Other matters
Subsidiaries and principal activities
The Company 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 in the Financial Statements.
Branches and countries in which the Group conducts business
In accordance with the Companies Act 2006, we disclose below the members of the Group that have representative or scientific branches/offices outside the UK:
- AstraZeneca UK Limited: Albania, Algeria, Angola, Armenia, Azerbaijan, Bosnia and Herzegovina, Bulgaria, Chile, Costa Rica, Croatia, Cuba, Georgia, Ghana (scientific office), Ireland, Jordan, Kazakhstan, Kenya (scientific office), Macedonia, 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.
- AstraZeneca Singapore Pte Limited: Cambodia and Vietnam.
Distributions to shareholders and dividends for 2009
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 Capitalisation and shareholder return section in the Financial Review and Notes 20 and 21 to the Financial Statements.
The Company's dividends for 2009 of $2.30 (141.4 pence, SEK 16.84) per Ordinary Share amount to, in aggregate, a total dividend payment to shareholders of $3,336 million.
Two of the Group'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.
A shareholders' resolution was passed at the 2009 AGM authorising the Company to purchase its own shares. However, no share re-purchases took place in 2009. The Company will seek a renewal of its current permission from shareholders to purchase its own shares at the AGM on 29 April 2010.
During the Company's share re-purchase programmes that operated between 1999 and 2008, 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.
Going concern accounting basis
Information on the business environment in which the Group operates, including the factors underpinning the industry's future growth prospects, are included in the Business Environment section. Details of the product portfolio of the Group, our approach to product development and a summary of our development pipeline are included in the Research and Development section. Additional information on our Therapy Areas and a more detailed table of our development pipeline is included in the Therapy Area Review.
The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Review. In addition, Notes 15 and 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 Notes 13 and 14 to the Financial Statements.
The Group has considerable financial resources available. At 31 December 2009, the Group had $12.3 billion in financial resources (cash balances of $9.9 billion and committed undrawn bank facilities of $4.25 billion, with $1.9 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 Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing this Annual Report and the Financial Statements.
Changes in share capital
Changes in the Company's Ordinary Share capital during 2009, 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 Articles require each Director to be the beneficial owner of Ordinary Shares in the Company with an aggregate nominal value of $125 (which currently represent at least 500 shares). Such holding must be obtained within two months of the date of the Director's appointment. At 31 December 2009, 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' interests in shares 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.
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 its shareholders. The Company has been authorised by shareholders to place shareholder communications (such as the Notice of AGM and this Annual Report) 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 independent Non-Executive Director is also available to shareholders if they have concerns that contact through the normal channels of Chairman, CEO, CFO 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 Group'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 Combined Code, details of proxy voting by shareholders, including votes withheld, are given at the AGM and are placed on our website following the AGM.
Political donations
Neither the Company nor its subsidiaries made any EU political donations or incurred any EU political expenditure in 2009 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 Annual 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 2010 AGM, similar to that passed at the AGM on 30 April 2009, 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 2009, the Group's US legal entities made contributions amounting in aggregate to $733,687 (2008: $815,838) 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 the federal level and all contributions were made only where allowed by US federal and state law. US 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 2006 and were made without any involvement of persons or entities outside the US.
Significant agreements
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 by the Directors to be essential to the business of the Company.
Use of financial instruments
Notes 15 and 16 to the Financial Statements, include further information on the Group's use of financial instruments.
Creditor payment policy
It is not Group policy formally to comply with the Confederation of British Industry's code of practice on the prompt payment of suppliers. It is, however, Group 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 the Company's subsidiaries to trade creditors at the balance sheet date was equivalent to 56 days' average purchases (2008: 46 days). The methodology for this calculation has been amended in 2009 whereby rebates and chargeback accruals, previously included in this calculation, have been removed. The Company believes that as these amounts arise typically from our revenue arrangements, principally in the US, this methodology more accurately reflects time taken on average to repay creditors. The comparative calculation for the prior year is also presented under the new methodology. A considerable part of the trade creditors balance relates to the Merck account in the US, which has particularly long contractual payment terms. By removing this balance and other items not directly related to trade purchases in the US, a more accurate average of 47 days is obtained (2008: 40 days).
The Company has no external trade creditors.
Annual General Meeting
The Company's AGM will be held on 29 April 2010. 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 29 April 2010 for the re-appointment of KPMG as auditor of the Company.
The external auditor has undertaken various non-audit work for the Company during 2009. 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 2009.
Bureau Veritas
Bureau Veritas UK Limited (Bureau Veritas) has provided external assurance on corporate responsibility related information within this Annual Report and of the detailed content of the 'Responsibility' section of our website. Bureau Veritas has found the information provided within this Annual Report to be accurate and reliable (based on the evidence provided and subject to the scope, objectives and limitations defined in the full assurance statement). The full assurance statement which contains 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 of providing independent assurance services, and an annual turnover in 2008 of €2.6 billion.
On behalf of the Board
A C N Kemp
Company Secretary
28 January 2010
