SERVICES – Ernst & Young Australia
Fees for auditing the statutory financial report of the parent covering the group and auditing
the statutory financial reports of any controlled entities
Fees for other assurance and agreed-upon-procedures services under other legislation
or contractual arrangements here there is discretion as to whether the service is provided
by the auditor or another firm
– Sustainability assurance
– Agreed upon procedures and other audit engagements
Fees for other services
Due diligence
Remuneration advisory
Tax compliance
2020
US$
2019
US$
1,851,091
1,374,356
110,982
9,749
375,384
232,728
22,288
64,778
30,544
–
186,845
–
Total fees to Ernst & Young (Australia)
2,602,222
1,656,523
AUDIT SERVICES – Ernst & Young Overseas Member Firms
Fees for auditing the statutory financial report of the parent covering the group and auditing the
statutory financial reports of any controlled entities
Fees for assurance services that are required by legislation to be provided by the auditor
Fees for other assurance and agreed-upon-procedures services under other legislation
or contractual arrangements here there is discretion as to whether the service is provided
by the auditor or another firm
– Agreed upon procedures and other audit engagements
Fees for other services
Total fees to overseas member firms of Ernst & Young (Australia)
3,649,937
3,469,810
38,540
13,459
110,806
28,463
28,226
31,283
3,827,746
3,542,778
5,771,105
4,981,174
658,863
218,128
6,429,968
5,199,301
and its depth of understanding of the Company’s global
business, operations and systems, accounting policies and
practices, including the potential effect on the financial
statements of the major risks and exposures facing the
Company, and internal control over financial reporting; and
• the auditor’s capability, expertise and efficiency in handling
the breadth and complexity of CSL’s global operations.
The current audit signing partners for CSL’s auditor, EY, are
Mr Rodney Piltz and Ms Kylie Bodenham.
In light of EY’s status as CSL’s incumbent auditor since 2002,
the ARMC will give consideration to all options available
at the next scheduled rotation, including the conduct
of a competitive tender process.
The next rotation of audit signing partner for EY is scheduled
to take place at the conclusion of the 2023 financial year.
17. Rounding
The amounts contained in this report and in the financial
report have been rounded to the nearest $100,000
(where rounding is applicable) unless specifically stated
otherwise under the relief available to CSL under ASIC
Corporations Instrument 2016/19. CSL is an entity to which
the Instrument applies.
Total audit services
Total non-audit services
Total auditor’s remuneration
The role of the Audit & Risk Management Committee of
the CSL Board of Directors (ARMC) is to oversee the integrity
and quality of half year and full year financial reporting and
disclosures. A key responsibility arising from this role is
the appointment of the Company’s independent auditor,
including the selection, review and evaluation of the audit
signing partner(s) and the negotiation of audit fees.
In accordance with its Charter and with CSL’s commitment
to best practice corporate governance practices, the ARMC
regularly reviews the performance of the Company’s
independent auditor.
Matters considered in reviewing the performance of the
Company’s independent auditor in the 2020 financial
year included:
• the professional qualifications and effectiveness of the
auditor, the audit signing partner(s) and other key
engagement partners;
• the auditor’s historical and recent performance on the
Company’s audit, including the extent and quality of their
communications with the ARMC;
• •an analysis of the auditor’s known legal risks and significant
proceedings that may impair its ability to perform CSL’s
annual audit;
• the appropriateness of the auditor’s fees;
• the auditor’s independence policies and its processes
for maintaining its independence and objectivity;
• the auditor’s tenure as the Company’s independent auditor
66
CSL Limited Annual Report 2020 Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor’s Independence Declaration to the Directors of CSL Limited
As lead auditor for the audit of the financial report of CSL Limited for the financial year ended 30 June
2020, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of CSL Limited and the entities it controlled during the financial year.
Ernst & Young
Rodney Piltz
Partner
18 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
67
CSL Limited Annual Report 2020
Directors’ Report
18. Remuneration Report
Dear Shareholder,
On behalf of the Board, I am pleased to present CSL’s
Remuneration Report (Report) for the year ended
30 June 2020. This Report contains detailed information
regarding CSL’s Key Management Personnel (KMP) for 2020.
recognition of extraordinary contribution in exceptional
circumstances or significant leadership failure. In setting
targets for 2021, the hurdle for the maximum performance
payment outcome for CFO has been extended.
CSL plays a critical role in the global community – providing
live-saving therapies to people with serious disease, and
vaccines that protect public health. The Board is proud
of the entire CSL team for delivering on this critical role.
Delivering on our Promise in 2020
Led by our Chief Executive Officer and Managing Director
(CEO), Mr Paul Perreault, the leadership team has delivered
an outstanding year, exceeding targets set in many areas.
The team has also responded to the COVID-19 pandemic by
prioritising staff, donors and patients and supporting global
efforts to fight COVID-19. In 2020 we have delivered:
• An increase to Net Profit after Tax (NPAT) of 17.1%
on a constant currency basis;
• An 8.9% increase in Revenue on a constant currency basis;
• Growth in Earnings per Share on a constant currency
basis of 17%;
• Return on Invested Capital (ROIC) of 21.6%;
• The opening of 40 new plasma collection centres globally –
taking the total to 227;
• The building of a growth pipeline of new medicines through
investment in R&D;
• Progression in our diversity strategy with 57% female
representation; and
• Employee engagement results above the global
external norm.
CSL’s Response to COVID-19 and the Impact on
Remuneration
As outlined earlier in this Annual Report, CSL has contributed
swiftly and strongly to the global response to COVID-19 by
participating in the search for and development of potential
therapies, vaccines and treatments in partnership with
others. The company helped staff work from home,
implemented safe protocols for staff and donors, and offered
staff caregiver leave of absence and allowances to help
balance work with home responsibilities. Payments to staff
and donors at our plasma collection centres were increased
in some areas to address the additional requirements of
COVID-19. CSL has not accepted any government workforce
support packages.
Our teams have delivered strongly on financial and non-
financial targets and as a result, the pandemic has not
materially impacted financial performance of CSL in 2020.
However, in assessing outcomes for 2020, the Board did
consider the impact of COVID-19 to ensure an appropriate
balance between remuneration delivered to our executives
and alignment with performance. Following this review,
the Board exercised its discretion and the financial metric
outcomes for the Short Term Incentive (STI) component
of remuneration, NPAT and Cash Flow from Operations
(CFO), were adjusted downward from the actual outcomes
achieved. The Board chose not to apply the ‘Leading and
Managing’ modifier to STI outcomes which allows for
Competition for talent in the pharmaceutical/biotechnology
industry has increased as the world focusses on health care.
The Board will continue to review the competitiveness of
our remuneration framework as we focus on balancing the
delivery of long term sustainable business performance with
the need to attract and retain outstanding executives.
2020 Key Management Personnel Changes
In 2020, following changes to the structure of our leadership
team, KMP were reviewed to include those leaders with
authority and responsibility for planning, directing and
controlling the activities of CSL. As a result we are reporting a
smaller KMP group this year as opposed to all executives who
report to the CEO. The remuneration framework described is
the same for all of the senior executives reporting to the CEO.
In 2021, Professor Andrew Cuthbertson will transition into an
executive advisory role, supporting the CEO in strategic global
projects. Professor Cuthbertson remains an Executive Director.
We will also farewell our Chief Financial Officer, Mr David
Lamont, and thank him for his outstanding contribution
to CSL.
2020 CEO Remuneration Outcomes
We congratulate our CEO, who was named by the Harvard
Business Review as one of the top 100 CEOs in the world and
was also named The Australian Financial Review 2019
Business Person of the Year and the Australian Herald Sun’s
Business Daily CEO of the Year 2019.
In 2020, Mr Perreault had no changes to his fixed reward nor
to his STI target, which stayed flat at US$1,751,000 and 120%
of fixed reward respectively. He received an increase to his
long term incentive (LTI) opportunity at target, now set at
400% of fixed reward (an increase from 350% in the prior
year). The increase to the LTI target drives focus on long term
performance delivery and rewards will only be earned when
performance hurdles are met.
Following above target performance in 2020, Mr Perreault will
receive a STI cash payment of US$2,477,746. The STI outcome
for Mr Perreault was 118% of target, based on the two financial
measures of ‘above target’ performance on both NPAT and
CFO and between ‘threshold’ and ‘target’ performance on
three individual non-financial measures. Details of the
outcomes can be found in sections 5 and 7.1 of the Report.
During the year Mr Perreault had LTI vesting of US$23,923,845
based on the CSL share price at the date of vesting. Of this
amount, US$18,592,836 relates to the increase in the CSL
share price since the date of grant of each award. Awards
were granted annually over the period 1 October 2015 to
1 September 2018. Refer to section 5.3.3 and table 6 of the
Report for detailed information. In 2021, there will be the final
vesting of legacy programs with the vesting of Options and
Performance Rights granted in October 2016. Thereafter,
these legacy plans will cease.
68
CSL Limited Annual Report 2020 Shareholder Engagement and Review of our Reward
Framework in 2021
Over the year, we enjoyed conversations with many of our
shareholders and welcomed their feedback on our executive
reward framework. In response to this feedback, for the LTI
awards granted in 2020, the Board introduced an annual
threshold of ROIC performance that must be achieved before
vesting can occur – the measure is the Investment Hurdle
Rate (IHR). This was added as a gateway condition of the LTI
target to ensure the ROIC is delivering an appropriate return
each financial year as well as over the seven year rolling
average period and aligns with shareholder outcomes. If the
ROIC outcome is below the IHR, no vesting will occur in that
year. The Board decided not to make any further changes
to the framework this year in light of continuing uncertainty
in the external market.
In 2021, we will undertake a formal review of the framework,
ensuring each component is fit for purpose for CSL and
enables us to attract, engage and retain talent, compete
with larger global pharmaceutical companies and motivate
our people to deliver their best performance. We will review
the STI and LTI design, making sure our framework drives
sustainable long term results and aligns the interests of
executives with our shareholders. The review will include the
STI framework, LTI measures, tranche structure and vesting
schedule. We look forward to engaging with you as we
undergo this review process.
Thank you to my fellow committee members and thank
you for supporting CSL and the patients we serve around
the world.
Dr Megan Clark AC
Chair
Human Resources and Remuneration Committee
In addition to the disclosure of statutory remuneration,
we also disclose CEO and Executive KMP ‘realised’
remuneration. Mr Perreault’s ‘realised’ remuneration for
2020 was US$28,224,845 and this is a 21% increase from
the prior year (full detail provided in section 7.2, table 12).
2020 CEO Realised Remuneration
0%
20%
40%
60%
80%
100%
● Total Fixed Reward Received
● Total STI Received
● LTI Received – Options (2016)
● LTI Received – Rights (2016)
● LTI Received – Notional Shares (2017)
● LTI Received – Performance Share Units (2018)
● LTI Received – Performance Share Units (2019)
Remuneration in 2021
For 2021, the Board has determined that there will be no
increase to any component of Mr Perreault’s total target
reward – remaining at fixed reward of US$1,751,000, a STI
target of 120% and a LTI target of 400%. Mr Perreault’s total
target reward will be US$10,856,200 with the maximum
potential outcome being US$11,906,800. While total target
reward is below the median of the global pharmaceutical/
biotechnology peer group, given the current global economic
environment and investor and community sentiment, the
Board believes no increase is warranted at this time.
For our remaining Executive KMP, in 2021 our Chief Operating
Officer Dr Paul McKenzie will receive an increase to his fixed
reward and long term incentive target to reflect an increase
in responsibilities to include leadership of the Seqirus business.
These increases better align Dr McKenzie towards the median
of the global pharmaceutical/biotechnology peer group in
accordance with our remuneration policy. Internal pay
relativity has also been considered by the Board.
Professor Cuthbertson’s total reward in 2021 has been
adjusted to reflect his reduced responsibilities and he will
no longer participate in CSL’s STI and LTI plans. No changes
will be made to Mr Lamont’s reward for his remaining period
of employment with CSL. He will not receive a LTI grant
in September 2020.
Following benchmarking with ASX 10 and ASX 25
Non-Executive Director (NED) remuneration, in 2021 there
will be a 2.8% increase to Board fees. There will be no payment
of the NED travel allowance until international travel of our
overseas NEDs resumes.
69
CSL Limited Annual Report 2020 Directors’ Report
Contents
1. CSL Key Management Personnel
2. 2020 Remuneration Outcomes at a Glance
3. Global Remuneration Framework
4. CSL Performance and Shareholder Returns
5. Executive Key Management Personnel Outcomes in 2020
6.
Executive Key Management Personnel Statutory
Remuneration Tables
7.
2020 and 2021 Executive Key Management
Personnel Remuneration
8. Non-Executive Director Remuneration
9. Remuneration Governance
10. Legacy Equity Programs
11. Additional Employee Equity Programs
Independent audit of the Report
The Remuneration Report (Report) has been audited by Ernst & Young. Please see page 139 of the Financial Statements
for Ernst & Young’s report.
1. CSL Key Management Personnel
This Report sets out remuneration information for Key Management Personnel (KMP) which includes Non-Executive Directors
(NEDs), Executive Directors (i.e. the Chief Executive Officer and Managing Director (CEO) and Chief Scientific Officer) and those
key executives who have authority and responsibility for planning, directing and controlling the activities of CSL during the
financial year (together with the Executive Directors, herein referred to as Executive KMP). The CSL KMP during the year ended
30 June 2020 and changes to KMP are outlined in Table 1.
In 2020, the Global Leadership Group (CEO and direct reports) changed as a result of the commencement of employment of
Dr Paul McKenzie and the retirement of Mr Gordon Naylor. In addition, reporting structures, roles and responsibilities changed
and this provided the opportunity for CSL to review who has authority and responsibility for planning, directing and controlling
the activities of CSL. Following the review, CSL has introduced changes to the composition of its KMP. Previous disclosures
included all direct reports to the CEO.
Table 1: CSL Key Management Personnel in 2020
Non-Executive Directors
Chairman
Dr Brian McNamee AO
Mr Bruce Brook
Dr Megan Clark AC
Ms Carolyn Hewson AO – appointed 9 December 2019
Mr Shah Abbas Hussain
Ms Marie McDonald
Ms Christine O’Reilly
Executive Key Management Personnel
Executive Director and Chief Executive Officer and
Managing Director (CEO)
Mr Paul Perreault
Executive Director and Chief Scientific Officer (CSO)
Professor Andrew Cuthbertson AO
Chief Financial Officer
Mr David Lamont1
Chief Operating Officer
Dr Paul McKenzie – appointed 1 July 2019
Former Non-Executive Directors
Dr Tadataka Yamada KBE – retired 16 October 2019
Former Executive Key Management Personnel
EVP Legal & Group General Counsel
Mr Greg Boss* – ceased to be KMP 30 June 2019
EVP & Chief Commercial Officer
Mr William Campbell* – ceased to be KMP 30 June 2019
EVP Quality & Business Services
Ms Karen Etchberger* – ceased to be KMP 30 June 2019
EVP Research & Development
Dr William Mezzanotte* – ceased to be KMP 30 June 2019
President, Seqirus
Mr Gordon Naylor – ceased to be KMP 30 June 2019
EVP Manufacturing Operations & Planning
Mr Val Romberg – ceased to be KMP 30 June 2019
EVP & Chief Human Resources Officer
Ms Elizabeth Walker* – ceased to be KMP 30 June 2019
1 D Lamont will cease employment on 30 October 2020 by way of resignation.
* Remains a current employee as at 30 June 2020 and the date of this Report.
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CSL Limited Annual Report 2020 2. 2020 Remuneration Outcomes at a Glance
CEO
• No increase to fixed reward
• A short term incentive (STI) payment of US$2,477,746 – 79% of maximum opportunity
• A long term incentive (LTI) grant of US$7,004,000 – 400% of fixed remuneration
• LTI vesting during the year of US$23,923,845 (face value at vest)
• Received ‘realised’ remuneration in financial year 2020 of US$28,224,945.
Other Executive KMP
• No increase to fixed reward
• STI awards were paid at an average of 82% of maximum opportunity and were in the range
of US$699,030 to US$1,164,765
• Annual LTI grants for all other Executive KMP were in the range of US$1,182,690 to US$2,981,906
(face value at grant)
• LTI vesting for Professor Cuthbertson of US$2,018,233 (face value at vest)
• LTI vesting for Mr Lamont of US$2,272,478 (face value at vest)
• Dr McKenzie received a sign on equity award of US$4,740,637 as partial compensation for forgone
Biogen equity awards, US$1,684,148 of which was ‘realised’ during 2020 (face value at vest)
• ‘Realised’ remuneration in 2020 received as follows:
– Professor Cuthbertson – US$3,425,261
– Mr Lamont – US$4,044,761
– Dr McKenzie – US$4,349,026
Non-Executive Directors
• Received an average increase to fees of 1.9%
3. Global Remuneration Framework
3.1 Global Total Rewards Principles
To deliver on our promise to patients and protect public health, we rely on our people and need to ensure a strong global talent
supply. Our Total Rewards Principles, reviewed and simplified in 2020, enable us to attract, engage and retain talent, provide us
with the flexibility to address talent challenges in various markets and allows us to compete with larger global pharmaceutical
companies. We motivate our people to deliver their best performance by enabling an approach that integrates market
competitive and differentiated reward programs that align to CSL’s strategy and business objectives.
Common Global Structure
Effort Matters
• We leverage a market-based approach
to offer competitive rewards, balancing
both a global and local view
• We align employee and shareholder
interests, and consider community
expectations
• We benchmark ourselves against
the life sciences industry2
• We have a single pay design for all
senior executives
• We celebrate and recognise both the
effort that is required along the way
as well as the real results created
by our employees
Results and Behaviours
Holistic Approach to Well-Being
• We are committed to a pay for performance
culture based on both role requirements
and how the individual performs
• Living our CSL Values is a non-negotiable
expectation
• We foster an environment of well-being that
is multi-dimensional – physical, emotional,
financial and social health
Internal Equity, Inclusive Culture
Simplicity and Clarity
• We reward fairly and competitively
• We strive and monitor for equal pay
for equal work
• We aim to create easy to understand
programs and policies so people value
and use them
• We are committed to transparency
in our communications – internally
and externally
2 CSL Plasma is benchmarked against the Retail industry.
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CSL Limited Annual Report 2020 Directors’ Report
3.2 Remuneration Framework
As a leading global biotechnology company with manufacturing sites across six countries and over 26,000 employees in
39 countries, CSL develops and delivers innovative biotherapies and influenza vaccines that save lives, and help people with
life-threatening medical conditions live full lives. This requires a research to commercialisation lifecycle that can extend seven
to ten years. Accordingly, we have designed a reward framework that effectively incentivises and rewards our executives over
the long term.
Our reward framework combines elements of traditional Fixed Reward (or base salary), STI and LTI plans with enhancements
to several design factors to suit CSL’s business, a very different business to other companies in Australia, and with a diverse
global employee and shareholder base. Our international footprint requires global leadership and, with executives based
in different countries, we need to ensure our framework is fair, equitable and market competitive in the countries and industry
in which we operate in order to attract and retain highly talented people.
3.2.1 Remuneration Framework Elements
Fixed Reward (FR)
Short Term Incentive (STI)
Long Term Incentive (LTI)
Purpose
Attract, retain and engage key
talent to deliver our CSL strategy
Structure
Cash – salary and
superannuation/pension
Reward performance against annual
Key Performance Indicators (KPIs)
– maintaining a focus on underlying
value creation within the business
operations is critical to the success
and sustainability of CSL
Alignment to longer term
performance and strategy of CSL,
building economic alignment
between Executive KMP and
shareholders over the long term
Cash
Performance Share Units3
Approach
Reviewed annually
Paid annually
Determined based on the scope,
complexity and responsibilities of the
role, experience and performance
Reviewed through both an internal
and external relativity lens
Peer group4 – global pharmaceutical/
biotechnology peers or a general
industry view depending on role
(desired positioning at the median)
Mr Perreault’s target is 120% of FR,
Dr McKenzie’s target is 100% of FR and
the target for Professor Cuthbertson
and Mr Lamont is 85% of FR
Maximum payout is 150% of target
for all Executive KMP
Outcomes based on business (70%)
and individual performance
measures (30%), except for Professor
Cuthbertson who has a 60%/40% split
Granted annually with vesting in
instalments over a four year period
– 25% each year
Performance measure is Return
on Invested Capital – measured
on a seven year rolling return
in the year the award vests
Risk
Management
Before determining remuneration outcomes and vesting, we ensure alignment with risk management outcomes to
hold executives accountable for effective risk management – both financial and non-financial. In addition, all variable
reward is subject to the Malus and Clawback Policy and the Board has full discretion over the outcome of any variable
reward payment and vesting
The Board has the discretion to apply a ‘Leading and Managing’ modifier to both the STI and LTI outcomes – formally
recognising the importance of CSL’s culture including leadership behaviours, values, diversity objectives and
management of risk. The modifier allows for the Board to adjust in exceptional circumstances +20%/-50% of annual
STI earned, and/or LTI opportunity granted. The modifier is also available to adjust for risk management outcomes
following the implementation of a more formal risk/consequence management framework. The Board has a
discretion in all circumstances, including a significant risk management failure, to reduce further, including to zero
Shareholding
Requirement
Executive KMP must hold CSL shares equal to 100% of FR (300% for the CEO) within five years from the date
of appointment to their role
Benefits
We also provide market competitive benefits to attract and retain key talent. Benefits may include, but are not limited
to, accident, disability and death insurance, health insurance, car parking and participation in local benefit programs
As noted in the letter from the Chair, in 2021 we will be reviewing our remuneration framework for executives, with any changes
to be implemented effective 1 July 2021. The review of our framework is directed at ensuring the arrangements in place facilitate
the delivery of our 2030 strategy, deliver outstanding returns to shareholders and ensure a market competitive program.
The review will include the STI framework, LTI measures, tranche structure and vesting schedule.
3
4
Legacy LTI plans (Options and Performance Rights) remain in place with final reporting in 2021. See section 10.1 for more details on testing and key
plan characteristics.
The global pharmaceutical/biotechnology industry peer group serves as a primary reference group for remuneration benchmarking, created such that
CSL falls in the middle of the group with respect to market capitalisation and revenue. The group represents global industry peers and is updated annually.
The peer group in 2020 included: Alexion Pharmaceuticals, Inc.; Allergan plc; AstraZeneca PLC; Bayer Aktiengesellschaft; Biogen Inc.; BioMarin Pharmaceutical
Inc.; Celgene Corporation; Eli Lilly and Company; GlaxoSmithKline plc; Gilead Sciences Inc.; Grifols, S.A.; Incyte Corporation; Jazz Pharmaceuticals Public
Limited Company; Merck Kommanditgesellschaft auf Aktien; Novo Nordisk A/S; Regeneron Pharmaceuticals, Inc.; Shire plc; UCB SA; Vertex Pharmaceuticals
Incorporated. For the 2021 year, AbbVie Inc., Amgen Inc., Bausch Health Companies Inc. and Bristol-Myers Squibb Company are added to the peer group and
BioMarin Pharmaceutical Inc, Celgene Corporation, Incyte Corporation, Jazz Pharmaceuticals plc and Shire plc have been removed. In addition, two general
industry reference groups representing Australia and North America also help us ensure we pay appropriately to reward senior talent and may be used
as a primary, or hybrid, data set for certain Executive KMP dependent on role and location.
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CSL Limited Annual Report 2020 3.2.2 Remuneration Delivery Timeline
The diagram below illustrates how the components of 2020 Executive KMP remuneration is delivered over a five year period.
Year 1
Year 2
Year 3
Year 4
Year 5
FR
STI
LTI
●
●
● Award Granted
● Eligible for payment or vesting
3.2.3 Pay Mix
●
●
●
●
The following diagram sets out the remuneration mix for Executive KMP in 2020. The majority of the target reward mix is
variable remuneration and is at risk. This better aligns Executive KMP rewards with shareholder interests and is aligned to our
pay for performance philosophy, focussing efforts on driving growth and long term performance and sustainability. The data
for Executive KMP excluding the CEO is a weighted average.
Remuneration Mix – CEO
Remuneration Mix – Executive KMP
Maximum
15%
26%
Target
16%
19%
59%
65%
Maximum
23%
31%
Target
25%
23%
46%
52%
Minimum
100%
Minimum
100%
40
60
80
100
20
0
● Fixed Reward
● STI
● LTI
20
0
● Fixed Reward
● STI
● LTI
40
60
80
100
From a market alignment perspective, within our global pharmaceutical/biotechnology peer group our Executive KMP reward
is competitive in the elements of fixed reward and STI, however LTI remains below market comparators for all roles, including
the CEO. The latter component remains a focus for the Board to ensure we have competitive reward packages and effectively
incentivise for the long term success of the organisation by aligning outcomes with shareholder interests.
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CSL Limited Annual Report 2020 Directors’ Report
3.2.4 Short Term Incentive (STI)
Rewarding performance over an annual period, the STI program is designed to drive business performance and the creation
of shareholder value. KPIs on which Executive KMP are assessed and rewarded are challenging and not just duties expected
in the normal course of their role.
The key features of the program for cash awards for the year ended 30 June 2020 (to be paid in September 2020) are detailed
as follows. In 2021, we will review the STI program to ensure it remains competitive and fit for purpose.
Feature
Description
Performance
Period
Performance
Measures
Annual aligned with the financial year – 1 July 2019 to 30 June 2020
Each Executive KMP has a maximum of six KPIs. The KPIs are made up of two critical financial measures of CSL
business strength, shared by all participants – Net Profit after Tax (NPAT) and Cash Flow from Operations (CFO),
plus up to four individual business building KPIs. Hurdles are set at threshold, target and maximum levels of
performance and there is real difference between under achieve/achieve/over achieve targets and measures,
so that a challenging but meaningful incentive is provided
Financial
Individual
Financial growth is the foundation of long term
sustainability and evidences our competitive
advantage, whilst pursuing profitable growth aligns
employee and shareholder objectives. The financial
performance measures are NPAT measured at constant
currency and CFO measured at the reported rate
Individual performance hurdles align with strategic
priorities, encourage appropriate decision making,
and balance performance in non-financial priorities.
The individual performance measures are based
on individual responsibilities and categories include
divisional performance, achievement of strategic
objectives and improvement in operations, risk
management, compliance, people, health and safety
and quality
Performance
Measure
Weighting
The weighting of the measures in 2020 is as follows:
• NPAT 35%/CFO 35%/Individual 30% – Mr Perreault, Mr Lamont and Dr McKenzie
• NPAT 30%/CFO 30%/Individual 40% – Professor Cuthbertson
In 2021, we will adjust the weighting of the CFO measure, reducing to 25% for Mr Perreault, Dr McKenzie and the
new Chief Financial Officer. The change focuses our leaders on growing a sustainable business and driving cost
efficiencies through their individual objectives, which will have their weighting increased accordingly
Executive KMP
STI Targets
• Mr Perreault – 120%
• Dr McKenzie – 100%
• Professor Cuthbertson and Mr Lamont – 85%
Vesting
Below Threshold
0% earned
Between Threshold and Target
Target
Maximum
50% earned on achievement of threshold level
performance, increasing on a straight-line basis to 100%
earned on achievement of target level performance
100% earned
100% earned at target level performance, increasing
on a straight-line basis to 150% earned on achievement
of maximum level performance (capped)
The above STI Outcome percentages are then multiplied by the KPI weighting and individual STI opportunity
(as disclosed in Table 3 in section 5.2 below) to determine the payment amount
Cessation of
Employment
A ‘good leaver’ (such as retirement) may receive a pro-rata payment paid in the ordinary course based on the
portion of the Performance Period worked, subject to Performance Measures being met. If the Executive KMP
is not a ‘good leaver’, no payment will be made
3.2.5 Long Term Incentive (LTI)
Introduced in 2017, our current LTI plan was designed to align our executives’ equity interests with those of our shareholders by
rewarding sustainable Return on Invested Capital (ROIC) outcomes over the longer term – a fit for purpose design to ensure the
long term growth of the organisation and returns to our shareholders. The instalment vesting of awards over a four year period
will only deliver reward where CSL performance has been strong over the longer term. When our target performance is achieved,
we want our executives to have their LTI vest – we set targets that not only provide excellent outcomes for shareholders both
absolutely and relative to the performance of our global peers, but also reward and assist us in retaining our talent.
