AstraZeneca PLC American Depositary Shares

Company Overview

Business Model: ASTRAZENECA PLC is a public limited company incorporated in England and Wales, formed in 1993 from the demerger of Imperial Chemical Industries PLC businesses. The Company evolved through strategic mergers and divestitures, including a merger with Astra of Sweden in 1999 and the demerger of its agrochemical business to form Syngenta AG in 2000. ASTRAZENECA PLC focuses on pharmaceuticals, with significant acquisitions including MedImmune (biologics and vaccines, 2007) and Alexion (rare disease, 2021), expanding its therapeutic areas to Oncology, Cardiovascular, Renal & Metabolism (CVRM), Respiratory & Immunology, Vaccines and Immune Therapies, and Rare Disease. The Company generates revenue primarily through product sales, alliance revenue, and collaboration revenue.

Market Position: ASTRAZENECA PLC is a well-known seasoned issuer and a large accelerated filer, indicating a significant presence in the global pharmaceutical industry. Its extensive and active development pipeline across multiple therapeutic areas, coupled with a broad portfolio of marketed products and strategic acquisitions, underscores its competitive standing. The Company maintains a global footprint with substantial sales across the US, Emerging Markets, Europe, and Established Rest of World.

Recent Strategic Developments: Key strategic developments include the acquisition of Alexion in 2021, significantly bolstering its Rare Disease portfolio. More recently, ASTRAZENECA PLC completed the acquisitions of Gracell in February 2024 for $1,037 million, Fusion in June 2024 for $2,195 million, Neogene in January 2023 for $267 million, and LogicBio Therapeutics, Inc. in November 2022 for $72 million, enhancing its pipeline in oncology and gene therapy. The Company also maintains strategic alliances, such as the 50:50 global pre-tax net income share arrangements with Daiichi Sankyo for Enhertu and Datroway.

Geographic Footprint: ASTRAZENECA PLC operates globally, with product sales distributed across major regions. In 2024, the US accounted for $21,655 million in product sales, Emerging Markets for $13,535 million (with China representing $6,402 million), Europe for $10,848 million, and Established Rest of World for $4,900 million (with Japan representing $3,489 million). The Company has legal entities and operations spanning numerous countries, including significant presence in the UK, Sweden, Germany, Ireland, Canada, and various countries across Asia, Africa, and Australasia.

Cross-Border Operations: ASTRAZENECA PLC maintains an extensive international network of wholly-owned subsidiaries in over 50 countries, including major markets like the US, China, Japan, Germany, France, and Canada. It also holds effective interests of less than 100% in subsidiaries in Algeria, China, India, Indonesia, Switzerland, and the US. Strategic joint ventures include IHP HK Holdings Limited and WuXi MedImmune Biopharmaceutical Co., Limited in Hong Kong, and Montrose Chemical Corporation of California in the US. The Company engages in licensing agreements, such as those for Soliris with Amgen and Samsung Bioepis, and FluMist with Daiichi Sankyo, Inc. ASTRAZENECA PLC also conducts limited sales of prescription pharmaceuticals in Iran through a third-party distributor, generating $35 million in gross revenues and $17 million in net profits from these activities in 2024, representing approximately 0.06% and 0.24% of total gross and net profits, respectively.

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Gross Margin: 81.1%
• Operating Margin: 18.5%
• Net Margin: 13.0%

Investment in Growth (2024):

• R&D Expenditure: $13,583 million (25.1% of revenue)
• Capital Expenditures: $4,586 million (comprising $1,924 million for property, plant and equipment and $2,662 million for intangible assets)
• Strategic Investments:
  • Acquisition of Gracell for $1,037 million (cash $983 million, future regulatory milestone-based consideration $54 million).
  • Acquisition of Fusion for $2,195 million (cash $2,027 million, future regulatory milestone-based consideration $144 million).
  • Investments in associates and joint ventures, including $158 million in 2024 (e.g., Fuse Biosciences, Cellectis, IHP HK Holdings Limited, Wuxi AstraZeneca-CICC Venture Capital Partnership).

