Interim Results - Part 2 of 2

AstraZeneca PLC 28 July 2005 Consolidated Income Statement As restated 2005 2004 For the six months ended 30 June $m $m Sales 11,875 10,362 Cost of sales (2,723) (2,409) Distribution costs (104) (86) Research and development (1,725) (1,745) Selling, general and administrative expenses (4,236) (4,165) Other operating income 84 147 Operating profit 3,171 2,104 Finance income 316 272 Finance expense (252) (246) Profit before tax 3,235 2,130 Taxation (968) (515) Profit for the period 2,267 1,615 Attributable to: Equity holders of the Company 2,259 1,608 Minority interests 8 7 2,267 1,615 Basic earnings per $0.25 Ordinary Share $1.38 $0.95 Diluted earnings per $0.25 Ordinary Share $1.38 $0.95 Weighted average number of Ordinary Shares in issue (millions) 1,634 1,684 Diluted average number of Ordinary Shares in issue (millions) 1,634 1,686 Dividends declared in the period 1,061 914 Consolidated Income Statement As restated 2005 2004 For the quarter ended 30 June $m $m Sales 6,132 5,288 Cost of sales (1,313) (1,251) Distribution costs (54) (44) Research and development (860) (888) Selling, general and administrative expenses (2,229) (2,162) Other operating income 42 109 Operating profit 1,718 1,052 Finance income 197 143 Finance expense (166) (149) Profit before tax 1,749 1,046 Taxation (525) (230) Profit for the period 1,224 816 Attributable to: Equity holders of the Company 1,219 811 Minority interests 5 5 1,224 816 Basic earnings per $0.25 Ordinary Share $0.75 $0.48 Diluted earnings per $0.25 Ordinary Share $0.75 $0.48 Weighted average number of Ordinary Shares in issue (millions) 1,628 1,679 Diluted average number of Ordinary Shares in issue (millions) 1,628 1,681 Consolidated Balance Sheet As restated As restated 30 June 31 Dec 30 June 2005 2004 2004 $m $m $m ASSETS Non-current assets Property, plant and equipment 7,355 8,097 7,537 Goodwill and intangible assets 2,696 3,050 2,919 Other investments 221 262 133 Deferred tax assets 1,174 1,218 1,843 11,446 12,627 12,432 Current assets Inventories 2,663 3,020 3,138 Trade and other receivables 4,926 4,771 4,701 Short term investments 398 1,167 2,573 Cash and cash equivalents 5,451 4,067 1,499 13,438 13,025 11,911 Total assets 24,884 25,652 24,343 LIABILITIES Current liabilities Short term borrowings and overdrafts (150) (142) (102) Other creditors (6,647) (6,445) (6,855) (6,797) (6,587) (6,957) Non-current liabilities Loans (1,163) (1,127) (1,097) Deferred tax liabilities (1,163) (1,328) (1,642) Retirement benefit obligations (1,803) (1,761) (1,508) Provisions (306) (266) (268) Other liabilities (82) (86) (68) (4,517) (4,568) (4,583) Total liabilities (11,314) (11,155) (11,540) Net assets 13,570 14,497 12,803 EQUITY Capital and reserves attributable to equity holders Share capital 404 411 419 Share premium account 584 550 521 Other reserves 1,892 1,851 1,875 Retained earnings 10,597 11,592 9,892 13,477 14,404 12,707 Minority equity interests 93 93 96 Total equity and reserves 13,570 14,497 12,803 Consolidated Cash Flow Statement As restated For the six months ended 30 June 2005 2004 $m $m Cash flows from operating activities Profit before tax 3,235 2,130 Finance income and expense (64) (26) Depreciation and amortisation 630 605 Decrease/(increase) in working capital 131 (378) Other non-cash movements 45 84 Cash generated from operations 3,977 2,415 Interest paid (13) (19) Tax paid (810) (713) Net cash inflow from operating activities 3,154 1,683 Cash flows from investing activities Disposal of business operations - 68 Movement in short term investments and fixed deposits 776 443 Purchases of property, plant and equipment (411) (583) Disposals of property, plant and equipment 73 11 Purchase of intangible assets (38) (95) Purchase of fixed asset investments (6) (7) Interest received 88 86 Dividends paid by subsidiaries to minority interests (5) (5) Dividends received - 4 Net cash inflow/(outflow) from investing activities 477 (78) Net cash inflow before financing activities 3,631 1,605 Cash flows from financing activities Proceeds from issue of share capital 34 72 Repurchase of shares (1,182) (968) Increase in loans - 731 Dividends paid (1,079) (897) Movement in short term borrowings 10 (2) Net cash outflow from financing activities (2,217) (1,064) Net increase in cash and cash equivalents in the period 1,414 541 Cash and cash equivalents at beginning of the period 3,927 872 Exchange rate effects (28) (16) Cash and cash equivalents at the end of the period 5,313 1,397 Cash and cash equivalents consists of: Cash and cash equivalents 5,451 1,499 Overdrafts (138) (102) 5,313 1,397 Statement of Recognised Income and Expense As restated 2005 2004 For the six months ended 30 June $m $m Net profit for the period (excluding minority interests) 2,259 1,608 Foreign exchange adjustments on consolidation (920) (221) Tax on foreign exchange adjustments (45) (16) Valuation gains taken to equity, net of tax 10 1 Actuarial losses, net of tax (86) (6) Recognised income and expense for the period 1,218 1,366 Independent review report to AstraZeneca PLC Introduction We have been engaged by the Company to review the financial information set out on pages 10,12 to 14 and 16 to 19 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Listing Rules of the Financial Services Authority. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of and has been approved by the Directors. The Directors are responsible for preparing the interim report in accordance with the Listing Rules which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual financial statements except where any changes, and the reasons for them, are disclosed. The accounting policies that have been adopted in preparing the financial information are consistent with those that the Directors currently intend to use in the next annual financial statements. There is, however, a possibility that the Directors may determine that some changes to these policies are necessary when preparing the full annual financial statements for the first time in accordance with those International Financial Reporting Standards adopted for use by the European Union. This is because, as disclosed in note 1, the Directors have anticipated that certain standards, which have yet to be formally adopted for use in the European Union, will be so adopted in time to be applicable to the next annual financial statements. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 Review of interim financial information issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2005. KPMG Audit Plc Chartered Accountants 8 Salisbury Square London 28 July 2005 Notes to the Interim Financial Statements 1 BASIS OF PREPARATION AND ACCOUNTING POLICIES The unaudited financial statements for the six months ended 30 June 2005 have been prepared in accordance with International Accounting Standards and International Financial Reporting Standards (collectively 'IFRS') expected to be endorsed by the European Union (EU) and available for use by European companies at 31 December 2005. These IFRSs are subject to ongoing review and possible amendment or interpretive guidance and are therefore still subject to change. Details of the accounting policies applied are set out in the IFRS Restatement information in AstraZeneca PLC's Annual Report and Form 20-F Information 2004 except that, in the period under review, the amendment to IAS 39 'Financial Instruments: Recognition and Measurement - The Fair Value Option' has been adopted. As a result, the accounting for long term loans has been changed; such loans are categorised as fair value through profit and loss with changes in value recognised in the income statement. Previously these loans had been recognised at cost except where hedge accounted. The comparative information has been restated accordingly. The effect of adoption on results was not significant; net assets at 31 December 2004 and 30 June 2004 were reduced by $21m and $31m respectively. The policies assume that this amendment, together with the amendments to IAS 19 'Employee Benefits' published in December 2004 by the International Accounting Standards Board, allowing actuarial gains and losses to be recognised in full through reserves, will be endorsed by the EU. The new information contained in Note 3 below updates the disclosures concerning legal proceedings in the Company's Annual Report and Form 20-F Information 2004. These interim financial statements do not constitute statutory accounts of the Group within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2004, which were prepared under accounting practices generally accepted in the UK, have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain any statement under Section 237 of the Companies Act 1985. 