Annual Report 2002









EXHIBIT 10.1      

  














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	 	AstraZeneca Annual Report and Form 20-F 2002

www.astrazeneca.com




Contents



  	Key Achievements	01
	
	 

	Financial Highlights	02
	
	 

	Chairman’s Statement	04
	
	 

	Chief Executive’s
      Review	05
	
	 

	Board of Directors	06
	
	 

	 	 
	Operational Review	 
	
	 

	Strategy	08
	
	 

	Key Product Summary	09
	
	 

	Global Market Overview	10
	
	 

	Gastrointestinal	11
	
	 

	Cardiovascular	12
	
	 

	Oncology	13
	
	 

	Infection	14
	
	 

	Respiratory and Inflammation	15
	
	 

	Central Nervous System	16
	
	 

	Pain Control	17
	
	 

	Geographic Review	18
	
	 

	Research and Development	21
	
	 

	Development Pipeline	22
	
	 

	Commercialisation and Portfolio	 
	Management	24
	
	 

	Supply and Manufacturing	25
	
	 

	Other Businesses	26
	
	 

	Main Facilities	26
	
	 

	Intellectual Property	27
	
	 

	Industry Regulation	27
	
	 

	Corporate Responsibility	29
	
	 

	Financial Review	30
	
	 

	Directors’ Report	44
	
	 

	Directors’ Remuneration
      Report	49
	
	 

	 	 
	Financial Statements	 
	
	 

	Contents	55
	
	 

	Financial Statements and Notes Relating	
	to the Financial Statements	56
	
	 

	Principal Subsidiaries, Joint Ventures	 
	and Associates	112
	
	 

	Additional Information for US Investors	113
	
	 

	Group Financial Record – UK
      GAAP	123
	
	 

	Group Financial Record – US
      GAAP	125
	
	 

	Shareholder Information	126
	
	 

	Risk Factors	134
	
	 

	AstraZeneca Code of Conduct	137
	
	 

	Additional Information	139
	
	 

	Cross Reference to Form 20-F	140
	
	 




 


	 


 














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	02	AstraZeneca Annual Report and Form 20-F 2002

   www.astrazeneca.com	Financial Highlights	 



Financial Highlights

	Continuing Operations before Exceptional Items	 	 	 	 	 
	 	 	 	 	 	% growth	 
	 	2002	 	2001	 	CER	 
	
	
	
	
	
	
	 
	Sales1
      $m	17,841	 	16,222	 	+9	 
	
	
	
	
	
	
	 
	Operating
    profit $m	4,356	 	4,156	 	+5	 
	
	
	
	
	
	
	 
	Earnings per
      share2
      $	1.84	 	1.73	 	+7	 
	
	
	
	
	
	
	 
	Group earnings per share2
      $

   (statutory FRS3)	1.64	 	1.65	 	 	 
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 


	Dividend for 2002	 	 	 	 	 	 	 	 
	 	$ 	 	pence	 	SEK	 	Payment date	 
	
	
	
	
	
	
	
	
	 
	First interim dividend	0.23	 	14.7	 	2.21	 	7 October 2002	 
	
	
	
	
	
	
	
	
	 
	Second interim dividend	0.47	 	28.5	 	3.99	 	7 April 2003	 
	
	
	
	
	
	
	
	
	 
	Total dividend	0.70	 	43.2	 	6.20	 	 	 
	
	
	
	
	
	
	
	
	 


 

	1	2001 cash discounts reclassified
      from cost of sales to sales
	2	2001 restated for implementation
      of FRS19 – Deferred Tax


	 






 



 Back to Contents

	 	AstraZeneca Annual Report and
      Form 20-F 2002

    www.astrazeneca.com	Financial Highlights	03






	1	continuing operations before
      exceptional items, excluding Agrochemicals
	2	2001 cash discounts
      reclassified from cost of sales to sales
	3	2001 restated for implementation
      of FRS19 – Deferred
      Tax
	*	as recently launched, growth
      rates not meaningful 

      Note: all growth rates at constant exchange rates (CER)
















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	06	 AstraZeneca
        Annual Report and Form 20-F 2002

        www.astrazeneca.com
	 Board
        of Directors
	 


Board of Directors at 31 December 2002









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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Board of Directors	07


          

          Percy
  Barnevik (61)

    Non-Executive Chairman

    Chairman of the Nomination CommitteeAppointed
    as a Director 6 April 1999. Honorary Chairman of Sandvik AB. Non-Executive
    Director of General Motors Corporation. Member of the Academies of Engineering
    Sciences in Sweden and Finland and Honorary Member of the Royal Academy of
    Engineering, UK. Member of Advisory Councils in Korea, India and the Investment
    Council advising the South African Government. Member of the Business Council
    of American CEOs and the Council on Foreign Relations, USA. Member of the
    Advisory Board of Centre for European Reform, UK.

  Håkan Mogren
    (58)
Executive Deputy Chairman

Member of the Nomination Committee
Appointed as a Director 6 April
    1999. Formerly CEO and a Director of Astra AB (appointed 18 May 1988). Non-Executive
    Chairman of Reckitt Benckiser plc. Non-Executive Vice-Chairman of Gambro AB.
    Non-Executive Director of Investor AB, Norsk Hydro ASA and the Marianne and
    Marcus Wallenberg Foundation. Member of the Royal Swedish Academy of Engineering
    Sciences.

  Åke Stavling
    (58)*

    Executive Director, Business Development

    Appointed as a Director 6 April 1999. Also has overall responsibility for
    corporate strategy. Non-Executive Director of Cambridge Antibody Technology
    Group plc.

  Jane Henney (55)
Non-Executive Director

    Member of the Audit Committee and Nomination Committee

    Appointed as a Director 24 September 2001. Senior Scholar, Association of
    Academic Health Centers, Washington DC. Commissioner of Food and Drugs 1998-2001
    and Deputy Commissioner for Operations 1992-1994, US Food and Drug Administration.
    Deputy Director, US National Cancer Institute 1980-1995. Non-Executive Director
    of AmerisourceBergen Corporation. Member of the Board of Trustees of the Commonwealth
    Fund and the Scripps Research Institute. Member of the Medical & Scientific
    Advisory Board of MPM Capital.

        


        
        
  
Sir Tom
    McKillop (59)

    Chief Executive

  
  Appointed as a Director 1 January
    1996. Non-Executive Director of Lloyds TSB Group plc. President of the European
    Federation of Pharmaceutical Industries and Associations. Pro-Chancellor of
    the University of Leicester. Chairman of the British Pharma Group and the
    North West Science Council.

  

  Dame Bridget Ogilvie (64)

    Non-Executive Director Member of the Audit Committee

    Appointed as a Director 1 January 1997. Also
    has responsibility for overseeing corporate responsibility. Non-Executive
    Director of the Manchester Technology Fund Limited. Chairman of the Medicines
    for Malaria Venture, the Governing Body of the Institute of Animal Health
    and the Association of Medical Research Charities. Trustee of the Science
    Museum and Cancer Research UK. Chairman of the Trustees of the AstraZeneca
    Science Teaching Trust.

  Marcus Wallenberg (46)

    Non-Executive Director

    Member of the Audit Committee

    Appointed as a Director 6 April 1999. Formerly a Director of Astra AB
    (appointed 18 May 1989). President and Chief Executive Officer of Investor
    AB. Non-Executive Vice-Chairman of Saab AB, Skandinaviska Enskilda Banken
    AB and Telefonaktiebolaget LM Ericsson. Non-Executive Director of Scania AB,
    Stora Enso Oyj and the Knut and Alice Wallenberg Foundation.

  Karl von
    der Heyden (66)

    Non-Executive Director

    Chairman of the Audit Committee

     Appointed as a Director 1 October 1998. Executive
    Vice-President 1989-1992 and Co-Chairman and Chief Executive Officer 1993
    of RJR Nabisco. President and Chief Executive Officer of Metallgesellschaft
    Corp. 1993-1994. Vice-Chairman of PepsiCo, Inc. 1996-2001. Non-Executive Director
    of Federated Department Stores Inc., ARAMARK Inc and Exult, Inc.



        

        
        
Jonathan
    Symonds (43)
Executive Director
    and Chief Financial Officer
Appointed as a Director 1 October 1997. Also
  has overall responsibility for Information Services. Non-Executive Director
  of QinetiQ Group plc. Member of the Accounting Standards Board’s Urgent
  Issues Task Force.

    Sir Peter Bonfield CBE, FREng
      (58)

      Senior Non-Executive Director Chairman of the Remuneration Committee and
      Member of the Nomination Committee

      Appointed as a Director 1 January
      1995. Chief Executive of British Telecommunications plc 1996-2002. Non-Executive
      Director of Telefonaktiebolaget LM Ericsson, Mentor Graphics Corporation
      and Taiwan Semiconductor Manufacturing Company, Ltd. Vice-President of The
      British Quality Foundation.

    Erna Möller
      (62)

      Non-Executive Director

      Member of the Remuneration Committee

      Appointed as a Director 6 April
      1999.

    Formerly a Director of Astra AB (appointed 15 May 1995). Executive Director
    of the Knut and Alice Wallenberg Foundation. Professor of Clinical Immunology
    and Member of the Nobel Assembly, Karolinska Institute.

    Member of the Royal Swedish Academy of Engineering Sciences.

    John Buchanan (59)

      Non-Executive Director

      Member of the Audit Committee and Remuneration
      Committee

      Appointed as a Director 25 April
      2002. Executive Director and Group Chief Financial Officer of BP p.l.c.
      1996-2002. Non-Executive Director of The Boots Company PLC, BHP Billiton
      Plc (effective 1 February 2003) and Vodafone Group Plc (effective 1 April
      2003).

  Other officers of the Company
    at 31 December 2002 included members of the Senior Executive Team, as set
    out on page 45 and:

        Graeme Musker

      Group Secretary and Solicitor

      Appointed as Company Secretary

      6 June 1993.

        *Åke
    Stavling left the Company on 
31 January 2003.

        

        





        






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	08	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Operational Review	 



Strategy



	We are committed to creating enduring shareholder value by delivering a flow of innovative medicines that meet the needs of patients and healthcare professionals in important
areas of medicine.
	 
	As a prescription pharmaceutical company focused on the introduction of new medicines, we are transforming our portfolio from successful but mature brands to a range of exciting new
  products.
     This transformation will involve:
	 	 
	>	realising the full potential of our established portfolio and high potential pipeline
	 	 
	>	retaining and building on our leading positions, notably in the key markets of the US, Japan and Europe
	 	 
	>	sustained, focused investment in R&D
	 	 
	>	effective resource allocation and cost control, supported by our strong performance-led culture
	 	 
	This strategy requires the fulfilment of six key business priorities:

     First choice for customers

       We aim to continue to build on our leading positions in many important areas of medicine by
  providing new, innovative products and services that meet the medical needs of patients and healthcare professionals and which offer value in the treatment of disease.
     We recognise the challenges of cost containment in healthcare and are committed to improving patient choice and access to medicines.
  We believe that new global communication channels offer scope for better use and uptake of medicines and we will embrace the opportunities this presents.
  Growth through key products

    Growth of our business will be driven by:
	 	 
	>	the rapid growth of our most
       recently launched high potential products Nexium and Symbicort (launched
       2001) and Faslodex and Iressa (launched 2002)
	 	 







	>	building on the success of
       other key products, Arimidex, Atacand, Casodex, Seroquel and Zomig
	 	 
	>	successful launches worldwide
       of the high potential products currently in late stage development, including Crestor and Exanta
	 	 
	>	active lifecycle management of the product portfolio and delivery of the full sales potential of the established range
	 	 
	Full details of product performance are given in this Operational Review and the Financial Review on pages 11 to 43.
     Win in the US

       Special focus is being given to the future growth of the US business as a critical, integrated part of our
    global organisation.
     We aim to deliver outstanding performance in the US, the world’s largest market for pharmaceuticals,
    worth $194 billion and growing at 15% per annum. We achieved a good US sales performance in 2002 of $9,351 million with a growth rate of 10%.
    We continued
         to expand our R&D presence in Boston and to improve the effectiveness
         of our US sales force to maximise the opportunities provided by the
    flow of new products.
    Further details are given on pages 18 to 19.
    Secure the flow of new products

        Already a world leading R&D organisation, we continue to focus on improving R&D
           productivity and efficiency of new drug delivery, increasing our output
           of quality CDs, vigorously eliminating weaker products from early
           development and bringing better drugs to market faster. Our CD delivery
           has increased by 20% in the last three
  years and on average one quality CD with more stringent criteria now enters
    pre-clinical development each month.
    We are well placed to exploit the opportunities in leading edge science and technology and to capture the benefits of scale of a large organisation whilst retaining the spirit and
    innovation of an entrepreneurial company.
    We aim to be at the forefront of innovative technology. An extensive network with leading universities and biotechnology companies, in addition to our in-licensing







	programme, complements
    our in-house R&D activities.

    R&D spend totalled $3,069 million in
      2002 and we are on track to meet the challenging R&D targets that will
    deliver our strategic objectives.

    Further
    details are given on pages 21 to 23.

    Build
      the talent base 

      We recognise that continued success depends
      on the quality and commitment of our people. We aim to continue to attract
      and retain the best talent within a performance-based culture that values,
      supports and rewards team and individual contributions. Our ongoing employer
      of choice initiative aims to allow the full potential of our people to be
      realised. It centres around three global themes: work environment, learning
      and development opportunities and
  reward.

    See page 29 for more details.

    Fast,
            effective organisation 

            Our success depends on our ability to respond
        quickly and effectively to changing business needs and we believe this
        will be increasingly important in the future. We have achieved productivity
        gains in
  a number of
  areas including R&D, supply chain efficiency and speed and clarity of decision
  making and have identified areas for further improvement to enhance our performance
  in these and all other aspects of our business.  






 








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	 	AstraZeneca Annual Report and Form 20-F 2002

   www.astrazeneca.com	Operational Review	09



Key Products Summary





























	n/m As recently launched, growth rates not meaningful
	1	Product under license from
      Merck & Co.,
Inc.
	2	Product under license from
      Takeda Chemical Industries Ltd
	3	Product under license from
      Sumitomo Pharmaceuticals Co., Ltd
	*	2001 cash discounts reclassified
        from cost of sales to sales

        Note: all growth rates at constant exchange rates (CER)























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	10	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Operational Review	 



Global Market Overview



	2002 was a challenging year for the pharmaceutical industry. The demand for pharmaceutical products continues to grow as do external pressures and
  expectations.
     Key factors affecting the industry at present include:
	 	 
	>  	pricing pressure
	 	 
	>  	R&D productivity
	 	 
	>  	increasing consolidation
	 	 
	>  	turbulence of the financial markets







	Globally, in 2002, the pharmaceutical industry maintained good annual growth of 10% (at constant US dollar exchange rates). The US, with a growth rate of 15%, has increased its world
  share to 53%, reinforcing its importance as the world’s largest pharmaceutical market. In the US, the mail order and hospital segments again showed impressive growth in
  2002. Japan (13% of global sales), Germany (5%), France (5%), the UK (4%) and Italy (3%) remain significant markets for pharmaceuticals, whilst countries such as Mexico, Thailand, Korea and China are increasing in importance. Negative growth for the
  second year in succession for Argentina and Brazil reflects difficult conditions in those countries.
     Growth in 2002 was largely attributable to volume increases of highly effective products in the major therapeutic categories of hypolipidaemics, anti-ulcerants, anti-psychotics,
    anti-anaemics and anti-cancer drugs.
  Underlying demand for modern medicines remains strong from ageing populations and other population groups due to higher use of treatments for chronic conditions. However, meeting this
    demand within the constraints of satisfying all stakeholders is proving increasingly difficult for pharmaceutical companies.
    Key factors affecting the industry at present include:
	 	 
	>	Pricing pressure –
        the economic and political pressure to limit the costs of pharmaceuticals
        continues. Pricing pressure is also exerted by the issue of access to
        affordable medicines for all those who need them.
	 	 
	>	R&D productivity –
        the unusually high level of patent expiries across the industry in 2002
        coupled with low numbers of new molecular entities being approved illustrates
        the increasing challenges to the pharmaceutical industry to improve R&D
        productivity levels to sustain historical growth at a time of increasing
        R&D costs.
	 	 
	>	Increasing consolidation
        – major merger and acquisition activity has been a recent feature
        of the maturing pharmaceuticals industry. Including the proposed merger
        of Pfizer and Pharmacia, the market share of the five leading companies
        has increased from 21% in 1998 to 33%, with the top 10 companies accounting
        for 50% of sales.







	>	Turbulence of the financial
        markets – following a long period of sustained high returns in the
        1990s, investor confidence has been dented across all sectors due to fears
        over economic conditions and future growth prospects. This has been compounded
        by financial irregularities and economic uncertainty due to world events.
        Pharmaceutical stocks have not been immune, despite traditionally being
        perceived as a defensive investment sector. In general, pharmaceutical
        stocks have put in a mixed performance, with a wide range of both over-
        and under-performance for individual stocks relative to their local markets
        this year. A further consequence of the financial irregularities has been
        increased regulation on all companies, including corporate governance
        initiatives in the US through the newly introduced Sarbanes-Oxley Act
        and in Europe.














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	 	AstraZeneca Annual Report and Form 20-F 2002

   www.astrazeneca.com	Operational Review	11



Gastrointestinal (GI)



	Strategic priorities 

    To maintain our number one
    position in GI treatments through continued market penetration for Nexium worldwide
    and management of the challenges of Losec patent expiries, coupled
    with high quality innovation and productivity in the research and development
    of new approaches to treatment. 

     Therapy area in brief 

      40% of adults in the western
      world regularly experience heartburn and 10% have GERD. 

     H.pylori is the major
        cause of peptic ulcer disease and is a risk factor for gastric cancer. 

     PPI world market value:
        $16.3 billion. 

         Key products

          Growth product 

          Nexium,
          PPI for acid related disease.

          Established
          products 

          Losec/Prilosec,
          PPI for acid related disease. 

          Losec
          MUPS, Losec in
          tablet formulation. 

         2002 in brief 

      GI franchise sales reach
      all time high of $6.7 billion. 

     Nexium now
          launched in more than 75 markets including the US, Canada and key European
          countries. 

     Nexium continues
          to establish a new improved treatment standard. In the US, new prescriptions
          for Nexium overtook those for Losec during 2002. 

     The challenge of Losec patent
        expiries continues. Positive outcome for 2002 in US litigation relating
        to patent infringement. Appeal underway. First US generic omeprazole
        product launched in December 2002. 

     R&D focus 

      Includes new areas of
      clinical use for Nexium and further strengthening the scope of its
      use in current areas. 

         Novel approaches
          to treat GERD, H.pylori, peptic ulcer disease, dyspepsia, inflammatory
          bowel disease and irritable bowel syndrome.








	We are the world leader
        in the treatment of GI diseases, in particular acid related disorders. 

     Key
          products 

          Nexium has
          been shown to be the first proton pump inhibitor (PPI) to offer significant
          improvements over Losec and its main competitor, lansoprazole,
          in terms of acid control and clinical efficacy in clinical studies involving
          55,000 patients in 49 countries. Nexium offers more effective
          acid inhibition than all other PPIs and, in the treatment of reflux
          oesophagitis, provides healing and symptom relief in more patients and
          in a shorter period of time than Losec or lansoprazole. Nexium
          is an effective, long term therapy for patients with gastro-oesophageal
          reflux disease (GERD), with or without oesophagitis. For the treatment
          of active duodenal ulcer disease, seven day Nexium triple therapy
          (in combination with two antibiotics for the eradication of Helicobacter
          pylori (H.pylori)) heals most patients without the need for follow up
          anti-secretory monotherapy. We expect Nexium to continue to establish
          a new, improved treatment standard for the PPI class. 

     Following its first launch
        in Sweden in August 2000, Nexium is now available in more than
        75 markets including the US, Canada and key European countries. Major
        launches in 2002 included Australia, Belgium, France, Italy and Spain. Nexium has
        been well received by patients and physicians alike and global sales
        performance is strong, particularly in the US where new prescriptions
        for Nexium overtook those for Losec/Prilosec during the
        year. Nexium is used to treat a wide range of patients, including
        both those newly diagnosed and patients switched from other therapies
        such as Losec, other PPIs and H2-receptor antagonists. Over 60
        million patient treatments of Nexium had been administered by
        the end of 2002 and global and US shares of the PPI market were 11% and
        14% respectively. 

         Losec/Prilosec,
          the first PPI product, set a new global standard in short and long term
          treatment of acid related diseases in the 1980s and 1990s and today
          is still the world’s
          largest selling GI product. Patients have benefited from over 665 million
          treatments with Losec
          since launch. Global and US shares
          of the PPI market were 34% and 33% respectively. Losec MUPS,
          a tablet formulation, which offers increased convenience, flexibility
          and predictability over the original Losec capsules, has been
          approved in 62 markets. 

  


   






	Patent protection for
        omeprazole, the active ingredient in Losec, has expired. In a
        number of countries, including some major markets, patent term extensions
        or supplementary protection certificates have been granted for the active
        ingredient. In October 2002, the US Court for the Southern District of
        New York delivered its judgement on the litigation relating to infringement
        of certain patents, including formulation patents, by four generic manufacturers.
        The judgement upheld the validity of two of these patents and ruled that
        three of the four defendants had infringed the patents. The decision
        has been appealed both by AstraZeneca and three of the defendants. The
        first US generic omeprazole product was launched in December 2002. Further
        information about the status of patents and patent litigation is set
        out on pages 103 and 104. 

     Entocort is
          a locally acting corticosteroid for the treatment of inflammatory bowel
          disease with better tolerability than other corticosteroids and greater
          efficacy than aminosalicylic acid medicines. 

     Pipeline 

      Regulatory filings for Nexium for
      the treatment of non-steroidal anti-inflammatory drugs (NSAID) GI side
      effects and a parenteral formulation are scheduled for submission in Q2
      2003. 

         AZD0865 is
          a reversible acid pump inhibitor based on a new concept of acid inhibition
          which has the potential to provide faster and more effective inhibition
          of gastric acid secretion than Losec. 

     AZD3355 and AZD9343 are
          reflux inhibitors offering a new approach to the treatment of GERD
          aiming to improve the function of the lower oesophageal sphincter (LOS).
          This is expected to reduce the abnormal, transient LOS relaxations
          typically associated with GERD. 

         We have discontinued
          our development of AR-H04718
          and rofleponide as a result of their failure to meet our target
          profile. 

    





 







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	12	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Operational Review	 



Cardiovascular (CV)



	Strategic
           priorities 

         To build on our strong
         position in this important area, focusing in the short to medium term
         on the growth segments of hypertension, dyslipidaemia, thrombosis and
         type 2 diabetes. 

      Therapy area in brief 

         CV diseases account
         for 17 million deaths globally each year, making it the greatest risk
        to life for most adults. 

      CV is
         the single largest therapy area in the global healthcare market. 

      The statin
         market has a world market value of $19 billion and is one of the largest
         and most rapidly growing areas of the pharmaceutical market. 

      CV treatments
         world market value: $87 billion. 

         Key products

          Growth products 

          Seloken ZOK/Toprol-XL,
          beta blocker for hypertension, angina, heart failure and other uses.

          Atacand,
          angiotensin II antagonist for hypertension.

          Established
          products 

          Zestril
          and Plendil for hypertension. 

      2002 in brief 

         First approval for Crestor in
        Europe. 

      Further
         information on Crestor required by FDA is planned for submission
         Q1 2003. 

         Atacand
          achieves global market share, excluding Japan, of 10% (9% in the US).
          

      Continued
         strong growth for Seloken ZOK/Toprol-XL of 27%. 

      Rapid
         erosion of Zestril sales due to patent expiry in major markets. 

      First
         regulatory submission for Exanta in Europe. 

      Publication
         of data confirming efficacy of Exanta in use for chronic conditions. 

      R&D focus 

         Broadening the CV portfolio
         into the areas of thromboembolism, dyslipidaemia, type 2 diabetes/metabolic
        syndrome, atrial fibrillation and vascular disease prevention.

    







	We are a world leader
         in CV medicines, backed by over 40 years’ experience. 

      Key
           products 

          Atacand is
          an angiotensin II antagonist for the first line treatment of hypertension.
          In 2002 the FDA approved a superiority claim in the labelling of
          Atacand versus the class leader, losartan. The Atacand family
          of products shows a strong market acceptance and competes in the fastest
          growing sector of the global hypertension market (angiotensin II antagonists
          – plain and combinations
          with diuretic). Atacand
          achieved a global market share, excluding Japan, of 10%. Further developments
          include major studies in heart failure (CHARM), due to report in 2003,
          and retinopathy in diabetic patients (DIRECT) due to report in 2006.
          

      Seloken ZOK/Toprol-XL,
           a once daily tablet for 24 hour control of blood pressure and for
           use in heart failure, is the world’s
           leading product in the beta blocker (plain and combinations with diuretic)
           class with a market share of 20% globally and 29% in the US. We expect
           sales growth to continue, backed by further inclusions in treatment
           guidelines for heart failure. 

      Zestril,
           an angiotensin converting enzyme (ACE) inhibitor, is used for the
           treatment of a wide range of CV diseases, including hypertension.
           Lisinopril, the active ingredient in Zestril, lost protection
           in the US in June 2002 and in Japan, the UK and most other major markets
           during 2002 and, as anticipated, a major erosion of sales commenced
           during the second half of 2002. Nonetheless, the Zestril family
           achieved a 15% share of the global ACE inhibitor sector (19% in the
           US). 

      Pipeline 

         Crestor is
         a new statin which clinical trials have shown to be highly effective
         in the treatment of patients with lipid disorders and which has the
         potential to be superior in efficacy to currently available statins.
         It offers significantly greater LDL cholesterol (low density lipoprotein)
         reduction than other statins, has beneficial effects on HDL cholesterol
         (high density lipoprotein) and triglyceride levels and may enable more
         patients to reach recommended target cholesterol levels. The approval
         of products in this class has been subject to additional regulatory
         scrutiny, partly as a result of the previous market withdrawal of cerivastatin. Crestor was
         first approved in Europe in the Netherlands in November and it entered
         the EU Mutual Recognition Procedure in December. In the US, we received
    an
     







	approvable letter for Crestor from
         the FDA which required further information from our ongoing clinical
         studies to supplement that already submitted which delayed plans for
         launch in the US. This data will support the use of Crestor over
         the dose range of 10-40 mg and is scheduled for submission during Q1
         2003. The approval of Crestor in the US is now expected in the
         latter part of 2003 and we anticipate completion of the regulatory review
         process in Japan during 2003. 

      Exanta,
           potentially the first new oral anticoagulant in 50 years, is a novel
           oral direct thrombin inhibitor targeted to prevent and treat the abnormal
           formation of blood clots (thrombosis). In clinical studies it has
           been shown to be effective and well tolerated and data published in
           late 2002 showed that Exanta significantly reduces the risk
           of venous thromboembolism (VTE) in orthopaedic surgery and effectively
           prevents the recurrence of clots. Its potential practical benefits
           include oral administration, rapid onset of action and lack of drug/food
           interactions with no need for routine blood coagulation monitoring.
           Studies in the major chronic indication, prevention of stroke in patients
           with atrial fibrillation, are ongoing. The first regulatory submission
           in Europe (for the prevention of VTE in orthopaedic surgery) was made
           in July 2002. First regulatory submissions in the US are planned for
           Q4 2003 as well as the filing for major chronic indications in the
           rest of the world. 

      Galida (previously
           known as AZ242) is a treatment for insulin resistance related glucose
           and lipid abnormalities associated with type 2 diabetes/metabolic
           syndrome. Early clinical studies indicate that it has a promising
           pharmacokinetic profile, shows a dose-related effect on lipids, glucose
           and insulin and is well tolerated. Further phase 2 work is under way
           with entry into phase 3 anticipated in 2003. 

      Our further research in
         thrombosis aims to deliver an oral, anti-platelet therapy and AZD6140 has
         now entered clinical development. Novel research in atrial fibrillation
         includes AZD7009, an atrial repolarisation delaying agent. Also
         in development: AZD0837 (an oral direct thrombin inhibitor for
         thrombosis), AZD9684 (a carboxy peptidase-U inhibitor for thrombosis)
         and AZD7806 (an ilial bile acid transport inhibitor in the dyslipidaemia
         area). 

      We have discontinued our
         development of AZD7545 as a result of its failure to meet our
      target profile. 

   















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	 	AstraZeneca Annual Report and Form 20-F 2002

   www.astrazeneca.com	Operational Review	13



Oncology



	Strategic priorities 

    To maintain our position
    as a world leader in cancer treatment through continued growth for key products Casodex,
    Arimidex and Zoladex, continued launches for new products, Faslodex and Iressa and
    the successful introduction of novel approaches currently in the pipeline. 

     Therapy area in brief 

            Globally, over 12
          million people are diagnosed with cancer each year. 

     Cancer
        is predicted to be the leading cause of death in the US by 2005. 

     Cancer
        therapy world market value: $15 billion. 

         Key products

          Growth products 

          Casodex,
          anti-androgen for advanced prostate cancer.

          Arimidex,
          aromatase inhibitor for breast cancer.

          Faslodex,
          for breast cancer. 

          Iressa, for NSCLC. 

         Established
          products 

          Nolvadex,
          breast cancer therapy. 

          Zoladex, LHRH analogue treatment for breast cancer, prostate cancer
          and certain benign gynaecological disorders. 

     2002 in brief 

      Approval for Arimidex in
      adjuvant treatment of early breast cancer in the US, UK and other markets. 

     First launch
        for Faslodex in the US. 

     First launch
        for Iressa in Japan. 

     FDA advisory
        committee recommend approval of Iressa. FDA require more time
        to complete Priority Review. 

         Trials
          of Iressa in combination with platinum based chemotherapy unexpectedly
          showed no additional benefit. 

     FDA decision
        not to approve Casodex 150mg for early prostate cancer. 

     R&D focus 

      Development of new agents
      and novel approaches across a wide range of cancers which include targeting
      tumour vasculature to control tumour growth, invasion and spread.

    







	Already a world leader
        in the treatment of cancer, during 2002 we introduced two new therapies
        which strengthen our position in this area of considerable medical need. 

     Key
          products 

          Casodex is
          the world’s leading
          anti-androgen therapy for the treatment of advanced prostate cancer
          with a global market share in excess of 70%. Recent growth of the brand
          has largely been driven by launches in the new indication for early
          prostate cancer (EPC).
          Casodex 150mg has received regulatory approval for the treatment of
          EPC in over 40 markets to date. In the US in June 2002, the FDA issued
          a non-approvable letter for Casodex 150mg for the treatment of
          EPC. Although disappointing, the FDA’s
          decision does not impact on the use and approval of Casodex for advanced prostate
          cancer treatment.The rapid uptake of Casodex in EPC as a favoured
          therapy is a demonstration of physicians’
          growing confidence in
          Casodex as a treatment in all stages
          of prostate cancer. 

         Arimidex
          is the world’s
          leading aromatase inhibitor, with a global market share in excess of
          50%. The ATAC study in breast cancer, first reported in December 2001,
          showed that Arimidex
          is significantly more effective in
          prolonging disease-free survival and has important tolerability benefits
          compared with the current gold standard, tamoxifen. Regulatory
          approvals for Arimidex in the adjuvant treatment of early breast
          cancer in post-menopausal women have been granted in the US, the UK
          and several other markets. Additionally, label restrictions in Japan
          have been lifted allowing promotion for its use in the treatment of
          early breast cancer as well as advanced breast cancer. Full submissions
          have been made in all major markets. Early breast cancer represents
          a major new market for Arimidex and is expected to drive significant
          growth. It is also approved for the treatment of advanced breast cancer
          in post-menopausal women based on demonstrated advantages over tamoxifen
          and megestrol acetate. 

     Faslodex was
          approved in the US in April 2002 for the second line treatment of hormone
          receptor positive advanced breast cancer in post-menopausal women.
          It has a novel mode of action and offers an effective, well-tolerated
          treatment option for patients, with the compliance and convenience
          benefits of a once-monthly injection. Initial sales of Faslodex represent
          the most successful US launch of a hormonal agent for breast cancer
    in the last 20 years. We 








	anticipate filing a regulatory
        submission in Europe early in 2003. The introduction of Faslodex enhances
        and complements the existing breast cancer portfolio as the use of Arimidex is
        shifting to first line use and earlier disease treatment. 

     Iressa is
          a novel anti-cancer agent that acts to block signals for cancer cell
          growth and survival. Early studies have shown encouraging anti-tumour
          activity or disease stabilisation in non-small cell lung cancer (NSCLC).
          Clinical trials with Iressa as monotherapy for NSCLC have shown
          response rates and disease control in approximately half of patients
          and symptomatic benefit in over 40% of patients treated. Regulatory
          filings based on monotherapy began in December 2001. 

     Since launch in Japan,
        uptake has been rapid with an estimated 23,500 patients treated since
        launch reflecting the high unmet need in NSCLC and the significant benefit
        seen with Iressa. Reports on the incidence of interstitial lung
        disease in seriously ill cancer patients receiving Iressa in Japan,
        whilst not proven to be linked to the treatment, led the Japanese Ministry
        of Health, Labour and Welfare to introduce strict precautions on its
        use and specialist supervision of patients. In the US, the FDA announced
        in January 2003 that it required more time (until 5 May 2003) to complete
        the Priority Review of Iressa following the recommendation supporting
        approval of Iressa by the Oncologic Drugs Advisory Committee in
        September 2002. We are pursuing monotherapy submissions for Iressa in
        all other major markets, including Europe where filing is scheduled for
        Q1 2003. 

     In contrast to the monotherapy
        results, trials of Iressa in combination with platinum based chemotherapy
        unexpectedly showed no additional benefit. Our focus is to maximise its
        potential as a single therapy treatment.

     Nolvadex is
          the world’s most
          commonly prescribed breast cancer therapy and the first medication
          approved in the US for reducing the incidence of breast cancer in women
          at high risk of developing the disease. Sales of tamoxifen this year
          were lower than anticipated as a result of sales of aromatase inhibitors
          (including Arimidex)
          gaining a higher than expected share of the market for the adjuvant
          treatment of breast cancer and as a result of our US distribution agreement
          with Barr Laboratories, Inc. not being extended. More details about
    this are set out on page 104.

















Back to Contents

	14	AstraZeneca Annual Report
      and Form 20-F 2002

      www.astrazeneca.com	
      Operational
        Review
	


Oncology continued   Infection



  Zoladex is
    our largest oncology brand and one of the world’s best selling luteinising-hormone
    releasing hormone (LHRH) agonists for the treatment of prostate cancer, breast
    cancer and gynaecological disorders. It has been approved in 14 countries
    for the adjuvant treatment of early stage pre-menopausal breast cancer, as
    an alternative to and/or in addition to chemotherapy. Zoladex
    offers the proven disease free survival
    benefits of cytotoxics but with improved patient tolerability. In prostate
    cancer, Zoladex in the adjuvant setting is the only LHRH analogue shown
    to improve overall survival following radical prostatectomy or radiotherapy. Zoladex
    three-month depot was approved in Japan for the treatment of prostate
    cancer in April 2002.

  Pipeline
  

The potential of Iressa to
  show benefits in a number of tumours in addition to NSCLC is being investigated
  with around 60 exploratory trials ongoing. Particular focus is on head and neck
  cancer, breast cancer and colorectal cancer.

  ZD6474 and
    AZD2171 are anti-angiogenics in phase 2 and phase 1 development respectively
    which target the control of growth of blood vessels of tumours.

 AZD9935 is
    another anti-angiogenic in pre-clinical development.

  ZD6126
    is a vascular targeting agent that is scheduled to enter phase 2 development
    which targets and destroys the vasculature of tumours, working to destroy
    the tumour from within.

  AZD4440 is
    a vascular targeting agent, a back-up compound to ZD6126.

  ZD4054 is
    an endothelin antagonist in phase 2 development that works by inhibiting the
    ETA receptor, responsible for tumour cell proliferation.

  AZD0530 is
    an anti-invasive designed to prevent tumours from spreading and is scheduled
    to enter clinical testing in Q3 2003.

  AZD3409 is
    a prenylation inhibitor designed to inhibit the proliferation of cancer cells
    and is scheduled to enter clinical testing in Q2 2003.

  We have discontinued our development of ZD9331
    as a result of its failure to meet our
    target profile and will return all rights to BTG Plc.







  	
Strategic priorities
          

          To build a franchise
          in the treatment of infectious diseases by increasing sales of
          Merrem and by exploiting our internationally competitive microbial
          genomics platform.

         Therapy area
          in brief 

          Infectious diseases cause
          more than 13 million deaths each year.

         Infection
          world market value: $49 billion.

         Key product

          Merrem,
          antibiotic for serious infection.

         2002 in brief
          

Merrem sales
          growth of 26%.

         R&D focus
          

Development
          of products with new modes of action that combat microbial disease.

  


    



  

  

We have many years experience in treating infectious
  diseases. World demand for, and interest in, antibiotics remains high due to
  escalating bacterial resistance and the increased risk of serious infections.

  Key product
    

    Merrem (Meronem) is an
    intravenous carbapenem antibiotic for the treatment of serious hospital acquired
    infections. Clinical studies are in place to support a supplementary new drug
    application in the US in late 2003 aimed at securing a skin and skin structure
    infection indication in 2004.

  Pipeline
  

Our R&D facility in Boston, US is progressing
  a range of projects using both traditional and genomic based technologies to
  deliver innovative anti-bacterial and anti-fungal agents to the infection pipeline.
Following the announcement in 2001 of a $10
  million capital investment in new laboratories at our R&D facility in Bangalore,
  India, the new facility is scheduled to be completed and open in 2003. Work
  will focus on finding a new treatment for tuberculosis, an infectious disease
  that is newly diagnosed in approximately two million people every year in India
  and over eight million people worldwide.

  We have discontinued our development of
    AZD2563 as
    a result of its failure to meet our target profile.












Back to Contents

	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Operational Review	15


Respiratory and Inflammation


	
Strategic priorities

           To build
          on our leading position in asthma treatment through growth of key products,
          particularly
          Symbicort, new indications for Symbicort and Oxis and the
          successful introduction of novel approaches to other areas of inflammatory
          disease such as COPD and rheumatoid arthritis.

        Therapy area
          in brief 

          The World Health Organisation
          estimates that 100 million people worldwide suffer from asthma and that
          COPD is the fourth greatest cause of death globally.

        Respiratory
          and Inflammation therapy world market value: $30 billion.

        Key products
          

          Growth product 

          Symbicort,
          inhaled combination of anti-inflammatory and fast onset long-acting
          bronchodilator in a single inhaler.

          Established
          products 

          Rhinocort,
          topical nasal anti-inflammatory for rhinitis control.

          Pulmicort,
          inhaled anti-inflammatory for asthma control.

          Oxis,
          inhaled fast onset long-acting bronchodilator for relief of asthma symptoms.

        2002 in brief
          

          Clinical results confirm
          efficacy and safety of
          Symbicort for adjustable
          maintenance treatment of asthma.

        Successful
          completion of the Mutual Recognition Procedure for the use of
          Symbicort in children
          (age 6-11 years) in the EU, Iceland and Norway.

        Regulatory
          submissions filed in Europe for
          Symbicort use in
          COPD.

        R&D focus
          

          Development of further
          treatments for asthma and rhinitis and for other inflammatory diseases
          of the respiratory and musculo-skeletal system, such as COPD and rheumatoid
          arthritis.









 We market a wide range of products
  for respiratory diseases and aim to broaden our portfolio to include treatments
  for other inflammatory conditions.

 Key
  products 

  Symbicort is
  a new, innovative and effective asthma treatment that offers adjustable dosing
  which enables doctors to tailor a patient’s treatment of this variable disease with a single inhaler.
  It is a combination of the corticosteroid, budesonide and the fast onset, long-acting
  bronchodilator, formoterol, in the
  Turbuhaler dry powder inhaler.

Symbicort Turbuhaler
  is approved in 68 countries and launched
  in 44. Early sales performance has been encouraging, achieving a 23% share of
  the rapidly growing fixed combination market in Europe.

Encouraging clinical results confirm
  the efficacy and safety of
  Symbicort and its use for the adjustable
  maintenance treatment of asthma. Further launches are planned in 2003.

 Pulmicort is
  a corticosteroid anti-inflammatory inhalation drug that helps prevent symptoms
  and improves the control of asthma. Pulmicort remains one of the world’s
  leading asthma medicines and is available in several forms, including the
  Turbuhaler dry
  powder inhaler, a pressurised metered dose inhaler and the Respules suspension
  for the treatment of children. The START study is a five year global trial involving
  more than 6,000 patients in 31 countries, with the objective of evaluating whether
  early intervention with inhaled glucocorticosteroids will affect the evolution
  of newly diagnosed asthma. This study will evaluate the benefits of Pulmicort
  in the early treatment of asthma in adults and children, and is due to report
  fully in 2003. Preliminary data was reported in September 2002 at the European
  Respiratory Society showing high efficacy and a good safety profile supporting
  the early use of
 Pulmicort.
  Pulmicort Turbuhaler was launched in Japan in February 2002.

 Pulmicort Respules,
  the first and only nebulised corticosteroid in the US for children as young
  as 12 months of age achieved 66% growth with 1.8 million prescriptions in 2002.
  In December 2002, Pulmicort Respules accounted for 17% of the US paediatric
  asthma controller market prescriptions.

Pulmicort Respules
  is the number one prescribed inhaled corticosteroid
  among paediatricians in the US.

   Oxis
    is a beta-agonist asthma therapy with a fast onset and long-acting clinical
    effect for






the relief of asthma symptoms when
  corticosteroid treatment is not adequate. It is now approved in most of the
  EU for additional ‘as needed’ therapy for patients already taking it
  as part of their regular maintenance therapy. This additional indication has
  enabled Oxis to increase its share
  of the long acting beta-agonist market. Oxis was approved for the treatment
  of chronic obstructive pulmonary disease (COPD) in the EU in December 2002.

Rhinocort is
  a nasal steroid treatment for allergic rhinitis (hay fever), perennial rhinitis
  and nasal polyps. It combines powerful efficacy with rapid onset of action and
  minimal side effects and is available as a once daily treatment in the Rhinocort
  Aqua pressurised metered dose inhaler and the Turbuhaler dry powder
  inhaler forms. US sales of Rhinocort Aqua in 2002 showed strong growth
  and as of December 2002 accounted for 13% of the inhaled nasal steroid market.

Accolate is
  an oral leukotriene receptor antagonist for the treatment of asthma available
  in most markets.

Pipeline
  

  Symbicort
  phase 3 development has started in the US in the pressurised metered dose inhaler.
  Further development of Symbicort includes use for the treatment of COPD
  and regulatory submissions for this indication were made in Europe in 2002.

Three new compounds have entered
  pre-clinical development targeted at COPD (AZD3342,
  AZD0275 and AZD0902) and one compound at osteoarthritis (AZD8955).

Compounds currently in early development
  include AZD7140,
  AZD8309 and AZD9056 each of which have novel mechanisms of action
  and are targeted at rheumatoid arthritis.

We have discontinued our development
  of

D5522, AZD4407 and
  AZD2315 as a result of their failure to meet our target profile.











Back to Contents

	16	AstraZeneca Annual Report
      and Form 20-F 2002

      www.astrazeneca.com	Operational
      Review	


Central Nervous System (CNS)


	
Strategic priorities 

          To build on the growth
          of our key products Seroquel
          and Zomig through continued investment in the treatment of major
          CNS disorders.

        Therapy area in brief
          

          Depression and anxiety
          affect an estimated 30 million people in the developed world.

        Prevalence of Alzheimer’s
          disease set to increase exponentially over the next 15 years unless
          new effective treatments are found.

        Acute stroke is the
          third leading cause of death in North America and Western Europe and
          the most common cause of adult disability.

        CNS therapies world
          market value: $46 billion.

        Key products

          Growth products 

          Seroquel,
          schizophrenia therapy. Zomig, migraine treatment.

        2002 in brief
          

          Global sales of
          Seroquel exceed $1
          billion annually for first time.

        Seroquel
          was the only major anti-psychotic to increase market share in the US.

        Filing in the US for
          Seroquel for the
          treatment of bipolar mania submitted in December 2002.

        Zomig Rapimelt
          launched in Japan.

        Zomig Nasal
          Spray launched in
          Sweden, UK, Germany and Austria.

        Cerovive
          progressing well
          through development.

        R&D focus
          

          New indications for existing
          products and the development of new approaches to the treatment of acute
          stroke, depression/anxiety, multiple sclerosis, Alzheimer’s disease
          and overactive bladder.








 We made significant progress in
  2002 in our aim to grow as a major force in the CNS area, with strong sales
  growth for our key products and several major R&D milestones being reached.
  Globally, in the CNS sector, AstraZeneca now ranks number nine and is one of
  the fastest growing companies.

 Key
  products 

  Seroquel is
  an atypical anti-psychotic for the treatment of schizophrenia. Since its launch
  in 1997, Seroquel has been used to treat more than four million people
  worldwide in over 50 countries. With strong sales in the US, Seroquel
  commands 19% of new prescriptions in the US anti-psychotic market. It is the
  only major anti-psychotic with increasing share in this key market. Sales are
  also growing strongly in major European markets and Japan (where it is sold
  under licence by Fujisawa). Annual sales exceeded $1 billion for the first time
  in 2002.

 Seroquel
  is effective against the positive, negative, cognitive and affective symptoms
  associated with schizophrenia with an onset of action within one week. Studies
  support a positive effect on mood, hostility and aggression.Seroquel
  offers the efficacy of the newer atypical agents but with unique patient tolerability,
  characterised by the low profile of extrapyramidal side effects across the entire
  dose range.

 Continuing strong sales growth
  of Seroquel is
  anticipated through new indications and increasing penetration in the schizophrenia
  market. Filings were made in the US in December 2002 for use of Seroquel
  in the treatment of bipolar mania and are scheduled for Europe for Q1 2003.
  Further developments are planned to show the full spectrum of clinical benefit
  in the elderly population and in those suffering from mood disorders.

 Zomig,
  for the treatment of acute migraine, provides rapid relief of symptoms and is
  effective when taken at all stages of a migraine attack. Available in over 80
  countries, it is the leading second-generation triptan with a global market
  share of 16%. Total cumulative sales of $1 billion were achieved in July 2002.

 Zomig Rapimelt (a
  rapidly dispersible formulation offering patients a convenient, orange flavoured
  melt-in-the-mouth tablet) was additionally launched in Japan in June 2002 and
  early signs indicate that it is generating additional sales for Zomig
  mirroring the significant success achieved in other markets.





Zomig Nasal Spray is
  a new formulation in an easy-to-use and convenient device to deliver fast pain
  relief for migraine sufferers. The nasal spray received EU approval in 2002
  and was successfully launched in Sweden, the UK, Germany and Austria with other
  major markets expected to follow through the first half of 2003. In Sweden,
  the first market where Zomig was launched, sales increased by almost
  28% following the introduction of the nasal spray and customer feedback continues
  to be encouraging with the total Zomig brand capturing share from competing
  products.

Pipeline
  

  Ongoing development projects include two serotonin
  antagonists (AR-A2 and
  AZD1134) selective for the 5HT 1B receptor subtypes.
  

Cerovive (previously
  known as NXY-059) is a nitrone-based free radical trapping agent for
  treatment of acute ischaemic stroke, a disease with substantial unmet need for
  new effective therapies. Pre-clinical data suggests that Cerovive may have
  the potential to minimise or prevent further neuronal damage to the brain following
  an acute ischaemic stroke and phase 2 results in stroke patients indicate a
  favourable safety profile. Phase 3 studies are scheduled to commence in 2003.

AstraZeneca aims to become a leading
  player in the area of overactive bladder (OAB) therapy. Early development activities
  for the treatment of OAB include potassium channel activation (ZD0947) and neurokinin antagonism
  (AZD5106), both novel approaches to the treatment of this highly prevalent
  condition.

Alzheimer’s disease is a core
  strategic focus. AZD0328 is a new candidate drug with a novel mechanism of action.

The collaboration with Shanghai
  Jiaotong University on neurogenetics, established in 2001, is progressing well
  as is our collaboration with NPS Pharmaceuticals with early and late phase pre-clinical
  projects on metabotropic glutamate receptors covering all major CNS and pain
  control disease indications.

We have discontinued our development
  of NAD-299 for
  depression as a result of its failure to meet our target profile.











Back to Contents

	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Operational Review	17


Pain Control


	
          Strategic priorities


To become a major
  force in pain control by building on our world leading position in anaesthesia,
  including maintaining Diprivan sales and increasing Naropin sales and
  by introducing new products for pain management.

Therapy area in brief
  

Anaesthetics are
  essential for surgical procedures in hospitals, clinics and day-care surgeries.

Over 46% of adults
  in the western world suffer from chronic pain. Pain management is the most common
  reason for seeking medical care.

High level of unmet
  medical need such as improved efficacy and reduced side effects.

Pain control world
  market value: $27.1 billion.

Key products

  Growth product 

  Naropin,
  local anaesthetic.

Established
  products 

  Diprivan,
  general anaesthetic.

  Xylocaine, local anaesthetic.

2002 in brief
  

We maintained our
  leading position in the anaesthetic market with a share of 33%.

Approvals in EU
  for extended uses for
  Naropin.

R&D focus
  

Development of
  therapies for nociceptive pain (caused by tissue damage) and neuropathic pain
  (caused by nerve damage). Pipeline includes projects addressing mechanisms such
  as G-protein coupled receptors and novel ion channel blockers, aimed at delivering
  first-in-class therapies.








 We are a world leader in anaesthesia,
  with over 50 years’ experience and a strong record of innovation and excellence.
  Plans to develop our pain control portfolio include exploitation of new mechanisms
  with novel approaches that are strongly linked to disease processes in key indications.

 Key
  products 

  Diprivan,
  the world’s largest selling
  general anaesthetic, is used in the induction and maintenance of anaesthesia
  and for intensive care sedation. Despite continued generic competition,
  Diprivan has a 25% share of the global general
  anaesthetic market. In the US, Diprivan has a 24% share of the general
  anaesthetic market with 53% of total propofol sales. In Japan, sales continued
  to grow in anaesthesia and sedation and Diprivan has gained a 36% share
  of the general anaesthetic market. The improved microbial resistant formulation,
  Diprivan EDTA, is approved in the majority of markets and accounts for more
  than 90% of total Diprivan sales.

 Naropin is
  a long-acting local anaesthetic with improved safety and mobility profile compared
  with bupivacaine. Regulatory submissions for intra-articular, spinal and continuous
  peripheral nerve block uses were filed in 2001 and we have received several
  approvals in EU countries in 2002.

 Xylocaine
  continues to be the world’s
  most widely used local anaesthetic, after 50 years on the market.

 Pipeline
  

AZD3582 is
  the first compound in a new class of drugs called COX-inhibiting nitric oxide
  donators (CINODs). It represents a novel approach to the treatment of acute
  and chronic nociceptive pain conditions such as post-operative pain and arthritic
  diseases. The rationale for AZD3582 is to retain a balanced inhibition of both
  Cox-1 and Cox-2 enzymes to deliver a controlled donation of nitric oxide to
  provide organ protection. Nitric oxide is thought to play a major role in maintaining
  mucosal integrity in the stomach and other organs, thereby reducing the gastrointestinal
  and other damage associated with non-steroidal anti-inflammatory drugs (NSAIDs).

 AZD4717 is
  the second compound in the novel CINOD class and is being developed as a follow-up
  to AZD3582.





AstraZeneca has recently amended
  its marketing agreement with NicOx to include Japan and thereby ensure AstraZeneca
  has exclusive worldwide rights to a number of CINOD development compounds.

AZD4282 (oral
  glycine) is an N-methyl-D-aspartate (NMDA) antagonist under development as a
  treatment of neuropathic pain. It is an antagonist at the glycine site associated
  with the NMDA receptor complex. Binding to the glycine site is expected to avoid
  the adverse CNS effects produced by NMDA channel blockers.












Back to Contents

	18	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Operational Review	 



Geographic Review


	
        Our strategy in key markets
          centres around driving the growth of key products, the successful introduction
          of new medicines and new indications for existing products and continued
          improvement in the speed and efficiency of our operations.

       North
        America

         US
          

          In support of our key business priority
          of ‘winning in the US’, we continued to build our presence
          in this highly competitive market.

       In 2002, our US business
        increased sales by 10% from $8.5 to $9.4 billion. This represented a 6%
        share of the US prescription pharmaceutical market, making AstraZeneca
        the fifth largest company in the US. The US market contributed 52% of
        AstraZeneca’s total sales in 2002.

       This performance was against
        the backdrop of a US pharmaceutical industry which faces a number of challenges.
        These include the continuing absence of any meaningful prescription drug
        benefit for Medicare recipients, government support for importation of
        prescription drugs from Canada and price controls and proposed changes
        to legislation protecting intellectual property. State governments are
        introducing preferred drug lists and other restrictions on Medicaid. In
        addition, the Prescription Drug Use Fee Amendment Act (PDUFA), the mechanism
        that allows for the expedited review of drug applications, was renewed
        to increase both risk assessment and post-marketing surveillance requirements
        for new products. During the year, there was a significant level of criticism
        of the patent defence strategies typically pursued by R&D based pharmaceutical
        companies. The trial in New York of AstraZeneca’s suits against four
        generic drug companies (more details of which are set out on page 103)
        received considerable media attention.

         Gastrointestinal
          (GI) 

          In 2002, AstraZeneca retained leadership
          of the US market in GI treatment with the continuing success of Nexium
          and Entocort EC. The absence of generic competition for the first
          11 months meant that Prilosec also made a substantial contribution
          to our US sales performance in the year with total US sales of $2.8
          billion.

      







	Nexium
          became the second most prescribed PPI with a 21% monthly share of total
          prescriptions and which at year end exceeded those written for Prilosec.
          Total US sales of Nexium in 2002 were $1.5 billion. Nexium
          is also now the leading product to which patients switch from other
          treatments in the anti-secretory category. This performance was attributed
          to the strong clinical data available to support the sales force, Managed
          Care Access and a nationwide, direct-to-consumer advertising programme
          covering both broadcast and print media.

         Nexium
          and Prilosec had a combined 28% share of the US anti-secretory
          market.

       Generic omeprazole performance
        in the early weeks after launch is described on page 31.

       Entocort EC,
        for the treatment of Crohn’s
        disease, achieved sales of $20 million in 2002.

         Cardiovascular (CV)
          

          The CV product portfolio achieved sales
          of $1.6 billion in 2002. Exclusivity for lisinopril, the active ingredient
          in Zestril,
          expired in the US in June. As anticipated, erosion of the market share
          of Zestril was rapid and, by Q3 of 2002, generic lisinopril gained
          a 32% share of the ACE inhibitor market. Total Zestril sales
          were $467 million in 2002 compared to $617 million in 2001. Sales of
          the combination product, Zestoretic (Zestril in combination
          with a diuretic), were also significantly affected by the patent expiry.

         A strong performance by
          Toprol-XL, the leading branded beta
          blocker in the US, led to a 43% increase in sales to $617 million for
          2002. Toprol-XL prescription market share increased to 21%. The
          Atacand family of products continues to outperform the angiotensin
          receptor blocker market in terms of total prescription volume growth,
          with 34% in 2002 compared to 23% for the market as a whole. Total sales
          of Atacand products in 2002 were $206 million.

         As described on page 12,
          we received an approvable letter for
          Crestor which required further information
          from our ongoing clinical study programme to be provided to supplement
          that already submitted. The data is scheduled for submission during
          Q1 2003. The launch of Crestor in the US is expected in the latter
          part of 2003.

         Oncology 

          The FDA announced in January 2003 that
          it required more time (until 5 May 2003) to

      







	complete the Priority Review
          of Iressa following
          the recommendation supporting approval of Iressa by the Oncologic
          Drugs Advisory Committee in September 2002.

         Sales of
          Arimidex grew by 127% to $134 million
          in 2002 following the good results, first reported in December 2001,
          from the ATAC trial for the adjuvant use of the drug in the treatment
          of post-menopausal women with early breast cancer. Casodex remained
          the anti-androgen market leader in the US with 79% prescription market
          share and total sales of $180 million for the year. However, in June
          the FDA issued a non-approvable letter for Casodex 150mg for
          the treatment of early prostate cancer (more details of which are set
          out on page 13).

         Zoladex
          achieved a growth rate of 7% and total sales of $212 million in 2002.
          We received marketing approval for Faslodex in April 2002 for
          the treatment of breast cancer, further strengthening our leadership
          position in hormonal cancer treatments.

         Our US distribution agreement
          with Barr Laboratories, Inc. for non-branded tamoxifen expired in August
          2002, as did our patent for
          Nolvadex. At the same time, a six month period of market exclusivity
          commenced which was awarded by the FDA in connection with the successful
          completion of certain paediatric testing with the product. Barr thereafter
          commenced litigation against the FDA challenging the FDA’s
          refusal to grant Barr final approval for its own generic tamoxifen prior
          to expiration of AstraZeneca’s exclusivity period. Barr also declined
          our offer to extend the distribution agreement to the end of the exclusivity
          period. In October 2002, we began shipping non-branded tamoxifen to
          customers to ensure an uninterrupted supply of products to patients.
          More details about this are set out on page 104.

         Our discussions with the
          US Department of Justice concerning its investigation into the sale
          and marketing of Zoladex
          are continuing. More information about this can be found on page 104.

         Respiratory and Inflammation
          

          Sales of
          Pulmicort Respules were up 75% in
          2002 to $257 million strengthening its position as the inhaled corticosteroid
          of choice for the treatment of children under five years of age with
          asthma. Pulmicort Turbuhaler sales only declined modestly to
          $104 million in 2002, despite the launch of a new competitor (fluticasone
          and salmeterol in combination) in the inhaled corticosteroid

      





 








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	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Operational Review	19





	
        market. In 2002,
          Rhinocort Aqua led the aqueous inhaled
          nasal steroid market in percentage total prescription volume growth
          and achieved sales of $172 million for the year. The Symbicort phase
          3 clinical trial programme was expanded with several new studies being
          started, in preparation for the scheduled launch of the product in the
          US market in 2006.

         Central Nervous System
          (CNS) 

          Sales in CNS were driven primarily by
          the strong sales growth for
          Seroquel of $927 million (+67%).
          Completion of a major clinical trial programme for mania during 2002
          is expected to lead to a submission for marketing approval for this
          new application in early 2003. Zomig achieved total sales of
          $177 million in 2002, up 20% on 2001. We are awaiting approval to market
          the nasal spray formulation in the US. The nasal spray delivers a faster
          onset of action than Zomig in tablet form.

         Pain Control
          

          Despite the introduction of generic competition,
          Diprivan sales reversed their previous
          downward trend and in 2002 showed a 3% increase over 2001 levels, with
          total sales of $216 million. This was principally due to increased use
          in the intensive care sedation market. Diprivan continues to
          be the market leader for injectable general anaesthetics.

         Infection 

          Merrem
          sales increased by 9% in 2002 and was the driving force behind the increased
          used of carbapenems in serious infections. Total sales for the year
          were $59 million. We are currently studying data from the recent trial
          of Merrem in the treatment of cystic fibrosis with a view to
          submitting an application for approval for this indication early in
          2003. Trials of Merrem in the treatment of skin and skin structure
          infections, ventilator associated pneumonia and pancreatitis continued
          to enrol patients during 2002. The trials are scheduled for completion
          in 2003 and 2004.‘Cefotan’
          (a trade mark of Yamanouchi Pharmaceuticals Co., Ltd licensed to AstraZeneca)
          achieved sales growth of 3% in its sixteenth year on the market, with
          total sales of $54 million in 2002.

         Sales and marketing
          

          Personal selling by sales representatives
          remains the single most effective marketing method in the industry.
          We continued to improve the effectiveness of our sales force in the
          US as illustrated by an AstraZeneca sales representative winning the
          ‘Pharmaceutical

      







	Representative’ magazine
          ‘2002   Pharmaceutical
          Sales Representative of the Year Award’. We welcome and are committed
          to full compliance with the new policies of the Pharmaceutical Research
          and Manufacturers of America (PhRMA) on promotional practices.

         Facilities 

          During 2002, we completed the relocation
          of 1,200 AstraZeneca employees from our site in Wayne, Pennsylvania
          to our existing campus in Wilmington, Delaware. As a result, about 4,200
          employees are now based at the Wilmington facility, over 40% of our
          total US workforce. The expansion of the Wilmington site began in October
          2002 and is scheduled for completion in the first half of 2003.

         Canada
          

          In 2002, sales growth in Canada was 10%
          with total sales of $570 million. AstraZeneca ranks number four in Canada
          with a 7% market share. The product portfolio performed well. Symbicort was successfully
          launched and is rapidly gaining market share. Nexium showed strong
          performance since its 2001 launch and continued to build market share.
          Two product franchises, Atacand and Seroquel, performed
          very well over the previous year with increases of 47% and 58% respectively.
          The Oncology group had another successful year with sales growth of
          13%, driven largely by Zoladex and Casodex. AstraZeneca
          ranks number one in Canada in oncology with a 22% market share.

         Europe
          

          AstraZeneca is ranked third in the European
          pharmaceutical market with a market share of 5.3%. Sales grew by 5%
          in 2002 to $5,695 million despite patent expiries, specifically Losec and Zestril in
          the UK and the Netherlands.

         Market factors
          

          Market trends in Europe are increasingly
          challenging. Government imposed price cuts impacted sales, with Italy
          suffering a 5% price reduction on all products. Generic substitution
          in Europe is being encouraged through legislation, with compulsory generic
          substitution introduced in Sweden and Germany in 2002.

       A further feature of the
        European market is the significant increase in the movement of products
        between countries, usually from southern Europe, where prices tend to
        be lower than northern Europe. This particularly









	affected our performance
        in Germany and the UK where reported sales are based on invoiced sales
        by AstraZeneca in the country in question.

         Product highlights
          

          Across Europe total sales of
          Nexium and Symbicort reached
          $630 million in 2002.

         The Oncology portfolio
          has performed well ahead of expectations, specifically driven by the
          growth products Casodex
          and Arimidex, but also Zoladex. Sales growth of 28% of
          these brands was achieved in 2002 along with improved market share.

         Other growth products
          that performed well were
          Seroquel and Atacand achieving
          67% and 32% sales growth respectively.

         Market highlights
          

          Of the large markets, France continued
          to perform well with 13% sales growth comparing favourably to market
          growth. Nexium performed
          particularly well in its launch year achieving sales of $53 million
          in nine months and a 9% market share. Symbicort achieved a 24%
          market share with sales of $67 million in 2002.

         Sales growth in Italy
          of 16% outperformed total market growth. AstraZeneca sales of
          Nexium were $61 million with total
          brand market share including licensees reaching 21%, seven months after
          launch. Symbicort achieved a 16% market share of the fixed combination
          market. Other key contributors to the strong growth were Casodex
          (+69%), Arimidex (+32%), Seroquel (+100%) and
           Atacand
          (+29%).

         UK sales were down by
          20% driven by the patent expiries for
          Losec and Zestril. Nexium
          increased its market share to 6% achieving sales of $40 million
          in 2002. Symbicort showed continued strong growth and achieved
          14% of the fixed combination market with $23 million sales. Strong performances
          were also seen for Casodex and Arimidex.

         In Germany
          Nexium has already gained a 15% market
          share whilst Symbicort sales continued the strong positive trend
          seen in 2001 with year end market share of 34%.

         Overall sales in Sweden
          achieved 3% growth in 2002.
          Nexium continued to grow and achieved
          a market share of 16%. Symbicort performed well and achieved
          a 48% market share of the fixed combination market.








 








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	20	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Operational Review	 


 Geographic Review continued


	The Netherlands showed
          a decline of 29% entirely driven by patent expiries.
          Nexium and Symbicort sales
          continued to increase achieving a market share of respectively 9% and
          18%.