Currency Impact Analysis:

• The US dollar is the Group’s functional currency and the most significant currency for reporting results.
• Approximately 60% of Group external sales in 2024 were denominated in currencies other than the US dollar.
• A significant proportion of manufacturing and research and development costs were denominated in pound sterling and Swedish krona.
• The Company employs various hedging strategies, including forward foreign exchange contracts for transactional exposures, net investment hedges for foreign currency borrowings (pound sterling and euro), and cashflow and fair value hedges using cross-currency swaps for euro-denominated loans.
• The Group operates in hyperinflationary economies such as Argentina, Venezuela, and Turkey, though the foreign exchange risk from these markets has been assessed as immaterial.

Business Segment Analysis

The Group operates as one reportable segment: pharmaceuticals. However, product sales are categorized by therapeutic area, providing insight into performance drivers.

Oncology

Financial Performance (2024 Product Sales):

• Revenue: $20,275 million (US $9,510 million, Emerging Markets $4,502 million, Europe $4,082 million, Established ROW $2,181 million)
• Key Growth Drivers: Strong performance from Tagrisso ($2,763 million in US, +21%), Imfinzi ($2,603 million in US, +20%), Calquence ($2,190 million in US, +21%), and Enhertu (Alliance Revenue $1,437 million, +40.6% YoY). Truqap and Datroway are recent launches contributing to growth. Product Portfolio:
• Major product lines include Tagrisso, Imfinzi, Calquence, Lynparza, Enhertu, Truqap, Datroway, Imjudo, Orpathys, and Zoladex.
• New product launches or major updates include Truqap + Faslodex (Launched), Datroway TROPION-Breast01 (Launched). Market Dynamics:
• Competitive positioning is maintained through a robust pipeline with compounds in all clinical phases, including significant life-cycle management initiatives for key products like Enhertu, Imfinzi, Lynparza, and Tagrisso.
• Patent expiries for key products range from 2024 to 2041 across major markets, with Lynparza facing US patent expiry in 2024 and 2027. Geographic Revenue Distribution (2024 Product Sales):
• US: $9,510 million (46.9% of segment revenue)
• Emerging Markets: $4,502 million (22.2% of segment revenue)
• Europe: $4,082 million (20.1% of segment revenue)
• Established ROW: $2,181 million (10.8% of segment revenue)

CVRM (Cardiovascular, Renal & Metabolism)

Financial Performance (2024 Product Sales):

• Revenue: $12,448 million (US $3,075 million, Emerging Markets $5,339 million, Europe $3,270 million, Established ROW $764 million)
• Key Growth Drivers: Farxiga/Forxiga ($1,750 million in US, +21%; $2,853 million in Emerging Markets, +29% / +35% CER; $2,634 million in Europe, +40% / +39% CER) is a primary driver. Lokelma and Andexxa also showed strong growth. Product Portfolio:
• Major product lines include Farxiga/Forxiga, Brilinta/Brilique, Lokelma, Roxadustat, Wainua/Wainzua, Andexxa/Ondexxya, Crestor, and Seloken.
• Wainua was launched in 2024. Market Dynamics:
• Patent expiries for Brilinta/Brilique range from 2024 to 2037, and Farxiga/Forxiga from 2025 to 2041. Roxadustat faced China patent expiry in 2024. Geographic Revenue Distribution (2024 Product Sales):
• US: $3,075 million (24.7% of segment revenue)
• Emerging Markets: $5,339 million (42.9% of segment revenue)
• Europe: $3,270 million (26.3% of segment revenue)
• Established ROW: $764 million (6.1% of segment revenue)

Respiratory & Immunology

Financial Performance (2024 Product Sales):

