AstraZeneca PLC – Annual report – 31 December 2023
Industry: pharmaceutical
Financial Review (extract)
Measuring performance
Reported and Core performance are referred to in this Financial Review when reporting on our performance in absolute terms, but more often in comparison with earlier years:
- Reported performance takes into account all the factors (including those which we cannot influence, such as currency exchange rates) that have affected the results of our business. The Consolidated Financial Statements have been prepared in accordance with UK-adopted IAS and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The Consolidated Financial Statements also comply fully with IFRS Accounting Standards as issued by the IASB and IAS as adopted by the EU.
- Core performance measures are adjusted to exclude certain significant items, using a set of established principles.
Use of non-GAAP performance measures
Core performance measures, EBITDA, Net debt, CER, Product Sales Gross Margin (formerly termed Gross Margin) and Operating Margin are non-GAAP performance measures because they cannot be derived directly from the Financial Statements.
By disclosing non-GAAP performance and growth measures, in addition to our Reported financial information, we are enhancing investors’ ability to evaluate and analyse the financial performance and trends of our ongoing business and the related key business drivers. The adjustments are made to our Reported financial information in order to show non-GAAP performance measures that illustrate clearly the impact on our performance of factors such as changes in revenues and expenses driven by volume, prices and cost levels relative to such prior years or periods. These non-GAAP performance measures are not a substitute for, or superior to, financial measures prepared in accordance with GAAP.
As shown in the 2023 Reconciliation of Reported results to Core results table on page 62, our reconciliation of Reported financial information to Core performance measures includes a breakdown of the items for which our Reported financial information is adjusted, and a further breakdown by specific line item as such items are reflected in our Reported income statement. This illustrates the significant items that are excluded from Core performance measures and their impact on our Reported financial information, both as a whole and in respect of specific line items.
Management presents these results externally to meet investors’ requirements for transparency and clarity. Core financial measures are also used internally in the management of our business performance, in our budgeting process and when determining compensation. As a result, Core performance measures allow investors to differentiate between different kinds of costs but they should not be used in isolation.
Our determination of non-GAAP measures, and our presentation of them within this Financial Review, may differ from similarly titled non-GAAP measures of other companies.
The SET retains strategic management of the costs excluded from Reported financial information in arriving at Core financial measures, tracking their impact on Reported Operating profit and EPS, with operational management being delegated on a case-by-case basis to ensure clear accountability and consistency for each cost category.
We strongly encourage readers of this Annual Report not to rely on any single financial measure but to review our Financial Statements, including the Notes thereto, and our other publicly filed reports, carefully and in their entirety.
For a detailed definition of Core measures, see page 61.
Readers should also refer to our Reported financial information in the Summary performance in 2023 table on page 59, our reconciliation of Core performance measures to Reported financial information in the 2023 Reconciliation of Reported results to Core results table and the Excluded from Core results table on page 63, for our discussion of comparative growth measures that reflect all factors that affect our business.
Non-GAAP measures: definitions
Accounts examples 