         The rest of Europe achieved
          a strong performance broadly above expectations driven by the introduction
          of Nexium
          and Symbicort in most markets along with the strong contribution
          of the oncology portfolio.

         Japan
          

          AstraZeneca was the fastest growing major
          pharmaceutical company in Japan during 2002 with sales growth of 21%,
          significantly exceeding the market. AstraZeneca is the largest pharmaceutical
          company in terms of oncology sales and has continued to increase its
          overall marketing and sales capabilities and now has the second largest
          field force in Japan.

       Iressa
          was launched in August achieving sales of $65 million in 2002. Casodex
          sales also grew strongly by 41% and now has a 78% market share.

         Losec
          was the fastest growing PPI in Japan in 2002 with sales growth of 40%.
          Seroquel (out-licensed to Fujisawa) has also grown strongly (by
          50%) and now has a 22% market share.

         During 2002, in addition
          to the Iressa
          launch, AstraZeneca launched Pulmicort, Zoladex LA and
          Zomig Rapimelt and received approval to promote Arimidex
          adjuvant use, and Losec for H. pylori eradication.

         Asia
          Pacific 

          Australia provided strong growth (+16%),
          ahead of the market. A highlight was the successful launch of Nexium.
          In December, following an appeal by AstraZeneca, the High Court of Australia
          overturned a previous decision by the Federal Court which declared the
          formulation patent for omeprazole (the active substance used in Losec)
          invalid. The latest judgement restored the patent’s
          validity, which will significantly reduce further threats of generic
          competition to Losec
          in Australia.

         Strong growth also occurred
        in China and South Korea (+13% in both cases) providing a firm platform
        for future growth and expansion plans.

      







	Latin
          America 

          The economic turbulence across the Latin
          American markets had a mixed effect on AstraZeneca in 2002. The greatest
          impact was in Argentina where AstraZeneca sales declined in line with
          the market decline. Elsewhere in the region though, sales in the key
          markets remained largely unaffected by economic and political pressures:
          in Brazil growth was well ahead of the market.

       Mexico and Venezuela provided
          exceptionally strong sales growth (25% and 86% respectively). This was
          well ahead of market growth.

      










 









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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Operational Review	21



Research and Development (R&D)



Our R&D is focused on improving productivity and efficiency of new drug delivery, increasing our output of quality CDs, vigorously eliminating weaker products from early development and bringing better
drugs to market faster. We will continue to simplify our processes, speed up our decision making and increase our focus on key projects.

   In R&D we employ over 11,000
    people at nine major sites in five countries – the UK, the US, Sweden,
    Canada and India. Our 2002 R&D investment totalled $3,069 million.

   AstraZeneca R&D remains
    an integrated, project driven organisation. Our approach is therapy area led
    with scientific, medical, technical and ethical input and control being provided
    by large, multi-skilled Discovery and Development organisations. This offers
    a number of significant advantages including sharing of best practice in terms
    of science and technology and efficient use of resources in a multi-site,
    global organisation.

   During 2002, we looked closely
    at overall productivity and efficiency throughout our global organisation.
    In Discovery, our aim is to increase the output of high quality candidate
    drugs (CDs) with a lower risk of failure in development. In Development, our
    aim is to develop better drugs faster.

   We remain focused on meeting
    our principal R&D performance target of delivering new, medically important
    and commercially successful products to the market every year.

   Discovery
    

Our Discovery organisation consists
    of highly skilled employees working in each of our eight research areas. The
    scientific groups are spread over a number of research sites worldwide but
    are organised so as to gain critical mass efficiencies and exchange of ideas
    and project opportunities.

   Safety assessment and process
    R&D teams work across all areas, starting in Discovery and following projects
    through Development and life cycle management.

   To increase the likelihood that
    CDs will progress through late stage development to market we are bringing
    new aspects of







   clinical medicine to the drug
    discovery process. This provides better understanding of human diseases and
    how future drugs will work to prevent and treat those diseases. We are also
    introducing more stringent safety and drug metabolism/pharmacokinetic testing
    earlier. This allows for early identification of CDs that are unlikely to
    succeed.

   We have increased CD delivery
    by 20% in the last three years. On average, one quality CD now enters pre-clinical
    development each month. During 2002, a further 11 CDs were selected and, in
    addition, six early development projects reached volunteer dosing.

   In 2002 we introduced a global
    knowledge exchange project incorporating systems that maximise the benefits
    of using the latest communication and informatics technologies. Our global
    Enabling Science and Technology activity continues to support all research
    areas worldwide with skills in compound management and natural product screening,
    structural chemistry, bio-imaging, genetics, transgenics, protein science
    and supply and informatics. We have also initiated a new global compound collection
    enhancement project. Our advanced science and technology activity has introduced
    a variety of new enabling technologies for drugs search programmes.

   We continued to invest in R&D
    facilities by upgrading or replacing older laboratories in Sweden, the UK,
    the US and India and by purchasing new technology and equipment to improve
    our capability in leading edge science. Recruitment of highly skilled new
    staff continued alongside the ongoing training and development of existing
    employees where appropriate.

   Development
    

Our Development organisation
    consists of people skilled in clinical research, regulatory affairs and pharmaceutical
    development. Maximum efficiencies are achieved from global working applied
    flexibly across the business subject to the provision of site specific needs
    or technologies.

   Our focus in 2002 was to complete
    the development programmes and deliver the regulatory support which we require
    for the approval and launch of Faslodex, Iressa, Crestor and Exanta. We also placed high
    priority on successful delivery of lifecycle programmes designed to optimise
    growth of our marketed range of products.







   We continue to improve our productivity
    and speed of product development through initiatives designed to make maximum
    use of local expertise within our global organisation. Specific e-based clinical
    and regulatory projects have been initiated to further speed our access to
    data worldwide and to improve regulatory file preparation and submission timelines.

   Productivity gains have also
    been realised through a more strategic approach to purchasing and outsourcing
    arrangements across the whole drug development process. Independent industry
    sources (CMR International) identify AstraZeneca
    as being among the fastest in drug development in the industry.

   Collaborations
    

Over 300 new collaborations
    have been entered into in 2002 with leading academic centres and biotech companies
    to complement our in-house R&D capabilities.











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	22	
      AstraZeneca Annual Report
        and Form 20-F 2002

        www.astrazeneca.com
	
      Operational Review




Development Pipeline













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	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Operational Review	23







  ADP – adenoside diphosphate

   AF – atrial fibrillation

   CHF – congestive heart failure
CINOD – Cox inhibiting nitric oxide donator

    COPD – chronic obstructive
    pulmonary disease

    CPU –
    carboxy peptidase-U

EGFR-TKI –
    epidermal growth factor receptor-tyrosine kinase inhibitor

GERD – gastro-oesophageal
    reflux disease

HCTZ – hydrochlorothiazide







  IBAT – ilial bile acid transport

K+ –
    potassium

LHRH –
    luteinising–hormone
    releasing hormone
MAA –
    marketing authorisation application (Europe)

MI – myocardial infarction

NCE – new chemical entity

NDA – new drug application (US)

NK-2 – neurokinin 2 antagonist

NMDA – N-methyl-D-aspartate

NSAID – non-steroidal anti-inflammatory drug







NSCLC – non-small cell lung
    cancer

PC – pre-clinical: candidate drug accepted for development but not yet administered
  to man

pMDI –
  pressurised metered dose inhaler

PPAR – peroxisome proliferator-activated receptor

sc >–
  subcutaneous

VEGFR-TKI – vascular endothelial cell growth factor receptor-tyrosine kinase inhibitor

VTE – venous thromboembolism

> 2005 – not earlier than 2006












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	24	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Operational Review	 


 Commercialisation and Portfolio
  Management


We have one of the broadest portfolios
  in the industry today. Maintaining the quality of this portfolio requires stringent
  prioritisation to maximise the value of high potential products and manage the
  progress of promising compounds in earlier development.

   To develop successful medicines we need to
    address unmet needs, find novel solutions, minimise the technical risk and
    maximise the commercial opportunity. Product Strategy and Licensing (PS&L),
    working closely with R&D and major marketing companies, leads the commercial
    aspects of drug development and co-ordinates global product marketing strategy.
    This includes selecting the right products and projects for investments, developing
    effective marketing platforms in time for new product launches and directing
    the creation and delivery of product marketing strategies that successfully
    align global and national plans.

   Successful commercialisation of new products
    is dependent on satisfying the needs of our different customer groups with
    a product with the right profile. Target product profiles (TPPs) are clearly
    defined early in development and act as a focal point for R&D activity
    as well as planning by the sales and marketing organisations. The TPPs describe
    the unmet needs of main patient and customer groups as well as how we should
    develop our project to meet these needs. Among the factors considered in developing
    a TPP are product features and benefits, medical and health outcomes information,
    positioning, pricing and the competitive environment.

   In common with other leading pharmaceutical
    companies, we seek to strengthen our portfolio, where appropriate, by licensing
    in attractive products or technologies from external sources.


With sales in over 100 countries, we have an extensive, high quality global sales and marketing network.


In the majority of key markets, we sell through our wholly-owned local marketing companies and in other countries through third party distributors or local representative offices.






   Our products are marketed primarily
    to physicians (both general and specialist) as well as to other healthcare
    professionals. Marketing efforts are also directed towards explaining the
    economic and therapeutic benefits of our products to governments and healthcare
    buying groups, for example, managed care organisations in the US, trust hospitals
    and budget-holding medical groups in the UK and other organisations which
    pay for healthcare costs in various countries. In the US, we invest a significant
    amount of money in direct-to-consumer advertising campaigns for certain of
    our products.

   Our e-business strategy
    focuses on supporting product development and marketing, increasing productivity
    and reducing costs.

   We use e-business opportunities
    to strengthen our relationships with key stakeholders and to improve our overall
    speed and effectiveness.

   Efficient pharmaceutical development
    requires transparent, quality assured processes, acceptable to regulatory
    authorities and increasingly relies on new technologies as well as strategic
    outsourcing. We are making significant investments in these new approaches
    and use internet-enabled processes and external partnerships to simplify the
    capture, collation, analysis and reporting of clinical trials data. In 2002
    we used internet-enabled processes to capture data in clinical studies in
    many geographic regions, including Europe, Japan and the US. In addition,
    more than 50 studies are currently supported by internet tools, such as document
    exchange sites and extranets.

   Significant progress has been
    made in business-to-business activity including the licensing of an application
    which improves efficiencies with suppliers and which is expected to realise
    savings in the procurement area.

   In 2002, we launched a customer
    internet portal in the US that enables our direct trade customers to place
    orders and obtain up to the minute information on billing and order status.

   E-marketing has been integrated
    into our worldwide commercial operations to improve marketing effectiveness
    and offer new customer value. In particular, we focus






   on providing a wide range of
    innovative internet-based physician resources in key therapy areas.

   In the US, AstraZeneca maximises
    opportunities for direct contact with the consumer by providing patient-focused
    websites as well as a range of other online promotions.

   In Europe and Asia, we have
    e-business programmes underway to improve interaction with healthcare providers
    and are developing internet strategies to support patients’ online needs.

   Our products are in
    fierce competition with others in respect of clinical efficacy, tolerability,
    price, cost-effectiveness and ease of use for patients.

   The prescription pharmaceutical
    market is intensely competitive. AstraZeneca’s principal competitors
    are other international, research-based pharmaceutical and biotechnology companies
    which also sell branded, patent-protected, prescription pharmaceuticals.

   Following patent expiry, our
    products also compete with generic pharmaceuticals. Competition with generic
    pharmaceuticals is principally on price since generic pharmaceutical companies
    typically incur only limited R&D costs compared to those of research-based
    companies such as AstraZeneca.

   Our ability to maintain and
    enhance our competitive position in our chosen therapy areas depends mainly
    on our development of new, innovative, cost-effective products from our R&D
    and in-licensing activities, the manufacture and supply of products to high
    quality standards and the effective marketing of products to our global customer
    groups.












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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Operational Review	25




Supply and Manufacturing



With 32 manufacturing sites in 20 countries and 15,000 employees worldwide, our Operations organisation aims to provide robust, fast, flexible and cost effective supply of AstraZeneca’s product range globally.

   Fast, effective supply 

    The fast and effective introduction of new
    products is key to future business success and multiple launches around the
    world within short timeframes has become the accepted industry norm. High
    initial demand followed by rapid growth in a variety of markets requires us
    to deliver a reliable flow of products to exacting quality standards and in
    a safe and environmentally sound manner. All new product launches in 2002
    were successful with product available to meet the required launch dates and
    the early product growth demand. In preparation for these launches as well
    as readiness for Crestor
    and Exanta, several new facilities
    were commissioned for active ingredient and formulated product manufacture
    and packaging in Puerto Rico, Sweden and the UK.

   Continued success also depends on unconstrained
    supply of our established products. Some limited supply problems on certain
    products occurred during the year and were addressed. A comprehensive programme
    was also put in place during 2002 to shorten production lead times and move
    manufacture from a ‘make to stock’ bias to a ‘demand pull’
    approach. Positive results have already been achieved with significant lead-time
    reductions on several key products supported where necessary by improved process
    reliability. Cross-functional team working and a strong focus on robust, fast
    and responsive product supply has been key to achieving this improvement.
    The programme is expected to deliver further improvements in the cost of manufacture
    of our products as well as significant working capital benefits through better
    utilisation and management of stock.

   An efficient supply network
    

    2002 saw the continued development of
    our supply network that consists of both our own manufacture and that of our
    contractors. AstraZeneca’s supply network is supported by global supply
    chain teams as well as purchasing, engineering, safety, health and environment
    (SHE) and quality and compliance functions.






   Our strategy remains to operate
    a small number of sites for the manufacture of active ingredients supported
    by speciality chemical contractors operating mainly in Europe and Japan. We
    have five active pharmaceutical ingredient sites in France, Puerto Rico, Sweden
    and the UK as well as a bulk drug purification plant in Germany. Some 1,500
    people are employed in active pharmaceutical ingredient supply.

   For certain key products, there
    are a number of global formulation facilities. In addition there are a small
    number of facilities that produce established products for regional or local
    markets as well as a small number of contractors supplying specialist formulations.
    Our principal formulation sites for oral solid dosage forms (such as tablets
    and capsules) are in France, Germany, Puerto Rico, Sweden, the UK and the
    US. There are also major formulation sites for the global supply of parenteral
    dosage forms and inhalation products in France, Sweden and the UK.

   Packaging is undertaken at a
    large number of locations, both at AstraZeneca facilities and contractors’facilities,
    to support our local sales and marketing companies. Some 12,500 people are
    employed in formulation and packaging. Our manufacturing asset base is routinely
    adjusted to ensure effective use is made of our production capacity and an
    appropriate balance achieved between high utilisation and sufficient additional
    production capacity to launch new products and grow existing products. A number
    of older units were closed during the year with residual manufacture transferred
    to contractors. The intention to sell a small manufacturing facility in Mexico
    was also announced. We will continue to make further adjustments to our manufacturing
    base to ensure optimum utilisation of production capacity.

   Continuing investment
    

    Investment for growth remains a core
    element of our supply strategy and in 2002 capital expenditure totalled $557
    million. New plant brought into operation included capacity for Casodex in Germany and Puerto
    Rico, for Seroquel and Iressa in the UK, for Pulmicort in
    the US and for Cresto in Puerto Rico and the UK.

   Looking ahead, plans are in
    place to expand our manufacturing capability in France, Germany, Japan, Puerto
    Rico, Sweden, the UK and the US to help to meet the growing demands of our
    product portfolio.






   Regulatory environment 

    Ensuring both patient safety and the efficacy
    of our medicines is a core priority. Our supply and manufacturing organisation
    works diligently to exceed the expectations of all stakeholders as well as
    those of regulatory authorities. The outcome from all inspections is rigorously
    reviewed and action taken to further enhance compliance. Device presentations
    of inhalation products present manufacturing challenges and where appropriate,
    like other manufacturers, we keep these under review with relevant regulators.
    During 2002, we did not experience any delays to approvals due to regulatory
    compliance issues at our manufacturing sites or those of our contractors.
    There were several successful pre-approval inspections by regulatory authorities
    during the year including those for Iressa
    and Faslodex. All sites involved in the proposed manufacture of
    Crestor were approved in 2001.

   SHE operating standards around the world
    continue to become more stringent with regulators placing emphasis on environmental
    standards. Our manufacturing sites are operated under various site-licensing
    regimes and during the year, we had three legal sanctions across our global
    operations which have been dealt with satisfactorily. There are currently
    no environmental issues that constrain AstraZeneca from fully utilising any
    sites. Our aim is continuous improvement, learning from incidences of non-compliance
    to ensure that we meet both the regulatory requirements and current good practice
    standards. Further information about our SHE performance can be found in the
    separate 2002 Corporate Responsibility Summary Report.

   Raw materials 

    AstraZeneca’s global purchasing
    policies together with our business interruption risk management (BIRM) process
    are aimed at ensuring the supply of raw materials, manufacturing equipment
    and other key supplies, all of which are purchased from a range of suppliers.
    The BIRM process systematically examines a range of risk scenarios to global
    supply, such as disasters that remove supply capability or the unavailability
    of key raw materials and ensures that these risks are mitigated by the implementation
    of contingency plans, including the appointment of dual or multiple suppliers
    and maintenance of appropriate stock levels. Although the price of raw materials
    may fluctuate from time to time, our global purchasing policies seek to avoid
    such fluctuations becoming material to our business.











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	26	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Operational Review	 




	Other Businesses	Main Facilities





   Astra Tech
    

    Astra Tech is engaged in the R&D, manufacture
    and marketing of medical devices and implants for use in healthcare, primarily
    in urology but also in odontology, diagnostic radiology and surgery. Astra
    Tech has a leading position in the Nordic countries and is expanding its operations
    in Europe and other key markets.

 All products showed good sales
  growth, in particular the Dental Implant System, which is gaining market share
  in several key markets. Further investments have been made in R&D, clinical
  research and new production facilities to strengthen the product portfolio and
  in the US in sales and marketing capabilities.

   Salick
    Health Care 

    Salick Health Care (SHC) is a leading provider
    of outpatient oncology management and consulting services in the US. Ownership
    of SHC provides AstraZeneca with a unique window on the provider sector of
    the US oncology market and access to many leading oncologists.

 SHC manages full-service outpatient
  comprehensive cancer centres in affiliation with major teaching and community
  hospitals in California, Florida and New York and is affiliated with a large
  network of over 100 physicians, working in specialised areas such as medical,
  radiation and surgical oncology.

 In 2002, SHC performed well in
  its cancer centre management business with positive profit and cash contributions
  and is pursuing growth of its recently launched consultancy business which provides
  hospitals with assessments of cancer care programmes and their financial feasibility.

 Additionally, SHC has continued
  its development of an innovative clinical research network to improve patient
  care and cancer treatment.






   Marlow
    Foods 

    Marlow Foods is a leading company in the fast
    growing ‘healthy eating’ sector of the food market. Marlow Foods
    has established this position through the Quorn
    brand. Quorn foods use mycoprotein,
    an innovative protein provided by fermentation.

   Quorn is
    the leading meat alternative brand in the UK with a 17% market share (TN Sofres).

   Quorn foods
    are currently sold in six other European countries, and now the US, following
    market entry in January 2002.

 Sales of the business increased
  by 8% in 2002 and Marlow Foods made positive profit and cash contributions.






AstraZeneca owns and operates numerous
  production, marketing and R&D facilities worldwide. Our corporate headquarters
  are in London, UK and our R&D headquarters are in Södertälje,
  Sweden.

 Out of a total 32 manufacturing
  sites in 20 countries, our principal manufacturing facilities are in the UK
  (Avlon and Macclesfield); Sweden (Snäckviken and Gärtuna, Södertälje);
  the US (Newark, Delaware and Westborough, Massachusetts); Australia (North Ryde,
  New South Wales); France (Dunkirk, Monts and Reims); Germany (Plankstadt); Italy
  (Caponago); Japan (Maihara); and Puerto Rico (Canovanas, Carolina and Guayama).

 Bulk drug production is concentrated
  in the UK, Sweden, France and Puerto Rico.

 Our principal R&D facilities
  are in the UK (Alderley Park and Charnwood); Sweden (Lund, MöIndal and
  Södertälje); the US (Boston, Massachusetts and Wilmington, Delaware);
  Canada (Montreal, Québec); and India (Bangalore). Other R&D activity
  is carried out at Macclesfield and Avlon in the UK and Reims in France.

   Substantially all of our properties
    are held freehold, free of material encumbrances and we believe such properties
    are adequate for their purposes and suitably utilised.














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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Operational Review	27





	Intellectual
      Property 	Industry Regulation
    	 





 During 2002, AstraZeneca invested
  $3,069 million in global healthcare R&D activities. Obtaining adequate protection
  for the intellectual property associated with these activities continues to
  be a key business imperative. The range of protection includes patents, trade
  marks, design registrations, copyrights and internet domain name registrations.

 Our policy is to seek patent or
  other appropriate intellectual property protection for all of the inventions
  and innovations of significant commercial value which arise from our drug discovery,
  development, manufacturing, marketing and other business activities.

 This policy is designed to provide
  each of our new products with an effective portfolio of valid, enforceable patent
  and other intellectual property rights in all significant markets to protect
  unauthorised competition during commercialisation. This shield of intellectual
  property rights extends to those areas of target identification, genomics and
  other research technologies in which we invest significant resources. The adequacy
  of the patent, trade mark and domain name portfolio for individual products
  is kept under review during product development, clinical evaluation and marketing
  so that, wherever possible, additional protection may be sought for new applications
  and other developments. The therapy area focus of our R&D operating model
  allows appropriate intellectual property strategies to be formulated and regularly
  updated from an early stage in product development.

 We vigorously defend our intellectual
  property rights, including taking appropriate infringement action in various
  courts throughout the world.



 

 Our products are subject to numerous
  regulations concerning their safety and efficacy. In many cases, governments
  also fix their price and/or restrict access to reimbursement. The degree and
  scope of regulation varies according to the product and countries concerned.

 Regulations governing prescription
  pharmaceuticals are stringent and the manufacture and marketing of these products
  are normally conditional upon regulatory approval. Registration processes are
  complex and time-consuming and involve significant expenditure. Regulation is
  concerned not only with a product’s chemical composition, but also with
  matters such as manufacturing, handling, packaging, labelling, distribution,
  promotion and marketing.

 AstraZeneca routinely participates
  in various industry associations and other bodies which, among other things,
  seek to ensure that those implementing legislation and regulation affecting
  pharmaceutical companies are fully informed as to its impact.

   Product
    regulation 

    Before a pharmaceutical product is approved
    for marketing, it must undergo exhaustive and lengthy clinical trials. The
    process of developing a new pharmaceutical product, from discovery to launch
    in the market, can take up to 12 years, but this period varies considerably
    in different cases and countries. The time taken from submission of an application
    for marketing approval to launch of the product is typically one to two years.

 After a product has been approved
  and launched, it is a condition of the product licence that all aspects relating
  to its safety, efficacy and quality must be kept under review. Depending on
  the country, fines and other penalties may be imposed for failure to adhere
  to the conditions of product licences. In extreme cases, the product licence
  may be revoked resulting in withdrawal of the product from sale. Our promotional
  and marketing activities are also tightly controlled by regulations and self
  regulating codes of ethical marketing practices.

 During the marketing of a product,
  strict procedures must be in place to monitor, evaluate and report any potential
  adverse reactions. Where adverse reactions occur or it is judged that they may
  occur, changes may be required to prescribing advice and to the

 



 


product licences. In extreme cases,
  the product licence may be revoked resulting in withdrawal of the product from
  sale.

 Manufacturing plants and processes
  are subject to periodic external inspection by regulators as part of their monitoring
  procedures to ensure that manufacturers are complying with prescribed standards
  of operation.

   Price
    regulation 

    Prescription medicines are subject to
    government controls on price and reimbursement which operate in most countries
    in which we sell our products. This can result in large price differentials
    between markets, which may be further aggravated by currency fluctuations.

   US
    

    Currently, there is no direct government control
    of prices for non-government drug sales in the US. Federal legislation mandates
    minimum discounts to US government agencies purchasing drugs for senior citizens,
    the poor and other populations with special needs. Providing these substantial
    discounts to the US government is also a condition for the manufacturers’
    drugs to be reimbursed by state Medicaid programmes and an additional rebate
    is required if manufacturer price increases after 1990 exceed the increase
    in inflation.

 In addition, certain states have
  taken action to require further manufacturer rebates on Medicaid drug utilisation
  and for other state pharmaceutical assistance programmes.

 In 2000, President Clinton signed
  the Medicines Equity and Drug Safety Act. However, the legislation was not implemented
  due to concerns over safety and cost-effectiveness. Nevertheless the US Congress
  is likely to revisit this legislation. The law would allow for the re-importation
  into the US of pharmaceutical products produced in the US and exported to countries
  where governmental price controls result in lower prices than in the US. If
  introduced, such a law could have an adverse impact on our revenues.

   Several bills have been introduced
    in Congress that could provide limited financial help to the elderly for prescription
    drugs. These various bills would likely result in lower prices for pharmaceutical
    products and may or may not be offset by increased demand.












Back to Contents

	28	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Operational Review	 




Industry Regulation
  continued



   Europe
    

    Most governments in Europe control the price
    and reimbursement of medicines after taking into account the medical, financial
    and social impact of a product. This budget-based approach reflects increasing
    constraints in overall healthcare spending. Governments increasingly require
    more assurance of value in their expenditures on medicines.

 In several European countries,
  the pricing and reimbursement systems are being evaluated, with the aim of controlling
  and limiting drug budgets. This is an ongoing process that puts a downward pressure
  on pricing and reimbursement of medicines in Europe.

   Japan
    

    There is formal central government control
    of prices in Japan. New product prices are determined primarily by comparison
    with existing product classes. All existing products are subject to a price
    review based on the market price at least every two years. In addition, products
    without patent protection are forced to further reduce prices by 4-6%. Regulations
    introduced in 2000 included an overseas price referencing system, under which
    prices can be adjusted according to the average price of four major countries
    (the US, the UK, Germany and France). Generally, if the US pricing environment
    remains unchanged, these regulations are likely to have a positive impact
    on pharmaceutical prices in Japan.

 







  Product
    regulation: Astra Tech 

    Product registration and certified quality
    management systems form the basis of the regulatory environment relating to
    medical devices. In Europe, compliance with regulatory requirements involves
    the implementation and maintenance of a quality management system and, for
    certain products, a design dossier review. Medical devices in the US are regulated
    through a product registration requirement. Astra Tech continues to maintain
    a European and US compliant quality management system.

   Product
    regulation: Salick Health Care (SHC) 

    The healthcare facilities to which SHC provides
    administrative and management services on behalf of certain hospitals are
    subject to extensive US federal, state and local legislation and regulations,
    such as those relating to the reimbursement and control of healthcare costs.
    The largest single component of SHC revenue continues to be fees that are
    affected by the reimbursement rates for healthcare services which are set
    or regulated by federal or state authorities.

   Product
    regulation: Marlow Foods 

    National legislation governs the safety of
    food products and the nutritional content of foods and their ingredients.
    Generally, the responsibility for achieving the required standards and for
    the processes adopted in so doing, resides with the manufacturer. The regulatory
    agencies audit compliance by way of process audits and product analysis.












 
 Back to Contents


	30	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Review


 Financial Review


  	Introduction

          The purpose of the Financial Review
          is to provide understanding and analysis of our results for the year
          2002 and of the progress made since 2001. It also provides details of
          material changes in financial performance between 2001 and 2000. The
          Financial Review describes:

	 	 
	>  	Business events influencing
        2002; page 30
	 	 
	>  	Results of operations 2000-2002
        in tabular form; pages 30 and 31
	 	 
	>  	Results of operations – analysis
        of year to 31 December 2002; page 31
	 	 
	>  	Financial position; page
        34
	 	 
	>  	Liquidity and capital resources
        2000-2002; page 34
	 	 
	>  	Financial policies; page
        34
	 	 
	>  	Critical accounting policies
        and estimates; page 37
	 	 
	>  	Off balance sheet transactions,
        contingent liabilities and commitments; page 38
	 	 
	>  	New accounting standards;
        page 39
	 	 
	>  	International accounting;
        page 40.
	 
	Additionally,
        in accordance with US requirements:
	 	 
	>  	Results of operations – analysis
        of year to31 December 2001; page 40
	 	 
	>  	US GAAP information 2000-2002;
        page 42.
	 
	Business
          events influencing 2002

          The business
          background is described in the Operational Review sections to this report.
          The following comments highlight how these and other factors affect
          our financial performance.








  	Our operations
        are focused on prescription pharmaceuticals and more than 97% of our sales
        are made in that sector. Sales of pharmaceutical products tend to be relatively
        insensitive to general economic circumstances in the short term. They
        are more directly influenced by medical needs and are generally financed
        by health insurance schemes or national healthcare budgets.
	 
	However, we
        are exposed to currency fluctuations which can significantly affect our
        results. We report our activities in US dollars as this is our single
        largest currency and best reflects our currency exposure.
	 
	The fluctuation
        of currencies against the US dollar consequently causes variation in our
        financial results principally because a substantial part of our income
        is denominated in US dollars whereas a large part of our cost base is
        in sterling and Swedish kronor. During 2002, there was a significant weakening
        of the US dollar, particularly as compared with the euro, Swedish kronor
        and sterling. Although this has had the effect of increasing the dollar
        value of our European sales compared with 2001 it means our UK and Swedish
        costs have also increased correspondingly. Our approach to managing currency
        exposures is described below in the Financial Policies section. The net
        impact of currency fluctuations on profit compared with 2001 was slightly
        negative.
	 
	In addition
        to fluctuating exchange rates, our operating results in the short term
        can be affected by a number of factors other than normal competition:
	 	 
	>  	Risk of loss or expiration
        of patents and the potential adverse effect on sales volumes and prices
        from generic competition;
	 	 
	>  	The costs associated with
        new product launches, the timings of those launches and the risk that
        such new products do not succeed as anticipated; and







  	>  	The adverse impact on pharmaceutical
        prices as a result of the regulatory environment. Although there is no
        direct governmental control on prices in the US, pressures from individual
        state programmes and health insurance bodies are leading to downward forces
        on realised prices. In other parts of the world there are a variety of
        price and volume control mechanisms and retrospective rebates based on
        sales levels which are imposed by governments.
	 
	Over the longer
        term, the success of our research and development is crucial. In common
        with other pharmaceutical companies we devote substantial resources to
        R&D, the benefit of which emerges over the long term and carries considerable
        uncertainty as to whether it will generate future products.
	 
	In 2002, the
        business events which had most significance for our financial results
        are described briefly in the following paragraphs.
	 
	The key business
        priority is the transformation of our product portfolio whereby existing
        growth products and the late stage product pipeline replace the loss of
        sales from products facing generic competition.
	 
	In the US, which
        is our largest market accounting for 52% of sales,
        Faslodex was
        launched in April 2002 whilst Nexium,  Seroquel and 
        Toprol-XL sales continued to grow strongly. We had planned to launch
         Crestor and  Iressa in the second half of the year but,
        as described elsewhere in this report, FDA approval of these products
        is now expected in 2003.
	 
	Our US product
        portfolio faces generic competition on three products – 
        Zestril  in 2002,  Nolvadex in 2003 and  Prilosec. The
         Prilosec  situation is described in detail on page 31 and we have
        had generic omeprazole competition from December 2002 although this had
        no impact on







 

	AstraZeneca
      sales	 	 	 	 	 
	 	2002

$m	   	2001
(reclassified)
$m	   	2000
(reclassified)
$m
	
	
	
	
	
	

	Continuing operations	17,841	
       
	16,222	
       
	15,583
	
	
	
	
	
	

	Agrochemicals (discontinued)	–	 	–	 	2,299
	
	
	
	
	
	

	 	17,841	 	16,222	 	17,882
	
	
	
	
	
	







 
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	 	AstraZeneca Annual Report and Form 20-F
      2002

      www.astrazeneca.com	Financial Review 	31


 
  reported sales in the year. Prilosec sales
  declined 21% as a result of patients switching to  Nexium during the year
  and competition from other products. Zestril sales have fallen sharply
  since the lisinopril patent expired in June 2002. The patent for Nolvadex expired
  in August 2002, but the FDA granted a further six months exclusivity following
  work on the paediatric indication of McCune-Albright syndrome. Although exclusivity
  will last until February 2003, sales of Nolvadex and tamoxifen have started
  to decline, partly through the success of Arimidex, and are expected to
  fall sharply after February 2003.

 In Europe, Nexium and Symbicort launches
  continued and both products are now marketed in most countries. Patents covering Losec and Zestril expired
  in the UK and the Netherlands during 2002. In Japan, the launch of Iressa generated
  significant sales in the second half of 2002. European markets generate 32%
  of our total sales and Japan 5%.

   Investment has continued in R&D and in
    selling and marketing activities. In both areas, prioritisation of resources
    across the portfolio is actively managed to avoid committing resources before
    opportunities are clear. R&D spend was particularly focused on completing
    the development programmes for  Crestor,
    Iressa and Exanta. Selling and marketing resources were prioritised
    to recently launched and growth products such as Nexium, Symbicort
    and Seroquel.

 As discussed in further detail in the results
  of operations of the year to 31 December 2002, we have taken a $350 million
  exceptional charge in respect of the US Department of Justice investigation
  into the sales and marketing of Zoladex in
  the US.

 As part of AstraZeneca’s objective to
  align with accounting best practice cash discounts arising from prompt payment
  of invoices have been reclassified from cost of sales to sales. Comparatives
  have also been reclassified for consistency of presentation. Both sales and






  cost of sales have been reduced by $287 million
    in the current year (2001 $258 million, 2000 $221 million). The change has
    minimal impact on previously stated sales growth rates. Furthermore, neither
    profits nor net assets have been affected.

  Results of operations
    

    The tables on this and the previous page show
    our sales and operating profit before exceptional items.

  Year to 31 December
    2002

    Growth rates described in
    this section exclude the effects of exchange rate movements (unless noted
    otherwise). This is consistent with our internal management reporting and
    we believe it provides a better understanding of underlying trends than using
    actual growth.

  Our sales increased by 9% from $16,222 million
    in 2001 to $17,841 million in 2002. Operating profit before exceptional items
    rose by 5%. The weaker US dollar increased our reported sales growth by 1%
    whilst there was no significant currency effect on operating profit growth.
    Earnings per share before exceptional items grew by 7% from $1.73 to $1.84.
    Earnings per share after exceptional items decreased from $1.65 to $1.64.

  Our sales growth for the year was impacted
       significantly by the decline in our 
    Losec/Prilosec  sales, which fell
     by 18%. If this effect is excluded, the sales growth is 23%, strong evidence

    of the positive underlying momentum of our business. This growth was fuelled
     by a trebling of  Nexium  sales, strong performances from the CNS
     (up  53%), Respiratory (up 16%) and the Oncology (up 12%) product ranges.
     Generic
    competition for Zestril resulted in a sales growth for Cardiovascular
     products of just 1%.

  The successful launches of  Faslodex
     in the US,  Iressa  in Japan, and
    Symbicort  outside the US, combined with  Nexium  sales, generated
    nearly $2.4 billion in sales in 2002 (up from $651 million in 2001). Five
    other
 






   growth products we highlight in our portfolio
    –  Casodex ,
    Arimidex ,  Atacand ,  Seroquel  and  Zomig 
    – grew by another $900 million
    (to just over $3 billion in aggregate). Together they comprise a solid foundation
    upon which to build our future performance.

   2003 should see the final elements of our portfolio
    transformation fall into place. We believe we are well positioned to absorb
    the full year effects of generic competition for 
    Prilosec, Nolvadex
     and  Zestril. Following the planned launches of  Crestor
    and  Exanta  all the elements will be in place to drive sales and earnings
    growth in 2004 and beyond.

   Gastrointestinal 

    Gastrointestinal sales grew by 7% to $6,664
    million.

   The strong growth of  Nexium more
    than offset declines in  LosecPrilosec. Nexium sales
    were $1,978 million for the year, including $453 million from markets outside
    the US. There were a further 38 launches in 2002, bringing the total to 76
    countries. The global PPI market continues to grow strongly (around 20% per
    annum). Nexium share of the PPI market across major markets was 16%
    in October 2002. In the US, Nexium share of total prescriptions for
    PPI products reached 20.5% in December.

   Losec/Prilosec
    sales were down by 18% for the year. The 21% decline in the US was broadly
    in line with the prescription trend. Sales performance outside the US (down
    12%) was aided by strong growth in Japan (up 40% from $69 million to $92 million)
    and Australia (up 25% from $72 million to $95 million). A generic omeprazole
    product became available in the US market on 8 December. In the week ending
    17 January 2003, Prilosec brand share of total omeprazole prescriptions
    was 47%, a rate that is consistent with reports of constrained supply of generic
    product.




 

	AstraZeneca
      operating profit	 	 	 	 	 
	before exceptional
      items	 	 	 	 	 
	 	2002
$m	  	2001
$m	  	2000
$m
	
	
	
	
	
	

	Continuing operations	4,356	 	4,156	 	3,984
	
	
	
	
	
	

	Agrochemicals (discontinued)	–	 	–	 	346
	
	
	
	
	
	

	 	4,356	 	4,156	 	4,330
	
	
	
	
	
	







 
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	32	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Review


 Financial Review continued

  


  Cardiovascular 

    Cardiovascular sales grew by 1% to $3,569 million.

    Zestril 
    sales have fallen by 18% from $1,067 million to $877 million as a result of
    the introduction of generic competition in the US, where revenues dropped
    by 24% to $467 million.
   Sales of  Atacand
     products grew by 36% on a global basis
    in 2002 to $569 million with sales in the US increasing by 37% to $206 million.

   Prescriptions continue to grow strongly for
     Seloken/Toprol-XL
     in the US generating sales of $617 million (up 43%). Worldwide sales grew
    by 27% from $711 million to $901 million.

    Plendil 
    sales rose by 5% to $489 million –
    as in 2001, growth in the US (up 6% to $209 million) was offset by lower growth
    in the rest of the world.

   Respiratory and Inflammation
    

    Respiratory sales increased by 16% to $1,818
    million.

    Symbicort 
    sales for the year were $299 million, up around 250%. The product has now
    been launched in more than 40 countries. Value share of the fixed combination
    asthma products across Europe was over 22% in November 2002, with notably
    higher shares achieved in Sweden (48%) and Germany (30%). The regulatory submission
    for COPD treatment is being reviewed in the European Union.

    Pulmicort Turbuhaler  sales
    globally reflect the declining inhaled bronchial steroid market in the face
    of growing acceptance of combination products. This was more than offset by
    the strong growth of  Pulmicort Respules  in the US (up 75%), enabling
     Pulmicort  to achieve a 5% global sales increase for the full year to
    $812 million.

    Rhinocort  sales
    in the US increased by 19% for the year to $211 million, fuelled chiefly by
    share gains for  Rhinocort Aqua  in the aqueous intranasal steroid
    market of more than three percentage points –
    Rhinocort Aqua  revenues
    grew by 39%. Sales were flat in the rest of the world resulting in a global
    13% increase in Rhinocort franchise sales to $299 million in 2002.

   Oncology 

    Oncology sales grew by 12% to $2,369 million.



              
  

 



   Arimidex 
    has enhanced its position as the leading product in the aromatase inhibitor
    market for breast cancer treatment. Market share has grown as the positive
    results of the ATAC trial in early breast cancer have been incorporated into
    product labels and are being adopted in clinical practice. Monthly prescriptions
    in the US have doubled since December 2001, driving the 127% increase in US
    sales for the year to $134 million. Sales outside the US increased by 51%
    to give total global sales growth of 75% to $331 million.

  Sales of 
    Casodex  outside of the US increased by
    42% to $464 million in 2002 as the use of  Casodex  150 mg tablets in
    the treatment of early prostate cancer has now been approved in 41 countries.
    However, in
 







  December 2002, the Oncology Drugs Advisory
    Committee to the US FDA did not recommend approval of this indication in the
    US. Even without the benefit of this new indication, prescriptions for  Casodex  grew by some 5% in
    the US market last year. The reported sales decline in the US of 23% to $180
    million is therefore not indicative of underlying demand, but rather an adverse
    comparison against wholesaler stockbuilding which occurred at the end of 2001.

   US revenues for  Nolvadex 
    in the year were $337 million, down 27%, as sales of our tamoxifen products
    fell as a result of the expiry of our distribution agreement with Barr Laboratories.
    Furthermore, a sharp decline in sales in the US is expected










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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Review	33


 

 following the end of exclusivity in February
  2003.

   Sales of
    Faslodex in the treatment of advanced breast
    cancer reached $35 million after eight months in the US market. A European
    submission for second line treatment of advanced breast cancer is planned
    for the first quarter of 2003.

   Sales of
    Iressa for the treatment of inoperable
    or recurrent non-small cell lung cancer reached $65 million (out of global
    sales of $67 million) in just over four months on the market in Japan, indicating
    a high level of acceptance in this area of great unmet medical need notwithstanding
    strict precautions introduced locally. In the US, the FDA has indicated that
    it will require an additional three months (to May 2003) to complete its review
    of the pending NDA. A regulatory submission in Europe is planned for the first
    quarter of 2003.

   Central Nervous System
    

    CNS sales increased by 53% to $1,505 million.

   Seroquel
    sales reached the $1 billion annualised sales megabrand milestone in 2002.
           Sales grew strongly in the US (up 67%) and in the rest of the world
          (also
    up 67%) to $1,145 million. Market share of new prescriptions in the US market
           was 19.2% in December, up 3.7 percentage points in the year –
    annual sales totalled $927 million.
    Seroquel value share of the market in
    Japan  is now 25% in just over one year on the market. An sNDA submission
    in the
    US for use of Seroquel in the treatment of acute mania associated
    with  bipolar disorder (manic depressive illness) was announced on 2 January
    2003.
    A filing in Europe is planned for the first quarter of 2003.

   Zomig sales
         for the full year grew by 19% to $328 million, with the bulk of the
        increase
    arising in Japan (up 67% to $14 million), France (up 29% to $60 million)
        as  well as from the US (up 20% to $177 million). Rapimelt tablets
        and  nasal spray formulations have been valuable additions to the product
        range
    in countries where they have been introduced. Zomig sales in the fourth
     quarter in the US appear to reflect some wholesaler stockbuilding. Zomig
    prescriptions in the US increased by 11% for the year, in line with the triptan
     market overall.

   Pain Control, Infection and Other
    Pharma 

    Pain Control, Infection and Other Pharma sales
    fell by 5% to $1,418 million.







 Sales of Merrem
  grew by 26% for the full year to $285 million,
  chiefly on the 31% increase on sales outside the US. In the US sales grew by
  9% to $59 million.

   The small sales increase for
    Diprivan in
    the US (up 3% to $216 million) was the result of growth in the underlying
    demand for propofol offsetting small market share losses to generic products.
    This rise did not compensate for declines elsewhere and global sales fell
    by 3% to $443 million.

 Other pharmaceutical products
  fell by 31% from $379 million to $258 million, mainly as a result of the disposal
  of the Sular product range at the beginning of the year.

   Others 

    Salick Health Care and Astra Tech achieved
    sales growth of 20% and 14% in the year to $233 million and $151 million,
    respectively. Marlow Foods’ sales increased by 8% to $114 million; the
    business saw its first sales in the US generating $3 million.

   Geographic analysis
    

    In the US sales increased by 10% for the full
    year. Excluding Prilosec,
    sales growth was 33%, with excellent performances in Nexium, Seroquel,
    Toprol-XL, Pulmicort Respules and Arimidex.
  

   Strong sales performance in
    France (up 13% to $1,140 million) and Italy (up 16% to $765 million) more
    than offset declining sales in Germany and the UK, resulting in a 5% increase
    in Europe for the full year. Sales growth was driven by
    Nexium, Symbicort, Casodex
    and Seroquel. 

 A strongly performing product
    range in Oncology (including the excellent uptake for
    Iressa) and continued strong growth in
    Losec (up 40%) fuelled the 21% sales growth in Japan for the full year.
    Sales reached $977 million in 2002, up from $851 million in 2001.

   Research and development
    

    Our R&D costs rose in 2002 from $2,687
    million before exceptional items to $3,069 million. Part of this 14% increase
    can be attributed to exchange fluctuations (4%).

   Operating margin and
    retained profit

    Operating profit before exceptional items increased
    by 5% to $4,356 million. Operating margin of 24.4% was 1.2 percentage points
    below prior year. Currency impacts reduced margin by 0.3% whilst the other
    0.9% reduction was largely due to lower other operating income. Elsewhere,
    improved







 product mix and lower Merck payments
  reduced cost of sales by 0.6 percentage points to 25.3 percentage points of
  sales whilst SG&A growth was broadly in-line with sales growth. R&D
  increased by 0.6% to 17.2% of sales, principally due to the growth in clinical
  trial costs. In aggregate, R&D and SG&A grew by around 10% at constant
  exchange rates. Other operating income fell from $368 million to $243 million
  reflecting both lower royalty income and product disposal gains.

   As previously disclosed, the
    US Department of Justice has been conducting a civil and criminal investigation
    into the sale and marketing of
    Zoladex (goserelin acetate implant). This investigation was prompted
    by the filing of a qui tam complaint by a private party in 1997 and
    involves allegations of improper submissions of claims to the Medicare and
    Medicaid programmes. The Company and federal and state authorities are in
    the process of negotiating a potential settlement of the civil and criminal
    claims at issue in the investigation. As a result, although no final agreement
    has been concluded, we believe it appropriate to accrue $350 million to cover
    estimated settlement costs as an exceptional item.

 Interest and dividend income was
  $31 million (2001 $113 million) for the full year and includes the effects of
  some small exchange and revaluation losses.

 Excluding exceptional items, the
  effective tax rate for the full year 2002 was 26.8% compared with 28.4% for
  2001. The 2001 tax rate has been restated under FRS19. No tax relief has been
  provided on the exceptional item charge in 2002. 

 We paid a first interim dividend for 2002 on
  7 October 2002 of $0.23 per Ordinary Share. A second interim dividend for 2002
  of $0.47 per Ordinary Share has been declared, which the Annual General Meeting
  will be asked to confirm as the final dividend. This, together with the first
  interim dividend, makes a total of $0.70 for the year in line with the Group’s
  dividend policy. The policy (in the absence of unforeseen circumstances) anticipates
  that dividends will be maintained at $0.70 until earnings cover dividends by
  between two and three times; thereafter, dividends are intended to be grown
  in line with earnings.

 In 2002, we re-purchased 28.4 million Ordinary
  Shares (nominal value $0.25 each) for cancellation at a total cost of $1,190
  million.











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	34	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Review


 Financial Review continued



   Financial position
    

    The net book value of our assets increased
    from $9,629 million at 31 December 2001 to $11,226 million at 31 December
    2002. The increase was driven by the net profit for the year of $2,836 million
    and consolidation translation gains of $1,110 million, offset by re-purchases
    of shares and the 2002 dividends, amounting to $1,190 million and $1,206 million,
    respectively. 

   Tangible fixed assets
    

    Our tangible fixed assets amounted to $6,597
    million at the year end (2001 $5,409 million). This includes $1,298 million
    of construction in progress (2001 $1,119 million), the major elements of which
    are new manufacturing capability in Puerto Rico and Sweden, research facilities
    in the UK and administrative and other facilities in the US. 

   Goodwill and intangible fixed assets
    

    As discussed in critical accounting policies,
    a substantial element ($1,237 million) of our goodwill and intangible assets
    balance of $2,807 million arose as a result of the set up in 1994 and subsequent
    restructuring in 1998 of the Astra Merck joint venture. A further $742 million
    relates to the Advanced Payment in relation to the Merck arrangements discussed
    below. We also own the marketing rights to Losec
    and Plendil in Italy and Spain, acquired from Schering Plough in 1999,
    amounting to $297 million. 

   Stocks 

    Our stock value has risen from last year to
    $2,593 million (2001 $2,402 million). Most of this increase can be attributed
    to an increase in levels of stock of products in pre-launch and early marketing
    phases as well as currency fluctuations. 

   Debtors and creditors
    

    The increase in debtors and creditors reflects
    year end timings of settlement of trade creditors and increased trading activity
    in the year together with exchange effects. 

   Net funds 

    We have significant net funds which have grown
    due to a cash inflow for the year to







 $3,844 million from $2,867 million.
  The net funds are summarised in the note below. 

 Within loans, the 6.3% guarantee
  notes amounting to $284 million are due for repayment in 2003. 

   Liquidity
    and capital resources 

    All data in this section is on an actual basis
    (unless noted otherwise). 

   Cash flow
    

    Before exceptional cash expenditure, we generated
    $5,686 million cash inflow from operations in 2002, significantly higher than
    the corresponding figure of $4,130 million in 2001. Higher profits before
    depreciation and amortisation contributed $300 million, and there were significant
    working capital inflows, particularly from stocks and creditors. A significant
    part of the creditors movements arises from the timing of payments to Merck.
    Expenditure on exceptional items was $275 million lower than in 2001 as the
    integration and synergy programmes reach their conclusion. Tax cash outflows
    at $795 million were marginally higher than 2001 whilst cash inflows from
    interest fell to $35 million as a result of lower returns. We applied the
    remaining cash in continuing our share re-purchase programme (up $110 million
    from 2001 to $1,190 million), continued investment in fixed assets (broadly
    similar to 2001 at $1,608 million) and dividends ($1,234 million). As a result,
    our net cash inflow before non-equity financing was $902 million compared
    to an outflow in 2001 of $691 million. 

 Undrawn committed and uncommitted
  bank facilities at 31 December 2002 totalled $0.5 billion with maturities ranging
  from one to two years. Our working capital is sufficient for our present requirements
  and includes sufficient cash for our capital programme, share re-purchases,
  and any costs of launching new products. 

 Future operating cash flows may
  be affected by a number of factors as outlined in the business background section
  on page 30.







   Capitalisation
    

    The share re-purchase programme has been extended
    and will continue as an integral part of the Company’s financial management
    until the end of 2003 at a total cost of $4 billion. We re-purchased 28.4
    million shares in 2002 for $1,190 million, bringing the total number of shares
    re-purchased since the start of the re-purchase programme in 1999 to 65.6
    million at a cumulative cost of $2,805 million. The number of shares in issue
    at year end was 1,719 million. Our reserves were increased by $1,110 million
    due to the effect of exchange rate movements on translation of non-dollar
    denominated assets and liabilities. Shareholders’ funds increased by
    a net $1,586 million to $11,172 million at year end. 

   Investments, divestments
    and capital expenditure 

    There were no significant acquisitions or disposals
    in 2002. 

 Our cash expenditure in 2002 on fixed assets
  (including intangible assets, goodwill and fixed asset investments) totalled
  $1,543 million (net of disposals of $65 million). This expenditure was broadly
  similar to the last two years and includes the elements discussed above together
  with a further instalment to purchase marketing rights of $146 million. The
  capital expenditures are financed from internally generated funds. 

   Financial policies

    Insurance 

    Our risk management processes are described
     in the Directors’ Report on page 46. An outcome of these processes
     is  that they enable us to identify risks which can be partly or entirely
     mitigated
    through use of insurance or which we can self-insure. We negotiate best possible
      premium rates with insurance providers on the basis of our extensive risk

    management procedures. In the current insurance market, level of cover is
      decreasing whilst premium rates are increasing. Rather than simply paying

    higher premiums for lower cover we focus our insurance resources on the most
      critical areas, or where there is a legal requirement, and where we can
     get
    best




	 	 	 	 	 
	AstraZeneca net funds	 	 	 	 
	 	2002

      $m	 	2001

      $m	 
	
	 
	
	 
	

	Short term investments	3,962	 	3,118	 
	
	 
	
	 
	

	Cash, net of overdrafts and short term
      borrowings	524	 	491	 
	
	 
	
	 
	

	Loans	(642	)	(742	)
	
	 
	
	 
	

	Total	3,844	 	2,867	 
	
	 
	
	 
	

	 	 	 	  	 



 







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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Review	35


  


value for money. Risks which we give particular
    attention to include product liability, business interruption, directors and
    officers liability, and property damage. 
   Treasury
    

    Our financial policies covering the management
    of cash, borrowings and foreign exchange are deliberately conservative and
    intended to support our objective of building shareholder value by managing
    and controlling our financial risks. Our treasury operations are conducted
    in accordance with policies and procedures approved by the Board. 

 The Treasury activities are managed centrally
  from London and over 90% of our cash and short term investments are managed
  directly from London. With only limited and specifically approved exceptions,
  all currency and interest rate hedging is conducted from London. Operating units
  benefit from local currency billing which has the effect of consolidating their
  foreign exchange exposures back into central Treasury. 

   Foreign exchange 

     The US dollar is the most significant currency
    for us. As a consequence we have chosen to report our results in US dollars
    and manage our exposures against US dollars accordingly. Approximately half
    of our sales in 2002 were denominated in currencies other than the US dollar,
    while a significant proportion of our manufacturing and R&D costs are
    denominated in sterling and Swedish kronor. As a result, our operating profit
    in US dollars can be affected by movements in exchange rates. 

 Currency exposure is managed centrally using
  12 month currency cash flow forecasts for Swedish kronor, sterling, euro, Japanese
  yen, Australian dollar and Canadian dollar and monthly updated working capital
  forecasts for the major currencies reported by subsidiaries. We use derivative
  financial instruments, principally currency options and forward foreign exchange
  contracts, to hedge our currency exposure. It is our policy not to engage in
  any speculative transactions nor to actively hedge through the financial markets
  currency translation exposures arising from the consolidation of our non-US
  dollar subsidiaries. 

 Key controls, applied to transactions in derivative
  financial instruments, are to use only instruments where good market liquidity
  exists, to re-value all financial instruments daily using current market rates
  and to sell options only to offset previously purchased options. 







 The transaction exposures that
  arise from non-local currency intercompany sales and transactions with third
  parties of our subsidiaries are fully hedged using forward foreign exchange
  contracts and purchased currency options. 

 Longer term forecast cash flow
  currency exposure is managed by forecasting cash flows by major currency for
  the next 12 months on a monthly rolling basis. The policy is to limit the potential
  downside by hedging 50%, subject to variation within authorised limits, using
  a mixture of purchased currency options and forward exchange contracts.


 In 2002, the US dollar depreciated
  against all major currencies. It is estimated that the effect of currency movements
  was to increase our continuing business sales by approximately $111 million
  and reduce our operating profit by $25 million (net of hedging benefits).


   Interest rate risk
    

    The management of our liquid assets and loans
    are co-ordinated and controlled centrally by our treasury operations. We have
    significant positive cash flows and the liquidity of major subsidiaries is
    co-ordinated in cash pools and concentrated daily in London. Interest rate
    risk is managed according to a benchmark reflecting 90 days’ duration
    of net liquid funds. Our liquid funds are primarily invested in US dollars.
  

 Our debt has an average maturity
  of 10 years and the majority is denominated in US dollars. A large portion has
  been swapped from fixed rate into floating rate debt, thereby reducing our exposure
  to downside interest rate movements. 

   Credit exposure
    

    Our exposure to financial counterparty credit
    risk is controlled by our treasury team centrally by establishing and monitoring
    counterparty limits. Our funds are invested almost entirely with counterparties
    whose credit rating is ‘A’ or better. 

 Trade debtor exposures are managed
  locally in the operating units where they arise. We are exposed to customers
  ranging from large private wholesalers to Government-backed agencies and the
  underlying local economic and sovereign risks vary throughout the world. Where
  appropriate we endeavour to minimise risks by the use of trade finance instruments
  such as letters of credit and insurance.







   Funding risk 

    We have significant net funds to finance ongoing
    working capital requirements for our operations. In addition, we also have
    guaranteed credit facilities in the amount of $75 million and retain a commercial
    paper programme should the need arise for significant additional funding.

   Sensitivity analysis
    

    The sensitivity analysis, set out in this Financial Review on page 36, summarises the
    sensitivity of the market value of our financial instruments to hypothetical
    changes in market rates and prices. Changes to the value of the financial
    instruments are normally offset by our underlying assets and liabilities.
    The range of variables chosen for the sensitivity analysis reflects our view
    of changes which are reasonably possible over a one year period. Market values
    are the present value of future cash flows based on market rates and prices
    at the valuation date.

 Market values for interest rate risk are calculated
  using third party systems which model the present value of the instruments based
  on the market conditions at the valuation date. For long term debt, a favourable
  change in market value results in a decline in the absolute value of debt. For
  other financial instruments a favourable change in market value results in an
  increase in the absolute value.

 The sensitivity analysis on page 36 assumes
  an instantaneous 100 basis point change in interest rates in all currencies
  from their levels at 31 December 2002, with all other variables held constant.

 Based on the composition of our long term debt
  portfolio as at 31 December 2002 (which is predominantly floating rate), a 1%
  increase in interest rates would result in an additional $4.5 million in interest
  being incurred per year.

   The exchange rate sensitivity analysis on
    page 36 assumes an instantaneous 10% change in foreign currency exchange rates
    from their levels at 31 December 2002, with all other variables held constant.
    The +10% case assumes a 10% strengthening of the US dollar against all other
    currencies and the –10% case assumes a 10% weakening of the US dollar.












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	36	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Review	 


 Financial Review
  continued

 Ratios

	As at end and for the year ended 31 December	2002	 	2001	 	2000	 
	 	 	 	(restated)	 	(restated)	 
	
	
	
	
	
	
	 
	Return on shareholders’ equity (%)	27.3	 	30.6	 	23.2	 
	
	
	
	
	
	
	 
	Equity/assets ratio (%)	51.8	 	51.8	 	49.8	 
	
	
	
	
	
	
	 
	Net funds/equity ratio (%)	34.4	 	29.9	 	38.4	 
	
	
	
	
	
	
	 
	Number of employees	58,700	 	54,600	 	52,300	 
	
	
	
	
	
	
	 



 Sensitivity analysis – 31
  December 2002 

	 	 	 	Market
        value change favourable/(unfavourable)
	 
	 	 
	 
	  	 Market
        value

        31 December 2002
	  	 Interest
        rate

        movement
	  	 Exchange
        rate

        movement
	 
	 	
	 	
	 	
	 
	 	 	 	+1 %	 	–1 %
	 	+10 %	 	–10 %	 
	 	$m	 	$m	 	$m
	 	$m	 	$m	 
	
	
	
	
	
	
	
	
	
	
	 
	Cash and short term investments	4,793	 	(7	)	7	 	(29	)	29	 
	
	
	
	
	
	
	
	
	
	
	 
	Long term debt	(733	)	26	 	(32	)	3	 	(3	)
	
	
	
	
	
	
	
	
	
	
	 
	Interest and currency swaps	82	 	–	 	–	 	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	 
	Foreign exchange forwards	(9	)	–	 	–	 	(3	)	3	 
	
	
	
	
	
	
	
	
	
	
	 
	Foreign exchange options	97	 	–	 	–	 	(10	)	150	 
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	19	 	(25	)	(39	)	179	 
	
	
	
	
	
	
	
	
	
	
	 


 Sensitivity analysis – 31 December 2001 

	 	 	 	Market
        value change favourable/(unfavourable)
	 
	 	 
	 
	  	 Market
        value

        31 December 2001
	  	 Interest
        rate

        movement
	  	 Exchange
        rate

        movement
	 
	 	
	 	
	 	
	 
	 	 	 	+1 %	 	–1 %
	 	+10 %	 	–10 %	 
	 	$m	 	$m	 	$m
	 	$m	 	$m	 
	
	
	
	
	
	
	
	
	
	
	 
	Cash and short term investments	3,897	 	(4	)	4	 	(13	)	13	 
	
	
	
	
	
	
	
	
	
	
	 
	Long term debt	(805	)	20	 	(24	)	10	 	(10	)
	
	
	
	
	
	
	
	
	
	
	 
	Interest and currency swaps	70	 	–	 	–	 	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	 
	Foreign exchange forwards	10	 	–	 	–	 	(10	)	11	 
	
	
	
	
	
	
	
	
	
	
	 
	Foreign exchange options	81	 	–	 	–	 	9	 	108	 
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	16	 	(20	)	(4	)	122	 
	
	
	
	
	
	
	
	
	
	
	 








 
Back to Contents


	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Review	37








  Critical accounting policies
    and estimates

    Our financial statements are prepared
    in accordance with accounting principles generally accepted in the United
    Kingdom (“UK GAAP”) and the
    accounting policies employed are set out under the heading “Financial
    Statements – Accounting Policies” on pages 63 and 64 of the Company’s
    Annual Report and Form 20-F. In applying these policies, we make estimates
    and assumptions that affect the reported amounts of assets and liabilities
    and disclosure of contingent assets and liabilities; the actual outcome could
    differ from those estimates.

  Some of these policies require a high level
    of judgement, either because the areas are especially subjective or due to
    their complexity. We believe that the most critical accounting policies and
    significant areas of judgement and estimation are in revenue recognition,
    research and development, goodwill and intangible assets, post-retirement
    benefits, share option compensation and provisions for contingent liabilities.


  Revenue recognition.
    Revenue represents sales of products (net of estimated rebates) to external
    third parties and excludes intercompany income and value added taxes. We also
    receive income from royalties, and from sales of intellectual property, brands
    and product lines which are included in other operating income.

  	>  	Sales of products to third
      parties



    Sales revenue is recorded as
      turnover in our financial statements and valued at the invoiced amount (excluding
      sales and value added taxes) less estimated provisions for product returns
      and rebates given to managed care and other customers – a particular
      feature in the US. Cash discounts for prompt payment are also deducted from
      sales. Revenue is recognised when title passes to the customer which is
      usually either on shipment or on receipt of goods by the wholesaler depending
      on local trading terms. Industry practice in the US allows wholesalers and
      pharmacies to return unused inventories within six months of shelf-life
      expiry. At point of sale, management estimate the quantity and value of
      goods which may ultimately be returned. Our returns provisions are based
      on actual experience over the preceding 12 months, although in certain situations,
      for example, a new product launch or at patent expiry, further

  




  

    judgement may be required.
      With Prilosec
      facing generic competition at the end of 2002, we have given particular
      attention to the possible level of returns. Overall, we believe that our
      estimates are reasonable.

     Similarly, at the time of invoicing
      sales, rebates which could be paid out over the following six to nine months
      are estimated. These rebates typically arise from sales contracts with managed
      care organisations and hospitals and from Medicaid “best price”
      contracts. The estimates are made on a customer by customer basis taking
      into account specific contract provisions and are reviewed each month. Management
      believes that it has been reasonable in its estimate for future rebates
      using similar methodology to that of 2001. Inevitably, however, such estimates
      involve judgements on future sales levels and the extent to which customers
      will access different incentive levels. Experience has shown these estimates
      to be substantially accurate.

   A further feature of the US
    market is that sales can also be significantly influenced by wholesaler buying
    patterns. Wholesalers often place orders
    which are significantly larger than their normal levels of demand ahead of
    anticipated price increases or they may seek to build up or run down their
    inventory levels for other reasons. If such speculative orders are shipped
    shortly before a quarter or year end it can result in revenue being recorded
    in the current financial period in respect of the following year’s underlying
    demand and distortion of the financial results from one period to the next.
    Management tracks wholesaler inventory levels by product using its own and
    third party estimates and, where we believe such distortions occur, we disclose
    in the financial review for each product where shipments may be out of line
    with underlying prescription trends. The Company does not offer any incentives
    to encourage wholesaler speculative buying and attempts where possible to
    restrict shipments to underlying demand when such speculation occurs.

 We offer cash discounts on prompt
  settlement of invoices and, once again, this is a particular feature in the
  US, although it is seen elsewhere. As noted above, we deduct cash discounts
  from revenue.






  
  	>  	Royalty income



    Royalty income is recorded under “Other
      Operating Income” in the financial statements. Royalties tend to be
      linked to levels of sales or production by a third party. At the time of
      preparing the financial statements, we may have to estimate the third party’s
      sales or production when arriving at the royalty income to be included in
      the accounts. These estimates, which may differ from actual sales, do not
      result in a material impact on reported other operating income.



