AstraZeneca Annual Report and Form 20-F Information 2008

Accounting Policies (Company)

Basis of accounting

The Company Financial Statements are prepared under the historical cost convention, modified to include revaluation to fair value of certain financial instruments as described below, in accordance with the Companies Act 1985 and UK Generally Accepted Accounting Principles (UK GAAP). The Group Financial Statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union as described in the Group Accounting Policies.

The following paragraphs describe the main accounting policies under UK GAAP, which have been applied consistently.

New Accounting Standards

The Company has adopted UITF Abstract 44 (IFRIC 11): ‘FRS 20 (IFRS 2) Group and Treasury Share Transactions’, which requires a parent company to recognise a capital contribution in respect of share option awards granted to employees of its subsidiaries for services provided to the subsidiary. The effect of adoption on the Company is to increase investments in subsidiaries for the aggregate amount of all such contributions and to increase other reserves. Comparative information has been restated to reflect this.

The Company has also adopted Amendments to FRS 17 ‘Retirement Benefits’ and the Amendment to FRS 26 and FRS 29 ‘Reclassification of Financial Assets’. The adoption of these amendments had no impact on the net results or net assets of the Company.

The Amendment to FRS 20 ‘Share-based Payment’, UITF Abstract 46 ‘Hedges of a Net Investment in a Foreign Operation’, Amendment to FRS 26 ‘Financial Instruments: Recognition and Measurement – Eligible Hedged Items’ and Amendment to FRS 8 ‘Related Party Disclosures’ have been issued but not yet adopted by the Company.

Foreign currencies

Profit and loss account items in foreign currencies are translated into US dollars at average rates for the relevant accounting periods. Assets and liabilities are translated at exchange rates prevailing at the date of the Company balance sheet. Exchange gains and losses on loans and on short term foreign currency borrowings and deposits are included within net interest payable. Exchange differences on all other transactions, except relevant foreign currency loans, are taken to operating profit.

Taxation

The charge for taxation is based on the result for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and for accounting purposes. Full provision is made for the effects of these differences. Deferred tax assets are recognised where it is more likely than not that the amount will be realised in the future. These estimates require judgements to be made including the forecast of future taxable income. Deferred tax balances are not discounted.

Accruals for tax contingencies require management to make judgements and estimates in relation to tax audit issues. Tax benefits are not recognised unless the tax positions will probably be sustained. Once considered to be probable, management reviews each material tax benefit to assess whether a provision should be taken against full recognition of that benefit on the basis of potential settlement through negotiation and/or litigation.

Any recorded exposure to interest on tax liabilities is provided for in the tax charge. All provisions are included in creditors due within one year.

Investments

Fixed asset investments, including investments in subsidiaries, are stated at cost and reviewed for impairment if there are indications that the carrying value may not be recoverable.

Financial instruments

Loans and other receivables are held at amortised cost. Long-term loans payable are held at amortised cost.

litigation

Through the normal course of business, AstraZeneca is involved in legal disputes, the settlement of which may involve cost to the Company. Provision is made where an adverse outcome is probable and associated costs can be estimated reliably. In other cases, appropriate descriptions are included.

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