The Board establishes a ROIC hurdle for each annual grant, taking into consideration the CSL budget and longer term forecast
annual ROIC over the four year term of the grant, together with the historical annual ROIC achieved that will form part of
the performance test over the four year annual testing period. The ROIC hurdle established is tested against market analyst
consensus for reasonableness. The Board also reviews peer group ROIC numbers to ensure the performance levels we are
targeting are appropriate.
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CSL Limited Annual Report 2020 For awards granted in 2020 (on 1 September 2019 to Mr Lamont and Dr McKenzie and on 23 October 2019 to Mr Perreault and
Professor Cuthbertson), the Board introduced an annual threshold of ROIC performance that must be achieved before vesting
can occur – the measure is the Investment Hurdle Rate (IHR). The IHR is the minimum return we require on our investments to
ensure we are making sound investment decisions and appropriately manage risk and cover our cost of capital. This was added
as a gateway condition of the LTI target to ensure that the ROIC is delivering an appropriate return each financial year as well
as over the seven year rolling average period and aligns with shareholder outcomes and expectations. If the ROIC outcome
for a year is below the IHR, no vesting will occur in that year.
The key features of the program for 2020 LTI awards are detailed as follows.
Feature
Summary
Description
A conditional ‘right’ to a CSL share (i.e. full value instrument) or at the Board’s discretion, a cash equivalent
payment. No price is payable by the Executive KMP on grant or vesting of rights. Shares are automatically
allocated (or cash automatically paid) without the need for exercise by an Executive KMP
Security
Performance Share Unit (PSU)
Grant
Methodology
Performance
Period
Gateway
Performance
Measure
Performance
Measure
Performance
Target
Executive KMP
LTI Targets
(target
opportunity set
as a percentage
of Fixed Reward)
Vesting
Schedule
To determine the number of PSUs issued, a five day weighted average share price is used. The LTI opportunity
for each Executive KMP is divided by the calculated face value to determine the number of securities granted
Seven year rolling average: Tranche 1 – 1 July 2013 to 30 June 2020; Tranche 2 – 1 July 2014 to 30 June 2021 Tranche 3
– 1 July 2015 to 30 June 2022; and Tranche 4 – 1 July 2016 to 30 June 2023
No vesting will occur unless an Investment Hurdle Rate (IHR) is achieved. The IHR is the minimum return CSL
requires on its investments to ensure it is making sound investment decisions and appropriately managing risk
and covering its cost base
Return on Invested Capital
Threshold – 22.0%
Target – 25.0%
• Mr Perreault – 400%
• Dr McKenzie – 315%
• Professor Cuthbertson – 200%
• Mr Lamont – 135%
Below Threshold
0% earned
Between Threshold and
Target
50% of target opportunity earned on achievement of threshold level performance,
increasing on a straight-line basis to 100% of target opportunity earned on
achievement of target level performance
Target
Maximum
100% of target opportunity earned
Outcome capped at 100%
Vesting Date
Subject to performance, 25% of the award vests annually over four years: Tranche 1 – 1 September 2020; Tranche 2
– 1 September 2021; Tranche 3 – 1 September 2022; and Tranche 4 – 1 September 2023
Retesting
No retest of any tranche
Cessation of
Employment
Change
of Control
A ‘good leaver’ (such as retirement) may retain a pro-rated number of PSUs based on time elapsed since grant
date, subject to original terms and conditions including test date. If an Executive KMP is not a ‘good leaver’,
all unvested awards will be forfeited
In the event of a change of control, the Board, in its absolute discretion, may determine that some or all of the
awards vest having regard to the performance of CSL during the vesting period to the date of the change
of control event. Vesting may occur at the date of the change of control event or an earlier vesting date as
determined by the Board
Dividends and
Voting Rights
No dividends or dividend equivalents are paid on unvested awards. Executive KMP are only eligible for dividends
once shares have been allocated following vesting of any PSUs. PSUs do not carry any voting rights prior to vesting
and allocation of shares
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CSL Limited Annual Report 2020 Directors’ Report
3.2.6 Leading and Managing Modifier
The Board, based on recommendations from the CEO for
Executive KMP, and the Human Resources and Remuneration
Committee (HRRC) for the CEO, has the discretion to apply
a ‘Leading and Managing’ modifier to both the STI and LTI
opportunity – allowing for recognition of extraordinary
contribution in exceptional circumstances or significant
leadership failure across culture and diversity. Applied to the
overall STI outcome or LTI target opportunity, there can be an
increase of up to 20% or a decrease of up to 50% applied. In
2020, the Leading and Managing modifier was not used as
the CEO and the Board determined that all Executive KMP
had met expectations in the leadership of their respective
business units and outcomes delivered, and consistently
modelled the CSL Values. Below sets out an illustrative
example of how the Modifier is used on STI outcomes.
KPI outcomes
assessed by
the Board
Proposed STI
outcome
determined
Modifier applied
in exceptional
circumstances
Final STI
outcome
determined
In addition to consideration during the determination of KPI
outcomes, the modifier is also utilised for the assessment of
the management of risk – both financial and non-financial.
In consultation with the Audit and Risk Management
Committee, the HRRC use a principles approach to
ensure alignment between remuneration outcomes and
performance. This enables Management to bring awareness
to behaviours that encourage unacceptable levels of risk
and discourage those behaviours, promotes behaviours that
encourage acceptable levels of risk and enables the Board
to recognise and appropriately address both acceptable and
unacceptable behaviours. In the event of a significant risk
management failure, the Board has the discretion to adjust
further than the 50% downwards outcome, including to zero.
4. CSL Performance and Shareholder Returns
4.1 Financial Performance from 2014 to 2020
The following graphs5 summarise key financial performance over the past seven financial years. We have disclosed over a seven
year period to align with our ROIC LTI performance measurement period.
Net Profit After Tax/
Earnings Per Share (USD)
Cash Inflow From
Operating Activities (millions USD)
Annual Return on
Invested Capital
2,500
2,000
1,500
1,000
500
0
400
320
240
160
80
0
500
400
300
200
100
0
2,500
2,000
1,500
1,000
500
0
35%
30%
25%
20%
15%
10%
5%
0%
2014
2015
2016
2017
2018
2019
2020
2014
2015
2016
2017
2018
2019
2020
2014
2015
2016
2017
2018
2019
2020
Net Profit After Tax (millions) – USD
Earnings Per Share (cents) – USD
Closing Share Price (at 30 June AUD)/
Total Shareholder Return
Total Dividends
Per Share (cents USD)
50%
40%
30%
20%
10%
0%
200
150
100
50
0
2014
2015
2016
2017
2018
2019
2020
2014
2015
2016
2017
2018
2019
2020
Closing Share Price (dollars) – AUD
Total Shareholder Return (12 month %) – AUD
5
The 2016 Annual Return on Invested Capital figure includes the gain on acquisition of Novartis’ global influenza vaccine business of US$176.1m. The opening
share price on 1 July 2015 was A$86.21. The Total Dividends per Share is the actual total dividends paid within the financial year.
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CSL Limited Annual Report 2020
5. Executive Key Management Personnel Outcomes in 2020
5.1 CSL Performance
2020 has been another year of outstanding performance outcomes. Financial performance has been strong and we continue
to develop and progress our research and development pipeline, consistently innovating to ensure a sustainable business. Our
new end to end supply chain model continues to be implemented enabling an efficient and reliable supply. CSL has been on
the forefront in the response to the COVID-19 pandemic. As the pandemic evolved, CSL continued to provide an uninterrupted
supply of our medicines around the world. Our team is working with academia, industry and governments globally to combat
the novel coronavirus COVID-19.
The following performance outcomes, as aligned to the CSL strategy, were achieved resulting in an average overall STI
payment outcome of 122% of target level opportunity across the Executive KMP (see Table 3). The minimum STI earned
as a percentage of target level opportunity was 118% and the maximum was 126% – the latter was 84% of the maximum STI
outcome that could be achieved. Additional quantitative objectives, which were also integral to the achievement of individual
performance, were considered by the Board when assessing Executive KMP performance. However, these remain confidential
for commercial reasons.
Table 2: CSL Achievements in 2020
Strategy Component
Rating
Outcome
Financial
NPAT
CFO
People
Focus
Innovation
●
●
●
●
●
• Reported NPAT above target at US$2,102.5m
• Reported CFO above target at US$2,488.3m
• CSL named in the Top 500 companies for Diversity in the US by Forbes
• Continued employee engagement scores above the global norm
• Key leadership appointments following organisational operating structure review
• Agreement for a primary immunodeficiency gene therapy collaboration with the Seattle
Children’s Research expanding our cell and gene therapy footprint into the Immunology
Therapeutic Area
• Acquisition of Vitaeris
• HIZENTRA® granted Orphan Drug Exclusivity for CIDP
• HIZENTRA® Dermatomyositis Phase III study initiated
• CSL112 trial (cardiovascular disease) Phase III progressing
• CSL200 first patient with sickle cell disease dosed
• US FDA approval of AUDENZTM – world’s first adjuvanted, cell-based influenza A (H5N1)
pandemic vaccine
• FLUCELVAX® launched in EU
• FLUAD® preferred recommendations in UK and Australia, and QIV approved in Australia
• Positive real world effectiveness evidence continuing for FLUCELVAX® and FLUAD®
Efficiency and
Reliable Supply
●
• 40 plasma collection centres opened taking our total to 277 globally
• Operationalisation of our new End to End Supply Chain model
• Commenced aQIVc development
• Successful implementation of the final phase of the new Enterprise Resource Planning system
in Asia Pacific – the system is now fully implemented globally
• Major capital projects at all manufacturing sites progressing to support future demand
Sustainable Growth ●
• Global expansion with two new offices opening (Saudi Arabia and Colombia)
• Transition to Good Supply Practices (GSP) license in China
• Strategic partnership with Thermo Fisher Scientific for the lease of CSL’s Lengnau biotech
manufacturing facility
● Target Exceeded
● Target Met
● Target Partially Met
● Target Not Met
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CSL Limited Annual Report 2020 Directors’ Report
5.2 STI Outcomes by Executive KMP in 2020
The financial performance of CSL (NPAT and CFO) makes up the majority weighting of the KPIs for Executive KMP, incentivising
the delivery of strong financial performance – 70% for Mr Perreault, Mr Lamont and Dr McKenzie and 60% for Professor
Cuthbertson. Both NPAT and CFO at 30 June 2020 resulted in above target performance and after reviewing the outcome and
considering the impact of COVID-19, the Board exercised its discretion and reduced outcomes for certain unbudgeted actual
outcomes. The remaining KPIs measured individual performance. Achievements that contributed to the outcomes detailed in
Table 3 below can be found in Table 2 of this Report. The Board made no adjustments under the Malus and Clawback Policy
and no risk management, behaviour or compliance issues involving Executive KMP were identified during the joint
consultation between the HRRC and Audit and Risk Management Committee.
Table 3: STI Outcomes in 2020
Executive
Value of STI
Earned US$
STI
opportunity
at Target
level hurdle
as a % of FR
STI
opportunity
at Maximum
level hurdle
as a % of FR
STI earned
as % of
Target
opportunity
STI earned
as % of
Maximum
opportunity
STI earned
as % of FR
Financial
Performance
Outcome
Individual
Performance
Outcome
P Perreault
2,477,746
120%
180%
118%
79%
142%
A Cuthbertson
699,030
85%
128%
121%
81%
103%
D Lamont
901,581
85%
128%
124%
83%
105%
P McKenzie
1,164,765
100%
150%
126%
84%
126%
Between
Target and
Maximum
Between
Target and
Maximum
Between
Target and
Maximum
Between
Target and
Maximum
Between
Threshold
and Target
Between
Target and
Maximum
Between
Target and
Maximum
Between
Target and
Maximum
5.3 LTI Outcomes by Executive KMP in 2020
5.3.1 LTI awards tested in 2020
In 2020, in the course of annual performance testing, four LTI grants were tested across both legacy and current LTI awards.
Due to CSL’s performance against a peer group of global pharmaceutical and biotechnology companies, and CSL’s strong share
price growth over the performance period, vesting value outcomes were high. The table below shows the performance of CSL
against the targets with vesting occurring in August 2019 and September 2019.
Table 4: LTI Awards Tested in 2020
Grant Date
Security
Tranche
Performance Period
1 October 2015
Option
Right
Right
Right
Notional
Share
1 October 2016
1 October 2017
PSU
1 October 2018
PSU
1
1
2
3
1
2
1
Exercise
Price A$
Performance Outcome
89.52
Individual Performance
Vesting
Outcome
100% vested
100% vested
RTSR ranking – 98th%ile against a
peer group of global Pharmaceutical
and Biotechnology companies
Annual EPS growth at 9.7%
57.31% vested6
Annual EPS growth at 9.7%
Individual Performance
0% vested7
100% vested
Seven year ROIC at 28.2%
100% vested
Seven year ROIC at 28.2%
100% vested
1 July 2015 –
30 June 2019
1 July 2016 –
30 June 2019
1 July 2012 –
30 June 2019
1 July 2012 –
30 June 2019
–
–
–
–
6 The remaining 42.69% of this tranche has lapsed – there is no retest.
7 The full tranche has lapsed – there is no retest.
78
CSL Limited Annual Report 2020 5.3.2 Fair Value of awards granted, vested and lapsed equity in 2020
The table below details the fair value at the date of grant for all awards granted8, vested and lapsed in 2020. The values are
shown in Australian Dollars.
Table 5: Grant Fair Value
Security
Option
Right
Right
Notional Share
PSU
PSU
PSU
PSU
PSU
PSU
Restricted Share Unit (RSU)
Tranche
Grant Date
Vest/Lapse Date
Fair Value at Grant A$
1
1
2/3
1
2
1
1
2
3
4
1
1 Oct 2015
1 Oct 2015
1 Oct 2015
1 Oct 2016
1 Oct 2017
1 Sep 2018
1 Sep 2019
1 Sep 2019
1 Sep 2019
1 Sep 2019
1 Sep 2019
15 Aug 2019
15 Aug 2019
15 Aug 2019
30 Sep 2019
1 Sep 2019
1 Sep 2019
1 Sep 2020
1 Sep 2021
1 Sep 2022
1 Sep 2023
1 Mar 2020
13.51
60.92
83.12
107.25
129.01
223.06
232.89
230.50
228.14
225.80
234.10
5.3.3 Summary of Executive KMP granted, vested and lapsed equity in 2020
The table below summarises the details of equity awards granted, vested and lapsed in US Dollars for each Executive KMP. For
awards granted, the maximum number of securities that may vest is shown. For accounting purposes, the maximum value of
each grant is the fair value of the equity granted multiplied by the number of equity instruments granted, or remaining each
year. Ultimately, the maximum value of the equity awards will be equal to the number of securities granted multiplied by the
CSL share price at the time of vesting. The minimum number of securities and the value of the equity awards is zero if the
equity award is fully lapsed.
For Dr McKenzie, the awards granted include the 2020 annual LTI grant, and the awards provided on commencement
of employment. Dr McKenzie, an accomplished global leader with diverse biotechnology experience, brought significant
experience and leadership capabilities to CSL that will continue to drive CSL’s sustainable growth. A sign-on award was made
to compensate for the loss of Biogen (prior employer) equity-based incentives Dr McKenzie held at the time of cessation of his
employment with Biogen. The awards were pro-rated and aligned to conditions of the awards at Biogen – performance hurdled
awards were discounted and replaced with CSL performance hurdled awards, and time-based awards were matched with CSL
time-based awards. The awards were provided in the form of PSUs and RSUs, with each PSU and RSU being a conditional right
to receive a share in CSL (or a cash equivalent payment). The vesting schedule was adjusted to match the dates on which CSL
awards vest following testing of performance conditions – vesting periods were extended beyond those of the relevant Biogen
incentives. No price is payable by Dr McKenzie on the grant or vesting of Rights awarded as a sign-on award. Further details of
how remuneration is determined is set out in section 9.2 and details on the terms of the awards can be found in section 3.2.5 for
the PSU grants, and section 11.2 for RSU grants.
8 The grant date of PSUs granted to P Perreault and A Cuthbertson was 23 October 2019.
79
CSL Limited Annual Report 2020 Directors’ Report
Table 6: Movement in equity in 2020
Executive
Security Grant Date Vesting Date
Exercise
Price A$
Fair Value
at Grant
US$
Face
Value at
Grant
US$9 Granted
Vested
Lapsed
Face Value
at Vest
– Vested
Award
US$10
Face Value
at Lapse
– Lapsed
Award
US$11
P Perreault
Option 1 Oct 2015
15 Aug 2019
89.52
1,343,515
–
147,911
147,911
–
13,633,051
–
Right
1 Oct 2015
15 Aug 2019
Notional
Share
1 Oct 2016
30 Sep 2019
PSU 1 Oct 2017
1 Sep 2019
PSU 1 Sep 2018
1 Sep 2019
PSU 1 Sep 2019
1 Sep 2020
PSU 1 Sep 2019
1 Sep 2021
PSU 1 Sep 2019
1 Sep 2022
PSU 1 Sep 2019
1 Sep 2023
A Cuthbertson
Right
1 Oct 2015
15 Aug 2019
Notional
Share
1 Oct 2016
30 Sep 2019
PSU 1 Oct 2017
1 Sep 2019
PSU 1 Sep 2018
1 Sep 2019
PSU 1 Sep 2019
1 Sep 2020
PSU 1 Sep 2019
1 Sep 2021
PSU 1 Sep 2019
1 Sep 2022
PSU 1 Sep 2019
1 Sep 2023
D Lamont
Right
1 Jan 2016
15 Aug 2019
P McKenzie
Notional
Share
1 Oct 2016
30 Sep 2019
PSU 1 Oct 2017
1 Sep 2019
PSU 1 Sep 2018
1 Sep 2019
PSU 1 Sep 2019
1 Sep 2020
PSU 1 Sep 2019
1 Sep 2021
PSU 1 Sep 2019
1 Sep 2022
PSU 1 Sep 2019
1 Sep 2023
PSU
(sign-on)
PSU
(sign-on)
PSU
(sign-on)
1 Sep 2019
1 Sep 2020
1 Sep 2019
1 Sep 2021
1 Sep 2019
1 Sep 2022
PSU (LTI)
1 Sep 2019
1 Sep 2020
PSU (LTI)
1 Sep 2019
1 Sep 2021
PSU (LTI)
1 Sep 2019
1 Sep 2022
PSU (LTI)
1 Sep 2019
1 Sep 2023
RSU 1 Sep 2019
1 Mar 202012
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,267,098 2,850,433
47,138
34,934
12,204
5,322,482
1,859,380
615,735
615,735
8,559
8,559
1,128,724
1,172,032
1,404,032
1,430,784
1,734,442
1,793,873
1,716,643
1,793,873
1,699,067
1,793,873
1,681,336
1,793,549
437,571
550,155
13,013
9,362
11,077
11,077
11,077
11,075
9,098
13,013
9,362
–
–
–
–
–
–
–
–
–
–
–
1,344,776
2,107,400
1,516,136
–
–
–
–
–
–
–
–
–
–
–
6,743
2,355
1,027,352
358,804
131,291
131,291
1,825
1,825
183,104
190,130
2,111
2,111
335,486
341,878
2,237
2,237
335,552
347,050
332,108
347,050
328,708
347,050
325,185
346,888
2,143
2,143
2,143
2,142
–
–
–
–
–
–
–
–
–
–
–
286,741
341,867
362,273
–
–
–
–
–
–
–
–
–
–
–
712,321
868,479
12,266
9,090
3,176
1,384,936
483,890
124,312
124,312
1,728
1,728
176,859
183,645
2,039
2,039
264,700
269,743
285,916
295,713
282,982
295,713
280,084
295,713
277,060
295,551
1,765
1,826
1,826
1,826
1,825
858,218
887,624
5,481
1,415,064
1,478,726
9,131
1,007,139
1,063,336
6,566
720,740
745,436
713,344
745,436
706,040
745,436
4,603
4,603
4,603
698,950
745,598
4,604
1,765
–
–
–
–
–
–
–
–
–
–
–
1,274,105
1,310,951
8,095
8,095
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
271,501
330,207
285,834
–
–
–
–
–
–
–
–
–
–
–
1,684,148
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9
Securities granted multiplied by the closing CSL share price on the date of grant. For Options granted, Options were multiplied by the share price at the
date of grant minus the exercise price payable (A$89.52). The face value of the Options at the date of grant for Mr Perreault is shown as zero as the exercise
price was higher than the closing CSL share price on the date of grant. The AUD value was converted to USD at an average exchange rate for the 2020 financial
year of 1.48735.
10 Securities vested multiplied by the closing CSL share price on the date of vest. For Options vested during the year, Options were multiplied by the share price
at the date of vesting minus the exercise price payable (A$89.52). The AUD value was converted to USD at an average exchange rate for the 2020 financial year
of 1.48735.
Securities lapsed multiplied by the closing CSL share price on the date of lapse. The AUD value was converted to USD at an average exchange rate for the 2020
financial year of 1.48735.
11
12 The RSU award granted to P McKenzie vested at 100% due to performance and service conditions being met – no portion of the award was lapsed. See section
11.2 for details of award terms.
80
CSL Limited Annual Report 2020 5.3.4 Executive KMP 2021 equity vesting opportunity
In 2021, our final legacy LTI awards will be tested which will result in one further year of complexity in the reporting of awards
that either vest or lapse across multiple award securities and terms and conditions, including performance measures. In regard
to the awards granted in 2017 (grant date of 1 October 2016), the value of any vesting is expected to be high – as has been the
case over the past two years. This outcome reflects the exceptionally strong CSL share price over the performance period.
The high vesting value is also in line with the shareholder returns over the same period.
The following tables set out a preview of the awards that will be tested in 2021 for Executive KMP with Table 8 providing the
specific grant details for each Executive KMP. The face value in Table 7 is provided in Australian Dollars.
Table 7: LTI awards to be tested in 2021
Grant Date
1 October 2016
Security
Option
1 October 2016
Right
1 October 2016
Right
Performance Measure
Individual Performance
Relative Total
Shareholder Return
(rTSR)
Earnings per Share
growth (EPSg)
1 October 2017
Performance Share Unit
1 September 2018
Performance Share Unit
1 September 2019
Performance Share Unit
ROIC
ROIC
ROIC
Table 8: Executive KMP LTI opportunity to be tested in 2021
Executive
P Perreault
A Cuthbertson
D Lamont
P McKenzie
Exercise
Price A$
107.25
–
–
–
–
–
Face Value of a CSL Share
at Date of Grant A$
107.00
107.00
107.00
133.96
227.31
240.87
Number of
Options
163,514
–
–
–
Number of
Performance
Rights
Number of
Performance
Share Units
51,727
11,389
11,683
–
33,452
6,491
5,630
10,084
81
CSL Limited Annual Report 2020 Directors’ Report
6. Executive Key Management Personnel Statutory Remuneration Tables
Remuneration is reported in US Dollars (USD), unless otherwise stated. This is consistent with the presentation currency used
by CSL. Remuneration for Executive KMP located in Australia is paid in Australian Dollars (AUD) and converted to USD based
on the average exchange rate for the 2020 financial year of 1.48735. Valuation of equity awards was converted from AUD to USD
using the same average exchange rate.
6.1 Executive KMP Remuneration 2019 and 2020
All amounts are presented in US Dollars.
Table 9: Statutory Remuneration Disclosure – Executive KMP
Executive
P Perreault –
CEO and Managing Director
A Cuthbertson –
Chief Scientific Officer
D Lamont –
Chief Financial Officer
P McKenzie
Chief Operating Officer
Former Executive KMP
G Boss –
EVP Legal & Group General Counsel
W Campbell –
EVP & Chief Commercial Officer
K Etchberger –
EVP Quality & Business Services
W Mezzanotte –
EVP Research & Development
G Naylor –
President, Seqirus
V Romberg – EVP Manufacturing
Operations & Planning
E Walker –
EVP & Chief Human Resources Officer
TOTAL
Short Term Benefits
Post-Employment
Other Long
Term
Year13
Cash Salary
and Fees US$15
Cash Bonus
US$16
Non-
Monetary
US$17
Super US$
LSL US$
Rights US$
Options US$
US$
US$
EDIP US$18, 19
Total US$
Related
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2020
2019
2020
2019
2020
2019
2020
2019
1,676,919
2,477,746
1,676,922
1,979,386
714,704
734,862
887,558
899,222
699,030
563,225
901,581
722,033
52,404
48,880
29,944
29,944
14,747
14,747
999,747
1,164,765
552,870
–
–
–
–
620,991
412,369
–
–
602,309
542,463
–
–
571,637
390,147
–
–
–
–
1,005,103
956,298
–
–
–
–
42,211
–
48,721
–
50,726
–
19,795
–
56,312
–
740,540
434,527
113,374
–
–
453,805
312,510
4,278,928
5,243,122
8,034,658
6,756,522
–
30,339
649,965
455,049
201920
729,267
443,564
19,950
19,600
16,808
17,948
16,808
17,948
22,243
–
–
19,600
–
19,527
–
18,121
–
20,261
–
81,438
–
21,413
–
–
75,809
235,856
Share Based Payments14
Performance
Share Units
Restricted
Share Units
% Performance
Performance
717,831
1,356,333
158,047
262,534
162,128
390,393
16,531
28,810
20,979
24,062
473,426
887,634
5,474,555
4,120,925
1,114,393
864,952
937,367
727,202
2,817,245
1,274,105
223,961
721,358
47,754
146,773
45,216
143,391
11,116,792
10,811,038
2,797,211
2,649,048
2,986,384
2,938,998
6,830,975
209,065
148,002
704,205
153,988
2,310,431
163,389
832,508
157,394
2,366,311
191,722
135,246
643,523
140,701
2,141,823
77,238
435,084
104,046
67,893
1,897,148
33,508
327,065
199,825
808,866
95,151
3,563,566
229,882
132,465
711,701
229,823
2,613,725
37,510
86,380
1,038,006
3,207,621
473,426
1,503,172
451,076
10,343,560
10,300,042
18,094
1,274,105
87,294
316,931
1,353,118
23,731,362
122,140
1,943,766
32,645,206
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
84%
84%
72%
69%
69%
67%
77%
–
–
–
–
–
–
–
–
70%
72%
70%
59%
67%
67%
64%
79%
73%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13 The AUD, GBP and CHF compensation paid during the years ended 30 June 2019 and 30 June 2020 have been converted to USD. For the 30 June 2020
compensation, this has been converted to USD at an average exchange rate for the 2020 financial year: AUD – 1.48735. Both the amount of remuneration and
any movement in comparison to prior years may be influenced by changes in the exchange rates. No cash sign on payments or termination benefits were paid
in 2020.
14 The Performance Rights and Options have been valued using a combination of the Binomial and Black Scholes option valuation methodologies including
Monte Carlo simulation as at the grant date adjusted for the probability of hurdles being achieved. The Performance Share Units and Restricted Share Units
have been valued using the Black Scholes option valuation methodology. These valuations were undertaken by Deloitte and PricewaterhouseCoopers. The
amounts disclosed have been determined by allocating the value of the Options, Performance Rights, Performance Share Units and Restricted Share Units over
the period from grant date to vesting date in accordance with applicable accounting standards.
15 Includes cash salary, cash allowances and short term compensated absences, such as annual leave entitlements accrued but not taken during the year.
16 The cash bonus in respect of 2020 is scheduled to be paid in September 2020. The cash component of the cash bonus received in 2019 was paid in full in
September 2019 for all Executive KMP as previously disclosed, with no adjustment.
17 Includes any health benefits, insurances benefits and other benefits. For International Assignees and domestic relocations, this may include personal tax advice,
health insurance, removalists, temporary accommodation and other expatriate assignment benefits.
18 The fair value of the EDIP cash settled deferred payment has been measured by reference to the CSL share price at reporting date, adjusted for the dividend
yield and the number of days left in the vesting period.