2 NET CASH FUNDS The table below provides an analysis of net cash funds and a reconciliation of net cash flow to the movement in net cash funds. As restated 1 Jan Cash Other Exchange 30 June 2005 flow non-cash* movements 2005 $m $m $m $m $m Loans due after 1 year (1,127) - (36) - (1,163) Current instalments of loans - - - - - Total loans (1,127) - (36) - (1,163) Short-term investments 1,167 (776) 9 (2) 398 Cash 4,067 1,414 - (30) 5,451 Overdrafts (140) - - 2 (138) Short-term borrowings (2) (10) - - (12) 5,092 628 9 (30) 5,699 Net cash funds 3,965 628 (27) (30) 4,536 * Other non-cash adjustments in the period consist of fair value adjustments to Financial Instruments under IAS 39. 3 LEGAL PROCEEDINGS AND COMMITMENTS AstraZeneca is involved in various legal proceedings considered typical to its business, including litigation relating to employment matters, product liability, commercial disputes, infringement of intellectual property rights and the validity of certain patents. The matters discussed below constitute the more significant developments since publication of the disclosures concerning legal proceedings in the Company's Annual Report and Form 20-F Information 2004. Matters previously disclosed in respect of the first quarter of 2005 CrestorTM (rosuvastatin) Of the two individual lawsuits served on AstraZeneca Pharmaceuticals LP and/or AstraZeneca LP in the US during 2004, involving alleged injury in association with the use of CrestorTM, one has now been dismissed. AstraZeneca has recently been served with a complaint filed in the Federal District Court in Puerto Rico and a complaint filed in Ohio making similar allegations. AstraZeneca is vigorously defending the pending CrestorTM litigation. ExantaTM (ximelagatran) As previously disclosed, on or about 27 January 2005, a putative class action was filed in the US District Court for the District of Massachusetts on behalf of purchasers of AstraZeneca publicly traded securities during the period 2 April 2003 to 11 October 2004 against AstraZeneca PLC, Percy Barnevik, Hakan Mogren, Sir Tom McKillop and Jonathan Symonds. The lawsuit asserted claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, alleging that the defendants made false and misleading statements regarding ExantaTM clinical trials and the status of the New Drug Application for ExantaTM in the US. Since then, three additional, but essentially similar, lawsuits have been filed in US District Courts in Delaware and the Southern District of New York. The litigation may ultimately be consolidated in one forum. The defendants deny the allegations made in the lawsuits and are vigorously defending the actions. SeroquelTM (quetiapine fumarate) The putative class action suit filed in August 2003 in the US District Court for the Middle District of Florida naming AstraZeneca PLC and AstraZeneca Pharmaceuticals LP as defendants and seeking damages and injunctive relief on behalf of a purported class 'consisting of all persons in the United States who purchased and/or used SeroquelTM' has been dismissed with prejudice. Matters disclosed in respect of the second quarter of 2005 CrestorTM (rosuvastatin) Another complaint involving alleged injury in association with the use of CrestorTM, filed in Tennessee, was recently served on AstraZeneca Pharmaceuticals LP and AstraZeneca LP. AstraZeneca is vigorously defending all four pending CrestorTM lawsuits in the US. DiprivanTM (propofol) The trial, post-trial briefing and closing arguments have taken place in the US District Court for the Southern District of New York in AstraZeneca's patent infringement action against Mayne Pharma (USA) Inc. that followed receipt of notice of Mayne's intention to market a generic version of DiprivanTM prior to the expiry of AstraZeneca's patents covering the current formulation. The court's decision is awaited. ExantaTM (ximelagatran) As noted above, four putative class actions have been filed against AstraZeneca PLC and certain individual defendants, asserting claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, alleging