Corporate governance: Other matters
OTHER COMPANY DISCLOSURES AND INFORMATION
Subsidiaries and principal activities
AstraZeneca PLC is the holding company for a group of subsidiaries whose principal activities are described in this Directors’ Report. Principal subsidiaries and their locations are given in the Principal Subsidiaries section.
Branches and countries in which the Company conducts business
In accordance with the Companies Act 1985, we disclose below the members of the Group that have representative or scientific branches/offices outside the UK:
AstraZeneca UK Limited: Albania, Algeria, Bosnia and Herzegovina, Bulgaria, Chile, Costa Rica, Croatia, Cuba, Ghana (scientific office), Ireland, Jordan, Kazakhstan, Romania, Russia, Serbia and Montenegro, Slovenia and Ukraine.
AstraZeneca AB: Egypt (scientific office), Latvia, Saudi Arabia (scientific office) and Slovakia.
AstraZeneca Export and Trading AB: Estonia, Lithuania, Romania and the United Arab Emirates.
Dividend
The Company’s dividends for 2008 of $2.05 (132.6 pence, SEK 15.36) per Ordinary Share amount to, in aggregate, a total dividend payment to shareholders of $2,171 million.
Two of the Company’s employee share trusts, AstraZeneca Share Trust Limited and AstraZeneca Quest Limited, waive their right to a dividend on the Ordinary Shares that they hold and instead receive a nominal dividend.
Going concern accounting basis
Information on the business environment AstraZeneca operates in, including the factors underpinning the industry’s future growth prospects, are included in the Business Environment section of this Directors’ Report. Details of the product portfolio of the Group, our approach to product development and our development pipeline are included in the Resources, Skills and Capabilities section, with additional information by major product group in the Therapy Area Review section.
The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Review. In addition, Note 15 and Note 16 to the Financial Statements include the Group’s objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and hedging activities and its exposures to credit, market and liquidity risk. Further details of the Group’s cash balances and borrowings are included in Note 13 and Note 14 of the Financial Statements.
The Group has considerable financial resources available. As at 31 December 2008, the Group has $7.8 billion in financial resources (cash balances of $4.3 billion and committed bank facilities of $4.3 billion, with $0.8 billion of debt due within one year). The Group’s revenues are largely derived from sales of products which are covered by patents and for which, in the short term at least, demand is relatively unaffected by changes in the global economy. In addition, the Group has a wide diversity of customers and suppliers across different geographic areas. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Form 20-F Information and Financial Statements.
Changes in share capital
Changes in the Company’s Ordinary Share capital during 2008, including details of the allotment of new shares under the Company’s share plans, are given in Note 20 to the Financial Statements.
Directors’ shareholdings
The Company’s Articles require each Director to be the beneficial owner of Ordinary Shares in the Company with an aggregate nominal value of $125 (500 shares). Such holding must be obtained within two months of the date of the Director’s appointment. At 31 December 2008, all of the Directors complied with this requirement and full details of each Director’s interests in shares of the Company are set out in the Directors' Remuneration Report section. Information about the shareholding expectations of the Remuneration Committee (in respect of Executive Directors and SET members) and the Board (in respect of Non-Executive Directors) is also set out in the Directors’ Remuneration Report. Separately, both the Non-Executive Directors and the Executive Directors (and members of the SET) are required as a matter of policy to build up a minimum level of shareholding in the Company. Details of these policies are set out in the Directors' Remuneration Report section.
Shareholder communications
In its financial and business reporting to shareholders and other interested parties by means of quarterly, half-year and full-year reports, the Board aims to present a balanced and understandable assessment of the Group’s financial position and prospects.