19 The 2019 EDIP share based payment amount has been restated due to an error in the calculation of the figures stated in the 2019 Remuneration Report.
This also impacts the 2019 Totals.
20 The period reported is 1 October 2018 to 30 June 2019 being the period W Mezzanotte was Executive KMP.
82
CSL Limited Annual Report 2020 Short Term Benefits
Post-Employment
Other Long
Term
Share Based Payments14
Cash Salary
Cash Bonus
Monetary
Year13
and Fees US$15
US$16
US$17
Super US$
LSL US$
Performance
Rights US$
Performance
Share Units
US$
Restricted
Share Units
US$
EDIP US$18, 19
Total US$
% Performance
Related
6. Executive Key Management Personnel Statutory Remuneration Tables
Remuneration is reported in US Dollars (USD), unless otherwise stated. This is consistent with the presentation currency used
by CSL. Remuneration for Executive KMP located in Australia is paid in Australian Dollars (AUD) and converted to USD based
on the average exchange rate for the 2020 financial year of 1.48735. Valuation of equity awards was converted from AUD to USD
using the same average exchange rate.
6.1 Executive KMP Remuneration 2019 and 2020
All amounts are presented in US Dollars.
Table 9: Statutory Remuneration Disclosure – Executive KMP
Executive
P Perreault –
CEO and Managing Director
A Cuthbertson –
Chief Scientific Officer
D Lamont –
Chief Financial Officer
P McKenzie
Chief Operating Officer
Former Executive KMP
G Boss –
EVP Legal & Group General Counsel
W Campbell –
EVP & Chief Commercial Officer
K Etchberger –
EVP Quality & Business Services
W Mezzanotte –
EVP Research & Development
G Naylor –
President, Seqirus
V Romberg – EVP Manufacturing
Operations & Planning
E Walker –
EVP & Chief Human Resources Officer
TOTAL
1,676,919
2,477,746
1,676,922
1,979,386
714,704
734,862
887,558
899,222
699,030
563,225
901,581
722,033
999,747
1,164,765
552,870
620,991
412,369
42,211
19,600
602,309
542,463
48,721
19,527
571,637
390,147
50,726
18,121
201920
729,267
443,564
19,795
20,261
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19,950
19,600
16,808
17,948
16,808
17,948
22,243
–
–
–
–
–
–
–
–
–
Non-
52,404
48,880
29,944
29,944
14,747
14,747
–
–
–
–
–
–
–
–
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2020
2019
2020
2019
2020
2019
2020
2019
5,474,555
4,120,925
1,114,393
864,952
937,367
727,202
–
–
–
–
–
–
2,817,245
1,274,105
–
–
16,531
28,810
20,979
24,062
–
–
–
–
–
–
–
–
–
–
–
717,831
1,356,333
158,047
262,534
162,128
390,393
–
–
–
–
163,389
–
191,722
–
77,238
–
Options US$
473,426
887,634
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
832,508
–
135,246
643,523
–
–
–
209,065
148,002
704,205
435,084
104,046
223,961
721,358
47,754
146,773
45,216
143,391
–
–
–
11,116,792
10,811,038
2,797,211
2,649,048
2,986,384
2,938,998
6,830,975
–
–
153,988
2,310,431
–
–
157,394
2,366,311
–
–
140,701
2,141,823
–
67,893
–
95,151
–
–
1,897,148
–
3,563,566
–
229,823
2,613,725
–
87,294
316,931
–
1,353,118
23,731,362
–
–
–
–
–
–
–
–
–
–
–
–
–
18,094
1,274,105
122,140
1,943,766
32,645,206
1,005,103
956,298
56,312
81,438
33,508
327,065
199,825
808,866
740,540
434,527
113,374
21,413
453,805
312,510
4,278,928
5,243,122
8,034,658
6,756,522
30,339
649,965
455,049
75,809
235,856
–
–
–
–
–
–
229,882
132,465
–
–
–
–
–
711,701
–
451,076
37,510
86,380
1,038,006
3,207,621
473,426
1,503,172
10,343,560
10,300,042
84%
84%
72%
69%
69%
67%
77%
–
–
70%
–
72%
–
70%
–
59%
–
67%
–
67%
–
64%
79%
73%
83
CSL Limited Annual Report 2020 Directors’ Report
6.2 Executive KMP Shareholdings
Details of shares held directly, indirectly or beneficially by each Executive KMP, including their related parties, are provided in
Table 10. Details of Options, Performance Rights, Performance Share Units and Restricted Share Units held directly, indirectly
or beneficially by each Executive KMP, including their related parties, are provided in Table 11. Any amounts are presented in US
Dollars. Following the vesting of awards, any trading undertaken by Executive KMP was subject to the Group Securities Dealing
Policy (outlined in section 9.6). Approved trading disclosed was actioned in accordance with the Policy, including forced trades
to cover CSL tax withholding obligations.
Table 10: Executive KMP Shareholdings
Executive
P Perreault
A Cuthbertson
D Lamont
P McKenzie
Balance at
1 July 2019
76,072
78,091
14,454
–
Number of shares
acquired on exercise of
Options, Performance
Rights, Performance
Share Units or Restricted
Share Units during year
Value of shares acquired
on exercise of Options21,
Performance Rights,
Performance Share Units
or Restricted Share Units
during year US$
Number of
(Shares Sold)/
Purchased
Balance at
30 June 2020
205,220
11,091
12,894
8,095
32,276,337
1,762,240
2,079,286
1,684,148
(153,911)
–
(8,073)
(4,082)
127,381
89,182
19,275
4,013
There have been no movements in shareholdings of Executive KMP between 30 June 2020 and the date of this Report.
Table 11: Executive KMP Option, Performance Right, Performance Share Unit and Restricted Share Unit Holding
Executive
P Perreault
Security
Option
Right
PSU
A Cuthbertson
Option
D Lamont
P McKenzie
Right
PSU
Option
Right
PSU
Option
Right
PSU
RSU
Balance
as at
1 July 2019
Number
Granted
Number
Exercised
Number
Lapsed
Balance
as at 30
June 2020
Number
Vested
During
Year
Vested22 Unvested
Balance as at 30 June 2020
311,425
98,865
76,488
–
20,487
15,278
–
23,949
13,175
–
–
–
–
–
–
44,306
–
–
8,571
–
–
7,303
–
–
39,591
8,095
147,911
34,934
22,375
–
6,743
4,348
–
9,090
3,804
–
–
–
8,095
–
12,204
–
–
2,355
–
–
3,176
–
–
–
–
–
163,514
51,727
98,419
–
11,389
19,501
–
11,683
16,674
–
–
39,591
147,911
34,934
22,375
–
6,743
4,348
–
9,090
3,804
–
–
–
–
8,095
–
–
–
–
–
–
–
–
–
–
–
–
–
163,514
51,727
98,419
–
11,389
19,501
–
11,683
16,674
–
–
39,591
–
21 The value of Options at exercise date has been determined by the share price at the close of business on exercise date less the Option exercise price, multiplied
by the number of Options exercised during 2020. For Performance Rights, Performance Share Units and Restricted Share Units, the value at exercise date has
been determined by the share price at the close of business on the exercise date multiplied by the number of securities exercised during 2020. The AUD value
was converted to USD at an average exchange rate for the year of 1.48735.
22 Vested awards are exercisable to the Executive KMP. There are no vested and unexercisable awards.
84
CSL Limited Annual Report 2020 7. 2020 and 2021 Executive Key Management Personnel Remuneration
7.1 CEO Remuneration
Mr Perreault’s target reward for 2020 is displayed below.
7.1.1 2020 CEO Remuneration Outcome
The Board determines any increases to reward for the
CEO based on his performance and relative to external
benchmarks. When comparing Mr Perreault’s total
reward to the reward of CEOs across the pharmaceutical/
biotechnology peer group, Mr Perreault lags the median –
specifically on the LTI component. As has been the case for
the past four years, there was no increase to fixed reward,
remaining at US$1,751,000. Mr Perreault’s STI percentage
remained set at 120% of his Fixed Reward for target
performance and his maximum payout opportunity capped
at 180% for outstanding performance. An increase was
applied to LTI as communicated in our 2019 Remuneration
Report – the target is now 400% of fixed reward (also
maximum opportunity) and the LTI is both time and
performance hurdled. Irrespective of these changes,
Mr Perreault is still below the median for the pharmaceutical/
biotechnology peer group.
2020 CEO Total Target Reward – USD
1,751,000
2,101,200
7,004,000
0%
20%
40%
60%
80%
100%
● 2020 Fixed Reward
● 2020 STI Target
● 2020 LTI Target
The 2020 STI outcome for Mr Perreault was 118% of target based on the two key measures of above target NPAT and CFO
performance outcome and individual performance that resulted in an outcome between threshold and target. Individual
outcomes against objectives set for Mr Perreault included:
Commentary
The optimisation of our newly implemented business model across the End to End Supply Chain. Succession
management and bench strength of critical roles focus with key leadership roles in place and/or transitioned. The
transformation of our ‘Enabling Functions’ to ensure enterprise-wide operating models and functions is underway,
ensuring the CSL Group is able to deliver on our 2030 strategy. Delivery of the 2020 diversity targets and objectives
Global, sustainable growth continues through the creation and implementation of the 2030 strategy with a focus
on Patients, Therapeutic Areas, Efficiency and Reliable Supply, Innovation and Digital Transformation. Key
outcomes are included in section 5.1, table 2
Stewardship of our culture and achievement of cultural initiatives focused on values, innovation, effective risk
management, employee health and safety, and compliance. Employee engagement outcomes continue to be
above the global norm. Celebrate the Promise, CSL’s new global recognition program piloted and on track for
global rollout in early 2021. Safety outcomes have continued to improve over prior year and key metrics continue
to outperform industry averages
Outcome
●
●
●
● Target Exceeded
● Target Met
● Target Partially Met
● Target Not Met
The achievement against targets set resulted in a cash payment of US$2,477,746 (to be paid in September 2020).
85
CSL Limited Annual Report 2020
Directors’ Report
Further detail can be found in section 5.2.
7.1.2 2020 CEO Realised Remuneration
CEO – Vested LTI Award Growth
Below we have disclosed the CEO ‘realised’ remuneration
with a full view of all Executive KMP ‘realised’ remuneration
detailed in section 7.2, Table 12. This is a voluntary disclosure
which the Board believes is simple and affords a transparent
view of what the CEO’s actual take-home pay was in 2020.
Further details related to how each of the below elements
is determined is provided in section 9.2. These outcomes are
aligned with the CEO’s and CSL’s performance during 2020,
as well as being aligned to CSL’s longer term performance.
This information has not been prepared in accordance
with the Australian accounting standards. See section 6.1
(Table 9) for the Statutory Remuneration disclosure that
has been prepared in accordance with the Australian
accounting standards.
2020 CEO Realised Remuneration – USD
1,823,354
2,477,746
23,923,845
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
● 2020 Total Fixed Reward
● Total STI Received
● Total LTI Received
Mr Perreault’s total ‘realised’ remuneration for 2020 was
US$28,224,945 and this is a 21% increase from the prior year.
Driving this increase was the vesting of LTI awards made
under our legacy plans – the 2016 Option and Performance
Right and 2017 Executive Deferred Incentive Plan awards
(granted 1 October 2015 and 1 October 2016 respectively with
further details in section 5.3). As you will have experienced as
shareholders, there has been a significant increase in the CSL
share price over this period (Options had an exercise price of
A$89.52 (set at grant23) and the share price at vesting was
A$226.61) leading to increased reward outcomes for the CEO.
The graph following depicts the increase in value of each of
the vested awards over the period of grant to vest using
the face value of the vested award at each point in time
(CSL closing share price). For Options, the value shown
is the difference between the exercise price and the
closing price on date of vest.
p
e
S
8
1
0
2
t
c
O
7
1
0
2
t
c
O
6
1
0
2
t
c
O
5
1
0
2
t
c
O
5
1
0
2
Performance
Share Units (PSUs)
Performance
Share Units (PSUs)
15%
US$1,430,785/US$1,516,136
US$1,172,032/US$2,107,400
Notional Shares
16%
US$615,735/US$1,344,776
Performance
Rights
Performance
Options
US$2,112,458/US$5,322,482
100%
US$-/US$13,633,051
30
0
● Face Value at Grant (USD)
● Face Value at Vest (USD)
60
90
120
150
Given the long term nature of CSL’s legacy remuneration plans,
we will also see their impact on the ‘realised’ remuneration
of our Executive KMP in our 2021 Remuneration Report when
we report on vesting outcomes for the 2017 LTI awards
(granted 1 October 2016).
7.1.3 2021 CEO Remuneration Targets
In 2021 the Board has determined that there will be no
increase to any component of total reward for Mr Perreault.
Mr Perreault’s fixed reward will remain at US$1,751,000, his STI
target at 120% of fixed reward and the LTI target at 400% of
fixed reward. While the Board recognises Mr Perreault’s total
reward is below the global pharmaceutical/biotechnology
peer group, given the current global economic environment
and investor and community sentiment, the Board believes
no increase is warranted at this time.
7.2 2020 Executive KMP Realised Remuneration
Table 12 shows the ‘realised’ remuneration of Executive KMP
for the year ended 30 June 2020 in US Dollars. This is a
voluntary disclosure that the Board believes is simple and
affords a transparent view of what the Executive KMP actual
take-home pay was in 2020.
The main difference between ‘realised’ remuneration
disclosures, and the statutory disclosures in section 6,
is that the ‘realised’ remuneration table includes the value
of performance based awards that vested or were paid in the
period (calculated at the date of vesting), while the statutory
tables include the accounting expense over the period the
performance hurdles are met.
Some of the ‘realised’ remuneration in the table was earned
over the previous three to four years, but was not paid until
2020. This includes cash settled LTI earned between 2017 and
2020 and equity settled LTI earned over four years from 2016
to 2020. The significant increase in the CSL share price over
the period of grant to vest has provided Executive KMP with
a significant increase in value of the LTI component of reward.
This has been demonstrated in the table below. The benefit
of the increased share price has been shared by shareholders
and Executive KMP alike.
23 At the date of grant, the Options were out of the money as the exercise price was higher than the CSL closing share price on the date of grant.
86
CSL Limited Annual Report 2020
Table 12: Executive KMP ‘realised’ remuneration (received or available as cash) in 2020
2020 Total
Fixed Reward
US$24
2020 Short
Term Incentive
US$25
Cash Settled
LTI in 2020
US$26
LTI Vested
in 2020 US$27
Total
LTI Received
US$
Total Reward
Received US$
Total LTI
Reward
Received
(valued at
grant date)
US$28
LTI Growth
in Value
(due to share
price growth)
US$29
2020
2020
2017 – 2020
2016 – 2020
2016 – 2020
2016 – 2020
2016 – 2020
2016 – 2020
Executive
Period
Earned
P Perreault
1,823,354
2,477,746
1,344,776
22,579,069
23,923,845
28,224,945
5,331,009
18,592,836
A Cuthbertson
D Lamont
P McKenzie
707,998
870,702
1,500,113
699,030
901,581
1,164,765
286,741
1,731,492
2,018,233
3,425,261
1,071,048
271,501
2,000,977
2,272,478
4,044,761
–
1,648,148
1,684,148
4,349,026
1,221,306
1,310,951
947,185
1,051,172
373,197
7.3 2020 and 2021 Executive KMP Remuneration
Adjustments
CSL competes for talent in a global market and we need
to attract and retain high calibre executives in a highly
competitive global pharmaceutical and biotechnology
industry. The unique skill set with specialised pharmaceutical
and biotechnology expertise and experience that we require
is critical to enable us to deliver on our strategy, promise
to patients and deliver returns to our shareholders.
Table 13 below sets out the changes to Executive KMP reward
for 2020 (effective 1 September 2019) and 2021 (effective
1 September 2020). Where applicable the higher increase
is applied to the LTI portion of the reward mix, driving focus
on long term performance delivery and is in line with our pay
for performance philosophy – rewards will only be earned
where performance hurdles are met.
As noted earlier in this report, a global pharmaceutical/
biotechnology peer group is used for external benchmarking.
We align reward with the median of this peer group. The
below rewards position our Executive KMP more competitively
in the market, at or below the median for total reward. The
increases also take into consideration the skills and experience
of Executive KMP. In determining reward, the Board considers
internal pay relativity across the full Global Leadership Group.
Table 13: Adjustments to Executive KMP reward 2020 and 2021
For Dr McKenzie, in 2021 there will be an expansion of role to
include responsibility for the Seqirus business. The adjustment
to salary and LTI reflects this increased responsibility
in addition to market position and internal relativity.
In 2021, Professor Cuthbertson will begin the transition
to retirement from his executive duties. He will remain
an Executive Director and continue to lead special projects
across the CSL Group. Professor Cuthbertson’s prior Chief
Scientific Officer role responsibilities will be undertaken by
Dr William Mezzanotte and Dr Andrew Nash, who reports to
Dr Mezzanotte. Accordingly, the remuneration structure for
Professor Cuthbertson will be adjusted and will include salary
only – remunerating for his work on the Board and leading
the project and consulting work. Professor Cuthbertson will
not be eligible for any STI or LTI awards.
Mr Lamont will not receive any increase to fixed reward and
will not receive a LTI grant in September 2020 due to his
resignation which takes effect on 30 October 2020. On
cessation of employment Mr Lamont will not be granted
‘good leaver’ status and will therefore not retain any unvested
LTI awards.
Executive
P Perreault
A Cuthbertson
D Lamont
P McKenzie
Year
2021
2020
2021
2020
2021
2020
2021
2020
% change in FR
% change in
STI $ opportunity
at target
% change in
LTI $ opportunity
at target
Total Reward
Adjustment %
Total Reward
Adjustment US$
–
–
-35%
–
–
–
3%
–
–
–
-100%
–
–
–
3%
–
–
14%
-100%
–
–
8%
14%
–
–
9%
-83%
–
–
3%
10%
–
–
875,500
(2,168,730)
–
–
91,396
476,375
–
24 Includes base salary, retirement/superannuation benefits, and other benefits such as insurances, relocation and allowances paid in 2020.
25 Relates to STI earned in 2020 and will be paid in September 2020 (refer to section 5.2).
26 Value of awards vested at 30 September 2019 under the Executive Deferred Incentive Plan (EDIP) and paid in October 2019 (refer to section 5.3).
27 Value of LTI vested at 15 August 2019 (Options and Performance Rights) and 1 September 2019 and 1 March 2020 (Performance Share Units and Restricted Share
Units) that became unrestricted (refer to section 5.3). The value at vest has been determined by multiplying the number of vested units by the closing share
price on the date of vest. For Options, it is the difference between the closing share price and the exercise price. This has been converted to USD at an average
exchange rate for the 2020 financial year of 1.48735.
28 The value at grant has been determined by multiplying the number of vested units by the closing share price on the date of grant. For Options, it is the difference
between the closing share price and the exercise price. This has been converted to USD at an average exchange rate for the 2020 financial year of 1.48735.
29 This figure shows the increase in market value of the LTI awards due to share price growth between the grant date and the vesting date. The increase in value
of the awards is calculated by multiplying the number of vested and/or exercised awards by the difference between the share price of CSL shares on the grant
date and the vesting date or exercise date (as applicable). This has been converted to USD at an average exchange rate for the 2020 financial year of 1.48735.
87
CSL Limited Annual Report 2020
Directors’ Report
8. Non-Executive Director Remuneration
8.1 NED fee policy
Feature
Description
Strategic objective
Maximum aggregate fees
approved by shareholders
Remuneration reviews
Independence
NED Equity
CSL’s NED fee arrangements are designed to appropriately compensate suitably qualified directors,
with appropriate experience and expertise, for their Board responsibilities and contribution to Board
committees. In the 2020 year, the Board had four Committees for which fees were payable
The current maximum aggregate fee pool of A$4,000,000 was approved by shareholders on
12 October 2016 and has applied from this date. Actual NED fees paid during the 2020 year (including
superannuation contributions, NED Rights Plan sacrifice amounts and Committee fees) is within this
agreed limit, and totalled A$2,594,787. NEDs may be reimbursed for reasonable expenses incurred by
them in the course of discharging their duties and this reimbursement is not included within this limit
The Board reviews NED fees on an annual basis in line with general industry practice. Fees are set with
reference to the responsibilities and time commitments expected of NEDs along with consideration
to the level of fees paid to NEDs of comparable Australian companies
To ensure independence and impartiality is maintained, NEDs do not receive any performance
related remuneration
The NEDs participate in the NED Rights Plan – introduced to enable NEDs to build up meaningful
levels of equity more quickly. Under the plan, NEDs sacrifice at least 20% of their pre-tax base fee
in return for a grant of Rights, each Right entitling a NED to acquire one CSL share at no cost. The
number of Rights granted is equivalent to the fee sacrificed divided by the prevailing market price
of CSL shares at that time. Rights are allocated in two tranches and vesting occurs following the
disclosure of half year and full year financial results following the grant of Rights. For Australian based
NEDs, shares are allocated at vesting of the Rights and for overseas based NEDs, shares are allocated
at the end of the nominated restriction period. At the end of a nominated restriction period, of three
to fifteen years, the NED is able to access their shares. No price is payable on vesting and exercise of
rights. Shares are automatically allocated without the need for exercise by a NED. As this is a salary
sacrifice plan, no performance conditions apply to the Rights. The shares are purchased on-market.
Additional shares may be purchased by NEDs on-market at prevailing share prices in accordance with
CSL’s Securities Dealing Policy
Shareholding Requirement NEDs must hold CSL shares equal to 100% of their Board base fee within five years from the date
of appointment to their role
Post-Employment Benefits
Superannuation contributions are made in accordance with legislation and are included in the
reported base fee and are not additional to the base fee. NEDs are not entitled to any compensation
on cessation of appointment
Contracts
NEDs are appointed under a letter of appointment and are subject to ordinary election and rotation
requirements as stipulated in the ASX Listing Rules and CSL Limited’s constitution
8.2 NED fees in 2020
The following table provides details of current Board and Committee fees from 1 July 2019. As a truly global business, our NED
fee structure allows us to attract and recruit globally experienced directors.
In 2020, after reviewing both ASX12 and ASX25 comparative Board fees, the Board has determined to increase Board and
Committee fees by 2.8% from 1 July 2020. These increases ensure market competitive fees and allow us to attract and retain
high quality NEDs. Fees remain within the existing aggregate fee pool approved by shareholders in 2016. The Board considers
that sufficient headroom remains within the existing fee pool. Committee fees are not payable to the Chairman or to members
of the Securities & Market Disclosure Committee.
Table 14: NED Fees 2020 and 2021
Board Chairman Fee
Board NED Base Fee
Committee Fees
Audit & Risk Management
Corporate Governance
& Nomination
Human Resources
& Remuneration
2020 Fees
A$798,000
A$232,050
2021 Fees
A$820,350
A$238,550
Committee Chair
Committee Member
Committee Chair
Committee Member
A$65,800
A$28,500
A$32,400
A$14,300
A$67,650
A$29,300
A$33,300
A$14,700
A$55,000
A$28,500
A$56,550
A$29,300
Innovation & Development
A$55,000
A$28,500
A$56,550
A$29,300
A travel allowance of A$15,000 per annum is in place for those NEDs who reside outside of Australia and travel to and from
Australia to attend Board and Committee meetings. Where no travel is undertaken in a quarter, no allowance is paid.
88
CSL Limited Annual Report 2020 8.3 Non-Executive Share Purchases
During 2020, CSL completed two on-market purchases of shares for the purposes of the NED Rights Plan. A total of 1,920 shares
were purchased during the reporting period and the average price paid per share was A$278.31.
8.4 Non-Executive Director Statutory Remuneration Tables
Remuneration is reported in US Dollars, unless otherwise stated. This is consistent with the presentation currency used by CSL.
Valuation of equity awards was converted from Australian Dollars (AUD) to USD at the average exchange rate of 1.48735 for the
2020 financial year.
8.4.1 Non-Executive Director Remuneration 2019 and 2020
All amounts are presented in US Dollars.
Table 15: Statutory Remuneration Disclosure – Non-Executive Directors
Non-Executive Director
B McNamee – Chairman
B Brook
M Clark
C Hewson32
A Hussain
M McDonald
C O’Reilly
Former Non-Executive Director
J Shine
D Anstice
T Yamada
TOTAL
Year
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
201933
2020
201934
202035
2019
2020
2019
Short Term
Benefits
Post Employment
Share Based
Payments
Cash Salary and
Fees US$30
Superannuation
US$
Retirement
Benefits US$
Rights US$31
Total US$
415,099
308,865
133,343
155,980
176,446
184,840
15,816
–
170,277
163,264
136,035
151,040
162,258
162,584
–
125,769
–
13,003
8,530
20,102
1,217,804
1,285,447
14,121
14,823
14,121
14,740
14,121
14,740
7,060
–
423
7,599
14,121
14,349
7,060
14,740
–
5,310
–
1,235
–
–
71,027
87,536
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
106,768
120,659
60,325
45,200
30,692
30,126
61,332
–
30,692
30,126
45,574
37,586
46,082
45,200
535,988
444,347
207,789
215,920
221,259
229,706
84,208
–
201,392
200,989
195,730
202,975
215,400
222,524
–
–
32,285
163,364
–
46,806
87,774
150,786
–
61,044
96,304
170,888
469,239
1,758,070
538,774
1,911,757
30 The AUD compensation paid during the years ended 30 June 2019 and 30 June 2020 have been converted to USD. For the 2020 compensation, this has been
converted to USD at an average exchange rate for the 2020 financial year: AUD – 1.48735. Both the amount of remuneration and any movement in comparison
to prior years may be influenced by changes in the AUD/USD exchange rates.
31 As disclosed in the section titled ‘Non-Executive Director Remuneration’, NEDs participate in the NED Rights Plan under which NEDs are required to take at
least 20% of their after-tax base fees (excluding superannuation guarantee contributions) in the form of Rights. Rights are granted upfront and are expensed
over the period of grant to vest. The Fair Value per Right at the grant date of 22 August 2019 was A$229.22 for Tranche 1 and A$227.92 for Tranche 2. For the grant
made to C Hewson on 20 February 2020, the Fair Value for the tranche granted was A$331.29.
32 In 2020 C Hewson was a NED for the period 9 December 2019 to 30 June 2020.
33 In 2019 J Shine was a NED for the period 1 July 2018 to 17 October 2018.
34 In 2019 D Anstice was a NED for the period 1 July 2018 to 17 October 2018.
35 In 2020 T Yamada was a NED for the period 1 July 2019 to 16 October 2019.
89
CSL Limited Annual Report 2020 Directors’ Report
8.4.2 Non-Executive Director Shareholdings
Details of shares held directly, indirectly or beneficially by each NED, including their related parties, is provided in Table 16.
Any amounts are presented in US Dollars. Details of Rights held directly, indirectly or beneficially by each NED, including their
related parties, is provided in Table 17. Following the vesting of awards, any trading undertaken by NEDs was subject to the
Group Securities Dealing Policy (outlined in section 9.6).
Table 16: Non-Executive Director Shareholdings
KMP
Non-Executive Director
B McNamee
B Brook
M Clark
C Hewson
A Hussain
M McDonald
C O’Reilly
Former Non-Executive Director
T Yamada37
Number of
shares
acquired on
exercise of
Rights during
year
Value of
shares
acquired on
exercise of
Rights during
year US$36
Balance at
1 July 2019
178,049
4,964
2,663
–
41
2,701
3,384
283
766
358
206
–
–
282
308
–
142,173
69,168
38,785
–
–
53,977
57,989
–
Number of
(Shares Sold)/
Purchased
Balance at
30 June 2020
(17,758)
161,057
–
355
174
–
–
–
–
5,322
3,224
174
41
2,983
3,692
283
There have been no movements in shareholdings of NEDs between 30 June 2020 and the date of this Report.