  	>  	Sales of intangible assets
      (intellectual property, brands, goodwill etc)



    A consequence of charging all research and
      development expenditure to the profit and loss account in the year that
      it is incurred (which is normal practice in the pharmaceutical industry)
      is that we own valuable assets (intellectual property, brands etc) which
      are not recorded on the balance sheet. We also own acquired intangible assets
      which may be included on the balance sheet (see “Research and development”
      below). As a consequence of its regular reviews of product strategy, from
      time to time the Company sells such assets and generates income. In a simple
      situation, the recognition of income may be easily defined but often the
      transfer of title can require ongoing commitment by us (for example, ongoing
      manufacturing arrangements, technology transfer, transfer of product licences,
      etc). In these circumstances, the recognition of revenue may be spread over
      the period of our ongoing commitment. Profits or losses from the sale of
      product related intangible assets are classified in “Other Operating
      Income” and are stated after taking account of product disposal costs,
      the valuation of which includes a degree of judgement.



Research and development.
  Our business is underpinned by our marketed products and development portfolio;
  the research and development expenditure to generate these products is charged
  to the profit and loss account in the year that it is incurred. This policy
  is in line with practice adopted by all major pharmaceutical companies.

Purchase of intellectual property, product rights,
  etc to supplement the Group’s R&D portfolio can lead to differing accounting
  treatment depending on management’s assessment of the nature of the acquisition





          



 
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	38	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Review	 


 Financial Review
  continued


   and the degree of risk involved. For example,
    payments in respect of rights to a compound in early stage development would
    normally be expensed immediately against income on the basis that, at this
    point, the probability of the compound successfully reaching the market place
    is still low. Payments in respect of rights to a compound in late stages of
    development, however, or to one already being marketed, would probably be
    capitalised as an intangible asset (see “Goodwill and intangible assets”
    below) as the prospect of success is much greater. There have been no material
    capitalisation of or charges for such items during 2002.

 Goodwill and intangible assets.
  We have significant investments in goodwill and intangible assets as a result
  of acquisitions of businesses and purchases of such assets as product development
  and marketing rights. Under UK GAAP these are amortised over their estimated
  useful lives. Changes in these lives would result in different effects on the
  profit and loss account. We estimate that a one year reduction in the estimated
  useful lives of goodwill and intangible assets would increase the annual amortisation
  charge by $23 million. A substantial part of our investments in intangible assets
  and goodwill relate to the restructuring of the Astra-Merck joint venture in
  1998 and we are satisfied that the carrying value is fully justified by future
  earnings. Goodwill and intangible assets are reviewed for impairment where there
  are indications that their carrying values may not be recoverable and any impairments
  are charged to the profit and loss account. Tests for impairment are based on
  discounted cash flow projections, which require management to estimate both
  future cash flows and an appropriate risk-adjusted discount rate. Such estimates
  are inherently subjective. No impairments to goodwill or intangibles (2001 $nil,
  2000 $24 million) were identified in 2002.

   Under UK GAAP, the merger of Astra and Zeneca
    in 1999 was recorded as a “merger of equals” (pooling of interests).
    Under US GAAP, the merger has been accounted for as the acquisition of Astra
    by Zeneca as discussed in more detail on page 42.

 Contingent liabilities.
  In the normal course of business, contingent liabilities may arise from environmental
  liabilities connected with our current or former sites, from product specific
  and general legal proceedings, or from guarantees. Where we believe that potential
  liabilities have a low probability of crystallising or are very difficult to
  quantify reliably, we treat







 these as contingent liabilities.
  These are not provided for but are disclosed in the notes. Further details of
  these are set out in Note 34 on page 101. Although there can be no assurance
  regarding the outcome of these proceedings, we do not expect them to have a
  materially adverse effect on our financial position or profitability.

   We also have significant commitments
    which are not currently recognised in the balance sheet arising from our relationship
    with Merck. These are described more fully in “Off-balance sheet transactions,
    contingent liabilities and commitments”.

 Post-retirement benefits.
  We account for the pension costs relating to the UK retirement plans under SSAP
  24 and under local accounting practices for non UK-subsidiaries due to the cost
  and difficulty of obtaining SSAP 24 information for non-UK schemes. In all cases,
  the pension costs are assessed in accordance with the advice of independent
  qualified actuaries but require the exercise of significant judgement in relation
  to assumptions for future salary and pension increases, long term price inflation
  and investment returns. SSAP 24 permits flexibility in the actual assumptions
  and bases to be used and the application of different assumptions could have
  a significant effect on the amounts reflected in the financial statements. Management
  considers that the assumptions and bases detailed in Note 32 are appropriate
  for the business.

 The off-balance sheet aspects
  of post-retirement benefits are discussed on page 39.

 On pages 94 to 96, we also provide
  additional disclosures in accordance with FRS17. Had FRS17 been applied the
  additional charge to profit and loss would have been about $30 million.

 Share option compensation.
  Through the remuneration committee we offer share options to certain employees
  as part of their compensation and benefits packages, designed to improve alignment
  of the interests of employees with shareholders. Details of these are given
  in Note 33. It is likely that, at some point, international, UK and US accounting
  standards will require share option grants to be valued and charged against
  income. At present US GAAP requires some share option costs to be charged to
  the profit and loss account and stipulates disclosure of the cost should all
  eligible options be expensed (as set out on page 118). Using the Black-Scholes
  model as a






valuation basis, which is appropriate for traded
  options but less so for more restrictive employee grants, we estimate an additional
  charge of approximately $122 million would arise. This would result in a charge
  to profit and loss but would have no impact on our net assets or on our current
  or future cash flows.

  Off-balance sheet transactions,
    contingent liabilities and commitments

    Details of our contingent liabilities
    and commitments are set out in Note 34 to the Financial Statements. We have
    no off-balance sheet entities and our hedging activities are non speculative.

  Arrangements with Merck

  Introduction

    In 1998, Astra and Merck & Co Inc restructured their joint venture (the
    “restructuring”) which had been established some years
    earlier for the purpose of selling and marketing certain Astra products in
    the United States. Under the restructuring a US limited partnership, in which
    Merck is the limited partner and we are the general partner, was set up. The
    restructuring agreement provided for certain termination clauses, and provisions
    for amending these clauses on the occurrence of certain defined events, including
    a merger by Astra.


Under the terms of the 1998 restructuring,
    the merger between Astra and Zeneca in 1999 triggered two one-time payments
    from us to Merck:

  	>  	a Lump Sum Payment of $809 million, which
        was charged to profit and loss account, as a result of which Merck relinquished
        any rights to Zeneca products; and


  

  	>  	an Advance Payment of $967 million. This
        Advance Payment was calculated as the then net present value of $2.8 billion
        discounted from 2008 to the date of payment of a rate of 13% per annum
        and causes Merck to relinquish any rights to future Astra products with
        no existing or pending US patents at the time of the merger.


  We make ongoing payments to Merck
    based on sales of certain of our products in the US (the “contingent
    payments” on the “agreement products”) as well as certain other
    partnership returns, the latter of which are not material to the Group. As
    a result of the 1999 merger, these contingent payments (excluding those in
    respect of Prilosec
    and










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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Review	
      39

    






Nexium)
      are subject to defined annual minimum amounts between 2002 and 2007 ranging
      from $125 million to $225 million.

Our payments have exceeded the minimum level
    in 2002 and we have no reason to believe that the annual payments in the
    future will fall below the minimum obligations. Merck also performs certain
    manufacturing stages for certain agreement products.

The terms of the 1998 restructuring provide
    for the following events:

  
  	>  	Partial Redemption
	>  	First Option
	>  	Second Option




These are described in more detail below.

        Partial Redemption

    In 2008, there will be a partial redemption
    of Merck’s limited partnership interest – which will end Merck’s
    rights to contingent payments in respect of certain agreement products –
    by distribution to Merck of an amount calculated as a multiple of the previous
    three years’ contingent payments on the relevant products, plus $750
    million.

        First Option

    In 2008 a calculation will be made of the
    Appraised Value, being the net present value of the future contingent payments
    in respect of all other agreement products not covered by the Partial Redemption
    other than Prilosec and Nexium. Payment of this amount to Merck
    in 2008 is, however, contingent on Merck’s
    exercise of the First Option. Exercise of the First Option will require us
    to re-purchase Merck’s interest in these products. Should Merck not exercise
    this option in 2008, we may exercise it in 2010 for a sum equal to the 2008
    Appraised Value. If neither Merck nor we exercise the option, the contingent
    payment arrangements in respect of these agreement products will continue
    and the Appraised Value will not be paid.


  In addition, in 2008 there will be a true
    up of the Advance Payment. The calculation of this will be based on a multiple
    of the previous three years’contingent payments in respect of all the
    agreement products with the exception of
    Prilosec and Nexium, plus other defined amounts, which are then
    reduced by the Appraised Value (whether paid or not), the Partial Redemption
    and the Advance Payment. This could result in a further payment by us to Merck
    or a payment by Merck to us.



 

  
  
The precise amount of settlements with Merck under the Partial Redemption and the First Option cannot be determined at this time, as some of the payments are based on calculations based on trading performance between
2005 and 2007, and another is contingent upon Merck exercising the First Option. However, if Merck does exercise this option, the combined effect will involve a minimum amount payable to Merck in 2008 of approximately $4.7 billion. If we exercise
this option in 2010, the combined effect will involve a minimum aggregate amount payable to Merck in 2008 and 2010 of approximately $4.7 billion.



Finally, in 2008, Merck will repay to us a loan in the amount of $1.4 billion made at the time of the restructuring.



Second Option


    A Second Option exists whereby we
    have  the option to re-purchase Merck’s
     interests in Prilosec and Nexium in
      the US. This option is exercisable by us two years after the exercise of
     the
    First Option in either 2008 or 2010. Exercise of the Second Option by us
     at  a later date is also provided for in 2017 or if combined annual sales
     of the
    two products fall below a minimum amount provided, in each case only so long
      as the First Option has been exercised. The exercise price for the Second

    Option is the fair value of these product rights as determined at the time
      of exercise. 


If the Second Option is exercised, Merck will have no further rights to contingent payments from us.



Accounting treatment


Under current UK and US generally accepted accounting principles, we believe that the payments described under the three headings above are likely to constitute purchase consideration in respect of future trading
rights and, accordingly, would be capitalised within the goodwill and intangible assets category and amortised, as appropriate.



Post-retirement benefits


We offer post-retirement benefit plans which cover many of our employees around the world. In keeping with local terms and conditions, most of these plans are defined contribution in nature where the resulting profit
and loss account charge is fixed at a set level or is a set percentage of employees’ pay.
However, several plans, mainly in the UK which has by far the largest single
scheme, the US and Sweden, are defined benefit






  
plans where benefits are based on employees’ length
  of service and final pensionable pay. The UK and US schemes were closed to new
  entrants in 2000. All new employees in these countries are offered defined contribution
  schemes.



Under FRS17, the disclosures on page 95 highlight a deficit of $637 million, after deferred tax, for all Group post-retirement defined benefit schemes. FRS17 prescribes detailed rules for the calculation of scheme
assets and liabilities and indicates the net accounting surplus or deficit that would exist if the schemes were wound up at the balance sheet date. Fluctuations in investment conditions and/or FRS17 prescribed assumptions can result in significant
volatility in the surplus or deficit.



Pension and other post-retirement schemes, however, are managed over the long term. Investment and liability decisions are based on underlying actuarial and economic circumstance with the intention of ensuring that the
schemes have sufficient assets to meet liabilities as they fall due rather than meeting accounting requirements. This actuarial approach tends to produce less volatility than is likely under FRS17.



The UK pension plan is the largest single scheme in the Group. At the last actuarial valuation at 31 March 2002, the market value of the fund’s
assets represented 90.1% of its liabilities as valued on the actuary’s funding
basis. The trustee manages both investments and liabilities closely. In particular,
over the last 12 months it has increased the weighting of the bond portfolio
that now represents 62.4% of the asset portfolio, compared with 58.2% a year
ago. As a result, the sterling value of the asset portfolio decreased by only
2.8% during 2002, significantly better than the UK or global equity markets.
The Company has indicated its intention to target a solvency ratio of 91% following
the 2003 actuarial valuation, and to restore full solvency over a period of around
15
years.



New accounting standards


    New UK or US applicable accounting
    standards which have been issued (both adopted and not yet adopted) are discussed
    on pages 62 and 115 respectively. We implemented FRS19 – Deferred Tax in full in 2002 and have complied with
    the disclosure requirements of FRS17 – Retirement Benefits; details are
    set out on page 62 and Note 32 respectively. The effects of the impact of
    SFAS No 144 – Accounting for the Impairment of Disposal of Long-Lived
    Assets











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	40	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Review	
         

      

    


Financial Review continued

 

	was
        not to be material. The adoption of SFAS No 141 – Business Combinations
        and SFAS No 142 – Goodwill and Other Intangible Assets resulted in
        an increase in US net income of about $755 million and no impact on US
        shareholders’ funds as a result of impairment. The effects of the
        impact of SFAS No 143 – Accounting for Asset Retirement Obligations,
        SFAS No 146 – Accounting for Costs Associated with Exit or Disposal
        Activities and SFAS No 148 – Accounting for Stock Based compensation
        are not expected to be material. 

       International accounting 

          Under current European proposals, we
          will be required to adopt International Financial Reporting Standards
          (‘IFRSs’) and
          International Accounting Standards (‘IASs’) in the preparation
          of our financial statements from 2005 onwards. The transitional arrangements
          for implementation of IFRSs
          and IASs have not been finalised by the regulatory bodies. However,
          in our opinion, the net profit and shareholders’funds
          in accordance with current international standards are not significantly
      different from those presented under UK GAAP. 

       The following information is provided
            in accordance with US requirements. 

       Year to 31 December
            2001 

            Growth rates described in this section
          exclude the effects of exchange rate movements (unless noted otherwise).
          Comparisons with the previous year are in terms of our continuing operations. 

       In 2001, sales increased by 8%
        to $16,222 million from $15,583 million in 2000. Operating profit before
        exceptional items grew by 6%. The strength of the US dollar reduced reported
        sales and profits by 4% and 2%, respectively. Earnings per share before
        exceptional items grew by 11% to $1.73. Excluding the Gastrointestinal
        area, sales growth for 2001 was 12% based on strong results from the Respiratory
        (up 17%), Oncology (up 16%) and CNS (up 49%) areas. Gastrointestinal sales
        were up 2% in the year, with Losec sales outside of the US growing
        by 4%. In the US, Losec/Prilosec sales decreased by 13%,
        offset by strong Nexium performance leaving Gastrointestinal sales
        2% lower than 2000. 

       Gastrointestinal 

        Gastrointestinal sales grew by 2% to
      $6,190 million. 

       Nexium sales
        in the US totalled $446 million and in December 2001 accounted for a
        
	 	

	 	16.3% share of
      new prescriptions in the US PPI market after only nine months. In the rest
      of the world, sales were $122 million – by the end of the year Nexium
      had been launched in 38 countries. Losec sales fell by 7% to $5,578
      million. The US decline of 13% was caused largely by reduced stocks of the
      product being held by wholesalers but also by the switch of prescriptions
      to Nexium. This was offset, in part, by an overall 4% sales increase
      elsewhere. 
      Cardiovascular

      Cardiovascular sales
      grew by 6% to $3,483 million.

      Although the underlying prescription demand
      for Zestril in
      the US
      increased, uneven	 	phasing of
        wholesaler shipments as well as higher rebates contributed to a worldwide
        reduction in sales of 6% to $1,067 million. Prescription increases for
        Seloken/Toprol-XL in
        the US, aided by the new indication, led to a 47% increase in sales value
        contributing to the 28% worldwide growth to $711 million. Atacand continued
        to perform well across all major markets with sales in the US and in the
        rest of the world growing by 29% and 58%, respectively, to a total of
        $410 million. Plendil worldwide sales increased by 2% to $463 million;
        growth in the US of 6% was offset by declines in Europe and the rest of
        the world of 2% and 4%, respectively. 

       Respiratory and Inflammation 

        Respiratory and Inflammation sales grew
    by

    


 

 

 

 

 

 








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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Review	
        41

      

    






  17% to $1,539 million.


  Total Pulmicort sales were $766 million, an
    increase of 13% driven by US growth of 81%. Rhinocort Aqua increased
    its share of the US aqueous intranasal steroid segment of the rhinitis market
    contributing towards the growth of Rhinocort worldwide of 25% to $265
    million. Symbicort was launched in the major markets in Europe and
    23 countries in total. Rapid market penetration was achieved in many of these
    markets in a matter of weeks after launch.

  Oncology

Oncology sales grew by 16% to $2,111 million.


   Casodex is
    the world’s leading anti-androgen
    for the treatment of prostate cancer. Strong growth was reported in all major
    markets with sales increasing to $561 million worldwide.
    Arimidex remains the leading product in
    the aromatase inhibitor market. Sales in the US were up 11%, and grew by 33%
    in the rest of the world, to reach $188 million worldwide. Nolvadex
    sales increased by 12% to $618 million driven by strong growth in the US where
    sales reached $462 million, up 18%.


Central Nervous System

CNS sales rose by 49% to $980 million.

   In 2001 sales of Seroquel in
    the US were up 51% to $555 million, in line with a strong growth in prescriptions.
    With the successful launch in Japan and continued growth in Europe, sales
    outside the US grew to $130 million. Sales of Zomig increased by 20%
    to $273 million. The August 2001 launch in Japan and good growth in Europe
    were the key contributors. In the US, the Zomig share of new prescriptions
    increased above 15%.


Pain Control and Infection

    Merrem enjoyed
    good growth in Europe where sales were up 21% and continued market share gains
    in the US led to strong growth for the year. Diprivan sales reduced
    by 5% in the US, a trend reflected elsewhere except for Japan where sales
    increased by 21% to $51 million. Worldwide sales reduced by 4% to $456 million.


Others

Salick Health Care sales grew by 10% to $194 million; Astra Tech sales rose by 19% to $126 million driven by growth in Europe, the major market for the business. Marlow Foods saw a strong performance, with sales
growing by 22% to $103 million.






Geographic analysis

  Sales growth in the US was led by the successful launch
  of Nexium, which generated $446 million in just nine months on the market.
  Excluding sales of Losec/Prilosec, sales growth was 28% for the
  full year, with strong performances from Seroquel,
  Toprol-XL and Faslodex.
   Double digit growth in France and Italy
    contributed to good performance in Europe. This performance was offset by
    declines in Sweden and the UK. Product highlights in the region included the
    launches of Nexium and Symbicort, as well as good growth from
    Atacand,
    Casodex and Seroquel.

   Strong growth in Losec (up 85%)
    and Casodex (up 56%) and the launches of Seroquel, Arimidex
    and Zomig led to excellent results in Japan.


  Research and development

  Our
  R&D expenditure totalled $2,687 million for 2001, an increase of $67 million
  from 2000. The level of the cost was reduced due to the effect of lower sterling
  and kronor exchange rates and the synergy and integration activities which
  realised cost benefits of approximately $180 million for the year. Investment
  in facilities
  continued, particularly in Boston, US and Bangalore, India.


    Operating margin and retained profit

  Our operating profit before exceptional items grew by 6% to $4,156 million.


  In 2001 currency reduced our operating profits by 2%. The adverse effect of the euro was partially offset by a favourable impact from our sterling and kronor cost base. The operating margin for the year was 25.6%, 0.3
  percentage points higher than 2000. Excluding the effect of the reclassification of $120 million of distribution costs, cost of sales as a percentage of sales was broadly similar to 2000.


  Our R&D costs for the year was 16.6% of sales, broadly unchanged from 2000. Increases in R&D
  expenditure to support the megabrand launches were offset by currency benefits,
  particularly from the Swedish sites. We recorded increased selling costs as
  a result of the new product launches and field force expansion, particularly
  in the US, whilst general and administrative costs continued to be tightly
  controlled. Other operating income, which included gains
  from product rationalisation, increased to $368 million for the full year (2.3%
  of sales).

 






During 2001, the merger related synergy and integration programme initiated in 1999 was completed, resulting in an exceptional charge of $202 million. An exceptional profit of $10 million on sale of fixed assets was
recorded in the year.


Our 50% interest in the seeds company Advanta BV resulted in sales attributed to us of $183 million. In 2001 we settled the dispute with our joint venture partner Koninklijke VanderHave Groep BV over certain aspects of
the shareholders’ agreement.


We recorded net interest and dividend income of $113 million compared with $138 million in 2000. Falling rates had an adverse effect on the interest income.


The taxation charge for continuing operations before exceptional items was $1,214 million representing an effective rate of 28% (2000 35%). The total tax charge, including exceptional item effects and discontinued
operations, was $1,160 million compared to $1,425 million in 2000.


Synergy and integration programme

Following completion of the merger in 1999, we established integration task forces to consolidate the operations of the newly merged Group, remove duplicate activities throughout the organisation and rationalise the
number of facilities around the world. The costs of the synergy and integration programme were incurred fully by the end of 2001 at a total cost of $1,388 million.


Cash flow

In 2001 we generated cash from operating activities before exceptional items amounting to $4,130 million (compared to $4,992 million in 2000). The reduction is almost entirely attributable to the effects of the
demerger of Zeneca Agrochemicals and one-off accelerated creditor settlement. After the 2000 final dividend and 2001 first interim dividend ($1,236 million), capital expenditure and financial investment of $1,543 million, exceptional item costs of
$368 million, tax payments of $792 million and share issues and re-purchases of $994 million, our net cash outflow before non-equity financing was $691 million. This compares to an equivalent inflow in 2000 of $1,314 million, augmented by $909
million of net cash repayment from Syngenta AG on the demerger of the Zeneca Agrochemicals business.












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	42	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial Review


 Financial Review continued


   Investments, divestments
    and capital expenditure

    There were no significant acquisitions or disposals
    in 2001.

 In 2001, cash expenditure on fixed
  assets amounted to $1,385 million. Major projects included a new business centre
  in the US, manufacturing facilities for new products in the UK, Puerto Rico
  and Sweden, together with ongoing research and development facility costs. This
  compared with a net cash outflow in 2000 of $1,426 million, again focused on
  manufacturing facilities, including resource in France and research premises
  in the UK and the US. Our capital expenditures are financed from internally
  generated funds.

   US
    GAAP 

    Our Financial Statements have been prepared
    in accordance with UK GAAP which differs in certain significant respects from
    US GAAP. In particular, under US GAAP, the AstraZeneca merger has been accounted
    for as a purchase accounting acquisition of Astra AB (Astra) by Zeneca Group
    PLC (Zeneca). Although there are several differences between our net income
    and assets under UK and US GAAP, the difference in accounting for the merger
    with Astra represents substantially all of the adjustments.

   Results of continuing
    operations (US GAAP)

    The table below shows the trend of sales under
    US GAAP for our continuing operations.

   2002 compared with
    2001 

    The US GAAP treatment of the merger under purchase
    accounting gave rise to additional goodwill and intangible assets with net
    book values at 31 December 2002 of $12,692 million and of $7,479 million,
    respectively.







 Following the adoption of SFAS
  No. 142, we are no longer amortising the group goodwill element, but are performing
  annual impairment tests on all our US GAAP goodwill balances. These tests show
  that our US GAAP goodwill balances are not impaired.

   Sales from continuing operations
    rose from $16,222 million in 2001 to $17,841 million in 2002. The principal
    drivers of this growth were improved performances from Nexium, Symbicort
    and Seroquel, offset by falls in Zestril
    and Losec.

 Net income under US GAAP has increased
  from $1,397 million to $2,279 million. These increases are as a result of both
  higher sales and the cessation of amortisation of goodwill. We estimate that
  the latter has improved profit by $755 million.

 Further details of the impact
  of the differences between UK GAAP and US GAAP are set out in the Additional
  Information for US Investors on pages 113 to 122.

   2001 compared with
    2000 

    Sales from continuing operations (US GAAP)
    grew by $639 million from $15,583 million in 2000 to $16,222 million in 2001.
    Organic growth from existing products, together with a significant contribution
    from Nexium
    were the principal reasons for this growth.

 In Europe sales grew to $5,238
  million and in the US to $8,483 million, again driven by established products
  and Nexium.

   Operating income for the year
    was $2,286 million compared with $1,693 million in 2000. Both years were impacted
    by amortisation charges arising from the acquisition of Astra – total goodwill amortisation amounting
    to $728 million in 2001 ceased with effect from 1 January 2002 as described
    below.







   Taxation
    

    Total taxation amounted to $1,035 million,
    an effective rate of 31% compared with 44.8% in 2001. The cessation of amortisation
    of goodwill, which did not attract tax relief, was the major factor in the
    rate improvement.

 Taxation on continuing operations
  in 2001 amounted to a charge of $1,109 million compared to a charge of $969
  million in 2000.

   Discontinued operations
    

    The 2000 net income from discontinued operations
    includes the results of Zeneca Agrochemicals up until its demerger on 13 November
    2000.

   Cash flow

    In 2002 operating activities produced cash
    inflows of $4,833 million after tax outflows of $795 million and interest
    inflows of $46 million. There was a cash outflow in respect of investing activities
    of $2,349 million, reflecting further investment in short term investments
    and fixed deposits. Financing cash outflows absorbed $2,506 million through
    the share re-purchase programme ($1,190 million) and equity dividends ($1,234
    million).

 In 2001 operating activities generated
  net cash of $3,126 million after exceptional cash outflows of $368 million.
  There was a cash outflow in respect of investing activities of $1,327 million,
  comprising mainly of capital expenditure of $1,582 million. Financing cash outflows
  totalled $2,195 million, the principal payments being in respect of the share
  re-purchase programme ($1,080 million) and equity dividends ($1,236 million).

 Net cash of $3,554 million was
  generated by operating activities in 2000, after exceptional cash outflows of
  $809 million. There was a cash outflow in respect of investing activities




	 	 	 	 	 	 	 
	Sales of
      continuing operations in each geographic area in
      which customers are located (US GAAP)	 	 	 	 	 	 
	 	 	 	 	 	 
	 	2002

      

      

        $m
	

      

      
	2001

      (reclassified)

      $m
	

      

      
	2000

      (reclassified)

      $m
	 
	 
	
	
	
	
	
	

	UK	623	 	759	 	787	 
	
	 
	 
	 
	 
	
	

	Continental Europe	5,072	 	4,479	 	4,359	 
	
	 
	
	

	
	 
	

	The Americas	10,287	 	9,353	 	8,799	 
	
	 
	
	 
	
	 
	

	Asia, Africa and Australasia	1,859	 	1,631	 	1,638	 
	
	 
	
	 
	
	 
	

	Total	17,841	 	16,222	 	15,583	 
	
	
	
	 
	
	 
	

	 



 







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	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Review	43
    




    

  of $1,294 million representing, primarily,
    capital expenditure of $1,460 million offset by the repayment of debt by Syngenta
    AG of $909 million, in connection with the demerger of Zeneca Agrochemicals.
    Financing cash outflows totalled $1,620 million, the principal elements being
    the share re-purchase programme of $353 million and dividend payments of $1,220
    million.

   Net assets 

    Net assets at 31 December 2002, in accordance
    with US GAAP, are significantly higher than those under UK GAAP as a result
    of the acquisition accounting for Astra. The goodwill arising on the acquisition
    of Astra had a net book value of $12.9 billion ($11.1 billion at 31 December
    2001) and fixed assets were $7.8 billion ($8.1 billion at 31 December 2001).
    These effects were partly offset by approximately $2.3 billion ($2.3 billion
    in 2001) of other adjustments being principally deferred tax liabilities related
    to the acquisition. Accordingly, of our net asset value under US GAAP at 31
    December 2002 of $30.2 billion, $16.2 billion is attributable to fixed assets,
    $13.6 billion to goodwill and $2.8 billion to deferred tax.










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	44	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Directors’
      Report



Directors’ Report


 AstraZeneca PLC is the holding company for
  a group of subsidiaries whose principal activities are described in the Operational
  and Financial Reviews on pages 8 to 29 and 30 to 43, which are incorporated
  in this report by reference. Principal subsidiaries, joint ventures and associates
  and their locations are given on page 112.

 The Company’s dividend for 2002 of $0.70
  (43.2 pence, SEK6.20) per Ordinary Share amounts to a total dividend payment
  to shareholders of $1,206 million.

 The Directors believe that the Company and
  its subsidiaries have adequate resources to continue in operational existence
  for the foreseeable future and therefore continue to adopt the going concern
  basis in preparing the Financial Statements.

 Changes in the Company’s Ordinary Share
  capital during 2002, including details of the allotment of new shares under
  the Company’s share plans, are given in Note 38 to the Financial Statements.

 Board of Directors
  

  Details of members of the Board at 31 December
  2002 are set out on pages 6 and 7.

 Board Changes 

  Claes Wilhelmsson, Executive Director, retired
  from the Board in June 2002. The Company announced in November 2002 that Åke
  Stavling, also an Executive Director, would be leaving the Company at the end
  of January 2003.

 Lars Ramqvist, Non-Executive Director, retired
  from the Board in April 2002 with effect from the end of the Annual General
  Meeting. Also at the Annual General Meeting, shareholders elected Jane Henney
  and John Buchanan as Non-Executive Directors. Dr Henney was first appointed
  to the Board in September 2001. Dr Buchanan’s appointment was effective
  from the end of the Annual General Meeting in April 2002.

 Re-election of Directors
  

  Other than Åke Stavling, who will have
  left the Company, all of the Directors will retire under Article 65 of the Company’s
  Articles of Association at the Annual General Meeting in April 2003 and are
  presenting themselves for re-election. All are recommended by the Board for
  re-election.

 Mandatory Shareholding for Directors
  

  The Company’s Articles of Association 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. All of the Directors comply with this requirement
  and full details of each Director’s interests in shares of the Company
  are set out in the Directors’ Remuneration Report on pages 49 to 54.

 Annual
  General Meeting 

  The Company’s Annual General Meeting will
  be held on 30 April 2003. The principal meeting place will be in London. There
  will be one satellite meeting place in Stockholm.

 Corporate
  Governance

  Combined Code 

  Throughout 2002, the Company has applied all
  of the principles of good governance in Part 1, Section 1 of the Combined Code
  published by the Hampel Committee on Corporate Governance and appended to the
  Listing Rules of the UK Listing Authority. The way in which these principles
  have been applied is described below.

 Throughout 2002, the Company has
  complied with all of the provisions of the code of best practice in Part 2,
  Section 1 of the Combined Code with two exceptions. These are provision A.2.1
  concerning the appointment of a senior Non-Executive Director, with which the
  Company has complied since March 2002, and provision B.1.7 relating to the notice
  period of Executive Directors’ service contracts. In March 2002, the Board
  appointed Sir Peter Bonfield as the senior Non-Executive Director.

 During 2002 the service contracts
  of the Executive Directors provided for a notice period of two years. However,
  in January 2003, all of the Executive Directors agreed to reduce the notice
  periods of their service contracts to one year. For new Executive Directors,
  the Board would aim to negotiate a one year notice period. In exceptional circumstances,
  the initial notice period may be for longer than one year. In those circumstances,
  the Board would explain to shareholders the reasons why it believed a longer
  notice period was necessary and it would be the Board’s intention that
  the notice period should be reduced to one year subsequently.

 Full details of the service contracts
     and remuneration of the Company’s Executive Directors are set out in
     the  Directors’ Remuneration Report on pages 49 to 54.







 The US Sarbanes-Oxley
  Act of 2002 

  AstraZeneca PLC American Depositary Shares are
  traded on the New York Stock Exchange and the Company is subject to the reporting
  and other requirements of the US Securities and Exchange Commission applicable
  to foreign issuers. The US Sarbanes-Oxley Act came into force at the end of
  July 2002. As a result of its New York listing, the Company is subject to those
  provisions of the Act applicable to foreign issuers.

 Many of the rules implementing
  the Act are currently being written and proposed by the Securities and Exchange
  Commission. As a result, the detailed provisions of the Act are likely to become
  effective during 2003.

 The Company will comply with those provisions
  of the Act applicable to foreign issuers as and when they become effective.
  The Board takes the view that the Company already has a sound corporate governance
  framework, good processes for the accurate and timely reporting of its financial
  position and results of operations and an effective and robust system of internal
  controls. Consequently, the Company’s approach to compliance with the Act
  principally involves the development and adjustment of the existing corporate
  governance framework and associated processes concerning reporting, internal
  controls and other relevant matters. In particular, some additional work has
  been undertaken to ensure that the Chief Executive and the Chief Financial Officer
  are in a position to provide the certifications required by the Act in respect
  of the Company’s Annual Report on Form 20-F for the year ended 31 December
  2002.

 The New York Stock Exchange
  

  In August 2002, the Corporate Accountability
  and Listing Standards Committee of the New York Stock Exchange filed new, draft
  corporate governance rules with the US Securities and Exchange Commission. The
  draft rules are currently under review by the Securities and Exchange Commission.
  The Company, as a foreign issuer with American Depositary Shares listed on the
  New York Stock Exchange, is obliged to disclose any significant ways in which
  its corporate governance practices differ from the rules.

   The Company has reviewed the draft rules and
    believes that, in most areas, its corporate governance practices are consistent
    with the draft rules and/or the principles behind the draft rules, with two
    significant exceptions.

   








 
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	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Directors’ Report	45


  


The draft rules state that non-executive directors
  must have regular scheduled meetings without the directors involved in the management
  of the company present. Currently, other than meetings of those Board committees
  comprised only of Non-Executive Directors, the Company’s Non-Executive
  Directors do not hold formal meetings without the Executive Directors of the
  Company present.

 Under the draft rules, listed companies’
  audit committees are given increased authority and responsibility. The Company’s
  current corporate governance practices regarding the Audit Committee are not
  consistent in all respects with the draft rules. However, as described below,
  it is anticipated that changes to certain of those practices will be introduced
  during 2003 in the context of the US Sarbanes-Oxley Act of 2002. The Company
  anticipates that any such changes made would bring the Company’s corporate
  governance practices in this area more closely in line with the proposed New
  York Stock Exchange rules.

   Disclosure Policy 

    The Company’s Disclosure Policy, approved
    by the Board in October 2002, provides a framework for the handling and disclosure
    of price sensitive information. A Disclosure Committee comprising the Chief
    Financial Officer, the Group Secretary and Solicitor and the Vice-President,
    Corporate Affairs, meets regularly. The role of the Disclosure Committee is
    to assist and inform the decisions of the Chief Executive concerning price
    sensitive information and its disclosure.

 Recent Developments 

    During the first half of 2003, the Company
    will review two significant new proposals in the UK concerning corporate governance:
    the report of Derek Higgs, ‘Review of the Role and Effectiveness of Non-Executive
    Directors’, and that of Sir Robert Smith, ‘Audit Committees: Combined
    Code Guidance’, both published in January 2003. The reports both propose
    changes to the Combined Code appended to the Listing Rules of the UK Listing
    Authority. Subject to completing its review of the proposals, the Company
    expects to comply with any changes to the Combined Code resulting from the
    reports’ proposals.

   Board Structure and
    Processes 

    Board Composition, Responsibilities and
    Appointments 

    The Board includes a balance of Executive and
    Non-Executive Directors. The majority of



 

 Board members
  are Non-Executive Directors. The differing roles of Executive Directors and
  Non-Executive Directors are clearly delineated, both having fiduciary duties
  towards shareholders. However, Executive Directors have direct responsibility
  for business operations whereas the Non-Executive Directors have a responsibility
  to bring independent, objective judgement to bear on Board decisions. 

  The Board considers that all of the Non-Executive
    Directors are independent of management and free from any business or other
    relationship which could materially interfere with the exercise of their independent
    judgement. However, the Board acknowledges that independence, as it applies
    to non-executive directors, is not defined in a way which is uniformly accepted
    by all regulatory bodies, codes of governance or best practice, stock exchanges
    or organisations representing institutional investors. Two of the Company’s
    Directors (Håkan Mogren, Executive Deputy Chairman and Marcus Wallenberg,
    Non-Executive Director) are also members of the Board of Directors of Investor
    AB, a company which, at 31 December 2002, had a 5.04% holding in the Ordinary
    Shares of the Company. This holding represents a significant proportion of
    Investor AB’s overall investment portfolio. Marcus Wallenberg is the
    Chief Executive Officer of Investor AB. Additionally, Dr Mogren and Erna Möller,
    Non-Executive Director, are Directors of the Marcus and Marianne Wallenberg
    Foundation and the Knut and Alice Wallenberg Foundation respectively.

    The Board sets the Company’s strategy
    and policies and monitors progress towards meeting its objectives. This includes
    regular reviews of the Company’s financial performance and critical business
    issues. The Board normally meets six times a year.

        There
    is an established and transparent procedure for appointments of new directors
    to the Board which is operated by the Nomination Committee. All of the Directors
    retire at each Annual General Meeting and may offer themselves for re-election
    by shareholders.

  Chief Executive and the Senior Executive
    Team

    The Chief Executive, Sir Tom McKillop,
    has delegated authority from, and is responsible to, the Board for directing
    and promoting the profitable operation and development of the Company, consistent
    with the primary aim of enhancing long term shareholder value.



 

 The Chief Executive is responsible to the Board
  for the management and performance of the Company’s businesses within the
  framework of Company policies, reserved powers and routine reporting requirements.
  He is obliged to refer certain major matters (defined in the formal delegation
  of the Board’s authority) back to the Board. The roles of the Board, the
  Board’s committees, the Chairman, the Executive Deputy Chairman, the Chief
  Executive and the Senior Executive Team are documented, as are the Company’s
  delegated authorities and reserved powers, the means of operation of the business
  and the roles of corporate functions.

 The Chief Executive has established and chairs
  the Senior Executive Team. While the Chief Executive retains full responsibility
  for the authority delegated to him by the Board, the Senior Executive Team is
  the vehicle through which he exercises that authority in respect of the Company’s
  business (including Salick Health Care, Astra Tech and Marlow Foods).

   The other members of the Senior Executive
    Team are Åke Stavling, Executive Director (until 31 January 2003); Jonathan
    Symonds, Chief Financial Officer; Bruno Angelici, Executive Vice-President,
    Europe, Japan, Asia Pacific and ROW; David Brennan, Executive Vice-President,
    North America and President and CEO, AstraZeneca LP; Jan Lundberg, Executive
    Vice-President, Discovery Research; John Patterson, Executive Vice-President,
    Product Strategy & Licensing and
    Business Development; Martin Nicklasson, Executive Vice-President, Development;
    Barrie Thorpe, Executive Vice-President, Operations; and Tony Bloxham, Executive
    Vice-President, Human Resources. Dr Lundberg and Dr Nicklasson succeeded Dr
    Wilhelmsson who retired in June 2002.

 The Senior Executive Team normally meets once
  a month to consider and decide all major business issues. It also usually reviews
  those matters which are of a size or importance to require the attention of,
  or which are reserved to, the Board before such matters are submitted to the
  Board for review and decision.

   Each business function is subject to an annual
    budget and target-setting process including forecasts for the following two
    years together with a sensitivity and risk analysis, quarterly updates of
    the forecast for the current year and regular reporting. Performance
    reviews are undertaken in each part of the business regularly. The Company’s







 
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	46	AstraZeneca Annual Report
        and Form 20-F 2002

      www.astrazeneca.com	Directors’ Report


 Directors’ Report continued



 quarterly business performance management system
  uses a broad range of measures that link directly to the achievement of key
  business priorities. Treasury operations are centralised, operate within defined
  limits and are subject to regular reporting requirements and Audit Committee
  reviews.

   Audit Committee,
    Internal Controls and Management of Risk

    Audit Committee 

    The members of the Audit Committee are Karl
    von der Heyden (Chairman of the Committee), John Buchanan, Jane Henney, Dame
    Bridget Ogilvie and Marcus Wallenberg. They are all Non-Executive Directors.

 The core remit of the Audit Committee is to
  review and report to the Board on the annual and other published financial reporting
  carried out by the Company, its accounting policies, the scope and audit programmes
  of its internal and external auditors and any material issues arising from these
  audits, the effectiveness of its systems of financial reporting and internal
  financial controls and the framework for risk management, with particular emphasis
  on financial risks.

 The Audit Committee met four times in 2002
  and is currently scheduled to meet at least four times in 2003. All of the members
  of the Audit Committee attended each meeting in 2002. The Chairman of the Board,
  a Non-Executive Director, attended two of the meetings held in 2002.

 During 2002, the business considered and discussed
  by the Audit Committee included the financial disclosures contained in the Company’s
  annual and quarterly reports to shareholders and other interested parties; various
  accounting matters raised in the context of the financial disclosures, including
  reports from management and the external auditor concerning those accounting
  matters; reports from management and the internal audit function on the Company’s
  risk profile and the assessment and management of risk; reports from management,
  the internal audit function and the external auditor on the effectiveness of
  the Company’s system of internal controls and, in particular, internal
  financial controls; proposals from the internal audit function and the external
  auditor about their audit programmes for 2002; a report from the Company’s
  treasury function about its operations and approach to risk management; the
  amount of audit and non-audit fees of the external auditor; the appointment
  of a new Chief Internal Auditor; and the impact of the US Sarbanes-Oxley Act



 


of 2002 on the Company and, in particular, on the
operation of the Audit Committee and its relationship with the external auditor.
More information about the work of the internal audit function and the Company’s
external auditor is given below. 

At
the scheduled meeting of the Audit Committee held at the end of January 2003,
the Chief Executive and the Chief Financial Officer presented to Audit Committee
members their conclusions following the evaluation of the effectiveness of the
Company’s disclosure controls and procedures required by Item 15(a) of Form
20-F. Based on their evaluation, the Chief Executive and the Chief Financial Officer
concluded that the Company maintains an effective system of disclosure controls
and procedures.

There have been no
significant changes in the Company’s internal controls or other factors that
could significantly affect internal controls subsequent to the date of their evaluation.

During the year, in line with its normal practice,
the Audit Committee also held a number of private meetings, without management
present, with both the Company’s Chief Internal Auditor and the lead partner
from the Company’s external audit firm. The purpose of these meetings was
to facilitate free and open discussions between the Audit Committee members and
the Chief Internal Auditor and the external lead audit partner, independent of
the main sessions of the Audit Committee attended by the Chief Financial Officer
and the Group Financial Controller.

  Internal Controls and Management of Risk

    The Board has overall responsibility
    for the Company’s system of internal controls which aims to safeguard
    shareholders’ investments and the Company’s assets, ensure that
    proper accounting records are maintained and that the financial information
    used within the business and for publication is accurate, reliable and fairly
    presents the financial position of the Company and the results of its business
    operations. The Board is also responsible for reviewing the effectiveness
    of the system of internal controls. The system is designed to provide reasonable
    assurance of effective operations and compliance with laws and regulations,
    although any system of internal controls can only provide reasonable, not
    absolute, assurance against material misstatement or loss.

        Since
    the publication in September 1999 by the Institute of Chartered Accountants
    in
 







   England and Wales of the Turnbull Report,
    ‘Internal Control: Guidance for Directors on the Combined Code’,
    the Directors have continued to review the effectiveness of the Group’s
    system of non-financial controls, including operational and compliance controls,
    risk management and the Company’s high level internal control arrangements.
    These reviews have included an assessment of internal controls, and in particular
    internal financial controls, by the internal audit function, management assurance
    of the maintenance of control and reports from the external auditor on matters
    identified in the course of its statutory audit work. A key part of these
    reviews is an annual‘letter of assurance’ process by which responsible
    managers confirm the adequacy of their systems of internal financial and non-financial
    controls, their compliance with Company policies (including those relating
    to safety, health and the environment), local laws and regulations (including
    the industry’s regulatory requirements) and report any control weaknesses
    identified in the past year. The Directors believe that the Company maintains
    an effective embedded system of internal controls and complies with the Turnbull
    Report guidance.

 The Company views the careful management of
  risk as a key management activity. A significant part of all of its activities
  is to deliver opportunities by managing business risks in a simple, flexible
  and sustained way which is consistent with the Company’s values. These
  risks, which may be strategic, operational, reputational, financial or environmental,
  should be understood and visible and the business context should determine the
  level of acceptable risk and control.

 Much of the Company’s work in the area
  of risk management is facilitated by the Risk Advisory Group consisting of representatives
  from each business function. Its role is advisory and is to assist senior management
  to identify and assess the main risks faced by the Company’s business in
  a co-ordinated manner, to assess, identify and document the Company’s risk
  profile and to ensure that the business focuses on critical business issues.
  It is chaired by the Chief Financial Officer and reports twice a year to the
  Senior Executive Team. The Risk Advisory Group’s reports on the Company’s
  risk profile are reviewed by both the Audit Committee and the Board.

 Under the auspices of the Risk Advisory Group,
  the Company has developed and is establishing an integrated risk management
  framework with the aim of ensuring that the







 
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	 	AstraZeneca Annual Report and Form 20-F
      2002

      www.astrazeneca.com	Directors’ Report	47


  


 business understands the key risks it faces,
  especially cross-functional risks, has an embedded risk management approach
  to all of its activities, links risk management to business performance reporting
  and seeks continuous improvement in the management of risk by sharing best practice
  throughout the organisation.

   Code of Conduct 

    The policy of the Company is that all of its
    subsidiaries and their employees observe high standards of integrity and act
    with due skill, care, diligence and fairness in the conduct of business. The
    Company’s management recognises that such standards make a significant
    contribution to the overall control environment and seeks, by its words and
    actions, to reinforce them throughout the business. In particular, all employees
    are required to comply with the letter and spirit of the AstraZeneca Code
    of Conduct and with the detailed standards issued in support of it. The AstraZeneca
    Code of Conduct is set out on page 137. The current version of the Code of
    Conduct was first published in June 2000 and will be reviewed during 2003.
    The review will include consideration of the relevant requirements of the
    US Sarbanes-Oxley Act of 2002, such as those concerning a code of ethics for
    senior financial officers.

   Group Internal Audit 

    Group Internal Audit (GIA) is an independent
    appraisal function which derives its authority from the Board through the
    Audit Committee. Its primary role is to provide reasonable and objective assurance
    about the adequacy and effectiveness of the Company’s financial control
    framework and risk management. It also assists senior management with its
    responsibility to improve the processes by which business risks are identified
    and managed and to report and advise on the proper and effective use of resources.

 GIA seeks to discharge the responsibilities
  set down in its charter by reviewing the processes which ensure that business
  risks are effectively managed; reviewing the financial and operational controls
  which help to ensure that the Company’s assets are properly safeguarded
  from losses, including fraud; reviewing the controls which help to ensure the
  reliability and integrity of management information systems; reviewing the processes
  which ensure compliance with corporate objectives, policies and procedures and
  external legislation and regulation (other than those relating to safety, health
  and the environment and regulatory compliance which are the responsibility of
  other audit



 

 functions);
  and on an ad hoc basis, reviewing that value for money is obtained. GIA also
  acts as a source of constructive advice and best practice. 

  External Auditor

    A resolution will be proposed at
    the Annual General Meeting on 30 April 2003 for the reappointment of KPMG
    Audit Plc, London as auditor of the Company.

        The
    external auditor has undertaken various non-audit work for the Company during
    2002. More information about this work and the fees paid by the Company for
    it are set out in Note 36 to the Financial Statements on page 107. 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. The Audit
    Committee has determined policies as to what non-audit work can be undertaken
    by the Company’s external auditor. Any item of non-audit work proposed
    to be undertaken for which its fees may exceed $500,000 must be approved in
    advance by the Audit Committee. The Audit Committee also monitors the level
    of audit and non-audit fees on a quarterly basis.

        The
    US Sarbanes-Oxley Act of 2002 is likely to lead to changes in the Company’s
    relationship with the external auditor, such as greater involvement of the
    Audit Committee in managing the relationship and the pre-approval by the Audit
    Committee of all non-audit work. Certain provisions of the Act are also likely
    to lead to changes in how the external auditor conducts its business, such
    as the mandatory rotation of the principal audit partners.


  Other Board Committees

    Remuneration Committee

    The members of the Remuneration
    Committee are Sir Peter Bonfield (Chairman of the Committee), John Buchanan
    and Erna Möller. They are all Non-Executive Directors.
 

    The remit of the Remuneration
    Committee is, primarily, to recommend for decision by the Board the fundamental
    remuneration policy for the Company and to ensure the proper operation of
    all plans for employees involving the Company’s shares. More particularly,
    it makes specific proposals in respect of the remuneration packages of individual
    Executive Directors and the Company’s most senior executives.

    Further information about the membership and
    work of the Remuneration Committee
 
 







 and the Company’s remuneration policy
     and practice is set out in the Directors’ Remuneration Report on pages
     49  to 54.

   Nomination Committee 

    The members of the Nomination Committee are
    Percy Barnevik (Chairman of the Committee), Håkan Mogren, Sir Peter
    Bonfield and Jane Henney. With the exception of Dr Mogren, they are all Non-Executive
    Directors.

 The remit of the Nomination Committee is, primarily,
  to make proposals to the Board for any new appointments as Directors of the
  Company.

   Shareholders 

    In its financial reporting to shareholders
    and other interested parties by means of annual and quarterly reports, the
    Board aims to present a balanced and understandable assessment of the Company’s
    financial position and prospects.

 The Company maintains a corporate website containing
  a wide range of information of interest to institutional and private investors:
  www.astrazeneca.com.

 The Company has frequent discussions with institutional
  shareholders on a range of issues affecting its performance. These include meetings
  following the announcement of the annual results with the Company’s largest
  institutional shareholders on an individual basis. In addition, the Company
  responds to individual ad hoc requests for discussions from institutional shareholders.

 All shareholders, including private investors,
  have an opportunity to put questions to members of the Board on matters relating
  to the Company’s operation and performance at the Annual General Meeting.

   Employees 

    The Company maintains an open management style
    and involves its employees both in daily decisions which affect them and longer
    term matters. The Company is fully committed to keeping all of its employees
    informed about their work unit and the wider business, as well as discussing
    the implications of major business changes and other relevant matters. Key
    business priorities are communicated throughout the organisation and form
    part of the basis for the Company’s employee incentive plans. Details
    of employees’ share plans appear in Note 33 to the Financial Statements.










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	48	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Directors’
      Report


 Directors’ Report
  continued

 


 In line with legal requirements
  and cultural standards, more formal national and business level employee consultation
  arrangements exist in some countries, including the UK. There is a forum for
  employee consultation at European level, chaired by the Chief Executive, in
  which employee representatives from 19 countries participate. The Company also
  has a variety of constructive relationships with trade unions across its worldwide
  operations including formal recognition and active dialogue where appropriate.

 The Company believes that every
  employee should be treated with the same respect and dignity. It values the
  rich diversity and creative potential of people with differing backgrounds and
  abilities and encourages a culture of equal opportunities in which personal
  success depends on personal merit and performance. It is Company policy that
  there should be no discrimination against any person for any reason. All judgements
  about people for the purposes of recruitment, development and promotion are
  made solely on the basis of their ability and potential in relation to the needs
  of the job. Every manager is responsible for implementing this policy.

 It is Company policy that people
  with disabilities should have the same consideration as others with respect
  to recruitment, retention and personal development. Depending on their skills
  and abilities, people with disabilities enjoy the same career prospects as other
  employees and the same scope for realising potential. The Company also takes
  all reasonable steps to ensure that its working environments can accommodate
  special needs.

 Other
  Stakeholders 

  The Company aims to set, promote and maintain
  high standards of corporate responsibility wherever it operates. Dame Bridget
  Ogilvie, a Non-Executive Director, is the Board member responsible for this
  area and oversees the work of a cross-functional committee. The Company has
  established systems to monitor its performance. Policies and standards relating
  to corporate responsibility are maintained and widely communicated within the
  organisation. In 2002, the Company was again included in the FTSE4Good and the
  Dow Jones Sustainability Indices. The Company publishes and sends to shareholders
  a separate Corporate Responsibility Summary Report. More detailed information
  about the Company’s approach to this area of its business can be found
  on its website: www.astrazeneca.com.







 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
  appropriate payment terms with all suppliers when agreeing 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 83 days’ average purchases. No equivalent
  disclosure is provided in respect of the Company as it has no external creditors.

 Purchase
  of Own Shares 

  The Company’s stated distribution policy
  contains both a regular dividend cash flow and a share re-purchase component
  to give the Company more flexibility in managing its capital structure over
  time. In August 1999, the Company announced a $2 billion share re-purchase programme
  to be completed by the end of 2002. This programme was completed ahead of schedule
  in the second quarter of 2002. In January 2002, the Company announced an additional
  $2 billion re-purchase programme to be completed by the end of 2003.

 During 2002, the Company purchased
  28.4 million of its own Ordinary Shares with a nominal value of $0.25 each for
  an aggregate cost of $1,190 million. Following the purchase of these shares,
  they were all cancelled as required by applicable English law. This number of
  shares represents 1.65% of the Company’s total issued share capital at
  31 December 2002.

 Since the beginning of the re-purchase
  programme in 1999, the Company has purchased for cancellation in total 65.6
  million of its own Ordinary Shares with a nominal value of $0.25 each for an
  aggregate cost of $2,805 million. This number of shares represents 3.82% of
  the Company’s total issued share capital at 31 December 2002.

 The Company continues to maintain
  robust controls in respect of all aspects of the share re-purchase programme
  to ensure compliance with English law and the Listing Rules of the UK Listing
  Authority. In particular, the Company’s Disclosure Committee meets to ensure
  that the Company does not purchase its own shares during prohibited periods.

   At the Annual General Meeting
    on 30 April 2003, the Company will seek a renewal of its







 current permission from shareholders
  to purchase its own shares.

 Political
  Donations 

  Under the UK’s Political Parties, Elections
  and Referendums Act 2000, shareholder authority is required for political donations
  to be made or political expenditure to be incurred by the Company or its subsidiaries
  in the European Union. Neither the Company nor its subsidiaries made any donations
  or incurred any expenditure in 2002 in the European Union in respect of which
  shareholder authority or disclosure in this Directors’ Report is required
  under the Act. Neither the Company nor its subsidiaries intend to make any such
  donations or incur any such expenditure in the European Union in the foreseeable
  future. However, the Act defines‘political organisation’ widely and,
  for example, interest groups or lobbying organisations concerned with the review
  of government policy or law reform may be caught by the definition.

 To enable the Company to continue
  to support such organisations without inadvertently breaching the Act, a resolution
  will, in the same way as last year, be proposed at the Annual General Meeting
  on 30 April 2003 authorising the Company to make donations or incur expenditure
  in the European Union up to an aggregate limit of $150,000.

 In 2002, AstraZeneca’s US
  legal entities made contributions amounting in aggregate to $275,000 to state
  and national political party committees and to campaign committees of various
  state candidates affiliated with the major parties. This total includes $54,500
  in national political party committee donations made prior to the implementation
  of the US Bipartisan Campaign Reform Act. All contributions were made only where
  allowed by state and federal law. American nationals exercised decision-making
  over the contributions and the funds were not provided or reimbursed by any
  non-US corporation.

 On behalf of the Board

  G H R Musker

  Group Secretary and Solicitor 

  30 January
  2003











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	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Directors’
      Remuneration Report	49



Directors’ Remuneration Report


  	At the Annual
        General Meeting on 30 April 2003, a resolution will be proposed to approve
        the Directors’ Remuneration Report.
	 
	Remuneration
        Committee

        The members of the RemunerationCommittee
        are Sir Peter Bonfield (Chairman of the Committee), John Buchanan and
        Erna Möller. They are all Non-Executive Directors. Sir Peter became
        Chairman of the Remuneration Committee in April 2002 in succession to
        Lars Ramqvist following Dr Ramqvist’s retirement from the Board.
        Dr Buchanan became a member of the Remuneration Committee following his
        election as a Non-Executive Director at the Annual General Meeting in
        April 2002.
	 
	The remit of
        the Remuneration Committee is, primarily, to recommend for decision by
        the Board the fundamental remuneration policy for the Company and to ensure
        the proper operation of all plans for employees involving the Company’s
        shares. More particularly, it makes specific proposals in respect of the
        remuneration packages of individual Executive Directors and the Company’s
        most senior executives.
	 
	The Remuneration
        Committee met six times during 2002. At its request, Peter Brown, Vice-President,
        Global Compensation and Benefits, attended a number of the meetings and
        provided advice and services which materially assisted the Remuneration
        Committee during 2002. In doing so, Mr Brown drew on various sources of
        data concerning directors’ and executives’ salaries, bonus levels
        and other incentives including general pharmaceutical industry reports
        and surveys, as well as surveys specifically carried out for the Company.
        These included certain surveys prepared for the Company by Towers Perrin.
        During 2002, Towers Perrin also provided consultancy and share plan administration
        services to the Company.
	 
	Overall
        Remuneration Policy and Purpose

        The Company is committed to maintaining
        a dynamic performance culture in which every employee champions the growth
        of shareholder value, is clear about the Company’s
        objectives, knows how their work impacts on those objectives and that
        they will benefit from achieving high levels of performance.
	 
	The Board has
        confirmed that the Company’s overall remuneration policy and purpose
        is:
	 	 
	>  	to attract and retain people
        of the quality necessary to sustain the Company as








  	 	one of the best pharmaceutical
        companies in the world; and
	>  	to motivate them to achieve
        the level of performance necessary to create sustained growth in shareholder
        value.
	 
	In order to
        achieve this, remuneration policy and practice is designed:
	 	 
	>  	to closely align individual
        and team reward with business performance at each level;
	>  	to encourage employees to
        perform to their fullest capacity;
	>  	to encourage employees to
        align their interests with those of shareholders;
	>  	to support managers’ responsibility
        to achieve business performance through people and for them to recognise
        superior performance, in the short and longer term;
	>  	to be as locally focused
        and flexible as is practicable and beneficial;
	>  	to be competitive and cost-effective
        in each of the relevant employment markets; and
	>  	to be as internally consistent
        as is practicable and beneficial taking due account of market need.
	 
	The cost and
        value of the components of the remuneration package are considered as
        a whole and are designed:
	 	 
	>  	to ensure a proper balance
        of fixed and variable performance related components, linked to short
        and longer term objectives; and
	>  	to reflect market competitiveness
        taking account of the total value of all of the benefit components.
	 
	The benefit
        components contained in the total remuneration package are:
	 	 
	>  	annual salary – based
        on conditions in the relevant geographic market, with the provision to
        recognise, in addition, the value of individuals’ sustained personal
        performance, resulting from their ability and experience;
	>  	ad hoc rewards – special
        payments and other measures available to reward individuals (other than
        Executive Directors) and teams following a particular and outstanding
        business contribution;
	>  	short term bonus –
        a lump sum payment related to the targeted achievement of identified business
        drivers and, where appropriate, personal performance goals, measured over
        a year within a specific plan;








  	>  	share participation –
        various plans provide the opportunity for employees to take a personal
        stake in the Company’s wealth as shareholders; and
	>  	other benefits such as holidays,
        sickness benefit and pensions which are cost-effective and compatible
        with the relevant national welfare arrangements.
	 
	The way in which
        these elements are combined and applied varies depending, for example,
        on market need and practice in various countries.
	 
	For Executive
        Directors, the individual components are:
	 	 
	>  	annual salary – the
        actual salary for each of the Executive Directors is determined on behalf
        of the Board by the Remuneration Committee; these salaries reflect the
        experience and sustained performance of the individuals to whom they apply,
        as judged annually by the Remuneration Committee, taking account also
        of market competitiveness;
	 	 
	>  	short term bonus –
        the Deputy Chairman and the Chief Executive are entitled to bonuses related
        solely to the achievement of the targeted performance of earnings per
        share; other Executive Directors are entitled to annual bonuses related
        to the achievement of both the targeted performance of earnings per share
        and the achievement of functional measures relevant to their particular
        area of responsibility; the bonus payable for Executive Directors is on
        a scale of 0-100% of salary and 50% of salary is payable for the achievement
        of target business performance; 80% of the bonus relates to the achievement
        of the earnings per share target and 20% to the individual measures;
	 	 
	>  	longer term bonus –
        Executive Directors are also rewarded for improvement in the share price
        performance of the Company over a period of years by the grant of share
        options; the grant of options under the AstraZeneca Share Option Plan
        is supervised by the Remuneration Committee which also determines whether
        any performance targets will apply to the grant and/or exercise of options;
        the exercise of options previously granted under the Zeneca 1994 Executive
        Share Option Scheme is currently subject to the performance condition
        that before any exercise, earnings per share must grow by at least













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	50	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Directors’
      Remuneration Report


 Directors’
  Remuneration Report continued


	 	the increase in the UK retail
      prices index plus 3% per annum over a continuous three year period following
      grant; and
	 	 
	>  	pension arrangements –
        these are described in more detail below.
	 
	Other customary
        benefits (such as a car and health benefits) are also made available.
        In the UK, this happens by way of the Executive Directors’ participation
        in the Company’s flexible benefits arrangements which apply to the
        vast majority of the Company’s UK employees. A similar programme
        was introduced in Sweden in January 2003.
	 
	Executive
      Directors’ Service Contracts

        As stated in the Directors’ Report,
        during 2002 the Company did not comply with provision B.1.7 of the code
        of best practice in Part 2, Section 1 of the Combined Code published by
        the Hampel Committee on Corporate Governance and appended to the Listing
        Rules of the UK Listing Authority, relating to the notice period of Executive
        Directors’ service contracts.
	 
	During 2002, the
      service contracts provided for a notice period of two years. However, in
      January 2003, all the Executive Directors agreed to reduce the notice periods
      of their service contracts to one year. For new Executive Directors, the
      Board would aim to negotiate a one year notice period. In exceptional circumstances,
      the initial notice period may be for longer than one year. In those circumstances,
      the Board would explain to shareholders the reasons why it believed a longer
      notice period was necessary and it would be the Board’s intention that
      it should be reduced to one year subsequently.
	 
	At the time
        of the Annual General Meeting on 30 April 2003, the unexpired term of
        Executive Directors’ service contracts will be a maximum of one year.
        The details of the Executive Directors’ individual service contracts
        are set out in the table below. In








 the event of the termination of
  an Executive Director’s service contract, depending upon the circumstances
  the Company may be liable to provide compensation to the Executive Director
  equivalent to the benefits which he or she would have received during the contractual
  notice period. The Company’s policy in the event of the termination of
  an Executive Director’s service contract is to avoid any liability to the
  Executive Director in excess of his or her contractual entitlement and aim to
  ensure that any liability is mitigated to the fullest extent possible.

   The Company announced in November
    2002 that Åke Stavling, Executive Director, would be leaving the Company
    at the end of January 2003. Mr Stavling will receive compensation from the
    Company, to be paid on a monthly basis, equivalent to two years base annual
    salary.

   Position
    of the Non-Executive Directors 

    None of the Non-Executive Directors has a service
    contract. They are not eligible for performance-related bonuses or the grant
    of share options. No pension contributions are made on their behalf.

   AstraZeneca
    Share Option Plan 

    As stated above, the Remuneration Committee
    determines the grant of options under the AstraZeneca Share Option Plan and
    ensures that, on every occasion before the grant of any option, the performance
    of the Company and the performance and contribution of each participant is
    fully taken into account when determining the number of shares to be put under
    option and the number of options to be granted. In respect of the grants of
    options under the Plan in March and August 2002, the Remuneration Committee
    considered the fact that business targets had been met in 2001, Nexium
    sales continued to grow strongly, the Respiratory, Central Nervous System
    and Oncology product portfolios continued to grow strongly, key products were
    progressing well through late stage development and the R&D pipeline







 remained strong and concluded a grant of options
  was justified. The Remuneration Committee also received assurances from each
  member of the Senior Executive Team that the participants for whom they were
  recommending a grant of options had achieved the appropriate level of performance.

 In respect of the grants of options under the
  Plan in March 2002 to each individual Executive Director, the Remuneration Committee
  considered the performance factors described above and also received an appraisal
  from the Chief Executive in respect of the performance of each Executive Director.
  In each case, the Remuneration Committee concluded a grant of options was justified.