• Revenue: $7,416 million (US $3,416 million, Emerging Markets $1,897 million, Europe $1,416 million, Established ROW $687 million)
• Key Growth Drivers: Symbicort ($1,187 million in US, +63%), Fasenra ($1,049 million in US, +6%), Saphnelo ($425 million in US, +63%), and Breztri/Trixeo ($516 million in US, +35%) are key contributors. Tezspire also showed strong growth. Product Portfolio:
• Major product lines include Symbicort, Fasenra, Saphnelo, Tezspire, Breztri/Trixeo Aerosphere, Airsupra, and Pulmicort.
• Airsupra was launched in 2024. Market Dynamics:
• Patent expiries for Symbicort in the US range from 2025-2029, while it has expired in China, EU, and Japan. Fasenra patent expiries range from 2024 to 2034. Geographic Revenue Distribution (2024 Product Sales):
• US: $3,416 million (46.1% of segment revenue)
• Emerging Markets: $1,897 million (25.6% of segment revenue)
• Europe: $1,416 million (19.1% of segment revenue)
• Established ROW: $687 million (9.3% of segment revenue)

Rare Disease

Financial Performance (2024 Product Sales):

• Revenue: $8,668 million (US $5,263 million, Emerging Markets $849 million, Europe $1,568 million, Established ROW $988 million)
• Key Growth Drivers: Ultomiris ($2,261 million in US, +29%; $884 million in Europe, +32% / +31% CER) and Strensiq ($1,167 million in US, +25%) are significant drivers. Koselugo and Kanuma also contributed to growth. Product Portfolio:
• Major product lines include Ultomiris, Soliris, Strensiq, Koselugo, Kanuma, and Voydeya.
• Kavigale (sipavibart) SUPERNOVA was approved in 2024. Market Dynamics:
• Patent expiries for Soliris range from 2025 to 2032, and Ultomiris from 2035 to 2040. Geographic Revenue Distribution (2024 Product Sales):
• US: $5,263 million (60.7% of segment revenue)
• Emerging Markets: $849 million (9.8% of segment revenue)
• Europe: $1,568 million (18.1% of segment revenue)
• Established ROW: $988 million (11.4% of segment revenue)

Vaccines & Immune Therapies

Financial Performance (2024 Product Sales):

• Revenue: $1,058 million (US $280 million, Emerging Markets $213 million, Europe $409 million, Established ROW $156 million)
• Key Growth Drivers: Beyfortus ($232 million in US, $84 million in Europe) is a new significant contributor. Synagis remains a key product in Emerging Markets and Established ROW. Product Portfolio:
• Major product lines include Beyfortus, FluMist, Synagis, and COVID-19 mAbs. Market Dynamics:
• Beyfortus patent expiries range from 2028 to 2040. FluMist patent expiries are around 2025-2026. Geographic Revenue Distribution (2024 Product Sales):
• US: $280 million (26.5% of segment revenue)
• Emerging Markets: $213 million (20.1% of segment revenue)
• Europe: $409 million (38.7% of segment revenue)
• Established ROW: $156 million (14.8% of segment revenue)

International Operations & Geographic Analysis

Revenue by Geography (2024 Product Sales by legal entity location):

International Business Structure:

• Subsidiaries: ASTRAZENECA PLC operates through a vast network of wholly-owned subsidiaries in over 50 countries, including AstraZeneca Canada Inc., AstraZeneca GmbH (Germany), AstraZeneca K.K. (Japan), Alexion Pharma International Operations Limited (Ireland), and AstraZeneca Pharmaceutical Co., Ltd. (China). It also has subsidiaries with less than 100% effective interest in Algeria (49%), China (48.90%), India (75%), Indonesia (95%), Switzerland (34.10%), and the US (19.90%).
• Joint Ventures: Key joint ventures include IHP HK Holdings Limited (Hong Kong, 50%), WuXi MedImmune Biopharmaceutical Co., Limited (Hong Kong, 50%), and Montrose Chemical Corporation of California (US, 50%). The Company also has contractual arrangements with Daiichi Sankyo for Enhertu and Datroway, involving a 50:50 global pre-tax net income share (excluding Japan).
• Licensing Agreements: ASTRAZENECA PLC has licensing agreements for products such as Soliris (with Amgen and Samsung Bioepis) and FluMist (with Daiichi Sankyo, Inc.).