Table 17: Non-Executive Director Right Holdings
Balance
at
1 July
2019
Number
Granted38
Face
Value of
Rights
Granted
Fair
Value of
Rights
Granted
US$39
US$40
Value of
Rights
Exercised
US$41
Balance
at
30 June
2020
Number
Vested
During
Year
Number
Lapsed
Number
Exercised
Balance at
30 June 2020
Vested42 Unvested
KMP
Instrument
Non-Executive Director
B McNamee
B Brook
M Clark
C Hewson
A Hussain
M McDonald
C O’Reilly
Right
Right
Right
Right
Right
Right
Right
420
157
105
–
210
131
157
692
402
201
388
201
302
302
111,131
106,344
64,559
61,778
32,279
30,889
88,350
86,423
32,279
30,889
48,499
46,410
48,499
46,410
766
358
206
–
–
282
308
142,173
69,168
38,785
–
–
53,977
57,989
Former Non-Executive Director
T Yamada43
Right
1,051
1,006
161,558
154,598
–
–
–
–
–
–
–
–
–
–
346
201
100
388
411
151
151
766
358
206
–
206
282
308
–
–
–
–
311
–
–
346
201
100
388
100
151
151
2,057
525
1,051
1,006
36 The value at exercise date has been determined by the share price at the close of business on the exercise date multiplied by the number of Rights exercised
during 2020. The AUD value was converted to USD at an average rate for the year of 1.48735.
37 The closing balance for T Yamada is 16 October 2019 being the date T Yamada ceased to be a Non-Executive Director and KMP.
38 The number of Rights granted is determined by dividing the NEDs elected percentage of pre-tax base fee (minimum 20%) by the five day volume weighted
average price at which CSL shares were traded on the ASX ending on (and including) the last ASX trading day prior to the date of grant of the Rights being
21 August 2019 of A$230.46. The Rights were granted on 22 August 2019 in two tranches. Tranche one had a vesting date of 17 February 2020 and tranche two
vests 24 August 2020. For C Hewson, the five day volume weighted average price at which CSL shares were traded on the ASX ending on (and including) the
last ASX trading day prior to the date of grant of the Rights, 19 February 2020, was A$332.64. The Rights were granted on 20 February 2020 in one tranche with
a vesting date of 24 August 2020.
39 The value at grant date has been determined by the share price at the close of business on the grant date of 22 August 2019 being A$238.86 and for C Hewson
the share price at the close of business on 20 February of A$338.68 multiplied by the number of Rights granted during 2020. The AUD value was converted
to USD at an average exchange rate for the year of 1.48735.
40 The value of Rights is calculated based on an assessment of the fair market value of the instruments in accordance with the accounting standards (refer to
Note 18 in the Financial Statements). The fair value of each Right granted on 22 August 2019 was Tranche 1: A$229.22 and Tranche 2: A$227.92 and for C Hewson
A$331.29 multiplied by the number of Rights granted during 2020.
41 The value at exercise date has been determined by the share price at the close of business on the exercise date multiplied by the number of Rights exercised
during 2020. The AUD value was converted to USD at an average exchange rate for the year of 1.48735. Australian based NEDs have Rights exercised at the
vesting date and a holding lock is placed on the shares for a period of three to fifteen years as elected by the NED. The UK and US based NED hold vested but
unexercisable Rights until the end of the nominated restriction period.
42 Vested Rights are exercisable to the NED at the end of the nominated restriction period. All vested Rights are currently unexercisable until the end of the
nominated restriction period.
43 The closing balance for T Yamada is 16 October 2019 being the date T Yamada ceased to be a Non-Executive Director and KMP.
90
CSL Limited Annual Report 2020 9. Remuneration Governance
The following diagram illustrates CSL’s remuneration governance framework.
CSL Board:
The Board is responsible for the oversight and strategic direction of CSL. It monitors operational and financial performance,
human resources policies and practices, and approves the company's budgets and business plans. It is also responsible
for overseeing CSL's risk management, financial reporting and compliance framework.
The Board reviews, makes comment on, and as appropriate, approves HRRC remuneration recommendations. The Board
approves the remuneration and remuneration outcomes for the CEO and Non-Executive Directors and approves the
policies and processes that govern both.
HRRC:
The HRRC has oversight of all aspects of remuneration
at CSL. The Board has delegated responsibility to the
HRRC for reviewing and making recommendations
to the Board with regard to:
• Executive remuneration design;
• Approval of awards to the CEO;
• Senior executive succession planning;
• The design and implementation of any incentive
plan (including equity based arrangements);
• The remuneration and other benefits applicable
to NEDs; and
• The CSL diversity policy and measurable objectives
for achieving gender diversity.
• The HRRC is able to approve the remuneration
of Executive KMP (excluding the CEO).
Members
Dr Megan Clark AC (Chair), Mr Abbas Hussain, Ms Carolyn
Hewson AO, Ms Marie McDonald and Ms Christine O’Reilly.
Charter
Full responsibilities of the HRRC are outlined in its
Charter, which is reviewed annually. The Charter is
available on CSL’s website at http://www.csl.com.au/
about/governance.htm
Audit and Risk Management Committee (ARMC):
The ARMC assists the Board in the governance of CSL’s
financial reporting and disclosures, risk identification
and management, and compliance.
The ARMC advises the HRRC on any material risk
management and financial matters that may impact
remuneration outcomes.
External Remuneration Advisers:
The Board and the HRRC may seek and consider
advice directly from external advisers, who are
independent of management.
In 2020 the HRRC engaged the services of Aon
Consulting in the US, and EY in Australia. Under
engagement and communication protocols adopted
by CSL, the market data and other advice were provided
directly to the HRRC by both Aon Consulting and EY.
Neither Aon Consulting nor EY provided Remuneration
Recommendations during the 2020 financial year.
Joint HRRC and ARMC meetings:
The Committees meet at least annually to review and consider relevant risk management matters
in the determination of the Executive KMP remuneration outcomes.
91
CSL Limited Annual Report 2020 Directors’ Report
9.1 HRRC Activities
During 2020, the HRRC met formally on six occasions
involving the following activities:
• Review of the executive remuneration framework;
• Review and consideration of investor feedback received
across the year;
• Appointment of external remuneration advisers;
• Review of senior executive appointments and remuneration
arrangements;
• Review of STI and LTI arrangements, and reward outcomes
for senior executives;
• Review of the CSL diversity objectives and report, and
gender pay review and progress against diversity objectives;
• Review of talent and succession planning for senior executives;
• Review of long term remuneration strategy and global
trends in remuneration;
• Review of NED remuneration; and
• Review of the HRRC Charter and HRRC performance.
9.2 Remuneration Determination
The Board has discretion across each element of Executive
KMP reward and considers business performance, individual
performance and shareholder experience before setting and
approving reward outcomes.
Remuneration recommendations – Reviewed on an annual
basis, the CEO makes a recommendation to the HRRC for
Executive KMP, with the HRRC recommending to the Board
for the CEO, any change to fixed reward and STI and LTI
targets for the year ahead. Recommendations take into
consideration market conditions, position in market within
the global pharmaceutical/biotechnology peer group,
individual performance, role responsibilities and internal
relativity. Remuneration is reviewed in the context of Total
Reward. There is a higher proportion of Total Reward in the
form of performance related variable pay.
STI outcomes – A formal review of Executive KMP progress
against objectives is conducted twice annually by the CEO
and annually by the Board for the CEO. Regular performance
conversations are held during the year. Following the full year
performance review, the CEO makes recommendations in
respect of Executive KMP to the HRRC. The HRRC and the
Board assess individual performance against objectives at the
end of the financial year, and approve the actual STI payments
to be made. The Board determines the outcomes for the CEO,
based on recommendations from the HRRC, who are informed
by the Chair of the Board and HRRC. The Board believes this
is the most appropriate method of measurement.
LTI outcomes – The HRRC assess performance against the
hurdle measures set at grant by the Board. Following this,
the HRRC undertakes a review to ensure the remuneration
outcomes are aligned with overall business performance and
the shareholder experience and then submits outcomes to
the Board for approval. The Board believes this is the most
appropriate method of measurement.
Board discretion – Prior to approving all remuneration
outcomes, the Board assesses the quality of the outcomes
and reviews the Malus and Clawback Policy. It also considers
the ‘Leading and Managing’ modifier and ensures that the
interaction of remuneration outcomes is in alignment with
risk management outcomes for the year and that any
material risk issues and behaviours and/or compliance
breaches are addressed. This review is done in conjunction
with the ARMC. The Board has discretion to determine final
vesting outcomes to ensure outcomes are in line with CSL
performance, market reported financial outcomes and
shareholder outcomes. The discretion can be used to both
increase and reduce vesting outcomes, which includes
reducing to zero. In 2020, after reviewing the outcome for
the NPAT and CFO STI metrics, and considering the impact
of COVID-19, the Board exercised its discretion and reduced
outcomes for certain unbudgeted actual outcomes.
New Hires and Internal Promotions – The Remuneration
Framework as set out in section 3.2 applies to the remuneration
arrangements for any newly hired or promoted Executive
KMP, ensuring a market competitive Total Reward offering.
In the case of external hires, the HRRC and Board may
determine that it is appropriate for a commencement
benefit to be offered. Commencement benefits in the
form of cash and/or equity can be made to compensate
for remuneration being forfeited from a former employer.
For any foregone equity awards, CSL equity will be used
as compensation. Awards may be discounted to take into
consideration any performance conditions on the award
at the former employer and the HRRC will determine the
appropriate service and performance conditions on the CSL
award within the CSL framework. For internal promotions, the
HRRC may determine that an award of equity should be made
to ensure an appropriate Total Reward package. This is done
as hurdled equity under the LTI framework described in 3.2.5.
92
CSL Limited Annual Report 2020 9.3 Contractual Provisions for Executive KMP
Executive KMP are employed on individual service contracts that outline the terms of their employment, which include:
Duration of Contract
Notice Period Employee
Notice Period CSL*
Termination Payment
No fixed term
Six months
Six months
12 months
*CSL may also terminate at any time without notice for serious misconduct and/or breach of contract.
9.4 Other Transactions
No loans or related party transactions were made to Executive
KMP or their associates during 2020.
No loans were made to NEDs during 2020. NEDs and their
related entities conducted the following transactions with
CSL, as part of a normal supplier relationship on ‘arm’s
length’ terms:
• CSL has entered into a number of contracts, including
collaborative research agreements, with Monash University,
of which Dr Megan Clark AC is a member of Council;
• Financial services provided by Bank of America Merrill Lynch
of which Dr Megan Clark AC is a member of the Australian
Advisory Board and is a member of the Global Advisory
Council of the Bank of America;
• CSL has entered into a research collaboration with the
Centre of Eye Research Australia, of which Professor Andrew
Cuthbertson AO is a director;
• CSL has entered into a number of contracts, including
collaborative research agreements, with the Walter and
Eliza Hall Institute for Medical Research (WEHI), of which
Ms Marie McDonald is a director;
• Corporate finance advisory services provided by Flagstaff
Partners of which Ms Marie McDonald is a senior adviser;
• CSL has entered into a research collaboration with the Baker
Heart and Diabetes Institute, of which Ms Christine O’Reilly
is a Director; and
• CSL has a corporate account with Medibank Private Limited,
of which Ms Christine O’Reilly is a director.
9.5 Malus and Clawback Policy
CSL operates a Malus and Clawback Policy. ‘Malus’ means
adjusting or cancelling all or part of an individual’s variable
remuneration as a consequence of a materially adverse
development occurring prior to payment (in the case of
cash incentives) and/or prior to vesting (in the case of equity
incentives). ‘Clawback’ means seeking recovery of a benefit
paid to take into account a materially adverse development
that only comes to light after payment, including shares
delivered post vesting.
The Board, in its discretion, may apply the policy to any
incentive provided to a senior executive, including a former
senior executive, in the event of a material misstatement or
omission in the financial statements of a Group company or
the CSL Group, or other material error, or in the event of fraud,
dishonesty or other serious and wilful misconduct involving
a senior executive, leading to a senior executive receiving a
benefit greater than the amount which would have been due
based on the corrected financial statements or had the error
or misconduct not occurred.
In 2020, following a joint review of reward outcomes by both
the HRRC and the ARMC, there was no application of the policy.
9.6 Securities Dealing
The CSL Securities Dealing Policy prohibits employees from
using price protection arrangements (e.g. hedging) in respect
of CSL securities, or allowing them to be used. The Policy also
provides that no CSL securities can be used in connection
with a margin loan. Upon vesting of an award, an employee
may only deal in their CSL securities in accordance with the
Policy. A breach of the Policy may result in disciplinary action.
A copy of the Policy is available on the CSL Limited website
at http://www.csl.com.au/about/governance.htm.
9.7 Minimum Shareholding Guideline
To be met within a target of the first five years of appointment,
or within five years for current incumbents, and to be held
whilst in the role at CSL, the following levels of vested equity
must be held:
• CEO: Three times base salary;
• Executive KMP: One times base salary; and
• NEDs: One times base fee.
As at 30 June 2020, all KMP hold, or are on track to hold,
the minimum shareholding requirement within the relevant
time period.
93
CSL Limited Annual Report 2020 Directors’ Report
10. Legacy Equity Programs
The following tables provide information on the key characteristics of legacy programs that were on foot during the 2020
reporting period. The 2018 (granted October 2017) and 2019 (granted September 2018) PSU LTI awards have the same key
characteristics as the 2020 award disclosed in section 3.2.5.
10.1 Key Characteristics of Prior Financial Year Performance Right and Option Grants
Feature
Grant Date
Instrument
Tranches
2016-2017
1 October 2015 (reported 2016/expiry 30 Sep 2020), 1 October 2016 (reported 2017/expiry 30 Sep 2021)
Options and Performance Rights
One tranche of Options and three tranches of Performance Rights
Performance Period
Four years
Performance Measure
Options – individual performance measure
Performance Rights T1 – rTSR against selected global Pharmaceutical and Biotechnology companies,
and T2 and T3 – EPSg
Vesting Schedule
Tranche 1 – rTSR
< 50th %ile – 0% vesting
50th %ile – 50% vesting
Between 50th and 75th %ile – Straight line vesting from 50% to 100% vesting
≥ 75th %ile – 100% vesting
Tranche 2 – EPS target performance
< 8% – 0% vesting
8% to 13% – Straight line vesting from 35% to 100% vesting
13% – 100% vesting
Tranche 3 – EPS maximum performance
13% – 0% vesting
13% to 15% – Straight line vesting from 0% to 100% vesting
15% – 100% vesting
Options only: 2016 – A$89.52 and 2017 – A$107.25
No retest
Exercise Price
Retesting
10.2 Key Characteristics of Prior Financial Year Executive Deferred Incentive Plan Grants
Feature
Grant Date
Instrument
Tranches
2017
1 October 2016 (reported 2017)
Notional Shares
One
Performance Period
Three years
Performance Measure
Individual performance measure
Vesting Schedule
100% if performance measure met
Exercise Price
Settlement
N/A
Value of the award at vest is based on the five day weighted average share price up to the award
maturity date multiplied by the number of Notional Shares held
Retesting
No retest
94
CSL Limited Annual Report 2020 • There is no retesting of awards;
• On cessation of employment a ‘good leaver’ (such as
retirement) may retain a pro-rated number of RSUs based
on time elapsed since grant date, subject to original terms
and conditions. If a participant is not a ‘good leaver’,
all unvested awards will be forfeited;
• In the event of a change of control, the Board, in its absolute
discretion, may determine that some or all of the awards
vest having regard to the performance of the participant
during the vesting period to the date of the change of
control event. Vesting may occur at the date of the change
of control event or an earlier vesting date as determined by
the Board; and
• No dividends or dividend equivalents are paid on unvested
awards. Participants are only eligible for dividends once
shares have been allocated following vesting of any RSUs.
RSUs do not carry any voting rights prior to vesting and
allocation of shares.
Our Senior Vice President and Vice President employees
participate in both the Executive Performance and Alignment
and Retain and Grow LTI Plans with a higher portion of
awards aligned to the executive plan.
The RGP is also used for commencement benefits, retention
and recognition awards. The difference to the annual
program is the vesting schedule, which is reviewed and
determined on a case by case basis.
11. Additional Employee Equity Programs
In addition to the Executive Performance and Alignment Plan
LTI program described earlier in this Report, CSL operates two
additional employee equity programs – the Global Employee
Share Plan and the Retain and Grow Plan. An overview of
those programs is provided below.
11.1 Global Employee Share Plan
CSL’s Global Employee Share Plan (GESP) provides all
employees the opportunity to share in the ownership
of our company and share in our future.
Operating across two six month contribution periods, an
employee can elect to make post tax salary contributions
between A$365 and A$6,000 per six month period. The
employee then receives shares at a minimum 15% discount
to the applicable market rate over the five day period up
to an including the first and last ASX trading days of the six
month period, whichever is the lower. Shares are then held
in restriction for a period of one or three years as determined
upfront by the employee. The shares may be issued or
purchased on market.
To participate in GESP an employee must have at least
six months service at the start of the contribution period.
Participation is open to regular permanent full or part
time and fixed term contract employees and excludes
Executive Directors.
11.2 Retain and Grow Plan
The CSL Group Retain and Grow (RGP) LTI program is
designed to attract, motivate and retain key talent across
the organisation. RGP provides eligible employees with
longer-term share ownership in CSL, enabling them
to share in the company’s success and any capital growth.
The RGP recognises those individuals in management roles
(Manager to Senior Vice President) across the CSL Group.
Awards under the RGP are not guaranteed and the CSL
Board will review participation on an annual basis.
Key plan elements are as follows
• A conditional ‘right’ to a CSL share (i.e. full value instrument)
or at the Board’s discretion, a cash equivalent payment.
No price is payable by the participant on grant or vesting
of rights. Shares are automatically allocated (or cash
automatically paid) without the need for exercise
by a participant;
• The security is a Restricted Share Unit (RSU) – settled
as an Ordinary Fully Paid Share;
• LTI opportunity set as % of local salary (converted to
Australian Dollars (AUD) at grant);
• Number of RSUs determined using face value (5 day
weighted average share price);
• Individual performance hurdle – must not fail to meet
performance expectations;
• 25% of RSUs will vest on the first, second, third and fourth
anniversaries of the Issue Date;
95
CSL Limited Annual Report 2020 Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2020
Continuing operations
Sales and service revenue
Influenza Pandemic Facility Reservation fees
Royalties and License revenue
Other Income
Total Operating Revenue
Cost of sales
Gross profit
Research and development expenses
Selling and marketing expenses
General and administration expenses
Operating profit
Finance costs
Finance income
Profit before income tax expense
Income tax expense
Net profit for the period
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations,
net of hedges on foreign investments
Items that will not be reclassified subsequently to profit or loss
Actuarial (losses)/gains on defined benefit plans, net of tax
Total of other comprehensive income/(loss)
Total comprehensive income for the period
Earnings per share (based on net profit for the period)
Basic earnings per share
Diluted earnings per share
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Consolidated Entity
2020
US$m
2019
US$m
Notes
8,796.6
8,205.4
145.4
158.5
50.3
9,150.8
(3,924.4)
5,226.4
(921.8)
(896.2)
(691.8)
2,716.5
(150.8)
7.0
2,572.7
(470.2)
2,102.5
133.4
171.1
28.7
8,538.6
(3,761.2)
4,777.4
(831.8)
(866.8)
(574.8)
2,504.0
(176.7)
13.8
2,341.1
(422.4)
1,918.7
13.3
(34.8)
(13.6)
(0.3)
2,102.2
US$
4.633
4.615
(67.1)
(101.9)
1,816.8
US$
4.236
4.226
6
2
3
12
19
10
10
96
CSL Limited Annual Report 2020 Consolidated Balance Sheet
As at 30 June 2020
CURRENT ASSETS
Cash and cash equivalents
Receivables and contract assets
Inventories
Current tax assets
Other financial assets
Total Current Assets
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Right-of-use assets
Deferred tax assets
Other receivables
Other financial assets
Retirement benefit assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Interest-bearing liabilities and borrowings
Current tax liabilities
Provisions
Deferred government grants
Total Current Liabilities
NON-CURRENT LIABILITIES
Interest-bearing liabilities and borrowings
Retirement benefit liabilities
Deferred tax liabilities
Provisions
Deferred government grants
Other non-current liabilities
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings
TOTAL EQUITY
The consolidated balance sheet should be read in conjunction with the accompanying notes.
Consolidated Entity
2020
US$m
2019
US$m
Notes
14
15
4
8
7
8
3
15
18
15
11
16
9
11
18
3
16
9
15
12
12
19
1,194.4
1,703.9
3,509.5
35.1
3.3
657.8
1,821.7
3,038.8
21.4
0.4
6,446.2
5,540.1
5,366.0
2,140.2
939.4
543.0
14.3
14.2
1.4
9,018.5
15,464.7
4,484.3
1,878.3
–
378.7
21.6
9.9
1.5
6,774.3
12,314.4
1,525.4
1,407.7
202.3
253.7
156.9
3.2
420.6
162.2
194.9
2.8
2,141.5
2,188.2
5,790.5
4,242.2
347.5
352.0
41.7
40.1
223.8
6,795.6
8,937.1
6,527.6
307.0
168.7
35.9
34.6
86.5
4,874.9
7,063.1
5,251.3
(4,561.0)
(4,603.0)
336.3
10,752.3
6,527.6
242.0
9,612.3
5,251.3
97
CSL Limited Annual Report 2020 Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2020
Contributed Equity
US$m
Foreign currency
translation reserve
US$m
Share based
payment reserve
US$m
Retained earnings
US$m
Total
US$m
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Consolidated Entity
As at the beginning
of the year
Profit for the period
Other comprehensive
income
Total comprehensive
income for the full year
Transactions with
owners in their
capacity as owners
Opening balance sheet
adjustment adopting
AASB 16 and 15 (See
Accounting Policies
disclosure)
Share based payments
Dividends
Share issues
(4,603.0)
(4,634.5)
–
–
–
–
–
–
–
–
–
–
– Employee share scheme
42.0
Other
–
31.5
–
(5.7)
–
29.1
–
13.3
(34.8)
247.7
195.1
9,612.3
8,490.2
5,251.3
4,079.9
–
–
–
–
2,102.5
1,918.7
2,102.5
1,918.7
(13.6)
(67.1)
(0.3)
(101.9)
2,102.2
1,816.8
–
–
–
–
–
–
–
–
–
–
–
81.0
–
52.6
(65.0)
74.0
–
–
(65.0)
81.0
74.0
52.6
–
–
–
–
–
–
(883.1)
(806.8)
(883.1)
(806.8)
(0.8)
–
3.3
42.0
(0.8)
31.5
3.3
As at the end of the year
(4,561.0)
(4,603.0)
7.6
(5.7)
328.7
247.7
10,752.3
9,612.3
6,527.6
5,251.3
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
98
CSL Limited Annual Report 2020 Consolidated Statement of Cash Flows
For the Year Ended 30 June 2020
The format of the consolidated statement of cash flows was changed to the indirect method of presentation for the cash
flows from operating activities. The prior comparative period was changed to align to the new format, which is informative
in showing the impact of changes in the balance sheet on cash flows.
Cash Flows from Operating Activities
Profit before income tax expense
Adjustments for:
Depreciation and amortisation
Inventory provisions
Share-based payments expense
Bad debt provision
Finance costs
Loss (gain) on disposal of property, plant and equipment
Changes in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in inventories
Increase in trade and other payables
(Decrease)/increase in provisions and other
Income tax paid
Finance costs paid
Net cash inflow from operating activities
Cash flows from Investing Activities
Payments for property, plant and equipment
Payments for intangible assets
Payment for business acquisition (Net of cash acquired)
Receipts/(payments) from other investing activities
Net cash outflow from investing activities
Cash flows from Financing Activities
Proceeds from issue of shares
Dividends paid
Proceeds from borrowings
Repayment of borrowings
Principal payments of AASB 16 lease liabilities
Other financing activities
Net cash (outflow)/inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Exchange rate variations on foreign cash and cash equivalent balances
Cash and cash equivalents at the end of the period
Reconciliation of cash and cash equivalents
Cash and cash equivalents at the end of the period as shown in the statement
of cash flows is reconciled as follows:
Cash and cash equivalents
Bank overdrafts
Cash and cash equivalents at the end of the period
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Consolidated Entity
2020
US$m
2019
US$m
Notes
2,572.7
2,341.1
10
11
11
419.8
189.5
81.0
10.1
142.4
0.5
124.9
(686.0)
157.8
(27.0)
(355.0)
(142.4)
375.5
191.3
52.0
(3.5)
127.8
(0.8)
(367.1)
(558.3)
136.2
18.6
(527.7)
(140.7)
2,488.3
1,644.4
(1,206.8)
(160.8)
(17.8)
18.7
(1,117.6)
(167.2)
–
(2.5)
(1,366.7)
(1,287.3)
42.0
(883.1)
1,652.7
(1,399.2)
(54.7)
(0.4)
(642.7)
478.9
657.8
14.6
1,151.3
31.8
(806.8)
898.5
(610.2)
–
(4.8)
(491.5)
(134.4)
812.7
(20.5)
657.8
1,194.4
(43.1)
1,151.3
657.8
–
657.8
99
CSL Limited Annual Report 2020 Notes to the Financial Statements
For the Year Ended 30 June 2020
Contents
About this Report
Notes to the financial statements:
Our Current Performance
Note 1: Segment Information and Business Combinations
Note 1b: Business Combination
Vitaeris acquisition
Note 2: Revenue and Expenses
Note 3: Tax
Note 4: Inventories
Note 5: People Costs
Our Future
Note 6: Research & Development
Note 7: Intangible Assets
Note 8: Property, Plant and Equipment
Note 9: Deferred Government Grants
Returns, Risk & Capital Management
Note 10: Shareholder Returns
Note 11: Financial Risk Management
Note 12: Equity and Reserves
Note 13: Commitments and Contingencies
Efficiency of Operation
Note 14: Cash and Cash Equivalents
Note 15: Trade Receivables and Payables
Note 16: Provisions
Other Notes
Note 17: Related Party Transactions
Note 18: Detailed Information – People Costs
Note 19: Detailed Information – Shareholder Returns
Note 20: Auditor Remuneration
Note 21: Deed of Cross Guarantee
Note 22: Parent Entity Information
Note 23: Subsequent Events
Note 24: New and Revised Accounting Standards
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About this Report
Notes to the financial statements:
Corporate information
CSL Limited (“CSL”) is a for-profit company incorporated and
domiciled in Australia and limited by shares publicly traded on
the Australian Securities Exchange. This financial report covers
the financial statements for the consolidated entity consisting
of CSL and its subsidiaries (together referred to as the Group).
The financial report was authorised for issue in accordance
with a resolution of directors on 18 August 2020.
A description of the nature of the Group’s operations and its
principal activities is included in the directors’ report.
a. Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting
Standards Board, International Financial Reporting Standards
(IFRS) and the Corporations Act 2001. It presents information
on a historical cost basis, except for certain financial instruments,
which have been measured at fair value. Amounts have been
rounded off to the nearest hundred thousand dollars.
The report is presented in US Dollars, because this currency
is the pharmaceutical industry standard currency for reporting
purposes. It is the predominant currency of the Group’s
worldwide sales and operating expenses.
b. Principles of consolidation
The consolidated financial statements comprise the financial
statements of CSL and its subsidiaries as at 30 June 2020. CSL has
control of its subsidiaries when it is exposed to, and has the rights
to, variable returns from its involvement with those entities and
when it has the ability to affect those returns. A list of significant
controlled entities (subsidiaries) at year-end is contained in Note 17.
The financial results of the subsidiaries are prepared using
consistent accounting policies and for the same reporting
period as the parent company.
In preparing the consolidated financial statements, all
intercompany balances and transactions have been eliminated
in full. The Group has formed a trust to administer the Group’s
employee share scheme. This trust is consolidated as it is
controlled by the Group.
c. Foreign currency
While the presentation currency of the Group is US dollars,
entities in the Group may have other functional currencies,
reflecting the currency of the primary economic environment in
which the relevant entity operates. The parent entity, CSL Limited,
has a functional currency of US dollars.