 Although the Company does not use total shareholder
  return (TSR) as a measure of performance for its share plans, a graph is set
  out on page 53 illustrating the Company’s TSR performance over the last
  five years against the FTSE 100 index.

   External Appointments
    

    With the specific approval of the Board in
    each case, Executive Directors may accept external appointments as non-executive
    directors of other companies and retain any related fees paid to them.

   Directors’
    Emoluments in 2002 

    The Directors’ emoluments in 2002 are
    disclosed on pages 51 and 52.

   Directors’
    Interests in Shares 

    Details of the Directors’ interests in
    the Company’s Ordinary Shares are disclosed on pages 53 and 54.

   Audit
    

    The Directors’ emoluments in 2002 and the
    details of the Directors’ interests in the Company’s Ordinary Shares
    disclosed on pages 51 to 54 have been audited by the Company’s external
    auditor.




	 	 	 	 
	 	 	 	 
	Details
      of Executive Directors’ Service Contracts
	 	 	 	 
	Executive
      Director	 Date
        of service contract

      
	 Unexpired
        term at

      31 December 2002
	 Notice
        period

      

	

	Håkan Mogren	14.12.98
	Two years*
	One year

	

	Sir Tom McKillop	11.01.96
	Two years*
	One year

	

	Jonathan Symonds	20.05.98
	Two years*
	One year

	

	Åke Stavling	28.06.93
	 Leaving
           the Company on 31.01.03

	

	* Reduced to one year subsequently	 	 	 



 








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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Directors’ Remuneration
      Report 	51



 Directors’
  Emoluments in 2002 

  The aggregate remuneration, excluding
  pension contributions, paid to or accrued for all Directors and officers of
  the Company for services in all capacities during the year ended 31 December
  2002 was $16 million (including $373,000 to the Chairman). Remuneration of individual
  Directors was as follows:

	  	 Salary

        and fees
	  	 Bonuses
	  	 Taxable

        benefits
	  	 Other
	   	 Total

        2002
	   	 Total

      2001
	  	 Total

      2000
	 
	 $’000
	 $’000
	 $’000
	 $’000
	 $’000
	 $’000
	 $’000

	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Percy Barnevik	373	 	–	 	–	 	–	 	373	 	368	 	385	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Håkan Mogren	1,032	 	660	 	146	‡	172	ø	2,010	 	1,623	 	1,564	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Sir Tom McKillop	1,277	 	816	 	3	 	112	*	2,208	 	1,918	 	1,917	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Åke Stavling	674	 	405	 	101	‡	66	ø	1,246	 	1,047	 	934	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Jonathan Symonds	774	 	450	 	9	 	124	†	1,357	 	1,199	 	1,245	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Sir Peter Bonfield	68	 	–	 	–	 	–	 	68	 	56	 	59	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	John Buchanan	49	**	–	 	–	 	–	 	49	 	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Jane Henney	60	 	–	 	–	 	30	#	90	 	13	 	–	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Karl von der Heyden	70	 	–	 	–	 	–	 	70	 	60	 	63	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Erna Möller	63	 	–	 	–	 	30	#	93	 	81	 	69	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Dame Bridget Ogilvie	63	 	–	 	–	 	30	#	93	 	81	 	69	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Marcus Wallenberg	63	 	–	 	–	 	–	 	63	 	56	 	59	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 Former Directors

      Claes Wilhelmsson
	683	+	211	 	10	 	–	 	904	 	938	 	1,074	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Lars Ramqvist	23	 	–	 	–	 	–	 	23	 	60	 	63	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Others	–	 	–	 	–	 	–	 	–	 	34	 	1,466	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Total	5,272	 	2,542	 	269	 	564	 	8,647	 	7,534	 	8,967	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 




	*  	Relates to relocation allowances
	†  	Payment for pension related
      tax liabilities
	#  	Fees for AstraZeneca Scientific
      Advisory Board
	+  	Includes settlement on retirement
      of accrued holiday entitlement
	‡  	Includes provision for
        accommodation in the UK

    
	ø	Payment for accommodation
      related tax liabilities
	**  	Part year only


The remuneration of Directors is or was in the
  case of former Directors (with minor exceptions) established and paid in either
  Swedish kronor (Claes Wilhelmsson) or pounds sterling (other Directors) and
  has been converted into US dollars in the table above at the average exchange
  rate for the year in question. These rates were:

	 	GBP/USD
	 	SEK/USD
	 
	
	
	
        

      
	
	 
	2000
	0.65
	 	8.91
	 
	
	
	
        

      
	
	 
	2001
	0.68
	 	10.79
	 
	
	
	
        

      
	
	 
	2002
	0.67
	 	9.86
	 
	
	
	
        

      
	
	 


 The movement of exchange rates affects the
  year on year comparison of the dollar amounts.

 Some Directors and officers were also granted
  options to subscribe for Ordinary Shares under the Company’s share option
  plans. Details of share options granted to, and exercised by, Directors and
  the aggregate of gains realised on exercised options in the year are given on
  page 54.

 No Director or officer has a family relationship
  with any other Director or officer.

 Transactions with Directors 

  During the year there were no material recorded
  transactions between the Company and the Directors.

 Transactions with Former Directors
  

  Following his retirement as a Director in June
  2002 and pursuant to the terms of an agreement dated 31 March 1999, Claes Wilhelmsson
  purchased an apartment in Stockholm from the Company. The price paid for the
  apartment, the Swedish kronor equivalent of $963,000 at the average exchange
  rate for 2002 set out above, was an arm’s length market value, as determined
  by independent third party valuations of the property carried out in 2002.





 
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	52	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Directors’ Remuneration
      Report 	 




Directors’ Remuneration
  Report continued

Directors’ Emoluments
  in 2002 (continued)

	Executive Directors’
      Pension Arrangements	Sir
        Tom McKillop
	 	 Jonathan
        Symonds
	 	Håkan
        Mogren
	 	Åke
        Stavling
	 	 Claes
        Wilhelmsson
	 
	(per annum)	$’000
	$’000
	$’000
	$’000
	$’000

	
	
	
	
	
	
	
	
	
	
	 
	Defined Benefit Arrangements	 	 	 	 	 	 	 	 	 	 
	1.	 Accrued pension at 1
        January 2002
	745	 	267	 	873	 	356	 	583	 
	
	
	
	
	
	
	
	
	
	
	
	 
	2.	Increase in accrued pension
        during year as a result of inflation
	12	 	5	 	19	 	8	 	7	 
	
	
	
	
	
	
	
	
	
	
	
	 
	3.	Adjustment to accrued
        pension as a result of salary increase
        relative to inflation
	23	 	6	 	–	 	49	 	65	 
	
	
	
	
	
	
	
	
	
	
	
	 
	4.	Increase in accrued pension
        as a result of additional service
	28	 	16	 	–	 	44	 	–	 
	
	
	
	
	
	
	
	
	
	
	
	 
	5.	Accrued
        pension at 31 December 2002
	808	 	294	 	892	†	457	†	655	*†
	
	
	
	
	
	
	
	
	
	
	
	 
	6.	Employee
        contributions during year
	–	 	29	 	–	 	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	
	 
	7.	Transfer value of accrued
        pension at 31 December 2001
	12,364	 	2,343	 	7,784	 	3,042	 	5,482	 
	
	
	
	
	
	
	
	
	
	
	
	 
	8.	Transfer value of accrued
        pension at 31 December 2002
	14,480	 	2,300	 	8,465	 	4,188	 	6,031	*
	
	
	
	
	
	
	
	
	
	
	
	 
	9.	Change in transfer value
        during the period less employee
        contributions
	2,116	 	(72	)	681	 	1,146	 	549	 
	
	
	
	
	
	
	
	
	
	
	
	 
	10.	Age at
        31 December 2002
	599/12	 	4310/12	 	583/12	 	5711/12	 	633/12	*
	
	
	
	
	
	
	
	
	
	
	
	 
	11.	Pensionable
        service (years)
	333/12	 	224/12	 	303/12	 	2911/12	 	353/12	*
	
	
	
	
	
	
	
	
	
	
	
	 
	†	Accrued pension payable between
      the age of 60 and 65. Once 65 the pension payable is reduced by 2/7ths (or
      28.6%) from the figures shown.
	*	 At retirement on 30 June
      2002


 Pensions are payable to Directors in either
  Swedish kronor or pounds sterling. For ease of understanding, the above table
  has been presented using the exchange rates for 2002 set out on page 51.

 UK Executive Directors’ Pension
  Arrangements 

  Sir Tom McKillop is a member of the Company’s
  main UK defined benefit pension plan. The normal pension age under this plan
  is 62. However, a member’s accrued pension is available from age 60 without
  any actuarial reduction. In addition the accrued pension is available, unreduced,
  from age 57 if the Company consents to a request for early retirement and from
  age 50 if the retirement is at the Company’s request.

 On death in retirement, the accrued pension
  shown is guaranteed payable for the first five years of retirement and then
  reduces to two-thirds of this amount should there be a surviving spouse or other
  dependant. Any member may choose higher or lower levels of survivor’s pensions
  at retirement, subject to Inland Revenue limits, in return for an adjustment
  to their own pension of equivalent actuarial value. Pensions are also payable
  to dependent children. In the event of a senior employee becoming incapacitated
  from performing his work then a pension is payable immediately as if such person
  had reached normal retirement age (subject to a maximum of 10 years additional
  service), based on current pensionable salary. In the event of death prior to
  retirement, dependants are entitled to a pension of two-thirds of the pension
  that would have been earned had such person remained in service to age 62 plus
  a capital sum of four times pensionable pay. Pensions in payment are increased
  annually in line with inflation, as measured by the retail prices index, up
  to a maximum of 5%.

 In respect of UK Executive Directors whose
  pensionable earnings are capped by the earnings limit imposed by the Finance
  Act 1989, unapproved defined contribution schemes are made available. Currently,
  only Jonathan Symonds is affected by this limit. The Company has agreed to pay
  annually 50% of base salary in excess of the statutory earnings cap for the
  pension and associated tax liability, with the intention of providing equivalence
  of benefits with non-capped UK Directors. If this does not provide equivalence,
  the Company has agreed to make up the difference. The benefits derived from
  equivalence are shown above as if the scheme was a defined benefit arrangement.
  The Company contribution in 2002 in respect of the pension element was $171,000.

 Swedish Executive Directors’
  Pension Arrangements 

  Normally, Swedish Executive Directors
  participate in the collectively bargained ITP pension plan, which provides pensions,
  dependants’pensions and lump sums on death in service. In respect of those
  Swedish Directors or former Directors, namely Håkan Mogren, Åke
  Stavling and Claes Wilhelmsson, whose pensionable earnings are or were in excess
  of the earnings limit imposed by the Swedish Communal Tax Law (Kommunalskattelagen),
  supplementary pension commitments are made. The Company has agreed to pay 70%
  of pensionable salary from age 60 to age 65 and 50% of such earnings from age
  65. The ITP provisions are included in this additional commitment. Paid in pension
  capital may also be used in the event of retirement or termination before the
  age of 60. In the event of long term illness then a pension is payable immediately
  as if such person had reached the normal retirement age, of 70% of current pensionable
  salary. On death in retirement the accrued pension shown is payable to a surviving
  spouse or other dependant. In the event of death prior to retirement the accrued
  pension shown is payable to a surviving spouse or other dependant plus a capital
  sum of three times pensionable salary less $100,000 if married or two times
  pensionable salary less $100,000 if not.





 
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	 	AstraZeneca Annual Report
      and Form 20-F 2002

      www.astrazeneca.com	Directors’
      Remuneration Report	53


 Graph Showing Total
  Shareholder Return 

  The UK Directors’ Remuneration Report Regulations
  2002 require the inclusion in the Directors’ Remuneration Report of a graph
  showing total shareholder return (TSR) over a five year period in respect of
  a holding of the Company’s shares, plotted against TSR in respect of a
  hypothetical holding of shares of a similar kind and number by reference to
  which a broad equity market index is calculated. This illustrates the Company’s
  TSR performance against the broad equity market index selected and is required
  even though the Company does not use TSR as a measure of performance for its
  share plans. For the purposes of this graph, set out below, we have selected
  the FTSE 100 Index as the appropriate index.

  

 Directors’
  Interests in Shares 

  The interests at 31 December 2002 or on date
  of retirement of the persons who on that date were Directors (including the
  interests of their families) in shares and debentures of AstraZeneca PLC are
  shown below, all of which were beneficial except as otherwise stated. None of
  the Directors has a beneficial interest in the shares of any of the Company’s
  subsidiaries.

	 	Interest
      in	 	 	 	Interest
      in	 	 	 	 
	 	Ordinary
      Shares,	 	 	 	Ordinary
      Shares,	 	 	 	 
	 	including
      shares	 	 	 	including
      shares	 	Shares
      held	 	Shares
      held
	 	held in
      trust, at	 	Net	 	held in
      trust, at	 	in trust
      at	 	in trust
      at
	 	1 Jan 2002	 	shares	 	31 Dec
      2002	 	1 Jan 2002	 	31 Dec
      2002
	 	or appointment	 	acquired/	 	or resignation	 	or appointment	 	or resignation
	 	date	 	(disposed)	 	date	 	date	 	date
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Percy Barnevik	100,000	 	–	 	100,000	 	–	 	–
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Håkan Mogren	65,706	 	268	 	65,974	 	9,966	 	10,234
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Sir Tom McKillop	74,443	 	–	 	74,443	 	16,824	 	13,424
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Åke Stavling	8,929	 	210	 	9,139	 	8,041	 	8,157
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Jonathan Symonds	14,314	 	(486	)	13,828	 	10,774	 	7,788
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Sir Peter Bonfield	500	 	–	 	500	 	–	 	–
	
	
	
	
	
	
	
	
	
	

	John Buchanan	–	 	500	 	500	 	–	 	–
	
	
	
	
	
	
	
	
	
	

	Jane Henney	500	 	–	 	500	 	–	 	–
	
	
	
	
	
	
	
	
	
	

	Karl von der Heyden	20,000	 	–	 	20,000	 	–	 	–
	
	
	
	
	
	
	
	
	
	

	Erna Möller	2,718	 	–	 	2,718	 	–	 	–
	
	
	
	
	
	
	
	
	
	

	Dame Bridget Ogilvie	500	 	–	 	500	 	–	 	–
	
	
	
	
	
	
	
	
	
	

	Marcus Wallenberg	74,504	 	–	 	74,504	 	–	 	–
	
	
	
	
	
	
	
	
	
	

	Former Directors	 	 	 	 	 	 	 	 	 
	Claes Wilhelmsson	27,462	 	1,059	 	28,521	 	8,774	 	8,897
	
	
	
	
	
	
	
	
	
	

	Lars Ramqvist	500	 	–	 	500	 	–	 	–
	
	
	
	
	
	
	
	
	
	



 No Director or senior executive beneficially
  owns, or has options over, 1% or more of the outstanding shares of the Company,
  nor do they have different voting rights to other shareholders.

 Shares held in trust above include both long
  term incentive bonus shares appropriated under the Zeneca Executive Performance
  Bonus Scheme and also shares allocated on the demerger of Zeneca Agrochemicals,
  in respect of executive share options held on 10 November 2000, and which have
  not yet been released. In respect of the latter, the shares generally will not
  become beneficially owned by Directors until 13 November 2003.





 
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	54	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Directors’
      Remuneration Report


 Directors’ Remuneration
  Report continued

 Directors’
  Interests in Shares (continued) 

  The interests of Directors and former Directors
  in options to subscribe for Ordinary Shares of the Company, which include options
  granted under the AstraZeneca Savings-Related Share Option Scheme, together
  with options granted and exercised during the year are included in the following
  table:

	   	   	   	 No.
      of shares

      under option	   	Exercise

      price

      per share	†	Market price

      at date of

      exercise	   	 First
      date

      exercisable	* 	 Last
      date

      exercisable	*
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	 

	Håkan Mogren	At 1
      Jan 2002	 	137,417	 	2947	p	 	 	13.12.02	  
	28.03.11	 
	 	Granted	 	41,928	 	3487	p	 	 	28.03.05	 	27.03.12	 
	 	At 31 Dec 2002	 	179,345	 	3073	p	 	 	13.12.02	 	27.03.12	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	 

	Sir Tom McKillop	At 1 Jan 2002	 	259,256	 	2332	p	 	 	05.04.97	 	28.03.11	 
	 	Granted	 	79,812	 	3487	p	 	 	28.03.05	 	27.03.12	 
	 	At 31 Dec 2002	 	339,068	 	2604	p	 	 	05.04.97	 	27.03.12	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	 

	Åke Stavling	At 1 Jan 2002	 	84,197	 	2862	p	 	 	26.05.02	 	28.03.11	 
	 	Granted	 	27,020	 	3487	p	 	 	28.03.05	 	27.03.12	 
	 	At 31 Dec 2002	 	111,217	 	3014	p	 	 	26.05.02	 	27.03.12	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	 

	Jonathan Symonds	At 1 Jan 2002	 	130,561	 	2678	p	 	 	01.10.00	 	28.03.11	 
	 	Granted	 	29,815	 	3487	p	 	 	28.03.05	 	27.03.12	 
	 	At 31 Dec 2002	 	160,376	 	2828	p	 	 	01.10.00	 	27.03.12	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	 

	Claes Wilhelmsson	At 1 Jan 2002	 	92,593	 	2855	p	 	 	26.05.02	 	28.03.11	 
	 	Granted	 	27,824	#	3487	p	 	 	28.03.05	 	27.03.12	 
	 	At 30 Jun 2002	 	120,417	 	3001	p	 	 	26.05.02	 	29.06.04	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	 

	†  Exercise
      prices at 1 January and 31 December are weighted averages.
	*  First and last
      exercise dates of groups of options, within which periods there are shorter
      exercise periods.
	#  Amends the Company’s
        announcement dated 2 April 2002 stating option granted over 27,983 shares
      which resulted from an exchange rate discrepancy.


 In addition to the above the following Directors
  or former Directors held options under the Astra Shareholder Value Incentive
  Plan which were converted into options over AstraZeneca shares on completion
  of the merger based on an exchange ratio of 0.5045 AstraZeneca options for each
  Astra option held. No further options have been or will be granted under the
  scheme:

	Håkan Mogren	 At 1 Jan
        2002
	37,480	359SEK	 	06.04.99	23.01.06
	 	Sold	12,400	298.28SEK	345SEK	06.04.99	03.01.03
	 	At 31 Dec 2002	25,080	389.68SEK	 	06.04.99	23.01.06
	
	
	
	
	
	 
	 

	Åke Stavling	At 1 Jan 2002	16,193	369SEK	 	06.04.99	23.01.06
	 	Sold	3,655	298.28SEK	533SEK	06.04.99	03.01.03
	 	Sold	4,395	316.13SEK	533SEK	06.04.99	09.01.04
	 	At 31 Dec 2002	8,143	429.38SEK	 	06.04.99	23.01.06
	
	
	
	
	
	 
	 

	Claes Wilhelmsson	At 1 Jan 2002	17,168	365SEK	 	06.04.99	23.01.06
	 	Sold	4,630	298.28SEK	518SEK	06.04.99	03.01.03
	 	Sold	4,395	316.13SEK	518SEK	06.04.99	09.01.04
	 	At 30 Jun 2002	8,143	429.38SEK	 	06.04.99	23.01.06
	
	
	
	
	
	 
	 



 The aggregate amount of gains made by Directors
  on the exercise of share options during the year amounted to $0.4 million (2001
  $0.02 million, 2000 $0.8 million) and the gains made by the highest paid Director
  were $nil (2001 $13,000, 2000 $nil). The market price of shares trading on the
  London Stock Exchange at 31 December 2002 was 2220 pence and the range during
  2002 was 1799 pence to 3625 pence. The market price of shares trading on the
  Stockholm Stock Exchange at 31 December 2002 was 306SEK and the range during
  2002 was 255SEK to 541SEK. The Register of Directors’ Interests (which
  is open to inspection) contains full details of Directors’ shareholdings
  and options to subscribe for Ordinary Shares.

 On behalf of the Board

  G H R Musker

  Group Secretary and Solicitor 

  30 January
  2003 








Back to Contents

	 	AstraZeneca Annual Report and
      Form 20-F 2002

    www.astrazeneca.com	Financial Statements	55




AstraZeneca Financial Statements



  	 Financial
          Statements
	 
	 

	Preparation
        of the Financial Statements and
        Directors’ Responsibilities	 56

	 
	 

	Independent
            Auditor’s Report to the Members
        of AstraZeneca PLC	 57

	 

	 Group
          Profit and Loss Account
	 58

	 

	Group
        Statement of Total Recognised Gains
        and Losses	 58

	 

	 Group
          Balance Sheet
	 60

	 

	 Statement
          of Group Cash Flow
	 61

	 
	 

	Basis
        of Consolidation and Presentation of
        Financial Information	 62

	 

	 Accounting
          Policies
	 63

	 

	 Notes
          to the Financial Statements
	 65

	 

	 	 
	 Notes
          to the Financial Statements
	 
	 

	1	 Composition
          of the Group
	 65

	 

	2 	Note of historical cost
        profits

        and losses	 65

	 

	3	Group
          operating profit
	 66

	 

	4	Share of operating profits/(losses)
          of joint ventures and associates	 

        66

	 

	5	Exceptional
          items
	 68

	 

	6	Net
          interest
	 69

	 
	
	 

	7	Taxation
	 70

	 

	8	Dividends
	 73

	 
	
	 

	9	Earnings
          per $0.25 Ordinary Share
	 73

	 

	10	Segment
          information
	 74

	 
	
	 

	11	Tangible
          fixed assets
	 78

	 

	12	Goodwill
          and intangible assets
	 79

	 

	13	Fixed
          asset investments
	 79

	 
	
	 

	14	Stocks
	 80

	 

	15	Debtors
	 80

	 

	16	Short
          term investments
	 81

	 

	17	Short
          term borrowings
	 81

	 

	18	Other
          creditors
	 82

	 
 








  	19	 Loans	
      82

	

 
	20	 Financial instruments	83
	

 
	21	 Provisions for liabilities
        and charges	86
	

 
	22  	 Reconciliation of movements
          in shareholders’ funds	87

	

 
	23 	Reserves	87
	

 
	24 	Net cash inflow from
          trading operations	 89

	

 
	25 	Cash flows
        related to exceptional
        items	 89

	

 
	26    	Acquisitions of subsidiaries
        and purchases of
        minority interests	 90

	

 
	27 	 Zeneca Agrochemicals
        demerger	91
	
        
 
	28	 Disposals	91
	

 
	29 	Reconciliation of net
        cash flow to movement
        in net funds	91
	

 
	30 	Analysis of net funds	92
	

 
	31	 Financing	92
	

 
	32	 Post-retirement benefits	93
	

 
	
33 
	Employee costs and share
        option plans for employees	
97

	

 
	34 	Assets pledged, commitments
          and contingent liabilities	 101

	

 
	35	 Leases	106
	

 
	36	Statutory and other information	107
	

 
	37	 Company information	108
	

 
	38 	Called-up share capital
        of parent company	111

	

 
	Principal
        Subsidiaries, Joint Ventures
        and Associates	 112

	

 
	Additional
        Information for US
        Investors	 113

	

 














Back to Contents

	58	AstraZeneca
        Annual Report and Form 20-F 2002

        www.astrazeneca.com
     	
Financial Statements






Group Profit and Loss Account for the year ended 31 December


	


    	
	
	
	
	
	
	
	 
	 	Notes

   	 	Continuing

    operations

   $m
	 	Exceptional

   items
     $m
	 	2002

   Total

   $m
	 
	
	
	
	

	
	
	
	

	 
	Turnover: Group and share of joint ventures
	 	 	18,032
	 	–
	 	18,032
	 
	
	
	
	
	
	
	
	
	 
	Less: Share of joint venture turnover
	 	 	(191
	)
	–

   	 	(191
	)

	
	
	
	
	
	
	
	
	 
	Group turnover
	3
	 	17,841
	 	–

   	 	17,841
	 
	
	
	
	
	
	
	
	
	 
	Operating costs
	3
	 	(13,728
	)
	(350
	)
	(14,078
	)

	
	
	
	
	
	
	
	
	 
	Other operating income
	3
	 	243
	 	–
	 	243
	 
	
	
	
	
	
	
	
	
	 
	Group operating profit	3
	 	4,356	 	(350
	)	4,006	 
	
	
	
	
	
	
	
	
	 
	Share of operating (loss) of joint ventures and associates	4
	 	–
	 	–
	 	–
	 
	
	
	
	
     

   
	
	
     

   
	
	
     

   
	 
	Profits less losses on sale, closure, or demerger of operations	5
	 	–
	 	–
	 	–
	 
	
	
	
	
	
	
	
	
	 
	Profits on sale of fixed assets	5
	 	–
	 	–
	 	–
	 
	
	
	
	
	
	
	
	
	 
	Dividend income	
	 	1
	 	–
	 	1
	 
	
	
	
	
	
	
	
	
	 
	Profit on ordinary activities before interest	
	 	4,357	 	(350
	)	4,007	 
	
	
	
	
	
	

	
	
	 
	Net interest	6
	 	30
	 	–
	 	30
	 
	
	
	
	
	
	
	
	
	 
	Profit on ordinary activities before taxation	
	 	4,387	 	(350
	)	4,037	 
	
	
	
	
	
	

	
	
	 
	Taxation	7
	 	(1,177	)	–
	 	(1,177	)
	
	
	
	
	
	

   	
	
	 
	Profit on ordinary activities after taxation	
	 	3,210	 	(350
	)	2,860	 
	
	
	
	
	
	

   	
	
	 
	Attributable to minorities	
	 	(24
	)	–
	 	(24
	)
	
	
	
	

   	
	

   	
	

   	 
	Net profit for the financial year	
	 	3,186	 	(350
	)	2,836	 
	
	
	
	
	
	

   	
	
	 
	Dividends to shareholders	
	 	   	 	   	 	   	 
	Cash	8
	 	   	 	   	 	(1,206	)
	
	
	
	

   	
	

   	
	
	 
	Dividend in specie – demerger of Zeneca Agrochemicals	8
	 	   	 	   	 	–
	 
	
	
	
	

   	
	

   	
	

   	 
	Profit/(loss) retained for the financial year	
	 	   	 	   	 	1,630	 
	
	
	
	

   	
	

   	
	
	 
	Earnings per $0.25 Ordinary Share before	
	 	   	 	   	 	   	 
	exceptional items	9
	 	$1.84
	 	–
	 	$1.84
	 
	
	
	
	

   	
	

   	
	

   	 
	Earnings per $0.25 Ordinary Share (basic)	9
	 	$1.84
	 	($0.20
	)	$1.64
	 
	
	
	
	

   	
	

   	
	

   	 
	Earnings per $0.25 Ordinary Share (diluted)	9
	 	$1.84
	 	($0.20
	)	$1.64
	 
	
	
	
	

   	
	

   	
	

   	 
	Weighted average number of	
	 	   	 	   	 	   	 
	Ordinary Shares in issue (millions)	9
	 	   	 	   	 	1,733	 
	
	
	
	

   	
	

   	
	
	 
	 





Group Statement of Total Recognised Gains and Losses for the year ended 31 December


	 	Notes
	 	 	 	 	 	2002

      $m
	 
	
	
	
	
	
	
	
	
 	 
	Net profit for the financial year	 	 	 	 	 	 	2,836	 
	
	
	
	
	
	
	
	
	 
	Exchange adjustments on net assets	22
	 	 	 	 	 	1,106	 
	
	
	
	
	
	
	
	
	 
	Translation differences on foreign currency
      borrowings	22
	 	 	 	 	 	6
	 
	
	
	
	
	
	
	
	
 	 
	Tax on translation differences on foreign
      currency borrowings	22
	 	 	 	 	 	(2
	)
	
	
	
	
	
	
	
	
 	 
	Total recognised gains and losses relating
      to the financial year	 	 	 	 	 	 	3,946	 
	
	
	
	
	
	
	
	
	 
	Prior year adjustment (page 62)	 	 	 	 	 	 	(200	)
	
	
	
	
	
	
	
	
	 
	Total recognised gains and losses since
      the last annual report	 	 	 	 	 	 	3,746	 
	
	
	
	
	
	
	
	
	 
	$m means millions of US dollars	 	 	 	 	 	 	 	 










Back to Contents

  

	 	AstraZeneca
        Annual Report and Form 20-F 2002

        www.astrazeneca.com

    	
Financial Statements

    	59


 

	 
	 
        

      
	 
	 
        

      
	 
	 
        

      
	 
	 
        

      
	 
	 
	 
	 
        

      
	 
	 

	Continuing

      operations

      (restated)

      $m	 	Exceptional

      items

      (restated)

      $m	 	2001

      Total

      (restated)

      $m	 	Continuing

      operations

      (restated)

          $m	 	Discontinued

        operations

        (restated)

      $m	 	Exceptional

      items

      (restated)

      $m	 	2000

      Total

      (restated)

      $m	 
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	 16,405
	 
	 –
	 
	 16,405
	 
	 15,778
	 
	 2,299
	 
	 –
	 
	 18,077
	 

	
	
        

        
	
 	
        

        
	
	
        

        
	
	
        

        
	
	
        

        
	
 	 
        

        
	
	

	(183
	)
	–
	
	(183
	)
	(195
	)
	–
	
	–
	 
	(195
	)

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	16,222
	
	–
	
	16,222
	
	15,583
	
	2,299
	
	–
	 
	17,882
	

	
	
        

        
	
 	
        

        
	
	
        

        
	
	
        

        
	
	
        

        
	
 	 
        

        
	
	

	(12,434
	)
	(202
	)
	(12,636
	)
	(11,822
	)
	(1,996
	)
	(322
	 )
	(14,140
	)

	
	
        

        
	
 	
        

        
	
	
        

        
	
	
        

        
	
	
        

        
	
 	 
        

        
	
	

	368
	
	–
	
	368
	
	223
	
	43
	
	–
	 
	266
	

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	4,156
	
	(202
	)
	3,954
	
	3,984
	
	346
	
	(322
	 )
	4,008
	

	
	
        

        
	
 	
        

        
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	 
        

        
	
	

	–
	
	–
	
	–
	
	(12
	)
	–
	
	(137
	 )
	(149
	)

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
	
        

        
	
 	 
        

        
	
 	

	–
	
	–
	
	–
	
	–
	
	–
	
	(150
	 )
	(150
	)

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	–
	
	10
	
	10
	
	–
	
	–
	
	–
	 
	–
	

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	8
	
	–
	
	8
	
	3
	
	–
	
	–
	 
	3
	

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	4,164
	
	(192
	)
	3,972
	
	3,975
	
	346
	
	(609
	 )
	3,712
	

	
	
        

        
	
 	
        

        
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	 
        

        
	
	

	105
	
	–
	
	105
	
	135
	
	–
	
	–
	 
	135
	

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	4,269
	
	(192
	)
	4,077
	
	4,110
	
	346
	
	(609
	 )
	3,847
	

	
	
        

        
	
 	
        

        
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	 
        

        
	
	

	(1,214
	)
	54
	
	(1,160
	)
	(1,453
	)
	(135
	)
	28
	 
	(1,560
	)

	
	
        

        
	
 	
        

        
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	 
        

        
	
	

	3,055
	
	(138
	)
	2,917
	
	2,657
	
	211
	
	(581
	 )
	2,287
	

	
	
        

        
	
 	
        

        
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	 
        

        
	
	

	(11
	)
	–
	
	(11
	)
	(9
	)
	(1
	)
	–
	 
	(10
	)

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
        

        
	
        

        
	
 	 
        

        
	
 	

	3,044
	
	(138
	)
	2,906
	
	2,648
	
	210
	
	(581
	 )
	2,277
	

	
	
        

        
	
 	
        

        
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	 
        

        
	
	

	
	
	
	
	
	
	
	
	
	
	
	 
	
	

	
	
	
	
	(1,225
	)
	
	
	
	
	
	 
	(1,236
	)

	
 	
        

        
	
 	
        

        
	
	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
	

	
	
	
	
	–
	
	
	
	
	
	
	 
	(1,669
	)

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
	

	
	
	
	
	1,681
	
	
	
	
	
	
	 
	(628
	)

	
 	
        

        
	
 	
        

        
	
	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	
	
	
	
	
	
	
	
	 
	
	

	$1.73
	
	–
	
	$1.73
	
	$1.50
	
	$0.12
	
	–
	 
	$1.62
	

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	$1.73
	
	($0.08
	)
	$1.65
	
	$1.50
	
	$0.12
	
	($0.32
	 )
	$1.30
	

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	$1.73
	
	($0.08
	)
	$1.65
	
	$1.50
	
	$0.12
	
	($0.32
	 )
	$1.30
	

	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	 
        

        
	
 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	
	
	
	
	
	
	
	
	 
	
	

	
	
	
	
	1,758
	
	
	
	
	
	
	 
	1,768
	

	
        

        
	
        

        
	
        

        
	
        

        
	
	
        

        
	
        

        
	
        

        
	
        

        
	
        

        
	
        

        
	 
        

        
	
	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	2001

      (restated)

      $m
	 	 	 	 	 	 	 	2000

      (restated)

      $m
	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	2,906
	 	 	 	 	 	 	 	2,277
	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	(502
	)	 	 	 	 	 	 	(870
	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	18
	 	 	 	 	 	 	 	154
	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	(6
	)	 	 	 	 	 	 	(42
	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	2,416
	 	 	 	 	 	 	 	1,519
	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 


	 











Back to Contents

	60	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements




 

Group Balance Sheet at 31 December


	
	 
	
	 
	
	 
	

	 	Notes	 	2002

      

      $m	 	2001

      (restated)

      $m	 
	
	 
	
	 
	
	 
	

	Fixed assets	 	 	  	 	  	 
	Tangible fixed assets	11	 	6,597	 	5,409	 
	
	 
	
	 
	
	 
	

	Goodwill and intangible assets	12	 	2,807	 	2,700	 
	
	 
	
	 
	
	 
	

	Fixed asset investments	13	 	 46	 	 23	 
	
	 
	
	 
	
	 
	

	  	 	 	9,450	 	8,132	 
	
	 
	
	 
	
	 
	

	Current assets 	 	 	  	 	  	 
	Stocks 	14	 	2,593	 	2,402	 
	
	 
	
	 
	
	 
	

	Debtors 	15	 	4,845	 	4,139	 
	
	 
	
	 
	
	 
	

	Short term
      investments	16	 	3,962	 	3,118	 
	
	 
	
	 
	
	 
	

	Cash 	30	 	726	 	705	 
	
	 
	
	 
	
	 
	

	  	 	 	12,126	 	10,364	 
	
	 
	
	 
	
	 
	

	Total assets 	 	 	21,576	 	18,496	 
	
	 
	
	 
	
	 
	

	Creditors due within one year	 	 	  	 	  	 
	Short term
      borrowings	17	 	(202	)	(214	)
	
	 
	
	 
	
	 
	

	Current instalments of loans	19	 	(314	)	(107	)
	
	 
	
	 
	
	 
	

	Other creditors 	18	 	(7,699	)	(6,159	)
	
	 
	
	 
	
	 
	

	  	 	 	(8,215	)	(6,480	)
	
	 
	
	 
	
	 
	

	Net current assets	 	 	3,911	 	3,884	 
	
	 
	
	 
	
	 
	

	Total assets less current liabilities	 	 	13,361	 	12,016	 
	
	 
	
	 
	
	 
	

	Creditors due after more than one year	 	 	  	 	  	 
	Loans	19	 	(328	)	(635	)
	
	 
	
	 
	
	 
	

	Other creditors 	18	 	(34	)	(152	)
	
	 
	
	 
	
	 
	

	  	 	 	(362	)	(787	)
	
	 
	
	 
	
	 
	

	Provisions for liabilities and charges	21	 	(1,773	)	(1,600	)
	
	 
	
	 
	
	 
	

	Net assets 	 	 	11,226	 	9,629	 
	
	 
	
	 
	
	 
	

	Capital and reserves	 	 	  	 	  	 
	Called-up share capital	38	 	429	 	436	 
	
	 
	
	 
	
	 
	

	Share premium account	23	 	403	 	334	 
	
	 
	
	 
	
	 
	

	Capital redemption reserve	23	 	 16	 	 9	 
	
	 
	
	 
	
	 
	

	Merger reserve 	23	 	433	 	433	 
	
	 
	
	 
	
	 
	

	Other reserves 	23	 	1,440	 	1,470	 
	
	 
	
	 
	
	 
	

	Profit and loss account	23	 	8,451	 	6,904	 
	
	 
	
	 
	
	 
	

	Shareholders’
      funds – equity interests	22	 	11,172	 	9,586	 
	
	 
	
	 
	
	 
	

	Minority equity interests	 	 	 54	 	 43	 
	
	 
	
	 
	
	 
	

	Shareholders’ funds and minority
      interests	 	 	11,226	 	9,629	 
	
	 
	
	 
	
	 
	




The Financial Statements on pages 58 to 122 were approved by the Board of Directors on 30 January 2003 and were signed on its behalf by:


	Sir Tom McKillop	Jonathan Symonds
	Director	Director



 







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	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements	61





Statement of Group Cash Flow for the year ended 31 December


	
	 
	
	 
	
	 
	
	 
	

	 	Notes	 	2002

      $m	 	2001

      $m	 	2000

      $m	 
	
	 
	
	 
	
	 
	
	 
	

	Cash flow from operating activities	 	 	 	 	 	 	 	 
	Net cash inflow from trading operations	24	 	5,686	 	4,130	 	4,992	 
	
	 
	
	 
	
	 
	
	 
	

	Outflow related to exceptional items	25	 	(93	)	(368	)	(809	)
	
	 
	
	 
	
	 
	
	 
	

	Net cash inflow from operating activities	 	 	5,593	 	3,762	 	4,183	 
	
	 
	
	 
	
	 
	
	 
	

	Dividends received from joint ventures	 	 	–	 	–	 	–	 
	
	 
	
	 
	
	 
	
	 
	

	Returns on investments and servicing
      of finance	 	 	 	 	 	 	 	 
	Interest received	 	 	142	 	232	 	180	 
	
	 
	
	 
	
	 
	
	 
	

	Interest paid	 	 	(96	)	(84	)	(145	)
	
	 
	
	 
	
	 
	
	 
	

	Dividends received	 	 	–	 	8	 	–	 
	
	 
	
	 
	
	 
	
	 
	

	Dividends paid by subsidiaries to minority
      interests	 	 	(11	)	–	 	(16	)
	
	 
	
	 
	
	 
	
	 
	

	 	 	 	35	 	156	 	19	 
	
	 
	
	 
	
	 
	
	 
	

	Tax paid	 	 	(795	)	(792	)	(648	)
	
	 
	
	 
	
	 
	
	 
	

	Capital expenditure and financial investment	 	 	 	 	 	 	 	 
	Cash expenditure on tangible fixed assets	11	 	(1,340	)	(1,385	)	(1,347	)
	
	 
	
	 
	
	 
	
	 
	

	Cash expenditure on intangible assets and
      goodwill	 	 	(268	)	(197	)	(113	)
	
	 
	
	 
	
	 
	
	 
	

	Cash expenditure on fixed asset investments	 	 	(1	)	(5	)	(3	)
	
	 
	
	 
	
	 
	
	 
	

	Disposals of fixed assets	 	 	66	 	44	 	37	 
	
	 
	
	 
	
	 
	
	 
	

	 	 	 	(1,543	)	(1,543	)	(1,426	)
	
	 
	
	 
	
	 
	
	 
	

	Acquisitions and disposals	 	 	 	 	 	 	 	 
	Acquisitions of subsidiaries and purchases
      of minority interests	26	 	–	 	(44	)	(167	)
	
	 
	
	 
	
	 
	
	 
	

	Net repayment of debt by Zeneca Agrochemicals	27	 	–	 	–	 	909	 
	
	 
	
	 
	
	 
	
	 
	

	Disposals of business operations	28	 	–	 	–	 	–	 
	
	 
	
	 
	
	 
	
	 
	

	Disposals of investments in joint ventures
      and associates	 	 	–	 	–	 	(2	)
	
	 
	
	 
	
	 
	
	 
	

	 	 	 	–	 	(44	)	740	 
	
	 
	
	 
	
	 
	
	 
	

	Equity dividends paid to Shareholders	 	 	(1,234	)	(1,236	)	(1,220	)
	
	 
	
	 
	
	 
	
	 
	

	Net cash inflow before management of
      liquid resources and financing	30	 	2,056	 	303	 	1,648	 
	
	 
	
	 
	
	 
	
	 
	

	Management of liquid resources and financing	 	 	 	 	 	 	 	 
	Movement in short term investments and
      fixed deposits (net)	 	 	(806	)	260	 	(608	)
	
	 
	
	 
	
	 
	
	 
	

	Financing	31	 	(118	)	35	 	(66	)
	
	 
	
	 
	
	 
	
	 
	

	Net share re-purchases	 	 	(1,154	)	(994	)	(334	)
	
	 
	
	 
	
	 
	
	 
	

	(Decrease)/increase in cash in the year	29	 	(22	)	(396	)	640	 
	
	 
	
	 
	
	 
	
	 
	




 





 
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	62	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements




 Basis of Consolidation and
  Presentation of Financial Information

  


The preparation of the Financial Statements
  in conformity with generally accepted accounting principles requires management
  to make estimates and assumptions that affect the reported amounts of assets
  and liabilities and disclosure of contingent assets and liabilities at the date
  of the Financial Statements and the reported amounts of revenues and expenses
  during the reporting period. Actual results could differ from those estimates.

   As part of AstraZeneca’s objective to
    align with accounting best practice, cash discounts arising from prompt payment
    of invoices have been reclassified from cost of sales to sales. Comparatives
    have also been reclassified for consistency of presentation. Both sales and
    cost of sales have been reduced by $287m in the current year (2001 $258m,
    2000 $221m). The change has minimal impact on previously stated sales growth
    rates. Furthermore, neither profits nor net assets have been affected.

   Discontinued operations
    

    Following the demerger of the Zeneca Agrochemicals
    business on 13 November 2000 and its subsequent merger with Novartis’
    agribusiness to form Syngenta AG, Zeneca Agrochemicals’ results have
    been reported as discontinued operations.

   New accounting standards
    

    The following new accounting standard was adopted
    during the year:

   UK Financial Reporting Standard 19 (FRS 19)
    – ‘Deferred Tax’ is applicable for accounting periods ending
    on or after 23 January 2002. It requires full provision to be made for deferred
    tax assets and liabilities arising from timing differences between the recognition
    of gains and losses in the Financial Statements and their recognition in a
    tax computation except for certain exemptions set out in the standard. The
    impact of adoption in the year ended 31 December 2002 has been to reduce net
    profit by $19m. Compliance with FRS 19 at 31 December 2001 reduced net assets
    by $193m, being an increase in assets of $511m and an increase in liabilities
    of $704m. The net profit for the year ended 31 December 2001 decreased by
    $61m (2000 $261m), resulting in an effective tax rate of 28.5% (2000 40.6%)
    compared with the previously reported 27% (2000 33.8%). The adjustments did
    not change the tax effects on exceptional items. Basic earnings per share
    for the year ended 31 December 2001 have been restated from $1.69 to $1.65
    (2000 $1.44 to $1.30) whilst earnings per share before exceptional items



 

 have fallen from $1.77 to $1.73
  (2000 $1.76 to $1.62). Comparative periods have been restated.

 In addition, the following new
  accounting standard had been issued but has not yet been fully adopted:

   UK Financial Reporting Standard 17 (FRS 17)
    – ‘Retirement Benefits’ becomes fully effective for accounting
    periods beginning on or after 1 January 2005, with increasing levels of disclosure
    required for each accounting period ending on or after 22 June 2001. It sets
    out the requirements for accounting for retirement benefits, including the
    fair value of assets and liabilities arising from employers’ obligations,
    the treatment of related costs and level of disclosure. AstraZeneca has adopted
    FRS 17 to the extent of the mandated disclosure requirements for the year
    ended 31 December 2002 and these are included in Note 32 to the Financial
    Statements.







 
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	 	AstraZeneca Annual Report and Form 20-F
      2002

      www.astrazeneca.com	Financial Statements	63




 Accounting Policies


   Basis of accounting
    

    The Financial Statements are prepared under
    the historical cost convention, modified to include the revaluation to market
    value of certain current asset investments held by Group subsidiaries as described
    below, in accordance with the Companies Act 1985 and UK generally accepted
    accounting principles (UK GAAP). Where there are significant differences to
    US GAAP these have been described in the US GAAP section on pages 113 to 122.
    The following paragraphs describe the main accounting policies under UK GAAP.
    The accounting policies of some overseas subsidiaries and associated undertakings
    do not conform with UK GAAP and, where appropriate, adjustments are made on
    consolidation in order to present the Group Financial Statements on a consistent
    basis.

 On 13 November 2000, AstraZeneca demerged Zeneca
  Agrochemicals, which was merged with the Novartis agribusiness to form Syngenta
  AG. The impact of the demerger on the AstraZeneca Financial Statements for the
  year ended 31 December 2000 is shown in Note 27.

   Critical accounting
    policies 

    AstraZeneca’s management considers the
    following to be the most important accounting policies in the context of the
    Group’s operations. The impact of these policies and management judgements
    made when applying them are discussed in the Financial Review.

   Turnover 

    Turnover excludes intercompany turnover and
    value added taxes and represents net invoice value less estimated rebates,
    returns and settlement discounts. Revenue is recognised at the point at which
    title passes.

   Research and development
    

    Research and development expenditure is charged
    to profit in the year in which it is incurred.

   Goodwill 

    On the acquisition of a business, fair values
    are attributed to the net assets acquired. Goodwill arises where the fair
    value of the consideration given for a business exceeds the fair value of
    such net assets. Goodwill arising on acquisitions since 1998 is capitalised
    and amortised over its estimated useful life (generally not exceeding 20 years).
    Goodwill is reviewed for impairment when there are indications that the carrying
    value may not be recoverable. The Group’s policy



 

 up to and including 1997 was
  to eliminate goodwill arising upon acquisitions against reserves. Such goodwill
  will remain eliminated against reserves until disposal or termination of the
  previously acquired business (including the planned disposal or termination
  when there are indications that the value of the goodwill has been permanently
  impaired), when the profit or loss on disposal or termination will be calculated
  after charging the gross amount, at current exchange rates, of any such goodwill.

   Post-retirement benefits
    

    The pension costs relating to UK retirement
    plans are assessed in accordance with the advice of independent qualified
    actuaries. The amounts so determined include the regular cost of providing
    the benefits under the plans which it is intended should remain as a level
    percentage of current and expected future earnings of the employees covered
    under the plans. Variations from the regular pension cost are spread on a
    systematic basis over the estimated average remaining service lives of current
    employees in the plans. Retirement plans of non-UK subsidiaries are accounted
    for in accordance with local conditions and practice. With minor exceptions,
    these subsidiaries recognise the expected cost of providing pensions on a
    systematic basis over the average remaining service lives of employees in
    accordance with the advice of independent qualified actuaries. The costs of
    providing post-retirement benefits other than pensions, principally healthcare,
    are charged to the profit and loss account on a consistent basis over the
    average service lives of employees. Such costs are assessed in accordance
    with the advice of independent qualified actuaries. AstraZeneca has adopted
    the disclosure requirements of FRS 17.

 Other
  accounting policies 

   Foreign currencies 

    Profit and loss accounts 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 Group balance sheet.

   Exchange gains and losses 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. In
    the consolidated Financial Statements exchange differences arising on consolidation
    of the net investments in overseas subsidiaries, joint



 

 ventures and associates together with those
  on relevant foreign currency loans are taken directly to reserves via the statement
  of total recognised gains and losses.

   Taxation 

    The charge for taxation is based on the profits
    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 tax effects of these differences. No provision
    is made for unremitted earnings of foreign subsidiaries where there is no
    commitment to remit such earnings, nor is provision made for rolled over capital
    gains. The deferred tax balances are not discounted.

   Fixed assets, depreciation and amortisation
    

    AstraZeneca’s policy is to write off the
    difference between the cost of each tangible fixed asset and its residual
    value evenly over its estimated remaining life. Reviews are made periodically
    of the estimated remaining lives of individual productive assets, taking account
    of commercial and technological obsolescence as well as normal wear and tear.
    Under this policy it becomes impracticable to calculate average asset lives
    exactly. However, the total lives range from approximately 13 to 50 years
    for buildings, and 3 to 15 years for plant and equipment. Intangible assets,
    including patents acquired, are capitalised and amortised over their estimated
    useful lives (generally not exceeding 20 years), in line with the benefits
    accruing. If related products fail, the remaining unamortised amounts are
    immediately written off to revenue expense. Finance costs and internally developed
    intangible assets are not capitalised. All fixed assets are reviewed for impairment
    when there are indications that the carrying value may not be recoverable.

   Leases 

    Assets held under finance leases are capitalised
    and included in tangible fixed assets at fair value. Each asset is depreciated
    over the shorter of the lease term or its useful life. The obligations related
    to finance leases, net of finance charges in respect of future periods, are
    included, as appropriate, under creditors due within, or creditors due after,
    one year. The interest element of the rental obligation is allocated to accounting
    periods during the lease term to reflect a constant rate of interest on the
    remaining balance of the obligation for each accounting period. Rentals under
    operating leases are








 
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	64	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements


 Accounting Policies continued


 charged to the profit and loss account as incurred.

   Investments 

    An associate is an undertaking, not being a
    subsidiary or joint venture, in which AstraZeneca has a participating interest
    and over whose commercial and financial policy decisions AstraZeneca exercises
    significant influence.

   A joint venture is an entity in which AstraZeneca holds an interest on a long term
    basis and which is jointly controlled by AstraZeneca and one or more other
    venturers under a contractual arrangement.

 AstraZeneca’s share of the profits less
  losses of all significant joint ventures and associates is included in the Group
  profit and loss account on the equity accounting basis or, in the case of joint
  ventures, the gross equity accounting basis. The holding value of significant
  associates and joint ventures in the Group balance sheet is calculated by reference
  to AstraZeneca’s equity in the net assets of such associates and joint
  ventures, as shown by the most recent accounts available, adjusted where appropriate
  and including goodwill on acquisitions made since 1 January 1998.

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

 Current asset investments held by the Group’s
  insurance company subsidiaries, to the extent that they are actively matched
  against insurance liabilities, are valued at market value and unrealised gains
  and losses are taken directly to reserves via the statement of total recognised
  gains and losses. Realised gains and losses are taken to the profit and loss
  account.

   Contingent liabilities
    

    Through the normal course of business, AstraZeneca is involved in legal disputes
    the settlement of which may involve cost to the Group. Provision is made where
    the outcome and associated costs can be estimated reliably.






 AstraZeneca is exposed to environmental
  liabilities relating to its past operations, principally in respect of soil
  and groundwater remediation costs. Provisions for these costs are made when
  there is a present obligation, it is probable that expenditure on remedial work
  will be required and a reliable estimate can be made of the cost.

   Stock valuation 

    Finished goods are stated at the lower of cost
    or net realisable value and raw materials and other stocks at the lower of
    cost or replacement price. The first in, first out or an average method of
    valuation is used. In determining cost, depreciation is included but selling
    expenses and certain overhead expenses (principally central administration
    costs) are excluded. Net realisable value is determined as estimated selling
    price less costs of disposal.

   Principal financial instruments
    

    Forward foreign exchange contracts for existing
    transactions are revalued to year end spot rates and the gains/losses arising
    are recognised in the Group profit and loss account. Interest differentials
    are amortised on a straight line basis over the life of the contract.

 The gains/losses on forward
  foreign exchange contracts and currency option contracts hedging anticipated
  exposures are deferred until the date the underlying transaction being hedged
  is completed.

 Interest rate swaps are accounted
  for on an accruals basis. Cross-currency swaps are translated at year end exchange
  rates; gains/losses arising are included in the measurement of the related liabilities
  and dealt with in the Group profit and loss account or reserves as appropriate.








 
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	 	AstraZeneca Annual Report
      and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	65




 Notes to the Financial Statements


 1 Composition
  of the Group 

 The Group Financial Statements consolidate
  the financial statements of AstraZeneca PLC and its subsidiaries, of which there
  were 235, at 31 December 2002. Owing to local conditions and to avoid undue
  delay in the presentation of the Group Financial Statements, Salick Health Care
  prepares its financial statements to 30 November.


 2 Note
  of historical cost profits and losses 

 There were no material differences between
  reported profits and losses and historical cost profits and losses on ordinary
  activities before taxation.








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	66	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	 


 Notes to the Financial Statements
  continued


	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	3 Group operating profit	 	 	 	 	 	 
	 	Continuing
        operations
	 	 	 
	 	
	 	 	 
	  	 Pre

      exceptional

      items

        

        
	  	 Exceptional

      items

        

        
	  	 2002

      Total

        

        
	  
	   	$m
	   	$m
	   	$m
	   
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Group turnover	17,841	 	–	 	17,841	 
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Operating costs
	 	 	 	 	 	 
	Cost of sales
	(4,520	)	–	 	(4,520	)
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Distribution costs	(141	)	–	 	(141	)
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Research and development	(3,069	)	–	 	(3,069	)
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Selling, general and administrative expenses	(5,998	)	(350	)	(6,348	)
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	 	(13,728	)	(350	)	(14,078	)
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Other operating income	 	 	 	 	 	 
	Royalties	113	 	–	 	113	 
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Other income	130	 	–	 	130	 
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	 	243	 	–	 	243	 
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Other income includes gains arising from
      disposals under ongoing product rationalisation programmes.	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Group
        operating profit
	4,356
	 
	(350)
	 
	4,006
	 

	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Charges included above	 	 	 	 	 	 
	   – for depreciation	(705	)	–	 	(705	)
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	   – for amortisation	(255	)	–	 	(255	)
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	   – for impairment	–	 	–	 	–	 
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Gross profit, as defined by the Companies
      Act 1985	13,321	 	–	 	13,321	 
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	 	 	 	 	 	 	 
	4
      Share of operating profits/(losses) of joint ventures and associates	 	 	 	 	 	 
	 	Continuing
        operations
	 	 	 
	 	
	 	 	 
	  	 Pre

      exceptional

      items

        
	  	 Exceptional

      items

        
	  	 2002

      Total

        
	  
	   	$m
	   	$m
	   	$m
	   
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Share of operating (loss)/profit of joint
      ventures 	–	 	–	 	–	 
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	Share of operating profit of associates 	–	 	–	 	–	 
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 
	 	–	 	–	 	–	 
	
	
        

      
	
        

      
	
        

      
	
        

      
	
        

      
	 











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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	67





	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Continuing
        operations

    	 	 	 	Continuing
        operations
	 	Discontinued
        operations
	 	 	 
	 	
	
	
	 
	 
	 
	
	 
	
	 	 	 
	 	 Pre

      exceptional

      items

      (reclassified
	) 	 Exceptional

      items

      (reclassified
	) 	 2001

      Total

      (reclassified
	) 	 Pre

      exceptional

      items

      (reclassified
	) 	 Exceptional

      items

      (reclassified
	) 	 Pre

      exceptional

      items

      (reclassified
	) 	 Exceptional

      items

      (reclassified
	) 	 2000

      Total

      (reclassified
	) 
	    	$m
	   	$m
	   	$m
	   	$m
	   	$m
	   	$m
	   	$m
	   	$m
	   
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	16,222	 	–	 	16,222	 	15,583	 	–	 	2,299	 	–	 	17,882	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	(4,198	)	(34	)	(4,232	)	(3,960	)	(11	)	(1,299	)	–	 	(5,270	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	(122	)	–	 	(122	)	(210	)	–	 	(76	)	–	 	(286	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	(2,687	)	(86	)	(2,773	)	(2,620	)	(51	)	(222	)	–	 	(2,893	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	(5,427	)	(82	)	(5,509	)	(5,032	)	(260	)	(399	)	–	 	(5,691	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	(12,434	)	(202	)	(12,636	)	(11,822	)	(322	)	(1,996	)	–	 	(14,140	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	154	 	–	 	154	 	160	 	–	 	33	 	–	 	193	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	214	 	–	 	214	 	63	 	–	 	10	 	–	 	73	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	368	 	–	 	368	 	223	 	–	 	43	 	–	 	266	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	4,156	 	(202	)	3,954	 	3,984	 	(322	)	346	 	–	 	4,008	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	(605	)	(12	)	(617	)	(585	)	–	 	(102	)	–	 	(687	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	(255	)	–	 	(255	)	(281	)	–	 	(14	)	–	 	(295	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	–	 	–	 	–	 	(6	)	(18	)	–	 	–	 	(24	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	12,024	 	(34	)	11,990	 	11,623	 	(11	)	1,000	 	–	 	12,612	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Continuing
        operations
	 	 	 	Continuing
        operations
	 	Discontinued
        operations
	 	 	 
	 	
	
	
	 
	 
	 
	
	 
	
	 	 	 
	 	 Pre

      exceptional

      items
	  	 Exceptional

      items

        
	  	 2001

      Total
	  	 Pre

      exceptional

      items
	  	 Exceptional

      items
	  	 Pre

      exceptional

      items
	  	 Exceptional

      items
	  	 2000

      Total
	  
	   	$m
	   	$m
	   	$m
	   	$m
	   	$m
	   	$m
	   	$m
	   	$m
	   
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	–	 	–	 	–	 	(12	)	(137	)	–	 	–	 	(149	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	–	 	–	 	–	 	(12	)	(137	)	–	 	–	 	(149	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 









 
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	68	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements


 Notes to the Financial Statements
  continued

	
	
	
	
	
	
	

	5 Exceptional items	 	 	 	 	 	 
	 	2002	 	2001	 	2000	 
	 	$m	 	$m	 	$m	 
	 
	
	
	
	
	
	

	Accrual related to Zoladex
      investigation	(350	)	–	 	–	 
	 
	
	
	
	
	
	

	Integration and synergy costs	–	 	(202	)	(322	)
	 
	
	
	
	
	
	

	Exceptional items
      included in operating profits	(350	)	(202	)	(322	)
	 
	
	
	
	
	
	

	Continuing operations	 	 	 	 	 	 
	Provision of impairment of
      investment in Advanta BV (after charging $49m of goodwill previously written
      off to reserves)	–	 	–	 	(137	)
	 
	
	
	
	
	
	

	Share of operating
      losses of joint ventures and associates	–	 	–	 	(137	)
	 
	
	
	
	
	
	

	Discontinued operations	 	 	 	 	 	 
	Costs related to the demerger
      of Zeneca Agrochemicals and formation of Syngenta AG	–	 	–	 	(150	)
	 
	
	
	
	
	
	

	Profits less losses
      on sale, closure, or demerger of operations	–	 	–	 	(150	)
	 
	
	
	
	
	
	

	Profit on sale
      of fixed assets	–	 	10	 	–	 
	 
	
	
	
	
	
	

	Total exceptional
      items before taxation	(350	)	(192	)	(609	)
	 
	
	
	
	
	
	

	Net taxation credit	–	 	54	 	28	 
	 
	
	
	
	
	
	

	Total exceptional
      items after taxation	(350	)	(138	)	(581	)
	 
	
	
	
	
	
	



 The US Department of Justice has been conducting
  an investigation into the sale and marketing of Zoladex
  (goserelin acetate implant). This investigation was prompted by the filing of
  a qui tam complaint by a private party in 1997 and involves allegations
  of improper submissions of claims to the Medicare and Medicaid programmes. The
  Company and federal and state authorities are in the process of negotiating
  a potential settlement of the civil and criminal claims at issue in the investigation.
  As a result, although no final agreement has been concluded, the Company believes
  it appropriate to accrue $350m to cover estimated settlement costs.

 The integration and synergy programme initiated
  in 1999 was completed during 2001, with further exceptional charges of $202m
  (2000 $322m), principally for manpower related costs, IT costs, and contractors.
  The cumulative charges were $1,388m.

 The Group took an exceptional charge of $137m
  in 2000 to provide for impairment of its 50% interest in the seeds company Advanta
  BV, including a write off of $49m of related goodwill previously taken to reserves.

 The costs related to the demerger of Zeneca
  Agrochemicals and formation of Syngenta AG included advisors’ fees, the
  costs of separating computer systems, employee related costs and environmental
  and occupational health provisions. The exceptional charge was reduced by the
  gain on disposal of products whose sale was required by the competition authorities
  as a condition of the creation of Syngenta AG. Tax relief on the net exceptional
  costs was more than offset by the provision for capital taxes arising out of
  the restructuring of the business in preparation for demerger, resulting in
  a net tax cost of $50m.





 
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	 	AstraZeneca Annual Report and Form 20-F
      2002

      www.astrazeneca.com	Financial Statements	69


 

	6 Net interest	 	 	 	 	 	 
	 	2002	 	2001	 	2000	 
	 	$m	 	$m	 	$m	 
	
	
	
	
	
	
	

	Interest receivable and similar
      income from investments	 	 	 	 	 	 
	Securities	21	 	19	 	30	 
	
	
	
	
	
	
	

	Short term deposits	90	 	179	 	192	 
	
	
	
	
	
	
	

	Exchange gain	6	 	1	 	46	 
	
	
	
	
	
	
	

	Joint ventures	–	 	–	 	1	 
	
	
	
	
	
	
	

	 	117	 	199	 	269	 
	
	
	
	
	
	
	

	Interest payable and similar
      charges	 	 	 	 	 	 
	Loan interest	(10	)	(32	)	(50	)
	
	
	
	
	
	
	

	Interest on short term borrowings and other
      financing costs	(51	)	(35	)	(62	)
	
	
	
	
	
	
	

	Discount on liability	(10	)	(15	)	(19	)
	
	
	
	
	
	
	

	Exchange losses	(16	)	(12	)	–	 
	
	
	
	
	
	
	

	Joint ventures	–	 	–	 	(3	)
	
	
	
	
	
	
	

	 	(87	)	(94	)	(134	)
	
	
	
	
	
	
	

	Net interest receivable	30	 	105	 	135	 
	
	
	
	
	
	
	



 The discounting charge above relates to amounts
  owed in respect of the re-acquisition of certain distribution rights, the final
  instalment of which is payable in 2003. In prior years, all interest has been
  classified within continuing operations as the management of the Group’s
  liquidity and funding is carried out by the central treasury function and it
  is not practicable to allocate interest to the different reporting segments.








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	70	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements


 Notes to the Financial Statements
  continued

7   Taxation
  

 Profit on ordinary activities before taxation,
  as shown in the Group profit and loss account, was as follows:

	 	2002

      

      $m	 	2001

      (restated)

      $m	 	2000

      (restated)

      $m	 
	
	 
	
	 
	
	 
	

	UK	741	 	618	 	808	 
	
	 
	
	 
	
	 
	

	Overseas	3,296	 	3,459	 	3,039	 
	
	 
	
	 
	
	 
	

	 	4,037	 	4,077	 	3,847	 
	
	 
	
	 
	
	 
	

	 	 	 	 	 	 	 
	Taxes on profit on ordinary activities
      were as follows:	 	 	 	 	 	 
	UK taxation	 	 	 	 	 	 
	
	 
	
	 
	
	 
	

	Corporation tax	165	 	147	 	130	 
	
	 
	
	 
	
	 
	

	Double taxation relief	(29	)	(37	)	(42	)
	
	 
	
	 
	
	 
	

	Deferred taxation	24	 	53	 	(3	)
	
	 
	
	 
	
	 
	

	 	160	 	163	 	85	 
	
	 
	
	 
	
	 
	

	Overseas taxation	 	 	 	 	 	 
	
	 
	
	 
	
	 
	

	Overseas taxes	929	 	739	 	1,066	 
	
	 
	
	 
	
	 
	

	Adjustments in respect of prior periods	(51	)	(17	)	4	 
	
	 
	
	 
	
	 
	

	Deferred taxation	139	 	275	 	402	 
	
	 
	
	 
	
	 
	

	 	1,017	 	997	 	1,472	 
	
	 
	
	 
	
	 
	

	Share of taxation of joint ventures and
      associates	–	 	–	 	3	 
	
	 
	
	 
	
	 
	

	Tax on profit on ordinary activities	1,177	 	1,160	 	1,560	 
	
	 
	
	 
	
	 
	



 In prior years, the charge for taxation has
  been allocated between continuing operations and discontinued operations based
  on the effective tax rates for the Group in the territories in which these operations
  are based.