Cross-Border Trade:

• Export Markets: Not explicitly detailed, but implied by the global distribution of product sales.
• Import Dependencies: Not explicitly detailed in the filing.
• Transfer Pricing: The Company manages worldwide transfer pricing exposures, with a net tax liability of $384 million in 2024 and a potential for additional tax liabilities of up to $422 million, including associated interest.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: No Ordinary Shares were repurchased in 2024.
• Dividend Payments: $4,602 million was declared and paid in 2024, equating to $2.97 per share. This included a second interim dividend of $1.97 per share and a first interim dividend of $1.00 per share.
• Future Capital Return Commitments: The Company's dividend policy involves regular interim dividend payments.

Balance Sheet Position (as of December 31, 2024):

• Cash and Equivalents: $5,488 million
• Total Debt: $30,295 million (interest-bearing loans and borrowings)
• Net Cash Position: The Group's net debt position increased by $2,060 million to $24,570 million in 2024.
• Credit Rating: Short-term credit ratings are P-1 (Moody’s) and A-1 (Standard and Poor’s); long-term ratings are A2 (Moody’s) and A+ (Standard and Poor’s).
• Debt Maturity Profile: Total non-derivative financial instruments, including bonds and bank loans, were $54,530 million in 2024. Current financial liabilities were $2,676 million, and non-current financial liabilities were $27,619 million.

Cash Flow Generation (2024):

• Operating Cash Flow: $11,861 million
• Free Cash Flow: $7,275 million (Operating Cash Flow of $11,861 million less Capital Expenditures of $4,586 million)
• Cash Conversion Metrics: Not explicitly detailed in the filing.

Currency Management:

• Cash holdings by major currencies: Surplus cash generated by business units is substantially converted to, and held centrally in, US dollars.
• Natural hedging through operational diversification: Not explicitly stated, but implied by global operations and multi-currency revenue/cost exposures.
• Financial hedging instruments and strategies: The Company uses forward foreign exchange contracts to hedge forecasted transactional currency exposures, and foreign currency borrowings, cross-currency swaps, and interest rate swaps for net investment, cashflow, and fair value hedges.

Operational Excellence

Production & Service Model: ASTRAZENECA PLC's operational philosophy is supported by a global network of properties, substantially all of which are held freehold, free of material encumbrances, and are fit for their purpose. The Company maintains manufacturing capabilities through subsidiaries such as AstraZeneca Reims Production SAS, AstraZeneca Dunkerque Production SCS (France), and AstraZeneca Pharmaceutical Manufacturing (Qingdao) Co., Ltd. (China).

Global Supply Chain Architecture: Key Suppliers & Partners:

• Supply Chain Financing Program: The Company utilizes a supply chain financing program, with $105 million due to suppliers under this arrangement in 2024.
• Manufacturing Partners: Specific manufacturing partners beyond wholly-owned subsidiaries are not explicitly named.
• Technology Partners: Strategic collaborations include those with Daiichi Sankyo for Enhertu and Datroway, and licensing agreements with Amgen and Samsung Bioepis for Soliris.

Facility Network:

• Manufacturing: Key production locations include facilities in France (Reims, Dunkerque) and China (Qingdao).
• Research & Development: The Company maintains R&D centers globally, including AstraZeneca Global R&D (China) Co., Ltd.
• Distribution: Distribution relies on a network of regional sales forces and channel partners. In the US, sales to three wholesalers accounted for approximately 74% of US sales in 2024. In Iran, the Company uses a single third-party distributor.