If an entity in the Group has undertaken transactions in foreign
currency, these transactions are translated into that entity’s
functional currency using the exchange rates prevailing at the
dates of the transactions. Where the functional currency of a
subsidiary is not US dollars, the subsidiary’s assets and liabilities
are translated on consolidation to US dollars using the exchange
rates prevailing at the reporting date, and its profit and loss is
translated at average exchange rates. All resulting exchange
differences are recognised in other comprehensive income and
in the foreign currency translation reserve in equity.
100
CSL Limited Annual Report 2020 d. Other accounting policies
g. Significant changes in the current reporting period
Significant accounting policies that summarise the measurement
basis used and are relevant to an understanding of the
financial statements are provided throughout the notes to the
financial statements.
e. Key judgements and estimates
In the process of applying the Group’s accounting policies, a
number of judgements and estimates of future events are
required. Material judgements and estimates are found in the
following notes:
Note g: AASB 16 Leases
Note 2: Revenue and Expenses
Note 3:
Tax
Note 4:
Inventories
Note 5: People Costs
Note 7:
Intangible Assets
Note 15: Trade Receivables & Payables
Note 16: Provisions
Page 101
Page 106
Page 107
Page 109
Page 110
Page 114
Page 126
Page 128
f. The notes to the financial statements
The notes to these financial statements have been organised into
logical groupings to help users find and understand the
information they need. Where possible, related information has
been provided in the same place. More detailed information
(for example, valuation methodologies and certain reconciliations)
has been placed at the rear of the document and cross-referenced
where necessary. CSL has also reviewed the notes for materiality
and relevance and provided additional information where it is
helpful to an understanding of the Group’s performance.
The consolidated financial statements have been prepared using
the same accounting policies as used in the annual financial
statements for the year ended 30 June 2019, except for the
adoption of AASB 16 Leases and AASB Interpretation 23
Uncertainty over Income Tax Treatments.
AASB Interpretation 23 clarifies the application of recognition
and measurement requirements of AASB 112 Income Taxes where
there is uncertainty over income tax treatments. The adoption of
this interpretation did not result in any material change to the
financial statements of the group.
AASB 16 supersedes AASB 117 Leases and related interpretations.
The standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires
lessees to account for most leases under a single on-balance
sheet model.
The Group adopted AASB16 using the modified retrospective
method of adoption with the date of initial application of July 1,
2019. The Group elected to use the transition practical expedient
approach allowing the following:
• Standard to be applied only to contracts that were previously
identified as leases applying AASB 117 and AASB Interpretation
4 at the date of initial application;
• Recognition exemptions for lease contracts that, at initial
application date, have a remaining lease term of 12 months
or less;
• Recognition exemptions for lease contracts for which the
underlying asset is of low value;
• Apply a single discount rate to a portfolio of leases with
reasonable similar characteristics;
• Use of hindsight, such as in determining the lease term if the
contract contains options to extend or terminate the lease; and
• Exclude initial direct costs from the measurement of the
right-of-use asset at the date of initial application
The effect of adopting AASB 16 is as follows:
Impact on the balance sheet (increase/(decrease)) as at 1 July 2019
Assets
Right-of-use assets
Finance lease assets
Total assets
Liabilities
Interest-bearing liabilities
Finance lease liabilities
Asset retirement obligations
Trade and other payables
Deferred tax liabilities
Total liabilities
Equity
Retained earnings
US$m
926
(11)
915
1,004
(11)
25
(29)
(9)
980
(65)
The Group has lease contracts for various items of plant, land and
vehicles. Before the adoption of AASB 16, the Group classified
each of its leases (as lessee) at the inception date as either
a finance lease or an operating lease. A lease was classified as
a finance lease if it transferred substantially all of the risks and
rewards incidental to ownership of the leased asset to the Group;
otherwise it was classified as an operating lease. Finance leases
were capitalised at the commencement of the lease at the
inception date fair value of the leased property or, if lower, at the
present value of the minimum lease payments. Lease payments
were apportioned between interest (recognised as finance costs)
and reduction of the lease liability. In an operating lease, the
leased property was not capitalised and the lease payments
were recognised as rent expense in the statement of income
on a straight-line basis over the lease term. Any accrued rent
was recognised under Trade and other payables.
Upon adoption of AASB 16, the Group applied a single recognition
and measurement approach for all leases that it is the lessee,
except for short-term leases and leases of low-value assets. The
Group recognised lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying
assets. In accordance with the modified retrospective method
of adoption, the Group applied AASB 16 at the date of initial
application as though effective at the commencement date
of existing lease contracts. The comparative information in
the consolidated financial statements has not been restated.
101
CSL Limited Annual Report 2020 Notes to the Financial Statements
As at 1 July 2019:
• Right-of-use assets of $926m were recognised and presented separately in the balance sheet. The right-of-use-asset at the time
of adoption was the carrying amount as if the Standard had been applied since the commencement date, discounted using
the Group’s incremental borrowing rate at the date of initial application.
• Lease liabilities of $1,004m were recognised based on the present value of the remaining lease payments, discounted using
the incremental borrowing rate at the date of initial application and included under interest bearing liabilities.
• Trade and other payables of $29m related to previous operating leases were derecognised.
• Deferred tax liabilities decreased by $9m because of the deferred tax impact of the changes in assets and liabilities.
• Finance lease assets and liabilities of $11m were removed and included in right-of-use assets and liabilities.
• Asset retirement obligations of $25m were recorded.
• The net effect of these adjustments had been adjusted to Retained earnings ($65m).
The lease liabilities as at 1 July 2019 can reconciled to the operating lease commitments as of 30 June 2019 as follows:
Operating Lease Commitments Reconciliation
Operating lease commitments as at 30 June 2019
Weighted Average Incremental Borrowing Rate
Discounted Operating Lease Commitments as at 1 July 2019
Add:
Commitments relating to leases previously classified as finance leases
Payments in optional extension periods not recognised as at 30 June 2019
Lease Liabilities as at 1 July 2019
US$m
735
2.52%
669
11
324
1,004
For the year ended 30 June 2020 included in the statement of income is depreciation of right-of-use assets of $70.9m and interest
expense of $26.0m. Expense for these leases would have been recorded under rent expense prior to the adoption of AASB 16.
After adoption of AASB 16, the Group’s cash flows from operating activities include only payments for the interest portion of lease payments
(included in borrowing costs paid) and cash flows from financing include repayment of the principal portion of the lease liabilities.
Below are the new accounting policies of the Group upon adoption of AASB 16:
Right-of-use 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).
Right-of-use assets are measured at cost, less any restoration obligations, accumulated depreciation, or impairment losses, and adjusted
for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised less any lease
incentives received and initial direct costs. 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. Right-of-use assets are subject to annual impairment assessment as discussed in Note 8 – PPE (Property, Plant &
Equipment). Based on each lease category, the following table summarises the range of useful lives (i.e. lease terms) for AASB 16 Leases:
ROU assets useful lives
Minimum
Maximum
Average
Lease liabilities
Plasma
Centres
Years
3
40
25
Office
Leases
Years
Warehouse
Leases
Years
<1
30
8
1
35
13
Land
Leases
Years
4
101
60
Vehicles
Years
3
4
3.5
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be
made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group
and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable
lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition
that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate of the lessee at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount
of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification, such as a change in the lease term, a change in the in-substance
fixed lease payments or a change in the assessment to purchase the underlying asset.
The following table summarises the maturity profile of the Group’s lease liabilities based upon contractual undiscounted payments:
Less than
1 year
US$m
91.0
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
US$m
88.8
US$m
84.6
US$m
82.1
US$m
76.2
More than
5 years
US$m
891.0
Total
US$m
1,313.7
Repayable in
As at 30 June 2020
102
CSL Limited Annual Report 2020 In considering further disclosures around variable lease consideration, the Group’s leases are subject only to future rent increases related
to fair market rental adjustments and adjustments linked to price index changes. Approximately 90% of lease liabilities relate to plasma
collection centres, offices, and warehouses subject primarily to future fair market rental adjustments. The remaining approximate 10%
of lease liabilities relates to long-term land leases that are subject to periodic index adjustments. Accordingly, the rental arrangements
themselves do not pose any incremental or unique risk specific to variable lease considerations that would warrant further evaluation
beyond what we have disclosed in Note 11, which addresses financial risk in the context of the Group’s collective business activities.
The Group’s lease liabilities are inclusive of extension options the Group is reasonably certain to exercise based upon our judgement
as of 30 June 2020. For lease extension options that the Group is not reasonably certain to exercise as of 30 June 2020, these are
appropriately excluded from the lease liabilities under AASB 16. However, the Group has analysed the lease contracts to determine
potential future lease payments (undiscounted) to which there is a contractual right to exercise an extension. We have summarised
these undiscounted potential future lease payments split between those due in five years or less or greater than five years in the
following table:
Undiscounted potential future lease payments
As at 30 June 2020
5 years
or less
Greater than
5 years
US$m
3.8
US$m
95.5
Total
US$m
99.3
The Group applied the same methodology in applying AASB 16 in determining the potential future lease payments not included in
the lease liability as we did for lease extension options included in the lease liability as of 30 June 2020. Should facts and circumstances
change the Group’s current assessment of the reasonable certainty about not extending these contracts beyond those included in our
lease liabilities, these undiscounted potential future lease payments represent and approximate additional lease payments that would
become contractually due.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of
12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets
recognition exemption, which relates to leases such as office photocopiers, gas storage cylinders, and other miscellaneous low value
assets that would not have quantitative or qualitative significance to recognise in our adoption of AASB 16 or ongoing accounting for
leases under AASB 16. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line
basis over the lease term.
Significant judgements
Determination of the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably
certain not to be exercised.
The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all
relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses
the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise
(or not to exercise) the option to renew (e.g., a change in business strategy).
Calculation of the incremental borrowing rates
Where the lessee cannot readily determine the interest rate implicit in the lease contracts, the present value of the lease liabilities are
estimated using the incremental borrowing rate based on the interest that the lessee would have to pay to borrow over a similar term,
the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment, and observable
inputs such as market interest rates are used as applicable.
Set out below, are the carrying amounts of the right-of-use assets and lease liabilities and the movements during the period:
As at 1 July 2019
Additions
Depreciation expense
Interest expense
Payments
As at 30 June 2020
Plasma
Centres
US$m
Office
Leases
US$m
Warehouse
Leases
US$m
Land
Leases
US$m
Vehicles
US$m
452
58
(23)
–
–
488
259
19
(39)
–
–
239
113
6
(9)
–
–
110
95
0
(1)
–
–
94
6
2
–
–
–
8
Total
US$m
926
85
(72)
–
–
Lease
liabilities
US$m
(1,004)
(85)
–
(26)
81
939
(1,034)
The Group has not adopted any accounting standards that are issued but not yet effective. Significant accounting policies that
summarise the measurement basis used and are relevant to an understanding of the financial statements are provided in the annual
financial report.
103
CSL Limited Annual Report 2020 Notes to the Financial Statements
Our Current Performance
Note 1: Segment Information and Business Combinations
The Group’s segments represent strategic business units that offer different products and operate in different industries and markets.
They are consistent with the way the CEO (who is the chief operating decision-maker) monitors and assesses business performance
in order to make decisions about resource allocation. Performance assessment is based on EBIT (earnings before interest and tax)
and EBITDA (earnings before interest, tax, depreciation and amortisation). These measures are different from the profit or loss reported
in the consolidated financial statements which is shown after net interest and tax expense. This is because decisions that affect net
interest expense and tax expense are made at the Group level. It is not considered appropriate to measure segment performance
at the net profit after tax level.
The Group’s operating segments are:
• CSL Behring – manufactures, markets, and develops plasma therapies (plasma products and recombinants), conducts early stage
research on plasma and non-plasma therapies, excluding influenza, receives licence and royalty income from the commercialisation
of intellectual property and undertakes the administrative and corporate function required to support the Group.
• Seqirus – manufactures and distributes non-plasma biotherapeutic products and develops influenza related products.
CSL Behring
US$m
Seqirus
US$m
Sales and service revenue
Influenza Pandemic Facility
Reservation fees
Royalties and License revenue
Other Income
2020
7,661.0
–
158.5
34.2
2019
7,187.3
–
151.1
4.5
Total segment revenue
7,853.7
7,342.9
Segment Gross Profit
Segment Gross Profit %
4,540.3
57.8%
4,195.1
57.1%
2020
1,135.6
145.4
–
16.1
1,297.1
686.1
52.9%
Consolidated Entity
US$m
2020
8,796.6
2019
8,205.4
145.4
158.5
50.3
133.4
171.1
28.7
2019
1,018.1
133.4
20.0
24.2
1,195.7
9,150.8
8,538.6
582.3
48.7%
5,226.4
57.1%
4,777.4
56.0%
Segment EBIT
2,451.4
2,350.6
265.1
153.4
2,716.5
2,504.0
Consolidated Operating Profit
Finance income
Finance costs
Consolidated profit before tax
Income tax expense
Consolidated net profit after tax
Amortisation
Depreciation
Segment EBITDA
42.8
309.9
2,804.1
76.5
244.5
2,671.6
29.7
37.4
332.2
25.8
28.6
207.8
2,716.5
2,504.0
7.0
(150.8)
2,572.7
(470.2)
2,102.5
72.5
347.3
13.8
(176.7)
2,341.1
(422.4)
1,918.7
102.3
273.1
3,136.3
2,879.4
Segment assets
Segment liabilities
Other Information – capital expenditure
Payments for property, plant
and equipment
Payments for intangibles
Total capital expenditures
CSL Behring
US$m
Seqirus
US$m
Intersegment
Elimination
US$m
Consolidated Entity
US$m
2020
2019
2020
14,193.4
11,249.7
1,617.0
8,510.2
6,697.3
715.1
2019
1,333.5
634.6
2020
2019
2020
2019
(345.8)
(268.8)
15,464.6
12,314.4
(288.1)
(268.8)
8,937.2
7,063.1
1,079.9
1,017.0
136.2
1,216.1
142.1
1,159.1
126.9
24.6
151.5
100.6
25.1
125.9
–
–
–
–
–
–
1,206.8
160.8
1,117.6
167.2
1,367.6
1,284.8
104
CSL Limited Annual Report 2020 Note 1: Segment Information and Business Combinations continued
Inter-segment sales
Inter-segment sales are carried out on an arm’s length basis and reflect current market prices.
Geographical areas of operation
The Group operates predominantly in Australia, the USA, Germany, the United Kingdom, Switzerland and China. The rest of the Group’s
operations are spread across many countries and are collectively disclosed as ‘Rest of World’.
Geographic
areas
Australia
US$m
United States
US$m
Germany
US$m
UK
US$m
Switzerland
US$m
China
US$m
Rest of world
US$m
Total
US$m
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
752.3
702.2 4,598.2 3,973.9 825.9
763.9 478.2
510.4 285.8
216.0
215.3
625.8 1,995.1
1,746.4 9,150.8 8,538.6
1,063.9 840.0 3,011.2* 2,159.5 936.8
737.1
362.2
333.0 2,298.1 1,804.0 477.0* 472.3
296.4
16.7 8445.6 6,362.6
External
Operating
Revenue
PPE,
ROU, and
intangible
assets
* This number has been corrected from that published on 19 August 2020.
Note 1b: Business Combination
Vitaeris acquisition
On 8 June 2020 CSL acquired 100% of the equity of Vitaeris Inc. for an upfront payment of $20m and a series of contingent payments
subject to the achievement of development milestones. Vitaeris has developed clazakizumab, a potential treatment of chronic active
antibody-mediated rejection, the leading cause of long-term rejection in kidney transplant recipients. CSL had entered into a strategic
collaboration with Vitaeris in 2017, one of the main drivers behind the acquisition was to be in a position to exercise greater control over the
R&D program than was possible under the collaboration. CSL acquired control of Vitaeris through the acquisition of 100% of its share capital.
The provisional fair value of assets and liabilities acquired were:
Asset Class
Cash
Trade and other receivables
Prepaid expenses
Intellectual property
Goodwill
Trade payables & other
Other liabilities
Deferred tax liabilities
Fair Value of Net Assets Acquired
Consideration paid
Contingent consideration recognised as a liability at the date of acquisition
$m
2.2
0.1
3.0
188.0
52.6
(8.8)
(3.5)
(52.6)
181.0
20.0
161.0
The liability recognised at the date of acquisition has been
calculated by reference to our judgement of the expected
probability and timing of the contingent consideration, based
upon level 3 inputs under the fair value hierarchy, which is then
discounted to a present value using an appropriate discount
rate. The liability is included in the other non-current liabilities
amount on the balance sheet.
The range of undiscounted contingent consideration is expected
to be between $0, in the event no product receives regulatory
approval, and $470m. The outcome is dependent on the technical
success of the research program and the commercial success of
any resultant product. At this stage
of development these factors are unknown and judgement has
been exercised in the determination of the fair value
of the contingent consideration.
The goodwill recognised is a consequence of the recognition
of deferred tax liabilities in respect of indefinite lived intellectual
property in accordance with accounting standards.
Since CSL obtained control of the acquired business it has
incurred $0.8m of R&D expenses as a result of the ongoing
research activity.
105
CSL Limited Annual Report 2020 Notes to the Financial Statements
Note 2: Revenue and Expenses
Recognition and measurement of revenue
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.
Further information about each source of revenue from contracts with customers and the criteria for recognition 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, or generally upon shipment.
Significant estimates on 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.
Licence 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.
Revenue from contracts with customers includes amounts in Total Operating Revenue except Other Income.
2020
US$m
142.4
8.4
150.8
347.3
72.5
419.8
189.5
2019
US$m
127.8
48.9
176.7
273.1
102.3
375.4
191.3
2,528.1
2,184.2
Write-down of inventory to net realisable value: Included
in Cost of Sales in the Statement of Comprehensive Income.
Refer to Note 4 for details of inventories.
Rental Expenses: The majority of rental expenses related to
previously categorised operating leases are now reflected as
depreciation expense under AASB 16, which we have disclosed
separately in section g of our significant accounting policies.
Therefore, rental expenses primarily include rental charges that
did not meet the recognition criteria under AASB 16 and are
charged to the statement of comprehensive income on
a straight-line basis over the period of the rental period.
Employee benefits expense: Refer to Note 5 for further details.
Goods and Services Tax and other foreign
equivalents (GST)
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.
Expenses
Finance costs
Unrealised foreign currency (gains) losses on debt
Total finance costs
Depreciation and amortisation of fixed assets
Amortisation of intangibles
Total depreciation and amortisation expense
Write-down of inventory to net realisable value
Employee benefits expense
Recognition and measurement of expenses
Total finance costs: Includes interest expense & borrowing costs,
including interest expense related to the adoption of AASB 16,
which have been disclosed separately in section g of our
significant accounting policies. Non-AASB 16 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 2020 was $15.8m
(2019: $16.4m). Interest-bearing liabilities and borrowings are stated
at amortised cost. Any difference between the 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 on debt is related to the EUR350m and CHF400m
of Senior Unsecured Notes in the US Private Placement market
(see Note 11). The foreign currency risk related to this debt was
partially hedged as a cash flow hedge in 2020 and 2019.
Depreciation and amortisation: Depreciation and amortisation
of fixed assets includes depreciation of fixed assets and right-of-
use assets, which can be found in Note 8 and in section g of our
significant accounting policies. Refer to Note 7 for full details on
amortisation of intangible assets.
106
CSL Limited Annual Report 2020 Note 3: Tax
a. Income tax expense recognised in the statement of comprehensive income
Current tax expense
Current year
Deferred tax expense/(recovery)
Origination and reversal of temporary differences
Total deferred tax expense/(recovery)
Over/(under) provided in prior years
Income tax expense
b. Reconciliation between tax expense and pre-tax net profit
The reconciliation between tax expense and the product of accounting profit before
income tax multiplied by the Group’s applicable income tax rate is as follows:
Accounting profit before income tax
Income tax calculated at 30% (2019: 30%)
Effects of different rates of tax on overseas income
Research and development incentives
(Over)/under provision in prior year
Revaluation of Deferred Tax Balances
Other (non-assessable revenue)/non-deductible expenses
Income tax expense
c. Income tax recognised directly in equity
Deferred tax benefit/(expense)
Share-based payments
Income tax benefit/(expense) recognised in equity
d. Deferred tax assets and liabilities
Deferred tax asset
Deferred tax liability
Net deferred tax asset
Deferred tax balances reflect temporary differences attributable to:
Amounts recognised in the statement of comprehensive income
Inventories
Property, plant and equipment
Intangible assets
Trade and other payables
Recognised carry forward tax lossesa
Retirement liabilities, net
Receivables and contract assets
Other assets
Interest bearing liabilities
Other liabilities and provisions
Tax bases not in net assets – share-based payments
Total recognised in the statement of comprehensive income
Amounts recognised in equity
Share-based payments
Net deferred tax asset
2020
US$m
2019
US$m
410.4
428.5
28.7
28.7
31.2
470.2
2,572.7
771.8
(325.8)
(22.8)
31.2
51.7
(35.9)
470.2
6.8
6.8
543.0
(352.0)
191.0
246.0
(285.0)
(227.8)
72.0
142.2
69.1
(19.8)
0.5
55.7
75.9
34.0
162.4
28.6
191.0
7.2
7.2
(13.3)
422.4
2,341.1
702.3
(256.1)
(25.5)
(13.3)
0.0
15.0
422.4
0.6
0.6
378.7
(168.7)
210.0
215.6
(162.6)
(169.0)
32.7
183.4
50.9
(54.9)
4.9
13.5
74.2
(0.4)
188.3
21.8
210.0
a.
Deferred tax assets in respect of carry forward tax losses are principally recorded in CSL entities in Switzerland and the UK (prior year: Switzerland and the UK)
and are recognised as it is probable that future taxable profit will be available in those entities to utilise the losses.
107
CSL Limited Annual Report 2020 Notes to the Financial Statements
Note 3: Tax continued
e. Movement in temporary differences during the year
Opening balance
Credited/(charged) to profit before tax
Charged to other comprehensive income
Net deferred tax asset/(liability) recognised in business combination
Credited/(charged) to equity
Closing balance
Unrecognised deferred tax assets
2020
US$m
210.0
(9.3)
(0.1)
0.0
(9.6)
191.0
2019
US$m
207.6
0.3
9.7
0.6
(8.2)
210.0
Deferred tax assets have not been recognised for the following items:
Tax losses with no expiry dateb
0.4
0.4
b. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available for utilisation in the
entities that have recorded these losses.
Current taxes
Current tax assets and liabilities are the amounts expected to be
recovered from (or paid to) tax authorities, under the tax rates and
laws in each jurisdiction. These include any rates or laws that are
enacted or substantively enacted as at the balance sheet date.
Deferred taxes
Deferred tax liabilities are recognised for taxable temporary
differences. Deferred tax assets are recognised for deductible
temporary differences, carried forward unused tax assets and
unused tax losses, only if it is probable that taxable profit will
be available to utilise them.
The carrying amount of deferred income tax assets is reviewed
at the reporting date. If it is no longer probable that taxable profit
will be available to utilise them, they are reduced accordingly.
Deferred tax is measured using tax rates and laws that are
enacted at the reporting date and are expected to apply when
the related deferred income tax asset is realised or when the
deferred income tax liability is settled.
Deferred tax assets and liabilities are offset only if a legally
enforceable right exists to set-off current tax assets against
current tax liabilities and if they relate to the same taxable entity
or group and the same taxation authority.
Income taxes attributable to amounts recognised in other
comprehensive income or directly in equity are also recognised
in other comprehensive income or in equity, and not in the
income statement.
CSL Limited and its 100% owned Australian subsidiaries have
formed a tax consolidated group effective from 1 July 2003.
Key Judgements and Estimates – Tax
The risk of uncertain tax positions, and recognition and recoverability of deferred tax assets, are regularly assessed.
To do this requires judgements about the application of income tax legislation in jurisdictions in which the Group operates
and the future operating performance of entities with carry forward losses. These judgements and assumptions, which
include matters such as the availability and timing of tax deductions and the application of the arm’s length principle
to related party transactions, are subject to risk and uncertainty. Changes in circumstances may alter expectations
and affect the carrying amount of deferred tax assets and liabilities. Any resulting adjustment to the carrying value
of a deferred tax item will be recorded as a credit or charge to the statement of comprehensive income.
108
CSL Limited Annual Report 2020 Note 4: Inventories
Raw materials
Work in progress
Finished products
Total inventories
Raw Materials
2020
US$m
876.8
1,361.1
1,271.6
3,509.5
2019
US$m
915.2
1,049.2
1,074.4
3,038.8
Raw materials comprise collected and purchased plasma,
chemicals, filters and other inputs to production that will be
further processed into saleable products but have yet to be
allocated to manufacturing.
Work in Progress
Work in progress comprises all inventory items that are currently
in use in manufacturing and intermediate products such as pastes
generated from the initial stages of the plasma production process.
Finished Products
Finished products comprise material that is ready for sale and has
passed all quality control tests.
Inventories generally have expiry dates and the Group provides
for product that is short dated. Expiry dates for raw material are
no longer relevant once the materials are used in production.
At this stage the relevant expiry date is that applicable to the
resultant intermediate or finished product.
Inventories are carried at the lower of cost or net realisable value.
Cost includes direct material and labour and an appropriate
proportion of variable and fixed overheads. Fixed overheads are
allocated on the basis of normal operating capacity.
Net realisable value is the estimated revenue that can be earned
from the sale of a product less the estimated costs of both
completion and selling. The Group assesses net realisable value
of plasma derived products on a basket of products basis given
their joint product nature.
Key Judgements and Estimates – Inventory
Various factors affect the assessment of recoverability of the carrying value of inventory, including regulatory approvals
and future demand for the Group’s products. These factors are taken into account in determining the appropriate level
of provisioning for inventory.
109
CSL Limited Annual Report 2020 Notes to the Financial Statements
Note 5: People Costs
(a) Employee Benefits
Employee benefits include salaries and wages, annual leave and long-service leave, defined benefit and defined contribution plans
and share-based payments incentive awards.
People Cost 2020 – $2,528.1m
People Cost 2019 – $2,184.2m
Salaries and wages $2,361.6m
Defined benefit plan expense $44.4m
Defined contribution plan expense $46.1m
Equity settled share-based payments expense (LTI) $73.6m
Cash settled share-based payments expense (EDIP) $2.4m
Salaries and wages
Salaries and wages $2,033.3m
Defined benefit plan expense $37.1m
Defined contribution plan expense $46.0m
Equity settled share-based payments expense (LTI) $52.0m
Cash settled share-based payments expense (EDIP) $15.8m
Wages and salaries include non-monetary benefits, annual leave
and long service leave. These are recognised and presented in
different ways in the financial statements:
• The liability for annual leave and the portion of long service
leave expected to be paid within twelve months is measured
at the amount expected to be paid.
• The liability for long service leave and annual leave expected
to be paid after one year is measured as the present value
Of expected future payments to be made in respect of
services provided by employees up to the reporting date.
• The liability for annual leave and the portion of long service
leave that has vested at the reporting date is included
in the current provision for employee benefits.
• The portion of long service leave that has not vested at the
reporting date is included in the non-current provision for
employee benefits.
110
CSL Limited Annual Report 2020 Defined benefit plans
Expenses/(gains) recognised in the statement of comprehensive income are as follows:
Current service costs
Net interest cost
Past service costs
Total included in employee benefits expense
Defined benefit pension plans provide either a defined lump
sum or ongoing pension benefits for employees upon retirement,
based on years of service and final average salary.
Liabilities or assets in relation to these plans are recognised in the
balance sheet, measured as the present value of the obligation
less the fair value of the pension fund’s assets at that date.
Present value is based on expected future payments to the
reporting date, calculated by independent actuaries using the
2020
US$m
2019
US$m
41.1
3.3
0.0
44.4
33.1
3.8
0.2
37.1
projected unit credit method. Past service costs are recognised
in income on the earlier of the date of plan amendments or
curtailment, and the date that the Group recognises restructuring
related costs.
Detailed information about the Group’s defined benefit plans
is in Note 18.
