Note 12: Commitments and Contingencies (a) Capital Commitments Commitments in relation to capital expenditure contracted but not recognised in the consolidated balance sheet are payable as follows: Capital Commitments 2024 2023 US$m US$m Not later than one year 301 411 Later than one year but not later than five years 67 84 Total 368 495 (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. Contingent liabilities recognised in connection with past business combinations are recorded within provisions (Note 14) at the higher of fair value and the amount recognised on acquisition date until the liability has been extinguished. Recognised contingent liabilities recorded within the provisions as at 30 June 2024 includes outstanding liabilities assumed in connection with the acquisition of Vifor Pharma. Key Judgements and Estimates A contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by occurrence or non-occurrence of uncertain future events not wholly within the control of the Group. A contingent liability may also be a present obligation arising from past events but is not recognised on the basis that a future settlement of economic benefits is not probable. If the expected settlement of the liability becomes probable, a provision is recognised. The outcomes of litigation are inherently difficult to predict, and judgement has been applied in assessing the likely outcome of legal claims and determining which claims require recognition of a provision or disclosure of a contingent liability. Contingent liabilities are recognised at fair value within provisions on acquisition date in connection with a business combination after consideration of a range of possible outcomes where an outflow of economic benefits is considered possible. A number of pending legal matters were identified from the historical acquisition of CSL Vifor, which include matters relating to intellectual property, contractor, competitor and regulatory disputes and various other matters. Management has recorded such contingent liabilities at fair value on the date of the Vifor acquisition, which requires the use of significant judgements, estimates and assumptions and is subject to uncertainty. The key estimates that may have a significant impact on the estimated contingent liability in the future reporting periods include the timing and final amounts of any payments. These uncertainties can also cause reversals in previously recognised liabilities once final settlement is reached. 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 $7,835m in the event each related product reached its full commercial potential (2023: $7,952m). 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 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. 133
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