that the defendants made false and misleading statements regarding ExantaTM clinical trials and the status of the New Drug Application for ExantaTM in the US. Of these suits, the Delaware case has been dismissed and the Massachusetts case is being transferred to the US District Court for the Southern District of New York. The defendants deny the allegations made and are vigorously defending the actions. IressaTM (gefitinib) In addition to the two claims disclosed in the Annual Report and Form 20-F Information 2004, two further claims have been filed against AstraZeneca KK in the Osaka District Court alleging that IressaTM caused fatal incidences of interstitial lung disease (ILD) in Japanese patients. AstraZeneca believes the claims are without merit and is defending all four cases. ILD is a known complication of lung disease, including advanced lung cancer, regardless of treatment. LosecTM (omeprazole) As previously disclosed, in June 2005, the European Commission notified AstraZeneca PLC and AstraZeneca AB of its Decision to impose fines totaling €60m on the companies for infringements of European competition law (Article 82 of the EC Treaty and Article 54 of the EEA Agreement). The Commission alleges that the companies abused their dominant position in periods between 1993 and 2000 by making a pattern of misleading representations before patent offices and/or courts in Belgium, Denmark, Germany, the Netherlands, Norway and the UK in regard to obtaining supplementary protection certificates for LosecTM; and by requesting the surrender of market authorisations for LosecTM capsules in Denmark, Norway and Sweden, combined with withdrawal from these countries of LosecTM capsules and the launch of LosecTM MUPS tablets. AstraZeneca does not accept the Commission's Decision and will appeal it to the Court of First Instance. AstraZeneca denies that it had a dominant position or that it engaged in the behaviours as characterised by the Commission. In the meantime, the fine has been fully provided for in the half year results through a charge to operating profit of $75m. It is alleged by the Commission that these activities had the effect of hindering the entry of the generic version of LosecTM and of parallel trade. It is possible that third parties could seek damages for alleged losses arising from this. Any such claims would be vigorously resisted. In the judicial review proceedings taking place in Canada following Apotex's launch of a generic omeprazole capsule product there in January 2004, the Canadian Federal Court of Appeal quashed Apotex's notice of compliance (marketing approval) for the omeprazole capsule product in May 2005. This overruled the first instance decision in September 2004 which, as disclosed in the Annual Report and Form 20-F Information 2004, went against AstraZeneca. In June 2005, the Canadian Federal Court of Appeal granted Apotex's motion for a stay of the court's decision to quash the notice of compliance, pending an application by Apotex for leave to appeal to the Supreme Court of Canada. NexiumTM (esomeprazole) As disclosed in the Annual Report and Form 20-F Information 2004, AstraZeneca entities have been sued in state courts in the US in purported representative and class actions involving the marketing of NexiumTM (esomeprazole). These actions generally allege that AstraZeneca's promotion and advertising of Nexium TM to physicians and consumers is unfair, unlawful and deceptive conduct, particularly as the promotion relates to comparisons of NexiumTM with Prilosec TM. They also allege that AstraZeneca's conduct relating to the pricing of NexiumTM was unfair, unlawful and deceptive. The plaintiffs allege claims under various state consumer protection, unfair practices and false advertising laws. The plaintiffs in these cases seek remedies that include restitution, disgorgement of profits, damages, punitive damages, injunctive relief, attorneys' fees and costs of suit. During 2005, other suits which make substantially similar allegations in respect of AstraZeneca's marketing and promotion of NexiumTM have been brought by putative classes of consumers, third party payers, purchasers and a labour-management trust fund in various state and federal courts