Key Judgements and Estimates – People Costs
The determination of certain employee benefit liabilities requires an estimation of future employee service periods
and salary levels and the timing of benefit payments. These assessments are made based on past experience and
anticipated future trends. The expected future payments are discounted using the rate applicable to high quality
corporate bonds. Discount rates are matched to the expected payment dates of the liabilities.
Defined contribution plans
Equity settled share-based payments expense
The Group makes contributions to various defined contribution
pension plans and the Group’s obligation is limited to these
contributions. The amount recognised as an expense for the
year ended 30 June 2020 was $46.1m (2019: $46.0m).
Share-based payments expenses arise from plans that award
long-term incentives.
Detailed information about the terms and conditions of the
share-based payments arrangements is presented in Note 18.
111
CSL Limited Annual Report 2020
Notes to the Financial Statements
Outstanding share-based payment equity instruments
The number and weighted average exercise price for each share-based payment scheme outstanding is as follows. All schemes are
settled by physical delivery of shares except for instruments granted to good leavers from 2012 onwards, which may be settled in cash
at the discretion of the company.
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Cash settled during the year
Forfeited during the year
GESP True-up1
Closing balance at the end of the year
Exercisable at the end of the year
Options
Performance Rights
Retain and Grow Plan (RGP)
Alignment Plan (EPA)
Director Plan (NED)#
(GESP)
Total
Executive Performance and
Non-Executive
Global Employee Share Plan
Weighted
average
exercise
price
A$97.83
A$0.00
A$89.52
A$0.00
A$0.00
A$0.00
Number
615,840
–
299,078
–
8,576
–
308,188
A$105.63
28,245
A$89.52
Weighted
average
exercise
price
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
Number
422,448
–
151,486
2,297
57,301
–
211,364
2,590
Weighted
average
exercise
price
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
Weighted
average
exercise
price
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
Weighted
average
exercise
price
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
Number
2,231
3,494
3,116
861*
–
–
1,748
311
Number
315,838
237,555
91,822
195
27,853
433,523
–
–
Number
500,756
444,508
168,866
59,294
717,102
–
–
–
Weighted
average
exercise
price
A$222.78
A$180.89
A$180.89
A$0.00
A$166.31
1,963,893
876,166
913,191
2,492
153,885
2,058
2,058
A$166.31
96,508
A$243.95
1,768,433
–
31,146
Number
106,780
190,609
198,823
–
–
–
The share price at the dates of exercise (expressed as a weighted average) by equity instrument type, is as follows:
Options
Performance Rights
RGP
EPA
GESP
2020
2019
A$243.87
A$215.88
A$243.73
A$209.97
A$248.01
A$227.29
A$239.85
A$229.43
A$276.35
A$204.39
Cash-settled share-based payments expense
The Group did not grant any notional shares related to the Executive Deferred Incentive Plan (EDIP) plan in the current fiscal year as this
plan has been replaced with other equity-based schemes as previously disclosed. All cash settlements ceased after 30 September 2019
and the EDIP ceased to operate. The amount of the cash payment was determined by reference to the CSL share price immediately
before the award maturity date.
The October 2016 EDIP grant, which is the final EDIP grant and payment, vested during the period ended 30 June 2020 and an amount
of $37.6m was paid to participants (2019: $30.1m).
1
The exercise price at which GESP plan shares are issued is calculated at a 15% discount of the five day VWAP up to and including the lower of the ASX market
price on the first and last dates of the contribution period. Accordingly, the exercise price and the final number of shares to be issued is not yet known (and may
differ from the assumptions and fair values disclosed above). The number of shares which may ultimately be issued from entitlements granted on 1 March 2020
has been estimated based on information available as at 30 June 2020.
* Forfeitures as a result of Director retirement.
# As noted in Note 18 Non-Executive Directors pay a portion of their pre-tax base fee in return for the grant of rights under his Plan.
112
CSL Limited Annual Report 2020 Options
Performance Rights
Retain and Grow Plan (RGP)
Executive Performance and
Alignment Plan (EPA)
Non-Executive
Director Plan (NED)#
Global Employee Share Plan
(GESP)
Total
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Cash settled during the year
Forfeited during the year
GESP True-up1
Closing balance at the end of the year
Exercisable at the end of the year
Weighted
average
exercise
price
A$97.83
A$0.00
A$89.52
A$0.00
A$0.00
A$0.00
Number
615,840
299,078
8,576
–
–
–
308,188
A$105.63
28,245
A$89.52
Weighted
average
exercise
price
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
Number
422,448
151,486
2,297
57,301
–
–
211,364
2,590
Weighted
average
exercise
price
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
Weighted
average
exercise
price
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
Weighted
average
exercise
price
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
A$0.00
Number
2,231
3,494
3,116
–
861*
–
1,748
311
Number
315,838
237,555
91,822
195
27,853
–
433,523
–
Number
500,756
444,508
168,866
–
59,294
–
717,102
–
Number
106,780
190,609
198,823
–
–
Weighted
average
exercise
price
A$166.31
1,963,893
A$222.78
A$180.89
A$180.89
A$0.00
876,166
913,191
2,492
153,885
2,058
2,058
A$166.31
96,508
A$243.95
1,768,433
–
–
31,146
(b) Key management personnel disclosures
The remuneration of key management personnel is disclosed in section 17 of the Directors’ Report and has been audited.
Total compensation for key management personnel
Total of short term remuneration elements
Total of post-employment elements
Total of other long term elements
Total of share-based payments
Total of all remuneration elements
The prior year share based payment amount has been restated to align with the Remuneration Report.
2020
US$
2019
US$
11,389,819
16,531,676
146,836
37,510
323,392
86,380
13,915,267
17,615,515
25,489,432
34,556,963
113
CSL Limited Annual Report 2020 Notes to the Financial Statements
Our Future
Note 6: Research & Development
The Group conducts research and development activities to
support future development of products to serve our patient
communities, to enhance our existing products and to develop
new therapies.
The Group also gains control of Intellectual Property (IP)
through acquisitions or licence arrangements. In certain
circumstances the acquired IP will be capitalised, dependant
on the phase of development.
All costs associated with our research and development activities
are expensed as incurred as uncertainty exists up until the point
of regulatory approval as to whether a research and development
project will be successful. At the point of approval, the total cost
of development has largely been incurred. Development costs
incurred after regulatory approval are expensed.
Note 7: Intangible Assets
For the year ended 30 June 2020, the research costs, net of
recoveries, were $921.8m (2019: $831.8m). Further information
about the Group’s research and development activities can
be found on the CSL website.
Year
Cost
Accumulated
amortisation
Goodwill
US$m
Intellectual Property
US$m
Software
US$m
Intangible capital
work in progress
US$m
Total
US$m
2020
2019
1,154.2
1,101.8
2020
575.7
2019
565.6
2020
696.1
2019
618.5
2020
133.4
2019
2020
2019
148.4
2,559.5
2,434.3
–
–
(184.1)
(332.1)
(235.2)
(223.9)
–
–
(419.3)
(556.0)
Net carrying amount
1,154.2
1,101.8
391.7
233.5
460.9
394.6
133.4
148.4
2,140.2
1,878.3
Movement
Net carrying amount at
the beginning of the year
Additions2
Business acquisition
Transfers from intangible
capital work in progress
Transfers to/from
property, plant and
equipment
Disposals
Amortisation for the year3
Currency translation
differences
Net carrying amount
at the end of the year
Goodwill
394.6
44.2
–
257.8
3.2
–
148.4
76.8
–
179.8
172.9
–
121.0
240.6
1,878.3
1,802.5
93.1
204.0
(93.1)
(204.0)
–
186.3
–
–
1,101.8
1,102.0
233.5
–
188.0
–
–
262.9
10.2
–
–
–
–
52.6
–
–
–
–
–
–
–
–
–
–
(25.2)
(3.7)
(1.5)
(37.2)
(1.0)
–
(68.7)
–
(0.1)
(65.1)
–
(0.1)
–
1.0
0.1
–
(1.0)
(25.3)
(72.5)
1.0
(1.5)
(102.3)
(0.2)
(0.2)
(0.9)
(0.9)
(1.3)
(5.2)
1.5
(1.4)
(0.9)
(7.7)
1,154.2
1,101.8
391.7
233.5
460.9
394.6
133.5
148.4
2,140.2
1,878.3
Any excess of the fair value of the purchase consideration of an acquired business over the fair value of the identifiable net assets (minus
incidental expenses) is recorded as goodwill.
Goodwill is allocated to each of the cash-generating units but is monitored at the segment (business unit) level. The aggregate carrying
amounts of goodwill allocated to each business unit are as follows:
CSL Behring
Closing balance of goodwill as at 30 June
2020
$m
1,154.2
1,154.2
2019
$m
1,101.8
1,101.8
Goodwill is not amortised but is measured at cost less any accumulated impairment losses. Impairment occurs when a business
unit’s recoverable amount falls below the carrying value of its net assets.
The results of the impairment test show that each business
unit’s recoverable amount exceeds the carrying value of its net
assets, inclusive of goodwill. Consequently, there is no goodwill
impairment as at 30 June 2020.
A change in assumptions significant enough to lead to
impairment is not considered a reasonable possibility.
2 The intangible capital work in progress additions relate to two significant information technology projects.
3 The amortisation charge is recognised in general and administration expenses in the statement of comprehensive income.
114
CSL Limited Annual Report 2020 Intellectual property
Recognition and measurement
Intellectual property acquired separately or in a business
combination is initially measured at cost, which is its fair
value at the date of acquisition. Following initial recognition,
it is carried at cost less any amortisation and impairment.
Amortisation is calculated on a straight-line basis over periods
generally ranging from 5 – 20 years. Certain intellectual property
acquired in a business combination is considered to have an
indefinite life
Software
Costs incurred in developing or acquiring software, licences
or systems that will contribute future financial benefits are
capitalised. These include external direct costs of materials
and service and direct payroll and payroll related costs of
employees’ time spent on the project. Amortisation is calculated
on a straight-line basis over periods generally ranging from
3 to 10 years. IT development costs include only those costs
directly attributable to the development phase and are only
recognised following completion of technical feasibility, where
the Group has the intention and ability to use the asset.
The useful lives of intangible assets are assessed to be either finite
or indefinite.
Intangible assets with finite lives are amortised over the useful life
of the asset. Significant software intangible assets are amortised
over a ten year useful life. The amortisation period and method
is reviewed at each financial year end at a minimum.
Intangible assets with indefinite useful lives are not amortised.
The useful life of these intangibles is reviewed each reporting
period to determine whether indefinite life assessment continues
to be supportable.
Impairment of intangible assets
Assets with finite lives are subject to amortisation and are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not
be recoverable.
Intangible assets that have an indefinite useful life (including
goodwill) are not subject to amortisation and are tested annually
for impairment or more frequently if events or changes in
circumstances indicate that they may be impaired.
An impairment loss is recognised in the statement of
comprehensive income for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and
value in use. For the purpose of assessing impairment, assets
are grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units), other than
goodwill that is monitored at the segment level.
Impairment losses recognised in respect of cash generating units
are allocated first to reduce the carrying amount of any goodwill
allocated to cash generating units, and then to reduce the
carrying amount of the other assets in the unit on a pro-rata basis.
Key Judgements and Estimates
The impairment assessment process requires significant judgement. Determining whether goodwill and indefinite lived
intangibles have been impaired requires an estimation of the recoverable amount of the cash generating units using
a discounted cash flow methodology. The goodwill calculation uses cash flow projections based on operating budgets
and a ten-year strategic business plan, after which a terminal value, based on our view of the longer term growth profile
of the business is applied. Cash flows have been discounted using an implied pre-tax discount rate of 7.6% (2019: 10.6%)
which is calculated with reference to external analyst views, long-term government bond rates and the company’s
pre-tax cost of debt.
The determination of cash flows over the life of an asset requires judgement in assessing the future demand for
the Group’s products, any changes in the price and cost of those products and of other costs incurred by the Group.
The intangible assets acquired in the Calimmune business combination comprise a disease specific project and two
platform technologies. The disease specific research program is actively being advanced and it is the Group’s intent
to fund this program for the next twelve months. The platform technologies support both the disease specific project
and other potential projects, two such projects have been identified to date and the Group continues to explore other
projects that will utilise these platforms. Factors considered in the exercise of our judgement include the progress
of the research project, time to market and the anticipated competitive landscape. These factors require judgement
and may change in future periods, the impairment analysis takes into account the latest available information.
115
CSL Limited Annual Report 2020 Notes to the Financial Statements
Note 8: Property, Plant and Equipment
Land
US$m
Buildings
US$m
Leasehold
Improvements
US$m
Plant and Equipment
Right of Use assets
US$m
US$m
Capital work
in progress
US$m
Total
US$m
2020
3,302.9
(1,714.5)
1,588.4
1,468.6
297.0
63.2
(129.3)
–
(229.3)
110.9
7.3
2019
3,040.0
(1,584.5)
1,455.5
1,436.8
246.2
12.3
(89.9)
–
(220.6)
88.7
(18.0)
2020
1,347.2
(407.8)
939.4
925.8
85.3
(71.7)
–
–
–
–
–
2020
2,852.5
–
2,852.5
2,221.0
(474.4)
1,124.6
(8.2)
(0.5)
–
–
2019
2,221.0
–
2,221.0
1,340.5
(337.7)
1,232.3
1.8
(1.0)
–
–
2020
8,784.3
(2,478.9)
6,305.4
5,410.0
–
1,273.1
(142.6)
(5.1)
(348.0)
113.2
4.7
2019
6,403.2
(1,918.9)
4,484.3
3,551.4
–
1,250.4
(97.2)
(1.0)
(273.2)
96.5
(42.6)
(10.0)
(14.9)
2019
–
–
–
–
–
–
–
–
–
–
–
–
1,588.4
1,455.5
939.4
2,852.5
2,221.0
6,305.4
4,484.3
Cost
Accumulated depreciation/amortisation
Net carrying amount
Movement
Net carrying amount at the start
of the year
Transferred from capital work in progress
Additions4
Disposals
Other Adjustments
Depreciation/amortisation for the year
Accumulated depreciation/amortisation
on disposals
Currency translation differences
Net carrying amount at the
end of the year
2020
38.8
–
38.8
38.8
–
–
–
–
–
–
(0.1)
38.7
2019
38.8
–
38.8
39.9
–
0.1
–
–
–
–
(1.1)
38.8
2020
782.0
(220.4)
561.7
490.0
92.9
–
–
(4.6)
(24.1)
–
7.5
2019
687.5
(197.5)
490.0
489.9
32.7
0.6
(0.1)
–
(25.7)
0.4
(7.8)
2020
461.0
(136.3)
324.8
265.9
84.5
–
(5.0)
–
(22.9)
2.3
(0.0)
561.7
490.0
324.8
2019
381.5
(115.7)
265.9
230.9
58.8
1.7
(4.7)
–
(24.0)
4.0
(0.9)
265.9
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.
Depreciation is on a straight-line basis over the estimated useful
life of the asset.
Buildings
Plant and equipment
5 – 40 years
3 – 15 years
Leasehold improvements
5 – 25 years
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 occurs
if an impairment trigger is identified. No impairment triggers
have been identified in the current year.
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.
4
The 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.
116
CSL Limited Annual Report 2020 Accumulated depreciation/amortisation
Net carrying amount
Net carrying amount at the start
Transferred from capital work in progress
Cost
Movement
of the year
Additions4
Disposals
Other Adjustments
Depreciation/amortisation for the year
Accumulated depreciation/amortisation
on disposals
Currency translation differences
Net carrying amount at the
end of the year
Property, plant and equipment
2020
38.8
–
38.8
38.8
–
–
–
–
–
–
(0.1)
38.7
2019
38.8
–
38.8
39.9
0.1
–
–
–
–
–
(1.1)
38.8
2020
782.0
(220.4)
561.7
490.0
92.9
–
–
(4.6)
(24.1)
–
7.5
2019
687.5
(197.5)
490.0
489.9
32.7
0.6
(0.1)
–
0.4
(7.8)
2020
461.0
(136.3)
324.8
265.9
84.5
(5.0)
–
–
2.3
(0.0)
(25.7)
(22.9)
2019
381.5
(115.7)
265.9
230.9
58.8
1.7
(4.7)
–
(24.0)
4.0
(0.9)
265.9
Land
US$m
Buildings
US$m
Leasehold
Improvements
US$m
Plant and Equipment
US$m
Right of Use assets
US$m
Capital work
in progress
US$m
Total
US$m
2020
3,302.9
(1,714.5)
1,588.4
1,468.6
297.0
63.2
(129.3)
–
(229.3)
110.9
7.3
2019
3,040.0
(1,584.5)
1,455.5
1,436.8
246.2
12.3
(89.9)
–
(220.6)
88.7
(18.0)
2020
1,347.2
(407.8)
939.4
925.8
–
85.3
–
–
(71.7)
–
–
561.7
490.0
324.8
1,588.4
1,455.5
939.4
2019
–
–
–
–
–
–
–
–
–
–
–
–
2020
2,852.5
–
2,852.5
2,221.0
(474.4)
1,124.6
(8.2)
(0.5)
–
–
2019
2,221.0
–
2,221.0
1,340.5
(337.7)
1,232.3
1.8
(1.0)
–
–
(10.0)
(14.9)
2020
8,784.3
(2,478.9)
6,305.4
5,410.0
–
1,273.1
(142.6)
(5.1)
(348.0)
113.2
4.7
2019
6,403.2
(1,918.9)
4,484.3
3,551.4
–
1,250.4
(97.2)
(1.0)
(273.2)
96.5
(42.6)
2,852.5
2,221.0
6,305.4
4,484.3
Note 9: Deferred Government Grants
Current deferred income
Non-current deferred income
Total deferred government grants
2020
US$m
3.2
40.1
43.3
2019
US$m
2.8
34.6
37.4
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and the Group
will comply with all attached conditions. Government grants relating to an expense item are deferred and recognised in the statement
of comprehensive income over the period necessary to match them with the expenses that they are intended to compensate.
Government grants received for which there are no future related costs are recognised in the statement of comprehensive income
immediately. Government grants relating to the purchase of property, plant and equipment are included in current and non-current
liabilities as deferred income and are released to the statement of comprehensive income on a straight-line basis over the expected
useful lives of the related assets.
117
CSL Limited Annual Report 2020 Notes to the Financial Statements
Returns, Risk & Capital Management
Note 10: Shareholder Returns
Dividends
Dividends are paid from the retained earnings and profits of CSL Limited, as the parent entity of the Group. (See Note 19 for the
Group’s retained earnings). During the year, the parent entity reported profits of US$93.1m (2019: US$461.9m). The parent entity’s
retained earnings as at 30 June 2020 were US$7,706.4m (2019: US$8,484.4m). During the financial year US$883.1m was distributed to
shareholders by way of a dividend, with a further US$485.8m being determined as a dividend payable subsequent to the balance date.
Dividend paid
Paid: Final ordinary dividend of US$1.00 per share, unfranked, paid on 11 October 2019 for FY19
(prior year: US$0.93 per share, unfranked, paid on 12 October 2018 for FY18)
Paid: Interim ordinary dividend of US$0.95 per share, unfranked, paid on 9 April 2020 for FY20
(prior year: US$0.85 per share, unfranked, paid on 12 April 2019 for FY19)
Total paid
Dividend determined, but not paid at year end:
2020
US$m
2019
US$m
453.9
420.3
429.2
883.1
386.5
806.8
Final ordinary dividend of US$1.07 per share, unfranked, expected to be paid on 9 October 2020 for
FY20, based on shares on issue at reporting date. The aggregate amount of the proposed dividend
will depend on actual number of shares on issue at dividend record date (prior year: US$1.00 per share,
unfranked paid on 11 October 2019 for FY19)
485.8
453.1
The distribution in respect of the 2020 financial year represents a US$2.02 dividend paid for FY2020 on each ordinary share held. These
dividends are approximately 43.6% of the Group’s basic earnings per share (“EPS”) of US$4.63.
Earnings per Share
CSL’s basic and diluted EPS are calculated using the Group’s net profit for the financial year of US$2,102.5m (2019: US$1,918.7m).
Basic EPS
Weighted average number of ordinary shares
Diluted EPS
Adjusted weighted average number of ordinary shares, represented by:
Weighted average ordinary shares
Plus:
2020
2019
US$4.633
US$4.236
453,808,099
452,919,486
US$4.615
US$4.226
455,605,010
454,027,808
453,808,099
452,919,486
Employee Share Schemes (See Note 5 & Note 18)
1,796,911
1,108,322
Diluted EPS differs from Basic EPS as the calculation takes into account potential ordinary shares arising from employee share schemes
operated by the Group.
On-market Share Buyback
The Group did not undertake any share buy backs during the year.
Contributed Equity
The following table illustrates the movement in the Group’s contributed equity.5
Opening balance at 1 July
Shares issued to employees
(see also Notes 5 and 18):
Performance Options Plan
Performance Rights Plan (for nil consideration)
Retain and Grow Plan (for nil consideration)
Executive Performance & Alignment plan
Global Employee Share Plan (GESP)
2020
2019
Numbers of
shares
US$m
Numbers of
shares
US$m
453,138,632
(4,603.0) 452,400,784
(4,634.5)
299,078
151,486
168,866
91,822
198,823
18.0
–
–
–
24.0
206,748
201,460
82,222
51,628
195,790
10.8
–
–
–
20.7
Closing balance
454,048,707
(4,561.0)
453,138,632
(4,603.0)
5
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from
the proceeds. Where the Group reacquires its own shares, for example as a result of a share buy-back, those shares are cancelled. No gain or loss is recognised
in the profit or loss and the consideration paid to acquire the shares, including any directly attributable transaction costs net of income taxes, is recognised
directly as a reduction in equity.
118
CSL Limited Annual Report 2020 Note 11: Financial Risk Management
CSL holds financial instruments that arise from the Group’s need
to access financing, from the Group’s operational activities and as
part of the Group’s risk management activities.
The Group is exposed to financial risks associated with its financial
instruments. Financial instruments comprise cash and cash
equivalents, receivables, payables, bank loans and overdrafts,
unsecured notes, and lease liabilities.
Source of Risk
a. Foreign exchange risk
The Group is exposed to foreign exchange risk because of its
international operations. These risks relate to future commercial
transactions, assets and liabilities denominated in other
currencies and net investments in foreign operations.
b. Interest Rate Risk
The Group is exposed to interest rate risk through its primary
financial assets and liabilities.
The primary risks these give rise to are:
• Foreign exchange risk.
• Interest rate risk.
• Credit risk.
• Funding and liquidity risk.
• Capital management risk.
Risk Mitigation
Where possible CSL takes advantage of natural hedging
(i.e. the existence of payables and receivables in the same
currency). The Group also reduces its foreign exchange risk
on net investments in foreign operations by denominating
external borrowings in currencies that match the currencies
of its foreign investments.
The Group mitigates interest rate risk on borrowings primarily
by entering into fixed rate arrangements, which are not subject
to interest rate movements in the ordinary course. If necessary,
CSL also hedges interest rate risk using derivative instruments.
As at 30 June 2020, no derivative financial instruments hedging
interest rate risk were outstanding (2019: Nil).
c. Credit Risk
The Group is exposed to credit risk from financial instruments
contracts and trade and other receivables. The maximum
exposure to credit risk at reporting date is the carrying amount,
net of any provision for impairment inclusive of any lifetime
expected credit loss under AASB 9, if applicable, of each financial
asset in the balance sheet.
The Group mitigates credit risk from financial instruments
contracts by only entering into transactions with counterparties
who have sound credit ratings and with whom the Group has
a signed netting agreement. Given their high credit ratings,
management does not expect any counterparty to fail to meet
its obligations.
d. Funding and Liquidity Risk
The Group is exposed to funding and liquidity risk from
operations and from external borrowing.
One type of this risk is credit spread risk, which is the risk that
in refinancing its debt, CSL may be exposed to an increased
credit spread.
Another type of this risk is liquidity risk, which is the risk of not
being able to refinance debt obligations or meet other cash
outflow obligations when required.
Liquidity and re-financing risks are not significant for the Group,
as CSL has a prudent gearing level and strong cash flows.
The Group minimises the credit risk associated with trade and
other debtors by undertaking transactions with a large number
of customers in various countries. Creditworthiness of customers
is reviewed prior to granting credit, using trade references and
credit reference agencies.
The Group mitigates funding and liquidity risks by ensuring that:
• The Group has sufficient funds on hand to achieve its working
capital and investment objectives
• The Group focusses on improving operational cash flow and
maintaining a strong balance sheet
• Short-term liquidity, long-term liquidity and crisis liquidity
requirements are effectively managed, minimising the cost
of funding and maximising the return on any surplus funds
through efficient cash management
• It has adequate flexibility in financing to balance short-term
liquidity requirements and long-term core funding and
minimise refinancing risk
e. Capital Risk Management
The Group’s objectives when managing capital are to safeguard
its ability to continue as a going concern while providing returns
to shareholders and benefits to other stakeholders. Capital is
defined as the amount subscribed by shareholders to the
Company’s ordinary shares and amounts advanced by debt
providers to any Group entity.
The Group aims to maintain a capital structure, which reflects
the use of a prudent level of debt funding. The aim is to reduce
the Group’s cost of capital without adversely affecting the credit
margins applied to the Group’s debt funding.
Each year the Directors determine the dividend taking into
account factors such as profitability and liquidity.
The Directors have proposed share buybacks in previous years,
consistent with the aim of maintaining an efficient balance
sheet, and with the ability to cease a buyback at any point should
circumstances such as liquidity conditions change.
119
CSL Limited Annual Report 2020 Notes to the Financial Statements
Risk management approach
b. Interest rate risk
The Group uses sensitivity analysis (together with other methods)
to measure the extent of financial risks and decide if they need to
be mitigated.
If so, the Group’s policy is to use derivative financial instruments,
such as foreign exchange contracts and interest rate swaps, to
support its objective of achieving financial targets while seeking
to protect future financial security.
The aim is to reduce the impact of short-term fluctuations
in currency or interest rates on the Group’s earnings.
Derivatives are exclusively used for this purpose and not
as trading or other speculative instruments.
a. Foreign exchange risk
The objective is to match the contracts with committed future
cash flows from sales and purchases in foreign currencies to
protect the Group against exchange rate movements.
The Group reduces its foreign exchange risk on net investments
in foreign operations by denominating external borrowings in
currencies that match the currencies of its foreign investments.
The total value of forward exchange contracts in place at
reporting date is nil (2019: Nil).
Sensitivity analysis – USD values
Profit after tax – sensitivity to general movement of 1%
A movement of 1% in the USD exchange rate against AUD,
EUR, CHF and GBP would not generate a material impact
to profit after tax.
Equity – sensitivity to general movement of 1%
Any change in equity is recorded in the Foreign Currency
Translation Reserve.
FX Sensitivity on Equity (US$m)
12
10
8
6
4
2
0
-2
-4
-6
AUD
EUR
CHF
GBP
This calculation is based on changing the actual exchange rate
of US Dollars to AUD, EUR, CHF and GBP as at 30 June 2020 by
1% and applying these adjusted rates to the net assets (excluding
investments in subsidiaries) of the foreign currency denominated
financial statements of various Group entities.
At 30 June 2020, it is estimated that a general movement of one
percentage point in the interest rates applicable to investments of
cash and cash equivalents would have changed the Group’s profit
after tax by approximately $8.1m. This calculation is based on
applying a 1% movement to the total of the Group’s cash and cash
equivalents at year end.
At 30 June 2020, it is estimated that a general movement of one
percentage point in the interest rates applicable to floating rate
unsecured bank loans would have changed the Group’s profit
after tax by approximately $6.7m. This calculation is based on
applying a 1% movement to the total of the Group’s floating rate
unsecured bank loans at year end.
As at 30 June 2020, the Group had the following bank facilities,
unsecured notes and finance leases:
• Five revolving committed bank facilities totalling $1,607.9m
are available. Of these facilities $70.9m mature in the twelve
months, $37.2m in November 2022 and $1.5b in February 2025.
