Dear Shareholder,

We are pleased to report that the continuing strong performance of our plasma therapeutics business has delivered an excellent year for CSL. In addition, our long-term commitment to research and development has resulted in a significant collaborative outcome with Merck & Co. Inc. with the approval of the world’s first vaccine against cervical cancer.

Highlights:

• Net profit after tax from continuing operations (before the recognition of the contingent consideration) reached $351 million, up 49% on the previous year, and net operating cash flow was $522 million. Given our strong performance, CSL has made provision for the contingent payment of US$250 million arising from the acquisition of Aventis Behring in 2004.
   
• In June 2006, the US FDA and Australia’s TGA both granted approval to market Gardasil, the world’s first vaccine against cervical cancer. Merck & Co. Inc. is our licensee and has exclusive global marketing rights. CSL will receive royalties from Merck’s sales and has the distribution rights for Australia and New Zealand.
   
• CSL announced an $80 million capital investment in our Australian influenza vaccine plant to double capacity to 40 million doses per season and accommodate plans to introduce this vaccine into the US market in the 2007-08 winter season.
   
• After achieving encouraging preliminary results from initial clinical trials of our pandemic influenza vaccine based on the H5N1 avian virus, CSL is working closely with public health authorities and the Australian Government to develop and license a safe and effective prototype vaccine.
   
• Key plasma therapeutics continued to record strong growth in sales and Vivaglobin® subcutaneous immunoglobulin became the first product of its kind to be launched in the US market.
   
• CSL announced a proposal to acquire 100% of the issued shares in Zenyth Therapeutics Limited to be implemented by way of a Scheme of Arrangement.
   
• The Company’s various visual identities and operating names have been aligned to strengthen connections throughout CSL’s global network.

Our Thanks to Management and Staff

CSL now has more than 7,500 employees in 26 countries and successfully integrated operations have been the key to another year of strong business performance. It is important that we recognise that our employees at all levels have been instrumental in delivering this result. Your Board of Directors congratulates management and staff for the vital roles they have played in another excellent business outcome for CSL this financial year by continuing to deliver innovative medicines to thousands of people.

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