AstraZeneca Annual Report and Form 20-F Information 2011

Financial ReviewCapitalisation and shareholder returnDividend for 2011$ Pence SEK Payment dateFirst interim dividend 0.85 51.9 5.33 12 September 2011Second interim dividend 1.95 123.6 13.21 19 March 2012Total 2.80 175.5 18.54Summary of shareholder distributionsSharesrepurchased(million)Cost$mDividend pershare$Dividendcost$mShareholderdistributions$m2000 9.4 352 0.70 1,236 1,5882001 23.5 1,080 0.70 1,225 2,3052002 28.3 1,190 0.70 1,206 2,3962003 27.2 1,154 0.795 1,350 2,5042004 50.1 2,212 0.94 1,555 3,7672005 67.7 3,001 1.30 2,068 5,0692006 72.2 4,147 1.72 2,649 6,7962007 79.9 4,170 1.87 2,740 6,9102008 13.6 610 2.05 2,971 3,5812009 – – 2.30 3,339 3,3392010 53.7 2,604 2.55 3,604 6,2082011 127.4 6,015 2.80 3,678 1 9,693Total 553.0 26,535 18.425 27,621 54,1561Total dividend cost estimated based upon number of shares in issue at 31 December 2011.CapitalisationThe total number of shares in issue at 31 December 2011 was1,292 million. 10.7 million shares were issued in consideration ofshare option exercises for a total of $409 million. Share repurchasesamounted to 127.4 million Ordinary Shares at a cost of $6,015 million.Shareholders’ equity increased by a net $33 million to $23,246 millionat the year end. Non-controlling interests increased to $226 million(2010: $197 million).Dividend and share repurchasesIn recognition of the Group’s strong balance sheet, sustainablesignificant cash flow and the Board’s confidence in the strategicdirection and long-term prospects for the business, the Board hasadopted a progressive dividend policy, intending to maintain or growthe dividend each year.The Board has recommended a 5% increase in the second interimdividend to $1.95 (123.6 pence, 13.21 SEK) to be paid on 19 March2012. This brings the full year dividend to $2.80 (175.5 pence pershare, 18.54 SEK), an increase of 10%.In 2010, the Group recommenced its share repurchase programme.The Group completed net share repurchases of $5,606 million in 2011(2010: $2,110 million). The Board has announced that the Group intendsto complete net share repurchases in the amount of $4.5 billion during2012, subject to market conditions and business needs.In setting the distribution policy and the overall financial strategy, theBoard’s aim is to continue to strike a balance between the interestsof the business, our financial creditors and our shareholders. Afterproviding for business investment, funding the progressive dividendpolicy and meeting our debt service obligations, the Board will keepunder review the opportunity to return cash in excess of theserequirements to shareholders through periodic share repurchases.AstraZeneca assumes that the global biopharmaceutical industrycan grow at least in line with real GDP over the planning horizon.While downward pressures on revenue from government interventionsin the marketplace have intensified, AstraZeneca’s assessmentremains that, as yet, these do not yet constitute a sustained ‘stepchange’in trend. The assumptions going forward for revenue, marginsand cash flow assume no material mergers, acquisitions or disposals.In addition, our plans assume no premature loss of exclusivity for keyAstraZeneca products.It is expected that revenue in 2012 will continue to be affectedby government interventions on pricing, and ongoing genericcompetition, including the anticipated loss of market exclusivity forSeroquel IR and Atacand in global markets, as well as for Crestorin Canada.Over the last several years, the Group has undertaken significantrestructuring initiatives aimed at reshaping the cost base to improvelong-term competitiveness. The second phase of restructuring,which was announced in January 2010, comprised a significantchange programme in R&D as well as additional productivityimprovement initiatives in the supply chain and SG&A. The first twophases of the restructuring programme are now largely complete ata cumulative cost of $4.6 billion. This programme will deliver annualbenefits to the Group by 2014. In February 2012, the Groupannounced the next phase of restructuring. Further details are setout in the Our strategic priorities to 2014 section from page 21.A planning assumption remains that continued productivityimprovements (including successful completion of restructuringinitiatives), will aid the achievement of levels of revenue and marginsto generate the requisite operating cash flow over the planning periodto support the reinvestment needs of the business, debt serviceobligations and shareholder distributions.Future prospectsAs described earlier in our Annual Report, the coming years will bechallenging for the industry and for AstraZeneca as its revenue basetransitions through a period of exclusivity losses and new productlaunches. AstraZeneca makes high-level planning assumptions forrevenue evolution, margins, cash flow and business reinvestment tohelp guide the management of the business.90 Financial ReviewAstraZeneca Annual Report and Form 20-F Information 2011