Operational Metrics: Specific capacity utilization, efficiency measures, or quality indicators are not explicitly disclosed in the filing.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Implied by the Company's extensive global presence and regional sales teams.
• Channel Partners: ASTRAZENECA PLC relies on channel partners, with one wholesaler representing greater than 10% of total Product Sales ($7,567 million) in 2024. In the US, three wholesalers accounted for approximately 74% of US sales. In Iran, sales are conducted through a single third-party distributor.
• Digital Platforms: Digital sales channels or e-commerce initiatives are not explicitly detailed in the filing.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Major enterprise relationships are implied by the significant sales volumes to wholesalers and the nature of pharmaceutical sales to healthcare systems globally.
• Strategic Partnerships: Strategic alliances, such as the 50:50 global pre-tax net income share arrangements with Daiichi Sankyo for Enhertu and Datroway, are crucial for market access and product development.
• Customer Concentration: The Company faces customer concentration risk, with one wholesaler accounting for over 10% of total product sales and three wholesalers representing 74% of US sales in 2024. Regional Market Penetration:
• The Company has strong market penetration across its primary geographic markets (US, Emerging Markets, Europe, Established ROW), evidenced by its substantial product sales in these regions.
• Growth Markets: Emerging Markets, particularly China and ex-China regions, are identified as key growth areas, with significant sales increases in products like Farxiga/Forxiga.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: ASTRAZENECA PLC operates within the global pharmaceutical industry, characterized by high R&D investment, complex regulatory environments, and intense competition. The Company's focus on therapeutic areas like Oncology, CVRM, Respiratory & Immunology, Vaccines and Immune Therapies, and Rare Disease reflects key growth segments within the industry.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The filing does not explicitly name direct competitors. However, the extensive patent litigation activities (both against and by ASTRAZENECA PLC) for key products like Enhertu, Faslodex, Forxiga, Soliris, Tagrisso, Brilinta, Calquence, Daliresp, Farxiga, and Lynparza indicate a highly competitive landscape with numerous pharmaceutical and biotechnology companies.

Regional Competitive Dynamics: The competitive landscape varies by region, influenced by local regulatory frameworks, market access conditions, and the presence of regional and global pharmaceutical players. The Company's patent litigation activities span multiple jurisdictions (US, Japan, UK, Turkey, Canada, Europe, Russia), highlighting the multi-jurisdictional nature of competitive challenges.

Risk Assessment Framework

Strategic & Market Risks

Global Market Dynamics:

• Foreign Currency Risk: Approximately 60% of 2024 external sales were non-USD denominated, and significant manufacturing/R&D costs are in pound sterling and Swedish krona, exposing the Group to currency fluctuations. Mitigation includes hedging strategies.
• Interest Rate Risk: Exposure to interest rate changes on floating-rate debt and cash reserves.
• Technology Disruption: The pharmaceutical industry is subject to rapid technological advancements and the risk of pipeline failures or competitive innovations.
• Customer Concentration: Sales to a single wholesaler accounted for over 10% of total product sales, and three wholesalers represented 74% of US sales in 2024, posing a concentration risk.

Operational & Execution Risks

Global Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on a network of suppliers, including those in a supply chain financing program, could pose risks if disruptions occur.
• Regional Disruptions: Operations in hyperinflationary economies (Argentina, Venezuela, Turkey) introduce economic instability risks.
• Trade Restrictions: Compliance with regulations like the Iran Threat Reduction and Syria Human Rights Act of 2012 for limited operations in Iran.