in Massachusetts, Florida and Delaware. AstraZeneca denies the allegations and is vigorously defending each of these actions. SymbicortTM (budesonide/formoterol) In May 2005, the European Patent Office (EPO) ruled that the European patent for SymbicortTM in the treatment of chronic obstructive pulmonary disease (COPD) is still valid, despite a challenge by generic manufacturers. The patent, which expires in 2018, was challenged by the generic manufacturers, Chiesi Farmaceutici SpA, Norton Healthcare Ltd and Generics (UK) Limited. Earlier in 2005, the EPO ruled that another European patent covering the combination of formoterol and budesonide in SymbicortTM is still valid, despite a separate challenge by several generic manufacturers. Drug importation anti-trust litigation As disclosed in the Annual Report and Form 20-F Information 2004, AstraZeneca Pharmaceuticals LP and eight other pharmaceutical manufacturers are defending a purported class action filed in the US District Court for Minnesota which alleges that the defendants conspired to prevent American consumers from purchasing prescription drugs from Canada, 'depriving consumers of the ability to purchase' drugs at competitive prices. In 2005, the chief magistrate judge assigned to the case issued a report on the defendants' motion to dismiss the case, making certain recommendations to the presiding district court judge. The report recommended dismissal of the plaintiffs' federal anti-trust claims, but not dismissal of the state statutory and common law claims. A final decision from the district court judge on the motion to dismiss is awaited. In July 2005, in the similar case in the Superior Court of California, the court overruled in part and sustained, without leave to amend, in part the defendants' motion to dismiss the plaintiffs' third amended complaint in these proceedings. The court overruled the defendants' motion in respect of the conspiracy claims but sustained the motion in respect of the California Unfair Competition Law claims. General With respect to each of the legal proceedings described above, we are unable to make estimates of the loss or range of losses at this stage other than where noted in the case of the European Commission fine. We also do not believe that disclosure of the amount sought by plaintiffs, if that is known, would be meaningful with respect to those legal proceedings. Arrangements with Merck As described in more detail in the Annual Report and Form 20-F Information 2004, AstraZeneca has significant arrangements with Merck & Co., Inc. relating to certain of our products and development compounds (the agreement products). These arrangements include exit provisions from 2008 onwards and we regularly monitor the value of the benefits we expect to receive. The exit provisions are subject to a minimum overall payment of $3.3 billion and will offer AstraZeneca unencumbered discretion in its operations in the US market without the restrictions of various contractual obligations that are currently imposed as a result of Merck's interests, together with relief from contingent payment obligations. The projected value of the benefits obtained in 2008 depends on a number of factors including the future contributions from products that have already been launched, those that are due to be launched in the US and those that are in development together with the further value AstraZeneca can extract from greater freedom to operate in the US. 4 HALF YEAR TERRITORIAL SALES ANALYSIS 1st Half 1st Half % Growth 2005 2004 Constant $m $m Actual Currency US 5,243 4,567 15 15 Canada 488 449 9 1 North America 5,731 5,016 14 13 France 874 847 3 (3) UK 380 281 35 28 Germany 621 467 33 25 Italy 609 543 12 5 Sweden 162 153 6 (1) Europe others 1,716 1,512 13 6 Total Europe 4,362 3,803 15 8 Japan 736 666 11 9 Rest of World 1,046 877 19 15 Total 11,875 10,362 15 12 5 SECOND QUARTER TERRITORIAL SALES ANALYSIS 2nd 2nd % Growth Quarter Quarter 2005 2004 Constant $m $m Actual Currency US 2,743 2,288 20 20 Canada 240 231 4 (3) North America 2,983 2,519 18 17 France 423 405 4 (2) UK 192 149 29 25 Germany 306 241 27 20 Italy 324 288 13 6 Sweden 82 74 11 3 Europe others 870 771 13 6 Total Europe 2,197 1,928 14 8 Japan 399 376 6 6 Rest of World 553 465 19 