 UK and overseas taxation has been provided
  at current rates on the profits earned for the periods covered by the Group
  financial statements. To the extent that dividends remitted from overseas subsidiaries,
  joint ventures and associates are expected to result in additional taxes, appropriate
  amounts have been provided. No deferred tax has been provided for unremitted
  earnings of Group companies overseas as these are, in the main, considered permanently
  employed in the businesses of these companies and, in the case of joint ventures
  and associates, the taxes would not be material. Cumulative unremitted earnings
  of overseas subsidiaries and related undertakings totalled approximately $9,141m
  at 31 December 2002. Unremitted earnings may be liable to overseas taxes and/or
  UK taxation (after allowing for double taxation relief) if they were to be distributed
  as dividends.

 Exceptional items included in tax on ordinary
  activities

	 	2002

      $m	 	2001

      $m	 	2000

      $m	 
	
	
	
	
	
	
	

	Tax credit on exceptional items* 	 –	 	(54	)	(28	)
	
	
      
	
	
      
	
	
      
	

	*	Includes deferred tax relief of $nil (2001
      $23m, 2000 $66m).	 	 	 	 	 	 


 Statement of total recognised gains and
  losses 

  In certain circumstances, tax charges or credits
  on currency differences on borrowings are taken to reserves via the statement
  of total recognised gains and losses. The tax charge on such currency translation
  differences amounted to $2m in 2002 (2001 $6m, 2000 $42m), and has been reported
  in the statement of total recognised gains and losses.

 Factors affecting future tax charges
  

  As a group involved in worldwide operations,
  AstraZeneca is subject to several factors that may affect future tax charges,
  principally the levels and mix of profitability in different jurisdictions,
  transfer pricing policies and tax levels imposed.








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	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements	71


 7   Taxation
  (continued) 

 Tax reconciliation to UK statutory
  rate 

  The table shown below reconciles the UK statutory
  tax charge to the Group’s current tax charge on profit on ordinary activities
  before taxation.

	 	2002

      

      $m	 	2001

      (restated)

      $m	 	2000

      (restated)

      $m	 
	
	 
	
	 
	
	 
	

	Profit on ordinary activities before taxation	4,037	 	4,077	 	3,847	 
	
	 
	
	 
	
	 
	

	Notional taxation charge at UK corporation
      tax rate	 	 	 	 	 	 
	of 30% (30% for 2001, 30% for 2000)	1,211	 	1,223	 	1,154	 
	
	 
	
	 
	
	 
	

	Differences in effective overseas tax rates	141	 	108	 	215	 
	
	 
	
	 
	
	 
	

	Capital allowances/tax reliefs in excess
      of depreciation	(291	)	(401	)	(235	)
	
	 
	
	 
	
	 
	

	Other timing differences	(40	)	(99	)	(134	)
	
	 
	
	 
	
	 
	

	Items not deductible for tax purposes	49	 	48	 	37	 
	
	 
	
	 
	
	 
	

	Items not chargeable for tax purposes	(110	)	(58	)	(54	)
	
	 
	
	 
	
	 
	

	Adjustments in respect of prior periods	(51	)	(17	)	4	 
	
	 
	
	 
	
	 
	

	Exceptional items	105	 	28	 	171	 
	
	 
	
	 
	
	 
	

	Current ordinary tax charge for the year	1,014	 	832	 	1,158	 
	
	 
	
	 
	
	 
	

	 


	Balance sheet	2002	 	2001	 	2000	 
	 	$m	 	$m	 	$m	 
	
	 
	
	 
	
	 
	

	Deferred taxation (liability)/asset
      movement	  	 	  	 	  	 
	At beginning of year	(212	)	96	 	369	 
	
	 
	
	 
	
	 
	

	Prior year adjustment (page 62)	 –	 	 –	 	(33	)
	
	 
	
	 
	
	 
	

	 	(212	)	96	 	336	 
	
	 
	
	 
	
	 
	

	Profit and loss account	(163	)	(328	)	(399	)
	
	 
	
	 
	
	 
	

	Statement of total recognised gains and
      losses	155	 	(19	)	83	 
	
	 
	
	 
	
	 
	

	Exchange	(139	)	39	 	76	 
	
	 
	
	 
	
	 
	

	At end of year	(359	)	(212	)	96	 
	
	 
	
	 
	
	 
	

	Debtors – amount due within one year
      (Note 15)	625	 	550	 	541	 
	
	 
	
	 
	
	 
	

	Debtors – amount due after more than
      one year (Note 15)	226	 	146	 	189	 
	
	 
	
	 
	
	 
	

	Provisions (Note 21)	(1,210	)	(908	)	(634	)
	
	 
	
	 
	
	 
	

	 	(359	)	(212	)	96	 
	
	 
	
	 
	
	 
	




 





 
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	72	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements


 Notes to the Financial Statements
  continued 





7 Taxation
  (continued) 

 Deferred taxation 

  The amounts of deferred taxation accounted for
  in the Group balance sheet comprised the following deferred tax liabilities
  and assets: 

	 	2002	 	2001	 
	 	 	 	(restated)	 
	 	$m	 	$m	 
	
	
	
	
	

	Deferred tax liabilities	 	 	 	 
	UK fixed assets	429	 	332	 
	
	
	
	
	

	Non-UK fixed assets	570	 	455	 
	
	
	
	
	

	Interest accruals	13	 	72	 
	
	
	
	
	

	Untaxed reserves	86	 	11	 
	
	
	
	
	

	Pension and post-retirement benefits	46	 	–	 
	
	
	
	
	

	Other	53	 	150	 
	
	
	
	
	

	 	1,197	 	1,020	 
	
	
	
	
	

	Deferred tax assets	 	 	 	 
	Intercompany inventory transfers	496	 	413	 
	
	
	
	
	

	Merger, integration and restructuring charges	16	 	121	 
	
	
	
	
	

	Accrued expenses	243	 	161	 
	
	
	
	
	

	Pension and post-retirement benefits	26	 	91	 
	
	
	
	
	

	Other	57	 	22	 
	
	
	
	
	

	 	838	 	808	 
	
	
	
	
	

	Deferred tax liability	(359	)	(212	)

	
	
	
	
	



 No provision has been made, in accordance with
  FRS19, for rolled over gains amounting to $126m (2001 $75m, 2000 $79m).






 
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      AstraZeneca Annual Report and Form 20-F
        2002

        www.astrazeneca.com
	Financial Statements	73


 

	8
      Dividends	 	 	 	 	 	 	 	 	 	 	 	 
	 	2002	 	2001	 	2000	 	2002	 	2001	 	2000	 
	 	Per Share	 	Per Share	 	Per Share	 	$m	 	$m	 	$m	 
	 
	 
	
	 
	
	 
	
	
	
	
	
	
	

	Interim, paid on 7 October
      2002	$0.23	 	$0.23	 	$0.23	 	398	 	405	 	406	 
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	Second interim, to be confirmed
      as final, payable 7 April 2003	$0.47	 	$0.47	 	$0.47	 	808	 	820	 	830	 
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	 	$0.70	 	$0.70	 	$0.70	 	1,206	 	1,225	 	1,236	 
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	Dividend in specie –
      demerger of Zeneca Agrochemicals	 	 	 	 	 	 	–	 	–	 	1,669	 
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	



 The demerger of Zeneca Agrochemicals in 2000
  was recorded in the Group accounts at the book value of the net assets which
  were deconsolidated, $2,059m (net of minority interest), together with $813m
  of related goodwill which had previously been written off to reserves, less
  debt and liabilities assumed by Zeneca Agrochemicals, $1,203m, giving a dividend
  in specie of $1,669m. 

	9 Earnings
      per $0.25 Ordinary Share	 	 	 	 	 	 
	 	2002	 	2001	 	2000	 
	 	 	 	(restated)	 	(restated)	 
	 	$m	 	$m	 	$m	 
	 
	 
	
	 
	
	 
	

	Net profit for the financial
      year before exceptional items ($m)	3,186	 	3,044	 	2,858	 
	 
	 
	
	 
	
	 
	

	Exceptional items after tax
      ($m) (see Note 5)	(350	)	(138	)	(581	)
	 
	 
	
	 
	
	 
	

	Net profit for the financial
      year ($m)	2,836	 	2,906	 	2,277	 
	 
	 
	
	 
	
	 
	

	Earnings per Ordinary Share
      before exceptional items ($)	$1.84	 	$1.73	 	$1.62	 
	 
	 
	
	 
	
	 
	

	Loss per Ordinary Share on
      exceptional items ($)	($0.20	)	($0.08	)	($0.32	)
	 
	 
	
	 
	
	 
	

	Earnings per Ordinary Share
      ($)	$1.64	 	$1.65	 	$1.30	 
	 
	 
	
	 
	
	 
	

	Diluted earnings per Ordinary
      Share before exceptional items ($)	$1.84	 	$1.73	 	$1.62	 
	 
	 
	
	 
	
	 
	

	Diluted loss per Ordinary
      Share on exceptional items ($)	($0.20	)	($0.08	)	($0.32	)
	 
	 
	
	 
	
	 
	

	Diluted earnings per Ordinary
      Share ($)	$1.64	 	$1.65	 	$1.30	 
	 
	 
	
	 
	
	 
	

	 	 	 	 	 	 	 
	Weighted average number of
      Ordinary Shares in issue for basic earnings (millions)	1,733	 	1,758	 	1,768	 
	 
	 
	
	 
	
	 
	

	Dilutive impact of share options
      outstanding (millions)	2	 	3	 	2	 
	 
	 
	
	 
	
	 
	

	Diluted average number of
      Ordinary Shares in issue (millions)	1,735	 	1,761	 	1,770	 
	 
	 
	
	 
	
	 
	



 There are no options, warrants or rights outstanding
  in respect of unissued shares except for employee share option schemes.


 The number of options outstanding and the weighted
  average exercise price of these options is shown in Note 33. The earnings figures
  used in the calculations above are unchanged for diluted earnings per Ordinary
  Share. Earnings per Ordinary Share before exceptional items have been calculated
  to eliminate the impact of exceptional items on the results of the business.






 
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	74	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements


 Notes to the Financial Statements
  continued 

10 Segment
  information 

	Classes of Business	 	 	 	 	 	 
	 	 	 	 	 	Turnover	 
	 	
	
	
	
	
	

	 	2002	 	2001	 	2000	 
	 	 	 	(reclassified)	 	(reclassified)	 
	 	$m	 	$m	 	$m	 
	
	
	
	
	
	
	

	Continuing operations	17,841	 	16,222	 	15,583	 
	
	
	
	
	
	
	

	Discontinued operations – Agrochemicals	–	 	–	 	2,299	 
	
	
	
	
	
	
	

	Group turnover	17,841	 	16,222	 	17,882	 
	
	
	
	
	
	
	

	Share of joint venture turnover	191	 	183	 	195	 
	
	
	
	
	
	
	

	Group turnover and share of joint venture
      turnover	18,032	 	16,405	 	18,077	 
	
	
	
	
	
	
	



	 
	The Group’ s policy is
      to transfer products internally at external market prices.
	  	  	  	Operating
      profit after exceptionals	  	  	  	Profit/(loss)
      before interest and taxation	  
	 	
      
	
	
	 	
	
	
	 
	 	2002	 	2001	 	2000	 	2002	 	2001	 	2000	 
	 	$m	 	$m	 	$m	 	$m	 	$m	 	$m	 
	
	
	
	
	
	
	
	
	
	
	
	
	

	Profit arising in	 	 	 	 	 	 	 	 	 	 	 	 
	Continuing operations	4,006	 	3,954	 	3,662	 	4,007	 	3,972	 	3,665	 
	
	
	
	
	
	
	
	
	
	
	
	
	

	Discontinued operations – Agrochemicals	–	 	–	 	346	 	–	 	–	 	196	 
	
	
	
	
	
	
	
	
	
	
	
	
	

	 	4,006	 	3,954	 	4,008	 	4,007	 	3,972	 	3,861	 
	
	
	
	
	
	
	
	
	
	
	
	
	

	Share of operating loss of joint ventures
      and associates	 	 	 	 	 	 	–	 	–	 	(149	)
	
	
	
	
	
	
	
	
	
	
	
	
	

	 	 	 	 	 	 	 	4,007	 	3,972	 	3,712	 
	
	
	
	
	
	
	
	
	
	
	
	
	



 In prior years, corporate overheads have been
  allocated to each business segment on a consistent basis. The effect of these
  allocations was not material. 

	 	 	 	Net
      assets/(liabilities)	 	 	 	 	 	Total assets	 
	 	 
	
      
	
	 	 
	 
	 
	
      
	

	

	 	2002	 	2001	 	2000	 	2002	 	2001	 	2000	 
	 	 	 	(restated)	 	(restated)	 	 	 	(restated)	 	(restated)	 
	 	$m	 	$m	 	$m	 	$m	 	$m	 	$m	 
	 
	
	
	
	
	
	
	
	
	
	
	
	

	Continuing operations	9,868	 	8,808	 	7,604	 	16,212	 	14,158	 	13,658	 
	 
	
	
	
	
	
	
	
	
	
	
	
	

	Discontinued operations –
      Specialties	–	 	–	 	(126	)	–	 	–	 	3	 
	 
	
	
	
	
	
	
	
	
	
	
	
	

	 	9,868	 	8,808	 	7,478	 	16,212	 	14,158	 	13,661	 
	 
	
	
	
	
	
	
	
	
	
	
	
	

	Intra-Group eliminations	–	 	–	 	–	 	–	 	–	 	(12	)
	 
	
	
	
	
	
	
	
	
	
	
	
	

	Non-operating assets*	1,358	 	821	 	1,938	 	5,364	 	4,338	 	5,208	 
	 
	
	
	
	
	
	
	
	
	
	
	
	

	Investments in joint ventures
      and associates	–	 	–	 	–	 	–	 	–	 	–	 
	 
	
	
	
	
	
	
	
	
	
	
	
	

	 	11,226	 	9,629	 	9,416	 	21,576	 	18,496	 	18,857	 
	 
	
	
	
	
	
	
	
	
	
	
	
	

	*  Non-operating
      assets include short term investments and cash, short term borrowings, loans,
      and non-operating debtors and creditors not attributable to individual business
      segments.
	 


	 	 	 	Capital expenditure	**	 	 	Depreciation,
      amortisation and impairment	 
	 	
	

	

	 	
	
	
	 
	 	2002	 	2001	 	2000	 	2002	 	2001	 	2000	 
	 	$m	 	$m	 	$m	 	$m	 	$m	 	$m	 
	
	
	
	
	
	
	
	
	
	
	
	
	

	Continuing operations	1,463	 	1,501	 	1,248	 	960	 	872	 	890	 
	
	
	
	
	
	
	
	
	
	
	
	
	

	Discontinued operations – Agrochemicals	–	 	–	 	153	 	–	 	–	 	121	 
	
	
	
	
	
	
	
	
	
	
	
	
	

	 	1,463	 	1,501	 	1,401	 	960	 	872	 	1,011	 
	 
	
	
	
	
	
	
	
	
	
	
	
	

	**  Capital expenditure
      includes expenditure on goodwill and intangible assets.









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	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	
        75

      







10 Segment information (continued)
 Geographic areas 

  The tables below show information by geographic
  area and, for turnover and tangible fixed assets, material countries. The figures
  for each area show the turnover, operating profit and profit on ordinary activities
  before interest and taxation made by companies located in that area/country,
  together with net operating assets and tangible fixed assets owned by the same
  companies; export sales and the related profit are included in the areas from
  which those sales were made.

	 	
Turnover
	 
	 	

	 
	   	2002
      $m
	 	2001
      (reclassified)
      $m
	 	2000
      (reclassified)
      $m
	 
	
	
	
	
	
	
	 
	UK	 	 	 	 	 	 
	External	872	 	954	 	989	 
	
	
	
	
	
	
	 
	Intra-Group	3,092	 	2,449	 	2,155	 
	
	
	
	
	
	
	 
	 	3,964	 	3,403	 	3,144	 
	
	
	
	
	
	
	 
	Continental Europe	 	 	 	 	 	 
	France	1,111	 	928	 	861	 
	
	
	
	
	
	
	 
	Germany	682	 	666	 	767	 
	
	
	
	
	
	
	 
	Italy	676	 	576	 	532	 
	
	
	
	
	
	
	 
	Netherlands	226	 	307	 	297	 
	
	
	
	
	
	
	 
	Spain	461	 	352	 	402	 
	
	
	
	
	
	
	 
	Sweden	619	 	559	 	601	 
	
	
	
	
	
	
	 
	Others	1,253	 	1,091	 	891	 
	
	
	
	
	
	
	 
	Intra-Group	1,646	 	1,494	 	1,371	 
	
	
	
	
	
	
	 
	 	6,674	 	5,973	 	5,722	 
	
	
	
	
	
	
	 
	The Americas	 	 	 	 	 	 
	Canada	570	 	525	 	479	 
	
	
	
	
	
	
	 
	United States	9,325	 	8,465	 	7,935	 
	
	
	
	
	
	
	 
	North America	9,895	 	8,990	 	8,414	 
	
	
	
	
	
	
	 
	Brazil	97	 	102	 	133	 
	
	
	
	
	
	
	 
	Others	237	 	213	 	185	 
	
	
	
	
	
	
	 
	Intra-Group	235	 	223	 	183	 
	
	
	
	
	
	
	 
	 	10,464	 	9,528	 	8,915	 
	
	
	
	
	
	
	 
	Asia, Africa & Australasia	 	 	 	 	 	 
	Japan	960	 	830	 	813	 
	
	
	
	
	
	
	 
	Others	752	 	654	 	698	 
	
	
	
	
	
	
	 
	Intra-Group	30	 	160	 	177	 
	
	
	
	
	
	
	 
	 	1,742	 	1,644	 	1,688	 
	
	
	
	
	
	
	 
	Continuing operations	22,844	 	20,548	 	19,469	 
	
	
	
	
	
	
	 
	Discontinued operations – Agrochemicals	–	 	–	 	3,396	 
	
	
	
	
	
	
	 
	 	22,844	 	20,548	 	22,865	 
	
	
	
	
	
	
	 
	Intra-Group eliminations	(5,003	)	(4,326	)	(4,983	)
	
	
	
	
	
	
	 
	 	17,841	 	16,222	 	17,882	 
	
	
	
	
	
	
	 


 Export sales from the UK totalled $3,368m for
  the year ended 31 December 2002 (2001 $2,664m, 2000 $3,429m).





 
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	76	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	
         

      





Notes to the Financial Statements
continued 



	
	
	
	
	
	
	
	
	
	
	
	
	 
	10 Segment information (continued)	 	 	 	 	 	 	 	 	 	 	 	 
	 	
Operating profit

      after exceptional
        items
	  	
Profit on ordinary activities

      before interest and
        taxation
	  
	 	

	 	
        

      
	 
	 	 2002
      $m
	  	 2001
      $m
	  	 2000
      $m
	  	 2002
      $m
	  	 2001
      $m
	  	 2000
      $m
	  
	Profit from
	
	
	
	
	
	
	
	
	
	
	
	
	 
	UK	672	 	520	 	666	 	673	 	523	 	661	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Continental Europe	1,689	 	1,400	 	1,084	 	1,689	 	1,405	 	943	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	The Americas	1,473	 	1,904	 	1,740	 	1,473	 	1,914	 	1,740	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Asia, Africa & Australasia	172	 	130	 	172	 	172	 	130	 	172	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Continuing operations	4,006	 	3,954	 	3,662	 	4,007	 	3,972	 	3,516	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Discontinued operations – Agrochemicals	–	 	–	 	346	 	–	 	–	 	196	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	4,006	 	3,954	 	4,008	 	4,007	 	3,972	 	3,712	 
	
	
	
	
	
	
	
	
	
	
	
	
	 


 

	 	 	 	Net
        operating assets
	 
	 	
	 
	 	2002	 	2001	 	2000	 
	 	$m	 	$m	 	$m
	 
	
	
	
	
	
	
	 
	UK	3,101	 	2,558	 	2,037	 
	
	
	
	
	
	
	 
	Continental Europe	4,805	 	4,940	 	4,649	 
	
	
	
	
	
	
	 
	The Americas	1,004	 	614	 	184	 
	
	
	
	
	
	
	 
	Asia, Africa & Australasia	958	 	696	 	734	 
	
	
	
	
	
	
	 
	Continuing operations	9,868	 	8,808	 	7,604	 
	
	
	
	
	
	
	 
	Discontinued operations – Specialties	–	 	–	 	(126	)
	
	
	
	
	
	
	 
	 	9,868	 	8,808	 	7,478	 
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 
	 	 	 	Tangible
        fixed assets
	 
	 	
	 
	 	2002	 	2001	 	2000	 
	 	$m	 	$m	 	$m
	 
	
	
	
	
	
	
	 
	UK	2,319
	 	1,881	 	1,631	 
	
	
	
	
	
	
	 
	Sweden	1,626
	 	1,251	 	1,327	 
	
	
	
	
	
	
	 
	US	1,031
	 	895	 	818	 
	
	
	
	
	
	
	 
	Others	1,621
	 	1,382	 	1,181	 
	
	
	
	
	
	
	 
	Continuing operations	6,597
	 	5,409	 	4,957	 
	
	
	
	
	
	
	 
	 	6,597
	 	5,409	 	4,957	 
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 
	Employees	2002	 	2001	 	2000	 
	
	
	
	
	
	
	 
	Average number of people employed by the
      Group in UK	10,700	 	10,200	 	10,000	 
	
	
	
	
	
	
	 
	Continental Europe	22,600	 	19,900	 	20,400	 
	
	
	
	
	
	
	 
	The Americas	17,800	 	16,700	 	14,200	 
	
	
	
	
	
	
	 
	Asia, Africa & Australasia	6,400	 	5,800	 	5,500	 
	
	
	
	
	
	
	 
	Continuing operations	57,500	 	52,600	 	50,100	 
	
	
	
	
	
	
	 
	Discontinued operations – Agrochemicals	–	 	–	 	6,900	 
	
	
	
	
	
	
	 
	 	57,500	 	52,600	 	57,000	 
	
	
	
	
	
	
	 


 The number of people employed by the Group
  at the end of 2002 was 58,700 (2001 54,600, 2000 52,300).





 
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	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	
        77

      





	10 Segment information (continued)	 	 	 	 	 	 
	  	 2002

        

        
	  	 2001

      (reclassified)
	  	 2000

      (reclassified)
	 
	 	$m
	 	$m
	 	$m
	 
	
	
	
	
	
	
	 
	Geographic markets	 	 	 	 	 	 
	Turnover in each geographic market in which
      customers located	 	 	 	 	 	 
	
	
	
	
	
	
	 
	UK	623	 	759	 	787	 
	
	
	
	
	
	
	 
	Continental Europe	5,072	 	4,477	 	4,359	 
	
	
	
	
	
	
	 
	The Americas	10,287	 	9,353	 	8,799	 
	
	
	
	
	
	
	 
	Asia, Africa & Australasia	1,859	 	1,633	 	1,638	 
	
	
	
	
	
	
	 
	Continuing operations	17,841	 	16,222	 	15,583	 
	
	
	
	
	
	
	 
	Discontinued operations – Agrochemicals	–	 	–	 	2,299	 
	
	
	
	
	
	
	 
	 	17,841	 	16,222	 	17,882	 
	
	
	
	
	
	
	 











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	78	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements


 Notes to the Financial Statements
  continued

	 
	
	
	
	
	
	
	
	

	11   Tangible fixed assets	 	 	 	 	 	 	 	 
	 	Land and

      buildings

      $m	 	Plant and

      equipment

      $m	 	Capital

      expenditure

      and assets in

      course of construction

      $m	 	Total

      tangible

      assets

      $m	 
	 
	
	
	
	
	
	
	
	

	Cost	 	 	 	 	 	 	 	 
	At beginning of year	2,490	 	5,295	 	1,119	 	8,904	 
	 
	
	
	
	
	
	
	
	

	Exchange adjustments	292	 	612	 	139	 	1,043	 
	 
	
	
	
	
	
	
	
	

	Capital expenditure	48	 	212	 	1,082	 	1,342	 
	 
	
	
	
	
	
	
	
	

	Transfer of assets into use	387	 	631	 	(1,018	)	 –	 
	 
	
	
	
	
	
	
	
	

	Disposals and other movements	(72	)	(150	)	(24	)	(246	)
	 
	
	
	
	
	
	
	
	

	At end of year	3,145	 	6,600	 	1,298	 	11,043	 
	 
	
	
	
	
	
	
	
	

	Depreciation	  	 	  	 	  	 	  	 
	At beginning of year	753	 	2,742	 	 –	 	3,495	 
	 
	
	
	
	
	
	
	
	

	Exchange adjustments	 87	 	354	 	 –	 	441	 
	 
	
	
	
	
	
	
	
	

	Charge for year	104	 	601	 	 –	 	705	 
	 
	
	
	
	
	
	
	
	

	Disposals and other movements	(49	)	(146	)	 –	 	(195	)
	 
	
	
	
	
	
	
	
	

	At end of year	895	 	3,551	 	 –	 	4,446	 
	 
	
	
	
	
	
	
	
	

	Net book value at 31 December 2002	2,250	 	3,049	 	1,298	 	6,597	 
	 
	
	
	
	
	
	
	
	

	Net book value at 31 December 2001	1,737	 	2,553	 	1,119	 	5,409	 
	 
	
	
	
	
	
	
	
	




Capital expenditure in the year of $1,342m (2001 $1,393m) did not include any capitalised finance leases (2001 $nil). Cash expenditure on tangible fixed assets was $1,340m (2001 $1,385m, 2000 $1,347m).

	 	2002

      $m	2001

      $m	 
	
	
	
	
	 
	

	The net book value of land and buildings
      comprised

      Freeholds	 	2,220	 	1,690	 
	
	
	
	
	 
	

	Long leases (over 50 years unexpired)	 	29	 	45	 
	
	
	
	
	 
	

	Short leases	 	1	 	2	 
	
	
	
	
	 
	

	 	 	2,250	 	1,737	 
	
	
	
	
	
	




 







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	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements	79


 

	
	
	
	 
	
	
	

	12   Goodwill and intangible
      assets	 	 	 	 	 	 
	 	Goodwill

      $m	 	Intangible

      assets

      $m	 	Total

      $m	 
	
	
	
	 
	
	
	

	Cost	 	 	 	 	 	 
	At beginning of year	1,000	 	2,727	 	3,727	 
	
	
	
	 
	
	
	

	Exchange adjustments	85	 	311	 	396	 
	
	
	
	 
	
	
	

	Additions	17	 	104	 	121	 
	
	
	
	 
	
	
	

	Disposals and other movements	–	 	(25	)	(25	)
	
	
	
	 
	
	
	

	At end of year	1,102	 	3,117	 	4,219	 
	
	
	
	 
	
	
	

	Amortisation	 	 	 	 	 	 
	At beginning of year	166	 	861	 	1,027	 
	
	
	
	 
	
	
	

	Exchange adjustments	28	 	128	 	156	 
	
	
	
	 
	
	
	

	Charge for year	55	 	200	 	255	 
	
	
	
	 
	
	
	

	Disposals and other movements	–	 	(26	)	(26	)
	
	
	
	 
	
	
	

	At end of year	249	 	1,163	 	1,412	 
	
	
	
	 
	
	
	

	Net book value at 31 December 2002	853	 	1,954	 	2,807	 
	
	
	
	 
	
	
	

	Net book value at 31 December 2001	834	 	1,866	 	2,700	 
	
	
	
	 
	
	
	

	 


	13   Fixed asset investments	 	 	 	 	 	 
	 	Joint

      ventures

      $ m	 	Other

      investments

      $ m	 	Total

      $ m	 
	
	
	
	
	
	
	

	Cost	 	 	 	 	 	 
	At beginning of year	134	 	23	 	157	 
	
	
	
	
	
	
	

	Additions	–	 	25	 	25	 
	
	
	
	
	
	
	

	Disposals and other movements, including
      exchange	–	 	(2	)	(2	)
	
	
	
	
	
	
	

	At end of year	134	 	46	 	180	 
	
	
	
	
	
	
	

	Share of post-acquisition reserves	 	 	 	 	 	 
	At beginning and end of year	(134	)	–	 	(134	)
	
	
	
	
	
	
	

	Net book value at 31 December 2002	–	 	46	 	46	 
	
	
	
	
	
	
	

	Net book value at 31 December 2001	–	 	23	 	23	 
	
	
	
	
	
	
	



 The fair values of other investments are not
  materially different from their carrying values. At 31 December 2002, the Company’s
  share ownership trust held 885,425 Ordinary Shares.

	Share of joint venture assets and liabilities	 	 	 	 
	 	2002

      $m	 	2001

      $m	 
	
	
	
	
	

	Gross assets	107	 	99	 
	
	
	
	
	

	Gross liabilities	(107	)	(99	)
	
	
	
	
	

	 	–	 	–	 
	
	
	
	
	




 







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      80

    	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements


 Notes to the Financial Statements
  continued

	
	
	
	
	

	14   Stocks	 	 	 	 
	 	2002

      $m	 	2001

      $m	 
	
	
	
	
	

	Raw materials and consumables	992	 	796	 
	
	
	
	
	

	Stocks in process	1,062	 	720	 
	
	
	
	
	

	Finished goods and goods for resale	539	 	886	 
	
	
	
	
	

	 	2,593	 	2,402	 
	
	
	
	
	



	 
	15   Debtors	 	 	 	 
	 	2002

      

      $m	 	2001

      (restated)

      $m	 
	
	 
	
	 
	

	Amounts due within one year	  	 	  	 
	Trade debtors	2,701	 	2,430	 
	
	 
	
	 
	

	Less: Amounts provided for doubtful debts	(56	)	(42	)
	
	 
	
	 
	

	 	2,645	 	2,388	 
	
	 
	
	 
	

	Deferred taxation (Note 7)	625	 	550	 
	
	 
	
	 
	

	Other debtors	658	 	641	 
	
	 
	
	 
	

	Prepayments and accrued income*	519	 	274	 
	
	 
	
	 
	

	 	4,447	 	3,853	 
	
	 
	
	 
	

	Amounts due after more than one year	  	 	  	 
	Deferred taxation (Note 7)	226	 	146	 
	
	 
	
	 
	

	Other debtors	 16	 	 23	 
	
	 
	
	 
	

	Prepayments and accrued income*	156	 	117	 
	
	 
	
	 
	

	 	398	 	286	 
	
	 
	
	 
	

	 	4,845	 	4,139	 
	
	
	
	
	

	*    Figures include prepaid pension costs
      (Note 32).	 	 	 	 


	 
	Provisions for doubtful
      debts
	 		2002

      $m		2001

      $m	 	2000

      $m	 
	
	
	
	
	
	
	
	

	Balance at beginning of year	 	42	 	39	 	118	 
	
	
	
	
	
	
	
	

	Profit and loss account charge	 	11	 	4	 	34	 
	
	
	
	
	
	
	
	

	Amounts utilised and other movements (incl.
      Agrochemicals demerger in 2000)	 	3	 	(1	)	(113	)
	
	
	
	
	
	
	
	

	Balance at end of year	 	56	 	42	 	39	 
	
	
	
	
	
	
	
	

	 



 








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	 	AstraZeneca Annual Report and Form 20-F 2002

   www.astrazeneca.com	Financial Statements	81





	
 
	16   Short
      term investments	 	 	 	 
	2002

      $m	 	2001

      $m	 
	
 
	Listed debt securities	144	 	288	 
	 
 
	Other listed investments	46	 	45	 
	 
 
	Investment securities	190	 	333	 
	 
 
	Fixed deposits	3,772	 	2,785	 
	 
 
	 	 	3,962	 	3,118	 
	
 


 The Group’s insurance subsidiaries hold
  cash and short term investments totalling $173m (2001 $186m), of which $120m
  (2001 $105m) is required to meet insurance solvency requirements and which,
  as a result, is not readily available for the general purposes of the Group.
  In addition, some $126m (2001 $236m) of short term investments shown above are
  committed as security against deferred payments due under a contractual obligation
  of the Group (see Note 34). The market value of other listed investments was
  $137m (2001 $145m) at the year end.

	17   Short
      term borrowings	 	 	 	 
	 	 	2002

      $m	 	2001

      $m	 
	
 
	Bank borrowings	 	 	 	 
	Fixed securities	11	 	22	 
	 
 
	Secured by floating
      charge	–	 	8	 
	 
 
	Unsecured	191	 	183	 
	 
 
	 	202	 	213	 
	 
 
	Other
      borrowings (unsecured)	–	 	1	 


  	
 
	 	202	 	214	 
	
 






 
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	82	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Financial Statements	 


	 	 	 

 
 Notes to the Financial Statements
  continued

	
 
	18   Other creditors	 	 	 	 
	 	2002

      $m	 	2001

      $m	 
	
 
	Amounts due within
      one year

      Trade creditors	 	 
	3,171	 	2,385	 
	
 
	Corporate taxation	1,191	 	1,018	 
	
 
	Value added and payroll taxes and social
      security	167	 	173	 
	
 
	Other creditors	1,507	 	1,219	 
	
 
	Accruals	855	 	544	 
	
 
	Dividends to shareholders	808	 	820	 
	
 
	 	7,699	 	6,159	 
	
 
	Amounts due after more than
      one year

      Other creditors	34	 	152
	
 


 Included in other creditors are amounts totalling
     $189m (2001 $104m) to meet insurance obligations of the Group’s insurance
      subsidiaries. Also included in other creditors are amounts due within one
     year
  in connection with the Group’s exceptional charges as detailed in Note
   5. The amounts comprise $350m (2001 $nil) in respect of the accrual related

  to theZoladex investigation
   in the US, $36m (2001 $116m) in respect of synergy and integration costs,
  $14m
  (2001 $21m) in respect of the Agrochemicals demerger and $48m (2001 $64m) in
   respect of the Specialties disposal and other minor restructurings.

	19   Loans	 	 	 	 	 	 
	 	Repayment

      Dates	 	2002

      $m	 	2001

      $m	 
	
 
	Secured loans

      Secured by fixed charge	2003/2007	 	19	 	48	 
	
 
	Total secured	 	 	19	 	48	 
	
 
	Unsecured loans

      US dollars

      6.3% Guaranteed notes	2003	 	284	 	284	 
	
 
	7% Guaranteed debentures	2023	 	295	 	295	 
	
 
	Others	2003/2013	 	44	 	115	 
	
 
	Total unsecured	 	 	623	 	694	 
	
 
	Total loans	 	 	642	 	742	 
	
 
	Less: current instalments of loans	 	 	(314	)	(107	)
	
 
	Loans due after more than one year	 	 	328	 	635	 
	
 


 In the above table loans are shown after taking
  account of associated cross-currency swaps (see Note 20).

 Loans from banks included in the table above
  amounted to $61m (2001 $156m) of which $40m (2001 $48m) was secured.





 
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	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Financial Statements	83


	 	 	 

	 
	
 



20   Financial
  instruments 

 A discussion of the Group’s objective,
  policy and strategy in respect of risk management and the use of financial instruments
  is included in the Financial Review on pages 30 to 43. The following disclosures
  exclude all short term trade related debtors and creditors.

 Interest rate risks of financial
  assets and liabilities 

  The interest rate profile, after taking account of interest
  and currency swaps, of the financial assets and liabilities of the Group as
  at 31 December 2002 was:

	 	Floating

      rate

      $m	Fixed

      rate

      $m	Financial

      assets/liabilities

      on which

      no interest is

      paid/received

      $m	Total

            $m
	 	Weighted

      average

      fixed

      interest

      rate

      %	 	Weighted

      average

      period for

      which rate

      is fixed

      Years
	 
 
	Financial liabilities

      US dollar	782	 	8	126	916	 	12.8	 	9.6
	 	 
	 
 
	Sterling	 	–	 	–	 	–	 	–	 	–	 	–
	 
 
	Euro	 	–	 	–	 	–	 	–	 	–	 	–
	 
 
	Other	35	19	 	–	 	54	 	6.3	 	2.2
	 

	 	817	27	126	970	 	–	 	–
	 
 
	Financial assets	 	 	 	 	 	 	 	 	 	 	 	 
	US dollar	4,354	 	–	 	–	4,354	 	–	 	–
	 
 
	Euro	71	 	–	 	–	 	71	 	–	 	–
	 
 
	Sterling	114	 	–	46	160	 	–	 	–
	 
 
	SEK	33	 	–	 	–	 	33	 	–	 	–
	 
 
	Other	70	 	–	22	 	92	 	–	 	–
	 
 
	 	4,642	 	–	68	4,710	 	–	 	–
	 
 


 Financial liabilities on which no interest
  is paid comprise deferred payments due relating to the reacquisition of certain
  marketing rights.

 The floating rate financial liabilities comprise
  largely of fixed rate debt that has been swapped into floating rate debt. One
  long dated $300m USD bond reverts back to a fixed rate in 2009. The financial
  liabilities also include $202m of short term bank borrowings and overdrafts,
  bearing interest at rates fixed by reference to local interbank rates.

 Financial assets on which no interest is received
  comprise equity investments held by the Group.

 The financial assets principally comprise cash
  on overnight deposit and short term investments with an average maturity of
  67 days. These include deposits where the interest rate is fixed until maturity
  but, as the original maturity is less than one year, they are classified as
  floating rate financial instruments. The benchmark rates for financial assets
  are the LIBID rate for euro and US dollar liquidity balances and the average
  Federal Funds effective rate for US dollar overnight balances. Financial assets
  include $46m of other fixed asset investments on which no interest is received.








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	84	AstraZeneca
        Annual Report and Form 20-F 2002

    www.astrazeneca.com
	Financial
        Statements



 Notes to the Financial Statements
  continued

  

	
	
	
	
	

	20   Financial
      instruments (continued) 	 	 	 	 


Currency exposures 

  100% of the Group’s
  transactional currency exposures on working capital balances, which typically
  extend for up to three months, are hedged using forward foreign exchange contracts.
  As a result, as at 31 December 2002, there were no material monetary assets
  or liabilities in currencies other than the functional currencies of the Group
  companies concerned, having taken into account the effect of forward exchange
  currency contracts that have been utilised to match foreign currency exposures.
  


Additionally, approximately 50% of forecast future foreign currency transaction exposures extending for 12 months are selectively hedged. The principal currency exposures (sterling, Swedish kronor, euro, Australian
dollars, Canadian dollars and yen) are hedged using a mixture of purchased currency options and forward foreign exchange contracts. As at 31 December 2002 the Group held forward and option contracts to hedge the following forecast foreign currency
transaction exposures:


	 	2002

     Hedged

     amount

   $m
	 	2001

        Hedged

        amount

        $m
	 
	
	
	
	
	 
	Sterling payables	1,316	 	1,324	 
	
	
	
	
	 
	SEK payables	503	 	401	 
	
	
	
	
	 
	Euro receivables	713	 	591	 
	
	
	
	
	 
	Yen receivables	153	 	89	 
	
	
	
	
	 
	AUD receivables	81	 	73	 
	
	
	
	
	 
	CAD receivables	168	 	128	 
	
	
	
	
	 
	 



Maturity of financial liabilities


The maturity
profile of the Group’s financial
liabilities, other than short term creditors such as trade creditors and accruals,
at 31 December 2002 was as follows: 

	 	 	 	 	 	2002
	 	 	 	 	 	2001
	 
	 	

	 	

	 
	Analysis by year of repayment	Loans

        $m
	
	Other

        $m
	
	Total

        $m
	
	Loans

        $m
	
	Other

        $m
	
	Total

        $m
	 
	

	
	
	
	
	
	
	
	
	
	
	
	 
	After five years	308	 	–
	
	308
	
	314
	
	–
	
	314
	 
	

	

	

    	

	
	

	
	

	
	

	
	

	 
	From five to four years	13	 	–
	
	13
	
	14
	
	–
	
	14
	 
	

	

	

    	

	
	

	
	

	
	

	
	    
	 
	From four to three years	–	 	–
	
	–
	
	9
	
	–
	
	9
	 
	

	

	

    	

	
	

	
	

	
	

	
	    
	 
	From three to two years	–	 	–
	
	–
	
	7
	
	–
	
	7
	 
	
	
	      

    	
	
	
	
	
	
	
	
	
	 
	From two to one years	7	 	–
	
	7
	
	291
	
	120
	
	411
	 
	

	

	

    	

	
	

	
	

	
	

	
	

	 
	Due after more than one year	328	 	–
	 	328	 	635	 	120	 	755	 
	

	

	

    	

	
	

	
	

	
	

	
	

	 
	Due within one year	314	 	328	 	642	 	      107	 	356	 	463	 
	

	

	

    	

	
	

	
	

	
	

	
	

	 
	 	642	 	328	 	970	 	742	 	476	 	1,218	 
	
	

	

    	

	
	

	
	

	
	

	
	

	 


 


Other financial liabilities comprise deferred payments to re-acquire certain distribution rights, short term borrowings and finance leases.



Borrowing facilities


The Group has various borrowing facilities available to it, the majority of which offer a currency option of US dollars, euros or sterling. Unused short term credit facilities (both committed and uncommitted) totalled
approximately $0.5bn at 31 December 2002. Included in this were undrawn committed facilities in respect of which all conditions precedent had been met at that date as follows:


	 	2002

        $m
	 	2001

        $m
	 
	
	
	
	
	 
	Expiring in one year or less	75
	 	375	 
	
	

	
	
	 
	Expiring in more than one year but not more than two years	–
	 	–
	 
	
	

	
	

	 
	Expiring in more than two years	–
	 	–
	 
	
	

	
	

	 
	 	75
	 	375	 
	
	
	
	
	 



 







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	 	AstraZeneca Annual Report and Form 20-F 2002

   www.astrazeneca.com	Financial Statements	85

   


  

	
	
	
	
	

	20   Financial
      instruments (continued) 	 	 	 	 



Fair values of financial assets and financial liabilities


Set out below is a comparison by category of carrying values and fair values of all the Group’s
financial assets and financial
liabilities as at
31 December 2002 and 2001.


	 	2002

      Carrying

   value

   $m

    	 	2002

      Fair

   value

   $m

    	 	2001

        Carrying

        value

        $m
	 	2001

        Fair

        value

        $m
	 
	
	
	
	
	
	
	
	
	 
	Primary financial instruments	 	 	 	 	 	 	 	 
	Short term borrowings	(202	)	(202	)	(214	)	(214	)
	
	
	
	
	
	
	
	
	 
	Loans	(657	)	(733	)	(759	)	(805	)
	
	
	
	
	
	
	
	
	 
	Cash	726	 	726	 	705	 	705	 
	
	
	
	
	
	
	
	
	 
	Short term investments	3,962	 	4,067	 	3,118	 	3,192	 
	
	
	
	
	
	
	
	
	 
	Fixed asset investments    	46
	
	46
	
	23
	
	23
	 
	
	

	
     

   
	

	
     

   
	
	
     

   
	
	 
	Derivative financial instruments held to manage	
	
	
	
	
	
	
	 
	the interest rate and currency profile	
	
	
	
	
	
	
	 
	Cross-currency swaps and interest rate swaps	15
	
	82
	
	17
	
	70
	 
	
	

	
     

   
	

	
     

   
	
	
     

   
	
	 
	Derivative financial instruments held or issued	
	
	
	
	
	
	
	 
	to hedge the currency exposure on existing transactions	
	
	
	
	
	
	
	 
	Forward foreign exchange contracts	(9
	)
	(9
	)
	11
	
	9
	 
	
	

	
     

   
	

	
     

   
	
	
     

   
	

	 
	Foreign currency option contracts	–
	
	–
	
	1
	
	–
	 
	
	

	
	

	
	

	
	

	 
	Derivative financial instruments held or issued to hedge	 	 	 	 	 	 	 	 
	the currency exposure on expected future transactions	
	
	
	
	
	
	
	

	Forward foreign exchange contracts	–
	
	–
	
	–
	
	1
	

	
	

	
	

	
	

	
	

	

	Foreign currency option contracts	56
	
	97
	
	82
	
	81
	

	
	

	
	

	
	
	
	
	

	 



In addition to the primary financial instruments above, the Group has financial liabilities of $126m comprising deferred payments due ($129m before discounting). The Group has a standby letter of credit covering these
financial liabilities which is collateralised by high grade government securities.


The methods and assumptions used to estimate the fair values of financial instruments are as follows:

	a.  	Short term investments –
      the fair value of listed investments is based on year end quoted market
      prices. For unlisted investments carrying values approximate fair value.
	 	 
	b.  	Fixed asset investments (excluding
      equity investments in joint ventures and associates) – the fair value
      of listed investments is based on year end quoted market prices. For unlisted
      investments carrying values approximate fair value.
	 	 
	c.  	Loans – the fair value
      of publicly traded debt is based on year end quoted market prices; the fair
      value of floating rate debt is nominal value, as market to market differences
      would be minimal given frequency of resets; the fair value of remaining
      debt is estimated using appropriate zero coupon valuation techniques based
      on rates current at year end.
	 	 
	d.  	Forward foreign exchange contracts
      – the Group has forward foreign exchange contracts to sell currency
      for the purpose of hedging non-dollar commercial transaction exposures which
      existed at the date of the balance sheet and to hedge anticipated, but not
      firmly committed, non-dollar commercial transactions for 2003. The majority
      of the contracts for existing transactions had a maturity of six months
      or less from year end. The fair value of forward foreign exchange contracts
      is based on market forward foreign exchange rates at year end.
	 	 
	e.  	Foreign currency option contracts
      – the Group has foreign currency option contracts to hedge anticipated,
      but not firmly committed, non-dollar commercial transactions for 2003. The
      fair value of option contracts is estimated using Black-Scholes valuation
      techniques as adapted by Garman and Kohlhagen.
	 	 
	f.  	Interest rate and cross-currency
      swaps – AstraZeneca uses interest rate and cross-currency swaps to
      hedge the Group’s exposure to fluctuations in interest rates and foreign
      exchange movements on borrowings in accordance with a formal risk management
      strategy. The fair value is estimated using appropriate zero coupon valuation
      techniques based on rates current at year end.



 








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	86	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	 


 Notes to the Financial Statements
  continued



20 Financial
instruments (continued) 
 The above financial instruments are subject
  to credit and market risk. AstraZeneca contains credit risk through the use
  of counterparty and product specific credit limits and by ongoing review procedures.
  All financial instruments except the letter of credit are transacted with commercial
  banks and, in line with standard market practice, are not backed with cash collateral.
  The notional principal values of off balance sheet financial instruments do
  not represent amounts exchanged by the parties and are not a measure of the
  credit risk to the Group of these instruments. The credit risk of these instruments
  is limited to the positive fair values of such contracts.

 Market risk is the sensitivity of the value
  of financial instruments to changes in related currency and interest rates.
  The Group is not exposed to material market risk because gains and losses on
  the derivative financial instruments are largely offset by gains and losses
  on the underlying assets, liabilities and transactions subject to hedge.

 Hedges 

  The Group’s policy is to hedge 100%
  of transactional currency exposures and 50% of forecast future transaction exposures
  using forward foreign exchange contracts and foreign currency option contracts.
  It also uses cross-currency and interest rate swaps to manage its borrowings’profile.

 Gains and losses on instruments used for hedging
  are not recognised until the exposure that is being hedged is itself recognised.
  Unrecognised gains and losses on instruments used for hedging are as follows:

	  	 Gains
	 	 Losses
	  	 Total
        net

      gains
	 
	 	$m
	 	m
	 	$m
	 
	
	
	
	
        

      
	
        

      
	
	 
	Unrecognised
        gains and losses on hedges at 1 January 2002
	 54
	 	 (4
	 )
	 50
	 
	
	
	
	
        

      
	
        

      
	
	 
	Gains
        and losses arising in previous years that were recognised in 2002
	31
	 	(4
	)
	27
	 
	
	
	
	
        

      
	
        

      
	
	 
	Gains
        and losses arising in previous years that were not recognised in 2002
	23
	 	–
	 	23
	 
	
	
	
	
        

      
	
        

      
	
	 
	Unrecognised gains
        and losses on hedges at 31 December 2002
	108
	 	–
	 	108
	 
	
	
	
	
        

      
	
        

      
	
	 
	Gains and losses expected
        to be recognised in 2003
	56
	 	–
	 	56
	 
	
	
	
	
        

      
	
        

      
	
	 
	Gains and losses expected
        to be recognised in 2004 or later
	52
	 	–
	 	52
	 
	
	
	
	
        

      
	
        

      
	
	 




21 Provisions for liabilities and charges

	  	 Integration

      and synergies
	  	 Employee

      benefits
	  	 Environmental

        litigation

      and other

      provisions
	  	 Deferred

      taxation

      (restated)
	  	 Total

      (restated)
	  
	  	$m
	 	$m
	 	$m
	 	$m
	 	$m
	 
	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	At 1
        January 2001 as previously reported
	 25
	  	 754
	  	 204
	  	 85
	  	 1,068
	  
	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	Prior
        year adjustment (page 62)
	–
	 	–
	 	–
	 	549
	 	549
	 
	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	 	25
	 	754
	 	204
	 	634
	 	1,617
	 
	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	Profit
        and loss account
	156
	 	103
	 	14
	 	329
	 	602
	 
	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	Net
        amounts paid or becoming current
	(148
	)
	(306
	)
	(55
	)
	–
	 	(509
	)

	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	Acquisitions
	–
	 	1
	 	–
	 	–
	 	1
	 
	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	Other
        movements, including exchange
	(18
	)
	(23
	)
	(15
	)
	(55
	)
	(111
	)

	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	At 31
        December 2001 (restated)
	15
	 	529
	 	148
	 	908
	 	1,600
	 
	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	Profit
        and loss account
	–
	 	89
	 	43
	 	305
	 	437
	 
	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	Net
        amounts paid or becoming current
	(11
	)
	(279
	)
	(31
	)
	–
	 	(321
	)

	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	Other
        movements, including exchange
	10
	 	34
	 	16
	 	(3
	)
	57
	 
	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
	At 31 December 2002
	14
	 	373
	 	176
	 	1,210
	 	1,773
	 
	
	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 
 	
        

      
	 


 Employee benefit provisions comprise pension,
  post-retirement and other employee benefit provisions. These will crystallise,
  in the main, over the estimated working lives of the employees concerned. The
  environmental provisions are principally in respect of sites in the US, further
  details of which are given in Note 34.

 No provision has been released or applied for
  any purpose other than that for which it was established.





 
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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	87




	
	
	
	
        

      
	
        

      
	
	 
	22 Reconciliation of movements in
      shareholders’ funds	 	 	 	 	 	 
	  	 2002

        

        
	  	 2001

      (restated)
	  	 2000

      (restated)
	  
	 	$m
	 	$m
	 	$m
	 
	
	
	
	
        

      
	
        

      
	
	 
	Shareholders’ funds at beginning of
      year	9,586	 	9,389	 	10,302	 
	
	
	
	
        

      
	
        

      
	
	 
	Prior year adjustment (page 62)	–	 	–	 	(39	)
	
	
	
	
        

      
	
        

      
	
	 
	 	9,586	 	9,389	 	10,263	 
	
	
	
	
        

      
	
        

      
	
	 
	Net profit for the financial year	2,836	 	2,906	 	2,277	 
	
	
	
	
        

      
	
        

      
	
	 
	Dividends	 	 	 	 	 	 
	   Cash	(1,206	)	(1,225	)	(1,236	)
	   Dividend in specie	–	 	–	 	(1,669	)
	
	
	
	
        

      
	
        

      
	
	 
	 	1,630	 	1,681	 	(628	)
	
	
	
	
        

      
	
        

      
	
	 
	Issues of AstraZeneca PLC Ordinary Shares	36	 	86	 	19	 
	
	
	
	
        

      
	
        

      
	
	 
	Re-purchase of AstraZeneca PLC Ordinary
      Shares	(1,190	)	(1,080	)	(353	)
	
	
	
	
        

      
	
        

      
	
	 
	Astra AB minority interest buyout	–	 	–	 	(8	)
	
	
	
	
        

      
	
        

      
	
	 
	Goodwill written back	–	 	–	 	862	 
	
	
	
	
        

      
	
        

      
	
	 
	Exchange adjustments on net assets	1,106	 	(502	)	(870	)
	
	
	
	
        

      
	
        

      
	
	 
	Translation differences on foreign currency
      borrowings	6	 	18	 	154	 
	
	
	
	
        

      
	
        

      
	
	 
	Tax on translation differences on foreign
      currency borrowings	(2	)	(6	)	(42	)
	
	
	
	
        

      
	
        

      
	
	 
	Other movements	–	 	–	 	(8	)
	
	
	
	
        

      
	
        

      
	
	 
	Net addition to/(reduction in) shareholders’
      funds	1,586	 	197	 	(874	)
	
	
	
	
        

      
	
        

      
	
	 
	Shareholders’ funds at end of year	11,172	 	9,586	 	9,389	 
	
	
	
	
        

      
	
        

      
	
	 



 Shareholders’ funds at the beginning of
  the year were originally $9,786m before deducting the prior year adjustment
  of $200m in respect of deferred tax under FRS 19 (2001 $9,521m before deduction
  of $132m).

	23 Reserves	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 Share

      premium

      account
	  	 Capital

      redemption

      reserve
	  	
Merger

      reserve
	  	
Other

      reserves
	  	 Joint

      ventures and

      associates
	  	 Profit

      and loss

      account

      (restated)
	  	
Total

      (restated)
	  
	 	$m
	 	$m
	 	$m
	 	$m
	 	$m
	 	$m
	 	$m
	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	At
        31 December 1999 as previously reported
	202	 	1
	 	441	 	703	 	(27	)	8,538	 	9,858	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Prior
        year adjustment (page 62)
	–	 	–
	 	–	 	 	 	–	 	(39	)	(39	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	202	 	1
	 	441	 	703	 	(27	)	8,499	 	9,819	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Loss retained
        for year
	 	 	 	 	 	 	 	 	(157	)	(471	)	(628	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Share
        premiums
	19	 	 	 	 	 	 	 	 	 	 	 	19	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Transfer
        between reserves
	14	 	 	 	 	 	 	 	 	 	(14	)	–	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Re-purchase
        of shares
	 	 	2
	 	 	 	 	 	 	 	(353	)	(351	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Astra
        AB minority interest buyout
	 	 	 	 	(8	)	 	 	 	 	 	 	(8	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Goodwill
        written back
	 	 	 	 	 	 	862	 	 	 	 	 	862	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Exchange adjustments:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	   Goodwill
	 	 	 	 	 	 	67	 	 	 	(67	)	–	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	   Net
        assets
	 	 	 	 	 	 	 	 	1	 	(871	)	(870	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	   On
        foreign currency borrowings
	 	 	 	 	 	 	 	 	 	 	154	 	154	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	   Foreign
        currency borrowings tax effect
	 	 	 	 	 	 	 	 	 	 	(42	)	(42	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 	67	 	1	 	(826	)	(758	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Other
        movements
	 	 	 	 	 	 	 	 	 	 	(10	)	(8	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Net movements
	33	 	2
	 	(8	)	931	 	(156	)	(1,674	)	(872	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	At
        31 December 2000 (restated)
	235	 	3
	 	433	 	1,634	 	(183	)	6,825	 	8,947	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 











Back to Contents

	88	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements


 Notes to the Financial Statements
  continued

	
	
	
	
	
	
	
	
	
	
	
	
	
	
	

	23   Reserves
      (continued)	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Share

      premium

      account

      $m	 	Capital

      redemption

      reserve

      $m	 	Merger

      reserve

      $m	

      	Other

      reserves

      $m	 	

      Joint

      ventures and

      associates

      $m	 	Profit

      and loss

      account

      (restated)

      $m	 	Total

      (restated)

      $m	 
	
	 
	
	 
	
	 
	
 	
	
	 
	
	 
	
	 
	

	At 31 December 2000 (restated)	235	 	 3	 	433	 	1,634	 	(183	)	6,825	 	8,947	 
	 
	 
	 
	 
	 
	 
	
	 
	
	 
	
	 
	
	 
	

	Profit retained for year	 	 	  	 	  	 	 	 	  	 	1,681	 	1,681	 
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	Share premiums	86	 	  	 	  	 	 	 	  	 	  	 	 86	 
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	Transfer between reserves	13	 	  	 	  	 	 	 	  	 	(13	)	 –	 
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	Re-purchase of shares	 	 	 6	 	  	 	 	 	  	 	(1,080	)	(1,074	)
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	Exchange adjustments:	 	 	  	 	  	 	 	 	  	 	  	 	  	 
	     Goodwill	 	 	  	 	  	 	19	 	  	 	(19	)	 –	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
 	

	      Net
      assets	  	 	  	 	  	 	 	 	  	 	(502	)	(502	)
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	      On
      foreign currency borrowings	  	 	  	 	  	 	 	 	  	 	 18	 	 18	 
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	      Foreign
      currency borrowings tax effect	  	 	  	 	  	 	 	 	  	 	 (6	)	 (6	)
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	  	  	 	  	 	  	 	19	 	  	 	(509	)	(490	)
	 
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	

	Net movements	 99	 	 6	 	 –	 	19	 	 –	 	 79	 	203	 
	 
	
      
	
	
      
	
	
      
	
	

	
	
      
	
	
      
	
	
      
	

	At 31 December 2001 (restated)	334	 	 9	 	433	 	1,653	 	(183	)	6,904	 	9,150	 
	 
	 
	
	
      
	
	

	
	

	
	
      
	
	
      
	
	
      
	

	Profit retained for year	  	 	  	 	  	 	 	 	  	 	1,630	 	1,630	 
	 
	
      
	
	
      
	
	
      
	
	

	
	
      
	
	
      
	
	
      
	

	Share premiums	 36	 	  	 	  	 	 	 	  	 	  	 	 36	 
	 
	
      
	
	
      
	
	 
	
	

	
	

	
	
      
	
	
      
	

	Transfer between reserves	 33	 	  	 	  	 	 	 	  	 	(33	)	 –	 
	 
	
      
	
	
      
	
	 
	
	

	
	
      
	
	
      
	
	
      
	

	Re-purchase of shares	  	 	 7	 	  	 	 	 	  	 	(1,190	)	(1,183	)
	 
	
      
	
	
      
	
	 
	
	

	
	
      
	
	
      
	
	
      
	

	Exchange adjustments:	  	 	  	 	  	 	 	 	  	 	  	 	  	 
	     Goodwill	  	 	  	 	  	 	(30	)	  	 	 30	 	 –	 
	
	
      
	
	
      
	
	 
	
      
	

	
	
      
	
	
      
	
	
      
	

	      Net
      assets	  	 	  	 	  	 	 	 	  	 	1,106	 	1,106	 
	 
 	
      
	
	
      
	
	 
	
	

	
	
      
	
	
      
	
	
      
	

	      On
      foreign currency borrowings	  	 	  	 	  	 	 	 	  	 	 6	 	 6	 
	 
 	
      
	
	
      
	
	 
	
	

	
	
      
	
	
      
	
	
      
	

	      Foreign
      currency borrowings tax effect	  	 	  	 	  	 	 	 	  	 	 (2	)	 (2	)
	 
 	
      
	
	
      
	
	 
	
	

	
	
      
	
	
      
	
	
      
	

	  	  	 	  	 	  	 	(30	)	  	 	1,140	 	1,110	 
	 
 	
      
	
	
      
	
	 
	
	

	
	
      
	
	
      
	
	
      
	

	Net movements	 69	 	 7	 	 –	 	(30	)	 –	 	1,547	 	1,593	 
	 
	
      
	
	
      
	
	 
	
	

	
	
      
	
	
      
	
	
      
	

	At 31 December 2002	403	 	 16	 	433	 	1,623	 	(183	)	8,451	 	10,743	 
	
	
      
	
	
      
	
	 
	
      
	

	
	
      
	
	
      
	
	
      
	





 The prior year adjustment arises as a result
  of the adoption of FRS19 ‘Deferred Tax’, as explained in more detail
  on page 62.

 The movement in other reserves in 2000 relates
  to the realisation of goodwill in respect of the demerger of Zeneca Agrochemicals
  ($813m) and the impairment of the Advanta seeds business goodwill ($49m).

 The cumulative amount of goodwill resulting
  from acquisitions, net of disposals, prior to the adoption of FRS 10 in 1998,
  amounted to $617m (2001 $587m, 2000 $606m) using year end rates of exchange.

 There are no significant statutory or contractual
  restrictions on the distribution of current profits of subsidiaries, joint ventures
  or associates; undistributed profits of prior years are, in the main, permanently
  employed in the businesses of these companies. The undistributed income of AstraZeneca
  companies overseas may be liable to overseas taxes and/or UK taxation (after
  allowing for double taxation relief) if they were to be distributed as dividends
  (see Note 7).









Back to Contents

	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements	89


	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
	 
	
	 
	
	 
	

	24   Net cash inflow
      from trading operations	 	 	 	 	 	 
	 	2002

      $m	 	2001

      $m	 	2000

      $m	 
	
	 
	
	 
	
	 
	

	Operating profit before exceptional items	4,356	 	4,156	 	4,330	 
	
	 
	
	 
	
	 
	

	Depreciation and amortisation	960	 	860	 	988	 
	
	 
	
	 
	
	 
	

	Stocks decrease/(increase)	101	 	(417	)	(670	)
	
	 
	
	 
	
	 
	

	Debtors (increase)/decrease	(198	)	138	 	(987	)
	
	 
	
	 
	
	 
	

	Creditors increase/(decrease)	402	 	(727	)	1,317	 
	
	 
	
	 
	
	 
	

	Other non-cash movements	65	 	120	 	14	 
	
	 
	
	 
	
	 
	

	 	5,686	 	4,130	 	4,992	 
	
	 
	
	 
	
	 
	



25   Cash
  flows related to exceptional items 

	Current period cash flow
      related to exceptional items and merger related
      payments, before associated tax charge/relief	2002

      $m	 	2001

      $m	 	2000

      $m	 
	 
	 
	 
	 
	 
	 
	

	Merck trigger event payment	 –	 	 –	 	(93	)
	 
	 
	 
	 
	 
	 
	

	Merger, integration and synergy
      costs	(68	)	(312	)	(532	)
	 
	 
	 
	 
	 
	 
	

	Salick Health Care rationalisation	 –	 	 –	 	(11	)
	 
	 
	 
	 
	 
	 
	

	Agrochemicals restructuring	 –	 	 –	 	(46	)
	 
	 
	 
	 
	 
	 
	

	Costs relating to the disposal
      of Specialties business	(21	)	(22	)	(62	)
	 
	 
	 
	 
	 
	 
	

	Demerger of Zeneca Agrochemicals
      and formation of Syngenta AG	 (4	)	(34	)	(65	)
	 
	 
	 
	 
	 
	 
	

	Outflow related to exceptional charges	(93	)	(368	)	(809	)
	 
	 
	 
	 
	 
	 
	

	Repayment of debt by Zeneca Agrochemicals
      (included in ‘Acquisitions and disposals’ )	 –	 	 –	 	909	 
	 
	 
	 
	 
	 
	 
	

	Proceeds from disposal of fixed assets
      accounted for as exceptional	 –	 	 10	 	 –	 
	 
	 
	 
	 
	 
	 
	

	Exceptional item cash flow	(93	)	(358	)	100	 
	 
	 
	 
	 
	 
	 
	




 








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	90	AstraZeneca
        Annual Report and Form 20-F 2002

    www.astrazeneca.com
	Financial
        Statements



 Notes to the Financial Statements
  continued

  

	
	
	
	
	
	
	 
	26   Acquisitions
      of subsidiaries and purchases of minority interests	 	 	 	 	 	 


 There were no
  significant business acquisitions in any of the years presented. All acquisitions
  have been accounted for by the acquisition method of accounting.