Financial & Regulatory Risks

Currency & Financial Risks:

• Foreign Exchange: Significant exposure to multiple currencies, managed through various hedging instruments (forwards, swaps, net investment hedges, cashflow hedges, fair value hedges).
• Interest Rate Risk: Exposure to interest rate fluctuations on its $30.3 billion debt portfolio, with both fixed and floating rate components.
• Credit & Liquidity: Credit risk on cash investments, derivative instruments, and trade receivables, mitigated by investing in high credit-quality assets and monitoring counterparty limits. The Group's net debt increased to $24.6 billion in 2024. Regulatory & Compliance Risks:
• Multi-Jurisdictional Compliance: Operates under diverse regulatory frameworks globally, including the UK Corporate Governance Code and specific Nasdaq Listing Rules for foreign private issuers.
• Trade Regulations: Compliance with international trade regulations and sanctions, as evidenced by the Iran disclosure.
• Tax Regulations: Exposure to complex international tax regulations, including Pillar Two income tax ($238 million charge in 2024) and transfer pricing exposures ($384 million net tax liability, with potential for additional $422 million).

Geopolitical & External Risks

Country-Specific Risks:

• Political Risk: Operations in various countries expose the Company to political instability and policy changes.
• Economic Risk: Exposure to economic instability, currency devaluation, and hyperinflation in certain markets.
• Regulatory Changes: Changes in local laws and regulations, such as the Pillar Two tax rules, can impact operations and financial results.

Innovation & Technology Leadership

Research & Development Focus: ASTRAZENECA PLC maintains a strong focus on R&D, evidenced by its $13,583 million expenditure in 2024 (25.1% of revenue). The Company has an active pipeline across Oncology, CVRM, Respiratory & Immunology, Vaccines and Immune Therapies, Other Medicines, and Rare Disease, with numerous compounds in Phase I, II, and III clinical development.

Global R&D Network: The Company operates a global R&D network, including AstraZeneca Global R&D (China) Co., Ltd., and has made strategic acquisitions like Gracell, Fusion, and Neogene to bolster its R&D capabilities and pipeline.

Innovation Pipeline: The development pipeline includes:

• Phase I Compounds: 20+ compounds across all therapeutic areas, including novel CAR-T cell therapies, ADCs, and inhibitors.
• Phase II Compounds: 15+ compounds, advancing therapies in Oncology, CVRM, and Respiratory & Immunology.
• Phase III/Pivotal Phase II/Registration Compounds: Numerous compounds with data read-outs or submissions, including camizestrant, baxdrostat, tozorakimab, and acoramidis.
• Significant Life-cycle Management: Extensive programs for key marketed products like Calquence, Datroway, Enhertu, Imfinzi, Lynparza, Tagrisso, Breztri/Trixeo, Fasenra, Saphnelo, Tezspire, Koselugo, and Ultomiris.

Intellectual Property Portfolio:

• Patent Strategy: ASTRAZENECA PLC actively manages a substantial intellectual property portfolio, with patent expiries for key marketed products ranging from 2024 to 2041 across major global markets.
• Licensing Programs: The Company engages in cross-border licensing, such as the agreements for Soliris and FluMist, and strategic alliances like those for Enhertu and Datroway.
• IP Litigation: ASTRAZENECA PLC is involved in multi-jurisdictional patent litigation, both as a plaintiff (e.g., Brilinta, Calquence, Farxiga, Lynparza, Soliris, Tagrisso) and defendant (e.g., Enhertu, Faslodex, Forxiga, Soliris, Tagrisso), indicating active defense and enforcement of its IP.

Technology Partnerships:

• Strategic Alliances: Key alliances include those with Daiichi Sankyo for Enhertu and Datroway, and investments in biotech companies like Cellectis (44% interest) and Fuse Biosciences (18.75% interest).
• Research Collaborations: The Company engages in research collaborations, as evidenced by its investments in various associated holdings focused on biotech and innovation.

Leadership & Governance

Executive Leadership Team (as of February 6, 2025)

International Management Structure: The appointment of an Executive Vice-President, International, indicates a dedicated focus on managing and growing the Company's global operations and regional leadership.