14 Total 6,132 5,288 16 13 6 HALF YEAR PRODUCT SALES ANALYSIS World US Constant 1st 1st Actual Currency 1st Actual Half Half Half 2005 2004 Growth Growth 2005 Growth $m $m % % $m % Gastrointestinal: Losec 865 1,071 (19) (22) 132 (37) Nexium 2,259 1,826 24 22 1,514 18 Others 36 38 (5) (8) 6 (45) Total Gastrointestinal 3,160 2,935 8 5 1,652 10 Cardiovascular: Zestril 165 222 (26) (30) (5) (116) Seloken 843 653 29 27 611 35 Atacand 489 425 15 10 122 (2) Plendil 205 259 (21) (23) 62 (42) Tenormin 175 178 (2) (5) 10 (33) Crestor 590 336 76 72 338 83 Others 160 175 (9) (14) 2 (78) Total Cardiovascular 2,627 2,248 17 14 1,140 23 Respiratory: Pulmicort 590 526 12 9 336 20 Rhinocort 204 181 13 11 148 17 Symbicort 502 393 28 21 - - Accolate 41 53 (23) (25) 27 (25) Oxis 46 51 (10) (16) - - Others 81 83 (2) (8) - - Total Respiratory 1,464 1,287 14 10 511 15 Oncology: Zoladex 494 439 13 8 61 (34) Casodex 564 478 18 14 118 10 Nolvadex 60 69 (13) (16) 3 - Arimidex 553 357 55 50 223 72 Iressa 140 196 (29) (31) 37 (63) Faslodex 64 49 31 29 44 2 Others 6 8 (25) (25) - - Total Oncology 1,881 1,596 18 14 486 2 Neuroscience: Seroquel 1,300 936 39 37 933 34 Zomig 172 186 (8) (11) 55 (34) Diprivan 205 248 (17) (19) 86 (33) Local anaesthetics 262 270 (3) (7) 31 (48) Others 35 38 (8) (13) 10 - Total Neuroscience 1,974 1,678 18 15 1,115 14 Infection and Other: Merrem 258 209 23 18 48 33 Other Products 189 136 39 33 112 90 Total Infection and Other 447 345 30 24 160 68 Aptium Oncology 165 148 11 11 165 11 Astra Tech 157 125 26 20 14 75 Total 11,875 10,362 15 12 5,243 15 7 SECOND QUARTER PRODUCT SALES ANALYSIS World US 2nd 2nd Constant 2nd Quarter Quarter Actual Currency Quarter Actual 2005 2004 Growth Growth 2005 Growth $m $m % % $m % Gastrointestinal: Losec 438 531 (18) (21) 72 (38) Nexium 1,204 891 35 33 823 35 Others 19 17 12 12 3 (25) Total Gastrointestinal 1,661 1,439 15 13 898 23 Cardiovascular: Zestril 78 117 (33) (36) (7) (137) Seloken 435 320 36 34 318 47 Atacand 254 216 18 13 66 16 Plendil 112 148 (24) (26) 40 (45) Tenormin 92 93 (1) (3) 7 75 Crestor 317 207 53 50 184 63 Others 82 92 (11) (14) - (100) Total Cardiovascular 1,370 1,193 15 12 608 24 Respiratory: Pulmicort 276 244 13 11 162 32 Rhinocort 112 100 12 10 81 14 Symbicort 255 205 24 17 - - Accolate 13 23 (43) (47) 6 (57) Oxis 23 26 (12) (16) - - Others 39 41 (5) (12) - - Total Respiratory 718 639 12 8 249 20 Oncology: Zoladex 263 226 16 12 29 (36) Casodex 287 249 15 12 56 10 Nolvadex 32 38 (16) (19) 3 50 Arimidex 297 191 55 51 122 79 Iressa 59 103 (43) (44) 7 (86) Faslodex 35 23 52 52 24 26 Others 3 4 (25) (25) - - Total Oncology 976 834 17 14 241 3 Neuroscience: Seroquel 667 488 37 35 477 34 Zomig 104 91 14 12 46 24 Diprivan 98 126 (22) (24) 41 (37) Local anaesthetics 135 140 (4) (8) 14 (53) Others 18 21 (14) (19) 5 (29) Total Neuroscience 1,022 866 18 16 583 18 Infection and Other: Merrem 127 112 13 9 19 6 Other Products 92 64 44 38 55 72 Total Infection and Other 219 176 24 19 74 48 Aptium Oncology 82 77 6 6 82 6 Astra Tech 84 64 31 25 8 100 Total 6,132 5,288 16 13 2,743 20 8 Transition from accounting practices generally accepted in the UK to International Financial Reporting Standards Set out below, in accordance with the provisions of IFRS No.1 'First-time Adoption of International Financial Reporting Standards' are the reconciliations of total equity and reserves and income from UK GAAP to IFRS. Total equity and reserves 31 Dec 2004 30 June 1 Jan 2003 2004 $m $m $m Total equity and reserves under UK GAAP 14,519 13,281 11,226 Adjustments to conform to IFRS Employee benefits (2,010) (1,745) (1,380) Financial instruments 11 39 153 Share-based payments - - - Goodwill 108 86 - Dividends 1,061 494 808 Capitalised software and other intangibles 106 94 80 Other 12 (2) - Deferred tax - IFRS adjustments above 562 499 362 - other 128 57 (82) Total equity and reserves under IFRS 14,497 12,803 11,167 Profit for the period Six months Year ended ended 31 Dec 2004 30 June 2004 $m $m Profit for the period under UK GAAP 3,831 1,641 Adjustments to conform to IFRS Employee benefits 1 7 Financial instruments (163) (97) Share-based payments (147) (64) Goodwill 49 27 Capitalised software and intangibles 21 9 Other (2) - Deferred tax - IFRS adjustments above 26 23 - other 67 69 