	 	
      2002

        Total

        fair value

     $m
	 	
      2001

        Total

        fair value

        $m
	 	
      2000

        Total

        fair value

        $m
	
       

    
	
	
     

   
	
     

   
	
     

   
	
     

   
	
     

   
	 
	Fixed assets	–
	
	4
	

	–
	 
	
	

	
     

   
	

	
     

   
	

	 
	Current assets	–
	
	26
	
	–
	 
	
	

	
     

   
	

	
     

   
	

	 
	Creditors due within one year	–
	
	(16
	)
	–
	 
	
	

	
     

   
	
	
     

   
	

	 
	Provisions for liabilities and charges	–
	
	(1
	)
	–
	 
	
	

	
     

   
	

	
     

   
	

	 
	Fair value of net assets acquired	–
	
	13
	
	–
	 
	
	

	
     

   
	

	
     

   
	

	 
	Goodwill acquired	–
	
	41
	
	32
	 
	
	

	
     

   
	

	
     

   
	

	 
	Consideration for subsidiaries and operations acquired	–
	
	54
	
	32
	 
	
	

	
     

   
	

	
     

   
	

	 
	Purchases of minority interests	–
	
	(7
	)
	135
	 
	
	

	
     

   
	

	
     

   
	
	 
	 	–
	
	47
	
	167
	 
	
	

	
     

   
	

	
     

   
	
	 
	Less:	
	
	
	
	
	 
	   Cash included in undertaking acquired	–
	
	(3
	)
	–
	 
	
	

	
     

   
	

	
     

   
	

	 
	Net cash consideration	–
	

	
44
	
	167
	 
	
	

	
	

	

	 



Assets and liabilities were adjusted to their fair values based on external valuations and internal assessments. There were no significant differences between book and fair values in respect of the acquisitions made in
any of the years presented.









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	 	AstraZeneca Annual Report and Form 20-F 2002

   www.astrazeneca.com	Financial Statements	91



  

	
	
	
	
	
	

	  
	27   Zeneca
      Agrochemicals demerger	 	 	 	 	 	 



On 13 November 2000 Zeneca Agrochemicals was demerged from the Group and merged with the agribusiness of Novartis to form Syngenta AG. The Zeneca Agrochemicals results for the period to 13 November 2000 have been
reported as discontinued in the AstraZeneca accounts for the year ended 31 December 2000. The demerger of Zeneca Agrochemicals was accounted for as a dividend in specie. The impact of the demerger on the year ended 31 December 2000 is set out
below.


	 	$m
	 
	
	

	 
	Fixed assets	1,491	 
	
	
	 
	Current assets	2,130	 
	
	
	 
	Creditors due within one year	(1,306	)
	
	
	 
	Creditors due after more than one year and provisions	(246	)
	
	
	 
	Book value of Zeneca Agrochemicals net assets disposed	2,069	 
	
	
	 
	Minority interest share of net assets	(10	)
	
	
	 
	Goodwill previously charged to reserves written back	813	 
	
	
	 
	 	2,872	 
	
	
	 
	Repayment of debt by Zeneca Agrochemicals	 	 
	   Net repayment of debt per Cash Flow Statement	(909	)
	
	
	 
	   Net financial liabilities demerged	(294	)
	
	
	 
	 	(1,203	)
	
	
	 
	Dividend in specie	1,669	 
	
	
	 



  In the year ended 31 December 2000, prior to its demerger, the Agrochemicals business contributed $173m to operating cash flows before exceptional items, and absorbed $78m in respect of exceptional items and $149m in
respect of capital expenditure.


 28   Disposals
  


There were no significant disposals in any of the years presented.


29   Reconciliation of net
  cash flow to movement in net funds

	 	2002

       $m
	 	2001

        $m
	 	2000

        $m
	 
	
	
	
	
	
	
	 
	(Decrease)/increase in cash
	(22
	)
	(396
	)
	640
	 
	
	
	

	
	

	
	 
	Cash outflow/(inflow) from decrease/(increase) in loans and	 	 	 	 	 	 
	short term borrowings	118	 	(35	)	66	 
	
	
	

   	
	

   	
	 
	Cash outflow/(inflow) from increase/(decrease)	 	 	 	 	 	 
	in short term investments	806	 	(260	)	608	 
	
	
	

   	
	

   	
	 
	Change in net funds resulting from cash flows	902	 	(691	)	1,314	 
	
	
	

   	
	

   	
	 
	Debt released on disposals	–
	 	–
	 	127	 
	
	

	

   	

	

   	
	 
	Other non-cash changes	–
	 	–
	 	48	 
	
	

	

   	

	

   	
	 
	Exchange movements	75
	 	(47	)	(53	)
	
	

	

   	
	

   	
	 
	Movement in net funds	977	 	(738	)	1,436	 
	
	
	
    
	
	

   	
	 
	Net funds at 1 January	2,867	 	3,605	 	2,169	 
	
	
	

   	
	

   	
	 
	Net funds at 31 December	3,844	 	2,867	 	3,605	 
	
	
	
	
	
	
	 
	 










Back to Contents

	92	AstraZeneca
        Annual Report and Form 20-F 2002

    www.astrazeneca.com
	Financial
        Statements



 Notes to the Financial Statements
  continued

30   Analysis of net funds

	 	At
        1 Jan

        2002

        $m
	 	Cash

        flow

        $m
	 	Other

        non-cash

        $m
	 	Exchange

        movements

        $m
	 	At
        31 Dec

        2002

        $m
	 
	
	
	
	
	
	
	
	
	
	
	 
	Loans
        due after one year
	(635
	)
	28
	
	279
	
	–
	
	(328
	)

	
	
	
        

        
	
 	
        

        
	
	
        

        
	
 	
        

        
	
	

	Current
        instalments of loans
	(107
	)
	77
	
	(279
	)
	(5
	)
	(314
	)

	
	
	
        

        
	
 	
        

        
	
	
        

        
	
 	
        

        
	
	

	Total
        loans
	(742
	)
	105
	
	–
	
	(5
	)
	(642
	)

	
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	
        

        
	
	

	Short
        term investments
	3,118
	
	806
	
	–
	
	38
	
	3,962
	

	
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	
        

        
	
	

	Cash
	705
	
	(18
	)
	–
	
	39
	
	726
	

	
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	
        

        
	
	

	Overdrafts
	(195
	)
	(4
	)
	–
	
	(3
	)
	(202
	)

	
	
	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
	

	Short
        term borrowings, excluding overdrafts
	(19
	)
	13
	
	–
	
	6
	
	–
	

	
	
	
        

        
	
 	
        

        
	
 	
        

        
	
 	
        

        
	
 	

	 	3,609
	
	797
	
	–
	
	80
	
	4,486
	

	
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	
        

        
	
	

	Net funds	2,867
	
	902
	
	–
	
	75
	
	3,844
	

	
	
	
        

        
	
	
        

        
	
 	
        

        
	
 	
        

        
	
	

	Financing items included in cash movements
      above:	
	
	
	
	
	
	
	
	
	

	   Issue of shares	
	
	(36
	)
	
	
	
	
	
	

	
	
 	
        

        
	
	
        

        
	
 	
        

        
	
 	
        

        
	
 	

	   Re-purchase of
      shares	
	
	1,190
	
	
	
	
	
	
	

	
	
 	
        

        
	
	
        

        
	
 	
        

        
	
 	
        

        
	
 	

	Net cash inflow before management of	
	
	
	
	
	
	
	
	
	

	liquid resources and financing	
	
	2,056
	
	
	
	
	
	
	

	
	
 	
        

        
	
 	
        

        
	
 	
 	
 	
        

        
	
 	

	 


31   Financing

	 	Notes
	 	2002

    $m
	 	2001

        $m
	 	2000

        $m
	 
	
	
	
	

	
	

	
	
	 
	Issues of AstraZeneca PLC Ordinary Shares	30
	 	36
	 	86
	 	19	 
	
	
	

	

	

	

	

	
	 
	Re-purchase of AstraZeneca PLC Ordinary Shares	30
	 	(1,190	)	(1,080	)	(353	)
	
	
	

	
	

	
	

	
	 
	 	
	 	(1,154	)	(994	)	(334	)
	
	
	

	
	

	
	

	
	 
	Repayment of lease finance	
	 	–
	 	–
	 	(2	)
	
	
	

	

	

	

	

	
	 
	New loans	
	 	–
	 	220	 	39	 
	
	
	

	

	

	
	

	
	 
	Loans repaid	
	 	(105	)	(192	)	(36	)
	
	
	

	
	

	
	

	
	 
	Net (decrease)/increase in short term borrowings	30
	 	(13	)	7
	 	(67	)
	
	
	

	
	

	

	

	
	 
	 	 	 	(118	)	35
	 	(64	)
	
	
	

	
	

	

	

	
	 
	Net cash outflow from financing	 	 	(1,272	)	(959	)	(400	)
	
	

	

	
	

	
	

	
	 
	 



There were no major non-cash financing transactions in any year.










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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	
        93

      



32 Post-retirement benefits 

Pensions

 Background 

  The Group continues to account for pension costs
  in its primary Financial Statements in accordance with the UK Statement of Standard
  Accounting Practice No.24 “Pension Costs” (SSAP 24). In addition,
  disclosures have been presented below in accordance with Financial Reporting
  Standard No.17 “Retirement Benefits” (FRS 17).

 The Company and most of its subsidiaries offer
  retirement plans which cover the majority of employees in the Group. Many of
  these plans are “defined contribution” where the company contribution
  and resulting profit and loss account charge is fixed at a set level or is a
  set percentage of employees’ pay. However, several plans, mainly in the
  UK, US and Sweden, are “defined benefit”, where benefits are based
  on employees’ length of service and final pensionable pay. All of the major
  plans are funded through legally separate trustee administered funds. The major
  defined benefit plans, apart from the Swedish plan, have been closed to new
  entrants since 2000. The cash funding of the plans, which may from time to time
  involve special payments, is designed, in consultation with independent qualified
  actuaries, to ensure that present and future contributions should be sufficient
  to meet future liabilities.

 SSAP 24 

  The cost of defined benefit plan pensions
  in a year can notionally be divided into the regular cost and variations from
  the regular cost. Under SSAP 24 the regular cost is based on actuarial assumptions
  and charged to the profit and loss account in the year it is paid whilst any
  variations, which arise where the experience of the scheme varies from the assumptions
  made by the actuary, are charged or credited over the estimated remaining service
  lives of the employees. Costs of defined contribution plan pensions are charged
  to the profit and loss account immediately. On these bases, the total pension
  cost for the Group under SSAP 24 for 2002 was $220m (2001 $194m, 2000 $184m).
  In the Group balance sheet at 31 December 2002, accrued pension costs included
  in other creditors amounted to $53m (2001 $76m); prepaid pension costs of $114m
  (2001 $47m) are included in debtors. Provisions for unfunded pension obligations,
  included in provisions, amounted to $235m (2001 $357m).

 With regard to the Group’s main UK defined
  benefit fund, the latest actuarial valuation was carried out at 31 March 2002
  and the pension cost assessed using the projected unit credit method. The key
  accounting assumptions for the purposes of SSAP 24 were that, against a background
  long term UK price inflation averaging 2.5% pa, investment returns would average
  6.5% pa, salary increases 4.3% pa and pension increases 2.5% pa. The market
  value of the fund’s assets at the valuation date was £2,161m ($3,477m
  equivalent), representing 94.6% of the liabilities using these assumptions.
  The regular cost for accounting purposes equates to 18.8% of pensionable salaries.
  At the same time, the valuation was carried out for ongoing funding purposes,
  with assumptions slightly more conservative than those used for SSAP 24 purposes.
  The market value of the fund’s assets at the valuation date represent 90.1%
  of the liabilities on a funding basis. The Company has indicated to the trustee
  of the UK fund its intention to target a solvency ratio of 91% following the
  2003 actuarial valuation, with a longer term aim of restoring solvency over
  a period of around 15 years. Any cash contributions made to the fund would be
  treated as a prepayment and taken into account in the actuarially assessed contributions
  to the fund charged to the profit and loss account.

 The US defined benefits programme was actuarially
  revalued at 31 December 2002 when plan obligations were estimated to amount
  to $812m and plan assets were $665m. The US typically makes contributions to
  provide for plan benefit deficits on a regular basis.

 PRI Pensionstjänst AB, a joint company
  for Swedish industry, administers the Swedish plan for salaried employees and
  Alecta establishes benefit levels and actuarial assumptions. During 2002 AstraZeneca
  AB has established separate trustee administered funds to support its pension
  liabilities; prior to 2002 the plan was unfunded.

 Post-retirement benefits other than
  pensions 

  In the US, and to a lesser extent in some
  other countries, AstraZeneca’s employment practices include the provision
  of healthcare and life insurance benefits for retired employees. Some 6,920
  retired employees and covered dependants currently benefit from these provisions
  and some 13,383 current employees will be eligible on retirement. AstraZeneca
  accrues for the present value of such retiree obligations over the working life
  of the employee.

 The cost of post-retirement benefits other
  than pensions for the Group in 2002 was $22m (2001 $16m, 2000 $25m). Provisions
  and creditors set aside for the benefit obligations at 31 December 2002 amounted
  to $32m (2001 $248m, 2000 $233m). Other than this provision there were plan
  assets amounting to $133m in the US at 31 December 2002. These benefit plans
  have been included in the disclosure of post-retirement benefits under FRS17.





 
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	94	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	
         

      



 Notes to the Financial Statements
  continued

 32 Post-retirement
  benefits (continued) 

 FRS 17 

  Full implementation of FRS 17 had originally
  been intended for accounting periods ending on or after 22 June 2003 but has
  been deferred by the Accounting Standards Board until accounting periods commencing
  on or after 1 January 2005. However, the requirements for disclosure under FRS
  17 between its issue and full implementation dates remain and this information
  is set out below. When fully adopted, the objective of FRS 17 is to reflect
  the fair value of post-retirement plan assets and liabilities and associated
  charges in the Financial Statements. FRS 17 specifies how key assumptions should
  be formulated and applied; these assumptions are often different to the funding
  bases established by the pension funds’ trustees or actuaries. The accounting
  requirements of FRS 17 are broadly as follows:

	>  	Post-retirement scheme assets
      are valued at market values at the balance sheet date;
	>  	Post-retirement scheme liabilities
      are measured using a projected unit method and discounted at the current
      rate of return on high quality corporate bonds of equivalent term and currency
      to the liability; and
	>  	The movement in the scheme
      surplus/deficit will be split between operating charges and financing items
      in the profit and loss account and, in the statement of total recognised
      gains and losses, actuarial gains and losses.


 Financial assumptions 

  Qualified independent actuaries have updated
  the actuarial valuations of the major defined benefit schemes operated by the
  Group to 31 December 2002. The assumptions used by the actuaries are the best
  estimates chosen from a range of possible actuarial assumptions which, due to
  the long term nature of the scheme, may not necessarily be borne out in practice.
  These assumptions were as follows:

	 	  	 	 2002
	 	  	 	 2001
	 
	 	 
 	 	 
 	 
	  	 UK
	 	 Rest
        of

      Group
	 	 UK
	 	 Rest
        of

      Group
	 
	
	
	
	
	
	
	
	
	 
	Inflation assumption	2.2%	 	2.1%	 	2.5%	 	2.7%	 
	
	
	
	
	
	
	
	
	 
	Rate of increase in salaries	4.0%	 	4.0%	 	4.3%	 	4.6%	 
	
	
	
	
	
	
	
	
	 
	Rate of increase in pensions in payment	2.2%	 	0.5%	 	2.5%	 	0.5%	 
	
	
	
	
	
	
	
	
	 
	Discount rate	5.6%	 	5.8%	 	5.8%	 	6.2%	 
	
	
	
	
	
	
	
	
	 
	Long term rate of return expected at 31
      December	 	 	 	 	 	 	 	 
	   Equities	8.3%	 	8.4%	 	7.6%	 	9.7%	 
	
	
	
	
	
	
	
	
	 
	   Bonds	4.9%	 	6.1%	 	5.3%	 	6.1%	 
	
	
	
	
	
	
	
	
	 
	   Others	3.7%	 	3.6%	 	4.0%	 	8.7%	 
	
	
	
	
	
	
	
	
	 








 
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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements	
        95

      







32 Post-retirement
benefits (continued) 
 Post-retirement scheme deficit 

  The post-retirement scheme deficit set out below
  under FRS 17 is as if this standard were fully applied. However, under the current
  accounting methodology (SSAP 24) there are prepayments and provisions (including
  deferred tax) within the balance sheet at 31 December 2002 that would offset
  the effect on net assets of this deficit in the event of a restatement under
  FRS 17.

 The assets and liabilities of the major defined
     benefit schemes operated by the Group at 31 December 2002 as calculated
    in accordance
  with FRS 17 are shown below. The fair values of the schemes’ assets are
   not intended to be realised in the short term and may be subject to significant

  change before they are realised. The present value of the scheme’s liabilities
   is derived from cash flow projections over long periods and are thus inherently

  uncertain. If FRS 17 had been adopted for the year ended 31 December 2002 the
   Group’s reported net assets (see page 60) would be reduced by $637m (5.7%)
    to $10,589m. Further explanation of this adjustment is included below:

	 	Value
        at 31 December 2002
	 	Value
        at 31 December 2001
	 
	 	

        

      
	 	

        

      
	 
	  	
UK
	  	 Rest
        of

      Group
	  	
Total
	  	 UK
	  	 Rest
        of

      Group
	  	 Total
	  
	  	$m
	  	$m
	  	$m
	  	$m
	  	$m
	  	$m
	  
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Scheme assets	 	 	 	 	 	 	 	 	 	 	 	 
	Equities	1,186	 	708	 	1,894	 	1,255	 	409	 	1,664	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Bonds	2,097	 	464	 	2,561	 	1,831	 	214	 	2,045	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Others	75	 	102	 	177	 	59	 	131	 	190	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Total fair value of assets	3,358	 	1,274	 	4,632	 	3,145	 	754	 	3,899	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Present value of scheme liabilities	(4,200	)	(1,665	)	(5,865	)	(3,569	)	(1,472	)	(5,041	)
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Deficit in the scheme	(842	)	(391	)	(1,233	)	(424	)	(718	)	(1,142	)
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Related deferred tax asset	253	 	151	 	404	 	127	 	248	 	375	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Net post-retirement deficit under
      FRS 17	(589	)	(240	)	(829	)	(297	)	(470	)	(767	)
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Adjustments for assets and provisions
      under SSAP 24	 	 	 	 	 	 	 	 	 	 	 	 
	Prepayment, net of related deferred tax	 	 	 	 	(177	)	 	 	 	 	(56	)
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Accrual, net of deferred tax	 	 	 	 	36	 	 	 	 	 	143	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Provision, net of deferred tax	 	 	 	 	333	 	 	 	 	 	296	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Adjusted post-retirement deficit,
      net of related deferred tax	 	 	 	 	(637	)	 	 	 	 	(384	)
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Net assets as currently disclosed
      (restated) (see page 60)	 	 	 	 	11,226	 	 	 	 	 	9,629	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Net assets as adjusted if FRS 17 were
      fully adopted	 	 	 	 	10,589	 	 	 	 	 	9,245	 
	
	
	
	
	
	
	
	
	
	
	
	
	 


 Profit and loss account disclosures
  

  On full compliance with FRS 17, on the basis
  of the above assumptions, the amounts that would have been charged to the consolidated
  profit and loss account and statement of total recognised gains and losses in
  respect of defined benefit schemes for the year ended 31 December 2002 are set
  out below:

	  	 UK
	  	 Rest
        of

      Group
	  	 Total
	  
	  	$m
	  	$m
	  	$m
	  
	
	
	
	
	
	
	 
	Operating profit	 	 	 	 	 	 
	Current service cost	(100	)	(69	)	(169	)
	
	
	
	
	
	
	 
	Past service costs	(2	)	8	 	6	 
	
	
	
	
	
	
	 
	Settlement and curtailment	–	 	24	 	24	 
	
	
	
	
	
	
	 
	Total operating charge	(102	)	(37	)	(139	)
	
	
	
	
	
	
	 
	Finance expense	 	 	 	 	 	 
	Expected return on post-retirement scheme
      assets	197	 	52	 	249	 
	
	
	
	
	
	
	 
	Interest on post-retirement scheme liabilities	(210	)	(98	)	(308	)
	
	
	
	
	
	
	 
	Net return	(13	)	(46	)	(59	)
	
	
	
	
	
	
	 
	Loss before taxation	(115	)	(83	)	(198	)
	
	
	
	
	
	
	 
	Consolidated statement of total recognised
      gains and losses	 	 	 	 	 	 
	Actual return less expected return on the
      post-retirement schemes’ assets	(301	)	(91	)	(392	)
	
	
	
	
	
	
	 
	Experience (losses)/gains arising on the
      post-retirement schemes’ liabilities	(108	)	8	 	(100	)
	
	
	
	
	
	
	 
	Changes in assumptions underlying the present
      value of the post-retirement schemes’ liabilities	58	 	(27	)	31	 
	
	
	
	
	
	
	 
	Actuarial loss recognised	(351	)	(110	)	(461	)
	
	
	
	
	
	
	 











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	96	AstraZeneca Annual Report and
      Form 20-F 2002

    www.astrazeneca.com	Financial Statements	 



Notes to the Financial Statements continued



32 Post-retirement benefits (continued)

Additional disclosures for the year ended 31 December 2002

	   	UK

      $m	 	Rest of

      Group

      $m	 	Total

      $m	 
	

	Difference between the expected and
      actual return on scheme assets:	 	 	 	 	 	 
	Amount	(301	)	(91	)	(392	)
	

	Percentage of scheme assets	9.0	%	7.1	%	8.5	%
	

	Experience gains and losses on scheme
      liabilities:	  	 	  	 	  	 
	Amount	(108	)	 8	 	(100	)
	

	Percentage of the present value of scheme
    liabilities	2.6	%	0.5	%	1.7	%
	


	Total amount recognised in statement
      of total recognised gains and losses:	  	 	  	 	  	 
	Amount	(351	)	(110	)	(461	)
	

	Percentage of the present value of scheme
      liabilities	8.4	%	6.6	%	7.9	%
	



 Movement in post-retirement deficit during
  the year ended 31 December 2002


	 	UK

    $m	 	Rest of

      Group

$m	 	Total

$m	 
	
	
	
	
	
	
	

	Deficits in schemes at beginning of the
      year	(424	)	(718	)	(1,142	)
	
	
	
	
	
	
	

	Current service cost	(100	)	(69	)	(169	)
	
	
	
	
	
	
	

	Contributions	125	 	567	 	692	 
	
	
	
	
	
	
	

	Past service costs	(2	)	8	 	 6	 
	
	
	
	
	
	
	

	Settlement and curtailment	 –	 	24	 	 24	 
	
	
	
	
	
	
	

	Other finance income	(13	)	(46	)	(59	)
	
	
	
	
	
	
	

	Actuarial loss	(351	)	(110	)	(461	)
	
	
	
	
	
	
	

	Exchange	(77	)	(47	)	(124	)
	
	
	
	
	
	
	

	Deficits in schemes at end of the year	(842	)	(391	)	(1,233	)
	
	
	
	
	
	
	

	Adjusted post-retirement deficit, net of
      deferred tax	   	 	  	 	(637	)
	
	
	
	
	
	
	



 The increase in the deficit during 2002 is
  due principally to shortfalls on returns of post-retirement scheme assets and
  exchange, offset by funding of Sweden’s pension scheme and the US’s
  non-pension post-retirement schemes for the first time
  in 2002.

Reserves note for the year ended 31 December
2002
	  	Total

       $m	 
	

	Profit and loss reserve excluding post-retirement
      (liability)	8,451	 
	

	Post-retirement reserve  	(637	)
	

	Profit and loss reserve under FRS17	7,814	 
	











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	 	AstraZeneca Annual Report and
      Form 20-F 2002

    www.astrazeneca.com	Financial Statements	97


	 

33   Employee costs and share option plans for employees

 Employee costs

The average number of people employed by the
  Group in 2002 was 57,500 (2001 52,600, 2000 57,000) and the costs incurred during
  the year in respect of these employees were:

	 	2002

      $m	 	2001

      $m	 	2000

      $m	 
	
	
	
	
	
	
	 
	Salaries	3,049	 	2,701	 	2,862	 
	
	
	
	
	
	
	 
	Social security costs	505	 	465	 	464	 
	
	
	
	
	
	
	 
	Pension costs	193	 	194	 	184	 
	
	
	
	
	
	
	 
	Other employment costs	246	 	182	 	170	 
	
	
	
	
	
	
	 
	 	3,993	 	3,542	 	3,680	 
	
	
	
	
	
	
	 


 Employee costs above do not include severance
  costs.

 The Directors believe that, together with the
  basic salary system, the Group’s employee incentive schemes provide competitive
  and market-related packages to motivate employees. They should also align the
  interests of employees with those of shareholders, as a whole, through long
  term share ownership in the Company. The Group’s current UK, Swedish and
  US schemes are described below; other arrangements apply elsewhere.

 The AstraZeneca UK Performance Bonus
      Plan 

Employees of participating AstraZeneca UK companies
  are invited to participate in this bonus plan which rewards good performance
  at corporate, function/business and individual/team levels. Depending upon performance
  and upon which level it is measured, bonuses may be paid partly in the form
  of free Ordinary Shares in the Company (under the Inland Revenue approved AstraZeneca
  All-Employee Share Plan and up to a maximum annual value of £3,000) and
  partly in cash. A tax efficient share retention scheme, under which employees
  leave their bonus shares in trust for three to five years, forms part of the
  All-Employee Share Plan. In 2002, for the first time the Company offered UK
  employees the opportunity to buy Partnership Shares (Ordinary Shares) under
  the All-Employee Share Plan. Employees may invest up to £125 per month
  over a 12 month accumulation period and purchase Partnership Shares in the Company
  with the total proceeds at the end of the period. The purchase price for the
  shares is the lower of the price at the beginning or the end of the 12 month
  period. A tax efficient share retention scheme is also available in respect
  of Partnership Shares. At the Company’s AGM in 2002, shareholders approved
the issue of new shares for the purposes of the All-Employee Share Plan.

 The AstraZeneca Executive Annual Bonus
      Scheme 

This scheme is a performance bonus scheme for
  Directors and senior employees who do not participate in the AstraZeneca UK
  Performance Bonus Plan. Annual bonuses are paid in cash and reflect both corporate
  and individual performance measures. The Remuneration Committee has discretion
  to reduce or withhold bonuses if business performance falls sufficiently short
of expectations in any year such as to make the payment of bonuses inappropriate.

 The AstraZeneca Savings-Related Share
      Option Scheme 

UK employees may make regular monthly savings
  contributions over a three or five year period and may apply for options to
acquire AstraZeneca shares. Further details are set out below.

The AstraZeneca Share Option Plan

   This is a share option plan for employees
  of participating AstraZeneca Group companies which was approved by shareholders
  at the Company’s AGM in 2000. The first grant of options occurred in August
  2000. The main grant of options in 2002 under the plan was in March, with a
  further, smaller grant in August. The Remuneration Committee sets the policy
  for the Company’s operation of the plan. Further details are set out below.

 Sweden 

In Sweden an all employee performance bonus
  plan is in operation. The plan rewards good performance at corporate, function
  and individual/team level. Bonuses for corporate and function performance are
  always paid in the form of AstraZeneca Ordinary Shares. Bonuses for individual/team
  performance may be paid in Ordinary Shares or in cash, at the employee’s
  discretion. Existing Ordinary Shares are used to pay bonuses awarded under the
  plan. These are purchased in the market. They must be left in trust for three
  years. The AstraZeneca Executive Annual Bonus Scheme and the AstraZeneca Share
Option Plan both operate in respect of relevant AstraZeneca employees in Sweden.

 US 

In the US, there are four senior staff incentive
  schemes, under which either AstraZeneca ADSs or stock appreciation rights related
  to AstraZeneca ADSs are awarded to participants. There are currently approximately
  146 participants in these schemes. AstraZeneca ADSs necessary to satisfy the
  awards under these schemes are purchased in the market and no subscriptions
  for new Ordinary Shares have been involved. The AstraZeneca Share Option Plan
operates in respect of relevant AstraZeneca employees in the US.









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	98	AstraZeneca Annual Report and
      Form 20-F 2002

    www.astrazeneca.com	Financial Statements	 



  Notes to the Financial Statements continued

 33 Employee
  costs and share option plans for employees (continued) 

 Share Option Plans 

At 31 December 2002, there were options outstanding
  under the Zeneca 1993 Senior Staff Share Option Scheme, the Zeneca 1994 Executive
  Share Option Scheme, the Astra Shareholder Value Incentive Plan, the AstraZeneca
Savings-Related Share Option Scheme and the AstraZeneca Share Option Plan.

 (1) Summary of the Zeneca 1993 Senior
      Staff Share Option Scheme 

 The Zeneca 1993 Senior Staff Share Option Scheme
  was introduced at the time of the demerger of Zeneca from ICI in 1993. The last
  date for the grant of options was 19 May 1994 and the scheme was replaced by
  the Zeneca 1994 Executive Share Option Scheme.

 (2) Summary of the Zeneca 1994 Executive
  Share Option Scheme 

The Zeneca 1994 Executive Share Option Scheme
  was introduced in 1994. The last date for the grant of options was 16 March
  2000 and the scheme has been replaced by the AstraZeneca Share Option Plan.

 Options granted under the 1994 scheme will
  normally be exercisable between three and 10 years following grant, provided
  the relevant performance condition has been satisfied. Options may be satisfied
  by the issue of new shares or by existing shares purchased in the market.

 Options will not normally be exercisable unless
  a performance condition set by the Remuneration Committee has been satisfied.
  The performance condition is that earnings per share must grow by at least the
  increase in the UK Retail Price Index over three years plus 3% per annum. Satisfaction
  of this condition is tested annually by reference to the audited financial statements.
  Once the condition is satisfied in respect of any rolling three year period
  beginning no earlier than the end of the financial year prior to the grant of
  the option, then it need not be satisfied again in respect of that option. The
  Remuneration Committee reviews the performance conditions at intervals to ensure
  that they continue to be appropriate.

 (3) Summary of the Astra Shareholder Value
  Incentive Plan 

In 1996, Astra established a stock option plan
  for some 100 Astra employees in key senior positions. The plan is no longer
  used for the grant of options and has been superseded by the AstraZeneca Share
  Option Plan.

 On completion of the merger with Zeneca, options
  in Astra shares granted under the plan were replaced by options to acquire a
  number of AstraZeneca shares based on the exchange ratio used in the exchange
  offers used to effect the AstraZeneca merger. The ratio of AstraZeneca options
  granted in respect of former Astra options was 0.5045 AstraZeneca options for
  each Astra option held and the table shown on page 100 has been restated throughout
  accordingly.

 (4) Summary of the AstraZeneca Savings-Related
  Share Option Scheme 

 Eligibility 

UK resident employees of participating AstraZeneca
companies are automatically eligible to participate.

 Grant of options 

Invitations to apply for options may be issued
  within six weeks after the announcement by the Company of its results for any
  period and at other times in circumstances considered to be exceptional by the
  Directors. No invitations may be issued later than 10 years after the approval
of the scheme by shareholders.

 Options may only be granted to employees who
  enter into UK Inland Revenue approved savings contracts with the savings body
  nominated by the Company, under which monthly savings of a fixed amount (currently
  not less than £5 nor more than £250) are made over a period of three
  or five years. The number of shares over which an option is granted will be
  such that the total amount payable on its exercise will be the proceeds on maturity
  of the related savings contract. No payment will be required for the grant of
  an option. Options are not transferable.

 Individual participation

Monthly savings by an employee under all savings
  contracts linked to options granted under any SAYE scheme may not exceed £250
or such lower amounts as may be determined by the Directors.








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	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements 	99



 33 Employee
  costs and share option plans for employees (continued) 

 Acquisition price

  The price per Ordinary Share payable
  upon the exercise of an option will not normally be less than the higher of:

	(a)  	90% of the arithmetical average
      of the middle-market quotations for an Ordinary Share on the London Stock
      Exchange on three consecutive dealing days shortly before the date on which
      invitations to apply for options are issued (provided that no such day may
      fall before the Company last announced its results for any period) or such
      other dealing day or days falling within the six week period for the issue
      of invitations as the Directors may decide; and
	 	 
	(b)  	the nominal value of an Ordinary
      Share (unless the option is expressed to relate only to existing shares).


 Exercise of options

  An option will normally be exercisable
  only for six months commencing on the third or fifth anniversary of the commencement
  of the related savings contract. Options may be satisfied by the issue of new
  shares or by existing shares purchased in the market.

 Options normally lapse on cessation of employment.
  Exercise is, however, permitted for a limited period (irrespective of the period
  during which the option has been held) following cessation of employment in
  certain compassionate circumstances or where an option has been held for more
  than three years (except on dismissal for misconduct) and on an amalgamation,
  take-over or winding-up of the Company.

 AstraZeneca has chosen to avail itself of the
  exemption to application of UITF17 (revised) to its SAYE scheme.

 (5) Summary of the AstraZeneca Share Option
  Plan 

 Eligibility

  Any AstraZeneca employee may be recommended
  from time to time for the grant of an option. The Remuneration Committee sets
  the policy for the Company’s operation of the plan including as regards
  which employees will be eligible to participate.

 Grant of options

  Options may be granted at any time
  other than during a close period. No options may be granted after the fifth
  anniversary of the approval of the plan by shareholders until the Remuneration
  Committee has reviewed the plan.

 The grant of options is supervised by the Remuneration
  Committee which is comprised wholly of Non-Executive Directors. No payment is
  required for the grant of an option. Options are not transferable.

 Options may be granted over Ordinary Shares
  in AstraZeneca PLC or over the Company’s ADSs.

 Acquisition price 

  The price per Ordinary Share payable upon
  the exercise of an option will not be less than an amount equal to the average
  of the middle-market closing price on the date of grant for an Ordinary Share
  of the Company on the London Stock Exchange on the three consecutive dealing
  days immediately before the date of grant (or as otherwise agreed with the Inland
  Revenue). Where the option is an option to subscribe, the price payable upon
  exercise cannot be less than the nominal value of an Ordinary Share of the Company.

 Exercise of options

  An option will normally be exercisable
  between three and 10 years following its grant provided any relevant performance
  condition has been satisfied. Options may be satisfied by the issue of new shares
  or by existing shares purchased in the market.

 The Remuneration Committee sets the policy
  for the Company’s operation of the plan including as regards whether any
  performance target(s) will apply to the grant and/or exercise of each eligible
  employee’s option.

 Options normally lapse on cessation of employment.
  Exercise is, however, permitted for a limited period following cessation of
  employment either for reasons of injury or disability, redundancy or retirement,
  or at the discretion of the Remuneration Committee, and on an amalgamation,
  take-over or winding-up of the Company.









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	100	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements	 


 Notes to the Financial Statements
  continued






33 Employee
    costs and share option plans for employees (continued) 

	 	AstraZeneca
        Share Option Plan
	 	1994
        Scheme
	 	SAYE
        Scheme
	 	 	 	ASVIP
	 
	  	 Options
	  	 WAEP*
	  	 Options
	  	 WAEP*
	  	 Options
	  	 WAEP*
	  	 Shares

      under

      option
	  	 WAEP*
	  
	 	‘000
	 	pence
	 	‘000
	 	pence
	 	‘000
	 	pence
	 	‘000
	 	SEK
	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	At 1 January 2000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Options outstanding	
      Nil
	 	
      Nil
	 	3,001	 	1934	 	4,388	 	1708	 	1,249	 	361	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Movements during 2000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Options granted	712
	 	3093
	 	8,885	 	2714	 	723	 	2806	 	Nil
	 	–	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Options exercised	Nil
	 	Nil
	 	(800	)	1525	 	(1,078	)	1117	 	(159	)	303	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Options forfeited	Nil
	 	Nil
	 	(99	)	2675	 	(207	
)	1843	 	Nil	 	–	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Options lapsed	Nil
	 	Nil
	 	Nil
	 	–	 	Nil
	 	–
	 	Nil
	 	–
	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Weighted average fair value of options
      granted during the year	 	 	809	 	 	 	712	 	 	 	396	 	 	 	 	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	At 31 December 2000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Options outstanding	712	 	3093	 	10,987	 	2588	 	3,826	 	2074	 	1,090	 	370	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Movements during 2001	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Options granted	10,984	 	3245	 	–	 	–	 	649	 	2971	 	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Options exercised	(1	)	3093	 	(592	)	1687	 	(1,125	)	1583	 	(117	)	328	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Options forfeited	(296	)	3231	 	(457	)	2709	 	(551	)	2181	 	(8	)	306	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Options lapsed	–	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Weighted average fair value
      of options granted during the year	 	 	653	 	 	 	 	 	 	 	495	 	 	 	 	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	At 31 December 2001	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Options outstanding	11,399	 	3236	 	9,938	 	2636	 	2,799	 	2459	 	965	 	375	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Movements during 2002	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Options granted	10,658	 	3462	 	–	 	–	 	2,721	 	1756	 	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Options exercised	(22	)	3214	 	(243	)	2175	 	(469	)	1888	 	(206	)	317	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Options forfeited	(637	)	3298	 	(406	)	2654	 	(986	)	2735	 	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Options lapsed	–	 	–	 	–	 	–	 	–	 	–	 	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Weighted average fair value of options
      granted during the year	 	 	1186	 	 	 	 	 	 	 	559	 	 	 	 	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	At 31 December 2002	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Options outstanding	21,398	 	3347	 	9,289	 	2647	 	4,065	 	1987	 	759	 	391	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Range of exercise prices	 	 	1913p to
      3487p	 	 	 	826p to
      2749p	 	 	 	1756p to
2971p	 	 	 	298SEK to
442SEK	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Weighted average remaining
      contractual life	 	 	3,183
        days
	 	 	 	2,542 days
	 	 	 	1,439 days
	 	 	 	746 days
	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 
	Options exercisable	351	 	3303	 	1786	 	2367	 	130	 	2070	 	759	 	391	 
	
	
	
	
	
	
	
	
	
	
	

	
	
	
	
	
	 


	*	Weighted
        Average Exercise Price



In addition to the schemes disclosed above at
  31 December 2002 there were 5,000 options outstanding issued under the Zeneca
  1993 Senior Staff Share Option Scheme with a weighted average exercise price
  of 717p.








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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Financial Statements
      	101





	34 Assets pledged, commitments and
      contingent liabilities	 	 	 	 	 	 
	 	2002
	 	2001
	 	2000
	 
	$m
	$m
	$m

	
	
	
	
	
	
	 
	Assets pledged	 	 	 	 	 	 
	Mortgages and other assets pledged	90	 	118	 	51	 
	
	
	
	
	
	
	 
	Commitments	 	 	 	 	 	 
	Contracts placed for future capital expenditure
      not provided for in these accounts	500	 	515	 	604	 
	
	
	
	
	
	
	 


 Included in the above total are contracts related
  to certain product purchase and licence agreements with deferred consideration
  obligations, the amounts of which are variable depending upon particular ‘milestone’
  achievements. Sales of the products to which these ‘milestones’ relate
  could give rise to additional payments, contingent upon the sales levels achieved.
  Guarantees and contingencies arising in the ordinary course of business, for
  which no security has been given, are not expected to result in any material
  financial loss.

 Commitments

  AstraZeneca is required to pay approximately
  $800m over at least a five-year period which commenced in 1999, under the terms
  of an agreement with Schering-Plough. With effect from 1 January 1999, in connection
  with this agreement, AstraZeneca obtained a stand-by letter of credit in the
  amount of $608m. This letter of credit is collateralised by high-grade government
  securities which are not available to AstraZeneca to the extent of the outstanding
  balance of the letter of credit. The amount outstanding under the letter of
  credit is automatically reduced with each payment made by AstraZeneca to Schering-Plough.
  Under the terms of this agreement AstraZeneca reacquired the rights to market
  omeprazole under theLosectrade
  mark and felodipine under the Prevex and Perfudal trade marks
  in Italy and Spain. The total discounted liability and associated asset were
  recognised in 1999. Payments under this agreement in 2002 totalled approximately
  $146m. The final payment will be made in 2003.

 In 1998, Astra and Merck & Co., Inc restructured
  their joint venture (the “restructuring”) which had been established
  some years earlier for the purpose of selling and marketing certain Astra products
  in the US.

 Under the terms of the 1998 restructuring,
  the merger between Astra and Zeneca in 1999 triggered two one-time payments
  from AstraZeneca to Merck:

	>  	a Lump Sum Payment of $809m,
      which was charged to profit and loss account, as a result of which Merck
      relinquished any rights to Zeneca products; and
	 	 
	>  	an Advance Payment of $967m.
      This Advance Payment was calculated as the then net present value of $2.8bn
      discounted from 2008 to the date of payment at a rate of 13% per annum and
      led Merck to relinquish any rights to future Astra products with no existing
      or pending US patents at the time of the merger.


 AstraZeneca makes ongoing payments to Merck
  based on sales of certain AstraZeneca products in the US (the “contingent
  payments” on the “agreement products”) as well as certain other
  partnership distributions, the latter of which are not material to the Group.
  As a result of the 1999 merger, these contingent payments (excluding those in
  respect of Prilosec and Nexium)
  are subject to defined minimum amounts ranging from $125m to $225m between 2002
  and 2007. Payments under these arrangements have exceeded the minimum level
  in 2002.

 The terms of the 1998 restructuring also provide
  for the following events:

	>  	Partial Redemption
	>  	First Option
	>  	Second Option


 Partial Redemption

  In 2008, there will be a partial redemption
  of Merck’s limited partnership interest – which will end Merck’s
  rights to contingent payments in respect of certain of the agreement products
  – by distribution to Merck of an amount calculated as a multiple of the
  previous three years’ contingent payments on the relevant products, plus
  $750m.

 First Option

  In 2008 a calculation will be made
  of the Appraised Value, being the net present value of the future contingent
  payments in respect of all other agreement products not covered by the Partial
  Redemption other than Prilosec and Nexium. Payment of this amount
  to Merck in 2008 is, however, contingent on Merck’s exercise of the First
  Option. Exercise of the First Option will require AstraZeneca to re-purchase
  Merck’s interest in these products. Should Merck not exercise this option
  in 2008, AstraZeneca may exercise it in 2010 for a sum equal to the 2008 Appraised
  Value. If neither Merck nor AstraZeneca exercise the option, the contingent
  payment arrangements in respect of these agreement products will continue and
  the Appraised Value will not be paid.









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	102	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements	 


 Notes to the Financial Statements
  continued

 34   Assets
  pledged, commitments and contingent liabilities (continued) 

  In addition, in 2008 there will be a true up
  of the Advance Payment. The calculation of this will be based on a multiple
  of the previous three years’ contingent payments in respect of all the
  agreement products with the exception of
  Prilosec and Nexium, plus other defined
  amounts, which are then reduced by the Appraised Value (whether paid or not),
  the Partial Redemption and the Advance Payment. This could result in a further
payment by AstraZeneca to Merck or a payment by Merck to AstraZeneca.

 The precise amount of settlements with Merck
  under the Partial Redemption and the First Option cannot be determined at this
  time, as some of the payments are based on calculations based on sales between
  2005 and 2007, and another is contingent upon Merck exercising the First Option.
  However, if Merck does exercise this option, the combined effect will involve
  a minimum amount payable to Merck in 2008 of approximately $4.7bn. If AstraZeneca
  exercises this option in 2010, the combined effect will involve a minimum aggregate
  payable to Merck in 2008 and 2010 of approximately $4.7bn.

 Finally, in 2008 Merck will repay to AstraZeneca
  a loan in the amount of $1.4bn made at the time of the restructuring.

 Second Option
  

  A Second Option exists whereby AstraZeneca has
  the option to re-purchase Merck’s interests in Prilosec and Nexium in
  the US. This option is exercisable by AstraZeneca two years after the exercise
  of the First Option in either 2008 or 2010. Exercise of the Second Option by
  AstraZeneca at a later date is also provided for in 2017 or if combined annual
  sales of the two products fall below a minimum amount provided, in each case
  only so long as the First Option has been exercised. The exercise price for
  the Second Option is the fair value of these product rights as determined at
  the time of exercise. If the Second Option is exercised, Merck will have no
further rights to contingent payments from AstraZeneca.

 Environmental costs and
      liabilities 

  The Group’s expenditure on environmental
  protection, including both capital and revenue items, relates to costs which
  are necessary for meeting current good practice standards and regulatory requirements
for processes and products.

 They are an integral part of normal ongoing
  expenditure for maintaining the Group’s manufacturing capacity and product
  ranges and are not separated from overall operating and development costs. There
  are no known changes in environmental, regulatory or other requirements resulting
  in material changes to the levels of expenditure for 2000, 2001 or 2002.

 In addition to expenditure for meeting current
  and foreseen environmental protection requirements, the Group incurs substantial
  costs in investigating and cleaning up land and groundwater contamination. In
  particular, AstraZeneca has environmental liabilities at some currently or formerly
  owned, leased and third party sites in the US and Europe. AstraZeneca, or its
  indemnitees, have been named under US legislation (the Comprehensive Environmental
  Response, Compensation and Liability Act of 1980, as amended) as potentially
  responsible parties (PRP) in respect of 32 sites (although AstraZeneca expects
  to be indemnified against liabilities associated with nine of these sites by
  the seller or owner of the businesses associated with such sites) and, where
  appropriate, actively participates in or monitors the clean-up activities at
  sites in respect of which it is a PRP. Stauffer Management Company, a subsidiary
  of AstraZeneca established in 1987 to own and manage certain assets of Stauffer
  Chemical Company which was acquired that year, has identified 28 sites (including
  18 for which an AstraZeneca indemnitee has been named a PRP) for which it may
  have responsibility that will, in aggregate, require significant expenditure
  on clean-up and monitoring.

 Liabilities are generally more likely to crystallise
  where a contaminated site is to be sold, its use changed or where a regulatory
  authority imposes a particular remedial measure. Costs of these liabilities
  may be offset by amounts recovered from third parties, such as previous owners
  of the sites in question or through insurance.

 The future level of investigation and clean
  up costs will depend on a number of factors, including the nature and extent
  of any contamination that may ultimately be found to exist, the need for and
  type of any remedial work to be undertaken and the standards required by applicable
  current and future environmental laws and regulations and the number and financial
  viability of other PRPs. The relative importance of these factors varies significantly
  from site to site. Many sites are at different stages in the regulatory process
  or at different stages in the process of evaluating environmental damage or
  alternative remediation methods. It is therefore difficult to form meaningful
  ranges of estimates for such costs.

 AstraZeneca had provisions at 31 December 2002
  in respect of such costs in accordance with the accounting policies on page
  64. Although there can be no assurance, management believes that, taking account
  of these provisions, the costs of addressing currently identified environmental
  obligations, as AstraZeneca currently views those obligations, is unlikely to
  impair materially AstraZeneca’s financial position.

 Such contingent costs, to the extent that they
  exceed applicable provisions, could have a material adverse effect on AstraZeneca’s
  results of operations for the relevant period.









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	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements	103


 Legal proceedings
  

  Losec/Prilosec (omeprazole)
  

  In June 1997, the German Federal Patent Court
  declared invalid a previously granted supplementary protection certificate which
  extended protection for omeprazole, the active ingredient contained in Losec,
  from 1999 to 2003. The decision was appealed and on 1 February 2000, at AstraZeneca’s
  request, the German Supreme Court decided to refer the case to the European
  Court of Justice for a preliminary ruling. The court heard the case on 8 November
  2001 and its decision is pending. The case does not involve any financial claims.

 In March 2000, the German Federal Patent Court
  declared that AstraZeneca’s formulation patent for omeprazole was invalid.
  The decision has been appealed to the German Supreme Court. As a consequence,
  all pending infringement actions in Germany have been stayed awaiting the outcome
  of the appeal. There is one interlocutory injunction in force against ratiopharm
  GmbH based on the formulation patent. If the final decision on the validity
  of the formulation patent goes against AstraZeneca, ratiopharm may claim damages
  for lost sales due to the interlocutory injunction.

 In 1998, Astra filed suits in the US against
  Andrx Pharmaceuticals, Inc. and Genpharm, Inc. This followed the filing of abbreviated
  new drug applications by Andrx and Genpharm with the US Food and Drug Administration
  (FDA) concerning the two companies’ intention to market generic omeprazole
  products in the US. During 1999, Astra also filed suits against Kremers Urban
  Development Company and Schwarz Pharma, Inc., and against Cheminor Drugs Ltd.,
  Reddy-Cheminor Inc. and Schein Pharmaceuticals, Inc. During 2000, AstraZeneca
  filed further suits against Lek Pharmaceutical and Chemical Company d.d, Impax
  Laboratories Inc., Eon Labs Manufacturing Inc. and Mylan Pharmaceuticals Inc.
  During 2001, AstraZeneca filed further suits against Torpharm, Inc. and Zenith
  Goldline Pharmaceuticals, Inc. (Ivax). The basis for the proceedings is that
  the actions of all the companies infringe several patents relating to omeprazole
  (Prilosec in
  the US). The cases are proceeding under the US Hatch-Waxman legislation. AstraZeneca
  filed additional patent infringement suits during 2001 against Andrx and Genpharm
  in respect of one other omeprazole patent outside the Hatch-Waxman legislation.
  The trial against Andrx, Genpharm, Kremers Urban Development Company and Cheminor
  started in December 2001 and ended in July 2002.

 In October 2002, the US District Court for
  the Southern District of New York ruled that two AstraZeneca patents (‘230
  and ‘505) relating to the formulation of omeprazole are valid until 2007,
  that Andrx, Genpharm and Cheminor all infringed both patents but that Kremers
  Urban Development Company did not infringe either patent. The court did not
  rule on the ‘281 patent relating to a manufacturing process for omeprazole
  formulations in respect of which AstraZeneca has sued Andrx only. AstraZeneca
  has appealed the judgement with regard to non-infringement and Kremers Urban
  Development Company. Andrx, Genpharm and Cheminor have appealed the decision
  with regard to infringement and validity of the patents.

 In April 2001, Andrx filed a case in the US
  District Court for the Southern District of New York against AstraZeneca, Merck
  & Co., Inc. and the FDA alleging that the listing of certain patents in
  the FDA’s Orange Book was improper and constituted violations of certain
  provisions of the Sherman Act, the US federal anti-trust legislation, and a
  state statute analogous to the federal anti-trust laws. Andrx seeks injunctive
  relief compelling the parties to delist omeprazole-related patents it claims
  were improperly listed in the Orange Book and prohibiting the defendants from
  using patents to delay the effective date of the FDA’s approval of Andrx’s
  ANDA for omeprazole. AstraZeneca and Merck have filed motions to dismiss the
  case, which are pending.

 AstraZeneca and Merck & Co., Inc. were
  named as defendants in three class actions; two in the US District Court for
  the Southern District of New York and one in the US District Court for the District
  of New Jersey. The plaintiffs are consumers and third party payers who have
  alleged that they and others who are similarly situated have been forced to
  pay higher prices for omeprazole as a result of agreements that AstraZeneca
  and Merck entered into that resulted in ‘unreasonable restraints of trade
  and competition’. Furthermore, the plaintiffs have alleged that AstraZeneca
  and Merck engaged in conduct designed to extend their monopoly power ‘beyond
  the lawful boundaries of their patents’. The plaintiffs are seeking declarative,
  equitable and injunctive relief enjoining AstraZeneca and Merck from continuing
  their alleged illegal activities, costs of suit, reasonable attorney’s
  fees and expenses and any other relief determined by the court. AstraZeneca
  filed a motion in March 2002 to dismiss the two class actions before the US
  District Court for the Southern District of New York, which was granted in June
  2002. The plaintiffs did not appeal. The plaintiffs voluntarily dismissed the
  New Jersey case also in June 2002.

 In October 2000, the Federal Court of Australia
  (Full Court) handed down a patent ruling pertaining to omeprazole in connection
  with a dispute between AstraZeneca and the generic company, Alphapharm Pty Ltd.
  The court declared that AstraZeneca’s formulation patent was invalid. In
  November 2001, AstraZeneca applied for special leave to appeal the decision
  to the High Court of Australia and this application was granted in December
  2001. The appeal was heard by the High Court in May 2002 and in December 2002
  the High Court reversed the judgement of the lower court. The High Court ruled
  that AstraZeneca’s formulation patent is valid and that the case should
  be returned to the lower court for determination of the remaining issues.

 During 2000, AstraZeneca was granted interlocutory
  injunctions based on certain of AstraZeneca’s omeprazole patents and supplementary
  protection certificates against the generic company, Scandinavian Pharmaceuticals-Generics
  AB (Scand Pharm), in Sweden, Denmark and Norway. In October 2000, the District
  Court of Stockholm ruled that Scand Pharm had infringed one of AstraZeneca’s
  supplementary protection certificates for omeprazole. Scand Pharm has appealed
  this decision. In October 2001, Oslo City Court in Norway found that Scand Pharm
  had infringed AstraZeneca’s formulation patent for omeprazole. At the same
  time, the court declared AstraZeneca’s formulation patent valid. As a result
  of the Norwegian case, Scand Pharm cannot sell its omeprazole product in Norway,
  nor can it do so in Sweden or Denmark pending the outcome of the main actions
  in the cases in these countries. If the final decisions in these cases are against
  AstraZeneca, Scand Pharm may claim damages for lost sales due to the interlocutory
  injunctions.









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	104	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements	 


 Notes to the Financial Statements
  continued

 34   Assets
  pledged, commitments and contingent liabilities (continued) 

  In March 2002, the Patents Court in the UK handed
  down a ruling invalidating certain of AstraZeneca’s formulation patents
  for omeprazole. AstraZeneca applied for leave to appeal the decision to the
  Court of Appeal and this application was granted. The appeal was heard by the
  Court of Appeal in October 2002 and the court affirmed the original decision
  of the Patents Court invalidating the formulation patents.


In the Netherlands, Pharmachemie BV has filed a claim against two AstraZeneca companies alleging that AstraZeneca has misused its exclusive rights in the Netherlands in relation to the expiration date for
AstraZeneca’s supplementary protection certificate for omeprazole. AstraZeneca denies the allegations and is defending the case.


Other court cases relating to omeprazole patents are pending worldwide. However, the financial impact if AstraZeneca loses is not considered to be material.


In February 2000, the European Commission commenced an investigation relating to certain omeprazole intellectual property rights, and associated regulatory and patent infringement litigation. The investigation is
pursuant to Article 82 of the EC Treaty, which prohibits an abuse of a dominant position. The investigation was precipitated by a complaint by a party to a number of patent and other proceedings involving AstraZeneca and relates to a limited number
of European countries. AstraZeneca has, in accordance with its corporate policy, co-operated with the Commission. AstraZeneca remains of the view that the complaint is unfounded and that it has complied with all relevant competition laws. In
particular, it considers that the matters raised by the complaint are more properly dealt with by the courts in the context of the litigation in which the complainant is involved. The Commission has recently requested certain factual patent and
regulatory information from AstraZeneca and AstraZeneca will continue to co-operate with the Commission.

 Zoladex (goserelin
  acetate implant) investigation 

  The US Department of Justice has been conducting
  a civil and criminal investigation into the sale and marketing of Zoladex
  (goserelin acetate implant). The investigation
  was prompted by the filing of a qui tam complaint by a private party
  in 1997 and involves allegations of improper submissions of claims to the Medicare
  and Medicaid programmes. The Company and federal and state authorities are in
  the process of negotiating a potential settlement of the civil and criminal
  claims at issue in the investigation. As a result, although no final agreement
  has been concluded, the Company believes it appropriate to accrue $350m to cover
  estimated settlement costs.

 Plendil
  (felodipine) 

  In August 2000, AstraZeneca LP received a letter
  from Mutual Pharmaceutical Co., Inc. informing AstraZeneca of Mutual’s
  intention to market a generic version of AstraZeneca’s felodipine extended
  release tablets (Plendil) prior to the expiration of AstraZeneca’s
  patent covering the extended release formulation. AstraZeneca filed a patent
  infringement action against Mutual in the US District Court for the Eastern
  District of Pennsylvania. Mutual responded and filed counterclaims alleging
  non-infringement and invalidity. Expert discovery is due to close in March 2003.
  A trial date has not yet been set.


In May 2001, AstraZeneca Pharmaceuticals LP received a similar letter from Zenith Goldline Pharmaceuticals, Inc. and in July 2001, AstraZeneca filed a patent infringement action against Zenith in the US District Court
for the District of New Jersey. Zenith responded and filed counterclaims alleging non-infringement. Fact discovery is due to close in May 2003. A trial date has not yet been set.

 Nolvadex (tamoxifen)
  

  AstraZeneca is a co-defendant with Barr Laboratories,
  Inc. in numerous purported class actions filed in federal and state courts throughout
  the US. All of the state court actions were removed to federal court and have
  been consolidated, along with all of the cases originally filed in federal court,
  in a federal multi-district litigation proceeding pending in the US District
  Court for the Eastern District of New York. Some of the cases were filed by
  plaintiffs representing a putative class of consumers who purchased tamoxifen.
  The other cases were filed on behalf of a putative class of ‘third party
  payers’ (including health maintenance organisations, insurers and other
  managed care providers and health plans) that have reimbursed or otherwise paid
  for prescriptions of tamoxifen. The plaintiffs allege that they paid ‘supra-competitive
  and monopolistic prices’ for tamoxifen as a result of the settlement of
  patent litigation between Zeneca and Barr in 1993. The plaintiffs seek injunctive
  relief, treble damages under the anti-trust laws, disgorgement and restitution.
  In April 2002, AstraZeneca filed a motion to dismiss the cases for failure to
  state a cause of action. The court’s decision is awaited.

 In August 2002, AstraZeneca’s US distribution
  agreement with Barr Laboratories, Inc. for non-branded tamoxifen expired, as
  did AstraZeneca’s patent for Nolvadex
  (tamoxifen). At the same time, a six month
  period of market exclusivity, awarded by the US Food and Drug Administration
  in connection with the successful completion of certain paediatric testing with
  the product, commenced. Barr thereafter commenced litigation against the FDA
  in the US District Court for the District of Columbia, challenging the FDA’s
  refusal to grant Barr final approval for its own generic tamoxifen prior to
  expiration of AstraZeneca’s exclusivity period. Barr also declined AstraZeneca’s
  offer to extend the distribution agreement through the end of the exclusivity
  period. Therefore, in October 2002, AstraZeneca began shipping its own non-branded
  tamoxifen to customers to ensure an uninterrupted supply to patients. In December
  2002, the Court held that Barr could not obtain final FDA approval for its own
  generic tamoxifen prior to the expiration of AstraZeneca’s paediatric exclusivity
  for Nolvadex.
  In January 2003, Barr made a claim that AstraZeneca improperly thwarted Barr’s
  entry into the tamoxifen market and caused Barr monetary damages. AstraZeneca
  disputes the claim.








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	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Financial
      Statements	105


 Zestril (lisinopril)
  

  In 1986, AstraZeneca’s predecessor company
  and Merck & Co., Inc. entered into licence agreements under which AstraZeneca
  was granted the right to make, use and sell lisinopril (Zestril),
  in return for which AstraZeneca agreed to pay royalties to Merck. In April 2002,
  AstraZeneca commenced arbitration proceedings against Merck under one of the
  licence agreements. In the arbitration, AstraZeneca is seeking repayment of
  approximately $38m of prior royalty amounts and a prospective reduction in the
  royalty rate going forward, based on a provision of the licence agreement which
  reduces the royalty rate if sales of lisinopril by third parties exceed a certain
  level. The case is currently progressing under the arbitration rules of the
International Chamber of Commerce.

 Retail pharmacies’/drug purchasers’ actions 

  Since October 1993, several thousand retail pharmacies
  and certain retail drug purchasers have commenced purported class actions and
  individual actions in various federal and state courts throughout the US alleging
  that, with respect to brand name prescription drugs, manufacturers and wholesalers
  engaged in discriminatory pricing practices, discriminatory discounting and
  rebate practices, and/or conspired with one another to fix prices and artificially
  maintain high prices to the plaintiffs in restraint of trade and commerce. More
  than 20 brand name prescription drug manufacturers and eight wholesalers have
been named defendants in some or all of these suits.

 AstraZeneca entered into a settlement agreement
  with the retail class plaintiffs whose anti-trust claims were consolidated in
  a federal multi-district litigation proceeding pending in the US District Court
  for the Northern District of Illinois. AstraZeneca also reached settlements
  with numerous independent and chain pharmacies that opted out of the federal
  class action, although there are still actions brought by certain chain and
  independent pharmacies pending in federal court. AstraZeneca has settled or
  been dismissed from all of the state cases except for a consumer case pending
  in state court in Alabama. AstraZeneca has consistently denied liability and
  continues to believe it has meritorious defences to all of these claims. However,
  it believes that entering into these settlements is the prudent course of action
  given the inherent risks and costs of litigation and to avoid further business
  disruption.

 Average wholesale price class action
      litigation 

  In January 2002, AstraZeneca was named as a defendant
  along with 24 other pharmaceutical manufacturers in a class action suit, in
  Massachusetts, brought on behalf of a putative class of plaintiffs alleged to
  have overpaid for prescription drugs as a result of inflated wholesale list
  prices. The suit seeks to recover unspecified damages. AstraZeneca has also
  been named as a co-defendant with various other pharmaceutical manufacturers
  in similar class action suits filed in five other states. Most of these suits
  have been consolidated with the Massachusetts action for pre-trial purposes
  pursuant to federal multi-district litigation procedures. AstraZeneca believes
that it has meritorious defences to all of these claims.

 Additional government investigations
      into drug marketing practices 

  As is true for most, if not all, major prescription
  pharmaceutical companies operating in the US, AstraZeneca is currently involved
  in multiple additional US federal and state criminal and civil investigations
  into drug marketing and pricing practices. AstraZeneca has received subpoenas
  from the US Attorney’s Office in Boston requesting production of documents
  relating to the sale and promotion of Prilosec
  to the New England Medical Center in Boston.
  A separate subpoena from the same office requests documents relating to Prilosec
  purchasing and services agreements with AdvancePCS, the pharmacy benefits
  management company. AstraZeneca has also received a subpoena from the Massachusetts
  Attorney General’s Office
  seeking documents relating to the sale and promotion of five products (Prilosec, Seroquel, Rhinocort Aqua, Toprol-XL and
  Zestril) within Massachusetts. AstraZeneca has received an investigative
  demand from the Missouri Attorney General’s
  Office seeking documents and information relating to agreements with drug retailers
  doing business within Missouri. Most recently, AstraZeneca has received a Civil
  Investigative Demand from the US Federal Trade Commission for certain information
  concerning AstraZeneca’s advertising and marketing of
  Nexium. AstraZeneca is cooperating with these
  investigations. It is not possible to predict the outcome of any of these investigations,
  which could include the payment of damages and the imposition of fines, penalties
  and administrative remedies.

 General 

  AstraZeneca is also involved in various other
  legal proceedings considered typical to its businesses, including some remaining
  US retail pharmacy anti-trust class and individual actions outside the scope
  of the settlements described above and litigation relating to employment, product
  liability, commercial disputes, infringement of intellectual property rights
  and the validity of certain patents. Although there can be no assurance regarding
  the outcome of any of the legal proceedings or investigations referred to in
  this Note 34 to the Financial Statements, AstraZeneca does not expect them to
  have a materially adverse effect on AstraZeneca’s financial position or
profitability.