The Company makes available to shareholders information about the Company through a range of media, including a fully integrated html corporate website (astrazeneca.com) containing a wide range of information of interest to institutional and private investors. The Company considers its website to be an important means of communication with shareholders. Accordingly, and as permitted by a change in UK company law, at the 2007 AGM of the Company, a resolution was proposed and approved which authorised the Company to place shareholder communications (such as the Notice of AGM and the Annual Report and Form 20-F Information) on its corporate website in lieu of sending paper copies to shareholders (unless specifically requested by shareholders). Whilst recognising and respecting the fact that some of our stakeholders may have different preferences regarding the manner in which they receive information about the Company, we will continue to promote the benefits of electronic communication given the advantages that this has over traditional paper-based communications both in terms of the configurability and accessibility of the information that is provided and the consequent cost savings and reduction in environmental impact associated with reduced printing and distribution costs.
The Company has frequent discussions with institutional shareholders on a range of issues affecting its performance. These include individual meetings with some of the Company’s largest institutional shareholders to seek their views and any concerns can be reported to the Board. In addition, the Company responds to individual ad hoc requests for discussions from institutional shareholders and analysts. The Group’s Investor Relations department acts as a main point of contact for investors throughout the year. The Senior Non-Executive Director is also available to shareholders if they have concerns that contact through the normal channels of Chairman, Chief Executive Officer, Chief Financial Officer and/or the Group Investor Relations department has failed to resolve, or in relation to which such contact is inappropriate.
All shareholders, including private investors, have an opportunity at the AGM to put questions to members of the Board on matters relating to the Company’s operation and performance. Formal notification of the AGM is sent to shareholders at least one month in advance. The Chairmen of the Board’s committees ordinarily attend the AGM to answer questions raised by shareholders. In line with the UK Combined Code, details of proxy voting by shareholders, including votes withheld, are made available on request and are placed on the Company’s website following the AGM.
Distributions to shareholders
The Company’s stated distribution policy comprises both a regular cash dividend and a share re-purchase component, further details of which are set out in the Financial Review and the Financial Statements.
Pursuant to the shareholders’ resolution passed at the 2008 AGM authorising the Company to purchase its own shares, during 2008 the Company re-purchased (and subsequently cancelled) 13.6 million of its own Ordinary Shares with a nominal value of $0.25 each, at an aggregate cost of $610 million, representing 0.9% of the total issued share capital of the Company. The average price paid per share in 2008 was 2397 pence. Shares issued in respect of share schemes totalled 4.1 million. The Board announced in the Third Quarter and Nine Month Results 2008 that no further share re-purchases would take place in 2008 in order to maintain the flexibility to invest in the business. For the same reason, the Board has decided that no share re-purchases will take place in 2009.
The Company executed the share re-purchase programme through a combination of discretionary purchases and through irrevocable, non-discretionary instructions. The Company continues to maintain robust controls in respect of all aspects of the share re-purchase programme to ensure compliance with English and other applicable law and the Financial Services Authority’s Listing Rules, Disclosure and Transparency Rules and Prospectus Rules. However, in order to maintain flexibility, the Company will seek a renewal of its current permission from shareholders to purchase its own shares at the AGM on 30 April 2009.
Since the Company began its share re-purchase programmes in 1999, a total of 376.3 million Ordinary Shares were re-purchased, and subsequently cancelled, at an average price of 2661 pence per share for a consideration, including expenses, of $18,099 million.
Political donations
Neither the Company nor its subsidiaries made any donations or incurred any expenditure in 2008 in the EU and they do not intend to do so in the future in respect of which shareholder authority is required (or for which disclosure in this Report is required under the Companies Act 2006).
However, to enable the Company to continue to support interest groups or lobbying organisations concerned with the review of government policy or law reform without inadvertently breaching the Companies Act 2006, which defines political donations and other political expenditure in broad terms, a resolution will be put to shareholders at the 2009 AGM, similar to that passed at the AGM on 24 April 2008, to authorise the Company and its subsidiaries to make: (i) donations to political parties; (ii) donations to political organisations other than political parties; and (iii) incur political expenditure, up to an aggregate limit of $250,000.
In 2008, AstraZeneca’s US legal entities made contributions amounting in aggregate to $815,838 (2007: $321,645) to state political party committees and to campaign committees of various state candidates affiliated with the major parties in accordance with pre-established guidelines. No corporate donations were made at federal level, and all contributions were made only where allowed by US federal and state law. American citizens or individuals holding valid green cards exercised decision-making over the contributions and the funds were not provided or reimbursed by any non-US legal entity. Such contributions do not constitute political donations or political expenditure for the purposes of the Companies Act 1985 or Companies Act 2006 and were made without any involvement of persons or entities outside the US.