Interest on the facilities is paid quarterly in arrears at a variable
rate. As at the reporting date the Group had $1,158.2m in
undrawn funds available under these facilities;
• US$750m uncommitted Commercial Paper Program. As at the
reporting date there was $740.0m in undrawn funds available
under this facility;
• EUR214.7m committed bank facility (the KfW loan) with
quarterly repayments commencing in September 2020
through to September 2027;
• US$2,900m of Senior Unsecured Notes in the US Private
Placement market. The notes mature in November 2021
(US$250m), March 2023 (US$150m), November 2023 (US$200m),
March 2025 (US$100m), October 2025 (US$100m), October 2026
(US$150m), November 2026 (US$100m), May 2027 (US$100m),
October 2027 (US$250m), October 2028 (US$200m), October
2029 (US$200m), August 2030 (U$300m), October 2031
(US$200m), May 2032 (US$150m), October 2032 (US$150m),
May 2035 (U$200m) and October 2037 (US$100m). The
weighted average interest rate on the notes is fixed at 3.23%;
• EUR350m of Senior Unsecured Notes in the US Private
Placement market. The Notes mature in November 2022
(EUR100m), November 2024 (EUR150m) and November 2026
(EUR100m). The weighted average interest rate on the notes
is fixed at 1.90%;
• CHF400m of Senior Unsecured Notes in the US Private
Placement market. The notes mature in October 2023
(CHF150m) and October 2025 (CHF250m). The weighted
average interest rate on the notes is fixed at 0.88%;
• US$500m of Unsecured Floating Rate Notes (the QDI Bond)
in the Hong Kong market. The notes mature in December 2021;
• Finance leases with a weighted average lease term of 5 years
(2019: 5 years). The weighted average discount rate implicit in
the leases is 5.24% (2019: 4.69%). The Group’s lease liabilities are
secured by leased assets of $13.1m (2019: $13.1m). In the event
of default, leased assets revert to the lessor.
The Group is in compliance with all debt covenants.
120
CSL Limited Annual Report 2020 c. Credit Risk
The Group only invests its cash and cash equivalent financial assets with financial institutions having a credit rating of at least
‘BBB+’ or better, as assessed by independent rating agencies.
Floating rate6
Non-Interest bearing
US$m
US$m
Total
US$m
Average Closing
Interest Rate
%
2020
2019
2020
2019
2020
2019
2020
2019
Financial Assets
Cash and cash equivalents
1,194.4
657.8
–
–
Trade and other receivables
Other financial assets
–
–
–
–
1,572.5
1,726.5
17.5
10.3
1,194.4
1,572.5
17.5
657.8
1,726.5
10.3
0.24%
0.5%
–
–
–
–
1,194.4
657.8
1,590.0
1,736.8
2,784.4
2,394.6
Credit quality of financial assets
(30 June 2020 in $m)
Credit quality of financial assets
(30 June 2019 in $m)
Financial Institutions* $1,217.4
Financial Institutions* $690.4
Governments $403.7
Hospitals $263.2
Buying Groups $475.7
Other $424.4
Governments $431.5
Hospitals $257.7
Buying Groups $700.9
Other $314.1
* US$1,194.4m of the assets held with financial institutions are held as cash
or cash equivalents, $5.6m of trade and other receivables and $17.4m of
other financial assets. Financial assets held with non-financial institutions
include US$1,572.5m of trade and other receivables and $0.05m of other
* US$657.8m of the assets held with financial institutions are held as cash
or cash equivalents, $22.6m of trade and other receivables and $10.0m of
other financial assets. Financial assets held with non-financial institutions
include US$1,703.9m of trade and other receivables and $0.4m of other
financial assets.
financial assets.
Refer to Note 15 for the Group’s policy on expected credit loss.
The Group has not renegotiated any material collection/repayment terms of any financial assets in the current financial year.
Government or government-backed entities (such as hospitals) often account for a significant proportion of trade receivables.
As a result, the Group carries receivables from a number of Southern European governments. The credit risk associated with trading
in these countries is considered on a country-by-country basis and the Group’s trading strategy is adjusted accordingly. The factors
taken into account in determining the credit risk of a particular country include recent trading experience, current economic and
political conditions and the likelihood of continuing support from agencies such as the European Central Bank. An analysis of trade
receivables that are past due and, where required, the associated provision for expected credit loss, is as follows. All other financial
assets are less than 30 days overdue.
Trade receivables:
current
less than 30 days overdue
between 30 and 90 days overdue
more than 90 days overdue
Gross
Trade Receivables
Provision
Net
2020
US$m
2019
US$m
2020
US$m
2019
US$m
2020
US$m
2019
US$m
1,191.0
1,311.8
46.1
27.7
47.5
18.7
38.1
87.8
1,312.3
1,456.4
9.2
–
–
16.1
25.3
3.6
–
0.1
13.8
17.5
1,181.8
1,308.2
46.1
27.7
31.4
18.7
38.0
74.0
1,287.0
1,438.9
6
Floating interest rates represent the most recently determined rate applicable to the instrument at balance sheet date. All interest rates on floating rate
financial assets and liabilities are subject to reset within the next six months.
121
CSL Limited Annual Report 2020
Notes to the Financial Statements
d. Funding and liquidity risk
Maturity Profile of Debt by Facility
(US$ millions)
800
700
600
500
400
300
200
100
0
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY33
FY34
FY35
FY36
FY37
FY38
● Private Placement ● QDI ● Bank Debt ● US CP ● KfW Loans ● Finance Leases
The following table analyses the Group’s financial liabilities excluding AASB 16 lease liabilities
Interest-bearing liabilities and borrowings
Current
Bank overdrafts – Unsecured
Bank Borrowings – Unsecured
Commercial Paper
Senior Unsecured Notes – Unsecured
Other liability – Secured
Non-current
Bank loans – Unsecured
Senior Unsecured Notes – Unsecured
Other liability – Secured
2020
US$m
2019
US$m
43.1
70.9
10.0
–
3.1
127.1
619.7
4,204.9
7.1
4,831.7
–
85.6
181.9
150.0
3.1
420.6
769.0
3,453.7
19.5
4,242.2
Interest-bearing liabilities and borrowings are recognised initially
at fair value, net of transaction costs incurred. Subsequent to
initial recognition, interest-bearing liabilities and borrowings
are stated at amortised cost, with any difference between the
proceeds (net of transaction costs) and the redemption value
recognised in the statement of comprehensive income over the
period of the borrowings.
Fees paid on the establishment of loan facilities that are yield
related are included as part of the carrying amount of the loans
and borrowings. Borrowings are classified as current liabilities
unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting date.
The Group is in compliance with all debt covenants.
122
CSL Limited Annual Report 2020 The following table categorises the financial liabilities into relevant maturity periods, taking into account the remaining period at the
reporting date and the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and
hence will not necessarily reconcile with the amounts disclosed in the balance sheet.
Trade and other payables
(non-interest bearing)
Bank loans – unsecured
(floating rates)
Bank loans – unsecured
(fixed rates)
Bank overdraft – unsecured
(floating rates)
Commercial Paper Program
(floating rates)
Senior unsecured notes
(fixed rates)
Senior unsecured notes
(floating rate)
Other liabilities (fixed rates)
Contractual payments due
1 year or less
US$m
Between 1 year
and 5 years
US$m
Over 5 years
US$m
Total
US$m
Average interest
Rate
%
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
1,525.4
1,407.7
–
–
39.9
77.4
426.8
533.6
–
–
–
–
1,525.4
1,407.7
–
–
466.7
611.0
1.3%
3.1%
36.3
28.4
141.7
180.1
73.1
73.9
251.1
282.4
1.0%
1.0%
43.1
–
10.0
184.3
–
–
–
–
–
–
–
–
43.1
–
–
–
10.0
184.3
0.4%
2.6%
104.9
238.7
1,498.9
1,503.0
2,924.1
2,041.5
4,527.9
3,783.2
2.8%
2.9%
4.5
5.2
14.6
3.3
502.3
6.8
521.9
13.8
–
7.8
–
9.3
506.8
19.8
536.5
26.4
1,769.3
1,954.4
2,576.5
2,752.4
3,005.0
2,124.7
7,350.8
6,831.5
0.9%
5.2%
–
3.0%
4.7%
–
Floating interest rates represent the most recently determined rate applicable to the instrument at balance sheet date. All interest rates
on floating rate financial assets and liabilities are subject to reset within the next six months.
Fair value of financial assets and financial liabilities
Interest bearing liabilities
The carrying value of financial assets and liabilities is materially
the same as the fair value. The following methods and
assumptions were used to determine the net fair values
of financial assets and liabilities.
Cash
The carrying value of cash equals fair value, due to the liquid
nature of cash.
Trade and other receivables/payables
The carrying value of trade and other receivables/payables
with a remaining life of less than one year is deemed to be
equal to its fair value.
Fair value is calculated based on the discounted expected
principal and interest cash flows, using rates currently available
for debt of similar terms, credit risk and remaining maturities.
The Group also has external loans payable that have been
designated as a hedge of its investment in foreign subsidiaries
(known as a net investment hedge).
An effective hedge is one that meets certain criteria. Gains or
losses on the net investment hedge that relate to the effective
portion of the hedge are recognised in equity. Gains or losses
relating to the ineffective portion, if any, are recognised in the
consolidated statement of comprehensive income.
Valuation of financial instruments
For financial instruments measured and carried at fair value,
the Group uses the following to categorise the method used:
• Level 1: Items traded with quoted prices in active markets
for identical liabilities
• Level 2: Items with significantly observable inputs other
than quoted prices in active markets
• Level 3: Items with unobservable inputs (not based on
observable market data)
There were no derivatives outstanding as of 30 June 2020
(30 June 2019 – nil).
There were no transfers between Level 1 and 2 during the year.
123
CSL Limited Annual Report 2020 Notes to the Financial Statements
Note 12: Equity and Reserves
(a) Contributed Equity
Ordinary shares issued and fully paid
Share buy-back reserve
Total contributed equity
2020
US$m
–
(4,561.0)
(4,561.0)
2019
US$m
–
(4,603.0)
(4,603.0)
Ordinary shares receive dividends as declared and, in the event of
winding up the company, participate in the proceeds from the sale
of all surplus assets in proportion to the number of and amounts
paid up on shares held. Ordinary shares entitle their holder to one
vote, either in person or proxy, at a meeting of the company.
Due to share buy-backs being undertaken at higher prices than
the original subscription prices, the balance for ordinary share
contributed equity has been reduced to nil, and a reserve created
to reflect the excess value of shares bought over the original
amount of subscribed capital.
Information relating to employee performance option plans and
GESP, including details of shares issued under the scheme, is set
out in Note 5.
(b) Reserves
Movement in reserves
Opening balance
Share-based payments expense
Deferred tax on share-based payments
Net exchange gains/(losses) on
translation of foreign subsidiaries, net
of hedge
Share-based
payments reserve (i)
US$m
Foreign currency
translation reserve (ii)
US$m
2020
247.7
74.3
6.8
2019
195.1
52.0
0.6
2020
(5.7)
2019
29.1
Total
US$m
2020
242.0
74.3
6.8
2019
224.2
52.0
0.6
Closing balance
328.7
247.7
13.3
7.6
(34.7)
13.3
(34.7)
(5.6)
336.3
242.0
Nature and purpose of reserves
i. Share-based payments reserve
The share-based payments reserve is used to recognise the
fair value of options, performance rights and GESP rights issued
to employees.
ii. Foreign currency translation reserve
Where the functional currency of a subsidiary is not US dollars,
its assets and liabilities are translated on consolidation to US
dollars using the exchange rates prevailing at the reporting date,
and its profit and loss is translated at average exchange rates.
All resulting exchange differences are recognised in other
comprehensive income and in the foreign currency translation
reserve in equity. Exchange differences arising from borrowings
designated as hedges of net investments in foreign entities are
also included in this reserve.
124
CSL Limited Annual Report 2020
Note 13: Commitments and Contingencies6
(a) Commitments
Commitments in relation to capital expenditure contracted but not provided for in the financial statements are payable as follows:
Not later than one year
Later than one year but not later than five years
Total
Capital Commitments
US$m
2020
505.9
79.1
585.0
2019
802.0
148.4
950.4
The Company has entered into a lease for a building, currently under construction in Melbourne, as our new global headquarters.
The lease is expected to commence in early 2023 with an annual lease cost of approximately $15m.
(b) Contingent assets and liabilities
Litigation
The Group is involved in litigation in the ordinary course of business, including litigation for breach of contract and other claims.
The Group remains subject to certain patent infringement actions brought by competitors. CSL is highly confident in our intellectual
property positions which are the product of many years of innovative research by the Group. The Company is vigorously defending
against the claims.
Other Contingent assets and liabilities
On 24 June 2020 the Group entered into an exclusive licence with Uniqure for Haemophilia-B gene therapy. The transaction is subject
to regulatory approvals and will not close until FY2021. The upfront payment is expected to be $450m upon approval followed by
regulatory and commercial milestones.
6 Commitments and contingencies are disclosed net of the amount of GST (or equivalent) recoverable from, or payable to, a taxation authority
125
CSL Limited Annual Report 2020 Notes to the Financial Statements
Efficiency of Operation
Note 14: Cash and Cash Equivalents
Reconciliation of cash and cash equivalents
Cash at bank and on hand
Cash deposits
Total cash and cash equivalents
Cash, cash equivalents and bank overdrafts
Cash and cash equivalents are held for the purpose of meeting
short term cash commitments rather than for investment
or other purposes. They are made up of:
• Cash on hand.
• At call deposits with banks or financial institutions.
• Investments in money market instruments with original
maturities of six months or less, that are readily convertible
to known amounts of cash and subject to insignificant risk
of changes in value.
Note 15: Trade Receivables and Payables
(a) Trade and other receivables
Current
Trade receivables
Contract Assets
Less: Provision for expected credit loss
Sundry receivables
Prepayments
Carrying amount of current receivables and contract assets7
Non-current
Long term deposits/other receivables
Carrying amount of non-current other receivables7
Trade, other receivables, and contract assets are initially recorded
at fair value and are generally due for settlement within 30 to 60
days from date of invoice. Collectability is regularly reviewed at an
operating unit level.
A provision for expected credit loss (ECL) is recognised in
accordance with AASB 9. ECLs are based on the difference
between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to
receive, discounted at an approximation of the original effective
interest rate. Cash flows relating to short-term receivables are
not discounted if the effect of discounting is immaterial. When
a trade receivable for which a provision for expected credit loss
has been recognised becomes uncollectible in a subsequent
period, it is written off against the provision.
2020
US$m
2019
US$m
773.4
421.0
1,194.4
653.8
4.0
657.8
For the purposes of the cash flow statement, cash at the end
of the financial year is net of bank overdraft amounts.
Cash flows are presented on a gross basis. The GST component
of cash flows arising from investing and financing activities that
are recoverable from or payable to a taxation authority are
presented as part of operating cash flows.
2020
US$m
2019
US$m
1,121.1
191.2
(25.3)
1,287.0
271.2
145.7
1,703.9
14.3
14.3
1,274.4
182.0
(17.5)
1,438.9
266.0
116.8
1,821.7
21.6
21.6
ECLs are recognised in two stages. For credit exposures for which
there has not been a significant increase in credit risk since initial
recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a
12-month ECL). For those credit exposures for which there has
been a significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected over the
remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
For trade receivables and contract assets, the Group applies
a simplified approach in calculating ECLs. Therefore, 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
its historical credit loss experience, adjusted for forward-looking
factors specific to the debtors and the economic environment.
7
The carrying amount disclosed above 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.
126
CSL Limited Annual Report 2020 Contract assets and deferred revenue (contract liabilities):
The completion of performance obligations often differs from
contract payment schedules. A contact asset is initially recognised
for revenue earned from satisfying a performance obligation
(AASB 15); 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. 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 2020, the Group had made provision for expected credit loss of $25.3m (2019: $17.5m).
Opening balance at 1 July
Additional allowance/(utilised/written back)
Currency translation differences
Closing balance at 30 June
2020
US$m
17.5
7.8
(0.0)
25.3
2019
US$m
21.5
(3.5)
(0.5)
17.5
Non-trade receivables do not include any impaired or overdue amounts and it is expected they will be received when due.
The Group does not hold any collateral in respect to other receivable balances.
Key Judgements and Estimates
In applying the Group’s accounting policy to trade and other receivables with governments and related entities
in South Eastern Europe as set out in Note 11, significant judgement is involved in assessing the expected credit loss
of trade or other receivable amounts. Matters considered include recent trading experience, current economic and
political conditions and the likelihood of continuing support from agencies such as the European Central Bank.
(b) Trade and other payables
Current
Trade payables
Accruals and other payables
Share-based payments (EDIP)
Carrying amount of current trade and other payables
Non-current
Accruals and other payables
Carrying amount of non-current other payables
2020
US$m
2019
US$m
458.3
1,067.1
–
422.6
951.5
33.6
1,525.4
1,407.7
223.8
223.8
86.5
86.5
Trade and other payables represent amounts reflected at notional amounts owed to suppliers for goods and services provided to
the Group prior to the end of the financial year that are unpaid. Trade and other payables are non-interest bearing and have various
repayment terms but are usually paid within 30 to 60 days of recognition.
Receivables and payables include the amount of GST receivable or payable. The net amount of GST recoverable from, or payable
to, taxation authorities is included in other receivables or payables in the balance sheet.
127
CSL Limited Annual Report 2020 Notes to the Financial Statements
Note 16: Provisions
Current
Carrying amount at the start of the year
Utilised
Reversal of previously recognised provision
Additions
Carrying amount at the end of the year
Non-current
Carrying amount at the start of the year
Additions
Carrying amount at the end of the year
Employee
benefits
US$m
130.4
–
–
25.7
156.1
35.9
5.8
41.7
Legal
US$m
63.7
(40.7)
(23.0)
–
–
–
–
–
Other
US$m
Total
US$m
0.8
–
–
–
0.8
–
–
–
194.9
(40.7)
(23.0)
25.7
156.9
35.9
5.8
41.7
Provisions are recognised when all three of the following conditions are met:
• The Group has a present or constructive obligation arising from a past transaction or event
• It is probable that an outflow of resources will be required to settle the obligation
• A reliable estimate can be made of the obligation.
Provisions are not recognised for future operating losses.
Provisions recognised reflect our best estimate of the expenditure required to settle the present obligation at the reporting date.
Where the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows
to settle the obligation at a pre-tax discount rate that reflects current market assessments of the time value of money and of the
risks specific to the obligation.
Detailed information about the employee benefits is presented in Note 5.
128
CSL Limited Annual Report 2020 Other Notes
Note 17: Related Party Transactions
Ultimate controlling entity
The ultimate controlling entity is CSL Limited, otherwise described as the parent company.
Related party transactions
The parent company entered into the following transactions during the year with related parties in the Group.
Wholly owned subsidiaries
• Loans were advanced and repayments received on the long term intercompany accounts.
• Interest was charged on outstanding intercompany loan account balances.
• Sales and purchases of products.
• Licensing of intellectual property.
• Provision of marketing services by controlled entities.
• Management fees were received from a controlled entity.
• Management fees were paid to a controlled entity.
• R&D services were charged from and to controlled entities.
The transactions were undertaken on commercial terms and conditions.
Payment for intercompany transactions is through intercompany loan accounts and may be subject to extended payment terms.
Ownership interests in related parties
All transactions with subsidiaries have been eliminated on consolidation.
Subsidiaries
The following table lists the Group’s material subsidiaries.
Company
CSL Limited
Subsidiaries of CSL Limited:
CSL Innovation Pty Ltd*
CSL Behring (Australia) Pty Ltd
CSL Behring LLC
CSL Plasma Inc
CSL Behring GmbH
CSL Behring AG
CSL Behring Lengnau AG
Seqirus UK Limited
Seqirus Pty Ltd
Seqirus Vaccines Limited
Seqirus Inc
Country of Incorporation
Percentage owned
2020
%
2019
%
Australia
Australia
Australia
USA
USA
Germany
Switzerland
Switzerland
UK
Australia
UK
USA
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
* This entity was named Zenyth Therapeutics Pty Ltd until 1 June 2019
Key management personnel transactions with the Group
The following transactions with key management personnel and
their related entities have occurred during the financial year.
These transactions occur as part of a normal supplier or partner
relationship on “arm’s length” terms:
CSL has entered into a number of contracts, including
collaborative research agreements, with Monash University,
of which Megan Clark is a member of Council.
CSL has entered into a number of contracts, including collaborative
research agreements, with the Walter and Eliza Hall Institute for
Medical Research, of which Marie McDonald is a director.
CSL has received advisory services from Flagstaff Partners,
of which Marie McDonald is a Senior Advisor.
CSL has entered into a research collaboration with Frazier
Healthcare, of which Tadataka Yamada is a partner.
CSL in Australia has a corporate account with Medibank Private
Limited, of which Christine O’Reilly is a director.
CSL has entered into a research collaboration with the Baker
Heart and Diabetes Institute, of which Christine O’Reilly
is a director.
CSL has received financial services from Bank of America Merrill
Lynch, of which Megan Clark is a member of the Australian
Advisory Board.
CSL has a commercial arrangement to acquire laboratory
supplies from Agilent Technologies, of which Tadataka Yamada
is a director.
CSL has entered into a research collaboration with the Centre of
Eye Research Australia, of which Andrew Cuthbertson is a director.
129
CSL Limited Annual Report 2020 Notes to the Financial Statements
Note 18: Detailed Information – People Costs
(a) Defined benefit plans
The Group sponsors a range of defined benefit pension plans that provide either a lump sum or ongoing pension benefit for its
worldwide employees upon retirement. Entities of the Group who operate defined benefit plans contribute to the respective plans in
accordance with the Trust Deeds, following the receipt of actuarial advice.
The surplus/deficit for each defined benefit plan operated by the Group is as follows:
Pension Plan
CSL Pension Plan (Australia) – provides a lump sum
benefit upon exit
CSL Behring AG Pension Plan (Switzerland)
– provides an ongoing pension
CSL Behring Union Pension Plan (USA)
– provides an ongoing pension
CSL Behring GmbH Supplementary Pension Plan
(Germany) – provides an ongoing pension
bioCSL GmbH Pension Plan (Germany)
– provides an ongoing pension
CSL Behring KG Pension Plan (Germany)
– provides an ongoing pension
CSL Plasma GmbH Pension Plan (Germany)
– provides an ongoing pension
CSL Behring KK Retirement Allowance Plan (Japan)
– provides a lump sum benefit upon exit
CSL Behring S.A. Pension Plan (France)
– provides a lump sum benefit upon exit
CSL Behring S.p.A Pension Plan (Italy)
– provides a lump sum benefit upon exit
June 2020
$m
June 2019
$m
Plan
Assets
Accrued
benefit
Plan
surplus/
(deficit)
Plan
Assets
Accrued
benefit
Plan
surplus/
(deficit)
17.8
(18.6)
(0.8)
20.3
(19.0)
1.3
649.7
(730.5)
(80.8)
582.6
(664.4)
(81.8)
68.0
(66.6)
1.4
62.2
(62.0)
0.2
–
–
–
–
–
–
–
(226.9)
(226.9)
(3.0)
(3.0)
(17.7)
(17.7)
(0.3)
(0.3)
(15.4)
(15.4)
(1.5)
(1.1)
(1.5)
(1.1)
–
–
–
–
–
–
–
(190.0)
(190.0)
(2.9)
(2.9)
(14.7)
(14.7)
(0.3)
(0.3)
(14.7)
(14.7)
(1.4)
(1.2)
(1.4)
(1.2)
Total
735.5
(1,081.6)
(346.1)
665.1
(970.6)
(305.5)
In addition to the plans listed above, CSL Behring GmbH and
Seqirus GmbH employees are members of multi-employer plans
administered by an unrelated third party. CSL Behring GmbH,
Seqirus GmbH and their employees make contributions
to the plans and receive pension entitlements on retirement.
Participating employers may have to make additional
contributions in the event that the plans have insufficient
assets to meet their obligations. However, there is insufficient
information available to determine this amount on an employer
by employer basis. The contributions made by CSL Behring
GmbH and Seqirus GmbH are determined by the Plan Actuary
and are designed to be sufficient to meet the obligations of the
plans based on actuarial assumptions. Contributions made by
CSL Behring GmbH and Seqirus GmbH are expensed in the year
in which they are made.
130
CSL Limited Annual Report 2020 Movements in Accrued benefits and assets
During the financial year the value of accrued benefits increased
by $111.6m, mainly attributable to three main factors:
• Actuarial adjustments, due primarily to lower discount rates at
the end of the year than originally anticipated by the actuary,
generated an increase in accrued benefits of $46.6m. These
adjustments do not affect the profit and loss as they are
recorded in Other Comprehensive Income.
• Service cost charged to the profit and loss of $41.1m. This
amount represents the increased benefit entitlement of
members, arising from an additional year of service and
salary increases.
• Interest costs of $9.1m, representing the discount rate on the
benefit obligation and anticipated monthly benefit payments.
In the prior year the value of accrued benefits increased by
$131.5m. The increase is mainly attributable to three main factors:
• Actuarial adjustments, due primarily to lower discount rates at
the end of the year than originally anticipated by the actuary,
generated an increase in accrued benefits of $46.7m. These
adjustments do not affect the profit and loss as they are
recorded in Other Comprehensive Income.
The principal actuarial assumptions, expressed as weighted averages,
at the reporting date are:
Discount rate
Future salary increases
Future pension increases
Plan Assets:
The major categories of total plan assets are as follows:
Cash
Instruments quoted in active markets:
Equity Instruments
Bonds
Unquoted investments – property
Other assets
Total Plan assets
The variable with the most significant impact on the defined
benefit obligation is the discount rate applied in the calculation
of accrued benefits. A decrease in the average discount rate
applied to the calculation of accrued benefits of 0.25% would
increase the defined benefit obligation by $70.6m. An increase
in the average discount rate of 0.25% would reduce the defined
benefit obligation by $66.7m.
The defined benefit obligation will be discharged over an
extended period as members exit the plans. The plan actuaries
have estimated that the following payments will be required to
satisfy the obligation. The actual payments will depend on the
pattern of employee exits from the Group’s plans.
Year ended 30 June 2020
$44.4m (2019: 22.8m)
Between two and five years
$164.1m (2019: 99.3m)
Between five and ten years
$197.5m (2019: 148.1m)
Beyond ten years
$676.0m (2019: 699.7m)
• Service cost charged to the profit and loss of $33.1m. This
amount represents the increased benefit entitlement of
members, arising from an additional year of service and
salary increases.
• Interest costs of $11.9m, representing the discount rate on the
benefit obligation and anticipated monthly benefit payments.
Plan assets increased by $70.4m during the financial year.
The increase is mainly attributable to the following factors:
• Contributions made by employer and employee increased
plan assets by $39.3m.
Investment returns increased plan assets by $27.1m; and
Offsetting these increases were benefits paid by the plans
of $9.3m and unfavourable foreign currency movements
of $0.4m which are taken directly to the Foreign Currency
Translation Reserve.
In the prior year the value of plan assets increased by 38.3m.
Contributing factors were investment returns earned on plan
assets ($5.9m), employer and employee contributions ($37.9m);
offset by benefits paid by the plan ($3.7m) and unfavourable
currency movements ($1.1m).
2020
%
0.7%
2.1%
0.5%
2020
$m
21.9
241.7
328.9
143.3
(0.3)
735.5
2019
%
1.0%
2.1%
0.4%
2019
$m
40.8
227.3
278.7
115.1
3.2
665.1
131
CSL Limited Annual Report 2020 Notes to the Financial Statements
(b) Share-based payments – equity settled
The Non-Executive Directors Plan (NED)
The Non-Executive Directors (NED) pay a minimum of 20% of
their pre-tax base fee in return for a grant of Rights, each Right
entitling a NED to acquire one CSL share at no cost. There is a
nominated restriction period, of three to fifteen years, after which
the NED will have access to their shares.