Profit for the period under IFRS 3,683 1,615 Under IAS 7 'Cash Flow Statements', movements on cash and cash equivalents are reconciled; under UK GAAP the statement reconciles cash only. The change to the IAS 7 approach makes no difference to the levels of free cash generated by the Group. This information differs from that presented in January 2005 in that certain balance sheet items have been reclassified. In addition, as noted in the basis of preparation and accounting policies on page 16, the comparative information has also been restated to reflect the adoption of IAS 39, 'Financial Instruments: Recognition and Measurement - the Fair Value Option'. INFORMATION FOR US INVESTORS RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES The consolidated income statement and balance sheet set out on pages 10 and 12 are prepared in accordance with IASs and IFRSs (collectively 'IFRS') expected to be endorsed by the European Union and available for use by European companies at 31 December 2005. The following is a summary of the differences between IFRS and accounting principles generally accepted in the United States (US GAAP) as they apply to AstraZeneca PLC. Purchase accounting adjustments Under IFRS, the merger of Astra and Zeneca is accounted for as a 'merger of equals' (pooling-of-interests) as a result of the business combinations exemption permitted by IFRS 1 'First-time Adoption of International Financial Reporting Standards'. Under US GAAP the merger was accounted for as the acquisition of Astra by Zeneca using 'purchase accounting'. Under purchase accounting, 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 its in-process research and development and existing products, 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. Under IFRS, up until 31 December 2002, goodwill was required to be capitalised and amortised. From 1 January 2003 goodwill is tested annually for impairment but not amortised. Under US GAAP, there is an equivalent requirement, but the effective date was 1 January 2002. Capitalisation of interest AstraZeneca does not capitalise interest under IFRS. 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. 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 IFRS, full provision is also made although there are a number of different bases on which this calculation is made, for example, the elimination of intra-group profit on inventories and share-based payment transactions. Pension and post-retirement benefits IFRS requires that in respect of defined benefit plans, obligations are measured at discounted fair value whilst plan assets are recorded at fair value. The operating and financing costs of such plans are recognised separately in the income statement; service costs are spread systematically over the lives of employees and financing costs are recognised in the periods in which they arise. US GAAP adopts a similar approach. Under IFRS, actuarial gains and losses are permitted to be recognised immediately in the statement of recognised income and expense. Under US GAAP, such actuarial gains and losses are required to be amortised on a straight-line basis over the average remaining service period of employees. A minimum pension liability is also recognised through other comprehensive income in certain circumstances when there is a deficit of plan assets relative to the accumulated benefits obligation. Intangible assets Under IFRS certain payments for rights to compounds in development are capitalised. Under US GAAP these payments are expensed. Financial instruments and hedging activities Under IFRS, financial assets and certain financial liabilities (including derivatives) are recognised at fair value; movements in the fair value may be recorded in equity or through income, depending upon their categorisation. Under US GAAP, marketable securities are recognised at fair value, with movements in fair value taken to a separate component of equity. Derivatives are also measured at fair value with movements taken through income. However, financial liabilities are recorded at amortised cost, unless hedge accounting is adopted. New accounting standards adopted AstraZeneca has adopted the provisions of SFAS No. 123 (R) 'Share-Based Payment' in the period under review. SFAS No. 123 (R) requires compensation cost related to share based payments to be recognised in the financial statements. AstraZeneca has used the transitional arrangements for modified retrospective application in adopting SFAS No. 123 (R). As a consequence, the comparative US GAAP income has been reduced by $53m and the shareholders' equity at 30 June 2004 increased by $151m. RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES (CONTINUED) The approximate effects on income and shareholders' equity of the GAAP differences are shown in the following tables. As restated 1st Half 1st Half Income attributable to Shareholders 2005 2004 $m $m Net income for the period under IFRS from continuing operations 2,259 1,608 Adjustments to conform to US GAAP Purchase accounting adjustments (amortisation and depreciation) (530) (508) Capitalisation less disposals and amortisation of interest (7) 10 Deferred taxation - on purchase accounting adjustments 147 142 - others 71 (58) Pension expense and other post-retirement benefits expense (39) (23) Financial instruments 40 32 In-licensed development intangibles (5) (12) Net income in accordance with US GAAP 1,936 1,191 Net income per Ordinary Share under US GAAP - basic and diluted $1.19 $0.71 RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES (CONTINUED) As restated Shareholders' equity 30 June 30 June 2005 2004 $m $m Shareholders' equity under IFRS 13,477 12,707 Adjustments to conform to US GAAP Purchase accounting adjustments: - goodwill 13,676 13,973 - tangible and intangible fixed assets 5,790 6,926 Capitalisation, less disposals and amortisation of interest 247 265 Deferred taxation - on purchase accounting adjustments (1,781) (2,103) - others (575) (569) Pension expense and other post-retirement benefits expense 1,528 1,196 Financial instruments 69 56 In-licensed development intangibles (92) (52) Other (1) (2) Shareholders' equity in accordance with US GAAP 32,338 32,397 Shareholder Information THIRD QUARTER ANNOUNCEMENT Announcement of third quarter and nine months 2005 results 27 October 2005 DIVIDENDS The record date for the first interim dividend payable on 19 September 2005 (in the UK, Sweden and the US) is 12 August 2005. Ordinary shares will trade ex-dividend on the London and Stockholm Stock Exchanges from 10 August 2005. ADRs will trade ex-dividend on the New York Stock Exchange from the same date. Future dividends will normally be paid as follows: First interim Announced in July and paid in September Second interim Announced in January and paid in March TRADEMARKS The following brand names used in these interim financial statements are trademarks of the AstraZeneca Group of companies: Accolate Arimidex Astra Tech Atacand Casodex Cefotan Crestor Diprivan Exanta Faslodex Iressa Losec Merrem Naropin Nexium Nolvadex Oxis Plendil Prilosec Pulmicort Pulmicort Respules Rhinocort Rhinocort Aqua Seloken Seroquel Symbicort Tenormin Toprol-XL Zactima Zestril Zoladex Zomig ADDRESSES FOR CORRESPONDENCE Registrar and Depositary Registered Office Swedish Securities Transfer Office for ADRs Registration Centre The AstraZeneca Registrar JPMorgan Chase Bank 15 Stanhope Gate VPC AB Lloyds TSB Registrars PO Box 43013 London PO Box 7822 The Causeway Providence W1K 1LN SE-103 97 Stockholm Worthing RI 02940-3013 UK Sweden West Sussex US BN99 6DA UK Tel (toll free in US): Tel: +44 (0)20 7304 5000 Tel: +46 (0)8 402 9000 Tel (freephone in UK): 888 697 8018 0800 389 1580 Tel: +1 (781) 575 4328 Tel (outside UK): +44 (0)121 415 7033 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS In order to utilise the 'Safe Harbor' provisions of the United States Private Securities Litigation Reform Act of 1995, AstraZeneca is providing the following cautionary statement. These interim financial statements contain forward-looking statements with respect to the financial condition, results of operations and businesses of AstraZeneca. By their nature, forward-looking statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from that expressed or implied by these forward-looking statements. These factors 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. This information is provided by RNS The company news service from the London Stock Exchange

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