Board Composition: The Board of Directors includes a mix of executive and non-executive directors. Karen Knudsen is proposed for election as a Non-Executive Director, while Deborah DiSanzo and Andreas Rummelt will retire. Diana Layfield was appointed to the Remuneration Committee. The Board's Audit Committee oversees cybersecurity risks.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Primary Regulatory Environments:

• United Kingdom: As a company incorporated in England and Wales, ASTRAZENECA PLC adheres to the U.K. Corporate Governance Code 2018.
• United States: As a foreign private issuer with American Depositary Shares listed on The Nasdaq Stock Market LLC, the Company complies with Nasdaq Listing Rules, though it follows home country practice in lieu of certain rules, such as those concerning external auditor appointment, committee composition, director nominations, shareholder approval for equity compensation plans, and related party transactions. It also complies with Sarbanes-Oxley Act requirements.
• Global: The Company operates under diverse regulatory frameworks across its numerous international markets, impacting product approvals, pricing, and commercial practices. Cross-Border Compliance:
• Export Controls: The Company's disclosure regarding operations in Iran highlights compliance with the Iran Threat Reduction and Syria Human Rights Act of 2012.
• Sanctions Compliance: Implied by the Iran disclosure and the need to navigate multi-jurisdictional sanctions regimes.
• Anti-Corruption: Not explicitly detailed, but generally a requirement for global pharmaceutical companies.

International Tax Strategy:

• Transfer Pricing: The Company manages significant worldwide transfer pricing exposures, with a net tax liability of $384 million in 2024 and a potential for additional tax liabilities of up to $422 million.
• Tax Treaties: Not explicitly detailed in the filing.
• BEPS Compliance: The Company recognized a Pillar Two income tax charge of $238 million in 2024, indicating compliance with global minimum tax rules. Intellectual property incentive regimes reduced the tax charge by $561 million in 2024.

Environmental & Social Impact

Global Sustainability Strategy: ASTRAZENECA PLC has integrated sustainability into its executive leadership, with an Executive Vice-President, Global Operations, IT & Chief Sustainability Officer appointed in January 2023. The Company's Performance Share Plan for 2024 awards includes carbon reduction as a performance condition, demonstrating a commitment to environmental goals. No material accounting impacts from sustainability topics were noted in the financial statements.

Environmental Commitments:

• Climate Strategy: Carbon reduction targets are integrated into executive compensation.
• Carbon Neutrality: Not explicitly detailed, but carbon reduction is a focus.
• Renewable Energy: Not explicitly detailed. Regional Sustainability Initiatives:
• Environmental Provisions: The Company maintains provisions for environmental investigation, remediation, operation, and maintenance activities, totaling $105 million in 2024, primarily related to the US. Estimated potential additional losses for future environmental activity range between $113 million and $190 million.
• Supply Chain: Global supplier ESG requirements and sustainability standards are not explicitly detailed.

Social Impact by Region:

• Community Investment: Not explicitly detailed in the filing.
• Labor Standards: The Company employs a global workforce of 94,300 people as of December 31, 2024, with significant employee costs ($13,709 million in 2024) and various share plans for employees across regions (US, UK, Sweden).

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure (as of December 31, 2024):

Hedging Strategies:

• Transaction Hedging: The Group aims to hedge all forecasted major transactional currency exposures on working capital balances (typically up to three months) using forward foreign exchange contracts.
• Translation Hedging: External dividend payments in pound sterling to UK shareholders and in Swedish krona to Swedish shareholders are fully hedged from announcement date to payment date. Certain pound sterling and euro-denominated loans are designated in a net investment hedge.
• Economic Hedging: Not explicitly detailed, but implied by the use of various financial instruments to manage long-term currency exposures.
• The Company uses foreign currency borrowings, foreign currency forwards and swaps, currency options, interest rate swaps, and cross-currency interest rate swaps. The hedge ratio for all existing hedge relationships is 1:1. The Group does not use derivative financial instruments for speculative purposes.