On 22 August 2019, 3,106 Rights were granted under the NED vesting
on 17 February 2020 and 24 August 2020. On February 20, 2020,
388 Rights were granted under NED vesting on August 24, 2020.
Global Employee Share Plan (GESP)
The Global Employee Share Plan (GESP) allows employees
to make contributions from after tax salary up to a maximum
of A$6,000 per six month contribution period. The employees
receive the shares at a 15% discount to the applicable market
ate, as quoted on the ASX on the first day or the last day of the
six-month contribution period, whichever is lower.
Recognition and measurement
The fair value of options or rights is recognised as an employee
benefit expense with a corresponding increase in equity. Fair
value is independently measured at grant date and recognised
over the period during which the employees become
unconditionally entitled to the options or rights. Fair value is
independently determined using a combination of the Binomial
and Black Scholes valuation methodologies, including Monte
Carlo simulation, considering the terms and conditions on
which the options and rights were granted. The fair value of the
options granted excludes the impact of any non-market vesting
conditions, which are included in assumptions about the number
of options that are expected to vest.
At each reporting date, the number of options and rights that
are expected to vest is revised. The employee benefit expense
recognised each period considers the most recent estimate
of the number of options and rights that are expected to vest.
No expense is recognised for options and rights that do not
ultimately vest, except where the vesting is conditional upon
a market condition and that market condition is not met.
In 2017 CSL introduced a new long term incentive framework.
Legacy programs will cease to operate in 2020.
Long Term Incentives under the current framework
A face value equity allocation methodology, being a volume
weighted average share price based on the market price of a CSL
share at the time of grant, is used to determine the number of
units granted to a participant under each of the shared based
payment plans, which are as follows:
The Executive Performance and Alignment Plan (EPA) that grants
Performance Share Units (PSU) to qualifying executives. Vesting
is subject to continuing employment, satisfactory performance
and the achievement of an absolute return measure. The return
measure is a seven year rolling average Return on Invested Capital.
The Retain and Grow Plan (RGP) that grants Restricted Share
Units (RSU) to qualifying employees, participation in the RGP plan
is broader than in the EPA plan. Vesting is subject to continuing
employment and satisfactory performance.
Under both the EPA and annual RGP plans grants will vest in
equal tranches on the first, second, third and fourth anniversaries
of grant. For RGP commencement benefit awards, vesting dates
will vary.
There have been no changes to the terms of grant of any existing
instruments.
The fair value of the PSUs and RSUs granted is estimated at the
date of grant using an adjusted form of the Black-Scholes model,
considering the terms and conditions upon which the PSUs and
RSUs were granted. There is no exercise price payable on PSUs or
RSUs. On 1 September 2019, 231,742 PSUs and 419,673 RSUs were
granted. The relevant tranche of PSUs and RSUs will exercise
upon vesting on 1 September 2020, 2021, 2022, and 2023 and
1 March 2020, 2021, 2022, and 2023.On 1 March 2020, 5,813 PSUs
and 24,835 RSUs were granted. The relevant tranche of PSUs
and RSUs will exercise upon vesting between March 2020 and
September 2023.
Legacy Share-based Long Term Incentives (LTI) issued
in October 2015 and October 2016
Performance rights grants made in 2016 will vest over a four year
period with no retest. The EPS growth test has 100% vesting
occurring at a 13% compound annual growth rate and the
potential for additional vesting on the achievement of stretch EPS
growth targets. The relative TSR test is against a cohort of global
pharmaceutical and biotechnology companies with 50% vesting
where CSL’s performance is at the 50th percentile rising to 100%
vesting at the 75th percentile. Performance Options also vest over
a four year period and have no performance hurdles. The options
only have value when the share price on exercise exceeds the
exercise price. The company does not provide loans to fund the
exercise of options.
132
CSL Limited Annual Report 2020 Valuation assumptions and fair values of equity instruments granted
The model inputs for performance share units, restricted share units and GESP awards granted during the year ended
30 June 2020 included:
Performance Share Units
(by grant date)
1 September 2019 – Tranche 1
1 September 2019 – Tranche 2
1 September 2019 – Tranche 3
1 September 2019 – Tranche 4
1 March 2020 – Tranche 1
1 March 2020 – Tranche 2
1 March 2020 – Tranche 3
1 March 2020 – Tranche 4
Restricted Share Units
(by grant date)
1 September 2019 – Tranche 1
1 September 2019 – Tranche 1
1 September 2019 – Tranche 1
1 September 2019 – Tranche 2
1 September 2019 – Tranche 2
1 September 2019 – Tranche 3
1 September 2019 – Tranche 3
1 September 2019 – Tranche 4
1 September 2019 – Tranche 4
1 March 2020 – Tranche 1
1 March 2020 – Tranche 1
1 March 2020 – Tranche 2
1 March 2020 – Tranche 2
1 March 2020 – Tranche 3
1 March 2020 – Tranche 3
1 March 2020 – Tranche 4
Rights (by grant date)
22 August 2019 – Tranche 1
22 August 2019 – Tranche 2
20 February – Tranche 1
GESP (by grant date)10
1 September 2019 – Tranche 1
6 March 2020 – Tranche 1
Fair Value8
A$
Share
Price
A$
$232.89
$230.50
$228.14
$225.80
$314.88
$312.15
$309.45
$306.76
$235.31
$234.10
$232.89
$231.70
$230.50
$229.33
$228.14
$226.98
$225.80
$316.27
$314.88
$313.56
$312.15
$310.81
$309.45
$306.76
$235.31
$235.31
$235.31
$235.31
$316.27
$316.27
$316.27
$316.27
$235.31
$235.31
$235.31
$235.31
$235.31
$235.31
$235.31
$235.31
$235.31
$316.27
$316.27
$316.27
$316.27
$316.27
$316.27
$316.27
$229.22
$230.46
$227.92
$230.46
$331.29
$332.64
Exercise
Price
Expected
Volatility9
Life
Assumption
Expected
Dividend
Yield
Risk-free
Interest
Rate
A$
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
24.40%
12 months
21.48%
24 months
21.87%
36 months
21.32%
48 months
20.63%
6 months
22.91%
18 months
21.00%
30 months
21.39%
42 months
N/A
Nil
21.15%
6 months
24.40%
12 months
22.94%
18 months
21.48%
24 months
20.78%
30 months
21.87%
36 months
21.54%
42 months
21.32%
48 months
N/A
0 months
20.63%
6 months
20.65%
12 months
22.91%
18 months
22.91%
24 months
21.00%
30 months
21.39%
42 months
21.20%
6 months
24.38%
12 months
19.00%
6 months
1.03%
1.03%
1.03%
1.03%
0.86%
0.86%
0.86%
0.86%
1.03%
1.03%
1.03%
1.03%
1.03%
1.03%
1.03%
1.03%
1.03%
0.86%
0.86%
0.86%
0.86%
0.86%
0.86%
0.86%
1.10%
1.10%
0.79%
0.66%
0.73%
0.72%
0.80%
0.62%
0.49%
0.42%
0.48%
1.00%
0.85%
0.66%
0.64%
0.73%
0.72%
0.72%
0.76%
0.80%
0.75%
0.62%
0.50%
0.50%
0.49%
0.49%
0.42%
1.01%
0.87%
0.83%
$ 78.11
$240.87
$108.37
$309.44
$162.76
$201.70
20.00%
20.00%
6 months
6 months
1.75%
1.50%
1.75%
1.75%
8 PSUs are subject to a ROIC based performance measure
9
The expected volatility is based on the historic volatility (calculated based on the remaining life assumption of each equity instrument, adjusted
for any expected changes
10 The fair value of GESP equity instruments is estimated based on the assumptions prevailing on the grant date. In accordance with the terms and conditions
of the GESP plan, shares are issued at a 15% discount to the lower of the ASX market price on the first and last dates of the contribution period.
133
CSL Limited Annual Report 2020
Notes to the Financial Statements
Note 19: Detailed Information – Shareholder Returns
Note
Retained earnings
Opening balance at 1 July
Net profit for the year
Opening Balance Sheet adj. for accounting pronouncement adoptions
Dividends
Actuarial gain on defined benefit plans
Deferred tax on actuarial gain on defined benefit plans
Closing balance at 30 June
Performance Options Plan
Options exercised under Performance Option plans as follows
299,078 issued at A$89.52 (2019: 8,530 issued at A$29.34; 198,218 issued at A$73.93)
Global Employee Share Plan (GESP)
104,722 issued at A$162.76 in September/October 2019
(2019: 97,889 issued at A$138.00 on 24 September 2018)
94,101 issued at A$201.07 on 10 March 2020
(2019: 97,901 issued at A$160.69 on March/April 2019)
Consolidated Entity
2020
$m
2019
$m
9,612.3
2,102.5
(65.0)
(883.1)
(27.1)
12.7
8,490.2
1,918.7
74.0
(806.8)
(76.8)
13.0
10,752.3
9,612.3
18.0
18.0
11.6
12.4
42.0
10.8
10.8
9.7
11.1
20.8
Note 20: Auditor Remuneration
During the year, the following fees were paid or were payable for services provided by CSL’s auditor and by the auditor’s related practices:
AUDIT SERVICES – Ernst & Young Australia
Fees for auditing the statutory financial report of the parent covering the group and auditing the
statutory financial reports of any controlled entities
Fees for other assurance and agreed-upon-procedures services under other legislation
or contractual arrangements here there is discretion as to whether the service is provided
by the auditor or another firm
– Sustainability assurance
– Agreed upon procedures and other audit engagements
Fees for other services
Due diligence
Remuneration advisory
Tax compliance
Total fees to Ernst & Young (Australia)
AUDIT SERVICES – Ernst & Young Overseas Member Firms
Fees for auditing the statutory financial report of the parent covering the group and auditing
the statutory financial reports of any controlled entities
Fees for assurance services that are required by legislation to be provided by the auditor
Fees for other assurance and agreed-upon-procedures services under other legislation
or contractual arrangements here there is discretion as to whether the service is provided
by the auditor or another firm
– Agreed upon procedures and other audit engagements
Fees for other services
Total fees to overseas member firms of Ernst & Young (Australia)
Total audit services
Total non-audit services
Total auditor’s remuneration
134
2020
US$
2019
US$
1,851,091
1,374,356
110,982
9,749
64,778
30,544
375,384
232,728
22,288
–
186,845
–
2,602,222
1,656,523
3,649,937
3,469,810
38,540
13,459
110,806
28,463
28,226
31,283
3,827,746
3,542,778
5,771,105
658,863
4,981,174
218,128
6,429,968
5,199,301
CSL Limited Annual Report 2020 Note 21: Deed of Cross Guarantee
On 3 February 2017, a deed of cross guarantee was executed between CSL Limited and some of its wholly owned entities, namely
CSL International Pty Ltd (now CSL Behring (Holdings) Pty Ltd), CSL Finance Pty Ltd, Seqirus (Australia) Pty Ltd), Zenyth Therapeutics
Pty Ltd (now CSL Innovation Pty Ltd), Seqirus Pty Ltd, CSL Behring (Australia) Pty Ltd and Seqirus Holdings Australia Pty Ltd. During
the year ended 30 June 2020, CSL IP Investments Pty Ltd and Amrad Pty Ltd, were added to the deed. Under this deed, each company
guarantees the debts of the others. By entering into the deed, these specific wholly owned entities have been relieved from the
requirement to prepare a financial report and directors’ report under Class Order 98/1418 (as amended) issued by the Australian
Securities and Investments Commission.
The entities that are parties to the deed represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other parties
to the deed of cross guarantee that are controlled by CSL Limited, they also represent the ‘Extended Closed Group’. A consolidated
income statement and a summary of movements in consolidated retained profits for the year ended 30 June 2020 and 30 June 2019
and a consolidated balance sheet as at each date for the Closed Group is set out below.
Income Statement
Continuing operations
Sales revenue
Cost of sales
Gross profit
Sundry revenues
Dividend income
Interest income
Research and development expenses
Selling and marketing expenses
General and administration expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit for the year
Consolidated Closed Group
2020
US$m
1,035.3
(488.3)
547.0
25.7
521.9
1.3
(141.8)
(44.9)
(95.6)
(26.1)
787.6
(20.3)
767.3
2019
US$m
830.9
(558.7)
272.2
38.9
745.9
31.6
(148.3)
(51.8)
(168.6)
(27.4)
692.5
(0.1)
692.4
135
CSL Limited Annual Report 2020 2020
US$m
2019
US$m
481.8
407.5
212.3
1,101.6
13.6
386.2
205.1
604.9
48.1
40.9
14,631.1
14,627.2
841.1
121.9
23.3
–
723.6
56.1
29.9
1.3
15,665.5
16,767.1
15,479.0
16,083.9
770.1
53.0
2.9
826.0
26.6
1,429.2
9.4
27.8
1,493.0
2,319.0
71.1
47.8
2.7
121.6
325.4
1,207.7
8.0
30.9
1,572.0
1,693.6
14,448.1
14,390.3
(3,476.6)
(3,434.0)
304.2
17,620.5
14,448.1
88.3
17,736.0
14,390.3
2020
US$m
2019
US$m
17,735.9
17,720.0
767.3
0.4
(883.1)
692.4
0.6
(677.1)
17,620.5
17,735.9
Notes to the Financial Statements
Balance Sheet
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total Current Assets
Non-current assets
Trade and other receivables
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Retirement benefit assets
Total Non-Current Assets
Total assets
Current liabilities
Trade and other payables
Provisions
Deferred government grants
Total Current Liabilities
Non-current liabilities
Trade and other payables
Interest-bearing liabilities and borrowings
Provisions
Deferred government grants
Total Non-Current Liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
TOTAL EQUITY
Summary of movements in consolidated retained earnings of the Closed Group
Retained earnings at beginning of the financial year
Net profit
Actuarial gain/(loss) on defined benefit plans, net of tax
Dividends provided for or paid
Retained earnings at the end of the financial year
136
CSL Limited Annual Report 2020 Note 22: Parent Entity Information
Information relating to CSL Limited (‘the parent entity’)
(a)
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Current assets
Total assets
Current liabilities
Total liabilities
Contributed equity
Foreign Currency Translation Reserve
Retained earnings
Net Assets & Total Equity
Profit or loss for the year
Total comprehensive income
2019
US$m
2018
US$m
310.6
6,272.1
323.7
3,181.0
(4,014.9)
(600.4)
7,706.4
3,091.0
93.1
117.9
336.9
6,072.1
42.3
2,269.0
(4,057.1)
(624.2)
8,484.4
3,803.1
461.9
201.6
(b)
Guarantees entered into by the parent entity
The parent entity provides certain financial guarantees in the ordinary course of business. No liability has been recognised in
relation to these guarantees as the fair value of the guarantees is immaterial. These guarantees are mainly related to all external
debt facilities of the Group. In addition, the parent entity provides letters of comfort to indicate support for certain controlled
entities to the amount necessary to enable those entities to meet their obligations as and when they fall due, subject to certain
conditions (including that the entity remains a controlled entity).
(c)
Contingent liabilities of the parent entity
The parent entity did not have any material contingent liabilities as at 30 June 2020 or 30 June 2019. For information about
guarantees given by the parent entity, please refer above and to Note 21.
(d)
Contractual commitments for the acquisition of property, plant or equipment
The parent entity did not have any material contractual commitments for the acquisition of property, plant and equipment
as at 30 June 2020 or 30 June 2019.
Note 23: Subsequent Events
Other than as disclosed elsewhere in these statements, there are no matters or circumstances which have arisen since the end of the
financial year which have significantly affected or may significantly affect the operations of the Group, results of those operations or the
state of affairs of the Group in subsequent financial years.
Note 24: New and Revised Accounting Standards
New and revised standards and interpretations adopted by the Group
The Group has adopted, for the first time, certain standards and amendments to accounting standards. The adoption of AASB 16 Leases
and AASB Interpretation 23 Uncertainty over income tax treatments as of 1 July 2019 has been disclosed in these financial statements.
137
CSL Limited Annual Report 2020 Notes to the Financial Statements
Directors’ Declaration
1) In the opinion of the Directors:
a) the financial statements and notes of the company and of the Group are in accordance with the Corporations Act 2001 (Cth),
including:
i.
giving a true and fair view of the company’s and Group’s financial position as at 30 June 2020 and of their performance
for the year ended on that date; and
ii. complying with Australian Accounting Standards and Corporations Regulations 2001.
b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
2) About this Report (a) in the notes to the financial statements confirms that the financial report complies with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
3) This declaration has been made after receiving the declarations required to be made to the directors in accordance with section
295A of the Corporations Act 2001 (Cth) for the financial period ended 30 June 2020.
4) In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe that the members
of the Closed Group identified in note 21 will be able to meet any obligations or liabilities to which they are or may become subject,
by virtue of the Deed of Cross Guarantee dated 3 February 2017.
This declaration is made in accordance with a resolution of the directors.
Brian McNamee AO
Chairman
Melbourne
August 18 2020
Paul Perreault
Managing Director
138
CSL Limited Annual Report 2020
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent Auditor's Report to the Members of CSL Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of CSL Limited (the Company) and its subsidiaries (collectively
the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes to the financial statements,
including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2020 and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
139
CSL Limited Annual Report 2020
Notes to the Financial Statements
2
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
1. Existence and valuation of inventories
Why significant
How our audit addressed the key audit matter
At 30 June 2020, the Group holds inventories of $3,509.5
million which are recorded at the lower of cost and net
realisable value. The Group’s accounting for inventories is
complex as the nature of products being produced and the
strict quality and efficacy requirements it must comply with
leads to a risk that inventories may be valued at greater
than their recoverable amount.
Provisions can be recognised for all components of
inventories, including raw materials, work in progress and
finished goods. The Group considers a number of factors
when determining the appropriate level of inventory
provisioning, including regulatory approvals and future
demand for the Group’s products.
In addition, the geographic footprint of the Group and the
movements and sale of inventory between the Group’s
operations means both the existence of inventories and the
valuation of inventories is a key audit matter. This includes
considering whether any mark up of inventories from sales
within the Group is appropriately eliminated in the
consolidated financial statements.
The Group’s disclosures with respect to inventories is
included in Note 4 of the financial report.
We have assessed the carrying value of inventories,
including costing and provisions for obsolescence and net
realisable value at 30 June 2020.
The existence of inventories has been tested through our
attendance at regular cycle counts conducted throughout
the period or through attendance at year-end inventory
stocktakes in all locations with significant stock holdings.
Due to the COVID-19 pandemic, we observed counts
through video-conferencing technology at certain locations
where we were unable to physically attend inventory counts
in material locations due to local restrictions. Observing
physical inventories assisted with our valuation assessment
as we were able to identify quality issues and validate expiry
dates of products.
We assessed the appropriateness of the determination of
inventory cost by assessing the accuracy of the standard
costing used by the Group and assessing the recognition of
variances from standard costs.
We assessed whether inventory is recognised at the lower of
cost or net realisable value at period end by comparing the
inventory value measured at cost to audit evidence
supporting net realisable value such as the current selling
price of the products and achieved margins.
We assessed whether the provisions for obsolescence
calculated by the Group reflect known quality issues and
commercial considerations including product expiration,
market demand, and manufacturing plans, as well as their
compliance with Australian Accounting Standards, and
consistent application from prior periods.
We assessed the Group’s financial report consolidation
process, the elimination of any unrealised profits on
transactions between group entities and resultant tax
consequences. We have substantively tested the inputs to
the calculation of the intercompany profit in stock, and
verified that it eliminated upon consolidation
We have assessed the Group’s disclosures with respect to
inventories in Note 4 of the financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
140
CSL Limited Annual Report 2020
3
2. Uncertain Tax Positions
Why significant
How our audit addressed the key audit matter
The Group operates in a number of different tax
jurisdictions, all of which have specific tax risks and
regulations that need to be considered.
We assessed the Group’s various tax exposures to assess
whether adequate provisions have been recorded for
exposures with higher risk and uncertainty.
In particular, transfer pricing arrangements relating to
transactions within the Group are significant with a large
number of cross-border purchases and sales,
intercompany charges as well as transfers of intellectual
property between Group entities in different tax
jurisdictions.
The Group’s disclosures with respect to taxation are
included in Note 3 of the financial report.
Involving our taxation specialists in relevant countries, our
audit procedures included:
► assessing the Group’s determination of current and
deferred income tax expense, with particular focus on
uncertain tax positions and consideration of AASB
Interpretation 23 ‘Uncertainty over Income Tax
Treatments’;
► considering any third-party taxation advice received;
► understanding the status of and accounting for any tax
audits being conducted by regulators around the world
and their findings; and
► considering the Group’s transfer pricing documentation.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
141
CSL Limited Annual Report 2020
Notes to the Financial Statements
4
3. Implementation of AASB 16 Leases
Why significant
How our audit addressed the key audit matter
The Group adopted AASB 16 Leases (“AASB 16”) from 1
July 2019, which resulted in the recognition of $926
million of right-of-use assets and $1,004 million lease
liabilities at adoption date.
We selected a sample of lease agreements to determine the
appropriateness of the judgements and accounting
treatments applied in determining the transition adjustment
upon adoption of the new standard, including:
The application of this accounting standard is inherently
complex due to the volume of operating leases held by
the Group and the judgements applied by management,
including:
► the determination of the lease term considering the
impact of lease extension options;
► the determination of the lease term;
► the identification of non-lease components;
► the treatment of adjustments to lease payments (both
fixed and variable rate adjustments);
► the impact of lease modifications;
► the calculation of incremental borrowing rates,
particularly in multiple geographic regions
► the determination of discount rates used in calculating
lease liabilities; and
Key judgements applied to the Group’s leases are set out
in the Significant changes in the current reporting period
section of the financial statements.
► the application of practical expedients available under
AASB 16
We evaluated the effectiveness of the Group’s processes and
controls to capture and measure the right-of-use asset and
associated liability including the completeness of the
balances.
We selected a sample of leases from the Group’s contract
management system and assessed whether they have been
appropriately recognised under the standard.
We selected a sample of lease contracts to determine the
appropriateness of the discount rate used by the Group.
Where an incremental borrowing rate is applied, we involved
our debt advisory specialists to assess the interest rates
applied by the Group
We assessed the calculation of the adjustment to opening
retained earnings calculated by the Group.
We have assessed the Group’s disclosures with respect to
leases the Significant changes in the current reporting period
section of the financial statements.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
142
CSL Limited Annual Report 2020
5
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2020 Annual Report other than the financial report and our
auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual
Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the
Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
143
CSL Limited Annual Report 2020
Notes to the Financial Statements
6
We also:
► Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
► Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
144
CSL Limited Annual Report 2020
7
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30
June 2020.
In our opinion, the Remuneration Report of CSL Limited for the year ended 30 June 2020, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Rodney Piltz
Partner
Melbourne
18 August 2020
Kylie Bodenham
Partner
Melbourne
18 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
145
CSL Limited Annual Report 2020
14 Share Information
CSL Limited
Issued Capital Ordinary Shares: 454,048,707 as at 30 June 2020;
454,048,707 as at 14 August 2020
Details of incorporation
CSL’s activities were carried on within the Commonwealth
Department of Health until the Commonwealth Serum
Laboratories Commission was formed as a Statutory Act 1961
(Cth) (the CSL Act) on 2 November 1961. On 1 April 1991, the
Corporation was converted to a public company limited by
shares under the Corporations Law of the Australian Capital
Territory and it was renamed Commonwealth Serum
Laboratories Limited. These changes were brought into effect
by the Commonwealth Serum Laboratories (Conversion into
Public Company) Act 1990 (Cth). On 7 October 1991, the name
was changed to CSL Limited. The Commonwealth divested
all of its shares by public float on 3 June 1994.
Substantial shareholders
The CSL Sale Act 1993 (Cth) amends the CSL Act to impose
certain restrictions on the voting rights of persons having
significant foreign shareholdings, and certain restrictions
on CSL itself. CSL ordinary shares (being the only class
of shares on issue) have been traded on the Australian
Securities Exchange (ASX) since 30 May 1994. Melbourne
is the Home Exchange.
In June 2014, CSL commenced a sponsored Level 1 American
Depository Receipts (ADR) program with the Bank of New
York Mellon. The sponsored ADR program replaced the
unsponsored ADR programs that have previously operated
with CSL’s involvement.
The ADRs are tradeable via licensed US brokers in the
ordinary course of trading in the Over-The-Counter (OTC)
market in the US. Particulars for the sponsored ADR program
are: US Exchange – OTC and DR Ticker Symbol – CSLLY.
The following table shows holdings of five per cent or more of voting rights in CSL Limited’s shares as notified to CSL Limited
under the Australian Corporations Act 2001, Section 671B as at 30 June 2020.1
Date of last notice
Title of class
Identity of person
or group
Date received
Date of change
Number owned
Ordinary Shares Vanguard Group Inc
5 November 2018
31 October 2018
22,656,088
Ordinary Shares Blackrock Group
2 December 2019
28 November 2019
27,353,205
% of total
voting rights2
% of total voting
rights as at
14 August 20203
5.02%
6.02%
4.9%
6.02%
Voting rights – ordinary shares
At a general meeting, subject to restrictions imposed on
significant foreign shareholdings and some other minor
exceptions, on a show of hands each shareholder present
has one vote. On a poll, each shareholder present in person
or by proxy, attorney or representative has one vote for each
fully paid share held.
In accordance with the CSL Act, CSL’s Constitution provides
that the votes attaching to significant foreign shareholdings
are not to be counted when they pertain to the appointment,
removal or replacement of more than one-third of the directors
of CSL who hold office at any particular time. A significant
foreign shareholding is one where a foreign person has
a relevant interest in 5% or more of CSL’s voting shares.
Distribution of shareholdings as at 14 August 2020
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total shareholders and shares on issue
Unmarketable parcels
Minimum A$500.00 parcel at A$279.34 per
share (being the closing market price
on 14 August 2020)
Total holders
178,978
21,450
3,404
1,411
50
205,293
Shares
34,262,373
49,237,798
23,402,904
25,511,059
321,634,573
454,048,707
Minimum parcel size
Holders
2
370
% of issued capital
7.55
10.84
5.15
5.62
70.84
100.00
Shares
370
1
No changes in the holdings of five per cent or more of the voting rights in CSL Limited’s shares have been notified to CSL Limited between 1 July 2020
and 14 August 2020.
2 The percentages quoted are based on the total voting rights provided in the last substantial shareholders notice.
3 The percentages quoted are based on the total voting rights conferred by ordinary shares in CSL Limited as at 14 August 2020 of 454,048,707.
146
CSL Limited Annual Report 2020 to use this option by providing a payment instruction online
via the Investor Centre at investorcentre.com or by obtaining
a direct credit form from the Share Registry or by advising
the Share Registry in writing with particulars.
CSL now offers shareholders the opportunity to receive
dividend payments in US dollars by direct credit to a US bank
account. Shareholders who wish to avail themselves of this
payment option for the 2020 final dividend payment must
provide their valid US bank account details to the Share
Registry by the dividend record date of 11 September 2020.
The Annual Report is produced for your information. The
default option is an online Annual Report via CSL.com. If you
opt to continue to receive a printed copy and you receive
more than one or you wish to be removed from the mailing
list for the Annual Report, please advise the Share Registry.
The 2020 Annual General Meeting will be held online on
Wednesday, 14 October 2020 at 10am (Melbourne time).
Shareholder Information
Share Registry is overseen by Computershare. Shareholders
with enquiries go to investorcentre.com where most
common questions can be answered by virtual agent Penny.
There is an option to contact the Share Registry by email
if the virtual agent cannot provide the answer. Alternatively,
shareholders may telephone or write to the Share Registry
at the below address.
Separate shareholdings may be consolidated by advising
the Share Registry in writing or by completing a Request
to Consolidate Holdings form which can be found online
at investorcentre.com.
Change of address should be notified to the Share Registry
online via the Investor Centre at investorcentre.com, by
telephone or in writing without delay. Shareholders who are
broker sponsored on the CHESS sub-register must notify their
sponsoring broker of a change of address.
Direct payment of dividends into a nominated account is
mandatory for shareholders with a registered address in
Australia or New Zealand. All shareholders are encouraged
CSL’s 20 largest shareholders as at 14 August 2020
Shareholder
1
2
3
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
4 NATIONAL NOMINEES LIMITED
5
6
7
BNP PARIBAS NOMINEES PTY LTD
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