Takeovers directive
Following the implementation of paragraph 13, Part VII, Schedule 7 of the Companies Act 1985 (inserted by section 992 of the Companies Act 2006), the Company is required to make certain additional disclosures.
Where disclosures are required they can be found in other parts of this Report as listed below, each of which is incorporated into this Directors’ Report:
- Structure of the Company’s share capital and rights and obligations attaching to shares (contained in the Corporate Information section and Notes to the Financial Statements).
- Significant holders of the Company’s shares (contained in the Shareholder Information section).
- Appointment and replacement of Directors (contained in the Corporate Governance section).
- Powers of Directors (contained in the Corporate Governance section).
- Amendments to the Company’s Articles (contained in the Corporate Information section).
- Details of the Company’s employee share schemes (set out in Note 24 to the Financial Statements).
There are no significant agreements to which the Company is a party that take effect, alter or terminate on a change of control of the Company following a takeover bid.
There are no persons, with whom the Company has contractual or other arrangements, who are deemed to be essential to the business of the Company.
Use of financial instruments
Note 15 and Note 16 to the Financial Statements, entitled Financial Risk Management Objectives and Policies/Financial Instruments, include further information on the Company’s use of financial instruments.
Creditor payment policy
It is not Company policy formally to comply with the Confederation of British Industry’s code of practice on the prompt payment of suppliers. It is, however, Company policy to agree to appropriate payment terms with all suppliers when agreeing to the terms of each transaction, to ensure that those suppliers are made aware of the terms of payment and, subject to their compliance, abide by the terms of payment. The total amount of money owed by AstraZeneca PLC’s subsidiaries to trade creditors at the balance sheet date was equivalent to 92 days’ average purchases (2007: 81 days). No equivalent disclosure is provided in respect of AstraZeneca PLC, as it has no external trade creditors.
Annual General Meeting
The Company’s AGM will be held on 30 April 2009. The meeting place will be in London. A Notice of AGM will be sent to all registered holders of Ordinary Shares and, where requested, to the beneficial holders of shares.
External auditor
A resolution will be proposed at the AGM on 30 April 2009 for the re-appointment of KPMG Audit Plc, London as auditor of the Company.
The external auditor has undertaken various pieces of non-audit work for the Company during 2008. More information about this work and the audit and non-audit fees paid by the Company are set out in Note 27 to the Financial Statements. The external auditor is not engaged by the Company to carry out any non-audit work on which it might, in the future, be required to express an audit opinion. As explained more fully in the Audit Committee section, the Audit Committee has established pre-approval policies and procedures for audit and non-audit work permitted to be carried out by the external auditor and has carefully monitored the objectivity and independence of the external auditor throughout 2008.
Bureau Veritas
Bureau Veritas UK Limited has provided external assurance on corporate responsibility related information within this Annual Report and Form 20-F Information, and of the detailed content of the ‘Responsibility’ section of AstraZeneca’s corporate website. Bureau Veritas has found the information provided within this Report to be accurate and reliable. The full assurance statement containing detailed scope, methodology, overall opinion and recommendations can be found on AstraZeneca’s website, astrazeneca.com; web page content assured by Bureau Veritas is marked at the bottom of each page.
Bureau Veritas is an independent professional services company that specialises in Quality, Health, Safety, Social and Environmental Management with a long history in providing independent assurance services, and an annual turnover in 2007 of €2.06 billion.
On behalf of the Board.
A C N KEMP
Company Secretary
29 January 2009
QUICK LINKS
DOWNLOAD REPORT
Our report is available to download in CORPORATE RESPONSIBILITY
Find out more about our commitment to responsible business
GLOSSARY
Abbreviations/expressions and their meanings, when used on this website
FEEDBACK
Your opinions and comments are very important to us