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	106	AstraZeneca
        Annual Report and Form 20-F 2002

    www.astrazeneca.com
	Financial
        Statements
	 



  Notes to the Financial Statements continued



35 Leases



Total rentals under operating leases charged to profit and loss account were
as follows:


	 	2002

   $m
	 	2001

    $m
	 	2000

   $m
	 
	
	
	
	
	
	
	 
	Hire of plant and machinery	23	 	25	 	15	 
	

  	

  	

  	

  	

  	

  	 
	Other	96	 	76	 	74	 
	

  	

  	

  	

  	

  	

  	 
	 	119	 	101	 	89	 
	

  	

  	

  	

  	

  	

  	 



Commitments under operating leases to pay rentals during the year following the year of these Financial Statements analysed according to the period in which each lease expires were as follows:

	 	Land
    and buildings

    
    

        	 	Other
    assets

    
    

        	 
	 	2002

        $m

    	 	2001

        $m

    	 	2002

        $m

    	 	2001

        $m

    	 
	
	

   	
	

	
	

	
	

	 
	Expiring within one year
	5
	 	5
	 	11
	 	12
	 
	

  	

  	

  	

  	

  	

  	

  	

  	 
	Expiring in years two to five
	25
	 	37
	 	15
	 	13
	 
	

  	

  	

  	

  	

  	

  	

  	

  	 
	Expiring thereafter
	32
	 	25
	 	2
	 	2
	 
	

  	

  	

  	

  	

  	

  	

  	

  	 
	 	62
	 	67
	 	28
	 	27
	 
	

  	

  	

  	

  	

  	

  	

  	

  	 



The future minimum lease payments under operating leases that have initial or remaining terms in excess of one year at 31 December 2002 were as follows:

	 	Operating leases

   
     

         	 
	 	2002

    $m
	 	2001

   $m
	 
	
	
	
	
	 
	Obligations under leases comprise
	 	 	 	 
	Rentals due within one year
	90
	 	94
	 
	

  	

  	

  	

  	 
	Rentals due after more than one year
	 	 	 	 
	After five years from balance sheet date
	94
	 	97
	 
	

  	

  	

  	

  	 
	From four to five years
	21
	 	20
	 
	

  	

  	

  	

  	 
	From three to four years
	27
	 	21
	 
	

  	

  	

  	

  	 
	From two to three years
	38
	 	25
	 
	

  	

  	

  	

  	 
	From one to two years
	47
	 	35
	 
	

  	

  	

  	

  	 
	 	227
	 	198
	 
	

  	

  	

  	

  	 
	 	317
	 	292
	 
	

  	

  	

  	

	 



The Group had no commitments (2001 $nil) under finance leases at the balance sheet date which were due to commence thereafter.









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	 	AstraZeneca
        Annual Report and Form 20-F 2002

    www.astrazeneca.com
	Financial
        Statements
	107


 



36 Statutory
        and other information 

	 	 	 	2002

      $m	 	2001

      $m	 	2000

      $m	 
	

   	
	
	
	
	
	
	
	 
	Statutory audit fees	 	 	 	 	 	 	 	 
	KPMG Audit Plc	 	 	3.5	 	2.5	 	3.2	 
	
	
	
	
	
	
	
	
	 
	Others	 	 	0.1	 	0.1	 	–	 
	
	
	
	
	
	
	
	

   	 
	 	 	 	3.6	 	2.6	 	3.2	 
	
	
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 	 	 
	Fees for other services	 	 	 	 	 	 	 	 
	KPMG Audit Plc and associates	– UK	 	0.4	 	3.2	 	8.9	 
	
	
	
	
	
	
	
	
	 
	 	– Worldwide	 	3.1	 	2.0	 	5.0	 
	

   	
	
	
	
	
	
	
	 
	 	 	 	3.5	 	5.2	 	13.9	 
	
	
	
	
	
	
	
	
	 



  Non statutory audit fees paid to KPMG Audit Plc and its associates were in relation to other assurance services $1.5m (2001 $1.8m); taxation $1.8m (2001 $2.1m); and other non audit services $0.2m (2001 $1.3m).


In addition to the above, in 2000 KPMG Audit Plc and its associates charged fees
for other services of $8.0m that were borne by Syngenta AG in relation to its
demerger from AstraZeneca.



The charge for the statutory audit of the Company, AstraZeneca PLC, was $1,600
(2001 $1,600, 2000 $1,600). KPMG Audit Plc were sole auditors to AstraZeneca
in 2002 and 2001.



The bulk of fees for other services charged by KPMG Audit Plc and its associates
(aside from the Zeneca Agrochemicals demerger and associated restructuring work)
were incurred in the early months of 2000, completing
1999 integration projects.



Related party transactions


The Group had no material related party transactions
which might reasonably be expected to influence decisions made by the users of
these Financial Statements.



Subsequent events


No significant change has occurred since the
date of the annual Financial Statements.









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	108	AstraZeneca
        Annual Report and Form 20-F 2002

        www.astrazeneca.com

    	Financial
        Statements

    	 



  Notes to the Financial Statements continued



37 Company information

Company Balance Sheet


	At 31 December	Notes	 	2002

      $m	 	2001

      $m	 
	
	
	
	
	
	
	 
	Fixed assets	 	 	  	 	  	 
	Fixed asset investments	37	 	7,236	 	6,736	 
	
	
	
	
	
	
	 
	 	 	 	7,236	 	6,736	 
	
	
	
	
	
	
	 
	 	 	 	  	 	  	 
	Current assets	 	 	  	 	  	 
	Debtors – amounts owed by subsidiaries	 	 	27,104	 	27,998	 
	
	
	
	
	
	
	 
	Total assets	 	 	34,340	 	34,734	 
	
	
	
	
	
	
	 
	 	 	 	  	 	  	 
	Creditors due within one year	 	 	  	 	  	 
	Non-trade creditors	37	 	(2,961	)	(835	)
	
	
	
	
	
	
	 
	 	 	 	(2,961	)	(835	)
	
	
	
	
	
	
	 
	Net current assets	 	 	24,143	 	27,163	 
	
	
	
	
	
	
	 
	Total assets less current liabilities	 	 	31,379	 	33,899	 
	
	
	
	
	
	
	 
	 	 	 	  	 	  	 
	Creditors due after more than one year	 	 	  	 	  	 
	Loans – owed to subsidiaries	37	 	(295	)	(590	)
	
	
	
	
	
	
	 
	Net assets	 	 	31,084	 	33,309	 
	
	
	
	
	
	
	 
	 	 	 	  	 	  	 
	Capital and reserves	 	 	  	 	  	 
	Called-up share capital	38	 	429	 	436	 
	
	
	
	
	
	
	 
	Share premium account	37	 	403	 	334	 
	
	
	
	
	
	
	 
	Capital redemption reserve	37	 	 16	 	 9	 
	
	
	
	

   	
	

   	 
	Other reserves	37	 	1,841	 	2,239	 
	
	
	
	
	
	
	 
	Profit and loss account	37	 	28,395	 	30,291	 
	
	
	
	
	
	
	 
	Shareholders’ funds – equity interests	 	 	31,084	 	33,309	 
	
	
	
	
	
	
	 



The financial statements on pages 58 to 122 were approved by the Board of Directors on 30 January 2003 and were signed on its behalf by:

	Sir Tom McKillop	Jonathan Symonds
	Director	Director











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	 	AstraZeneca Annual Report
        and Form 20-F 2002

    www.astrazeneca.com	Financial
    Statements	109


 




37 Company information (continued)

Deferred taxation

The parent company had no deferred tax assets or liabilities (actual or potential) at 31 December 2002.

	 	Investments in subsidiaries	 
	 	

   	 
	Fixed asset investments	Shares

   $m	 	Loans

   $m	 	Total

   $m	 
	
	

   	
	

   	
	

   	 
	Cost at beginning of year	6,145	 	591	 	6,736	 
	
	
	
	
	
	
	 
	Additions	500	 	–	 	500	 
	
	
	
	

   	
	
	 
	Net book value at 31 December 2002	6,645	 	591	 	7,236	 
	
	
	
	
	
	
	 
	Net book value at 31 December 2001	6,145	 	591	 	6,736	 
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 
	Non-trade creditors 	  	  	2002

   $m	  	2001

   $m	  
	
	

   	
	

   	
	

   	 
	Amounts due within one year	 	 	 	 	 	 
	Short term borrowings (unsecured)	 	 	3	 	3	 
	
	

   	
	

   	
	

   	 
	Other creditors	 	 	50	 	4	 
	
	

   	
	
	
	

   	 
	Amounts owed to subsidiaries	 	 	2,100	 	8	 
	
	

   	
	
	
	

   	 
	Dividends to Shareholders	 	 	808	 	820	 
	
	

   	
	
	
	
	 
	 	 	 	2,961	 	835	 
	
	

   	
	
	
	
	 
	 	 	 	 	 	 	 
	Loans – owed to subsidiaries 	Repayment

    Dates	  	2002

   $m	  	2001

    $m	  
	
	
	
	

   	
	

   	 
	Loans (unsecured)	 	 	 	 	 	 
	US dollars	 	 	 	 	 	 
	   6.58% loan	2003	 	295	 	295	 
	
	
	
	
	
	
	 
	   7.2% loan	2023	 	295	 	295	 
	
	
	
	
	
	
	 
	Total loans	 	 	590	 	590	 
	
	

   	
	
	
	
	 
	 	 	 	 	 	 	 
	Loans or instalments thereof are repayable	 	 	 	 	 	 
	   After five years from balance sheet date	 	 	295	 	295	 
	
	

   	
	
	
	
	 
	   From two to five years	 	 	–	 	–	 
	
	

   	
	

   	
	

   	 
	   From one to two years	 	 	–	 	295	 
	
	

   	
	

   	
	
	 
	Total unsecured	 	 	295	 	590	 
	
	

   	
	
	
	
	 
	Total due within one year	 	 	295	 	–	 
	
	

   	
	
	
	

   	 
	Total loans	 	 	590	 	590	 
	
	
	
	
	
	
	 










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	110	AstraZeneca Annual Report
        and Form 20-F 2002

    www.astrazeneca.com	Financial Statements	 



  Notes to the Financial Statements continued



37 Company information (continued)
	Reserves

     

   	Share

      premium

      account

      $m	 	Capital

      redemption

      reserve

      $m	 	Other

      reserves

      $m	 	Profit

      and loss

      account

      $m	 	2002

   Total

   $m	 	2001

      Total

      $m	 
	
	

   	

	

   	

	

   	

	

   	

	
	

	
	 
	At beginning of year	334	 	9	 	2,239	 	30,291	 	32,873	 	32,759	 
	
	
	

	

   	

	
	

	
	

	
	

	
	 
	Net profit for the year	–	 	–	 	–	 	102	 	102	 	2,314	 
	
	

   	

	

   	

	

   	

	
	

	
	

	
	 
	Dividends	–	 	–	 	(398	)	(808	)	(1,206	)	(1,225	)
	
	

   	

	

   	

	
	

	
	

	
	

	
	 
	Share re-purchase	–	 	7	 	–	 	(1,190	)	(1,183	)	(1,074	)
	
	

   	

	

   	

	

   	

	
	

	
	

	
	 
	Share premiums	69	 	–	 	–	 	–	 	69	 	99	 
	
	

   	

	

   	

	

   	

	

   	

	
	

	
	 
	At end of year	403	 	16	 	1,841	 	28,395	 	30,655	 	32,873	 
	
	
	

	

   	

	
	

	
	

	
	

	
	 
	Distributable reserves at end of year	–	 	–	 	443	 	1,614	 	2,057	 	1,623	 
	
	

   	
    
	

   	
    
	
	
    
	
	
    
	
	
    
	
	 



  As permitted by section 230 of the Companies Act 1985, the Company has not presented its profit and loss account.


At 31 December 2002 $26,781m (31 December 2001 $29,440m) of the profit and loss
account reserve was not available for distribution. The majority of this non-distributable
amount relates to profit arising on the sale of Astra AB to a subsidiary in 1999,
which becomes distributable as the underlying receivable is settled in cash.
During 2002, $2,659m of the profit was realised by repayment. Subsequent to the
year end a further $825m was repaid on 23 January 2003
resulting in additional distributable reserves not included in the figures above. Included in other reserves is a special reserve of $157m, arising on the redenomination of share capital in 1999.

	Reconciliation of movement in shareholders’ funds	2002

   $m	 	2001

   $m	 
	
	
	
	
	 
	Shareholders’ funds at beginning of year	33,309	 	33,201	 
	
	
	
	
	 
	Net profit for the financial year	102	 	2,314	 
	
	
	
	
	 
	Dividends	(1,206	)	(1,225	)
	
	
	
	
	 
	Issues of AstraZeneca PLC Ordinary Shares	69	 	99	 
	
	
	
	
	 
	Re-purchase of AstraZeneca PLC Ordinary Shares	(1,190	)	(1,080	)
	
	
	
	
	 
	Net (reduction in)/addition to shareholders’ funds	(2,225	)	108	 
	
	
	
	
	 
	Shareholders’ funds at end of year	31,084	 	33,309	 
	
	
	
	
	 










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	 	AstraZeneca Annual Report
        and Form 20-F 2002

    www.astrazeneca.com	Financial Statements	111


 



38 Called-up
share capital of parent company

	 	Authorised	 	Allotted, called-up

   and fully paid	 
	 	
	 	

   	 
	 	2002

   $m	 	2002

   $m	 	2001

   $m	 
	

   	

   	
	

   	
	

   	 
	Ordinary Shares ($0.25 each)	429	 	429	 	436	 
	
	
	
	
	
	
	 
	Unissued Ordinary Shares ($0.25 each)	171	 	–	 	–	 
	
	
	
	

   	
	

   	 
	Redeemable Preference Shares (£50,000)	–	 	–	 	–	 
	
	

   	
	

   	
	

   	 
	 	600	 	429	 	436	 
	
	
	
	
	
	
	 



  The Redeemable Preference Shares carry limited
  class voting rights and no dividend rights. This class of shares is capable
  of redemption at par at the option of the Company on the giving of seven days’ written
notice to the registered holder of the shares.


The movements in share capital during the year can be summarised as follows:


	 	No. of shares

      (million)	 	$m	 
	
	
	
	
	 
	At beginning of year	1,745	 	436	 
	
	
	

	
	 
	Issues of shares	2	 	–	 
	
	
	

	

   	 
	Re-purchase of shares	(28	)	(7	)
	
	
	

	

   	 
	At 31 December 2002	1,719	 	429	 
	
	
	
	
	 



Share buy-back


During the year the Company purchased, and subsequently
cancelled, 28,386,560 Ordinary Shares at an average price of 2785 pence per share
for a consideration, including expenses, of $1,190m. The excess of the consideration
over the nominal value has been charged against the profit and loss account reserve.



Share schemes


  A total of 1,737,401 shares were issued during
  the year in respect of share schemes. Details of movements in the number of
  shares under option are shown in Note 33; details of options granted to Directors
  are shown in the Directors’ Remuneration
  Report. 







  
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	112	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Financial Statements	 


Principal Subsidiaries, Joint
  Ventures and Associates

 



	 	 	Percentage of voting	 	 
	At 31 December 2002	Country	share capital held	 	Principal activity
	
 
	UK	 	 	 	 
	AstraZeneca UK Limited	England	100	#	Research, production, marketing
	

	AstraZeneca Insurance Company Limited	England	100	 	Insurance and reinsurance
      underwriting
	 

	AstraZeneca Treasury Limited	England	100	 	Treasury
	 

	 	 	 	 	 
	Continental Europe	 	 	 	 
	NV AstraZeneca SA	Belgium	100	 	Marketing
	 

	ASP SA	France	100	 	Production
	
 
	AstraZeneca Pharma SA	France	100	 	Research, production, marketing
	
 
	AstraZeneca GmbH	Germany	100	 	Development, production,
      marketing
	
 
	AstraZeneca Holding GmbH	Germany	100	 	Production, marketing
	 

	AstraZeneca SpA	Italy	100	 	Production, marketing
	
 
	AstraZeneca Farmaceutica Spain SA	Spain	100	 	Production, marketing
	
 
	AstraZeneca AB	Sweden	100	 	Research and development,
	 	 	 	 	production, marketing
	
 
	Astra Tech AB	Sweden	100	 	Research and development,
	 	 	 	 	production, marketing
	
 
	AstraZeneca BV	The Netherlands	100	 	Marketing
	
 
	 	 	 	 	 
	The Americas	 	 	 	 
	AstraZeneca do Brasil Ltda.	Brazil	100	 	Production, marketing
	
 
	AstraZeneca Canada Inc.	Canada	100	 	Research, production, marketing
	
 
	IPR Pharmaceuticals Inc.	Puerto Rico	100	 	Development, production,
      marketing
	
 
	AstraZeneca LP	US	99	 	Development, production,
      marketing
	
 
	AstraZeneca Pharmaceuticals LP	US	100	 	Development, production,
      marketing
	 

	Salick Health Care, Inc.	US	100	 	Provision of disease-specific
	 	 	 	 	healthcare services
	
 
	Zeneca Holdings Inc.	US	100	 	Production, marketing
	
 
	 	 	 	 	 
	Asia, Africa & Australasia	 	 	 	 
	AstraZeneca Pty Limited	Australia	100	 	Research, production, marketing
	
 
	AstraZeneca Pharmaceutical Co., Limited	China	100	 	Production, marketing
	
 
	AstraZeneca Hong Kong Limited	Hong Kong	100	 	Production
	
 
	AstraZeneca KK	Japan	80	 	Production, marketing
	
 
	# shares held directly


 The companies
  and other entities listed above are those whose results or financial position
  principally affected the figures shown in the Group’s annual financial
  statements. A full list of subsidiaries, joint ventures and associates will
  be annexed to the Company’s next annual return filed with the Registrar
  of Companies. The country of registration or incorporation is stated alongside
  each company. The accounting dates of principal subsidiaries and associates
  are 31 December, except for Salick Health Care, Inc. which is 30 November. AstraZeneca
  operates through 235 subsidiary companies worldwide. Products are manufactured
  in some 20 countries worldwide and are sold in over 100 countries.






 
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	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Additional Information for
      US Investors	113


Additional Information for US Investors


  Differences between UK and US accounting
    principles 

  The accompanying consolidated financial statements
    included in this Annual Report are prepared in accordance with UK GAAP. Certain
    significant differences between UK GAAP and US GAAP which affect AstraZeneca’s
    net income and shareholders’ equity are set out below. 

  

 Purchase accounting
  adjustments 

    Under UK GAAP the merger of Astra and Zeneca
    was accounted for as a ‘merger of equals’ (pooling-of-interests).
    Under US GAAP the merger was accounted for as the acquisition of Astra by
    Zeneca using ‘purchase accounting’. Under purchase accounting, the
    cost of the investment is calculated at the market value of the shares issued
    together with other incidental costs and the assets and liabilities of the
    acquired entity are recorded at fair value. As a result of the fair value
    exercise, increases in the values of Astra’s tangible fixed assets and
    inventory were recognised and values attributed to their in-process research
    and development, existing products and assembled work force, together with
    appropriate deferred taxation effects. The difference between the cost of
    investment and the fair value of the assets and liabilities of Astra was recorded
    as goodwill. The amount allocated to in-process research and development was,
    as required by US GAAP, expensed immediately in the first reporting period
    after the business combination. Fair value adjustments to the recorded amount
    of inventory were expensed in the period the inventory was utilised. Additional
    amortisation and depreciation have also been recorded in respect of the fair
    value adjustments to tangible and intangible assets and the resulting goodwill.

   In the consolidated financial
    statements prepared under UK GAAP, goodwill arising on acquisitions made prior
    to 1 January 1998 accounted for under the purchase method has been eliminated
    against shareholders’equity. Under the requirements of UK Financial Reporting
    Standard 10 ‘Goodwill and Intangible Assets’, goodwill on acquisitions
    made after 1 January 1998 is capitalised and amortised over its estimated
    useful life which is generally presumed not to exceed 20 years. UK GAAP requires
    that on subsequent disposal or termination of a previously acquired business,
    any goodwill previously taken directly to shareholders’equity is then
    charged in the income statement against the profit or loss on disposal or
    termination. Up until 1 January






 2002, under US GAAP, goodwill
  was required to be capitalised and amortised. Now, instead of being amortised,
  goodwill is tested annually for impairment. Amortisation charged under UK GAAP
  is added back in the reconciliation of net income. The intangible recognised
  as assembled workforce has been reclassified as goodwill.

   Identifiable intangible assets,
    which principally include patents, ‘know-how’ and product registrations,
    are amortised over their estimated useful lives which vary between 5 years
    and 20 years with a weighted average life of approximately 13 years.

 At 31 December 2002 and 2001,
  shareholders’ equity includes capitalised goodwill of $13,600m and $12,169m
  respectively (net of amortisation and impairment of $2,383m and $2,180m) and
  capitalised identifiable intangible assets of $9,433m and $9,789m respectively
  (net of amortisation and impairment of $4,566m and $3,475m). Goodwill on businesses
  disposed of is charged to the gain or loss on disposal.

 On disposal of a business, the
  gain or loss under US GAAP may differ from that under UK GAAP due principally
  to goodwill capitalised and amortised, together with the appropriate share of
  other differences between UK and US accounting principles recognised previously.

 Capitalisation of interest
  

  AstraZeneca does not capitalise interest in its
  financial statements. US GAAP requires interest incurred as part of the cost
  of constructing fixed assets to be capitalised and amortised over the life of
  the asset.

 Dividends
  

  Under UK GAAP Ordinary Share dividends proposed
  are provided for in the year in respect of which they are recommended by the
  Board of Directors for approval by the shareholders. Under US GAAP such dividends
  are not provided for until declared by the Board.

 Deferred taxation
  

  Deferred taxation is provided on a full liability
  basis under US GAAP, which permits deferred tax assets to be recognised if their
  realisation is considered to be more likely than not. Under current UK GAAP,
  full provision is also made although there are a number of different bases on
  which this calculation is made, eg rolled over capital gains.






   Pension and post-retirement
    benefits 

    There are four main differences between
    current UK GAAP and US GAAP in accounting for pension costs:

	(i)	US GAAP requires measurements
        of plan assets and obligations to be made as at the date of the financial
        statements or a date not more than three months prior to that date. Under
        UK GAAP, calculations may be based on the results of the latest actuarial
        valuation;
	 	 
	(ii)	US GAAP mandates a particular
        actuarial method – the projected unit credit method – and requires
        that each significant assumption necessary to determine annual pension
        cost reflects best estimates solely with regard to that individual assumption.
        UK GAAP does not mandate a particular method, but requires that the method
        and assumptions taken as a whole should be compatible and lead to the
        actuary’s best estimate of the cost of providing the benefits promised;
	 	 
	(iii)	under US GAAP, a negative
        pension cost may arise where a significant unrecognised net asset or gain
        exists at the time of implementation. This is required to be amortised
        on a straight-line basis over the average remaining service period of
        employees. Under UK GAAP, AstraZeneca’s policy is not to recognise
        pension credits in its financial statements unless a refund of, or reduction
        in, contributions is likely; and
	 	 
	(iv)	under US GAAP, a minimum
        pension liability is recognised through other comprehensive income in
        certain circumstances when there is a deficit of plan assets relative
        to the projected benefits obligation. Under UK GAAP, there is no such
        requirement.














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	114	AstraZeneca Annual Report and
      Form 20-F 2002

    www.astrazeneca.com	Additional Information for
      US Investors	 



Additional Information for US
Investors continued



   Differences between UK and
    US accounting principles (continued)


Restructuring costs


Under UK GAAP, provisions are made for restructuring
costs once a detailed formal plan is in place and valid expectations have been
raised in those affected that the restructuring will be carried out. US GAAP
requires a number of specific criteria to be met before such costs can be recognised
as an expense. Among these are the requirements that the costs incurred are incremental
to other costs incurred by the company, or represent amounts to be incurred under
contractual obligations which are not associated with or do not benefit activities
that will be continued. Also, all significant actions arising from a restructuring
and their completion dates must be identified by the balance sheet date. To the
extent that restructuring costs are related to the activities of the acquired
company, US GAAP allows them to be recognised as a liability upon acquisition.


Software costs


Under UK GAAP, AstraZeneca capitalises certain
defined software costs. Under US GAAP software costs are generally capitalised
and amortised over three to five years.


Foreign exchange


Under UK GAAP, unrealised gains and losses on
foreign currency transactions to hedge anticipated, but not firmly committed,
foreign currency transactions may be deferred and accounted for at the same time
as the anticipated transactions. Under US GAAP such deferral is not permitted
except in certain defined circumstances.


Derivative instruments and hedging activities


Under US GAAP, all derivative instruments should
be recognised as assets or liabilities in the balance sheet at fair value. Gains
and losses are recognised in net income unless they are regarded as hedges. Under
UK GAAP, these instruments are measured at cost and gains or losses deferred
until the underlying transactions occur.


Deferred income


Under UK GAAP, profits or losses from the sale
of product related intangible assets are classified in other operating income
and are stated after taking account of product disposal costs and costs of minor
outstanding obligations. Under US GAAP, such profits are deferred and recognised
in







the income statement in subsequent periods until all disposal obligations and
commitments have been completed.


Current assets and liabilities


    In the Group’s
    financial statements prepared under UK GAAP, no cost is accrued for the share
    options awarded to employees under the Zeneca 1994 Executive Share Option
    Scheme, the AstraZeneca Share Option Plan, and the AstraZeneca Savings-Related
    Share Option Scheme as the exercise price is equivalent to the market value
    at the date of grant. Under US GAAP the cost is calculated as the difference
    between the option price and the market price at the date of grant or, for
    variable plans, at the end of the reporting period (until measurement date).
    Under the requirements of APB Opinion No. 25 any compensation cost would be
    amortised over the period from the date the options are granted to the date
    they are first exercisable. Under US GAAP in the net income reconciliation,
    the Group has adjusted for stock compensation costs and calculated under APB
    Opinion No. 25.


Statement of cash flows: Basis of preparation


    AstraZeneca’s
    Statement of Group Cash Flow is prepared in accordance with United Kingdom
    Financial Reporting Standard 1 (Revised 1996) (‘FRS 1’), whose objective
    and principles are similar to those set out in SFAS No. 95, ‘Statement
    of Cash Flows’. The principal differences between the standards relate
    to classification. Under FRS 1, the Company presents its cash flows for (a)
    operating activities; (b) dividends received from joint ventures and associates;
    (c) returns on investments and servicing of finance; (d) tax paid; (e) capital
    expenditure and financial investment; (f) acquisitions and disposals; (g)
    dividends paid to shareholders; (h) management of liquid resources; and (i)
    financing. SFAS No. 95 requires only three categories of cash flow activity
    being (a) operating; (b) investing; and (c) financing.


Cash flows from taxation, returns on investments and servicing of finance and
dividends received from joint ventures and associates under FRS 1 would be included
as operating activities under SFAS No. 95; capital expenditure and financial
investment and acquisitions and disposals would be included as investing activities;
and distributions would be included as a financing activity under SFAS No. 95.
Under FRS 1 cash comprises cash in hand and deposits repayable on demand, less
overdrafts repayable on demand; and liquid resources







comprise current asset investments held as readily disposable stores of value.
Under SFAS No. 95 cash equivalents, comprising short term highly liquid investments,
generally with original maturities of three months or less, are grouped together
with cash; short term borrowings repayable on demand would not be included within
cash and cash equivalents and movements on those borrowings would be included
in financing activities.


New accounting standards adopted


    Statement of Financial Accounting Standards
    SFAS No. 141 ‘Business Combinations’
    and SFAS No. 142 ‘Goodwill and Other Intangible Assets’ were issued
    in July 2001 and are effective for accounting periods commencing on or after
    15 December 2001. Under SFAS No. 141, all business combinations initiated
    after 30 June 2001 must be accounted for using the purchase method. The pooling
    of interest method is no longer permitted. Intangible assets arising on acquisitions
    are required to be amortised to residual values over their estimated useful
    lives unless they are regarded as having indefinite useful lives, in which
    case they are tested annually for impairment. Goodwill, arising on a combination
    of business, is tested for impairment annually in lieu of amortisation. SFAS
    No. 142 requires that goodwill and intangible assets acquired prior to 1 July
    2001 should continue to be amortised and tested for impairment until the adoption
    of the standard. Upon adoption of SFAS No. 142 an impairment test must be
    carried out on all intangible assets with indefinite useful lives and goodwill.
    Any impairment loss identified on the date of adoption of SFAS No. 142 should
    be accounted for as a cumulative effect of a change in accounting principle.
    At the same time, the estimated useful lives of amortised intangible assets
    must be reviewed.


Adoption of these new accounting standards has resulted in an estimated increase
in net income of $755m (including amortisation charged under UK GAAP of $55m).
Initial adoption of SFAS No. 142 did not result in an impairment charge, nor
was there any impairment at the subsequent annual test. Had goodwill not been
amortised in 2001, net income would have increased from $1,397m to $2,125m (2000
$865m to $1,716m) with a corresponding increase in basic and diluted earnings
per share from $0.77 to $1.21 (2000 $0.49 to $0.97). No changes were made to
estimated useful lives of intangible assets.

   SFAS No. 144 ‘Accounting
    for the Impairment
    or Disposal of Long-Lived Assets’











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	 	AstraZeneca Annual Report
        and Form 20-F 2002

    www.astrazeneca.com	Additional Information for
      US Investors	115





   addresses financial accounting and reporting
    for the impairment or disposal of long-lived assets and supersedes SFAS No.
    121, ‘Accounting for the Impairment of Long-Lived Assets and for Long-Lived
    Assets to be Disposed of’ and the accounting and reporting provisions
    of APB Opinion No. 30, ‘Reporting the Results of Operations – Reporting
    the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
    and Infrequently Occurring Events and Transactions’, for the disposal
    of a segment of a business. It is effective for accounting periods beginning
    on or after 15 December 2001. The adoption of SFAS No. 144 did not have a
    material effect.
   New accounting standards not yet adopted

    SFAS No. 143 ‘Accounting
    for Asset Retirement Obligation’ addresses the accounting and reporting
    for obligations associated with the retirement of long-lived assets and the
    associated asset retirement costs. It is effective for accounting periods
    beginning on or after 15 June 2002. The adoption of SFAS No. 143 is not expected
    to have a material effect.


SFAS No.146 ‘Accounting
for Costs Associated with Exit or Disposal Activities’, issued on 30 July
2002 requires costs associated with exit or disposal activities to be recognised
when the costs are incurred rather than at the date of commitment to an exit
or disposal plan. The provisions are effective for disposals initialised after
31 December 2002 and restatement of prior periods is not required. As SFAS No.
146 may apply to future activities which are not currently envisaged it is not
possible to assess the impact of SFAS
No. 146.

   SFAS No. 148 ‘Accounting
    for Stock Based Compensation – Transition and Disclosure – an amendment
    of FASB Statement No. 123’ permits two additional transition methods
    for entities that adopt the fair value based method of accounting for stock-based
    employee compensation. The Statement also requires new disclosures about the
    ramp-up effect of stock-based employee compensation on reported results and
    that those effects be disclosed more prominently by specifying the form, content
    and location of those disclosures. The transition guidance and annual disclosure
    provisions of SFAS No. 148 are effective for fiscal years ending after 15
    December 2002. AstraZeneca has not yet determined whether it will adopt the
    transition provisions of SFAS No. 148.























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	116	AstraZeneca Annual Report
        and Form 20-F 2002

    www.astrazeneca.com	Additional Information
    for US Investors	 



  Additional Information for US
Investors continued 



Differences between UK and US accounting principles
(continued)

Introduction


  As a result of the significant difference between
  the UK GAAP and US GAAP treatment of the combination of Astra and Zeneca in
  the year of acquisition, and in the results of preceding periods, condensed
  statements of operations and cash flow under US GAAP have been prepared for
  the benefit of US investors.


The following is a summary of the material adjustments
to net income and shareholders’ equity
which would have been required if US GAAP had been applied instead of UK GAAP.
As noted on page 62, 2001 and 2000 net income and shareholders’ equity under
UK GAAP have been restated under FRS19 – Deferred Tax. On this basis the
deferred
tax adjustment below as been restated for those years.

	Net income	2002

      $m	 	2001

      $m	 	2000

      $m	 
	
	
	
	
	
	
	 
	Net income, as shown in the consolidated statements	  	 	  	 	  	 
	of income before exceptional items (restated)	3,186	 	3,044	 	2,858	 
	
	
	
	
	
	
	 
	Exceptional items after tax	(350	)	(138	)	(581	)
	
	
	
	
	
	
	 
	Net income for the period under UK GAAP (restated)	2,836	 	2,906	 	2,277	 
	
	
	
	
	
	
	 
	 	  	 	  	 	  	 
	Adjustments to conform to US GAAP	  	 	  	 	  	 
	Purchase accounting adjustments (including goodwill and intangibles)

      Deemed acquisition of Astra

         Amortisation and other acquisition adjustments	    (864	)	    (1,514	)	    (1,756	)
	
	
	
	
	
	
	 
	   Others	 55	 	 –	 	(20	)
	
	
     	
	

   	
	
	 
	Capitalisation, less disposals and amortisation of interest	 46	 	 57	 	 45	 
	
	
     	
	

   	
	

   	 
	Deferred taxation	  	 	  	 	  	 
	   On fair values of Astra	239	 	249	 	284	 
	
	
	
	
	
	
	 
	   Others (restated)	(99	)	(198	)	115	 
	
	
	
	
	
	
	 
	Pension expense	(50	)	(33	)	(50	)
	
	
	
	
	
	
	 
	Post-retirement benefits/plan amendment	 4	 	 4	 	 4	 
	
	

   	
	

   	
	

   	 
	Software costs	(46	)	(10	)	 98	 
	
	
	
	
	
	

   	 
	Restructuring costs	 –	 	(22	)	(97	)
	
	

   	
	
	
	
	 
	Share based compensation	 33	 	 (7	)	(33	)
	
	

   	
	

   	
	
	 
	Fair value of derivative financial instruments	 93	 	 18	 	 –	 
	
	

   	
	

   	
	

   	 
	Deferred income recognition	 61	 	(75	)	 –	 
	
	

   	
	
	
	

   	 
	Unrealised losses on foreign exchange and others	 (1	)	(10	)	 (2	)
	
	

   	
	
	
	

   	 
	Net income before cumulative effect of change in accounting policy	2,307	 	1,365	 	865	 
	
	
	
	
	
	
	 
	Cumulative effect of change in accounting policy, net of tax, on adoption of SFAS No 133	 –	 	 32	 	 –	 
	
	

   	
	

   	
	

   	 
	Net income in accordance with US GAAP	2,307	 	1,397	 	865	 
	
	
	
	
	
	
	 










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	 	AstraZeneca Annual Report
        and Form 20-F 2002

    www.astrazeneca.com	Additional Information
          for US Investors	117






Differences between UK and US accounting principles
(continued)
US GAAP Condensed Consolidated Statement
of Operations

	For the years ended
      31 December	 	2002

      $m	 	2001

      $m	 	2000

      $m	 
	
	
	
 	
	
 	
	
 	 
	Sales	 	17,841	 	16,222	 	15,583	 
	
	
	
	
	
	
	
	 
	Cost of sales	 	(4,520	)	(4,198	)	(3,960	)
	
	
	
	
	
	
	
	 
	Distribution costs	 	(141	)	(122	)	(210	)
	
	
	
 	
	
 	
	
 	 
	Research and development	 	(3,069	)	(2,687	)	(2,620	)
	
	
	
	
	
	
	
	 
	Selling, general and administrative expenses	 	(6,165	)	(5,219	)	(4,861	)
	
	
	
	
	
	
	
	 
	Acquisition related costs	 	–	 	(224	)	(419	)
	
	
	
 	
	
 	
	
 	 
	Amortisation of intangibles and goodwill	 	(1,052	)	(1,769	)	(2,043	)
	
	
	
	
	
	
	
	 
	Other income	 	308	 	283	 	223	 
	
	
	
 	
	
 	
	
 	 
	Operating income	 	3,202	 	2,286	 	1,693	 
	
	
	
	
	
	
	
	 
	Net interest income	 	140	 	188	 	183	 
	
	
	
 	
	
 	
	
 	 
	Income from continuing operations
      before taxation	 	3,342	 	2,474	 	1,876	 
	
	
	
	
	
	
	
	 
	Taxes on income from continuing operations	 	(1,035	)	(1,109	)	(969	)
	
	
	
	
	
	
	
 	 
	Net income from continuing operations	 	2,307	 	1,365	 	907	 
	
	
	
	
	
	
	
 	 
	Discontinued operations:

         Net income from discontinued operations	  	 –	  	 –	  	 (42	 )
	
	
	
 	
	
 	
	
 	 
	Net income before cumulative effect
      of change in accounting policy	 	2,307	 	1,365	 	865	 
	
	
	
 	
	
 	
	
 	 
	Cumulative effect of change in accounting
      policy on adoption of SFAS No 133	 	–	 	32	 	–	 
	
	
	
 	
	
 	
	
 	 
	Net income for the year	 	2,307	 	1,397	 	865	 
	
	
	
	
	
	
	
 	 
	 	 	 	 	 	 	 	 
	Weighted average number of $0.25 Ordinary
      Shares

      in issue (millions of shares)	  	 1,733	  	 1,758	  	 1,768	  
	
	
	
	
	
	
	
	 
	Dilutive impact of share options outstanding
      (millions of shares)	 	2	 	3	 	2	 
	
	
	
 	
	
 	
	
 	 
	Diluted weighted average number of $0.25
      Ordinary Shares

      in accordance with US GAAP (millions
      of shares)	  	 1,735	  	 1,761	  	 1,770	  
	
	
	
	
	
	
	
	 
	Net income per $0.25 Ordinary Share and
      ADS before change

      in accounting policy in accordance
      with US GAAP – basic and diluted ($)	  	 $1.33	  	 $0.77	  	 $0.49	  
	
	
	
	
	
	
	
 	 
	Net income per $0.25 Ordinary Share and
      ADS after change in

      accounting policy in accordance with
      US GAAP – basic and diluted ($)	  	 $1.33	  	 $0.79	  	 $0.49	  
	
	
	
 	
	
 	
	
 	 
	 	 	 	 	 	 	 	 
	  	  	  	  	  	  	  	  
	 	 	2002	 	2001	 	2000	 
	
	
	
	
	
	
	
 	 
	Net income from continuing operations per
      $0.25 Ordinary Share and ADS

      in accordance with US GAAP –
      basic and diluted ($)	  	 $1.33	  	 $0.79	  	 $0.51	  
	
	
	
 	
	
 	
	
 	 
	Net loss from discontinued operations per
      $0.25 Ordinary Share and ADS

      in accordance with US GAAP –
      basic and diluted ($)	  	 –	  	 –	  	 ($0.02	 )
	
	
	
	
	
	
	
 	 



  The dividend in specie in 2000 in respect of the demerger of Zeneca Agrochemicals under US GAAP amounted to $836m, after realised exchange gains on the translation of foreign currency financial statements of
$297m.


As noted on page 62, cash settlement discounts have been reclassified from cost
of sales to sales. Comparative information for 2001 and 2000 has also been reclassified
for consistency of presentation.








 
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	118	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Additional Information or US
      Investors 	 


 Additional Information for
  US Investors continued

 



Differences between UK and US accounting principles
(continued)
	 	 	 	 	 	 	 
	US GAAP Statement of Comprehensive Income	 	 	 	 	 	 
	 For
      the years ended 31 December	2002

      $m	 	2001

      $m	 	2000

      $m	 
	
	 
	Net income for the year	2,307	 	1,397	 	865	 
	
	 
	Exchange gains/(losses) net of tax	2,919	 	(1,473	)	(2,184	)
	
	 
	Exchange realised on demerger of Zeneca
      Agrochemicals	–	 	–	 	(297	)
	
 	 
	Other movements	(73	)	–	 	(2	)
	
 	 
	Total Comprehensive Income	5,153	 	(76	)	(1,618	)
	
	 


 Other movements in 2002 include the recognition
  of a minimum liability under SFAS 87 of $45m.

 The cumulative exchange gains and losses (net
  of tax) on the translation of foreign currency financial statements under US
  GAAP are set out in the following note:

	For the years ended
      31 December	2002

      $m	 	2001

      $m	 	2000

      $m	 
	
	 
	Balance at 1 January	(4,318	)	(2,845	)	(364	)
	
	 
	Movement in year	2,919	 	(1,473	)	(2,481	)
	
	 
	Balance at 31 December	(1,399	)	(4,318	)	(2,845	)
	
	 


 Stock compensation 

  In the Group’s financial statements prepared
  under UK GAAP, no cost is accrued for the share options awarded to employees
  under the Zeneca 1994 Executive Share Option Scheme, the AstraZeneca Share Option
  Plan, and the AstraZeneca Savings-Related Share Option Scheme as the exercise
  price is equivalent to the market value at the date of grant. Under US GAAP
  the cost is calculated as the difference between the option price and the market
  price at the date of grant or, for variable plans, at the end of the reporting
  period (until measurement date). Under the requirements of APB Opinion No. 25
  any compensation cost would be amortised over the period from the date the options
  are granted to the date they are first exercisable. Under US GAAP in the net
  income reconciliation, the Group has adjusted for stock compensation costs as
  calculated under APB Opinion No 25, SFAS No.123 sets out an alternative methodology
  for recognising the compensation cost based on the fair value at grant date.
  Had the Group adopted this methodology, the incremental effect on net income
  under US GAAP is shown below:

	 	2002	 	2001	 	2000	 
	$m	$m	$m
	
	 
	Net income under US GAAP as reported	2,307	 	1,397	 	865	 
	
 	 
	Compensation cost (after adjusting for
      APB 25 credit of $33m)	(155	)	(76	)	(46	)
	
	 
	Pro forma net income	2,152	 	1,321	 	819	 
	
	 
	Pro forma net income per $0.25 Ordinary
      Share and ADS in accordance with US GAAP (basic and diluted):	 	 	 	 	 	 
	
 	 
	As reported ($)	$1.33	 	$0.79	 	$0.49	 
	
	 
	Pro forma ($)	$1.24	 	$0.75	 	$0.46	 
	
	 



The fair value of options granted is estimated, based on the stock price at the grant date, using the Black-Scholes option pricing model with the following assumptions:

	 	2002	 	2001	 	2000	 
	
	 
	Dividend yield	1.6%		1.5%	 	2.0%	 
	
	 
	Expected volatility	30.0%		20.0%	 	20.0%	 
	
	 
	Risk-free interest rate	5.2%		4.2%	 	5.9%	 
	
	 
	Expected lives: 1994 Scheme	–	 	–	 	6.0 years	 
	
	 
	Expected lives: AstraZeneca Share Option
      Plan	6.0 years	 	6.0 years	 	6.0 years	 
	
	 
	Expected lives: SAYE Scheme	4.3 years	 	4.3 years	 	4.6 years	 
	
	 



In the initial phase-in period, the effects of applying SFAS No.123 for disclosing compensation cost may not be representative of the effects on pro forma net income and earnings per share for future years.







 
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	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Additional Information for
      US Investors	119




Differences between UK and US accounting principles
(continued)
 Pension and post-retirement benefits
  

  For the purposes of US GAAP, the pension costs
  of the major UK retirement plan and of the retirement plans of the major non-UK
  subsidiaries have been restated in the following tables in accordance with the
  requirements of SFAS No. 132. These plans comprise a substantial portion of
  the actuarial liabilities of all AstraZeneca retirement plans. The changes in
  projected benefit obligations, plan assets and details of the funded status
  of these retirement plans, together with the changes in the accumulated other
  post-retirement benefit obligations, under SFAS No. 132 are as follows:

	 	Pension
      benefits	 	Other
      post-retirement benefits	 
	 	 
 	 	 
 	 
	Change in projected benefit
      obligation	2002	 	2001	 	2002	 	2001	 
	 	$m	 	$m	 	$m	 	$m	 
	
	 
	Benefit obligation at beginning of year	4,337	 	4,188	 	205	 	197	 
	
	 
	Service cost	114	 	102	 	8	 	7	 
	
	 
	Interest cost	263	 	243	 	14	 	14	 
	
	 
	Participant contributions	18	 	17	 	–	 	–	 
	
	 
	Plan amendments	–	 	(11	)	–	 	–	 
	
	 
	Actuarial (gain)/loss	80	 	75	 	23	 	(1	)
	
	 
	Special termination benefits	12	 	19	 	–	 	–	 
	
	 
	Settlement and curtailment	–	 	–	 	(24	)	–	 
	
	 
	Benefits paid	(206	)	(198	)	(19	)	(14	)
	
	 
	Exchange	408	 	(98	)	3	 	2	 
	
	 
	Benefit obligation at end of year	5,026	 	4,337	 	210	 	205	 
	
	 


 

 

	  	 Pension
      benefits	 	 Other
      post-retirement benefits	 
	 	 
 	 	 
 	 
	Change in plan assets	2002	 	2001	 	2002	 	2001	 
	 	$m	 	$m	 	$m	 	$m	 
	
	 
	Fair value at 1 January	3,753	 	3,803	 	–	 	–	 
	
	 
	Actual return on plan assets	(142	)	45	 	(16	)	–	 
	
	 
	Group contribution	284	 	170	 	161	 	–	 
	
	 
	Participant contributions	18	 	17	 	–	 	–	 
	
	 
	Settlement and curtailment	–	 	–	 	–	 	–	 
	
	 
	Benefits paid	(205	)	(198	)	(12	)	–	 
	
	 
	Exchange	330	 	(84	)	–	 	–	 
	
	 
	Fair value of plan assets at end of year	4,038	 	3,753	 	133	 	–	 
	
	 
	Funded status of plans	(988	)	(584	)	(77	)	(205	)
	
	 
	Unrecognised net loss/(profit)	938	 	396	 	–	 	–	 
	
	 
	Prior service cost not recognised	29	 	35	 	–	 	–	 
	
	 
	Unrecognised net obligation on implementation	3	 	6	 	–	 	–	 
	
	 
	 	(18	)	(147	)	(77	)	(205	)
	
	 
	Adjustments to recognise minimum liability	 	 	 	 	 	 	 	 
	Intangible assets	(45	)	–	 	–		–	 
	
	 
	Accumulated other comprehensive income	(45	)	–	 	–		–	 
	
	 
	Accrued benefit liability	(108	)	(147	)	(77	)	(205	) 
	
	 


 







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	120	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Additional Information for
      US Investors	 


Additional Information for US
  Investors continued




Differences between UK and US accounting principles
(continued)
 At 31 December 2002, the projected benefit
  obligation, accumulated benefit obligation and fair value of the plan assets
  in respect of the retirement plans above with accumulated benefit obligations
  in excess of plan assets were $4,249m, $3,557m and $3,296m, (2001 $97m, $73m
  and $nil) respectively.

 Assumed discount rates and rates of increase
  in remuneration used in calculating the projected benefit obligations together
  with long term rates of return on plan assets vary according to the economic
  conditions of the country in which the retirement plans are situated. The weighted
  average rates used for calculation of year end benefit obligations and forecast
  benefits cost in the main retirement plans and other benefit obligations for
  SFAS No. 132 purposes were as follows:

	 	  Pension
      benefits	 	Other post-retirement
      benefits	 
	 	
	 	
	 
	  	2002

      %	  	2001

      %	  	2000

      %	  	2002

      %	  	2001

      %	  	2000

      %	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Discount rate	5.8	 	6.0	 	5.6	 	6.6	 	7.1	 	7.1	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Long term rate of increase in remuneration	4.1	 	4.4	 	4.4	 	4.8	 	n/a	 	n/a	 
	
	
	
	
	
	
	
	
	
	

	

	

	 
	Expected long term return on assets	6.4	 	6.5	 	6.2	 	7.8	 	n/a	 	n/a	 
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 


The Group has assumed a long term rate of increase
  in healthcare costs of 11.0%, reducing to 5.0%. 

	 	  Pension
      benefits	 	Other post-retirement
      benefits	 
	 	
	 	
	 
	  	2002

      $m	  	2001

      $m	  	2000

      $m	  	2002

      $m	  	2001

      $m	  	2000

      $m	  
	
	 
	
	 
	
	 
	 	 
	
	 
	
	 
	 
	Net periodic cost	 	 	 	 	 	 	 	 	 	 	 	 
	Service cost – present value of benefits	 	 	 	 	 	 	 	 	 	 	 	 
	accruing during the year	114	 	102	 	152	 	8	 	7	 	10	 
	
	
	
	
	
	
	
	 
	
	 
	
	 
	 
	Interest cost on projected benefit obligations	263	 	243	 	301	 	14	 	14	 	17	 
	
	
	
	
	
	
	
	 
	
	 
	
	 
	 
	Expected return on assets	(263	)	(242	)	(322	)	–	 	–	 	–	 
	
	
	
	
	
	
	
	 
	
	 
	
	 
	 
	Net amortisation and deferral	28	 	39	 	46	 	(1	)	(2	)	(1	)
	
	 
	
	 
	
	 
	
	 
	
	 
	
	 
	 
	Net periodic cost for the year	142	 	142	 	177	 	21	 	19	 	26	 
	
	
	
	
	
	
	
	
 	
	
 	
	
	 
	 


 It is estimated that a 1 percentage point change
  in the weighted average healthcare costs trend would have the following effects
  on the accumulated benefit obligation and net periodic cost at 31 December 2002:

	 	 	 	1 percentage
      point	 
	 	 	 	
	 
	  	  	  	increase

      $m	  	decrease

      $m	 
	
	 
	Accumulated benefit obligation	 	 	10	 	(9	)
	 
	 
	Net periodic cost	 	 	2	 	(1	)
	
	 
	 	 	 	 	 	 	 
	Taxation	 	 	 	 	 	 
	Years ended 31 December	2002

      $m	  	2001

      $m	  	2000

      $m	 
	
	 
	
	 
	
	 
	 
	Taxes on income from continuing operations	 	 	 	 	 	 
	UK taxation	 	 	 	 	 	 
	   Corporation tax	165	 	147	 	79	 
	
	 
	
	 
	
	 
	 
	   Double taxation
      relief	(7	)	(4	)	(42	)
	
	 
	
	 
	
	 
	 
	   Deferred	40	 	10	 	(27	)
	
	 
	
	 
	
	 
	 
	Overseas taxation	 	 	 	 	 	 
	   Overseas taxes	921	 	831	 	956	 
	
	 
	
	 
	
	 
	 
	   Deferred taxation	(84	)	125	 	–	 
	
	 
	
	 
	
	 
	 
	Share of taxation of joint ventures and
      associates	–	 	–	 	3	 
	
	 
	
	 
	
	 
	 
	Taxes on income from continuing operations	1,035	 	1,109	 	969	 
	
	
	
	
	
	
	 
	 









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	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Additional Information for
      US Investors	121


 



Differences between UK and US accounting
  principles (continued) 

 The table below reconciles the UK statutory
  tax charge to the Group’s actual charge on income from continuing operations.


	Years ended 31 December	2002

      $m	 	2001

      $m	 	2000

      $m	 
	
	 
	Income on continuing operations	3,342	 	2,506	 	1,876	 
	
	 
	
	 
	
	 
	 
	Taxation charge at UK corporation	  	 	  	 	  	 
	tax rate of 30% for 2002 (30% for 2001,
      30% for 2000)	1,002	 	751	 	563	 
	
	 
	
	 
	
	 
	 
	Acquisition related items	 –	 	 4	 	29	 
	
	 
	
	 
	
	 
	 
	Goodwill, Advanta, and Salick Health Care
      impairment	 –	 	190	 	576	 
	
	 
	
	 
	
	 
	 
	Net effect of different rates and eligible
      costs in other jurisdictions	(21	)	(43	)	(86	)
	
	 
	
	 
	
	 
	 
	Exceptional items	105	 	 4	 	19	 
	
	 
	
	 
	
	 
	 
	Other	(51	)	203	 	(132	)
	
	 
	
	 
	
	 
	 
	Tax on income from continuing operations	1,035	 	1,109	 	969	 
	
	 
	 



In 2002, claims amounting to $43m (2001 $109m) for tax relief arising as a result of a restructuring of the AMI joint venture in 1998 were made. Under US GAAP, these reliefs are adjusted against the goodwill arising on
the restructuring and included in other adjustments.

	Shareholders’ equity 	2002

      $m	 	2001

      $m	 
	 

    	 
	Total shareholders’ equity
      under UK GAAP (restated)	11,172	 	9,586	 
	 
	 
	
	
	 
	 	  	 	  	 
	Adjustments to conform
      to US GAAP	  	 	  	 
	Purchase accounting adjustments
      (including goodwill and intangibles)	  	 	  	 
	   Deemed
      acquisition of Astra	  	 	  	 
	      Goodwill	12,692	 	11,062	 
	 
	 
	
	
	 
	      Tangible
      and intangible fixed assets	7,707	 	8,139	 
	 
	 
	
	
	 
	   Others	 86	 	31	 
	 
	 
	
	
	 
	Capitalisation, less disposals
      and amortisation of interest	238	 	192	 
	 
	 
	
	
	 
	Deferred taxation	  	 	  	 
	   On
      fair value of Astra	(2,305	)	(2,313	)
	 
	 
	
	 
	 
	   Others
      (restated)	(159	)	(68	)
	 
	 
	
	 
	 
	Dividend	808	 	820	 
	 
	 
	
	 
	 
	Pension expense	(271	)	(162	)
	 
	 
	
	 
	 
	Post-retirement benefits/plan
      amendment	(24	)	(28	)
	 
	 
	
	 
	 
	Software costs capitalised	 64	 	110	 
	 
	 
	
	 
	 
	Fair value of derivative financial
      instruments	 99	 	50	 
	 
	 
	
	 
	 
	Deferred income recognition	(14	)	(75	)
	 
	 
	
	 
	 
	Others	 90	 	58	 
	 
	 
	
	 
	 
	Shareholders’ equity
      in accordance with US GAAP	30,183	 	27,402	 
	 
	
 	
	
 	 
	 











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	122	AstraZeneca Annual Report and
      Form 20-F 2002

    www.astrazeneca.com	Additional
    Information for US Investors	 



  Additional Information for US
Investors continued



Differences between UK and US accounting principles
(continued)

US GAAP Condensed Consolidated Statement of Cash Flows


	For the years ended 31 December	2002

   $m	 	2001

   $m	 	2000

   $m	 
	
	
	
	
	
	
	 
	Cash flows from operating activities	4,833	 	3,126	 	3,554	 
	
	
	
	
	
	
	 
	Cash flows from investing activities	 	 	 	 	 	 
	   Movement in short term investments and fixed deposits	(806	)	260	 	(608	)
	
	
	
	
	
	
	 
	   New fixed asset investments	(1	)	(5	)	(3	)
	
	

   	
	

   	
	

   	 
	   Disposal of fixed assets	66	 	44	 	37	 
	
	

   	
	

   	
	

   	 
	   Acquisitions and disposals	–	 	(44	)	740	 
	
	

   	
	
	
	
	 
	   Capital expenditure	(1,608	)	(1,582	)	(1,460	)
	
	
	
	
	
	
	 
	Net cash outflows from investing activities	(2,349	)	(1,327	)	(1,294	)
	
	
	
	
	
	
	 
	Net cash flow before financing	2,484	 	1,799	 	2,260	 
	
	
	
	
	
	
	 
	Cash flows from financing activities	 	 	 	 	 	 
	   Equity dividends paid	(1,234	)	(1,236	)	(1,220	)
	
	
	
	
	
	
	 
	   Repurchase of AstraZeneca PLC Ordinary Shares	(1,154	)	(994	)	(334	)
	
	
	
	
	
	
	 
	   Net (decrease)/increase in short term borrowings	(13	)	7	 	(67	)
	
	
	
	

   	
	
	 
	   Loans repaid/new loans	(105	)	28	 	3	 
	
	
	
	

   	
	

   	 
	   Repayment of lease finance	–	 	–	 	(2	)
	
	

   	
	

   	
	

   	 
	Net cash outflows from financing activities	(2,506	)	(2,195	)	(1,620	)
	
	
	
	
	
	
	 
	(Decrease)/increase in cash	(22	)	(396	)	640	 
	
	
	
	
	
	
	 
	Cash:	 	 	 	 	 	 
	At 1 January	510	 	908	 	262	 
	
	
	
	
	
	
	 
	(Decrease)/increase in cash	(22	)	(396	)	640	 
	
	
	
	
	
	
	 
	Exchange movements	36	 	(2	)	6	 
	
	

   	
	

   	
	

   	 
	At 31 December	524	 	510	 	908	 
	
	
	
	
	
	
	 


	(1)	Interest paid was $96m in 2002, $84m in 2001, $145m in 2000. Interest received was $142m in 2002, $232m in 2001, $180m in 2000.
	(2)	Tax paid was $795m in 2002, $792m in 2001, $648m in 2000.










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	 	AstraZeneca Annual Report and
      Form 20-F 2002

    www.astrazeneca.com	Additional
    Information for US Investors	123



  Group Financial Record – UK
  GAAP



	For the years ended 31 December	1995

      (restated)

      $m	 	1996

      (restated)

      $m	 	1997

      (restated)

      $m	 	1998

      (restated)

      $m	 	1999

      (restated)

      $m	 	2000

      (restated)

      $m	 	2001

      (restated)

      m	 	2002

      

      $m	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Turnover and profits	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Group turnover	12,007	 	13,106	 	13,055	 	15,260	 	18,257	 	17,882	 	16,222	 	17,841	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Cost of sales	(4,018	)	(4,225	)	(3,952	)	(4,819	)	(5,849	)	(5,270	)	(4,232	)	(4,520	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Distribution costs	(374	)	(385	)	(364	)	(367	)	(343	)	(286	)	(122	)	(141	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Research and development	(1,671	)	(1,961	)	(2,170	)	(2,473	)	(2,923	)	(2,893	)	(2,773	)	(3,069	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Selling, general and administrative expenses	(3,566	)	(3,751	)	(3,838	)	(4,812	)	(6,585	)	(5,691	)	(5,509	)	(6,348	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Other income	189	 	193	 	126	 	353	 	189	 	266	 	368	 	243	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Group operating profit	2,567	 	2,977	 	2,857	 	3,142	 	2,746	 	4,008	 	3,954	 	4,006	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Group operating profit

      before exceptional items	 2,670	  	 2,977	  	 2,857	  	 3,051	  	 3,908	  	 4,330	  	 4,156	  	 4,356	  
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Exceptional items charged to

      operating profit	 (103	)	 –	  	 –	  	 91	  	 (1,162	)	 (322	)	 (202	)	 (350	)
	
	
	
	
 	
	
 	
	
	
	
	
	
	
	
	
	
	 
	Share of operating profit of

      joint ventures and associates	 354	  	 504	  	 722	  	 539	  	 (7	)	 (149	)	 –	  	 –	  
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Exceptional items	(306	)	(56	)	–	 	(29	)	(776	)	(150	)	–	 	–	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Profits on sale of fixed assets	–	 	–	 	–	 	–	 	–	 	–	 	10	 	–	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Dividend income	–	 	–	 	–	 	–	 	–	 	3	 	8	 	1	 
	
	
	
	
	
	
	
	
	
	
 	
	
	
	
	
	
 	 
	Net interest	75	 	118	 	81	 	47	 	(4	)	135	 	105	 	30	 
	
	
	
	
	
	
	
	
	
	
 	
	
	
	
	
	
 	 
	Profit on ordinary activities before taxation	2,690	 	3,543	 	3,660	 	3,699	 	1,959	 	3,847	 	4,077	 	4,037	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Taxation	(802	)	(1,087	)	(1,081	)	(1,118	)	(661	)	(1,560	)	(1,160	)	(1,177	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Profit on ordinary activities after taxation	1,888	 	2,456	 	2,579	 	2,581	 	1,298	 	2,287	 	2,917	 	2,860	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Attributable to minorities	(25	)	(19	)	(9	)	(2	)	(1	)	(10	)	(11	)	(24	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Net profit for the financial year	1,863	 	2,437	 	2,570	 	2,579	 	1,297	 	2,277	 	2,906	 	2,836	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Return on sales	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Group operating profit before exceptional

      items as a percentage of sales	 22.2	%	 22.7	%	 21.9	%	 20.0	%	 21.4	%	 24.2	%	 25.6	%	 24.9	%
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Ratio of earnings to fixed charges

      (UK GAAP)

      	 18.3	  	 28.3	  	 28.1	  	 26.1	  	 10.1	  	 25.2	  	 42.8	  	 45.6	  
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	At 31 December	1995

      (restated)

      $m	 	1996

      (restated)

      $m	 	1997

      (restated)

      $m	 	1998

      (restated)

      $m	 	1999

      (restated)

      $m	 	2000

      (restated)

      $m	 	2001

      (restated)

      $m	 	2002

      

      $m	 
	
	
 	
	
 	
	
 	
	
 	
	
 	
	
 	
	
 	
	
 	 
	Balance sheets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fixed assets (tangible and intangible)

      and goodwill	 5,251	  	 5,661	  	 5,894	  	 8,721	  	 9,717	  	 7,908	  	 8,109	  	 9,404	  
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Fixed asset investments	834	 	1,005	 	1,027	 	353	 	185	 	11	 	23	 	46	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
 	 
	Current assets	8,343	 	9,387	 	9,355	 	9,630	 	10,393	 	10,938	 	10,364	 	12,126	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Total assets	14,428	 	16,053	 	16,276	 	18,704	 	20,295	 	18,857	 	18,496	 	21,576	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Creditors due within one year	(4,540	)	(4,599	)	(4,459	)	(5,650	)	(7,019	)	(6,897	)	(6,480	)	(8,215	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Total assets less current liabilities	9,888	 	11,454	 	11,817	 	13,054	 	13,276	 	11,960	 	12,016	 	13,361	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Creditors due after more than one year	(917	)	(912	)	(902	)	(801	)	(1,202	)	(927	)	(787	)	(362	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Provisions for liabilities and charges	(1,452	)	(1,511	)	(1,478	)	(1,472	)	(1,765	)	(1,617	)	(1,600	)	(1,773	)
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Minority equity interests	169	 	184	 	60	 	59	 	46	 	27	 	43	 	54	 
	
	
	
	
	
	
	
	
	
	
 	
	
	
	
	
	
 	 
	Shareholders’ funds – equity
      interests	7,350	 	8,847	 	9,377	 	10,722	 	10,263	 	9,389	 	9,586	 	11,172	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	Shareholders’ funds and minority interests	7,519	 	9,031	 	9,437	 	10,781	 	10,309	 	9,416	 	9,629	 	11,226	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	 


 Net profit and shareholders’funds have
  been restated under FRS19 – Deferred Tax for the years 1995 to 2001. In
  addition, the information under sales and costs of sales has been reclassified
  for cash settlement discounts which are now deducted from sales as opposed to
  being included in cost of sales.








 
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	124	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Group Financial Record –
      UK GAAP	 


 Group Financial Record
  – UK GAAP
  continued



	For the years ended 31 December

      	1995

      $m	 	1996

      $m	 	1997

      $m	 	1998

      $m	 	1999

      $m	 	2000

      $m	2001

      $m 	 	2002

      $m
      	 
	
	 
	Cash flow	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash inflow from operating activities	3,005	 	3,198	 	3,355	 	3,832	 	3,113	 	4,183	 	3,762	 	5,593	 
	
	 
	Dividends received from	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	joint ventures and associates	243	 	328	 	369	 	262	 	3	 	–	 	–	 	–	 
	
	 
	Returns on investments and servicing of
      finance	65	 	98	 	(31	)	103	 	29	 	19	 	156	 	35	 
	
	 
	Tax paid	(788	)	(719	)	(750	)	(775	)	(1,020	)	(648	)	(792	)	(795	)
	
	 
	Capital expenditure and financial investment	(918	)	(1,182	)	(1,292	)	(1,369	)	(2,731	)	(1,426	)	(1,543	)	(1,543	)
	
	 
	Acquisitions and disposals	(531	)	227	 	(321	)	(2,013	)	1,978	 	740	 	(44	)	–	 
	
	 
	Equity dividends paid to Shareholders	(628	)	(750	)	(882	)	(995	)	(1,216	)	(1,220	)	(1,236	)	(1,234	)
	
	 
	Net cash flow before management of
      liquid resources and financing	 448	  	 1,200	  	 448	  	 (955	)	 156	  	 1,648	  	 303	  	 2,056	  
	
	 










 
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	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Group Financial Record –
      US GAAP	125


 Group Financial Record –
  US GAAP



Group Financial Record –
  US GAAP 

  The selected financial data set out below for
  each of the years in the five year period ended 31 December 2002, has been extracted
  or derived from audited Financial Statements.

