Note 13: Commitments and Contingencies (a) Capital Commitments Commitments in relation to capital expenditure contracted but not provided for in the financial statements are payable as follows: Capital Commitments 2023 US$m 2022 US$m Not later than one year 411 403 Later than one year but not later than five years 84 83 Total 495 486 (b) Contingent assets and liabilities Litigation In the ordinary course of business, the Group is exposed to contingent liabilities related to litigation for breach of contract and other claims. Contingent liabilities occur when the possibility of a future settlement of economic benefits is considered to be less than probable but more likely than remote. If the expected settlement of the liability becomes probable, a provision is recognised. Where appropriate, contingent liabilities are recognised at fair value on acquisition date in connection with a business combination (Note 2). Other contingent assets and liabilities The Group has entered into collaboration arrangements, including in-licensing arrangements with various companies. Such collaboration agreements may require the Group to make payments on achievement of stages of development, launch or revenue milestones and may include variable payments that are based on unit sales or profit (e.g. royalty and profit share payments). The amount of variable payments under the arrangements are inherently uncertain and difficult to predict, given the direct link to future sales, profit levels and the range of outcomes. The maximum potential unrecognised future milestone payments could amount to $7,952m in the event each related product reached its full commercial potential (2022: $2,050m). These amounts are undiscounted and are not risk-adjusted, which include all such possible payments that can arise assuming all products currently in development are successful and all possible performance objectives are met. The increase in potential milestone payments during the year includes commitments assumed from the acquisition of CSL Vifor (Note 2) and the collaboration and license agreement with Arcturus Therapeutics. The arrangement with Arcturus Therapeutics was entered into by the Group during the year in order to access their late stage self-amplifying mRNA (sa-mRNA) vaccine platform technology. Payments in connection with the transaction was paid to Arcturus during the year ended 30 June 2023, which has been recognised as an intangible asset (Note 8). The arrangement requires the Group to make payments on achievement of certain regulatory and commercial milestones, as well as royalties and future profit share arrangements. The Group also has certain take or pay arrangements with contract manufacturers or service providers which serve as commercial manufacturers and suppliers for certain products. To the extent a commitment is determined to be onerous, these are provided for within provisions in the consolidated balance sheet. CSL Limited Annual Report 2022/23 147
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