 The selected financial data should be read
  in conjunction with, and are qualified in their entirety by reference to, the
  Financial Statements of AstraZeneca and the notes thereto, which are included
  elsewhere in this document.

	Consolidated income statement data

      For the years ended 31 December
      	1998	 	1999	 	2000	 	2001	 	2002	 
	 
 	 
	Net income/(loss) from operations
      ($ million)	1,036	 	(3,539	)	865	 	1,397	 	2,307	 
	
	 
	Net income/(loss) from operations per Ordinary
      Share	$1.09	 	($2.26	)	$0.49	 	$0.79	 	$1.33	 
	
	 
	Diluted income/(loss) from operations per
      Ordinary Share	$1.09	 	($2.26	)	$0.49	 	$0.79	 	$1.33	 
	
	 
	 	 	 	 	 	 	 	 	 	 	 
	Net income/(loss) from operations had SFAS
      No 141 been adopted	1,129	 	(2,833	)	1,716	 	2,125	 	 	 
	
	 
	Net and diluted income/(loss) per Ordinary
      Share from operations

      had SFAS No 141 been adopted 	$1.19	 	($1.81	)	$0.97	 	$1.21	 	 	 
	
	 




	Ratio of earnings to fixed charges

        For the Group with estimated material

        adjustments to accord with US GAAP
	 11.7	 	(19.3	)	 15.5	 	25.0	 	36.7	 
	
	 
	 	 	 	 	 	 	 	 	 	 	 
	Consolidated balance sheet data

      At 31 December 	1998

      $m 	 	1999

      $m 	 	2000

      $m 	 	2001

      $m 	 	2002

      $m 	 
	
	 
	Total assets	10,675	 	46,640	 	41,500	 	38,081	 	42,578	 
	
	 
	Shareholders’ equity	5,558	 	33,735	 	29,707	 	27,402	 	30,183	 
	
	 


Merger accounting 

  For the purpose of US GAAP, the merger has been
  regarded as a purchase accounting acquisition of Astra by Zeneca.

  Accordingly the US GAAP results above for 1998
  are not restated for the merger with Astra and represent the previously reported
  results of Zeneca Group PLC.

 Ratio of earnings to fixed charges
  (UK and US GAAP) 

  For the purpose of computing these ratios, earnings
  consist of the income from continuing ordinary activities before taxation of
  Group companies and income received from companies owned 50% or less, plus fixed
  charges (excluding capitalised interest). Fixed charges consist of interest
  (including capitalised interest) on all indebtedness, amortisation of debt discount
  and expense and that portion of rental expense representative of the interest
  factor. The comparative figures have been restated from those previously disclosed
  to reflect the reclassification of the operations of Specialties and Agrochemicals
  as discontinued.









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	126	AstraZeneca Annual Report and
      Form 20-F 2002

    www.astrazeneca.com	Shareholder
    Information	 



  Shareholder Information



	AstraZeneca	1999	*	2000	 	2001	 	2002	 
	
	
	
	
	
	
	
	
	 
	Ordinary Shares in issue – millions	 	 	 	 	 	 	 	 
	At year end	1,775	 	1,766	 	1,745	 	1,719	 
	
	
	
	
	
	
	
	
	 
	Weighted average for year	1,776	 	1,768	 	1,758	 	1,733	 
	
	
	
	
	
	
	
	
	 
	Stock Market price – per $0.25
    Ordinary Share	 	 	 	 	 	 	 	 
	Highest (pence)	2946	 	3600	 	3555	 	3625	 
	
	
	
	
	
	
	
	
	 
	Lowest (pence)	2208	 	1926	 	2880	 	1799	 
	
	
	
	
	
	
	
	
	 
	At year end (pence)	2568	 	3375	 	3098	 	2220	 
	
	
	
	
	
	
	
	
	 
	Earnings per $0.25 Ordinary Share before exceptional items1	$1.63	 	$1.62	 	$1.73	 	$1.84	 
	
	
	
	
	
	
	
	
	 
	Earnings per $0.25 Ordinary Share (basic)1	$0.73	 	$1.30	 	$1.65	 	$1.64	 
	
	
	
	
	
	
	
	
	 
	Earnings per $0.25 Ordinary Share (diluted)1	$0.73	 	$1.30	 	$1.65	 	$1.64	 
	
	
	
	
	
	
	
	
	 
	Dividends	$0.70	 	$0.70	†	$0.70	 	$0.70	 
	
	
	
	
	
	
	
	
	 


	*	For the period 1 January 1999 to 31 December 1999 (except for Stock Market prices which are for the period from 6 April 1999 to 31 December 1999).
	†	In addition, shareholders received a distribution of shares in Syngenta AG as a dividend in specie in respect of the demerger of Zeneca Agrochemicals.

    
	1	Earnings per share have been
      restated for the effect of the adoption of FRS19 – Deferred
    Tax


	 	 	 	 	 	 	 	 	 
	Zeneca	1999	*	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	Ordinary Shares in issue – millions	 	 	 	 	 	 	 	 
	At period end	953	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	Weighted average for period	951	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	Stock Market price – per
    25 pence Ordinary Share	 	 	 	 	 	 	 	 
	Highest (pence)	3037	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	Lowest (pence)	2406	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	At period end (pence)	3037	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	*	For the period from 1 January
    1999 to 6 April 1999	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Astra	1999	*	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	Ordinary Shares in issue – millions	 	 	 	 	 	 	 	 
	At period end	1,643	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	Weighted average for period	1,643	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	Stock Market price – per
    Astra A Share	 	 	 	 	 	 	 	 
	Highest (SEK)	190	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	Lowest (SEK)	154	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	At period end (SEK)	190	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	Stock Market price – per
    Astra B Share	 	 	 	 	 	 	 	 
	Highest (SEK)	190	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	Lowest (SEK)	154	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	At period end (SEK)	190	 	 	 	 	 	 	 
	
	
	 	 	 	 	 	 	 
	*	For the period from 1 January 1999 to 6
    April 1999	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 


	Percentage analysis at 31 December 2002 of issued share capital

   By size of account

   No. of shares

   

   	2002

   %	 
	
	
	 
	1 – 250	0.6	 
	
	
	 
	251 – 500	0.8	 
	
	
	 
	501 – 1,000	1.1	 
	
	
	 
	1,001 – 5,000	1.7	 
	
	
	 
	5,001 – 10,000	0.3	 
	
	
	 
	10,001 – 50,000	1.4	 
	
	
	 
	50,001 – 1,000,000	12.2	 
	
	
	 
	over 1,000,000†	81.9	 
	
	
	 
	Issued share capital	100.0	 
	
	
	 
	†	includes VPC and ADR holdings	 	 



At 31 December 2002, AstraZeneca PLC had 177,573 registered holders of 1,718,666,329 Ordinary Shares of $0.25 each. In addition there were approximately 46,000 holders of American Depositary Receipts (ADRs)
representing 5.31% of the issued share capital and 156,000 holders of shares held under the VPC Services Agreement representing 23.56% of the issued share capital. The ADRs, each of which is equivalent to one Ordinary Share, are issued by JPMorgan
Chase Bank.









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	 	AstraZeneca Annual Report
        and Form 20-F 2002

    www.astrazeneca.com	Shareholder Information	127


  



AstraZeneca PLC

Since April 1999, following the AstraZeneca
merger, the principal markets for trading in the shares of AstraZeneca PLC are
the London, Stockholm and New York Stock Exchanges. The table below sets forth,
for the four quarters of 2001 and for the first two quarters and last six months
of 2002 the reported high and low share prices of AstraZeneca PLC, on the following
bases:

	>	for shares listed on the London Stock Exchange (‘LSE’) the reported high and low middle market closing quotations are derived from The Daily Official List;
	 	 
	>	for shares listed on the Stockholm Stock Exchange (‘SSE’) the high and low closing sales prices are as stated in the Official List;
	 	 
	>	for American Depositary Shares (‘ADS’) listed on the New York Stock Exchange the reported high and low sales prices are as reported by Dow Jones (ADR quotations).
	 	 


	 	 	AstraZeneca	 
	 	 	

   	 
	 	 	Ordinary LSE	 	ADS	 	Ordinary SSE	*
	 	 	

   	 
	 	 	High

   (pence)	 	Low

   (pence)	 	High

   (US$)	 	Low

   (US$)>	 	High

   (SEK)	 	Low

   (SEK)	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	2001	– Quarter 1	3385	 
	2880	 	50.88	 	42.70	 	501	 	400	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	– Quarter 2	3555	 	3149	 	50.40	 	45.68	 	540	 	460.5	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	– Quarter 3	3512	 	2913	 	51.11	 	42.60	 	534	 	431	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	– Quarter 4	3285	 	3012	 	48.14	 	44.01	 	507	 	458.5	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	2002	– Quarter 1	3625	 	3051	 	52.00	 	43.72	 	541	 	455.5	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	– Quarter 2	3574	 	2634	 	52.04	 	39.12	 	536	 	366	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	– July	2680	 	2002	 	41.30	 	29.90	 	392	 	286	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	– August	2406	 	1822	 	38.00	 	28.30	 	360.5	 	264	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	– September 	2067	 	1799	 	32.15	 	28.00	 	305	 	255	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	– October	2400	 	1947	 	38.15	 	30.16	 	351.5	 	279	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	– November	2540	 	2259	 	40.48	 	34.19	 	365	 	316.5	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 
	 	– December	2430	 	2194	 	38.47	 	34.82	 	350	 	304	 
	
	
	
	
	
	
	
	
	
	
	
	
	
	 


	*	Principally held in bearer
    form


During 2002 AstraZeneca’s share re-purchase
    programme which was introduced in 1999 continued with the re-purchase and subsequent
    cancellation of 28.4 million shares at a total cost of $1,190m, representing
    1.6 per cent of the total issued share capital of the Company. The average
    price paid per share in 2002 was 2818 pence. Between 1999 and 2001 a total
    of 37.1 million
  Ordinary Shares were re-purchased, and subsequently cancelled, at an average
    price of 2910 pence per share for a consideration, including expenses, of $1,615m.
    The excess of the consideration over the nominal value was charged against
    the profit and loss account reserve. Shares issued in respect of share schemes
totalled 1.7 million.


In 1999 in connection with the merger, AstraZeneca’s
share capital was redenominated into US dollars. On 6 April 1999, Zeneca shares
were cancelled and US dollar shares issued, credited as fully paid on the basis
of one dollar share for each Zeneca share then held. This was achieved by a reduction
of capital under section 135 of the Companies Act 1985. Upon the reduction of
capital
becoming effective, all issued and unissued Zeneca shares were cancelled and
the sum arising as a result thereof credited to a special reserve which was converted
into US dollars at the rate of exchange prevailing on the record date. This US
dollar
reserve was then applied in paying up at par newly created US dollar shares.



At the same time as the US dollar shares were issued,
the Company issued £50,000 Redeemable Preference Shares for cash at par.
The Redeemable Preference Shares carry limited class voting rights and no dividend
rights. This class of shares is also capable of redemption at par at the option
of the Company on the giving of seven days’ written
notice to the registered holder of
the shares.



A total of 826 million AstraZeneca shares were issued to Astra shareholders who
accepted the merger offer before the final closing date, 21 May 1999. AstraZeneca
received acceptances from Astra shareholders
representing 99.6 per cent of Astra’s
shares and the remaining 0.4 per cent was acquired in 2000 for cash.











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	128	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Shareholder Information	 


Shareholder Information
  continued



Major shareholdings

  On 29 January 2003 (not more than
  one month prior to the date of the Notice of Annual General Meeting) the following
  had disclosed an interest in the issued Ordinary Share capital of the Company
  in accordance with the requirements of Sections 198-208 of the Companies Act
  1985:

	Shareholder	Number of shares	 	Date of disclosure

      to Company*	Percentage
      of issued

      share capital	 
	
	
	
	
	
	 
	The Capital Group Companies, Inc.	204,812,653	 	14 Jan 2003	11.92%	 
	
	
	
	
	
	 
	Investor AB	91,545,308	 	16 Apr 1999	5.33%	 
	
	
	
	
	
	 
	Putnam Investment Management, LLC and The
      Putnam Advisory Company, LLC	52,643,485	 	8 Feb 2002	3.06%	 
	
	
	
	
	
	 
	Legal & General Investment Management
      Limited	52,518,020	 	13 Jun 2002	3.06%	 
	
	
	
	
	
	 


 No other person held a notifiable interest
  in shares, comprising 3% or more of the issued Ordinary Share capital of the
  Company, appearing in the register of interests in shares maintained under the
  provisions of Section 211 of the Companies Act 1985.

 Significant changes in the percentage ownership
  held by major shareholders during the past three years are set out below. Major
  shareholders do not have different voting rights.

 *Since the date of disclosure to the Company,
  the interest of any person listed above in the Ordinary Shares of the Company
  may have increased or decreased. No requirement to notify the Company of any
  increase or decrease would have arisen unless the holding moved up or down through
  a whole number percentage level.

	  	Percentage
        of issued share capital
	  	  	  
	Shareholder
	 29
        Jan 2003In AstraZeneca
	  	 17
        Feb 2002In AstraZeneca 
	  	 9
        Feb 2001In AstraZeneca
	  	 14
        Mar 2000In AstraZeneca
	 
	
	
	
	 
	
	
	
	
	 
	The Capital Group Companies, Inc.	11.92%
	 	11.09%
	 	10.02%
	 	7.80%
	 
	
	
	
	 
	
	
	
	
	 
	Investor AB
	5.33%
	 	5.25%
	 	5.18%
	 	5.20%
	 
	
	
	
	 
	
	
	
	
	 
	Putnam Investment Management,
        LLC and The Putnam Advisory Company, LLC
	3.06%
	 	3.02%
	 	<3.00%
	 	<3.00%
	 
	
	
	
	 
	
	
	
	
	 
	Legal & General Investment
        Management Limited
	3.06%
	 	<3.00%
	 	<3.00%
	 	<3.00%
	 
	
	
	
	 
	
	
	
	
	 



AstraZeneca PLC American Depositary Shares (each representing one Ordinary Share) evidenced by American Depositary Receipts issued by JPMorgan Chase Bank, as depositary, are listed on the New York Stock Exchange. As of
29 January 2003, the proportion of Ordinary Shares represented by American Depositary Shares was 5.32% of the Ordinary Shares outstanding.

	Number of registered holders of Ordinary
      Shares as of 29 January 2003:	 	 
	– In the US	804	 
	– Total	176,842	 
	 	 	 
	Number of record holders of American Depositary
      Receipts as of 29 January 2003:	 	 
	– In the US	3,133	 
	– Total	3,167	 



So far as the Company is aware, it is neither directly nor indirectly owned nor controlled by one or more corporations or by any government.









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	 	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Shareholder Information	129






As of 29 January 2003 the total amount of the
  Company’s voting securities owned by Directors and Officers of the Company
  was:

	Title of class	Amount
        owned
	Per
        cent of class

	 	($0.25
        shares)
	 
	

	Ordinary Shares	508,201
	0.03%

	




 The Company does not know of any arrangements
  the operation of which might result in a change in the control of the Company.

 Related party transactions

  During the period 1 January 2003 to
  29 January 2003 there were no transactions, loans, or proposed transactions
  between the Company and any related parties which were material to either the
  Company or the related party, or which were unusual in their nature or conditions.
  (See also Note 36 Statutory and other information).

 Options to purchase securities from registrant
  or subsidiaries

	(a) 	As of 29 January 2003, options outstanding
      to subscribe for Ordinary Shares of $0.25 of the Company were: 




	Number
        of shares
	 	Subscription
        price
	 	Normal
        expiry date

	
	
	
	
	

	34,608,810	 	630p-3487p
	 	2003-2012

	
	
	
	
	



 The weighted average subscription price of
  options outstanding at 29 January 2003 was 3000p. All options were granted under
  Company employee schemes.

	(b) 	Included in paragraph (a) are options granted
      to Directors and Officers of AstraZeneca as follows: 




	Number
        of shares
	 	Subscription
        price
	 	Normal
        expiry date

	
	
	
	
	

	1,562,652	 	748p-3487p
	 	2004-2012

	
	
	
	
	





	(c)  	Included in paragraph (b)
      are options granted to individually named Directors. Details of these option
      holdings as at 31 December 2002 are shown in the Directors’ Remuneration
      Report.
	 	 
	 	During the period 1 January
      2003 to 29 January 2003 no Director exercised any options.


 Dividend payments

  The record date for the second interim
  dividend for 2002 payable on 7 April 2003 (in the UK, US and Sweden) is 21 February
  2003. Shares trade ex-dividend on the London and Stockholm Stock Exchanges from
  19 February 2003 and ADRs trade ex-dividend on the New York Stock Exchange from
  the same date. Future dividends will normally be paid as follows:

 The record date for the first interim dividend
  for 2003 payable on 6 October 2003 (in the UK, US and Sweden) is 22 August 2003.

	First interim:	Announced end of July and paid
      in October
	Second interim:	Announced end of January and paid in April


 Registrar and Transfer Office The AstraZeneca
  Registrar Lloyds TSB Registrars The Causeway Worthing West Sussex BN99 6DA Telephone
  0870 600 3956

 Shareview 

  AstraZeneca’s shareholders with internet
  access may visit www.shareview.co.uk and register their details to create a
  portfolio. Shareview is a free and secure on-line service from Lloyds TSB Registrars
  that gives access to shareholdings including balance movements, indicative share
  prices and information about recent dividends.

 Results

  Unaudited trading results of AstraZeneca
  in respect of the first three months of 2003 will be published on 30 April 2003
  and results in respect of the first six months of 2003 will be published on
  24 July 2003.

 Documents on display

  The Memorandum and Articles of Association
  of the Company and other documents concerning the Company which are referred
  to in this document may be inspected at the Company’s registered office
  at 15 Stanhope Gate, London W1K 1LN.





 
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	130	AstraZeneca Annual Report and
      Form 20-F 2002

      www.astrazeneca.com	Shareholder Information	 


 Shareholder Information
  continued


  Taxation for US residents 

    The following summary of the principal UK and
    certain US tax consequences of ownership of Ordinary Shares or ADRs held as
    capital assets by US resident shareholders is based on current UK and US federal
    income tax law and practice and in part on representations of JPMorgan Chase
    Bank as Depositary for ADRs and assumes that each obligation in the deposit
    agreement among the Company, the Depositary and the holders from time to time
    of ADRs and any related agreement will be performed in accordance with its
    terms. The US Treasury has expressed concerns that parties to whom ADRs are
    pre-released may be taking actions that are inconsistent with the claiming,
    by US holders of ADRs, of foreign tax credits for US federal income tax purposes.
    Accordingly, the analysis of the creditability of UK taxes described below
    could be affected by future actions that may be taken by the US Treasury.

   UK and US income taxes and tax treaties
    affecting remittance of dividends 

    Under the current Double Taxation (Income)
    Convention (the ‘Convention’) between the UK and the US, US resident
    individuals who are the beneficial owners of dividends on Ordinary Shares,
    or ADRs representing Ordinary Shares, in UK corporations are generally entitled
    to a tax credit payment in respect of dividends equal to one-ninth (1/9th)
    of the dividend paid (the ‘Tax Credit Amount’). This tax credit
    payment is reduced by a UK withholding (the ‘UK withholding’) of
    up to 15% of the gross dividend paid. Therefore, a US holder will not actually
    receive any payment of this credit.

 US resident corporate shareholders are generally
  treated in the same way as individuals provided that either alone, or together
  with associated corporations, they do not control directly or indirectly 10%
  or more of the voting shares of the Company and do not constitute investment
  or holding companies, 25% or more of the capital of which is owned, directly
  or indirectly, by persons that are not individuals resident in, and are not
  nationals of, the US.

   The UK and the US have signed a new double
    taxation convention (the ‘New Convention’), which must be ratified
    by the UK Parliament and the US Senate before its provisions enter into force.
    No assurance can be provided as to when the New Convention will enter into
    force. When the Convention ceases to apply, US resident shareholders will
    no longer be entitled to the Tax Credit Amount because the New Convention
    does not provide for that entitlement.


 


   For US federal income tax purposes, the dividend
    paid and, if a US resident shareholder elects under the Convention to claim
    a foreign tax credit with respect to the UK withholding, the associated Tax
    Credit Amount are includible in gross income by US resident shareholders and,
    for foreign tax credit limitation purposes, are foreign source income, treated
    separately, together with other items of ‘passive income’ (or, in
    the case of certain holders, ‘financial services income’). The UK
    withholding is treated as a foreign income tax which may, subject to certain
    limitations and restrictions, be eligible for credit against a US resident
    shareholder’s US federal income tax liability (or deductible by such
    shareholders in computing their taxable income) for a US resident shareholder
    who elects to include the associated Tax Credit Amount in income.

 The election described in the
  preceding paragraph will not be available under the New Convention and, accordingly,
  no foreign tax credit for the related UK withholding will be available under
  the New Convention with respect to dividends paid to US resident shareholders.

 Shareholders whose holdings
  are effectively connected with a permanent establishment or fixed base in the
  UK, or who are corporations also resident in the UK for the purpose of the Convention,
  are not entitled to payment of the Tax Credit Amount nor are they subject to
  any deductions from the dividend.

   Taxation on capital gains 

    Under the Convention (and the New Convention)
    each contracting state may in general tax capital gains in accordance with
    the provisions of its domestic law. Under present UK law, individuals who
    are neither resident nor ordinarily resident in the UK, and companies which
    are not resident in the UK will not be liable to UK tax on capital gains made
    on the disposal of their Ordinary Shares or ADRs, unless such Ordinary Shares
    or ADRs are held in connection with a trade, profession or vocation carried
    on in the UK through a branch or agency. A US resident shareholder will recognise
    capital gain or loss for US federal income tax purposes on the sale or exchange
    of the Ordinary Shares or ADRs in the same manner as such holder would on
    the sale or exchange of any other shares held as capital assets. As a result,
    a US resident shareholder will generally recognise capital gain or loss for
    US federal income tax purposes equal to the difference between the amount
    realised and such holder’s adjusted basis in the Ordinary


 

 Shares or ADRs. The gain or loss will generally
  be US source income or loss. US resident shareholders should consult their own
  tax advisors about the treatment of capital gains, which may be taxed at lower
  rates than ordinary income for non-corporate taxpayers and capital losses, the
  deductibility of which may be limited.

   UK inheritance tax 

    Under the current Double Taxation (Estates)
    Convention (the ‘Estate Tax Convention’) between the US and the
    UK, Ordinary Shares or ADRs held by an individual shareholder who is domiciled
    for the purposes of the Estate Tax Convention in the US, and is not for the
    purposes of the Estate Tax Convention a national of the UK, will generally
    not be subject to the UK inheritance tax on the individual’s death or
    on a chargeable gift of the Ordinary Shares or ADRs during the individual’s
    lifetime provided that any applicable US federal gift or estate tax liability
    is paid, unless the Ordinary Shares or ADRs are part of the business property
    of a permanent establishment of the individual in the UK or, in the case of
    a shareholder who performs independent personal services, pertain to a fixed
    base situated in the UK. Where the ADRs or Ordinary Shares have been placed
    in trust by a settlor who, at the time of settlement, was a US resident shareholder,
    the ADRs or Ordinary Shares will generally not be subject to UK inheritance
    tax unless the settlor, at the time of settlement, was not domiciled in the
    US and was a UK national. In the exceptional case where the Ordinary Shares
    or ADRs are subject both to UK inheritance tax and to US federal gift or estate
    tax, the Estate Tax Convention generally provides for double taxation to be
    relieved by means of credit relief.







 
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	 	AstraZeneca Annual Report and Form 20-F
      2002

      www.astrazeneca.com	Shareholder Information	131






Taxation for US residents (continued)

 Exchange controls and other limitations affecting
  security holders

	(a)  	There are no governmental
      laws, decrees or regulations in the UK restricting the import or export
      of capital or affecting the remittance of dividends, interest or other payments
      to non-resident holders of Ordinary Shares or ADRs. However, a 1.5% stamp
      duty reserve tax is payable upon the deposit of Ordinary Shares in connection
      with the creation of but not subsequent dealing in ADRs. This is in lieu
      of the normal 0.5% stamp duty on all purchases of Ordinary Shares.
	 	 
	(b)  	There are no limitations under
      English law or the Company’s Memorandum and Articles of Association
      on the right of non-resident or foreign owners to be the registered holders
      of and to vote Ordinary Shares or to be registered holders of notes or debentures
      of Zeneca Wilmington Inc.


 Exchange rates 

  For the periods up to April 1999, Astra accounted
  for and reported its results in Swedish kronor, whereas Zeneca accounted for
  and reported its results in sterling. Consistent with AstraZeneca’s decision
  to publish its Financial Statements in US dollars, the financial information
  in this document has been translated from kronor and sterling into US dollars
  at the following applicable exchange rates:

	 	SEK/USD	 	USD/GBP
	Average rates (profit and loss account,
      cash flow)	 	 	 
	1995	7.1100	 	1.5796
	
	 
	
	 

	1996	6.7000	 	1.5525
	
	 
	
	 

	1997	7.6225	 	1.6386
	
	 
	
	 

	1998	7.9384	 	1.6603
	
	 
	
	 

	1999	8.2189	 	1.6247
	
	 
	
	 

	 	 	 	 
	End of year spot rates (balance sheet)	 	 	 
	1995	6.6500	 	1.5500
	
	 
	
	 

	1996	6.8400	 	1.6900
	
	 
	
	 

	1997	7.8500	 	1.6600
	
	 
	
	 

	1998	8.0400	 	1.6600
	
	 
	
	 

	1999	8.5130	 	1.6185
	
	 
	
	 



 The following information relating to average
  and spot exchange rates used by AstraZeneca is provided for convenience:

	 	SEK/USD	 	USD/GBP
	Average rates (profit and loss account,
      cash flow)	 	 	 
	2000	8.9103	 	1.5341
	
	 
	
	 

	2001	10.3235	 	1.4447
	
	 
	
	 

	2002	9.8558	 	1.4817
	
	 
	
	 

	 	 	 	 
	End of year spot rates (balance sheet)	 	 	 
	2000	9.5390	 	1.4925
	
	 
	
	 

	2001	10.5420	 	1.4501
	
	 
	
	 

	2002	8.7700	 	1.6093
	
	 
	
	 










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	132	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Shareholder Information


 Shareholder Information
  continued

  




Definitions 

  In this Annual Report and Form 20-F the following
  words and expressions shall, unless the context otherwise requires, have the
  following meanings:

	ADR	American Depositary Receipt
      evidencing title to an ADS
	 

	ADS	American Depositary Share representing
      one underlying Ordinary Share
	 

	Depositary	JPMorgan Chase Bank, as depositary under
      the deposit agreement pursuant to which the ADRs are issued
	 

	Directors	The Directors of the Company
	 

	Company	AstraZeneca PLC
	 

	AstraZeneca, AstraZeneca Group or the Group	The Company and its subsidiaries
	 

	Ordinary Shares	Ordinary Shares of $0.25 each in the capital
      of the Company
	 

	LSE	London Stock Exchange Limited
	 

	NYSE	New York Stock Exchange, Inc.
	 

	SSE	Stockholm Stock Exchange
	 

	Pound sterling, £, GBP, pence or
      p	References to UK currency
	 

	SEK, kronor	References to Swedish currency
	 

	UK	United Kingdom of Great Britain and Northern
      Ireland
	 

	US dollar, US$, USD or $	 References to US currency
	 

	US	United States of America
	 

	FDA	Food and Drug Administration of the US
	 



 Figures in parentheses in tables and financial
  statements are used to represent negative numbers.

 Except where otherwise indicated, figures included
  in this report relating to pharmaceutical product market sizes and market shares
  are obtained from syndicated industry sources, primarily IMS Health (IMS), a
  market research firm internationally recognised by the pharmaceutical industry.
  The 2002 market share figures included in this report are based primarily on
  data obtained from an online IMS database.

 IMS data may differ from that compiled by the
  Group with respect to its own products. Of particular significance in this regard
  are the following: (1) AstraZeneca publishes its financial results on a financial
  year and quarterly interim basis, whereas IMS issues its data on a monthly and
  quarterly basis; (2) the online IMS database is updated quarterly and uses the
  average exchange rates for the relevant quarter; (3) IMS data from the US is
  not adjusted for Medicaid and similar state rebates; and (4) IMS sales data
  is compiled using actual wholesaler data and data from statistically representative
  panels of retail and hospital pharmacies, which data are then projected by IMS
  to give figures for national markets.

 References to prevalence of disease have been
  derived from a variety of sources and are not intended to be indicative of the
  current market or any potential market for AstraZeneca’s pharmaceutical
  products since, among other things, there may be no correlation between the
  prevalence of a disease and the number of individuals who are treated for such
  disease.









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	 	AstraZeneca Annual
      Report and Form 20-F 2002

      www.astrazeneca.com	Shareholder
      Information	133


	 	 
	 	 
	
	

	Terms used in the Annual Report and
      Form 20-F	US
      equivalent or brief description
	Accruals	Accrued expenses
	 

	Allotted	Issued
	 

	Bank borrowings	Payable to banks
	 

	Called-up share capital	Issued share capital
	 

	Capital allowances	Tax term equivalent to US tax depreciation
      allowances
	 

	Creditors	Liabilities/payables
	 

	Current instalments of loans	Long term debt due within one year
	 

	Debtors	Receivables and prepaid expenses
	 

	Earnings	Net income
	 

	Finance lease	Capital lease
	 

	Fixed asset investments	Non-current investments
	 

	Freehold	Ownership with absolute rights in perpetuity
	 

	Interest receivable	Interest income
	 

	Interest payable	Interest expense
	 

	Loans	Long term debt
	 

	Prepayments	Prepaid expenses
	 

	Profit	Income
	 

	Profit and loss account	Income statement/consolidated statement
      of income
	 

	Reserves	Retained earnings
	 

	Short term investments	Redeemable securities and short term deposits
	 

	Share premium account	Premiums paid in excess of par value of
      Ordinary Shares
	 

	Statement of Total Recognised Gains and
      Losses	Statement of Comprehensive Income
	 

	Stocks	Inventories
	 

	Tangible fixed assets	Property, plant and equipment
	 

	Turnover	Sales/revenues
	
	




 








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	134	AstraZeneca Annual Report
        and Form 20-F 2002

    www.astrazeneca.com	Risk Factors	 



Risk Factors




Risk of loss or expiration of patents, marketing exclusivity or trade marks
  

     Scientific development and technological
    innovation is crucial if AstraZeneca is to deliver long term market success.
    In the pharmaceutical market, a drug, diagnostic or medical device is normally
    only subject to competition from alternative products, in the same therapy
    area, during the period of patent protection or other types of marketing exclusivity,
    but once patent protection or other types of marketing exclusivity has expired
    the product is generally open to competition from generic copy products. Products
    under patent protection or other types of marketing exclusivity usually generate
    significantly higher revenues than those not protected by patents or other
    types of marketing exclusivity. We believe that we have patent protection
    for many of our most important products. 

   For example, lisinopril, the active ingredient
    in Zestril lost protection in the US in June 2002 and in Japan, the
    UK and most other major markets during 2002. As anticipated, a major erosion
    of our sales of lisinopril products occurred during the second half of 2002.
    

   Also, Nolvadex patent protection
    in the US expired in August 2002, although the FDA requested and we submitted
    paediatric data for Nolvadex which resulted in Nolvadex being
    granted six months’ marketing exclusivity until February 2003.
    

   Increasingly, manufacturers of generic pharmaceutical
    products whether based in developing
    countries, such as those in Asia, or elsewhere in the world seek to challenge
    our patents or other types of marketing exclusivity in order to allow access
    to the market for their own generic products. 

   For example, AstraZeneca was involved in
    litigation in the US during 2002 relating to omeprazole, the active ingredient
    in Losec/Prilosec, concerning the infringement of certain patents,
    including formulation patents, by four generic manufacturers. The US Court
    for the Southern District of New York upheld the validity of two of these
    patents, ruled that three generic companies infringed the patents, but that
    one did not. The infringement and non-infringement decisions are all under
    appeal but, in the meantime, the fourth generic company launched its generic
    omeprazole in the US market in December 2002. Other patent litigation relating
    to omeprazole is proceeding or pending in several countries. 










   Trade mark protection for our
    products is also an important element of our overall product marketing programmes.
    Combined with patent protection or other types of marketing exclusivity, products
    protected by a valid trade mark usually generate significantly higher revenues
    than those not protected by a trade mark. We believe that we have trade mark
    protection for many of our most important products. However, trade mark protection
    may expire or be challenged by third parties. 

   The expiration or loss of certain
    patents, marketing exclusivity or trade marks could have an adverse effect
    on pricing and sales with respect to these products and, consequently, could
    result in a material adverse effect on AstraZeneca’s
    financial condition and results of operations. 

   Impact of fluctuations in
    exchange rates 

     The results of AstraZeneca’s
    operations are accounted for in US dollars. Approximately 57% of our 2002
    sales were in the Americas (comprised of the US, Canada and Latin America)
    with a significant proportion of that figure being in respect of US sales.
    The US is, and is expected to remain, our largest and potentially fastest
    growing major market. Sales in certain other countries are also in US dollars,
    or in currencies whose exchange rates are linked to the US dollar. Major components
    of our cost base are, however, located in Europe, where an aggregate of approximately
    60% of our employees are based. Movements in the exchange rates used to translate
    foreign currencies into US dollars may therefore have a material adverse effect
    on AstraZeneca’s financial condition and results of operations.
    

   Certain subsidiaries of AstraZeneca
    import and export goods and services in currencies other than their own functional
    currency, although we minimise this practice. The results of such subsidiaries
    could, therefore, be affected by currency fluctuations arising between the
    transaction dates and the settlement dates for those transactions. We hedge
    these exposures through financial instruments in the form of forward contracts
    and currency swaps. The notional principal amount of financial instruments
    used to hedge these exposures, principally forward foreign exchange contracts
    and purchased currency options, at 31 December 2002 was $47 million. We have
    policies that seek to mitigate the effect of exchange rate fluctuations on
    the value of foreign currency cash flows and in turn their effects on the
    results of the various subsidiaries, but do not 







   seek to remove all such risks.
    In general, a unilateral strengthening of the US dollar adversely affects
    our results whereas a weakening of the US dollar is generally favourable.
    We cannot ensure that exchange rate fluctuations will not have a material
    adverse effect on AstraZeneca’s
    financial condition and results of operations in the future.
    

   Risk that R&D will not
    yield new products that achieve commercial success 

     As a result of the complexities and uncertainties
    associated with pharmaceutical research, it cannot be ensured that compounds
    currently under development will achieve success in laboratory, animal or
    clinical trials and ultimately be granted the regulatory approvals needed
    to market such products successfully. For example, in 2002 our anti-cancer
    drug, Iressa, unexpectedly failed in clinical trials to show any benefit
    when used in combination with the most common chemotherapy treatments and
    we discontinued our development of AZD7545, a potential anti-diabetic, due
    to failure to meet our target profile. Development of a number of other drugs
    was also discontinued during 2002 for the same reason: these included ZD9331
    (a direct acting anti-folate for potential treatment of cancers), D5522 (an
    intranasal steroid for the potential treatment of rhinitis) and NAD-299 (a
    potential treatment for anxiety and depression). There can be no absolute
    assurances regarding the development and commercial success of any of the
    products in our current pipeline. The commercial success of pipeline products
    is of particular importance to us in view of the recent and anticipated expiry
    of patent protection in major markets for a number of our key current products
    in the 2002-2003 period. 

   Competition, price controls
    and price reductions 

     The principal markets for our pharmaceutical
    products are the Americas, the countries of the European Union and Japan.
    These markets are highly competitive. We compete in all of them, and elsewhere
    in the world, against major prescription pharmaceutical companies which, in
    many cases, are able to match or exceed the resources which we have available
    to us, particularly in the areas of R&D and marketing investment. Recent
    industry consolidation has resulted in the formation of a small number of
    very large companies with which we compete as well. Some of our most important
    products for future growth, such as Crestor, will compete directly
    with similar products marketed by 














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	 	AstraZeneca Annual Report
        and Form 20-F 2002

    www.astrazeneca.com	Risk Factors	135







  some of these companies. Increasingly, we also compete directly with biotechnology companies and companies which manufacture generic versions of our products following the expiry or loss of patent or other marketing
exclusivity.


   In most of the principal markets in which
    we sell our products, there is continued economic, regulatory and political
    pressure to limit the cost of pharmaceutical products. Certain groups have
    been involved in exerting price pressure on pharmaceutical companies to ensure
    medicines are affordable to those who need them. 

   Currently there is no direct government control
    of prices for non-government sales in the US. In 1990, however, federal legislation
    was enacted which required drug manufacturers to agree to substantial rebates
    in order for the manufacturer’s
    drugs to be reimbursed by state Medicaid programmes, and an additional rebate
    if manufacturer price increases after 1990 exceed the increase in inflation.
    In addition, certain states have taken action to require further manufacturer
    rebates on Medicaid drug utilisation and for other state pharmaceutical assistance
    programmes. Congress also has enacted statutes that place a ceiling on the
    price manufacturers may charge US government agencies, thereby causing a substantial
    discount, as well as establishing a minimum discount (comparable to the Medicaid
    rebate) on manufacturers’ sales to certain clinics and hospitals that
    serve the poor and other populations with special needs. These government
    initiatives together with competitive market pressures have contributed to
    restraints on realised prices. 

   Pending legislation in the US may also affect
    the pricing of and access to pharmaceutical products. If drug importation
    into the US market from other countries with lower prices becomes a reality,
    parallel import activity will affect realised prices. On the other hand, outpatient
    prescription drug coverage could improve access to pharmaceutical products
    for senior citizens, albeit at potentially lower realised prices. 

   In addition, realised prices are being depressed
    by pressure from managed care and institutional purchasers who use cost considerations
    to restrict the sale of preferred drugs that their physicians may prescribe
    as well as other competitive activity. Such limited lists or formularies may
    force manufacturers either to reduce prices or be excluded from the list,
    thereby losing all the sales revenue 







   from patients covered by that
    formulary. The use of strict formularies by institutional customers is increasing
    rapidly in response to the current cost containment environment, resulting
    in lower margins on such sales. 

   Some governments in Europe,
    notably Italy and Spain, set price controls having regard to the medical,
    economic and social impact of the product. In other European countries, primarily
    Germany, the UK, the Netherlands and, more recently, France, governments are
    exerting a strong downward pressure on prices by incentives and sanctions
    to encourage doctors to prescribe cost-effectively. Efforts by the European
    Commission to harmonise the disparate national systems have met with little
    immediate success, leaving the industry exposed to ad hoc national cost containment
    measures on prices and the consequent parallel trading of products from markets
    with prices depressed by governments into those where higher prices prevail.
    

   There is formal central government
    control of prices in Japan. New product prices are determined primarily by
    comparison with existing products for the same medical condition. All existing
    products are subject to a price review at least every two years. Regulations
    introduced in 2000 included provisions allowing a drug’s
    price to be set according to the average price of the product in four major
    countries (the US, the UK, Germany and France). 

   Taxation 

     The UK is party to various double tax treaties
    with foreign jurisdictions which enable AstraZeneca’s
    revenues and capital gains to escape a double tax charge to both UK and foreign
    jurisdiction tax. If any of these double tax treaties should be withdrawn
    or amended, or should any member of the AstraZeneca Group become involved
    in taxation disputes with any tax authority, such withdrawal, amendment or
    a negative outcome of such disputes could have a material adverse effect on
    AstraZeneca’s financial condition and results of operations.
    

   Risk of substantial product
    liability claims 

     Given the widespread impact ethical prescription
    drugs may have on the health of large patient populations, pharmaceutical
    and medical device companies have, historically, been subject to large product
    liability damages claims, settlements and awards for injuries allegedly caused
    by the use of their products. Substantial product liability claims that are
    not covered by 







   insurance could have a material
    adverse effect on AstraZeneca’s
    financial condition and results of operations. 

   Risk of reliance on third
    parties for supplies of materials and services 

     Like most, if not all, major prescription
    pharmaceutical companies, in some of its key business operations, such as
    the manufacture, formulation and packaging of products, AstraZeneca relies
    on third parties for the timely supply of specified raw materials, equipment,
    contract manufacturing, formulation or packaging services and maintenance
    services. Although we actively manage these third party relationships to ensure
    continuity of supplies on time and to our required specifications, some events
    beyond our control could result in the complete or partial failure of supplies
    or in supplies not being delivered on time. Any such failure could have a
    material adverse effect on AstraZeneca’s financial condition and results of operations.
    

   Risk of delay to new product
    launches 

     AstraZeneca’s
    continued success depends on the development and successful launch of innovative
    new drugs. The anticipated launch dates of major new products have a significant
    impact on a number of areas of our business including investment in large
    clinical trials, the manufacture of pre-launch stocks of the products and
    the timing of anticipated future revenue streams from commercial sales of
    the products. Any delay to the anticipated launch dates may therefore impact
    AstraZeneca’s business and operations in a number of ways. For example,
    we had expected our new statin for the treatment of lipid disorders,
    Crestor, to be launched in the US in the
    second half of 2002. However, the approval of products in this class has been
    subject to additional regulatory scrutiny partly as a result of the previous
    withdrawal from the market of cerivastatin. Although Crestor received
    marketing approval in the Netherlands in November 2002, launch in the US is
    now expected in the latter part of 2003 subject to the FDA being satisfied
    by additional trial data to be submitted by AstraZeneca in Q1 of 2003. Significant
    delay to the anticipated launch dates of new products could have a material
    adverse effect on AstraZeneca’s
    financial condition and results of operations. 

   Difficulties of obtaining
    government regulatory approvals for new products 

     AstraZeneca is subject to strict controls
    on the manufacture, labelling, distribution and marketing of pharmaceutical
    products. The 









 
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	136	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Risk Factors 


 Risk Factors
  continued


 requirement to obtain regulatory approval based
  on safety, efficacy and quality before such products may be marketed in a particular
  country and to maintain and to comply with licences and other regulations relating
  to their manufacture are particularly important. The submission of an application
  to a regulatory authority does not guarantee that approval to market the products
  will be granted. The countries that constitute material markets for our pharmaceutical
  products include the US, the countries of the European Union and Japan. Approval
  of such products is required by the relevant regulatory authority in each country,
  although in Europe, single marketing authorisation can govern the approval of
  products throughout the European Union through a centralised procedure. In addition,
  each jurisdiction has very high standards of regulatory approval and, consequently,
  in most cases, a lengthy approval process. Furthermore, each regulatory authority
  may impose its own requirements and may refuse to grant, or may require additional
  data before granting, an approval even though the relevant product has been
  approved in another country.

   Risk of failure to observe ongoing
    regulatory oversight 

    AstraZeneca’s products are only licenced
    following exhaustive regulatory approval processes. Once a product is licenced
    it is subject to ongoing control and regulation such as the manner of its
    manufacture distribution and marketing. Regulatory authorities have wide-ranging
    administrative powers to deal with any failure to comply with their ongoing
    regulatory oversight. These powers include withdrawal of a licence approval
    previously granted, product recalls, seizure of products and other sanctions
    for non-compliance. Regulatory sanction following a failure to comply with
    such ongoing regulatory oversight could have a material adverse effect on
    AstraZeneca’s financial condition and results of operations.

 Environmental liabilities
    

    AstraZeneca has environmental liabilities at
    some currently or formerly owned, leased and third party sites in the US as
    described in more detail on page 102. There is no reason for us to believe
    that current and expected expenditure and risks occasioned by these circumstances
    are likely to have a material adverse effect on AstraZeneca’s financial
    position and results of operations although they could, to the extent that
    they exceed applicable provisions, have a material adverse effect on AstraZeneca’s
    financial position and results of operations for the relevant period. In





 addition, a change in circumstances
  (including a change in applicable laws or regulations) may result in such a
  material adverse effect. Although we take great care to ensure that we operate
  our business at all of our sites within all applicable environmental laws, regulations,
  licences and permits, a significant environmental incident for which we were
  responsible could result in AstraZeneca being liable to pay compensation, fines
  or remediation costs. In some circumstances, such liability could have a material
  adverse effect on AstraZeneca’s financial position and results of operations.

   Risks associated with forward-looking
    statements 

    This report contains certain forward-looking
    statements about AstraZeneca. Although we believe our expectations are based
    on reasonable assumptions, any forward-looking statements may be influenced
    by factors that could cause actual outcomes and results to be materially different
    from those predicted. Forward-looking statements are identified in this report,
    by using the words ‘anticipates’, ‘believes’, ‘expects’,
    ‘intends’ and similar expressions in such statements. These forward-looking
    statements are subject to numerous risks and uncertainties. Important factors
    that could cause actual results to differ materially from those in forward-looking
    statements, certain of which are beyond our control, include, among other
    things: the loss or expiration of patents, marketing exclusivity or trade
    marks; exchange rate fluctuations; the risk that R&D will not yield new
    products that achieve commercial success; the impact of competition, price
    controls and price reductions; taxation risks; the risk of substantial product
    liability claims; the impact of any failure by third parties to supply materials
    or services; the risk of delay to new product launches, the difficulties of
    obtaining and maintaining governmental approvals for products; and the risk
    of environmental liabilities.







 
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	 	AstraZeneca Annual Report and Form 20-F
      2002

      www.astrazeneca.com	AstraZeneca Code of Conduct 	137


 AstraZeneca Code of Conduct

 Introductory Message
  from the Chief Executive 

 The reputation of the AstraZeneca Group and
  the trust and confidence of those with whom it deals are of great importance
  to its business. It is essential that AstraZeneca maintains high ethical standards
  in its dealings with all those with whom it is involved. All employees are required
  to comply with the letter and spirit of the Code of Conduct and with the detailed
  standards issued in support of it. Taken together, the policy and standards
  comprise the Group’s Code of Conduct which was approved by the Board of
  Directors in April 2000.

 Tom McKillop 

 Policy
  

 The Group requires its companies, and their
  employees, to observe high standards of integrity and honesty and act with due
  skill, care, diligence and fairness in the conduct of business. To this end
  all Group companies, and their employees, are required to comply with the laws
  of all countries in which they operate and with the high ethical standards detailed
  by the Group in support of this policy.

 Compliance
  

 It is the responsibility of management to ensure
  that the Group Code of Conduct and standards are communicated, understood and
  acted upon. They must positively promote them by personal example and are not
  entitled to permit exceptions to the required behaviour.

 All employees should familiarise themselves
  with the Code of Conduct and must comply with it. Failure to act in compliance
  with the Code is likely to result in disciplinary action against both the employee
  committing the breach and others who condone it.

 The Standards set out in the Code are general
  and do not address each and every situation that may confront employees in markets
  around the world. Guidance on the application of the Code to particular situations
  should be sought from management. In addition, Legal Department and Group Internal
  Audit are available on a confidential basis as independent sources of advice.
  Where confidential phone lines are available, these should be used to raise
  issues of concern. So long as this is done in good faith,




 the Group assures individual
  employees who raise issues that they will be protected from any adverse impact
  on their employment as a result.

 Standards
  of Conduct 

   Business practices 

    Group companies, and their employees, should
    comply with the laws of all countries in which they operate, with appropriate
    international and national industry codes of practice and with the high ethical
    standards specified by the Group.

 It is the responsibility of
  all employees to ensure, by taking advice where appropriate, that they are fully
  aware of all relevant laws, practices and codes of practice. While this standard
  applies without exception, particular areas where compliance must be ensured
  are laws concerned with competition, employment, new product research and development,
  manufacturing, marketing and selling and safety, health and the environment.

 Employees should ensure that,
  within their sphere of business activity, Group companies carry out their contractual
  obligations in a proper and timely manner and are not in breach of contract.

 Business practice, and what
  amounts to improper conduct, varies from country to country and from industry
  to industry. All employees will comply with (a) the high ethical standards specified
  by the Group (b) any overall AstraZeneca Code published relating to business
  practices and (c) any international and national codes of practice applicable
  to the conduct of business in each environment.

 Gifts, entertainment and personal
  favours may only be offered to a third party if they are consistent with customary
  business practice and not in contravention of any applicable law or code of
  practice.

 No employee should seek or accept
  a gift, entertainment or personal favour which might reasonably be believed
  to have a significant influence on business transactions. An offer of entertainment
  must not be accepted unless the offer is within the bounds of accepted business
  hospitality. Gifts which do not meet the above criteria should be reported to
  management who shall determine how they shall be dealt with.

 Group funds should not be used
  in payments, direct or indirect, to government officials,




 people participating in government bodies,
  employees of state organisations or representatives of political parties, for
  unlawful or improper purposes.

   Equal opportunities 

    All employees should be treated with equal
    respect and dignity and should be provided with equality of opportunity to
    develop themselves and their careers.

 AstraZeneca values the individuality, diversity
  and creative potential that every employee brings to its business and supports
  the continuous development of their skills and abilities.

 Judgements about people for the purpose of
  recruitment, development or promotion should be made solely on the basis of
  a person’s ability and potential in relation to the needs of the job and
  should take no account of any matter not relevant to the performance of that
  job. Overall, success and advancement within the Group should depend solely
  on personal ability and work performance.

 In some countries these principles may be modified
  by national legal requirements for positive discrimination.

   Personal harassment 

    Conduct involving the harassment of any employee
    of the Group, its suppliers or customers is unacceptable. In particular, sexual
    harassment will not be tolerated.

 Any person who believes they have been personally
  harassed should report the incident and circumstances to their immediate manager
  or personnel manager or other senior manager who will arrange for it to be investigated
  impartially and confidentially.

 AstraZeneca is fully supportive of the principles
  set forth in the UN Declaration of Human Rights. These include freedom from
  torture and arbitrary arrest, the right to a fair trial and equality before
  the law.

   Political contributions
    

    Any political contributions by Group companies
    must be lawful and approved under procedures laid down by the board or governing
    body of the company concerned.

 Approval should not be given to any political
  contributions which, by their scale or affiliation, might embarrass the Group.
  The Group’s accounting procedures require any







 
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	138	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	AstraZeneca Code of Conduct 


 AstraZeneca Code of Conduct
  continued


 political contributions to be reported to Group
  headquarters as part of the annual consolidation of results.

   Conflicts of interest
    

    Employees dealing with the Group’s business
    must act in the best interests of the Group and must disregard any personal
    preference or advantage.

 Employees should avoid entering into situations
  in which their personal, family or financial interests may conflict with those
  of the AstraZeneca Group. Where any potential conflict of interest may arise,
  the employee should declare that interest and seek advice from senior management.

 Examples of conflict that must be declared
  and resolved include:

  	>  	having a family interest
        in a transaction with AstraZeneca or one of its subsidiaries (the Company)
        or any supplier or customer;
	 	 
	>  	hiring of a family member
        in any capacity;
	 	 
	>  	having an interest in a
        competitor, supplier or customer of the Company;
	 	 
	>  	having an interest in an
        organisation that has, or seeks to do business with the Company;
	 	 
	>  	acquiring an interest in
        property (such as real estate, patent rights or securities) where the
        Company has, or might have, an interest.


 These examples do not extend to normal financial
  investments in publicly quoted companies.

   Insider information 

    Employees must not use confidential information
    obtained through their employment for personal gain.

   It is AstraZeneca policy, and in certain
    countries a legal requirement carrying criminal sanctions, that employees
    in possession of confidential ‘price sensitive’ information (in
    relation to securities) must not make use of such information to deal in securities
    of AstraZeneca or provide such information to third parties for that purpose.
    The same considerations apply in relation to confidential ‘price sensitive’
    information relating to other companies and dealing in their securities.





   Group property and resources
    

    Group resources should be kept securely and
    should only be applied for the proper advancement of its business and not
    for personal gain.

 Individuals expending Group
  resources should recognise that they owe a duty of care to the shareholders
  of the Group, who are its ultimate owners. Commitments and expenditure should
  only be such as could be justified to shareholders if the facts were known.

 Group resources include not
  only tangible assets such as materials, equipment and cash, but also intangible
  assets such as computer systems, trade secrets and confidential information.
  Employees must observe Group and local guidelines concerning the classifying
  and handling of documents and electronic data. The storage of personal data
  in an electronic medium may be governed by laws with which relevant employees
  should familiarise themselves.

 Information generated within
  the Group, including research and development and manufacturing data, costs,
  prices, sales, profits, markets, customers and methods of doing business, is
  the property of the Group and should not, unless legally required, be disclosed
  outside the Group without proper authority.

   Group policies, delegated authorities
    and reserved powers 

    Group employees are expected to make themselves
    aware of and comply with the letter and spirit of all Group policies and with
    the reserved powers and delegated authorities established by the Board from
    time to time. Copies of these are available on the Company’s intranet
    site.

 The freedoms which individuals
  have to carry out their jobs should be exercised within both the letter and
  spirit of Group policies and procedures, reserved powers and delegated authorities.
  These are designed to empower people to carry out their responsibilities within
  a necessary framework of corporate control and legal responsibility but are
  not so voluminous as to prescribe appropriate action in every circumstance.
  In the exercise of their authorities individuals must bear Group and legal entity
  requirements in mind and must surface problems, and consult on issues, which
  have significant Group implications. When considering whether an issue does




 require reference to another authority, the
  overall substance of the issue must be considered and when sharing an issue
  with another authority all facts relevant to a decision must be fully and fairly
  presented.

 June 2000 










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	 	AstraZeneca
      Annual Report and Form 20-F 2002

      www.astrazeneca.com	Additional
      Information	139



Additional Information


 


  History and
    development of the Company

     

    AstraZeneca PLC was incorporated in England and Wales on 17 June 1992 under
    the Companies Act 1985. It is a public limited company domiciled in the UK.
    The Company’s registered number is 2723534 and its registered office
    is at 15 Stanhope Gate, London W1K 1LN (telephone + 44 (0)20 7304 5000). From
    February 1993 until April 1999, the Company was called Zeneca Group PLC. On
    6 April 1999, the Company changed its name to AstraZeneca PLC.

 The Company was formed when the pharmaceutical,
  agrochemical and specialty chemical businesses of Imperial Chemical Industries
  PLC were demerged in 1993. In 1999, the Company sold the specialty chemical
  business. Also in 1999, the Company merged with Astra AB of Sweden. In 2000,
  it demerged the agrochemical business and merged it with the similar agribusiness
  of Novartis AG to form a new company called Syngenta AG.

 The Company owns and operates numerous R&D,
  production and marketing facilities worldwide. Its corporate headquarters are
  at 15 Stanhope Gate, London, W1K 1LN and its R&D headquarters are at SE-151
  85 Södertälje, Sweden.

 Memorandum and Articles
  of Association 

 Objects 

  As is typical of companies registered in England
  and Wales, the Company’s objects, which are detailed in the Memorandum
  of Association, are broad and wide-ranging and include manufacturing, distributing
  and trading pharmaceutical products.

 Directors 

  Subject to certain exceptions, Directors do not
  have power to vote at Board Meetings on matters in which they have a material
  interest.

 The quorum for meetings of the Board of Directors
  is a majority of the full Board, of whom at least four must be Non-Executive
  Directors. In the absence of a quorum, the Directors do not have power to determine
  compensation arrangements for themselves or any member of the Board.

 The Board of Directors may exercise all the
  powers of the Company to borrow money. Variation of these borrowing powers would
  require the passing of a special resolution of the Company’s shareholders.







 Directors are not required to
  retire at a particular age.

 Directors are required to beneficially
  own Ordinary Shares in the Company of an aggregate nominal amount of $125. At
  present, this means they must own at least 500 shares.

 Rights, preferences
  and restrictions attaching to shares 

  The share capital of the Company is divided into
  2,400,000,000 Ordinary Shares with a nominal value of $0.25 each and 50,000
  Redeemable Preference Shares with a nominal value of £1.00 each. The rights
  and restrictions attaching to the Redeemable Preference Shares differ from those
  attaching to Ordinary Shares as follows:

  	>  	the Redeemable Preference
        Shares carry no rights to receive dividends;
	 	 
	>  	the holders of Redeemable
        Preference Shares have no rights to receive notices of, attend or vote
        at general meetings except in certain limited circumstances; they have
        one vote for every 50,000 Redeemable Preference Shares held;
	 	 
	>  	on a distribution of assets
        of the Company, on a winding-up or other return of capital (subject to
        certain exceptions), the holders of Redeemable Preference Shares have
        priority over the holders of Ordinary Shares to receive the capital paid
        up on those shares; and
	 	 
	>  	subject to the provisions
        of theCompanies Act 1985, the Company has the right to redeem the Redeemable
        Preference Shares at any time on giving not less than seven days’written
        notice.


 Action necessary to
  change the rights of shareholders 

  In order to vary the rights attached to any class
  of shares, the consent in writing of the holders of three quarters in nominal
  value of the issued shares of that class or the sanction of an extraordinary
  resolution passed at a general meeting of such holders is required.

 Annual general meetings
  and extraordinary general meetings

  Annual general meetings and extraordinary general
  meetings where a special resolution is to be passed or a Director is to be appointed
  require 21 clear days’ notice to shareholders. All other extraordinary
  general meetings require 14 clear days’ notice.







 For all general meetings, a quorum
  of two shareholders present in person or by proxy is required.

 Shareholders and their duly appointed
  proxies and corporate representatives are entitled to be admitted to general
  meetings.

 Limitations on the rights to own
  shares

  There are no limitations on the rights to own
  shares. 

   ShareGift
    

    

    AstraZeneca welcomes and values all its shareholders, no matter how many or
    how few shares they own. However, shareholders who have only a small number
    of shares whose value makes it uneconomic to sell them, either now or at some
    stage in the future, may wish to consider donating them to charity through
    ShareGift, an independent charity share donation scheme. One of the advantages
    of the scheme is that there is no gain or loss for capital gains tax purposes
    on gifts of shares through ShareGift and it may now also be possible to obtain
    income tax relief on the donation. Further information about ShareGift can
    be found on its website, www.sharegift.org, or by contacting ShareGift on
    020 7337 0501 or at 46 Grosvenor Street, London W1K 3HN. More information
    about the tax position on gifts of shares to ShareGift can be obtained from
    the Inland Revenue whose website address is www.inlandrevenue.gov.uk. The
    share transfer form needed to make a donation may be obtained from the AstraZeneca
    Registrar, Lloyds TSB Registrars whose address can be found on page 129. ShareGift
    is administered by The Orr Mackintosh Foundation, registered charity number
    1052686.

   The Unclaimed
    Assets Register 

    

    AstraZeneca supplies unclaimed dividend data to the Unclaimed Assets Register
    (UAR) which provides investors who have lost track of shareholdings with an
    opportunity to search the UAR’s database of unclaimed financial assets
    on payment of a small, fixed fee.The UAR donates part of the search fee to
    charity. The UAR can be contacted at Leconfield House, Curzon Street, London
    W1J 5JA and at www.uar.co.uk.

   








 
Back to Contents


	140	AstraZeneca Annual Report
      and Form 20-F 2002

      www.astrazeneca.com	Cross Reference to Form 20-F 


 Cross Reference to Form 20-F




The information in this document that is referenced
  on this page is included in the Annual Report on Form 20-F for 2002 (2002 Form
  20-F) and is filed with the Securities and Exchange Commission (SEC). The 2002
  Form 20-F is the only document intended to be incorporated by reference into
  any filings by AstraZeneca under the Securities Act of 1933, as amended. References
  to major headings include all information under such major headings, including
  subheadings. References to subheadings include only the information contained
  under such subheadings. Graphs are not included unless specifically identified
  opposite. The 2002 Form 20-F has not been approved or disapproved by the SEC
  nor has the SEC passed comment upon the accuracy or adequacy of the 2002 Form
  20-F. The 2002 Form 20-F filed with the SEC may contain modified information
  and may be updated from time to time.





  	Item	 	 	Page
	
        
	
        
	
        
	
        

	3	Key Information	 
	
        
	
        
	
        
	
        

	 	A.	Selected financial data	 
	 	 	Financial Highlights	2
	 	 	Group Financial Record	123
	 	 	Shareholder Information	126
	 	D.	Risk factors	134
	4	Information
        on the Company	 
	
        
	
        
	
        
	
        

	 	A.	History and development of the Company	139
	 	 	Note 11 – Tangible fixed assets	78
	 	 	Note 26 – Acquisitions of subsidiaries
        and purchases of minority interests	90
	 	 	Note 28 – Disposals	91
	 	B.	Business overview	 
	 	 	Operational Review	8
	 	C.	Organisational structure	 
	 	 	Directors’ Report – Principal
        activities	44
	 	 	Note 1 – Composition of the Group	65
	 	 	Principal Subsidiaries, Joint Ventures
        and Associates	112
	 	D.	Property, plants and equipment	 
	 	 	Operational Review – Main Facilities	26
	5	Operating
        and Financial Review and Prospects	 
	
        
	
        
	
        
	
        

	 	A-D.	Financial Review	30
	6	Directors,
        Senior Management and Employees	 
	
        
	
        
	
        
	
        

	 	A.	Directors and senior management	 
	 	 	Board of Directors and Officers of the
        Company	6
	 	B.	Compensation	 
	 	 	Directors’ Remuneration Report	49
	 	C.	Board practices	 
	 	 	Board of Directors and Officers of the
        Company	6
	 	 	Directors’ Remuneration Report	49
	 	 	Directors’ Report	44
	 	D.	Employees	 
	 	 	Note 10 – Segment information, employees	76
	 	 	Directors’ Report – Employees	47
	 	E.	Share ownership	 
	 	 	Directors’ Remuneration Report –
        Directors’ Interests in Shares	53
	7	Major Shareholders
        and Related Party Transactions	 
	
        
	
        
	
        
	
        

	 	A.	Major shareholders	 
	 	 	Shareholder Information – Major
        shareholdings	128
	 	B.	Related party transactions	 
	 	 	Shareholder Information – Related
        party transactions	129
	 	 	Note 36 – Statutory and other information	107
	8	Financial
        Information	 
	
        
	
        
	
        
	
        

	 	A.	Consolidated statements and other financial
        information	 
	 	 	Financial Statements (excluding Directors’
        responsibilities on page 56 and Auditor’ s opinion on page 57)	58
	 	B.	Significant changes	n/a
	9	The Offer
        and Listing	 
	
        
	
        
	
        
	
        

	 	A4.	Price history of stock listed	 
	 	 	Shareholder Information	126
	 	C.	Markets	 
	 	 	Shareholder Information	127
	10	Additional
        Information	 
	
        
	
        
	
        
	
        

	 	B.	Memorandum and Articles of Association	139
	 	C.	Material contracts	n/a
	 	D.	Exchange controls	131
	 	E.	Taxation	130
	 	H.	Documents on display	129
	 	I.	Subsidiary information	112
	11	Quantitative
        and Qualitative Disclosures about Market Risk	 
	
        
	
        
	
        
	
        

	 	Financial Policies
        – Treasury	35
	13	Defaults,
        Dividend Arrearages and Delinquencies	n/a
	
        
	
        
	
        
	
        

	14	Material
        Modifications to the Rights of Security Holders and
        Use of Proceeds	n/a
	
        
	
        
	
        
	
        

	15	Controls
        and Procedures	 
	
        
	
        
	
        
	
        

	 	Directors’
        Report – Audit Committee, Internal Controls and Management of Risk	46
	18	Financial
        Statements	 
	
        
	
        
	
        
	
        

	 	Financial Statements
        (excluding Directors’ responsibilities on page 56 and Auditor’s
        opinion on page 57)	58